Document:

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                                                                   EXHIBIT 10.35

                             DATED 18 DECEMBER 2000

                  ____________________________________________

                                PARENT AGREEMENT

                  ____________________________________________

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<TABLE>
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                                            TABLE OF CONTENTS

<S>   <C>                                                                                                       <C>
1.   DEFINITIONS...............................................................................................   2

2.   RECIPROCAL GUARANTEES OF PERFORMANCE......................................................................   2
     2.1.   Lyondell Guarantee.................................................................................   2
     2.2.   Bayer Guarantee....................................................................................   3
     2.3.   No Demand or Notice................................................................................   3
     2.4.   Continued Effectiveness; Certain Waivers...........................................................   3
     2.5.   Certain Matters Which Do Not Limit or Affect Guarantees............................................   4

3.   RESTRICTIONS ON TRANSFERS AND PLEDGES.....................................................................   4
     3.1.   Prohibition on Transfer............................................................................   4
     3.2.   Ownership Interest; Higher Tier Entity; Lyondell Successor Parent; Bayer Successor Parent..........   5
     3.3.   Permitted Transfers Provided Partner Remains an Affiliate..........................................   5
     3.4.   Certain Transfers in Connection with Successor Parent Transfer or Permitted Successor..............   6
     3.5.   Successor Parent Assignment and Assumption as to this Agreement....................................   7
     3.6.   Assignment and Assumption of License Agreement.....................................................   7
     3.7.   Pledge of Ownership Interest in Lyondell Partner or Bayer Partner..................................   7
     3.8.   No Implied Restrictions of Transfers and Pledges in Respect of Parent or Successor Parent..........   8
     3.9.   No Implied Prohibition of Certain Agreements in Respect of Production Capacity.....................   8

4.   CERTAIN OTHER OBLIGATIONS IN RESPECT OF PARTY OBLIGORS....................................................   9
     4.1.   Prevention of Bankruptcy or Appointment of Receiver................................................   9
     4.2.   Keep Well Covenant.................................................................................   9
     4.3.   Single Purpose Entities............................................................................   9
     4.4.   Restrictions on Third Party Equity Interests in a Partner With Associated PO Production Rights.....  10

5.   REPRESENTATIONS AND WARRANTIES............................................................................  10
     5.1.   Organisation, Standing and Power...................................................................  10
     5.2.   Authority; Execution and Delivery; Enforceability..................................................  10
     5.3.   No Conflicts; Consents.............................................................................  11
     5.4.   Subsidiaries.......................................................................................  11
     5.5.   Proceedings........................................................................................  11
     5.6.   Brokers or Finders.................................................................................  12

6.   MISCELLANEOUS.............................................................................................  12
     6.1.   Notices............................................................................................  12
     6.2.   Construction.......................................................................................  13
     6.3.   Severability.......................................................................................  13

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<S>   <C>                                                                                                       <C>
     6.4.   Governing Law.....................................................................................   14
     6.5.   Amendment and Waiver..............................................................................   14
     6.6.   Further Assurances................................................................................   14
     6.7.   Benefits of Agreement Restricted to the Parties and Named Beneficiaries...........................   14
     6.8.   Disputes..........................................................................................   14
</TABLE>

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     THIS PARENT AGREEMENT (this "AGREEMENT") is dated 18 December 2000 (the
"SIGNING DATE") and is made between LYONDELL CHEMICAL COMPANY, a Delaware
corporation ("LYONDELL") and BAYER AG, a German corporation ("BAYER"; Lyondell
and Bayer are sometimes referred to in this Agreement as a "PARENT COMPANY").

                                    RECITALS

(A)  As of the Signing Date:

     (1)  Lyondell PO-11 C.V., a limited partnership formed under the laws of
          The Netherlands (together with its successors and assigns as permitted
          under this Agreement, the "LYONDELL PARTNER") and Bayer Polyurethanes
          B.V., a company organised under the laws of The Netherlands (together
          with its successors and assigns as permitted under this Agreement, the
          "BAYER PARTNER") have entered into the Partnership Agreement to create
          the Partnership, being a general partnership under the laws of The
          Netherlands named "Lyondell Bayer Manufacturing Maasvlakte VOF" (the
          "PARTNERSHIP") for a manufacturing joint venture to own the PO-11
          Plant Facilities, being a grassroots PO/SM plant at the Maasvlakte,
          The Netherlands employing the Lyondell Group's technology.

     (2)  The Partnership and Lyondell Chemical Nederland, Ltd., a Delaware
          corporation (the "OPERATOR") have entered into the Operating Agreement
          pursuant to which, among other things, the Partnership engages the
          Operator to (a) oversee and manage the development of the PO-11 Plant
          Facilities and (b) operate and manage the PO-11 Plant Facilities.

     (3)  ARCO Chemical Technology, L.P. (together with its permitted successors
          and assigns under the Bayer License Agreement, "ACTLP") and the Bayer
          Partner have entered into the Bayer License Agreement pursuant to
          which Proprietary PO/SM Technology is licensed to the Bayer Partner on
          a non-exclusive basis subject to the terms and conditions of the Bayer
          License Agreement.

     (4)  ACTLP and Lyondell Chemie Technologie Nederland, B.V. (together with
          its permitted successors and assigns under the Lyondell License
          Agreement, "LCTN") have entered into a License Agreement (the "LCTN
          LICENSE AGREEMENT") pursuant to which Proprietary PO/SM Technology is
          licensed to LCTN on a non-exclusive basis subject to the terms and
          conditions of the LCTN License Agreement.

     (5)  LCTN and the Lyondell Partner have entered into the Lyondell License
          Agreement pursuant to which Proprietary PO/SM Technology is sub-
          licensed to the Lyondell Partner on a non-exclusive basis subject to
          the terms and conditions of the Lyondell License Agreement.

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     (6)  The Lyondell Partner, its general partner, Lyondell Chemie (POSM)
          B.V., the Bayer Partner, Lyondell Chemie PO-11 B.V. (together with its
          permitted successors and assigns under the Conditional Transfer
          Agreement, the "LYONDELL CONDITIONAL TRANSFEREE") and Bayer B.V.
          (together with its permitted successors and assigns under the
          Conditional Transfer Agreement, the "BAYER CONDITIONAL TRANSFEREE")
          have entered into the Conditional Transfer Agreement, providing for
          reciprocal transfers of the Partnership Interests of the Lyondell
          Partner and the Bayer Partner on specified Suspending Conditions and
          Dissolving Conditions, as therein defined.

     The Partnership Agreement, the Operating Agreement, the Bayer License
     Agreement, the LCTN License Agreement, the Lyondell License Agreement, the
     Conditional Transfer Agreement and this Agreement are called herein the
     "PO-11 AGREEMENTS".  The Lyondell Partner, Operator, ACTLP, LCTN, Lyondell
     Chemie (POSM) B.V. (in its capacity as a "Lyondell Conditional Transferor"
     under the Conditional Transfer Agreement) and Lyondell Conditional
     Transferee are called herein the "LYONDELL PO-11 AFFILIATES".  The Bayer
     Partner, the Bayer Conditional Transferee are called herein the "BAYER PO-
     11 AFFILIATES".  The Lyondell PO-11 Affiliates as to Lyondell and the Bayer
     PO-11 Affiliates as to Bayer are sometimes referred to herein as, together
     with their respective Affiliate transferees as permitted herein, as a
     "PARTY OBLIGOR".

(B)  Lyondell and Bayer have agreed to certain performance guarantees and to the
     other covenants and restrictions set forth in this Agreement.

NOW THEREFORE Lyondell and Bayer agree as follows:

1.   DEFINITIONS

Capitalised terms that are used but not defined herein shall have the meaning
given to them in Exhibit A.

2.  RECIPROCAL GUARANTEES OF PERFORMANCE

2.1.  Lyondell Guarantee.

Lyondell hereby unconditionally, absolutely and irrevocably, as primary obligor
and not merely as surety, guarantees, undertakes and promises to cause, as
herein provided, for the benefit of Bayer, any Bayer Successor Parent and the
Bayer PO-11 Affiliates and as to the obligations of the Operator under the
Operating Agreement, the Partnership, the full and prompt performance and the
due and punctual payment by the Lyondell PO-11 Affiliates of all covenants,
affirmative and negative, to be performed or observed, and of all amounts to be
paid, by or on the part of the Lyondell PO-11 Affiliates under the PO-11
Agreements in accordance with the terms thereof, in each case as if Lyondell
were itself the obligor with respect to such obligations under the PO-11
Agreements.

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2.2.  Bayer Guarantee.

Bayer hereby unconditionally, absolutely and irrevocably, as primary obligor and
not merely as surety, guarantees, undertakes and promises to cause, as herein
provided, for the benefit of Lyondell, any Lyondell Successor Parent and the
Lyondell PO-11 Affiliates, the full and prompt performance and the due and
punctual payment by the Bayer PO-11 Affiliates of all covenants, affirmative and
negative, to be performed or observed, and of all amounts to be paid, by or on
the part of the Bayer PO-11 Affiliates under the PO-11 Agreements in accordance
with the terms thereof, as if Bayer were itself the obligor with respect to such
obligations under the PO-11 Agreements.

The beneficiaries of the guarantee of Lyondell under Section 2.1 are sometimes
referred to herein as the "BAYER BENEFICIARIES" and the beneficiaries of the
guarantee of Bayer under Section 2.2 are sometimes referred to herein as
"LYONDELL BENEFICIARIES".  The Bayer Beneficiaries and the Lyondell
Beneficiaries are sometimes collectively referred to herein as the "PARENT
COMPANY GUARANTEE BENEFICIARIES".

2.3.  No Demand or Notice

It shall not be a condition to the guarantees and agreements of Lyondell and
Bayer, respectively, in Section 2.1 and Section 2.2 (in such capacity Lyondell
and Bayer are each sometimes referred to as a "GUARANTOR") that a Parent Company
Guarantee Beneficiary shall have first made any request of or demand upon, or
given any notice of the occurrence of a default under the PO-11 Agreement or any
other notice whatsoever to such Guarantor or any other Person, other than such
notice as is required to be given under the terms of the PO-11 Agreements.

      2.4.    Continued Effectiveness; Certain Waivers.

      2.4.1.  Defences. A Guarantor may assert any and all of the defences,
              counterclaims and other rights that its respective Party Obligor
              would be entitled to assert under the PO-11 Agreements, other than
              (a) any bankruptcy under any Bankruptcy Proceeding or suspension
              of payments under any Suspension of Payments Proceeding affecting
              the Party Obligor; (b) any lack of capacity or authority to enter
              into or perform its obligations under the PO-11 Agreements in any
              applicable jurisdiction; and (c) any lack of authority under such
              Party Obligor's organisational documents to enter into or perform
              its obligations under the PO-11 Agreements.

      2.4.2.  Waiver of Other Defences. Without limiting Section 2.4.1, each
              Guarantor waives all other defences, including (a) requiring any
              Parent Company Guarantee Beneficiary to exercise rights and
              remedies first against the Party Obligors or exhaust any security
              held for performance of the obligations of the Party Obligors
              under the PO-11 Agreements; (b) the absence of any notice of
              acceptance, demand, protest or other notice, other than notice
              required under the PO-11 Agreements; (c) any requirement of
              promptness or diligence on the part of any Parent Company
              Guarantee Beneficiary, except as would constitute a defence of

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              the Party Obligor under the PO-11 Agreements; and (d) any other
              discharge, release or defence of a surety or a guarantor under
              Applicable Law.

2.5.  Certain Matters Which Do Not Limit or Affect Guarantees.

The enforceability of the guarantees of Lyondell and Bayer in Section 2.1 and
Section 2.2 shall not be limited or affected by:

      2.5.1.  Any amendment, supplement, extension, consent or waiver with
              respect to any of the terms or provisions of any of the PO-11
              Agreements, regardless of whether such action or inaction results
              in any increase in any obligation or any change in the time,
              manner or place of payment or performance of any of the
              obligations under the PO-11 Agreements.

      2.5.2.  Any exercise or non-exercise by any Parent Company Guarantee
              Beneficiary of any right or remedy under or in respect of any
              PO-11 Agreement, or any waiver of any such right or remedy or of
              any default in respect of any PO-11 Agreement.

      2.5.3.  Any limitation of the liability or obligations of the applicable
              Party Obligor under the terms of any PO-11 Agreement which may now
              or hereafter be imposed by Applicable Law.

      2.5.4.  Any merger or consolidation of the applicable Guarantor into or
              with any other Person, or any sale, lease or transfer of any or
              all of the assets of the applicable Guarantor, to any other Person
              or any other change in the corporate structure of the applicable
              Guarantor except as contemplated herein in Section 3.5.

      2.5.5.  Any other circumstances which might otherwise constitute any
              discharge, release or defence of a guarantor or surety.

3.    RESTRICTIONS ON TRANSFERS AND PLEDGES

3.1.  Prohibition on Transfer.

Except as otherwise permitted under this Article 3, neither Lyondell nor Bayer
shall, and they will each ensure that none of their respective Affiliates, in
any transaction or series of transactions, directly or indirectly Transfer or
Pledge:

      3.1.1.  any Ownership Interest in the Lyondell Partner (in the case of
              Lyondell) or the Bayer Partner (in the case of Bayer); or

      3.1.2.  any Ownership Interest in any Higher Tier Entity such that such
              Higher Tier Entity is no longer, or pursuant to the terms of any
              Pledge may under any circumstances cease to be, an Affiliate of
              Lyondell or a Lyondell Successor Parent (in the case of Lyondell)
              or an Affiliate of Bayer or a Bayer Successor Parent (in the case
              of Bayer).

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3.2.  Ownership Interest; Higher Tier Entity; Lyondell Successor Parent; Bayer
      Successor Parent.

      3.2.1.  "OWNERSHIP INTEREST" means any common stock, preferred stock with
              voting rights or that is convertible to voting stock, partnership
              interest or other form of ownership in a Person that confers
              economic and voting rights.

      3.2.2.  "HIGHER TIER ENTITY" means any Person that owns directly or
              indirectly through an Ownership Interest in another entity an
              Ownership Interest in the Lyondell Partner (or a Lyondell
              Successor Parent) or the Bayer Partner (or a Bayer Successor
              Parent), as the case may be.

      3.2.3.  "LYONDELL SUCCESSOR PARENT" means the ultimate parent entity of
              the acquiring, succeeding or surviving entity or entities in any
              transaction permitted by Section 3.4 that directly, or indirectly
              through Higher Tier Entities, owns the Ownership Interest in the
              Lyondell Partner.

      3.2.4.  "BAYER SUCCESSOR PARENT" means the ultimate parent entity of the
              acquiring, succeeding or surviving entity or entities in any
              transaction permitted by Section 3.4 that directly, or indirectly
              through Higher Tier Entities, owns the Ownership Interest in the
              Bayer Partner.

      3.2.5.  "SUCCESSOR PARENT" means the Lyondell Successor Parent or the
              Bayer Successor Parent, as context requires.

3.3.  Permitted Transfers Provided Partner Remains an Affiliate.

Notwithstanding Section 3.1,

      3.3.1.  Without the need for the consent of the Bayer Partner, Bayer or
              any Bayer Successor Parent, Ownership Interests in the Lyondell
              Partner may be Transferred, provided that the Lyondell Partner
              remains an Affiliate either of Lyondell or a Lyondell Successor
              Parent following such Transfer and the conditions of Section 4.3
              and Section 4.4 remain satisfied following such Transfer.
              Additionally, if the Lyondell Partner is a general or limited
              partnership and the Ownership Interest being transferred is that
              of a general partner in the Lyondell Partner, then as a condition
              to such Transfer, the reconstituted Lyondell Partner and its
              general partner(s) shall execute a new Conditional Transfer
              Agreement on the same terms and conditions as the then existing
              Conditional Transfer Agreement (which existing agreement shall be
              contemporaneously cancelled).

      3.3.2.  Without the need for the consent of the Lyondell Partner, Lyondell
              or any Lyondell Successor Parent, Ownership Interests in the Bayer
              Partner may be Transferred, provided that the Bayer Partner
              remains an Affiliate of Bayer or a Bayer Successor Parent
              following such Transfer and the conditions of Section 4.3 and
              Section 4.4 remain satisfied following such Transfer.
              Additionally, if the Bayer Partner is a general or limited
              partnership and the Ownership Interest being

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              transferred is that of a general partner in the Bayer Partner,
              then as a condition to such Transfer, the reconstituted Bayer
              Partner and its general partner(s) shall execute a new Conditional
              Transfer Agreement on the same terms and conditions as the then
              existing Conditional Transfer Agreement (which existing agreement
              shall be contemporaneously cancelled).

      3.3.3.  Without the need for the consent of the Bayer Partner, Bayer or
              any Bayer Successor Parent, all (but not part only) of the
              Partnership Interest of the Lyondell Partner may be Transferred to
              a Lyondell Affiliate or to a Lyondell Successor Parent or to an
              Affiliate of a Lyondell Successor Parent, provided the conditions
              of Section 4.3 and Section 4.4 remain satisfied following the
              Transfer and the conditions of Section 23.4 of the Partnership
              Agreement are satisfied.

      3.3.4.  Without the need for the consent of the Lyondell Partner, Lyondell
              or any Lyondell Successor Parent all (but not part only) of the
              Partnership Interest of the Bayer Partner may be Transferred to a
              Bayer Affiliate or to a Bayer Successor Parent or to an Affiliate
              of a Bayer Successor Parent, provided the conditions of Section
              4.3 and Section 4.4 remain satisfied following the Transfer and
              the conditions of Section 23.4 of the Partnership Agreement are
              satisfied.

3.4.  Certain Transfers in Connection with Successor Parent Transfer or
      Permitted Successor.

The provisions of Section 3.1 shall not be deemed violated by or be deemed to
prohibit, and no consent shall be required from any Party in relation to, any
Transfer of all (but not less than all) of the Ownership Interest in the
Lyondell Partner or, as the case may be, the Bayer Partner (directly or
indirectly through Higher Tier Entities) if such Transfer is in connection with
any of the following:

      3.4.1.  In the case of either Bayer or Lyondell a merger, consolidation,
              conversion or share exchange of Lyondell (or the Lyondell
              Successor Parent) or, as the case may be, Bayer (or the Bayer
              Successor Parent).

      3.4.2.  In the case of Lyondell:

              (a)  a sale or other disposition of the Ownership Interest in the
                   Lyondell Partner together with assets representing at least
                   50% of the book value of the total assets of Lyondell (or the
                   Lyondell Successor Parent), excluding the Ownership Interest
                   in the Lyondell Partner, as reflected in the most recent
                   audited consolidated (or combined) financial statements of
                   Lyondell (or the Lyondell Successor Parent) to a single
                   entity or to entities which are all Affiliates of one
                   another; or

              (b)  a sale or other disposition of the Ownership Interest in the
                   Lyondell Partner together with (a) the Proprietary PO/SM
                   Technology and (b) other assets equal to at least 90% of the
                   book value of all of the PO production assets of the Lyondell
                   Group world-wide, to a single entity or to entities which are
                   all Affiliates of one another.

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              3.4.3.  In the case of Bayer:

                      (a)  a sale or other disposition of the Ownership Interest
                           in the Bayer Partner together with assets
                           representing at least 50% of the book value of the
                           total assets of Bayer (or the Bayer Successor
                           Parent), excluding the Ownership Interest in the
                           Bayer Partner, as reflected in the most recent
                           audited consolidated (or combined) financial
                           statements of Bayer (or the Bayer Successor Parent)
                           to a single entity or to entities which are all
                           Affiliates of one another; or

                      (b)  a sale or other disposition of the Ownership Interest
                           in the Bayer Partner together with other assets equal
                           to at least 90% of the book value of all of the
                           Identified Polyols production assets of the Bayer
                           Group world-wide, to a single entity or to entities
                           which are all Affiliates of one another.

3.5.  Successor Parent Assignment and Assumption as to this Agreement.

In connection with, and effective upon, any Transfer of the Ownership Interest
in either the Lyondell Partner or the Bayer Partner under Section 3.4.1, Section
3.4.2 or Section 3.4.3, the relevant Successor Parent shall assume the
obligations and acquire the rights of Lyondell or Bayer, as the case may be,
under this Agreement by executing an assignment and assumption agreement as
follows: (a) where the Ownership Interest in the Lyondell Partner is being
transferred, the Lyondell Successor Parent shall join the Bayer Beneficiaries
(and Bayer shall cause the Bayer Beneficiaries to join the Lyondell Successor
Parent) in executing an assignment and assumption agreement or (b) where the
Ownership Interest in the Bayer Partner is being transferred, the Bayer
Successor Parent shall join the Lyondell Beneficiaries (and Lyondell shall cause
the Lyondell Beneficiaries to join the Bayer Successor Parent) in executing an
assignment and assumption agreement.  Upon the effectiveness of such assignment
and assumption agreement, Lyondell, or Bayer, as the case may be, if it remains
in existence following the transaction under Section 3.4 and if it is not an
Affiliate of the relevant Successor Parent, shall be released from its
obligations under this Agreement accruing subsequent to the date of Transfer of
the Ownership Interest in the Lyondell Partner or the Bayer Partner, as the case
may be, under Section 3.4.

3.6.  Assignment and Assumption of License Agreement.

In connection with, and effective upon, any Transfer of all of an Ownership
Interest permitted under this Article 3, the Lyondell License Agreement (in the
case of the Lyondell Partner) or the Bayer License Agreement (in the case of
Bayer Partner) shall be assigned to and assumed by the transferee of the
Ownership Interest. With respect to the Bayer License Agreement, Lyondell shall
cause ACTLP and Bayer shall cause the transferee of the Ownership Interest to
enter into an appropriate assignment and assumption agreement.

3.7.  Pledge of Ownership Interest in Lyondell Partner or Bayer Partner.

Notwithstanding the provisions of Section 3.1, either Parent Company or its
relevant Successor Parent, without the need for the consent of the other Parent
Company or that Party's Affiliates or Successor Parent, may (a) as to Lyondell,
Pledge or cause to be Pledged (directly or through one

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or more Higher Tier Entities) to a Financial Institution (i) all or part of the
Ownership Interests in the Lyondell Partner and/or (ii) the rights to
distributions from such Ownership Interest in the Lyondell Partner and (b) as to
Bayer, Pledge or caused to be Pledged (directly or through one or more Higher
Tier Entities) to a Financial Institution (i) all or part of the Ownership
Interests in the Bayer Partner and/or (ii) the rights to distributions from such
Ownership Interest in the Bayer Partner. Notwithstanding the provisions of the
foregoing clauses (a)(i) and (b)(i) of this Section 3.7, if the Lyondell Partner
or the Bayer Partner is a general or limited partnership, no general partnership
interest in the Lyondell Partner or the Bayer Partner, as the case may be, may
be Pledged (but the Ownership Interests in the general partner may be Pledged
unless such general partner is itself a general or limited partnership). Neither
Partner may Pledge all or any part of, or interests in (including distribution
rights), its Partnership Interest. For avoidance of doubt, no Pledge permitted
under this Section 3.7 shall affect or encumber the Transfer of a Partner's
Partnership Interest (including rights to distributions) under the Conditional
Transfer Agreement upon the effective date of a Suspending Condition. Any
pledgee of a Pledge permitted under this Section 3.7 will receive written notice
of the rights of the Parties to this Agreement and the Conditional Transfer
Agreement prior to the creation of such Pledge. "FINANCIAL INSTITUTION" means
any bank, insurance company, investment bank or other financial institution or
investment fund that is regularly in the business of making loans, participating
in syndicated loan transactions or acquiring debt securities and any Person
benefiting derivatively from such Pledge.

3.8.  No Implied Restrictions of Transfers and Pledges in Respect of Parent or
      Successor Parent.

Nothing in this Article 3 shall prevent or restrict the Transfer or Pledge of
the capital stock, equity ownership interests or other securities of either
Parent Company or its Successor Parent and no such Transfer or Pledge of
securities of that Parent Company or its Successor Parent shall be deemed to
constitute a Transfer or Pledge of the Ownership Interest of the Lyondell
Partner or, as the case may be, the Bayer Partner.

3.9.  No Implied Prohibition of Certain Agreements in Respect of Production
      Capacity.

      3.9.1.  Nothing in this Agreement restricts the right of Lyondell Partner
              to enter into capacity sharing agreements, tolling agreements or
              supply contracts of any kind or nature in respect of the offtake
              rights of the Lyondell Partner as to PO and/or SM from the PO-11
              Plant Facilities, provided that neither the Partnership nor the
              Bayer Partner shall have any contractual relationship with, or
              obligations to, any counterparty whatsoever in relation to such
              arrangements and any such arrangement in respect of PO is a
              market-based transaction.

      3.9.2.  Nothing in this Agreement is intended to restrict the rights of
              the Bayer Partner to enter into capacity sharing agreements,
              tolling agreements or supply contracts of any kind or nature in
              respect of the offtake rights of the Bayer Partner as to SM from
              the PO-11 Plant Facilities, provided that neither the Partnership
              nor the Lyondell Partner shall have any contractual relationship
              with, or obligations to, any counterparty to such arrangements.
              Bayer shall not permit the Bayer Partner to enter into capacity
              sharing agreements, tolling agreements or long-term supply

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              contracts in respect of PO with third parties that are not Bayer
              Affiliates. Sales of PO by Bayer Partner to third parties that are
              not prohibited pursuant to the terms of the Partnership Agreement
              shall be conditioned on payment by the Bayer Partner of the
              Accommodation Fee to the Lyondell Partner.

4.    CERTAIN OTHER OBLIGATIONS IN RESPECT OF PARTY OBLIGORS

4.1.  Prevention of Bankruptcy or Appointment of Receiver.

Bayer and Lyondell shall, as far as they are reasonably able and subject to the
actions of third parties and any relevant insolvency law, with respect to each
of their respective Party Obligors (a) not cause or permit the filing of a
bankruptcy petition by the Party Obligor in any Bankruptcy Proceeding; (b) cause
the annulment of any bankruptcy petition filed against the Party Obligor in any
Bankruptcy Proceeding prior to any declaration of bankruptcy; (c) otherwise
prevent the bankruptcy of the Party Obligor under any Bankruptcy Proceeding; and
(d) not permit the appointment of a receiver, custodian, liquidator or trustee
for all or any substantial portion of the assets of the Party Obligor.

4.2.  Keep Well Covenant.

Bayer and Lyondell shall, with respect to each of their respective Party
Obligors, cause the Party Obligor to maintain its legal existence, good
standing, authorisations to transact business and necessary registrations,
licenses and permits so as to be able to perform its obligations under the PO-11
Transaction Agreement(s) to which it is a Party.

4.3.  Single Purpose Entities

Commencing on a date that is not later than 1 July 2001: Bayer shall cause the
Bayer Partner, and during any period in which the Bayer Partner is a general or
limited partnership, Bayer shall cause each general partner of the Bayer
Partner, and Lyondell shall cause the Lyondell Partner, and during any period in
which the Lyondell Partner is a general or limited partnership, Lyondell shall
cause each general partner of the Lyondell Partner:

      4.3.1.  Not to engage in or invest in any other business other than the
              PO-11 Business; and

      4.3.2.  Not to incur or guarantee money indebtedness unrelated to the PO-
              11 Business. Liabilities imposed under the Dutch tax collection
              act (Invorderingswet 1990), as the same may be amended,
              supplemented or replaced, for tax obligations imposed as a result
              of being a member of a fiscal unity ("fiscale eenheid") for Dutch
              tax purposes shall not be deemed to violate the provisions of this
              Section 4.3.2. Nothing herein limits or affects Section 3.7.

Additionally, neither Partner may Transfer its Partnership Interest, and if the
Lyondell Partner or the Bayer Partner is a general or limited partnership, no
general partner in the Lyondell Partner or the Bayer Partner, as the case may
be, may Transfer its Ownership Interest in such Partner, to a Person that has
been the subject of a Suspension of Payments Proceeding or a Bankruptcy
Proceeding at any time within the three years prior to the proposed date of
Transfer.  The

                                       9
<PAGE>

foregoing obligations under this Section 4.3 in respect of any general partner
of the Lyondell Partner or the Bayer Partner shall also apply to any general
partner at a higher tier in any partnership owning a general partnership
interest in the immediately predecessor entity (if such predecessor entity and
each intervening entity between such predecessor entity and the Partner is a
partnership). The "PO-11 BUSINESS" means (a) the holding by the Partner of its
respective Partnership Interest, and its Partnership Percentage interest in the
assets of the Partnership; (b) the marketing, sale and servicing of PO and SM
produced from the PO-11 Plant Facilities; and (c) any activity incidental to
those described in clauses (a) and/or (b). The foregoing restrictions shall
apply to all successors and assigns of the Bayer Partner and the Lyondell
Partner (and if applicable, their respective general partners), notwithstanding
any right of Transfer under Article 3 hereof. Nothing herein prevents any Person
owning an Ownership Interest in the Partner (other than as a general partner in
the Partner), whether as a shareholder, limited partner or otherwise, from
engaging in any business, whether related or unrelated to the PO-11 Business.

4.4.  Restrictions on Third Party Equity Interests in a Partner With Associated
      PO Production Rights.

No Ownership Interest in the Lyondell Partner or the Bayer Partner, as the case
may be, may be Transferred to a Person that is not a Lyondell Affiliate or an
Affiliate of a Lyondell Successor Parent (as to the Lyondell Partner) or a Bayer
Affiliate or an Affiliate of a Bayer Successor Parent (as to the Bayer Partner),
in each case if such Person, as a result of such Ownership Interest, has a right
to any portion of the PO produced from the PO-11 Plant Facilities.

5.  REPRESENTATIONS AND WARRANTIES

Each Parent Company, with respect to itself and, as applicable, with respect to
its Party Obligors, represents and warrants (to the extent each representation
and warranty is applicable to it under the jurisdiction in which it is
domiciled) to the other Parent Company as follows:

5.1.  Organisation, Standing and Power.

Such Parent Company and its Party Obligors which is or will be a signatory to
any PO-11 Agreement (a) is duly organised or formed, validly existing and in
good standing under the laws of the jurisdiction in which it is so organised or
formed, (b) has full corporate (or equivalent) power and authority necessary to
enable it to perform its obligations under any PO-11 Agreement to which it is or
will be a Party and (c) is duly qualified to do business as a foreign
corporation, partnership or limited liability company and is in good standing in
each jurisdiction where such qualification is necessary, except where the
failure to be so qualified could not reasonably be expected to have a material
adverse effect.

5.2.  Authority; Execution and Delivery; Enforceability.

Such Parent Company and its Party Obligors has full corporate (or equivalent)
power and authority to execute and deliver the PO-11 Agreements to which it is
or will be a Party and to consummate the transactions to be consummated by it
thereunder.  The execution and delivery by each of such Parent Company and its
Party Obligors of the PO-11 Agreements to which it is or will be a Party and the
consummation of the transactions to be consummated by it thereunder will have
been duly authorised by all necessary corporate (or equivalent) action.  Such
Parent

                                      10
<PAGE>

Company and its Party Obligors will have duly executed and delivered each
PO-11 Agreement to which it is a Party, and each such PO-11 Agreement (assuming
the due authorisation, execution and delivery by each other Party thereto) will
constitute its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except (a) as the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (b) as may be limited by legal principles of general
applicability.

5.3.  No Conflicts; Consents

      5.3.1   The execution and delivery by each of such Parent Company and its
              Party Obligors of the PO-11 Agreements to which it is or will be a
              Party does not and will not, and the consummation of the
              transactions contemplated by, and compliance with the terms of,
              the PO-11 Agreements will not conflict with, or result in any
              violation of or default (with or without notice or lapse of time,
              or both) under, or give rise to a right of termination,
              cancellation or acceleration of any obligation or to a loss of a
              material benefit under, or to increased, additional or accelerated
              rights or entitlements of any Person under, or result in the
              creation of any lien upon any of the properties or assets of such
              Parent Company or any of its Party Obligors under, any provision
              of (a) its organisational documents, (b) any material contract to
              which it is a Party or by which any its properties or its assets
              is bound or (c) any judgement or any Applicable Law applicable to
              its properties or its assets, other than, in the case of clauses
              (b) and (c) above, any such items that, individually or in the
              aggregate, could not reasonably be expected to have a material
              adverse effect.

      5.3.2   No consent or filing with any Governmental Entity is or will be
              (a) required to be obtained or made by or with respect to such
              Parent Company or any of its Party Obligors for the execution and
              delivery of the PO-11 Agreements to which it is or will be a Party
              or (b) except for consents and filings required for the
              development and operation of the PO-11 Plant Facilities, necessary
              for the consummation by such Parent Company and its Party Obligors
              of the transactions contemplated thereunder other than where the
              failure to obtain such a consent or make such a filing,
              individually or in the aggregate, could not reasonably be expected
              to result in a material adverse effect.

5.4.  Subsidiaries

Each Party Obligor of such Parent Company is a direct or indirect wholly owned
subsidiary of such Parent Company.

5.5.  Proceedings

There were not any (a) outstanding judgements against or affecting such Parent
Company or its Party Obligors, or (b) proceedings pending or, to the knowledge
of such Parent Company, threatened in writing against or affecting such Parent
Company or its Party Obligors, by or against any Governmental Entity or any
other Person, that, in the case of (a) or (b), in any manner challenged or
sought to prevent, enjoin, materially alter or materially delay any of the

                                      11
<PAGE>

transactions contemplated by the PO-11 Agreements and which is expected to have
a material adverse effect.

5.6.  Brokers or Finders

No agent, broker, investment banker or other Person is or will be entitled to
any broker's or finder's fee or any other commission or similar fee in
connection with any of the transactions contemplated by the PO-11 Agreements.

6.  MISCELLANEOUS

6.1.  Notices.

All notices, requests, demands and other communications that are required or may
be given to Lyondell or Bayer under this Agreement, unless otherwise provided
herein, shall be in writing (facsimile and electronic communications shall be
treated as being "in writing") and shall be given to a Party at the address
and/or facsimile number or electronic mail address specified below or as such
Party shall at any time otherwise specify by like notice to the other Party.
Each such notice, request, demand or other communication shall be effective (a)
if given by facsimile, at the time such facsimile is transmitted and the
appropriate confirmation is received (or, if such time is not during regular
business hours of a Business Day, at the beginning of the next such Business
Day); (b) if given by electronic mail, when receipt is confirmed by the sender,
provided notice is also delivered by another means permitted under this Section
6.1; or (c) if given by mail or by any other means, upon receipt or refusal of
service at the address specified below.

     To Lyondell:

               Lyondell Chemical Company
               Lyondell House
               Bridge Avenue
               Maidenhead
               Berkshire SL6 1YP U.K.
               Attention: European Counsel
               Facsimile:  44(0) 1628 773104

     Copy to:

               Lyondell Chemical Company
               One Houston Center
               1221 McKinney Street, Suite 1600
               Houston, TX.  77253-3646
               U.S.A.
               Attention:  General Counsel
               Facsimile:  1 713 309 2143

     To Bayer:

               Bayer AG

                                      12
<PAGE>

               Geschaftsbereich PU
               D-51368 Leverkusen
               Germany
               Attention:  PU-Leitung
               Facsimile:  49 (0) 214 30 61990

     Copy to:

               Bayer AG
               Legal Department
               K-RP Rechstabteilung
               D-51368 Leverkusen
               Germany
               Attention:  Senior Counsel
               Facsimile:  49(0) 214 302 6786

6.2.  Construction.

In construing this Agreement: (a) no consideration shall be given to the
captions of the Articles, Sections, subsections or clauses, which are inserted
for convenience only, (b) no consideration shall be given to the fact or
presumption that any Party had a greater or lesser hand in drafting this
Agreement, (c) examples shall not be construed to limit, expressly or by
implication, the matter they illustrate, (d) the word "includes" and its
syntactic variants means "includes, but is not limited to" and corresponding
syntactic variant expressions, words such as "herein," "hereafter," "hereof,"
"hereto" and "hereunder" refer to this Agreement as a whole and the word "and"
shall be deemed to mean "and/or" where the context so requires, (e) the plural
shall be deemed to include the singular, and vice versa, (f) each gender shall
be deemed to include the other gender, (g) each Exhibit to this Agreement is
part of this Agreement, (h) references to a Person are also to its permitted
successors and permitted assigns, (i) unless otherwise expressly provided
herein, any agreement, instrument or statute defined or referred to herein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes, and (j) the use of the word "reasonable" or the failure to use the
word "reasonable" does not expand or limit the application of Article 6:248 of
The Netherlands Civil Code.

6.3.  Severability.

In the event that any provision of this Agreement shall be finally determined to
be unenforceable, such provision shall, so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any
materially adverse manner as to any Party hereto, be deemed severed from this
Agreement and every other provision of this Agreement shall remain in full force
and effect.

                                      13
<PAGE>

6.4.  Governing Law.

This Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of Delaware, United States of America without giving
effect to the conflicts of law principles thereof.

6.5.  Amendment and Waiver.

This Agreement may not be amended, modified or altered except by an instrument
in writing signed on behalf of each Party.  By an instrument in writing any
Party may waive compliance by any other Party with any term or provision of this
Agreement.  The failure of a Party at any time to strictly enforce any provision
of this Agreement shall in no way affect its right thereafter to require
performance thereof, nor shall the waiver of any breach of any provision of this
Agreement be taken or held to be a waiver of any succeeding breach of any such
provision or as a waiver of the provision itself.

6.6.  Further Assurances.

From time to time, each Party agrees to execute and deliver such additional
documents, and will provide such additional information and assistance, as the
other Party may reasonably require to carry out the terms of this Agreement.

6.7.  Benefits of Agreement Restricted to the Parties and Named Beneficiaries.

This Agreement is made solely for the benefit of the Parties and the Parent
Company Guarantee Beneficiaries defined in Section 2.2, and no other Person
shall have any right, claim or cause of action under or by virtue of this
Agreement.

6.8.  Disputes.

All controversies or disputes arising under this Agreement shall be resolved
pursuant to Exhibit B.

                                      14
<PAGE>

Lyondell and Bayer have executed this Agreement to be effective as of the
Signing Date.

                              LYONDELL CHEMICAL COMPANY

                              By:  /s/ DAVID M. BALDERSTON
                                  ________________________________

                              Name:  David M. Balderston
                                    _____________________________

                              Title:  Director, PO Venture
                                     ______________________________

                              BAYER AG

                              By:  /s/ HANS-J. KAISER
                                  ________________________________

                              Name:  Hans-J. Kaiser
                                    _____________________________

                              Title: Head of BG PU
                                    ______________________________

                              By:  /s/ STEFAN WUNDERLICH
                                  ________________________________

                              Name:  Stefan Wunderlich
                                    _____________________________

                              Title:  Legal Counsel
                                     ______________________________

              [Signature Page to PO-11 Parent Agreement]
<PAGE>

                                   EXHIBIT A

                             LIST OF DEFINED TERMS

                              FOR PO-11 DOCUMENTS

          The following defined terms are used in the Partnership Agreement,
Operating Agreement, Parent Agreement and Conditional Transfer Agreement.

          "Above Threshold" is in reference to a Capital Project and is defined
in Section 7.2 of the Operating Agreement.

          "Accommodation Fee" is defined in Section 20.2 of the Partnership
Agreement.

          "ACTLP" means Arco Chemical Technology L.P., and its permitted
successors and assigns under the Bayer License Agreement.

          "Additional Services" is defined in Section 4.8 of the Operating
Agreement.

          "Affiliate" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries or otherwise,
controls, is controlled by or is under common control with, the specified
Person.  As used in this definition, "control" means the power to direct or
cause the direction of the management or policies of a Person, directly or
indirectly, whether through ownership of voting securities by contract or
otherwise); the terms "controlling" and "controlled" have meanings correlative
to the foregoing. For purposes of Article 3 of the Parent Agreement, in addition
to the foregoing requirements, "control" shall require (i) with respect to a
corporation (or similar entity), the ownership, whether directly or indirectly,
of at least 51% of the voting securities of such Person, (ii) with respect to a
partnership, that such Person is the sole general partner or managing general
partner of such partnership and (iii) with respect to a limited liability
company, as applicable, either (x) the ownership, whether directly or
indirectly, of at least 51% of the voting interests of such limited liability
company or (y) that such Person is the sole manager or the managing member of
such limited liability company. Notwithstanding the foregoing, the Operator and
the Partnership shall not be deemed to be Affiliates of one another.  For
purposes of the PO-11 Transaction Documents (but without limiting any accounting
treatment), the Partnership shall not be deemed to be an Affiliate of either
Lyondell or Bayer.

          "Annual Accounts" is defined in Section 12.2 of the Partnership
Agreement.

          "Annual Plan" is defined in Section 7.3 of the Operating Agreement.

          "Annual Production Plan" is defined in Section 7.3 of the Operating
Agreement.

          "Applicable Law" means any judgement or any applicable statute, law,
ordinance, rule or regulation of a Governmental Entity that is applicable to the
PO-11 Plant Facilities or the ownership or operation thereof, the Partners or
the Partnership, as the context may require.

                                      A-1
<PAGE>

          "Arbitration Notice" is defined in Section B.2 of the Dispute
Resolution Procedures.

          "Assignment and Assumption Agreement" is defined in Section 1.1 of the
Sale and Transfer Agreement.

          "AVR Agreement" means the agreement dated 11 May 1998 and made between
Arco Chemie Nederland, Ltd (now LCNL) and RAV Water Treatment, CV.

          "Bankruptcy Proceeding" is defined in Section 2.1 of the Conditional
Transfer Agreement.

          "Bayer" means Bayer AG, a German Corporation.

          "Bayer 300 Million Pound PO Option Agreement" has the meaning
specified in the definitions to the MTA.

          "Bayer Beneficiaries" is defined in Section 2.2 of the Parent
Agreement.

          "Bayer Conditional Transferee" means Bayer B.V. and its permitted
successors and assigns under the Conditional Transfer Agreement.

          "Bayer Conditional Transferor" means Bayer Polyurethanes B.V. and its
permitted successors and assigns under the Conditional Transfer Agreement.

          "Bayer Conditions" is defined in Section 3.1 of the Conditional
Transfer Agreement.

          "Bayer Dissolving Conditions" is defined in Section 3.1 of the
Conditional Transfer Agreement.

          "Bayer Group" means Bayer, Bayer Corporation and their respective
Affiliates.

          "Bayer License Agreement" means the license, dated as of the Signing
Date, by ACTLP to the Bayer Partner in respect of the PO-11 Technology, as the
same may be amended from time to time.

          "Bayer Members" is defined in Section 8.1 of the Partnership Agreement
(in reference to the Management Committee).

          "Bayer Notarial Deed" is defined in Section 1.1 of the Sale and
Transfer Agreement.

          "Bayer Partner" means Bayer Polyurethanes B.V., and its permitted
successors and assigns under the Partnership Agreement.

          "Bayer PO-11 Affiliates" is defined in the Recitals of the Parent
Agreement.

                                      A-2
<PAGE>

          "Bayer PO Annual Offtake Amount" has the meaning specified in the
definitions to the MTA.

          "Bayer Spare Capacity" is defined in Section 9.4 of the Partnership
Agreement.

          "Bayer Successor Parent" is defined in Section 3.2 of the Parent
Agreement.

          "Bayer Suspending Conditions" is defined in Section 3.1 of the
Conditional Transfer Agreement.

          "Below Threshold" is in reference to a Capital Project and is defined
in Section 7.2 of the Operating Agreement.

          "Botlek Complex" means the Botlek Plant and other chemical
manufacturing and related facilities operated by the Lyondell Group located at
Botlek, The Netherlands.

          "Botlek Plant" means the PO/TBA plant and related facilities currently
owned and operated by LCNL as of the Signing Date located at Botlek, The
Netherlands.

          "Business Day" means any day other than a Saturday, Sunday or other
day on which banks are closed in Rotterdam, The Netherlands; provided, however,
that for purposes of the definition of "EURIBOR", "Business Day" shall mean a
day on which the Trans-European Automated Real-Time Gross-Settlement Express
Transfer system (TARGET) is open.

          "Capital Account" means the separate capital account established and
maintained by the Partnership for each Partner, as contemplated by Section 7.1
of the Partnership Agreement.

          "Capital Budget" is defined in Section 7.3 of the Operating Agreement.

          "Capital Costs" means all costs in connection with Capital Projects
that may be capitalised by the Partnership in accordance with US GAAP and that
the Lyondell Group capitalises in accordance with Lyondell's accounting
capitalisation procedures, as the same may be modified from time to time.

          "Capital Costs Statement" is defined in Section 6.1.3 of the
Partnership Agreement.

          "Capital Project" means any project with respect to the PO-11 Plant
Facilities that is permitted to be treated as a capital project under US GAAP
and that is the type of project which the Lyondell Group treats as a capital
project in accordance with Lyondell's accounting capitalisation procedures, as
the same may be modified from time to time.

          "Casualty" means any damage or destruction to the PO-11 Plant
Facilities by explosion, fire or other cause.

          "Casualty Restoration Costs" means in the event of a Casualty to the
PO-11 Plant Facilities, the sum of (i) the portion of the cost of restoration of
such PO-11 Plant Facilities that

                                      A-3
<PAGE>

is not paid under any property and/or boiler and machinery insurance policies
maintained by the Operator, plus (ii) any surcharge that is payable under such
policies thereafter in respect of the insured claim.

          "Chemical Substance" means any (i) petroleum or any fraction thereof,
(ii) chemical substance, pollutant, contaminant, constituent, chemical, mixture,
raw material, intermediate, product or by-product that is regulated (including
any requirement for the reporting of any Release thereof) under any EHS Law, as
now or hereafter in effect, or defined or listed as an industrial, toxic,
deleterious, harmful, radioactive, infectious, disease-causing or hazardous
substance, material or waste under any EHS Law, as now or hereafter in effect.

          "Claim" means (i) for all purposes other than in respect of the
Conditional Transfer Agreement, any claim, demand or litigation made or pending
for Damages and (ii) in respect of the Conditional Transfer Agreement, the
definition given to such term in Section 2.2.3 of the Conditional Transfer
Agreement.

          "Commercial Start-up" means the first date on which the PO-11 Plant
Facilities after "air in" has run at stable conditions for 72 consecutive hours
at not less than 70% of design operating rates, with all products meeting
specification.

          "Commingled Raw Materials" is defined in Section 4.4 of the Operating
Agreement.

          "Conditional Transfer Agreement" means the Conditional Transfer
Agreement dated as of the Signing Date entered into among the Lyondell Partner,
the Bayer Partner, the Bayer Conditional Transferee and the Lyondell Conditional
Transferee.

          "Confidential Information" means with respect to any Person, all non-
public or proprietary information of any nature (including trade secrets,
technological know-how, research and development data, product formulations,
processes and application technology and all other non public or proprietary
concepts, methods of doing business, ideas, materials or information of or
prepared or performed for, by or on behalf of that Person), and all information
derived from any non-public or proprietary information of that Person.

          "Consistency Claim" is defined in Section C.1 of the Dispute
Resolution Procedures.

          "Control Estimate" means the official estimate of the required PO-11
Project Costs, as of the Signing Date (being NLG 1,476,000,000), exclusive of
working capital and indirect capital, which are estimated separately.  A
breakdown of the Control Estimate is attached as Appendix 1B to the Operating
Agreement.

          "Damages" means, with respect to any Person, any cost, damage or
expense (including attorneys' fees and disbursements), any fine of or penalty on
or any liability of any nature of that Person.  With respect to a Party,
"Damages" excludes lost profits and consequential damages, incidental damages
and punitive damages incurred by or awarded to the Party for its own account.

                                      A-4
<PAGE>

          "Default Rate" means EURIBOR plus 2.5%, compounded monthly.

          "Delivery Point" means, with respect to PO and SM produced from the
PO-11 Plant Facilities, the outlet flange of the loading facility fixed loading
arm or hose leading to any transport vessel.

          "Development Phase" means the period from and including 1 January 2000
to and including Commercial Start-up.

          "Development Phase Cash Call Statement" is defined in Section 6.1 of
the Partnership Agreement.

          "Development Phase Recovery Period" is defined in Appendix 1A to the
Operating Agreement.

          "Development Services" means the services, utilities, materials,
facilities and access easements required to be supplied by the Operator for the
construction, development and commissioning of the PO-11 Plant Facilities during
the Development Phase.  The Development Services are described in more detail in
Appendix 1 to the Operating Agreement.

          "Development Works" means all design, engineering, procurement,
construction and other work required to be performed by the EPC Contractor under
the EPC Contract.

          "Discretionary Capital Project" means a Capital Project that is not an
EHS Capital Project, a Maintenance Capital Project or an Enterprise Consistency
Capital Project.

          "Dispute Resolution Procedures" means Exhibit B to the Operating
Agreement, the Partnership Agreement and the Parent Agreement.

          "Disruption Event" means any event resulting in a disruption or
impairment of PO and/or SM production below planned operating levels from any
cause whatsoever, including (i) any event of Force Majeure; (ii) any shortage in
supplies, impairment in facilities of production, manufacture, or
transportation; (iii) any event that is attributable to mechanical or other
breakdown or failure or preventative maintenance that is performed to avoid such
breakdown or failure, (iv) any unscheduled Turnaround or continuation of a
scheduled turndown or other planned outage beyond its anticipated duration; or
(v) the inability to obtain any feedstock, catalyst or other raw material
(including energy) on reasonable terms.

          "Dissolving Conditions" means the Bayer Dissolving Conditions and/or
the Lyondell Dissolving Conditions, as context requires.

          "EB" means ethylbenzene.

          "EHS" means the environment, health and safety or environmental,
health and safety, as the context requires.

                                      A-5
<PAGE>

          "EHS Capital Project" means a Capital Project that in the Operator's
good faith judgement is necessary to achieve or maintain compliance with any EHS
Law or the EHS Policies.

          "EHS Law" means any Applicable Law relating to (i) protection of the
environment, including pertaining to or regulating pollution, contamination,
cleanup, preservation, protection and reclamation of the environment, (ii)
health or safety of employees and other individuals, including the exposure of
employees and other individuals to any Chemical Substance, (iii) a Release or
threatened Release, including investigation, study, assessment, testing,
monitoring, containment, removal, remediation, response, cleanup and abatement
of such Release or threatened Release and (iv) the management of any Chemical
Substance, including the manufacture, generation, formulation, processing,
labelling, use, treatment, handling, storage, disposal, transportation,
distribution, re-use, recycling or reclamation of any Chemical Substance.

          "EHS Policies" is defined in Section 4.6 of the Operating Agreement.

          "EID" means the Energy Investment Deduction ("Energie Investerings
Aftrek"), a tax incentive for certain energy efficient investments in The
Netherlands.

          "Eligible Indemnitees" means, with respect to any Person, its
Affiliates and their respective employees, officers and directors (or the
equivalent thereof).

          "Enterprise Consistency Capital Project" means an Enterprise
Consistency Initiative that is permitted to be treated as a capital project
under US GAAP and that is the type of project which the Lyondell Group treats as
a capital project in accordance with Lyondell's accounting capitalisation
procedures, as the same may be modified from time to time.

          "Enterprise Consistency Initiative" means a new programme or a
modified programme (i) that relates in whole or in part to the Operating
Services and (ii) is undertaken on an enterprise-wide basis within the Lyondell
Group for plants operations that are similar to the PO-11 Plant Facilities in
respect of the systems or equipment to be replaced or modified by the Enterprise
Consistency Initiative.  Examples of Enterprise Consistency Initiatives include
certain information systems and manufacturing controls systems.

          "Enterprise Consistency Operating Cost" means an Operating Cost
incurred in connection with an Enterprise Consistency Initiative.

          "EPC Contract" means the Lump Sum Engineering, Procurement,
Construction Management and Construction Agreement between LCNL and the EPC
Contractor dated as of 19 June, 2000, as the same may be amended from time to
time.

          "EPC Contractor" means ABB Lummus Global B.V.

          "EPC Lump Sum Price" means the lump sum, turnkey price under the EPC
Contract, subject to adjustment for incentive bonus payments and as otherwise
provided in the EPC Contract.

                                      A-6
<PAGE>

          "Equistar" means Equistar Chemicals, LP, a Delaware limited
partnership, and any successor to all or substantially all of the business
conducted as of the Signing Date by Equistar Chemicals, LP.

          "Estimated Final Cost" means at any time, the then-current forecast
(updated regularly) of the total PO-11 Project Costs expected to be incurred
through the Development Phase Recovery Period, including an allowance for
contingencies.  The Estimated Final Cost includes the EPC Lump Sum Price,
projected incentive bonus payments to the EPC Contractor, overheads and other
reimbursements due the Operator, the costs of pre-operations and start-up
(including the estimated net cost due to the anticipated loss of Raw Materials
and utilities that are estimated to be consumed in the Development Phase) and
other costs under purchase orders and contracts related to the development of
the PO-11 Plant Facilities, but excluding the Partnership Working Capital and
indirect capital.

          "EURIBOR" means, for the day, the one-month EURIBOR as published on
that day on page 248 of the BRIDGE telerate screen (or any subsequent official
or industry-recognised source for EURIBOR rates) provided that if that day is
not a Business Day, the one-month EURIBOR as so published on the immediately
preceding Business Day.

          "Europoort Terminal" means the terminal so designated which, among
other things, provides logistics facilities and propylene storage for the PO-11
Plant Facilities and the Botlek Plant.

          "Fault" is defined as any act or omission by Managerial Personnel of a
Person that viewed objectively from the standpoint of the Person at the time the
events occurred (and without viewing the matter in hindsight) (i) involved an
extreme degree of risk, considering the probability and magnitude of the
potential harm to others and (ii) Managerial Personnel of the Person must have
actual, subjective awareness of the risk involved, but nevertheless proceed in
conscious indifference to the rights, safety or welfare of others.  The Parties
agree that with respect to the Operator, the material disregard by a member of
the Senior Plant Management Team at the PO-11 Plant Facilities of the policies
and procedures manuals applicable to the PO-11 Plant Facilities proximately
causing a Third Party Claim shall be deemed to be Fault.

          "Financial Institution" is defined in Section 3.7 of the Parent
Agreement.

          "Five Year Demand Forecast" is defined in Section 13.2 of the
Partnership Agreement.

          "Fixed Costs" means costs associated with the production of PO and SM,
as the case may be, that do not vary directly to a significant extent with
changes in production levels.

          "Force Majeure" has the meaning as set forth in Article 6:75 of The
Netherlands Civil Code, but expressly includes acts of God, floods, storms or
unusually bad weather; war or other military action, national emergency,
governmental rationing, prioritisation, taking or requisition, civil commotion
or riot; any strike or other difference with workers or unions, without regard
to the reasonableness of acceding to the demands of such workers or unions;
explosions, fires, mechanical breakdown, electrical shortage or blackouts or
other production

                                      A-7
<PAGE>

shutdown; inability to obtain sufficient feedstocks, catalysts
or other raw materials or supplies; or other event beyond the reasonable control
of Managerial Personnel of a Party.

          "Four Year Forward Forecast" is defined in Section 7.2 of the
Operating Agreement.

          "FTEs" means (in relation to personnel providing shared services and
those personnel supporting personnel providing shared services) full time
equivalents.

          "General and Administrative Shared Support and Overheads Staff" is
defined in Appendix 6.2 to the Operating Agreement.

          "Global Steering Committee" means the steering committee established
by Bayer and Lyondell to review the overall relationship of the Lyondell Group
and Bayer Group with respect to PO and SM, as the same may be constituted from
time to time.

          "Global Steering Committee Resolution" means a written resolution
signed by a majority of both (i) the Lyondell Group representatives and (ii) the
Bayer Group representatives of the Global Steering Committee, in accordance with
the Global Steering Committee Charter.

          "Good Industry Practice" means standards, practices and methods of
prudent operators of major chemical plants in Western Europe, taking into
account and adjusting for Applicable Law, the EHS Policies, the process design
and location of the PO-11 Plant Facilities and the products it produces and the
feedstocks, raw materials and catalysts used in production at the PO-11 Plant
Facilities.

          "Governmental Entity" means any European Union, national, regional or
local governmental body or authority exercising executive, legislative,
judicial, regulatory, administrative or other governmental authority with
jurisdiction over a Party or such Party's Parent Company (including the United
States Securities Exchange Commission as to Lyondell) or the PO-11 Plant
Facilities or their ownership or operation.

          "Ground Lease" means the ground lease to be created between the
Rotterdam Port Authority and the Partnership whereby the Partnership leases the
approximately 52 hectares of land covered thereby and certain related
infrastructure that constitutes part of the PO-11 Plant Facilities, as such
ground lease is amended from time to time.

          "Guarantor" is defined in Section 2.3 of the Parent Agreement.

          "Higher Tier Entity" is defined in Section 3.2 of the Parent
Agreement.

          "ICIS" means the Independent Commodity Information Services - London
Oil Reports.

          "Identified Polyols" means: (i) materials containing one hydroxyl
group, one or more propylene oxide units, and having a number average molecular
weight of more than 500, (ii) materials having an average hydroxyl functionality
of greater than one, containing one or more propylene oxide units and having a
number average molecular weight of more than 250, or

                                      A-8
<PAGE>

(iii) materials that are exceptions to (i) and (ii) because they fall below the
minimum average molecular weight recited, are prepared by reacting PO with a
starter compound which is not a glycol, and are used in polyurethane
applications

          "Inflation Adjusted" is defined in Section 7.7 of the Operating
Agreement.

     "Inflation Index" means "Producentenprijsindex cijfers naar activiteiten
(SBI) totale verbruik 241 basischemie" (1995 = 100) as published by the Centraal
Bureau voor de Statistiek ("CBS"), Princes Beatrixlaan 428, 2273 XZ Voorburg,
The Netherlands.

          "Initial Contract Term" is defined in Section 5.1 of the Partnership
Agreement.

          "Initial Service Charge Advance" is defined in Section 6.4 of the
Operating Agreement.

          "Key Performance Indicators" is defined in Section 7.2 of the
Operating Agreement and listed on Schedule 7.2.4 to the Operating Agreement.

          "KT" means 1,000 metric tonnes.

          "LCNL" means Lyondell Chemical Nederland, Ltd., a Delaware
corporation, and its successors and assigns by operation of law or any successor
to substantially all of the business conducted by LCNL as of the Signing Date.

          "LCT License Agreement" is defined in the Recitals to the Parent
Agreement.

          "LCTN" means Lyondell Chemie Technologie Nederland B.V., and its
permitted successors and assigns as the licensor under the Lyondell License
Agreement.

          "Leased Premises" means the land and certain related infrastructure
that is leased by the Partnership under the Ground Lease.  The Leased Premises
are depicted on the Plot Plan.

          "License Agreements" means the Lyondell License Agreement and the
Bayer License Agreement.

          "Local Project Team" is defined in Appendix 1A to the Operating
Agreement.

          "Lyondell" means Lyondell Chemical Company.

          "Lyondell Beneficiaries" is defined in Section 2.2 of the Parent
Agreement.

          "Lyondell Conditional Transferee" means Lyondell Chemie (PO-11) B.V.
and its permitted successors and assigns under the Conditional Transfer
Agreement.

          "Lyondell Conditions" is defined in Section 2.1 of the Conditional
Transfer Agreement.

                                      A-9
<PAGE>

          "Lyondell Conditional Transferor" means Lyondell PO-11 C.V. and its
permitted successors and assigns under the Conditional Transfer Agreement.

          "Lyondell Dissolving Conditions" is defined in Section 2.1 of the
Conditional Transfer Agreement.

          "Lyondell Group" means Lyondell and its Affiliates.

          "Lyondell License Agreement" means the license, dated as of the
Signing Date, by LCT Nederland to the Lyondell Partner in respect of the PO-11
Technology, as the same may be amended from time to time.

          "Lyondell Members" is defined in Section 8.1 of the Partnership
Agreement (in reference to the Management Committee).

          "Lyondell Notarial Deed" is defined in Section 1.1 of the Sale and
Transfer Agreement.

          "Lyondell Operator Representative" is defined in Section 2.6 of the
Operating Agreement.

          "Lyondell Operating Practices" means both (i) the operating practices
employed by the Operator with respect to the Botlek manufacturing complex,
except as to operational matters that relate to the PO/SM production process and
related Raw Materials procurement, and (ii) the operating practices employed by
the Lyondell Group with respect to the other PO/SM manufacturing plants operated
by the Lyondell Group.

          "Lyondell Partner" means Lyondell PO-11 C.V., and its permitted
successors and assigns under the Partnership Agreement.

          "Lyondell PO-11 Affiliates" is defined in the Recitals of the Parent
Agreement.

          "Lyondell Suspending Conditions" is defined in Section 2.1 of the
Conditional Transfer Agreement.

          "Lyondell Successor Parent" is defined in Section 3.2 of the Parent
Agreement.

          "Maintenance Capital Project" means a Capital Project as to which the
primary purpose is, in the Operator's reasonable judgement, to either (a)
maintain the PO-11 Plant Facilities in their condition in accordance with the
initial operating design specifications and parameters for the PO-11 Plant
Facilities or (b) maintain or achieve the Key Performance Indicators.  The
restoration of the PO-11 Plant Facilities following a Casualty shall be
considered a Maintenance Capital Project.  The Parties acknowledge that
Maintenance Capital Projects may also result in enhanced efficiency or other
performance characteristics.

          "Maintenance Policies" is defined in Section 4.2 of the Operating
Agreement.

          "Major Casualty" is defined in Section 22.6 of the Partnership
Agreement.

                                     A-10
<PAGE>

          "Major Decisions" is defined in Section 8.1 of the Partnership
Agreement.

          "Management Committee" means the management committee of the
Partnership, established in accordance with Section 8.1 of the Partnership
Agreement.

          "Management Committee Resolution" is defined in Section 8.1 of the
Partnership Agreement.

          "Managerial Personnel" means (i) with respect to a Partner, any
employee of that Partner or its Affiliate who holds a senior managerial or
higher position with such Partner and who has direct responsibility for the
administration and oversight of the Partner's investment in the Partnership and
(ii) with respect to the Operator, any employee who holds a position as "Plant
Manager" of the PO-11 Plant Facilities or higher and who, in each case, has
direct responsibility for the operation of the PO-11 Plant Facilities.

          "Managing Partner" is defined in Section 3.4 of the Partnership
Agreement.

          "Master Transaction Agreement" means the Master Transaction Agreement
between Lyondell, Bayer and Bayer Corporation dated as of 31 March 2000, as
amended from time to time.

          "Material Litigation" means any litigation or other proceedings to
which the Partnership and/or the Operator in connection with its capacity as
such under the Operating Agreement is a claimant or defendant and (i) where the
total claim or counterclaim against the Partnership and/or the Operator is more
than 5,000,000 Euros above applicable insurance coverage limits; (ii) where the
total claim or counterclaim of the Partnership against third parties is more
than five million Euros; or (iii) where the claim against the Partnership and/or
the Operator (x) involves credible allegations of criminal wrongdoing with the
potential for material criminal penalties against the Partnership and/or its
Partners; (y) imposes a material risk of shut down or other disruption of
production on the PO-11 Plant Facilities; and/or (z) imposes material
restrictions on the Partners' use or sale of PO or SM produced from the PO-11
Plant Facilities.

          "Material Raw Materials Contract" means (i) any ethylene, propylene
and benzene contracts (other than "spot" contracts), or (ii) any Other Raw
Materials contract which has a total expenditure by the purchaser of more than
1,000,000 Euros per contract year.

          "Material Utility Contract Amendment" means any amendment, renewal,
extension, or replacement of any contract for the provision of utilities to the
PO-11 Plant Facilities which relates to the costs or duration of supply or which
may result in the termination of a utility contract.

          "Members" is defined in Section 8.1 of the Partnership Agreement (in
reference to the Management Committee).

          "MERIT" is defined in Appendix 1A to the Operating Agreement.

          "Minimum Turndown Operating Rate" is defined in Section 7.2 of the
Operating Agreement.

                                     A-11
<PAGE>

          "month" means a calendar month.

          "Monthly Production Report" is defined in Section 4.2 of the Operating
Agreement.

          "Movable Assets" is defined in Section 2.2 of the Conditional Transfer
Agreement.

          "NAI" means The Netherlands Arbitration Institute ("Nederlands
Arbitrage Instituut").

          "NAI Rules" means the Arbitration Rules of the NAI.

          "Non-Procuring Partner" is defined in Section 13.3 of the Partnership
Agreement.

          "Notarial Deed" is defined in Section 1.1 of the Sale and Transfer
Agreement.

          "Offtake Percentage" means the percentage interest of each Partner in
PO and co-produced SM capacity rights for PO-11.  The Offtake Percentage of each
of the Bayer Partner and Lyondell Partner is 50% as of the Signing Date and is
subject to adjustment in accordance with Section 15.1 of the Partnership
Agreement.

          "Operating Agreement" means the PO-11 Operating Agreement between the
Partnership and the Operator dated as of the Signing Date, as amended from time
to time.

          "Operating Budget" is defined in Section 7.3 of the Operating
Agreement.

          "Operating Costs" means all costs, including all third party charges
and Service Charges incurred in connection with the management, operation,
maintenance and ownership of the PO-11 Plant Facilities, which are not
capitalised by the Partnership in accordance with US GAAP or Lyondell's
accounting capitalisation procedures for the Lyondell Group, as the same may be
modified from time to time.

          "Operating Costs Statement" is defined in Section 10.1 of the
Partnership Agreement.

          "Operating Services" means all services, utilities, materials,
facilities and access easements required to be supplied or procured by the
Operator for the operation of the PO-11 Plant Facilities and production of PO
and SM at the PO-11 Plant Facilities during the Production Term.  The Operating
Services are described in more detail in Article IV of the Operating Agreement.

          "Operator" means LCNL and its permitted successors and assigns as the
Operator under the Operating Agreement.

          "Other Assets" is defined in Section 2.2 of the Conditional Transfer
Agreement.

                                     A-12
<PAGE>

          "Other Project Implementation Staff" is defined in Appendix 1A to the
Operating Agreement.

          "Other Raw Materials" means any feedstock (other than ethylene,
propylene or benzene), catalyst, additive or process chemical used in the
production of PO and SM.

          "Other Raw Materials Purchasing Plan" is defined in Section 5.2 of the
Operating Agreement.

          "Ownership Interest" is defined in Section 3.2 of the Parent
Agreement.

          "Parent Agreement" means the Agreement dated as of the Signing Date
between Lyondell and Bayer pursuant to which, among other things, Lyondell and
Bayer guarantee the performance of their respective Affiliates that are the
Partners in the Partnership and enter into certain agreements as to indirect
transfers of the interests in the Partnership owned by their respective
Affiliates as of the Signing Date.

          "Parent Company" means, as to the Lyondell Partner and the Operator,
Lyondell or its permitted successor under the Parent Agreement and means as to
the Bayer Partner, Bayer or its permitted successor under the Parent Agreement.

          "Parent Company Guarantee Beneficiary" is defined in Section 2.2 of
the Parent Agreement.

          "Partner" means a partner of the Partnership.

          "Partners Transfer Agreement" is defined in Section 1.1 of the Sale
and Transfer Agreement.

          "Partnership" means Lyondell Bayer Manufacturing Maasvlakte VOF, a
general partnership organised under the laws of The Netherlands ("vennootschap
onder firma"), together with the Partnership's permitted successors and assigns
under the Operating Agreement.

          "Partnership Accounts" means, whether one or more, the bank account or
accounts of the Partnership, to be held with Bank of America or another
creditworthy bank.

          "Partnership Agreement" means the Partnership Agreement of the
Partnership dated as of the Signing Date between the Lyondell Partner and the
Bayer Partner, as amended from time to time.

          "Partnership Asset Proceeds" is defined in Section 17.3 of the
Partnership Agreement.

          "Partnership Interest" means all of a Partner's rights and obligations
under the Partnership Agreement.

          "Partnership Percentage" has the meaning specified in Section 2.2 of
the Partnership Agreement.

                                     A-13
<PAGE>

          "Partnership Representatives" is defined in Section 2.6 of the
Operating Agreement.

          "Partnership Working Capital" is defined in Section 6.2 of the
Partnership Agreement.

          "Party" or "Parties" means (i) as used in the Partnership Agreement,
the Lyondell Partner and the Bayer Partner, (ii) as used in the Operating
Agreement, the Operator and the Partnership and (iii) as used in the Parent
Agreement, Lyondell and Bayer.  For purposes of Section 10.4 of the Operating
Agreement and Section 19.4 of the Partnership Agreement, "Party" shall mean and
include, as applicable to the Claim in question, the Operator, the Partnership,
the Lyondell Partner and/or the Bayer Partner.

          "Party Obligor" is defined in the Recitals of the Parent Agreement.

          "Party Representative" is defined in Section 2.6 of the Operating
Agreement.

          "Permitted PO Successor" means the successor (acknowledging that the
"successor" may be an Affiliated group of companies acting collectively) or an
Affiliate of a successor to (a) the Partnership Interest of the Lyondell
Partner; (b) the PO-11 Technology; and (c) other assets equal to at least 90% of
the book value of all of the PO production assets of the Lyondell Group world-
wide.

          "Permitted Polyols Successor" means the successor (acknowledging that
the "successor" may be an Affiliated group of companies acting collectively) to
(a) the Partnership Interest of the Bayer Partner; and (b) other assets equal to
at least 90% of the book value of all of the Identified Polyols production
assets of the Bayer Group world-wide.

          "Person" means any individual, corporation, limited liability company,
limited partnership, general partnership, trust, joint, venture, governmental
authority, association or other entity or organisation, wherever residing or
organised.

          "Personnel Policies" is defined in Section 2.5 of the Operating
Agreement

          "Plan Year" is defined in Section 7.2 of the Operating Agreement.

          "Pledge" means to mortgage, pledge, hypothecate charge, encumber or
create or suffer to exist any pledge, lien or encumbrance upon or security
interest in any asset. Such defined term is used as both a noun and a verb.

          "Plot Plan" means the site plan drawing depicting, among other things,
the PO-11 Plant Facilities, which is attached to the Operating Agreement as
Exhibit C thereto.

          "PO" means propylene oxide.

          "PO-11 Agreements" means, collectively, the Partnership Agreement, the
Operating Agreement, the Parent Agreement, the Bayer License Agreement, the
Lyondell License Agreement and the Conditional Transfer Agreement.

                                     A-14
<PAGE>

          "PO-11 Business" is defined in Section 4.3 of the Parent Agreement.

          "PO-11 Design Volumes" means 285 KT of PO per year and 640 KT of SM
per year.

          "PO-11 Plant Facilities" means, collectively, the Leased Premises, the
EB production plant, PO/SM production plant and related piping (other than
piping owned by third parties), logistics, storage and other fixtures, equipment
and property located within the Leased Premises.

          "PO-11 Project Costs" means all amounts due under the EPC Contract,
amounts owed to the Operator with respect to the Development Phase in accordance
with Appendix 1 of the Operating Agreement and all other amounts required to
develop, design, procure, construct, equip, pre-commission, commission and
start-up the PO-11 Plant Facilities and related infrastructure, including Sunk
Costs.

          "PO-11 Project Assets" means all assets, rights and obligations,
including the Ground Lease, claims and contracts (including the contracts,
letters of intent and negotiations listed on Schedule 18 to the Partnership
Agreement), relating to the development, design, procurement and construction of
the PO-11 Plant Facilities, excluding the PO-11 Technology.

          "PO-11 Project Development" is defined in Appendix 1A to the Operating
Agreement.

          "PO-11 Technology" means all technical information patented in The
Netherlands or unpatented relating to the POSM Process (as defined in the
License Agreements) practised at the PO-11 Plant Facilities, including, process
descriptions, production and production results, tests and test results, data,
plans, designs, specifications, reports, know-how, inventions, software
operating experience and other information (including PO-11 Plant Facilities
plant operating manuals) in the possession or control of Lyondell and/or any of
its Affiliates, or acquired  or developed by Lyondell and/or any of its
Affiliates.

          "PO-11 Transaction Agreements" is defined in the Recitals of the
Parent Agreement.

          "Policies" means the EHS Policies, the Maintenance Policies and the
Personnel Policies.

          "PO Logistics Agreement" means the Propylene Oxide Exchange and
Logistics Agreement dated as of 31 March 2000 between Lyondell and LCNL and
Bayer, BAYPO Limited Partnership, Bayer Antwerpen N.V. and Bayer Polyols SNC, as
the same may be amended or replaced from time to time.

          "PO Manufacturing Costs" is defined in Section 20.2 of the Partnership
Agreement.

          "Production Term" means the period commencing on Commercial Start-up
and ending on the 50th anniversary of Commercial Start-up, subject to automatic
extension for any

                                     A-15
<PAGE>

extension of the term of the Partnership Agreement pursuant to Section 5.2 of
the Partnership Agreement.

          "Proposed Annual Plan" is defined in Section 7.2 of the Operating
Agreement.

          "Proposed Annual Production Plan" is defined in Section 7.2 of the
Operating Agreement.

          "Proposed Capital Budget" is defined in Section 7.2 of the Operating
Agreement.

          "Proposed Operating Budget" is defined in Section 7.2 of the Operating
Agreement.

          "Proprietary PO/SM Technology" means all technical information
patented or unpatented relating to the POSM Process (as defined in the License
Agreements) practised by the Lyondell Group in any location (including the PO-11
Technology), including, process descriptions, production and production results,
tests and test results, data, plans, designs, specifications, reports, know-how,
inventions, software operating experience and other information (including PO-11
Plant Facilities plant operating manuals) in the possession or control of
Lyondell and/or any of its Affiliates, or acquired  or developed by Lyondell
and/or any of its Affiliates.

          "Purchase Price" is defined in Section 2.1 of the Conditional Transfer
Agreement.

          "Raw Materials" means ethylene, propylene, benzene and/or Other Raw
Materials.

          "Registered Goods" is defined in Section 2.2 of the Conditional
Transfer Agreement.

          "Related Persons" is defined in Section 13.1 of the Operating
Agreement.

          "Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, dumping, discharge, dispersal, leaching, escaping,
emanation or migration of any Chemical Substance in, into or onto the
environment of any kind whatsoever, including the movement of any Chemical
Substance through or in the environment, exposure of any type in any workplace,
any release as defined in any EHS Law.

          "Sale and Transfer Agreement" means the Sale and Transfer Agreement
entered into as of the Signing Date between LCNL as Transferor and the Bayer
Partner as Transferee.

          "Senior Plant Management Team" means the Director of European
Manufacturing, PO-11 Plant Manager, Process Engineering Manager, Project
Engineering Manager and EHS/Q Manager (or equivalent positions of responsibility
if titles change) with responsibility for the PO-11 Plant Facilities and whether
or not such Persons have responsibility for other facilities operated by the
Lyondell Group.

                                     A-16
<PAGE>

          "Service Center Europe" or "SCE" means Lyondell's Service Center
Europe located on the Signing Date at Weenapoint D, Weena 762, 3014DA,
Rotterdam, The Netherlands, or any successor service function.

          "Service Charges" means all direct personnel and other costs, indirect
costs, taxes and permitted off-site or corporate indirect costs and overheads
(subject to Section 6.2 of the Operating Agreement), including third party
Operating Costs and Capital Costs that are billed by a third party to the
Operator, incurred by or on behalf of the Operator in connection with the
provision of Development Services and/or Operating Services pursuant to the
Operating Agreement.

          "Service Provider" is defined in Schedule 4.2.5 to the Operating
Agreement.

          "Shared European/Regional Manufacturing Staff" is defined in
Appendix 1A to the Operating Agreement (for purposes of Appendix 1A only) and
in Appendix 6.2 to the Operating Agreement (for all purposes other than
Appendix 1A).

          "Shared Storage Facilities" means storage facilities for PO or SM that
are located within the Leased Premises and are shared between the Partners
(i.e., are not dedicated 100% to the use of any one Partner as a result of a
Unilateral Capital Project).

          "Signing Date" means the signing date for the PO-11 Transaction
Agreements, being 18 December 2000.

          "SM" means styrene monomer.

     "SM Manufacturing Costs" means the total Variable and Fixed Costs excluding
depreciation per metric tonne of styrene for SM from PO-11, as determined by the
Lyondell accounting system and used in Lyondell's business management processes.
The monthly SM Manufacturing Costs shall be auditable for the Bayer Partner in
accordance with Section 9.4.2 of the Operating Agreement.

          "Small Projects Budget" is defined in Section 7.2 of the Operating
Agreement.

          "SRM Procuring Partner" is defined in Section 13.3 of the Partnership
Agreement.

          "Strategic Raw Materials" means propylene, ethylene and/or benzene, as
context requires.

          "Strategic Raw Materials Purchasing Plan" is defined in Section 5.1 of
the Operating Agreement.

          "Successor Parent" is defined in Section 3.2 of the Parent Agreement.

          "Sunk Costs" means all costs incurred by the Lyondell Group prior to
2001 in connection with the development and design, procurement and construction
of the PO-11 Plant

                                     A-17
<PAGE>

Facilities, as agreed by the Partners and reflected in their initial capital
contributions funded in accordance with Section 6.1 of the Partnership
Agreement.

          "Suspending Conditions" means the Bayer Suspending Conditions and/or
the Lyondell Suspending Conditions, as context requires.

          "Suspension of Payments Proceeding" is defined in Section 2.1 of the
Conditional Transfer Agreement.

          "Taxes" means all taxes, charges, fees, levies or other assessments
imposed by any taxing authority, including, but not limited to, income, gross
receipts, excise, property, sales, use, transfer, payroll, license, ad valorem,
value added, withholding, social security, national insurance (or other similar
contributions or payments), franchise, severance and stamp taxes (including any
interest, fines, penalties or additions attributable to, or imposed on or with
respect to, any such taxes, charges, fees, levies or other assessments).

          "TBA" means tertiary butyl alcohol.

          "Technical Support Staff" is defined in Appendix 1A to the Operating
Agreement (for purposes of Appendix 1A only) and in Appendix 6.2 to the
Operating Agreement (for all purposes other than Appendix 1A).

          "Technology Licensor" means Lyondell Chemie Technologie Nederland B.V.
and its permitted successors and assigns under the Parent Agreement.

          "Term" means the Development Phase and the Production Term.

          "Third Party" means any Person other than the Partnership, a Partner,
the Operator, and their respective Affiliates.

          "Third Party Claim" means any Claim by a Third Party.  For avoidance
of doubt, any obligation to remediate under EHS Law or Applicable Law and
regardless of whether the remediation or environmental condition has become the
subject of an enforcement proceeding, shall be considered a Third Party Claim.

          "Total Costs Plus New Capital Depreciation" is defined in Section 20.2
of the Partnership Agreement.

          "Transfer" means to sell, assign or otherwise in any manner other than
a Pledge dispose of, whether by act, deed, merger, consolidation, conversion or
otherwise.  Such defined term is used as both a noun and a verb.

          "Turnaround" means a major periodic maintenance programme for the
PO-11 Plant Facilities or a portion thereof, involving disruption of
production.  A Turnaround may be scheduled or unscheduled.

                                     A-18
<PAGE>

          "Umbrella Agreement" means the Umbrella Agreement to be entered into
between the Municipality of Rotterdam (represented by the Chairman of the
Rotterdam Municipal Port Management) and the Partnership.

          "Unilateral Capital Project" is defined in Section 7.6 of the
Operating Agreement.

          "Unilateral Capital Project Asset" means an asset of the Partnership
used exclusively in connection with a Unilateral Capital Project, and the
allocable share attributable to a Unilateral Capital Project of an asset of the
Partnership used in both a Unilateral Capital Project and other aspects of
Partnership operations.

          "Unilateral Capital Project Asset Proceeds" is defined in Section 17.3
of the Partnership Agreement.

          "Unilateral Capital Implementation Plan" is defined in Section 7.6 of
the Operating Agreement.

          "Unilateral Capital Project Threshold" is defined in Section 14.5 of
the Partnership Agreement.

          "Uninsured Third Party Claim" means a Third Party Claim with respect
to the operations of the PO-11 Plant Facilities that is not covered by the
insurance program maintained by or on behalf of the Operator.  A Third Party
Claim that would be insured but for deductibles and/or self-insurance retention
limits under the insurance program maintained by or on behalf of the Operator
shall not be considered an Uninsured Third Party Claim.  The portion of a Third
Party Claim that exceeds coverage limits or that would have been covered but for
a lapse in coverage due to non-payment of premium or otherwise shall be treated
as an Uninsured Third Party Claim.

          "VAMIL" means "Free Depreciation of Ecologically Sound Investments"
("Willekeurige afschrijving milieu-investeringen"), a tax incentive for certain
environmentally beneficial investments in The Netherlands.

          "Variable Costs" means the portion of cash costs associated with the
production of PO or SM, as the case may be, that vary directly with changes in
production levels.

          "VAT" means value added tax ("BTW" in The Netherlands).

          "Working Capital Statements" is defined in Section 6.2 of the
Partnership Agreement.

          "year" means a calendar year.

                                     A-19
<PAGE>

                                   EXHIBIT B

                         DISPUTE RESOLUTION PROCEDURES

               FOR OPERATING AGREEMENT AND PARTNERSHIP AGREEMENT

A.  GENERAL PROVISIONS.

1.  Binding and Exclusive Means.

     The applicable dispute resolution provisions set forth in this Exhibit B
     shall be the binding and exclusive means to resolve all disputes arising
     under the Operating Agreement, the Partnership Agreement, the Parent
     Agreement, the Conditional Transfer Agreement and any other instrument
     entered into between members of the Lyondell Group and members of the Bayer
     Group that expressly provides for disputes to be exclusively resolved in
     accordance with these Dispute Resolution Procedures.

2.  Single Proceeding for Disputes.

     For disputes involving more than one of the instruments which provide for
     disputes to be resolved in accordance with these Dispute Resolution
     Procedures, and all disputes arising under the same facts or circumstances
     relating to more than one of such instruments, such disputes, if submitted
     to the same dispute resolution body, shall be combined in a single
     proceeding involving all relevant Parties.

3.  Continuation of Business.

     Notwithstanding the existence of any dispute or the pendency of any
     procedures pursuant to this Exhibit B, the Parties agree and undertake that
     all payments shall continue to be made and that all obligations not in
     dispute shall continue to be performed.

4.  Initiation of Dispute Resolution Procedures.

     Any Party may at any time invoke these Dispute Resolution Procedures by
     providing written notice of such action to the other Parties.  The
     following provisions of this Article A do not apply to any dispute that is
     governed by the provisions of Article C to Article E below.

5.  Submission of Dispute to the Management Committee.

     Unless the dispute has arisen at the Management Committee, the Parties
     within five Business Days after such notice shall schedule a meeting of the
     Management Committee to be held at the Operator's offices in Rotterdam, The
     Netherlands.  The meeting shall
<PAGE>

     occur within 20 Business Days after notice of the meeting is delivered to
     the Parties. The Management Committee shall attempt, in a commercially
     reasonable manner, to negotiate a resolution of the dispute.

6.   Submission of Dispute to the Global Steering Committee.

     If the Management Committee has not negotiated a resolution to the dispute
     within 45 days of the initial notice of such dispute, or if the dispute
     arose at the Management Committee, then a meeting of the Global Steering
     Committee shall be called and shall be held.  The meeting shall be held in
     Rotterdam, The Netherlands or at another location selected by the Global
     Steering Committee members.  The Global Steering Committee shall attempt,
     in a commercially reasonable manner, to negotiate a resolution of the
     dispute.

7.   Mediation or Other Alternative Dispute Resolution.

     Either the Management Committee or the Global Steering Committee may, by a
     majority vote of each of the Lyondell representatives and the Bayer
     representatives, order mediation or other form of alternative dispute
     resolution if they believe such technique is useful in resolving the
     dispute.  If a method of alternative dispute resolution is agreed upon, a
     specific timetable and completion date for its implementation shall also be
     agreed upon.

8.   Implementing the Resolution.

     If the Management Committee or the Global Steering Committee succeed in
     resolving the dispute, then one or more of the Parties shall be directed
     (in as comprehensive detail as reasonably practicable) to take the actions
     necessary to carry out such resolution and each Party agrees that it will
     do all things reasonably necessary to give full effect to such resolution.
     Each Party shall have a commercially reasonable time in which to take such
     actions.

B.   ARBITRATION.

1.   Binding Arbitration under NAI Rules.

     Any dispute, other than disputes that are governed by Article C to Article
     E below, that is not resolved within 45 days after the first meeting of the
     Global Steering Committee, under Article A above, shall be finally settled
     by arbitration by a three-member arbitration panel in accordance with the
     rules of The Netherlands Arbitration Institute (the "NAI RULES").  The
     arbitration proceedings and all documents delivered to or by the
     arbitrators shall be in English and the arbitrators shall make their award
     in accordance with the rules of law.  The extended periods of time
     applicable to international arbitration proceedings pursuant to Article
     5(2) of the NAI Rules shall not be applicable.  The venue for the
     proceedings shall be Rotterdam, The Netherlands.  To the fullest extent
     permitted by law, the arbitration proceedings and award shall be maintained
     in confidence by the

                                      B-2
<PAGE>

     arbitrators and the Parties.  The NAI will not be
     authorised to publish the award in accordance with Article 55 of the NAI
     Rules.

2.   Appointment of Arbitrators.

     The Party initiating arbitration shall notify the NAI in accordance with
     the NAI Rules (the "ARBITRATION NOTICE") and shall deliver a copy thereof
     to the other Parties.  The Parties, having regard to the nature of the
     dispute and the expertise required of the arbitrators (e.g., technical,
     financial or judicial), shall attempt to agree on the qualification
     requirements of the arbitrators to present to the NAI within 15 days
     following the Arbitration Notice to be used by the NAI in its "List
     Procedure" under Article 14 of the NAI Rules.  If the Parties cannot agree
     on such qualification requirements within such 15 day period, then the
     normal procedures of Article 14 of the NAI Rules shall apply.  If any
     arbitrator is unable to serve, his or her replacement will be selected in
     the same manner as the arbitrator to be replaced.

3.   Arbitration Decision.

     The arbitrators shall have the authority to issue injunctive relief.  The
     arbitrators shall render the final arbitration award, in writing, within 20
     days following the completion of the final arbitration hearing.  If the
     arbitrators' decision results in a monetary award, the interest to be
     granted on such award, if any, and the rate of such interest shall be
     determined by the arbitrators in their discretion.  The arbitrators shall
     allocate the costs of the arbitrators and the costs of the proceeding in
     their discretion.  The arbitration award shall be final and binding on the
     Parties and, to the extent permitted by Applicable Law, the Parties waive
     any rights to appeal against such award.

4.   Special Burden of Proof for Certain Disputes.

     For any dispute to be resolved by arbitration in relation to the Operating
     Agreement in which it is alleged that the Operator is not complying with
     Applicable Law, the Policies or Good Industry Practice or is acting in a
     manner that is not consistent with the Lyondell Operating Practices, the
     arbitrators must find such non-compliance or inconsistency in a significant
     respect, after giving reasonable latitude to the Operator's judgement in
     applying Applicable Law, the Policies, the Lyondell Operating Practices and
     Good Industry Practice.

5.   Curative Period.

     If the issue of whether a breach of the Operating Agreement and/or the
     Partnership Agreement occurred or whether one of the Parties was entitled
     to exercise remedial rights is in dispute, then the non-prevailing Party
     shall have a commercially reasonable period of time to cure the default or
     circumstance before the prevailing Party shall be entitled to exercise such
     remedial rights.  The Arbitrators shall include in their award the time in
     which the non-prevailing Party must complete such cure.

                                      B-3
<PAGE>

C.   DETERMINATION OF CERTAIN CONSISTENCY CLAIM DISPUTES BY PANEL OF BINDING
     ADVISORS.

1.   Submission of Consistency Claim Disputes to Panel of Binding Advisors.

     Any dispute as to whether the Operator's proposed actions and/or
     expenditures are consistent with the Policies and Lyondell Operating
     Practices (a "CONSISTENCY CLAIM") in connection with a dispute under
     Section 7.3.4 of the Operating Agreement among the Parties regarding the
     Annual Plan or in connection with an expenditure or proposed expenditure by
     the Operator in respect of EHS activities or resulting from personnel
     compensation increases in which such expenditure is disputed by the Bayer
     Partner pursuant to and in accordance with Section 13.4 of the Partnership
     Agreement, may be submitted by the Bayer Partner within the time period
     provided in Section 7.3.4 of the Operating Agreement or Section 13.4 of the
     Partnership Agreement, as applicable, to binding resolution by a three-
     member panel of binding advisors ("bindend adviseurs") pursuant to this
     Article C.  Both Partners and the Operator shall be Parties to any
     Consistency Claim procedure under this Article C.  The fact that the
     Partnership is deadlocked on the issue shall be disclosed to the binding
     advisors and neither Party shall have the authority to represent the
     Partnership in such proceeding.

2.   Appointment of Binding Advisor Panel.

     Within 15 days following the notice by the Bayer Partner to the Operator
     that the Consistency Claim is to be submitted to resolution by a three-
     member binding advisor panel, the Parties shall attempt to agree on the
     qualification requirements of the binding advisors to present to the NAI to
     be used by the NAI in its "List Procedure" under Article 14 of the NAI
     Rules, which shall be used to appoint the binding advisor panel members.
     If the Parties cannot agree on such qualification requirements within such
     15 day period, then the qualification requirements are that each binding
     advisor must be a chemical engineer with experience in the management and
     operation of a major chemical plant in Western Europe or North America.

3.   Conduct of the Proceedings.

     The binding advisor proceeding and all documents delivered to or by the
     binding advisors shall be in English.  In the absence of an agreement to
     the contrary, the place of the proceeding shall be Rotterdam, The
     Netherlands.  The proceeding shall be conducted in accordance with the NAI
     Rules.  The extended periods of time applicable to international
     arbitration proceedings pursuant to Article 5(2) of the NAI Rules shall not
     be applicable.  To the fullest extent permitted by law, the binding advisor
     proceedings and decision shall be maintained in confidence by the binding
     advisors and the Parties.  The NAI will not be authorised to publish the
     award in accordance with Article 55 of the NAI Rules.

4.   Standard of Proof.

                                      B-4
<PAGE>

     To reach a decision in favour of the Bayer Partner, the binding advisors
     must find, after giving reasonable latitude to the Operator's judgement in
     applying the Policies and the Lyondell Operating Practices, that the
     Operator's proposed course of action and/or expenditure, as applicable, is
     inconsistent with the Policies and the Lyondell Operating Practices in a
     significant respect.  The binding advisors are not authorised to make any
     other decision or award except as provided in Section C.7 and Section C.8
     below.

5.   If Decision is in Favour of the Operator and the Lyondell Partner or there
     is No Decision within Six Months.

     If the binding advisors decide for the Operator and the Lyondell Partner,
     or do not reach a decision for any reason within six months following the
     expiration of the period within which the Global Steering Committee is to
     attempt to resolve the dispute pursuant to Section 7.3.4(b) of the
     Operating Agreement or Section 13.4 of the Partnership Agreement, as
     applicable, then the proposed course of action or expenditure of the
     Operator shall be deemed consistent with the Policies and the Lyondell
     Operating Practices for all purposes and shall be treated as part of the
     Annual Plan for all purposes, including as to spending authority of the
     Operator.  In addition, if a decision is made regarding proposed spending
     under Section 13.4 of the Partnership Agreement and the Lyondell Partner
     has instructed the Operator to defer proceeding with the disputed
     expenditures pending resolution of the dispute because the Bayer Partner
     would not release the Lyondell Partner from responsibility for a
     disproportionate share of costs pursuant to Section C.7 below, then the
     binding advisors shall have the authority to award Damages in favour of the
     Operator and/or the Lyondell Partner in the appropriate case under Section
     C.8 below.

6.   If Decision is Against the Lyondell Partner and the Operator.

     If the binding advisors decide in favour of the Bayer Partner, the Operator
     shall prospectively modify its conduct accordingly. The Operator shall not
     be responsible in Damages for the past failure of the Operator to have
     operated consistently with the Policies and the Lyondell Operating
     Practices.  Allocation of cost responsibility between the Partners shall be
     in accordance with Section C.7 below.

7.   If there is a Dispute under Section 13.4 of the Partnership Agreement
     Decided Against the Lyondell Partner and the Operator.

     For Consistency Claim disputes regarding expenditures or proposed
     expenditures for EHS activities, or that result from personnel compensation
     increases, the Bayer Partner is required by Section 13.4 of the Partnership
     Agreement to elect whether it will release the Lyondell Partner from
     responsibility pursuant to this Section C.7 for potentially paying more
     than its Partnership Percentage share of the costs associated with such
     expenditures by the Operator which the Partnership may incur during the
     pendency of the relevant dispute resolution process.  If the Bayer Partner
     elects not to release the Lyondell Partner from responsibility for
     additional costs pursuant to Section 13.4 of the Partnership

                                      B-5
<PAGE>

     Agreement, and the Operator makes expenditures in connection with the
     disputed EHS activity or personnel compensation increase and the binding
     advisors determine that the Operator's expenditures were not consistent
     with the EHS Policies or the Personnel Policies, as applicable, then the
     following shall apply:

     (a)  The binding advisors shall determine a realistic alternative to the
          Operator's proposed course of action that is also consistent with the
          Policies and the Lyondell Operating Practices.

     (b)  The binding advisors shall make a cost/benefit analysis, comparing the
          relative benefits and costs of the course of action undertaken by the
          Operator to the alternative course of action determined by the binding
          advisors pursuant to Section C.7(a) above.

     (c)  Subject to Section C.7(d) below, the Lyondell Partner will be
          allocated 100% of the capital or other costs incurred that are
          associated with the course of action of the Operator that is
          determined to be not consistent with the EHS Policies or the Personnel
          Policies, as applicable.

     (d)  If and to the extent that the course of action undertaken by the
          Operator creates an economic benefit to the Partnership, then the
          portion of the economic costs allocated 100% to the Lyondell Partner
          shall be reduced by a ratio (expressed as a percentage) equal to the
          economic benefit resulting to the Partnership over the total costs
          associated with the course of action undertaken by the Operator. This
          reduction shall be applied to each item of the applicable costs for
          the course of action undertaken by the Operator. The costs for the
          course of conduct undertaken by the Operator that are not charged 100%
          to the Lyondell Partner shall be shared by the Partners in the ratio
          of their Partnership Percentages.

     (e)  By way of example only, if an EHS course of action implemented by the
          Operator is subsequently determined by the binding advisors to be
          completely unnecessary for regulatory purposes and is otherwise
          inconsistent with the EHS Policies and the Lyondell Operating
          Practices, then the applicable costs will have no economic benefit to
          the Partnership and all of those costs will be allocated 100% to the
          Lyondell Partner. On the other hand, if the EHS course of action
          implemented by the Operator is subsequently determined by the binding
          advisors to address an applicable regulatory requirement but otherwise
          is determined to be inconsistent with the EHS Policies and the
          Lyondell Operating Practices, and the alternative determined by the
          binding advisors that is consistent with the Policies and the Lyondell
          Operating Practices is less costly, then the costs associated with the
          action implemented by the Operator will have an economic benefit equal
          to the costs that would have been incurred by the Partnership to
          implement the alternative course of action determined by the binding
          advisors that is consistent with the EHS Policies and the Lyondell
          Operating Practices.

                                      B-6
<PAGE>

8.   If there is a Dispute under Section 13.4 of the Partnership Agreement that
     is Not Decided against the Lyondell Partner and the Operator and Damages
     Result From Deferral.

     If the Bayer Partner elects under Section 13.4 of the Partnership Agreement
     not to release the Lyondell Partner from responsibility pursuant to Section
     C.7 above for potentially paying more than the Lyondell Partner's
     Partnership Percentage share of the costs associated with such expenditures
     by the Operator which the Partnership may incur during the resolution of
     the dispute if the Operator proceeds with the proposed EHS or personnel
     compensation increase expenditures, then the Lyondell Partner may elect
     under Section 13.4 of the Partnership Agreement to instruct the Operator to
     defer proceeding with such disputed expenditures during the resolution of
     the dispute.  If the binding advisors do not find that the proposed
     expenditures were inconsistent with the EHS Policies and/or the Personnel
     Polices, as applicable, then the following shall apply:

     (a)  If the Lyondell Partner and/or the Operator allege that the
          Partnership or the Operator have incurred Damages as a result of the
          deferral of such expenditures during the resolution of the dispute,
          then the binding advisors shall determine the Damages actually
          incurred by the Partnership and/or the Operator as a result of such
          deferral. For the avoidance of doubt, "Damages" excludes any lost
          profits or consequential, incidental or punitive damages incurred by
          the Operator or the Partnership for its own account.

     (b)  The Bayer Partner shall be responsible for 100% of the Damages awarded
          by the binding advisors that are incurred by the Partnership or the
          Operator as a result of the Operator's deferral in proceeding with its
          proposed course of action and corresponding expenditures.

9.   Costs.

     Costs of the binding advisor procedure shall be borne by the non-prevailing
     Partner.

D.   DETERMINATION OF DISPUTES CONCERNING THE ANNUAL ACCOUNTS THROUGH BINDING
     ADVISORS.

1.  Application; Binding Advisor Panel.

     The provisions of this Article D shall only be applicable to disputes
     concerning the Annual Accounts that are timely submitted by the disputing
     Partner to resolution hereunder pursuant to Section 12.3 of the Partnership
     Agreement.  Such disputes are to be resolved by a three-member binding
     advisor panel in accordance with the following provisions of this
     Article D.

2.   Appointment of Binding Advisor Panel.

     The binding advisor panel shall be comprised of three public accountants
     with substantial experience in auditing chemical businesses in Western
     Europe.  If no agreement is

                                      B-7
<PAGE>

     reached on the appointment of the binding advisors by the Partners within
     15 days from the submission of the dispute to binding advisor determination
     pursuant to Section 12.3 of the Partnership Agreement, then such
     qualification requirements shall be used by the NAI in its "List Procedure"
     under Article 14 of the NAI Rules, which shall be used to appoint the
     binding advisor panel members.

3.   Conduct of the Proceedings.

     The binding advisor proceedings shall be in English.  In the absence of an
     agreement to the contrary, the place of the proceeding shall be Rotterdam,
     The Netherlands.  The proceeding shall be conducted in accordance with the
     NAI Rules.  The binding advisors shall have access to the books and records
     of the Partnership as well as to all relevant working papers and other
     information available to the external auditors which audited the Annual
     Accounts.  The extended periods of time applicable to international
     arbitration proceedings pursuant to Article 5(2) of the NAI Rules shall not
     be applicable.  To the fullest extent permitted by law, the binding advisor
     proceedings and decision shall be maintained in confidence by the binding
     advisors and the Parties.  The NAI will not be authorised to publish the
     award in accordance with Article 55 of the NAI Rules.

4.   Decision of the Binding Advisors; Costs.

     The binding advisors shall reach their decision within 30 days of
     appointment.  The costs of the binding advisors proceeding shall be for the
     account of the Partnership if the Annual Accounts, as revised by the
     binding advisors, deviate materially from the Annual Accounts as audited by
     the Partnership's external auditors.  Otherwise, the costs of the binding
     advisors proceeding shall be for the sole account of the disputing Partner.

E.   DETERMINATION OF FAIR MARKET VALUE THROUGH BINDING ADVISORS UPON FULFILMENT
     OF SUSPENDING CONDITIONS.

1.   Application.

     The provisions of this Article E shall only be applicable following
     fulfilment of the Lyondell Suspending Conditions or the Bayer Suspending
     Conditions pursuant to the Conditional Transfer Agreement.

2.   Fair Market Value by Binding Advisors.

     The fair market value of the Partnership Interest of the Lyondell Partner
     or the Bayer Partner as of the date of the fulfilment of a Lyondell
     Suspending Condition or a Bayer Suspending Condition whichever is
     applicable, shall be determined by the decision of a three-member binding
     advisor panel in accordance with the following procedures.  The
     determination of fair market value shall include a separate allocation of
     value to the Ground Lease.

3.   Appointment of Binding Advisor Panel.

                                      B-8
<PAGE>

     The binding advisor panel shall be comprised of three investment bankers or
     business consultants with substantial experience in valuing chemical plants
     and chemical businesses in Western Europe.  Such qualification requirements
     shall be used by the NAI in its "List Procedure" under Article 14 of the
     NAI Rules, which shall be used to appoint the binding advisor panel
     members.

4.   Conduct of the Proceedings.

     The binding advisors shall conduct the proceeding in accordance with the
     NAI Rules, except as hereinafter provided.  In the absence of an agreement
     to the contrary, the place of the proceeding shall be Rotterdam, The
     Netherlands.  The proceedings and all documents delivered to and by the
     binding advisors shall be in English.  The extended periods of time
     applicable to international arbitration proceedings pursuant to Article
     5(2) of the NAI Rules shall not be applicable.  The binding advisors shall
     consider all relevant valuation methodologies and all relevant facts and
     circumstances in determining the fair market value of the Partnership
     Interest of the Lyondell Partner or the Bayer Partner, as applicable,
     including the availability or non-availability of licenses and permits to
     operate the PO-11 Plant Facilities.

5.   Decision of the Binding Advisors; Costs.

     The binding advisors shall reach their decision within 30 days of
     appointment.  The costs of the binding advisor procedure shall be for the
     account of the transferee of the Partnership Interest of the Lyondell
     Partner or the Bayer Partner, as applicable.

                                      B-9Exhibit 10.2

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

                              AMENDED AND RESTATED

                                CREDIT AGREEMENT

                                 $1,200,000,000

                          Dated as of December 15, 2000

                                      among

                           ORION POWER MIDWEST, L.P.,

                                  as Borrower,

                         BANC OF AMERICA SECURITIES LLC,

                as a Co-Lead Arranger and as a Joint Book Runner,

                             BANK OF AMERICA, N.A.,

                  as Issuing Bank and as Administrative Agent,

                       GOLDMAN SACHS CREDIT PARTNERS L.P.,

                 as Co-Lead Arranger, as a Syndication Agent and

                             as a Joint Book Runner,

                                    PARIBAS,

      as an Arranger, as a Documentation Agent and as a Syndication Agent,

                         DEUTSCHE BANK SECURITIES INC.,

                                 as an Arranger,

                        DEUTSCHE BANK AG NEW YORK BRANCH,

              as a Documentation Agent and as a Syndication Agent,

                                       and

                      THE FINANCIAL INSTITUTIONS INITIALLY
                     SIGNATORIES HERETO, TOGETHER WITH THOSE
                   ASSIGNEES PURSUANT TO SECTION 9.06 HEREOF,

                                   as Lenders
-------------------------------------------------------------------------------

<PAGE>

                                TABLE OF CONTENTS

                                                                         Page

ARTICLE I DEFINITIONS........................................................1

   SECTION 1.01   DEFINITIONS................................................1
   SECTION 1.02   ACCOUNTING TERMS..........................................40
   SECTION 1.03   COMPUTATION OF TIME PERIODS...............................40
   SECTION 1.04   RULES OF CONSTRUCTION.....................................40

ARTICLE II CREDIT FACILITIES................................................41

   SECTION 2.01   ACQUISITION LOANS.........................................41
   SECTION 2.02   REVOLVING LOANS...........................................43
   SECTION 2.03   BORROWINGS................................................45
   SECTION 2.04   ELECTION OF INTEREST RATES................................47
   SECTION 2.05   FEES......................................................48
   SECTION 2.06   INTEREST..................................................49
   SECTION 2.07   MANDATORY PREPAYMENTS.....................................50
   SECTION 2.08   VOLUNTARY PREPAYMENT; TERMINATION OF COMMITMENTS;
                  REVOLVING COMMITMENT REDUCTIONS...........................51
   SECTION 2.09   INCREASED COSTS; CAPITAL ADEQUACY; FUNDING BREAKAGE
                  COSTS.....................................................52
   SECTION 2.10   ILLEGALITY................................................53
   SECTION 2.11   PAYMENTS AND COMPUTATIONS.................................53
   SECTION 2.12   TAXES.....................................................55
   SECTION 2.13   SHARING OF PAYMENTS.......................................58
   SECTION 2.14   CHANGE OF APPLICABLE LENDING OFFICE.......................58
   SECTION 2.15   REPLACEMENT OF LENDERS....................................58
   SECTION 2.16   DLC LETTER OF CREDIT......................................59
   SECTION 2.17   OPERATIONAL LETTERS OF CREDIT.............................63

ARTICLE III CONDITIONS PRECEDENT............................................68

   SECTION 3.01   CONDITIONS PRECEDENT TO THE CLOSING DATE..................68
   SECTION 3.02   CONDITIONS PRECEDENT TO REVOLVING LOANS...................75
   SECTION 3.03   CONDITIONS PRECEDENT TO THE CEREDO EFFECTIVE DATE.........75

ARTICLE IV REPRESENTATIONS AND WARRANTIES...................................79

   SECTION 4.01   EXISTENCE; DUE QUALIFICATION; COMPLIANCE WITH LAW.........79
   SECTION 4.02   POWER; AUTHORITY; NO VIOLATION; BINDING EFFECT............79
   SECTION 4.03   OWNERSHIP OF PROPERTY.....................................80
   SECTION 4.04   GOVERNMENTAL APPROVALS....................................80
   SECTION 4.05   LEGAL PROCEEDINGS.........................................81
   SECTION 4.06   FINANCIAL STATEMENTS......................................81
   SECTION 4.07   INDEBTEDNESS..............................................81
   SECTION 4.08   NO DEFAULT................................................81
   SECTION 4.09   TAXES.....................................................81
   SECTION 4.10   USE OF PROCEEDS...........................................82
   SECTION 4.11   COMPLIANCE WITH ERISA.....................................82
   SECTION 4.12   MATERIAL LIABILITIES......................................82
   SECTION 4.13   REGULATION OF PARTIES.....................................82
   SECTION 4.14   SECURITY DOCUMENTS........................................83
   SECTION 4.15   ACCURACY AND COMPLETENESS OF INFORMATION..................83
   SECTION 4.16   PROPERTY RIGHTS, UTILITIES, ETC...........................84
   SECTION 4.17   PROJECT CONTRACTS.........................................84
   SECTION 4.18   PRINCIPAL PLACE OF BUSINESS...............................85
   SECTION 4.19   PATENTS; LICENSES; FRANCHISES AND FORMULAS................85
   SECTION 4.20   ENVIRONMENTAL MATTERS.....................................85
   SECTION 4.21   INSURANCE.................................................87
   SECTION 4.22   TRANSACTIONS WITH AFFILIATES..............................87
   SECTION 4.23   ORGANIZATIONAL STRUCTURE..................................87
   SECTION 4.24   PROJECTIONS...............................................87
   SECTION 4.25   ENVIRONMENTAL INSURANCE...................................87
   SECTION 4.26   EQUITY INTERESTS..........................................88

ARTICLE V AFFIRMATIVE COVENANTS.............................................88

   SECTION 5.01   CONDUCT OF BUSINESS; MAINTENANCE OF EXISTENCE.............88
   SECTION 5.02   GOVERNMENTAL APPROVALS....................................89
   SECTION 5.03   PAYMENT OF INDEBTEDNESS...................................89
   SECTION 5.04   ACCOUNTS..................................................89
   SECTION 5.05   PERFORMANCE OF COVENANTS, ETC.............................89
   SECTION 5.06   INSURANCE REQUIREMENTS....................................89
   SECTION 5.07   BOOKS AND RECORDS.........................................89
   SECTION 5.08   VISITATION, INSPECTION, ETC...............................89
   SECTION 5.09   REQUIREMENTS OF LAW.......................................90
   SECTION 5.10   REPORTING REQUIREMENTS....................................90
   SECTION 5.11   OPERATING BUDGET..........................................91
   SECTION 5.12   PAYMENT OF TAXES AND CLAIMS...............................93
   SECTION 5.13   MAINTENANCE AND OPERATION OF PORTFOLIO ASSETS; REPAIR
                  AND REPLACEMENT OF PORTFOLIO ASSETS.......................93
   SECTION 5.14   REAL AND PERSONAL PROPERTY................................93
   SECTION 5.15   ERISA.....................................................94
   SECTION 5.16   INTEREST HEDGE CONTRACTS..................................94
   SECTION 5.17   NOTICES...................................................95
   SECTION 5.18   PRESERVATION OF SECURITY INTERESTS; FURTHER ASSURANCES....96
   SECTION 5.19   USE OF PROCEEDS...........................................97
   SECTION 5.20   EXTRAORDINARY PROCEEDS....................................97
   SECTION 5.21   ENVIRONMENTAL COMPLIANCE..................................97
   SECTION 5.22   ADDITIONAL CONTRACTS......................................99
   SECTION 5.23   OTHER INFORMATION.........................................99
   SECTION 5.24   FUEL PROCUREMENT AND O&M ARRANGEMENTS....................100
   SECTION 5.25   POWER MARKETING AND TRANSMISSION ARRANGEMENTS............100
   SECTION 5.26   CAPITAL EXPENDITURES.....................................101
   SECTION 5.27   POLR II AGREEMENT........................................102
   SECTION 5.28   CEREDO SECURITY DOCUMENTS................................102

ARTICLE VI NEGATIVE COVENANTS..............................................103

   SECTION 6.01   LIMITATION ON MERGERS....................................103
   SECTION 6.02   LIMITATION ON INDEBTEDNESS...............................103
   SECTION 6.03   LIMITATION ON LIENS......................................103
   SECTION 6.04   NATURE OF BUSINESS.......................................103
   SECTION 6.05   PROJECT CONTRACTS; WAIVER; MODIFICATION; AMENDMENT.......104
   SECTION 6.06   PARTNERSHIPS; SUBSIDIARIES...............................105
   SECTION 6.07   LOANS, ADVANCES OR INVESTMENTS...........................105
   SECTION 6.08   LIMITATION ON CAPITAL EXPENDITURES.......................105
   SECTION 6.09   AFFILIATE TRANSACTIONS...................................105
   SECTION 6.10   DISTRIBUTIONS............................................105
   SECTION 6.11   LIMITATION ON DISPOSITION OF ASSETS......................105
   SECTION 6.12   OPERATING BUDGET.........................................106
   SECTION 6.13   DEBT SERVICE COVERAGE RATIO..............................106
   SECTION 6.14   ENVIRONMENTAL INSURANCE..................................107
   SECTION 6.15   ASH DISPOSAL.............................................107
   SECTION 6.16   SPECULATIVE TRADING......................................107

ARTICLE VII EVENTS OF DEFAULT..............................................107

   SECTION 7.01   PAYMENTS.................................................107
   SECTION 7.02   COVENANTS................................................108
   SECTION 7.03   REPRESENTATIONS..........................................109
   SECTION 7.04   DEFAULTS OF OTHER INDEBTEDNESS...........................109
   SECTION 7.05   SECURITY DOCUMENTS.......................................109
   SECTION 7.06   TRANSACTION DOCUMENTS....................................110
   SECTION 7.07   BANKRUPTCY...............................................110
   SECTION 7.08   GOVERNMENTAL APPROVALS...................................110
   SECTION 7.09   OWNERSHIP................................................111
   SECTION 7.10   JUDGMENT.................................................112
   SECTION 7.11   DESTRUCTION OF PORTFOLIO ASSETS..........................112
   SECTION 7.12   ERISA....................................................112
   SECTION 7.13   REGULATORY STATUS........................................112
   SECTION 7.14   NEGATIVE PLEDGE..........................................112
   SECTION 7.15   ABANDONMENT..............................................113
   SECTION 7.16   SPONSOR INDEBTEDNESS.....................................113
   SECTION 7.17   CEREDO PROJECT...........................................113

ARTICLE VIII THE AGENTS AND ISSUING BANK...................................114

   SECTION 8.01   APPOINTMENT OF AGENTS, POWERS AND IMMUNITIES.............114
   SECTION 8.02   RELIANCE BY AGENTS.......................................114
   SECTION 8.03   DEFAULTS 114
   SECTION 8.04   RIGHTS AS LENDERS........................................115
   SECTION 8.05   INDEMNIFICATION..........................................115
   SECTION 8.06   DOCUMENTS................................................116
   SECTION 8.07   NON-RELIANCE ON AGENTS AND OTHER LENDERS.................116
   SECTION 8.08   RESIGNATION..............................................116
   SECTION 8.09   AUTHORIZATION............................................117
   SECTION 8.10   DOCUMENTATION AGENTS; SYNDICATION AGENTS; JOINT BOOK
                  RUNNERS, ARRANGERS.......................................117

ARTICLE IX MISCELLANEOUS...................................................117

   SECTION 9.01   NOTICES..................................................117
   SECTION 9.02   AMENDMENTS, ETC..........................................117
   SECTION 9.03   NO WAIVER; REMEDIES CUMULATIVE...........................118
   SECTION 9.04   PAYMENT OF EXPENSES AND INDEMNIFICATION..................118
   SECTION 9.05   RIGHT OF SETOFF..........................................120
   SECTION 9.06   BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS.....121
   SECTION 9.07   GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
                  JURY TRIAL; WAIVER OF DAMAGES............................123
   SECTION 9.08   NONLIABILITY OF ADMINISTRATIVE AGENT AND LENDERS.........125
   SECTION 9.09   MARSHALLING; RECAPTURE...................................125
   SECTION 9.10   INDEPENDENT NATURE OF LENDERS' RIGHTS....................126
   SECTION 9.11   COUNTERPARTS.............................................126
   SECTION 9.12   EFFECTIVENESS............................................126
   SECTION 9.13   SURVIVAL OF INDEMNITIES AND REPRESENTATIONS AND
                  WARRANTIES...............................................126
   SECTION 9.14   SEVERABILITY.............................................126
   SECTION 9.15   HEADINGS DESCRIPTIVE.....................................126
   SECTION 9.16   LIMITATION OF RECOURSE...................................126
   SECTION 9.17   CONFIDENTIALITY..........................................127

<PAGE>

ANNEXES:

Annex I         - Commitments
Annex II        - Notice Provisions
Annex III       - Estimated Income Taxes

SCHEDULES:

Schedule 1.01(a)- Avon Lake; Brunot Island; Cheswick; Elrama; New Castle; Niles;
                  Phillips; Ceredo

Schedule 1.01(b)- Known Conditions List
Schedule 1.01(c)- Acquired Fuel Supply Contracts
Schedule 4.04   - Governmental Approvals
Schedule 4.05   - Material Litigation
Schedule 4.12   - Material Liabilities
Schedule 4.14   - Filing Offices
Schedule 4.19   - Patents; Licenses; Franchises and Formulas
Schedule 4.20   - Environmental Matters
Schedule 4.22   - Transactions with Affiliates
Schedule 4.23A  - Closing Date Organizational Structure
Schedule 4.23B  - Ceredo Effective Date Organizational Structure
Schedule 5.06   - Insurance Requirements
Schedule 5.22   - Additional Contracts Relating to Ceredo

EXHIBITS:

Exhibit A       - Form of Acquisition Loan Note
Exhibit B       - Form of Revolving Loan Note
Exhibit C       - Form of Notice of Acquisition Borrowing
Exhibit D       - Form of Notice of Revolving Borrowing
Exhibit E       - Form of Notice of Conversion
Exhibit F       - Form of Deposit Account Agreement
Exhibit G       - Form of Security Account Control Agreement
Exhibit H       - Form of Borrower Security Agreement
Exhibit I-1     - Form of GP Partnership Interest Pledge Agreement
Exhibit I-2     - Form of LP Partnership Interest Pledge Agreement
Exhibit J       - Form of Borrower Mortgage
Exhibit K       - Form of Assignment and Acceptance
Exhibit L       - Form of Equity Contribution Agreement
Exhibit M       - Form of DLC Letter of Credit
Exhibit N       - Form of Subordinated Equity Owner Loan Agreement
Exhibit O       - Form of Stock Pledge Agreement
Exhibit P       - Form of Subsidiary Guarantee
Exhibit Q       - Form of Intercompany Working Capital Agreement
Exhibit R       - Form of Intercompany Working Capital Note
Exhibit S       - Form of Subsidiary Security Agreement
Exhibit T       - Form of Supplemental Agreement
Exhibit U       - Form of LLC Interest Pledge Agreement
Exhibit V       - Form of Subsidiary Operating Agreement Covenants
Exhibit W       - [Reserved]
Exhibit X       - Form of Amendment No. 1 to Ceredo EPC Contract
Exhibit Y       - Form of Twelvepole Management Services Agreement

<PAGE>

          THIS AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
December 15, 2000 (this "AGREEMENT"), among ORION POWER MIDWEST, L.P., a
Delaware limited partnership (the "BORROWER"), BANC OF AMERICA SECURITIES LLC
and GOLDMAN SACHS CREDIT PARTNERS L.P., as co-lead arrangers (collectively, the
"CO-LEAD Arrangers"), PARIBAS and DEUTSCHE BANK SECURITIES INC., as arrangers
(together with the Co-Lead Arrangers, the "ARRANGERS"), BANC OF AMERICA
SECURITIES LLC AND GOLDMAN SACHS CREDIT PARTNERS L.P., as joint book runners
(collectively, the "JOINT BOOK RUNNERS"), BANK OF AMERICA, N.A., as
administrative agent for the Lenders (in such capacity, together with any
successors and assigns, the "ADMINISTRATIVE AGENT"), BANK OF AMERICA, N.A., as
issuer of the Letters of Credit (the "ISSUING BANK"), GOLDMAN SACHS CREDIT
PARTNERS L.P., PARIBAS and DEUTSCHE BANK AG NEW YORK BRANCH, as syndication
agents (collectively, the "SYNDICATION AGENTS"), PARIBAS and DEUTSCHE BANK AG
NEW YORK BRANCH, as documentation agents (collectively, the "DOCUMENTATION
AGENTS"), and the financial institutions signatories hereto (each of which,
together with each other financial institution which may hereafter become an
assignee pursuant to Section 9.06 is hereinafter referred to as a "LENDER", and
collectively the "LENDERS").

                              W I T N E S S E T H:

          WHEREAS, the Borrower has requested the Lenders, and the Lenders have
agreed, subject to the terms and conditions set forth herein, to extend a credit
facility to the Borrower to finance the purchase by the Borrower of the
Portfolio Assets (defined below) and to provide revolving advances to the
Borrower from time to time; and

          WHEREAS, it is an obligation of the Borrower to provide an irrevocable
standby letter of credit to DLC (as defined below) pursuant to the POLR
Agreement described below, and the Issuing Bank has agreed to provide such
letter of credit, subject to the terms and conditions set forth herein;

          NOW, THEREFORE, the Borrower, the Arrangers, the Administrative Agent,
the Syndication Agents, the Documentation Agents, the Issuing Bank, and the
Lenders agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

          Section 1.01 DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings specified below (to be equally applicable to both
the singular and plural forms of the terms defined):

          "ACCEPTABLE CAPACITY PROVIDER" shall mean any of (A) any Person (i)
that owns and/or operates power generation assets, (ii) has the ability and
legal and/or contractual right to sell power, electric capacity and/or energy
into the area covered by ECAR and/or the Duquesne Control Area, and (iii) whose
long term senior unsecured indebtedness has been assigned an Investment Grade
Rating by Moody's and S&P, and (B) CPS, for so long as it is a wholly-owned
subsidiary, directly or indirectly, of Constellation Enterprises, Inc.;
PROVIDED, THAT, CPS shall be considered an Acceptable Capacity Provider only
with respect to contracts or agreements which provide for (i) physical delivery
of not more than an aggregate amount of 750MW on a one-day (or less) forward
basis, less any electric capacity and/or energy to be delivered pursuant to the
following clause (ii), and (ii) physical delivery of not more than 250 MW (on
more than a one day forward basis), within 12 months from the Closing Date,
where CPS has entered into "back-to-back" contracts covering such delivery
obligations with a Person meeting the requirements of clause (A) preceding.

          "ACCEPTABLE RESERVES" shall mean, with respect to any contest,
dispute, appeal or other similar circumstance in respect of which any Borrower
Entity is entitled hereunder to provide reserves (including pursuant to Section
5.09), any of (i) cash reserves in an amount equal to such Borrower Entity's
maximum liability in respect of such contest, dispute, appeal or circumstance
deposited with the Administrative Agent; (ii) a bond or bonds, surety, insurance
or other similar obligation of the relevant Borrower Entity reasonably
acceptable to the Administrative Agent and in an amount necessary to satisfy the
applicable reserve requirement as reasonably determined by the Administrative
Agent; or (iii) from and after such time as Indebtedness of the Borrower shall
have an Investment Grade Rating from Moody's or S&P, reserves in conformity with
GAAP maintained by the relevant Borrower Entity.

          "ACCOUNTS" shall mean the collective reference to the Revenue Account,
the Operating Account, the Twelvepole Construction Account, the Insurance
Proceeds Account, the Debt Service Account, the Debt Service Reserve Account,
the Replacement Capital Expenditure Pre-Funding Account, the Loan Proceeds
Account, the Extraordinary Proceeds Account, the Equity Proceeds Account, the
Prepayment Account, the Cash Retention Account, the Distribution Account, the
Distribution Holdback Account and all sub-accounts established within any of the
foregoing.

          "ACQUIRED FUEL SUPPLY CONTRACTS" shall mean those certain fuel supply
agreements set forth on SCHEDULE 1.01(C) hereto.

          "ACQUISITION AGREEMENT" shall mean the Asset Purchase Agreement, dated
as of September 24, 1999, between DLC, the FE Subsidiaries and the Sponsor.

          "ACQUISITION AGREEMENT TERMINATION DATE" shall mean September 24,
2000.

          "ACQUISITION COSTS" shall mean the aggregate cost required to purchase
the Portfolio Assets (other than Ceredo), initially fund the Debt Service
Reserve Account and the Replacement Capital Expenditure Pre-Funding Account and
pay Closing Expenses, which is estimated to be approximately $1,836,137,000.

          "ACQUISITION DOCUMENTS" shall mean, collectively, the Acquisition
Agreement, the POLR Agreement, the Must-Run Agreements, the Easement and
Attachment Agreements, the Interconnection Agreements and the Acquired Fuel
Supply Contracts.

          "ACQUISITION LENDER" shall mean each Lender that, from time to time,
has Acquisition Loan Commitments outstanding or has made Acquisition Loan
Advances hereunder.

          "ACQUISITION LOAN" shall mean a Loan consisting of simultaneous
Acquisition Loan Advances of the same Type from each of the Acquisition Lenders
pursuant to Section 2.01(a).

          "ACQUISITION LOAN ADVANCE" shall mean an advance by an Acquisition
Lender to the Borrower as part of an Acquisition Loan pursuant to Section
2.01(a).

          "ACQUISITION LOAN COMMITMENT" shall mean, as to any Acquisition Lender
as of any date, the difference between (i) the amount set forth opposite such
Acquisition Lender's name on ANNEX I hereto under the heading "Acquisition Loan
Commitment", as such annex may be amended from time to time and as such amount
may be reduced from time to time pursuant to this Agreement, or increased or
reduced from time to time by assignment pursuant to Section 9.06, and (ii) the
aggregate principal amount of Acquisition Loan Advances made by such Acquisition
Lender as of such date of determination.

          "ACQUISITION LOAN NOTE" shall have the meaning ascribed thereto in
Section 2.01(b)(i).

          "ADDITIONAL CONTRACT" shall mean any of the following agreements or
undertakings to which any Borrower Entity is a party, in each case relating to
the Portfolio Assets and entered into after the Closing Date: (i) any agreement,
or series of related agreements, for the supply of fuel to any Portfolio Asset
whose term extends for more than 365 days and any material agreement for the
supply of fuel to the Portfolio Assets other than as contemplated in the Fuel
Plan then in effect, (ii) any material agreement for the operation and/or
maintenance of any portion of the Portfolio Assets that is not discussed or
contemplated in or by the O&M Plan or the Operating Budget then in effect, (iii)
any agreements with an Affiliate or Affiliates of the Borrower other than as
specifically contemplated by the Financing Documents or any Operational Plan
then in effect, (iv) any contract for the purchase or sale of power, electric
capacity and/or energy, other than as contemplated by the Power Marketing Plan
then in effect, (v) all material contracts (as determined by the Administrative
Agent in the exercise of its reasonable discretion) relating to the Brunot
Island Reactivation Project (as defined in Section 5.26(b) below) or (vi) any
material contract (as determined by the Administrative Agent in the exercise of
its reasonable discretion) or series of contracts relating to any Capital
Expenditure project (other than the Brunot Island Reactivation Project) in
respect of which the Borrower is obligated to expend greater than $20,000,000 in
the aggregate.

          "ADDITIONAL CONTRACT CONSENT" shall mean the consent of the
counterparty to each Additional Contract to the assignment of each such
Additional Contract to the Administrative Agent pursuant to a Security
Agreement, in form and substance approved by the Administrative Agent, such
approval not to be unreasonably withheld, conditioned or delayed, it being
acknowledged and agreed that a consent no less favorable to the Lenders than the
DLC Consent shall be deemed reasonable.

          "ADMINISTRATIVE AGENT" shall have the meaning ascribed thereto in the
preamble to this Agreement.

          "ADMINISTRATIVE AGENT FEE SIDE LETTER" shall mean the letter agreement
regarding the Agency Fee described therein, dated as of the Closing Date,
between the Borrower and the Administrative Agent.

          "ADVANCE" shall mean, as applicable, an Acquisition Loan Advance or a
Revolving Advance.

          "AEP CONSENT" shall mean a consent and acknowledgment agreement among
American Electric Power Service Corporation, the Administrative Agent and
Twelvepole, in regard to the Ceredo Interconnection and Operation Agreement, in
form and substance reasonably satisfactory to the Arrangers.

          "AFFILIATE" shall mean, as to any Person, any other Person directly or
indirectly controlling or controlled by, or under common control with, such
Person. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by" and "under common control
with") when used with respect to any Person means the possession, directly or
indirectly, of the power either (i) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.

          "AGENCY AGREEMENT" shall mean that certain Agency Agreement, dated as
of April 27, 2000.

          "AGENCY FEE" shall have the meaning ascribed thereto in the
Administrative Agent Fee Side Letter.

          "AGENTS" shall mean the collective reference to the Administrative
Agent, the Syndication Agents and the Documentation Agents.

          "AGGREGATE COMMITMENT" shall mean with respect to each Lender, the sum
of (i) its Acquisition Loan Commitment PLUS (ii) its Revolving Loan Commitment.

          "APPLICABLE LENDING OFFICE" shall mean, with respect to each Lender,
such Lender's LIBO Lending Office, and, with respect to the Administrative
Agent, its office located at 100 North Tryon Street, NC1-007-12-05, Charlotte,
NC 28255, or such other office as the Administrative Agent may from time to time
specify to the Borrower and the Lenders.

          "APPLICABLE MARGIN" shall mean the Base Rate Margin or the LIBO Rate
Margin, as the context requires.

          "APPROVED CAPACITY PURCHASER" shall mean (i) CPS, for so long as it is
a wholly-owned subsidiary, directly or indirectly, of Constellation Enterprises,
Inc. or (ii) any Person whose long term senior unsecured indebtedness has been
assigned an Investment Grade Rating by Moody's and S&P, or a Person whose
obligations are guaranteed by a Person whose long term senior unsecured
indebtedness has been assigned an Investment Grade Rating by Moody's and S&P.

          "APPROVED POWER PURCHASE AGREEMENT" shall mean any contract or other
agreement between any Borrower Entity (or any Affiliate thereof) and an
Acceptable Capacity Provider relating to capacity purchases and/or options to
call on capacity from such Acceptable Capacity Provider containing provisions
for, among other things, the payment by such Acceptable Capacity Provider of
liquidated damages in a minimum amount equal to the cost of replacement capacity
in the event of a failure to perform by such Acceptable Capacity Provider
thereunder.

          "APPROVED POWER SALES AGREEMENT" shall mean any contract or other
agreement, other than the Spot Power Sales Agreements, between any Borrower
Entity (or any Affiliate thereof) and an Approved Capacity Purchaser relating to
capacity sales and options to sell capacity to Approved Capacity Purchasers that
contain provisions for, among other things, a maximum forward delivery date
thereunder of less than 365 days from the date thereof.

          "ARRANGERS" shall have the meaning ascribed thereto in the preamble to
this Agreement.

          "ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by an assigning Lender and an assignee Lender, and accepted by the
Administrative Agent, in accordance with Section 9.06 and substantially in the
form of EXHIBIT K.

          "AVON LAKE" shall mean all generating units and related assets located
at the generating station known as Avon Lake as more fully described on SCHEDULE
1.01(A) hereto, and all additions, modifications and improvements thereto.

          "BASE RATE" shall mean, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time, which rate per annum shall at
all times be equal to the higher of (a) the rate of interest announced publicly
by the Administrative Agent, from time to time, as its "base rate" or "prime
rate" for Dollar loans (which rate may not necessarily be its lowest rate) and
in effect on any date of determination, as determined by the Administrative
Agent, and (b) the sum of the Federal Funds Rate in effect on any date of
determination, as determined by the Administrative Agent plus 0.50%.

          "BASE RATE ADVANCE" shall mean any Advance which bears interest based
upon the Base Rate.

          "BASE RATE LOAN" shall mean a Loan consisting of simultaneous Base
Rate Advances from each of the applicable Lenders.

          "BASE RATE MARGIN" shall mean, during the period, (i) from the Closing
Date until the date twelve (12) months thereafter, 0.375%, (ii) from and
including the date twelve (12) months after the Closing Date until the date
twenty-four (24) months thereafter, 0.50% and (iii) from and including the date
twenty-four (24) months after the Closing Date until and including the Final
Maturity Date, 1.00%.

          "BENEFIT ARRANGEMENT" shall mean at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
Borrower Entity, the Operator or any ERISA Affiliate.

          "BORROWER" shall have the meaning ascribed thereto in the preamble to
this Agreement.

          "BORROWER CONSENTS" shall mean the collective reference to (i) the DLC
Consent, the FE Consent, the Operator Consent, the Harwick Consent, and the CPS
Consent and (ii) all Additional Contract Consents relating to the Portfolio
Assets (excluding Ceredo).

          "BORROWER ENTITY" shall mean the collective reference to the Borrower
and, from and after the Ceredo Effective Date, Twelvepole.

          "BORROWER MORTGAGES" shall mean one or more Mortgage, Security
Agreement, Fixture Filing and Assignment of Leases and Rents executed and
delivered by the Borrower in favor of the Administrative Agent in respect of
real property located in Allegheny County, Pennsylvania, Beaver County,
Pennsylvania, Lawrence County, Pennsylvania, Washington County, Pennsylvania,
Lorain County, Ohio and Trumbull County, Ohio which is owned or leased by the
Borrower, substantially in the form of EXHIBIT J hereto.

          "BORROWER SECURITY AGREEMENT" shall mean that certain Security
Agreement, dated as of the Closing Date, between the Borrower and the
Administrative Agent (for the benefit of the Secured Parties), substantially in
the form of EXHIBIT H hereto.

          "BORROWER TWELVEPOLE LLC INTEREST PLEDGE AGREEMENT" shall mean that
certain LLC Interest Pledge Agreement, dated as of the Ceredo Effective Date,
among the Borrower, Twelvepole and the Administrative Agent (for the benefit of
the Secured Parties), relating to the Borrower's membership interests in
Twelvepole, substantially in the form of Exhibit U hereto.

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

          "BRUNOT ISLAND" shall mean all generating units and related assets
located at the generating station known as Brunot Island, as more fully
described on SCHEDULE 1.01(A) hereto, and all additions, modifications and
improvements thereto.

          "BRUNOT ISLAND PIPELINE" shall mean the natural gas pipeline to be
installed at Brunot Island with a transportation capacity necessary to provide
gas required to operate Brunot Island at least at the capacity level
contemplated in the Projections.

          "BUDGETED OPERATING COSTS" shall mean, with respect to the Operating
Budget for any fiscal year of the Borrower Entities (excluding Twelvepole, until
Ceredo has achieved Commercial Operation), the aggregate amount of all Operating
Costs set forth in such Operating Budget.

          "BUSINESS DAY" shall mean any day, which is not a Saturday or Sunday,
on which commercial banks are open for business in New York, New York and
Charlotte, North Carolina and, if such day relates to a borrowing of, a payment
or prepayment of principal of, or a Conversion of or into, or an interest period
for, a LIBO Rate Loan or a notice by the Borrower with respect to any such
borrowing, payment, prepayment, Conversion or interest period, which day is also
a day on which dealings in U.S. dollar deposits are carried out in the London
interbank market.

          "CAPITAL EXPENDITURES" shall mean, for any period, all expenditures by
any Borrower Entity (excluding expenditures of Twelvepole, until Ceredo has
achieved Commercial Operation) which would be classified as "capital
expenditures" in accordance with GAAP (including, without limitation,
expenditures for maintenance and repairs which, in conformity with GAAP, would
be capitalized and obligations under Capital Leases of any capital asset)
including, without limitation, Non-Discretionary Capital Expenditures.

          "CAPITAL LEASE" shall mean, with respect to any Person, any lease of
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is required to be accounted for as a capital lease on the
balance sheet of that Person.

          "CAPITAL STOCK" shall mean, with respect to any Person, any and all
shares, interests, rights to purchase, warrants, options, participations or
other equivalents of or interest in (however designated) the common or
preference share capital of such Person, including, without limitation,
partnership interests and limited liability company interests.

          "CASH RETENTION ACCOUNT" shall mean the special account designated by
that name and established by the Administrative Agent pursuant to the Deposit
Account Agreement.

          "CEREDO" shall mean all generating units and related assets located at
the generating station known as Ceredo, as more fully described on Schedule
1.01(a) attached hereto, and all additions, modifications and improvements
thereto.

          "CEREDO BOND INDENTURE" shall mean that certain Bond Indenture and
Security Agreement between The County Commission of Wayne County, West Virginia
and Bank One, West Virginia, National Association dated July 1, 2000.

          "CEREDO CLOSING DATE" shall mean December 15, 2000.

          "CEREDO CONSENTS" shall mean the collective reference to the Wayne
County Commission Consent, the Mountaineer Consent, the AEP Consent and all
Additional Contract Consents relating to Ceredo.

          "CEREDO CONSTRUCTION AND TRANSPORTATION AGREEMENT" shall mean that
certain Facilities Construction and Gas Transportation Agreement between
Twelvepole and Mountaineer Gas Company dated July 12, 2000.

          "CEREDO CONSTRUCTION EQUITY CONTRIBUTION AMOUNT" shall mean
$100,000,000.

          "CEREDO EFFECTIVE DATE" shall mean the date on which all of the
conditions precedent set forth in Section 3.03 hereof have been satisfied or
waived.

          "CEREDO EFFECTIVE DATE GOVERNMENTAL APPROVALS" shall mean those
Governmental Approvals relating to Ceredo or Twelvepole required to be obtained
by any Credit Party on or prior to the Ceredo Effective Date, as set forth in
Parts A and B of Schedule 4.04.

          "CEREDO EPC CONTRACT" shall mean that certain Engineering, Procurement
and Construction Services Contract (EPC Contract) between Twelvepole and AEP Pro
Serv, Inc. dated April 28, 2000 (including Change Order No. 1 dated June 21,
2000).

          "CEREDO GENERATOR PURCHASE ORDER" shall mean that certain Purchase
Order for six (6) 7EA Combustion Turbine Generators between Columbia Capacity
LLC and General Electric Company dated March 10, 2000.

          "CEREDO INTERCONNECTION AND OPERATION AGREEMENT" shall mean that
certain Interconnection and Operation Agreement between American Electric Power
Service Corporation and Twelvepole dated June 28, 2000.

          "CEREDO LEASE AGREEMENT" shall mean that certain Lease Agreement
between The County Commission of Wayne County, West Virginia and Twelvepole
dated July 1, 2000.

          "CEREDO PARENT GUARANTY" shall mean that certain Parent Guaranty for
EPC Contract by Columbia Electric Corporation in favor of AEP Pro Serv, Inc.
dated July 5, 2000.

          "CEREDO PROJECT CONTRACTS" shall mean the collective reference to (i)
the Ceredo Construction and Transportation Agreement, the Ceredo EPC Contract,
the Ceredo Interconnection and Operation Agreement, the Ceredo Lease Agreement,
the Ceredo Purchase and Sale Agreement, the Ceredo Parent Guaranty and the
Governing Documents of Twelvepole and (ii) all other material interconnection
agreements, material power marketing agreements, all material transmission
services agreements, all material easements and material rights-of-way, and all
material utility supply agreements and all Additional Contracts relating to
Ceredo.

          "CEREDO PURCHASE AGREEMENT" shall mean that certain Purchase
Agreement, dated as of February 18, 2000, by and between Glenn John Meddings and
Patricia Meddings, and Columbia Electric Corporation, assigned to Twelvepole
pursuant to that certain Assignment of Purchase Agreement, dated May 4, 2000, by
and between Columbia Electric Corporation, Twelvepole and Glenn John Meddings
and Patricia Ann Meddings.

          "CEREDO PURCHASE AND SALE AGREEMENT" shall mean that certain Purchase
and Sale Agreement for Ceredo Electric Generating Station Project Site between
Columbia Gas Transmission Corporation and Twelvepole dated March 31, 2000.

          "CEREDO SECURITY DOCUMENTS" shall mean the collective reference to the
Borrower Twelvepole LLC Interest Pledge Agreement, the Ceredo Consents, the
Twelvepole Guarantee, the Twelvepole Intercompany Agreement, the Twelvepole
Intercompany Working Capital Note, the Twelvepole Mortgage, the Twelvepole
Security Agreement, and the Twelvepole Supplemental Agreement, along with the
Twelvepole Financing Statements and all other filings made pursuant thereto.

          "CEREDO STACK PURCHASE AGREEMENT" shall mean that certain Braden Stack
Purchase Agreement between Twelvepole and Braden Manufacturing for supply of six
(6) turbine exhaust systems dated August 2, 2000.

          "CEREDO TRANSFORMER PURCHASE ORDER" shall mean that certain Purchase
Order for three (3) main generator/transformers between Twelvepole and
Pennsylvania Transformer Technology, Inc. dated April 28, 2000 (including Change
Order no. 1 dated May 5, 2000).

          "CEREDO TRANSACTION DOCUMENTS" shall mean the collective reference to
the Ceredo Project Contracts and the Ceredo Security Documents.

          "CHESWICK" shall mean all generating units and related assets located
at the generating station known as Cheswick, as more fully described on SCHEDULE
1.01(A) attached hereto, and all additions, modifications and improvements
thereto.

          "CLEAN-UP COSTS" shall have the meaning set forth in the Environmental
Insurance Policy.

          "CLOSING DATE" shall mean April 28, 2000.

          "CLOSING DATE GOVERNMENTAL APPROVALS" shall mean those Governmental
Approvals required to be obtained by any Credit Party on or prior to the Closing
Date, as set forth in Parts A and B of SCHEDULE 4.04 hereto.

          "CLOSING EXPENSES" shall mean all Fees payable by the Borrower on the
Closing Date pursuant to any Financing Document and all other costs and expenses
(including prorated taxes) payable by the Borrower in connection with the
acquisition of the Portfolio Assets (excluding Ceredo) which are included in
detail in the Projections or are otherwise approved by the Borrower and the
Arrangers.

          "CLOSING FAILURE" shall mean the failure of the Ceredo Effective Date
to occur on or before December 31, 2000.

          "CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.

          "CO-LEAD ARRANGER" shall mean each of Banc of America Securities LLC
and Goldman Sachs Credit Partners L.P., or any of their respective Affiliates
which becomes a party to this Agreement and the other applicable Financing
Documents as a "Co-Lead Arranger".

          "COLLATERAL" shall mean at any time all property and interest of any
kind, now owned or hereafter acquired, which is at such time subject to, or
purported to be subject to, a Lien in favor of the Administrative Agent (for the
benefit of the Secured Parties) created or granted pursuant to the Security
Documents in effect at such time.

          "COLUMBIA CAPACITY" means Columbia Capacity, LLC, a Delaware limited
liability company.

          "COMMERCIAL OPERATION" shall mean and shall be deemed to have occurred
upon (i) receipt by the Administrative Agent of a certificate of the Independent
Engineer certifying that each "Phase" and the "Facility" have achieved
"Substantial Completion" (as such terms are defined in the Ceredo EPC Contract),
or (ii) in the event any "Phase" or the "Facility" shall not have achieved
"Substantial Completion" (as such terms are defined in the Ceredo EPC Contract),
then (A) upon delivery by Borrower to the Arrangers of an officer's certificate
certifying (1) the amount of megawatts and associated heat rate of each such
"Phase" or such "Facility" successfully tested pursuant to the Ceredo EPC
Contract, (2) the amount of liquidated damages or other amounts which will be
applied in prepayment of the Loans upon approval by the Arrangers of the
certifications set forth in such Borrower certificate, and (3) that the Borrower
is then in compliance with its covenants under Section 5.25, (B) approval by the
Arrangers (after consultation with the Independent Engineer) of the
certifications set forth in such Borrower certificate and (C) deposit of the
liquidated damages and other amounts described in Clause (A)(2) above to the
Extraordinary Proceeds Account for application in prepayment of the Loans in
accordance with the Deposit Account Agreement.

          "COMMITMENT FEES" shall mean any fees payable by the Borrower to the
Administrative Agent (for the account of the Lenders) in accordance with Section
2.05(a).

          "COMMITMENTS" shall mean the collective reference to the Acquisition
Loan Commitments and the Revolving Loan Commitments.

          "CONDEMNATION PROCEEDS" shall mean all amounts and proceeds (including
instruments) received in respect of any action by any Governmental Authority to
condemn, or obtain through powers of eminent domain any portion of the Portfolio
Assets or the property or assets of any Borrower Entity.

          "CONSENTS" shall mean the collective reference to (i) the Borrower
Consents and (ii) from and after the Ceredo Effective Date, the Ceredo Consents.

          "CONTRACTUAL OBLIGATION" shall mean, with respect to any Person, any
provision of any securities issued by such Person or any indenture, mortgage,
deed of trust, contract, undertaking, document, instrument or other agreement to
which such Person is a party or by which it or any of its properties is bound or
subject.

          "CONVERSION", "CONVERT" or "CONVERTED" each refers to a conversion of
Loans pursuant to Section 2.04, including but not limited to any selection of a
longer of shorter Interest Period to be applicable thereto or any continuation
of a Loan as described in Section 2.04.

          "COSI" shall mean Constellation Operating Services, Inc., a Maryland
corporation.

          "COSI TECHNICAL SUPPORT AGREEMENT" shall mean the Technical Support
Agreement, dated as of April 26, 2000, by and between COSI and the Sponsor
relating to the O&M Agreement.

          "CPI" shall mean the price index computed and issued monthly by the
Bureau of Labor Statistics of the U. S. Department of Labor.

          "CPS" shall mean Constellation Power Source, Inc., a Delaware
corporation.

          "CPS CONSENT" shall mean that certain consent and acknowledgement
agreement among CPS, the Borrower and the Administrative Agent.

          "CPS STRATEGIC ALLIANCE AGREEMENT" shall mean that certain Strategic
Alliance Agreement, dated as of March 10, 1998, between the Sponsor and CPS.

          "CREDIT PARTY" shall mean each of the Sponsor, Harwick, the Borrower,
each Partner, and, from and after the Ceredo Effective Date, Twelvepole.

          "DEBT SERVICE" shall mean, for any period and without duplication, the
difference between (a) the sum of (i) all interest payments paid, payable or
accrued on all Indebtedness of the Borrower for borrowed money during such
period, (ii) scheduled principal due and payable on all Indebtedness of the
Borrower for borrowed money during such period, and (iii) all payments under
Interest Hedge Contracts paid by the Borrower during such period, and (iv) all
Fees (other than Fees constituting Closing Expenses) payable by the Borrower
pursuant to any Financing Document during such period, MINUS (b) amounts, if
any, received by the Borrower under Interest Hedge Contracts during such period;
PROVIDED, THAT, nothing in this definition shall be deemed to modify Section
6.02 hereof.

          "DEBT SERVICE ACCOUNT" shall mean the special account designated by
that name and established by the Administrative Agent pursuant to the Deposit
Account Agreement.

          "DEBT SERVICE COVERAGE RATIO" shall mean, for any period of
determination, the ratio of (i) Net Cash Flow, to (ii) Debt Service, calculated
on a trailing twelve (12) month basis, except as expressly provided in Section
6.13(a).

          "DEBT SERVICE RESERVE ACCOUNT" shall mean the special account
designated by that name and established by the Administrative Agent pursuant to
the Deposit Account Agreement.

          "DEBT SERVICE RESERVE REQUIREMENT" shall mean $45,000,000.

          "DEFAULT" shall mean any condition or event which, with giving of
notice or lapse of time or both, would constitute an Event of Default.

          "DEFAULT RATE" shall mean the rate determined pursuant to Section
2.06(c).

          "DEPOSIT ACCOUNT AGREEMENT" shall mean that certain Amended and
Restated Deposit Account Agreement, dated as of the Ceredo Closing Date, between
the Borrower and the Administrative Agent (for the benefit of the Secured
Parties), substantially in the form of EXHIBIT F hereto.

          "DISCRETIONARY CAPITAL EXPENDITURES" shall mean all capital
expenditures which are not Non-Discretionary Capital Expenditures.

          "DISTRIBUTION" shall mean any payment or other distribution of assets,
properties, cash, rights, obligations or securities to any Person constituting
Estimated Income Taxes or otherwise in respect of such Person's equity ownership
interest in the Borrower or on account of any Permitted Equity Owner Loans.

          "DISTRIBUTION ACCOUNT" shall mean the special account designated by
that name and established by the Administrative Agent pursuant to the Deposit
Account Agreement.

          "DISTRIBUTION HOLDBACK ACCOUNT" shall mean the special account
designated by that name and established by the Administrative Agent pursuant to
the Deposit Account Agreement.

          "DLC" shall mean Duquesne Light Company Inc., a Pennsylvania
corporation.

          "DLC CONSENT" shall mean that certain consent and acknowledgment
agreement among DLC, the Administrative Agent and the Borrower in regard to the
DLC Documents in form and substance reasonably acceptable to the Arrangers.

          "DLC DOCUMENTS" shall mean the collective reference to the Acquisition
Agreement, the DLC Interconnection Agreements, the DLC Must-Run Agreements, the
POLR Agreement, the POLR II Agreement and the DLC Easement and Attachment
Agreement.

          "DLC EASEMENT AND ATTACHMENT AGREEMENTS" shall mean the Easement,
License and Attachment Agreements to be entered into between the Borrower and
DLC in substantially the form attached as Exhibit D.1 to the Acquisition
Agreement.

          "DLC INTERCONNECTION AGREEMENTS" shall mean the Connection and Site
Agreements to be entered into between the Borrower and DLC in respect of each of
Brunot Island, Cheswick, Elrama, and Phillips in substantially the form attached
as Exhibit C.1 to the Acquisition Agreement.

          "DLC LETTER OF CREDIT" shall mean one or more irrevocable standby
letters of credit, substantially in the form of EXHIBIT M hereto issued pursuant
to Section 2.16 and satisfying the requirements set forth in the POLR Agreement
and the POLR II Agreement.

          "DLC LETTER OF CREDIT AVAILABILITY PERIOD" shall mean the period from
and including the Closing Date to but excluding the earliest of (a) the date six
Business Days prior to the Final Maturity Date and (b) the termination of the
Revolving Loan Commitments in accordance with the terms hereof.

          "DLC LETTER OF CREDIT DISBURSEMENT" shall mean a payment or
disbursement made by the Issuing Bank pursuant to a DLC Letter of Credit.

          "DLC LETTER OF CREDIT EXPOSURE" shall mean at any time the sum of (a)
the aggregate undrawn amount of a DLC Letter of Credit, plus (b) the aggregate
amount of all DLC Letter of Credit Disbursements not yet reimbursed by the
Borrower as provided in Section 2.16. The DLC Letter of Credit Exposure of any
Revolving Lender at any time shall mean its Pro Rata Share (based on such
Revolving Lender's Revolving Loan Commitment) of the aggregate DLC Letter of
Credit Exposure at such time.

          "DLC LETTER OF CREDIT FEE" shall mean the fee payable to the Issuing
Bank and the Revolving Lenders pursuant to Section 2.16(f).

          "DLC MUST-RUN AGREEMENTS" shall mean the Must-Run Agreements to be
entered into between the Borrower and DLC in respect of each of Cheswick and
Elrama in substantially the form attached as Exhibit E to the Acquisition
Agreement.

          "DOCUMENTATION AGENTS" shall have the meaning ascribed thereto in the
preamble to this Agreement.

          "DUQUESNE CONTROL AREA" shall mean the electric system or systems
owned or operated by DLC, bounded by interconnection metering and telemetry,
capable of controlling generation to maintain its interchange schedule with
other control areas and contributing to frequency regulation of the facilities
that connect DLC's electric system with other systems or control areas or with
non-utility generators.

          "DOLLAR" and the sign "$" shall mean lawful money of the United States
of America.

          "EASEMENT AND ATTACHMENT AGREEMENTS" shall mean the collective
reference to the DLC Easement and Attachment Agreement and the FE Easement and
Attachment Agreements.

          "ECAR" shall mean the Eastern Central Area Reliability Council.

          "EFFECTIVE DATE" shall have the meaning ascribed thereto in Section
9.06(c).

          "ELRAMA" shall mean all generating units and related assets located at
the generating station known as Elrama, as more fully described on SCHEDULE
1.01(A) attached hereto, and all additions, modifications and improvements
thereto.

          "EMERGENCY" shall mean a condition or situation which in the
reasonable judgment of the relevant Borrower Entity either affects or will
affect such Borrower Entity's ability to safely operate any portion of the
Portfolio Assets or the ability of any portion of the Portfolio Assets to
operate due to any sudden or unexpected mechanical breakdown or other unforeseen
event.

          "ENVIRONMENTAL CLAIM" shall mean, with respect to any Person, any
written notice, claim, assertion, administrative, regulatory or judicial action,
suit, judgment, demand or other written communication by any other Person
alleging or asserting such Person's liability for investigatory costs, cleanup
costs, governmental response costs, damages to natural resources or other
property of such Person, personal injuries, fines or penalties arising out of,
based on or resulting from (a) the presence, use, Release or threatened Release
into the environment of any Hazardous Material at any location, whether or not
owned by such Person or (b) any fact, circumstance, condition or occurrence
forming the basis of any violation, or alleged violation, of any Environmental
Law. The term "Environmental Claim" shall include, without limitation, any claim
by any Governmental Authority for enforcement, cleanup, removal, response,
remedial or other actions or damages pursuant to any applicable Environmental
Law, and any claim by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
the presence of Hazardous Materials or arising from alleged injury or threat of
injury to health, safety or the environment.

          "ENVIRONMENTAL INSURANCE POLICY" shall mean the environmental
impairment liability policy as more particularly described in Paragraph A(7) of
SCHEDULE 5.06.

          "ENVIRONMENTAL LAWS" shall mean all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements with any Governmental Authority issued, promulgated or entered into
by any Governmental Authority, relating in any way to the environment,
preservation or reclamation of natural resources, the management, Release or
threatened Release of any Hazardous Material or to health and safety matters.

          "ENVIRONMENTAL LIABILITY" shall mean any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities, and including any Lien filed
against any Portfolio Asset in favor of any Governmental Authority), of any
Borrower Entity directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

          "EQUITY CONTRIBUTION AGREEMENT" shall mean that certain Equity
Contribution Agreement, dated as of the Closing Date, among the Sponsor, the
Borrower and the Administrative Agent (for the benefit of the Secured Parties),
substantially in the form of EXHIBIT L hereto.

          "EQUITY CONTRIBUTION AMOUNT" shall mean $705,000,000.

          "EQUITY PROCEEDS ACCOUNT" shall mean the special account designated by
that name and established by the Administrative Agent pursuant to the Deposit
Account Agreement.

          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.

          "ERISA AFFILIATE" shall mean any trade, business or entity (whether or
not incorporated) that is treated as a member of a group described in Sections
414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA that includes
the Borrower, or members of the same "controlled group" as the Borrower pursuant
to Section 4001(a)(14) of ERISA.

          "ESTIMATED INCOME TAXES" for any period, shall mean the amount
calculated in accordance with the formula set forth on Annex III hereto.

          "EVENT OF DEFAULT" shall have the meaning ascribed thereto in Article
VII hereof.

          "EXTRAORDINARY PROCEEDS" shall mean the collective reference to (i)
Condemnation Proceeds, (ii) proceeds realized from the sale of assets by any
Borrower Entity pursuant to Section 6.11(c), (iii) net proceeds from the
issuance of debt (other than Permitted Equity Owner Loans and other Permitted
Indebtedness) or equity by any Borrower Entity, (iv) any liquidated damage
payments or penalties received by any Borrower Entity pursuant to any Project
Contract, (v) indemnity payments received under the Acquisition Agreement (other
than indemnity payments in respect of third party claims) and (vi) property and
casualty Insurance Proceeds, to the extent such Insurance Proceeds are not
applied to the reconstruction, repair or replacement of the affected Portfolio
Assets pursuant to the Deposit Account Agreement.

          "EXTRAORDINARY PROCEEDS ACCOUNT" shall mean the special account
designated by that name and established by the Administrative Agent pursuant to
the Deposit Account Agreement.

          "FE CONSENT" shall mean that certain consent and acknowledgment
agreement among the FE Subsidiaries, the Administrative Agent and the Borrower
in regard to the FE Documents in form and substance reasonably acceptable to the
Arrangers.

          "FE DOCUMENTS" shall mean the collective reference to the Acquisition
Agreement, the FE Interconnection Agreements, the FE Must-Run Agreements, and
the FE Easement and Attachment Agreements.

          "FE EASEMENT AND ATTACHMENT AGREEMENTS" shall mean the Easement,
License and Attachment Agreements to be entered into between the Borrower and
applicable FE Subsidiary in substantially the form attached as Exhibit D.2 to
the Acquisition Agreement.

          "FE INTERCONNECTION AGREEMENTS" shall mean the Connection and Site
Agreements to be entered into between the Borrower and the applicable FE
Subsidiary in respect of each of Avon Lake, New Castle and Niles in
substantially the form attached as Exhibit C.2 to the Acquisition Agreement.

          "FE MUST-RUN AGREEMENTS" shall mean the Must-Run Agreements entered
into between the Borrower and each FE Subsidiary in respect of each of Avon
Lake, New Castle and Niles in substantially the form attached as Exhibit E to
the Acquisition Agreement.

          "FE SUBSIDIARIES" shall mean the collective reference to The Cleveland
Electric Illuminating Company, an Ohio corporation, Ohio Edison Company, an Ohio
corporation, and Pennsylvania Power Company, a Pennsylvania corporation.

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

          "FEE SIDE LETTERS" shall mean the letter agreement or agreements,
among the Borrower, the Arrangers, the Administrative Agent, the Syndication
Agents and the Documentation Agents, or any of them.

          "FEES" shall mean the Agency Fee, the Commitment Fees, the DLC Letter
of Credit Fees, the Operational Letter of Credit Fees and any other fees payable
by the Borrower to any Secured Party pursuant to any Financing Documents.

          "FINAL MATURITY DATE" shall mean with respect to the Acquisition Loans
and the Revolving Loans, the earlier to occur of (i) October 28, 2002 and (ii)
the date of acceleration of any of the Loans pursuant to the terms of the
Financing Documents.

          "FINANCING DOCUMENTS" shall mean the collective reference to the
Credit Agreement, the Notes, the Letters of Credit, the Security Documents, the
Interest Hedge Contracts and the Fee Side Letters.

          "FINANCING STATEMENT" shall mean any UCC-1 financing statement or
other similar instrument which is filed pursuant to a Security Agreement or any
of the Mortgages to perfect the security interest purported to be created
thereby.

          "FPA" shall mean the Federal Power Act of 1920.

          "FUEL CONSULTANT" shall mean Pace Global Energy Services, LLC, as fuel
consultant to the Arrangers, the Lenders and the Agents, or any successor
thereto appointed by the Administrative Agent on the direction of the Required
Lenders after consultation with the Borrower.

          "FUEL CONSULTANT'S REPORT" shall mean the report of the Fuel
Consultant, dated April 28, 2000.

          "FUEL PLAN" shall mean the plan of the Borrower addressing the sale,
procurement, transportation, delivery and management of fuel to the Portfolio
Assets (excluding Ceredo, until it has achieved Commercial Operation) and the
disposal of ash and gypsum for the period from the Closing Date until the
conclusion of the current calendar year and a similar plan delivered in respect
of each calendar year thereafter in accordance with Section 5.24 below. The
initial Fuel Plan shall be reasonably satisfactory to the Arrangers (in
consultation with the Fuel Consultant) in all respects and subsequent Fuel Plans
shall be reasonably satisfactory to the Administrative Agent (in consultation
with the Fuel Consultant) in all respects.

          "FUEL SUPPLIER" shall mean each party to a Fuel Supply Agreement
having the obligation thereunder to supply fuel to any of the Portfolio Assets.

          "FUEL SUPPLY AGREEMENTS" shall mean the Acquired Fuel Supply Contracts
and other material fuel contracts existing on the Closing Date.

          "FUNDING BREAKAGE COSTS" shall have the meaning ascribed thereto in
Section 2.09(c).

          "GAAP" shall mean generally accepted accounting principles in effect
from time to time in the United States of America.

          "GENERAL PARTNER" shall mean Orion Power MidWest GP, Inc., a Delaware
corporation and 1% general partner of the Borrower.

          "GOLDMAN ENTITIES" shall mean the collective reference to GS Capital
Partners II, L.P., GS Capital Partners III, L.P., Stone Street Fund 1998, L.P.,
Bridge Street Fund 1998, L.P., GS Capital Partners II Offshore, L.P., GS Capital
Partners III Offshore, L.P., Goldman, Sachs & Co. Verwaltungs GmbH (for GS
Capital Partners II Germany C.L.P. and GS Capital Partners III Germany C.L.P.)
and any other investment fund that is an Affiliate of The Goldman Sachs Group,
Inc.

          "GOVERNING DOCUMENTS" of any Person shall mean the charter and
by-laws, memorandum or articles of association, partnership agreement, operating
agreement or other organizational or governing documents of such Person.

          "GOVERNMENTAL APPROVALS" shall mean any action, authorization,
certificate, consent, waiver, approval, license, franchise, lease, ruling,
permit, variance, order, right, tariff, rate, certification, exemption of or
from, and any filing or registration with, any Governmental Authority
(including, without limitation, all environmental permits) relating to the
acquisition, ownership, operation or maintenance of the Portfolio Assets or to
the execution, delivery or performance of any Project Contract by any Person
party thereto.

          "GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
state, county, city or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, government.

          "GP PARTNERSHIP INTEREST PLEDGE AGREEMENT" shall mean that certain
Partnership Interest Pledge Agreement, dated as of the Closing Date, among the
General Partner, the Borrower and the Administrative Agent (for the benefit of
the Secured Parties), relating to the General Partner's interest in the
Borrower, substantially in the form of EXHIBIT I-1 hereto.

          "GUARANTEE OBLIGATION" shall mean the obligation or agreement of any
Person, contingently or otherwise, to purchase or repurchase the Indebtedness
of, or assume, guaranty, endorse or otherwise become or remain liable, directly
or indirectly, for the Indebtedness, obligations, stock or dividends of any
other Person.

          "HARWICK" shall mean MidWest Ash Disposal, Inc., a Delaware
corporation and a wholly-owned subsidiary of Orion Power Operating Services,
Inc. and the Sponsor.

          "HARWICK ASH AGREEMENT" shall mean that certain ash handling and
leachate management contract dated April 28, 2000 by and between the Borrower
and Harwick.

          "HARWICK CONSENT" shall mean that certain consent and acknowledgment
agreement among Harwick, the Administrative Agent and the Borrower relating to
the Harwick Ash Agreement, in form and substance reasonably acceptable to the
Arrangers.

          "HARWICK MINE COMPLEX" shall mean the mines and subsurface rights
consisting of those certain coal mines known as the Monarch, Cornell and Old
Harwick Mines as described in the Cheswick Real Property portion of Schedule 4.9
of the Acquisition Agreement, exclusive of the Monarch Mine Dewatering Facility.

          "HAZARDOUS MATERIALS" shall mean all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.

          "INDEBTEDNESS" of any Person shall mean:

          (i)    all obligations of such Person for borrowed money or for the
     deferred purchase price of property or services (including, without
     limitation, all obligations contingent or otherwise of such Person in
     connection with acceptance, letter of credit or similar facilities and in
     connection with any agreement to purchase, redeem or otherwise acquire for
     value any Capital Stock of such Person, or any rights or options to acquire
     such Capital Stock, now or hereafter outstanding);

          (ii)   all obligations of such Person evidenced by bonds, notes,
     debentures or other similar instruments or securities;

          (iii)  all indebtedness created or arising under any sale and
     leaseback arrangement, conditional sale or other title retention agreement
     with respect to property owned or acquired by such Person (whether or not
     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);

          (iv)   all rental obligations under Capital Leases to the extent not
     included in clause (iii) above;

          (v)    all Guarantee Obligations, all contingent reimbursement
     obligations under undrawn letters of credit and all other contingent
     obligations of such Person in respect of, or obligations to purchase or
     otherwise acquire or to assure payment of, Indebtedness of others;

          (vi)   all "take or pay" obligations of such Person;

          (vii)  Indebtedness of others secured by any Lien upon property owned
     by such Person, whether or not assumed, but only to the extent of such
     property's fair market value; and

          (viii) all obligations of such Person under Interest Hedge Contracts
     to the extent not included in clauses (i) through (vii) above.

          "INDEMNIFIED PERSON" shall have the meaning ascribed thereto in
Section 9.04.

          "INDEPENDENT ENGINEER" shall mean Stone & Webster, as independent
engineer for the Arrangers, the Lenders and the Agents or any successor thereto
appointed by the Administrative Agent at the direction of the Required Lenders
after consultation with the Borrower.

          "INDEPENDENT ENGINEER'S REPORT" shall mean the report of the
Independent Engineer, dated April 28, 2000.

          "INSURANCE CONSULTANT" shall mean Marsh USA, Inc. as insurance
consultant to the Arrangers, the Lenders and the Agents, or any successor
thereto appointed by the Administrative Agent on the direction of the Required
Lenders after consultation with the Borrower.

          "INSURANCE CONSULTANT'S REPORT" shall mean the report of the Insurance
Consultant, dated April 28, 2000.

          "INSURANCE POLICIES" shall mean the policies of insurance with respect
to the ownership, operation or maintenance of the Portfolio Assets meeting the
requirements set forth in SCHEDULE 5.06.

          "INSURANCE PROCEEDS" shall mean all amounts and proceeds (including
interest, if any, thereon) and instruments in respect of the proceeds of any
Insurance Policy (other than in respect of business interruption insurance)
receivable by, or for the account of, any Borrower Entity.

          "INSURANCE PROCEEDS ACCOUNT" shall mean the special account designated
by that name and established by the Administrative Agent pursuant to the Deposit
Account Agreement.

          "INTELLECTUAL PROPERTY" shall have the meaning ascribed thereto in
Section 4.19.

          "INTERCONNECTION AGREEMENTS" shall mean the collective reference to
the DLC Interconnection Agreements and the FE Interconnection Agreements.

          "INTEREST HEDGE CONTRACTS" shall mean interest rate swaps, caps,
options or other interest rate hedging mechanisms entered into by the Borrower
and reasonably approved by the Agents to provide protection against changes in
interest rates.

          "INTEREST PAYMENT DATE" shall mean (i) with respect to any LIBO Rate
Loan, the last day of the Interest Period applicable to such Loan, and, in the
case of an Interest Period of more than three months' duration, each day that
would have been an Interest Payment Date had successive Interest Periods of
three months' duration been applicable to such Loan and, in addition, the date
of any refinancing or Conversion of such LIBO Rate Loan with or to a Loan of a
different Type or with a different Interest Period, (ii) with respect to any
Base Rate Loan, each Quarterly Payment Date and, in addition, the date of any
refinancing or Conversion of such Base Rate Loan with or to a Loan of a
different Type, and (iii) the Final Maturity Date.

          "INTEREST PERIOD" shall mean, for each LIBO Rate Loan the period from
the date on which such LIBO Rate Loan was most recently Converted or, if not
previously Converted, on which such LIBO Rate Loan was made, to (and including)
a date selected by the Borrower in accordance with this definition and Article
II hereof.

          All Loans comprising part of the same Borrowing shall have the same
Interest Period. The duration of each Interest Period for any LIBO Rate Loan
shall be 1, 3, 6 or, if available, 12 months, in each case as the Borrower may
select in the relevant Notice of Borrowing or Notice of Conversion; provided,
that:

          (i)   any Interest Period for any Loan which 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 unless such
     extension would cause the last day of such Interest Period to occur in the
     next following calendar month, in which case the last day of such Interest
     Period shall occur on the next preceding Business Day;

          (ii)  any Interest Period that begins on the last Business Day of a
     calendar month (or on a day for which there is no numerically corresponding
     day in the calendar month at the end of such Interest Period) shall end on
     the last Business Day of a calendar month; and

          (iii) the Borrower may not select any Interest Period which ends after
     the Final Maturity Date.

          "INTERIM OPERATING BUDGET" shall mean, during the period of any
dispute described in Section 5.11(a), an Operating Budget contemplating
expenditures in an amount equal to the lesser of (i) the expenditures
contemplated in the Operating Budget in effect for the immediately preceding
calendar year (as adjusted by the current year's annual increase in the CPI over
such preceding calendar year or as further adjusted for changes in variable
costs attributable to changes in dispatch requirements during such current year)
and (ii) the expenditures contemplated in the Projections (or if delivered more
recently, the projections described in Section 5.10(c) hereof).

          "INTERRUPTIBLE LOAD" shall mean, for any Person, any power supply
obligations of such Person, to the extent that any (i) interruption,
discontinuance or curtailment thereof, or (ii) any other failure to fulfill any
such obligation, will not result in any penalty, breach of contract or other
liability to any other Person.

          "INVESTIGATION PLAN" shall have the meaning set forth in Section
5.21(c)(i).

          "INVESTMENT" shall mean, with respect to any Person, any direct or
indirect advance, loan or other extension of credit or capital contribution by
such Person (by means of transfers of property to others or payments for
property or services for the account or use of others, or otherwise) to any
other Person, or any direct or indirect purchase or other acquisition by such
Person of, or of a beneficial interest in, capital stock, bonds, notes,
debentures or other securities issued by any other Person.

          "INVESTMENT GRADE RATING" shall mean, in respect of any nationally
recognized statistical rating organization (as such term is defined in the Rules
under the Securities Exchange Act of 1934, as amended), one of such
organization's generic categories that signifies investment grade.

          "ISSUING BANK" shall mean Bank of America, N.A., in its capacity as
the issuer of the DLC Letter of Credit and any Operational Letters of Credit,
and its successors in such capacity.

          "KNOWN CONDITIONS LIST" shall mean those Pollution Conditions
identified in the reports and documents set forth on SCHEDULE 1.01(B).

          "LENDER" shall have the meaning ascribed thereto in the preamble to
this Agreement.

          "LETTER OF CREDIT EXPOSURE" shall mean at any time the sum of (a) the
DLC Letter of Credit Exposure, plus (b) the Operational Letter of Credit
Exposure.

          "LETTERS OF CREDIT" shall mean the DLC Letter of Credit and all
Operational Letters of Credit.

          "LIBO LENDING OFFICE" shall mean, with respect to any Lender, the
office of such Lender specified as its "LIBO Lending Office" opposite its name
on ANNEX I hereto, as such annex may be amended from time to time, or such other
office of an Affiliate of such Lender as such Lender may from time to time
specify to the Borrower and the Administrative Agent.

          "LIBO RATE" shall mean, with respect to any LIBO Rate Loan for any
Interest Period, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Dow Jones Market Page 3750 (or any successor
page) as the London interbank offered rate for deposits in dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the term "LIBO Rate" shall mean, for any
LIBO Rate Loan for any Interest Period, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; PROVIDED, THAT, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates.

          "LIBO RATE ADVANCE" shall mean an Advance which bears interest based
upon the LIBO Rate.

          "LIBO RATE LOAN" shall mean a Loan consisting of simultaneous LIBO
Rate Advances from each of the applicable Lenders.

          "LIBO RATE MARGIN" shall mean, during the period, (i) from the Closing
Date to the date twelve (12) months thereafter, 1.3750%, (ii) from and including
the date twelve (12) months after the Closing Date until the date twenty-four
(24) months thereafter, 1.50% and (iii) from and including the date twenty-four
(24) months after the Closing Date until and including the Final Maturity Date,
2.00%.

          "LIEN" shall mean any mortgage, deed of trust, pledge, security
interest, encumbrance, lien, option, restriction, charge or deposit arrangement
or other arrangement having the practical effect of the foregoing or other
preferential arrangement of any other kind and shall include the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement.

          "LIMITED PARTNER" shall mean Orion Power MidWest LP, Inc., a Delaware
corporation and 99% limited partner of the Borrower.

          "LOAN PROCEEDS ACCOUNTS" shall mean the special account designated by
that name and established by the Administrative Agent pursuant to the Deposit
Account Agreement.

          "LOANS" shall mean the Acquisition Loans and the Revolving Loans, or
any of them, as the case may be.

          "LP PARTNERSHIP INTEREST PLEDGE AGREEMENT" shall mean that certain
Partnership Interest Pledge Agreement, dated as of the Closing Date, among the
Limited Partner, the Borrower and the Administrative Agent (for the benefit of
the Secured Parties), relating to the Limited Partner's interest in the
Borrower, substantially in the form of EXHIBIT I-2 hereto.

          "MAINTENANCE CAPITAL EXPENDITURES" shall mean all items identified as
capital expenditures in an Operating Budget (as administered pursuant to Section
5.11 hereof) which are necessary to maintain the Portfolio Assets (excluding
Ceredo, until it has achieved Commercial Operation) in accordance with the O&M
Plan and Prudent Industry Practice.

          "MAINTENANCE EXPENDITURES" shall mean any amounts from time to time
paid by any Borrower Entity (excluding amounts paid by Twelvepole, until Ceredo
has achieved Commercial Operation) in respect of labor, materials and other
direct expenses for any major maintenance procedure for any Portfolio Asset
which requires significant disassembly or shutdown of such Portfolio Asset
pursuant to manufacturers' guidelines or recommendations, engineering or
operating considerations or the requirements of any applicable Requirement of
Law.

          "MAJOR PROJECT PARTY" shall mean the collective reference to DLC, each
FE Subsidiary, CPS, the Operator, Harwick and each other Person from time to
time party to a Project Contract.

          "MARGIN STOCK" shall have the meaning ascribed thereto in Regulation
U.

          "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (i)
the ability of any Credit Party or any Major Project Party to perform their
respective obligations under any Transaction Document to which it is a party;
(ii) the legality, validity or enforceability of any Transaction Document; (iii)
the performance, operations, prospects, business, property, assets, liabilities
or financial condition of the Borrower Entities or of the Portfolio Assets taken
as a whole (provided, however, that when the term "Material Adverse Effect" is
used as contemplated in Section 3.03, the phrase "taken as a whole" shall apply
only to Ceredo and Twelvepole); or (iv) the rights or interests of the Secured
Parties under the Financing Documents, including, without limitation, any
security interest in the Collateral granted pursuant thereto.

          "MATERIAL PLAN" shall mean at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $10,000,000.

          "MAXIMUM ACQUISITION LOAN AMOUNT" shall mean $1,110,000,000.

          "MAXIMUM PERMITTED DISTRIBUTION AMOUNT" shall mean $175,000,000.

          "MAXIMUM REVOLVING LOAN AMOUNT" shall mean $90,000,000.

          "MONARCH MINE DEWATERING FACILITY" shall mean the wastewater
collection, treatment and discharge facilities, including without limitation any
and all improvements, structures, or equipment, used in the collection,
treatment and discharge of wastewater that is located in the Township of
Indiana, County of Allegheny, Pennsylvania on the real property described as the
"Parcel Third" in the Cheswick facility real property description found at
Schedule 4.9 to the Acquisition Agreement.

          "MOODY'S" shall mean Moody's Investors Service, Inc., and its
successors.

          "MORTGAGES" shall mean the collective reference to (i) the Borrower
Mortgages and (ii) from and after delivery thereof, the Twelvepole Mortgage.

          "MOUNTAINEER CONSENT" shall mean a consent and acknowledgment
agreement among Mountaineer Gas Company, the Administrative Agent and
Twelvepole, in regard to the Ceredo Construction and Transportation Agreement,
in form and substance reasonably satisfactory to the Arrangers.

          "MULTIEMPLOYER PLAN" shall mean at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
Borrower Entity, the Operator or any ERISA Affiliate makes, or is making or
accruing an obligation to make contributions or has within the preceding five
plan years made contributions, including for these purposes any Person which
ceased to be an ERISA Affiliate during such five year period.

          "MUST-RUN AGREEMENTS" shall mean the collective reference to the DLC
Must-Run Agreements and the FE Must Run Agreements.

          "NET CASH FLOW" shall mean for any period, the amount, if any, by
which Revenues for such period exceed Operating Costs for such period.

          "NEW CASTLE" shall mean all generating units and related assets
located at the generating station known as New Castle, as more fully described
on SCHEDULE 1.01(A) hereto, and all additions, modifications and improvements
thereto.

          "NILES" shall mean all generating units and related assets located at
the generating station known as Niles, as more fully described on SCHEDULE
1.01(A) hereto, and all additions, modifications and improvements thereto.

          "NON-DISCRETIONARY CAPITAL EXPENDITURES" shall mean, for any given
period, all amounts actually paid by any Borrower Entity (excluding Twelvepole,
until Ceredo has achieved Commercial Operation) in respect of Replacement
Capital Expenditures, Maintenance Capital Expenditures, and other capital
expenditures necessary to maintain the Portfolio Assets in accordance with
Requirements of Law (including Environmental Laws), Prudent Industry Practice or
any material Project Contract.

          "NON-OWNED COVERED LOCATIONS SCHEDULE" shall mean the "Non-Owned
Covered Locations Schedule" attached to and made a part of the Environmental
Insurance Policy.

          "NON-RECOURSE PARTY" shall have the meaning ascribed thereto in
Section 9.16.

          "NOTES" shall mean the collective reference to the Acquisition Loan
Notes and the Revolving Loan Notes.

          "NOTICE DATE" shall have the meaning ascribed thereto in Section
2.09(d).

          "NOTICE OF ACQUISITION BORROWING" shall have the meaning ascribed
thereto in Section 2.03(a).

          "NOTICE OF BORROWING" shall mean a Notice of Acquisition Borrowing or
a Notice of Revolving Borrowing, as the context requires.

          "NOTICE OF CONVERSION" shall have the meaning ascribed thereto in
Section 2.04.

          "NOTICE OF REVOLVING BORROWING" shall have the meaning ascribed
thereto in Section 2.03(b).

          "O&M AGREEMENT" shall mean that certain Operation and Maintenance
Agreement, dated as of April 28, 2000 between the Borrower and the Operator.

          "O&M PLAN" shall mean the plan of the Borrower (delivered to the
Arrangers on or before the Closing Date) addressing the operation and
maintenance of the Portfolio Assets (excluding Ceredo, until it has achieved
Commercial Operation) that is reasonably satisfactory to the Arrangers (in
consultation with the Independent Engineer) in all respects, as the same may be
amended from time to time by the Borrower with the prior written consent of the
Arrangers (in consultation with the Independent Engineer), such consent not to
be unreasonably withheld, delayed or conditioned.

          "OBLIGATIONS" shall mean (i) all principal, interest, fees and other
liabilities payable from time to time by the Credit Parties to the Secured
Parties under the Financing Documents (including, without limitation, those
payable with respect to any Loan, the DLC Letter of Credit and any Operational
Letters of Credit) as well as all other indebtedness, obligations and
liabilities (including, without limitation, guaranties and other contingent
liabilities) of the Credit Parties to the Secured Parties arising under or in
connection with any Financing Document, in each case whether now existing or
hereafter arising, (ii) all obligations under any Interest Hedge Contracts to
which a Swap Bank is a party relating to the Obligations referred to in clause
(i) above, (iii) any and all sums advanced by the Secured Parties pursuant to
the Financing Documents in order to preserve the Collateral or preserve the
Administrative Agent's security interest in the Collateral and (iv) in the event
of any proceeding for the collection or enforcement of any indebtedness,
obligations or liabilities of the Credit Parties referred to above, the expenses
of retaking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by the Secured
Parties of their rights hereunder or under any other Financing Document,
together with attorneys' fees and disbursements and court costs.

          "OPERATING ACCOUNT" shall mean the special account designated by that
name and established by the Administrative Agent pursuant to the Deposit Account
Agreement.

          "OPERATING BUDGET" shall mean a budget of Revenues, Debt Service,
Non-Discretionary Capital Expenditures, Discretionary Capital Expenditures and
Operating Costs for the then current calendar year and the immediately
succeeding calendar year; and, for each full calendar year thereafter, a similar
budget for such calendar year and the immediately succeeding calendar year in
each instance, set forth on a monthly basis in each case, as such budget is
determined and administered pursuant to Section 5.11 hereof. The initial
Operating Budget shall be in form and substance satisfactory to the Arrangers
and the Borrower, and subsequent Operating Budgets shall be in form and
substance satisfactory to the Borrower and the Administrative Agent (after
consultation with the Independent Engineer).

          "OPERATING COSTS" shall mean with respect to the Borrower Entities or
the Portfolio Assets (excluding Twelvepole and Ceredo, until Ceredo has achieved
Commercial Operation), for any period, the difference between (a) the sum
(without duplication) of the following amounts, in each case to the extent
disbursed in cash by, or for the benefit of, any Borrower Entity or the
Portfolio Assets during such period: (i) the sum of all salaries, employee
benefits, labor costs and other compensation expended in the operation of the
Portfolio Assets, PLUS (ii) the cost of raw materials, emissions control related
costs (including costs of required materials, supplies and chemicals relating to
operations of emission control equipment and costs of emission offsets), fuel,
fuel related taxes, fuel procurement and handling costs, ash handling costs,
permitting and licensing costs and the cost of other materials, supplies and
utilities, including the transportation costs for raw materials, fuel and such
other materials, supplies and utilities, consumed in the operation of the
Portfolio Assets, PLUS (iii) insurance premiums incurred in maintaining the
insurance coverages required by this Agreement and the other Project Contracts,
PLUS (iv) all other cash expenditures for administrative expense, operating
costs, power marketing costs (but only to the extent of the Monthly Fee payable
under (and as defined in) the Agency Agreement as in effect on the date hereof),
and energy hedging costs, ancillary service and transmission procurement costs
and expenses, professional expenses, Maintenance Expenditures and property
taxes, incurred in the operation of the Portfolio Assets, PLUS (v) all costs and
expenses paid by any Borrower Entity pursuant to any O&M Agreement, PLUS (vi)
all Non-Discretionary Capital Expenditures, PLUS (vii) all amounts paid by any
Borrower Entity in respect of any Emergency during such period and PLUS (viii)
amounts deposited into the Replacement Capital Expenditure Pre-Funding Account
and (b) amounts released from the Replacement Capital Expenditure Pre-Funding
Account during such period and used to satisfy Replacement Capital Expenditures
contemplated by the approved Operating Budget.

          "OPERATIONAL LETTER OF CREDIT" shall mean any letter of credit issued
by the Issuing Bank for the account of the Borrower in accordance with the terms
of Section 2.17.

          "OPERATIONAL LETTER OF CREDIT AVAILABILITY PERIOD" shall mean the
period from and including the Closing Date to but excluding the earliest of (a)
the date five Business Days prior to the Final Maturity Date and (b) the
termination of the Revolving Loan Commitments in accordance with the terms
hereof.

          "OPERATIONAL LETTER OF CREDIT EXPOSURE" shall mean at any time the sum
of (a) the aggregate undrawn amount of all outstanding Operational Letters of
Credit, plus (b) the aggregate amount of all Operational Letter of Credit
Disbursements not yet reimbursed by the Borrower as provided in Section 2.17.
The Operational Letter of Credit Exposure of any Revolving Lender at any time
shall mean its Pro Rata Share (based on such Revolving Lender's Revolving Loan
Commitment) of the aggregate Operational Letter of Credit Exposure at such time.

          "OPERATIONAL LETTER OF CREDIT FEE" shall mean the fee payable to the
Issuing Bank and the Revolving Lenders pursuant to Section 2.17(f).

          "OPERATIONAL PLANS" shall mean the collective reference to the Fuel
Plan, the O&M Plan and the Power Marketing Plan, each as in effect from time to
time.

          "OPERATOR CONSENT" shall mean that certain consent and acknowledgment
agreement, among Operator, the Administrative Agent and the Borrower relating to
the O&M Agreement, in form and substance reasonably acceptable to the Arrangers.

          "OPERATOR" shall mean Orion Power Operating Services MidWest, Inc., a
Maryland corporation.

          "PARTNERS" shall mean the collective reference to the General Partner
and the Limited Partner.

          "PARTNERSHIP INTEREST PLEDGE AGREEMENTS" shall mean the collective
reference to the GP Partnership Interest Pledge Agreement and the LP Partnership
Interest Pledge Agreement.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.

          "PERMITTED DISTRIBUTION" shall have the meaning ascribed thereto in
the Deposit Account Agreement.

          "PERMITTED EQUITY OWNER LOANS" shall mean any loan from the Sponsor or
any Subsidiary of the Sponsor that owns, directly or indirectly, 100% of the
partnership interests of the Borrower to the Borrower which (a) is unsecured,
(b) does not require payments of principal or interest to be made thereunder or
permit any exercise of lender remedies (including, without limitation,
acceleration of the applicable indebtedness) until after all of the Obligations
have been indefeasibly paid in full in cash, all Letters of Credit have been
cancelled or have expired and all amounts thereunder have been indefeasibly
reimbursed in full in cash and all Commitments have terminated; PROVIDED, THAT,
the Borrower may make payments of principal or interest out of amounts permitted
to be paid as equity distributions pursuant to Section 6.10 hereof and the
Deposit Account Agreement, (c) is subordinated in all respects to the
Obligations of the Borrower on, and payments in respect of principal thereof and
interest thereon are made in accordance with, the terms set forth on EXHIBIT N
hereto, and (d) is created and evidenced by documents and instruments that
contain clear legends indicating such documents and instruments are subordinated
to the Obligations pursuant to the terms of the agreement described in clause
(c) preceding.

          "PERMITTED INDEBTEDNESS" shall mean (i) Indebtedness of any Borrower
Entity under the Financing Documents; (ii) from and after the Ceredo Effective
Date, Indebtedness of Twelvepole to the Borrower as evidenced by the Twelvepole
Intercompany Working Capital Note, (iii) Indebtedness in respect of operating
leases (and not Capital Leases) where payments to be made thereunder are
pursuant to an approved Operating Budget as administered pursuant to Section
5.11 hereof and the aggregate rental obligation (excluding indemnity and expense
reimbursement payments) of the Borrower Entities under all such operating leases
shall not exceed $5,000,000 at any time; (iv) Indebtedness in respect of trade
amounts payable which are incurred in the ordinary course of business and
payable within 60 days of the date incurred, but only to the extent such amounts
are incurred in connection with the operation or maintenance of the Portfolio
Assets or such Borrower Entity's interest therein and only to the extent
contemplated by the Operating Budget as administered pursuant to Section 5.11
hereof; (v) Indebtedness in respect of surety bonds incurred in connection with
the ordinary course of operation of the Portfolio Assets that does not exceed
$10,000,000 in the aggregate at any one time outstanding; (vi) Permitted Equity
Owner Loans; and (vii) "take or pay" obligations contemplated by the Fuel Plan
then in effect.

          "PERMITTED INVESTMENTS" shall mean any of the following instruments or
transactions:

          (i) direct obligations of the United States of America or obligations
     fully guaranteed as to principal and interest by the United States of
     America, maturing not later than 30 days from the date of acquisition
     thereof;

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

          (iii) commercial paper rated (on the date of acquisition thereof) A-1
     or better by S&P and P-1 or better by Moody's, maturing not more than 30
     days from the date of acquisition thereof;

          (iv) repurchase obligations with a term of not more than thirty days
     for underlying securities of the types described in clauses (i) and (ii)
     above, entered into with any financial institution meeting the
     qualifications specified in clause (iii) above; and

          (v) investments in money market funds or money market mutual funds
     sponsored by any securities broker dealer of recognized national standing
     (or an affiliate thereof), having an investment policy that requires
     substantially all the invested assets of such fund to be invested in
     investments described in any one or more of the foregoing clauses having a
     rating of "A" or better by S&P or "A2" or better by Moody's (including
     money market funds for which the Administrative Agent in its individual
     capacity or any of its affiliates is investment manager or adviser).

          "PERMITTED LIENS" shall mean the collective reference to (i) Liens for
taxes, assessments and other governmental charges not yet due or payable, or the
validity of which are being contested in good faith by appropriate proceedings
and as to which Acceptable Reserves have been established, (ii) deposits or
pledges to secure the payment of workmen's compensation, unemployment insurance
or other social security benefits or obligations, public or statutory
obligations or other minor obligations of a like general nature incurred in the
ordinary course of business, (iii) easements, licenses, restrictions on the use
of real property and other matters affecting, or other irregularities in, title
thereto which are expressly listed or described in either the owner's or the
lender's policies of title insurance delivered on the Closing Date or the Ceredo
Effective Date, as applicable, as contemplated by Article III of this Agreement,
(iv) mechanic's, warehouseman's, carrier's, materialmen's, or other like liens
arising in the ordinary course of business securing obligations which (a) are
not yet due or (b) are being contested in good faith by appropriate proceedings
and as to which Acceptable Reserves have been established as security therefor,
(v) rights and interests of the parties as provided in the Financing Documents,
including, without limitation, Liens securing the Obligations under the Security
Documents, (vi) Liens arising out of judgments or awards, but only so long as an
appeal or proceeding for review is being prosecuted in good faith and Acceptable
Reserves have been established, (vii) deposits or pledges to secure statutory
obligations or performance of bids, tenders or contracts (other than for the
repayment of borrowed money) in the ordinary course of its business, (viii)
rights to set off or hold back amounts pursuant to the POLR Agreement or the
POLR II Agreement and (ix) purchase option rights, transfer restrictions and
similar encumbrances set forth in the Ceredo Purchase and Sale Agreement.

          "PERSON" shall mean an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority, limited liability company or other entity of whatever
nature.

          "PHILLIPS" shall mean all generating units and related assets located
at the generating station known as Phillips, as more fully described on SCHEDULE
1.01(A) hereto, and all additions, modifications and improvements thereto.
Notwithstanding anything herein to the contrary, the parties hereto acknowledge
and agree that, as of the Closing Date, the Phillips generating station is in
cold storage and may remain in cold storage until the Borrower elects to place
such station into operation.

          "PLAN" shall mean at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Code and either (i) is
sponsored, maintained, or contributed to, by any Borrower Entity, the Operator
or any ERISA Affiliate or (ii) has at any time within the preceding five years
been sponsored, maintained, or contributed to, by any Borrower Entity, the
Operator or any Person which was at such time an ERISA Affiliate.

          "POLLUTION CONDITIONS" shall have the meaning as set forth in the
Environmental Insurance Policy.

          "POLR AGREEMENT" shall mean the POLR Agreement, dated as of September
24, 1999, by and between DLC and the Sponsor (as assigned to the Borrower).

          "POLR II AGREEMENT" shall mean the POLR II Agreement, dated as of
April 16, 2000, by and between DLC and the Borrower.

          "PORTFOLIO ASSETS" shall mean the collective reference to (i) the Avon
Lake, Brunot Island, Cheswick, Elrama, New Castle, Niles and Phillips facilities
and (ii) from and after the Ceredo Effective Date, Ceredo.

          "POWER MARKET CONSULTANT" shall mean Pace Global Energy Services, LLC,
as power market consultant to the Arrangers, the Lenders and the Agents, or any
successor thereto appointed by the Administrative Agent on the direction of the
Required Lenders.

          "POWER MARKET CONSULTANT'S REPORT" shall mean the report of the Power
Market Consultant, dated April 28, 2000.

          "POWER MARKETING PLAN" shall mean the plan of the Borrower addressing,
among other things, the marketing and sale of power, electric capacity and/or
energy produced by the Portfolio Assets (except Ceredo, until it has achieved
Commercial Operation) and the purchase of power, electric capacity and/or energy
necessary or advisable for the performance by any Borrower Entity of its
obligations under any Project Contract, as well as an energy hedging strategy,
for the period from the Closing Date until the conclusion of the current
calendar year and a similar plan delivered in respect of each calendar year
thereafter in accordance with Section 5.24 below. The initial Power Marketing
Plan shall be reasonably satisfactory to the Arrangers (in consultation with the
Independent Engineer and the Power Market Consultant) in all respects and
subsequent Power Marketing Plans shall be reasonably satisfactory to the
Administrative Agent (in consultation with the Independent Engineer and the
Power Market Consultant) in all respects.

          "PREPAYMENT ACCOUNT" shall mean the special account designated by that
name and established by the Administrative Agent pursuant to the Deposit Account
Agreement.

          "PROHIBITED TRANSACTION" shall mean any transaction described in
Section 406 of ERISA which is not exempt by reason of Section 408 of ERISA or
the transitional rules set forth in Section 414(c) of ERISA and any transaction
described in Section 4975(c)(1) of the Code which is not exempt by reason of
Section 4975(c)(2) or Section 4975(d) of the Code, or the transitional rules of
Section 2003(c) of ERISA.

          "PROJECT CONTRACTS" shall mean the collective reference to (i) the
Acquisition Agreement, the POLR Agreement, the POLR II Agreement (unless and
until terminated in accordance with its terms), the Must-Run Agreements, the
Easement and Attachment Agreements, the Interconnection Agreements, the O&M
Agreement, the Harwick Ash Agreement, the Agency Agreement and the Governing
Documents of the Credit Parties, (ii) from and after the Ceredo Effective Date,
the Ceredo Project Contracts, and (iii) all other material interconnection
agreements, material power marketing agreements, all material transmission
services agreements, all material easements and material rights-of-way, and all
material utility supply agreements and all Additional Contracts.

          "PROJECT PARTY" shall mean the collective reference to the Major
Project Parties and each other Person which from time to time becomes a party to
a Project Contract.

          "PROJECTIONS" shall mean the pro forma financial projections for the
first twenty years of operations of the Portfolio Assets in form and substance
acceptable to the Arrangers, as updated pursuant to Section 5.10(c).

          "PRO RATA SHARE" shall mean (i) as to any Acquisition Lender, the
percentage set forth opposite such Lender's name on ANNEX I attached hereto
(which percentages for all such Lenders shall equal 100%), as such annex may be
amended from time to time, under the heading entitled "Pro Rata
Share--Acquisition Loan," and (ii) as to any Revolving Lender, the percentage
set forth opposite such Lender's name on ANNEX I attached hereto (which
percentages for all such Lenders shall equal 100%), as such annex may be amended
from time to time, under the heading entitled "Pro Rata Share--Revolving Loan."

          "PRUDENT INDUSTRY PRACTICE" shall mean (i) with respect to a
particular time, those practices, methods, techniques, standards and acts
engaged in or approved by a significant portion of the competitive,
non-regulated fossil fuel fired electric generating industry at such time in the
reliability region in which the applicable Portfolio Assets are located, or (ii)
with respect to any matter to which clause (i) does not apply, any of the
practices, methods and acts which, in the exercise of reasonable judgment at the
time the decision was made, could have been expected to accomplish the desired
result consistent with good business practices, reliability, safety and
expedition. "Prudent 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
a spectrum of possible practices, methods or acts having due regard for, among
other things, manufacturers' warranties and the requirements of any Governmental
Authority of competent jurisdiction.

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

          "QUARTERLY PAYMENT DATE" shall mean each March 31, June 30, September
30 and December 31 occurring after the Closing Date and up to, and including,
the Final Maturity Date.

          "REGISTER" shall have the meaning ascribed thereto in Section 9.06(e).

          "REGULATION U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
thereto.

          "RELEASE" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including the movement of Hazardous Materials
through ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata.

          "REMEDIAL ACTION PLAN" shall have the meaning as set forth in Section
5.21(c)(i)

          "REMEDY NOTICE" shall have the meaning ascribed thereto in Article
VII.

          "REPLACEMENT CAPITAL EXPENDITURE PRE-FUNDING ACCOUNT" shall mean the
special account designated by that name and established by the Administrative
Agent pursuant to the Deposit Account Agreement.

          "REPLACEMENT CAPITAL EXPENDITURES" shall mean all annual budgeted
items related to the replacement of equipment at Avon Lake and Brunot Island all
as agreed on the Closing Date by the Borrower and the Arrangers, after
consultation with the Independent Engineer, and set forth in a schedule to the
approved Operating Budget delivered on the Closing Date, as such Operating
Budget is administered pursuant to Section 5.11 hereof.

          "REPLACEMENT LENDER" shall have the meaning ascribed thereto in
Section 2.15.

          "REQUIRED LENDERS" shall mean, at any time, Secured Parties holding
51% of the Combined Exposure at such time. For purposes of the foregoing,
"Combined Exposure" shall mean the sum of (a) the aggregate amount of
Acquisition Loans outstanding at such time, (b) the aggregate Revolving Loan
Commitments outstanding at such time, and (c) an amount equal to 10% of the
aggregate notional amount under all Interest Hedge Contracts (other than caps or
options) in effect as of the date of determination.

          "REQUIREMENT OF LAW" shall mean any foreign, federal, state, local or
municipal laws, rules, orders, judgments, regulations, statutes, ordinances,
codes, or published decrees of any Governmental Authority (including any
determination of an arbitration or a court or other Governmental Authority) and
including, without limitation, all Environmental Laws.

          "RESPONSIBLE OFFICER" shall mean (i) with respect to the Sponsor, its
chief executive officer, chief operating officer, chief financial officer, chief
legal officer, treasurer, and vice president-asset management; (ii) with respect
to any Subsidiary of the Sponsor, the president, treasurer, secretary or any
vice president of operations thereof; (iii) with respect to any other Person
(other than a partnership or limited liability company), the chief executive
officer, the president and any senior vice president of such Person or, with
respect to financial matters, the chief financial officer or treasurer of such
Person and (iv) with respect to any partnership or limited liability company,
the chief executive officer, the president, the treasurer and any vice president
of operations of a general partner or manager in such Person or, with respect to
financial matters, the chief financial officer or treasurer of the general
partner or manager of such partnership or limited liability company.

          "REVENUE ACCOUNT" shall mean the special account designated by that
name and established by the Administrative Agent pursuant to the Deposit Account
Agreement.

          "REVENUES" shall mean for any period, all cash income and receipts
derived from the ownership and ordinary course of operation of the Portfolio
Assets, including, without limitation, revenues from the sale of electricity and
other products and services (including capacity, ancillary services and thermal
energy), proceeds of business interruption insurance, revenues in respect of
forward sales and similar options to the extent received in cash by any Borrower
Entity, interest and other income earned on amounts on deposit in the Accounts
and Permitted Investments, but excluding any amounts offset or held back under
the POLR Agreement or the POLR II Agreement.

          "REVOLVING ADVANCE" shall mean an advance by a Revolving Lender to the
Borrower as part of a Revolving Loan pursuant to Section 2.02(a).

          "REVOLVING LENDER" shall mean each Lender that, from time to time, has
Revolving Loan Commitments outstanding or holds Revolving Loans.

          "REVOLVING LOAN" shall mean a Loan consisting of simultaneous
Revolving Advances of the same Type from each of the Revolving Lenders pursuant
to Section 2.02(a).

          "REVOLVING LOAN AVAILABILITY PERIOD" shall mean the period from and
including the Closing Date to but excluding the Final Maturity Date.

          "REVOLVING LOAN COMMITMENT" shall mean, as to any Lender, the amount
set forth opposite such Lender's name on ANNEX I hereto under the heading
"Revolving Loan Commitments" as such annex may be amended from time to time and
as such amount may be reduced from time to time pursuant to the terms of this
Agreement or increased or reduced from time to time by assignment pursuant to
Section 9.06.

          "REVOLVING LOAN FUNDING DATE" shall mean any Business Day on or after
the Closing Date and prior to the Final Maturity Date, on which the conditions
precedent contained in Section 3.02 shall have been satisfied and the Lenders
shall make Revolving Advances in accordance with the terms hereof.

          "REVOLVING LOAN NOTES" shall have the meaning ascribed thereto in
Section 2.02(b)(i).

          "S&P" shall mean Standard and Poor's Rating Services, and its
successors.

          "SCHEDULED POLLUTION CONDITIONS" shall mean those specified known
contamination conditions set forth on the endorsement to the Environmental
Insurance Policy entitled "Specified Pollution Conditions Subject to a
Self-Insured Retention Endorsement."

          "SECURED PARTIES" shall mean the Agents, the Arrangers, the Lenders,
the Swap Banks and the Issuing Bank.

          "SECURITY ACCOUNT CONTROL AGREEMENT" shall mean that certain Amended
and Restated Security Account Control Agreement, dated as of the Ceredo Closing
Date, among the Borrower, the Administrative Agent and Bank of America, N.A., as
securities intermediary thereunder, substantially in the form of EXHIBIT G
hereto.

          "SECURITY AGREEMENTS" shall mean the collective reference to (i) the
Borrower Security Agreement and (ii) from and after delivery thereof, the
Twelvepole Security Agreement.

          "SECURITY DOCUMENTS" shall mean the collective reference to (i) the
Borrower Security Agreement, the Equity Contribution Agreement, the Security
Account Control Agreement, the Deposit Account Agreement, the Borrower Consents,
the Partnership Interest Pledge Agreements, the Financing Statements, the
Borrower Mortgages, the Stock Pledge Agreement and all other filings made
pursuant thereto, (ii) from and after the Ceredo Effective Date, the Borrower
Twelvepole LLC Interest Pledge Agreement, the Twelvepole Guarantee, the
Twelvepole Intercompany Agreement, the Twelvepole Intercompany Working Capital
Note and the Financing Statements and other filings made pursuant thereto, and
(iii) as and when required pursuant to Section 5.28, the other Ceredo Security
Documents delivered pursuant thereto.

          "SETTLEMENT AMOUNT" shall mean the amount payable by the Borrower
pursuant to the terms of an Interest Hedge Contract, in connection with an early
termination, in whole or in part, thereunder.

          "SPONSOR" shall mean Orion Power Holdings, Inc., a Delaware
corporation.

          "SPONSOR HIGH YIELD DEBT" shall mean the 12% Senior Notes due 2010
issued by the Sponsor pursuant to an indenture dated April 27, 2000, for up to
an aggregate principal amount not to exceed $425,000,000, and on terms
satisfactory to the Arrangers.

          "SPONSOR REVOLVER" shall mean the indebtedness of the Sponsor arising
pursuant to a Credit Agreement substantially in the form of the draft dated
April 27, 2000 (or as may otherwise be reasonably approved by the Arrangers) and
to be entered into among Sponsor and Fleet National Bank, Union Bank of
California, N.A., FleetBoston Robertson Stephens, Inc. and the other lenders
specified therein.

          "SPOT POWER SALES AGREEMENTS" shall mean the collective reference to
the contracts or agreements for the sale of ancillary services, electric
capacity and/or energy requiring delivery thereof by the Borrower Entities on an
hour-forward or day-forward basis, and:

               (i) during June, July and August, any such contract or agreement
          in respect of up to 300 MW on an up to seven-day firm-forward basis;
          and

               (ii) during all months other than June, July and August, any such
          contract or agreement in respect of (A) up to 200 MW on an up to and
          including 180 day firm-forward basis, and (B) up to 400 MW on an up to
          and including 30 day firm-forward basis; PROVIDED, THAT, in no event
          shall more than 400 MW be deliverable on more than a one-day
          firm-forward basis.

          "STOCK PLEDGE AGREEMENT" shall mean that certain Stock Pledge
Agreement, dated as of the Closing Date, among Sponsor, the General Partner, the
Limited Partner and the Administrative Agent (for the benefit of the Secured
Parties), substantially in the form of EXHIBIT O hereto.

          "SUBSIDIARY" shall mean with respect to any Person, any corporation or
other legal entity of which a majority of the Capital Stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.

          "SWAP BANKS" shall mean any Lender from time to time party to an
Interest Hedge Contract.

          "SWAP TRIGGER EVENT" shall mean that the ten year treasury rate shall
be greater than 7% for any period of three (3) consecutive days.

          "SYNDICATION AGENTS" shall have the meaning ascribed thereto in the
preamble of this Agreement.

          "TAXES" shall have the meaning ascribed thereto in Section 2.12(a).

          "TOTAL CAPACITY" for any period, shall mean an amount of electric
capacity, calculated in megawatts, equal to (i) the total capacity of the
Portfolio Assets (other than Phillips or Ceredo, unless and to the extent
Phillips or Ceredo, respectively, is operational), PLUS all capacity purchases
and options to call on capacity from Acceptable Capacity Providers for physical
delivery to any Borrower Entity during such period pursuant to any Approved
Power Purchase Agreement; MINUS (ii) the sum of (x) the greater of (a) capacity
lost as a result of unplanned outages, (b) 600 MW or (c) the capacity of the
largest individual unit, or group of related units, to the extent not operable
on a stand alone basis, PLUS (y) all megawatts subject to planned outages during
such period.

          "TOTAL LOAD FORECAST" for any period, shall mean an amount of electric
capacity, calculated in megawatts, equal to (i) the sum of the capacity required
to be delivered by DLC as the POLR provider in Duquesne Control Area during such
period, PLUS all capacity sales and options to sell capacity to Approved
Capacity Purchasers for the delivery by the Borrower of such capacity during
such period pursuant to any Approved Power Sales Agreement or otherwise in
accordance with the then current Power Marketing Plan (other than pursuant to
Spot Power Sales Agreements), MINUS (ii) the sum of (A) all Interruptible Load
of the Borrower and (B) all capacity described in clause (i) of this definition
to be provided by Electric Generation Suppliers for such period and for which
the Borrower has no obligation to supply under the POLR Agreement or the POLR II
Agreement, as the case may be.

          "TOTAL VOTING POWER" with respect to any Person on any date shall mean
the total number of votes which may be cast in the election of directors of such
Person at any meeting of stockholders of such Person if all securities entitled
to vote in the election of directors of such Person (on fully diluted basis,
assuming the exercise, conversion or exchange of all rights, warrants, options
and securities outstanding on such date which are or may thereafter become
exercisable for, exchangeable for or convertible into, such voting securities)
were present and voted at such meeting (other than votes that may be cast only
upon the happening of a contingency).

          "TRANSACTION DOCUMENTS" shall mean the collective reference to the
Financing Documents, the Project Contracts, the Acquisition Documents, the
Twelvepole Acquisition Agreement and the Operational Plans.

          "TRANSFER" shall mean any sale, transfer, assignment, hypothecation,
pledge or other disposition, and, when used as a verb shall have a correlative
meaning.

          "TWELVEPOLE" shall mean Twelvepole Creek, LLC, a Delaware limited
liability company and a single-purpose entity created for the purpose of
constructing, owning and operating Ceredo.

          "TWELVEPOLE ACQUISITION AGREEMENT" shall mean that certain Stock
Purchase Agreement, dated September 29, 2000, by and between the Sponsor and
Columbia Energy Group.

          "TWELVEPOLE CONSTRUCTION ACCOUNT" shall mean the special account
designated by that name and established by the Administrative Agent pursuant to
the Deposit Account Agreement.

          "TWELVEPOLE GUARANTEE" shall mean a Subsidiary Guarantee Agreement,
dated as of the Ceredo Effective Date, from Twelvepole in favor of the
Administrative Agent (for the benefit of the Secured Parties), in the form of
Exhibit P hereto.

          "TWELVEPOLE INTERCOMPANY AGREEMENT" shall mean an Intercompany Working
Capital Agreement, dated as of the Ceredo Effective Date, substantially in the
form of Exhibit Q hereto.

          "TWELVEPOLE INTERCOMPANY WORKING CAPITAL NOTE" shall mean an
Intercompany Working Capital Note of Twelvepole, payable to the order of the
Borrower, dated as of the Ceredo Effective Date, substantially in the form of
Exhibit R hereto.

          "TWELVEPOLE MORTGAGE" shall mean a Mortgage, Security Agreement,
Fixture Filing and Assignment of Leases and Rents executed and delivered by
Twelvepole in favor of the Administrative Agent (for the benefit of the Secured
Parties) in respect of real property located in Wayne County, West Virginia
which is owned or leased by Twelvepole (including, subject to the provisions of
Section 6.11 hereof, all present and future real property interests of
Twelvepole in Ceredo), in form and substance reasonably satisfactory to the
Arrangers.

          "TWELVEPOLE OPERATING AGREEMENT" shall mean the Operating Agreement of
Twelvepole entered into by Columbia Electric Limited Holdings Corporation and
Columbia Electric Ceredo Corporation dated November 5, 1999, as amended and/or
restated in accordance with Section 3.03(e).

          "TWELVEPOLE SECURITY AGREEMENT" shall mean an Assignment and Security
Agreement, between Twelvepole and the Administrative Agent (for the benefit of
the Secured Parties), substantially in the form of Exhibit S hereto.

          "TWELVEPOLE SUPPLEMENTAL AGREEMENT" shall mean an agreement between
Twelvepole and the Administrative Agent (for the benefit of the Secured
Parties), substantially in the form of Exhibit T hereto.

          "TYPE" of any Loan shall mean, as the context requires, a Base Rate
Loan or a LIBO Rate Loan.

          "UNFUNDED LIABILITIES" shall mean, with respect to any Plan at any
time, the amount (if any), by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of the Borrower or an ERISA
Affiliate to the PBGC or any other Person under Title IV of ERISA.

          "WAYNE COUNTY COMMISSION CONSENT" shall mean a consent and
acknowledgement agreement and estoppel letter among The County Commission of
Wayne County, West Virginia, the Administrative Agent and Twelvepole, relating
to the Ceredo Lease Agreement and the Twelvepole Mortgage, in form and substance
reasonably acceptable to the Arrangers.

          Section 1.02 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.

          Section 1.03 COMPUTATION OF TIME PERIODS. Except as otherwise provided
herein, in this Agreement, in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and words "to" and "until" each means "to but excluding".

          Section 1.04 RULES OF CONSTRUCTION. When used in this Agreement: (a)
"or" is not exclusive; (b) a reference to a Requirement of Law includes any
amendment or modification to such Requirement of Law; (c) a reference to a
Person includes its permitted successors and permitted assigns; and (d) a
reference to an agreement, instrument or document shall include such agreement,
instrument or document and all exhibits and schedules thereto as the same may be
amended, modified or supplemented from time to time in accordance with its terms
and as permitted by the Financing Documents.

                                   ARTICLE II
                                CREDIT FACILITIES

          Section 2.01 ACQUISITION LOANS.

          (a) ACQUISITION LOAN COMMITMENTS

               (i) Subject to the terms and conditions of this Agreement and
          relying on the representations and warranties set forth herein, each
          Acquisition Lender severally agrees to make an Acquisition Loan
          Advance to the Borrower on the Closing Date in an amount equal to its
          Pro Rata Share of the Acquisition Loan requested to be made on such
          date, but in no event shall any Acquisition Loan Advance made by any
          Acquisition Lender on any date exceed such Acquisition Lender's
          Acquisition Loan Commitment as of such date. The aggregate amount of
          all Acquisition Loan Advances made by the Acquisition Lenders
          hereunder shall not in any event exceed the Maximum Acquisition Loan
          Amount. Each Acquisition Lender's Acquisition Loan Commitment shall
          terminate at 5:00 p.m. (New York time) on the Closing Date. Once
          prepaid or repaid, an Acquisition Loan cannot be reborrowed.

               (ii) The failure of any Acquisition Lender to make the
          Acquisition Loan Advance to be made by it as part of the Acquisition
          Loan shall not relieve, in and of itself, any other Acquisition Lender
          of its obligation hereunder to make its Acquisition Loan Advance on
          the date of the Acquisition Loan, but no Acquisition Lender shall be
          responsible for the failure of any other Acquisition Lender to make
          the Acquisition Loan Advance to be made by such other Acquisition
          Lender on the date of the Acquisition Loan.

          (b) ACQUISITION LOAN NOTES.

               (i) All Acquisition Loan Advances made by each Acquisition Lender
          shall be evidenced by the Acquisition Loan Note of the Borrower in the
          form of EXHIBIT A hereto (each an "ACQUISITION LOAN NOTE" and,
          collectively, the "ACQUISITION LOAN NOTES"), dated the Closing Date,
          payable to the order of such Lender for the account of its Applicable
          Lending Office in an aggregate principal amount equal to its Pro Rata
          Share of the Maximum Acquisition Loan Amount and otherwise duly
          completed. Each Acquisition Loan Note shall (A) represent the
          Borrower's obligation to pay the aggregate unpaid principal amount of
          all outstanding Acquisition Loan Advances made by such Acquisition
          Lender, (B) be stated to mature on the Final Maturity Date, (C) bear
          interest for the period from the date thereof until paid in full on
          the unpaid principal amount thereof from time to time outstanding at
          the applicable interest rate per annum provided in, and payable as
          specified in, this Agreement, and (D) be entitled to the benefits of
          this Agreement and the Security Documents.

               (ii) Each Acquisition Lender is hereby authorized to record the
          date and the amount of each Acquisition Loan Advance made by it and
          the Type thereof and the date and amount of each payment and
          prepayment of principal made with respect thereto, and all Conversions
          of such Advances pursuant to Section 2.04, and prior to any Transfer
          of its Acquisition Loan Note, may annotate on the schedule forming a
          part thereof appropriate notations to evidence the foregoing
          information with respect to each such Acquisition Loan Advance then
          outstanding; PROVIDED, that, failure by such Acquisition Lender to
          make any such annotation or any error therein shall not affect the
          obligations of the Borrower hereunder or under such Acquisition Loan
          Note in respect of such Acquisition Loan Advances evidenced thereby.
          Each Acquisition Lender is hereby irrevocably authorized by the
          Borrower to endorse its Acquisition Loan Note and to attach to and
          make a part of its Acquisition Loan Note a continuation of such
          schedule as and when required.

          (c) TYPE OF ACQUISITION LOAN ADVANCES. All or any portion of
Acquisition Loan Advances shall be either Base Rate Advances or LIBO Rate
Advances and may be Converted or continued from time to time pursuant to Section
2.04.

          (d) USE OF PROCEEDS OF ACQUISITION LOANS. The Borrower shall use the
proceeds of the Acquisition Loans solely to pay Acquisition Costs as
contemplated by this Agreement.

          (e) REPAYMENT OF ACQUISITION LOANS. On each Quarterly Payment Date,
the Borrower shall repay the Acquisition Loans in accordance with the terms of
the Deposit Account Agreement. On the Final Maturity Date, the Borrower shall
repay the aggregate principal amount of all Acquisition Loans outstanding on
such date.

          Section 2.02 REVOLVING LOANS.

          (a) REVOLVING LOAN COMMITMENTS

               (i) Subject to the terms and conditions of this Agreement and
          relying on the representations and warranties set forth herein, each
          Revolving Lender severally agrees to make Revolving Advances to the
          Borrower, during the Revolving Loan Availability Period on any
          Revolving Loan Funding Date, in an amount equal to its Pro Rata Share
          of the Revolving Loan requested to be made on such date, but in no
          event shall the sum of (x) any Revolving Advance made by any Revolving
          Lender as of any date, plus (y) the aggregate principal amount of
          Revolving Advances previously made by such Revolving Lender that
          remain outstanding and unpaid as of such date, plus (z) such Revolving
          Lender's Letter of Credit Exposure on such date, exceed such Revolving
          Lender's Revolving Loan Commitment. As of any date, the aggregate
          amount of all Revolving Advances made by all Revolving Lenders
          hereunder and that remain outstanding and unpaid from time to time
          plus the aggregate amount of all Letter of Credit Exposure on such
          date, shall not in any event exceed the Maximum Revolving Loan Amount.
          Unless earlier terminated in accordance herewith, the Revolving Loan
          Commitments shall terminate in their entirety on the Final Maturity
          Date. Subject to the terms hereof, Revolving Loans that are repaid
          prior to the Final Maturity Date may be reborrowed.

               (ii) The failure of any Revolving Lender to make a Revolving
          Advance to be made by it as part of any Revolving Loan shall not
          relieve, in and of itself, any other Revolving Lender of its
          obligation hereunder to make its Revolving Advance on the date of such
          Revolving Loan, but no Revolving Lender shall be responsible for the
          failure of any other Revolving Lender to make the Revolving Advance to
          be made by such other Revolving Lender on the date of such Revolving
          Loan.

          (b) REVOLVING LOAN NOTES

               (i) All Revolving Advances made by each Revolving Lender shall be
          evidenced by a Revolving Loan Note of the Borrower in the form of
          EXHIBIT B hereto (each a "REVOLVING LOAN Note" and, collectively, the
          "REVOLVING LOAN NOTES"), dated the Closing Date, payable to such
          Lender for the account of its Applicable Lending Office in an
          aggregate principal amount equal to its Pro Rata Share of the Maximum
          Revolving Loan Amount and otherwise duly completed. Each Revolving
          Loan Note shall (A) represent the Borrower's obligation to pay the
          aggregate unpaid principal amount of all outstanding Revolving
          Advances made by such Lender, (B) be stated to mature on the Final
          Maturity Date, (C) bear interest for the period from the date thereof
          until paid in full on the unpaid principal amount thereof from time to
          time outstanding at the applicable interest rate per annum provided
          in, and payable as specified in, this Agreement, and (D) be entitled
          to the benefits of this Agreement and the Security Documents.

               (ii) Each Revolving Lender is hereby authorized to record the
          date and amount of each Revolving Advance made by it and the Type
          thereof and the date and amount of each payment and prepayment of
          principal made with respect thereto, and all Conversions of such
          Advances pursuant to Section 2.04, and prior to any Transfer of its
          Revolving Loan Note may annotate on the schedule forming a part
          thereof appropriate notations to evidence the foregoing information
          with respect to each such Revolving Advance then outstanding;
          PROVIDED, THAT, failure by such Revolving Lender to make any such
          annotation or any error therein shall not affect the obligations of
          the Borrower hereunder or under such Revolving Loan Note in respect of
          such Revolving Advances evidenced thereby. Each Revolving Lender is
          hereby irrevocably authorized by the Borrower to endorse its Revolving
          Loan Note and to attach to and make a part of its Revolving Loan Note
          a continuation of such schedule as and when required.

          (c) TYPES OF REVOLVING ADVANCES. All or any portion of any Revolving
Advances shall be either Base Rate Advances or LIBO Rate Advances, and may be
Converted or continued from time to time pursuant to Section 2.04.

          (d) USE OF PROCEEDS OF REVOLVING LOANS. The Borrower shall use the
proceeds of each Revolving Loan solely to pay, or to finance the payment by
Twelvepole of, (i) Operating Costs of the Borrower Entities contemplated by the
then current Operating Budget (as administered pursuant to Section 5.11 hereof)
to the extent that funds in the Operating Account are insufficient for such
purpose, (ii) on the Closing Date, the purchase price of certain inventories,
supplies and spare parts (including coal or other fuel inventories), pro-rated
expenses (including certain Taxes), all as agreed among the Borrower and the
Arrangers on or prior to the Closing Date. In no event shall the proceeds of
Revolving Loans be used to (i) pay Acquisition Costs (except to the extent
referenced above), (ii) pay Debt Service, (iii) make Distributions, or (iv) make
a contribution to the capital of any Subsidiary of the Borrower.

          (e) REPAYMENT

               (i) The Borrower shall repay the principal of all outstanding
          Revolving Loans in full on the Final Maturity Date.

               (ii) Notwithstanding anything to the contrary in this Agreement,
          for so long as the Revolving Loan Commitments are in effect, the
          Borrower agrees to repay the entire principal amount of Revolving
          Loans outstanding from time to time such that, for a period of ten
          (10) consecutive days on a rolling twelve (12) months basis during
          each calendar year in which either an Acquisition Loan Commitment or a
          Revolving Loan Commitment is in effect or any Loan remains outstanding
          and unpaid, there shall be no Revolving Loans outstanding under this
          Agreement.

               (iii) Notwithstanding anything to the contrary in this Agreement,
          for so long as the Revolving Loan Commitments are in effect, the
          Borrower agrees to repay the principal amount of Revolving Loans
          outstanding from time to time such that on each Distribution Date (as
          defined in the Deposit Account Agreement) the aggregate principal
          amount of Revolving Loans outstanding PLUS the aggregate Letter of
          Credit Exposure shall be equal to or less than $25,000,000.

          Section 2.03 BORROWINGS

          (a) ACQUISITION LOANS. The Acquisition Loan shall be made on notice
from the Borrower to the Administrative Agent, given not later than 10:00 a.m.
(New York City time) (x) on the third (3rd) Business Day prior to the proposed
Closing Date, if such Acquisition Loan is to be a LIBO Rate Loan, or (y) on the
Business Day prior to the proposed Closing Date, if such Acquisition Loan is to
be a Base Rate Loan. Such notice by the Borrower (a "NOTICE OF ACQUISITION
BORROWING") shall be irrevocable and shall be in writing in substantially the
form of EXHIBIT C, specifying therein (i) the proposed Closing Date, (ii) the
aggregate amount of the Acquisition Loan to be made on such date, (iii) the
requested Type of Acquisition Loan, (iv) the specific Acquisition Costs to be
paid with the proceeds of such Acquisition Loan, and (v) with respect to a LIBO
Rate Loan, the requested Interest Period for such Acquisition Loan. The
Administrative Agent shall give to each Acquisition Lender prompt notice of the
Notice of Acquisition Borrowing by telecopy, telex or cable. Each Acquisition
Lender shall, before 10:00 a.m. (New York City time) on the Closing Date, make
available to the Administrative Agent, for the account of its Applicable Lending
Office, in immediately available funds, the amount of such Acquisition Lender's
Acquisition Loan Advance. Subject to the Administrative Agent's receipt of such
funds and fulfillment of the applicable conditions set forth in Article III for
such Acquisition Loans, the Administrative Agent will make such funds available
to the Borrower at its account with the Administrative Agent at its Applicable
Lending Office or at such other account designated by the Borrower in the Notice
of Acquisition Borrowing.

          (b) REVOLVING LOANS. Each Revolving Loan shall be made on notice from
the Borrower to the Administrative Agent, given not later than 10:00 a.m. (New
York City time) (x) on the third (3rd) Business Day prior to the proposed
Revolving Loan Funding Date, if such Revolving Loan is to be a LIBO Rate Loan,
or (y) on the Business Day prior to the proposed Revolving Loan Funding Date, if
such Revolving Loan is to be a Base Rate Loan. Such notice by the Borrower (a
"NOTICE OF REVOLVING BORROWING"), shall be irrevocable and shall be in writing
in substantially the form of EXHIBIT D, specifying therein (i) the proposed
Revolving Loan Funding Date, (ii) the requested aggregate amount of the
Revolving Loan, (iii) any specific payment instructions regarding the
disbursement of the proceeds of such Revolving Loan, (iv) the requested Type of
Revolving Loan and (v) with respect to a LIBO Rate Loan, the initial Interest
Period applicable thereto. The Notice of Revolving Borrowing shall be
accompanied by the certificates and information required by Section 3.02. The
Administrative Agent shall give each Revolving Lender prompt notice of the
Notice of Revolving Borrowing by telecopy, telex or cable. Each Revolving Lender
shall, no later than 10:00 a.m. (New York City time) on the applicable Revolving
Loan Funding Date, make available to the Administrative Agent, for the account
of its Applicable Lending Office, in immediately available funds, the amount of
such Revolving Lender's Revolving Advance. Subject to the Administrative Agent's
receipt of such funds and fulfillment of the applicable conditions set forth in
Article III for such Loans, the Administrative Agent will make such funds
available to the Borrower by depositing the proceeds of such Revolving Loan into
the Operating Account.

          (c) PARTICIPATIONS. If the Administrative Agent has not received from
the Borrower the payment required by Section 2.16(g) by 12:30 p.m. (New York
City time), on the Business Day immediately following the date on which the
Issuing Bank has notified the Borrower and the Administrative Agent that payment
of a draft presented under any DLC Letter of Credit or any Operational Letter of
Credit will be made, as provided in Section 2.16(g) or 2.17(g), as applicable,
the Administrative Agent will promptly notify the Issuing Bank and each
Revolving Lender of the DLC Letter of Credit Disbursement or the Operational
Letter of Credit Disbursement, as the case may be, and, in the case of each
Revolving Lender, its Pro Rata Share (based on such Revolving Lender's Revolving
Loan Commitment) of the DLC Letter of Credit Disbursement or the Operational
Letter of Credit Disbursement, as the case may be. Not later than 10:00 a.m.
(New York City time) on the next Business Day, each Revolving Lender shall,
irrespective of the existence of any Default or Event of Default or failure of
any other applicable condition precedent, make available its Pro Rata Share of
the DLC Letter of Credit Disbursement or the Operational Letter of Credit
Disbursement, as the case may be, in Federal or other funds immediately
available in New York, New York, to the Administrative Agent at its address set
forth in Section 9.01. Any such funding of a DLC Letter of Credit Disbursement
or the Operational Letter of Credit Disbursement, as the case may be, by the
Revolving Lenders shall be considered as Revolving Advances made to the
Borrower. Any Revolving Loans made pursuant to this Section 2.03(c) shall be
made as Base Rate Loans and the Administrative Agent will promptly make such
funds available to the Issuing Bank. In the event that any Revolving Advance
cannot for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower), then each Revolving Lender shall
forthwith purchase (as of the date such Revolving Advance would otherwise have
occurred) from the Issuing Bank such Revolving Lender's Pro Rata Share of the
DLC Letter of Credit Disbursement or the Operational Letter of Credit
Disbursement, as the case may be.

          Section 2.04 ELECTION OF INTEREST RATES.

          (a) So long as no Default or Event of Default shall have occurred and
be continuing (and notwithstanding the existence of any Default or Event of
Default with respect to a Conversion from a LIBO Rate Loan to a Base Rate Loan),
the Borrower may from time to time elect to Convert any Loan of any Type to a
Loan of the same or any other Type on the following terms and subject to the
following conditions:

               (i) Each such Conversion shall be made as to all or a portion of
          the outstanding Loans, on notice given not later than 10:00 a.m. (New
          York City time) on the third (3rd) Business Day prior to the date of
          the proposed Conversion, in the case of any such Conversion into LIBO
          Rate Loans, or on the Business Day prior to the date of the proposed
          Conversion, in the case of any such Conversion into Base Rate Loans,
          by the Borrower to the Administrative Agent, who shall give each
          applicable Lender prompt notice thereof. Each such notice of
          Conversion (a "NOTICE OF CONVERSION") shall be in writing in
          substantially the form of EXHIBIT E hereto, specifying therein the
          requested (A) date of such Conversion, (B) Type of, and, with respect
          to LIBO Rate Loans, Interest Period applicable to, the Loans proposed
          to be Converted, (C) Type of Loans to which such Loans are proposed to
          be Converted, (D) in the case of a Conversion to LIBO Rate Loans,
          initial Interest Period to be applicable to the Loans resulting from
          such Conversion and (E) aggregate amount of Loans proposed to be
          Converted. If the Notice of Conversion applies only to a portion of
          the aggregate principal amount of the Loans, (X) such portion shall be
          allocated ratably among the applicable Lenders and (Y) both the
          portion to which the Notice of Conversion applies and the remaining
          portion to which it does not apply, shall be sufficient to meet the
          minimum amounts specified in Section 2.06(f). In the case of a
          proposed Conversion into LIBO Rate Loans, the Administrative Agent
          shall, within one Business Day of receiving the Notice of Conversion
          from the Borrower, notify each applicable Lender of the interest rate
          to be applicable to such LIBO Rate Loan resulting from such Conversion
          pursuant to this Section 2.04.

               (ii) LIBO Rate Loans may not be Converted on a date other than
          the last day of the Interest Period then applicable thereto.

               (iii) No Conversion may be requested by the Borrower hereunder
          unless made in compliance with the definition of "Interest Period,"
          Section 2.06 and Section 2.10.

               (iv) Any selection by the Borrower of a longer or shorter
          Interest Period to be applicable to any LIBO Rate Loan shall be deemed
          a Conversion pursuant to this Section 2.04, shall be governed by the
          terms and conditions hereof and shall be notified to the
          Administrative Agent as herein provided. In the event the Borrower
          shall fail to elect an Interest Period in respect of any LIBO Rate
          Loan prior to the expiration of the then current Interest Period in
          respect of such LIBO Rate Loan, then such LIBO Rate Loan shall
          automatically be Converted into a Base Rate Loan in accordance with
          this Section 2.04.

          (b) Each Notice of Borrowing and Notice of Conversion 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 proposed date specified in such Notice
of Borrowing or Notice of Conversion, as the case may be, the applicable
conditions set forth in this Article II or Article III, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
re-employment of deposits or other funds acquired by such Lender to fund or
Convert such Loan.

          (c) So long as any Interest Hedge Contract is in effect with respect
to any Loans, the Borrower shall maintain as LIBO Rate Loans having Interest
Periods corresponding to the payment dates under such Interest Hedge Contract an
aggregate amount of Loans at least equal to the notional amount then in effect
under such Interest Hedge Contract, except to the extent the Borrower would be
prevented from complying with this Section 2.04(c) by operation of Section 2.10.

          Section 2.05 FEES.

          (a) COMMITMENT FEE. The Borrower shall pay to the Administrative
Agent, quarterly in arrears on each Quarterly Payment Date, for the account of
each Lender, commitment fees (the "COMMITMENT FEES") of (i) 0.375% per annum on
the average daily unutilized amount of each Acquisition Lender's Acquisition
Loan Commitment during the period from the Closing Date until, and including,
the termination of all Acquisition Loan Commitments pursuant to the terms of
this Agreement, and (ii) 0.375% per annum on the average daily unutilized amount
of each Revolving Lender's Revolving Loan Commitment during the period from the
Closing Date until, and including, the Final Maturity Date. For purposes of this
Section 2.05(a), the "unutilized amount" of a Revolving Lender's Revolving Loan
Commitment on any date shall mean the amount of such Revolving Lender's
Revolving Loan Commitment on such date, minus the sum of (X) its outstanding
Revolving Advances on such date and (Y) its Letter of Credit Exposure on such
date.

          (b) AGENCY FEE. The Borrower shall pay the Agency Fee to the
Administrative Agent, for the Administrative Agent's own account, in accordance
with the terms of the Administrative Agent Fee Side Letter.

          (c) LETTER OF CREDIT FEES. The Borrower shall pay (i) the DLC Letter
of Credit Fees to the applicable Persons in accordance with the terms set forth
in Section 2.16 below and (ii) the Operational Letter of Credit Fees to the
applicable Persons in accordance with the terms set forth in Section 2.17 below.

          (d) OTHER FEES. The Borrower shall pay all Fees not specifically
contemplated by clauses (a) and (b) of this Section 2.05 to the appropriate
Persons in the amounts and at such times as set forth in the Fee Side Letters
and any other applicable Financing Document.

          Section 2.06 INTEREST. The Borrower shall pay interest on the unpaid
principal amount of each Advance made by each Lender from the date of such
Advance until such principal amount shall be paid in full, at one of the
following rates per annum:

          (a) If such Advance is a Base Rate Advance, a rate per annum equal at
all times to the sum of the Base Rate in effect from time to time plus the
Applicable Margin, payable quarterly in arrears on each applicable Interest
Payment Date and on the date that such Base Rate Advance shall be repaid in
full.

          (b) If such Advance is a LIBO Rate Advance, a rate per annum equal at
all times during each Interest Period for such Advance to the sum of the LIBO
Rate for such Interest Period for such Advance plus the Applicable Margin,
payable on the applicable Interest Payment Date and on the date that such LIBO
Rate Advance shall be repaid in full.

          (c) If an Event of Default shall have occurred and be continuing and
whether or not so specified in any Note, the Borrower shall pay, upon receipt of
written demand, interest on the entire principal amount of the Loans to the
extent permitted by applicable Requirements of Law, on any overdue installment
of interest and on any other amount due hereunder during such period at a rate
per annum equal at all times to 2.00% plus the LIBO Rate for such period plus
the LIBO Rate Margin for such period, if the Loans are LIBO Rate Loans or, at a
rate per annum equal to 2.00% plus the Base Rate for such period plus the Base
Rate Margin for such period, if the Loans are Base Rate Loans, which increased
interest shall be payable on the last Business Day of each month during the
continuation of such Event of Default.

          (d) If the Administrative Agent is unable at any time to determine the
LIBO Rate for LIBO Rate Loans, if the Administrative Agent shall determine that
the LIBO Rate does not reflect the cost of funding LIBO Rate Loans or if any
Lender shall have determined that such Lender is unable to acquire funding in a
reasonable manner so as to make available LIBO Rate Loans in the amount and for
the Interest Period requested, the right to maintain the Loans as LIBO Rate
Loans shall be suspended at the end of the then current Interest Period and all
Loans shall be maintained as Base Rate Loans until the Administrative Agent
shall notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.

          (e) At no time shall more than six (6) different Interest Periods be
in effect as to outstanding LIBO Rate Loans hereunder.

          (f) Each LIBO Rate Loan shall be in a minimum aggregate principal
amount of $1,000,000.

          Section 2.07 MANDATORY PREPAYMENTS.

          (a) Subject to Section 2.07(c) hereof, all Extraordinary Proceeds
received by the Administrative Agent or any Borrower Entity shall be applied to
prepay the then outstanding Acquisition Loans in accordance with the Deposit
Account Agreement, and after all Acquisition Loans have been prepaid in full,
applied to prepay then outstanding Revolving Loans in accordance with the
Deposit Account Agreement. Any prepayment of Revolving Loans required by this
Section 2.07(a) shall automatically reduce pro rata the amount of Revolving Loan
Commitments by an amount equal to the prepayment so required. Contemporaneously
with any reduction of Revolving Commitments required by this Section 2.07(a),
the Borrower shall cash collateralize with the Administrative Agent the
difference between (y) any Letter of Credit Exposure existing at such time, less
(z) the aggregate amount of the Revolving Loan Commitments existing after the
application of the terms of this Section 2.07(a), until such time as such Letter
of Credit Exposure no longer exists. Nothing in this Section 2.07(a) shall be
deemed to imply that any of the activities or actions described in clauses (ii)
or (iii) of the definition of Extraordinary Proceeds are permitted under this
Agreement other than as specifically set forth in this Agreement.

          (b) In addition to the foregoing, until the Final Maturity Date, the
Borrower shall prepay the Acquisition Loans on each Quarterly Payment Date, in
the amounts set forth in and as contemplated by the Deposit Account Agreement.

          (c) Notwithstanding Section 2.07(a) hereof, to the extent that
prepayment of Loans with Extraordinary Proceeds would require the Borrower to
pay Funding Breakage Costs in accordance with Section 2.09(c) below, such
Extraordinary Proceeds shall be deposited in the Extraordinary Proceeds Account
in accordance with the Deposit Account Agreement until such date(s) as the
application of such proceeds can be applied to the prepayment of Loans without
incurring such Funding Breakage Costs.

          (d) In the event the interest rate on any Acquisition Loan is fixed or
capped pursuant to an Interest Hedge Contract, the Borrower shall pay all
Settlement Amounts required under such Interest Hedge Contract in connection
with any mandatory prepayment of such Loan.

          (e) In addition to the foregoing, in the event of a Closing Failure,
all amounts on deposit in the Equity Proceeds Account shall, on December 31,
2000, be applied to prepay the Loans and otherwise as provided in the Deposit
Account Agreement.

          Section 2.08 VOLUNTARY PREPAYMENT; TERMINATION OF COMMITMENTS;
REVOLVING COMMITMENT REDUCTIONS. (a) The Borrower may, upon at least five
Business Days' prior written notice to the Administrative Agent stating the
proposed date and aggregate principal amount of the prepayment, and if such
notice is given the Borrower shall, prepay the outstanding principal amounts of
the Loans in whole or ratably in part in the amount set forth in such notice,
together with accrued interest to the date of such prepayment on the principal
amount prepaid; PROVIDED, that (i) each partial prepayment shall be in a minimum
aggregate principal amount of $1,000,000 or whole multiples thereof (or, if
less, the entire balance then remaining), (ii) concurrently with such payment,
the Borrower shall pay all applicable Funding Breakage Costs in accordance with
Section 2.09(c) below and, (iii) to the extent applicable, the Borrower shall
have reduced the aggregate notional amounts of any Interest Hedge Contracts
existing on such prepayment date such that such aggregate notional amounts do
not exceed the aggregate principal amount of outstanding Loans on such date and
shall have paid any Settlement Amounts incurred in connection therewith. Each
such voluntary prepayment shall otherwise be without penalty or premium.

          (b) The Revolving Loan Commitments shall be automatically terminated
on the expiration of the Revolving Loan Availability Period.

          (c) Upon at least six Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Revolving Loan Commitments; PROVIDED, THAT, (i) each partial reduction of
the Revolving Loan Commitments shall be in an aggregate principal amount which
is equal to $1,000,000 or an integral multiple thereof; (ii) concurrently with
such payment, the Borrower shall pay all applicable Funding Breakage Costs in
accordance with Section 2.09(c) below, (iii) to the extent applicable, the
Borrower shall have reduced the aggregate notional amounts of any Interest Hedge
Contracts existing on such prepayment date such that such aggregate notional
amounts do not exceed the aggregate principal amount of outstanding Loans on
such date and shall have paid any Settlement Amounts incurred in connection
therewith, and (iv) concurrently with any such reduction in the Revolving Loan
Commitments, the Borrower shall deposit with the Administrative Agent cash
collateral in an amount equal to the difference between (y) any Letter of Credit
Exposure existing at such time, less (z) the aggregate amount of the Revolving
Loan Commitments existing after the effectiveness of such reduction, until such
time as such Letter of Credit Exposure no longer exists.

          (d) Each reduction in the Revolving Loan Commitments shall be made
ratably among the Revolving Lenders in accordance with their respective
Revolving Loan Commitments. The Borrower shall pay to the Administrative Agent
for the account of the Revolving Lenders, on the date of each termination or
reduction of the Revolving Loan Commitments, all accrued but unpaid Commitment
Fees on the amount of the Revolving Loan Commitments so terminated or reduced
accrued to the date of such termination or reduction.

          Section 2.09 INCREASED COSTS; CAPITAL ADEQUACY; FUNDING BREAKAGE
COSTS.

          (a) If, due to either (i) the enactment, promulgation or any change
(including any change by way of imposition of reserve requirements in the case
of LIBO Rate Loans) in any Requirement of Law or in the interpretation or
administration of any Requirement of Law by any Governmental Authority charged
with the interpretation or administration thereof on or after the date hereof or
(ii) the compliance with any guideline or request from any such Governmental
Authority (whether or not having the force of law) imposed on or after the date
hereof, there shall be any increase in the cost to any Lender of agreeing to
make or making, funding or maintaining LIBO Rate Loans, then such Lender shall
deliver to the Borrower and the Administrative Agent a certificate as to the
amount of such increased cost setting forth in reasonable detail the basis for
calculation thereof as soon as practicable but in no event later than one
hundred twenty (120) days after such Lender has actual knowledge of the event
(the date that is 120 days from the date any Lender obtains actual knowledge of
any such event being referred to herein as the "NOTICE DATE"). Within fifteen
(15) days after delivery of such certificate, the Borrower shall pay to such
Lender the amount shown as due on the certificate; provided, that the Borrower
shall not be obligated to compensate that Lender for the amount of such
increased cost incurred during the period of time from the Notice Date to the
date of actual delivery of the certificate. A certificate as to the amount of
such increased cost showing the basis therefor and the calculation thereof, in
reasonable detail, submitted to the Borrower and the Administrative Agent by
such Lender, shall be conclusive and binding for all purposes, absent manifest
error.

          (b) If any Lender determines that compliance with any Requirement of
Law or regulation or with any guideline or request from any central bank or
other governmental authority (whether or not having the force of law) has the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
this Agreement, any Letter of Credit or such Lender's Commitments, or its making
or maintaining Loans below the rate which the Lender or any other corporation
would have achieved but for such compliance (taking into account the policies of
such Lender or corporation with regard to capital), then such Lender shall
deliver to the Borrower and the Administrative Agent a certificate setting forth
in reasonable detail the amount being charged by such Lender and the basis for
the determination of such amount as soon as practicable but in no event later
than one hundred twenty (120) days after the Notice Date in respect thereof.
Within fifteen (15) days after delivery of such certificate, the Borrower shall
pay to such Lender the amount shown as due on the certificate; provided, that
the Borrower shall not be obligated to compensate that Lender for the amount of
such charge incurred with respect to a period of time from the Notice Date to
the date of actual delivery of the certificate. A certificate as to such
amounts, submitted to the Borrower and the Administrative Agent by such Lender,
shall be conclusive and binding for all purposes, absent manifest error.

          (c) If (i) any payment of principal of any LIBO Rate Loan is made
other than on the last day of the Interest Period for such Loan, as a result of
a payment or prepayment of such Loan or acceleration of the maturity of the
Notes or for any other reason or (ii) upon any failure to prepay a LIBO Rate
Loan after notice of prepayment has been given or any failure to borrow a LIBO
Rate Loan, continue a LIBO Rate Loan or convert a LIBO Rate Loan after notice of
borrowing, continuation or conversion has been given, then the Borrower shall,
upon demand by any Lender (with a copy of such demand to the Administrative
Agent), pay to the Administrative Agent for the account of such Lender any
amounts required to compensate such Lender for any additional losses, costs or
expenses which it may reasonably incur as a result of such payment, including,
without limitation, any loss, 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 Loan. The foregoing amounts payable by the Borrower under
this Section 2.09(c) shall be referred to herein as "FUNDING BREAKAGE COSTS".

          (d) Each Lender agrees to notify the Borrower and the Administrative
Agent of any circumstances that would cause the Borrower to pay additional
amounts pursuant to subsections (a) and (b) of this Section 2.09 on or prior to
the Notice Date; PROVIDED, THAT, the failure to give such notice shall not
affect the Borrower's obligation to pay any such additional amounts accrued
prior to the Notice Date or after delivery of such notice.

          Section 2.10 ILLEGALITY. If the enactment, promulgation or any change
in or in the interpretation of any Requirement of Law after the Closing Date
shall make it unlawful, or any central bank or other Governmental Authority to
which any Lender is subject shall assert that it is unlawful, for any Lender or
its LIBO Lending Office to perform its obligations hereunder to make LIBO Rate
Loans or to continue to fund or maintain LIBO Rate Loans hereunder, then, on
notice thereof and demand therefor by such Lender to the Borrower through the
Administrative Agent, the obligation of such Lender to make or maintain LIBO
Rate Loans shall be suspended until such Lender shall notify the Administrative
Agent that the circumstances causing such suspension no longer exist and such
Lender shall maintain all of its Loans as Base Rate Loans.

          Section 2.11 PAYMENTS AND COMPUTATIONS.

          (a) The Borrower shall make each payment hereunder and under the Notes
not later than 12:00 Noon New York City time on the day when due in Dollars to
the Administrative Agent at its Applicable Lending Office in immediately
available funds. The Administrative Agent shall promptly thereafter cause to be
distributed like funds relating to the payment of principal, interest or Fees
(other than amounts payable to the Administrative Agent for Agency Fees and
expenses or to reimburse the Administrative Agent pursuant to Section 2.12)
ratably to the Lenders for the account of their respective Applicable Lending
Offices, and like funds relating to the payment of any other amount payable to
any Lender to such Lender for the account of its Applicable Lending Office, in
each case to be distributed and applied in accordance with the terms of
subsection (b) of this Section 2.11.

          (b) All payments received by the Administrative Agent in respect of
the Loans whether received under Section 2.11(a), in connection with any sale or
other realization upon the Collateral or otherwise shall be distributed and
applied in the order and in the amounts set forth in the Deposit Account
Agreement.

          (c) The Borrower hereby authorizes each Lender, if and to the extent
that the Borrower has failed to pay amounts due hereunder or under any Financing
Document and as a result payment owed to such Lender is not made when due
hereunder or under any other Financing Document, to charge from time to time
against any or all of the Borrower's accounts with such Lender any amount so
due. Each Lender receiving any payment as a result of charging any such account
shall promptly notify the Administrative Agent thereof and make such
arrangements as the Administrative Agent shall request to share the benefit
thereof in accordance with Section 2.13 and the Deposit Account Agreement.

          (d) All computations of (i) interest hereunder based on the LIBO Rate
or the Federal Funds Rate and (ii) Commitment Fees, shall be made by the
Administrative Agent on the basis of a year of 360 days and all computations of
interest hereunder based on the Base Rate shall be made by the Administrative
Agent on the basis of 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 or fees are payable.
Each determination by the Administrative Agent of an interest rate hereunder
shall be conclusive and binding for all purposes, absent manifest error.

          (e) Except as contemplated by the definition of "Interest Period" for
LIBO Rate Loans, whenever any payment hereunder or under any Financing Document
shall be stated to be due on a day other than a Business Day, such payment shall
be made on the first Business Day preceding such required payment date.

          (f) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to a Secured Party
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may, but shall not be required to, assume that the Borrower
has made such payment in full to the Administrative Agent on such date and the
Administrative Agent may, in reliance upon such assumption, but shall not be
required to, cause to be distributed to each Secured Party on such due date an
amount equal to the amount then due such Secured Party. If and to the extent the
Borrower shall not have so made such payment in full to the Administrative
Agent, each Lender shall repay to the Administrative 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 Administrative Agent, (i) at the Federal Funds
Rate for the three Business Days following demand by the Administrative Agent
and (ii) the Federal Funds Rate plus 1% for each day thereafter.

          (g) Unless the Administrative Agent shall have received notice from a
Secured Party prior to the date of any Borrowing, or prior to the time of any
required payment by such Secured Party in respect of a DLC Letter of Credit
Disbursement or an Operational Letter of Credit Disbursement, as the case may
be, that such Secured Party will not make available to the Administrative Agent
such Secured Party's portion of such borrowing or payment, the Administrative
Agent may assume that such Secured Party has made such portion available to the
Administrative Agent on the date of such borrowing or payment in accordance with
Section 2.03 and the Administrative 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 Secured Party shall not have made such portion available to
the Administrative Agent, such Secured Party and the Borrower severally agree to
repay to the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower or the Issuing Bank (or, if the Administrative Agent
and the Issuing Bank are the same person, from the date of such payment in
respect of a DLC Letter of Credit Disbursement or an Operational Letter of
Credit Disbursement, as the case may be), as applicable, until the date such
amount is repaid to the Administrative Agent at (i) in the case of the Borrower,
the interest rate applicable thereto pursuant to Section 2.06 or 2.16(g), as
applicable, and (ii) in the case of such Secured Party, (y) the Federal Funds
Rate for the three Business Days following demand by the Administrative Agent
and (z) the Federal Funds Rate plus 1% for each day thereafter.

          Section 2.12 TAXES.

          (a) Any and all payments by the Borrower hereunder or under the Notes
to or for the benefit of any Secured Party shall be made free and clear of and
without deduction for any and all present or future taxes (including, without
limitation, income, gross receipts, franchise, sales, use, personal property,
license, stamp, documentary, recording, privilege or other excise tax), levies,
imposts, deductions, charges or withholdings, together with any penalties, fines
or interest thereon, and all liabilities with respect thereto, imposed by any
Governmental Authority, excluding, income or franchise taxes measured by net
income imposed under the laws of the United States or any state, or any
political subdivision thereof, in which each such Secured Party is organized,
or, solely in the case of each such Lender, in which the Applicable Lending
Office or the principal office of such Lender is located (all such excluded net
income taxes and franchise taxes hereinafter referred to as "INCOME TAXES" and
all nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities 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 or for the benefit of any Secured Party Lender,
(i) the sum payable shall be increased as may be necessary so that after making
all required deductions of Taxes (including deductions of Taxes applicable to
additional sums payable under this Section 2.12) such Secured Party 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 so deducted to the relevant taxation authority or other
authority in accordance with applicable Requirement of Law.

          (b) In addition, without limiting the generality of this Section 2.12,
the Borrower agrees to pay any present or future stamp, documentary, recording,
privilege, intangible or similar taxes or any other excise or property taxes,
charges or similar levies that arise at any time or from time to time (i) from
any payment made under any and all Financing Documents, (ii) from the transfer
of the rights of any Secured Party under any Financing Documents to any other
Secured Party or (iii) from the execution or delivery by the Borrower or any
Credit Party of, or from the filing or recording or maintenance of, or otherwise
with respect to, any and all Financing Documents.

          (c) The Borrower will indemnify each Secured Party for the full amount
of all Taxes (excluding any Income Taxes imposed by any jurisdiction on amounts
payable under this Section 2.12) paid by, or imposed or asserted against, such
Secured Party or any Collateral, as the case may be, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, which Taxes are imposed or asserted in any manner resulting from or
relating to or arising from the execution, delivery or performance of the
Financing Documents, the Transaction Documents or the transactions contemplated
thereby, whether or not such Taxes were correctly or legally asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment
or liability prepared by such Secured Party, absent manifest error, shall be
final, conclusive and binding for all purposes. Payment of this indemnification
shall be made within 30 days from the date such Secured Party makes written
demand therefor. With respect to any such Taxes for which any Secured Party is
entitled to indemnification pursuant to this paragraph, such Secured Party
agrees to cooperate with the Borrower and to provide to it such information as
may be reasonably requested by it for the purpose of establishing the
entitlement of the Borrower to a refund or credit of all or any portion of such
Taxes; provided, that, no Secured Party shall be required to provide to the
Borrower (a) copies of any of its tax or information returns or (b) any other
information which would prejudice the interests of such Secured Party (as
reasonably determined by such Secured Party, in its good faith judgment) or
which it reasonably deems to be of a confidential nature.

          (d) As soon as practicable after the date of any payment of Taxes by
the Borrower or other authority to the relevant Governmental Authority, the
Borrower will deliver to the Administrative Agent (for delivery to each Lender)
at its address referred to on its signature page hereto, the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
payment thereof and identifying the Taxes paid. If such receipt does not
identify such Taxes paid, and no procedure exists for identifying such Taxes
paid, the Borrower shall concurrently furnish to the Administrative Agent a
certificate, signed by a Responsible Officer of the Borrower providing such
identification. The Borrower shall compensate each Secured Party, as the case
may be, for all reasonable losses and expenses sustained by such Secured Party,
as a result of any failure by the Borrower to so furnish such original or copy
of such receipt or such certificate.

          (e) If any Secured Party is not organized and existing under the laws
of the United States of America or any political subdivision thereof or therein
(a "FOREIGN SECURED PARTY"), to the extent entitled to do so under Applicable
Law, such Secured Party shall furnish to the Borrower, on the Closing Date (or
on the date on which such Foreign Secured Party first becomes a Secured Party
pursuant to Section 9.06) a duly executed certificate to the effect that such
Foreign Secured Party is entitled to receive all amounts payable under the
Financing Documents without deduction or withholding (or at a reduced rate of
deduction or withholding) on account of Taxes imposed by the United States of
America (i) pursuant to the terms of an applicable tax treaty in effect with the
United States of America (in which case such certificate shall be accompanied by
two executed copies of IRS Form W-8BEN), or (ii) under Code Section 1441(c) (in
which case such certificate shall be accompanied by two executed copies of IRS
Form W-8ECI) (such forms being the "PRESCRIBED FORMS"). If requested by the
Borrower from time to time after the Closing Date (upon the obsolescence of any
previously delivered form or otherwise), or if a new form is required by any
applicable Requirement of Law, a Foreign Secured Party shall, to the extent
required thereto under any applicable Requirement of Law, provide to the
Borrower new Prescribed Forms, in each case duly executed and completed by such
Foreign Secured Party. The Borrower shall not be required to indemnify any
Foreign Secured Party or pay any additional amounts to any Foreign Secured Party
pursuant to Sections 2.12(a), 2.12(c) or 2.12(d) to the extent that the
obligation to indemnify such Foreign Secured Party or pay such additional
amounts would not have arisen but for the failure by such Foreign Secured Party
to comply with applicable certification, information or other documentation
requirements concerning the nationality, residency, identity or connection with
the United States of such Foreign Secured Party if such compliance is required
by statute or regulation of the United States as a precondition to relief or
exemption from such amounts payable under, or for which indemnification is given
pursuant to, Sections 2.12(a), (c) or (d); PROVIDED, THAT, the Borrower shall be
required to indemnify each Foreign Secured Party to the extent that (A) any such
payment or indemnification is attributable to an enactment, promulgation or any
change in or interpretation of any Requirement of Law occurring after the date
hereof and (B) such deductions, withholding, payments or liabilities accrue
after the date on which such Secured Party timely furnishes to the Borrower all
Prescribed Forms required to be furnished by this Section 2.12(e) with respect
to such enactment, promulgation or any change in or interpretation of any
Requirement of Law.

          (f) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.12 shall survive the payment in full of principal and interest on
the Loans hereunder and under the Notes.

          Section 2.13 SHARING OF PAYMENTS. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off or otherwise) on account of a Loan made by it in excess of its Pro Rata
Share of payments on account of such Loan obtained by all the Lenders, such
Lender shall forthwith purchase from the other Lenders such participations in
the Loan made by it as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; PROVIDED, THAT, if all or
any portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each Lender shall be rescinded and each such Lender
shall repay to the purchasing Lender the purchase price to the extent of such
recovery together with an amount equal to such Lender's Pro Rata Share
(according to the proportion of (i) the amount of such 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
to the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 2.13
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.

          Section 2.14 CHANGE OF APPLICABLE LENDING OFFICE. Without affecting
its rights under Section 2.09(a), 2.09(b), 2.10 or 2.12, each of the Lenders,
the Issuing Bank and the Administrative Agent agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, in its sole opinion)
to designate a different Applicable Lending Office if such redesignation would
thereafter eliminate or reduce any amounts that the Borrower is required to pay
to any of the Lenders, the Issuing Bank or the Administrative Agent pursuant to
such Sections; PROVIDED, THAT, in determining, in its sole opinion, whether
designating a different Applicable Lending Office would be disadvantageous to
it, the applicable Lender, the Issuing Bank or the Administrative Agent, as the
case may be, shall disregard any direct financial loss of making such a
designation if the Borrower agrees in form and substance satisfactory to such
Lender, the Issuing Bank or the Administrative Agent, as the case may be, to
indemnify and hold such Lender, the Issuing Bank or the Administrative Agent, as
the case may be, harmless from such financial loss and PROVIDED, FURTHER, that
any out-of-pocket costs and expenses associated with such efforts shall be paid
or reimbursed by the Borrower.

          Section 2.15 REPLACEMENT OF LENDERS. On each occasion that a Lender
either makes a demand for compensation pursuant to Section 2.06(d), 2.09(a),
2.09(b) or 2.12 in an amount in excess of the amount that the Borrower would
have had to pay pursuant to such Sections if such Lender's Commitments were held
by a Lender with respect to which no such amounts would then be payable pursuant
to any such Section or is unable for a period of two consecutive months to fund
or maintain LIBO Rate Loans pursuant to Section 2.10, the Borrower may, upon at
least ten (10) Business Days' prior written notice to each of such Lender and
the Administrative Agent and upon the payment by the Borrower of all applicable
assignment fees associated therewith (as set forth in Section 9.06(j) below), in
whole permanently replace the Commitment of such Lender; PROVIDED, THAT, the
Borrower shall replace such Commitment with the commitment of a commercial bank
which is reasonably satisfactory to the Administrative Agent or any other Lender
(a "REPLACEMENT LENDER"). Such Replacement Lender shall, upon the effective date
of replacement, purchase the Obligations owed to such replaced Lender for the
aggregate amount thereof and shall thereupon for all purposes become a "Lender"
hereunder. Such notice from the Borrower shall specify an effective date for the
replacement of such Lender's Commitment, which date shall not be earlier than
the tenth (10th) day after the day such notice is given. On the effective date
of any replacement of such Lender's Commitment pursuant to this Section 2.15,
the Borrower shall pay to the Administrative Agent for the account of such
Lender (i) any Fees or other amounts due to such Lender to the date of such
replacement, (ii) accrued interest on the principal amount of outstanding Loans
held by such Lender to the date of such replacement and (iii) the amount or
amounts payable to such Lender pursuant to Section 2.09(a), Section 2.09(b) or
Section 2.12, as applicable. The Borrower will be liable to such replaced Lender
for costs that such Lender may sustain or incur pursuant to Section 2.09(c) as a
direct consequence of repayment of such Lender's Loans. Upon the effective date
of repayment of any Lender's Commitment and Obligations pursuant to this Section
2.15, such Lender shall cease to be a "Lender" hereunder. No such termination of
any such Lender's Commitment and the purchase of such Lender's Loans pursuant to
this Section 2.15 shall affect (x) any liability or obligation of the Borrower
or any other Lender to such terminated Lender which accrued on or prior to the
date of such termination or (y) such terminated Lender's rights hereunder in
respect of any such liability or obligation.

          Section 2.16 DLC LETTER OF CREDIT.

          (a) The Borrower may request the issuance of a DLC Letter of Credit,
for the account of the Borrower, at any time during the DLC Letter of Credit
Availability Period; PROVIDED, THAT, a DLC Letter of Credit shall be issued only
if (and a request by the Borrower for the issuance of a DLC Letter of Credit
shall be deemed a representation and warranty of the Borrower that) immediately
following the issuance of the DLC Letter of Credit, (i) a DLC Letter of Credit
Exposure shall not exceed $10,000,000, and (ii) the sum of the aggregate Letter
of Credit Exposure and the aggregate principal amount of outstanding Revolving
Loans at such time shall not exceed the lesser of (y) the aggregate Revolving
Loan Commitments at such time and (z) the Maximum Revolving Loan Amount
effective as of such time.

          (b) Each DLC Letter of Credit shall expire at 5:00 p.m., New York City
time, on the last day of the DLC Letter of Credit Availability Period, unless
such DLC Letter of Credit expires by its terms (or is required by Section
2.16(c) to expire) on an earlier date. Each DLC Letter of Credit shall provide
for payments of drawings in Dollars.

          (c) The issuance of a DLC Letter of Credit shall be made on at least
three Business Days' prior irrevocable written or telecopy application (such
application to be delivered by 10:00 a.m., New York City time) from the Borrower
(or such shorter application period as shall be acceptable to the Issuing Bank)
to the Administrative Agent and the Issuing Bank, specifying the date of
issuance, the date on which such DLC Letter of Credit is to expire (which shall
not be later than the last day of the DLC Letter of Credit Availability Period
and shall be for such period of time as is contemplated by the form of letter of
credit attached hereto as EXHIBIT M), the amount of such DLC Letter of Credit,
the name and address of the beneficiary of such DLC Letter of Credit, and such
other information as may be necessary or desirable to complete such DLC Letter
of Credit. The Issuing Bank will give the Administrative Agent prompt notice of
the issuance and amount of a DLC Letter of Credit and the expiration date of
such DLC Letter of Credit (and the Administrative Agent shall give prompt notice
thereof to each Revolving Lender). Any DLC Letter of Credit issued hereunder
will be subject to the Uniform Customs and Practices for Documentary Credits, as
in effect from time to time.

          (d) By the issuance of a DLC Letter of Credit and without any further
action on the part of the Issuing Bank, the Administrative Agent or the
Revolving Lenders in respect thereof, the Issuing Bank hereby grants to each
Revolving Lender, and each Revolving Lender hereby acquires from the Issuing
Bank, a participation in such DLC Letter of Credit equal to such Revolving
Lender's Pro Rata Share (based on such Revolving Lender's Revolving Loan
Commitment) of the aggregate amount available to be drawn under a DLC Letter of
Credit, effective upon the issuance of a DLC Letter of Credit. In consideration
and in furtherance of the foregoing, each Revolving Lender having a Revolving
Loan Commitment hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, on behalf of the Issuing Bank, in accordance with Section
2.03(c), such Revolving Lender's Pro Rata Share (based on such Revolving
Lender's Revolving Loan Commitment) of a DLC Letter of Credit Disbursement made
by the Issuing Bank and not reimbursed by the Borrower when due in accordance
with Section 2.16(g); PROVIDED, THAT, the Revolving Lenders shall not be
obligated to make any such payment with respect to any wrongful DLC Letter of
Credit Disbursement made as a result of the gross negligence or willful
misconduct of the Issuing Bank.

          (e) Each Revolving Lender acknowledges and agrees that its obligation
to acquire participations pursuant to Section 2.16(d) in respect of a DLC Letter
of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or Event of Default, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever (subject only to the
proviso set forth in the last sentence of Section 2.16(d)).

          (f) During the DLC Letter of Credit Availability Period, from and
after the date on which a DLC Letter of Credit is issued, the Borrower shall pay
to the Administrative Agent, on each Quarterly Payment Date in each year and on
the date on which the Revolving Loan Commitments shall be terminated as provided
herein, (i) for the account of the Revolving Lenders, ratably in proportion to
their Revolving Loan Commitments, a fee on the average daily aggregate amount
available to be drawn under each DLC Letter of Credit during the preceding
quarter (or shorter period commencing with the Closing Date) at a rate per annum
equal to the applicable LIBO Rate Margin from time to time in effect during such
period pursuant to Section 2.06 and (ii) for the account of the Issuing Bank, a
fee on the average daily aggregate amount available to be drawn under each DLC
Letter of Credit during the preceding quarter (or shorter period commencing with
the Closing Date) at a rate per annum equal to 0.25%. Such fees shall be
computed on the basis of the actual number of days elapsed in a year of 360
days. Such fees shall accrue from and including the Closing Date to but
excluding the last day of the DLC Letter of Credit Availability Period. In
addition to the foregoing, the Borrower shall pay directly to the Issuing Bank,
for its account, payable within 15 days after written demand therefor by the
Issuing Bank has been received by the Borrower, the Issuing Bank's out-of-pocket
expenses and customary fees in connection with the issuance, transfer or
amendment of or payment on each DLC Letter of Credit.

          (g) The Borrower hereby agrees to reimburse the Issuing Bank for any
payment or disbursement made by the Issuing Bank under each DLC Letter of
Credit, by making payment in immediately available funds to the Administrative
Agent within one Business Day after receipt of notice of such payment or
disbursement, in an amount equal to the amount of such payment or disbursement,
plus interest on the amount so paid or disbursed by the Issuing Bank, to the
extent not reimbursed prior to 12:00 p.m. (New York City time) on the date of
such payment or disbursement, from and including the date paid or disbursed to
but excluding the date the Issuing Bank is reimbursed by the Borrower therefor,
at a rate per annum equal to the rate applicable to Base Rate Revolving Loans
during such period pursuant to Section 2.06. In the event the Borrower fails to
reimburse the Issuing Bank as required by the preceding sentence, the Issuing
Bank shall so notify the Administrative Agent and such payment or disbursement
shall be reimbursed to the Issuing Bank as contemplated by Section 2.03(c) or
Section 2.16(d), as applicable. The Issuing Bank shall give the Borrower prompt
notice of each drawing under any DLC Letter of Credit, provided, that, the
failure to give any such notice shall in no way affect, impair or diminish the
Borrower's obligations hereunder. The Administrative Agent shall promptly pay
any such amounts received by it to the Issuing Bank.

          (h) The Borrower's obligation to reimburse DLC Letter of Credit
Disbursements as provided in Section 2.16(g) shall be absolute, unconditional
and irrevocable and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances, including the following:

               (i) any lack of validity or enforceability of any DLC Letter of
          Credit or any other Financing Document;

               (ii) except as otherwise provided in clause (iv) of this Section
          2.16(h), the existence of any claim, setoff, defense or other right
          which the Borrower, any Affiliate or any other person may at any time
          have against the beneficiary under a DLC Letter of Credit, the Issuing
          Bank, the Administrative Agent, any Revolving Lender or any other
          person in connection with this Agreement, any other Financing Document
          or any other related or unrelated agreement or transaction;

               (iii) any draft or other document presented under any DLC Letter
          of Credit proving to be forged, fraudulent, invalid or insufficient in
          any respect or failing to comply with the Uniform Customs and
          Practices for Documentary Credits, as in effect from time to time, or
          any statement therein being untrue or inaccurate in any respect;

               (iv) payment by the Issuing Bank under any DLC Letter of Credit
          against presentation of a draft or other document which does not
          comply with the terms of such DLC Letter of Credit; PROVIDED, THAT,
          such payment was not wrongfully made as a result of the gross
          negligence or willful misconduct of the Issuing Bank;

               (v) any amendment, waiver or consent in respect of this Agreement
          or any other Financing Document; and

               (vi) any other act or omission or delay of any kind or any other
          circumstance or event whatsoever, whether or not similar to any of the
          foregoing and whether or not foreseeable, that might, but for the
          provisions of this Section 2.16(h), constitute a legal or equitable
          discharge of the Borrower's obligations hereunder.

          (i) It is expressly understood and agreed that, for purposes of
determining whether a wrongful payment under a DLC Letter of Credit resulted
from the Issuing Bank's gross negligence or willful misconduct, (i) the Issuing
Bank's acceptance of documents that appear on their face to comply with the
requirements of such DLC Letter of Credit, without responsibility for further
investigation, regardless of any notice or information to the contrary, (ii) the
Issuing Bank's exclusive reliance on the documents presented to it under such
DLC Letter of Credit as to any and all matters set forth therein, including the
amount of any draft presented under such DLC Letter of Credit, whether or not
the amount due to the beneficiary thereunder equals the amount of such draft and
whether or not any document presented pursuant to such DLC Letter of Credit
proves to be insufficient in any respect (so long as such document on its face
appears to comply with the requirements of the applicable DLC Letter of Credit),
and whether or not any other statement or any other document presented pursuant
to such DLC Letter of Credit proves to be forged or invalid or any statement
therein proves to be inaccurate or untrue in any respect whatsoever and (iii)
any noncompliance in any immaterial respect of the documents presented under
such DLC Letter of Credit with the terms thereof shall, in each case, be deemed
not to constitute willful misconduct or gross negligence of the Issuing Bank. It
is further understood and agreed that, notwithstanding the proviso to clause
(iv) of Section 2.16(h), the Borrower's obligation hereunder to reimburse Letter
of Credit Disbursements will not be excused by the gross negligence or willful
misconduct of the Issuing Bank to the extent that the DLC Letter of Credit
Disbursement actually discharged a liability of, or otherwise benefited, or was
recovered by, the Borrower; provided, that, the foregoing shall not be construed
to excuse the Issuing Bank from liability to the Borrower to the extent of any
direct damages suffered by the Borrower that are caused by the Issuing Bank's
gross negligence or willful misconduct in determining whether drafts and other
documents presented under the applicable DLC Letter of Credit comply with the
terms thereof.

          (j) The Issuing Bank shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand for payment under a DLC
Letter of Credit. The Issuing Bank shall as promptly as possible give telephonic
notification, confirmed by telex or telecopy, to the Administrative Agent and
the Borrower of such demand for payment and whether the Issuing Bank has made or
will make the DLC Letter of Credit Disbursement thereunder; PROVIDED, THAT, the
failure to give such notice shall not relieve the Borrower of its obligation to
reimburse the DLC Letter of Credit Disbursement in accordance with this Section
2.16. The Administrative Agent shall promptly give each Revolving Lender notice
thereof.

          (k) The Borrower shall use each DLC Letter of Credit solely to support
its obligations under the POLR Agreement or the POLR II Agreement as required
thereby.

          (l) In the event that the Borrower is required pursuant to the terms
of this Agreement to provide cash collateral in respect of the DLC Letter of
Credit Exposure, the Borrower shall deposit in an account with the
Administrative Agent, for the benefit of each Lender having a Revolving Loan
Commitment, an amount in cash equal to the DLC Letter of Credit Exposure (or
such lesser amount as shall be required hereunder or thereunder). Such deposit
shall be held by the Administrative Agent as collateral for the payment and
performance of any outstanding DLC Letter of Credit Exposure. The Administrative
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Moneys in such account shall be held and
applied by the Administrative Agent in accordance with the Deposit Account
Agreement.

          Section 2.17 OPERATIONAL LETTERS OF CREDIT.

          (a) The Borrower may request the issuance of Operational Letters of
Credit, for the account of the Borrower, at any time during the Operational
Letter of Credit Availability Period; PROVIDED, THAT, any Operational Letter of
Credit shall be issued only if (and a request by the Borrower for the issuance
of any Operational Letter of Credit shall be deemed a representation and
warranty of the Borrower that) immediately following the issuance of such
Operational Letter of Credit, (i) the Operational Letter of Credit Exposure
shall not exceed $5,000,000, and (ii) the sum of the aggregate Letter of Credit
Exposure and the aggregate principal amount of outstanding Revolving Loans at
such time shall not exceed the lesser of (y) the aggregate Revolving Loan
Commitments at such time and (z) the Maximum Revolving Loan Amount effective as
of such time.

          (b) Each Operational Letter of Credit shall expire at 5:00 p.m., New
York City time, on the last day of the Operational Letter of Credit Availability
Period, unless such Operational Letter of Credit expires by its terms (or is
required by Section 2.17(c) to expire) on an earlier date. Each Operational
Letter of Credit shall provide for payments of drawings in Dollars.

          (c) Each issuance of any Operational Letter of Credit shall be made on
at least three Business Days' prior irrevocable written or telecopy notice (such
notice to be delivered by 10:00 a.m., New York City time) from the Borrower (or
such shorter notice as shall be acceptable to the Issuing Bank) to the
Administrative Agent and the Issuing Bank, specifying whether such Operational
Letter of Credit is a standby letter of credit or a trade letter of credit, the
date of issuance, the date on which such Operational Letter of Credit is to
expire (which shall not be later than (i) in all events, the last day of the
Operational Letter of Credit Availability Period and (ii)(A) in the case of
standby letters of credit, subject to extension, one year after the date of
issuance of such Operational Letter of Credit and (B) in the case of trade
letters of credit, 180 days after the date of issuance of such Operational
Letter of Credit), the amount of such Operational Letter of Credit, the name and
address of the beneficiary of such Operational Letter of Credit, and such other
information as may be necessary or desirable to complete such Operational Letter
of Credit. The Issuing Bank will give the Administrative Agent prompt notice of
the issuance and amount of such Operational Letter of Credit and the expiration
date of such Operational Letter of Credit (and the Administrative Agent shall
give prompt notice thereof to each Revolving Lender). Each Operational Letter of
Credit issued hereunder will be subject to the Uniform Customs and Practices for
Documentary Credits, as in effect from time to time.

          (d) By the issuance of an Operational Letter of Credit and without any
further action on the part of the Issuing Bank, the Administrative Agent or the
Revolving Lenders in respect thereof, the Issuing Bank hereby grants to each
Revolving Lender, and each Revolving Lender hereby acquires from the Issuing
Bank, a participation in such Operational Letter of Credit equal to such
Revolving Lender's Pro Rata Share (based on such Revolving Lender's Revolving
Loan Commitment) of the aggregate amount available to be drawn under such
Operational Letter of Credit, effective upon the issuance of such Operational
Letter of Credit. In consideration and in furtherance of the foregoing, each
Revolving Lender having a Revolving Loan Commitment hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, on behalf of the
Issuing Bank, in accordance with Section 2.03(c), such Revolving Lender's Pro
Rata Share (based on such Revolving Lender's Revolving Loan Commitment) of each
Operational Letter of Credit Disbursement made by the Issuing Bank and not
reimbursed by the Borrower when due in accordance with Section 2.17(g);
PROVIDED, THAT, the Revolving Lenders shall not be obligated to make any such
payment with respect to any wrongful Operational Letter of Credit Disbursement
made as a result of the gross negligence or willful misconduct of the Issuing
Bank.

          (e) Each Revolving Lender acknowledges and agrees that its obligation
to acquire participations pursuant to Section 2.17(d) in respect of Operational
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or Event of Default, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever (subject only to the
proviso set forth in the last sentence of Section 2.17(d)).

          (f) During the Operational Letter of Credit Availability Period, the
Borrower shall pay to the Administrative Agent, on each Quarterly Payment Date
in each year and on the date on which the Revolving Loan Commitments shall be
terminated as provided herein, (i) for the account of the Revolving Lenders,
ratably in proportion to their Revolving Loan Commitments, a fee on the average
daily aggregate amount available to be drawn under all outstanding Operational
Letters of Credit during the preceding quarter (or shorter period commencing
with the Closing Date) at a rate per annum equal to the applicable LIBO Rate
Margin from time to time in effect during such period pursuant to Section 2.06
and (ii) for the account of the Issuing Bank, a fee on the average daily
aggregate amount available to be drawn under all outstanding Operational Letters
of Credit during the preceding quarter (or shorter period commencing with the
Closing Date) at a rate per annum equal to 0.25%. Such fees shall be computed on
the basis of the actual number of days elapsed in a year of 360 days. Such fees
shall accrue from and including the Closing Date to but excluding the last day
of the Operational Letter of Credit Availability Period. In addition to the
foregoing, the Borrower shall pay directly to the Issuing Bank, for its account,
payable within 15 days after written demand therefor by the Issuing Bank has
been received by the Borrower, the Issuing Bank's out-of-pocket expenses in
connection with the issuance, transfer or amendment of or payment on any
Operational Letter of Credit.

          (g) The Borrower hereby agrees to reimburse the Issuing Bank for any
payment or disbursement made by the Issuing Bank under any Operational Letter of
Credit, by making payment in immediately available funds to the Administrative
Agent within one Business Day after receipt of notice of such payment or
disbursement, in an amount equal to the amount of such payment or disbursement,
plus interest on the amount so paid or disbursed by the Issuing Bank, to the
extent not reimbursed prior to 12:00 p.m. (New York City time) on the date of
such payment or disbursement, from and including the date paid or disbursed to
but excluding the date the Issuing Bank is reimbursed by the Borrower therefor,
at a rate per annum equal to the rate applicable to Base Rate Revolving Loans
during such period pursuant to Section 2.06. In the event the Borrower fails to
reimburse the Issuing Bank as required by the preceding sentence, the Issuing
Bank shall so notify the Administrative Agent and such payment or disbursement
shall be reimbursed to the Issuing Bank as contemplated by Section 2.03(c) or
Section 2.17(d), as applicable. The Issuing Bank shall give the Borrower prompt
notice of each drawing under any Operational Letter of Credit, provided, that,
the failure to give any such notice shall in no way affect, impair or diminish
the Borrower's obligations hereunder. The Administrative Agent shall promptly
pay any such amounts received by it to the Issuing Bank.

          (h) The Borrower's obligation to reimburse Operational Letter of
Credit Disbursements as provided in Section 2.17(g) shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance with
the terms of this Agreement under any and all circumstances, including the
following:

               (i) any lack of validity or enforceability of any Operational
          Letter of Credit or any other Financing Document;

               (ii) except as otherwise provided in clause (iv) of this Section
          2.17(h), the existence of any claim, setoff, defense or other right
          which the Borrower, any Affiliate or any other person may at any time
          have against the beneficiary under any Operational Letter of Credit,
          the Issuing Bank, the Administrative Agent, any Revolving Lender or
          any other person in connection with this Agreement, any other
          Financing Document or any other related or unrelated agreement or
          transaction;

               (iii) any draft or other document presented under an Operational
          Letter of Credit proving to be forged, fraudulent, invalid or
          insufficient in any respect or failing to comply with the Uniform
          Customs and Practices for Documentary Credits, as in effect from time
          to time, or any statement therein being untrue or inaccurate in any
          respect;

               (iv) payment by the Issuing Bank under an Operational Letter of
          Credit against presentation of a draft or other document which does
          not comply with the terms of such Operational Letter of Credit;
          PROVIDED, THAT, such payment was not wrongfully made as a result of
          the gross negligence or willful misconduct of the Issuing Bank;

               (v) any amendment, waiver or consent in respect of this Agreement
          or any other Financing Document; and

               (vi) any other act or omission or delay of any kind or any other
          circumstance or event whatsoever, whether or not similar to any of the
          foregoing and whether or not foreseeable, that might, but for the
          provisions of this Section 2.17(h), constitute a legal or equitable
          discharge of the Borrower's obligations hereunder.

          (i) It is expressly understood and agreed that, for purposes of
determining whether a wrongful payment under an Operational Letter of Credit
resulted from the Issuing Bank's gross negligence or willful misconduct, (i) the
Issuing Bank's acceptance of documents that appear on their face to comply with
the requirements of such Operational Letter of Credit, without responsibility
for further investigation, regardless of any notice or information to the
contrary, (ii) the Issuing Bank's exclusive reliance on the documents presented
to it under such Operational Letter of Credit as to any and all matters set
forth therein, including the amount of any draft presented under such
Operational Letter of Credit, whether or not the amount due to the beneficiary
thereunder equals the amount of such draft and whether or not any document
presented pursuant to such Operational Letter of Credit proves to be
insufficient in any respect (so long as such document on its face appears to
comply with the requirements of such Operational Letter of Credit), and whether
or not any other statement or any other document presented pursuant to such
Operational Letter of Credit proves to be forged or invalid or any statement
therein proves to be inaccurate or untrue in any respect whatsoever and (iii)
any noncompliance in any immaterial respect of the documents presented under
such Operational Letter of Credit with the terms thereof shall, in each case, be
deemed not to constitute willful misconduct or gross negligence of the Issuing
Bank. It is further understood and agreed that, notwithstanding the proviso to
clause (iv) of Section 2.17(h), the Borrower's obligation hereunder to reimburse
Operational Letter of Credit Disbursements will not be excused by the gross
negligence or willful misconduct of the Issuing Bank to the extent that such
Operational Letter of Credit Disbursement actually discharged a liability of, or
otherwise benefited, or was recovered by, the Borrower; PROVIDED, THAT, the
foregoing shall not be construed to excuse the Issuing Bank from liability to
the Borrower to the extent of any direct damages suffered by the Borrower that
are caused by the Issuing Bank's gross negligence or willful misconduct in
determining whether drafts and other documents presented under an Operational
Letter of Credit comply with the terms thereof.

          (j) The Issuing Bank shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand for payment under an
Operational Letter of Credit. The Issuing Bank shall as promptly as possible
give telephonic notification, confirmed by telex or telecopy, to the
Administrative Agent and the Borrower of such demand for payment and whether the
Issuing Bank has made or will make the Operational Letter of Credit Disbursement
thereunder; PROVIDED, THAT, the failure to give such notice shall not relieve
the Borrower of its obligation to reimburse Operational Letter of Credit
Disbursement in accordance with this Section 2.17. The Administrative Agent
shall promptly give each Revolving Lender notice thereof.

          (k) The Borrower shall use the Operational Letters of Credit solely to
support various financial and other payment or performance obligations of the
Borrower Entities (excluding obligations of Twelvepole, until Ceredo has
achieved Commercial Operation) incurred in the ordinary course of business
including, without limitation, any expansion, repowering, maintenance, repairs
or capital expenditures.

          (l) In the event that the Borrower is required pursuant to the terms
of this Agreement to provide cash collateral in respect of the Operational
Letter of Credit Exposure, the Borrower shall deposit in an account with the
Administrative Agent, for the benefit of each Lender having a Revolving Loan
Commitment, an amount in cash equal to the Operational Letter of Credit Exposure
(or such lesser amount as shall be required hereunder or thereunder). Such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of any outstanding Operational Letter of Credit Exposure. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Moneys in such account shall
be held and applied by the Administrative Agent in accordance with the Deposit
Account Agreement.

                                   ARTICLE III
                              conditions precedent

          Section 3.01 CONDITIONS PRECEDENT TO THE CLOSING DATE. The obligation
of the Lenders to make any Advances under this Agreement is subject to the
fulfillment on the Closing Date (in form, scope and substance satisfactory to
the Lenders) of the following conditions precedent:

          (a) FINANCING DOCUMENTS. Each of the following Financing Documents
shall have been duly authorized, executed and delivered by each party thereto
and shall be in full force and effect and all associated notices and
acknowledgments shall have been made or waived:

               (i)    this Agreement;

               (ii)   the Acquisition Loan Notes;

               (iii)  the Revolving Loan Notes;

               (iv)   any DLC Letter of Credit required to be delivered under
               the POLR Agreement or the POLR II Agreement on the Closing
               Date pursuant to the terms thereof;

               (v)    the Security Agreement;

               (vi)   the Equity Contribution Agreement;

               (vii)  the Security Account Control Agreement;

               (viii) the Deposit Account Agreement;

               (ix)   the Partnership Interest Pledge Agreements;

               (x)    the Mortgages;

               (xi)   the Financing Statements in respect of the Security
               Agreement, the Partnership Interest Pledge Agreements,
               the Stock Pledge Agreement and the Mortgages; and

               (xii)  the Stock Pledge Agreement.

          (b) PROJECT CONTRACTS. Receipt of a copy of each of the following duly
executed and delivered Project Contracts certified by a Responsible Officer of
the Borrower. All conditions precedent contained in such Project Contracts shall
have been satisfied or waived (as determined or approved by the Arrangers) in
accordance with the terms thereto:

               (i)       the CPS Strategic Alliance Agreement;

               (ii)      the O&M Agreements;

               (iii)     the DLC Interconnection Agreements;

               (iv)      the FE Interconnection Agreements;

               (v)       the POLR Agreement;

               (vi)      the POLR II Agreement;

               (vii)     the DLC Must-Run Agreements;

               (viii)    the FE Must-Run Agreements;

               (ix)      the Acquired Fuel Supply Contracts;

               (x)       the DLC Consent;

               (xi)      the FE Consent;

               (xii)     the Operator Consent;

               (xiii)    the CPS Consent;

               (xiv)     the DLC Easement and Attachment Agreement;

               (xv)      the FE Easement and Attachment Agreements;

               (xvi)     the COSI Technical Support Agreement;

               (xvii)    the Harwick Ash Agreement;

               (xviii)   the Harwick Consent; and

               (xix)     the Agency Agreement.

          (c) BORROWING NOTICE. The Administrative Agent shall have received a
Notice of Acquisition Borrowing in accordance with the terms of Section 2.03(a).

          (d) CORPORATE PROCEEDINGS. Receipt of copies of (i) all partnership
actions taken by or on behalf of the Borrower authorizing the execution,
delivery and performance of this Agreement and each other Transaction Document
to which the Borrower is a party, certified by a Responsible Officer of the
Borrower, (ii) all corporate or limited liability company action taken by or on
behalf of each other Credit Party and, to the extent obtainable using reasonable
efforts, each Major Project Party authorizing the execution, delivery and
performance of each Transaction Document to which such Person is a party,
certified by a Responsible Officer of such Credit Party or, to the extent
obtainable using reasonable efforts, such Major Project Party, as the case may
be, and (iii) all other documents evidencing other necessary corporate, limited
liability company, partnership or other action of each Credit Party with respect
to the Financing Documents to which it is a party, certified by a Responsible
Officer of such Credit Party.

          (e) INCUMBENCY; GOVERNING DOCUMENTS. Receipt of a certificate of a
Responsible Officer of the Borrower and each other Credit Party certifying (x)
the names and true signatures of the officers or authorized representatives of
such Credit Party authorized to sign the Financing Documents to which it is a
party and the other documents to be delivered thereunder and (y) a copy of the
Governing Documents of each Credit Party as in effect on the Closing Date.

          (f) GOOD STANDING CERTIFICATES. Receipt of copies of certificates
dated as of a recent date from the Secretary of State or other appropriate
authority of such jurisdiction evidencing the good standing of the Borrower and
each other Credit Party in the jurisdiction of incorporation or its
organization, as the case may be, and in every jurisdiction where the character
of such Person's properties or the nature of its activities make such
qualifications necessary.

          (g) LEGAL OPINIONS. Receipt of the following legal opinions: (i)
Thelen Reid & Priest LLP, special counsel to the Credit Parties; (ii) Kirkland &
Ellis, special counsel to the Credit Parties; (iii) Stroock & Stroock & Lavan
LLP, special counsel to the Credit Parties, (iv) Wolf, Block, Schorr and
Solis-Cohen, special Pennsylvania counsel to the Credit Parties, (v) Ryan,
Russell, Ogden & Seltzer, special Pennsylvania counsel to the Credit Parties,
and (vi) Benesch, Friedlander, Caplan & Aronoff, special Ohio counsel to the
Credit Parties.

          (h) ACQUISITION. Receipt of a copy of the Acquisition Agreement, in
the form executed and delivered by the parties thereto as of September 24, 1999,
certified by a Responsible Officer of the Borrower and all conditions precedent
to the obligation of the Borrower thereunder shall have been satisfied (as
determined by the Lenders) or waived (as approved by the Lenders).

          (i) PROJECTIONS. Receipt, on or prior to the Closing Date, of the
Projections mutually acceptable to the Borrower and the Arrangers.

          (j) GOVERNMENTAL APPROVALS. Receipt of a certificate from a
Responsible Officer of the Borrower (i) attaching copies of those Closing Date
Governmental Approvals appearing on Part A of SCHEDULE 4.04 and stating that all
such Closing Date Governmental Approvals have been duly obtained and are in full
force and effect, not subject to any appeal or similar proceeding, except only
as to an appeal or similar proceeding that is specifically set forth on Part C
of Schedule 4.04, (ii) certifying that those Closing Date Governmental Approvals
appearing on Part B of SCHEDULE 4.04 have been duly obtained and are in full
force and effect, copies of which are expected to be received in the ordinary
course of business without undue expense or delay, and that are not subject to
any appeal or similar proceeding, except only as to an appeal or similar
proceeding that is specifically set forth on Part C of Schedule 4.04, and (iii)
certifying that the Borrower has no reason to believe that all Governmental
Approvals appearing on Part D of SCHEDULE 4.04 will not be obtained by the dates
by which they are required and no other Governmental Approvals are required for
the ownership or operation of the Portfolio Assets as contemplated by the
Transaction Documents (other than Governmental Approvals that may be required
for the operation of the Phillips facility or Ceredo, which in each case shall
not be necessary unless and until the Borrower or Twelvepole, as applicable,
elects to place such facility into operation).

          (k) INDEPENDENT ENGINEER'S REPORT. Receipt of the Independent
Engineer's Report, addressing all aspects of the Portfolio Assets, including,
without limitation, the forecasted operating and capital costs of the Portfolio
Assets, the ability of the Portfolio Assets to operate as expected, forecasted
heat rates, overall assessment of the Portfolio Assets and forecasted
electricity generation revenues for the Borrower and environmental matters, in
form and substance reasonably satisfactory to the Arrangers.

          (l) POWER MARKET CONSULTANT REPORT. Receipt of the Power Market
Consultant Report, in form and substance reasonably satisfactory to the
Arrangers.

          (m) FUEL CONSULTANT REPORT. Receipt of the Fuel Consultant's Report,
as to fuel-related matters, in form and substance reasonably satisfactory to the
Arrangers.

          (n) FUEL PLAN. Receipt of the Fuel Plan, in form and substance
reasonably satisfactory to the Arrangers.

          (o) POWER MARKETING PLAN. Receipt of the Power Marketing Plan, in form
and substance reasonably satisfactory to the Arrangers.

          (p) O&M PLAN. Receipt of the O&M Plan, in form and substance
reasonably satisfactory to the Arrangers.

          (q) FEES AND EXPENSES. All fees and expenses due and payable by the
Borrower or any other Credit Party to any Secured Party pursuant to any
Financing Document on or prior to the Closing Date shall have been paid to the
extent invoiced to the Borrower at least one (1) Business Day prior to the
Closing Date.

          (r) EQUITY CONTRIBUTION. The Sponsor shall have (i) made an
irrevocable and unconditional cash equity contribution to the account of the
Borrower in an amount equal to the Equity Contribution Amount, and such amount
shall have been deposited into the Equity Proceeds Account for application
therefrom pursuant to the terms of the Deposit Account Agreement, and (ii) taken
such action as is necessary to make the representation and warranty set forth in
Section 4.23 true and correct as of the Closing Date.

          (s) NO LEGAL PROCEEDINGS. Except as set forth on SCHEDULE 4.05 hereto,
there shall be no (i) injunction, writ, preliminary restraining order or any
order of any nature issued by an arbitrator, court or other Governmental
Authority in connection with the transactions provided for herein or in the
other Transaction Documents, or (ii) litigation, investigation or proceedings
before any arbitrator, court or other Governmental Authority pending or, to the
Borrower's knowledge, threatened (A) against the Borrower, any Credit Party, any
Portfolio Asset or any other Major Project Party or any of their respective
properties, revenues or assets or (B) with respect to this Agreement or the
other Transaction Documents or any of the transactions contemplated hereby or
thereby. To the Borrower's knowledge, there is no reasonable basis for any of
the foregoing and a Responsible Officer of the Borrower shall have delivered a
certificate of a Responsible Officer of as to the matters set forth in this
Section 3.01(s).

          (t) FINANCIAL STATEMENTS; FEDERAL TAX ID NUMBERS. Receipt of (i)
balance sheets and financial statements of each Credit Party, prepared in
accordance with GAAP and certified as to accuracy by a Responsible Officer of
each such Credit Party, (ii) the most recent balance sheets and financial
statements of COSI and its Subsidiaries, CPS and, to the extent reasonably
available to the Borrower, each other Major Project Party as at the end of their
respective fiscal years and the related statements of income, retained earnings
and cash flows of such Major Project Party, for such fiscal year, all in
reasonable detail and (iii) the Federal tax identification numbers and addresses
of each Credit Party delivering financial statements under Section 3.01(t)(i).

          (u) ESTABLISHMENT OF ACCOUNTS. All Accounts and sub-accounts thereof
shall have been established pursuant to the Transaction Documents and the
Borrower shall have contemporaneously made, or caused to be made, the initial
deposits into (i) the Debt Service Reserve Account, in an amount not less than
$45,000,000 and (ii) the Replacement Capital Expenditure Pre-Funding Account in
an amount not less than $10,000,000.

          (v) PERFECTION OF SECURITY INTERESTS. All filings, recordings and
other actions that are necessary or, in the reasonable opinion of the Lenders,
desirable in order to establish, protect and preserve the Administrative Agent's
(for the benefit of the Secured Parties) first priority lien on and, perfected
security interest in all right, title, estate and interest in and to the
Collateral covered by the Security Documents executed and delivered as of the
Closing Date, on the terms set forth therein, shall have been duly made or taken
or satisfactory arrangements to make such filings promptly following the Closing
Date shall be established. Upon making such filings, the Administrative Agent
(for the benefit of the Secured Parties) shall have, on the terms set forth in
such Security Documents, a first priority lien on and perfected security
interest in all right, title, estate and interest in and to the applicable
Collateral, in each case prior and superior to all other Liens except Permitted
Liens.

          (w) REAL ESTATE MATTERS. Receipt of (i) one or more original lender's
policies of title insurance issued by Fidelity National Title Insurance Company
of New York and Chicago Title Insurance Company (the "TITLE COMPANIES"), as
co-insurers thereunder, or one or more other title companies acceptable to the
Arrangers with such endorsements and coverage as the Arrangers reasonably
request insuring the liens created by the Mortgages in a manner reasonably
acceptable to the Arrangers, (ii) one or more original owner's policies of title
insurance issued by the Title Companies or one or more other title companies
reasonably acceptable to the Arrangers with such endorsements and coverage as is
reasonably acceptable to the Arrangers covering the real property interests
encumbered by the Mortgages, and (iii) surveys conducted by licensed surveyors
reasonably satisfactory to the Arrangers containing certifications satisfactory,
and showing no state of facts unsatisfactory, to the Arrangers, in respect of
the real property interests encumbered by the Mortgages.

          (x) INSURANCE. (i) Receipt, from the Insurance Consultant, of the
Insurance Consultants Report in respect of the insurance coverages for the
Portfolio Assets, in form and substance reasonably satisfactory to the
Arrangers, (ii) all insurance policies required to be maintained by the Borrower
pursuant to Section 5.06 shall have been obtained, shall be in full force and
effect on the Closing Date and not subject to cancellation without prior notice,
all such insurance policies shall comply in all material respects with the
requirements of SCHEDULE 5.06, and the Arrangers shall have received a
certificate from the Insurance Consultant as to the matters set forth in this
clause (ii), (iii) the Borrower shall deliver or cause to be delivered originals
or certified copies of all policies evidencing such insurance described in
clause (ii) of this Section 3.01(x) (or a binder, commitment or certificates
signed by the insurer or a broker authorized to bind the insurer) in form and
substance satisfactory to the Arrangers, and (iv) the Insurance Consultant shall
have approved all insurance policies, applications, disclosures and other
information provided to or obtained from, as the case may be, all insurers
providing the insurances identified in SCHEDULE 5.06 and (v) all premiums then
due and payable on the insurance policies required pursuant to Section 5.06
shall have been paid.

          (y) INTELLECTUAL PROPERTY. The Borrower shall provide satisfactory
evidence to the Lenders that it has obtained, on or prior to the Closing Date,
all Intellectual Property rights contemplated by Section 4.19.

          (z) OPERATING BUDGET. The Arrangers and the Independent Engineer shall
have received an Operating Budget conforming to the requirements set forth in
the definition thereof and otherwise reasonably acceptable to them.

          (aa) PROCESS AGENT. Receipt of evidence that each Credit Party has
irrevocably appointed as its agent for service of process National Registered
Agents, Inc. (or another Person satisfactory to the Arrangers), and that each
such agent has accepted the appointment and has agreed to forward forthwith to
such Credit Party all legal process in New York, New York addressed to such
Credit Party as applicable, received by such agent.

          (bb) FEE SIDE LETTERS. Each Arranger and each Agent shall have
received a copy of each such Person's respective Fee Side Letter, in form and
substance satisfactory to such Person.

          (cc) OFFICER'S CERTIFICATE. Receipt of a certificate from a
Responsible Officer of the Borrower certifying that (i) all representations and
warranties made by the Borrower in Article IV hereof are true in all respects,
(ii) the Borrower has duly performed and complied with each of the obligations
required under the Project Contracts to which it is a party, (iii) no Default or
Event of Default has occurred and is continuing, (iv) each Project Contract to
which the Borrower is a party remains in full force and effect, (v) to such
Responsible Officer's knowledge, no event has occurred which could reasonably be
expected to cause a Material Adverse Effect, both before and after giving effect
to the transactions contemplated to occur on the Closing Date, and (vi) all
utility services necessary for the operation and maintenance of the Portfolio
Assets in accordance with Prudent Industry Practice are available and have been
obtained (other than utility services necessary for the operation and
maintenance of the Phillips facility, which shall not be necessary unless and
until the Borrower elects to place such facility into operation).

          (dd) LIEN SEARCHES. Receipt of results of a recent search by a Person
satisfactory to the Lenders of the Uniform Commercial Code, judgment and tax
lien filings which may have been filed with respect to personal property of the
Credit Parties, and the results of such search shall be reasonably satisfactory
to the Lenders.

          (ee) ALLEGHENY LITIGATION. Either (i) receipt of evidence of a final
resolution to the litigation between Allegheny Energy, Inc. and DQE, Inc. filed
in the United States District Court for the Western District of Pennsylvania
(Civil Action No. 98-1639), and any related actions, or (ii) the Lenders have
otherwise become reasonably satisfied with the risk of the sale of the Portfolio
Assets to the Borrower being enjoined, rescinded or otherwise materially
adversely affected as a result of such litigation.

          (ff) OTHER DOCUMENTS; INFORMATION. The Arrangers shall have received
(with a copy for each of the other Lenders) all such other statements,
certificates, documents and other information with respect to the matters
contemplated by this Agreement and the other Financing Documents and Transaction
Documents as the Arrangers or any Lender may reasonably request.

          Section 3.02 CONDITIONS PRECEDENT TO REVOLVING LOANS. The obligation
of any Lender to make its respective Revolving Advance and the obligation of the
Issuing Bank to issue the DLC Letter of Credit or any Operational Letter of
Credit under this Agreement is subject to the fulfillment on the applicable
Revolving Loan Funding Date in a manner satisfactory to each such Lender of the
following conditions precedent:

          (a) NOTICE OF REVOLVING LOAN. The Administrative Agent shall have
received (with a copy for each of the other Revolving Lenders) a Notice of
Revolving Borrowing in accordance with the terms of Section 2.03(b).

          (b) REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Credit Parties under this Agreement and in each other Financing
Document to which each such Person is a party shall be true and correct in all
material respects (both before and after giving effect to the proposed Revolving
Loan) on and as of the Revolving Loan Funding Date as though made on and as of
the Revolving Loan Funding Date, except to the extent that such representations
and warranties relate to a specific earlier date, in which case such
representations and warranties shall have been true and correct in all material
respects on and as of such earlier date.

          (c) EVENT OF DEFAULT. No Default or Event of Default shall have
occurred and be continuing under any Transaction Document (both before and after
giving effect to the proposed Revolving Loan) on and as of such Revolving Loan
Funding Date.

          Section 3.03 CONDITIONS PRECEDENT TO THE CEREDO EFFECTIVE DATE. The
occurrence of the "Ceredo Effective Date," and the obligation of the
Administrative Agent from time to time thereafter to release funds then
remaining in the Equity Proceeds Account, to or on the direction of the
Borrower, in accordance with the Deposit Account Agreement, is subject to the
fulfillment (in form, scope and substance satisfactory to the Arrangers) of the
following conditions precedent:

          (a) CLOSING DATE CONDITIONS. All of the conditions precedent set forth
in this Section 3.03 shall have been satisfied on or before December 31, 2000.

          (b) ACQUISITION CERTIFICATE. The Administrative Agent shall have
received an Officer's Certificate of the Sponsor certifying the acquisition by
the Sponsor of 100% of the equity interests in Twelvepole, free and clear of any
lien, claim or encumbrance, pursuant to the Twelvepole Acquisition Agreement.

          (c) FINANCING DOCUMENTS. The Twelvepole Intercompany Working Capital
Note shall be executed by Twelvepole, accompanied by undated assignments
executed in blank, and delivered to the Administrative Agent. In addition, each
of the following Financing Documents shall have been duly authorized, executed
and delivered and shall be in full force and effect and all associated notices
and acknowledgments shall have been made or waived:

               (i)   the Borrower Twelvepole LLC Interest Pledge Agreement;

               (ii)  the Twelvepole Intercompany Agreement;

               (iii) the Twelvepole Guarantee; and

               (iv)  the Financing Statements in respect of the Borrower
          Twelvepole LLC Interest Pledge Agreement.

          (d) PROJECT CONTRACTS. Receipt of a certificate from a Responsible
Officer of the Borrower certifying that (i) the Ceredo Project Contracts and the
Governing Documents of Twelvepole delivered to the Administrative Agent on the
Ceredo Closing Date are true, correct and complete copies of the Ceredo Project
Contracts in effect as of the Ceredo Effective Date (except as the Ceredo EPC
Contract has been amended as provided in EXHIBIT X hereto, with any changes to
such EXHIBIT X as shall be approved by the Arrangers, or Section 6.05) and all
of the Governing Documents of Twelvepole in existence as of the Ceredo Effective
Date and (ii) as of the Ceredo Effective Date, none of such Ceredo Project
Contracts or Governing Documents has been amended, modified or terminated except
in accordance herewith and as disclosed in writing to the Administrative Agent,
the representations and warranties of Twelvepole and, to the Borrower's
knowledge, each Major Project Party, in each such Ceredo Project Contract to
which each such Person is a party are true and correct in all material respects
and, to the Borrower's current actual knowledge, no other party to a Ceredo
Project Contract is in default of such party's material obligations thereunder.

          (e) CORPORATE PROCEEDINGS. Receipt of copies of (i) all corporate,
limited liability company, partnership or other actions taken by or on behalf of
Twelvepole, authorizing the execution, delivery and performance of each
Transaction Document to which it is a party, certified by a Responsible Officer
of Twelvepole, (ii) all corporate, limited liability company, or partnership or
other action taken by or on behalf of the Borrower and the General Partner
authorizing the execution, delivery and performance of each Transaction Document
executed and delivered pursuant to this Section 3.03 to which such Person is a
party, certified by a Responsible Officer of each such Person, as the case may
be (including the amendment of the business purpose clauses of the Governing
Documents of the Borrower and the General Partner to the extent necessary to
reflect the Borrower's acquisition and ownership of the membership interests of
Twelvepole and the development, construction, ownership and operation of Ceredo
by Twelvepole as contemplated under Section 6.04 hereof), (iii) the Twelvepole
Operating Agreement, amended to reflect the 100% ownership interest of Borrower
and to include single-purpose entity covenants as provided on Exhibit V hereto,
certified by a Responsible Officer of Twelvepole, and (iv) all other documents
evidencing other necessary corporate, limited liability company, partnership or
other action of any other Credit Party with respect to the Transaction Documents
delivered pursuant to this Section 3.03, certified by a Responsible Officer of
such Person.

          (f) INCUMBENCY; RESPONSIBLE OFFICER CERTIFICATES. Receipt of a
certificate of a Responsible Officer of Twelvepole certifying the names and true
signatures of the officers or authorized representatives of Twelvepole
authorized to sign the Financing Documents to which it is a party and the other
documents to be delivered thereunder.

          (g) GOOD STANDING CERTIFICATES. Receipt of copies of certificates
dated as of a recent date from the Secretary of State or other appropriate
authority of such jurisdiction evidencing the good standing of Twelvepole in the
jurisdiction of its incorporation or organization, as the case may be, and in
every jurisdiction where the character of such Person's properties or the nature
of its activities make such qualifications necessary.

          (h) GENERATOR PURCHASE ORDER. The Administrative Agent shall have
received an Officer's Certificate of the Borrower certifying that all right,
title and interest of Columbia Capacity in, to and under the Ceredo Generator
Purchase Order has been duly assigned to Twelvepole, free and clear of liens,
claims or encumbrances, or that the Borrower has made other arrangements with
respect thereto reasonably satisfactory to the Arrangers.

          (i) EQUITY CONTRIBUTION. The Administrative Agent shall have received
an Officer's Certificate of the Sponsor certifying that the Sponsor has made an
irrevocable and unconditional contribution to the Borrower of 100% of the equity
interests in Twelvepole.

          (j) LEGAL OPINIONS. The Arrangers shall have received the following
legal opinions: (i) Thelen Reid & Priest, special counsel to the Borrower and
Twelvepole, and (ii) Stroock & Stroock & Lavan LLP, special counsel to the
Borrower and Twelvepole, in each case in form and substance reasonably
acceptable to the Arrangers, it being acknowledged that legal opinions
substantially in the form delivered pursuant to Section 3.01(g) hereof (with
such additions and other changes as are acceptable to the Arrangers and
necessary to reflect the structure of the transactions contemplated by this
Section 3.03) shall be deemed to be acceptable.

          (k) GOVERNMENTAL APPROVALS. Receipt of a certificate from a
Responsible Officer of the Borrower certifying that the Borrower has no reason
to believe that all Governmental Approval required for the ownership or
operation of Ceredo will not be obtained by the dates by which they are
required.

          (l) PERFECTION OF SECURITY INTERESTS. All filings, recordings and
other actions that are necessary or desirable in the reasonable opinion of the
Lenders in order to establish, protect and preserve the Administrative Agent's
(for the benefit of the Secured Parties) first priority lien on and, perfected
security interest in all right, title, estate and interest in and to the
Collateral covered by the Borrower Twelvepole LLC Interest Pledge Agreement, on
the terms set forth therein, shall have been duly made or taken or satisfactory
arrangements to make such filings promptly following the Ceredo Effective Date
shall be established. Upon making such filings, the Administrative Agent (for
the benefit of the Secured Parties) shall have, on the terms set forth in such
Security Documents, a first priority lien on and perfected security interest in
all right, title, estate and interest in and to the applicable Collateral, in
each case prior and superior to all other Liens except Permitted Liens.

          (m) REAL ESTATE MATTERS. Receipt of a copy of one or more owner's
policies of title insurance issued by First American Title Insurance Company or
one or more other title companies acceptable to the Arrangers, insuring title to
the real property interests to be encumbered by the Twelvepole Mortgage,
reasonably acceptable to the Arrangers.

          (n) OFFICER'S CERTIFICATE. Receipt of a certificate from a Responsible
Officer of the Borrower certifying that (i) all representations and warranties
made by the Borrower in Article IV hereof (except in respect of Twelvepole,
Ceredo or the other properties or assets (tangible or intangible, real or
personal) of Twelvepole) are true in all respects as if made on and as of the
Ceredo Effective Date, except to the extent that such representations and
warranties relate to a specific earlier date, in which case such representations
and warranties shall have been true and correct on and as of such earlier date,
(ii) nothing has come to the attention of the Borrower that would cause the
Borrower to believe that the representations and warranties in Article IV, as
they relate to Ceredo, will not be true in all respects as of February 15, 2001
or that Twelvepole will not be able to achieve Commercial Operation with respect
to Ceredo on or before July 1, 2001, (iii) no Default or Event of Default has
occurred and is continuing, and (iv) no Closing Failure has occurred as of such
date.

          (o) INSURANCE. (i) Receipt, from the Insurance Consultant, of a
supplemental Insurance Consultant's Report in respect of the insurance coverages
for Ceredo, in form and substance reasonably satisfactory to the Arrangers, (ii)
all insurance policies required to be maintained with respect to Twelvepole and
Ceredo pursuant to Section 5.06 shall have been obtained, shall be in full force
and effect on the Ceredo Effective Date and not subject to cancellation without
prior notice, all such insurance policies shall comply in all material respects
with the requirements of Schedule 5.06, and the Arrangers shall have received a
certificate from the Insurance Consultant as to the matters set forth in this
clause (ii), (iii) the Borrower shall deliver or cause to be delivered originals
or certified copies of all policies evidencing such insurance described in
clause (ii) of this Section 3.03(o) (or a binder, commitment or certificates
signed by the insurer or a broker authorized to bind the insurer) in form and
substance satisfactory to the Arrangers, (iv) the Insurance Consultant shall
have approved all insurance policies, applications, disclosures and other
information provided to or obtained from, as the case may be, all insurers
providing the insurance identified in Schedule 5.06 and (v) all premiums then
due and payable on the insurance policies required pursuant to Section 5.06
shall have been paid.

          (p) PROCESS AGENT. Receipt of evidence that Twelvepole has irrevocably
appointed as its agent for service of process National Registered Agents, Inc.
(or another Person satisfactory to the Arrangers), and that each such agent has
accepted the appointment and has agreed to forward forthwith to Twelvepole all
legal process in New York, New York addressed to Twelvepole received by such
agent.

          (q) OTHER DOCUMENTS; INFORMATION. The Arrangers shall have received
(with a copy for each of the other Lenders) all such other statements,
certificates, documents and other information with respect to the matters
contemplated by this Agreement and the other Financing Documents and Transaction
Documents as the Arrangers or any Lender may reasonably request.

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

          In order to induce the Secured Parties to enter into this Agreement
and the other agreements contemplated hereby, the Borrower makes the following
representations and warranties to the Secured Parties; PROVIDED, however, that
(i) the Borrower shall not be deemed to make such representations as they relate
to Twelvepole, Ceredo or the other properties and assets (tangible or
intangible, real or personal) of Twelvepole until the Borrower has delivered to
the Administrative Agent the certificate with respect thereto described in
Section 5.28(vii) and (ii) with respect to all such representations as they
relate to Twelvepole, Ceredo or the other properties and assets (tangible or
intangible, real or personal) of Twelvepole, all references in this Article IV
to the "Closing Date" shall be deemed to be references to the date of the
certificate with respect thereto described in Section 5.28(vii).

          Section 4.01 EXISTENCE; DUE QUALIFICATION; COMPLIANCE WITH LAW. Each
Borrower Entity (a) is duly formed, validly existing and in good standing under
the laws of the respective jurisdiction of its formation, (b) has all requisite
power and authority to own its property and assets, to borrow money and to
transact the business in which it is presently engaged and in which it proposes
to be engaged, (c) has duly qualified and is authorized to do business and is in
good standing in every jurisdiction where the character of its properties or the
nature of its activities makes such qualification necessary and (d) is in full
compliance with its Governing Documents, all Contractual Obligations, all
applicable Requirements of Law and all of its Governmental Approvals, except to
the extent that the failure to comply therewith could not reasonably be expected
to have a Material Adverse Effect.

          Section 4.02 POWER; AUTHORITY; NO VIOLATION; BINDING EFFECT. (a) The
execution, delivery and performance by the Borrower Entities of the Transaction
Documents to which each is a party and the consummation of the transactions
contemplated thereby (i) are within their respective powers, (ii) have been duly
authorized by all necessary corporate or partnership action, (iii) do not and
will not contravene (A) their respective Governing Documents or (B) any material
Requirement of Law, any material Contractual Obligation or any material
Governmental Approval binding on or affecting any of them and (iv) do not and
will not conflict with or be inconsistent with or result in any breach of any of
the terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to create
or impose) any Lien (except Permitted Liens) upon any of their respective
properties or assets pursuant to, the terms of any material Contractual
Obligation binding on or affecting any of them.

          (b) Each Borrower Entity has duly executed and delivered each
Transaction Document to which it is a party. Each Transaction Document
constitutes the legal, valid and binding obligation of each Borrower Entity (to
the extent it is a party thereto), enforceable against such Borrower Entity in
accordance with its terms, except as enforcement thereof may be subject to (i)
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and (ii) general
principles of equity.

          Section 4.03 OWNERSHIP OF PROPERTY. Each Borrower Entity has good
title to, or valid leasehold, easement or right-of-way interests in, the
material property, assets or revenues which it purports to own, lease or hold
any such interest in, free and clear of all Liens (except Permitted Liens),
including possession of all required real estate interests and licenses,
Intellectual Property and other proprietary rights.

          Section 4.04 GOVERNMENTAL APPROVALS. (i) Except as otherwise set forth
on SCHEDULE 4.04 attached hereto, no Governmental Approval or approval of any
other Person (except such as have been duly obtained, made or given, and are in
full force and effect or the failure to obtain which is not material to the
ongoing operation of any Portfolio Asset) is required to authorize, or is
required in connection with (a) the execution, delivery or performance of any
Transaction Document by any Borrower Entity or the consummation of any of the
transactions contemplated thereby (including, without limitation, the purchase
of the Portfolio Assets and the granting of Liens pursuant to the Security
Documents), (b) the ownership, maintenance or operation of the Portfolio Assets
by the relevant Borrower Entity (other than Governmental Approvals that may be
required for the operation of Phillips or Ceredo, which shall not be necessary
unless and until the Borrower or Twelvepole, as applicable, elects to place such
Portfolio Asset into operation) or (c) the legality, validity, binding effect or
enforceability of any Transaction Document. Except as otherwise set forth on
Part C of SCHEDULE 4.04, all applicable waiting periods (including appeal
periods) relating to any such Governmental Approval or other approval which are
required and have been obtained have expired without any adverse action taken
with respect thereto.

               (ii) On the Closing Date, each Revolving Loan Funding Date and
the date of issuance of any Letter of Credit, each of the Governmental Approvals
and other consents and approvals listed on Parts A and B of SCHEDULE 4.04, is in
full force and effect, is not subject to any appeal or similar proceeding,
except as such appeal or similar proceeding is expressly described on Part C of
SCHEDULE 4.04. The Borrower has no reason to believe, after reasonable inquiry,
that as of the Closing Date, any of the Governmental Approvals and other
consents and approvals listed on Part D of SCHEDULE 4.04 cannot or will not be
obtained or made in the normal course of business as and when required and
without material expense or delay. No Borrower Entity is in violation of any
condition in any material Governmental Approval.

          Section 4.05 LEGAL PROCEEDINGS. Except as set forth on SCHEDULE 4.05
attached hereto, there is no (a) injunction, writ, preliminary restraining order
or order of any nature issued by an arbitrator, court or other Governmental
Authority against any Borrower Entity, or, to the Borrower's knowledge, against
any other Major Project Party, in connection with the transactions provided for
herein or in the other Transaction Documents, or (b) action, suit, arbitration,
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority pending against (i) any Borrower Entity or, to the
Borrower's knowledge, threatened against any Borrower Entity nor, to the
Borrower's knowledge, is there any reasonable basis for any such action, suit
arbitration, litigation, investigation or proceeding, or, (ii) to the Borrower's
knowledge, pending or threatened against any other Major Project Party, which,
solely with respect to this clause (ii), could reasonably be expected to result
in a material adverse affect on the financial condition of such Major Project
Party or such Major Project Parties' ability to fulfill its obligations under
the Project Contract to which it is a party.

          Section 4.06 FINANCIAL STATEMENTS. Each financial statement of the
Credit Parties, and to the Borrower's knowledge, the Major Project Parties,
delivered by the Borrower to the Arrangers, Lenders or the Administrative Agent,
on the Closing Date was prepared in accordance with GAAP and fairly presents the
financial condition of such party as of the date of such financial statement.
Each financial statement of the Credit Parties, delivered from time to time by
the Borrower as required hereunder, was prepared in accordance with GAAP and
fairly presents the financial condition of such party as of the date of such
financial statement.

          Section 4.07 INDEBTEDNESS. On the Closing Date, the Ceredo Closing
Date, the Ceredo Effective Date and each Revolving Loan Funding Date, the
Borrower has no outstanding Indebtedness other than Permitted Indebtedness.

          Section 4.08 NO DEFAULT. No Default or Event of Default has occurred
and is continuing.

          Section 4.09 TAXES. Each Borrower Entity has filed all tax returns
required to be filed by it and has paid all taxes and assessments payable by it
which have become due, other than those not yet delinquent and except for those
being contested in good faith and by appropriate proceedings and for which
Acceptable Reserves have been established. No tax Liens have been filed and no
claims or assessments are currently being asserted or, to the Borrower's
knowledge, are reasonably expected to be asserted with respect to any such taxes
or other charges.

          Section 4.10 USE OF PROCEEDS. All proceeds of the Loans will be used
only for the purposes specified in Sections 2.01(d) and 2.02(d), as applicable.
No part of the proceeds of any Loan and no proceeds of any Letter of Credit will
be used by the Borrower to purchase or carry any Margin Stock or to extend
credit to any other Person for the purpose of purchasing or carrying any Margin
Stock.

          Section 4.11 COMPLIANCE WITH ERISA. Each Borrower Entity, the Operator
and each ERISA Affiliate has fulfilled its obligations under the minimum funding
standards of ERISA and the Code with respect to each Benefit Arrangement and
Plan and is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code with respect to each Benefit Arrangement and
Plan. None of the Borrower Entities, the Operator or any ERISA Affiliate has (a)
sought a waiver of the minimum funding standard under Section 412 of the Code in
respect of any Plan, (b) failed to make any contribution or payment to any Plan
or Multiemployer Plan or in respect of any Benefit Arrangement, or made any
amendment to any Plan or Benefit Arrangement, which in either case would trigger
the provisions of Section 412(n) or 401(a)(29) of the Code (or any corresponding
provisions of ERISA), (c) incurred any liability under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of ERISA, (d)
engaged in any transaction described in Sections 4069 or 4204 of ERISA, or (e)
engaged in any Prohibited Transaction. No condition has occurred or exists with
respect to each Plan which by the passage of time would be expected to result in
an accumulated funding deficiency (within the meaning of Section 412 of the
Code).

          Section 4.12 MATERIAL LIABILITIES. No Borrower Entity has any material
liabilities (actual or contingent) other than those (a) existing on the Closing
Date as set forth in SCHEDULE 4.12 hereto, as set forth in its most recent
financial statements or in the Operating Budget, (b) arising out of, or
expressly permitted by, this Agreement or the other Transaction Documents to
which it is, or is to become, a party or (c) liabilities incurred, existing or
assumed after the Closing Date pursuant to written agreements, contracts,
commitments and/or arrangements of any Borrower Entity, entered into in the
ordinary course of business permitted pursuant to the Financing Documents and
which individually or in the aggregate would not reasonably likely to result in
a material adverse effect on such Borrower Entity's financial condition or its
ability to fulfill its obligations under the Transaction Documents to which it
is a party.

          Section 4.13 REGULATION OF PARTIES. (a) Each of the Borrower Entities
and Operator is an "exempt wholesale generator" under Section 32 of PUHCA. So
long as the Borrower Entities and Operator are owning and operating the
Portfolio Assets and are "exempt wholesale generators" under Section 32 of
PUHCA, none of the Borrower Entities nor any Credit Party nor Operator is, and
none will be, solely as a result of its participation in the transactions
contemplated hereby or by any other Transaction Document, or as a result of the
ownership, use or operation of the Portfolio Assets, subject to regulation by
the Securities and Exchange Commission as a "public-utility company," or an
"electric utility company," or a "holding company" or a "subsidiary" or
"affiliate" of any of the foregoing under PUHCA. So long as the owner and each
operator of the Portfolio Assets is an "exempt wholesale generator" under
Section 32 of PUHCA, none of the Lenders will, solely as a result of its or
their ownership or operation of the Portfolio Assets upon the exercise of
remedies under the Security Documents, be subject to regulation by the
Securities and Exchange Commission as a "public-utility company," an "electric
utility company," a "holding company," or a subsidiary or affiliate of any of
the foregoing under PUHCA.

          (b) None of the Credit Parties is an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.

          Section 4.14 SECURITY DOCUMENTS. The Security Documents, together with
all necessary recordings thereof and filings with respect thereto, are effective
to create as security for the Loans, valid and enforceable Liens in and on all
of the Collateral described in each such Security Document in favor of the
Administrative Agent (for the benefit of the Secured Parties), and upon making
the filings referenced in SCHEDULE 4.14 hereof in the applicable filing or
recording office in accordance with applicable Requirements of Law, all
necessary and appropriate recordings and filings will have been made, all other
necessary and appropriate action will have been taken so that each such Security
Document creates a perfected Lien (other than with respect to vehicles or boats)
on and security interest in the Collateral covered thereby and appropriate
consents to the action, perfection and enforcement of such Liens have been
obtained from each of the Project Parties superior to and prior to the rights of
all other Persons, subject only to Permitted Liens. All taxes, fees and other
charges payable in connection therewith will have either been paid in full by
the Borrower or arrangements for the payment of such amounts satisfactory to the
Administrative Agent shall have been made.

          Section 4.15 ACCURACY AND COMPLETENESS OF INFORMATION. (a) All factual
written information heretofore or contemporaneously created and furnished by or
on behalf of any Credit Party to the Arrangers, the Administrative Agent or any
Lender, for purposes of, or in connection with, this Agreement, any other
Transaction Document or any transaction contemplated hereby or thereby is, and
all such other factual information hereafter furnished by or on behalf of any
Credit Party to the Arrangers, the Administrative Agent or any Lender will be,
true and accurate in all material respects on the date as of which such
information is given, dated or certified and not incomplete by omitting to state
any material fact necessary to make such information not materially misleading
at such time, in each case taken as a whole together with all other information
theretofore or contemporaneously supplied; provided, that, no representation or
warranty is made with regard to (a) any projections or other forward-looking
statements provided by the Borrower, including the Projections (except as set
forth in Section 4.24 below) and (b) general market information.

          (b) The Borrower has made a reasonable inquiry in respect of factual
written information heretofore or contemporaneously created and furnished by or
on behalf of any Person (other than any Credit Party) to the Arrangers, the
Administrative Agent or any Lender, for purposes of, or in connection with, this
Agreement, any other Transaction Document or any transaction contemplated hereby
or thereby. To the knowledge of the Borrower based on such inquiry, all such
factual information is true and accurate in all material respects on the date as
of which such information is given, dated or certified and is not incomplete by
omitting to state any material fact necessary to make such information not
materially misleading at such time, in each case taken as a whole together with
all other information theretofore or contemporaneously supplied.

          (c) There is no fact known to any Credit Party which has, or could
reasonably be expected to have, a Material Adverse Effect which fact has not
been set forth herein, in the financial statements of any Credit Party, or any
certificate or other written statement made or furnished by any Credit Party to
the Arrangers or the Administrative Agent.

          Section 4.16 PROPERTY RIGHTS, UTILITIES, ETC. All easements, leasehold
and other property interests, and all utility and other services, means of
transportation, facilities, other materials and other rights that are necessary
for the acquisition, operation and maintenance of the Portfolio Assets (other
than those which may be required for the operation of Phillips or Ceredo which
shall not be necessary unless and until the Borrower or Twelvepole, as
applicable, elects to place such Portfolio Asset into operation) in accordance
with all material Requirements of Law and the then existing Project Contracts
(including, without limitation, gas, electrical, water and sewage services and
facilities) have been procured and are available to the Borrower Entities and
the Portfolio Assets pursuant to the Project Contracts or are otherwise
commercially available to the Borrower Entities and the Portfolio Assets and, to
the extent appropriate, arrangements have been made by, or on behalf of (and
with the approval of), each Borrower Entity on commercially reasonable terms for
such easements, interests, services, means of transportation, facilities,
materials and rights in each case, except where the failure to procure or have
available any of the foregoing could not reasonably be expected to have a
material adverse effect on the operation of any Portfolio Asset.

          Section 4.17 PROJECT CONTRACTS. The Borrower has delivered to the
Lenders prior to the date hereof, true, correct and complete copies of the
Project Contracts in effect as of the date hereof and all of the Governing
Documents of each Credit Party in existence as of the date hereof. As of the
date hereof, none of such Project Contracts or Governing Documents has been
amended, modified or terminated except in accordance herewith and as disclosed
in writing to the Administrative Agent, the representations and warranties of
each Borrower Entity and, to the Borrower's knowledge each Major Project Party,
in each such Project Contract to which each such Person is a party are true and
correct in all material respects and, to the Borrower's knowledge, no other
party to a Project Contract is in default of such party's material obligations
thereunder.

          Section 4.18 PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Borrower and the office where the Borrower maintains its records
relating to the transactions contemplated by the Transaction Documents is
located at 2000 Cliff Mine Road, Suite 2000, Pittsburgh, PA 15275.

          Section 4.19 PATENTS; LICENSES; FRANCHISES AND FORMULAS. (a) Each
Borrower Entity owns, has a license to use or otherwise has the right to use,
free and clear of any pending or, to the knowledge of the Borrower, threatened
Liens (other than Permitted Liens), all the patents, patent applications,
trademarks, permits, service marks, names, trade secrets, proprietary
information and knowledge, technology, computer programs, databases, copyrights,
licenses, franchises and formulas, or rights with respect thereto required to
operate and maintain the Portfolio Assets (other than Phillips or Ceredo, unless
and until the Borrower or Twelvepole, as applicable, elects to place such
Portfolio Asset into operation) as presently operated and maintained
(collectively, "INTELLECTUAL PROPERTY"), and to conduct its business as
presently conducted and as presently proposed to be conducted, in each case,
except where the failure to own or possess any such Intellectual Property could
not reasonably be expected to result in a Material Adverse Effect, and the
activities and transactions contemplated by the Transaction Documents, without
any conflict with the rights of others.

          (b) Except as set forth on SCHEDULE 4.19 attached hereto, (i) each
Borrower Entity has obtained and holds in full force and effect, all franchises,
licenses, permits, certificates, authorizations, qualifications, easements,
rights of way and other rights and approvals which are necessary for the
operation of the Portfolio Assets as presently conducted and as presently
proposed to be conducted and the activities and transactions contemplated in the
Transaction Documents, and (ii) no Borrower Entity is in violation of the terms
of any such franchise, license, permit, certificate, authorization, easement,
right of way, qualification, right or approval, in any such case with respect to
clause (i) or (ii) above, which could reasonably be expected to have a Material
Adverse Effect.

          Section 4.20 ENVIRONMENTAL MATTERS. Except as described in SCHEDULE
4.20:

          (a) There are no facts, circumstances, conditions or occurrences
regarding the Portfolio Assets that could reasonably be likely to (i) form the
basis of any Environmental Claim arising with respect to the Portfolio Assets,
against the Portfolio Assets or any Borrower Entity, which individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect,
(ii) cause any Portfolio Asset to be subject to any material restrictions on
ownership, occupancy, or use under any Environmental Law or (iii) require the
filing or recording of any notice, registration, permit or disclosure documents
with respect to any material violation of any Environmental Law.

          (b) There are no past, pending or, to the Borrower's knowledge,
threatened Environmental Claims arising with respect to the ownership, operation
and maintenance of the Portfolio Assets, which individually or in the aggregate
could reasonably be likely to have a Material Adverse Effect.

          (c) Hazardous Materials have not at any time been used or Released by
any Borrower Entity or, to the Borrower's knowledge, by any other Person, at,
on, under or from the Portfolio Assets other than in compliance at all times
with all applicable Environmental Laws, except where such use or Release could
not reasonably be expected to have a Material Adverse Effect. As of the Closing
Date, no Hazardous Material generated by any Borrower Entity has been recycled,
treated, stored, disposed of or Released by any Borrower Entity at any location
other than those listed in SCHEDULE 4.20.

          (d) (i) there are not now and, to the Borrower's knowledge after
reasonable inquiry, never have been any underground storage tanks located at the
sites of any of the Portfolio Assets, (ii) there is no asbestos contained in,
forming part of, or contaminating any part of the Portfolio Assets, and (iii) no
polychlorinated biphenyls ("PCBS") are used, stored, located at or contaminate
any part of the Portfolio Assets, in any such case referenced in any of clauses
(i), (ii), or (iii) which individually or in the aggregate could reasonably be
likely to have a Material Adverse Effect.

          (e) All written environmental investigations, studies, audits, tests,
reviews or other analyses conducted by, or that are in the possession of or
which have been delivered to, any Credit Party in relation to facts,
circumstances or conditions at or affecting the Portfolio Assets or any site or
facility now or previously owned, operated or leased by any Borrower Entity have
been made available to the Lenders.

          (f) No Borrower Entity has transported or contractually permitted for
the transportation of any Hazardous Material to any location that is listed on
the National Priorities List ("NPL") under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), listed
for possible inclusion on the NPL by the Environmental Protection Agency in the
Comprehensive Environmental Response and Liability Information System, as
provided for by 40 C.F.R. ss. 300.5 ("CERCLIS"), or on any similar state or
local list or that is the subject of Federal, state or local enforcement actions
or other investigations that could reasonably be expected to result in any
material Environmental Claims against any Borrower Entity.

          (g) No written notification of a Release of a Hazardous Material has
been filed by or on behalf of any Borrower Entity and neither the Portfolio
Assets nor any site or facility now or previously owned, operated or leased by
any Borrower Entity is listed or, to the Borrower's knowledge, proposed for
listing on the NPL by the Environmental Protection Agency in CERCLIS or any
similar state list of sites requiring investigation or clean-up.

          (h) (i) No Liens have arisen under or pursuant to any Environmental
Laws on the Portfolio Assets or any site or facility that will be owned,
operated or leased by any Borrower Entity, and (ii) no government action has
been taken or is in process that could subject any of the Portfolio Assets or
any such site or facility to such Liens or that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
No Borrower Entity will be required to place any notice or restriction relating
to the presence of Hazardous Materials at any of the Portfolio Assets or any
site or facility owned by it in any deed to the real property on which any of
the Portfolio Assets or such site or facility is located.

          (i) The Portfolio Assets are in compliance with all Environmental Laws
and, to the Borrower's knowledge after reasonable inquiry, there is no reason to
believe that there are any facts or circumstances that will materially limit the
continued compliance of the operation of the Portfolio Assets with all
Environmental Laws or which would, other than as set forth in the Projections,
require material changes to the Portfolio Assets, or the operation thereof, to
comply with Environmental Laws in the future, except in any such case where such
non-compliance could not be reasonably expected to materially adversely effect
the operation or performance of any Portfolio Asset that is the subject of such
non-compliance.

          Section 4.21 INSURANCE. All insurance policies required to be obtained
by the Borrower pursuant to Section 5.06 have been obtained and are in full
force and such insurance policies comply with the requirements of Section 5.06.

          Section 4.22 TRANSACTIONS WITH AFFILIATES. Except as disclosed on
SCHEDULE 4.22 hereof, no Borrower Entity is a party to any contract or agreement
with, or has any other commitment of any nature or kind, to any Affiliate, which
would result in a breach of the Borrower's covenants and agreements set forth in
Section 6.09.

          Section 4.23 ORGANIZATIONAL STRUCTURE. On the Closing Date, the
organizational structure of the Credit Parties is as set forth on SCHEDULE 4.23A
hereof. On the Ceredo Effective Date, the organizational structure of the Credit
Parties is as set forth on SCHEDULE 4.23B.

          Section 4.24 PROJECTIONS. The Borrower has prepared or caused to be
prepared the Projections and is responsible for developing the assumptions on
which the Projections are based. As of the Ceredo Closing Date, the Projections
are, to the Borrower's knowledge after reasonable inquiry (a) based on
reasonable assumptions, including all legal and factual matters material to the
estimates set forth therein, and (b) consistent with the provisions of the
Transaction Documents; PROVIDED, that each of the Secured Parties hereby
acknowledges and agrees that such Projections may or may not prove to be correct
and that no representation or warranty is made as to whether actual performance
of the Portfolio Assets is or will be accurately reflected in such Projections.

          Section 4.25 ENVIRONMENTAL INSURANCE.

          (a) To the Borrower's knowledge after reasonable inquiry, all
Pollution Conditions existing in, on, under or from the Portfolio Assets
(excluding Ceredo) prior to the inception date of the Environmental Insurance
Policy are identified in the reports and documents on the Known Conditions List
and were disclosed in the application for the Environmental Insurance Policy.

          (b) The Borrower reasonably believes, based on reasonable assumptions,
that all Scheduled Pollution Conditions identified on the Known Conditions List
which require any clean-up, investigation, remediation, corrective action or
monitoring under the Environmental Laws or which are otherwise necessary to
address a significant risk to human health or the environment are included in
the Pollution Conditions.

          Section 4.26 EQUITY INTERESTS. The Borrower has free and clear title
to the equity interests of its Subsidiaries except for Permitted Liens, and all
pledged equity interests are validly issued, fully paid and non-assessable and
not subject to restrictions on transfer.

                                    ARTICLE V
                              AFFIRMATIVE COVENANTS

          The Borrower covenants and agrees that, so long as this Agreement is
in effect and any Lender shall have any Commitment outstanding hereunder, and
until the Notes, together with interest, and all other Obligations are
indefeasibly paid in full and all Letters of Credit have been cancelled or have
expired and all amounts drawn thereunder have been indefeasibly reimbursed in
full, the Borrower will, and as applicable will cause each of its Subsidiaries
to:

          Section 5.01 CONDUCT OF BUSINESS; MAINTENANCE OF EXISTENCE. (a) Engage
solely in the business of owning, operating, maintaining and managing its
interests in the Portfolio Assets and in its Subsidiaries, (b) preserve and
maintain in full force and effect its existence as a partnership or limited
liability company, as applicable, under the laws of the state of its
organization and its qualification to do business in every jurisdiction where
the character of its properties or the nature of its activities makes such
qualification necessary, (c) preserve and maintain all of its rights,
privileges, permits and franchises necessary for the ownership, operation,
maintenance and management of the Portfolio Assets (other than rights,
privileges, permits and franchises necessary for the operation of the Phillips
facility, unless and until the Borrower elects to place such facility into
operation) and (d) subject to Section 6.11, keep all property useful and
necessary in its business in good working order and condition (except to the
extent that any such property is no longer required for the business of any
Borrower Entity), ordinary wear and tear excepted. No Borrower Entity shall
amend its Governing Documents in any manner, the result of which would be to
alter the distribution, nature of business, management, transfer of interests or
powers of the general partner provisions thereof.

          Section 5.02 GOVERNMENTAL APPROVALS. Duly obtain on, or prior to, such
date as the same may be legally required, and thereafter maintain in effect as
long as legally required, all Governmental Approvals required under Section
4.04, except to the extent the failure to so obtain or maintain could not
reasonably be expected to result in a Material Adverse Effect.

          Section 5.03 PAYMENT OF INDEBTEDNESS. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all of its Obligations and other Indebtedness and obligations of whatever
nature (except for any Indebtedness (other than the Obligations) or other
obligations which are being contested in good faith and by appropriate
proceedings if (a) Acceptable Reserves have been established, and (b) such
contest does not involve any unreasonable risk of the sale, forfeiture or loss
of any of the right, title estate and interest of any Borrower Entity in any
Portfolio Asset, taking into account the existence of such Acceptable Reserves).

          Section 5.04 ACCOUNTS. Maintain all of the Accounts with the
Administrative Agent in accordance with the Deposit Account Agreement and the
other Financing Documents and, to the extent it is permitted to do so under the
Deposit Account Agreement, apply, or cause the application of, all amounts on
deposit therein from time to time as required by the Financing Documents.

          Section 5.05 PERFORMANCE OF COVENANTS, ETC. Perform and observe all
material Contractual Obligations, including all of the covenants and agreements
contained in the Project Contracts to which it is a party and shall enforce
(including, as necessary, through negotiation, litigation or other reasonable
means) the material rights granted to it under and in connection with each of
the Transaction Documents.

          Section 5.06 INSURANCE REQUIREMENTS. Procure and maintain with respect
to all Borrower Entities and all Portfolio Assets, as applicable, insurance
against physical loss, public liability, property damage, general liability,
business interruption, environmental risk and other insurance, with coverages
and limits in no event less than those set forth on SCHEDULE 5.06 hereto (and in
conformance with the requirements set forth thereon). The Borrower shall timely
pay all premiums due under all insurance policies required to be maintained
under this Section 5.06. Promptly upon receipt or delivery thereof by any
Borrower Entity, such Borrower Entity shall deliver to the Administrative Agent
all material notices relating to the Insurance Policies.

          Section 5.07 BOOKS AND RECORDS. Keep proper books of records and
accounts in which full, true and correct entries shall be made of all of its
transactions in accordance with GAAP.

          Section 5.08 VISITATION, INSPECTION, ETC. Permit representatives of
the Administrative Agent, the Independent Engineer and the Arrangers (at the
cost and expense of the Borrower so long as any Default or Event of Default
exists), and any other Lender (at the cost and expense of such Lender) to visit
and inspect any of the Portfolio Assets, to examine its books and records and to
make copies and take extracts therefrom, and to discuss its affairs, finances
and accounts with its officers and employees and its independent accountants,
all with reasonable prior notice and at such reasonable times as such Person may
reasonably request and subject to the applicable Borrower Entity's reasonable
rules and procedures regarding operation, safety and confidentiality.

          Section 5.09 REQUIREMENTS OF LAW. Comply in all material respects with
all Requirements of Law and Governmental Approvals (a) applicable to it and the
Portfolio Assets, including all Environmental Laws and (b) required of any
Borrower Entity by virtue of any concessions and licenses held by the Borrower
Entity except when any such Requirement of Law or Governmental Approval is being
contested in good faith and by appropriate proceedings or, as appropriate,
settlement negotiations, and for which Acceptable Reserves have been
established; PROVIDED, HOWEVER, that no Borrower Entity shall be required to
establish Acceptable Reserves in respect of any "new source review" enforcement
action brought by the Environmental Protection Agency against such Borrower
Entity or any Portfolio Asset (other than for penalties which may be assessed as
a result of such enforcement action) that such Borrower Entity is contesting in
good faith or in respect of which such Borrower Entity is involved in settlement
negotiations. For purposes of the proviso contained in this Section 5.09 only,
the amount of Acceptable Reserves shall equal the greater of (i) $4,000,000 and
(ii) the amount required by GAAP to be included on the balance sheet or in any
contingency footnote in the financial statements of the Borrower.

          Section 5.10 REPORTING REQUIREMENTS. Furnish to the Administrative
Agent:

          (a) as soon as available, but in any event, within 45 days after the
end of each fiscal quarter of the Borrower, the unaudited consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of each such quarter
and the related unaudited statement of income, partners' capital and cash flows
for such quarter and the portion of the fiscal year through the end of each such
quarter, in each case setting forth in comparative form the figures for the
corresponding quarter in the year immediately preceding such year, prepared in
accordance with GAAP, certified by a Responsible Officer of the Borrower as
being fairly stated in all material respects;

          (b) as soon as available, but in any event, within 90 days after the
end of each fiscal year of the Borrower, the consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at the end of such year
and the related statement of income, members' capital, cash flows and a
statement of sources and uses of all funds for such year, prepared in accordance
with GAAP and audited by Arthur Andersen LLP or any other independent certified
public accountants of recognized standing in the United States of America
reasonably satisfactory to the Administrative Agent and setting forth in each
case in comparative form the figures for the previous year, and a certificate as
to compliance with the Financing Documents, and a certificate from Arthur
Andersen (or such other independent certified public accountants selected by the
Borrower) whether, in the course of their audit, they have become aware of any
Default or Event of Default and, if any such Default or Event of Default exists,
specifying the nature and extent thereof;

          (c) as soon as available, but in any event, not later than 60 days
after the commencement of each fiscal year of the Borrower, furnish forecasts
prepared by management in form and detail satisfactory to the Administrative
Agent, of projections (substantially in the form of the Projections) on a fiscal
period basis for such fiscal year and on a fiscal year basis for each of the
remaining fiscal years until at least twenty years beyond the Closing Date; and

          (d) Each time the financial statements of the Borrower are delivered
under this Section 5.10, a certificate signed by a Responsible Officer of the
Borrower shall be delivered along with such financial statements, certifying
that such Responsible Officer has made or caused to be made a review of the
transactions and financial condition of the Borrower and its Subsidiaries during
the relevant fiscal period and that such review has not, to the best of such
Responsible Officer's knowledge, disclosed the existence of any event or
condition which constitutes a Default or an Event of Default under any Financing
Document to which any Borrower Entity is a party, or if any such event or
condition existed or exists, the nature thereof and the corrective actions that
the relevant Borrower Entity has taken or proposes to take with respect thereto,
and also certifying that each Borrower Entity is in compliance in all material
respects with its obligations under this Agreement and each other Financing
Document to which it is a party or, if such is not the case, stating the nature
of such non-compliance and the corrective actions which the relevant Borrower
Entity has taken or proposes to take with respect thereto.

          Section 5.11 OPERATING BUDGET.

          (a) Deliver to the Administrative Agent for its approval an Operating
Budget not less than 30 days in advance of each calendar year satisfying the
requirements contained in the definition thereof; provided, THAT, with respect
to any Operating Budget, if the Administrative Agent fails to approve such
Operating Budget or provides notice to the Borrower that it rejects all or any
portion of such Operating Budget, the Borrower and the Administrative Agent (in
consultation with the Independent Engineer) agree to work in good faith to
resolve such dispute; and PROVIDED, FURTHER, that if an Operating Budget is not
adopted and approved on or prior to the first day of any calendar year, the
Borrower Entities shall adhere to the Interim Operating Budget until such time
as an Operating Budget is adopted and approved by the Administrative Agent (in
consultation with the Independent Engineer); PROVIDED, FURTHER, that, upon
achievement of Commercial Operation with respect to Ceredo, the Borrower will
submit a supplement to the 2001 Operating Budget, acceptable to the Arrangers,
covering Ceredo.

          (b) Subject to clauses (c) through (e) of this Section 5.11, operate
and maintain the Portfolio Assets or cause the Portfolio Assets to be operated
and maintained, in accordance with each Operating Budget.

          (c) The Borrower Entities shall not make expenditures in respect of
Operating Costs in any fiscal year in an aggregate amount in excess of 105% of
the Budgeted Operating Costs for such fiscal year, PROVIDED THAT, the Borrower
Entities may make expenditures in any fiscal year in an aggregate amount in
excess of 105%, but less than or equal to 110%, of the Budgeted Operating Costs
for such fiscal year with the written consent of the Administrative Agent (after
consultation with the Independent Engineer) and may make expenditures in any
fiscal year in an aggregate amount in excess of 110% of the Budgeted Operating
Costs for such fiscal year with the written consent of the Required Lenders. The
Borrower Entities shall not make Capital Expenditures or Maintenance
Expenditures in any fiscal year in an aggregate amount in excess of 105% of the
Capital Expenditures or Maintenance Expenditures, as the case may be, set forth
in the Operating Budget in effect for such fiscal year; PROVIDED, THAT, the
Borrower Entities may make expenditures in any fiscal year in an aggregate
amount in excess of 105%, but less than or equal to 110%, of the budgeted
Capital Expenditures or Maintenance Expenditures, as the case may be, for such
fiscal year with the written consent of the Administrative Agent (after
consultation with the Independent Engineer) and may make expenditures in any
fiscal year in an aggregate amount in excess of 110% of the budgeted Capital
Expenditures or Maintenance Expenditures, as the case may be, for such year with
the written consent of the Required Lenders.

          (d) The Borrower Entities shall not make re-allocations in respect of
any line item Budgeted Operating Cost in any fiscal year in excess of 5% of such
Budgeted Operating Cost for such fiscal year, provided that the Borrower
Entities may make re-allocations any fiscal year in an excess of 5%, but less
than or equal to 10%, of any line item Budgeted Operating Cost for such fiscal
year with the written consent of the Administrative Agent (after consultation
with the Independent Engineer) and may make re-allocations in any fiscal year in
excess of 10% of a line item Budgeted Operating Cost for such fiscal year with
the written consent of the Required Lenders.

          (e) Notwithstanding the foregoing, in the event of any Emergency, the
Borrower Entities may make expenditures and/or reallocations in excess of the
limitations set forth in clauses (c) and (d) to the extent of such amount
reasonably necessary for the remediation of the conditions giving rise to such
Emergency and otherwise in accordance with Prudent Industry Practice; PROVIDED,
THAT, any expenditures made under this Section 5.11(e) in excess of $5,000,000
shall require the prior consent of the Required Lenders which consent shall not
be unreasonably withheld, conditioned or delayed. The Borrower Entities shall
notify the Administrative Agent in writing as soon as practicable after the
commencement of any such Emergency.

          (f) The Borrower Entities shall undertake all Non-Discretionary
Capital Expenditures set forth from time to time in each approved Operating
Budget in accordance with such Operating Budget subject to the other provisions
of this Section 5.11. The Borrower Entities shall complete all Non-Discretionary
Capital Expenditures on or prior to the scheduled completion dates set forth in
the Projections and any approved Operating Budget, and shall procure all
Governmental Approvals and major equipment and perform all necessary
engineering, design and other services required in connection therewith at such
times as will permit the timely commencement and completion of such
Non-Discretionary Capital Expenditures.

          (g) To the extent that modifications to, or deviations from, an
approved Operating Budget have been consented to by the Administrative Agent or
the Required Lenders, as applicable, such modifications or deviations shall be
deemed to amend such approved Operating Budget and all references in this
Agreement or the other Financing Documents to the Operating Budget shall be
deemed to refer to the Operating Budget as so amended.

          Section 5.12 PAYMENT OF TAXES AND CLAIMS. Timely pay and discharge or
cause to be paid and discharged all taxes, assessments and governmental charges
or levies lawfully imposed upon any Borrower Entity or upon its respective
income or profits or upon any portion of the Portfolio Assets or the Collateral
and all lawful claims or obligations that, if unpaid, would become a Lien upon
the Collateral, real or personal, or upon any part thereof; PROVIDED, THAT, the
Borrower Entities shall have the right to contest in good faith the validity or
amount of any such tax, assessment, charge or levy by proper proceedings, and
may permit the taxes, assessments, charges or levies so contested to remain
unpaid during the period of such contest if: (a) such Borrower Entity diligently
prosecutes such contest in good faith and by appropriate proceedings and for
which Acceptable Reserves have been established; (b) during the period of such
contest, the enforcement of any contested item is effectively stayed; and (c)
the failure to pay or comply with the contested item could not reasonably be
expected to result in a Material Adverse Effect taking into account the
existence of such Acceptable Reserves.

          Section 5.13 MAINTENANCE AND OPERATION OF PORTFOLIO ASSETS; REPAIR AND
REPLACEMENT OF PORTFOLIO ASSETS.

          (a) Operate and maintain the Portfolio Assets (other than Phillips or
Ceredo to the extent Phillips or Ceredo, respectively, has not been put into
service by the Borrower or Twelvepole, as applicable) and conduct its business
(i) in accordance with Prudent Industry Practice and (ii) in accordance with the
terms of any insurance policy or policies in effect at any time with respect to
the Portfolio Assets or any part thereof; and

          (b) After the occurrence of a loss, damage, destruction or taking of
any part of the Portfolio Assets (other than Phillips or Ceredo to the extent
Phillips or Ceredo, respectively, has not been put into service by the Borrower
or Twelvepole, as applicable), proceed diligently with all work necessary to
replace and/or repair such loss, destruction or damage to the extent required
pursuant to the terms of the Financing Documents.

          Section 5.14 REAL AND PERSONAL PROPERTY.

          (a) Maintain good title to or valid leasehold, easement or
right-of-way interests in the material property, assets or revenues on which it
purports to own, lease or hold any such interest in, free and clear of all Liens
(except Permitted Liens), including the possession of all real estate interests
and licenses, Intellectual Property and other proprietary rights required for
the ownership, operation and maintenance of the Portfolio Assets in accordance
with Prudent Industry Practice and as contemplated by the Transaction Documents.

          (b) It is agreed by Borrower that the Harwick Mine Complex is not
intended to be included in the Portfolio Assets and that the Borrower shall not
hold title or other indicia of ownership to the Harwick Mine Complex at any time
during the term of the Loan.

          Section 5.15 ERISA.

          (a) The Borrower shall deliver to the Administrative Agent, if and
when any Borrower Entity, the Operator or any ERISA Affiliate (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan, other than a reportable event
for which 30-day notice to the PBGC has been waived by the PBGC, or knows that
the plan administrator of any Plan has given or is required to give notice of
any such reportable event, a copy of the notice of such reportable event given
or required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability in respect of, or appoint a trustee to administer
any Plan, a copy of such notice; (iv) applies for a waiver of the minimum
funding standard under Section 412 of the Code, a copy of such application; (v)
gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a
copy of such notice and other information filed with the PBGC; (vi) gives notice
of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which in either case would trigger
the provisions of Section 412(n) or 401(a)(29) of the Code (or any corresponding
provisions of ERISA), a certificate of the chief financial officer or the chief
accounting officer of the Borrower setting forth details as to such occurrence
and action, if any, which the Borrower or applicable ERISA Affiliate is required
or proposes to take.

          (b) Unless the Required Lenders provide their express, advance written
consent, none of the Borrower Entities and the Operator shall (i) sponsor,
maintain, contribute to or otherwise incur any obligation with respect to any
Plan or Multiemployer Plan that, as of the Closing Date, the Borrower or the
Operator did not sponsor, maintain, contribute to or otherwise have any
obligation with respect to, or (ii) permit any interest in the Operator to be
sold or transferred, either directly or indirectly, to any Person other than the
Borrower or any ERISA Affiliate with respect to any Plan.

          Section 5.16 INTEREST HEDGE CONTRACTS.

          (a) Enter into Interest Hedge Contracts only with one or more of the
Lenders; PROVIDED, THAT, the Borrower shall not, at any time, enter into
Interest Hedge Contracts in respect of principal Obligations in excess of
$750,000,000. Except pursuant to and to the extent of, any prepayment of
outstanding Loans, the Borrower shall not terminate any Interest Hedge Contract
without the prior written consent of the Administrative Agent.

          (b) Within 15 Business Days after the Closing Date, the Borrower shall
enter into one or more Interest Hedge Contracts in respect of the aggregate
principal amount of $250,000,000 and having an aggregate weighted average
maturity of seven (7) years from the date of delivery thereof.

          (c) Within ten (10) Business Days of the occurrence of any Swap
Trigger Event during the period from the Closing Date to the date which is 24
months thereafter, the Borrower shall enter into one or more Interest Hedge
Contracts with one or more Swap Banks in respect of the aggregate principal
amount of $300,000,000 (less the aggregate principal amount of Obligations then
subject to an Interest Hedge Contract) and having an aggregate weighted average
maturity of seven (7) years from the date of delivery thereof.

          Section 5.17 NOTICES. Promptly upon obtaining actual knowledge
thereof, give notice to the Lenders of:

          (a) any Default or Event of Default, together with a description of
any action being taken or proposed to be taken with respect thereto;

          (b) any action, suit, arbitration, litigation, investigation or
proceeding involving or affecting any Borrower Entity or any Portfolio Asset or
any Major Project Party involving $1,000,000 or more or seeking any injunctive,
declaratory or other equitable relief;

          (c) any action, suit, arbitration, litigation, investigation or
proceeding instituted for the purpose of revoking, terminating, suspending,
withdrawing, modifying or withholding any material Governmental Approval
necessary for any Borrower Entity or any other Major Project Party to perform
its obligations or exercise its rights under any Project Contract or for the
operation or maintenance of the Portfolio Assets in the manner contemplated by
the Transaction Documents;

          (d) proposed execution of any Additional Contract;

          (e) any casualty, loss or damage to any Portfolio Asset, whether or
not insured, involving a probable loss of $1,000,000 or more;

          (f) any termination, material default or event of default or notice
thereof under any Project Contract;

          (g) any change in the Responsible Officers of any Borrower Entity,
together with evidence of authority thereof and specimen signature;

          (h) any fact, circumstance, condition or occurrence that is reasonably
likely to form the basis of a material Environmental Claim arising with respect
to the Portfolio Assets against any Borrower Entity or any pending or threatened
material Environmental Claim arising with respect to the Portfolio Assets
against any Borrower Entity, describing the same in reasonable detail and,
together with or as soon thereafter as is reasonably possible, a description of
the action that the applicable Borrower Entity has taken or proposes to take
with respect thereto and, thereafter, from time to time such detailed reports
with respect thereto as the Administrative Agent or any Lender (through the
Administrative Agent) may reasonably request;

          (i) promptly upon their becoming available, copies of all written
communications with any Governmental Authority relating to any material
violation or alleged material violation of any material Environmental Law or
other Environmental Claim arising out of the Portfolio Assets;

          (j) promptly upon receipt or delivery thereof by any Borrower Entity,
copies of all notices and other information that any Borrower Entity receives
from, or delivers to, any Governmental Authority that could reasonably be
expected to be materially adverse to the Portfolio Assets;

          (k) any Emergency; and

          (l) any other event or development that could reasonably be expected
to have a Material Adverse Effect.

          Section 5.18 PRESERVATION OF SECURITY INTERESTS; FURTHER ASSURANCES.

          (a) Preserve, or cause to be preserved, the security interests granted
under the Security Documents and undertake all actions which are necessary or
appropriate in the reasonable judgment of the Administrative Agent to (i)
maintain the Secured Parties' security interest in the Collateral in full force
and effect at all times (including the priority thereof, other than with respect
to vehicles and boats) and (ii) preserve and protect the Collateral and protect
and enforce each Borrower Entity's rights and title and the rights of the
Secured Parties to the Collateral, including, without limitation, the making or
delivery of all filings and recordations, the payments of fees and other charges
and the issuance of supplemental documentation.

          (b) Upon notice from the Administrative Agent, take or cause to be
taken all action required or, in the reasonable opinion of any Secured Party,
which is desirable to maintain and preserve the Liens of the Security Documents
and execute or cause to be executed any and all further instruments (including
financing statements, continuation statements and similar statements with
respect to any of the Security Documents) requested by the Administrative Agent
for such purpose.

          Section 5.19 USE OF PROCEEDS. Use all proceeds of Acquisition Loans
solely in accordance with Section 2.01(d). Use all proceeds of Revolving Loans
solely in accordance with Section 2.02(d). Use any DLC Letter of Credit solely
in accordance with Section 2.16(k). Use any Operational Letter of Credit solely
in accordance with Section 2.17(k). Neither any part of the proceeds of any Loan
nor any Letter of Credit will be used by any Borrower Entity to purchase or
carry any Margin Stock or to extend credit to any other Person for the purpose
of purchasing or carrying any Margin Stock.

          Section 5.20 EXTRAORDINARY PROCEEDS. Promptly apply all payments in
respect of Insurance Proceeds or Condemnation Proceeds received by, or for the
account of, any Borrower Entity in accordance with the terms of the Deposit
Account Agreement.

          Section 5.21 ENVIRONMENTAL COMPLIANCE.

          (a) The Borrower Entities shall not use or Release, or permit the use
or Release of, Hazardous Materials at the site of any Portfolio Asset other than
in material compliance with all applicable Environmental Laws; PROVIDED, THAT,
the Borrower Entities shall have the right to contest or engage in settlement
negotiations with respect to such Environmental Laws in accordance with Section
5.09.

          (b) Conduct and complete any investigation, study, sampling and
testing and undertake any cleanup, removal, remedial or other action necessary
to remove and clean up all Hazardous Materials Released at, on, in, under or
from the Portfolio Assets, in accordance with the requirements of all applicable
Environmental Laws, except where the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.

          (c) (i) Within ninety (90) days of the Closing Date, the Borrower
shall submit to the Administrative Agent a plan for the additional investigation
and delineation of the Scheduled Pollution Conditions as necessary to develop
the proposed Remedial Action Plan as described below (the "INVESTIGATION Plan").
The Borrower shall promptly implement and diligently conduct and complete the
tasks set forth in the Investigation Plan and shall deliver the results thereof
to the Administrative Agent. Within sixty (60) days of completion of the tasks
set forth in the Investigation Plan, the Borrower shall deliver to the
Administrative Agent a plan for the monitoring, clean-up, removal, remediation
or corrective action of the Scheduled Pollution Conditions (the "REMEDIAL ACTION
PLAN"). The Borrower shall promptly implement and diligently conduct and
complete the tasks set forth in the Remedial Action Plan. The Borrower shall
provide the Administrative Agent a brief written report documenting the progress
of the implementation of the Remedial Action Plan annually beginning after
approval of the Remedial Action Plan. The Borrower shall conduct all work in
connection with the Investigation Plan and the Remedial Action Plan so as to
qualify as Clean-Up Costs and to otherwise be credited toward the self-insured
retention under the Environmental Insurance Policy.

               (ii) The Borrower shall promptly provide the Administrative Agent
upon request with copies of any (a) reports of material claims made to the
insurer pursuant to the Environmental Insurance Policy or claims or accountings
made under the self-insured retention under the Environmental Insurance Policy
and (b) denials, partial denials or reservations of rights in respect to any
such material claims or accountings received from an insurer. The Borrower shall
report claims to the insurer pursuant to the Environmental Insurance Policy for
any Pollution Conditions which the Borrower reasonably believes based upon
reasonable assumptions will exceed $25,000 in Clean-Up Costs; however, this
covenant shall in no way prohibit the Borrower from reporting claims pursuant to
the Environmental Insurance Policy for amounts below $25,000 in Clean-Up Costs.
The Borrower shall make all claims or accountings to the insurer under the
Environmental Insurance Policy for all Clean-Up Costs incurred in connection
with the Investigation Plan or the Remedial Action Plan. Such claims or
accountings shall be made in accordance with the terms of the Environmental
Insurance Policy.

               (iii) The Borrower shall assure that the insurer adds any
off-site location for the disposal of waste from any of the Portfolio Assets on
the Non-Owned Covered Locations Schedule under the Environmental Insurance
Policy before disposing of any such waste or entering into any contractual
arrangement permitting any such disposal.

               (iv) The Borrower shall assure that a listing of transporters and
listing of material to be transported is delivered to the insurer within the
time period specified under the Environmental Insurance Policy to maintain the
"transported cargo" (as defined under the Environmental Insurance Policy)
coverage under the Environmental Insurance Policy and shall only use such
insured transporters for transporting of materials that could reasonably result
in Pollution Conditions.

               (v) The Borrower shall assure that computer or hand copies of
legal descriptions for the Portfolio Assets are delivered to the insurer within
fifteen (15) days of the date of purchase of the Portfolio Assets by the
Borrower.

               (vi) The Borrower shall assure that promptly after the Closing
Date all underground storage tanks to be owned or operated by the Borrower at
any of the Portfolio Assets are listed on the "Schedule of Underground Storage
Tanks" to the Environmental Insurance Policy.

          (d) The Borrower is planning to replace the economizer and repair the
steam turbine at unit 9 at Avon Lake in early 2001. The Borrower plans to
address Prevention of Significant Deterioration permitting under 40 C.F.R. ss.
52.21 and Ohio Admin. Code ss. 3745-31 by having no "significant" air emissions
increase. In connection with making such repair and replacement, the Borrower
has filed an application for a Ohio air permit to construct under Ohio Admin.
Code ss. 3745-31 and has or shall incorporate into such application and
subsequent submission the "actuals to future actuals showing" that demonstrates
that there will be "no significant net emission increase" under 40 C.F.R. ss.
52.21 and Ohio Admin. Code ss. 3745-31, including, without limitation, the
baseline and the basis for no emissions increase. Based on the above, the
Borrower shall comply with the reporting requirements in such Ohio air permit to
construct and not exceed in its operations the "future actual emissions" which
are provided in the application to Ohio for the air permit to construct. The
Borrower shall provide the Administrative Agent with a copy of the complete
application for the Ohio air permit to construct and any amendments thereto
promptly upon submission to Ohio and a copy of any draft or final air permit to
construct issued by Ohio promptly upon receipt. Upon the request of the
Administrative Agent, the Borrower shall provide evidence of compliance with
this Section 5.21(d).

          (e) Borrower shall file and use all reasonable efforts to obtain on or
before December 31, 2000 a Prevention of Significant Deterioration air permit to
construct under applicable federal and state law for the refurbishment of three
combustion turbines at Brunot Island identified as units 2A, 2B and 3 and the
installation of heat recovery steam generators so that they can operate as
combined cycle units.

          Section 5.22 ADDITIONAL CONTRACTS.

          (a) Enter into Additional Contracts (other than the Additional
Contracts, if any, relating to Ceredo, identified on SCHEDULE 5.22 attached
hereto) only with the prior written consent of the Required Lenders, which
consent shall not be unreasonably withheld, conditioned or delayed; PROVIDED
that no such consent shall be required to the extent such Additional Contracts
were entered into in response to an Emergency in accordance with Prudent
Industry Practice. The Borrower shall notify the Administrative Agent in writing
as soon as practicable after the commencement of any such Emergency.

          (b) If any Borrower Entity shall at any time enter into an Additional
Contract, the Borrower shall promptly upon such acquisition or execution,
execute, deliver and record, or cause to be executed, delivered and recorded, a
supplement to the Security Documents, satisfactory in form and substance to the
Administrative Agent, subjecting such Additional Contract to the Lien and
security interests created by the Security Documents, ensure that the security
interest in such interest will be a valid and an effective interest on terms
comparable to the security interest of the Secured Parties in the Collateral,
and deliver to the Administrative Agent, a duly executed and delivered
Additional Contract Consent in respect of each Additional Contract.

          Section 5.23 OTHER INFORMATION. Furnish to the Administrative Agent:

          (a) on each anniversary of the Closing Date, a certificate from the
Borrower's insurers or insurance agents (i) evidencing that the insurance
policies in place satisfy the requirements of this Agreement and (ii) setting
forth a summary of all losses in excess of $1,000,000 incurred with respect to
the Portfolio Assets in the preceding year; and

          (b) any such other information or data with respect to its business or
operations (including supporting information as to compliance with this
Agreement) as the Administrative Agent may reasonably request from time to time.

          Section 5.24 FUEL PROCUREMENT AND O&M ARRANGEMENTS.

          (a) Deliver to the Administrative Agent for its approval a Fuel Plan
not less than 30 days in advance of each April 1, covering the period form April
1 through the following March 31, satisfying the requirements contained in the
definition thereof; PROVIDED, THAT, with respect to any Fuel Plan, if the
Administrative Agent fails to approve such Fuel Plan or provides notice to the
Borrower that it rejects all or any portion of such Fuel Plan, the Borrower and
the Administrative Agent (in consultation with the Fuel Consultant) agree to
work in good faith to resolve such dispute. The Borrower Entities shall conduct
the procurement, purchase and use of fuel and, to the extent covered by the Fuel
Plan, the operation of the Portfolio Assets (excluding Ceredo, until Ceredo has
achieved Commercial Operation) in all material respects in accordance with the
then current Fuel Plan.

          (b) Perform operation and maintenance of the Portfolio Assets
(excluding Ceredo, until Ceredo has achieved Commercial Operation), or contract
for the provision thereof as permitted by this Agreement, in all material
respects in accordance with the O&M Plan.

          Section 5.25 POWER MARKETING AND TRANSMISSION ARRANGEMENTS.

          (a) The Borrower shall deliver to the Administrative Agent for its
approval a Power Marketing Plan on or prior to March 1 of each year satisfying
the requirements contained in the definition thereof and containing, at minimum,
on a month by month basis the projected Total Capacity and the projected Total
Load Forecast, together with a detailed discussion of how the Borrower
anticipates meeting necessary obligations to comply with Section 5.25(b) below
for the period from April 1st of such year until March 31st of the subsequent
year; PROVIDED, THAT, with respect to any Power Marketing Plan, if the
Administrative Agent fails to approve such Power Marketing Plan or provides
notice to the Borrower that it rejects all or any portion of such Power
Marketing Plan, the Borrower and the Administrative Agent (in consultation with
the Power Marketing Consultant and the Independent Engineer) agree to work in
good faith to resolve such dispute. In all events the Borrower Entities will
sell all ancillary services, energy and capacity that is to be sold more than 90
days forward pursuant to an Approved Power Sales Agreement. All ancillary
services, energy and capacity that is sold pursuant to Spot Power Sales
Agreements shall be sold to either (i) an Approved Capacity Purchaser or (ii)
any Person who, after giving effect to any transaction, does not owe more than
$25,000,000 in the aggregate in currently invoiced amounts to the Borrower
Entities. Without limiting the provisions of this Section 5.25, the Borrower
Entities (either themselves or through an Affiliate or agent) shall conduct the
marketing or sale of power, electric capacity and/or energy produced by the
Portfolio Assets or the purchase of any thereof that is necessary or advisable
for the performance of its material obligations under each Project Contract and
in all material respects in accordance with the then current Power Marketing
Plan.

          (b) The Borrower shall at all times cause Total Capacity to exceed
Total Load Forecast. On or prior to the first (1st) Business Day of each
calendar quarter (each, a "DETERMINATION DATE"), the Borrower shall provide
evidence reasonably satisfactory to the Administrative Agent (in consultation
with the Power Market Consultant) that such condition will be satisfied for the
immediately following three (3) month period beginning with such Determination
Date. For the purposes of determining compliance with the foregoing covenant,
if, on any date, the Borrower shall have failed to comply with the requirements
of this Section 5.25(b) as a result of an unplanned outage of 200 MW or less,
which unplanned outage can reasonably be expected to be cured within 14 days
from such date, then the Borrower shall be deemed to be in compliance with this
Section 5.25(b) notwithstanding such failure.

          (c) The Borrower Entities shall maintain such access or other rights
to transmission capacity (including firm and/or non-firm and interstate and/or
non-interstate transmission capacity, as the case may be) as may be required for
the Borrower Entities to conduct successfully any marketing or sale of ancillary
services, electric capacity and/or energy produced by the Portfolio Assets
(excluding Ceredo, until Ceredo has achieved Commercial Operation), or the
purchase of any thereof, in accordance with any then current Power Marketing
Plan and all applicable Project Contracts.

          Section 5.26 CAPITAL EXPENDITURES. (a) The Borrower shall cause the
following actions in respect of the Brunot Island Pipeline to be completed on or
prior to the indicated dates: (i) execution and delivery of definitive
documentation relating to the engineering, procurement and construction of the
Pipeline on or prior to September 30, 2000; (ii) receipt of all permits
necessary for the construction, installation and use of the Pipeline on or
before June 30, 2001; (iii) commencement of construction on or prior to
September 30, 2001 and (iv) completion of installation, construction, testing
and initial operation of the Pipeline on or prior to June 30, 2002.

          (b) The Borrower shall cause the following actions in respect of the
installation of a new heat recovery steam generator and reactivation of the
three Frame 7 combustion turbines into combined-cycle operation at Brunot Island
(the "BRUNOT ISLAND REACTIVATION PROJECT") to be completed on or prior to the
indicated dates: (i) filing of applications for all Governmental Approvals
necessary for the construction, installation and operation of the Brunot Island
Reactivation Project on or prior to June 30, 2000; (ii) receipt of all such
Governmental Approvals on or prior to March 31, 2001; (iii) placement of orders
for all major equipment necessary for the Brunot Island Reactivation Project on
or prior to March 31, 2001; (iv) execution and delivery of definitive
documentation for the engineering, procurement and construction of the Brunot
Island Reactivation Project on or prior to December 31, 2001; (v) receipt of the
major equipment described in clause (iii) above by the Borrower on or prior to
June 30, 2002 and (vi) completion of installation, construction, testing and
initial operation of the Brunot Island Reactivation Project on or before
December 31, 2002.

          (c) The Borrower shall cause the following actions in respect of the
replacement of the economizer at Avon Lake Unit 9 (the "AVON LAKE PROJECT") to
be completed on or prior to the indicated dates: (i) placement of orders for
major equipment necessary for the Avon Lake Project on or prior to June 30,
2000; (ii) receipt of such major equipment on or prior to March 31, 2001 and
(iii) completion of installation of equipment, construction, testing and initial
operation of the Avon Lake Project on or prior to June 30, 2002.

          Section 5.27 POLR II AGREEMENT. In the event the Pennsylvania Utility
Commission (the "PUC") at any time requires any changes to the POLR II Agreement
as in effect on the Closing Date (including, without limitation, the Retail
Tariff and Generation Rates provided for therein and the prices paid to the
Borrower thereunder) which changes (taken as a whole) are adverse to the
interests, taken as a whole, of the Borrower or the Lenders, then the Borrower
shall, within fifty (50) days from the date of any order from the PUC evidencing
any such change, terminate the POLR II Agreement.

          Section 5.28 CEREDO SECURITY DOCUMENTS. As soon as practical, but not
later than February 15, 2001 (except as otherwise agreed by the Arrangers in
their sole discretion), unless there shall have occurred a Closing Failure and
the Administrative Agent shall have applied the amounts on deposit in the Equity
Proceeds Account to the prepayment of the Loans and otherwise as provided in
Section 5.3(b) of the Deposit Account Agreement, the Borrower, at the Borrower's
expense, shall have taken any and all action necessary to cause the following:
(i) execution and delivery by Twelvepole and delivery to the Administrative
Agent of the Twelvepole Mortgage, the Twelvepole Security Agreement and the
Twelvepole Supplemental Agreement; (ii) execution by all parties thereto and
delivery to the Administrative Agent of the Wayne County Commission Consent, the
Mountaineer Consent and the AEP Consent; (iii) delivery to the Administrative
Agent of one or more original lender's policies of title insurance issued by
First American Title Insurance Company or one or more other title companies
acceptable to the Arrangers with such endorsements and coverage as the Arrangers
request insuring the liens created by the Twelvepole Mortgage in a manner
reasonably acceptable to the Arrangers; (iv) execution and delivery to the
Administrative Agent of any and all Financing Statements and other documents and
the taking of any and all other actions reasonably requested by the
Administrative Agent or the Required Lenders to establish, perfect and protect,
in favor of the Administrative Agent (for the benefit of the Secured Parties), a
first priority security interest, lien, pledge and assignment of all properties
and assets of Twelvepole (other than motor vehicles and boats); (v) delivery to
the Administrative Agent of such UCC, judgment, tax and other lien searches with
respect to the personal property of Twelvepole as the Administrative Agent or
the Required Lenders may reasonably request to verify the perfection and
priority of such security interests, liens, pledges and assignments; (vi)
execution and delivery to the Administrative Agent of opinions of counsel
reasonably satisfactory to the Administrative Agent and the Required Lenders
covering such matters with respect to the foregoing as the Administrative Agent
and the Required Lenders may reasonably request; (vii) receipt by the
Administrative Agent of a certificate of a Responsible Officer of the Borrower
certifying that all representations and warranties made by the Borrower in
Article IV hereof as they relate to Twelevepole, Ceredo or the other properties
and assets of Twelvepole are true in all respects as if made on and as of the
date of such certificate (subject to such qualifications with respect to such
matters as may be set forth in updated Schedules hereto delivered to the
Administrative Agent and are acceptable to the Arrangers); and (viii) delivery
to the Administrative Agent of such other statements, certificates, documents
and other information with respect to the matters contemplated by this Section
5.28 as the Arrangers may reasonably request.

                                   ARTICLE VI
                               NEGATIVE COVENANTS

          The Borrower covenants and agrees that, so long as this Agreement is
in effect and any Lenders shall have any Commitment outstanding hereunder, and
until the Notes, together with interest, and all other Obligations are
indefeasibly paid in full and all Letters of Credit have been cancelled or have
expired and all amounts drawn thereunder have been indefeasibly reimbursed in
full, the Borrower shall not, and shall not permit any of its Subsidiaries to:

          Section 6.01 LIMITATION ON MERGERS. Merge or consolidate with or into
any other Person or liquidate, wind up, dissolve or otherwise transfer or
dispose of all or substantially all of its property, assets or business, acquire
all or substantially all of the assets of any Person or abandon the Portfolio
Assets.

          Section 6.02 LIMITATION ON INDEBTEDNESS. Create, incur, assume or
suffer to exist any Indebtedness, other than Permitted Indebtedness.

          Section 6.03 LIMITATION ON LIENS. Create or permit to exist any Lien
or encumbrance on any Portfolio Assets or any other assets of any Borrower
Entity, other than Permitted Liens.

          Section 6.04 NATURE OF BUSINESS. Change its legal form or Governing
Documents, change its fiscal year nor engage in any business other than the
acquisition, ownership, operation and financing of the Portfolio Assets as
contemplated by the Transaction Documents, provided, that the Lenders hereby
expressly consent to the amendment of the business purpose clauses of the
Governing Documents of the Borrower and the General Partner to the extent
necessary to reflect the acquisition and ownership of the membership interests
of Twelvepole and the development, construction, ownership and operation of
Ceredo by Twelvepole as contemplated hereby. The Borrower Entities shall not
engage in the sale or trading of any fuel (i) to the extent such fuel is
necessary for the operation of any Portfolio Assets (including reasonable
reserves thereof) or (ii) on terms materially different from those set forth in
the Fuel Plan then in effect.

          Section 6.05 PROJECT CONTRACTS; WAIVER; MODIFICATION; AMENDMENT.

          (a) Terminate, or agree to any termination of, any Transaction
Document to which it is a party or any of its Governmental Approvals, unless the
Borrower first obtains the written consent of the Required Lenders.

          (b) Amend or modify, or consent or agree to any amendment or
modification of, or waive timely performance by any Person of its material
obligations under or in respect of, any Project Contract (other than (i) change
orders relating to the construction of Ceredo that do not (A) delay Commercial
Operation of the "Facility" (as defined in the Ceredo EPC Contract) beyond July
1, 2001, (B) change any of the "Performance Tests" or "Performance Test
Procedures" as defined in the Ceredo EPC Contract, except as may be consented to
by the Arrangers, or (C) otherwise amend or modify the definition of
"Substantial Completion" in the Ceredo EPC Contract or the requirements
necessary to achieve "Substantial Completion" thereunder, except as may be
consented to by the Arrangers, (ii) assignment of the Ceredo Generator Purchase
Order to Twelvepole in accordance with Section 3.03(h) hereof, (iii) amendment
of the business purpose clauses of the Governing Documents of the Borrower and
the General Partner to the extent necessary to reflect the acquisition and
ownership of the membership interests of Twelvepole and the development,
construction, ownership and operation of Ceredo by Twelvepole as contemplated
hereby and (iv) amendments to the POLR I Agreement and the POLR II Agreement
pursuant to that certain Amended and Restated POLR II Agreement, dated as of
December 7, 2000 (the "AMENDED POLR II AGREEMENT"), between Duquesne Light
Company and the Borrower and any changes, amendments or modifications to the
Amended POLR II Agreement (in each case, taken as a whole) which are not adverse
to the interests, taken as a whole, of the Borrower or the Lenders, as
determined by the Arrangers), Operational Plan or Acquisition Document to which
it is a party or any material Governmental Approval, unless the Borrower first
obtains the consent of the Required Lenders, which consent will not be
unreasonably withheld, delayed or conditioned, upon demonstration to the
reasonable satisfaction of the Required Lenders (in consultation with the
Independent Engineer, Fuel Consultant or Power Marketing Consultant, as
applicable) that the proposed action could not reasonably be expected to have a
Material Adverse Effect. Upon granting any such consent by the Required Lenders
with respect to a Project Contract, the Administrative Agent shall forthwith
grant consent to such amendment or modification required under the Consent
applicable to any such Project Contract.

          (c) Assign, sell, convey or otherwise transfer any of its obligations
under the POLR Agreement, the POLR II Agreement or any agreement in replacement
thereof, without the prior written consent of the Required Lenders.

          Section 6.06 PARTNERSHIPS; SUBSIDIARIES. Become a general or limited
partner in any partnership or a joint venture in any joint venture, acquire any
ownership interest in any other Person or enter into any profit-sharing or
royalty agreement or other similar arrangement whereby the Borrower Entity's
income or profits are, or might be, shared with any other Person, or enter into
any management contract or similar arrangement whereby its business or
operations are managed by any other Person (other than the O&M Agreement or as
contemplated in any Power Marketing Plan and/or Fuel Plan and/or, with respect
to the management of Twelvepole, as provided in Section 6.09) or form any
Subsidiary.

          Section 6.07 LOANS, ADVANCES OR INVESTMENTS. Make or permit to remain
outstanding any loans, extensions of credit or advances to or investments in
(whether by acquisitions of any stocks, notes or other securities or
obligations) any Person, except Permitted Investments or as expressly
contemplated by this Agreement.

          Section 6.08 LIMITATION ON CAPITAL EXPENDITURES. Make any Capital
Expenditure other than such Capital Expenditures that are (a) contemplated by
the annual Operating Budget in effect for such fiscal year (as administered
pursuant to Section 5.11), or (b) provided no Event of Default has occurred and
is continuing, (x) determined in writing by the Administrative Agent (after
consultation with the Independent Engineer) to be required by applicable
Requirements of Law or to be reasonable and necessary and to arise from
circumstances which could not reasonably have been anticipated, which
determination will not be unreasonably withheld, conditioned or delayed, or (y)
required as a result of an Emergency.

          Section 6.09 AFFILIATE TRANSACTIONS. Except as expressly contemplated
by the Financing Documents or any Operational Plan (and, with respect to the
management of Twelvepole, as contemplated in the management services agreements
attached hereto as EXHIBIT Y), directly or indirectly enter into any transaction
with any Affiliate or any other Person other than in the ordinary course of
business and on an arm's-length basis.

          Section 6.10 DISTRIBUTIONS. Declare or pay any Distributions in
respect of any Person's ownership interest in the Borrower other than Permitted
Distributions or declare or pay Distributions, in the aggregate, in excess of
the Maximum Permitted Distribution Amount (other than Distributions of funds to
the Sponsor pursuant to Section 5.3(c) of the Deposit Account Agreement).

          Section 6.11 LIMITATION ON DISPOSITION OF ASSETS. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its assets (including,
equipment, inventory and other physical assets of similar nature), other than
(a) electricity, capacity, ancillary services, steam, ash and other coal process
by-products, scrap metal and other scrap materials, and excess fuel conveyed,
sold, leased, assigned, transferred or otherwise disposed of in the ordinary
course of the Borrower Entity's business, (b) such assets that are replaced
within 60 days by other assets of like utility in the Borrower Entity's
business; PROVIDED, THAT, this clause (b) above shall not permit any sale of
assets for an aggregate sales price in excess of $7,500,000 in any calendar year
during the term hereof, and (c) obsolete or surplus assets or assets not
required in connection with the operation of the Portfolio Assets as
contemplated by the Transaction Documents. All proceeds of any disposition of
such assets pursuant to clauses (a) and (b) above shall be deposited into the
Revenue Account for application therefrom in accordance with the Deposit Account
Agreement. All proceeds of any disposition of such assets pursuant to clause (c)
above shall be applied to the prepayment of Loans to the extent required under
Section 2.07(a) and shall be deposited into the Extraordinary Proceeds Account
pursuant to the Deposit Account Agreement. Notwithstanding the foregoing,
Twelvepole shall be permitted (i) to transfer transmission assets back to
American Electric Power Service Corporation in accordance with the Ceredo
Interconnection and Operation Agreement and (ii) to transfer interests in Ceredo
to the County Commission of Wayne County, West Virginia, in accordance with the
terms and provisions of the Ceredo Lease Agreement as in effect on the Ceredo
Closing Date, without waiver of any condition precedent to the obligations of
Twelvepole thereunder (except as may be approved by the Required Lenders);
PROVIDED that, contemporaneously with any such transfer to the County Commission
of Wayne County, West Virginia, the Borrower shall deliver to the Administrative
Agent (to be held as Collateral for the benefit of the Secured Parties, in
accordance with the Security Documents) all bonds issued under the Ceredo Bond
Indenture and delivered in connection therewith, accompanied by undated
assignments executed in blank. So long as no Default (except to the extent
waived by the Arrangers for the purposes of this sentence) or Event of Default
(except to the extent waived by the Required Lenders for the purposes of this
sentence) shall have occurred and be continuing, Lenders agree, and authorize
the Administrative Agent acting on their behalf, in connection with any such
transfer of interests in Ceredo in accordance with the Ceredo Lease Agreement,
to release the lien of the Twelvepole Mortgage in respect of such interests,
subject to receipt by the Administrative Agent of evidence, in form and
substance reasonably satisfactory to the Administrative Agent (which may involve
the issuance or verification of a mortgagee's policy of title insurance and/or
opinions of counsel), of the creation or reservation of a first priority
perfected lien and security interest on and in Twelvepole's leasehold interest
under the Ceredo Lease Agreement in the property so transferred.

          Section 6.12 OPERATING BUDGET. Amend, adjust, modify or re-allocate
any portion of the Operating Budget except as specifically permitted in Section
5.11.

          Section 6.13 DEBT SERVICE COVERAGE RATIO. (a) On the Quarterly Payment
Date occurring on March 31, 2001, fail to maintain a Debt Service Coverage Ratio
of at least 1.25 to 1.00 for the three month period immediately preceding such
date, or (b) on the Quarterly Payment Date occurring on June 30, 2001, fail to
maintain an average annual Debt Service Coverage Ratio of at least 1.30 to 1.00
for the twelve month period immediately preceding such date, or (c) on any
Quarterly Payment Date occurring on and after September 30, 2001, fail to
maintain an average annual Debt Service Coverage Ratio of at least 1.50 to 1.00
for the twelve-month period immediately preceding any date of determination of
such Debt Service Coverage Ratio.

          Section 6.14 ENVIRONMENTAL INSURANCE. Add any properties not included
within the Portfolio Assets (with the exception of the Harwick Mine Complex
which may be added) to the insured properties under the Environmental Insurance
Policy or any matters to the Environmental Insurance Policy which are not
identified as covered locations under the Environmental Insurance Policy without
the prior written consent of the Administrative Agent, which consent shall not
be unreasonably withheld, conditioned or delayed; provided, that, the Borrower
delivers to the Administrative Agent all reasonably requested information
regarding (1) pollution conditions or potential for pollution conditions on the
new properties or pertaining to the matters relating to Environmental Insurance
Policy and (2) the effects on the protections afforded to the Portfolio Assets
by adding such new properties to the Environmental Insurance Policy or matters
relating to the Environmental Insurance Policy.

          Section 6.15 ASH DISPOSAL. Dispose of, or arrange for the disposal of,
any coal combustion waste or untreated ash leachate (i) in any location that
does not comply with the rules, regulations and applicable standards (including
any permitted variances) of the states of Ohio and Pennsylvania as applicable
based upon the location of the facility or (ii) into the Harwick Mine Complex
except pursuant to the Harwick Ash Contract. This prohibition on disposal
includes, without limitation, any disposal of coal combustion wastes in a mine
shaft or other unlined underground borehole (except for the Harwick Mine Complex
as contemplated above), even if such disposal would otherwise be allowable under
applicable Environmental Laws.

          Section 6.16 SPECULATIVE TRADING. Engage in any speculative trading
activities.

                                   ARTICLE VII
                                EVENTS OF DEFAULT

          If any of the following specified events (each an "EVENT OF DEFAULT")
shall occur and be continuing:

          Section 7.01 PAYMENTS.

          (a) The Borrower shall fail to pay in accordance with the terms hereof
(including, without limitation, by mandatory prepayment or acceleration) (i) any
principal of any Loan or reimbursement obligation in respect of any Letter of
Credit when due; (ii) any scheduled or periodic payment of interest or any other
scheduled or periodic amount (including Fees) payable by the Borrower on demand
hereunder or under the other Financing Documents, within three (3) Business Days
after any such amount becomes due in accordance with the terms hereof or of any
other Financing Document or (iii) any other payment, including non-scheduled and
non-periodic payments of the Borrower, and such failure shall continue for ten
(10) Business Days after written notice thereof to the Borrower;

          (b) except as set forth in Section 7.02(a)(ii), any Credit Party
(other than the Borrower) shall fail to pay any amount when due under any
Financing Document to which such Credit Party is a party in accordance with the
terms thereof and such failure shall continue for ten (10) Business Days after
written notice thereof to such Credit Party; or

          (c) any Borrower Entity shall fail to deposit, in accordance with the
terms hereof or any other Financing Document, the amounts required to be
deposited into the Accounts as and when required by the terms hereof or any
other Financing Document and such failure shall not be remedied within five (5)
Business Days after such Borrower Entity shall have received such amount;

          Section 7.02 COVENANTS.

          (a) (i) The Borrower shall fail to observe or perform any covenant or
agreement contained in Sections 5.01(a), (b) and (c), 5.06, 5.13, 5.17, 5.22,
5.26(a)(iv), 5.26(b)(vi), 5.26(c)(iii) or 5.27 hereof or in Article VI hereof or
to deliver all items described in Section 5.28 hereof on or before February 15,
2001; (ii) any Credit Party shall fail to observe or perform any covenant or
agreement contained in Section 2(b) of the Equity Contribution Agreement; (iii)
the Borrower shall fail to observe or perform any covenant or agreement
contained in any of the FE Interconnection Agreements or any of the FE Easement
and Attachment Agreements, and such failure shall remain unremedied for one half
(1/2) the number of days provided for cure or grace in any such document; or
(iv) Twelvepole shall fail to observe or perform any covenant or agreement
contained in SECTIONS 7.01(A), (B) AND (C), 7.06, 7.13, 7.16, 7.22 or SECTION 8
of the Twelvepole Guarantee;

          (b) Any Credit Party shall fail to observe or perform any covenant or
agreement contained in any Financing Document to which it is a party, other than
those referred to in Sections 7.01 and 7.02(a), and, if capable of being
remedied, such failure shall remain unremedied and material for thirty (30) days
after the earlier of (i) such Credit Party's obtaining actual knowledge thereof
or (ii) written notice thereof shall have been given to such Credit Party by any
Lender or the Administrative Agent; provided, that, such Credit Party shall have
such longer period of time (up to a maximum of an additional 120 days) which may
be necessary to remedy such failure, so long as, (x) such Credit Party commences
such remedy within such thirty (30) day period, (y) such Credit Party is
diligently pursuing such remedy and (z) such Default has not had, and could not
reasonably be expected to have, a Material Adverse Effect;

          (c) Any other Major Project Party shall fail to observe or perform any
material covenant or material agreement contained in any Project Contract to
which such Major Project Party is a party, and, if capable of being remedied,
such failure shall remain unremedied and material beyond the applicable grace
period provided therefor in such Project Contract or if no grace period is
provided therefor, for a period of 120 days after written notice thereof;
PROVIDED, HOWEVER, that it shall not be an Event of Default under this Section
7.02(c) if, prior to the date such cure period specified above expires, such
Project Contract shall be replaced by an agreement in form and substance and
with a party reasonably satisfactory to the Required Lenders;

          Section 7.03 REPRESENTATIONS. Any representation or warranty made by
any Credit Party in any Financing Document, or any representation, warranty or
statement in any certificate, financial statement or other document furnished to
any Lender by or on behalf of any Credit Party under any Financing Document,
shall prove to have been false or misleading in any material respect as of the
time made, confirmed or furnished and such Credit Party shall fail to correct
such representation or warranty or any material adverse effect therefrom within
30 days after written notice thereof to the Borrower;

          Section 7.04 DEFAULTS OF OTHER INDEBTEDNESS.

          (a) Any Borrower Entity or either Partner shall fail to observe or
perform any covenant or agreement contained in any material agreement or
instrument relating to any of its Indebtedness in excess of $1,000,000 within
any applicable grace period, or any other event shall occur, if the effect of
such failure or other event is to accelerate the maturity of such Indebtedness
or cause the holder of such Indebtedness to take steps to accelerate such
Indebtedness; or any such Indebtedness shall be required to be prepaid (other
than by a regularly scheduled required prepayment or a refinancing thereof) in
whole or in part prior to its stated maturity or (b) the Sponsor shall fail to
observe or perform any covenant or agreement contained in any agreement or
instrument relating to any of its Indebtedness in excess of $25,000,000 within
any applicable grace period, or any other event shall occur, if the effect of
such failure or other event is to accelerate the maturity of such Indebtedness
or cause the holder of such Indebtedness to take steps to accelerate such
Indebtedness; or any such Indebtedness shall be required to be prepaid (other
than by a regularly scheduled required prepayment or a refinancing thereof) in
whole or in part prior to its stated maturity;

          Section 7.05 SECURITY DOCUMENTS. Any of the Security Documents shall,
after the execution and delivery thereof, cease to be in full force and effect,
or shall cease to give the Administrative Agent (for the benefit of the Secured
Parties) the Liens, rights, powers and privileges purported to be created
thereby (including, without limitation, a security interest in, and Lien on, any
of the Collateral covered thereby which is superior to and prior to the rights
of all other Persons, other than with respect to vehicles and boats), in favor
of the Administrative Agent (for the benefit of the Secured Parties) subject to
no other Liens other than Permitted Liens;

          Section 7.06 TRANSACTION DOCUMENTS. Any Transaction Document or any
material provision contained in any thereof, shall become invalid, illegal or
unenforceable or shall cease, for any reason not permitted hereby, to be in full
force and effect prior to its stated termination date, or any party thereto
asserts the same in writing, unless such Transaction Document or provision, as
the case may be, is replaced within 120 days of such cessation by an agreement
in form and substance and with a party reasonably satisfactory to the Required
Lenders;

          Section 7.07 BANKRUPTCY. Any Credit Party or Major Project Party shall
commence a voluntary case or proceeding concerning itself under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors; or such an involuntary case or
proceeding is commenced against any Credit Party or Major Project Party and the
petition is not dismissed within 60 days after commencement of the case; or a
custodian, receiver, trustee, conservator or other similar official is appointed
for, or takes charge of, all or any substantial part of the property of any
Credit Party or Major Project Party and such official is not dismissed or
removed within 60 days after such appointment; or any Credit Party or Major
Project Party commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to such Credit Party or Major Project Party, or there is
commenced against any Credit Party or Major Project Party any such proceeding
which remains undismissed for a period of 60 days; or any Credit Party or Major
Project Party is adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered and is undischarged
and unstayed for a period of 60 days; or any Credit Party or Major Project Party
suffers any appointment of any custodian or the like for it or any substantial
part of its property to continue undischarged and unstayed for a period of 60
days; or any Credit Party or Major Project Party makes a general assignment for
the benefit of creditors; or any Credit Party or Major Project Party shall fail
to pay, or shall state that it is unable to pay, or shall be unable to pay, its
debts generally as they become due; or any Credit Party or Major Project Party
shall call a meeting of its creditors with a view to arranging a composition or
adjustment of its debts; or any Credit Party or Major Project Party shall by any
act or failure to act indicate its consent to, approval of or acquiescence in
any of the foregoing; or any corporate action is taken by any Credit Party or
Major Project Party for the purpose of effecting any of the foregoing; provided,
that, the foregoing, as it relates to any Major Project Party, shall not
constitute an Event of Default if the Borrower obtains, within 60 days after
expiration of such 60 day period, a replacement Person reasonably satisfactory
to the Required Lenders to perform the obligations of the affected Major Project
Party on terms and conditions reasonably satisfactory to the Required Lenders;

          Section 7.08 GOVERNMENTAL APPROVALS. (a) Any material Governmental
Approval required by any Borrower Entity shall not be obtained, shall be revoked
or cancelled or materially and adversely modified, which modification,
revocation or cancellation is not promptly stayed upon appeal or other legal
challenge instituted by or on behalf of such Borrower Entity by any Governmental
Authority having jurisdiction; or (b) any notice of violation is issued under
any material Governmental Approval or any proceeding is commenced by any
Governmental Authority for the purpose of modifying in any materially adverse
manner, revoking or canceling any such Governmental Approval and any such event
or condition described in this clause (b) shall have a material adverse effect
on any Portfolio Asset and shall continue for a period of one hundred fifty
(150) days without a variance or similar relief being granted with respect
thereto; PROVIDED, THAT, notwithstanding the foregoing, it shall be an Event of
Default (with no cure period except as provided in the following proviso) if any
event or condition described in this clause (b) occurs and any Governmental
Authority commences any enforcement action with respect thereto which has or
could reasonably be expected to have a Material Adverse Effect; and, PROVIDED
FURTHER, that if no Material Adverse Effect has in fact occurred and, within
forty-five (45) days after the commencement of any such enforcement action, such
enforcement action is stayed or otherwise resolved in a manner reasonably
satisfactory to the Required Lenders, then the Borrower shall be entitled to the
full cure period specified above with respect to the occurrence of any such
event or condition described in this clause (b);

          Section 7.09 OWNERSHIP. (a) The failure of the Sponsor to own,
directly or indirectly, 100% of the outstanding Capital Stock of the Partners,
the Borrower, and all of their respective Subsidiaries, or (b) (i) at any time
prior to an initial registered public offering pursuant to an effective
registration statement under the Securities Act of 1933 covering the offer and
sale of common stock of the Sponsor to the public (a "SPONSOR IPO"), (A) the
failure of Constellation Enterprises, Inc. ("CEI") or any direct or indirect
parent of CEI to own, directly or indirectly, an amount of the outstanding
Capital Stock of the Sponsor entitled to 20% or more of the Total Voting Power
of the Sponsor, (B) the failure of the Goldman Entities to own, directly or
indirectly, an amount of the outstanding Capital Stock of the Sponsor entitled
to 20% or more of the Total Voting Power of the Sponsor, (C) the occurrence of a
Goldman Disposition (as defined in the CPS Strategic Alliance Agreement) or (D)
the failure of CEI (or any direct or indirect parent of CEI) and the Goldman
Entities (jointly, the "PERMITTED HOLDERS") collectively to own an amount of the
outstanding Capital Stock of the Sponsor entitled to 51% or more of the Total
Voting Power of the Sponsor, or (ii) at any time after successful consummation
of a Sponsor IPO, (A) any person or "group" (within the meaning of Rule 13d-5
under the Securities and Exchange Act of 1934, as amended), together with its
Affiliates, other than the Permitted Holders, shall beneficially own, directly
or indirectly, an amount of Capital Stock of the Sponsor entitled to twenty
percent (20%) or more of the Total Voting Power of the Sponsor; (B) the failure
of the Permitted Holders to own shares of Capital Stock of the Sponsor
representing at least thirty-three and one-third percent (33 1/3%) of the Total
Voting Power of the Sponsor; or (C) the Continuing Directors in office at any
time shall not constitute a majority of the Board of Directors of the Sponsor.
For purposes of the foregoing, the term "Continuing Directors" shall mean, at
any date, an individual (y) who is a member of the Board of Directors of the
Sponsor on the Closing Date, or (z) who has been nominated to fill a vacancy on
the Board of Directors of the Sponsor by a majority of the Continuing Directors
then in office;

          Section 7.10 JUDGMENT. A judgment shall be entered (i) for the payment
of money (a) in excess of $1,000,000 against any Borrower Entity or any Partner,
or (b) in excess of $10,000,000 against the Sponsor and such judgment or order
(in the case of a money judgment) shall continue unsatisfied and in effect, or
such party shall fail to provide Acceptable Reserves for the satisfaction
thereof, for a period of 60 days during which execution shall not be effectively
stayed or deferred (whether by action of a court, by agreement or otherwise);
(ii) which could reasonably be expected to cause a Material Adverse Effect; or
(iii) in the form of an injunction or similar form of relief requiring
suspension of operations of any Portfolio Asset (other than Phillips or Ceredo
to the extent not put into service by the Borrower or Twelvepole, as applicable)
on the grounds of violation of an Environmental Law or other Requirement of Law
and failure of the Borrower to have such injunction or similar form of relief
stayed or discharged within 90 days;

          Section 7.11 DESTRUCTION OF PORTFOLIO ASSETS. Any of the Portfolio
Assets (other than Phillips or Ceredo to the extent not put into service by the
Borrower or Twelvepole, as applicable) shall suffer a substantial casualty, or
be destroyed, abandoned, irreparably damaged, or requisitioned or taken by
condemnation;

          Section 7.12 ERISA. Any Borrower Entity or any ERISA Affiliate shall
fail to pay when due an amount or amounts aggregating in excess of $10,000,000
which it shall have become liable to pay under Title IV of ERISA; or notice of
intent to terminate a Material Plan shall be filed under Title IV of ERISA by
any Borrower Entity or any ERISA Affiliate, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate, to impose liability in respect of, or to cause a
trustee to be appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall occur a
complete or partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause any Borrower Entity or one or more ERISA Affiliates to incur a
current payment obligation in excess of $10,000,000;

          Section 7.13 REGULATORY STATUS. Any Borrower Entity or any operator of
the Portfolio Assets shall fail at any time to be an "exempt wholesale
generator" under Section 32 of PUHCA;

          Section 7.14 NEGATIVE PLEDGE. Any Person pledging an interest pursuant
to any Partnership Interest Pledge Agreement or Stock Pledge Agreement, as the
case may be, shall, or shall agree to, create, incur, assume or suffer to exist
any Lien upon, or with respect to, such pledged interest other than Permitted
Liens;

          Section 7.15 ABANDONMENT. Any Borrower Entity shall have voluntarily
abandoned the ownership or operation of any material portion of any of the
Portfolio Assets (other than Phillips or Ceredo to the extent not put into
service by the Borrower or Twelvepole, as applicable) for a continuous period of
seven days other than pursuant to a Requirement of Law;

          Section 7.16 SPONSOR INDEBTEDNESS. The Sponsor shall incur
Indebtedness (or any amendment, modification, restructuring, replacement or
refinancing thereof) for borrowed money, (or issue any guarantee or surety of
any Indebtedness for borrowed money) in excess of $5,000,000, other than
Permitted Indebtedness, the Sponsor High Yield Debt and the Sponsor Revolver,
that (i) has a maturity date of less than 36 months and (ii) limits or restricts
the Lenders in exercising their rights and remedies hereunder and under the
other Financing Documents, in any way that is more limiting or restricting than
the provisions of the Sponsor High Yield Debt; or

          Section 7.17 CEREDO PROJECT. The failure of Twelvepole to achieve
Commercial Operation with respect to Ceredo on or before July 1, 2001 (unless
there shall have occurred a Closing Failure and the Administrative Agent shall
have applied the amounts on deposit in the Equity Proceeds Account to the
prepayment of the Loans and otherwise as provided in Section 5.3(b) of the
Deposit Account Agreement);

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent may, and upon the written,
telecopied or telex request of the Required Lenders, shall, by written notice to
the Credit Parties (a "REMEDY NOTICE"), take any or all of the following
actions, without prejudice to the rights of the Administrative Agent, any
Secured Party or the holder of any Note to enforce its claims against the
Borrower: (i) declare the Commitments terminated, whereupon the Commitments of
each Lender shall terminate immediately and any accrued but unpaid Commitment
Fee shall forthwith become due and payable without any action of any kind; or
(ii) declare the principal of and any accrued interest on the Loans, and all
other Obligations, to be, whereupon the same shall become, forthwith due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived; provided that, if any Event of Default specified in
Section 7.07 shall occur, the result which would occur upon the giving of a
Remedy Notice by the Administrative Agent, as specified in clauses (i) and (ii)
above, shall occur automatically without the giving of any such Notice. Except
as expressly provided in the immediately preceding sentence, neither the
Administrative Agent nor any Secured Party shall otherwise be precluded from
pursuing any other right or remedy then available to them against the Borrower
or any Credit Party pursuant to the Financing Documents. Upon the exercise of
any of the foregoing remedies, any excess remaining after payments to each
Secured Party of any and all amounts sufficient to compensate such Secured Party
for all amounts owing and all costs incurred under any Financing Document, shall
be remitted by the Administrative Agent to the Borrower.

                                  ARTICLE VIII
                           THE AGENTS AND ISSUING BANK

          Section 8.01 APPOINTMENT OF AGENTS, POWERS AND IMMUNITIES. Each
Secured Party hereby irrevocably appoints and authorizes each of the Agents and
the Issuing Bank to act as its Agent and the Issuing Bank hereunder and under
the other Transaction Documents with such powers as are expressly delegated to
such Agent and the Issuing Bank by the terms of this Agreement, together with
such other powers as are reasonably incidental thereto. The Agents shall not
have any duties or responsibilities except those expressly set forth in this
Agreement or in any other Transaction Document, or be a trustee for any Secured
Party. Notwithstanding anything to the contrary contained herein, no Agent shall
be required to take any action which is contrary to this Agreement or any other
Transaction Document or applicable law. Neither the Agents, the Issuing Bank nor
any Secured Party nor any of their respective affiliates shall be responsible to
any other Secured Party for any recitals, statements, representations or
warranties made by the Borrower contained in this Agreement or any other
Transaction Document or in any certificate or other document referred to or
provided for in, or received by any Secured Party under, this Agreement or any
other Transaction Document, for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, the Notes, the other
Transaction Documents or any other document referred to or provided for herein
or therein or for any failure by the Borrower to perform its obligations
hereunder or thereunder. Each Agent may employ Agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such Agents or
attorneys-in-fact selected by it with reasonable care. Neither the Agents, the
Issuing Bank nor any of their respective directors, officers, employees or
agents shall be responsible for any action taken or omitted to be taken by it or
them hereunder or under any other Transaction Document or in connection herewith
or therewith, except for its or their own gross negligence or willful
misconduct.

          Section 8.02 RELIANCE BY AGENTS. Each Agent and the Issuing Bank shall
be entitled to rely upon any certificate, notice or other document (including
any cable, telegram, telecopy or telex) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by such Agent or the Issuing Bank. As to any matters
related to this Agreement or the transactions contemplated hereby, none of the
Agents nor the Issuing Bank shall be required to take any action or exercise any
discretion, but the Agents and the Issuing Bank shall be required to act or to
refrain from acting upon instructions of the Required Lenders and shall in all
cases be fully protected in acting, or in refraining from acting, hereunder or
under any other Transaction Document in accordance with the instructions of the
Required Lenders, and such instructions of the Required Lenders and any action
taken or failure to act pursuant thereto shall be binding on all of the Secured
Parties.

          Section 8.03 DEFAULTS. The Administrative Agent shall not be deemed to
have actual knowledge or notice of the occurrence of a Default or an Event of
Default unless the Administrative Agent has received notice from a Lender or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event that
the Administrative Agent receives such a notice of the occurrence of a Default
or an Event of Default the Administrative Agent shall give notice thereof to the
Secured Parties. The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required
Lenders (or, if required by Section 9.02, as shall be reasonably directed by all
of the Lenders); PROVIDED that, unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interest of the Secured Parties.

          Section 8.04 RIGHTS AS LENDERS. With respect to its commitment to make
Loans, Bank of America, N.A. shall have the same rights and powers hereunder as
any Lender and may exercise the same as though it was not acting as the
Administrative Agent and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include Bank of America, N.A. in its individual
capacity. Bank of America, N.A. and its Affiliates may (without having to
account therefor to any Lender) accept deposits from, extend credit (on a
secured or unsecured basis) to and generally engage in any kind of banking,
trust or other business with the Borrower or any of its Affiliates, as if it
were not acting as the Administrative Agent.

          Section 8.05 INDEMNIFICATION. Without limiting the obligations of the
Borrower under Section 9.04 hereof, each Lender agrees to indemnify each Agent,
the Issuing Bank and the Arrangers, ratably in accordance with the aggregate
principal amount of the Loans and Letter of Credit Exposure held by the Lenders,
or, if no Loans are then outstanding, the respective amounts of the Lenders'
Commitments, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements or any
kind or nature whatsoever which may at any time (including, without limitation,
at any time following the payment of principal of and/or interest on the Loans)
be imposed on, incurred by or asserted against any Agent, the Issuing Bank or
any Arranger in any way relating to or arising out of this Agreement or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses which the
Borrower is obligated to pay under Section 9.04 hereof) or the enforcement of
any of the terms hereof or thereof or of any such other documents, provided that
no Lender shall be liable for any of the foregoing to the extent they arise from
any Agent's, the Issuing Bank's or any Arranger's gross negligence or willful
misconduct as determined by a court of competent jurisdiction. The Agents, the
Issuing Bank and the Arrangers shall be fully justified in refusing to take or
to continue to take any action hereunder 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 or continuing to take any such action.

          Section 8.06 DOCUMENTS. The Administrative Agent will forward to each
Lender, promptly after the Administrative Agent's receipt thereof, a copy of
each document furnished to the Administrative Agent for such Secured Party
hereunder (and a copy of such other documents furnished to the Administrative
Agent pursuant to Article III hereof as may be requested by such Lender).

          Section 8.07 NON-RELIANCE ON AGENTS AND OTHER LENDERS. Each Lender
represents that it has, independently and without reliance on any Agent, the
Issuing Bank, any Arranger, or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of the
financial condition and affairs of the Borrower and its own decision to enter
into this Agreement and agrees that it will, independently and without reliance
upon any Agent, the Issuing Bank, any Arranger or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own appraisals and decisions in taking or not taking action
under this Agreement. None of the Agents, the Issuing Bank, any Arranger or any
Lender shall be required to keep informed as to the performance or observance by
the Borrower under this Agreement or any other document referred to or provided
for herein or to make inquiry of, or to inspect the properties or books of, the
Borrower. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by any Agent, the Issuing
Bank, or any Arranger hereunder, none of the Agents, the Issuing Bank, any
Arranger or any Lender shall have any duty or responsibility to provide any
Lender with any credit or other information concerning the Borrower, or any
Affiliate of the Borrower, which may come into the possession of such Agent, the
Issuing Bank, any Arranger or such Lender or any of its or their Affiliates.

          Section 8.08 RESIGNATION. Subject to the appointment and acceptance of
a successor as provided below, each of the Agents and the Issuing Bank (prior to
the issuance of the DLC Letter of Credit) may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent and/or
Issuing Bank, as applicable, which shall be a Lender hereunder. If no successor
Agent and/or Issuing Bank, as applicable, shall have been appointed by the
Required Lenders and no Lender shall have accepted such appointment within 30
days after the retiring Agent's and/or Issuing Bank's giving of notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent and/or Issuing Bank, which shall be a Lender hereunder having a
combined capital and surplus of not less than $500,000,000. Upon the acceptance
of any appointment as an Agent and/or Issuing Bank, as applicable, hereunder by
a successor Agent and/or Issuing Bank, as the case may be, such successor Agent
and/or Issuing Bank shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent and/or Issuing Bank,
and the retiring Agent and/or Issuing Bank shall be discharged from its duties
and obligations hereunder. After any retiring Agent's and/or Issuing Bank's
resignation hereunder as Agent and/or Issuing Bank, the provisions of this
Article VIII shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Agent and/or Issuing
Bank.

          Section 8.09 AUTHORIZATION. The Administrative Agent and the Issuing
Bank are hereby authorized by the Lenders to execute, deliver and perform each
of the Transaction Documents to which they (whether as "Administrative Agent",
"Issuing Bank", "Secured Party", "Grantee" or "Mortgagee") are or are intended
to be a party and each Lender agrees to be bound by all of the agreements of the
Administrative Agent and the Issuing Bank respectively, contained in the
Transaction Documents.

          Section 8.10 DOCUMENTATION AGENTS; SYNDICATION AGENTS; JOINT BOOK
RUNNERS, ARRANGERS. Nothing in this Agreement shall create or impose on any
Documentation Agent, Syndication Agent, Joint Book Runner or Arranger, in each
case in such capacity, any duty, obligation or responsibility whatsoever to any
Person.

                                   ARTICLE IX
                                  MISCELLANEOUS

          Section 9.01 NOTICES. All notices, requests and other communications
to the Borrower or any Secured Party shall be in writing (including bank wire,
cable, telex, telecopy or similar teletransmission or writing) and shall be
given to such party at its address, or telex, cable or telecopy number set forth
on ANNEX II hereto or such other address or telecopy number as such party may
hereafter specify by notice to the Administrative Agent and the Borrower. Each
such notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
Annex II and receipt thereof is confirmed in writing, or (ii) if given by any
other means (including, without limitation, by air courier), when delivered at
the address specified in Annex II.

          Section 9.02 AMENDMENTS, ETC.. No amendment or waiver of any provision
of any Financing Document, nor consent to any departure by any Credit Party
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders and the Administrative Agent or Issuing Bank,
as the case may be, or if the Lenders shall not be parties thereto, by the
parties thereto and consented to by the Required Lenders, and each such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; PROVIDED, THAT, no amendment,
waiver or consent shall, unless in writing and signed by all the Lenders, do any
of the following: (i) increase the Commitments of the Lenders or subject the
Lenders to any additional obligations, (ii) reduce the principal of, or interest
on, the Notes or any Fees hereunder, (iii) postpone any date fixed for any
scheduled payment in respect of principal of (as set forth in the Deposit
Account Agreement), or interest on, the Notes or any Fees hereunder, (iv) change
the percentage of the Commitments or of the aggregate unpaid principal amount of
the Notes, or the number or identity of the Lenders which shall be required for
the Lenders or any of them to take any action hereunder, (v) postpone the date
fixed for reimbursement of any DLC Letter of Credit Disbursement or any
Operational Letter of Credit Disbursement, (vi) amend or waive Sections 9.02,
9.04 or the definitions of the terms used in such Sections under any Financing
Document insofar as the definitions affect the substance of such Sections, (vii)
consent to the assignment or other transfer by any Credit Party of any of its
rights and obligations under any Financing Document, (viii) release any
Collateral (other than as expressly contemplated under the Financing Documents),
(ix) extend the Revolving Loan Availability Period, or (x) subordinate the Loans
to any other Indebtedness; and PROVIDED, FURTHER, that no amendment, waiver or
consent affecting the rights or duties of the Administrative Agent or the
Issuing Bank under any Financing Document shall in any event be effective,
unless in writing and signed by the Administrative Agent or the Issuing Bank, as
the case may be, in addition to the Lenders required hereinabove to take such
action. Notwithstanding any of the foregoing to the contrary, the consent of the
Borrower shall not be required for any amendment, modification or waiver of the
provisions of Article VIII (other than the provisions of Section 8.08). In
addition, the Borrower, the Arrangers, the Lenders and the Swap Banks hereby
authorize the Administrative Agent to modify this Agreement by amending or
supplementing Annexes I and II from time to time in the manner requested by the
Borrower, the Administrative Agent or any other Secured Party and otherwise in
accordance with the terms of this Agreement; PROVIDED, HOWEVER, that the
Administrative Agent shall promptly deliver a copy of any such modification to
the Borrower and each Secured Party.

          Section 9.03 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on
the part of any Secured Party or any holder of a Note in exercising any right or
remedy under any Financing Document and no course of dealing between the
Borrower and any Secured Party or the holder of any Note shall operate as a
waiver thereof, nor shall any single or partial exercise of any right or remedy
under any Financing Document preclude any other or further exercise thereof or
the exercise of any other right or remedy hereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Secured Parties or the holder of any Note would otherwise
have. No notice to or demand on the Borrower not required under any Financing
Document shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of any
Secured Party or the holder of any Note to any other or further action in any
circumstances without notice or demand.

          Section 9.04 PAYMENT OF EXPENSES AND INDEMNIFICATION. The Borrower
shall:

               (i) promptly reimburse each Agent, the Issuing Bank and each
          Arranger for all of such Person's reasonable costs and expenses
          (including, without limitation, (A) the reasonable fees and
          disbursements of legal counsel, (B) reasonable out-of-pocket expenses
          of its personnel, (C) other reasonable legal, appraisal,
          environmental, audit, consulting, filing fees and expenses and (D) all
          reasonable fees, taxes, assessments and duties (to the extent such
          taxes, assessments and duties are required to be paid under Article II
          of this Agreement)) incurred by it in connection with the due
          diligence, negotiation, preparation, review, execution, delivery,
          interpretation, administration or syndication of this Agreement and
          the Loans made thereunder, the other Transaction Documents and the
          transactions contemplated hereby and thereby;

               (ii) promptly reimburse each Swap Bank for all reasonable costs
          and expenses (including, without limitation, (A) the reasonable fees
          and disbursements of legal counsel, (B) reasonable out-of-pocket
          expenses of its personnel and (C) all reasonable fees, taxes,
          assessments and duties (to the extent such taxes, assessments and
          duties are required to be paid under Article II of this Agreement))
          reasonably incurred by it in connection with the negotiation,
          preparation, review, execution, delivery, administration, collection,
          enforcement, termination or unwinding of any Interest Hedge Contract;

               (iii) promptly pay all out-of-pocket costs and expenses of the
          Secured Parties (both before and after the execution hereof) in
          connection with protecting or perfecting the security interest in the
          Collateral or in connection with any matters contemplated by or
          arising out of this Agreement or any of the Financing Documents,
          whether (a) to prepare, negotiate or execute any amendment to,
          modification of or extension of this Agreement or any other Financing
          Document, (b) to commence, defend, or intervene in any litigation or
          to file a petition, complaint, answer, motion or other pleadings
          necessary to protect the rights of the Secured Parties under any of
          the Financing Documents, (c) to take any other action in or with
          respect to any suit or proceeding (bankruptcy or otherwise) necessary
          to protect the rights of the Secured Parties under any of the
          Financing Documents, (d) to protect, collect, lease, sell, take
          possession of, release or liquidate any of the Collateral or (e) to
          attempt to enforce any security interest in any of the Collateral, or
          to enforce any rights of the Administrative Agent to collect any of
          the Obligations, including all reasonable fees and expenses of
          attorneys and paralegals (including charges for inside counsel), and,
          in the case of enforcement, pay such costs and expenses for any of the
          Secured Parties;

               (iv) indemnify each Secured Party, its officers, directors,
          employees, representatives, agents, affiliates and advisors (each an
          "INDEMNIFIED PERSON") from, and hold each of them harmless against,
          any and all costs, losses, liabilities, claims, damages or expenses
          incurred by any Indemnified Person of any kind or nature whatsoever
          (including, without limitation, any such costs, losses, liabilities,
          claims, damages or expenses of such Indemnified Person (whether or not
          a party) arising out of or by reason of any investigation, litigation
          or other proceeding) relating to any actual or proposed use by any
          Borrower Entity of any Letter of Credit or the proceeds of any of the
          Loans or any Credit Party's entering into and performing of this
          Agreement or any of the other Financing Documents and the Transaction
          Documents, together with the reasonable fees and disbursements of
          attorneys and paralegals (including charges for inside counsel)
          incurred in connection with any of the foregoing; PROVIDED that the
          Borrower shall have no obligation to an Indemnified Person hereunder
          with respect to any of the foregoing to the extent resulting from the
          gross negligence or willful misconduct of such Indemnified Person; and

               (v) indemnify each Indemnified Person from, and hold each
          Indemnified Person harmless against, any and all costs, losses,
          liabilities, claims, damages or expenses incurred by any of them
          resulting from (x) any past, present or future storage, holding,
          existence, release, emission discharge, generation, abatement,
          disposition, handling or transportation by, any Borrower Entity, or
          their agents, employees and representatives of any Hazardous Materials
          or (y) any past, present or future violation of, failure to comply
          fully with or requirement to comply with any Environmental Law by any
          Borrower Entity, or their agents, employees and representatives, in
          each case together with the reasonable fees and disbursements of
          attorneys and paralegals (including reasonable charges for inside
          counsel) incurred in connection with any of the foregoing; provided,
          that the Borrower shall have no obligation to an Indemnified Person
          hereunder with respect to any of the foregoing to the extent resulting
          from the gross negligence or willful misconduct of such Indemnified
          Person.

          (b) If and to the extent that the obligations of the Borrower under
this Section 9.04 are unenforceable for any reason, the Borrower hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable Requirement of Law. The
Borrower's obligations under this Section 9.04 shall survive any termination of
this Agreement and the payment of the Notes.

          Section 9.05 RIGHT OF SETOFF. In addition to and not in limitation of
all rights of offset that any Lender or other holder of a Note may have under
applicable Requirement of Law, each Lender or other holder of a Note shall, upon
the occurrence and during the continuance of any Event of Default and whether or
not such Lender or such holder has made any demand or the Obligations of the
Borrower are matured, have the right to appropriate and apply to the payment of
the Obligations of the Borrower all deposits (general or special, time or
demand, provisional or final) then or thereafter held by and other indebtedness
or property then or thereafter owing by such Lender or other holder, whether or
not related to this Agreement or any transaction hereunder. Any amount received
as a result of the exercise of such rights shall be re-allocated among the
Lenders as set forth in Section 2.13 and the Borrower shall receive prompt
notice thereof from the Administrative Agent; provided, that any failure by the
Administrative Agent to provide such notice shall in no way affect the rights of
any Lender or other holder of a Note under this Section 9.05.

          Section 9.06 BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS.

          (a) This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto; provided that the Borrower may not assign or transfer any of its
interest hereunder without the prior written consent of the Lenders.

          (b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of such
Lender except to the extent such transfer would result in increased costs to the
Borrower.

          (c) Each Lender may assign (with the consent of the Administrative
Agent, not to be unreasonably withheld, conditioned or delayed, if such proposed
assignment is not to an existing Lender or an Affiliate of an existing Lender,
after consultation with the Borrower) to one or more banks or other entities all
or a portion of its rights and obligations under this Agreement, the Notes and
the Letters of Credit; PROVIDED that no such assignment shall be for less than
$5,000,000 of such Lender's Commitments or Loans, as the case may be. Upon such
execution, delivery and acceptance, from and after the effective date (the
"EFFECTIVE DATE") of such Assignment and Acceptance (x) the assignee thereunder
shall be a party hereto, and, to the extent that rights and obligations
hereunder have been assigned to and assumed by it pursuant to such Assignment
and Acceptance, such assignee shall have the rights and obligations of a Lender
hereunder and (y) the Lender assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
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).

          (d) By executing and delivering an Assignment and Acceptance, the
assignee thereunder confirms and agrees as follows: (i) other than as provided
in such Assignment and Acceptance, the 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, the Notes, the Letters of Credit or any other
instrument or document furnished pursuant hereto, (ii) such assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or any other Credit Party or the
performance or observance by the Borrower or any other Credit Party of any of
its obligations under this Agreement, any other Financing Document or
Transaction Document or any other instrument or document furnished pursuant
hereto or 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 5.10 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 Arrangers, the Agents, the Administrative Agent, the Issuing
Bank, 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 appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement and the
other Financing Documents as are delegated to the Administrative Agent by the
terms hereof, together with such powers as are reasonably incidental thereto and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.

          (e) The Administrative Agent shall maintain at its address referred to
in Section 9.01 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 Commitments of, and principal amount of the Loans 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 and each Secured Party may treat each Person whose name is recorded in
the Register as a Lender hereunder for all purposes of this Agreement. The
Register and copies of each Assignment and Acceptance shall be available for
inspection by the Borrower, the Issuing Bank or any Lender at any reasonable
time and from time to time upon reasonable prior notice.

          (f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, together with the Note or Notes subject to such assignment,
the Administrative Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of EXHIBIT K hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Issuing Bank and the
Borrower. Within five (5) Business Days after its receipt of such notice, the
Borrower shall execute and deliver to the Administrative Agent in exchange for
the surrendered Note or Notes a new Note or Notes to the order of such assignee
in an amount equal to the Commitment or Commitments assumed by it pursuant to
such Assignment and Acceptance and, if the assigning Lender has retained a
Commitment or Commitments hereunder, a new Note or Notes to the order of the
assigning Lender in an amount equal to the Commitment or Commitments retained by
it hereunder. Such new Note or Notes shall re-evidence the indebtedness
outstanding under the old Notes or Notes and 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 the Note or Notes subject to
such assignments.

          (g) Each Lender may sell participations (without the consent of the
Administrative Agent, the Issuing Bank, the Borrower or any other Lender) to one
or more parties in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment, the Loans owing to it and the Note or Notes held by it and the
participations in the Letters of Credit held by it); provided that (i) such
Lender's obligations under this Agreement (including, without limitation, its
Commitment) shall remain unchanged, (ii) such Lender shall remain solely
responsible to other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Note for all purposes of
this Agreement, (iv) the Borrower, the Administrative Agent, the Issuing Bank
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 (v) such Lender shall not transfer, grant, assign or sell any
participation under which the participant shall have rights to approve any
amendment or waiver of this Agreement except to the extent such amendment or
waiver would (A) extend the final maturity date or the date for the payments of
any installment of fees or principal or interest of any Loans in which such
participant is participating, (B) reduce the amount of any installment of
principal of the Loans in which such participant is participating, (C) reduce
the interest rate applicable to the Loans in which such participant is
participating, (D) reduce any fees payable hereunder, or (E) release all or
substantially all of the Collateral.

          (h) Each Lender agrees that, without the prior written consent of the
Borrower and the Administrative Agent, it will not make any assignment hereunder
in any manner or under any circumstances that would require registration or
qualification of, or filings in respect of, any Loan, Note or other Obligation
under the securities laws of the United States of America or of any state.

          (i) Any Lender may at any time assign all or any portion of its rights
under this Agreement and the other Financing Documents to the Federal Reserve
Bank of the United States; provided, that any payment in respect of such
assigned rights made by the Borrower to the assigning Lender in accordance with
the terms of this Agreement shall satisfy the Borrower's obligations hereunder
in respect of such assigned rights to the extent of such payment. No such
assignment shall release the assignor Lender from its obligations hereunder.

          (j) After the completion of the primary and general syndication of the
Loans described herein, each transferor Lender shall pay the Administrative
Agent a fee of $2,000 in the case of an assignment to an existing Lender or an
Affiliate of an existing Lender or $3,500.00 in all other cases, for processing
each assignment made pursuant to this Section 9.06.

          Section 9.07 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.

          (a) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK OTHER THAN ANY SUCH REQUIREMENT OF LAWS
THAT WOULD APPLY THE LAWS OF ANOTHER JURISDICTION, EXCEPT TO THE EXTENT THAT THE
LAWS OF ANOTHER JURISDICTION ARE MANDATORILY APPLICABLE. ANY DISPUTE ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE BORROWER AND EACH SECURED PARTY IN CONNECTION WITH THIS AGREEMENT
AND THE OTHER FINANCING DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY
OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED
TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.

          (b) EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH, THE BORROWER AND EACH
SECURED PARTY AGREE THAT ALL DISPUTES BETWEEN THEM ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS, AND WHETHER
ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE
OR FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK, BUT THE BORROWER AND EACH
SECURED PARTY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK. THE BORROWER WAIVES IN
ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.

          (c) THE BORROWER AGREES THAT ANY SECURED PARTY SHALL HAVE THE RIGHT,
TO THE EXTENT PERMITTED BY APPLICABLE REQUIREMENT OF LAW, TO PROCEED AGAINST THE
BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD
FAITH TO ENABLE ANY SECURED PARTY TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF ANY SECURED PARTY. THE
BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN
WHICH ANY SECURED PARTY HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS.

          (d) THE BORROWER AND THE SECURED PARTIES EACH WAIVE ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT AND THE
OTHER FINANCING DOCUMENTS. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

          (e) THE BORROWER HEREBY IRREVOCABLY DESIGNATES NATIONAL REGISTERED
AGENTS, INC., WITH AN ADDRESS AT 440 9TH AVENUE, 5TH FLOOR, NEW YORK, NY 10001
AS THE DESIGNEE, APPOINTEE AND AGENT OF THE BORROWER TO RECEIVE, FOR AND ON
BEHALF OF THE BORROWER, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE NOTES, THE
OTHER FINANCING DOCUMENTS OR ANY DOCUMENTS RELATED THERETO. IT IS UNDERSTOOD
THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY
MAIL TO THE BORROWER AT ITS ADDRESS SET FORTH IN ANNEX II HERETO IN ACCORDANCE
WITH SECTION 9.01. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO THE BORROWER AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE ON THE
DATE OF RECEIPT THEREOF.

          (f) NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY HERETO OR ANY
HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PARTY IN ANY OTHER
JURISDICTION.

          Section 9.08 NONLIABILITY OF ADMINISTRATIVE AGENT AND LENDERS. The
relationship between the Borrower and the Secured Parties shall be solely that
of borrower and lender. No Secured Party shall have any fiduciary
responsibilities to the Borrower. No Secured Party undertakes any responsibility
to the Borrower to review or inform the Borrower of any matter in connection
with any phase of the Borrower's business or operations.

          Section 9.09 MARSHALLING; RECAPTURE. No Secured Party shall be under
any obligation to marshal any assets in favor of the Borrower or any other party
or against or in payment of any or all of the Obligations. To the extent any
Secured Party receives any payment by or on behalf of the Borrower, which
payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to the Borrower
or its estate, trustee, receiver, custodian or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such payment or repayment, the obligation or part thereof which has
been paid, reduced or satisfied by the amount so repaid shall be reinstated by
the amount so repaid and shall be included within the liabilities of the
Borrower to such Secured Party as of the date such initial payment, reduction or
satisfaction occurred.

          Section 9.10 INDEPENDENT NATURE OF LENDERS' RIGHTS. The amounts
payable at any time hereunder to each Lender shall be a separate and independent
debt, and, except as otherwise provided in any Financing Document, each Lender
shall be entitled to protect and enforce its rights arising our of this
Agreement, and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.

          Section 9.11 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.

          Section 9.12 EFFECTIVENESS. This Agreement shall become effective as
of the date hereof; PROVIDED, THAT, all of the parties hereto shall have signed
a copy hereof (whether the same or different copies) and shall have delivered
the same to the Administrative Agent pursuant to Section 9.01 or, in the case of
the Lenders, shall have given to the Administrative Agent written, telecopied or
telex notice (actually received) at such office that the same has been signed
and mailed to it.

          Section 9.13 SURVIVAL OF INDEMNITIES AND REPRESENTATIONS AND
WARRANTIES. All indemnities set forth herein and all representations and
warranties made herein and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement, the Notes, the Letters of Credit and the other
Financing Documents and the making and repayment of the Loans and the expiration
or cancellation of all Letters of Credit.

          Section 9.14 SEVERABILITY. In case any provision in or obligation
under this Agreement or the Notes or the other Financing Documents shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

          Section 9.15 HEADINGS DESCRIPTIVE. The headings of the several
sections and subsections of this Agreement, and the Table of Contents, are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.

          Section 9.16 LIMITATION OF RECOURSE. The obligations of the Borrower
hereunder and under the other Financing Documents are obligations solely of the
Borrower and shall not constitute a debt or obligation of any direct or indirect
partner or shareholder of the Borrower or any of their respective directors,
officers, agents or employees (each such Person, a "NON-RECOURSE PARTY"). No
Non-Recourse Party shall be liable for any amount payable by the Borrower under
this Agreement or the other Financing Documents, and the Secured Parties shall
not seek a money judgment or deficiency or personal judgment against any
Non-Recourse Party for payment of the indebtedness payable by the Borrower
evidenced by this Agreement or the other Financing Documents. No property or
assets of any Non-Recourse Party, other than as provided in the Financing
Documents, shall be sold, levied upon or otherwise used to satisfy any judgment
rendered in connection with any action brought against the Borrower with respect
to this Agreement or the other Financing Documents. The foregoing
acknowledgments, agreements and waivers shall be enforceable by any Non-Recourse
Party. Notwithstanding the foregoing, nothing in this Section shall limit or
affect or be construed to limit or affect the obligations and liabilities of any
Credit Party or any other Non-Recourse Party (a) in accordance with the terms of
any Transaction Document or Financing Document creating such liabilities and
obligations to which such Credit Party or Non-Recourse Party is a party, (b)
arising from liability pursuant to applicable Requirements of Law for such
Credit Party's or such Non-Recourse Party's fraudulent actions, knowing
misrepresentations or willful misconduct or (c) with respect to amounts
distributed to it in violation of Section 6.10 hereof.

          Section 9.17 CONFIDENTIALITY. Each party hereto will treat as
confidential the data and information in their possession regarding the
Portfolio Assets, the Transaction Documents and each other party hereto
(including any Affiliate of such other party), unless such data or information
(i) was disclosed to the receiving party without violating a confidentiality
obligation, (ii) was in the public domain, or (iii) is required to be disclosed
by law. In addition, each party may disclose confidential information to its
Affiliates or its technical, financial and legal advisors on a need-to-know
basis, provided such party agrees that it will not disclose such information to
third parties, or in accordance with governmental, administrative or judicial
requirements to which such party is subject.

                  [Remainder of page intentionally left blank.]

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first above
written.

                                       BORROWER:

                                       ORION POWER MIDWEST, L.P.,
                                       a Delaware limited partnership

                                       By:  Orion Power MidWest GP, Inc., its
                                            general partner

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            CO-LEAD ARRANGERS:

                                            BANC OF AMERICA SECURITIES LLC

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            GOLDMAN SACHS CREDIT PARTNERS L.P.

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Authorized Signatory

<PAGE>

                                            ARRANGERS:

                                            BNP PARIBAS

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            DEUTSCHE BANK SECURITIES INC.

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            ISSUING BANK:

                                            BANK OF AMERICA, N.A.,
                                            as Issuing Bank

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

<PAGE>

                                            ADMINISTRATIVE AGENT:

                                            BANK OF AMERICA, N.A.,
                                            as Administrative Agent

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            SYNDICATION AGENTS:

                                            GOLDMAN SACHS CREDIT PARTNERS L.P.

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Authorized Signatory

                                            BNP PARIBAS

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            DEUTSCHE BANK AG NEW YORK BRANCH

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

<PAGE>

                                            DOCUMENTATION AGENTS:

                                            BNP PARIBAS

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            DEUTSCHE BANK AG NEW YORK BRANCH

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

<PAGE>

                                            LENDERS:

                                            BANK OF AMERICA, N.A., as Revolving
                                            Lender and an Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            GOLDMAN SACHS CREDIT PARTNERS L.P.,
                                            as a Revolving Lender and an
                                            Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            BNP PARIBAS, as a Revolving Lender
                                            and an Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

<PAGE>

                                            DEUTSCHE BANK AG NEW YORK AND/OR
                                            CAYMAN ISLAND BRANCH, as a Revolving
                                            Lender and an Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            THE BANK OF NOVA SCOTIA, as a
                                            Revolving Lender and an Acquisition
                                            Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            BAYERISCHE HYPO- UND VEREINSBANK
                                            AG, NEW YORK BRANCH, as a Revolving
                                            Lender and an Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

<PAGE>

                                            DEXIA- CREDIT LOCAL DE FRANCE, as a
                                            Revolving Lender and an
                                            Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            DG BANK DEUTSCHE
                                            GENOSSENSHAFTSBANK AG, as a
                                            Revolving Lender and an Acquisition
                                            Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            DRESDNER BANK AG, NEW YORK AND
                                            GRAND CAYMAN BRANCHES, as a
                                            Revolving Lender and an Acquisition
                                            Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            ING (U.S.) CAPITAL LLC, as a
                                            Revolving Lender and an Acquisition
                                            Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            SOCIETE GENERALE, as a Revolving
                                            Lender and an Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            UNION BANK OF CALIFORNIA, N.A., as
                                            a Revolving Lender and an
                                            Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

<PAGE>

                                            ABN AMRO BANK N.V., as a Revolving
                                            Lender and an Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            COBANK, ACB, as a Revolving Lender
                                            and an Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            CREDIT LYONNAIS NEW YORK BRANCH, as
                                            a Revolving Lender and an
                                            Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            THE DAI-ICHI KANGYO BANK, LIMITED,
                                            as a Revolving Lender and an
                                            Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            FLEET NATIONAL BANK, as a Revolving
                                            Lender and an Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            THE FUJI BANK, LIMITED, as a
                                            Revolving Lender and an Acquisition
                                            Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            NORDDEUTSCHE LANDESBANK
                                            GIROZENTRALE, NEW YORK/GRAND CAYMAN
                                            ISLANDS BRANCH, as a Revolving
                                            Lender and an Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

<PAGE>

                                            THE ROYAL BANK OF SCOTLAND PLC, as
                                            a Revolving Lender and an
                                            Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            ABBEY NATIONAL TREASURY SERVICES
                                            PLC, as an Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            BANK ONE, NA, as an Acquisition
                                            Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            BARCLAYS BANK PLC, as an Acquisition
                                            Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            LLOYDS TSB BANK PLC, as an
                                            Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            THE GOVERNOR AND COMPANY OF THE BANK
                                            OF SCOTLAND, as an Acquisition
                                            Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            THE SUMITOMO BANK, LIMITED, as an
                                            Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            AIB CAPITAL MARKETS PLC, as an
                                            Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            BANCA NAZIONALE DEL LAVORO S.P.A.,
                                            NEW YORK BRANCH, as an Acquisition
                                            Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            CREDIT INDUSTRIEL ET COMMERCIAL, as
                                            an Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            THE INDUSTRIAL BANK OF JAPAN,
                                            LIMITED, as an Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            LANDESBANK SCHLESWIG-HOLSTEIN
                                            GIROZENTRALE, as an Acquisition
                                            Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

<PAGE>

                                            NATIONAL CITY BANK OF PENNSYLVANIA,
                                            as an Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            THE GOVERNOR AND COMPANY OF THE BANK
                                            OF IRELAND, as an Acquisition
                                            Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            THE SAKURA BANK, LTD, as an
                                            Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            ERSTE BANK DER OESTERREICHISCHEN
                                            SPARKASSEN AG, as an Acquisition
                                            Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

<PAGE>

                                            BANK AUSTRIA CREDITANSTALT CORPORATE
                                            FINANCE, INC., as an Acquisition
                                            Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            THE SANWA BANK LIMITED, NEW YORK
                                            BRANCH, as an Acquisition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

                                            COOPERATIEVE CENTRALE RAIFFEISEN-
                                            BOERENLEENBANK B.A., as an
                                            Acquistition Lender

                                            By:  /s/
                                                 ------------------------------
                                                 Name:
                                                 Title:

<PAGE>

                                     ANNEX I

                                   COMMITMENTS

                             as of December 15, 2000

                                ACQUISITION LOAN

<TABLE>
<CAPTION>

                                                                    ACQUISITION
                         LENDER                                     LOAN AMOUNT         PRO RATA SHARE
                         ------                                     ------------        ---------------
<S>                                                                 <C>                 <C>
Bank of America, N.A.                                               $39,850,000         3.590090090%
Goldman Sachs Credit Partners, L.P.                                 $39,850,000         3.590090090%
Deutsche Bank AG New York and/or Cayman Island Branch               $39,850,000         3.590090090%
BNP Paribas                                                         $39,850,000         3.590090090%
The Bank of Nova Scotia                                             $38,100,000         3.432432432%
Bayerische Hypo-Und Vereinsbank AG, New York                        $38,100,000         3.432432432%
     Branch
Dexia-Credit Local de France                                        $38,100,000         3.432432432%
DG Bank Deutsche Genossenshaftsbank AG                              $38,100,000         3.432432432%
Dresdner Bank AG, New York and Grand Cayman                         $23,100,000         2.081081081%
     Branches
ING (U.S.) Capital LLC                                              $38,100,000         3.432432432%
Societe Generale                                                    $38,100,000         3.432432432%
Union Bank of California, N.A.                                      $38,100,000         3.432432432%
ABN Amro Bank N.V.                                                  $28,850,000         2.599099099%
CoBank, ACB                                                         $28,850,000         2.599099099%
Credit Lyonnais New York Branch                                     $28,850,000         2.599099099%
The Dai-Ichi Kangyo Bank, Limited                                   $28,850,000         2.599099099%
Fleet National Bank                                                 $28,850,000         2.599099099%
The Fuji Bank, Limited                                              $28,850,000         2.599099099%
NordDeutsche Landesbank Girozentrale, New York/Grand                $28,850,000         2.599099099%
     Cayman Islands Branch
The Royal Bank of Scotland Plc                                      $28,850,000         2.599099099%
Abbey National Treasury Services plc                                $30,000,000         2.702702703%
Bank One, NA                                                        $30,000,000         2.702702703%
Barclays Bank PLC                                                   $30,000,000         2.702702703%
Lloyds TSB Bank plc                                                 $30,000,000         2.702702703%
The Governor and Company of the Bank of Scotland                    $30,000,000         2.702702703%
The Sumitomo Bank, Limited                                          $30,000,000         2.702702703%
The Sanwa Bank Limited, New York Branch                             $30,000,000         2.702702703%
Cooperatieve Centrale Raiffeisen-Boerenleenbank b.a.                $30,000,000         2.702702703%
AIB Capital Markets                                                 $20,000,000         1.801801802%
Banca Nazionale del Lavoro                                          $20,000,000         1.801801802%
Credit Industriel et Commercial                                     $20,000,000         1.801801802%
Industrial Bank of Japan, Limited                                   $20,000,000         1.801801802%
Landesbank Schleswig Holstein                                       $20,000,000         1.801801802%
National City Bank of Pennsylvania                                  $20,000,000         1.801801802%
The Governor and Company of the Bank of Ireland                     $20,000,000         1.801801802%
The Sakura Bank, Limited                                            $20,000,000         1.801801802%
Bank Austria Creditanstalt Corporate Finance, Inc.                  $15,000,000         1.351351351%
Erste Bank - Der Oesterreichischen  Sparkassen AG, New              $15,000,000         1.351351351%
     York Branch

                           Total Underwriting                    ==============       ==============
                                                                 $1,110,000,000       100.000000000%
</TABLE>

<PAGE>

                                 REVOLVING LOAN

<TABLE>
<CAPTION>

                                                                    REVOLVING
                        LENDER                                   LOAN COMMITMENT                 PRO RATA SHARE
                        ------                                   ---------------                 ---------------
<S>                                                                <C>                            <C>
Bank of America, N.A.                                              $5,400,000                     6.000000000%
Goldman Sachs Credit Partners, L.P.                                $5,400,000                     6.000000000%
Deutsche Bank AG New York and/or Cayman Island Branch              $5,400,000                     6.000000000%
BNP Paribas                                                        $5,400,000                     6.000000000%
The Bank of Nova Scotia                                            $4,650,000                     5.166666667%
Bayerische Hypo-Und Vereinsbank AG, New York                       $4,650,000                     5.166666667%
     Branch
Dexia-Credit Local de France                                       $4,650,000                     5.166666667%
DG Bank Deutsche Genossenshaftsbank AG                             $4,650,000                     5.166666667%
Dresdner Bank AG, New York and Grand Cayman                        $4,650,000                     5.166666667%
     Branches
ING (U.S.) Capital LLC                                             $4,650,000                     5.166666667%
Societe Generale                                                   $4,650,000                     5.166666667%
Union Bank of California, N.A.                                     $4,650,000                     5.166666667%
ABN Amro Bank N.V.                                                 $3,900,000                     4.333333333%
CoBank, ACB                                                        $3,900,000                     4.333333333%
Credit Lyonnais New York Branch                                    $3,900,000                     4.333333333%
The Dai-Ichi Kangyo Bank, Limited                                  $3,900,000                     4.333333333%
Fleet National Bank                                                $3,900,000                     4.333333333%
The Fuji Bank, Limited                                             $3,900,000                     4.333333333%
NordDeutsche Landesbank Girozentrale, New York/Grand               $3,900,000                     4.333333333%
     Cayman Islands Branch
The Royal Bank of Scotland Plc                                     $3,900,000                     4.333333333%
                           Total Underwriting                       =========                    =============
                                                                  $90,000,000                   100.000000000%

The Borrower acknowledges and agrees that this Annex I may be modified from time
to time.
</TABLE>

<PAGE>

                                    ANNEX II

                                NOTICE PROVISIONS

                             as of December 15, 2000

BORROWER

Orion Power MidWest, L.P.
2000 Cliff Mine Road, Suite 200
Pittsburgh, PA 15275
Telecopy:  (412) 809-1699
Telephone: (412) 809-9354
Attention: Controller

with a copy to:

Orion Power Holdings, Inc.
7 East Redwood Street
10th Floor
Baltimore, MD 21202
Attn:  Chief Legal Officer

ARRANGERS

Banc of America Securities LLC
Bank of America Corporate Center
100 North Tryon Street
NC1-007-12-05
Charlotte, NC  28255
Telecopy:  (704) 386-3324
Telephone: (704) 388-6833
Attention: Laura Ryan

Goldman Sachs Credit Partners L.P.
85 Broad Street
New York, NY 10004
Telecopy:  (212) 902-7260
Telephone: (212) 357-4597
Attention: Stephen King

BNP Paribas
787 Seventh Avenue
New York, NY  10019
Telecopy:  (212) 841-2052
Telephone: (212) 841-2156
Attention: Project Finance Department/Leonardo Osorio

Deutsche Bank AG New York Branch and/or Cayman Island Branch
31 West 52nd Street, 14th Floor
New York, NY 10019
Telecopy:  (212) 469-8256
Telephone: (212) 469-7156
Attention: Amy Walter

ISSUING BANK

Bank of America, N.A.
333 South Beaudry Avenue, 19th Floor
Mail Code CA9-703-19-23
Los Angeles, CA 90017
Telecopy:  (213) 345-6694
Telephone: (213) 345-5231
Attention: Standby Letter of Credit Department

ADMINISTRATIVE AGENT

Bank of America, N.A.
Bank of America Corporate Center
100 North Tryon Street
NC1-007-12-05
Charlotte, NC  28255
Telecopy:  (704) 386-3324
Telephone: (704) 388-6833
Attention: Laura Ryan

LENDERS

Bank of America, N.A.
Bank of America Corporate Center
100 North Tryon Street
NC1-007-12-05
Charlotte, NC  28255
Telecopy:  (704) 386-3324
Telephone: (704) 388-6833
Attention: Laura Ryan

Goldman Sachs Credit Partners L.P.
85 Broad Street, 6th Floor
New York, NY 10004
Telecopy:  (212) 357-4597
Telephone: (212) 902-2192
Attention: Jason Savarese

Deutsche Bank AG New York Branch and/or Cayman Island Branch
31 West 52nd Street, 14th Floor
New York, NY 10019
Telecopy:  (212) 469-8634
Telephone: (212) 469-2766
Attention: Lisa Cintron

BNP Paribas
787 7th Avenue
New York, NY  10019
Telecopy:  (212) 841-2052
Telephone: (212) 841-2156
Attention: Leonardo Osorio

The Bank of Nova Scotia
New York Agency
One Liberty Plaza - 26th Floor
New York, NY  10006
Telecopy:  (212) 225-5090
Telephone: (212) 225-5017
Attention: Meredith Wedeking

Bayerische Hypo- und Vereinsbank AG, New York Branch
150 East 42nd Street
New York, NY  10017
Telecopy:  (212) 672-5516
Telephone: (212) 672-5646
Attention: Gisela Kroess

Dexia- Credit Local de France
445 Park Avenue
New York, NY 10022
Telecopy:  (212) 515-7071
Telephone: (212) 515-7014
Attention: Andrew Brave

DG Bank Deutsche Genossenshaftsbank AG
New York Branch
609 Fifth Avenue
New York, NY  10017
Telecopy:  (212) 745-1552
Telephone: (212) 745-1545
Attention: Daria A. Pishko

Dresdner Bank AG, New York and Grand Cayman Branches
75 Wall Street
New York, NY  10005
Telecopy:  (212) 429-2192
Telephone: (212) 429-2224
Attention: Michael Higgins

ING (U.S.) Capital LLC
55 East 52nd Street
New York, NY  10055
Telecopy:  (212) 486-4636
Telephone: (212) 409-1417
Attention: Jacqueline Bove

<PAGE>

Societe Generale
1221 Avenue of the Americas - 11th Floor
New York, NY 10020
Telecopy:  (212) 278-6144
Telephone: (212) 278-6149
Attention: Beth West

Union Bank of California, N.A.
Energy Capital Services
445 S. Figueroa Street, 15th Floor
Los Angeles, CA  90071
Telecopy:  (213) 236-4096
Telephone: (213) 236-5023
Attention: David M. Musicant

ABN AMRO Bank N.V.
135 South LaSalle Street, Suite 710
Chicago, IL  60603
Telecopy:  (312) 904-6387
Telephone: (312) 904-2799
Attention: David Bryant

CoBank, ACB
5500 South Quebec Street
Englewood, CO  80111
Telecopy:  (303) 224-2615
Telephone: (303) 740-4037
Attention: Todd Telesz

Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, NY 10019
Telecopy:  (212) 261-3421
Telephone: (212) 261-7525
Attention: Sophie Loiodice

<PAGE>

The Dai-Ichi Kangyo Bank, Ltd.
One World Trade Center, Suite 4911
New York, NY 10048
Telecopy:  (212) 466-3348
Telephone: (212) 432-8436
Attention: Antonio Rocha

Fleet National Bank
100 Federal Street
MA DE 10008D
Boston, MA 02110
Telecopy:  (617) 434-3652
Telephone: (617) 434-9579
Attention: Jill Calabrese

The Fuji Bank, Limited
2 World Trade Center
New York, NY 10048
Telecopy:  (212) 488-2172
Telephone: (212) 898-2635
Attention: Rosa Martinez-Bynon

NordDeutsche Landesbank Girozentrale, New York/Cayman Islands Branch
1114 Avenue of the Americas, 37th Floor
New York, NY 10036
Telecopy:  (212) 812-6860
Telephone: (212) 812-6808
Attention: Bruno Mejean

The Royal Bank of Scotland plc
Wall Street Plaza
88 Pine Street
New York, NY 10005
Telcopy:   (212) 480-0791
Telephone: (212) 269-1700, x213
Attention: Siobhan Smyth

<PAGE>

Abbey National Treasury Services plc
26-28 Dorset Square
London NW1 6QG
United Kingdom
Telecopy:  44-207-487-0543
Telephone: 44-207-612-3346
Attention: Chris Bassindale

Bank One, NA
1 Bank One Plaza, Suite 0363
Chicago, IL  60670
Telecopy:  (312) 732-3055
Telephone: (312) 732-7579
Attention: Mary Lu Cramer

Barclays Bank PLC
222 Broadway, 8th Floor
New York, NY  10038
Telecopy:  (212) 412-6709
Telephone: (212) 412-2470
Attention: Sydney Dennis

Lloyds TSB Bank plc
575 Fifth Avenue, 17th Floor
New York, NY  10017
Telecopy:  (212) 930-5098
Telephone: (212) 930-8904
Attention: Paul Briamonte

Bank of Scotland
565 Fifth Avenue
New York, NY  10017
Telecopy:  (212) 682-5720
Telephone: (212) 450-0831
Attention: Richard Burge

<PAGE>

The Sumitomo Bank, Limited
277 Park Avenue
New York, NY  10172
Telecopy:  (212) 224-4880
Telephone: (212) 224-4036
Attention: Elaine Calderon

AIB Capital Markets plc
AIB Special Finance Unit
AIB Trade Centre
I.F.S.C., Dublin 1, Ireland
Telecopy:  353-1-829-0269
Telephone: 353-1-641-7460
Attention: Conor Geary

Banca Nazionale del Lavoro S.p.A.
25 West 51st Street
New York, NY  10019
Telecopy:  (212) 765-2978
Telephone: (212) 314-0263
Attention: Frederic W. Hall

Credit Industriel et Commercial
4 rue Gaillon
F-75 002 Paris
(France)
Telecopy:  33-1-42-66-78-38
Telephone: 33-1-42-66-76-27
Attention: Mark Palin

<PAGE>

The Industrial Bank of Japan, Limited
1251 6th Avenue
New York, NY  10020
Telecopy:  (212) 282-4488
Telephone: (212) 282-3412
Attention: John Dippo

Landesbank Schleswig-Holstein Girozentrale
Martensdamm 6
24103 Kiel, Germany
Telecopy:  49-431-900-2751
Telephone: 49-431-900-2166
Attention: Nikolai Ulrich

National City Bank of Pennsylvania
20 Stanwix Street
Pittsburgh, PA  15222
Telecopy:  (412) 355-2283
Telephone: (412) 644-8424
Attention: Ervine Geiger

The Governor and Company of the Bank of Ireland
La Touche House, IFSC
Dublin 1, Ireland
Telecopy:  353-1-829-0129
Telephone: 353-1-670-1400
Attention: Fiona O'Connor
           Willie Aherne

<PAGE>

The Sakura Bank, Ltd.
101 Park Avenue
New York, NY  10178
Telecopy:  (212) 909-4599
Telephone: (212) 909-4584
Attention: Joe Rothman

Erste Bank Der Oesterreichischen Sparkassen AG
280 Park Avenue, West Building
New York, NY  10017
Telecopy:  (212) 984-5627
Telephone: (212) 984-5637
Attention: Patrick Kunkel

Bank Austria Creditanstalt Corporate Finance, Inc.
Two Greenwich Plaza
Greenwich, CT 06830
Telecopy:  (203) 861-1532
Attention: William Hunter

The Sanwa Bank Limited, New York Branch
Park Avenue Plaza
55 East 52nd Street, 26th Floor
New York, NY 10055
Telecopy:  (212) 339-6249
Telephone: (212) 754-2360
Attention: David Leech

Cooperatieve Centrale Raiffeisen-Boerenleenbank b.a.
Rabobank International
Croeslaan 18, Utrecht
P.O. Box 17100, 3500 HG Utrecht
The Netherlands
Attention: Marc Schmitz

The Borrower acknowledges and agrees that this Annex II may be modified from
time to time.

<PAGE>

                                    ANNEX III

                             ESTIMATED INCOME TAXES

"ESTIMATED INCOME TAXES" for any period, shall mean an amount equal to the sum
of (i) Taxable Income for such period TIMES the Weighted Blended State Tax Rate
for such period PLUS (ii) Net Taxable Income for such period TIMES the
Applicable Federal Tax Rate.

For purposes hereof, the terms listed below shall have the following meanings:

"APPLICABLE FEDERAL TAX RATE" shall mean 35%.1

"DEPRECIATION" for any period, shall mean an amount equal to (i) the aggregate
depreciation of the Portfolio Assets allocated to any calendar year (or portion
thereof) as determined in accordance with the depreciation methodology included
in the Projections times (ii) a fraction the numerator of which equals the
number of days in such period and the denominator of which equals 365 for a full
calendar year or such smaller number equal to the actual aggregate number of
days constituting the portion of any partial calendar year.

"NET TAXABLE INCOME" for any period, shall mean an amount equal to the Taxable
Income for such period MINUS the product of (i) the Taxable Income for such
period TIMES (ii) the Weighted Blended State Tax Rate applicable to such period.

"OHIO GENERATION PERCENTAGE" for any period, shall mean a fraction, the
numerator of which shall equal the actual number of MWh of electrical generation
dispatched from the Portfolio Assets located in Ohio during such period and the
denominator of which shall equal the actual aggregate amount of MWh dispatched
from all of the Portfolio Assets during such period.

"PENNSYLVANIA GENERATION PERCENTAGE" for any period, shall mean a fraction, the
numerator of which shall equal the actual number of MWh of electrical generation
dispatched from the Portfolio Assets located in Pennsylvania during such period
and the denominator of which shall equal the actual aggregate amount of MWh
dispatched from all of the Portfolio Assets during such period.

"TAXABLE INCOME" for any period, shall mean an amount equal to actual cash
Revenues received by the Borrower Entities during such period MINUS (i) actual
cash disbursed in respect of Operating Costs (other than Capital Expenditures)
during such period; MINUS (ii) actual interest paid in respect of the
Acquisition Loans and Revolving Loans during such period; MINUS (iii)
Depreciation allocated to such period ; MINUS (iv) for calendar year 2000 only,
$57,010,000 (representing a one-time deduction for transaction costs).

"WEIGHTED BLENDED STATE TAX RATE" for any period, shall mean a percentage equal
to (i) 9.99%2 TIMES the Pennsylvania Generation Percentage for such period PLUS
(ii) 8.50%3 TIMES the Ohio Generation Percentage for such period.

-----------------
1 Federal corporate income tax rate in effect on the Closing Date.
2 Pennsylvania state corporate income tax rate in effect on the Closing Date.
3 Ohio state corporate income tax rate in effect on the Closing Date.

Each corporate income tax rate is subject to amendment based upon changes to the
corporate income tax rate implemented from time to time by any applicable
Governmental Authority.

<PAGE>

                                                         Exhibit A
                                                         to
                                                         Amended and Restated
                                                         Credit Agreement

                         [Form of Acquisition Loan Note]

                        [NO CHANGE CURRENTLY ANTICIPATED.
                       EXHIBIT TO AMENDED CREDIT AGREEMENT
                         WILL BE THE SAME AS EXHIBIT TO
                           EXISTING CREDIT AGREEMENT.]

<PAGE>

                                                         Exhibit B
                                                         to
                                                         Amended and Restated
                                                         Credit Agreement

                          [Form of Revolving Loan Note]

                        [NO CHANGE CURRENTLY ANTICIPATED.
                       EXHIBIT TO AMENDED CREDIT AGREEMENT
                         WILL BE THE SAME AS EXHIBIT TO
                           EXISTING CREDIT AGREEMENT.]

<PAGE>

                                                           Exhibit C
                                                           to
                                                           Amended and Restated
                                                           Credit Agreement

                    [Form of Notice of Acquisition Borrowing]

                        [NO CHANGE CURRENTLY ANTICIPATED.
                       EXHIBIT TO AMENDED CREDIT AGREEMENT
                         WILL BE THE SAME AS EXHIBIT TO
                           EXISTING CREDIT AGREEMENT.]

<PAGE>

                                                           Exhibit D
                                                           to
                                                           Amended and Restated
                                                           Credit Agreement

                     [Form of Notice of Revolving Borrowing]

                        [NO CHANGE CURRENTLY ANTICIPATED.
                       EXHIBIT TO AMENDED CREDIT AGREEMENT
                         WILL BE THE SAME AS EXHIBIT TO
                           EXISTING CREDIT AGREEMENT.]

<PAGE>

                                                            Exhibit E
                                                            to
                                                            Amended and Restated
                                                            Credit Agreement

                         [Form of Notice of Conversion]

                        [NO CHANGE CURRENTLY ANTICIPATED.
                       EXHIBIT TO AMENDED CREDIT AGREEMENT
                         WILL BE THE SAME AS EXHIBIT TO
                           EXISTING CREDIT AGREEMENT.]

<PAGE>

                                                           Exhibit H
                                                           to
                                                           Amended and Restated
                                                           Credit Agreement

                      [Form of Borrower Security Agreement]

                        [NO CHANGE CURRENTLY ANTICIPATED.
                       EXHIBIT TO AMENDED CREDIT AGREEMENT
                         WILL BE THE SAME AS EXHIBIT TO
                           EXISTING CREDIT AGREEMENT.]

<PAGE>

                                                            Exhibit I-1
                                                            to
                                                            Amended and Restated
                                                            Credit Agreement

               [Form of GP Partnership Interest Pledge Agreement]

                        [NO CHANGE CURRENTLY ANTICIPATED.
                       EXHIBIT TO AMENDED CREDIT AGREEMENT
                         WILL BE THE SAME AS EXHIBIT TO
                           EXISTING CREDIT AGREEMENT.]

<PAGE>

                                                         Exhibit I-2
                                                         to
                                                         Amended and Restated
                                                         Credit Agreement

               [Form of LP Partnership Interest Pledge Agreement]

                        [NO CHANGE CURRENTLY ANTICIPATED.
                       EXHIBIT TO AMENDED CREDIT AGREEMENT
                         WILL BE THE SAME AS EXHIBIT TO
                           EXISTING CREDIT AGREEMENT.]

<PAGE>

                                                           Exhibit J
                                                           to
                                                           Amended and Restated
                                                           Credit Agreement

                           [Form of Borrower Mortgage]

                        [NO CHANGE CURRENTLY ANTICIPATED.
                       EXHIBIT TO AMENDED CREDIT AGREEMENT
                         WILL BE THE SAME AS EXHIBIT TO
                           EXISTING CREDIT AGREEMENT.]

<PAGE>

                                                         Exhibit K
                                                         to
                                                         Amended and Restated
                                                         Credit Agreement

                       [Form of Assignment and Acceptance]

                        [NO CHANGE CURRENTLY ANTICIPATED.
                       EXHIBIT TO AMENDED CREDIT AGREEMENT
                         WILL BE THE SAME AS EXHIBIT TO
                           EXISTING CREDIT AGREEMENT.]

<PAGE>

                                                           Exhibit L
                                                           to
                                                           Amended and Restated
                                                           Credit Agreement

                     [Form of Equity Contribution Agreement]

                        [NO CHANGE CURRENTLY ANTICIPATED.
                       EXHIBIT TO AMENDED CREDIT AGREEMENT
                         WILL BE THE SAME AS EXHIBIT TO
                           EXISTING CREDIT AGREEMENT.]

<PAGE>

                                                           Exhibit M
                                                           to
                                                           Amended and Restated
                                                           Credit Agreement

                         [Form of DLC Letter of Credit]

                        [NO CHANGE CURRENTLY ANTICIPATED.
                       EXHIBIT TO AMENDED CREDIT AGREEMENT
                         WILL BE THE SAME AS EXHIBIT TO
                           EXISTING CREDIT AGREEMENT.]

<PAGE>

                                                           Exhibit N
                                                           to
                                                           Amended and Restated
                                                           Credit Agreement

               [Form of Subordinated Equity Owner Loan Agreement]

                        [NO CHANGE CURRENTLY ANTICIPATED.
                       EXHIBIT TO AMENDED CREDIT AGREEMENT
                         WILL BE THE SAME AS EXHIBIT TO
                           EXISTING CREDIT AGREEMENT.]

<PAGE>

                                                          Exhibit O
                                                          to
                                                          Amended and Restated
                                                          Credit Agreement

                        [Form of Stock Pledge Agreement]

                        [NO CHANGE CURRENTLY ANTICIPATED.
                       EXHIBIT TO AMENDED CREDIT AGREEMENT
                         WILL BE THE SAME AS EXHIBIT TO
                           EXISTING CREDIT AGREEMENT.]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}]]