Cogeneration Corp of America – ‘10-K’ for 6/30/94 – EX-4.15

As of:  Thursday, 10/13/94   ·   For:  6/30/94   ·   Accession #:  910213-94-18   ·   File #:  1-09208

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Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report Pursuant to Section 13 and 15(D)       106±   500K 
 2: EX-4.15     Subordinated Loan Agreement                           32    187K 
 5: EX-10.10.7  Operation & Maintenance Contract                      32    143K 
 6: EX-10.12.2  Rights Assignment Agreement                           11     60K 
 7: EX-10.12.3  Repurchase Agreement                                   3     16K 
 8: EX-10.12.4  Master Equipment Lease Agreement                      26    134K 
 9: EX-10.12.5  Equipment Lease                                       10     41K 
10: EX-10.12.6  Fairbanks Purchase Agreement                           3±    15K 
 3: EX-10.8.3.2  Construction and Term Credit Agreement                8     25K 
 4: EX-10.8.3.3  Waiver and Consent                                   20     70K 
11: EX-23.1     Independent Accountants Consent                        1      8K 
12: EX-27       Article 5 FDS for 10-K                                 1      9K 

EX-4.15   —   Subordinated Loan Agreement
Exhibit Table of Contents

EX-4.15
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$7,000,000      

SUBORDINATED LOAN AGREEMENT     
Dated as of March 11, 1994      

__________________              

O'BRIEN (NEWARK) COGENERATION, INC.         
a Delaware corporation          
(Borrower)      

and         

STEWART & STEVENSON SERVICES, INC.,           
a Texas corporation             
(Lender)        

__________________              

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THIS SUBORDINATED LOAN AGREEMENT dated as of March 11, 1994,          
by and between O'BRIEN (NEWARK) COGENERATION, INC., a Delaware                  
corporation, as Borrower and STEWART & STEVENSON SERVICES, INC. a               
Texas corporation, as Lender.                                                   

In consideration of the agreements herein and in the other            
Loan Documents and in reliance upon the representations and                     
warranties set forth herein and therein, the parties agree as                   
follows:                                                                        

ARTICLE 1 - DEFINITIONS               

1.1. Definitions.                                                     

Except as otherwise expressly provided, capitalized terms used        
in this Agreement and its Exhibits shall have the meanings given in             
Exhibit A.                                                                      

1.2. Rules of Interpretation.                                         

Except as otherwise expressly provided, the rules of                  
interpretation set forth in Exhibit A shall apply to this Agreement             
and the other Loan Documents.                                                   

ARTICLE 2 - THE LOAN FACILITY               

2.1. Loan Facility.                                                   

(a)  Availability.                                          

(i)       Availability.  Subject to the terms and 
conditions set forth in this Agreement, Lender agrees to advance to             
Borrower (A) on the Closing Date a loan (the "Tranche A Loan") in               
the aggregate principal amount of Three Million Five Hundred                    
Thousand Dollars ($3,500,000) and (B) on the Tranche B Funding Date             
a loan (the "Tranche B Loan") in the aggregate principal amount of              
Three Million Five Hundred Thousand Dollars ($3,500,000) (the                   
"Total Loan Commitment").  The Tranche A Loan and the Tranche B                 
Loan are sometimes referred to herein as the "Loans."                           

(ii)      Loan Interest.  Borrowers shall pay     
interest on the unpaid principal amount of each Loan from the date              
of such Loan until the maturity thereof at a rate per annum equal               
to the Prime Rate plus four percent (4%), such rate to change from              
time to time as the Prime Rate shall change; provided that such                 
rate shall not exceed fourteen percent (14%) and shall not be less              
than ten percent (10%) at any time, regardless of any changes in                
the Prime Rate.                                                                 

(iii)          Loan Payments.                     

        (A)  Borrower shall repay to Lender on
each Repayment Date (i) the aggregate unpaid principal amount of                
each Loan, in installments payable on such Repayment Date, (x) in               
accordance with the repayment schedule set forth on Exhibit C-1                 
(the "Amortization Schedule"), and (y) on and after the Tranche B               
Funding Date, in accordance with the repayment schedule set forth               
on Exhibit C-2 (the "Alternate Amortization Schedule"); and (ii)                
all accrued interest on the unpaid principal amount of each Loan.               
On the Maturity Date any remaining unpaid principal, interest, fees             
and costs shall be due and payable.                                             

  (iv)      Note.  The obligation of Borrower to repay
each Loan made by Lender and to pay interest thereon at the rates               
provided herein shall be evidenced by a promissory note in the form             
of Exhibit B (the "Note") payable to the order of Lender and in the             
principal amount of such Loan.  Borrower authorizes Lender to                   
record on the schedule annexed to the Note the date and amount of               
each Loan and agrees that all such notations shall constitute prima             

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facie evidence of the matters noted.  Borrower further authorizes               
Lender to attach to and make a part of the Note continuations of                
the schedule attached thereto as necessary.  No failure to make any             
such notations shall affect the validity of the Borrower's                      
obligations to repay the full unpaid principal amount of the Loan               
or the duties of Borrower hereunder or thereunder.                              

  (v)  Reborrowing.  Any amounts that have been repaid
or prepaid under this Agreement may not thereafter be reborrowed or             
readvanced to Borrower.                                                         

(b)  Prepayments.                                           

 (i)  Terms of all Prepayments.  Upon the prepayment
of any Loan (whether such prepayment is an optional prepayment                  
under Section 2.1(b)(ii) or a mandatory prepayment required by the              
terms of this Agreement or the other Loan Documents, including,                 
without limitation, a prepayment upon acceleration), Borrower shall             
pay to Lender all accrued interest, fees and costs to the date of               
such prepayment on the amount prepaid.  All prepayments of the Loan             
shall reduce the remaining payments of principal of the Loan in                 
inverse order of maturity.                                                      

(ii)          Optional Prepayments.  Subject to 
Section 2.l(b)(i), Borrower may, at its option, upon four (4)                   
Banking Days' notice to Lender, prepay all outstanding Loans in                 
whole or in part.                                                               

(iii)          Mandatory Prepayment Upon Refinance
of Senior Loans.  Upon any Newark Term Loan Refinancing, Borrower               
shall prepay all Loans then outstanding, to the extent that net                 
proceeds are available to Borrower to do so, and provided that all              
such available net proceeds shall be applied first toward repayment             
of the Loans outstanding hereunder.                                             

(c)  Interest Account and Interest Computations.            
Borrower authorizes Lender to record in an account or accounts                  
maintained by Lender on its books (the "Interest Account") (i) the              
date and amount of each principal and interest payment on the Loan              
and (ii) such other information as Lender may determine is                      
necessary for the computation of interest payable by Borrower                   
hereunder.  Borrower agrees that all computations by Lender of                  
interest shall be conclusive in the absence of manifest error.  All             
computations of interest on the Loan shall be based on a year of                
365 or 366 days and the actual days elapsed.                                    

(d)  Repayment of Bridge Loan.  If the Tranche B Loan is    
borrowed by Borrower, One Million Dollars ($1,000,000) of such                  
Tranche B Loan shall be simultaneously paid to Lender in                        
satisfaction (or partial satisfaction) of the balance of the Bridge             
Loan then outstanding.                                                          

2.2. Other Payment Terms.                                             

(a)  Place and Manner.  Borrower shall make all payments    
due to Lender to Stewart & Stevenson Services, Inc., c/o Texas                  
Commerce Bank, Houston, Texas, Account No. 00101616119 in lawful                
money of the United States and in immediately available funds not               
later than 1:00 p.m.                                                            

(b)  Date.  Whenever any payment due hereunder shall fall   
due on a day other than a Banking Day, such payment shall be made               
on the next succeeding Banking Day, and such extension of time                  
shall be included in the computation of interest or fees, as the                
case may be.                                                                    

(c)  Late Payments.  If any amounts required to be paid     
by Borrower under this Agreement or the other Loan Document                     
(including, without limitation, principal or interest payable on                
any Loan, and any fees or other amounts otherwise payable to                    
Lender) remain unpaid after such amounts are due, Borrower shall                
pay interest on the aggregate, outstanding balance of such amounts              
from the date due until those amounts are paid in full at a per                 
annum rate equal to the Default Rate.                                           

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(d)  Net of Taxes, Etc.  All payments under this            
Agreement and the other Loan Documents shall be made free and clear             
of and without deduction, setoff or counterclaim of any kind                    
whatsoever and in such amounts as may be necessary in order that                
all such payments, after deduction or withholding for or on account             
of any present or future taxes, levies, imposts, deductions, duties             
or other charges or withholdings of whatever nature (other than any             
income, franchise or similar tax imposed upon the gross or net                  
income of Lender by the jurisdiction in which Lender is located)                
imposed by any Governmental Authority (collectively the "Taxes"),               
shall not be less than the amount otherwise specified to be paid                
under this Agreement and the other Loan Documents.  If Borrower                 
shall be required by law to deduct any Taxes from or in respect of              
any sum payable hereunder or under any other Loan Documents, (i)                
the sum payable shall be increased as may be necessary so that                  
after making all required deductions (including deductions                      
applicable to additional sums payable under this Section 2.2(d)),               
Lender receives an amount equal to the sum Lender would have                    
received had no such deductions been made, (ii) Borrower shall make             
such deductions and (iii) Borrower shall pay the full amount                    
deducted to the relevant Governmental Authority in accordance with              
applicable law.  Borrower shall indemnify Lender against liability              
for all Taxes due on amounts payable under this Agreement or the                
other Loan Documents as and when due and shall promptly (and in any             
event not later than thirty (30) days after payment thereof)                    
furnish to Lender such certificates, receipts and other documents               
as may be required (in the judgment of Lender) to establish the                 
payment of such Taxes and any tax credit to which Lender may be                 
entitled.  Borrower agrees to pay any present or future stamp,                  
recording or documentary taxes or any other excise or property                  
taxes, charges or similar levies which arise from any payment made              
hereunder or under the other Loan Documents or from the execution               
or delivery or otherwise with respect to, this Agreement or the                 
other Loan Documents.  The obligations of Borrower under this                   
Section 2.2(d) shall survive the termination of this Agreement and              
the repayment of the Obligations.                                               

(e)  Application of Payment.  Payments made under this      
Agreement or the other Loan Documents shall first be applied to any             
fees, costs, charges or expenses payable to Lender hereunder or                 
under the other Loan Documents, next to any accrued but unpaid                  
interest, and then to outstanding principal.                                    

2.3. Security.                                                        

(a)  Security Agreements, etc.  The Obligations shall be    
secured by, and Borrower shall deliver or cause to be delivered to              
Lender, the following:                                                          

 (i)  A Security Agreement in the form of Exhibit D,
duly executed by Borrower (the "Newark Security Agreement");                    

(ii) If the Tranche B Loan is made, a Distribution
Agreement in the form of Exhibit E-1, duly executed by O'Brien and              
Parlin (the "Distribution Agreement");                                          

 (iii)     If the Tranche B Loan is made. a Lock Box
Agreement in the form of Exhibit E-2, duly executed by O'Brien,                 
Parlin and the Escrow Agent (the "Lock Box Agreement"); and                     

(iv) Such other documents, instruments and        
agreements as Lender may request to grant to a perfected security               
interest in, and pledge of, the Collateral.                                     

(b)  Further Assurances.  Borrower shall deliver to         
Lender each of the foregoing and such other instruments,                        
agreements, certificates, opinions and documents (including,                    
without limitation, Uniform Commercial Code financing statements)               
as Lender may request to perfect and maintain the security interest             
and pledge granted to Lender by the foregoing prior to the Liens or             
other interests of any Person other than Permitted Liens and the                
security interests of, and pledge to, Lender.  Borrower shall fully             
cooperate with Lender and perform all additional acts reasonably                
requested by Lender to effect the purposes of the foregoing.                    

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ARTICLE 3 - CONDITIONS PRECEDENT                

3.1. Conditions Precedent to the Closing Date.                        

The obligation of Lender to make the Tranche A Loan is subject        
to the prior satisfaction of each of the following conditions                   
(unless waived in writing by Lender):                                           

(a)  Delivery to Lender of a copy of one or more            
resolutions of Borrower, certified by the appropriate officials of              
Borrower as being in full force and effect on the Closing Date,                 
authorizing the Loans herein provided for and the execution,                    
delivery and performance of this Agreement and the other Loan                   
Documents and any instruments or agreements required hereunder or               
thereunder to which Borrower is a party;                                        

(b)  Delivery to Lender of a certificate from Borrower,     
satisfactory in form and substance to Lender, signed by the                     
appropriate authorized official of Borrower and dated as of the                 
Closing Date, as to the incumbency of the Person or Persons                     
authorized to execute and deliver this Agreement and the other Loan             
Documents and any instruments or agreements required hereunder or               
thereunder to which Borrower is a party;                                        

(c)  Delivery to Lender of copies of the Certificate of     
Incorporation of Borrower, certified by the Delaware Secretary of               
State, and of copies of the Bylaws of Borrower and any agreement                
filed in accordance with applicable state law, certified by an                  
appropriate officer of Borrower;                                                

(d)  Delivery to Lender of a certificate issued by the      
Delaware Secretary of State as to the good standing of Borrower and             
the tax status of Borrower;                                                     

(e)  All corporate and legal proceedings and all            
instruments in connection with the transactions contemplated by                 
this Agreement shall be satisfactory in form and substance to                   
Lender, and Lender shall have received all information and copies               
of all documents, including records of corporate proceedings and                
copies of any approval by any Governmental Authority required in                
connection with any transaction herein contemplated, which Lender               
may reasonably have requested in connection herewith, such                      
documents where appropriate to be certified by proper corporate,                
partnership or Governmental Authorities;                                        

(f)  Delivery to Lender of true and correct copies of       
each Newark Operative Document and any supplements or amendments                
thereto, all of which shall be in form and substance satisfactory               
to Lender, shall have been duly authorized, executed and delivered              
by the parties thereto, and shall be certified by an authorized                 
official of Borrower as of the Closing Date as being true, complete             
and correct and in full force and effect, and delivery to Lender of             
evidence satisfactory to Lender that each Newark Operative Document             
is in full force and effect and that no party to any Newark                     
Operative Document is or, but for the passage of time or giving of              
notice or both will be, in breach of any material obligation                    
thereunder which is reasonably expected to have a material adverse              
effect on the Newark Project, that all appropriate financing                    
statements were filed and/or recorded as required hereunder or by               
law, and that this Agreement has been delivered;                                

(g)  Delivery to Lender of an opinion of Sills Cummis       
Zuckerman Radin Tischman Epstein & Gross, special counsel for                   
Borrower, in substantially the form of Exhibit F-1:                             

(h)  Insurance complying with Section 5.15 hereof shall     
be in full force and effect and Lender shall have received (i) a                
certificate from Borrower's insurance broker(s), dated as of the                
Closing Date and identifying underwriters, type of insurance,                   
insurance limits and policy terms, listing the special provisions               
required as set forth in Section 5.15 hereof, describing the                    
insurance obtained and stating that such insurance is in full force             
and effect and that all premiums then due thereon have been paid                
and (ii) certified copies of all policies evidencing such insurance             
(or a binder, commitment or certificates signed by the insurer or               
a broker authorized to bind the insurer);                                       

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(i)  No change shall have occurred since the date of this   
Agreement in any law or regulation or interpretation thereof that               
would subject Lender to any material unreimbursed Tax;                          

(j)  No action, proceeding or investigation shall have      
been instituted or threatened. nor shall any order, judgment or                 
decree have been issued or proposed to be issued by any                         
Governmental Authority that, as a result of the construction,                   
ownership, leasing or operation of the Newark Project, the sale of              
electricity or steam therefrom or the entering into of any Newark               
Operative Document or any transaction contemplated hereby or                    
thereby, would cause or deem Lender, Borrower or any Affiliate of               
any of them to be subject to, or not exempted from, regulation                  
under the FPA or PUHCA or under state laws and regulations                      
respecting the rates or the financial or organizational regulation              
of electric utilities;                                                          

(k)  All taxes, fees and other costs payable in             
connection with the execution, delivery, recordation and filing of              
the documents and instruments referred to in this Section 3.1 shall             
have been paid in full;                                                         

(l)  Lender shall have received a certificate, dated as     
of the Closing Date, signed by an authorized officer of Borrower,               
in the form of Exhibit G-1 hereto;                                              

(m)  Lender shall have received the most recent annual      
financial statement (audited if available) and most recent                      
quarterly financial statements (if available) from Borrower;                    

(n)  Borrower shall have furnished Lender a budget (the     
"Operating Budget") for the budgeted income and all expense items               
for the Newark Project through the twelve months following the                  
Closing Date, together with all budget projections and financial                
models for the term of the Loans;                                               

(o)  Borrower and Lender (and/or certain of Lender's        
Affiliates) shall have executed and delivered the Newark O&M                    
Contract and the Parlin O&M Contract; each shall be in full force               
and effect, and no default shall have occurred under any of them;               
and the Newark Senior Lender shall have approved in writing the                 
Newark O&M Contract;                                                            

(p)  In the reasonable judgment of Lender, there shall      
not have occurred any material adverse change in the economics or               
feasibility of operating the Newark Project, in the financial                   
condition, business or property of Borrower which will have a                   
material and adverse effect on the ability of any of Borrower to                
meet its obligations with respect to the Newark Project in the                  
manner contemplated by and consistent with the Loan Documents and               
the Newark Project Documents;                                                   

(q)  Lender shall have received a UCC-3 (or similar)        
report of a date not less recent than one (1) week before the                   
Closing Date for each of the jurisdictions in which the UCC-1                   
financing statements are intended to be filed in respect of the                 
Collateral, showing that upon due filing or recordation (assuming               
such filing or recordation occurred on such date), the security                 
interests created under such Collateral Documents will be prior to              
all other financing statements, fixture filings, deeds of trust,                
mortgages or other security documents in respect of the Collateral              
other than those relating to the Newark Senior Lien;                            

(r)  The Newark Project shall be a Qualifying Facility,     
eligible for all the benefits of 18 C.F.R. Sections 301-309, 18 C.F.R. Sections 
292.601 and 18 C.F.R. Section 292.602; and                                      

(s)  The Consent and Subordination Agreement shall have     
been executed and delivered by the parties thereto in form and                  
substance satisfactory to Lender.                                               

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3.2. Conditions Precedent to Tranche B Loan.                          

The obligation of Lender to make the Tranche B Loan is subject        
to the prior satisfaction of each of the following conditions                   
(unless waived by Lender):                                                      

(a)  No more than sixty (60) days shall have passed since   
the Closing Date;                                                               

(b)  Redelivery of and/or evidence satisfactory to Lender   
in its sole discretion that the conditions set forth in Section 3.1             
with respect to the Newark Project are satisfied as of the Tranche              
B Funding Date;                                                                 

(c)  The Parlin Senior Lender shall have approved in        
writing the Parlin O&M Contract in the form executed by Parlin and              
Stewart & Stevenson, the Parlin O&M Contract shall be in full force             
and effect, and no default shall have occurred thereunder;                      

(d)  Delivery to Lender of a copy of one or more            
resolutions of Parlin, certified by the appropriate officials of                
Parlin as being in full force and effect on the Tranche B Funding               
Date, authorizing the Loans herein provided for and the execution,              
delivery and performance of the Parlin Closing Certificate, the                 
Lock Box Agreement and the Distribution Agreement and any                       
instruments or agreements required hereunder or thereunder to which             
Borrower is a party;                                                            

(e)  Delivery to Lender of a certificate from Parlin,       
satisfactory in form and substance to Lender, signed by the                     
appropriate authorized official of Parlin and dated as of the                   
Closing Date, as to the incumbency of the Person or Persons                     
authorized to execute and deliver any instruments or agreements                 
required hereunder to which Parlin is a party;                                  

(f)  Delivery to Lender of copies of the Certificate of     
Incorporation of Parlin, certified by the Delaware Secretary of                 
State, and of copies of the Bylaws of Parlin and any agreements                 
filed in accordance with applicable state law, certified by an                  
appropriate officer of Parlin;                                                  

(g)  Delivery to Lender of a certificate issued by the      
Delaware Secretary of State as to the good standing of Parlin and               
the tax status of Parlin;                                                       

(h)  Delivery to Lender of true and correct copies of       
each Parlin Operative Document and any supplements or amendments                
thereto, all of which shall be in form and substance satisfactory               
to Lender, shall have been duly authorized, executed and delivered              
by the parties thereto, and shall be certified by an authorized                 
official of Parlin as of the Tranche B Funding Date as being true,              
complete and correct and in full force and effect, and delivery to              
Lender of evidence satisfactory to Lender that each Parlin                      
Operative Document and each Newark Operative Document is in full                
force and effect and that no party to any Parlin Operative Document             
or Newark Operative Document is or, but for the passage of time or              
giving of notice or both will be, in breach of any material                     
obligation thereunder which is reasonably expected to have a                    
material adverse effect on the Parlin Project or the Newark                     
Project, respectively, that all appropriate financing statements                
were filed and/or recorded as required hereunder or by law, and                 
that this Agreement has been delivered;                                         

(i)  Delivery to Lender of an opinion of:  Sills Cummis     
Zuckerman Radin Tischman Epstein & Gross, special counsel for                   
Parlin, in substantially the form of Exhibit F-2;                               

(j)  Lender shall have received (i) a certificate from      
Parlin's insurance broker(s), dated as of the Closing Date and                  
identifying underwriters, type of insurance, insurance limits and               
policy terms, listing the special provisions required as set forth              
in the Parlin Senior Loan Documents describing the insurance                    
obtained and stating that such insurance is in full force and                   
effect and that all premiums then due thereon have been paid and                

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(ii) certified copies of all policies evidencing such insurance (or             
a binder, commitment or certificates signed by the insurer or a                 
broker authorized to bind the insurer);                                         

(k)  No action, proceeding or investigation shall have      
been instituted or threatened, nor shall any order, judgment or                 
decree have been issued or proposed to be issued by any                         
Governmental Authority that, as a result of the construction,                   
ownership, leasing or operation of the Parlin Project, the sale of              
electricity or steam therefrom or the entering into of any Parlin               
Operative Document or any transaction contemplated hereby or                    
thereby, would cause or deem Lender, Borrower or any Affiliate of               
any of them to be subject to, or not exempted from, regulation                  
under the FPA or PUHCA or under state laws and regulations                      
respecting the rates or the financial or organizational regulation              
of electric utilities;                                                          

(l)  Lender shall have received a certificate, dated as     
of the Tranche B Funding Date, signed by an authorized officer of               
Parlin, in the form of Exhibit G-2 hereto.                                      

(m)  Lender shall have received the most recent annual      
financial statements (audited if available) and most recent                     
quarterly financial statement (if available) from Parlin:                       

(n)  Parlin shall have furnished Lender an Operating        
Budget for the Parlin Project through the twelve months following               
the Closing Date, together with all budget projections and                      
financial models for the term of the Loans;                                     

(o)  The Parlin Project shall be a Qualifying Facility,     
eligible for all the benefits 18 C.F.R. Sections 301-309, 18 C.F.R.             
292.601 and 18 C.F.R. 292.602; and                                              

(p)  In the reasonable opinion of Lender, there shall       
have been no material adverse change in (i) the financial                       
condition, business, properties. prospects or operations of any                 
Newark Major Project Participant or Parlin Major Project                        
Participant or which will have a material adverse affect on the                 
ability of such Party to meet its obligations with respect to the               
Newark Project or Parlin Project, as applicable. in the manner                  
contemplated by and consistent with the Newark Operative Documents              
and the Parlin Operative Documents.                                             

3.3. Conditions Precedent to Each Loan. The obligation of             
Lender to effect or permit any Loan is subject to the further                   
conditions that, on the date such Loan is to occur, the following               
shall be true and correct:                                                      

(a)  Each representation and warranty set forth in          
Article 4 is true and correct as if made on such date;                          

(b)  No Event of Default or Inchoate Default has occurred   
and is continuing or will result from such Loan; and                            

(c)  Each Loan Document remains in full force and effect.   

ARTICLE 4 - REPRESENTATIONS AND WARRANTIES                

Borrower makes the following representations and warranties to        
and in favor of Lender as of the Closing Date.  All of these                    
representations and warranties shall survive the Closing Date and               
the making of the Loans:                                                        

4.1. Organization.  Borrower is a Delaware corporation and is         
duly organized, validly existing and in good standing under the                 
laws of Delaware and Borrower has the full power and authority to               
carry on it's business as now conducted, to own or hold under lease             
its properties and to enter into and perform its obligations under              
each Newark Operative Document to which it is or is to be a party.              

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4.2. Authorization: No Conflict.  Borrower has duly                   
authorized, executed and delivered each Newark Operative Document               
to which Borrower is a party (or such Newark Operative Documents                
have been duly and validly assigned to Borrower and Borrower has                
assumed the obligations thereunder), and neither Borrower's                     
execution and delivery thereof nor its consummation of the                      
transactions contemplated thereby nor its compliance with the terms             
thereof (i) does or will contravene the Articles of Incorporation               
of Borrower or any other Legal Requirement applicable to or binding             
on Borrower or any of it's properties.  (ii) does or will                       
contravene or result in any breach of or constitute any default                 
under, or result in or require the creation of any Lien (other than             
Permitted Liens) upon any of it's property under, any agreement or              
instrument to which it is a party or by which it or any of its                  
properties may be bound or affected or (iii) does or will require               
the consent or approval of any Person which has not already been                
obtained.                                                                       

4.3. Enforceability.  Each Newark Operative Document to which         
Borrower is a party is a legal, valid and binding obligation of                 
Borrower, enforceable against Borrower in accordance with in terms,             
except to the extent that enforceability may be limited by                      
applicable bankruptcy, insolvency, moratorium, reorganization or                
other similar laws affecting the enforcement of creditors' rights.              
None of the Newark Operative Documents to which Borrower is a party             
have been amended or modified except in accordance with this                    
Agreement.                                                                      

4.4. ERISA.  There is no ERISA Plan with respect to Borrower          
or any member of the Controlled Group, and neither Borrower nor any             
member of the Controlled Group has maintained, contributed to or                
been obligated to contribute to any ERISA Plan at any time within               
the preceding five (5) years.                                                   

4.5. Taxes.  Borrower has filed all federal, state and local          
tax returns that it is required to file, has paid all taxes it is               
required to pay to the extent due (other than those taxes that it               
is contesting in good faith and by appropriate proceedings, with                
adequate, segregated reserves established for such taxes) and, to               
the extent such taxes are not due, has established reserves the are             
adequate for the payment thereof and are required by GAAP.                      

4.6. Business, Debt, Contracts. Etc.  Borrower has not                
conducted any business other than the business contemplated by the              
Newark Operative Document, it has no outstanding Debt or other                  
material liabilities other than in connection with the Newark                   
Project, and it is not a party to or bound by any material contract             
other than the Newark Operative Documents to which it is a party.               

4.7. Investment Company, Holding Company and Power Acts.              
Neither Borrower nor any Affiliate is an investment company or a                
company controlled by an investment company, within the meaning of              
the Investment Company Act of 1940, and Borrower is either not                  
subject to or is exempt from regulation under PUHCA or the FPA.                 

4.8. Governmental Regulation.  Neither Borrower nor Lender,           
nor any Affiliate of either of them will, solely as a result of the             
Loans, be subject to, or not exempt from, regulation under the FPA              
or PUHCA or under state laws and regulations respecting the rates               
or the financial or organizational regulation of electric                       
utilities.                                                                      

4.9. Financial Statements.  The financial statements of               
Borrower (certified by an authorized official of Borrower), a copy              
of which will be delivered to Lender on the Closing Date, are true,             
complete and correct and fairly present the financial condition of              
Borrower as of the date thereof.  The financial statements have                 
been prepared in accordance with GAAP. Borrower has not nor will                
have any material liabilities, direct or contingent, except as will             
be disclosed in such financial statements or except in connection               
with the development of the Newark Project.                                     

4.10.     Regulation U, Etc. Borrower is not engaged                  
principally, or as one of its principal activities in the business              
of extending credit for the purpose of purchasing or carrying                   
margin stock (as defined in Regulations G, T, U or X of the Federal             
Reserve Board), and no part of the proceeds of the Loan will be                 
used by Borrower to purchase or carry any such margin stock or to               

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extend credit to others for the purpose of purchasing or carrying               
any such margin stock.                                                          

4.11.     Partnerships and Joint Ventures.  Borrower is not a         
general partner or a limited partner in any general or limited                  
partnership or a joint venturer in any joint venture.                           

4.12.     Newark Project Documents.  Borrower makes, as of the        
time made, each of the representations and warranties combined in               
the Newark Project Documents or any Newark Additional Project                   
Document to which Borrower is or will be a party to and for the                 
benefit of Lender as if the same were set forth at length herein.               
All Newark Project Documents and Newark Applicable Permits have                 
been entered into by or duly and validly assigned to the Newark                 
Project or Borrower free and clear of all Liens except Permitted                
Liens, and all necessary Persons have duly consented to such                    
assignment.  All Newark Operative Documents are in full force and               
effect in the form delivered to Lender.                                         

4.13.     Existing Defaults.  Borrower is not in default under        
any material term of any Newark Project Document or any agreement               
relating to any obligation of Borrower for or with respect to                   
borrowed money, and to the best of Borrower's knowledge, no other               
party to any Newark Project Document is in default thereunder, in               
each case which default would have a material adverse effect on the             
Newark Project or on Borrower's ability to perform it's obligations             
under the Newark Operative Documents.                                           

4.14.     Senior Loan Default.  No default or event of default        
(however such terms are defined) or occurrence, circumstance or                 
event, or any combination thereof which, with the lapse of time                 
and/or the giving of notice, would constitute a default or event of             
default, has occurred or is existing under the Newark Senior Loan               
Agreement.                                                                      

4.15.     Possession of Franchises, Licenses, Etc.  Borrower          
possesses all franchises, certificates, licenses, Permits, and                  
other authorizations from any necessary or advisable Governmental               
Authority, free from unduly burdensome restrictions, that are                   
necessary for the ownership, maintenance and operation of the                   
Newark Project, and Borrower is not in violation thereof in any                 
material respect.  To the best of Borrower's knowledge, each of the             
Newark Major Project Participant possesses all licenses, Permits,               
franchises, patents, copyrights, trademarks and trade names, or                 
rights thereto necessary to perform its duties under the Newark                 
Operative Documents to which it is a party, and such party is not               
in violation of any right of others with respect to any of the                  
foregoing.                                                                      

4.16.     Offices, Location of Collateral.                            

(a)  The chief executive office or principal place of       
business (as such term is used in Division 9 of the Uniform                     
Commercial Code as in effect in the State of New York from time                 
to time) of Borrower is located at 225 South Eighth Street,                     
Philadelphia, Pennsylvania, 19106.                                              

(b)  All of the Collateral will be deemed to be located     
at the offices of Borrower set forth in Section 4.16(a).                        

4.17.     Adverse Change.  There are no facts or conditions           
which materially adversely affect or in the future will (so far                 
as Borrower can now reasonably foresee) have a materially adverse               
effect in the economics or feasibility of operating the Newark                  
Project, or in the financial condition, business or property of                 
any Newark Major Project Participant, which will have a material                
and adverse effect on the ability of any Newark Major Project                   
Participant to meet its obligations with respect to the Newark                  
Project in the manner contemplated by and consistent with the                   
Loan Documents and the Newark Project Documents.                                

4.18.     Hazardous Substance.  Except as disclosed on                
Exhibit H:                                                                      

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In connection with the construction, power generation and             
transmission, waste disposal, and other operations and processes                
relating to the Newark Project, no release, emission, or discharge              
into the environment of petroleum or petroleum products, hazardous              
wastes, hazardous substances, hazardous materials, toxic wastes,                
air pollutants, toxic substances, toxic pollutants, hazardous                   
chemical substance or mixture, imminently hazardous chemical                    
substance or mixture, radioactive "by product material," "source                
material," or "special nuclear material" (hereinafter collectively,             
"Hazardous Substance"), as those terms are used in the                          
Comprehensive Environmental Response, Compensation, and Liability               
Act of 1980, 42 U.S.C. Section 9601 et seq., Resource Conservation and          
Recovery Act, 42 U.S.C. Section 6901 et seq., the Solid Waste Disposal          
Act, 42 U.S.C. Section 6901 et seq., the Clean Air Act, 42 U.S.C. Section       
7401 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Toxic    
Substance Control Act, 15 U.S.C. Section 2601 et seq. (all of the               
foregoing laws and regulations being the "Hazardous Substances                  
Laws"), has occurred, is presently occurring, or is scheduled to                
occur other than federally permitted releases or those equal to or              
less than reportable quantities, or other than releases, emissions              
or discharges that do not or would not exceed applicable standards              
or limitations under any other applicable federal, state or local               
laws or regulations.  No Hazardous Substances are located on the                
Newark Project in violation of, and the Newark Project, and                     
Borrower's use thereof are not in violation of, any environmental               
or occupational safety and health laws, or other applicable law or              
Legal Requirement now in effect, the effect of which violation, in              
any single case or in the aggregate, would materially adversely                 
affect the Newark Project or Borrower's use thereof, or which, in               
any single case or in the aggregate, would impose a material                    
liability on or jeopardize the interest of Borrower in the Newark               
Project or the interest of Lender, or adversely affect the ability              
of Borrower to meet the obligations under the operative Documents.              
Borrower has no knowledge of any past or existing violations of any             
such laws, ordinances or regulations issued by any governmental                 
authority.                                                                      

4.19.     Litigation.  Except as set forth on Exhibit I               
hereto, there are no pending or, to the best of Borrower's                      
knowledge, threatened actions or proceedings of any kind, including             
without limitation actions or proceedings of or before any                      
Governmental Authority, to which Borrower or the Newark Project is              
a party or is subject, or by which any of them or any of their                  
properties or the Newark Project are bound that, if adversely                   
determined to or against Borrower or the Newark Project would have              
a materially adverse effect on the Newark Project, Borrower's                   
financial condition, business or operation, Borrower's ability to               
carry on it's business, or to perform it's obligations under any                
Loan Document, nor, to the best of Borrower's knowledge, is there               
any basis for any such action or proceeding.                                    

4.20.     Permits.  There are no Permits under existing law as        
the Newark Project is currently operated that are Newark Applicable             
Permits other than the Permits described in Exhibit J.  Each Newark             
Applicable Permit is in full force and effect and is not subject to             
any appeals or further proceedings or to any unsatisfied condition              
that may allow material modification or revocation.                             

4.21.     Title and Liens.  On and after the Closing Date,            
Borrower will have good, marketable, insurable and indefeasible                 
title to the Newark Project free and clear of all Liens,                        
encumbrances or other exceptions to title other than Permitted                  
Lien.                                                                           

4.22.     Utilities.  All utility services necessary for the          
operation of the Newark Project for its intended purposes are                   
available at the Newark Site.                                                   

4.23.     Qualifying Facility.  The Newark Project qualifies          
as a Qualifying Facility.                                                       

4.24.     Labor Disputes and Acts of God.  Neither the                
business nor the properties of Borrower are affected by any fire,               
explosion, accident, strike, lockout or other labor dispute,                    
drought, storm, earthquake, embargo, act of God or of the public                
enemy, or other casualty (whether or not governed by insurance),                
materially and adversely affecting the business or properties or                
the operation of Borrower or materially and adversely affecting the             
ability of any Newark Major Project Participant to perform its                  
obligations under any Newark Operative Document to which it is a party.         

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4.25.     Disclosure.  To the best of Borrower's knowledge,           
there is no fact known to Borrower which Borrower has not disclosed             
to Lender which materially adversely affects or, so far as Borrower             
can now reasonably foresee, will materially adversely affect the                
properties, business or financial or other condition of Borrower,               
or the ability of Borrower to perform it's obligations hereunder                
and under the other Newark Operative Documents.                                 

4.26.     Collateral.  The security interests granted to              
Lender pursuant to the Collateral Documents in the Collateral (a)               
constitute as to personal property included in the Collateral and,              
with respect to subsequently acquired personal property included in             
the Collateral, will constitute, a perfected security interest                  
under the UCC and (b) are, and, with respect to such subsequently               
acquired property, will be, as to Collateral perfected under the                
UCC, superior and prior to the rights of all third Persons now                  
existing or hereafter arising whether by way of lien, pledge,                   
security interests, encumbrance, assignment or otherwise.  Except               
to the extent possession of portions of the Collateral is required              
for perfection, all such action as is necessary has been made to                
establish and perfect Lender's rights in and to the Collateral,                 
including any recording, filing, registration, giving of notice or              
other similar action.  The Collateral Documents relating to the                 
Collateral and the financing statements relating thereto have been              
duly filed or recorded in each office and in each jurisdiction                  
where required in order to create and perfect the first lien and                
security interest described above.                                              

4.27.     Trademarks.  Borrower owns or has the right to use          
all patents, trademarks, service marks, trade names, copyrights,                
licenses and other rights, which are necessary for the operation of             
its business as presently conducted.  Nothing has come to the                   
attention of Borrower to the effect that (i) any material product,              
process, method, substance, part or other material presently                    
contemplated to be sold by or employed by Borrower in connection                
with its business will infringe any patent, trademark, service                  
mark, trade name, copyright, license or other right owned by any                
other Person, (ii) there is pending or threatened any claim or                  
litigation against or affecting Borrower contesting its right to                
sell or use any such product, process, method, substance, part or               
other material or (iii) there is, or there is pending or proposed,              
any patent, invention, device, application or principle or any                  
statute, law, rule, regulation, standard or code which would                    
prevent or inhibit or substantially reduce the projected revenues               
of, or otherwise materially adversely affect the business,                      
condition or operations of, Borrower.                                           

ARTICLE 5 - COVENANTS OF THE BORROWER               

Borrower covenants and agrees that so long as this Agreement          
is in effect, it will, unless Lender waives compliance in writing:              

5.1. Application of Revenues: Use of Proceeds.                        

(a)  Cause an amount payable under Section 7.01(b)(xiii)    
of the Newark Senior Loan Agreement equal to the scheduled                      
principal and interest then due and payable to Lender on such                   
Repayment Date to be deposited directly into the account of Lender              
at Texas Commerce Bank.  Houston, Texas, Account No. 00101616119.               
Any amounts paid directly to Borrower in violation of this Section              
5.1(a) shall be immediately paid by Borrower to Lender, and shall               
be held in trust by Borrower for the benefit of Lender until paid               
over to Lender; and                                                             

(b)  Upon and following the occurrence and continuation     
of any Event of Default. cause any and all distributions payable                
under Section 7.01(b)(xv) of the Newark Senior Loan Agreement                   
("Distributions") to be deposited directly into the account of                  
Lender at Texas Commerce Bank, Houston, Texas, Account No.                      
00101616119.  Any amounts paid directly to Borrower in violation of             
this Section 5.1(c) shall be immediately paid by Borrower to                    
Lender, and shall be held in trust by Borrower for the benefit of               
Lender until paid over to Lender.                                               

(c)  Apply $150.000 of the Tranche A Loan to the reserve    
account for heat rate and availability improvements pursuant to the             
provisions of the Parlin O&M Agreement.                                         

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(d)  Permit the simultaneous application by Lender of       
$1,000,000 of the Tranche B Loan, if drawn by Borrower, to                      
prepayment of the Bridge Loan in accordance with Section 2.1(d).                

5.2. Payment.  Pay all sums due under the Newark Senior Loan          
Documents, this Agreement and the other Loan Documents according to             
the terms hereof and thereof.                                                   

5.3. Notices.  Promptly, upon acquiring notice or giving              
notice, as the case may be, give written notice to Lender of:                   

(a)  Any litigation pending or, to the knowledge of         
Borrower, threatened against Borrower involving claims against                  
Borrower or the Project in excess of $50,000 in the aggregate or                
involving any injunctive or declaratory relief, such notice to                  
include copies of all papers filed in such litigation and to be                 
given monthly if any such papers have been filed since the last                 
notice given;                                                                   

(b)  Any dispute or disputes which may exist between        
Borrower and any Governmental Authority and which involve (i)                   
claims against Borrower which individually exceed $25,000 or in the             
aggregate exceed $50,000, (ii) injunctive or declaratory relief,                
(iii) revocation or modification or the like of any Newark                      
Applicable Permit or (iv) any Liens for taxes due but not paid;                 

(c)  Any Event of Default or Inchoate Default;              

(d)  Any casualty, damage or loss, whether or not           
insured, through fire, theft, other hazard or casualty, or any act              
or omission of Borrower, its employees, agents, contractors,                    
consultants or representatives, or of any other Person if such                  
casualty, damage or loss affects Borrower or the Project, in excess             
of $50,000 for any one casualty or loss, or an aggregate of                     
$100,000;                                                                       

(e)  Any cancellation or material change in the terms,      
coverages or amounts of any insurance described in Section 5.15;                

(f)  Any matter which has resulted or is likely, in light   
of other circumstances affecting such Person, to result in a                    
material adverse change in any Newark Major Project Participant's               
financial condition or operations;                                              

(g)  Initiation of any condemnation proceedings involving   
the Project or any portion thereof;                                             

(h)  Any contractual obligations incurred by Borrower       
exceeding $250,000 per year in the aggregate for the Newark                     
Project, not including any obligations incurred pursuant to the                 
Newark Operative Documents or any obligation contemplated in the                
then applicable annual Operating Budget;                                        

(i)  Any act by Borrower to become a surety, guarantor,     
endorser or accommodation endorser for a third party other than                 
endorsement of negotiable instruments for collection purposes;                  

(j)  Any termination or material event of default or        
notice thereof under any Newark Project Document; and                           

(k)  Any default or event of default (however such terms    
are defined) under the Newark Senior Loan Documents.                            

5.4. Financial Statements, Report, Etc.  Deliver to Lender or         
cause to be delivered to Lender in form and detail reasonably                   
satisfactory to Lender such financial or other or statements, lists             
of property and accounts, budgets, forecasts or reports relating to             

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the Newark Project, Borrower or O'Brien, as Lender may reasonably               
request.                                                                        

5.5. Cooperation.  Perform, on request of Lender, such                
reasonable acts as may be necessary or advisable to carry out the               
intent of this Agreement and the other Loan Documents.                          

5.6. Existence, Conduct of Business, Properties, Etc. Except          
as otherwise expressly permitted under this Agreement, (a) maintain             
and preserve its existence as a Delaware corporation and all                    
material rights, privileges and franchises necessary or desirable               
in the normal conduct of its business, (b) perform all of its                   
material contractual obligations under the Newark Operative                     
Documents and all other agreements and contracts by which it is                 
bound, maintain all necessary Permits and licenses, including all               
Newark Applicable Permits, with respect to its business and the                 
Newark Project, and (c) engage only in the business contemplated by             
the Newark Operative Documents.                                                 

5.7. Obligations.  Pay all obligations, howsoever arising, as         
and when due and payable, including taxes and tax claims, except                
(a) such as may be contested in good faith or as to which a bona                
fide dispute may exist, provided that Lender is satisfied in its                
reasonable discretion that nonpayment of such obligation pending                
the resolution of such contest or dispute will not in any way                   
endanger or materially adversely affect the Newark Project or that              
provision is made to the satisfaction of Lender in its sole                     
discretion for the posting of security (other than the Collateral)              
for or the bonding of such obligations or the prompt payment                    
thereof in the event that such obligation is payable and (b)                    
Borrower's trade payables which shall be paid in the ordinary                   
course of business.                                                             

5.8. Damage and Cancellation Payments.  Except as otherwise           
expressly permitted under the Newark Senior Loan Agreement, apply               
the proceeds of any surety, performance or similar bonds and any                
liquidated or other damages paid in respect of damage payments or               
performance payments by Persons involved in the operation of the                
Newark Project, to prepay the Senior Loan.                                      

5.9. Books, Records, Access Thereto.  Maintain adequate books,        
accounts and records with respect to Borrower and the Newark                    
Project and prepare all financial statements required hereunder in              
accordance with GAAP and in compliance with the regulations of any              
Governmental Authority having jurisdiction thereof, and permit                  
employees or agents of Lender at any reasonable times and upon                  
reasonable prior notice to inspect all of Borrower's properties,                
including the Newark Project, and to examine or audit all of                    
Borrower's books, accounts and records and make copies and                      
memoranda thereof.                                                              

5.10.     Qualifying Facility.  Take or cause to be taken all         
necessary or appropriate actions (a) so that the Newark Project                 
will be a Qualifying Facility at all times hereafter until all                  
amounts due Lender under this Agreement have been paid in full, and             
(b) to maintain Borrower's and the Newark Project's exemptions from             
regulation under the FPA and PUHCA.                                             

5.11.     Preservation of Rights, Further Assurances, Etc.            

(a)  Preserve, protect and defend the rights of Borrower    
under each and every Newark Project Document, including prosecution             
of suit to enforce any right of Borrower thereunder and enforcement             
of any claims with respect thereto;                                             

(b)  From time to time, execute, acknowledge, record,       
register, deliver and/or file all such notices, statements,                     
instruments and other documents (including any financing statement,             
continuation statement, certificate of title or estoppel                        
certificate relating to any Loan) stating the interest and charges              
then due and any known defaults and take such other steps as may be             
necessary or advisable to render fully valid and enforceable under              
all applicable laws the right, liens and priorities of Lender with              
respect to all Collateral and other security from time to time                  
furnished under this Agreement or intended to be so furnished, in               
each case in such form and at such times as shall be satisfactory               

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to Lender, and pay all fees and expenses (including attorneys'                  
fees) incident to compliance with this Section 5.11(b).                         

5.12.     Taxes. Other Government Charges and Utility Charges.        
Pay, or cause to be paid, as and when due and prior to delinquency,             
all taxes, assessment and governmental charges of any kind that may             
at any time be lawfully assessed or levied against or with respect              
to Borrower or the Newark Project, all utility and other charges                
incurred in the operation, maintenance, use, occupancy and upkeep               
of the Newark Project. and all assessment and charges lawfully made             
by any Governmental Authority for public improvements that may be               
secured by a lien on the Newark Project.                                        

5.13.     Compliance with Laws, Instruments, Etc.  At its             
expense, promptly (a) comply, or cause compliance, in all material              
respects, with all laws, rules, regulations and Legal Requirements.             
including without limitation laws, rules, regulations and Legal                 
Requirements, relating to pollution control, environmental                      
protection, equal employment opportunity employee benefit plans,                
ERISA Plans and employee safety, with respect to the operation and              
maintenance of the Newark Project, and (b) procure, maintain and                
comply, or cause to be procured. maintained and complied with, in               
all material respects, all Permits required for any use of the                  
Newark Project or any part thereof, then being trade or                         
contemplated by the Newark Operative Documents, except that                     
Borrower may, at its expense, contest by appropriate proceedings                
conducted in good faith the validity or application of any such                 
law, rule or regulation provided that (i) neither Lender nor                    
Borrower would be subject to any criminal liability for failure to              
comply therewith and (ii) all proceedings to enforce such law, rule             
or regulation against Lender, Borrower, or the Newark Project or                
any part of any of them, shall have been duly and effectively                   
stayed during the entire pendency of such contest.                              

5.14.     Compliance with Terms of Newark Operative Documents,        
Etc. Observe and perform all of its obligations under this                      
Agreement, the other Loan Documents and each and every one of the               
other Newark Operative Documents to which it is a party.                        

5.15.     Maintenance of Insurance.                                   

(a)  Borrower shall, without cost to Lender, maintain or    
cause to be maintained on its behalf in effect at all times that                
Borrower has any outstanding Obligations owing to Lender insurance              
that satisfies the requirement set forth in the Newark Senior Loan              
Agreement, as in effect as of the date hereof and without giving                
effect to any waiver of any such requirement by the Senior Lender.              
Lender shall be named as an additional loss payee or an additional              
insured under such policies after the Newark Senior Lender is paid              
in full all obligations owed to Newark Senior Lender under the                  
Newark Senior Loan Documents.                                                   

(b)  Upon request by Lender, Borrower shall furnish to      
Lender a certificate signed by a duly authorized representative of              
Borrower, showing the insurance then maintained by or on behalf of              
Borrower pursuant to the Newark Senior Loan Agreement and stating               
that such insurance complies in all material aspects with the terms             
thereof, together with evidence of payment of the premiums thereon.             
In the event that at any time such insurance shall be reduced or                
cease to be maintained. then (without limiting the rights of Lender             
hereunder in respect of the Event of Default which arises as a                  
result of such failure) Lender may at its option maintain any of                
the insurance required hereby and, in such event, Borrower shall                
reimburse Lender upon demand for the cost thereof together with                 
interest thereon at a rate per annum equal to the Default Rate, but             
in no event shall the rate of interest exceed the maximum rate                  
permitted by law.                                                               

5.16.     Warranty of Title.  Borrower has and will maintain          
(a) good, marketable and insurable tide to the Newark Project                   
subject only to Permitted Liens, and (b) good, marketable,                      
insurable and indefeasible title to all of its other respective                 
properties and assets (other than properties and assets disposed of             
in the ordinary course of business) to the extent that failure to               
do so would materially adversely affect the Newark Project or                   

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Borrower's ability to carry on in business or perform its                       
obligations under the Loan Documents and/or the Newark Senior Loan              
Documents.                                                                      

5.17.     Event of Eminent Domain.  If an Event of Eminent            
Domain shall be threatened or occur with respect to any Collateral,             
Borrower (a) shall promptly upon discovery or receipt of notice of              
any such threat or occurrence provide written notice of either to               
Lender, (b) shall diligently pursue all its right to compensation               
against the relevant Governmental Authority in respect of such                  
Event of Eminent Domain, (c) shall not, without the written consent             
of Lender, which consent shall not be unreasonably withheld,                    
compromise or settle any claim against such Governmental Authority              
(d) shall hold all amounts and proceeds (including instruments)                 
received in respect of any Event of Eminent Domain ("Eminent Domain             
Proceeds") in trust for the benefit or the Operative Lender.                    
segregated from other funds of Borrower, for application in                     
accordance with Section 7.3 and (e) shall forthwith pay over to                 
Operative Lender all such amounts and proceeds in the same form as              
received (with any necessary endorsement) to be held and applied in             
accordance with the provisions of Sections 7.2 and 7.3. Borrower                
consents to the participation of Lender in any eminent domain                   
proceedings, and Borrower shall from time to time deliver to                    
Operative Lender all instruments requested by it to permit such                 
participation.                                                                  

5.18.     Indemnification.                                            

(a)  Borrower shall indemnify, defend and hold harmless     
Lender and its respective officers, directors, shareholders,                    
controlling persons, employees, agents and servants (collectively,              
the "Indemnitees") from and against and reimburse the Indemnitees               
for:                                                                            

(i)  any and all claims, obligations, liabilities,
losses, damages, penalties, stamp or other similar taxes, actions,              
suits, judgments, costs and expenses (including attorneys' fees) of             
whatever kind or nature, whether or not well founded, meritorious               
or unmeritorious, demanded, asserted or claimed against any such                
Indemnitee in any way relating to, or arising out of or in                      
connection with this Agreement, the other Newark Operative                      
Documents, or the Newark Project, except for claims against any                 
such Indemnitee based on the gross negligence or willful misconduct             
of any such Indemnitee;                                                         

(ii) any and all losses, claims, liabilities,     
damages, injuries (to person, property, or natural resources),                  
costs, expenses, actions or causes of action, arising in connection             
with the release or presence of any Hazardous Substance at the                  
Newark Project, whether foreseeable or unforeseeable, including,                
without limitation, all costs of removal and disposal of such                   
Hazardous Substances, all reasonable costs required to be incurred              
in (i) determining whether the Newark Project is in compliance and              
(ii) causing the Newark Project to be in compliance with all                    
applicable Legal Requirements, all reasonable costs associated with             
claims for damages to persons or property, and reasonable                       
attorneys' and consultants' fees and court costs; and                           

(iii)     any and all claims, obligations,        
liabilities. losses, damages, penalties, actions, suits, costs and              
expenses (including attorneys' fees) of whatever kind or nature,                
whether or not well founded, meritorious or unmeritorious,                      
demanded, asserted or claimed against any Indemnitee in any way                 
relating to, or arising out of or in connection with the disputes,              
circumstances and events described in Exhibit I and any claims,                 
suits, liabilities against Borrower or any of its Affiliates.                   

(b)  The provisions of this Section 5. 18 shall survive     
foreclosure of the Collateral Documents and satisfaction or                     
discharge of Borrower's obligations hereunder, and shall be in                  
addition to any other rights and remedies of Lender.                            

(c)  In case any action, suit or proceeding shall be        
brought against any Indemnitee. such Indemnitee shall notify                    
Borrower of the commencement thereof, and Borrower shall be                     
entitled, at its expense, acting through counsel acceptable to such             
Indemnitee, to participate in, and, to the extent that Borrower                 

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desires, to assume and control the defense thereof. Such Indemnitee             
shall be entitled, at its expense, to participate in any action,                
suit or proceeding the defense of which has been assumed by the                 
Borrower. Notwithstanding the foregoing, Borrower shall not be                  
entitled to assume and control the defenses of any such action,                 
suit or proceedings if and to the extent that, in the opinion of                
such Indemnitee and its counsel, such action, suit or proceeding                
involves the potential imposition of criminal liability on such                 
Indemnitee or a conflict of interest between such Indemnitee and                
Borrower or between such Indemnitee and other Indemnitee, and in                
such event (other than with respect to disputes between such                    
Indemnitee and other Indemnitee) Borrower shall pay the reasonable              
expenses of such Indemnitee in such defense.                                    

(d)  Borrower shall report to such Indemnitee on the        
status of such action, suit or proceeding as developments shall                 
occur and at least within sixty (60) days of the previous report.               
Borrower shall deliver to such Indemnitee a copy of each document               
filed or served on any party in such action, suit or proceeding,                
and each material document which Borrower possesses relating to                 
such action, suit or proceeding.                                                

(e)  Notwithstanding Borrower's rights hereunder to         
control certain actions, suits or proceedings, any Indemnitee                   
against whom any claim is made shall be entitled to compromise or               
settle any such claim if such Indemnitee determines in its                      
reasonable discretion that failure to compromise or settle such                 
claim is reasonably likely to have a material adverse effect on                 
such Indemnitee, the Newark Project or such Indemnitees interest in             
the Newark Project.  Any such compromise or settlement shall be                 
binding upon Borrower for purposes of this Section 5.18.                        

(f)  Upon payment of any claim by Borrower pursuant to      
this Section 5.18 or other similar indemnity provisions contained               
herein to or on behalf of an Indemnitee, Borrower, without any                  
further action, shall be subrogated to any and all claims that such             
Indemnitee may have relating thereto, and such Indemnitee shall                 
cooperate with Borrower and give such further assurances as are                 
necessary or advisable to enable Borrower vigorously to pursue such             
claims.  Payment thereof by any Indemnitee or the payment by such               
Indemnitee of any judgment or claim successfully perfected against              
such Indemnitee shall constitute a Prime Rate Loan and shall be                 
payable upon demand of such Indemnitee.                                         

(g)  Any amounts payable by Borrower pursuant to this       
Section 5.18 shall be regularly payable within thirty (30) days                 
after Borrower receives an invoice for such amounts from any                    
applicable Indemnitee.                                                          

5.19.     ERISA.  Either (i) Borrower will not establish,             
maintain, contribute to or become obligated to contribute to any                
ERISA Plan, or suffer or permit any member of the Controlled Group              
to do so, or (ii) if any ERISA Plan is so established, maintained               
or contributed to or so becomes the obligee of contributions,                   
(1) Borrower and each member of the Controlled Group shall have at              
all times fulfilled their obligations under the minimum funding                 
standards of ERISA and the Code for each such ERISA Plan, shall at              
all times be in compliance in all material respects with applicable             
provisions of ERISA and the Code and shall not incur any liability              
to the PBGC or any ERISA Plan under Title IV of ERISA, and (2)                  
within thirty (30) days after (A) the occurrence of any reportable              
event (as defined in section 4043(b) of ERISA) with respect to any              
ERISA Plan, (B) the complete or partial withdrawal by Borrower or               
any member of the Controlled Group from any Multiemployer Plan or               
(C) any Multiemployer Plan enters reorganization status or becomes              
insolvent, Borrower shall report such occurrence to Lender and                  
furnish such information as Lender may reasonably request with                  
respect thereto.                                                                

ARTICLE 6 - NEGATIVE COVENANTS                

Borrower covenants and agrees that so long as this Agreement          
is in effect, it will not.                                                      
without the written consent of Lender:                                          

6.1. Continent Liabilities.  Except as provided in this               
Agreement, become liable as a surety, guarantor, accommodation                  
endorser or otherwise, for or upon the obligation of any other                  
Person; provided, however, that this Section 6.1 shall not be                   
deemed to prohibit:                                                             

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(a)  The acquisition of goods, supplies or merchandise in   
the normal course of business or normal trade credit; or                        

(b)  The endorsement of negotiable instruments received     
in the normal course of its business.                                           

6.2. Limitations on Liens. Create, assume or suffer to exist          
any Lien, securing a charge or obligation on the Newark Project or              
on any of the Collateral, whether now owned or hereafter acquired,              
except Permitted Liens.                                                         

6.3. Indebtedness.  Incur, create, assume or permit to exist          
any Debt except (a) the Senior Obligations (b) the Loans,                       
(c) additional indebtedness in an aggregate principal amount not                
exceeding $7,000,000, of which (i) an aggregate principal amount of             
$6,500,000 may be incurred solely to satisfy final judgments for                
the payment of money rendered in connection with the fire at the                
Newark Project which occurred on December 25, 1992 and (ii) an                  
aggregate principal amount of $500,000 may be incurred without                  
restriction, and (d) any obligations in connection with the Newark              
Project (which obligations are not otherwise contrary to any of the             
terms and conditions of the Loan Documents) which may be construed              
to be Debt hereunder.                                                           

6.4. Sale or Lease of Assets.  Sell, lease, assign, transfer          
or otherwise dispose of assets, whether now owned or hereafter                  
acquired, (i) except in the ordinary course of its business as                  
permitted by the Newark Senior Loan Agreement and as contemplated               
by the Newark Operative Documents and (ii) except for obsolete,                 
worn out or replaced property not used or useful in its business;               
and in each case at fair market value.                                          

6.5. Changes.  Change the nature of its business or expand its        
business beyond the business contemplated in the Newark Senior Loan             
Agreement and the Newark Operative Documents.                                   

6.6. Distributions.  Directly or indirectly, make or declare          
any distribution (in cash, property or obligation) on, or other                 
payment on account of, any interest in Borrower, unless pursuant to             
Section 7.1 hereof.                                                             

6.7. Investments.  Make or permit to remain outstanding any           
advances or loans or extensions of credit to, or purchase or own                
any stock, bonds, notes, debentures or other securities of any                  
Person, except as permitted under the Newark Senior Loan Agreement.             

6.8. Transactions with Affiliates. Directly or indirectly,            
enter into any transaction or series of transactions with or for                
the benefit of an Affiliate unless such transaction is on                       
substantially the same terms as are available in an arms-length                 
transaction in the commercial marketplace.                                      

6.9. Regulations.  Directly or indirectly apply any part of           
the proceeds of the Loan or any Project Revenues to the purchasing              
or carrying of any margin stock within the meaning of Regulation G,             
T, U or X of the Federal Reserve Board, or any regulations,                     
interpretations or rulings thereunder.                                          

6.10.     Partnerships.  Become a general or limited partner          
in any partnership or a joint venturer in any joint venture.                    

6.11.     Dissolution.  Liquidate or dissolve, or sell or             
lease or otherwise transfer or dispose of all or any substantial                
part of its property, assets or business, or combine, merge or                  
consolidate with or into any other entity.                                      

6.12.     Amendments.  Cause, consent to or permit any                
material amendment, modification, variance or waiver of timely                  
compliance with any terms or conditions of any Newark Project                   
Document or cancel or terminate any Newark Operative Document                   
(except upon expiration of the stated term thereof) to which                    
Borrower is a party other than termination or modification of any               
of the O&M Agreements in accordance with the terms thereof.                     

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6.13.     Compliance with Newark Operative Documents.  Do or          
permit (to the extent within its control) to be done in, upon or                
about the Newark Project or any part thereof, anything that is                  
likely to result in the material diminution or impairment of the                
operation, efficiency, capacity, utility, output, reliability,                  
performance, utility, availability or value thereof; do or permit               
(to the extent within its control) to be done any act under the                 
Newark Operative Documents, or omit or refrain from any act under               
the Newark Operative Documents, where such act done or permitted to             
be done, or such omission of or refraining from action, would                   
materially adversely affect the Newark Project or the interests of              
Lender under any of the Loan Documents.                                         

6.14.     Name and Location; Fiscal Year.  Change its name or         
the location of its principal place of business without notice to               
Lender at least ninety (90) days prior to such change or change its             
fiscal year.                                                                    

6.15.     Use of Newark Project.  Use, or permit to be used,          
the Newark Project for any purpose other than for the operation and             
maintenance of the Newark Project as contemplated by or otherwise               
permitted by the Newark Operative Documents without the prior                   
written approval of Lender, such approval not to be unreasonably                
withheld.                                                                       

6.16.     Assignment.  Assign its rights hereunder or under           
any of the Newark Operative Documents to any Person, or create and              
deliver any ownership interest in Borrower to any Person other than             
those existing on the Closing Date if such assignment shall reduce              
the amounts available for payment to Lender pursuant to Section                 
7.01(b)(xiii) of the Newark Senior Loan Agreement as in effect on               
the Closing Date.                                                               

6.17.     Transfer of Interests.  Cause, make, suffer, permit         
or consent to any sale, assignment or transfer of any ownership                 
interest or other interest in Borrower if such sale shall reduce                
the amounts available for payment to Lender pursuant to Section                 
7.01(b)(xiii) of the Newark Senior Loan Agreement as in effect on               
the Closing Date. As used herein, the transfer of an ownership                  
interest in Borrower shall include direct and indirect transfers,               
including without limitation sale of stock or ownership interests               
in the Borrower or other Person who has an ownership interest in                
Borrower.                                                                       

6.18.     Abandonment of Newark Project.  Voluntarily abandon         
the operation of the Newark Project.                                            

6.19.     Hazardous Substance.  Release, emit or discharge            
into the environment any Hazardous Substances in excess of                      
permitted levels or reportable quantifies or in violation of other              
permitted concentrations standards or limitations under any                     
Hazardous Substance Laws, Legal Requirements or Newark Applicable               
Permits in connection with the Newark Project.                                  

6.20.     ERISA.    Establish, maintain, contribute to or             
become obligated to contribute to any ERISA Pian or suffer or                   
permit any member of the Controlled Group to do so.                             

6.21.     Modification of Newark Senior Loan Agreement.               
Modify the express levels of distribution set forth in Section                  
7.01(b) of the Newark Senior Loan Agreement so as to reduce amounts             
available for payment to Lender pursuant to Section 7.01(b)(xiii)               
or Section 7.01(b)(xv) thereunder, except in accordance with the                
terms of the Consent and Subordination Agreement.                               

ARTICLE 7 - APPLICATION OF FUNDS                

7.1. Application of Project Revenues.                                 

(a)  All amounts available for payment of Subordinated      
Loans (as such term is defined in the Newark Senior Loan Agreement)             
pursuant to Section 7.01(b)(xiii) of the Newark Senior Loan                     
Agreement shall be applied (i) toward the scheduled principal and               
interest then due and payable to Lender on such Repayment Date, and             
(ii) after payment in full of the scheduled principal and interest              
then due and payable to Lender, as otherwise set forth in such                  
Section 7.01(b).                                                                

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(b)  Upon and following the occurrence and continuation     
of any Event of Default, all Distributions under Section                        
7.01(b)(xv) of the Newark Senior Loan Agreement deposited in                    
Lender's account pursuant to Section 5.1(b) hereof shall be applied             
(i) toward payment in full of all outstanding Obligations of                    
Borrower to Lender, and, (ii) after payment in full of all                      
Obligations of Borrower to Lender, to Borrower.                                 

7.2. Application of Insurance Proceeds.                               

(a)  Each of the parties hereto agree that all amounts      
and proceeds (including instruments) in respect of the proceeds of              
any insurance policy required to be maintained by Borrower                      
hereunder ("Insurance Proceeds") shall, except as otherwise                     
provided in clause (b) below, be paid by the respective insurers                
directly to Operative Lender and if paid to Borrower, such                      
Insurance Proceeds shall be received only in trust for Operative                
Lender, shall be segregated from other funds of Borrower, and shall             
be forthwith paid over to Operative Lender in the same form as                  
received (with any necessary endorsement).  Each of the parties                 
hereto agrees, to the fullest extent that it effectively may do so              
under applicable law, and subject to subsection (b) of this Section             
7.2 that Operative Lender shall apply all such insurance Proceeds               
to the repayment of the Senior Obligations in accordance with the               
Newark Senior Loan Documents and, if applicable, the Loans and                  
shall remit any excess Insurance Proceeds after payment of such                 
amounts to Borrower.                                                            

(b)  If an Event Of Default or Inchoate Default shall       
have occurred and be continuing, then any provisions of the                     
foregoing Section 7.2(a) to the contrary notwithstanding, the                   
Insurance Proceeds may be applied by Operative Lender to curing                 
such Event of Default or Inchoate Default.  Any Insurance Proceeds              
remaining thereafter shall be applied as provided in Section                    
7.2(a).                                                                         

7.3. Application of Eminent Domain Proceeds.  All Eminent             
Domain Proceeds shall be paid by the condemning authority directly              
to Operative Lender, and, if paid to Borrower, such Eminent Domain              
Proceeds shall be received only in trust for Operative Lender,                  
shall be segregated from other funds of Borrower and shall                      
forthwith be paid over to Operative Lender in the same form as                  
received (with any necessary endorsement).  To the extent any                   
Eminent Domain Proceeds remain after all obligations owing from                 
Borrower to Senior Lender and Lender have been satisfied, such                  
Eminent Domain Proceeds shall be released to Borrower.                          

ARTICLE 8 - EVENTS OF DEFAULT: REMEDIES               

A.   Events of Default.                                               

The occurrence of any of the following events shall constitute        
an event of default ("Even of Default") hereunder:                              

8.1. Failure to Make Payment.  Borrower shall fail to pay             
within 15 days of the due date, in accordance with the terms of                 
this Agreement, (a) any principal on any Loan on the date that such             
sum is due, (b) any interest on any Loan on the date that such sum              
is due, or (c) any other fee, cost, charge or other sum due under               
this Agreement on the date that such sum is due.                                

8.2. Warranties Untrue.  Any representation or warranty of            
Borrower herein, in any Loan Document or in any agreement,                      
instrument or certificate executed pursuant hereto in connection                
with any transaction contemplated hereby shall be false or                      
misleading in any material respect when made and shall remain                   
material at the time in question, and as a result thereof, there is             
a material and adverse effect on Borrower's ability to meet its                 
obligations under the Loan Documents as determined by Lender in its             
sole discretion; provided that no Event of Default shall occur if               
within ten (10) days of the date on which Borrower receives notice              
(from any source) that such representation or warranty is false or              
misleading, Borrower causes such representation or warranty to be               
true and correct.                                                               

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8.3. Judgments.  A final judgment or judgments shall be               
entered against Borrower or, after the Tranche B Funding Date,                  
Parlin in the aggregate amount of $1,000,000 or more which remain               
unstayed or unsatisfied for 30 days after entry, and which will                 
materially impair or inhibit Borrower's use of the Newark Project               
or Parlin's use of the Parlin Project, as applicable, for the                   
purpose for which such Project was intended.                                    

8.4. Misstatements; Omissions.  Any financial statement,              
representation, warranty or certificate made or prepared by, under              
the control of or on behalf of Borrower and furnished to lender                 
pursuant to this Agreement, or in any separate document to be                   
delivered to Lender hereunder or under any other Loan Document,                 
shall contain an untrue or misleading statement of a material fact              
or shall fail to state a material fact necessary to make the                    
statements therein not misleading as of the date made and as a                  
result thereof, there is a material and adverse effect on                       
Borrower's ability to meet its obligations under the Loan Documents             
as determined by Lender in its sole discretion, provided that no                
Event of Default shall occur pursuant hereto, if within ten (10)                
days of the date on which Borrower receives notice (from any                    
source) that such untrue or misleading statement or failure to                  
state a material fact has occurred, Borrower shall eliminate or                 
otherwise addresses to the satisfaction of Lender any such material             
and adverse effects relating to such misleading statement or                    
failure to state a material fact.                                               

8.5. Bankruptcy; Insolvency.  Borrower shall institute a              
voluntary case seeking liquidation or reorganization under the                  
Bankruptcy Law (or any successor statute), or shall consent to the              
institution of an involuntary case thereunder against it; or                    
Borrower shall file a petition, answer or consent or shall                      
otherwise institute any similar proceeding under any other                      
applicable federal or state law, or shall consent thereto; or                   
Borrower shall apply for, or by consent or acquiescence there shall             
be an appointment of, a receiver, liquidator, sequestrator, trustee             
or other officer with similar powers, or Borrower shall make an                 
assignment for the benefit of creditors; or Borrower shall admit in             
writing its inability to pay its debts generally as they become                 
due; or if an involuntary case shall be commenced seeking the                   
liquidation or reorganization of Borrower under the Bankruptcy Law              
(or any successor statute) or any similar proceeding shall be                   
commenced against Borrower under any other applicable federal or                
state law or a decree or order of a court having jurisdiction in                
the premises for the appointment of a receiver, liquidator,                     
sequestrator, trustee or other officer having similar powers of                 
Borrower or of all or a part of Borrower's property, shall have                 
been entered; or any other similar relief shall be granted against              
Borrower under any applicable federal or state law, any of which                
shall remain unstayed and in effect for a period of 60 consecutive              
days.                                                                           

8.6. Cross Default.  Borrower shall default (i) in the payment        
of any principal, interest or other amount due under any agreement              
involving the borrowing of money or the advance of credit and the               
outstanding amount or amounts payable under all such agreements                 
exceeds $50,000 in the aggregate and such default has a material                
adverse effect on Borrower's ability to make timely repayment of                
the Loans, or (ii) in the payment of any amount due under any                   
guarantee of any agreement or obligation of the type described in               
the foregoing clause, if in either case, pursuant to such default,              
the holder of the obligation concerned exercises its right to                   
accelerate the maturity of the indebtedness evidenced thereby.                  

8.7. ERISA.  If Borrower or any member of the Controlled Group        
should maintain or become obligated to contribute to an ERISA Plan              
and (a) a reportable event (as defined in Section 4043(b) of ERISA)             
shall have occurred with respect to any ERISA plan; or (b) a                    
trustee shall be appointed by a United States District Court to                 
administer any ERISA Plan; or (c) the PBGC shall institute                      
proceedings to terminate any ERISA Plan; or (d) a complete or                   
partial withdrawal by Borrower or any member of the Controlled                  
Group from any Multiemployer Plan shall have occurred, or any                   
Multiemployer Plan shall enter reorganization status or shall                   
become insolvent; provided that any of the events described in this             
Section 8.7 shall involve (X) one or more ERISA Plans that are                  
single-employer plans (as defined in Section 4001(a)(15) of ERISA)              
and under which the aggregate amount of vested unfunded liabilities             
(including vested unfunded liabilities which arise or might arise               
as the result of the termination of such ERISA Plan or Plans),                  
and/or (Y) one or more Multiemployer Plans to which the aggregate               
liabilities of Borrower or the members of the Controlled Group,                 
shall exceed One Hundred Thousand Dollars ($100,000).                           

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8.8. Breach of Newark Project Documents.                              

Borrower or any other party thereto shall breach or default           
under any material term, condition, provision, representation or                
warranty contained in any Newark Project Document or other                      
Agreement (other than the Loan Documents) to which Borrower is a                
party and Lender shall have reasonably determined that the effect               
of such breach or default will have a material adverse effect on                
Borrower's ability to perform its obligations under the Loan                    
Documents or Lender's interests in Distributions from the Newark                
Project or the Collateral and such breach or default shall continue             
unremedied for thirty (30) days after notification from Lender to               
Borrower; provided, however, that if the breach or default cannot               
be remedied within such thirty (3) days despite Borrower's and/or               
such other party's, as the case may be, best efforts to do so,                  
Lender will not unreasonably withhold its consent to an extension               
of such time for such additional periods as is reasonably necessary             
to cure such breach of default if remedial action is promptly                   
instituted within such 30-day period and is thereafter diligently               
pursued until the breach or default is corrected; and provided                  
further that Borrower shall not be in violation of this Section 8.8             
if Borrower shall be contesting in good faith any alleged breach by             
Borrower of any Newark Project Document.                                        

8.9. Breach of Terms of Agreement.                                    

(a)  Borrower shall (i) fail to perform or observe any of the         
covenants set forth in Sections 5.1, 5.2 or 5.6, or Sections 6.1                
through 6.21 or Sections 7.1, 7.2 or 7.3 or, after the Tranche B                
Funding date, Parlin shall fail to perform or observe any of the                
covenants set forth in the Parlin Distribution Agreement and, in                
each case, such failure has a material, adverse effect on                       
Borrower's ability to make timely repayment of the Loans, and such              
failure to perform or observe such covenants remains in effect for              
30 days; or                                                                     

(b)  Borrower or, after the Tranche B Funding date, parlin            
shall fail to perform or observe any other covenant to be observed              
or performed by it hereunder or under any Loan Document and not                 
otherwise specifically provided for therein or in Section 8.9(a),               
and such failure shall continue unremedied for a period of thirty               
(30) days after Borrower or Parlin, if applicable, becomes aware                
thereof or receives written notice thereof from Lender, provided,               
however, that if such default is of a nature such that it cannot                
reasonably be cured within such thirty (30) day period, an Event of             
Default shall not result therefrom so long as (i) Borrower or                   
Parlin, if applicable, has, promptly upon discovery thereof, given              
written notice to Lender of such default (provided, that if any                 
Event of Default is cured within any applicable time period                     
specified herein, or waived or temporarily waived by Lender, the                
failure alone to give notice of such Event of Default as provided               
in this sentence shall not be deemed an Event of Default);                      
(ii) Borrower or Parlin, if applicable, as promptly as practicable              
commences action reasonably designed to cure such default and                   
continues diligently to pursue such action and (iii) Lender in its              
sole discretion shall have determined and shall continue to                     
conclude that such default does not have a material adverse effect              
on Borrower's or Parlin's, if applicable, ability to perform its                
obligations hereunder or under the other Newark Operative Documents             
or a material adverse effect on Lender's interests in the Project.              

8.10.     Loss of Qualifying Facility Status.                         

(a)  The Newark Project or, after the Tranche B Funding date,         
the Parlin Project shall cease to be a Qualifying Facility and all              
periods for cure of such loss of Qualifying Facility status shall               
have expired under applicable law; or                                           

(b)  Borrower or, after the Tranche B Funding Date, Parlin,           
shall lose its exemption from regulation under PUHCA and all                    
periods for cure of such loss of exemption shall have expired under             
applicable law.                                                                 

8.11.     Security.  Any of the Collateral Documents, once            
executed and delivered, shall, except as the result of the acts or              
omissions of Lender, in any material respect fail to provide Lender             
the liens, security interest, rights, titles, interest, remedies,               
powers or privileges intended to be created thereby or cease to be              
in full force and effect, or the validity thereof or the                        
applicability thereof to the Loan, the Note, or any other                       

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obligations purported to be secured or guaranteed thereby or any                
part thereof shall be disaffirmed by or on behalf of Borrower or                
any other party thereto or there shall occur a default or event of              
default (however defined) under any of the Collateral Documents,                
such default or event of default shall not have been cured within               
ten (10) days after its occurrence and Lender shall determine in                
its sole discretion that such default or event of default would                 
have a material adverse effect on the Project or Borrower's ability             
to perform its obligations under the Newark Operative Documents, or             
would materially impair Lender's security position.                             

8.12.     Breach of Parlin Project Documents.  After the              
Tranche B Funding Date:  Parlin or any other party thereto shall                
breach or default under any material term, condition, provision,                
representation or warranty contained in any Parlin Project Document             
or other Agreement to which Parlin is a party and Lender shall have             
determined that the effect of such breach or default will have a                
material adverse effect on Lender's interests in Distributions from             
the Parlin Project or the Collateral and such breach or default                 
shall continue unremedied for 10 days after notification from                   
Lender to Parlin; provided, however, that if the breach or default              
cannot be remedied within such 10 days despite Parlin's and/or such             
other party's, as the case may be, best efforts to do so, Lender                
will not unreasonably withhold its consent to an extension of such              
time for such additional periods as is reasonably necessary to cure             
such breach of default if remedial action is promptly instituted                
within such 10-day period and is thereafter diligently pursued                  
until the breach or default is corrected; and provided further that             
Parlin shall not be in violation of this Section 8.12 if Parlin                 
shall be contesting in good faith any alleged breach by Parlin of               
any Parlin Project Document.                                                    

8.13.     Breach of Senior Loan Documents.  An event of               
default (however such term is defined) shall occur and be                       
continuing under (i) the Newark Senior Loan Agreement or any of the             
Newark Senior Loan Documents or, (ii) after the Tranche B Funding               
Date, the Parlin Senior Loan Agreement or any of the Parlin Senior              
Loan Documents.                                                                 

B.   Remedies                                                         

Subject to the provisions of the Consent and Subordination            
Agreement, (i) upon the occurrence and during the continuation of               
an Event of Default specified under Section 8.1 (or automatically               
upon the occurrence of an Event of Default under Section 8.5), and              
(ii) upon the occurrence and during the continuation of any other               
Event of Default specified herein pursuant to, or at a time during,             
which the Newark Senior Lender has accelerated the obligations of               
Borrower under the Newark Senior Loan Documents, Lender may                     
(i) terminate any obligation on its part to make or continue any                
Loan and (ii) declare and make all sums of outstanding principal                
and accrued but unpaid interest remaining under this Agreement                  
together with all fees, costs and charges due hereunder or under                
any other Loan Document, immediately due and payable, without                   
further notice of default, presentment or demand for payment,                   
protest or notice of nonpayment or dishonor, or other notices or                
demands of any kind, all such notices and demands being waived;                 
provided, however, that Lender shall look solely to Distributions               
(and, after the Tranche B Funding Date, amounts available for                   
payment to Lender pursuant to the Lock Box Agreement) for repayment             
of such accelerated outstanding principal and interest.  Lender may             
also exercise any or all of the following rights and remedies, in               
any combination or order that it may elect, in addition to such                 
other rights or remedies as Lender may have hereunder, under the                
Collateral Documents or at law or in equity.                                    

8.14.     No Further Loan.  Upon the occurrence and during the        
continuation of an Event of Default, Lender may refuse, and shall               
not be obligated, to make the Tranche B Loan.                                   

8.15.     Cure.  Upon the occurrence and during the                   
continuation of an Event of Default, Lender may, but shall not be               
obligated to, loan to or on behalf of Borrower to pay any Project               
Cost or to cure any Event of Default or Inchoate Default hereunder              
and to cure any default and render any performance under any                    
Project Document as Lender in its sole discretion may consider                  
necessary or appropriate, whether to preserve and protect the                   
Collateral or Lender's interests therein or for any other reason,               
and all sums so expended, together with interest on such total                  
amount at the Default Rate, shall be repaid by Borrower to Lender               
on demand and shall be secured by the Loan Documents,                           

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notwithstanding that such expenditures may, together with amounts               
advanced under this Agreement, exceed the amount of the Total Loan              
Commitment.                                                                     

8.16.     Remedies Under Loan Documents.  Subject to the              
provisions of the Consent and Subordination Agreement, upon the                 
occurrence and during the continuation of an Event of Default,                  
Lender may exercise any and all rights and remedies available to it             
under any of the Loan Documents, pursuant to the Collateral                     
Documents.                                                                      

ARTICLE 9 - SCOPE OF LIABILITY                

9.1. Scope of Liability.  Notwithstanding any other provision         
of the Loan Documents, there shall be no recourse against any                   
Affiliate of Borrower, or any of its respective Affiliates,                     
stockholders, partners, officers, directors, employees, or agents               
except for, on or after the Tranche B Funding Date, parlin, for any             
liability to Lender arising in connection with any breach or                    
default under this Agreement except to the extent the same is                   
enforced against and limited to Borrower, Parlin (on and after the              
Tranche B Funding Date), or the Collateral, and Lender shall look               
solely to Borrower, Parlin (on and after the Tranche B Funding                  
Date) and the Collateral in enforcing rights and obligations under              
and in connection with the Loan Documents, provided that (a) the                
foregoing provisions of this Article 9 shall not constitute a                   
waiver, release or discharge of any of the indebtedness, or of any              
of the terms, covenants, conditions, or provisions of this                      
Agreement, the Notes, any other Collateral Document or Loan                     
Document, and the same shall continue until fully paid, discharged,             
observed, or performed; (b) the foregoing provisions of this                    
Article 9 shall not limit or restrict the right of Lender to name               
Borrower or any other Person as a defendant in any action or suit               
for foreclosure or for the exercise of any other remedy under or                
with respect to this Agreement, the Security Agreement or any other             
Loan Document, or for injunction or specific performance, so long               
as no judgment in the nature of a deficiency judgment shall be                  
enforced against any of Borrower's or Parlin's respective                       
Affiliates, stockholders, partners, officers, directors, employers              
or agents out of any property, assets or funds other than the                   
Collateral; (c) the foregoing provisions of this Article 9 shall                
not in any way limit or restrict any right or remedy of Lender (or              
any assignee or beneficiary thereof or successor thereto) with                  
respect to, and all of such Persons shall remain fully liable to                
the extent that it would otherwise be liable for its own actions                
with respect to, any fraud, gross negligence or willful                         
misrepresentation, or misappropriation of Project Revenues or any               
other earnings, revenues, rents, issues, profits or proceeds from               
or of the Collateral that should or would have been paid as                     
provided herein or paid or delivered to Lender (or any assignee or              
beneficiary thereof or successor thereto) towards any payment                   
required under this Agreement or any other Loan Document; (d) the               
foregoing provisions of the Article 9 shall not in any way restrict             
any right or remedy of Lender or its Affiliates (or any assignee or             
beneficiary thereof or successor thereto) with respect to, and all              
of such Persons shall remain fully liable with respect to, the                  
obligations of the Persons described above under the O&M                        
Agreements, to the extent such liability is not expressly limited               
by the terms of the O&M Agreements; and (e) nothing contained                   
herein shall limit the liability of any Person rendering a legal                
opinion pursuant to this Agreement relating solely to such                      
liability of such Person as may arise under such opinion.  The                  
limitations on recourse set forth in this Article 9 shall survive               
the termination of this Agreement and the full payment and                      
performance of the Obligations of Borrower hereunder and under the              
other Newark Operative Documents.                                               

ARTICLE 10 - MISCELLANEOUS                

10.1.     Addresses.                                                  

Any communications between the parties hereto or notices              
provided herein to be given may be given to the following                       
addresses:                                                                      

If to Lender:       Stewart & Stevenson Services, Inc.                
16415 Jacinto Port            
Houston, TX 77015             
   Attention:  David Herberger, Esq.

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If to Borrower:     O'Brien (Newark) Cogeneration, Inc.               
St. James Place at 8th Street 
Philadelphia, PA 19106        
       Attention:  Joel Cooperman, President

All notices or other communications required or permitted to          
be given hereunder shall be in writing and shall be considered as               
properly given (a) if delivered in person, (b) if sent by overnight             
delivery service (including Federal Express, ETA, Emery, Purolator,             
DHL, Airborne and other similar overnight delivery services),                   
(c) in the event overnight delivery services are not readily                    
available, if mailed by first class United States Mail, postage                 
prepaid, registered or certified with return receipt requested or               
(d) if sent by prepaid telegram, or by telecopy confirmed by                    
telephone.  Notice so given shall be effective upon receipt by the              
addressee, except that communication or notice so transmitted by                
telecopy or other direct written electronic means shall be deemed               
to have been validly and effectively given on the day (if a Banking             
Day and, if not, on the next following Banking Day) on which it is              
transmitted if transmitted before 4 p.m., recipient's time, and if              
transmitted after that time, on the next following Banking Day;                 
provided, however, that if any notice is tendered to an addressee               
and the delivery thereof is refused by such addressee, such notice              
shall be effective upon such tender.  Any party shall have the                  
right to change its address for notice hereunder to any other                   
location within the continental United States by giving of thirty               
(30) days' notice to the other parties in the manner set forth                  
hereinabove.                                                                    

10.2.     Additional Security; Lender's Right to Set-Off.  Any        
deposits or other sums at any time credited or due from Lender and              
any Distributions, securities or other property of Borrower in the              
possession of Lender (other than such property as is in the                     
possession of Lender or its Affiliates solely in its capacity as a              
party to any of the O&M Agreements) may at all times be treated as              
collateral security for the payment of the Loan and the Note and                
all other obligations of Borrower to Lender under this Agreement                
and the other Loan Documents, and the Borrower hereby pledges to                
Lender and grants Lender a security interest in and to all such                 
deposits, sums, securities or other property.  Regardless of the                
adequacy of any other Collateral, Lender may execute or realize on              
the security interest in any such deposits or other sums credited               
by or due from Lender to Borrower, may apply any such deposits or               
other sums to or set them off against Borrower's obligations to                 
Lender under the Note and this Agreement at any time after the                  
occurrence and during the continuance of any Event of Default.                  

10.3.     Delay and Waivers.  No delay or omission to exercise        
any right, power or remedy accruing to Lender upon the occurrence               
of any Event of Default or Inchoate Default or any breach or                    
default of the Borrower under this Agreement or any other Loan                  
Document shall impair any such right, power or remedy of Lender,                
nor shall it be construed to be a waiver of any such breach or                  
default, or an acquiescence therein, or of or in any similar breach             
or default thereafter occurring, nor shall any waiver of any single             
Event of Default, Inchoate Default or other breach or default be                
deemed a waiver of any other Event of Default, Inchoate Default or              
other breach or default theretofore or thereafter occurring.  Any               
waiver, permit, consent or approval of any kind or character on the             
part of Lender of any Event of Default, Inchoate Default or other               
breach or default under this Agreement or any other Loan Document,              
or any waiver on the part of Lender of any provision or condition               
of this Agreement or any other Loan Document, must be in writing                
and shall be effective only to the extent in such writing                       
specifically set forth.  All remedies, either under this Agreement              
or any other Loan Document or by law or otherwise afforded Lender,              
shall be cumulative and not alternative.                                        

10.4.     Costs, Expenses and Attorneys' Fees; Commitment             
Letter Fees, Etc.  Borrower will pay to Lender fifty percent (50%)              
of Lender's reasonable costs and expenses in connection with the                
preparation, negotiation, and closing of this Agreement and the                 
documents contemplated hereby, including the reasonable fees,                   
expenses and disbursements of Latham & Watkins, and the travel and              
out-of-pocket costs incurred by Lender.  Borrower will reimburse                
Lender for all costs and expenses, including reasonable attorneys'              
fees, expended or incurred by Lender in enforcing this Agreement or             
the other Loan Documents in connection with an Event of Default or              
Inchoate Default, in actions for declaratory relief in any way                  
related to this Agreement or in collecting any sum which becomes                
due lender on the Note or under the Loan Documents.                             

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10.5.     Entire Agreement.  This Agreement and any agreement,        
document or instrument attached hereto or referred to herein                    
integrate all the terms and conditions mentioned herein or                      
incidental hereto and supersede all oral negotiations and prior                 
writings in respect to the subject matter hereof.  In the event of              
any conflict between the terms, conditions and provisions of this               
Agreement and any such agreement, document or instrument, the                   
terms, conditions and provisions of this Agreement shall prevail.               
This Agreement and the other Loan Documents may only be amended or              
modified by an instrument in writing signed by Borrower and Lender.             

10.6.     Governing Law.  This Agreement, and any instrument          
or agreement required hereunder (to the extent not expressly                    
provided for therein), shall be governed by, and construed under,               
the laws of the State of New York.                                              

10.7.     Severability.  In case any one or more of the               
provisions contained in this Agreement should be invalid, illegal               
or unenforceable in any respect, the validity, legality and                     
enforceability of the remaining provisions shall not in any way be              
affected or impaired thereby.                                                   

10.8.     Headings.  Paragraph headings have been inserted in         
this Agreement as a matter of convenience for reference only and it             
is agreed that such paragraph headings are not a part of this                   
Agreement and shall not be used in the interpretation of any                    
provision of this Agreement.                                                    

10.9.     Accounting Terms.  All accounting terms not                 
specifically defined herein shall be construed in accordance with               
GAAP and practices consistent with those applied in the preparation             
of the financial statements submitted by Borrower to Lender, and                
all financial data submitted pursuant to this Agreement shall be                
prepared in accordance with such principles and practices.                      

10.10.    Additional Financing.  The parties hereto                   
acknowledge that Lender has made no agreement or commitment to                  
provide any financing except as set forth herein.                               

10.11.    No Partnership, Etc.  Lender and Borrower intend            
that the relationship between them shall be solely that of creditor             
and debtor.  Nothing contained in this Agreement, the Note or in                
any of the other Loan Documents shall be deemed or construed to                 
create a partnership, tenancy-in-common, joint tenancy, joint                   
venture or co-ownership by or between lender and Borrower or any                
other Person.  Lender shall not be in any way responsible or liable             
for the debts, losses, obligations or duties of Borrower or any                 
other Person with respect to the Projects or otherwise.  All                    
obligations to pay real property or other taxes, assessments,                   
insurance premiums, and all other fees and charges arising from the             
ownership, operation or occupancy of the Projects and to perform                
all obligations under any agreements and contracts relating to the              
Projects shall be the sole responsibility of Borrower.                          

10.12.    No Setoff by Borrower.  Borrower and Lender (and/or         
certain of Lender's Affiliates) are party to the Newark O&M                     
Contract, and Borrower's Affiliates are party, with Lender (and/or              
certain of Lender's Affiliates), to the Parlin O&M Contract and                 
Artesia O&M Contract.  Notwithstanding any dispute or claims for                
payment, performance, or otherwise, between Borrower and/or its                 
Affiliates and/or Lender and/or its Affiliates with respect to the              
O&M Contracts, Borrower shall have no right of setoff with respect              
to Borrower's obligations under this Agreement and/or such                      
Contracts, and Borrower hereby waives for itself and its                        
Affiliates, to the extent permitted under applicable law, any and               
all such rights of setoff.                                                      

10.13.    Security Agreements.  Reference is hereby made to           
the Security Agreements for the provisions, among others, relating              
to the nature and extent of the security provided thereunder, the               
rights, duties and obligations of Borrower and the rights of Lender             
with respect to such security.                                                  

10.14.    Limitation on Liability.  No claim shall be made by         
Borrower, its Affiliates against Lender or any of its Affiliates,               
directors, employees, attorneys or agents for any special,                      
indirect, consequential or punitive damages in respect of any                   
breach or wrongful conduct (whether or not the claim therefor is                
based on contract, tort or duly imposed by law), in connection                  

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with, arising out of or in any way related to the transactions                  
contemplated by this Agreement or the other Newark Operative                    
Documents and Parlin Operative Documents or any act or omission or              
event occurring in connection therewith; and Borrower hereby                    
waives, releases and agrees not to sue upon any such claim for any              
such damages, whether or not accrued and whether or not known or                
suspect to exist in its favor; provided, however, that nothing in               
this Section 10.14 shall limit or restrict Borrower's rights, if                
any, to recover consequential damages under the O&M Agreements                  
against the parties thereto, to the extent Borrower is so permitted             
pursuant to the express terms of such agreements.                               

10.15.    Waiver of Jury Trial.  LENDER AND BORROWER HEREBY           
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY             
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,              
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR              
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OR CONDUCT, COURSE OF                    
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF                  
LENDER OR THE BORROWER.  THIS PROVISION IS A MATERIAL INDUCEMENT                
FOR LENDER TO ENTER INTO THIS AGREEMENT.                                        

10.16.    Consent to Jurisdiction.  Lender and Borrower agree         
that any legal action or proceeding by or against Borrower or with              
respect to or arising out of this Agreement, the Note, or any other             
Loan Document shall be brought in the courts of the State of New                
York in and for the County of New York, or of the United States of              
America for the Southern District of New York, as Lender may elect.             
By execution and delivery of the Agreement, Lender and Borrower                 
accept, for themselves and in respect of their property, generally              
and unconditionally, the jurisdiction of the aforesaid courts.                  
Lender and Borrower irrevocably consent to the service of process               
out of any of the aforementioned courts in any such action or                   
proceeding by the mailing of copies thereof by registered or                    
certified airmail, postage prepaid, to Lender or the Borrower, as               
the case may be, at their respective addresses for notices as                   
specified herein and that such service shall be effective five (5)              
Banking Days after such mailing.  Nothing herein shall affect the               
right to serve process in any other manner permitted by law or the              
right of Lender to bring legal action or proceedings in any other               
competent jurisdiction.  Notwithstanding the foregoing, service of              
process shall not be deemed mailed to Lender until a copy of all                
matters to be served have been mailed to Latham & Watkins, 505                  
Montgomery Street, Suite 1900, San Francisco, California 94111,                 
Attn:  Tim Flato or such other Person as Lender may hereafter                   
designate by notice given pursuant to Section 10.1.  Lender and the             
Borrower further agree that the aforesaid courts of the State of                
New York and of the United States of America shall have exclusive               
jurisdiction with respect to any claim or counterclaim of the                   
Borrower based upon the assertion that the rate of interest charged             
by Lender on or under this Agreement, the Loan and/or the other                 
Loan Documents is usurious.  Lender and the Borrower hereby waive               
any right to stay or dismiss any action or proceeding under or in               
connection with any or all of the Project, this Agreement or any                
other Loan Document brought before the foregoing courts on the                  
basis of forum non-conveniens.                                                  

10.17.    Usury.  Nothing contained in this Agreement or the          
Note shall be deemed to require the payment of interest or other                
charges by the Borrower or any other Person in excess of the amount             
which Lender may lawfully charge under any applicable usury laws.               
In the event that Lender shall collect moneys which are deemed to               
constitute interest which would increase the effective interest                 
rate to a rate in excess of that permitted to be charged by                     
applicable law, all such sums deemed to constitute interest in                  
excess of the legal rate shall, upon such determination, at the                 
option of the holder of the Notes, be returned to Borrower or                   
credited against the principal balance of the Notes then                        
outstanding.                                                                    

10.18.    Successors and Assigns.  The provisions of this             
Agreement shall be binding upon and inure to the benefit of the                 
parties hereto and their respective successors and assigns.                     
Borrower may not assign or otherwise transfer any of its rights                 
under this Agreement without the prior written consent of Lender                
which may be given or withheld in Lender's sole discretion.  Any                
assignment or participation by Lender hereunder shall be subject to             
the Consent and Subordination Agreement.                                        

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10.19.    Counterparts.  This Agreement may be executed in one        
or more duplicate counterparts and when signed by all of the                    
parties listed below shall constitute a single binding agreement.               

IN WITNESS WHEREOF, the parties have caused this Subordinated         
Loan Agreement to be duly executed by their officers or partners                
thereunto duly authorized as of the day and year first above                    
written.                                                                        

                          O'BRIEN NEWARK COGENERATION, INC., a
          Delaware corporation

By:/s/    
                           -------------------------------------
Name:     
Title:    

                           STEWART & STEVENSON SERVICES, INC., a
           Texas corporation

By:/s/    
                            --------------------------------------
Name:     
Title:    

By:/s/    
                            --------------------------------------
Name:     
Title:    

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TABLE OF CONTENTS               

                                              Page

ARTICLE 1  DEFINITIONS . . . . . . . . . . . . . . . . . . . . .1               
1.1. Definitions. . . . . . . . . . . . . . . . . . . . . .1          
1.2. Rules of Interpretation. . . . . . . . . . . . . . . .1          

ARTICLE 2  THE LOAN FACILITY . . . . . . . . . . . . . . . . . .1               
2.1. Loan Facility. . . . . . . . . . . . . . . . . . . . .1          
2.2. Other Payment Terms. . . . . . . . . . . . . . . . . .3          
2.3. Security.. . . . . . . . . . . . . . . . . . . . . . .4          

ARTICLE 3  CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . .5               
3.1. Conditions Precedent to the Closing Date . . . . . . .5          
3.2. Conditions Precedent to Tranche B Loan.. . . . . . . .7          
3.3. Conditions Precedent to Each Loan. . . . . . . . . . .9          

ARTICLE 4  REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . 10               
4.1. Organization . . . . . . . . . . . . . . . . . . . . 10          
4.2. Authorization: No Conflict . . . . . . . . . . . . . 10          
4.3. Enforceability . . . . . . . . . . . . . . . . . . . 10          
4.4. ERISA. . . . . . . . . . . . . . . . . . . . . . . . 10          
4.5. Taxes. . . . . . . . . . . . . . . . . . . . . . . . 11          
4.6. Business, Debt, Contracts. Etc . . . . . . . . . . . 11          
4.7. Investment Company, Holding Company and Power                    
Acts . . . . . . . . . . . . . . . . . . . . . . . . 11     
4.8. Governmental Regulation. . . . . . . . . . . . . . . 11          
4.9. Financial Statement. . . . . . . . . . . . . . . . . 11          
4.10.     Regulation Etc. . . . . . . . . . . . . . . . . 11          
4.11.     Partnerships and Joint Ventures . . . . . . . . 11          
4.12.     Newark Project Document . . . . . . . . . . . . 11          
4.13.     Existing Default. . . . . . . . . . . . . . . . 12          
4.14.     Senior Loan Default . . . . . . . . . . . . . . 12          
4.15.     Possession of Franchises, Licenses, Etc.. . . . 12          
4.16.     Offices, Location of Collateral . . . . . . . . 12          
4.17.     Adverse Change. . . . . . . . . . . . . . . . . 12          
4.18.     Hazardous Substance . . . . . . . . . . . . . . 13          
4.19.     Litigation. . . . . . . . . . . . . . . . . . . 13          
4.20.     Permits . . . . . . . . . . . . . . . . . . . . 13          
4.21.     Title and Liens . . . . . . . . . . . . . . . . 14          
4.22.     Utilities . . . . . . . . . . . . . . . . . . . 14          
4.23.     Qualifying Facility . . . . . . . . . . . . . . 14          
4.24.     Labor Disputes and Acts of God. . . . . . . . . 14          
4.25.     Disclosure. . . . . . . . . . . . . . . . . . . 14          
4.26.     Collateral. . . . . . . . . . . . . . . . . . . 14          
4.27.     Trademarks. . . . . . . . . . . . . . . . . . . 14          

ARTICLE 5  COVENANTS OF THE BORROWER . . . . . . . . . . . . . 15               
5.1. Application of Revenues: Use of Proceeds . . . . . . 15          
5.2. Payment. . . . . . . . . . . . . . . . . . . . . . . 15          
5.3. Notices. . . . . . . . . . . . . . . . . . . . . . . 16          

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5.4. Financial Statements, Report, Etc. . . . . . . . . . 17          
5.5. Cooperation. . . . . . . . . . . . . . . . . . . . . 17          
5.6. Existence, Conduct of Business, Properties, Etc. . . 17          
5.7. Obligations. . . . . . . . . . . . . . . . . . . . . 17          
5.8. Damage and Cancellation Payments . . . . . . . . . . 17          
5.9. Books, Records, Access Thereto . . . . . . . . . . . 17          
5.10. Qualifying Facility . . . . . . . . . . . . . . . . 18          
5.11. Preservation of Rights, Further Assurances,                     
Etc . . . . . . . . . . . . . . . . . . . . . . . . 18    
5.12. Taxes. Other Government Charges and Utility                     
Charges . . . . . . . . . . . . . . . . . . . . . . 18    
5.13. Compliance with laws, Instrument, Etc.  . . . . . . 18          
5.14. Compliance with Terms of Newark Operative                       
Documents, Etc. . . . . . . . . . . . . . . . . . . 19    
5.15. Maintenance of Insurance. . . . . . . . . . . . . . 19          
5.16. Warranty of Title . . . . . . . . . . . . . . . . . 19          
5.17. Event of Eminent Domain . . . . . . . . . . . . . . 19          
5.18. Indemnification . . . . . . . . . . . . . . . . . . 19          
5.19. ERISA . . . . . . . . . . . . . . . . . . . . . . . 21          

ARTICLE 6  NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . 21               
6.1. Continent Liabilities. . . . . . . . . . . . . . . . 21          
6.2. Limitations on Liens . . . . . . . . . . . . . . . . 21          
6.3. Indebtedness . . . . . . . . . . . . . . . . . . . . 21          
6.4. Sale or Lease of Assets. . . . . . . . . . . . . . . 21          
6.5. Changes. . . . . . . . . . . . . . . . . . . . . . . 22          
6.6. Distributions. . . . . . . . . . . . . . . . . . . . 22          
6.7. Investments. . . . . . . . . . . . . . . . . . . . . 22          
6.8. Transactions with Affiliates . . . . . . . . . . . . 22          
6.9. Regulations. . . . . . . . . . . . . . . . . . . . . 22          
6.10. Partnerships. . . . . . . . . . . . . . . . . . . . 22          
6.11. Dissolution . . . . . . . . . . . . . . . . . . . . 22          
6.12. Amendments. . . . . . . . . . . . . . . . . . . . . 22          
6.13. Compliance with Newark Operative Documents. . . . . 22          
6.14. Name and Location; Fiscal Year. . . . . . . . . . . 22          
6.15. Use of Newark Project . . . . . . . . . . . . . . . 22          
6.16. Assignment. . . . . . . . . . . . . . . . . . . . . 22          
6.17. Transfer of Interests . . . . . . . . . . . . . . . 22          
6.18. Abandonment of Newark Project . . . . . . . . . . . 23          
6.19. Hazardous Substance . . . . . . . . . . . . . . . . 23          
6.20. ERISA . . . . . . . . . . . . . . . . . . . . . . . 23          
6.21. Modification of Newark Senior Loan Agreement. . . . 23          

ARTICLE 7  APPLICATION OF FUNDS. . . . . . . . . . . . . . . . 23               
7.1. Application of Project Revenues. . . . . . . . . . . 23          
7.2. Application of Insurance Proceeds. . . . . . . . . . 23          
7.3. Application of Eminent Domain Proceeds . . . . . . . 24          

ARTICLE 8  EVENTS OF DEFAULT: REMEDIES . . . . . . . . . . . . 24               

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A.   Events of Default . . . . . . . . . . . . . . . . . . . . 24               
8.1. Failure to Make Payment. . . . . . . . . . . . . . . 24          
8.2. Warranties Untrue. . . . . . . . . . . . . . . . . . 24          
8.3. Judgments. . . . . . . . . . . . . . . . . . . . . . 24          
8.4. Misstatements; Omissions . . . . . . . . . . . . . . 24          
8.5. Bankruptcy; Insolvency . . . . . . . . . . . . . . . 24          
8.6. Cross Default. . . . . . . . . . . . . . . . . . . . 25          
8.7. ERISA. . . . . . . . . . . . . . . . . . . . . . . . 25          
8.8. Breach of Newark Project Documents . . . . . . . . . 25          
8.9. Breach of Terms of Agreement . . . . . . . . . . . . 25          
8.10. Loss of Qualifying Facility Status. . . . . . . . . 26          
8.11. Security. . . . . . . . . . . . . . . . . . . . . . 26          
8.12. Breach of Parlin Project Documents. . . . . . . . . 26          
8.13. Breach of Senior Loan Documents . . . . . . . . . . 27          
B.   Remedies. . . . . . . . . . . . . . . . . . . . . . . . . 27               
8.14. No Further Loan . . . . . . . . . . . . . . . . . . 27          
8.15. Cure. . . . . . . . . . . . . . . . . . . . . . . . 27          
8.16. Remedies Under Loan Documents . . . . . . . . . . . 27          

ARTICLE 9 - SCOPE OF LIABILITY . . . . . . . . . . . . . . . . 27               
9.1. Scope of Liability . . . . . . . . . . . . . . . . . 27          

ARTICLE 10 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . 28               
10.1. Addresses . . . . . . . . . . . . . . . . . . . . . 28          
10.2. Additional Security; Lender's Right to Set-                     
Off . . . . . . . . . . . . . . . . . . . . . . . . 29    
10.3. Delay and Waivers . . . . . . . . . . . . . . . . . 29          
10.4. Costs, Expenses and Attorneys' Fees;                            
Commitment Letter Fees, Etc.  . . . . . . . . . . . 29    
10.5. Entire Agreement. . . . . . . . . . . . . . . . . . 29          
10.6. Governing Law . . . . . . . . . . . . . . . . . . . 29          
10.7. Severability. . . . . . . . . . . . . . . . . . . . 29          
10.8. Headings. . . . . . . . . . . . . . . . . . . . . . 29          
10.9. Accounting Terms. . . . . . . . . . . . . . . . . . 30          
10.10. Additional Financing . . . . . . . . . . . . . . . 30          
10.11. No Partnership, Etc. . . . . . . . . . . . . . . . 30          
10.12. No Setoff by Borrower  . . . . . . . . . . . . . . 30          
10.13. Security Agreements  . . . . . . . . . . . . . . . 30          
10.14. Limitation on Liability  . . . . . . . . . . . . . 30          
10.15. Waiver of Jury Trial . . . . . . . . . . . . . . . 30          
10.16. Consent to Jurisdiction  . . . . . . . . . . . . . 30          
10.17. Usury  . . . . . . . . . . . . . . . . . . . . . . 31          
10.18. Successors and Assigns . . . . . . . . . . . . . . 31          
10.19. Counterparts . . . . . . . . . . . . . . . . . . . 31          

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EXHIBITS                

A    DEFINITIONS                                                                

B    FORM OF NOTE                                                               

C-1  AMORTIZATION SCHEDULE                                                      

C-2  ALTERNATE AMORTIZATION SCHEDULE                                            

D    SECURITY AGREEMENT                                                         

E-1  DISTRIBUTION AGREEMENT                                                     

E-2  LOCK BOX AGREEMENT                                                         

F-1  OPINION OF COUNSEL TO BORROWER                                             

F-2  OPINION OF COUNSEL TO PARLIN                                               

G-1  BORROWER CLOSING CERTIFICATE                                               

G-2  PARLIN CLOSING CERTIFICATE                                                 

H    HAZARDOUS SUBSTANCES                                                       

I    PENDING LITIGATION                                                         

J    PERMITS                                                                    

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
Filed on:		10/13/94
For Period End:		6/30/94							NT 10-K
		3/11/94		1		2
		12/25/92		18
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