-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, HnZ5FbU8HBNhtFhKNGWElQistXKr/9hxN2MTNcGXNcVp/ZmlnkOtmGVIxQ1W6crc C1y7Bz4pYpRbiw5Vb+0lNQ== 0000912057-94-002435.txt : 19940802 0000912057-94-002435.hdr.sgml : 19940802 ACCESSION NUMBER: 0000912057-94-002435 CONFORMED SUBMISSION TYPE: 35-CERT PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19940801 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EASTERN UTILITIES ASSOCIATES CENTRAL INDEX KEY: 0000031224 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 041271872 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 35-CERT SEC ACT: 1935 Act SEC FILE NUMBER: 070-08255 FILM NUMBER: 94541078 BUSINESS ADDRESS: STREET 1: ONE LIBERTY SQ STREET 2: P O BOX 2333 CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6173579590 35-CERT 1 CERTIFICATE OF NOTIFICATION File No. 70-8373 SECURITIES AND EXCHANGE COMMISSION 450 Fifth Street, N.W. Washington, D.C. 20549 CERTIFICATION OF NOTIFICATION (RULE 24) TO THE SECURITIES AND EXCHANGE COMMISSION by OCEAN STATE POWER OCEAN STATE POWER II P.O. Box 561 P.O. Box 561 Harrisville, RI 02830 Harrisville, RI 02830 (Names of companies filing this statement and addresses of principal executive offices) EASTERN UTILITIES ASSOCIATES and NEW ENGLAND ELECTRIC SYSTEM (Names of top registered holding company parents) Jacek Makowski Kenneth M. Simon, Esquire Chairman, Management Committees Emanuel Faust, Jr., Esquire Ocean State Power Laura J.V. Szabo, Esquire Ocean State Power II Dickstein, Shapiro & Morin, L.L.P. P.O. Box 561 2101 L Street, N.W. Harrisvile, R.I. 02830 Washington, D.C. 20037 (Names and addresses of agents for service) It is hereby certified that the transaction detailed below, which was described in the Application/Declaration on Form U-1, as amended, and the Order of the Securities and Exchange Commission dated July 11, 1994 (Commission's File No. 70-8373) with respect thereto, has been carried out in accordance with the terms and conditions of and for the purposes represented in said Application/Declaration and the Order of the Commission. 1. FINANCING ARRANGEMENTS. On July 21, 1994, Ocean State Power, a Rhode Island general partnership ("OSP") and Ocean State Power II, a Rhode Island general partnership ("OSP II"; and OSP and OSP II collectively, the "Applicants"), entered into an agreement (effective as of July 20, 1994) with the Bank of New York ("BNY") to issue one or more revolver notes ("Revolver Notes") in an aggregate principal amount of $25 million with maturities not in excess of seven (7) years (including reborrowings, renewals, replacements and extensions) to evidence debt incurred under a revolving line of credit (the "Secured Credit Agreement"). The Secured Credit Agreement, including Schedules and Exhibits thereto, is set forth in Exhibit A hereto. 2. ISSUANCE OF REVOLVER NOTES. On July 21, 1994, the Applicants issued Revolver Notes (effective as of July 20, 1994) in the aggregate amount of $15,000,000 under the terms and conditions of the Secured Credit Agreement payable to BNY. The Revolver Notes will be used to fund capital expenditures, pay transaction costs and other costs connected with the financing of the Revolver Notes, and provide liquidity in general. Copies of the Revolver Notes are attached as Exhibit B hereto. To secure the Applicants joint and several obligations to BNY under the Revolver Notes, on July 21, 1994, BNY entered into a supplement ("Guarantor Security Agreement Supplement") (effective as of July 20, 1994) to the Guarantor Security Agreement dated as of October 19, 1992, as amended, among the Applicants and State Street Bank and Trust Company, as collateral agent (the "Guarantor Security Agreement"). The Guarantor Security Agreement Supplement entitles BNY to the benefits of the Guarantor Security Agreement and to share ratably and pari passu in the collateral subject to the Guarantor Security Agreement. A copy of the Guarantor Security Agreement Supplement is attached hereto as Exhibit C.. 3. The required "Past-Tense" Opinion of counsel is attached hereto as Exhibit D. SIGNATURES Pursuant to the requirements of the Public Utility Holding Company Act of 1935, each of the undersigned has duly caused this Certificate of Notification to be signed on their behalf by the undersigned thereunto duly authorized. Dated this 1st day of August, 1994. OCEAN STATE POWER By JMC Ocean State Corporation, a general partner By:/s/ ------------------------------- Name: Carlos A. Riva Title: President OCEAN STATE POWER II By JMC Ocean State Corporation, a general partner By:/s/ ------------------------------- Name: Carlos A. Riva Title: President EXHIBIT A EXECUTION COPY --------- - -------------------------------------------------------------------------------- $15,000,000 SECURED CREDIT AGREEMENT Dated as of July 20, 1994 Among OCEAN STATE POWER, OCEAN STATE POWER II and THE BANK OF NEW YORK - -------------------------------------------------------------------------------- THIS PAGE NOT FOR ATTORNEY CODED FOR TOC Schedule 1.02 NOTICE OF BORROWING Schedule 1.03(c)(iv) NOTICE OF CONVERSION OR CONTINUATION Schedule 1.05 NOTICE OF PREPAYMENT Schedule 2.01(a)(v) OPINION OF REVOLVER BORROWER'S COUNSEL Schedule 2.01(a)(vi) OFFICERS' CERTIFICATE OF REVOLVER BORROWER Schedule 2.01(a)(ix) OFFICERS' CERTIFICATE OF PARTNER Schedule 3.06 SCHEDULE OF MATERIAL LITIGATION Schedule 3.10 SCHEDULE OF FACILITY PERMITS Schedule 3.11 SCHEDULE OF EXISTING INDEBTEDNESS, LIENS, INVESTMENTS AND GUARANTIES Schedule 3.15 SCHEDULE OF ENVIRONMENTAL COMPLIANCE Schedule 3.17 SCHEDULE OF PARTNERSHIP INTERESTS Schedule 3.24 SCHEDULE OF FACILITY CONTRACTS Schedule 7.09(a) NOTICE OF ASSIGNMENT Exhibit A-1 DOMESTIC NOTE Exhibit A-2 EURODOLLAR NOTE TABLE OF CONTENTS PAGE 1 CREDIT FACILITY............................ 1 1.01. Commitment to Lend............................................ 1 1.02. Manner of Borrowing........................................... 1 1.03. Interest...................................................... 2 (a) Rates..................................................... 2 (b) Payment................................................... 2 (c) Conversion and Continuation............................... 2 (d) Maximum Interest Rate..................................... 3 1.04. Repayment..................................................... 3 1.05. Prepayments................................................... 3 1.06. Limitation on Types of Loans.................................. 4 1.07. Reduction of Commitment....................................... 4 1.08. Fees.......................................................... 4 1.09. Computation of Interest and Fees.............................. 4 1.10. Evidence of Indebtedness...................................... 4 1.11. Payments by the Revolver Borrowers............................ 5 (a) Time, Place and Manner.................................... 5 (b) No Reductions............................................. 5 (c) Extension of Payment Dates................................ 5 1.12. Taxes......................................................... 5 (a) Taxes Payable by the Revolver Borrower.................... 5 (b) Taxes Payable by the Bank................................. 6 2 CONDITIONS TO LOANS.......................... 6 2.01. Conditions to Initial Loan.................................... 6 2.02. Conditions to Each Loan....................................... 8 3 CERTAIN REPRESENTATIONS AND WARRANTIES................. 8 3.01. Partnership Existence......................................... 9 3.02. Partnership Power and Authorization, Etc...................... 9 3.03. No Legal Bar; No Conflict..................................... 9 3.04. Financial Statements, Etc..................................... 9 3.05. Taxes........................................................ 10 3.06. Litigation, Etc.............................................. 10 3.07. Legal Compliance............................................. 10 3.08. Employee Retirement Income Security Act of 1974. ........... 10 3.09. Disclosure. ................................................ 10 3.10. Consents and Permits. ...................................... 11 3.11. Indebtedness and Liens; No Defaults. ....................... 11 3.12. Investment Company Act. .................................... 12 3.13. Public Utility Holding Company Act; Federal Power Act; Rhode Island General Laws.................................... 12 3.14. Title. ..................................................... 12 3.15. Environmental Compliance. .................................. 12 3.16. Single Purpose Entity. ..................................... 13 3.17. Ownership of Partnership Interests, Etc. .................... 13 3.18. Compliance with Federal Reserve Board Regulations............ 13 3.19. Foreign Assets Control Regulations. ......................... 14 3.20. Power Sale Agreements. ..................................... 14 3.21. Undisclosed Liabilities. ................................... 14 3.22. Intellectual Property. ..................................... 14 3.23. Utilities. ................................................. 15 3.24. Facility Contracts. ........................................ 15 4 CERTAIN COVENANTS.......................... 15 4.01. Partnership Existence. ..................................... 15 4.02. Obligations and Taxes. ..................................... 15 4.03. Financial Statements and Reports. .......................... 16 4.04. Maintenance and Operation of Facility Properties............. 17 4.05. Insurance. ................................................. 18 4.06. Compliance with Laws. ....................................... 18 4.07. Records; Inspection. ....................................... 18 4.08. Governmental Permits. ...................................... 18 4.09. Compliance with Contracts. ................................. 19 4.10. Continuance in Present Business. ............................ 19 4.11. Maintenance of Title. ...................................... 19 4.12. Filings. ................................................... 19 4.13. Indebtedness. .............................................. 19 4.14. Liens. ..................................................... 19 4.15. Guarantees. ................................................ 20 4.16. Sales. ..................................................... 20 4.17. Restricted Payments. ....................................... 20 4.18. Hazardous Materials. ....................................... 20 4.19. Investments. ............................................... 20 4.20. Consolidation or Merger. ................................... 21 4.21. Transactions with Affiliates. .............................. 21 4.22. Business. .................................................. 21 4.23. ERISA. ..................................................... 21 5 DEFAULT............................... 22 5.01. Events of Default; Acceleration. ........................... 22 5.02. Other Remedies. ............................................ 25 6 ADDITIONAL CREDIT FACILITY PROVISIONS................ 26 6.01. Mandatory Suspension and Conversion of Fixed Rate Loans...... 26 6.02. Regulatory Changes........................................... 27 6.03. Capital Requirements......................................... 27 6.04. Funding Losses............................................... 28 6.05. Certain Determinations....................................... 28 6.06. Change of Lending Office..................................... 28 7 MISCELLANEOUS............................ 29 7.01. Notices and Deliveries....................................... 29 (a) Manner of Delivery..................................... 29 (b) Addresses.............................................. 29 (c) Effectiveness.......................................... 31 (d) Reasonable Notice...................................... 31 7.02. Expenses; Indemnification.................................... 31 7.03. Amounts Payable Due Upon Request for Payment................. 33 7.04. Remedies of the Essence...................................... 33 7.05. Rights Cumulative............................................ 33 7.06. Disclosures.................................................. 33 7.07. Amendments; Waivers.......................................... 33 7.08. Amendments; Waivers.......................................... 33 7.09. Assignments and Participations............................... 34 (a) Assignments............................................ 34 (b) Participations......................................... 34 7.10. Governing Law................................................ 35 7.11. Judicial Proceedings; Waiver of Jury Trial................... 35 7.12. LIMITATION OF LIABILITY...................................... 36 7.13. Severability of Provisions................................... 36 7.14. Counterparts................................................. 36 7.15. Survival of Obligations...................................... 36 7.16. Entire Agreement............................................. 36 7.17. Successors and Assigns....................................... 36 8 INTERPRETATION............................ 36 8.01. Defined Terms................................................ 36 8.02. Other Interpretive Provisions................................ 51 8.03. Accounting Matters........................................... 52 8.04. Representations and Warranties............................... 52 8.05. Captions..................................................... 53 8.06. Interpretation of Related Documents.......................... 53 Schedule 1.02 NOTICE OF BORROWING Schedule 1.03(c)(iv) NOTICE OF CONVERSION OR CONTINUATION Schedule 1.05 NOTICE OF PREPAYMENT Schedule 2.01(a)(v) OPINION OF REVOLVER BORROWER'S COUNSEL Schedule 2.01(a)(vi) OFFICERS' CERTIFICATE OF REVOLVER BORROWER Schedule 2.01(a)(ix) OFFICERS' CERTIFICATE OF PARTNER Annex A RESOLUTIONS OF MANAGEMENT COMMITTEE Schedule 3.06 SCHEDULE OF MATERIAL LITIGATION Schedule 3.10 SCHEDULE OF FACILITY PERMITS Schedule 3.11 SCHEDULE OF EXISTING INDEBTEDNESS, LIENS, INVESTMENTS AND GUARANTIES Schedule 3.15 SCHEDULE OF ENVIRONMENTAL COMPLIANCE Schedule 3.17 SCHEDULE OF PARTNERSHIP INTERESTS Schedule 3.24 SCHEDULE OF FACILITY CONTRACTS Schedule 7.09(a) NOTICE OF ASSIGNMENT Exhibit A-1 DOMESTIC NOTE Exhibit A-2 EURODOLLAR NOTE SECURED CREDIT AGREEMENT Dated as of July 20, 1994 OCEAN STATE POWER and OCEAN STATE POWER II, each a Rhode Island general partnership, and THE BANK OF NEW YORK agree as follows (with certain terms used herein being defined in Article 8): ARTICLE 1 CREDIT FACILITY Section 1.01. COMMITMENT TO LEND. Upon the terms and subject to the conditions of this Agreement, the Bank agrees to make, from time to time during the period from and including the Closing Date through but not including the Termination Date, one or more Loans to each Revolver Borrower in an aggregate unpaid principal amount for both Revolver Borrowers not exceeding at any time the Commitment at such time. Subject to Section 1.06 and the other terms and conditions of this Agreement, the Loans made to a Revolver Borrower may, at the option of such Revolver Borrower, be made as, and from time to time continued as or converted into, Base Rate, CD Rate or Eurodollar Rate Loans of any permitted Type, or any combination thereof. The amount of the Commitment on the Closing Date is $15,000,000. Section 1.02. MANNER OF BORROWING. A Revolver Borrower shall give the Bank notice (which shall be irrevocable) no later than 12:00 noon (New York time) on, in the case of Base Rate Loans, the Business Day before the requested date for the making of such Loans, in the case of CD Rate Loans, the second Business Day before the requested date for the making of such loans, and, in the case of Eurodollar Rate Loans, the third Eurodollar Business Day before the requested date for the making of such Loans. Each such notice shall be in the form of SCHEDULE 1.02 and shall specify (a) the requested date for the making of the requested Loans, which shall be, in the case of Domestic Rate Loans, a Business Day and, in the case of Eurodollar Rate Loans, a Eurodollar Business Day, (b) the Type or Types of Loans requested and (c) the amount of each such Type of Loan, the aggregate of which amounts for all Types of Loans requested shall be not less than the lesser of (i) $300,000 and any integral multiple of $100,000 and (ii) the amount of the unused Commitment. Each Loan so requested shall be disbursed by the Bank on the requested date therefor in Dollars in funds immediately available to the applicable Revolver Borrower by credit to an account of such Revolver Borrower at the Bank's Office or in such other manner as may have been specified in the applicable notice and as shall be acceptable to the Bank. Section 1.03. INTEREST. (a) RATES. Each Loan shall bear interest on the outstanding principal amount thereof at a rate per annum equal to (i) so long as it is a Base Rate Loan, the Base Rate as in effect from time to time, (ii) so long as it is a CD Rate Loan, the applicable Adjusted CD Rate plus the applicable CD Rate Margin and (iii) so long as it is a Eurodollar Rate Loan, the applicable Adjusted Eurodollar Rate plus the applicable Eurodollar Rate Margin. Each other amount due and payable under the Loan Documents shall, to the maximum extent permitted by Applicable Law, bear interest at a rate per annum equal to the Base Rate as in effect from time to time. Each Loan (whether or not due) and, to the maximum extent permitted by Applicable Law, each other amount due and payable under the Loan Documents shall bear interest from the occurrence and during the continuation of a Default at a rate per annum equal to the applicable Post-Default Rate. (b) PAYMENT. Interest shall be payable, (i) in the case of Base Rate Loans, on each Interest Payment Date, (ii) in the case of CD and Eurodollar Rate Loans, on the last day of each applicable Interest Period (and, in the case of a CD or Eurodollar Rate Loan having an Interest Period longer than 90 days or three months, respectively, at intervals of 90 days and three months, respectively, after the first day of such Interest Period), (iii) in the case of any Loan, when such Loan shall be due (whether at maturity, by reason of notice of prepayment or acceleration or otherwise) or converted, but only to the extent then accrued on the amount then so due or converted, and (iv) in the case of all other amounts due and payable under the Loan Documents, on demand. Interest at the Post-Default Rate shall be payable on demand. (c) CONVERSION AND CONTINUATION. (i) All or any part of the principal amount of Loans of any Type may, on any Business Day, be converted into any other Type or Types of Loans, except that (A) Fixed Rate Loans may be converted only on the last day of an applicable Interest Period and (B) Domestic Rate Loans may be converted into Eurodollar Rate Loans only on a Eurodollar Business Day. (ii) Each Base Rate Loan shall continue as a Base Rate Loan unless and until such Loan is converted into a Loan of another Type. Each Fixed Rate Loan of any Type shall continue as a Loan of such Type until the end of the then current Interest Period therefor, at which time it shall be automatically converted into a Base Rate Loan unless the applicable Revolver Borrower shall have given the Bank notice in accordance with Section 1.03(c)(iv) requesting either that such Loan continue as a Loan of such Type for another Interest Period or that such Loan be converted into a Loan of another Type at the end of such Interest Period. -2- (iii) Notwithstanding anything to the contrary contained in Section 1.03(c)(i) or (ii), during a Default, the Bank may notify the Revolver Borrowers that Loans may only be converted into or continued as Loans of certain specified Types and, thereafter, until no Default shall continue to exist, Loans may not be converted into or continued as Loans of any Type other than one or more of such specified Types. (iv) A Revolver Borrower shall give the Bank notice (which shall be irrevocable) of each conversion of a Loan or continuation of a Fixed Rate Loan no later than 12:00 noon (New York time) on, in the case of a conversion into or a continuation of a Domestic Rate Loan, the Business Day, and, in the case of a conversion into or continuation of a Eurodollar Rate Loan, the third Eurodollar Business Day, before the requested date of such conversion or continuation. Each notice of conversion or continuation shall be in the form of SCHEDULE 1.03(C)(IV) and shall specify (A) the requested date of such conversion or continuation, (B) the amount and Type and, in the case of Fixed Rate Loans, the last day of the applicable Interest Period of each Loan to be converted or continued and (C) the amount and Type or Types of Loans into which such Loans are to be converted or as which such Loans are to be continued. (d) MAXIMUM INTEREST RATE. Nothing contained in the Loan Documents shall require either Revolver Borrower at any time to pay interest at a rate exceeding the Maximum Permissible Rate. If interest payable by a Revolver Borrower on any date would exceed the maximum amount permitted by the Maximum Permissible Rate, such interest payment shall automatically be reduced to such maximum permitted amount, and interest for any subsequent period, to the extent less than the maximum amount permitted for such period by the Maximum Permissible Rate, shall be increased by the unpaid amount of such reduction. Any interest actually received for any period in excess of such maximum amount permitted for such period shall be deemed to have been applied as a prepayment of the Loans. Section 1.04. REPAYMENT. The Loans shall mature and become due and payable, and shall be repaid by the Revolver Borrowers, in full on the Termination Date. Section 1.05. PREPAYMENTS. The Revolver Borrowers may, at any time and from time to time, prepay the Loans in whole or in part, without premium or penalty (but subject to Section 6.04), except that any partial prepayment shall be in an aggregate principal amount of at least $100,000 and any integral multiple of $100,000. A Revolver Borrower shall give the Bank notice of each prepayment no later than 12:00 noon (New York time) on, in the case of a prepayment of Domestic Rate Loans, the Business Day, and, in the case of a prepayment of Eurodollar Rate Loans, the third Eurodollar Business Day, before the date of such prepayment. Each such notice of prepayment shall be in the form of SCHEDULE 1.05 and shall specify (i) the date such prepayment -3- is to be made and (ii) the amount and Type and, in the case of Fixed Rate Loans, the last day of the applicable Interest Period of each Loan to be prepaid. Amounts to be prepaid shall irrevocably be due and payable on the date specified in the applicable notice of prepayment, together with interest thereon as provided in Section 1.03(b). Section 1.06. LIMITATION ON TYPES OF LOANS. Notwithstanding anything to the contrary contained in this Agreement, the Revolver Borrowers shall borrow, prepay, convert and continue Loans in a manner such that (a) there shall not be, at any one time, more than ten Interest Periods in effect with respect to Fixed Rate Loans of all Types and (b) no payment of a Fixed Rate Loan will have to be made prior to the last day of an applicable Interest Period in order to repay the Loans in the amounts and (subject to Section 1.11(c)) on the date specified in Section 1.04. Section 1.07. REDUCTION OF COMMITMENT. The Revolver Borrowers may reduce the Commitment by giving the Bank notice (which shall be irrevocable) thereof no later than 12:00 noon (New York time) on the fifth Business Day before the requested date of such reduction. Partial reductions of the Commitment shall be in the aggregate amount of $500,000 or integral multiples of $500,000 in excess thereof. Section 1.08. FEES. The Revolver Borrowers shall pay to the Bank a commitment fee on the daily unused amount of the Commitment for each day from and including the Closing Date through but not including the Termination Date at a rate per annum of 0.15%, payable on successive Interest Payment Dates, on the Termination Date and on the date of any reduction of the Commitment (to the extent accrued and unpaid on the amount of the reduction). Section 1.09. COMPUTATION OF INTEREST AND FEES. Interest calculated on the basis of the Adjusted CD Rate or the Adjusted Eurodollar Rate and the commitment fee shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed. Interest calculated on the basis of the Base Rate shall be computed on the basis of a year of 365 or 366 days, as applicable, and paid for the actual number of days elapsed. Interest for any period shall be calculated from and including the first day thereof to but excluding the last day thereof. Section 1.10. EVIDENCE OF INDEBTEDNESS. The Loans and the Revolver Borrowers' obligation to repay the Loans with interest in accordance with the terms of this Agreement shall be evidenced by this Agreement, the records of the Bank and, in the case of Domestic Rate Loans, a single Domestic Note of the Revolver Borrowers and, in the case of Eurodollar Rate Loans, a single Eurodollar Note of the Revolver Borrowers. The records of the Bank shall be prima facie evidence of the Loans and accrued interest thereon and of all payments made in respect thereof. -4- Section 1.11. PAYMENTS BY THE REVOLVER BORROWERS. (a) TIME, PLACE AND MANNER. All payments due to the Bank under the Loan Documents shall be made to the Bank at the Bank's Office or to such other Person or at such other address as the Bank may designate by notice to the Revolver Borrowers. All such payments shall be made for the account of, in the case of payments in respect of Eurodollar Rate Loans, the Eurodollar Lending Office and, in the case of all other payments, the Domestic Lending Office. A payment shall not be deemed to have been made on any day unless such payment has been received by the required Person, at the required place of payment, in Dollars in funds immediately available to such Person at such place, on such day. (b) NO REDUCTIONS. All payments due to the Bank under the Loan Documents, and all other terms, conditions, covenants and agreements to be observed and performed by the Revolver Borrowers thereunder, shall be made, observed or performed by the Revolver Borrowers without any reduction or deduction whatsoever, including any reduction or deduction for any set-off, recoupment, counterclaim (whether sounding in tort, contract or otherwise) or Tax, except for any withholding or deduction for Taxes required to be withheld or deducted under Applicable Law. (c) EXTENSION OF PAYMENT DATES. Whenever any payment to the Bank under the Loan Documents would otherwise be due (except by reason of acceleration) on a day that is not a Business Day, or, in the case of payments of the principal of Eurodollar Rate Loans, a Eurodollar Business Day, such payment shall instead be due on the next succeeding Business or Eurodollar Business Day, as the case may be, unless, in the case of a payment of the principal of a Eurodollar Rate Loan, such extension would cause payment to be due in the next succeeding calendar month, in which case such due date shall be advanced to the next preceding Eurodollar Business Day. If the date any payment under the Loan Documents is due is extended (whether by operation of any Loan Document, Applicable Law or otherwise), such payment shall bear interest for such extended time at the rate of interest applicable hereunder. Section 1.12. TAXES. (a) TAXES PAYABLE BY THE REVOLVER BORROWER. If any Tax is required to be withheld or deducted from, or is otherwise payable by the Revolver Borrowers or either of them in connection with, any payment to the Bank under the Loan Documents, the Revolver Borrowers shall pay to the Bank such additional amounts as may be necessary so that the net amount received by the Bank with respect to such payment, after withholding or deducting all Taxes required to be withheld or deducted, is equal to the full amount payable under the Loan Documents. (b) TAXES PAYABLE BY THE BANK. The Revolver Borrowers shall, promptly upon request by the Bank for the payment thereof, pay to the Bank (i) all Taxes (other than Bank Taxes) payable by the Bank with respect to any payment due to the Bank under the -5- Loan Documents and (ii) all Taxes (including Bank Taxes) payable by the Bank as a result of payments made by the Revolver Borrowers or either of them (whether made to a taxing authority or to the Bank) pursuant to Section 1.12(a) or (b). Section 1.13. JOINT AND SEVERAL LIABILITY OF REVOLVER BORROWERS; NO LIABILITY OF PARTNERS. (a) The Revolver Borrowers shall be jointly and severally liable for all of the obligations of the Revolver Borrowers hereunder, regardless of which Revolver Borrower requested Loans or to which Revolver Borrower Loans were made by the Bank, or any other circumstances. (b) No Partner or other Person (or any officer, employee, servant, controlling Person (other than the Revolver Borrowers), executive, director, agent, authorized representative or affiliate of such person (herein referred to as "Operatives")) shall be personally liable for payments due under the Loan Documents or for the performance of any obligation thereunder, or breach of any representation or warranty made by any Revolver Borrower. The sole recourse of the Bank for satisfaction of the obligations of the Revolver Borrowers under the Loan Documents shall be against the Revolver Borrowers and their respective assets (and not against any assets or property of any such Partner or Person or its Operatives) and to the liens, security interests and remedies provided thereunder. In the event that default occurs in connection with such obligations, no action shall be brought against any such Partner or Person or its Operatives. In the event of foreclosure or other sale of disposition of properties, no judgment for any deficiency upon the obligations thereunder shall be obtainable by the Bank against any such Partner or Person or its Operatives. ARTICLE 2 CONDITIONS TO LOANS Section 2.01. CONDITIONS TO INITIAL LOAN. The obligation of the Bank to make the initial Loan is subject to the following conditions: (a) the Bank shall have received each of the following, in form and substance and, in the case of the materials referred to in subsections (iv) and (viii), certified in a manner satisfactory to it: (i) a duly executed copy of this Agreement; (ii) a Domestic Note and Eurodollar Note, each duly executed by both Revolver Borrowers; (iii) a duly executed Supplement to the Guarantor Security Agreement; -6- (iv) a true and correct copy of each Power Sale Agreement; (v) an opinion of Dickstein, Shapiro & Morin, L.L.P., counsel for the Revolver Borrowers, an opinion of Tillinghast Collins & Graham, counsel to the Revolver Borrowers and an opinion of Roberts, Carroll, Feldstein & Peirce Incorporated, counsel to the Bank, each dated the requested date for the making of such Loan, substantially in the forms of SCHEDULE 2.01(a)(v)-1, 2.01(a)(v)-2 and 2.01(a)(v)-3, respectively; (vi) an Officer's Certificate of each Revolver Borrower, dated the requested date for the making of such Loan, as to the accuracy of the Representations and Warranties, the absence of Defaults and the validity and enforceability of each of the Power Sale Agreements, substantially in the form of SCHEDULE 2.01(a)(vi); (vii) a copy of search reports as of a recent date acceptable to the Bank with respect to UCC financing statements filed against each Revolver Borrower; (viii) copies of the general partnership agreement of each Revolver Borrower and of documents evidencing all necessary partnership action of each Revolver Borrower approving such Revolver Borrower's execution, delivery and performance of the Loan Documents and the performance of the transactions contemplated thereby; (ix) an Officer's Certificate of the general partner of each Revolver Borrower executing the Agreement on behalf of such Revolver Borrower, dated the requested date for the making of such Loan, substantially in the form of SCHEDULE 2.01(a)(ix), to which shall be attached copies of the resolutions referred to in such certificate; and (x) such additional materials as the Bank may have requested pursuant to Section 4.03(j); (b) copies, certified to the Bank's satisfaction to be true and correct, of each of the Facility Contracts shall have been made available to the Bank and its special counsel; and (c) copies, certified to the Bank's satisfaction to be true and correct, of each of the Refinancing Documents shall have been made available to the Bank and its special counsel. -7- Section 2.02. CONDITIONS TO EACH LOAN. The obligation of the Bank to make each Loan, including the initial Loan, is subject to the fulfillment of each of the following conditions: (a) the Bank shall have received a notice of borrowing with respect to such Loan complying with the requirements of Section 1.02; (b) each Loan Document Representation and Warranty shall be true and correct at and as of the time such Loan is to be made (except to the extent such Loan Document Representation and Warranty relates solely to the Closing Date), both with and without giving effect to such Loan and all other Loans to be made at such time and to the application of the proceeds thereof; and (c) no Default shall have occurred and be continuing at the time such Loan is to be made or would result from the making of such Loan and all other Loans to be made at such time or from the application of the proceeds thereof. Except to the extent that either Revolver Borrower shall have disclosed in the notice of borrowing, or in a subsequent notice given to the Bank prior to 5:00 p.m. (New York time) on the Business Day before the requested date for the making of the requested Loans, that a condition specified in clause (b) or (c) above will not be fulfilled as of the requested time for the making of such Loans, each Revolver Borrower shall be deemed to have made a Representation and Warranty as of the time of the making of such Loans that the conditions specified in such clauses have been fulfilled as of such time. No such disclosure by a Revolver Borrower that a condition specified in clause (b) or (c) above will not be fulfilled as of the requested time for the making of the requested Loans shall affect the right of the Bank to not make the Loans requested to be made by it if, in the Bank's determination, such condition has not been fulfilled at such time. ARTICLE 3 CERTAIN REPRESENTATIONS AND WARRANTIES In order to induce the Bank to enter into this Agreement and to make each Loan, each Revolver Borrower represents and warrants as follows: Section 3.01. PARTNERSHIP EXISTENCE. Such Revolver Borrower is a general partnership duly formed and validly existing and in good standing under the laws of Rhode Island, with all requisite partnership power to own or hold under lease its assets, to transact the business in which it is engaged and to execute, deliver, borrow under and perform in accordance with their respective terms the Loan Documents to which it is a party, and such Revolver Borrower is qualified to do business and in -8- good standing in all states in which it is required to be qualified where failure to so qualify would have a Materially Adverse Effect. Section 3.02. PARTNERSHIP POWER AND AUTHORIZATION, ETC. This Agreement and each of the other Loan Documents to which it is a party have been duly authorized by all necessary partnership action on the part of such Revolver Borrower and all necessary action on the part of such Revolver Borrower's Management Committee, and this Agreement and the borrowings hereunder by such Revolver Borrower and each of the other Loan Documents to which it is a party constitute legal, valid and binding obligations of such Revolver Borrower enforceable against it in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium and similar laws affecting creditors' rights generally and general principles of equity. As of the Closing Date, the Guarantor Security Agreement has duly created a valid security interest in the Collateral (as defined therein) in favor of the Collateral Agent for the benefit of the Bank ratably as a Secured Party (as defined in the Guarantor Security Agreement) and such security interest is duly perfected as a first priority security interest subject to the terms and conditions of the Guarantor Security Agreement. Section 3.03. NO LEGAL BAR; NO CONFLICT. The execution and delivery of this Agreement, each of the other Loan Documents to which it is a party, the borrowings hereunder by such Revolver Borrower, the consummation of the transactions contemplated hereby and thereby, and the performance of the provisions hereof and thereof have not resulted and will not result in any violation or breach of, any default under or, except as specifically contemplated hereby, the creation of any Lien in respect of any of such Revolver Borrower's property pursuant to or under its partnership agreement or other governing documents, any Applicable Law or any agreement, document or instrument to which it is a party or by which it is bound. Section 3.04. FINANCIAL STATEMENTS, ETC. Such Revolver Borrower has delivered to the Bank its balance sheets as of the last day of each of the fiscal years ended December 31, 1992 and 1993, and the related statements of income, partners capital and cash flows for each of such years, certified by Arthur Andersen, independent public accountants. Such financial statements have been prepared in accordance with GAAP and present fairly its financial condition as of the dates of such balance sheets and the results of its operations for the fiscal years then ended. Since December 31, 1993 through the Closing Date, there have been no material adverse changes in such Revolver Borrower's business, operations, affairs or condition (financial or other). Section 3.05. TAXES. Such Revolver Borrower has filed all tax returns which are required to be filed, and has paid all -9- taxes as shown on said returns and all other taxes and assessments that have become due and before they have become delinquent except for taxes being contested in good faith by appropriate proceedings and for which reserves have been established in accordance with GAAP. All tax liabilities are adequately provided for on such Revolver Borrower's books. Section 3.06. LITIGATION, ETC. Except as set forth on SCHEDULE 3.06, there is no action, proceeding or investigation pending or, to such Revolver Borrower's knowledge, threatened against such Revolver Borrower or any of its assets or properties which questions the validity of this Agreement, or any of the other Loan Documents or any action taken or to be taken pursuant hereto or thereto or which otherwise could, if adversely determined, reasonably be expected to result, either in any case or in the aggregate, in any Materially Adverse Effect. Section 3.07. LEGAL COMPLIANCE. As of the Closing Date, such Revolver Borrower is not in violation of any term of its partnership agreement or other governing documents. As of the Closing Date, such Revolver Borrower is not in violation of any term of any Applicable Law or any agreement, document or instrument to which it is a party or by which it is bound, except where such violation could not reasonably be expected to result in any Materially Adverse Effect. Section 3.08. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974. Such Revolver Borrower has not incurred (l) any material "accumulated funding deficiency" within the meaning of Section 412 of the Code, and Section 302 of ERISA, or (2) any material liability to the PBGC established under ERISA in connection with any employee benefit plan established or maintained by it; nor has such Revolver Borrower had any tax assessed against it by the Internal Revenue Service for any alleged violation under Section 4975 of the Code. The transactions contemplated by this Agreement and each of the other Loan Documents will not constitute a prohibited transaction (as such term is defined in Section 4975 of the Code or Section 406 of ERISA) that could subject such Revolver Borrower to any tax or penalty on prohibited transactions imposed under said Section 4975 of the Code or by Section 502(i) or (1) of ERISA. Section 3.09. DISCLOSURE. Such Revolver Borrower is not subject to the reporting requirements of Section 13 of the Securities Exchange Act of 1934, as amended. As of the Closing Date, none of this Agreement or the information set forth in the Descriptive Memorandum (other than projections, which are the subject of and covered by the next succeeding sentence), or in any other document delivered by a Revolver Borrower to the Bank in connection with the transactions contemplated hereunder, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein, in light of the circumstances in which such statements were made, not misleading. On the Closing -10- Date, no fact is known to such Revolver Borrower which, if it had been true at the time, would cause any of the information set forth in the Descriptive Memorandum to be incorrect or misleading in any material respect as of the date thereof, provided that with respect to the projections set forth in the Descriptive Memorandum, such projections were prepared in good faith based on reasonable assumptions (which are set forth therein) consistently applied and, on the Closing Date, no fact is known to such Revolver Borrower which, if it had been true at the time, could cause the assumptions on which such projections are based to be unreasonable or to be inconsistently applied as of the date thereof. There is no fact known to such Revolver Borrower which could reasonably be expected now or in the future (so far as it can now foresee) to result in a Materially Adverse Effect, except as disclosed in the Descriptive Memorandum or, in the case of matters discussed in Section 3.06, as set forth on SCHEDULE 3.06. Section 3.10. CONSENTS AND PERMITS. No Governmental Approval or any other consent or approval is required for such Revolver Borrower's execution and delivery of this Agreement or any other Loan Document or any instrument contemplated hereby or thereby, for the borrowings by such Revolver Borrower hereunder or for its performance of any of the terms or conditions hereof or thereof, except for the Facility Permits. Each Facility Permit has been obtained, and except as set forth on SCHEDULE 3.10, is final and in full force and effect, has not been modified in any way and is not subject to any pending or threatened appeal or attack by way of direct proceedings or otherwise and the time within which any such appeal or attack may be brought which could affect the validity of this Agreement or any of the other Loan Documents has expired. As of the Closing Date, all terms and conditions of each Facility Permit required to be satisfied or performed by such Revolver Borrower prior to such date have been duly satisfied and performed. True and correct copies of each of the Facility Permits have been made available to the Bank and its special counsel. The Facility Permits include, without limitation, all such authorizations, licenses, permits, consents, orders, approvals, rights and Governmental Approvals as are necessary to construct, own and operate the Facility and to perform the Power Sale Agreements in accordance with their respective terms. Section 3.11. INDEBTEDNESS AND LIENS; NO DEFAULTS. As of the Closing Date, SCHEDULE 3.11 sets forth a complete and correct list of (1) all of such Revolver Borrower's Indebtedness (other than the Indebtedness incurred hereunder) and any Liens securing such Indebtedness (other than Liens permitted pursuant to Section 4.14) and (2) all of such Revolver Borrower's Investments and Guarantees (other than the Guarantees permitted pursuant to Section 4.15). As of the Closing Date, such Revolver Borrower is not in default in respect of any term or provision of such Indebtedness or under any mortgage, deed of trust, indenture, loan agreement or other agreement relating thereto. -11- Section 3.12. INVESTMENT COMPANY ACT. Such Revolver Borrower is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Section 3.13. PUBLIC UTILITY HOLDING COMPANY ACT; FEDERAL POWER ACT; RHODE ISLAND GENERAL LAWS. Such Revolver Borrower is a "public utility company" and a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. Such Revolver Borrower is a "public utility", as such term is defined in the Federal Power Act, as amended, and in the Rhode Island General Laws. The Facility Permits include all authorizations, consents, orders, approvals, declarations, filings and registrations required under said Acts in connection with such Revolver Borrower's execution and delivery of this Agreement, and the other Loan Documents and any instrument contemplated hereby or thereby for the borrowings by such Revolver Borrower hereunder and for its performance of the terms and conditions hereof and thereof. Without limiting the foregoing, the execution, delivery and performance by such Revolver Borrower of this Agreement and the other Loan Documents have been approved by all necessary action of the SEC under the Public Utility Holding Company Act of 1935, as amended, and of the RIDPUC under the Rhode Island General Laws, and, accordingly, no appeal of said approvals or attack thereon or review thereof made after the consummation of the transactions contemplated hereby would affect the validity thereof or alter or diminish or void the obligations of such Revolver Borrower thereunder. Section 3.14. TITLE. Such Revolver Borrower has good title to its properties and assets, and none of such properties and assets is subject to any Lien except for Liens permitted by this Agreement. Such ownership or leasehold interests are sufficient to permit such Revolver Borrower to operate the portion of the Facility owned by it. Such Revolver Borrower enjoys peaceful and undisturbed possession under all leases of real property on which facilities operated by it are situated, and all such leases are valid and subsisting and are in full force and effect. Section 3.15. ENVIRONMENTAL COMPLIANCE. Except as disclosed in SCHEDULE 3.15, to such Revolver Borrower's knowledge after due inquiry there has been no generation, treatment, use or storage on, or disposal, release, spill, escape on or from, the Facility or any other property owned, occupied or operated by such Revolver Borrower, its predecessor in interest or any other person for whose conduct it is responsible, of any industrial, toxic or hazardous substances or solid or hazardous waste material or substance ("HAZARDOUS MATERIALS") in violation of common law, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Sections 9601 ET SEQ.), the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901, ET SEQ.), or any applicable state laws relating to the protection of human health, safety and the environment or the release or -12- threatened release of Hazardous Materials, as each may have been amended, or any regulation under or any interpretations of the foregoing (collectively, the "ENVIRONMENTAL LAWS"), and such Revolver Borrower has not received any notice or made any discovery, after reasonable inquiry of its employees, of any violation relating to the Environmental Laws arising out of its activities or the activities of anyone else on the Facility or such other property. Except as disclosed in SCHEDULE 3.15, to such Revolver Borrower's knowledge after due inquiry, there are and have been no underground storage tanks, vessels or related equipment or containers, and no electrical transformers or other equipment containing polychlorinated biphenyls, owned or operated by such Revolver Borrower or located on the property included in the Facility, which are subject to the Environmental Laws or other Federal, state or local laws and regulations. No item disclosed in SCHEDULE 3.15 will cause or result in any liability to such Revolver Borrower that could, individually or in the aggregate, have a Materially Adverse Effect. Section 3.16. SINGLE PURPOSE ENTITY. Such Revolver Borrower is a single purpose entity organized for the sole purpose of carrying out the construction, ownership, operation and maintenance of its portion of the Facility, and other activities incident thereto and which are described in the Descriptive Memorandum. Section 3.17. OWNERSHIP OF PARTNERSHIP INTERESTS, ETC. As of the Closing Date, the Partners are the owners of all outstanding partnership interests of such Revolver Borrower in the percentages set forth in SCHEDULE 3.17, and all capital contributions required to be made in respect of such partnership interests as of such date have been paid in full. Except as set forth on SCHEDULE 3.17, the Descriptive Memorandum completely, correctly and separately identifies, as of the Closing Date, each Power Purchaser, the Entitlement (as defined in the respective Power Sales Agreements) of each Power Purchaser, each Partner and the Voting Interest (as defined in the Partnership Agreements) of each Partner. Section 3.18. COMPLIANCE WITH FEDERAL RESERVE BOARD REGULATIONS. No part of the proceeds from the making of the loans evidenced by the Notes of such Revolver Borrower will be used, directly or indirectly, for the purpose of buying or carrying any "margin stock" within the meaning of Regulation G of the Board of Governors of the Federal Reserve System (12 CFR 207), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve such Revolver Borrower in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Section 3.19. FOREIGN ASSETS CONTROL REGULATIONS. Neither the making of the Loans to such Revolver Borrower nor such Revolver Borrower's borrowings or use of the proceeds -13- thereof will violate the Foreign Assets Control Regulations, the Foreign Funds Control Regulations, the Cuban Assets Control Regulations, the Iranian Assets Control Regulations, the South African Transactions Regulations, the Libyan Sanctions Regulations, the Iranian Transactions Regulations or the Panamanian Transactions Regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or the Comprehensive Anti-Apartheid Act of 1986 (P.L. 99-440) or Executive Orders 12722 and 12724 (55 Fed. Reg. 31803 and 55 Fed. Reg. 33089) Blocking Iraqi Government Property and Prohibiting Transactions with Iraq and Executive Orders 12723 and 12725 (55 Fed. Reg. 31805 and 55 Fed. Reg. 33091) Blocking Kuwaiti Government Property and Prohibiting Transactions with Kuwait. Section 3.20. POWER SALE AGREEMENTS. Each Revolver Borrower has delivered to the Bank and its special counsel complete and correct copies of the Power Sale Agreements to which it is a party and all modifications, amendments, waivers and supplements thereto. As of the Closing Date, each of such Power Sale Agreements has been duly authorized by all necessary partnership action on the part of such Revolver Borrower, and all necessary action on the part of such Revolver Borrower's Management Committee, is in full force and effect, there is no presently effective waiver of any obligations thereunder of any party thereto and neither such Revolver Borrower nor, to the best of its knowledge, any other party thereto is in default under any such agreement. Section 3.21. UNDISCLOSED LIABILITIES. As of the Closing Date, such Revolver Borrower has no material Liabilities, other than Liabilities pursuant to the Facility Contracts and as set forth in SCHEDULE 3.11 and in the financial statements referred to in Section 3.04 and the Obligations (as defined in the Guarantor Security Agreement). Section 3.22. INTELLECTUAL PROPERTY. Such Revolver Borrower owns or has the right to use all patents, trademarks, service marks, trade names, copyrights, licenses and other rights that are necessary for the operation of its business as presently contemplated. Nothing has come to the attention of such Revolver Borrower to the effect that any product, process, method, substance, part or other material presently contemplated to be sold by or employed by such Revolver Borrower in connection with its business may infringe any patent, trademark, service mark, trade name, copyright, license or other right owned by any other Person. Section 3.23. UTILITIES. On the Closing Date, all utility services necessary and sufficient for the operation of the Facility for its intended purposes are, and such Revolver Borrower reasonably expects that after the Closing Date all utility services necessary and sufficient for the operation of the Facility for its intended purposes will be, available at the boundaries of the Facility Site, including water supply, storm -14- and sanitary sewer, electric power and telephone facilities when needed. Section 3.24. FACILITY CONTRACTS. The Contracts listed on SCHEDULE 3.24 constitute on the Closing Date all of the material Contracts of such Revolver Borrower currently in effect relating to the construction, ownership or operation of the Facility (other than the Loan Documents and the Refinancing Documents). As of the Closing Date, each of the Facility Contracts to which such Revolver Borrower is a party has been duly executed and delivered by such Revolver Borrower and constitutes on such date the legal, valid and binding obligation of such Revolver Borrower and, to the best of its knowledge, the other parties thereto, enforceable against such parties in accordance with its respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally or principles of equity. True and correct copies of all such Facility Contracts have been made available to the Bank and its special counsel. As of the Closing Date, no default or event of default under any material term or provision of any such Facility Contract by such Revolver Borrower or, to the best of its knowledge, any other party thereto, has occurred and is continuing, and no termination notice in respect of any Facility Contract has been given by any party thereto. ARTICLE 4 CERTAIN COVENANTS From the Closing Date and until the Repayment Date each Revolver Borrower hereby severally covenants and agrees that: Section 4.01. PARTNERSHIP EXISTENCE. Such Revolver Borrower will maintain its existence as a general partnership under the laws of Rhode Island and its qualification in such jurisdictions as may be necessary or appropriate to construct, own and operate the Facility and to borrow hereunder and perform the transactions contemplated pursuant to this Agreement and the other Loan Documents. Section 4.02. OBLIGATIONS AND TAXES. Such Revolver Borrower will pay promptly all taxes and assessments imposed upon it or upon its income or profits or any of its property before the same shall be in default, provided that such Revolver Borrower shall not be required to pay any such tax or assessment so long as (l) the validity thereof shall be contested in good faith by appropriate proceedings diligently pursued and such contest poses no threat to the Collateral, or other consequence, which threat or consequence could reasonably be expected to result in a Materially Adverse Effect and (2) such Revolver Borrower shall have made such reserves or other appropriate -15- provision, if any, in respect thereof as shall be required by GAAP. Section 4.03. FINANCIAL STATEMENTS AND REPORTS. Such Revolver Borrower will furnish to the Bank: (a) as soon as available but in any event within 120 days after the end of each fiscal year, such Revolver Borrower's balance sheet as of the end of such fiscal year and the related statements of operations, partners' capital, and cash flows for such fiscal year, all in reasonable detail, stating in comparative form the respective figures as of the end of and for the previous fiscal year and certified by Arthur Andersen or other independent public accountants of recognized national standing selected by such Revolver Borrower, which certification shall state that said financial statements fairly present the financial condition and results of operation of such Revolver Borrower as at the end of, and for, such fiscal year, and who shall have authorized such Revolver Borrower to deliver such financial statements and certifications thereof to the Bank pursuant to this Agreement; (b) as soon as available but in any event within 60 days after the end of each quarter of each fiscal year, such Revolver Borrower's balance sheet as of the last day of such fiscal quarter and the related statements of operations, partners' capital, and cash flows for such quarter and the portion of the fiscal year then ended, all in reasonable detail, stating in comparative form the respective figures as of the end of and for corresponding periods in the previous fiscal year, all of which shall be certified by an authorized representative of such Revolver Borrower to be complete and to present fairly, in accordance with GAAP that are consistent with those followed in the preparation of the audited financial statements previously furnished to the Bank, if any, and that have been consistently applied throughout the period involved, the financial position of such Revolver Borrower as at the end of such period and the results of operations and the changes in financial position for such period, in each case on the basis presented and subject only to normal year-end auditing adjustments; (c) together with the financial statements delivered pursuant to clause (a) above, a written statement of the accountants certifying as to such financial statements stating that, in making the examination necessary for their report on its financial statements for that year, they obtained no knowledge of any Default or, if such accountants shall have obtained knowledge of any such event, specifying the same and the nature and status thereof; (d) promptly after receipt by such Revolver Borrower, copies of any report as to material inadequacies in -16- accounting controls (including reports as to the absence of any such inadequacies) submitted by independent accountants in connection with any audit of it; (e) as soon as available, copies of all regular and periodic reports (other than routine filings under the Public Utility Holding Company Act of 1935, as amended) and registration statements (other than on Form S-8 or a similar form) which it files with the Securities and Exchange Commission or with any securities exchange; (f) as promptly as practicable, but in any event not later than 5 Business Days after any such Revolver Borrower obtains knowledge of any Default, an Officers' Certificate describing such event in reasonable detail, with a statement of any action with respect thereto taken or proposed; (g) as promptly as practicable, but in any event not later than 5 Business Days after the occurrence of any Event of Loss, or of any event, act or condition that could reasonably be expected to result in an Event of Loss, notice thereof describing such occurrence in reasonable detail; (h) as promptly as practicable, but in any event not later than 5 Business Days after execution and delivery thereof, notice of each Facility Contract entered into after the Closing Date and description thereof; (i) as promptly as practicable, but in any event not later than 5 Business Days after receipt thereof, notice of each Facility Permit received after the Closing Date, the failure to obtain which could reasonably be expected to result in a Materially Adverse Effect, and promptly upon acquiring knowledge thereof, notice of any change in the status of any material Facility Permit; and (j) such other Information regarding the operations, business, affairs and condition (financial and other) of such Revolver Borrower that the Bank may from time to time reasonably request. Section 4.04. MAINTENANCE AND OPERATION OF FACILITY PROPERTIES. Such Revolver Borrower will maintain and keep, or cause to be maintained and kept, its material properties (including, without limitation, its interest in the Common Facilities, as defined in the Power Sale Agreements) in good repair, working order and condition (ordinary wear and tear excepted), and from time to time make or cause to be made all needful and proper repairs, renewals, replacements and improvements to such properties so that the business carried on in connection therewith may be properly conducted; and at all times carry on the operations of the Facility in accordance with good business practices consistent with those used by prudent operators of similar facilities and in any event (i) in such a -17- manner as required by the Power Sale Agreements and (ii) in accordance with "Good Utility Practices" as defined in the O&M Agreement and in accordance with "Site Procedures" established pursuant to such agreement, or in accordance with any comparable standards set forth in any substitute agreement for operation and maintenance of the Facility. Section 4.05. INSURANCE. Such Revolver Borrower will carry and maintain in full force and effect at all times in financially sound and reputable insurers with a Best's rating of A-10 or better (or, as to workers' compensation or similar insurance, in an insurance fund or by self-insurance authorized by the jurisdiction in which its operations are carried on) insurance against such risks as are usually insured against by companies of established reputation engaged in the same or similar businesses and similarly situated, including, without limitation, property insurance in amounts which, when aggregated with the amounts of such property insurance of the Revolver Borrower, will at all times be at least equal to the then outstanding principal amount of the Senior Indebtedness and which property insurance will name the Collateral Agent, for the benefit of the Secured Parties, loss payee with respect thereto. Section 4.06. COMPLIANCE WITH LAWS. Such Revolver Borrower will comply with all Applicable Laws, the noncompliance with which could reasonably be expected to have a Materially Adverse Effect. Section 4.07. RECORDS; INSPECTION. Such Revolver Borrower will (1) keep proper books of account in which complete and accurate entries will be made of all transactions in accordance with GAAP, and maintain proper records of the construction and operation of the Facility; and (2) permit the Bank, upon reasonable notice, to visit and inspect the properties of such Revolver Borrower, examine and copy its books of record and account, and discuss its affairs, finances and accounts with its officers and independent public accountants (whether or not in the presence of either Revolver Borrower), all at such reasonable times as the Bank may desire. Section 4.08. GOVERNMENTAL PERMITS. Such Revolver Borrower will obtain and maintain in full force and effect such Governmental Approvals and other consents or approvals as may be required in connection with its borrowings hereunder and the performance of its obligations under this Agreement, the Notes, the other Loan Documents, and the operation of the Facility and the performance in accordance with their respective terms of the Power Sale Agreements, where the failure to so obtain and maintain could reasonably be expected to have a Materially Adverse Effect. -18- Section 4.09. COMPLIANCE WITH CONTRACTS. Such Revolver Borrower will comply with the terms of all Facility Contracts and all other contracts to which it is a party and timely perform all of its obligations thereunder, noncompliance with which could reasonably be expected to have a Materially Adverse Effect. Section 4.10. CONTINUANCE IN PRESENT BUSINESS. Such Revolver Borrower will continue to engage substantially only in the business described in Section 3.16. Section 4.11. MAINTENANCE OF TITLE. Such Revolver Borrower will maintain good and marketable ownership or leasehold interests, subject only to the Liens permitted under Section 4.14, in its properties and assets including, without limitation, its interests, if any, in the Facility Site. Section 4.12. FILINGS. Such Revolver Borrower will file within the applicable time period under, and in accordance with, all Applicable Law (including, without limitation, under the Public Utility Holding Company Act of 1935, as amended, and RIDPUC) all certificates, agreements, documents, instruments and all other filings required in connection with the Loan Documents and the transactions contemplated thereby, and shall provide the Bank with evidence of such filings promptly after such filings are made. Section 4.13. INDEBTEDNESS. Such Revolver Borrower will not, directly or indirectly, create, incur, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness except: (a) Indebtedness incurred hereunder; and (b) other Indebtedness permitted under the Refinancing Documents, including Indebtedness incurred in connection with the transactions contemplated thereby. Section 4.14. LIENS. Such Revolver Borrower will not, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any of its property or assets (including any document or instrument in respect of goods or accounts receivable), whether now owned or hereafter acquired, or any income or profits' therefrom, except: (a) Liens in favor of the Collateral Agent for the benefit of the Secured Parties, including Liens securing the Indebtedness incurred hereunder; (b) other Liens permitted under the Refinancing Documents, including Liens securing Indebtedness incurred in connection with the transactions contemplated thereby. -19- Section 4.15. GUARANTEES. Such Revolver Borrower will not be or become obligated with respect to any Guarantee, except Guarantees permitted under the Refinancing Documents. Section 4.16. SALES. Such Revolver Borrower, will not sell, lease or otherwise dispose of (including without limitation in a sale and leaseback transaction) any assets constituting a part of the Facility except (i) in the ordinary course of business, (ii) for the transfers contemplated or permitted pursuant to the Inter-Guarantor Agreements, (iii) for dispositions of obsolete assets which are simultaneously replaced or other assets that are no longer necessary or useful for the operation of the Facility in accordance with prudent industry practice, (iv) in connection with the repayment of all of the Senior Indebtedness and (v) for sale of properties acquired pursuant to the Property Value Stabilization Plan. Section 4.17. RESTRICTED PAYMENTS. Such Revolver Borrower will not, directly or indirectly, declare, pay, make or set apart any sum for any Restricted Payment unless, immediately after giving effect thereto, (a) no Default shall have occurred and be continuing; and (b) the aggregate outstanding principal amount of all Indebtedness incurred by the Revolver Borrowers would not be greater than 65% of Total Capitalization. Such Revolver Borrower will not declare any Restricted Payment payable other than in cash and not more than 90 days after the declaration date. Section 4.18. HAZARDOUS MATERIALS. Such Revolver Borrower will not permit the Facility Site to be used for the disposal or storage (other than temporary storage pending use on the Facility Site or disposal in accordance with Applicable Law) of any Hazardous Material or permit any Hazardous Material to be brought onto or stored on the Facility Site other than pending and during use on the Facility Site or pending disposal, as below provided or, in any event, permit any Hazardous Material to be stored or used on the Facility Site or disposed of other than in accordance with prudent Hazardous Material management practices and applicable Environmental Law. Section 4.19. INVESTMENTS. Such Revolver Borrower will not make or permit to exist any Investments nor own nor acquire by purchase or otherwise any equity interest or other beneficial ownership of any Person, other than (a) Permitted Investments, (b) capital stock of OSP Finance Company acquired and held in compliance with Section 10H of the Note and Guaranty -20- Agreement and any capital contribution in respect thereof, and (c) Investments consisting of any Guarantee permitted by Section 4.15. Section 4.20. CONSOLIDATION OR MERGER. Such Revolver Borrower will not, directly or indirectly, consolidate with or merge with or into any Person, provided that the Revolver Borrowers may consolidate or merge with or into each other. Section 4.21. TRANSACTIONS WITH AFFILIATES. Such Revolver Borrower will not engage in any transaction with an Affiliate (other than the other Revolver Borrower or OSP Finance Company and other than with respect to Facility Contracts in existence on the Closing Date which have been entered into with an Affiliate) except in the ordinary course of business and on terms no more favorable to the Affiliate than would have been obtainable in arm's-length dealing. Without limitation of the foregoing, transactions meeting the requirements set forth in the preceding sentence may include contracts with Affiliates approved by applicable Governmental Bodies providing for the recovery by such Affiliate of no more than the cost to such Affiliate of providing services in such transaction or the net book value of any asset acquired from such Affiliate in such transaction. Section 4.22. BUSINESS. Such Revolver Borrower will not (1) engage in any business other than the businesses conducted or proposed to be conducted as of the date of this Agreement, as described in the Descriptive Memorandum, which, in any event, shall consist solely of the operation and maintenance of the Facility and matters incidental thereto (including, without limitation, gas remarketing activities) and (2) enter into any agreements or understandings not related to the conduct of such business. Section 4.23. ERISA. Such Revolver Borrower will not permit any "employee pension benefit plan" (as defined in Section 3 of ERISA) maintained by it or to which it makes contributions to (l) engage in any "prohibited transaction" (as defined in Section 4975 of the Code), (2) incur any "accumulated funding deficiency" (as defined in Section 302 of ERISA) whether or not waived, or (3) terminate in a manner which could result in the imposition of a lien or encumbrance on its assets pursuant to Section 4068 of ERISA. ARTICLE 5 DEFAULT Section 5.01. EVENTS OF DEFAULT; ACCELERATION. If any of the following events ("EVENTS OF DEFAULT") shall occur and be continuing (for any reason whatsoever and whether it shall be -21- voluntary or involuntary or occur or be effected by operation of law or otherwise): (a) default shall be made in the due and punctual payment of any principal of or premium on any Loan when due and payable, whether at stated maturity, by acceleration, by notice of prepayment or otherwise; or (b) default shall be made in the due and punctual payment of interest on any Loan when due and payable, and such default shall continue for a period of 10 days; or (c) the aggregate Power Sale Revenues under Defaulted Power Sale Agreements (as herein defined) shall at any time exceed 6% of the aggregate Power Sale Revenues under all Power Sale Agreements; PROVIDED, that such condition shall not constitute an "Event of Default" if prior to the Collateral Agent's taking any remedial action contemplated by this Section 5.01 as a consequence thereof any of the following shall occur: (i) the Entitlement (as defined in the Power Sale Agreements) of one or more Power Purchasers under Defaulted Power Sale Agreements has been completely allocated to and unconditionally assumed by other Power Purchasers not in default, in accordance with the terms of the Power Sale Agreements, so that the percentage of aggregate Power Sale Revenues under any remaining Defaulted Power Sale Agreements is 6% or less; (ii) the affected Revolver Borrower or Revolver Borrowers shall enter into one or more new power sale agreements with purchasers having an investment grade credit rating of at least BBB- from S&P or an equivalent rating from any other nationally recognized rating agency (each, a "SUBSTITUTE POWER SALE AGREEMENT") so that, after giving effect to such Substitute Power Sale Agreement(s), the percentage of aggregate Power Sale Revenues under any remaining Defaulted Power Sale Agreements is 6% or less (provided, that in order to satisfy the requirements of this clause (b), each Substitute Power Sale Agreement shall have terms (including but not limited to the recovery of such Revolver Borrower's debt servicing costs) no less favorable to the affected Revolver Borrower than the Defaulted Power Sale Agreement it replaces and shall have a remaining term not less than the original term of such Defaulted Power Sale Agreement); or (iii) the curing (by the defaulting Power Purchaser) of all payment defaults under one or more Defaulted Power Sale Agreements so that the percentage -22- of aggregate Power Sale Revenues under any remaining Defaulted Power Sale Agreements is 6% or less. As used herein, "DEFAULTED POWER SALE AGREEMENT" means any Power Sale Agreement (a) which has been terminated or repudiated by the Power Purchaser party thereto (other than any such termination pursuant to which such Power Purchaser has paid the "Termination Sum" (as such term is defined in such Power Sale Agreement) and the prepayment of the Senior Indebtedness as a result of the payment of such "Termination Sum" has been made in accordance with Section 6B(4) of the Note and Guaranty Agreement), or rejected by such Power Purchaser in a bankruptcy proceeding to which it is subject, or (b) as to which the Power Purchaser party thereto is in default (after giving effect to any applicable grace periods set forth in such Power Sale Agreement, or where no such grace period is specified, 30 days) with respect to payment of undisputed capacity, or energy charges. (d) default shall be made by either Revolver Borrower in the performance or observance of any covenant, agreement or condition contained in Sections 4.13 through 4.17, inclusive, or in Sections 4.19 through 4.23, inclusive; or (e) default shall be made by either Revolver Borrower in the performance or observance of any other covenant, agreement or condition in this Agreement (other than the covenants contained in Sections 4.03 and 4.05) or any other Loan Document, and such default shall continue for a period of 90 days after the same shall have become first known to such Revolver Borrower; or (f) any representation or warranty made by either Revolver Borrower in this Agreement, any other Loan Document or any other document, certificate, financial or other written statement furnished pursuant hereto or thereto, shall prove to have been untrue in any material respect at the time when made; or (g) any Indebtedness of either Revolver Borrower (other than Indebtedness incurred hereunder) which is outstanding in an aggregate principal amount of at least $1,000,000 shall as a consequence of a default become or be declared to be due and payable prior to its stated maturity; or (h) either Revolver Borrower shall (i) be generally not paying its debts as they become due, (ii) file, or consent by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy or insolvency law of any -23- jurisdiction, (iii) make an assignment for the benefit of its creditors, (iv) consent to the appointment of a custodian, receiver, trustee or other officer with similar powers of itself or of any substantial part of its property, (v) be adjudicated insolvent or be liquidated, or (vi) take corporate action for the purpose of any of the foregoing; or (i) (i) a court or governmental authority of competent jurisdiction shall enter an order appointing, without consent by a Revolver Borrower, a custodian, receiver, trustee or other officer with similar powers with respect to such Revolver Borrower or with respect to any substantial part of its property, or (ii) if an order for relief shall be entered in any case or proceeding for liquidation or reorganization or otherwise to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of such Revolver Borrower or (iii) if any petition of any such relief shall be filed against such Revolver Borrower and such petition shall not be dismissed within 60 days; or (j) final judgment shall be rendered against either Revolver Borrower for the payment of money in excess of $1,000,000 and such judgment shall not be discharged or execution thereon stayed pending appeal, within 60 days after entry thereof, or, in the event of such a stay, such judgment shall not be discharged within 60 days after such stay expires; or (k) either Revolver Borrower shall fail to provide a notice of Default pursuant to Section 4.03; or (l) the Collateral Agent shall cease to have a valid, perfected first-priority security interest in the Collateral as then constituted; or (m) either Revolver Borrower shall fail to maintain or cause to be maintained in full force and effect insurance as required by Section 4.05; or (n) an Abandonment shall have occurred; then (i) upon the occurrence of any Event of Default described in clause (h) or (i) above (A) the unpaid principal amount of and the accrued interest on all Loans shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Revolver Borrowers and (B) the Commitment shall immediately terminate, or (ii) upon the occurrence of any Event of Default other than any Event of Default described in clause (h) or (i) above the Bank (or, if an assignment has been made pursuant to Section 7.09, the Banks holding 66 2/3% of the aggregate principal amount of the Loans outstanding or, if no Loans are outstanding, having 66 2/3% of the total Commitments) -24- may, by written notice to the Revolver Borrowers, (A) declare the unpaid principal amount of the Loans to be, and the same shall forthwith become, due and payable, together with accrued interest thereon which shall be deemed matured, and, any amounts payable pursuant to Section 6.04 and (B) terminate the Commitment. Section 5.02. OTHER REMEDIES. If any Default shall have occurred and be continuing, the Bank may proceed to protect and enforce its rights under the Loan Documents by exercising such remedies as are available to such Bank in respect thereof under applicable law, either by suit in equity or by action at law, or both, whether for specific performance of any agreement contained in this Agreement or the Guarantor Security Agreement or in aid of the exercise of any power granted in this Agreement or the Guarantor Security Agreement. No remedy is intended to be exclusive and each remedy shall be cumulative. The Bank acknowledges that all rights and remedies with respect to the Collateral (including upon acceleration of the Loans) shall be subject to the terms and conditions of the Guarantor Security Agreement and the interests of the Bank as a Secured Party thereunder. ARTICLE 6 ADDITIONAL CREDIT FACILITY PROVISIONS Section 6.01. MANDATORY SUSPENSION AND CONVERSION OF FIXED RATE LOANS. The Bank's obligations to make, continue or convert into Fixed Rate Loans of any Type shall be suspended, all outstanding Loans of that Type shall be converted on the last day of their applicable Interest Periods (or, if earlier, in the case of clause (b) below, on the last day the Bank may lawfully continue to maintain Loans of that Type or, in the case of clause (c) below, on the day determined by the Bank to be the last Business Day before the effective date of the applicable restriction) into, and all pending requests for the making or continuation of or conversion into Loans of such Type shall be deemed requests for, Base Rate Loans, if: (a) on or prior to the determination of an interest rate for a Fixed Rate Loan of that Type for any Interest Period, the Bank determines that for any reason appropriate quotations are not available to it (including, in the case of the Eurodollar Rate, quotations in the interbank market selected by it for deposits with it) for purposes of determining the CD Rate or the Eurodollar Rate, as the case may be, for such Interest Period or that such rate would not accurately reflect the cost to the Bank of making, continuing or converting into a Fixed Rate Loan of such Type for such Interest Period; -25- (b) at any time the Bank determines that any Regulatory Change makes it unlawful or impracticable for the Bank or the applicable Lending Office to make, continue or convert into any Fixed Rate Loan of that Type, or to comply with its obligations hereunder in respect thereof; or (c) the Bank determines that, by reason of any Regulatory Change, the Bank or the applicable Lending Office is restricted, directly or indirectly, in the amount that it may hold of (i) a category of liabilities that includes deposits by reference to which, or on the basis of which, the interest rate applicable to Fixed Rate Loans of that Type is directly or indirectly determined or (ii) the category of assets that includes Fixed Rate Loans of that Type. The Bank shall promptly notify the Revolver Borrowers of any circumstance that would make the provisions of this Section 6.01 applicable, but the failure to give any such notice shall not affect the Bank's rights hereunder. Section 6.02. REGULATORY CHANGES. If in the determination of the Bank (a) any Regulatory Change shall directly or indirectly (i) reduce the amount of any sum received or receivable by the Bank with respect to any Loan or the return to be earned by the Bank on any Loan, (ii) impose a cost on the Bank or any Affiliate of the Bank that is attributable to the making or maintaining of, or the Bank's commitment to make, any Loan, (iii) require the Bank or any Affiliate of the Bank to make any payment on or calculated by reference to the gross amount of any amount received by the Bank under any Loan Document or (iv) reduce, or have the effect of reducing, the rate of return on any capital of the Bank or any Affiliate of the Bank that the Bank or such Affiliate is required to maintain on account of any Loan or the Bank's commitment to make any Loan and (b) such reduction, increased cost or payment shall not be fully compensated for by an adjustment in the applicable rates of interest payable under the Loan Documents, then the Revolver Borrowers shall pay to the Bank such additional amounts as the Bank determines will, together with any adjustment in the applicable rates of interest payable hereunder, fully compensate for such reduction, increased cost or payment. Such additional amounts shall be payable, in the case of those applicable to prior periods, within 15 days after request by the Bank for such payment and, in the case of those applicable to future periods, on the dates specified, or determined in accordance with a method specified, by the Bank. The Bank will promptly notify the affected Revolver Borrower of any determination made by it referred to in clauses (a) and (b) above, but the failure to give such notice shall not affect the Bank's right to compensation. Section 6.03. CAPITAL REQUIREMENTS. If, in the determination of the Bank, the Bank or any Affiliate of the Bank is required, under Applicable Law, interpretations, directives, -26- requests and guidelines (whether or not having the force of law), to maintain capital on account of any Loan or the Bank's commitment to make any Loan, then, upon request by the Bank, the Revolver Borrowers shall from time to time thereafter pay to the Bank such additional amounts as the Bank determines will fully compensate for any reduction in the rate of return on the capital that the Bank or such Affiliate is so required to maintain on account of such Loan or commitment suffered as a result of such capital requirement. Such additional amounts shall be payable, in the case of those applicable to prior periods, within 15 days after request by the Bank for such payment and, in the case of those relating to future periods, on the dates specified, or determined in accordance with a method specified, by the Bank. Section 6.04. FUNDING LOSSES. The Revolver Borrowers shall pay to the Bank, upon request, such amount or amounts as the Bank determines are necessary to compensate it for any loss, cost or expense incurred by it as a result of (a) any payment, prepayment or conversion of a Fixed Rate Loan on a date other than the last day of an Interest Period for such Fixed Rate Loan or (b) a Fixed Rate Loan for any reason (other than the failure of the Bank to comply with the terms hereof) not being made or converted, or any payment of principal thereof or interest thereon not being made, on the date therefor determined in accordance with the applicable provisions of this Agreement. At the election of the Bank, and without limiting the generality of the foregoing, but without duplication, such compensation on account of losses may include an amount equal to the excess of (i) the interest that would have been received from the Revolver Borrower(s) under this Agreement on any amounts to be reemployed during an Interest Period or its remaining portion over (ii) the interest component of the return that the Bank determines it could have obtained had it placed such amount on deposit in the interbank Dollar market selected by it for a period equal to such Interest Period or its remaining portion. Section 6.05. CERTAIN DETERMINATIONS. In making the determinations contemplated by Sections 6.01, 6.02, 6.03 and 6.04, the Bank may make such estimates, assumptions, allocations and the like that the Bank in good faith determines to be appropriate, and the Bank's selection thereof in accordance with this Section 6.05, and the determinations made by the Bank on the basis thereof, shall be final, binding and conclusive upon the Revolver Borrowers, except, in the case of such determinations, for manifest errors in computation or transmission. The Bank shall furnish to the Revolver Borrowers upon request a certificate outlining in reasonable detail the computation of any amounts claimed by it under Sections 6.02, 6.03 and 6.04 and the assumptions underlying such computations. Section 6.06. CHANGE OF LENDING OFFICE. If an event occurs with respect to a Lending Office that obligates the Revolver Borrowers or either of them to pay any amount under Section 1.12, makes operable the provisions of clause (b) or (c) -27- of Section 6.01 or entitles the Bank to make a claim under Section 6.02 or 6.03, the Bank shall, prior to invoking such provisions, use reasonable efforts to designate another Lending Office or Offices the designation of which will reduce the amount such Revolver Borrower(s) are so obligated to pay, eliminate such operability or reduce the amount the Bank is so entitled to claim, provided that such designation would not, in the sole and absolute discretion of the Bank, be disadvantageous to the Bank in any manner or contrary to Bank policy. The Bank may at any time and from time to time change any Lending Office and shall give notice of any such change to the Revolver Borrowers. Except in the case of a change in Lending Offices made at the request of the Revolver Borrowers, the designation of a new Lending Office by the Bank shall not obligate either Revolver Borrower to pay any amount to the Bank under Section 1.12, make operable the provisions of clause (b) or (c) of Section 6.01 or entitle the Bank to make a claim under Section 6.02 or 6.03 if such obligation, the operability of such clause or such claim results solely from such designation and not from a subsequent Regulatory Change. ARTICLE 7 MISCELLANEOUS Section 7.01. NOTICES AND DELIVERIES. (a) MANNER OF DELIVERY. All notices, communications and materials (including all Information) to be given or delivered pursuant to the Loan Documents shall, except in those cases where giving notice by telephone is expressly permitted, be given or delivered in writing (which shall include telecopy transmissions). Notices under Sections 1.02, 1.03(c), 1.05, 1.07 and 5.01 may be by telephone, promptly, in the case of each notice other than one under Section 5.01, confirmed in writing. In the event of a discrepancy between any telephonic notice and any written confirmation thereof, such written confirmation shall be deemed the effective notice except to the extent that the Bank has acted in reliance on such telephonic notice. (b) ADDRESSES. All notices, communications and materials to be given or delivered pursuant to the Loan Documents shall be given or delivered at the following respective addresses and telecopier and telephone numbers and to the attention of the following individuals or departments: (i) if to a Revolver Borrower, to it at: (A) Ocean State Power P.O. Box 561 Harrisville, Rhode Island 02830 -28- (or, for courier purposes, 1575 Sherman Farm Road Route 98 Harrisville, Rhode Island 02830) Telecopier No.: (401) 568-1999 Telephone No.: (401) 568-9550 Attention: General Manager with a copy to: J. Makowski Management Corporation One Bowdoin Square Boston, Massachusetts 02114 Telecopier No.: (617) 227-2690 Telephone No.: (617) 227-8080 Attention: Mark D. Segel Senior Associate, Finance (B) Ocean State Power II P.O. Box 561 Harrisville, Rhode Island 02830 (or, for courier purposes, 1575 Sherman Farm Road Route 98 Harrisville, Rhode Island 02830) Telecopier No.: (401) 568-1999 Telephone No.: (401) 568-9550 Attention: General Manager with a copy to: J. Makowski Management Corporation One Bowdoin Square Boston, Massachusetts 02114 Telecopier No.: (617) 227-2690 Telephone No.: (617) 227-8080 Attention: Mark D. Segel Senior Associate, Finance -29- (ii) if to the Bank, to it at: The Bank of New York One Wall Street New York, New York 10286 Telecopier No.: (212) 635-7923 Telephone No.: (212) 635-7581 Attention: John W. Hall Vice President or at such other address or telecopier or telephone number or to the attention of such other individual or department as the party to which such information pertains may hereafter specify for the purpose in a notice to the other specifically captioned "Notice of Change of Address". (c) EFFECTIVENESS. Each notice and communication and any material to be given or delivered pursuant to the Loan Documents shall be deemed so given or delivered (A) if sent by registered or certified mail, postage prepaid, return receipt requested, on the third Business Day after such notice, communication or material, addressed as above provided, is delivered to a United States post office and a receipt therefor is issued thereby, (B) if sent by any other means of physical delivery, when such notice, communication or material is delivered to the appropriate address as above provided, (C) if sent by telecopier, when such notice, communication or material is transmitted to the appropriate telecopier number as above provided and is received at such number and (D) if given by telephone, when communicated to the individual or any member of the department specified as the individual or department to whose attention notices, communications and materials are to be given or delivered, or, in the case of notice by the Bank to either Revolver Borrower under Section 5.01 given by telephone as above provided, if any individual or any member of the department to whose attention notices, communications and materials are to be given or delivered is unavailable at the time, to any other officer or employee of such Revolver Borrower, except that (x) notices of a change of address, telecopier or telephone number or individual or department to whose attention notices, communications and materials are to be given or delivered shall not be deemed given until received and (y) notices, communications and materials to be given or delivered to the Bank pursuant to Sections 1.02, 1.03(c), 1.05 and 1.07 and Article 4 shall not be deemed given or delivered until received by the officer of the Bank responsible, at the time, for the administration of the Loan Documents. (d) REASONABLE NOTICE. Any requirement under Applicable Law of reasonable notice by the Bank to either Revolver Borrower of any event in connection with, or in any way related to, the Loan Documents or the exercise by the Bank of any -30- of its rights thereunder shall be met if notice of such event is given to such Revolver Borrower in the manner prescribed above at least 10 days before (A) the date of such event or (B) the date after which such event will occur. Section 7.02. EXPENSES; INDEMNIFICATION. Whether or not any Loans are made hereunder, the Revolver Borrowers shall: (a) pay or reimburse the Bank for all transfer, documentary, stamp and similar taxes, and all recording and filing fees and taxes, payable in connection with, arising out of, or in any way related to, the execution, delivery and performance of the Loan Documents or the making of the Loans; (b) pay or reimburse the Bank for all costs and expenses (including fees and disbursements of legal counsel) reasonably incurred by the Bank in connection with, arising out of, or in any way related to (i) the negotiation, preparation, execution and delivery of (A) the Loan Documents and (B) whether or not executed, any waiver, amendment or consent thereunder or thereto, (ii) the administration of and any operations under the Loan Documents, (iii) consulting with respect to any matter in any way arising out of, related to, or connected with, the Loan Documents, including (A) the protection or preservation of the Collateral, (B) the protection, preservation, exercise or enforcement of any of its rights in, under or related to the Collateral or the Loan Documents or (C) the performance of any of its obligations under or related to the Loan Documents, (iv) protecting or preserving the Collateral in accordance with the terms of the Guarantor Security Agreement or (v) protecting, preserving, exercising or enforcing any of its rights in, under or related to the Collateral or the Loan Documents in accordance with the terms thereof; and (c) indemnify and hold each Indemnified Person harmless from and against all losses (including judgments, penalties and fines) suffered, and pay or reimburse each Indemnified Person for all costs and expenses (including fees and disbursements of legal counsel and other experts employed or retained by such Indemnified Person) reasonably incurred, by such Indemnified Person in connection with, arising out of, or in any way related to (i) any Loan Document Related Claim (whether asserted by such Indemnified Person or the Revolver Borrower or any other Person), including the prosecution or defense thereof and any litigation or proceeding with respect thereto (whether or not, in the case of any such litigation or proceeding, such Indemnified Person is a party thereto), or (ii) any investigation, governmental or otherwise, arising out of, related to, or in any way connected with, the Loan Documents or the relationships established thereunder, except that the foregoing indemnity shall not be applicable to any loss suffered by any Indemnified Person to the extent such loss is determined by a judgment of a court that is binding on the Revolver Borrower and such Indemnified Person, final and not subject to review on -31- appeal, to be the result of acts or omissions on the part of such Indemnified Person constituting (x) gross negligence, (y) willful misconduct, or (z) in the case of claims by a Revolver Borrower against such Indemnified Person, such Indemnified Person's failure to observe any other standard applicable to it under any of the other provisions of the Loan Documents or, but only to the extent not waivable thereunder, Applicable Law. Section 7.03. AMOUNTS PAYABLE DUE UPON REQUEST FOR PAYMENT. All amounts payable by the Revolver Borrowers under Section 7.02 and under the other provisions of the Loan Documents shall, except as otherwise expressly provided, be immediately due upon request for the payment thereof. Section 7.04. REMEDIES OF THE ESSENCE. The various rights and remedies of the Bank under the Loan Documents are of the essence of those agreements, and the Bank shall be entitled to obtain a decree requiring specific performance of each such right and remedy. Section 7.05. RIGHTS CUMULATIVE. Each of the rights and remedies of the Bank under the Loan Documents shall be in addition to all of its other rights and remedies under the Loan Documents and Applicable Law, and nothing in the Loan Documents shall be construed as limiting any such rights or remedies. Section 7.06. DISCLOSURES. The Bank may disclose to, and exchange and discuss with, any other Person (the Bank and each such other Person being hereby authorized to do so) any information concerning the Collateral or either Revolver Borrower or any of their respective Subsidiaries (whether received by the Bank or such other Person in connection with or pursuant to the Loan Documents or otherwise) for the purpose of (a) complying with Applicable Law, (b) protecting or preserving the Collateral, (c) protecting, preserving, exercising or enforcing any of its rights in, under or related to the Collateral or the Loan Documents, (d) performing any of its obligations under or related to the Loan Documents or (e) consulting with respect to any of the foregoing matters. Section 7.07. AMENDMENTS; WAIVERS. Any term, covenant, agreement or condition of the Loan Documents may be amended, and any right under the Loan Documents may be waived, if, but only if, such amendment or waiver is in writing and is signed by the Bank and, in the case of an amendment, by the Revolver Borrowers. Unless otherwise specified in such waiver, a waiver of any right under the Loan Documents shall be effective only in the specific instance and for the specific purpose for which given. No election not to exercise, failure to exercise or delay in exercising any right, nor any course of dealing or performance, shall operate as a waiver of any right of the Bank under the Loan Documents or Applicable Law, nor shall any single or partial exercise of any such right preclude any other or -32- further exercise thereof or the exercise of any other right of the Bank under the Loan Documents or Applicable Law. Section 7.08. SET-OFF. The Bank hereby waives any right which it may have at law or otherwise to set off and apply any deposits (general or special, time or demand, provisional or final) at any time held for the account of either of the Revolver Borrowers or both of them against any obligations of the Revolver Borrowers now or hereafter existing under this Agreement. Section 7.09. ASSIGNMENTS AND PARTICIPATIONS. (a) ASSIGNMENTS. (i) Neither Revolver Borrower may assign any or all of its rights and obligations under the Loan Documents without the prior written consent of the Bank, and no assignment of any such obligation shall release a Revolver Borrower therefrom unless the Bank shall have consented to such release in a writing specifically referring to the obligation from which such Revolver Borrower is to be released. (ii) The Bank may from time to time assign all of its rights and obligations under the Loan Documents to one or more Persons; PROVIDED that, except in the case of the grant of a security interest to a Federal Reserve Bank (which may be made without condition or restriction), no such assignment shall be effective unless the assignment is consented to by the Revolver Borrowers (unless an Event of Default specified in Section 5.01(h) or (i) with respect to either Revolver Borrower exists). Upon any effective assignment, the assignor shall be released from the obligations so assigned and, in the case of an assignment of all of its Loans and Commitment, shall cease to be a Bank. In the event of any effective assignment by a Bank, the Revolver Borrowers shall, against receipt of the existing Notes of the assignor Bank, issue new Notes to the assignee Bank appropriately reflecting such assignment. (b) PARTICIPATIONS. The Bank may from time to time sell or otherwise grant participations in any or all of its rights and obligations under the Loan Documents without the consent of either Revolver Borrower. In the event of any such grant by the Bank of a participation, the Bank's obligations under the Loan Documents to the other parties thereto shall remain unchanged, the Bank shall remain solely responsible for the performance thereof, and the Revolver Borrowers may continue to deal solely and directly with the Bank in connection with the Bank's rights and obligations thereunder. The Bank may not grant to any holder of a participation the right to require the Bank to take or omit to take any action under the Loan Documents, except that the Bank may grant to any such holder the right to require such holder's consent to (i) reduce the principal of or the rate of interest on the Loans or the fees payable to the Bank hereunder, (ii) postpone any date fixed for any payment of principal of or interest on the Loans or the fees payable to the Bank hereunder, (iii) permit either of the Revolver Borrowers to assign any of its obligations under the Loan Documents to any -33- other Person or (iv) release any Collateral from the Security Interest except as required or contemplated by the Loan Documents. Each holder of a participation in any rights under the Loan Documents, if and to the extent the applicable participation agreement so provides, shall, with respect to such participation, be entitled to all of the rights of a Bank as fully as though it were a Bank under Sections 1.12, 6.02, 6.03, 6.04, 7.02(c) and 7.07 (subject to any conditions imposed on a Bank hereunder with respect thereto) and may exercise any and all rights of set-off with respect to such participation as fully as though the Revolver Borrowers were directly indebted to the holder of such participation for Loans in the amount of such participation; PROVIDED, HOWEVER, that no holder of a participation shall be entitled to any amounts that would otherwise be payable to it with respect to its participation under Section 1.12 or 6.02 unless such amounts would have been payable to the Bank that granted such participation if such participation had not been granted. Section 7.10. GOVERNING LAW. This Agreement and the Notes (including matters relating to the Maximum Permissible Rate) shall be construed in accordance with and governed by the law of the State of New York (without giving effect to its choice of law principles). Section 7.11. JUDICIAL PROCEEDINGS; WAIVER OF JURY TRIAL. Any judicial proceeding brought against the Revolver Borrowers or either of them with respect to any Loan Document Related Claim may be brought in any state or federal court of competent jurisdiction sitting in the City of New York, and, by execution and delivery of this Agreement, each Revolver Borrower (a) accepts, generally and unconditionally, the nonexclusive jurisdiction of such courts and any related appellate court and irrevocably agrees to be bound by any judgment rendered thereby in connection with any Loan Document Related Claim and (b) irrevocably waives any objection it may now or hereafter have as to the venue of any such proceeding brought in such a court or that such a court is an inconvenient forum. Each Revolver Borrower hereby waives personal service of process and consents that service of process upon it may be made by certified or registered mail, return receipt requested, at its address specified or determined in accordance with the provisions of Section 7.01(a)(ii), and service so made shall be deemed completed on the third Business Day after such service is deposited in the mail. Nothing herein shall affect the right of the Bank or any other Indemnified Person to serve process in any other manner permitted by law or shall limit the right of the Bank or any other Indemnified Person to bring proceedings against either Revolver Borrower in the courts of any other jurisdiction. Any judicial proceeding by either Revolver Borrower against the Bank involving any Loan Document Related Claim shall be brought only in a court located in the City and State of New York. THE REVOLVER BORROWERS AND THE BANK HEREBY WAIVE TRIAL BY JURY IN ANY -34- JUDICIAL PROCEEDING TO WHICH THEY ARE EACH PARTIES INVOLVING ANY LOAN DOCUMENT RELATED CLAIM. Section 7.12. LIMITATION OF LIABILITY. NEITHER THE BANK NOR ANY OTHER INDEMNIFIED PERSON SHALL HAVE ANY LIABILITY WITH RESPECT TO, AND EACH REVOLVER BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE FOR, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES SUFFERED BY SUCH REVOLVER BORROWER IN CONNECTION WITH ANY LOAN DOCUMENT RELATED CLAIM. Section 7.13. SEVERABILITY OF PROVISIONS. Any provision of the Loan Documents that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof or affecting the validity or enforceability of such provision in any other jurisdiction. To the extent permitted by Applicable Law, each Revolver Borrower hereby waives any provision of Applicable Law that renders any provision of the Loan Documents prohibited or unenforceable in any respect. Section 7.14. COUNTERPARTS. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto were upon the same instrument. Section 7.15. SURVIVAL OF OBLIGATIONS. Except as otherwise expressly provided therein, the rights and obligations of the Revolver Borrowers, the Bank and the other Indemnified Persons under the Loan Documents shall survive the Repayment Date and the termination of the Security Interest. Section 7.16. ENTIRE AGREEMENT. This Agreement and the Loan Documents embody the entire agreement among the Revolver Borrowers and the Bank relating to the subject matter hereof and supersede all prior agreements, representations and understandings, if any, relating to the subject matter hereof. Section 7.17. SUCCESSORS AND ASSIGNS. All of the provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. ARTICLE 8 INTERPRETATION Section 8.01. DEFINED TERMS. For the purposes of this Agreement: "ABANDONMENT" means, an abandonment of the Facility pursuant to which the Revolver Borrowers disclaim any operational or beneficial interest in the Facility. -35- "ADJUSTED CD RATE" means, for any Interest Period, a rate per annum equal to the sum (rounded upward, if necessary, to the next higher 1/100 of 1%) of (a) the rate obtained by dividing (i) the CD Rate for such Interest Period by (ii) a percentage equal to 1 minus the Reserve Requirement in effect from time to time during such Interest Period PLUS (b) the Assessment Rate in effect from time to time during such Interest Period. "ADJUSTED EURODOLLAR RATE" means, for any Interest Period, a rate per annum (rounded upward, if necessary, to the next higher 1/16 of 1%) equal to the rate obtained by dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage equal to 1 minus the Reserve Requirement in effect from time to time during such Interest Period. "AFFILIATE" means, with respect to a Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person; unless otherwise specified, "Affiliate" means an Affiliate of the Revolver Borrowers or either of them. "AGREEMENT" means this Agreement, including all schedules, annexes and exhibits hereto. "APPLICABLE LAW" means, anything in Section 7.10 to the contrary notwithstanding, (a) all applicable common law and principles of equity and (b) all applicable provisions of all (i) constitutions, statutes, rules, regulations and orders of governmental bodies, (ii) Governmental Approvals and (iii) orders, decisions, judgments and decrees of all courts (whether at law or in equity or admiralty) and arbitrators. "ASSESSMENT RATE" means, at any time, the annual rate (rounded upwards, if necessary, to the next higher 1/100th of 1%) then estimated by the Bank as the net annual assessment rate that will be employed in determining the annual assessment payable by the Bank to the Federal Deposit Insurance Corporation (or any successor) for insuring domestic Dollar deposits at the Bank. "BANK" means (a) The Bank of New York and (b) any Person that has been assigned any or all of the rights or obligations of the Bank pursuant to Section 7.09(a). "BANK TAX" means any income, revenue, profit or franchise tax imposed upon any Bank by any jurisdiction (or political subdivision thereof) in which the Bank or any of its Lending Offices is located. "BANK'S OFFICE" means the address of the Bank specified in or determined in accordance with the provisions of Section 7.01(a)(ii). -36- "BASE RATE" means, for any day, a rate per annum equal to the higher of (a) the Prime Rate in effect on such day and (b) the sum of the Federal Funds Rate in effect on such day plus 1/2%. "BASE RATE LOAN" means any Loan the interest on which is, or is to be, as the context may require, computed on the basis of the Base Rate. "BEST'S" means A.M. Best & Company. "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on which banks in New York City are authorized to close. "CD RATE" means, for any Interest Period, the prevailing rate per annum (rounded upward, if necessary, to the next higher 1/100 of 1%) bid at approximately 10:00 a.m. (New York time) (or as soon thereafter as is practicable) on the first day of such Interest Period by two or more New York certificate of deposit dealers of recognized standing selected by the Bank for the purchase at face value of certificates of deposit of the Bank in the secondary market in an amount comparable to the principal amount of the CD Rate Loan to which such Interest Period applies and with a maturity comparable to such Interest Period. "CD RATE LOAN" means any Loan the interest on which is, or is to be, as the context may require, computed on the basis of the Adjusted CD Rate. "CD RATE MARGIN" means (a) during the period from the Closing Date through the third anniversary thereof, 0.50%, (b) during the period from but not including the third anniversary of the Closing Date through the fifth anniversary of the Closing Date, 0.5625% and (c) during the period from but not including the fifth anniversary of the Closing Date through the seventh anniversary of the Closing Date, 0.75%. "CLOSING DATE" means the date on which the initial Loan is made hereunder. "CODE" means the Internal Revenue Code of 1986. "COLLATERAL" has the meaning specified in Section 3 of the Guarantor Security Agreement. "COLLATERAL AGENT" means State Street Bank and Trust Company in its capacity as collateral agent under the Guarantor Security Agreement and any successor appointed pursuant thereto. "COMMITMENT" means (a) the amount set forth in Section 1.01, as the same may be reduced from time to time pursuant to Section 1.07, or (b) as the context may require, the obligation -37- of the Bank to make Loans in an aggregate unpaid principal amount not exceeding such amount. "CONTRACT" means (a) any agreement (whether bi-lateral or uni-lateral or executory or non-executory and whether a Person entitled to rights thereunder is so entitled directly or as a third-party beneficiary), including an indenture, lease or license and (b) any deed or other instrument of conveyance. "DEFAULT" means any condition or event that constitutes an Event of Default or that with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "DEFAULTED POWER SALE AGREEMENT" has the meaning stated in Section 5.01(c). "DESCRIPTIVE MEMORANDUM" means the Descriptive Memorandum dated February, 1994, as supplemented, delivered by the Revolver Borrowers to the Bank. "DOLLARS" and the sign "$" mean lawful money of the United States of America. "DOMESTIC LENDING OFFICE" means The Bank of New York, One Wall Street, New York, New York 10286, or such other branch or office of the Bank designated by the Bank from time to time as the branch or office at which Domestic Rate Loans are to be made or maintained. The Bank may from time to time designate separate Domestic Lending Offices for its Base Rate Loans and CD Rate Loans, in which case all references to the Domestic Lending Office shall be deemed to refer to either or both of such Offices, as the context may require. "DOMESTIC NOTE" means a promissory note in the form of EXHIBIT A-1. "DOMESTIC RATE LOAN" means any CD Rate Loan or Base Rate Loan. "EVIRONMENTAL LAWS" has the meaning stated in Section 3.15. "ERISA" means the Employee Retirement Income Security Act of 1974. "EURODOLLAR BUSINESS DAY" means any Business Day on which dealings in Dollar deposits are carried on in the relevant interbank market and on which commercial banks are open for domestic and international business (including dealings in Dollar deposits) in the jurisdiction in which such interbank market is located. -38- "EURODOLLAR LENDING OFFICE" means The Bank of New York, One Wall Street, New York, New York 10286, or such other branch or office of the Bank designated by the Bank from time to time as the branch or office at which Eurodollar Rate Loans are to be made or maintained. "EURODOLLAR NOTE" means a promissory note in the form of EXHIBIT A-2. "EURODOLLAR RATE" means, for any Interest Period, the rate per annum determined by the Bank to be the rate at which it would offer or would have offered to place with first-class banks in the interbank market selected by the Bank deposits in Dollars in amounts comparable to the Eurodollar Rate Loan to which such Interest Period applies, for a period equal to such Interest Period, at the time as of which the Bank makes such determination. "EURODOLLAR RATE LOAN" means any Loan the interest on which is, or is to be, as the context may require, computed on the basis of the Adjusted Eurodollar Rate. "EURODOLLAR RATE MARGIN" means (a) during the period from the Closing Date through the third anniversary thereof, 0.375%, (b) during the period from but not including the third anniversary of the Closing Date through the fifth anniversary of the Closing Date, 0.4375% and (c) during the period from but not including the fifth anniversary of the Closing Date through the seventh anniversary of the Closing Date, 0.625%. "EVENT OF DEFAULT" means any of the events specified in Section 5.01. "EVENT OF LOSS" means (A) damage to or destruction of all or a substantial part of the Facility or a constructive or compromise loss of a substantial part of the Facility based on an insurance settlement as a result of damage to the Facility or (B) any taking of all or a substantial part of the Facility by the exercise of the power of eminent domain. "FACILITY" means the electric generating facility located at Burrillville, Rhode Island, which is comprised of two approximately 250 megawatt units, owned and operated by the respective Revolver Borrowers, together with all rights and interests of the respective Revolver Borrowers therein or related thereto but shall not include any expansion of, or beyond, the two units described above (other than enhancements thereof in the ordinary course of business). Any reference to the Facility in respect of either Revolver Borrower shall be deemed to include only that portion of the Facility in which such Revolver Borrower has an ownership or leasehold interest. "FACILITY CONTRACTS" means, collectively, the Contracts listed on SCHEDULE 3.24, and any other material Contract (whether -39- or not in substitution for any of the foregoing) to which OSP I or OSP II becomes a party after the date of this Agreement relating to the construction, ownership or operation of the Facility, including without limitation the Power Sale Agreements. "FACILITY PERMITS" means the permits listed on SCHEDULE 3.10. "FACILITY SITE" means the parcel of land owned by OSP I and leased, in part, to OSP II at Burrillville, Rhode Island, on which the Facility is located, the parcel of land owned by OSP I and subject to an easement granted to OSP II at Woonsocket, Rhode Island, together with all easements, rights of way and similar property interests appurtenant or related thereto or supporting the Facility. "FEDERAL FUNDS RATE" means, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York or, if such rate is not so published for any day that is a Business Day, the average of quotations for such day on such transactions received by The Bank of New York from three Federal funds brokers of recognized standing selected by such bank. "FERC" means the Federal Energy Regulatory Commission and any successor thereto. "FIXED RATE LOAN" means any CD Rate Loan or Eurodollar Rate Loan. "GAAP" means generally accepted accounting principles and, where applicable, the Uniform System of Accounts of FERC, in each case as in effect at the time of application to the provisions hereof. "GOVERNMENTAL APPROVAL" means any authorization, consent, approval, license or exemption of, registration or filing with, or report or notice to, any governmental unit. "GOVERNMENTAL BODY" means any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality (including, without limitation, the SEC, the RIDPUC and FERC). "GUARANTEE" means, with respect to any Person, any guarantee or other contingent liability (other than any endorsement for collection or deposit in the ordinary course of business), direct or indirect, with respect to any obligation of another Person, through an agreement or otherwise, including without limitation: -40- A. any other endorsement or discount with recourse or undertaking substantially equivalent to or having economic effect similar to a guarantee in respect of any such obligation, B. any agreement (1) to purchase, or to advance or supply funds for the payment or purchase of, any such obligation, (2) to purchase, sell or lease property, products, materials or supplies, or transportation or services, for the purpose of enabling such other Person to pay any such obligation or to assure the Person to which such obligation is owed against loss, in each case regardless of the delivery or nondelivery of the property, products, materials or supplies, or transportation or services or (3) to make any loan, advance or capital contribution to or other investment in, or to otherwise provide funds to or for, such other Person for the purpose of enabling such Person to satisfy any obligation (including any liability for a dividend, stock liquidation payment or expense) or to assure a minimum equity, working capital or other balance sheet condition in respect of any such obligation and C. any indirect liability of such Person arising as a result of its status as a joint venturer or partner in a joint venture or partnership. The amount of any Guarantee shall be equal to the outstanding amount of the obligation directly or indirectly guaranteed. "GUARANTOR AGREEMENT" means the Guarantor Agreement dated as of October 19, 1992 among OSP Finance Company, OSP I and OSP II, as amended. "GUARANTOR NOTES" means the promissory notes delivered by OSP I and OSP II pursuant to the Guarantor Agreement. "GUARANTOR SECURITY AGREEMENT" means the Guarantor Security Agreement, dated as of October 19, 1992, among OSP I, OSP II and State Street Bank and Trust Company, as Collateral Agent. "HAZARDOUS MATERIALS" has the meaning stated in Section 3.15. "INDEBTEDNESS" of any Person means, as of any date A. all obligations of such Person for borrowed money, B. all obligations of such Person for the deferred (for 90 days or more) purchase price of property or services -41- (other than trade payables and accrued expenses incurred in the ordinary course of business), C. all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, D. all rental obligations of such Person under leases to the extent such obligations would appear as a liability on a balance sheet of such Person in accordance with GAAP (other than as may be created under the Inter-Guarantor Agreements), E. all direct and indirect Guarantees of such Person with respect to obligations of other Persons of any type referred to in the preceding Subsections A through D, and F. obligations of other Persons (not assumed by such Person) secured by any Lien upon property owned by such Person. "INDEMNIFIED PERSON" means any Person that is, or at any time was, the Bank, an Affiliate of the Bank or a director, officer, employee or agent of any such Person. "INFORMATION" means data, certificates, reports, statements (including financial statements), opinions of counsel, documents and other information. "INTEREST PAYMENT DATE" means the last Business Day of each March, June, September and December. "INTEREST PERIOD" means a period commencing, in the case of the first Interest Period applicable to a Fixed Rate Loan, on the date of the making of, or conversion into, such Loan, and, in the case of each subsequent, successive Interest Period applicable thereto, on the last day of the immediately preceding Interest Period, and ending, depending on the Type of Loan, in the case of Eurodollar Interest Periods, on the same day in the first, second, third, sixth or twelfth calendar month thereafter, and, in the case of CD Interest Periods, on the day 30, 60, 90 or 180 days thereafter, except that (a) any Interest Period that would otherwise end on a day that is not a Business Day or, in the case of a Eurodollar Interest Period or a CD Interest Period for a CD Rate Loan being converted into a Eurodollar Rate Loan, a Eurodollar Business Day shall be extended to the next succeeding Business Day or Eurodollar Business Day, as the case may be, unless, in the case of a Eurodollar Interest Period, such Eurodollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Eurodollar Business Day and (b) any Eurodollar Interest Period that begins on the last Eurodollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month in which such Interest -42- Period ends) shall end on the last Eurodollar Business Day of a calendar month. "CD INTEREST PERIOD" and "EURODOLLAR INTEREST PERIOD" mean, respectively, an Interest Period applicable to a CD Rate Loan and a Eurodollar Rate Loan. "INTER-GUARANTOR AGREEMENTS" means any Contract to which both OSP I and OSP II are parties providing for their respective rights and obligations regarding properties and assets comprising the Facility and the coordinated construction and operation thereof, including but not limited to the Ground Lease, the Common Facilities Lease, the Facilities Coordination Agreement, the Cross-Easement Agreement, the Woonsocket Easement Agreement and the Option Agreement, in each case between OSP I and OSP II and dated as of September 29, 1989, but excluding the Guarantor Agreement and the Guarantees of OSP I and OSP II on the notes of OSP Finance Company issued pursuant to the Note and Guaranty Agreement. "INVESTMENT" means any investment so classified under GAAP, made by stock purchase, capital contribution, loan or advance or by purchase of property or otherwise, but in any event shall include as an investment in any Person the amount of all Indebtedness owned by such Person and all accounts receivable from such Person which are not current assets or did not arise from sales to such Person in the ordinary course of business. "LENDING OFFICE" means the Domestic Lending Office or the Eurodollar Lending Office. "LIABILITY" as applied to a Person, means an obligation or liability, whether arising under Contract, applicable law or regulation or otherwise, in each case to the extent such obligation or liability does not otherwise constitute Indebtedness of such Person. "LIEN" means, as to any Person, any mortgage, pledge, security interest, encumbrance, lien, charge, adverse claim or other arrangement having the effect of the foregoing and shall include the interest of a vendor or lessor under any conditional sale agreement or capitalized lease (other than as may be created under the Inter-Guarantor Agreements) or the signing or filing of a financing statement that names such Person as debtor or the signing of any security agreement authorizing any other Person as the secured party to file any financing statement. "LOAN" means any amount advanced by the Bank pursuant to Section 1.01. "LOAN DOCUMENT RELATED CLAIM" means any claim or dispute (whether arising under Applicable Law, including any "environmental" or similar law, under Contract or otherwise and, in the case of any proceeding relating to any such claim or dispute, whether civil, criminal, administrative or otherwise) in any way arising out of, related to, or connected with, the Loan -43- Documents, the relationships established thereunder or any actions or conduct thereunder or with respect thereto, whether such claim or dispute arises or is asserted before or after the Closing Date or before or after the Repayment Date. "LOAN DOCUMENT REPRESENTATION AND WARRANTY" means any "Representation and Warranty" as defined in any Loan Document and any other representation or warranty made or deemed made under any Loan Document. "LOAN DOCUMENTS" means (a) this Agreement, the Notes, the Guarantor Security Agreement and (b) all other agreements, documents and instruments relating to, arising out of, or in any way connected with any agreement, document or instrument referred to in clause (a) or this clause (b) or any of the transactions contemplated by any thereof. "MANAGEMENT COMMITTEE" means the OSP I Management Committee and the OSP II Management Committee, created pursuant to the OSP I Partnership Agreement or the OSP II Partnership Agreement, respectively. "MATERIALLY ADVERSE EFFECT" means, as to each Revolver Borrower, a material adverse effect on (a) the ability of such Revolver Borrower to perform its obligations under this Agreement, the Notes, any other Loan Document or any other Indebtedness of such Revolver Borrower, (b) the validity or enforceability of this Agreement, the Notes, any other Loan Document, or of the rights or remedies of the Collateral Agent under the Guarantor Security Agreement, (c) the validity or enforceability of, or performance of such Revolver Borrower under, any Power Sale Agreement to which such Revolver Borrower is a party, or of the rights or remedies of such Revolver Borrower thereunder; or (d) the overall business, operations, affairs or condition (financial or other) of such Revolver Borrower. "MAXIMUM PERMISSIBLE RATE" means, with respect to interest payable on any amount, the rate of interest on such amount that, if exceeded, could, under Applicable Law, result in (a) civil or criminal penalties being imposed on the payee or (b) the payee's being unable to enforce payment of (or, if collected, to retain) all or any part of such amount or the interest payable thereon. "MOODY'S" means Moody's Investors Service, Inc. "NOTE" means any Domestic Note or Eurodollar Note. "NOTE AND GUARANTY AGREEMENT" means the Note and Guaranty Agreement, dated as of October 19, 1992, among OSP Finance Company, OSP I, OSP II and the several Purchasers named therein. -44- "OFFICER'S CERTIFICATE" means, (A) with respect to any Person which is a corporation, a certificate signed by the Chairman of the Board of such Person (if an executive officer) or its President or one of its Vice Presidents and by its Treasurer or one of its Assistant Treasurers and (B) with respect to any Person which is a partnership, a certificate signed by any of the aforementioned executive officers of a general partner of such Person. "O&M AGREEMENT" means the Operation and Maintenance Agreement, dated as of July 7, 1988, between OSP I and General Electric Company, as in part assigned to OSP II by OSP I pursuant to the Partial Assignment Agreement, dated as of September 29, 1989. "OSP I" means Ocean State Power, a Rhode Island general partnership. "OSP I PARTNERS" means TCPL Power Ltd., EUA Ocean State Corporation, Narragansett Energy Resources Company and JMC Ocean State Corporation. "OSP II" means Ocean State Power II, a Rhode Island general partnership. "OSP II PARTNERS" means TCPL Power Ltd., EUA Ocean State Corporation, Narragansett Energy Resources Company and JMC Ocean State Corporation. "OSP I PARTNERSHIP AGREEMENT" means the Amended and Restated Partnership Agreement of OSP I, dated as of December 2, 1988, among the OSP I Partners. "OSP II PARTNERSHIP AGREEMENT" means the Amended and Restated Partnership Agreement of OSP II, dated as of September 29, 1989, among the OSP II Partners. "PARTNERS" means the OSP I Partners and the OSP II Partners. "PBGC" means the Pension Benefit Guaranty Corporation. "PERMITTED INVESTMENTS" means Investments that are A. obligations issued or guaranteed by the United States of America and maturing within one year after acquisition thereof; B. obligations issued or guaranteed by any state or political subdivision of the United States of America, maturing within one year after acquisition thereof, with a rating of at least "A-1", "MIG-1" or "P-1" by Moody's and "A+", "SP-1" or "A-1" by S&P (or either of them if such obligation is rated by only one such rating agency); -45- C. open-market commercial paper, maturing within 270 days after issuance thereof, issued by U.S. domestic corporations having on any date of determination a commercial paper rating of at least "P-1" by Moody's and "A-1" by S&P (or either of them if such commercial paper is rated by only one such rating agency); D. investments in time deposits or certificates of deposit, maturing within one year after acquisition thereof, issued by or banker's acceptances eligible for rediscount under the requirements of the Board of Governors of the Federal Reserve System drawn on and accepted by (i) The Bank of New York or (ii) a domestic commercial bank or the U.S. branch of a foreign bank (a) with a bank deposit rating or a commercial paper rating of at least "P-1" by Moody's and "A-1" by S&P (or either of them if such bank is rated by only one such rating agency) or, if such bank does not have a commercial paper or bank deposit rating, an outstanding long-term debt rating of at least "A" by S&P, (b) that is a member of the Federal Deposit Insurance Corporation and (c) having a combined capital, surplus and undistributed profits of at least $500,000,000; E. fully secured repurchase obligations with a term of not more than 30 days for underlying securities of the types referred to in clauses A or B entered into with The Bank of New York or any bank meeting the qualifications specified in clause D; F. assets acquired by either Revolver Borrower pursuant to the Property Value Stabilization Plan; and G. in a money market fund the portfolio of which consists solely of investments described in paragraphs A-E above. "PERSON" means any individual, sole proprietorship, corporation, partnership, trust, unincorporated organization, mutual company, joint stock company, estate, union, employee organization, government or any agency or political subdivision thereof. "POST-DEFAULT RATE" means the rate otherwise applicable under Section 1.03(a) plus 2.0%. "POWER PURCHASERS" means Boston Edison Company, New England Power Company, Montaup Electric Company and Newport Electric Corporation (until such time as it shall assign all of its rights and obligations under the Power Sale Agreements to which it is a party to Montaup Electric Company) and any purchaser of power from the Facility pursuant to a Substitute Power Sale Agreement entered into pursuant to Section 12A(3) of the Note and Guaranty Agreement. -46- "POWER SALE AGREEMENTS" means (A) with respect to OSP I, the Unit Power Agreement, dated as of December 31, 1985, between OSP I and Boston Edison Company; the Unit Power Agreement, dated as of May 14, 1986, between OSP I and New England Power Company; the Unit Power Agreement, dated May 14, 1986, between OSP I and Montaup Electric Company; and the Unit Power Agreement, dated as of May 14, 1986, between OSP I and Newport Electric Corporation (assigned to Montaup Electric Company), (B) with respect to OSP II, the Unit Power Agreement, dated as of July 1, 1988, between OSP II and Boston Edison Company; the Unit Power Agreement, dated as of June 15, 1988, between OSP II and New England Power Company; the Unit Power Agreement, dated as of September 28, 1988 between OSP II and Montaup Electric Company; and the Unit Power Agreement, dated as of July 12, 1988, between OSP II and Newport Electric Corporation and (C) any Substitute Power Sale Agreement entered into pursuant to Section 12A(3) of the Note and Guaranty Agreement. "POWER SALE REVENUES" means all amounts payable to the Revolver Borrowers in respect of the most recently concluded billing period prior to the date of determination pursuant to the Power Sale Agreements, without regard to whether any of the Power Sale Agreements is a Defaulted Power Sale Agreement. "PRIME RATE" means the prime commercial lending rate of The Bank of New York, as publicly announced to be in effect from time to time. The Prime Rate shall be adjusted automatically, without notice, on the effective date of any change in such prime commercial lending rate. The Prime Rate is not necessarily The Bank of New York's lowest rate of interest. "PROPERTY VALUE STABILIZATION PLAN" means the property value stabilization plan adopted pursuant to the Mitigation Agreement, dated December 27, 1988, between OSP I and Tennessee (as defined in the Note and Guaranty Agreement), together with any additional requirements as to mitigation of the effects of Facility operations on properties within the vicinity of the Facility Site imposed by any Governmental Body. "REFINANCING DOCUMENTS" means the Note and Guaranty Agreement, the notes issued pursuant thereto (the "OSP Finance Notes"), the Borrower Security Agreement (as defined in the Note and Guaranty Agreement), the Guarantor Security Agreement, the Guarantor Agreement, the Guarantor Notes and the Guarantees of OSP I and OSP II endorsed on the OSP Finance Notes, and all documents, agreements and instruments executed and delivered in connection therewith. "REGULATION D" means Regulation D of the Board of Governors of the Federal Reserve System. "REGULATORY CHANGE" means any Applicable Law, interpretation, directive, request or guideline (whether or not having the force of law), or any change therein or in the -47- administration or enforcement thereof, that becomes effective or is implemented or first required or expected to be complied with after the Closing Date, whether the same is (a) the result of an enactment by a government or any agency or political subdivision thereof, a determination of a court or regulatory authority, or otherwise or (b) enacted, adopted, issued or proposed before or after the Closing Date, including any such that imposes, increases or modifies any Tax, reserve requirement, insurance charge, special deposit requirement, assessment or capital adequacy requirement, but excluding any such that imposes, increases or modifies any Bank Tax. "REPAYMENT DATE" means the later of (a) the termination of the Commitment (whether as a result of the occurrence of the Termination Date, reduction to zero pursuant to Section 1.07 or termination pursuant to Section 5.02) and (b) the payment in full of the Loans and all other amounts payable or accrued hereunder. "REPRESENTATION AND WARRANTY" means any representation or warranty made pursuant to or under (a) Section 2.02, Article 3 or any other provision of this Agreement or (b) any amendment to, or waiver of rights under, this Agreement, WHETHER OR NOT, IN THE CASE OF ANY REPRESENTATION OR WARRANTY REFERRED TO IN CLAUSE (a) OR (b) OF THIS DEFINITION (EXCEPT, IN EACH CASE, TO THE EXTENT OTHERWISE EXPRESSLY PROVIDED), THE INFORMATION THAT IS THE SUBJECT MATTER THEREOF IS WITHIN THE KNOWLEDGE OF THE REVOLVER BORROWER MAKING SUCH REPRESENTATION OR WARRANTY. "RESERVE REQUIREMENT" means, at any time, the then current maximum rate for which reserves (including any marginal, supplemental or emergency reserve) are required to be maintained under Regulation D by member banks of the Federal Reserve System in New York City with deposits comparable in amount to those of the Bank against (a) in the case of a CD Rate Loan, negotiable certificates of deposit in an amount of $100,000 or more with a term comparable to the Interest Period applicable to such Loan and (b) in the case of a Eurodollar Rate Loan, "Eurocurrency liabilities", as that term is used in Regulation D. The Adjusted CD and Adjusted Eurodollar Rates shall be adjusted automatically on and as of the effective date of any change in the applicable Reserve Requirement. "RESTRICTED PAYMENT" means, with respect to any Person, A. the declaration of any dividend or distribution on, or the incurrence of any liability to make any other payment or distribution in respect of, any equity capital of such Person (other than one payable solely in its common equity), and B. any payment or distribution on account of the purchase, redemption or other retirement of any equity capital of such Person, or of any warrant, option or other right to acquire such equity capital, or any other payment -48- or distribution (other than pursuant to a dividend or distribution theretofore declared or liability theretofore incurred as specified in Subsection A above), made in respect thereof, either directly or indirectly. "REVOLVER BORROWER" means OSP I or OSP II; Revolver Borrowers means the Revolver Borrowers and each of them, individually and collectively. "RIDPUC" means the Rhode Island Division of Public Utilities and Carriers. "S&P" means Standard & Poor's Corporation. "SEC" means the Securities and Exchange Commission. "SECURED PARTY" means the Holders and the Additional Creditors, as such terms are defined in the Guarantor Security Agreement as in effect on the Closing Date. "SECURITY INTEREST" means the Liens created, or purported to be created, by the Loan Documents. "SENIOR INDEBTEDNESS" means the Indebtedness of the Revolver Borrowers constituting Guarantees of the Revolver Borrowers on the notes of OSP Finance Company issued pursuant to the Note and Guaranty Agreement and the Indebtedness of the Revolver Borrowers incurred hereunder. "SITE RESTORATION FUNDS" means the funds established under each of the Site Restoration Trust Agreement, dated as of April 17, 1991, between The Bank of New York and OSP and the Site Restoration Trust Agreement, dated as of September 30, 1991, between The Bank of New York and OSP II (each, a "Site Restoration Trust Agreement"), for Site Restoration (as defined in the Site Restoration Trust Agreements. "SUBSIDIARY" means, with respect to any Person, any other Person (a) securities of which having ordinary voting power to elect a majority of the board of directors (or other persons having similar functions) or (b) other ownership interests of which ordinarily constituting a majority voting interest, are at the time, directly or indirectly, owned or controlled by such first Person, or by one or more of its Subsidiaries, or by such first Person and one or more of its Subsidiaries; unless otherwise specified, "Subsidiary" means a Subsidiary of the Revolver Borrowers or either of them. "TAX" means any Federal, State or foreign tax, assessment or other governmental charge or levy (including any withholding tax) upon a Person or upon its assets, revenues, income or profits. -49- "TENNESSEE SECURITY ACCOUNT" means the accounts of OSP and OSP II maintained at the Collateral Agent for the purpose of accepting payments by the Power Purchasers to OSP and OSP II, respectively, of specified charges under the Power Sale Agreements. "TERMINATION DATE" means the seventh anniversary of Closing Date. "TOTAL CAPITALIZATION" means, as of any date of determination and as to both Revolver Borrowers in the aggregate, the sum as of such date of (A) the total shareholders' equity of the Revolver Borrowers, determined in accordance with GAAP (but excluding any portion thereof attributable to any write-up in the book value of any asset on the books of the Revolver Borrowers resulting from a revaluation thereof on other than a cost basis subsequent to December 31, 1991), and (B) the aggregate outstanding principal amount of Indebtedness of the Revolver Borrowers incurred pursuant to Section 4.13. "TYPE" means, with respect to Loans, any of the following, each of which shall be deemed to be a different "Type" of Loan: Base Rate Loans, CD Rate Loans having a 30-day Interest Period, CD Rate Loans having a 60-day Interest Period, CD Rate Loans having a 90-day Interest Period, CD Rate Loans having a 180-day Interest Period, Eurodollar Rate Loans having a one-month Interest Period, Eurodollar Rate Loans having a two-month Interest Period, Eurodollar Rate Loans having a three-month Interest Period, Eurodollar Rate Loans having a six-month Interest Period and Eurodollar Rate Loans having a twelve-month Interest Period. Any CD Rate Loan or Eurodollar Rate Loan having an Interest Period with a duration that differs from the duration specified for a Type of CD Rate Loan or Eurodollar Rate Loan, as the case may be, listed above solely as a result of the operation of clauses (a) and (b) of the definition of "Interest Period" shall be deemed to be a Loan of such above-listed Type notwithstanding such difference in duration of Interest Periods. Section 8.02. OTHER INTERPRETIVE PROVISIONS. (a) Except as otherwise specified herein, all references herein (i) to any Person shall be deemed to include such Person's successors and assigns, (ii) to any Applicable Law defined or referred to herein shall be deemed references to such Applicable Law or any successor Applicable Law as the same may have been or may be amended or supplemented from time to time and (iii) to any Loan Document or Contract defined or referred to herein shall be deemed references to such Loan Document or Contract (and, in the case of any Note or any other instrument, any instrument issued in substitution therefor) as the terms thereof may have been or may be amended, supplemented, waived or otherwise modified from time to time. (b) When used in this Agreement, the words "herein", "hereof" and "hereunder" and words of similar import shall refer -50- to this Agreement as a whole and not to any provision of this Agreement, and the words "Article", "Section", "Annex", "Schedule" and "Exhibit" shall refer to Articles and Sections of, and Annexes, Schedules and Exhibits to, this Agreement unless otherwise specified. (c) Whenever the context so requires, the neuter gender includes the masculine or feminine, the masculine gender includes the feminine, and the singular number includes the plural, and vice versa. (d) Any item or list of items set forth following the word "including", "include" or "includes" is set forth only for the purpose of indicating that, regardless of whatever other items are in the category in which such item or items are "included", such item or items are in such category, and shall not be construed as indicating that the items in the category in which such item or items are "included" are limited to such items or to items similar to such items. (e) Each authorization in favor of the Bank or any other Person granted by or pursuant to this Agreement shall be deemed to be irrevocable and coupled with an interest. (f) Except as otherwise specified herein, all references herein to the Bank or either Revolver Borrower shall be deemed to refer to such Person however designated in the Loan Documents, so that (i) a reference to rights of the Bank under the Loan Documents shall be deemed to include the rights of the Bank as a Secured Party under the Guarantor Security Agreement, (ii) a reference to costs incurred by the Bank in connection with the Loan Documents shall be deemed to include costs incurred by the Bank as a Secured Party under the Guarantor Security Agreement and (iii) a reference to the obligations of the Revolver Borrowers or either of them under the Loan Documents shall be deemed to include the obligations of the Revolver Borrower(s) as the Obligor(s) under the Guarantor Security Agreement. Section 8.03. ACCOUNTING MATTERS. Unless otherwise specified herein, all accounting determinations hereunder and all computations utilized by the Revolver Borrowers in complying with the covenants contained herein shall be made, all accounting terms used herein shall be interpreted, and all financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP, except, in the case of such financial statements, for departures from GAAP that may from time to time be approved in writing by the independent certified public accountants who are at the time, in accordance with Section 4.21(b), reporting on the Revolver Borrowers' respective financial statements. Section 8.04. REPRESENTATIONS AND WARRANTIES. All Representations and Warranties shall be deemed made in the case -51- of any Representation and Warranty contained in this Agreement at the time of its initial execution and delivery, at and as of the Closing Date, and except for Representations and Warranties expressly contemplated by this Agreement as being made only at and as of the Closing Date, (a) in the case of any Representation and Warranty contained in this Agreement or any other document at the time any Loan is made, at and as of such time and (b) in the case of any particular Representation and Warranty, wherever contained, at such other time or times as such Representation and Warranty is made or deemed made in accordance with the provisions of this Agreement or the document pursuant to, under or in connection with which such Representation and Warranty is made or deemed made. Section 8.05. CAPTIONS. Captions to Articles, Sections and subsections of, and Annexes, Schedules and Exhibits to, this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or in any way affect the meaning or construction of any provision of this Agreement. Section 8.06. INTERPRETATION OF RELATED DOCUMENTS. Except as otherwise specified therein, terms that are defined herein that are used in Notes, certificates, opinions and other documents delivered in connection herewith shall have the meanings ascribed to them herein and such documents shall be otherwise interpreted in accordance with the provisions of this Article 8. -52- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers all as of the Closing Date. OCEAN STATE POWER By JMC Ocean State Corporation, its General Partner By /s/ --------------------------------------- Name: Richard H. King, Jr. Title: Senior Vice President and Assistant Secretary OCEAN STATE POWER II By JMC Ocean State Corporation, its General Partner By /s/ -------------------------------------- Name: Richard H. King, Jr. Title: Senior Vice President and Assistant Secretary THE BANK OF NEW YORK By /s/ ------------------------------------ Name: John W. Hall Title: Vice President Closing Date: July 21, 1994 -53- SCHEDULE 1.02 NOTICE OF BORROWING [Name and address of Bank in accordance with Section 7.01(b)(ii)] Date: Gentlemen: Reference is made to the Secured Credit Agreement, dated as of ___________ , 1994, among Ocean State Power, Ocean State Power II and The Bank of New York (the "Credit Agreement"). The undersigned hereby gives notice pursuant to Section 1.02 of the Credit Agreement of its request to have the following Loans made to it on [insert requested date of borrowing]: TYPE OF LOAN(1) AMOUNT --------------- ------ _________________________________ ______________ _________________________________ ______________ _________________________________ ______________ [Please disburse the proceeds of the Loans by [insert requested method of disbursement].](2) The undersigned represents and warrants that (a) the borrowing requested hereby complies with the requirements of Section 1.02 of the Credit Agreement and (b) [except to the extent set forth on Annex A hereto,](3) (i) each Loan Document Representation and Warranty (other than those made solely at and as of the Closing Date) is true and correct at and as of the date hereof and (except to the extent the undersigned gives notice to the Bank to the contrary prior to 5:00 p.m. (New York time) on the Business Day before the requested date for the making of the Loans) will be true and correct at and as of the time the Loans are made, in each case both with and without giving effect to the Loans and the application of the proceeds thereof, and (ii) no Default has occurred and is continuing as of the date hereof or would result from the making of the Loans or from the application of the proceeds thereof if the Loans were made on the date hereof, and (except to the extent the undersigned gives notice to the Bank to the contrary prior to 5:00 p.m. (New York time) on the Business Day before the requested date for the making of the Loans) no Default will have occurred and be continuing at the time the Loans are to be made or would result from the making of the Loans or from the application of the proceeds thereof. [OCEAN STATE POWER] [OCEAN STATE POWER II] By JMC Ocean State Corporation, its General Partner By ---------------------------------- Name: Title: _____________________ 1. Be sure to specify the duration of the Interest Period in the case of Fixed Rate Loans (E.G., one-month Eurodollar Rate). 2. Include and complete this sentence if the proceeds of the requested Loans are to be disbursed in a manner other than by credit to an account of the Revolver Borrower at the Bank's Office. 3. If the representation and warranty in either clause (b)(i) or (b)(ii) would be incorrect, include the material in brackets and set forth the reasons such representation and warranty would be incorrect on an attachment labeled Annex A. -2- SCHEDULE 1.03(C)(IV) NOTICE OF CONVERSION OR CONTINUATION [Name and address of Bank in accordance with Section 7.01(b)(ii)] Date: Gentlemen: Reference is made to the Secured Credit Agreement, dated as of ___________ ___, 1994, among Ocean State Power, Ocean State Power II and The Bank of New York (the "Credit Agreement"). The undersigned hereby gives notice pursuant to Section 1.03(c)(iv) of the Credit Agreement of its desire to convert or continue the Loans specified below into or as Loans of the Types and in the amounts specified below on [insert date of conversion or continuation]: Converted Loans to be Converted or Continued or Continued Loans - ---------------------------------- ------------------ Last Day of Type Current Type of Loan(1) Interest Period Amount of Loan(1) Amount - ---------- --------------- ------ ---------- ------ __________ _______________ ______ __________ _______ __________ _______________ ______ __________ _______ __________ _______________ ______ __________ _______ The undersigned represents and warrants that conversions and continuations requested hereby comply with the requirements of Section 1.03(c) of the Credit Agreement. [OCEAN STATE POWER] [OCEAN STATE POWER II] By JMC Ocean State Corporation, its General Partner By ------------------------------------ Name: Title: ____________________ 1. Be sure to specify the duration of the Interest Period in the case of Fixed Rate Loans (E.G., one-month Eurodollar Rate). SCHEDULE 1.05 NOTICE OF PREPAYMENT [Name and address of Bank in accordance with Section 7.01(b)(ii)] Date: Gentlemen: Reference is made to the Secured Credit Agreement, dated as of __________ ___, 1994, among Ocean State Power, Ocean State Power II and The Bank of New York (the "Credit Agreement"). The undersigned hereby gives notice pursuant to Section 1.05 of the Credit Agreement that it will prepay the Loans specified below on [insert date of prepayment]: Last Day of Current Type of Loan(1) Interest Period Amount -------------- --------------- ------ ______________ _______________ _______ ______________ _______________ _______ ______________ _______________ _______ The undersigned represents and warrants that the prepayment requested hereby complies with the requirements of Section 1.05 of the Credit Agreement. [OCEAN STATE POWER] [OCEAN STATE POWER II] By JMC Ocean State Corporation, its General Partner By ------------------------------------ Name: Title: ____________________ 1. Be sure to specify the duration of the Interest Period in the case of Fixed Rate Loans (E.G., one-month Eurodollar Rate). SCHEDULE 2.01(A)(V)-1 OPINION OF REVOLVER BORROWER'S COUNSEL Schedule 2.01(a)(v)-1 [Letterhead: DICKSTEIN, SHAPIRO & MORIN, L.L.P.] July 20, 1994 The Bank of New York One Wall Street New York, New York 10286 Gentlemen: We have acted as special counsel to Ocean State Power and Ocean State Power II (together, the "Revolver Borrowers" and each of them, a "Revolver Borrower") in connection with the execution and delivery of the Credit Agreement, dated as of July 20, 1994, among the Revolver Borrowers and The Bank of New York (the "Credit Agreement"). Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to them in the Credit Agreement. For the purposes of rendering the opinions set forth below, we have examined originals or copies identified to our satisfaction of each of the following: 1. The Credit Agreement, the Guarantor Security Agreement and the Supplement thereto, and the Notes (collectively, the "Loan Documents"); 2. The Power Sale Agreements; and 3. The general partnership agreement of each Revolver Borrower. In rendering the opinions expressed below, we have also examined the originals or copies identified to our satisfaction of such partnership records, agreements and instruments of the Revolver Borrowers, certificates of public officials and other documents as we have deemed appropriate as a basis for the opinions hereinafter expressed. We have relied solely on The Bank of New York July 20, 1994 Page 2 certificates, orders, decrees, correspondence and other documents from public officials as to the matters stated in such documents. As to questions of fact material to these opinions, we have relied upon representations (including, without limitation, representations of the Revolver Borrowers set forth in the Loan Documents) and certifications of representatives of the Revolver Borrowers. We have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to authentic original documents of all documents submitted to us as certified, conformed or photostatic copies. We have further assumed that: (a) the Loan Documents have been duly authorized, executed and delivered by the respective parties thereto, (b) the Loan Documents constitute legal, valid and binding obligations of, and are enforceable in accordance with their terms against, each of the respective parties thereto, (c) each of the parties to the Loan Documents is duly organized and validly existing under the laws of its respective jurisdiction of organization and has full power, authority and legal right to execute, deliver and perform each Loan Document to which it is a party and (d) each of the parties to the Loan Documents (except, to the extent set forth below, the Revolver Borrowers) has received and will maintain in full force and effect all Approvals (as hereinafter defined) required by applicable law (by reason of such Person's legal or regulatory status or otherwise) for the due execution, delivery and performance by such Person of the Loan Documents to which it is a party, and that such execution, delivery and performance does not conflict with any provision of applicable law. For the purposes of the opinion rendered in paragraph 3 below, we have assumed that all applicable laws and regulations have been duly enacted and validly promulgated, that all regulatory agencies, boards and commissions have been duly constituted and that all public officials and all members of said agencies, boards and commissions have been duly appointed and are lawfully holding the positions to which they have been elected or appointed, and that any actions taken by them under delegated authority are undertaken pursuant to properly delegated authority. The opinions expressed below are limited to the present laws of the State of New York ("New York Law") and the present The Bank of New York July 20, 1994 Page 3 Federal laws of the United States of America ("Federal Law"), and we express no opinion as to the laws of any other jurisdiction. 1. The execution and delivery by each Revolver Borrower of the Credit Agreement and each of the other Loan Documents, the borrowings thereunder, the consummation of the transactions contemplated thereby and the performance by each Revolver Borrower of its obligations thereunder do not and will not result in any violation or breach of, any default under or, except as specifically contemplated thereby, the creation of any Lien in respect of either Revolver Borrower's property pursuant to or under (a) any order, decision, judgment or decree of any Governmental Body or any provision of Federal Law or New York Law applicable to such Revolver Borrower, or (b) any material agreement or instrument known to us to which it is a party or by which it is bound. The opinion expressed in clause (a) above is limited to our review of only those laws and regulations that, in our experience, are applicable to the transactions contemplated by the Loan Documents. 2. Except as set forth in Schedule 3.06 to the Credit Agreement, to our knowledge after due inquiry, there is no action, proceeding or investigation pending or, to our knowledge, threatened against either Revolver Borrower or any of its assets or properties which questions the validity of the Credit Agreement, or any of the other Loan Documents or any action taken or to be taken pursuant thereto or which otherwise could, if adversely determined, reasonably be expected to result, either alone or in the aggregate, in any Materially Adverse Effect. 3. No Governmental Approval is required to be obtained or made by either Revolver Borrower under applicable Federal Law or New York Law for the execution and delivery by such Revolver Borrower of the Credit Agreement or any other Loan Document or any instrument contemplated hereby or thereby, for the borrowings by such Revolver Borrower thereunder or for the performance of any of its obligations thereunder (other than obligations constituting Non-Credit Obligations (as hereinafter defined), as to which we express no opinion) except for the approval listed at Item I.A.2(a) and Item I.B.2(d) of Schedule 3.10 to the Credit Agreement (the "SEC Approval"). As used herein, "Non-Credit Obligations" of a Revolver Borrower means the obligations of such Borrower under the Credit Agreement and the other Loan Documents that relate generally to the ownership, development, The Bank of New York July 20, 1994 Page 4 construction, completion, administration, operation and maintenance of the Facility. The SEC Approval has been obtained, is in full force and effect, has not been modified in any way and is sufficient under the Public Utility Holding Company Act of 1935, as amended ("PUHCA") and the rules and regulations promulgated thereunder to authorize the execution, delivery and performance by the Revolver Borrowers of the Credit Agreement and the other Loan Documents. Assuming the due and proper filing with the Securities and Exchange Commission ("SEC") of the certificate required by Rule 24 promulgated by the SEC under PUHCA, the SEC Approval is not subject to any unsatisfied condition. As noted in Schedule 3.10, SEC Approval is subject to judicial review during the sixty days following the date of its issuance; however, no objection to the SEC Approval may be considered by a court on appeal unless such objection was raised before the SEC or there were reasonable grounds for the failure to do so. The record of the SEC in the proceeding under which the SEC Approval was issued reflects that no Person has filed with the SEC any objection to the issuance thereof, and to our knowledge, no Person has asserted any opposition thereto. We note that, should any appeal or review of the SEC Approval be sought by any Person, such appeal or review will not affect the validity of the Loans made under the Credit Agreement or any Note issued to the Bank under the Credit Agreement, or afford a defense to the collection of any Loans made under the Credit Agreement or any Note issued to the Bank thereunder, assuming the Bank made its Loans under the Credit Agreement and acquired such Note in good faith and had no actual knowledge of facts by reason of which the making of such Loans or the acquiring of such Note was a violation of PUHCA or the rules and regulations promulgated thereunder. 5. Each Revolver Borrower is a "public utility company" and a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. Each Revolver Borrower is a "public utility", as such term is defined in the Federal Power Act, as amended. 6. To our knowledge, and without making any independent inquiry of any Person party to the Power Sales Agreements (other than the Revolver Borrowers), each of the Power Sale Agreements is in full force and effect and there is no presently effective The Bank of New York July 20, 1994 Page 5 waiver of any material obligations thereunder of any party thereto. This opinion is delivered to you pursuant to Section 2.01(a)(5) of the Credit Agreement solely in connection with the transactions contemplated by the Credit Agreement, and may not be relied upon by any other Person or for any other purpose. This opinion is based on our knowledge of the law and the facts, and may be relied upon, solely as of the date hereof, and we undertake no obligation to update or supplement this opinion after the date hereof for the benefit of the addressee or any other Person. Very truly yours, DICKSTEIN, SHAPIRO & MORIN, L.L.P. SCHEDULE 2.01(A)(V)-2 OPINION OF REVOLVER BORROWER'S COUNSEL Schedule 2.01(a)(v)-2 TILLINGHAST COLLINS & GRAHAM COUNSELORS AT LAW July 20, 1994 The Bank of New York One Wall Street New York, New York 10286 Re: $15,000,000. Secured Credit Agreement of Ocean State Power and Ocean State Power II ---------------------------------------------- Ladies and Gentlemen: We have acted as counsel for Ocean State Power, a Rhode Island general partnership ("OSP") and Ocean State Power II, a Rhode Island general partnership ("OSP II") (together, the "Revolver Borrowers" and each of them, a "Revolver Borrower") in connection with the execution and delivery of the Secured Credit Agreement (the "Credit Agreement") by and among OSP, OSP II and the Bank of New York (the "Bank"), dated as of July 15, 1994. We wish to advise you that this firm acts as Rhode Island counsel to Newport Electric Corporation, a Rhode Island corporation ("Newport"). Newport is one of the purchasers of power under the terms of those certain Power Purchase Agreements previously pledged as security by OSP and OSP II. We have also acted as Rhode Island counsel to EUA Ocean State Corporation, a Rhode Island corporation and affiliate of Newport. EUA Ocean State Corporation is a general partner of both OSP and OSP II. Capitalized terms used herein but not otherwise defined shall have the meaning assigned to such terms in the Credit Agreement. As used herein "Obligations" shall have the meaning ascribed thereto in the Guarantor Security Agreement as herein defined and the Supplement to the Guarantor Security Agreement as herein defined. For the purposes of rendering the opinions contained in this letter, we have examined and reviewed the following: The Bank of New York July 20, 1994 Page 2 (1) The Credit Agreement; (2) The Guarantor Security Agreement by and among OSP, OSP II and State Street Bank and Trust Company (the "Collateral Agent") dated as of October 19, 1992 (the "Guarantor Security Agreement"); (3) The Supplement to the Guarantor Security Agreement dated as of July 15, 1994 from the Lender to the Collateral Agent and the Revolver Borrowers (the "Supplement to the Guarantor Security Agreement"); (4) Form of Domestic Note from the Revolver Borrowers; (5) Form of Eurodollar Note from the Revolver Borrowers; (6) Copies of the general partnership agreements of each Revolver Borrower with all amendments thereto listed in Schedule A attached hereto; (7) Certificates from Parasearch, Inc. as to financing statements naming each Revolver Borrower as Debtor on file with the Secretary of State of the Commonwealth of Massachusetts; (8) Certificates from the Rhode Island Secretary of State as to financing statements naming each Revolver Borrower as Debtor in the State of Rhode Island; and (Instruments (2) through (5) above are sometimes hereinafter collectively referred to as the "Related Documents") (Certificates (7) and (8) above are hereinafter collectively referred to as the "Search Reports") In conducting our examination of the documents listed above, we have made no independent investigation as to the accuracy or completeness of any representations, warranties, data, or other information, written or oral, made or furnished by the Obligors, or any of their respective partners, officers, employees, agents or representatives, except as expressly set forth in this opinion. As to factual "matters material to this opinion we have relied on representations from representatives of OSP and OSP II, including representations contained in the Credit Agreement, without investigation or special inquiry on our part to verify the accuracy of such representations, and a review of the instruments and other documents specifically identified in this opinion. The Bank of New York July 20, 1994 Page 3 In rendering this opinion, we have assumed the genuineness of all signatures not actually witnessed by us, the accuracy of all documents submitted to us as originals, the conformity to originals of all documents submitted to us as copies or drafts, the validity of all laws, regulations, and ordinances, and the competency and legal capacity of all natural persons. To the extent that any document cited above and relied upon herein is executed by any party other than the Revolver Borrowers, we likewise assume further that such execution is valid and duly authorized in full. As used in this opinion, the term "to our knowledge" means that the opinion to which such term applies is based solely on facts that are clearly recognized by attorneys currently employed by Tillinghast Collins & Graham or its partners and who are directly involved in the representation of the Revolver Borrowers on an ongoing basis, without any further investigation. For purposes of this opinion, we have assumed that each Revolver Borrower will maintain its chief executive office in Burrillville, Rhode Island and that each Revolver Borrower will not change its name, identity or structure as a general partnership. We have also assumed that each Revolver Borrower owns no assets, does no business, conducts no activities and has no offices outside of the Commonwealth of Massachusetts and the State of Rhode Island. Based upon the foregoing, we are of the opinion that: 1. Each of the Revolver Borrowers is a general partnership duly formed and validly existing under the laws of Rhode Island, with all requisite partnership power to own or hold under lease its assets, to transact the business in which it is engaged and to execute, deliver, borrow under and perform in accordance with their respective terms the Credit Agreement and Related Documents to which it is a party, and each Revolver Borrower is qualified to do business in all states in which it is required to be qualified where failure to so qualify would have a Materially Adverse Effect. 2. The Credit Agreement and each of the Related Documents and the borrowings thereunder by each Revolver Borrower have been duly authorized by all necessary partnership action on the part of each Revolver Borrower and all necessary action on the part of each Revolver Borrower's Management Committee. The Bank of New York July 20, 1994 Page 4 3. Subject to the qualifications set forth below, the Guarantor Security Agreement has duly created a valid security interest in the Collateral in favor of the Collateral Agent for the benefit of the Bank ratably as a Secured Party, subject to the terms and conditions of the Guarantor Security Agreement, and such security interest is duly perfected. Based on the Search Reports, there are no financing statements naming each Revolver Borrower as Debtor filed with respect to the Collateral prior to the financing statements filed in connection with the Guarantor Security Agreement and the Tennessee Agreements. 4. The Credit Agreement and the Related Documents have each been duly executed and delivered by each of the Revolver Borrowers. 5. The choice of law of the State of New York as the law in accordance with which the Credit Agreement and the Notes shall be governed, interpreted and enforced (including, but not limited to, the usury laws of the State of New York) is an effective choice of law under the laws of the State of Rhode Island, subject to (a) the exception to such choice of law expressly set forth in the Credit Agreement and (b) paragraph 2 of Section 1-105 of the Uniform Commercial Code. 6. The execution and delivery of the Credit Agreement and each of the Related Documents, the borrowings thereunder by each Revolver Borrower, the consummation of the transactions contemplated thereby and the performance of the provisions thereof do not and will not result in any violation or breach of, any default under or, except as specifically contemplated thereby, the creation of any Lien in respect of either Revolver Borrower's property pursuant to or under its partnership agreement or any applicable law. The opinion expressed in the preceding sentence is limited to our review of only those laws and regulations that, in our experience, are applicable to the transactions contemplated by the Credit Agreement and Related Documents. 7. No Governmental Approval or any other consent or approval which has not been obtained is required for the execution and delivery by either Revolver Borrower of the Credit Agreement or any other Related Documents, for the borrowings by either Revolver Borrower thereunder or for the performance of any of its obligations thereunder other than obligations constituting Non-Credit Obligations (as hereinafter defined). As used herein, "Non-Credit Obligations" of a Revolver Borrower means the obligations of such Revolver Borrower under the Credit Agreement and the Related Documents that relate generally to the ownership, development, The Bank of New York July 20, 1994 Page 5 construction, completion, administration, operation and maintenance of the Facility. 8. We have assumed that each Revolver Borrower is a "public utility", as such term is defined in the Rhode Island General Laws for the purpose of obtaining approval of the RIDPUC for the financing. The execution, delivery and performance by each Revolver Borrower of the Credit Agreement has been approved by all necessary action of the RIDPUC under the Rhode Island General Laws. The time period provided by law during which an appeal of the decision of the RIDPUC may be lawfully taken has expired, and no person has, within the applicable time period for filing an appeal, taken an appeal. Consequently, the decision is final and, absent an independent collateral attack under Section 42-46-8 of the Rhode Island General Laws or based on violations of title 11 of the Rhode Island General Laws, is not appealable. 9. There are no taxes, governmental fees or charges, the payment of which are required in connection with the execution and delivery of the Credit Agreement and the Related Documents. Our opinions expressed in paragraph 3 above are qualified as follows: (I) The Security Interest in so much of the Collateral as is subject to Article 8 or 9 of the UCC will not be enforceable against the Revolver Borrowers or third parties and will not attach to such Collateral until the Revolver Borrowers have rights therein; (II) We express no opinion as to any priorities arising from the Security Interest in the Collateral, except as set forth in the last sentence of paragraph 3; (III) In the case of instruments (as such term is defined in Article 9 of the UCC) or money, the security interests of the Collateral Agent therein cannot be perfected by the filing of the Financing Statements but will be perfected if possession thereof is obtained; (IV) In the case of non-identifiable, cash proceeds, continuation of perfection of the Collateral Agent's security interest therein is limited to the extent set forth in Section 9-306 of the UCC; (V) In the case of all Collateral in which a security interest may be perfected by filing, Article 9 of the UCC requires the filing of continuation statements within the period of six months prior to the expiration of five years The Bank of New York July 20, 1994 Page 6 from the date of the original filings in order to maintain the effectiveness of the filings referred to in paragraph 3; (VI) In the case of property which becomes Collateral after the date hereof, Section 552 of the Federal Bankruptcy Code limits the meant to which property acquired by a debtor after the commencement of a case under the Federal Bankruptcy Code may be subject to a security interest arising from a security agreement entered into by the debtor before the commencement of such case; and (VII) We assume the validity and enforceability of the Obligations. We wish to point out that the perfection of the Security Interests may be terminated as provided in Section 9-402(7) of the UCC (i) as to any Collateral acquired by the Revolver Borrowers more than four months after the Revolver Borrowers so change their name as to make the Financing Statements seriously misleading, unless new appropriate financing statements indicating the new names of the Revolver Borrowers are properly filed before the expiration of such four months and (ii) as to any Collateral consisting of Accounts, four months after the Revolver Borrowers change their chief executive offices to a new jurisdiction unless such Security Interests are perfected in such new jurisdiction before the termination. We express no opinion as to: (I) The creation or perfection of any lien, with respect to any Collateral located outside of the State of Rhode Island; (II) Either Revolver Borrower's right, title or interest in, to or under any Collateral; (III) The validity or perfection of the Security Interests as they relate to any interest in or claim in or under any policy of insurance; and (IV) The present or future value of the security that may be realized by the Collateral Agent or by any holder upon its exercise of any remedy under the Credit Agreement. Based on the opinion of Roberts, Carroll, Feldstein & Peirce Incorporated of even date herewith, it is our opinion that the provisions contained in Section 2.01(a)(v) of the Credit Agreement, and the receipt pursuant thereto of this opinion and the opinion of Dickstein, Shapiro & Morin, L.L.P. of even date herewith will not cause the Bank to violate Rhode The Bank of New York July 20, 1994 Page 7 Island General Laws Section 19-19-10 which prohibits a financing institution making a loan in Rhode Island or any attorney, agent or representative for such financial institution from requiring any attorney representing a borrower in such loan transaction to give an opinion in relation to the validity of remedies thereunder. This opinion relates only to the present laws of the State of Rhode Island and the Commonwealth of Massachusetts and we express no opinion with respect to the laws of any other jurisdiction, state or federal. We express no opinion as to the effect of any future amendments, changes or modifications of any such laws, statutes, rules, regulations or court decisions; and we assume no obligation to update or supplement such opinions to reflect any facts or circumstances which any hereafter come to our attention or any changes in any law, statute, rule, regulation or court decision which may hereafter occur. This opinion is solely your benefit in connection with for with the transactions contemplated by the Credit Agreement and may not be cited or relied upon by any other person or by you in connection with any other matter without our firm's express written consent. Very truly yours, TILLINGHAST COLLINS & GRAHAM By Tillinghast Collins & Graham, Inc., Partner By: ----------------------------------- Schedule A 1. Ocean State Power Amended and Restated General Partnership Agreement effective December 2, 1988 by and among EUA Ocean State Corporation, JMAI Power Corporation, Narragansett Energy Resources Company, NECO Power, Inc., Ocean State Power Company and TCPL Power Ltd. a. Ocean State Power Amendment Number 1 to Amended and Restated General Partnership Agreement dated as of March 27, 1989 by and among EUA Ocean State Corporation, JMAI Power Corporation, Narragansett Energy Resources Company, NECO Power, Inc., Ocean State Power Company and TCPL Power Ltd. b. Ocean State Power Amendment Number 2 to Amended and Restated General Partnership Agreement dated as of December 31, 1990 by and among EUA Ocean State Corporation, JMAI Power Corporation, Narragansett Energy Resources Company, NECO Power, Inc., Ocean State Power Company and TCPL Power Ltd. c. Ocean State Power Amendment Number 3 to Amended and Restated General Partnership Agreement dated as of November 12, 1992 by and among EUA Ocean State Corporation, JMAI Power Corporation, Narragansett Energy Resources Company, Ocean State Power Company, JMC Ocean State Corporation and TCPL Power Ltd. d. Ocean State Power Amendment Number 4 to Amended and Restated General Partnership Agreement dated as of February 23, 1993 by and among EUA Ocean State Corporation, Narragansett Energy Resources Company, JMC Ocean State Corporation and TCPL Power Ltd. 2. Ocean State Power II Amended and Restated General Partnership Agreement dated as of September 29, 1989 by and among EUA Ocean State Corporation, JMC Ocean State Corporation, Makowski Power Inc., Narragansett Energy Resources Company, Newport Electric Power Corporation and TCPL Power Ltd. a. Ocean State Power II Amendment Number 1 to Amended and Restated General Partnership Agreement dated as of December 31, 1990 by and among EUA Ocean State Corporation, JMC Ocean State Corporation, Makowski Power Inc., Narragansett Energy Resources Company, Newport Electric Power Corporation and TCPL Power Ltd. b. Ocean State Power II Amendment Number 2 to Amended and Restated General Partnership Agreement dated as of November 12, 1992 by and among EUA Ocean State Corporation, JMC Ocean State Corporation, Makowski Power Inc., Narragansett Energy Resources Company and TCPL Power Ltd. c. Ocean State Power II Amendment Number 3 to Amended and Restated General Partnership Agreement dated as of February 23, 1993 by and among EUA Ocean State Corporation, JMC Ocean State Corporation, Narragansett Energy Resources Company and TCPL Power Ltd. -2- SCHEDULE 2.01(A)(V)-3 OPION OF BANK'S COUNSEL Schedule 2.01(a)(v)-3 ROBERTS, CARROLL,FELDSTEIN & PEIRCE INCORPORATED July 20, 1994 The Bank of New York One Wall Street New York, New York 10286 Re: Fifteen Million Dollar ($15,000,000) Secured Credit Agreement of Ocean State Power and Ocean State Power II Ladies and Gentlemen: We have acted as special counsel for The Bank of New York (the "Bank") in connection with the execution and delivery of the Secured Credit Agreement by and among Ocean State Power, a Rhode Island general partnership ("OSP") and Ocean State Power II, a Rhode Island general partnership ("OSP II") (together, the "Revolver Borrowers") and the Bank dated as of July 20, 1994 (the "Credit Agreement"). In such capacity. we have examined and relied upon originals or copies, certified or otherwise identified, of the following documents (the "Loan Documents"): 1. The Credit Agreement; 2. The Guarantor Security Agreement by and among OSP, OSP II and State Street Bank and Trust Company (the "Collateral Agent") dated as of October 19, 1992 (the "Guarantor Security Agreement"); 3. The Supplement to the Guarantor Security Agreement dated as of July 20, 1994 from the Bank to the Collateral Agent and the Revolver Borrowers (the "Supplement to the Guarantor Security Agreement"); 4. The Domestic Note of the Revolver Borrowers payable to the order of the Bank in the principal amount of Fifteen Million Dollars ($15,000,000) dated July 20, 1994 (the "Domestic Note"); and The Bank of New York July 20, 1994 Page 2 5. The Eurodollar Note of the Revolver Borrowers payable to the order of the Bank in the principal amount of Fifteen Million Dollars ($15,000,000) dated July 20, 1994 (the "Eurodollar Note"). Capitalized terms used herein but not otherwise defined shall have the meanings assigned to such terms in the Guarantor Security Agreement. In our examination of the various documents referred to herein, we have assumed the genuineness of all signatures of the parties, the authenticity of all documents submitted to us as originals, and the conformity to original documents of all documents submitted to us as certified or photostatic copies. We have also assumed that the Loan Documents correctly and completely set forth the intent of the parties thereto, that the execution and delivery of the Loan Documents are or were free from mutual mistake, fraud, misrepresentation or criminal activity and that there is and was no undue influence or duress in the execution of the Loan Documents. We are members of the Bar of the State of Rhode Island and we do not purport to be expert on, or to express any opinion herein concerning, any laws other than the laws of the State of Rhode Island. Therefore, the opinions expressed herein are based only upon applicable Rhode Island laws. statutes, rules, regulations and court decisions in existence on the date hereof. To the extent that questions of law dealt with in this opinion may be affected by the laws of jurisdictions other than those of the State of Rhode Island, including but not limited to the laws of the State of New York, we have assumed that such other laws are identical with those of the State of Rhode Island. We express no opinion as to the effect of any future amendments, changes or modifications of any such laws, statutes. rules, regulations or court decisions, and we assume no obligation to update or supplement such opinions to reflect any facts or circumstances which may hereafter come to our attention or any changes in any law, statute, rule, regulation or court decision which may hereafter occur. The Bank of New York July 20, 1994 Page 3 In issuing the opinions set forth herein, we have assumed your legal capacity, power and due authorization to execute and deliver the Credit Agreement and the Supplement to the Guarantor Security Agreement and that such documents are legal, valid and binding obligations of you We have further assumed that the Revolver Borrowers operate a single electric generating facility in Burrillville, Rhode Island (the "Facility") and do not engage in any other business, that the proceeds of advances made pursuant to the Credit Agreement shall be used solely for capital improvements in connection with the operation of the Facility, and that all such proceeds will benefit both of the Revolver Borrowers. The opinion hereinafter expressed is subject to the following qualifications and limitations: (i) the validity and enforceability of the Loan Documents and particular provisions thereof are subject to and may be affected by bankruptcy, insolvency, reorganization, arrangement, moratorium, avoidance, fraudulent transfer or other similar laws relating to or affecting the rights of creditors generally; (ii) the validity and enforceability of the Loan Documents and particular provisions thereof are subject to or may be affected by limitations imposed by general principles of equity upon the specific enforceability of any of the remedies, covenants or other provisions thereof and upon the availability of injunctive relief or other equitable remedies, and the application of principles of equity (regardless of whether enforcement is considered in proceedings at law or in equity) in regard to certain covenants or provisions of the Loan Documents where (a) the breach of such covenant or provision imposes restrictions or The Bank of New York July 20, 1994 Page 4 burdens upon the Revolver Borrowers, and it cannot be demonstrated that the enforcement of such restriction or burden is reasonably necessary for the protection of the Collateral Agent or the Holders or (b) the Collateral Agent's or the Holders' enforcement of such covenant or provision under the circumstances, or in the manner selected by the Collateral Agent or the Holders, would violate implied covenants of good faith and fair dealing or would not be commercially reasonable; (iii) those provisions of the Loan Documents pertaining to the payment of legal expenses, including attorneys' fees, and provisions requiring the Revolver Borrowers to waive procedural, judicial or substantive rights, such as rights to notice and to a jury trial, and provisions designating federal and state courts as having jurisdiction and/or venue with respect to, and specifying the method of serving process on, the Revolver Borrowers, are subject to determinations by the courts in which litigation may be instituted that such provisions are reasonable and comply with or are permitted by applicable constitutional provisions and by applicable laws, regulations and rules of court; (iv) we express no opinion on usury or the effectiveness of any provision in the Loan Documents purporting to avoid usury limitations; (v) we express no opinion on the enforceability of any provisions of the Loan Documents imposing increased interest rates and/or late payment charges upon delinquency in payment or The Bank of New York July 20, 1994 Page 5 the occurrence of a default, liquidated damages, or prepayment premiums, to the extent they are deemed to be penalties or forfeitures; (vi) we express no opinion on whether either or both of the Revolver Borrowers may be given the status of sureties and as such will have the rights and defenses of guarantors; (vii) we express no opinion on the creation, perfection or priority of any lien or security interest provided for in the Loan Documents or the adequacy or sufficiency thereof; (viii) we express no opinion on the enforceability of any self-help, non-judicial remedies provided to the Collateral Agent and the Holders in the Loan Documents; and (ix) we express no opinion on the enforceability of any provisions requiring the Revolver Borrowers to indemnify, or which limit the liability of, the Collateral Agent and the Holders or their agents, officers or directors or of any provisions exculpating the Collateral Agent and the Holders from liability for their actions or inaction to the extent such indemnification or exculpation is contrary to public policy or law. For purposes of this opinion, we have assumed the accuracy of the opinions set forth in that certain opinion letter of Tillinghast Collins & Graham to the Bank dated July 20, 1994 (the "TCG Opinion"). and further assume the accuracy of the opinions contained in paragraph 1 of the TCG Opinion as of the date of execution of the Guarantor Security Agreement. We have not made any independent investigation an to the accuracy or completeness of any The Bank of New York July 20, 1994 Page 6 legal conclusions contained in the TCG Opinion. This opinion also incorporates by reference the qualifications described in subparagraphs (I) through (VI) and contained in the TCG Opinion immediately following paragraph 9 thereof. We have also assumed that the Guarantor Security Agreement has not been amended or terminated pursuant to the terms thereof. We have further assumed the compliance with all of the terms and conditions of the Guarantor Security Agreement. Based upon and subject to the foregoing, we are of the opinion that; 1. The execution, delivery and performance of the Loan Documents constitute the legal, valid, and binding agreements of the Revolver Borrowers, enforceable against them in accordance with their terms. 2. Assuming (a) the acceptance of the Bank's commitment to extend financing under the Credit Agreement on behalf of the Revolver Borrowers in a jurisdiction other than the State of Rhode Island, (b) the execution of the Credit Agreement, the Supplement to the Guarantor Security Agreement, the Domestic Note and the Eurodollar Note on behalf of the Revolver Borrowers in a jurisdiction other than the State of Rhode Island for delivery by mail to the Bank in the State of New York, and (c) the disbursement of the proceeds of the Loans under the Credit Agreement by deposit directly into accounts of the Revolver Borrowers with the Bank in the State of New York, a well reasoned opinion of a Rhode Island court of competent jurisdiction would hold that the transactions contemplated by the Credit Agreement do not constitute the "making [of] a loan in this state [Rhode Island]" within the meaning of Section 19-19-10 of the General Laws of Rhode Island, 1956, as amended. This opinion is limited to the matters stated herein, and no opinion shall be implied or inferred beyond the matters expressly stated. This opinion (i) is provided to you as a legal opinion only and not as a guaranty or warranty of the matters discussed herein, (ii) rendered solely for your benefit, (iii) may not be relied upon by any other person or entity, (iv) except as The Bank of New York July 20, 1994 Page 7 may be required by law, may not be used by or distributed to any other person or entity, (v) except as may be required by law, may not be reproduced, referred to or quoted in any financial statements, notes to financial statements, offering materials, disclosure materials or similar printed matter, and (vi) may not be used in connection with any further or subsequent transactions involving either or both of the Revolver Borrowers without the express written authorization of a principal of this firm. Very truly yours, ROBERTS, CARROLL, FELDSTEIN & PEIRCE INCORPORATED By -------------------------------- SCHEDULE 2.01(A)(VI) [NAME OF REVOLVER BORROWER] OFFICERS' CERTIFICATE I, ____________________, [title] of JMC Ocean State Corporation, a general partner of [name of Revolver Borrower], a Rhode Island general partnership (the "Revolver Borrower"), hereby certify, pursuant to Section 2.01(a)(vi) of the Secured Credit Agreement, dated as of _____________ , 1994, (the "Credit Agreement"), among Ocean State Power, Ocean State Power II and The Bank of New York (with capitalized terms used and not otherwise defined herein used with the meanings ascribed to them in the Credit Agreement), that, as of the date hereof: 1. Each Loan Document Representation and Warranty is true and correct; and 2. No Default has occurred or is continuing. IN WITNESS WHEREOF, I have signed this certificate this ___ day of ____________, 1994. ____________________________ [Title] SCHEDULE 2.01(A)(IX) [NAME OF PARTNER] OFFICERS' CERTIFICATE I, ________________, [title] of JMC Ocean State Corporation, a Rhode Island corporation (the "Company") and general partner of [name of Revolver Borrower], a Rhode Island general partnership (the "Revolver Borrower"), hereby certify, pursuant to Section 2.01(a) of the Secured Credit Agreement dated as of _____________ , 1994 (the "Credit Agreement") among Ocean State Power, Ocean State Power II and The Bank of New York (with capitalized terms not otherwise defined used herein with the meanings ascribed to them in the Credit Agreement), that: 1. The below named persons have been duly elected (or appointed) and have been duly qualified as, and on this day are, officers of the Company holding their respective offices below set opposite their names, and the signatures below set opposite their names are their genuine signatures: NAME OFFICE SIGNATURE [Insert names and offices __________________________________ of persons authorized to sign the __________________________________ Loan Documents to which __________________________________ the Revolver Borrower is a party __________________________________ and any related documents] __________________________________ 2. Attached as Annex A is a true and correct copy of resolutions duly adopted by [unanimous written consent of] the Management Committee of the Revolver Borrower. Such resolutions have not been amended, modified or revoked and are in full force and effect on the date hereof. 3. [List Loan Documents to which the Revolver Borrower is a party], in each case as executed and delivered on behalf of the Revolver Borrower, are in the forms thereof approved by [unanimous written consent of] the Management Committee of the Revolver Borrower. IN WITNESS WHEREOF, I have signed this certificate this __ day of ____________, 1994. ___________________________ [Title] I, __________, [title] of the Company, hereby certify that [name of the above [title]] has been duly elected or appointed and has been duly qualified as, and on this day is, [title] of the Company, and the signature in paragraph 1 above is his genuine signature. IN WITNESS WHEREOF, I have signed this certificate this __ day of _____________, 1994. ___________________________ [Title] -2- ANNEX A [NAME OF REVOLVER BORROWER] RESOLUTIONS OF MANAGEMENT COMMITTEE WHEREAS, the Management Committee of the Partnership (the "Management Committee") deems it advisable and in the best interests of the Partnership to enter into a Credit Agreement (as defined below) to make borrowings to finance certain capital expenditures for its approximately 250 MW electric generation facility located in Burrillville, Rhode Island; and WHEREAS, it is a condition to such borrowings under the Credit Agreement that this Partnership secure all Liabilities (as that term is defined in the Credit Agreement) of this Partnership under the Credit Agreement with a security interest in, pledge and assignment of, and lien upon, the Collateral (as defined in the below-mentioned Guarantor Security Agreement) subject to the terms and conditions set forth in the Guarantor Security Agreement; be it hereby RESOLVED, that this Partnership is authorized to borrow from The Bank of New York (the "Bank"), under and pursuant to the below-mentioned Credit Agreement, an aggregate principal amount not to exceed at any time outstanding $15,000,000, to be repaid in accordance with the Credit Agreement, with interest on the unpaid principal amounts thereof from time to time outstanding at the interest rates per annum provided for in the Credit Agreement and to be jointly and severally liable for all amounts payable to the Bank by either this Partnership or [Ocean State Power][Ocean State Power II] under and pursuant to the Credit Agreement; and be it further RESOLVED, that this Partnership is authorized to secure all Liabilities of this Partnership under the Credit Agreement with a security interest in, pledge and assignment of, and lien upon, (a) the Collateral (as defined in the below-mentioned Guarantor Security Agreement); and be it further RESOLVED, that the form, terms and provisions of: (a) the proposed Secured Credit Agreement (the "Credit Agreement"), in substantially the form of the draft of __________, 19__, among this Partnership, [Ocean State Power][Ocean State Power II] and the Bank, providing, among other things, (i) for the making by the Bank to this Partnership from time to time of advances ("Loans") in an aggregate principal amount not to exceed at any time outstanding $15,000,000 upon the terms and conditions therein set forth, (ii) for the payment by this Partnership of the fees, costs and expenses as therein provided, (iii) for the joint and several liability of this Partnership with -3- [Ocean State Power][Ocean State Power II] for all amounts payable to the Bank by either this Partnership or [Ocean State Power][Ocean State Power II] thereunder AND (iv) FOR THE WAIVER BY THIS PARTNERSHIP OF (A) TRIAL BY JURY AND (B) CLAIMS FOR SPECIAL, INDIRECT AND CONSEQUENTIAL DAMAGES, ALL AS THEREIN PROVIDED; (b) the proposed promissory notes (the "Notes"), in substantially the form of EXHIBITS A-1 and A-2 to the draft of the Credit Agreement referred to in paragraph (a) of this resolution, to be issued by this Partnership jointly and severally with [Ocean State Power][Ocean State Power II] to the Bank pursuant to the terms and conditions of the Credit Agreement, to evidence the indebtedness of this Partnership to the Bank resulting from each of the Loans made by the Bank to this Partnership or [Ocean State Power][Ocean State Power II] and providing, among other things, for the repayment of such Loans, and payment of interest thereon and for the joint and several liability of this Partnership for all amounts payable to the Bank by either this Partnership or [Ocean State Power][Ocean State Power II]; and (c) the Guarantor Security Agreement (the "Guarantor Security Agreement"), dated as of October 19, 1992, among this Partnership, [Ocean State Power][Ocean State Power II] and State Street Bank and Trust Company, as Collateral Agent, and the proposed Supplement thereto in substantially the form of the draft of __________, 19__, among this Partnership, [Ocean State Power][Ocean State Power II] and the Bank, providing, among other things, (i) for a security interest in, pledge and assignment of, and lien upon, the Collateral (as defined therein), including the following (in each case as defined therein), as security for the Obligations (as defined therein), including (without limitation) all amounts payable under the Credit Agreement: (A) each of the Power Sale Agreements, as the same may be amended, modified or supplemented from time to time and (B) all Proceeds (as defined in the Uniform Commercial Code as in effect in Rhode Island) of the foregoing; (ii) for the waiver of any notice or judicial hearing in connection with the Collateral Agent's taking or other disposition of the Collateral; (iii) for the grant by this Partnership to the Collateral Agent of this Partnership's power of attorney for certain purposes; (iv) for the Collateral Agent's obtaining the appointment of a receiver upon the occurrence of an event of default in accordance with the Guarantor Security Agreement; and (v) for, upon the occurrence of a default, the Collateral Agent's exercising dominion and control over and refusing to permit withdrawals from the various deposit, custody and other accounts constituting part of the Collateral; be, and the same hereby are, in all respects approved, and that the [Chairman] of the Management Committee of this Partnership, -4- [the President, any Vice President or the Treasurer] of JMC Ocean State Corporation, a general partner of this partnership, or J. Makowski Management Company, the project management firm (and any successor) (each, an "Authorized Officer") be, and each of them hereby is, authorized, in the name and on behalf of this Partnership, to execute and deliver the Credit Agreement, the Notes and the Supplement to the Guarantor Security Agreement (collectively, the "Loan Documents"), each in the form, or substantially in the form, thereof submitted to the Management Committee of this Partnership, with such changes, additions and modifications thereto as the Authorized Officer executing the same shall approve, such approval to be conclusively evidenced by his execution and delivery thereof; and be it further RESOLVED, that the drafts of the Loan Documents referred to above be filed among the minutes of the meeting of the Management Committee of this Partnership; and be it further RESOLVED, that the proper Authorized Officers be, and each of them hereby is, authorized and empowered (any one of them acting alone) to do or cause to be done all such acts or things and to sign and deliver, or cause to be signed and delivered, all such documents, instruments and certificates (including, without limitation, all notices and certificates required or permitted to be given or made under the terms of the Loan Documents), in the name and on behalf of this Partnership or otherwise, as such Authorized Officer may deem necessary, advisable or appropriate to effectuate or carry out the purposes and intent of the foregoing resolutions and to perform the obligations of this Partnership under the agreements and instruments referred to therein. -5- SCHEDULE 3.06 SCHEDULE OF MATERIAL LITIGATION SCHEDULE 3.06 SECURED CREDIT AGREEMENT OCEAN STATE POWER OCEAN STATE POWER II LITIGATION SCHEDULE (Delivered Pursuant to Section 3.06 of the Secured Credit Agreement) A. OCEAN STATE POWER I ("OSP") 1. On February 28, 1994 (Docket No. ER94-998-000), OSP filed with the Federal Energy Regulatory Commission ("FERC") two sets of supplements to its rate schedules: one set based on the methodology approved by the Commission on April 16, 1993, OCEAN STATE POWER, 63 FERC PARA 61,072 (1993) (the "April Order"), and an alternative set based on OSP's "preferred methodology." In the April Order, the FERC summarily rejected certain aspects of the methodology OSP used to calculate its February 26, 1993 proposed benchmark rate of return on equity ("ROE"), which the FERC found to have varied from the methodology previously used by the FERC to calculate the benchmark ROE. OSP filed the alternative supplements to preserve its rights in its pending Petition for Rehearing of the April Order, which OSP filed on May 17, 1993. In its Petition for Rehearing, OSP requested that the FERC reverse its decision to limit the methodology that OSP can use in future ROE filings to calculate the benchmark ROE. The supplements based on the Commission-approved methodology set forth a proposed generic benchmark ROE ("Benchmark ROE") for 1994 of 9.93% and a proposed 1994 ROE for OSP of 11.42%. The alternative supplements based on OSP's preferred methodology set forth a proposed Benchmark ROE of 11.35% and a proposed 1994 ROE for OSP of 13.05%. Several parties intervened and protested OSP's calculations of both the proposed benchmark ROEs and their resultant ROEs. On April 28, 1994, the FERC accepted for filing the proposed ROE based on the Commission-approved methodology, permitting an April 29, 1994 effective date, and set for hearing the issue of whether OSP correctly calculated the Benchmark ROE. At the same time, the FERC rejected OSP's proposed ROE based on its alternative preferred methodology. The Commission's acceptance of OSP's ROE based on the Commission-approved methodology is subject to refund, and subject to the final disposition of the other pending rehearing requests. The FERC's Staff has recommended a Benchmark ROE of 9.34%. 2. OSP's ROE for the period from April 27, 1993 to April 28, 1994 was 11.79%. This ROE was established pursuant to a Settlement Agreement, filed with the FERC on May 27, 1993 (Docket No. ER93-397-000), between OSP and those parties which had protested OSP's 1993 filing. The Settlement Agreement established a Benchmark ROE of 10.25%. The Settlement Agreement is conditioned upon the outcome of certain issues on which rehearing is still pending in various OSP dockets, particularly OSP's rehearing petition in Docket No. ER93-397-000 regarding the calculation of the benchmark ROE. On August 4, 1993, the FERC accepted the Settlement Agreement, subject to the outcome of the various OSP dockets. OCEAN STATE POWER II, 64 FERC PARA 61,197 (1993). 3. On September 25, 1992 (Docket No. ER92-748-000), the FERC accepted for filing OSP's ROE for 1992 and assigned an effective date of April 28, 1992. One intervenor filed a request for clarification that OSP's 1992 ROE filing is subject to the outcome of Docket No. ER91-576 (the OSP II rate case) or, in the alternative, rehearing of the FERC's decision to allow changes in OSP's ROE through informational filings. The FERC issued a tolling order on November 11, 1992. 2 4. OSP is an intervenor in a rate proceeding at the FERC in Docket Nos. RP91-203 and RP92-132 initiated by Tennessee Gas Pipeline Company ("Tennessee"). Tennessee provides gas transportation services for the Facility. Part of the proceeding was settled in October, 1992, when OSP entered into a partial settlement agreement (the "Northeast Settlement") with Tennessee which provided for a reduction in rates for the Facility and rate certainty for the period February 1, 1992 through February 1, 1994. The Northeast Settlement rates took effect on November 1, 1993, and Tennessee paid refunds to OSP under the settlement. In a separate portion of the same proceeding that was not resolved by the Northeast Settlement, OSP and similarly-situated shippers currently receiving service at incremental rates on Tennessee's system under Part 157 of the FERC's regulations are seeking to have their incremental rate for service on Tennessee "rolled-in" with Tennessee's general system rates. Roll-in of OSP's rate with general system rates will substantially reduce OSP's domestic gas transportation costs. OSP is also seeking system enhancements such as flexible receipt and delivery points and capacity assignment. Phase II of this proceeding concerns the allocation of remediation costs that may be imposed with respect to the presence of polychlorinated biphenals in Tennessee's system. 5. OSP has filed an appeal of the FERC's Order Nos. 636-A and 636-B with the Court of Appeals for the District of Columbia Circuit. The appeal is based on the FERC's failure to require interstate pipelines to provide shippers receiving natural gas transportation service under Part 157 of the FERC's regulations with capacity assignment and flexible receipt and delivery point rights. 6. OSP also has filed an appeal with the Court of Appeals for the District of Columbia Circuit of an order by the FERC in Tennessee's restructuring proceeding in 3 Docket No. RS92-23 with respect to the FERC's failure to approve a proposal by Tennessee to charge certain incremental shippers, including OSP, for fuel on an actual mileage basis rather than on the basis of the system average use of fuel for all customers, as well as the FERC's failure to approve a proposal by Tennessee under which the Facility and other incremental shippers would have the option to convert to service under Part 284 of the FERC's regulations along with a phased roll-in of rates for their incremental services. 7. OSP has filed a complaint in Docket No. RP94-184 with the FERC seeking relief from the obligation to pay Tennessee's Order No. 528 take-or-pay surcharges. If successful, this action will reduce OSP's transportation rate on Tennessee prospectively from the date of Commission action. 8. On February 13, 1992, a Petition to Enforce Mechanic's Lien and Complaint was filed in a Rhode Island state court by Joy Electrical Company, Inc. ("Joy"), a subcontractor against Alltemp Insulation Company, Inc., OSP and each of its partners, and OSP II and each of its partners, alleging that approximately $400,000 remains outstanding for work performed on the facilities. In accordance with the construction contract with General Electric Company ("GE"), GE has indicated that it intends to fulfill its obligation to indemnify OSP and has caused the lien against OSP to be released. 9. In 1992, OSP received a real property and tangible personal property tax assessment from the City of Woonsocket, Rhode Island (the "City") which was higher than the taxes that had been assessed by and paid to the City in past years. OSP owns property within the City consisting of the parcel of land on the Blackstone River on which the water intake facility is located including the building, its equipment and several miles of pipeline. Although OSP mistakenly paid the first quarterly installment of the new tax without protest, subsequent installment payments of the tax have been made under 4 protest. Moreover, OSP filed an administrative appeal challenging the tax which was denied. OSP has now filed a complaint for relief from assessment against the City Assessor of Taxes in June of 1993. The complaint, Miscellaneous Petition No. 93-3239, alleges the taxes assessed by the City for the 1992 tax year are excessive in that the taxes are in excess of market value and are disproportionate with similar properties in the City of Woonsocket. Discovery has commenced. (As calculated by OSP the annual tax payment owed by OSP is approximately $14,000 while the City calculates the annual tax as approximately $57,000.) On or about May 9, 1994, OSP filed another Complaint against the City's Assessor of Taxes, captioned as OCEAN STATE POWER AND OCEAN STATE POWER II v. THE CITY OF WOONSOCKET AND ARTHUR E. BOUCHARD, JR., IN HIS CAPACITY AS ASSESSOR OF TAXES FOR THE CITY OF WOONSOCKET, in Providence County, Superior Court, Miscellaneous Petition No. 94-2514. The basis of Miscellaneous Petition 94-2514 regarding the 1993 tax year is identical to Miscellaneous Petition 93-3239. 10. Following the denial of an administrative appeal challenging a tax assessment, OSP filed a complaint for relief from assessment against the Town of North Smithfield's Assessor of Taxes in March of 1994. The complaint, M.P. No. 94-1178, alleges that the taxes assessed by North Smithfield for the 1992 tax year are excessive in that the taxes are in excess of market value and are disproportionate with similar properties in the Town of North Smithfield. 11. On October 5, 1993, a former employee of GE filed a complaint in Rhode Island State Court naming OSP and GE as defendants. The GE former employee is seeking damages in an unspecified amount for personal injuries allegedly sustained in the course of his employment by GE at the facility. OSP has submitted this matter to GE pursuant to the Unit 2 Engineering, Procurement and 5 Construction Contract dated as of October 21, 1992, between OSP and GE, and GE, by letter dated as of November 12, 1993, committed to and is undertaking to defend this matter. B. OCEAN STATE POWER II ("OSP II") 1. On June 25, 1992, the FERC approved OSP II's rates on a market basis, including its ROE that was equal to 115% of the FERC's benchmark ROE. OCEAN STATE POWER II, 59 FERC PARA 61,630 (1992). Certain intervenors in the rate proceeding have requested rehearing of the order; FERC issued a tolling order on August 24, 1992. 2. On September 25, 1992 (Docket No. ER92-747-000), the FERC accepted for filing OSP II's ROE for 1992. Although OSP II had requested an effective date of April 28, 1992 for the rates, the FERC made the rates effective as of February 1, 1992. OSP II has filed a request for clarification or, in the alternative, rehearing of that order with respect to the effective date of the rate and a confirmation that the FERC did not intend to preclude OSP II from requesting in the future an effective date for future rate filings that are consistent with the unit power agreements. A decision on OSP II's filing is expected in late 1994. If the FERC maintains the February 1, 1992 effective date, OSP II may be ordered to refund any amounts it collected in excess of the effective rate of return on equity for the period from February 1, 1992 to April 28, 1992. 3. On February 28, 1994 (Docket No. ER94-999-000), OSP II filed with the FERC two sets of supplements to its rate schedules: one set based on the methodology approved by the Commission on April 16, 1993, OCEAN STATE POWER, 63 FERC PARA 61,072 (1993) (the "April Order"), and an alternative set based on OSP II's "preferred methodology." In the April Order, the FERC summarily rejected certain aspects of the methodology OSP II used to calculate its February 26, 1993 proposed 6 benchmark ROE, which the FERC found to have varied from the methodology previously used by the FERC to calculate the benchmark ROE. OSP II filed the alternative supplements to preserve its rights in its pending Petition for Rehearing of the April Order, which OSP II filed on May 17, 1993. In that Petition for Rehearing, OSP II requested that the FERC reverse its decision to limit the methodology that OSP II can use in future ROE filings to calculate the benchmark ROE. The supplements based on the Commission-approved methodology set forth a proposed Benchmark ROE for 1994 of 9.93% and a proposed 1994 ROE for OSP II of 11.42%. The alternative supplements based on OSP II's preferred methodology set forth a proposed Benchmark ROE of 11.35% and a proposed 1994 ROE for OSP II of 13.05%. Several parties intervened and protested OSP II's calculations of both the proposed benchmark ROEs and their resultant ROEs. On April 28, 1994, the FERC accepted for filing the proposed ROE based on the Commission-approved methodology, permitting an April 29, 1994 effective date, and set for hearing the issue of whether OSP II correctly calculated the Benchmark ROE. At the same time, the FERC rejected OSP II's proposed ROE based on its alternative preferred methodology. The Commission's acceptance of OSP II's ROE based on the Commission-approved methodology is subject to refund, and subject to the final disposition of the other pending rehearing requests. The FERC's staff has recommended a Benchmark ROE of 9.34%. 4. OSP II's ROE for the period from April 27, 1993 to April 28, 1994 was 11.79%. This ROE was established pursuant to a Settlement Agreement, filed with the FERC on May 27, 1993 (Docket No. ER93-397-000), between OSP II and those parties which has protested OSP II's 1993 filing. The Settlement Agreement established a Benchmark ROE of 10.25%. The Settlement Agreement is conditioned upon the outcome of certain issues on which rehearing is still pending in various OSP II dockets, particularly OSP II's rehearing petition in 7 Docket No. ER93-398-000 regarding the calculation of the benchmark ROE. On August 4, 1993, the FERC accepted the Settlement Agreement, subject to the outcome of the various OSP II dockets. OCEAN STATE POWER II, 64 FERC PARA 61,197 (1993). 5. OSP II is an intervenor in a rate proceeding at the FERC in Docket Nos. RP91-203 and RP92-132 initiated by Tennessee. Tennessee provides gas transportation services for the Facility. Part of the proceeding was settled in October 1992, when OSP II entered into a partial settlement agreement (the "Northeast Settlement") with Tennessee that provided for a reduction in rates for the Facility and rate certainty for the period February 1, 1992 through February 1, 1994. The Northeast Settlement rates took effect on November 1, 1993, and Tennessee paid to OSP II refunds under the settlement. In a separate portion of the same proceeding that was not resolved by the Northeast Settlement, OSP II and similarly-situated shippers currently receiving service at incremental rates on Tennessee's system under Part 157 of the FERC's regulations are seeking to have their incremental rate for service on Tennessee "rolled-in" with Tennessee's general system rates. Roll-in of OSP II's rate with general system rates will substantially reduce OSP II's domestic gas transportation costs. OSP II is also seeking system enhancements such as flexible receipt and delivery points and capacity assignment. Phase II of this proceeding concerns the allocation of remediation costs that may be imposed with respect to the presence of polychlorinated biphenals in Tennessee's system. 6. OSP II has filed an appeal of the FERC's Order Nos. 636-A and 636-B with the Court of Appeals for the District of Columbia Circuit. The appeal is based on the FERC's failure to require interstate pipelines to provide shippers receiving natural gas transportation service under Part 157 of the FERC's 8 regulations with capacity assignment and flexible receipt and delivery point rights. 7. OSP II also has filed an appeal with the Court of Appeals for the District of Columbia Circuit of an order by the FERC in Tennessee's restructuring proceeding in Docket No. RS92-23 with respect to the FERC's failure to approve a proposal by Tennessee to charge certain incremental shippers, including OSP II, for fuel on an actual mileage basis rather than on the basis of the system average use of fuel for all customers, as well as the FERC's failure to approve a proposal by Tennessee under which the Facility and other incremental shippers would have the option to convert to service under Part 284 of the FERC's regulations along with a phased roll-in of rates for their incremental services. 8. OSP II has filed a complaint in Docket No. RP94-184 with the FERC seeking relief from the obligation to pay Tennessee's Order No. 528 take-or-pay surcharges. If successful, this action will reduce OSP II's transportation rate on Tennessee prospectively from the date of Commission action. 9. On February 13, 1992, a Petition to Enforce Mechanic's Lien and Complaint was filed in a Rhode Island state court by Joy, a subcontractor, against Alltemp Insulation Company, Inc., OSP and each of its partners, and OSP II and each of its partners, alleging that approximately $400,000 remains outstanding for work performed on the facilities. In accordance with the construction contract with GE, GE has indicated it intends to fulfill its obligations to indemnify OSP II and has caused the lien against OSP II to be released. 10. On October 5, 1993, a former employee of GE filed a complaint in Rhode Island State Court naming OSP II and GE as defendants. The GE former employee is seeking damages in an unspecified amount for personal injuries allegedly sustained in the course of his 9 employment by GE at the facility. OSP II has submitted this matter to GE pursuant to the Unit 2 Engineering, Procurement and Construction Contract dated as of October 21, 1992, between OSP II and GE, and GE, by letter dated as of November 12, 1993, committed to and is undertaking to defend this matter. 10 SCHEDULE 3.10 SCHEDULE OF FACILITY PERMITS SCHEDULE 3.10 TO SECURED CREDIT AGREEMENT OCEAN STATE POWER AND OCEAN STATE POWER II FACILITY PERMITS (Delivered pursuant to Section 3.10 of the Secured Credit Agreement) I. FEDERAL A. Ocean State Power 1. FINAL APPROVALS a. Federal Energy Regulatory Commission authorization of transfer of jurisdictional facilities from OSP to OSP II (16 U.S.C. Sections 824b and 824c). Order Granting Application to Transfer Assets, FERC Docket No. EC89-12-000 (issued June 2, 1989). b. Federal Energy Regulatory Commission acceptance for filing and permission to become effective of OSP's rates for the sale of capacity and energy under the Power Sales Agreement (16 U.S.C. Section 824d). (1) Order Accepting Rates, as Modified, For Filing, Noting Intervention, Granting Waiver and Terminating Docket, FERC Docket No. ER87-23-000 (issued February 9, 1987); (2) Order Accepting Amendments to Power Sales Agreements, FERC Docket No. ER88-487-000 (issued August 19, 1988); (3) Letter Order of acceptance for filing, FERC Docket No. ER88-627-000 (issued November 28, 1988); (4) Letter Order of acceptance for filing, FERC Docket No. ER89-564-000 (issued September 28, 1989); (5) Letter Order of acceptance for filing, FERC Docket No. ER91-183-000 and ER91-184-000 (issued February 6, 1991); (6) Letter Order of acceptance for filing, FERC Docket No. ER91-284-000 (issued April 25, 1991). c. Federal Energy Regulatory Commission authorization of OSP's partnership reorganization (16 U.S.C. Sections 824b and 824c). Order Authorizing Proposed Partnership Reorganization, Granting Request for Waiver, and Terminating Dockets, FERC Docket Nos. EC88-14-000 and ES88-33-000 (issued June 8, 1988). d. Office of Fossil Energy authorization for OSP to import natural gas from Canada (15 U.S.C. Section 717b). (1) Order Granting Authorization to Import Natural Gas from Canada, DOE/OFE Opinion and Order No. 243-A, ERA Docket No. 86-26-NG (issued September 14, 1988). (2) Order Granting Blanket Authorization to Import and Export Natural Gas from Canada, DOE/OFE Opinion and Order 2 No. 451, FE Docket No. 90-78-NG (issued November 20, 1990). (3) Order Granting Blanket Authorization to Import Natural Gas from Canada, DOE/OFE Opinion and Order No. 887, FE Docket No. 93-127-NG (issued December 9, 1993). e. Economic Regulatory Administration Self-Certification of OSP's exemption from the provisions of the Powerplant and Industrial Fuel Use Act of 1978, as amended (42 U.S.C. Section 8311). Notice of Filing Certification of Compliance; Coal Capability of New Electric Powerplants Pursuant to Provisions of the Powerplant and Industrial Fuel Use Act, as Amended; Ocean State Power, ERA Docket No. C&E 88-15; Certification Notice-20, 53 Fed. Reg. 27385 (issued July 14, 1988). f. United States Army Corps of Engineers Nationwide Wetlands permit (33 U.S.C. Section 1344). Letter of confirmation of applicability of Nationwide Permits, Department of the Army, New England Division, Corps of Engineers, Regulatory Branch CENED-OD-R-29-87-576 (issued August 24, 1988). g. Federal Aviation Administration determination concerning OSP's power facility stacks (49 U.S.C. Section 1501). 3 Acknowledgment of Notice of Proposed Construction or Alteration, Aeronautical Study No. 87-ANE-005-OE (issued on December 24, 1987). h. Securities and Exchange Commission authorization of Ocean State Power's Construction Financing (15 U.S.C. Sections 79(b) and (1)). (1) Order Authorizing the Issuance of Notes, Performance Guarantees by Parent Companies and the Sale and Acquisition of Utility Assets. SEC Release No. 35-24790; 70-7540 (issued December 23, 1988); (2) Supplemental Order Authorizing Guarantees by Parent Company; Additional Expenses. SEC Release No. 35-25285; 70-7540 (issued March 28, 1991); (3) Certificate of Notification (Rule 24), by OSP, Eastern Utilities Assoc., New England Electric System and Blackstone Valley Electric Co. ("BVEC") (filed January 10, 1989) ("OSP Certificate of Notification"); (4) Amendment No. 1 to OSP Certificate of Notification (filed November 13, 1989); (5) Amendment No. 2 to OSP Certificate of Notification (filed January 10, 1991); (6) Amendment No. 3 to OSP Certificate of Notification (filed April 15, 1991); (7) Amendment No. 4 to OSP Certificate of Notification (filed June 11, 1991). i. Securities and Exchange Commission Order Authorizing Refinancing and Exempting OSP and OSP II from Competitive Bidding. SEC Release No. 35-25645; 70-7893 (15 U.S.C. Sections 79(b) and (1))(issued on October 2, 1992). 4 (1) Certificate of Notification (Rule 24), by OSP, OSP II, Eastern Utilities Assoc., New England Electric System and Blackstone Valley Electric Company (filed October 28, 1992). j. Economic Regulatory Administration authorization for OSP to import natural gas from Canada (15 U.S.C. Section 717b). (1) Order Granting Authorization to Import Natural Gas from Canada, DOE/ERA Opinion and Order No. 243-A, ERA Docket No. 86-26-NG (issued September 14, 1988). k. Federal Trade Commission and U.S. Department of Justice notice filing of exemption from premerger notification requirements of Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C. Section 18a(c)(6)) (filed July 30, 1992). l. U.S. Department of Commerce Initial Report on a Foreign Person's Direct or Indirect Acquisition, Establishment or Purchase of the Operating Assets of a U.S. Business Enterprise, Including Real Estate for OSP (22 U.S.C. Section 3104)(filed March 18, 1993). m. U.S. Environmental Protection Agency approval for alternative fuel monitoring schedule pursuant to the New Source Performance Standards for Gas Turbines (40 C.F.R. 60.330 ET SEG.) (dated March 23, 1994). 2. OUTSTANDING APPROVALS a. Securities and Exchange Commission Order Authorizing Financing of Secured Revolving Debt for OSP and OSP II, SEC Release No. 35-26083; 70-8373 (issued on July 11, 1994) (15 U.S.C. Section 79(b) and (l)). (The Order is subject to petition for judicial review for a 60-day period following the date of its 5 issuance.) b. Federal Energy Regulatory Commission Letter Order accepting for filing and permitting to become effective OSP's annually revised rate of return on equity for 1992 (16 U.S.C. 824d), Docket No. ER92-747-000 (issued September 25, 1992). (The Order is subject to a pending request for clarification or rehearing and the FERC's action on such request is subject to judicial review for a 60-day period following such action.) c. Federal Energy Regulatory Commission Order accepting for filing a Settlement Agreement on OSP's annually revised rate of return on equity for 1993 (16 U.S.C. 824d), Docket No. ER93-397-0000 (issued August 4, 1993). (The acceptance of the Settlement Agreement is conditioned upon the outcome of certain issues pending on rehearing in various other OSP dockets.) d. Federal Energy Regulatory Commission Order accepting for filing the OSP's proposed rate of return on equity for 1994 and setting for hearing subject to refund (issued April 28, 1994), Docket No. ER94-998-000. (The Order is subject to petition for rehearing for 30 days following the date of its issuance and the FERC's action on any such request is subject to judicial review for a 60-day period following such action.) e. Federal Energy Regulatory Commission Order Accepting for Filing OSP I and OSP II's agreements consenting to assignment of Newport Electric Corporation's power purchase agreements to Montaup Electric Company (16 U.S.C. 824d) (issued on May 20, 1994) (The Order is subject to petition for rehearing for 30 days following the date of its issuance and the FERC's action on any such petition is subject to judicial review for a 60-day period following such action.) 6 B. OCEAN STATE POWER II 1. FINAL APPROVALS a. Federal Energy Regulatory Commission acceptance for filing and permission to become effective of OSP II's rates (excluding the rate of return on equity) for the sale of capacity and energy under the Power Sales Agreement (16 U.S.C. Section 824d). (1) Letter Order in FERC Docket No. ER89-563-000 (issued September 28, 1989); (2) Letter Order of acceptance for filing, FERC Docket No. ER91-183-000 and ER91-184-000 (issued February 6, 1991). b. Office of Fossil Energy (successor to Economic Regulatory Administration) authorization for OSP II to import natural gas from Canada (15 U.S.C. Section 717b). (1) Order Granting Authorization to Import Natural Gas from Canada, DOE/ERA Opinion and Order No. 335, FE Docket No. 89-27-NG (issued September 22, 1989). (2) Order Granting Blanket Authorization to Import and Expert Natural Gas from and to Canada, DOE/FE Opinion and Order No. 556, FE Docket No. 91-47-NG (issued December 10, 1991). c. Office of Fossil Energy (successor to Economic Regulatory Administration) Self-Certification of OSP II's coal capability in accordance with the provisions of the Powerplant and Industrial Fuel Use Act of 1978, as amended (42 U.S.C. Section 8311). 7 Notice of Filing Certification of Compliance; Coal Capability of New Electric Powerplants pursuant to Provisions of the Powerplant and Industrial Fuel Use Act, as amended; Ocean State Power II, OFE Docket No. C&E 89-10; Certification Notice-36, 54 Fed. Reg. 19434 (published May 5, 1989). d. United States Army Corps of Engineers Nationwide Wetlands Permit (33 U.S.C. Section 1344). Acknowledgment of Notice Partial Assignment of COE Nationwide Wetlands Permit, CENED-OD-R-29-87-576 to OSP II (received September 12, 1989). e. Federal Aviation Administration determination concerning OSP II's power facility stacks (49 U.S.C. Section 1501). Acknowledgment of Notice adding OSP II to Aeronautical Study Number 87-ANE-005-OE as a Sponsor of the Proposed Construction (received August 21, 1989). f. Securities and Exchange Commission authorization of OSP II's Construction and Term Financing (15 U.S.C. Sections 79(f) and 79(g)). (1) Order Authorizing Sale and Acquisition of Common Stock and Partnership Interests; Sale and Acquisition of Utility Assets; Partnership Interests; Issuance of Notes, Advances, Loans and Contributions to Capital; Performance Guarantees by Parent Companies; Services and other Affiliate Transactions; Exception from Competitive Bidding. SEC Release No. 35-24960; 70-7630 (issued September 28, 1989); (2) Supplemental Order Authorizing Common Stock Repurchase; Payments of Dividends out of Capital; Capital Contributions; the Grant and Acquisition of an Easement; 8 Guarantees by Parent Companies. SEC Release No. 35-25321; 70-7630 (issued May 31, 1991); (3) Supplemental Order Authorizing the Payment of Additional Bank Fees; Exception from Competitive Bidding. SEC Release No. 35-25441; 70-7630 (issued December 23, 1991); (4) Certificate of Notification (Rule 24), by OSP, OSP II, Eastern Utilities Assoc., EUA Ocean State Corp., EUA Service Corp., TransCanada PipeLines LTD., New England Electric System, Narragansett Energy Resources Co., New England Power Service Co. and BVEC (filed November 13, 1989) ("OSP II Certificate of Notification"); (5) Amendment No. 1 to OSP II Certificate of Notification (filed June 11, 1991); (6) Amendment No. 2 to OSP II Certificate of Notification (filed October 11, 1991); (7) Amendment No. 3 to OSP II Certificate of Notification (filed January 10, 1992). g. Securities and Exchange Commission Order Authorizing Refinancing and Exempting OSP and OSP II from Competitive Bidding. SEC Release No. 35-25645; 70-7893 (15 U.S.C. Sections 79(b) and (1))(issued on October 2, 1992). (1) Certificate of Notification (Rule 24) by OSP, OSP II, Eastern Utilities Assoc., New England Electric System and Blackstone Valley Electric Company (filed October 28, 1992). h. Federal Trade Commission and U.S. Department of Justice notice filing of exemption from premerger notification requirements of Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C. Section 18a(c)(6)) (filed July 30, 1992). 9 i. U.S. Department of Commerce Initial Report on a Foreign Person's Direct or Indirect Acquisition, Establishment, or Purchase of the Operating Assets of a U.S. Business Enterprise, Including Real Estate for OSPII (22 U.S.C. 3104) (filed March 18, 1993). j U.S. Department of Agriculture Agricultural Foreign Investment Disclosure Act Report for OSP II's Acquisition of Land (dated January 6, 1993). k. U.S. Environmental Protection Agency approval for alternative fuel monitoring schedule pursuant to the New Source Performance Standards for Gas Turbines (40 C.F.R. 60.330 ET SEQ.) (dated March 23, 1994). 2. OUTSTANDING APPROVALS a. Federal Energy regulatory Commission Authorization of OSP II's Rate of Return on Equity. Order Noting and granting Interventions, Denying Requests for Hearing and Approving Market-Based Rates, FERC Docket No. ER91-576-000, (issued June 25, 1992). (Four petitions for rehearing have been filed. FERC issued an order on August 24, 1992 tolling the 30-day period provided by its rules for action or deemed rejection of such petitions. FERC's action on such petitions is subject to judicial review for a 60-day period following the date of such action.) b. Federal Energy Regulatory Commission Letter Order accepting for filing and permitting to become effective OSP II's annually revised rate of return on equity (16 U.S.C. 824d), Docket No. ER92-747-000 (issued September 25, 1992). (The Order is subject to a pending request for clarification or rehearing and the FERC's action on such request is subject to 10 judicial review for a 60-day period following such action.) c. Federal Energy Regulatory Commission Order Accepting for Filing OSP I and OSP II's agreements consenting to assignment of Newport Electric Corporation's power purchase agreements to Montaup Electric Company (16 U.S.C. 824d) (issued on May 20, 1994) (The Order is subject to petition for rehearing for 30 days following the date of its issuance and the FERC's action on any such petition is subject to judicial review for a 60-day period following such action.) d. Securities and Exchange Commission Order Authorizing Financing of Secured Revolving Debt for OSP and OSP II, SEC Release No. 35-26083; 70-8373 (15 U.S.C. Section 79(b) and (l))(issued on July 11, 1994). (The Order is subject to petition for judicial review for a 60-day period following the date of its issuance.) II. STATE AND LOCAL A. Approvals Applicable to Both Ocean State Power and Ocean State Power II 1. FINAL APPROVALS a. Final Decision and Order of the Rhode Island Energy Facility Siting Board ("EFSB"), Docket No. S.B. 87-1, dated October 25, 1988 (the "EFSB License" or "EFSB Final Decision and Order") which by its explicit terms also includes and incorporates the following Rhode Island state and local approvals: (1) a fuel oil storage permit and a spill prevention and countermeasure plan that would otherwise be issued by the Rhode 11 Island Department of Environmental Management ("DEM"); (2) a use special exception and structure height variances that would otherwise be issued or approved by the Town of Burrillville Zoning Board of Review; (3) a zoning/floodplain variance for the water intake facility that would otherwise be issued by the City of Woonsocket Zoning Board of Review. b. Rhode Island Division of Public Utilities and Carriers ("DPUC") Approval* of: (1) Pipeline Easement Modification dated June 21, 1989 by and between OSP and BVEC, Docket No. D-89-11 (13031), dated July 11, 1989; (2) The reconveyance of certain property and the modification of easements between OSP, OSP II and BVEC, Docket No. D-89-16 (13082), dated September 14, 1989; (3) An easement and agreement for detention pond encroachment between OSP, OSP II, and BVEC, Docket No. D-91-2 (13617), dated April 19, 1991. (4) DPUC approval of proposed permanent refinancing issued July 24, 1992 in Docket No. 0-92-2 (13988). (5) DPUC approval of proposed revolving credit facility issued on May 2, 1994 in Docket No. D-93-11.* c. Rhode Island Historic Preservation Commission letters, dated April 7, 1987 and September 26, 1988, respectively. ____________________ * Filed with the EFSB as post-license state and local permits. 12 d. DEM Division of Water Resources Rhode Island Pollutant Discharge Elimination System ("RIPDES") letter regarding stormwater runoff at the Facility Site, dated April 27, 1987. e. DEM Division of Water Resources RIPDES Permit, issued May 3, 1993. f. Rhode Island Department of Transportation ("DOT") Preliminary Approval of construction of oil and water pipelines in state roads and highways, dated June 27, 1988. g. DEM Division of Groundwater and Freshwater Wetlands Intake Facility Wetlands Permit and Compliance Agreement each dated November 29, 1988 and a Water Quality Certification Agreement, dated July 19, 1988 by and between DEM and OSP. (1) Amended Compliance Agreement between DEM and OSP dated December 24, 1993. h. Coastal Resources Management Council Decision not to require an assent for the Facility, dated August 22, 1988. i. DEM Division of Groundwater and Freshwater Wetlands Determination of Insignificant Alteration re oil and water pipeline construction, dated October 28, 1988. j. Town of Burrillville Approval of Site Erosion & Sediment Control Plans, dated November 17, 1988.* k. DEM Division of Groundwater and Freshwater Wetlands Site Wetlands Permit, dated November 25, 1988. l. DEM PSD Decision and Order approving construction and operation of a major source ____________________ * Filed with the EFSB as post-license state and local permits. 13 of air pollution in an attainment area, dated December 13, 1988. m. DEM Division of Water Resources Preliminary Approval of Wastewater Treatment System dated August 30, 1988 and additional DEM Wastewater Treatment System Letter, dated August 23, 1989. n. DEM Division of Air and Hazardous Materials Approval of RATA testing schedule, dated December 10, 1992. o. DEM Division of Air and Hazardous Materials construction plans approval of OSP turbine equipment, dated September 1, 1989.(1) p. Town of Burrillville Zoning Board of Review Approval of Application of OSP and OSP II for a setback variance applicable to an interior portion of the Facility site, dated as of March 13, 1990 and issued on March 19, 1990.* q. Rhode Island Department of Health Approval for the Facility's portable well and drinking water system, dated August 27, 1990.* r. DEM Division of Water Resources approval for on-site zero discharge wastewater treatment systems of the Facility, dated December 31, 1990. s. DEM Individual Sewage Disposal System Section, Certificate of Conformance, dated January 25, 1991.* ____________________ (1) Each item of air emissions and emissions control equipment for each unit of the Facility requires a separate DEM equipment permit. Such permits have been periodically and routinely issued by DEM since 1989 and are considered to be largely technical in nature. No additional air equipment permits of OSP or OSP II are separately listed herein. * Filed with the EFSB as post-license state and local permits. 14 t. Rhode Island Building Commission and Town of Burrillville Temporary Certificate of Use and Occupancy No. 91-04, and Temporary Certificate of Use and Occupancy No. 91-05, both issued on January 28, 1991 and authorizing occupancy of listed structures at the OSP Facility.* u. DEM Individual Sewage Disposal System Section, Approvals of application for alteration of existing individual sewage disposal system, dated September 16, 1991 and December 9, 1991.* v. DEM Individual Sewage Disposal System Section, Certificate of Conformance, dated December 9, 1991.* w. Department of Health Office of Drinking Water Quality Public Water System License, issued December 12, 1993. x. Building and Construction Permits*: (1) Town of Burrillville Building Permits for the Facility, both dated July 27, 1989, Permit No. B-977 for construction of the Facility, and Permit No. 976 for certain temporary facilities at the site; (2) Town of Burrillville Special Permit for pipeline construction work in Town roads, issued May 16, 1989; (3) City of Woonsocket Department of Public Works Permit No. 5126 for pipeline construction in City streets, issued May 4, 1989; (4) DOT Utility and Physical Alteration Permit, dated April 20, 1989, Permit No. 033747, for pipeline construction work in state highways, and Permit No. 034201, ____________________ * Filed with the EFSB as post-license state and local permits. 15 dated July 21, 1989, for booster pump portion of pipeline; (5) Rhode Island Division of Fire Safety permits and notifications authorizing blasting operations for pipeline construction; (6) Town of Burrillville plumbing (No. P 503 and No. P 504) and electrical (No. E 1178 and No. E 1179) permits issued in connection with Facility construction; (7) Town of Burrillville re-issued Plumbing Permit No. P 503 and re-issued Plumbing Permit No. P 504, both dated September 25, 1989, replacing two earlier plumbin permits from the Town of Burrillville; (8) Town of Burrillville Mechanical Permit No. M 518, issued in connection with Facility site construction, dated September 25, 1989; (9) Rhode Island DOT Division of Maintenance letter dated December 13, 1989, constituting a further approval for construction of the water pipeline booster station on DOT property; (10) City of Woonstock Building Permit No. 5851, dated as of November 21, 1989, for construction of the water intake facility on the Blackstone River; (11) Rhode Island Building Commission Building Permit No. B1026, dated January 25, 1990, for construction of the water pipeline booster pump station on DOT property. y. Rhode Island Building Commission/Town of Burrillville Certificate of Use and Occupancy for the Facility, dated March 25, 1992.* ____________________ * Filed with the EFSB as post-license state and local permits. 16 B. Ocean State Power 1. FINAL APPROVALS a. DPUC approval of*: (1) Financing plan for Unit 1, Docket No. D-88-13 (12819), dated November 29, 1988, corrected by an Errata Notice (12832) issued by the DPUC in Docket No. D-88-13, dated November 29, 1988; (2) Land Purchase Agreement dated November 2, 1988 by and between OSP and BVEC and the Interconnection Agreement dated as of November 1, 1988 by and between OSP and BVEC, Docket No. D-88-15 (12820), dated November 29, 1988; (3) Project Administration Agency Agreement dated December 2, 1988 by and between OSP and J. Makowski Management Corporation, Docket No. D-89-2 (12898), dated March 1, 1989; (4) Payment by OSP of an additional finance fee, Docket No. D-91-2 (13549), dated February 28, 1991. b. DEM Division of Air and Hazardous Materials Revised PSD Permit, dated November 13, 1992. C. Ocean State Power II 1. FINAL APPROVALS a. Notice letters regarding partial transfers of interests from OSP to OSP II, both dated July 28, 1989, sent to DEM pursuant to the provisions of the Water Quality Certification Agreement and of the Compliance Agreement, both between OSP and DEM; and notice letter ____________________ * Filed with the EFSB as post-license state and local permits. 17 dated November 8, 1989 sent to DEM by OSP regarding partial transfer of interests in the Facility Site to OSP II, pursuant to Site Wetlands Permit. b. Notice Letter to DEM regarding transfer of Unit II to OSP II, dated July 28, 1989 in connection with the PSD Final Decision and Order, and Acknowledgment of DEM Division of Air and Hazardous Materials, dated September 6, 1989. c. Decision and Order of the EFSB, dated September 12, 1989, approving the addition of OSP II to the EFSB License for the Facility. d. DPUC Approvals of*: (1) the Amended and Restated Interconnection Agreement dated August 16, 1989 by and between OSP, OSP II and BVEC, Docket No. D-89-13 (13068), dated August 29, 1989; (2) OSP II's financing plans, Docket No. D-89-14 (13085), dated September 18, 1989; (3) the leases and other asset transfers to be undertaken between OSP and OSP II, Docket No. D-89-15 (13081), dated September 14, 1989; (4) payment of OSP II of an additional finance fee upon the conversion of Facility financing and commercial operation of Unit II, Docket No. D-91-8 (13791), dated November 29, 1991. ____________________ * Filed with the EFSB as post-license state and local permits. 18 SCHEDULE 3.11 SCHEDULE OF EXISTING INDEBTEDNESS, LIENS, INVESTMENTS AND GUARANTIES SCHEDULE 3.11 TO SECURED CREDIT AGREEMENT OCEAN STATE POWER AND OCEAN STATE POWER II INDEBTEDNESS, LIENS, INVESTMENTS, GUARANTEES (Delivered pursuant to Section 3.11 of the Secured Credit Agreement) OSP I 1. Indebtedness incurred under the Refinancing Documents, including indebtedness incurred in connection with the transactions contemplated thereby. 2. Permitted Investments OSP II 1. Indebtedness incurred under the Refinancing Documents, including indebtedness incurred in connection with the transactions contemplated thereby. 2. Permitted Investments SCHEDULE 3.15 SCHEDULE OF ENVIRONMENTAL COMPLIANCE SCHEDULE 3.15 TO SECURED CREDIT AGREEMENT OCEAN STATE POWER AND OCEAN STATE POWER II ENVIRONMENTAL COMPLIANCE (Delivered pursuant to Section 3.15 of the Secured Credit Agreement) A. OCEAN STATE POWER ("OSP") 1. OSP received a notice, dated November 5, 1990, from the Department of Environmental Management of the State of Rhode Island (the "Department") identifying four instances of OSP inadvertently altering fresh water wetlands on the property located east of Sherman Farm Road and North of West Iron Stone Road in the Town of Burrillville, Rhode Island, in violation of Rhode Island General Laws, Section 2-1-21. OSP took prompt corrective action with respect to the Department's November 5, 1990 notice and has entered into a Consent Agreement, Complaint No. C90-0156, dated March 9, 1992, with the Department whereby OSP agrees to abide by the terms of the Consent Agreement by having taken the actions specified therein in order to remedy the violations. OSP remains in compliance with the Consent Agreement. 2. OSP has exceeded the air emissions standards allowed under permit RI- PSD-1 (the "Permit") Section F12 issued by the Department, on the following dates, as indicated in Quarterly Excess Emissions Reports filed with the Department: In 1992, OSP exceeded the Permit on January 2, 9, 16, 17, 18, 23, 25, February 2, 9, 14, 29, March 1, 17, 25 and 26. OSP engaged in corrective actions to eliminate these excess emissions including improvements to plant equipment and software. In 1993, OSP exceeded the Permit on February 23, May 9 and December 13. The first incident was due to a steam turbine trip, the second to an ammonia heater skid trip and the third to operator error regarding ammonia injection. In 1994, OSP exceeded the Permit on May 11 due to a runback. OSP continues with its objective of zero excess emissions. 3. OSP received a notice, dated November 9, 1990, from the Department which stated that OSP may have violated Rhode Island General Laws, Sections SD2.02 and 5-56-7 by failing to provide all pertinent data on the original application for the license of the individual sewage disposal system number 9003-63 located at Plat 26, Lot 20 (incorrectly identified in the notice as Lot 6), off Sherman Farm Road in Burrillville, Rhode Island. OSP took immediate corrective action by filing with the Department on November 19, 1990, additional permit application information in the form of a revised drawing of the location and dimensions of the concrete, electrical duct bank located beneath the sewage system. OSP remains in compliance with its permit. 4. On May 29, 1992, OSP informed the Department of the installation at the Facility of the following underground storage tanks, none of which had been registered with the Department: (a) One (1) ammonia drain tank (app. 1,000 gallons in size); (b) Four (4) water wash tanks (each app. 1,500 gallons in size); and (c) Four (4) false start oil tanks (each app. 250 gallons in size). 2 The tanks listed in subparagraph (b) above had on several occasions since December 1990 been used for the storage of water wash liquid unexpectedly containing regulated levels of cadmium. The tanks listed in subparagraph (a) and (c) above were apparently never used. In June 1992, following application to the Department for closure of each of these underground tanks, the tanks were removed. No evidence of any release or discharge of hazardous materials into the environment was discovered in the course of closure, and the Department has notified OSP that it will not seek to impose any fine or other penalty due to the installation and/or use of these tanks. 5. OSP, on December 24, 1993, entered into an Amended Compliance Agreement with the Rhode Island Department of Environmental Protection which conditions use of Blackstone River Water during low river flow events. The facility will cease use of Blackstone River water during times of low river flow (designated as 102 cubic feet per second) and will construct an alternate water supply system within 32 months of the execution of the agreement amendment. OSP has a purchase option on an appropriate parcel of land and expects to obtain necessary permits and construct the alternate water supply system within the Compliance Agreement schedule. 6. On February 9, 1994, OSP had an accidental release of approximately 200 to 225 gallons of sodium hypochlorite solution, comprised of 15% sodium hypochlorite, 72% water, 1% sodium hydroxide and 12% sodium chloride. There was no release to any waterway. OSP made the appropriate notifications to federal, state and local agencies. OSP does not expect to receive any fine or other penalty for this incident. 3 7. On February 18, 1994, OSP had an accidental release of approximately 9,700 gallons of #2 fuel oil from the oil storage tank. The release was caused by the failure of a flanged connection to the tank drain system. Several measures, including sand dikes and vacuum tankers were used to help contain the released material. The area surrounding the release was excavated and soil was placed in 22 roll-off boxes. Both the surrounding excavated area and the roll-off boxes were sampled for possible contamination. Excavation continued until approved levels were reached, and roll-off boxes were shipped to approved facility for disposal. OSP does not expect to receive any fine or other penalty for this incident. 8. OSP received a Citation and Notification of Penalty, dated April 5, 1994, from the Occupational Health and Safety Administration of the U.S. Department of Labor. The penalty amount is $2,275.00 for a single citation under the general duty clause of Section (5)(a)(1) of the Occupational Safety and Health Act of 1970. The citation arose from an inspection following a March 22, 1994 incident where muriatic acid was inadvertently introduced to a chemical sump and created an acid vapor reaction with water in the sump. Because of exhibited good faith, OSP is eligible for, and did execute, an Expedited Informal Settlement Agreement that reduced the penalty by 50%. 4 SCHEDULE 3.17 SCHEDULE OF PARTNERSHIP INTERESTS SCHEDULE 3.17 TO SECURED CREDIT AGREEMENT OCEAN STATE POWER AND OCEAN STATE POWER II PARTNERSHIP INTERESTS AND POWER PURCHASERS' ENTITLEMENTS (Delivered pursuant to Section 3.17 of the Secured Credit Agreement)
OSP I OSP II Percentage Percentage Partner Equity Interest Equity Interest - ------- --------------- --------------- TCPL Power Ltd. 40.00% 40.00% EUA Ocean State Corporation 29.90 29.90 Narragansett Energy Resources Company 20.00 20.00 JMC Ocean State Corporation 10.10 10.10 Power Purchaser % Entitlement - --------------- ------------- New England Power Company 48.5% Boston Edison Company 23.5% Montaup Electric Company1 28.0% Total 100.0% ------ - ---------------------- (1) On March 13, 1994, Ocean State Power and Ocean State Power II executed respective Consent, Assignment and Assumption Agreements with Montaup Electric Company ("Montaup") and Newport Electric Corporation ("Newport") agreeing to Newport's assignment to Montaup of its respective Power Sales Agreements with Ocean State Power and Ocean State Power II. On May 20, 1994, the FERC issued an order accepting the assignments making them effective when Newport became a full requirements customer of Montaup. SEE OCEAN STATE POWER, 67 FERC 61,217 (1994). On May 26, 1994, the FERC issued an order in Docket Nos. ER94-1062-000 and EL94-68-000 approving and making effective as of May 21, 1994, Newport's conversion to a full requirements customer of Montaup.
SCHEDULE 3.24 SCHEDULE OF FACILITY CONTRACTS SCHEDULE 3.24 OCEAN STATE POWER AND OCEAN STATE POWER II FACILITY CONTRACTS (Delivered pursuant to Section 3.24 of the Secured Credit Agreement) A. OCEAN STATE POWER 1. Turnkey Construction Agreement, dated May 17, 1988 between OSP I and General Electric Company - Amendment Nos. 1-2 December 28, 1988 - Amendment Nos. 3-7 September 13, 1989 - Amendment No. 8 October 9, 1989 - Amendment No. 9 December 19, 1989 - Amendment No. 10 March 7, 1990 - Amendment No. 11 May 21, 1990 - Amendment No. 12 September 24, 1990 - Amendment No. 13 March 25, 1991 - Amendment No. 14 April 23, 1991 - Amendment No. 15 June 19, 1992 2. Unit Power Agreement, dated December 31, 1985 between OSP I and Boston Edison Company - First Amendment April 1, 1986 - Second Amendment April 30, 1986 - Third Amendment May 21, 1986 - Fourth Amendment August 20, 1986 - Fifth Amendment July 1, 1988 - Sixth Amendment September 26, 1988 - Seventh Amendment October 21, 1988 - Eighth Amendment July 21, 1989 - Ninth Amendment February 7, 1990 - Tenth Amendment December 21, 1990 3. Unit Power Agreement, dated May 14, 1986 between OSP I and New England Power Company - First Amendment August 20, 1986 - Second Amendment June 15, 1988 - Third Amendment September 23, 1988 - Fourth Amendment October 21, 1988 - Fifth Amendment July 21, 1989 - Sixth Amendment February 7, 1990 - Seventh Amendment December 21, 1990 4. Unit Power Agreement, dated May 14, 1986 between OSP I and Montaup Electric Company - First Amendment August 27, 1986 - Second Amendment September 27, 1988 - Third Amendment October 21, 1988 - Fourth Amendment July 21, 1989 - Fifth Amendment February 7, 1990 - Sixth Amendment December 21, 1990 5. Unit Power Agreement, dated May 14, 1986 between OSP I and Newport Electric Corporation - First Amendment August 20, 1986 - Second Amendment July 12, 1988 - Third Amendment September 23, 1988 - Fourth Amendment October 21, 1988 - Fifth Amendment July 21, 1989 - Sixth Amendment February 7, 1990 - Seventh Amendment December 21, 1990 6. Gas Purchase Contract, dated December 14, 1988 between OSP I and ProGas Ltd. 7. Gas Transportation Contract, dated December 28, 1988 between OSP I and Tennessee Gas Pipeline Company 8. Operation and Maintenance Agreement, dated July 7, 1988 between OSP I and General Electric Company 2 9. Project Administration Agency Agreement, dated December 2, 1988 between OSP I and J. Makowski Management Corporation - First Amendment August 1, 1990 - Second Amendment December 31, 1990 10. Firm Export Transportation Contract, dated December 27, 1988 between TransCanada Pipelines Limited and ProGas Ltd. 11. Gas Substitution Agreement, dated December 27, 1988 between OSP I, ProGas Ltd. and TransCanada Pipelines Limited 12. Land Sale Contract, dated November 2, 1988 between OSP I and Blackstone Valley Electric Company 13. Transfer Agreement, dated September 28, 1989 between OSP I and Blackstone Valley Electric Company 14. Service Agreement, dated August 27, 1987 between OSP I and New England Power Service Company 15. Service Agreement, dated December 1, 1988 between OSP I and EUA Service Corporation 16. Security and Collection Agreement, dated December 29, 1988 between OSP I and Tennessee Gas Pipeline Company 17. Mitigation Agreement, dated December 27, 1988 between OSP I and Tennessee Gas Pipeline Company - Amendment No. 1 November 30, 1989 18. Amended and Restated Purchase and Sale Agreement, dated December 15, 1988 between OSP I and City of Woonsocket, Rhode Island 19. Memorandum of Understanding, dated June 3, 1988, as amended by a letter agreement, dated December 23, 1988, between OSP I and the City of Woonsocket Rhode Island 3 20. Siphon Easement Agreement, dated December 28, 1988 between OSP I and the City of Woonsocket, Rhode Island 21. Land Purchase Agreement, dated August 8, 1989 between OSP I and Ronald and Cynthia Woods 22. Tax Treaty and Agreement, dated April 13, 1988 between OSP I and the Town of Burrillville, Rhode Island 23. Access Road Agreement, dated April 14, 1989 between OSP I and Algonguin Gas Transmission Company 24. Heating Oil Agreement, dated December 29, 1989 between OSP I and Mobil Oil Corporation 25. Terminal Throughout Agreement dated December 29, 1989 between OSP I and Mobil Oil Corporation 26. Pipeline Connection Agreement, dated December 4, 1989 between OSP I and Mobil Oil Corporation 27. Interruptible Gas Transportation Agreement, dated August 2, 1990 between OSP I and Tennessee Gas Pipeline Company - Amendment No. 1 September 4, 1990 - Amendment No. 2 October 29, 1990 - Amendment No. 3 November 8, 1990 - Amendment No. 4 June 6, 1991 - Amendment No. 5 November 5, 1991 - Amendment No. 6 December 4, 1991 28. Interruptible Gas Purchase Contract, dated August 1, 1990 Between OSP I and Distrigas of Massachusetts Corporation 29. Interruptible Gas Purchase Contract, dated August 1, 1990 between OSP I and Boston Gas Company 30. Interruptible Gas Purchase Contract, dated August 14, 1990 between OSP I and Providence Gas Company 31. Interruptible Gas Purchase Contract, dated August 1, 1990 between OSP I and Citizens Gas Supply Corporation 4 32. Layoff Gas Sales Agreement, dated October 31, 1990 between OSP I and Citizens Gas Supply Corporation 33. Layoff Gas Sales Agreement, dated October 31, 1990 between OSP I and Pepperell Power Association 34. Service Agreement (Applicable to Rate Schedule AIT-1), dated October 17, 1990 between OSP I and Algonquin Gas Transmission Company 35. Service Agreement (Applicable to Rate Schedule AIT-1), dated December 4, 1991 between OSP I and Algonquin Gas Transmission Company 36. Site Restoration Trust Agreement, dated April 17, 1991 between OSP I and The Bank of New York 37. Consent and Agreement, dated April 17, 1991 between OSP I, Boston Edison Company, Montaup Electric Company, Newport Electric Corporation and New England Power Company 38. Gas Purchase and Sales Agreement, dated February 1, 1990 between OSP I and Tenngasco Corporation 39. TENN-SPEED System Agreement, dated March 22, 1990 between OSP I and Tennessee Gas Pipeline Company 40. Water Quality Certification Agreement, dated July 19, 1988 between OSP I and the Rhode Island Department of Environmental Management 41. Compliance Agreement, dated November 29, 1988 between OSP I and the Rhode Island Department of Environmental Management - Amended Compliance Agreement, dated December 24, 1993 42. Consent Agreement, dated March 9, 1992 between OSP I and the Rhode Island Department of Environmental Management 5 43. Letter Agreement regarding property access, dated June 15, 1992, by and among OSP I, Tennessee Gas Pipeline Company and Blackstone Valley Electric Company 44. Operational Balancing Agreement, dated February 1, 1993, among OSP I and Tennessee Gas Pipeline Company 45. Consent, Assignment and Assumption Agreement, dated March 13, 1994, among Newport Electric Corporation, Montaup Electric Company and OSP I 46. Agreement of Assignment, dated April 6, 1994, between Lou Plavidal, P.E. and OSP I ("Assignment Agreement") 47. Option Agreement, dated March 22, 1994 between Rosenfeld Concrete Corp. and Lou Plavidal, P.E., as assigned to OSP I pursuant to the Assignment Agreement 48. Option Agreement, dated March 18, 1994, between Lou Plavidal, P.E. and Paolino Land Company, assigned to OSP I pursuant to the Assignment Agreement 49. Gas Storage Agreement, dated April 9, 1994, between OSP I and Tennessee Gas Pipeline Company B. OCEAN STATE POWER II 1. Construction Agreement, dated September 28, 1989 between OSP II and General Electric Company - Amendment No. 1 December 19, 1989 - Amendment No. 2 June 8, 1990 - Amendment No. 3 April 21, 1991 - Amendment No. 4 June 19, 1992 2. Unit Power Agreement, dated July 1, 1988 between OSP II and Boston Edison Company - First Amendment September 26, 1988 - Second Amendment July 21, 1989 - Supplemental Agreement July 21, 1989 - Third Amendment February 7, 1990 6 3. Unit Power Agreement, dated June 15, 1988 between OSP II and New England Power Company - First Amendment September 23, 1988 - Second Amendment July 21, 1989 - Supplemental Agreement July 21, 1989 - Third Amendment February 7, 1990 4. Unit Power Agreement, dated September 28, 1988 between OSP II and Montaup Electric Company - First Amendment July 21, 1989 - Supplemental Agreement July 21, 1989 - Second Amendment February 7, 1990 5. Unit Power Agreement, dated July 12, 1988 between OSP II and Newport Electric Corporation - First Amendment September 23, 1988 - Second Amendment July 21, 1989 - Supplemental Agreement July 21, 1989 - Third Amendment February 7, 1990 6. Gas Purchase Contract, dated September 29, 1989 between OSP II and ProGas Ltd. 7. Gas Purchase Contract, dated September 29, 1989 between OSP II and TransCanada Pipelines Limited and Western Gas Marketing Limited 8. Firm Natural Gas Transportation Agreement, dated September 27, 1989 between OSP II and Tennessee Gas Pipeline Company - Amendment No. 1 April 17, 1991 9. Gas Substitution Letter Agreement, dated September 29, 1989 between OSP II, ProGas Ltd. and TransCanada Pipelines Limited 10. Project Administration Agency Agreement, dated September 29, 1989 between OSP II and J. Makowski Management Corporation 7 - First Amendment August 1, 1990 11. Service Agreement, dated September 29, 1989 between OSP II and New England Power Service Company 12. Service Agreement, dated September 29, 1989 between OSP II and EUA Service Corporation 13. Security and Collection Agreement, dated September 29, 1989 between OSP II and Tennessee Gas Pipeline Company 14. Site Restoration Trust Agreement, dated September 30, 1991 between OSP II and The Bank of New York 15. Consent and Agreement, dated September 30, 1991 between OSP II, Boston Electric Company, Montaup Electric Company, Newport Electric Corporation and New England Power Company 16. Consent, Assignment and Assumption Agreement, dated March 13, 1994, among Newport Electric Corporation, Montaup Electric Company and OSP II C. OCEAN STATE POWER AND OCEAN STATE POWER II 1. Grant of Easement of Right-of-Way, dated December 23, 1988 between OSP I, OSP II and the City of Woonsocket, Rhode Island - Modification of Easement September 22, 1989 2. Easement and Agreement, dated December 21, 1988 between OSP I, OSP II and Blackstone Valley Electric Company - Modification of Easement and Agreement June 21, 1989 - Second Modification of Easement and Agreement September 28, 1989 3. Amended and Restated Interconnection Agreement, dated August 16, 1989 between Blackstone Valley Electric Company, OSP I and OSP II 8 4. Common Facilities Lease Agreement, dated September 29, 1989 between OSP I and OSP II - Amendment No. 1 September 30, 1991 5. Construction Coordination Agreement, dated September 28, 1989 between OSP I, OSP II and General Electric Company 6. Facilities Coordination Agreement, dated September 29, 1989 between OSP I and OSP II 7. Ground Lease, dated September 29, 1989 between OSP I and OSP II 8. Cross-Easement Agreement, dated September 29, 1989 between OSP I and OSP II - Amendment No. 1 May 29, 1991 - Amendment No. 2 September 30, 1991 9. Option to Purchase Agreement, dated September 29, 1989 between OSP I and OSP II 10. Water Rights Agreement, dated September 29, 1989 between OSP I and OSP II 11. Easement Agreement, dated November 21, 1989 between the Town of North Smithfield, Rhode Island, OSP I and OSP II 12. Reimbursement Agreement, dated November 21, 1989 between OSP I and OSP II 13. Backstopping Agreement, dated September 29, 1989 between OSP I, OSP II, ProGas Ltd. and TransCanada Pipelines Limited 14. Assignment of Certain Rights Under the Operation and Maintenance Agreement, dated September 29, 1989 between OSP I and OSP II 15. Woonsocket Easement Agreement, dated September 29, 1989 between OSP I and OSP II 9 16. Easement and Agreement, dated May 24, 1991 between OSP I, OSP II and Blackstone Valley Electric Company 17. License Agreement, dated January 13, 1992 between OSP I and OSP II, Boston Edison Company and Commonwealth Electric Company 18. Settlement Agreement, dated May 27, 1992 among OSP I and OSP II, General Electric Company and Ebasco Constructors, Inc. (Unit I) 19. Settlement Agreement, dated May 27, 1992 among OSP I, OSP II, General Electric Company and Ebasco Constructors, Inc. (Unit II) 20. Agreement, dated August 23, 1990 between OSP I, OSP II, and the Harrisville Fire District 21. Easement Agreement, dated October 2, 1990 between OSP I, OSP II, and the Rhode Island Department of Transportation 22. Right of Way Agreement, dated June 4, 1990 between OSP I, OSP II, and Tennessee Gas Pipeline Company 23. Letter Agreement regarding engagement of placement agent, dated March 20, 1992, by and among OSP I, OSP II and The First Boston Corporation 24. Letter Agreement, dated August 15, 1992, among OSP I, OSP II, Selkirk Cogen Partners, L.P., MASSPOWER, New England Power Company and Tennessee Gas Pipeline Company 25. Settlement Agreement dated May 27, 1993, among OSP I, OSP II, Boston Edison Company, Middleborough Gas and Electric Department and the Pascoag Fire District 26. Final Settlement Agreement, dated April 24, 1994, among OSP I, OSP II, and General Electric Company 27. Settlement Agreement (OSP - Unit I), dated May 27, 1992, among OSP I, OSP II, General Electric Company and Ebasco Construction, Inc. 10 28. Settlement Agreement (OSP - Unit II), dated May 27, 1992, among OSP I, OSP II, General Electric Company and Ebasco Constructors, Inc. D. AGREEMENTS RELATING TO THE PROPERTY VALUE STABILIZATION PROGRAM 1. Purchase and Sale Agreements, entered into from time to time between OSP I or OSP II, as the purchaser under the Property Value Stabilization Program, and certain eligible property owners, as sellers 2. Purchase and Sale Agreements, entered into from time to time between OSP I or OSP II, as seller to resell homes previously acquired under the Property Value Stabilization Program, and certain parties, as buyers 3. Lease Agreements, entered into from time to time between OSP I or OSP II, as the lessor of property purchased under the Property Value Stabilization Program, and certain area residents, as lessees 11 EXHIBIT A-1 OCEAN STATE POWER OCEAN STATE POWER II DOMESTIC NOTE ____________ ___, 1994 FOR VALUE RECEIVED, OCEAN STATE POWER and OCEAN STATE POWER II (together, the "Revolver Borrowers") hereby promise to pay to the order of THE BANK OF NEW YORK (the "Bank") the principal amount of __________ Dollars ($__________), or, if less, the principal amount of the Domestic Rate Loans outstanding, on the dates and in the amounts specified in Section 1.04 of the Credit Agreement referred to below, and to pay interest on such principal amount on the dates and at the rates specified in Section 1.03 of such Credit Agreement. All payments due the Bank hereunder shall be made to the Bank at the place, in the type of money and funds and in the manner specified in Section 1.11 of such Credit Agreement. Each holder hereof is authorized to endorse on the grid attached hereto, or on a continuation thereof, each Domestic Rate Loan and each payment, prepayment or conversion with respect thereto. Presentment, demand, protest, notice of dishonor and notice of intent to accelerate are hereby waived by the undersigned. This Domestic Note evidences Loans made under, and is entitled to the benefits of, the Secured Credit Agreement, dated as of __________ ____, 1994, among the Revolver Borrowers and the Bank, as the same may be amended from time to time. Reference is made to such Credit Agreement, as so amended, for provisions relating to the prepayment and the acceleration of the maturity hereof. This Domestic Note is also entitled to the benefits of the Guarantor Security Agreement. -2- This Domestic Note shall be construed in accordance with and governed by the law of the State of New York (without giving effect to its choice of law principles). OCEAN STATE POWER By JMC Ocean State Corporation, its General Partner By -------------------------------------- Name: Title: OCEAN STATE POWER II By JMC Ocean State Corporation, its General Partner By -------------------------------------- Name: Title: -3- GRID DOMESTIC NOTE _______________________________________________________________________ Amount of Amount of Principal Paid, Unpaid Principal Domestic Prepaid or Amount of Notation Date Rate Loan Converted Domestic Note Made By - ---- --------- -------------- ---------------- --------- ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ EXHIBIT A-2 OCEAN STATE POWER OCEAN STATE POWER II EURODOLLAR NOTE ________________ ____, 1994 FOR VALUE RECEIVED, OCEAN STATE POWER AND OCEAN STATE POWER II (together, the "Revolver Borrowers") hereby promise to pay to the order of THE BANK OF NEW YORK (the "Bank") the principal amount of __________ Dollars ($__________), or, if less, the principal amount of the Eurodollar Rate Loans outstanding, on the dates and in the amounts specified in Section 1.04 of the Credit Agreement referred to below, and to pay interest on such principal amount on the dates and at the rates specified in Section 1.03 of such Credit Agreement. All payments due the Bank hereunder shall be made to the Bank at the place, in the type of money and funds and in the manner specified in Section 1.11 of such Credit Agreement. Each holder hereof is authorized to endorse on the grid attached hereto, or on a continuation thereof, each Eurodollar Rate Loan and each payment, prepayment or conversion with respect thereto. Presentment, demand, protest, notice of dishonor and notice of intent to accelerate are hereby waived by the undersigned. This Eurodollar Note evidences Loans made under, and is entitled to the benefits of, the Secured Credit Agreement, dated as of ___________ ____, 1994, among the Revolver Borrowers and the Bank, as the same may be amended from time to time. Reference is made to such Credit Agreement, as so amended, for provisions relating to the prepayment and the acceleration of the maturity hereof. This Eurodollar Note is also entitled to the benefits of the Guarantor Security Agreement. This Eurodollar Note shall be construed in accordance with and governed by the law of the State of New York (without giving effect to its choice of law principles). OCEAN STATE POWER By JMC Ocean State Corporation, its General Partner By ----------------------------------------- Name: Title: OCEAN STATE POWER II By JMC Ocean State Corporation, its General Partner By ------------------------------------------ Name: Title: -2- GRID EURODOLLAR NOTE ______________________________________________________________________ Amount of Amount of Principal Paid, Unpaid Principal Eurodollar Prepaid or Amount of Notation Date Rate Loan Converted Eurodollat Note Made By - ---- ---------- -------------- --------------- -------- ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ EXHIBIT B OCEAN STATE POWER OCEAN STATE POWER II DOMESTIC NOTE July 20, 1994 FOR VALUE RECEIVED, OCEAN STATE POWER and OCEAN STATE POWER II (together, the "Revolver Borrowers") hereby promise to pay to the order of THE BANK OF NEW YORK (the "Bank") the principal amount of Fifteen Million Dollars ($15,000,000), or, if less, the principal amount of the Domestic Rate Loans outstanding, on the dates and in the amounts specified in Section 1.04 of the Credit Agreement referred to below, and to pay interest on such principal amount on the dates and at the rates specified in Section 1.03 of such Credit Agreement. All payments due the Bank hereunder shall be made to the Bank at the place, in the type of money and funds and in the manner specified in Section 1.11 of such Credit Agreement. Each holder hereof is authorized to endorse on the grid attached hereto, or on a continuation thereof, each Domestic Rate Loan and each payment, prepayment or conversion with respect thereto. Presentment, demand, protest, notice of dishonor and notice of intent to accelerate are hereby waived by the undersigned. This Domestic Note evidences Loans made under, and is entitled to the benefits of, the Secured Credit Agreement, dated as of July 20, 1994, among the Revolver Borrowers and the Bank, as the same may be amended from time to time. Reference is made to such Credit Agreement, as so amended, for provisions relating to the prepayment and the acceleration of the maturity hereof. This Domestic Note is also entitled to the benefits of the Guarantor Security Agreement. This Domestic Note shall be construed in accordance with and governed by the law of the State of New York (without giving effect to its choice of law principles). OCEAN STATE POWER By JMC Ocean State Corporation, its General Partner By /s/ ---------------------------------------- Name: Richard H. King, Jr. Title: Senior Vice President and Assistant Secretary OCEAN STATE POWER II By JMC Ocean State Corporation, its General Partner By /s/ ----------------------------------------- Name: Richard H. King, Jr. Title: Senior Vice President and Assistant Secretary -2- GRID DOMESTIC NOTE _______________________________________________________________________ Amount of Amount of Principal Paid, Unpaid Principal Domestic Prepaid or Amount of Notation Date Rate Loan Converted Domestic Note Made By - --- --------- --------------- ---------------- -------- ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ OCEAN STATE POWER OCEAN STATE POWER II EURODOLLAR NOTE July 20, 1994 FOR VALUE RECEIVED, OCEAN STATE POWER AND OCEAN STATE POWER II (together, the "Revolver Borrowers") hereby promise to pay to the order of THE BANK OF NEW YORK (the "Bank") the principal amount of Fifteen Million Dollars ($15,000,000), or, if less, the principal amount of the Eurodollar Rate Loans outstanding, on the dates and in the amounts specified in Section 1.04 of the Credit Agreement referred to below, and to pay interest on such principal amount on the dates and at the rates specified in Section 1.03 of such Credit Agreement. All payments due the Bank hereunder shall be made to the Bank at the place, in the type of money and funds and in the manner specified in Section 1.11 of such Credit Agreement. Each holder hereof is authorized to endorse on the grid attached hereto, or on a continuation thereof, each Eurodollar Rate Loan and each payment, prepayment or conversion with respect thereto. Presentment, demand, protest, notice of dishonor and notice of intent to accelerate are hereby waived by the undersigned. This Eurodollar Note evidences Loans made under, and is entitled to the benefits of, the Secured Credit Agreement, dated as of July 20, 1994, among the Revolver Borrowers and the Bank, as the same may be amended from time to time. Reference is made to such Credit Agreement, as so amended, for provisions relating to the prepayment and the acceleration of the maturity hereof. This Eurodollar Note is also entitled to the benefits of the Guarantor Security Agreement. This Eurodollar Note shall be construed in accordance with and governed by the law of the State of New York (without giving effect to its choice of law principles). OCEAN STATE POWER By JMC Ocean State Corporation, its General Partner By /s/ ---------------------------------------- Name: Richard H. King, Jr. Title: Senior Vice President and Assistant Secretary OCEAN STATE POWER II By JMC Ocean State Corporation, its General Partner By /s/ ---------------------------------------- Name: Richard H. King, Jr. Title: Senior Vice President and Assistant Secretary -2- GRID EURODOLLAR NOTE ______________________________________________________________________ Amount of Amount of Principal Paid, Unpaid Principal Eurodollar Prepaid or Amount of Notation Date Rate Loan Converted Eurodollar Note Made By - ---- ---------- -------------- ----------------- -------- ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ EXHIBIT C Supplement to Guarantor Security Agreement July 20, 1994 State Street Bank and Trust Company Corporate Trust Department 5th Floor One Heritage Drive North Quincy, Massachusetts 02171-2128 Attention: Ocean State Power P.O. BOX 561 Harrisville, Rhode Island 02830 Attention: General Manager Ocean State Power II P.O. BOX 561 Harrisville, Rhode Island 02830 Attention: General Manager Reference is made to that certain Security Agreement dated as of October 19, 1992 (as amended, modified or supplemented, the "SECURITY AGREEMENT") among Ocean State Power and Ocean State Power II (collectively, the "Guarantors"), the noteholders referred to therein (the "HOLDERS") and State Street Bank and Trust Company (in its capacity as Collateral Agent and together with its successors and assigns in such capacity, the "COLLATERAL AGENT"). Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Security Agreement. The undersigned intends to extend credit to one or both of the Obligors on substantially the terms and conditions set forth in the agreements and other instruments attached hereto as Annex A and requests (1) that the undersigned be designated as an Additional Creditor under the Security Agreement and (2) that such agreements and instruments be designated as Additional Agreements under the Security Agreement. By its execution and delivery of this letter, the undersigned agrees to be bound by all of the terms of the Security Agreement as a Holder thereunder. The address of the undersigned for notices delivered under Section 14.1 of the Security Agreement is: The Bank of New York One Wall Street New York, New York 10286 Attention: John W. Hall Vice President Telecopy: (212) 635-7923 Thank you for your cooperation. THE BANK OF NEW YORK By /s/ ----------------------------- Name: John W. Hall Title: Vice President 2 Exhibit D Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W. Washington, D.C. 20037 202-785-9700 August 1, 1994 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: File No. 70-8373 - Ocean State Power and Ocean State Power II ----------------------------------------- Gentlemen: As counsel to Ocean State Power ("OSP") and Ocean State Power II ("OSP II"), we are furnishing this opinion to the Securities and Exchange Commission (the "Commission") in connection with the Application/Declaration on Form U-1 filed by OSP and OSP II on March 8, 1994 (the "Original Application"), as amended by Amendments No. 1 and 2 (the Original Application as so amended, the "Application/Declaration") under the Public Utility Holding Company Act of 1935, as amended (the "Act"), File No. 70-8373. The Application/Declaration seeks the Commission's authorization of OSP's and OSP II's (collectively, the "Applicants") proposed incurrence of up to $25,000,000 aggregate principal amount of secured revolving debt through the issuance of notes with maturities not in excess of seven (7) years from the date of initial borrowings (collectively, the "Proposed Transaction," but not including the transactions over which the Applicants have requested that the Commission reserve its jurisdiction), the proceeds of which will be used to fund capital expenditures, to pay transaction costs and other costs in connection with the Proposed Transaction, and to provide liquidity in general. An order authorizing the Proposed Securities and Exchange Commission August 1, 1994 Page 2 Transaction dated July 11, 1994 was issued by the Commission (Release No. 35-26083) (the "Order"). We have reviewed the Order of the Commission and the opinion of this firm as Exhibit F to the Application/Declaration. In addition we have examined such records, documents and matters of law and satisfied ourselves as to such matters of fact as we have considered relevant for the purposes of this opinion. Based upon the foregoing, and subject to the additional qualifications and limitations hereinafter stated, it is our opinion that the Proposed Transaction was consummated in accordance with the Application/Declaration. Our opinions set forth above are subject to the following additional qualifications and limitations: (1) To the extent our opinion set forth above relates to the laws of the State of Rhode Island, we have relied solely upon the opinion of Rhode Island counsel to OSP and OSP II addressed to us, dated as of the date hereof, without independently verifying the matters covered therein, and our opinion is subject to the qualifications and limitations set forth therein. We express no opinion with respect to the finality of any order or approval given under State law with respect to the Proposed Transaction. (2) Our opinion, insofar as it relates to the enforceability of the notes referred to therein, is subject to the effect of bankruptcy, insolvency, reorganization, moratorium, and other similar laws relating to or affecting creditors generally and general principles of equity, regardless of whether enforcement is sought in proceedings at law or equity. (3) Our opinion, insofar as it relates to the holders of securities of the Applicants, is limited to legal rights created under the agreements pursuant to which such securities are issued and outstanding and, insofar as it relates to the holders of securities of any associate Securities and Exchange Commission August 1, 1994 Page 3 company other than the Applicants, is limited to our actual knowledge, without independent investigation. (4) We express no opinion with respect to the transactions over which the Applicants have requested that the Commission reserve its jurisdiction. We understand that any such transactions will be the subject of one or more supplemental filings by the Applicants with the Commission. (5) Certain documents executed at the closing of the Proposed Transaction either differ from the corresponding documents in their draft form as exhibits to the Application/Declaration or were not filed in draft form, but such additional documents or differences in documents filed in draft form do not alter or modify in any material respect the terms and conditions of the Proposed Transaction set forth in the Order. We hereby consent to the filing of this opinion as part of the Certificate of Notification required by Rule 24 promulgated under the Act. Very truly yours, /s/ DICKSTEIN, SHAPIRO & MORIN, L.L.P. -----END PRIVACY-ENHANCED MESSAGE-----