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(F)  any situation requiring the Lessee to make any payment of Supplemental Lease Rent pursuant to the Operative Documents, such notice to set forth the reason for and amount of such payment;

 

 

(iii)  promptly, copies of all material correspondence sent to or received from any Financing Party, which shall include, without limitation, copies of any and all proposed amendments to any Designated Operative Document.

 

 

Section 2.3  Representations and Warranties

 

 

(a)  Representations and Warranties of the Sublessor. The Sublessor represents and warrants to the Sublessee that, as of the date hereof:

 

 

(i)  Organization; Power and Authority. The Sublessor is a limited liability company duly organized, validly existing and in good standing under the laws of the State of New York.  The Sublessor has the requisite corporate power and authority to execute and deliver and perform its obligations under this Facility Sublease and other Facility Sublease Documents.

 

 

(ii)  Authorization, etc. The execution, delivery and performance by the Sublessor of this Facility Sublease and the other Facility Sublease Documents have been duly authorized by all necessary corporate action on the part of the Sublessor, and, when executed and delivered, this Facility Sublease and each other Facility Sublease Document will constitute the legal, valid and binding obligation of the Sublessor enforceable against the Sublessor in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, arrangement, moratorium or other laws relating to or affecting the rights of creditors generally and (b) general principles of equity.

 

 

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(iii)  Non-Contravention. The execution, delivery and performance of this Facility Sublease and other Facility Sublease Documents do not and will not (A) contravene any Applicable Law binding on the Sublessor or its property, (B) require any action, consent or approval by any trustee or holder of indebtedness of the Sublessor (other than those obtained prior to the date hereof) or (C) constitute a violation of or a default under any indenture, mortgage or other material contract to which the Sublessor is a party or by which any of its property is bound, which in any case, individually or in the aggregate, is reasonably likely to result in a Material Adverse Effect.

 

 

(iv)  Governmental Approvals. All Governmental Approvals (if any) which are required as of the date hereof for the execution, delivery or performance by the Sublessor of its obligations under this Facility Sublease and each other Facility Sublease Document have been obtained or made, are not the subject of any pending request for rehearing or appeal, and are in full force and effect (other than any Governmental Approvals, the failure to obtain which is not likely to cause a Material Adverse Effect).

 

 

(v)  Investment Company Act. The Sublessor is not an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

 

 

(vi)  No Amendments to Designated Operative Documents. The Sublessor has delivered to the Sublessee copies of each Designated Operative Document to which it is a party and has not (i) entered into any supplements, amendments, modifications or clarifications to any such Designated Operative Document or (ii) requested or obtained any waiver other than supplements, amendments, modifications clarifications or waivers delivered to the Sublessee prior to the date hereof.

 

 

(vii)  Ventures, Subsidiaries and Affiliates; Outstanding Equity Interests and Indebtedness. The Sublessor has no Subsidiaries and is not engaged in any joint venture or partnership with any other Person.  As of the date hereof, all of the issued and outstanding Equity Interests of the Sublessor are owned by the Members.  There are no outstanding rights to purchase, options, warrants or similar rights or agreements pursuant to which the Sublessor may be required to issue, sell, repurchase or redeem any of its Equity Interests.  As of the date hereof, the Sublessor has no indebtedness (except for the obligations under the Operative Documents and the Facility Sublease Documents).

 

 

(viii)  Nature of Business; No Material Contracts.  The Sublessor is not and has not engaged in any business other than as relates to the Facility Lease, the Site Sublease and the transactions contemplated hereby and

 

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activities related thereto, has no material liabilities other than pursuant to or as permitted by the Operative Documents, and is not a party to or bound by any material contract other than the Facility Sublease Documents and the Operative Documents to which it is a party.

 

 

(ix)  No Lease Default or Lease Event of Default. No Lease Default or Lease Event of Default has occurred or will occur upon execution of the Facility Sublease Documents.  To the Sublessor’s Actual Knowledge no Event of Loss or Burdensome Termination Event has occurred or will occur upon the execution and delivery of the Facility Sublease Documents.

 

 

(b)  Representations and Warranties of the Sublessee. The Sublessee represents and warrants to the Sublessor that, as of the date hereof:

 

 

(i)  Organization; Power and Authority. The Sublessee is a limited liability company duly organized, validly existing and in good standing under the laws of the State of New York.  The Sublessee has the requisite corporate power and authority to execute and deliver and perform its obligations under this Facility Sublease and other Facility Sublease Documents.

 

 

(ii)  Authorization, etc. The execution, delivery and performance by the Sublessee of this Facility Sublease and each other Facility Sublease Documents have been duly authorized by all necessary corporate action on the part of the Sublessee, and, when executed and delivered, this Facility Sublease will constitute the legal, valid and binding obligation of the Sublessee enforceable against the Sublessee in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, arrangement, moratorium or other laws relating to or affecting the rights of creditors generally and (b) general principles of equity.

 

 

(iii)  Non-Contravention. The execution, delivery and performance of this Facility Sublease and other Facility Sublease Documents do not and will not (A) contravene any Applicable Law binding on the Sublessee or its property, (B) require any action, consent or approval by any trustee or holder of indebtedness of the Sublessee (other than those obtained prior to the date hereof) or (C) constitute a violation of or a default under any indenture, mortgage or other material contract to which the Sublessee is a party or by which any of its property is bound, which in any case, individually or in the aggregate, is reasonably likely to result in a Material Adverse Effect.

 

 

(iv)  Governmental Approvals. All Governmental Approvals (if any) which are required as of the date hereof for the execution,

 

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delivery or performance by the Sublessee of its obligations under this Facility Sublease each other Facility Sublease Document have been obtained or made, are not the subject of any pending request for rehearing or appeal, and are in full force and effect (other than any Governmental Approvals, the failure to obtain which is not likely to cause a Material Adverse Effect).

 

 

(v)  Investment Company Act. The Sublessee is not an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

 

 

(vi)   Reliance of Corporate Separateness. The Sublessee is entering into the transactions contemplated by the Facility Sublease Documents in reliance on the Sublessor's identity as a separate and distinct legal entity from the Guarantor or any of its Affiliates or any other Person.

 

 

Section 3.

FACILITY SUBLEASE TERM AND RENT

 

Section 3.1  Basic Sublease Term.  The basic term of this Facility Sublease (the “Basic Sublease Term”) shall commence on the Sublease Closing Date and shall terminate at 11:59 p.m. (New York City time) on May 25, 2040 (the “Sublease Expiration Date”), subject to earlier termination pursuant to Section 10 or Section 17 hereof.

 

Section 3.2  Rent.

 

 

(a)   Payment of Sublease Base Rent.  The Sublessee hereby agrees to pay to the Sublessor on each Basic Sublease Rent Payment Date during the Basic Sublease Term, unless this Facility Sublease is earlier terminated in accordance with the express provisions hereof, the amount set forth opposite such Basic Sublease Rent Payment Date on Schedule A-1 hereto (“Sublease Base Rent”).

 

 

(b)  Prepayment of Sublease Base Rent upon Change of Control.  Upon occurrence of the Change of Control of the Sublessee, the Sublessee shall prepay the net present value of all Sublease Base Rent as determined using the Discount Rate and as set forth on Schedule A-2 hereto (the "NPV of Sublease Base Rent").  Such prepayment of the Sublease Base Rent shall constitute compensation to the Sublessor for the sublease of the Facility to the Sublessee under this Facility Sublease and shall fully satisfy the obligation of the Sublessee to pay Sublease Base Rent under this Facility Sublease.

 

 

(c)  Allocation of Rent Upon Change of Control.

 

 

(i)  Initial Allocations.  The Sublease Base Rent will be allocated in the amounts and to the periods as set forth in Schedule A-3, column

 

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“b”, hereto (the “Allocated Rent”).  Within each full or partial calendar year during the Basic Sublease Term (each, a “Rental Period”), Sublease Base Rent shall be allocated on a level basis by month and on a level daily basis within each month.  It is the intention of the Sublessor and the Sublessee that the allocation of Sublease Base Rent to each Rental Period as provided in this Section 3.2(c)(i) constitutes a specific allocation of fixed rent within the meaning of Treasury Regulation section 1.467-1(c)(2)(ii).

 

 

(ii)  Proportional Rent Amounts.  Because the amount prepaid by the Sublessee pursuant to Section 3.2(b) as the net present value of all Sublease Base Rent  exceeds the sum of the present values of the Allocated Rent set forth on Schedule A-3, column “b”, hereto (as determined using the Applicable Federal Rate of 4.65%, compounded annually, as the discount rate), the fixed rent for each rental period is the “proportional rental amount” as required by Treasury Regulation section 1.467-2(a).  Such “proportional rental amount”, calculated in accordance with Treasury Regulation section 1.467-2(c)(1), equals, in each Rental Period, the Allocated Rent for such period multiplied by a fraction, the numerator of which equals the amount shown as the “Rent Payment” on July 15, 2008, on Schedule A-3, column “a”, hereto and the denominator of which equals the sum of the present values of the Allocated Rent shown on Schedule A-3, column “b”, hereto calculated as described in the first sentence of this paragraph (ii).

 

 

(iii)  Prepaid Rent Amounts and Interest on Prepaid Rent.  Because, as of the close of each Rental Period, the prepaid rent shown as the “Rent Payment” on Schedule A-3, column “a”, hereto reduced by the absolute value of cumulative 467 Interest as shown on Schedule A-3, column “j”, hereto exceeds the cumulative amount of 467 Proportional Rental Accruals as shown on Schedule A-3, column “g”, hereto it is the intention of the Sublessor and the Sublessee that such excess constitutes prepaid rent within the meaning of Treasury Regulation section 1.467-1(c)(3)(ii) and interest shall accrue thereon at the annual discount rate shown on Schedule A-3 hereto (and equal to 110% of the annual long-term Applicable Federal Rate on the Sublease Closing Date).  The Sublessor and the Sublessee on any Federal income tax returns filed by them (or on any Federal income tax returns on which their income is included), shall accrue as interest expense and interest income, respectively, the amount (and only such amount, unless required to do otherwise by the Internal Revenue Service) shown under the heading “467 Interest” (the “Interest on Prepaid Rent”) set forth opposite such Rental Period in column “i” of Schedule A-3 hereto and shall accrue as rental income and rental expense, respectively, the amount (and only such amount, unless required to do otherwise by the Internal Revenue Service) shown as 467 Proportional Rent Accrual set forth opposite such Rental Period in column “g” of Schedule A-3 hereto.

 

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(d)  Payment and Allocation of Sublease Renewal Rent.  Sublease Renewal Rent, if any, shall be paid as set forth in Section 15 and shall be allocated on a level daily basis over such Renewal Sublease Term.

 

Section 3.3  Supplemental Sublease Rent.  The Sublessee also agrees to pay to the Sublessor any and all Supplemental Sublease Rent, promptly as the same shall become due and owing, or where no due date is specified, promptly after demand by the Sublessor, and in the event of any failure on the part of the Sublessee to pay any Supplemental Sublease Rent, the Sublessor shall have all the same rights, powers and remedies as are provided for herein or by law or equity or otherwise for the failure to pay Sublease Base Rent or Sublease Renewal Rent.  The Sublessee will also pay as Supplemental Sublease Rent, to the extent permitted by Applicable Law, an amount equal to interest at the Overdue Rate on any Supplemental Sublease Rent not paid when due (whether on demand or otherwise) for the period from such due date until the same shall be paid.  All Supplemental Sublease Rent to be paid pursuant to this Section 3.3 shall be payable in the manner set forth in Section 3.4.

 

Section 3.4  Manner of Payments.  All Sublease Rent shall be paid by the Sublessee in lawful currency of the United States of America in immediately available funds to the recipient not later than 10:00 a.m. (New York City time) on the due date therefor. All Supplemental Sublease Rent due on account of Supplemental Lease Rent shall be paid as provided in Section 3.5 of the Facility Lease. All other Sublease Rent shall be paid by the Sublessee to the Sublessor by payment to the Sublessor’s Account or to such other place as the Sublessor shall notify the Sublessee in writing reasonably in advance of such payment.  The Sublessee agrees that, except pursuant to Section 10.2 (b) and Section 10.3 and any provision of this Facility Sublease which expressly provides for the same, the Sublease Rent is non-refundable and that the Sublessee will not have any right of abatement, reduction, set-off, counterclaim, rescission, refund, defense or deduction with respect thereto.

 

 

Section 4.

DISCLAIMER OF WARRANTIES; RIGHT OF QUIET ENJOYMENT

 

Section 4.1  Disclaimer of Warranties

 

 

(a)  Without waiving any claim the Sublessee may have against any manufacturer, vendor or contractor, or any claims that the Sublessee or any of its Affiliates may have pursuant to the MISPA, THE SUBLESSEE ACKNOWLEDGES AND AGREES SOLELY FOR THE BENEFIT OF THE SUBLESSOR THAT (i) THE FACILITY AND EACH COMPONENT THEREOF IS OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE ACCEPTABLE TO THE SUBLESSEE, (ii) THE SUBLESSEE IS SATISFIED THAT THE FACILITY AND EACH COMPONENT THEREOF IS SUITABLE FOR THEIR RESPECTIVE PURPOSES, (iii) THE SUBLESSOR IS NOT A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND, (iv) THE FACILITY IS SUBLEASED HEREUNDER TO THE EXTENT PROVIDED HEREBY FOR THE BASIC SUBLEASE TERM AND THE RENEWAL SUBLEASE TERMS, IF ANY, SPECIFIED HEREIN SUBJECT TO ALL APPLICABLE LAWS NOW IN EFFECT OR HEREAFTER ADOPTED, INCLUDING (1) ZONING REGULATIONS, (2) ENVIRONMENTAL LAWS OR (3) BUILDING

 

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RESTRICTIONS, AND IN THE STATE AND CONDITION OF EVERY PART THEREOF WHEN THE SAME FIRST BECAME SUBJECT TO THIS FACILITY SUBLEASE WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND BY THE SUBLESSOR AND (v) THE SUBLESSOR SUBLEASES FOR THE BASIC SUBLEASE TERM AND THE RENEWAL SUBLEASE TERMS, IF ANY, SPECIFIED HEREIN AND THE SUBLESSEE TAKES THE FACILITY UNDER THIS FACILITY SUBLEASE “AS-IS”, “WHERE-IS” AND “WITH ALL FAULTS”, AND THE SUBLESSEE ACKNOWLEDGES THAT THE SUBLESSOR NEITHER MAKES NOR SHALL BE DEEMED TO HAVE MADE, AND EXPRESSLY DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS, WARRANTIES OR REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION, MERCHANTABILITY THEREOF OR AS TO THE TITLE OF THE FACILITY, THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, FREEDOM FROM PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY LATENT OR OTHER DEFECT, WHETHER OR NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT THERETO.  It is agreed that all such risks, as between the Sublessor on the one hand and the Sublessee on the other hand are to be borne by the Sublessee with respect to acts, occurrences or omissions during the Facility Sublease Term.  The Sublessor shall not have any responsibility or liability to the Sublessee or any other Person with respect to any of the following occurring during the Facility Sublease Term:  (x) any liability, loss or damage caused or alleged to be caused directly or indirectly by the Facility or any Component or by any inadequacy thereof or deficiency or defect therein or by any other circumstances in connection therewith; (y) the use, operation or performance of the Facility or any Component thereof or any risks relating thereto; or (z) the delivery, operation, servicing, maintenance, repair, improvement, replacement or decommissioning of the Facility or any Component thereof.  The provisions of this paragraph (a) of this Section 4.1 have been negotiated, and, except for the representations and warranties set forth in Section 2.3(a) hereof and the MISPA, the foregoing provisions are intended to be a complete exclusion and negation of any representations or warranties of the Sublessor, express or implied, with respect to the Facility or any Component thereof that may arise pursuant to any Applicable Law now or hereafter in effect, or otherwise.

 

 

(b)  During the Facility Sublease Term, so long as no Sublease Event of Default shall have occurred and be continuing, the Sublessor hereby appoints irrevocably and constitutes the Sublessee its agent and attorney-in-fact, coupled with an interest, to assert and enforce, from time to time, in the name and for the account of the Sublessor, at the sole cost and expense of the Sublessee, whatever claims and rights the Sublessor may have in respect of the Facility or any Component thereof against any manufacturer, vendor or contractor, or under any express or implied warranties relating to the Facility or any Component thereof.

 

Section 4.2  Quiet Enjoyment.

 

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(a)  The Sublessor acknowledges notice of the Site Sub-Sublease and expressly agrees that, so long as no Sublease Event of Default has occurred and is continuing, neither the Sublessor nor any party acting by, through or under the Sublessor shall take or cause to be taken any action contrary to the Sublessee’s rights under this Facility Sublease and the Site Sub-sublease, including the right to possession, use and quiet enjoyment of the Facility, the Facility Site and the Easements.  So long as no Sublease Event of Default has occurred and is continuing, in the event of a bankruptcy of the Owner Lessor, without the prior written consent of the Sublessee, the Sublessor shall not exercise, or refrain from exercising, any rights that it might have or obtain pursuant to section 365(h) of title 11, United States Code.

 

 

(b)  The Sublessee and the Sublessor agree that at any time prior to the Transfer Date if any Seller Event of Default results in a termination of the Facility Lease and loss by the Sublessee of its right of possession, use and quiet enjoyment of the Facility, the Sublessor shall pay to the Sublessee the Unamortized Portion of the Purchase Price (in which case provisions of Section 10.3 shall not apply) as of the applicable Sublease Termination Date, and such payment will be the sole and exclusive remedy of the Sublessee on account of any termination of this Facility Sublease and the Facility Lease due to a Sublessor Event of Default. The Sublessee hereby expressly waives and relinquishes any and all other remedies at law or in equity it may have against the Sublessor or any of its Affiliates on account of such event. The Sublessor shall have the right to apply amounts owed to the Sublessee pursuant to this Section 4.2(b) against any and all amounts owed to the Sublessor by the Sublessee on such Sublease Termination Date (including any amounts which may be owed pursuant to Section 17.1).

 

 

Section 5.

RETURN OF FACILITY

 

Section 5.1  Return. Upon expiration or early termination of this Facility Sublease, the Sublessee, at its own expense, shall return the Facility (together with any Modifications to the Facility title to which shall have vested in the Owner Lessor pursuant to Section 8.3) to the Sublessor or any transferee or assignee of the Sublessor by surrendering the Facility into the possession of the Sublessor or such transferee or assignee at the Facility Site.  In connection with such return, the Sublessee shall:

 

 

(i)  assign, to the extent permitted by Applicable Law, and shall cooperate with all reasonable requests of the Sublessor or any transferee or assignee of the Sublessor for purposes of obtaining, or enabling the Sublessor or such transferees or assignees to obtain, any and all Governmental Approvals and licenses, permits, approvals and consents of any other Persons that are or will be required to be obtained by the Sublessor or such transferee or assignee in connection with the use, operation or maintenance of the Facility on or after such return in compliance with Applicable Law; provided that if any such Governmental Approval or other license, permit, approval or consent also relates to any other facilities, the Sublessee and the Sublessor shall enter into mutually satisfactory arrangements so that the Facility and such other facilities may each be owned, operated and maintained in a commercially reasonable manner;

 

 

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(ii)  provide the Sublessor or a transferee or assignee of the Sublessor copies of all documents (including equipment inspection reports and maintenance records and all Governmental Approvals and related materials), instruments, plans, maps, specifications, manuals, drawings and other documentary materials relating to the installation, maintenance, operation, construction, design, modification and repair of the Facility as shall be in the Sublessee’s possession and shall be reasonably appropriate or necessary for the continued operation of the Facility.  Upon such return, the right to use the Facility granted hereunder for the benefit of the Sublessee shall cease and terminate;

 

 

(iii)  assign any long-term service contracts specifically applicable only to the Facility to the extent such assignment is permitted under such contract without the consent of the counterparty thereto;

 

 

(iv)  enter into any reasonably requested support arrangements contemplated by Section 5.6 of the Participation Agreement; and

 

 

(v)  take, execute, acknowledge and deliver such acts, documents and assurances as may be required pursuant to Section 5.7 of the Participation Agreement.

 

Section 5.2  Condition Upon Return.  At the time of the return of the Facility by the Sublessee to the Sublessor or any transferee or assignee of the Sublessor pursuant to Section 5.1, the following conditions shall be complied with, all at the Sublessee’s sole cost and expense; provided that this Section 5.2 shall not apply to any return pursuant to Section 10:

 

 

(a)  the Facility shall be free and clear of all Liens (other than Permitted Liens of the type specified in (b) (other than Indenture Trustee’s Liens), (h), (i), (j), (k), (1) or (m) of the definition thereof and the interests of the Owner Participant and the Owner Lessor under any of the Operative Documents);

 

 

(b)  the Facility shall be in at least as good a condition as if it had been maintained and operated during the Facility Sublease Term in compliance with the provisions of this Facility Sublease, ordinary wear and tear excepted; and

 

 

(c)  at the request of the Sublessor and to the extent permitted by the Facility Lease, remove all Sublessee’s Severable Modifications and otherwise restore the Facility Site to the condition required by the Facility Lease.  Any Sublessee’s Severable Modifications not removed by the Sublessee within thirty (30) days of the expiration or the early termination of this Facility Sublease will, at the Sublessor’s option, be deemed abandoned by the Sublessee and title to such Severable Modifications will automatically, without further action, vest in the Sublessor or its designee.

 

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Section 5.3  Environmental Reports; Clean-up.

 

 

(a)  In connection with the return of the Facility to the Sublessor at the Sublease Expiration Date or the expiration of the last Renewal Lease Term elected by the Sublessee or pursuant to Section 17, the Sublessee shall, at its own expense, provide the Sublessor (a) not later than nine (9) months prior to the later of the Sublease Expiration Date or the expiration date of the last Renewal Lease Term elected by the Sublessee, or (b) in connection with any return pursuant to Section 17 of this Facility Sublease, as promptly as possible prior to such return, a Phase I Survey (as defined below) as to the environmental conditions or circumstances of the Facility and the Facility Site and the presence or absence of any Environmental Conditions that reasonably could give rise to a liability or a potential liability.  Such survey shall be conducted in conformance with American Society for Testing and Materials (“ASTM”) standards for a Phase I environmental site assessment and shall include a review of the compliance or non-compliance of the Facility and Facility Site at the time of the return of the Facility with any applicable Environmental Laws, as then currently in effect (together, a “Phase I Survey”) performed not more than 90 days prior to the date such report is provided to the Sublessor, by a reputable environmental consulting firm (selected by the Sublessee and reasonably acceptable to the Sublessor).  The Phase I Survey will only be expanded to a Phase II environmental site assessment conducted in conformance with the ASTM standards (a “Phase II Survey”) if, as a result of the Phase I Survey, facts are revealed that would reasonably necessitate a Phase II Survey; provided however, that such facts were not otherwise previously identified in the scope of work, site investigation results, contaminant fate and transport, conclusions and recommendations sections of the environmental reports listed as items 13, 14 and 21 in Schedule 4(w) to the Participation Agreement.  The provisions of such Phase I Survey or Phase II Survey shall not relieve the Sublessee of any indemnification obligation or liability with respect to Environmental Conditions or any non-compliance with Environmental Laws existing at the time of such return, whether known or unknown, in respect of the Facility or the Facility Site.

 

 

(b)  If the Phase I Survey or Phase II Survey delivered pursuant to Section 5.3(a) indicates that, or at the time of any return of the Facility pursuant to Section 5.1 (other than pursuant to Section 10) the Sublessee has received written notice or otherwise has Actual Knowledge that, any action (including

 

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clean-up, investigation, abatement, correction, removal or remediation) is then required under any then applicable Environmental Laws as then currently in effect (whether indicated in the Phase I Survey or Phase II Survey or otherwise and including any action then required under applicable Environmental Laws (as then currently in effect) for the Facility to be then in compliance with such Environmental Laws), the Sublessee shall, at its own expense, within 90 days of the Sublessor having received such Phase I Survey or Phase II Survey, provide the Sublessor with a remediation plan reasonably satisfactory to the Sublessor designed to effect compliance with then applicable Environmental Laws (as then currently in effect) and the return conditions set forth in this Section 5 as promptly as is reasonably practical (and in any event prior to the expiration of the Facility Sublease Term) and without materially adversely affecting the continued operation of the Facility.  To the extent that any action (including clean-up, investigation, abatement, correction, removal or remediation) required to be taken under this Section 5.3(b) cannot reasonably be completed prior to expiration or termination of this Facility Sublease, the Sublessee shall complete such action (including clean-up, investigation, abatement, correction, removal or remediation) as promptly thereafter as is reasonably practical, and in addition the Sublessee shall provide to the Sublessor adequate financial assurance during such period following the end of the Facility Sublease Term with respect to the ability of the Sublessee (or any other Person responsible therefor) to satisfy such obligation.  The obligations of the Sublessee set forth in Section 5.3(a) and (b) hereof shall survive the termination of this Facility Sublease and the expiration of the Facility Sublease Term. 

 

 

(c)  Nothing contained in Section 5.3(a) and (b) above shall be construed to waive any right or claim or modify any obligation which any party hereto or any of their respective Affiliates may have pursuant to the MISPA.

 

Section 5.4  Return upon termination of the Facility Lease. Notwithstanding anything to the contrary in the foregoing Sections 5.1 through and including 5.3, upon the expiration or early termination of this Facility Sublease concurrently with or as a result of the termination of the Facility Lease (whether in accordance with its terms or as a result of any exercise of remedies by the Owner Lessor or any of its successors or assigns), all obligations of the Lessee set forth in Section 5 of the Facility Lease and Section 5.6 and 5.7 of the Participation Agreement (in each case except for the Sublessor Retained Obligations thereunder) shall constitute obligations of the Sublessee hereunder mutatis mutandis and performance by the Sublessee of all such obligations for the benefit of the Owner Participant, the Owner Trustee, the Owner Lessor or any transferees or assignee of any of such parties resulting in full and unconditional satisfaction of the Sublessor’s obligations to such parties shall constitute performance by the Sublessee of its obligations hereunder and shall fully discharge such obligations.

 

Section 6.

LIENS

 

 

(a)  The Sublessee will not directly or indirectly create, incur, assume or suffer to exist any Lien on or with respect to the Facility (or any Component thereof), the Ground Interest, the Operative Documents or the Facility Sublease Documents or the Sublessor’s interest therein, except Permitted Liens, other than of the type specified in clause (c) of the definition thereof. The Sublessee shall promptly notify the Sublessor of the imposition of any such Lien of which the Sublessee has Actual Knowledge and shall promptly at its own expense take such action as may be necessary to fully discharge and release such Lien.  If the Sublessee fails to cause any Lien (except Permitted Liens, other than of the type specified in clause (c) of the definition thereof) to be discharged within the permitted time, the Sublessor may cause it to be discharged and may pay (but shall be under no obligation to do so) the amount necessary to discharge such Lien.  If the Sublessor makes any such payment, all amounts paid by the Sublessor will be payable by the Sublessee to the Sublessor as Supplemental Sublease Rent within ten (10) days of demand.

 

 

(b)  Other than the Facility Sublease and the Site Sub-sublease, the Sublessor will not directly or indirectly create, incur, assume or suffer to exist any Lien on or with respect to the Facility (or any Component thereof), the Ground Interest, the Operative Documents or the Facility Sublease Documents or the Sublessee’s interest therein, except

 

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Permitted Liens, other than of the type specified in clause (c) of the definition thereof.  The Sublessor shall promptly notify the Sublessee of the imposition of any such Lien of which the Sublessor has Actual Knowledge and shall promptly at its own expense take such action as may be necessary to fully discharge and release such Lien.  If the Sublessor fails to cause any Lien (except Permitted Liens, other than of the type specified in clause (c) of the definition thereof) to be discharged within the permitted time, the Sublessee may cause it to be discharged and may pay (but shall be under no obligation to do so) the amount necessary to discharge such Lien. If the Sublessee makes any such payment, all amounts paid by the Sublessee will be payable by the Sublessor to the Sublessee within ten (10) days of demand.

 

 

Section 7.

MAINTENANCE; REPLACEMENTS OF COMPONENTS

 

Section 7.1  Maintenance.  The Sublessee, at its own cost and expense, will (a) cause the Facility to be maintained in good condition, repair and working order, ordinary wear and tear excepted, and in any event in all material respects (i) in accordance with Prudent Industry Practice without discrimination by reason of the subleased status of the Facility as compared to other comparable property owned, leased or subleased by the Sublessee or its Affiliates; (ii) in compliance with all Applicable Laws of any Governmental Entity unless such non-compliance could not reasonably be expected to result in a material adverse effect on (x) the ability of the Sublessee to perform its material obligations under any of the Facility Sublease Documents or (y) the validity or enforceability of any of the Facility Sublease Documents or any Operative Document; provided however, that the Sublessee may, in good faith and by appropriate proceedings, diligently contest the validity or application of any Applicable Law in any reasonable manner that (A) does not involve any risk of foreclosure, sale or forfeiture or loss of the Facility or any substantial part thereof or the Facility Site (in each case, unless such risk is not material) or the impairment of the use, operation or maintenance of the Facility in any material respect, and (B) could not result in any criminal liability being incurred by, or could not reasonably be expected to have any material adverse effect on the interests of the Sublessor, any Financing Party or any of their Affiliates, including subjecting any of the above parties (other than the Sublessor or its Affiliates to the extent already subject to regulation as a public utility, in which case such regulation shall not become materially more burdensome as a result of such contest), to regulation as a public utility under Applicable Law; and (iii) in accordance with the terms of all insurance policies required to be maintained with respect to the Facility pursuant to Section 11; and (b) cause to be made, at its own cost and expense, all repairs, renewals, replacements and improvements thereof, all as in the judgment of the Sublessee may be necessary so that the Facility may be operated in accordance with its intended purpose.

 

Section 7.2  Replacement of Components.  The Sublessee shall have all rights and perform all obligations of the Lessee under Section 7.2 of the Facility Lease.  The Sublessor hereby designates the Sublessee to take title to any replaced Component pursuant to Section 7.2 of the Facility Lease. The Sublessee acknowledges and agrees that if any Component to the Facility that is subject to the Facility Lease and this Facility Sublease is removed from the Facility, such Component shall remain subject to the Facility Lease and the other Operative Documents and this Facility Sublease, wherever located, until such time as such Component is replaced by a Replacement Component which has been incorporated into the Facility and which

 

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meets the requirements for the Replacement Component specified in Section 7.2 of the Facility Lease.

 

 

Section 8.

MODIFICATIONS

 

Section 8.1  Required Modifications.  The Sublessee, at its sole cost and expense, shall make or cause to be made all Modifications to the Facility as are required (a) by Applicable Law or (b) to maintain in effect any insurance policy required to be maintained with respect to the Facility pursuant to Section 11 hereof (each, a “Required Modification”); providedhowever, that the Sublessee may, in good faith and by appropriate proceedings, diligently contest the validity or application of any Applicable Law in any reasonable manner that (i) does not involve any danger of foreclosure, sale or forfeiture or loss of any part of the Facility or any substantial part thereof or the Facility Site (in each case unless such risk is not material) or impair the use, operation or maintenance of the Facility in any material respect, and (ii) could not result in any criminal liability being incurred by, or could not reasonably be expected to have any material adverse effect on the interests of the Sublessor, any Financing Party or any of their Affiliates, including subjecting any of the above parties (other than the Sublessor or its Affiliates to the extent already subject to regulation as a public utility, in which case such regulation shall not become materially more burdensome as a result of such contest), to regulation as a public utility under Applicable Law.

 

Section 8.2  Optional Modifications.  The Sublessee at any time may, at its sole cost and expense, make or cause or permit to be made any Modification to the Facility as the Sublessee considers desirable in the proper conduct of its business (any such Modification that is not a Required Modification being referred to as an “Optional Modification”); provided that the Sublessee shall not make and shall prevent from being made any Optional Modification to the Facility that would (i) materially diminish the current or residual value, utility (other than with respect to Optional Modifications for pollution control equipment) or remaining useful life of the Facility as a whole, below the current or residual value, utility (other than with respect to Optional Modifications for pollution control equipment) or remaining useful life of the Facility as a whole immediately prior to such Optional Modification (assuming the Facility was then in the condition required to be maintained by the terms of this Facility Sublease, but without regard to any Severable Modifications previously made that were not Required Modifications) or (ii) cause the Facility or any substantial portion thereof to become “limited use” property, within the meaning of Revenue Procedure 2001-28, 2001-19 I.R.B. 1156 or Revenue Procedure 2001-29, 2001-19 I.R.B. 1160.

 

Section 8.3  Title to Modifications.  The Sublessee acknowledges Section 8.3 of the Facility Lease and agrees that title to all Required Modifications and all Nonseverable Modifications shall (at no cost to the Sublessor or the Owner Lessor) vest in the Owner Lessor pursuant to such Section 8.3.  In addition, the Sublessee acknowledges the right of the Owner Lessor to purchase any Removable Modification and agrees to be bound by all obligations of the Lessee under Section 8.3 of the Facility Lease and exercise all rights of the Lessee in connection therewith pursuant to and in accordance with Section 2.2 hereof.

 

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Section 9.

NET SUBLEASE

 

 

This Facility Sublease is a “net sublease” and the Sublessee’s obligation to pay all Sublease Rent payable hereunder (and all amounts, including Sublease Termination Value (or amounts computed by reference thereto), in lieu of Sublease Rent following termination of this Facility Sublease in whole or in part) shall be absolute and unconditional under any and all circumstances and shall not be terminated, extinguished, diminished, lost or otherwise impaired by any circumstance of any character, including by:

 

 

(i)           any setoff, counterclaim, recoupment, defense or other right which the Sublessee may have against the Sublessor or any other Person, including any claim as a result of any breach by any of said parties of any covenant or provision in any Facility Sublease Document or any Operative Document,

 

 

(ii)           any lack or invalidity of title or any defect in the title, condition, design, operation, merchantability or fitness for use of the Facility or any Component or any portion of either thereof, or any eviction by paramount title or otherwise, or any unavailability of the Facility, the Facility Site, any Component or any portion of either thereof, any other portion of the Facility, or any part thereof,

 

 

(iii)           any loss, theft or destruction of, or damage to, the Facility or any Component or any portion of either thereof or interruption or cessation in the use or possession thereof or any part thereof by the Sublessee for any reason whatsoever and of whatever duration,

 

 

(iv)           the condemnation, requisitioning, expropriation, seizure or other taking of title to or use of the Facility Site, the Facility, any Component or any portion of either thereof by any Governmental Entity or otherwise,

 

 

(v)           the invalidity or unenforceability (or allegation of invalidity or unenforceability) or lack of due authorization or other infirmity of any Facility Sublease Document or any Operative Document,

 

 

(vi)           the lack of right, power or authority of the Sublessor or Owner Lessor to enter into any Facility Sublease Document or any Operative Document,

 

 

(vii)           any ineligibility of the Facility or any Component or any portion of either thereof for any particular use, whether or not due to any failure of the Lessee to comply with any Applicable Law,

 

 

(viii)           any event of “force majeure” or any frustration,

 

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(ix)           any legal requirement similar or dissimilar to the foregoing, any present or future law to the contrary notwithstanding,

 

 

(x)           any insolvency, bankruptcy, reorganization or similar proceeding by or against the Sublessee or any other Person,

 

 

(xi)           any Lien of any Person with respect to the Facility Site, the Facility, any Component or any portion of either thereof or any part thereof,

 

 

(xii)           any prohibition, limitation or restriction of Sublessee’s use of all or any part of the Facility, the Facility Site or the Ground Interest or any portion thereof or any interest therein or the interference with such use by any Person,

 

 

(xiii)            the termination or loss of the Facility, the Facility Site or the Ground Interest or any portion thereof, any other lease, sublease, right-of-way, easement or other interest in personal or real property upon or to which any portion of the Facility is located, attached or appurtenant or in connection with which any portion of the Facility is used or otherwise affects or may affect the Facility or any right thereto,

 

 

(xiv)            any breach, default or misrepresentation by the Sublessor or the Owner Lessor or any other Person under any Facility Sublease Document or any Operative Document,

 

 

(xv)            any failure, omission or delay on the part of any Person to exercise any right, power or remedy under any Facility Sublease Document or any Operative Document,

 

 

(xvi)           the taking or omission of any of the actions referred to in any Facility Sublease Document or any Operative Document or

 

 

(xvii)          any other cause, whether similar or dissimilar to the foregoing, any present or future law notwithstanding, except as expressly set forth herein or in any Facility Sublease Document or any Operative Document.

 

 

It is the intention of the parties hereto that all Sublease Rent (and all amounts, including Sublease Termination Value, in lieu of Sublease Rent following termination of this Facility Sublease in whole or in part) payable by the Sublessee hereunder shall continue to be payable in all events in the manner and at times provided for herein.  Except as otherwise expressly provided in Section 10.2(b) and Section 10.3, such Sublease Rent, and all amounts (including Sublease Termination Value (or amounts computed by reference thereto), in lieu of Sublease Rent following termination of this Facility Sublease in whole or in part) shall not be subject to any abatement and the payments thereof shall not be subject to any setoff or reduction

 

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for any reason whatsoever, including any present or future claims of the Sublessee or any other Person against the Sublessor or any other Person under this Facility Sublease or otherwise.  To the extent permitted by Applicable Law, the Sublessee hereby waives any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, cancel, quit or surrender this Facility Sublease with respect to the Facility except in accordance with Section 10.  If for any reason whatsoever this Facility Sublease shall be terminated in whole or in part by operation of law or otherwise (other than a termination solely as a result of the Seller Event of Default), except as specifically provided herein, the Sublessee nonetheless agrees, to the extent permitted by Applicable Law, to pay to the Sublessor an amount equal to, if in connection with a termination of a Renewal Sublease Term, Sublease Renewal Rent, and all Supplemental Sublease Rent and any other amounts due and owing, at the time such payment would have become due and payable in accordance with the terms hereof had this Facility Sublease not been so terminated.  Nothing contained herein shall be construed to waive any claim which the Sublessee might have under any Facility Sublease Document or otherwise or to limit the right of the Sublessee to make any claim it might have against the Sublessor or any other Person or to pursue such claim in such manner as the Sublessee shall deem appropriate.

 

 

Section 10.

EVENTS OF LOSS; OTHER TERMINATION EVENTS AND RIGHTS OF FIRST OFFER AND FIRST REFUSAL

 

Section 10.1  Occurrence of Events of Loss.

 

 

(a)  If an Event of Loss described in clauses (a), (b) or (c) of the definition of Event of Loss shall occur, the Sublessee shall have the right, at its own cost and expense, to rebuild or replace the Facility in accordance with the terms of Sections 10.1 and 10.3 of the Facility Lease and subject to all conditions to such rebuilding or replacement set forth in such Sections 10.1 and 10.3.  The Sublessee shall have the right, at its own cost and expense, to negotiate with the Financing Parties on behalf of and for the benefit of the Sublessor in connection with such rebuilding or replacement and the Sublessor, if requested by the Sublessee, will exercise commercially reasonable efforts to assist the Sublessee in satisfying the conditions to rebuilding or replacement set forth in Section 10.3 of the Facility Lease; provided however, that the Sublessor shall not be obligated to take any action until it shall have received from each Buyer Sublease Guarantor a re-affirmation of its obligation under the Buyer Sublease Guaranty.

 

 

(b)  If an Event of Loss described in clauses (a) or (b) of the definition of Event of Loss shall have occurred and the Sublessee shall have elected (or shall be deemed to have elected) not to rebuild or replace the Facility, and the Owner Lessor has delivered a written notice of its election to retain the Owner Lessor’s interest in accordance with Section 10.1(b)(ii) of the Facility Lease, Section 10.3 hereof shall apply and this Facility Sublease shall automatically terminate on date the Facility Lease terminates pursuant to Section 10.1(b)(ii) thereof.  The Sublessee shall pay to the Sublessor all Supplemental Sublease Rent accrued and unpaid on such termination date.  The Sublessee’s obligation to pay accrued Supplemental Sublease Rent shall survive the termination of the Facility Sublease pursuant to this Section 10.1(b).

 

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(c)  If an Event of Loss described in clauses (a), (b) or (c) of the definition of Event of Loss shall have occurred and the Sublessee shall have elected (or shall be deemed to have elected) not to rebuild or replace the Facility, and the Owner Lessor does not elect to retain its interest in accordance with Section 10.1(b)(ii) of the Facility Lease, then on the date specified for the payment by the Lessee in Section 10.1(b)(iv)(A) or (B) of the Facility Lease, the Sublessee shall, subject to Sections 10.2(b) and 10.3,  pay to the Sublessor (i) the amount which the Sublessor is required to pay to the Owner Lessor pursuant to such Section 10.1(b)(iv)(A) or (B), as applicable, plus (ii) all other Supplemental Sublease Rent accrued and unpaid on such termination date (including all reasonable documented out-of-pocket costs and expenses of the Sublessor and each Financing Party).  This Facility Sublease shall automatically terminate without any further action by or notice from the Sublessor as of the date of the termination of the Facility Lease following such Event of Loss; provided however, that the parties’ respective payment obligations hereunder shall survive such termination of this Facility Sublease.

 

 

(d)  If an Event of Loss described in clause (d) of the definition of Event of Loss shall occur, provisions of Section 10.1(c) of the Facility Lease shall apply.  If the Owner Lessor’s Interest is sold within the timeframe specified by such Section 10.1(c), the Sublessee shall, subject to Sections 10.2(b) and 10.3, pay to the Sublessor the sum of (i) the amount which the Sublessor is required to pay to the Owner Lessor under Section 10.1(c)(ii) of the Facility Lease and (ii) any accrued Supplemental Sublease Rent.  If the Owner Lessor’s Interest is not sold within the timeframe specified by such Section 10.1(c), the Sublessee shall, subject of Sections 10.2(b) and 10.3, pay to the Sublessor the Sublease Termination Value plus all other accrued Supplemental Sublease Rent.  The Sublessor hereby irrevocably designates the Sublessee to receive any and all net cash proceeds of the sale of the Owner Lessor’s Interest which may be payable to it as the Lessee pursuant to Section 10.1(c)(iii) of the Facility Lease.

 

 

(e)  the Sublessee and the Sublessor agree to cooperate in connection with any disposition of the Owner Lessor’s Interest pursuant to Section 10.1(b) and (c) of the Facility Lease.

 

Section 10.2  Sublease Termination Value.

 

 

(a)  Sublease Termination Value shall be calculated monthly, for the same day of the month as the stated Basic Lease Rent and Renewal Lease Rent, if any, are payable under the Facility Lease (each, a “TV Payment Date”). Sublease Termination Values during the Basic Sublease Term are set forth in Schedule B.

 

 

(b)  The Sublessee shall have the right to apply Sublease Termination Value amounts owed to the Sublessor under this Facility Sublease against any and all amounts owed to the Sublessee by the Sublessor on date of such termination or transfer pursuant to Section 4.2(b) and Section 10.3 hereof.

 

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Section 10.3  Payment of Unamortized Rent.  If (i) this Facility Sublease terminates for any reason, other than pursuant to Section 17 hereof, and the Sublessor has not entered into a New Sublease pursuant to Section 22.1, or (ii) the Sublessee acquires the Owner Lessor’s Interest pursuant to and in accordance with the provisions of Section 14.1, the Sublessor shall pay to the Sublessee on the next Sublease Termination Date an amount equal to Unamortized Rent as of such Sublease Termination Date and the Sublessee hereby expressly waives and relinquishes any and all other claims remedies at law or in equity it may have against the Sublessor or any of its Affiliates on account of such early termination of this Facility Sublease.

 

 

The Sublessor shall have the right to apply amounts owed to the Sublessee pursuant to this Section 10.3 against any and all amounts owed to the Sublessor by the Sublessee on the applicable Sublease Termination Date (including the Sublessee’s obligation to pay any Sublease Termination Value).

 

Section 10.4  Event of Loss Proceeds.

 

      Any payments solely with respect to the Facility received at any time by the Sublessee or the Sublessor from any Governmental Entity as a result of the occurrence of an Event of Loss described in clause (c) of the definition of an Event of Loss or from insurance proceeds as a result of the occurrence of an Event of Loss described in clause (a), (b) or (d) of the definition of an Event of Loss shall be applied in accordance with Section 10.2(b) of the Facility Lease subject in the case of the Sublessor to the next succeeding paragraph.  Each of the Sublessee and the Sublessor hereby agrees to pay any and all such amounts received by it at any time promptly to the parties entitled to receive such payment pursuant to Section 10.2(b) of the Facility Lease.

 

The Sublessor and the Sublessee agree that (i) the Sublessee shall be entitled to any and all proceeds received by, or which are required to be paid to, the Lessee pursuant to and in accordance with such Section 10.2 (“Event of Loss Proceeds”), (ii) the Sublessee will be entitled to use the Event of Loss Proceeds to pay for the costs of rebuilding or replacing the Facility in accordance with the terms of this Facility Sublease and the Operative Documents and (iii) if the Sublessee has not elected to rebuild or replace the Facility pursuant to Section 10.1 above, all Event of Loss Proceeds shall be applied in reduction of the Sublessee’s obligation to pay the amounts required to be paid by it pursuant to Section 10.1 above or, if already paid by the Sublessee, shall be applied to reimburse the Sublessee for its payment of such amounts.

 

Section 10.5  Burdensome Buyout and Obsolescence Events.

 

  Unless requested in writing by the Sublessee, subject to all applicable provisions of the Facility Lease, the Sublessor hereby agrees not to exercise any termination right it may have as the Lessee pursuant to Section 13 or Section 14 of the Facility Lease.  The Sublessee shall have the right to request the Sublessor to exercise its rights under Section 13 or Section 14 of the Facility Lease and the Sublessor agrees, if requested by the Sublessee, to assist the Sublessee in exercising such rights; provided however, that the Sublessor shall not be obligated to take any action until it shall have received such indemnity, security or undertaking for costs from the Sublessee as it may reasonably require for all costs, claims, losses and expenses and liabilities to the Financing

 

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Parties or any other Person which it will or may reasonably be expected to expend or incur in connection with such exercise of right of first offer or right of first refusal.

 

 

        Section 10.6  Right of First Offer and First Refusal. The Sublessee shall have the right to request the Sublessor to exercise its right of first offer or right of first refusal on the terms and conditions set forth in Section 13.1 and 13.2 of the Participation Agreement and the Sublessor agrees, if requested by the Sublessee, to take all commercially reasonable efforts to assist the Sublessee in exercising such rights; provided however, that the Sublessor shall not be obligated to take any action until it shall have received such indemnity, security or undertaking for costs from the Sublessee as it may reasonably require for all costs, claims, losses and expenses and liabilities to the Financing Parties or any other Person which it will or may reasonably be expected to expend or incur in connection with such exercise of the right of first offer or right of first refusal.

 

Section 10.7  Supplemental Financing; Optional Refinancing. Unless requested in writing by the Sublessee, subject to all applicable provisions of the Participation Agreement, the Sublessor hereby agrees not to exercise any right (a) to issue Additional Lessor Notes pursuant to Section 11.1 of the Participation Agreement or (b) to refund or refinance any Note pursuant to Section 11.2 of the Participation Agreement. The Sublessee shall have the right to request the Sublessor to exercise its rights under Section 11.1 or Section 11.2 of the Participation Agreement and the Sublessor agrees, if requested by the Sublessee, to take all commercially reasonable efforts to assist the Sublessee in exercising such rights; provided, however, that the Sublessor shall not be obligated to take any action until it shall have received such indemnity, security or undertaking for costs from the Sublessee as it may reasonably require for all costs, claims, losses and expenses and liabilities to the Financing Parties or any other Person which it will or may reasonably be expected to expend or incur in connection with such exercise of the rights to issue Additional Lessor Notes or refund or refinance any Note.

 

 

Section 11.

INSURANCE

 

 

The Sublessee will maintain (or cause to be maintained) the insurance required to be maintained by the Lessee pursuant to Schedule D to the Facility Lease. In addition, all policies of insurance required to be maintained by the Sublessee hereunder which, pursuant to the provisions of the Facility Lease, require the Owner Lessor to be named as an additional insured, shall name the Sublessor and the Guarantor as additional insureds.

 

 

Section 12.

INSPECTION

 

 

During the Facility Sublease Term, the Sublessee will provide to the Sublessor and each Financing Party access for inspection in accordance with the provisions of the Facility Lease.

 

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Section 13.

COVENANTS

 

Section 13.1  Covenants of the Sublessor.

 

 

(a)  Waivers, Modifications and Amendments.  The Sublessor agrees not to, directly or indirectly amend, modify, terminate or supplement any Designated Operative Document in any material respect without prior written consent of the Sublessee, such consent not to be unreasonably withheld or delayed.  The Sublessor shall promptly provide to the Sublessee a notice of any such amendment, modification or supplement together with a copy of all relevant documentation.

 

 

(b)  Special Purpose Entity.  So long as the Facility Sublease is outstanding, the Sublessor shall independently make decisions with respect to its business and daily operations, respect and appropriately document the separate and independent natures of its activities, as compared with those of any other Person, take all reasonable steps to continue its identity as a separate legal entity, and make it apparent to third persons that the Sublessor is a Person with assets and liabilities distinct from those of any other Person.  Without limiting the foregoing, the Sublessor shall:

 

 

(i)  not amend, modify or otherwise change this Facility Sublease or the Sublessor’s certificate of formation, in any material term or manner, or in a manner which adversely affects the Sublessor’s existence as a single purpose entity;

 

 

(ii)  not liquidate or dissolve (or suffer any liquidation or dissolution), or enter into any transaction of merger or consolidation, or acquire or permit the acquisition by purchase or otherwise all or substantially all the business or assets of, or any stock or other evidence of beneficial ownership of any Person;

 

 

(iii)  not guarantee or pledge its assets for the benefit of, or otherwise become liable on or in connection with, any obligation of any other Person;

 

 

(iv)  not own any asset other than the Facility Site and incidental property necessary for the operation of the Facility and not transfer or further encumber the Facility Site or the Facility, except as otherwise permitted by the Operative Documents or the Facility Sublease Documents;

 

 

(v)  not engage, either directly or indirectly, in any business other than the ownership of the Facility Site and activities contemplated by the Operative Documents and the Facility Sublease Documents;

 

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(vi)  not enter into any contract or agreement with any affiliate of any principal or Member of the Sublessor, except upon terms and conditions that are substantially similar to those that would be available on an arms length basis with third parties other than an affiliate;

 

 

(vii)  not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (i) the existing indebtedness and obligations that the Sublessor has in respect of the Facility Sublease Documents and the Operative Documents;

 

 

(viii)  not make any loans or advances to any third party which, for avoidance of doubt, shall not include the Intercompany Note;

 

 

(ix)  be solvent and pay its debts from its assets as the same shall become due;

 

 

(x)  do all things necessary to preserve its existence, and will observe all formalities applicable to it;

 

 

(xi)  conduct and operate its business in its own name;

 

 

(xii)  at all times hold itself out to the public as, a legal entity separate and distinct from any other entity (including, without limitation, any affiliate or Member of the Sublessor, as applicable);

 

 

(xiii)  file its own tax returns (to the extent the Sublessor shall be unable to file a consolidated tax return with its Members);

 

 

(xiv)  maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations;

 

 

(xv)  allocate fairly and reasonably any overhead and expense for shared office space;

 

 

(xvi)  not commingle the funds and other assets of the Sublessor with those of, or pledge its assets for the benefit of, any of any other Person;

 

 

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(xvii)  maintain its assets in such a manner that it is not costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or any other Person;

 

 

(xviii)  not hold itself out to creditors (including through issuances of financial statements or otherwise) as being available to satisfy, or otherwise hold itself out to be responsible for the debts, liabilities or obligations of any other Person or entity;

 

 

(xix)  pay any liabilities out of its own funds, including salaries of its employees, not funds of any Affiliate;

 

 

(xx)  not use stationary, invoices, or checks of any other Person or entity, including its Affiliates; and

 

 

(xxi)  not hold title to the Sublessor’s assets other than in Sublessor’s name.

 

 

(c)  The Sublessor covenants and agrees that during the term of this Facility Sublease it shall not revoke a notice designating the Sublessee as a “copy party” under the Operative Documents.

 

Section 13.2  Covenants of the Sublessee.

 

 

(a)  Taxes. The Sublessee shall, prior to the time penalties shall attach thereto, (i) file, or cause to be filed, all material tax and information returns that are required to be, or are required to have been, filed by it in any jurisdiction, and (ii) pay or cause to be paid all material Taxes shown to be, or to have been, due and payable on such returns and all other material Taxes lawfully imposed and payable by it, to the extent the same shall have become due and payable, except to the extent there is a good faith contest thereof by the Sublessee.

 

 

(b)  No disposition of Units 10 through 30.  Without the prior written consent of the Sublessor, the Sublessee shall not (i) lease, assign, transfer or otherwise dispose of the Unit 10 Facility, the Unit 20 Facility or the Unit 30 Facility (as each such term is defined in the MISPA) or (ii) merge or consolidate with or into any Person, liquidate or dissolve unless, in each case, the transferee or the entity resulting from such consolidation or succeeding to such properties or assets (A) is organized under the laws of the United States, any state thereof or the District of Columbia and (B) shall expressly assume, pursuant to an agreement reasonably acceptable to the Sublessor, all of the Sublessee’s obligations under the Facility Sublease Documents or provide other indemnification, security or undertaking reasonably acceptable to the Sublessor.

 

 

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Section 13.3  Cooperation

 

. Upon either Party’s request, the other Party shall use all commercially reasonable efforts to assist the other Party in discharging such other Party’s obligations under Section 5.7 of the Participation Agreement.

 

 

Section 14.

SPECIAL SUBLEASE TRANSFERS

 

Section 14.1  Special Sublease Transfers.The Sublessor agrees that if it exercises the right to purchase the Facility or the Owner Lessor’s Interest at the direction of the Sublessee pursuant to Section 10.6, the Sublessor shall designate the Sublessee as its designee in respect of such transfer and the Sublessee shall purchase from the Sublessor such interest at a price equal to the Sublessor’s out-of-pocket costs and expenses (which shall include the purchase price paid by the Sublessor to the Owner Lessor) incurred in connection with such purchase (a “Special Sublease Transfer”), net of any amounts which may be owed by the Sublessor to the Sublessee pursuant to Section 10.3 hereof. Upon payment of such sums this Facility Sublease shall automatically terminate and the Sublessee shall cease to have any liability to the Sublessor with respect to this Facility Sublease and other Facility Sublease Documents except for obligations surviving pursuant to the express terms of this Facility Sublease or any Facility Sublease Document or which have otherwise accrued but not been paid as of such date.  The Sublessor shall transfer (by an appropriate instrument of transfer) such interest acquired from the Owner Lessor on “as is”, “where is” and “with all faults basis, without any representation or warranty other than a warranty as to the absence of any Lien in favor of the Sublessor.

 

 

Section 15.

FACILITY SUBLEASE RENEWAL

 

Section 15.1  Facility Sublease Renewal Term.  With respect to any negotiations with the Financing Parties of the terms of a renewal or extension of the Facility Lease, the Sublessee will, at Sublessee’s sole cost and expense, use commercially reasonable efforts to negotiate and obtain an extension or renewal of the Facility Lease on behalf of and for the benefit of the Sublessor, and the Sublessor, if requested by the Sublessee, will make commercially reasonable efforts to assist the Sublessee in obtaining such extension or renewal; provided however, that such renewal or extension does not impose any additional liability or obligation on the Sublessor or any of its Affiliates for which the Sublessee is not responsible (or subsequently agrees to be responsible) under the terms of this Facility Sublease. In connection with any such negotiation, the Sublessee will use commercially reasonable efforts to obtain from the Owner Lessor a release of the Guarantor from its obligations under the Guaranty. If, at the conclusion of any such negotiations by the Sublessee, the Sublessee has obtained a proposal from the Owner Lessor for the renewal or extension of the Facility Lease which does not impose any other conditions or responsibilities on the Lessee thereunder materially more onerous than prior to the renewal of the Facility Lease, the Sublessor agrees to accept such proposal and use commercially reasonable efforts to cause such renewal or extension to be entered into. Upon renewal of the Facility Lease and the payment by the Sublessee to the Sublessor of all amounts required under Section 15.2 this Facility Sublease shall automatically be extended for a term contemporaneous with the term of the Facility Lease (the “Renewal Sublease Term”).

 

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Section 15.2  Sublease Renewal Rent for the Renewal Sublease Terms

 

.  Renewal rent for any Renewal Sublease Term selected will be in the amount due under the Facility Lease, excluding any Supplemental Lease Rent (the “Sublease Renewal Rent”).

 

 

Section 16.

EVENTS OF DEFAULT

 

 

The following events shall constitute a “Sublease Event of Default” hereunder (whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any Governmental Entity):

 

 

(a)  failure by the Sublessee to pay Sublease Rent when due pursuant to Section 3.2(b) or 15.2;

 

 

(b)  failure by the Sublessee to perform any obligations under the Facility Lease assumed by it hereunder as provided in Section 2.2, and such failure continues for a period of time in excess of the cure period, if any, applicable to such event pursuant to the Facility Lease;

 

 

(c)  failure by the Sublessee to make payment when due of any Sublease Rent (other than payments covered by clause (a) above) and such failure continues for more than the later of ten (10) days after written notice from the Sublessor and the last day of a cure period for corresponding payment, if any, under the Facility Lease;

 

 

(d)  failure by the Sublessee to perform or observe any covenant, obligation or agreement to be performed or observed by it under this Facility Sublease or any other Facility Sublease Document (other than any obligation or agreement referred to in Section 16(a), (b) or (c) above) in any material respect, and such failure shall continue unremedied for thirty (30) days after the earlier of (i) written notice thereof from the Sublessor or (ii) the date on which the Sublessee obtains Actual Knowledge thereof provided however, that if (i) such failure is capable of being remedied but not within such 30-day period, and (ii) such party is diligently proceeding to cure such failure, and such failure is reasonably capable of being remedied within such extended period, then the period for cure shall be extended for an additional 90 days;

 

 

(e)  (i) the Sublessee or any Buyer Sublease Guarantor commences any case or other proceeding (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or

 

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the Sublessee or any Buyer Sublease Guarantor shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Sublessee or any Buyer Sublease Guarantor any case or other proceeding of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii) there shall be commenced against the Sublessee or any Buyer Sublease Guarantor any case or other proceeding seeking issuance of a warrant of attachment, execution or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or (iv) the Sublessee or any Buyer Sublease Guarantor shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above; or (v) the Sublessee shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due;

 

 

(f)  any Facility Sublease Document to which the Sublessee is a party is terminated or ceases to constitute a valid and binding obligation of the Sublessee;

 

 

(g)  any Buyer Sublease Guarantor shall fail to perform any of its obligations set forth in the Buyer Sublease Guaranty and such failure shall continue unremedied until the later of (i) the cure period, if any, applicable to the underlying Sublease Default pursuant to clauses (a) through (f) above or (ii)  30 days after receipt by such Buyer Sublease Guarantor of written notice thereof from the Sublessor; and

 

 

(h)  the Buyer Sublease Guaranty ceases to be a valid and binding obligation of either Buyer Sublease Guarantor.

 

 

Section 17.

REMEDIES

 

Section 17.1  Remedies for Sublease Event of Default.  Upon the occurrence of any Sublease Event of Default and at any time thereafter so long as the same shall be continuing, the Sublessor may, at its option, declare this Facility Sublease to be in default by written notice to the Sublessee; provided that upon the occurrence of a Sublease Event of Default described in paragraph (e) of Section 16, this Facility Sublease shall automatically be deemed to be in default without the need for giving any notice; and at any time thereafter, so long as the Sublessee shall not have remedied all outstanding Sublease Events of Default, the Sublessor may do one or more of the following as the Sublessor in its sole discretion shall elect, if (i) the applicable Sublease Event of Default is (x) also a Lease Event of Default and has been declared or notified as such by the Owner Lessor or (y) a Sublease Event of Default under Section 16(e) or (h) above, elect to proceed under clause (a), (b) or (c) below and (ii) in any other case, proceed under clause (a) below only (and, for the avoidance of doubt, the provisions of clause (iii) of the paragraph immediately succeeding clause (c) shall not be applicable) to the extent permitted by, and subject to compliance with any mandatory requirements of, Applicable Law then in effect:

 

 

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(a)  proceed by appropriate court action or actions, either at law or in equity, to enforce performance by the Sublessee, at the Sublessee’s sole cost and expense, of the applicable covenants and terms of this Facility Sublease or to recover damages for breach thereof;

 

 

(b)  by notice in writing to the Sublessee, terminate this Facility Sublease whereupon all right of the Sublessee to the possession and use under this Facility Sublease of the Facility shall absolutely cease and terminate but the Sublessee shall remain liable as hereinafter provided; and thereupon, the Sublessor may demand that the Sublessee, and the Sublessee shall upon written demand of the Sublessor and at the Sublessee’s expense, forthwith return possession of the Facility to the Sublessor in the manner and condition required by, and otherwise in accordance with all of the provisions of this Facility Sublease; and the Sublessor may thenceforth hold, possess and enjoy the same free from any right of the Sublessee, or its successor or assigns, to use the Facility for any purpose whatever;

 

 

(c)  hold, keep idle or lease to others the Sublessor’s interest as the Sublessor in its sole discretion may determine, free and clear of any rights of the Sublessee under this Facility Sublease and without any duty to account to the Sublessee with respect to such action or inaction or for any proceeds with respect thereto, except that the Sublessee’s obligation to pay Sublease Rent due for any periods subsequent to the date upon which the Sublessee shall have been deprived of possession and use of the Facility pursuant to this Section 17 shall be reduced by the net proceeds, if any, received by the Sublessor from leasing the Facility to any Person other than the Sublessee.

 

 

In addition, the Sublessee shall be liable, except as otherwise provided in clause (c) above, (i) for any and all unpaid Sublease Rent due hereunder before or during the exercise of any of the foregoing remedies, (ii) on an After-Tax Basis, for reasonable legal fees and other reasonable, documented out-of-pocket costs and expenses incurred by reason of the occurrence of any Sublease Event of Default or the exercise of the Sublessor’s remedies with respect thereto,  and (iii) where applicable, the repayment in full of any costs and expenses necessary to be expended in connection with the return of the Facility in accordance with this Facility Sublease, including any costs and expenses incurred by Sublessor in connection with retaking constructive possession of, or in repairing, the Facility in order to cause it to be in compliance with all maintenance standards imposed by this Facility Sublease.

 

Section 17.2  Cumulative Remedies.  The remedies in this Facility Sublease provided in favor of the Sublessor shall not be deemed exclusive, but shall be cumulative and shall be in addition to all other remedies in its favor existing at law or in equity; and the exercise or beginning of exercise by the Sublessor of any one or more of such remedies shall not, except as specifically provided in this Section 17, preclude the simultaneous or later exercise by the Sublessor of any or all of such other remedies.  To the extent permitted by Applicable Law, the Sublessee hereby waives any rights now or hereafter conferred by statute or otherwise which may require the Sublessor to sell, lease or otherwise use the Facility or any Component thereof in mitigation of the Sublessor’s damages as set forth in this Section 17 or which may otherwise limit or modify any of the Sublessor’s rights and remedies in this Section 17.

 

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Section 17.3  No Delay or Omission to be Construed as Waiver.  No delay or omission to exercise any right, power or remedy accruing to the Sublessor upon any breach or default by the Sublessee under this Facility Sublease shall impair any such right, power or remedy of the Sublessor, nor shall any such delay or omission be construed as a waiver of any breach or default, or of any similar breach or default hereafter occurring; nor shall any waiver of a single breach or default be deemed a waiver of any subsequent breach or default.

 

 

Section 18.

NO ASSIGNMENTS, SUBLETTING

 

The Sublessee may not assign, sell, convey, transfer sublease or otherwise dispose of this Facility Sublease or any of its right hereunder in whole or in part, or sublease or grant concessions, or licenses or other rights for the occupancy or use of all or any portion of the Facility or the Facility Site.  The Sublessee hereby agrees that any assignment of its interest in this Facility Sublease shall constitute an event of default hereunder and shall be null and void ab initio.

 

 

Section 19.

SUBLESSOR’S RIGHT TO PERFORM

 

 

If the Sublessee fails to make any payment required to be made by it hereunder or under any Facility Sublease Document or fails to perform or comply with any of its other agreements contained herein or obligations under the Facility Lease assumed by it pursuant to Section 2.2 after notice to the Sublessee and failure of the Sublessee to so perform or comply within ten (10) days thereafter in the case of a failure to make any payment or thirty (30) days thereafter in all other cases, the Sublessor may itself make such payment or perform or comply with such agreement in a reasonable manner, but shall not be obligated hereunder to do so, and the amount of such payment and of the reasonable expenses of the Sublessor incurred in connection with such payment or the performance of or compliance with such agreement, as the case may be, together with interest thereon at the Overdue Rate, to the extent permitted by Applicable Law, shall be deemed payable by the Sublessee to the Sublessor on demand.

 

 

Section 20.

GENERAL INDEMNITY

 

Section 20.1  Claims Indemnified.

 

  Subject to the exclusions stated in Section 20.2, the Sublessee will, on an after-tax basis, indemnify the Sublessor and its respective members, partners, agents, employees, servants and affiliates (each, a “Sublessor Indemnitee”) for, hold each Sublessor Indemnitee harmless from, and defend each Sublessor Indemnitee against, all liabilities, obligations, losses, damages, penalties, environmental claims, actions, suits, costs, expenses, judgments and claims of any nature (each, a “Claim,” and collectively, the “Claims”) that may be imposed on or asserted against such Sublessor Indemnitee arising out of, in connection with, or relating to any of the following:

 

 

(a)  the construction, financing, refinancing, acquisition, operation, warranty, ownership, possession, maintenance, repair, lease, condition, alteration, modification,

 

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restoration, refurbishing, return, purchase, sale or other disposition, insuring, sublease, or other use or non-use of the Facility, the Facility Site or any portion or component thereof or interest therein;

 

 

(b)  the conduct of the business or affairs of the Sublessee at the Facility and the Facility Site or in connection therewith;

 

 

(c)  the manufacture, design, purchase, acceptance, rejection, delivery or condition of, or improvement to, the Facility, the Facility Site or any portion or component thereof or interest therein;

 

 

(d)  any Facility Sublease Document, the execution, delivery, performance or enforcement thereof or any amendment, supplement or modification to, or any waiver, thereof or thereto;

 

 

(e)  the Environmental Condition of, or any Release of Hazardous Materials from the Facility, the Facility Site or any portion or component thereof;

 

 

(f)  the reasonable documented costs and expenses of each Sublessor Indemnitee incurred in connection with any modification, amendment, supplement to, or any waiver to the Facility Sublease documents or any Operative Document (whether or not entered into);

 

 

(g)  the imposition of any lien other than, with respect to a particular Sublessor Indemnitee, a lien arising by or through such Sublessor Indemnitee (or its agents, employees, servants or affiliates) that is prohibited under the terms of the Facility Lease documents;

 

 

(h)  any violation by, or liability relating to, the Sublessee of, or under, any applicable law, whether now or hereafter in effect (including those relating to the environment), or any action of any governmental body or other person taken with respect to the Facility, the Facility Site, any Facility Sublease Document or the interests of any Sublessor Indemnitee under the Facility Sublease Documents, or the presence, release, generation, management, recycling, use, storage, transportation, treatment or manufacture of any Hazardous Materials in, at, under or from the Facility, the Facility Site or any portion or component thereof;

 

 

(i)  failure to obtain the KeySpan Release (as such term is defined in the MISPA) of the guaranty issued by the Guarantor to the New York Department of Public Service on August 5, 2005 in connection with the decommissioning of the Facility, or the failure by the Sublessee or its relevant Affiliate to maintain or comply with the terms of any

 

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replacement guaranty, letter of credit or other form of security posted by the Sublessee or such Affiliate in connection with the KeySpan Release of such guaranty;

 

 

(j)  the nonperformance or breach by the Sublessee of any obligation contained in any Facility Sublease Document;

 

 

(k)  the continuing fees (if any) and expenses of any Financing Party acting as a trustee or agent (including the reasonable, documented out of pocket fees and expenses of its counsel, accountants and other professional persons) arising out of discharge of its duties under or in connection with the Operative Documents; and

 

 

(l)  in any other way relating to the Facility Lease or the Facility Sublease, or the transaction contemplated by the Facility Sublease Documents.

 

Section 20.2  Claims Excluded. Any Claim to the extent (A) arising out of or attributable to, (B) in connection with or (C) relating to, any of the following, is excluded from the Sublessee’s agreement to indemnify any Sublessor Indemnitee under this Section 20:

 

 

(a)  acts, omissions or events (including violation of law or any change in the Environmental Condition of the Facility or the Facility Site or any portion or Component thereof, or the use, storage, transportation, treatment or manufacture of any Hazardous Material in, at, under or from the Facility or the Facility Site)  occurring after expiration or other termination of the Facility Sublease and, where required by the Facility Sublease, return of the Facility to the Sublessor or its designee in compliance with the provisions of the Facility Sublease. Nothing in this Section 20.2 shall be construed to waive any right or claim which either party hereto (or any of their respective Affiliates) may have pursuant to the MISPA;

 

 

(b)  any offer, sale, assignment, transfer or other disposition (voluntary or involuntary) by or on behalf of the Sublessor of all or any of its interests in the Facility Lease or the Facility Site, unless such transfer is required by the terms of the Facility Sublease Documents or occurs in connection with the exercise of remedies during continuance of a Sublease Event of Default;

 

 

(c)  the gross negligence or willful misconduct of the Sublessor Indemnitee seeking indemnification or of a Related Party of such Sublessor Indemnitee;

 

 

(d)  noncompliance with the terms of any Facility Sublease Document by, or the breach of any agreement, covenant, representation or warranty under the Operative Documents, including Sublessor Retained Obligations, of the Sublessor Indemnitee seeking indemnification or a Related Party of such Sublessor Indemnitee, unless attributable to a breach by the Sublessee of any of its obligations under the Facility Sublease Documents;

 

 

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(e)  any obligation or liability expressly assumed in any Facility Sublease Document by the Sublessor Indemnitee seeking indemnification or by a Related Party of such Sublessor Indemnitee;

 

 

(f)  with respect to the Sublessor Indemnitee seeking indemnification, any claim constituting or arising from a Lien (other than a Permitted Lien) attributable to such Sublessor Indemnitee or to a Related Party of such Sublessor Indemnitee;

 

 

(g)  any Claim that is a tax, or is a cost of contesting a tax, whether or not the Lessee is required to indemnify therefor; and

 

 

(h)  any Claim relating to the costs and expenses of any Sublessor Indemnitee in connection with any amendments, supplements, modification or waiver to the Facility Sublease Documents or the Facility Lease Documents requested by such Sublessor Indemnitee or a Related Party if such amendment or supplement is not required by the Facility Lease Documents or requested by the Sublessee.

 

Section 20.3  Insured Claims.  Subject to the provisions of Section 20.5, in the case of any Claim indemnified by the Sublessee hereunder which is covered by a policy of insurance maintained by the Sublessee, each Sublessor Indemnitee agrees, unless it and each other Sublessor Indemnitee shall waive its rights to indemnification (for itself and each Related Party thereto) in a manner reasonably acceptable to the Sublessee, to cooperate, at the sole cost and expense of the Sublessee, with insurers in exercise of their rights to investigate, defend or compromise such Claim.

Section 20.4  Claims Procedure. Each Sublessor Indemnitee shall promptly after such Sublessor Indemnitee shall have Actual Knowledge thereof notify the Sublessee of any Claim as to which indemnification is sought; provided, that the failure so to notify the Lessee shall not reduce or affect the Sublessee’s liability which it may have to such Sublessor Indemnitee under this Section 20, unless such failure materially increases the Sublessee’s liability under such Claim from that which would have existed if the failure to give notice had not occurred or materially prejudices the Sublessee’s ability to defend such claim; and provided, further, that no payment hereunder by the Sublessee to an Sublessor Indemnitee shall be deemed to constitute a waiver or release of any right or remedy that the Sublessee may have against any such Sublessor Indemnitee for actual damages resulting directly from such failure or delay of such Sublessor Indemnitee to give the Sublessee such notice. Any amount payable to any Sublessor Indemnitee pursuant to this Section 20 shall be paid within thirty (30) days after receipt of such written demand therefor from such Sublessor Indemnitee (or, if this Facility Sublease is terminated pursuant to Section 10 or 17 hereof prior to the expiration of the 30-day period, by such date of termination), accompanied by a certificate of such Sublessor Indemnitee stating in reasonable detail the basis for the indemnification thereby sought and (if such Sublessor Indemnitee is not a party hereto) an agreement to be bound by the terms hereof as if such Sublessor Indemnitee were such a party. The foregoing shall not, however, constitute an obligation to disclose confidential information of any kind without the execution of an

 

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appropriate confidentiality agreement. Promptly after the Sublessee receives notification of such Claim accompanied by a written statement describing in reasonable detail the Claims which are the subject of and basis for such indemnity and the computation of the amount so payable, the Sublessee shall, without affecting its obligations hereunder, notify such Sublessor Indemnitee whether it intends to pay, object to, compromise or defend any matter involving the asserted liability of such Sublessor Indemnitee. The Sublessee shall have the right to investigate and, so long as no Sublease Event of Default shall have occurred and be continuing, the Sublessee shall have the right, in its sole discretion, to defend or compromise such Claim for which indemnification under this Section 20 is sought (which defense or compromise shall be deemed an acknowledgment of liability by the Sublessee in respect of such Claim); provided that no such defense or compromise (i) is reasonably likely to involve any danger of foreclosure, sale, forfeiture or loss of, or imposition of a Lien on any part of the Facility, the Ground Interest, the Lessor Estate or the other Indenture Estate or the impairment of the Facility in any material respect or (ii) could result in any criminal liability being incurred by, or could reasonably be expected to have any material adverse effect on, such Sublessor Indemnitee, provided further, that no Claim shall be compromised by the Sublessee on a basis that admits any criminal violation or gross negligence or willful misconduct on the part of such Sublessor Indemnitee without the express written consent of such Sublessor Indemnitee; and provided, further, that to the extent that other Claims unrelated to the  transactions contemplated by the Facility Sublease Documents are part of the same proceeding involving such Claim, the Sublessee may assume responsibility for the contest or compromise of such Claim only if the same may be and is severed from such other Claims (and each Sublessor Indemnitee agrees to use reasonable efforts to obtain such a severance). If the Sublessee elects, subject to the foregoing, to compromise or defend any such asserted liability, it may do so at its own expense and by counsel selected by it and reasonably satisfactory to such Sublessor Indemnitee. Upon the Sublessee’s election to compromise or defend such asserted liability and notification to such Sublessor Indemnitee of its intent to do so, such Sublessor Indemnitee shall cooperate at the Sublessee’s expense with all reasonable requests of the Sublessee in connection therewith and will provide the Sublessee with all information not within the control of the Sublessee as is reasonably available to such Sublessor Indemnitee which the Sublessee may reasonably request; provided however, that such Sublessor Indemnitee shall not, unless otherwise required by Applicable Law, be obligated to disclose to the Sublessee or any other Person, or permit the Sublessee or any other Person to examine (i) any income tax returns of the Sublessor, the Owner Participant, the Owner Lessor or the Equity Investor or (ii) any confidential information or pricing information not generally accessible by the public possessed by the Sublessor, the Owner Participant, the Owner Lessor or the Equity Investor (and, in the event that any such information is made available, the Sublessee shall treat such information as confidential and shall take all actions reasonably requested by such Sublessor Indemnitee for purposes of obtaining a stipulation from all parties to the related proceeding providing for the confidential treatment of such information from all such parties). Where the Sublessee, or the insurers under a policy of insurance maintained by the Sublessee, undertake the defense of such Sublessor Indemnitee with respect to a Claim (with counsel reasonably satisfactory to such Sublessor Indemnitee in the case of the Sublessee or its Affiliates and without reservation of rights against such Sublessor Indemnitee), no additional legal fees or expenses of such Sublessor Indemnitee in connection with the defense of such Claim shall be indemnified hereunder unless such fees or expenses were incurred at the request of the Sublessee or such insurers. Notwithstanding the foregoing, a Sublessor Indemnitee may participate at its

 

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own expense in any judicial proceeding controlled by the Sublessee pursuant to the preceding provisions, but only to the extent that such party’s participation does not in the reasonable opinion of counsel to the Sublessee interfere with such control; provided however, that such party’s participation does not constitute a waiver of the indemnification provided in this Section 20; provided, further, that if and to the extent that (i) such Sublessor Indemnitee is advised by counsel that an actual or potential conflict of interest exists where it is advisable for such Sublessor Indemnitee to be represented by separate counsel or (ii) there is a risk that such Sublessor Indemnitee may be indicted or otherwise charged in a criminal complaint and such Sublessor Indemnitee informs the Sublessee that such Sublessor Indemnitee desires to be represented by separate counsel, such Sublessor Indemnitee shall have the right to control its own defense of such Claim and the reasonable fees and expenses of such defense (including the reasonable fees and expenses of such separate counsel) shall be borne by the Sublessee. So long as no Sublease Event of Default shall have occurred and be continuing, no Sublessor Indemnitee shall enter into any settlement or other compromise with respect to any Claim without the prior written consent of the Sublessee unless (i) the Sublessor Indemnitee waives its rights to indemnification hereunder or (ii) the Sublessee has not acknowledged its indemnity obligation with respect thereto and there is a significant risk that a default judgment will be entered against such Sublessor Indemnitee. Nothing contained in this Section 20.4 shall be deemed to require any Sublessor Indemnitee to contest any Claim or to assume responsibility for or control of any judicial proceeding with respect thereto.

Section 20.5  Subrogation. To the extent that a Claim indemnified by the Sublessee under this Section 20 is in fact paid in full by the Sublessee or an insurer under an insurance policy maintained by the Sublessee, the Sublessee (so long as no Sublease Event of Default shall have occurred and be continuing) or such insurer shall be subrogated to the rights and remedies of the Sublessor Indemnitee on whose behalf such Claim was paid to the extent of such payment (other than rights of such Sublessor Indemnitee under insurance policies maintained at its own expense or rights of the Owner Trustee under the Trust Agreement) with respect to the transaction or event giving rise to such Claim. Should a Sublessor Indemnitee receive any refund, in whole or in part, with respect to any Claim paid by the Sublessee hereunder, it shall promptly pay over to the Sublessee the lesser of (i) the amount refunded reduced by the amount of any Tax incurred by reason of the receipt or accrual of such refund and increased by the amount of any Tax (but not in excess of the amount of such reduction) saved as a result of such payment or (ii) the amount the Sublessee or any of its insurers has paid in respect of such Claim; provided that, so long as a Sublease Event of Default shall have occurred and is continuing, such amount may be held by the Sublessor as security for the Sublessee’s obligations under the Facility Sublease Documents.

Section 20.6  Minimize Claims. The Sublessor and any other Sublessor Indemnitee will, to the extent within their control, use their respective reasonable efforts to minimize Claims relating to them, respectively, indemnifiable by the Sublessee under this Section 20, including by complying with reasonable requests by the Sublessee to do or to refrain from doing any act if such compliance is of a purely ministerial nature or, in the good faith opinion of the Sublessor, otherwise has no adverse impact on the Sublessor or any Affiliate of any thereof or on the business or operations of any of the foregoing.

 

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Section 21.

GENERAL TAX INDEMNITY

 

Section 21.1  General Tax Indemnity.

 

 

(a)  Indemnity.  Except as provided in Section 21.1(b), the Sublessee agrees (but, in all events, without duplication of indemnities) to indemnify on an After-Tax Basis the Sublessor and its respective Affiliates, agents, employees, servants, directors, members, and shareholders (the “Tax Indemnitee”), and to hold the Tax Indemnitee harmless from and to defend the Tax Indemnitee against (i) any amounts owed by the Tax Indemnitee to the Head Lease Tax Indemnitees under the Operative Documents and (ii) all Taxes that are imposed upon (A) the Tax Indemnitee as the result of (x) acts or omissions of the Sublessee (other than permitted acts excluded under Section 3(b), and events excluded under Section 4, of the Sublease Tax Indemnity Agreement) or (y) any breach of a Tax Representation (within the meaning of the Sublease Tax Indemnity Agreement) or (B) the Facility, the Facility Site, the Ground Interest or any Component or portion thereof or any interest therein, the Indenture Estate, the Collateral or upon any Operative Document or interest therein, or otherwise arising out of, in connection with or relating to, any of the following:

 

 

(i)  the construction, financing, refinancing, acquisition, operation, use, non-use, warranty, ownership, possession, repossession, maintenance, repair, lease, condition, alteration, modification, substitution, restoration, refurbishing, rebuild, replacement, return, purchase, sale, transfer or other disposition, insuring, sublease, or other use or non-use of the Facility, the Facility Site, the Ground Interest or any Component or portion of any thereof or interest therein;

 

 

(ii)  the conduct of the business or affairs of the Sublessee, any of its Affiliates, or any other operator at or in connection with the Facility, the Ground Interest, or the Facility Site;

 

 

(iii)  the manufacture, design, installation, preparation, purchase, acceptance, rejection, delivery, redelivery, exchange, transport, assembly, dismantling, abandonment, storage, shutdown or condition of, or improvement to, the Facility, the Facility Site, the Ground Interest, or any Component or portion thereof or any interest therein;

 

 

(iv)  the Facility Sublease, the Site Sub-sublease or any other Facility Sublease Document, the execution or delivery thereof, or the performance or enforcement of any terms thereof or any amendment or supplement thereto;

 

 

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(v)  any indebtedness with respect to the Facility or the Facility Sublease or the transfer, issuance, acquisition, modification, reoptimization or refinancing thereof, or the payment of any amounts thereon or with respect thereto;

 

 

(vi)  any actual or constructive payment of principal, interest or any other amount in respect of any prepaid rent;

 

 

(vii)  the payment of Sublease Base Rent, Sublease Renewal Rent, Supplemental Sublease Rent or any other payment under the Facility Sublease; or

 

 

(viii)  otherwise in connection with the transactions contemplated by the Operative Documents or any document or instrument in connection with the Facility or related to any Operative Document, including the exercise of rights or remedies under any Operative Document or the enforcement of any Operative Document.

 

 

(b)  Excluded Taxes.  The indemnity provided for in Section 21.1(a) above shall not extend to any Tax that is attributable to or arises as a result of any of the following (the “Excluded Taxes”):

 

 

(i)  (A) U.S. federal income taxes (including Taxes in the nature of capital gain, accumulated earnings, personal holding company, excess profits, minimum, alternative minimum and other similar taxes), (B) Taxes imposed under Article 9-A of the New York State Tax Law or Title 11, Chapters 5 (Unincorporated Business Tax) or 6, Subchapter 2 (General Corporation Tax) of the Administrative Code of the City of New York (“New York Taxes”) or any Taxes imposed in lieu thereof to the extent such Taxes imposed in lieu thereof are not in excess of the New York Taxes assumed to be owed by the Owner Participant on an annual basis with respect to the transactions contemplated by the Operative Documents and set forth on Schedule 9.2(b)(i) to the Participation Agreement, and (C) Taxes other than (x) U.S. federal income taxes and (y) Taxes imposed by the State of New York or any governmental or taxing authority thereof or therein, provided that this clause (C) shall not apply to any Taxes that would not have been imposed but for (w) the location of the Facility or any portion thereof (including any Component) in the jurisdiction imposing such Taxes, (x) the execution and delivery of the Operative Documents or the Facility Sublease in such jurisdiction, (y) the identity, organization, incorporation or presence in such jurisdiction of the Sublessee and/or (z) the making of any payment under the Operative Documents or under the Facility Sublease by or on behalf of the Sublessee from within such jurisdiction;

 

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(ii)  (A) Taxes attributable to any period after expiration or other termination of the Facility Lease or the Facility Sublease and surrender of the Facility to the Sublessor, the Lessor or the successors of either and, as to Taxes in respect of the payment of Sublease Rent, after the payment of all Sublease Rent, (B) Taxes attributable to any period ending prior to the Sublease Closing Date, and (C) with respect to any Straddle Period, Taxes allocated to the portion of the Straddle Period deemed to end on or before the Sublease Closing Date on the basis of an interim closing of the books, except that Taxes (such as real property Taxes) imposed on a periodic basis shall be allocated on a daily basis;

 

 

(iii)  Taxes imposed on the Tax Indemnitee attributable to the fraud, gross negligence or willful misconduct of the Tax Indemnitee or any Affiliate thereof (other than fraud, gross negligence or willful misconduct imputed to the Tax Indemnitee or any Affiliate thereof by reason of its participation in the transactions contemplated by the Operative Documents or the Facility Sublease);

 

 

(iv)  Taxes in the nature of succession, inheritance, estate and other similar taxes;

 

 

(v)  Taxes imposed on the Tax Indemnitee attributable to (A) any act or omission of such Tax Indemnitee (or any Related Party thereto) that is expressly prohibited (or, in the case of a failure to act, required to be performed) by the Operative Documents, any document or instrument in connection with the Facility and related to any Operative Document to which the Tax Indemnitee is a party or the Facility Sublease or (B) a breach by the Tax Indemnitee (or any Related Party thereto) or the inaccuracy of any of its representations, warranties or covenants under any Operative Document or under the Facility Sublease, unless attributable to the breach by the Sublessee of any of its obligations or representations under any Operative Document or under the Facility Sublease;

 

 

(vi)  Taxes imposed on any assignee or successor-in-interest to the Tax Indemnitee (including any transfer by merger, consolidation, liquidation, reorganization or otherwise by operation of law) to the extent any such Taxes exceed the Taxes that would have been imposed had no assignment or transfer taken place determined under the law as in effect on the date of the transfer; provided that this exclusion shall not apply for purposes of determining gross-up amounts and payments required to be made on an After-Tax Basis;

 

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(vii)  Taxes imposed on the Tax Indemnitee attributable to the Tax Indemnitee’s or any Related Party to such Tax Indemnitee’s being treated as other than a United States Person.

 

 

(viii)  Taxes attributable to the failure of the Tax Indemnitee or any Related Party thereto to comply on a timely basis with certification, information, documentation, reporting or other similar requirements; provided that this exclusion shall only apply if such Tax Indemnitee or Related Party is eligible to comply with such requirement and shall have been given timely written notice of such requirement by the Sublessee;

 

 

(ix)  Taxes imposed on the Tax Indemnitee to the extent that such Tax Indemnitee’s breach of its contest obligations under Section 21.1(g) effectively precludes the Sublessee’s ability to contest the Taxes;

 

 

(x)  Taxes imposed on the Tax Indemnitee resulting from an amendment, modification, supplement or waiver to any Operative Document which was not requested by the Sublessee unless such amendment, modification, supplement or waiver (A) was required by Applicable Law or the Operative Documents, (B) is necessary or appropriate to conform with any amendment, modification, supplement or waiver to any Operative Document requested by the Sublessee in writing, or (C) is made while a Sublease Event of Default shall have occurred and be continuing;

 

 

(xi)  Taxes relating to Section 4975 of the Code, Title I of ERISA or any Similar Law to the extent attributable to a breach by the Tax Indemnitee of its representations and/or covenants in Section 3.4(g) or 7.8 of the Participation Agreement, Section 6.8 or 7.2 of the OP Guaranty, Section 4.3 of the Certificate Purchase Agreement or the Certificates (including in respect of any beneficial interest therein), as applicable;

 

 

(xii)  Taxes imposed or collected under Section 1441 through 1446 of the Code;

 

 

(xiii)  Penalties, additions to tax or interest imposed on the Tax Indemnitee attributable to the Tax Indemnitee’s or a Related Party’s failure (A) to comply with the requirements imposed on it under Section 6011, 6111, or 6112 of the Code or the Treasury Regulations promulgated thereunder or (B) to timely file returns as required by a taxing authority unless such failure to timely file returns is attributable to the Sublessee’s not providing information that it is expressly required to provide under the Facility Sublease or otherwise breaching any of its obligations under the Facility Sublease;

 

 

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(xiv)  Taxes imposed on the Sublessor or any Related Party thereto as a result of the Sublessor’s being treated as other than a disregarded entity or pass through entity for tax purposes;

 

 

(xv)  Taxes imposed on the Tax Indemnitee with respect to the employees of the Tax Indemnitee in the nature of a payroll tax;

 

 

(xvi)  Taxes imposed on the Tax Indemnitee as a result of the transfer, delivery or recordation of the Operative Documents or the Facility Sublease occurring on the Sublease Closing Date;

 

 

(xvii)  New York State and New York City sales Taxes, the payment of which has been contractually allocated to the Sublessor pursuant to Section 23.12 hereof; and

 

 

(xviii)  Taxes arising out of, or caused by, any voluntary assignment, sale, transfer or other disposition (direct or indirect) or any involuntary assignment, sale, transfer or other disposition (direct or indirect) resulting from a bankruptcy or similar proceeding for relief of debtors in which the Tax Indemnitee or a Related Party thereto is a debtor or a foreclosure by a creditor of such Tax Indemnitee or Related Party by the Sublessor of all or any of its interest in the Facility, the Facility Site, or any Component or portion thereof or interest therein.

 

provided, however, that no Tax that is being contested in good faith in an appropriate proceeding shall be payable (except as may be required to be paid pursuant to Section 21.1(c) below) while such proceeding is pending or subject to any appeal pending a final judgment.

 

 

(c)  Payment.  Each payment required to be made by the Sublessee to the Tax Indemnitee pursuant to this Section 21.1 shall be paid either (i) when due directly to the applicable taxing authority, by the Sublessee if it is permitted to do so, or (ii) where direct payment is not permitted and with respect to gross-up amounts, in immediately available funds to the Tax Indemnitee by the later of (A) 30 days following the Sublessee’s receipt of the Tax Indemnitee’s written demand for the payment (which demand shall be accompanied by a statement of the Tax Indemnitee describing in reasonable detail the Taxes for which the Tax Indemnitee is demanding indemnity and the computation of such Taxes), (B) subject to Section 21.1(g) below, in the case of amounts which are being contested pursuant to such Section 21.1(g), at the time and in accordance with a final determination of such contest or (c) in the case of any indemnity demand for which the Sublessee has requested review and determination pursuant to Section 21.1(d) below, the completion of such review and determination; provided, however, that in no event shall such payment (or, at the Sublessee’s option pursuant to Section 21.1(g)(iii)(E), payment by the Sublessee of a Tax Advance) be made later than the date which is five Business Days prior to the date on which such Taxes are required to be paid to the applicable taxing

 

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authority.  Any amount payable to the Sublessee pursuant to Section 21.1(e) or Section 21.1(f) below shall be paid promptly (but in all events within 30 days) after the Tax Indemnitee realizes a Tax or Indemnity Benefit giving rise to a payment under Section 21.1(e) or receives a refund or credit giving rise to a payment under Section 21.1(f) or receives a payment from a Head Lease Tax Indemnitee under Section 9.2(e) or (f) of the Participation Agreement, as the case may be, and shall be accompanied by a statement of the Tax Indemnitee computing in reasonable detail the amount of such payment.  Any amount that would be payable to the Sublessee pursuant to Section 21.1(e) or Section 21.1(f) below but for the fact that such amount would be in excess of the amount of indemnity(ies) previously paid to the Tax Indemnitee by the Sublessee may be used as an offset against any future general tax indemnity payments owed by the Sublessee to the Tax Indemnitee.  Upon the final determination of any contest pursuant to Section 21.1(g) below in respect of any Taxes for which the Sublessee has made a Tax Advance, the amount of the Sublessee’s obligation under Section 21.1(a) above shall be determined as if such Tax Advance had not been made.  Any obligation of the Sublessee under this Section 21.1 and the Tax Indemnitee’s obligation to repay the Tax Advance will be satisfied first by set-off against each other, and any difference owing by either party will be paid within 10 days of such final determination.

 

 

(d)  Independent Examination.  With respect to the exercise of rights by the Tax Indemnitee under Section 9.2(d) of the Participation Agreement, the Tax Indemnitee shall, to the extent permitted under Section 9.2(d) of the Participation Agreement, grant the Sublessee a power of attorney to act on behalf of the Tax Indemnitee, provided that no Sublease Event of Default shall have occurred and be occurring.  Within 30 days after the Sublessee receives any computation from the Tax Indemnitee pursuant to Section 21.1(c)(ii)(A) above, the Sublessee may request in writing that an independent public accounting firm jointly selected by the Tax Indemnitee and the Sublessee review and determine on a confidential basis the amount of any indemnity payment payable by the Sublessee to the Tax Indemnitee pursuant to this Section 21.1 or any payment by the Tax Indemnitee to the Sublessee pursuant to Section 21.1(e) or Section 21.1(f) below.  The Tax Indemnitee shall cooperate with such accounting firm and supply it with all information reasonably necessary for the accounting firm to conduct such review and determination; provided that such accounting firm shall agree in writing in a manner reasonably satisfactory to the Tax Indemnitee to maintain the confidentiality of such information; and provided, further, that the Tax Indemnitee shall not be required to provide income tax returns.  The parties hereto agree that the Tax Indemnitee shall have sole control over the positions taken with respect to its own tax returns and filings.  The parties hereto further agree that the independent public accounting firm’s sole responsibility shall be to verify the computation of any payment pursuant to this Section 21.1 and that matters of interpretation of this Facility Sublease or any other Operative Document are not within the scope of the independent accountant’s responsibility.  The fees and disbursements of such accounting firm will be paid by the Sublessee; provided that such fees and disbursements will be paid by the Tax Indemnitee if the verification results in an adjustment in the Sublessee’s favor of five percent or more of the indemnity payment or payments computed by the Tax Indemnitee (determined using a discount rate of six percent).  In the event such accounting firm determines that such computations are incorrect, then such firm shall determine what it believes to be the correct computations.  The computations of the accounting firm shall be final, binding and conclusive

 

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upon the Sublessee and the Tax Indemnitee (absent manifest error).  Such accounting firm shall be requested to makes its determination within 30 days.

 

 

(e)  Tax or Indemnity Benefit.  If, as the result of any Taxes paid or indemnified against by the Sublessee under this Section 21.1, (i) the aggregate Taxes actually paid by the Tax Indemnitee for any taxable year are less (whether by reason of a deduction, credit, allocation or apportionment of income or otherwise) than the amount of such Taxes that otherwise would have been payable by the Tax Indemnitee, or (ii) the Tax Indemnitee actually receives a payment pursuant to Section 9.2(e) of the Participation Agreement (each a “Tax or Indemnity Benefit”), then to the extent such Tax or Indemnity Benefit was not taken into account in determining the amount of indemnification payable under Section 21.1(a) above and provided no Sublease Event of Default shall have occurred and be continuing (in which event the payment provided under this Section 21.1(e) shall be deferred until the Sublease Event of Default has been cured), the Tax Indemnitee shall pay to the Sublessee the lesser of (A) (y) the amount of such Tax or Indemnity Benefit, plus (z) an amount equal to any United States federal, state or local income tax benefit realized by the Tax Indemnitee as a result of the payment under clause (y) above and this clause (z) and (B) the amount of the indemnity(ies) paid pursuant to this Section 21.1 giving rise to such Tax or Indemnity Benefit.  If it is subsequently determined that the Tax Indemnitee was not entitled to such Tax or Indemnity Benefit, the portion of such Tax or Indemnity Benefit that was repaid to the Sublessee will be treated as Taxes for which the Sublessee must indemnify the Tax Indemnitee pursuant to this Section 21.1 without regard to Section 21.1(b) (other than Section 21.1(b)(iii)).

 

 

(f)  Refund.  If the Tax Indemnitee obtains a refund or credit of all or part of any Taxes paid, reimbursed or advanced by the Sublessee pursuant to this Section 21.1 or a payment from a Head Lease Tax Indemnitee under Section 9.2(f) of the Participation Agreement with respect to a refund or credit of any Taxes indemnified by the Sublessee, the Tax Indemnitee promptly shall pay to the Sublessee (x) the amount of such refund or credit (net of any Tax payable by the Tax Indemnitee or a Head Lease Tax Indemnitee as a result of the receipt or accrual of such refund or credit if the payment of such refund or credit by the Tax Indemnitee to the Sublessee or a Head Lease Tax Indemnitee to the Sublessor is not deductible against such Tax) plus (y) an amount equal to any United States federal, state or local income tax benefit realized by (i) such Tax Indemnitee as a result of the payments under clause (x) above and this clause (y) or (ii) the Head Lease Tax Indemnitee as a result of, and to the extent reflected in the calculation thereof, the payment by the Head Lease Tax Indemnitee under Section 9.2(f) of the Participation Agreement; provided that (A) if at the time such payment is due to the Sublessee a Sublease Event of Default shall have occurred and be continuing, such amount shall not be payable until such Sublease Event of Default has been cured, and (B) the amount payable to the Sublessee pursuant to this sentence shall not exceed the amount of the indemnity(ies) paid pursuant to Section 21.1 in respect of such refunded or credited Taxes.  If it is subsequently determined that the Tax Indemnitee or a Head Lease Tax Indemnitee was not entitled to such refund or credit, the portion of such refund or credit that was repaid to the Sublessee will be treated as Taxes for which the Sublessee must indemnify the Tax Indemnitee pursuant to this Section 21.1 without regard to Section 21.1(b) (other than Section 21.1(b)(iii)).  If, in connection with a refund or credit of all or party of any Taxes paid, reimbursed or advanced by the

 

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 Sublessee pursuant to this Section 21.1, the Tax Indemnitee receives an amount representing interest on such refund or credit, the Tax Indemnitee promptly shall pay to the Sublessee (1) the amount of such interest that shall be fairly attributable to such Taxes paid, reimbursed or advanced by the Sublessee prior to the receipt of such refund or credit (net of Taxes payable in respect of the receipt or accrual of such interest if the payment of such interest by the Head Lease Tax Indemnitee to the Tax Indemnitee or the Tax Indemnitee to the Sublessee is not deductible against such Tax) and (2) any Tax savings realized by the Head Lease Tax Indemnitee or Tax Indemnitee as a result of the payments made by the Head Lease Tax Indemnitee or Tax Indemnitee as described under (1) and (2).

 

 

(g)  Contest.  With respect to the exercise of rights by the Tax Indemnitee under Section 9.2(g) of the Participation Agreement, the Tax Indemnitee shall, to the extent permitted under Section 9.2(g) of the Participation Agreement, grant the Sublessee a power of attorney to act on behalf of the Tax Indemnitee, provided that no Sublease Event of Default shall have occurred and be occurring.

 

 

(i)  Notice of Contest.  If a written claim for payment is made by any taxing authority against the Tax Indemnitee or a Head Lease Tax Indemnitee for any Taxes with respect to which the Sublessee is liable for indemnity hereunder (a “Tax Claim”), the Tax Indemnitee shall give the Sublessee written notice of such Tax Claim promptly after its receipt (and in all events within 30 days of such receipt), and shall furnish the Sublessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such Taxes; provided that failure so to notify the Sublessee shall not relieve the Sublessee of any obligation to indemnify the Tax Indemnitee hereunder except as provided in clause (xii) of Section 21.1(b).  The Tax Indemnitee shall not pay, or permit a Head Lease Tax Indemnitee to pay, such Tax Claim or take any other action with respect to such Tax Claim without the written consent of the Sublessee until at least 30 days after providing the Sublessee with such written notice; provided, however, that if action shall be required by Applicable Law to be taken prior to the end of such 30-day period, the Tax Indemnitee shall, in its notice to the Sublessee, so inform the Sublessee, and the Tax Indemnitee shall not take, or permit a Head Lease Tax Indemnitee to take, any action with respect to such Tax Claim without the written consent of the Sublessee before such time as action shall be required by Applicable Law to be taken.

 

 

(ii)  Control of Contest.  Subject to Section 21.1(g)(iii) below, the Sublessee will be entitled to contest (acting through counsel selected by the Sublessee and reasonably satisfactory to the Tax Indemnitee), and control the contest of, any Tax Claim if (i) the contest of the Tax Claim can be pursued in the name of the Sublessee; (ii) the contest of such Tax Claim must be pursued in the name of the Tax Indemnitee but may in the reasonable judgment of the Tax Indemnitee be segregated procedurally from tax claims for which the Sublessee is

 

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not obligated to indemnify the Tax Indemnitee (with the Tax Indemnitee agreeing or agreeing to use reasonable efforts to ensure that the Head Lease Tax Indemnitee will agree to use reasonable efforts to segregate the contest of any indemnified Tax from the contest of any unindemnified Tax, so that the Sublessee can control the contest of the indemnified Tax) or (iii) the Head Lease Tax Indemnitee or the Tax Indemnitee requests that the Sublessee control such contest.  In the case of all other Tax Claims, subject to Section 21.1(g)(iii) below, the Tax Indemnitee will, or will use reasonable efforts to ensure that the Head Lease Tax Indemnitee will, in good faith diligently contest the Tax Claim (including seeking judicial review of any adverse administrative determination and appealing any adverse judicial determination, except that no appeal shall be required to the United States Supreme Court) if the Sublessee shall request that the Tax be contested, and the following rules shall apply with respect to such contest:

 

 

(A)  the Tax Indemnitee will, or will use reasonable efforts to ensure that the Head Lease Tax Indemnitee will, control the contest of such Tax Claim in good faith (acting through counsel selected by the Tax Indemnitee and reasonably satisfactory to the Sublessee),

 

 

(B)  at the Sublessee’s written request, if payment is made to the applicable taxing authority, the Tax Indemnitee shall, or shall use reasonable efforts to ensure that the Head Lease Tax Indemnitee shall, use all reasonable efforts to obtain a refund thereof in appropriate administrative or judicial proceedings, and

 

 

(C)  the Tax Indemnitee shall, or shall use reasonable efforts to ensure that the Head Lease Tax Indemnitee shall, not otherwise settle, compromise or abandon such contest without the Sublessee’s prior written consent except as provided in Section 21.1(g)(iv).

 

In any case, the party conducting such contest shall consult in good faith with and keep reasonably informed the other party or parties and its designated counsel (and shall provide the other party or parties with copies of any documents, reports or claims issued by or sent to the relevant auditing agent or taxing authority as well as redacted portions of tax returns) with respect to such Tax Claim; provided, however¸ that the decisions regarding any actions to be taken shall be made by the party controlling the contest in its sole judgment.

 

 

(iii)  Conditions of Contest.  Not withstanding the foregoing, in no event shall the Sublessee be permitted to contest or continue to contest (or shall the Tax Indemnitee be required to contest or continue to contest) any Tax Claim pursuant to this Section 21.1, unless:

 

 

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(A)  within 30 days after notice by the Tax Indemnitee to the Sublessee of such Tax Claim (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of such Tax Claim must be commence prior to the expiration of such 30-day period), the Sublessee shall request in writing to the Tax Indemnitee that such Tax Claim be contested,

 

 

(B)  no Sublease Event of Default has occurred and is occurring,

 

 

(C)  there is no material risk of sale, forfeiture or loss of, or the creation of a material Lien on the Facility or any Component or portion thereof as a result of the contest of such Tax Claim (other than a Permitted Lien); provided that this clause (3) shall not apply if the Sublessee posts a bond or other security (which may include cash reserves) reasonably satisfactory to the Tax Indemnitee or the Taxes are fully paid in either manner specified in clause (5) below,

 

 

(D)  there is no material risk of imposition of any criminal liability to the Tax Indemnitee as a result of the contest of such Tax Claim,

 

 

(E)  if such contest involves payment of such Taxes, the Sublessee either advances to the Tax Indemnitee (on an interest-free basis and an After-Tax Basis) the amount of such payment (a “Tax Advance”) or pays the Tax Indemnitee (on an After-Tax Basis) the amount payable by the Sublessee pursuant to Section 21.1(a) above with respect to such Taxes,

 

 

(F)  the Sublessee agrees to pay and shall pay on demand and on an After-Tax Basis all reasonable out-of-pocket costs and expenses that the Tax Indemnitee may incur in connection with the contest of such Tax Claim (including all reasonable legal, accounting and investigatory fees and disbursements),

 

 

(G)  the amount of the Taxes in controversy, taking into account the amount of all similar and logically related Taxes with respect to the transactions contemplated by the Operative Documents and the Facility Sublease Documents that could be raised in any other year (including any future year) not barred by the statute of limitations, exceeds $25,000, and

 

 

(H)  the Tax Indemnitee has been provided with an opinion of independent tax counsel selected by the Sublessee and reasonably

 

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acceptable to the Tax Indemnitee to the effect that there is a Reasonable Basis for contesting such Tax Claim.

 

 

(iv)  Waiver of Indemnification.  Notwithstanding anything to the contrary contained in this Section 21.1, the Tax Indemnitee at any time may elect to decline to take any action or any further action with respect to a Tax Claim and may in its sole discretion settle or compromise any contest with respect to such Tax Claim without the Sublessee’s consent (and the Tax Indemnitee must so act to the extent that the Head Lease Tax Indemnitee has so acted) if the Tax Indemnitee:

 

 

(A)  waives its right to any indemnity payment by the Sublessee in respect of such Tax Claim (and any other claim for Taxes with respect to any other taxable year the contest of which is effectively precluded by the Tax Indemnitee’s declining to take action with respect to the Tax Claim), and

 

 

(B)  promptly pays to the Sublessee an amount which, after addition or subtraction of any further net decrease or increase, respectively, of Taxes realized by the Tax Indemnitee as a result of (i) such payment or (ii) the receipt by the Tax Indemnitee of any payment from a Head Lease Tax Indemnitee under the comparable provision of Section 9.2(g) of the Participation Agreement and the payment thereof by the Tax Indemnitee to the Sublessee, shall be equal to the amount of any Tax Advance and any payments made to the Tax Indemnitee under Section 21.1(a) above in respect of such Tax Claim, provided, however, that the amount of such repayment shall not include the amount of any costs or expenses with respect to any such contest.

 

Except as provided in the preceding sentence, any such waiver shall be without prejudice to the rights of the Tax Indemnitee with respect to any other Tax Claim.

 

 

(h)  Reports.

 

 

(i)  If any report, statement or return is required to be filed by the Tax Indemnitee or a Head Lease Tax Indemnitee with respect to any Tax that is subject to indemnification under this Section 21.1, the Sublessee shall (1) notify the Tax Indemnitee in writing of such requirement not later than 30

 

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days prior to the date such report, statement or return is required to be filed (determined without regard to extensions) or (2) either (y) if permitted by Applicable Law and not otherwise directed by the Tax Indemnitee, prepare such report, statement or return with the Tax Indemnitee and timely file such report, statement or return with the appropriate taxing authority or (z) if the Sublessee is not permitted by law to file such report, statement or return, or if so directed by the Tax Indemnitee, prepare and furnish to the Tax Indemnitee not later than 30 days prior to the date such report, statement or return is required to be filed (determined without regard to extensions) a proposed form of such report, statement or return for filing, or delivery to the Head Lease Tax Indemnitee, by the Tax Indemnitee; provided, however, that if such report, statement or return requires information within the control of the Tax Indemnitee and its Affiliates or a Head Lease Tax Indemnitee, and not available to the Sublessee or its Affiliates, that is not provided to the Sublessee within a reasonable amount of time of the Sublessee’s request, the Sublessee shall instead prepare (and furnish to the Tax Indemnitee within the time frame discussed above) a draft of such report, statement or return by completing those portions of such report, statement or return which can be completed based upon the information then available to the Sublessee.

 

 

(ii)  The Tax Indemnitee and the Sublessee will timely provide the other, at the Sublessee’s expense, with all information in its possession that the other party may reasonably require and request to satisfy its obligations under this Section 21.1(h).  The Sublessee shall indemnify and hold the Tax Indemnitee harmless on an After-Tax Basis from and against all liabilities, costs and expenses (including the attorneys’, accountants’ and other professional fees for tax related filings or reviews) of the Tax Indemnitee arising out of any insufficiency or inaccuracy of any report, statement or return if such insufficiency or inaccuracy results from the insufficiency or inaccuracy of any information to be supplied by the Sublessee pursuant to this Section 21.1(h) in preparing and filing such report, statement or return.

 

 

Section 22.

SUBLESSEE LENDER PROTECTIONS.

 

Section 22.1  Replacement Sublease. In the event of the termination of this Facility Sublease prior to the expiration of the Basic Sublease Term (other than due to an Event of Loss or any Special Sublease Transfer or due to termination of the Facility Lease), including pursuant to Section 365 of the federal bankruptcy code, as amended from time to time and including any successor legislation thereto, the Sublessor shall serve upon a Sublessee Lender written notice that this Facility Sublease has been terminated, together with a statement of any and all sums due under this Facility Sublease and of all breaches and events of default, if any, under this Facility Sublease and any other Facility Sublease Document then known to the Sublessor (“Termination Notice”).  Sublessee Lender thereupon shall have the option, which option must be exercised by the Sublessee Lender delivering notice to the Sublessor within ten (10) Business Days from receipt of the Termination Notice (the “Option Period”), to cure any such Sublessee’s breaches or Sublessee events of default and the right to enter into a new sublease (the “New Sublease”) and related Facility Sublease Documents, subject to the satisfaction of the requirements of the Section 19 of the Facility Lease and at such Sublessee Lender’s sole cost and expense (i) effective as of the date of termination of this Facility Sublease, (ii) for the remainder of what otherwise would have been the Basic Sublease Term and (iii) at and upon all the agreements, terms, covenants and conditions of this Facility Sublease and other applicable Facility Sublease Documents; provided that if the Sublessee’s noncompliance is not a

 

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type which can be immediately remedied and if, but only if, extending the Option Period will not involve increased risk of termination of the Facility Lease, such Option Period shall be further extended for an additional period of 60 days, which period shall be further extended to up to 180 days from receipt of the Termination Notice so long as the Sublessee’s Lender or it’s designee has commenced and is diligently pursuing appropriate action to cure such default.

 

Section 22.2  Default Notices.  The Sublessor, upon serving the Sublessee with any notice of default under the provisions of, or with respect to, this Facility Sublease and all other Facility Sublease Documents shall also serve a copy of such notice upon the Sublessee Lender (in the same manner as required hereby for notices to the Sublessee) at the address specified herein, or at such other address as a Sublessee Lender shall designated in writing to the Sublessor.

 

 

Section 23.

MISCELLANEOUS

 

Section 23.1  Amendments and Waivers.  No term, covenant, agreement or condition of this Facility Sublease may be terminated, amended or compliance therewith waived (either generally or in a particular instance, retroactively or prospectively) except by an instrument or instruments in writing executed by each party hereto.

 

Section 23.2  Notices.  Unless otherwise expressly specified or permitted by the terms hereof, all communications and notices provided for herein to a party hereto shall be in writing or by a telecommunications device capable of creating a written record, and any such notice shall become effective (a) upon personal delivery thereof, including by overnight mail or courier service, (b) in the case of notice by United States mail, certified or registered, postage prepaid, return receipt requested, upon receipt thereof, or (c) in the case of notice by such a telecommunications device, upon transmission thereof, provided such transmission is promptly confirmed by either of the methods set forth in clause (a) or (b) above, in each case addressed to such party and copy party at its address set forth below or at such other address as such party or copy party may from time to time designate by written notice to the other party:

 

 

If to the Sublessor:

KeySpan Corporation

One MetroTech Center

Brooklyn, New York 11201

Attention:  General Counsel

Telecopier: [REDACTED]

Telephone: [REDACTED]

 

If to the Sublessee:

KeySpan Ravenswood, LLC

C/O TransCanada Facility USA, Inc

TransCanada Pipelines Tower

       450 – 1^st Street, SW

Calgary, AB  T2P 5H1

     

 

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Attention: Sean McMaster

     Executive Vice-President,

     Law and General Counsel

Facsimile:  [REDACTED]

With copies to:

Mayer Brown LLP

71 South Wacker Drive

Chicago, IL 60606

Attention: Marc F. Sperber

     D. Michael Murray

Facsimile: [REDACTED]

 

Section 23.3  Survival.  Except for any provisions of Section 3.3, 3.4, 5, 9 and 17 hereof (and any other provisions hereof which expressly contemplate that they shall so survive), the warranties and covenants made by each party hereto shall not survive the expiration or termination of this Facility Sublease in accordance with its terms.

 

Section 23.4  Successors and Assigns.  This Facility Sublease shall be binding upon and shall inure to the benefit of, and shall be enforceable by, the parties hereto and their respective successors and assigns as permitted by and in accordance with the terms hereof.  Except as expressly provided herein or in the other Facility Sublease Documents, neither party hereto may assign its interests or transfer its obligations herein without the consent of the other party hereto.

 

Section 23.5  Governing Law.  This Facility Sublease has been delivered in the State of New York and shall be in all respects governed by and construed in accordance with the laws of the State of New York, including all matters of construction, validity and performance.

 

Section 23.6  Severability.  Any provision of this Facility Sublease that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

Section 23.7  Counterparts.  This Facility Sublease may be executed by the parties hereto on any number of separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

 

Section 23.8  Headings and Table of Contents.  The headings of the sections of this Facility Sublease and the Table of Contents are inserted for purposes of convenience only and shall not be construed to affect the meaning or construction of any of the provisions hereof.

 

Section 23.9  Further Assurances.  Each party hereto will promptly and duly execute and deliver such further documents to make such further assurances for and take such

 

58

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further action reasonably requested by the other party, all as may be reasonably necessary to carry out more effectively the intent and purpose of this Facility Sublease.  The Sublessee shall be responsible for any costs and expenses incurred in connection therewith.

 

Section 23.10  Measuring Life.  If and to the extent that any of the rights and privileges granted under this Facility Sublease, would, in the absence of the limitation imposed by this sentence, be invalid or unenforceable as being in violation of the rule against perpetuities or any other rule or law relating to the vesting of interests in property or the suspension of the power of alienation of property, then it is agreed that notwithstanding any other provision of this Facility Sublease, such options, rights and privileges, subject to the respective conditions hereof governing the exercise of such options, rights and privileges, will be exercisable only during (a) the longer of (i) a period which will end twenty-one (21) years after the death of the last survivor of the descendants living on the date of the execution of this Facility Sublease of the following Presidents of the United States:  Franklin D. Roosevelt, Harry S. Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M. Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush, William J. Clinton and George W. Bush or (ii) the period provided under the Uniform Statutory Rule Against Perpetuities or (b) the specific applicable period of time expressed in this Facility Sublease, whichever of (a) and (b) is shorter.

 

Section 23.11  No Third Party Beneficiaries. The terms and provisions of this Facility Sublease shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns in accordance with the terms hereof, and is made solely and specifically for their benefit. Except as expressly provided under Section 22 hereof, no other Person shall have any rights, interest or claims hereunder or be entitled to any benefits under or on account of this Facility Sublease as a third-party beneficiary or otherwise.

 

Section 23.12  New York Sales Taxes. For New York State and New York City sales tax purposes, the parties to this Facility Sublease intend that 5.98% of each payment of Sublease Base Rent and Sublease Renewal Rent, if any, shall be attributable to transmission equipment and other tangible personal property the rental of which is subject to sales tax under Articles 28 and 29 of the New York Tax Law. The Sublessor shall, to the extent permitted by law, pay all taxes due with respect to the Sublease Base Rent directly to New York State, provided however that in the event that the payment of such tax by the Sublessor will result in any increase of the amount of tax due under Articles 28 and 29 of the New York Tax Law, the Sublessor will pay such amount to the Sublessee and then the Sublessee will pay such tax directly to New York State. The Sublessor shall indemnify the Sublessee, on an After-Tax Basis, for any payments of New York State and New York City sales tax with respect to Sublease Base Rent made in accordance with this Section 23.12. The Sublessee shall pay all taxes due with respect to Sublease Renewal Rent directly to New York State.

 

Section 23.13  Consent to Jurisdiction; Waiver of Trial by Jury.

 

 

(a)  Each of the parties hereto (i) hereby irrevocably submits to the nonexclusive jurisdiction of the Supreme Court of the State of New York, New York County (without prejudice to the right of any party to remove to the United States District Court for the Southern District of New York) and to the nonexclusive jurisdiction of the United States District

 

59

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Court for the Southern District of New York for the purposes of any suit, action or other proceeding arising out of this Facility Sublease or any other Facility Sublease Document or the subject matter hereof or thereof or any of the transactions contemplated hereby or thereby brought by any of the parties hereto or any of their successors or permitted assigns; (ii) hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court, or in such federal court; and (iii) to the extent permitted by Applicable Law, hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that such party is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Facility Sublease or any other Facility Sublease Document or the subject matter hereof or thereof may not be enforced in or by such court.

 

 

(b)  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS FACILITY SUBLEASE OR ANY OTHER FACILITY SUBLEASE DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF BROUGHT BY ANY OF THE PARTIES HERETO OR THEIR SUCCESSORS OR PERMITTED ASSIGNS.

 

 

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IN WITNESS WHEREOF, the Sublessor and the Sublessee have caused this Facility Sublease to be duly executed and delivered by their respective officers thereunto duly authorized.

 

 

[UNIT 40 SUBLESSOR], as Sublessor

 

 

By:  ___________________________________

Name:

Title:

 

By:  ___________________________________

Name:

Title:

 

                                      KEYSPAN-RAVENSWOOD, LLC, as Sublessee

 

By:  ___________________________________

Name:

Title:

 

By:  ___________________________________

Name:

Title:

 

 

 

61

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SCHEDULE A-1

 

 

[REDACTED: Basic rent payment dates and amounts from the Facility Lease.]

 

 

SCHEDULE A-2

 

 

[REDACTED: Amount which represents the NPV of all Basic Rent payments under the Facility Lease as of the Closing Date.]

 

 

SCHEDULE A-3

 

 

[REDACTED: Tax allocation of Sublease Base Rent.]

 

 

SCHEDULE B

 

 

[REDACTED: Dates and amounts mirror those in the Facility Lease.]

 

 

SCHEDULE C

 

 

Unamortized Rent

 

 

[REDACTED: The sum of all remaining Facility Lease Basic Lease Rent discounted at the Discount Rate.]

 

 

SCHEDULE D

 

 

Unamortized Purchase Price

 

 

[REDACTED: The amounts will be determined for each Sublease Termination Date as sum of (i) the NPV of all remaining Basic Lease Rent as of such date discounted at the Discount Rate and (ii) the unamortized portion of the Purchase Price allocable to the Facility Sublease Agreement (based upon a straight-line amortization of such allocated portion of the Purchase Price over the Basic Sublease Term).]

 

      

        M      

    

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EXHIBIT A

to

Site Sub-sublease

 

 

DESCRIPTION OF FACILITY SITE

 

All that certain piece or parcel of land, situate, lying, and being at Ravenswood Cogeneration Facility in Long Island City, the Borough and County of Queens, City and State of New York, bounded and described as follows:

Beginning at the point of a newly constructed building within Parcel “A” having coordinates of N277358.47 and E607681.66 in the New York State Plane Coordinate System of 1927, which beginning point is distant the following three courses from an angle point on the westerly side of Vernon Boulevard (75 feet wide), which angle point is located at the intersection of 38^th Avenue (75 feet wide), as said Boulevard and Avenue are shown on map #4297, titled “the Elimination of 37^th Avenue and 38^th Avenue between Vernon Boulevard and the East River, along with the layout of Sewer Easements”, dated November 28, 1962 and adopted by the Board of Estimate of the City of New York on July 25^th, 1963 (Map #4297) which map was filed at Topographical Bureau, Borough of Queens, City of New York on August 9, 1963 thence;

A.	North 25o02’04” East a distance of 476.77 feet in the right of way of Vernon Boulevard to a point, thence;

B.	North 64o57’56” West a distance of 214.15 feet at right angle from the previous course to a point being the original point of beginning of the Con Edison Lease area, thence;

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C.	South 23o48’54” West a distance of 9.07 feet to the point of beginning of the Facility Site, running thence;

1.	South 59o11’27” East a distance of 43.51 feet along the perimeter of the said Facility Site area to a point, thence;

2.	North 32o20’17” East a distance of 4.31 feet along the same to a point, thence;

3.	South 59o20’48” East a distance of 22.03 feet along the same to a point, thence;

4.	North 30o48’33” East a distance of 0.55 feet along the same to a point, thence;

5.	South 59o11’27” East a distance of 30.24 feet along the same to a point, thence;

6.	South 30o48’33” West a distance of 30.23 feet along the same to a point, thence;

7.	South 59o11’27” East a distance of 30.52 feet along the same to a point, thence;

8.	South 30o48’33” West a distance of 13.79 feet along the same to a point, thence;

9.	South 59o11’27” East a distance of 9.74 feet along the same to a point, thence;

10.	South 30o48’33” West a distance of 107.85 feet along the same to a point, thence;

11.	North 59o11’27” West a distance of 20.80 feet along the same to a point, thence;

12.	South 30o48’33” West a distance of 85.62 feet along the same to a point, thence;

13.	South 59o11’27” East a distance of 28.29 feet along the same to a point, thence;

14.	South 30o48’33” West a distance of 82.39 feet along the same to a point, thence;

15.	North 59o11’27” West a distance of 57.01 feet along the same to a point, thence;

16.	North 30o48’33” East a distance of 13.49 feet along the same to a point, thence;

17.	North 59o11’27” West a distance of 51.01 feet along the same to a point, thence;

18.	North 30o48’33” East a distance of 16.72 feet along the same to a point, thence;

19.	North 59o11’27” West a distance of 41.34 feet along the same to a point, thence;

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20.	North 30o48’33” East a distance of 18.65 feet along the same to a point, thence;

21.	North 59o11’27” West a distance of 123.57 feet along the same to a point, thence;

22.	North 30o48’33” East a distance of 163.89 feet to a point, thence;

23.	South 64o14’53” East a distance of 6.58 feet to a point, thence;

24.	South 60o36’23” East a distance of 10.27 feet along facility site area to a point, thence;

25.	South 59o11’27” East a distance of 117.09 feet along said facility site area to a point, thence;

26.	North 30o48’33” East a distance of 76.07 feet along the same to a point, thence;

27.	North 59o11’27” West a distance of 4.63 feet along the same to a point, thence;

28.	North 30o48’33” East a distance of 25.31 feet along the same to the Point and Place of Beginning.

Containing: 1.380 Acres (60,095 Square Feet), more or less.

Being known as the Facility Site, on map entitled “Facility Site Within Parcel “A”, Long Island City, Queens, New York”, prepared by GEOD Corporation, dated April 22, 2004, as last revised May 24, 2004.

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EXHIBIT B

to

Site Sub-sublease Agreement

 

 

DESCRIPTION OF EASEMENTS

 

A.  The easements originally granted to the Ground Lessor pursuant to that certain Supplemental (Ravenswood) Easement Agreement ("SREA"), dated as of February 4, 2003, by and among Consolidated Edison Company of New York, Inc., Steam House Leasing, LLC and the Ground Lessor (the "SREA Easements"), as follows:

1.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of a concrete "stack" and the concrete foundation on which it is constructed.

2.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of a building to house the Continuous Emission Monitoring System "CEMS".

3.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of an "Aqueous Ammonia Tank in Dike," as well as an area appurtenant thereto for the installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of an oil water separator.

4.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of (A) a building to house a gas

 

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compressor and (B) lubricating oil containment and storage tanks and systems, a hot gas scrubber, coalescing filter, recycling cooler, fuel gas heater, related piping and electrical conduits.

5.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of (A) an underground kerosene fuel line and (B) electric lines located in an underground trench.

6.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of' a 12 foot wide underground common utility trench.

7.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of an above grade export steam line.

8.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of a " 138 KV underground cable line".

9.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of a "Sanitary Sewer Line".

10.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of a " 12" Fire Protection Loop".

11.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of a "31G04 Feeder Breaker G4E," and appurtenant equipment (including, but not limited to, appurtenant generator breakers, motor operated disconnect switches, ground switches, voltage regulators, transformers, manually operated disconnect switches, circuit breakers).

 

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12.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of a "Natural Gas Feeder Line".

B.             The easements originally granted to the Ground Lessor as described in Schedule 2.02(a)(5), Schedule 2.02(a)(8) and Schedule 2.03(3) of that certain Amended and Restated Ravenswood Declaration of Easements Agreement ("DOE"), dated June 18, 1999, by and among Consolidated Edison Company of New York, Inc., Steam House Leasing, LLC and the Ground Lessor (the "DOE Easements," and collectively with the SREA Easements, the "Easements"), recorded in the Queens County Register's Office on June 30, 1999 in Reel 5294, Page 2470, as follows:

1.   An Easement over a portion of Rainey Substation for the maintenance, repair, operation, inspection and replacement of electrical feeders B1A, B1B, B2A, C1A, ClB, and C2A.

2.   An Easement over a portion of Vernon Substation for the maintenance, repair, operation and inspection of the Discharge Tunnel.

3.   An Easement for the operation, inspection, testing, repair, replacement and maintenance of all steam piping downstream of the 2 6" revenue meters.

The Easements are depicted on the attached Survey prepared by GEOD Corporation, dated April 22, 2004, as last revised May 24, 2004 (provided, however, that any conflict between the description on the Survey and the actual location of the Easement shall be resolved in favor of the actual location of the Easement).

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EXHIBIT C

 

 

GUARANTY

 

 

Guaranty, dated as of [                                                      ], 2008 (this "Guaranty"), by TransCanada Corporation, a Canadian corporation and TransCanada Energy USA, Inc., a Delaware corporation (each, a "Guarantor," and collectively, the “Guarantors”), in favor of KeySpan Corporation, a New York corporation (the "Guaranty Beneficiary").

 

 

1.  GUARANTY.  In order to induce the Guaranty Beneficiary to re-affirm its obligations under the Guaranty, dated as of May 25, 2004 (the “Lease Guaranty”), in connection with the transactions contemplated by that certain Facility Sublease, dated as of [  ], 2008 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Facility Sublease”; unless the context hereof shall otherwise require, capitalized terms used in this Guaranty and not otherwise defined herein shall have the respective meanings specified therefor in the Facility Sublease) by and between [UNIT 40 SUBLESSOR], as sublessor (in such capacity, the “Sublessor”) and KeySpan-Ravenswood, LLC, as sublessee (in such capacity, the “Sublessee”), together with other Facility Sublease Documents (as such term is defined in the Facility Sublease) and to consummate the transactions contemplated therein with the Sublessee, each Guarantor, jointly and severally, hereby absolutely, unconditionally and irrevocably guarantees to the Guaranty Beneficiary the payment and performance obligations of (x) the Sublessee under the Facility Sublease, the Site Sub-sublease and the Sublease Tax Indemnity Agreement accruing from and after the date hereof and (y) from and including the Transfer Date, the obligations of the Sublessor, in its capacity as the Lessee, the Ground Lessor and the Ground Sublessee under the Operative Documents, except for liabilities arising or occurring prior to the Transfer Date and except to the extent arising out of the failure of the Guarantee Beneficiary to pay or cause to be paid Basic Lease Rent under the Facility Lease (the “Obligations”), in each case, without regard to whether such Obligation is direct or indirect, absolute or contingent, now or hereafter existing or owing, voluntary or involuntary, created or arising by contract, operation of law or otherwise or incurred or payable before or after commencement of any proceedings by or against any Guaranteed Party under any bankruptcy law. In furtherance of the foregoing, each of the Guarantors acknowledges that the Guaranty Beneficiary may, in its sole discretion, bring and prosecute a separate action or actions against either Guarantor in respect of any or all of the Obligations, regardless of whether action is brought against any Guaranteed Party or whether the Guaranteed Party is joined in any such action or actions. The Obligations of the Guarantors under this Guaranty are joint and several. As used in this Guaranty, the “Guaranteed Party” shall mean the Sublessee under the Facility Sublease Documents and from and after the Transfer Date, the Sublessor in its capacity as the Lessee, the Ground Lessor and the Ground Sublessee under the Operative Documents.

 

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2.  NATURE OF GUARANTY.  This Guaranty is in no way conditioned upon any attempt to collect from any Guaranteed Party or upon any other event or contingency, and shall be binding upon and enforceable against each Guarantor without regard to the validity, regularity or enforceability of any Facility Sublease Document, any Operative Document or of any term thereof. In the event that any payment to the Guaranty Beneficiary in respect of the Obligations is rescinded or must otherwise be returned for any reason whatsoever, each of the Guarantors shall remain liable hereunder with respect to the Obligations as if such payment had not been made. This Guaranty is an absolute, unlimited, continuing and unconditional guarantee of performance and payment (but not of collection) of the Obligations. The liability of each Guarantor under this Guaranty shall, to the fullest extent permitted under applicable law, be absolute, irrevocable and unconditional. This Guaranty is a primary and original obligation of each Guarantor and is not merely the creation of a surety relationship. The obligations of each Guarantor set forth herein constitute the full recourse obligations of such Guarantor enforceable against it to the full extent of all its assets and properties. Without limiting the foregoing, it is agreed and understood that (a) repeated and successive demands may be made and recoveries may be had hereunder as and when, from time to time, any Guaranteed Party shall be in default with respect to the Obligations under the terms of the Facility Sublease Documents or the Operative Documents, and (b) notwithstanding the recovery hereunder for or in respect of any given default with respect to the Obligations of any Guaranteed Party under any Facility Sublease Document or any Operative Document, this Guaranty shall remain in full force and effect and shall apply to each and every subsequent default with respect to the Obligations.

 

 

3.  CHANGES IN OBLIGATIONS.  Each Guarantor agrees that the Guaranty Beneficiary may at any time and from time to time, without notice to or further consent of either Guarantor, extend the time of payment or performance of any Obligations, and may also make any agreement with the Guaranteed Party or with any other Person interested in the transactions contemplated by the Facility Sublease Documents for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any Facility Sublease Document or any Operative Document without in any way impairing or affecting the Guarantors' obligations under this Guaranty. The obligations of each Guarantor hereunder shall not be subject to any counterclaim, setoff, deduction or defense (other than payment or performance) based upon any claim or defense such Guarantor may have against the Guaranty Beneficiary or any claim or defense such Guarantor may have against any Guaranteed Party or any other Person and shall remain in full force and effect without regard to, and shall not be released, discharged, reduced or in any way affected by, any circumstance or condition whatsoever (whether or not either Guarantor shall have any knowledge or notice thereof) which might constitute a legal or equitable discharge or defense including, but not limited to:

 

 

(i)  any amendment, modification, supplement or termination (by operation of law or otherwise), express or implied, of any Facility Sublease Document or Operative Document, or any other instrument applicable to any Guaranteed Party or to such Guaranteed Party’s Obligations, or any part thereof;

 

 

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(ii)  any failure on the part of any Guaranteed Party to perform or comply with any term of any Facility Sublease Document or Operative Document;

 

 

(iii)  any waiver, consent, change, extension, indulgence or other action or any action or inaction under or in respect of any Facility Sublease Document or Operative Document, including this Guaranty, whether or not the Guaranty Beneficiary, any Guaranteed Party or either Guarantor has notice or knowledge of any of the foregoing;

 

 

(iv)  any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or similar proceeding with respect to the Guaranty Beneficiary, either Guarantor or any Guaranteed Party, or their respective properties or their creditors, or any action taken by any trustee or receiver or by any court in any such proceeding;

 

 

(v)  any furnishing or acceptance of additional security or any release of any security (and each Guarantor authorizes the Guaranty Beneficiary to furnish, accept or release said security);

 

 

(vi)  any termination (by operation of law or otherwise), cancellation (by operation of law or otherwise), frustration or unenforceability, in whole or in part, of any Facility Sublease Document or Operative Document or any term thereof;

 

 

(vii)  any Lien on or affecting the respective assets and properties of either Guarantor or any Guaranteed Party;

 

 

(viii)  any claim as a result of any other dealings among the Guaranty Beneficiary, either Guarantor, or any of them;

 

 

(ix)  any change in the name of the Guaranty Beneficiary, any Guaranteed Party or any other Person;

 

 

(x)  any redelivery, repossession, sale, transfer or other disposition or surrender of the Facility, the Ground Interest or any part thereof;

 

 

(xi)  the transfer, assignment, mortgaging or purported transfer, assignment or mortgaging of all or any part of the interest of any Guaranteed Party in the

 

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Facility, the Ground Interest, any part thereof or any Facility Sublease Document or Operative Documents;

 

 

(xii)  any failure of title with respect to the interest of any Guaranteed Party, or its successors and assigns, in the Facility, the Ground Interest or any part thereof;

 

 

(xiii)  any merger or consolidation of any Guaranteed Party or either Guarantor into or with any other Person or any direct or indirect sale, lease or transfer of any other assets of any Guaranteed Party or either Guarantor to any other Person;

 

 

(xiv)  any change in the ownership of any shares of capital stock of either Guarantor or any Guaranteed Party (including any such change which results in either Guarantor no longer owning capital stock of any Guaranteed Party); or

 

 

(xv)  any termination of the Facility Lease or the Facility Sublease as a result of the rejection thereof or other action by any Guaranteed Party or any trustee, receiver or liquidating agent of the Guaranteed Party or any of its properties in any bankruptcy, insolvency, reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar proceeding (whether or not the Sublessee remains in possession of the Facility).

 

 

4.  CERTAIN WAIVERS. To the fullest extent permitted by Law, each of the Guarantors hereby expressly and unconditionally waives: (a) notice of any of the matters referred to in Section 3 hereof; (b) all notices which may be required by statute, rule of law or otherwise (except as expressly required to be given to the Guarantors by any Facility Sublease Document) to preserve any rights against the Guarantors hereunder, including notice of the acceptance of this Guaranty by the Guaranty Beneficiary, or the creation, renewal, extension, modification or accrual of the Obligations or notice of any other matters relating thereto, any presentment, demand, notice of dishonor, protest or nonpayment of any damages or other amounts payable under any Facility Sublease Document or any Operative Document; (c) any requirement for the enforcement, assertion or exercise of any right, remedy, power or privilege under or in respect of any Facility Sublease Document or any Operative Document, including diligence in collection or protection of or realization upon or in respect of the Obligations or any part thereof; (d) any requirement of diligence; (e) the occurrence of every other condition precedent to which such Guarantor or any Guaranty Beneficiary may otherwise be entitled, except as provided in any Facility Sublease Document or any Operative Document; (f) any requirement to mitigate the damages resulting from a default or termination under any Facility Sublease Document or any Operative Document, except that this shall not relieve the Guaranty Beneficiary of any such obligation; and (g) the right to require the Guaranty Beneficiary to proceed against any Guaranteed Party or any other Person liable on the Obligations, to proceed against or exhaust security held from any Guaranteed Party or any other Person, or to pursue any other remedy in

 

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the Guaranty Beneficiary’s power whatsoever, and each Guarantor waives the right to have the property of any Guaranteed Party first applied to the discharge of the Obligations.

 

 

The Guaranty Beneficiary may, at its election, exercise any right or remedy it might have against any Guaranteed Party or any security held by the Guaranty Beneficiary, including the right to foreclose upon any such security by judicial or nonjudicial sale, without affecting or impairing in any way the liability of either Guarantor hereunder, except to the extent the Obligations have been paid or satisfied, and each Guarantor waives any defense arising out of the absence, impairment or loss of any right of reimbursement, contribution or any other right or remedy of such Guarantor against any Guaranteed Party or any such security, whether resulting from such election by the Guaranty Beneficiary, or otherwise.

 

 

Each Guarantor assumes the responsibility for being and keeping informed of the financial condition of each Guaranteed Party and of all other circumstances bearing upon the risk of nonpayment or nonperformance of the Obligations and agrees that the Guaranty Beneficiary shall not have any duty to advise any Guarantor of information regarding any condition or circumstance or any change in such condition or circumstance. Each Guarantor acknowledges that the Guaranty Beneficiary has not made any representation to the Guarantor concerning the financial condition of the Guaranteed Parties.

 

 

5.  NO WAIVER; CUMULATIVE RIGHTS.  No failure on the part of the Guaranty Beneficiary to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Guaranty Beneficiary of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power hereunder.  Each and every right, remedy and power hereby granted to the Guaranty Beneficiary or allowed it by law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Guaranty Beneficiary at any time or from time to time.

 

 

6.  REPRESENTATIONS AND WARRANTIES.  Each Guarantor hereby represents and warrants that:

 

 

(a)  it is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation;

 

 

(b)  it has the requisite capacity and corporate power and authority to execute and deliver this Guaranty and to fulfill and perform it’s obligations hereunder;

 

 

(c)  the execution, delivery and performance by the Guarantor of this Guaranty has been duly authorized by all necessary action on the part of the Guarantor, and when

 

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executed and delivered, this Guaranty will constitute the legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, arrangement, moratorium or other laws relating to or affecting the rights of creditors generally and (ii) general principles of equity;

 

 

(d)  the execution, delivery and performance of this Guaranty do not and will not (a) contravene any Applicable Law binding on the Guarantor or its property, (b) require any action, consent or approval by any trustee or holder of indebtedness of the Guarantor (other than those obtained prior to the date hereof) or (c) constitute a violation of or a default under any indenture, mortgage or other material contract to which the Guarantor is a party or by which any of its property is bound, which in any case, individually or in the aggregate, is reasonably likely to result in a material adverse affect on (i) the business or financial condition of the Guarantor and its subsidiaries taken as a whole, or (ii) the ability of the Guarantor to perform any of its material obligations hereunder (“Material Adverse Effect”);

 

 

(e)  all Governmental Approvals (if any) which are required as of the date hereof for the execution, delivery or performance by the Guarantor of its obligations under this Guaranty have been obtained or made, were validly issued, are not the subject of any pending request for rehearing or appeal, and are in full force and effect (other than any Governmental Approvals, the failure to obtain which is not likely to cause a Material Adverse Effect);

 

 

(f)  the Guarantor is not and “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940; and

 

 

(g)  the Guarantor has the financial capacity to pay and perform its obligations under this Guaranty, and shall continue to have such capacity for so long as this Guaranty shall remain in effect in accordance with Section 9 hereof.

 

 

7.  COVENANTS. Each Guarantor agrees not to consolidate or merge with or into any other Person or sell, convey, transfer or lease all or substantially all of its properties and assets to any other Person without the prior written consent of the Guaranty Beneficiary, unless (i) immediately prior to and immediately following such consolidation, merger, sale, conveyance, transfer or lease, no Sublease Default or Sublease Event of Default shall have occurred and be continuing, (ii) the Person resulting from such consolidation, surviving such merger or succeeding to such assets (if other than each Guarantor) shall (A) be organized under the laws of the United States, any state thereof or the District of Columbia, and (B) expressly assume, pursuant to an agreement reasonably acceptable to the Guaranty Beneficiary, the obligations

 

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under this Guaranty, and (iii) if the Guarantor is the Person resulting from such consolidation or surviving such merger, such Guarantor shall affirm in writing its obligations under this Guaranty.

 

 

8.  NO ASSIGNMENT. Neither of the Guarantors nor the Guaranty Beneficiary may assign its rights, interests or obligations hereunder to any other Person without the prior written consent of the Guaranty Beneficiary (in the case of an assignment by either Guarantor) or each of the Guarantors (in the case of an assignment by the Guaranty Beneficiary).

 

 

9.  CONTINUING GUARANTY.  This Guaranty shall remain in full force and effect and shall be binding on each Guarantor, its successors and assigns until the Obligations are satisfied in full and shall inure to the benefit of, and be enforceable by, the Guaranty Beneficiary and its successors and permitted assigns.

 

 

10.  REMEDIES. In the event any Guarantor shall fail to pay immediately any amounts due under this Guaranty, or to comply with any other term of this Guaranty, the Guaranty Beneficiary shall be entitled to all rights and remedies to which it may be entitled hereunder or at law, in equity or by statute.

 

 

11.  PARTIES. This Guaranty shall inure to the benefit of, and shall be enforceable by, the Guaranty Beneficiary, and shall be binding upon each Guarantor and its successors and assigns.

 

 

12.  NOTICES. All notices and other communications hereunder shall be in writing in the English language and shall be deemed given (a) when received if delivered personally, (b) on the first Business Day following the date of dispatch if delivered by a nationally recognized next-day courier service, (c) on the fifth Business Day following the date of mailing if delivered by registered or certified mail (postage prepaid, return receipt requested) or (d) if sent by facsimile transmission, when transmitted and receipt of transmittal is confirmed. All notices hereunder shall be delivered as set forth below or to such other Person or address or facsimile number as a party shall specify by notice in writing to the other party delivered in accordance with the terms hereof:

 

 

if to the Guaranty Beneficiary, to it at:

KeySpan Corporation

One MetroTech Center

Brooklyn, New York 11201

Attention:  John G. Cochrane, Executive Vice-President

      Michael Walker, Deputy General Counsel

Facsimile:  [REDACTED]

 

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with a copy to (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

4 Times Square

New York, New York 10036-6522

Attention:  Sheldon S. Adler, Esq.

      Pankaj K. Sinha, Esq.

Facsimile:  [REDACTED]

 

if to the Guarantors, to them at at:

 

TransCanada Facility USA, Inc.

c/o TransCanada Corporation

450-1^st Street, SW

Calgary, AB  T2P 5H1

Attention:  Garry Lamb

Facsimile:  [REDACTED]

 

with a copy (which shall not constitute notice) to:

 

Mayer Brown LLP

71 Wacker Drive

Chicago, IL  60606

 

Attention:  Michael Murray

Facsimile:  [REDACTED]

 

 

13.  GOVERNING LAW.  This Guaranty shall be governed by and construed in accordance with the Laws of the State of New York (regardless of the Laws that might otherwise govern under applicable New York principles of conflicts of Law) as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies.

 

 

14.  CONSENT TO JURISDICTION; WAIVER OF TRIAL BY JURY. Each Guarantor (i) hereby irrevocably submits to the nonexclusive jurisdiction of the Supreme Court of the State of New York, New York County (without prejudice to the right of any party to remove to the United States District Court for the Southern District of New York) and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York for the purposes of any suit, action or other proceeding arising out of this Guaranty or the subject matter hereof brought by the Guaranty Beneficiary; (ii) hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court, or in such federal court; and (iii) to the extent permitted by Applicable Law, hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that such party is not personally subject to the

 

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jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Guaranty or the subject matter hereof may not be enforced in or by such court.

 

 

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH GUARANTOR HEREBY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTY OR THE SUBJECT MATTER THEREOF BROUGHT BY THE GUARANTY BENEFICIARY.

 

 

15.  SUBROGATION.  Each Guarantor shall be subrogated to any and all rights of the holders of the Obligations against the Guaranteed Parties in respect of all amounts paid to the holders of the Obligations by any Guarantor under or pursuant to this Guaranty.

 

 

16.  SEVERABILITY, AMENDMENTS AND WAIVERS. If any provision of this Guaranty or any application hereof shall be invalid or unenforceable under Applicable Law, the validity, legality and enforceability of the remaining provisions hereof shall not be affected or impaired thereby.  No term, covenant, agreement or condition of this Guaranty may be terminated or amended, or compliance therewith waived, except by an instrument or instruments in writing executed by each Guarantor and consented to by the parties hereto.

 

 

17.  COUNTERPARTS.  This Guaranty may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same instrument.

 

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, each of the Guarantors has caused this Guaranty to be executed and delivered as of the date first written above by its officers thereunto duly authorized.

 

 

TRANSCANADA CORPORATION

 

 

By:  ___________________________________

Name:

Title:

 

By:  ___________________________________

Name:

Title:

 

 

TRANSCANADA ENERGY USA, INC.

 

 

By:  ___________________________________

Name:

Title:

 

By:  ___________________________________

Name:

Title:

 

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IN WITNESS WHEREOF, the Guaranty Beneficiary has caused this Guaranty to be executed and delivered as of the date first written above by its officer thereunto duly authorized.

 

 

 

 

KEYSPAN CORPORATION

 

 

By:  ___________________________________

Name:

Title:

 

 

 

 

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EXHIBIT D

 

GUARANTY

 

 

GUARANTY, dated as of [                    ], 2008 (this “Guaranty”), from National Grid Plc, a public limited company organized under the laws of England and Wales, and National Grid USA, a Delaware corporation (each a “Guarantor,” and together the “Guarantors”), in favor of KeySpan-Ravenswood, LLC, a New York limited liability company (the “Guaranty Beneficiary”).

 

 

18.  GUARANTY.  In order to induce the Guaranty Beneficiary to enter into a certain Facility Sublease, dated as of [], 2008 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Facility Sublease”; unless the context hereof shall otherwise require, capitalized terms used in this Guaranty and not otherwise defined herein shall have the respective meanings specified therefor in the Facility Sublease) by and between [UNIT 40 SUBLESSOR], as sublessor (in such capacity, the “Sublessor”) and KeySpan-Ravenswood, LLC, as sublessee (in such capacity, the “Sublessee”), together with other Facility Sublease Documents (as such term is defined in the Facility Sublease) and to consummate the transactions contemplated therein with the Sublessee, each Guarantor, jointly and severally, hereby absolutely, unconditionally and irrevocably guarantees to the Guaranty Beneficiary the due, punctual and full payment (when and as the same may become due and payable, at the stated due date, by acceleration or otherwise) of each amount that the Guaranteed Party is obligated to pay under or pursuant to Section 2.2(b), Section 4.2(b) and Section 10.3 of the Facility Sublease (the “Obligations”), in each case, without regard to whether such Obligation is direct or indirect, absolute or contingent, now or hereafter existing or owing, voluntary or involuntary, created or arising by contract, operation of law or otherwise or incurred or payable before or after commencement of any proceedings by or against any Guaranteed Party under any bankruptcy law. In furtherance of the foregoing, each of the Guarantors acknowledges that the Guaranty Beneficiary may, in its sole discretion, bring and prosecute a separate action or actions against either Guarantor in respect of any or all of the Obligations, regardless of whether action is brought against the Guaranteed Party or whether the Guaranteed Party is joined in any such action or actions. The Obligations of each Guarantor under this Guaranty are joint and several. As used in this Guaranty, the “Guaranteed Party” shall mean the Sublessor.

 

 

19.  NATURE OF GUARANTY.  This Guaranty is in no way conditioned upon any attempt to collect from any Guaranteed Party or upon any other event or contingency, and shall be binding upon and enforceable against each Guarantor without regard to the validity, regularity or enforceability of any Facility Sublease Document, any Operative Document or of any term thereof. In the event that any payment to the Guaranty Beneficiary in respect of the Obligations is rescinded or must otherwise be returned for any reason whatsoever, each Guarantor shall remain liable hereunder with respect to the Obligations as if such payment had not been made. This Guaranty is an absolute, unlimited, continuing and unconditional guarantee of performance and payment (but not of collection) of the Obligations. The liability of each Guarantor under this Guaranty shall, to the fullest extent permitted under applicable law, be absolute, irrevocable and unconditional. This Guaranty is a primary and original obligation of each Guarantor and is not merely the creation of a surety relationship. The obligations of each Guarantor set forth herein constitute the full recourse obligations of each Guarantor enforceable against it to the full extent of all its assets and properties. Without limiting the foregoing, it is agreed and understood that (a) repeated and successive demands may be made and recoveries may be had hereunder as and when, from time to time, any Guaranteed Party shall be in default with respect to the Obligations

 

1

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under the terms of the Facility Sublease or the Operative Documents, and (b) notwithstanding the recovery hereunder for or in respect of any given default with respect to the Obligations of any Guaranteed Party under any Facility Sublease Document or any Operative Document, this Guaranty shall remain in full force and effect and shall apply to each and every subsequent default with respect to the Obligations.

 

 

20.  CHANGES IN OBLIGATIONS.  Each Guarantor agrees that the Guaranty Beneficiary may at any time and from time to time, without notice to or further consent of either Guarantor, extend the time of payment or performance of any Obligations, and may also make any agreement with the Guaranteed Party or with any other Person interested in the transactions contemplated by the Facility Sublease Documents for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between the Guaranteed Party and the Guaranty Beneficiary without in any way impairing or affecting the Guarantors' obligations under this Guaranty. The obligations of each Guarantor hereunder shall not be subject to any counterclaim, setoff, deduction or defense (other than payment or performance) based upon any claim or defense such Guarantor may have against the Guaranty Beneficiary or any claim or defense such Guarantor may have against the Guaranteed Party or any other Person and shall remain in full force and effect without regard to, and shall not be released, discharged, reduced or in any way affected by, any circumstance or condition whatsoever (whether or not either Guarantor shall have any knowledge or notice thereof) which might constitute a legal or equitable discharge or defense including, but not limited to:

 

 

(xvi)  any amendment, modification, supplement or termination (by operation of law or otherwise), express or implied, of any Facility Sublease Document or Operative Document, or any other instrument applicable to the Guaranteed Party or to such Guaranteed Party’s Obligations, or any part thereof;

 

 

(xvii)  any failure on the part of the Guaranteed Party to perform or comply with any term of any Facility Sublease Document or Operative Document;

 

 

(xviii)  any waiver, consent, change, extension, indulgence or other action or any action or inaction under or in respect of any Facility Sublease Document or Operative Document, including this Guaranty, whether or not the Guaranty Beneficiary, the Guaranteed Party or either Guarantor has notice or knowledge of any of the foregoing;

 

 

(xix)  any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or similar proceeding with respect to the Guaranty Beneficiary, either Guarantor or the Guaranteed Party, or their respective properties or their creditors, or any action taken by any trustee or receiver or by any court in any such proceeding;

 

 

(xx)  any furnishing or acceptance of additional security or any release of any security (and each Guarantor authorizes the Guaranty Beneficiary to furnish, accept or release said security);

 

 

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(xxi)  any termination (by operation of law or otherwise), cancellation (by operation of law or otherwise), frustration or unenforceability, in whole or in part, of any Facility Sublease Document or Operative Document or any term thereof;

 

 

(xxii)  any Lien on or affecting the respective assets and properties of either Guarantor or the Guaranteed Party;

 

 

(xxiii)  any claim as a result of any other dealings among the Guaranty Beneficiary, either Guarantor, or any of them;

 

 

(xxiv)  any change in the name of the Guaranty Beneficiary, the Guaranteed Party or any other Person;

 

 

(xxv)  any redelivery, repossession, sale, transfer or other disposition or surrender of the Facility, the Ground Interest or any part thereof;

 

 

(xxvi)  the transfer, assignment, mortgaging or purported transfer, assignment or mortgaging of all or any part of the interest of the Guaranteed Party in the Facility, the Ground Interest, any part thereof or any Facility Sublease Document or Operative Documents;

 

 

(xxvii)  any failure of title with respect to the interest of any Guaranteed Party, or its successors and assigns, in the Facility, the Ground Interest or any part thereof;

 

 

(xxviii)  any merger or consolidation of any Guaranteed Party or either Guarantor into or with any other Person or any direct or indirect sale, lease or transfer of any other assets of the Guaranteed Party or either Guarantor to any other Person;

 

 

(xxix)  any change in the ownership of any shares of capital stock of either Guarantor or the Guaranteed Party (including any such change which results in either Guarantor no longer owning capital stock of the Guaranteed Party); or

 

 

(xxx)  any termination of the Facility Lease or the Facility Sublease as a result of the rejection thereof or other action by the Guaranteed Party or any trustee, receiver or liquidating agent of the Guaranteed Party or any of its properties in any bankruptcy, insolvency, reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar proceeding (whether or not the Sublessee remains in possession of the Facility).

 

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21.  CERTAIN WAIVERS. To the fullest extent permitted by Law, each Guarantor hereby expressly and unconditionally waives: (a) notice of any of the matters referred to in Section 3 hereof; (b) all notices which may be required by statute, rule of law or otherwise (except as expressly required to be given to the Guarantors by any Facility Sublease Document) to preserve any rights against the Guarantors hereunder, including notice of the acceptance of this Guaranty by the Guaranty Beneficiary, or the creation, renewal, extension, modification or accrual of the Obligations or notice of any other matters relating thereto, any presentment, demand, notice of dishonor, protest or nonpayment of any damages or other amounts payable under any Facility Sublease Document or any Operative Document; (c) any requirement for the enforcement, assertion or exercise of any right, remedy, power or privilege under or in respect of any Facility Sublease Document or any Operative Document, including diligence in collection or protection of or realization upon or in respect of the Obligations or any part thereof; (d) any requirement of diligence; (e) the occurrence of every other condition precedent to which such Guarantor or any Guaranty Beneficiary may otherwise be entitled, except as provided in any Facility Sublease Document or any Operative Document; (f) any requirement to mitigate the damages resulting from a default or termination under any Facility Sublease Document or any Operative Document, except that this shall not relieve the Guaranty Beneficiary of any such obligation; and (g) the right to require the Guaranty Beneficiary to proceed against the Guaranteed Party or any other Person liable on the Obligations, to proceed against or exhaust security held from any Guaranteed Party or any other Person, or to pursue any other remedy in the Guaranty Beneficiary’s power whatsoever, and each Guarantor waives the right to have the property of the Guaranteed Party first applied to the discharge of the Obligations.

 

 

The Guaranty Beneficiary may, at its election, exercise any right or remedy it might have against the Guaranteed Party or any security held by the Guaranty Beneficiary, including the right to foreclose upon any such security by judicial or nonjudicial sale, without affecting or impairing in any way the liability of either Guarantor hereunder, except to the extent the Obligations have been paid or satisfied, and each Guarantor waives any defense arising out of the absence, impairment or loss of any right of reimbursement, contribution or any other right or remedy of such Guarantor against the Guaranteed Party or any such security, whether resulting from such election by the Guaranty Beneficiary, or otherwise.

 

 

Each Guarantor assumes the responsibility for being and keeping informed of the financial condition of the Guaranteed Party and of all other circumstances bearing upon the risk of nonpayment or nonperformance of the Obligations and agrees that the Guaranty Beneficiary shall not have any duty to advise any Guarantor of information regarding any condition or circumstance or any change in such condition or circumstance. Each Guarantor acknowledges that the Guaranty Beneficiary has not made any representation to the Guarantor concerning the financial condition of the Guaranteed Party.

 

 

22.  NO WAIVER; CUMULATIVE RIGHTS.  No failure on the part of the Guaranty Beneficiary to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Guaranty Beneficiary of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power hereunder.  Each and every right, remedy and power hereby granted to the Guaranty Beneficiary or allowed it by law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Guaranty Beneficiary at any time or from time to time.

 

 

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23.  REPRESENTATIONS AND WARRANTIES.  Each Guarantor hereby represents and warrants that:

 

 

(a)  it is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation;

 

 

(b)  it has the requisite capacity and corporate power and authority to execute and deliver this Guaranty and to fulfill and perform it’s obligations hereunder;

 

 

(c)  the execution, delivery and performance by the Guarantor of this Guaranty has been duly authorized by all necessary action on the part of the Guarantor, and when executed and delivered, this Guaranty will constitute the legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, arrangement, moratorium or other laws relating to or affecting the rights of creditors generally and (ii) general principles of equity;

 

 

(d)  the execution, delivery and performance of this Guaranty do not and will not (a) contravene any Applicable Law binding on the Guarantor or its property, (b) require any action, consent or approval by any trustee or holder of indebtedness of the Guarantor (other than those obtained prior to the date hereof) or (c) constitute a violation of or a default under any indenture, mortgage or other material contract to which the Guarantor is a party or by which any of its property is bound, which in any case, individually or in the aggregate, is reasonably likely to result in a material adverse affect on (i) the business or financial condition of the Guarantor and its subsidiaries taken as a whole, or (ii) the ability of the Guarantor to perform any of its material obligations hereunder (“Material Adverse Effect”);

 

 

(e)  all Governmental Approvals (if any) which are required as of the date hereof for the execution, delivery or performance by the Guarantor of its obligations under this Guaranty have been obtained or made, were validly issued, are not the subject of any pending request for rehearing or appeal, and are in full force and effect (other than any Governmental Approvals, the failure to obtain which is not likely to cause a Material Adverse Effect);

 

 

(f)  the Guarantor is not and “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940; and

 

 

(g)  the Guarantor has the financial capacity to pay and perform its obligations under this Guaranty, and shall continue to have such capacity for so long as this Guaranty shall remain in effect in accordance with Section 9 hereof.

 

 

24.  COVENANTS. Each Guarantor agrees not to consolidate or merge with or into any other Person or sell, convey, transfer or lease all or substantially all of its properties and assets to any other Person without the prior written consent of the Guaranty Beneficiary, unless (i) immediately prior to and immediately following such consolidation, merger, sale, conveyance, transfer or lease, no Sublease

 

5

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Default or Sublease Event of Default shall have occurred and be continuing, (ii) the Person resulting from such consolidation, surviving such merger or succeeding to such assets (if other than the other Guarantor) shall (A) be organized under the laws of the United States, any state thereof or the District of Columbia, and (B) expressly assume, pursuant to an agreement reasonably acceptable to the Guaranty Beneficiary, the obligations under this Guaranty, and (iii) if the Guarantor is the Person resulting from such consolidation or surviving such merger, such Guarantor shall affirm in writing its obligations under this Guaranty.

 

 

25.  NO ASSIGNMENT. Neither of the Guarantors nor the Guaranty Beneficiary may assign its rights, interests or obligations hereunder to any other Person without the prior written consent of the Guaranty Beneficiary (in the case of an assignment by either Guarantor) or each of the Guarantors (in the case of an assignment by the Guaranty Beneficiary).

 

 

26.  CONTINUING GUARANTY.  This Guaranty shall remain in full force and effect and shall be binding on each Guarantor, its successors and assigns until the Obligations are satisfied in full and shall inure to the benefit of, and be enforceable by, the Guaranty Beneficiary and its successors and permitted assigns.

 

 

27.  REMEDIES. In the event any Guarantor shall fail to pay immediately any amounts due under this Guaranty, or to comply with any other term of this Guaranty, the Guaranty Beneficiary shall be entitled to all rights and remedies to which it may be entitled hereunder or at law, in equity or by statute.

 

 

28.  PARTIES. This Guaranty shall inure to the benefit of, and shall be enforceable by, the Guaranty Beneficiary, and shall be binding upon each Guarantor and its successors and assigns.

 

 

29.  NOTICES. All notices and other communications hereunder shall be in writing in the English language and shall be deemed given (a) when received if delivered personally, (b) on the first Business Day following the date of dispatch if delivered by a nationally recognized next-day courier service, (c) on the fifth Business Day following the date of mailing if delivered by registered or certified mail (postage prepaid, return receipt requested) or (d) if sent by facsimile transmission, when transmitted and receipt of transmittal is confirmed. All notices hereunder shall be delivered as set forth below or to such other Person or address or facsimile number as a party shall specify by notice in writing to the other party delivered in accordance with the terms hereof:

 

 

if to the Guaranty Beneficiary, to it at:

TransCanada Facility USA, Inc.

c/o TransCanada Corporation

450-1^st Street, SW

Calgary, AB  T2P 5H1

Attention:  Garry Lamb

Facsimile:  [REDACTED]

 

6

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with a copy (which shall not constitute notice) to:

 

Mayer Brown LLP

71 Wacker Drive

Chicago, IL  60606

 

Attention:  Michael Murray

Facsimile:  [REDACTED]

 

if to the Guarantors, to them at:

KeySpan Corporation

One MetroTech Center

Brooklyn, New York 11201

Attention:  John G. Cochrane, Executive Vice-President

      Michael Walker, Deputy General Counsel

Facsimile:  [REDACTED]

with a copy to (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

4 Times Square

New York, New York 10036-6522

Attention:  Sheldon S. Adler, Esq.

 

                    Pankaj K. Sinha, Esq.

Facsimile:  [REDACTED]

 

 

30.  GOVERNING LAW.  This Guaranty shall be governed by and construed in accordance with the Laws of the State of New York (regardless of the laws that might otherwise govern under applicable New York principles of conflicts of law) as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies.

 

 

31.  CONSENT TO JURISDICTION; WAIVER OF TRIAL BY JURY. Each Guarantor (i) hereby irrevocably submits to the nonexclusive jurisdiction of the Supreme Court of the State of New York, New York County (without prejudice to the right of any party to remove to the United States District Court for the Southern District of New York) and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York for the purposes of any suit, action or other proceeding arising out of this Guaranty or the subject matter hereof brought by the Guaranty Beneficiary; (ii) hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court, or in such federal court; and (iii) to the extent permitted by Applicable Law, hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that such party is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Guaranty or the subject matter hereof may not be enforced in or by such court.

 

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TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH GUARANTOR HEREBY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTY OR THE SUBJECT MATTER THEREOF BROUGHT BY THE GUARANTY BENEFICIARY.

 

 

32.  SUBROGATION.  Each Guarantor shall be subrogated to any and all rights of the holders of the Obligations against the Guaranteed Party in respect of all amounts paid to the holders of the Obligations by any Guarantor under or pursuant to this Guaranty.

 

 

33.  SEVERABILITY, AMENDMENTS AND WAIVERS. If any provision of this Guaranty or any application hereof shall be invalid or unenforceable under Applicable Law, the validity, legality and enforceability of the remaining provisions hereof shall not be affected or impaired thereby.  No term, covenant, agreement or condition of this Guaranty may be terminated or amended, or compliance therewith waived, except by an instrument or instruments in writing executed by each Guarantor and consented to by the parties hereto.

 

 

34.  COUNTERPARTS.  This Guaranty may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same instrument.

 

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be executed and delivered as of the day and year first above written.

 

 

 

 

NATIONAL GRID, PLC

as Guarantor

 

By:      __________________________

Name: 

Title:  

 

 NATIONAL GRID USA

as Guarantor

By:      __________________________

Name: 

Title:

 

KEYSPAN-RAVENSWOOD, LLC

as Guaranty Beneficiary

By:     __________________________

Name: 

Title:

 

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EXHIBIT E

 

TRANSITION SERVICES AGREEMENT

 

This Transition Services Agreement is dated as of [•], 2008 (this "Agreement"), between KeySpan Corporation, a New York corporation (the "Seller"), and TransCanada Facility USA, Inc., a Delaware corporation (the "Buyer"), (collectively, the "Parties").

 

R E C I T A L S:

WHEREAS, the Seller and the Buyer have entered into the Membership Interest and Stock Purchase Agreement, dated as of March 31, 2008 (the "Purchase Agreement"), relating to the purchase and sale of all the outstanding Membership Interests (as defined therein) of KeySpan-Ravenswood, LLC ("Ravenswood") and the Shares (as defined therein) of KeySpan Ravenswood Services Corp. ("Services Corp." and together with Ravenswood, the "Companies"); and

 

WHEREAS, the Purchase Agreement provides that concurrently with the consummation of the transactions contemplated thereby, the Parties will enter into this Agreement whereby the Seller, or its Affiliates (as defined herein), will provide Services (as defined herein) to the Buyer during the Transition Period (as defined herein).

 

NOW, THEREFORE, the Parties, intending to be legally bound, hereby agree as follows:

 

SECTION 1

DEFINITIONS

 

For the purposes of this Agreement, the following terms will have the definitions hereinafter specified:

 

1.1           "Affiliate" shall mean with respect to any specified entity, any entity that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, the entity specified;

 

1.2           "Direct Cost" shall mean, with respect to each Service, the cost or expense incurred by the Seller attributable to the provision by it of such Service, but which does not include any profit component.

 

1.3           "Reimbursable Cost" shall mean, with respect to each Service, (i) the Direct Cost, (ii) the actual cost to the Seller directly related to the provision of such Service by a Provider, or (iii) any other method agreed to by the Seller and the Buyer for the reimbursement of costs and expenses incurred by the Seller to perform such Service as set forth in the applicable Section of Schedule A.

 

1.4           "Service" or "Services" shall mean those services listed and described on Schedule A attached hereto to be provided pursuant to the terms and in the manner described herein; and

 

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1.5  "Transition Period" shall mean (a) with respect to each Service other than the Shares Assets, the period beginning on the date of this Agreement and continuing for nine (9) months and (b) with respect to the Shared Assets, the period beginning on the date of this Agreement and continuing for six  (6) months; provided, that the Buyer shall use reasonable best efforts to terminate each Service as soon as reasonably practicable, it being understood that a breach of this Section 1.5 shall not affect Seller's obligations under this Agreement.

 

All capitalized terms not otherwise defined herein will have the meanings ascribed to them in the Purchase Agreement.

 

SECTION 2

SERVICES

 

2.1	Transition Services.

 

(a)  During the applicable Transition Period, the Seller agrees to provide, or cause its Affiliates to provide, to the Buyer all of the Services set forth in Schedule A to this Agreement.

 

(b)  The Seller may cause third-party service providers (the “Providers”) that have been approved by the Buyer, whether acting on behalf of the Seller or any of its Affiliates, to provide Services to the Buyer, in accordance with the terms and conditions of this Agreement.

 

(c)  In every case, all of the Services will be provided in accordance with the terms, limitations and conditions set forth herein and on Schedule A.

 

(d)  The Parties may, in writing, mutually agree to modify, reduce or increase the scope of any Services at any time.

 

(e)  Notwithstanding anything to the contrary in this Agreement, the Seller shall use commercially reasonable efforts to maintain staffing at levels capable of delivering Services in a timely manner.

 

2.2  Quality of Services.  The Seller, or its respective Affiliates, as applicable, shall provide the Services to the Buyer in accordance with at least the same standard of care and timeliness that the Services were provided to the Companies during the period between [January 1, 2007 and the Closing Date].

 

SECTION 3

PAYMENT

3.1

Payment.

 

(a)  In consideration for providing the Services, the Buyer will pay to the Seller, or its respective Affiliates, as applicable, for each calendar month: (i) the Reimbursable Cost for each Service on Schedule A attached hereto; and (ii) all reasonable and documented expenses incurred by the Seller, or its respective Affiliates, as applicable, in providing the

 

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Services (including, but not limited to, airfare, lodging, meals, mileage, parking and ground transportation).

 

(b)  Except as otherwise provided herein, statements will be rendered each month by the Seller, or its respective Affiliates, as applicable, to the Buyer for Services delivered during the preceding month and all reasonable and documented expenses incurred by the Seller, or its respective Affiliates, as applicable, in providing such Services (the “Monthly Statement”).  Such Monthly Statements will be substantiated by supporting information and will itemize in reasonable detail the basis for such Monthly Statement.  Each Monthly Statement will be payable to the Seller, or its respective Affiliates, as the case may be, in cash 10 days after the invoice date of such Monthly Statement.  Any overdue payment will bear interest at 8% per annum until paid.

 

(c)  No amounts due hereunder from the Buyer to the Seller, or its respective Affiliates, as applicable, may or will be offset or held in escrow by the Buyer against amounts due or allegedly due from the Seller, or its respective Affiliates, to the Buyer pursuant to the Purchase Agreement or any other documents delivered in connection with the transactions contemplated by the Purchase Agreement.

 

(d)  The Buyer will pay and be responsible for all sales, service, value-added, use, excise, consumption, and other similar taxes (but excluding any withholding taxes or other net income or franchise taxes  that are assessed or imposed against the Seller, or its respective Affiliates, as applicable) and duties that are assessed or imposed against the Seller, or its respective Affiliates, as applicable, on the provision of Services as a whole, or of any particular Service, pursuant to the terms of this Agreement.  Any and all payments by or on account of any obligation of the Buyer hereunder will be made free and clear of and without deduction for any and all present or future taxes, including deductions, charges or withholdings imposed by any Governmental Entity.

 

SECTION 4

TERM

4.1  General.  Each Service will commence on the date of this Agreement, and will continue for the applicable Transition Period; provided, however, that the Buyer may terminate this Agreement, or any Service or Services provided hereunder, upon 30 days prior written notice.

 

4.2  Amounts Due.  In the event of a termination of this Agreement, all outstanding amounts due from the Buyer under Section 3.1, up through and including the date of termination, will become due and payable to the Seller, or its respective Affiliates, as applicable.  The fee for any terminated Service will be prorated for the number of days of Service received in the calendar month (based on a thirty (30)-day month) in which the Service is terminated.

 

4.3  Effect of Expiration.  In the event of expiration of this Agreement, the Seller shall, and shall cause its applicable Affiliates to, transfer to the Buyer all materials and supplies procured in connection with the provision of the Services, the cost of which has been included in Reimbursable Costs already paid by the Buyer for the Services.

 

4.4  Survival.  The provisions in Sections 3.1, 4.2, 4.3, 4.4, 6.2 through 6.13 and Article V hereof shall survive the expiration or other termination of this Agreement.

 

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SECTION 5

LIABILITIES; INDEMNIFICATION

5.1  Consequential and Other Damages.  Neither the Seller, nor any of its respective Affiliates, will be liable, whether in contract, in tort or otherwise, for any punitive, special, indirect, incidental, liquidated or consequential damages whatsoever, which in any way arise out of, relate to, or are a consequence of, its performance or nonperformance hereunder, or the provision of or failure to provide any Service hereunder.

 

5.2  LIMITATION OF LIABILITY.  EACH OF THE SELLER, AND ITS RESPECTIVE AFFILIATES, AS APPLICABLE, WILL USE REASONABLE CARE AND SKILL IN CARRYING OUT THE SERVICES.  NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NEITHER THE SELLER, NOR ANY OF ITS RESPECTIVE AFFILIATES, WILL BE LIABLE WITH RESPECT TO THIS AGREEMENT OR ANYTHING DONE IN CONNECTION HEREWITH, INCLUDING BUT NOT LIMITED TO THE PERFORMANCE OR BREACH HEREOF, OR FROM THE SALE, DELIVERY, PROVISION OR USE OF ANY SERVICE OR DOCUMENTATION OR DATA PROVIDED UNDER OR COVERED BY THIS AGREEMENT EXCEPT IN THE EVENT OF THE SELLER'S, OR ANY OF ITS RESPECTIVE AFFILIATE'S, AS THE CASE MAY BE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IN CONNECTION WITH THIS AGREEMENT, IN WHICH CASE THE AGGREGATE LIABILITY OF THE SELLER AND ITS RESPECTIVE AFFILIATES, AS THE CASE MAY BE, SHALL BE LIMITED TO THE SUM OF ALL FEES RECEIVED BY SUCH PARTY FOR SERVICES UNDER THE AGREEMENT.

 

5.3  Indemnification. The Buyer will indemnify and hold harmless each of the Seller or its respective Affiliates for any Loss that is incurred by the Seller, or its respective Affiliates, as the case may be, under this Agreement, except solely to the extent such Loss is the direct result of either the Seller's or any of its respective Affiliate's, as the case may be, gross negligence or willful misconduct with respect to its obligations under this Agreement.

 

SECTION 6

GENERAL PROVISIONS

 

6.1           Access

 

(a)           During the Transition Period, the Seller, or its respective Affiliates, as the case may be, will have access, at reasonable times and during regular business hours, to any information or records kept by the Buyer or the Company reasonably requested by the Seller and in order to provide the Services under this Agreement.

 

 

(b)           For a period of 12 months following the end of the Transition Period, the Buyer, or its respective Affiliates, as the case may be, may inspect, review and copy, at reasonable times and during regular business hours, the files, books, records, accounts, servicing practices, policies and procedures of the Seller or its Affiliates, as applicable, primarily related to the Services.

 

 

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(c)  The Seller, or its respective Affiliates, as the case may be, will have the right of reasonable ingress to and egress from the Company's and its Subsidiaries' premises, during regular business hours and upon reasonable prior notice, for purposes specifically connected with the delivery of Services hereunder.

 

 

6.2           Confidentiality.  The Seller shall, and shall cause its applicable Affiliates to, treat all information provided to Seller or any of its Affiliates pursuant to Section 6.1(a) as though it was Buyer Protected Information.  The Buyer shall, and shall cause its applicable Affiliates to, treat all information provided to the Buyer or any of its Affiliates pursuant to Section 6.1(b) as though it was Seller Protected Information.

 

 

6.3           Notices.  All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) when received if delivered personally, (b) when sent if sent by facsimile (provided that the sender receives confirmation of successful transmission), and (c) when received, if sent by overnight courier service or if mailed by certified or registered mail, return receipt requested, with postage prepaid to the parties at the following addresses (or at such other address for a Party as shall be specified by like notice):

 

If to the Buyer to:

 

TransCanada Facility USA, Inc.

450 – 1^st Street, SW

Calgary, AB   T2P 5H1

Attention:  Sean McMaster

                    Executive Vice-President,

                    Law and General Counsel

Facsimile: [REDACTED]

 

with copies to:

 

Mayer Brown LLP

71 South Wacker Drive

Chicago, IL 60606

Attention: Marc F. Sperber

                   D. Michael Murray

Facsimile: [REDACTED]

If to the Seller, or any of its respective Affiliates, to:

 

KeySpan Corporation

One MetroTech Center

Brooklyn, New York 11201

Attention:  John G. Cochrane, Executive Vice-President

    Michael Walker, Esq.

Facsimile: [REDACTED]

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with copies to:

 

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

Attention: Sheldon S. Adler, Esq.

    Pankaj K. Sinha, Esq.

Facsimile: [REDACTED]

 

6.4           Relationship between Parties.  Nothing contained in this Agreement shall be construed as creating a partnership, joint venture, agency, trust or other association of any kind, or treating the Seller and the Buyer as co-employers, it being understood that each Party is individually responsible only for its obligations as set forth in this Agreement.  The Seller, or its respective Affiliates, as the case may be, shall provide the Services hereunder in the capacity of an independent contractor and not as an employee or agent of the Buyer or its Affiliates.

 

 

6.5           Assignment; Binding Effect.  This Agreement and the rights hereunder are not assignable unless such assignment is consented to in writing by the Buyer and the Seller and, subject to the preceding clause, this Agreement and all the provisions hereof shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns; provided, however, that the Buyer may assign its rights and delegate its duties under this Agreement to an Affiliate of the Buyer without the consent of (but with prior written notice to) the Seller if (a) the assignee shall assume in writing all of the Buyer's obligations hereunder and (b) the Buyer shall not be released from any of its obligations hereunder by reason of such assignment.  Notwithstanding the foregoing, the Parties acknowledge that the Seller may delegate the performance of any Services to be provided under this Agreement to one or more of its Affiliates that normally performs such Services and that the Buyer may designate one or more of its Affiliates that is engaged in the conduct of the Business to receive any or all of the Services; provided, however, that the Seller and the Buyer will each remain fully responsible for compliance with the terms of this Agreement the same as if such delegation or designation were not effected.

 

 

6.6	Governing Law; Jurisdiction.

 

 

(a)           This Agreement shall be governed by and interpreted and enforced in accordance with the Laws of the State of New York without regard to the conflicts of laws rules thereof.

 

 

(b)  All judicial Actions brought against the parties arising out of or relating to this Agreement, or any obligations hereunder, shall be brought in any state or federal court of competent jurisdiction in the State of New York.  By executing and delivering this Agreement, the Parties irrevocably:  (i) accept generally and unconditionally the exclusive jurisdiction and venue of these courts; (ii) waive any objections which such Party may now or hereafter have to the laying of venue of any of the aforesaid Actions arising out of or in connection with this

 

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Agreement brought in the courts referred to in clause (i) above and hereby further irrevocably waive and agree not to plead or claim in any such court that such Action brought in any such court has been brought in an inconvenient forum; (iii) agree that service of all process in any such Action in any such court may be made by registered or certified mail, return receipt requested, to such Party at their respective addresses provided in accordance with Section 6.3; and (iv) agree that service as provided in clause (iii) above is sufficient to confer personal jurisdiction over such Party in any such Action in any such court, and otherwise constitutes effective and binding service in every respect.

 

 

             6.7    Counterparts; Facsimile Signatures.  This Agreement may be executed in any number of counterparts, each of which when executed, shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument binding upon all of the parties notwithstanding the fact that all of the parties are not signatory to the original or the same counterpart.  For purposes of this Agreement, facsimile signatures shall be deemed originals.

 

 

6.8    Headings.  The headings contained in this Agreement are inserted for convenience only and shall not be considered in interpreting or construing any of the provisions contained in this Agreement.

 

 

6.9    Entire Agreement.  This Agreement and Schedule A hereto constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings between the Parties with respect to such subject matter.

 

 

6.10   Interpretation.

 

(a)  When a reference is made in this Agreement to a Section or Schedule, such reference shall be to a Section or Schedule of or to this Agreement unless otherwise indicated.

(b)  Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation."|

 

 

(c)           Unless the context requires otherwise, the terms "hereof," "herein," "hereby," "hereto" and derivative or similar words in this Agreement refer to this entire Agreement.

 

 

(d)           Unless the context requires otherwise, words in this Agreement using the singular or plural number also include the plural or singular number, respectively, and the use of any gender herein shall be deemed to include the other genders.

 

 

(e)           References in this Agreement to "dollars" or "$" are to U.S. dollars.

 

 

(f)           This Agreement was prepared jointly by the Parties and no rule that it be construed against the drafter will have any application in its construction or interpretation.

 

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6.11  Waiver and Amendment.  This Agreement may be amended, modified or supplemented only by a written mutual agreement executed and delivered by the Seller and the Buyer.  Except as otherwise provided in this Agreement, any failure of any Party to comply with any obligation, covenant, agreement or condition herein may be waived by the Party entitled to the benefits thereof only by a written instrument signed by the Party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligations, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

 

 

6.12  Third Party Beneficiaries.  This Agreement is for the sole benefit of the Parties and their successors and permitted assigns and nothing herein express or implied shall give or be construed to give to any person, other than the Parties and such successors and permitted assigns, any legal or equitable rights hereunder and except that each of the Seller, or its respective Affiliates shall have the right to enforce the obligations of the Buyer solely with respect to Section 5.3.

 

 

6.13  Severability.  If any provision of this Agreement or the application of any such provision to any Person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

 

 

6.14  Reasonable Cooperation.  During the Transition Period, each of the Parties shall reasonably cooperate with each other to perform its obligations under this Agreement.

 

[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above.

KEYSPAN CORPORATION

 

 

By:___________________________________

Name:

Title:

 

 

TRANSCANADA FACILITY USA, INC.

 

 

By:___________________________________

Name:

Title:

By:___________________________________

Name:

Title:

 

 

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Schedule A

Service	Obligations of the Seller	Fee
1. Shared Assets	For a period of six (6) months after the date of this Agreement, the Seller shall, and shall cause its Affiliates to, make all Shared Assets available for the Companies’ use on substantially the same basis as such Shared Assets were available for use in the conduct of the Business as conducted prior to the date of the Purchase Agreement.  The Buyer shall cause the Companies to limit their use of the Shared Assets during such six (6)-month period after the date of this Agreement to substantially the same frequency and extent that such Shared Assets were used in the conduct of the Business as conducted during the one (1)-year period prior to the date of Purchase Agreement.	Direct Cost
[Additional Sections of Schedule A to be mutually agreed upon by the Seller and the Buyer prior to the Closing Date.]

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SELLER DISCLOSURE SCHEDULES

These disclosure schedules are delivered to you pursuant to the Membership Interest and Stock Purchase Agreement, dated March 31, 2008 (the "Agreement"), by and among KeySpan Corporation, a New York corporation (the "Seller"), KeySpan Energy Corporation (solely for purposes of Sections 2.1, 4.5, 5.1, 5.2, 5.3, 5.6, 7.1, 7.8, 7.13, 7.17 and Article XI thereof), a New York corporation, and TransCanada Facility USA, Inc., a Delaware corporation (the "Buyer"), and constitutes the "Seller Disclosure Schedules" as defined in the Agreement.

Nothing in these Seller Disclosure Schedules is intended to broaden the scope of any representation or warranty contained in the Agreement or to independently constitute any representation, warranty or covenant.  In particular, although these Seller Disclosure Schedules may contain supplementary information not specifically required under the Agreement, such supplementary information (i) is provided for general information purposes for the parties to the Agreement, (ii) is not separately represented or warranted herein or in the Agreement and (iii) does not necessarily include other matters of a similar informational nature.

Inclusion of any item in these Seller Disclosure Schedules (i) does not represent a determination that such item is material (or constitutes a "Material Adverse Effect") or establish a standard of materiality, (ii) does not represent a determination that such item is required to be disclosed pursuant to the Agreement, (iii) does not represent a determination that such item did not arise in the ordinary course of business, and (iv) shall not constitute, or be deemed to be, an admission to any third party concerning such item or an admission of default or breach under any agreement or document.

Disclosures included herein shall be considered to be made for purposes of other sections of these Seller Disclosure Schedules to the extent that the relevance of any such disclosure to any other sections of the Seller Disclosure Schedules is reasonably apparent from the text of such disclosure.  The inclusion of any cross-references to any section of these Seller Disclosure Schedules, or the failure to include such cross-references, shall not be deemed to mean that the relevance of any disclosure is not reasonably apparent for the purposes of the immediately preceding sentence.

The information contained herein is provided solely for purposes of making disclosures to the Buyer under the Agreement.  In disclosing this information, the disclosing party does not waive any attorney-client privilege associated with such information or any protection afforded by the work-product doctrine with respect to any of the matters disclosed or discussed herein.  Any information contained herein shall be subject to the terms of the Confidentiality Agreement until the Closing.

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Appendices and exhibits attached hereto and referenced herein form an integral part of the sections of these Seller Disclosure Schedules into which they are incorporated by reference or attached for all purposes as if fully set forth in such section.

Unless otherwise noted herein, any capitalized term used in these Seller Disclosure Schedules shall have the same meaning assigned to such term in the Agreement.  Any introductory language or headings contained in these Seller Disclosure Schedules are for convenience of reference only and shall not affect the interpretation of these Seller Disclosure Schedules or the Agreement.

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Section 1.1(a)

Excluded Liabilities

[REDACTED: Description of liabilities which the seller is retaining.]

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Section 1.1(b)

Knowledge

1.  [REDACTED: Listing of employees identified for the definition of “Knowledge of the Seller” or “to the Seller’s Knowledge”.]

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Section 1.1(c)

Permitted Encumbrances

1.

Pursuant to the Voluntary Cleanup Agreement, Ravenswood has submitted to the NYSDEC a draft Declaration of Covenants and Restrictions providing, inter alia, that the owner shall occupy and use the Unit 40 Land in accordance with the NYSDEC’s approved "Soils Management Plan".  NYSDEC approval is pending.

2.	With the exception of Items 4, 21 and 22 of Section 5.7(a), Section 5.7(a) of the Seller Disclosure Schedules are incorporated herein by reference.

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Section 1.1(d)

Scheduled Capital Expenditures

2008 Capital Expenditures

[REDACTED: Capital expenditure amounts.]

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Section 1.1(e)

Unit 10/20/30 Land

 

PARCEL I (RAVENSWOOD GENERATING STATION PARCEL A)

 

All that certain plot, piece or parcel of land including land now or formerly under water, situate, lying and being at Ravenswood in the Borough and County of Queens, City and State of New York, bounded and described as follows:

 

 

BEGINNING at a point on the westerly side of Vernon Boulevard at the extreme southeasterly end of the arc of a curve connecting the southerly side of 36th Avenue with the westerly side of Vernon Boulevard;

 

 

RUNNING THENCE southerly along the westerly side of Vernon Boulevard, 981.30 feet to an angle point;

 

 

THENCE southerly still along the westerly side of Vernon Boulevard, 675.44 feet;

 

 

THENCE westerly along a line forming an interior angle of 96 degrees 49 minutes 42 seconds with the westerly side of Vernon Boulevard, 52.52 feet;

 

 

THENCE northerly along a line forming an interior angle of 90 degrees 56 minutes 05 seconds with the last mentioned course, 29.12 feet;

 

 

THENCE westerly along a line forming an interior angle of 270 degrees 54 minutes 55 seconds with the last mentioned course, 465.83 feet;

 

 

THENCE southerly along a line forming an interior angle of 270 degrees 04 minutes 03 seconds with the last mentioned course, 344.55 feet;

 

 

THENCE westerly along a line forming an interior angle of 86 degrees 35 minutes 25 seconds with the last mentioned course 149.56 feet to the United States Pierhead and Bulkhead approved by the Secretary of War on June 30, 1947;

 

 

THENCE northerly along said pierhead and bulkhead line, 290.42 feet to an angle point;

 

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THENCE northerly still along said pierhead and bulkhead line, 1171.01 feet to an angle point;

 

 

THENCE northerly still along said pierhead and bulkhead line, 466.21 feet to the southerly side of 36^th Avenue;

 

 

THENCE easterly along the southerly side of 36^th Avenue, 12.07 feet to the angle point;

 

 

THENCE easterly still along the southerly side of 36^th Avenue 38.45 feet to a point of curvature;

 

 

THENCE easterly still along the southerly side of 36^th Avenue on a curve bearing to the left having a radius of 2061.00 feet, and a central angle of 08 degrees 56 minutes 17 seconds a distance of 321.51 feet to a point of tangency;

 

 

THENCE easterly still along the southerly side of 36^th Avenue, 278.69 feet to the extreme northwesterly end of the arc of the curve, first above mentioned, connecting the southerly side of 36th Avenue to the westerly side of Vernon Boulevard;

 

 

THENCE along the aforementioned arc of the curve bearing to the right having a radius of 15.00 feet and a central angle of 90 degrees 00 minutes 00 seconds, a distance of 23.56 feet to the westerly side of Vernon Boulevard at the point or place of BEGINNING.

 

 

EXCEPTING the following described premises:

 

 

All that certain plot, piece or parcel of land, situate, lying and being at Ravenswood Cogeneration Facility in Long Island City, the Borough and County of Queens, City and State of New York, bounded and described as follows:

 

 

BEGINNING at the point of a newly constructed building within Parcel "A" having coordinates of N277358.47 and E607681.66 in the New York State Plane Coordinate System of 1927, which beginning point is distant the following three courses from an angle point on the westerly side of Vernon Boulevard (75 feet wide), which angle point is located at the intersection of 38^th Avenue (75 feet wide), as said Boulevard and Avenue are shown on Map #4297, titled "the Elimination of 37^th Avenue and 38^th Avenue between Vernon Boulevard and the East River, along with the layout of Sewer Easements", dated November 28, 1962 and adopted by the Board of Estimate of the City of New York on July 25^th, 1963 (Map #4297) which map was filed at Topographical Bureau, Borough of Queens, City of New York on August 9, 1963, thence;

 

 

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A.	North 25 degrees 02 minutes 04 seconds East a distance of 476.77 feet in the right of way of Vernon Boulevard to a point, thence;

 

 

B.	North 64 degrees 57 minutes 56 seconds West a distance of 214.15 feet at a right angle from the previous course to a point being the original point of beginning of the Con Edison Lease area, thence;

 

 

C.	South 23 degrees 48 minutes 54 seconds West a distance of 9.07 feet to the point of beginning of the Facility Site, running thence;

 

 

1.

South 59 degrees 11 minutes 27 seconds East a distance of 43.51 feet along the perimeter of the said Facility Site area to a point, thence;

 

 

2.

North 32 degrees 20 minutes 17 seconds East a distance of 4.31 feet along the same to a point, thence;

 

 

3.

South 59 degrees 20 minutes 48 seconds East a distance of 22.03 feet along the same to a point, thence;

 

 

4.

North 30 degrees 48 minutes 33 seconds East a distance of 0.55 feet along the same to a point, thence;

 

 

5.

South 59 degrees 11 minutes 27 seconds East a distance of 30.24 feet along the same to a point, thence;

 

 

6.

South 30 degrees 48 minutes 33 seconds West a distance of 30.23 feet along the same to a point, thence;

 

 

7.

South 59 degrees 11 minutes 27 seconds East a distance of 30.52 feet along the same to a point, thence;

 

 

8.

South 30 degrees 48 minutes 33 seconds West a distance of 13.79 feet along the same to a point, thence;

 

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9.

South 59 degrees 11 minutes 27 seconds East a distance of 9.74 feet along the same to a point, thence;

 

 

10.	South 30 degrees 48 minutes 33 seconds West a distance of 107.85 feet along the same to a point, thence;

 

 

11.	North 59 degrees 11 minutes 27 seconds West a distance of 20.80 feet along the same to a point, thence;

 

 

12.	South 30 degrees 48 minutes 33 seconds West a distance of 85.62 feet along the same to a point, thence;

 

 

13.	South 59 degrees 11 minutes 27 seconds East a distance of 28.29 feet along the same to a point, thence;

 

 

14.	South 30 degrees 48 minutes 33 seconds West a distance of 82.39 feet along the same to a point, thence;

 

 

15.	North 59 degrees 11 minutes 27 seconds West a distance of 57.01 feet along the same to a point, thence;

 

 

16.	North 30 degrees 48 minutes 33 seconds East a distance of 13.49 feet along the same to a point, thence;

 

 

17.	North 59 degrees 11 minutes 27 seconds West a distance of 51.01 feet along the same to a point, thence;

 

 

18.	North 30 degrees 48 minutes 33 seconds East a distance of 16.72 feet along the same to a point, thence;

 

 

19.	North 59 degrees 11 minutes 27 seconds West a distance of 41.34 feet along the same to a point, thence;

 

 

20.	North 30 degrees 48 minutes 33 seconds East a distance of 18.65 feet along the same to a point, thence;

 

 

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21.	North 59 degrees 11 minutes 27 seconds West a distance of 123.57 feet along the same to a point, thence;

 

 

22.	North 30 degrees 48 minutes 33 seconds East a distance of 163.89 feet to a point, thence;

 

 

23.	South 64 degrees 14 minutes 53 seconds East a distance of 6.85 feet to a point, thence;

 

 

24.	South 60 degrees 36 minutes 23 seconds East a distance of 10.27 feet along Facility Site area to a point, thence;

 

 

25.	South 59 degrees 11 minutes 27 seconds East a distance of 117.09 feet along said Facility Site area to a point, thence;

 

 

26.	North 30 degrees 48 minutes 33 seconds East a distance of 76.07 feet along the same to a point, thence;

 

 

27.	North 59 degrees 11 minutes 27 seconds West a distance of 4.63 feet along the same to a point, thence;

 

 

28.	North 30 degrees 48 minutes 33 seconds East a distance of 25.31 feet along the same to the point or place of beginning.

 

 

PARCEL II (RAINEY OIL TANK FARM PARCEL D):

 

All that certain plot, piece or parcel of land including land now or formerly under water, situate, lying and being at Ravenswood in the Borough and County of Queens, City and State of New York, bounded and described as follows:

 

 

BEGINNING at a point on the northerly side of 36^th Avenue distant 11.10 feet westerly from the extreme southwesterly end of the arc of a curve connecting the northerly side of 36^th Avenue with the westerly side of Vernon Boulevard;

 

 

RUNNING THENCE westerly along the northerly side of 36^th Avenue, 267.59 feet to a point of curvature;

 

---

 

THENCE westerly still along the northerly side of 36^th Avenue on a curve bearing to the right having a radius of 1934.00 feet, and a central angle of 00 degrees 30 minutes 51 seconds a distance of 17.36 feet to a point of tangency;

 

 

THENCE northwesterly along a line forming an interior angle of 119 degrees 05 minutes 28 seconds with the tangent to the preceding course (which tangent forms the aforesaid point of tangency) 18.81 feet;

 

 

THENCE northerly along a line forming an interior angle of 151 degrees 53 minutes 55 seconds with the last mentioned course, 71.37 feet;

 

 

THENCE easterly along a line forming an interior angle of 89 degrees 33 minutes 57 seconds with the last mentioned course, 160.85 feet;

 

 

THENCE southerly along a line forming an interior angle of 89 degrees 47 minutes 41 seconds with the last mentioned course, 62.83 feet;

 

 

THENCE easterly along a line forming an interior angle of 269 degrees 54 minutes 41 seconds with the last mentioned course, 133.82 feet;

 

THENCE southerly along a line forming an interior angle of 90 degrees 22 minutes 41 seconds with the last mentioned course, 24.65 feet to the northerly side of 36^th Avenue at the point or place of BEGINNING.

---

Section 1.1(f)

Unit 40 Land

 

All that certain piece or parcel of land, situate, lying, and being at Ravenswood Cogeneration Facility in Long Island City, the Borough and County of Queens, City and State of New York, bounded and described as follows:

 

 

Beginning at the point of a newly constructed building within Parcel "A" having coordinates of N277358.47 and E607681.66 in the New York State Plane Coordinate System of 1927, which beginning point is distant the following three courses from an angle point on the westerly side of Vernon Boulevard (75 feet wide), which angle point is located at the intersection of 38^th Avenue (75 feet wide), as said Boulevard and Avenue are shown on map #4297, titled "the Elimination of 37^th Avenue and 38^th Avenue between Vernon Boulevard and the East River, along with the layout of Sewer Easements", dated November 28, 1962 and adopted by the Board of Estimate of the City of New York on July 25^th, 1963 (Map #4297) which map was filed at Topographical Bureau, Borough of Queens, City of New York on August 9, 1963 thence;

 

 

A.	North 25°02'04" East a distance of 476.77 feet in the right of way of Vernon Boulevard to a point, thence;

 

 

B.	North 64°57'56" West a distance of 214.15 feet at right angle from the previous course to a point being the original point of beginning of the Con Edison Lease area, thence;

 

 

C.	South 23°48'54" West a distance of 9.07 feet to the point of beginning of the Facility Site, running thence;

 

 

1.	South 59°11'27" East a distance of 43.51 feet along the perimeter of the said Facility Site area to a point, thence;

 

 

2.	North 32°20'17" East a distance of 4.31 feet along the same to a point, thence;

 

 

3.	South 59°20'48" East a distance of 22.03 feet along the same to a point, thence;

 

 

4.	North 30°48'33" East a distance of 0.55 feet along the same to a point, thence;

 

 

5.	South 59°11'27" East a distance of 30.24 feet along the same to a point, thence;

 

 

---

6.	South 30°48'33" West a distance of 30.23 feet along the same to a point, thence;

 

 

7.	South 59°11'27" East a distance of 30.52 feet along the same to a point, thence;

 

 

8.	South 30°48'33" West a distance of 13.79 feet along the same to a point, thence;

 

 

9.	South 59°11'27" East a distance of 9.74 feet along the same to a point, thence;

 

 

10.	South 30°48'33" West a distance of 107.85 feet along the same to a point, thence;

 

 

11.	North 59°11'27" West a distance of 20.80 feet along the same to a point, thence;

 

 

12.	South 30°48'33" West a distance of 85.62 feet along the same to a point, thence;

 

 

13.	South 59°11'27" East a distance of 28.29 feet along the same to a point, thence;

 

 

14.	South 30°48'33" West a distance of 82.39 feet along the same to a point, thence;

 

 

15.	North 59°11'27" West a distance of 57.01 feet along the same to a point, thence;

 

 

16.	North 30°48'33" East a distance of 13.49 feet along the same to a point, thence;

 

 

17.	North 59°11'27" West a distance of 51.01 feet along the same to a point, thence;

 

 

18.	North 30°48'33" East a distance of 16.72 feet along the same to a point, thence;

 

 

19.	North 59°11'27" West a distance of 41.34 feet along the same to a point, thence;

 

 

20.	North 30°48'33" East a distance of 18.65 feet along the same to a point, thence;

 

 

21.	North 59°11'27" West a distance of 123.57 feet along the same to a point, thence;

 

 

22.	North 30°48'33" East a distance of 163.89 feet to a point, thence;

 

---

 

23.	South 64°14'53" East a distance of 6.58 feet to a point, thence;

 

 

24.	South 60°36'23" East a distance of 10.27 feet along facility site area to a point, thence;

 

 

25.	South 59°11'27" East a distance of 117.09 feet along said facility site area to a point, thence;

 

 

26.	North 30°48'33" East a distance of 76.07 feet along the same to a point, thence;

 

 

27.	North 59°11'27" West a distance of 4.63 feet along the same to a point, thence;

 

 

28.	North 30°48'33" East a distance of 25.31 feet along the same to the Point and Place of Beginning.

 

 

Containing: 1.380 Acres (60,095 Square Feet), more or less.

 

---

Section 1.1(g)

Target Working Capital

[REDACTED: Ravenswood and Services January 31, 2008 working capital.]

---

Section 5.3(a)

Consents and Approvals

[REDACTED: Description of certain agreements under which consents are required for approvals.]

4.	Prior to the Closing, the Seller will assign the Operation and Maintenance Agreement between Global Common Greenport, LLC and Services, dated June 27, 2003, to an Affiliate of the Seller other than the Companies.

---

Section 5.3(b)

Consents and Approvals

1.	FCC consent is required for the transfer of one (1) radio license to the Buyer.

2.	Approval from the New York State Board on Electric Generation Siting and the Environment for the transfer of the Certificate of Environmental Compatibility and Public Need for Unit 40 (Case 99-F-1625) pursuant to 16 NYCRR § 1000.16.

3.	As of the date hereof, KeySpan Generation LLC is named on the Ravenswood SPDES permit. This permit will be transferred into the name of one of the Companies prior to the Closing.

 

 

---

Section 5.5(a)

Absence of Certain Changes or Events

None.

---

Section 5.7(a)

Real Property

	Title of Document	Parties	Date
	Ravenswood Continuing Site Agreement	Con Edison and MarketSpan Corporation d/b/a Energy (assigned to KeySpan-Ravenswood, Inc. n/k/a Ravenswood)	January 28, 1999
	Ravenswood-Rainey Declaration of Subdivision Easements	Con Edison as sole declarant	May 26, 1999
	Ravenswood –Vernon Declaration of Subdivision Easements	Con Edison as sole declarant	May 26, 1999
	Indenture of Trust, Security Agreement and Assignment	LIC Funding, Limited Partnership ("LIC") and The Bank of New York	June 9, 1999
	Amended and Restated Declaration of Easement Agreement	Con Edison, Ravenswood and Steam House Leasing, LLC (an affiliate of Con Edison)	June 18, 1999
	Ravenswood-Rainey Zoning Lot Development Agreement	Con Edison and Ravenswood	June 18, 1999
	Ravenswood-Vernon Zoning Lot Development Agreement	Con Edison and Ravenswood	June 18, 1999
	Lease Agreement between Con Edison and Steam House Leasing, LLC (affiliate of Con Edison) (commonly known as the Steam House Lease)	Con Edison (as Landlord) and Steam House Leasing, LLC (as Tenant). Services is now the Landlord under the Lease.	June 18, 1999
	Agreement Regarding the Operation and Maintenance of the "A" House at the Ravenswood Facility (commonly known as the O&M Agreement)	Con Edison and Services	June 18, 1999
	Ground Lease and Easement Agreement	Ravenswood as landlord and LIC as tenant	June 18, 1999
	Deed from Con Edison to Ravenswood	Con Edison, as grantor	June 18, 1999
	Deed from Con Edison to LIC	Con Edison, as grantor	June 18, 1999
	Deed from Ravenswood to Services	Ravenswood, as grantor	June 18, 1999
	Supplemental Ravenswood Easement Agreement	Con Edison, Ravenswood and Steam House Leasing, LLC (affiliate of Con Edison)	February 4, 2003
	Indenture of Trust, Assignment of Leases and Rents and Security Agreement	SE Ravenswood Trust and Wells Fargo Bank Northwest, N.A. as Indenture Trustee	May 25, 2004
	Deed and Bill of Sale	Ravenswood to SE Ravenswood Trust	May 25, 2004

---

	Site Lease and Easement Agreement	Ravenswood, as ground lessor, SE Ravenswood Trust, as ground lessee	May 25, 2004
	Site Sublease	SE Ravenswood Trust, as Sublessor, and Ravenswood, as Sublessee	May 25, 2004
	Memorandum of Site Lease and Easement Agreement	Ravenswood	May 25, 2004
	Memorandum of Site Sublease	Ravenswood	May 25, 2004
	Subordination and Non-Disturbance Agreement	The Bank of New York, as Trustee, Ravenswood, LIC and Wells Fargo Bank Northwest, N.A., as trustee	May 25, 2004
	Leasehold Mortgage, Assignment of Rents and Fixture Filing	LIC and the Bank of New York	Undated
	The matters set forth in and described on Schedule B, exception numbers 3, 5-12 and 14-16, in that certain Certificate and Report of Title	Issued by Commonwealth Land Title Insurance Company, Title Number NY080086	January 15, 2008

---

Section 5.7(d)

Real Property

(see attached)

---

Section 5.8

Environmental Matters

1.	All information, data and conclusions set forth in the documents set forth in the Electronic Data Room, including but not limited to:

[REDACTED: Description of certain environmental assessments and reports.]

 2.           The following renewal applications are pending with the NYSDEC: MPFL (renewal filed12/5/07); Unit 40 Title V (renewal filed 4/21/06); and A House Title V (renewal filed4/17/06).

Air

1.	From time to time, Ravenswood violates opacity limits specified in its New York State Title V air permit.  Exceedences are reported to the NYSDEC in accordance with the applicable NY DEC consent order. Ravenswood has received the following fines for such exceedances since 2004:

Year	Unit	Fines ($)
2004	10	100
2004	20	1000
2005	10	100
2005	20	100
2005	30	800
2006	20	100
2006	30	100
2007	10	100
2007	20	600
2007	30	300

The above-listed fines were imposed pursuant to the stipulated penalty provision of the Consent Decree.  Pursuant to a letter from the NYSDEC dated March 10, 2008, the stipulated penalty provision of the Consent Decree applicable to opacity exceedances is no longer in effect as a result of the issuance of a Title V permit to the facility.

[REDACTED: Disclosure related to potential environmental liabilities.]

Water, Oil and Chemical

1.           [REDACTED: Disclosure related to potential environmental liabilities.]

2.	As of the date hereof, KeySpan Generation LLC is named on the Ravenswood SPDES permit. This permit will be transferred into the name of one of the Companies prior to the Closing.

3.

Per the NYSDEC's Spill Database, there are twelve (12) open spill numbers from the Consent Decree: 9103498, 9415584, 9809807, 9910096, 9912003, 9009327, 9407884, 9411975, 9704952, 9806863, 9812437, and 9900155. These twelve (12) open spills are subject to possible investigation and/or remediation. Five (5) of these twelve (12) spill numbers are the subject of the 2007 GT Site Remedial Action Work Plan that is pending NYSDEC approval.

---

4.	Ravenswood and Services are subject to the Consent Decree.

5.	Ravenswood is subject to the Voluntary Cleanup Order.

6.

The Seller submitted for NYSDEC approval the 2007 GT Site Remedial Action Work Plan; the Bedrock Monitoring/Recovery Well Installation Work Plan; and post cleanup sampling data for the 2007 No. 6 Oil Excavation near Unit 40.  In March 2008, the NYSDEC approved the 2008 Boiler House A - Oil Seepage Investigation Work Plan.

7.	The Real Property previously had a Manufactured Gas Plant (MGP) operation from 1898 to the early 1950's and there are MGP and non-MGP subsurface contamination issues that exist.

8.           [REDACTED: Disclosure related to potential environmental liabilities.]

---

Section 5.8(a)

Environmental Permits

Agency	Program	Permit Number
NYCDEP	NYCDEP Air	PA129672M
NYCDEP	NYCDEP Air	PA129772J
NYCDEP	NYCDEP Air	PA129872R
NYCDEP	NYCDEP Air	PA049595H
NYCDEP	NYCDEP Air	PA049395N
NYCDEP	NYCDEP Air	PA049495K
NYCDEP	NYCDEP Air	PA052195X
NYCDEP	NYCBS	2-000366
NYCDEP	NYCDEP Air	PA129472H
NYCDEP	NYCDEP Air	PA129572P
NYSDEC	Title V	2-6304-00024/00035 REN1
NYSDEC	Title IV Acid Rain	2-6304-00024/00029 REN1
NYSDEC	SPDES	NY-0005193
NYSDEC	MPFL	02-1960
NYSDEC	NYCBS	2-000063
NYSDEC	Title V	2-6304-00024/00039
NYSDEC	Title V	2-6304-01378/00002
NYSDEC	EPA PSD	2-6304-00024/00039EPA
NYSDEC	Title IV Acid Rain	2-6304-00024/00039EPA
Board on Electric Generation Siting and the Environment	Certificate of Environmental Compatibility and Public Need – Unit 40	Case 99-F-1625

---

Section 5.9(a)

Collective Bargaining Agreement(s)

 

1.           Ravenswood Collective Bargaining Agreement between Services and Local 1-2 UtilityWorkers’ Union of America, AFL-CIO, dated from June 25, 2006 to June 24, 2009.

 

---

Section 5.9(b)

Labor Matters

1.	One (1) case is pending against Services alleging that management performed bargaining unit work. The union postponed the arbitration scheduled on March 24, 2008, and has not rescheduled the arbitration as of the date hereof.

2.	One (1) charge was filed against Services for the alleged termination of an employee because of his activities on behalf of Local 1-2, Utility Workers of Union of America.

---

Section 5.10(a)

ERISA; Benefit Plans

1.           Employees of Services participate in the following benefit plans/programs:

2007 Management Change of Control Severance Plan;

Employees’ Retirement Plan for Management Employees - DefinedBenefit;

Employees’ Retirement Plan for Management Employees – Cash Balance

Employees’ Retirement Plan for Management Employees – Ravenswood;

Retirement Income Plan of KeySpan Corporation for ManagementEmployees;

Retirement Income Plan for Management Employees – Cash Balance

Employees’ Retirement Plan for Ravenswood Union Employees

Supplemental Retirement Plan of MarketSpan Corporation d/b/a KeySpan Energy;

Excess Benefit Plan of Market Span Corporation d/b/a KeySpan Energy;

KeySpan Energy 401(k) Plan for Management Employees;

KeySpan Energy 401(k) Plan for Union Employees;

Annual Bonus Program (known as The KeySpan Incentive Compensationand Gainsharing Award Program prior to acquisition by National Grid);

Medical and dental coverage;

Prescription drug coverage;

Retiree Medical, Dental and Prescription Drug Plans;

Basic Group Term Life Insurance Plan;

Optional employee paid supplemental life insurance;

Retiree Life Insurance Plan;

Accidental Death and Dismemberment Insurance;

Optional Accidental Death and Dismemberment insurance

Business Travel Accident Insurance;

Optional Long Term Disability;

Flexible Spending Accounts for Healthcare and Dependent care;

Employee Stock Purchase Plan (rollout in April 2008);

Tuition Reimbursement Plan;

Vacation Allowance;

Vacation Buy/Sell Plan (Management Only);

Transit/Parking Reimbursement Plan (for management only);

Legal Services Plan;

Long-Term Care;

Cancer Coverage;

Adoption Assistance;

Paid Holidays;

Paid Sick Time;

Management Shift Pay Coverage; and

Services has entered into management retention agreements with the following employees:

[REDACTED: Names of employees.]

---

Section 5.10(g)

ERISA; Benefit Plans

 

The consummation of the transactions contemplated by the Agreement will trigger payments under retention agreements with the following employees:

 

[REDACTED: Names of employees.]

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Section 5.11(a)

Certain Contracts and Arrangements

1.           Agreements:

Contract	Parties	Date
Ravenswood Continuing Site Agreement	Con Edison and MarketSpan Corporation d/b/a Energy (assigned to KeySpan-Ravenswood, Inc. n/k/a Ravenswood)	January 28, 1999
Energy Service Agreement	Services and Ravenswood	June 9, 1999
Operation and Maintenance Agreement	Services and Ravenswood	June 9, 1999
Fuel Oil Supply Agreement	Con Edison and Services	June 18, 1999
	[REDACTED: Subject to confidentiality.]
Gas Transportation	Iroquois Gas Transmission System, LP and Ravenswood	February 18, 2002
Warehouse Lease	Ravenswood and Port Distribution Corp.	February 20, 2002
Gas Transportation and Balancing Service Agreement	Con Edison and Services	April 1, 2002
Operation and Maintenance of the A House Agreement, as amended	Con Edison and Services	October 1, 2002
Fuel Supply Letter Agreement	Con Edison and Services	December 20, 2002
Storage and Throughput Agreement, as amended	K-Sea Transportation Corp. or K-Sea Operating Partnership L.P. and Services	February 1, 2003
Interconnection Agreement	Con Edison and Ravenswood	August 1, 2003
Demineralized Water System Agreement	Ecolochem, Inc. and KeySpan Energy Corporation	September 18, 2003
Environmental Spill Response	Ken's Marine Service, Inc. and KeySpan Corporate Services LLC	November 10, 2003
	[REDACTED: Subject to confidentiality.]
	[REDACTED: Subject to confidentiality.]
	[REDACTED: Subject to confidentiality.]
Fuel Storage – Tank 8563	IMTT-Bayonne and Ravenswood (assigned to Services on October 1, 2007)	May 27, 2004
Fuel Storage – Tank 8563	IMTT-Bayonne and Services	February 13, 2008
Fuel Storage – Tank 6204	IMTT-Bayonne and Ravenswood (assigned to Services on October 1, 2007)	October 12, 2005
Time Charter Barge Agreement	Moran Towing and Transportation, Inc. and Services	September 13, 2006

---

Fuel Storage – Tank 8070	IMTT-Bayonne and Ravenswood (assigned to Services on October 1, 2007)	March 7, 2007
Time Charter Barge Agreement	Bouchard Transportation Co. Inc. and Bouchard Ocean Services and Services	June 1, 2007
Fuel Supply – No. 6 Oil	Sunoco, Inc. and Services	July 1, 2007
Fuel Supply – No. 6 Oil	ConocoPhillips Company and Services	July 1, 2007
Fuel Supply - Kerosene	ConocoPhillips Company and Services	July 1, 2007
Fuel Supply – No. 6 Oil and Kerosene	Westport Petroleum, Inc. and Services	September 1, 2007
Agency Agreement, as amended	[REDACTED: Name of party due to confidentiality] Corporation, Ravenswood and Services	December 19, 2007
Energy, Ancillary Services and Fuel Conversion	[REDACTED: Name of party due to confidentiality] Corporation and Ravenswood	December 19, 2007
Toll – Insurance	XL Specialty Insurance	January 1, 2008
Warehouse Storage for Ravenswood Power Station Critical Spares	Worldwide Holding & Logistics and Ravenswood	December 2, 2004
Operation and Maintenance Agreement	Global Common Greenport, LLC and Services	June 27, 2003

2.           Purchase Orders:

Project	PO #	Vendor Name	Original Amount
RS0157	402450	SIEMENS POWER GENERATION	[REDACTED]
RS0158	402451	SIEMENS POWER GENERATION	[REDACTED]
RS0168	402446	SIEMENS POWER GENERATION	[REDACTED]
RS0168	402446	SIEMENS POWER GENERATION	[REDACTED]
RS0168	402446	SIEMENS POWER GENERATION	[REDACTED]
RS0168	402446	SIEMENS POWER GENERATION	[REDACTED]
RS0168	402450	SIEMENS POWER GENERATION	[REDACTED]
RS0168	402450	SIEMENS POWER GENERATION	[REDACTED]
RS0168	402450	SIEMENS POWER GENERATION	[REDACTED]
RS0168	402451	SIEMENS POWER GENERATION	[REDACTED]
RS0168	402451	SIEMENS POWER GENERATION	[REDACTED]

---

RS0206	466878	SIEMENS POWER GENERATION	[REDACTED]
RS0206	466889	SIEMENS POWER GENERATION	[REDACTED]

3.           Sections 5.7(a) (Real Property), 5.9(a) (Collective Bargaining Agreements), 5.10(a) (ERISA; Benefit Plans), Item 3 of Section 5.15 (Taxes) and 7.13 (Affiliate Contracts) of the Seller Disclosures is incorporated herein by reference.

 

 

---

Section 5.11(b)

Certain Contracts and Arrangements

1.	[REDACTED: Description of contract which must be assigned.]

2.	Section 5.3(a) of the Seller Disclosure Schedules is incorporated herein by reference.

---

Section 5.11(c)

Certain Contracts and Arrangements

 

None.

 

---

Section 5.12

Legal Proceedings

Regulatory Proceedings

FERC

FERC In-City Capacity Market Investigation FERC Docket No. EL07-39

FERC In-City Capacity Market Mitigation  FERC Docket No. EL07-39

NYISO Demand Curve Reset FERC Docket No. ER08-283

NYISO v. SCS Astoria FERC Docket No. EL07-18

KeySpan v. NYISO FERC Docket No. EL05-17

KeySpan v. FERC (D.C. Circuit) No. 07-1278 (FERC Case EL07-35)

KeySpan-Ravenswood, Inc., et. al., FERC Docket No. EL08-15-000

KeySpan-Ravenswood, Inc., FERC Docket No. ER99-2387

National Grid plc and KeySpan Corporation, FERC Docket No. EC06-125

NYPSC

 

National Grid/KeySpan Merger Order, 06-M-0878

 

Other

 

·	[REDACTED: Description of civil investigation.]

 

Litigation

Personal Injury and Property Damage

 

Chris Arciszewski and Anna Dyjak v. KeySpan Energy Corporation, KeySpan-Ravenswood LLC, and Consolidated Edison Company of New York, Inc., Supreme Court, King County

 

Daniel Sally v. KeySpan Energy Corporation and KeySpan Corporation, Supreme Court, King County

There are [REDACTED: Specific number] pending lawsuits arising out of the Unit 40 expansion project.

[REDACTED: Description of pending lawsuits and insurance coverage.]

Employment

Jeffrey Brathwaite v. KeySpan Energy Corporation, Supreme Court, King County

Kevin O’Connell v. KeySpan Energy Corporation, KeySpan Ravenswood Services, Inc. and Hydrochem Industrial Services, Inc., Supreme Court, King County

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Section 5.13(a)

Permits; Compliance with Laws

1.           Ravenswood holds the following New York City Fire Department permits:

Account #	Permit Description
04115150	AC/REFRIG>SHP AND/OR ROOF/CEIL
06462758	STR/USE/SELL/ACD1000GL/MAJ/POR
08015133	BULK OIL STR-INSPECT PER UNIT
08014086	BULK OIL STR-INSPECT PER UNIT COM-MX/LQ STR/USE/SEL 1-10 UNIT
09061680	LAB STR/USE SML QTY-RENEW INSP
20010849	COM-MX/LQ STR/USE/SEL 1-10 UNIT
26062695	COM-MX> 10 GAL TO 550 GAL
86077468	AUTO SPRINK SYS/INIT SIAMESE EACH ADD SIAMESE CONNECTION
23097637	2-YEARS FUNCTIONALITY TEST
22118103	2-YEARS FUNCTIONALITY TEST
24128407	2-YEARS FUNCTIONALITY TEST
25090721	2-YEARS FUNCTIONALITY TEST
25159815	2-YEARS FUNCTIONALITY TEST
24065427	GASES COMPRESSED STORE/SELL; COMB GASES NOT 15 PSI
85013548	GASES/STR/1300G INSPECT PER HR; GASES/STR/1300G INSPECT 5 MINS                    COMPRESSED GASES ONLY STR/USE
22012819	STAND PIPE SYS/INITIAL SIAMESE STAND PIPE SYS/EA ADD SIAMESE
22014237	COM-MX/LQ STR/USE/SEL 500-2500
21059514	COM-MX/LQ STR/USE/SEL 1-10 UNIT
Rainey Substation
20003216	COM-MX/LQ STR/USE/SEL>500-2500 COM-MX/LQ EA ADD-2500G MAJ POR
Gas Turbines
99029456	AC/REFRIG>SHP AND/OR ROOF/CEIL
99029464	COMPRESSED GASES ONLY STR/USE USE O2/COMB GASES IN BLOWPIPE COM-MX/LQ STR/USE/SEL 500-2500 COM-MX/LQ EA ADD-2500G MAJ POR

---

86015161	A/C UP TO 3 UNITS                                                                                                                                    USE 02 COMB GASES IN BLOWPIPE                                                                                                                    A/C EACH ADDITIONAL 6 UNITS                                                                                                                     GASES COMPRESSED STORE/SELL                                                                                                ACETYLENE STORAGE                                                                                                                                 COMB MIX/LIQ-300F> 70-500 GAL                                                                                                                         LIQUID GASES ONLY < 1300 GALS                                                                                                          COMPRESSED GASES ONLY STR/USE
24013898	COMPRESSED GASES ONLY STR/USE
CITYWIDE DISASTER	ANNUAL QUEENSWATCH SERVICE

2.           The New York City Fire Department issues "Certificates of Fitness" to employees ofServices in the following categories:

C14	CHARGE OF CHEMICAL LABORATORY
C24	SUPERVISE BULK ACID STORAGE
F12	STDPIPE/FIRE PUMP/GRAV TANK
F30	FIRE GUARD TORCH OPERATIONS
F36	FIRE GUARD GENERIC
F93	CON FG CONST/TOR OP.
F97	CON STD/SPRK FIRE PUMP
G14	HANDLE HYDROGEN
G29	COMPRESS GAS  15 PSI
G35	OPERATE AIR COMPRESSOR
G38	TORCH USE OF O-2 COMB GAS
G44	STORE/SALE/USE OF LPG
G46	STORE/USE NONFLAM COMP GASES
G95	CON USE FLAMM GAS CUT/WELD/JT
G97	CON CRYO SYST/STORE/HAND/LIQU
G98	CON HAND/STOR/COMP FLAMM GAS
P10	SUPERVISE PETROLEUM PIPELINE
P12	SUPERVISE BULK OIL PLANTS
P23	OPERATION OF PETRO PIPELINE
W11	TEST AIR COMPRESSOR
W12	MAINTENANCE SPRINKLER SYSTEM

3.           Section 5.8(a) of the Seller Disclosure Schedules is incorporated herein by reference.

---

Section 5.13(b)

Permits; Compliance with Laws

None.

---

Section 5.14

Regulation as a Utility

1.

Ravenswood is a regulated public utility under the Federal Power Act and subject to the jurisdiction of FERC.  It is an exempt wholesale generator ("EWG") (See FERC Docket No. EG99-166).  It sells its capacity, energy, and ancillary services exclusively at wholesale pursuant to its market-based rate authority and tariff (See FERC Docket No. ER99-2387) subject to the market rules and mitigation measures contained in the New York Independent System Operator Inc. Services Tariff (See Central Hudson Gas & Electric, Corp., et al, 86 FERC ¶ 61,062 (1999) and its progeny).

2.	Ravenswood is also a regulated public utility under the New York Public Service Law and subject to the jurisdiction of the New York State Public Service Commission.

---

Section 5.15

Taxes

1.	The Seller is under IRS audit with respect to the federal consolidated tax returns of it and its subsidiaries, including the Companies, for the years 2000 – 2004.

2.	Ravenswood annually files grievances with New York City challenging the property tax assessments for the Real Property.

3.	The Companies are party to the National Grid General Partnership and Affiliated U.S. Corporations Federal and State Income Tax Allocation Agreement, as amended and restated, effective as of August 24, 2007.

4.

For Federal income tax purposes, the Companies join in the filing of a consolidated return with the Seller as the parent/taxpayer.  All tax years through and including December 31, 1999, are closed.  The current IRS audit cycle is for the calendar years 2000 – 2004, inclusive.  Thus, all years from 2000 forward are open.

5.

For state and local income tax purposes, Ravenswood joins in the filing of combined New York State and New York City "income" tax returns beginning July 1, 2002, with the Seller as the parent.  The combined returns are currently under audit by the New York State Department of Finance for the tax years 2000 – 2002, inclusive.  The New York City Department of Finance is also auditing the combined returns for the tax years 2000 – 2002, inclusive.  The calendar tax years 2003 – 2006 are open years.  Tax returns for the short tax year ended August 24, 2007, have not yet been filed.

6.	For state and local income tax purposes, Services files separate company returns.  The tax years 1999 – 2003, inclusive, are closed by statute.

---

Section 5.16

Intellectual Property

1.           The following applications are owned or licensed by the Seller or one of its Affiliates, and will not be available to the Companies or their Affiliates after the Closing (except to the extent applicable as set forth in the Transition Services Agreement):

 

 

Application Function	Vendor
Supply Chain (Purchasing & Inventory)	Oracle
Work Management - Demand Maintenance and Preventative Maintenance	Maximo
HR (payroll & benefits)	Peoplesoft
Time Entry	Smart Time
Finance	Oracle
Fixed Assets	PowerPlant
Budgeting	Essbase/Pillar
Security – Access	AMAG
Security – Video	Verint
Email client	Netscape
Email server	Sun One Messaging Server and LDAP
Calendar client	Oracle Calendar Client
Calendar client	Oracle Calendar Server
MircoGads System - provides data to the NYISO and the National Electric Reliability Council; captures unit outage and derate events which is used to calculate unit capacity payments; also used to capture unit performance, reliability, availability, and maintenance information.	MicroGads
The E-notification system provides all Ravenswood PI alarming to e-mail, pagers and cell phone.	E-Notification
Outage Scheduling	Primavera
Visual KPI - role based cell phone access to Ravenswood PI and Smartsignal data.	Transpara
NOx RACT Compliance and Reporting System	KeySpan

2.           Seller also holds site licenses for Microsoft Office and McAfee Anti-Virus, which are currently used by the Companies but will not be available to the Companies or their Affiliates after the Closing. Should the Buyer wish to continue using these software packages, it will need to purchase licenses from the vendors.

3.           [REDACTED: Name of party due to confidentiality] owns certain software relating to the performance of fuel supply management and energy supply trading operations for the Companies

 

---

pursuant to the Companies’ obligations under the [REDACTED: Name of party due to confidentiality] Agreements, which will not be transferred to the Companies after the Closing.  The Companies do not maintain software to support fuel supply management and energy supply trading operations.

---

 

Section 5.17

Insurance

 

None.

---

Section 5.19

Bank Accounts

	Bank	Account	Account Name	Purpose	Authorized Signatories
1.	Chase	[REDACTED]	KeySpan-Ravenswood Services Corp.	Working Fund Account; Permits	[REDACTED]
2.	Chase	[REDACTED]	KeySpan-Ravenswood LLC	Site Restoration after decommissioning of the Facility as required by the NYSPSC (Prior to the Closing, Services will transfer this Chase account [REDACTED: Account Number] to an Affiliate of the Seller other than the Companies.)	[REDACTED]

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Section 7.1

Conduct of Business of the Seller

1.	Ravenswood has the following pending property tax petitions and may enter into or amend a tax agreement, treaty or settlement with respect to such petitions:

Tax Year	Index Number
1999	104132
2000	103309
2001	103859
2002	104083
2003	104432
2004	101463
2005	100551
2006	100433
2007	100107

2.	Prior to the Closing, Service will assign the Operation and Maintenance Agreement between Global Common Greenport, LLC and Services, dated June 27, 2003, to an Affiliate of the Seller other than the Companies.

3.	Prior to the Closing, KeySpan Corporate Services LLC will, subject to the satisfaction of the terms therein, assign to Services its obligations under the following contracts:

[REDACTED: Certain contracts subject to assignment.]

4.	[REDACTED: Certain contracts subject to assignment.]

5.	[REDACTED: Potential settlement agreement.]

6.	Prior to the Closing, Services will transfer Chase account number [REDACTED: account number] to an Affiliate of the Seller other than the Companies.

7.	[REDACTED: Potential settlement agreement.]

8.

Management employees are due an annual wage increase effective July 1, 2008.  The wage increase will be consistent with past practices except that it will be based on a 15 month period as a result of moving the annual effective date from April 1 (KeySpan) to July 1 (National Grid). The estimated amount for all Ravenswood management employees and corporate support employees is $[REDACTED: Amount of wage increase.]

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Section 7.9(b)(ii)

Continuing Corporate Employee(s)

[REDACTED: Employee names.]

---

Section 7.9(b)(iv)

Severance Benefits

1.           Eligible Management Employees Terminated On or Before [REDACTED: Date.]

Eligibility: any full time Continuing Employee who had achieved at least one full year of service as of August 24, 2007 ("Eligible Management Employee").

Eligible Management Employees terminated on or before [REDACTED: Date] shall be entitled to severance benefits consistent with the terms of the 2007 Management Change of Control Severance Plan, as in effect on the Closing Date.

The 2007 Management Change of Control Severance Plan provides for a cash severance payment in an amount equal to not less than 12 weeks, but not more than 78 weeks, of base pay.  Benefit amounts are determined based on the Eligible Management Employee’s management band and years of service.  Eligible Management Employees shall also receive (i) continuation of medical, dental and life insurance benefits during the severance period and (ii) one (1) month of outplacement services.

2.	Severance Benefits for Eligible Management Employees Terminated

after [REDACTED: Date] and Other Management Employees.

Any (a) Eligible Management Employee terminated after [REDACTED: Date] (but within [REDACTED: Length of term] of the Closing Date) and (b) Continuing Employee terminated from Services or its successor for reasons other than cause within [REDACTED: Length of term] of the Closing Date who is not eligible for the 2007 Management Change of Control Severance Plan shall be entitled to a cash severance benefit in an amount equal to [REDACTED: Severance benefits.]

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 Section 7.10(a)

Emissions Allowances to be Included in the Ravenswood Accounts

SO₂ Allowances

Account No.: 002500FACLTY

Account Name: Ravenswood Generating Station

Vintage Year	Start Block	End Block	PRG Code	Total Block	ORISPL Code
2008	5452506	5452905	ARP	400	2500
2008	5455644	5456543	ARP	900	2500
2008	5458300	5460999	ARP	2700	2500
2008	9440724	9440724	ARP	1	2500
2008	9440725	9440725	ARP	1	2500
2008	9440726	9440727	ARP	2	2500
2009	5452506	5452905	ARP	400	2500
2009	5455644	5456543	ARP	900	2500
2009	5458300	5460999	ARP	2700	2500
2009	9440724	9440724	ARP	1	2500
2009	9440725	9440725	ARP	1	2500
2009	9440726	9440727	ARP	2	2500
2010	5166789	5167188	ARP	400	2500
2010	5169949	5170848	ARP	900	2500
2010	5172622	5175321	ARP	2700	2500
2011	5166789	5167188	ARP	400	2500
2011	5169949	5170848	ARP	900	2500
2011	5172622	5175321	ARP	2700	2500
2012	5166789	5167188	ARP	400	2500
2012	5169949	5170848	ARP	900	2500
2012	5172622	5175321	ARP	2700	2500
2013	5166789	5167188	ARP	400	2500
2013	5169949	5170848	ARP	900	2500
2013	5172622	5175321	ARP	2700	2500
2014	5166789	5167188	ARP	400	2500
2014	5169949	5170848	ARP	900	2500
2014	5172622	5175321	ARP	2700	2500
2015	5166789	5167188	ARP	400	2500
2015	5169949	5170848	ARP	900	2500
2015	5172622	5175321	ARP	2700	2500
2016	5166789	5167188	ARP	400	2500
2016	5169949	5170848	ARP	900	2500
2016	5172622	5175321	ARP	2700	2500
2017	5166789	5167188	ARP	400	2500
2017	5169949	5170848	ARP	900	2500
2017	5172622	5175321	ARP	2700	2500
2018	5166789	5167188	ARP	400	2500

---

2018	5169949	5170848	ARP	900	2500
2018	5172622	5175321	ARP	2700	2500
2019	5166789	5167188	ARP	400	2500
2019	5169949	5170848	ARP	900	2500
2019	5172622	5175321	ARP	2700	2500
2020	5166789	5167188	ARP	400	2500
2020	5169949	5170848	ARP	900	2500
2020	5172622	5175321	ARP	2700	2500
2021	5166789	5167188	ARP	400	2500
2021	5169949	5170848	ARP	900	2500
2021	5172622	5175321	ARP	2700	2500
2022	5166789	5167188	ARP	400	2500
2022	5169949	5170848	ARP	900	2500
2022	5172622	5175321	ARP	2700	2500
2023	5166789	5167188	ARP	400	2500
2023	5169949	5170848	ARP	900	2500
2023	5172622	5175321	ARP	2700	2500
2024	5166789	5167188	ARP	400	2500
2024	5169949	5170848	ARP	900	2500
2024	5172622	5175321	ARP	2700	2500
2025	5166789	5167188	ARP	400	2500
2025	5169949	5170848	ARP	900	2500
2025	5172622	5175321	ARP	2700	2500
2026	5166789	5167188	ARP	400	2500
2026	5169949	5170848	ARP	900	2500
2026	5172622	5175321	ARP	2700	2500
2027	5166789	5167188	ARP	400	2500
2027	5169949	5170848	ARP	900	2500
2027	5172622	5175321	ARP	2700	2500
2028	5166789	5167188	ARP	400	2500
2028	5169949	5170848	ARP	900	2500
2028	5172622	5175321	ARP	2700	2500
2029	5166789	5167188	ARP	400	2500
2029	5169949	5170848	ARP	900	2500
2029	5172622	5175321	ARP	2700	2500
2030	5166789	5167188	ARP	400	2500
2030	5169949	5170848	ARP	900	2500
2030	5172622	5175321	ARP	2700	2500
2031	5166789	5167188	ARP	400	2500
2031	5169949	5170848	ARP	900	2500
2031	5172622	5175321	ARP	2700	2500
2032	5166789	5167188	ARP	400	2500
2032	5169949	5170848	ARP	900	2500
2032	5172622	5175321	ARP	2700	2500
2033	5166789	5167188	ARP	400	2500
2033	5169949	5170848	ARP	900	2500

---

2033	5172622	5175321	ARP	2700	2500
2034	5166789	5167188	ARP	400	2500
2034	5169949	5170848	ARP	900	2500
2034	5172622	5175321	ARP	2700	2500
2035	5166789	5167188	ARP	400	2500
2035	5169949	5170848	ARP	900	2500
2035	5172622	5175321	ARP	2700	2500
2036	5166789	5167188	ARP	400	2500
2036	5169949	5170848	ARP	900	2500
2036	5172622	5175321	ARP	2700	2500
2037	5166789	5167188	ARP	400	2500
2037	5169949	5170848	ARP	900	2500
2037	5172622	5175321	ARP	2700	2500

NYS ADRP NOx Allowances

Account Name: Ravenswood Generating Station

Unit ID	Account Number	Control Period	AllowanceType	Program	Date Acquired	Serial Range	AllowanceTotal
10	NYNOX10047	2007-08	Standard	Part 237	1/26/05	224494-224766	273
10	NYNOX10047	2008-09	Standard	Part 237	9/08/06	273870 - 274142	273
	NYNOX10048	2007-08		Part 237
	NYNOX10048	2008-09		Part 237
20	NYNOX10049	2007-08	Standard	Part 237	1/26/05	224767 - 225395	629
20	NYNOX10049	2008-09	Standard	Part 237	9/08/06	274143 - 274771	629
30	NYNOX10050	2007-08	Standard	Part 237	1/26/05	225396 - 226902	1507
30	NYNOX10050	2008-09	Standard	Part 237	9/08/06	274772 - 276278	1507
CT02-1	NYNOX10051	2007-08	Standard	Part 237	1/26/05	226903 - 226906	4
CT02-1	NYNOX10051	2008-09	Standard	Part 237	9/08/06	276279 - 276282	4

---

CT02-2	NYNOX10052	2007-08	Standard	Part 237	1/26/05	226907 - 226909	3
CT02-2	NYNOX10052	2008-09	Standard	Part 237	9/08/06	276283 - 276285	3
CT02-3	NYNOX10053	2007-08	Standard	Part 237	1/26/05	226910 - 226912	3
CT02-3	NYNOX10053	2008-09	Standard	Part 237	9/08/06	276286 - 276288	3
CT02-4	NYNOX10054	2007-08	Standard	Part 237	1/26/05	226913 - 226916	4
CT02-4	NYNOX10054	2008-09	Standard	Part 237	9/08/06	276289 - 276292	4
CT03-1	NYNOX10055	2007-08	Standard	Part 237	1/26/05	226917 - 226919	3
CT03-1	NYNOX10055	2008-09	Standard	Part 237	9/08/06	276293 - 276295	3
CT03-2	NYNOX10056	2007-08	Standard	Part 237	1/26/05	226920 - 226921	2
CT03-2	NYNOX10056	2008-09	Standard	Part 237	9/08/06	276296 - 276297	2
CT03-3	NYNOX10057	2007-08	Standard	Part 237	01/26/2005	226922 - 226924	3
CT03-3	NYNOX10057	2008-09	Standard	Part 237	9/08/06	276298 - 276300	3
CT03-4	NYNOX10058	2007-08	Standard	Part 237	1/26/05	226925 - 226927	3
CT03-4	NYNOX10058	2008-09	Standard	Part 237	9/08/06	276301 - 276303	3
UCC001	NYNOX10518	2007-08		Part 237
UCC001	NYNOX10518	2008-09		Part 237

NYS ADRP SO₂ Allowances

---

Unit ID	Account Number	Account Name	Control Period	Date Acquired	Serial Range	Allowance Total
10	NYSO210239	Unit 10 SO2 Compliance	2008	11/02/2005	1605384 - 1605741	358
10	NYSO210239	Unit 10 SO2 Compliance	2009	10/18/2006	1812391 - 1812748	358
	NYSO210240	SO2 Overdraft	2008
	NYSO210240	SO2 Overdraft	2009
20	NYSO210241	Unit 20 SO2 Compliance	2008	11/02/2005	1605742 - 1606299	558
20	NYSO210241	Unit 20 SO2 Compliance	2009	10/18/2006	1812749 - 1813306	558
30	NYSO210242	Unit 30 SO2 Compliance	2008	11/02/2005	1606300 - 1608387	2088
30	NYSO210242	Unit 30 SO2 Compliance	2009	10/18/2006	1813307 - 1815394	2088

NOx Budget Allowance

Account Name: Ravenswood Generating Station

Account Number	Start Lock	End Block	PRG Code	Total Block	ORISPL Code
2500000010	224528	225015	NBP	488	2500
2500000020	225016	225633	NBP	618	2500
2500000030	225634	226863	NBP	1230	2500
002500BLR001	259141	259172	NBP	32	2500
002500BLR003	259173	259209	NBP	37	2500
002500BLR004	259210	259245	NBP	36	2500
002500CT0001	226985	226986	NBP	2	2500
002500CT0004	226987	226988	NBP	2	2500
002500CT0005	226989	226993	NBP	5	2500
002500CT0006	226994	226998	NBP	5	2500
002500CT0007	226999	227004	NBP	6	2500
002500CT0008	227005	227012	NBP	8	2500
002500CT0009	227013	227021	NBP	9	2500
002500CT0010	227022	227028	NBP	7	2500
002500CT0011	227029	227036	NBP	8	2500
002500CT02Z1	227037	227043	NBP	7	2500
002500CT02Z2	227044	227051	NBP	8	2500
002500CT02Z3	227052	227058	NBP	7	2500
002500CT02Z4	227059	227066	NBP	8	2500
002500CT03Z1	227067	227072	NBP	6	2500
002500CT03Z2	227073	227078	NBP	6	2500
002500CT03Z3	227079	227084	NBP	6	2500
002500CT03Z4	227085	227089	NBP	5	2500
002500UCC001	261202	261226	NBP	25	2500

---

 Section 7.12

Restructuring

[REDACTED: Specific steps to implement the restructuring contemplated in Section 7.12.]

Set forth below is a summary of the steps to be undertaken to effectuate the Restructuring contemplated by Section 7.12 of the Agreement.

---

 

 

Section 7.13

Termination of Affiliate Contracts

Set forth below are Affiliate Contracts that will terminate upon their terms in accordance with the Agreement:

1.	Both Companies are party to the Services Agreement with KeySpan Corporate Services LLC, dated January 1, 2008.

2.	The Companies are party to the National Grid General Partnership and Affiliated U.S. Corporations Federal and State Income Tax Allocation Agreement, as amended and restated, effective as of August 24, 2007.

---

Section 7.16

Ravenswood Insurance

The Seller maintains the following insurance policies for its subsidiaries, including the Companies:

SCHEDULE OF INSURANCE
2007/2008
	POLICY	CARRIER	POLICY #		PERIOD	LIMITS	DESCRIPTION
	GENERAL LIABILITY	[REDACTED]	[REDACTED]		02/01/07 - 04/01/08	[REDACTED]	CAPTIVE LAYER
·	EXCESS LIABILITY	[REDACTED]	[REDACTED]		02/01/07 - 04/01/08	[REDACTED]	MULTI- LAYERED PER OCCURRENCE
	EXCESS LIABILITY	[REDACTED]	[REDACTED]		02/01/07 - 04/01/08	[REDACTED]	GENERAL LIABILITY PROGRAM
	EXCESS LIABILITY	[REDACTED]	[REDACTED]		08/24/07-04/01/08	[REDACTED]
	EXCESS D & O LIABILITY	[REDACTED]	[REDACTED]		12/01/07 - 12/01/08	[REDACTED]	DIRECTORS & OFFICERS  INS COVER
	CHARTERERS LEGAL LIABILITY	[REDACTED]	[REDACTED]		02/21/08 – 02/21/09	[REDACTED]	CHARTERERS LEGAL LIABILITY FOR TRANSPORT OF FUEL OIL VIA BARGE FROM NJ TERMINAL TO RAVENSWOOD PLT.

---

ALL RISK POLICY

[REDACTED]

[REDACTED]

03/01/07 - 04/01/08

[REDACTED]

ALL RISK PROP. & BOILER MACH. COV.

	BUSINESS TRAVEL	[REDACTED]	[REDACTED]		01/14/05 - 03/14/08	[REDACTED]	INS. COV. FOR BUSINESS TRAVEL
	BLANKET CRIME INS	[REDACTED]	[REDACTED]		08/24/07 -08/24/08	[REDACTED]	INS. COV. FOR CRIME ON KEYSPAN PROPERTY
·	BLANKET CRIME INS	[REDACTED]	[REDACTED]		08/24/07 -08/24/08	[REDACTED]
·	FIDUCIARY LIA.	[REDACTED]	[REDACTED]		11/30/07 - 11/30/08	[REDACTED]	INS. COV FOR FIDUCIARY PLANS INCLUD. NAT GRID US
	FIDUCIARY LIA.	[REDACTED]	[REDACTED]		11/30/07 - 11/30/08	[REDACTED]
	FIDUCIARY LIA.	[REDACTED]	[REDACTED]		11/30/07 - 11/30/08	[REDACTED]
	FIDUCIARY LIA.	[REDACTED]	[REDACTED]		11/30/07 - 11/30/08	[REDACTED]
	SPECIAL CRIME	[REDACTED]	[REDACTED]		05/28/07 - 05/28/08	[REDACTED]	SPECIAL CRIME COVERAGE FOR EMPLOYEES
	WORKERS COMP.	[REDACTED]	[REDACTED]		09/30/07 - 09/30/08	[REDACTED]	CAPTIVE LAYER
KEYSPAN CAPTIVE INSURANCE PROGRAM
	POLICY	POLICY #		PERIOD		LIMITS	DESCRIPTION
	GENERAL LIABILITY	[REDACTED]		02/01/08 - 04/01/09		[REDACTED]	SELF INS TO $3M

---

	PROPERTY	[REDACTED]		03/01/07 - 04/01/08		[REDACTED]	FOR $5M LAYER ABOVE VARIOUS DEDUCTIBLES
	WORKERS COMP.	[REDACTED]		09/30/07 - 09/30/08		[REDACTED]	SELF INSURED TO $1M
OUTAGE INSURANCE
	POLICY	POLICY #		PERIOD		LIMITS	DESCRIPTION
	OUTAGE INSURANCE	[REDACTED]		1/1/08 – 12/31/08		[REDACTED]	LOSSES INCURRED TO REPLACE THE POWER OTHERWISE GENERATED BY COVERED UNITS RESULTING FROM AN UNPLANNED EVENT

---

Section 7.20

Guaranties

Item	Counter Party	Guaranteed Party	Contract	Amount $	Guarantee Date
1.	Con Edison	Ravenswood	Gas Transportation and Balancing Agreement	[REDACTED]	1/12/04
2.	Iroquois Gas Transmission System, LP	Ravenswood	Contract for 60,000 Dth/day firm reserved transportation	[REDACTED]	9/23/05
3.	Sunoco, Inc	Services	Fuel Oil Supply Agreement to provide No. 6 oil to Ravenswood	[REDACTED]	12/13/07
4.	Westport Petroleum, Inc.	Services	Fuel Oil Supply Agreement to provide No. 6 oil to Ravenswood	[REDACTED]	12/13/07
5.	New York State Department of Public Service	Ravenswood	Financial assurances required for the Unit 40 decommissioning license obligations pursuant to Article X license	[REDACTED]	8/05/05
6.	ConocoPhilips Company	Services	Fuel Oil Supply Agreement	[REDACTED]	2/08/08

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BUYER DISCLOSURE SCHEDULES

These disclosure schedules are delivered to you pursuant to the Membership Interest and Stock Purchase Agreement, dated March 31, 2008 (the "Agreement"), by and among KeySpan Corporation, a New York corporation (the "Seller"), for purposes of Sections 2.1, 4.5, 5.1, 5.2, 5.3, 5.6, 7.1, 7.8, 7.13, 7.17 and Article XI only, KeySpan Energy Corporation, a New York corporation and TransCanada Facility USA, Inc., a Delaware corporation (the "Buyer"), and constitutes the "Buyer Disclosure Schedules" as defined in the Agreement.

           Nothing in these Buyer Disclosure Schedules is intended to broaden the scope of any representation or warranty contained in the Agreement or to independently constitute any representation, warranty or covenant.  In particular, although these Buyer Disclosure Schedules may contain supplementary information not specifically required under the Agreement, such supplementary information (i) is provided for general information purposes for the parties to the Agreement, (ii) is not separately represented or warranted herein or in the Agreement and (iii) does not necessarily include other matters of a similar informational nature.

           Inclusion of any item in these Buyer Disclosure Schedules (i) does not represent a determination that such item is material or establish a standard of materiality, (ii) does not represent a determination that such item is required to be disclosed pursuant to the Agreement, (iii) does not represent a determination that such item did not arise in the ordinary course of business, and (iv) shall not constitute, or be deemed to be, an admission to any third party concerning such item or an admission of default or breach under any agreement or document.

           Disclosures included herein shall be considered to be made for purposes of other sections of these Buyer Disclosure Schedules to the extent that the relevance of any such disclosure to any other sections of the Buyer Disclosure Schedules is reasonably apparent from the text of such disclosure.  The inclusion of any cross-references to any section of these Buyer Disclosure Schedules, or the failure to include such cross-references, shall not be deemed to mean that the relevance of any disclosure is not reasonably apparent for the purposes of the immediately preceding sentence.

           The information contained herein is provided solely for purposes of making disclosures to the Seller under the Agreement.  In disclosing this information, the disclosing party does not waive any attorney-client privilege associated with such information or any protection afforded by the work-product doctrine with respect to any of the matters disclosed or discussed herein.

           Appendices and exhibits attached hereto and referenced herein form an integral part of the sections of these Buyer Disclosure Schedules into which they are incorporated by reference or attached for all purposes as if fully set forth in such section.

           Unless otherwise noted herein, any capitalized term used in these Buyer Disclosure Schedules shall have the same meaning assigned to such term in the Agreement.  

 

---

Any introductory language or headings contained in these Buyer Disclosure Schedules are for convenience of reference only and shall not affect the interpretation of these Buyer Disclosure Schedules or the Agreement.

---

Schedule 6.3(a)

Consent and Approvals; No Violation

None.

---

Schedule 6.3(b)

Buyer’s Required Regulatory Approvals

1.	Ravenswood participates in a NOx RACT Compliance Program (6 NYCRR Part 227-2) with the A-House and the Seller's Long Island generation portfolio. The Buyer will need to establish a NOx RACT Compliance Program with the NYDEC.

2.	FCC consent is required for the transfer of one (1) radio license to the Buyer.

3.	Approval from the New York State Board on Electric Generation Siting and the Environment for the transfer of the Certificate of Environmental Compatibility and Public Need for Unit 40 (Case 99-F-1625) pursuant to 16 NYCRR § 1000.16.

 

4.	As of the date hereof, KeySpan Generation LLC is named on the Ravenswood SPDES permit. This permit will be transferred into the name of one of the Companies prior to the Closing.

 

 

 

---

Section 6.3(c)

New York State UCAP Generation Capacity and NYISO Transmission

An Affiliate of the Buyer is a party to an agreement (“Unit Entitlement Agreement”) through which it is entitled to the energy and capacity of a 65 MW gas-fired power generation facility in New York state which is qualified to bid in the UCAP auction in the Rest-of-State Region.  Neither the Buyer nor its Affiliates own any equity interest in this facility.  The Unit Entitlement Agreement expires on July 1, 2008.  [REDACTED: Further description of the Unit Entitlement Agreement subject to Confidentiality Agreement.]

Neither the Buyer nor any of its Affiliates own or control any other generation capacity in any zones within New York state.  In addition, neither the Buyer nor any of its Affiliates own or control any transmission which is located in, or interconnected to, the NYISO market.