EX-10.11





EXECUTION VERSION



Exhibit 10.11




AGREEMENT AND PLAN OF MERGER




among




US POWER GENERATING COMPANY,




EBG HOLDINGS LLC,




EBG MERGER LLC,




ASTORIA GENERATING COMPANY HOLDINGS, L.L.C.




and




ASTORIA MERGER LLC




Dated as of February 28, 2007




 









 





	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE I THE MERGERS	 	 	2	 
	 

	 	 	1.1	 	 	The Mergers
	 	 	2	 
	 

	 	 	1.2	 	 	Closing; Effective Time
	 	 	2	 
	 

	 	 	1.3	 	 	Conversion of Interests
	 	 	3	 
	 

	 	 	1.4	 	 	EBG Warrants
	 	 	4	 
	 

	 	 	1.5	 	 	Organization Documents of USPowerGenCo
	 	 	5	 
	 

	 	 	1.6	 	 	Limited Liability Company Operating Agreements
	 	 	5	 
	 

	 	 	1.7	 	 	Directors and Officers of USPowerGenCo
	 	 	5	 
	 

	 	 	1.8	 	 	True-up
	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE II REPRESENTATIONS AND WARRANTIES OF EBG	 	 	7	 
	 

	 	 	2.1	 	 	Status, etc
	 	 	7	 
	 

	 	 	2.2	 	 	Capitalization
	 	 	8	 
	 

	 	 	2.3	 	 	Conflicts Consents
	 	 	9	 
	 

	 	 	2.4	 	 	Financial Statements
	 	 	10	 
	 

	 	 	2.5	 	 	Absence of Undisclosed Liabilities
	 	 	11	 
	 

	 	 	2.6	 	 	Events Subsequent to Latest Financial Statements
	 	 	11	 
	 

	 	 	2.7	 	 	Tax Matters
	 	 	12	 
	 

	 	 	2.8	 	 	Litigation
	 	 	13	 
	 

	 	 	2.9	 	 	Compliance with Laws; Permits
	 	 	13	 
	 

	 	 	2.10	 	 	Regulatory Status
	 	 	14	 
	 

	 	 	2.11	 	 	Employee Benefits
	 	 	15	 
	 

	 	 	2.12	 	 	Labor Matters
	 	 	17	 
	 

	 	 	2.13	 	 	Real Property; Tangible Property
	 	 	17	 
	 

	 	 	2.14	 	 	Intellectual Property
	 	 	19	 
	 

	 	 	2.15	 	 	Contracts
	 	 	19	 
	 

	 	 	2.16	 	 	Insurance
	 	 	21	 
	 

	 	 	2.17	 	 	Environmental Matters
	 	 	22	 
	 

	 	 	2.18	 	 	Affiliate Transactions
	 	 	23	 
	 

	 	 	2.19	 	 	Brokers
	 	 	23	 
	 

	 	 	2.20	 	 	Formation of USPowerGenCo, Astoria MergerCo and EBG MergerCo; No Prior Activities
	 	 	23	 
	 

	 	 	2.21	 	 	Appraisal Rights
	 	 	23	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF ASTORIA	 	 	23	 
	 

	 	 	3.1	 	 	Status, etc
	 	 	23	 
	 

	 	 	3.2	 	 	Capitalization
	 	 	24	 
	 

	 	 	3.3	 	 	Conflicts, Consents
	 	 	25	 
	 

	 	 	3.4	 	 	Financial Statements
	 	 	26	 
	 

	 	 	3.5	 	 	Absence of Undisclosed Liabilities
	 	 	27	 
	 

	 	 	3.6	 	 	Events Subsequent to Latest Financial Statements
	 	 	27	 
	 

	 	 	3.7	 	 	Tax Matters
	 	 	28	 






i









 






	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	3.8	 	 	Litigation
	 	 	29	 
	 

	 	 	3.9	 	 	Compliance with Laws; Permits
	 	 	29	 
	 

	 	 	3.10	 	 	Regulatory Status
	 	 	30	 
	 

	 	 	3.11	 	 	Employee Benefits
	 	 	31	 
	 

	 	 	3.12	 	 	Labor Matters
	 	 	33	 
	 

	 	 	3.13	 	 	Real Property; Tangible Property
	 	 	33	 
	 

	 	 	3.14	 	 	Intellectual Property
	 	 	35	 
	 

	 	 	3.15	 	 	Contracts
	 	 	35	 
	 

	 	 	3.16	 	 	Insurance
	 	 	37	 
	 

	 	 	3.17	 	 	Environmental Matters
	 	 	38	 
	 

	 	 	3.18	 	 	Affiliate Transactions
	 	 	39	 
	 

	 	 	3.19	 	 	Brokers
	 	 	39	 
	 

	 	 	3.20	 	 	Accredited Investors
	 	 	39	 
	 

	 	 	3.21	 	 	Appraisal Rights
	 	 	39	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE IV COVENANTS	 	 	39	 
	 

	 	 	4.1	 	 	Conduct of the Companies and their Subsidiaries
	 	 	39	 
	 

	 	 	4.2	 	 	Solicitation of EBG Members
	 	 	40	 
	 

	 	 	4.3	 	 	Regulatory Compliance
	 	 	41	 
	 

	 	 	4.4	 	 	Updates
	 	 	41	 
	 

	 	 	4.5	 	 	Satisfaction of Closing Conditions
	 	 	41	 
	 

	 	 	4.6	 	 	No Solicitation
	 	 	43	 
	 

	 	 	4.7	 	 	Access and Information
	 	 	46	 
	 

	 	 	4.8	 	 	Publicity
	 	 	46	 
	 

	 	 	4.9	 	 	Transfer Taxes
	 	 	46	 
	 

	 	 	4.10	 	 	Indemnification of Directors and Officers
	 	 	46	 
	 

	 	 	4.11	 	 	2006 Audited Financial Statements
	 	 	48	 
	 

	 	 	4.12	 	 	Rating Agencies; Preparation of 144A Financial Statements
	 	 	48	 
	 

	 	 	4.13	 	 	Initial Public Offering
	 	 	49	 
	 

	 	 	4.14	 	 	Unit Appreciation Rights
	 	 	49	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE V CONDITIONS TO CLOSING	 	 	49	 
	 

	 	 	5.1	 	 	Conditions to the Obligations of EBG and Astoria
	 	 	49	 
	 

	 	 	5.2	 	 	Conditions to the Obligation of Astoria
	 	 	50	 
	 

	 	 	5.3	 	 	Conditions to the Obligation of EBG
	 	 	51	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE VI NO SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS	 	 	52	 
	 

	 	 	6.1	 	 	No Survival of Representations, Warranties and Covenants
	 	 	52	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE VII TERMINATION	 	 	52	 
	 

	 	 	7.1	 	 	Termination
	 	 	52	 
	 

	 	 	7.2	 	 	Effect of Termination
	 	 	53	 






ii









 






	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE VIII DEFINITIONS AND INTERPRETATION	 	 	56	 
	 

	 	 	8.1	 	 	Definition of Certain Terms; Interpretation
	 	 	56	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE IX GENERAL PROVISIONS	 	 	65	 
	 

	 	 	9.1	 	 	Expenses
	 	 	65	 
	 

	 	 	9.2	 	 	Further Actions
	 	 	66	 
	 

	 	 	9.3	 	 	Certain Limitations
	 	 	66	 
	 

	 	 	9.4	 	 	Notices
	 	 	66	 
	 

	 	 	9.5	 	 	Limited Disclosure
	 	 	68	 
	 

	 	 	9.6	 	 	Binding Effect
	 	 	68	 
	 

	 	 	9.7	 	 	Assignment; Successors; Third Party Beneficiaries
	 	 	68	 
	 

	 	 	9.8	 	 	Amendment; Waivers, etc
	 	 	69	 
	 

	 	 	9.9	 	 	Entire Agreement
	 	 	69	 
	 

	 	 	9.10	 	 	Severability
	 	 	69	 
	 

	 	 	9.11	 	 	Headings
	 	 	69	 
	 

	 	 	9.12	 	 	Counterparts
	 	 	69	 
	 

	 	 	9.13	 	 	Governing Law
	 	 	69	 
	 

	 	 	9.14	 	 	Consent to Jurisdiction, etc
	 	 	70	 
	 

	 	 	9.15	 	 	Waiver of Punitive and Other Damages and Jury Trial
	 	 	70	 






iii









 






EXHIBITS




	 	 	 
	 
	 	 
	Exhibit A-1

	 	Form of Certificate of Incorporation of USPowerGenCo
	 
	 	 
	Exhibit A-2

	 	Form of Bylaws of USPowerGenCo
	 
	 	 
	Exhibit B

	 	Form of Astoria LLC Agreement
	 
	 	 
	Exhibit C

	 	Form of EBG LLC Agreement
	 
	 	 
	Exhibit D-l

	 	Directors of USPowerGenCo
	 
	 	 
	Exhibit D-2

	 	Officers of USPowerGenCo
	 
	 	 
	Exhibit E

	 	Required Consents
	 
	 	 
	Exhibit F

	 	Form of Consulting Agreement
	 
	 	 
	Exhibit G

	 	Form of Investor Rights Agreement







iv











 





     AGREEMENT AND PLAN OF MERGER, dated as of February 28, 2007, among US Power Generating
Company, a Delaware corporation (“USPowerGenCo”), EBG Holdings LLC, a Delaware limited
liability company (“EBG”), EBG Merger LLC, a Delaware limited liability company (“EBG
MergerCo”), Astoria Generating Company Holdings, L.L.C., a Delaware limited liability company
(“Astoria”) and Astoria Merger LLC, a Delaware limited liability company (“Astoria
MergerCo”). Capitalized terms used herein are defined in Article VIII.



RECITALS:




     A. USPowerGenCo has been formed, and USPowerGenCo has formed EBG MergerCo and Astoria MergerCo
as wholly-owned Subsidiaries, in each case for the purpose of facilitating the transactions
contemplated hereby.



     B. The Board of Managers of Astoria and the Board of Directors of USPowerGenCo (as the sole
member of Astoria MergerCo) have determined that it is advisable and in the best interests of the
respective members of Astoria and Astoria MergerCo for Astoria MergerCo to merge with and into
Astoria (the “Astoria Merger”), with Astoria continuing as the surviving company of the
Astoria Merger, upon the terms and subject to the conditions set forth in this Agreement.



     C. The Board of Directors of EBG and the Board of Directors of USPowerGenCo (as the sole
member of EBG MergerCo), have determined that it is advisable and in the best interests of the
respective members of EBG and EBG MergerCo for EBG MergerCo to merge with and into EBG (the
“EBG Merger”, and together with the Astoria Merger, the “Mergers”), with EBG
continuing as the surviving company of the EBG Merger, upon the terms and subject to the conditions
set forth in this Agreement.



     D. For U.S. federal income Tax purposes, it is intended that (i) the Astoria Merger shall be
treated as a contribution of the Astoria Units to USPowerGenCo by the members of Astoria pursuant
to section 351 of the Code and (ii) the EBG Merger shall be treated as a contribution of the EBG
Units to USPowerGenCo by the members of EBG pursuant to section 351 of the Code.



     E. Immediately prior to the Mergers, each of the members of Astoria shall transfer (whether by
exchange, contribution, merger or otherwise) to New Astoria Generating Company Holdings, LLC, a
Delaware limited liability company (“New Astoria”), all of the Astoria Units held by such
member in exchange for the issuance by New Astoria to such member of an equivalent type and number
of units of limited liability company interest in New Astoria (the “Exchange”).



     NOW, THEREFORE, the parties hereto agree as follows:




 









 








ARTICLE I




THE MERGERS




     1.1 The Mergers.



     (a) Upon the terms and subject to the conditions of this Agreement and in accordance with the
applicable provisions of the Delaware Limited Liability Company Act (the “LLC Act”), at the
Effective Time, the EBG Merger shall be consummated pursuant to which EBG MergerCo shall be merged
with and into EBG and the separate existence of EBG MergerCo shall cease. After the EBG Merger, EBG
shall continue as the surviving company (sometimes hereinafter referred to as the “EBG
Surviving Company”) and shall continue to be governed by the laws of the State of Delaware. The
EBG Merger shall have the effect as provided in the applicable provisions of the LLC Act. Without
limiting the generality of the foregoing, at the Effective Time, all the rights, privileges,
immunities, powers and franchises of EBG MergerCo and EBG shall vest in the EBG Surviving Company
and all restrictions, obligations, duties, debts and liabilities of EBG MergerCo and EBG shall be
the restrictions, obligations, duties, debts and liabilities of the EBG Surviving Company.



     (b) Upon the terms and subject to the conditions of this Agreement and in accordance with the
applicable provisions of the LLC Act, at the Effective Time, the Astoria Merger shall be
consummated pursuant to which Astoria MergerCo shall be merged with and into Astoria and the
separate existence of Astoria MergerCo shall cease. After the Astoria Merger, Astoria shall
continue as the surviving company (sometimes hereinafter referred to as the “Astoria Surviving
Company”) and shall continue to be governed by the laws of the State of Delaware. The Astoria
Merger shall have the effect as provided in the applicable provisions of the LLC Act. Without
limiting the generality of the foregoing, at the Effective Time, all the rights, privileges,
immunities, powers and franchises of Astoria and Astoria MergerCo shall vest in the Astoria
Surviving Company and all restrictions, obligations, duties, debts and liabilities of Astoria and
Astoria MergerCo shall be the restrictions, obligations, duties, debts and liabilities of the
Astoria Surviving Company.



     1.2 Closing; Effective Time.



     (a) The closing of the Mergers (the “Closing”) shall take place at the offices of
Debevoise & Plimpton LLP, 919 Third Avenue, New York, New York, at 10:00 a.m., New York time, on
the third Business Day following the satisfaction or waiver of the conditions set forth in Article
V (other than conditions which, by their nature, are to be satisfied at the Closing, but subject to
the waiver or satisfaction of those conditions), or at such other place, time and date as the
parties may agree. The “Closing Date” shall be the date upon which the Closing occurs.



2









 





     (b) On the Closing Date, (i) EBG and EBG MergerCo will cause the appropriate
certificate of merger (the “EBG Certificate of Merger”) to be executed and filed with the
Secretary of State of the State of Delaware (the “Delaware Secretary of State”) in such
form and executed as provided in Section 18-209 of the LLC Act, and (ii) Astoria and
Astoria MergerCo will cause the appropriate certificate of merger (the “Astoria Certificate of
Merger”, and together with the EBG Certificate of Merger, the “Certificates of Merger”)
to be executed and filed with the Delaware Secretary of State in such form and executed as provided
in Section 18-209 of the LLC Act. The “Effective Time” shall be on the date and at the time
that both of the Certificates of Merger have been accepted for filing by the Delaware Secretary of
State, and all other documents required by the LLC Act to effectuate the Mergers shall have been
properly executed and filed (or such later date and time as may be agreed to by EBG and Astoria and
specified in the Certificates of Merger, provided that both Mergers shall become effective at the
same time). The parties will cause the EBG Certificate of Merger and the Astoria Certificate of
Merger to be filed with the Delaware Secretary of State as soon as practicable after the Closing on
the Closing Date.



     1.3 Conversion of Interests.



     (a) At the Effective Time, by virtue of the EBG Merger and without any action on the part of
EBG, EBG MergerCo or the members of any of the foregoing, each EBG Unit (other than EBG Units held
as treasury units) issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive ten (10) fully paid and nonassessable shares of Class A Common
Stock of USPowerGenCo (the “EBG Merger Consideration”). The EBG Units, when converted,
shall no longer be outstanding and shall automatically be canceled and retired and shall cease to
exist, and the holders of the EBG Units shall cease to have any rights with respect thereto, except
the right to receive the EBG Merger Consideration upon the delivery by such member of a letter of
transmittal in customary form.



     (b) At the Effective Time, by virtue of the Astoria Merger and without any action on the part
of Astoria, Astoria MergerCo or the members of any of the foregoing, each Astoria Unit (other than
Astoria Units held as treasury units) issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive thirty-five thousand five hundred thirty-nine
(35,539) fully paid and non-assessable shares of Class B Common Stock of USPowerGenCo (the
“Astoria Merger Consideration”). The Astoria Units, when converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to exist, and the
holders of the Astoria Units shall cease to have any rights with respect thereto, except the right
to receive the Astoria Merger Consideration upon the delivery by such member of a letter of
transmittal in customary form.



3









 





     (c) All EBG Units that are held by EBG as treasury units shall be canceled and retired and
shall cease to exist and no EBG Merger Consideration shall be delivered in exchange therefor.



     (d) All Astoria Units that are held by Astoria as treasury units shall be canceled and retired
and shall cease to exist and no Astoria Merger Consideration shall be delivered in exchange
therefor.



     (e) Each EBG MergerCo Unit issued and outstanding immediately prior to the Effective Time
(1,000 units, in the aggregate) shall be converted into and exchangeable for one unit of limited
liability company interest of the EBG Surviving Company (1,000 units, in the aggregate) (“EBG
Surviving Company Units”). From and after the Effective Time, each outstanding certificate
theretofore representing EBG MergerCo Units shall be deemed for all purposes to evidence ownership
of and to represent the number of EBG Surviving Company Units into which such EBG MergerCo Units
shall have been converted.



     (f) Each Astoria MergerCo Unit issued and outstanding immediately prior to the Effective Time
(1,000 units, in the aggregate) shall be converted into and exchangeable for one unit of limited
liability company interest of the Astoria Surviving Company (1,000 units, in the aggregate)
(“Astoria Surviving Company Units”). From and after the Effective Time, each outstanding
certificate theretofore representing Astoria MergerCo Units shall be deemed for all purposes to
evidence ownership of and to represent the number of Astoria Surviving Company Units into which
such Astoria MergerCo Units shall have been converted.



     1.4 EBG Warrants. At the Effective Time, by virtue of the EBG Merger and without any
action on the part of the holders thereof, each of the then outstanding EBG Warrants, if any, will
be converted into a warrant (a “Converted Warrant”) covering the purchase of a number of
shares of Class A Common Stock of USPowerGenCo equal to the number of shares of Class A Common
Stock of USPowerGenCo into which the EBG Units covered by such EBG Warrant would have been
converted pursuant to the EBG Merger, assuming such EBG Warrant had been exercised immediately
prior to the Effective Time. The terms and conditions of each Converted Warrant will otherwise
remain as set forth in the EBG Warrant converted into such Converted Warrant. USPowerGenCo shall at
all times keep in its authorized and issued shares of Class A Common Stock a sufficient number of
shares of Class A Common Stock to issue to holders of Converted Warrants upon exercise thereof.
USPowerGenCo shall take all such action such that, upon issuance, all shares of Class A Common
Stock issued pursuant to the exercise of a Converted Warrant shall be duly authorized, fully paid
and nonassessable.



4









 





     1.5 Organization Documents of USPowerGenCo. Each of the parties shall take such action
within its control such that, effective as of the Effective Time (a) the Certificate of
Incorporation of USPowerGenCo shall be substantially in the form of Exhibit A-l attached hereto
(until amended in accordance with the terms thereof), and (b) the Bylaws of USPowerGenCo shall be
substantially in the form of Exhibit A-2 attached hereto (until amended in accordance with the
terms thereof).



     1.6 Limited Liability Company Operating Agreements. At the Closing:



     (a) (i) EBG shall deliver a counterpart executed by USPowerGenCo and (ii)
Astoria shall deliver any required consents of the then current members of Astoria, in each case to
an amended and restated limited liability company operating agreement of Astoria in the form set
forth in Exhibit B (the “Astoria LLC Agreement”), which, effective as of the Effective
Time, shall be the limited liability company operating agreement of the Astoria Surviving Company.



     (b) EBG shall deliver a counterpart executed by USPowerGenCo to an amended and restated
limited liability company operating agreement of EBG in the form set forth in Exhibit C (the
“EBG LLC Agreement”), which, effective as of the Effective Time, shall be the limited
liability company operating agreement of the EBG Surviving Company.



     1.7 Directors and Officers of USPowerGenCo.



     (a) From and after the Effective Time, the individuals set forth on Exhibit D-l hereto shall
be the directors of USPowerGenCo and each of its Subsidiaries until their successors shall have
been duly elected or appointed and qualified or until their earlier death, resignation or removal
in accordance with the applicable Organizational Documents. On or prior to the Closing Date, EBG
shall deliver to Astoria evidence reasonably satisfactory to Astoria of the resignations, effective
as of the Effective Time, of the directors of EBG and each of its Subsidiaries (other than any
director set forth on Exhibit D-l), such resignations to be effective as of the Effective Time, and
evidence reasonably satisfactory to Astoria that the individuals set forth on Exhibit D-l have been
duly elected as directors of USPowerGenCo, effective as of the Effective Time.



     (b) From and after the Effective Time, the officers set forth on Exhibit D-2 hereto shall be
the officers of the USPowerGenCo until their successors shall have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance with the
applicable Organizational Documents. On or prior to the Closing Date, EBG shall deliver to Astoria
evidence reasonably satisfactory to Astoria of the resignations, effective as of the Effective
Time, of the officers of EBG and each of its Subsidiaries, and evidence reasonably satisfactory to
Astoria that the individuals set forth




5









 







on Exhibit D-2 have been duly appointed as officers of USPowerGenCo, effective as of the Effective
Time.




     1.8 True-up. It is the intention of the parties that, as of the Effective Time, the
aggregate number of shares of Class A Common Stock to be issued to the holders of EBG Units
pursuant to Section 1.3(a) and issuable to holders of Converted Warrants represents the EBG
Percentage multiplied by the Relevant Share Number and that the aggregate number of shares of Class
B Common Stock to be issued to New Astoria pursuant to Section 1.3(b) represents the New Astoria
Percentage multiplied by the Relevant Share Number. If, at the Effective Time, as a result of
application of Section 1.3 (a) and Section 1.4, the sum of (a) the aggregate number of shares of
USPowerGenCo Common Stock issued or issuable pursuant to Section 1.3(a) plus (b) the number of
shares of Class A Common Stock issuable upon exercise of the Converted Warrants (such sum, the
“EBG Fully-Diluted Shares”), exceeds 41,719,600, USPowerGenCo shall, for no consideration,
issue to New Astoria as promptly as practicable, an additional number of shares of Class B Common
Stock such that the number of shares of Class B Common Stock issued pursuant to Section 1.3(b) plus
the number of shares of Class B Common Stock issued pursuant to this Section 1.8 equals the New
Astoria Percentage multiplied by the Relevant Share Number (in each case determined as of the
Effective Time, but giving effect to such issuance). Furthermore, if, at the Effective Time, as a
result of application of Section 1.3(a) and Section 1.4, the number of EBG Fully-Diluted Shares is
less than 41,719,600, New Astoria shall, for no consideration, deliver as promptly as practicable
to USPowerGenCo for cancellation a number of shares of Class B Common Stock such that the number of
EBG Fully-Diluted Shares equals the EBG Percentage multiplied by the Relevant Share Number (in each
case determined as of the Effective Time, but giving effect to such cancellation). When used
herein, “EBG Percentage” means 54.0%, “New Astoria Percentage” means 46.0% and
“Relevant Share Number” means a number of shares of USPowerGenCo Common Stock equal to the
sum of (i) the number of shares of USPowerGenCo Common Stock issued or issuable to New Astoria
pursuant to Section 1.3(b), plus (ii) the number of shares of USPowerGenCo Common Stock issued or
issuable to holders of EBG Units pursuant to Section 1.3(a), plus (iii) the number of shares of
USPowerGenCo Common Stock issued or issuable upon exercise of the Converted Warrants, plus (iv) the
number of shares of Class B Common Stock (if any) which USPowerGenCo is obligated to issue pursuant
to this Section 1.8, minus (v) the number of shares of Class B Common Stock (if any) that New
Astoria is obligated to deliver for cancellation pursuant to this Section 1.8. For purposes of the
foregoing, USPowerGenCo shall at all times keep in its authorized and issued shares of Class B
Common Stock, and New Astoria shall keep free and clear of liens (other than liens under the
Certificate of Incorporation and liens on transfer under securities laws), a sufficient number of
shares of Class B Common Stock to satisfy its obligations hereunder. For all purposes hereof
(including USPowerGenCo’s and New Astoria’s obligations pursuant to the immediately foregoing
sentence), the type and number of shares otherwise issuable or deliverable under this Section 1.8
shall be equitably adjusted for any split, combination,




6









 







dividend, reorganization, recapitalization, merger, consolidation or similar transaction affecting
the Class B Common Stock after the Closing and prior to satisfaction of USPowerGenCo’s and New
Astoria’s obligations hereunder. Furthermore, in the event any regulatory filing or other
governmental filing is required in connection with the issuance of Class B Common Stock hereunder,
USPowerGenCo shall, and shall cause its Subsidiaries to, and New Astoria shall, cooperate in such
filing, and USPowerGenCo shall bear all fees and expenses related to such filing. USPowerGenCo
shall take all such action such that, upon issuance, all shares of Class B Common Stock issued
pursuant to this Section 1.8 shall be duly authorized, fully paid and nonassessable. In connection
with any delivery for cancellation by New Astoria pursuant to this Section 1.8, New Astoria shall
be required to represent only that such shares are owned by New Astoria free and clear of liens
(other than liens under the Certificate of Incorporation and liens on transfer under securities
laws). If the certificate representing the USPowerGenCo Common Stock being delivered for
cancellation represents shares in addition to those required to be delivered for cancellation,
USPowerGenCo shall promptly deliver to New Astoria a new certificate representing the shares of
USPowerGenCo Common Stock not being delivered for cancellation. It is intended that, for tax and
corporate law purposes, the issuance of USPowerGenCo Common Stock pursuant to this Section 1.8
shall be a contract right (not a dividend or distribution) and shall be treated for tax purposes as
an adjustment to the consideration paid at the Closing.




ARTICLE II




REPRESENTATIONS AND WARRANTIES

OF EBG




     Except as set forth in the disclosure letter delivered by EBG to Astoria on the date hereof
(the “EBG Disclosure Letter”), EBG represents and warrants to Astoria as of the date hereof
and as of the Closing Date as follows:



     2.1 Status, etc.



     (a) Organization. Schedule 2.1 (a) of the EBG Disclosure Letter lists all of EBG’s
Subsidiaries and their respective jurisdictions of organization. Each of EBG and its Subsidiaries
is the type of entity indicated on Schedule 2.1 (a) of the EBG Disclosure Letter, duly incorporated
or organized, as applicable, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, and has full corporate or other power and
authority to own, lease and operate its properties and to carry on its business as presently
conducted. Each of EBG and each of its Subsidiaries is duly qualified to do business and in good
standing as a foreign entity in all jurisdictions in which the failure to be so qualified would
have a Material Adverse Effect.



7









 





     (b) Authorization, etc. EBG has full limited liability company power and authority to
enter into this Agreement and, subject to receipt of the Requisite Consent of EBG Members, to
perform its obligations hereunder. The execution, delivery and performance by EBG of this Agreement
have been duly authorized by the Board of Directors of EBG, which, along with the Requisite Consent
of EBG Members, constitutes all requisite limited liability company authorization on the part of
EBG for such action. This Agreement has been duly executed and delivered by EBG and constitutes the
valid and binding obligation of EBG, enforceable against EBG in accordance with its terms, except
as limited by laws affecting the enforcement of creditors’ rights generally or by general equitable
principles. The Board of Directors of EBG, at a meeting duly called and held, duly and adopted
resolutions (i) approving this Agreement, the Mergers and the other transactions
contemplated by this Agreement, (ii) determining that the terms of the Mergers and the
other transactions contemplated by this Agreement are fair and in the best interests of EBG and the
members of EBG, (iii) recommending that the members of EBG adopt this Agreement and approve
the Mergers and (iv) declaring that this Agreement is advisable.



     2.2 Capitalization.



     (a) EBG. As of the date hereof, the authorized capital of EBG consists of an unlimited
number of EBG Units, which may be designated as Class A Units or Class B Units. 3,884,644 Class A
Units and 222,316 Class B Units have been validly issued and are outstanding. Schedule 2.2(a) of
the EBG Disclosure Letter sets forth, as of the date hereof, all Persons owning of record any
outstanding EBG Units and the number and class of EBG Units owned by such Person.



     (b) Subsidiaries. Schedule 2.2(b) of the EBG Disclosure Letter lists for each
Subsidiary of EBG the equity interests of such Subsidiary that are authorized, the equity interests
of such Subsidiary that are issued and outstanding and the Persons owning such issued and
outstanding equity interests. All issued and outstanding equity interests of EBG’s Subsidiaries
have been duly authorized and validly issued, are fully paid and nonassessable and are owned by the
Persons listed in Schedule 2.2(b) of the EBG Disclosure Letter free and clear of any Liens.



     (c) Warrants. As of the date hereof, EBG has granted or issued and has outstanding EBG
Warrants owned by the Persons and relating to the number of EBG Units listed in Schedule 2.2(c) of
the EBG Disclosure Letter.



     (d) Agreements with Respect to EBG Units, etc. Other than as set forth in the
Organizational Documents of EBG, or in Section 2.2(c) hereof, there are no (i) preemptive
or similar rights on the part of any holders of any class of securities of EBG or any of its
Subsidiaries; (ii) subscriptions, options, warrants, conversion, exchange or other rights,
agreements, commitments, arrangements or understandings of




8









 







any kind obligating EBG or any of its Subsidiaries, contingently or otherwise, to issue or sell, or
cause to be issued and sold, any EBG Units of or other equity interest of any class of EBG or any
of its Subsidiaries or any securities convertible into or exchangeable for any such EBG Units or
equity interests; (iii) unitholder agreements, voting trusts or other agreements or
understandings to which EBG or any of its Subsidiaries is a party or to which EBG or any of its
Subsidiaries is bound relating to the voting, purchase, redemption or other acquisition of any EBG
Units or other capital securities of EBG or any of its Subsidiaries; or (iv) outstanding
distributions, whether current or accumulated, due or payable on any of the equity interests of EBG
or any of its Subsidiaries.




     (e) Equity Interests. Except for its Subsidiaries, EBG does not own equity securities
or interests in any other Person. EBG is not a party to any stockholder agreements, voting trusts
or other agreements or understandings relating to the voting, purchase, redemption or other
acquisition of any shares of capital stock or equity interests in any other Person.



     2.3 Conflicts, Consents.



     (a) Conflicts. The execution and delivery of this Agreement by EBG, and the
performance of its obligations hereunder (i) do not conflict with the Organizational
Documents of EBG or any of its Subsidiaries, or (ii) subject to obtaining the Consents
referred to in Section 2.3(b) or Schedule 2.3(b) of the EBG Disclosure Letter, (x) do not
conflict with, violate, breach or result in a default under (with or without the giving of notice
or the lapse of time), give rise to a right of termination, cancellation, modification or
acceleration of any obligation or to the loss of any benefit under, any Permit or any Contract to
which EBG or any of its Subsidiaries is a party or by which any of them or their respective
properties or assets are bound or result in the creation or imposition of any Liens other than
Liens created by or resulting from the actions of Astoria or any of its Affiliates, or (y)
violate any law applicable to EBG or any of its Subsidiaries, except in the case of clauses (x) or
(y) for such conflicts, violations, breaches, defaults, terminations, cancellations, modifications,
accelerations, losses of benefits and Liens that would not, individually or in the aggregate,
reasonably be expected to be material and adverse to EBG and its Subsidiaries, taken as a whole.



     (b) Consents. Except as may be required (i) under the HSR Act, (ii) from FERC
under Section 203 of the Federal Power Act, or (iii) by the NYPSC under Section 70 of the New York
Public Service Law in the absence of a ruling declaring that the NYPSC will not review the Mergers
under Section 70 because the WallKill presumption is satisfied, no Consent of or with any court,
Governmental Entity or third Person is required to be obtained by EBG or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by EBG or the performance of its
obligations hereunder, except where the failure to do so would not, individually or in the
aggregate,




9









 







reasonably be expected to be material and adverse to EBG and its Subsidiaries, taken as a whole.




     2.4 Financial Statements. Schedule 2.4(a) of the EBG Disclosure Letter contains
complete and correct copies of consolidated statements of operations, members’ capital (deficit)
and cash flows of EBG and its Subsidiaries for the fiscal year ended December 31, 2005 and a
consolidated balance sheet of EBG and its Subsidiaries as at such date, together with the notes
thereto (the “EBG Annual Financial Statements”), audited by KPMG LLP, EBG’s certified
public accountants, complete and correct copies of unaudited consolidated statements of operations,
members’ capital (deficit) and cash flows of EBG and its Subsidiaries for the nine months ended
September 30, 2006 and an unaudited consolidated balance sheet of EBG and its Subsidiaries as at
such date (the “EBG September 2006 Financial Statements”) and a preliminary and unaudited
summary consolidated balance sheet of EBG and its Subsidiaries as at December 31, 2006 (the
“EBG Preliminary December 2006 Balance Sheet” and together with the EBG September 2006
Financial Statements, the “EBG Interim Financial Statements”); provided that, with
respect to the EBG Preliminary December 2006 Balance Sheet, no representation or warranty is being
made pursuant to this Section 2.4 to the extent relating to (i) additional adjustments to
reflect the mark-to-market values of assets or liabilities related to any swap or hedge
arrangements of EBG and its Subsidiaries, (ii) the final provision or benefit for income
taxes for 2006, including the amount of any deferred tax asset or deferred tax liability arising
from the difference between book and tax treatment of depreciation of assets and differences in the
timing of recognition of income and expenses for book and tax purposes, or (iii) other
adjustments which may be required (x) in completing the 2006 closing of the accounting
books and records of EBG and its Subsidiaries or (y) as a result of completion of the audit
of the 2006 consolidated financial statements of EBG and its Subsidiaries, none of which are
currently expected to be material. The EBG Interim Financial Statements, together with the EBG
Annual Financial Statements, are the “EBG Financial Statements”. The EBG Financial
Statements have been prepared in accordance with generally accepted accounting principles as
applied in the United States of America (“GAAP”) applied on a consistent basis during the
periods involved (except as otherwise noted therein or herein and except that the EBG Interim
Financial Statements are subject to year-end adjustment and do not contain all footnote disclosures
required by GAAP, which footnote disclosures would either (a) be substantially consistent,
including with respect to amount and contingencies, with the footnotes contained in the EBG Annual
Financial Statements, or (b) not, alone or in the aggregate, be materially adverse to the
business, operations, assets, liabilities, financial condition or results of operations of EBG and
its Subsidiaries taken as a whole) and fairly present in all material respects the consolidated
financial position and the consolidated results of operations and cash flows of EBG and its
consolidated Subsidiaries, as at the dates thereof or for the periods presented therein.



10









 





     2.5 Absence of Undisclosed Liabilities. Except (i) as reflected in the EBG
Financial Statements, (ii) for liabilities and obligations incurred in the ordinary course
of business since December 31, 2005 (none of which is a liability for breach of contract, breach of
warranty, tort, infringement, violation of law or lawsuit) and (iii) for liabilities and
obligations that, individually or in the aggregate, would not reasonably be expected to result in a
Material Adverse Effect, EBG and its Subsidiaries have not incurred any liabilities or obligations
that would be required to be reflected or reserved against in a consolidated balance sheet of EBG
and its consolidated Subsidiaries or the footnotes thereto prepared in accordance with GAAP in a
manner consistent with the EBG Financial Statements.



     2.6 Events Subsequent to Latest Financial Statements. Since December 31, 2005 through
the date hereof, other than in connection with the transactions contemplated by this Agreement, EBG
and its Subsidiaries have conducted their business in the ordinary course, in substantially the
same manner in which it has been previously conducted, EBG and its Subsidiaries have not suffered
any Material Adverse Effect and none of EBG or any of its Subsidiaries has:



     (a) amended its Organizational Documents;



     (b) issued any notes, bonds or other debt securities or any equity securities or rights
convertible, exchangeable or exercisable into any equity securities;



     (c) purchased or redeemed any of its equity securities;



     (d) incurred any long-term indebtedness for borrowed money or entered into any guaranty in
excess of $500,000 in the aggregate, other than revolver borrowings incurred in the ordinary course
of business;



     (e) mortgaged, pledged or subjected to any Lien any of its properties or assets, except for
Permitted Liens;



     (f) made any capital expenditures or commitments therefor that, individually or in combination
with related expenditures or commitments, amount to more than $1,000,000;



     (g) delayed or postponed the payment of accounts payable or commissions or any other liability
or obligation or negotiated with any party to extend the payment date of accounts payable or
commissions or any other liability or obligation or accelerated the collection of (or discounted)
any accounts or notes receivable, except in the case of any of the foregoing, in the ordinary
course of business;



11









 





     (h) except as required by GAAP or required by a change in applicable law, statute, rule or
regulation, made any material change in its accounting principles or the methods by which such
principles are applied for financial accounting purposes;



     (i) except as required by a change in applicable law, made any material change in its Tax
accounting principles or its Tax elections;



     (j) adopted, modified, or terminated any EBG Benefit Plan or EBG Employment Agreement, or
increased the compensation of any officer or employee, other than (i) in the ordinary
course of business, (ii) to comply with applicable law or (iii) as required
pursuant to existing contracts or agreements;



     (k) implemented any plant closing or other layoff of employees that could implicate the Worker
Adjustment and Retraining Notification Act, as amended, or any similar foreign, state or local law,
regulation or ordinance;



     (1) disposed or agreed to dispose of any material properties or assets in an amount in excess
of $500,000 in any individual case or $1,000,000 in the aggregate (in the case of related
dispositions) or acquired or agreed to acquire assets or properties in an amount in excess of
$500,000 in any individual case or $1,000,000 in the aggregate (in the case of related
acquisitions), in each case other than sales of fuel, power or energy, in the ordinary course of
business;



     (m) merged or consolidated with, purchased substantially all of the assets of, or otherwise
acquired any business or any Person;



     (n) materially amended any EBG Material Contract or terminated any material contract, other
than in the ordinary course of business;



     (o) instituted or settled any claim or lawsuit involving equitable or injunctive relief or
damages of more than $1,000,000;



     (p) canceled or forgiven any material debts or claims;



     (q) made any changes to its hedging policies or risk management policies; or



     (r) declared or paid distributions on its equity securities except intercompany dividends and
distributions and tax distributions to its members payable in accordance with its limited liability
company operating agreement.



     2.7 Tax Matters. Except as reflected or reserved against in the EBG Financial
Statements and for matters that would not reasonably be expected to be material, either
individually or in the aggregate, (a) each Tax Return required to have been filed by EBG or
any of its Subsidiaries has been timely filed and each such Tax Return is accurate and




12









 







complete, (b) all Taxes required to be paid by EBG and its Subsidiaries (whether or not
shown as due on such Tax Returns) have been paid, (c) all Employment and Withholding Taxes required
to be paid or withheld by or on behalf of EBG or any of its Subsidiaries have been paid or properly
set aside in accounts for such purpose, (d) no written agreement or other document
extending, or having the effect of extending, the period of assessment or collection of any Taxes
payable by EBG or any of its Subsidiaries is in effect as of the date hereof, (e) neither
EBG nor any of its Subsidiaries is, as of the date hereof, the beneficiary of any extension of time
(other than an automatic extension of time not requiring the consent of the IRS or any other taxing
authority) within which to file any Tax Return not previously filed, (f) as of the date
hereof, there are not pending any audits, examinations or other proceedings in respect of Taxes
payable by EBG or any of its Subsidiaries, (g) neither EBG nor any of its Subsidiaries is a
party to any Tax sharing or Tax allocation agreement with any other Person or has liability for
Taxes of any other Person (other than EBG or any of its Subsidiaries) (I) under Treasury
Regulation § 1.1502-6 (or any similar provision of state, local or foreign Tax law) or (II)
as a transferee or successor, (h) neither EBG nor any of its Subsidiaries has distributed
stock of another Person, or has had its stock distributed by another Person, in a transaction that
was purported or intended to be governed in whole or in part by Code section 355 or 361, and
(i) neither EBG nor any of its Subsidiaries has engaged in a “listed” transaction within
the meaning of Treasury Regulations Section 1.6011-4.




     2.8 Litigation. There is no judicial or administrative action, criminal charge, civil
or criminal complaint, claim, suit, proceeding or investigation pending or, to the Knowledge of
EBG, threatened against EBG or any of its Subsidiaries or any of the EBG Owned Real Property or the
EBG Leased Real Property, in each case, before any Governmental Entity, that (a)
individually or in the aggregate would reasonably be expected to have a Material Adverse Effect or
(b) questions the validity of this Agreement or any action taken or to be taken by EBG or
any of its Subsidiaries in connection herewith.



     2.9 Compliance with Laws; Permits.



     (a) Neither EBG nor any of its Subsidiaries is in, and none of EBG or any of its Subsidiaries
is in receipt of any written notice of any, violation of any law, statute, rule, regulation,
judgment, order, decree, permit, concession, franchise or other governmental authorization or
approval applicable to it or to any of its properties, and EBG and its Subsidiaries have complied
in all material respects with all laws, statutes, riles, regulations, judgments, orders, decrees,
permits, concessions, franchises, and other governmental authorizations or approvals applicable to
it or its properties, except, for any such violations or non-compliance which would not,
individually or in the aggregate, reasonably be expected to be material to EBG and its
Subsidiaries, taken as a whole.



13









 





     (b) All of the licenses, permits and other governmental authorizations necessary to conduct
the business of EBG and its Subsidiaries as presently conducted (collectively, the “EBG
Permits”) have been duly obtained, are held by EBG or its Subsidiaries and are in full force
and effect, except in each case where such a failure would not reasonably be expected to have a
Material Adverse Effect. No event has occurred or other fact exists with respect to the Permits
that allows, or after notice or lapse of time or both would allow, revocation or termination of any
of the Permits or would result in any other impairment of the rights of the holder of any of the
Permits that individually or in the aggregate would reasonably be expected to have a Material
Adverse Effect.



     (c) This Section 2.9 does not relate to tax matters, employee benefits matters or
environmental matters, which are provided for in Sections 2.7, 2.1l and 2.17, respectively.



     2.10 Regulatory Status.



     (a) Schedule 2.10(a) of the EBG Disclosure Letter sets forth, the name, location, nominal
capacity and EBG’s direct or indirect ownership of each generating facility owned directly or
indirectly, in whole or in part, by EBG or any of its Subsidiaries (the “EBG Facilities”).
Each of the EBG Project Company Subsidiaries meets the requirements for, and has made the necessary
filing with, or has been determined by, FERC to be an exempt wholesale generator (“EWG”)
within the meaning of Section 1262(6) of PUHCA. Each of BG and the EBG Project Company Subsidiaries
is authorized by FERC pursuant to Section 205 of the FPA to sell electric power, including energy
and capacity and ancillary services, at market-based rates and has received such waivers and
blanket authorizations as are customarily granted by FERC to entities authorized to sell electric
power at market-based rates, including, but not limited to, authorization to issue securities and
assume obligations or liabilities pursuant to Section 204 of the FPA.



     (b) There are no pending FERC proceedings in which the EWG status (as applicable),
market-based rate authority or the FPA Section 204 authority of BG or any EBG Project Company
Subsidiary is subject to withdrawal, revocation or material modification other than (i) FERC
rulemakings of general applicability, including, but not limited to, Market-Based Rates for
Wholesale Sales of Energy, Capacity and Ancillary Services by Public Utilities in Docket No.
RM04-7-000 and (ii) FERC proceedings concerning ISO New England market rules including, but not
limited to, market mitigation measures as may apply to BG or such EBG Project Company Subsidiary
and similarly situated sellers of wholesale electric power with market-based rates.



     (c) EBG, BG and each EBG Project Company Subsidiary is in full compliance in all material
respects with the terms and conditions of all orders issued by




14









 







FERC under Section 203 of the FPA and obtained by EBG, BG or any EBG Project Company Subsidiary.




     (d) Each of EBG and BG is a “holding company” within the meaning of Section 1262(8) of PUHCA
solely with respect to its ownership of one or more EWGs, and is not subject to or is otherwise
exempt from regulation under PUHCA except for regulation under Section 1265 of PUHCA.



     (e) EBG and each of its Subsidiaries has filed or caused to be filed with the applicable state
or local utility commissions or utility regulatory bodies and the FERC, all material forms,
statements, reports and documents (including all exhibits, amendments and supplements thereto)
required to be filed by it with respect to EBG and each of its Subsidiaries’ businesses and each
EBG Facility under all applicable laws and PUHCA and the respective rules and regulations
thereunder, all of which complied in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder in effect on the date each such report was
filed.



     (f) No order, judgment or decree shall have been issued or proposed to be issued by any
Governmental Entity that, as a result of the construction, ownership, leasing or operation of any
EBG Facility by EBG or any of its Subsidiaries, the sale of electricity therefrom by BG or the EBG
Project Company Subsidiaries, or any transaction contemplated hereby, could reasonably be expected
to cause or deem EBG or any of its Subsidiaries to be subject to, and not exempted from, regulation
under PUHCA, except for regulation under Section 1265 of PUHCA.



     (g) EBG has disclosed to Astoria all information regarding EBG and each of its Subsidiaries,
their respective businesses, financial conditions and corporate governance, directors, officers and
affiliates, any agreements and arrangements among such Persons regarding their direct and indirect
interests in EBG and each of its Subsidiaries and the allocation among such Persons of economic and
management rights relating to EBG and its Subsidiaries that could be reasonably expected to affect
the ability of the parties to obtain any approval, Consent or authorization of any Governmental
Entity under the FPA or any other federal, state or local energy law or regulation (including any
Section 203 approval) or to make any requisite filing with any Governmental Entity under the FPA or
any other federal, state or local energy law or regulation, in any case necessary for or required
as a result of the execution, delivery and performance of this Agreement.



     2.11 Employee Benefits.



     (a) Company Benefit Plans; Employment Agreements. Schedule 2.11 (a)(i) of the EBG
Disclosure Letter contains a complete and accurate list of each material Plan that is maintained,
contributed to or established by EBG or any of its ERISA Affiliates or




15









 







under which any such Person has any current or contingent obligation and under which any current or
former officer, director, consultant or employee of EBG or any of its ERISA Affiliates, or the
beneficiaries or dependents of any such person, is or will become eligible to participate or derive
a benefit (“EBG Benefit Plans”). Schedule 2.1 l(a)(ii) of the EBG Disclosure Letter sets
forth all written employment, severance and retention agreements other than any such agreement
(x) that, by its terms, may be terminated or canceled by EBG or any Subsidiary with notice
of not more than the greater of 120 days and the period of notice required under applicable law, in
each case without penalty and (y) providing for the payment of annual salary and bonus or
severance payments less than $250,000 in any one case (“EBG Employment Agreements”).




     (b) Compliance; Liability. Each EBG Benefit Plan has been operated and administered in
accordance with its terms and with applicable law, except for any failure to do so that would not
reasonably be expected to have a Material Adverse Effect. All contributions required to have been
made by EBG and its Subsidiaries under any EBG Benefit Plan have been made by the due date therefor
(including any extensions). There is no pending or, to the Knowledge of EBG, threatened material
legal action, suit or claim relating to EBG Benefit Plans (other than routine claims for benefits).
EBG and its ERISA Affiliates have engaged in no transaction with respect to any EBG Benefit Plan
that, assuming the taxable period of such transaction has expired as of the date hereof, would
reasonably be expected to subject EBG and its Subsidiaries to a tax or penalty imposed by either
section 4975 of the Code or section 502(i) of ERISA that would reasonably be expected to have a
Material Adverse Effect. Neither EBG nor any of its Subsidiaries is in breach of any EBG Employment
Agreement.



     (c) Tax Qualification. Each EBG Benefit Plan that is intended to be qualified under
section 401(a) of the Code has received a favorable determination letter from the IRS as to its
qualification under the Code and to the effect that each such trust is exempt from taxation under
section 501(a) of the Code, and, to the Knowledge of EBG, nothing has occurred since the date of
such determination letter that will adversely affect such qualification or tax-exempt status.



     (d) Title IV of ERISA. Neither EBG nor any ERISA Affiliate has incurred any material
liability under Title IV of ERISA or is subject to section 302 of ERISA or section 412 of the Code,
and no event, transaction or condition exists that would result in any material liability to the
EBG Surviving Company or any ERISA Affiliate following the Closing. No EBG Benefit Plan is or was a
plan subject to Code section 412 or section 302 or Title IV of ERISA, a “multiemployer plan” as
defined in section 3(37) of ERISA, or “multiple employer plan” under section 4063 of ERISA.



     (e) Triggering Events. Neither the execution of this Agreement nor the performance of
the obligations hereunder by EBG or its Subsidiaries shall by itself or in




16









 







connection with any other event require a payment, or cause the accelerated vesting or timing of a
right to a payment, under any EBG Benefit Plan or under any EBG Employment Agreement. The
performance of the obligations hereunder by EBG or its Subsidiaries will not, by itself or in
connection with other events, result in any payment under any EBG Benefit Plan or under any EBG
Employment Agreement that would constitute an “excess parachute payment” for purposes of section
280G or 4999 of the Code.




     (f) Documents. With respect to each EBG Benefit Plan, EBG has made available to
Astoria true and complete copies of the following documents, to the extent applicable: (i)
the most recent Plan document and all amendments thereto; (ii) the most recent trust
instrument and insurance contracts and any other funding or investment agreements; (iii)
the Form 5500 and accompanying schedules for the current year and the immediately preceding three
years filed with the IRS; (iv) the most recent summary plan description; and (v)
the most recent determination letter issued by the IRS. EBG has made available to Astoria true and
complete copies of EBG Employment Agreements.



     (g) Neither EBG nor any of its Subsidiaries or ERISA Affiliates has any obligation to provide
health benefits or other benefits to retired or other former employees, except as specifically
required by section 4980B of the Code or Part 6 of Title I of ERISA, and EBG and each of its
Subsidiaries or ERISA Affiliates has complied in all material respects with the requirements of
Code section 4980B and such Part 6. Schedule 2.1l(g) of the EBG Disclosure Letter sets forth a list
of all employees on or eligible for COBRA.



     2.12 Labor Matters. No labor strike, material labor dispute, or concerted work
stoppage is currently pending or, to the Knowledge of EBG, threatened with respect to any employee
of EBG or its Subsidiaries. Each of EBG and its Subsidiaries is in compliance with all applicable
labor laws in connection with the employment of its employees, except for such non-compliance that
individually or in the aggregate would not reasonably be expected to have a Material Adverse
Effect. None of EBG or any of its Subsidiaries is party to or bound by any Contract or other
agreement with any labor union representing its employees or collective bargaining agreement and,
to the Knowledge of EBG, there are no activities or proceedings of any labor union to organize any
such employees.



     2.13 Real Property; Tangible Property.



     (a) Schedule 2.13(a) of the EBG Disclosure Letter lists all material items of real property
either owned by EBG or its Subsidiaries (the “EBG Owned Real Property”) or leased by EBG or
its Subsidiaries (the “EBG Leased Real Property”). EBG and its Subsidiaries have good and
marketable fee simple title to the EBG Owned Real Property listed on Schedule 2.13(a) and valid
leasehold interests in the EBG Leased Real Property




17









 







listed on Schedule 2.13(a), in each case free and clear of all Liens except for Permitted Liens.
None of EBG or any of its Subsidiaries owns or holds, has granted or is obliged under any
contractual right to purchase, acquire, sell or dispose of any EBG Owned Real Property. None of EBG
or any of its Subsidiaries is obligated under any agreement to purchase or acquire any EBG Leased
Real Property.




     (b) The EBG Owned Real Property and the EBG Leased Real Property, together with easements
appurtenant thereto, include all of the material real property used or held for use in connection
with or otherwise required to carry on the business of EBG and its Subsidiaries, as currently
conducted.



     (c) Schedule 2.13(c) of the EBG Disclosure Letter contains a complete and correct list of all
real property leases relating to the EBG Leased Real Property to which EBG or any of its
Subsidiaries is a party or is bound (the “EBG Leases”). EBG has made available to Astoria
correct and complete copies of the EBG Leases, including all amendments, modifications, and
extensions thereto and guarantees thereof. Under each of the EBG Leases, the tenant thereunder
enjoys peaceful and undisturbed possession of and has the exclusive right to use and occupy its
respective EBG Leased Real Property. Each of the EBG Leases (including any option to purchase
contained therein) is in full force and effect and, to the Knowledge of EBG, is enforceable against
the landlord which is party thereto in accordance with its terms, and there exists no default or
event of default (or any event that with notice or lapse of time or both would become a default) on
the part of EBG or any of its Subsidiaries under any EBG Leases, except for such failures to be in
full force and effect and defaults as would not, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse Effect.



     (d) EBG and its Subsidiaries have legal and beneficial ownership of all of their respective
tangible personal property and assets included in the EBG Financial Statements for the fiscal year
ended December 31, 2005, except for properties and assets disposed of in the ordinary course of
business since December 31, 2005, in each case free and clear of all Liens other than Permitted
Liens. Except as would not reasonably be expected to have a Material Adverse Effect, EBG and its
Subsidiaries own or have the right to use all of the properties and assets necessary for the
conduct of their business as currently conducted. Each such tangible asset has been maintained in
accordance with normal industry practice, is in good operating condition and repair (subject to
normal wear and tear) and is suitable for the purpose for which it is currently used.



     (e) Each parcel included in EBG Owned Real Property is assessed for real property tax purposes
as a wholly-independent tax lot, separate and apart from any adjoining land or improvements not
constituting a part of that parcel.



18









 





     2.14 Intellectual Property.



     (a) Schedule 2.14(a) of the EBG Disclosure Letter lists all material trademarks, trade names,
service marks, copyrights and patents that, as of the date hereof, are registered or subject to an
application for registration (collectively, “Intellectual Property”) that are owned by EBG
or any of its Subsidiaries and are material to the conduct of the business of EBG or any of its
Subsidiaries, as currently conducted (“EBG Owned Intellectual Property”). EBG and its
Subsidiaries have taken commercially reasonable steps in accordance with normal industry practice
to protect and maintain in force the EBG Owned Intellectual Property and to protect the
confidentiality of trade secrets used in the operation of the business. Except for infringements,
claims, demands, proceedings and defects in rights that would not, individually or in the
aggregate, reasonably be expected to have or result in a Material Adverse Effect, (i) to
the Knowledge of EBG, the use of the EBG Owned Intellectual Property by EBG and its Subsidiaries as
currently used does not infringe on the Intellectual Property rights of any Person and (ii)
there is no claim or demand of any Person pertaining to, or any proceeding that is pending or, to
the Knowledge of EBG, threatened that challenges the rights of EBG or any of its Subsidiaries in
respect of, any EBG Owned Intellectual Property.



     (b) Schedule 2.14(b) of the EBG Disclosure Letter lists all material written licenses to
Intellectual Property or trade secrets (other than licenses for “off-the-shelf software) to which
EBG or any of its Subsidiaries is a party, pursuant to which (i) EBG or such Subsidiary
permits any Person to use any of the EBG Owned Intellectual Property or trade secrets owned by EBG
or such Subsidiary, or (ii) any Person permits EBG or such Subsidiary to use any
Intellectual Property or trade secrets not owned by EBG or such Subsidiary that are necessary for
the conduct of the business of EBG or any of its Subsidiaries as currently conducted (collectively,
the “EBG Licenses”). EBG has made available to Astoria copies of all of the EBG Licenses.
Neither EBG nor any of its Subsidiaries, nor, to the Knowledge of EBG, any other party thereto, is
in default under any EBG License, and each EBG License is in full force and effect as to EBG or
Subsidiary thereof party thereto and, to the Knowledge of EBG, as to each other party thereto,
except for such defaults and failures to be so in full force and effect as would not, individually
or in the aggregate, reasonably be expected to have or result in a Material Adverse Effect.



     2.15 Contracts. Schedule 2.15 of the EBG Disclosure Letter lists, as of the date
hereof, all EBG Material Contracts (other than Organizational Documents of any of the Subsidiaries,
agreements related to employee benefits, agreements related to labor matters, real property leases
and agreements related to intellectual property, the last four of which are provided for in
Sections 2.11, 2.12, 2.13, and 2.14, respectively). The term “EBG Material Contracts” means
all of the following types of Contracts to which EBG or




19









 







any of its Subsidiaries is a party or by which EBG or any of its Subsidiaries or any of their
respective properties is bound as of the date hereof:





     (a) all material gas pipeline interconnection agreements, gas supply agreements, gas
purchase and sale agreements and gas transportation agreements;




     (b) all material fuel, supply or transportation agreements (including fuel and oil
transportation agreements);




     (c) all power purchase agreements (involving more than 10% of any EBG Facility’s nominal
capacity or having a term of more than one month) and all material water supply agreements,
wastewater disposal agreements, any waste disposal agreements, electricity transmission
agreements and electricity interconnection agreements;




     (d) all material swap, exchange, commodity option or hedging agreements or similar
arrangements;




     (e) all material operating and maintenance agreements, management agreements,
administrative services agreements and long term service agreements;




     (f) all Contracts (other than ordinary course maintenance Contracts) requiring a future
capital expenditure or known commitment by EBG or any of its Subsidiaries in excess of
$1,000,000 in any twelve month period;




     (g) all contracts requiring known or liquidated expenditures or payments to or from EBG
or any of its Subsidiaries in excess of $1,000,000 in any calendar year, other than those that
can be terminated without material penalty to EBG or any of its Subsidiaries, as applicable,
upon not more than sixty (60) days’ notice;




     (h) all contracts or agreements under which the EBG or any of its Subsidiaries is
obligated to sell real or personal property having a value in excess of $1,000,000;




     (i) mortgages, indentures, loan or credit agreements, security agreements, and other
agreements and instruments relating to the borrowing of money or extension of credit in any
case in excess of $1,000,000;




     (j) joint venture and limited partnership agreements (other than limited partnerships of
which EBG owns 100% of the partnership interests);



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     (k) all contracts to which EBG or any of its Subsidiaries is party that contain a
covenant not to compete applicable to EBG or any of its Subsidiaries or their respective
Affiliates or otherwise restrict any of EBG or any of its Subsidiaries or their respective
Affiliates from engaging in any line of business in the electricity or power industry or
generating, developing or distributing, or other rights with respect to, electricity or power
(other than term loan agreements, indentures or similar financing contracts typical to the
electricity or power industry containing customary restrictive covenants);



     (1) stock purchase agreements, asset purchase agreements and other acquisition or
divestiture agreements relating to the acquisition, lease or disposition by EBG or its
Subsidiaries of material assets and properties (other than in the ordinary course of business)
or any equity interest of EBG or its Subsidiaries, in each case which was entered into by EBG
or its Subsidiaries after December 31, 2005 or under which EBG or its Subsidiaries has any
executory indemnification obligations;



     (m) credit support guarantees, letters of credit or other agreements by which EBG or any
of its Subsidiaries guarantees or otherwise provides support for the obligations of another
Person other than EBG or any of its Subsidiaries, in each case with respect to amounts in
excess of $1,000,000; and



     (n) securityholder agreements, voting trusts or other agreements or understandings to
which EBG or any of its Subsidiaries is a party or to which EBG or any of its Subsidiaries is
bound relating to the voting, purchase, redemption or other acquisition of any equity
securities of EBG or any of its Subsidiaries.



EBG has made available to Astoria copies of all of the EBG Material Contracts. Each such EBG
Material Contract is a valid and binding agreement of EBG or one of its Subsidiaries and, to the
Knowledge of EBG, the counterparty thereto, and is in full force and effect, and neither EBG nor
any of its Subsidiaries nor, to the Knowledge of EBG, any other Person is in default under any EBG
Material Contract, except for such failures to be in full force and effect and defaults as would
not, individually or in the aggregate, reasonably be expected to have or result in a Material
Adverse Effect.



     2.16 Insurance. Schedule 2.16 of the EBG Disclosure Letter lists all of the policies
of insurance, other than real property title insurance policies, maintained by EBG or any of its
Subsidiaries for the policy year that includes the date hereof. Each such policy is in full force
and effect. All policy premiums due and payable with respect to all periods specified in Schedule
2.16 of the EBG Disclosure Letter have either been paid or adequate provision for the payment by
EBG or a Subsidiary thereof has been made. Neither EBG nor any of its Subsidiaries has received any
written notice of any material




21









 







increase of premiums with respect to, or cancellation or non-renewal of, any of such insurance
policies.




     2.17 Environmental Matters. Except as would not, individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect:




     (a) EBG and its Subsidiaries are and have been in compliance with all applicable
Environmental Laws;




     (b) EBG and its Subsidiaries have obtained, and are in compliance with, all permits,
licenses and other authorizations required under applicable Environmental Laws for their
operations and the ownership of the EBG Owned Real Property and the occupation of the EBG
Leased Real Property;




     (c) neither EBG nor any of its Subsidiaries has received from any Person any written
notice of violation, alleged violation, non-compliance, liability or potential liability under
Environmental Laws, other than matters that have been settled and resolved without future
obligation;




     (d) no complaint, claim, suit, investigation, judicial proceeding or governmental or
administrative action is pending, or to the Knowledge of EBG, threatened, under any applicable
Environmental Law relating to EBG or any of its Subsidiaries, the EBG Owned Real Property or
the EBG Leased Real Property;




     (e) neither EBG nor any of its Subsidiaries has any liability with respect to, or any
obligation to investigate or remediate any condition resulting from the release or threatened
release of Hazardous Substances; and




     (f) none of the EBG Owned Real Property or the EBG Leased Real Property is subject to any
activity or use restriction, or other deed restriction, that was implemented pursuant to any
Environmental Law or as a result of the presence or remediation of Hazardous Substances, and
that would reasonably be expected to limit, hinder or interfere with the current or future
operations at such real property.


EBG has provided to Astoria all environmental site assessments, audits, investigations and studies
in the possession, custody or control of EBG or any of its Subsidiaries relating to properties or
assets currently or formerly owned, leased, or operated by EBG or any of its Subsidiaries.




     Notwithstanding any of the representations and warranties contained elsewhere in this
Agreement, matters arising under Environmental Laws shall be governed exclusively by this Section
2.17.




22












 





     2.18 Affiliate Transactions. Except for any such agreements among EBG and its wholly
owned subsidiaries, neither EBG nor any of its Subsidiaries is a party to any agreement with any
Affiliate or any member of EBG.



     2.19 Brokers. Other than with respect to Lehman Brothers whose fees and expenses will
be paid by the EBG Surviving Company, all negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out without the intervention of any Person
acting on behalf of EBG in such manner as to give rise to any valid claim against USPowerGenCo, the
Astoria Surviving Company or the EBG Surviving Company for any brokerage or finder’s commission,
fee or similar compensation.



     2.20 Formation of USPowerGenCo, Astoria MergerCo and EBG MergerCo; No Prior
Activities. Each of USPowerGenCo, Astoria MergerCo and EBG MergerCo was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement. As of the date hereof and
the Closing Date, except for (i) obligations or liabilities incurred in connection with its
incorporation or organization and the transactions contemplated by this Agreement and (ii)
this Agreement and any other agreements or arrangements contemplated by this Agreement or in
furtherance of the transactions contemplated hereby, none of USPowerGenCo, Astoria MergerCo and EBG
MergerCo has incurred, directly or indirectly, through any Subsidiary or Affiliate, any obligations
or liabilities or engaged in any business activities of any type or kind whatsoever or entered into
any agreements or arrangements with any Person.



     2.21 Appraisal Rights. No member of EBG shall have any appraisal or similar rights as
a result of the EBG Merger.



ARTICLE III




REPRESENTATIONS AND WARRANTIES OF

ASTORIA




          Except as set forth in the disclosure letter delivered by Astoria to EBG on the date hereof
(the “Astoria Disclosure Letter”), Astoria represents and warrants to EBG as of the date
hereof and as of the Closing Date as follows:




     3.1 Status, etc.



     (a) Organization. Schedule 3.1(a)of the Astoria Disclosure Letter lists all of
Astoria’s Subsidiaries and their respective jurisdictions of organization. Each of Astoria and its
Subsidiaries is the type of entity indicated on Schedule 3.1 (a) of the Astoria Disclosure Letter,
duly incorporated or organized, as applicable, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization, and



23









 




has full corporate or other power and authority to own, lease and operate its properties and to
carry on its business as presently conducted. Each of Astoria and each of its Subsidiaries is duly
qualified to do business and in good standing as a foreign entity in all jurisdictions in which the
failure to be so qualified would have a Material Adverse Effect.




     (b) Authorization, etc. Astoria has full limited liability company power and authority
to enter into this Agreement and to perform its obligations hereunder. The execution, delivery and
performance by Astoria of this Agreement have been duly authorized by the Board of Directors of
Astoria and the unanimous consent of all members of Astoria, which constitute all requisite limited
liability company authorization on the part of Astoria for such action. This Agreement has been
duly executed and delivered by Astoria and constitutes the valid and binding obligation of Astoria,
enforceable against Astoria in accordance with its terms, except as limited by laws affecting the
enforcement of creditors’ rights generally or by general equitable principles.



     3.2 Capitalization.



     (a) Astoria. As of the date hereof, the authorized capital of Astoria consists of
32,001,086 total Astoria Units, of which 32,000,000 are designated Series A Voting Common Units and
1,086 are designated Series B Nonvoting Common Units. 31,440,000 Series A Voting Common Units and
1,086 Series B Nonvoting Common Units have been validly issued and are outstanding. Schedule 3.2(a)
of the Astoria Disclosure Letter sets forth, as of the date hereof, all Persons owning of record
any outstanding Astoria Units and the number and series of Astoria Units owned by such Person.
Immediately prior to the Closing and after giving effect to the Exchange, New Astoria shall own all
outstanding Astoria Units and each member of New Astoria shall own the same number and series of
New Astoria units as the number and series of Astoria Units owned by such member immediately prior
to the Exchange.



     (b) Subsidiaries. Schedule 3.2(b) of the Astoria Disclosure Letter lists for each
Subsidiary of Astoria the equity interests of such Subsidiary that are authorized, the equity
interests of such Subsidiary that are issued and outstanding and the Persons owning such issued and
outstanding equity interests. All issued and outstanding equity interests of Astoria’s Subsidiaries
have been duly authorized and validly issued, are fully paid and nonassessable and are owned by the
Persons listed in Schedule 3.2(b) of the Astoria Disclosure Letter free and clear of any Liens.



     (c) Agreements with Respect to Astoria Units, etc. Other than as set forth in the
Organizational Documents of Astoria and the Exchange Agreement, there are no (i) preemptive
or similar rights on the part of any holders of any class of securities of Astoria or any of its
Subsidiaries; (ii) subscriptions, options, warrants, conversion, exchange or other rights,
agreements, commitments, arrangements or understandings of any kind obligating Astoria or any of
its Subsidiaries, contingently or otherwise, to issue



24









 




or sell, or cause to be issued and sold, any Astoria Units of or other equity interest of any class
of Astoria or any of its Subsidiaries or any securities convertible into or exchangeable for any
such Astoria Units or equity interests; (iii) unitholder agreements, voting trusts or other
agreements or understandings to which Astoria or any of its Subsidiaries is a party or to which
Astoria or any of its Subsidiaries is bound relating to the voting, purchase, redemption or other
acquisition of any Astoria Units or other capital securities of Astoria or any of its Subsidiaries;
or (iv) outstanding distributions, whether current or accumulated, due or payable on any of
the equity interests of Astoria or any of its Subsidiaries.




     (d) Equity Interests. Except for its Subsidiaries, Astoria does not own equity
securities or interests in any other Person. Astoria is not a party to any stockholder agreements,
voting trusts or other agreements or understandings relating to the voting, purchase, redemption or
other acquisition of any shares of capital stock or equity interests in any other Person.



     3.3 Conflicts, Consents.



     (a) Conflicts. The execution and delivery of this Agreement by Astoria, and the
performance of its obligations hereunder (i) do not conflict with the Organizational
Documents of Astoria or any of its Subsidiaries, or (ii) subject to obtaining the Consents
referred to in Section 3.3(b) or Schedule 3.3(b) of the Astoria Disclosure Letter, (x) do
not conflict with, violate, breach or result in a default under (with or without the giving of
notice or the lapse of time), give rise to a right of termination, cancellation, modification or
acceleration of any obligation or to the loss of any benefit under, any Permit or any Contract to
which Astoria or any of its Subsidiaries is a party or by which any of them or their respective
properties or assets are bound or result in the creation or imposition of any Liens other than
Liens created by or resulting from the actions of EBG or any of its Affiliates, or (y)
violate any law applicable to Astoria or any of its Subsidiaries, except in the case of clauses (x)
or (y) for such conflicts, violations, breaches, defaults, terminations, cancellations,
modifications, accelerations, losses of benefits and Liens that would not, individually or in the
aggregate, reasonably be expected to be material and adverse to Astoria and its Subsidiaries, taken
as a whole.



     (b) Consents. Except as may be required (i) under the HSR Act, (ii)
from the FERC under Section 203 of the Federal Power Act, or (iii) by the NYPSC under
Section 70 of the New York Public Service Law in the absence of a ruling declaring that the NYPSC
will not review the Mergers under Section 70 because the Wallkill presumption is satisfied, no
Consent of or with any court, Governmental Entity or third Person is required to be obtained by
Astoria or any of its Subsidiaries in connection with the execution and delivery of this Agreement
by Astoria or the performance of its obligations hereunder, except where the failure to do so would
not, individually or in the aggregate,



25









 




reasonably be expected to be material and adverse to Astoria and its Subsidiaries, taken as a
whole.




     3.4 Financial Statements. Schedule 3.4(a) of the Astoria Disclosure Letter contains
complete and correct copies of consolidated statements of operations, changes in unitholder’s
equity and cash flows of Astoria and its Subsidiaries for the fiscal year ended December 31, 2005
and a consolidated balance sheet of Astoria and its Subsidiaries as at such date, together with the
notes thereto (the “Astoria Annual Financial Statements”), audited by KPMG LLP, Astoria’s
certified public accountants at such date and for such period, and complete and correct copies of
unaudited consolidated statements of operations, changes in unitholders’ equity and cash flows of
Astoria and its Subsidiaries for the period beginning February 24, 2006 and ended September 30,
2006 and an unaudited consolidated balance sheet of Astoria and its Subsidiaries as at September
30, 2006 (the “Astoria September 2006 Financial Statements”) and an unaudited summary
consolidated balance sheet of Astoria and its Subsidiaries as at December 31, 2006 (the
“Astoria December 2006 Balance Sheet” and together with the Astoria September 2006
Financial Statements, the “Astoria Interim Financial Statements”); provided that,
with respect to the Astoria December 2006 Balance Sheet, no representation or warranty is being
made pursuant to this Section 3.4 to the extent relating to (i) additional adjustments to
reflect the mark-to-market values of assets or liabilities related to any swap or hedge
arrangements of Astoria and its Subsidiaries, (ii) the final provision or benefit for
income taxes for 2006, including the amount of any deferred tax asset or deferred tax liability
arising from the difference between book and tax treatment of depreciation of assets and
differences in the timing of recognition of income and expenses for book and tax purposes, or
(iii) other adjustments which may be required (x) in completing the 2006 closing of
the accounting books and records of Astoria and its Subsidiaries or (y) as a result of
completion of the audit of the 2006 consolidated financial statements of Astoria and its
Subsidiaries, none of which are currently expected to be material. The Astoria Interim Financial
Statements, together with the Astoria Annual Financial Statements, are the “Astoria Financial
Statements”. The Astoria Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as otherwise noted therein or
herein and except that the Astoria Interim Financial Statements are subject to year-end adjustment
and do not contain all footnote disclosures required by GAAP, which footnote disclosures would
either (a) be substantially consistent, including with respect to amount and contingencies,
with the footnotes contained in the Astoria Annual Financial Statements, or (b) not, alone
or in the aggregate, be materially adverse to the business, operations, assets, liabilities,
financial condition or results of operations of Astoria and its Subsidiaries taken as a whole) and
fairly present in all material respects the consolidated financial position and the consolidated
results of operations and cash flows of Astoria and its consolidated Subsidiaries, as at the dates
thereof or for the periods presented therein.



26









 





     3.5 Absence of Undisclosed Liabilities. Except (i) as reflected in the Astoria
Financial Statements, (ii) for liabilities and obligations incurred in the ordinary course
of business since February 24, 2006 (none of which is a liability for breach of contract, breach of
warranty, tort, infringement, violation of law or lawsuit) and (iii) for liabilities and
obligations that, individually or in the aggregate, would not reasonably be expected to result in a
Material Adverse Effect, Astoria and its Subsidiaries have not incurred any liabilities or
obligations that would be required to be reflected or reserved against in a consolidated balance
sheet of Astoria and its consolidated Subsidiaries or the footnotes thereto prepared in accordance
with GAAP in a manner consistent with the Astoria Financial Statements.



     3.6 Events Subsequent to Latest Financial Statements. Since February 24, 2006 through
the date hereof, other than in connection with the transactions contemplated by this Agreement,
Astoria and its Subsidiaries have conducted their business in the ordinary course, in substantially
the same manner in which it has been previously conducted, Astoria and its Subsidiaries have not
suffered any Material Adverse Effect and none of Astoria or any of its Subsidiaries has:



     (a) amended its Organizational Documents;



     (b) issued any notes, bonds, or other debt securities or any equity securities or rights
convertible, exchangeable or exercisable into any equity securities;



     (c) purchased or redeemed any of its equity securities;



     (d) incurred any long-term indebtedness for borrowed money or entered into any guaranty in
excess of $500,000 in the aggregate, other than revolver borrowings incurred in the ordinary course
of business;



     (e) mortgaged, pledged or subjected to any Lien any of its properties or assets, except for
Permitted Liens;



     (f) made any capital expenditures or commitments therefor that, individually or in combination
with related expenditures or commitments, amount to more than $1,000,000;



     (g) delayed or postponed the payment of accounts payable or commissions or any other liability
or obligation or negotiated with any party to extend the payment date of accounts payable or
commissions or any other liability or obligation or accelerated the collection of (or discounted)
any accounts or notes receivable except, in the case of any of the foregoing, in the ordinary
course of business;



27









 





     (h) except as required by GAAP or required by a change in applicable law, statute, rule or
regulation, made any material change in its accounting principles or the methods by which such
principles are applied for financial accounting purposes;



     (i) except as required by a change in applicable law, made any material change in its Tax
accounting principles or its Tax elections;



     (j) adopted, modified, or terminated any Astoria Benefit Plan or Astoria Employment Agreement,
or increased the compensation of any officer or employee, other than (i) in the ordinary
course of business, (ii) to comply with applicable law or (iii) as required
pursuant to existing contracts or agreements;



     (k) implemented any plant closing or other layoff of employees that could implicate the Worker
Adjustment and Retraining Notification Act, as amended, or any similar foreign state or local law,
regulation or ordinance;



     (1) disposed or agreed to dispose of any material properties or assets in an amount in excess
of $500,000 in any individual case or $1,000,000 in the aggregate (in the case of related
dispositions) or acquired or agreed to acquire assets or properties in an amount in excess of
$500,000 in any individual case or $1,000,000 in the aggregate (in the case of related
acquisitions), in each case other than sales of fuel, power or energy, in the ordinary course of
business;



     (m) merged or consolidated with, purchased substantially all of the assets of, or otherwise
acquired any business or any Person;



     (n) materially amended any Astoria Material Contract or terminated any material contract,
other than in the ordinary course of business;



     (o) instituted or settled any claim or lawsuit involving equitable or injunctive relief or
damages of more than $1,000,000;



     (p) canceled or forgiven any material debts or claims;



     (q) made any changes to its hedging policies or risk management policies; or



     (r) declared or paid distributions on its equity securities except intercompany dividends and
distributions and tax distributions to its members payable in accordance with its limited liability
company operating agreement.



     3.7 Tax Matters. Except as reflected or reserved against in the Astoria Financial
Statements and for matters that would not reasonably be expected to be material, either
individually or in the aggregate, (a) each Tax Return required to have been filed by
Astoria or any of its Subsidiaries has been timely filed and each such Tax



28









 




Return is accurate and complete, (b) all Taxes required to be paid by Astoria and its
Subsidiaries (whether or not shown as due on such Tax Returns have been paid, (c) all
Employment and Withholding Taxes required to be paid or withheld by or on behalf of Astoria or any
of its Subsidiaries have been paid or properly set aside in accounts for such purpose, (d)
no written agreement or other document extending, or having the effect of extending, the period of
assessment or collection of any Taxes payable by Astoria or any of its Subsidiaries is in effect as
of the date hereof, (e) neither Astoria nor any of its Subsidiaries is, as of the date
hereof, the beneficiary of any extension of time (other than an automatic extension of time not
requiring the consent of the IRS or any other taxing authority) within which to file any Tax Return
not previously filed, (f) as of the date hereof, there are not pending any audits,
examinations or other proceedings in respect of Taxes payable by Astoria or any of its
Subsidiaries, (g) neither Astoria nor any of its Subsidiaries is a party to any Tax sharing
or Tax allocation agreement with any other Person or has liability for Taxes of any other Person
(other than Astoria or any of its Subsidiaries) (I) under Treasury Regulation §1.1502-6 (or
any similar provision of state, local or foreign Tax law) or (II) as a transferee or
successor, (h) neither Astoria nor any of its Subsidiaries has distributed stock of another
Person, or has had its stock distributed by another Person, in a transaction that was purported or
intended to be governed in whole or in part by Code section 355 or 361, and (i) neither
Astoria nor any of its Subsidiaries has engaged in a “listed” transaction within the meaning of
Treasury Regulations Section 1.6011-4.




     3.8 Litigation. There is no judicial or administrative action, criminal charge, civil
or criminal complaint, claim, suit, proceeding or investigation pending or, to the Knowledge of
Astoria, threatened against Astoria or any of its Subsidiaries or any of the Astoria Owned Real
Property or the Astoria Leased Real Property, in each case, before any Governmental Entity, that
(a) individually or in the aggregate would reasonably be expected to have a Material
Adverse Effect or (b) questions the validity of this Agreement or any action taken or to be
taken by Astoria or any of its Subsidiaries in connection herewith.



     3.9 Compliance with Laws; Permits.



     (a) Neither Astoria nor any of its Subsidiaries is in, and none of Astoria or any of its
Subsidiaries is in receipt of any written notice of any, violation of any law, statute, rule,
regulation, judgment, order, decree, permit, concession, franchise or other governmental
authorization or approval applicable to it or to any of its properties, and Astoria and its
Subsidiaries have complied in all material respects with all laws, statutes, rules, regulations,
judgments, orders, decrees, permits, concessions, franchises, and other governmental authorizations
or approvals applicable to it or its properties, except for any such violations or non-compliance
which would not, individually or in the aggregate, reasonably be expected to be material to Astoria
and its Subsidiaries, taken as a whole.



29









 





     (b) All of the licenses, permits and other governmental authorizations necessary to conduct
the business of Astoria and its Subsidiaries as presently conducted (collectively, the “Astoria
Permits”) have been duly obtained, are held by Astoria or its Subsidiaries and are in full
force and effect, except in each case where such a failure would not reasonably be expected to have
a Material Adverse Effect. No event has occurred or other fact exists with respect to the Permits
that allows, or after notice or lapse of time or both would allow, revocation or termination of any
of the Permits or would result in any other impairment of the rights of the holder of any of the
Permits that individually or in the aggregate would reasonably be expected to have a Material
Adverse Effect.



     (c) This Section 3.9 does not relate to tax matters, employee benefits matters or
environmental matters, which are provided for in Sections 3.7, 3.11 and 3.17, respectively.



     3.10 Regulatory Status.




(a) Schedule 3.10(a) of the Astoria Disclosure Letter sets forth, the name, location, nominal
capacity and Astoria’s direct or indirect ownership of each generating facility owned directly
or indirectly, in whole or in part, by Astoria or any of its Subsidiaries (the “Astoria
Facilities”). The Astoria Project Company Subsidiary (i) meets the requirements
for, and has made the necessary filing with, or has been determined by, FERC to be EWGs within
the meaning of Section 1262(6) of PUHCA; (ii) is authorized by FERC pursuant to
Section 205 of the FPA to sell electric power, including energy and capacity and ancillary
services, at market-based rates; and (iii) has received such waivers and blanket
authorizations as are customarily granted by FERC to entities authorized to sell electric
power at market-based rates, including, but not limited to, authorization to issue securities
and assume obligations or liabilities pursuant to Section 204 of the FPA.



(b) There are no pending FERC proceedings in which the EWG status, market-based rate
authority, or the FPA Section 204 authority of the Astoria Project Company Subsidiary is subject to
withdrawal, revocation or material modification other than (i) FERC rulemakings of general
applicability, including, but not limited to, Market-Based Rates for Wholesale Sales of Energy,
Capacity and Ancillary Services by Public Utilities in Docket No. RM04-7-000; and (ii) FERC
proceedings concerning New York Independent System Operator market rules including, but not limited
to market mitigation measures as may apply to such Astoria Project Company Subsidiary and similarly
situated sellers of wholesale electric power with market based rates.



30









 





     (c) Astoria and each of its Subsidiaries is in full compliance in all material respects with
the terms and conditions of all orders issued by FERC under Section 203 of the FPA and obtained by
Astoria or any of its Subsidiaries.



     (d) Astoria is a “holding company” within the meaning of Section 1262(8) of PUHCA solely with
respect to its ownership of one or more EWGs, and is not subject to or is otherwise exempt from
regulation under PUHCA except for regulation under Section 1265 of PUHCA.



     (e) Astoria and each of its Subsidiaries has filed or caused to be filed with the applicable
state or local utility commissions or utility regulatory bodies and the FERC, all material forms,
statements, reports and documents (including all exhibits, amendments and supplements thereto)
required to be filed by it with respect to Astoria and each of its Subsidiaries’ businesses and
each Astoria Facility under all applicable laws and PUHCA and the respective rules and regulations
thereunder, all of which complied in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder in effect on the date each such report was
filed.



     (f) No order, judgment or decree shall have been issued or proposed to be issued by any
Governmental Entity that, as a result of the construction, ownership, leasing or operation of any
Astoria Facility by Astoria or any of its Subsidiaries, the sale of electricity therefrom by the
Astoria Project Company Subsidiary, or any transaction contemplated hereby, could reasonably be
expected to cause or deem Astoria or any of its Subsidiaries to be subject to, and not exempted
from, regulation under PUHCA, except for regulation under Section 1265 of PUHCA.



     (g) Astoria has disclosed to EBG all information regarding Astoria and each of its
Subsidiaries, their respective businesses, financial conditions and corporate governance,
directors, officers and affiliates, any agreements and arrangements among such Persons regarding
their direct and indirect interests in Astoria and each of its Subsidiaries and the allocation
among such Persons of economic and management rights relating to Astoria and its Subsidiaries that
could be reasonably expected to affect the ability of the parties to obtain any approval, Consent
or authorization of any Governmental Entity under the FPA or any other federal, state or local
energy law or regulation (including any Section 203 approval) or to make any requisite filing with
any Governmental Entity under the FPA or any other federal, state or local energy law or
regulation, in any case necessary for or required as a result of the execution, delivery and
performance of this Agreement.



     3.11 Employee Benefits.



     (a) Company Benefit Plans; Employment Agreements. Schedule 3.1 l(a)(i) of the Astoria
Disclosure Letter contains a complete and accurate list of each material Plan



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that is maintained, contributed to or established by Astoria or any of its ERISA Affiliates or
under which any such Person has any current or contingent obligation and under which any current or
former officer, director, consultant or employee of Astoria or any of its ERISA Affiliates, or the
beneficiaries or dependents of any such person, is or will become eligible to participate or derive
a benefit (“Astoria Benefit Plans”). Schedule 3.11(a)(ii) of the Astoria Disclosure Letter
sets forth all written employment, severance and retention agreements other than any such agreement
(x) that, by its terms, may be terminated or canceled by Astoria or any Subsidiary with
notice of not more than the greater of 120 days and the period of notice required under applicable
law, in each case without penalty and (y) providing for the payment of annual salary and
bonus or severance payments less than $250,000 in any one case (“Astoria Employment
Agreements”).




     (b) Compliance; Liability. Each Astoria Benefit Plan has been operated and
administered in accordance with its terms and with applicable law, except for any failure to do so
that would not reasonably be expected to have a Material Adverse Effect. All contributions required
to have been made by Astoria and its Subsidiaries under any Astoria Benefit Plan have been made by
the due date therefor (including any extensions). There is no pending or, to the Knowledge of
Astoria, threatened material legal action, suit or claim relating to Astoria Benefit Plans (other
than routine claims for benefits). Astoria and its ERISA Affiliates have engaged in no transaction
with respect to any Astoria Benefit Plan that, assuming the taxable period of such transaction has
expired as of the date hereof, would reasonably be expected to subject Astoria and its Subsidiaries
to a tax or penalty imposed by either section 4975 of the Code or section 502(i) of ERISA that
would reasonably be expected to have a Material Adverse Effect. Neither Astoria nor any of its
Subsidiaries is in breach of any Astoria Employment Agreement.



     (c) Tax Qualification. Each Astoria Benefit Plan that is intended to be qualified
under section 401 (a) of the Code has received a favorable determination letter from the IRS as to
its qualification under the Code and to the effect that each such trust is exempt from taxation
under section 501 (a) of the Code, and, to the Knowledge of Astoria, nothing has occurred since the
date of such determination letter that will adversely affect such qualification or tax-exempt
status.



     (d) Title IV of ERISA. Neither Astoria nor any ERISA Affiliate has incurred any
material liability under Title IV of ERISA or is subject to section 302 of ERISA or section 412 of
the Code, and no event, transaction or condition exists that would result in any material liability
to the Astoria Surviving Company or any ERISA Affiliate following the Closing. No Astoria Benefit
Plan is or was a plan subject to Code section 412 or section 302 or Title IV of ERISA, a
“multiemployer plan” as defined in section 3(37) of ERISA, or “multiple employer plan” under
section 4063 of ERISA.



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     (e) Triggering Events. Neither the execution of this Agreement nor the performance of
the obligations hereunder by Astoria or its Subsidiaries shall by itself or in connection with any
other event require a payment, or cause the accelerated vesting of or timing a right to a payment,
under any Astoria Benefit Plan or under any Astoria Employment Agreement. The performance of the
obligations hereunder by Astoria or its Subsidiaries will not, by itself or in connection with
other events, result in any payment under any Astoria Benefit Plan or under any Astoria Employment
Agreement that would constitute an “excess parachute payment” for purposes of section 280G or 4999
of the Code.



     (f) Documents. With respect to each Astoria Benefit Plan, Astoria has made available
to EBG true and complete copies of the following documents, to the extent applicable: (i)
the most recent Plan document and all amendments thereto; (ii) the most recent trust
instrument and insurance contracts and any other funding or investment agreements; (iii)
the Form 5500 and accompanying schedules for the current year and the immediately preceding three
years filed with the IRS; (iv) the most recent summary plan description; and (v)
the most recent determination letter issued by the IRS. Astoria has made available to EBG true and
complete copies of Astoria Employment Agreements.



     (g) Neither Astoria nor any of its Subsidiaries or ERISA Affiliates has any obligation to
provide health benefits or other benefits to retired or other former employees, except as
specifically required by section 4980B of the Code or Part 6 of Title I of ERISA, and Astoria and
each of its Subsidiaries or ERISA Affiliates has complied in all material respects with the
requirements of Code section 4980B and such Part 6. Schedule 3.11 (g) of the Astoria Disclosure
Letter sets forth a list of all employees on or eligible for COBRA.



     3.12 Labor Matters. No labor strike, material labor dispute, or concerted work
stoppage is currently pending or, to the Knowledge of Astoria, threatened with respect to any
employee of Astoria or its Subsidiaries. Each of Astoria and its Subsidiaries is in compliance with
all applicable labor laws in connection with the employment of its employees, except for such
non-compliance that individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect. None of Astoria or any of its Subsidiaries is party to or bound by any
Contract or other agreement with any labor union representing its employees or collective
bargaining agreement and, to the Knowledge of Astoria, there are no activities or proceedings of
any labor union to organize any such employees.



     3.13 Real Property; Tangible Property.



     (a) Schedule 3.13 (a) of the Astoria Disclosure Letter lists all material items of real
property either owned by Astoria or its Subsidiaries (the “Astoria Owned Real Property”) or
leased by Astoria or its Subsidiaries (the “Astoria Leased Real Property”).



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Astoria and its Subsidiaries have good and marketable fee simple title to the Astoria Owned Real
Property listed on Schedule 3.13(a) and valid leasehold interests in the Astoria Leased Real
Property listed on Schedule 3.13 (a), in each case free and clear of all Liens except for Permitted
Liens. None of Astoria or any of its Subsidiaries owns or holds, has granted or is obliged under
any contractual right to purchase, acquire, sell or dispose of any Astoria Owned Real Property.
None of Astoria or any of its Subsidiaries is obligated under any agreement to purchase or acquire
any Astoria Leased Real Property.




     (b) The Astoria Owned Real Property and the Astoria Leased Real Property, together with
easements appurtenant thereto, include all of the material real property used or held for use in
connection with or otherwise required to carry on the business of Astoria and its Subsidiaries, as
currently conducted.



     (c) Schedule 3.13(c) of the Astoria Disclosure Letter contains a complete and correct list of
all real property leases relating to the Astoria Leased Real Property to which Astoria or any of
its Subsidiaries is a party or is bound (the “Astoria Leases”). Astoria has made available
to EBG correct and complete copies of the Astoria Leases including all amendments, modifications
and extensions thereto and guarantees thereof. Under each of the Astoria Leases, the tenant
thereunder enjoys peaceful and undisturbed possession of and has the exclusive right to use and
occupy its respective Astoria Leased Real Property. Each of the Astoria Leases (including any
option to purchase contained therein) is in full force and effect and, to the Knowledge of Astoria,
is enforceable against the landlord which is party thereto in accordance with its terms, and there
exists no default or event of default (or any event that with notice or lapse of time or both would
become a default) on the part of Astoria or any of its Subsidiaries under any Astoria Leases,
except for such failures to be in full force and effect and defaults as would not, individually or
in the aggregate, reasonably be expected to have or result in a Material Adverse Effect.



     (d) Astoria and its Subsidiaries have legal and beneficial ownership of all of their
respective tangible personal property and assets included in the Astoria Financial Statements for
the fiscal year ended December 31, 2005, except for properties and assets disposed of in the
ordinary course of business since December 31, 2005, in each case free and clear of all Liens other
than Permitted Liens. Except as would not reasonably be expected to have a Material Adverse Effect,
Astoria and its Subsidiaries own or have the right to use all of the properties and assets
necessary for the conduct of their business as currently conducted. Each such tangible asset has
been maintained in accordance with normal industry practice, is in good operating condition and
repair (subject to normal wear and tear) and is suitable for the purpose for which it is currently
used.



34









 





     (e) Each parcel included in Astoria Owned Real Property is assessed for real property tax
purposes as a wholly-independent tax lot, separate and apart from any adjoining land or
improvements not constituting a part of that parcel.



     3.14 Intellectual Property.



     (a) Schedule 3.14(a) of the Astoria Disclosure Letter lists all Intellectual Property that are
owned by Astoria or any of its Subsidiaries and are material to the conduct of the business of
Astoria or any of its Subsidiaries, as currently conducted (“Astoria Owned Intellectual
Property”). Astoria and its Subsidiaries have taken commercially reasonable steps in accordance
with normal industry practice to protect and maintain in force the Astoria Owned Intellectual
Property and to protect the confidentiality of trade secrets used in the operation of the business.
Except for infringements, claims, demands, proceedings and defects in rights that would not,
individually or in the aggregate, reasonably be expected to have or result in a Material Adverse
Effect, (i) to the Knowledge of Astoria, the use of the Astoria Owned Intellectual Property
by Astoria and its Subsidiaries as currently used does not infringe on the Intellectual Property
rights of any Person and (ii) there is no claim or demand of any Person pertaining to, or
any proceeding that is pending or, to the Knowledge of Astoria, threatened that challenges the
rights of Astoria or any of its Subsidiaries in respect of, any Astoria Owned Intellectual
Property.



     (b) Schedule 3.14(b) of the Astoria Disclosure Letter lists, all material written licenses to
Intellectual Property or trade secrets (other than licenses for “off-the-shelf” software) to which
Astoria or any of its Subsidiaries is a party, pursuant to which (i) Astoria or such
Subsidiary permits any Person to use any of the Astoria Owned Intellectual Property or trade
secrets owned by Astoria or such Subsidiary, or (ii) any Person permits Astoria or such
Subsidiary to use any Intellectual Property or trade secrets not owned by Astoria or such
Subsidiary that are necessary for the conduct of the business of Astoria or any of its Subsidiaries
as currently conducted (collectively, the “Astoria Licenses”). Astoria has made available
to EBG copies of all of the Astoria Licenses. Neither Astoria nor any of its Subsidiaries, nor, to
the Knowledge of Astoria, any other party thereto, is in default under any Astoria License, and
each Astoria License is in full force and effect as to Astoria or Subsidiary thereof party thereto
and, to the Knowledge of Astoria, as to each other party thereto, except for such defaults and
failures to be so in full force and effect as would not, individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect.



     3.15 Contracts. Schedule 3.15 of the Astoria Disclosure Letter lists, as of the date
hereof, all Astoria Material Contracts (other than Organizational Documents of any of the
Subsidiaries, agreements related to employee benefits, agreements related to labor matters, real
property leases and agreements related to intellectual property, the last four of which are
provided for in Sections 3.11, 3.12, 3.13, and 3.14, respectively). The term



35









 




“Astoria Material Contracts” means all of the following types of Contracts to which Astoria
or any of its Subsidiaries is a party or by which Astoria or any of its Subsidiaries or any of
their respective properties is bound as of the date hereof:





     (a) all material gas pipeline interconnection agreements, gas supply agreements, gas
purchase and sale agreements and gas transportation agreements;




     (b) all material fuel, supply or transportation agreements (including fuel and oil
transportation agreements);




     (c) all power purchase agreements (involving more than 10% of any Astoria Facility’s
nominal capacity or having a term of more than one month) and all material water supply
agreements, wastewater disposal agreements, any waste disposal agreements, electricity
transmission agreements and electricity interconnection agreements;




     (d) all material swap, exchange, commodity option or hedging agreements or similar
arrangements;




     (e) all material operating and maintenance agreements, management agreements,
administrative services agreements and long term service agreements;




     (f) all Contracts (other than ordinary course maintenance Contracts) requiring a future
capital expenditure or known commitment by Astoria or any of its Subsidiaries in excess of
$1,000,000 in any twelve month period;




     (g) all contracts requiring known or liquidated expenditures or payments to or from
Astoria or any of its Subsidiaries in excess of $1,000,000 in any calendar year, other than
those that can be terminated without material penalty to Astoria or any of its Subsidiaries,
as applicable, upon not more than sixty (60) days’ notice;




     (h) all contracts or agreements under which the Astoria or any of its Subsidiaries is
obligated to sell real or personal property having a value in excess of $1,000,000;




     (i) mortgages, indentures, loan or credit agreements, security agreements, and other
agreements and instruments relating to the borrowing of money or extension of credit in any
case in excess of $1,000,000;




     (j) joint venture and limited partnership agreements (other than limited partnerships of
which Astoria owns 100% of the partnership interests);



36









 






     (k) all contracts to which Astoria or any of its Subsidiaries is party that contain a
covenant not to compete applicable to Astoria or any of its Subsidiaries or their respective
Affiliates or otherwise restrict any of Astoria or any of its Subsidiaries or their respective
Affiliates from engaging in any line of business in the electricity or power industry or
generating, developing or distributing, or other rights with respect to, electricity or power
(other than term loan agreements, indentures or similar financing contracts typical to the
electricity or power industry containing customary restrictive covenants);




     (1) stock purchase agreements, asset purchase agreements and other acquisition or
divestiture agreements relating to the acquisition, lease or disposition by Astoria or its
Subsidiaries of material assets and properties (other than in the ordinary course of business)
or any equity interest of Astoria or its Subsidiaries, in each case which was entered into by
Astoria or its Subsidiaries after February 23, 2006 or under which Astoria or its Subsidiaries
has any executory indemnification obligations;




     (m) credit support guarantees, letters of credit or other agreements by which Astoria or
any of its Subsidiaries guarantees or otherwise provides support for the obligations of
another Person other than Astoria or any of its Subsidiaries, in each case with respect to
amounts in excess of $1,000,000; and




     (n) securityholder agreements, voting trusts or other agreements or understandings to
which Astoria or any of its Subsidiaries is a party or to which Astoria or any of its
Subsidiaries is bound relating to the voting, purchase, redemption or other acquisition of any
equity securities of Astoria or any of its Subsidiaries.


Astoria has made available to EBG copies of all of the Astoria Material Contracts. Each such
Astoria Material Contract is a valid and binding agreement of Astoria or one of its Subsidiaries
and, to the Knowledge of Astoria, the counterparty thereto, and is in full force and effect, and
neither Astoria nor any of its Subsidiaries nor, to the Knowledge of Astoria, any other Person is
in default under any Astoria Material Contract, except for such failures to be in full force and
effect and defaults as would not, individually or in the aggregate, reasonably be expected to have
or result in a Material Adverse Effect.




     3.16 Insurance. Schedule 3.16 of the Astoria Disclosure Letter lists all of the
policies of insurance, other than real property title insurance policies, maintained by Astoria or
any of its Subsidiaries for the policy year that includes the date hereof. Each such policy is in
full force and effect. All policy premiums due and payable with respect to all periods specified in
Schedule 3.16 of the Astoria Disclosure Letter have either been paid or adequate provision for the
payment by Astoria or a Subsidiary thereof has been made. Neither Astoria nor any of its
Subsidiaries has received any written notice of any



37









 




material increase of premiums with respect to, or cancellation or non-renewal of, any of such
insurance policies.




     3.17 Environmental Matters. Except as would not, individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect:




     (a) Astoria and its Subsidiaries are and have been in compliance with all applicable
Environmental Laws;




     (b) Astoria and its Subsidiaries have obtained, and are in compliance with, all permits,
licenses and other authorizations required under applicable Environmental Laws for their
operations and the ownership of the Astoria Owned Real Property and the occupation of the
Astoria Leased Real Property;




     (c) neither Astoria nor any of its Subsidiaries has received from any Person any written
notice of violation, alleged violation, non-compliance, liability or potential liability under
Environmental Laws, other than matters that have been settled and resolved without future
obligation;




     (d) no complaint, claim, suit, investigation, judicial proceeding or governmental or
administrative action is pending or to the Knowledge of Astoria threatened, under any
applicable Environmental Law relating to Astoria or any of its Subsidiaries, the Astoria Owned
Real Property or the Astoria Leased Real Property;




     (e) neither Astoria nor any of its Subsidiaries has any liability with respect to, or any
obligation to investigate or remediate any condition resulting from the release or threatened
release of Hazardous Substances; and




     (f) none of the Astoria Owned Real Property or the Astoria Leased Real Property is
subject to any activity or use restriction, or other deed restriction, that was implemented
pursuant to any Environmental Law or as a result of the presence or remediation of Hazardous
Substances, and that would reasonably be expected to limit, hinder or interfere with the
current or future operations at such real property.


Astoria has provided to EBG all environmental site assessments, audits, investigations and studies
in the possession, custody or control of Astoria or any of its Subsidiaries relating to properties
or assets currently or formerly owned, leased, or operated by Astoria or any of its Subsidiaries.




     Notwithstanding any of the representations and warranties contained elsewhere in this
Agreement, matters arising under Environmental Laws shall be governed exclusively by this Section
3.17.



38









 





     3.18 Affiliate Transactions. Except for any such agreements among Astoria and its
wholly owned Subsidiaries, neither Astoria nor any of its Subsidiaries is a party to any agreement
with any Affiliate or any member of Astoria.



     3.19 Brokers. Other than with respect to Credit Suisse, whose fees and expenses will
be paid by the Astoria Surviving Company, all negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out without the intervention of any Person
acting on behalf of Astoria in such manner as to give rise to any valid claim against USPowerGenCo,
the Astoria Surviving Company or the EBG Surviving Company for any brokerage or finder’s
commission, fee or similar compensation.



     3.20 Accredited Investors. When New Astoria is formed, each of its members shall be an
accredited investor (as defined in Rule 501 (a) under the Securities Act).



     3.21 Appraisal Rights. No member of Astoria shall have any appraisal or similar rights
as a result of the Astoria Merger.



ARTICLE IV




COVENANTS




     4.1 Conduct of the Companies and their Subsidiaries. Except as set forth in Schedule
4.1 of the EBG Disclosure Letter or the Astoria Disclosure Letter, as applicable, from the date
hereof to the Closing, except (i) for entering into and performing this Agreement,
(ii) for performance of its obligations hereunder, (iii) as contemplated by this
Agreement (including in preparation for consummation of the Mergers and the public offering of
securities pursuant to this Agreement and the Investor Rights Agreement) or by EBG’s or Astoria’s
budgets, as applicable, heretofore made available to the other party, (iv) to the extent
required by applicable law, statute, rule or regulation, (v) for actions not inconsistent
with the ordinary course of business or (vi) as otherwise consented to by the other party
in writing, such consent not to be unreasonably withheld or delayed, each of EBG and Astoria shall
conduct its business in the ordinary course in substantially the same manner in which it is
conducted as of the date hereof, to the extent consistent with such business, use its commercially
reasonable efforts to preserve intact its present business organization and to preserve its
relationships with customers, suppliers and others having business dealings with it, and not take
any action that would have caused a breach of Section 2.6 in the case of EBG or 3.6 in the case of
Astoria had it been taken prior to the date hereof and not disclosed to the other parties hereto in
accordance with this Agreement, and neither EBG nor Astoria shall take or fail to take any action
which results in the loss of EWG status under PUHCA by any Subsidiary of EBG or Astoria that holds
such status as of the date of this Agreement. Each of EBG and



39









 




Astoria shall, and shall cause its Subsidiaries to, pay all Taxes when due and shall make capital
expenditures substantially in accordance with the budget therefor.




     4.2 Solicitation of EBG Members. As promptly as reasonably practicable following the
date hereof, EBG shall prepare and distribute to each EBG Member an information statement
describing the transactions contemplated by this Agreement together with a written consent
soliciting the Requisite Consent of EBG Members; and requesting that such written consent be
returned to EBG in no more than twenty (20) days (as such date may be extended by EBG),
provided that, prior to distribution of such information statement and written consent, EBG
shall deliver a draft of the information statement and written consent to Astoria for its review
and comment and shall include any reasonable comments made by Astoria in such information statement
and written consent and further provided that Astoria covenants and agrees that it
shall reasonably cooperate in the preparation of such information statement and provide all
information reasonably requested in connection therewith. EBG covenants and agrees that, except
with respect to any information provided by Astoria, the information contained in such information
statement will not, at the time of mailing, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading. The
Board of Directors of EBG shall recommend adoption of this Agreement by the members of EBG to the
effect as set forth in Section 2.1(b) (the “EBG Recommendation”), and shall not withdraw,
modify or qualify (or propose to withdraw, modify or qualify) (a “Change”) in any manner
adverse to Astoria such recommendation or take any action or make any statement to the members of
EBG inconsistent with such recommendation including, without limitation, approving or recommending
or proposing to approve or recommend a third party Takeover Proposal with respect to EBG or failing
to recommend the adoption of this Agreement (collectively, a “Change in the EBG
Recommendation”); provided that the foregoing shall not prohibit accurate disclosure
(and such disclosure shall not be deemed to be a Change in the EBG Recommendation) of factual
information regarding the business, financial condition or results of operations of Astoria or EBG
or the fact that a Takeover Proposal has been made, the identity of the party making such proposal
or the material terms of such proposal (provided that the Board of Directors of EBG does
not make a Change in the EBG Recommendation in any manner adverse to Astoria), to the extent such
information, facts, identity or terms are required to be disclosed under applicable law; and,
provided, further, that the Board of Directors of EBG may make a Change in the EBG
Recommendation only in accordance with Section 4.6 (b) hereof. Unless EBG makes a Change in the EBG
Recommendation in accordance with Section 4.6(b) hereof, EBG shall use its reasonable best efforts
to solicit from its members the Requisite Consent of EBG Members and shall take all other action
reasonably necessary or advisable to secure the Requisite Consent of EBG Members. EBG shall keep
Astoria reasonably updated with respect to the status of its receipt of the Requisite Consent of
EBG Members.



40









 





     4.3 Regulatory Compliance. EBG and Astoria shall not, and shall not permit any of
their Subsidiaries to, take any action that would result in the representations and warranties set
forth in Section 2.10, in the case of EBG, or 3.10, in the case of Astoria becoming untrue.



     4.4 Updates.



     (a) Each party shall give prompt written notice to the other parties hereto if such party
becomes aware that such party is in breach or will, as of the Closing Date, be in breach of any
representation, warranty, covenant or agreement of such party made in this Agreement.



     (b) EBG shall promptly provide notice to Astoria of any change in ownership of EBG securities
relative to that set forth in Schedule 2.2(a) of the EBG Disclosure Letter that causes a Person who
did not previously own five percent’(5%) or more of the voting securities of EBG to own five
percent (5%) or more of such voting securities. Astoria shall promptly provide notice to EBG of any
change in ownership of Astoria Units relative to that set forth in Schedule 3.2(a) of the Astoria
Disclosure Letter that causes a Person who did not previously own five percent (5%) or more of the
voting interests in EBG to own five percent (5%) or more of such voting interests; provided
that, with respect to the Exchange, notification that the Exchange has been completed shall
constitute notice for this purpose. In connection with any such updates, EBG or Astoria, as
applicable, may provide the other party with an updated version of Schedule 2.2(a) or Schedule
3.2(a), as applicable, provided that except as a result of the Exchange, Astoria may not
provide EBG with an updated version of Schedule 3.2(a) reflecting ownership by MDCP IV of less than
85% of the voting securities of Astoria; provided  further that immediately after the
Exchange and for all subsequent periods until the Closing, MDCP IV shall own not less than 85% of
the voting securities of New Astoria.



     (c) The Exchange shall take place prior to the Mergers. Immediately after the Exchange, the
issued and outstanding Astoria Units shall be 1,000 common units, all of which shall be owned by
New Astoria, and that the limited liability company operating agreement of Astoria, after giving
effect to the Exchange, shall be in substantially the form of the Astoria LLC Agreement (revised to
reflect that such common units are owned by New Astoria). In no event shall completion of the
Exchange be deemed to constitute a breach of any representation, warranty or covenant contained in
this Agreement.



     4.5 Satisfaction of Closing Conditions.



     (a) Subject to the terms and conditions of this Agreement, each of Astoria and EBG shall use
its reasonable best efforts to cause the Closing to occur, including, without limitation,
(i) taking such actions as are contemplated by Section 4.5(b) and (ii) defending
against any suits, actions or proceedings, judicial or administrative,



41









 




challenging this Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any temporary restraining order, preliminary injunction or other legal restraint or
prohibition entered or imposed by any court or other Governmental Entity and that is not yet final
and non-appealable to be vacated or reversed; provided that neither Astoria and EBG nor any
of their Affiliates shall be required to make any material monetary expenditure, commence or be a
plaintiff in any litigation or other proceeding or offer or grant any material accommodation
(financial or otherwise) to any Person.




     (b) Each of EBG and Astoria shall file as promptly as practicable with the United States
Federal Trade Commission (the “FTC”) and the United States Department of Justice (the
“DOJ”), in each case pursuant to the HSR Act: (i) the notification and report form, if any,
required for the transactions contemplated hereby, which form shall be filed not later than ten
Business Days following the execution and delivery of this Agreement, and (ii) any
supplemental information requested in connection therewith, which information shall be filed
promptly following the request therefor during the initial waiting period. Any such notification
and report form and supplemental information shall be in substantial compliance with the
requirements of the HSR Act.



     (c) EBG and Astoria shall use reasonable best efforts to file as promptly as practicable, but
not more than 15 days following the execution and delivery of this Agreement, (i) a joint
application to FERC for approval under Section 203 of the FPA of the transactions contemplated
hereby and (ii) the necessary filings with the NYPSC seeking authorization under Section 70
of the New York Public Service Law or a ruling declaring that the NYPSC will not review the Mergers
under Section 70 because the Wallkill presumption is satisfied.



     (d) EBG, on the one hand, and Astoria, on the other hand, shall furnish to the other such
necessary information and reasonable assistance as the other may request in connection with its
preparation of the information statement referred to in Section 4.2 and any filing that is
necessary under the HSR Act or any other law. EBG, on the one hand, and Astoria, on the other hand,
shall keep each other apprised of the status of any communications with, and any inquiries or
requests for additional information from, the FTC and the DOJ and any other Governmental Entity and
shall comply promptly with any such inquiry or request. Subject to Section 4.5(a), each of EBG and
Astoria shall use its reasonable best efforts to obtain any clearance required under the HSR Act or
any other consent, approval or authorization of any Governmental Entity necessary for the Mergers.



     (e) EBG will take all action necessary such that, as of the Closing Date, all agreements set
forth in Schedule 2.18 of the EBG Disclosure Letter will have been terminated without payment
(other than amounts accrued in accordance with the terms thereof) and without further liability
(other than unmatured indemnification obligations)



42









 




to EBG or any of its Subsidiaries, except as otherwise described on such Schedule. Astoria will
take all action necessary such that, as of the Closing Date, all agreements set forth in Schedule
3.18 of the Astoria Disclosure Letter will have been terminated without further liability to
Astoria or any of its Subsidiaries (other than unmatured indemnification obligations), except as
otherwise described on such Schedule.




     (f) Each party agrees that actions taken or to be taken in furtherance of the transactions
contemplated hereby shall not be deemed to violate any provision of any confidentiality agreement
regarding non-disclosure of the transactions contemplated hereby; provided that this
sentence shall not be deemed a waiver of the parties’ obligations with respect to non-disclosure
and non-use of confidential information or evaluation material.



     4.6 No Solicitation.



     (a) EBG shall not, nor shall it authorize or permit any of its Subsidiaries or any of their
respective representatives to (and shall instruct its Subsidiaries and their respective
representatives not to), directly or indirectly (i) initiate, solicit, facilitate or
encourage any inquiry or the making of any proposal that constitutes or could reasonably be
expected to lead to a Takeover Proposal (as defined in Section 4.6(d)), (ii) enter into any
letter of intent, memorandum of understanding, merger agreement or other agreement, arrangement or
understanding relating to, or that could reasonably be expected to lead to, any Takeover Proposal,
or (iii) continue or otherwise participate in any discussions or negotiations regarding,
furnish to any Person any information or data with respect to, or otherwise cooperate with or take
any other action to facilitate any proposal that (A) constitutes, or could reasonably be
expected to lead to, any Takeover Proposal or (B) requires EBG to abandon, terminate or
fail to consummate the Mergers or any other transactions contemplated by this Agreement.
Notwithstanding the foregoing, prior to the receipt of Requisite Consent of EBG Members, EBG may,
in response to a bonafide written Takeover Proposal that was unsolicited and did not otherwise
result from a breach of this Section 4.6(a), and subject to compliance with Section 4.6(c):




     (x) furnish information with respect to EBG and its Subsidiaries to the Person making
such Takeover Proposal and its representatives pursuant to and in accordance with a
confidentiality agreement containing terms and conditions no less restrictive than those
contained in the Confidentiality Agreement, provided that all such information
provided to such Person has previously been provided to Astoria or is provided to Astoria
prior to or concurrently with the time it is provided to such Person; and




     (y) participate in discussions or negotiations with such Person and its representatives
regarding such Takeover Proposal;




43












 




provided, in each case, that the Board of Directors of EBG determines in good faith, by
resolution duly adopted after consultation with its outside legal counsel and a financial advisor
of nationally recognized reputation, that (i) the failure to furnish such information or
participate in such discussions or negotiations would breach its fiduciary duties to the members of
EBG under applicable law and (ii) such Takeover Proposal would reasonably be expected to
lead to a Superior Proposal (as defined in Section 4.6(d)). EBG shall (A) immediately cease
and cause to be terminated any existing activities, discussions or negotiations with any Persons
conducted prior to the date of this Agreement with respect to any
potential Takeover Proposal, (B) use its reasonable best efforts, consistent with existing confidentiality agreements, to obtain the
return or destruction of any confidential information previously furnished to any such Person by
EBG, its Subsidiaries or any of their respective representatives, and (C) use its
reasonable best efforts promptly to inform its representatives of the obligations undertaken in
this Section 4.6. Without limiting the foregoing, any violation of the restrictions set forth in
this Section 4.6 by any representative of EBG or any of its Subsidiaries, whether or not such
person is purporting to act on behalf of EBG or any of its Subsidiaries, shall be deemed to be a
breach of this Section 4.6 by EBG.




     (b) Neither the Board of Directors of EBG nor any committee thereof shall, directly or
indirectly, (i) effect a Change in EBG Recommendation or
(ii) approve any letter of intent,
memorandum of understanding, merger agreement or other agreement, arrangement or understanding
relating to, or that may reasonably be expected to lead to, any Takeover Proposal. Notwithstanding
the foregoing, at any time prior to Requisite Consent of EBG Members, the Board of Directors of EBG
may, in response to a Superior Proposal, effect a Change in EBG Recommendation, provided
that the Board of Directors of EBG determines in good faith, by resolution duly adopted after
consultation with its outside legal counsel and a financial advisor of nationally recognized
reputation, that the failure to do so would breach its fiduciary duties to the members of EBG under
applicable law, and provided, further, that the Board of Directors of EBG may not
effect such a Change in EBG Recommendation unless (i) the Board of Directors shall have
first provided prior written notice to Astoria that it is prepared to recommend a Superior
Proposal, which notice shall summarize the material terms and conditions of such Superior Proposal
(including the identity of the party making such Superior Proposal) and attach the most current
version of the written agreement relating to the transaction that constitutes such Superior
Proposal, and (ii) Astoria does not make, within five Business Days after the receipt of
such notice (the “Notice Period”), a proposal that the Board of Directors determines in
good faith, after consultation with a financial advisor of nationally recognized reputation, is at
least as favorable to the members of EBG as such Superior Proposal (it being understood that
(x) EBG shall negotiate in good faith with Astoria, to the extent Astoria wishes to
negotiate, to enable Astoria to make changes to the terms of this Agreement and (y) in the
event of any change to any material term of any such Superior Proposal, EBG shall deliver to
Astoria an additional notice relating thereto, and the Notice Period shall recommence).
Notwithstanding any Change in EBG



44









 




Recommendation, Astoria shall have the option, exercisable within five Business Days after its
receipt of the notice referred to in the preceding sentence, to cause the Board of Directors to
submit this Agreement to the members of EBG for the purpose of adopting this Agreement and
approving the Mergers. If Astoria exercises such option, Astoria shall not be entitled to terminate
this Agreement pursuant to Section 7.1(c)(iii). If Astoria fails to exercise such option, EBG may
terminate this Agreement pursuant to and in accordance with Section 7.1(d)(ii).




     (c) As promptly as practicable after the receipt by EBG of any Takeover Proposal or any
inquiry with respect to, or that could reasonably be expected to lead to, any Takeover Proposal,
and in any case within 48 hours after the receipt thereof, EBG shall provide oral and written
notice to Astoria of the fact that it has received such Takeover Proposal or inquiry, which notice
shall identify the Person making such Takeover Proposal or inquiry, summarize the material terms of
such Takeover Proposal or inquiry and, in the case of written notice, attach any written materials
delivered in connection with such Takeover Proposal or inquiry. EBG shall keep Astoria reasonably
informed of the status (including any change to the terms) of any Takeover Proposal or any inquiry
with respect to, or that could reasonably be expected to lead to, any Takeover Proposal. EBG shall
not enter into a confidentiality or other agreement that prohibits EBG from providing such
information to Astoria.



     (d) For purposes of this Agreement:



     “Takeover Proposal” means any proposal or offer in respect of (i) a tender or
exchange offer, merger, consolidation, business combination, unit exchange, reorganization,
recapitalization, liquidation, dissolution, or similar transaction involving EBG or any of its
Subsidiaries (any of the foregoing, a “Business Combination Transaction”) with any Person
other than Astoria or any Affiliate thereof (a “Third Party”), (ii) EBG’s
acquisition of any Third Party in a Business Combination Transaction in which the shareholders of
the Third Party immediately prior to consummation of such Business Combination Transaction will own
more than 15% of EBG’s outstanding equity securities immediately following such Business
Combination Transaction, including the issuance by EBG of more than 15% of any class of its voting
equity securities as consideration for assets or securities of a Third Party, or (iii) any
direct or indirect acquisition by any Third Party of 15% or more of any class of equity securities
of EBG or of 15% or more of the consolidated assets of EBG and its Subsidiaries, in a single
transaction or a series of related transactions.



     “Superior Proposal” means any bona fide written proposal or offer made by a Third
Party in respect of a Business Combination Transaction involving, or any purchase or acquisition
of, (i) all or substantially all of the voting power of EBG’s outstanding equity securities
or (ii) all or substantially all of the consolidated assets of EBG and its Subsidiaries,
which Business Combination Transaction or other purchase or acquisition



45









 




contains terms and conditions that the Board of Directors determines in good faith, by resolution
duly adopted after consultation with its outside counsel and a financial advisor of nationally
recognized reputation, would result in a transaction that (x) if consummated, would be more
favorable to the members of EBG than the Merger, taking into account all of the terms and
conditions of such proposal and of this Agreement (including any proposal by Astoria to amend the
terms of this Agreement), and (y) is reasonably capable of being consummated on the terms
so proposed, taking into account all financial, regulatory, legal and other aspects of such
proposal, including the conditionality and the timing and the likelihood of consummation of such
proposal.




     4.7 Access and Information. Prior to the Closing, EBG, Astoria and each of their
Subsidiaries shall permit the other party and its representatives after the date of execution of
this Agreement to have reasonable access at reasonable times to the properties, books and records
of EBG, Astoria and their Subsidiaries, as applicable, other than any personnel information
protected by applicable privacy laws, and shall furnish such information and documents in its
possession relating to EBG, Astoria and their Subsidiaries, as applicable, as may reasonably be
requested, provided that neither EBG nor Astoria shall be entitled to any such access,
information or documents for the purposes of conducting any examination of the other party’s
products, formulae or other trade secrets without the prior written consent of such party. All
information provided or obtained pursuant to the foregoing shall be kept confidential by the party
receiving such information.



     4.8 Publicity. Except as required by applicable law, and except for the making of any
regulatory filings as required by this Agreement, (a) EBG shall not, directly or
indirectly, make or cause to be made any public announcement or issue any notice in respect of this
Agreement or the transactions contemplated hereby without the prior written consent of Astoria, and
(b) Astoria shall not, directly or indirectly, make or cause to be made any public
announcement or issue any notice in respect of this Agreement or the transactions contemplated
hereby, without the prior written consent of EBG. EBG and Astoria shall consult with each other
prior to issuing any press releases or otherwise making public statements with respect to the
transactions contemplated hereby and prior to making any filings with any Governmental Entity or
with any national securities exchange with respect thereto.



     4.9 Transfer Taxes. EBG and Astoria shall be equally responsible for and shall pay for
all sales, use, transfer, stamp, duties, gains, recording and other similar Taxes arising from the
transactions contemplated by this Agreement.



     4.10 Indemnification of Directors and Officers.



     (a) From and after the Closing Date, until the sixth anniversary of the Closing Date, except
as such Organizational Documents are being amended in connection with



46









 




the Mergers in accordance with this Agreement, USPowerGenCo and its Subsidiaries (including the EBG
Surviving Company and its Subsidiaries and the Astoria Surviving Company and its Subsidiaries)
shall, to the fullest extent permitted under applicable law and their respective Organizational
Documents as in effect on the date hereof, to maintain their existing indemnification provisions
with respect to, and indemnify and hold harmless, each present and former director and officer of
Astoria, USPowerGenCo and their respective Subsidiaries (collectively, the “Indemnified
Parties”) against any and all costs or expenses (including travel expenses and reasonable
attorneys’ fees), judgments, fines, losses, claims, damages, liabilities and amounts paid in
defense or settlement or otherwise in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising out of or
pertaining to any facts or events existing or occurring at or prior to the Closing Date;
provided that if any claim or claims are asserted or made within such six-year period, all
rights to indemnification in respect of any such claim or claims shall continue until disposition
of any and all such claims. USPowerGenCo shall, or shall cause its Subsidiaries to, advance
expenses to an Indemnified Party, as incurred, to the fullest extent permitted under applicable
law; provided that the Indemnified Party to whom expenses are advanced provides an
undertaking to repay such advances if it is determined by a court of competent jurisdiction in a
final order as to which the time for appeal has expired or decree that such Indemnified Party is
not entitled to indemnification. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Closing Date), (i) the Indemnified
Parties shall promptly notify USPowerGenCo thereof, (ii) any counsel retained by the
Indemnified Parties for any period after the Closing Date shall be subject to the consent of
USPowerGenCo (which consent shall not be unreasonably withheld), (iii) USPowerGenCo shall
not be obligated to pay for more than one firm of counsel for all Indemnified Parties, except to
the extent that (x) an Indemnified Party has been advised by counsel that there are
conflicting interests between it and any other Indemnified Party or (y) local counsel, in
addition to such other counsel, is required to effectively defend against such action or
proceedings, and (iv) USPowerGenCo shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld). USPowerGenCo shall not have
any obligation hereunder to any Indemnified Party when and if it shall be determined by a court of
competent jurisdiction in a final non-appealable order or decree that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable law.




     (b) For a period of six years after the Closing Date, USPowerGenCo shall, or shall cause its
Subsidiaries to, maintain in effect directors’ and officers’ liability insurance policies no less
favorable than those maintained by Astoria, EBG and their respective Subsidiaries as of the date
hereof with respect to claims arising from or related to facts or events that occurred at or before
the Closing Date; provided, however, that USPowerGenCo or its Subsidiaries shall
not be obligated to make annual premium payments for such insurance to the extent such premiums
exceed 300% of the annual premiums paid as of the date hereof by Astoria, EBG and their respective
Subsidiaries for



47









 




such insurance (such 300% amount, the “Maximum Premium”). If such insurance coverage cannot
be obtained at all, or can only be obtained at an annual premium in excess of the Maximum Premium,
USPowerGenCo shall, or shall cause its Subsidiaries to, maintain the most advantageous policies of
directors’ and officers’ insurance obtainable for an annual premium equal to the Maximum Premium;
provided, further, if such insurance coverage cannot be obtained at all,
USPowerGenCo shall, or shall cause its Subsidiaries to, purchase all available extended policy
periods with respect to pre—existing insurance in an amount that, together with all other
insurance purchased pursuant to this Section 4.10(b), does not exceed the Maximum Premium. Nothing
herein shall limit the ability of USPowerGenCo to satisfy its obligations under this Section
4.10(b) by purchasing a tail policy for each of the directors’ and officers’ insurance policies in
effect as of the Closing Date that covers, for a period of six years after the Closing Date, claims
related to facts or events that occurred prior to the Closing Date. USPowerGenCo agrees, and will
cause its Subsidiaries, not to take any action that would have the effect of limiting the aggregate
amount of insurance coverage required to be maintained for the individuals referred to in this
Section 4.10.




     (c) If USPowerGenCo or any of its Subsidiaries or any of their successors or assigns
(i) shall merge or consolidate with or merge into any other corporation or entity and shall
not be the surviving or continuing corporation or entity of such consolidation or merger or
(ii) shall transfer all or substantially all of their respective properties and assets to
any individual, corporation or other entity, then in each such case, proper provisions shall be
made so that the successors or assigns of USPowerGenCo or its Subsidiaries shall assume all of the
obligations set forth in this Section 4.10.



     4.11 2006 Audited Financial Statements. Promptly upon completion thereof, each of EBG
and Astoria shall deliver to the other party a complete and correct copy of the consolidated
statement of operations, changes in unitholder’s equity and cash flows of EBG or Astoria, as
applicable, and its Subsidiaries for the fiscal year ended December 31, 2006 and consolidated
balance sheets of EBG or Astoria, as applicable, and its Subsidiaries as at such date, together
with the notes thereto, audited by the applicable certified public accountants.



     4.12 Rating Agencies; Preparation of 144A Financial Statements. Each of the parties
acknowledges and agrees that each of EBG and Astoria will be seeking lender consent and making
rating agency presentations in connection with the transactions contemplated hereby. Without
otherwise limiting the generality of the obligations of the parties hereunder, each of the parties
agrees to provide the other with such financial information and other information regarding such
party and its Subsidiaries and its Affiliates that the other party may reasonably request to
facilitate obtaining such consent or making such rating agency presentation. In no event shall any
bank meeting to obtain such lender consent or any rating agency presentation be deemed to violate
the provisions of Section 4.8 hereof. Furthermore, each of the parties acknowledges and agrees that
it is



48









 




the intention of the parties that the capital stock of USPowerGenCo be tradable from and after the
Closing Date under Rule 144A under the Securities Act and that, to facilitate such trading, each
party shall cooperate with the other to provide such financial information and other information as
may be necessary (including preparation of combined financial statements) so that USPowerGenCo can
permit such trades from and after the Closing without violation of applicable law.




     4.13 Initial Public Offering. Each of the parties acknowledges and agrees that each of
EBG and Astoria desires that after the Closing USPowerGenCo conduct an initial registered public
offering of its common stock under the Securities Act, underwritten by an underwriter of recognized
national standing (an “IPO”), as promptly as reasonably practicable (subject to compliance
with the requirements of the Securities and Exchange Commission with respect to financial
statements for such offering), and each of EBG and Astoria agrees to, from and after the date of
this Agreement, reasonably cooperate and take such reasonable action as is necessary or desirable
to complete an IPO as promptly as reasonably practicable. Without otherwise limiting the generality
of the obligations of the parties hereunder, each of the parties agrees to provide the other with
such financial information and other information regarding such party and its Subsidiaries and
Affiliates that the other party may reasonably request to facilitate the preparation for an IPO
(including preparation of combined financial statements, preparation and filing of registration
statements and attendance at drafting and similar sessions, and making employees and accountants
reasonably available therefor).



     4.14 Unit Appreciation Rights. EBG shall make payments in respect of each Unit
Appreciation Right (“UAR”) granted pursuant to the 2006 Unit Appreciation Rights Plan of EBG (the
“UAR Plan”) which has been validly exercised prior to the Closing. The Board of Directors
of EBG shall not take any action which would require EBG to make a payment in respect of an
unexercised UAR. The Board of Directors of EBG shall terminate the UAR Plan effective as of the
Closing, as a result of which EBG shall have no outstanding or ongoing obligations under the UAR
Plan, other than the obligation to make payments with respect to any UARs which were validly
exercised prior to the Closing and for which payment has not been made.



ARTICLE V




CONDITIONS TO CLOSING




     5.1 Conditions to the Obligations of EBG and Astoria. The obligations of EBG and
Astoria to effect the Mergers shall be subject to the fulfillment or waiver by EBG and Astoria on
or prior to the Closing Date, of each of the following conditions:




     (a) The Requisite Consent of EBG Members shall have been obtained.



49









 






     (b) The waiting period under the HSR Act, including any extension thereof, shall have
been terminated or expired.




     (c) All authorizations, consents, approvals, filings and notifications listed on Exhibit
E shall have been made or obtained, without material conditions.




     (d) There shall not be in effect any injunction or other order issued by a court of
competent jurisdiction restraining or prohibiting the consummation of the transactions
contemplated by this Agreement.



     5.2 Conditions to the Obligation of Astoria. The obligation of Astoria to effect the
Mergers shall be subject to the satisfaction or waiver by Astoria on or prior to the Closing Date
of each of the following conditions:




     (a) The representations and warranties of EBG contained in Article II shall be true and
correct (disregarding any limitation as to “materiality” or “Material Adverse Effect” set
forth therein) on the date of this Agreement and at the Closing (except to the extent that
such representation and warranty speaks as of a particular date, in which case such
representation and warranty shall be true and correct as of that date), except where the
failure of the representations and warranties to so be true and correct, individually or in
the aggregate, has not had and would not reasonably be expected to have a Material Adverse
Effect on EBG; provided, however, that notwithstanding the foregoing, the
representations and warranties contained in Sections 2.1 and 2.2 shall be true and correct in
all material respects.




     (b) EBG shall have duly performed and complied in all material respects with all
agreements contained herein required to be performed or complied with by it at or before the
Closing.




     (c) EBG shall have delivered to Astoria a certificate, dated the Closing Date and signed
by EBG’s Chief Executive Officer or President and Chief Operating Officer, as to the
fulfillment of the conditions set forth in Sections 5.2(a) and 5.2(b).




     (d) USPowerGenCo and the holders of EBG Units representing not less than 75% of the
outstanding EBG Units shall have executed and delivered to New Astoria the Investor Rights
Agreement.




     (e) Since the date of this Agreement, EBG shall not have suffered any Material Adverse
Effect.




     (f) EBG shall have delivered evidence to Astoria, in form and substance reasonably
satisfactory to Astoria, that all equity interests in



50









 






USPowerGenCo issued and outstanding as of immediately prior to the Closing have been canceled
for no consideration and without further liability to USPowerGenCo or any of its Subsidiaries.



     5.3 Conditions to the Obligation of EBG. The obligation of EBG to effect the Mergers
shall be subject to the satisfaction or waiver by EBG on or prior to the Closing Date of each of
the following conditions:




     (a) The representations and warranties of Astoria contained in Article III shall be true
and correct (disregarding any limitation as to “materiality” or “Material Adverse Effect” set
forth therein) on the date of this Agreement and at the Closing (except to the extent that
such representation and warranty speaks as of a particular date, in which case such
representation and warranty shall be true and correct as of that date), except where the
failure of the representations and warranties to so be true and correct, individually or in
the aggregate, has not had and would not reasonably be expected to have a Material Adverse
Effect on Astoria; provided, however, that notwithstanding the foregoing, the
representations and warranties contained in Sections 3.1 and 3.2 shall be true and correct in
all material respects.




     (b) Astoria shall have duly performed and complied in all material respects with all
agreements contained herein required to be performed or complied with by it at or before the
Closing.




     (c) Astoria shall have delivered to EBG a certificate, dated the Closing Date and signed
by a senior executive officer of Astoria, as to the fulfillment of the conditions set forth in
Sections 5.3(a) and 5.3(b).




     (d) USPowerGenCo shall have executed and delivered the Consulting Agreement.




     (e) New Astoria and the members of New Astoria shall have executed and delivered to EBG
the Investor Rights Agreement.




     (f) Astoria shall have delivered to EBG a statement similar to that provided for in
Treasury Regulation Section 1.897-1(h) (1) (i) that, were Astoria a U.S. Corporation,
interests in Astoria would not constitute a U.S. real property interest.




     (g) Since the date of this Agreement, Astoria shall not have suffered any Material
Adverse Effect.



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ARTICLE VI




NO SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS




     6.1 No Survival of Representations, Warranties and Covenants. The representations,
warranties and covenants of Astoria and EBG contained in this Agreement or in any certificate
delivered in connection with this Agreement (other than the covenants contained in Section 1.8,
Section 4.10 and Article IX of this Agreement) shall not survive the Closing, and any and all
breaches of such representations and warranties and covenants shall be deemed waived as of the
Closing.



ARTICLE VII




TERMINATION




     7.1 Termination. This Agreement may be terminated at any time prior to the Closing
Date:




     (a) By the written agreement of Astoria and EBG;




     (b) By either EBG (on behalf of itself and its Subsidiaries party hereto), on the one
hand, or Astoria, on the other hand, by written notice to the other party if:




     (i) after 5:00 p.m. New York City time on the Termination Date, if the Mergers
shall not have been effected pursuant hereto, unless such date is extended by the mutual
written consent of EBG and Astoria, provided that such termination right shall
not be available to the party whose failure or the failure of whose affiliates to
fulfill or cause to be fulfilled any obligation under this Agreement has been the
primary cause of the failure of the Mergers to occur prior to such date;




     (ii) any event shall occur after the date hereof that shall have made it impossible
to satisfy a condition precedent to the terminating party’s obligations to perform its
obligations hereunder, unless the occurrence of such event shall be due to the failure
of the terminating party to perform or comply with any of the agreements, covenants or
conditions hereof to be performed or complied with by such party prior to the Closing;
or




     (iii) the Requisite Consent of EBG Members shall not have been obtained by the date
which is ninety (90) days after the date hereof, provided that the right to
terminate this Agreement pursuant to this



52









 






Section 7.1(b)(iii) shall not be available to EBG if it has not complied with its
obligations under Section 4.2 and Section 4.6, or if the information statement has not
been mailed or the time period for return of the written consents has not expired.




     (c) By Astoria, by written notice to EBG if:




     (i) EBG shall have breached or failed to comply with any representation, warranty,
covenant or agreement set forth in this Agreement which would cause any of the
conditions set forth in Section 5.2(a) or 5.2(b) not to be satisfied, and such breach is
incapable of being cured by the Termination Date; provided, however,
that Astoria is not then in material breach of this Agreement so as to cause any of the
conditions set forth in Section 5.1, 5.3(a) or 5.3(b) not to be satisfied;




     (ii) EBG or any of its Subsidiaries or their respective representatives shall have
willfully or materially breached in any respect their respective obligations under
Section 4.6; or




     (iii) subject to the penultimate sentence of Section 4.6(b), the Board of Directors
of EBG shall (A) fail to authorize, approve or recommend the Mergers, or
(B) effect a Change in the EBG Recommendation, or (C) fail to reconfirm
its authorization, approval or recommendation of the Mergers within three Business Days
after a written request by Astoria to do so.




     (d) By EBG, by written notice to Astoria:




     (i) if Astoria shall have breached any representation, warranty, covenant or
agreement set forth in this Agreement which would cause any of the conditions set forth
in Section 5.3(a) or 5.3(b) not to be satisfied, and such breach is incapable of being
cured by the Termination Date; provided, however, that EBG is not then
in material breach of this Agreement so as to cause any of the conditions set forth in
Section 5.1, 5.2(a) or 5.2(b) not to be satisfied; or




     (ii) pursuant to the last sentence of Section 4.6(b), provided that
(A) EBG is and has been in compliance in all respects with Section 4.6, and
(B) the Board of Directors of EBG concurrently approves, and EBG concurrently
enters into, a definitive agreement providing for the implementation of a Superior
Proposal.



     7.2 Effect of Termination.



53









 





     (a) In the event of the termination of this Agreement pursuant to the provisions of Section
7.1, this Agreement shall become void and have no effect, and there shall be no liability or
obligation on the part of any party hereto or any of its directors, officers, representatives,
members, stockholders, Subsidiaries or Affiliates, except as provided in Sections 4.8 regarding
publicity, this Section 7.2 and Article IX, each of which will survive termination. Except as
otherwise provided in Section 7.2(e), nothing in this Section 7.2 shall be deemed to release any
party from any liability for any willful breach by such party of its representations, warranties,
covenants or other agreements set forth in this Agreement. If the transactions contemplated by this
Agreement are terminated as provided herein, each party shall return to the other party all
documents and other materials received from the other party, its Affiliates or their agents
(including all copies of or materials developed from any such documents or other materials)
relating to the transactions contemplated hereby, whether obtained before or after the execution
hereof.



     (b) In the event that this Agreement is terminated (i) by Astoria pursuant to Section
7.1(c)(iii) or (ii) by EBG pursuant to Section 7.1(d)(ii), then, EBG shall pay $46,000,000
(the “EBG Termination Fee”) to Astoria. If EBG is required to pay Astoria the EBG
Termination Fee pursuant to this Section 7.2(b), such EBG Termination Fee shall be payable
immediately prior to and as a condition to the termination of this Agreement in the event of
termination by EBG, and not later than two Business Days after the receipt by EBG of a notice of
termination from Astoria in the event of termination by Astoria.



     (c) In the event that this Agreement is terminated by Astoria or by EBG pursuant to Section
7.1(b)(iii) and at the time of such termination no Takeover Proposal is pending, then EBG shall pay
Astoria the Astoria Expenses as provided in Section 9.1(b), provided that if within six
months after such termination EBG or any of its Subsidiaries enters into a definitive agreement to
consummate or consummates any Takeover Proposal then, upon and as a condition to such action, EBG
shall pay $23,000,000 (the “EBG Partial Termination Fee”) to Astoria, less the amount of
any Astoria Expenses previously paid by EBG to Astoria pursuant to Section 9.1(b).



     (d) In the event that this Agreement is terminated by Astoria or by EBG pursuant to Section
7.1(b)(iii) and at the time of such termination a Takeover Proposal is pending then EBG shall pay
Astoria the Astoria Expenses as provided in Section 9.1(b), provided that if within six
months after such termination EBG or any of its Subsidiaries enters into a definitive agreement to
consummate or consummates any Takeover Proposal then, upon and as a condition to such action, EBG
shall pay the EBG Termination Fee to Astoria, less the amount of any Astoria Expenses previously
paid by EBG to Astoria pursuant to Section 9.1(b).



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     (e) In the event that this Agreement is terminated by Astoria pursuant to Section 7.1(c)(i),
provided that any breach or failure to comply on the part of EBG shall be willful,
provided further that if within six months after such termination EBG or any of its
Subsidiaries enters into a definitive agreement to consummate or consummates any Takeover Proposal,
then, upon and as a condition to such action, EBG shall pay the EBG Termination Fee to Astoria.
Notwithstanding anything else to the contrary in this Agreement, in the event EBG pays the EBG
Termination Fee to Astoria in accordance with this Section 7.2(e), EBG shall have no further
liability to Astoria for monetary damages under this Agreement.



     (f) In the event that this Agreement is terminated by Astoria pursuant to Section 7.1(c)(ii),
EBG shall pay the EBG Termination Fee to Astoria. Such EBG Termination Fee shall be payable not
later than two Business Days after the receipt by EBG of a notice of termination from Astoria.



     (g) For purposes of this Section 7.2, the term “Takeover Proposal” shall have the meaning
ascribed thereto in Section 4.6(d), except that all references to 15% shall be changed to 50%.



     (h) Any amount that becomes payable pursuant to this Section 7.2 or 9.1, shall be paid by wire
transfer of immediately available funds to an account designated by Astoria. The parties hereto
agree and understand that in no event shall EBG be required to pay the EBG Termination Fee on more
than one occasion. The parties hereto acknowledge that the agreements contained in this Section 7.2
and Section 9.1 are an integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Astoria would not have entered into this Agreement and that any amounts
payable pursuant to this Section 7.2 or Section 9.1 do not constitute a penalty. In the event that
EBG fails to pay the EBG Termination Fee when due, EBG shall reimburse Astoria for all reasonable
costs and expenses (including reasonable legal fees and expenses) incurred by Astoria in connection
with any action, including the filing of any lawsuit, taken to collect payment of such amounts,
together with interest on such unpaid amounts at the prime lending rate prevailing during such
period as published in The Wall Street Journal, calculated on a daily basis from the date such
amounts were required to be paid until the date of actual payment. Astoria agrees that any payment
of the EBG Termination Fee, together with the reimbursement of Astoria Expenses pursuant to Section
9.1, shall be Astoria’s sole remedy in respect of termination of this Agreement, except, subject to
Section 7.2(e), in the case of any willful breach of this Agreement by the Company.



55









 





ARTICLE VIII




DEFINITIONS AND INTERPRETATION




     8.1 Definition of Certain Terms; Interpretation. The terms defined in this Article
VIII, whenever used in this Agreement (including in the Schedules of the EBG Disclosure Letter or
the Astoria Disclosure Letter), shall have the respective meanings indicated below for all purposes
of this Agreement (each such meaning to be equally applicable to the singular and the plural forms
of the respective terms so defined). All references herein to a Section, Article, Exhibit or
Schedule are to a Section, Article, Exhibit or Schedule of or to this Agreement, unless otherwise
indicated and the words “here of and “hereunder” will be deemed to refer to this Agreement as a
whole and not to any particular provision. The words “includes” and “including” will be deemed to
be followed by the words “without limitation” whenever used. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms. The parties have
participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provisions of this Agreement. Whenever there is a
representation by a party that a Contract or other information has been provided, delivered or made
available to another party hereunder, such party shall, regardless of whether such representation
or warranty specifically includes language to such effect, be deemed a representation and warranty
by such party that a complete and correct copy of such Contract or other information (including all
amendments, supplements, and extensions thereto) has been provided, delivered or made available by
such party.




     Affiliate: with respect to any Person, a Person that directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under common control
with such Person. “Control” (including the terms “controlled by” and “under common
control with”) means the possession, directly or indirectly, of the power to direct or cause
the direction of the management policies of a Person, whether through the ownership of voting
securities, by contract or credit arrangement, as trustee or executor, or otherwise.




     Agreement: this Agreement and Plan of Merger, including the Exhibits and
Schedules hereto.




     Astoria: the meaning set forth in the preamble.




     Astoria Annual Financial Statements: the meaning set forth in Section 3.4.




     Astoria Benefit Plan: the meaning set forth in Section 3.11 (a).



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     Astoria Certificate of Merger: the meaning set forth in Section 1.2(b).




     Astoria December 2006 Balance Sheet: the meaning set forth in Section 3.4.




     Astoria Disclosure Letter: the meaning set forth in the first paragraph of
Article III.




     Astoria Employment Agreements: the meaning set forth in Section 3.11(a).




     Astoria Expenses: the meaning set forth in Section 9.2(b).




     Astoria Facilities: the meaning set forth in Section 3.10(a).




     Astoria Financial Statements: the meaning set forth in Section 3.4.




     Astoria Interim Financial Statements: the meaning set forth in Section 3.4.




     Astoria Leased Real Property: the meaning set forth in Section 3.13(a).




     Astoria Leases: the meaning set forth in Section 3.13(c).




     Astoria Licenses: the meaning set forth in Section 3.14(b).




     Astoria LLC Agreement: the meaning set forth in Section 1.6(a).




     Astoria Material Contracts: the meaning set forth in Section 3.15.




     Astoria Merger: the meaning set forth in paragraph C of the Recitals.




     Astoria Merger Consideration: the meaning set forth in Section 1.3(b).




     Astoria MergerCo: the meaning set forth in the preamble.




     Astoria MergerCo Units: the units of limited liability company interest in
Astoria MergerCo.




     Astoria Owned Intellectual Property: the meaning set forth in Section 3.14(a).




     Astoria Owned Real Property: the meaning set forth in Section 3.13(a).




     Astoria Project Company Subsidiary: Astoria Generating Company, L.P., a Delaware
limited partnership.



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     Astoria Permits: the meaning set forth in Section 3.9(b).




     Astoria September 2006 Financial Statements: the meaning set forth in Section
3.4.




     Astoria Surviving Company: the meaning set forth in Section 1.1 (b).




     Astoria Surviving Company Units: the meaning set forth in Section 1.3(f).




     Astoria Units: the units of limited liability company interest in Astoria.




     BG: Boston Generating, LLC, a Delaware limited liability company.




     Business Day: each Monday, Tuesday, Wednesday, Thursday and Friday that is not a
day on which banking institutions in New York, New York are authorized or obligated by law or
executive order to close.




     Certificates of Merger: the meaning set forth in Section 1.2(b).




     Change: the meaning set forth in Section 4.2.




     Change in the EBG Recommendation: the meaning set forth in Section 4.2.




     Class A Common Stock: means the USPowerGenCo’s Class A Common Stock, par value
$0.0001 per share.




     Class B Common Stock: means the USPowerGenCo’s Class B Common Stock, par value
$0.0001 per share.




     Closing: the meaning set forth in Section 1.2(a).




     Closing Date: the meaning set forth in Section 1.2(a).




     COBRA: Part 6 of Subtitle B of Title I of ERISA, section 4980B of the Code, and
any similar state law.




     Code: the Internal Revenue Code of 1986, as amended.




     Consent: any consent, approval, authorization, order, filing, registration or
qualification of or with any Person.




     Consulting Agreement: the Consulting Agreement in the form attached hereto as
Exhibit F.



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     Contract: any written agreement, contract, commitment, instrument, lease,
license, undertaking or arrangement.




     Converted Warrant: the meaning set forth in Section 1.4.




     Delaware Secretary of State: the meaning set forth in Section 1.2(b).




     DOJ: the meaning set forth in Section 4.5(b).




     EBG: the meaning set forth in the preamble.




     EBG Annual Financial Statements: the meaning set forth in Section 2.4.




     EBG Benefit Plans: the meaning set forth in Section 2.11 (a).




     EBG Certificate of Merger: the meaning set forth in Section 1.2(b).




     EBG Disclosure Letter: the meaning set forth in the first paragraph of Article
II.




     EBG Employment Agreements: the meaning set forth in Section 2.11 (a).




     EBG Facilities: the meaning set forth in Section 2.10(a).




     EBG Financial Statements: the meaning set forth in Section 2.4.




     EBG Fully Diluted Shares: the meaning set forth in Section 1.8.




     EBG Interim Financial Statements: the meaning set forth in Section 2.4.




     EBG Leased Real Property: the meaning set forth in Section 2.13(a).




     EBG Leases: the meaning set forth in Section 2.13(c).




     EBG Licenses: the meaning set forth in Section 2.14(b).




     EBG Material Contracts: the meaning set forth in Section 2.15.




     EBG Merger: the meaning set forth in paragraph C of the Recitals.




     EBG Merger Consideration: the meaning set forth in Section 1.3(a).




     EBG Owned Intellectual Property: the meaning set forth in Section 2.14(a).



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     EBG Owned Real Property: the meaning set forth in Section 2.13(a).




     EBG Partial Termination Fee: the meaning set forth in Section 7.2(c).




     EBG Percentage: the meaning set forth in Section 1.8.




     EBG Permits: the meaning set forth in Section 2.9(b).




     EBG Preliminary December 2006 Balance Sheet: the meaning set forth in Section
2.4.




     EBG Project Company Subsidiary: each of Mystic I, LLC, a Delaware limited
liability company; Mystic Development, LLC, a Delaware limited liability company; and Fore
River Development, LLC, a Delaware limited liability company.




     EBG Recommendation: the meaning set forth in Section 4.2.




     EBG September 2006 Financial Statements: the meaning set forth in Section 2.4.




     EBG Surviving Company: the meaning set forth in Section 1.1 (a).




     EBG Surviving Company Units: the meaning set forth in Section 13(e).




     EBG Termination Fee: the meaning set forth in Section 7.2(b).




     EBG Units: the units of limited liability company interest in EBG.




     EBG Warrants: Warrants covering the purchase of EBG Units.




     Effective Time: the meaning set forth in Section 1.2(b).




     Employment and Withholding Taxes: any federal, state, provincial, local, foreign
or other employment, unemployment insurance, social security, disability, workers’
compensation, payroll, health care or other similar tax, duty or other governmental charge or
assessment or deficiencies thereof and all Taxes required to be withheld by or on behalf of a
company and each of its Subsidiaries in connection with amounts paid or owing to any employee,
independent contractor, creditor or other party, in each case, on or in respect of the
business or assets thereof.




     Environmental Law: any federal, state, or local law (including common law),
statute, rule, regulation or order relating to (i) the manufacture, transport, use, treatment,
storage, disposal, release or threatened release of Hazardous



60









 






Substances, or (ii) the protection of human health (as it relates to exposure to
Hazardous Substances), pollution, or the protection of the environment (including, without
limitation, natural resources, air, and surface or subsurface land or waters).




     EPA: the meaning set forth in Section 2.10(a).




     ERISA: the Employee Retirement Income Security Act of 1974, as amended.




     ERISA Affiliate: as to any Person, any trade or business (whether or not
incorporated) which, together with such Person (or their successors), is or would have been at
any date of determination occurring within the preceding six years, treated as a single
employer under section 414 of the Code.




     EWG: the meaning set forth in Section 2.10(a).




     Exchange: the meaning set forth in paragraph E of the Recitals.




     FERC: the Federal Energy Regulatory Commission and its successors.




     FPA: the Federal Power Act, as amended, and the rules and regulations promulgated
under such act.




     FTC: the meaning set forth in Section 4.5(b).




     GAAP: the meaning set forth in Section 2.4.




     Governmental Entity: any governmental or regulatory authority, agency, court,
commission or other entity, domestic or foreign.




     Hazardous Substance: any material or substance that: (i) is or contains
asbestos, polychlorinated biphenyls, petroleum or petroleum products, (ii) requires
investigation or remedial action pursuant to any Environmental Law, or is defined, listed or
identified as a “hazardous waste,” “hazardous substance,” “toxic substance” or words of
similar meaning or regulatory effect thereunder, or (iii) is regulated under any
Environmental Law because of its hazardous or deleterious properties or characteristics.




     HSR Act: the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder.




     Indemnified Parties: the meaning set forth in Section 4.10(a).



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     Intellectual Property: the meaning set forth in Section 2.14(a).




     Investor Rights Agreement: the Investor Rights Agreement in the form attached
hereto as Exhibit G.




     IPO: the meaning set forth in Section 4.13.




     IRS: the Internal Revenue Service.




     Knowledge of Astoria: the actual knowledge of Jacob Worenklein, Jeff Hunter, Mark
Sudbey, Belinda Foxworth or Ian Nutt.




     Knowledge of EBG: the actual knowledge of William Kriegel, Barry Sullivan, David
Tohir, Dan O’Shea or Paul Ehrenzeller.




     Leases: the meaning set forth in Section 2.13(c).




     Lien: any mortgage, pledge, deed of trust, hypothecation, claim, security
interest, title defect, encumbrance, burden, charge or other similar restriction, lease,
sublease, claim, title retention agreement, option, easement, covenant, encroachment or other
adverse claim.




     LLC Act: the meaning set forth in Section 1.1(a).




     Material Adverse Effect: with respect to Astoria or EBG, any event, change,
circumstance, state of facts or effect that, individually or in combination with other events,
changes, circumstances, facts or effects is, has had or would reasonably be expected to result
in a materially adverse effect on the business, operations, assets, liabilities, the financial
condition or results of operations of Astoria or EBG, as applicable, and its Subsidiaries
taken as a whole, other than any event, change, circumstance, state of facts or effect that
results or arises from or relates to (i) changes in (x) economic, regulatory
or political conditions (including acts of war, declared or undeclared, armed hostilities and
terrorism), financial, securities or other market conditions or prevailing interest rates,
(y) the industry in which Astoria or EBG, as applicable, operates, or (z)
laws, regulations or accounting standards, principles or interpretations, provided
that, in the case of the foregoing clauses (x), (y) and (z), such events, changes,
circumstances, facts or effects have not had a disproportionate impact on Astoria or EBG, as
applicable, and its Subsidiaries, taken as a whole, relative to other companies operating in
the same industry in which Astoria and EBG, and their Subsidiaries operate, (ii) any
action expressly required to be taken pursuant to this Agreement or taken upon the written
consent or written request of EBG or Astoria, as applicable, or (iii) the announcement
of this Agreement or the performance of obligations hereunder.



62









 






     Material Contract: the meaning set forth in Section 2.15.




     Maximum Premium: the meaning set forth in Section 4.10(b).




     MDCP IV: Madison Dearborn Capital Partners IV, L.P., a Delaware limited
partnership.




     Mergers: the meaning set forth in paragraph C of the Recitals.




     New Astoria: the meaning set forth in paragraph E of the Recitals.




     New Astoria Percentage: the meaning set forth in Section 1.8.




     Notice Period: the meaning set forth in Section 4.6(b).




     NYPSC: the New York Public Service Commission and its successor.




     ordinary course, ordinary course of business and similar phrases: the usual and
ordinary course, consistent with past practice, of the operation of the businesses of any
Person and its Subsidiaries, including with regard to nature, frequency and magnitude.




     Organizational Documents: with respect to any limited liability company, its
articles or certificate of formation and operating or limited liability company operating
agreement and with respect to any corporation, its articles or certificate of incorporation
and by-laws.




     Permitted Liens: (i) Liens disclosed in the EBG Financial Statements or
the Astoria Financial Statements, as applicable, including the notes thereto, (ii)
Liens for taxes, assessments and similar charges that are not yet delinquent or that are being
contested in good faith and for which adequate reserves have been established in accordance
with GAAP requirements on the applicable party’s books and records; (iii) mechanic’s,
materialmen’s, carrier’s, repairer’s and other similar Liens arising or incurred in the
ordinary course of business that secure obligations that are not yet overdue for a period of
more than 30 days or that are being contested in good faith; (iv) easements, rights of
way, zoning ordinances and other similar encumbrances affecting real property that are
incurred in the ordinary course of business and do not materially detract from the value or
interfere with the present use of the property, (v) statutory Liens in favor of
lessors arising in connection with any property leased to a company or its Subsidiaries;
(vi) pledges or deposits to secure obligations under workers’ compensation laws or
similar legislation; and (vii) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases,




63












 






statutory obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature incurred in the ordinary course of business.




     Person: any natural person, firm, partnership, association, corporation,
company, trust, business trust, Governmental Entity or other entity.




     Plan: each “employee benefit plan”, as such term is defined in section 3(3)
of ERISA (whether or not subject to ERISA), and each bonus, incentive or deferred
compensation, severance, termination, retention, change of control, stock option, stock
appreciation, stock purchase, phantom stock or other equity-based, performance or other
employee or retiree benefit or compensation plan, program, arrangement, policy or
understanding.




     PUHCA: the Public Utility Holding Company Act of 2005, as amended, and the
rules and regulations promulgated by FERC under such act.




     Requisite Consent of EBG Members: the written consent of holders of EBG
Units representing not less than 75% of the voting power of the outstanding EBG Units
with respect to the adoption of this Agreement and to the transactions contemplated
hereby, including the Mergers.




     Securities Act: the Securities Act of 1933, as amended.




     Subsidiary: with respect to any Person (for the purposes of this
definition, the “parent”), any other Person (other than a natural person),
whether incorporated or unincorporated, of which at least a majority of the securities
or ownership interests having by their terms ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions is directly or
indirectly owned or controlled by the parent or by one or more of its respective
Subsidiaries or by the parent and any one or more of its respective Subsidiaries.




     Superior Proposal: the meaning set forth in Section 4.6(d).




     Takeover Proposal: the meaning set forth in Section 4.6(a).




     Tax Return: all returns, reports, declarations, claim for refunds,
information return or other document (including any relating or supporting schedule,
statement or information) supplied or required to be supplied to a taxing authority
relating to Taxes.




     Taxes: all U.S. or non-U.S. federal, national, state or local taxes,
assessments, levies or other governmental charges in the nature of taxes, including,
without limitation, all income, franchise, withholding, payroll,



64









 






alternative minimum, estimated, natural resources, unemployment insurance, social
security, sales, use, excise, real and personal property, stamp, transfer, value added and
workers’ compensation taxes, together with all interest, penalties and additions payable with
respect thereto.




     Termination Date: the date that is the five-month anniversary of the earlier of:
(i) the date (the “Publication Date”) that the NYPSC publishes a notice in the
New York State Register in connection with the parties’ application under Section 70 of the
New York State Public Service Law and (ii) April 20, 2007; provided that if
all of the conditions to Closing are satisfied upon the Termination Date (determined without
regard to this proviso), other than (a) the condition of NYPSC approval under Section
70 of the New York Public Service Law in the absence of a ruling declaring that the NYPSC will
not review the Mergers under Section 70 because the Wallkill presumption is satisfied, and
(b) conditions which by their terms are to be satisfied at Closing, the “Termination
Date” shall be the six month anniversary of the earlier date between clauses (i) and (ii)
above.




     UAR: the meaning set forth in Section 4.14.




     UAR Plan: the meaning set forth in Section 4.14.




     USPowerGenCo: the meaning set forth in the preamble.




     Worker Adjustment and Retraining Notification Act: The Worker Adjustment and
Retraining Notification Act, as amended.



ARTICLE IX




GENERAL PROVISIONS




     9.1 Expenses.



     (a) Except as otherwise specifically provided for in this Agreement, EBG and its Subsidiaries
party hereto, on the one hand, Astoria, on the other hand, shall bear their respective expenses,
costs and fees (including attorneys’ and auditors’ if any) in connection with the transactions
contemplated hereby, including the preparation, execution and delivery of this Agreement and
compliance herewith, whether or not the Mergers are effected; provided that Astoria and EBG
shall share equally all filing fees in connection with the filings required by the HSR Act. In no
event shall the transaction fees and transaction bonuses of Astoria (including amounts payable to
Affiliates as transaction fees or transaction bonuses which are expressly permitted to be paid, but
specifically excluding transfer taxes and expenses reasonably related to the IPO) exceed
$34,000,000. For purposes of confirming that the total of such transaction fees and transaction
bonuses



65









 




does not exceed $34,000,000, EBG shall have a reasonable opportunity to review expenses that were
deemed to be reasonably related to the IPO.




     (b) Notwithstanding anything to the contrary contained in this Agreement, in the event that
this Agreement is terminated, by Astoria or EBG pursuant to Section 7.1(b)(iii) then EBG shall pay
promptly (but in any event within two business days), as directed by Astoria in writing, all of
Astoria’s out-of-pocket fees and expenses (including reasonable legal fees and expenses) incurred
by Astoria and its Affiliates on or prior to the termination of this Agreement in connection with
the transactions contemplated by this Agreement (the “Astoria Expenses”), provided
that the aggregate amount of all such Astoria Expenses for which EBG has an expense reimbursement
obligation when triggered pursuant to this Section 9.1(b) shall not exceed $6,000,000.



     9.2 Further Actions. Subject to the terms and conditions of this Agreement, each party
shall execute and deliver such certificates and other documents and take such actions as may
reasonably be requested by the other party in order to effect the transactions contemplated by this
Agreement.



     9.3 Certain Limitations. It is the explicit intent and understanding of each of the
parties that no party nor any of its Affiliates, representatives or agents is making any
representation or warranty whatsoever, oral or written, express or implied, other than those set
forth in Articles II and III and no party is relying on any statement, representation or warranty,
oral or written, express or implied, made by another party or such other party’s Affiliates,
representatives or agents, except for the representations and warranties set forth in such
Articles. The parties agree that this is an arm’s-length transaction in which the parties’
undertakings and obligations are limited to the performance of their undertakings and obligations
under this Agreement.



     9.4 Notices. All notices, requests, demands, waivers and other communications required
or permitted to be given under this Agreement shall be in writing and shall be deemed to have been
duly given if (i) delivered personally, (ii) mailed, certified or registered mail
with postage prepaid, (iii) sent by next-day or overnight mail or delivery or (iv)
sent by fax, as follows:




	 	(a)	 	if to EBG,




EBG Holdings LLC

The Schrafft Center

529 Main Street, Suite 605

Charlestown, MA 02129

Attention: Chief Executive Officer

Tel: (617) 381-2270

Fax: (617) 381-2211




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     Copies of any of the same shall also be delivered to the following:


K Road BG Management, LLC

330 Madison Avenue, 25th Floor

New York, NY 10017

Attention: William Kriegel, CEO

Tel: (212) 351-0510

Fax:(212) 351-0515



and



Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

Fax: (212) 909-6836

Telephone: (212) 909-6000

Attention: John M. Allen, Esq. and Robert F. Quaintance Jr., Esq.





	 	(b)	 	if to Astoria,




c/o US Power Generating Company, LLC

505 Fifth Avenue, 21st Floor

New York, NY 10017

Fax:(212) 792-0899

Telephone: (212) 792-0810

Attention: Chief Executive Officer




     Copies of any of the same shall also be delivered to the following:



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Madison Dearborn Partners, LLC

Three First National Plaza

70 W. Madison, Suite 3800

Fax: (312) 895-1051

Telephone: (312) 895-1000

Attention: Thomas S. Souleles and Patrick Eilers



Kirkland & Ellis LLP

200 East Randolph Drive

Fax: (312) 861-2200

Telephone: (312) 861-2000

Attention: Mitchell F. Hertz, P.C. and Richard J. Campbell, P.C.



or, in each case, at such other address as may be specified in writing to the other parties hereto.




     All such notices, requests, demands, waivers and other communications shall be deemed to have
been received (i) if by personal delivery, on the day after such delivery, (ii) if
by certified or registered mail, on the seventh Business Day after the mailing thereof,
(iii) if by next-day or overnight mail or delivery, on the day delivered or (iv) if
by fax, on the next day following the day on which such fax was sent, provided that a copy is also
sent by certified or registered mail.



     9.5 Limited Disclosure. Notwithstanding anything to the contrary contained in this
Agreement or in any other express or implied understanding or agreement with any Person, each of
the parties hereto and their equityholders and representatives may disclose the tax treatment and
tax structure of the transactions contemplated by this Agreement, provided that no Person
shall be permitted by virtue of this paragraph to disclose the name of, or any other identifying
information with respect to, any party to this Agreement.



     9.6 Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, successors and permitted assigns.



     9.7 Assignment; Successors; Third Party Beneficiaries. This Agreement shall not be
assignable by any party hereto without the prior written consent of all of the other parties and
any attempt to assign this Agreement without such consent shall be void and of no effect. Nothing
in this Agreement, expressed or implied, is intended or shall be construed to confer upon any
Person other than the parties hereto, and their successors and assigns permitted by this Section
9.7, any right, remedy or claim under or by reason of this Agreement, other than, following the
Closing, (a) the rights of the holders of Class A Common Stock or Class B Common Stock of
USPowerGenCo under Section 1.8, and (b) the rights of former directors and officers of
Astoria, EBG and their Subsidiaries



68









 




under Section 4.10. The agreements with respect to the foregoing Persons are intended to be for the
benefit of the Persons covered thereby and may be enforced by such Persons. Nothing else in this
Agreement, express or implied, is intended or shall be construed to create any third-party
beneficiaries.




     9.8 Amendment; Waivers, etc. No amendment, modification or discharge of this
Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly
executed by the party against whom enforcement of the amendment, modification, discharge or waiver
is sought; provided, however, that no amendment shall be made that by law requires
further approval by the holders of the EBG Units without such approval having been obtained. Any
such waiver shall constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver in any other
respect or at any other time. The waiver by any of the parties hereto of a breach of or a default
under any of the provisions of this Agreement or a failure to or delay in exercising any right or
privilege hereunder, shall not be construed as a waiver of any other breach or default of a similar
nature, or as a waiver of any of such provisions, rights or privileges hereunder. The rights and
remedies herein provided are cumulative and none is exclusive of any other, or of any rights or
remedies that any party may otherwise have at law or in equity.



     9.9 Entire Agreement. This Agreement (including the Exhibits and Schedules referred to
herein or delivered hereunder) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, between the parties with respect to the subject matter
hereof.



     9.10 Severability. If any provision, including any phrase, sentence, clause, section
or subsection, of this Agreement is invalid, inoperative or unenforceable for any reason, such
circumstances shall not have the effect of rendering such provisions in question invalid,
inoperative or unenforceable in any other case or circumstance, or of rendering any other provision
herein contained invalid, inoperative, or unenforceable to any extent whatsoever.



     9.11 Headings. The headings contained in this Agreement are for purposes of
convenience only and shall not affect the meaning or interpretation of this Agreement.



     9.12 Counterparts. This Agreement may be executed in several counterparts (including by
facsimile and electronic transmission), each of which shall be deemed an original and all of which
shall together constitute one and the same instrument.



     9.13 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED, PERFORMED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES
OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR



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RULES WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.




     9.14 Consent to Jurisdiction, etc.



     (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and
its property, to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, in
any action or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby or for recognition or enforcement of any judgment relating thereto, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.



     (b) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement
or the transactions contemplated hereby in the Court of Chancery of the State of Delaware. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any such court.



     (c) Each of the parties hereto hereby irrevocably and unconditionally consents to service of
process in the manner provided for notices in Section 9.4. Nothing in this Agreement will affect
the right of any party to this Agreement to serve process in any other manner permitted by law.



     9.15 Waiver of Punitive and Other Damages and Jury Trial.



     (a) EXCEPT IN CONNECTION WITH A WILLFUL BREACH OF THIS AGREEMENT, IN WHICH CASE, SUBJECT TO
SECTION 7.2(E), ANY PARTY TO THIS AGREEMENT SHALL HAVE THE RIGHT TO RECOVER UNLIMITED DANAGES, THE
PARTIES TO THIS AGREEMENT EXPRESSLY WAIVE AND FOREGO ANY RIGHT TO RECOVER PUNITIVE, EXEMPLARY, LOST
PROFITS, CONSEQUENTIAL OR SIMILAR DAMAGES IN ANY ARBITRATION, LAWSUIT, LITIGATION OR PROCEEDING
ARISING OUT OF OR RESULTING FROM ANY CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.



     (b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT



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HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.




     (c) EACH PARTY ACKNOWLEDGES AND AGREES THAT (i) THE COVENANTS, OBLIGATIONS AND
AGREEMENTS OF SUCH PARTY CONTAINED IN THIS AGREEMENT RELATE TO SPECIAL, UNIQUE AND EXTRAORDINARY
MATTERS, (ii) THE OTHER PARTIES TO THIS AGREEMENT ARE AND WILL BE RELYING ON SUCH
COVENANTS, OBLIGATIONS AND AGREEMENTS IN CONNECTION WITH ENTERING INTO THIS AGREEMENT AND THE
PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND (C) A VIOLATION OF ANY OF THE
COVENANTS, OBLIGATIONS OR AGREEMENTS OF SUCH PARTY CONTAINED IN THIS AGREEMENT WILL CAUSE THE OTHER
PARTIES IRREPARABLE INJURY FOR WHICH ADEQUATE REMEDIES ARE NOT AVAILABLE AT LAW. THEREFORE, EACH
PARTY AGREES THAT THE OTHER PARTIES SHALL BE ENTITLED TO AN INJUNCTION, RESTRAINING ORDER OR SUCH
OTHER EQUITABLE RELIEF (WITHOUT THE REQUIREMENT TO POST BOND), INCLUDING SPECIFIC PERFORMANCE, AS A
COURT OF COMPETENT JURISDICTION MAY DEEM NECESSARY OR APPROPRIATE TO RESTRAIN SUCH PARTY FROM
COMMITTING ANY VIOLATION OF SUCH COVENANTS, OBLIGATIONS OR AGREEMENTS AND/OR TO REQUIRE SUCH PARTY
TO PERFORM ITS COVENANTS, OBLIGATIONS AND COMMITMENTS HEREUNDER. NOTWITHSTANDING ANYTHING IN THIS
SECTION 9.15(C), EACH PARTY EXPRESSLY WAIVES ANY RIGHT TO SEEK AN INJUNCTION, RESTRAINING ORDER OR
SUCH OTHER EQUITABLE RELIEF (INCLUDING SPECIFIC PERFORMANCE) THAT WOULD BE REASONABLY LIKELY TO
REQUIRE A PARTY TO MAKE A MATERIAL EXPENDITURE IN ORDER TO REMEDY A BREACH OF A REPRESENTATION OR
WARRANTY.



     (d) EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF THE FOREGOING WAIVERS, (ii) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH
WAIVERS VOLUNTARILY, AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.15.



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     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above
written.



	 	 	 	 	 
	 	US POWER GENERATING COMPANY

 	 
	 	By 	/s/ William Kriegel
 	 
	 	 	Name: 	 William Kriegel	 
	 	 	Title:  	 	 
	 
	 	EBG HOLDINGS LLC

 	 
	 	By  	/s/ William Kriegel	 
	 	 	Name: 	 William Kriegel	 
	 	 	Title:  	 	 
	 
	 	EBG MERGER LLC

 	 
	 	By  	/s/ William Kriegel	 
	 	 	Name:	 William Kriegel	 
	 	 	Title:  	 	 
	 
	 	ASTORIA GENERATING COMPANY

HOLDINGS, LLC

 	 
	 	By  	/s/ William Kriegel	 
	 	 	Name:	 William Kriegel	 
	 	 	Title:  	 	 
	 
	 	ASTORIA MERGER LLC

 	 
	 	By  	/s/ William Kriegel	 
	 	 	Name:	 William Kriegel	 
	 	 	Title:  	 	 



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     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above
written.



	 	 	 	 	 
	 	US POWER GENERATING COMPANY

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	EBG HOLDINGS LLC

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	EBG MERGER LLC

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	ASTORIA GENERATING COMPANY HOLDINGS, LLC

 	 
	 	By  	/s/
Jacob J. Worenklein
 	 
	 	 	Name: Jacob J. Worenklein	 
	 	 	Title:  	Chairman & CEO 	 
	 
	 	ASTORIA MERGER LLC

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title: