Exhibit 10-uu

 

 

ASSET PURCHASE AGREEMENT

 

 

BY AND AMONG

 

 

CINERGY CAPITAL & TRADING, INC.,

 

CINCAP VII, LLC

 

 

AND

 

 

PSI ENERGY, INC.

 

 

Dated as of February 5, 2003

 

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ARTICLE I

DEFINITIONS

 

ARTICLE II

PURCHASE AND SALE

 

 

Section 2.01.

Transfer of Assets

Section 2.02.

Excluded Assets

Section 2.03.

Assumed Liabilities

Section 2.04.

Excluded Liabilities

 

 

ARTICLE III

PURCHASE PRICE; CLOSING

 

 

Section 3.01.

Purchase Price

Section 3.02.

Inventory

Section 3.03.

Proration

Section 3.04.

Closing

Section 3.05.

Closing Deliveries

 

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

 

Section 4.01.

Representations and Warranties of Parent and Seller

Section 4.02.

Representations and Warranties of Buyer

 

 

ARTICLE V

COVENANTS

 

 

Section 5.01.

Books and Records

Section 5.02.

Finder’s Fees

Section 5.03.

Tax Matters

Section 5.04.

Further Assurances

 

 

ARTICLE VI

INDEMNIFICATION

 

 

Section 6.01.

Survival

Section 6.02.

Indemnification

Section 6.03.

Procedure for Indemnification

 

 

ARTICLE VII

MISCELLANEOUS PROVISIONS

 

 

Section 7.01

Notices

 

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Section 7.02.

Waiver

Section 7.03.

Entire Agreement; Amendment etc.

Section 7.04.

Assignment

Section 7.05.

Severability

Section 7.06.

Bulk Sales Laws

Section 7.07.

Governing Law

Section 7.08.

Counterparts; Facsimile Execution

Section 7.09.

Schedules

Section 7.10

U.S. Dollars

Section 7.11.

Dispute Resolution

Section 7.12.

Ratemaking

Section 7.13.

State Review

 

 

SCHEDULES

 

 

Schedule I

Form of Deed

Schedule II

Form of Bill of Sale

Schedule III

Form of Assumption Agreement

 

 

DISCLOSURE SCHEDULES

 

 

Schedule 2.01(b)

Tangible Personal Property

Schedule 2.01(d)

Transferred Contracts

Schedule 2.01(e)

Transferred Permits

Schedule 4.01(c)(ii)

Seller’s Required Governmental and Third Party Consents

Schedule 4.01(g)(i)

Real Property

Schedule 4.01(k)

Environmental Permits

Schedule 4.01(m)

Seller Contracts

Schedule 4.01(o)

Permits

Schedule 4.02(c)(ii)

Buyer’s Required Governmental and Third Party Consents

 

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ASSET PURCHASE AGREEMENT

 

ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of February 5, 2003, by
and among Cinergy Capital & Trading, Inc., an Indiana corporation (“Parent”),
CinCap VII, LLC, a Delaware limited liability company and indirect wholly-owned
subsidiary of Parent (“Seller”), and PSI Energy, Inc., an Indiana corporation
(“Buyer” and, together with Parent and Seller, “Parties” and individually, a
“Party”).

 

W I T N E S S E T H

 

WHEREAS, Seller owns the Henry County Generating Station (“Henry County
Station”), a simple cycle, natural gas-fired electric generating station located
in Henry County, Indiana, comprised of three GE Model LM 6000 combustion
turbines with an aggregate summer rated capacity of approximately 136.5
megawatts, together with certain other assets, properties, facilities and rights
associated therewith or ancillary thereto; and

 

WHEREAS, Buyer desires to purchase and assume from Seller, and Seller desires to
sell and assign to Buyer, the Purchased Assets (as hereinafter defined) and
certain associated liabilities, upon the terms and conditions hereinafter set
forth;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants,
agreements, representations and warranties hereinafter set forth, the Parties,
intending to be legally bound, hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01.          Definitions.          (a)          As used in this
Agreement, the following terms have the following meanings::

 

“Affiliate” means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified.  The term “control” (including the terms “controlling,”
“controlled by” and “under common control with”) means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

 

“Ancillary Agreements” means the Assumption Agreement, the Bill of Sale and the
Deed.

 

“Assumption Agreement” means the form of Assumption Agreement of Buyer in favor
of Seller attached hereto as Schedule III.

 

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“Assumed Liabilities” has the meaning set forth in Section 2.03.

 

“Bill of Sale” means the form of Bill of Sale from Seller to Buyer attached
hereto as Schedule II.

 

“Buyer” has the meaning set in the first paragraph of this Agreement.

 

“Buyer Indemnitee” has the meaning set forth in Section 6.02.

 

“Buyer’s Required Consents” means Buyer’s Required Governmental Consents and
Buyer’s Required Third-Party Consents.

 

“Buyer’s Required Governmental Consents” means the consents, approvals, filings
and/or notices of, with, from or to Governmental Authorities listed in Section I
of Schedule 4.02(c)(ii).

 

“Buyer’s Required Third-Party Consents” means the consents, approvals, filings
and/or notices of, with, from or to Third Parties (other than Governmental
Authorities) listed in Section II of Schedule 4.02(c)(ii).

 

“Carrying Costs” means an amount in dollars equal to the financing costs
associated with Henry County Station incurred from the earlier of (1) the date
of the Indiana Utility Regulatory Commission Order in Cause No. 42145 granting
Buyer a certificate of public convenience and necessity to purchase the Henry
County Station, or (2) December 1, 2002, to and including the Closing Date, to
be calculated at Buyer’s weighted cost of capital using the return on equity
from Buyer’s last retail base rate case (11% ROE).

 

“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended from time to time.

 

“Closing” has the meaning set forth in Section 3.04.

 

“Closing Date” has the meaning set forth in Section 3.04.

 

“Closing Inventory” means an amount in dollars equal to all Inventories on the
Closing Date.

 

“Deed” means the form of Warranty Deed and Assignment of Adjoining Easement
Interest from Seller to Buyer attached hereto as Schedule I.

 

“Direct Claim” has the meaning set forth in Section 6.03(c).

 

“Encumbrance” means any security interest, pledge, mortgage, lien, charge,
option to purchase, lease, claim, restriction, covenant, title defect,
hypothecation,

 

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assignment, deposit arrangement or other encumbrance of any kind or any
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or title retention
agreement).

 

“Environmental Condition” means the presence or Release to the environment,
whether at the Real Property or otherwise, of Hazardous Substances, including
any migration of Hazardous Substances through air, soil or groundwater at, to or
from the Real Property or at, to or from any Off-Site Location, regardless of
when such presence or Release occurred or is discovered.

 

“Environmental Laws” means all (a) Laws relating to pollution or protection of
the environment, natural resources or human health and safety, including Laws
relating to Releases or threatened Releases of Hazardous Substances or otherwise
relating to the manufacture, formulation, generation, processing, distribution,
use, treatment, storage, Release, transport, Remediation, abatement, cleanup or
handling of Hazardous Substances, (b) Laws with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Substances and (c) Laws relating to the management or use of natural resources.

 

“Environmental Liabilities” has the meaning set forth in Section 2.03.

 

“Environmental Permit” has the meaning set forth in Section 4.01(k).

 

“Excluded Assets” has the meaning set forth in Section 2.02.

 

“Excluded Liabilities” has the meaning set forth in Section 2.04.

 

“GAAP” means United States generally accepted accounting principles as in effect
from time to time, applied on a consistent basis.

 

“Good Utility Practice” means any of the practices, methods and acts engaged in
or approved by a significant portion of the electric utility industry during the
relevant time period, or any of the practices, methods or acts which, in the
exercise of reasonable judgment in light of the facts known at the time the
decision was made, could have been expected to accomplish the desired result at
a reasonable cost consistent with good business practices, reliability, safety
and expedition.

 

“Governmental Authority” means any: (a) nation, state, county, city, town,
village, district, or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign, or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal); (d)
multi-national organization or body; or (e) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.

 

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“Hazardous Substances” means (a) any petrochemical or petroleum products, oil or
coal ash, radioactive materials, radon gas, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid which may contain levels of
polychlorinated biphenyls; (b) any chemicals, materials or substances defined as
or included in the definition of “hazardous substances,” “hazardous wastes,”
“hazardous materials,” “hazardous constituents,” “restricted hazardous
materials,” “extremely hazardous substances,” “toxic substances,”
“contaminants,” “pollutants,” “toxic pollutants,” or words of similar meaning
and regulatory effect under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law.

 

“Henry County Station” has the meaning given in the recitals to this Agreement.

 

“Improvements” means all buildings, structures,  machinery and equipment,
fixtures, construction in progress, and other improvements, including all
piping, cables and similar equipment forming part of the mechanical, electrical,
plumbing or HVAC infrastructure of any building, structure or equipment, located
on and affixed to the Real Property.

 

“Indemnifiable Loss” has the meaning set forth in Section 6.02(a).

 

“Indemnifying Party” has the meaning set forth in Section 6.02(d).

 

“Indemnitee” has the meaning set forth in Section 6.02(c).

 

“Inventories” means all inventories of fuels, supplies, materials and spare
parts of Seller located on or in transit to the Real Property.

 

“Knowledge” means the actual knowledge of the corporate officer or officers of
the specified Person charged with responsibility for the particular function as
of the date of this Agreement, or, with respect to any certificate delivered
pursuant to this Agreement, the date of delivery of the certificate, after
reasonable inquiry by each such officer of selected employees of the specified
Person whom such officer believes, in good faith, to be the persons generally
responsible for the subject matters to which the knowledge is pertinent.

 

“Laws” means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States, any foreign
country and any domestic or foreign state, county, city or other political
subdivision or of any Governmental Authority.

 

“Liability” means any liability or obligation, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, whether incurred or
consequential, and whether due or to become due.

 

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“Material Adverse Effect” means (i) any event, circumstance or condition
materially impairing the ability of Seller or Parent to perform its obligations
under this Agreement or any Ancillary Agreement, or (ii) any change in or effect
on Seller or the Purchased Assets that is materially adverse to the Purchased
Assets, other than (a) any change resulting from changes in the international,
national, regional or local wholesale or retail markets for electricity, (b) any
change resulting from changes in the international, national, regional or local
markets for fuel used at Henry County Station, (c) any change resulting from
changes in the North American, national, regional or local electric transmission
system, and (d) any change in Law generally applicable to similarly situated
Persons.

 

“Net Book Value” means an amount in dollars, as set forth in the balance sheet
of Seller as of the applicable date, equal to total fixed assets net of accrued
depreciation.

 

“Off-Site Location” means any real property other than the Real Property.

 

“Organizational Documents” means (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the limited liability company
or operating agreement and certificate of formation of a limited liability
company; (c) the partnership agreement and any statement of partnership of a
general partnership; (d) the limited partnership agreement and the certificate
of limited partnership of a limited partnership; (e) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; and (f) any amendment to any of the foregoing.

 

“Parent” has the meaning set forth in the first paragraph of this Agreement.

 

“Party” has the meaning set forth in the first paragraph of this Agreement.

 

“Permits” has the meaning set forth in Section 4.01(o).

 

“Permitted Encumbrances” means (i) the respective rights and obligations of the
Parties under this Agreement and the Ancillary Agreements; (ii) all matters that
would be disclosed in a current title commitment or title policy or survey for
the Real Property; (iii) Encumbrances for Taxes not yet due or which are being
contested in good faith by appropriate proceedings and that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; (iv) carriers’, warehousemen’s, materialmen’s, mechanics’,
repairman’s or other like Encumbrances arising in the ordinary course of
business that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; (v) zoning, planning, conservation
restriction and other land use and environmental regulations by Governmental
Authorities; (vi) Encumbrances resulting from legal proceedings being contested
in good faith by appropriate proceedings that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; and (vii)
other Encumbrances that would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

 

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“Person” means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Authority.

 

“Prime Rate” means as of any date, the prime rate as published in The Wall
Street Journal on such date or, if not published on such date, on the most
recent date of publication.

 

“Purchase Price” has the meaning set forth in Section 3.01.

 

“Purchased Assets” has the meaning set forth in Section 2.01.

 

“Real Property” has the meaning set forth in Section 4.01(g)(i).

 

“Real Property Lease” has the meaning set forth in Section 4.01(g)(ii).

 

“Release” means any release, spill, leak, discharge, disposal of, pumping,
pouring, emitting, emptying, injecting, leaching, dumping or allowing to escape
into or through the environment.

 

“Remediation” means an action of any kind to address an Environmental Condition
or a Release of Hazardous Substances or the presence of Hazardous Substances at
the Real Property or an Off-Site Location, including the following activities to
the extent they relate to, result from or arise out of the presence of a
Hazardous Substance at the Real Property or an Off-Site Location:  (a)
monitoring, investigation, assessment, treatment, cleanup, containment, removal,
mitigation, response or restoration work; (b) obtaining any permits, consents,
approvals or authorizations of any Governmental Authority necessary to conduct
any such activity; (c) preparing and implementing any plans or studies for any
such activity; (d) obtaining a written notice from a Governmental Authority with
jurisdiction over the Real Property or an Off-Site Location under Environmental
Laws that no material additional work is required by such Governmental
Authority; (e) the use, implementation, application, installation, operation or
maintenance of removal actions on the Real Property or an Off-Site Location,
remedial technologies applied to the surface or subsurface soils, excavation and
treatment or disposal of soils at an Off-Site Location, systems for long-term
treatment of surface water or groundwater, engineering controls or institutional
controls; and (f) any other activities reasonably determined by a Party to be
necessary or appropriate or required under Environmental Laws to address an
Environmental Condition or a Release of Hazardous Substances or the presence of
Hazardous Substances at the Real Property or an Off-Site Location.

 

“Representatives” means, with respect to a Party, such respective directors (or
parties performing similar functions), officers, employees, representatives,
agents and

 

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advisors (including accountants, legal counsel, environmental consultants and
financial advisors).

 

“Seller” has the meaning set forth in the first paragraph of this Agreement.

 

“Seller Indemnitee” has the meaning set forth in Section 6.02(a).

 

“Seller’s Required Consents” means Seller’s Required Governmental Consents and
Seller’s Required Third-Party Consents.

 

“Seller’s Required Governmental Consents” means the consents, approvals, filings
and/or notices of, with, from or to Governmental Authorities listed in Section I
of Schedule 4.01(c)(ii).

 

“Seller’s Required Third-Party Consents” means the consents, approvals, filings
and/or notices of, with, from or to Third Parties (other than Governmental
Authorities) listed in Section II of Schedule 4.01(c)(ii).

 

“Tax” means any tax, charge, fee, levy, penalty or other assessment imposed by
any federal, state, local or foreign taxing authority, including, but not
limited to, any income, gross receipts, excise, property, sales, transfer, use,
franchise, payroll, withholding, social security or other tax, including any
interest, penalty or addition attributable thereto.

 

“Third Party Claim” has the meaning set forth in Section 6.03(a).

 

“Transferred Contracts” has the meaning set forth in Section 2.01(d).

 

“Transferred Intellectual Property” has the meaning set forth in
Section 2.01(h).

 

“Transferred Permits” has the meaning set forth in Section 2.01(e).

 

(b)                                 Interpretation.                    In this
Agreement, unless otherwise specified or where the context otherwise requires:

 

(i)                                     a reference, without more, to a recital
is to the relevant recital to this Agreement, to an Article or  Section is to
the relevant Article or Section of this Agreement, and to a Schedule is to the
relevant Schedule to this Agreement;

 

(ii)                                  words importing any gender shall include
other genders;

 

(iii)                               words importing the singular only shall
include the plural and vice versa;

 

(iv)                              the words “include,” “includes” or “including”
shall be deemed to be followed by the words “without limitation;”

 

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(v)                                 reference to any agreement, document or
instrument means such agreement, document or instrument as amended or modified
and in effect from time to time in accordance with the terms thereof;

 

(vi)                              reference to any applicable Law means, if
applicable, such Law as amended, modified, codified, replaced or reenacted, in
whole or in part, and in effect from time to time, including rules and
regulations promulgated thereunder,

 

(vii)                           “or” is used in the inclusive sense of “and/or”;

 

(viii)                        references to documents, instruments or agreements
shall be deemed to refer as well to all addenda, exhibits, schedules or
amendments thereto;

 

(ix)                                the words “hereof,” “herein” and “herewith”
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and

 

(x)                                   references to any party hereto or any
other agreement or document shall include such party’s successors and permitted
assigns, but, if applicable, only if such successors and assigns are not
prohibited by this Agreement.

 

ARTICLE II

 

PURCHASE AND SALE

 

Section 2.01.                             Transfer of Assets.          Upon the
terms and conditions set forth in this Agreement, at the Closing, Seller shall
sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase
and acquire from Seller, free and clear of all Encumbrances other than Permitted
Encumbrances, all of Seller’s right, title and interest in, to and under the
real and personal property, tangible and intangible, constituting, or used in
connection with the operation of, Henry County Station, except as otherwise
provided in Section 2.02, each as of the Closing Date, including all of Seller’s
right, title and interest in, to and under the following assets (collectively,
the “Purchased Assets”):

 

(a)                                  the Real Property;

 

(b)                                 the machinery, fixtures, equipment
(including communications equipment), vehicles, furniture and other personal
property located on the Real Property, including the items of tangible personal
property listed on Schedule 2.01(b);

 

(c)                                  all Inventories;

 

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(d)                                 subject to the receipt of any necessary
consents and approvals, the contracts or agreements (including any licenses or
real or personal property leases, other than any thereof constituting
Transferred Permits or Transferred Intellectual Property) listed on
Schedule 2.01(d) (the “Transferred Contracts”);

 

(e)                                  subject to the receipt of any necessary
consents and approvals, the permits, licenses, certificates, certifications,
orders and other governmental authorizations listed on Schedule 2.01(e) (the
“Transferred Permits”);

 

(f)                                    all unexpired, transferable warranties
and guarantees from manufacturers, vendors and other third parties with respect
to any item of real or tangible personal property referred to in clauses (a),
(b) and (c) of this Section 2.01;

 

(g)                                 all books, expired purchase orders,
operating records, operating, safety and maintenance manuals, engineering design
plans, blueprints and as-built plans, specifications, procedures, studies,
reports, equipment repair, safety, maintenance or service records, and similar
items (subject to the right of Seller to retain copies of same for its use),
other than such items that are proprietary to third parties and accounting
records (to the extent that any of the foregoing is contained in an electronic
format, Seller shall cooperate with Buyer to transfer such items to Buyer in a
format that is reasonably acceptable to Buyer); and

 

(h)                                 subject to the receipt of any necessary
consents and approvals, any intellectual property (the “Transferred Intellectual
Property”).

 

Notwithstanding the foregoing, the transfer of the Purchased Assets pursuant to
this Agreement shall not include the assumption of any Liability related to the
Purchased Assets unless Buyer expressly assumes that Liability pursuant to
Section 2.03.

 

Section 2.02.                             Excluded
Assets.          Notwithstanding anything to the contrary contained in
Section 2.01 or elsewhere in this Agreement, the following assets of Seller
(collectively, the “Excluded Assets”) are not part of the sale and purchase
contemplated hereunder, are excluded from the Purchased Assets and shall remain
the property of Seller after the Closing:

 

(a)                                  all cash, cash equivalents, bank deposits,
accounts and notes receivables (trade or otherwise), prepaid expenses and any
income, sales, payroll or other Tax receivables;

 

(b)                                 all minute books, limited liability company
interest transfer books, corporate seals and other corporate records;

 

(c)                                  any refund, credit penalty payment,
adjustment or reconciliation (i) related to Taxes paid prior to the Closing Date
in respect of the Purchased Assets, whether such refund, adjustment or
reconciliation is received as a payment or, subject to

 

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Section 3.03, as a credit against future Taxes payable, or (ii) arising under
Assigned Contract and relating to a period before the Closing Date;

 

(d)                                 the rights of Seller in, to and under all
contracts, agreements, arrangements, permits or licenses of any nature, of which
the obligations of Seller thereunder are not expressly assumed by Buyer pursuant
to Section 2.03;

 

(e)                                  any insurance policies; and

 

(f)                                    the rights of Seller under this Agreement
and the Ancillary Agreements.

 

Section 2.03.                             Assumed Liabilities.          On the
Closing Date, Buyer shall execute and deliver in favor of Seller the Assumption
Agreement, pursuant to which Buyer shall assume and agree to pay, perform and
discharge, without recourse to Seller or Parent, the following Liabilities of
Seller, solely to the extent such Liabilities accrue or arise from and after the
Closing, other than Excluded Liabilities (as defined below), in accordance with
the respective terms and subject to the respective conditions thereof
(collectively, the “Assumed Liabilities”):

 

(a)                                  All Liabilities of Seller under the
Transferred Contracts, Transferred Permits and Transferred Intellectual
Property, in each case in accordance with the terms thereof, except to the
extent that such Liabilities, but for a breach or default by Seller, would have
been paid, performed or otherwise discharged on or prior to the Closing Date or
to the extent the same arise out of any such breach or default or out of any
event which after the giving of notice would constitute a default by Seller;

 

(b)                                 all Liabilities with respect to Henry County
Station arising under or relating to Environmental Laws or relating to any claim
in respect of Environmental Conditions or Hazardous Substances, including
settlements, judgments, costs and expenses, including reasonable attorneys fees,
whether based on common law or Environmental Laws (collectively, “Environmental
Liabilities”), but in each case solely to the extent accruing or arising from
and after the Closing Date, with respect to (i) any violation or alleged
violation of Environmental Laws with respect to the ownership, lease,
maintenance or operation of any of the Purchased Assets, including any fines or
penalties that arise in connection with the ownership, lease, maintenance or
operation of the Purchased Assets, and the costs associated with correcting any
such violations; (ii) loss of life, injury to persons or property or damage to
natural resources caused (or allegedly caused) by any Environmental Condition or
the presence or Release of Hazardous Substances at, on, in, under, adjacent to
or migrating from the Purchased Assets, including any Environmental Condition or
Hazardous Substances contained in building materials at or adjacent to the
Purchased Assets or in the soil, surface water, sediments, groundwater, landfill
cells, or in other environmental media at or near the Purchased Assets; (iii)
any Remediation of any Environmental Condition or Hazardous Substances that are
present or have been Released at, on, in, under, adjacent to or

 

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migrating from, the Purchased Assets or in the soil, surface water, sediments,
groundwater, landfill cells or in other environmental media at or adjacent to
the Purchased Assets; (iv) any bodily injury, loss of life, property damage, or
natural resource damage arising from the storage, transportation, treatment,
disposal, discharge, recycling or Release, at any Off-Site Location, or arising
from the arrangement for such activities, of Hazardous Substances generated in
connection with the ownership, lease, maintenance or operation of the Purchased
Assets; (v) any Remediation of any Environmental Condition or Release of
Hazardous Substances arising from the storage, transportation, treatment,
disposal, discharge, recycling or Release, at any Off-Site Location, or arising
from the arrangement for such activities, of Hazardous Substances generated in
connection with the ownership, lease, maintenance or operation of the Purchased
Assets; and (vi) any obligation to repower, replace, decommission, deactivate,
dismantle, demolish or close the Purchased Assets or any  portion thereof, or
any surface impoundments or other waste or effluent handling or storage units on
owned or leased adjacent properties used in connection with the operation of the
Purchased Assets;

 

(c)                                  all liabilities or obligations to third
parties for personal injury or tort, or similar causes of action arising solely
out of the ownership, lease, maintenance or operation of the Purchased Assets
(collectively, “Tort Liabilities”), but in each case solely to the extent
accruing or arising from and after the Closing Date; and

 

(d)                                 any Tax that may be imposed by any federal,
state or local government on the ownership, sale, operation or use of the
Purchased Assets on or after the Closing Date, except for any income Taxes
attributable to income received by Seller.

 

Section 2.04.                             Excluded Liabilities.          Except
for the Assumed Liabilities, Buyer shall not assume by virtue of this Agreement,
the Assumption Agreement or any other Ancillary Agreement, or the transactions
contemplated hereby or thereby, or otherwise, and shall have no liability for,
any Liabilities of Seller (the “Excluded Liabilities”), including any of the
following Liabilities:

 

(a)                                  any Liabilities of Seller in respect of any
Excluded Assets or other assets of Seller that are not Purchased Assets, except
to the extent caused by the acts or omissions of Buyer or its Representatives or
Buyer’s ownership, lease, maintenance or operation of the Purchased Assets;

 

(b)                                 any Liabilities in respect of Taxes
attributable to the Purchased Assets for taxable periods ending before the
Closing Date;

 

(c)                                  any Liabilities of Seller (i) arising from
the breach or default by Seller, prior to the Closing Date, of any Transferred
Contract, Transferred Permit or Transferred Intellectual Property or (ii) in
respect of any other contract, agreement, personal property lease, permit,
license or other arrangement or instrument entered into by Seller;

 

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(d)                                 subject to Section 3.03, any payment
obligations of Seller, including accounts or notes payable, arising prior to the
Closing Date;

 

(e)                                  any fines and penalties imposed by any
Governmental Authority resulting from any act or omission by Seller that
occurred prior to the Closing Date;

 

(f)                                    any income Taxes attributable to income
received by Seller;

 

(g)                                 any Liability of Seller arising as a result
of its execution and delivery of this Agreement or any Ancillary Agreement, the
performance of its obligations hereunder or thereunder, or the consummation by
Seller of the transactions contemplated hereby or thereby;

 

(h)                                 any Liability of Seller based on Seller’s
acts or omissions after the Closing; and

 

(i)                                     any and all Environmental Liabilities
and Tort Liabilities accruing, arising, existing or occurring prior to the
Closing Date.

 

ARTICLE III

 

PURCHASE PRICE; CLOSING

 

Section 3.01.                             Purchase Price.          The purchase
price payable by Buyer to Seller for the Purchased Assets is $69,602,024.64,
such amount being equal to (a) the Net Book Value at the earlier of (1) the date
of the Indiana Utility Regulatory Commission Order in Cause No. 42145 granting
Buyer a certificate of public convenience and necessity to purchase the Henry
County Station, or (2) December 1, 2002, plus (b) the Carrying Costs, minus (c)
$5 million (collectively, the “Purchase Price”).

 

Section 3.02.                             Inventory.          At Closing, in
addition to payment of the Purchase Price, Buyer shall also compensate Seller
for the Closing Inventory, at cost.

 

Section 3.03.                             Proration.          (a)          Buyer
and Seller agree that all of the items normally prorated, including those listed
below, relating to the business and operation of the Purchased Assets shall be
prorated as of the Closing Date, with Seller liable to the extent such items
relate to any time period through the Closing Date, and Buyer liable to the
extent such items relate to periods subsequent to the Closing Date:

 

(i)                                     personal property, real estate,
occupancy and any other Taxes, assessments and other charges, if any, on or with
respect to the business and operation of the Purchased Assets;

 

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(ii)                                  rent, Taxes and other items payable by or
to Seller under any of the Seller Agreements to be assigned to and assumed by
the Buyer hereunder;

 

(iii)                               any permit, license or registration fees
with respect to any Environmental Permit or other Permit; and

 

(iv)                              sewer rents and charges for water, telephone,
electricity and other utilities.

 

(b)                                 In connection with such proration, in the
event that actual figures are not available at the Closing Date, the proration
shall be based upon the actual amount of such Taxes or fees for the preceding
year (or appropriate period) for which actual Taxes or fees are available and
such Taxes or fees shall be reprorated upon request of either the Seller or the
Buyer made within 60 days of the date that the actual amounts become available. 
Seller and Buyer agree to furnish each other with such documents and other
records as may be reasonably requested in order to confirm all adjustment and
proration calculations made pursuant to this Section 3.03.

 

Section 3.04.                             Closing.          The sale,
assignment, conveyance, transfer and delivery of the Purchased Assets, the
payment of the Purchase Price, and the consummation of the other transactions
contemplated by this Agreement shall take place at a closing (the “Closing”), to
be held at the offices of Cinergy Corp., 139 East Fourth Street, Cincinnati Ohio
45201 at 10:00 a.m. eastern standard time (or another mutually acceptable time
and location), on the date of execution and delivery of this Agreement by each
of the Parties (or on such other date as may be mutually agreed upon by the
Parties) (the “Closing Date”)  The Closing shall be effective for all purposes
as of the close of business on the Closing Date.

 

Section 3.05.                             Closing
Deliveries.          (a)          At the Closing, Parent will deliver, or cause
to be delivered, to Buyer:

 

(i)                                     the Deed, duly executed and acknowledged
by Seller and in recordable form;

 

(ii)                                  the Bill of Sale, duly executed by Seller;

 

(iii)                               copies of all Seller’s Required Consents
obtained by Parent or Seller ;

 

(iv)                              the certificate of incorporation, certificate
of formation or similar formation document of each of Parent and Seller,
certified as of a date not earlier than 15 days prior to the Closing Date, by
the office of the Secretary of State of such entity’s organization;

 

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(v)                                 a certificate of good standing with respect
to (A) Seller , dated as of a date not earlier than 20 days prior to the Closing
Date, from the office of the Secretary of State of such entity’s organization
and from the office of Secretary of State of each state in which Seller is
qualified or licensed to do business as a foreign limited liability company, and
(B) Parent, dated as of a date not earlier than 20 days prior to the Closing
Date, from the office of the Secretary of State of such entity’s organization;

 

(vi)                              copies, certified on the Closing Date by the
Secretary or Assistant Secretary of each of Parent and Seller of corporate or
limited liability company resolutions, as applicable, authorizing the execution
and delivery of this Agreement and each Ancillary Agreement to which Parent or
Seller is a party, and the consummation of the transactions contemplated hereby
and thereby;

 

(vii)                           a certificate dated the Closing Date of the
Secretary or Assistant Secretary of each of Parent and Seller identifying the
name and title and bearing the signatures of the respective officers thereof
authorized to execute and deliver this Agreement and each Ancillary Agreement to
which Parent or Seller is a party;

 

(viii)                        a complete copy of the Organizational Documents as
in effect on the Closing Date of each of Parent and Seller, certified by the
Secretary or Assistant Secretary of each of Parent and Seller; and

 

(ix)                                such other documents as Buyer may reasonably
request to carry out the purposes of this Agreement.

 

(b)                                 At the Closing, Buyer will issue to Cinergy
Corp. in full satisfaction of the Purchase Price one or more promissory notes,
each in substantially the form attached as Exhibit A to the Buyer’s Petition
filed with the Indiana Utility Regulatory Commission in Cause No. 42311 on
October 18, 2002.  In addition, Buyer will deliver, or cause to be delivered, to
Seller:

 

(i)                                     the Assumption Agreement, duly executed
by Buyer;

 

(ii)                                  copies of all Buyer’s Required Consents
obtained by Buyer;

 

(iii)                               the certificate of incorporation,
certificate of formation or similar formation document of Buyer , certified as
of a date not earlier than 20 days prior to the Closing Date, by the office of
the Secretary of State of such entity’s organization;

 

(iv)                              copies, certified on the Closing Date by the
Secretary or Assistant Secretary of Buyer, of corporate resolutions authorizing
the execution and delivery of this Agreement and each Ancillary Agreement to
which Buyer is a party, and the consummation of the transactions contemplated
hereby and thereby;

 

(v)                                 a certificate dated the Closing Date of the
Secretary or Assistant Secretary of Buyer identifying the name and title and
bearing the signatures of the

 

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officers thereof authorized to execute and deliver this Agreement and each
Ancillary Agreement to which Buyer is a party;

 

(vi)                              a complete copy of the Organizational
Documents as in effect on the Closing Date of Buyer, certified by the Secretary
or Assistant Secretary of Buyer; and

 

(vii)                           such other documents as Seller or Parent may
reasonably request to carry out the purposes of this Agreement.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.01.                             Representations and Warranties of
Parent and Seller.  Parent and Seller jointly and severally represent and
warrant to Buyer as follows:

 

(a)                                  Organization and Good Standing;
Qualification.          Parent is a corporation duly formed, validly existing
and in good standing under the laws of the State of Indiana.  Seller is a
limited liability company duly formed, validly existing and in good standing
under the laws of the State of Delaware.  Seller has all requisite power and
authority to own, lease or operate the Purchased Assets and to carry on its
business as it is now being conducted.  Parent has all requisite power and
authority to own the outstanding limited liability company interests of Seller
and to carry on its business with respect to Seller as it is now being
conducted.  Seller does not own, directly or indirectly, any capital stock or
other equity securities of, or have any other direct or indirect equity or other
ownership interest in, any other corporation, limited liability company,
partnership, entity or business.  Seller is duly qualified or licensed to do
business as a foreign limited liability company and is in good standing as a
foreign limited liability company in each jurisdiction in which the character or
location of the properties owned or used by it or the nature of the business
conducted by it makes such qualification or license necessary, except for
jurisdictions in which the failure to be so qualified, licensed or in good
standing would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

 

(b)                                 Authority and Enforceability.          Each
of Parent and Seller has full corporate or limited liability company (as
applicable) power and authority to execute and deliver, and carry out its
obligations under, this Agreement and each Ancillary Agreement to which it is a
party and to consummate the transactions contemplated hereby and thereby.  The
execution, delivery and performance by Parent and Seller of this Agreement and
each Ancillary Agreement to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate or limited liability company (as
applicable) action on the part of Parent and Seller.  Assuming the due
authorization, execution and delivery of this Agreement and each Ancillary
Agreement to which it is a party by Buyer, and

 

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subject to the receipt of Seller’s Required Consents, each of this Agreement and
each such Ancillary Agreement constitutes a legal, valid and binding obligation
of Parent and/or Seller, as the case may be, enforceable against Parent and/or
Seller in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
the rights and remedies of creditors generally and by general principles of
equity.

 

(c)                                  No Violation; Consents and
Approvals.          (i)          Subject to obtaining Seller’s Required
Consents, neither the execution, delivery and performance by Parent and Seller
of this Agreement and each Ancillary Agreement to which Parent or Seller is a
party, nor the consummation by Parent and Seller of the transactions
contemplated hereby and thereby, will (A) conflict with or result in any breach
of any provision of the Organizational Documents of Parent or Seller; (B) result
in a default (or give rise to any right of termination, cancellation or
acceleration), or require a consent, under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, material agreement or other
instrument or obligation to which Parent or Seller is a party or by which it or
any of the Purchased Assets may be bound, except for any such defaults or
consents (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained or which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; or (C) constitute a violation of any law, regulation, order,
judgment or decree applicable to Parent or Seller, except for any such
violations as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(ii)                                  Except as set forth in Section I of
Schedule 4.01(c)(ii) (listing each of Seller’s Required Governmental Consents)
or Section II thereof (listing each of Seller’s Required Third-Party Consents),
no consent or approval of, filing with, or notice to, any Governmental Authority
or other Person is necessary for the execution, delivery and performance of this
Agreement by Parent or Seller or of any Ancillary Agreement to which Parent or
Seller is a party, or the consummation by Parent or Seller of the transactions
contemplated hereby and thereby, other than such consents, approvals, filings or
notices which, if not obtained or made, would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

(d)                                 Ownership.          Parent owns beneficially
and of record all the outstanding limited liability company interests of CinCap
VIII, LLC, a Delaware limited liability company (“CinCap VIII”), free and clear
of all Encumbrances.  CinCap VIII owns beneficially and of record all the
outstanding limited liability company interests of Seller, free and clear of all
Encumbrances.

 

(e)                                  Financial Statements; No Material Adverse
Effect; No Undisclosed Liabilities.          (i)          Seller has delivered
to Buyer a balance sheet of Seller as at December 31, 2001, and the related
statement of income for the fiscal year then ended, including the notes
thereto.  Such financial statements fairly present the financial condition and
the results of operations of Seller as of the date and for the period referred
to in such financial statements, all in accordance with GAAP.

 

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(ii)                                  Since December 31, 2001, there has not
been any Material Adverse Effect and, to the Knowledge of Parent and Seller, no
event has occurred or circumstance exists that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.

 

(iii)                               Seller has no liabilities or obligations of
any nature except for (A) liabilities or obligations reflected in the financial
statements referred to in paragraph (i) of this Section 4.01(e), including the
notes thereto; (B) liabilities or obligations incurred in the ordinary course of
business, whether before or after the respective dates of the financial
statements referred to in paragraph (i) of this Section 4.01(e); and (C)
liabilities or obligations which in the aggregate are not material to the
Purchased Assets.

 

(f)                                    Insurance.          All material policies
of fire, liability, workers’ compensation and other forms of insurance owned or
held by, or on behalf of, Parent or Seller and insuring the Purchased Assets are
in full force and effect, all premiums with respect thereto covering all periods
up to and including the date hereof have been paid (other than retroactive
premiums which may be payable with respect to comprehensive general liability
and workers’ compensation insurance policies), and no notice of cancellation or
termination has been received with respect to any such policy which was not
replaced on substantially similar terms prior to the date of such cancellation.

 

(g)                                 Real
Property.          (i)          Schedule 4.01(g)(i) sets forth all real property
owned, used or occupied by Seller (the “Real Property”), including a description
of all land, and all encumbrances, easements or rights of way of record (or, if
not of record, of which Seller or Parent has Knowledge) granted on or
appurtenant to or otherwise affecting such Real Property, and all plants,
buildings, structures or other Improvements located thereon.  To the Knowledge
of Parent and Seller, encumbrances, easements or rights of way which are not of
record, if any, would not have a Material Adverse Effect.  There are now in full
force and effect duly issued certificates of occupancy permitting the Real
Property and Improvements located thereon to be legally used and occupied as the
same are now constituted.  To the Knowledge of Parent and Seller, no fact or
condition exists which would prohibit or adversely affect the ordinary rights of
access to and from the Real Property from and to the existing highways and roads
and there is no pending or, to the Knowledge of Parent or Seller, threatened
restriction or denial, governmental or otherwise, upon such ingress and egress. 
To the Knowledge of Parent and Seller, there is not (i) any claim of adverse
possession or prescriptive rights involving any of the Real Property, (ii) any
structure located on any Real Property which encroaches on or over the
boundaries of neighboring or adjacent properties or (iii) any structure of any
other party which encroaches on or over the boundaries of any such Real
Property.  To the Knowledge of Parent and Seller, no public improvements have
been commenced and none are planned which in either case may result in special
assessments or otherwise would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

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(ii)                                  There are no material Real Property leases
(the “Real Property Leases”) relating to the Purchased Assets under which the
Seller is a lessee, lessor or under which Seller has any interest.

 

(h)                                 Conveyance of Real Property.          No
state, municipal, or other governmental approval regarding the division,
platting, or mapping of real estate is required as a prerequisite to the
conveyance by Seller to Buyer (or as a prerequisite to the recording of any
conveyance document) of any Real Property pursuant to the terms hereof.

 

(i)                                     Improvements.          Neither Seller
nor any Affiliate thereof has received any written notices from any Governmental
Authority stating or alleging that any Improvements have not been constructed in
compliance with applicable Laws.  No written notice has been received by the
Seller or any Affiliate thereof from any Governmental Authority requiring or
advising as to the need for any repair, alteration, restoration or improvement
in connection with the Purchased Assets.

 

(j)                                     Title; Condition and Sufficiency of
Assets.          (i)          Subject to Permitted Encumbrances, Seller is the
holder of record title to the Real Property and has good and valid title to the
other Purchased Assets which it purports to own, free and clear of all
Encumbrances.

 

(ii)                                  The tangible assets (real and personal)
at, related to, or used in connection with Henry County Station, taken as a
whole, (A) are in good operating and usable condition and repair, free from any
defects (except for ordinary wear and tear, in light of their respective ages
and historical usages, and except for such defects as do not materially
interfere with the use thereof in the conduct of the normal operation and
maintenance of the Purchased Assets taken as a whole) and (B) have been
maintained consistent with Good Utility Practice.

 

(iii)                               Except for immaterial omissions, the
Purchased Assets (A) constitute all of the assets, tangible and intangible, of
any nature whatsoever, necessary to operate Seller’s business in the manner
presently operated by Seller and (B) include all of the operating assets of
Seller.

 

(k)                                  Environmental
Matters.          (i)          Seller or its Affiliate, Cinergy Power Generation
Services, LLC, a Delaware limited liability company (“GGPS”) holds, and is in
compliance with, all permits, certificates, certifications, licenses and other
authorizations issued by Governmental Authorities under Environmental Laws
(collectively, “Environmental Permits”) that are required for Seller to conduct
the business and operations of the Purchased Assets, and Seller is otherwise in
compliance with all applicable Environmental Laws with respect to the business
and operations of the Purchased Assets, except for any such failures to hold or
comply with required Environmental Permits, or such failures to be in compliance
with applicable Environmental Laws, as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect;

 

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(ii)                                  neither Seller nor Parent has received any
written request for information, or been notified of any violation, or that it
is a potentially responsible party, under CERCLA or any other Environmental Law
for contamination or air emissions at Henry County Station or the Real Property,
except for any such requests or notices that would result in liabilities under
such laws as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, and there are no claims, actions, proceedings
or investigations pending or, to the Knowledge of Seller or Parent, threatened
against Seller before any Governmental Authority or body acting in an
adjudicative capacity relating in any way to any Environmental Laws or against
Seller or Parent concerning contamination or air emissions at Henry County
Station or the Real Property; and

 

(iii)                               there are no outstanding judgments, decrees
or judicial orders relating to the Purchased Assets regarding compliance with
any Environmental Law or to the investigation or cleanup of Hazardous Substances
under any Environmental Law relating to the Purchase Assets, except for such
outstanding judgments, decrees or judicial orders as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(iv)                              Schedule 4.01(k) lists all Environmental
Permits.

 

The representations and warranties made in this Section 4.01(k) are the
exclusive representations and warranties of Parent and Seller relating to
environmental matters.

 

(l)                                     Condemnation.               There are no
pending or, to the Knowledge of Parent or Seller, threatened proceedings or
governmental actions to condemn or take by power of eminent domain all or any
part of the Purchased Assets.

 

(m)                               Contracts and
Leases.          (i)          Schedule 4.01(m) lists all written contracts,
agreements, licenses (other than Environmental Permits, Permits or Intellectual
Property) or personal property leases that are material to the business or
operations of the Purchased Assets, other than any such agreements, licenses, or
personal property leases that are expected to expire or terminate on or prior to
the Closing Date.

 

(ii)                                  Except as disclosed in Schedule 4.01(m),
each Transferred Contract (A) constitutes a legal, valid and binding obligation
of Seller and, to Parent’s and Seller’s Knowledge, constitutes a valid and
binding obligation of the other parties thereto, (B) is in full force and effect
and Seller has not delivered or received any written notice of termination
thereunder, and (C) may be transferred to Buyer pursuant to this Agreement
without the consent of the other parties thereto and will continue in full force
and effect thereafter, in each case without breaching the terms thereof or
resulting in the forfeiture or impairment of any rights thereunder.

 

(iii)                               Except as set forth in Schedule 4.01(m),
there is not under any Transferred Contract any default or event which, with
notice or lapse of time or both, (A) would

 

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constitute a default by Seller or, to Parent’s or Seller’s Knowledge, any other
party thereto, (B) would constitute a default by Seller or, to Parent’s or
Seller’s Knowledge, any other party thereto which would give rise to an
automatic termination, or the right of discretionary termination, thereof, or
(C) would cause the acceleration of any of Seller’s obligations thereunder or
result in the creation of any Encumbrance (other than any Permitted Encumbrance)
on any of the Purchased Assets.  There are no claims, actions, proceedings or
investigations pending or, to the Knowledge of Seller or Parent, threatened
against Seller or any other party to any Transferred Contract before any
Governmental Authority or body acting in an adjudicative capacity relating in
any way to any Transferred Contract or the subject matter thereof.  Seller and
Parent have no Knowledge of any defense, offset or counterclaim arising under
any Transferred Contract.

 

(n)                                 Legal Proceedings.          There are no
actions or proceedings pending or, to the Knowledge of Seller or Parent,
threatened against Seller before any court, arbitrator or Governmental
Authority, which, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect.  Seller is not subject to any outstanding
judgments, rules, orders, writs, injunctions or decrees of any court, arbitrator
or Governmental Authority which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.

 

(o)                                 Permits.          (i)          Seller has
all permits, licenses, franchises-and other governmental authorizations,
consents and approvals (other than Environmental Permits, which are addressed in
Section 4.01(k)) (collectively, “Permits”) necessary to own and operate the
Purchased Assets, except where any failures to have such Permits would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  Neither Seller nor Parent has received any written notification
that Seller is in violation, nor does Parent or Seller have Knowledge of any
violations, of any such Permits, or any Law or judgment of any Government
Authority applicable to Seller with respect to the Purchased Assets, except for
violations that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(ii)                                  Schedule 4.01(o) lists all material
Permits.

 

(p)                                 Taxes.          Seller has-filed all Tax
Returns that are required to be filed by it with respect to any Tax, and Seller
has paid all Taxes that have become due as indicated thereon, except where such
Tax is being contested in good faith by appropriate proceedings, or where any
failures to so file or pay would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.  There are no
Encumbrances for Taxes on the Purchased Assets that are not Permitted
Encumbrances.

 

(q)                                 Intellectual Property.          Seller has
such ownership of or such rights by license or other agreement to use all
Intellectual Property necessary to permit Seller to conduct its business as
currently conducted, except where any failures to have such ownership, license
or right to use would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.  Seller is not, nor has Parent or
Seller

 

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received any notice that Seller is, in default (or with the giving of notice or
lapse of time or both, would be in default) under any contract to use such
Intellectual Property, and there are no material restrictions on the transfer of
any material contract, or any interest therein, held by Seller in respect of
such Intellectual Property.  Neither Parent nor Seller has received notice that
Seller is infringing any Intellectual Property of any other Person in connection
with the operation or business of the Purchased Assets.

 

(r)                                    Compliance with Laws.          Seller is
in compliance with all applicable Laws with respect to the ownership or
operation of the Purchased Assets, except where any such failures to be in
compliance would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

 

(s)                                  EWG Status.          Seller is an “exempt
wholesale generator” and Henry County Station is an “eligible facility,” each
within the meaning of Section 32(a) of the Public Utility Holding Company Act of
1935.

 

(t)                                    Employees.          Seller has no
employees or employee benefit plans nor has had any employees or employee
benefit plans since the date of its formation.  Seller has not assumed
(voluntarily or by operation of Law or order) or incurred any liabilities
associated with employees or employee benefit plans, including without
limitation under or pursuant to the Employee Retirement Income Security Act of
1974, as amended.

 

(u)                                 Limitation of Representations and
Warranties.          EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN
THIS AGREEMENT AND IN ANY ANCILLARY AGREEMENT, PARENT AND SELLER ARE NOT MAKING,
AND HEREBY DISCLAIM, ANY OTHER REPRESENTATIONS AND WARRANTIES, WRITTEN OR ORAL,
STATUTORY, EXPRESS OR IMPLIED, CONCERNING SELLER, PARENT, HENRY COUNTY STATION
OR THE PURCHASED ASSETS OR ANY PART THEREOF.

 

Section 4.02.                             Representations and Warranties of
Buyer.  Buyer represents and warrants to Seller and Parent as follows:

 

(a)                                  Organization and Good
Standing.          Buyer is a corporation duly formed, validly existing and in
good standing under the laws of the State of Indiana and has all requisite power
and authority to own, lease or operate its properties and to carry on its
business as it is now being conducted.

 

(b)                                 Authority and Enforceability.          Buyer
has full corporate power and authority to execute and deliver and carry out its
obligations under this Agreement and each Ancillary Agreement to which it is a
party, and to consummate the transactions contemplated hereby and thereby.  The
execution, delivery and performance by Buyer of this Agreement and each such
Ancillary Agreement, and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
corporate action by Buyer.  Assuming the due authorization, execution and

 

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delivery of this Agreement and each such Ancillary Agreement by the other party
or parties thereto, and subject to the receipt of Buyer’s Required Consents,
each of this Agreement and each such Ancillary Agreement constitutes a legal,
valid and binding obligation of Buyer , enforceable against Buyer in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency and other similar laws affecting the rights and remedies
of creditors generally and by general principles of equity.

 

(c)                                  No Violation; Consents and
Approvals.          (i)          Subject to obtaining Buyer’s Required Consents,
neither the execution, delivery and performance by Buyer of this Agreement and
each Ancillary Agreement to which Buyer is a party, nor the consummation by
Buyer of the transactions contemplated hereby and thereby, will (A) conflict
with or result in any breach of any provision of the Organizational Documents of
Buyer; (B) result in a default (or give rise to any right of termination,
cancellation or acceleration), or require a consent, under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, material
agreement or other instrument or obligation to which Buyer is a party or by
which any of their respective material properties or assets may be bound, except
for any such defaults or consents (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained or
which would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of Buyer to perform its
obligations under this Agreement and the Ancillary Agreements; or (iii)
constitute a violation of any law, regulation, order, judgment or decree
applicable to Buyer, except for any such violations as would not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the ability of Buyer to perform its obligations under this Agreement and the
Ancillary Agreements.

 

(ii)                                  Except as set forth in Section I of
Schedule 4.02(c)(ii) (listing each of Buyer’s Required Governmental Consents) or
Section II thereof (listing each of Buyer’s Required Third-Party Consents), no
consent or approval of, filing with, or notice to, any Governmental Authority or
other Person is necessary for the execution and delivery of this Agreement or
any Ancillary Agreement by Buyer, or the consummation by Buyer or Company of the
transactions contemplated hereby and thereby, except for any such consents,
approvals, filings or notices which, if not obtained or made, would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of Buyer to perform its obligations under this
Agreement and the Ancillary Agreements.

 

(d)                                 Legal Proceedings.          There are no
actions or proceedings pending or, to the Knowledge of Buyer, threatened against
Buyer before any court, arbitrator or Governmental Authority, which,
individually or in the aggregate, would reasonably be expected to have a
material adverse effect on the ability of Buyer to perform its obligations under
this Agreement and the Ancillary Agreements.  Buyer is not subject to any
outstanding judgments, rules, orders, writs, injunctions or decrees of any
court, arbitrator or Governmental Authority which, individually or in the
aggregate, would

 

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reasonably be expected to have a material adverse effect on the ability of Buyer
to perform its obligations under this Agreement and the Ancillary Agreements.

 

(e)                                  Availability of Funds.          Buyer has
or will have liquid capital or committed sources therefor sufficient to permit
Buyer to perform in full when due all of its obligations under this Agreement
and any Ancillary Agreement to which it is a party.

 

ARTICLE V

 

COVENANTS

 

Section 5.01.                             Books and Records.          For a
period of 7 years after the Closing Date (or such other date as the Parties may
mutually determine), each Party and its Representatives shall have reasonable
access to all books and records of the Purchased Assets , to the extent that
such access may reasonably be required by such Party in connection with the
Assumed Liabilities or the Excluded Liabilities, or other matters affected by
the operation of the Purchased Assets.  Such access shall be afforded by the
Party in possession of any such books and records upon receipt of reasonable
advance notice and during normal business hours.  The Party exercising this
right of access shall be solely responsible for any costs or expenses incurred
by it or the other Party with respect to such access pursuant to this
Section 5.01.  If the Party in possession of such books and records desires to
dispose of any such books and records upon or prior to the expiration of such
seven-year period, such Party shall, prior to such disposition, give the other
Party a reasonable opportunity, at such other Party’s expense, to segregate and
remove such books and records as such other Party may select.

 

Section 5.02.                             Finder’s Fees.          Seller and
Parent, on the one hand, and Buyer, on the other hand, represent and warrant to
the other that no broker, finder or other Person is entitled to any brokerage
fees, commissions or finder’s fees in connection with the transactions
contemplated hereby by reason of any action taken by the Party making such
representation.  Seller and Parent, on the one hand, and Buyer, on the other
hand, will pay to the other or otherwise discharge, and will indemnify and hold
the other harmless from and against, any and all claims or liabilities for all
brokerage fees, commissions and finder’s fees incurred by reason of any action
taken by the indemnifying party.

 

Section 5.03.                             Tax Matters.          All transfer,
use, stamp, sales and similar Taxes incurred in connection with this Agreement
and the transactions contemplated hereby shall be the sole responsibility of
Seller and, to the extent paid by Buyer, Seller shall promptly reimburse Buyer
upon request.

 

Section 5.04.                             Further
Assurances.          (a)          Subject to the terms and conditions of this
Agreement, each of Seller and Parent, on the one hand, and Buyer, on the other
hand, shall use commercially reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable

 

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Laws to consummate and make effective the transfer of the Purchased Assets
pursuant to this Agreement and the assumption of the Assumed Liabilities,
including using commercially reasonable efforts with a view to obtaining all
necessary consents, approvals and authorizations of, and making all required
notices or filings with, third parties required to be obtained or made in order
to consummate the transactions hereunder, including the transfer of the
Transferred Permits to Buyer.  Neither Seller and Parent, on the one hand, nor
Buyer, on the other hand, shall, without prior written consent of the other,
take or fail to take any action which might reasonably be expected to prevent or
materially impede, interfere with or delay the transactions contemplated by this
Agreement.

 

(b)                                 In the event that any portion of the
Purchased Assets shall not have been conveyed to Buyer at the Closing, Seller
shall, subject to paragraphs (c) and (d) immediately below, convey such asset to
Buyer as promptly as practicable after the Closing.

 

(c)                                  To the extent, if any, that Seller’s rights
under any Transferred Contract may not be assigned without the consent of any
other party thereto, which consent has not been obtained by the Closing Date,
this Agreement shall not constitute an agreement to assign the same if an
attempted assignment would constitute a breach thereof or be unlawful.  Seller
and Buyer agree that if any consent to an assignment of any Transferred Contract
has not been obtained at the Closing Date, or if any attempted assignment would
be ineffective or would impair Buyer’s rights and obligations under the
Transferred Contract in question, so that Buyer would not in effect acquire the
benefit of all such rights and obligations, Seller, at its option and to the
maximum extent permitted by law and such Transferred Contract, shall, after the
Closing Date, (i) appoint Buyer to be Seller’s agent with respect to such
Transferred Contract or (ii) to the maximum extent permitted by law and such
Transferred Contract, enter into such reasonable arrangements with Buyer or take
such other commercially reasonable actions to provide Buyer with the same or
substantially similar rights and obligations of such Transferred Contract.  From
and after the Closing Date, Seller, Parent and Buyer shall cooperate and use
commercially reasonable efforts to obtain an assignment to Buyer of any such
Transferred Contract.

 

(d)                                 To the extent that Seller’s rights under any
warranty or guaranty described in Section 2.01(f) may not be assigned without
the consent of another Person, which consent has not been obtained by the
Closing Date, this Agreement shall not constitute an agreement to assign the
same, if an attempted assignment would constitute a breach thereof or be
unlawful.  The Parties agree that if any consent to an assignment of any such
warranty or guaranty has not been obtained or if any attempted assignment would
be ineffective or would impair Buyer’s rights and obligations under the warranty
or guaranty in question, so that Buyer would not in effect acquire the benefit
of all such rights and obligations, Seller shall use commercially reasonable
efforts to the extent permitted by law and such warranty or guaranty, to enforce
such warranty or guaranty for the benefit of Buyer to the maximum extent
possible so as to provide Buyer with the benefits and obligations of such
warranty or guaranty.  Notwithstanding the foregoing, Seller shall not

 

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be obligated to bring or file suit against any third party, provided that if
Seller determines not to bring or file suit after being requested by Buyer to do
so, Seller shall assign, to the extent permitted by law or any applicable
agreement, its rights in respect of the claims so that Buyer may bring or file
such suit.

 

ARTICLE VI

 

INDEMNIFICATION

 

Section 6.01.                             Survival.          (a)          The
representations and warranties of the Parties contained herein shall survive the
Closing for a period of one year and thereafter shall be of no further force and
effect, except that (i) the representations and warranties set forth in
Section 4.01(k) shall survive the Closing for a period of three years, (ii) the
representations and warranties set forth in Section 4.01(p) shall survive the
Closing for the period of the applicable statute of limitations, (iii) the
representations and warranties set forth in Section 4.01(a), (b) and (c) and
Section 4.02(a), (b) and (c) shall survive indefinitely, and (iv) any
representation or warranty as to which a claim has been asserted during the
survival period shall continue in effect with respect to such claim until such
claim has been finally resolved or settled.

 

(b)                                 The covenants and agreements of the Parties
contained in this Agreement shall survive the Closing in accordance with their
respective terms.

 

Section 6.02.                            
Indemnification.          (a)          From and after the Closing, Buyer shall
indemnify, defend and hold harmless Seller and Parent and their Representatives
(each, a “Seller Indemnitee”) from and against any and all claims, demands,
suits, losses, liabilities, penalties, damages, obligations, payments, costs and
expenses (including, without limitation, the costs and expenses of any and all
actions, suits, proceedings, assessments, judgments, settlements and compromises
relating thereto and reasonable attorneys’ fees and reasonable disbursements in
connection therewith) (each, an “Indemnifiable Loss”) asserted against or
suffered by any Seller Indemnitee relating to, resulting from or arising out of
(i) any breach by Buyer of any representation, warranty, covenant or agreement
of Buyer contained in this Agreement or the Ancillary Agreements, or (ii) the
Assumed Liabilities.

 

(b)                                 From and after the Closing, Parent and
Seller shall indemnify, defend and hold harmless Buyer and its Representatives
(each, a “Buyer Indemnitee”) from and against any and all Indemnifiable Losses
asserted against or suffered by any Buyer Indemnitee relating to, resulting from
or arising out of (i) any breach by Parent or Seller of any of their
representations, warranties, covenants or agreements contained in this Agreement
or the Ancillary Agreements, (ii) the Excluded Liabilities, or (iii)
noncompliance with any bulk sales or transfer laws as provided in Section 7.06.

 

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(c)                                  The amount of any Indemnifiable Loss shall
be reduced (i) to the extent that any Person entitled to receive indemnification
under this Agreement (an “Idemnitee”) receives any insurance proceeds with
respect to such Indemnifiable Loss, and (ii) to take into account any net Tax
benefit realized by the Indemnitee arising from the recognition of such
Indemnifiable Loss (but only to the extent that the Parties, following good
faith negotiations for a period of 30 days, jointly agree that such Tax benefit
would be realized by the Indemnitee).

 

(d)                                 The expiration or termination of any
covenant, agreement, representation or warranty shall not affect the Parties’
obligations under this Section 6.02 if the Indemnitee provided the Person
required to provide indemnification under this Agreement (the “Indemnifying
Party”) with proper notice of the claim or event for which indemnification is
sought prior to such expiration, termination or extinguishment.

 

(e)                                  The rights and remedies of the Parties
under this Article VI are exclusive and in lieu of any and all other rights and
remedies which the Parties may have under this Agreement or otherwise for
declaratory, injunctive or monetary relief with respect to any breach of or
failure to perform any representation, warranty, covenant or agreement set forth
in this Agreement, after the occurrence of the Closing.

 

(f)                                    Each Party waives any provision of law to
the extent that it would limit or restrict the agreements contained in this
Section 6.02.  Notwithstanding any provisions in this Agreement to the contrary,
each Party retains its remedies at law or in equity with respect to willful,
knowing or intentional misrepresentations or breaches of this Agreement.

 

(g)                                 Notwithstanding anything to the contrary
herein, no Party (including an Indemnitee) shall be entitled to recover from any
other Party (including an Indemnifying Party) for any liabilities, damages,
obligations, payments, losses, costs, or expenses under this Agreement or any
amount in excess of the actual compensatory damages, court costs and reasonable
attorney’s fees suffered by such party.  The Parties waive any right to recover
punitive, special, exemplary and consequential damages arising in connection
with or with respect to this Agreement.  The provisions of this Section 6.02(g)
shall not apply to indemnification for a Third Party Claim.

 

(h)                                 An Indemnitee shall use commercially
reasonable efforts to mitigate all Indemnifiable Losses, including availing
itself of any defenses, limitations, rights of contribution, claims against
third parties and other rights at law or equity.  Commercially reasonable
efforts shall include the reasonable expenditure of money to mitigate or
otherwise reduce or eliminate any losses or expenses for which indemnification
would otherwise be due hereunder, and, in addition to its other obligations
hereunder, the Indemnifying Party shall reimburse the Indemnitee for the
Indemnitee’s reasonable expenditures in undertaking such mitigation.

 

(i)                                     The rights and obligations of
indemnification under this Section 6.02 shall not be limited or subject to
set-off based on any violation or alleged violation of any

 

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obligation under this Agreement or otherwise, including but not limited to
breach or alleged breach by the Indemnitee of any representation, warranty,
covenant or agreement contained in this Agreement.

 

Section 6.03.                             Procedure for
Indemnification.          (a)          If any Indemnitee receives notice of the
assertion of any claim or of the commencement of any claim, action, or
proceeding made or brought by any Person who is not a party to this Agreement or
any Affiliate of a Party to this Agreement (a “Third Party Claim”) with respect
to which indemnification is to be sought from an Indemnifying Party, the
Indemnitee shall give such Indemnifying Party reasonably prompt written notice
thereof, but in any event such notice shall not be given later than 20 days
after the Indemnitee’s receipt of notice of such Third Party Claim.  Such notice
shall describe the nature of the Third Party Claim in reasonable detail and
shall indicate the estimated amount, if practicable, of the Indemnifiable Loss
that has been or may be sustained by the Indemnitee.  The Indemnifying Party
will have the right to participate in or, by giving written notice to the
Indemnitee, to elect to assume the defense of any Third Party Claim at such
Indemnifying Party’s expense and by such Indemnifying Party’s own counsel,
provided that the counsel for the Indemnifying Party who shall conduct the
defense of such Third Party Claim shall be reasonably satisfactory to the
Indemnitee.  The Indemnitee shall cooperate in good faith in such defense at
such Indemnitee’s own expense.  If an Indemnifying Party elects not to assume
the defense of any Third Party Claim, the Indemnitee may compromise or settle
such Third Party Claim over the objection of the Indemnifying Party, which
settlement or compromise shall conclusively establish the Indemnifying Party’s
liability pursuant to this Agreement.

 

(b)                                 If, within 20 days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claims, the
Indemnitee receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party Claim
as provided in Section 6.03(a), the Indemnifying Party will not be liable for
any legal expenses subsequently incurred by the Indemnitee in connection with
the defense thereof; provided, however, that if the Indemnifying Party shall
fail to take reasonable steps necessary to defend diligently such Third Party
Claim within 20 days after receiving notice from the Indemnitee that the
Indemnitee believes the Indemnifying Party has failed to take such steps, the
Indemnitee may assume its own defense and the Indemnifying Party shall be liable
for all reasonable expenses thereof.  Without the prior written consent of the
Indemnitee, the Indemnifying Party shall not enter into any settlement of any
Third Party Claim which would lead to liability or create any financial or other
obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder.  If a firm offer is made to settle a
Third Party Claim without leading to liability or the creation of a financial or
other obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder and the Indemnifying Party desires to
accept and agree to such offer, the Indemnifying Party shall give written notice
to the Indemnitee to that effect.  If the Indemnitee fails to consent to such
firm offer within 10 days after its receipt of such notice, the Indemnifying
Party shall be relieved of its obligations to defend such Third

 

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Party Claim and the Indemnitee may contest or defend such Third Party Claim.  In
such event, the maximum liability of the Indemnifying Party as to such Third
Party Claim will be the amount of such settlement offer plus reasonable costs or
expenses paid or incurred by Indemnitee up to the date of said notice.

 

(c)                                  Any claim by an Indemnitee on account of an
Indemnifiable Loss which does not result from a Third Party Claim (a “Direct
Claim”) shall be asserted by giving the Indemnifying Party reasonably prompt
written notice thereof, stating the nature of such claim in reasonable detail
and indicating the estimated amount, if practicable, but in any event such
notice shall not be given later than 30 days after the Indemnitee becomes aware
of such Direct Claim, and the Indemnifying Party shall have a period of 30 days
within which to respond to such Direct Claim.  If the Indemnifying Party does
not respond within such thirty 30 day period, the Indemnifying Party shall be
deemed to have accepted such claim.  If the Indemnifying Party rejects such
claim, the Indemnitee will be free to seek enforcement of its right to
indemnification under this Agreement.

 

(d)                                 If the amount of any Indemnifiable Loss, at
any time subsequent to the making of an indemnity payment in respect thereof, is
reduced by recovery, settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by, from or
against any other entity, the amount of such reduction, less any costs, expenses
or premiums incurred in connection therewith (together with interest thereon
from the date of payment thereof at the Prime Rate) shall promptly be repaid by
the Indemnitee to the Indemnifying Party.  Upon making any indemnity payment,
the Indemnifying Party, to the extent of such indemnity payment, shall be
subrogated to all rights of the Indemnitee against any third party in respect of
the Indemnifiable Loss to which the indemnity payment relates; provided,
however, that (i) the Indemnifying Party shall then be in compliance with its
obligations under this Agreement in respect of such Indemnifiable Loss and (ii)
until the Indemnitee recovers full payment of its Indemnifiable Loss, any and
all claims of the Indemnifying Party against such third party on account of said
indemnity payment are hereby made subordinate in right of payment to the
Indemnitee’s rights against such third party.  Without limiting the generality
or effect of any other provision hereof, each such Indemnitee and Indemnifying
Party shall duly execute upon request all instruments reasonably necessary to
evidence and perfect the above-described subrogation and subordination rights,
and otherwise cooperate in the prosecution of such claims at the direction of
the Indemnifying Party.  Nothing in this Section 6.03(d) shall require any Party
hereto to obtain or maintain any insurance coverage.

 

(e)                                  A failure to give timely notice as provided
in this Section 6.03 shall not affect the rights or obligations of any Party
hereunder except if, and only to the extent that, as a result of such failure,
the Party which was entitled to receive such notice was actually and materially
prejudiced as a result of such failure.

 

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ARTICLE VII

 

MISCELLANEOUS PROVISIONS

 

Section 7.01                                Notices.          All notices and
other communications hereunder shall be in writing and shall be deemed given (i)
on the day when delivered personally or by e-mail (with confirmation) or
facsimile transmission (with confirmation), (ii) on the next business day when
delivered to a nationally recognized overnight delivery service, or (iii) 5
business days after deposited as registered or certified mail (return receipt
requested), in each case, postage prepaid, addressed to the recipient Party at
its address set forth below (or to such other addresses and e-mail and facsimile
numbers for a Party as shall be specified by like notice; provided, however,
that any notice of a change of address or e-mail or  facsimile number shall be
effective only upon receipt thereof):

 

If to Seller or Parent, to:

 

Cinergy Capital & Trading, Inc.
c/o CinCap VII, LLC
139 East Fourth Street
Cincinnati, OH 45202
M. Stephen Harkness
Vice President, Chief Operations and
Financial Officer
Facsimile No.: 513-419-5719
e-mail: sharkness@cinergy.com

 

If to Buyer, to:

 

PSI Energy, Inc.

1000 East Main Street

Plainfield, Indiana  46168
Douglas F. Esamann/President

Facsimile No: 317/838-2987

e-mail: desamann@cinergy.com

 

Section 7.02.                             Waiver.          The rights and
remedies of the Parties are cumulative and not alternative.  Neither the failure
nor any delay by any Party in exercising any right, power, or privilege under
this Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power, or
privilege.  To the maximum extent permitted by applicable Law, (a) no claim or
right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one Party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by each other Party;
(b) no waiver that may be given by a

 

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Party will be applicable except in the specific instance for which it is given;
and (c) no notice to or demand on one Party will be deemed to be a waiver of any
obligation of such Party or of the right of the Party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.

 

Section 7.03.                             Entire Agreement; Amendment etc.

(a)                                  This Agreement and the Ancillary
Agreements, including the Schedules, documents, certificates and instruments
referred to herein or therein, embody the entire agreement and understanding of
the Parties hereto in respect of the transactions contemplated by this
Agreement.  There are no restrictions, promises, representations, warranties,
covenants or undertakings, other than those expressly set forth or referred to
herein or therein.  This Agreement supersedes all prior agreements and
understandings between the Parties, whether written or oral, with respect to the
transactions contemplated hereby.

 

(b)                                 This Agreement may not be amended,
supplemented, terminated or otherwise modified except by a written agreement
executed by Seller, Parent and Buyer.  In addition, any proposed amendment
hereto is subject to Section 7.13.

 

(c)                                  This Agreement shall be binding upon and
inure solely to the benefit of each Party hereto and, other than with respect to
Sections 7.12 and 7.13, nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.

 

Section 7.04.                             Assignment.          This Agreement
and all the of the provisions hereof shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by, on the one hand, Seller and Parent,
and on the other hand, Buyer, in whole or in part (whether by operation of law
or otherwise), without the prior written consent of the other Party, and any
attempt to make any such assignment without such consent will be null and void. 
Notwithstanding the foregoing, Seller or Buyer may assign or otherwise transfer
its rights hereunder and under any Ancillary Agreement to any bank, financial
institution or other lender providing financing to Seller or Buyer, as
applicable, as collateral security for such financing; provided, however, that
no such assignment shall (x) impair or materially delay the consummation of the
transactions contemplated hereby or (y) relieve or discharge Seller or Buyer, as
the case may be, from any of its obligations hereunder and thereunder.

 

Section 7.05.                             Severability.          If any term or
other provision of this Agreement is invalid, illegal or incapable of being
enforced by any law or public policy, all other terms and provisions of this
Agreement will nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party hereto.  Upon such
determination that any

 

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term or other provision is invalid, illegal or incapable of being enforced, the
Parties will negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.

 

Section 7.06.                             Bulk Sales Laws.          Buyer hereby
acknowledges that, notwithstanding anything in this Agreement to the contrary,
Seller will not comply with the provisions of the bulk sales laws of any
jurisdiction in connection with the transactions contemplated by this Agreement;
and Buyer hereby irrevocably waives compliance by Seller with the provisions of
the bulk sales laws of all applicable jurisdictions.

 

Section 7.07.                             Governing Law.          This Agreement
will be governed by and construed in accordance with the laws of the State of
Indiana, without giving effect to choice of law principles thereof.

 

Section 7.08.                             Counterparts; Facsimile
Execution.   This Agreement may be executed in one or more counterparts, all of
which will be considered one and the same agreement and will become effective
when one or more counterparts have been signed by each of the Parties and
delivered to each other Party, it being understood that the Parties need not
sign the same counterpart.  This Agreement may be executed by facsimile
signature(s).

 

Section 7.09.                             Schedules.          The Schedules to
this Agreement are intended to be and hereby are specifically made a part of
this Agreement

 

Section 7.10                                U.S. Dollars.   Unless otherwise
stated, all dollar amounts set forth herein are United States (U.S.) dollars.

 

Section 7.11.                             Dispute Resolution.   (a)          If
a dispute arises between the Parties relating to this Agreement, the Parties
agree to use the following alternative dispute resolution (“ADR”) procedures
prior to any Party pursuing other available remedies:

 

(i)                                     A meeting shall be held promptly between
the Parties, attended by individuals with decision-making authority regarding
the dispute, to attempt in good faith to negotiate a resolution of the dispute.

 

(ii)                                  If, within 30 days after such meeting, the
Parties have not succeeded in negotiating a resolution of the dispute, they will
jointly appoint a mutually

 

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acceptable neutral person not affiliated with either Party (the “Neutral”) to
act as a mediator.  If the Parties are unable to agree on the Neutral within 20
days, they shall seek assistance in such regard from the CPR Institute for
Dispute Resolution, Inc. (“CPR”).  The Parties shall share the fees of the
Neutral and all other common fees and expenses equally.

 

(iii)                               The mediation may proceed in accordance with
CPR’s Model Procedure for Mediation of Business Disputes, or the Parties may
establish their own procedure.

 

(iv)                              The Parties shall pursue mediation in good
faith and in a timely manner.  In the event the mediation does not result in
resolution of the dispute within 60 days, then, upon 7 days” written notice to
the other Party, either Party may propose another form of ADR (e.g.,
arbitration, a mini-trial, or a summary jury trial) or may pursue other
available remedies.

 

(b)                                 All ADR proceedings shall be strictly
confidential and used solely for the purposes of settlement.  Any materials
prepared by one Party for the ADR proceedings shall not be used as evidence by
the other Party in any subsequent litigation; provided, however, that the
underlying facts supporting such materials may be subject to discovery.

 

(c)                                  Each Party fully understands its specific
obligations under the ADR provisions of this Agreement.  Neither Party considers
such obligations to be vague or in any way unenforceable, and neither Party will
contend to the contrary at any future time or in any future proceeding.

 

Section 7.12.                             Ratemaking.          Buyer shall not
seek to overturn, reverse, set aside, change or enjoin, whether through appeal
or the initiation or maintenance of any action in any forum, a decision or order
of the Indiana Utility Regulatory Commission (“IURC”) which pertains to
recovery, disallowance, deferral or ratemaking treatment of any expense, charge,
cost or allocation incurred or accrued by Buyer in or as a result of this
Agreement (or any amendment hereto) on the basis that this Agreement and any
such expense, charge, cost or allocation was filed with or approved by the
Securities and Exchange Commission (“SEC”).

 

Section 7.13.                             State Review.          In the event
the Parties execute an amendment to this Agreement, the Parties shall fulfill
the following obligations, where applicable (it being understood that none of
such obligations are intended to detract from the authority of the SEC under the
Public Utility Holding Company Act of 1935):

 

(a)                                  Prior to filing any amendment with the SEC,
the Parties shall file with the IURC and provide to the Indiana Utility Consumer
Counselor (and, provide, upon request, to other appropriate parties) a copy of
such amendment.

 

(b)                                 In the event that the amendment is finally
rejected or disapproved or found to be unreasonable by the IURC prior to filing
with the SEC, the amendment

 

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shall not become effective and the Parties shall not request SEC approval of the
amendment.

 

(c)                                  In the event that the amendment is rejected
or disapproved or found to be unreasonable by IURC after it has been filed with
but before it has been approved by the SEC, the amendment shall be terminated
and the Parties agree to request withdrawal of the filing.

 

(d)                                 Notwithstanding “(b)” and “(c)” immediately
above, in the event that the amendment is rejected, disapproved or found to be
unreasonable by IURC before it has been approved by the SEC, the Parties shall
have the right to request further revisions of the amendment in order to cure or
remove the cause of the IURC’s rejection, disapproval or finding of
unreasonableness.  Upon request by a Party, the other Parties shall agree
promptly to negotiate in good faith to revise the amendment and thereafter to
file for any necessary regulatory authorization of the renegotiated amendment. 
If the Parties are unable to reach agreement satisfactory to each of them and to
the IURC after good faith negotiations, then “(b)” or “(c)” immediately above,
as applicable, shall apply.

 

(e)                                  In the event that the IURC has previously
approved the amendment prior to SEC approval, “(f)” immediately below shall not
apply.

 

(f)                                    In the event that an amendment has become
effective and is subsequently rejected, disapproved or found to be unreasonable
by IURC, the Parties shall make a good faith effort to terminate, amend or
modify the amendment in a manner which remedies the IURC’s adverse findings
without adverse impact on any of the Parties.  The Parties shall request to meet
with representatives of the IURC and make a good faith attempt to resolve any
differences regarding the subject amendment.  If agreement can be reached to
terminate the amendment or amend or modify the amendment in a manner
satisfactory to the Parties and to the representatives of the IURC, then the
Parties shall file such amendment with the appropriate state and federal
regulatory agencies, seeking all necessary regulatory authorizations.  If the
Parties are unable to reach agreement satisfactory to each of them and to the
IURC after good faith negotiations, then they shall be under no further
obligation to amend the amendment.

 

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IN WITNESS WHEREOF, each of the Parties has caused this Asset Purchase Agreement
to be executed on its behalf by its respective officer thereunto duly
authorized, all as of the day and year first above written.

 

 

 

CINERGY CAPITAL & TRADING, INC.

 

 

 

 

 

By:

/s/ M. Stephen Harkness

 

 

 

M. Stephen Harkness

 

 

Vice President, Chief Operations and

 

 

Financial Officer

 

 

 

 

 

 

 

CINCAP VII, LLC

 

 

 

 

 

 

 

By:

/s/ M. Stephen Harkness

 

 

 

M. Stephen Harkness

 

 

Vice President, Chief Operations and

 

 

Financial Officer

 

 

 

 

 

 

 

PSI ENERGY, INC.

 

 

 

 

 

 

 

By:

/s/ Douglas F. Esamann

 

 

 

Douglas F. Esamann

 

 

President

 

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SCHEDULE I:  FORM OF DEED

 

THIS INDENTURE WITNESSETH that CinCap VII, LLC, a Delaware limited liability
company (“Grantor”), CONVEYS AND WARRANTS unto PSI Energy, Inc., an Indiana
corporation (“Grantee”), for the sum of One Dollar ($1.00) and other valuable
consideration, the receipt of which is hereby acknowledged, the following
described real estate in Henry County, Indiana (“Real Estate”), to-wit:

 

Part of the east half of Section 4, Township 17 North, Range 9 East, Henry
County, Indiana, bounded and described as follows, to-wit:

 

Beginning at a point on the east line of said Section 4 and in the centerline of
State Road 38, Pendleton Pike, said point being Due North (an assumed bearing)
2845.99 feet from the Southeast Corner of said Section; thence along the east
line of said Section 4, passing a set concrete monument at 36.29 feet, Due South
400.96 feet to a corner fence post; thence S89º40’54”W, passing a set concrete
monument at 877.07 feet, 892.07 feet to a corner fence post; thence S00º03’25”E
1052.92 feet to a set iron pin; thence S89º40’54”W 561.24 feet to a fence post;
thence N00º13’24”E, passing a set concrete monument at 1822.12 feet, 1858.37
feet to a point in the centerline of State Road 38; thence with the centerline
of said State Road S74º39’34”E 1498.39 feet to the point of beginning,
containing 33.542 acres, more or less.

 

The above-described tract conveys all of the real estate, described in that
certain Affidavit (recorded on May 11, 1994 in the Office of the Auditor of
Henry County, Indiana), which is located south of the centerline of State Road
38 a/k/a Pendleton Pike.

 

Being and intended to be the same real estate conveyed to Grantor by S. Robert
Abshire, Gary R. Abshire and Janice E. Carter as tenants in common, each an
undivided one-third (1/3) interest, by that certain Warranty Deed dated November
19, 1999 and recorded November 22, 1999 as Instrument No. 99010989 in the Office
of the Recorder of Henry County, Indiana.

 

AND ALSO, Out Lot number 1 in the Northwest Quarter of Section 3, Township 17
North, Range 9 East; beginning at the Southwest corner of the Northwest Quarter
of Section 3, Township 17 North, Range 9 East; thence running North 14 rods and
6 links; thence South 70 degrees East 44 rods; thence West

 

35

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41 rods and 3 links to the place of beginning, containing 1.82 acres.

 

Being and intended to be the same real estate conveyed to Grantor by Timothy
Berg and Connie Diane Berg, husband and wife, by that certain Warranty Deed
dated August 22, 2000 and recorded August 23, 2000 as Instrument No. 20006497 in
the Office of the Recorder of Henry County, Indiana.

 

Grantor also assigns and transfers to Grantee, and its successors and assigns,
all right, title and interest which Grantor derives from that certain Legal
Drain Easement dated June 27, 2000 and recorded August 30, 2000 as Instrument
No. 20006691 in the Office of the Recorder of Henry County, Indiana.

 

Grantor states that there is no Indiana Gross Income Tax due and owing on this
transaction.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

 

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IN WITNESS WHEREOF, Grantor has caused this Warranty Deed and Assignment of
Adjoining Easement Interest to be executed by its duly authorized officer,
this           day of                        , 200  .

 

 

CinCap VII, LLC

 

 

 

 

 

By:

 

 

 

 

M. Stephen Harkness,

 

 

 

Vice President and

 

 

 

Chief Operations and Financial Officer

 

 

STATE OF

)

 

 

)

SS:

COUNTY OF

)

 

 

Personally appeared before me this day M. Stephen Harkness, Vice President and
Chief Operations and Financial Officer of CinCap VII, LLC, a Delaware limited
liability company, and acknowledged the execution of this Warranty Deed and
Assignment of Adjoining Easement Interest to be his voluntary act and deed for
and on behalf of such company, and having been duly sworn states that any
representations contained therein are true to the best of his personal
knowledge.

 

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal, on
this              day of             , 200  .

 

 

 

 

 

Notary Public

 

 

 

 

 

 

 

 

Printed Name:

 

 

My Commission Expires:

 

 

 

 

 

 

 

 

 

 

 

My County of Residence:

 

 

 

 

 

 

 

 

 

 

Please send tax statements to:

 

This instrument prepared by:

PSI Energy, Inc.

 

John B. Scheidler

Attention:  Tax Department

 

Attorney at Law

1000 East Main Street

 

1000 East Main Street

Plainfield, Indiana  46168

 

Plainfield, Indiana 46l68

 

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SCHEDULE II:  FORM OF BILL OF SALE

 

BILL OF SALE made, executed and delivered as of this      day of          ,
200    by CinCap VII, LLC, a Delaware limited liability company (“Seller”) to
PSI Energy, Inc., an Indiana corporation (“Buyer”).  (Capitalized terms used
herein but not defined herein have the respective meanings assigned in that
certain Asset Purchase Agreement of even date herewith (the “Asset Purchase
Agreement”) by and among Seller, Buyer and Cinergy Capital & Trading, Inc., an
Indiana corporation (“CC&T”).)

 

WHEREAS, Seller, Buyer and CC&T are parties to the Asset Purchase Agreement
providing for, among other things, the sale and transfer to Buyer of all of
Seller’s right, title and interest in, to and under the real and personal
property, tangible and intangible, constituting, or used in connection with the
operation of, that certain natural gas-fired electric generating station known
as the Henry County Generating Station, located in Henry County, Indiana (as
more fully described in the Asset Purchase Agreement), in exchange for the
consideration, and subject to the other terms and conditions, specified therein;
and

 

WHEREAS, the parties to the Asset Purchase Agreement having executed and
delivered such agreement contemporaneously herewith, Seller now desires to carry
out the intent and purposes of the Asset Purchase Agreement by its execution and
delivery to Buyer of this instrument, evidencing the vesting in Buyer (together
with such other instruments as Buyer shall have otherwise received concurrently
herewith or may hereafter request, including the Deed and certain Assignment and
Assumption Agreements) of substantially all of the properties and assets
constituting, or used in connection with the operation of, the Henry County
Generating Station;

 

NOW, THEREFORE, in consideration of the premises, and for good and valuable
consideration paid by Buyer, the receipt, adequacy and legal sufficiency of
which are hereby acknowledged, Seller, intending to be legally bound, hereby
agrees as follows:

 

ARTICLE I

SALE AND TRANSFER OF ASSETS

 

Seller hereby irrevocably and unconditionally sells, transfers, assigns,
conveys, grants and delivers to Buyer, effective as of the execution and
delivery hereof, free and clear of all Encumbrances (other than Permitted
Encumbrances), all of Seller’s right, title and interest in and to the following
(collectively, the “Purchased Assets”):

 

(a)                                  the machinery, fixtures, equipment
(including communications equipment), vehicles, furniture and other personal
property located on the Real Property, including the items of tangible personal
property listed on Schedule 2.01(b) of the Asset Purchase Agreement;

 

(b)                                 all Inventories;

 

38

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(c)                                  subject to the receipt of any necessary
consents and approvals, the contracts or agreements (including any licenses or
real or personal property leases, other than any thereof constituting
Transferred Permits or Transferred Intellectual Property) listed on
Schedule 2.01(d) of the Asset Purchase Agreement;

 

(d)                                 subject to the receipt of any necessary
consents and approvals, the permits, licenses, certificates, certifications,
orders and other governmental authorizations listed on Schedule 2.01(e) of the
Asset Purchase Agreement;

 

(e)                                  all unexpired, transferable warranties and
guarantees from manufacturers, vendors and other third parties with respect to
any item of real or tangible personal property referred to in the preceding
clauses (a) and (b);

 

(f)                                    all books, expired purchase orders,
operating records, operating, safety and maintenance manuals, engineering design
plans, blueprints and as-built plans, specifications, procedures, studies,
reports, equipment repair, safety, maintenance or service records, and similar
items (subject to the right of Seller to retain copies of same for its use),
other than such items that are proprietary to third parties and accounting
records (to the extent that any of the foregoing is contained in an electronic
format, Seller shall cooperate with Buyer to transfer such items to Buyer in a
format that is reasonably acceptable to Buyer);

 

(g)                                 subject to the receipt of any necessary
consents and approvals, any intellectual property; and .

 

(h)                                 all other assets and properties used in
connection with the Henry County Generating Station.

 

ARTICLE II

FURTHER ACTIONS

 

Seller covenants and agrees to warrant and defend the sale, transfer,
assignment, conveyance, grant and delivery of the Purchased Assets hereby made
against all persons whomsoever, to take all steps reasonably necessary to
establish the record of Buyer’s title to the Purchased Assets and, at the
request of Buyer, to execute and deliver further instruments of transfer and
assignment and take such other action as Buyer may reasonably request to more
effectively transfer and assign to and vest in Buyer each of the Purchased
Assets, all at the sole cost and expense of Seller.

 

39

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ARTICLE III

POWER OF ATTORNEY

 

Without limiting Article 2 hereof, Seller hereby constitutes and appoints Buyer
the true and lawful agent and attorney in fact of Seller, with full power of
substitution and resubstitution, in whole or in part, in the name and stead of
Seller but on behalf and for the benefit of Buyer and its successors and
assigns, from time to time:

 

(a)                                  to demand, receive and collect any and all
of the Purchased Assets and to give receipts and releases for and with respect
to the same, or any part thereof;

 

(b)                                 to institute and prosecute, in the name of
Seller or otherwise, any and all proceedings at law, in equity or otherwise,
that Buyer or its successors and assigns may deem proper in order to collect or
reduce to possession any of the Purchased Assets and in order to collect or
enforce any claim or right of any kind hereby assigned or transferred, or
intended so to be; and

 

(c)                                  to do all things legally permissible,
required or reasonably deemed by Buyer to be required to recover and collect the
Purchased Assets and to use Seller’s name in such manner as Buyer may reasonably
deem necessary for the collection and recovery of same,

 

Seller hereby declaring that the foregoing powers are coupled with an interest
and are and shall be irrevocable by Seller.

 

ARTICLE IV

TERMS OF ASSET PURCHASE AGREEMENT

 

The terms of the Asset Purchase Agreement, including but not limited to Seller’s
representations, warranties, covenants, agreements and indemnities relating to
the Purchased Assets, are incorporated herein by this reference.  Seller
acknowledges and agrees that the representations, warranties, covenants,
agreements and indemnities contained in the Asset Purchase Agreement shall not
be superseded hereby but shall remain in full force and effect to the full
extent provided therein.  In the event of any conflict or inconsistency between
the terms of the Asset Purchase Agreement and the terms hereof, the terms of the
Asset Purchase Agreement shall govern.

 

40

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IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be duly signed on its
behalf as of the date first above written.

 

 

CINCAP VII, LLC

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

M. Stephen Harkness

 

Title:

Vice President, Chief Operations
and Financial Officer

 

41

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SCHEDULE III:  FORM OF ASSUMPTION AGREEMENT

 

ASSUMPTION AGREEMENT made and effective as of           , 200   by PSI Energy,
Inc., an Indiana corporation (“Buyer”), in favor of CinCap VII, LLC, a Delaware
limited liability company (“Seller”).  (Capitalized terms used herein but not
defined herein have the respective meanings assigned in that certain Asset
Purchase Agreement of even date herewith (the “Asset Purchase Agreement”) by and
among Buyer, Seller and Cinergy Capital & Trading, Inc., an Indiana corporation
(“Parent”).)

 

WHEREAS, pursuant to the Asset Purchase Agreement, and by means of various
agreements and instruments executed and delivered in connection therewith
(including without limitation the Deed, Bill of Sale and certain assignment and
assumption agreements), concurrently with the execution and delivery hereof,
Seller is selling and conveying to Buyer, and Buyer is purchasing from Seller,
for the consideration and upon the terms and conditions set forth in the Asset
Purchase Agreement, all of Seller’s right, title and interest in and to the
assets (tangible and intangible) comprising, or used in connection with, the
Henry County Generating Station (the “Purchased Assets”); and

 

WHEREAS, the Asset Purchase Agreement contemplates in Section 2.03 thereof that,
on the Closing Date, in consideration of the foregoing, Buyer shall also execute
this instrument in favor of Seller, agreeing to assume various liabilities and
obligations of Seller relating to the Purchased Assets, as more specifically set
forth below;

 

NOW, THEREFORE, in consideration of the premises and the transactions
contemplated by the Asset Purchase Agreement, including without limitation the
execution and delivery simultaneously herewith of the Bill of Sale and the Deed,
Buyer, intending to be legally bound, hereby agrees as follows:

 

ARTICLE I

ASSUMPTION OF ASSUMED LIABILITIES

 

Section 1.1              Assumption of Assumed Liabilities.  Effective upon the
execution and delivery hereof, Buyer hereby assumes and agrees to pay, perform
and discharge, without recourse to Seller or Parent, the following Liabilities
of Seller (excluding, however, for the avoidance of doubt, for all purposes
whatsoever any Excluded Liabilities), solely to the extent such Liabilities
accrue or arise from and after the Closing, in each case in accordance with the
respective terms and subject to the respective conditions thereof (collectively,
the “Assumed Liabilities”):

 

(a)                                  All Liabilities of Seller under the
Transferred Contracts, Transferred Permits and Transferred Intellectual
Property, in each case in accordance with the terms thereof, except to the
extent that such Liabilities, but for a breach or default by Seller, would have
been paid, performed or otherwise discharged on or prior to the Closing Date or
to the extent the same arise out of any such breach or default or out of any
event which after the giving of notice would constitute a default by Seller;

 

42

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(b)                                 all Liabilities with respect to Henry County
Station arising under or relating to Environmental Laws or relating to any claim
in respect of Environmental Conditions or Hazardous Substances, including
settlements, judgments, costs and expenses, including reasonable attorneys fees,
whether based on common law or Environmental Laws, but in each case solely to
the extent accruing or arising from and after the Closing Date, with respect to
(i) any violation or alleged violation of Environmental Laws with respect to the
ownership, lease, maintenance or operation of any of the Purchased Assets,
including any fines or penalties that arise in connection with the ownership,
lease, maintenance or operation of the Purchased Assets, and the costs
associated with correcting any such violations; (ii) loss of life, injury to
persons or property or damage to natural resources caused (or allegedly caused)
by any Environmental Condition or the presence or Release of Hazardous
Substances at, on, in, under, adjacent to or migrating from the Purchased
Assets, including any Environmental Condition or Hazardous Substances contained
in building materials at or adjacent to the Purchased Assets or in the soil,
surface water, sediments, groundwater, landfill cells, or in other environmental
media at or near the Purchased Assets; (iii) any Remediation of any
Environmental Condition or Hazardous Substances that are present or have been
Released at, on, in, under, adjacent to or migrating from, the Purchased Assets
or in the soil, surface water, sediments, groundwater, landfill cells or in
other environmental media at or adjacent to the Purchased Assets; (iv) any
bodily injury, loss of life, property damage, or natural resource damage arising
from the storage, transportation, treatment, disposal, discharge, recycling or
Release, at any Off-Site Location, or arising from the arrangement for such
activities, of Hazardous Substances generated in connection with the ownership,
lease, maintenance or operation of the Purchased Assets; (v) any Remediation of
any Environmental Condition or Release of Hazardous Substances arising from the
storage, transportation, treatment, disposal, discharge, recycling or Release,
at any Off-Site Location, or arising from the arrangement for such activities,
of Hazardous Substances generated in connection with the ownership, lease,
maintenance or operation of the Purchased Assets; and (vi) any obligation to
repower, replace, decommission, deactivate, dismantle, demolish or close the
Purchased Assets or any  portion thereof, or any surface impoundments or other
waste or effluent handling or storage units on owned or leased adjacent
properties used in connection with the operation of the Purchased Assets;

 

(c)                                  all liabilities or obligations to third
parties for personal injury or tort, or similar causes of action arising solely
out of the ownership, lease, maintenance or operation of the Purchased Assets,
but in each case solely to the extent accruing or arising from and after the
Closing Date; and

 

(d)                                 any Tax that may be imposed by any federal,
state or local government on the ownership, sale, operation or use of the
Purchased Assets on or after the Closing Date, except for any income Taxes
attributable to income received by Seller.

 

43

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ARTICLE II

FURTHER ACTIONS

 

Buyer hereby covenants and agrees, at its own expense, to execute and deliver,
at the request of Seller, from time to time after the Closing Date, such further
instruments of assumption and to take such other actions as Seller may
reasonably request to more effectively consummate the assumptions provided in
this Assumption Agreement.

 

ARTICLE III

TERMS OF ASSET PURCHASE AGREEMENT

 

The terms of the Asset Purchase Agreement, including but not limited to Buyer’s
representations, warranties, covenants, agreements and indemnities relating to
the Assumed Liabilities, are incorporated herein by this reference.  Buyer
acknowledges and agrees that its representations, warranties, covenants,
agreements and indemnities contained in the Asset Purchase Agreement shall not
be superseded hereby but shall remain in full force and effect to the full
extent provided therein.  In the event of any conflict or inconsistency between
the terms of the Asset Purchase Agreement and the terms hereof, the terms of the
Asset Purchase Agreement shall govern.

 

 

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IN WITNESS WHEREOF, Buyer has caused this Assumption Agreement in favor of
CinCap VII, LLC, as Seller, to be duly signed on its behalf as of the date first
above written.

 

 

 

PSI ENERGY, INC.

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name: Douglas F. Esamann

 

 

Title:  President

 

 

45

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SCHEDULE 2.01(B):  TANGIBLE PERSONAL PROPERTY

 

•                  Three General Electric Model LM6000 PC gas turbine generator
units:

 

•                  Fuel system, including fuel oil forwarding skids and dual
fuel burners;

 

•                  Plant high voltage power system & interconnection, including
three two-winding generator step-up transfomers;

 

•                  Water supply and treatment systems, including 6” 327-ft deep
raw water well and submersible pump, 440,000 gallon raw water storage tank,
573,000 gallon demineralized water storage tank and related pumps, and chemical
feed system;

 

•                  Chilled water system, including three 2,200 ton, motor-driven
Trane absorption chillers;

 

•                  Cooling tower and circulating water system, including an
eight cell, mechanical draft, evaporative, cross-flow cooling tower and three
33% horizontal centrifuge pumps;

 

•                  Fire protection system, including fire hydrant, CO2
suppression systems, and fire detection system;

 

•                  Plant auxiliary power system, including auxiliary
transformers, DC power supply system and AC uninterruptible power supply system;

 

•                  Continuous emissions monitoring;

 

•                  Plant control systems;

 

•                  Communications systems;

 

•                  Security and access, including chain link security fence
topped with barbed wire enclosing plant site, electronically operated access
gate, and security cameras;

 

•                  Wastewater holding pond;

 

•                  Storm water drainage; and

 

•                  Maintenance/warehouse facilities

 

46

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SCHEDULE 2.01(D):  TRANSFERRED CONTRACTS

 

Fuel Supply and Management Agreement dated as of April 1, 2001 between Seller
and Cinergy Marketing & Trading, LP

 

47

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SCHEDULE 2.01(E):  TRANSFERRED PERMITS

 

Air construction permit (CP-065-1049-00032) issued by Indiana Department of
Environmental Management (“IDEM”)

 

Title V operating permit (permit pending) issued by IDEM

 

Title IV acid rain permit (AR-065-10505-00032) issued by IDEM

 

Water withdrawal permit (Reg. No. 33-04367) issued by Indiana Department of
Natural Resources

 

NPDES discharge permit (INj0061361) issued by IDEM

 

48

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SCHEDULE 4.01(C)(II):  SELLER’S REQUIRED GOVERNMENTAL AND THIRD PARTY CONSENTS

 

SECTION I: SELLER’S REQUIRED GOVERNMENTAL CONSENTS

 

Federal Energy Regulatory Commission under Section 203 of Federal Power Act

 

Indiana Utility Regulatory Commission under applicable provisions of the Indiana
Code in respect of the sale of the Henry County Station to Buyer.

 

SECTION II: SELLER’S REQUIRED THIRD-PARTY CONSENTS

 

Cinergy Marketing & Trading, LP in respect of Fuel Supply and Management
Agreement with Seller

 

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SCHEDULE 4.01(G)(I):  REAL PROPERTY

 

1.               For a description of all land owned, used or occupied by
Seller, see Schedule I to this Asset Purchase Agreement.

 

2.               Legal Drain Easement granted by S. Robert Abshire to Seller
upon adjoining land dated June 27, 2000 and recorded on August 30, 2000 as
Instrument No. 20006691 in the Office of the Recorder of Henry County, Indiana.

 

3.               Unrecorded Farm License Agreement granted by Buyer to
Shenandoah High School FFA Chapter dated May 1, 2002.

 

4.               Easement Agreement For Ingress and Egress granted to S. Robert
Abshire, an adult, dated June 26, 2000 and recorded on August 30, 2000 as
Instrument No. 20006692 in the Office of the Recorder of Henry County, Indiana.

 

5.               For a description of plants, buildings, structures or other
Improvements located on the Real Property, see Schedule 2.01(b) to this Asset
Purchase Agreement.

 

50

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SCHEDULE 4.01(K):  ENVIRONMENTAL PERMITS

 

The permits listed in Schedule 2.01(e) are hereby incorporated by reference
herein.

 

51

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SCHEDULE 4.01(M):  SELLER CONTRACTS

 

The contracts listed in Schedule 2.01(d) are hereby incorporated by reference
herein.

 

52

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SCHEDULE 4.01(0):  PERMITS

 

EWG certification (CinCap VII, LLC, 91 FERC par. 62,209(2000))

 

Market-based wholesale rate authority (CinCap VII, LLC, FERC Docket No.
ER00-1831 (letter order, May 4, 2000)

 

In addition, the permits listed in Schedule 2.01(e) are hereby incorporated by
reference herein.

 

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SCHEDULE 4.02(C)(II):  BUYER’S REQUIRED GOVERNMENTAL AND THIRD PARTY CONSENTS

 

SECTION I: BUYER’S REQUIRED GOVERNMENTAL CONSENTS

 

Federal Energy Regulatory Commission under Section 203 of Federal Power Act

 

Indiana Utility Regulatory Commission under applicable provisions of the Indiana
Code in respect of (i) the purchase of the Henry County Station by Buyer and
(ii) the issuance by Buyer of long-term promissory notes in consideration
therefor.

 

SECTION II: BUYER’S REQUIRED THIRD-PARTY CONSENTS

 

None

 

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