Exhibit 10.kkkk

 

EXECUTION COPY

 

 

ASSET PURCHASE AGREEMENT

 

BY AND AMONG

 

PSI ENERGY, INC.

 

AND

 

THE CINCINNATI GAS & ELECTRIC COMPANY

 

(AS BUYERS)

 

AND

 

ALLEGHENY ENERGY SUPPLY COMPANY, LLC,

 

ALLEGHENY ENERGY SUPPLY WHEATLAND

 

GENERATING FACILITY, LLC

 

AND

 

LAKE ACQUISITION COMPANY, L.L.C.

 

(AS SELLER PARTIES)

 

 

DATED AS OF MAY 6, 2005

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

 

 

 

 

ARTICLE I DEFINITIONS

 

 

 

 

1.1.

Definitions

 

 

 

 

ARTICLE II PURCHASE AND SALE

 

 

 

 

2.1.

Purchase and Sale

 

2.2.

Excluded Assets

 

2.3.

Assumed Liabilities

 

2.4.

Excluded Liabilities

 

2.5.

Procedures for Acquired Assets Not Transferable

 

 

 

 

ARTICLE III PURCHASE PRICE

 

 

 

 

3.1.

Purchase Price

 

3.2.

Possible Purchase Price Adjustment

 

3.3.

Allocation of Purchase Price

 

3.4.

Proration

 

 

 

 

ARTICLE IV THE CLOSING

 

 

 

 

4.1.

Time and Place of Closing

 

4.2.

Payment of Purchase Price

 

4.3.

Deliveries by the Sellers

 

4.4.

Deliveries by the Buyers

 

 

 

 

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES

 

 

 

 

5.1.

Organization; Qualification

 

5.2.

Authority Relative to this Agreement

 

5.3.

Capitalization and Other Matters

 

5.4.

Consents and Approvals; No Violation

 

5.5.

Reports

 

5.6.

Absence of Certain Changes or Events; No Undisclosed Liabilities

 

5.7.

Indebtedness of the Sellers

 

5.8.

Real Property and Related Matters

 

5.9.

Insurance

 

5.10.

Environmental Matters

 

5.11.

Labor and Employment Matters

 

5.12.

ERISA; Employee Benefit Plans

 

5.13. [a05-12634_1ex10dkkkk.htm#a5_13_Contracts__181310]

Contracts [a05-12634_1ex10dkkkk.htm#a5_13_Contracts__181310]

 

5.14. [a05-12634_1ex10dkkkk.htm#a5_14_LegalProceedings_181346]

Legal Proceedings [a05-12634_1ex10dkkkk.htm#a5_14_LegalProceedings_181346]

 

5.15. [a05-12634_1ex10dkkkk.htm#a5_15_ComplianceWithPermitsAndLaw_181353]

Compliance with Permits and Laws
[a05-12634_1ex10dkkkk.htm#a5_15_ComplianceWithPermitsAndLaw_181353]

 

 

i

--------------------------------------------------------------------------------

 

5.16. [a05-12634_1ex10dkkkk.htm#a5_16_RegulationSolePurpose__181404]

Regulation; Sole Purpose
[a05-12634_1ex10dkkkk.htm#a5_16_RegulationSolePurpose__181404]

 

5.17. [a05-12634_1ex10dkkkk.htm#a5_17_TaxMatters__181406]

Tax Matters [a05-12634_1ex10dkkkk.htm#a5_17_TaxMatters__181406]

 

5.18. [a05-12634_1ex10dkkkk.htm#a5_18_RelatedPartyMatters_181416]

Related Party Matters
[a05-12634_1ex10dkkkk.htm#a5_18_RelatedPartyMatters_181416]

 

5.19. [a05-12634_1ex10dkkkk.htm#a5_19_AssetsOtherThanRealProperty_181413]

Assets Other than Real Property Interests
[a05-12634_1ex10dkkkk.htm#a5_19_AssetsOtherThanRealProperty_181413]

 

5.20. [a05-12634_1ex10dkkkk.htm#a5_20_IntellectualProperty_181425]

Intellectual Property
[a05-12634_1ex10dkkkk.htm#a5_20_IntellectualProperty_181425]

 

5.21. [a05-12634_1ex10dkkkk.htm#a5_21_DueDiligenceMaterials_181432]

Due Diligence Materials
[a05-12634_1ex10dkkkk.htm#a5_21_DueDiligenceMaterials_181432]

 

5.22. [a05-12634_1ex10dkkkk.htm#a5_22_NoKnowledgeOfCertainConditi_181436]

No Knowledge of Certain Conditions
[a05-12634_1ex10dkkkk.htm#a5_22_NoKnowledgeOfCertainConditi_181436]

 

5.23. [a05-12634_1ex10dkkkk.htm#a5_23_DisclaimerOfOtherRepresenta_181438]

Disclaimer of Other Representations and Warranties
[a05-12634_1ex10dkkkk.htm#a5_23_DisclaimerOfOtherRepresenta_181438]

 

 

 

 

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BUYERS
[a05-12634_1ex10dkkkk.htm#Articlevi_181527]

 

 

 

 

6.1. [a05-12634_1ex10dkkkk.htm#a6_1_Organization_181515]

Organization [a05-12634_1ex10dkkkk.htm#a6_1_Organization_181515]

 

6.2. [a05-12634_1ex10dkkkk.htm#a6_2_AuthorityRelativeToThisAgree_181533]

Authority Relative to this Agreement
[a05-12634_1ex10dkkkk.htm#a6_2_AuthorityRelativeToThisAgree_181533]

 

6.3. [a05-12634_1ex10dkkkk.htm#a6_3_ConsentsAndApprovalsNoViolat_181624]

Consents and Approvals; No Violation
[a05-12634_1ex10dkkkk.htm#a6_3_ConsentsAndApprovalsNoViolat_181624]

 

6.4. [a05-12634_1ex10dkkkk.htm#a6_4_AvailabilityOfFunds_181654]

Availability of Funds [a05-12634_1ex10dkkkk.htm#a6_4_AvailabilityOfFunds_181654]

 

6.5. [a05-12634_1ex10dkkkk.htm#a6_5_Litigation_181651]

Litigation [a05-12634_1ex10dkkkk.htm#a6_5_Litigation_181651]

 

6.6. [a05-12634_1ex10dkkkk.htm#a6_6_NoKnowledgeOfCertainConditio_181646]

No Knowledge of Certain Conditions
[a05-12634_1ex10dkkkk.htm#a6_6_NoKnowledgeOfCertainConditio_181646]

 

6.7. [a05-12634_1ex10dkkkk.htm#a6_7_DueDiligenceInvestigationAnd_181633]

Due Diligence Investigation and Other Acknowledgements
[a05-12634_1ex10dkkkk.htm#a6_7_DueDiligenceInvestigationAnd_181633]

 

6.8. [a05-12634_1ex10dkkkk.htm#a6_8_DisclaimerOfOtherRepresentat_181712]

Disclaimer of Other Representations and Warranties
[a05-12634_1ex10dkkkk.htm#a6_8_DisclaimerOfOtherRepresentat_181712]

 

 

 

 

ARTICLE VII COVENANTS OF THE PARTIES
[a05-12634_1ex10dkkkk.htm#ArticleviiCovenantsOfTheParties_183756]

 

 

 

 

7.1. [a05-12634_1ex10dkkkk.htm#a7_1_ConductOfBusiness__181737]

Conduct of Business [a05-12634_1ex10dkkkk.htm#a7_1_ConductOfBusiness__181737]

 

7.2. [a05-12634_1ex10dkkkk.htm#a7_2_AccessToInformation__181748]

Access to Information
[a05-12634_1ex10dkkkk.htm#a7_2_AccessToInformation__181748]

 

7.3. [a05-12634_1ex10dkkkk.htm#a7_3_Expenses_182359]

Expenses [a05-12634_1ex10dkkkk.htm#a7_3_Expenses_182359]

 

7.4. [a05-12634_1ex10dkkkk.htm#a7_4_FurtherAssurances_182403]

Further Assurances [a05-12634_1ex10dkkkk.htm#a7_4_FurtherAssurances_182403]

 

7.5. [a05-12634_1ex10dkkkk.htm#a7_5_PublicStatements_182412]

Public Statements [a05-12634_1ex10dkkkk.htm#a7_5_PublicStatements_182412]

 

7.6. [a05-12634_1ex10dkkkk.htm#a7_6_ConsentsAndApprovalsOtherObl_182415]

Consents and Approvals; Other Obligations
[a05-12634_1ex10dkkkk.htm#a7_6_ConsentsAndApprovalsOtherObl_182415]

 

7.7. [a05-12634_1ex10dkkkk.htm#a7_7_RegulatoryApprovals__184114]

Regulatory Approvals [a05-12634_1ex10dkkkk.htm#a7_7_RegulatoryApprovals__184114]

 

7.8. [a05-12634_1ex10dkkkk.htm#a7_8_FeesAndCommissions_184122]

Fees and Commissions [a05-12634_1ex10dkkkk.htm#a7_8_FeesAndCommissions_184122]

 

7.9. [a05-12634_1ex10dkkkk.htm#a7_9_TaxMatters__184130]

Tax Matters [a05-12634_1ex10dkkkk.htm#a7_9_TaxMatters__184130]

 

7.10. [a05-12634_1ex10dkkkk.htm#a7_10_Employees__182603]

Employees [a05-12634_1ex10dkkkk.htm#a7_10_Employees__182603]

 

7.11. [a05-12634_1ex10dkkkk.htm#a7_11_RiskOfLoss__182705]

Risk of Loss [a05-12634_1ex10dkkkk.htm#a7_11_RiskOfLoss__182705]

 

7.12. [a05-12634_1ex10dkkkk.htm#a7_12_TaxClearanceCertificates_182722]

Tax Clearance Certificates
[a05-12634_1ex10dkkkk.htm#a7_12_TaxClearanceCertificates_182722]

 

7.13. [a05-12634_1ex10dkkkk.htm#a7_13_NonuseOfAlleghenyMarksAfter_182718]

Non-Use of Allegheny Marks After the Closing
[a05-12634_1ex10dkkkk.htm#a7_13_NonuseOfAlleghenyMarksAfter_182718]

 

7.14. [a05-12634_1ex10dkkkk.htm#a7_14_Insurance_184420]

Insurance [a05-12634_1ex10dkkkk.htm#a7_14_Insurance_184420]

 

7.15. [a05-12634_1ex10dkkkk.htm#a7_15_NoSolicitation_184423]

No Solicitation [a05-12634_1ex10dkkkk.htm#a7_15_NoSolicitation_184423]

 

7.16. [a05-12634_1ex10dkkkk.htm#a7_16_Notifications__184437]

Notifications [a05-12634_1ex10dkkkk.htm#a7_16_Notifications__184437]

 

7.17. [a05-12634_1ex10dkkkk.htm#a7_17_NoticeOfAllocationOfAcquire_182917]

Notice of Allocation of Acquired Assets
[a05-12634_1ex10dkkkk.htm#a7_17_NoticeOfAllocationOfAcquire_182917]

 

7.18. [a05-12634_1ex10dkkkk.htm#a7_18_PostclosingStartup__182912]

Post-Closing Start-Up
[a05-12634_1ex10dkkkk.htm#a7_18_PostclosingStartup__182912]

 

7.19. [a05-12634_1ex10dkkkk.htm#a7_19_WaiverOfIndianaResponsibleT_184620]

Waiver of Indiana Responsible Transfer Property Law
[a05-12634_1ex10dkkkk.htm#a7_19_WaiverOfIndianaResponsibleT_184620]

 

7.20. [a05-12634_1ex10dkkkk.htm#a7_20_CertainTransmissionMatters_184616]

Certain Transmission Matters
[a05-12634_1ex10dkkkk.htm#a7_20_CertainTransmissionMatters_184616]

 

 

 

 

ARTICLE VIII CONDITIONS [a05-12634_1ex10dkkkk.htm#ArticleviiiConditions_184612]

 

 

 

 

8.1. [a05-12634_1ex10dkkkk.htm#a8_1_ConditionsToEachPartysObliga_184645]

Conditions to Each Party’s Obligations to Effect the Transaction
[a05-12634_1ex10dkkkk.htm#a8_1_ConditionsToEachPartysObliga_184645]

 

8.2. [a05-12634_1ex10dkkkk.htm#a8_2_ConditionsToObligationOfTheB_183119]

Conditions to Obligation of the Buyers
[a05-12634_1ex10dkkkk.htm#a8_2_ConditionsToObligationOfTheB_183119]

 

 

ii

--------------------------------------------------------------------------------

 

8.3. [a05-12634_1ex10dkkkk.htm#a8_3_ConditionsToObligationOfTheS_194943]

Conditions to Obligation of the Seller Parties
[a05-12634_1ex10dkkkk.htm#a8_3_ConditionsToObligationOfTheS_194943]

 

 

 

 

ARTICLE IX INDEMNIFICATION [a05-12634_1ex10dkkkk.htm#Articleix_185510]

 

 

 

 

9.1. [a05-12634_1ex10dkkkk.htm#a9_1_Indemnification__185519]

Indemnification [a05-12634_1ex10dkkkk.htm#a9_1_Indemnification__185519]

 

9.2. [a05-12634_1ex10dkkkk.htm#a9_2_DefenseOfClaims__185524]

Defense of Claims [a05-12634_1ex10dkkkk.htm#a9_2_DefenseOfClaims__185524]

 

 

 

 

ARTICLE X TERMINATION AND ABANDONMENT
[a05-12634_1ex10dkkkk.htm#ArticlexTerminationAndAbandonment_185530]

 

 

 

 

10.1. [a05-12634_1ex10dkkkk.htm#a10_1_Termination__185532]

Termination [a05-12634_1ex10dkkkk.htm#a10_1_Termination__185532]

 

10.2. [a05-12634_1ex10dkkkk.htm#a10_2_ProcedureAndEffectOfTermina_185544]

Procedure and Effect of Termination
[a05-12634_1ex10dkkkk.htm#a10_2_ProcedureAndEffectOfTermina_185544]

 

 

 

 

ARTICLE XI MISCELLANEOUS PROVISIONS
[a05-12634_1ex10dkkkk.htm#ArticlexiMiscellaneousProvisions_185601]

 

 

 

 

11.1. [a05-12634_1ex10dkkkk.htm#a11_1_AmendmentAndModification_Su_185603]

Amendment and Modification
[a05-12634_1ex10dkkkk.htm#a11_1_AmendmentAndModification_Su_185603]

 

11.2. [a05-12634_1ex10dkkkk.htm#a11_2_WaiverOfCompliance_ExceptAs_185613]

Waiver of Compliance
[a05-12634_1ex10dkkkk.htm#a11_2_WaiverOfCompliance_ExceptAs_185613]

 

11.3. [a05-12634_1ex10dkkkk.htm#a11_3_Survival__185615]

Survival [a05-12634_1ex10dkkkk.htm#a11_3_Survival__185615]

 

11.4. [a05-12634_1ex10dkkkk.htm#a11_4_Notices_AllNoticesAndOtherC_185617]

Notices [a05-12634_1ex10dkkkk.htm#a11_4_Notices_AllNoticesAndOtherC_185617]

 

11.5. [a05-12634_1ex10dkkkk.htm#a11_5_AssignmentNoThirdpartyBenef_185627]

Assignment; No Third-Party Beneficiaries
[a05-12634_1ex10dkkkk.htm#a11_5_AssignmentNoThirdpartyBenef_185627]

 

11.6. [a05-12634_1ex10dkkkk.htm#a11_6_GoverningLaw_ThisAgreementS_185628]

Governing Law
[a05-12634_1ex10dkkkk.htm#a11_6_GoverningLaw_ThisAgreementS_185628]

 

11.7. [a05-12634_1ex10dkkkk.htm#a11_7_Counterparts_ThisAgreementM_185631]

Counterparts [a05-12634_1ex10dkkkk.htm#a11_7_Counterparts_ThisAgreementM_185631]

 

11.8. [a05-12634_1ex10dkkkk.htm#a11_8_Interpretation_TheArticlean_185632]

Interpretation
[a05-12634_1ex10dkkkk.htm#a11_8_Interpretation_TheArticlean_185632]

 

11.9. [a05-12634_1ex10dkkkk.htm#a11_9_SchedulesAndExhibits_AllExh_185633]

Schedules and Exhibits
[a05-12634_1ex10dkkkk.htm#a11_9_SchedulesAndExhibits_AllExh_185633]

 

11.10. [a05-12634_1ex10dkkkk.htm#a11_10_EntireAgreement_ThisAgreem_185634]

Entire Agreement
[a05-12634_1ex10dkkkk.htm#a11_10_EntireAgreement_ThisAgreem_185634]

 

11.11. [a05-12634_1ex10dkkkk.htm#a11_11_BulkSalesOrTransferLaws_Th_185635]

Bulk Sales or Transfer Laws
[a05-12634_1ex10dkkkk.htm#a11_11_BulkSalesOrTransferLaws_Th_185635]

 

11.12. [a05-12634_1ex10dkkkk.htm#a11_12_ConsentToJurisdiction_Each_185636]

Consent to Jurisdiction
[a05-12634_1ex10dkkkk.htm#a11_12_ConsentToJurisdiction_Each_185636]

 

11.13. [a05-12634_1ex10dkkkk.htm#a11_13_WaiverOfJuryTrial_TheParti_185637]

Waiver of Jury Trial
[a05-12634_1ex10dkkkk.htm#a11_13_WaiverOfJuryTrial_TheParti_185637]

 

11.14. [a05-12634_1ex10dkkkk.htm#a11_14_WaiverOfConsequentialEtc_D_185638]

Waiver of Consequential, Etc. Damages
[a05-12634_1ex10dkkkk.htm#a11_14_WaiverOfConsequentialEtc_D_185638]

 

11.15. [a05-12634_1ex10dkkkk.htm#a11_15_SpecificPerformance_ThePar_185646]

Specific Performance
[a05-12634_1ex10dkkkk.htm#a11_15_SpecificPerformance_ThePar_185646]

 

11.16. [a05-12634_1ex10dkkkk.htm#a11_16_ChangeOfStructure_Notwiths_185647]

Change of Structure
[a05-12634_1ex10dkkkk.htm#a11_16_ChangeOfStructure_Notwiths_185647]

 

11.17. [a05-12634_1ex10dkkkk.htm#a11_17_CertainApprovals_ThePartie_185648]

Certain Approvals
[a05-12634_1ex10dkkkk.htm#a11_17_CertainApprovals_ThePartie_185648]

 

 

EXHIBITS

 

 

 

 

EXHIBIT A [a05-12634_1ex10dkkkk.htm#Exhibita_185656]

Form of Assignment and Assumption Agreement
[a05-12634_1ex10dkkkk.htm#Exhibita_185656]

 

EXHIBIT B [a05-12634_1ex10dkkkk.htm#Exhibitb_185703]

Form of Bill of Sale [a05-12634_1ex10dkkkk.htm#Exhibitb_185703]

 

EXHIBIT C [a05-12634_1ex10dkkkk.htm#Exhibitc_185707]

Form of Deeds [a05-12634_1ex10dkkkk.htm#Exhibitc_185707]

 

EXHIBIT D

Form of FIRPTA Affidavit

 

EXHIBIT E

Indiana Settlement Agreement

 

 

iii

--------------------------------------------------------------------------------

 

SCHEDULES

 

1.1(a)(37)(A)

 

Seller Parties’ Knowledge Persons

1.1(a)(37)(B)

 

Buyers’ Knowledge Persons

2.1(a)(i)

 

AESC Contracts and Leases

2.1(a)(ii)

 

AESC Vehicles

2.1(b)(ii)

 

Personal Property

2.1(b)(iii)

 

Permits and Environmental Permits

2.1(b)(iv)

 

Assumed Contracts

2.1(b)(viii)

 

Emission Allowances

2.2(f)

 

Excluded Contracts and Leases

2.4(i)

 

Excluded Liabilities

5.4(a)

 

Consents and Approvals

5.5

 

Reports

5.6(a)

 

Absence of Certain Changes

5.8

 

Lake Owned Real Property, Wheatland Owned Real Property and Other Real Property
Interests

5.8(a)

 

Exceptions to Title

5.8(d)

 

Title Policies

5.8(f)

 

Leases

5.10(a)

 

Environmental Matters

5.10(b)

 

Environmental Permits

5.10(c)

 

Emission Allowances

5.11

 

Employees who Provide Services for Wheatland Facility

5.12(a)

 

Benefit Plans

5.12(f)

 

Benefit Plan Claims

5.13(a)

 

Material Contracts

5.13(c)

 

Transferability of Material Contracts

5.15(a)

 

Compliance with Permits

5.15(b)

 

Sellers’ Permits

5.17

 

Taxes

5.18

 

Related Party Matters

5.19(a)

 

Title to Acquired Assets

5.20

 

Intellectual Property

7.1(a)

 

Sellers’ Conduct of Business

7.1(a)(xiii)

 

Maintenance Expenditures

7.1(b)

 

AESC’s Conduct of Business

7.6(d)

 

Guarantees

 

iv

--------------------------------------------------------------------------------

 

ASSET PURCHASE AGREEMENT

 

ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of May 6, 2005, by and
among PSI Energy, Inc., an Indiana corporation (“PSI Energy”), and The
Cincinnati Gas & Electric Company, an Ohio corporation (“CG&E” and, together
with PSI Energy, collectively, the “Buyers”), and Allegheny Energy Supply
Wheatland Generating Facility, LLC, a Delaware limited liability company and a
wholly owned subsidiary of AESC (“Wheatland LLC”), Lake Acquisition Company,
L.L.C., a Delaware limited liability company and a wholly owned subsidiary of
AESC (“Lake LLC” and, together with Wheatland LLC, each, individually, a
“Seller” and, collectively, the “Sellers”), and Allegheny Energy Supply Company,
LLC, a Delaware limited liability company (“AESC” and, together with the
Sellers, the “Seller Parties”).

 

W I T N E S S E T H

 

WHEREAS, Wheatland LLC owns, among other things, a 508-MW (nominal rating)
natural gas-fired generating facility located in Wheatland, Indiana (the
“Wheatland Facility”) and certain other assets associated therewith, and Lake
LLC owns certain real property relating to the Wheatland Facility; and

 

WHEREAS, the Buyers desire to purchase and assume, and the Sellers desire to
sell and convey, certain assets and liabilities relating to the Wheatland
Facility, upon the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
representations, warranties and agreements hereinafter set forth, the parties
hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

1.1.          Definitions.

 

(A)           AS USED IN THIS AGREEMENT, THE FOLLOWING TERMS HAVE THE MEANINGS
SPECIFIED IN THIS SECTION 1.1(A).  FOR CAPITALIZED TERMS USED IN THIS AGREEMENT
BUT NOT DEFINED IN THIS SUBSECTION (A), SEE SUBSECTION (B).

 

(1)           “AFFILIATE” HAS THE MEANING SET FORTH IN RULE 12B-2 OF THE GENERAL
RULES AND REGULATIONS PROMULGATED UNDER THE EXCHANGE ACT.

 

(2)           “ALLEGHENY MARKS” MEANS THE NAMES AND MARKS “ALLEGHENY ENERGY” AND
“ALLEGHENY” TOGETHER WITH ALL DERIVATIONS AND VARIATIONS THEREOF, AND THE
ALLEGHENY ENERGY, INC. CORPORATE LOGO, TOGETHER WITH ALL DERIVATIONS OR
VARIATIONS THEREOF.

 

(3)           “ANCILLARY AGREEMENTS” MEANS THE DEEDS, THE BILL OF SALE, THE
ASSIGNMENT AND ASSUMPTION AGREEMENT, THE SELLERS CONFIDENTIALITY AGREEMENT AND
ANY OTHER INSTRUMENTS OF SALE, TRANSFER, CONVEYANCE, ASSIGNMENT OR ASSUMPTION AS
MAY BE REQUIRED TO CONVEY THE ACQUIRED ASSETS IN ACCORDANCE WITH THIS AGREEMENT.

 

1

--------------------------------------------------------------------------------

 

(4)           “ASSIGNMENT AND ASSUMPTION AGREEMENT” MEANS THE AGREEMENT BETWEEN
THE BUYERS AND THE SELLER PARTIES PURSUANT TO WHICH, AMONG OTHER THINGS, THE
SELLER PARTIES SHALL ASSIGN, AND THE BUYERS SHALL ASSUME, THE ASSUMED CONTRACTS,
IN SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT A.

 

(5)           “BILL OF SALE” MEANS THE BILL OF SALE BY WHICH THE TITLE TO THE
PERSONAL PROPERTY INCLUDED IN THE ACQUIRED ASSETS SHALL BE CONVEYED BY THE
SELLERS TO THE BUYERS, IN SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT B.

 

(6)           “BUSINESS DAY” MEANS ANY DAY OTHER THAN SATURDAY, SUNDAY AND ANY
DAY THAT IS A LEGAL HOLIDAY OR A DAY ON WHICH BANKING INSTITUTIONS IN NEW YORK
CITY ARE AUTHORIZED BY LAW OR OTHER GOVERNMENTAL ACTION TO CLOSE.

 

(7)           “BUYERS’ REPRESENTATIVES” MEANS THE ACCOUNTANTS, EMPLOYEES,
OFFICERS, DIRECTORS, COUNSEL, ENVIRONMENTAL CONSULTANTS, FINANCIAL ADVISORS AND
OTHER AUTHORIZED REPRESENTATIVES OF THE BUYERS AND THEIR AFFILIATES.

 

(8)           “COBRA” MEANS THE CONSOLIDATED OMNIBUS RECONCILIATION ACT OF 1985,
AS AMENDED, AND ANY SIMILAR APPLICABLE STATE LAW.

 

(9)           “CODE” MEANS THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.

 

(10)         “COMMERCIALLY REASONABLE EFFORTS” MEANS EFFORTS THAT ARE REASONABLE
FOR A PRUDENT BUSINESS ENTERPRISE IN CIRCUMSTANCES SIMILAR TO THOSE OF THE
PERFORMING PARTY, BUT THAT DO NOT REQUIRE THE PERFORMING PARTY TO EXPEND FUNDS
OTHER THAN EXPENDITURES THAT ARE CUSTOMARY AND REASONABLE IN TRANSACTIONS OF THE
KIND AND NATURE CONTEMPLATED BY THIS AGREEMENT IN ORDER FOR THE PERFORMING PARTY
TO SATISFY ITS OBLIGATIONS UNDER THIS AGREEMENT.

 

(11)         “CONFIDENTIALITY AGREEMENT” MEANS THAT CERTAIN CONFIDENTIALITY
AGREEMENT DATED AS OF OCTOBER 6, 2004, BETWEEN CINERGY CORP. AND AESC, INCLUDING
ANY AMENDMENTS OR WAIVERS THERETO.

 

(12)         “CREDIT AGREEMENT” MEANS THAT CERTAIN AMENDED AND RESTATED CREDIT
AGREEMENT DATED AS OF OCTOBER 28, 2004, AMONG AESC, THE LENDERS AND LOAN PARTIES
REFERRED TO THEREIN, CITICORP NORTH AMERICA, INC., AS ADMINISTRATIVE AGENT, AND
CITIBANK, N.A., AS COLLATERAL AGENT AND INTERCREDITOR AGENT.

 

(13)         “DEEDS” MEANS SPECIAL WARRANTY DEEDS, DULY EXECUTED BY WHEATLAND
LLC AND LAKE LLC AND DULY ACKNOWLEDGED, WHICH CONVEY TO THE BUYERS (I) FEE
SIMPLE TITLE TO THE OWNED REAL PROPERTY AND (II) ALL OF THE RIGHT, TITLE AND
INTEREST OF THE SELLERS IN AND TO THE OTHER REAL PROPERTY INTERESTS, SUBJECT, IN
EACH CASE, ONLY TO THE PERMITTED ENCUMBRANCES, AND WHICH SHALL BE IN
SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT C AND OTHERWISE IN A FORM
SUITABLE FOR RECORDING.

 

(14)         “DUE DILIGENCE MATERIALS” MEANS (I) ALL DUE DILIGENCE MATERIALS
PROVIDED FOR REVIEW OR DISTRIBUTED IN WRITTEN OR DIGITAL FORM BY THE SELLER
PARTIES OR THE SELLER PARTIES’ REPRESENTATIVES TO THE BUYERS OR THE BUYERS’
REPRESENTATIVES, (II) ALL WRITTEN, ORAL OR ELECTRONIC ANSWERS TO QUESTIONS
PROVIDED BY THE SELLER PARTIES OR THE SELLER PARTIES’ REPRESENTATIVES TO THE

 

2

--------------------------------------------------------------------------------

 

BUYERS OR THE BUYERS’ REPRESENTATIVES, AND (III) ALL MATERIALS CONTAINED IN DATA
ROOMS OR PRIVATELY-ACCESSIBLE INTERNET SITES ESTABLISHED BY THE SELLER PARTIES
FOR PURPOSES OF PROVIDING DUE DILIGENCE MATERIALS TO THE BUYERS OR THE BUYERS’
REPRESENTATIVES.

 

(15)         “EMISSION ALLOWANCES” MEANS (I) “ALLOWANCE,” AS THAT TERM IS
DEFINED IN 40 CFR § 72.2, AND (II) “NOX ALLOWANCE,” AS THAT TERM IS DEFINED IN
326 INDIANA ADMINISTRATIVE CODE § 10-4-2(37), IN EACH CASE, AS SUCH TERMS ARE
DEFINED AS OF THE DATE HEREOF.

 

(16)         “ENCUMBRANCES” MEANS ANY MORTGAGES, PLEDGES, LIENS, SECURITY
INTERESTS, CONDITIONAL AND INSTALLMENT SALE AGREEMENTS, CHARGES, RESTRICTIONS ON
TRANSFER, PROXIES AND VOTING OR OTHER SIMILAR AGREEMENTS, CLAIMS AND OTHER LEGAL
AND EQUITABLE ENCUMBRANCES, LIMITATIONS, TITLE OR SURVEY MATTERS AND
RESTRICTIONS OF ANY NATURE WHATSOEVER.

 

(17)         “ENVIRONMENTAL LAWS” MEANS ALL LAWS THAT RELATE TO POLLUTION OR
PROTECTION OF THE ENVIRONMENT (INCLUDING, WITHOUT LIMITATION, AMBIENT AIR,
SURFACE WATER, GROUNDWATER, LAND, SURFACE AND SUBSURFACE STRATA) OR HUMAN HEALTH
AND SAFETY RELATING TO HAZARDOUS SUBSTANCE EXPOSURE INCLUDING, WITHOUT
LIMITATION, LAWS WHICH RELATE TO RELEASES OR THREATENED RELEASES OF HAZARDOUS
SUBSTANCES OR OTHERWISE RELATE TO THE MANUFACTURE, PROCESSING, DISTRIBUTION,
USE, TREATMENT, STORAGE, RELEASE, TRANSPORT OR HANDLING OF HAZARDOUS SUBSTANCES.

 

(18)         “ERISA” MEANS THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

 

(19)         “EXCHANGE ACT” MEANS THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

 

(20)         “EXISTING DEBT DOCUMENTS” MEANS, COLLECTIVELY, (I) THE CREDIT
AGREEMENT DATED AS OF MARCH 8, 2004, AMONG ALLEGHENY ENERGY, INC., THE LENDERS
AND THE LENDER PARTIES REFERRED TO THEREIN, AND CITICORP NORTH AMERICA, INC., AS
ADMINISTRATIVE AGENT, (II) THE CREDIT AGREEMENT, (III) THE AMENDMENT AGREEMENT
DATED AS OF OCTOBER 28, 2004, AMONG AESC, THE OTHER GRANTORS REFERRED TO
THEREIN, CITIBANK, N.A., AS COLLATERAL AGENT, INTERCREDITOR AGENT AND DEPOSITORY
BANK, AND CITICORP NORTH AMERICA, INC., AS ADMINISTRATIVE AGENT, (IV) THE
AMENDMENT AGREEMENT DATED AS OF MARCH 8, 2004, AMONG AESC, THE OTHER GRANTORS
REFERRED TO THEREIN, CITIBANK, N.A., AS COLLATERAL AGENT, INTERCREDITOR AGENT
AND DEPOSITORY BANK, AND CITICORP NORTH AMERICA, INC., AS ADMINISTRATIVE AGENT,
(V) THE SECURITY AND INTERCREDITOR AGREEMENT, (VI) THE REFINANCING INDENTURE
REFERRED TO IN THE SECURITY AND INTERCREDITOR AGREEMENT, AND (VII) OTHER
DOCUMENTS, INSTRUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH
OR OTHERWISE RELATING TO THE FOREGOING AGREEMENTS, INCLUDING ANY MORTGAGES,
DEEDS OF TRUST, SECURITY AGREEMENTS, FINANCING STATEMENTS, PLEDGE AGREEMENTS AND
OTHER DOCUMENTS CREATING OR EVIDENCING ENCUMBRANCES SECURING THE INDEBTEDNESS OR
OTHER OBLIGATIONS UNDER THE FOREGOING.

 

(21)         “EXTRAORDINARY CAPITAL EXPENDITURES” MEANS THE AGGREGATE AMOUNT OF
ALL FUNDS ACTUALLY EXPENDED OR LIABILITIES ACTUALLY INCURRED (OTHER THAN SUCH AS
CONSTITUTE ASSUMED LIABILITIES) BY THE SELLER PARTIES ON CAPITAL EXPENDITURES
ASSOCIATED WITH THE WHEATLAND FACILITY OR THE SITE DURING THE PERIOD BEGINNING
ON THE DATE HEREOF AND ENDING ON THE CLOSING DATE, BUT ONLY TO THE EXTENT SUCH
FUNDS WERE EXPENDED, IN WHOLE OR IN PART, AS REQUIRED BY ANY CHANGE IN

 

3

--------------------------------------------------------------------------------

 

LAW OR AS REQUIRED BY ANY GOVERNMENTAL ENTITY OR QUASI REGULATORY AGENCY,
INCLUDING, WITHOUT LIMITATION, ANY INDEPENDENT SYSTEM OPERATOR.

 

(22)         “FERC” MEANS THE FEDERAL ENERGY REGULATORY COMMISSION.

 

(23)         “FEDERAL POWER ACT” MEANS THE FEDERAL POWER ACT, AS AMENDED, AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

 

(24)         “FINAL ORDER” SHALL MEAN ACTION BY THE RELEVANT GOVERNMENTAL ENTITY
WHICH HAS NOT BEEN REVERSED, STAYED, ENJOINED, SET ASIDE, ANNULLED OR SUSPENDED
(WITHOUT REGARD TO ANY WAITING PERIOD PRESCRIBED BY LAW OTHER THAN WAITING
PERIODS UNDER THE HSR ACT).

 

(25)         “FIRPTA AFFIDAVIT” MEANS THE FOREIGN INVESTMENT IN REAL PROPERTY
TAX ACT CERTIFICATION AND AFFIDAVIT, IN SUBSTANTIALLY THE FORM ATTACHED HERETO
AS EXHIBIT D.

 

(26)         “GOOD UTILITY PRACTICE” MEANS ANY OF THE PRACTICES, METHODS AND
ACTS ENGAGED IN AND APPROVED BY A SIGNIFICANT PORTION OF THE INDEPENDENT
ELECTRIC POWER GENERATION INDUSTRY DURING THE RELEVANT TIME PERIOD THAT, IN THE
EXERCISE OF REASONABLE JUDGMENT IN LIGHT OF THE APPLICABLE MANUFACTURER’S
RECOMMENDATIONS AND 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. 
GOOD UTILITY PRACTICE IS INTENDED TO CONSIST OF PRACTICES, METHODS OR ACTS
GENERALLY ACCEPTED IN THE REGION WHERE THE WHEATLAND FACILITY IS LOCATED, AND IS
NOT INTENDED TO BE LIMITED TO OPTIMUM PRACTICES, METHODS OR ACTS TO THE
EXCLUSION OF ALL OTHERS.

 

(27)         “GOVERNMENTAL ENTITY” MEANS ANY FEDERAL, STATE OR LOCAL COURT,
GOVERNMENTAL OR REGULATORY AUTHORITY, AGENCY, COMMISSION, BODY OR OTHER
GOVERNMENTAL ENTITY.

 

(28)         “HAZARDOUS SUBSTANCES” MEANS ANY CHEMICALS, MATERIALS OR SUBSTANCES
DEFINED AS OR INCLUDED IN THE DEFINITION OF “HAZARDOUS SUBSTANCES,” “HAZARDOUS
WASTES,” “HAZARDOUS MATERIALS,” “RESTRICTED HAZARDOUS MATERIALS,” “EXTREMELY
HAZARDOUS SUBSTANCES,” “TOXIC SUBSTANCES,” “CONTAMINANTS” OR “POLLUTANTS” OR
WORDS OF SIMILAR MEANING OR SUBSTANCE FOUND IN ANY ENVIRONMENTAL LAW, OR ANY
PETROLEUM AND ALL DERIVATIVES THEREOF OR SYNTHETIC SUBSTITUTES THEREFOR, AND ANY
ASBESTOS OR ASBESTOS-CONTAINING MATERIAL.

 

(29)         “HOLDING COMPANY ACT” MEANS THE PUBLIC UTILITY HOLDING COMPANY ACT
OF 1935, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

 

(30)         “HSR ACT” MEANS THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF
1976, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

 

(31)         “IMPROVEMENTS” MEANS ALL BUILDINGS, STRUCTURES (INCLUDING ALL
STEP-UP TRANSFORMERS, TRANSMISSION FACILITIES AND LINES AND GAS HANDLING AND
STORAGE FACILITIES), IMPROVEMENTS, MACHINERY, EQUIPMENT, FIXTURES AND
CONSTRUCTION IN PROGRESS, 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 THE SITE, INCLUDING ALL
GENERATING UNITS LOCATED ON AND AFFIXED TO THE WHEATLAND FACILITY.

 

4

--------------------------------------------------------------------------------

 

(32)         “INCOME TAX RETURN” MEANS A TAX RETURN FOR ANY TAX BASED UPON OR
CALCULATED IN WHOLE OR IN PART WITH RESPECT TO NET INCOME, GAIN OR PROFITS.

 

(33)         “INDEBTEDNESS” MEANS (I) ALL INDEBTEDNESS FOR BORROWED MONEY OR FOR
THE DEFERRED PURCHASE PRICE OF PROPERTY OR SERVICES (OTHER THAN CURRENT TRADE
LIABILITIES INCURRED IN THE ORDINARY COURSE OF BUSINESS AND PAYABLE IN
ACCORDANCE WITH CUSTOMARY PRACTICES), (II) ANY OTHER INDEBTEDNESS THAT IS
EVIDENCED BY A NOTE, BOND, DEBENTURE OR SIMILAR INSTRUMENT, (III) ALL
OBLIGATIONS UNDER FINANCING LEASES, (IV) ALL OBLIGATIONS IN RESPECT OF
ACCEPTANCES ISSUED OR CREATED, (V) ALL LIABILITIES SECURED BY ANY LIEN ON ANY
PROPERTY, AND (VI) ALL GUARANTEE OBLIGATIONS.

 

(34)         “INDEPENDENT ACCOUNTING FIRM” MEANS AN INDEPENDENT ACCOUNTING FIRM
(WHICH MAY NOT BE THE AUDITORS OF ANY PARTY HERETO OR ANY OF THEIR AFFILIATES)
OF NATIONAL OR REGIONAL REPUTATION MUTUALLY APPOINTED BY THE SELLER PARTIES AND
THE BUYERS.

 

(35)         “INFORMATION MEMORANDUM” MEANS THAT CERTAIN INFORMATION MEMORANDUM
REGARDING THE FACILITY, DATED SEPTEMBER, 2004, AND ANY SUPPLEMENTS OR AMENDMENTS
THERETO TO THE EXTENT PROVIDED TO THE BUYERS OR THE BUYERS’ REPRESENTATIVES.

 

(36)         “INVENTORIES” MEANS ANY FUEL INVENTORIES, MATERIALS, SPARE PARTS,
CONSUMABLE SUPPLIES AND CHEMICAL AND GAS INVENTORIES LOCATED AT THE WHEATLAND
FACILITY, IN TRANSIT TO THE WHEATLAND FACILITY, OWNED BY THE SELLERS OR HELD BY
THE SELLERS.

 

(37)         “KNOWLEDGE” MEANS, WITH RESPECT TO AN INDIVIDUAL, THAT, WITH
RESPECT TO A PARTICULAR FACT OR OTHER MATTER, SUCH INDIVIDUAL IS ACTUALLY AWARE
OF SUCH FACT OR OTHER MATTER.  WITH RESPECT TO THE SELLER PARTIES, “KNOWLEDGE”
MEANS THE KNOWLEDGE OF ANY OF THE PERSONS LISTED ON SCHEDULE 1.1(A)(37)(A) (AND
ANY INDIVIDUAL WHO, AFTER THE DATE HEREOF, REPLACES ANY SUCH PERSON’S EMPLOYMENT
POSITION).  WITH RESPECT TO THE BUYERS, “KNOWLEDGE” MEANS THE KNOWLEDGE OF ANY
OF THE PERSONS LISTED ON SCHEDULE 1.1(A)(37)(B) (AND ANY INDIVIDUALS WHO, AFTER
THE DATE HEREOF, REPLACES ANY SUCH PERSON’S EMPLOYMENT POSITION).

 

(38)         “LAKE OWNED REAL PROPERTY” MEANS THE REAL PROPERTY DESCRIBED IN
SCHEDULE 5.8 AND DESIGNATED THEREIN AS THE “LAKE REAL PROPERTY”, TOGETHER WITH
ALL RIGHTS, PRIVILEGES, INTERESTS, EASEMENTS AND APPURTENANCES NOW OR HEREAFTER
BELONGING OR IN ANY WAY PERTAINING TO SUCH REAL PROPERTY (INCLUDING, WITHOUT
LIMITATION, ANY MINERAL RIGHTS) AND ANY IMPROVEMENTS LOCATED THEREON.

 

(39)         “LAWS” MEANS ANY APPLICABLE FEDERAL, STATE OR LOCAL LAW, COMMON
LAW, STATUTE, CODE, ORDINANCE, RULE, REGULATION, JUDGMENT, ORDER, INJUNCTION,
DECREE, ARBITRATION AWARD, AGENCY REQUIREMENT, LICENSE OR PERMIT OF ANY
GOVERNMENTAL ENTITY.

 

(40)         “LIABILITIES” MEANS ANY DEBTS, LIABILITIES, COMMITMENTS OR
OBLIGATIONS OF ANY KIND, CHARACTER OR NATURE WHATSOEVER.

 

(41)         “MAINTENANCE EXPENDITURES” MEANS THOSE MAINTENANCE EXPENDITURES
THAT ARE IDENTIFIED ON SCHEDULE 7.1(A)(XIII).

 

(42)         “MATERIAL ADVERSE EFFECT” MEANS (I) ANY CHANGE OR CHANGES IN, OR
EFFECT ON, THE WHEATLAND FACILITY (EXCLUDING THE EXCLUDED ASSETS AND THE
EXCLUDED LIABILITIES) THAT IS,

 

5

--------------------------------------------------------------------------------

 

OR IN THE AGGREGATE ARE, MATERIALLY ADVERSE TO THE BUSINESS, ASSETS, OPERATIONS
OR CONDITIONS (FINANCIAL OR OTHERWISE) OF THE WHEATLAND FACILITY, OR (II) ANY
CHANGE OR CHANGES IN, OR EFFECT ON, THE SELLERS (EXCLUDING THE EXCLUDED ASSETS
AND THE EXCLUDED LIABILITIES), TAKEN AS A WHOLE, THAT IS, OR IN THE AGGREGATE
ARE, REASONABLY LIKELY TO PREVENT, MATERIALLY DELAY OR IMPAIR ANY OF THE SELLER
PARTIES’ ABILITY TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. 
“MATERIAL ADVERSE EFFECT”, HOWEVER, DOES NOT INCLUDE ANY EFFECT THAT IS
ATTRIBUTABLE TO ANY OF THE FOLLOWING: (A) ANY CHANGE OR EFFECT GENERALLY
AFFECTING THE INTERNATIONAL, NATIONAL OR REGIONAL ELECTRIC GENERATING,
TRANSMISSION OR DISTRIBUTION INDUSTRY AS A WHOLE, (B) ANY CHANGE OR EFFECT
RESULTING FROM CHANGES IN THE INTERNATIONAL, NATIONAL OR REGIONAL WHOLESALE OR
RETAIL MARKETS FOR ELECTRIC POWER, (C) ANY CHANGE OR EFFECT RESULTING FROM
CHANGES IN THE NATIONAL OR REGIONAL MARKETS FOR THE TYPE OF FUEL USED AT THE
WHEATLAND FACILITY, (D) ANY CHANGE OR EFFECT RESULTING FROM CHANGES IN THE
INTERNATIONAL, NATIONAL OR REGIONAL ELECTRIC TRANSMISSION OR DISTRIBUTION
SYSTEMS, (E) ANY CHANGE OR EFFECT RESULTING FROM CHANGES IN THE GENERAL NATIONAL
OR REGIONAL ECONOMIC OR FINANCIAL CONDITIONS, (F) ANY CHANGE OR EFFECT RESULTING
FROM CHANGES IN LAWS OR IN INDUSTRY STANDARDS, OR (G) ANY CHANGE OR EFFECT THAT
IS CURED TO THE REASONABLE SATISFACTION OF THE BUYERS BEFORE THE EARLIER OF THE
CLOSING OR THE TERMINATION OF THIS AGREEMENT PURSUANT TO SECTION 10.1; EXCEPT,
IN THE CASES OF CLAUSES (A) THROUGH (F) ABOVE, FOR SUCH CHANGES OR EVENTS WHICH
MATERIALLY DISPROPORTIONATELY IMPACT THE SELLERS OR THE ACQUIRED ASSETS.

 

(43)         “OFF-SITE LOCATION” MEANS ANY LOCATION OTHER THAN THE OWNED REAL
PROPERTY.

 

(44)         “OTHER REAL PROPERTY INTERESTS” MEANS THE EASEMENTS, RIGHTS-OF-WAY
AND OTHER INTERESTS IN REAL PROPERTY IDENTIFIED IN SCHEDULE 5.8 AND DESIGNATED
THEREIN AS THE “OTHER REAL PROPERTY INTERESTS.”

 

(45)         “OWNED REAL PROPERTY” MEANS, COLLECTIVELY, THE WHEATLAND OWNED REAL
PROPERTY AND THE LAKE OWNED REAL PROPERTY.

 

(46)         “PERMITTED ENCUMBRANCES” MEANS (I) THOSE EXCEPTIONS TO TITLE LISTED
IN SCHEDULE 5.8 AS OF THE DATE HEREOF, (II) LIENS FOR TAXES OR OTHER
GOVERNMENTAL CHARGES OR ASSESSMENTS NOT YET DUE AND DELINQUENT OR THE VALIDITY
OF WHICH IS BEING CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS,
(III) MECHANICS’, CARRIERS’, WORKERS’, REPAIRERS’ AND OTHER SIMILAR LIENS AND
RIGHTS ARISING OR INCURRED IN THE ORDINARY COURSE OF BUSINESS FOR AMOUNTS NOT
YET DUE AND PAYABLE OR THE VALIDITY OF WHICH IS BEING CONTESTED IN GOOD FAITH BY
APPROPRIATE PROCEEDINGS, (IV) ZONING, ENTITLEMENT, CONSERVATION RESTRICTIONS AND
OTHER LAND USE AND ENVIRONMENTAL REGULATIONS BY ANY GOVERNMENTAL ENTITIES, AND
(V) SUCH OTHER ENCUMBRANCES WHICH WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE,
BE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT.

 

(47)         “PERSON” MEANS AN INDIVIDUAL, A PARTNERSHIP, A LIMITED LIABILITY
COMPANY, A JOINT VENTURE, A CORPORATION, A TRUST, AN UNINCORPORATED
ORGANIZATION, AN ASSOCIATION, A JOINT STOCK COMPANY, ANY OTHER BUSINESS ENTITY,
AND A GOVERNMENTAL ENTITY OR A DEPARTMENT OR AGENCY THEREOF.

 

(48)         “RELEASE” MEANS A RELEASE, SPILL, LEAK, DISCHARGE, DISPOSAL OF,
PUMPING, POURING, EMITTING, EMPTYING, INJECTING, LEACHING, DUMPING OR ESCAPE
INTO OR THROUGH THE ENVIRONMENT.

 

6

--------------------------------------------------------------------------------

 

(49)         “RESPONSE ACTIONS” MEANS THOSE ACTIVITIES DEFINED IN
SECTION 101(25) OF THE COMPREHENSIVE ENVIRONMENTAL RESPONSE COMPENSATION AND
LIABILITY ACT, 42 U.S.C. § 9601(25).

 

(50)         “RETAINED ENVIRONMENTAL LIABILITIES” MEANS THE FOLLOWING
LIABILITIES: (I) LIABILITIES FOR RESPONSE ACTIONS TO THE EXTENT REQUIRED TO
ADDRESS THE RELEASE OF HAZARDOUS SUBSTANCES OCCURRING AT OR FROM THE OWNED REAL
PROPERTY ON OR BEFORE THE CLOSING DATE; (II) LIABILITIES FOR LOSS OF LIFE,
INJURY TO PERSONS OR PROPERTY, OR DAMAGE TO NATURAL RESOURCES TO THE EXTENT
ARISING IN CONNECTION WITH THE RELEASE OF HAZARDOUS SUBSTANCES ON, AT OR FROM
THE OWNED REAL PROPERTY ON OR BEFORE THE CLOSING DATE; (III) LIABILITIES ARISING
IN CONNECTION WITH ANY HAZARDOUS SUBSTANCES THAT WERE DISPOSED OF AT, OR
TRANSPORTED BY OR ON BEHALF OF EITHER OF THE SELLERS TO, ANY OFF-SITE LOCATION
ON OR BEFORE THE CLOSING DATE; OR (IV) LIABILITIES FOR ANY VIOLATION OR ALLEGED
VIOLATION OF OR NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAW BY THE SELLERS OR THEIR
AFFILIATES OR PREDECESSOR OWNERS OF THE WHEATLAND FACILITY OR THE OWNED REAL
PROPERTY ON OR PRIOR TO THE CLOSING DATE, INCLUDING ANY FINES AND PENALTIES AND
THE COSTS OF CORRECTING SUCH VIOLATIONS OR NON-COMPLIANCE WITH APPLICABLE
ENVIRONMENTAL LAW.  “RETAINED ENVIRONMENTAL LIABILITIES” SHALL NOT INCLUDE ANY
OF THE FOLLOWING LIABILITIES: (A) LIABILITIES FOR RESPONSE ACTIONS ARISING IN
CONNECTION WITH RELEASES OF HAZARDOUS SUBSTANCES AT OR FROM THE WHEATLAND
FACILITY OR THE OWNED REAL PROPERTY SPECIFICALLY AUTHORIZED BY, AND IN
COMPLIANCE WITH, ANY ENVIRONMENTAL PERMITS; (B) ANY COSTS FOR DECOMMISSIONING OF
ANY EQUIPMENT OR FACILITIES; (C) COSTS FOR UPGRADES TO POLLUTION CONTROL OR
OTHER EQUIPMENT REQUIRED BY CHANGES IN APPLICABLE ENVIRONMENTAL LAWS THAT IMPOSE
COMPLIANCE DEADLINES AFTER THE CLOSING DATE; (D) LIABILITIES ARISING IN
CONNECTION WITH ANY RELEASES OF HAZARDOUS SUBSTANCES, OR THE DISPOSAL OF
HAZARDOUS SUBSTANCES, ON, AT OR FROM THE OWNED REAL PROPERTY, INITIALLY
OCCURRING AFTER THE CLOSING DATE; (E) LIABILITIES ARISING IN CONNECTION WITH ANY
TRANSPORTATION OR DISPOSAL OF HAZARDOUS SUBSTANCES FROM THE WHEATLAND FACILITY
OR THE OWNED REAL PROPERTY TO ANY OFF-SITE LOCATION WHICH OCCURS AFTER THE
CLOSING DATE; OR (F) LIABILITIES FOR ANY VIOLATION OR ALLEGED VIOLATION OF OR
NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAW BY THE BUYERS OR THEIR AFFILIATES, IN
CONNECTION WITH THE OWNERSHIP OR OPERATION OF THE ACQUIRED ASSETS, WHICH OCCURS
AFTER THE CLOSING DATE.

 

(51)         “SEC” MEANS THE SECURITIES AND EXCHANGE COMMISSION.

 

(52)         “SECURITIES ACT” MEANS THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

 

(53)         “SECURITY AND INTERCREDITOR AGREEMENT” MEANS THAT CERTAIN AMENDED
AND RESTATED SECURITY AND INTERCREDITOR AGREEMENT AMONG AESC, THE OTHER GRANTORS
REFERRED TO THEREIN, CITIBANK, N.A., AS COLLATERAL AGENT, INTERCREDITOR AGENT
AND DEPOSITORY BANK, CITICORP NORTH AMERICA, INC., AS ADMINISTRATIVE AGENT, AND
LAW DEBENTURE TRUST COMPANY OF NEW YORK, AS INDENTURE TRUSTEE, DATED
FEBRUARY 21, 2003, AS AMENDED AND RESTATED IN ITS ENTIRETY ON MARCH 8, 2004, AND
AS FURTHER AMENDED AND RESTATED IN ITS ENTIRETY ON OCTOBER 28, 2004.

 

(54)         “SELLER PARTIES’ REPRESENTATIVES” MEANS THE ACCOUNTANTS, EMPLOYEES,
OFFICERS, DIRECTORS, COUNSEL, ENVIRONMENTAL CONSULTANTS, FINANCIAL ADVISORS AND
OTHER AUTHORIZED REPRESENTATIVES OF ANY OF THE SELLER PARTIES AND THEIR
AFFILIATES.

 

7

--------------------------------------------------------------------------------

 

(55)         “SITE” MEANS, COLLECTIVELY, THE OWNED REAL PROPERTY AND THE OTHER
REAL PROPERTY INTERESTS.

 

(56)         “SUBSIDIARY” MEANS ANY CORPORATION, PARTNERSHIP, LIMITED LIABILITY
COMPANY OR OTHER ENTITY IN WHICH ANY PERSON HAS DIRECT OR INDIRECT EQUITY OR
OWNERSHIP INTEREST THAT REPRESENTS FIFTY PERCENT (50%) OR MORE OF THE AGGREGATE
EQUITY OR OWNERSHIP INTEREST IN SUCH ENTITY, OR HAS THE POWER TO VOTE OR DIRECT
THE VOTING OF SUFFICIENT SECURITIES TO ELECT A MAJORITY OF THE DIRECTORS OR
GOVERNORS.

 

(57)         “TAXES” MEANS ALL TAXES, CHARGES, FEES, LEVIES, DUTIES, CUSTOMS,
TARIFFS, IMPORTS, PENALTIES, ASSESSMENTS OR OTHER OBLIGATIONS OF THE SAME OR OF
A SIMILAR NATURE TO ANY OF THE FOREGOING IMPOSED BY ANY FEDERAL, STATE OR LOCAL
OR FOREIGN TAXING AUTHORITY, INCLUDING, WITHOUT LIMITATION, INCOME OR PROFITS,
EXCISE, PROPERTY, SALES, TRANSFER, FRANCHISE, PAYROLL, WITHHOLDING,
UNEMPLOYMENT, SEVERANCE, USE, AD VALOREM, GROSS RECEIPTS, BUSINESS LICENSE,
OCCUPATION, STAMP, ENVIRONMENTAL, WORKERS’ COMPENSATION, SOCIAL SECURITY OR
OTHER TAXES, INCLUDING ANY INTEREST, PENALTIES OR ADDITIONS ATTRIBUTABLE
THERETO, WHETHER DISPUTED OR NOT.

 

(58)         “TAX RETURN” MEANS ANY RETURN, DECLARATION, CLAIM FOR REFUND,
REPORT, INFORMATION RETURN OR OTHER DOCUMENT (INCLUDING ANY RELATED OR
SUPPORTING INFORMATION) SUPPLIED TO OR REQUIRED TO BE FILED WITH ANY TAXING
AUTHORITY WITH RESPECT TO TAXES.

 

(59)         “TRANSFERRING EMPLOYEE RECORDS” MEANS ALL PERSONNEL FILES RELATED
TO THE SELLERS’ EMPLOYEES THAT PERTAIN TO (I) SENIORITY HISTORIES AND
(II) SALARY AND BENEFIT INFORMATION, BUT ONLY TO THE EXTENT DISCLOSURE OF SUCH
INFORMATION IS PERMITTED BY LAW.

 

(60)         “WHEATLAND OWNED REAL PROPERTY” MEANS THE REAL PROPERTY DESCRIBED
IN SCHEDULE 5.8 AND DESIGNATED THEREIN AS THE “WHEATLAND REAL PROPERTY”,
TOGETHER WITH ALL RIGHTS, PRIVILEGES, INTERESTS, EASEMENTS AND APPURTENANCES NOW
OR HEREAFTER BELONGING OR IN ANY WAY PERTAINING TO SUCH REAL PROPERTY
(INCLUDING, WITHOUT LIMITATION, ANY MINERAL RIGHTS) AND ANY IMPROVEMENTS LOCATED
THEREON.

 

(B)           EACH OF THE FOLLOWING TERMS HAS THE MEANING SPECIFIED IN THE
SECTION SET FORTH OPPOSITE SUCH TERM:

 

Term

 

Section

 

Acquired Assets

 

2.1

(b)

AESC Transferred Assets

 

2.1

(a)

Assumed Contracts

 

2.1

(b)(iv)

Assumed Liabilities

 

2.3

 

Bankruptcy and Equity Exception

 

5.2

 

Benefit Plans

 

5.12

(a)

Buyers’ Benefit Plans

 

7.10

(c)

Buyers Indemnified Party

 

9.1

(a)

Buyers-Initiated Start-Up

 

7.18

(a)

Buyers Required Regulatory Approvals

 

6.3

(b)

Capital Expenditures Statement

 

3.2

(b)

 

8

--------------------------------------------------------------------------------

 

Term

 

Section

 

Closing

 

4.1

 

Closing Date

 

4.1

 

CPCN

 

6.3

(b)

Direct Claim

 

9.2

(c)

Environmental Permits

 

5.10

(a)(i)

ERISA Affiliate

 

5.12

(a)

Excluded Assets

 

2.2

 

Excluded Liabilities

 

2.4

 

FERC

 

5.5

 

FERC Approvals

 

6.3

(b)

Final Extraordinary Capital Expenditures Amount

 

3.2

(c)

GAAP

 

3.2

(a)

Indemnifiable Loss

 

9.1

(a)

Indemnifying Party

 

9.1

(d)

Indemnitee

 

9.1

(c)

Indiana Settlement Agreement

 

6.3

(c)

Intellectual Property

 

5.20

 

IRS

 

5.12

(a)

IURC

 

5.4

(b)

Leases

 

5.8

(f)

Material Contracts

 

5.13

(a)

Notice of Disagreement

 

3.2

(c)

Permits

 

5.15

(a)

Prior Welfare Plans

 

7.10

(b)

Proposed Acquisition Transaction

 

7.15

 

Property Taxes

 

3.4

(a)(i)

Purchase Price

 

3.1

 

Replacement Welfare Plans

 

7.10

(b)

Reviewing Parties

 

7.16

(f)

Sellers Confidentiality Agreement

 

7.2

(b)

Sellers’ Employees

 

5.11

 

Sellers Indemnified Party

 

9.1

(b)

Sellers-Initiated Start-Up

 

7.18

(b)

Sellers Required Regulatory Approvals

 

5.4

(b)

Support Obligations

 

7.6

(d)

Survey

 

4.3

(o)

Termination Date

 

10.1

(b)

Third Party Claim

 

9.2

(a)

Title Company

 

4.3

(n)

Title Policy

 

4.3

(n)

Transfer Taxes

 

7.9

(a)

Wheatland Facility

 

Recitals

 

 

(C)           UNLESS OTHERWISE SPECIFIED, ANY PERIOD MEASURED IN DAYS SHALL BE
MEASURED IN CALENDAR DAYS RATHER THAN BUSINESS DAYS.

 

9

--------------------------------------------------------------------------------

 

ARTICLE II
PURCHASE AND SALE

 

2.1.         Purchase and Sale.

 

(A)           UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THIS
AGREEMENT, AT THE CLOSING, AESC WILL SELL, TRANSFER, CONVEY, ASSIGN AND DELIVER
TO THE BUYERS, AND THE BUYERS WILL PURCHASE, ACQUIRE AND ASSUME FROM AESC,
(I) ALL OF THE RIGHTS OF AESC UNDER THE CONTRACTS AND LEASES IDENTIFIED IN
SCHEDULE 2.1(A)(I) TO THE EXTENT THEY PERTAIN TO THE WHEATLAND FACILITY,
INCLUDING, WITHOUT LIMITATION, ANY RIGHT TO RECEIVE PAYMENT, ANY RIGHT TO
RECEIVE GOODS AND SERVICES AND ANY RIGHT TO ASSERT CLAIMS AND TAKE OTHER
RIGHTFUL ACTIONS IN RESPECT OF BREACHES, DEFAULTS AND OTHER VIOLATIONS OF SUCH
CONTRACTS AND LEASES, AND (II) THE VEHICLES IDENTIFIED ON
SCHEDULE 2.1(A)(II) (COLLECTIVELY, THE “AESC TRANSFERRED ASSETS”).

 

(B)           UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THIS
AGREEMENT, AT THE CLOSING, THE SELLERS WILL SELL, TRANSFER, CONVEY, ASSIGN AND
DELIVER TO THE BUYERS, AND THE BUYERS WILL PURCHASE, ACQUIRE AND ASSUME FROM THE
SELLERS, ALL OF THE SELLERS’ RIGHT, TITLE AND INTEREST IN AND TO THE PROPERTIES
AND ASSETS THAT ARE OWNED BY THE SELLERS (TANGIBLE OR INTANGIBLE, INCLUDING
GOODWILL), WHEREVER LOCATED, INCLUDING, WITHOUT LIMITATION, THE SELLERS’ RIGHT,
TITLE AND INTEREST IN AND TO THE FOLLOWING ASSETS (COLLECTIVELY, TOGETHER WITH
THE AESC TRANSFERRED ASSETS, THE “ACQUIRED ASSETS”):

 

(I)            THE SITE AND THE WHEATLAND FACILITY;

 

(II)           THE MACHINERY, EQUIPMENT, INVENTORIES, FURNITURE, BOATS, VEHICLES
AND OTHER PERSONAL PROPERTY OWNED BY THE SELLERS AND LOCATED AT OR IN TRANSIT TO
THE WHEATLAND FACILITY (INCLUDING, WITHOUT LIMITATION, THE STEP-UP TRANSFORMERS
AND THE ITEMS OF PERSONAL PROPERTY DESCRIBED IN SCHEDULE 2.1(B)(II) AND ALL
APPLICABLE WARRANTIES AGAINST MANUFACTURERS OR VENDORS, TO THE EXTENT THAT SUCH
WARRANTIES ARE TRANSFERABLE WITHOUT FURTHER ACTION BY THE SELLERS, AND ALL ITEMS
OF PERSONAL PROPERTY DUE UNDER APPLICABLE WARRANTIES), IN EACH CASE AS IN
EXISTENCE ON THE CLOSING DATE;

 

(III)          TO THE EXTENT TRANSFERABLE, ALL PERMITS AND ENVIRONMENTAL PERMITS
SET FORTH IN SCHEDULE 2.1(B)(III);

 

(IV)          ALL OF THE RIGHTS OF THE SELLERS UNDER THE MATERIAL CONTRACTS AND
LEASES SET FORTH IN SCHEDULE 2.1(B)(IV) AND ANY SIMILAR CONTRACTS OR LEASES
ENTERED INTO, IN ACCORDANCE WITH SECTION 7.1(A), AFTER THE DATE HEREOF AND PRIOR
TO THE CLOSING DATE (COLLECTIVELY, TOGETHER WITH THE CONTRACTS AND LEASES
INCLUDED WITHIN THE DEFINITION OF AESC TRANSFERRED ASSETS, THE “ASSUMED
CONTRACTS”), INCLUDING, WITHOUT LIMITATION, ANY RIGHT TO RECEIVE PAYMENT, ANY
RIGHT TO RECEIVE GOODS AND SERVICES AND ANY RIGHT TO ASSERT CLAIMS AND TAKE
OTHER RIGHTFUL ACTIONS IN RESPECT OF BREACHES, DEFAULTS AND OTHER VIOLATIONS OF
THE ASSUMED CONTRACTS;

 

(V)           ALL BOOKS, RECORDS, MANUALS, REGULATORY DOCUMENTS, REAL ESTATE
DOCUMENTS, ENGINEERING DESIGNS, BLUEPRINTS, AS-BUILT PLANS, SPECIFICATIONS,
PROCEDURES, STUDIES, REPORTS AND EQUIPMENT REPAIR, SAFETY, MAINTENANCE OR
SERVICE RECORDS, LISTS OF PRESENT AND FORMER

 

10

--------------------------------------------------------------------------------

 

SUPPLIERS, LISTS OF PRESENT AND FORMER CUSTOMERS, AND OTHER SUCH MATERIALS (IN
ANY FORM OR MEDIUM) OF THE SELLERS, INCLUDING THE TRANSFERRING EMPLOYEE RECORDS;

 

(VI)          ALL RIGHTS IN AND TO ANY CAUSES OF ACTION, LAWSUITS, JUDGMENTS,
CLAIMS AND DEMANDS OF ANY NATURE AVAILABLE TO OR BEING PURSUED BY OR ON BEHALF
OF THE SELLERS, WHETHER ARISING BY WAY OF COUNTERCLAIM OR OTHERWISE;

 

(VII)         EXCEPT FOR PREPAID EXPENSES AND DEPOSITS OF THE SELLERS
ATTRIBUTABLE TO ANY EXCLUDED ASSETS OR EXCLUDED LIABILITIES, ALL PREPAID
EXPENSES, PROGRESS PAYMENTS AND DEPOSITS OF OR BY THE SELLERS, RIGHTS TO RECEIVE
A PREPAID EXPENSE, DEPOSIT OR PROGRESS PAYMENT, AND CASH IN TRANSIT THAT
CONSTITUTES A PREPAID EXPENSE, PROGRESS PAYMENT OR DEPOSIT, RELATING TO ANY
ACQUIRED ASSET OR ASSUMED LIABILITY;

 

(VIII)        SUBJECT TO SECTION 7.1(A)(XVI), ALL EMISSION ALLOWANCES SET FORTH
ON SCHEDULE 2.1(B)(VIII), ALL EMISSIONS ALLOWANCES SPECIFICALLY ISSUED OR
ALLOCATED TO THE WHEATLAND FACILITY BY ENVIRONMENTAL AGENCIES OF THE UNITED
STATES OF AMERICA OR THE STATE OF INDIANA WITH A VINTAGE YEAR OF 2005 OR LATER
(TO THE EXTENT NOT ALREADY IDENTIFIED ON SCHEDULE 2.1(B)(VIII)), AND ANY
EMISSIONS ALLOWANCE PURCHASED BY THE SELLERS SPECIFICALLY FOR THE WHEATLAND
FACILITY ON OR BEFORE THE DATE HEREOF;

 

(IX)           ALL INTELLECTUAL PROPERTY AND ASSOCIATED LICENSES, INCLUDING
RIGHTS TO SUE FOR AND REMEDIES AGAINST PAST, PRESENT AND FUTURE INFRINGEMENTS
THEREOF, AND RIGHTS OF PRIORITY AND PROTECTION OF INTERESTS THEREIN UNDER THE
LAWS OF ANY JURISDICTION WORLDWIDE AND ALL TANGIBLE EMBODIMENTS THEREOF; AND

 

(X)            ALL OTHER ASSETS, RIGHTS AND INTERESTS OF THE SELLERS;

 

PROVIDED, HOWEVER, THAT THE ACQUIRED ASSETS SHALL NOT INCLUDE THE EXCLUDED
ASSETS.

 

2.2.         Excluded Assets.  Notwithstanding any provision herein to the
contrary, the Acquired Assets shall exclude the following assets (collectively,
the “Excluded Assets”):

 

(A)           ALL CASH, CASH EQUIVALENTS, BANK DEPOSITS, ACCOUNTS RECEIVABLE OF
THE SELLERS OR WITH RESPECT TO THE WHEATLAND FACILITY AS OF THE CLOSING AND ANY
TAX RECEIVABLES OF THE SELLERS;

 

(B)           ANY REFUND OR CREDIT OF TAXES PAID BY THE SELLER PARTIES IN
RESPECT OF THE SELLERS OR THE ACQUIRED ASSETS OR FOR WHICH THE SELLER PARTIES
ARE REQUIRED TO REIMBURSE THE BUYERS, WHETHER SUCH PAYMENT IS ACTUALLY RECEIVED
AS A REFUND OR AS A CREDIT AGAINST TAXES PAYABLE;

 

(C)           ALL INTERESTS IN AND TO THE ALLEGHENY MARKS, AND THE MAXIMO
SOFTWARE LICENSE (IT BEING UNDERSTOOD THAT THE DATABASE INFORMATION, INCLUDING
HISTORICAL INFORMATION, RELATED TO THE WHEATLAND FACILITY USED WITH THE MAXIMO
SOFTWARE SHALL BE AN ACQUIRED ASSET);

 

(D)           ALL PERSONNEL, MEDICAL AND BENEFITS RECORDS OF THE SELLER PARTIES
OR THEIR AFFILIATES, OTHER THAN TRANSFERRING EMPLOYEE RECORDS;

 

11

--------------------------------------------------------------------------------

 

(E)           ANY AMOUNT RECEIVED AFTER THE CLOSING DATE FOR ELECTRICITY SOLD
AND DELIVERED ON OR PRIOR TO THE CLOSING DATE;

 

(F)            THOSE CONTRACTS AND LEASES LISTED ON SCHEDULE 2.2(F);

 

(G)           ANY ASSET SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN ACCORDANCE
WITH SECTION 7.1(A)(V); AND

 

(H)           ALL PROPERTIES AND ASSETS OF AESC OTHER THAN THE AESC TRANSFERRED
ASSETS.

 

2.3.         Assumed Liabilities.  On the terms and subject to the conditions
set forth herein, from and after the Closing, the Buyers shall assume and
satisfy or perform all of the Liabilities of the Seller Parties that relate
directly or indirectly to, in respect of, or otherwise arising from the
ownership, use or operation of the Acquired Assets (collectively, the “Assumed
Liabilities”), including, without limitation, the following Liabilities:

 

(A)           ALL LIABILITIES OF THE SELLER PARTIES ARISING UNDER THE ASSUMED
CONTRACTS IN ACCORDANCE WITH THE TERMS THEREOF (OTHER THAN LIABILITIES
ATTRIBUTABLE TO ANY FAILURE BY ANY OF THE SELLER PARTIES PRIOR TO OR ON THE
CLOSING DATE TO COMPLY WITH THE TERMS THEREOF);

 

(B)           ALL LIABILITIES RELATING TO ANY ENVIRONMENTAL LAW OTHER THAN
RETAINED ENVIRONMENTAL LIABILITIES; AND

 

(C)           ALL LIABILITIES IN RESPECT OF TAXES ATTRIBUTABLE TO THE ACQUIRED
ASSETS FOR TAXABLE PERIODS, OR PORTIONS THEREOF, BEGINNING AFTER THE CLOSING
DATE (AS PRORATED UNDER SECTION 3.4(A)(I) FOR TAXES DESCRIBED THEREIN), AND ALL
LIABILITIES FOR TRANSFER TAXES PURSUANT TO SECTION 7.9(A);

 

PROVIDED, HOWEVER, THAT THE ASSUMED LIABILITIES SHALL NOT INCLUDE THE EXCLUDED
LIABILITIES.

 

2.4.         Excluded Liabilities.  Notwithstanding the provisions of
Section 2.3, the Buyers shall not assume the following Liabilities
(collectively, the “Excluded Liabilities”), which shall remain the exclusive
responsibility of the Seller Parties or their Affiliates:

 

(A)           THE RETAINED ENVIRONMENTAL LIABILITIES;

 

(B)           ANY LIABILITY OF THE SELLER PARTIES OR THEIR AFFILIATES AND
PREDECESSORS IN RESPECT OF OR OTHERWISE ARISING FROM THE EXCLUDED ASSETS, EXCEPT
TO THE EXTENT CAUSED BY THE ACTS OR OMISSIONS OF THE BUYERS OR THE BUYERS’
REPRESENTATIVES OR BY THE BUYERS’ OWNERSHIP, LEASE, MAINTENANCE OR OPERATION OF
THE ACQUIRED ASSETS;

 

(C)           ANY LIABILITY OF THE SELLER PARTIES OR THEIR AFFILIATES AND
PREDECESSORS ARISING FROM THE EXECUTION, DELIVERY OR PERFORMANCE OF THIS
AGREEMENT OR ANY ANCILLARY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY;

 

(D)           ANY LIABILITY OF THE SELLER PARTIES OR THEIR AFFILIATES AND
PREDECESSORS UNDER CONTRACTS OR LEASES WHICH ARE NOT ASSUMED CONTRACTS, EXCEPT
TO THE EXTENT CAUSED BY THE

 

12

--------------------------------------------------------------------------------

 

ACTS OR OMISSIONS OF THE BUYER OR THE BUYERS’ REPRESENTATIVES OR BY THE BUYERS’
OWNERSHIP, LEASE, MAINTENANCE OR OPERATION OF THE ACQUIRED ASSETS;

 

(E)           ANY LIABILITY OF THE SELLER PARTIES OR THEIR AFFILIATES AND
PREDECESSORS FOR ANY FINES OR PENALTIES IMPOSED BY A GOVERNMENTAL ENTITY
RESULTING FROM ANY (I) INVESTIGATION OR PROCEEDING BY A GOVERNMENTAL ENTITY
PENDING ON OR PRIOR TO THE CLOSING DATE OR (II) ACTS OR OMISSIONS OF THE SELLER
PARTIES OR THEIR AFFILIATES AND PREDECESSORS ON OR PRIOR TO THE CLOSING DATE;

 

(F)            ANY LIABILITY IN RESPECT OF TAXES ATTRIBUTABLE TO THE ACQUIRED
ASSETS FOR TAXABLE PERIODS, OR PORTIONS THEREOF, ENDING ON OR BEFORE THE CLOSING
DATE (AS PRORATED UNDER SECTION 3.4(A)(I) FOR TAXES DESCRIBED THEREIN), EXCEPT
FOR TRANSFER TAXES PURSUANT TO SECTION 7.9(A);

 

(G)           ANY LIABILITY OF THE SELLER PARTIES OR THEIR AFFILIATES ARISING
FROM THE BREACH OR DEFAULT BY THE SELLER PARTIES OR THEIR AFFILIATES, PRIOR TO
THE CLOSING DATE, OF ANY ASSUMED CONTRACTS OR ANY OTHER CONTRACT, LICENSE,
AGREEMENT OR PERSONAL PROPERTY LEASE ENTERED INTO BY ANY OF THE SELLER PARTIES
OR THEIR AFFILIATES WITH RESPECT TO THE PURCHASED ASSETS;

 

(H)           ANY LIABILITY OF THE SELLER PARTIES OR THEIR AFFILIATES AND
PREDECESSORS RELATING TO ANY CAUSE OF ACTION PENDING, OR THREATENED IN WRITING,
PRIOR TO THE CLOSING DATE AGAINST THE SELLER PARTIES OR THEIR AFFILIATES AND
PREDECESSORS OR THEIR ASSETS;

 

(I)            ANY LIABILITIES RELATING TO ANY MATTERS IDENTIFIED ON
SCHEDULE 2.4(I); AND

 

(J)            ALL LIABILITIES OF THE SELLER PARTIES FOR INDEBTEDNESS INCURRED
ON OR PRIOR TO THE CLOSING.

 

2.5.         Procedures for Acquired Assets Not Transferable.  If any consent
required to transfer or assign any of the Assumed Contracts, Permits,
Environmental Permits or any other property or rights included in the Acquired
Assets cannot be obtained prior to the Closing Date and the Closing occurs, or,
if an attempted assignment thereof would be ineffective or would adversely
affect the rights of any of the Seller Parties thereunder so that the Buyers
would not in fact receive all such rights, this Agreement and the related
instruments of transfer shall not constitute an assignment or transfer thereof
and the Buyers shall not assume the Seller Parties’ obligations with respect
thereto.  In the event any such consent is not obtained on or prior to the
Closing Date, the Seller Parties shall continue to use Commercially Reasonable
Efforts to obtain any such consent after the Closing Date until such consent has
been obtained.  If such efforts are unsuccessful, the Seller Parties and the
Buyers will cooperate to achieve a mutually agreeable arrangement under which
the Buyers would obtain the benefits and assume the obligations from and after
the Closing Date in accordance with this Agreement, including subcontracting,
sublicensing or subleasing to the Buyers, or under which the Seller Parties
would enforce for the benefit of the Buyers any and all rights of the Seller
Parties against a third party thereto, in any case with the Buyers assuming the
Seller Parties’ obligations to the extent such obligations would have
constituted an Assumed Liability if such assignment had occurred on the Closing
Date.  Each Seller will pay promptly to the Buyers when received all monies
received by such Seller after the Closing Date under any such contracts for any
claim or right or any benefit

 

13

--------------------------------------------------------------------------------

 

arising thereunder to the extent that the Buyers would be entitled thereto
pursuant hereto.  Nothing in this Section 2.5 shall be deemed to (a) constitute
an agreement to exclude from the Acquired Assets any assets described in
Section 2.1 or (b) alter the rights or obligations of the Buyers pursuant to
Section 7.6 or Section 8.1(c).

 

ARTICLE III
PURCHASE PRICE

 

3.1.         Purchase Price.  Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing, in exchange for the Acquired Assets,
the Buyers shall pay to the Sellers an amount equal to One Hundred Million
Dollars ($100,000,000) (the “Purchase Price”) and shall assume the Assumed
Liabilities.  The parties acknowledge that the Final Extraordinary Capital
Expenditures Amount, if any, shall be treated as a post-Closing adjustment to
the Purchase Price.

 

3.2.         Possible Purchase Price Adjustment.

 

(A)           BEFORE EXPENDING ANY FUNDS FOR AN EXTRAORDINARY CAPITAL
EXPENDITURE, (I) THE SELLER PARTIES SHALL GIVE THE BUYERS WRITTEN NOTICE OF SUCH
PROPOSED EXTRAORDINARY CAPITAL EXPENDITURE, INCLUDING SUPPLEMENTARY MATERIALS
EXPLAINING THE PROPOSED EXTRAORDINARY CAPITAL EXPENDITURE AND, IF APPLICABLE,
DIAGRAMS OR TECHNICAL DRAWINGS, AND, IF REQUESTED BY THE BUYERS, REASONABLE
SUPPORTING MATERIALS SUPPORTING THE SELLER PARTIES’ CONCLUSION THAT THE
EXTRAORDINARY CAPITAL EXPENDITURE IS REQUIRED BY A CHANGE IN LAW OR BY ANY
GOVERNMENTAL ENTITY OR QUASI REGULATORY AGENCY, AT LEAST 10 BUSINESS DAYS PRIOR
TO THE DATE OF THE PROPOSED EXTRAORDINARY CAPITAL EXPENDITURE, (II) THE SELLERS
SHALL CONSIDER IN GOOD FAITH THE BUYERS’ REASONABLE COMMENTS ON THE PROPOSED
EXTRAORDINARY CAPITAL EXPENDITURE, AND (III) THE PARTIES SHALL HAVE ATTEMPTED IN
GOOD FAITH TO AGREE ON THE APPROPRIATE RESPONSE TO THE CIRCUMSTANCE THAT
REQUIRES THE EXTRAORDINARY CAPITAL EXPENDITURE.  THE AMOUNT OF EXTRAORDINARY
CAPITAL EXPENDITURES, IF ANY, TO BE INCLUDED IN THE CAPITAL EXPENDITURES
STATEMENT AND THE FINAL EXTRAORDINARY CAPITAL EXPENDITURES AMOUNT SHALL BE
REDUCED, IN AN AMOUNT TO BE MUTUALLY AGREED UPON BY THE PARTIES IN GOOD FAITH,
TO ACCOUNT FOR THE OWNERSHIP AND USAGE OF ANY PROJECT OR ADDITION FUNDED BY AN
EXTRAORDINARY CAPITAL EXPENDITURE (INCLUDING, IF APPROPRIATE, THE FAIR
DEPRECIATION OF SUCH PROJECT OR ADDITION UNDER UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (“GAAP”) ALLOCABLE TO THE PERIOD IN WHICH THE SELLER
PARTIES OWNED THE PROJECT) BY THE SELLER PARTIES PRIOR TO THE CLOSING DATE.

 

(B)           IN THE EVENT THE SELLER PARTIES HAVE INCURRED AN EXTRAORDINARY
CAPITAL EXPENDITURE IN ACCORDANCE WITH SECTION 3.2(A), THEN WITHIN 30 DAYS AFTER
THE CLOSING, THE SELLER PARTIES WILL PREPARE AND DELIVER TO THE BUYERS A
STATEMENT (THE “CAPITAL EXPENDITURES STATEMENT”) SETTING FORTH THE EXTRAORDINARY
CAPITAL EXPENDITURES, IF ANY, INCLUDING DETAILED SUPPORTING MATERIAL.  THE
BUYERS AGREE TO COOPERATE WITH THE SELLER PARTIES IN CONNECTION WITH THE
PREPARATION OF THE CAPITAL EXPENDITURES STATEMENT AND RELATED INFORMATION, AND
SHALL PROVIDE TO THE SELLER PARTIES SUCH BOOKS, RECORDS AND INFORMATION AS MAY
BE REASONABLY REQUESTED FROM TIME TO TIME.

 

14

--------------------------------------------------------------------------------

 

(C)           DURING THE 30-DAY PERIOD FOLLOWING THE DELIVERY BY THE SELLER
PARTIES OF THE CAPITAL EXPENDITURES STATEMENT, THE BUYERS AND THE BUYERS’
REPRESENTATIVES MAY REVIEW SUCH STATEMENT.  THE SELLER PARTIES AGREE TO
COOPERATE WITH THE BUYERS IN SUCH REVIEW AND TO PROVIDE THE BUYERS WITH THE
INFORMATION USED TO PREPARE THE CAPITAL EXPENDITURES STATEMENT AND ANY OTHER
RELATED INFORMATION AS REASONABLY REQUESTED BY THE BUYERS.  THE BUYERS SHALL
PROVIDE ANY COMMENTS OR OBJECTIONS THEY HAVE WITH RESPECT TO THE CAPITAL
EXPENDITURES STATEMENT TO THE SELLER PARTIES IN WRITING WITHIN SUCH 30-DAY
PERIOD (THE “NOTICE OF DISAGREEMENT”).  THE BUYERS AND THE SELLER PARTIES SHALL
ATTEMPT IN GOOD FAITH TO RESOLVE ANY DIFFERENCES AND ISSUES AS SET FORTH IN THE
NOTICE OF DISAGREEMENT.  IF NO NOTICE OF DISAGREEMENT IS DELIVERED OR THE
MATTERS SET FORTH IN THE NOTICE OF DISAGREEMENT ARE SO RESOLVED, THEN THE
CAPITAL EXPENDITURES STATEMENT, AS ADJUSTED FOR ANY CHANGES AS ARE AGREED UPON
BY THE BUYERS AND THE SELLER PARTIES, SHALL BE FINAL AND BINDING UPON THE BUYERS
AND THE SELLER PARTIES AND SHALL CONSTITUTE THE “FINAL EXTRAORDINARY CAPITAL
EXPENDITURES AMOUNT.”  IF THE MATTERS RAISED BY THE BUYERS IN THE NOTICE OF
DISAGREEMENT CANNOT BE RESOLVED BETWEEN THE BUYERS AND THE SELLER PARTIES WITHIN
15 DAYS FOLLOWING DELIVERY BY THE BUYERS OF THE NOTICE OF DISAGREEMENT, THE
QUESTION OR QUESTIONS IN DISPUTE SHALL BE PROMPTLY SUBMITTED TO THE INDEPENDENT
ACCOUNTING FIRM, WHICH SHALL BE INSTRUCTED TO DETERMINE AND REPORT TO THE
PARTIES, WITHIN 30 DAYS AFTER RECEIVING SUCH SUBMISSION, UPON SUCH REMAINING
DISPUTED AMOUNTS, AND SUCH REPORT SHALL BE FINAL, BINDING AND CONCLUSIVE ON THE
PARTIES HERETO WITH RESPECT TO THE AMOUNTS DISPUTED.  ANY AMOUNT (I) MUTUALLY
AGREED TO IN WRITING BY THE SELLER PARTIES AND THE BUYERS WITH RESPECT TO AN
AMOUNT THAT WAS DISPUTED BY THE BUYERS OR (II) FINALLY DETERMINED BY THE
INDEPENDENT ACCOUNTING FIRM SHALL BE THE “FINAL EXTRAORDINARY CAPITAL
EXPENDITURES AMOUNT.”  THE FEES AND DISBURSEMENTS OF THE INDEPENDENT ACCOUNTING
FIRM SHALL BE BORNE EQUALLY BY THE BUYERS AND THE SELLER PARTIES. 
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, IN NO EVENT SHALL THE
FINAL EXTRAORDINARY CAPITAL EXPENDITURES AMOUNT EXCEED $2,000,000.

 

(D)           WITHIN FIVE BUSINESS DAYS AFTER THE FINAL DETERMINATION OF THE
FINAL EXTRAORDINARY CAPITAL EXPENDITURES AMOUNT, IF ANY, THE BUYERS SHALL PAY TO
THE SELLER PARTIES AN AMOUNT EQUAL TO THE FINAL EXTRAORDINARY CAPITAL
EXPENDITURES AMOUNT.  ANY AMOUNT PAID UNDER THIS SECTION 3.2(D) SHALL BE PAID
WITH INTEREST FOR THE PERIOD COMMENCING ON THE CLOSING DATE THROUGH THE DATE OF
PAYMENT, CALCULATED AT THE 90-DAY U.S. TREASURY BILL RATE AS PUBLISHED IN THE
WALL STREET JOURNAL IN THE “MONEY RATES” SECTION ON THE CLOSING DATE, AND IN
CASH BY FEDERAL OR OTHER WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO THE
BANK ACCOUNT OR ACCOUNTS DESIGNATED BY THE SELLER PARTIES IN WRITING.

 

3.3.         Allocation of Purchase Price.  The Buyers and the Seller Parties
shall use Commercially Reasonable Efforts to agree upon an allocation among the
Acquired Assets of the portion of the Purchase Price set forth in Section 3.1,
together with Assumed Liabilities, consistent with section 1060 of the Code and
the treasury regulations thereunder within 180 days of the date of this
Agreement but in no event less than 30 days prior to the Closing.  Any
post-Closing adjustments with respect to the Purchase Price for purchase price
allocation purposes shall be jointly made and agreed to within 30 days following
the determination of the Final Extraordinary Capital Expenditures Amount in a
manner consistent with the allocation determined pursuant to this Section 3.3. 
In the event the parties are unable to agree upon such an allocation, then the
matter shall be resolved in accordance with Section 7.9(f).  Each of the Buyers
and the Seller

 

15

--------------------------------------------------------------------------------

 

Parties agree to file IRS Form 8594, and all federal, state, local and foreign
Tax Returns, in accordance with such agreed allocation.  Each of the Buyers and
the Seller Parties shall report the transactions contemplated by this Agreement
for Tax purposes in a manner consistent with the allocation determined pursuant
to this Section 3.3.  Each of the Buyers and the Seller Parties agrees to
provide each other promptly with any other information reasonably required to
complete Form 8594.  Each of the Buyers and the Seller Parties shall notify each
other in the event of an examination, audit or other proceeding regarding the
agreed upon allocation of the Purchase Price.

 

3.4.         Proration.

 

(A)           THE BUYERS AND THE SELLER PARTIES AGREE THAT THOSE ITEMS LISTED
BELOW, TO THE EXTENT THEY RELATE TO THE ACQUIRED ASSETS, WILL BE PRORATED AS OF
THE CLOSING DATE, WITH THE SELLER PARTIES LIABLE TO THE EXTENT SUCH ITEMS RELATE
TO ANY TIME PERIOD THROUGH THE CLOSING DATE, AND THE BUYERS LIABLE TO THE EXTENT
SUCH ITEMS RELATE TO PERIODS SUBSEQUENT TO THE CLOSING DATE:

 

(I)            ANY AD VALOREM TAXES IMPOSED ON TANGIBLE OR INTANGIBLE PROPERTY
(“PROPERTY TAXES”) SHALL BE PRORATED BASED ON THE NUMBER OF DAYS IN SUCH TAXABLE
PERIOD UP TO AND INCLUDING THE CLOSING DATE, AND ON THE NUMBER OF DAYS IN SUCH
TAXABLE PERIOD AFTER THE CLOSING DATE, PROVIDED THAT, FOR PURPOSES OF THIS
AGREEMENT, THE TAXABLE PERIOD OF ANY PROPERTY TAX SHALL BE THE CALENDAR YEAR
DURING WHICH THE STATUTORY ASSESSMENT DATE FALLS (FOR THE AVOIDANCE OF DOUBT,
THE ITEMS LISTED IN THIS SECTION 3.4(A)(I) INCLUDE, WITHOUT LIMITATION, ANY
PROPERTY TAXES WITH RESPECT TO THE TAXABLE PERIOD INCLUDING THE CLOSING DATE,
AND ALL PRIOR TAXABLE PERIODS, FOR WHICH THE SELLER PARTIES HAVE NOT
(A) RECEIVED FROM THE COUNTY TREASURER A STATEMENT OF CURRENT AND DELINQUENT
TAXES AND SPECIAL ASSESSMENTS, OR (B) PAID THE AMOUNT SHOWN AS DUE ON SUCH
STATEMENT);

 

(II)           ANY PERMIT, LICENSE, REGISTRATION, OR COMPLIANCE ASSURANCE FEES
WITH RESPECT TO ANY PERMIT;

 

(III)          SEWER RENTS AND CHARGES FOR WATER, TELEPHONE, ELECTRICITY AND
OTHER UTILITIES AND SIMILAR CHARGES OF THE SELLERS; AND

 

(IV)          ANY PAYMENT OBLIGATIONS FOR GOODS PURCHASED OR DELIVERED, OR
SERVICES RENDERED, INCLUDING RENT UNDER ANY LEASES OR LEASES OF PERSONAL
PROPERTY THAT ARE ASSUMED CONTRACTS BY WHICH EITHER SELLER IS BOUND.

 

(B)           IN CONNECTION WITH THE PRORATIONS REFERRED TO IN (A) ABOVE, IN THE
EVENT THAT ACTUAL FIGURES ARE NOT AVAILABLE AT THE CLOSING DATE, THE PRORATION
SHALL BE BASED UPON THE ACTUAL 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 PARTIES OR THE
BUYERS MADE WITHIN 30 DAYS OF THE DATE THAT THE ACTUAL AMOUNTS BECOME
AVAILABLE.  THE BUYERS SHALL COOPERATE WITH THE SELLER PARTIES IN THE
PROSECUTION OF TAX PROCEEDINGS WHICH HAVE NOT BEEN COMPLETED BY THE CLOSING
DATE.  THE SELLER PARTIES AND THE BUYERS 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 3.4.

 

16

--------------------------------------------------------------------------------

 

ARTICLE IV
THE CLOSING

 

4.1.         Time and Place of Closing.  Upon the terms and subject to the
satisfaction of the conditions contained in Article VIII of this Agreement, the
closing of the purchase and sale of the Acquired Assets contemplated by this
Agreement (the “Closing”) will take place at Skadden, Arps, Slate, Meagher &
Flom LLP, 1440 New York Avenue, N.W., Washington, D.C., at 10:00 A.M. (local
time) on such date as the parties may agree, which date is as soon as
practicable, but no later than five Business Days following the date on which
all of the conditions contained in Article VIII have been satisfied or waived
(except for those conditions which by their nature can only be satisfied at the
Closing); or at such other place or time as the parties may agree.  The date and
time at which the Closing actually occurs is hereinafter referred to as the
“Closing Date.”

 

4.2.         Payment of Purchase Price.  The Buyers shall pay to the Sellers at
the Closing an amount in United States dollars in the aggregate equal to the
Purchase Price, by wire transfer of immediately available funds to the bank
account or accounts designated by the Sellers, in writing, on or prior to the
2nd Business Day immediately preceding the Closing Date.

 

4.3.         Deliveries by the Sellers.  At the Closing, the Seller Parties will
deliver the following to the Buyers:

 

(A)           THE DEEDS;

 

(B)           THE BILL OF SALE, DULY EXECUTED BY THE APPLICABLE SELLER PARTIES;

 

(C)           THE ASSIGNMENT AND ASSUMPTION AGREEMENT, DULY EXECUTED BY THE
APPLICABLE SELLER PARTIES, IN RECORDABLE FORM IF NECESSARY;

 

(D)           EACH OTHER ANCILLARY AGREEMENT REQUIRED TO BE DELIVERED UNDER THIS
AGREEMENT, DULY EXECUTED BY THE APPLICABLE SELLER PARTIES;

 

(E)           THE FIRPTA AFFIDAVIT, DULY EXECUTED BY AESC;

 

(F)            CERTIFICATES OF TITLE FOR THE VEHICLES AND BOATS WHICH ARE PART
OF THE ACQUIRED ASSETS, DULY EXECUTED BY THE APPLICABLE SELLER PARTIES;

 

(G)           ALL ATTORNMENT AGREEMENTS, NOTICES AND OTHER DOCUMENTS AND
INSTRUMENTS REQUIRED FOR THE ASSIGNMENT OR OTHER TRANSFER OF ANY OF THE ASSUMED
CONTRACTS FROM THE APPLICABLE SELLER PARTIES TO THE BUYERS, DULY EXECUTED BY THE
APPLICABLE SELLER PARTIES AND, IN THE CASE OF ANY LEASES, UPON THE REASONABLE
REQUEST OF THE BUYERS, IN RECORDABLE FORM;

 

(H)           UNIFORM COMMERCIAL CODE AND OTHER ENCUMBRANCE SEARCHES WITH
RESPECT TO THE ACQUIRED ASSETS, AND SUCH DULY EXECUTED UCC-3 TERMINATION OR
PARTIAL RELEASE STATEMENTS AND OTHER RELEASES AS MAY BE REQUIRED TO CONVEY THE
ACQUIRED ASSETS FREE AND CLEAR OF ALL ENCUMBRANCES (EXCEPT FOR PERMITTED
ENCUMBRANCES) IN ACCORDANCE WITH THIS AGREEMENT;

 

(I)            COPIES OF ALL CONSENTS, WAIVERS OR APPROVALS OBTAINED BY THE
SELLERS WITH RESPECT TO THE TRANSFER OF THE ACQUIRED ASSETS OR THE CONSUMMATION
OF THE TRANSACTIONS

 

17

--------------------------------------------------------------------------------

 

CONTEMPLATED BY THIS AGREEMENT AND THE ANCILLARY AGREEMENTS, TO THE EXTENT
REQUIRED UNDER THIS AGREEMENT OR THE ANCILLARY AGREEMENTS;

 

(J)            ALL OF THE BOOKS, RECORDS AND OTHER MATERIALS OF THE SELLERS SET
FORTH IN SECTION 2.1(B)(V);

 

(K)           A CERTIFICATE FROM AN AUTHORIZED OFFICER OF EACH OF THE SELLER
PARTIES IN ACCORDANCE WITH SECTION 8.2(E);

 

(L)            ANY AMOUNTS FOR WHICH THE SELLER PARTIES ARE LIABLE PURSUANT TO
SECTION 3.4;

 

(M)          ANY DISCLOSURE DOCUMENT REQUIRED TO BE DELIVERED IN ACCORDANCE WITH
THE INDIANA RESPONSIBLE TRANSFER PROPERTY LAW (IND. CODE § 13-251-3-1 ET SEQ.);

 

(N)           AN ALTA (FORM B-1992) OWNER POLICY OF TITLE INSURANCE, WITH AN
ENDORSEMENT PROVIDING “EXTENDED COVERAGE” OVER THE STANDARD EXCEPTIONS CONTAINED
IN SUCH FORM OF OWNER POLICY OF TITLE INSURANCE AND SUCH OTHER ENDORSEMENTS AS
ARE REASONABLY REQUESTED BY THE BUYERS (THE “TITLE POLICY”), ISSUED BY CHICAGO
TITLE INSURANCE COMPANY (THE “TITLE COMPANY”), IN THE AMOUNT OF $100,000,000,
AND INSURING THAT (I) GOOD AND MARKETABLE TITLE TO THE OWNED REAL PROPERTY AND
(II) VALID EASEMENT INTERESTS IN THE OTHER REAL PROPERTY INTERESTS ARE VESTED IN
THE BUYERS, SUBJECT TO NO EXCEPTIONS TO TITLE OTHER THAN THE PERMITTED
ENCUMBRANCES;

 

(O)           A SURVEY OF THE SITE (THE “SURVEY”) PREPARED BY A SURVEYOR
LICENSED IN THE STATE OF INDIANA, (I) CERTIFIED TO THE SELLER PARTIES, THE
BUYERS AND THE TITLE COMPANY IN ACCORDANCE WITH A FORM OF CERTIFICATION WHICH IS
REASONABLY ACCEPTABLE TO THE BUYERS, SUCH CERTIFICATION TO INCLUDE A STATEMENT
THAT THE SURVEY HAS BEEN PREPARED IN ACCORDANCE WITH “MINIMUM STANDARD DETAIL
REQUIREMENTS FOR ALTA/ACSM LAND TITLE SURVEYS” JOINTLY ADOPTED BY ALTA, ACSM AND
NSPS IN 1999 AND INCLUDING ITEMS 1, 4, 6, 7(A), 7(B)(1), 7(C), 8-10, 11(B) AND
13-16, (II) SHOWING NO GAPS, GORES, ENCROACHMENTS OR OTHER MATTERS WHICH ARE NOT
PERMITTED ENCUMBRANCES, (III) SHOWING THAT THE EASEMENTS CREATED BY (A) THAT
CERTAIN EASEMENT AGREEMENT, DATED MARCH 10, 2000, BETWEEN WEST FORK LAND
DEVELOPMENT COMPANY, L.L.C. AND LARRY B. MURRAY AND (B) THAT CERTAIN EASEMENT
AGREEMENT, DATED MARCH 10, 2000, BETWEEN WEST FORK LAND DEVELOPMENT COMPANY,
L.L.C. AND CHARLES L. MURRAY AND BARBARA NELL MURRAY, CONSTITUTE A CONTINUOUS
EASEMENT CORRIDOR BETWEEN THE FEE PARCELS OWNED BY WHEATLAND LLC AND THE FEE
PARCELS OWNED BY LAKE LLC AND (IV) PLOTTING THE LOCATION OF THE WATER PIPELINE,
GAS TRANSMISSION PIPELINE AND ELECTRICAL TRANSMISSION POLES AND LINES SERVING
THE WHEATLAND FACILITY AND CONFIRMING THAT SUCH PIPELINES, POLES AND LINES LIE
WHOLLY WITHIN THE OWNED REAL PROPERTY OR THE OTHER REAL PROPERTY INTERESTS; AND

 

(P)           SUCH REAL ESTATE TRANSFER DECLARATIONS, DISCLOSURES OR FORMS AND
SUCH OTHER DOCUMENTS, INSTRUMENTS OR AGREEMENTS, IF ANY, AS SHALL HAVE BEEN
REASONABLY REQUESTED BY THE TITLE COMPANY IN ORDER TO ISSUE THE TITLE POLICY TO
THE BUYERS AND TO CONSUMMATE THE CLOSING.

 

4.4.         Deliveries by the Buyers.  At the Closing, the Buyers will deliver
the following to the Seller Parties:

 

(A)           THE PURCHASE PRICE BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE
FUNDS, TOGETHER WITH ANY AMOUNTS FOR WHICH THE BUYERS ARE LIABLE PURSUANT TO
SECTION 3.4;

 

18

--------------------------------------------------------------------------------

 

(B)           THE ASSIGNMENT AND ASSUMPTION AGREEMENT, DULY EXECUTED BY THE
BUYERS AND IN RECORDABLE FORM IF NECESSARY;

 

(C)           EACH OTHER ANCILLARY AGREEMENT REQUIRED TO BE DELIVERED UNDER THIS
AGREEMENT, DULY EXECUTED BY THE BUYERS AS APPLICABLE;

 

(D)           A CERTIFICATE FROM AN AUTHORIZED OFFICER OF EACH OF THE BUYERS
REFERRED TO IN SECTION 8.3(D); AND

 

(E)           SUCH OTHER AGREEMENTS, DOCUMENTS, INSTRUMENTS AND WRITINGS AS ARE
REQUIRED TO BE DELIVERED BY THE BUYERS AT OR PRIOR TO THE CLOSING DATE PURSUANT
TO THIS AGREEMENT OR OTHERWISE REQUIRED IN CONNECTION HEREWITH.

 

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES

 

The Seller Parties jointly and severally represent and warrant to the Buyers,
except as set forth on the corresponding sections of the Seller Parties’
Schedules, as follows:

 

5.1.         Organization; Qualification.  Each of the Seller Parties is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware.  Each of the Sellers has all requisite
limited liability company power and authority to own, lease and operate its
respective properties and to carry out its respective business as is now being
conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its assets and properties makes such qualification necessary (including Indiana,
as applicable), except where the failure to have such power and authority, or to
be so qualified or in good standing, would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.  The Sellers
have made available to the Buyers complete and correct copies of the Sellers’
respective Certificates of Formation and Limited Liability Company Agreements,
each as currently in effect.

 

5.2.         Authority Relative to this Agreement.  Each of the Seller Parties
has full limited liability company power and authority to execute and deliver
this Agreement and, as of the Closing, will have full limited liability company
power and authority to execute and deliver the Ancillary Agreements, as
applicable, and to consummate the transactions contemplated hereby and thereby. 
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been, and, as of the Closing, the
execution and delivery of the Ancillary Agreements and the consummation of the
transactions contemplated thereby will have been, duly and validly authorized by
the Boards of Managers of each of the Seller Parties, and no other limited
liability company proceedings on the part of the Seller Parties are necessary to
authorize this Agreement or, as of the Closing, the Ancillary Agreements, as
applicable, or to consummate the transactions contemplated hereby and thereby. 
This Agreement has been, and, as of the Closing, the Ancillary Agreements, as
applicable, will be, duly and validly executed and delivered by the Seller
Parties, as applicable.  Assuming that this Agreement and, as of the Closing,
the Ancillary Agreements constitute valid and binding agreements of the
respective Buyers, subject to receipt of the Sellers Required Regulatory
Approvals and the Buyers Regulatory Required Approvals, this Agreement
constitutes, and the Ancillary Agreements will

 

19

--------------------------------------------------------------------------------

 

constitute, valid and binding agreements of the Seller Parties, enforceable
against the Seller Parties in accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles (the “Bankruptcy and Equity Exception”).

 

5.3.         Capitalization and Other Matters.  AESC owns, beneficially and of
record, all of the issued and outstanding limited liability company interests in
the Sellers, free and clear of all Encumbrances, other than Encumbrances
pursuant to the Existing Debt Documents.  Neither of the Sellers has any equity
or other investment interest in any other Person.

 

5.4.         Consents and Approvals; No Violation.

 

(A)           OTHER THAN OBTAINING THE SELLERS REQUIRED REGULATORY APPROVALS AND
THE BUYERS REQUIRED REGULATORY APPROVALS, AND EXCEPT AS SET FORTH ON
SCHEDULE 5.4(A), NEITHER THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND, ON
THE CLOSING DATE, THE ANCILLARY AGREEMENTS, AS APPLICABLE, BY THE SELLER PARTIES
NOR THE SALE BY THE SELLERS OF THE ACQUIRED ASSETS PURSUANT TO THIS AGREEMENT OR
PERFORMANCE BY THE SELLER PARTIES UNDER THIS AGREEMENT OR THE ANCILLARY
AGREEMENTS, AS APPLICABLE, WILL (I) CONFLICT WITH OR RESULT IN ANY BREACH OF ANY
PROVISION OF THE RESPECTIVE CERTIFICATES OF FORMATION OR LIMITED LIABILITY
COMPANY AGREEMENTS OF THE SELLER PARTIES; (II) REQUIRE ANY CONSENT, APPROVAL,
AUTHORIZATION OR PERMIT OF, OR FILING WITH OR NOTIFICATION TO, ANY GOVERNMENTAL
ENTITY, EXCEPT (A) WHERE THE FAILURE TO OBTAIN SUCH CONSENT, APPROVAL,
AUTHORIZATION OR PERMIT, OR TO MAKE SUCH FILING OR NOTIFICATION, WOULD NOT,
INDIVIDUALLY OR IN THE AGGREGATE, BE REASONABLY LIKELY TO HAVE A MATERIAL
ADVERSE EFFECT OR (B) FOR THOSE REQUIREMENTS WHICH BECOME APPLICABLE TO THE
SELLERS AS A RESULT OF THE SPECIFIC REGULATORY STATUS OF THE BUYERS (OR ANY OF
THEIR AFFILIATES) OR AS A RESULT OF ANY OTHER FACTS THAT SPECIFICALLY RELATE TO
THE BUSINESS OR THE ACTIVITIES IN WHICH EITHER OF THE BUYERS (OR ANY OF THEIR
AFFILIATES) IS OR PROPOSES TO BE ENGAGED; (III) REQUIRE ANY CONSENT, APPROVAL OR
NOTICE, OR RESULT IN A DEFAULT (WITH OR WITHOUT NOTICE OR LAPSE OF TIME OR BOTH)
(OR GIVE RISE TO ANY RIGHT OF TERMINATION, CANCELLATION OR ACCELERATION), UNDER
ANY OF THE TERMS, CONDITIONS OR PROVISIONS OF ANY NOTE, BOND, MORTGAGE,
INDENTURE, LICENSE, AGREEMENT OR OTHER INSTRUMENT OR OBLIGATION TO WHICH ANY OF
THE SELLER PARTIES IS A PARTY, OTHER THAN THE EXISTING DEBT DOCUMENTS, OR BY
WHICH ANY OF THE SELLER PARTIES MAY BE BOUND, EXCEPT FOR SUCH DEFAULTS (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, BE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT; OR
(IV) VIOLATE ANY LAW OR PERMIT APPLICABLE TO ANY OF THE SELLER PARTIES, OR THEIR
RESPECTIVE ASSETS, WHICH VIOLATION WOULD, INDIVIDUALLY OR IN THE AGGREGATE, BE
REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT; AND WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
COMPLY WITH THE PROVISIONS OF THE EXISTING DEBT DOCUMENTS AND THE SELLER PARTIES
HAVE OBTAINED THE BOARD APPROVAL AND THE APPRAISAL REQUIRED UNDER
SECTION 5.02(E)(V) OF THE CREDIT AGREEMENT.

 

(B)           EXCEPT FOR (I) ANY FILINGS OR APPROVALS REQUIRED UNDER THE FEDERAL
POWER ACT, (II) THE FILINGS BY THE SELLER PARTIES REQUIRED BY THE HSR ACT AND
THE EXPIRATION OR EARLIER TERMINATION OF ALL WAITING PERIODS UNDER THE HSR ACT,
AND (III) THE REQUIRED APPROVALS FROM THE INDIANA UTILITY REGULATORY COMMISSION
(THE “IURC”) (THE FILINGS AND APPROVALS REFERRED TO IN CLAUSES (I) THROUGH
(III) ARE COLLECTIVELY REFERRED TO AS THE “SELLERS REQUIRED REGULATORY
APPROVALS”), NO DECLARATION, FILING OR REGISTRATION WITH, OR NOTICE TO, OR
AUTHORIZATION, CONSENT OR

 

20

--------------------------------------------------------------------------------

 

APPROVAL OF ANY GOVERNMENTAL ENTITY IS NECESSARY FOR THE CONSUMMATION BY THE
SELLER PARTIES OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY THE ANCILLARY
AGREEMENTS, OTHER THAN SUCH DECLARATIONS, FILINGS, REGISTRATIONS, NOTICES,
AUTHORIZATIONS, CONSENTS OR APPROVALS WHICH, IF NOT OBTAINED OR MADE, WOULD NOT,
INDIVIDUALLY OR IN THE AGGREGATE, BE REASONABLY LIKELY TO HAVE A MATERIAL
ADVERSE EFFECT.

 

5.5.         Reports.  Except as set forth in Schedule 5.5, since January 1,
2004, each of the Seller Parties has filed or caused to be timely filed with the
SEC (limited to filings on Form 10-K and Form 10-Q, and any amendments thereof,
with respect to filings under the Exchange Act) and the Federal Energy
Regulatory Commission (the “FERC”), as the case may be, all material forms,
statements, reports and documents (including all exhibits, amendments and
supplements required to be filed by them) with respect to the business and
operations of the Sellers under each of the Federal Power Act and the Holding
Company Act and the respective rules and regulations thereunder, all of which
complied in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder in effect on the date
each such report was filed, and there are no material misstatements or omissions
in respect of such reports.

 

5.6.         Absence of Certain Changes or Events; No Undisclosed Liabilities.

 

(A)           EXCEPT AS DISCLOSED IN SCHEDULE 5.6(A), SINCE DECEMBER 31, 2004,
EACH OF THE SELLERS HAS CONDUCTED ITS BUSINESS ONLY IN THE ORDINARY COURSE OF
BUSINESS CONSISTENT WITH PAST PRACTICE AND GOOD UTILITY PRACTICE AND THERE HAS
NOT BEEN:  (I) ANY MATERIAL ADVERSE EFFECT; (II) ANY DAMAGE, DESTRUCTION OR
CASUALTY LOSS WITH RESPECT TO THE ACQUIRED ASSETS, WHETHER COVERED BY INSURANCE
OR NOT, WHICH WOULD, INDIVIDUALLY OR IN THE AGGREGATE, BE REASONABLY LIKELY TO
HAVE A MATERIAL ADVERSE EFFECT; (III) ANY ENTRY INTO ANY AGREEMENT, COMMITMENT
OR TRANSACTION (INCLUDING, WITHOUT LIMITATION, ANY INDEBTEDNESS, CAPITAL
EXPENDITURE OR CAPITAL FINANCING) BY ANY OF THE SELLER PARTIES, WHICH IS
MATERIAL TO THE BUSINESS OR OPERATIONS OF THE SELLERS; (IV) ANY CHANGE IN
FINANCIAL OR TAX ACCOUNTING METHODS, PRINCIPLES OR PRACTICES, OF THE SELLERS, OR
WITH RESPECT TO ANY OF THE ACQUIRED ASSETS, EXCEPT AS REQUIRED UNDER GAAP;
(V) ANY ELECTION, REVOCATION, OR AMENDMENT OF ANY TAX ELECTION OF THE SELLERS OR
WITH RESPECT TO ANY OF THE ACQUIRED ASSETS; (VI) ANY FILING OF ANY AMENDED TAX
RETURN OF THE SELLERS OR WITH RESPECT TO ANY OF THE ACQUIRED ASSETS; (VII) AN
ENTRY INTO ANY CLOSING AGREEMENT AFFECTING ANY TAX LIABILITY OR REFUND OF THE
SELLERS OR WITH RESPECT TO ANY OF THE ACQUIRED ASSETS; OR (VIII) A SETTLEMENT OR
COMPROMISE OF ANY TAX LIABILITY OR REFUND OF THE SELLERS OR WITH RESPECT TO ANY
OF THE ACQUIRED ASSETS.

 

(B)           THERE ARE NO LIABILITIES OF THE SELLER PARTIES RELATING TO THE
WHEATLAND FACILITY OR THE SITE OF A NATURE THAT WOULD BE REQUIRED TO BE ACCRUED
IN ACCORDANCE WITH GAAP ON A BALANCE SHEET OF ANY SELLER PARTY IF SUCH SELLER
PARTY HAD PREPARED SUCH A BALANCE SHEET.

 

5.7.         Indebtedness of the Sellers.  Except for Indebtedness pursuant to
the Existing Debt Documents, neither Seller has any Indebtedness.

 

5.8.         REAL PROPERTY AND RELATED MATTERS.

 

(A)           EXCEPT AS SET FORTH IN SCHEDULE 5.8(A) AND EXCEPT FOR PERMITTED
ENCUMBRANCES, (I) WHEATLAND LLC HOLDS (A) GOOD, VALID AND MARKETABLE TITLE IN
FEE SIMPLE TO

 

21

--------------------------------------------------------------------------------

 

EACH PARCEL INCLUDED IN THE WHEATLAND OWNED REAL PROPERTY AND (B) A VALID
PERPETUAL EASEMENT TO EACH PARCEL SUBJECT TO THE OTHER REAL PROPERTY INTERESTS
THAT ARE APPURTENANT TO THE WHEATLAND OWNED REAL PROPERTY AND (II) LAKE LLC
HOLDS (A) GOOD, VALID AND MARKETABLE TITLE IN FEE SIMPLE TO EACH PARCEL INCLUDED
IN THE LAKE OWNED REAL PROPERTY AND (B) A VALID PERPETUAL EASEMENT TO EACH
PARCEL SUBJECT TO THE OTHER REAL PROPERTY INTERESTS THAT ARE APPURTENANT TO THE
LAKE OWNED REAL PROPERTY.  THE OTHER REAL PROPERTY INTERESTS ARE IN FULL FORCE
AND EFFECT.  THE OWNED REAL PROPERTY IS THE ONLY REAL PROPERTY OWNED BY THE
SELLERS, AND THE OTHER REAL PROPERTY INTERESTS CONSTITUTE ALL EASEMENTS,
RIGHTS-OF-WAY OR OTHER RIGHTS OF THE SELLERS TO USE REAL PROPERTY OWNED BY
PERSONS OTHER THAN THE SELLERS.  THE SITE IS THE ONLY REAL PROPERTY NECESSARY
FOR THE USE AND OPERATION OF THE WHEATLAND FACILITY AS CURRENTLY USED AND
OPERATED.  NO OTHER PERSON HAS, DIRECTLY OR INDIRECTLY, ANY INTEREST IN THE SITE
(WHETHER LEGAL OR EQUITABLE), EXCEPT FOR PERMITTED ENCUMBRANCES, AND NO OTHER
PERSON HAS ANY CONTRACT, OPTION, RIGHT OF FIRST REFUSAL OR OTHER AGREEMENT TO
PURCHASE THE SITE OR ANY PART THEREOF.

 

(B)           TO THE SELLER PARTIES’ KNOWLEDGE, EACH OF THE WHEATLAND OWNED REAL
PROPERTY AND THE LAKE OWNED REAL PROPERTY IS AN INDEPENDENT PROPERTY THAT DOES
NOT RELY ON ANY FACILITIES, IMPROVEMENTS OR EASEMENTS (OTHER THAN PUBLIC
FACILITIES AND PUBLIC ROADS) LOCATED ON ANY PROPERTY OTHER THAN THE SITE TO
FULFILL ANY REQUIREMENT OF ANY GOVERNMENTAL ENTITY, FOR THE FURNISHING TO THE
WHEATLAND OWNED REAL PROPERTY OR THE LAKE OWNED REAL PROPERTY OF ANY ACCESS,
ESSENTIAL BUILDING SYSTEMS OR UTILITIES OR FOR THE USE OR OPERATION OF THE
WHEATLAND FACILITY.

 

(C)           EACH OF THE WHEATLAND OWNED REAL PROPERTY AND THE LAKE OWNED REAL
PROPERTY IS A SEPARATE REAL ESTATE TAX PARCEL, SEPARATE AND APART FROM ANY
PROPERTY OTHER THAN THE OWNED REAL PROPERTY.  THE SELLER PARTIES HAVE NOT
RECEIVED ANY NOTICE OF ANY REAL PROPERTY SPECIAL TAX ASSESSMENTS OR REASSESSMENT
OF THE SITE.  THERE ARE NO UNPAID CHARGES, DEBTS, LIABILITIES OR CLAIMS ARISING
FROM THE CONSTRUCTION, OCCUPANCY, USE OR OPERATION OF THE SITE WHICH COULD GIVE
RISE TO ANY MECHANIC’S OR MATERIALMAN’S OR OTHER STATUTORY LIEN AGAINST THE SITE
OTHER THAN CHARGES INCURRED IN THE ORDINARY COURSE OF BUSINESS AND WHICH SHALL
BE TIMELY PAID.

 

(D)           TO THE SELLER PARTIES’ KNOWLEDGE, TRUE AND ACCURATE COPIES OF THE
EXISTING OWNER’S TITLE INSURANCE POLICY WITH RESPECT TO THE SITE ISSUED TO
WHEATLAND LLC AND LAKE LLC AND THE LENDER’S TITLE INSURANCE POLICY ISSUED TO
CITIBANK, N.A., AS COLLATERAL AGENT, ARE ATTACHED HERETO AS SCHEDULE 5.8(D).

 

(E)           THERE ARE NO TAX PROCEEDINGS PENDING IN RESPECT OF THE SITE.

 

(F)            SCHEDULE 5.8(F) DESCRIBES ALL OF THE LEASES, LICENSES AND
OCCUPANCY AGREEMENTS AFFECTING THE SITE AND TO WHICH EITHER OF THE SELLER
PARTIES IS A PARTY, WHETHER AS LESSOR OR LESSEE (THE “LEASES”).  NO THIRD PARTY
HAS ANY OCCUPANCY OR USE RIGHTS WITH RESPECT TO THE OWNED REAL PROPERTY EXCEPT
PURSUANT TO THE LEASES.  ALL LEASES ARE IN FULL FORCE AND EFFECT.  ALL MATERIAL
OBLIGATIONS OF THE SELLER PARTIES UNDER THE LEASES AND, TO THE SELLER PARTIES’
KNOWLEDGE, ALL MATERIAL OBLIGATIONS OF THE OTHER PARTIES TO THE LEASES UNDER
SUCH LEASES, IN EACH CASE, TO BE PERFORMED THROUGH THE DATE HEREOF HAVE BEEN
PERFORMED IN FULL.  THE SELLER PARTIES HAVE NOT RECEIVED ANY NOTICE OF DEFAULT
BY EITHER OF THE SELLERS UNDER ANY OF THE LEASES.

 

22

--------------------------------------------------------------------------------

 

(G)           THERE ARE NO SURFACE CONDITIONS, AND TO THE SELLER PARTIES’
KNOWLEDGE, THERE ARE NO SUBSURFACE CONDITIONS, UPON THE SITE WHICH CONSTITUTE,
OR WHICH WITH THE PASSING OF TIME MAY CONSTITUTE, A PUBLIC NUISANCE.  TO THE
SELLER PARTIES’ KNOWLEDGE, THE SITE DOES NOT CONTAIN ANY ARCHEOLOGICAL
ARTIFACTS, HUMAN REMAINS OR OTHER HISTORICAL OR ARCHEOLOGICAL MATERIALS WHICH
ARE REGULATED UNDER ANY LAWS.

 

(H)           TO THE SELLER PARTIES’ KNOWLEDGE, THERE ARE NO PUBLIC IMPROVEMENTS
PENDING, CONTEMPLATED OR PROPOSED RELATING TO THE SITE.  NONE OF THE SELLER
PARTIES HAVE COMMENCED ANY IMPROVEMENTS UPON THE OWNED REAL PROPERTY, NOR TO THE
SELLER PARTIES’ KNOWLEDGE, ARE ANY SUCH IMPROVEMENTS CONTEMPLATED OR PROPOSED TO
BE COMMENCED UPON THE OWNED REAL PROPERTY.

 

(I)            THE SITE IS SERVED BY PUBLIC ELECTRIC, TELEPHONE AND UTILITY
SERVICES WHICH ARE MADE AVAILABLE TO THE SITE FROM PUBLIC UTILITY EASEMENTS,
APPURTENANT INSURED EASEMENTS OR PUBLIC RIGHTS-OF-WAY.  ALL SUCH UTILITIES ARE
ADEQUATE AND HAVE SUFFICIENT CAPACITY FOR OPERATION AND USE OF THE WHEATLAND
FACILITY AS CURRENTLY OPERATED AND USED AND FOR COMPLIANCE WITH THE ASSUMED
CONTRACTS.

 

(J)            (I) THE OBLIGATIONS OF THE SELLERS WITH REGARD TO ALL APPLICABLE
COVENANTS, EASEMENTS AND RESTRICTIONS AFFECTING THE SITE HAVE BEEN AND ARE BEING
PERFORMED IN A PROPER AND TIMELY MANNER BY THE SELLERS, EXCEPT FOR SUCH MATTERS
WHICH WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, BE REASONABLY LIKELY TO HAVE
A MATERIAL ADVERSE EFFECT, (II) THE SELLERS ARE NOT CURRENTLY IN DEFAULT UNDER
ANY AGREEMENT, ORDER, JUDGMENT OR DECREE RELATING TO THE SITE, AND NO CONDITIONS
OR CIRCUMSTANCES EXIST WHICH, WITH THE GIVING OF NOTICE OR PASSAGE OF TIME,
WOULD CONSTITUTE A DEFAULT OR BREACH WITH RESPECT TO ANY SUCH AGREEMENT, ORDER,
JUDGMENT OR DECREE, EXCEPT FOR SUCH DEFAULT OR BREACH WHICH WOULD NOT,
INDIVIDUALLY OR IN THE AGGREGATE, BE REASONABLY LIKELY TO HAVE A MATERIAL
ADVERSE EFFECT, (III) THE SELLERS HAVE RECEIVED NO NOTICE OF, AND ARE NOT
OTHERWISE AWARE OF, ANY CLAIMS, CAUSES OF ACTION, LAWSUITS OR LEGAL PROCEEDINGS
PENDING OR THREATENED REGARDING THE OWNERSHIP, USE OR POSSESSION OF THE SITE
INCLUDING, WITHOUT LIMITATION, CONDEMNATION OR SIMILAR PROCEEDINGS AND (IV) THE
SELLERS HAVE RECEIVED NO NOTICE OF ANY VIOLATION OF ANY ZONING, SUBDIVISION,
PLATTING, BUILDING, FIRE, INSURANCE, SAFETY, HEALTH, ENVIRONMENTAL OR OTHER
APPLICABLE LAWS, ORDINANCES OR REGULATIONS (WHETHER RELATED TO THE SITE OR THE
OCCUPANCY THEREOF).

 

(K)           THE WHEATLAND FACILITY IS LOCATED ENTIRELY ON THE OWNED REAL
PROPERTY (OTHER THAN IMPROVEMENTS REQUIRED TO CONNECT THE WHEATLAND FACILITY
WITH THE ELECTRIC TRANSMISSION GRID, NATURAL GAS PIPELINES AND WATER RESERVES,
WHICH ARE PROPERLY LOCATED ON REAL PROPERTY SUBJECT TO THE OTHER REAL PROPERTY
INTERESTS).

 

5.9.         Insurance.  All material policies of fire, liability, worker’s
compensation and other forms of insurance owned or held by the Seller Parties or
their Affiliates that insure any of the Acquired Assets are in full force and
effect, subject to the terms of each policy, all premiums with respect thereto
have been paid (other than retroactive premiums which may be payable with
respect to comprehensive general liability and worker’s 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.  During the past 12 months, the Seller
Parties or their Affiliates have not been refused any insurance with

 

23

--------------------------------------------------------------------------------

 

respect to the Acquired Assets nor has such coverage been limited by any
insurance carrier to which Seller Parties or their Affiliates has applied for
any such insurance or with which it has carried insurance.

 

5.10.       Environmental Matters.

 

(A)           EXCEPT AS SET FORTH IN SCHEDULE 5.10(A), AND EXCEPT FOR SUCH
MATTERS THAT WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, BE REASONABLY LIKELY
TO HAVE A MATERIAL ADVERSE EFFECT:

 

(I)            THE SELLERS HAVE OBTAINED ALL PERMITS, LICENSES, REGISTRATIONS,
EXEMPTIONS AND OTHER AUTHORIZATIONS WHICH ARE REQUIRED UNDER THE ENVIRONMENTAL
LAWS FOR THE OWNERSHIP, USE AND OPERATION OF THE WHEATLAND FACILITY AND THE
OWNED REAL PROPERTY AS PRESENTLY OPERATED (“ENVIRONMENTAL PERMITS”).  ALL SUCH
ENVIRONMENTAL PERMITS ARE IN EFFECT, AND, TO THE SELLER PARTIES’ KNOWLEDGE, NO
APPEAL OR ANY OTHER ACTION IS PENDING TO REVOKE ANY SUCH ENVIRONMENTAL PERMITS. 
THE SELLERS HAVE FILED (OR WILL HAVE FILED BY THE CLOSING DATE) ALL APPLICATIONS
NECESSARY TO RENEW ANY NECESSARY ENVIRONMENTAL PERMITS IN A TIMELY FASHION.

 

(II)           THE SELLERS HAVE BEEN AND ARE IN COMPLIANCE WITH APPLICABLE
ENVIRONMENTAL LAWS AND ENVIRONMENTAL PERMITS.  TO THE SELLER PARTIES’ KNOWLEDGE,
PREDECESSOR OWNERS AND OPERATORS OF THE WHEATLAND FACILITY AND THE OWNED REAL
PROPERTY WERE IN COMPLIANCE WITH APPLICABLE ENVIRONMENTAL LAWS AND ENVIRONMENTAL
PERMITS.

 

(III)          THE SELLERS HAVE MADE AVAILABLE TO THE BUYERS COMPLETE COPIES OF
ALL THE ENVIRONMENTAL STUDIES ON THE WHEATLAND FACILITY OR THE OWNED REAL
PROPERTY IN THEIR POSSESSION, INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL AUDIT
REPORTS AND PHASE I OR PHASE II ENVIRONMENTAL ASSESSMENTS, IF ANY.

 

(IV)          THERE IS NO CIVIL, CRIMINAL OR ADMINISTRATIVE ACTION, SUIT,
DEMAND, CLAIM, HEARING, NOTICE OF VIOLATION, INVESTIGATION, PROCEEDING, NOTICE
OR DEMAND LETTER EXISTING OR PENDING THAT HAS NOT BEEN RESOLVED WITH NO FURTHER
OBLIGATIONS ON THE PART OF THE SELLERS OR, TO THE SELLER PARTIES’ KNOWLEDGE,
THREATENED, RELATING TO THE WHEATLAND FACILITY OR THE SITE PURSUANT TO ANY
ENVIRONMENTAL LAWS OR RELATING HAZARDOUS SUBSTANCES, INCLUDING, WITHOUT
LIMITATION, CLAIMS FOR PERSONAL OR BODILY INJURY WITH RESPECT TO EXPOSURE TO
HAZARDOUS SUBSTANCES.

 

(V)           THE SELLERS HAVE NOT, AND, TO THE SELLER PARTIES’ KNOWLEDGE, NO
OTHER PERSON HAS RELEASED ANY HAZARDOUS SUBSTANCES ON, BENEATH OR ADJACENT TO
THE SITE, EXCEPT FOR RELEASES OF HAZARDOUS SUBSTANCES THAT ARE NOT LIKELY TO
RESULT IN A CLAIM AGAINST THE SELLERS.  TO THE SELLER PARTIES’ KNOWLEDGE, THERE
ARE NO HAZARDOUS SUBSTANCES PRESENT ON, BENEATH OR ADJACENT TO THE SITE, EXCEPT
FOR SUCH HAZARDOUS SUBSTANCES THAT ARE NOT LIKELY TO RESULT IN A CLAIM AGAINST
THE SELLERS.

 

(VI)          TO THE SELLER PARTIES’ KNOWLEDGE, NO RELEASE OR RESPONSE ACTION
HAS OCCURRED AT THE SITE THAT COULD REASONABLY BE EXPECTED TO RESULT IN THE
ASSERTION OR CREATION OF AN ENCUMBRANCE ON THE SITE BY ANY GOVERNMENTAL ENTITY
WITH RESPECT THERETO, NOR HAS

 

24

--------------------------------------------------------------------------------

 

ANY SUCH ASSERTION OF AN ENCUMBRANCE BEEN MADE BY ANY GOVERNMENTAL ENTITY WITH
RESPECT THERETO.

 

(VII)         NEITHER OF THE SELLERS HAS ENTERED INTO OR AGREED TO ANY
OUTSTANDING CONSENT DECREE OR ORDER, OR IS SUBJECT TO ANY OUTSTANDING JUDGMENT,
JUDICIAL OR ADMINISTRATIVE DECREE OR JUDICIAL OR ADMINISTRATIVE ORDER RELATING
TO COMPLIANCE WITH ANY ENVIRONMENTAL LAW OR TO RESPONSE ACTIONS TO ADDRESS A
RELEASE OR THREATENED RELEASE OF HAZARDOUS SUBSTANCES UNDER ANY ENVIRONMENTAL
LAW.

 

(B)           THE SELLER PARTIES HAVE LISTED THE CURRENT ENVIRONMENTAL PERMITS
IN SCHEDULE 5.10(B), AND HAVE MADE AVAILABLE TO THE BUYERS A COMPLETE COPY OF
EACH ENVIRONMENTAL PERMIT.

 

(C)           SCHEDULE 5.10(C) LISTS ALL EMISSION ALLOWANCES FOR 2005 AND FUTURE
YEARS THAT HAVE BEEN (I) ISSUED OR ALLOCATED BY THE U.S. ENVIRONMENTAL
PROTECTION AGENCY OR THE INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT
SPECIFICALLY FOR THE WHEATLAND FACILITY OR (II) PURCHASED BY THE SELLERS
SPECIFICALLY FOR THE WHEATLAND FACILITY ON OR BEFORE THE DATE HEREOF.

 

(D)           THE REPRESENTATIONS AND WARRANTIES MADE IN THIS SECTION 5.10 ARE
THE EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES RELATING TO
ENVIRONMENTAL LAWS, ENVIRONMENTAL PERMITS OR OTHER ENVIRONMENTAL MATTERS, AND NO
OTHER PROVISION OF THIS AGREEMENT SHALL BE DEEMED TO CONSTITUTE, DIRECTLY OR
INDIRECTLY, A REPRESENTATION OR WARRANTY WITH RESPECT TO SUCH MATTERS.

 

5.11.       Labor and Employment Matters.  With respect to the business or
operations of the Sellers, except for such matters that would not, individually
or in the aggregate, be reasonably likely to have a Material Adverse Effect: 
(a) each of the Seller Parties is in compliance with all applicable Laws
respecting employment and employment practices, terms and conditions of
employment, health and safety, and wages and hours; (b) none of the Seller
Parties has received notice of any charge or complaint against it pending before
the Equal Employment Opportunity Commission, the National Labor Relations Board
or any other Governmental Entity regarding an unlawful employment practice;
(c) there is no labor strike, slowdown or work stoppage actually pending or, to
the Seller Parties’ Knowledge, threatened against or affecting the Seller
Parties and none of the Seller Parties has experienced any strike, slowdown or
work stoppage in the past 5 years; (d) none of the Seller Parties has received
notice that any representation petition respecting the employees of the Seller
Parties has been filed with the National Labor Relations Board, no union claims
to represent any of the employees of the Seller Parties, and there has been no
labor union, prior to the date hereof, organizing or attempting to organize any
employees of the Seller Parties into one or more collective bargaining units;
(e) there are no complaints, lawsuits, arbitrations or other proceedings pending
or, to the Seller Parties’ Knowledge, threatened by or on behalf of any present
or former employee of the Seller Parties arising out of or relating in any way
to any present or former employee’s hiring by, employment with or separation
from the Seller Parties, specifically including, without limitation, any claim
for breach of any express or implied contract of employment, wrongful
termination or infliction of emotional distress, or any claim under any
applicable Law respecting employment, employment practices, terms and conditions
of employment, health and safety, and wages and hours; and (f) to the Seller
Parties’ Knowledge, no Sellers’ Employee, during the course of and

 

25

--------------------------------------------------------------------------------

 

as part of his or her employment with the Sellers or their Affiliates, has been
exposed to Hazardous Substances exceeding permissible exposure limits
established by applicable Law.  Schedule 5.11 lists the three employees of the
Seller Parties or their Affiliates who provide services on a full time basis for
the Wheatland Facility as of the date hereof (collectively, the “Sellers’
Employees”) and identifies the employer of each such Sellers’ Employee.

 

5.12.       ERISA; Employee Benefit Plans.

 

(A)           SCHEDULE 5.12(A) LISTS ALL DEFERRED COMPENSATION, INCENTIVE
COMPENSATION, BONUS, VACATION, EQUITY COMPENSATION AND EQUITY BASED OR OWNERSHIP
PLANS, POLICIES, PROGRAMS, AGREEMENTS AND ARRANGEMENTS, ALL OTHER “EMPLOYEE
BENEFIT PLANS,” WITHIN THE MEANING OF SECTION 3(3) OF ERISA AND ALL EMPLOYMENT,
RETENTION, CONSULTING, CHANGE IN CONTROL, TERMINATION OR SEVERANCE AGREEMENTS,
PROGRAMS, PLANS, POLICIES OR ARRANGEMENTS, COVERING THE SELLERS’ EMPLOYEES,
INCLUDING SUCH POLICIES OF ANY PERSON THAT IS CONSIDERED A SINGLE EMPLOYER WITH
ANY OF THE SELLER PARTIES UNDER SECTION 4001 OF ERISA OR SECTION 414 OF THE CODE
(EACH, AN “ERISA AFFILIATE”) (COLLECTIVELY, THE “BENEFIT PLANS”).  TRUE AND
COMPLETE COPIES OF ALL BENEFIT PLANS (OR IF THE BENEFIT PLAN IS NOT A WRITTEN
PLAN, A DESCRIPTION THEREOF), ANY RELATED TRUST OR OTHER FUNDING VEHICLE, THE
LATEST VERSION OF ANY REPORTS OR SUMMARIES REQUIRED UNDER ERISA OR THE CODE
INCLUDING, WITHOUT LIMITATION, SUMMARY PLAN DESCRIPTIONS AND SUMMARY MATERIAL
MODIFICATIONS, A COPY OF THE THREE MOST RECENT ANNUAL REPORTS AND ACTUARIAL
REPORTS, TO THE EXTENT REQUIRED BY ERISA OR THE CODE, AND THE MOST RECENT
DETERMINATION LETTER RECEIVED FROM THE INTERNAL REVENUE SERVICE (THE “IRS”) WITH
RESPECT TO EACH BENEFIT PLAN INTENDED TO QUALIFY UNDER SECTION 401 OF THE CODE
HAVE BEEN PROVIDED OR MADE AVAILABLE TO THE BUYERS.  THE SELLERS HAVE HAD NO
EMPLOYEES AND DO NOT SPONSOR, MAINTAIN OR CONTRIBUTE TO BENEFIT PLANS ON BEHALF
OF THE SELLERS’ EMPLOYEES.

 

(B)           ALL BENEFIT PLANS THAT ARE SUBJECT TO ERISA, OTHER THAN
“MULTIEMPLOYER PLANS” WITHIN THE MEANING OF SECTIONS 3(37) OR 4001(A)(3) OF
ERISA, ARE IN COMPLIANCE WITH THEIR TERMS, AND IN MATERIAL COMPLIANCE WITH ALL
APPLICABLE LAWS, INCLUDING, WITHOUT LIMITATION, THE CODE AND ERISA.  EACH
BENEFIT PLAN INTENDED TO BE QUALIFIED WITHIN THE MEANING OF SECTION 401(A) OF
THE CODE HAS RECEIVED A CURRENT FAVORABLE IRS DETERMINATION LETTER WITH RESPECT
TO SUCH QUALIFICATIONS.  NONE OF THE SELLER PARTIES OR, TO THE SELLER PARTIES’
KNOWLEDGE, ANY ERISA AFFILIATE HAS ENGAGED IN A TRANSACTION WITH RESPECT TO ANY
BENEFIT PLAN THAT COULD SUBJECT ANY OF THE SELLER PARTIES TO A TAX OR PENALTY
IMPOSED BY EITHER SECTIONS 4975 OR 4976 OF THE CODE OR SECTION 409 OR 502(I) OF
ERISA IN AN AMOUNT THAT WOULD BE MATERIAL.

 

(C)           THERE HAS BEEN NO AMENDMENT TO, OR ANNOUNCEMENT OR OTHER
COMMUNICATION BY THE SELLER PARTIES OR, TO THE SELLER PARTIES’ KNOWLEDGE, ANY
ERISA AFFILIATE REGARDING ANY CHANGE IN EMPLOYEE PARTICIPATION OR COVERAGE
UNDER, ANY BENEFIT PLAN WHICH WOULD INCREASE MATERIALLY THE BENEFITS PROVIDED TO
THE SELLERS’ EMPLOYEES UNDER SUCH PLAN ABOVE THE LEVEL OF THE BENEFITS PROVIDED
THEREUNDER FOR THE MOST RECENT FISCAL YEAR.  NEITHER THE EXECUTION OF THIS
AGREEMENT NOR THE CONSUMMATION OF ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THE TERMINATION OF EMPLOYMENT AFTER THE DATE HEREOF WILL ENTITLE ANY SELLERS’
EMPLOYEES TO SEVERANCE PAY OR OTHER PAYMENTS (BUT NOT INCLUDING ANY PAYMENTS
MADE PURSUANT TO ANY TAX-QUALIFIED RETIREMENT PLAN), ANY INCREASE IN SEVERANCE
PAY OR OTHER PAYMENTS, OR ANY ACCELERATION OF VESTING OF ANY PAYMENT OR BENEFIT,
OR WOULD RESULT IN ANY FUNDING OF ANY PAYMENT OR BENEFIT BY THE SELLER PARTIES.

 

26

--------------------------------------------------------------------------------

 

(d)                                 Neither the Seller Parties nor any ERISA
Affiliate (i) has failed to fulfill its obligations under the minimum funding
requirements of section 302 of ERISA, to the extent applicable; or (ii) has any
actual or potential withdrawal liability resulting from a complete or partial
withdrawal (as defined in sections 4203 and 4205 of ERISA) from any
multiemployer plan (as defined in sections 3(37) and 4001(a)(3) of ERISA).  No
Liability under Title IV of ERISA has been incurred by the Seller Parties or any
ERISA Affiliate that has not been satisfied in full as of the date of this
Agreement.  No event has occurred in connection with any of the employee benefit
plan of the Seller Parties or any ERISA Affiliate that has, will or may result
in any Liability for which any transferee of assets of the Sellers may be
responsible, whether by operation of Law, by contract or otherwise.  The
transactions contemplated by this Agreement will not, either alone or in
combination with any other event or events, cause the Buyers to incur any
Liabilities under Title IV of ERISA or section 4980B of the Code.

 

(e)                                  To the Seller Parties’ Knowledge, none of
the Seller Parties nor any ERISA Affiliate has used the services of workers
provided by third party contract labor suppliers, temporary employees, “leased
employees” (as that term is defined in section 414(n) of the Code), or
independent contractors to an extent that would reasonably be expected to result
in the disqualification of any of the Benefit Plans or the imposition of
penalties or excise taxes with respect to the Benefit Plans by the IRS, the
Department of Labor, or the Pension Benefit Guaranty Corporation.

 

(f)                                    Except as set forth in Schedule 5.12(f),
there are no pending or threatened claims by or on behalf of any Benefit Plan,
by any employee, beneficiary or alternate payee against any such Benefit Plan,
or otherwise involving any such Benefit Plan (other than routine claims for
benefits) against the Seller Parties or any ERISA Affiliate.

 

5.13.                     Contracts.

 

(a)                                  Schedule 5.13(a) lists the following
agreements and contracts to which any of the Seller Parties (limited in the case
of AESC, to the extent such agreements or contracts are included in the
definition of AESC Transferred Assets) is a party or by which either of the
Sellers or the Wheatland Facility is bound (the “Material Contracts”):

 

(i)                                     gas pipeline interconnection agreements,
gas supply agreements, gas purchase and sale agreements, and gas transportation
agreements;

 

(ii)                                  power purchase agreements, electricity
transmission agreements, and electricity interconnection agreements;

 

(iii)                               swap, exchange, commodity option or hedging
agreements;

 

(iv)                              material operating and maintenance agreements;

 

(v)                                 material equipment lease, purchase and sale
contracts;

 

(vi)                              any contract (i) requiring known or liquidated
expenditures or payments by any of the Seller Parties in excess of $100,000 in
any calendar year or (ii) that cannot

 

27

--------------------------------------------------------------------------------

 

be terminated without penalty by the Seller Party that is a party to such
contract upon 90 days’ notice or less;

 

(vii)                           any pending sale or lease of real property of
either Seller or any pending sale or lease of personal property of either Seller
(other than sales of electric energy in the ordinary course of business) in
excess of $100,000;

 

(viii)                        any contract that contains a covenant not to
compete applicable to any Seller Party;

 

(ix)                                any other agreement material to either
Seller, the Acquired Assets or the Wheatland Facility; and

 

(x)                                   any amendment relating to any of the
foregoing.

 

(b)                                 The Seller Parties have provided or made
available to the Buyers true, correct and complete copies of all the Material
Contracts.

 

(c)                                  Each of the Material Contracts
(i) constitutes a valid and binding obligation of the respective Seller Parties
and, to the Seller Parties’ Knowledge, constitutes a valid and binding
obligation of the other parties thereto, (ii) is in full force and effect, and
(iii) except as set forth in Schedule 5.13(c), may be transferred to the Buyers
pursuant to this Agreement, without the consent of, or notice to, any third
party.

 

(d)                                 No Seller Party and, to the Seller Parties’
Knowledge, no other party to any of the Material Contracts, is in breach or
default under, and, to the Seller Parties’ Knowledge, no event has occurred
that, with notice or lapse of time, would constitute a breach or default or
permit termination, modification or acceleration of, any of the Material
Contracts, except for such breaches, defaults or events as to which requisite
waivers have been, or prior to the Closing will have been, obtained or that
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect.

 

5.14.                     Legal Proceedings.  Since December 31, 2004, there
have been no claims, actions, proceedings or investigations pending or, to the
Seller Parties’ Knowledge, threatened in writing against any Seller before any
Governmental Entity, which (a) involve in the aggregate an amount greater than
$100,000 or (b) if adversely determined would, individually or in the aggregate,
be reasonably likely to have a Material Adverse Effect.  Neither the Sellers,
the Acquired Assets nor the Assumed Liabilities are subject to any outstanding
judgments, rules, orders, writs, injunctions or decrees of any Governmental
Authority relating specifically to the Sellers, the Acquired Assets or the
Assumed Liabilities that would, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect.

 

5.15.                     Compliance with Permits and Laws.

 

(a)                                  Each of the Sellers has all material
permits, subdivision approvals, variances, licenses, franchises and other
governmental authorizations, consents and approvals (other than with respect to
Environmental Laws which are addressed in Section 5.10) (collectively,
“Permits”) necessary to operate its respective businesses as presently
conducted.

 

28

--------------------------------------------------------------------------------

 

Except as set forth in Schedule 5.15(a), no Seller has received any notification
that it or the Site is in material violation of any Permits or Laws applicable
to it or the Acquired Assets.  Each Seller and the Site is in material
compliance with all Permits and Laws applicable to it or the Acquired Assets.

 

(b)                                 Schedule 5.15(b) lists all Permits obtained
by the Sellers in connection with the ownership or operation of the Wheatland
Facility and the Site and all consent orders to which any Seller is subject. 
The Seller Parties have provided or made available to the Buyers true, correct
and complete copies of all Permits and consent orders.  All such Permits have
become final and nonappealable and, except as would, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect, are valid and
in full force and effect.

 

5.16.                     Regulation; Sole Purpose.

 

(a)                                  Wheatland LLC is an “exempt wholesale
generator” as defined by the Holding Company Act and is authorized by the FERC
to sell electric energy at market-based rates pursuant to an approved rate
schedule on file with the FERC.  The Wheatland Facility is an “eligible
facility” as defined in the Holding Company Act.  Neither Seller is subject to
regulation as a public utility, public service company or an electric company or
similar entity subject to regulation by a Governmental Authority.

 

(b)                                 Wheatland LLC has not conducted, and is not
conducting, any business or operations, other than the development,
construction, ownership, operation and maintenance of the Wheatland Facility,
including the generation and sale of electric energy at wholesale from the
Wheatland Facility, and the ownership of the Wheatland Owned Real Property.

 

5.17.                     Tax Matters.

 

(a)                                  Except as set forth in Schedule 5.17,
(i) all material Tax Returns required to be filed on or before the Closing Date,
by or with respect to any Seller or any of the Acquired Assets, have been or
will be timely filed on or before the Closing Date in all jurisdictions in which
such Tax Returns are required to be filed; (ii) such Tax Returns are or will be
true, correct, and complete in all material respects; and (iii) all Taxes shown
to be due on such Tax Returns have been or will be timely paid in full.

 

(b)                                 No statute of limitations of any
jurisdiction regarding the assessment or collection of any Tax of either Seller
or with respect to any of the Acquired Assets has been extended or waived, which
extension or waiver remains in effect.

 

(c)                                  There are no audits, claims, assessments,
levies, administrative proceedings, or lawsuits pending, or to the Seller
Parties’ Knowledge, threatened against either Seller or with respect to any of
the Acquired Assets by any taxing authority.

 

(d)                                 The Sellers have each qualified as, and been
treated as, an entity disregarded as separate from its owner for federal, state
and local income Tax purposes at all times since the date of its formation.

 

29

--------------------------------------------------------------------------------

 

(e)                                  There are no Encumbrances for Taxes on any
of the Acquired Assets, except for Permitted Encumbrances.

 

(f)                                    To the Seller Parties’ Knowledge, no
claim has ever been made by an authority in a jurisdiction where a Tax Return is
not filed by, or with respect to, either Seller or any of the Acquired Assets,
that either Seller or any of the Acquired Assets are or may be subject to
taxation in that jurisdiction.

 

(g)                                 The Sellers have each withheld and paid all
material Taxes required to have been paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, member or other third
party.

 

(h)                                 True and complete copies of all Income Tax
Returns filed by either Seller, or any Tax Returns (other than Income Tax
Returns) filed with respect to any of the Acquired Assets, and all written
communications to or from any taxing authority since January 1, 2003 have been
made available to the Buyers for inspection.

 

(i)                                     None of the assets of the Sellers (i) is
required to be treated as “tax-exempt use property” within the meaning of
section 168(h) of the Code, (ii) is subject to the provisions of
section 168(f) of the Code, or (iii) directly or indirectly secures any debt the
interest on which is tax exempt under section 103(a) of the Code.

 

5.18.                     Related Party Matters.  Except as set forth in
Schedule 5.18, neither Seller is party to any agreement, contract, commitment,
transaction or proposed transaction with any of its Affiliates.

 

5.19.                     Assets Other than Real Property Interests.

 

(a)                                  Except as set forth in Schedule 5.19(a),
each of the Seller Parties has good and valid title to all of its respective
properties and assets constituting the Acquired Assets other than the Site (it
being understood that the Site is covered by Section 5.8), in each case free and
clear of all Encumbrances except any Permitted Encumbrances.

 

(b)                                 All the material tangible personal property
of the Sellers has been maintained in all material respects in accordance with
the past practice of the Sellers and Good Utility Practice.  Each item of
material tangible personal property of the Sellers is in all material respects
in good working order, ordinary wear and tear excepted.  All leased personal
property of the Sellers is in all material respects in the condition required of
such property by the terms of the lease applicable thereto during the term of
the lease and upon the expiration thereof.

 

(c)                                  Other than the Acquired Assets and the
Excluded Assets listed in clauses (a) through (g) of Section 2.2, none of the
Seller Parties or their Affiliates owns any material assets relating to the Site
or the Wheatland Facility.

 

5.20.                     Intellectual Property.  The Sellers own, or possess
licenses or other valid rights to use, all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, copyrights, service marks,
service mark rights, trade secrets, applications to register, and registrations
for, the foregoing trademarks, service marks, know-how and other proprietary
rights

 

30

--------------------------------------------------------------------------------

 

and information (collectively, the “Intellectual Property”) necessary in
connection with the business of the Sellers as currently conducted, except where
the failure to possess such rights or licenses or valid rights to use would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect.  The conduct of the businesses of the Sellers as currently
conducted does not infringe upon any Intellectual Property of any third party,
except where such infringement would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect.  No person is infringing
upon any Intellectual Property of the Sellers, except where such infringement
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect.  Except as set forth in Schedule 5.20, the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby will not result in the loss of, or any Encumbrance on, the
rights of the Sellers with respect to the Intellectual Property owned or used by
them, except where such loss or encumbrance would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.

 

5.21.                     Due Diligence Materials.  All of the Due Diligence
Materials that are photostatic, facsimile or electronic copies conform in all
material respects with the original documents.

 

5.22.                     No Knowledge of Certain Conditions.  To the Seller
Parties’ Knowledge, and assuming the accuracy of the Buyers’ representations and
warranties in this Agreement, the parties’ compliance with their obligations
under this Agreement, and the making or obtaining, as applicable, of the Buyers
Required Regulatory Approvals, the Sellers Required Regulatory Approvals and any
other third party consents contemplated herein, no condition or circumstance
exists as of the date of this Agreement that will excuse the Seller Parties from
their timely performance of their obligations under this Agreement.

 

5.23.                     Disclaimer of Other Representations and Warranties.

 

(a)                                  EXCEPT FOR THOSE REPRESENTATIONS AND
WARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE V OR ELSEWHERE IN THIS AGREEMENT
OR THE ANCILLARY AGREEMENTS, THE SELLER PARTIES MAKE NO REPRESENTATIONS OR
WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE ACQUIRED ASSETS,
INCLUDING, WITHOUT LIMITATION, THE SITE OR THE WHEATLAND FACILITY, THE
OPERATIONS OF THE WHEATLAND FACILITY, OR THE PROSPECTS (FINANCIAL AND
OTHERWISE), RISKS AND OTHER INCIDENTS OF THE WHEATLAND FACILITY OR THE ACQUIRED
ASSETS, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO THE ACTUAL OR RATED
GENERATING CAPABILITY OF THE WHEATLAND FACILITY OR THE ABILITY OF THE BUYERS TO
GENERATE OR SELL ELECTRICAL ENERGY.

 

(b)                                 WITHOUT LIMITING THE FOREGOING, AND EXCEPT
FOR THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE V
OR ELSEWHERE IN THIS AGREEMENT OR THE ANCILLARY AGREEMENTS, THE SELLER PARTIES
MAKE NO REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY, USAGE OR SUITABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE ACQUIRED ASSETS OR ANY
PART THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS
THEREIN, WHETHER LATENT OR PATENT, OR COMPLIANCE OF SUCH PROPERTIES OR ASSETS
WITH ANY LAWS, INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LAWS, OR AS TO THE
CONDITION OF THE ACQUIRED ASSETS OR ANY PART THEREOF, OR AS TO THE ABSENCE OF

 

31

--------------------------------------------------------------------------------

 

HAZARDOUS SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY UNDER ENVIRONMENTAL
LAWS WITH RESPECT TO THE ACQUIRED ASSETS.  ANY SUCH OTHER REPRESENTATIONS AND
WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

 

(c)                                  EXCEPT FOR THOSE REPRESENTATIONS AND
WARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE V OR ELSEWHERE IN THIS AGREEMENT
OR THE ANCILLARY AGREEMENTS, THE ACQUIRED ASSETS ARE SOLD “AS IS, WHERE IS” ON
THE CLOSING DATE, AND IN THEIR CONDITION ON THE CLOSING DATE “WITH ALL FAULTS.”

 

(d)                                 WITHOUT LIMITING THE FOREGOING, EXCEPT AS
OTHERWISE SET FORTH IN THIS AGREEMENT OR THE ANCILLARY AGREEMENTS, NO MATERIAL
OR INFORMATION PROVIDED BY OR COMMUNICATIONS MADE BY THE SELLER PARTIES OR THE
SELLER PARTIES’ REPRESENTATIVES, INCLUDING, WITHOUT LIMITATION, ANY INFORMATION
OR MATERIAL CONTAINED IN THE DUE DILIGENCE MATERIALS OR IN THE INFORMATION
MEMORANDUM, WILL CAUSE OR CREATE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO THE
TITLE, CONDITION, VALUE OR QUALITY OF THE ACQUIRED ASSETS.

 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF THE BUYERS

 

The Buyers jointly and severally represent and warrant to the Seller Parties,
except as set forth on the corresponding sections of the Buyers’ Schedules, as
follows:

 

6.1.                            Organization.  PSI Energy is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Indiana.  CG&E is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio.  Each of PSI Energy and CG&E has
all requisite corporate power and authority to own, lease and operate its
properties and to carry out its respective business as is now being conducted,
and is duly qualified and in good standing to do business in each jurisdiction
in which the nature of its business or the ownership or leasing of its assets
and properties makes such qualification necessary, except where the failure to
have such power and authority, or to be so qualified or in good standing, would
not individually or in the aggregate, be reasonably likely to prevent or
materially delay or impair such Buyer’s ability to consummate the transactions
contemplated by this Agreement.  The Buyers have made available to the Seller
Parties complete and correct copies of their respective Articles of
Incorporation and By-Laws, each as currently in effect.

 

6.2.                            Authority Relative to this Agreement.  Each of
the Buyers has full corporate power and authority to execute and deliver this
Agreement and, as of the Closing Date, will have full corporate power and
authority to execute and deliver the Ancillary Agreements, as applicable, and to
consummate the transactions contemplated hereby and thereby.  The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been, and, as of the Closing, the execution and delivery of the
Ancillary Agreements and the consummation of the transactions contemplated
thereby will have been, duly and validly authorized by the Boards of Directors
of each of the Buyers, and no other corporate proceedings on the part of the
Buyers are necessary to authorize this Agreement and, as of the Closing, the
Ancillary Agreements, as applicable, or to consummate the transactions
contemplated hereby or

 

32

--------------------------------------------------------------------------------

 

thereby.  This Agreement has been, and, as of the Closing, the Ancillary
Agreements, as applicable, will have been, duly and validly executed and
delivered by the Buyers, as applicable.  Assuming that this Agreement and, as of
the Closing, the Ancillary Agreements constitute valid and binding agreements of
the respective Seller Parties, subject to receipt of the Sellers Required
Regulatory Approvals and the Buyers Required Regulatory Approvals, this
Agreement constitutes, and the Ancillary Agreements will constitute, valid and
binding agreements of the Buyers, enforceable against the Buyers in accordance
with their respective terms, subject to the Bankruptcy and Equity Exception.

 

6.3.                            Consents and Approvals; No Violation.

 

(a)                                  Other than obtaining the Sellers Required
Regulatory Approvals and the Buyers Required Regulatory Approvals, neither the
execution and delivery of this Agreement and, on the Closing Date, the Ancillary
Agreements, as applicable, by the Buyers nor the purchase by the Buyers of the
Acquired Assets pursuant to this Agreement or performance by the Buyers under
this Agreement or the Ancillary Agreements, as applicable, will (i) conflict
with or result in any breach of any provision of the respective Articles of
Incorporation or By-Laws of the Buyers, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity, except where the failure to obtain such consent, approval, authorization
or permit, or to make such filing or notification, would not, individually or in
the aggregate, be reasonably likely to prevent or materially delay or impair the
Buyers’ ability to consummate the transactions contemplated by this Agreement,
(iii) require any consent, approval or notice, or result in a default (with or
without notice or lapse of time or both) (or give rise to any right of
termination, cancellation or acceleration), under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, agreement, lease
or other instrument or obligation to which any of the Buyers or their respective
Subsidiaries is a party or by which any of the Buyers or their respective
Subsidiaries may be bound, except for such defaults (or rights of termination,
cancellation or acceleration) as to which requisite waivers or consents have
been obtained or which, individually or in the aggregate, are not reasonably
likely to prevent or materially delay or impair the Buyers’ ability to
consummate the transactions contemplated by this Agreement, or (iv) violate any
Law or permit applicable to any of the Buyers, or their respective assets, which
violation would, individually or in the aggregate, be reasonably likely to
prevent or materially delay or impair the Buyers’ ability to consummate the
transactions contemplated by this Agreement.

 

(b)                                 Except for (i) any filings or approvals
under section 203 and section 205 the Federal Power Act (the “FERC Approvals”);
(ii) the filings by the Buyers required by the HSR Act and the expiration or
earlier termination of all waiting periods under the HSR Act; and (iii) subject
to Section 11.16, (A) IURC approval of a certificate of public convenience and
necessity (“CPCN”) and deferred ratemaking treatment for transaction costs,
capital improvement costs, carrying costs and depreciation costs (i.e., return
on and return of) associated with the Acquired Assets consistent with the
Indiana Settlement Agreement and (B) any required approvals from the SEC under
the Holding Company Act (the filings and approvals referred to in clauses
(i) through (iii), collectively, the “Buyers Required Regulatory Approvals”), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of any Governmental Entity is necessary for the consummation
by the Buyers of the transactions contemplated hereby or by the Ancillary
Agreements, other than such declarations, filings,

 

33

--------------------------------------------------------------------------------

 

registrations, notices, authorizations, consents or approvals which, if not
obtained or made, are not reasonably likely to prevent or materially delay or
impair the Buyers’ ability to consummate the transactions contemplated by this
Agreement.

 

(c)                                  On or prior to the date hereof, the Buyers
executed a settlement agreement with the IURC staff and the Indiana Office of
Utility Consumer Counselor concerning both CPCN authority and ratemaking
treatment regarding the Wheatland Facility, a copy of which is attached hereto
as Exhibit E (the “Indiana Settlement Agreement”).

 

6.4.                            Availability of Funds.  Each Buyer has access
to, and at the Closing will have available, sufficient funds to enable it to pay
its portion of the Purchase Price on the terms and conditions of this
Agreement.  The Buyers’ obligations hereunder are not subject to any conditions
regarding the Buyers’ ability to obtain financing for the consummation of the
transactions contemplated hereby.

 

6.5.                            Litigation.  There are no claims, actions,
proceedings or investigations pending or, to the Buyers’ Knowledge, threatened
against or relating to either Buyer before any Governmental Entity, which
question, challenge the validity of, or are reasonably likely to have the effect
of preventing, delaying, making illegal or otherwise interfering with, this
Agreement or the Ancillary Agreements, the transactions contemplated herein or
therein or any action taken or proposed to be taken by the Buyers pursuant
hereto or thereto or in connection with the transactions contemplated herein or
therein.

 

6.6.                            No Knowledge of Certain Conditions.  To the
Buyers’ Knowledge, and assuming the accuracy of the Seller Parties’
representations and warranties in this Agreement, the parties’ compliance with
their obligations under this Agreement, and the making or obtaining, as
applicable, of the Buyers Required Regulatory Approvals, the Sellers Required
Regulatory Approvals and any other third party consents contemplated herein, no
condition or circumstance exists as of the date of this Agreement that will
excuse the Buyers from their timely performance of their obligations under this
Agreement.

 

6.7.         Due Diligence Investigation and Other Acknowledgements.

 

(a)                                  Each of the Buyers acknowledges and agrees
that it has conducted and is relying exclusively upon the Seller Parties’
representations and warranties in this Agreement and any Ancillary Agreement and
its own inspections and investigation in order to satisfy itself as to the
condition and suitability of the business, Inventories, assets, real and
personal properties, Liabilities, results of operations, condition (financial or
otherwise) and prospects of the Wheatland Facility and of the Acquired Assets.

 

(b)                                 Each of the Buyers acknowledges and agrees
that, except as provided in this Agreement and any Ancillary Agreement, the
Seller Parties make no representations or warranties (express, implied, at
common law, statutory or otherwise) with respect to the accuracy or completeness
of the Information Memorandum or the Due Diligence Materials now, previously or
hereafter made available to the Buyers in connection with this Agreement
(including any description of the Wheatland Facility, revenue, price and expense
assumptions, electricity demand forecasts or environmental information), or of
any other information

 

34

--------------------------------------------------------------------------------

 

furnished to the Buyers or the Buyers’ Representatives by the Seller Parties or
the Seller Parties’ Representatives.

 

6.8.                            Disclaimer of Other Representations and
Warranties.  EXCEPT FOR THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH
IN THIS ARTICLE VI OR THE ANCILLARY AGREEMENTS, THE BUYERS MAKE NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED.

 

ARTICLE VII
COVENANTS OF THE PARTIES

 

7.1.                            Conduct of Business.

 

(a)                                  Except as specifically contemplated in this
Agreement, except as described in Schedule 7.1(a), except as required as a
result of any change in Law, except with respect to the Excluded Assets, and
except as necessitated by Good Utility Practices in circumstances where time
does not permit the Seller Parties to obtain the prior written consent of the
Buyers (in which case the Seller Parties shall notify the Buyers promptly after
any such circumstance), during the period from the date of this Agreement to the
Closing Date, each of the Sellers shall, and AESC shall cause each Seller to,
operate its respective business in the usual, regular and ordinary course
consistent with Good Utility Practice and shall use Commercially Reasonable
Efforts to preserve intact its respective business and the goodwill and
relationships with customers, suppliers, Governmental Entities, local
communities and others having dealings with it.  Without limiting the generality
of the foregoing, and, except as specifically contemplated in this Agreement,
except as described in Schedule 7.1(a), except as required as a result of any
change in Law, except with respect to the Excluded Assets, and except as
necessitated by Good Utility Practices in circumstances where time does not
permit the Seller Parties to obtain the prior written consent of the Buyers (in
which case the Seller Parties shall notify the Buyers promptly after any such
circumstance), prior to the Closing Date, without the prior written consent of
the Buyers, which will not be unreasonably withheld or delayed, the Sellers
shall not, and AESC shall not permit the Sellers to, directly or indirectly:

 

(i)                                     amend their respective certificates of
formation or limited liability company agreements;

 

(ii)                                  (A) issue any new limited liability
company interests in the Sellers; (B) grant any stock option, warrant or other
right to purchase limited liability company interests in the Sellers; or
(C) issue any security convertible into limited liability company interests in
the Sellers;

 

(iii)                               (A) except for Permitted Encumbrances,
create, incur, assume or suffer to exist any Indebtedness secured by, or any
Encumbrances on, the Acquired Assets; or (B) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly or indirectly,
contingently or otherwise) for the obligations of any Person;

 

(iv)                              make any material change in the levels of
Inventory customarily maintained by the Sellers, other than consistent with Good
Utility Practice;

 

35

--------------------------------------------------------------------------------

 

(v)                                 sell, lease (as lessor), transfer or
otherwise dispose of, any asset, other than assets used, consumed or replaced in
the ordinary course of business consistent with past practice and Good Utility
Practice;

 

(vi)                              terminate, extend, request or grant a waiver
under, or otherwise amend, in any material respect, any Material Contract or
Lease, or enter into any contract, agreement, commitment or arrangement which,
had it been in effect as of the date hereof, would have constituted a Material
Contract;

 

(vii)                           execute, enter into, terminate or otherwise
amend, in any material respect, (A) any of the Permits or Environmental Permits,
other than routine renewals or (B) any other agreement, order, decree or
judgment relating to any current or new Permits or Environmental Permits;

 

(viii)                        enter into any power sales commitments other than
those on customary terms and market pricing and that have terms that expire on
or before November 20, 2005 or such other date that the parties mutually agree
to be the date on which the Closing is expected to occur;

 

(ix)                                permit the Seller Parties or their
Affiliates to (A) amend or cancel any liability or casualty insurance policies
related to the Acquired Assets or (B) fail to maintain, by self insurance or
with financially responsible insurance companies, insurance in such amounts and
against such risks and losses as was in place as of the date of this Agreement
and as is consistent with Good Utility Practice for the Acquired Assets;

 

(x)                                   enter into any commitment or contract not
addressed in clauses (i) through (ix) above that will be delivered or performed
after the Closing, in an amount greater than $100,000;

 

(xi)                                acquire (including by merger, consolidation
or acquisition of stock or assets) any Person or any division thereof or
material portion of the assets thereof;

 

(xii)                             liquidate, dissolve or wind up either of the
Sellers or commence a voluntary bankruptcy or similar proceeding in respect of
either of the Sellers or appoint a custodian, receiver, liquidator or similar
official or make an assignment for the benefit of creditors or admit in writing
of its inability to pay its debts;

 

(xiii)                          make less than 100% of its Maintenance
Expenditures, unless the projects associated with such expenditures are duly
completed at a price below the cost indicated on Schedule 7.1(a)(xiii), or fail
to make any capital expenditures required in accordance with Good Utility
Practice;

 

(xiv)                         enter into any agreement or arrangement with any
Affiliates other than such agreements and arrangements as are entered into in
the ordinary course of business and which have been negotiated on an
arm’s-length basis and are no less favorable to the Sellers than the Sellers
would have obtained from an unaffiliated third party, and provided that the
Sellers shall have notified the Buyers in writing prior to entering into

 

36

--------------------------------------------------------------------------------

 

any such Affiliate transactions and, further, that the termination date of any
such agreement or arrangement shall be not later than the Closing Date;

 

(xv)                            take any action that alters the regulatory
status of the Sellers, the Site or the Wheatland Facility;

 

(xvi)                         sell, lease, dispose of, transfer or otherwise
convey Emission Allowances issued with respect to the Wheatland Facility,
including the transfer of Emission Allowances to other accounts maintained by
the Sellers or their Affiliates, except to the extent that such transfers do not
result in a breach of the provisions of this Agreement with respect to the
Emission Allowances to be transferred to the Buyers; provided that, in any
event, if the Closing occurs prior to November 30, 2005, the Sellers shall
transfer to the Buyers, in addition to the Emission Allowances to be transferred
to the Buyers as set forth in Section 2.1(b)(viii), additional Emission
Allowances sufficient for the Wheatland Facility to comply with the Indiana NOx
Budget Program for NOx emissions occurring in 2005 up to and including the
Closing Date; provided further, that if the Closing occurs on or after
November 30, 2005, the Sellers shall not be obligated to transfer Emissions
Allowances with a vintage year of 2005 to the Buyers to the extent necessary for
the Sellers to comply with the Indiana NOx Budget Program with respect to the
emissions from the Wheatland Facility; or

 

(xvii)                      enter into any written or oral contract, agreement,
commitment or arrangement with respect to any of the transactions set forth in
the foregoing paragraphs (i) through (xvi).

 

(b)                                 Except as specifically contemplated in this
Agreement, except as described in Schedule 7.1(b), except as required as a
result of any change in Law, except with respect to the Excluded Assets, and
except as necessitated by Good Utility Practices in circumstances where time
does not permit the Seller Parties to obtain the prior written consent of the
Buyers (in which case the Seller Parties shall notify the Buyers promptly after
any such circumstance), during the period from the date of this Agreement to the
Closing Date, AESC shall, with respect to the Sellers and the Wheatland Facility
only, operate its business in the usual, regular and ordinary course consistent
with Good Utility Practice and shall, with respect to the Sellers and the
Wheatland Facility only, use Commercially Reasonable Efforts to preserve intact
its respective business and the goodwill and relationships with customers,
suppliers, Governmental Entities, local communities and others having dealings
with it.  Without limiting the generality of the foregoing, and, except as
specifically contemplated in this Agreement, except as described in
Schedule 7.1(b), except as required as a result of any change in Law, except
with respect to the Excluded Assets, and except as necessitated by Good Utility
Practices in circumstances where time does not permit the Seller Parties to
obtain the prior written consent of the Buyers (in which case the Seller Parties
shall notify the Buyers promptly after any such circumstance), prior to the
Closing Date, without the prior written consent of the Buyers, which will not be
unreasonably withheld or delayed, AESC shall not, and shall not permit the
Sellers or any of their Affiliates to, directly or indirectly:

 

(i)                                     make any change in the compensation
payable or to become payable to any of the Sellers’ Employees (other than normal
recurring adjustments of salaries and

 

37

--------------------------------------------------------------------------------

 

wages payable to the Sellers’ Employees, which adjustments are in the ordinary
course of business consistent with past practice);

 

(ii)                                  enter into or amend any employment,
severance, change in control, retention, consulting, termination or other
compensation-related agreement or arrangement with or with respect to, or make
any loan or advance to, any of the Sellers’ Employees, except for loans
permitted under any 401(k) plan sponsored by any ERISA Affiliate in which the
Sellers’ Employees participate;

 

(iii)                               (A) pay or make any accrual or arrangement
for payment of any pension, profit-sharing, retirement allowance or other
employee benefit pursuant to any existing plan, agreement, policy or arrangement
to any of the Sellers’ Employees, except to the extent AESC or the Sellers are
obligated to do so on the date hereof, (B) adopt or pay, grant, issue,
accelerate or accrue salary or other payments or benefits pursuant to any
pension, profit-sharing, bonus, extra compensation, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, termination, severance pay, retention, retirement or other employee
benefit plan, agreement or arrangement, or any employment or consulting
agreement with or for the benefit of any of the Sellers’ Employees, except to
the extent AESC or the Sellers are obligated to do so on the date hereof, or
(C) amend in any material respect any existing employee benefit plan, agreement
or arrangement in a manner inconsistent with the foregoing, except as required
by applicable Law;

 

(iv)                              hire any new employee to provide services in
connection with the businesses of the Sellers with an annual salary in excess of
$50,000 or terminate the employment of any such employee other than for cause,
or engage any additional consultants or independent contractors or enter into or
extend the term of any consulting or independent contractor relationship;

 

(v)                                 encumber, mortgage, pledge, lease, transfer
or otherwise dispose of the AESC Transferred Assets;

 

(vi)                              take any action which alters the regulatory
status of the Sellers;

 

(vii)                           (A) change any financial or Tax accounting
methods, policies or practices of either Seller or with respect to any of the
Acquired Assets, except as required under GAAP, (B) make, revoke or amend any
Tax election of either Seller or with respect to any of the Acquired Assets,
(C) file any amended Tax Return of either Seller or with respect to any of the
Acquired Assets, (D) enter into any closing agreement affecting any material Tax
liability or refund of either Seller or with respect to any of the Acquired
Assets, (E) settle or compromise any material Tax liability or refund of either
Seller or with respect to any of the Acquired Assets, or (F) extend or waive the
application of any statute of limitations regarding the assessment or collection
of any Tax of either Seller or with respect to any of the Acquired Assets;

 

(viii)                        terminate, extend, request or grant a waiver
under, or otherwise amend, in any material respect, any Material Contract or
Lease, or enter into any contract,

 

38

--------------------------------------------------------------------------------

 

agreement, commitment or arrangement which, had it been in effect as of the date
hereof, would have constituted a Material Contract; or

 

(ix)                                enter into any written or oral contract,
agreement, commitment or arrangement with respect to any of the transactions set
forth in the foregoing paragraphs (i) through (viii).

 

7.2.                            Access to Information.

 

(a)                                  Between the date of this Agreement and the
Closing Date, the Seller Parties will, during ordinary business hours and upon
reasonable notice, (i) give the Buyers and the Buyers’ Representatives
reasonable access to all books, records, personnel, plants, offices and other
facilities and properties of the Seller Parties (limited, in the case of AESC,
to the extent they pertain to the Sellers or otherwise relate directly to this
Agreement, the Ancillary Agreements and the transactions contemplated hereby and
thereby), (ii) permit the Buyers and the Buyers’ Representatives to make such
reasonable inspections thereof as the Buyers may reasonably request,
(iii) furnish the Buyers and the Buyers’ Representatives with such financial and
operating data and other information regarding the Wheatland Facility as the
Buyers may from time to time reasonably request; provided, however, that the
Seller Parties will not be required to create special reports or perform any
studies, and (iv) furnish the Buyers a copy of each material report, schedule or
other document filed or received by it with or from the SEC, FERC or any other
Governmental Entity with respect to the Wheatland Facility; provided, however,
that (A) any such investigation shall be conducted in such manner as not to
unduly interfere with the operation of the Seller Parties’ respective businesses
and operations, (B) none of the Seller Parties shall be required to take any
action which would constitute a waiver of the attorney-client privilege, and
(C) none of the Seller Parties need supply the Buyers with any information which
such Person is under a legal obligation not to supply.  Notwithstanding anything
in this Section 7.2 to the contrary, (x) the Seller Parties will only furnish
copies of or provide such access to Transferring Employee Records and any other
personnel, medical and benefits records to the extent allowed by Law, and (y)
the Buyers shall not have the right to perform or conduct any environmental
sampling or testing at, in, on or underneath any property or facility or real
estate owned by any of the Seller Parties.

 

(b)                                 Until the Closing Date, all information
furnished to or obtained by the Buyers and the Buyers’ Representatives pursuant
to this Section 7.2 or the Ancillary Agreements shall be subject to the
provisions of the Confidentiality Agreement.  At the Closing, the Seller Parties
shall execute a confidentiality and non-use agreement (the “Sellers
Confidentiality Agreement”) on substantially similar terms to the
Confidentiality Agreement which shall require the Seller Parties to maintain the
confidentiality of all information related to the Acquired Assets and the
Assumed Liabilities for a period of five years from the Closing Date.  Promptly
following the date hereof, the Seller Parties shall request, if they have not
previously done so, the return or destruction of all non-public information
provided by the Seller Parties or their Affiliates or the Seller Parties’
Representatives prior to the date hereof to other potential purchasers of the
Acquired Assets in connection with a confidentiality agreement executed in
connection with such a potential sale of the Acquired Assets.

 

39

--------------------------------------------------------------------------------

 

 

(c)                                  For a period of seven years after the
Closing Date, each of the parties hereto shall have reasonable access to all of
the books and records of the other parties (limited, in the case of AESC, to the
extent they pertain to the Sellers or the Acquired Assets and, in the case of
the Buyers, to the extent they pertain to the Acquired Assets, or, in either
case, to the extent otherwise related to this Agreement, the Ancillary
Agreements and the transactions contemplated hereby and thereby), including all
Transferring Employee Records, to the extent that such access may reasonably be
required by such party.  Such access shall be afforded by the party or parties
in possession of such books and records upon receipt of reasonable advance
notice and during normal business hours.  The party or parties exercising this
right of access shall be solely responsible for any costs or expenses incurred
by it or them pursuant to this Section 7.2(c).  If the party or parties in
possession of such books and records shall desire to dispose of any such books
and records upon or prior to the expiration of such seven-year period, such
party or parties shall, prior to such disposition, give the other party or
parties a reasonable opportunity, at such other party’s or parties’ expense, to
segregate and remove such books and records as such other party or parties may
select.

 

(d)                                 AESC agrees not to release any Person (other
than the Buyers) from any confidentiality agreement now existing with respect to
the Sellers or the transactions contemplated hereby, or waive or amend any
provision thereof.  From and after the Closing, AESC shall assign to the Buyers
(or, if assignment is not permitted, enforce for the benefit of the Buyers) any
such existing confidentiality agreements with other potential purchasers in
connection with a potential sale of, or other transaction relating to, the
Sellers; provided, however, that AESC will not be obligated to assign any
existing confidentiality agreement if such confidentiality agreement
contemplates, in addition to a transaction relating to the Sellers, the
consummation of other potential transactions with AESC or any of its Affiliates
and instead AESC will enforce such confidentiality agreement for the benefit of
the Buyers to the extent it relates to a potential sale of, or other transaction
relating to, the Sellers or the Acquired Assets.

 

7.3.                            Expenses.  Except as set forth in Section 7.9
and as otherwise specifically provided herein, whether or not the transactions
contemplated hereby are consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
borne by the party incurring such costs and expenses, except that (i) the fee
payable in connection with the filing required by the HSR Act shall be shared
one-half by the Seller Parties and one-half by the Buyers and (ii) the premium
for the Title Policy, including the costs of any endorsements, and the cost of
the Survey shall be paid solely by the Seller Parties.

 

7.4.                            Further Assurances.  Subject to the terms and
conditions of this Agreement, each of the parties hereto will use Commercially
Reasonable Efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Laws to consummate and make effective the sale of the Acquired Assets pursuant
to this Agreement, including, without limitation, using Commercially Reasonable
Efforts to ensure satisfaction of the conditions precedent to each party’s
obligations hereunder.  None of the parties hereto will, without prior written
consent of the other parties, except as contemplated by this Agreement, take or
fail to take any action, which would reasonably be expected to prevent or
materially impede, interfere with or delay the transactions contemplated by this
Agreement.  From time to time after the date hereof, without further
consideration, each party shall, at its own expense, execute and deliver such
and take such further actions as may reasonably be requested

 

40

--------------------------------------------------------------------------------

 

by the other party in order to consummate the transactions contemplated by this
Agreement in accordance with the terms hereof.

 

7.5.                            Public Statements.  Prior to the Closing, the
parties shall consult with each other prior to issuing any public announcement,
statement or other disclosure with respect to this Agreement or the Ancillary
Agreements or the transactions contemplated hereby or thereby and shall not
issue any such public announcement, statement or other disclosure prior to such
consultation, except as may be required by Law or by any securities exchange and
except that the parties may make public announcements, statements or other
disclosures with respect to this Agreement and the transactions contemplated
hereby to the extent and under the circumstances in which the parties are
expressly permitted by the Confidentiality Agreement to make disclosures.

 

7.6.                            Consents and Approvals; Other Obligations.

 

(A)                                  THE SELLER PARTIES AND THE BUYERS SHALL
COOPERATE AND CONSULT WITH EACH OTHER AND KEEP EACH OTHER INFORMED OF THE STATUS
AND (I) PREPARE AND FILE ALL NECESSARY DOCUMENTATION AND (II) EFFECT ALL
NECESSARY APPLICATIONS, NOTICES, PETITIONS AND FILINGS AND EXECUTE ALL
AGREEMENTS AND DOCUMENTS, IN EACH CASE, TO OBTAIN AS PROMPTLY AS PRACTICABLE ALL
NECESSARY CONSENTS, APPROVALS AND AUTHORIZATIONS OF ALL PERSONS (OTHER THAN ANY
GOVERNMENTAL ENTITY) NECESSARY OR ADVISABLE TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR REQUIRED BY THE TERMS OF ANY NOTE, BOND,
MORTGAGE, INDENTURE, DEED OF TRUST, LICENSE, FRANCHISE, PERMIT, CONCESSION,
CONTRACT, LEASE OR OTHER INSTRUMENT TO WHICH ANY OF THE SELLER PARTIES OR THE
BUYERS ARE A PARTY OR BY WHICH ANY OF THEM IS BOUND.

 

(B)                                 AS PROMPTLY AS PRACTICABLE AFTER THE DATE
HEREOF, THE SELLER PARTIES OR THEIR AFFILIATES AND THE BUYERS (OR THE ULTIMATE
PARENT ENTITY OF THE BUYERS, IF NECESSARY) SHALL EACH FILE OR CAUSE TO BE FILED
WITH THE FEDERAL TRADE COMMISSION AND THE UNITED STATES DEPARTMENT OF JUSTICE
ANY NOTIFICATIONS REQUIRED TO BE FILED UNDER THE HSR ACT AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED
HEREBY.  THE PARTIES SHALL CONSULT WITH EACH OTHER AS TO THE APPROPRIATE TIME OF
FILING SUCH NOTIFICATIONS AND SHALL USE COMMERCIALLY REASONABLE EFFORTS TO MAKE
SUCH FILINGS AT THE AGREED UPON TIME, TO RESPOND PROMPTLY TO, AND CONSULT WITH
EACH OTHER WITH RESPECT TO, ANY REQUESTS FOR ADDITIONAL INFORMATION MADE BY
EITHER OF SUCH AGENCIES, AND TO CAUSE THE WAITING PERIODS UNDER THE HSR ACT TO
TERMINATE OR EXPIRE AT THE EARLIEST POSSIBLE DATE AFTER THE DATE OF FILING.

 

(C)                                  THE SELLER PARTIES AND THE BUYERS SHALL
COOPERATE WITH EACH OTHER AND PROMPTLY PREPARE AND FILE NOTIFICATIONS WITH, AND
REQUEST TAX CLEARANCES FROM, STATE AND LOCAL TAXING AUTHORITIES IN JURISDICTIONS
IN WHICH A PORTION OF THE PURCHASE PRICE MAY BE REQUIRED TO BE WITHHELD PURSUANT
TO SUCH STATE AND LOCAL TAX LAW.

 

(D)                                 THE SELLER PARTIES, AT THEIR SOLE EXPENSE,
WILL USE ALL COMMERCIALLY REASONABLE EFFORTS TO CAUSE THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT TO BE PERMITTED, AS OF THE CLOSING, UNDER THE
EXISTING DEBT DOCUMENTS.  IN ADDITION, THE SELLER PARTIES, AT THEIR SOLE
EXPENSE, WILL TIMELY SEEK, AND WILL USE ALL COMMERCIALLY REASONABLE EFFORTS TO
OBTAIN, THE RELEASE OF ALLEGHENY ENERGY, INC. OR ITS AFFILIATES FROM THE
GUARANTEES AND OTHER SECURITY OBLIGATIONS WITH RESPECT TO THE WHEATLAND FACILITY
SET FORTH ON SCHEDULE 7.6(D) (THE “SUPPORT

 

41

--------------------------------------------------------------------------------

 

Obligations”).  The Buyers will use Commercially Reasonable Efforts to arrange
for the Seller Parties and their Affiliates to be released, as of the Closing,
from their obligations under the Support Obligations, including by providing any
substitute guarantee or other security in like amount, if necessary.  If the
Buyers and the Seller Parties are not successful in obtaining such releases of
the Support Obligations prior to the Closing, then the Buyers shall indemnify
and hold the Seller Parties and their Affiliates harmless from any claims made
against the Seller Parties or their Affiliates with respect to the Wheatland
Facility that are attributable to the period on or after the Closing Date or are
otherwise in respect of Assumed Liabilities.

 

7.7.                            Regulatory Approvals.

 

(A)                                  THE SELLER PARTIES AND THE BUYERS SHALL
COOPERATE AND CONSULT WITH EACH OTHER AND KEEP EACH OTHER INFORMED OF THE STATUS
AND (I) PREPARE AND FILE ALL NECESSARY DOCUMENTATION AND (II) EFFECT ALL
NECESSARY APPLICATIONS, NOTICES, PETITIONS AND FILINGS AND EXECUTE ALL
AGREEMENTS AND DOCUMENTS, IN EACH CASE, TO OBTAIN AS PROMPTLY AS PRACTICABLE ALL
NECESSARY CONSENTS, APPROVALS AND AUTHORIZATIONS OF ALL GOVERNMENTAL ENTITIES
(INCLUDING, WITHOUT LIMITATION, THE SELLERS REQUIRED REGULATORY APPROVALS AND
THE BUYERS REQUIRED REGULATORY APPROVALS) OR REQUIRED BY THE TERMS OF ANY NOTE,
BOND, MORTGAGE, INDENTURE, DEED OF TRUST, LICENSE, FRANCHISE, PERMIT,
CONCESSION, CONTRACT, LEASE OR OTHER INSTRUMENT TO WHICH ANY OF THE SELLER
PARTIES OR THE BUYERS ARE A PARTY OR BY WHICH ANY OF THEM IS BOUND.  THE PARTIES
HERETO HAVE EXCHANGED, AND AGREED TO, DRAFTS OF THE JOINT APPLICATION TO BE
FILED WITH THE FERC UNDER SECTION 203 OF THE FEDERAL POWER ACT RELATED TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, AND OF THE APPLICATION TO BE
FILED BY THE BUYERS WITH THE FERC UNDER SECTION 205 OF THE FEDERAL POWER ACT
RELATED TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, AND SUCH
AGREED DRAFTS WILL BE FILED WITH THE FERC ON OR ABOUT MAY 6, 2005.  EACH OF THE
SELLER PARTIES AND THE BUYERS SHALL HAVE THE RIGHT TO REVIEW IN ADVANCE ALL
CHARACTERIZATIONS OF THE INFORMATION RELATING TO THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT WHICH APPEAR IN ANY FILING MADE IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

(B)                                 THE BUYERS HAVE RETAINED AND WILL USE, AT
THEIR EXPENSE, A QUALIFIED ECONOMIST TO PREPARE ANY ANALYSES NECESSARY TO
SUPPORT SUCH APPLICATION.

 

(C)                                  THE BUYERS WILL USE COMMERCIALLY REASONABLE
EFFORTS TO OBTAIN SEC APPROVAL PURSUANT TO THE HOLDING COMPANY ACT IN PARALLEL
WITH ALL REQUIRED FERC AND STATE REGULATORY APPROVALS.

 

7.8.                            Fees and Commissions.  The Seller Parties and
the Buyers each represent and warrant to the other that except for Banc of
America Securities LLC, which is acting for and at the expense of the Seller
Parties, no broker, finder or other Person is entitled to any brokerage fees,
commissions or finder’s fees in connection with the transactions contemplated
hereby.  The Seller Parties shall be solely responsible for paying all fees or
commissions of Banc of America Securities LLC.

 

7.9.                            Tax Matters.

 

(A)                                  NOTWITHSTANDING ANY OTHER PROVISION OF THIS
AGREEMENT, ALL APPLICABLE SALES, TRANSFER, USE, STAMP, CONVEYANCE, VALUE ADDED,
RECORDING, EXCISE, AND OTHER SIMILAR TAXES,

 

42

--------------------------------------------------------------------------------

 

IF ANY, TOGETHER WITH ALL RECORDING OR FILING FEES, NOTARIAL FEES AND OTHER
SIMILAR COSTS OF CLOSING, THAT MAY BE IMPOSED UPON, OR PAYABLE, COLLECTIBLE OR
INCURRED IN CONNECTION WITH THE TRANSFER OF THE ACQUIRED ASSETS TO THE BUYERS OR
OTHERWISE AS A RESULT OF THE TRANSFER OF THE ACQUIRED ASSETS (“TRANSFER TAXES”)
SHALL BE BORNE SOLELY BY THE BUYERS.  THE BUYERS, AT THEIR OWN EXPENSE, WILL
FILE, TO THE EXTENT REQUIRED BY APPLICABLE LAW, ALL NECESSARY TAX RETURNS AND
OTHER DOCUMENTATION WITH RESPECT TO ALL SUCH TRANSFER TAXES, AND IF REQUIRED BY
APPLICABLE LAW, THE SELLER PARTIES WILL JOIN IN THE EXECUTION OF ANY SUCH TAX
RETURNS OR OTHER DOCUMENTATION.

 

(B)                                 WITH RESPECT TO TAXES TO BE PRORATED IN
ACCORDANCE WITH SECTION 3.4, THE BUYERS SHALL PREPARE AND TIMELY FILE ALL TAX
RETURNS REQUIRED TO BE FILED AFTER THE CLOSING WITH RESPECT TO THE ACQUIRED
ASSETS, IF ANY, AND SHALL DULY AND TIMELY PAY ALL SUCH TAXES SHOWN TO BE DUE ON
SUCH TAX RETURNS.  THE BUYERS’ PREPARATION OF ANY SUCH TAX RETURNS THAT ARE
MATERIAL SHALL BE SUBJECT TO THE SELLER PARTIES’ APPROVAL, WHICH SHALL NOT BE
UNREASONABLY WITHHELD, CONDITIONED OR DELAYED.  THE BUYERS SHALL MAKE SUCH TAX
RETURNS AVAILABLE FOR THE SELLER PARTIES’ REVIEW AND APPROVAL NOT LATER THAN 15
BUSINESS DAYS PRIOR TO THE DUE DATE FOR FILING SUCH TAX RETURN AND SHALL MAKE
SUCH CHANGES AS ARE REASONABLY REQUESTED BY THE SELLER PARTIES.  WITHIN 10
BUSINESS DAYS AFTER THE BUYERS’ PAYMENT OF SUCH TAXES, THE SELLER PARTIES SHALL
PAY TO THE BUYERS, OR THE BUYERS SHALL PAY TO THE SELLER PARTIES, AS
APPROPRIATE, THE DIFFERENCE BETWEEN (I) THE SELLER PARTIES’ PROPORTIONATE SHARE
OF THE AMOUNT SHOWN AS DUE ON SUCH TAX RETURN DETERMINED IN ACCORDANCE WITH
SECTION 3.4 AND (II) THE AMOUNT PAID BY THE SELLER PARTIES AT THE CLOSING DATE
PURSUANT TO SECTION 4.3(L).

 

(C)                                  EACH OF THE BUYERS AND THE SELLER PARTIES
SHALL PROVIDE THE OTHER WITH SUCH ASSISTANCE AS MAY REASONABLY BE REQUESTED IN
CONNECTION WITH THE PREPARATION OF ANY TAX RETURN, ANY AUDIT OR OTHER
EXAMINATION BY ANY TAXING AUTHORITY, OR ANY JUDICIAL OR ADMINISTRATIVE
PROCEEDINGS RELATING TO LIABILITY FOR TAXES, AND EACH WILL RETAIN AND PROVIDE
THE REQUESTING PARTIES WITH ANY RECORDS OR INFORMATION THAT MAY BE RELEVANT TO
SUCH RETURN, AUDIT, OR EXAMINATION, PROCEEDINGS OR DETERMINATION.  ANY
INFORMATION OBTAINED PURSUANT TO THIS SECTION 7.9(C) OR PURSUANT TO ANY OTHER
SECTION HEREOF PROVIDING FOR THE SHARING OF INFORMATION OR REVIEW OF ANY TAX
RETURN OR OTHER SCHEDULE RELATING TO TAXES SHALL BE KEPT CONFIDENTIAL BY THE
PARTIES HERETO.

 

(D)                                 THE BUYERS SHALL REMIT TO THE SELLER PARTIES
ANY REFUND OR CREDIT OF TAXES, IF AND WHEN ACTUALLY RECEIVED BY THE BUYERS, TO
THE EXTENT SUCH TAXES ARE ATTRIBUTABLE TO ANY TAXABLE PERIOD, OR PORTION
THEREOF, ENDING ON OR BEFORE THE CLOSING DATE.

 

(E)                                  ANY PAYMENT BY THE BUYERS OR THE SELLER
PARTIES TO THE OTHER PURSUANT TO THIS SECTION 7.9 SHALL BE TREATED FOR ALL
PURPOSES BY BOTH PARTIES AS AN ADJUSTMENT TO THE PURCHASE PRICE, TO THE MAXIMUM
EXTENT PERMITTED BY LAW.

 

(F)                                    IN THE EVENT THAT THE BUYERS AND THE
SELLER PARTIES DISAGREE AS TO THE AMOUNT OR CALCULATION OF ANY PAYMENT TO BE
MADE UNDER THIS AGREEMENT RELATING TO TAXES, OR THE INTERPRETATION OR
APPLICATION OF ANY PROVISION UNDER THIS AGREEMENT RELATING TO TAXES, THE PARTIES
SHALL ATTEMPT IN GOOD FAITH TO RESOLVE SUCH DISPUTE.  IF SUCH DISPUTE IS NOT
RESOLVED WITHIN 60 DAYS FOLLOWING THE COMMENCEMENT OF THE DISPUTE, THE BUYERS
AND THE SELLERS SHALL JOINTLY RETAIN THE INDEPENDENT ACCOUNTING FIRM TO RESOLVE
THE DISPUTE; PROVIDED, HOWEVER, THAT NEITHER PARTY SHALL BE ENTITLED TO DISPUTE
ANY INDIVIDUAL TAX ITEM THAT INVOLVES AN AMOUNT OF LESS THAN $25,000.  THE

 

43

--------------------------------------------------------------------------------

 

INDEPENDENT ACCOUNTING FIRM SHALL ACT AS AN ARBITRATOR TO RESOLVE ALL POINTS OF
DISAGREEMENT AND ITS DECISION SHALL BE FINAL AND BINDING UPON ALL PARTIES
INVOLVED.  FOLLOWING THE DECISION OF THE INDEPENDENT ACCOUNTING FIRM, THE BUYERS
AND THE SELLER PARTIES SHALL EACH TAKE OR CAUSE TO BE TAKEN ANY ACTION NECESSARY
TO IMPLEMENT THE DECISION OF THE INDEPENDENT ACCOUNTING FIRM.  THE FEES AND
EXPENSES RELATING TO THE INDEPENDENT ACCOUNTING FIRM SHALL BE BORNE FIFTY
PERCENT (50%) BY THE BUYERS AND FIFTY PERCENT (50%) BY THE SELLER PARTIES.

 

7.10.                     Employees.

 

(A)                                  NOT LATER THAN 15 DAYS PRIOR TO THE CLOSING
DATE, THE BUYERS WILL OFFER EMPLOYMENT TO EACH OF THE SELLERS’ EMPLOYEES THAT IS
ACTIVELY EMPLOYED WITH ANY OF THE SELLER PARTIES OR THEIR AFFILIATES IMMEDIATELY
PRIOR TO THE CLOSING DATE, ON SUCH TERMS AND CONDITIONS AS THE BUYERS MAY
DETERMINE IN THEIR SOLE DISCRETION.  EACH SUCH OFFER OF EMPLOYMENT SHALL BE MADE
CONTINGENT UPON THE SELLERS’ EMPLOYEES PASSING THE BUYERS’ STANDARD SCREENING
PROCEDURES, WHICH INCLUDE DRUG SCREENING AND BACKGROUND CHECKS.  THE SELLER
PARTIES SHALL COOPERATE WITH THE BUYERS’ REASONABLE REQUESTS FOR ACCESS TO THE
SELLERS’ EMPLOYEES FOR PURPOSES OF MAKING EMPLOYMENT OFFERS.  EACH OF THE
SELLERS’ EMPLOYEES WHO PASSES THE BUYERS’ STANDARD SCREENING PROCEDURES, ACCEPTS
THE BUYERS’ OFFER OF EMPLOYMENT AND ACTUALLY COMMENCES WORK WITH THE BUYERS OR
THEIR AFFILIATES SHALL BE A “BUYERS’ EMPLOYEE” FOR PURPOSES OF THIS AGREEMENT
UPON THE LATER OF THE CLOSING DATE OR THE COMMENCEMENT OF SUCH SELLERS’
EMPLOYEE’S ACTIVE EMPLOYMENT WITH THE BUYERS.  EXCEPT AS REQUIRED BY LAW,
NEITHER THE BUYERS NOR THEIR AFFILIATES SHALL BE REQUIRED TO CONTINUE THE
EMPLOYMENT OF ANY BUYERS’ EMPLOYEE FOR ANY PERIOD OF TIME, EACH SUCH EMPLOYEE
SHALL BE AN AT-WILL EMPLOYEE, AND THE EMPLOYMENT OF ANY BUYERS’ EMPLOYEE MAY BE
TERMINATED IN THE BUYERS’ SOLE DISCRETION AT ANY TIME IN ACCORDANCE WITH
APPLICABLE LAW.

 

(B)                                 WITH RESPECT TO EACH BUYERS’ EMPLOYEE,
EFFECTIVE AS OF 12:01 A.M. ON THE DATE SUCH EMPLOYEE BECOMES A BUYERS’ EMPLOYEE,
SUCH BUYERS’ EMPLOYEE SHALL CEASE TO PARTICIPATE IN THE EMPLOYEE WELFARE BENEFIT
PLANS (AS SUCH TERM IS DEFINED IN ERISA) MAINTAINED OR SPONSORED BY THE SELLERS
OR THEIR AFFILIATES (THE “PRIOR WELFARE PLANS”), EXCEPT AS MAY BE REQUIRED UNDER
COBRA, AND SHALL, IF APPLICABLE, COMMENCE TO PARTICIPATE IN WELFARE BENEFIT
PLANS OF THE BUYERS OR THEIR AFFILIATES (THE “REPLACEMENT WELFARE PLANS”).  THE
BUYERS SHALL USE REASONABLE EFFORTS (I) TO WAIVE ALL LIMITATIONS AS TO
PRE-EXISTING CONDITION EXCLUSIONS AND WAITING PERIODS WITH RESPECT TO THE
BUYERS’ EMPLOYEES UNDER THE REPLACEMENT WELFARE PLANS, OTHER THAN, BUT ONLY TO
THE EXTENT OF, LIMITATIONS OR WAITING PERIOD THAT WERE IN EFFECT WITH RESPECT TO
SUCH EMPLOYEE UNDER THE PRIOR WELFARE PLANS AND THAT HAVE NOT BEEN SATISFIED AS
OF THE CLOSING DATE, AND (II) TO PROVIDE THE BUYERS’ EMPLOYEES WITH CREDIT FOR
ANY CO-PAYMENTS AND DEDUCTIBLES PAID PRIOR TO THE CLOSING DATE IN SATISFYING ANY
DEDUCTIBLE OR OUT OF POCKET REQUIREMENTS UNDER THE REPLACEMENT WELFARE PLAN (ON
A PRO RATA BASIS IN THE EVENT OF A DIFFERENCE IN PLAN YEARS).  WITH RESPECT TO
EACH BUYERS’ EMPLOYEE (INCLUDING ANY BENEFICIARY OR THE DEPENDANT THEREOF), THE
SELLER PARTIES SHALL RETAIN ALL LIABILITIES AND OBLIGATIONS ARISING UNDER ANY
PRIOR WELFARE PLAN WHETHER ARISING ON, PRIOR TO OR FOLLOWING THE CLOSING DATE.

 

(C)                                  EFFECTIVE NOT LATER THAN THE DATE A
SELLERS’ EMPLOYEE BECOMES A BUYERS’ EMPLOYEE, THE SELLER PARTIES SHALL CAUSE
SUCH BUYERS’ EMPLOYEE TO CEASE TO PARTICIPATE IN THE BENEFIT PLANS, EXCEPT AS
MAY BE REQUIRED UNDER COBRA, AND THE BUYERS SHALL CAUSE SUCH EMPLOYEE IF
APPLICABLE AND TO THE EXTENT THAT SUCH EMPLOYEE SATISFIES ANY APPLICABLE
CONDITIONS AND REQUIREMENTS, TO COMMENCE PARTICIPATION IN CERTAIN OF THE
EMPLOYEE BENEFIT PLANS, PROGRAMS

 

44

--------------------------------------------------------------------------------

 

AND FRINGE BENEFIT PLANS, PROGRAMS AND FRINGE BENEFIT ARRANGEMENTS OF THE BUYERS
(“BUYERS BENEFIT PLANS”).  THE BUYERS’ EMPLOYEES SHALL BE GIVEN YEARS OF SERVICE
CREDIT, SOLELY FOR PURPOSES OF ELIGIBILITY FOR VACATION ALLOTMENT AND NOT FOR
(I) ELIGIBILITY FOR ANY OTHER PURPOSE, (II) VESTING, (III) BENEFIT ACCRUAL,
(IV) SERVICE RELATED TO BENEFIT LEVEL OR (V) ANY OTHER PURPOSE, FOR ALL SERVICE
WITH THE SELLERS UNDER THE BUYERS BENEFIT PLANS, IF ANY, IN WHICH THEY BECOME
PARTICIPANTS TO THE SAME EXTENT SUCH EMPLOYEES WERE CREDITED WITH SERVICE UNDER
COMPARABLE BENEFIT PLANS.  NEITHER THE BUYERS NOR THEIR AFFILIATES SHALL ASSUME
ANY BENEFIT PLAN, INCLUDING, WITHOUT LIMITATION, ANY SEVERANCE PLAN, POLICY,
PROGRAM, AGREEMENT OR ARRANGEMENT OF THE SELLER PARTIES OR ANY OF THEIR
AFFILIATES, NOR, EXCEPT TO THE EXTENT OTHERWISE PROVIDED IN
SUBSECTION (D) BELOW, SHALL THERE BE ANY TRANSFER OF ASSETS OR LIABILITIES OF
ANY BENEFIT PLAN TO ANY BUYERS BENEFIT PLANS.  NO PROVISION OF THIS AGREEMENT
SHALL BE CONSTRUED TO LIMIT THE AUTHORITY OF THE BUYERS OR THEIR AFFILIATES TO
DISCONTINUE, SUSPEND OR MODIFY ANY PARTICULAR BENEFIT OR COMPENSATION PLAN OR
PROGRAM PROVIDED TO THE BUYERS’ EMPLOYEES AT ANY TIME, OR TO TERMINATE
EMPLOYMENT OF ANY BUYERS EMPLOYEES AT ANY TIME AFTER THE CLOSING DATE.

 

(D)                                 THE BUYERS WILL, WITH RESPECT TO ANY 401(K)
PLAN OF THE SELLER PARTIES OR THEIR ERISA AFFILIATE IN WHICH ANY OF THE SELLERS’
EMPLOYEES PARTICIPATES, TAKE ALL NECESSARY ACTION TO CAUSE THE TRUSTEE OF ANY
DEFINED CONTRIBUTION PLAN OF THE BUYERS OR ANY OF THE BUYERS’ ERISA AFFILIATES
IN WHICH A SELLERS’ EMPLOYEE BECOMES A PARTICIPANT TO, IF ELECTED BY THE
SELLERS’ EMPLOYEE, ACCEPT A DIRECT “ROLLOVER” OF THE EMPLOYEE’S “ELIGIBLE
ROLLOVER DISTRIBUTION,” AS SUCH TERMS ARE DEFINED IN CODE SECTION 401(A)(31), IN
CASH, BUT SOLELY TO THE EXTENT SUCH DISTRIBUTION IS ALLOWABLE BY APPLICABLE LAW
AND SATISFIES THE REQUIREMENTS FOR SUCH A ROLLOVER PURSUANT TO APPLICABLE LAW.

 

(E)                                  THE SELLER PARTIES OR THEIR AFFILIATES (AND
NOT THE BUYERS OR THEIR AFFILIATES) SHALL BE RESPONSIBLE FOR ANY AND ALL
LIABILITIES ATTRIBUTABLE TO THE SELLERS’ EMPLOYEES, INCLUDING WITHOUT
LIMITATION, ANY AND ALL LIABILITIES ARISING OUT OF OR RESULTING FROM ANY CLAIM
BY ANY SELLERS’ EMPLOYEE WHICH ARISES UNDER ANY LAW (INCLUDING, WITHOUT
LIMITATION, ANY CLAIMS FOR WRONGFUL DISCHARGE OR OTHERWISE), OR UNDER ANY
POLICY, AGREEMENT, UNDERSTANDING OR PROMISE, WRITTEN OR ORAL, FORMAL OR
INFORMAL, BETWEEN THE SELLER PARTIES OR ANY OF THEIR AFFILIATES AND THE SELLERS’
EMPLOYEE, WHETHER ARISING OUT OF ACTIONS, EVENTS OR OMISSIONS THAT OCCURRED (OR,
IN THE CASE OF OMISSIONS, FAILED TO OCCUR) BEFORE, ON OR AFTER, THE CLOSING
DATE), OTHER THAN LIABILITIES ATTRIBUTABLE TO ANY BUYERS’ EMPLOYEES IN RESPECT
OF THE PERIOD AFTER THE CLOSING DATE (OR SUCH LATER DATE AS THE INDIVIDUAL
BECOMES A BUYERS’ EMPLOYEE).  WITHOUT LIMITING THE GENERALITY OF THE PRECEDING
SENTENCE, THE SELLER PARTIES SHALL BE RESPONSIBLE FOR SATISFYING CONTINUATION
COVERAGE PROVISIONS UNDER SECTION 4980B OF THE CODE AND SECTIONS 601-608 OF
ERISA WITH RESPECT TO ANY SELLERS’ EMPLOYEE (INCLUDING ANY SELLERS’ EMPLOYEE
THAT BECOMES A BUYERS’ EMPLOYEE) AND ANY ELIGIBLE SPOUSE OR DEPENDENT WHO
EXPERIENCES A “QUALIFYING EVENT,” AS DEFINED IN CODE SECTION 4980B(F)(3), ON OR
BEFORE THE CLOSING DATE.  THE SELLER PARTIES SHALL PAY TO EACH BUYERS’ EMPLOYEE
ON OR BEFORE THE CLOSING DATE (OR SUCH LATER DATE AS THE INDIVIDUAL BECOMES A
BUYERS’ EMPLOYEE) ALL SUMS SUCH BUYERS’ EMPLOYEE IS DUE AS OF SUCH DATE FOR ANY
ACCRUED BUT UNPAID SALARY AND WAGES, INCLUDING, WITHOUT LIMITATION, ACCRUED BUT
UNPAID VACATION DAYS, PERSONAL DAYS, AND EXPENSE REIMBURSEMENTS.  IN ADDITION,
THE SELLER PARTIES SHALL BE SOLELY RESPONSIBLE FOR ANY AND ALL SEVERANCE
PAYMENTS OR BENEFITS ARISING UNDER ANY BENEFIT PLAN, OR OTHERWISE WITH RESPECT
TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND THE BUYERS SHALL HAVE NO
LIABILITIES WITH RESPECT THERETO.

 

45

--------------------------------------------------------------------------------

 

(F)                                    NOTHING CONTAINED IN THIS SECTION 7.10,
WHETHER EXPRESS OR IMPLIED, IS INTENDED TO CONFER UPON ANY SELLERS’ EMPLOYEE OR
FORMER EMPLOYEE OF ANY OF THE SELLER PARTIES OR THEIR AFFILIATES OR ANY BUYERS’
EMPLOYEE ANY RIGHT OR REMEDY, INCLUDING, WITHOUT LIMITATION, ANY RIGHT AS A
THIRD-PARTY BENEFICIARY.

 

(G)                                 EFFECTIVE AS OF THE CLOSING DATE, THE
SELLERS SHALL PAY TO EACH BUYER’S EMPLOYEE WHO WAS A PARTICIPANT IN THE ANNUAL
INCENTIVE PLAN OF ANY OF THE SELLER PARTIES THE ANNUAL BONUS THAT SUCH EMPLOYEE
WOULD HAVE RECEIVED HAD SUCH EMPLOYEE REMAINED EMPLOYED WITH ANY OF THE SELLER
PARTIES UNTIL THE LAST DAY OF THE PLAN YEAR, PRORATED TO REFLECT A PARTIAL PLAN
YEAR ENDING AS OF THE CLOSING DATE AND BASED ON SUCH OTHER ASSUMPTIONS AS THE
SELLER PARTIES REASONABLY NEED TO MAKE TO CALCULATE SUCH BONUSES.

 

7.11.                     Risk of Loss.

 

(A)                                  FROM THE DATE HEREOF THROUGH THE CLOSING
DATE, ALL RISK OF LOSS OR DAMAGE TO THE ACQUIRED ASSETS SHALL BE BORNE BY THE
SELLER PARTIES, EXCEPT THAT LOSS OR DAMAGE CAUSED BY THE ACTS OR OMISSIONS OF
THE BUYERS OR THE BUYERS’ REPRESENTATIVES WILL BE THE RESPONSIBILITY OF THE
BUYERS.

 

(B)                                 IF, BEFORE THE CLOSING DATE, ALL OR ANY
PORTION OF THE ACQUIRED ASSETS IS (I) CONDEMNED OR TAKEN BY EMINENT DOMAIN OR IS
THE SUBJECT OF A PENDING OR, TO THE SELLER PARTIES’ KNOWLEDGE, CONTEMPLATED
TAKING WHICH HAS NOT BEEN CONSUMMATED, OR (II) MATERIALLY DAMAGED OR DESTROYED
BY FIRE OR OTHER CASUALTY, THEN THE SELLER PARTIES SHALL NOTIFY THE BUYERS
PROMPTLY IN WRITING OF SUCH FACT.  IF THAT CONDEMNATION, TAKING, DAMAGE, OR
DESTRUCTION RESULTS IN THE FAILURE OF ANY CONDITION IN SECTIONS 8.1 OR 8.2 TO BE
MET OR RESULTS IN A MATERIAL ADVERSE EFFECT, THEN THE BUYERS MAY TERMINATE THIS
AGREEMENT.  UNLESS THE BUYERS TERMINATE THIS AGREEMENT PURSUANT TO THE FOREGOING
SENTENCE, (X) IN THE CASE OF A CONDEMNATION OR TAKING, THE SELLER PARTIES SHALL
ASSIGN OR PAY, AS THE CASE MAY BE, ANY NET PROCEEDS THEREOF TO THE BUYERS AT THE
CLOSING, AND (Y) IN THE CASE OF A FIRE OR OTHER CASUALTY, THE SELLER PARTIES
SHALL EITHER RESTORE SUCH DAMAGE OR ASSIGN THE INSURANCE PROCEEDS THEREFOR TO
THE BUYERS AT THE CLOSING.

 

7.12.                     Tax Clearance Certificates.  The parties hereto shall
use Commercially Reasonable Efforts to obtain from any taxing authority any
certificate, permit, license, or other document necessary to mitigate, reduce or
eliminate any Taxes (including additions thereto or interest and penalties
thereon) that otherwise would be imposed with respect to the transactions
contemplated in this Agreement.

 

7.13.                     Non-Use of Allegheny Marks After the Closing.

 

(A)                                  THE ALLEGHENY MARKS APPEAR ON SOME OF THE
ACQUIRED ASSETS, INCLUDING ON SIGNAGE AT THE WHEATLAND FACILITY, AND ON
SUPPLIES, MATERIALS, STATIONERY, BROCHURES, ADVERTISING MATERIALS, MANUALS AND
SIMILAR CONSUMABLE ITEMS.  THE BUYERS ACKNOWLEDGE AND AGREE THAT THEY DO NOT
HAVE AND, UPON CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT,
WILL NOT HAVE, ANY RIGHT, TITLE, INTEREST, LICENSE OR OTHER RIGHT TO USE THE
ALLEGHENY MARKS.

 

(B)                                 THE BUYERS WILL (I) WITHIN 60 DAYS AFTER THE
CLOSING DATE, REMOVE THE ALLEGHENY MARKS FROM, OR COVER OR CONCEAL THE ALLEGHENY
MARKS ON, THE ACQUIRED ASSETS,

 

46

--------------------------------------------------------------------------------

 

INCLUDING SIGNAGE AT THE WHEATLAND FACILITY, AND PROVIDE WRITTEN VERIFICATION
THEREOF TO THE SELLER PARTIES PROMPTLY AFTER COMPLETING SUCH REMOVAL,
(II) WITHIN 14 DAYS AFTER THE CLOSING DATE, RETURN OR DESTROY (WITH PROOF OF
DESTRUCTION) ALL OTHER ACQUIRED ASSETS THAT CONTAIN ANY ALLEGHENY MARKS THAT ARE
NOT REMOVABLE, AND (III) WITHIN 30 DAYS AFTER THE CLOSING DATE, SUBMIT
NOTIFICATIONS OR AMENDMENTS WITH RESPECT TO ANY PERMITS OR ENVIRONMENTAL PERMITS
THAT USE ANY ALLEGHENY MARKS.

 

(C)                                  EACH BUYER AGREES NEVER TO CHALLENGE
ALLEGHENY ENERGY, INC.’S OR ITS AFFILIATES’ OWNERSHIP OF THE ALLEGHENY MARKS OR
ANY APPLICATION FOR REGISTRATION THEREOF OR ANY REGISTRATION THEREOF OR ANY
RIGHTS OF THE SELLER PARTIES OR THEIR AFFILIATES THEREIN AS A RESULT, DIRECTLY
OR INDIRECTLY, OF ITS OWNERSHIP OF THE ACQUIRED ASSETS.

 

(D)                                 THE BUYERS WILL NOT WILL CONDUCT ANY
BUSINESS OR OFFER ANY GOODS OR SERVICES UNDER ANY ALLEGHENY MARKS, EXCEPT AS
EXPRESSLY PERMITTED DURING THE TRANSACTION PERIOD PURSUANT TO SECTION 7.13(B) OR
AS PERMITTED PURSUANT TO ALLEGHENY ENERGY, INC.’S WRITTEN CONSENT.

 

(E)                                  NO BUYER WILL SEND, OR CAUSE TO BE SENT,
ANY CORRESPONDENCE OR OTHER MATERIALS TO ANY PERSON ON ANY STATIONERY THAT
CONTAINS ANY ALLEGHENY MARKS OR OTHERWISE OPERATE WHEATLAND FACILITY IN ANY
MANNER THAT WOULD OR MIGHT REASONABLY BE EXPECTED TO CONFUSE ANY PERSON INTO
BELIEVING THAT SUCH BUYER HAS ANY RIGHT, TITLE, INTEREST OR LICENSE TO USE ANY
ALLEGHENY MARKS.

 

7.14.                     Insurance.  The Buyers acknowledge that, after the
Closing, the Acquired Assets shall not be covered by any insurance policy in
respect of fire, liability, worker’s compensation or otherwise maintained by the
Seller Parties or any of their Affiliates.  Accordingly, the parties agree that
the Buyers shall be responsible for procuring insurance in respect of the
Acquired Assets after the Closing Date.

 

7.15.                     No Solicitation.  From the date hereof through the
Closing, none of the Seller Parties, their Affiliates nor the Sellers’
Representatives (including, without limitation, investment bankers, attorneys
and accountants) shall, directly or indirectly, enter into, solicit, initiate or
continue any discussions or negotiations with, or encourage or respond to any
inquiries or proposals by, or participate in any negotiations with, or provide
any information to, or otherwise cooperate in any other way with, any Person or
group, concerning any sale of all or a portion of the Acquired Assets, the
Sellers or any equity interest therein, or any merger, consolidation,
liquidation, dissolution or similar transaction involving the Sellers (each such
transaction being referred to herein as a “Proposed Acquisition Transaction”)
other than with the Buyers, their Affiliates and the Buyers’ Representatives. 
None of the Seller Parties shall, directly or indirectly, through any Affiliate,
officer, director, employee, Sellers’ Representative or otherwise, solicit,
initiate or encourage the submission of any proposal or offer from any Person
(including, without limitation, a “person” as defined in Section 13(d)(3) of the
Exchange Act) relating to any Proposed Acquisition Transaction.  The Seller
Parties represent that they are not now engaged in discussions or negotiations
with any Person other than the Buyers with respect to a Proposed Acquisition
Transaction.

 

47

--------------------------------------------------------------------------------

 

7.16.                     Notifications.

 

(A)                                  SUBJECT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT, EACH OF THE PARTIES WILL USE COMMERCIALLY REASONABLE EFFORTS TO
(I) PROMPTLY NOTIFY THE OTHER PARTIES OF (A) ANY REPRESENTATION OR WARRANTY MADE
BY IT CONTAINED IN THIS AGREEMENT THAT IS QUALIFIED AS TO MATERIALITY BECOMING
UNTRUE OR INACCURATE AS SO QUALIFIED IN ANY RESPECT OR ANY SUCH REPRESENTATION
OR WARRANTY THAT IS NOT SO QUALIFIED BECOMING UNTRUE OR INACCURATE IN ANY
MATERIAL RESPECT, (B) THE FAILURE BY IT TO COMPLY IN ANY MATERIAL RESPECT WITH
OR SATISFY IN ANY MATERIAL RESPECT ANY COVENANT, CONDITION OR AGREEMENT TO BE
COMPLIED WITH OR SATISFIED BY IT UNDER THIS AGREEMENT, AND (C) ANY CHANGE OR
EVENT WHICH, INDIVIDUALLY OR IN THE AGGREGATE, HAS HAD A MATERIAL ADVERSE EFFECT
ON THE BUYERS OR A MATERIAL ADVERSE EFFECT; AND (II) PROMPTLY PROVIDE THE OTHER
PARTY WITH COPIES OF ALL FILINGS MADE BY SUCH PARTY OR ANY AFFILIATES THEREOF
WITH ANY GOVERNMENTAL ENTITY IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

(B)                                 THE SELLER PARTIES WILL, FROM TIME TO TIME
PRIOR TO THE CLOSING (BUT NO MORE THAN ONCE IN ANY 30-DAY PERIOD), PROMPTLY
SUPPLEMENT OR AMEND ANY OF THE SELLER PARTIES’ SCHEDULES RELATING TO ARTICLE V
WITH RESPECT TO ANY MATTER THAT EXISTED AS OF THE DATE OF THIS AGREEMENT AND
SHOULD HAVE BEEN SET FORTH OR DESCRIBED IN SUCH SCHEDULE.  IF THE MATTERS
DISCLOSED ON SUCH SUPPLEMENTED OR AMENDED SCHEDULES WOULD, INDIVIDUALLY OR IN
THE AGGREGATE, BE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT, THEN THE
BUYERS MAY ELECT TO TERMINATE THIS AGREEMENT WITHIN 15 DAYS AFTER RECEIPT OF THE
SUPPLEMENTED OR AMENDED SCHEDULE, BY PROVIDING WRITTEN NOTICE THEREOF TO THE
SELLER PARTIES.  IF THE BUYERS ELECT TO TERMINATE THIS AGREEMENT PURSUANT TO
THIS SECTION 7.16(B), THEN THE SELLER PARTIES WILL HAVE A 20-DAY PERIOD TO CURE
THE EVENT CAUSING THE AMENDED OR SUPPLEMENTED SCHEDULE, PROVIDED THAT, IF SO
CURED WITHIN SUCH 20-DAY PERIOD, THIS AGREEMENT SHALL NOT BE TERMINATED.  NO
DISCLOSURE BY THE SELLER PARTIES PURSUANT TO THIS SECTION 7.16(B), HOWEVER, WILL
BE DEEMED TO AMEND OR SUPPLEMENT ANY OF THE SELLER PARTIES’ SCHEDULES, TO HAVE
QUALIFIED THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT OR TO
HAVE REDUCED OR LIMITED IN ANY WAY THE INDEMNIFICATION OBLIGATIONS OF THE SELLER
PARTIES PURSUANT TO ARTICLE IX, UNLESS THE BUYERS EXPRESSLY CONSENT TO SUCH
SUPPLEMENT IN WRITING.

 

(C)                                  THE SELLER PARTIES WILL, FROM TIME TO TIME
PRIOR TO THE CLOSING (BUT NO MORE THAN ONCE IN ANY 30-DAY PERIOD), PROMPTLY
SUPPLEMENT OR AMEND ANY OF THE SELLER PARTIES’ SCHEDULES RELATING TO ARTICLE V
WITH RESPECT TO ANY MATTER ARISING AFTER THE DATE OF THIS AGREEMENT, WHICH, IF
EXISTING AS OF THE DATE OF THIS AGREEMENT, WOULD HAVE BEEN REQUIRED TO BE SET
FORTH OR DESCRIBED IN SUCH SCHEDULE IN ORDER TO MAKE ANY REPRESENTATION OR
WARRANTY SET FORTH IN THIS AGREEMENT TRUE AND CORRECT AS OF SUCH DATE.  IF THE
MATTERS DISCLOSED ON SUCH SUPPLEMENTED OR AMENDED SCHEDULES WOULD, INDIVIDUALLY
OR IN THE AGGREGATE, BE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT,
THEN THE BUYERS MAY ELECT TO TERMINATE THIS AGREEMENT, WITHIN 15 DAYS AFTER
RECEIPT OF THE SUPPLEMENTED OR AMENDED SCHEDULES, BY PROVIDING WRITTEN NOTICE
THEREOF TO THE SELLER PARTIES; PROVIDED, HOWEVER, THAT IF THE BUYERS DO NOT
EXERCISE SUCH RIGHT TO TERMINATE THIS AGREEMENT WITHIN SUCH 15-DAY PERIOD, THEN
(I) THE BUYERS WILL BE DEEMED TO HAVE FOREVER WAIVED ANY RIGHT TO TERMINATE THIS
AGREEMENT BASED UPON SUCH SUPPLEMENT OR AMENDMENT, EXCEPT WHEN CONSIDERED IN THE
AGGREGATE WITH SUBSEQUENT SUPPLEMENTS OR AMENDMENTS, (II) THE BUYERS WILL BE
DEEMED TO HAVE ACCEPTED SUCH SUPPLEMENT OR AMENDMENT, SUBJECT TO (AND IN NO WAY
LIMITING) THE BUYERS’ RIGHT TO RECEIVE THE INDEMNITY SET FORTH IN THE LAST

 

48

--------------------------------------------------------------------------------

 

SENTENCE OF THIS SECTION 7.16(C), AND (III) SUCH SUPPLEMENT OR AMENDMENT WILL BE
DEEMED TO SUPPLEMENT OR AMEND THE SELLERS’ SCHEDULES, SUBJECT TO (AND IN NO WAY
LIMITING) THE BUYERS’ RIGHT TO RECEIVE THE INDEMNITY SET FORTH IN THE LAST
SENTENCE OF THIS SECTION 7.16(C).  IF THE BUYERS ELECT TO TERMINATE THIS
AGREEMENT PURSUANT TO THIS SECTION 7.16(C), THEN THE SELLER PARTIES WILL HAVE A
20-DAY PERIOD TO CURE THE EVENT CAUSING THE AMENDED OR SUPPLEMENTED SCHEDULE,
PROVIDED THAT, IF SO CURED WITHIN SUCH 20-DAY PERIOD, THIS AGREEMENT SHALL NOT
BE TERMINATED.  IN THE EVENT THE CLOSING OCCURS, THE SELLER PARTIES SHALL
INDEMNIFY THE BUYERS FOR ALL LIABILITIES ASSOCIATED WITH OR ARISING OUT OF THE
MATTERS DISCLOSED IN ANY SUPPLEMENTED OR AMENDED SCHEDULES DELIVERED PURSUANT TO
THIS SECTION 7.16(C) IN ACCORDANCE WITH ARTICLE IX.

 

(D)                                 THE BUYERS WILL, FROM TIME TO TIME PRIOR TO
THE CLOSING (BUT NO MORE THAN ONCE IN ANY 30-DAY PERIOD), PROMPTLY SUPPLEMENT OR
AMEND ANY OF THE BUYERS’ SCHEDULES RELATING TO ARTICLE VI WITH RESPECT TO ANY
MATTER THAT EXISTED AS OF THE DATE OF THIS AGREEMENT AND SHOULD HAVE BEEN SET
FORTH OR DESCRIBED IN SUCH SCHEDULE.  IF THE MATTERS DISCLOSED ON SUCH
SUPPLEMENTED OR AMENDED SCHEDULE WOULD, INDIVIDUALLY OR IN THE AGGREGATE, BE
REASONABLY LIKELY TO PREVENT, MATERIALLY DELAY OR IMPAIR THE BUYERS’ ABILITY TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THEN THE SELLER
PARTIES MAY ELECT TO TERMINATE THIS AGREEMENT WITHIN 15 DAYS AFTER RECEIPT OF
THE SUPPLEMENTED OR AMENDED SCHEDULE, BY PROVIDING WRITTEN NOTICE THEREOF TO THE
BUYERS.  IF THE SELLER PARTIES ELECT TO TERMINATE THIS AGREEMENT PURSUANT TO
THIS SECTION 7.16(D), THEN THE BUYERS WILL HAVE A 20 DAY PERIOD TO CURE THE
EVENT CAUSING THE AMENDED OR SUPPLEMENTED SCHEDULE, PROVIDED THAT, IF SO CURED
WITHIN SUCH 20-DAY PERIOD, THIS AGREEMENT SHALL NOT BE TERMINATED.  NO
DISCLOSURE BY THE BUYERS PURSUANT TO THIS SECTION 7.16(D), HOWEVER, WILL BE
DEEMED TO AMEND OR SUPPLEMENT ANY OF THE BUYERS’ SCHEDULES, TO HAVE QUALIFIED
THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT OR TO HAVE
REDUCED OR LIMITED IN ANY WAY THE INDEMNIFICATION OBLIGATIONS OF THE BUYERS
PURSUANT TO ARTICLE IX, UNLESS THE SELLER PARTIES EXPRESSLY CONSENT TO SUCH
SUPPLEMENT IN WRITING.

 

(E)                                  THE BUYERS WILL, FROM TIME TO TIME PRIOR TO
THE CLOSING (BUT NO MORE THAN ONCE IN ANY 30-DAY PERIOD), PROMPTLY SUPPLEMENT OR
AMEND ANY OF THE BUYERS’ SCHEDULES RELATING TO ARTICLE VI WITH RESPECT TO ANY
MATTER ARISING AFTER THE DATE OF THIS AGREEMENT, WHICH, IF EXISTING AS OF THE
DATE OF THIS AGREEMENT, WOULD HAVE BEEN REQUIRED TO BE SET FORTH OR DESCRIBED IN
SUCH SCHEDULE IN ORDER TO MAKE ANY REPRESENTATION OR WARRANTY SET FORTH IN THIS
AGREEMENT TRUE AND CORRECT AS OF SUCH DATE.  IF THE MATTERS DISCLOSED ON SUCH
SUPPLEMENTED OR AMENDED SCHEDULE WOULD, INDIVIDUALLY OR IN THE AGGREGATE, BE
REASONABLY LIKELY TO PREVENT, MATERIALLY DELAY OR IMPAIR THE BUYERS’ ABILITY TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THEN THE SELLER
PARTIES MAY ELECT TO TERMINATE THIS AGREEMENT, WITHIN 15 DAYS AFTER RECEIPT OF
THE SUPPLEMENTED OR AMENDED SCHEDULE, BY PROVIDING WRITTEN NOTICE THEREOF TO THE
BUYERS; PROVIDED, HOWEVER, THAT IF THE SELLER PARTIES DO NOT EXERCISE SUCH RIGHT
TO TERMINATE THIS AGREEMENT WITHIN SUCH 15-DAY PERIOD, THEN (I) THE SELLER
PARTIES WILL BE DEEMED TO HAVE FOREVER WAIVED ANY RIGHT TO TERMINATE THIS
AGREEMENT BASED UPON SUCH SUPPLEMENT OR AMENDMENT, EXCEPT WHEN CONSIDERED IN THE
AGGREGATE WITH SUBSEQUENT SUPPLEMENTS OR AMENDMENTS, (II) THE SELLER PARTIES
WILL BE DEEMED TO HAVE ACCEPTED SUCH SUPPLEMENT OR AMENDMENT, AND (III) SUCH
SUPPLEMENT OR AMENDMENT WILL BE DEEMED TO SUPPLEMENT OR AMEND THE BUYERS’
SCHEDULES.  IF THE SELLER PARTIES ELECT TO TERMINATE THIS AGREEMENT PURSUANT TO
THIS SECTION 7.16(E), THEN THE BUYERS WILL HAVE A 20-DAY PERIOD TO CURE THE
EVENT CAUSING THE AMENDED OR SUPPLEMENTED SCHEDULE, PROVIDED THAT, IF SO CURED
WITHIN SUCH 20-DAY PERIOD, THIS AGREEMENT SHALL NOT BE TERMINATED.

 

49

--------------------------------------------------------------------------------

 

(F)                                    TOGETHER WITH ANY SUPPLEMENT OR AMENDMENT
TO THE SCHEDULES PURSUANT TO THIS SECTION 7.16, THE PARTY DELIVERING SUCH
SUPPLEMENT OR AMENDMENT SHALL ALSO DELIVER SUPPLEMENTARY MATERIAL, AND ANY OTHER
EXPLANATORY MATERIAL WITH RESPECT TO SUCH AMENDMENT OR SUPPLEMENT AS REASONABLY
REQUESTED BY ANY OTHER PARTY, TO THE OTHER PARTIES (THE “REVIEWING PARTIES”). 
NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT, AND REGARDLESS OF WHETHER
THE CONDITIONS TO THE CLOSING IN ARTICLE VIII HAVE BEEN SATISFIED OR WAIVED, IN
NO EVENT SHALL THE CLOSING OCCUR DURING THE 15-DAY REVIEW PERIOD GRANTED TO THE
REVIEWING PARTIES AS PROVIDED IN THIS SECTION 7.16 WITHOUT THE WRITTEN CONSENT
OF THE REVIEWING PARTIES.

 

7.17.                     Notice of Allocation of Acquired Assets.  The Buyers
shall deliver to the Seller Parties, no later than four Business Days prior to
the expected Closing Date, a written notice indicating the respective ownership
percentage of each of PSI Energy and CG&E with respect to the Acquired Assets
and Assumed Liabilities as of the Closing.  The parties hereto agree to use
Commercially Reasonable Efforts to prepare the Ancillary Agreements to reflect
the ownership percentages contained in such notice.

 

7.18.                     Post-Closing Start-Up.

 

(A)                                  IN THE EVENT THAT THE BUYERS CONDUCT A
START-UP (OTHER THAN A SELLERS-INITIATED START-UP) OF THE WHEATLAND FACILITY (A
“BUYERS-INITIATED START-UP”) WITHIN THREE MONTHS AFTER THE CLOSING DATE, THE
BUYERS SHALL GIVE THE SELLER PARTIES WRITTEN NOTICE AT LEAST THREE DAYS, OR SUCH
SHORTER PERIOD AS MAY BE REASONABLY BE REQUIRED UNDER THE CIRCUMSTANCES, PRIOR
TO THE PLANNED DATE OF THE FIRST BUYERS-INITIATED START-UP, AND THE BUYERS SHALL
ALLOW UP TO TWO INDIVIDUALS WHO ARE SELLER PARTIES’ REPRESENTATIVES TO ATTEND
THE FIRST BUYERS-INITIATED START-UP IN ORDER TO OBSERVE THE OPERATION OF THE
WHEATLAND FACILITY.  THE SELLER PARTIES SHALL SOLELY BE OBSERVERS OF THE
BUYERS-INITIATED START-UP AND SHALL HAVE NO AUTHORITY WITH RESPECT TO THE
OPERATIONAL PARAMETERS OF ANY BUYERS-INITIATED START-UP.  THE BUYERS SHALL BE
SOLELY RESPONSIBLE FOR ALL COSTS RELATED TO ANY BUYERS-INITIATED START-UP.

 

(B)                                 WITHIN 30 DAYS AFTER THE CLOSING DATE, THE
SELLER PARTIES MAY DELIVER A WRITTEN NOTICE TO THE BUYERS REQUESTING THAT THE
BUYERS INITIATE ONE START-UP OF THE WHEATLAND FACILITY (A “SELLERS-INITIATED
START-UP”).  IN THE EVENT SUCH A NOTICE IS DELIVERED, THE BUYERS SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO CONDUCT SUCH SELLERS-INITIATED START-UP
WITHIN 30 DAYS OF THE DELIVERY OF SUCH NOTICE TO THE BUYERS, SUBJECT TO
REASONABLE DELAY FOR WEATHER CONDITIONS, FUEL AVAILABILITY AND OTHER REASONABLE
FACTORS THAT MIGHT DELAY SUCH SELLERS-INITIATED START-UP.  THE BUYERS SHALL
ALLOW UP TO TWO INDIVIDUALS WHO ARE SELLER PARTIES’ REPRESENTATIVES TO ATTEND
THE SELLERS-INITIATED START-UP IN ORDER TO OBSERVE THE OPERATION OF THE
WHEATLAND FACILITY.  THE SELLER PARTIES SHALL SOLELY BE OBSERVERS OF THE
SELLERS-INITIATED START-UP AND SHALL HAVE NO AUTHORITY WITH RESPECT TO THE
OPERATIONAL PARAMETERS OF THE SELLERS-INITIATED START-UP.  THE SELLER PARTIES
SHALL PAY TO THE BUYERS THE DIFFERENCE BETWEEN THE MARKET PRICE OF THE
ELECTRICITY SOLD DURING THE SELLERS-INITIATED START-UP AND THE PRICE OF THE
NATURAL GAS USED TO GENERATE SUCH ELECTRICITY, ALSO KNOWN AS THE SPARK SPREAD.

 

(C)                                  NOTWITHSTANDING SECTIONS 7.18(A) AND (B),
IN NO EVENT SHALL THE BUYERS BE OBLIGATED TO (I) CONDUCT A SELLERS-INITIATED
START-UP IF THE BUYERS HAVE ALREADY CONDUCTED A BUYERS-INITIATED START-UP IN
COMPLIANCE WITH SECTION 7.18(A) OR (II) ALLOW THE SELLER PARTIES’

 

50

--------------------------------------------------------------------------------

 

REPRESENTATIVES TO OBSERVE MORE THAN ONE START-UP OF THE WHEATLAND FACILITY,
REGARDLESS OF WHETHER SUCH OBSERVED START-UP WAS A BUYERS-INITIATED START-UP OR
A SELLERS-INITIATED START-UP.

 

(D)                                 FOR THE AVOIDANCE OF DOUBT, THE OCCURRENCE
OF A BUYERS-INITIATED START-UP OR A SELLERS-INITIATED START-UP SHALL IN NO WAY
LIMIT OR MODIFY (I) THE REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES,
INCLUDING THOSE CONTAINED IN SECTION 5.19(B), (II) THE INDEMNIFICATION
OBLIGATIONS OF THE SELLER PARTIERS PURSUANT TO ARTICLE IX OR (III) THE SURVIVAL
PERIODS OF ANY OF THE PROVISIONS OF THIS AGREEMENT AS SET FORTH IN SECTION 11.3.

 

7.19.                     Waiver of Indiana Responsible Transfer Property Law. 
The Sellers shall comply with the provisions of section 2(b) of the Indiana
Responsible Transfer Property Law (Ind. Code § 13-25-3), to the extent
applicable, in connection with the conveyance of the Owned Real Property to the
Buyers; provided, however, that each of the Buyers hereby (a) waives the 30 day
advance delivery requirement set forth in section 13-25-3-2(a) of the Indiana
Responsible Transfer Property Law, and (b) acknowledges its awareness of the
purpose and intent of the disclosure document referred to therein

 

7.20.                     Certain Transmission Matters.  On or prior to the
Closing Date, the Seller Parties shall, and shall cause their Affiliates to,
take all necessary actions required to delist all of the units at the Wheatland
Facility as capacity resources for PJM.  From and after the Closing Date, the
Seller Parties shall not, and shall cause their Affiliates not to, use any of
the units at the Wheatland Facility for any capacity obligations of the Seller
Parties or their Affiliates.  No later than May 31, 2006, the Seller Parties
shall, and shall cause their Affiliates to, cease utilizing any of the units at
the Wheatland Facility as a source for the purposes of transmission service or
transmission service reservations.  If any of the Seller Parties or any of their
Affiliates have an existing transmission service reservation from the Wheatland
Facility on June 1, 2006, such Seller Parties shall, or shall cause their
Affiliates to, either terminate such transmission service reservation or, if
reasonably acceptable to both the Seller Parties and the Buyers, assign such
transmission service agreement to the Buyers.

 

ARTICLE VIII
CONDITIONS

 

8.1.                            Conditions to Each Party’s Obligations to Effect
the Transaction.  The respective obligations of each party to effect the sale
and purchase of the Acquired Assets shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions, except as may be waived
in writing pursuant to Section 11.2 by the joint action of the parties hereto:

 

(A)                                  THE WAITING PERIOD UNDER THE HSR ACT
APPLICABLE TO THE CONSUMMATION OF THE SALE OF THE ACQUIRED ASSETS CONTEMPLATED
HEREBY SHALL HAVE EXPIRED OR BEEN TERMINATED;

 

(B)                                 NO PRELIMINARY OR PERMANENT INJUNCTION OR
OTHER ORDER OR DECREE BY ANY FEDERAL OR STATE COURT WHICH PREVENTS THE
CONSUMMATION OF THE SALE OF THE ACQUIRED ASSETS CONTEMPLATED HEREBY SHALL HAVE
BEEN ISSUED AND REMAIN IN EFFECT (EACH PARTY AGREEING TO USE COMMERCIALLY
REASONABLE EFFORTS TO HAVE ANY SUCH INJUNCTION, ORDER OR DECREE LIFTED); AND NO
LAW SHALL HAVE BEEN ENACTED BY ANY GOVERNMENTAL ENTITY WHICH PROHIBITS THE
CONSUMMATION OF THE SALE OF THE ACQUIRED ASSETS;

 

51

--------------------------------------------------------------------------------

 

(C)                                  ALL CONSENTS AND APPROVALS FOR THE
CONSUMMATION OF THE SALE OF THE ACQUIRED ASSETS REQUIRED UNDER THE TERMS OF ANY
NOTE, BOND, MORTGAGE, INDENTURE, CONTRACT, PERMIT OR OTHER AGREEMENT TO WHICH
THE SELLER PARTIES OR THE BUYERS, OR ANY OF THEIR SUBSIDIARIES, ARE A PARTY
SHALL HAVE BEEN OBTAINED, OTHER THAN THOSE WHICH IF NOT OBTAINED, WOULD NOT,
INDIVIDUALLY OR IN THE AGGREGATE, BE REASONABLY LIKELY TO HAVE A MATERIAL
ADVERSE EFFECT; AND

 

(D)                                 SUBJECT TO SECTION 11.16, THE SELLERS
REQUIRED REGULATORY APPROVALS AND THE BUYERS REQUIRED REGULATORY APPROVALS SHALL
HAVE BEEN OBTAINED BY A FINAL ORDER.

 

8.2.                            Conditions to Obligation of the Buyers.  The
obligation of the Buyers to effect the purchase of the Acquired Assets
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date of the following additional conditions, except as may be
waived by the Buyers in writing pursuant to Section 11.2:

 

(A)                                  THERE SHALL NOT HAVE OCCURRED SINCE THE
DATE OF THIS AGREEMENT AND BE CONTINUING A MATERIAL ADVERSE EFFECT OR ANY EVENTS
OR CONDITIONS WHICH ARE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT;

 

(B)                                 THE SELLER PARTIES SHALL HAVE PERFORMED AND
COMPLIED WITH IN ALL MATERIAL RESPECTS THE COVENANTS AND AGREEMENTS CONTAINED IN
THIS AGREEMENT THAT ARE REQUIRED TO BE PERFORMED AND COMPLIED WITH BY THE SELLER
PARTIES ON OR PRIOR TO THE CLOSING DATE;

 

(C)                                  EACH OF THE REPRESENTATIONS AND WARRANTIES
OF THE SELLER PARTIES SET FORTH IN THIS AGREEMENT THAT ARE NOT QUALIFIED BY
MATERIALITY OR MATERIAL ADVERSE EFFECT SHALL BE TRUE AND CORRECT IN ALL MATERIAL
RESPECTS AS OF THE DATE OF THIS AGREEMENT AND AS OF THE CLOSING DATE, WITH THE
SAME EFFECT AS THOUGH SUCH REPRESENTATIONS AND WARRANTIES HAD BEEN MADE ON AND
AS OF THE CLOSING DATE, EXCEPT THAT SUCH REPRESENTATIONS AND WARRANTIES THAT ARE
MADE AS OF A SPECIFIC DATE NEED ONLY BE TRUE AND CORRECT AS OF SUCH DATE;

 

(D)                                 EACH OF THE REPRESENTATIONS AND WARRANTIES
OF THE SELLER PARTIES THAT ARE QUALIFIED BY MATERIALITY OR MATERIAL ADVERSE
EFFECT SHALL BE TRUE AND CORRECT AS OF THE DATE OF THIS AGREEMENT AND AS OF THE
CLOSING DATE, WITH THE SAME EFFECT AS THOUGH SUCH REPRESENTATIONS AND WARRANTIES
HAD BEEN MADE ON AND AS OF THE CLOSING DATE, EXCEPT THAT SUCH REPRESENTATIONS
AND WARRANTIES THAT ARE MADE AS OF A SPECIFIC DATE NEED ONLY BE TRUE AND CORRECT
AS OF SUCH DATE;

 

(E)                                  EACH OF THE BUYERS SHALL HAVE RECEIVED A
CERTIFICATE FROM AN AUTHORIZED OFFICER OF EACH OF THE SELLER PARTIES, DATED THE
CLOSING DATE, TO THE EFFECT THAT THE CONDITIONS SET FORTH IN SECTIONS 8.2(A),
8.2(B), 8.2(C) AND 8.2(D) HAVE BEEN SATISFIED;

 

(F)                                    THE SELLER PARTIES SHALL HAVE COMPLIED
WITH THE DELIVERY REQUIREMENTS OF SECTION 4.3;

 

(G)                                 ALL PERMITS AND MATERIAL ENVIRONMENTAL
PERMITS SHALL HAVE BEEN TRANSFERRED TO THE BUYERS OR, IF SUCH PERMITS AND
ENVIRONMENTAL PERMITS ARE NOT TRANSFERABLE, SHALL HAVE BEEN MODIFIED OR REISSUED
TO THE BUYERS, EXCEPT TO THE EXTENT THAT APPLICABLE LAWS (INCLUDING, WITHOUT
LIMITATION, APPLICABLE ENVIRONMENTAL LAWS) WOULD ALLOW THE BUYERS TO LAWFULLY
OWN AND OPERATE THE WHEATLAND FACILITY AND THE SITE AFTER THE CLOSING DATE IN
THE MANNER IN WHICH THEY ARE CURRENTLY OPERATED WITHOUT SUCH CONDITIONS HAVING
BEEN SATISFIED;

 

52

--------------------------------------------------------------------------------

 

(h)           Subject to Section 11.16, the Final Orders of any Governmental
Entity having authority over the transactions contemplated by this Agreement
shall have been received, and such Final Orders shall not impose terms or
conditions which would, individually or in the aggregate, be reasonably likely
to have a Material Adverse Effect or a material adverse effect on the business,
assets, operations or conditions of either of the Buyers, in the context of the
transaction contemplated hereby and as determined by the board of directors of
either of the Buyers based on the advice of the Buyers’ Representatives; and

 

(i)            The Seller Parties shall have delivered evidence, reasonably
satisfactory in form and substance to the Buyers, of the full and irrevocable
release of all Encumbrances on the Acquired Assets arising under or relating to
the Existing Debt Documents.

 

8.3.         Conditions to Obligation of the Seller Parties.  The obligation of
the Seller Parties to effect the sale of the Acquired Assets contemplated by
this Agreement shall be subject to the fulfillment at or prior to the Closing
Date of the following additional conditions, except as may be waived by the
Seller Parties in writing pursuant to Section 11.2:

 

(a)           The Buyers shall have performed and complied with in all material
respects the covenants and agreements contained in this Agreement that are
required to be performed and complied with by the Buyers on or prior to the
Closing Date;

 

(b)           Each of the representations and warranties of the Buyers set forth
in this Agreement that are not qualified by materiality shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date, with the same effect as though such representations and warranties
had been made on and as of the Closing Date, except that such representations
and warranties that are made as of a specific date need only be true and correct
as of such date;

 

(c)           Each of the representations and warranties of the Buyers that are
qualified by materiality shall be true and correct as of the date of this
Agreement and as of the Closing Date, with the same effect as though such
representations and warranties had been made on and as of the Closing Date,
except that such representations and warranties that are made as of a specific
date need only be true and correct as of such date;

 

(d)           The Seller Parties shall have received a certificate from an
authorized officer of each of the Buyers, dated the Closing Date, to the effect
that the conditions set forth in Sections 8.3(a), 8.3(b) and 8.3(c) have been
satisfied;

 

(e)           The Buyers shall have complied with the delivery requirements of
Section 4.4; and

 

(f)            Subject to Section 11.16, the Final Orders of any Governmental
Entity having authority over the transactions contemplated by this Agreement
shall have been received, and such Final Orders shall not impose terms or
conditions which would, individually or in the aggregate, be reasonably likely
to have a material adverse effect on the business, assets, operations or
conditions of any of the Seller Parties, in the context of the transactions
contemplated hereby and as determined by the board of directors of AESC based on
the advice of the Seller Parties’ Representatives.

 

53

--------------------------------------------------------------------------------

 

ARTICLE IX
INDEMNIFICATION

 

9.1.                            Indemnification.

 

(A)                                  FROM AND AFTER THE CLOSING DATE, SUBJECT TO
THE LIMITATIONS SET FORTH IN THIS SECTION 9.1(A), AND PROVIDED THAT THE BUYERS
INDEMNIFIED PARTY MAKES A WRITTEN CLAIM FOR INDEMNIFICATION AGAINST THE SELLER
PARTIES PURSUANT TO SECTION 11.4 WITHIN THE SURVIVAL PERIOD SET FORTH IN
SECTION 11.3, THE SELLER PARTIES SHALL, JOINTLY AND SEVERALLY, INDEMNIFY, DEFEND
AND HOLD HARMLESS EACH OF THE BUYERS AND THEIR AFFILIATES, AND THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, SHAREHOLDERS AND AGENTS (EACH, A “BUYERS
INDEMNIFIED PARTY”) FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS OR SUITS (BY
ANY PERSON), LOSSES, LIABILITIES, 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 THE BUYERS INDEMNIFIED PARTIES RELATING TO, RESULTING FROM OR
ARISING OUT OF (I) ANY BREACH BY ANY OF THE SELLER PARTIES OF ANY OF THE
REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES CONTAINED IN THIS
AGREEMENT, OR ANY INACCURATE STATEMENT IN THE CERTIFICATE DELIVERED PURSUANT TO
SECTION 8.2(E), (II) ANY BREACH BY ANY OF THE SELLER PARTIES OF ANY COVENANT OR
AGREEMENT OF THE SELLER PARTIES CONTAINED IN THIS AGREEMENT, (III) ANY EXCLUDED
LIABILITIES, (IV) ANY FAILURE OF THE SELLER PARTIES TO COMPLY WITH APPLICABLE
BULK SALES LAWS OR (V) THE MATTERS DISCLOSED ON ANY SUPPLEMENTED OR AMENDED
SCHEDULES PROVIDED BY THE SELLER PARTIES PURSUANT TO SECTION 7.16(C). 
NOTWITHSTANDING THE FOREGOING, (A) THE SELLER PARTIES SHALL HAVE NO LIABILITY
UNDER SECTIONS 9.1(A)(I) OR 9.1(A)(V) FOR INDEMNIFIABLE LOSSES (OTHER THAN
INDEMNIFIABLE LOSSES PURSUANT TO SECTION 7.8), UNLESS AND UNTIL THE AGGREGATE
INDEMNIFIABLE LOSSES INCURRED BY THE BUYERS INDEMNIFIED PARTIES EXCEED $750,000
IN WHICH CASE THE SELLER PARTIES SHALL BE JOINTLY AND SEVERALLY LIABLE FOR ALL
LOSSES IN EXCESS OF $750,000, (B) IN NO EVENT SHALL THE SELLER PARTIES’
AGGREGATE LIABILITY UNDER SECTIONS 9.1(A)(I) AND 9.1(A)(V) EXCEED $50,000,000 IN
THE AGGREGATE; (C) IN NO EVENT SHALL THE SELLER PARTIES’ AGGREGATE LIABILITY
UNDER SECTION 9.1(A)(II) EXCEED THE AMOUNT OF THE PURCHASE PRICE; AND (D) FOR
PURPOSES OF CALCULATING THE AMOUNT OF INDEMNIFIABLE LOSSES, ALL REFERENCES TO
MATERIALITY OR SIMILAR QUALIFIERS OR MATERIAL ADVERSE EFFECT SHALL BE
DISREGARDED.

 

(B)                                 FROM AND AFTER THE CLOSING DATE, SUBJECT TO
THE LIMITATIONS SET FORTH IN THIS SECTION 9.1(B), AND PROVIDED THAT THE SELLERS
INDEMNIFIED PARTY MAKES A WRITTEN CLAIM FOR INDEMNIFICATION AGAINST THE BUYERS
PURSUANT TO SECTION 11.4 WITHIN THE SURVIVAL PERIOD SET FORTH IN SECTION 11.3,
THE BUYERS SHALL, JOINTLY AND SEVERALLY, INDEMNIFY, DEFEND AND HOLD HARMLESS
EACH OF THE SELLER PARTIES AND THEIR AFFILIATES, AND THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, SHAREHOLDERS AND AGENTS (EACH, A “SELLERS INDEMNIFIED
PARTY”) FROM AND AGAINST ALL INDEMNIFIABLE LOSSES ASSERTED AGAINST OR SUFFERED
BY THE SELLERS INDEMNIFIED PARTIES RELATING TO, RESULTING FROM OR ARISING OUT OF
(I) ANY BREACH BY EITHER OF THE BUYERS OF ANY OF THE REPRESENTATIONS AND
WARRANTIES OF THE BUYERS CONTAINED IN THIS AGREEMENT, OR ANY INACCURATE
STATEMENT IN THE CERTIFICATE DELIVERED PURSUANT TO SECTION 8.3(D), (II) ANY
BREACH BY EITHER OF THE BUYERS OF ANY COVENANT OR AGREEMENT OF THE BUYERS
CONTAINED IN THIS AGREEMENT, OR (III) THE ASSUMED LIABILITIES.  NOTWITHSTANDING
THE FOREGOING, (A) THE BUYERS SHALL HAVE NO LIABILITY UNDER
SECTION 9.1(B)(I) FOR INDEMNIFIABLE LOSSES (OTHER THAN INDEMNIFIABLE LOSSES
PURSUANT TO SECTION 7.8), UNLESS AND UNTIL THE AGGREGATE INDEMNIFIABLE LOSSES
INCURRED BY THE SELLERS INDEMNIFIED PARTIES

 

54

--------------------------------------------------------------------------------

 

EXCEED $750,000 IN WHICH CASE THE BUYERS SHALL BE JOINTLY AND SEVERALLY LIABLE
FOR ALL LOSSES IN EXCESS OF $750,000; (B) IN NO EVENT SHALL THE BUYERS’
AGGREGATE LIABILITY UNDER SECTION 9.1(B)(I) EXCEED $50,000,000; (C) IN NO EVENT
SHALL THE BUYERS’ AGGREGATE LIABILITY UNDER SECTION 9.1(B)(II) EXCEED THE AMOUNT
OF THE PURCHASE PRICE; AND (D) FOR PURPOSES OF CALCULATING THE AMOUNT OF
INDEMNIFIABLE LOSSES, ALL REFERENCES TO MATERIALITY, MATERIAL ADVERSE EFFECT OR
SIMILAR QUALIFIERS SHALL BE DISREGARDED.

 

(C)                                  ANY PERSON ENTITLED TO RECEIVE
INDEMNIFICATION UNDER THIS AGREEMENT (AN “INDEMNITEE”) HAVING A CLAIM UNDER
THESE INDEMNIFICATION PROVISIONS SHALL MAKE A GOOD FAITH EFFORT TO RECOVER ALL
INDEMNIFIABLE LOSSES FROM INSURERS OF SUCH INDEMNITEE UNDER APPLICABLE INSURANCE
POLICIES SO AS TO REDUCE THE AMOUNT OF ANY INDEMNIFIABLE LOSS HEREUNDER;
PROVIDED THAT IN NO EVENT SHALL AN INDEMNITEE BE REQUIRED TO INITIATE LITIGATION
OR ARBITRATION AGAINST AN INSURANCE PROVIDER BEFORE RECEIVING PAYMENT FOR ANY
INDEMNIFIABLE LOSS PURSUANT TO THIS ARTICLE IX.  THE AMOUNT OF INDEMNIFIABLE
LOSS WILL BE (I) REDUCED TO THE EXTENT THAT INDEMNITEE RECEIVES ANY INSURANCE
PROCEEDS WITH RESPECT TO AN INDEMNIFIABLE LOSS AND (II) REDUCED OR INCREASED TO
TAKE INTO ACCOUNT ANY NET TAX BENEFIT OR BURDEN RECOGNIZED BY THE INDEMNITEE
ARISING FROM THE RECOGNITION OF THE INDEMNIFIABLE LOSS AND ANY PAYMENT ACTUALLY
RECEIVED WITH RESPECT TO AN INDEMNIFIABLE LOSS.

 

(D)                                 THE EXPIRATION, TERMINATION OR
EXTINGUISHMENT OF ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT PURSUANT
TO SECTION 11.3 SHALL NOT AFFECT THE PARTIES’ OBLIGATIONS UNDER THIS SECTION 9.1
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)                                  FOLLOWING THE CLOSING AND EXCEPT WITH
RESPECT TO INTENTIONAL BREACHES OF THIS AGREEMENT, WILLFUL MISCONDUCT OR FRAUD,
THE REMEDIES SET FORTH IN THIS ARTICLE IX WILL BE THE SOLE AND EXCLUSIVE
REMEDIES FOR ANY AND ALL CLAIMS, DAMAGES, COMPLAINTS, DEMANDS, CAUSES OF ACTION,
INVESTIGATIONS, HEARINGS, ACTIONS, SUITS OR OTHER PROCEEDINGS IN CONNECTION
WITH, ARISING FROM OR RELATING TO THIS AGREEMENT AND THE ANCILLARY AGREEMENTS
AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY AND ARE IN LIEU OF ANY AND
ALL OTHER RIGHTS AND REMEDIES WHICH THE SELLER PARTIES OR THE BUYERS MAY HAVE
UNDER THIS AGREEMENT OR OTHERWISE FOR RELIEF (MONETARY OR OTHERWISE) WITH
RESPECT TO ANY BREACH OF OR FAILURE TO PERFORM UNDER THIS AGREEMENT AND THE
ANCILLARY AGREEMENTS OR OTHERWISE WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY, INCLUDING WITH RESPECT TO THE ASSUMED LIABILITIES OR
EXCLUDED LIABILITIES.  EACH PARTY WAIVES ANY PROVISION OF LAW TO THE EXTENT THAT
IT WOULD LIMIT OR RESTRICT THE AGREEMENTS CONTAINED IN THIS ARTICLE IX.  NOTHING
HEREIN SHALL PREVENT EITHER PARTY FROM TERMINATING THIS AGREEMENT IN ACCORDANCE
WITH ARTICLE X.

 

(F)                                    ANY INDEMNITY PAYMENT UNDER THIS
AGREEMENT SHALL BE TREATED AS AN ADJUSTMENT TO THE PURCHASE PRICE FOR TAX
PURPOSES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW.

 

9.2.                            Defense of Claims.

 

(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

 

55

--------------------------------------------------------------------------------

 

PARTY TO THIS AGREEMENT OR AN AFFILIATE OF A PARTY TO THIS AGREEMENT (A “THIRD
PARTY CLAIM”) WITH RESPECT TO WHICH INDEMNIFICATION IS TO BE SOUGHT FROM THE
INDEMNIFYING PARTY, THE INDEMNITEE WILL GIVE THE INDEMNIFYING PARTY REASONABLY
PROMPT WRITTEN NOTICE THEREOF, BUT IN ANY EVENT NOT LATER THAN 15 DAYS AFTER THE
INDEMNITEE’S RECEIPT OF WRITTEN 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 THE
INDEMNIFYING PARTY’S OWN EXPENSE AND BY THE INDEMNIFYING PARTY’S OWN COUNSEL
(REASONABLY ACCEPTABLE TO THE INDEMNITEE), AND THE INDEMNITEE WILL COOPERATE IN
GOOD FAITH IN SUCH DEFENSE AT SUCH INDEMNITEE’S OWN EXPENSE.

 

(B)                                 IF WITHIN 10 DAYS AFTER AN INDEMNITEE
PROVIDES WRITTEN NOTICE TO THE INDEMNIFYING PARTY OF ANY THIRD PARTY CLAIM THE
INDEMNITEE RECEIVES WRITTEN NOTICE FROM THE INDEMNIFYING PARTY THAT THE
INDEMNIFYING PARTY HAS ELECTED TO ASSUME THE DEFENSE OF SUCH THIRD PARTY CLAIM
AS PROVIDED IN THE LAST SENTENCE OF SECTION 9.2(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 AT ANY TIME THE
INDEMNIFYING PARTY FAILS TO TAKE REASONABLE STEPS NECESSARY TO DEFEND DILIGENTLY
SUCH THIRD PARTY CLAIM WITHIN 10 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
WILL BE LIABLE FOR ALL REASONABLE EXPENSES THEREOF; PROVIDED FURTHER, THAT IF,
UNDER APPLICABLE STANDARDS OF PROFESSIONAL CONDUCT, A CONFLICT WITH RESPECT TO
ANY SIGNIFICANT ISSUE BETWEEN ANY INDEMNITEE AND THE INDEMNIFYING PARTY EXISTS
IN RESPECT OF SUCH THIRD PARTY CLAIM, THE INDEMNIFYING PARTY SHALL PAY
REASONABLE FEES AND EXPENSES OF ONE ADDITIONAL COUNSEL AS MAY BE REQUIRED TO BE
RETAINED IN ORDER TO RESOLVE SUCH CONFLICT.  THE INDEMNIFYING PARTY SHALL BE
LIABLE FOR THE FEES AND EXPENSES OF COUNSEL EMPLOYED BY THE INDEMNITEE FOR ANY
PERIOD DURING WHICH THE INDEMNIFYING PARTY HAS NOT ASSUMED THE DEFENSE OF ANY
SUCH THIRD PARTY CLAIM (OTHER THAN DURING ANY PERIOD IN WHICH THE INDEMNITEE HAS
FAILED TO GIVE NOTICE OF THE THIRD PARTY CLAIM AS PROVIDED ABOVE).  IF THE
INDEMNIFYING PARTY ASSUMES SUCH DEFENSE, THE INDEMNITEE SHALL HAVE THE RIGHT TO
PARTICIPATE IN THE DEFENSE THEREOF AND TO EMPLOY COUNSEL, AT ITS OWN EXPENSE,
SEPARATE FROM THE COUNSEL EMPLOYED BY THE INDEMNIFYING PARTY, IT BEING
UNDERSTOOD THAT THE INDEMNIFYING PARTY SHALL CONTROL SUCH DEFENSE.  IF THE
INDEMNIFYING PARTY CHOOSES TO DEFEND OR BRING ANY THIRD PARTY CLAIM, THE
INDEMNITEE SHALL AGREE TO ANY SETTLEMENT, COMPROMISE OR DISCHARGE OF SUCH THIRD
PARTY CLAIM THAT THE INDEMNIFYING PARTY MAY RECOMMEND AND THAT, BY ITS TERMS,
DISCHARGES THE INDEMNITEE AND ITS AFFILIATES FROM THE FULL AMOUNT OF LIABILITY
IN CONNECTION WITH SUCH THIRD PARTY CLAIM; PROVIDED, HOWEVER, THAT, WITHOUT THE
CONSENT OF THE INDEMNITEE, THE INDEMNIFYING PARTY SHALL NOT CONSENT TO, AND THE
INDEMNITEE SHALL NOT BE REQUIRED TO AGREE TO, THE ENTRY OF ANY JUDGMENT OR ENTRY
INTO ANY SETTLEMENT THAT (I) PROVIDES FOR INJUNCTIVE OR OTHER NON-MONETARY
RELIEF AFFECTING THE INDEMNITEE OR ANY OF ITS AFFILIATES OR (II) DOES NOT
INCLUDE AS AN UNCONDITIONAL TERM THEREOF THE GIVING OF A RELEASE FROM ALL
LIABILITY WITH RESPECT TO SUCH CLAIM BY EACH CLAIMANT OR PLAINTIFF TO EACH
INDEMNITEE THAT IS THE SUBJECT OF SUCH THIRD PARTY CLAIM.

 

(C)                                  ANY CLAIM BY AN INDEMNITEE ON ACCOUNT OF AN
INDEMNIFIABLE LOSS WHICH DOES NOT RESULT FROM A THIRD PARTY CLAIM (A “DIRECT
CLAIM”) WILL 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, AND THE INDEMNIFYING PARTY

 

56

--------------------------------------------------------------------------------

 

WILL HAVE A PERIOD OF 30 DAYS WITHIN WHICH TO RESPOND TO SUCH DIRECT CLAIM.  IF
THE INDEMNIFYING PARTY DOES NOT RESPOND WITHIN SUCH 30-DAY PERIOD, THE
INDEMNIFYING PARTY WILL BE DEEMED TO HAVE ACCEPTED SUCH CLAIM.  IF THE
INDEMNIFYING PARTY REJECTS SUCH CLAIM, THE INDEMNITEE WILL BE FREE TO SEEK
ENFORCEMENT OF ITS RIGHTS 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 OR
AGAINST ANY OTHER PERSON, THE AMOUNT OF SUCH REDUCTION, LESS ANY COSTS, EXPENSES
OR PREMIUMS INCURRED IN CONNECTION THEREWITH WILL PROMPTLY BE REPAID BY THE
INDEMNITEE TO THE INDEMNIFYING PARTY, BUT IN ANY EVENT NOT LATER THAN 30 DAYS
AFTER RECEIPT OF SUCH REDUCTION BY THE INDEMNITEE.  UPON MAKING ANY INDEMNITY
PAYMENT, THE INDEMNIFYING PARTY WILL, TO THE EXTENT OF SUCH INDEMNITY PAYMENT,
BE SUBROGATED TO, AND THE INDEMNITEE SHALL PROVIDE THE INDEMNIFYING PARTY A
WRITTEN ASSIGNMENT OF, ALL RIGHTS OF THE INDEMNITEE AGAINST ANY THIRD PARTY
(INCLUDING ANY INSURER) IN RESPECT OF THE INDEMNIFIABLE LOSS TO WHICH THE
INDEMNITY PAYMENT RELATES; PROVIDED, HOWEVER, THAT (I) THE INDEMNIFYING PARTY
WILL 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
ANY SUCH THIRD PARTY ON ACCOUNT OF SAID INDEMNITY PAYMENT IS HEREBY MADE
EXPRESSLY SUBORDINATED AND SUBJECT 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 THE INDEMNIFYING PARTY WILL
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 9.2(D) SHALL BE CONSTRUED TO REQUIRE ANY PARTY
HERETO TO OBTAIN OR MAINTAIN ANY INSURANCE COVERAGE.

 

(E)                                  A FAILURE TO GIVE TIMELY NOTICE AS PROVIDED
IN THIS SECTION 9.2 WILL 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 PREJUDICED AS A
RESULT OF SUCH FAILURE.

 

ARTICLE X
TERMINATION AND ABANDONMENT

 

10.1.                     Termination.

 

(A)                                  THIS AGREEMENT MAY BE TERMINATED AT ANY
TIME PRIOR TO THE CLOSING DATE BY MUTUAL WRITTEN CONSENT OF THE SELLER PARTIES
AND THE BUYERS.

 

(B)                                 THIS AGREEMENT MAY BE TERMINATED BY THE
SELLER PARTIES OR THE BUYERS IF THE CLOSING CONTEMPLATED HEREBY SHALL HAVE NOT
OCCURRED ON OR BEFORE DECEMBER 31, 2005 (THE “TERMINATION DATE”); PROVIDED,
HOWEVER, THAT THE RIGHT TO TERMINATE THIS AGREEMENT UNDER THIS
SECTION 10.1(B) WILL NOT BE AVAILABLE TO ANY PARTY WHOSE FAILURE TO FULFILL ANY
OBLIGATION UNDER THIS AGREEMENT HAS BEEN THE CAUSE OF, OR RESULTED IN, THE
FAILURE OF THE CLOSING TO OCCUR ON OR BEFORE SUCH DATE.

 

57

--------------------------------------------------------------------------------

 

(C)                                  THIS AGREEMENT MAY BE TERMINATED BY THE
SELLER PARTIES OR THE BUYERS IF (I) ONE OR MORE COURTS OF COMPETENT JURISDICTION
SHALL HAVE ISSUED AN ORDER, JUDGMENT OR DECREE PERMANENTLY RESTRAINING,
ENJOINING OR OTHERWISE PROHIBITING THE CLOSING, AND SUCH ORDER, JUDGMENT OR
DECREE SHALL HAVE BECOME FINAL AND NONAPPEALABLE OR (II) ANY LAW SHALL HAVE BEEN
ENACTED BY ANY GOVERNMENTAL ENTITY WHICH PROHIBITS THE CONSUMMATION OF THE
CLOSING.

 

(D)                                 THIS AGREEMENT MAY BE TERMINATED BY THE
BUYERS IF THERE SHALL HAVE BEEN A MATERIAL BREACH OF ANY REPRESENTATION OR
WARRANTY, OR A MATERIAL BREACH OF ANY COVENANT OR AGREEMENT OF THE SELLER
PARTIES HEREUNDER, WHICH BREACH WOULD, INDIVIDUALLY OR IN THE AGGREGATE, BE
REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT AND SUCH BREACH HAS NOT BEEN
CURED BY THE SELLER PARTIES WITHIN 30 BUSINESS DAYS AFTER THE SELLER PARTIES
HAVE KNOWLEDGE OF SUCH BREACH.

 

(E)                                  THIS AGREEMENT MAY BE TERMINATED BY THE
SELLER PARTIES IF THERE SHALL HAVE BEEN A MATERIAL BREACH OF ANY REPRESENTATION
OR WARRANTY, OR A MATERIAL BREACH OF ANY COVENANT OR AGREEMENT OF THE BUYERS
HEREUNDER, WHICH BREACH WOULD PREVENT, MATERIALLY DELAY OR MATERIALLY IMPAIR THE
BUYERS’ ABILITY TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
AND SUCH BREACH HAS NOT BEEN CURED BY THE BUYERS WITHIN 30 BUSINESS DAYS AFTER
THE BUYERS HAVE KNOWLEDGE OF SUCH BREACH.

 

(F)                                    THIS AGREEMENT MAY BE TERMINATED BY THE
BUYERS AS CONTEMPLATED IN SECTION 7.11(B).

 

(G)                                 THIS AGREEMENT MAY BE TERMINATED BY THE
SELLER PARTIES OR THE BUYERS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 7.16.

 

10.2.                     Procedure and Effect of Termination.  In the event of
termination of this Agreement and abandonment of the transactions contemplated
hereby by either the Seller Parties or the Buyers pursuant to Section 10.1,
written notice thereof shall forthwith be given by the terminating party to the
other parties and this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned, without further action by any of the
parties hereto.  If this Agreement is terminated as provided herein:

 

(A)                                  NONE OF THE PARTIES HERETO NOR ANY OF THEIR
RESPECTIVE TRUSTEES, DIRECTORS, OFFICERS, AFFILIATES, AS THE CASE MAY BE, SHALL
HAVE ANY LIABILITY OR FURTHER OBLIGATION TO THE OTHER PARTIES OR ANY OF THEIR
RESPECTIVE TRUSTEES, DIRECTORS, OFFICERS OR AFFILIATES, AS THE CASE MAY BE,
PURSUANT TO THIS AGREEMENT, EXCEPT (I) THAT NOTHING HEREIN SHALL RELIEVE ANY
PARTY FROM LIABILITY FOR ANY MATERIAL BREACH OF ANY REPRESENTATION, WARRANTY,
COVENANT, OR AGREEMENT OF SUCH PARTY CONTAINED IN THIS AGREEMENT AND (II) THAT
SECTIONS 7.2(B), 7.3, 7.8, 10.2, 11.1, 11.2, 11.4 THROUGH 11.6, AND 11.8 THROUGH
11.10 AND 11.12 THROUGH 11.15 SHALL SURVIVE SUCH TERMINATION; AND

 

(B)                                 ALL FILINGS, APPLICATIONS AND OTHER
SUBMISSIONS MADE PURSUANT TO THIS AGREEMENT, TO THE EXTENT PRACTICABLE, SHALL BE
WITHDRAWN FROM THE GOVERNMENTAL ENTITY OR OTHER PERSON TO WHICH THEY WERE MADE.

 

58

--------------------------------------------------------------------------------

 

ARTICLE XI
MISCELLANEOUS PROVISIONS

 

11.1.                     Amendment and Modification.  Subject to applicable
Law, this Agreement may be amended, modified or supplemented only by written
agreement of the Seller Parties and the Buyers.

 

11.2.                     Waiver of Compliance.  Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party expressly
granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any other failure.

 

11.3.                     Survival.

 

(A)                                  THE REPRESENTATIONS AND WARRANTIES OF THE
SELLER PARTIES CONTAINED HEREIN OR IN ANY CERTIFICATES OR DOCUMENTS DELIVERED
PURSUANT TO THIS AGREEMENT ON THE CLOSING DATE SHALL SURVIVE THE CLOSING FOR A
PERIOD OF 24 MONTHS FOLLOWING THE CLOSING DATE; PROVIDED, HOWEVER, THAT (I) THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 5.10 SHALL SURVIVE FOR A
PERIOD OF FIVE YEARS FOLLOWING THE CLOSING DATE, (II) THE REPRESENTATIONS AND
WARRANTIES SET FORTH IN SECTION 5.19(B) SHALL SURVIVE FOR A PERIOD OF THREE
MONTHS FOLLOWING THE CLOSING DATE, AND (III) THE REPRESENTATIONS AND WARRANTIES
SET FORTH IN SECTIONS 5.2, 5.3, 5.8, 5.17, 5.19(A), 5.22 AND 5.23 SHALL SURVIVE
UNTIL 90 DAYS AFTER THE EXPIRATION OF THE APPLICABLE STATUTE OF LIMITATIONS
(GIVING EFFECT TO EXTENSIONS OR WAIVERS THEREOF; PROVIDED, HOWEVER, THAT NOTHING
CONTAINED IN THIS AGREEMENT SHALL BE DEEMED TO REQUIRE ANY OF THE PARTIES TO
AGREE TO ANY SUCH EXTENSION OR WAIVER).

 

(B)                                 THE REPRESENTATIONS AND WARRANTIES OF THE
BUYERS CONTAINED HEREIN OR IN ANY CERTIFICATES OR DOCUMENTS DELIVERED PURSUANT
TO THIS AGREEMENT ON THE CLOSING DATE SHALL SURVIVE THE CLOSING FOR A PERIOD OF
24 MONTHS FOLLOWING THE CLOSING DATE; PROVIDED, HOWEVER, THAT THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTIONS 6.2, 6.6, 6.7 AND 6.8 SHALL
SURVIVE UNTIL 90 DAYS AFTER THE EXPIRATION OF THE APPLICABLE STATUTE OF
LIMITATIONS (GIVING EFFECT TO EXTENSIONS OR WAIVERS THEREOF; PROVIDED, HOWEVER,
THAT NOTHING CONTAINED IN THIS AGREEMENT SHALL BE DEEMED TO REQUIRE ANY OF THE
PARTIES TO AGREE TO ANY SUCH EXTENSION OR WAIVER).

 

(C)                                  THE COVENANTS AND AGREEMENTS IN ARTICLE IX
SHALL SURVIVE THE CLOSING AND SHALL REMAIN IN FULL FORCE AND EFFECT FOR SUCH
PERIOD AS IS NECESSARY TO RESOLVE ANY CLAIM MADE WITH RESPECT TO ANY
REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT CONTAINED HEREIN DURING THE
SURVIVAL PERIOD THEREOF, AND THE COVENANTS AND AGREEMENTS OF THE PARTIES
CONTAINED IN ARTICLES II, III, VII AND XI OF THIS AGREEMENT SHALL SURVIVE THE
CLOSING FOR (I) THE TIME PERIOD(S) SET FORTH IN THE RESPECTIVE SECTIONS
CONTAINED IN SUCH ARTICLES, OR (II) IF NO TIME PERIOD IS SO SPECIFIED, UNTIL 90
DAYS AFTER THE EXPIRATION OF THE APPLICABLE STATUTE OF LIMITATIONS.

 

11.4.                     Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or by facsimile transmission, telexed or mailed by overnight courier or
registered or certified mail (return receipt requested), postage prepaid, to the

 

59

--------------------------------------------------------------------------------

 

parties at the following address (or at such other address for a party as shall
be specified by like notice; provided that notices of a change of address shall
be effective only upon receipt thereof):

 

(A)                                  IF TO THE SELLER PARTIES, TO:

 

Allegheny Energy Supply Company, LLC

4350 Northern Pike – 4 North

Monroeville, PA  15146-2841

Facsimile:  (412) 856-2789

Attention:  Deputy General Counsel

 

with a copy to:

 

Allegheny Energy, Inc.

800 Cabin Hill Drive

Greensburg, PA  15601-1689

Facsimile:  (724) 830-5151

Attention:  President

 

and

 

Gray, Plant, Mooty, Mooty & Bennett, P.A.

500 IDS Center

80 South Eighth Street

Minneapolis, MN 55402

Facsimile:  (612) 632-4388

Attention:  Joseph T. Kinning, Esq.

 

(B)                                 IF TO PSI ENERGY, TO:

 

PSI Energy, Inc.

1000 East Main Street

Plainfield, IN  46168

Facsimile:  (317) 838-2111

Attention:  Kay E. Pashos, President

 

with a copy to:

 

Cinergy Corp.

139 East Fourth Street

Cincinnati, OH  45202

Facsimile:  (513) 287-4090

Attention:  Douglas C. Taylor, Vice President, Corporate Development

 

and

 

60

--------------------------------------------------------------------------------

 

Skadden, Arps, Slate, Meagher & Flom LLP

1440 New York Avenue, N.W.

Washington, DC  20005

Facsimile:  (202) 393-5760

Attention:  Pankaj K. Sinha, Esq.

 

(C)                                  IF TO CG&E, TO:

 

The Cincinnati Gas & Electric Company

139 East Fourth Street

Cincinnati, OH  45202

Facsimile:  (513) 287-4031

Attention:  Gregory C. Ficke, President

 

with a copy to:

 

Cinergy Corp.

139 East Fourth Street

Cincinnati, OH  45202

Facsimile:  (513) 287-4090

Attention:  Douglas C. Taylor, Vice President, Corporate Development

 

and

 

Skadden, Arps, Slate, Meagher & Flom LLP

1440 New York Avenue, N.W.

Washington, DC  20005

Facsimile:  (202) 393-5760

Attention:  Pankaj K. Sinha, Esq.

 

11.5.                     Assignment; No Third-Party Beneficiaries.  This
Agreement and all 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 any party hereto, including by
operation of Law without the prior written consent of the other party, nor is
this Agreement intended to confer upon any other Person except the parties
hereto any rights or remedies hereunder.  Without limiting the generality of the
foregoing, no provision of this Agreement will create any third-party
beneficiary rights in any employee or former employee of the Seller Parties or
any of their Affiliates (including any beneficiary or dependent thereof) in
respect of continued employment or resumed employment, and no provision of this
Agreement will create any rights in any such Persons in respect of any benefits
that may be provided, directly or indirectly, under any employee benefit plan or
arrangement except as expressly provided for thereunder.

 

11.6.                     Governing Law.  This Agreement shall be governed by
and construed in accordance with the Laws of the State of Indiana (regardless of
the Laws that might otherwise govern under applicable Indiana principles of
conflicts of law) as to all matters, including,

 

61

--------------------------------------------------------------------------------

 

without limitation, matters of validity, construction, effect, performance and
remedies, except where Indiana Law is preempted by federal Law, in which event
federal Law shall govern.

 

11.7.                     Counterparts.  This Agreement may be executed and
delivered (including via facsimile) in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

 

11.8.                     Interpretation.  The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement.

 

11.9.                     Schedules and Exhibits.  All Exhibits and Schedules
referred to herein are intended to be and hereby are specifically made a part of
this Agreement.

 

11.10.              Entire Agreement.  This Agreement, the Confidentiality
Agreement and the Ancillary Agreements including the Exhibits, 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 and
the Ancillary Agreements supersede all prior agreements and understandings,
whether written or oral, between the parties with respect to such transactions
other than the Confidentiality Agreement.

 

11.11.              Bulk Sales or Transfer Laws.  The Buyers acknowledge that
the Seller Parties will not comply with the provision of any bulk sales or
transfer Laws of any jurisdiction in connection with the transactions
contemplated by this Agreement.  The Buyers hereby waive compliance by the
Sellers with the provisions of the bulk sales or transfer Laws of all applicable
jurisdictions.

 

11.12.              Consent to Jurisdiction.  Each party hereby irrevocably
submits to the exclusive jurisdiction of the federal or state courts located in
the State of Indiana in any action, suit or proceeding arising out of or
relating to this Agreement or the Ancillary Agreements or any of the
transactions contemplated hereby or thereby, provided, however, that such
consent to jurisdiction is solely for the purpose referred to in this
Section and shall not be deemed to be a general submission to the jurisdiction
of said courts or in the State of Indiana other than for such purpose.  Each
party hereby irrevocably waives, to the fullest extent permitted by Law, any
objection that it may now or hereafter have to the laying of the venue of any
such action, suit or proceeding brought in such a court and any claim that any
such action, suit or proceeding brought in such a court has been brought in an
inconvenient forum.

 

11.13.              Waiver of Jury Trial.  THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
ANCILLARY AGREEMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

11.14.              Waiver of Consequential, Etc. Damages.  NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS AGREEMENT, EXCEPT TO THE EXTENT RESULTING FROM
ANY THIRD PARTY CLAIM OR FROM FRAUD OR WILLFUL MISCONDUCT, THE BUYERS SHALL NOT
BE LIABLE

 

62

--------------------------------------------------------------------------------

 

TO THE SELLER PARTIES, NOR SHALL THE SELLER PARTIES BE LIABLE TO THE BUYERS, FOR
ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE
DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST PROFITS
OR OPPORTUNITIES) RESULTING FROM OR ARISING OUT OF THIS AGREEMENT OR THE
ANCILLARY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

11.15.              Specific Performance.  The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof and that
prior to the Closing, the parties will be entitled to specific performance of
the terms hereof in addition to any other remedies at law or in equity.

 

11.16.              Change of Structure.  Notwithstanding anything in this
Agreement to the contrary, (a) if, with respect to Buyers Required Regulatory
Approvals, all required IURC approvals with respect to PSI Energy have not been
obtained by November 20, 2005, and all required FERC and SEC approvals have been
obtained by November 30, 2005, then, subject to the satisfaction of the other
conditions contained in Article VIII, CG&E alone will acquire the Wheatland
Facility pursuant to this Agreement and all references in this Agreement to
“Buyers” shall be deemed to refer to CG&E only (and not PSI Energy) and PSI
Energy shall have no further rights or obligations under this Agreement, or
(b) if, with respect to Buyers Required Regulatory Approvals, all required IURC
approvals and FERC Approvals have been obtained, but all required SEC approvals
under the Holding Company Act for CG&E have not been obtained by November 30,
2005, then, subject to the satisfaction of the other conditions contained in
Article VIII, PSI Energy alone will acquire the Wheatland Facility pursuant to
this Agreement and all references in this Agreement to “Buyers” shall be deemed
to refer to PSI Energy only (and not CG&E) and CG&E shall have no further rights
or obligations under this Agreement.  Notwithstanding the foregoing, the Seller
Parties acknowledge that, prior to November 20, 2005, the Buyers shall have sole
discretion to allocate the ownership of the Acquired Assets and the Assumed
Liabilities between the Buyers (including by allocating 100% of the Acquired
Assets and Assumed Liabilities to one Buyer) provided the Buyer Required
Regulatory Approvals necessary for Closing the transaction with the selected
allocation have been received by November 20, 2005.  In the event the Buyers
determine, and give written notice pursuant to Section 7.17, that either PSI
Energy or CG&E shall acquire 100% of the Acquired Assets and Assumed
Liabilities, all references in this Agreement to “Buyers” shall be deemed to
refer to the one applicable Buyer (and not the other Buyer) and the other Buyer
shall have no further rights or obligations under this Agreement.  The parties
hereto agree to use their Commercially Reasonable Efforts to amend this
Agreement and the Ancillary Agreements if necessary to reflect any revised
transaction structure discussed in this Section 11.16.

 

11.17.              Certain Approvals.  The parties hereto agree that in the
event FERC approval under section 203 of the Federal Power Act, in form and
substance sufficient to satisfy the requirements of Section 8.2(h), is received
on or before December 20, 2005, and FERC approval under section 205 of the
Federal Power Act is not received by the Buyers on or before December 29, 2005,
then FERC approval under section 205 of the Federal Power Act shall no longer be
deemed to be a Buyers Required Regulatory Approval (and thus shall no longer be
deemed to constitute a condition to the Closing) and, subject to the
satisfaction of the other conditions contained in Article VIII, the Closing
shall occur on December 30, 2005; provided that, in no

 

63

--------------------------------------------------------------------------------

 

event shall the Closing occur if, prior to December 30, 2005, the FERC has
issued an adverse order with respect to the filing made by the Buyers under
section 205 of the Federal Power Act.

 

[Remainder of this page is blank. Signature page follows.]

 

64

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Seller Parties and the Buyers have caused this Agreement
to be signed by their respective duly authorized officers as of the date first
above written.

 

BUYERS:

SELLER PARTIES:

 

 

PSI ENERGY, INC.

ALLEGHENY ENERGY SUPPLY
COMPANY, LLC

 

 

By:

/s/ Kay Pashos

 

 

 

Name: Kay Pashos

By:

/s/John P. Campbell

 

 

Title: President

 

Name: John P. Campbell

 

 

 

Title:  Vice President

 

 

 

 

 

 

THE CINCINNATI GAS & ELECTRIC
COMPANY

ALLEGHENY ENERGY SUPPLY
WHEATLAND GENERATING FACILITY, LLC

 

 

 

 

By:

/s/ Gregory C. Ficke

 

By:

/s/ John P. Campbell

 

 

Name: Gregory C. Ficke

 

Name: John P. Campbell

 

Title: President

 

Title: Vice President

 

 

 

 

 

LAKE ACQUISITION COMPANY, L.L.C.

 

 

 

 

 

By:

/s/ John P. Campbell

 

 

 

Name: John P. Campbell

 

 

Title: Vice President

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

This ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”) is made effective as
of the      day of             , 2005, by and among PSI Energy, Inc., an Indiana
corporation (“PSI Energy”), and The Cincinnati Gas & Electric Company, an Ohio
corporation (“CG&E” and, together with PSI Energy, collectively, the “Buyers”),
and Allegheny Energy Supply Wheatland Generating Facility, LLC, a Delaware
limited liability company and a wholly owned subsidiary of AESC (“Wheatland
LLC”), Lake Acquisition Company, L.L.C., a Delaware limited liability company
and a wholly owned subsidiary of AESC (“Lake LLC”), and Allegheny Energy Supply
Company, LLC, a Delaware limited liability company (“AESC” and, together with
Wheatland LLC and Lake LLC, the “Seller Parties”).

 

WHEREAS, the Seller Parties and the Buyers have entered into an Asset Purchase
Agreement dated as of May 5, 2005 (the “Asset Purchase Agreement”; capitalized
terms used herein but not otherwise defined herein having the meanings given to
such terms in the Asset Purchase Agreement), pursuant to which, subject to the
terms and conditions set forth therein, the Seller Parties have agreed to assign
to the Buyers all of the Seller Parties’ right, title and interest in and to the
Assumed Contracts and the Leases, and the Buyers have agreed to assume the
Assumed Liabilities, in the proportions set forth on Schedule A.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements set forth herein, the Seller Parties and the Buyers hereby agree as
follows:

 

1.                                       Assignment of Contracts.  Subject to
the terms and conditions of the Asset Purchase Agreement, the Seller Parties
hereby assign and transfer to the Buyers (in the percentages set forth on
Schedule A), and the Buyers (in the percentages set forth on Schedule A) hereby
take assignment of and assume from the Seller Parties, all of the Seller
Parties’ right, title and interest in and to the Assumed Contracts and any other
agreements or contracts included in the Acquired Assets.  Notwithstanding the
foregoing, the Seller Parties do not assign or transfer any agreement or
contract or any claim or right or any benefit or obligation thereunder or
resulting therefrom if an assignment or transfer thereof, without the consent of
a third party thereto, would constitute a breach or violation thereof or impose
any obligation or liability on the Seller Parties unless and until such a
consent has been obtained.

 

2.                                       Assumption of Liabilities.  The Buyers
(in the percentages set forth on Schedule A) hereby assume and satisfy, and
agree to pay, perform, fulfill and discharge when due, the Assumed Liabilities.

 

3.                                       Asset Purchase Agreement.  This
Agreement is being executed and delivered pursuant and subject to the Asset
Purchase Agreement.  Nothing in this Agreement shall, or shall be deemed to,
defeat, limit, alter or impair, enhance or enlarge

 

--------------------------------------------------------------------------------

 

any right, obligation, claim or remedy created by the Asset Purchase Agreement. 
In the event of any conflict between this Agreement and the Asset Purchase
Agreement, the Asset Purchase Agreement shall control.

 

4.                                       Successor and Assigns.  This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

 

5.                                       Applicable Law.  This Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Indiana without giving effect to the principles of conflicts of law
thereof.

 

6.                                       Counterparts.  This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed
and delivered as of this          day of                , 2005.

 

 

PSI ENERGY, INC.

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

THE CINCINNATI GAS & ELECTRIC
COMPANY

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

ALLEGHENY ENERGY SUPPLY COMPANY,
LLC

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

ALLEGHENY ENERGY SUPPLY WHEATLAND
GENERATING FACILITY, LLC

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

LAKE ACQUISITION COMPANY, L.L.C.

 

 

 

By:

 

 

Name:

 

Title:

 

3

--------------------------------------------------------------------------------

 

SCHEDULE A

 

Allocation of Contracts and Assumed Liabilities Between the Buyers

 

Buyer

 

Percent Allocation

 

 

 

 

 

PSI Energy

 

[     ]

%(1)

 

 

 

 

CG&E

 

[     ]

%

 

--------------------------------------------------------------------------------

(1) To be determined prior to Closing pursuant to the Asset Purchase Agreement.

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

BILL OF SALE

 

This BILL OF SALE (this “Bill of Sale”) is made effective as of the      day of
            , 2005, by Allegheny Energy Supply Wheatland Generating Facility,
LLC, a Delaware limited liability company (“Wheatland LLC”), Lake Acquisition
Company, L.L.C., a Delaware limited liability company (“Lake LLC”), and
Allegheny Energy Supply Company, LLC, a Delaware limited liability company
(“AESC” and, together with Wheatland LLC and Lake LLC, the “Seller Parties”), to
PSI Energy, Inc., an Indiana Corporation (“PSI Energy”), and The Cincinnati
Gas & Electric Company, an Ohio corporation (“CG&E” and, together with PSI
Energy, the “Buyers”).(1)

 

WHEREAS, the Seller Parties and the Buyers have entered into an Asset Purchase
Agreement dated as of May 5, 2005 (the “Asset Purchase Agreement”; capitalized
terms used herein but not otherwise defined herein having the meanings given to
such terms in the Asset Purchase Agreement) providing for, subject to the terms
and conditions set forth therein, the sale, assignment, conveyance, transfer and
delivery by the Seller Parties to the Buyers of the Acquired Assets.

 

NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Sellers hereby sell, assign, convey, transfer and deliver (or
cause to be sold, assigned, conveyed, transferred and delivered) to the Buyers
(in the percentages set forth on Schedule A) all of the Seller Parties’
respective rights, title and interests in and to the Acquired Assets other than
the Assumed Contracts, which are being assigned and transferred to the Buyers
pursuant to the Assignment and Assumption Agreement of even date herewith
between the Seller Parties and the Buyers.

 

This Bill of Sale is being executed and delivered pursuant and subject to the
Asset Purchase Agreement.  Nothing in this Bill of Sale shall, or shall be
deemed to, defeat, limit, alter, impair, enhance or enlarge any right,
obligation, claim or remedy created by the Asset Purchase Agreement.  In the
event of any conflict between this Bill of Sale and the Asset Purchase
Agreement, the Asset Purchase Agreement shall control.

 

This Bill of Sale shall be binding upon the Seller Parties and their successors
and permitted assigns and shall inure to the benefit of the Buyers and their
respective successors and permitted assigns.

 

This Bill of Sale shall be governed by and construed and enforced in accordance
with the laws of the State of Indiana without giving effect to the principles of
conflicts of law thereof.

 

--------------------------------------------------------------------------------

(1) Note that if PSI Energy or CG&E acquires 100% of the Acquired Assets, then
this Bill of Sale will be revised to remove the entity that is not acquiring any
of the Acquired Assets.

 

--------------------------------------------------------------------------------

 

This Bill of Sale may be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.

 

IN WITNESS WHEREOF, the undersigned have caused this Bill of Sale to be executed
and delivered as of this       day of               , 2005.

 

 

ALLEGHENY ENERGY SUPPLY COMPANY,
LLC

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

ALLEGHENY ENERGY SUPPLY WHEATLAND GENERATING FACILITY, LLC

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

LAKE ACQUISITION COMPANY, L.L.C.

 

 

 

By:

 

 

Name:

 

Title:

 

Acknowledged and accepted as of this

     day of              , 2005.

 

PSI ENERGY, INC.

 

By:

 

 

Name:

Title:

 

 

THE CINCINNATI GAS & ELECTRIC COMPANY

 

By:

 

 

Name:

Title:

 

2

--------------------------------------------------------------------------------

 

SCHEDULE A

 

Allocation of Assets Between the Buyers

 

Buyer

 

Percent Allocation

 

 

 

 

 

PSI Energy

 

[     ]

%(2)

 

 

 

 

CG&E

 

[     ]

%

 

--------------------------------------------------------------------------------

(2) To be determined prior to Closing pursuant to the Asset Purchase Agreement.

 

--------------------------------------------------------------------------------

 

EXHIBIT C

 

FORM OF DEEDS

 

This Instrument Was Prepared By:

 

Gray Plant Mooty

500 IDS Center, 80 South 8th St.

Minneapolis, Minnesota  55402-3796

Attention:  John D. Giudicessi, Esq.

 

After Recording, Mail To:

 

Cinergy/PSI

1000 East Main Street

Plainfield, Indiana  46168

Attention:  John B. Scheidler, Esq.

 

Send Subsequent Tax Bills To:

 

Cinergy/PSI

1000 East Main Street

Plainfield, Indiana  46168

Attention:  Tax Department

 

[SUBJECT TO FORMATTING REVISIONS TO CONFORM

WITH LOCAL RECORDING REQUIREMENTS]

 

SPECIAL WARRANTY DEED

 

THIS INDENTURE is made as of this [    ] day of [          ], 2005 from
[ALLEGHENY ENERGY SUPPLY WHEATLAND GENERATING FACILITY, LLC/LAKE ACQUISITION
COMPANY, L.L.C.], a Delaware limited liability company having its principal
place of business at 4530 Northern Pike – 4 North, Monroeville, Pennsylvania
15146-2841 (“Grantor”), to PSI ENERGY, INC., an Indiana corporation having its
principal place of business at 1000 East Main Street, Plainfield, Indiana 46168
(“PSI”), and THE CINCINNATI GAS & ELECTRIC COMPANY, an Ohio corporation having
its principal place of business at 139 East Fourth Street, Cincinnati, Ohio
45202 (“CG&E” and collectively with PSI, “Grantee”), as tenants in common as
more particularly set forth below.   [Grantor is formerly known as West Fork
Land Development Company, LLC, a Delaware limited liability company.]

 

WITNESSETH, that Grantor, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration in hand paid by Grantee, the
receipt whereof is hereby acknowledged, by these presents does DEMISE, RELEASE,
ALIEN AND CONVEY FOREVER unto (i) PSI and its successors and assigns, an
undivided fifty percent (50%) interest as tenant in common and not as joint
tenant with rights of survivorship and (ii) CG&E and its successors and assigns,
an undivided fifty percent (50%) interest as tenant in common and not as joint
tenant with rights of survivorship, in and to all of that certain real estate,
situated in the County of Knox and State of Indiana, which real estate is more
particularly described on Exhibit A attached hereto, together with, all and
singular, all the estate, right, title, interest, claim or demand whatsoever of
Grantor, either in law or equity, of, in and to (i) the easements, rights of
way, servitudes and other hereditaments and appurtenances thereunto belonging,
or in anyway appertaining, and the reversion and reversions, remainder and
remainders, rents, issues and profits thereof, (ii) all buildings, structures,
fixtures and other improvements located thereon and (iii) the streets adjacent
thereto (collectively, the “Property”), subject to the matters set forth in
Exhibit B

 

--------------------------------------------------------------------------------

 

attached hereto (the “Permitted Encumbrances”): TO HAVE AND TO HOLD the
Property, unto Grantee, and each of their respective successors and assigns
forever.

 

And Grantor, for itself, and its successors, does covenant, promise and agree,
to and with Grantee and each of their respective successors and assigns, that,
except for Permitted Encumbrances, it has not done or suffered to be done,
anything whereby the Property is, or may be, in any manner encumbered or
charged, except as herein recited; and that Grantor WILL WARRANT AND DEFEND the
title to the Property to said Grantee and their respective successors and
assigns, against the lawful claims and demands of all persons claiming through
or under the said Grantor or its predecessor corporations by merger,
consolidation, change of name, etc., except for the Permitted Encumbrances.

 

[Signature Page Follows]

 

2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, Grantor has caused its name to be signed to these presents
by the undersigned authorized signatory as of the day and year first above
written.

 

 

 

Grantor:

[ALLEGHENY ENERGY SUPPLY WHEATLAND GENERATING FACILITY, LLC/LAKE ACQUISITION
COMPANY, L.L.C.], a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

STATE OF                        

 

                                             SS

 

COUNTY OF                         

 

 

I, the undersigned, a Notary Public in and for the County and State Aforesaid,
do hereby certify that                                                personally
known to me to be                           of [ALLEGHENY ENERGY SUPPLY
WHEATLAND GENERATING FACILITY, LLC/LAKE ACQUISITION COMPANY, L.L.C.], a Delaware
limited liability company, and personally known to me to be the same person
whose name is subscribed to the foregoing instrument, appeared before me this
day in person and acknowledged that he signed and delivered such instrument, in
his capacity as                 of such limited liability company, as his free
and voluntary act and as the free and voluntary act and deed of such limited
liability company, for the uses and purposes therein set forth.

 

Given under my hand and official seal this           day of                ,
2005.

 

 

 

 

Notary Public

 

 

 

Printed Name:

 

 

 

 

 

 

My County of Residence:

 

 

 

My Commission Expires:

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

LEGAL DESCRIPTION OF THE PROPERTY

 

[TO BE ADDED FROM FINAL TITLE COMMITMENT]

 

Tax Indentification Numbers:  [            ]

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

PERMITTED EXCEPTIONS

 

[To Be Reasonably Agreed Upon by the Parties Prior to Closing]

 

--------------------------------------------------------------------------------

 

EXHIBIT D

 

CERTIFICATION OF NON-FOREIGN STATUS

 

Section 1445 of the Internal Revenue Code of 1986, as amended, provides that a
transferee of a U.S. real property interest must withhold tax if the transferor
is a foreign person.  For U.S. tax purposes (including section 1445), the owner
of a disregarded entity (which has legal title to a U.S. real property interest
under local law) will be the transferor of the property and not the disregarded
entity.  To inform the transferee that such withholding of tax is not required
upon the disposition of a U.S. real property interest by Allegheny Energy Supply
Company, LLC, a Delaware limited liability company (“Transferor”), the
undersigned hereby certifies the following on behalf of Transferor:

 

1.         Transferor is not a foreign corporation, foreign partnership, foreign
trust,  or foreign estate (as those terms are defined in the Internal Revenue
Code of 1986, as amended, and the Income Tax Regulations thereunder);

 

2.         Transferor is not a disregarded entity as defined in Treasury
Regulation §1.1445-2(b)(2)(iii);

 

3.         Transferor’s U.S. employer identification number is              ;
and

 

4.         Transferor’s office address is                                  .

 

Transferor understands that this certification may be disclosed to the Internal
Revenue Service by the transferee and that any false statement contained herein
could be punished by fine, imprisonment, or both.

 

Under penalties of perjury, I declare that I have examined this certification
and to the best of my knowledge and belief it is true, correct and complete, and
I further declare that I have authority to sign this document on behalf of
Transferor.

 

 

 

By:

 

 

 

Name:

 

Title:

 

 

Dated:                             , 2005

 

 

 

 

--------------------------------------------------------------------------------