Exhibit 10.2

PORTIONS OF THIS EXHIBIT MARKED BY

* * * HAVE BEEN OMITTED PURSUANT TO

A REQUEST FOR CONFIDENTIAL TREATMENT

FILED SEPARATELY WITH THE

SECURITIES AND EXCHANGE COMMISSION

FOIA

CONFIDENTIAL

TREATMENT

REQUESTED

 

 

AGREEMENT AND PLAN OF MERGER

by and among

DEGS WIND I, LLC,

DEGS WIND VERMONT, INC.,

CATAMOUNT ENERGY CORPORATION

and

THE SHAREHOLDERS

NAMED HEREIN

 

 

Dated as of June 25, 2008

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TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS

   2

1.1

   Certain Definitions    2

1.2

   Other Definitional and Interpretive Matters    15

ARTICLE II THE MERGER

   16

2.1

   The Merger    16

2.2

   Articles of Incorporation of the Surviving Corporation    17

2.3

   By-laws of the Surviving Corporation    17

2.4

   Directors and Officers of the Surviving Corporation    17

2.5

   Conversion of Stock    17

2.6

   Payments to Shareholders    18

2.7

   Treatment of Company Options; Unallocated Class TV Stock Options    18

2.8

   Payment to Escrow Account; Company Transaction Expenses; Shareholders’
Representative Expense Amount    19

2.9

   No Further Rights of Transfers    20

2.10

   Withholding Rights    20

2.11

   Amendment of schedule 1.1(d)    20

2.12

   Closing Date    20

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY

   21

3.1

   Organization and Good Standing    21

3.2

   Authorization of Agreement    21

3.3

   Conflicts; Consents of Third Parties    21

3.4

   Capitalization    22

3.5

   Subsidiaries; Project Companies; Investments    23

3.6

   Financial Statements    25

3.7

   No Undisclosed Liabilities    25

3.8

   Absence of Certain Developments    26

3.9

   Taxes    28

3.10

   Real Property    31

3.11

   Tangible Personal Property    35

3.12

   Intellectual Property    35

3.13

   Material Contracts    36

3.14

   Employee Benefits Plans    38

 

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TABLE OF CONTENTS (CONT’D)

 

3.15

   Labor    40

3.16

   Litigation    41

3.17

   Compliance with Laws; Permits    41

3.18

   Environmental Matters    42

3.19

   Insurance    44

3.20

   Regulatory Matters    44

3.21

   Related Party Transactions    46

3.22

   Takeover Provisions    46

3.23

   Finders or Brokers    46

3.24

   No Other Representations or Warranties; Schedules    46

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

   47

4.1

   Organization and Good Standing    47

4.2

   Authorization of Agreement    47

4.3

   Conflicts; Consents of Third Parties    47

4.4

   Ownership and Transfer of Purchased Securities    48

4.5

   Litigation    48

4.6

   Support Obligations    48

4.7

   No Other Representations or Warranties; Schedules    48

ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

   49

5.1

   Organization and Good Standing    49

5.2

   Authorization of Agreement    49

5.3

   Conflicts; Consents of Third Parties    50

5.4

   Litigation    50

5.5

   Finders or Brokers    50

5.6

   Financing    50

5.7

   Merger Sub’s Operations    50

5.8

   No Knowledge    51

5.9

   No Additional Representations    51

ARTICLE VI COVENANTS

   51

 

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TABLE OF CONTENTS (CONT’D)

 

6.1

   Access to Information    51

6.2

   Conduct of the Business Pending the Closing    52

6.3

   Third Party Consents    56

6.4

   Regulatory Filings    56

6.5

   Further Assurances    57

6.6

   Confidentiality    58

6.7

   Indemnification, Exculpation and Insurance    58

6.8

   Preservation of Records    60

6.9

   Publicity    60

6.10

   Company Options; Company Option Plan; Shareholder Approval    61

6.11

   Resignation of Directors    61

6.12

   Employment and Employee Benefits    61

6.13

   Termination of Certain Agreements    62

6.14

   Takeover Statutes    63

6.15

   Tax Returns; Other Tax Matters    63

6.16

   Merger Sub    63

ARTICLE VII CONDITIONS TO CLOSING

   63

7.1

   Conditions Precedent to Obligations of Parent and Merger Sub    64

7.2

   Conditions Precedent to Obligations of the Company and Shareholders    65

7.3

   Frustration of Closing Conditions    66

ARTICLE VIII TERMINATION

   66

8.1

   Termination of Agreement    66

8.2

   Procedure Upon Termination    67

8.3

   Effect of Termination    67

ARTICLE IX INDEMNIFICATION

   67

9.1

   Survival of Representations, Warranties and Covenants    67

9.2

   Indemnification by the Securityholders    68

9.3

   Indemnification by the Shareholders    68

9.4

   Indemnification by Parent    68

9.5

   Claims    68

 

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TABLE OF CONTENTS (CONT’D)

 

9.6

   Certain Limitations on Indemnification    70

9.7

   Calculation of Losses    71

9.8

   Exclusive Remedy    72

9.9

   Mitigation    73

9.10

   Tax Treatment of Indemnity Payments    73

ARTICLE X MISCELLANEOUS

   73

10.1

   Expenses    73

10.2

   Shareholders’ Representative    75

10.3

   Specific Performance    75

10.4

   Submission to Jurisdiction; Consent to Service of Process; Waiver of Jury
Trial    76

10.5

   Entire Agreement; Amendments and Waivers    76

10.6

   Governing Law    77

10.7

   Notices    77

10.8

   Severability    78

10.9

   Binding Effect; Assignment    79

10.10

   Non-Recourse    79

10.11

   Counterparts    79

Exhibit A – Table of Shareholders

Exhibit B – Letter of Transmittal

Exhibit C – Escrow Agreement

Exhibit D – Table of Option holders

Exhibit E – Budget

Exhibit F – Insurance

Exhibit G – Purchase Price Calculation and Closing Payments Schedule

Exhibit H – Transaction Bonus Recipient Letter

 

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AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER, dated as of June 25, 2008 (the “Agreement”),
by and among DEGS Wind I, LLC, a Delaware limited liability company (“Parent”),
DEGS Wind Vermont, Inc., a corporation organized under the laws of Vermont and a
wholly-owned subsidiary of Parent (“Merger Sub”), Catamount Energy Corporation,
a Vermont corporation (the “Company”), and the security holders of the Company
listed on the signature pages hereof (each a “Shareholder” and, collectively,
the “Shareholders”).

W I T N E S S E T H

WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved, adopted and recommended to their respective shareholders
or members, as the case may be, this Agreement, which contemplates the merger of
Merger Sub with and into the Company as set forth below (the “Merger”), in
accordance with the Vermont Business Corporation Act, 11A V.S.A. § 11.01 et seq.
(the “VBCA”), and upon the terms and subject to the conditions set forth in this
Agreement;

WHEREAS, upon the consummation of the Merger, each issued and outstanding share
of the Company’s Class A common stock, $0.01 par value per share (the “Common
Stock”), will be converted into the right to receive (i) an amount per Share in
cash at Closing (without interest) equal to the Closing Common Stock Payment,
and (ii) a conditional amount of cash equal to the sum of the Applicable Escrow
Per Share Payment and the Applicable Shareholders’ Representative Expense Per
Share Payment, upon the terms and subject to the limitations and conditions of
this Agreement;

WHEREAS, the Shareholders collectively own 762,501 shares of Common Stock, which
constitute all of the issued and outstanding shares of capital stock of the
Company (the “Shares”);

WHEREAS, concurrently with the execution of this Agreement, the sole shareholder
of Merger Sub has approved and adopted this Agreement and the Merger;

WHEREAS, concurrently with the execution of this Agreement, the Shareholders
have approved and adopted this Agreement and the Merger;

WHEREAS, Parent, Merger Sub, the Company and the Shareholders desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger;

WHEREAS, concurrently with the execution of this Agreement, Duke Energy
Corporation (the “Guarantor”) has entered into a guaranty, dated as of the date
hereof, for the account of Parent, and with the Company and the Securityholders
(as defined herein) as third party beneficiaries with respect to the obligations
of Parent arising under, or in connection with, this Agreement (the “Guaranty”);
and

WHEREAS, certain terms used in this Agreement are defined in Section 1.1.

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NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1 Certain Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified in this Section 1.1:

“Advisory Services Agreement” means that certain Advisory Services Agreement,
dated December 20, 2005, by and among the Company and Diamond Castle Holdings,
LLC.

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

“Affiliated Group” means any affiliated group within the meaning of Section 1504
of the Code or any comparable or analogous group under applicable Law.

“Agreement” shall have the meaning set forth in the Preamble hereto.

“Amended and Restated Registration Rights Agreement” means that certain Amended
and Restated Registration Rights Agreement, dated October 31, 2005, among the
Company and the stockholders signatory thereto, as may be further amended from
time to time.

“Amended and Restated Stockholders’ Agreement” means that certain Amended and
Restated Stockholders’ Agreement, dated October 31, 2005, among the Company and
the stockholders signatory thereto, as may be further amended from time to time.

“Antitrust Laws” means, collectively, the HSR Act, the Sherman Act, as amended,
the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and
any other Laws that are designed to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade or that
require notification.

“Applicable Escrow Per Share Payment” means, with respect to any Share, Class TV
Stock Option or Unallocated Class TV Stock Option, the quotient obtained by
dividing (x) the product of the Escrow Amount multiplied by the applicable
Escrow Percentage by (y) the sum of (i) the number of Shares owned by such
Securityholder, plus (ii) the number of shares of Common Stock issuable upon the
exercise of the Class TV Stock Options owned by such Securityholder, plus
(iii) the number of shares of Common Stock that would have been issuable upon
the exercise of the Unallocated Class TV Stock Options (if and as though such
Unallocated Class TV Stock Options were issued and outstanding as of the
Closing) allocated to such Securityholder.

 

2

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“Applicable Shareholders’ Representative Expense Per Share Payment” means, with
respect to any Share, Class TV Stock Option or Unallocated Class TV Stock
Option, the quotient obtained by dividing (x) the Shareholders’ Representative
Expense Amount multiplied by the applicable Escrow Percentage by (y) the sum of
(i) the number of Shares owned by such Securityholder, plus (ii) the number of
shares of Common Stock issuable upon the exercise of the Class TV Stock Options
owned by such Securityholder, plus (iii) the number of shares of Common Stock
that would have been issuable upon the exercise of the Unallocated Class TV
Stock Options (if and as though such Unallocated Class TV Stock Options were
issued and outstanding as of the Closing) allocated to such Securityholder.

“Articles of Merger” shall have the meaning set forth in Section 2.1(a) of this
Agreement.

“Balance Sheet” shall have the meaning set forth in Section 3.6(a) of this
Agreement.

“Balance Sheet Date” shall have the meaning set forth in Section 3.6(a) of this
Agreement.

“Base Purchase Price” means $240,000,000, plus the aggregate amount of the
exercise prices for all Class TV Stock Options outstanding immediately prior to
the Closing, plus the aggregate amount of the Unallocated Class TV Stock Option
Exercise Prices for all Unallocated Class TV Stock Options set forth in the
Unallocated Class TV Stock Options Spreadsheet, less the Company Transaction
Expenses.

“Basket” shall have the meaning set forth in Section 9.6(a) of this Agreement.

“BLB Loan Agreement” shall have the meaning set forth in Section 6.5(b) of this
Agreement.

“Board” shall mean the Board of Directors of the Company.

“Budget” shall have the meaning set forth in Section 3.8(xii) of this Agreement.

“Business Day” means any day of the year on which national banking institutions
in New York are open to the public for conducting business and are not required
or authorized to close.

“Claim Notice” shall have the meaning set forth in Section 9.5(a) of this
Agreement.

“Class DT Stock Option” means any outstanding option granted pursuant to a Class
DT Stock Option Award Agreement between the Company and the applicable employee
of the Company.

“Class TV Stock Option” means any outstanding option granted pursuant to a Class
TV Stock Option Award Agreement between the Company and the applicable employee
of the Company, and such term shall not include any Unallocated Class TV Stock
Options.

 

3

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“Closing” shall have the meaning set forth in Section 2.11 of this Agreement.

“Closing Common Stock Payment” shall mean the Common Stock Payment less (i) the
Applicable Escrow Per Share Payment and (ii) the Applicable Shareholders’
Representative Expense Per Share Payment.

“Closing Date” shall have the meaning set forth in Section 2.11 of this
Agreement.

“Closing Option Consideration” shall mean, with respect to each Class TV Stock
Option, the Option Consideration less the product of (a) the sum of (i) the
Applicable Escrow Per Share Payment and (ii) the Applicable Shareholders’
Representative Expense Per Share Payment, and (b) the number of Shares subject
to the underlying Class TV Stock Option.

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Stock” shall have the meaning set forth in the Recitals hereto.

“Common Stock Payment” means the quotient obtained by dividing (x) the Base
Purchase Price by (y) the Fully Diluted Number.

“Company” shall have the meaning set forth in the Preamble hereto.

“Company Consolidated Group” shall have the meaning set forth in Section 3.9(k)
of this Agreement.

“Company Documents” shall have the meaning set forth in Section 3.2 of this
Agreement.

“Company Intellectual Property” shall have the meaning set forth in
Section 3.12(a) of this Agreement.

“Company Option Plan” means the Catamount Energy Corporation 2005 Equity
Incentive Plan.

“Company Option” means each Class TV Stock Option or Class DT Stock Option or
other right to purchase shares of Common Stock.

“Company Permits” shall have the meaning set forth in Section 3.17(b) of this
Agreement.

“Company Plans” shall have the meaning set forth in Section 3.14(a) of this
Agreement.

“Company Transaction Expenses” means the aggregate amount of all out-of-pocket
fees and expenses of Weil, Gotshal & Manges LLP, Goldman Sachs and Andrews Kurth
LLP, incurred by or on behalf of, or paid or to be paid by, the Company, any of
its Subsidiaries or the Shareholders in connection with transactions
contemplated herein.

 

4

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“Confidentiality Agreement” shall have the meaning set forth in Section 6.6 of
this Agreement.

“Continuing Employees” shall have the meaning set forth in Section 6.12(a) of
this Agreement.

“Contract” means any legally binding written contract, agreement, indenture,
note, bond, mortgage, loan, instrument, lease, license or other commitment or
obligation.

“DC Shareholders” means Diamond Castle Partners IV, L.P., Diamond Castle
Partners IV-A, L.P., and Deal Leaders Fund, L.P.

“Development Project” means each of the Underlying Projects other than the
Operating Projects.

“Dispute Notice” shall have the meaning set forth in Section 9.5(a) of this
Agreement.

“Easement Agreements” means all instruments creating easements, licenses, rights
of way or other access rights benefiting Real Property.

“Easement Interest” means an easement, license, right of way or other access
right in real property granted with respect to or otherwise benefiting any Real
Property.

“Effective Time” shall have the meaning set forth in Section 2.1(a) of this
Agreement.

“Employee Payments” shall have the meaning set forth in Section 6.12(b)(iv) of
this Agreement.

“Employees” shall have the meaning set forth in Section 3.15(a) of this
Agreement.

“Environmental Law” means any Law relating to pollution, damage to or protection
of the environment and natural resources, or human health and safety as it
relates to, the protection of the environment and natural resources, or to the
exposure to Hazardous Materials in the environment, and occupational health and
safety as it relates to the exposure to Hazardous Materials, including, but not
limited to, (i) the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (“CERCLA”), 42 U.S.C. § 9601 et seq., the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the Clean Air
Act of 1970, 42 U.S.C. § 7401 et seq., the Federal Water Pollution Control Act
of 1977, 33 U.S.C. § 1251 et seq., the Endangered Species Act of 1973, 16 U.S.C.
§ 1531 et seq., the National Environmental Policy Act of 1969, 42 U.S.C. § 4321
et seq., the Migratory Bird Treaty Act of 1918, 16 U.S.C. § 703 et seq., the
Bald and Golden Eagle Protection Act, 16 U.S.C. § 668 et seq., 16 U.S.C. § 470
et seq., the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq., the Toxic
Substances and Control Act of 1976, 15 U.S.C. § 2601 et seq., the Emergency
Planning and Community Right-To-Know Act of 1986, 42 U.S.C. § 11011 et seq., the
Safe Drinking Water Act of 1974, 42 U.S.C. § 300f et seq., the Pollution
Prevention Act of 1990, 42 U.S.C. § 13101

 

5

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et seq., the Hazardous Materials Transportation Act of 1975, 49 U.S.C. § 5101 et
seq., the Occupational Health and Safety Act of 1970, 29 U.S.C. § 651 et seq.
(to the extent it regulates exposure to Hazardous Materials), each as amended as
of the date hereof; (ii) any Law relating to the Release or threatened Release
of Hazardous Materials into the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface); or
(iii) any Law relating to environmental protection and the use, treatment,
storage, generation, disposal or transport of any Hazardous Material.

“Environmental Permits” shall have the meaning set forth in Section 3.18.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERCOT” means the Electric Reliability Council of Texas, Inc. and any successor
organization.

“Escrow Account” shall have the meaning set forth in Section 2.8.

“Escrow Agent” shall have the meaning set forth in Section 2.8.

“Escrow Agreement” shall have the meaning set forth in Section 2.8.

“Escrow Amount” shall have the meaning set forth in Section 2.8.

“Escrow Funds” shall have the meaning set forth in Section 2.8.

“Escrow Percentage” means, with respect to each Securityholder, the percentage
set forth across from such Securityholder’s name on Schedule 1.1(d) or, if there
is more than one such percentage, the sum of such percentages.

“EWG” shall have the meaning set forth in Section 3.20(c) of this Agreement.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Existing D&O Coverage” shall have the meaning set forth in Section 6.7(d) of
this Agreement.

“FERC” means the Federal Energy Regulatory Commission.

“Financial Statements” shall have the meaning set forth in Section 3.6(a) of
this Agreement.

“FPA” means the Federal Power Act.

“Fully Diluted Number” means the sum of (i) the number of Shares outstanding
immediately prior to the Closing, (ii) all shares of Common Stock that are
subject to Class TV Stock Options outstanding immediately prior to Closing, and
(iii) all shares of Common Stock that would be subject to the Unallocated Class
TV Stock Options set forth on the Unallocated

 

6

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Class TV Stock Options Spreadsheet (if and as though such Unallocated Class TV
Stock Options were issued and outstanding as of immediately prior to Closing).

“GAAP” means generally accepted accounting principles in the United States as of
the date hereof.

“Goldman Sachs” means Goldman, Sachs & Co.

“Goldman Sachs Fee” means the amount payable by the Company to Goldman Sachs in
connection with the transactions contemplated hereby.

“Governmental Body” means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).

“Hazardous Material” means any product, material, substance or waste that is
regulated, classified or otherwise characterized under or pursuant to any
applicable Environmental Laws as “hazardous,” “toxic,” “pollutant,” or a
contaminant, including, but not limited to (i) any “hazardous substance” as now
defined pursuant to CERCLA, as amended; (ii) any “pollutant or contaminant” as
now defined in 42 U.S.C. § 9601(33); (iii) any material now defined as
“hazardous waste” pursuant to 40 C.F.R. Part 261; (iv) any petroleum, including
crude oil and any fraction thereof; (v) natural or synthetic gas usable for
fuel; (vi) any “hazardous chemical” as now defined pursuant to 29 C.F.R. Part
1910; (vii) any asbestos, polychlorinated biphenyl (“PCB”), radium, or isomer of
dioxin, or any material or thing composed of such substance or substances; or
(viii) any material now defined as a “hazardous material” pursuant to 49 C.F.R.
§ 171.8.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

“Incentive Plans” shall have the meaning set forth in Section 6.12(b) of this
Agreement.

“Indebtedness” of any Person means, without duplication, (i) the principal,
accreted value, accrued and unpaid interest, prepayment and redemption premiums
or penalties (if any), unpaid fees or expenses and other monetary obligations in
respect of (A) indebtedness of such Person for money borrowed and
(B) indebtedness evidenced by notes, debentures, bonds or other similar
instruments for the payment of which such Person is responsible or liable;
(ii) all obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations of such Person and all
obligations of such Person under any title retention agreement (but excluding
trade accounts payable and other accrued current liabilities arising in the
Ordinary Course of Business (other than the current liability portion of any
indebtedness for borrowed money)); (iii) all obligations of such Person under
leases required to be capitalized in accordance with GAAP; (iv) all obligations
of such Person for the reimbursement of any obligor on any letter of credit,
banker’s acceptance or similar credit transaction; (v) all obligations of such
Person under interest rate or currency swap transactions (valued at the
termination value thereof); (vi) all obligations of the type referred to in
clauses (i) through (v) of any Persons for the payment of which such Person is
responsible or liable, directly

 

7

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or indirectly, as obligor, guarantor, surety or otherwise, including guarantees
of such obligations; and (vii) all obligations of the type referred to in
clauses (i) through (vi) of other Persons secured by (or for which the holder of
such obligations has an existing right, contingent or otherwise, to be secured
by) any Lien on any property or asset of such Person (whether or not such
obligation is assumed by such Person).

“Indemnified Party” shall have the meaning set forth in Section 9.5(a) of this
Agreement.

“Indemnitees” shall have the meaning set forth in Section 6.7(a) of this
Agreement.

“Individual Shareholder” shall mean each of Joseph Cofelice and James Moore.

“Investment” means, in any Person, any loan or advance to such Person, any
purchase or other acquisition of capital stock, warrants, rights, options,
obligations or other securities or any substantial assets of such Person, any
capital contributions to such Person or any other investment in such Person.

“IRS” means the Internal Revenue Service and, to the extent relevant, the United
States Department of Treasury.

“Knowledge” of the Company means, with respect to information relating to the
Company (but not otherwise relating to any of the Project Companies or
Underlying Projects), the actual knowledge, after reasonable inquiry, of the
individuals specified in Schedule 1.1(a), and with respect to information
relating to the Project Companies and Underlying Projects, the Knowledge of the
Company shall be based on information either within the possession of such
Persons listed in Schedule 1.1(a) or reasonably available or accessible to, or
within the actual knowledge of, such Persons.

“Late Stage Development Projects” or “LSDP” means each of the Underlying
Projects referred to as Blaengwen, Mark Hill, Laurel Hill and Sweetwater Wind 6
LLC on Schedule 1.1(c).

“Law” means any applicable foreign, federal, state or local law, statute, code,
ordinance, rule, regulation, Order or other legal requirement.

“Legal Proceeding” means any judicial, administrative or arbitral actions,
suits, litigation or similar proceedings (public or private) by or before any
court or other Governmental Body.

“Letter of Transmittal” means a letter of transmittal in the form set forth on
Exhibit B hereto.

“Liability” means any debt, liability or obligation (whether direct or indirect,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due
or to become due) and including all costs and expenses relating thereto.

 

8

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“Lien” means any lien, encumbrance, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction or any other restriction or limitation.

“Loss” shall have the meaning set forth in Section 9.2 of this Agreement.

“Managed Projects” shall mean each of the Underlying Projects other than the
Specified Projects.

“Material Adverse Effect” means any material adverse effect on (A) the business,
assets, properties, results of operations, or financial condition of the
Company, its Subsidiaries and the Underlying Projects (taken as a whole), other
than any such effect to the extent it results from (i) changes in general
economic, financial or securities market or political conditions other than
changes that disproportionately affect the Company, its Subsidiaries or the
Underlying Projects (taken as a whole) as compared to other similarly situated
participants (including as to size, scope and area of operation, as applicable)
in the industry in which the Company, its Subsidiaries or the Underlying
Projects operate, (ii) changes or developments in the international, national,
regional, state or local independent power industry or in the products or
services for such industry other than changes or developments that
disproportionately affect the Company, its Subsidiaries or the Underlying
Projects (taken as a whole) as compared to other similarly situated participants
(including as to size, scope and area of operation, as applicable) in the
industry in which the Company, its Subsidiaries or the Underlying Projects
operate, (iii) matters resulting from the execution, delivery, performance or
announcement of this Agreement or any of the related transaction documents and
the transactions contemplated hereby and thereby, (iv) any change of Law other
than a change of Law that disproportionately affects the Company, its
Subsidiaries or the Underlying Projects (taken as a whole) as compared to other
similarly situated participants (including as to size, scope and area of
operation, as applicable) in the industry in which the Company, its Subsidiaries
or the Underlying Projects operate; (v) any change in GAAP (but not changes in
the application thereof), (vi) any change arising in connection with
earthquakes, hostilities, acts of war, sabotage or terrorism or military actions
or any escalation or material worsening of any such hostilities, acts of war,
sabotage or terrorism or military actions existing or underway as of the date
hereof that does not disproportionately affect the Company, its Subsidiaries or
the Underlying Projects (taken as a whole) as compared to other similarly
situated participants (including as to size, scope and area of operation, as
applicable) in the industry in which the Company, its Subsidiaries or the
Underlying Projects operate, (vii) any failure, in and of itself, of the Company
to meet any revenue or earnings predictions prepared by the Company (it being
the understanding of the parties hereto that the underlying cause of such
failure may constitute a Material Adverse Effect if such event is not otherwise
excluded from the definition of Material Adverse Effect), (viii) the actions of
Parent or Merger Sub or (ix) the failure of any LSDP or any Development Project
to receive any Permit that is required for the construction, ownership or
operation of its business, provided that such failure does not result from a
material breach by the Shareholders or the Company of any of their respective
covenants or agreements hereunder; or (B) the ability of the Shareholders or the
Company to perform any of their respective material obligations under this
Agreement.

“Material Contracts” shall have the meaning set forth in Section 3.13(a) of this
Agreement.

 

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“Merger” shall have the meaning set forth in the Recitals hereto.

“Merger Sub” shall have the meaning set forth in the Preamble hereto.

“Multiemployer Plan” shall have the meaning set forth in Section 3.14(a) of this
Agreement.

“Operating Projects” or “OP” means each the Underlying Projects referred to as
Rumford, Ryegate and the Sweetwater OPs on Schedule 1.1(c).

“Option Cancellation Agreement” means each option cancellation agreement,
executed on the date hereof, by an Optionholder and acknowledged by the Company
and the Shareholders’ Representative.

“Option Consideration” means, with respect to each Class TV Stock Option, an
amount equal to the product of (a) the excess, if any, of the Common Stock
Payment over the exercise price of each such Class TV Stock Option with respect
to one underlying share of Common Stock and (b) the number of Shares subject to
such Class TV Stock Option.

“Optionholders” means the Persons who hold Company Options as set forth on
Exhibit D.

“Order” means any order, injunction, judgment, doctrine, decree, ruling, writ,
assessment or arbitration award of a Governmental Body.

“Ordinary Course of Business” means the ordinary and usual course of day-to-day
operations of the business of the Company, the Subsidiaries or the Underlying
Projects, as the case may be, consistent with past practice; provided, however,
that with respect to the operations or activities of the Underlying Projects
which remain under construction (and have not achieved operational completion)
or are in the development stages, the “Ordinary Course of Business” shall mean
the normal day-to-day activities for a project in a similar state of
construction or development.

“Other Real Property Interest” means an option of the Company, a Company
Subsidiary or an Underlying Project to acquire on behalf of a Project either an
Easement Interest in, license to, or right of way with respect to Real Property
or an ownership or leasehold interest in Real Property pursuant to an RP Option
Agreement, but excluding any Easement Interest.

“Owned Property” shall have the meaning set forth in Section 3.10(a) of this
Agreement.

“Parent” shall have the meaning set forth in the Preamble hereto.

“Parent Documents” shall have the meaning set forth in Section 5.2 of this
Agreement.

“Parent Indemnified Parties” shall have the meaning set forth in Section 9.2 of
this Agreement.

 

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“Parent Plans” shall have the meaning set forth in Section 6.12(b)(ii) of this
Agreement.

“Permits” means any approvals, authorizations, consents, licenses, permits or
certificates of a Governmental Body.

“Permitted Exceptions” means (i) defects, exceptions, covenants, conditions,
reservations, restrictions, easements, rights of way, encumbrances and other
matters disclosed in policies of title insurance provided to Parent, provided
the same do not materially interfere with the present or contemplated use of any
Owned Property or Leased Property, as the case may be, or render title to same
unmarketable or uninsurable; (ii) statutory liens for current Taxes, assessments
or other governmental charges not yet delinquent or the amount or validity of
which is being contested in good faith by appropriate proceedings and for which
there has been an accrual on the Balance Sheet in accordance with GAAP;
(iii) mechanics’, carriers’, workers’, and repairers’ Liens arising or incurred
in the Ordinary Course of Business that are not, individually or in the
aggregate, material to the business, operations or financial condition of the
owner of any Owned Property or the lessor of any Leased Property, as the case
may be, so encumbered; (iv) zoning, entitlement and other land use and
environmental regulations by any Governmental Body; and (v) statutory or common
law liens to secure landlords, lessors or renters under leases or rental
agreements confined to the premises leased or rented that are not material to
the business, operations or financial condition of the owner of any Owned
Property or the lessor of any Leased Property, as the case may be, so encumbered
and not validly waived pursuant to the terms of the documents creating the
applicable Real Property Interest.

“Person” means any individual, corporation, limited liability company,
partnership, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.

“Project” means any electric power generation farm or facility, whether
operating, currently under development, or proposed for development, in which
the Company holds a direct or indirect ownership interest.

“Project Company” or “Project Companies” means, as of the date hereof, those
Persons specified as a “Project Company” in Schedule 1.1(b).

“PUHCA” shall have the meaning set forth in Section 3.20(a) of this Agreement.

“PURA” means the Public Utility Regulatory Act of Texas.

“PURPA” means the Public Utility Regulatory Policies Act.

“QF” shall have the meaning set forth in Section 3.20(b) of this Agreement.

“Real Property” means (i) each parcel of real property owned or leased by the
Company, a Company Subsidiary or an Underlying Project, (ii) each parcel of real
property over which the Company, a Company Subsidiary or an Underlying Project
holds an Easement Interest, and (iii) each parcel of real property as to which
the Company, a Company Subsidiary or an Underlying Project has an Other Real
Property Interest.

 

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“Real Property Interest” means an interest in Real Property.

“Real Property Lease” shall have the meaning set forth in Section 3.10(b) of
this Agreement.

“Release” means any release, spill, leak, discharge, abandonment, disposal,
pumping, pouring, emitting, emptying, injecting, leaching, dumping, depositing,
dispersing, or migration into or through the environment (including ambient air,
surface water, groundwater, land surface and subsurface strata or within any
building, structure, facility or fixture) of any Hazardous Material, including
the abandonment or discarding of Hazardous Materials in barrels, drums, or other
containers.

“Remedial Action” means all actions including any capital expenditures
undertaken to (i) clean up, remove, treat or in any other way address any
Hazardous Material; (ii) prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it does not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment; (iii) perform pre-remedial studies and investigations or
post-remedial monitoring and care; or (iv) correct a condition of noncompliance
with Environmental Laws.

“Responsible Party” shall have the meaning set forth in Section 9.5(a) of this
Agreement.

“RP Option Agreement” means with respect to any Project, the instruments
creating options to enter into easements, leases, licenses, rights of way, other
rights of access or to acquire ownership interests in Real Property, in each
case pursuant to which, upon the exercise of the option, all or a part of the
applicable facilities of a Project will be permitted to be constructed,
installed, operated and maintained and will create easements, leases, licenses
or rights of way or ownership interests in Real Property for such purpose that
will become part of the applicable Project.

“Rumford” means Rumford Cogeneration Company Limited Partnership.

“Ryegate” means Ryegate Associates.

“Securities Act” means the Securities Act of 1933, as amended.

“Securityholders” means the Shareholders, the Optionholders and the Transaction
Bonus Recipients.

“Securityholder Indemnified Parties” shall have the meaning set forth in
Section 9.4 of this Agreement.

“Shareholder” and “Shareholders” shall have the meaning set forth in the
Preamble hereto.

“Shareholder Documents” shall have the meaning set forth in Section 4.2 of this
Agreement.

 

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“Shareholder Related Persons” shall have the meaning set forth in Section 3.21
of this Agreement.

“Shareholders’ Representative” shall have the meaning set forth in
Section 10.2(a) of this Agreement.

“Shareholders’ Representative Expense Account” means the account designated by
the Shareholders’ Representative in accordance with Section 2.8(b) of this
Agreement.

“Shareholders’ Representative Expense Amount” shall have the meaning set forth
in Section 10.2(c) of this Agreement.

“Shares” shall have the meaning set forth in the Recitals hereto.

“Specified Parent Officers” means Wouter van Kempen, President of Parent, David
Marks, Senior Vice President of Parent, William Keeney, Vice President of
Parent, Theodore Matula, Associate General Counsel of an Affiliate of Parent,
and Andrew Dickson, Vice President of Parent.

“Specified Projects” means the Underlying Project associated with, and
including, each of Rumford, Ryegate, the Sweetwater OPs and SweetwaterWind 6
LLC.

“Subsidiary” means, with respect to any Person, another Person of which (i) a
majority of the outstanding share capital, voting securities or other voting
equity interests are owned, directly or indirectly, by such first Person, or
(ii) such first Person is entitled, directly or indirectly, to appoint a
majority of the board of directors, board of managers or comparable body of such
other Person.

“Support Obligations” shall have the meaning set forth in Section 4.6 of this
Agreement.

“Survival Expiration Date” shall have the meaning set forth in Section 9.1 of
this Agreement.

“Surviving Corporation” shall have the meaning set forth in Section 2.1(b) of
this Agreement.

“Sweetwater OPs” means each of Sweetwater Wind 1 LLC, Sweetwater Wind 2 LLC,
Sweetwater Wind 3 LLC, Sweetwater Wind 4 LLC and Sweetwater Wind 5 LLC.

“Taxes” means (i) all federal, state, local or foreign taxes, charges, fees,
imposts, payments in lieu, levies and governmental fees or other assessments or
charges of any kind whatsoever, whether payable by reason of contract,
assumption, transferee liability, operation of law, closing agreement, or
otherwise, including all income, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise, profits, alternative or add-on
minimum, single business, margin, inventory, capital stock, license, bulk,
production, license, recording, registration, mortgage, stamp, real estate
excise, withholding, payroll, employment, social security, unemployment, excise,
title, severance, stamp, occupation, real property, personal

 

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property, environmental, intangible property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, and (ii) all
interest, penalties, fines, additions to tax or additional amounts imposed by
any Taxing Authority in connection with any item described in clause (i).

“Taxing Authority” means the IRS or any other Governmental Body responsible for
the administration of any Tax.

“Tax Return” means any return, report or statement filed or required to be filed
with respect to any Tax (including any attachments thereto, and any amendment
thereof), including any information return, claim for refund, amended return or
declaration of estimated Tax, and including, where permitted or required,
combined, consolidated or unitary returns for any group of entities that
includes the Company, any of its Subsidiaries or any of their Affiliates.

“Termination Date” shall have the meaning set forth in Section 8.1(e) of this
Agreement.

“Third Party Claim” shall have the meaning set forth in Section 9.5(b) of this
Agreement.

“Title IV Plan” shall have the meaning set forth in Section 3.14(a) of this
Agreement.

“Title Report Matters” shall mean matters relating to a parcel of Real Property
that would be disclosed in an accurate title report if one were to be issued as
of the date hereof.

“Transaction Bonus Payment” means an amount, based on each Unallocated Class TV
Stock Option set forth across from each Transaction Bonus Recipient’s name in
the Unallocated Class TV Stock Options Spreadsheet, equal to (X) the product of
(a) the excess, if any, of the Common Stock Payment over the Unallocated Class
TV Stock Option Exercise Price with respect to one underlying share of Common
Stock (if and as though such Unallocated Class TV Stock Option were issued and
outstanding) and (b) the number of shares of Common Stock that would be subject
to such Unallocated Class TV Stock Option (if and as though such Unallocated
Class TV Stock Option were issued and outstanding) less (Y) the product of
(a) the sum of (i) the Applicable Escrow Per Share Payment and (ii) the
Applicable Shareholders’ Representative Expense Per Share Payment and (b) the
number of shares of Common Stock subject to the applicable Unallocated Class TV
Stock Option (if and as though such Unallocated Class TV Stock Option were
issued and outstanding).

“Transaction Bonus Recipient” means each Person listed in the Unallocated Class
TV Stock Options Spreadsheet.

“Transaction Bonus Recipient Letter” means a letter agreement between a
Transaction Bonus Recipient, the Company and the Shareholders’ Representative in
the form attached hereto as Exhibit H.

“Transfer Taxes” means any real property transfer, sales, use, value added,
stamp, documentary, recording, registration, conveyance, stock transfer, real
estate excise, intangible

 

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property transfer, personal property transfer, gross receipts, registration,
duty, securities transactions or similar fees or Taxes or governmental charges
(together with any interest or penalty, addition to Tax or additional amount
imposed) as levied by any Governmental Body in connection with the transactions
contemplated by this Agreement, including, without limitation, any payments made
in lieu of any such Taxes or governmental charges, which become payable in
connection with the transactions contemplated by this Agreement.

“Unallocated Class TV Stock Option” means each authorized, but unissued, Class
TV Stock Option set forth across from the name of the Transaction Bonus
Recipient in the Unallocated Class TV Stock Options Spreadsheet.

“Unallocated Class TV Stock Option Exercise Price” means $100.

“Unallocated Class TV Stock Options Spreadsheet” means the spreadsheet titled
“Unallocated Class TV Stock Options” delivered by e-mail to Parent by the
Company on June 24, 2008 at 5:53 p.m. E.D.T.

“Underlying Project” means each project specified in Schedule 1.1(c), and shall
include the applicable Subsidiary or Project Company and its operations,
activities, resources and actions.

“VBCA” shall have the meaning set forth in the Recitals hereto.

“WARN” means the Worker Adjustment and Retraining Notification Act of 1988, as
amended and any similar state or local “mass layoff” or “plant closing” Law.

1.2 Other Definitional and Interpretive Matters.

(a) Unless otherwise expressly provided, for purposes of this Agreement, the
following rules of interpretation shall apply:

Calculation of Time Period. When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
this Agreement, the date that is the reference date in calculating such period
shall be excluded. If the last day of such period is a non-Business Day, the
period in question shall end on the next succeeding Business Day.

Dollars. Any reference in this Agreement to $ shall mean U.S. dollars.

Exhibits/Schedules. The Exhibits and Schedules to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
All Exhibits and Schedules annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise
defined therein shall be defined as set forth in this Agreement.

Gender and Number. Any reference in this Agreement to gender shall include all
genders, and words imparting the singular number only shall include the plural
and vice versa.

 

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Headings. The provision of a Table of Contents, the division of this Agreement
into Articles, Sections and other subdivisions and the insertion of headings are
for convenience of reference only and shall not affect or be utilized in
construing or interpreting this Agreement. All references in this Agreement to
any “Section” or “Article” are to the corresponding Section or Article of this
Agreement unless otherwise specified.

Herein. The words such as “herein,” “hereinafter,” “hereof,” and “hereunder”
refer to this Agreement as a whole and not merely to a subdivision in which such
words appear unless the context otherwise requires.

Including. The word “including” or any variation thereof means “including,
without limitation” and shall not be construed to limit any general statement
that it follows to the specific or similar items or matters immediately
following it.

Joint Preparation. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement and, in the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as jointly drafted by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provision of this Agreement.

ARTICLE II

THE MERGER

2.1 The Merger.

(a) Upon the terms and subject to the conditions of this Agreement, at the
Closing, articles of merger (the “Articles of Merger”) complying with
Section 11.05 of the VBCA shall be delivered to the Secretary of State of the
State of Vermont for filing. The Merger shall become effective at the time of
the filing of the Articles of Merger (or at such later time reflected in such
Articles of Merger as shall be agreed to by Parent and the Company). The date
and time when the Merger shall become effective is hereinafter referred to as
the “Effective Time.”

(b) On the terms and subject to the conditions set forth in this Agreement and
in accordance with the VBCA, at the Effective Time, Merger Sub shall be merged
with and into the Company, and the separate corporate existence of Merger Sub
shall cease, and the Company shall continue as the surviving corporation under
the laws of the State of Vermont (the “Surviving Corporation”).

(c) From and after the Effective Time, the Merger shall have the effects set
forth in Section 11.06 of the VBCA. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges and powers of the Company and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
Merger Sub shall become debts, liabilities and duties of the Surviving
Corporation.

 

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2.2 Articles of Incorporation of the Surviving Corporation. The Articles of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation.

2.3 By-laws of the Surviving Corporation. The By-laws of the Company, as in
effect immediately prior to the Effective Time, shall be the By-laws of the
Surviving Corporation.

2.4 Directors and Officers of the Surviving Corporation.

(a) At the Effective Time, the directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, each of such
directors to hold office, subject to the applicable provisions of the Articles
of Incorporation and By-laws of the Surviving Corporation, until their
respective successors shall be duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Articles of
Incorporation and the By-laws of the Surviving Corporation.

(b) At the Effective Time, the officers of Merger Sub immediately prior to the
Effective Time shall, subject to the applicable provisions of the Articles of
Incorporation and By laws of the Surviving Corporation, be the officers of, and
hold the same positions with, the Surviving Corporation until their respective
successors shall be duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Articles of
Incorporation and the By-laws of the Surviving Corporation.

2.5 Conversion of Stock. At the Effective Time:

(a) Each Share issued and outstanding immediately prior to the Effective Time
(other than any Shares which are held by any wholly-owned Subsidiary of the
Company or in the treasury of the Company, all of which shall cease to be
outstanding and be canceled and none of which shall receive any payment with
respect thereto) and all rights in respect thereof shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and represent the right to receive consideration equal to:

(i) an amount in cash (without interest) equal to the Closing Common Stock
Payment; and

(ii) a conditional amount of cash (without interest, other than as may be
provided under the terms of the Escrow Agreement), equal to the sum of (i) the
Applicable Escrow Per Share Payment, in accordance with the terms of the Escrow
Agreement, and (ii) the Applicable Shareholders’ Representative Expense Per
Share Payment, in accordance with the terms of this Agreement. A schedule
illustrating the calculation of the foregoing amounts, based on certain
assumptions as set forth therein, is set forth in Exhibit G hereto.

(b) Each share of common stock, par value $0.01 per share, of Merger Sub, then
issued and outstanding, shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into one fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.

 

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2.6 Payments to Shareholders. At the Effective Time, upon the terms and
conditions of this Agreement, (i) each Shareholder shall deliver to the
Surviving Corporation stock certificates representing all of the Shares held by
such Shareholder, duly endorsed or accompanied by stock transfer powers and a
Letter of Transmittal, in each case duly executed, and (ii) Parent shall pay, or
shall cause the Surviving Corporation to pay, to each such Shareholder an amount
equal to the product of (x) the Closing Common Stock Payment and (y) the number
of Shares held by such Shareholder, as set forth under the heading “Number of
Shares” on Exhibit A, and such amount shall be paid by wire transfer of
immediately available United States funds into the account designated by each
such Shareholder at least three business days prior to Closing. Upon surrender
of a Shareholder’s stock certificate as described in clause (i) above, such
Shareholder shall be entitled to receive in exchange therefor, in addition to
the payment described in clause (ii) above, the right to receive amounts payable
from the Escrow Account in accordance with the Escrow Agreement.

2.7 Treatment of Company Options; Unallocated Class TV Stock Options.

(a) Immediately prior to the Effective Time, each outstanding Class TV Stock
Option, whether or not then vested or exercisable shall no longer be exercisable
for the purchase of Common Stock but shall entitle the corresponding
Optionholder, in cancellation and settlement therefor, to the following
payments, subject to Section 2.7(c):

(i) a payment in cash (without interest) equal to the Closing Option
Consideration; and

(ii) a conditional amount of cash (without interest, other than as may be
provided under the terms of the Escrow Agreement), equal to (a) the sum of
(i) the Applicable Escrow Per Share Payment, in accordance with the terms of the
Escrow Agreement, and (ii) the Applicable Shareholders’ Representative Expense
Per Share Payment, in accordance with the terms of this Agreement, multiplied by
(b) the number of Shares subject to the underlying Class TV Stock Option. A
schedule illustrating the calculation of the foregoing amounts, based on certain
assumptions as set forth therein, is set forth in Exhibit G hereto.

(b) Each Transaction Bonus Recipient shall be entitled to receive, subject to
Section 2.7(c), (X) a Transaction Bonus Payment and (Y) a conditional amount of
cash (without interest, other than as may be provided under the terms of the
Escrow Agreement), equal to (a) the sum of (i) the Applicable Escrow Per Share
Payment, in accordance with the terms of the Escrow Agreement and (ii) the
Applicable Shareholders’ Representative Expense Per Share Payment, in accordance
with the terms of this Agreement, multiplied by (b) the number of shares of
Common Stock that would be subject to the underlying Unallocated Class TV Stock
Option set forth across from such Transaction Bonus Recipient’s name on the
Unallocated Class TV Stock Options Spreadsheet (if and as though such
Unallocated Class TV Stock Options were issued and outstanding).

(c) At the Effective Time, upon the terms and conditions of this Agreement,
Parent shall pay or cause to be paid to the Company an amount equal to the sum
of (X) the aggregate Closing Option Consideration payable to each Optionholder
holding a Class

 

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TV Stock Option who has executed and delivered an Option Cancellation Agreement
and (Y) the aggregate Transaction Bonus Payments payable to each Transaction
Bonus Recipient who has executed and delivered a Transaction Bonus Recipient
Letter, which the Surviving Corporation shall pay to the Optionholders and
Transaction Bonus Recipients, as applicable, after deduction of income and
employment tax withholdings, as well as any other required withholdings, on the
Closing Date or as soon as practicable thereafter. After the Closing, each such
Optionholder holding a Class TV Stock Option shall have the right to receive,
subject to the Escrow Agreement and in addition to the payment described in the
first sentence of this subsection (c), amounts payable in accordance with clause
(ii) of Section 2.7(a) above, and each such Transaction Bonus Recipient shall
have the right to receive, subject to the Escrow Agreement and in addition to
the payment described in the first sentence of this subsection (c), amounts
payable in accordance with clause (Y) of Section 2.7(b) above.

(d) Unless otherwise required by law, Parent and the Company shall treat the
payment of any consideration pursuant this Section 2.7 (including any release of
such amounts from the Escrow Account pursuant to the Escrow Agreement) as
properly allocable under Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) to
the portion of the Closing Date following Parent’s acquisition of the Company
Consolidated Group and shall not take any inconsistent position therewith.

(e) Immediately prior to the Effective Time, each outstanding Class DT Stock
Option whether or not then vested or exercisable shall be cancelled without
consideration.

2.8 Payment to Escrow Account; Company Transaction Expenses; Shareholders’
Representative Expense Amount.

(a) At the Effective Time, upon the terms and conditions of this Agreement,
Parent shall deposit an amount of cash equal to * * * (such amount the “Escrow
Amount”) in an interest bearing account (the “Escrow Account”) with Wilmington
Trust Company (the “Escrow Agent”), for the purpose of securing the
indemnification obligations set forth in Article IX. The portion of the Escrow
Amount to be withheld from each Shareholder, Optionholder or Transaction Bonus
Recipient shall be based upon the Shareholder, Optionholder or Transaction Bonus
Recipient’s applicable Escrow Percentage. The Escrow Amount, together with all
interest, dividends and other income thereon (the “Escrow Funds”), shall be held
and released, from time to time, by the Escrow Agent under an escrow agreement
in substantially the form attached hereto as Exhibit C to be entered into among
the Shareholders, Parent, the Company and the Escrow Agent (the “Escrow
Agreement”).

(b) At the Effective Time, upon the terms and conditions of this Agreement,
Parent shall deposit an amount of cash equal to the Shareholders’ Representative
Expense Amount to such account as shall be designated by the Shareholders’
Representative to Parent in writing at least three Business Days prior to
Closing.

(c) At least three Business Days prior to Closing, the Company shall deliver to
Parent a written notice specifying the dollar amount of Company Transaction
Expenses that have been paid or are payable to each Person to whom such expenses
are owed.

 

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Such notice shall include wire instructions for accounts designated by each such
Person to whom such Company Transaction Expenses will remain unpaid immediately
prior to the Effective Time, as well as a “payoff” letter as a final invoice
from each such Person, confirming the amount to be paid to such Person.
Immediately after the Effective Time, upon the terms and conditions of this
Agreement, the Surviving Corporation shall pay by wire transfer of immediately
available funds all Company Transaction Expenses that are unpaid as of
immediately prior to the Effective Time, with such payments to be made in the
amounts and to the Persons designated in such written notice.

2.9 No Further Rights of Transfers. At and after the Effective Time, each holder
of Shares shall cease to have any rights as a shareholder of the Company, except
as otherwise required by applicable law and except for, in the case of a holder
of a certificate representing Shares (other than Shares to be canceled pursuant
to Section 2.5(a)), the right to surrender such certificate in exchange for
payment in accordance with this Article II, and no transfer of Shares shall be
made on the stock transfer books of the Surviving Corporation. Certificates
presented to the Surviving Corporation after the Effective Time shall be
canceled and exchanged for cash as provided in this Article II. At the close of
business on the day of the Effective Time the stock ledger of the Company with
respect to the Shares shall be closed.

2.10 Withholding Rights. The Company or the Surviving Corporation shall be
entitled to deduct and withhold, or cause to be deducted or withheld, from any
payment made pursuant to this Article II, such amounts as are required to be
deducted and withheld with respect to the making of such payment under the Code,
or any provision of applicable state, local or foreign tax law. To the extent
that amounts are so deducted and withheld, such deducted and withheld amounts
shall be treated for all purposes of this Agreement as having been paid to such
holders in respect of which such deduction and withholding was made.

2.11 Amendment of Schedule 1.1(d). Not later than three Business Days prior to
Closing, the Company shall have the right to amend Schedule 1.1(d) to reflect
changes in applicable Escrow Percentages resulting from modifications to the
underlying assumptions thereto, by delivering to Parent an amended Schedule
1.1(d); provided that, in all cases, the sum of such Escrow Percentages shall
equal 100%.

2.12 Closing Date. Unless this Agreement shall have been terminated pursuant to
Section 8.1, and subject to the satisfaction or waiver of the conditions set
forth in Article VII, the closing of the transactions contemplated herein (the
“Closing”) shall take place at a location and on a date to be specified by the
parties (such date, the “Closing Date”), which date shall be no later than the
third Business Day after the satisfaction or waiver of the conditions set forth
in Article VII (other than conditions that by their nature are to be satisfied
at the Closing, but subject to the satisfaction or waiver of those conditions at
such time), unless another date is agreed to in writing by the parties hereto.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and Merger Sub as follows:

3.1 Organization and Good Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Vermont,
and the Company has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now conducted and as
currently proposed to be conducted. The Company is duly qualified or authorized
to do business as a foreign corporation in each jurisdiction in which the nature
of its business or the ownership of its property makes such qualification
necessary and is in good standing under the laws of each jurisdiction in which
it owns or leases real property and each other jurisdiction in which the conduct
of its business or the ownership of its properties requires such qualification
or authorization, except where the failure to be so qualified, authorized or in
good standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

3.2 Authorization of Agreement. The Company has all requisite power, authority
and legal capacity to execute and deliver this Agreement and each other
agreement, document, or instrument or certificate contemplated by this Agreement
or to be executed by the Company in connection with the transactions
contemplated by this Agreement (the “Company Documents”), to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of this
Agreement and each of the Company Documents, and the consummation of the Merger
and other transactions contemplated hereby and thereby, have been duly
authorized and approved by the Board and by each of the Shareholders, and no
other corporate action on the part of the Company (other than, in each case, as
required by the VBCA and the filing of appropriate merger documents with the
Secretary of State of the State of Vermont) is necessary to authorize the
execution, delivery and performance of this Agreement and each of the Company
Documents and the consummation of the Merger and other transactions contemplated
hereby and thereby. This Agreement has been, and each of the Company Documents
required to be delivered at the Closing will be at or prior to the Closing, duly
and validly executed and delivered by the Company and (assuming due
authorization, execution and delivery by Parent, Merger Sub and the
Shareholders) this Agreement constitutes, and each of the Company Documents when
so executed and delivered will constitute, legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other equivalent Laws affecting the enforcement
of creditors’ rights in general and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding at law
or in equity).

3.3 Conflicts; Consents of Third Parties.

(a) Except as set forth in Schedule 3.3(a), none of the execution and delivery
by the Company of this Agreement or the Company Documents, the consummation of

 

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the transactions contemplated hereby or thereby, or compliance by the Company
with any of the provisions hereof or thereof will conflict with, or result in
any violation or breach of, conflict with or cause a default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a material
benefit under, or give rise to any obligation of the Company, its Subsidiaries
or any of the Project Companies, to make any payment under, or to the increased,
additional, accelerated or guaranteed rights or entitlements of any Person
under, or give rise to any right to purchase or sell (including any rights of
first refusal or comparable obligations) any direct or indirect interest in the
Company, its Subsidiaries or any of the Underlying Projects, or result in the
creation of any Liens upon any of the properties or assets of the Company, any
of its Subsidiaries or any of the Underlying Projects under, any provision of
(i) the certificate of incorporation, by-laws, limited liability company
agreement, operating agreement, partnership agreement or comparable
organizational documents of the Company, any of its Subsidiaries or any of the
Underlying Projects or any Material Contract; (ii) any Permit or Contract that
is not a Material Contract to which the Company, any of its Subsidiaries or any
of the Underlying Projects is a party or by which any of the properties or
assets of the Company, any of its Subsidiaries or any of the Underlying Projects
are bound; (iii) any Order applicable to the Company, any of its Subsidiaries or
any of the Underlying Projects or any of the properties or assets of the
Company, any of its Subsidiaries or any of the Underlying Projects; or (iv) any
applicable Law, other than, in the case of clauses (ii) and (iv), such
conflicts, violations, defaults, terminations or cancellations that would not
have a Material Adverse Effect.

(b) Except as set forth in Schedule 3.3(b), no material consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of the
Company, any of the Company’s Subsidiaries or any of the Underlying Projects in
connection with (i) the execution and delivery of this Agreement or the Company
Documents, the compliance by the Company with any of the provisions hereof and
thereof, or the consummation of the transactions contemplated hereby or thereby,
or (ii) the continuing validity and effectiveness immediately following the
Closing of any Permit or Contract of the Company, any of its Subsidiaries or any
of the Underlying Projects, except for (1) compliance with the applicable
requirements of the HSR Act, and (2) such other consents, waivers, approvals,
Orders, Permits or authorizations under Antitrust Law, FPA, PURA or otherwise,
the failure of which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

3.4 Capitalization.

(a) The authorized capital stock of the Company consists of 1,999,999 shares of
Class A Common Stock, and one (1) share of Class B Common Stock. The Shares are
the only issued and outstanding shares of Common Stock. The Shares have been
duly authorized and validly issued and are fully paid and non-assessable.

(b) Except as set forth in Schedule 3.4(b), as of the date hereof there is no
existing option, warrant, call, right or Contract to which the Company is a
party requiring, and there are no securities of the Company outstanding, which
upon conversion or exchange would require the issuance, sale or transfer of any
shares of capital stock or other equity securities of the Company or other
securities convertible into, exchangeable for or evidencing the right to

 

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subscribe for or purchase shares of capital stock or other equity securities of
the Company. Except as set forth in Schedule 3.4(b), (i) there are no
obligations, contingent or otherwise, of the Company, any of its Subsidiaries or
any of the Underlying Projects to repurchase, redeem or otherwise acquire any
shares of Common Stock or the capital stock or other equity interests of any of
its Subsidiaries or any of the Underlying Projects, and (ii) there are no
obligations, contingent or otherwise, of the Company, any of its Subsidiaries,
any of the Managed Projects or, to the Knowledge of the Company, any of the
Specified Projects to provide material funds to, or make any material investment
in (in the form of a loan, capital contribution or otherwise), or provide any
guarantee with respect to the obligations of, any Person. Except as set forth in
Schedule 3.4(b), there are no outstanding stock appreciation, phantom stock,
profit participation or similar rights with respect to the Company, any of its
Subsidiaries, any of the Managed Projects or, to the Knowledge of the Company,
any of the Specified Projects. There are no bonds, debentures, notes or other
Indebtedness of the Company, any of its Subsidiaries or any of the Underlying
Projects having the right to vote or consent (or, convertible into, or
exchangeable for, securities having the right to vote or consent) on any matters
on which stockholders (or other equityholders) of the Company, any of such
Subsidiaries or any of such Underlying Projects may vote. There are no voting
trusts, irrevocable proxies or other Contracts or understandings to which the
Company, any of its Subsidiaries, any of the Managed Projects or, to the
Knowledge of the Company, any of the Specified Projects is a party or is bound
with respect to the voting or consent of any shares of Common Stock or the
equity interests of any of the Company’s Subsidiaries or any of the Underlying
Projects.

3.5 Subsidiaries; Project Companies; Investments.

(a) Schedule 3.5(a) sets forth the name of each Subsidiary of the Company, and,
with respect to each Subsidiary, the jurisdiction in which it is incorporated or
organized, the jurisdictions, if any, in which it is qualified as a foreign
corporation or other entity because the nature of its business or the ownership
of property makes such qualification necessary, the number of shares of its
authorized capital stock or equivalent equity interests, the number and class of
shares or equivalent equity interests thereof duly issued and outstanding, the
names of all stockholders or other equity owners (including any partners) and
the number of shares of stock or equivalent equity interests owned by each
stockholder or other equity owner (including any partners) or the amount of
equity owned by each equity owner (including any partners). Each Subsidiary of
the Company is a duly organized and validly existing corporation, limited
liability company, partnership or other entity in good standing under the laws
of the jurisdiction of its incorporation, formation or organization. Except as
set forth in Schedule 3.5(a), each Subsidiary of the Company is duly qualified
or authorized to do business as a foreign corporation, limited liability
company, partnership or other entity in each jurisdiction in which the nature of
its business or the ownership of its property makes such qualification necessary
and is in good standing under the laws of each jurisdiction in which the conduct
of its business or the ownership of its properties requires such qualification
or authorization, except where the failure to be so qualified, authorized or in
good standing has not had and would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each Subsidiary has
all requisite corporate or entity power and authority to own its properties and
carry on its business as presently and proposed to be conducted. The outstanding
shares of capital stock or equivalent equity interests of each Subsidiary are
validly issued, fully paid and non-assessable and were not issued in violation
of any purchase or call option, right of first

 

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refusal, subscription right, preemptive right or any similar right. All such
shares or other equivalent equity interests of any Subsidiary represented as
being owned by the Company or any of its Subsidiaries are owned by them free and
clear of any and all Liens, except as set forth in Schedule 3.5(a). Except as
set forth in Schedule 3.5(a), there is no existing option, warrant, call, right
or Contract requiring, and there are no convertible securities of any of the
Company’s Subsidiaries outstanding which upon conversion would require, the
issuance of any shares of capital stock or other equivalent equity interests of
any Subsidiary or other securities convertible into shares of capital stock or
other equivalent equity interests of any such Subsidiary. Except as set forth in
Schedule 3.5(a), there are no material restrictions on the ability of any of the
Company’s Subsidiaries to make distributions of cash to their respective equity
holders.

(b) Schedule 3.5(b) sets forth the name of each Project Company, and, with
respect to each Project Company the jurisdiction in which it is incorporated or
organized, the jurisdictions, if any, in which it is qualified to do business as
a foreign corporation because the nature of its business or the ownership of
property makes such qualification necessary, the number of shares of its
authorized capital stock or equivalent equity interests, the number and class of
shares or equivalent equity interests thereof duly issued and outstanding, the
names of all stockholders or other equity owners (including any partners) and
the number of shares of stock or equivalent equity interests owned by each
stockholder or other equity owner (including any partners) or the amount of
equity owned by each equity owner (including any partners), in each case, as of
the date hereof. To the Knowledge of the Company, each Project Company is a duly
organized and validly existing corporation, limited liability company,
partnership or other entity in good standing under the laws of the jurisdiction
of its incorporation, formation or organization. To the Knowledge of the
Company, each Project Company is duly qualified or authorized to do business as
a foreign corporation, limited liability company, partnership or other entity in
each jurisdiction in which the nature of its business or the ownership of its
property makes such qualification necessary and is in good standing under the
laws of each jurisdiction in which the conduct of its business or the ownership
of its properties requires such qualification or authorization, except where the
failure to be so qualified, authorized or in good standing has not had and would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. To the Knowledge of the Company, each Project Company has all
requisite corporate or entity power and authority to own its properties and
carry on its business as presently and proposed to be conducted. To the
Knowledge of the Company, the outstanding shares of capital stock or equivalent
equity interests of each Project Company that are owned, directly or indirectly,
by the Company are validly issued, fully paid and non-assessable and were not
issued in violation of any purchase or call option, right of first refusal,
subscription right, preemptive right or any similar right. All such shares or
other equivalent equity interests represented as being owned, directly or
indirectly, by the Company or any of its Subsidiaries are owned by them free and
clear of any and all Liens, except as set forth in Schedule 3.5(b). Except as
set forth in Schedule 3.5(b), there is no existing option, warrant, call, right
or Contract requiring, and there are no convertible securities of any of the
Project Companies outstanding that upon conversion would require, the issuance
of any shares of capital stock or other equity interests of any Project Company
or other securities convertible into shares of capital stock or other equity
interests of any such Project Company. Except as set forth in Schedule 3.5(b),
there are no material restrictions on the ability of any of the Project
Companies to make distributions of cash to their respective equity holders.

 

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(c) The Company does not own, directly or indirectly, any Investment in any
Person other than the Subsidiaries and the Project Companies and there are no
Contracts providing for the Company, directly or indirectly, to acquire any such
Investment.

3.6 Financial Statements.

(a) The Company has delivered to Parent copies of (i) the audited consolidated
balance sheets of the Company and its Subsidiaries as at December 31, 2005, 2006
and 2007 and the related audited consolidated statements of income and of cash
flows of the Company and its Subsidiaries for the years then ended, and (ii) the
unaudited consolidated balance sheet of the Company and its Subsidiaries as at
March 31, 2008 and the related unaudited consolidated statement of income and of
cash flows of the Company and its Subsidiaries for the three month period then
ended (such audited and unaudited statements, including the related notes and
schedules thereto, are referred to as the “Financial Statements”). Except as set
forth in Schedule 3.6(a), each of the Financial Statements has been prepared in
accordance with GAAP (subject, in the case of unaudited Financial Statements, to
the absence of notes) consistently applied by the Company (except as may be
indicated in the notes thereto) and presents fairly in all material respects the
consolidated financial position, results of operations and cash flows of the
Company and its Subsidiaries as at the dates and for the periods indicated
therein.

The audited consolidated balance sheet of the Company and its Subsidiaries as at
December 31, 2007 is referred to herein as the “Balance Sheet” and December 31,
2007 is referred to herein as the “Balance Sheet Date.”

(b) All the books, records and accounts of the Company, its Subsidiaries and the
Managed Projects are maintained in all material respects in accordance with
commercially reasonable business practice. The Company has established and
maintains internal controls and procedures that are commercially reasonable and
provide reasonable assurance regarding the reliability of the Company’s
financial statements, to the Knowledge of the Company, such disclosure controls
and procedures are effective in timely alerting the Company’s principal
executive officer or its principal financial officer to material information
which such principal officers deem necessary to be provided to them. To the
Knowledge of the Company, all books, records and accounts of the Specified
Projects are maintained in all material respects in accordance with commercially
reasonable business practice and the Specified Projects maintain systems of
internal accounting controls that are commercially reasonable and provide
reasonable assurance regarding the reliability of the financial statements
prepared by such Specified Project.

3.7 No Undisclosed Liabilities. Except as set forth in Schedule 3.7, none of the
Company nor any of its Subsidiaries has any Indebtedness or Liabilities (whether
or not required under GAAP to be reflected on a balance sheet or the notes
thereto), other than those (i) specifically reflected on and fully reserved
against in the Balance Sheet, (ii) incurred in the Ordinary Course of Business
of the Company and its Subsidiaries since the Balance Sheet Date, (iii) that are
immaterial to the Company and its Subsidiaries, taken as a whole, or (iv) that
have been discharged or paid in full prior to the date hereof. Except as set
forth in Schedule 3.7, none of the Managed Projects or, to the Knowledge of the
Company, the Specified Projects have any

 

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Liabilities other than those incurred in the Ordinary Course of Business of such
applicable Managed Project or Specified Project, those paid that have been
discharged or paid in full prior to the date hereof, or those that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

3.8 Absence of Certain Developments. Except as expressly contemplated by this
Agreement or as set forth in Schedule 3.8, between the Balance Sheet Date and
the date hereof, the Company, its Subsidiaries, the Managed Projects and, to the
Knowledge of the Company, the Specified Projects have conducted their respective
businesses only in the Ordinary Course of Business thereof, and there has not
been any event, change, occurrence or circumstance that has had a Material
Adverse Effect, nor has there occurred or arisen any event, condition or state
of facts of any character specifically related to any Shareholder, the Company,
any of its Subsidiaries, any of the Managed Projects or, to the Knowledge of the
Company, any of the Specified Projects that has had or could reasonably be
expected to result in a Material Adverse Effect. Without limiting the generality
of the foregoing, except as set forth in Schedule 3.8, between the Balance Sheet
Date and the date hereof:

(i) there has not been any damage, destruction or loss, whether or not covered
by insurance, with respect to the property and assets of the Company, any of its
Subsidiaries, and of the Managed Projects or, to the Knowledge of the Company,
any of the Specified Projects having a replacement cost of more than $150,000
for any single loss or $250,000 for all such losses;

(ii) there has not been any declaration, setting aside or payment of any
dividend or other distribution in respect of any shares of capital stock of the
Company or any of its Subsidiaries or any repurchase, redemption or other
acquisition by the Company, any of its Subsidiaries or any of the Project
Companies of any outstanding shares of capital stock or other securities of, or
other ownership interest in, the Company, any of its Subsidiaries or any of the
Project Companies;

(iii) none of the Company nor any of its Subsidiaries has awarded or paid any
bonuses to employees of the Company or any of its Subsidiaries except to the
extent accrued on the Balance Sheet, or entered into any employment, deferred
compensation, severance, collective bargaining or similar agreement (nor amended
or modified in any respect any such agreement) or agreed to increase the
compensation payable or to become payable by it to any of the Company’s or any
of its Subsidiaries’ directors, officers, employees, agents or representatives
or agreed to increase the coverage or benefits available under any Company Plan;

(iv) except as required by law or under GAAP, there has not been any change by
the Company, any of its Subsidiaries, any of the Managed Projects or, to the
Knowledge of the Company, any of the Specified Projects in any material
accounting or Tax reporting principles, methods or policies;

(v) none of the Company, any of its Subsidiaries or any of the Managed Projects
has made or rescinded any material election relating to Taxes or settled or
compromised any material claim relating to Taxes and, to the Knowledge of the
Company, none

 

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of the Specified Projects, has made or rescinded any material election relating
to Taxes or settled or compromised any material claim relating to Taxes;

(vi) none of the Company, any of its Subsidiaries, any of the Managed Projects
or, to the Knowledge of the Company, any of the Specified Projects has
terminated any Material Contract (other than any such terminations pursuant to
which none of the Company, any of its Subsidiaries, any of the Managed Project
or any of the Specified Projects has any post-termination obligations with a
value in excess of, or that are payable or may potentially become payable in an
amount in excess of, $150,000 for any such individual termination or in excess
of $250,000 in the aggregate for all such terminations) or relinquished, waived
or released any rights under any Material Contract or failed in any material
respect to perform obligations under or suffered the occurrence of any uncured
default under any Material Contract;

(vii) none of the Company, any of its Subsidiaries, any of the Managed Projects
or, to the Knowledge of the Company, any of the Specified Projects, has failed
to pay any creditor any material amount owed to such creditor when due or
granted any extensions of credit other than in the Ordinary Course of Business;

(viii) none of the Company or any of its Subsidiaries has entered into financial
arrangements for the benefit of any Shareholder other than financial
arrangements with respect to any Shareholder in his capacity as an officer or
employee of the Company or any of its Subsidiaries;

(ix) none of the Company, any of its Subsidiaries or any of the Managed Projects
has (A) except as would constitute a Permitted Exception, mortgaged, pledged or
subjected to any Lien any of its assets, or (B) other than in the Ordinary
Course of Business, acquired any assets, tangible or intangible, or sold,
assigned, transferred, conveyed, leased or otherwise disposed of any assets,
tangible or intangible, of the Company, any of its Subsidiaries or any of the
Managed Projects, in each case greater than $150,000 individually or $250,000 in
the aggregate;

(x) to the Knowledge of the Company, none of the Specified Projects has
(A) except as would constitute a Permitted Exception, mortgaged, pledged or
subjected to any Lien any of its assets, or (B) other than in the Ordinary
Course of Business, acquired any assets, tangible or intangible, or sold,
assigned, transferred, conveyed, leased or otherwise disposed of any assets,
tangible or intangible, of such Specified Project, in each case greater than
$150,000 individually or $250,000 in the aggregate;

(xi) none of the Company, any Subsidiary or any Managed Project has discharged
or satisfied any Lien, or paid any Liability and, to the Knowledge of the
Company, none of the Specified Projects has discharged or satisfied any Lien, or
paid any Liability, other than, with respect to a Lien or Liability incurred in
the Ordinary Course of Business, the payment, discharge or satisfaction in the
Ordinary Course of Business, greater than $150,00 individually or $250,000 in
the aggregate;

 

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(xii) except as set forth in the 2008 Budget, in the form as set forth in
Exhibit E (the “Budget”), none of the Company, any of its Subsidiaries or any of
the Managed Projects has made or committed to make any capital expenditures or
capital additions or betterments and, to the Knowledge of the Company, none of
the Specified Projects has made or committed to make any capital expenditures or
capital additions or betterments in excess of $150,000 individually or $250,000
in the aggregate;

(xiii) except as set forth in the Budget, neither the Company, any of its
Subsidiaries or any of the Managed Projects has issued, created, incurred,
assumed, guaranteed, endorsed or otherwise become liable or responsible with
respect to (whether directly, contingently, or otherwise) any Indebtedness and,
to the Knowledge of the Company, other than in the Ordinary Course of Business,
none of the Specified Projects has issued, created, incurred, assumed,
guaranteed, endorsed or otherwise become liable or responsible with respect to
(whether directly, contingently, or otherwise) any Indebtedness in excess of
$150,000 individually or $250,000 in the aggregate;

(xiv) none of the Company, any Subsidiary or any Managed Project has instituted
or settled any Legal Proceeding and, to the Knowledge of the Company, none of
the Specified Projects has instituted or settled any Legal Proceeding resulting
in a loss of revenue in excess of $150,000 individually or $250,000 in the
aggregate; and

(xv) none of the Company, any of its Subsidiaries, any of the Managed Projects,
and, to the Knowledge of the Company, none of the Specified Projects has agreed,
committed, arranged or entered into any understanding to do anything prohibited
by this Section 3.8.

3.9 Taxes. Except as set forth in Schedule 3.9:

(a) The Company, each of its Subsidiaries, each of the Managed Projects, any
Affiliated Group or other consolidated, combined, unitary or aggregate group of
which the Company, any of its Subsidiaries or any Managed Project is or was a
member and, to the Knowledge of the Company, the Specified Projects have
(i) filed all material Tax Returns (relating to such Persons) required to be
filed by or on behalf thereof with the appropriate Taxing Authority in all
jurisdictions in which such Tax Returns are required to be filed (after giving
effect to any valid extensions of time in which to make such filings) within the
time and manner prescribed by law, and all such Tax Returns are true, complete
and correct in all material respects; (ii) fully and timely paid all material
amounts of Taxes (including withholding taxes) relating to such Persons that are
due and payable or to the extent not due and payable made due and sufficient
accruals for the amount of such Taxes on the Financial Statements in accordance
with GAAP. There are no Liens for Taxes (other than Permitted Exceptions) on any
of the assets of the Company, the Subsidiaries, the Managed Projects or, to the
Knowledge of the Company, on the assets of the Specified Projects. None of the
Company, the Subsidiaries, the Managed Projects or, to the Knowledge of the
Company, the Specified Projects, (x) is a party to any Tax allocation, Tax
indemnity or Tax sharing agreement or similar arrangements with any Person, or
(y) has any Liability for the Taxes of any other Person (other than a member of
the Company Consolidated Group) under Treas. Reg. Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract or otherwise.

 

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(b) The Company, each of its Subsidiaries, the Managed Projects and, to the
Knowledge of the Company, each of the Specified Projects has complied in all
material respects with applicable Law relating to the payment and withholding of
Taxes, including satisfying all reporting, recordkeeping, and information
reporting requirements related thereto.

(c) To the extent requested in writing by Parent, prior to the date hereof, the
Company has made available to Parent copies of the following: (i) all material
federal, state, local and foreign income or franchise Tax Returns of the
Company, its Subsidiaries, the Managed Projects and, to the extent reasonably
available to the Company, the Specified Projects, relating to all taxable
periods ending on or after December 31, 2003, and (ii) any written audit report,
information document request, other written request for information or notice of
claim, controversy or investigation issued within the last two years relating to
material amounts of Taxes due from or with respect to the Company, any of its
Subsidiaries any of the Managed Projects or, to the extent reasonably available
to the Company or any of its Subsidiaries, the Specified Projects.

(d) Within the period beginning on October 31, 2005 or otherwise to the
Knowledge of the Company, no claim has been made in writing by a Taxing
Authority in a jurisdiction where the Company, any of its Subsidiaries, any of
the Managed Projects or, to the Knowledge of the Company, any of the Specified
Projects does not file Tax Returns such that it is or may be subject to taxation
by that jurisdiction.

(e) There are no other audits, claims, controversies, proceedings, litigations
or investigations in progress with respect to Taxes of the Company, its
Subsidiaries, the Managed Projects or, to the Knowledge of the Company, any
Specified Project, nor has the Company, any of its Subsidiaries, any Managed
Project or, to the Knowledge of the Company, any of the Specified Projects
received any written notice of a deficiency, audit, claim, controversy,
reassessment, proceeding, litigation or investigation (including any audit or
investigation that could result in an adjustment under Section 481 of the Code).

(f) None of the Company, any of its Subsidiaries, any of the Managed Projects,
any other Person on their behalf, or, to the Knowledge of the Company, any
Specified Project has (i) agreed to make any adjustments pursuant to
Section 481(a) of the Code or any similar provision of Law, (ii) executed or
entered into a closing agreement pursuant to Section 7121 of the Code or any
similar provision of Law with respect to the Company, any of its Subsidiaries or
any of the Underlying Projects, (iii) requested any extension of time within
which to file any Tax Return, which Tax Return has since not been filed,
(iv) granted any extension for the assessment or collection of Taxes, which
Taxes have not since been paid, or (v) granted to any Person any power of
attorney that is currently in force with respect to any Tax matter or any
extension of any statute of limitations with respect to liabilities for Taxes,
but only to the extent such agreement, request, extension or power of attorney
will have continuing effect after the Closing Date.

(g) None of the Company, any of its Subsidiaries, any of the Managed Projects
or, to the Knowledge of the Company, any of the Specified Projects (i) has any
application pending with any Taxing Authority requesting permission for any
changes in its accounting methods, (ii) is subject to any private letter ruling
of the IRS or comparable rulings of

 

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any Taxing Authority, or (iii) except as set forth in Schedule 3.9(g), has
received written notice from any Governmental Body that any interest in real
property held or enjoyed by such Person is, or shall become, subject to rollback
taxes, tax penalties, or tax assessment increases under any local, state or
federal law, statute, code, ordinance or regulation pursuant to which any such
interest, or any portion or parcel thereof, may have been or may be entitled to
a preferential or special real estate tax assessment or tax treatment, but with
respect to clauses (i) and (ii) above, only to the extent such application or
ruling will have continuing effect after the Closing Date.

(h) For federal income tax purposes, (i) the Company and each of the
Subsidiaries and Project Companies in Schedule 3.9(h)(i) is and has been, since
its formation, treated as a corporation, (ii) each of the entities listed in
Schedule 3.9(h)(ii) is and has been, since its formation, treated as a
partnership, and (iii) each of the entities listed in Schedule 3.9(h)(iii) is
and has been, since its formation, disregarded as an entity separate from its
owners.

(i) As a result of entering into the transactions contemplated by this
Agreement, no abatement, payment in lieu or other agreements entered into with a
Governmental Authority by the Company, any of its Subsidiaries, any of the
Managed Projects or, to the Knowledge of the Company, any of the Specified
Projects that affects the amount of Taxes imposed on or paid by the Company, any
of its Subsidiaries, or any of the Underlying Projects (or with respect to such
Persons, the assets thereof) will be terminated, voided or otherwise caused to
no longer have effect for periods after the Closing Date.

(j) Except as set forth in Schedule 3.9(j), no grants, tax exempt bonds or
financing of the type described in Section 45(b)(3) of the Code has been
provided in connection with, or with respect to, any of the assets of the
Company, its Subsidiaries or, to the Knowledge of the Company, the Project
Companies.

(k) The Company and its domestic corporate Subsidiaries are all members of a
single Affiliated Group of which the Company is the common parent (the “Company
Consolidated Group”) that has elected to file its United States federal income
tax return on a consolidated basis, and such group does not include any other
members.

(l) Schedule 3.9(l) lists all of the jurisdictions in which the Company, its
Subsidiaries, the Managed Projects and to the Knowledge of the Company, the
Specified Projects file Tax Returns and lists and describes any currently
outstanding audits, negotiations, written claims or litigations relating to
Taxes.

(m) None of the Company, its Subsidiaries, the Managed Projects or, to the
Knowledge of the Company, the Specified Projects has (i) engaged in any
transaction or agreement (including without limitation, an installment sale)
prior to the Closing Date which could result in the recognition of a material
amount of income or gain in any period ending after the Closing Date, (ii) has a
material amount of deferred intercompany gain (as described in Section 1.1502-13
of the Treasury Regulations), (iii) has been a “distributing corporation” in a
transaction intended to be governed by Section 355 of the Code (A) in the two
years prior to the date of this Agreement or (B) in a distribution which could
otherwise constitute part of a “plan” or “series of related transactions” in
conjunction with the transactions contemplated by this Agreement, (iv) is
projected to have an amount includible in its income for the current taxable

 

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year under Section 951 of the Code, (v) has been a passive foreign investment
company within the meaning of Section 1296 of the Code, or (vi) has an
unrecaptured overall foreign loss within the meaning of Section 904(f) of the
Code.

Notwithstanding any provision in this Agreement to the contrary, the only
representations and warranties made by the Shareholders and the Company with
respect to all matters relating to Taxes shall be representations and warranties
set forth in this Section 3.9 and in Section 3.14 and Sections 3.8(iv) and (v),
and this Agreement shall not be interpreted in any manner that is contrary
thereto. For purposes of this Section 3.9, any Underlying Project that is also a
Subsidiary shall be treated as a Subsidiary.

3.10 Real Property.

(a) Schedule 3.10(a) sets forth a complete list of all real property and
interests in real property owned in fee by the Company, its Subsidiaries, the
Managed Projects or, to the Knowledge of the Company, any Specified Project as
of the date hereof (individually, an “Owned Property” and collectively, the
“Owned Properties”). The Owned Properties are in material compliance with all
Laws relating to the ownership, use and operation of the Owned Properties
(including building codes and zoning laws). Except as set forth on Schedule
3.10(a), all material Permits required in order to own, use, construct and
operate the Owned Properties have been obtained and are in full force and
effect, and the certificates of occupancy for the Owned Properties (as
applicable) permit their current uses in all material respects. Except for Title
Report Matters, the Company, its Subsidiaries, the Managed Projects or, to the
Knowledge of the Company, the Specified Projects, as applicable, each have good
and insurable fee title to all Owned Properties, free and clear of all Liens,
other than Permitted Exceptions. Except as set forth in Schedule 3.10(a), there
are no other Owned Properties.

(b) Schedule 3.10(b)(i) sets forth a complete list, as of the date hereof, of
all real property leases (including amendments thereto) involving aggregate
annual payments in excess of $50,000 under which the Company, its Subsidiaries,
the Managed Projects or, to the Knowledge of the Company, any Specified Project
is the lessee or lessor as of the date hereof (individually, a “Real Property
Lease” and collectively, the “Real Property Leases”), including a description of
each such Real Property Lease (including the name of the third party lessor or
lessee, the date of the lease or sublease and all amendments thereto). True,
complete and correct copies of the Real Property Leases and all amendments
thereto have previously been delivered to, or otherwise made available to,
Parent by the Company. The Company, its Subsidiaries or Underlying Project, as
applicable, is the owner and holder of the leasehold estates purported to be
granted to it as lessee by the Real Property Leases. Except for Title Report
Matters and except as set forth in Schedule 3.10(b)(ii), the Real Property
Leases are in full force and effect and are binding and enforceable against the
Company, its Subsidiary, the Managed Project or, to the Knowledge of the
Company, the Specified Project, as applicable, and to the Knowledge of the
Company, each of the other parties thereto in accordance with their respective
terms. Neither the Company, its Subsidiaries nor any Underlying Project, as
applicable, nor, to the Knowledge of the Company, any other party to a Real
Property Lease, has given or received any written notice of a breach or default
which remains uncured under any Real Property Lease, nor, to the Knowledge of
the Company, has there occurred any event that with the passage of time or the
giving of notice or both would constitute a material breach or default which
remains uncured

 

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thereunder. The Company, its Subsidiaries, the Managed Projects or, to the
Knowledge of the Company, each Specified Project, as applicable, has paid all
amounts due and payable under the Real Property Leases by it as of the date
hereof. Except for Title Report Matters, the Company, its Subsidiaries, the
Managed Projects and, to the Knowledge of the Company, each Specified Project,
as applicable, enjoys peaceful and undisturbed possession of the Real Property
under all Real Property Leases, none of which contain any provisions that will
materially impair or adversely affect its ability to continue to use the Real
Property leased thereunder as it currently does.

(c) Except as listed in Schedule 3.10(c), to the Knowledge of the Company,
(A) except for Title Report Matters, there are no third-party options to
purchase, easements, easement options, leases, lease options, uses,
rights-of-way, tenancies, subleases, licenses, occupancies, co-tenancies or
non-exclusive rights to use real property in effect, oral or written, related to
or affecting the Real Property or any portion thereof or any improvements
thereon that could reasonably be expected to adversely affect the interest
therein or use thereof by any LSDP or any Operating Project, as applicable, in
any material respect (including by permitting uses that would conflict with or
interfere with, as applicable, any LSDP’s or any Operating Project’s use or
enjoyment of their respective Real Property Interests), and (B) except for
Permitted Exceptions and Title Report Matters, there are no encumbrances,
covenants, conditions, reservations, restrictions, easements, rights of way or
other matters affecting the Real Property or any portion thereof or any
improvements thereon that could reasonably be expected to adversely affect the
interest therein or use thereof by any LSDP or any Operating Project, as
applicable, in any material respect.

(d) Schedule 3.10(d)(i) contains a list of, as of the date hereof, all Easement
Agreements with respect to the Company, its Subsidiaries, the Managed Projects
and, to the Knowledge of the Company, the Specified Projects pursuant to which
Real Property Interests were created, and true, complete and correct copies of
such Easement Agreements (and all amendments thereto) have previously been
delivered to, or otherwise made available to, Parent by the Company. All
payments required to renew or extend any Easement Agreement set forth on
Schedule 3.10(d)(i) that have become due have been paid when required to
maintain such Easement Agreement in full force and effect. Except for Title
Report Matters and except as set forth in Schedule 3.10(d)(ii), each Easement
Agreement set forth in Schedule 3.10(d)(i) is in full force and effect and is
binding and enforceable against the Company, its Subsidiaries, the Managed
Projects or, to the Knowledge of the Company, the Specified Projects, as
applicable, and to the Knowledge of the Company, each of the other parties
thereto in accordance with its respective terms. None of the Company, its
Subsidiaries, any Managed Projects nor, to the Knowledge of the Company, any
Specified Projects, as applicable, nor, to the Knowledge of the Company, any
other party to any Easement Agreement set forth in Schedule 3.10(d)(i), has
given or received any written notice of breach or default which remains uncured
under any Easement Agreement, nor, to the Knowledge of the Company, has there
occurred any event that with the passage of time or the giving of notice or both
would constitute a material breach or default which remains uncured thereunder.

(e) Except for limitations which are now, or may in the future be, imposed by
any Permit, except for Title Report Matters and except as set forth on Schedule
3.10(e)(i), to the Knowledge of the Company, there are no facts or circumstances
related to the

 

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Real Property for any LSDP that would preclude its development, construction,
operation and maintenance as presently designed and configured completely within
the boundaries and other limits of the Real Property upon which the Company, its
Subsidiary or Underlying Project, as applicable, has the right to locate the
LSDP (or upon which the Company, its Subsidiary, or Underlying Project, as
applicable, will have the right to locate the LSDP upon exercise of its options
pursuant to the RP Option Agreements), in the Ordinary Course of Business,
without encroaching upon any contiguous or adjoining property, easements or
rights-of-way so as to violate any rights therein or granted thereunder. Except
as set forth on Schedule 3.10(e)(ii), to the Knowledge of the Company, there is
no action pending or threatened by any Governmental Body or other Person against
or affecting any Real Property for any LSDP or the improvements located or to be
located thereon.

(f) Schedule 3.10(f)(i) contains a list of, as of the date hereof, RP Option
Agreements with respect to the Company, its Subsidiaries, the Managed Projects
and, to the Knowledge of the Company, the Specified Projects pursuant to which
Other Real Property Interests were created, and true, complete and correct
copies of such RP Option Agreements (and all amendments thereto) have previously
been delivered to, or otherwise made available to, Parent by the Company. All
payments required to renew or extend any RP Option Agreement set forth on
Schedule 3.10(f)(i) that have become due have been paid when required to
maintain such RP Option Agreement in full force and effect. Except for Title
Report Matters and except as set forth on Schedule 3.10(f)(ii), each RP Option
Agreement set forth in Schedule 3.10(f)(i) is in full force and effect and is
binding and enforceable against the Company, its Subsidiaries, the Managed
Projects or, to the Knowledge of the Company, the Specified Projects, as
applicable, and to the Knowledge of the Company, each of the other parties
thereto in accordance with its respective terms. Neither the Company, its
Subsidiaries nor any Underlying Project, as applicable, nor, to the Knowledge of
the Company, any other party to any RP Option Agreement set forth in Schedule
3.10(f)(i), has given or received any written notice of breach or default which
remains uncured under any RP Option Agreement, nor, to the Knowledge of the
Company, has there occurred any event that with the passage of time or the
giving of notice or both would constitute a breach or default which remains
uncured thereunder.

(g) For each LSDP:

(i) except as disclosed in Schedule 3.10(g)(i), there are no pending or, to the
Knowledge of the Company, threatened proceedings in eminent domain, or for
rezoning, or otherwise, that would adversely affect in any material respect the
Real Property for any LSDP or any portion thereof or any improvements thereto;

(ii) Schedule 3.10(g)(ii) contains a list, as of the date hereof, of all
material Permits required to construct any LSDP as currently proposed to be
constructed;

(iii) except as disclosed in Schedule 3.10(g)(iii) for an LSDP, there are no
pending or, to the Knowledge of the Company, threatened public improvements or
special assessments that could reasonably be expected to materially affect in
any material respect the Real Property for any LSDP or any portion thereof or
any improvements thereon, or that could reasonably be expected to result in any
material charge being levied or assessed or in the creation of any Lien that is
not a Permitted Exception;

 

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(iv) except as disclosed in Schedule 3.10(g)(iv) to the Knowledge of the
Company, there is no defect or condition of the soil or land, including any
wetlands, that could reasonably be expected to impair the use of the Real
Property for, or the construction of, any LSDP;

(v) except for Title Report Matters and except as disclosed in Schedule
3.10(g)(v), to the Knowledge of the Company, there are no mining, mineral, oil,
gas, or water rights or operations on the Real Property, that could reasonably
be expected to impair the use of the Real Property for, or the construction of,
any LSDP;

(vi) to the Knowledge of the Company, for any LSDP, there are no material
violations of any covenants, conditions or restrictions applicable to the Real
Property or any portion thereof;

(vii) to the Knowledge of the Company, with respect to the construction of the
planned improvements at any LSDP, there are no claims by the respective
contractors, schedule delays, or budget overruns which, individually, or in the
aggregate could reasonably be expected to have a Material Adverse Effect;

(viii) to the Knowledge of the Company, except for Permitted Exceptions, Title
Report Matters and the Real Property Interests for each LSDP, there are no
commitments or agreements between any Governmental Body or public or private
utility and the Company, its Subsidiaries or the Underlying Projects or, to the
Knowledge of the Company, any other Person that could reasonably be expected to
impair the use of the Real Property for any LSDP or any portion thereof or any
improvements; and

(ix) none of the Company, its Subsidiaries or, to the Knowledge of the Company,
any other party to a Real Property Lease for any LSDP, has committed a material
breach or default which remains uncured under any such Real Property Lease, nor,
to the Knowledge of the Company, has there occurred any event that with the
passage of time or the giving of notice or both would constitute such a material
breach or default thereunder. The Company, its Subsidiaries or, to the Knowledge
of the Company, any LSDP, as applicable, has paid all amounts due and payable by
it under the Real Property Leases for any LSDP as of the date hereof. Except for
Title Report Matters and except as set forth on Schedule 3.10(g)(ix), to the
Knowledge of the Company, there is no fact or circumstance which would prohibit
the Company, its Subsidiaries or the Underlying Projects, at the time at which
the Company, its Subsidiary or an Underlying Project, as applicable, exercises
its option under the applicable RP Option Agreement, from enjoying peaceful and
undisturbed possession of the Real Property under all Real Property Leases for
any LSDP. There are no Real Property Leases for any LSDP other than those set
forth in Schedule 3.10(b)(i).

(h) None of the Company, its Subsidiaries or, to the Knowledge of the Company,
the Managed Projects or any Specified Project, as applicable, has received
written notice from any applicable provider of services that electricity, water
and telecommunications necessary for the development, construction, operation
and maintenance of each LSDP, would not be available when needed for such
development, construction, operation and maintenance. Except for Title Report
Matters and except for limitations which are now, or may in the future

 

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be, imposed by or under any Permit and except as disclosed in Schedule 3.10(h),
to the Knowledge of the Company, the Company, its Subsidiary, the Managed
Projects or the Specified Projects, as applicable, possesses or, after such
entity exercises its option under an RP Option Agreement, will possess adequate
rights of egress and ingress in order to construct, operate and maintain the
LSDP to be located thereon.

3.11 Tangible Personal Property.

(a) Except as would not, individually or in the aggregate, be expected to have a
Material Adverse Effect, each of the Company, its Subsidiaries and the Managed
Projects has good title or valid leasehold interests to all of the items of
tangible personal property used in the business of the Company, its Subsidiaries
or the Managed Projects, as applicable (except as sold or disposed of subsequent
to the date hereof in the Ordinary Course of Business and not in violation of
this Agreement), free and clear of any and all Liens, other than the Permitted
Exceptions. Except as would not, individually or in the aggregate, be expected
to have a Material Adverse Effect, all such items of tangible personal property
are in good condition and in a state of good maintenance and repair (ordinary
wear and tear excepted) and are suitable for the purposes used.

(b) To the Knowledge of the Company, except as would not, individually or in the
aggregate, be expected to have a Material Adverse Effect, each of the Specified
Projects has good title or valid leasehold interests to all of the items of
tangible personal property used in the business of such Specified Project
(except as sold or disposed of subsequent to the date hereof in the Ordinary
Course of Business of the Specified Projects and not in violation of this
Agreement), free and clear of any and all Liens, other than the Permitted
Exceptions. To the Knowledge of the Company, except as would not, individually
or in the aggregate, be expected to have a Material Adverse Effect, all such
items of tangible personal property are in good condition and in a state of good
maintenance and repair (ordinary wear and tear excepted) and are suitable for
the purposes used.

(c) Except as set forth on Schedule 3.11(c), and except as would not,
individually or in the aggregate, be expected to have a Material Adverse Effect,
none of the Company, any of its Subsidiaries, any of the Managed Projects or, to
the Knowledge of the Company, any of the Specified Projects has received or
given any notice of any default or event that with notice or lapse of time, or
both, would constitute a default by the Company, any of its Subsidiaries, any of
the Managed Projects or, to the Knowledge of the Company, any of the Specified
Projects under any lease of personal property thereof that is material to the
business of such Person. Except as would not, individually or in the aggregate,
be expected to have a Material Adverse Effect, to the Knowledge of the Company,
no other party is in default of any lease of personal property of the Company,
any of its Subsidiaries or any of the Underlying Projects that is material to
the business thereof, and no party to any such lease has exercised any
termination rights with respect thereto.

3.12 Intellectual Property.

(a) Except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, each of the Company, its
Subsidiaries, the

 

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Managed Projects and, to the Knowledge of the Company, the Specified Projects
owns or possesses valid, subsisting and enforceable licenses or rights to use,
all trademarks and service marks (whether registered or unregistered), trade
names and designs, together with all goodwill related to the foregoing, patents
(including any continuations, continuations in part, renewals and applications
for any of the foregoing), copyrights (including any registrations and
applications therefor and whether registered or unregistered), internet domain
names, computer software, databases, works of authorship, mask works,
technology, trade secrets and other confidential information, know-how,
proprietary processes, formulae, algorithms, models, user interfaces,
inventions, discoveries, concepts, ideas, techniques, methods, source codes,
object codes, methodologies and, with respect to all of the foregoing, related
confidential data or information, which in each case is used in or necessary for
the conduct of their respective business as currently conducted and as proposed
to be conducted (“Company Intellectual Property”). The material Intellectual
Property used by the Company, the Subsidiaries and the Managed Projects are not
the subject of any challenge received by the Company, any of the Subsidiaries or
any of the Managed Projects in writing. Except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, to the
Knowledge of the Company, the use of Company Intellectual Property by the
Company, its Subsidiaries or any of the Underlying Projects does not infringe on
or otherwise violate the rights of any third party (nor, to the Knowledge of the
Company, has any such claim been made). None of the Company, any Subsidiary, any
Managed Project nor, to the Knowledge of the Company, any of the Specified
Projects has received any written notice of any default or any event that with
notice or lapse of time, or both, would constitute a default under any material
Intellectual Property license to which the Company, any Subsidiary, any Managed
Project or any Specified Project is a party or by which it is bound. Except as
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, to the Knowledge of the Company, all Company
Intellectual Property that has been licensed by the Company or any of its
Subsidiaries is being used in accordance with the applicable license pursuant to
which the Company, such Subsidiary or such Managed Project acquired the right to
use such Company Intellectual Property.

(b) The Company, each of its Subsidiaries, each of the Managed Projects and, to
the Knowledge of the Company, each of the Specified Projects have all necessary
and required rights to license, use and sublicense the data contained in
databases and data compilations used by or necessary to the business of the
Company, each of its Subsidiaries and each Underlying Project.

(c) To the Knowledge of the Company, none of the Company, any of its
Subsidiaries or any of the Managed Projects has suffered a material security
breach with respect to their data or systems that has resulted in or, in
accordance with Law, should have resulted in notification to their employees of
any information security breach related to the information of such employees.

3.13 Material Contracts.

(a) Schedule 3.13(a) sets forth a listing, as of the date hereof, of the
following Contracts to which the Company, any of its Subsidiaries, any of the
Managed Projects or, to the Knowledge of the Company, any of the Specified
Projects is a party or by which any of the Company, any of its Subsidiaries, any
of the Managed Projects or, to the Knowledge of the

 

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Company, any of the Specified Projects or their respective assets or properties
are bound as of the date hereof (collectively, the “Material Contracts”):

(i) Contracts containing covenants of the Company, any of the Subsidiaries, any
of the Managed Projects or, to the Knowledge of the Company, any of the
Specified Projects not to compete in any line of business or with any Person,
entitling a third party to the most favorable price or any other terms for any
product or service, or, except as part of any confidentiality agreement or audit
engagement agreement entered into in the Ordinary Course of Business, not to
hire any person or solicit any person with respect to employment;

(ii) Contracts between a Securityholder or any Affiliate of a Securityholder
(other than the Company, any of its Subsidiaries or any of the Underlying
Projects) on the one hand and the Company, any of its Subsidiaries or any of the
Underlying Projects, on the other hand, other than Contracts that have been
disclosed on Schedule 3.14(a); and

(iii) Contracts to which the Company, any of its Subsidiaries, any of the
Managed Projects or, to the Knowledge of the Company, any of the Specified
Projects is a party or by which any of the Company, any of its Subsidiaries, any
of the Managed Projects or, to the Knowledge of the Company, any of the
Specified Projects or their respective assets or properties are bound with a
term of one year or more or with a value or involving amounts payable or
potentially payable at any time during the term thereunder in excess of
$250,000, that, in either case, are not terminable by the Company, any of its
Subsidiaries or any of the Underlying Projects, without any penalty, payment or
forfeiture of amounts previously paid on notice of 60 days or less.

(b) Each of the Material Contracts to which the Company, any of its Subsidiaries
or any Managed Project is a party is in full force and effect and is the legal,
valid and binding obligation of the Company, its Subsidiary or the Managed
Project which is party thereto, and of the other parties thereto enforceable
against each of them in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other equivalent Laws
affecting the enforcement of creditors’ rights in general and subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding at law or in equity), and, upon consummation of the transactions
contemplated by this Agreement, shall continue in full force and effect without
penalty or other adverse consequence. Except as otherwise stated in Schedule
3.13(b), none of the Company, any of its Subsidiaries or any of the Managed
Projects is in material default under any Material Contract to which the
Company, any of its Subsidiaries or any of the Managed Projects is a party, nor,
to the Knowledge of the Company, is any other party to any such Material
Contract in material breach of or material default thereunder, and no event has
occurred that with the lapse of time or the giving of notice or both would
constitute a material breach or material default by the Company, any Subsidiary,
any Managed Project or any other party thereunder. No party to any of the
Material Contracts to which the Company, any of its Subsidiaries or any of the
Managed Projects is a party has exercised any termination rights with respect
thereto, and no party has given notice of any significant dispute with respect
to any such Material Contract.

 

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(c) Except as otherwise stated in Schedule 3.13(c), to the Knowledge of the
Company (i) each of the Material Contracts to which a Specified Project is a
party is in full force and effect and is the legal, valid and binding obligation
of the Specified Project which is party thereto, and of the other parties
thereto enforceable against each of them in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium, or other
equivalent Laws affecting the enforcement of creditors’ rights in general and
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity), and, upon
consummation of the transactions contemplated by this Agreement, shall continue
in full force and effect without penalty or other adverse consequence, (ii) none
of the Specified Projects is in material default under any Material Contract to
which an Specified Project is a party and no other party to any such Material
Contract is in material breach of or material default thereunder, and no event
has occurred that with the lapse of time or the giving of notice or both would
constitute a material breach or material default by any Specified Project or any
other party thereunder, and (iii) no party to any of the Material Contracts to
which any of the Specified Projects is a party has exercised any termination
rights with respect thereto, and no party has given notice of any significant
dispute with respect to any such Material Contract.

(d) The Company has made available to Parent true, correct and complete copies
of all of the Material Contracts, together with all amendments, modifications or
supplements thereto; provided, that with respect to Material Contracts to which
a Specified Project is a party, the foregoing is to the Knowledge of the
Company.

3.14 Employee Benefits Plans.

(a) Except for employee non-solicitation provisions included in confidentiality
agreements or audit engagement agreements entered into by the Company in the
Ordinary Course of Business, Schedule 3.14(a) sets forth a correct and complete
list, as of the date hereof, of: (i) all “employee benefit plans” (as defined in
Section 3(3) of ERISA), (ii) all employment, consulting (other than immaterial
consulting agreements entered into in the Ordinary Course of Business, the
general nature of which are described in the aggregate in such schedule),
non-competition, employee non-solicitation, employee loan or other compensation
agreements, and all collective bargaining agreements, and (iii) all bonus or
other incentive compensation, equity or equity-based compensation, stock
purchase, deferred compensation, change in control, severance, leave of absence,
vacation, salary continuation, medical, life insurance or other death benefit,
educational assistance, training, service award, section 125 cafeteria,
dependent care, pension, welfare benefit or other employee or fringe benefit
plans, policies, agreements or arrangements, in each case as to which the
Company or any of its Subsidiaries has any obligation or liability, contingent
or otherwise, thereunder for current or former employees, directors or such
individual consultants (as are described in clause (ii) above) of the Company or
any of its Subsidiaries (collectively, the “Company Plans”). Each Company Plan
that is subject to Title IV of ERISA or Section 412 of the Code (“Title IV
Plan”) or is a “multiemployer plan” (as defined in Section 3(37) of ERISA
(“Multiemployer Plan”)) is separately identified in Schedule 3.14(a).

(b) Correct and complete copies of the following documents with respect to each
of the Company Plans (other than a Multiemployer Plan) have been made

 

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available or delivered to Parent by the Company, to the extent applicable:
(i) any plans and related trust documents, insurance contracts or other funding
arrangements, and all amendments thereto; (ii) the most recent Forms 5500 and
all schedules thereto, (iii) the most recent actuarial report, if any; (iv) the
most recent IRS determination letter; and (v) the most recent summary plan
descriptions.

(c) The Company Plans (other than a Multiemployer Plan) have been maintained in
all material respects in accordance with their terms and with all applicable
provisions of ERISA, the Code and other applicable Laws.

(d) Each Company Plan (other than a Multiemployer Plan) that is intended to meet
the requirements for tax-favored treatment under Subchapter B of Chapter 1 of
Subtitle A of the Code meets such requirements. Nothing has occurred with
respect to the operation of the Company Plans (other than a Multiemployer Plan)
that could cause the imposition of any liability, penalty or tax under ERISA or
the Code, excluding any benefits properly payable under or any income or
employment taxes properly withheld or properly accrued or paid with respect to
any Company Plan.

(e) Neither the Company nor any of its Affiliates nor any trade or business
(whether or not incorporated) that is or has ever been under common control, or
that is or has ever been treated as a single employer, with any of them under
Section 414(b), (c), (m) or (o) of the Code has any outstanding liability
(whether or not assessed) to, or with respect to, any Multiemployer Plan or
Title IV Plan.

(f) All contributions (including all employer contributions and employee
contributions) required to have been made under any of the Company Plans
(including workers compensation) or by Law to any funds or trusts established
thereunder or in connection therewith have been made by the due date thereof
(including any valid extension).

(g) Except as set forth on Schedule 3.14(g), none of the Company Plans provides
for post-employment life insurance or health benefits coverage, except as may be
required under Part 6 of Subtitle B of Title I of ERISA or at the full expense
of the participant or the participant’s beneficiary, or coverage through the
last day of the month following the date of termination of employment.

(h) Except as set forth on Schedule 3.14(h), neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will (either alone or in conjunction with any other event) (i) result in any
payment becoming due to any employee, director or individual consultant under
any Company Plan, (ii) increase any benefits otherwise payable under any Company
Plan, (iii) result in the acceleration of the time of payment, funding or
vesting of any such benefits under any Company Plan or (iv) result in the
disallowance of any deduction pursuant to Section 280G of the Code.

(i) Neither the Company nor any of its Subsidiaries has classified any
individual as an “independent contractor” or similar status who, under
applicable Law or the provisions of any Company Plan, should have been
classified as an employee. Neither the Company nor any of its Subsidiaries has
any material liability by reason of any individual who

 

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provides or provided services to the Company or any of its Subsidiaries, in any
capacity, being improperly excluded from participating in any Company Plan.

(j) Each Company Option has been granted with an exercise price no lower than
“fair market value” (within the meaning of Sections 409A and 422 of the Code) as
of the grant date of such option.

3.15 Labor.

(a) Schedule 3.15(a) sets forth a list of each of the employees of the Company
and its Subsidiaries as of the date hereof. None of the current employees of the
Company or any of its Subsidiaries (“Employees”) is represented in his or her
capacity as an employee of the Company or any of its Subsidiaries by any labor
organization, other than with respect to a foreign Underlying Project or any Law
of the jurisdiction in which employees of such Underlying Project are located
that functions as a labor agreement or provides protection for groups of
individuals under common employment. Neither the Company nor any of its
Subsidiaries has recognized any labor organization nor has any labor
organization been elected as the collective bargaining agent of any Employees,
nor has the Company or any of its Subsidiaries entered into any collective
bargaining agreement or union contract recognizing any labor organization as the
bargaining agent of any Employees. There is no union organization activity
involving any of the Employees pending or, to the Knowledge of the Company,
threatened, nor has there ever been union representation involving any of the
Employees. There are no strikes, slowdowns or work stoppages pending or, to the
Knowledge of the Company, threatened. There are no complaints, petitions,
proceedings, charges or claims against the Company or any of its Subsidiaries
pending or, to the Knowledge of the Company, threatened which could be brought
or filed with any Governmental Body based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment of,
or failure by the Company or any of its Subsidiaries to employ, any individual,
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The Company and each of its Subsidiaries is in
material compliance with all Laws relating to the employment of labor, including
all such Laws relating to wages, hours, WARN, collective bargaining or labor
relations, discrimination, civil rights, safety and health, workers’
compensation, worker and workplace protection and the collection and payment of
withholding and/or social security Taxes and any similar Tax except for
immaterial non-compliance. There has been no “mass layoff” or “plant closing” as
defined by WARN with respect to the Company or any of its Subsidiaries within
the previous six months.

(b) Except as set forth on Schedule 3.15(b), to the Knowledge of the Company,
(i) there is no labor organization representing any of the employees of any
Underlying Project, nor have such employees entered into any collective
bargaining agreement or union contract; (ii) there is no union organization
activity involving any of the employees of any Underlying Project pending or
threatened, (iii) there are no strikes, slowdowns or work stoppages pending at
any Underlying Project or threatened, (iv) there are no complaints, petitions,
proceedings, charges or claims against the Underlying Project pending or
threatened which could be brought or filed with any Governmental Body based on,
arising out of, in connection with, or otherwise relating to the employment or
termination of employment of, or failure by the Company or any of its
Subsidiaries to employ, any individual, except as would not,

 

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individually or in the aggregate, be expected to have a Material Adverse Effect;
and (v) each Underlying Project is in compliance with all Laws relating to the
employment of labor, including all such Laws relating to wages, hours, WARN,
collective bargaining and labor relations, discrimination, civil rights, safety
and health, workers’ compensation, worker and workplace protection and the
collection and payment of withholding and/or social security Taxes and any
similar Tax except for immaterial non-compliance.

3.16 Litigation. Except as set forth on Schedule 3.16, as of the date hereof,
there is no Legal Proceeding pending or, to the Knowledge of the Company,
threatened against, involving or relating to the Company, any of its
Subsidiaries or any of the Owned Properties (or, to the Knowledge of the
Company, pending or threatened, against any of the Specified Projects or any of
the officers, directors or employees of the Company, any of its Subsidiaries or
any of the Managed Projects with respect to their business activities on behalf
of the Company, any of its Subsidiaries or any of the Managed Projects) or to
which the Company, any of its Subsidiaries, any of the Managed Projects or, to
the Knowledge of the Company, any of the Specified Projects, is otherwise a
party before any Governmental Body which (i) relates to the employment or
termination of any employee, officer or director of any of the Company, its
Subsidiaries or the Underlying Projects or (ii) if adversely determined, would
reasonably be expected to result in a claim for damages against the Company in
excess of $1,000,000 individually or $5,000,000 in the aggregate, or would
reasonably be expected to have a Material Adverse Effect, nor has any such
Governmental Body indicated to the Company an intention to initiate any Legal
Proceeding. Except as set forth on Schedule 3.16, as of the date hereof, none of
the Company, any of its Subsidiaries, any of the Managed Projects or, to the
Knowledge of the Company, any of the Specified Projects is subject to any Order,
and none of the Company, any of its Subsidiaries, any of the Managed Projects
or, to the Knowledge of the Company, any of the Specified Projects, is in breach
or violation of any Order, which, if adversely determined, would reasonably be
expected to result in a claim for damages against the Company in excess of
$1,000,000 individually or $5,000,000 in the aggregate or would reasonably be
expected to have a Material Adverse Effect. Except as set forth on Schedule
3.16, the Company does not have Knowledge of any plans, proposals, studies or
investigations by any Governmental Body which could adversely affect the
continued development of any of the Underlying Projects in any material respect.
There are no Legal Proceedings pending or, to the Knowledge of the Company,
threatened that are reasonably likely to affect the Company’s ability to enter
into this Agreement or consummate the transactions contemplated hereby.

3.17 Compliance with Laws; Permits.

(a) This Section 3.17 is not intended to and does not relate to the subject
matter specifically addressed in and covered by the representations and
warranties set forth in Sections 3.9 (Taxes), 3.14 (Employee Benefits Plans),
3.15 (Labor), 3.18 (Environmental Matters), and 3.20 (Regulatory Matters). Each
of the Company, its Subsidiaries, the Managed Projects and, to the Knowledge of
the Company, the Specified Projects is in compliance in all material respects
with all Laws applicable to its business, operations or assets (other than those
Laws, the consequences of the violation of which would be immaterial to the
Company, its Subsidiaries, the Managed Projects or any of the Specified
Projects). None of the Company, any of its Subsidiaries, any of the Managed
Projects or, to the Knowledge of the Company, any of the Specified Projects has
received any notice of or been charged with any material violation of any

 

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Laws (other than those Laws, the consequences of the violation of which would be
immaterial to the Company, its Subsidiaries, the Managed Projects or any of the
Specified Projects). To the Knowledge of the Company, none of the Company, any
of its Subsidiaries or any of the Underlying Projects is under investigation
with respect to any material violation of any Laws and, to the Knowledge of the
Company, there are no facts or circumstances which could form the basis for any
such violation.

(b) Each of the Company, its Subsidiaries, the Managed Projects and, to the
Knowledge of the Company, the Specified Projects currently has all Permits
(other than those Permits, the consequences of the failure of which to have
would be immaterial to the Company, its Subsidiaries, the Managed Projects or
any of the Specified Projects) that are required as of the date hereof for the
ownership and operation of its business as presently conducted, and each such
Permit set forth in Schedule 3.17(b)(i) is final, in full force and effect, and
nonappealable (“Company Permits”). Schedule 3.17(b)(ii) sets forth a complete
list, as of the date hereof, of Permits (other than those Permits, the
consequences of the failure of which to have would be immaterial to the Company,
its Subsidiaries, the Managed Projects or any of the Specified Projects) that
have been applied for and not received, by or on behalf of, each of the Company,
its Subsidiaries, the Managed Projects and, to the Knowledge of the Company, the
Specified Projects. None of the Company, any of its Subsidiaries, any of the
Managed Projects or, to the Knowledge of the Company, any of the Specified
Projects is in material default or material violation, and no event has occurred
which, with notice or the lapse of time or both, would constitute a material
default or material violation, of any term, condition or provision of any
Company Permit. Except as set forth in Schedule 3.17(b)(iii), there have not
been any and there are currently no Legal Proceedings pending or, to the
Knowledge of the Company, threatened by any Governmental Body, which have
resulted or could reasonably be expected to result in revocation, cancellation,
suspension or any adverse modification of any Company Permits or the failure to
grant any Permit that has been applied for but not yet received. None of the
Company Permits or the applications for Permits that has been applied for but
not yet received, will be materially impaired or in any way materially affected
(including with respect to the renewal or transfer thereof) by the consummation
of the transactions contemplated by this Agreement; provided, however, that,
with respect to Permits relating to the Specified Projects, the foregoing is to
the Knowledge of the Company.

3.18 Environmental Matters. Except as set forth in Schedule 3.18 and except as
disclosed in a phase I Environmental Site Assessment or similar study that the
Company has made available to Parent (i) the Company, its Subsidiaries and the
Underlying Projects are currently, and have been, in compliance with applicable
Environmental Laws, which compliance includes obtaining, maintaining and
complying with all Permits required under applicable Environmental Laws(other
than those Permits, the consequences of the failure of which to have would be
immaterial to the Company, its Subsidiaries, the Managed Projects or any of the
Specified Projects) (collectively, “Environmental Permits”), except those
instances as described in this clause (i) where, individually or in the
aggregate, the results of noncompliance would be immaterial to the Company, its
Subsidiaries and the Underlying Projects, and none of the Company, its
Subsidiaries or, to the Knowledge of the Company, the Underlying Projects, has
received any written notice that (a) any such existing Environmental Permits
will be revoked or materially modified or (b) any pending application for any
new such Environmental Permits or renewal of such existing Environmental Permits
will be denied, materially delayed, or reasonably

 

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expected to require unbudgeted material capital expenditures or material changes
in operation at any Underlying Project, (ii) to the Knowledge of the Company,
none of the Company, any of its Subsidiaries or any of the Underlying Projects
is under any pending investigation by a Governmental Body with respect to a
violation of or liability under any Environmental Laws other than with respect
to violations or liabilities the result of which, individually or in the
aggregate, would be immaterial to the Company, its Subsidiaries and the
Underlying Projects, (iii) the Company, its Subsidiaries, and, to the Knowledge
of the Company, the Underlying Projects have not received any notices, demand
letters or requests for information from any Governmental Body or other Person
alleging violation of or liability under Environmental Law that have not been
resolved, other than with respect to violations or liabilities the result of
which would be, individually or in the aggregate, immaterial to the Company, its
Subsidiaries and the Underlying Projects, (iv) there are no Legal Proceedings
pending or, to the Knowledge of the Company, threatened, against the Company,
any of its Subsidiaries, or any of the Underlying Projects relating to any
violation of or liability under any Environmental Law, except for such Legal
Proceedings that, individually or in the aggregate, would reasonably be expected
to result in liabilities that are immaterial to the Company, its Subsidiaries
and the Underlying Projects, (v) to the Knowledge of the Company, there has not
been a Release or threatened Release of Hazardous Materials at or otherwise
affecting the Underlying Projects or any of their Owned Properties or Leased
Properties that (a) constitutes an unremedied violation of any Environmental Law
where the effect of such violation imposes a current affirmative remediation
obligation on the part of any of the Underlying Projects, (b) currently imposes
any Release reporting obligations on the Company, its Subsidiaries or any of the
Underlying Projects or (c) currently imposes any affirmative cleanup or
remediation obligations on the Company, its Subsidiaries or the Underlying
Projects under any Environmental Law, in each case, except those that the effect
of which, individually or in the aggregate, would be immaterial to the Company,
its Subsidiaries and the Underlying Projects, (vi) to the Knowledge of the
Company, there are no existing conditions, or past or present actions or
activities at any of the Underlying Projects or associated with the Company or
its Subsidiaries, including the storage, treatment or Release of any Hazardous
Materials, that could reasonably form the basis of any Legal Proceeding against
the Company, its Subsidiaries or any of the Underlying Projects, and, to the
Knowledge of the Company, there are no Hazardous Materials located on any of the
Owned Properties or Leased Properties through the fault of the Company, its
Subsidiaries or the Underlying Projects or, to the Knowledge of the Company,
through the fault of any third party in such condition or amount as could
reasonably be expected to result in a Legal Proceeding against the Company, its
Subsidiaries or the Underlying Projects, in each case, except those conditions,
actions, activities or amounts the result of which would be immaterial to the
Company, its Subsidiaries and the Underlying Projects, (vii) to the Knowledge of
the Company, the Company has made available to Parent true, correct and complete
copies of all Environmental Permits and material environmental assessments,
studies, tests, reviews or other analyses that have been conducted by, or
otherwise are in the possession of the Company or its Subsidiaries, including
without limitation environmental impact assessments/statements and all bat,
bird, cultural resources and endangered species assessments, and (viii) none of
the Company or any of its Subsidiaries or, to the Knowledge of the Company, none
of the Underlying Projects or any real property currently owned, operated or
leased by the Company, or, to the Knowledge of the Company, any Subsidiary or
any of the Underlying Projects, is subject to an outstanding written Order or
Contract with a Governmental Body or other Person assuming responsibility or
liability for

 

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Remedial Action or the Release or threatened Release of any Hazardous Material,
except for responsibilities or liabilities the result of which, individually or
in the aggregate, would be immaterial to the Company, its Subsidiaries and the
Underlying Projects.

3.19 Insurance. Set forth in Schedule 3.19 is a list of all material title,
asset, fire, hazard, casualty, liability, life, workers’ compensation and other
form of insurance policies and all fidelity bonds owned or held by or applicable
to the Company, any of its Subsidiaries, any of the Managed Projects or, to the
Knowledge of the Company, any of the Specified Projects setting forth, in
respect of each such policy, the policy name, policy number, carrier, term, type
and amount of coverage and annual premium, whether the policies may be
terminated upon consummation of the transactions contemplated hereby and if and
to what extent events being notified to the insurer after the Closing Date are
generally excluded from the scope of the respective policy. The Company, each of
its Subsidiaries and each of the Managed Projects are covered, in all material
respects, by valid and currently effective insurance policies issued in favor of
them that are customary, including, without limitation, coverage amounts,
deductibles amounts and scope of risks and losses covered, for companies of
similar size and financial condition in their respective industries. Except as
would not, individually or in the aggregate, be expected to have a Material
Adverse Effect, (i) all such policies are in full force and effect, all premiums
due thereon have been paid and the Company, each of its Subsidiaries and each of
the Managed Projects have complied with the provisions of all such policies,
(ii) such policies are sufficient for compliance by the Company, its
Subsidiaries, the Managed Projects and, to the Knowledge of the Company, the
Specified Projects, with all requirements of Law and of all Material Contracts;
(iii) none of the Company, any of its Subsidiaries or any of the Managed
Projects has been advised of any defense to coverage in connection with any
claim to coverage asserted or notice by any of them under or in connection with
any of such insurance policies, and (iv) none of the Company, any of its
Subsidiaries any of the Managed Projects has received any notice from or on
behalf of any insurance carrier issuing policies or binders relating to or
covering the Company, its Subsidiaries or the Managed Projects or their assets
or properties that there will be a cancellation or non-renewal of existing
policies or binders or that the alteration of any equipment or any improvements
to real estate occupied by or leased to or by the Company, its Subsidiaries or
the Managed Projects or the purchase of additional equipment or the material
modification of any of the methods of doing business will be required.

3.20 Regulatory Matters.

(a) Each of the Company, its Subsidiaries or the Underlying Projects either
(i) is not a “holding company” or a “public-utility company” within the meaning
of the Public Utility Holding Company Act of 2005, as amended and the
implementing regulations of FERC (“PUHCA”) or (ii) is exempt from regulation by
FERC under PUHCA.

(b) Each of the Rumford and Ryegate Underlying Projects is a “qualifying
facility” (“QF”), within the meaning of PURPA and the rules and regulations
promulgated thereunder, and has maintained its status as a QF at all times since
its initial certification or self-recertification as a QF, and is not currently
subject to any pending inquiry, investigation, or challenge relating to its
status as a QF.

 

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(c) Each of the Sweetwater OPs are currently “exempt wholesale generators”
(“EWG”) within the meaning of PUHCA and its implementing regulations, and none
of them is currently subject to any pending inquiry, investigation, or challenge
relating to its status as an EWG. The consummation of the transactions
contemplated hereby will not adversely affect the “exempt wholesale generator”
status of any of the Sweetwater OPs.

(d) To the Knowledge of the Company, with respect to the Managed Projects
located in the United Kingdom, (i) there are no events or circumstances
reasonably likely to result in any of such Managed Projects, upon their
completion, not qualifying for receiving or not obtaining “Levy Exemption
Certificates” under the Finance Act 2000 and the Climate Change Levy (General)
Regulations 2001 as amended by the Climate Change Levy (General) Regulations
2003 and Climate Change Levy (General) Regulations 2007 and the related
guidance, circulars and similar pronouncements associated therewith and
(ii) there are no events or circumstances reasonably likely to result in any of
such Managed Projects, upon their completion, (A) not being eligible or
accredited for the “Renewables Obligation” or not being issued “Renewable
Obligation Certificates,” in each case as contemplated by The Renewables
Obligation Order 2006, as amended by The Renewables Obligation Order 2006
(Amendment) Order 2007 and the related guidance, circulars and similar
pronouncements associated therewith, or (B) not being eligible or accredited for
the “Scottish Renewables Obligation” or not being issued “Scottish Renewable
Obligation Certificates,” in each case as contemplated by The Renewables
Obligation (Scotland) Order 2007 and the related guidance, circulars and similar
pronouncements associated therewith, as applicable.

(e) None of the Sweetwater OPs is a “public utility” under the FPA, and none of
the Rumford and Ryegate Underlying Projects makes any wholesale electric sales
subject to regulation under Sections 205 and 206 of the FPA or has on file with
FERC any tariff or rate schedule for making such wholesale electric sales.

(f) Each of the Sweetwater OPs and, to the Knowledge of the Company, the Rumford
and Ryegate Underlying Projects has made all material filings with each
applicable Governmental Body and obtained all material Permits and Orders
required to be made or obtained by each of the Company and the Project Company,
as applicable, to construct, own and operate its respective electric generating
facilities and to transmit and sell electric power and renewable energy credits
therefrom, as applicable, in compliance with applicable Law, and each such
Governmental Approval is validly issued, final and in full force and effect and
is not subject to any current legal proceeding or to any unsatisfied condition,
and all applicable appeal periods with respect thereto have expired. Each of the
Sweetwater OPs and, to the Knowledge of the Company, the Rumford and Ryegate
Underlying Projects are in compliance in all material respects with all
applicable Governmental Approvals and all applicable Laws.

(g) Each of the Sweetwater OPs and, to the Knowledge of the Company, the Rumford
and Ryegate Underlying Projects has made all required material filings and
notifications with and is in compliance in all material respects with all
requirements of the North American Electric Reliability Corporation.

(h) Each of the Sweetwater OPs has made all material filings and notifications
with, entered into all material agreements required by and otherwise is in

 

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compliance in all material respects with all requirements of ERCOT for such
company to sell electric energy and renewable energy credits in the ERCOT
region.

3.21 Related Party Transactions. Except in the Ordinary Course of Business or
otherwise as set forth on Schedule 3.21, no Shareholder, nor any employee,
officer, director, stockholder, partner or member of any such Shareholder, nor
any member of his or her immediate family or any of their respective Affiliates
(“Shareholder Related Persons”), (i) owes any amount to the Company, any of its
Subsidiaries, any of the Managed Projects or, to the Knowledge of the Company,
any of the Specified Projects, nor does the Company, any of its Subsidiaries,
any of the Managed Projects or, to the Knowledge of the Company, any of the
Specified Projects owe any amount to, or has the Company, any of its
Subsidiaries, any of the Managed Projects or, to the Knowledge of the Company,
any of the Specified Projects committed to make any loan or extend or guarantee
credit to or for the benefit of, any Shareholder or any Shareholder Related
Person, (ii) is involved in any business arrangement with the Company, any of
the Subsidiaries, any of the Managed Projects or, to the Knowledge of the
Company, any of the Specified Projects (whether written or oral), (iii) owns any
material property or right, tangible or intangible, that is used by the Company,
any of the Subsidiaries, any of the Managed Projects or, to the Knowledge of the
Company, any of the Specified Projects, or (iv) has asserted any claim or cause
of action against the Company, any of its Subsidiaries, any of the Managed
Projects or, to the Knowledge of the Company, any of the Specified Projects.

3.22 Takeover Provisions. The Company has taken all necessary actions so that
this Agreement and the transactions contemplated hereby are exempt from the
requirements of any “moratorium,” “control share,” “fair price” or other
anti-takeover laws and regulations of the State of Vermont.

3.23 Finders or Brokers. Except as set forth on Schedule 3.23, no Person has
acted, directly or indirectly, as a broker, finder or financial advisor for the
Shareholders or the Company in connection with the transactions contemplated by
this Agreement and no such Person is entitled to any fee or commission or like
payment from Parent in respect thereof.

3.24 No Other Representations or Warranties; Schedules. Except for the
representations and warranties contained in this Article III (as modified by the
Schedules hereto), (a) neither the Company, nor any other Person on its behalf,
makes any other express or implied representation or warranty with respect to
the Company, the Subsidiaries, the Underlying Projects or the transactions
contemplated by this Agreement, and the Company disclaims any other
representations or warranties, whether made by the Company, the Shareholders or
any of their respective Affiliates, officers, directors, employees, agents or
representatives; and (b) the Company hereby disclaims all liability and
responsibility for any projection or forecast (including any such projection or
forecast made available to Parent in any “data rooms,” “virtual data rooms,”
management presentations or in any other form in expectation of, or in
connection with, the transactions contemplated hereby) made, communicated, or
furnished (orally or in writing) to Parent or its Affiliates or representatives
(including any opinion, information or advice in respect thereof that may have
been or may be provided to Parent by any director, officer, employee, agent,
consultant, or representative of the Company or the Shareholders or any of their
respective Affiliates). The Company makes no representations or warranties to

 

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Parent regarding the probable success or profitability of the Company, its
Subsidiaries or the Underlying Projects.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

The Shareholders, severally but not jointly, hereby represent and warrant to
Parent and Merger Sub as follows:

4.1 Organization and Good Standing. Each of the Shareholders (that is not an
individual) is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has all requisite
power and authority to enter into this Agreement and the Shareholder Documents
and to consummate the transactions contemplated hereby and thereby.

4.2 Authorization of Agreement. Each Shareholder has all power, authority and
legal capacity to execute and deliver this Agreement and each other agreement,
document, or instrument or certificate contemplated by this Agreement or to be
executed by such Shareholder in connection with the transactions contemplated by
this Agreement (the “Shareholder Documents”), to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance of this Agreement and each
of the Shareholder Documents, and the consummation of the Merger and other
transactions contemplated hereby and thereby, have been duly authorized and
approved by all required action on the part of such Shareholder. This Agreement
has been, and each of the Shareholder Documents required to be delivered at the
Closing will be at or prior to the Closing, duly and validly executed and
delivered by such Shareholder and (assuming due authorization, execution and
delivery by Parent and Merger Sub) this Agreement constitutes, and each of the
Shareholder Documents when so executed and delivered will constitute, legal,
valid and binding obligations of such Shareholder, enforceable against such
Shareholder in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium, or other equivalent Laws
affecting the enforcement of creditors’ rights in general and subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding at law or in equity).

4.3 Conflicts; Consents of Third Parties.

(a) None of the execution and delivery by each Shareholder of this Agreement or
the Shareholder Documents, the consummation of the transactions contemplated
hereby or thereby, or performance by such Shareholder of its obligations
hereunder or thereunder will conflict with, or result in any violation or breach
of, conflict with or default (with or without notice or lapse of time, or both)
under (i) to the extent that such Shareholder is not a natural person, the
organizational documents of such Shareholder; (ii) any Contract, or Permit to
which such Shareholder is a party or by which any of the properties or assets of
such Shareholder are bound; (iii) any Order of any Governmental Body applicable
to such Shareholder or any of the properties or assets of such Shareholder; or
(iv) any applicable Law.

 

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(b) Except as set forth in Schedule 4.3(b), no consent, waiver, approval, Order,
Permit or authorization of, or declaration or filing with, or notification to,
any Person or Governmental Body is required on the part of any Shareholder in
connection with the execution and delivery of this Agreement or the Shareholder
Documents, the performance by such any Shareholder of its obligations hereunder
and thereunder, or the consummation of the transactions contemplated hereby or
thereby, except for compliance with the applicable requirements of the PURA,
FPA, HSR Act or other Antitrust Laws.

4.4 Ownership and Transfer of Purchased Securities. Except as set forth in
Schedule 4.4, each Shareholder is the record and beneficial owner of the Shares
listed opposite such Shareholder’s name on Exhibit A attached hereto, free and
clear of any and all Liens. Such Shareholder has the power and authority to
sell, transfer, assign and deliver such Shares as provided in this Agreement,
and such delivery will convey to Parent good and valid title to such Shares,
other than any Liens created by Parent or restrictions on transfer arising under
applicable securities Laws.

4.5 Litigation. There are no Legal Proceedings pending or, to the knowledge of
any Shareholder, threatened that are reasonably likely to affect such
Shareholder’s ability to enter into this Agreement or consummate the
transactions contemplated hereby.

4.6 Support Obligations. All of the credit and other contractual support and
assurances that the Shareholders and their Affiliates (other than the Company,
its Subsidiaries and the Underlying Projects) have provided to or for the
benefit of the Underlying Projects with respect to their businesses and assets
are pursuant to the support obligations set forth in, and are as described in,
Schedule 4.6(a) (the “Support Obligations”), and true, correct and complete
copies of such credit and other contractual support and assurances have been
delivered, or otherwise made available, to Parent. Such Support Obligations
constitute all of the credit and other contractual support and assurance that
the Shareholders and their Affiliates are required by any Company Permit or
Material Contract to provide to or for the benefit of the Underlying Projects
with respect to their respective business and assets as of the date hereof. All
other credit and other contractual support and assurances that the Shareholders
and their Affiliates (other than the Company, its Subsidiaries and the
Underlying Projects) are required by any Company Permit or Material Contract to
provide to or for the benefit of the Underlying Projects with respect to their
respective business and assets as of the date hereof are pursuant to the support
obligations set forth in, and are as described in, Schedule 4.6(b).

4.7 No Other Representations or Warranties; Schedules. Except for the
representations and warranties contained in this Article IV (as modified by the
Schedules hereto), (a) no Shareholder makes any other express or implied
representation or warranty of any kind or nature with respect to such
Shareholder, the Company, the Subsidiaries, the Underlying Projects or the
transactions contemplated by this Agreement, and such Shareholder disclaims any
other representations or warranties, whether made by such Shareholder, the
Company or any of its respective Affiliates, officers, directors, employees,
agents or representatives; and (b) the Shareholders hereby disclaim all
liability and responsibility for any projection or forecast (including any such
projection or forecast made available to Parent in any “data rooms,” “virtual
data rooms,” management presentations or in any other form in expectation of, or
in connection with, the transactions contemplated hereby) made, communicated, or
furnished (orally or in

 

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writing) to Parent or its Affiliates or representatives (including any opinion,
information or advice in respect thereof that may have been or may be provided
to Parent by any director, officer, employee, agent, consultant, or
representative of the Shareholders or any of their respective Affiliates). The
Shareholders make no representations or warranties to Parent regarding the
probable success or profitability of the Company, its Subsidiaries or the
Underlying Projects.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Each of Parent and Merger Sub hereby represents and warrants to the Company and
Shareholders as follows:

5.1 Organization and Good Standing. Parent is a limited liability company duly
organized, validly existing and in good standing under the laws of the state of
its jurisdiction and has all requisite limited liability company power and
authority to own, lease and operate its properties and carry on its business.
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the state of its jurisdiction and has all requisite
corporate power and authority to own, lease and operate its properties and carry
on its business.

5.2 Authorization of Agreement. Each of Parent and Merger Sub has full limited
liability or corporate power, as the case may be, authority and legal capacity
to execute and deliver this Agreement and each other agreement, document,
instrument or certificate contemplated by this Agreement or to be executed by
Parent or Merger Sub in connection with the consummation of the transactions
contemplated hereby and thereby (the “Parent Documents”), to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by each
of Parent and Merger Sub of this Agreement and each Parent Document to which it
is a party, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized and approved by all necessary limited
liability company or corporate action on behalf of Parent and Merger Sub,
respectively. Assuming the due authorization, execution and delivery by the
other parties hereto and thereto, this Agreement has been, and each Parent
Document will be at or prior to the Closing, duly and validly executed and
delivered by Parent and Merger Sub and (assuming the due authorization,
execution and delivery, as applicable, by the Company and the Shareholders) this
Agreement constitutes, and each Parent Document when so executed and delivered
will constitute, the legal, valid and binding obligation of Parent and Merger
Sub, as applicable, enforceable against Parent and Merger Sub, as applicable, in
accordance with its respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other equivalent Laws affecting the
enforcement of creditors’ rights in general and subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
at law or in equity).

 

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5.3 Conflicts; Consents of Third Parties.

(a) None of the execution and delivery by Parent or Merger Sub of this Agreement
and of the Parent Documents to which it is a party, the consummation of the
transactions contemplated hereby or thereby, or the performance by Parent or
Merger Sub with any of its respective obligations hereunder or thereunder will
conflict with, or result in violation of or breach of, conflict with or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration under any provision of
(i) the certificate of incorporation, by-laws, limited liability company
agreement, operating agreement, partnership agreement or comparable
organizational documents of Parent or Merger Sub, as the case may be; (ii) any
Contract, or Permit to which Parent or Merger Sub is a party or by which any of
the properties or assets of Parent or Merger Sub are bound; (iii) any Order of
any Governmental Body applicable to Parent or Merger Sub or by which any of the
properties or assets of Parent or Merger Subs are bound; or (iv) any applicable
Law.

(b) No consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental Body
is required on the part of Parent or Merger Sub in connection with the execution
and delivery of this Agreement or the Parent Documents to which it is a party or
the performance by Parent or Merger Sub with any of its respective obligations
hereof or thereof or the consummation of the transactions contemplated hereby,
except for compliance with the applicable requirements of the HSR Act or other
Antitrust Laws, PURA, Section 203 of the Federal Power Act and the filing of the
Articles of Merger.

5.4 Litigation. There are no Legal Proceedings pending or, to the knowledge of
Parent or the Merger Sub, threatened that are reasonably likely to affect
Parent’s or Merger Sub’s ability to enter into this Agreement or consummate the
transactions contemplated hereby.

5.5 Finders or Brokers. Except as disclosed to the Company by letter dated the
date hereof, no Person has acted, directly or indirectly, as a broker, finder or
financial advisor for Parent or Merger Sub in connection with the transactions
contemplated by this Agreement and no Person is entitled to any fee or
commission or like payment in respect thereof other than fees that will be paid
by Parent.

5.6 Financing. Parent has access to, and at the Closing will have,
(a) sufficient internal funds available to pay the aggregate Closing Common
Stock Payment, aggregate Closing Option Consideration, and the Escrow Amount,
all in accordance with Article II, and any fees or expenses incurred by Parent
in connection with the transactions contemplated by this Agreement, and (b) the
resources and capabilities (financial or otherwise) to perform its obligations
hereunder. Parent has not incurred any obligation, commitment, restriction or
Liability of any kind, which would impair or adversely affect in any material
respect such resources and capabilities.

5.7 Merger Sub’s Operations. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement and has not engaged
in any business activities or conducted any operations other than in connection
with such transactions.

 

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5.8 No Knowledge. Except as may be reflected in written comments to the
Company’s disclosure schedules presented to the Company by representatives of
Parent prior to the date hereof that were not accepted by the Company, none of
the Specified Parent Officers has actual Knowledge of any breach of a
representation or warranty by the Company or the Shareholders made pursuant to
this Agreement that would result in an indemnification obligation to any Parent
Indemnified Party under Article IX of this Agreement; provided, that, solely for
purposes of this Section 5.8, “Knowledge” shall mean the actual knowledge with
respect to the applicable breach, with no inference of constructive knowledge,
including without limitation as a result of an awareness by any Person of any of
the actions, circumstances, events, occurrences or omissions which may have
caused or resulted in such breach unless such Person was aware that such
actions, circumstances, events, occurrences or omissions actually caused or
resulted in such breach. In the event of any allegation by any Securityholder
that Parent or Merger Sub has breached this representation, the Securityholder
shall have the burden of proof to show, by a preponderance of the evidence, that
a Specified Parent Officer had actual Knowledge of the underlying breach claimed
by the Securityholder.

5.9 No Additional Representations. Parent acknowledges that except for the
representations and warranties contained in Articles III and IV (as modified by
the Schedules hereto), (a) neither the Company, the Shareholders nor any other
Person on behalf of the Company or the Shareholders makes any other express or
implied representation or warranty with respect to the Company, the
Shareholders, the Subsidiaries, the Underlying Projects or the transactions
contemplated by this Agreement, and the Company and Shareholders disclaim any
other representations or warranties, whether made by the Company, the
Shareholders or any of their respective Affiliates, officers, directors,
employees, agents or representatives; and (b) the Company and the Shareholders
make no representation or warranty to Parent with respect to any financial
projection or forecast relating to the Company, its Subsidiaries or the Project
Companies, whether or not included in any management presentation. Parent
acknowledges that it and its representatives have been permitted reasonable
access to the books and records, facilities, equipment, Tax Returns, contracts,
agreements, insurance policies and other properties and assets of the Company
and its Subsidiaries that it and its representatives have requested to see
and/or review, and that it and its representatives have had the opportunity to
meet with the officers and employees of the Company and its Subsidiaries to
discuss the business of the Company, its Subsidiaries and the Underlying
Projects.

ARTICLE VI

COVENANTS

6.1 Access to Information. Prior to the Closing, Parent shall be entitled,
through its officers, employees and representatives (including its legal
advisors and accountants), to make such investigation of the properties,
businesses and operations of the Company, its Subsidiaries and, to the extent
that the Company is entitled to afford Parent access, the Project Companies,
such examination of the books and records of the Company, its Subsidiaries and,
to the extent that the Company is entitled to afford Parent access, the Project
Companies, and shall have reasonable access to the offices of the Company and
its Subsidiaries, and to the directors, officers, managers, executives,
employees, consultants and agents of the Company and its Subsidiaries (only to
the extent such access is reasonably related to Parent’s rights and

 

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obligations hereunder), in each case, as Parent reasonably requests. Any such
investigation, examination or access shall be conducted during regular business
hours upon reasonable advance notice and under reasonable circumstances and
shall be subject to restrictions under applicable Law. The Company shall cause
the senior officers of the Company and the Subsidiaries to cooperate with Parent
and Parent’s representatives in connection with such investigation, examination
and access, and Parent and its representatives shall cooperate with the Company
and its representatives and shall use their best efforts to minimize any
disruption to the business. Notwithstanding anything herein to the contrary, no
such investigation or examination shall be permitted to the extent that it would
require the Company or any of the Subsidiaries to disclose information subject
to attorney-client privilege or conflict with any confidentiality obligations to
which the Company or any of the Subsidiaries is bound. Notwithstanding anything
to the contrary contained herein, prior to the Closing, without the prior
written consent of the Company, which may be withheld for any reason, (i) Parent
shall not contact any suppliers to, or customers of, the Company in their
capacity as such in connection with the transactions contemplated by the
Agreement, and (ii) Parent shall have no right to perform invasive or subsurface
investigations of the properties or facilities of the Company, any of the
Subsidiaries or any of the Underlying Projects.

6.2 Conduct of the Business Pending the Closing.

(a) Prior to the Closing, except (I) as set forth on Schedule 6.2(a), (II) as
required by applicable Law, (III) as otherwise expressly contemplated by this
Agreement, (IV) as expressly provided for in the Budget, or (V) with the prior
written consent of Parent (which consent shall not be unreasonably withheld,
delayed or conditioned), the Company shall cause its Subsidiaries and the
Managed Projects, other than the Managed Projects located in the United Kingdom
and the Underlying Projects referred to as Laurel Hill, Hexagon Fuel Cell, Quad
Fuel Cell, Cube Fuel Cell and Triangle Fuel Cell on Schedule 1.1(c), to, and the
Company shall (either directly or indirectly through its Subsidiaries) use
reasonable commercial efforts to cause, to the extent within its ability, the
Specified Projects, the Managed Projects located in the United Kingdom and the
Underlying Projects referred to as Laurel Hill, Hexagon Fuel Cell, Quad Fuel
Cell, Cube Fuel Cell and Triangle Fuel Cell on Schedule 1.1(c) to (and to the
extent not within its ability to so cause, neither the Company nor any of its
Subsidiaries shall approve, consent to or otherwise authorize, and the Company
and its Subsidiaries, to the extent within their respective rights, shall veto
the taking of any action that would cause or result in a Specified Project, a
Managed Project located in the United Kingdom or any of the Underlying Projects
referred to as Laurel Hill, Hexagon Fuel Cell, Quad Fuel Cell, Cube Fuel Cell
and Triangle Fuel Cell on Schedule 1.1(c) not to):

(i) conduct their respective businesses only in the Ordinary Course of Business;
and

(ii) use their commercially reasonable efforts to (A) preserve the present
business operations, assets, organization and goodwill of the Company, the
Subsidiaries and the Underlying Projects (including but not limited to, solely
with respect to the Company, the Subsidiaries and the Managed Projects,
maintaining rights and franchises, retaining the services of managers,
executives, consultants, officers, directors, employees and agents and keeping
in full force and effect liability insurance and bonds comparable in amount

 

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and scope of coverage to that currently maintained), and (B) preserve the
present relationships with customers, suppliers, licensors and licensees of, and
others having business dealings with, the Company, the Subsidiaries and the
Underlying Projects.

(b) Without limiting the generality of the foregoing and in addition to the
other obligations set forth in this Agreement, except (I) as set forth on
Schedule 6.2(b), (II) as required by applicable Law, (III) as otherwise
expressly contemplated by this Agreement, (IV) as expressly provided for in the
Budget, or (V) with the prior written consent of Parent (which consent shall not
be unreasonably withheld, delayed or conditioned), the Company shall not, and
the Company shall cause its Subsidiaries and the Managed Projects other than the
Managed Projects located in the United Kingdom and the Underlying Projects
referred to as Laurel Hill, Hexagon Fuel Cell, Quad Fuel Cell, Cube Fuel Cell
and Triangle Fuel Cell on Schedule 1.1(c) not to, and, to the extent applicable,
the Company shall (either directly or indirectly through its Subsidiaries) use
reasonable commercial efforts to cause, to the extent within its ability, the
Specified Projects, the Managed Projects located in the United Kingdom and the
Underlying Projects referred to as Laurel Hill, Hexagon Fuel Cell, Quad Fuel
Cell, Cube Fuel Cell and Triangle Fuel Cell on Schedule 1.1(c) not to (and to
the extent not within its ability to so cause, neither the Company nor any of
its Subsidiaries shall approve, consent to or otherwise authorize, and the
Company and its Subsidiaries, to the extent within their respective rights,
shall veto the taking of any action that would cause or result in a Specified
Project, a Managed Project located in the United Kingdom or any of the
Underlying Projects referred to as Laurel Hill, Hexagon Fuel Cell, Quad Fuel
Cell, Cube Fuel Cell and Triangle Fuel Cell on Schedule 1.1(c) to):

(i) declare, set aside, make or pay any dividend or other distribution in
respect of its capital stock or other ownership interests, or repurchase, redeem
or otherwise acquire any outstanding shares of the capital stock or other
securities of, or other ownership interests in any Person, or any securities or
obligations convertible into or exchangeable for any shares of the capital stock
of, or other ownership interests in any Person, or any options, warrants or
conversion or other rights to acquire any shares of the capital stock or other
securities of, or other ownership interests in any Person;

(ii) transfer, issue, deliver, award, grant, sell, pledge, encumber or dispose
of (including the grant of any limitations in voting rights or other Liens on)
any shares of capital stock or other securities of, or ownership interests in,
or any securities convertible into or exercisable or exchangeable for any such
securities of or ownership interest in, the Company, any of the Subsidiaries or
such Project Companies or grant options (other than to employees in the Ordinary
Course of Business), warrants, calls, options or other rights to purchase or
otherwise acquire shares of the capital stock or other securities of, or other
ownership interests in, the Company, any of the Subsidiaries or such Project
Companies, or amend or otherwise modify the terms of any such warrants, calls,
options or other rights the effect of which shall be to make such terms more
favorable to the holders thereof;

(iii) effect any reorganization, recapitalization, reclassification, stock
split, combination, share exchange or like change in the capitalization of the
Company, any of its Subsidiaries or such Project Companies, amend the terms of
any outstanding securities of the Company, any of its Subsidiaries or such
Project Companies, or issue or authorize or propose

 

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the issuance of any other securities in respect of, in lieu of or in
substitution for, securities of the Company, any of its Subsidiaries or such
Project Companies;

(iv) amend the certificate of incorporation or by-laws or comparable
organizational documents of the Company, any of the Subsidiaries or any Project
Company;

(v) other than in the Ordinary Course of Business or as required by Law or
pursuant to the terms of a Material Contract, (A) increase the annual level of
compensation of any director, officer or employee of the Company or any of the
Subsidiaries, (B) grant any bonus, benefit or other direct or indirect
compensation to any director, employee or officer of the Company or any of its
Subsidiaries, (C) increase the coverage or benefits available under any (or
create any new) Company Plan made to, for, or with any of the directors,
officers, employees, agents or representatives of the Company or any of its
Subsidiaries or otherwise modify or amend or terminate any such Company Plan, or
(D) enter into any employment, deferred compensation, severance, special pay,
consulting, non-competition or similar agreement or arrangement with any
directors, employees or officers of the Company or any of its Subsidiaries (or
amend any such agreement to which the Company or any of its Subsidiaries is a
party), in each case, except as required by applicable Law or pursuant to
previously existing Contracts (other than by virtue of the existing terms
thereof or pursuant to this Agreement);

(vi) incur, guarantee, endorse or otherwise become liable or responsible with
respect to (whether directly, contingently or otherwise) any Liability of the
Company, any of its Subsidiaries, any Project Company or any other Person,
individually greater than $150,000 or in the aggregate greater than $250,000;

(vii) subject to any Lien, any of the properties or assets (whether tangible or
intangible) of the Company, any of the Subsidiaries or any Project Company,
except, in each case, for Permitted Exceptions or otherwise in the Ordinary
Course of Business;

(viii) sell, assign, license, transfer, convey, lease or otherwise dispose of
any of the material properties or assets (including, without limitation, any
Investment in an Underlying Project) of the Company, the Subsidiaries or any
Project Company in each case greater than $150,000 individually or $250,000 in
the aggregate (except pursuant to an existing Contract for fair consideration in
the Ordinary Course of Business or in connection with a bona fide intercompany
transfer between wholly owned Subsidiaries of the Company);

(ix) make or enter into any commitment for capital expenditures of the Company,
the Subsidiaries or any Project Company in excess of $150,000 for any individual
commitment and $250,000 for all commitments in the aggregate;

(x) enter into or agree to enter into any merger or consolidation with or
acquire, by purchasing an equity interest in or a portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other entity or division thereof, and engage in any new business or invest
in, make a loan, advance or capital contribution to, or otherwise acquire the
securities or any assets of, any other Person, in each

 

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case involving more than $150,000 in transaction value individually or $250,000
in transaction value in the aggregate;

(xi) enter into any labor or collective bargaining agreement of the Company or
any of its Subsidiaries or, through negotiation or otherwise, make any
commitment or incur any liability to any labor organization with respect to the
Company or any of its Subsidiaries;

(xii) enter into, renew, terminate, materially amend, modify, or assign (except
in connection with a bona fide intercompany transfer between wholly owned
Subsidiaries of the Company) any rights or claims pursuant to, any Material
Contract, or enter into any agreement that, if existing on the date of this
Agreement, would be a Material Contract;

(xiii) institute, pay, discharge, settle, satisfy or compromise any pending or
threatened Legal Proceeding or any claims, Liabilities or obligations (whether
absolute or contingent, matured or unmatured, known or unknown), for, or that
would result in a loss of revenue of, an amount that could reasonably be
expected to be greater than $150,000 individually or $250,000 in the aggregate;

(xiv) make, change or rescind any material election relating to Taxes, settle or
compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit controversy relating to Taxes, or except as
required by applicable law or GAAP, make any material change to any of its
methods of accounting or methods of reporting income or deductions for Tax or
accounting practice or policy from those employed in the preparation of its most
recent Tax Return, amend any material Tax Returns, request a ruling relating to
Taxes, enter into any material agreements with a Taxing Authority, or terminate
any material agreement entered into with a Taxing Authority that is in effect as
of the date hereof; grant any power of attorney relating to Tax matters if such
power of attorney will have continuing effect after the Closing Date, or prepare
any Tax Return in a manner that is not consistent with past practices;

(xv) sell, assign, license, encumber, transfer, convey, lease or otherwise
dispose of any environmental or renewable energy credits, energy conservation
credits, benefit, offsets or allowances, emission reduction credits or
allowances under any applicable emissions trading, compliance or budget
programs, or any other state, regional federal emissions, renewable energy, or
energy conservation, trading or budget program;

(xvi) waive any benefits of, or agree to modify in any respect, any
confidentiality, standstill or similar agreement to which the Company, any of
its Subsidiaries or any Project Company is a party;

(xvii) change any method of accounting or accounting practice or policy other
than as required by GAAP or a Governmental Body;

(xviii) collect accounts receivables or pay accounts payable other than in the
Ordinary Course of Business;

 

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(xix) enter into any real property lease or exercise rights under any RP Option
Agreement; or

(xx) authorize, commit or agree to do anything prohibited by this Section 6.2.

6.3 Third Party Consents. Parent and the Company shall use (and the Company
shall cause the Subsidiaries to use) their commercially reasonable efforts to
obtain at the earliest practicable date all consents and approvals set forth on
Schedule 3.3(b) and any other consents and approvals required to consummate the
transactions contemplated by this Agreement identified by the Parent or the
Company in writing prior to the Closing; provided, however, that no party shall
be obligated to pay any consideration to any third party from whom consent or
approval is requested, commence or participate in any Legal Proceeding or offer
or grant any accommodation (financial or otherwise) to any third party if such
party has requested reimbursement in respect of the cost thereof from Parent and
Parent shall have declined to provide such reimbursement.

6.4 Regulatory Filings.

(a) Each of Parent, the Company and the Shareholders (if necessary) shall
(i) make or cause to be made all filings required of each of them or any of
their respective Subsidiaries or Affiliates under (x) the HSR Act or other
Antitrust Laws (y) PURA and (z) Section 203 of the Federal Power Act, in each
case with respect to the transactions contemplated hereby as promptly as
practicable and, in any event, within ten Business Days after the date of this
Agreement in the case of (x) and five Business Days after the date of this
Agreement in the case of (y) and (z), (b) comply at the earliest practicable
date with any request under the HSR Act or other Antitrust Laws for additional
information, documents, or other materials received by each of them or any of
their respective subsidiaries or Affiliates from the FTC, the Antitrust Division
of the United States Department of Justice or any other Governmental Body in
respect of such filings or such transactions, and (c) cooperate with each other
in connection with any such filing (including, to the extent permitted by
applicable law, providing copies of all such documents to the non-filing parties
prior to filing and considering all reasonable additions, deletions or changes
suggested in connection therewith) and in connection with resolving any
investigation or other inquiry of any of the FTC, the Antitrust Division of the
United States Department of Justice or other Governmental Body with respect to
any such filing or any such transaction. Each such party shall use its
reasonable best efforts to furnish to each other all information required for
any application or other filing to be made pursuant to any applicable law in
connection with the transactions contemplated by this Agreement. Each such party
shall promptly inform the other parties hereto of any oral communication with,
and provide copies of written communications with, any Governmental Body
regarding any such filings or any such transaction. No party hereto shall
independently participate in any formal meeting with any Governmental Body in
respect of any such filings, investigation, or other inquiry without giving the
other parties hereto prior notice of the meeting and, to the extent permitted by
such Governmental Body, the opportunity to attend and/or participate. Subject to
applicable Law, the parties hereto will consult and cooperate with one another
in connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any party
hereto relating to proceedings under the HSR Act, other

 

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Antitrust Laws, PURA or the Federal Power Act. Any party may, as it deems
advisable and necessary, reasonably designate any competitively sensitive
material provided to the other parties under this Section 6.4 as “outside
counsel only.” Such materials and the information contained therein shall be
given only to the outside legal counsel of the recipient and will not be
disclosed by such outside counsel to employees, officers, or directors of the
recipient, unless express written permission is obtained in advance from the
source of the materials.

(b) Each of Parent and the Company shall use its reasonable best efforts to
resolve such objections, if any, as may be asserted by any Governmental Body
with respect to the transactions contemplated by this Agreement under Antitrust
Laws. In connection therewith, if any Legal Proceeding is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as in violation of any Antitrust Law, each of Parent and the Company
shall cooperate and use its reasonable best efforts to contest and resist any
such Legal Proceeding, and to have vacated, lifted, reversed, or overturned any
decree, judgment, injunction or other order whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents, or restricts
consummation of the transactions contemplated by this Agreement, including by
pursuing all available avenues of administrative and judicial appeal, unless by
mutual agreement, Parent and the Company decide that litigation is not in their
respective best interests. Each of Parent and the Company shall use reasonable
best efforts to take such action as may be required to cause the expiration of
the notice periods under the HSR Act or other Antitrust Laws with respect to
such transactions as promptly as possible after the execution of this Agreement.
In connection with and without limiting the foregoing, each of Parent and the
Company agree to use its reasonable best efforts to take promptly any and all
steps as reasonably may be necessary to avoid or eliminate each and every
impediment under any Antitrust Laws that may be asserted by any Federal, state
and local and non-United States antitrust or competition authority, so as to
enable the parties to close the transactions contemplated by this Agreement as
expeditiously as possible; provided however, that neither party, nor any of
their respective Affiliates, shall be required to enter into any divestiture
agreement to comply with its obligations hereunder.

(c) Notwithstanding any provision in this Agreement to the contrary, all filing
fees in respect of any HSR or other regulatory filing under Antitrust Laws shall
be borne by Parent.

6.5 Further Assurances.

(a) Except as otherwise set forth herein, each of Parent and the Company shall
use (and the Company shall cause each of the Subsidiaries to use) their
commercially reasonable efforts to (i) take all actions necessary or appropriate
to consummate and make effective the transactions contemplated by this Agreement
as soon as reasonably practicable (such actions shall include exerting their
reasonable efforts to obtain the consents, authorizations and approvals of all
private parties and all Governmental Bodies necessary to effectuate the
transactions contemplated by this Agreement or required to be obtained by this
Agreement) and (ii) cause the fulfillment at the earliest practicable date of
all of the conditions to their respective obligations to consummate and make
effective the transactions contemplated by this Agreement.

 

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(b) Notwithstanding anything to the contrary contained herein, with respect to
that certain Loan Agreement, dated May 16, 2006, as amended (the “BLB Loan
Agreement”), among the Company, Bayerische Landesbank and the lenders party
thereto, the Company and Parent shall use their respective best efforts to reach
an agreement, as soon as practicable after the date hereof, with the lenders
under the BLB Loan Agreement that would in effect (i) cause Parent or one or
more of its Affiliates to be substituted in all respects for the Shareholders
and their Affiliates (other than the Company, the Subsidiaries and the Project
Companies) as a guarantor under the BLB Loan Agreement, or (ii) cause the BLB
Loan Agreement to be terminated concurrently with the Closing, in either case in
a manner such that each Shareholder and its Affiliates (other than the Company,
the Subsidiaries and the Project Companies) that is obligated as a guarantor
under the BLB Loan Agreement be fully and unconditionally released from any and
all Liabilities with respect thereto, pursuant to documentation satisfactory, in
form and substance, to the Shareholders.

6.6 Confidentiality. The Parties hereby covenant and agree that, from the date
of this Agreement until the earlier to occur of the Closing Date or the
termination of this Agreement pursuant to its terms, the Parties shall abide,
and shall cause each of their Affiliates to abide, by the terms and conditions
of the confidentiality and non-disclosure agreement between Duke Energy
Generation Services, Inc. and the Company, dated June 11, 2007 and the
supplement thereto dated March 15, 2008 (the “Confidentiality Agreement”), the
terms of which are incorporated herein by reference. After the date hereof and
until the Closing, the Company shall not, and shall not permit its Subsidiaries
to terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement in respect of the Company and its Subsidiaries to which it
is a party and which relates to the potential acquisition of a control interest
in, or all or substantially all of the assets of, the Company. After the date
hereof, the Company shall enforce to the fullest extent permitted under
applicable law, the provisions of any such agreement, including without
limitation, by taking reasonable steps to enforce specifically the terms and
provisions thereof in any court having jurisdiction. Immediately following the
date hereof, the Company shall request that any Person in receipt of
confidential information pursuant to any such confidentiality or standstill
agreement that was provided on or after January 1, 2007 shall either
(i) promptly redeliver to the Company all such confidential information
(including but not limited to written and computer files) and any other material
containing or reflecting, or generated from, any information in such
confidential information (whether prepared by such Person, its representatives
or otherwise) or (ii) destroy all such confidential information (including but
not limited to written and computer files) and any other material containing or
reflecting, or generated from, any information in such confidential information
(whether prepared by such Person, its representatives or otherwise) and certify
in writing to the Company by an authorized officer of such Person supervising
such destruction as to such destruction, in each case, to the extent provided
for in the confidentiality or standstill agreement.

6.7 Indemnification, Exculpation and Insurance.

(a) Parent agrees that all rights of the individuals who on or prior to the
Closing Date were directors, officers or employees of the Company or any of its
Subsidiaries (collectively, the “Indemnitees”) to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to the
Closing Date as provided in the respective certificate of incorporation or
by-laws or comparable organizational documents of the Company or any of the

 

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Subsidiaries as now in effect and the indemnification agreements or arrangements
of the Company or any of the Subsidiaries set forth on Schedule 6.7(a) shall
survive the Closing Date and shall continue in full force and effect in
accordance with their terms. Such rights shall not be amended, or otherwise
modified in any manner that would adversely affect the rights of the
Indemnitees, unless such modification is required by Law. In addition, Parent
shall pay any expenses of any Indemnitee under this Section 6.7 in accordance
with the provisions of Section 6.7(c) to the extent that they are based on or
arising out of the fact that such Person is or was a director, officer or
employee of the Company or any of its Subsidiaries, as incurred to the fullest
extent permitted under applicable Law, provided that the person to whom expenses
are advanced provides an undertaking to repay such advances to the extent
required by applicable Law.

(b) Parent, from and after the Closing Date, shall cause the articles of
incorporation and by-laws of the Surviving Corporation and each of its
Subsidiaries, to contain provisions no less favorable to the Indemnitees with
respect to limitation of certain liabilities of directors, officers, employees
and agents and indemnification than are set forth as of the date of this
Agreement in the certificate of incorporation and by-laws of the Company.

(c) In the event of any such liability (whether or not asserted before the
Effective Time), (i) the Surviving Corporation shall pay the reasonable fees and
expenses of counsel selected by the Indemnitees, which counsel shall be
reasonably satisfactory to the Surviving Corporation, promptly after statements
therefor are received and otherwise advance to such Indemnitees upon request,
reimbursement of documented expenses reasonably incurred, in either case to the
extent not prohibited by the VBCA, (ii) the Surviving Corporation and the
applicable Indemnitee will cooperate, and cause their respective Affiliates to
cooperate, in the defense of any Claim and shall provide access to properties
and individuals as reasonably requested and furnish or cause to be furnished
records, information and testimony, and attend such conferences, discovery
proceedings, hearings, trials or appeals, as may be reasonably requested in
connection therewith, and (iii) any determination required to be made with
respect to whether an Indemnitee’s conduct complies with the standards set forth
under the VBCA and the articles of incorporation or by-laws of the Surviving
Corporation shall be made by independent counsel mutually acceptable to the
Surviving Corporation and the Indemnitees; provided, however, that the Surviving
Corporation shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld). The Indemnitees as a
group may retain only one law firm with respect to each related matter except to
the extent there is, in the opinion of counsel to an Indemnitee, under
applicable standards of professional conduct, a conflict on any significant
issue between positions of such Indemnitee and any other Indemnitee or
Indemnitees.

(d) Parent shall cause the Surviving Corporation to either (i) maintain in
effect for the six-year period commencing immediately after the Closing Date the
Company’s current directors’ and officers’ liability insurance (the “Existing
D&O Coverage”) covering acts or omissions occurring prior to the Effective Time
with respect to those persons who are currently covered by the Company’s
directors’ and officers’ liability insurance policy on terms with respect to
such coverage and amount no less favorable to the Company’s directors and
officers currently covered by such insurance than those of such policy in effect
on the date hereof (provided that Parent may cause the Surviving Corporation to
substitute therefor policies of a reputable insurance company the terms of
which, including coverage and amount, are no less

 

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favorable to such directors and officers with respect to matters occurring prior
to the Effective Time); provided that if the aggregate annual premiums for such
insurance shall exceed two hundred and fifty per cent (250%) of the aggregate
annual premiums paid by the Company as of the date hereof, then Parent shall
cause the Surviving Corporation to provide or cause to be provided a policy for
the applicable individuals with the best coverage as shall then be available at
an annual premium of two hundred and fifty per cent (250%) of the current
aggregate annual premium or (ii) to purchase a six-year extended reporting
period endorsement (“reporting tail coverage”) under the Existing D&O Coverage,
provided that such reporting tail coverage shall extend the director and officer
liability coverage in force as of the date hereof from the Effective Time on
terms, that in all material respects, are no less advantageous to the Company’s
directors and officers currently covered by such insurance than those of such
policy in effect on the date hereof.

(e) The provisions of this Section 6.7 (i) shall not be terminated or modified
in such a manner as to adversely affect any Indemnitee to whom this Section 6.7
applies without the consent of the affected Indemnitee (it being expressly
agreed that the Indemnitees to whom this Section 6.7 applies shall be third
party beneficiaries of this Section 6.7 and this Section 6.7 shall be
enforceable by each Indemnitee, his or her heirs and his or her
representatives); and (ii) are in addition to, and not in substitution for, any
other rights to indemnification or contribution that any such person may have by
Contract or otherwise.

6.8 Preservation of Records. The Company agrees, and Parent agrees to cause the
Surviving Corporation and its Subsidiaries to act in such a manner, to preserve
and keep the records held by it relating to the businesses of the Company, the
Subsidiaries and the Project Companies for a period of seven years from the
Closing Date and shall make such records and personnel available to the
Shareholders’ Representative as may be reasonably required in connection with,
among other things, any insurance claims by, Legal Proceedings or tax audits
against or governmental investigations of the Shareholders or any of their
Affiliates or in order to enable the Shareholders to comply with their
respective obligations under this Agreement and each other agreement, document
or instrument contemplated hereby or thereby.

6.9 Publicity. None of the Shareholders, the Company or Parent shall issue any
press release or public announcement concerning the terms or existence of this
Agreement or the transactions contemplated hereby without obtaining the prior
written approval of the other party hereto, which approval will not be
unreasonably withheld or delayed, unless, in the good faith judgment of the
Shareholders, the Company or Parent, as applicable, disclosure is otherwise
required by applicable Law or by the applicable rules of any stock exchange on
which Parent lists securities; provided that, the party intending to make such
release shall use its commercially reasonable efforts consistent with such
applicable Law to consult with the other party with respect to the timing and
content thereof. To the extent that any party determines that disclosure is so
required, prior to making any such disclosure, the parties shall consult with
respect thereto regarding confidentiality, and if in the good faith judgment of
the disclosing party such party is entitled under applicable Law to seek
confidential treatment with respect to any portion of such disclosure, such
party shall give reasonable consideration to any request by another party to
seek such confidential treatment.

 

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6.10 Company Options; Company Option Plan; Shareholder Approval. Effective as of
the Closing: (i)(a) each Class TV Stock Option outstanding immediately prior to
the Closing Date shall become fully vested and entitled to the right to payment
from the Surviving Corporation of the Closing Option Consideration and other
amounts as set forth in Section 2.7(a)(ii) and (b) each Class DT Stock Option
outstanding immediately prior to the Closing Date shall be cancelled without
consideration, and (ii) the Company shall terminate its Company Option Plan, in
accordance with its terms, and all rights under the Company Option Plan and any
provision of any other plan, program or arrangement providing for the issuance
or grant of any other interest in respect of the capital stock of the Company or
any of the Subsidiaries shall be cancelled. Prior to Closing, the Company shall
submit to the Shareholders for approval in accordance with the shareholder
approval provisions of Section 280G(b)(5)(A)(ii) of the Code, so that any
amounts or benefits which become vested or payable to any employee of the
Company or any Securityholder in connection with the transactions contemplated
hereby (including payments described in Section 2.7 and Employee Payments
described in Section 6.12(b)(iv)) shall not constitute a “parachute payment”
within the meaning of Section 280G of the Code or result in the disallowance of
a deduction to the Company or the Surviving Corporation under 280G of the Code.

6.11 Resignation of Directors. Except as otherwise directed in writing by Parent
prior to the Closing, the DC Shareholders shall cause each of the directors and
officers of the Company, each of its Subsidiaries and, to the extent such
officers and directors were appointed by and are representatives or designees of
the Company, any of its Subsidiaries or any of the Shareholders, each of the
Project Companies, to submit a letter of resignation as a director and officer
of the Company, each of its Subsidiaries and, to the extent applicable, each of
the Project Companies, effective as of the Closing.

6.12 Employment and Employee Benefits.

(a) Employees. The employees of the Company or the Subsidiaries who are employed
immediately prior to the Closing and who continue their employment with the
Surviving Corporation, Parent or an Affiliate thereof following the Closing Date
are hereinafter referred to as the “Continuing Employees.”

(b) Benefits.

(i) For the one-year period following the Closing Date, Parent shall, or shall
cause its Affiliates to, (A) pay each Continuing Employee, while he or she is
employed by Parent or such Affiliates, base salary or base wages at a rate no
less than the rate of base salary or base wages such Continuing Employee was
paid by the Company immediately prior to the Closing, and (B) pay or provide
other compensation and benefits which are comparable in the aggregate to the
compensation and benefits paid or provided by the Company to such Continuing
Employees immediately prior to the Closing.

(ii) For purposes of eligibility and vesting and determining vacation
entitlement (but not for purposes of benefit accrual under any plan or
eligibility under Parent’s retiree medical plans) under the employee benefit
plans of Parent or its Affiliates providing benefits to Continuing Employees
(the “Parent Plans”), Parent or its Affiliates shall

 

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credit each Continuing Employee with his or her years of service with the
Company, the Subsidiaries and any predecessor entities, to the same extent as
such Continuing Employee was entitled immediately prior to the Closing to credit
for such service under any similar Company Plan. Parent shall, or shall cause
its Affiliates to, honor any exceptions to the normal service crediting rules
applicable to determining vacation entitlement that are described in Schedule
6.12(b)(ii). For calendar year 2008, Parent shall, or shall cause its Affiliates
to, maintain the Company Plan governing vacation entitlement that is listed in
Schedule 3.14(a)(iii). Subject to the foregoing provisions of this
Section 6.12(b)(ii), effective January 1, 2009, such Continuing Employees shall
be entitled to vacation in accordance with the Parent Plan governing vacation
applicable to similarly situated employees of Parent or its Affiliates.
Notwithstanding the foregoing, Parent and its Affiliates shall have no
obligation to provide any paid vacation days to a Continuing Employee for 2008
to the extent such Continuing Employee’s accrued but unused vacation days for
2008 have been satisfied through a payment or reimbursement made by the Company,
Parent or its Affiliates in response to a claim made by such Continuing
Employee. The Parent Plans providing health benefits shall not deny Continuing
Employees coverage on the basis of pre-existing conditions.

(iii) The Company and its Subsidiaries shall, effective prior to the Closing
Date, take all actions necessary to terminate all incentive plans listed on
Schedule 6.12(b)(iii) (the “Incentive Plans”), and to pay out all amounts
payable under the Incentive Plans in full satisfaction of any and all rights
that any participant may have thereunder.

(iv) All amounts to which the Continuing Employees are entitled to, if any, as
reflected on Schedule 6.12(b)(iv) with respect to each such Continuing Employee
(the “Employee Payments”), shall be subject to any required withholding of Taxes
and shall be paid without interest as soon as practicable following the
Effective Time. Unless otherwise required by law, Parent and the Company shall
treat the Employee Payments pursuant to this Section 6.12(b)(iv) as properly
allocable under Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) to the
portion of the Closing Date following Parent’s acquisition of the Company
Consolidated Group and shall not take any inconsistent position therewith.

(c) Nothing contained in this Section 6.12 will confer upon any Continuing
Employee any rights or remedies, including, without limitation, any right to
employment for any specified period under or by reason of this Agreement. The
Company and Parent expressly acknowledge and agree that all provisions contained
in this Section 6.12 with respect to Continuing Employees are included for the
sole benefit of the Company and Parent and, without limiting the generality of
the foregoing, no Continuing Employee or any other Person shall have any rights
as a third party beneficiary or otherwise on account of the provisions contained
in this Section 6.12.

6.13 Termination of Certain Agreements. The Company and each Shareholder, as
applicable, shall, effective as of the Closing, terminate (i) the Amended and
Restated Stockholders’ Agreement (other than sections of such agreement that
survive in accordance with their terms and Article VII thereof) and (ii) the
Amended and Restated Registration Rights Agreement, and shall deliver to Parent
written evidence of such termination. The Shareholders shall cause Diamond
Castle Holdings, LLC to terminate, effective as of the Closing, the Advisory
Services Agreement and shall deliver to Parent written evidence of such
termination.

 

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6.14 Takeover Statutes. If any “fair price,” “moratorium,” “control share
acquisition” or other similar anti-takeover statute, regulation or order by any
Governmental Body is or may become applicable to the Merger or the other
transactions contemplated by this Agreement, the Company and its Board shall
grant such approvals and take such actions as are necessary so that such
transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise act to eliminate or minimize the
effects of such statute or regulation on such transactions.

6.15 Tax Returns; Other Tax Matters.

(a) Tax Returns. The Company, its Subsidiaries and the Managed Projects shall
prepare and file all income and franchise Tax Returns of the Company, its
Subsidiaries and the Managed Projects that are required to be filed on or prior
to the Closing Date. All such Tax Returns shall be prepared in accordance with
(and not take any position that is inconsistent with) past practices unless
otherwise required by Law. The Company, its Subsidiaries and the Managed
Projects shall use commercially reasonable efforts to provide to Parent a draft
completed copy of all such Tax Returns 30 days prior to filing for Parent’s
review and comments; provided, however, that to the extent any such Tax Return
is not completed by such date due to the failure of the Company, its
Subsidiaries and the Managed Projects having received information relating to
Taxes from the Specified Projects, the Company, its Subsidiaries and the Managed
Projects shall provide to Parent drafts of such Tax Returns without the missing
information by such date and shall as promptly as possible provide to Parent
revised draft copies of such Tax Return once such Tax Returns are completed to
reflect such missing information. Such Tax Returns shall be revised to reflect
any comments provided by Parent to the extent such comments relate to a matter
that is reasonably likely to adversely affect the Parent, the Company, its
Subsidiaries or the Managed Projects to the extent permitted under Applicable
Law.

(b) Termination of Tax Sharing Agreement and Powers of Attorney. Within 30 days
hereof the Company shall provide to Parent a list of all powers of attorney
relating to Taxes and of the Tax sharing, Tax allocation or other similar
agreements or arrangements relating to sharing or payment of Taxes that involve
or are binding on the Company, any of its Subsidiaries or any Project Company.
Unless otherwise directed by Parent, as of the day prior to the Closing Date,
the Company, its Subsidiaries and the Project Companies that are parties or are
otherwise bound by any such agreements or arrangements shall, to the extent
unilaterally permitted, enter into a termination agreement that will cause
(i) such arrangements and agreements to be terminated as of the day immediately
prior to the Closing Date and (ii) such agreements and arrangements to have no
force or effect thereafter.

6.16 Merger Sub. Parent will take all action necessary to cause Merger Sub to
perform its obligations under this Agreement and to consummate the Merger on the
terms and conditions set forth in this Agreement.

ARTICLE VII

CONDITIONS TO CLOSING

 

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7.1 Conditions Precedent to Obligations of Parent and Merger Sub. The obligation
of Parent and Merger Sub to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, on or prior to the Closing Date, of
each of the following conditions precedent (any or all of which may be waived by
Parent in whole or in part to the extent permitted by applicable Law):

(a) The representations and warranties of the Company contained in this
Agreement shall be true and correct (without giving effect to any limitation on
any representation or warranty indicated by the words “Material Adverse Effect,”
“in all material respects,” “in any material respect,” “material” or
“materially”) as of the Closing as though made at and as of the Closing (except
to the extent expressly made as of an earlier date, in which case as of such
earlier date), except where the failure of any such representations and
warranties to be so true and correct would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and Parent shall
have received a certificate signed by an authorized officer of the Company,
dated the Closing Date, to the foregoing effect;

(b) the representations and warranties of the Shareholders contained in this
Agreement shall be true and correct (without giving effect to any limitation on
any representation or warranty indicated by the words “Material Adverse Effect,”
“in all material respects,” “in any material respect,” “material” or
“materially”) as of the Closing as though made at and as of the Closing (except
to the extent expressly made as of another date, in which case as of such other
date), except where the failure of any such representations and warranties to be
so true and correct would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect, and Parent shall have received a
certificate signed by the Shareholders’ Representative, dated the Closing Date,
to the foregoing effect;

(c) the Company shall have performed and complied in all material respects with
all obligations and agreements required by this Agreement to be performed or
complied with by it on or prior to the Closing Date, and Parent shall have
received a certificate signed by an authorized officer of the Company, dated the
Closing Date, to the foregoing effect;

(d) each of the Shareholders shall have performed and complied in all material
respects with all obligations and agreements required by this Agreement to be
performed or complied with by them on or prior to the Closing Date, and Parent
shall have received a certificate signed by the Shareholders’ Representative,
dated the Closing Date, to the foregoing effect;

(e) there shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby; it being agreed that the parties hereto
shall promptly appeal any adverse determination which is not nonappealable (and
pursue such appeal with reasonable diligence); provided, however, that this
condition shall not be available to a party if such Order was primarily due to
the failure of such party to perform any of its obligations under this
Agreement;

(f) the waiting period applicable to the transactions contemplated by this
Agreement under the HSR Act shall have expired or early termination shall have
been

 

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granted, and the Parties hereto shall have obtained approval under
Section 39.158 of PURA and authorization under Section 203 of the Federal Power
Act;

(g) the Company and its Subsidiaries shall not have suffered a Material Adverse
Effect since the date of this Agreement; and

(h) each of Shareholders shall provide to Parent a certificate satisfying the
requirements of Treasury Regulation Section 1.1445-2(b).

7.2 Conditions Precedent to Obligations of the Company and Shareholders. The
obligations of the Company and the Shareholders to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, prior to or on
the Closing Date, of each of the following conditions precedent (any or all of
which may be waived by the Shareholders in whole or in part to the extent
permitted by applicable Law):

(a) the representations and warranties of Parent and Merger Sub set forth in
this Agreement qualified as to materiality shall be true and correct, and those
not so qualified shall be true and correct in all material respects, at and as
of the Closing Date as though made on the Closing Date, except to the extent
such representations and warranties relate to another date (in which case such
representations and warranties qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct in all material
respects, on and as of such other date), and the Shareholders shall have
received a certificate signed by an authorized officer of Parent, dated the
Closing Date, to the foregoing effect;

(b) Parent and Merger Sub shall have performed and complied in all material
respects with all obligations and agreements required by this Agreement to be
performed or complied with by Parent or Merger Sub on or prior to the Closing
Date, and the Shareholders shall have received a certificate signed by an
authorized officer of Parent, dated the Closing Date, to the foregoing effect;

(c) there shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby; it being agreed that the parties hereto
shall promptly appeal any adverse determination which is not nonappealable (and
pursue such appeal with reasonable diligence); provided, however, that this
condition shall not be available to a party if such Order was primarily due to
the failure of such party to perform any of its obligations under this
Agreement;

(d) the waiting period applicable to the transactions contemplated by this
Agreement under the HSR Act shall have expired or early termination shall have
been granted and the Parties hereto shall have obtained approval under
Section 39.158 of PURA and authorization under Section 203 of the Federal Power
Act; and

(e) (i) each Shareholder and its Affiliates (other than the Company, the
Subsidiaries and the Project Companies) that is obligated as a guarantor under
the BLB Loan Agreement (“Shareholders’ Guarantee”) shall have been removed and
released from any Liability with respect thereto pursuant to documentation
reasonably satisfactory, in form and substance, to the Shareholders and
(ii) Parent or one or more of its Affiliates shall have been

 

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substituted in all respects for the Shareholders and their Affiliates (other
than the Company, the Subsidiaries and the Project Companies).

7.3 Frustration of Closing Conditions. None of the Company, Parent or the
Shareholders may rely on the failure of any condition set forth in Sections 7.1
or 7.2, as the case may be, if such failure was caused by such party’s failure
to comply with any provision of this Agreement.

ARTICLE VIII

TERMINATION

8.1 Termination of Agreement. This Agreement may be terminated and the
transactions contemplated hereby abandoned prior to the Closing as follows:

(a) by the mutual written consent of the Shareholders and Parent;

(b) by Parent if any of the Shareholders or the Company shall have breached or
failed to perform any of their respective representations, warranties, covenants
or agreements set forth in this Agreement that are required of the Shareholders
and the Company on or prior to the Closing, or if any representation or warranty
of the Shareholders or the Company shall have become untrue, in either case such
that the conditions set forth in Sections 7.1(a) or 7.1(b) would not be
satisfied and such breach is incapable of being cured or, if capable of being
cured, shall not have been cured within twenty (20) Business Days following
receipt by the Shareholders or the Company, as applicable, of notice of such
breach from Parent; or

(c) by the Shareholders if Parent shall have breached or failed to perform any
of its representations, warranties, covenants or agreements set forth in this
Agreement that are required of Parent on or prior to the Closing, or if any
representation or warranty of Parent shall have become untrue, in either case
such that the conditions set forth in Sections 7.2(a) or 7.2(b) would not be
satisfied and such breach is incapable of being cured or, if capable of being
cured, shall not have been cured within twenty (20) Business Days following
receipt by Parent of notice of such breach from the Shareholders or the Company;
or

(d) by either the Shareholders or Parent if there shall be in effect a final
nonappealable Order of a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby; it being agreed that the parties hereto shall
promptly appeal any adverse determination which is not nonappealable (and pursue
such appeal with reasonable diligence); provided, however, that the right to
terminate this Agreement under this clause (d) shall not be available to a party
if such Order was primarily due to the failure of such party to perform any of
its obligations under this Agreement;

(e) by the Shareholders or Parent if the Closing shall not have been consummated
on or before August 25, 2008 (such date, as it may be extended herein, the
“Termination Date”); provided, however, that either Parent or the Shareholders
shall have the option to extend the Termination Date for one additional period
not to exceed 60 days if all other conditions to consummation of the Closing are
satisfied or capable of then being satisfied and the

 

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sole reason that the Closing has not been consummated by such date is that the
conditions set forth in Sections 7.1(f) and 7.2(d) have not been satisfied and
Parent, the Shareholders and the Company are still attempting to satisfy such
conditions; provided, further, that the right to terminate this Agreement
pursuant to this clause (e) shall not be available to any party whose failure to
fulfill or cause to be fulfilled any obligation under this Agreement has been
the primary cause of the failure of the Closing to occur on or before such date;

8.2 Procedure Upon Termination. In the event of termination and abandonment
pursuant to Section 8.1, written notice thereof shall forthwith be given to the
other parties hereto and this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned without further action by any of the
parties hereto.

8.3 Effect of Termination.

(a) In the event that this Agreement is validly terminated as provided herein,
then each of the parties shall be relieved of their duties and obligations
arising under this Agreement after the date of such termination and such
termination shall be without liability to Parent, the Shareholders or the
Company; provided that no such termination shall relieve any party hereto from
liability for any intentional breach of this Agreement. Notwithstanding anything
to the contrary herein, the obligations of the parties set forth in this
Section 8.3, Section 6.6 (Confidentiality), Section 6.9 (Publicity) and
Section 10.1 (Expenses) hereof shall survive any such termination and shall be
enforceable hereunder. The damages recoverable by the non-breaching party shall
include all attorneys’ fees reasonably incurred by such party in connection with
the transactions contemplated hereby.

(b) Except as otherwise provided therein, the Confidentiality Agreement shall
survive any termination of this Agreement and nothing in this Section 8.3 shall
relieve the Company or Parent of their obligations under the Confidentiality
Agreement.

ARTICLE IX

INDEMNIFICATION

9.1 Survival of Representations, Warranties and Covenants. The representations,
warranties and covenants of the parties contained in this Agreement shall
survive the Closing until the date that is * * * months after the Closing Date
(the “Survival Expiration Date”); provided that the representations and
warranties set forth in Sections 3.2 and 4.2 and the first sentence of
Section 4.4 shall survive * * *. Except as provided in the preceding sentence,
after the Survival Expiration Date, the representations, warranties and
covenants of the parties shall terminate and have no further force and effect;
provided, however, that any representation, warranty or covenant that is the
subject of a claim for indemnification under this Article IX of which notice to
the Shareholders’ Representative or Parent, as applicable, is given in writing
setting forth the specific claim and the basis therefore in reasonable detail
prior to the Survival Expiration Date shall survive with respect to such claim
until the final resolution thereof.

 

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9.2 Indemnification by the Securityholders. Subject to the provisions of this
Article IX and the terms of the Escrow Agreement, from and after the Closing
Date, each of the Securityholders other than the DC Shareholders shall,
severally (on a pro rata basis based on such Securityholder’s Escrow Percentage)
and not jointly, and the DC Shareholders shall, jointly and severally, with each
other DC Shareholder (for purposes of clarity, not jointly and severally, but
rather severally and not jointly, with Securityholders other than the DC
Shareholders and the DC Shareholders’ aggregate liability shall be based on the
DC Shareholders’ aggregate Escrow Percentage), indemnify, defend and hold
harmless Parent and its directors, officers, employees, Affiliates, agents and
representatives and each of their successors in interest and permitted assigns
(collectively, the “Parent Indemnified Parties”), from and against any damages,
losses, liabilities, obligations, claims of any kind, interest or expenses
(including, without limitation, reasonable attorneys’ fees and expenses, but
excluding punitive, exemplary, special, or indirect consequential damages (other
than with respect to Third Party Claims for punitive, exemplary, special or
indirect consequential damages), or any damages measured by lost profits or a
multiple of earnings) (“Loss”), including any Loss suffered by Parent indirectly
due to a Loss at the Surviving Corporation, as a result of or arising out of
(i) the failure of any representation or warranty made by the Company in this
Agreement or in any certificate delivered by the Company hereunder to be true
and correct as of the date hereof or the Closing Date (or on the date when made
in the case of any representation or warranty which specifically relates to an
earlier date), or (ii) any breach by the Company of any of its express covenants
or agreements contained herein which are to be performed by the Company on or
before the Closing Date.

9.3 Indemnification by the Shareholders. Subject to the provisions of this
Article IX and the terms of the Escrow Agreement, from and after the Closing
Date, each of the Shareholders other than the DC Shareholders shall, severally
and not jointly, and the DC Shareholders shall, jointly and severally, with each
other DC Shareholder (for purposes of clarity, not jointly and severally, but
rather severally and not jointly, with Shareholders other than the DC
Shareholders), indemnify, defend and hold harmless the Parent Indemnified
Parties, from and against all Losses, including any Loss suffered by Parent
indirectly due to a Loss at the Surviving Corporation, as a result of or arising
out of (i) the failure of any representation or warranty made by such
Shareholder in Article IV of this Agreement or in any certificate delivered by
such Shareholder hereunder to be true and correct as of the date hereof or the
Closing Date (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date), or (ii) any breach by
such Shareholder of any of its express covenants or agreements contained herein.

9.4 Indemnification by Parent. Subject to Section 9.6, Parent hereby agrees to
indemnify and hold harmless the Securityholders and their respective directors,
officers, employees, Affiliates, representatives and agents, and each of their
successors in interest and permitted assigns (collectively, the “Securityholder
Indemnified Parties”) from any Loss as a result of or arising out of (i) the
failure of any representation or warranty made by Parent or Merger Sub in this
Agreement or in any certificate delivered by Parent hereunder to be true and
correct as of the date hereof or the Closing Date (or on the date when made in
the case of any representation or warranty which specifically relates to an
earlier date), and (ii) any breach by Parent or Merger Sub of any of its express
covenants or agreements contained herein.

9.5 Claims.

 

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(a) Any party seeking indemnification under Sections 9.2, 9.3 or 9.4 (an
“Indemnified Party”) shall promptly give the party from whom indemnification is
being sought (such notified party, the “Responsible Party”) notice (a “Claim
Notice”) of any matter which such Indemnified Party has determined has given
rise to a right of indemnification under this Agreement within 75 days of such
determination, stating in reasonable detail the nature of the claim; provided
that failure to deliver a Claim Notice within such time period shall not
constitute a waiver of the Indemnified Party’s rights to indemnification
hereunder unless and only to the extent that such failure shall have actually
prejudiced the Responsible Party. With respect to any recovery or
indemnification sought by an Indemnified Party from the Responsible Party that
does not involve a Third-Party Claim (as defined below), if the Responsible
Party does not notify the Indemnified Party within 30 days from its receipt of
the Claim Notice that the Responsible Party disputes such claim (the “Dispute
Notice”), the Responsible Party shall be deemed to have accepted and agreed with
such claim. If the Responsible Party has disputed a claim for indemnification
(including any Third-Party Claim), the Responsible Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution to such dispute. If
the Responsible Party and the Indemnified Party cannot resolve such dispute in
30 days after delivery of the Dispute Notice, such dispute shall be resolved by
litigation in an appropriate court of law.

(b) If a claim, action, suit or proceeding by a third party (a “Third Party
Claim”) is made against any Indemnified Party, and if such Indemnified Party
intends to seek indemnity with respect thereto under this Article IX, such
Indemnified Party shall promptly notify the Responsible Party of such claims;
provided that the failure to so notify shall not relieve the Responsible Party
of its obligations hereunder, except to the extent that the Responsible Party is
actually prejudiced thereby. The Responsible Party shall have 90 days after
receipt of such notice to provide written notice to the Indemnified Party that
it is assuming the conduct and control of the settlement or defense of said
claim, action, suit or proceeding, through counsel reasonably acceptable to the
Indemnified Party at the expense of the Responsible Party; provided that, if the
Responsible Party assumes such settlement or defense, the Responsible Party
shall be bound by and promptly pay the full amount of any final judgment
(subject to the limitations set forth herein) from which no further appeal may
be taken. The Indemnified Party shall cooperate with the Responsible Party in
connection with such settlement or defense; provided that the Responsible Party
shall permit the Indemnified Party to participate in such settlement or defense
through counsel chosen by such Indemnified Party, provided that, the fees and
expenses of such counsel shall be borne by such Indemnified Party. So long as
the Responsible Party is reasonably contesting any such claim in good faith, the
Indemnified Party shall not pay or settle any such claim. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay or settle any such
claim, provided that in such event it shall waive any right to indemnity
therefor by the Responsible Party or from the Escrow Account, as the case may
be, for such claim unless the Responsible Party shall have consented to such
payment or settlement. The Responsible Party shall not, except with the consent
of the Indemnified Party, which consent shall not be unreasonably withheld,
enter into any settlement with respect to any such claim.

(c) Any Indemnified Party shall cooperate in all reasonable respects with the
Responsible Party and its attorneys in the investigation, trial and defense of
any Third Party Claim and any appeal arising therefrom and shall furnish such
records, information and testimony, subject to appropriate and reasonable
confidentiality agreements, and attend such

 

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conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested in connection therewith. Such cooperation shall include
access during normal business hours afforded to the Responsible Party and its
agents and representatives to, and reasonable retention by the Indemnified Party
of, records and information which have been identified by the Responsible Party
as being reasonably relevant to such Third Party Claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The parties shall cooperate with
each other in any notifications to insurers.

9.6 Certain Limitations on Indemnification.

(a) Notwithstanding any other provisions of this Article IX, the Securityholders
shall have no indemnification obligations for Losses under Sections 9.2 or 9.3,
and Parent shall have no indemnification obligations for Losses under
Section 9.4, unless the aggregate amount of all such Losses by Parent
Indemnified Parties, on the one hand, or the Securityholder Indemnified Parties,
on the other hand, exceeds * * * (the “Basket”), and then only to the extent of
such excess; provided that the limitations contained in this Section 9.6(a)
shall not limit the liability of any Securityholder with respect to its
indemnification obligations in respect of any Losses relating to a breach under
Sections 3.2 and 4.2 and the first sentence of Section 4.4.

(b) Except with respect to any claims arising from fraud, the aggregate maximum
liability to be paid by the Securityholders under Sections 9.2 or 9.3, will be
limited to the amount of available funds in the Escrow Account (whether or not
reduced by this Article IX) and, after the Closing, on the date that the amount
of cash in the Escrow Account is reduced to zero, Parent Indemnified Parties
shall have no further rights to indemnification under this Article IX; provided,
however, that (x) the foregoing shall not apply to any Losses relating to the
breach by (1) the Company of its representations and warranties contained in
Section 3.2, or (2) any Shareholder of its respective representations and
warranties contained in Section 4.2 and the first sentence of Section 4.4, and
(y) all indemnification claims in respect of Losses of the type described in
clause (x)(1) above shall be made directly against the Securityholders and not
from the Escrow Account, and all indemnification claims in respect of Losses of
the type described in clause (x)(2) above shall be made directly against the
relevant Shareholder and not from the Escrow Account; provided, that in the
event that any such Losses have not been paid in full at any time that funds are
to be released from the Escrow Account to one or more Securityholders with an
obligation to pay such Losses (including with respect to the DC Shareholders,
the obligations of the other DC Shareholders), funds from the Escrow Account
that are attributable to such Securityholders shall be paid to the applicable
Parent Indemnified Parties in satisfaction of any such Losses. Notwithstanding
the foregoing, (i) the liability of a Securityholder that is not a DC
Shareholder for Losses relating to this Agreement, including, without
limitation, Losses relating to any breach by the Company of any of its
representations and warranties in Section 3.2 (or any such Securityholder’s
breach of its representations and warranties contained in Section 4.2 or the
first sentence of Section 4.4), or otherwise with respect to any claim for fraud
hereunder, shall be limited to an amount equal to the aggregate payment received
by such Securityholder at the Effective Time pursuant to Section 2.6, 2.7 or 2.8
hereof, as applicable, and any available funds in the Escrow Account and the
Shareholders’ Representative Expense Account attributable to such
Securityholder; and (ii) the liability of the DC Shareholders for

 

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Losses relating to this Agreement, including, without limitation, Losses
relating to any breach by the Company of any of its representations and
warranties in Section 3.2 (or any DC Shareholder’s breach of its representations
and warranties contained in Section 4.2 or the first sentence of Section 4.4),
or otherwise with respect to any claim for fraud hereunder, shall, collectively,
be limited to an amount equal to the aggregate payment received by the DC
Shareholders at the Effective Time pursuant to Section 2.6 hereof and any
available funds in the Escrow Account and the Shareholders’ Representative
Expense Account attributable to any of the DC Shareholders.

(c) Except with respect to any claims arising from fraud (which will be subject
to the last proviso in Section 9.6(b) above), the aggregate maximum liability to
be paid to Parent under Section 9.3 will be limited to * * *; provided that the
limitations contained in this Section 9.6(c) shall not limit the liability to be
paid to Parent with respect to any Losses relating to a breach of the
representations and warranties in Sections 3.2, 4.2 or the first sentence of
Section 4.4.

9.7 Calculation of Losses.

(a) The amount of any Losses for which indemnification is provided under this
Article IX shall be net of any amounts actually recovered or recoverable by the
Indemnified Party under insurance policies or otherwise with respect to such
Losses.

(b) For purposes of this Agreement, with respect to any claim for indemnity made
by the Parent Indemnified Parties for Losses relating to, resulting from or
arising out of any Tax matters, the amount of Losses shall be calculated without
taking into account (i) the payment of the Option Consideration pursuant to
Section 2.7 of this Agreement, (ii) the payment of any amounts payable to
Transaction Bonus Recipients in respect of Unallocated Class TV Stock Options
pursuant to Section 2.7 of this Agreement, (iii) the payment of the Goldman
Sachs Fee and (iv) the operational net operating loss generated by the Company
or its Subsidiaries in the taxable year ending on the Closing Date calculated
without taking into account the payment of any expenses relating to the
transactions contemplated by this Agreement (including without taking into
account the expenses described in the foregoing clauses (i), (ii) and (iii)).
For the avoidance of doubt and notwithstanding the last sentence of
Section 6.12(b)(iv), for purposes of the calculation described in the previous
sentence, the amount of Losses shall be calculated as though all Company
expenses relating to the transactions contemplated by this Agreement not
otherwise specifically excluded from the calculation of Losses are allocated to
the taxable period ending on the Closing Date or the pre-closing portion of a
Straddle Period.

(c) Notwithstanding anything to the contrary elsewhere in this Agreement, no
party shall, in any event, be liable to any other Person in respect of any
claims arising out of the transactions contemplated by this Agreement for any
punitive, exemplary, special or indirect consequential damages (other than with
respect to Third Party Claims for punitive, exemplary, special or indirect
consequential damages), or any damages measured by lost profits or a multiple of
earnings of such other Person.

 

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(d) Subject to the immediately succeeding sentence, the amount of the indemnity
payments required to be made pursuant to this Agreement shall be net of any
reduction in the Tax liability of the Parent Indemnified Parties that is
actually realized and recognized as a result of the claiming of any deduction,
credit or other allowance against Taxes for a Loss by a Parent Indemnified Party
for which such indemnity payment will be made (such reduction in Tax liability,
a “Tax Benefit”); provided, that such Tax Benefit shall be computed based on the
assumption that the Parent Indemnified Parties shall be entitled to claim such
deduction, credit or other allowance against Taxes after first taking into
account all other Tax attributes of the Parent Indemnified Parties. For purposes
of calculating the Tax Benefit described above with respect to any such benefit
that is realized over more than one tax year, the parties agree that it will be
assumed that such Tax Benefit will be actually realized and recognized over the
shortest period allowable under law and such Tax Benefit will be calculated on a
present-value basis assuming a tax rate of 40% and using a discount factor equal
to 6.25%; provided, however, that no amount shall be taken into account as a Tax
Benefit to the extent it relates to a Tax adjustment that is not amortizable,
depreciable or deductible. Notwithstanding any provision in this Agreement or
the Escrow Agreement to the contrary, in the event a Parent Indemnified Party
makes a claim for indemnity and the related Tax Benefit has not been actually
realized and recognized in the same or a prior year in which an indemnity
payment is paid, the Securityholders agree that they shall not dispute the
amount of such indemnity payment on the basis that the Tax Benefit related
thereto is unknown at the time such indemnity payment is made, and the Parent
Indemnified Parties shall be entitled to receive under the Escrow Agreement the
amount of such indemnity payment without offset for the related Tax Benefit, and
the Parent Indemnified Parties agree that in the year in which the related Tax
Benefit is actually realized and recognized, it shall pay an amount equal to
such Tax Benefit (calculated in accordance with the previous two sentences) to
an account designated by the Sellers’ Representative in immediately available
funds as promptly as practicable following the occurrence of such reduction in
the Tax liability. Notwithstanding any provision in this Agreement to the
contrary, none of the Securityholders will have any right to review or otherwise
have access to any information regarding any Tax Return that is filed by a
Parent Indemnified Party, provided that, in the year of an indemnity payment and
in the year that a Parent Indemnified Party actually recognizes and realizes a
Tax Benefit, Parent shall provide to the Shareholders’ Representative a schedule
setting forth its calculation of the Tax Benefit that is described under this
provision for the Shareholders’ Representative review. For purposes of
clarification, the parties agree that no amount shall be taken into account as a
Tax Benefit to the extent the Company, its Subsidiaries or the Underlying
Projects are required to indemnify another party with respect to such Tax
Benefit.

9.8 Exclusive Remedy. From and after the Closing, (i) indemnification pursuant
to the provisions of this Article IX shall be the sole and exclusive remedy for
the parties hereto for any misrepresentation or breach of any warranty, covenant
or other provision contained in this Agreement or in any certificate delivered
hereunder and with respect to all actions or claims relating directly or
indirectly to this Agreement or any other agreement executed in connection
herewith and the transactions contemplated hereby and thereby, and (ii) except
as provided in Section 9.6(b), the amounts recoverable from the Securityholders
(including the Shareholders) for any and all Losses or other claims relating to
or arising from this Agreement or in connection with the transactions
contemplated hereby (whether due to predecessor or successor liability,
contract, tort, strict liability or otherwise, or arising under any

 

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statute, regulation or ordinance) including, without limitation, any exhibit,
Schedule or certificate delivered hereunder, shall be recoverable solely and
exclusively from the Escrow Account. In furtherance of the foregoing, absent
fraud, the parties hereby waive, to the fullest extent permitted by applicable
Law, any and all other rights, claims and causes of action known or unknown,
foreseen or unforeseen, which exist or may arise in the future, that it may have
against the Securityholders, the Company or Parent, as the case may be, arising
under or based upon any United States federal, state, local or foreign Law
(including any such Law relating to matters arising under or based upon any
Environmental Laws, or any securities Law, common Law or otherwise).

9.9 Mitigation. Each of the parties agrees to take all reasonable steps to
mitigate its respective Losses upon and after gaining actual knowledge of any
event or condition that would reasonably be expected to result in Losses that
are indemnifiable hereunder, including, without limitation, seeking recovery
(with the assistance of the Shareholders, as requested) under indemnification
claims available to the Company under that certain Stock Subscription Agreement,
dated October 12, 2005, by and among CEC Wind Acquisition, LLC, the Company,
Catamount Resources Corporation and Central Vermont Public Service Corporation.

9.10 Tax Treatment of Indemnity Payments. The parties hereby agree that any and
all payments made pursuant to this Agreement shall, to the maximum extent
permitted by applicable Law, be treated for all Tax purposes as an adjustment to
the Purchase Price.

ARTICLE X

MISCELLANEOUS

10.1 Expenses. Parent shall bear all fees and expenses incurred by Parent and
its Affiliates and representatives in connection with the negotiation and
execution of this Agreement and each other agreement, document and instrument
contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby. The Company shall bear all expenses incurred by
the Company and the Shareholders and their Affiliates in connection with the
negotiation and execution of this Agreement and each other agreement, document
and instrument contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby. All Transfer Taxes incurred in
connection with this Agreement and the transactions contemplated hereby shall be
borne by Parent. Parent will file, to the extent required by applicable law, all
necessary Tax Returns and other documentation with respect to all such Transfer
Taxes.

10.2 Shareholders’ Representative.

(a) Each Shareholder hereby irrevocably appoints Diamond Castle Partners IV,
L.P. (the “Shareholders’ Representative”) as such Shareholder’s representative,
attorney-in-fact and agent, with full power of substitution, and to act on
behalf of such Shareholder in any amendment of or litigation or arbitration
involving this Agreement and the Escrow Agreement and to do or refrain from
doing all such further acts and things, and to execute and deliver all such
documents, as such Shareholders’ Representative shall deem

 

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necessary or appropriate in conjunction with any of the transactions
contemplated by this Agreement and the Escrow Agreement including, without
limitation, the power:

(i) to take all action necessary or desirable in connection with the waiver of
any condition to the obligations of the Shareholders to consummate the
transactions contemplated by this Agreement;

(ii) to negotiate, execute and deliver (A) the Escrow Agreement (with all such
modifications or changes thereto as to which the Shareholders’ Representative,
in its sole discretion, shall have consented), and (B) all ancillary agreements,
statements, certificates, statements, notices, approvals, extensions, waivers,
undertakings, amendments and other documents required or permitted to given in
connection with the consummation of the transactions contemplated by this
Agreement and the Escrow Agreement (it being understood that such Shareholder
shall execute and deliver any such documents which the Shareholders’
Representative agrees to execute);

(iii) to collect and receive any amounts due or paid for the benefit of such
Shareholder under this Agreement and to disburse such amounts to such
Shareholder in accordance with its respective Escrow Percentage;

(iv) to enforce and protect the rights and interests of such Shareholder arising
out of or under or in any manner relating to this Agreement and the Escrow
Agreement, and each other agreement, document, instrument or certificate
referred to herein or therein or the transactions provided for herein or therein
(including without limitation, in connection with any and all claims for
indemnification brought by any indemnifying party under Article IX hereof);

(v) to enforce payment of amounts due to such Shareholder from the Escrow Funds
and any other amounts payable to such Shareholder under this Agreement or the
Escrow Agreement, in each case, on behalf of such Shareholder to the extent of
such Shareholder’s Escrow Percentage, in the name of the Shareholders’
Representative or, if the Shareholders’ Representative so elects, in the names
of such Shareholder;

(vi) to cause to be paid out of the Escrow Fund the full amount of any Losses
arising out of the indemnification provisions set forth in Article IX hereof, or
any amounts payable by such Shareholder to an indemnified party in respect of
any compromise or settlement of any claim for indemnification under such Article
IX agreed to by the Shareholders’ Representative in its sole discretion;

(vii) to refrain from enforcing any right of such Shareholder arising out of or
under or in any manner relating to this Agreement or the Escrow Agreement;

(viii) to utilize the funds comprising the Escrow Amount to make any payment
which is required pursuant to this Agreement or the Escrow Agreement;

(ix) to terminate this Agreement if the Shareholders are entitled to do so;

 

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(x) to give and receive all notices and communications to be given or received
under this Agreement and to receive service of process in connection with the
any claims under this Agreement, including service of process in connection with
arbitration; and

(xi) to take all actions which under this Agreement may be taken by the
Shareholders and to do or refrain from doing any further act or deed on behalf
of the Shareholders which the Shareholders’ Representative deems necessary or
appropriate in his sole discretion relating to the subject matter of this
Agreement as fully and completely as such Shareholder could do if personally
present.

(b) The Shareholders’ Representative will not be liable for any act taken or
omitted by it as permitted under this Agreement, except if such act is taken or
omitted in bad faith or by intentional misconduct. The Shareholders’
Representative will also be fully protected in relying upon any written notice,
demand, certificate or document that it in good faith believes to be genuine
(including facsimiles thereof).

(c) The Shareholders’ Representative shall not be paid any fee for services to
be rendered hereunder. All reasonable fees and expenses incurred by the
Shareholders’ Representative in performing its duties hereunder or under the
Escrow Agreement (including any fees and expenses of legal counsel retained by
such Representative) shall be borne by the Securityholders (severally as to each
Securityholder only and not jointly as to or with any other Securityholder)
according to their respective Escrow Percentages; provided, that, to the extent
practical, the Shareholders’ Representative shall cause Parent or the Escrow
Agent, as applicable, to deduct such fees and expenses from the amounts
otherwise distributable to the Securityholders. In particular and without
limitation, the Shareholders acknowledge that the sum of $250,000 is being
deposited by Parent into an account designated by the Shareholders’
Representative in accordance with Section 2.8(b) hereof (the “Shareholders’
Representative Expense Amount”), to be used for anticipated administrative
expenses. At such time that the Shareholders’ Representative believes, in its
sole and absolute discretion, that no additional administrative expenses will be
incurred, the Shareholders’ Representative shall distribute any remaining funds
from the Shareholders’ Representative Expense Amount to the Securityholders,
according to their respective Escrow Percentages. If the expenses of the
Shareholders’ Representative exceed the Shareholders’ Representative Expense
Amount, (i) such expenses shall be borne by the Securityholders (severally as to
each Securityholder only and not jointly as to or with any other Securityholder)
according to their respective Escrow Percentages immediately prior to the
Effective Time and (ii) each of the Shareholders hereby authorizes the
Shareholders’ Representative to apply proceeds otherwise distributable to such
Shareholder pursuant to the Escrow Agreement to satisfy any of such
Shareholder’s obligations under this Section 10.2.

10.3 Specific Performance. Each party hereto acknowledges and agrees that a
breach of this Agreement would cause irreparable damage to the other party and
that the other party will not have an adequate remedy at law. Therefore, each
party shall be entitled to seek enforcement of this Agreement by a decree of
specific performance issued by any court of competent jurisdiction, and
appropriate injunctive relief may be applied for in connection therewith. Such
remedies shall, however, be cumulative and not exclusive and shall be in
addition to any other remedies which any party may have under this Agreement or
otherwise.

 

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10.4 Submission to Jurisdiction; Consent to Service of Process; Waiver of Jury
Trial.

(a) The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of any federal or state court located within the borough of
Manhattan of the City, County and State of New York, over any dispute arising
out of or relating to this Agreement or any of the transactions contemplated
hereby and each party hereby irrevocably agrees that all claims in respect of
such dispute (whether in contract or tort) or any suit, action proceeding
related thereto may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the parties hereto agrees that a judgment
in any such dispute may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.

(b) Each of the parties hereto hereby consents to process being served by any
party to this Agreement in any suit, action or proceeding by delivery of a copy
thereof in accordance with the provisions of Section 10.7.

(c) THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY, OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.

10.5 Entire Agreement; Amendments and Waivers. This Agreement (including the
schedules and exhibits hereto), the Confidentiality Agreement, the Shareholder
Documents, and the Parent Documents represent the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and thereof and supersedes all other prior understandings and agreements, both
written and oral, among the parties with respect to the subject matter hereof
and thereof, and can be amended, supplemented or changed, and any provision
hereof can be waived, only by written instrument making specific reference to
this Agreement signed by the party against whom enforcement of any such
amendment, supplement, modification or waiver is sought. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a further or continuing waiver of such breach or as a waiver of any
other or subsequent breach. No failure on the part of any party to exercise, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power or
remedy by such party

 

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preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by Law.

10.6 Governing Law. This Agreement, and all claims or causes of action (whether
in contract or tort) that may be based upon, arise out of or relate to this
Agreement or the negotiation, execution or performance of this Agreement
(including any claim or cause of action based upon, arising out of or related to
any representation or warranty made in or in connection with this Agreement or
as an inducement to enter this Agreement) shall be governed and construed and
enforced in accordance with the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of the law of any jurisdiction other than the State of New York.

10.7 Notices. All notices and other communications under this Agreement shall be
in writing and shall be deemed given (a) when delivered personally by hand (with
written confirmation of receipt), (b) the day of transmission when sent by
facsimile (with written confirmation of transmission) or (c) one Business Day
following the day sent by overnight courier (with written confirmation of
receipt), in each case at the following addresses and facsimile numbers (or to
such other address or facsimile number as a party may have specified by notice
given to the other party pursuant to this provision):

 

If to the Company (prior to Closing), to:

Catamount Energy Corporation

71 Allen Street, Suite 101

Rutland, VT 05701

Facsimile:    (802) 772-6799 Attention:    James Moore With a copy to (which
shall not constitute notice):

Diamond Castle Holdings, LLC

280 Park Avenue

New York, NY 10017

Facsimile:    (212) 983-1234 Attention:    Ari J. Benacerraf    Daniel H. Clare
and   

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Facsimile:    (212) 310-8007 Attention:    David M. Blittner If to the
Shareholders, to the Shareholders’s Representative:

 

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Diamond Castle Partners IV, L.P.

c/o Diamond Castle Holdings, LLC

280 Park Avenue

New York, NY 10017

Facsimile:    (212) 983-1234 Attention:    Ari J. Benacerraf    Daniel H. Clare
With a copy to (which shall not constitute notice): Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Facsimile:    (212) 310-8007 Attention:    David M. Blittner if to Parent or to
Merger Sub, to:

DEGS Wind I, LLC

c/o Duke Energy Corporation

7000 North Mopac

Suite 475

Austin, TX 78731

Facsimile:    (512) 241-0507 Attention:    David B. Marks With a copy to (which
shall not constitute notice):

DEGS Wind I, LLC

c/o Duke Energy Corporation

7000 North Mopac

Suite 475 Austin, TX 78731 Facsimile:    (512) 241-0507 Attention:    Theodore
D. Matula and   

Dewey & LeBoeuf LLP

1301 Avenue of the Americas

New York, NY 10019

Facsimile:    (212) 259-6333 Attention:    John G. Klauberg    Frederick J. Lark

10.8 Severability. If any term or other provision of this Agreement is invalid,
illegal, or incapable of being enforced by any law or public policy, all other
terms or provisions of this Agreement shall nevertheless remain in full force
and effect so long as the economic or

 

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legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal, or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.

10.9 Binding Effect; Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns. Nothing in this Agreement shall create or be deemed to create any third
party beneficiary rights in any person or entity not a party to this Agreement.
No assignment of this Agreement or of any rights or obligations hereunder may be
made by the Shareholders or the Company (by operation of law or otherwise)
without the prior written consent of the other parties hereto and any attempted
assignment without the required consent shall be void. No assignment of any
obligations hereunder shall relieve the parties hereto of any such obligations.
Upon any such permitted assignment, the references in this Agreement to Parent
shall also apply to any assignee of Parent unless the context otherwise
requires.

10.10 Non-Recourse. No past, present or future director, officer, employee,
incorporator, member, partner, stockholder, Affiliate, agent, attorney or
representative of the Shareholders, the Shareholders’ Representative or the
Company (other than as expressly provided herein) or any of their respective
Affiliates shall have any liability for any obligations or liabilities of the
Shareholders, the Shareholders’ Representative or the Company under this
Agreement of or for any claim based on, in respect of, or by reason of, the
transactions contemplated hereby and thereby.

10.11 Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement. One or more counterparts of this Agreement or any exhibits hereto may
be executed and delivered via facsimile or other electronic means, with the
intention that they shall have the same effect as an original counterpart
hereof.

**REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
written above.

 

PARENT: DEGS WIND I, LLC By:  

 

Name:   Title:   MERGER SUB: DEGS WIND VERMONT, INC. By:  

 

Name:   Title:   SHAREHOLDERS: DIAMOND CASTLE PARTNERS IV, L.P. By:  

DCP IV GP, L.P.

its general partner

By:  

DCP IV GP-GP, LLC

its general partner

By:  

 

Name:   Title:  

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DIAMOND CASTLE PARTNERS IV-A, L.P. By:  

DCP IV GP, L.P.

its general partner

By:  

DCP IV GP-GP, LLC

its general partner

By:  

 

Name:   Title:   DEAL LEADERS FUND, L.P. By:  

DCP IV GP, L.P.

its general partner

By:  

DCP IV GP-GP, LLC

its general partner

By:  

 

Name:   Title:   By:  

 

  James Moore By:  

 

  Joseph Cofelice

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COMPANY: CATAMOUNT ENERGY CORPORATION By:  

 

Name:   Title: