EXHIBIT 10.2

EXECUTION DRAFT

 

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PURCHASE AND SALE AGREEMENT

by and between

CED/SCS NEWINGTON, LLC,

as Seller,

and

NORTH AMERICAN ENERGY ALLIANCE, LLC,

as Buyer

dated as of December 10, 2007

 

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Table of Contents

 

          Page ARTICLE I DEFINITIONS AND CONSTRUCTION    1         Section 1.1
   Definitions    1         Section 1.2    Rules of Construction    11 ARTICLE
II PURCHASE AND SALE AND CLOSING    12         Section 2.1    Purchase and Sale
   12         Section 2.2    Purchase Price    12         Section 2.3    Closing
   13         Section 2.4    Net Working Capital Adjustment    13
        Section 2.5    Allocation of Purchase Price    14 ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING SELLER    15         Section 3.1   
Organization    15         Section 3.2    Authority    15         Section 3.3   
No Conflicts; Consents and Approvals    16         Section 3.4    Capitalization
   16         Section 3.5    Legal Proceedings    16         Section 3.6   
Brokers    17 ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING NEWINGTON
ENERGY    17         Section 4.1    Organization    17         Section 4.2    No
Conflicts; Consents and Approvals    17         Section 4.3    Capitalization   
18         Section 4.4    Business    18         Section 4.5    Bank Accounts   
19         Section 4.6    Legal Proceeding    19         Section 4.7   
Compliance with Laws and Orders    19         Section 4.8    Liabilities    19
        Section 4.9    Taxes    19         Section 4.10    Regulatory Status   
20         Section 4.11    Contracts    20         Section 4.12    Real Property
   22

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        Section 4.13    Permits    23         Section 4.14    Environmental
Matters    23         Section 4.15    Insurance    24         Section 4.16   
Intellectual Property    25         Section 4.17    Brokers    25
        Section 4.18    Subsidiaries    25         Section 4.19    Financial
Statements    25         Section 4.20    Conduct in the Ordinary Course; Absence
of Changes    26         Section 4.21    Certain Matters Regarding the Project
   26 ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER    27         Section
5.1    Organization    27         Section 5.2    Authority    27         Section
5.3    No Conflicts    27         Section 5.4    Legal Proceedings    28
        Section 5.5    Compliance with Laws and Orders    28         Section 5.6
   Brokers    28         Section 5.7    Acquisition as Investment    28
        Section 5.8    Financial Resources    28         Section 5.9    No
Conflicting Contracts    29         Section 5.10    Opportunity for Independent
Investigation    29         Section 5.11    No Knowledge of Seller’s Breach   
29         Section 5.12    Bankruptcy    29 ARTICLE VI COVENANTS    29
        Section 6.1    Regulatory and Other Approvals    29         Section 6.2
   Access of Buyer    31         Section 6.3    Certain Restrictions    33
        Section 6.4    Use of Certain Names    36         Section 6.5    Support
Obligations    36         Section 6.6    Termination of Certain Services and
Contracts    40         Section 6.7    Distributions    40         Section 6.8
   Insurance    40         Section 6.9    Casualty    41         Section 6.10   
Condemnation    43

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        Section 6.11    Transfer Taxes    43         Section 6.12    Tax Matters
   44         Section 6.13    Affiliate Contracts    47         Section 6.14   
Appointment of Representatives    47         Section 6.15    Updating Schedules
   47         Section 6.16    Announcements    48         Section 6.17   
Liability of Seller and Newington Energy    48         Section 6.18   
Replacement Software Licenses    48         Section 6.19    Certain Payments,
Costs and Expenses    49         Section 6.20    Certain Agreements Regarding
the Project    49         Section 6.21    Further Assurances    49 ARTICLE VII
BUYER’S CONDITIONS TO CLOSING    49         Section 7.1    Representations and
Warranties    49         Section 7.2    Performance    50         Section 7.3   
Project Purchase    50         Section 7.4    Officer’s Certificate    50
        Section 7.5    Orders and Laws    50         Section 7.6    Consents and
Approvals    50         Section 7.7    No Material Adverse Effect    51
        Section 7.8    Resignation of Members, Managers, Officers and Directors
   51         Section 7.9    Seller Deliverables    51         Section 7.10   
Restoration Cost Report    51         Section 7.11    Condemnation Value Report
   52 ARTICLE VIII SELLER’S CONDITIONS TO CLOSING    52         Section 8.1   
Representations and Warranties    52         Section 8.2    Performance    52
        Section 8.3    Officer’s Certificate    52         Section 8.4    Orders
and Laws    52         Section 8.5    Consents and Approvals    52
        Section 8.6    Buyer Deliverables    53 ARTICLE IX TERMINATION    53
        Section 9.1    Termination    53         Section 9.2    Effect of
Termination    54

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        Section 9.3    Break-up Damages    54 ARTICLE X INDEMNIFICATION,
LIMITATIONS OF LIABILITY AND WAIVERS    56         Section 10.1   
Indemnification    56         Section 10.2    Limitations of Liability    57
        Section 10.3    Notice; Duty to Mitigate    58         Section 10.4   
Indirect Claims    58         Section 10.5    Waiver of Other Representations   
59         Section 10.6    Waiver of Remedies    59         Section 10.7   
Procedure with Respect to Third-Party Claims    60         Section 10.8   
Access to Information    61 ARTICLE XI MISCELLANEOUS    61         Section 11.1
   Notices    61         Section 11.2    Entire Agreement.    62         Section
11.3    Expenses    62         Section 11.4    Disclosure    63         Section
11.5    Waiver    63         Section 11.6    Amendment    63         Section
11.7    No Third Party Beneficiary    63         Section 11.8    Assignment;
Binding Effect    63         Section 11.9    Remedies; Specific Performance   
63         Section 11.10    Headings    64         Section 11.11    Invalid
Provisions    64         Section 11.12    Counterparts; Facsimile    64
        Section 11.13    Governing Law; Jurisdiction; Waiver of Jury Trial    64
EXHIBITS               Exhibit A   

-        Form of Membership Interests Assignment Agreement

   SCHEDULES                 1.1-A   

Sample Aggregate Net Working Capital Calculation

             1.1-AC   

Affiliate Contracts

             1.1-K   

Knowledge of Seller

             1.1-PL   

Permitted Liens

  

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          3.3(b)   

Seller Consents

             3.3(c)   

Seller Approvals

             3.4   

Capitalization

             3.5   

Claims Concerning Agreement

             4.2   

Newington Consents

             4.3   

Capitalization

             4.4(a)   

Exceptions To Sufficiency of Assets

             4.5   

Bank Accounts

             4.6   

Legal Proceedings

             4.7   

Compliance with Laws and Orders

             4.8   

Liabilities

             4.9   

Taxes (Newington Energy)

             4.11(a)   

Material Contracts

             4.11(b)   

Material Contracts: Exceptions to Effectiveness

             4.11(c)   

Material Contracts: Material Defaults

             4.12(a)   

Property Leases

             4.12(d)   

Tangible Personal Property

             4.13   

Material Non-Environmental Permits

             4.14(a)   

Material Environmental Site Assessment Reports and Facility Compliance Reports

             4.14(b)   

Material Environmental Permits

             4.14(c)   

Exceptions To Compliance In Material Respects With Environmental Laws and
Permits

             4.14(d)   

Material Environmental Claims

             4.14(e)   

Release of Hazardous Materials Resulting In Material Environmental Claim

             4.14(f)   

Claims for Indemnification With Respect To Environmental Claims

             4.15   

Insurance

             4.16(a)   

Seller’s Software Licenses

             4.16(b)   

Infringement Claims

             4.18   

Subsidiaries

             4.19(b)   

Exceptions to GAAP

             4.20   

Absence of Changes

             5.3   

Buyer Approvals

  

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          5.9   

Conflicts

             6.3   

Exceptions to Conduct/Restrictions During Interim Period

             6.5   

Support Obligations

             6.6   

Terminated Contracts

  

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PURCHASE AND SALE AGREEMENT

This PURCHASE AND SALE AGREEMENT, dated as of December 10, 2007 (this
“Agreement”), by and between CED/SCS Newington, LLC, a Delaware limited
liability company (“Seller”) and North American Energy Alliance, LLC, a Delaware
limited liability company (“Buyer”).

RECITALS

WHEREAS, Newington Energy is party to a certain Lease Agreement, dated as of
November 14, 2000 (as amended, restated or otherwise modified from time to time,
the “Lease”), with Hawkeye Funding, Limited Partnership, a Delaware limited
partnership (“Hawkeye”), pursuant to which Newington Energy leases from Hawkeye
a certain 525 megawatt nominal combined-cycle dual fired power generation
facility, and the premises thereon, which are together identified in the Lease
as the “Project;” and

WHEREAS, under the terms of the Lease, Newington Energy maintains the right (the
“Sale Right”), upon providing 90 days prior notice to Hawkeye, to purchase (the
“Project Purchase”) the Project from Hawkeye on any Basic Rent Payment Date; and

WHEREAS, by and through its execution of this Agreement, Seller agrees to cause
Newington Energy to exercise the Sale Right in accordance with the terms of the
Lease and, simultaneously with the Project Purchase or as soon as practical
thereafter, Seller shall sell all of its membership interests (the “Membership
Interests”) in Newington Energy to Buyer on the terms and pursuant to the
conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the agreements in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:

ARTICLE I

DEFINITIONS AND CONSTRUCTION

Section 1.1 Definitions. As used in this Agreement, the following capitalized
terms have the meanings set forth below:

“1933 Act” has the meaning set forth in Section 5.7.

“Actual Net Working Capital Adjustment Amount” has the meaning set forth in
Section 2.4(b).

“Affiliate” means any Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with the
Person specified. For purposes of this definition, “control” (including the
terms “controlled by” or “under common

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control with”) means the power, direct or indirect, to direct or cause the
direction of the management, policies or investment activities of such Person
whether through ownership of voting securities or ownership interests, by
contract or otherwise.

“Affiliate Contracts” means, collectively, those contracts listed on Schedule
1.1-AC.

“Agreement” means this Purchase and Sale Agreement.

“Alternative Financing” has the meaning set forth in Section 6.2(d).

“Applicable Insurance Policies” and “Applicable Insurance Policy” have the
respective meanings set forth in Section 6.8.

“Assets” of any Person means all assets and properties of every kind, nature,
character and description (whether real, personal or mixed, whether tangible or
intangible and wherever situated), including the goodwill related thereto and
Intellectual Property, operated, owned or leased by such Person.

“Base Purchase Price” has the meaning set forth in Section 2.2(a).

“Basic Rent Payment Date” has the meaning set forth in the Lease.

“Break-up Damages Stop Date” has the meaning set forth in Section 9.3(b).

“Break-up L/C” and “Break-up L/Cs” have the respective meanings set forth in
Section 9.3(b).

“Business” as to Newington Energy, means the lease and operation of the Project,
including the generation and sale of electricity and capacity by Newington
Energy at or from the Project and the conduct of other activities by Newington
Energy related or incidental to the foregoing.

“Business Day” means a day other than Saturday, Sunday or any day on which banks
located in the State of New York are authorized or required to close.

“Buyer” has the meaning set forth in the Preamble.

“Buyer Approvals” has the meaning set forth in Section 5.3(c).

“Buyer L/C” has the meaning set forth in Section 6.5(d)(iii).

“Buyer’s Replacement Software Licenses” has the meaning set forth in
Section 6.18.

“Casualty Insurance Proceeds” has the meaning set forth in Section 6.9(a)(iii).

“CFIUS” has the meaning set forth in Section 6.1(c)(iii).

 

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“Charter Documents” means with respect to any Person, its certificate or
articles of incorporation, formation or organization and its by-laws, limited
partnership agreement, partnership agreement, limited liability company
agreement or limited liability company operating agreement or trust agreement
all as and if applicable to it and including all amendments thereto, and all
such other organizational documents of such Person, including all amendments
thereto and including those that are required to be registered or kept in the
jurisdiction of incorporation, organization or formation of such Person in order
to establish the legal personality of such Person.

“Claim” means any demand, claim or action or any legal, mediation or arbitration
proceeding (whether at law or in equity or otherwise).

“Claiming Party” has the meaning set forth in Section 10.7(a).

“Closing” means the consummation of the conveyance of the Membership Interests
to Buyer.

“Closing Balance Sheet” has the meaning set forth in Section 2.4(b).

“Closing Date” means the date on which Closing occurs.

“Closing Restoration Cost” has the meaning set forth in Section 6.9(a)(iii).

“Closing Statement” has the meaning set forth in Section 2.4(b).

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

“Commitment” has the meaning set forth in Section 5.8.

“Condemnation Value” has the meaning set forth in Section 6.10.

“Confidentiality Agreement” means, collectively, the Confidentiality Agreement
between Consolidated Edison, Inc. and AllCapital (US), LLC dated April 23, 2007
as modified by the letter agreement between Consolidated Edison, Inc. and
AllCapital (US), LLC dated November 5, 2007 and as further modified by the
letter agreement between Consolidated Edison, Inc. and AllCapital (US), LLC
dated November 27, 2007, the Confidentiality Agreement between Consolidated
Edison, Inc. and Industry Funds Management (Nominees) Limited, as trustee of the
IFM (International Infrastructure) Wholesale Trust, dated November 7, 2007 as
modified by the letter agreement between Consolidated Edison, Inc. and Industry
Funds Management (Nominees) Limited, as trustee of the IFM (International
Infrastructure) Wholesale Trust, dated November 7, 2007, and the Agreement among
Consolidated Edison, Inc., All Capital (US), LLC, and Industry Funds Management
(Nominees) Limited, as trustee of the IFM (International Infrastructure)
Wholesale Trust, dated November 7, 2007 pertaining to the foregoing
Confidentiality Agreements as modified.

 

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“Continuing Support Obligation” has the meaning set forth in Section 6.5(d).

“Contract” means any contract, transaction confirmation, lease, license,
evidence of indebtedness, mortgage, indenture, purchase order, binding bid,
letter of credit, security agreement or other legally binding agreement or
arrangement.

“Credit Rating” means, with respect to any Person, the rating then assigned to
such Person’s unsecured, senior long-term debt obligations not supported by
third party credit enhancements, or if such Person does not have such a rating,
then the rating then assigned to such Person as an issuer, by S&P and/or
Moody’s, as applicable, and any successors thereto.

“Debt Commitment Letter” has the meaning set forth in Section 5.8.

“Deductible Amount” has the meaning set forth in Section 10.2(c).

“Dollars” and “$” mean United States dollars.

“Environmental Claim” means any Claim, arising out of, based on or resulting
from (a) the presence, or Release or threatened Release into the environment, of
any Hazardous Substance at any location; or (b) circumstances forming the basis
of any violation, or alleged violation, of any Environmental Law or
Environmental Permit.

“Environmental Law” means all Laws or Orders relating to pollution, the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata) or protection of public health and the environment,
including, those relating to Releases or threatened Releases of any Hazardous
Substance, or otherwise relating to the treatment, storage or disposal of any
Hazardous Substance. The term “Environmental Law” includes but is not limited to
the Federal Water Pollution Control Act (33 U.S.C. §1251 et seq.), Resources
Conservation and Recovery Act (42 U.S.C. §6901 et. seq.), Safe Drinking Water
Act (42 U.S.C. §3000(f) et. seq.), Toxic Substances Control Act (15 U.S.C. §2601
et seq.), Clean Air Act (42 U.S.C. §7401 et. seq.), Comprehensive Environmental
Response Compensation and Liability Act (42 U.S.C. §9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. §1801, et seq.), the Clean Water Act (33
U.S.C. §1311, et seq.), the Emergency Planning and Community Right-to-Know Act
of 1986 (42 U.S.C. §11001, et seq.), the Occupational Safety and Health Act of
1970 (29 U.S.C. §651, et seq.), and any similar state or local Laws, and the
regulations promulgated pursuant thereto, each as amended and in effect at the
relevant time.

“Environmental Permits” means any and all Permits required pursuant to any
Environmental Law, including all air emissions authorizations and allowances and
wastewater and stormwater discharge authorizations.

“Equity Commitment Letters” has the meaning set forth in Section 5.8.

“Equity Investors” has the meaning set forth in Section 5.8.

 

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

“Estimated Net Working Capital Adjustment Amount” has the meaning set forth in
Section 2.4(a).

“Exon-Florio Provision” has the meaning set forth in Section 6.1(c)(iii).

“FERC” means the Federal Energy Regulatory Commission, or any successor agency
or agency succeeding to its authority.

“Financial Statements” has the meaning set forth in Section 4.19(a).

“Full Restoration Cost” has the meaning set forth in Section 6.9(a)(i).

“GAAP” means generally accepted accounting principles in the United States of
America, applied on a consistent basis.

“Governmental Authority” means any court, tribunal, arbitrator, authority,
agency, commission, legislative body, official or other instrumentality of the
United States or any state, county, city or other political subdivision or
entity exercising executive, legislative, judicial, regulatory or administrative
functions, and includes any governmental, quasi-governmental or non-governmental
body administering, regulating or having general oversight over fuel,
electricity, power or other markets.

“Hawkeye” has the meaning set forth in the Recitals.

“Hazardous Substance” means and includes each (a) substance, material, chemical
or waste regulated or prohibited pursuant to any Environmental Law, or the
presence or exposure to which may form the basis for liability under any
applicable Environmental Law, including those designated as a hazardous waste,
hazardous substance, pollutant, contaminant or toxic substance under any
Environmental Law and (b) any petroleum or hydrocarbon in any form, and any
derivative or by product thereof, asbestos and asbestos-containing materials,
mercury, and polychlorinated biphenyl.

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

“Independent Accounting Firm” means an independent accounting firm of national
reputation that is selected by mutual agreement of Seller and Buyer or, if
Seller and Buyer do not reach mutual agreement on the independent accounting
firm to be selected within 5 days after either Party first receives written
notice from the other Party requesting such mutual agreement in connection with
a requirement for such Independent Accounting Firm under this Agreement, then by
mutual agreement by Seller’s and Buyer’s respective accounting firms; provided
that if Seller’s and Buyer’s respective accounting firms do not reach mutual
agreement on an independent accounting firm within 5 days after such decision is
referred to them for

 

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determination, then the independent accounting firm shall be selected by the
American Arbitration Association pursuant to the then effective and applicable
rules of the American Arbitration Association (with Seller and Buyer sharing
equally the cost of such selection process).

“Intellectual Property” means computer software and the following intellectual
property rights, both statutory and common law rights, if applicable:
(a) copyrights, registrations and applications for registration thereof,
(b) trademarks, service marks, trade names, slogans, domain names, business
names, logos, trade dress, and registrations and applications for registrations
thereof, (c) patents, as well as any reissued and reexamined patents and
extensions corresponding to the patents, and any patent applications, as well as
any related continuation, continuation in part and divisional applications and
patents issuing therefrom and (d) trade secrets and confidential information,
including ideas, designs, concepts, compilations of information, methods,
techniques, procedures, processes and other know-how, whether or not patentable.

“Interim Period” means the period from the date hereof until the Closing.

“Knowledge” when used with respect to Seller, means the actual knowledge, after
due inquiry (as opposed to any constructive or imputed knowledge), of the
individuals listed on Schedule 1.1-K.

“Law” means any applicable law, statute, rule, regulation, ordinance or court
decision, or any policy, guideline, decree or pronouncement having the effect of
law.

“Lease” has the meaning set forth in the Recitals.

“Leased Property” has the meaning set forth in Section 4.12(b).

“Letter of Credit Requirements” means the requirement that any Buyer L/C and any
Break-up L/C be an irrevocable, standby letter of credit issued by a major U.S.
commercial bank or the U.S. branch office of a foreign bank, which, in either
case, has counters for presentment and payment located in the City of New York
and a Credit Rating of at least (a) “A” by S&P and “A2” by Moody’s, if such
entity is rated by both S&P and Moody’s or (b) “A” by S&P or “A2” by Moody’s, if
such entity is rated by either S&P or Moody’s, but not both, and which letter of
credit is in a form reasonably acceptable to Seller, including, but not limited
to, drawings being permitted solely upon a signed statement from an officer of
the beneficiary of the letter of credit that the amount of the drawing is owed
to the beneficiary pursuant to this Agreement, and the requirement that any
Buyer L/C and any Break-up L/C be transferable by Seller, on a one-time basis,
to a single Affiliate of Seller, which Affiliate shall be prohibited from
subsequently transferring any such Buyer L/C or Break-up L/C without the prior
written consent of Buyer or one of its Affiliates.

“Lien” means any mortgage, pledge, assessment, security interest, charge,
restriction, lien or other similar encumbrance.

 

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“Long Stop Date” has the meaning set forth in Section 9.1(e).

“Loss” means any and all judgments, losses, liabilities, amounts paid in
settlement, damages, fines, penalties, deficiencies, costs, charges, taxes,
obligations, demands, fees, losses and expenses (including interest, court
costs, reasonable fees of attorneys, accountants and other experts or other
reasonable expenses of investigation, litigation or other proceedings or of any
claim, dispute, default or assessment) and are net of any net tax benefits
actually realized as a result of such loss and indemnification therefor, taking
into account the timing and the character of such net tax benefits. For all
purposes in this Agreement the term “Losses” does not include any
Non-reimbursable Damages.

“Material Adverse Effect” means any circumstance, change or effect that,
individually or in the aggregate with all other circumstances, changes or
effects, has an effect on Newington Energy that is materially adverse to the
assets, business, condition or results of operations of Newington Energy, taken
as a whole; provided that in determining whether a Material Adverse Effect has
occurred, there shall not be taken into account any effect resulting from
(a) any change in economic conditions generally or in the industry in which
Newington Energy operates, (b) any change in the international, national,
regional or local wholesale or retail energy, capacity or ancillary services
markets, (c) any change in the international, national, regional or local
markets for fuel used or usable in connection with the Project, (d) any change
in the national, regional or local electric transmission systems, (e) any change
in any bid cap, price limitation, market power mitigation measure or other Law
in respect of transmission services or the wholesale or retail energy, capacity
or ancillary services markets adopted or approved (or failed to be adopted or
approved) by any Governmental Authority or proposed by any Person, (f) any
change in any Laws (including Environmental Laws) or any new Laws (including
Environmental Laws) adopted or approved (or failed to be adopted or approved) by
any Governmental Authority or proposed by any Person, (g) any change in general
regulatory or political conditions, including any acts of war or terrorist
activities, (h) any change in Laws, procedures or other requirements of ISO New
England, Inc.; North American Electric Reliability Corporation; or any Regional
Entity, as defined under 18 C.F.R. 39.1 of FERC’s regulations, including, but
not limited to, Reliability First Corporation or Northeast Power Coordinating
Council, Inc., (i) the failure of Seller or any Non-Newington Affiliate to
effect the assignment of any Contract to Buyer, Newington Energy, or any
Affiliate of Buyer, (j) any changes in the costs of commodities, services,
equipment, materials or supplies, including fuel and other consumables, or
changes in the price of energy, capacity or ancillary services, (k) any change
in the financial condition or results of operation of Newington Energy caused by
the pending sale of Newington Energy to Buyer, including changes due to the
Credit Rating of Buyer, (l) any actions to be taken pursuant to or in accordance
with this Agreement, and (m) the announcement or pendency of the transactions
contemplated hereby, but excluding any of the events described in clauses
(a) through (h) and (j) above to the extent that any of the events described in
any such clauses specifically targeted the Project and no other power plant.

“Material Contracts” has the meaning set forth in Section 4.11(a).

 

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“Material Contracts List” has the meaning set forth in Section 4.11(a).

“Membership Interests” means 100% of the limited liability company interests in
Newington Energy.

“Membership Interests Assignment Agreement” has the meaning set forth in
Section 7.9(a).

“Moody’s” means Moody’s Investors Services, Inc., or its successor.

“Net Working Capital” means the net working capital of Newington Energy, as
determined in accordance with the methodology used in the preparation of the
sample calculation of Net Working Capital set forth on Schedule 1.1-A, and
otherwise in accordance with GAAP; provided that fuel oil, jet kerosene and
other fuel inventories shall be valued at their purchase price.

“Net Working Capital Adjustment Amount” means the amount by which the Net
Working Capital, expressed as a positive or negative number, is greater than or
less than zero as of the Closing Date.

“Newington Consents” has the meaning set forth in Section 4.2(b).

“Newington Energy” means Newington Energy, LLC, a Delaware limited liability
company.

“Non-Newington Affiliate” means any Affiliate of Seller, except for Newington
Energy.

“Non-reimbursable Damages” has the meaning set forth in Section 10.6(b).

“Order” means any order, judgment, writ, injunction, decree, settlement,
stipulation or award of a Governmental Authority.

“Party” or “Parties” means the parties to this Agreement.

“Permits” means all licenses, permits, certificates of authority or occupancy,
authorizations, approvals, registrations, franchises and similar consents
granted by a Governmental Authority.

“Permitted Expiry” has the meaning set forth in Section 6.5(d)(iii).

“Permitted Lien” means (a) any Lien for Taxes not yet due or delinquent, (b) any
Lien for Taxes being contested in good faith by appropriate proceedings and not
in excess of $100,000, (c) any Lien arising in the ordinary course of business
by operation of Law with respect to a liability that is not yet due or
delinquent or which is being contested in good faith by Seller or Newington
Energy, (d) all matters that are disclosed (whether or not subsequently

 

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deleted or endorsed over) on any survey or in the title policies insuring the
Property or any commitments therefor or any title report with respect to
Property, in each case that have been heretofore made available to Buyer, or
(e) imperfections or irregularities of title and other Liens that would not, in
the aggregate, reasonably be expected to be material to Newington Energy,
(f) zoning, planning, and other similar governmental limitations and
restrictions, all rights of any Governmental Authority to regulate the Property,
and all matters of public record, (g) the terms and conditions of the Material
Contracts listed on the 4.12(a) portion of the Material Contracts List, (h) any
Lien released prior to Closing and (i) the matters identified on
Schedule 1.1-PL.

“Person” means any natural person, corporation, general partnership, limited
partnership, limited liability company, proprietorship, other business
organization, trust, union, association, Governmental Authority or any other
entity.

“Pre-Closing Taxable Period” has the meaning set forth in Section 6.12(a).

“Project” has the meaning set forth in the Lease.

“Project Purchase” has the meaning set forth in the Recitals.

“Property” means the real property on which the Project is located or operating
or that is otherwise used by Newington Energy in the conduct of its Business and
includes (i) all improvements located thereon or attached thereto and (ii) all
leasehold interests, easements and rights-of-way appurtenant thereto.

“Property Lease” has the meaning set forth in Section 4.12(a).

“Property Taxes” has the meaning set forth in Section 6.12(b).

“Purchase Price” has the meaning set forth in Section 2.2.

“Purchase Price Allocation Schedule” has the meaning set forth in Section 2.5.

“Purchased Assets” means all of the Assets of Newington Energy, except for
Seller’s Licensed Software and the Seller Marks.

“Qualified Engineering Firm” has the meaning set forth in Section 6.9(a)(i).

“Release” means any release, spill, emission, migration, leaking, pumping,
injection, deposit, disposal or discharge of any material into the environment,
in each case to the extent giving rise to liability under applicable
Environmental Law.

“Remedial Action” means all actions undertaken to (a) investigate, clean up,
remove, treat, or in any other way mitigate or address any Release of Hazardous
Substance in the environment; (b) prevent the Release or threat of Release, or
minimize the further Release, of

 

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any Hazardous Substance; or (c) perform pre-remedial studies and investigations
or post remedial monitoring and care pertaining or relating to a Release of any
Hazardous Substance.

“Repair Election” has the meaning set forth in Section 6.9(a)(ii).

“Representatives” means, as to any Person, its officers, directors, employees,
counsel, accountants, financial advisers and consultants, and, for the purposes
of Section 6.2, Buyer’s potential lenders and physical and financial hedge
providers or tollers, if any.

“Responding Party” has the meaning set forth in Section 10.7(a).

“Restored Condition” has the meaning set forth in Section 6.9(a)(i).

“S&P” means Standard and Poor’s Rating Group (a division of McGraw-Hill, Inc.)
or its successor.

“Sale Right” has the meaning set forth in the Recitals.

“Schedules” means the disclosure schedules attached to this Agreement as of the
date hereof.

“Seller” has the meaning set forth in the Preamble.

“Seller Approvals” has the meaning set forth in Section 3.3(c).

“Seller Consents” has the meaning set forth in Section 3.3(b).

“Seller’s Licensed Software” has the meaning set forth in Section 4.16(a).

“Seller Marks” has the meaning set forth in Section 6.4.

“Seller’s Software Licenses” has the meaning set forth in Section 4.16(a).

“September 30 Balance Sheet” has the meaning set forth in Section 4.19(a).

“Straddle Taxable Period” has the meaning set forth in Section 6.12(a).

“Support Obligations” has the meaning set forth in Section 6.5(a).

“Tax” or “Taxes” means (a) any and all federal, state, local or foreign income,
gross receipts, ad valorem, sales and use, employment, social security,
disability, occupation, property, severance, value added, transfer, capital
stock, excise or other taxes, fees, levies, duties, tariffs, imposts and other
charges of any kind imposed by or on behalf of any taxing authority, including
any interest, penalty or addition thereto and (b) any transferee, successor or
contractual liability for any of the foregoing.

 

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“Tangible Personal Property” has the meaning set forth in Section 4.12(d).

“Terminated Contracts” has the meaning set forth in Section 6.6(a).

“Transfer Taxes” means all transfer, conveyance, sales, use, goods and services,
value added, documentary, stamp duty, intangibles, gross receipts, excise,
permit, license, stock, filing and other similar Taxes, duties, fees or charges.

“Treasury Regulation” means a regulation promulgated by the United States
Department of the Treasury (or its successor).

“Unaudited Balance Sheet” has the meaning set forth in Section 4.19(a).

“Unnecessary Software” has the meaning set forth in Section 6.18.

“Updated Material Contracts List” has the meaning set forth in Section 6.15.

“Updated Schedules” has the meaning set forth in Section 6.15.

Section 1.2 Rules of Construction.

(a) All article, section, paragraph, schedules and exhibit references used in
this Agreement are to articles, sections, paragraphs, schedules and exhibits to
this Agreement unless otherwise specified. The exhibits and schedules attached
to this Agreement constitute a part of this Agreement and are incorporated
herein for all purposes.

(b) A term defined as one part of speech (such as a noun) shall have a
corresponding meaning when used as another part of speech (such as a verb).
Unless the context of this Agreement clearly requires otherwise words importing
the masculine gender shall include the feminine and neutral genders and vice
versa. A term defined in the singular number shall include the correlative
plural and vice versa. The words “include,” “includes” or “including” shall mean
“including without limitation,” the words “hereof,” “hereby,” “herein,”
“hereunder” and similar terms in this Agreement shall refer to this Agreement as
a whole and not any particular section or article in which such words appear and
unless otherwise specified, any reference to a Law shall include any amendment
thereof or any successor thereto and any rules and regulations promulgated
thereunder.

(c) Time is of the essence in this Agreement. Whenever this Agreement refers to
a number of days, such number shall refer to calendar days unless Business Days
are specified. Whenever any action must be taken hereunder on or by a day that
is not a Business Day, then such action may be validly taken on or by the next
day that is a Business Day.

(d) All accounting terms used herein and not expressly defined herein shall have
the meanings given to them under, and all accounting determinations hereunder
shall be made in accordance with, GAAP.

 

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(e) Each Party acknowledges that this Agreement was negotiated by it with the
benefit of representation by legal counsel, and any rule of construction or
interpretation otherwise requiring this Agreement to be construed or interpreted
against any Party shall not apply to any construction or interpretation hereof.

(f) The phrase “made available to Buyer” means made available to Buyer, any of
its Affiliates or any Representatives of Buyer or any of its Affiliates, and the
written materials made available to any such Persons include all written
materials in the electronic data room established by Seller to the extent such
Persons had access through Intralinks, all written materials made available to
such Persons during site visits to the Project or during the management
presentations at Seller’s offices, and all written materials actually delivered
or furnished to such Persons during the period from April 23, 2007 to the date
hereof.

(g) With respect to any materials made available during site visits to the
Project and not otherwise made available as set forth in (f) above, such
materials will be deemed to have been made available if copies of the same were
actually delivered or furnished to Buyer, any of its Affiliates or any
Representatives of Buyer or any of its Affiliates, or if such Persons actually
reviewed such materials.

ARTICLE II

PURCHASE AND SALE AND CLOSING

Section 2.1 Purchase and Sale. On the terms and subject to the conditions set
forth in this Agreement:

(a) Seller agrees to cause Newington Energy to exercise the Sale Right so as to
become entitled to purchase the Project in accordance with Section 13 of the
Lease on the first Basic Rent Payment Date in 2008.

(b) Simultaneously with the Project Purchase, Seller agrees to sell and convey
to Buyer, and Buyer agrees to purchase and accept from Seller, all of the
Membership Interests. In exchange for the Membership Interests, Buyer shall pay
the Purchase Price, as contemplated below.

Section 2.2 Purchase Price. The purchase price (the “Purchase Price”) for the
Membership Interests shall be an amount equal to:

(a) $736,000,000.00 (the “Base Purchase Price”); plus

(b) the Net Working Capital Adjustment Amount (whether a positive or a negative
amount); minus

(c) adjustments under Section 6.9 or 6.10.

 

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Section 2.3 Closing.

(a) Seller shall inform Buyer no later than 12 noon New York City time on the
fifth Business Day before the expected Closing Date of any scheduled commitments
to dispatch the Project on or following the expected Closing Date and any known
potential limitations, restrictions or outages affecting the Project for the two
weeks following such notification. Seller shall promptly update such information
and inform Buyer to the extent Seller becomes aware of any material changes to
such information prior to the Closing. To the extent the Project has not been
committed to dispatch on the expected Closing Date, then, by not later than 12
noon on the day before the expected Closing Date, Buyer shall provide Seller its
preliminary hourly schedule for energy for dispatch the following day at the
Project (which schedule shall include designation of quantity and time), and
Seller shall cause the Project to be dispatched on the Closing Date in
accordance with this day-ahead schedule.

(b) The Closing shall take place at the offices of Shearman & Sterling LLP at
10:00 A.M. local time, on the fifth Business Day after the conditions to Closing
set forth in Articles VII and VIII (other than actions to be taken or items to
be delivered at Closing) have been satisfied (or waived by the Party entitled to
waive such condition), or on such other date and at such other time and place as
Buyer and Seller mutually agree in writing. All actions listed in Section 7.9 or
8.6 that occur on the Closing Date shall be deemed to occur simultaneously at
the Closing. The Closing shall be deemed effective as of 12:01 A.M. (Eastern
time) on the Closing Date.

Section 2.4 Net Working Capital Adjustment.

(a) At least 10 Business Days prior to the expected Closing Date, Seller will
deliver to Buyer a worksheet setting forth Seller’s good faith reasonable
estimate of the expected Net Working Capital Adjustment Amount as of the
expected Closing Date (the “Estimated Net Working Capital Adjustment Amount”),
as well as a computation thereof. If the Estimated Net Working Capital
Adjustment Amount is a positive number, the Base Purchase Price payable at
Closing will be increased by an amount equal to such Estimated Net Working
Capital Adjustment Amount. If the Estimated Net Working Capital Adjustment
Amount is a negative number, the Base Purchase Price payable at Closing will be
decreased by an amount equal to such Estimated Net Working Capital Adjustment
Amount.

(b) Within 60 days after the Closing, Seller will prepare and deliver to Buyer
(i) an unaudited consolidated balance sheet of Newington Energy (the “Closing
Balance Sheet”), prepared in accordance with GAAP applied on a basis consistent
with the past practices of Seller, together with all work papers relating
thereto, and (ii) a statement (the “Closing Statement”) setting forth a
computation of the actual Net Working Capital Adjustment Amount as of the
Closing Date and all other amounts to be determined under Section 2.2
(collectively, the “Actual Net Working Capital Adjustment Amount”). If within 60
days following delivery of the Closing Balance Sheet and the Closing Statement
Buyer does not object in writing thereto to Seller, then the Actual Net Working
Capital Adjustment Amount shall be as reflected on the Closing Statement. If
within such 60 days Buyer objects to Seller in writing to such computation, then
Seller and Buyer shall negotiate in good faith and attempt to resolve their

 

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disagreement. Should such negotiations not result in an agreement within 20 days
after receipt by Seller of such written objection from Buyer, then the matter
shall be submitted to the Independent Accounting Firm. All fees and expenses
relating to the work, if any, to be performed by the Independent Accounting Firm
will be borne equally by Buyer and Seller. The Independent Accounting Firm will
deliver to Buyer and Seller a written determination of the Actual Net Working
Capital Adjustment Amount (such determination to include a worksheet setting
forth all material calculations used in arriving at such determination and to be
based solely on information provided to the Independent Accounting Firm by Buyer
and Seller or their Affiliates) within 30 days of the submission of the dispute
to the Independent Accounting Firm, which determination will be final, binding
and conclusive on the Parties (absent manifest error). If, following the
determination of the Actual Net Working Capital Adjustment Amount (as agreed
between the Parties or as determined by the Independent Accounting Firm), the
Estimated Net Working Capital Adjustment Amount less the Actual Net Working
Capital Adjustment Amount is a positive number, then Seller shall be obligated
to pay Buyer a cash payment equal to such positive number. If the Estimated Net
Working Capital Adjustment Amount less the Actual Net Working Capital Adjustment
Amount is a negative number, then Buyer shall be obligated to pay Seller a cash
payment equal to the absolute value of such negative number. Any such payment,
together with interest thereon at the rate of five percent (5%) per annum from
the Closing Date through the date of payment, will be due and payable within 15
days after the Actual Net Working Capital Adjustment Amount is finally
determined as provided in this Section 2.4(b) and will be payable by wire
transfer of immediately available funds to such account or accounts as shall be
specified by Buyer or Seller, as applicable.

(c) Following the Closing, Seller and Buyer shall cooperate and provide each
other and, if applicable the Independent Accounting Firm, reasonable access to
such books, records (including those of Newington Energy) and such employees of
Seller or its Affiliates as are reasonably requested in connection with the
matters addressed in Section 2.4 (b).

Section 2.5 Allocation of Purchase Price. Seller shall prepare and provide to
Buyer within 60 days after the Closing, a schedule allocating the Purchase Price
among the Purchased Assets (the “Purchase Price Allocation Schedule”). The
Purchase Price Allocation Schedule shall be prepared in good faith and in
accordance with applicable provisions of the Code. Buyer shall have reasonable
opportunity to review and comment on the Purchase Price Allocation Schedule.
Seller shall make such revisions to the Purchase Price Allocation Schedule as
may be reasonably requested by Buyer and approved by Seller. After consideration
of Buyer’s comments, Seller’s Purchase Price Allocation Schedule shall be
binding on both Seller and Buyer for all federal income tax purposes; provided,
that if upon the advice of tax counsel reasonably acceptable to Seller, Buyer
believes that the Purchase Price Allocation Schedule (or any portion thereof) is
materially incorrect, the Independent Accounting Firm shall determine whether
the Purchase Price Allocation Schedule or such portion is materially incorrect
and the determination of such Independent Accounting Firm shall be final. If the
Independent Accounting Firm determines that the Purchase Price Allocation
Schedule or such portion is not materially incorrect, Seller and Buyer shall be
bound by the Purchase Price Allocation Schedule. If the Independent Accounting
Firm determines that the Purchase Price Allocation Schedule (or

 

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any portion thereof) is materially incorrect, Seller and Buyer shall be bound by
the Purchase Price Allocation Schedule as adjusted by such Independent
Accounting Firm. Neither Buyer nor Seller shall agree to any proposed adjustment
to the Purchase Price Allocation Schedule by any taxing authority without first
giving the other prior written notice and the opportunity to challenge such
proposed adjustment. Seller and Buyer each shall prepare a mutually acceptable
and substantially identical IRS Form 8594 “Asset Acquisition Statement Under
Section 1060” consistent with the Purchase Price Allocation Schedule which the
Parties shall use to report the transactions contemplated by this Agreement to
the applicable taxing authorities. The Purchase Price Allocation Schedule shall
be revised to take into account subsequent adjustments to the Purchase Price,
including any indemnification payments (which shall be treated for Tax purposes
as adjustments to the Purchase Price), in accordance with the provisions of
Section 1060 of the Code and the Treasury Regulations thereunder.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

REGARDING SELLER

Except as disclosed in the Schedules or the Material Contracts List (with any
disclosure in a Schedule or the Material Contracts List being deemed and
understood to be a disclosure in each other Schedule or the Material Contracts
List to which the applicability of the disclosure is apparent on its face,
notwithstanding reference to a specific section or paragraph), and, with respect
to representations and warranties as of the Closing, except as disclosed in the
Updated Schedules or the Updated Material Contracts List (with any disclosure in
an Updated Schedule or the Updated Material Contracts List being deemed and
understood to be a disclosure in each other Updated Schedule or the Updated
Material Contracts List to which the applicability of the disclosure is apparent
on its face, notwithstanding reference to a specific section or paragraph),
Seller hereby represents and warrants to Buyer as follows:

Section 3.1 Organization. Seller is a limited liability company duly formed,
validly existing and in good standing under the Laws of the State of Delaware.
Seller is duly qualified or licensed to do business in each other jurisdiction
where the obligations to be performed by it hereunder make such qualification or
licensing necessary, except in those jurisdictions where the failure to be so
qualified or licensed would not reasonably be expected to be material to it or
its Assets or business or result in a material adverse effect on the Seller’s
ability to perform such obligations hereunder.

Section 3.2 Authority. Seller has all requisite limited liability company power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery by Seller of this Agreement, and the performance by Seller of its
obligations hereunder, have been duly and validly authorized by all necessary
organizational action. This Agreement has been duly and validly executed and
delivered by Seller and constitutes the legal, valid and binding obligation of
Seller enforceable against Seller in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, arrangement, moratorium or

 

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other similar Laws relating to or affecting the rights of creditors generally,
or by general equitable principles.

Section 3.3 No Conflicts; Consents and Approvals. The execution and delivery by
Seller of this Agreement do not, the performance by Seller of its obligations
hereunder will not, and the consummation of the transactions contemplated hereby
will not:

(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the Charter Documents of Seller;

(b) assuming the filings, waivers, approvals, consents, authorizations and
notices set forth on Schedule 3.3(b), which items are intended to be the
necessary filings, waivers, approvals, consents, authorizations and notices with
respect to material Contracts to which Seller is a party (the “Seller
Consents”), the Seller Approvals and the Newington Consents have been made,
obtained or given, as applicable, be in violation of or result in a default (or
give rise to any right of termination, cancellation or acceleration) under any
material Contract to which Seller is a party, except for any such violations or
defaults (or rights of termination, cancellation or acceleration) which would
not, in the aggregate, reasonably be expected to materially adversely affect
Seller’s ability to perform its obligations hereunder or to consummate the
transactions contemplated hereby within the time period referenced in
Section 2.3(b); and

(c) assuming all required filings, waivers, approvals, consents, authorizations
and notices set forth on Schedule 3.3(c), which items are intended to be the
necessary filings, waivers, approvals, consents, authorizations and notices with
regard to any Law applicable to Seller or to consents or approvals of any
Governmental Authority under any applicable Law (the “Seller Approvals”), the
Newington Consents and the Seller Consents have been made, obtained or given, as
applicable, (i) conflict with, violate or breach, in each case in any material
respect, any term or provision of any Law applicable to Seller or its Assets or
(ii) require any consent or approval of any Governmental Authority under any
Law.

Section 3.4 Capitalization. Schedule 3.4 accurately sets forth the ownership
structure of Seller and Newington Energy. Except as set forth in Schedule 3.4,
Seller owns, holds of record and is the beneficial owner of the ownership
interests shown as being owned by it on Schedule 3.4 free and clear of all
Liens, restrictions on transfer or other encumbrances other than those arising
pursuant to this Agreement, the Charter Documents of Newington Energy, all of
which have been made available to Buyer, or applicable securities Laws, and,
without limiting the generality of the foregoing, none of the Membership
Interests are subject to any voting trust, shareholder agreement or voting
agreement other than, as applicable, the Charter Documents of Newington Energy,
all of which have been made available to Buyer.

Section 3.5 Legal Proceedings. Except as set forth in Schedule 3.5, there is no
Claim or, to Seller’s Knowledge, investigation by a Governmental Authority
pending against or, to Seller’s Knowledge threatened against, Seller or
Newington Energy, which seeks a writ,

 

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judgment, order or decree restraining, enjoining or otherwise prohibiting or
making illegal any of the transactions contemplated by this Agreement or which
would be material to Newington Energy. This Section 3.5 shall not apply to
environmental matters, which are addressed by Section 4.14.

Section 3.6 Brokers. Other than with respect to Morgan Stanley & Co.
Incorporated, all of the fees and expenses of which will be paid by Seller or a
Non-Newington Affiliate, Seller does not have nor will have any liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES REGARDING

NEWINGTON ENERGY

Except as disclosed in the Schedules or the Material Contracts List (with any
disclosure in a Schedule or the Material Contracts List being deemed and
understood to be a disclosure in each other Schedule or the Material Contracts
List to which the applicability of the disclosure is apparent on its face,
notwithstanding reference to a specific section or paragraph), and, with respect
to representations and warranties as of the Closing, except as disclosed in the
Updated Schedules or the Updated Material Contracts List (with any disclosure in
an Updated Schedule or the Updated Material Contracts List being deemed and
understood to be a disclosure in each other Updated Schedule or the Updated
Material Contracts List to which the applicability of the disclosure is apparent
on its face, notwithstanding reference to a specific section or paragraph),
Seller hereby represents and warrants to Buyer as follows:

Section 4.1 Organization. Newington Energy is a limited liability company, duly
formed, validly existing and in good standing under the Laws of the State of
Delaware, and has all requisite limited liability company power and authority to
conduct its business as it is now being conducted and to own, lease and operate
its Assets. Newington Energy is duly qualified or licensed to do business in
each jurisdiction in which the ownership or operation of its Assets make such
qualification or licensing necessary, except in those jurisdictions where the
failure to be so duly qualified or licensed would not reasonably be expected to
be material to it or its Assets or Business.

Section 4.2 No Conflicts; Consents and Approvals. The execution and delivery by
Seller of this Agreement do not, the performance by Seller of its obligations
hereunder will not and the consummation of the transactions contemplated hereby
will not:

(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the Charter Documents of Newington Energy;

(b) assuming the consents set forth on Schedule 4.2, all of which are in regard
to Material Contracts (the “Newington Consents”), the Seller Approvals and the
Seller Consents have been obtained or given, as applicable, result in a
violation of or a default (or give rise to any

 

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right of termination, cancellation or acceleration) under, any Material
Contract, except for any such violations or defaults (or rights of termination,
cancellation or acceleration) which would not, in the aggregate, reasonably be
expected to be material to Newington Energy; and

(c) assuming the Seller Approvals, the Seller Consents and the Newington
Consents have been made, obtained or given, as applicable, (i) conflict with or
result in a violation or breach of, in each case, in any material respect, any
term or provision of any Law applicable to Newington Energy or any of its Assets
or (ii) require any consent or approval of any Governmental Authority under any
Law.

Section 4.3 Capitalization. Except as disclosed in Schedule 4.3, Newington
Energy is not a party to any written or oral agreement, and has not granted to
any Person any option or any right or privilege capable of becoming an agreement
or option, for the purchase, subscription, allotment or issue of any unissued
interests, units or other securities (including convertible securities, warrants
or convertible obligations of any nature) of Newington Energy (other than
pursuant to the Charter Documents of Newington Energy, which have been made
available to Buyer). There are no outstanding contractual obligations of
Newington Energy to repurchase, redeem or otherwise acquire any interests of
Newington Energy or to provide funds to or make any investment in any other
Person. No action has been taken for the merger, consolidation, dissolution,
winding up or liquidation of Newington Energy. The minute books of Newington
Energy contain true, accurate and complete records of all meetings of the
member.

Section 4.4 Business.

(a) The Business of Newington Energy is the only business operation carried on
by Newington Energy and, with respect to contract rights, Newington Energy is a
party to and enjoys the right to the benefits of all contracts, agreements and
other arrangements used in its Business (subject to the exclusion of the
Affiliate Contracts, Sellers Software Licenses, the Terminated Contracts and the
insurance policies set forth on Schedule 4.15). Except as disclosed in Schedule
4.4(a), the material Purchased Assets owned, leased or licensed by Newington
Energy and the Purchased Assets that Newington Energy otherwise has the right to
use (i) constitute the tangible Assets that are sufficient in all material
respects to operate its Business as currently operated (subject to the exclusion
of the Affiliate Contracts, the Seller’s Software Licenses, the Terminated
Contracts and the insurance policies set forth on Schedule 4.15), (ii) taken as
a whole, are in such operating condition and state of repair (giving due account
to the age and length of use of the same and subject to normal wear and tear) as
is reasonably required to operate its Business as currently operated, and
(iii) taken as a whole, have been maintained in all material respects so that
they are in the condition and state of repair stated in clause (ii) immediately
above; provided that no representation or warranty is made by Seller or its
Affiliates with regard to the value, quality, design, usage, merchantability, or
suitability for any particular purpose or use of any of the Purchased Assets.

 

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(b) Newington Energy has title to, or valid leasehold interests in or other
rights to use, all of the Purchased Assets, free and clear of all Liens, except
Permitted Liens. This Section 4.4(b) does not apply to Property, which is
addressed by Section 4.12.

(c) The representations and warranties set forth in Sections 4.4(a) and
(b) above do not pertain to any Purchased Asset or portion thereof that is
damaged or destroyed or taken by condemnation and for which the Purchase Price
is reduced pursuant to Sections 6.9 or 6.10.

Section 4.5 Bank Accounts. Schedule 4.5 sets forth an accurate and complete list
of the names and locations of banks, trust companies and other financial
institutions at which Newington Energy maintains accounts of any nature or safe
deposit boxes and the names of all Persons authorized to draw thereon, make
withdrawals therefrom or have access thereto.

Section 4.6 Legal Proceedings. Except as set forth on Schedule 4.6, there is no
Claim or, to Seller’s Knowledge, investigation by a Governmental Authority
pending against, or to Seller’s Knowledge threatened against, Newington Energy
that (a) (i) affects Newington Energy or the Purchased Assets and (ii) would
reasonably be expected, if determined adversely to Newington Energy, to result
in Losses in excess of $250,000, or (b) seeks a writ, judgment, order or decree
restraining, enjoining or otherwise prohibiting or making illegal any of the
transactions contemplated by this Agreement. Except as set forth on Schedule
4.6, there is no unsatisfied judgment against Newington Energy. This Section 4.6
shall not apply to environmental matters, which are addressed by Section 4.14.

Section 4.7 Compliance with Laws and Orders. Except as may be set forth in
Schedule 4.7, Newington Energy is in compliance in all material respects with
all Laws and orders applicable to it; provided that this Section 4.7 does not
address Taxes, which are exclusively addressed by Section 4.9; Environmental
Laws, which are exclusively addressed by Section 4.14; or matters with respect
to “Exempt Wholesale Generator” status, which are exclusively addressed in
Section 4.10.

Section 4.8 Liabilities. As of the date of this Agreement, except for
liabilities disclosed in Schedule 4.8, Newington Energy has no liabilities of
any nature, whether accrued, absolute, or (in accordance with GAAP) contingent,
except liabilities that (i) are accrued or reserved against in the most recent
Financial Statements (or are reflected in the notes thereto), (ii) were incurred
in the ordinary course of business consistent with past practice and are not
individually in excess of $250,000 (or $1,000,000 in the aggregate) since the
date of such Financial Statements, (iii) would be reflected in the Actual Net
Working Capital Adjustment Amount if such liability existed as of Closing, or
(iv) are incurred pursuant to this Agreement or the transactions contemplated
hereby.

Section 4.9 Taxes. Except as set forth on Schedule 4.9: (a) all material Tax
returns that are required to be filed on or before the Closing Date by Newington
Energy have been or will have been duly and timely filed, (b) all such Tax
returns are, to Seller’s Knowledge, true,

 

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correct and complete in all material respects, (c) all material Taxes that are
shown to be due on such Tax returns and all other material Taxes whether or not
shown as due on such Tax returns (including estimated tax payments) that are due
and owing have been or will have been timely paid in full or have been or will
be adequately reserved, (d) all material withholding Tax requirements imposed on
Newington Energy have been satisfied in full in all respects, except for amounts
that are being contested in good faith, (e) Newington Energy does not have in
force any waiver of any statute of limitations in respect of any material Taxes
or any extension of time with respect to a Tax assessment or deficiency,
(f) there are no pending or active audits or legal proceedings involving
material Tax matters or, to Seller’s Knowledge, threatened audits or proposed
deficiencies or other claims for unpaid Taxes of Newington Energy, (g) there are
no liens for material Taxes upon any of the assets of Newington Energy except
liens for current Taxes not yet due and payable, (h) Newington Energy is not a
party to and has no liability under any tax sharing or tax indemnification
agreement, (i) to Seller’s Knowledge, no claim has been made by any taxing
authority (domestic or foreign) in any jurisdiction where Newington Energy does
not file Tax returns that Newington Energy (or its owner for Tax purposes, in
cases in which Newington Energy is treated as a disregarded entity) may be
subject to Tax by that jurisdiction, and (j) to Seller’s Knowledge, no claim has
been made by any taxing authority for any Tax purpose that Newington Energy
should be subject to an entity classification that is different from its entity
classification under federal tax laws.

Section 4.10 Regulatory Status. Newington Energy is an “Exempt Wholesale
Generator”, as defined under the Public Utility Holding Company Act of 2005, as
amended, and related FERC regulations; and has been granted, and retains,
market-based rate authority by the FERC pursuant to section 205 of the Federal
Power Act.

Newington Energy is not subject to ratemaking or similar financial regulation by
any state utility commission.

Section 4.11 Contracts. (a) By letter of even date herewith, Seller provided to
Buyer a list (such list, as of the date hereof being the “Material Contracts
List”) that, excluding the Terminated Contracts, sets forth a true and complete
list of the following Contracts, that are in force and effect as of the date
hereof and to which Newington Energy is a party or by which the Purchased Assets
may be bound (the “Material Contracts”) and a true, accurate and complete copy
of each (including any and all extant amendments and modifications thereto) has
been made available to Buyer:

(i) Contracts for the purchase, exchange or sale of fuel;

(ii) Contracts for the purchase, exchange or sale of capacity, energy or
ancillary services;

(iii) Contracts for the transportation of fuel;

(iv) Contracts for the transmission of electric power;

 

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(v) interconnection Contracts for fuel or electricity;

(vi) other than Contracts of the nature addressed by Section 4.11(a)(i)-(iii),
Contracts (A) for the sale of any Asset or (B) that grant a right or option to
purchase any Asset, other than in each case Contracts entered into in the
ordinary course of business relating to Assets with a value of less than
$1,000,000 individually and all such Contracts concerning Asset purchases when
considered collectively do not call for the purchase of Assets in excess of
$5,000,000 in the aggregate;

(vii) other than Contracts listed on the Material Contracts List in response to
Section 4.11(a)(i) to (vi) and (viii) to (xv), Contracts requiring payments by
Newington Energy after the date hereof in excess of $1,000,000 for each
individual Contract;

(viii) Contracts under which it has created, incurred, assumed or guaranteed any
indebtedness for borrowed money or any capitalized lease obligation or
obligation under letter of credit or similar facilities, or under which it has
imposed a security interest on any of its Assets, tangible or intangible;

(ix) agreements of guaranty, surety or indemnification, direct or indirect, by
Newington Energy (other than agreements which, among other provisions, may
contain provisions relating to indemnification, but whose primary purpose is
something other than indemnification);

(x) Contracts with Seller or any Non-Newington Affiliate;

(xi) Contracts for consulting services providing annual compensation in excess
of $100,000 and which are not cancelable by Newington Energy on notice of 90
days or less;

(xii) outstanding futures, swap, collar, put, call, floor, cap, option or other
Contracts that are intended to benefit from or reduce or eliminate the risk of
fluctuations in interest rates or the price of commodities, including electric
power, fuel or securities;

(xiii) Contracts that purport to limit Newington Energy’s freedom to compete in
any line of business or in any geographic area;

(xiv) partnership, joint venture, profit sharing, “earnout” or limited liability
company agreements or powers of attorney which remain in effect; and

(xv) all Contracts with respect to storage, parking, loaning, distribution,
wheeling, unloading, delivery or balancing of natural gas, electricity, fuel
oil, any Hazardous Material (as used in this Section, “Hazardous Material” means
materials

 

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identified in the Hazardous Materials Transportation Act (49 U.S.C. §1801) et
seq.) and involving quantities sufficient to trigger regulation under that Act
(49 C.F.R. Part 173).

(b) Except as set forth on the Material Contracts List, each of the Material
Contracts is in full force and effect and constitutes a valid and binding
obligation of Newington Energy and, to Seller’s Knowledge, of the other parties
thereto.

(c) (i) Except as set forth on the Material Contracts List, Newington Energy is
not in breach or default in any material respect under any Material Contract,
and (ii) to Seller’s Knowledge, no other party to any of the Material Contracts
is in breach or default in any material respect thereunder.

Section 4.12 Real Property.

(a) Other than with respect to the Lease, Schedule 4.12(a) sets forth a true and
complete list of all leases or licenses under which Newington Energy is the
landlord, sublandlord, tenant, subtenant, or occupant (including all amendments,
modifications and all estoppel certificates and subordinations, non-disturbance
and attornment agreements related thereto) (each a “Property Lease”), that have
not been terminated or expired as of the date hereof, true and complete copies
of which have been made available to Buyer. Each Property Lease with respect to
which Newington Energy is a tenant, subtenant or occupant constitutes a valid
and binding obligation of Newington Energy, and, to Seller’s Knowledge, of the
other parties thereto, Newington Energy is not in breach or default in any
material respect under any such Property Lease, and to Seller’s Knowledge, no
other party to any such Property Lease is in breach or default in any material
respect thereunder. Each Property Lease with respect to which Newington Energy
is a landlord or sublandlord constitutes a valid and binding obligation of
Newington Energy, and, to Seller’s Knowledge, of the other parties thereto,
Newington Energy is not in breach or default in any material respect under any
such Property Lease, and none of Seller or Newington Energy has delivered any
notice of default thereunder to any other party to any such Property Lease.

(b) Newington Energy has valid leasehold estates in or other rights to use, in
each case which are in full force and effect, all Property subject to the Lease
and each Property Lease under which Newington Energy is a tenant, subtenant or
occupant (collectively, including the improvements thereon, the “Leased
Property”), in each case free and clear of all liens, except Permitted Liens,
and has not collaterally assigned or granted any security interest in any Leased
Property, except Permitted Liens.

(c) All improvements consisting of the power generation Assets of the Project
are wholly within the lot lines of the Property, and neither Seller nor
Newington Energy has received any notices from any Person concerning violations
of or encroachments over such lot lines with respect to any other improvements
to the Project.

 

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(d) Schedule 4.12(d) sets forth a true and complete list of all leases, other
than the Lease, that contemplate aggregate payments in excess of $500,000 for
machinery, equipment, tools, furniture, fixtures and vehicles (the “Tangible
Personal Property”) and any and all material ancillary documents pertaining
thereto (including all amendments, consents and evidence of commencement dates
and expiration dates). Newington Energy has the full right to exercise any
renewal options contained in the leases pertaining to the Tangible Personal
Property on the terms and conditions contained therein and upon due exercise
would be entitled to enjoy the use of each item of leased Tangible Personal
Property for the full term of such renewal options.

Section 4.13 Permits. Schedule 4.13 sets forth a true and complete list of all
Permits held by Newington Energy that are required for the conduct by Newington
Energy of its Business as conducted on the date hereof or the operation of the
Project in the manner in which it is currently operated, except for (i) any
Permits relating exclusively to the construction (and not required for
operation) of the Project, and (ii) any Permits, the absence of which would not,
in the aggregate, reasonably be expected to be material to Newington Energy. All
Permits set forth on Schedule 4.13 are in full force and effect and a true,
accurate and complete copy of each such Permit has been made available to Buyer
(including all extant amendments and modifications thereto). Except as set forth
on Schedule 4.13, the Project is in compliance in all material respects with all
of the foregoing Permits, and to Seller’s Knowledge there is no fact or
circumstance in existence which would cause any of the foregoing Permits to be
cancelled, revoked or fail to be renewed upon due application therefor. Assuming
receipt of the Seller Approvals, the Seller Consents and the Newington Consents,
the consummation of the Closing and the other transactions contemplated by this
Agreement would not reasonably be expected to result in a material violation of
any such Permit and Seller has no Knowledge of any facts or circumstances that
would reasonably be expected to result in such Permits not remaining in full
force and effect in accordance with their terms following the consummation of
the Closing. This Section 4.13 shall not apply to Environmental Permits, which
are exclusively addressed by Section 4.14, or matters relating to “Exempt
Wholesale Generator” status, which are exclusively addressed by Section 4.10.

Section 4.14 Environmental Matters.

(a) Schedule 4.14(a) sets forth all material environmental site assessment
reports and facility compliance audit reports for the past five years in the
possession of Seller or Newington Energy and that relate to environmental
matters concerning the construction, maintenance or operation of the Project or
any Property.

(b) Schedule 4.14(b) sets forth all Environmental Permits held by Newington
Energy that are required for the operation of the Project by Newington Energy in
the manner in which it is currently owned and operated, except any such Permits,
the absence of which would not, in the aggregate, reasonably be expected to be
material to Newington Energy. Except as set forth on Schedule 4.14(b), all
Environmental Permits are in full force and effect or, where applicable, a
renewal application has been timely filed and is pending approval by any

 

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Governmental Authority (and Seller has no Knowledge of any facts or
circumstances that would reasonably be expected to result in such approval not
being granted or renewed), and Newington Energy is in compliance with all
material terms and conditions of the Environmental Permits and such
applications. Assuming receipt of the Seller Approvals, the Seller Consents and
the Newington Consents, the consummation of the Closing and the other
transactions contemplated by this Agreement would not reasonably be expected to
result in a material violation of any such Permit and Seller has no Knowledge of
any facts or circumstances that would reasonably be expected to result in such
Permits not remaining in full force and effect in accordance with their terms
following the consummation of the Closing

(c) Except as set forth in Schedule 4.14(c), to the Knowledge of Seller,
Newington Energy and the Project is and, to the actual knowledge of the Persons
listed on Schedule 1.1-K (without any duty of due inquiry), has been in
compliance in all material respects with all Environmental Laws and Permits
under Environmental Law.

(d) Except as set forth in Schedule 4.14(d), Newington Energy has not received
any written communication from any third party alleging that Newington Energy or
any facility owned, operated, or subject to development by Newington Energy is
not in material compliance with or has material liability under any
Environmental Law, except as would not, in the aggregate, reasonably be expected
to be material to Newington Energy.

(e) Except as set forth in Schedule 4.14(e), since the initial date on which
Seller took possession of the Project or, to the actual knowledge of the Persons
listed on Schedule 1.1-K (without any duty of due inquiry), since before that
date, there has been no Release of any Hazardous Substance at or from such
Project arising from Newington Energy’s operations that has formed or would
reasonably be expected to form the basis of (i) any material Environmental Claim
against Newington Energy or against any person whose liability for such claim
Newington Energy has or may have retained or assumed, either by operation of Law
or Contract, or (ii) any requirement pursuant to applicable Environmental Law on
the part of Newington Energy to undertake material Remedial Action.

(f) Except as set forth on Schedule 4.14(f), no claims for indemnification have
been made with respect to any Environmental Claims under the purchase and sale
agreement or other acquisition agreement with respect to Newington Energy.

Section 4.15 Insurance. Schedule 4.15 sets forth a list of all insurance
policies and fidelity bonds covering Newington Energy, the Project and tangible
Assets of Newington Energy and/or the Business of Newington Energy. Schedule
4.15 sets forth a list of all pending claims of $500,000 or more under any such
policies (and, with respect to such pending claims, Seller is taking or has
taken all necessary actions in connection with the processing of such claim),
and coverage has not been denied by the underwriters of such policies and bonds.
All premiums due and payable under such policies and bonds have been paid, and
Newington Energy is otherwise in material compliance with the terms and
conditions of all such policies and bonds. To the

 

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Knowledge of Seller, there is no threatened termination (that would take effect
prior to Closing) of any coverage under such policies and bonds.

Section 4.16 Intellectual Property.

(a) Newington Energy owns, or has the licenses or rights to use for the
Business, all Intellectual Property currently used in the Business; provided
that (i) Seller or Non-Newington Affiliates have entered into the agreements set
forth in Schedule 4.16(a) (collectively, the “Seller’s Software Licenses”),
pursuant to which Seller and/or one or more Non-Newington Affiliates, together
with Newington Energy, are permitted to use the software set forth opposite each
Seller’s Software License listed on Schedule 4.16(a) (collectively, the
“Seller’s Licensed Software”) and (ii) as further set forth in Section 6.18, the
Seller’s Software Licenses will not be assigned in whole or in part to Buyer or
Newington Energy and Buyer has certain obligations in respect of the Seller’s
Licensed Software.

(b) Except as set forth in Schedule 4.16(b), Newington Energy has not received
from any Person a claim in writing that Newington Energy is infringing in any
material respect on the Intellectual Property of such Person.

Section 4.17 Brokers. Other than with respect to Morgan Stanley & Co.
Incorporated, all of the fees and expenses of which will be paid by Seller or a
Non-Newington Affiliate, Newington Energy does not have nor will have any
liability or obligation to pay fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement.

Section 4.18 Subsidiaries. Except as disclosed in Schedule 4.18, Newington
Energy has no subsidiaries and does not own equity interests in any Person.

Section 4.19 Financial Statements.

(a) Seller has made available to Buyer true and complete copies of (i) the
unaudited balance sheet of Newington Energy for the fiscal year ended
December 31, 2006 and the related unaudited statements of operations, changes in
partnership deficit and cash flows for the fiscal year then ended (the
“Unaudited Balance Sheet”); and (ii) the unaudited balance sheet of Newington
Energy for the nine months ended September 30, 2007 and the related unaudited
statements of operations, changes in partnership deficit and cash flows for the
nine month period then ended (the “September 30 Balance Sheet” and, together
with the Unaudited Balance Sheet, the “Financial Statements”).

(b) Except as set forth in Schedule 4.19(b), the Financial Statements were
prepared in accordance with GAAP applied on a basis consistent with the past
practices of Seller and fairly present the financial condition and results of
operations of Newington Energy as of the respective dates thereof and for the
respective periods covered thereby (subject, in the case of unaudited statements
to the absence of notes and normal year-end audit adjustments that are not

 

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material in amount). The financial and accounting records of Newington Energy
are in all material respects complete and correct and do not contain or reflect
any material inaccuracies or discrepancies and have been maintained in
accordance with good business and accounting practices.

Section 4.20 Conduct in the Ordinary Course; Absence of Changes. Except as set
forth on Schedule 4.20, since September 30, 2007, Newington Energy has conducted
its business in the ordinary course and consistent with past practice. Without
limitation of the foregoing, since September 30, 2007, except as set forth on
Schedule 4.20 and except as expressly required or permitted by this Agreement:

(a) Newington Energy is not involved in any payment dispute in excess of
$500,000 with any of its counterparties;

(b) Newington Energy has not implemented any change in its accounting methods or
practices materially affecting its Assets (provided that the representation in
this Section 4.20(b) applies only to the period between September 30, 2007 and
the date hereof);

(c) no event has occurred which would entitle any party (with or without the
giving of notice) to call for the repayment of any indebtedness of Newington
Energy prior to its normal maturity date;

(d) no asset of a value or price in excess of $500,000 has been acquired or
disposed of or agreed to be acquired or disposed of by Newington Energy, and no
contract involving expenditure by it in excess of $500,000 in total has been
entered into by Newington Energy (provided that the representation in this
Section 4.20(d) applies only to the period between September 30, 2007 and the
date hereof);

(e) Newington Energy has not hired any employee or consultant (except those that
may be terminated on no more than 60 days notice) (provided that the
representation in this Section 4.20(e) applies only to the period between
September 30, 2007 and the date hereof); and

(f) no event or condition has occurred which, individually or in the aggregate,
has had, or will have, a Material Adverse Effect.

Section 4.21 Certain Matters Regarding the Project. With respect to the full
unforced capacity of the Project, Newington Energy or a Non-Newington Affiliate
has qualified the Project for the ISO New England, Inc. capacity market for the
annual periods of each of 2007 through 2010 and Newington Energy is currently
receiving payments in connection therewith for the current period.

 

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

Except as disclosed in the Schedules pertaining to the Sections of this Article
V (with any disclosure in such a Schedule being deemed and understood to be a
disclosure in each other such Schedule to which the applicability of the
disclosure is apparent on its face, notwithstanding reference to a specific
section or paragraph), Buyer hereby represents and warrants to Seller as
follows:

Section 5.1 Organization. Buyer is a limited liability company duly formed,
validly existing and in good standing under the Laws of Delaware. Buyer is duly
qualified or licensed to do business in each other jurisdiction where the
obligations to be performed by it hereunder makes such qualification or
licensing necessary, except in those jurisdictions where the failure to be so
qualified or licensed would not reasonably be expected to result in a material
adverse effect on Buyer’s ability to perform such obligations hereunder.

Section 5.2 Authority. Buyer has all requisite limited liability company power
and authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery by Buyer of this Agreement and the performance by Buyer of its
obligations hereunder have been duly and validly authorized by all necessary
limited liability company action on behalf of Buyer. This Agreement has been
duly and validly executed and delivered by Buyer and constitutes the legal,
valid and binding obligation of Buyer enforceable against Buyer in accordance
with its terms except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, arrangement, moratorium or other similar
Laws relating to or affecting the rights of creditors generally or by general
equitable principles.

Section 5.3 No Conflicts. The execution and delivery by Buyer of this Agreement
do not, the performance by Buyer of its obligations hereunder will not and the
consummation of the transactions contemplated hereby will not:

(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of its Charter Documents;

(b) be in violation of or result in a default (or give rise to any right of
termination, cancellation or acceleration) under any material Contract to which
Buyer is a party, except for any such violations or defaults (or rights of
termination, cancellation or acceleration) which would not, in the aggregate,
reasonably be expected to result in a material adverse effect on Buyer’s ability
to perform its obligations hereunder; or

(c) assuming all required filings, waivers, approvals, consents, authorizations
and notices set forth in Schedule 5.3 (collectively, the “Buyer Approvals”), the
Seller Consents, the Seller Approvals and the Newington Consents have been made,
obtained or given, (i) conflict with or result in a violation or breach of any
term or provision of any Law applicable to Buyer or

 

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any of its material Assets or (ii) require any consent or approval of any
Governmental Authority under any Law.

Section 5.4 Legal Proceedings. There is no Claim or, to Buyer’s knowledge,
investigation by a Governmental Authority pending against or, to Buyer’s
knowledge, threatened against, Buyer which seeks a writ, judgment, order or
decree restraining, enjoining or otherwise prohibiting or making illegal any of
the transactions contemplated by this Agreement.

Section 5.5 Compliance with Laws and Orders. Buyer is not in violation of or in
default under any Law or order applicable to Buyer or its Assets the effect of
which, in the aggregate, would reasonably be expected to hinder, prevent or
delay Buyer from performing its obligations hereunder.

Section 5.6 Brokers. Buyer does not have any liability or obligation to pay fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement for which Seller would become liable or
obligated.

Section 5.7 Acquisition as Investment. Buyer is acquiring the Membership
Interests for its own account as an investment without the present intent to
sell, transfer or otherwise distribute the same to any other Person except in
accordance with all Laws. Buyer has made, independently and without reliance on
Seller (except to the extent that Buyer has relied on the express
representations and warranties of Seller in this Agreement), its own analysis of
the Membership Interests, Newington Energy, the Project and the Purchased Assets
for the purpose of acquiring the Membership Interests. Buyer acknowledges that
the Membership Interests are not registered pursuant to the Securities Act of
1933 (the “1933 Act”) and that none of the Membership Interests may be
transferred, except pursuant to an applicable exemption under the 1933 Act or a
transaction not subject to the 1933 Act. Buyer is an “accredited investor” as
defined in Rule 501 promulgated under the 1933 Act.

Section 5.8 Financial Resources. Buyer has delivered, or caused to be delivered,
to Seller, correct, complete and fully executed copies of (a) signed commitment
letters from Allco Finance Group Limited and Industry Funds Management
(Nominees) Ltd. (collectively, the “Equity Investors”) to provide equity
financing in the aggregate amount of $597,000,000.00 (the “Equity Commitment
Letters”) and (b) a signed financing commitment, as amended through the date
hereof, from Barclays Bank PLC (the “Debt Commitment Letter”) to provide Buyer
with financing in the aggregate amount of $880,000,000.00 (together with the
Equity Commitment Letters, referred to, collectively, as the “Commitments,” and
individually, as a “Commitment”). Assuming consummation of the transactions
contemplated by the Commitments, Buyer shall have at the Closing proceeds in
connection with the Commitments in an aggregate amount sufficient to consummate
the transactions contemplated by this Agreement. As of the date hereof, none of
the Commitments has been amended or modified, and the respective commitments
contained in the Commitments have not been withdrawn or rescinded in any
respect. As of the date hereof, (i) the Equity Commitment Letters, in the forms
so delivered, are in full force and effect and are a legal, valid, and binding
obligation of the parties thereto, (ii) the

 

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Debt Commitment Letter, in the form so delivered, is in full force and effect
and is a legal, valid and binding obligation of Buyer and, to the knowledge of
Buyer, the other parties thereto, and (iii) no event has occurred which, with or
without notice, lapse of time or both, would constitute a default on the part of
Buyer under any Commitment.

Section 5.9 No Conflicting Contracts. Except as set forth in Schedule 5.9,
neither Buyer nor any of its Affiliates is a party to any Contract to build,
develop, acquire or operate any power facility, or otherwise owns Assets or is
engaged in a business, that would reasonably be expected to hinder or cause an
undue delay in any Governmental Authority’s granting of a Buyer Approval, a
Seller Approval, a Seller Consent or a Newington Consent, and neither Buyer nor
any of its Affiliates has any plans to enter into any such Contract, acquire any
such Assets or engage in any such business prior to the Closing Date.

Section 5.10 Opportunity for Independent Investigation. Prior to its execution
of this Agreement, Buyer has conducted to its satisfaction an independent
investigation and verification of the current condition and affairs of Newington
Energy the Purchased Assets and the Project. In making its decision to execute
this Agreement and to purchase the Membership Interests, Buyer has relied and
will rely solely upon the results of such independent investigation and
verification and the express representations, terms and conditions of this
Agreement.

Section 5.11 No Knowledge of Seller’s Breach. Buyer has no knowledge of any
breach of any representation or warranty, including any breach of Section 4.20,
by Seller or of any other condition or circumstance that would excuse Buyer from
its timely performance of its obligations hereunder.

Section 5.12 Bankruptcy. There are no bankruptcy, reorganization, or arrangement
proceedings pending against, being contemplated by, or to the knowledge of
Buyer, threatened against, it.

ARTICLE VI

COVENANTS

The Parties hereby covenant and agree as follows:

Section 6.1 Regulatory and Other Approvals. During the Interim Period:

(a) The Parties will, in order to consummate the transactions contemplated
hereby, (i) take all commercially reasonable steps necessary, and proceed
diligently and in good faith and use all commercially reasonable efforts, as
promptly as practicable, to obtain the Seller Approvals, Seller Consents,
Newington Consents and Buyer Approvals in form and substance reasonably
satisfactory to Seller and Buyer, and to make all required filings with, and to
give all required notices to, the applicable Governmental Authorities and
(ii) cooperate in good faith with the applicable Governmental Authorities and
provide promptly such other information and communications to such Governmental
Authorities or other Persons as such Governmental

 

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Authorities or other Persons may reasonably request in connection therewith. In
furtherance of the foregoing, Seller agrees to use its commercially reasonable
efforts, during the period of 15 Business Days commencing on the first Business
Day after the date hereof, to arrange for a meeting between Buyer and each of
the counterparties to the Material Contracts. If Seller does not or is unable to
arrange for such meetings, then Buyer shall be permitted to contact such
counterparties directly. At any meeting arranged with such counterparties,
Representatives of Seller shall be entitled to attend and participate therein.

(b) The Parties will provide prompt notification to each other when any such
approval referred to in Section 6.1(a) is obtained, taken, made, given or
denied, as applicable, and will advise each other of any material communications
with any Governmental Authority or other Person regarding any of the
transactions contemplated by this Agreement.

(c) In furtherance of the foregoing covenants:

(i) Each Party shall prepare, as soon as is practical following the execution of
this Agreement, all necessary filings in connection with the transactions
contemplated by this Agreement that may be required by FERC, including, but not
limited to, under sections 8 and 203 of the Federal Power Act, or under the HSR
Act or any other federal, state or local Laws. Each Party shall submit such
filings to the applicable Governmental Authority as soon as practicable, but in
no event later than 30 days after the execution hereof for filings with the FERC
and under the HSR Act. The Parties shall request expedited treatment of any such
filings, shall promptly make any appropriate or necessary subsequent or
supplemental filings, and shall cooperate with each other in the preparation of
such filings in such manner as is reasonably necessary and appropriate. The
Parties shall consult with each other and shall agree in good faith upon the
timing of such filings.

(ii) Neither Party shall, and each Party shall cause their respective Affiliates
not to, take any action that could reasonably be expected to adversely affect
the approval of any Governmental Authority of any of the aforementioned filings.

(iii) The Parties shall file with the Committee on Foreign Investment in the
United States (“CFIUS”), as promptly as practicable, a joint voluntary notice
under Section 721 of the Defense Production Act of 1950, as amended (the
“Exon-Florio Provision”), in respect of the transactions contemplated hereby.
The Parties shall cooperate with each other in the preparation of this filing in
such manner as is reasonably necessary and appropriate. Each Party shall
promptly furnish the other Party with any necessary information and reasonable
assistance that such other Party may reasonably request in connection with this
filing. The Parties shall promptly, appropriately and reasonably respond, after
consultation between the Parties, to any requests in connection with this filing
from CFIUS or its member agencies.

 

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Section 6.2 Access of Buyer.

(a) During the Interim Period, Seller will provide, and will cause Newington
Energy to provide, Buyer and its Representatives with reasonable access, upon
reasonable prior notice (but in no event less than five Business Days’ prior
written notice) and during normal business hours, to the Project and the
officers and employees of Seller and its Affiliates who have significant
responsibility for Newington Energy and to Newington Energy’s properties, books,
Contracts and records and members of management, and Seller shall furnish
promptly to Buyer such information concerning Newington Energy’s Business and
properties as Buyer may reasonably request, but only to the extent that such
access and such requests do not unreasonably interfere with the business of
Seller and its Affiliates or the Business of Newington Energy, and that such
access is reasonably related to the requesting Party’s obligations and rights
hereunder, and subject to compliance with applicable Laws; provided that Seller
shall have the right to (i) have a Representative present for any communication
with employees or officers of Seller or its Affiliates and (ii) impose
reasonable restrictions and requirements for safety purposes. Buyer shall be
entitled, at its sole cost and expense, to have the Property surveyed and to
conduct non-invasive physical inspections; provided that Buyer shall not be
entitled to collect any air, soil, surface water or ground water samples nor to
perform any invasive or destructive sampling on the Property. Promptly upon
completion of any such entry, Buyer shall repair any damage caused Buyer or
Buyer’s Affiliate during such entry. Any access by or disclosure to Buyer
pursuant to the foregoing shall be subject to such access or disclosure (A) not
violating any Laws or Contracts (provided that with respect to any Contract that
would be violated by such access or disclosure, Seller shall exercise
commercially reasonable efforts to obtain a waiver or consent from the Contract
counterparty in order to permit such access or disclosure), (B) not resulting in
the waiver of any attorney/client or attorney work product privilege, (C) not
being of confidential information concerning the activities of Seller or the
Non-Newington Affiliates that is unrelated to Newington Energy, the Business, or
the Project, (D) not being of proprietary models of Seller or any of its
Affiliates pertaining to energy project evaluation, energy or fuel price curves
or projections, or other economic predictive models, or (E) with respect to a
hedge provider or toller, not being of Contracts that are no longer in force and
effect.

(b) During the Interim Period, in no event shall Buyer or any of Buyer’s
Affiliates hold any meetings with, or otherwise communicate with, any suppliers,
other vendors or customers of Newington Energy, or any representatives of any
Governmental Authority, regarding the Project or Newington Energy without the
prior consent of Seller (which consent will not be unreasonably withheld or
delayed); provided that Seller agrees to use its commercially reasonable
efforts, during the period of 15 Business Days commencing on the first Business
Day after the date hereof, to arrange for a meeting between Buyer and Hawkeye.
If Seller does not or is not able to arrange for such a meeting, then Buyer
shall be permitted to contact Hawkeye directly. At any such meeting consented to
by Seller, Representatives of Seller shall be entitled to participate therein.

(c) Buyer agrees to indemnify and hold harmless Seller, its Affiliates and their
Representatives from and against any and all liabilities, losses, costs or
expenses incurred by Seller, its Affiliates or their Representatives arising out
of the access and other rights under this

 

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Section 6.2, including any Claims by any of Buyer’s Representatives for any
injuries or property damage while present on the Property.

(d) Buyer shall use its commercially reasonable efforts to arrange and
consummate all of the Commitments, including using its reasonable best efforts
to (i) negotiate definitive agreements with respect thereto on terms and
conditions contained therein and (ii) to satisfy all conditions in such
definitive agreements that are within its control. In the event all or any
portion of the equity or debt financing under the Commitments becomes
unavailable on the terms and conditions contemplated in the Commitments, Buyer
shall use its commercially reasonable efforts to arrange to obtain any such
financing from alternative sources as promptly as practicable following the
occurrence of such event (the “Alternative Financing”). Buyer shall give Seller
prompt notice of any material breach by any party of any Commitments or any
termination of any Commitments. Buyer shall keep Seller reasonably informed of
the status of their efforts to arrange the Commitments and shall notify Seller
of any material modifications to the Commitments.

(e) Seller shall provide, and, prior to the Closing Date, shall cause Newington
Energy to provide, reasonable cooperation in connection with the arrangement of
the equity and debt financing contemplated by the Commitments (or Alternative
Financing) as may be reasonably requested by Buyer, including (i) participation
in a reasonable number (in the aggregate) of meetings, presentations, management
presentation sessions, “road shows,” sessions with ratings agencies, and due
diligence sessions, (ii) furnishing Buyer and its financing sources with, or (if
not already prepared) assisting Buyer with the preparation (at Buyer’s expense)
of, audited financial statements for Newington Energy, for each of the three
most recent fiscal years (including, as one of such fiscal years, the fiscal
year ended December 31, 2007), furnishing such other financial information
regarding Newington Energy as may be reasonably requested by Buyer, including,
if available, unaudited financial statements as of and for the fiscal years
ending December 31, 2003 and 2004 and the then most recent quarterly unaudited
financial statements (and the corresponding quarterly period for the prior year)
and, if not available, other available information relating to the financial
reporting of Newington Energy, and furnishing usual and customary management
representation letters that may be requested by the auditors as a condition of
the preparation of the audited financial statements referenced above in this
Section 6.2(e), (iii) reasonably assisting Buyer with Buyer’s satisfaction of
the conditions, if any, set forth in the Commitments which reasonably require
the cooperation of Seller or Newington Energy, and (iv) providing commercially
reasonable cooperation with Buyer and Buyer’s lenders and potential physical and
financial hedge providers and tollers in connection with hedging the syndication
of such debt financing and related activities; provided that (A) Seller’s
provision of such cooperation shall not unreasonably interfere with the business
of the Seller and its Affiliates or the Business of Newington Energy, (B) Seller
shall not be required to pay any commitment or other similar fee or incur any
cost, expense or liability whatsoever in connection with such cooperation or the
equity or debt financing under the Commitments and Newington Energy shall not be
required, prior to the Closing, to pay any commitment or other similar fee or
incur any cost, expense or liability whatsoever in connection with such
cooperation or the equity or debt financing under the Commitment, (C) the public
accounting firm that will conduct the audit work

 

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in connection with the audited financial statements referenced above in this
Section 6.2(e) shall be selected by Seller in its sole discretion (unless, in
Seller’s sole discretion, Seller expressly permits Buyer to make the selection),
(D) Buyer shall promptly pay all fees and expenses of the public accounting firm
that conducts the audit work in connection with the audited financial statement
referenced above in this Section 6.2(e) (and, if Seller should happen to pay
such fees and expenses, to promptly reimburse Seller therefore), (E) Buyer shall
pay the Seller for the reasonably allocated and documented cost of each officer
or employee of Seller, Newington Energy or any Non-Newington Affiliate who
performs any service arising from or in connection with this Section 6.2(e),
such cost to be a per hour cost and based on the fully loaded cost (salary,
bonuses, benefits, administrative and overhead costs) of each such officer or
employee and the time spent on performing services arising from or in connection
with this Section 6.2(e), and Buyer shall also reimburse Seller for the
reasonable out-of-pocket costs incurred by the Seller or Non-Newington Affiliate
in connection with any officer or employee of Seller or any Non-Newington
Affiliate performing any service arising from or in connection with this
Section 6.2(e), (F) Seller’s obligations pursuant to this Section 6.2(e) shall
not extend beyond the date that is nine months following the completion of the
audited financial statements referred to in clause (ii) above, and (G) Buyer
shall keep Seller reasonably apprised as to the timing and schedule with respect
to the arrangement of the equity and debt financing Commitments (or Alternative
Financings). Nothing in this Agreement and no performance or failure to perform
any services arising from or in connection with this Section 6.2(e) shall be
construed to make the receipt by Buyer or any of its Affiliates of any financing
whatsoever (whether debt financing, equity financing, Alternate Financing or
otherwise, including any matter referenced in any of the Commitments) or
entering into any contracts or other arrangements with physical or financial
hedge providers or tollers a condition of Buyer’s obligation to consummate the
Closing. The only conditions to Buyer’s obligation to consummate the Closing are
set forth in Article VII of this Agreement.

Section 6.3 Certain Restrictions. Except as expressly required or expressly
permitted hereby, or as otherwise set forth in Schedule 6.3, during the Interim
Period, Seller will cause Newington Energy and the Project to operate and be
maintained in the ordinary course of business (including with respect to capital
expenditures), without contravention of any Material Contract and in accordance
with good utility practices and Permits applicable to it, and in accordance, in
all material respects, with all Laws. Seller will also cause Newington Energy to
take all commercially reasonable actions as may be necessary to maintain the
Project’s market-based rate authority and its status as an “Exempt Wholesale
Generator”. Without limiting the foregoing, except as otherwise set forth on
Schedule 6.3, except as otherwise expressly required or expressly permitted
hereby or as expressly consented to by Buyer in writing (which consent with
respect to clauses (b), (g), (q) and (r) below, shall not be unreasonably
withheld or delayed), and except that this Section 6.3 shall not apply to
Terminated Contracts or services terminated pursuant to Section 6.6, Seller
will, during the Interim Period, cause Newington Energy not to:

(a) permit or allow to exist any Lien (other than a Permitted Lien) to be
imposed on or against any of the Purchased Assets or Membership Interests;

 

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(b) grant any waiver of any term under, or give any consent with respect to, any
Material Contract (other than consents in connection with day-to-day operations
under such Material Contract granted in the ordinary course of business
consistent with past practice);

(c) sell, lease, transfer, convey, remove, assign, salvage, or otherwise dispose
of any Purchased Assets (including emission credits and allowances) in excess of
$100,000 in the aggregate or outside the ordinary course of business consistent
with past practice;

(d) other than accounts payable incurred in the ordinary course of business
incur, create, assume or otherwise become liable for indebtedness for borrowed
money or issue any debt securities or assume or guarantee the obligations of any
other Person;

(e) except as may be required to meet the requirements of Laws or changes in
GAAP, change any financial or tax accounting method, principle or practice or
change an annual accounting period;

(f) fail to maintain its existence or consolidate with any other Person;

(g) except for capital expenditures for which neither Buyer nor its Affiliates
will have any obligation on or following the Closing, authorize or make any
capital expenditure or acquire any property or Asset of any other Person that,
in the aggregate is in excess of 10% over the aggregate amount of the current
capital expenditure budget for the Project;

(h) (i) issue, sell, grant, pledge, dispose of, transfer or encumber any shares
of its capital stock, other securities, rights of any kind or ownership
interest, or any securities or rights convertible into, exchangeable or
exercisable for, or evidencing the right to subscribe for, any shares of its
capital stock, other securities, rights of any kind or ownership interest, or
any rights, warrants or options to purchase any shares of its capital stock,
other securities, rights of any kind or ownership interest, or any securities or
rights convertible into, exchangeable or exercisable for, or evidencing the
right to subscribe for, any shares of its capital stock, other securities,
rights of any kind or ownership or interest; (ii) redeem, purchase or otherwise
acquire any of its outstanding shares of capital stock, or any rights or options
to acquire any shares of its capital stock; or (iii) split, combine, subdivide
or reclassify any shares of its capital stock;

(i) liquidate, dissolve, recapitalize, reorganize or otherwise wind up its
business or operations;

(j) purchase any securities of any Person;

(k) except with respect to any Contract under which performance will be
completed prior to Closing and with respect to which neither Buyer nor its
Affiliates will have any obligation on or following the Closing, enter into,
terminate, replace, extend, renew, fail to enforce any right under, or amend any
Contract involving sale or purchase of energy, capacity, ancillary services or
fuel (or physical or financial hedges in respect of any of the foregoing) or

 

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involving a total consideration or involving indemnification throughout its term
in excess of $1,000,000 or which restricts its ability to compete (other than
Contracts for the purchase of equipment which are governed solely by
Section 6.3(o));

(l) cancel, forgive or release any debts owed to Newington Energy or waive any
claims or rights having a value in excess of $1,000,000 or fail to pay its bills
in the ordinary course of business consistent with past practice;

(m) make, amend or revoke any election with respect to Taxes;

(n) amend or modify its Charter Documents or grant any power of attorney;

(o) purchase any individual item of equipment involving total consideration in
excess of $5,000,000 (other than purchases in the ordinary course of business
which will be fully paid prior to Closing); provided that Seller in its sole
discretion and without the consent of Buyer may cause Newington Energy to enter
into any such purchase so long as Seller first executes and delivers to Buyer a
written agreement obligating Seller, at Seller’s expense, to cause any payments
and other performance required of Newington Energy pursuant to such purchase
after the Closing to be paid by Seller and performed at the expense of Seller
(or to advance to Buyer for Buyer’s payment or performance of same) when and as
such payments or other performance becomes due pursuant to such purchase;

(p) waive, file, institute, commence, compromise or settle any material Claim or
investigation by a Governmental Authority;

(q) hire any consultant (unless pursuant to a contract which is terminable upon
90 days’ notice) or any employee;

(r) on the date immediately prior to the Closing Date, make any determinations
as to whether or not to dispatch the Project without Buyer’s written consent
therefor;

(s) take any action or omit to take any action that would reasonably be likely
to cause a material breach of Sections 4.10 or 4.21; or

(t) agree or commit to do any of the foregoing.

Notwithstanding the foregoing, without the prior consent of Buyer, (i) Seller
may permit Newington Energy to take commercially reasonable actions with respect
to emergency situations so long as Seller shall, upon receipt of notice of any
such actions, promptly inform Buyer of any such actions taken, and (ii) the
maximum available amount under the Support Obligations may be increased, and
additional Support Obligations may be furnished, subject to and in accordance
with Section 6.5(d)(iii).

 

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Section 6.4 Use of Certain Names. Within 60 days following Closing, Buyer shall
use commercially reasonable efforts to cause Newington Energy to cease using the
word “CED”, “Con Ed”, “Con Edison”, “Consolidated Edison”, “Edison” and any word
similar thereto or constituting an abbreviation or extension thereof, and the
CED, Con Ed, Con Edison, Consolidated Edison and Edison logos (collectively,
such words, abbreviations, extensions and logos are referred to herein as the
“Seller Marks”), including using commercially reasonable efforts to eliminate
the Seller Marks from the Property and Purchased Assets and dispose of any
unused stationery and literature of Newington Energy bearing the Seller Marks,
and thereafter, Buyer shall not, and shall cause Newington Energy not to, use
the Seller Marks or any logos, trademarks, trade names, patents or other
Intellectual Property rights belonging to Seller or any Non-Newington Affiliate,
and Buyer acknowledges that it, its Affiliates and Newington Energy have no
rights whatsoever to use such Intellectual Property. Without limiting the
foregoing:

(a) Within 10 days after the Closing Date, Buyer shall cause Newington Energy to
change its name to a name that does not contain any of the Seller Marks.

(b) Within 30 days after the Closing Date, Buyer shall provide evidence that is
reasonably acceptable to Seller, that Buyer has made all filings required
pursuant to paragraph (a) above with, and has provided notice to, all applicable
Governmental Authorities and all counterparties to the Material Contracts
regarding the sale of Newington Energy and the Purchased Assets thereof to Buyer
and the new addresses for notice purposes.

Section 6.5 Support Obligations. (a) Buyer recognizes that Seller and/or certain
of the Non-Newington Affiliates have provided credit support to Newington Energy
with respect to the Project pursuant to certain credit support obligations, all
of which that are outstanding as of the date hereof are set forth on Schedule
6.5 (such support obligations contained in Schedule 6.5 are hereinafter referred
to as the “Support Obligations”).

(b) Prior to Closing, Buyer shall use its commercially reasonable efforts to
effect the full and unconditional release, effective as of the Closing Date, of
the Seller and Non-Newington Affiliates from all Support Obligations, including
by using commercially reasonable efforts to:

(i) furnish a letter of credit to replace each existing letter of credit that is
a Support Obligation containing terms and conditions that are substantially
similar to the terms and conditions of such existing letter of credit and from
lending institutions that have a Credit Rating commensurate with or better than
that of lending institutions for such existing letter of credit;

(ii) institute an escrow arrangement to replace each existing escrow arrangement
that is a Support Obligation with terms equal to or more favorable to the
counterparty thereunder than the terms of such existing escrow arrangement;

 

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(iii) furnish a guaranty to replace each existing guaranty that is a Support
Obligation, which replacement guaranty is issued by a Person having a net worth
or Credit Rating acceptable to the beneficiary of such existing guaranty, and
containing terms and conditions that are substantially similar to the terms and
conditions of such existing guaranty;

(iv) post a surety or performance bond to replace each existing surety or
performance bond that is a Support Obligation, which replacement surety or
performance bond is issued by a Person having a net worth and Credit Rating at
least equal to those of the issuer of such existing surety or performance bond,
and containing terms and conditions that are substantially similar to the terms
and conditions of such existing surety or performance bond; and

(v) replace any other security agreement or arrangement on substantially similar
terms and conditions to the existing security agreement or arrangement that is a
Support Obligation.

Nothing contained in this Agreement shall prohibit Buyer from furnishing a
letter of credit to replace each of the Support Obligations described in
Sections 6.5(b)(ii) though (v) above, in each case, containing terms and
conditions that provide credit support substantially similar to the existing
Support Obligations and such letters of credit shall be from lending
institutions that have a Credit Rating acceptable to each obligee.

(c) Buyer and Seller shall cooperate and use their commercially reasonable
efforts to cause the beneficiary or beneficiaries of such Support Obligations to
(i) remit any cash to Seller or one of its Affiliates, as applicable, held under
any escrow arrangement that is a Support Obligation promptly following the
replacement of such escrow arrangement pursuant to Section 6.5(b)(ii) and
(ii) terminate, surrender and redeliver to Seller, one of its Affiliates or
Seller’s other designee each original copy (to the extent reasonably
practicable) of each original guaranty, letter of credit or other instrument
constituting or evidencing such Support Obligations.

(d) If Buyer is not successful, following the use of its commercially reasonable
efforts, in obtaining the complete and unconditional release of Seller and the
Non-Newington Affiliates from any Support Obligations by the Closing Date (each
such Support Obligation, until such time as such Support Obligation is released
in accordance with Section 6.5(d)(i), a “Continuing Support Obligation”), then:

(i) from and after the Closing Date, Buyer shall continue to use its
commercially reasonable efforts to obtain promptly the full and unconditional
release of Seller and the Non-Newington Affiliates from each Continuing Support
Obligation;

(ii) from and after Closing, Buyer shall reimburse and indemnify Seller and the
Non-Newington Affiliates for, from and against any liabilities, losses, costs or
expenses incurred by Seller or the Non-Newington Affiliates in connection with
any

 

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and all Continuing Support Obligations (including any demand or draw upon, or
withdrawal from, or payment under any Continuing Support Obligation, the amount
of which shall be reimbursed by Buyer within 3 Business Days of demand therefor
to Buyer of the demand or request for payment under the Continuing Support
Obligation), except to the extent that any such liabilities, losses, costs or
expenses are incurred as a result of the failure by Seller or any Non-Newington
Affiliate to comply with the terms of any Continuing Support Obligation; and

(iii) as security for Buyer’s obligations pursuant to Section 6.5(d)(ii) (which
security may be drawn down upon if Buyer does not timely perform its obligations
pursuant to Section 6.5(d)(ii)), Buyer shall deliver to Seller at the Closing
and maintain at all times thereafter until the full and unconditional release of
each Continuing Support Obligation in accordance with Section 6.5(d)(i) (the
“Permitted Expiry”) a letter of credit (the “Buyer L/C”) that satisfies the
Letter of Credit Requirements and is in the amount of the total of the maximum
available amounts under all Continuing Support Obligations combined as such
maximum available amounts for each Support Obligation are listed on Schedule
6.5(a), it being understood and agreed that subject to Section 6.3, Schedule
6.5(a) may be modified by one or more Updated Schedules during the Interim
Period to reflect increased maximum available amounts under one or more Support
Obligations above those shown for such Support Obligation on Schedule 6.5(a) as
of the execution of this Agreement, which increased maximum amounts were
reasonably required during the Interim Period in order for Newington Energy to
operate in the ordinary course of business consistent with past practice, or to
reflect the maximum amounts of Support Obligations that were not listed on
Schedule 6.5(a) as of the execution of this Agreement but which were reasonably
required during the Interim Period in order for Newington Energy to operate in
the ordinary course of business consistent with past practice; provided,
however, that the total of the incremental increases in the maximum available
amounts under the Support Obligations listed on Schedule 6.5(a) as of the
execution of this Agreement and the maximum amounts of the Support Obligations
that were furnished anew during the Interim Period shall not exceed an amount
equal to twenty percent (20%) of the total of the maximum available amounts
under the Support Obligations as listed on Schedule 6.5(a) as of the execution
of this Agreement; and provided further that to the extent the aggregate amount
of the Continuing Support Obligations is reduced on or after the Closing Date
pursuant to Section 6.5(d)(i), Buyer shall be entitled to amend or reduce the
available amount under or replace the Buyer L/C from time to time to reflect
such reduction. If at any time prior to the Permitted Expiry, the Buyer L/C has
an expiration date earlier than the Permitted Expiry, then the Buyer shall cause
to be provided to Seller, at least thirty (30) days prior to the expiration date
of the Buyer L/C, a substitute Buyer L/C (which may consist of an amendment to
the Buyer L/C) containing an expiration date that is at least ninety (90) days
later than the expiration date of the Buyer L/C it is amending or replacing. If,
at any time prior to the Permitted Expiry, the Credit Rating of the bank issuing
the Buyer L/C falls below the level specified in the Letter of Credit
Requirements or such bank

 

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repudiates its obligation under, or fails to honor or pay against, the Buyer
L/C, the Buyer shall cause to be furnished to Seller a substitute Buyer L/C
promptly (and, in any event, within three (3) Business Days) after written
notice demanding such substitute Buyer L/C has been given to Buyer. In each case
where a substitute Buyer L/C is required to be furnished pursuant to this
Agreement, the substitute Buyer L/C shall be required to comply with all
requirements pertaining to the Buyer L/C set forth in this Agreement, including
the Letter of Credit Requirements, and shall be considered the Buyer L/C
following its provision. Concurrently with Seller’s receipt of a substitute
Buyer L/C, Seller shall return to Buyer any Buyer L/C that is being replaced by
such substitute Buyer L/C. Should Buyer fail to cause a substitute Buyer L/C to
be furnished within the time specified in, and as otherwise required by, this
Agreement, including under circumstances where (a) the Credit Rating of the bank
issuing the Buyer L/C falls below the level specified in the Letter of Credit
Requirements, (b) the bank issuing the Buyer L/C repudiates its obligations
under, or fails to honor or pay against, the Buyer L/C, or (c) the expiration
date of the Buyer L/C is required to be extended, then the aggregate amount then
outstanding of the Continuing Support Obligations shall be owed to Seller for
use as a cash security deposit and Seller may, without limitation or duplication
of any other rights or remedies that may be available to it, draw down the
entire remaining amount of the Buyer L/C in the same manner as provided in the
next sentence. Should Seller exercise its rights under this Section 6.5(d)(iii)
to draw down the entire remaining amount of the Buyer L/C, the cash obtained as
a result of such drawing shall be utilized as a cash security deposit for the
performance by Buyer of its obligations in Section 6.5(d)(ii), with the right to
draw upon such cash security deposit in accordance with the terms hereof at any
time prior to the Permitted Expiry to the same extent that the Buyer L/C could
have been drawn upon had it remained in force and effect (and assuming that the
expiration date of the Buyer L/C was the Permitted Expiry). If, for any reason,
cash is not furnished to Seller within the time for payments under the Buyer L/C
and in the amount of, and otherwise in accordance with, the drawing request
under the Buyer L/C as contemplated above, then the Buyer shall remain obligated
to furnish a substitute Buyer L/C within the applicable time set forth in this
Agreement for furnishing a substitute Buyer L/C. Assuming that cash in the
amount of, and otherwise in accordance with, the drawing request under the Buyer
L/C is furnished to Seller within the time for payments under the Buyer L/C,
then Buyer may at any time thereafter furnish a substitute Buyer L/C to Seller
and, if the required substitute Buyer L/C is so furnished to Seller (and, in any
event, promptly after the Buyer L/C Permitted Expiry), Seller shall return to
Buyer a sum of cash equal to (a) the amount of the cash security deposit
obtained as a result of the draw down upon the prior Buyer L/C as permitted by
this Section 6.5(d)(iii), minus (b) the aggregate amount of any and all drawings
made by Seller on such cash security deposit as permitted hereunder. Seller
shall be required to keep any cash security deposit in a separate interest
bearing account, and, shall not be entitled to use, possess, invest, commingle,
assign, sell, or pledge such cash security deposit for any purpose other than
drawing upon such cash security deposit in accordance with the terms hereof. Any
interest on such cash security deposit shall be the sole property of Buyer;

 

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(e) Seller and the Non-Newington Affiliates may not terminate any Continuing
Support Obligations at any time on or after the Closing Date.

(f) During the Interim Period, Buyer shall have the right to contact and have
discussions with each beneficiary of a Support Obligation in order to satisfy
its obligations under this Section 6.5; provided that (i) Buyer shall give
Seller prior notice before making any such contact, (ii) Seller have the right
to have one of its Representatives present via telephone or in person, as
applicable, during any such contact or discussion, (iii) Buyer shall contact and
hold discussions with such beneficiaries only through Representatives of Buyer
previously approved by Seller and (iv) Buyer shall cause such Representatives to
comply with all procedures and protocols regarding such contacts and discussions
that may be established by Seller.

Section 6.6 Termination of Certain Services and Contracts.

(a) Subject to Section 6.6(b), prior to the Closing, Seller shall (without
further liability of Newington Energy thereunder or therefor) (i) terminate,
sever, or assign to Seller or a Non-Newington Affiliate effective upon or before
the Closing any services provided to Newington Energy by Seller or a
Non-Newington Affiliate, including the termination or severance of insurance
policies (including those policies referred to in Section 6.8), Tax services,
legal services and banking services (to include the severance of any centralized
clearance accounts) and (ii) use commercially reasonable efforts to terminate or
assign to Seller or a Non-Newington Affiliate each Contract listed on Schedule
6.6 (such Contracts listed, collectively, the “Terminated Contracts”).

(b) Seller agrees that promptly following the date hereof Seller and Buyer shall
organize a transition team to coordinate the transition activities during the
Interim period, for the purposes of developing a plan for the transition of the
Project from Seller to Buyer. Seller shall cooperate in good faith to provide
such support and resources as may be reasonably required to implement such
transition. Seller shall use commercially reasonable efforts to facilitate
discussions between the Buyer and the counterparties to Material Contracts in
connection with the implementation of the transition plan. Each of the Seller,
Buyer and their respective Affiliates will bear the costs each incurs in
planning and implementing the transition plan; provided, however, that Seller
shall not be required to incur any additional third-party out-of-pocket costs in
connection with the services provided by Seller or its affiliates or any
third-party pursuant to this Section 6.6(b).

Section 6.7 Distributions. Notwithstanding anything in this Agreement to the
contrary, Seller shall have the right to cause Newington Energy to pay cash
dividends, make cash distributions to Seller or its Affiliates at any time prior
to the Closing.

Section 6.8 Insurance. Buyer acknowledges and agrees that the insurance policies
described on Schedule 4.15 shall not be transferred to Buyer, Newington Energy,
or Buyer’s Affiliates or be retained or assumed by Newington Energy on or after
the Closing. Seller shall maintain or cause to be maintained in full force and
effect the insurance policies described on

 

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Schedule 4.15 (as such Schedule may be modified by an Updated Schedule)
throughout the Interim Period. Any and all such insurance coverage available
under such insurance policies with respect to or relating to Newington Energy,
its Assets, operations or properties, may, in Seller’s sole discretion, be
cancelled or terminated for the period beginning on the Closing; provided that
following the Closing, Seller shall be responsible for all claims and claim
recovery, to the extent arising from events that occurred prior to the Closing
and which are covered (or would have been covered, but for the termination of
any policy) by the terms and conditions of the insurance policies listed under
the heading “Section 6.9 Insurance Policies” on Schedule 4.15 (collectively, the
“Applicable Insurance Policies” and each, an “Applicable Insurance Policy”) and
shall submit such claims for coverage under the Applicable Insurance Policies or
shall be liable for such coverage amount in the event that the Applicable
Insurance Policy has been terminated by Seller. Seller agrees to be responsible
for the applicable deductible associated with such claim under the Applicable
Insurance Policy, but Seller shall not be responsible for any portion of any
claim to the extent such portion is denied by the insurance carrier nor shall
Seller be responsible for any portion of any claim to the extent such portion is
not covered because of one or more exclusions, coverage limits or sublimits, or
other terms and conditions of any Applicable Insurance Policy other than the
deductible associated with such claim. Other than as expressly set forth in this
Section 6.8, Seller shall have no responsibility, from and after the Closing,
with respect to insurance for any of the Newington Energy, its Assets,
operations, properties, officers, directors or employees for any periods from
and after the Closing.

Section 6.9 Casualty.

(a) If any of the Purchased Assets is damaged or destroyed during the Interim
Period, then:

(i) as promptly as practicable after such damage or destruction occurs, the
aggregate cost of restoring such damaged or destroyed Purchased Assets to their
condition immediately prior to such damage or destruction (the “Restored
Condition”) shall, subject to Section 6.9(d), be determined by a qualified
engineering firm reasonably acceptable to Buyer and Seller (the “Qualified
Engineering Firm”) (such aggregate cost with respect to all such Purchased
Assets, the “Full Restoration Cost”);

(ii) Seller shall (unless the Buyer shall have elected its termination right set
forth in Section 6.9(b)), as promptly as practicable after such damage or
destruction occurs and through the end of the Interim Period, undertake at its
sole cost and expense to replace, repair, rebuild or restore such Purchased
Assets to the Restored Condition, it being understood that the obligation of
Seller to proceed with such replacement, repair, rebuilding or restoration may,
after consultation with and agreement from the Buyer, continue beyond the
Closing if Seller elects (the “Repair Election”) to continue with such
replacement, repair, rebuilding or restoration after Closing, in which event,
Seller shall repair, rebuild or restore such Purchased Assets to the Restored
Condition (i) at its sole cost and expense, (ii) in accordance with good utility
practices and Permits applicable to it, Buyer or Newington Energy, and in
accordance, in all

 

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material respects, with all Laws, (iii) as promptly as reasonably practicable
(taking into account good utility practices), and (iv) in consultation with
Buyer or Newington Energy;

(iii) unless the Seller shall have made the Repair Election, the Purchase Price
shall be reduced by an amount equal to the remaining aggregate cost, as of
Closing, to complete the replacement, repair, rebuilding or restoration of such
damaged or destroyed Purchased Assets to the Restored Condition, as estimated by
the Qualified Engineering Firm (the “Closing Restoration Cost”), which Closing
Restoration Cost shall be reduced by the amount of any related insurance
proceeds paid to and, after the Closing, retained by Newington Energy (the
“Casualty Insurance Proceeds”); provided that if the Parties are unable to
obtain an estimate of the Closing Restoration Cost from the Qualified
Engineering Firm prior to the Closing Date, then the Parties shall reasonably
agree in good faith with respect to such Closing Restoration Cost and, within 10
Business Days of the determination by the Qualified Engineering Firm following
Closing of the Closing Restoration Cost, the Parties shall reimburse each other
for any overpayment or underpayment, as applicable, as of Closing of the Closing
Restoration Cost, based on the Qualified Engineering Firm’s determination
thereof;

(iv) such casualty loss shall not otherwise affect the Closing;

(v) if any such damaged or destroyed Purchased Assets have not been restored to
the Restored Condition prior to Closing, then, for up to eight full weeks
immediately following the Closing, Seller shall pay to Buyer an amount equal to
the greater of (A) the Weekly BI Proceeds for such week, or (B) a weekly amount
equal to (I) $500,000, if the Project is unable to produce electricity because
of such damage or destruction or (II) $250,000 if only one combustion turbine is
able to produce electricity because of such damage or destruction; provided,
that in all cases, amounts paid pursuant to this Section 6.9(a)(v) shall be
pro-rated for partial weeks;

(vi) for purposes of clause (v) above, “Weekly BI Proceeds” means the amount of
any business interruption insurance proceeds paid to and retained by Seller with
respect to any period following the Closing and with respect to any Purchased
Assets that have not been restored to the Restoration Condition prior to
Closing; and

(vii) if Seller receives any Weekly BI Proceeds for any week following the
eighth full week after the Closing, then Seller shall promptly remit such Weekly
BI Proceeds to Buyer.

(b) If any of the Purchased Assets is damaged or destroyed during the Interim
Period and the Full Restoration Cost is in excess of 10% of the Base Purchase
Price, then Buyer may elect to terminate this Agreement by providing written
notice to Seller.

(c) If, following the Closing, any Casualty Insurance Proceeds are paid to and
retained by Newington Energy in connection with any damage or destruction to any

 

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Purchased Assets during the Interim Period and if the Closing Restoration Cost
has not been reduced by the amount of such Casualty Insurance Proceeds, then
Buyer shall pay to Seller the amount of such Casualty Insurance Proceeds within
10 Business Days of the receipt thereof.

(d) If, in the Seller’s reasonable judgment (i) the cost of restoring such
damaged or destroyed Purchased Assets to the Restored Condition is less than $5
million and (ii) such restoration will be completed by the expected Closing
Date, the requirement to engage the Qualified Engineering Firm shall not apply.

Section 6.10 Condemnation. If any of the Purchased Assets is taken by
condemnation during the Interim Period and such Purchased Assets have an
aggregate condemnation value (as determined by a qualified firm reasonably
acceptable to Buyer and Seller) (such aggregate value with respect to such
Purchased Assets net of the reasonable costs of recovery, the “Condemnation
Value”) greater than $5,000,000 but do not have a Condemnation Value in excess
of 20% of the Base Purchase Price, then Seller may elect to reduce the Purchase
Price by such Condemnation Value (less the amount of any condemnation award
proceeds which shall be paid to Buyer) by notice to Buyer, and such condemnation
shall not affect the Closing. If Seller does not make such an election within 45
days after the award of the condemnation proceeds (or, if earlier, at least 10
Business Days prior to the expected Closing) or, if as a result of such
condemnation the balance of the Purchased Assets, considered collectively,
cannot be used in a reasonably efficient manner for its current purposes, Buyer
may elect to terminate this Agreement by written notice to Seller. If the
Condemnation Value is in excess of 20% of the Base Purchase Price, Buyer may, by
notice to Seller within 45 days after the award of the condemnation proceeds
(or, if earlier, at least 10 Business Days prior to the expected Closing), elect
to (a) reduce the Purchase Price by such Condemnation Value (after giving effect
to any condemnation award proceeds which shall be paid to Buyer along with any
related Tax benefits available to Buyer) or (b) terminate this Agreement, in
each case by providing written notice to Seller. If the Condemnation Value is
$5,000,000 or less, (A) neither Buyer nor Seller shall have the right or option
to terminate this Agreement and (B) the Purchase Price shall be reduced by an
amount equal to the excess of the Condemnation Value over the amount of any
condemnation award proceeds paid to Buyer. If the Parties are unable to obtain
an estimate of the Condemnation Value from a qualified firm reasonably
acceptable to the Parties prior to the Closing Date, then the Parties shall
reasonably agree in good faith with respect to such Condemnation Value, and the
Purchase Price shall be reduced accordingly pursuant to the terms of this
Section 6.10. Within 10 Business Days of the determination by such firm
following Closing of the Condemnation Value, the Parties shall reimburse each
other for any overpayment or underpayment as of Closing of the Condemnation
Value, based on such firm’s determination thereof.

Section 6.11 Transfer Taxes. Notwithstanding anything in this Agreement to the
contrary Seller shall bear 50% and Buyer shall bear 50% of the total of all
Transfer Taxes attributable to the transfer of the Membership Interests
including the Project Purchase and the Sale of the Membership Interests, and if
either Seller or Buyer is required by Law to pay more than its half of any such
Transfer Taxes, the other shall promptly reimburse Seller or Buyer, as

 

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applicable, for amounts in excess of such half. Seller and Buyer shall timely
file their own Transfer Tax returns as required by Law and shall notify the
other Party when such filings have been made. Seller and Buyer shall each use
all commercially reasonable efforts to reduce the amount of Transfer taxes
payable in connection with the transactions contemplated herein, including the
sale of the Purchased Interests, and cooperate and consult with each other prior
to filing such Transfer Tax returns to ensure that all such returns are filed in
a consistent manner. Without limiting the foregoing, Buyer shall be solely
responsible for any Transfer Taxes arising from any action to dissolve,
terminate or restructure Newington Energy or to convey, distribute or transfer
any assets, properties or other rights by deed, bill of sale or otherwise to or
from Newington Energy on or after the Closing Date.

Section 6.12 Tax Matters. Except as provided in Section 6.11 relating to
Transfer Taxes:

(a) With respect to any Tax return covering a taxable period ending on or before
the Closing Date (a “Pre-Closing Taxable Period”) that is required to be filed
after the Closing Date with respect to Newington Energy (i) Seller shall cause
such Tax return to be prepared and shall deliver such Tax return as so prepared,
to Buyer not later than 30 days prior to the due date for filing such Tax
return, (ii) Buyer and Seller shall cooperate and consult with each other in
order to finalize such Tax return, and (iii) Buyer shall thereafter cause such
Tax return to be executed and duly and timely filed with the appropriate taxing
authority and shall pay all Taxes due with respect to the period covered by such
Tax return. With respect to any Tax return covering a taxable period beginning
on or before the Closing Date and ending after the Closing Date (a “Straddle
Taxable Period”) that is required to be filed after the Closing Date with
respect to Newington Energy (x) Buyer shall cause such Tax return to be prepared
(in a manner consistent with practices followed in prior taxable periods except
as required by a change in Law or fact) and shall deliver a draft of such Tax
return to Seller for Seller’s review and approval at least 30 days prior to the
due date for filing such Tax return, (y) Seller and Buyer shall cooperate and
consult with each other in order to finalize such Tax return, and (z) thereafter
Buyer shall cause such Tax return to be executed and duly and timely filed with
the appropriate taxing authority and shall pay all Taxes due with respect to the
period covered by such Tax return.

(b) As between Seller and Buyer, Seller shall be responsible for and indemnify
Buyer against, and Seller shall be entitled to all refunds or credits of (except
as resulting from the carry back of a Tax attribute relating to a taxable period
after the Closing Date), (i) any Tax with respect to Newington Energy that is
attributable to a Pre-Closing Taxable Period or to that portion of a Straddle
Taxable Period that ends on the Closing Date (other than Taxes attributable to
Buyer having not timely filed any Tax Return in accordance with this
Section 6.12), and (ii) any Taxes imposed on Newington Energy under United
States Treasure Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign Law), in each case to the extent that such Tax exceeds the
amount (if any) reflected as a current liability for such Tax in the Net Working
Capital. Within five days prior to the due date for the payment of any such Tax,
if (i) the amount of such Tax for which Seller is responsible exceeds (ii) the

 

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amount reflected as a current liability for such Tax in the Net Working Capital,
Seller shall pay to Buyer an amount equal to such excess, and if the amount
described in clause (ii) exceeds the amount described in clause (i), Buyer shall
pay to Seller the amount of such excess. With respect to a Straddle Taxable
Period, Seller shall determine the Tax attributable to the portion of the
Straddle Taxable Period that ends on the Closing Date by an interim closing of
the books of Newington Energy as of the Closing Date, except for ad valorem or
property Taxes (“Property Taxes”) and franchise Taxes based solely on capital
(and other Taxes imposed on a periodic basis with respect to one or more assets
or otherwise measured by the level of any item) which shall be prorated on a
daily basis to the Closing Date. For this purpose, any franchise Tax paid or
payable with respect to Newington Energy shall be allocated to the taxable
period for which payment of the Tax provides the right to engage in business,
regardless of the taxable period during which the income, operations, assets or
capital comprising the base of such Tax is measured. In determining whether a
Property Tax is attributable to a Pre-Closing Taxable Period or a Straddle
Taxable Period, any Property Tax that is based on the assessed value of any
assets, property or other rights as of any lien date or other specified
valuation date shall be deemed a Property Tax attributable to the taxable period
(whether a fiscal year or other tax year) specified on the relevant Property Tax
bill that is issued with respect to that lien date or other valuation date.

(c) Buyer shall be responsible for and indemnify Seller against all Taxes of
Newington Energy that are not the responsibility of Seller, and Buyer shall be
entitled to all refunds and credits of all Taxes of Newington Energy to which
Seller is not entitled, pursuant to Section 6.12(b).

(d) With respect to any Tax for which Seller is responsible pursuant to Sections
6.12(a) and (b), Seller shall have the right, at its sole cost and expense, to
initiate any claim for refund and to control the prosecution, settlement or
compromise of any proceeding involving such Tax, including the determination of
the value of property for purposes of real and personal property ad valorem
Taxes. Buyer shall (and shall cause Newington Energy to) take such action (at
Seller’s sole cost and expense) in connection with any such proceeding as Seller
shall reasonably request from time to time to implement the preceding sentence,
including the selection of counsel and experts and the execution of powers of
attorney. Buyer shall (and shall cause Newington Energy to) give written notice
to Seller of its receipt of any notice of any audit, examination, claim or
assessment for any Tax for which Seller may be responsible within 20 days after
its receipt of such notice; failure to give any such written notice within such
20-day period shall cause Buyer to forfeit any rights it may have by reason of
Section 4.9 or this Section 6.12 but only to the extent Seller is actually
prejudiced by such failure.

(e) Seller shall grant to Buyer (or its designees) access at all reasonable
times to all of the information, books and records relating to Newington Energy
within the possession of Seller (including workpapers and correspondence with
taxing authorities), and shall afford Buyer (or its designees) the right (at
Buyer’s expense) to take extracts therefrom and to make copies thereof, to the
extent reasonably necessary to permit Buyer (or its designees) to prepare Tax
returns, respond to Tax audits and investigations, prosecute Tax protests,
appeals and refund

 

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claims and to conduct negotiations with taxing authorities. Buyer shall grant or
cause Newington Energy to grant to Seller (or its designees) access at all
reasonable times to all of the information, books and records relating to
Newington Energy within the possession of Buyer (including workpapers and
correspondence with taxing authorities) and to the employees of General Electric
International, Inc. and any other entity responsible for operation and
management of the Project, and shall afford Seller (or its designees) the right
(at Seller’s expense) to take extracts therefrom and to make copies thereof, to
the extent reasonably necessary to permit Seller (or its designees) to prepare
Tax returns, respond to Tax audits and investigations, prosecute Tax protests,
appeals and refund claims and to conduct negotiations with taxing authorities.
After the Closing Date, Seller and Buyer will preserve all information, records
or documents in their respective possessions relating to liabilities for Taxes
of Newington Energy until six months after the expiration of any applicable
statute of limitations (including extensions thereof) with respect to the
assessment of such Taxes; provided that neither Party shall dispose of any of
the foregoing items without first offering such items to the other Party.

(f) If, after the Closing, Buyer or Newington Energy receives a refund or
utilizes a credit of any Tax of Newington Energy attributable to a Pre-Closing
Taxable Period or that portion of a Straddle Taxable Period ending on the
Closing Date to the extent that such refunded or credited Tax was not reflected
in the Net Working Capital, Buyer shall pay to Seller within 30 days after such
receipt or utilization an amount equal to such refund received or credit
utilized, together with any interest received or credited thereon. Buyer shall,
and shall cause Newington Energy to, take such action to obtain a refund or
credit of any Tax of Newington Energy attributable to a Pre-Closing Taxable
Period or that portion of a Straddle Taxable Period ending on the Closing Date
or to mitigate, reduce or eliminate any such Tax that could be imposed for a
Pre-Closing Taxable Period or that portion of a Straddle Taxable Period ending
on the Closing Date (including with respect to the transactions contemplated
hereby) as is reasonably requested by Seller on a case-by-case basis.

(g) In the event that Seller initiates a claim for refund from a taxing
authority with regard to any Tax of Newington Energy attributable to a
Pre-Closing Taxable Period or that portion of a Straddle Taxable Period ending
on the Closing Date, whether the initiation of such claim begins prior to or
after the Closing, Seller shall have all rights to and interest in such refund.
Buyer shall, upon request, provide Seller a limited power of attorney allowing
Seller to pursue such claim for refund with and collect such refund from such
taxing authority. If, after the Closing, Buyer or Newington Energy receives a
refund or utilizes a credit of any such Tax with regard to a claim so initiated
by Seller, Buyer shall pay to Seller within 30 days after such receipt or
utilization an amount equal to such refund received or credit utilized, together
with any interest received or credited thereon.

(h) In the event that Seller initiates a claim for refund from a third party who
improperly withheld sales and use Tax, or withheld excessive sales and use Tax,
with regard to Newington Energy attributable to a Pre-Closing Taxable Period or
that portion of a Straddle Taxable Period ending on the Closing Date, whether
the initiation of such claim begins prior to

 

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or after the Closing, Seller shall have all rights to and interest in such
refund to the extent that it was not reflected in the Net Working Capital. Buyer
shall, upon request, provide Seller a limited power of attorney allowing Seller
to pursue such claim for refund with and collect such refund from such third
party. If after the Closing Buyer or Newington Energy receives a refund of any
such Tax with regard to a claim so initiated by Seller, Buyer shall pay to
Seller within 30 days after such receipt an amount equal to such refund
received, together with any interest received or credited thereon.

Section 6.13 Affiliate Contracts. Effective upon Closing, Seller on behalf of
itself and its Non-Newington Affiliates, hereby irrevocably and unconditionally
releases and waives any Claim of any nature howsoever and whensoever arising
against Newington Energy.

Section 6.14 Appointment of Representatives. In order to facilitate the
consummation of the transactions contemplated by this Agreement, each Party
shall designate a representative to act as the primary point of contact to
coordinate communications and other interaction between the Parties during the
Interim Period.

Section 6.15 Updating Schedules. Prior to Closing, Seller shall (in reasonable
detail so that Buyer can understand the consequence thereof) in writing by
notice to the Buyer supplement and/or otherwise amend the Material Contracts
List and only those Schedules which relate to the matters contained in Articles
III and IV hereof, including by the addition of new schedules with respect to
any representations and warranties of Seller in this Agreement for which no
schedule was provided as of the date hereof (such Schedules as supplemented
and/or otherwise amended and any such new schedules, being collectively referred
to herein as the “Updated Schedules,” and such Material Contracts List as
supplemented and/or otherwise amended being referred to herein as the “Updated
Material Contracts List”), in each case with respect to matters arising after
the date of this Agreement which matters, if existing as of the date of this
Agreement, would have been set forth in such Schedules or the Material Contracts
List; provided that the foregoing shall not apply with respect to any Schedule
or potion of the Material Contracts List that relates solely to the date of this
Agreement. Notwithstanding the foregoing, no Updated Schedule or Updated
Material Contracts List shall be deemed to have cured any breach of any
representation or warranty made by Seller as of the date of this Agreement,
unless Buyer otherwise consents in writing. Seller and Buyer acknowledge and
agree that the inclusion of any item or statement in any Schedule, Material
Contracts List, Updated Schedule or Updated Material Contracts List, which item
or statement was not required to be included in such documents (because it does
not meet a threshold amount for inclusion or for any other reason), shall not be
construed to create any obligation to include any item or statement in the same
or any different Schedule, Material Contracts List, Updated Schedule or Updated
Material Contracts List, which item or statement is not required to be so
included (because it does not meet a threshold amount for inclusion or for any
other reason). Seller agrees to advise Buyer promptly in writing of any matter
or occurrence of which it has or obtains Knowledge, and Buyer agrees to advise
Seller promptly in writing of any matter of which Buyer has knowledge, which, in
either case, may constitute a breach by either Party of any representation,
warranty or covenant contained in this Agreement.

 

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Section 6.16 Announcements. Prior to the Closing Date no press release or other
public announcement, or public statement or comment in response to any inquiry,
relating to this Agreement or the transactions contemplated hereby shall be
issued or made by either Buyer or Seller, or any of their Affiliates, without
the approval of Buyer or Seller, as the case may be; provided that a press
release or other public announcement, regulatory filing, statement or comment
made without such approval, including in furtherance of the requirements of
Section 6.1, shall not be in violation of this Section 6.16 if it is made in
order to comply with applicable Laws or stock exchange rules and in the
reasonable judgment of the Party or its Affiliate making such release or
announcement, based upon advice of counsel, prior review and joint approval,
despite reasonable efforts to obtain the same, would prevent dissemination of
such release or announcement in a fashion to comply with such Laws or rules;
provided further that in all instances Buyer or Seller, as the case may be,
shall provide prompt notice of any such release, announcement, statement or
comment to the other Party.

Section 6.17 Liability of Seller and Newington Energy. Notwithstanding any other
provision herein, the terms and provisions of this Section 6.17 apply in the
event that (a) Seller has not materially breached any of its obligations under
this Agreement and (b) Newington Energy has the right to purchase the Project
pursuant to Section 13 of the Lease. If the circumstances described in the
immediately-preceding sentence have occurred, but Hawkeye fails to convey the
Project to Newington Energy pursuant to Sections 13 and 29(i) of the Lease, then
(i) Seller shall, or shall cause Newington Energy to, diligently pursue all
remedies and enforcement rights (including specific performance) that Newington
Energy may have against Hawkeye to compel Hawkeye to so convey the Project to
Newington Energy in accordance with the Lease, and (ii) Buyer agrees that, so
long as Seller is in compliance with its obligation in the preceding clause (i),
Buyer’s sole and exclusive remedy with respect to Seller and Newington Energy
shall be as set forth in Section 9.1(c)(ii) and that it shall not bring any
Claim, in contract, in tort or under any other legal theory, in law or in
equity, against Seller, Newington Energy or any of their respective Affiliates
or Representatives.

Section 6.18 Replacement Software Licenses. Prior to Closing, Buyer shall obtain
or cause to be obtained, at no expense to Seller or any Non-Newington Affiliate,
licenses and/or other agreements (collectively, the “Buyer’s Replacement
Software Licenses”) that are separate agreements from Seller’s Software Licenses
and that are sufficient to (i) lawfully permit Newington Energy, on and after
the Closing Date, to continue to make use of the Seller’s Licensed Software in
at least the manner and extent permitted under Seller’s Software Licenses, and
(ii) lawfully permit Seller or the Non-Newington Affiliate that is the party to
each Seller’s Software License to leave, on and after the Closing Date, the
Sellers’ Licensed Software on the computer hardware, firmware or other equipment
or devices on which it is stored, loaded, located or used prior to the Closing
Date rather than removing the Seller’s Licensed Software therefrom; provided,
that to the extent Buyer notifies Seller in writing at least 30 days prior the
Closing Date that it will not make use of any particular Seller’s Licensed
Software (collectively, the “Unnecessary Software”), then the Buyer’s
Replacement Software Licenses that Buyer must otherwise obtain or cause to be
obtained pursuant to this Section 6.18 need not include rights to make use of
the Unnecessary Software set forth in Buyer’s written notice and Seller, on or
prior

 

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to the Closing Date, may cause the Unnecessary Software to be removed from the
computer hardware, firmware or other equipment or devices on which it is stored,
loaded, located or used.

Section 6.19 Certain Payments, Costs and Expenses. Except as provided in
Section 6.12 relating to Tax Matters:

(a) In the event that, after the Closing Date, Seller or the Non-Newington
Affiliates receive any payments relating to any period after the Closing from
any Governmental Authority or any third parties with respect to the Project,
Seller shall promptly remit such payments to the Buyer (or its designees).

(b) In the event that, after the Closing Date, Buyer or Newington Energy receive
any bills or invoices from any Governmental Authority or any third parties for
services provided to the Project during any period prior to the Closing, then,
to the extent the amounts due pursuant to such bills or invoices are not
reflected in the Actual Net Working Capital Adjustment Amount, Buyer shall remit
payment to such Governmental Authority or third parties, as applicable, and
Seller shall reimburse Buyer (or its designees) for the full amount thereof
promptly upon determination of the Aggregate Net Working Capital Adjustment
Amount.

Section 6.20 Certain Agreements Regarding the Project. During the Interim
Period, with respect to the full unforced capacity for the Project, the parties
shall (and Seller shall cause Newington Energy to) cooperate and consult with
each other to ensure that Newington Energy has qualified the Project for the ISO
New England, Inc., capacity market beyond May 2010.

Section 6.21 Further Assurances. Subject to the terms and conditions of this
Agreement, at any time and from time to time after the Closing, at either
Party’s request and without further consideration, the other Party shall execute
and deliver to such requesting Party such other instruments of sale, transfer,
conveyance, assignment and confirmation, provide such materials and information
and take such other actions as such Party may reasonably request in order to
consummate the transactions contemplated by this Agreement.

ARTICLE VII

BUYER’S CONDITIONS TO CLOSING

The obligation of Buyer to consummate the Closing is subject to the fulfillment
of each of the following conditions (except to the extent waived in writing by
Buyer in its sole discretion):

Section 7.1 Representations and Warranties. The representations and warranties
made by Seller contained in this Agreement, (a) that are not qualified by
“materiality” or “Material Adverse Effect” shall have been true and correct in
all material respects as of the date of this Agreement (giving effect to the
Schedules and the Material Contracts List but without giving effect to the
Updated Schedules or the Updated Material Contracts List) and shall be true

 

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and correct in all material respects as of the Closing with the same force and
effect as if made as of the Closing (after giving effect to the Updated
Schedules and the Updated Material Contracts List), and (b) that are qualified
by “materiality” or “Material Adverse Effect” shall have been true and correct
as of the date of this Agreement (giving effect to the Schedules and the
Material Contracts List but without giving effect to the Updated Schedules or
the Updated Material Contracts List) and shall be true and correct as of the
Closing with the same force and effect as if made as of the Closing (after
giving effect to the Updated Schedules and the Updated Material Contracts List),
except to the extent such representations and warranties are as of another date,
in which case, such representations and warranties shall be true and correct as
of that date (after giving effect to the Schedules and the Material Contracts
List but without giving effect to the Updated Schedules and the Updated Material
Contracts List, if such date is on or prior to the date hereof, and after giving
effect to the Updated Schedules and the Updated Material Contracts List if such
date is after the date hereof).

Section 7.2 Performance. Seller shall have performed and complied, in all
material respects, with the agreements, covenants and obligations required by
this Agreement to be performed or complied with by Seller at or before the
Closing other than those contained in Section 6.2(e).

Section 7.3 Project Purchase. The Sale Right shall have been exercised and the
Project Purchase shall have occurred pursuant to the Lease.

Section 7.4 Officer’s Certificate. Seller shall have delivered to Buyer at the
Closing a certificate of an officer of Seller, dated as of the Closing Date, as
to the matters set forth in Sections 7.1, 7.2, and 7.3.

Section 7.5 Orders and Laws. There shall not be any temporary restraining order,
preliminary or permanent injunction or other judgment or order issued by a court
or agency of competent jurisdiction or other Law restraining, enjoining or
otherwise prohibiting or making illegal the consummation of the Closing;
provided that any court decision (part of the definition of Law) that restrains,
enjoins or otherwise prohibits or makes illegal the consummation of the Closing,
or any such temporary restraining order, preliminary or permanent injunction or
other judgment or order must not have resulted from any litigation or proceeding
filed by Buyer or its Affiliates.

Section 7.6 Consents and Approvals. The Buyer Approvals, the Seller Approvals,
as well as the Seller Consents and the Newington Consents, shall have been
unconditionally obtained, made or given and shall be in full force and effect
(and copies of such shall have been provided to Buyer), and all terminations or
expirations of applicable waiting periods imposed by any Governmental Authority
shall have occurred; provided that the absence of any appeals and the expiration
of any appeal period with respect to any of the foregoing shall not constitute a
condition to Closing hereunder. Additionally, CFIUS shall have concluded its
review of the filing made by the Parties pursuant to the Exon-Florio Provision
and a written notice that no

 

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action will be taken pursuant to the Exon-Florio Provision shall have been
received from CFIUS or the President of the United States.

Section 7.7 No Material Adverse Effect. No event or condition shall have
occurred since the date hereof which, individually or in the aggregate, has had,
or will have, any Material Adverse Effect.

Section 7.8 Resignation of Members, Managers, Officers and Directors. Seller
shall have caused the resignation or removal of all members, managers, officers
and directors, as applicable, nominated or appointed by Seller or its Affiliates
to any board or operating, management or other committee relating to the Project
or established under Newington Energy’s Charter Documents, and shall have
delivered to Buyer at the Closing evidence of such resignations or removals.

Section 7.9 Seller Deliverables. Seller shall have delivered, or caused to have
been delivered, to Buyer each of the following in accordance with the terms of
this Agreement:

(a) a counterpart, executed by Seller, of an assignment of membership interests
evidencing the assignment and transfer to Buyer of all of the Membership
Interests, substantially in the form of Exhibit A (the “Membership Interests
Assignment Agreement”);

(b) to the extent that the Membership Interests are certificated, certificates
representing all of the Membership Interests, in each case, duly endorsed by
Seller (or accompanied by appropriate powers duly executed by Seller) for
transfer to Buyer, and all books and records of Newington Energy in its
possession

(c) all original and substitute Break-up L/Cs, for cancellation thereof;

(d) a certification of non-foreign status in the form prescribed by Treasury
Regulation Section 1.1445-2(b) with respect to Seller;

(e) resolutions of the board of directors of Seller certified by the Secretary
or Assistant Secretary of Seller authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby; and

(f) a certificate of the Secretary or Assistant Secretary of Seller as to the
incumbency of the Person executing this Agreement on behalf of Seller and the
genuineness of such Person’s signature.

Section 7.10 Restoration Cost Report. If any of the Purchased Assets is damaged
or destroyed during the Interim Period and unless the cost of replacing,
repairing, rebuilding or restoring such Purchased Assets is less than $5 million
in the Seller’s reasonable judgment pursuant to Section 6.9(d), Buyer shall have
received a report from the Qualified Engineering Firm setting forth the Full
Restoration Cost.

 

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Section 7.11 Condemnation Value Report. If any of the Purchased Assets is taken
by condemnation during the Interim Period, Buyer shall have received a report
from a qualified firm reasonably acceptable to Buyer and Seller setting forth
the Condemnation Value.

ARTICLE VIII

SELLER’S CONDITIONS TO CLOSING

The obligation of Seller to consummate the Closing is subject to the fulfillment
of each of the following conditions (except to the extent waived in writing by
Seller in its sole discretion):

Section 8.1 Representations and Warranties. The representations and warranties
made by Buyer in this Agreement shall have been true and correct in all material
respects when made and shall be true and correct in all material respects as of
the Closing, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct in all material respects as of that date.

Section 8.2 Performance. Buyer shall have performed and complied, in all
material respects, with the agreements, covenants and obligations required by
this Agreement to be so performed or complied with by Buyer at or before the
Closing.

Section 8.3 Officer’s Certificate. Buyer shall have delivered to Seller at the
Closing a certificate of an officer of Buyer, dated as of the Closing Date, as
to the matters set forth in Sections 8.1 and 8.2.

Section 8.4 Orders and Laws. There shall not be any temporary restraining order,
preliminary or permanent injunction or other judgment or order issued by a court
or agency of competent jurisdiction or other Law or restraining, enjoining or
otherwise prohibiting or making illegal the consummation of the Closing;
provided that any court decision (part of the definition of Law) that restrains,
enjoins or otherwise prohibits or makes illegal the consummation of the Closing
or any such temporary restraining order, preliminary or permanent injunction or
other judgment or order must not have resulted from any litigation or proceeding
filed by Seller or its Affiliates.

Section 8.5 Consents and Approvals. The Seller Approvals, as well as the Seller
Consents and Newington Consents shall have been duly obtained, made or given and
shall be in full force and effect (and copies of such shall have been provided
to Seller), and all applicable terminations or expirations of waiting periods
imposed by any Governmental Authority shall have occurred; provided that the
absence of any appeals and the expiration of any appeal period with respect to
any of the foregoing shall not constitute a condition to Closing hereunder.
Additionally, CFIUS shall have concluded its review of the filing made by the
Parties pursuant to the Exon-Florio Provision and a written notice that no
action will be taken pursuant to the Exon-Florio Provision shall have been
received from CFIUS or the President of the United States.

 

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Section 8.6 Buyer Deliverables. Buyer shall have delivered, or caused to have
been delivered, to Seller each of the following:

(a) a wire transfer of immediately available funds (to such account or accounts
as Seller shall have given notice to Buyer not less than five Business Days
prior to the Closing Date) in an amount equal to the sum of (i) the Base
Purchase Price plus (ii) the Estimated Net Working Capital Adjustment Amount
(whether a positive or a negative amount);

(b) an executed counterpart of the Membership Interests Assignment Agreement;
and

(c) the Buyer L/C required to be delivered to Seller at Closing pursuant to
Section 6.5(d)(iii).

(d) any and all releases obtained by Buyer pursuant to Section 6.5(b);

(e) the releases required by Section 10.4;

(f) a written consent of the manager of Buyer authorizing the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby; and

(g) a certificate of the manager of Buyer as to the incumbency of each
authorized Person executing this agreement on behalf of Buyer and the
genuineness of such Person’s signature

ARTICLE IX

TERMINATION

Section 9.1 Termination. This Agreement may be terminated, and the transactions
contemplated hereby, including the transfer of the Membership Interests, may be
abandoned, as follows:

(a) at any time before the Closing, by Seller or Buyer, by written notice to the
other, in the event that any Law or final, non-appealable court decision
restrains, enjoins or otherwise prohibits or makes illegal the sale of the
Membership Interests pursuant to this Agreement; provided that such final,
non-appealable court decision has not resulted from any litigation or proceeding
filed by the Party asserting a termination right under this Section 9.1(a) or
its Affiliates;

(b) any time before the Closing, by Seller or Buyer (if the terminating Party is
not in material breach of its obligations under this Agreement), by notice to
the other, if the other has materially breached its obligations hereunder
(including any representation, warranty, covenant or agreement) so as to cause
the failure of a condition set forth in Article VII or Article VIII, as
applicable, and such breach (other than a breach of Buyer’s obligation to pay
the Purchase Price in accordance with the terms of Article II, for which no cure
period shall be

 

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allowed) has not been cured within the earlier of the Long Stop Date or 30 days
following written notification thereof; provided that if, at the end of such 30
day period, and provided that such 30 day period shall have ended prior to the
Long Stop Date, the breaching Party is endeavoring in good faith, and proceeding
diligently, to cure such breach, the breaching Party shall have an additional
period expiring on the earlier of 30 days thereafter and the Long Stop Date in
which to effect such cure;

(c) by Buyer, by notice to Seller, (i) in the event Newington Energy no longer
has the right to purchase the Project in accordance with Section 13 of the Lease
or (ii) in the event that the Project Purchase does not occur by the Long Stop
Date;

(d) by Seller, by notice to Buyer, in the event that the Project Purchase does
not occur by the Long Stop Date; provided that Seller shall have no right to
terminate this Agreement pursuant to this Section 9.1(d) if (i) Seller is in
material breach of Section 2.1(a) or 6.17(a), or (ii) Newington Energy no longer
has the right to purchase the Project in accordance with Section 13 of the
Lease;

(e) at any time before the Closing, by Buyer or Seller, by notice to the other,
on or after December 31, 2008 (the “Long Stop Date”); provided that if the
failure to achieve Closing by the Long Stop Date is the result of a Party’s
delay, such Party may not terminate this Agreement pursuant to this
Section 9.1(e);

(f) by Buyer pursuant and subject to Sections 6.9 or 6.10; or

(g) by mutual written consent of Buyer and Seller.

Section 9.2 Effect of Termination. If this Agreement is validly terminated
pursuant to Section 9.1, there will be no liability or obligation on the part of
Seller or Buyer (or any of their respective Representatives or Affiliates),
provided that (a) Sections 6.2(c), 6.16 and 9.3 and Article XI will survive any
such termination and (b) subject to Sections 9.3 and 11.9, each Party shall
continue to be liable for any breach of this Agreement by it occurring prior to
such termination.

Section 9.3 Break-up Damages. (a) If this Agreement is terminated by Seller
pursuant to Section 9.1(b) and if the basis for such termination is that Buyer
has breached its obligations under Section 6.1(a) or 6.1(c) or its obligation to
consummate the Closing in accordance with Section 2.3(b) (including by failure
to pay the Purchase Price or perform its obligations under Section 8.6), then,
in lieu of all other Claims and remedies that might otherwise be available to
Seller with respect to such breaches and such termination and as Seller’s
exclusive remedy therefor notwithstanding any other provision of this Agreement,
Buyer shall pay Seller, by wire transfer of immediately available funds within 3
Business Days following the date of termination, as liquidated damages, an
amount equal to 10% (ten percent) of the Base Purchase Price. If Buyer pays such
amount in full by the time required, then Seller shall simultaneously return the
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Buyer. If Buyer does not pay such amount in full by the time required, then
Seller may draw down the entire amount of the Break-up L/Cs and/or substitute
Break-up L/Cs, as applicable.

(b) On the date hereof, Buyer will cause to be delivered to Seller letters of
credit satisfying the Letter of Credit Requirements, in an aggregate amount
sufficient to secure the Buyer’s obligation under Section 9.3(a) (each, a
“Break-up L/C” and collectively, the “Break-up LCs”). If at any time prior to
January 31, 2009 (the “Break-up Damages Stop Date”) (unless the Closing shall
have occurred), a Break-up L/C has an expiration date earlier than the Break-up
Damages Stop Date, then the Buyer shall cause to be provided to Seller, at least
thirty (30) days prior to the expiration date of such Break-up L/C, a substitute
Break-up L/C (which may consist of an amendment to a Break-up L/C) containing an
expiration date that is at least thirty (30) days later than the expiration date
of the Break-up L/C it is amending or replacing. If, at any time prior to the
Break-up Damages Stop Date (unless the Closing shall have occurred), the Credit
Rating of the bank issuing a Break-up L/C falls below the level specified in the
Letter of Credit Requirements or such bank repudiates its obligations under, or
fails to honor or pay against, a Break-up L/C, the Buyer shall cause to be
furnished to Seller a substitute Break-up L/C promptly (and, in any event,
within three (3) Business Days) after written notice demanding such substitute
Break-up L/C has been given to Buyer. In each case where a substitute Break-up
L/C is required to be furnished pursuant to this Agreement, the substitute
Break-up L/C shall be required to comply with all requirements pertaining to
Break-up L/Cs set forth in this Agreement, including the Letter of Credit
Requirements, and shall be considered a Break-up L/C following its provision.
Concurrently with Seller’s receipt of a substitute Break-up L/C, Seller shall
return to Buyer any Break-up L/C that is being replaced by such substitute
Break-up L/C. At the Closing, Seller shall deliver to Buyer all original
Break-up L/Cs for cancellation as provided in Section 7.9(c). Should Buyer fail
to cause a substitute Break-up L/C to be furnished within the time specified in,
and as otherwise required by, this Agreement, including under circumstances
where (a) the Credit Rating of the bank issuing a Break-up L/C falls below the
level specified in the Letter of Credit Requirements, (b) the bank issuing the
Break-up L/C repudiates its obligations under, or fails to honor or pay against,
the Break-up L/C. or (c) the expiration date of a Break-up L/C is required to be
extended, then the aggregate amounts specified therein shall be owed to Seller
for use as a cash security deposit and Seller may, without limitation or
duplication of any other rights or remedies that may be available to it, draw
down such entire remaining amount in the same manner as provided in the next
sentence. Should Seller exercise its rights under this Section 9.3(b) to draw
down the entire amount of a Break-up L/C, the cash obtained as a result of such
drawing shall be utilized as a cash security deposit for the performance by
Buyer of its obligations under Section 9.3(a), with the right to draw upon such
cash security deposit in accordance with the terms hereof at any time prior to
the Break-up Damages Stop Date to the same extent that a Break-up L/C could have
been drawn upon had it remained in force and effect (and assuming that the
expiration date of such Break-up L/C was the Break-up Damages Stop Date). If,
for any reason, cash is not furnished to Seller within the time for payments
under a Break-up L/C and in the amount of, and otherwise in accordance with, the
drawing request under such Break-up L/C as contemplated above, then the Buyer
shall remain obligated to furnish a substitute Break-up L/C within the
applicable time set

 

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forth in this Agreement for furnishing a substitute Break-up L/C. Assuming that
cash in the amount of, and otherwise in accordance with, the drawing request
under a Break-up L/C is furnished to Seller within the time for payments under
such Break-up L/C, then Buyer may at any time thereafter furnish a substitute
Break-up L/C to Seller and, if such substitute Break-up L/C is so furnished to
Seller, Seller shall return to Buyer a sum of cash equal to (a) the amount of
the cash security deposit obtained as a result of the draw down upon the prior
Break-up L/C as permitted by this Section 9.3(b), minus (b) the aggregate amount
of any and all drawings made by Seller on such cash security deposit as
permitted hereunder. Seller shall be required to keep any cash security deposit
in a separate interest bearing account, and, shall not be entitled to use,
possess, invest, commingle, assign, sell, or pledge such cash security deposit
for any purpose other than drawing upon such cash security deposit in accordance
with the terms hereof. Any interest on such cash security deposit shall be the
sole property of Buyer

(c) If this Agreement is terminated by Buyer pursuant to Section 9.1(b) or
9.1(c)(i), then, in lieu of all other Claims and remedies against Seller or
Newington Energy that might otherwise be available to Buyer with respect
thereto, Seller shall pay Buyer, by wire transfer of immediately available funds
within three Business Days following the date of termination, as liquidated
damages, the sum of (i) all costs, fees and expenses or other liabilities
incurred in connection with the Commitments and Alternative Financing or the
definitive documents arising therefrom, as applicable, including all breakage,
lenders’ legal fees, escrow and pre-payment fees, (ii) all interest or
commitment fees paid or incurred by Buyer or its Affiliates in connection with
the Commitment or Alternative Financing or the definitive documents arising
therefrom that relate to the portion of such facilities intended to finance a
portion of the Purchase Price hereunder, (iii) all costs, fees and expenses or
other liabilities incurred in connection with any hedging or tolling
arrangements entered into by Buyer or one of its affiliates that relate to
Newington Energy and (iv) an amount equal to Buyer’s other actual and reasonable
out-of-pocket fees (including reasonable attorney’s fees and regulatory filing
fees) and expenses incurred in connection with this Agreement, subject, in the
case of this Section 9.3(c), to an aggregate maximum of $40,000,000.

(c) The provision for payments of liquidated damages in this Section 9.3 has
been included because, in the event of a breach by Seller or Buyer, the actual
damages to be incurred by Seller or Buyer, as applicable, can reasonably be
expected to approximate the amount of liquidated damages provided for herein and
because the actual amount of such damages would be difficult if not impossible
to measure accurately.

ARTICLE X

INDEMNIFICATION, LIMITATIONS OF LIABILITY AND WAIVERS

Section 10.1 Indemnification. (a) Subject to Section 10.2, from and after the
Closing, Seller shall indemnify, defend and hold harmless Buyer and its
Representatives and Affiliates from and against all Losses incurred or suffered
by Buyer or its Representative or Affiliates (including, on and after the
Closing Date, Newington Energy) resulting from:

 

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(i) any breach of any representation or warranty of Seller contained in this
Agreement as of (x) the date of this Agreement (after giving effect to the
Schedules and the Material Contracts List but without giving effect to the
Updated Schedules and Updated Material Contracts List), or (y) the Closing Date
(after giving effect to the Updated Schedules and the Updated Material Contracts
List), it being understood that, in all cases, such representations and
warranties shall be interpreted without giving effect to any limitations or
qualifications as to “materiality” (including the word “material”) or “Material
Adverse Effect” set forth therein;

(ii) any breach of any covenant or agreement of Seller contained in this
Agreement;

(iii) the Terminated Contracts and the Affiliate Contracts; and

(iv) any Claim or Loss arising in connection with the Lease.

(b) Subject to Section 10.2, from and after Closing, Buyer shall indemnify,
defend and hold Seller harmless from and against all Losses incurred or suffered
by Seller resulting from:

(i) any breach of any representation or warranty of Buyer contained in this
Agreement; and

(ii) any breach of any covenant or agreement of Buyer contained in this
Agreement.

(c) Notwithstanding any contrary provision in this Agreement, the terms and
provisions of Sections 6.11 and 6.12 shall be the exclusive remedy of Buyer with
respect to any claim for indemnification in respect of any Tax or any Tax
matter, and Buyer shall have no right to indemnification under this Article X
for any breach of a representation or warranty contained in Section 4.9.

Section 10.2 Limitations of Liability. Notwithstanding anything in this
Agreement to the contrary, except in the case of any Claim based upon fraud or
willful misconduct, which shall not be subject to the following limitations:

(a) the representations and warranties in this Agreement shall survive for a
period of 12 months following the Closing Date; provided, however, that the
representations and warranties made pursuant to Sections 3.1, 3.2, 3.4, 3.6,
4.1, 4.3, 4.4(b), 4.9, 4.12(b), 4.12(c), 4.14 and 4.17 shall survive until 60
days following the expiration of the applicable statute of limitations. Any
Claim by a Party pursuant to Sections 10.1(a)(i) or (b)(i) must be made in
writing and received by the Party against which the Claim is made no later than
the expiration of the survival period of the applicable representation and
warranty; provided that if written notice of a Claim has been given prior to the
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representation and warranty, then the relevant representation and warranty shall
survive as to such Claim until such Claim has been finally resolved;

(b) any breach of a representation or warranty in this Agreement in connection
with any single item or group of substantially related items that results in
Losses of less than $100,000 shall be deemed, for all purposes, not to be a
breach of such representation or warranty;

(c) Seller shall have no liability for breaches of representations and
warranties in this Agreement until the aggregate amount of all Losses incurred
by Buyer equals or exceeds 1% of the Base Purchase Price (the “Deductible
Amount”), in which event Seller shall be liable for Losses for breaches of
representations and warranties only to the extent they are in excess of the
Deductible Amount;

(d) in no event shall Seller’s aggregate liability arising out of or relating to
breaches of representations and warranties (other than Sections 3.1, 3.2, 3.4,
3.6, 4.1, 4.3, 4.4(b), 4.12(b), 4.12(c), and 4.17) in this Agreement, exceed 10%
of the Base Purchase Price;

(e) the amount of any Loss for which indemnification is provided by an
indemnifying party under Section 10.1 shall be net of any insurance proceeds
actually received (net of Taxes and other expenses incurred in connection with
such recovery) as an offset against such Losses; provided that nothing contained
in this clause (e) shall require an indemnified party to maintain any insurance
coverage or submit any claims with respect to any insurance policies; and

(f) from and after the Closing, Newington Energy shall not have any liability or
obligation to indemnify, save or hold harmless or otherwise pay, reimburse or
make Seller whole for or on account of any indemnification claim made for any
breach of any representation, warranty, covenant or agreement of Seller, and
from and after the Closing the Seller shall have no right of contribution
against Newington Energy for or on account of any such indemnification claim.

Section 10.3 Notice; Duty to Mitigate. Each Party shall give written notice to
the other Party within a reasonable period of time after becoming aware of any
breach by such other Party of any representation, warranty, covenant, agreement
or obligation in this Agreement. Each Party shall have a duty to mitigate any
Loss in connection with this Agreement.

Section 10.4 Indirect Claims. From and after the Closing, Buyer agrees to (and
cause Newington Energy to) release Seller, its Affiliates and the officers,
directors and employees of Newington Energy (acting in their capacity as such)
from and against any Losses for controlling stockholder liability or breach of
any fiduciary or other duty not arising hereunder relating to any pre-Closing
actions or failures to act (other than gross negligence or willful misconduct)
in connection with the business of Newington Energy prior to the Closing.

 

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Section 10.5 Waiver of Other Representations. (a) IT IS THE EXPLICIT INTENT OF
EACH PARTY, AND THE PARTIES HEREBY AGREE, THAT NONE OF SELLER OR ANY OF ITS
AFFILIATES OR REPRESENTATIVES HAS MADE OR IS MAKING ANY REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WRITTEN OR ORAL, AS TO THE CONDITION,
MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH
RESPECT TO THE MEMBERSHIP INTERESTS, NEWINGTON ENERGY OR ANY OF THE PURCHASED
ASSETS, OR ANY PART THEREOF, EXCEPT THOSE REPRESENTATIONS AND WARRANTIES
EXPRESSLY SET FORTH IN THIS AGREEMENT. SELLER MAKES NO REPRESENTATION OR
WARRANTY TO BUYER WITH RESPECT TO ANY FINANCIAL PROJECTIONS OR FORECASTS
RELATING TO NEWINGTON ENERGY OR THE PURCHASED ASSETS.

(b) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, (i) SELLER’S INTERESTS IN
NEWINGTON ENERGY ARE BEING TRANSFERRED THROUGH THE SALE OF THE MEMBERSHIP
INTERESTS “AS IS, WHERE IS, WITH ALL FAULTS,” AND (ii) SELLER EXPRESSLY
DISCLAIMS ANY REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR
IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF NEWINGTON ENERGY, THE
CONDITION, VALUE, QUALITY, STATE OR REPAIR, DESIGN, MERCHANTABILITY, USAGE,
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE PURCHASED ASSETS OR THE
PROSPECTS (FINANCIAL OR OTHERWISE), RISKS AND OTHER INCIDENTS OF NEWINGTON
ENERGY, THE MEMBERSHIP INTERESTS AND THE PURCHASED ASSETS.

Section 10.6 Waiver of Remedies. (a) Buyer and Seller acknowledge and agree that
the foregoing indemnification provisions in this Article X (to the exclusion of
equitable relief and except as expressly provided herein) shall, from and after
Closing, be the exclusive remedy of Buyer and Seller with respect to breaches of
this Agreement.

(b) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NO PARTY SHALL
BE LIABLE FOR SPECIAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL OR INDIRECT DAMAGES OR
LOST PROFITS, WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY, OTHER LAW OR
OTHERWISE AND WHETHER OR NOT ARISING FROM THE OTHER PARTY’S SOLE, JOINT OR
CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT (“Non-reimbursable
Damages”).

(c) Notwithstanding anything in this Agreement to the contrary, no
Representative or Affiliate of Seller shall have any personal liability to Buyer
or any other Person as a result of the breach of any representation, warranty,
covenant, agreement or obligation of Seller in this Agreement and no
Representative or Affiliate of Buyer shall have any personal liability to Seller
or any other Person as a result of the breach of any representation, warranty,
covenant, agreement or obligation of Buyer in this Agreement.

 

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Section 10.7 Procedure with Respect to Third-Party Claims. (a) If any Party (or
as to Buyer after Closing, Newington Energy) becomes subject to a pending or
threatened Claim of a third party and such Party (the “Claiming Party”) believes
it has a Claim against the other Party (the “Responding Party”) as a result,
then the Claiming Party shall notify the Responding Party in writing of the
basis for such Claim setting forth the nature of the Claim in reasonable detail.
The failure of the Claiming Party to so notify the Responding Party shall not
relieve the Responding Party of liability hereunder except to the extent that
the defense of such Claim is prejudiced by the failure to give such notice.

(b) If any proceeding is brought by a third party against a Claiming Party and
the Claiming Party gives notice to the Responding Party pursuant to this
Section 10.7, the Responding Party shall be entitled to participate in such
proceeding and, to the extent that it wishes, to assume the defense of such
proceeding, if (i) the Responding Party provides written notice to the Claiming
Party that the Responding Party intends to undertake such defense, (ii) the
Responding Party conducts the defense of the third-party Claim actively and
diligently with counsel reasonably satisfactory to the Claiming Party and
(iii) if the Responding Party is a party to the proceeding, the Responding Party
has not determined in good faith that joint representation would be
inappropriate because of a conflict in interest. The Claiming Party shall, in
its sole discretion, have the right to employ separate counsel (who may be
selected by the Claiming Party in its sole discretion) in any such action and to
participate in the defense thereof, and the fees and expenses of such counsel
shall be paid by such Claiming Party. The Claiming Party shall fully cooperate
with the Responding Party and its counsel in the defense or compromise of such
Claim. If the Responding Party assumes the defense of a proceeding, no
compromise or settlement of such Claims may be effected by the Responding Party
without the Claiming Party’s consent unless (A) there is no finding or admission
of any violation of Law or any violation of the rights of any Person and no
effect on any other Claims that may be made against the Claiming Party and
(B) the sole relief provided is monetary damages that are paid in full by the
Responding Party.

(c) If (i) notice is given to the Responding Party of the commencement of any
third-party legal proceeding and the Responding Party does not, within 30 days
after the Claiming Party’s notice is given, give notice to the Claiming Party of
its election to assume the defense of such legal proceeding, (ii) any of the
conditions set forth in clauses (i) through (iii) of Section 10.7(b) above
become unsatisfied or (iii) a Claiming Party determines in good faith that there
is a reasonable probability that a legal proceeding may adversely affect it
other than as a result of monetary damages for which it would be entitled to
indemnification from the Responding Party under this Agreement, then the
Claiming Party shall (upon notice to the Responding Party) have the right to
undertake the defense, compromise or settlement of such Claim; provided that the
Responding Party shall reimburse the Claiming Party for the costs of defending
against such third-party Claim (including reasonable attorneys’ fees and
expenses) and shall remain otherwise responsible for any liability with respect
to amounts arising from or related to such third-party Claim, in both cases to
the extent it is determined that such Responding Party is liable with respect to
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Responding Party may elect to participate in such legal proceedings,
negotiations or defense at any time at its own expense.

Section 10.8 Access to Information. After the Closing Date, Seller and Buyer
shall grant each other (or their respective designees), and Buyer shall cause
Newington Energy to grant to Seller (or its designees), access at all reasonable
times upon reasonable notice to all of the information, books and records
relating to Newington Energy in its possession, and shall afford such party the
right (at such party’s expense) to take extracts therefrom and to make copies
thereof, to the extent reasonably necessary to implement the provisions of, or
to investigate or defend any claims between the Parties arising under, this
Agreement.

ARTICLE XI

MISCELLANEOUS

Section 11.1 Notices. (a) Unless this Agreement specifically requires otherwise,
any notice, demand or request provided for in this Agreement, or served, given
or made in connection with it, shall be in writing and shall be deemed properly
served, given or made if delivered in person or sent by facsimile or sent by
registered or certified mail, postage prepaid, or by a nationally recognized
overnight courier service that provides a receipt of delivery, in each case, to
the Parties at the addresses specified below:

If to Buyer, to:

North American Energy Alliance, LLC

c/o AllCapital (US), LLC

 

153 East 53rd Street, 55th floor

           

New York, NY 10022

           

Attn: Joe Synnott and Andrew Blevin

           

Phone: (212) 906 4400

           

Facsimile: (212) 906 4401

           

Email(s):

  joe.synnott@allcapitalus.com               andrew.blevin@allcapitalus.com   
        

with copies to:

Industry Funds Management (Nominees) Limited

 

Casselden Place, Level 29

        

2 Lonsdale

        

Melbourne, Victoria 3000

        

Australia

           

Attn: James Dickson

           

Phone: +61 (0) 3 9657 4382

           

 

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Facsimile: +61 (0) 3 9923 7189

           

Email:

  jdickson@ifm.net.au            

and:

Shearman & Sterling LLP

 

599 Lexington Ave

           

New York, NY 10022

           

Attn: Eliza Swann

           

Phone: (212) 848 8073

           

Email:

  eswann@shearman.com            

If to Seller, to:

 

Consolidated Edison, Inc.

           

4 Irving Place, Room 1810-S

           

New York, NY 10003

           

Attn: Brian E. Cray, Esq.

           

Facsimile: (212) 677-5850

           

with copies to:

 

Paul, Hastings, Janofsky & Walker LLP

           

75 East 55th Street

           

New York, NY 10022

           

Attn: John Hawkins, Esq.

           

Facsimile: (212) 230-7886

           

(b) Notice given by personal delivery, mail or overnight courier pursuant to
this Section 11.1 shall be effective upon physical receipt. Notice given by
facsimile pursuant to this Section 11.1 shall be effective as of the date of
confirmed delivery if delivered before 5:00 p.m. Eastern Time on any Business
Day or the next succeeding Business Day if confirmed delivery is after 5:00 p.m.
Eastern Time on any Business Day or during any non-Business Day.

Section 11.2 Entire Agreement. Except for the Confidentiality Agreement, this
Agreement supersedes all prior discussions and agreements between the Parties
with respect to the subject matter hereof and thereof and contains the sole and
entire agreement between the Parties and their Affiliates with respect to the
subject matter hereof and thereof.

Section 11.3 Expenses. Except as otherwise expressly provided in this Agreement
or as may otherwise be agreed in writing by the Parties, whether or not the
transactions contemplated hereby are consummated, each Party will pay its own
costs and expenses incurred

 

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in anticipation of, relating to and in connection with the negotiation and
execution of this Agreement and the transactions contemplated hereby.
Notwithstanding the immediately-preceding sentence, each Party shall pay
one-half of all fees required by Governmental Authorities with respect to
filings made with any Governmental Authorities, including such fees in
connection with filings under the HSR Act.

Section 11.4 Disclosure. Seller may, at its option, include in the Schedules,
the Updated Schedules, the Material Contracts List and the Updated Material
Contracts List, items that are not material in order to avoid any
misunderstanding, and any such inclusion, or any references to dollar amounts,
shall not be deemed to be an acknowledgment or representation that such items
are material, to establish any standard of materiality or to define further the
meaning of such terms for purposes of this Agreement.

Section 11.5 Waiver. Any term or condition of this Agreement may be waived at
any time by the Party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the Party waiving such term or condition. No waiver by any
Party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion.

Section 11.6 Amendment. This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of each Party.

Section 11.7 No Third Party Beneficiary. Except for the provisions of Sections
6.2(c), 6.4, 6.5, 6.6, 6.7, 6.13, 10.4, 10.5, and 10.6(c) (which are intended to
be for the benefit of the Persons identified therein), the terms and provisions
of this Agreement are intended solely for the benefit of the Parties and their
respective successors or permitted assigns, and it is not the intention of the
Parties to confer third-party beneficiary rights upon any other Person.

Section 11.8 Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any Party without the prior
written consent of the other Party except that the Buyer may assign this
Agreement as collateral security to its or its Affiliates’ lenders, hedge
counterparties (whether physical or financial), and tollers. Subject to this
Section 11.8, this Agreement is binding upon, inures to the benefit of and is
enforceable by the Parties and their respective successors and permitted
assigns.

Section 11.9 Remedies; Specific Performance.

(a) Seller agrees that to the extent it has incurred Losses in connection with
the termination of this Agreement as described in Section 9.3(a) or otherwise in
connection with the failure of the transactions contemplated by this Agreement
to close a result of Buyer’s breach, (i) the maximum aggregate liability of
Buyer for such Losses shall be as set forth in Section 9.3(a) and any amounts
owed under Section 6.2(c), and (ii) in no event shall Seller seek equitable
relief therefor or to recover any money damages in excess of such amount from
Buyer.

 

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(b) The Parties agree that irreparable damage would occur in the event any
provision of this Agreement were not performed by Seller in accordance with the
terms hereof and that, prior to any termination of this Agreement by Buyer
pursuant to Section 9.1, Buyer shall be entitled to seek specific performance of
the terms hereof, in addition to any other remedy at law or equity.

(c) The Parties further agree that irreparable damage would occur in the event
any covenant of Buyer contained in this Agreement that, by its terms, survives
the Closing were not performed by Buyer in accordance with the terms thereof and
that Seller shall be entitled to seek specific performance of the terms of any
such covenant in addition to any other remedy at law or equity.

Section 11.10 Headings. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.

Section 11.11 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any Party under this Agreement will not be materially
and adversely affected thereby, such provision will be fully severable, this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom and in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.

Section 11.12 Counterparts; Facsimile. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument. Any facsimile or
electronically transmitted copies hereof or signature hereon shall, for all
purposes, be deemed originals.

Section 11.13 Governing Law; Jurisdiction; Waiver of Jury Trial.

(a) This Agreement shall be governed by and construed in accordance with the Law
of the State of New York, without giving effect to any conflict or choice of law
provision that would result in the application of another state’s Law.

(b) Each of the Parties hereby submits to the exclusive jurisdiction of the
State and Federal courts located in the Borough of Manhattan in the City and
State of New York with respect to any action or proceeding relating to this
Agreement and the transactions contemplated hereby.

 

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(c) EACH OF THE PARTIES IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH
RESPECT TO ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY.

[signature page follows]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date
first written above, intending to be legally bound.

 

SELLER: CED/SCS NEWINGTON, LLC

/s/ Stephen B. Bram

Name:   Stephen B. Bram Title:   Chairman of the Board of Consolidated  

Edison Development, Inc. / Group President

- Competitive Energy Businesses

BUYER: NORTH AMERICAN ENERGY ALLIANCE, LLC By:   NORTH AMERICAN ENERGY ALLIANCE
HOLDINGS, LLC, its Manager By:  

/s/ Raymond Kwok

Name:   Raymond Kwok Title:   Manager By:  

/s/ James Dickson

Name:   James Dickson Title:   Manager

 

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