EXECUTION COPY
[***]
 
Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. A series of three asterisks within brackets denotes omissions.

EXHIBIT 10.1

       
PURCHASE AND SALE AGREEMENT
 
by and between
 
Riverside Energy Center, LLC
and
Calpine Development Holdings, Inc.,
 
as Sellers,
 
and
 
Public Service Company of Colorado,
 
as Purchaser,
 
dated as of April 2, 2010
         

 
 

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TABLE OF CONTENTS

  Page
ARTICLE I                            DEFINITIONS AND CONSTRUCTION
 
1
 
Section 1.01
 
Definitions
 
1
 
Section 1.02
 
Construction
 
12
 
ARTICLE II                            PURCHASE AND SALE AND CLOSING
 
12
 
Section 2.01
 
Purchase and Sale
 
12
 
Section 2.02
 
Purchase Price
 
13
 
Section 2.03
 
Closing
 
13
 
Section 2.04
 
Closing Deliveries by Sellers to Purchaser
 
13
 
Section 2.05
 
Closing Deliveries by Purchaser to Sellers
 
14
 
Section 2.06
 
Post-Closing Adjustment
 
14
 
Section 2.07
 
Closing Date Cash
 
15
 
Section 2.08
 
Purchase Price Allocation
 
15
 
ARTICLE III                            REPRESENTATIONS AND WARRANTIES REGARDING
SELLERS
 
16
 
Section 3.01
 
Organization and Qualification
 
16
 
Section 3.02
 
Authority
 
16
 
Section 3.03
 
No Conflicts; Consents and Approvals
 
16
 
Section 3.04
 
Ownership of Interests
 
17
 
ARTICLE IV                            REPRESENTATIONS AND WARRANTIES REGARDING
THE COMPANIES
 
17
 
Section 4.01
 
Organization and Qualification
 
17
 
Section 4.02
 
No Conflicts; Consents and Approvals
 
17
 
Section 4.03
 
Subsidiaries; No Other Business
 
18
 
Section 4.04
 
Litigation
 
18
 
Section 4.05
 
Compliance with Laws; Permits
 
18
 
Section 4.06
 
Contracts
 
18
 
Section 4.07
 
Assets
 
19
 
Section 4.08
 
Employee Benefit Plans
 
21
 

 
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TABLE OF CONTENTS
(continued)

    Page
Section 4.09
 
Labor and Employment Matters; Independent Contractors
 
22
 
Section 4.10
 
Environmental Matters
 
22
 
Section 4.11
 
Insurance
 
22
 
Section 4.12
 
Taxes
 
23
 
Section 4.13
 
Intellectual Property
 
23
 
Section 4.14
 
PUHCA
 
23
 
Section 4.15
 
Brokers
 
24
 
Section 4.16
 
Capital Structure
 
24
 
Section 4.17
 
Financial Statements
 
24
 
Section 4.18
 
Liabilities
 
25
 
Section 4.19
 
Changes in Circumstances
 
25
 
ARTICLE V                            REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
25
 
Section 5.01
 
Organization and Qualification
 
25
 
Section 5.02
 
Authority
 
25
 
Section 5.03
 
No Conflicts; Consents and Approvals
 
25
 
Section 5.04
 
Litigation
 
26
 
Section 5.05
 
Compliance with Laws
 
26
 
Section 5.06
 
Brokers
 
26
 
Section 5.07
 
No Registration for Acquisition
 
26
 
Section 5.08
 
Financial Resources
 
26
 
Section 5.09
 
No Knowledge of Breach
 
26
 
Section 5.10
 
Reliance on Sellers’ Representations and Warranties
 
26
 
ARTICLE VI                            COVENANTS
 
27
 
Section 6.01
 
Access of Purchaser
 
27
 
Section 6.02
 
Conduct of Business Pending the Closing
 
28
 
Section 6.03
 
Tax Matters
 
30
 
Section 6.04
 
Public Announcements
 
32
 
Section 6.05
 
Expenses and Fees
 
32
 
Section 6.06
 
Agreement to Cooperate; Regulatory Approval
 
32
 

 
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TABLE OF CONTENTS
(continued)

    Page
Section 6.07
 
Further Assurances
 
33
 
Section 6.08
 
Post-Closing Access to Information
 
34
 
Section 6.09
 
Employee and Benefit Matters
 
34
 
Section 6.10
 
Resignation of Members, Managers, Officers and Directors
 
35
 
Section 6.11
 
Use of Certain Names
 
35
 
Section 6.12
 
Support Obligations
 
35
 
Section 6.13
 
Termination of Certain Services, Contracts, Receivables and Payables
 
35
 
Section 6.14
 
Insurance
 
36
 
Section 6.15
 
Title Evidence
 
36
 
Section 6.16
 
Fall 2010 RMEC Outage
 
36
 
ARTICLE VII                            CONDITIONS TO THE CLOSING
 
37
 
Section 7.01
 
Conditions to the Obligations of Each Party
 
37
 
Section 7.02
 
Conditions to the Obligations of Purchaser
 
38
 
Section 7.03
 
Conditions to the Obligations of Sellers
 
38
 
ARTICLE VIII                            TERMINATION
 
39
 
Section 8.01
 
Termination
 
39
 
Section 8.02
 
Effect of Termination
 
41
 
ARTICLE IX                            INDEMNIFICATION
 
41
 
Section 9.01
 
Survival
 
41
 
Section 9.02
 
Indemnification
 
41
 
Section 9.03
 
Right to Specific Performance; Certain Limitations
 
44
 
Section 9.04
 
Procedures for Indemnification
 
44
 
ARTICLE X                            MISCELLANEOUS
 
45
 
Section 10.01
 
Notices
 
45
 
Section 10.02
 
Headings
 
46
 
Section 10.03
 
Assignment
 
46
 
Section 10.04
 
Supplements to Schedules
 
46
 
Section 10.05
 
Governing Law; Jurisdiction; Waiver of Jury Trial
 
46
 

 
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TABLE OF CONTENTS
(continued)

    Page
Section 10.06
 
Counterparts
 
47
 
Section 10.07
 
Amendments
 
47
 
Section 10.08
 
Entire Agreement
 
47
 
Section 10.09
 
Severability
 
47
 

 

 
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EXHIBITS
     
Exhibit A
Form of Assignment of Limited Liability Company Interests
Exhibit B
Form of Seller Guaranty
   
SCHEDULES
     
Schedule 1.01(a)
Adjusted Net Working Capital Calculations
Schedule 1.01(b)
Fall 2010 RMEC Outage Schedule and Scope
Schedule 1.01(c)
Post-Outage Operations Confirmation
Schedule 1.01(d)
Sellers’ and the Company’s Knowledge
Schedule 1.01(e)
Purchaser’s Knowledge
Schedule 1.01(f)
Permitted Liens
Schedule 3.03(c)
Seller Approvals
Schedule 3.04
Liens on Interests
Schedule 4.02
Conflicts; Consents and Approvals
Schedule 4.02(c)
Third Party Consents
Schedule 4.04
Litigation
Schedule 4.05(a)
Compliance with Laws
Schedule 4.05(b)(i)
Permits
Schedule 4.05(b)(ii)
Compliance with Permits
Schedule 4.06(a)
Material Contracts
Schedule 4.06(c)
Validity and Enforceability of Material Contracts
Schedule 4.07(a)(i)
Owned Real Property
Schedule 4.07(a)(ii)
Real Property Liens and Exceptions to Title
Schedule 4.07(a)(viii)
Pending Conditions or Obligations
Schedule 4.07(b)(i)
Material Non-Real Estate Assets
Schedule 4.07(b)(ii)
Material Non-Real Estate Assets Liens
Schedule 4.07(b)(iii)
Major Maintenance and Repair Records for Material Non-Real Estate Assets
Schedule 4.08(a)
Material Benefit Plans
Schedule 4.08(b)
Material Employment Practices and Arrangements
Schedule 4.09(a)
Labor and Employment Matters
Schedule 4.09(b)
Major Independent Contractors
Schedule 4.10
Environmental Matters
Schedule 4.11(i)
Insurance Policies
Schedule 4.11(ii)
Insurance Claims
Schedule 4.12(a)
Tax Returns
Schedule 4.12(b)
Tax Claims and Liens
Schedule 4.12(c)
Tax Liabilities
Schedule 4.13(a)
Intellectual Property
Schedule 4.13(b)
Material Licenses
Schedule 4.18
Liabilities
Schedule 4.19
Change in Circumstance
Schedule 5.03(c)
Purchaser Governmental Approvals
Schedule 5.09
Purchaser Knowledge of Breach

 
-v-

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Schedule 6.02(a)
Conduct of Business Pending Closing
Schedule 6.06(c)
Interim Period Permits
Schedule 6.12
Support Obligations
Schedule 6.13
Terminated Services and Contracts
Schedule 6.14
Post-Closing Insurance Coverage
       

 
 

 
 
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PURCHASE AND SALE AGREEMENT
 
This Purchase and Sale Agreement (this “Agreement”), dated as of April 2, 2010
(the “Execution Date”), is made and entered into by and among Calpine
Development Holdings, Inc., a Delaware corporation (“Blue Spruce Seller”) and
Riverside Energy Center, LLC, a Wisconsin limited liability company (“Rocky
Mountain Seller”, and together with Blue Spruce Seller, each a “Seller” and
collectively “Sellers”), and Public Service Company of Colorado, a Colorado
corporation (“Purchaser”).
 
RECITALS
 
WHEREAS, Blue Spruce Seller owns 100% of the limited liability company interests
(“Blue Spruce Interests”) of Blue Spruce Energy Center, LLC, a Delaware limited
liability company (“Blue Spruce Company”);
 
WHEREAS, Rocky Mountain Seller owns 100% of the limited liability company
interests (“Rocky Mountain Interests”, and collectively with the Blue Spruce
Interests, the “Interests”) of Rocky Mountain Energy Center, LLC, a Delaware
limited liability company (“Rocky Mountain Company”, and together with Blue
Spruce Company, each a “Company” and collectively the “Companies”);
 
WHEREAS, the Companies are special purpose companies that own the Rocky Mountain
Energy Center (“RMEC”), a natural gas combined cycle facility with a plant
nominal winter capacity of 652 MW located in Keenesburg, CO, and Blue Spruce
Energy Center (“BSEC” and RMEC, each a “Facility”, and collectively the
“Facilities”), a nominal winter 310 MW natural gas simple cycle peaking facility
located in Aurora, CO, respectively;
 
WHEREAS, Purchaser is the owner and operator of electric generation,
transmission and distribution facilities through which it is engaged in the
business of generating, transmitting and selling electric energy to the general
public and at wholesale;
 
WHEREAS, Purchaser has been the tolling counterparty under the PPAs since
commercial operation of the Facilities; and
 
WHEREAS, Sellers desire to sell to Purchaser, and Purchaser desires to purchase
from Sellers, all of the Interests, as provided in this Agreement.
 
NOW, THEREFORE, in consideration of the foregoing and the mutual promises made
in this Agreement and of the mutual benefits to be derived from such promises,
and for other good and valuable consideration, the receipt and sufficiency of
which is acknowledged, the Parties to this Agreement, intending to be legally
bound, agree as follows:
 
ARTICLE I
 
DEFINITIONS AND CONSTRUCTION
 
Section 1.01                      Definitions.  For purposes of this Agreement,
the following terms shall have the respective meanings set forth below:
 

 
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“1933 Act” has the meaning set forth in Section 5.07.
 
“Adjusted Current Assets” means all “accounts receivable, trade” of the
Companies, each determined in a manner consistent with the September 30, 2009,
balance sheets of the Companies and in accordance with GAAP, consistently
applied, as set forth on Schedule 1.01(a).
 
“Adjusted Current Liabilities” means all “accounts payable, trade and accrued
liabilities (excluding accrued audit fees and accrued letter of credit fees)” of
the Companies, each determined in a manner consistent with the September 30,
2009, balance sheets of the Companies and in accordance with GAAP, consistently
applied, as set forth on Schedule 1.01(a).
 
“Adjusted Net Working Capital” means Adjusted Current Assets minus Adjusted
Current Liabilities of the Companies, determined as of 11:59 pm on the day prior
to the Closing Date, calculated as set forth on Schedule 1.01(a).
 
“Affected Employee” has the meaning set forth in Section 6.09(a).
 
“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 of a Person means the
power, direct or indirect, to direct or cause the direction of the management
and policies of such Person whether through ownership of voting securities or
ownership interests, by contract or otherwise, and specifically with respect to
a corporation, partnership, trust or limited liability company, means direct or
indirect ownership of more than fifty percent (50%) of the voting securities in
such corporation or of the voting interest in a partnership or limited liability
company or of the beneficial interests in a trust.
 
“Agreement” has the meaning set forth in the introductory paragraph to this
Agreement.
 
“Allocation Schedule” has the meaning set forth in Section 2.08.
 
“Antitrust Laws” means the HSR Act, the Sherman Antitrust Act of 1890, as
amended, the Clayton Antitrust Act of 1914, as amended, the Federal Trade
Commission Act of 1914, as amended, and any other federal or state statutes,
rules, regulations, orders, decrees, administrative or judicial doctrines or
other laws that prohibit, restrict or regulate actions that have the purpose or
effect of monopolizing or restraining trade.
 
“Balance Sheet Date” has the meaning set forth in Section 4.17(a).
 
“Base Purchase Price” has the meaning set forth in Section 2.02(a).
 
“Benefit Plan” means: (a) each “employee benefit plan,” as such term is defined
in Section 3(3) of ERISA, (b) each stock bonus, stock ownership, stock option,
stock purchase, stock appreciation rights, phantom stock, or other equity plan
(whether qualified or nonqualified), (c) each bonus, deferred compensation or
incentive compensation plan, and (d) any other employee benefit plan, program,
agreement or arrangement of any kind (including, any employment, consulting,
retention, change in control or severance plan, policy, arrangement or
agreement), in each case covering either current or former employees, officers
or directors of the Company who are or were employed at or providing services in
respect of the Facility, provided
 

 
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that the term “Benefit Plan” shall not include (1) routine employment policies
and procedures, including wage, vacation, holiday, and sick or other leave
policies, (2) workers compensation insurance, and (3) directors and officers
liability insurance.
 
“Blue Spruce Company” has the meaning set forth in the recitals.
 
“Blue Spruce Credit Agreement” means that certain Credit Agreement dated as of
February 1, 2008 by and among Blue Spruce Energy Center, LLC, Cobank, ACB, and
Siemens Financial Services, Inc.
 
“Blue Spruce Interests” has the meaning set forth in the recitals.
 
“Blue Spruce Seller” has the meaning set forth in the introductory paragraph to
this Agreement.
 
“Books and Records” means all files, documents, instruments, papers, books,
reports, records, drawings, tapes, microfilms, photographs, letters, budgets,
ledgers, journals, title policies, supplier lists, regulatory filings, operating
data and plans, technical documentation (design specifications, functional
requirements, operating instructions, logic manuals, flow charts, etc), user
documentation (installation guides, user manuals, training materials, release
notes, working papers, etc.), internal and external correspondence and other
documents relating to the operation of the Facilities (including correspondence
with contractors, customers, suppliers, vendors and the like), and other similar
materials that, in all such cases, are primarily related to the business and the
assets and the operations of the Companies, in whatever form (including
electronic), but excluding (i) materials relating to this transaction and market
and similar forecast information, and (ii) electronic correspondence and files
stored on equipment and media which are not located at the Facilities at the
Closing and are not material to the operation and ownership of the Companies
following the Closing (“Excluded Electronic Records”).
 
“BSEC” has the meaning set forth in the recitals.
 
“BSEC 2007 Emissions Losses” means any and all Losses that arise out of, or
result from, or otherwise relate to, the matters set forth under Section 4.10(b)
of Schedule 4.10.
 
“Business Day” means a day other than Saturday, Sunday or any day on which banks
located in the City of New York are authorized or obligated to close.
 
“Calpine Guarantees” mean (i) the Guaranty, dated May 11, 2001, by Calpine
Corporation in favor of Purchaser, in connection with the performance by Blue
Spruce Company under its PPA, and (ii) the Guaranty, dated May 11, 2001, by
Calpine Corporation in favor of Purchaser, in connection with the performance by
Rocky Mountain Company under its PPA.
 
“Change of Law” means the adoption, implementation, promulgation, repeal,
modification or reinterpretation of any Law, order, protocol, practice or
measure of or by any Governmental Authority, which occurs subsequent to the
Execution Date.
 
“Charter Documents” means with respect to any Person, the certificate or
articles of incorporation, organization or formation and by-laws, the limited
partnership agreement, the
 

 
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partnership agreement or the operating or limited liability company agreement,
equityholder agreements and/or other organizational and governance documents of
such Person, including those that are required to be registered or kept in the
place of incorporation, organization or formation of such Person and which
establish the legal personality of such Person.
 
“Claim” means any demand, claim, action, legal proceeding (whether at law or in
equity) or arbitration.
 
“Closing” has the meaning set forth in Section 2.03.
 
“Closing Date” means the date on which the Closing occurs.
 
“Code” means the Internal Revenue Code of 1986.
 
“Commonly Controlled Entity” means any trade or business, whether or not
incorporated, that, together with the Company, would be a “single employer”
within the meaning of Section 414(b) or (c) of the Code.
 
“Company” and “Companies” have the meaning set forth in the recitals.
 
“Confidentiality and Non-Disclosure Agreement” means that certain
Confidentiality and Non-Disclosure Agreement, dated as of June 29, 2009, by and
between Calpine Corporation and Purchaser.
 
“Contract” means any written contract, lease, license, evidence of indebtedness,
mortgage, indenture, purchase order, binding bid, letter of credit, security
agreement or other written and legally binding arrangement.
 
“CPUC” means the Colorado Public Utilities Commission.
 
“Credit Agreements” mean the Blue Spruce Credit Agreement, the Rocky Mountain
Credit Agreement, and any other credit agreement or agreements to which either
of the Companies is a party or by which it is bound or to which any of its
assets or securities are subject.
 
“Debt” of any specified Person means: (a) any and all liabilities and
obligations of any Person (i) for borrowed money (including the current portion
thereof), (ii) under or related to any reimbursement obligation relating to a
letter of credit, bankers’ acceptance or note purchase facility, (iii) evidenced
by a bond, note, debenture or similar instrument (including a purchase money
obligation), (iv) for the payment of money relating to a lease or instrument
that is required to be classified as a capitalized/finance lease obligation in
accordance with GAAP, (v) for all or any part of the deferred purchase price of
property or services (other than non-Affiliate trade payables), (vi) under or
related to any agreement that is an interest rate swap agreement, basis swap,
forward rate agreement, commodity swap, commodity option, equity or equity index
swap or option, bond option, interest rate option, forward foreign exchange
agreement, rate cap, collar or floor agreement, currency swap agreement,
cross-currency rate swap agreement, currency option or other similar agreement
(including any option to enter into any of the foregoing), and (vii) audit fees,
and (b) any and all liabilities and obligations of others described in the
preceding clause (a) that such Person has guaranteed or that is recourse to such
Person or
 

 
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any of its assets or that is otherwise its legal liability or that is secured in
whole or in part by the assets of such Person.  For purposes of this Agreement,
Debt shall include any and all accrued interest, success fees, prepayment
premiums, make-whole premiums or penalties, and fees or expenses (including,
without limitation, attorneys’ fees) associated with any Debt.
 
“Discovery Work” means maintenance and repair work that is identified in the
course of completing the work contemplated by the Fall 2010 RMEC Outage Schedule
and Scope but was not contemplated by the Fall 2010 RMEC Outage Schedule and
Scope and, should, in accordance with Good Industry Practices, be completed
before the next major outage for RMEC gas turbine unit #2.
 
“Disproportionate Impact” has the meaning set forth in the definition of
Material Adverse Effect.
 
“Due Diligence Information” means the information provided or made available to
Purchaser or its Representatives, shareholders, Affiliates or agents, including,
without limitation, any information, document, or material provided or made
available, or statements made, to Purchaser (including its Representatives,
shareholders, Affiliates or agents) during site or office visits, in any “data
rooms” (virtual or otherwise), management presentations, “break-out”
discussions, in responses to questions submitted by or on behalf of Purchaser
(including its Representatives, shareholders, Affiliates or agents), whether
orally or in writing, or in any supplemental due diligence information provided
to Purchaser (including its Representatives, shareholders, Affiliates or
agents), in connection with discussions with management or in any other form in
expectation of the transactions contemplated by this Agreement.
 
“Environmental Law” means any applicable federal, state or local law, statute,
ordinance, rule, regulation, permit or order of any Governmental Authority
relating to (a) the protection, preservation or restoration of the environment
(including air, surface water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural resource), or (b)
the exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of Hazardous Substances, in each case as in effect at the Execution Date.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
 
“Essential Discovery Work” means Discovery Work that, under Good Industry
Practices, should be completed before RMEC gas turbine unit #2 is placed back
into service in order to avoid a potentially hazardous or dangerous condition.
 
“Estimated Purchase Price” has the meaning set forth in Section 2.05(a).
 
“Execution Date” has the meaning set forth in the introductory paragraph to this
Agreement.
 
“Facility” and “Facilities” have the meaning set forth in the recitals.
 

 
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“Fall 2010 RMEC Outage Schedule and Scope” means the work plan, schedule and
scope attached hereto as Schedule 1.01(b) for the Fall 2010 RMEC Outage Work, as
such schedule may be amended by Sellers with Purchaser’s consent (not to be
unreasonably withheld).
 
“Fall 2010 RMEC Outage Work” means the maintenance and repair work contemplated
by the Fall 2010 RMEC Outage Schedule and Scope, and all related, post-outage
operations confirmation in accordance with Schedule 1.01(c), as such schedule
may be amended by Sellers with Purchaser’s consent (not to be unreasonably
withheld), as well as any Discovery Work that must also be completed prior to
the conclusion of the outage as set forth in Section 6.16(c).  It is anticipated
that the maintenance and repair work will commence on or about [***], and
continue for approximately [***] thereafter, and that the post-outage operations
confirmation will commence upon completion of the outage and continue for
another approximately [***] thereafter.1
 
“Federal Power Act” means the Federal Power Act, as amended.
 
“FERC” means the Federal Energy Regulatory Commission, or any successor agency.
 
“Final Purchase Price” has the meaning set forth in Section 2.06(c).
 
“Financial Statements” has the meaning set forth in Section 4.17.
 
“GAAP” means generally accepted accounting principles in the United States of
America.
 
“Good Industry Practices” means, with respect to the Facilities, any of the
practices, methods and acts generally engaged in or approved by a significant
portion of the electric power generation industry during the relevant time
period that, in the exercise of reasonable judgment in light of the applicable
manufacturer’s recommendations and the facts known or that reasonably should
have been known at the time the decision was made, would reasonably have been
expected to accomplish the desired result at a reasonable cost consistent with
good business practices, reliability, safety and expedition.  Good Industry
Practices are intended to consist of practices, methods or acts generally
accepted in the region where the Facilities are located, and are not intended to
be limited to optimum practices, methods or acts to the exclusion of all others.
 
“Governmental Authority” means any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States or
any state, county, city or other political subdivision or similar governing
entity, and including any governmental, quasi–governmental or non-governmental
body administering, regulating or having general oversight over gas,
electricity, power or other markets, including, without limitation, NERC and
WECC.
 
“Hazardous Substance” means any substance presently listed, defined or
classified as a pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, solid waste or special waste under any applicable Environmental
Law, including, without limitation, asbestos,
 

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

 
1 Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. A series of three asterisks within brackets denotes omissions.
 

 
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mold, petroleum or any fraction of petroleum, polychlorinated biphenyls, or urea
formaldehyde foam insulation.
 
“HSR Act” means the Hart-Scott Rodino Antitrust Improvements Act of 1976, as
amended.
 
“Indemnified Party” has the meaning set forth in Section 9.04.
 
“Indemnifying Party” has the meaning set forth in Section 9.04.
 
“Independent Accounting Firm” means a nationally recognized accounting firm that
is not the principal accounting firm of either Purchaser or either Seller, as
agreed to between the Parties.
 
“Independent Engineer” means Worley Parsons or, if such firm is unable or
unwilling to promptly serve as Independent Engineer, URS Corporation or, if both
such firms are unable or unwilling to promptly serve as Independent Engineer,
such other nationally recognized engineering firm that is reasonably acceptable
to the Parties.
 
“Intellectual Property” has the meaning set forth in Section 4.13.
 
“Interest Rate” means the prime per annum rate of interest as published from
time to time by The Wall Street Journal.
 
“Interests” has the meaning set forth in the recitals.
 
“Interim Period” means the period of time from the Execution Date until the
Closing Date or termination of this Agreement.
 
“Knowledge” means, (i) in the case of Sellers or the Companies, the actual
knowledge (as opposed to any constructive or imputed knowledge) of the
individuals listed on Schedule 1.01(d) after due inquiry, and (ii) in the case
of Purchaser, the actual knowledge (as opposed to any constructive or imputed
knowledge) of the individuals listed on Schedule 1.01(e) after due inquiry.
 
“Laws” means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of any Governmental Authority.
 
“Lien” means any security interest, pledge, mortgage, lien, charge, encumbrance,
conditional sale agreement, title retention contract, right of first refusal,
option to purchase, proxy, voting trust or voting agreement or any similar
interest.
 
“Losses” means any and all judgments, losses, liabilities, amounts paid in
settlement, damages, fines, penalties, deficiencies, losses and expenses
(including interest, court costs, reasonable fees of attorneys, accountants and
other experts or other reasonable expenses of litigation or other proceedings or
of any Claim, default or assessment).
 

 
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“Material Adverse Effect” means any change, event or effect occurring on or
after the date hereof that, individually or in the aggregate, is materially
adverse to the assets, operations, business, or properties of the Facilities or
the Companies, taken as a whole,  except for any such change, event or effect
resulting from or arising out of (a) changes in economic or financial conditions
generally or in  the electric generating, transmission or distribution
industries, whether national, regional or state, that do not have a
disproportionate impact on the Facilities or the Companies as compared to
similar facilities or their owners in the regions in which the Facilities are
located (a “Disproportionate Impact”); (b) changes in the national, regional or
state wholesale or retail markets for electric power or fuel supply or
transportation, including those due to actions by competitors, that do not have
a Disproportionate Impact; (c) any acts of war or terrorism that do not have a
Disproportionate Impact; (d) changes in the North American, national, regional,
or state transmission or distribution systems that do not have a
Disproportionate Impact, or any change in any way relating to Purchaser’s
electric transmission or distribution systems; (e) strikes, work stoppages or
other labor disturbances that do not occur at the Facilities; (f) increases in
the costs of commodities or supplies, including fuel, that do not have a
Disproportionate Impact; (g) effects of weather or meteorological events that do
not have a Disproportionate Impact; (h) any change in GAAP or Change of Law
(including but not limited to changes in regulatory policy and any such change
relating to climate change, renewables or the environment); (i) any judgment,
order or decree, including but not limited to any such change, judgment, order
or decree relating to climate change, renewables or the environment, that does
not have a Disproportionate Impact; (j) changes or adverse conditions in the
securities markets, including those relating to debt financing; (k) any adverse
change or effect attributable to  the execution, delivery or pendency of this
Agreement or the consummation of the transactions contemplated hereby or the
announcement of any of the aforementioned matters set forth in this clause (k),
including but not limited to any decrease in customer demand, any reduction in
revenues, any disruption in supplier or similar relationships, or any loss of
employees; and (l) any actions taken or  to be taken pursuant to this Agreement
or any other action of, or omission by, Purchaser or any of its Affiliates
(including, without limitation, any default by Purchaser under the PPAs).
 
“Material Contracts” has the meaning set forth in Section 4.06(a).
 
“Material Non-Real Estate Assets” has the meaning set forth in Section
4.07(b)(i).
 
“NERC” means North American Electric Reliability Corporation and any successor.
 
“Operator” means Calpine Operating Services Company, Inc.
 
“Operator Facility Employees” means the employees employed full time or
part-time by the Operator at the Facilities, including all employees (both
active and inactive, who are receiving disability pay of any kind).
 
“Ordinary Course” means the ordinary and normal course of each Company’s conduct
of business consistent with past practice employed by such Company.
 
“Owned Real Property” has the meaning set forth in Section 4.07(a).
 

 
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“Party” or “Parties” means Purchaser, on the one hand, and Sellers, on the other
hand, provided that when the context dictates, such terms shall include the
Companies.
 
“Permits” has the meaning set forth in Section 4.05(b).
 
“Permitted Liens” means (a) mechanic’s, materialmen’s, workmen’s, repairmen’s
and similar Liens arising in the Ordinary Course with respect to any amounts not
yet due and payable or which (i) are being contested in good faith through
appropriate proceedings or (ii) have been bonded, provided that, in either case,
the applicable property will not be subject to forfeiture or sale during the
pendency of any such proceeding, (b) Liens for Taxes not yet due and payable or
which are being contested in good faith through appropriate proceedings,
provided that no portion of the Facilities or the Owned Real Property will be
subject to sale or forfeiture during the pendency of such proceedings, (c)
purchase money Liens securing obligations not yet due and payable, and Liens
securing rental payments not yet due and payable under capital lease
arrangements, arising in each case in the Ordinary Course, (d) pledges or
deposits under workers’ compensation legislation, unemployment insurance Laws or
similar Laws, (e) good faith deposits in connection with bids, tenders or
contracts, including rent security deposits, (f) pledges or deposits to secure
public or statutory obligations or appeal bonds, (g) Liens arising by operation
of applicable Law securing amounts not yet due and payable arising in the
Ordinary Course, (h) Liens and other matters disclosed on Schedule 1.01(f)
hereto and (i) such imperfections of title, easements, encumbrances,
restrictions or other Liens that, individually or in the aggregate, do not
materially affect the current or future value or use of the Companies’ assets in
a manner consistent with past practice.
 
“Person” means any natural person, corporation, general partnership, limited
partnership, limited liability company, proprietorship, other business
organization, trust, union, association or Governmental Authority.
 
“Post-Closing Adjustment” has the meaning set forth in Section 2.06(a).
 
“Post-Closing Straddle Period” has the meaning set forth in Section 6.03(e).
 
“PPA Termination Instruments” means such instruments, reasonably acceptable to
the Parties, necessary to terminate the PPAs effective as of the Closing Date.
 
“PPAs” means the Power Purchase Agreement, dated January 26, 2001, between Blue
Spruce Company and Purchaser, as amended from time to time, and the Power
Purchase Agreement, dated March 9, 2001, between Rocky Mountain Company and
Purchaser, as amended from time to time.
 
“Pre-Closing Straddle Period” has the meaning set forth in Section 6.03(e).
 
“Pre-Closing Tax Period” means any Tax period ending on or before the Closing
Date.
 
“Purchaser” has the meaning set forth in the introductory paragraph to this
Agreement.
 
“Purchaser Governmental Approvals” has the meaning set forth in Section 5.03(c).
 

 
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“Representatives” means the officers, directors, managers, employees, counsel,
accountants, financial advisers or consultants of a Person.
 
“RMEC” has the meaning set forth in the recitals.
 
“RMEC Outage Work Period” means the period of time required to complete the Fall
2010 RMEC Outage Work as set forth in the Fall 2010 RMEC Outage Schedule and
Scope.
 
“Rocky Mountain Company” has the meaning set forth in the recitals.
 
“Rocky Mountain Credit Agreement” means that certain Credit Agreement, dated as
of June 24, 2004 by and among Rocky Mountain Energy Center, LLC, Credit Suisse
First Boston, Union Bank of California, N.A., Cobank ACB and the financial
institutions listed on Exhibit H therein.
 
“Rocky Mountain Interests” has the meaning set forth in the recitals.
 
“Rocky Mountain Seller” has the meaning set forth in the introductory paragraph
to this Agreement.
 
“Schedule” or “Schedules” means one or more of the disclosure schedules attached
hereto.
 
“Seller” and “Sellers” have the meaning set forth in the introductory paragraph
to this Agreement.
 
“Seller Guarantor” means Calpine Corporation, a Delaware corporation.
 
“Seller Guaranty” has the meaning provided in Section 2.04(f).
 
“Seller Approvals” has the meaning set forth in Section 3.03(c).
 
“Sellers’ Additional Maintenance and Repair Work Notice” has the meaning set
forth in Section 6.16(c).
 
“Sellers’ Incomplete Discovery Work Notice” has the meaning set forth in Section
6.16(d)(ii).
 
“Sellers’ Marks” has the meaning set forth in Section 6.11.
 
“Specified Representations” have the meaning set forth in Section 9.02(c).
 
“Straddle Period” has the meaning set forth in Section 6.03(e).
 
“Subsidiary” means, with respect to any Person, any corporation or other
organization, whether incorporated or unincorporated, of which such Person or
any Subsidiaries of such Person owns, directly or indirectly, more than fifty
percent (50%) of the stock or other equity interest, or controls more than fifty
percent (50%) of the voting power entitled (x) to vote on the
 

 
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election of members to the board of directors or similar governing body or (y)
to manage the business of such Person.
 
“Supplemental Disclosure” has the meaning set forth in Section 10.4.
 
“Surface Use Agreement Losses” means any and all Losses that arise out of, or
result from, or otherwise relate to, any breach by [***] of any of the
provisions of, or any default by [***] on the performance or other satisfaction
of any of its obligations under, the Surface Use Agreement dated [***], by and
among [***] as supplemented by the letter dated April 18, 2002, by  [***], which
was agreed to and accepted by [***] on [***].2
 
“Surviving Credit Agreement Indemnities” means indemnification and other
obligations of the borrowers under the Credit Agreements that will survive the
payoff of the debt thereunder and the Closing.
 
“Tax” or “Taxes” means any foreign, United States federal, state or local net
income, alternative or add-on minimum tax, gross income, gross receipts, sales,
use, ad valorem, personal property (tangible and intangible), real property
(including general and special assessments), value added, transfer, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, environmental or windfall profit tax, custom, duty or other
tax, governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty or addition thereto.
 
“Tax Proceeding” has the meaning set forth in Section 6.03(b).
 
“Tax Returns” means any return, report or similar statement required to be filed
with respect to any Taxes, including any information return, claim for refund,
amended return and declaration of estimated Tax.
 
“Taxing Authority” means, with respect to any Tax, the governmental entity or
political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision.
 
“Termination Date” has the meaning set forth in Section 8.01(b)(i).
 
“Title Evidence” has the meaning set forth in Section 6.15.
 
“Transfer Taxes” means all transfer, sales, use, goods and services, value
added, documentary, recording, stamp duty, gross receipts, excise, and
conveyance Taxes and other similar Taxes, duties, fees or charges.
 
“Unaudited Balance Sheet” has the meaning set forth in Section 4.17(a).
 
“Unaudited Financial Statements” has the meaning set forth in Section 4.17(a).
 

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2 Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. A series of three asterisks within brackets denotes omissions.
 

 
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“WECC” means Western Electricity Coordinating Council and any successor.
 
Section 1.02                      Construction.
 
(a)           All Article, Section, Subsection, Schedule and Exhibit references
used in this Agreement are to Articles, Sections, Subsections, 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, provided that, in the event of any
conflict between any of the provisions of such Exhibits or Schedules and any of
the provisions of this Agreement, the provisions of this Agreement shall
control.
 
(b)           If a term is defined as one part of speech (such as a noun), it
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. The words “includes” or “including” shall mean “includes without
limitation” or “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 any reference to a Law shall include any amendment thereof or
any successor thereto and any rules and regulations promulgated
thereunder.  Currency amounts referenced herein are in U.S. Dollars.
 
(c)           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)           Sellers may, at their option, include in the Schedules items that
are not material, 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 or would cause a Material Adverse Effect, to establish any standard
of materiality or to define further the meaning of such terms for purposes of
this Agreement.  Information disclosed in each Schedule shall be deemed to be
disclosed in each other Schedule hereto to the extent the applicability of such
information on other Schedules is reasonably apparent.
 
(e)           Each Party acknowledges that it and its attorneys have been given
an equal opportunity to negotiate the terms and conditions of this Agreement and
that in the event an ambiguity of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties and no
presumption shall arise favoring any Party by virtue of the authorship of any
provisions of this Agreement.
 
ARTICLE II
 
PURCHASE AND SALE AND CLOSING
 
Section 2.01                      Purchase and Sale.  On the terms and subject
to the conditions set forth in this Agreement, Purchaser shall purchase from
Sellers, and Sellers shall sell to Purchaser, the Interests in the Companies.
 

 
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Section 2.02                      Purchase Price.
 
(a)           The aggregate base purchase price to be paid by Purchaser to
Sellers shall be $739,000,000 (the “Base Purchase Price”).
 
(b)           In addition to any other adjustments referenced in this Section
2.02, the Base Purchase Price will be increased or decreased, as the case may
be, to the extent that the amount of Adjusted Net Working Capital as of the
Closing is greater or less, respectively, than zero dollars ($0).  The Base
Purchase Price is also subject to such adjustments as may occur under the
provisions of Section 2.06 following the Closing.
 
Section 2.03                      Closing.  The closing of the transactions
contemplated by this Agreement (the “Closing”) shall take place at the offices
of White & Case LLP, 1155 Avenue of the Americas, New York, New York 10036 at
10:00 A.M. local time, on the second Business Day after the conditions to the
Closing set forth in Article VII (other than actions to be taken or items to be
delivered at the Closing) have been satisfied or waived by the applicable Party
or Parties, or on such other date and at such other time and place as the
applicable Parties mutually agree in writing, but not earlier than December 1,
2010.  All actions listed in Section 2.04 or Section 2.05 that occur on the
Closing Date shall be deemed to occur simultaneously at the Closing.  Subject to
the provisions of Article VIII, failure to consummate the transactions provided
for in this Agreement on the date determined pursuant to this Section 2.03 will
not result in the termination of this Agreement and will not relieve any Party
of any obligation under this Agreement.
 
Section 2.04                      Closing Deliveries by Sellers to
Purchaser.  At the Closing, Sellers shall deliver, or shall cause to be
delivered, to Purchaser the following:
 
(a)           an assignment of the Interests being transferred by each Seller,
substantially in the form attached hereto as Exhibit A together with such
documents endorsed for transfer or executed in blank as are necessary to
transfer such Interests;
 
(b)           the certificate described in Section 7.02(c);
 
(c)           an affidavit dated as of the Closing Date, in the form required by
Treasury Regulations Section 1.1445-2(b)(2) and signed under penalties of
perjury, stating that each Seller (or, in the case of a Seller that is a
disregarded entity, its owner for federal income Tax purposes) is not a foreign
person (within the meaning of Section 1445 of the Code);
 
(d)           Books and Records of the Companies (at Closing or as soon as
reasonably practical thereafter) regardless of whether held at the Facilities or
held by an affiliate of the Companies which may be made available at the
Facilities;
 
(e)           evidence reasonably satisfactory to Purchaser that all Liens
arising under the Credit Agreements on the Interests and the assets or
properties of the Companies have been terminated as of the Closing;
 
(f)           a guaranty (the “Seller Guaranty”) by the Seller Guarantor of the
obligations of Sellers under this Agreement in the form attached hereto as
Exhibit B;
 

 
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(g)           appropriate termination statements under the Uniform Commercial
Code, and such other documents and instruments (including consents and waivers)
as may be reasonably requested by Purchaser, evidencing (i) the repayment and
otherwise complete satisfaction of all Debt for borrowed money of the Companies
and (ii) the extinguishment or termination of (1) all security interests (other
than Permitted Liens) in the assets of the Companies and (2) the contractual
rights of lenders that may affect the business and operations of the Companies
or the continuation or termination of the existence of the Companies, including
the rights of lenders under the Rocky Mountain Credit Agreement that might
otherwise limit in any way Purchaser’s ability to independently and unilaterally
(a) operate or direct the operation of the business and affairs of the Rocky
Mountain Company (including the ability to amend or terminate the Third Amended
and Restated Limited Liability Company Operating Agreement of the Rocky Mountain
Company dated June 24, 2004) and (b) determine the continuation and termination
of the Rocky Mountain Company’s existence (including the termination of its
existence by liquidation and dissolution, merger or otherwise) and the
disposition of its assets; and
 
(h)           the PPA Termination Instruments and such instruments as are
reasonably requested by Sellers to terminate the Calpine Guarantees and letters
of credit posted thereunder.
 
Section 2.05                      Closing Deliveries by Purchaser to
Sellers.  At the Closing, Purchaser shall deliver, or shall cause to be
delivered, to Sellers the following:
 
(a)           wire transfers of immediately available funds (to such account or
accounts as Sellers shall have designated to Purchaser at least two (2) Business
Days prior to the Closing Date) in an aggregate amount equal to the Base
Purchase Price as adjusted pursuant to Section 2.02, as estimated in good faith
by Sellers (the “Estimated Purchase Price”).  Sellers shall deliver a
calculation of the Estimated Purchase Price in writing to Purchaser at least two
(2) Business Days prior to the Closing Date and shall attach to the calculation
of the Estimated Purchase Price a schedule showing the estimated adjustment to
the Base Purchase Price pursuant to Section 2.02; and
 
(b)           the certificate described in Section 7.03(c); and
 
(c)           the PPA Termination Instruments and such instruments as are
reasonably required by Sellers to terminate the Calpine Guarantees and letters
of credit posted thereunder.
 
Section 2.06                      Post-Closing Adjustment.
 
(a)           As soon as practicable after the Closing, but no later than ninety
(90) days after the delivery of the financial Books and Records pursuant to
Section 2.04(d) which will enable Purchaser to perform said calculation,
Purchaser shall determine the actual adjustment to the Base Purchase Price,
pursuant to Section 2.02(b).  Sellers and Purchaser shall cooperate and provide
each other access to their respective books and records (and those of the
Companies) as are reasonably requested in connection with the matters addressed
in this Section 2.06.  Purchaser shall provide Sellers with written notice of
such determination, along with reasonable supporting information (the
“Post-Closing Adjustment”).
 

 
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(b)           If Sellers object to any determinations set forth in the
Post-Closing Adjustment, then Sellers shall provide Purchaser written notice
thereof within ten (10) Business Days after receiving the Post-Closing
Adjustment, together with a reasonably detailed explanation of the nature and
bases of such objections.  If Sellers and Purchaser are unable to agree on the
adjustment to the Base Purchase Price, pursuant to Section 2.02(b) within thirty
(30) days after Purchaser’s receipt of Sellers’ objection to the Post-Closing
Adjustment, Purchaser and Sellers shall refer such dispute to the Independent
Accounting Firm which firm shall make a final and binding determination as to
all such matters in dispute relating to adjustment to the Base Purchase Price
(and only such matters) on a timely basis and promptly shall notify Purchaser
and such Sellers in writing of its resolution.  Such firm shall not have the
power to modify or amend any term or provision of this Agreement.  Each of
Purchaser and Sellers shall bear and pay one-half of the fees and other costs
charged by such accounting firm.
 
(c)           If the Base Purchase Price pursuant to Section 2.02(a), as
adjusted, using such actual values (as agreed or determined by the Independent
Accounting Firm) (the “Final Purchase Price”) is greater than the Estimated
Purchase Price, then Purchaser shall pay Sellers within five (5) Business Days
after such actual values are agreed or determined, by wire transfer of
immediately available funds, an amount equal to the difference between the Final
Purchase Price and the Estimated Purchase Price plus interest thereon at the
Interest Rate from the Closing Date through and including the date of such
payment.  If the Final Purchase Price is less than the Estimated Purchase Price,
then Sellers shall pay Purchaser within five (5) Business Days after such actual
values are agreed or determined, by wire transfer of immediately available
funds, an amount equal to the difference between the Estimated Purchase Price
and the Final Purchase Price plus interest thereon at the Interest Rate from the
Closing Date through and including the date of such payment.  In each case, the
recipient Party or Parties, as applicable, shall designate the account or
accounts to which such payments are to be made at least two (2) Business Days
prior to the date such payments are due.
 
Section 2.07                      Closing Date Cash.  On or prior to the Closing
Date, Sellers shall be permitted to transfer, to themselves or their designees,
all of the cash and cash equivalents (including, without limitation, restricted
cash) of the Companies, without any adjustment to the Base Purchase Price.
 
Section 2.08                      Purchase Price Allocation.  The Final Purchase
Price, plus the amount of the Companies’ liabilities included in the amount
realized on the sale of the Companies’ assets for federal income Tax purposes,
shall be allocated among the assets of the Companies in accordance with Section
1060 of the Code and the applicable Treasury Regulations promulgated
thereunder.  Purchaser shall prepare and deliver to Sellers an allocation
schedule setting forth Purchaser’s determination of the allocation (the
“Allocation Schedule”) within ninety (90) days after the Execution
Date.  Sellers shall have fifteen (15) days to review the Allocation Schedule
and either notify Purchaser that they are in agreement with such Allocation
Schedule or deliver, in writing, any objections that they may have with respect
thereto.  If Sellers notifies Purchaser that they disagree with any aspect of
the Allocation Schedule, Purchaser and Sellers shall work together in good faith
to resolve any such disagreement.  If any dispute regarding the Allocation
Schedule remains unresolved after forty five (45) days following Purchaser’s
delivery of such Allocation Schedule to Sellers, then such disagreement shall be
immediately submitted to the Independent Accounting Firm, which shall be
instructed to resolve such disagreement within
 

 
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thirty (30) days after such disagreement is submitted to it for resolution and
shall notify Purchaser and Sellers in writing of its resolution.  The
Independent Accounting Firm’s resolution of the disagreement shall be final and
binding on Purchaser and Sellers.  Purchaser and Sellers shall file all Tax
Returns (including IRS Form 8594) in a manner consistent with the agreed upon or
final Allocation Schedule and neither Purchaser nor Sellers shall take any
position (whether in Tax Proceedings, on Tax Returns, or otherwise) that is
inconsistent with such Allocation Schedule except as may be adjusted by
subsequent agreement following an audit by the Internal Revenue Service or by
court decision.  In the event the Base Purchase Price is adjusted pursuant to
Section 2.06 or Article IX, Purchaser shall promptly prepare and deliver to
Sellers an updated Allocation Schedule reflecting such adjustment, and any
Sellers’ disagreement with such adjustment shall be resolved in the same manner
as a disagreement over the original Allocation Schedule.  If incurred, any fees
and expenses of the Independent Accounting Firm shall be borne fifty percent
(50%) by Purchaser and fifty percent (50%) by Sellers.
 
ARTICLE III
 
REPRESENTATIONS AND WARRANTIES REGARDING SELLERS
 
Each Seller hereby severally represents and warrants to Purchaser that:
 
Section 3.01                      Organization and Qualification.  Such Seller
is a limited liability company duly formed or a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
organization.  Such Seller is duly qualified or licensed to do business in each
other jurisdiction where the actions required to be performed by it under this
Agreement makes such qualification or licensing necessary, except in those
jurisdictions where the failure to be so qualified or licensed would not have a
Material Adverse Effect.
 
Section 3.02                      Authority.  Such Seller has all requisite
company or corporate 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 such Seller of this
Agreement, and the performance by such Seller of its obligations hereunder, have
been duly and validly authorized by all necessary limited liability company or
corporate action on the part of such Seller.  This Agreement has been duly and
validly executed and delivered by such Seller and constitutes the legal, valid
and binding obligation of such Seller enforceable against such Seller in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar Laws
relating to or affecting the rights of creditors generally, or by general
equitable principles regardless of whether considered in a proceeding at law or
in equity.
 
Section 3.03                      No Conflicts; Consents and Approvals.  The
execution and delivery by such Seller of this Agreement does not, and the
performance by such Seller of its obligations under this Agreement 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 such Seller;
 
(b)           materially violate or result in a material default (or give rise
to any right of termination, cancellation or acceleration) under any material
Contract to which such Seller is a
 

 
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party, or require any notice under any material Contract to which such Seller is
a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Lien (other than a Permitted Lien) upon any of
the assets of the Facilities; and
 
(c)           assuming all required filings, approvals, consents, authorizations
and notices set forth on Schedule 3.03(c) (collectively, “Seller Approvals”)
have been made, obtained or given, (i) materially violate or materially breach
any material Law or writ, judgment, order or decree applicable to such Seller
(ii) require any consent or approval of any Governmental Authority under any
material applicable Law applicable to such Seller or (iii) require the material
consent or material approval of any third party (other than a Governmental
Authority) under a material Contract.
 
Section 3.04                      Ownership of Interests.  Rocky Mountain Seller
owns 100% of the equity interest in Rocky Mountain Company, and Blue Spruce
Seller owns 100% of the equity interests in Blue Spruce Company.  Each Seller
owns its interests in the applicable Company directly and free and clear of all
Liens other than those arising pursuant to this Agreement or applicable
securities laws or as set forth in Schedule 3.04.
 
ARTICLE IV
 
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES
 
Each Seller hereby represents and warrants to Purchaser, with respect to itself
and the Company owned by it, that:
 
Section 4.01                      Organization and Qualification.  Such Company
is a limited liability company duly formed, validly existing and in good
standing under the laws of the State of Delaware.  Such Company has the
requisite limited liability company power and authority to own, lease and
operate its assets and properties and to carry on its business as it is now
being conducted.  Such Company is qualified to transact business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
necessary, unless the failure to be so qualified would not have a Material
Adverse Effect.
 
Section 4.02                      No Conflicts; Consents and Approvals.  Except
as set forth on Schedule 4.02, the execution and delivery by Sellers of this
Agreement does not, and the performance by Sellers of their obligations under
this Agreement 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 the applicable
Company;
 
(b)           materially violate or result in a material default (or give rise
to any right of termination, cancellation or acceleration) under any Material
Contract, or require any notice under any Material Contract to which such
Company is a party or by which it is bound or to which any of its assets is
subject or result in the imposition of any Lien (other than a Permitted Lien)
upon any of the assets of the applicable Facility; and
 

 
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(c)           assuming all the Seller Approvals have been made, obtained or
given, (i) materially violate or materially breach any material Law or writ,
judgment, order or decree applicable to such Company (ii) require any consent or
approval of any Governmental Authority under any material Law applicable to such
Company or (iii) require the material consent or material approval of any third
party (other than a Governmental Authority), under any Material Contract except
as set forth in Schedule 4.02(c).
 
Section 4.03                      Subsidiaries; No Other Business.  Each Company
does not own equity interests in any Person and has not conducted any business
other than activities incidental to its ownership and operation of the
applicable Facility.
 
Section 4.04                      Litigation.  Except as disclosed on Schedule
4.04, as of the date hereof there are no material Claims pending or, to the
Knowledge of Sellers, overtly threatened against either of Sellers, either of
the Companies or either of the Facilities (or any of the assets of either of the
Facilities, including the Owned Real Property) before any Governmental Authority
or any arbitrator.  Except as disclosed on Schedule 4.04, there are no material
outstanding judicial orders or judgments to which either of Sellers or either of
the Companies is subject or by which either of Sellers, either of the Companies
or either of the Facilities (or any assets of either of the Facilities,
including the Owned Real Property) are bound.
 
Section 4.05                      Compliance with Laws; Permits.
 
(a)           Except (i) as disclosed on Schedule 4.05(a) and (ii) with respect
to Environmental Laws (as to which certain representations and warranties are
set forth in Section 4.10) and laws relating to Taxes (as to which certain
representations and warranties are set forth in Section 4.12), such Company is
not, and the operation of such Facility is not, in material violation of any
material Law, and the Facilities and the Owned Real Property are operating in
compliance in all materials respects with applicable Laws.
 
(b)           (i) Schedule 4.05(b)(i) sets forth the material permits, licenses,
franchises, variances, exemptions, orders and other authorizations, consents and
approvals from Governmental Authorities (“Permits”), which relate to the
operation of the Facilities or any assets that are used or held by Sellers or
any of their Affiliates in connection with operation of the Facilities, and the
holder thereof.  (ii) Except as set forth on Schedule 4.05(b)(ii), such Company
holds, and is in compliance in all material respects with, all Permits currently
required to be held by such Company under applicable Law for the operation of
its business, and is not in material violation of the terms of any Permits, and
there is no material pending governmental proceeding or, to the Knowledge of
Sellers, any overt threat by any Governmental Authority to cancel, modify, or
fail to renew any Permit, other than modifications to the Companies’
authorizations from FERC to sell electric energy, capacity and certain ancillary
services at market-based rates of general applicability to similarly-situated
sellers.
 
Section 4.06                      Contracts.
 
(a)           Excluding Contracts with respect to which the applicable Company
will not be bound or have liability after the Closing, Schedule 4.06(a) sets
forth a list as of the date of this Agreement of all Contracts requiring
payments, either individually or in the aggregate, in
 

 
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excess of two hundred fifty thousand dollars ($250,000) per annum and which will
be in effect, or as to which such Company will have obligations, after the
Closing (collectively, “Material Contracts”).
 
(b)           The applicable Company has provided Purchaser with copies of, or
access to, true and complete copies of all Material Contracts.
 
(c)           Except as set forth on Schedule 4.06(c) hereto, each Material
Contract is a legal, valid and binding obligation of the applicable Company and,
to the Knowledge of Sellers, the other parties thereto, enforceable against such
Seller or such Company, as applicable,  and, to the Knowledge of Sellers, the
other parties thereto in all material respects in accordance with their
respective terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors’ rights generally and general equitable principles regardless of
whether considered in a proceeding at law or in equity.
 
(d)           Neither such Company nor, to the Knowledge of Sellers, any other
party is in default in the performance or observance of any material term or
material provision of, and to the applicable Company’s Knowledge, no event has
occurred that, with lapse of time or action by a third party, would result in
such a default under any Material Contract to which such Company is a party or
by which it is bound or to which its assets or property is subject.
 
Section 4.07                      Assets.
 
(a)           Real Property.
 
(i)           Schedule 4.07(a)(i) describes all real property, or any interest
therein, owned in whole or in part (and states the names of the owners, the
nature of their affiliation with Sellers and their respective ownership
percentages in any partially owned real property) by Sellers and their
Affiliates and used in connection with the operation of the Facilities as of the
Execution Date, including, without limitation, any easements, licenses or
similar interests (“Owned Real Property”).
 
(ii)           Except as described on Schedule 4.07(a)(i), there is no real
property other than the Owned Real Property owned, leased, used or occupied by
either Company in connection with the ownership and operation of the applicable
Facility.  Such Company has made available to Purchaser, to the extent within
such Company’s possession or control, a copy of all certificates of occupancy
for the Owned Real Property, a copy of all special or conditional use permits,
and any variance granted with respect to the Owned Real Property pursuant to
applicable zoning laws or ordinances, all of which documents are true and
complete copies thereof.  Such Company has provided or made available to
Purchaser the most recent existing surveys for the Owned Real Property,
commitments for title insurance and the most recent Phase 1 environmental report
in such Company’s possession or control relating to the Owned Real
Property.  Except for Permitted Liens and except as set forth on Schedule
4.07(a)(ii), the applicable Company has
 

 
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good and marketable title to the Owned Real Property attributed to it on
Schedule 4.07(a)(i) and, subject to the Permitted Liens, there is no unrecorded
Lien, easement, right-of-way agreement, license, lease (including leases of
minerals and/or oil and gas), sublease, occupancy agreement, or like instrument
burdening the Owned Real Property.  Such Company has not received any written
condemnation notice from any Governmental Authority with respect to the Owned
Real Property as to which Sellers have not given notice to Purchaser and there
is no pending or, to the Knowledge of Sellers, threatened condemnation of any
material portion of the Owned Real Property.  The Owned Real Property complies
in all material respects with all applicable easements, covenants and similar
restrictions.
 
(iii)           The Owned Real Property of each Company constitutes separate
parcels for real estate tax assessment and conveyancing purposes.
 
(iv)           No portion of the Owned Real Property or the Facilities has been
classified under any designation under applicable Law to obtain a special ad
valorem tax rate or receive either an abatement or deferment of Taxes that may
result in any catch-up or other deferred Taxes.
 
(v)           As of the Execution Date, neither of Sellers nor either of the
Companies has received notice of any, and to the Knowledge of Sellers there are
no, pending or proposed special assessments affecting any of the Owned Real
Property or the Facilities or any proposed or pending public improvements that
may give rise to any special assessments affecting the Owned Real Property or
the Facilities.
 
(vi)           No commitment has been made by any Person that is binding on the
Companies or the Owned Real Property to dedicate any of the Owned Real Property.
 
(vii)           Sellers and the Companies have not received notice of any, and
to the Knowledge of Sellers there is no, actual or threatened curtailment,
cancellation or suspension of any utility service, except in accordance with the
terms of such service (e.g. force majeure).
 
(viii)           To the Knowledge of Sellers, except as set forth on Schedule
4.07(a)(viii), there are no conditions or obligations related to any special use
permits, annexation agreements, zoning, planned development, subdivision or site
plan approvals, or other land use permits or approvals issued in connection with
any of the Owned Real Property or the Facilities that have not been satisfied or
completed.
 
(b)           Other Property.
 
(i)           List of Material Non-Real Estate Assets.  Set forth on Schedule
4.07(b)(i) is a complete and correct list of all of the material non-real estate
assets
 

 
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used, or held for use by the applicable Company, in the operation of the
applicable Facility (“Material Non-Real Estate Assets”).
 
(ii)           Title to Material Non-Real Estate Assets.  The applicable Company
has good and marketable title to the Material Non-Real Estate Assets that it
owns and purports to own, free clear of all Liens other than Permitted Liens and
Liens set forth on Schedule 4.07(b)(ii), and except as set forth on Schedule
4.07(b)(ii) has valid and enforceable contractual rights to hold and use all of
the other tangible Material Non-Real Estate Assets used or held for use by it in
the operation of the applicable Facility.
 
(iii)           Maintenance and Repair of Material Non-Real Estate
Assets.  Schedule 4.07(b)(iii) sets forth a list of each maintenance and repair
record relating to each of the Facilities, where the cost (including capital
expenditures and maintenance and repair expenses) is in excess of $400,000,
complete and correct copies of which have been delivered to Purchaser. Each
maintenance and repair activity listed in such records was performed at the
times indicated in such records and was performed in all material respects in a
professional and workmanlike manner consistent with Good Industry Practices.
 
Section 4.08                      Employee Benefit Plans.
 
(a)           Schedule 4.08(a) lists all material Benefit Plans covering any or
all current Operator Facility Employees.  Sellers have made available to
Purchaser complete and correct copies of all such Benefit Plans, and, as
applicable, all related summary plan descriptions with all amendments, and
summaries of material modifications.
 
(b)           Schedule 4.08(b) describes all material employment practices,
policies, contracts, programs or arrangements which are applicable to Operator
Facility Employees, including wage, vacation, holiday and sick and other leave
plans, to the extent not listed on Schedule 4.08(a).
 
(c)           Neither the Companies nor any Commonly Controlled Entity has,
prior to the Closing Date, (i) incurred any liability under ERISA, or (ii)
failed to satisfy the minimum funding requirements of Section 302 of ERISA or
Section 412 of the Code (including with respect to installments).  All
contributions or payments required to be made by any Commonly Controlled Entity
or Affiliate of such Company with respect to any Benefit Plan have been timely
made.
 
(d)           Such Company neither maintains nor contributes to nor has ever
maintained or contributed to, nor been required to contribute to, any Benefit
Plan, including without limitation any Benefit Plan which is subject to Title IV
of ERISA or a multiemployer plan within the meaning of Section 3(37) of ERISA.
 
(e)           Neither such Company nor any Commonly Controlled Entity or any
other Person has taken any action, failed to take any action or otherwise
incurred any liability with respect to any Benefit Plan or any other employee
benefit plan subject to ERISA that is or was maintained or contributed to, or
required to be contributed to, by such Company or any
 

 
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Commonly Controlled Entity that may subject Purchaser or its Affiliates
(following the Closing) to any liability, including but not limited to any Tax
or penalty under ERISA or the Code.
 
(f)           No Owned Real Property is and no non-real estate assets such
Company owns or purports to own are subject to a Lien under ERISA or under
Section 412 of the Code.
 
Section 4.09                      Labor and Employment Matters; Independent
Contractors.
 
(a)           Except as set forth in Schedule 4.09(a), as of the date of this
Agreement there are no (i) collective bargaining agreements or other labor
agreements relating to such Company or covering any Operator Facility Employee
to which such Company is a party or by which it is bound, (ii) material unfair
labor practice complaints against such Company, pending or, to the Knowledge of
Sellers, threatened in writing before the National Labor Relations Board or any
state or local agency with respect to the operation of such Company, (iii)
pending or, to the Knowledge of Sellers, threatened in writing labor strikes or
other material labor troubles affecting such Company, or (iv) material labor
grievances pending against such Company.  Such Company does not have, and has
never at any time had, any employees.  Operator is the only entity that is
providing or has provided operating and maintenance services to such Company.
 
(b)           Schedule 4.09(b) sets forth a list of all major independent
contractors who have performed services for the Facilities during the twelve
(12) months immediately prior to the Execution Date, including a description of
such services performed.
 
Section 4.10                      Environmental Matters.  Except as disclosed on
Schedule 4.10,  (a) such Company and the Facility owned by it are in compliance
in all material respects with all material applicable Environmental Laws, (b)
there are no material suits, notices, demands, claims, hearings or proceedings
pending or, to the Knowledge of Sellers, threatened against such Company
relating to any material violation, or alleged violation, of any material
Environmental Law, (c) no Hazardous Substance has been disposed of or released
at such Facility other than in compliance in all material respects with
applicable Environmental Laws, (d) such Company has not disposed of, released or
transported, or arranged for the disposal, release, or transportation of, any
Hazardous Substance related to the operation of the Facility owned by it in a
manner giving rise to any material liability or material obligation to report,
investigate or cleanup under any applicable Environmental Law, and (e) such
Company is not subject to any material corrective actions or remedial
obligations relating to any settlement, court order, administrative order, or
judgment asserted or arising under any material Environmental Law.  The
foregoing representation is the sole representation in this Agreement relating
to Environmental Laws.
 
Section 4.11                      Insurance.  At the date hereof, such Company
and its businesses and properties are insured under the insurance policies
listed on Schedule 4.11(i).  Such Company has made available to Purchaser
accurate and complete copies of the certificates of insurance listed on Schedule
4.11(i).  From January 1, 2007, to the date hereof, such Company has not made
any claim under any of the insurance policies, or suffered any losses that could
give rise to any such claims, for an amount in excess of $250,000, except as set
forth on Schedule 4.11(ii).  Neither such Company nor any of its Affiliates has
failed to give, in a timely manner, any material notice required under any of
the insurance policies to preserve its rights thereunder with
 

 
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respect to the Owned Real Property and all other material assets of the
Facilities respecting any claim in excess of $250,000.
 
Section 4.12                      Taxes.
 
(a)           Except as set forth in Schedule 4.12(a), all material Tax Returns
required to be filed by each Company have been timely filed (taking into account
any properly obtained extensions) and all such Tax Returns were correct and
complete in all material respects.  All Taxes due and owing by the Companies
(whether or not shown to be due and payable on any Tax Return) have been timely
paid or a reserve for the amount of such Tax has been established, which reserve
shall have been accrued on the books and records of the applicable Company.
 
(b)           Except as set forth in Schedule 4.12(b), (i) there is no material
action, suit, proceeding, audit, written claim or assessment pending or, to the
Knowledge of Sellers or the Companies, proposed against either Company with
respect to a material amount of Taxes or with respect to any material Tax Return
filed by either Company, (ii) there are no waivers or extensions of any
applicable statute of limitations for the assessment or collection of material
Taxes of either Company that remain in effect, (iii) neither Company is
currently the beneficiary of any extension of time within which to file any Tax
Return, (iv) there are no material Liens for Taxes upon the assets of either
Company, other than Permitted Liens, and (iv) each Company has withheld and
remitted to the proper Taxing Authority all Taxes that it was required to
withhold and remit.
 
(c)           Except as set forth in Schedule 4.12(c), neither Company (i) has
any liability for the Taxes of any other Person as a transferee or successor or
pursuant to any Law, (ii) is a party to any Tax sharing, allocation or indemnity
agreement, arrangement or similar Contract the subject matter of which is the
payment of or indemnification for Taxes, (iii) has participated in any “listed
transaction” as defined in Section 6707A of the Code or Treasury Regulation
Section 1.6011-4(b)(2) or any comparable provision of state, local or foreign
Law, or (iv) has received notice of any claim by a Taxing Authority in a
jurisdiction where the Company has not filed and currently does not file Tax
Returns that it is or may be (or was or may have been) subject to a material
amount of taxation by that Taxing Authority.
 
(d)           Each Company has been classified as a disregarded entity for
federal income tax purposes at all times since it was formed.
 
Section 4.13                      Intellectual Property.  Schedule 4.13(a) sets
forth all material patent, registered trademark, service mark, trade name and
registered copyright (collectively, “Intellectual Property”) owned by such
Company. Schedule 4.13(b) sets forth all material licenses and other rights to
use intellectual property of others used by such Company in the operation of the
Facilities.  Such Company has not received from any third party any material
claim in writing that such Company is infringing the Intellectual Property of
such third party.
 
Section 4.14                      PUHCA.  Such Company meets the requirements
for, and has been determined by FERC to be, an “Exempt Wholesale Generator”
within the meaning of the Public Utility Holding Company Act of 2005.
 

 
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Section 4.15                      Brokers.  Such Company has no liability or
obligation to pay fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement, and no Person is
entitled to receive any brokerage commission or other similar payment with
respect to the Owned Real Property, for which Purchaser or any of its Affiliates
could become liable or obligated.
 
Section 4.16                      Capital Structure.  The Interests constitute
all of the limited liability company interests in the Companies.  There are no
outstanding rights to acquire from such Company, or any obligations of such
Company to issue, any limited liability company interests in such Company, and
there are no outstanding obligations of such Company to repurchase, redeem or
otherwise acquire any limited liability company interests in such Company.  Such
Company is not a party to any agreement  restricting the purchase or transfer
of, relating to the voting of, requiring the registration of, or granting any
preemptive or antidilutive rights with respect to, any limited liability company
interests in such Company.  Such Company does not directly or indirectly
beneficially own any securities of, or other beneficial ownership interests in,
any other entity.
 
Section 4.17                      Financial Statements.  Such Company has
heretofore delivered to Purchaser the following financial statements (the
“Financial Statements”):
 
(a)           the unaudited Balance Sheet of such Company (the “Unaudited
Balance Sheet”) as of September 30, 2009 (the “Balance Sheet Date”), the
unaudited Statement of Earnings for the nine-month period ended September 30,
2009, the unaudited Statement of Changes in Partners’ Equity for the nine-month
period ended September 30, 2009, and the unaudited Statement of Cash Flows for
the nine-month period ended  September 30, 2009 (the Financial Statements
referred to in this Section 4.17(a) being referred to collectively as “Unaudited
Financial Statements”); and
 
(b)           the audited Balance Sheet of such Company as of December 31, 2008,
the audited Statement of Earnings for the year ended December 31, 2008, the
audited Statement of Changes in Partners’ Equity for the year ended December 31,
2008, and the audited Statement of Cash Flows for the year ended December 31,
2008, together with the notes thereto and the report thereon by
PricewaterhouseCoopers, LLP, independent certified public accountants.
 
(c)           Each of the Financial Statements was prepared from the books and
records kept by such Company and fairly presents (subject, in the case of the
Unaudited Financial Statements, to year-end audit adjustments and the absence of
footnote disclosure) the financial position of such Company, as of such dates,
and the results of such Company’s operations and such Company’s cash flows for
the periods then ended in accordance with GAAP consistently applied.  The
Unaudited Balance Sheet reflects all material properties and assets, real,
personal or mixed, that are owned by such Company as of the Execution Date,
except for inventory purchased or sold in the Ordinary Course since the Balance
Sheet Date, other properties and assets (other than capital assets) not in
excess of $250,000 (in the aggregate) purchased or sold since the Balance Sheet
Date in the Ordinary Course, capital assets purchased since the Balance Sheet
Date in an amount not in excess of $500,000 (in the aggregate), and purchase
commitments disclosed on Schedule 4.18.  No financial statements of any Person
other than such Company are required by GAAP to be included in the Financial
Statements.
 

 
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Section 4.18                      Liabilities.  Except as disclosed on Sellers’
Schedules, such Company has no Debt or other liabilities or obligations of any
nature whatsoever, whether absolute, accrued or contingent, that are, in the
aggregate, material, except for those (a) reflected or reserved on the Unaudited
Balance Sheet, (b) incurred or accrued since the Balance Sheet Date in the
Ordinary Course, (c) set forth on Schedule 4.18, or (d) incurred in compliance
with Section 6.02.
 
Section 4.19                      Changes in Circumstances.  Except as disclosed
on Schedule 4.19, since the Balance Sheet Date, there has not been a Material
Adverse Effect that is continuing.
 
ARTICLE V
 
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
Purchaser hereby represents and warrants to each Seller that:
 
Section 5.01                      Organization and Qualification.  Purchaser is
a corporation duly formed, validly existing and in good standing under the Laws
of the State of Colorado.  Purchaser is duly qualified or licensed to do
business in each other jurisdiction where the actions required 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 have a
material adverse effect on Purchaser’s ability to perform its obligations
hereunder.
 
Section 5.02                      Authority.  Purchaser has all requisite
corporate 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 Purchaser of this Agreement and the
performance by Purchaser of its obligations hereunder have been duly and validly
authorized by all necessary corporate action on behalf of Purchaser.  This
Agreement has been duly and validly executed and delivered by Purchaser and
constitutes the legal, valid and binding obligation of Purchaser enforceable
against Purchaser in accordance with its terms except as the same may be limited
by bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar Laws relating to or affecting the rights of creditors generally or by
general equitable principles.
 
Section 5.03                      No Conflicts; Consents and Approvals.  The
execution and delivery by Purchaser of this Agreement does not, and the
performance by Purchaser of its obligations under this Agreement 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)           violate or result in a default (or give rise to any right of
termination, cancellation or acceleration) under any Contract to which Purchaser
is a party, except for any such violations or defaults (or rights of
termination, cancellation or acceleration) which would not, in the aggregate,
have a material adverse effect on Purchaser’s ability to perform its obligations
hereunder; and
 
(c)           assuming all required filings, approvals, consents, authorizations
and notices set forth in Schedule 5.03(c) (collectively, the “Purchaser
Governmental Approvals”) have been made, obtained or given, (i) violate or
breach any Law or writ, judgment, order or
 

 
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decree applicable to Purchaser or (ii) require the consent or approval of any
Governmental Authority under any applicable Law, except where any such violation
or breach or the failure to obtain any such consent or approval would not have a
material adverse effect on Purchaser’s ability to perform its obligations
hereunder.
 
Section 5.04                      Litigation.  There are no Claims pending or,
to Purchaser’s Knowledge, threatened in writing, or, to Purchaser’s Knowledge,
any investigations ongoing or threatened in writing against Purchaser before any
Governmental Authority or any arbitrator, that would, in the aggregate, have a
material adverse effect on Purchaser’s ability to perform its obligations
hereunder.  Purchaser is not subject to any judgment, decree, injunction, rule
or order of any Governmental Authority or any arbitrator that prohibits the
consummation of the transactions contemplated by this Agreement or would, in the
aggregate, have a material adverse effect on Purchaser’s ability to perform its
obligations hereunder.
 
Section 5.05                      Compliance with Laws.  Purchaser is not in
violation of any Law, except for violations that would not, in the aggregate,
have a material adverse effect on Purchaser’s ability to perform its obligations
hereunder.
 
Section 5.06                      Brokers.  Purchaser 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
any Seller or its Affiliates could become liable or obligated.
 
Section 5.07                      No Registration for Acquisition.  Purchaser is
acquiring the Interests for its own account without the present intent to sell,
transfer or otherwise distribute the same to any other Person in violation of
the Securities Act of 1933 (the “1933 Act”). Purchaser acknowledges that the
Interests are not registered pursuant to the 1933 Act and that the Interests may
not be transferred, except pursuant to an applicable exception under the 1933
Act.  Purchaser is an “accredited investor” as defined under Rule 501
promulgated under the 1933 Act.
 
Section 5.08                      Financial Resources.  Purchaser has sufficient
funds available or sources of sufficient funding capacity available, and will
have the same available at the Closing, to enable it to purchase the Interests
on the terms hereof and otherwise perform its obligations hereunder.
 
Section 5.09                      No Knowledge of Breach.  Except as set forth
on Schedule 5.09, the individuals whose names are set forth on Schedule 1.01(d)
do not have actual knowledge (without due inquiry) of any material breach by
Sellers of any of Sellers’ respective representations and warranties herein of
which Purchaser has not given notice to Sellers.
 
Section 5.10                      Reliance on Sellers’ Representations and
Warranties.  In entering into this Agreement, Purchaser has relied solely upon
the representations, warranties and covenants contained herein and has not been
induced by and has not relied upon any representations, warranties or
statements, whether oral or written, express or implied, made by any Seller or
any of its Representatives, Affiliates or agents that are not expressly set
forth in this Agreement, and except as specifically set forth in this Agreement,
Sellers have not made any representations or warranties of any kind, oral or
written, express or implied.  Neither of the Sellers nor either of the Companies
or any of their respective Representatives, Affiliates or agents shall have any
 

 
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liability or responsibility whatsoever to Purchaser or its Representatives,
shareholders, Affiliates or agents on any basis in contract or tort, under
federal or state securities Laws or otherwise, resulting from the furnishing to
Purchaser, or from Purchaser’s use of, any Due Diligence Information, except (i)
where such Due Diligence Information is set forth in a Schedule or Exhibit to
this Agreement or the Sellers make a representation or warranty specifically
covering the Due Diligence Information in this Agreement or in any other
document, instrument or agreement delivered in connection herewith and (ii) in
the case of intentional fraud.
 
ARTICLE VI
 
COVENANTS
 
The Parties hereby covenant and agree as follows:
 
Section 6.01                      Access of Purchaser.
 
(a)           During the Interim Period, Sellers shall cause each Company to
provide Purchaser and its Representatives with reasonable access to the
Facilities and the officers and management employees of such Company and, from
and after September 1, 2010, suitable office space for not more than one
Representative of Purchaser at each Facility for purposes of observing the
operations of the Facilities and facilitating the transition of ownership, in
such a manner so as not to unreasonably interfere with the business or
operations of such Company, provided that such Company shall have the right to
(i) have a Representative present for any communication with employees or
officers of such Company or its contractors and (ii) impose reasonable
restrictions and requirements for safety or operational purposes, provided
further that neither Purchaser nor its Representatives shall collect or analyze
any environmental samples (including building materials, indoor and outdoor air,
surface and ground water, and surface and subsurface soils), without the prior
written authorization of Sellers.  Notwithstanding the foregoing, Sellers and
the Companies shall not be required to provide any information or allow any
inspection which they reasonably believe they may not provide to Purchaser or
allow by reason of applicable Law, which constitutes or allows access to
information protected by attorney/client privilege, or which Sellers or the
Companies are required to keep confidential or prevent access to by reason of
contract, agreement or understanding with third parties if Sellers or the
Companies have used reasonable commercial efforts to obtain the consent of such
third party to such inspection or disclosure.  Notwithstanding anything to the
contrary contained herein, Purchaser shall not be permitted to contact any of
either Company’s vendors, customers or suppliers, or any Governmental
Authorities, during the Interim Period, regarding Sellers, the Companies or the
Facilities, without receiving prior written authorization from Sellers; provided
that the foregoing is not intended to prohibit Purchaser from contacting those
Governmental Authorities from whom it must obtain regulatory approval regarding
the transactions contemplated by this Agreement.  Following the Closing, Sellers
shall be entitled to retain copies of all books and records relating to its
ownership and/or operation of the Companies and its businesses, subject to the
terms of the confidentiality agreements entered into between Sellers and
Purchaser.
 
(b)           Purchaser shall indemnify, defend and hold harmless Sellers and
their Representatives from and against all Losses incurred by Sellers, their
Representatives or any other Person arising out of the access rights under this
Section 6.01, including any Claims by any
 

 
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of Purchaser’s Representatives for any injuries or Losses while present at the
Facilities, to the extent that such Losses do not result from or arise out of
the gross negligence or willful misconduct of either of the Sellers or either of
the Companies or the Operator or any of their respective Representatives or
Affiliates or any employee of any of such Persons.
 
Section 6.02                      Conduct of Business Pending the Closing.
 
(a)           During the Interim Period, Sellers shall use commercially
reasonable efforts to cause the Companies to operate and maintain the Facilities
in the Ordinary Course in accordance with Good Industry Practices and in
compliance in all material respects with all applicable Laws.  Without limiting
the foregoing, except as otherwise contemplated by this Agreement or set forth
in Schedule 6.02(a) or as consented to by Purchaser, which consent shall not be
unreasonably withheld, conditioned or delayed, each Company will not, during the
Interim Period:
 
(i)           sell, transfer, convey, encumber or otherwise dispose of any
portion of, or interest in, any Owned Real Property, or grant any easement,
right-of-way agreement, license, lease, sublease, occupancy agreement, or like
instrument burdening any portion of, or interest in,  the Owned Real Property
other than Permitted Liens;
 
(ii)           sell, transfer, convey, encumber or otherwise dispose of any
Material Non-Real Estate Assets outside the Ordinary Course, except for
Permitted Liens;
 
(iii)           other than trade or account payables incurred in the Ordinary
Course, incur, create, assume or otherwise become liable for any Debt other than
Debt that will be discharged at or prior to the Closing;
 
(iv)           fail to maintain its  existence or merge or consolidate with any
other Person or acquire all or substantially all of the assets of any other
Person, having a value of more than $100,000 in any one instance or $500,000 in
the aggregate;
 
(v)           issue or sell any of its equity interests;
 
(vi)           liquidate, dissolve, reorganize or otherwise wind up its business
or operations;
 
(vii)           purchase any securities of any Person, except for short-term
investments or cash equivalents made in the Ordinary Course;
 
(viii)           amend or modify its Charter Documents in any manner that will
have a material adverse effect on such Company or Purchaser;
 
(ix)           effect any recapitalization, reclassification or like change in
its capitalization;
 

 
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(x)           except in the Ordinary Course, acquire any material assets;
 
(xi)           engage in any new line of business;
 
(xii)           make any change in its accounting or Tax reporting principles,
methods or policies, except as required by GAAP or applicable Law;
 
(xiii)           cease to be treated as a disregarded entity for federal and
Colorado state income Tax purposes;
 
(xiv)           make any material change in the levels of inventory maintained
at such Facility for the applicable time of year, except for such changes as are
consistent with Good Industry Practices;
 
(xv)           enter into, modify or terminate any Contract required to be
listed in Schedule 4.06(a), except in the Ordinary Course, which action shall be
promptly disclosed to Purchaser by Sellers;
 
(xvi)           make any loans or advances to any Person, except for expenses
incurred in the Ordinary Course;
 
(xvii)           enter into any agreement or settlement with any Governmental
Authority that relates to any amount of Tax, unless the amount of all Taxes
imposed as a result of such agreement or settlement does not exceed $100,000 in
the aggregate;
 
(xviii)           enter into any transaction with any Affiliate by which the
Company would be bound following the Closing;
 
(xix)           terminate any material policy of insurance, unless such policy
is replaced with a policy of insurance from financially responsible insurers
covering substantially the same risks, including substantially the same coverage
amounts, and including substantially the same or lower deductibles, in each case
to the extent available on commercially reasonable terms;
 
(xx)           adopt, create, sponsor or otherwise establish, maintain or
contribute to any Benefit Plan;
 
(xxi)           hire any individual as an employee or otherwise establish or
maintain any employer/employee relationship with any individual; or
 
(xxii)           agree or commit to do any of the foregoing.
 
(b)           Notwithstanding Section 6.02(a) or any other provision herein,
such Company may (i) take commercially reasonable actions with respect to
emergency situations or to comply with applicable Law or the PPAs and (ii) at or
before the Closing, irrevocably transfer out all cash to Sellers.
 

 
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(c)           With respect to any Permits that will expire, lapse or otherwise
cease to be effective prior to the Closing Date or within sixty (60) days
thereafter and any Permits for which the filing of an application for extension,
renewal or replacement is due during the Interim Period (regardless of whether
such Permits will expire, lapse or otherwise cease to be effective prior to the
Closing Date or within the sixty-day period thereafter), including but not
limited to the Permits identified and described on Schedule 6.02(c), Sellers
shall, or shall cause such Company to, prepare and file during the Interim
Period any and all such applications for the extension, renewal or replacement
of such Permits and/or any and all such other filings, and shall take (or cause
such Company to take) during the Interim Period any and all such other
commercially reasonable actions, as may be necessary to ensure that such Permits
will be extended, renewed or replaced prior to the expiration, lapsing or other
cessation of the effectiveness of such Permits without any material
modifications to the terms of such Permits other than (i) modifications to
comply with applicable Law or the PPAs or (ii) modifications with Purchaser’s
consent, which shall not be unreasonably withheld or delayed.
 
(d)           For purposes of clarity, nothing contained in this Agreement shall
prohibit the Companies from complying with the PPAs. Nothing in this Agreement
shall be deemed to be an amendment or modification of the PPAs.
 
(e)           Sellers shall repay in full or otherwise fully extinguish,
eliminate or transfer without recourse to the Companies, all Debt of the
Companies at or prior to the Closing.
 
Section 6.03                      Tax Matters.
 
(a)           Tax Returns
 
(i)           Tax Reporting.  Purchaser and Sellers shall, for federal income
Tax purposes (and, to the extent permissible, for state and local income Tax
purposes), treat the purchase and sale of the Interests pursuant to this
Agreement as the purchase and sale of the assets of the Companies, and shall
report the purchase and sale on all such income Tax Returns consistently with
such treatment.
 
(ii)           Seller Income Tax Returns.  Sellers shall include or cause to be
included in their federal income Tax Returns (and to the extent permissible,
state and local income Tax Returns) that include the income and activities of
such Seller all items of income, gain, loss, deduction and credit or other items
of the Companies through the Closing Date.
 
(iii)           Purchaser Tax Returns.  Following the Closing, Purchaser shall
cause to be timely filed all Tax Returns required to be filed by each Company
after the Closing Date, and shall be responsible for the timely payment of all
Taxes shown due thereon, subject to reimbursement by Sellers pursuant to Section
6.03(e).
 
(b)           Cooperation.  Purchaser and Sellers shall cooperate fully, and
shall cause their respective Affiliates to cooperate fully, as and to the extent
reasonably requested by either Party, in connection with the filing of Tax
Returns pursuant to this Section 6.03 and any audit, litigation or other
proceeding (each a “Tax Proceeding”) with respect to such Tax Returns.  Such
 

 
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cooperation shall include (upon a Party’s request) the provision of records and
information which are reasonably relevant to any such Tax Proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Purchaser shall
within fifteen (15) days of receipt notify Sellers in writing of the receipt by
Purchaser or any affiliate of Purchaser (including the Companies following the
Closing Date) of written notice of any inquires, claims, assessments, audits or
similar events with respect to Taxes relating to a Taxable period ending on or
prior to the Closing Date.  Purchaser agrees to retain all original Books and
Records related to Taxes or Tax matters until the fourth anniversary of the
Closing Date.
 
(c)           Transfer Taxes.  In the event that any Transfer Taxes (but, for
the avoidance of doubt, not any Taxes based on or measured by income) are
payable in connection with the sale of the Interests, all such Transfer Taxes
shall be borne by Purchaser.  Accordingly, if Sellers are required by law to pay
any such Transfer Taxes, Purchaser shall promptly reimburse Sellers within five
(5) Business Days of receipt of written request from Sellers for the amount of
such Transfer Taxes actually paid by Sellers.  Sellers and Purchaser shall
timely file any Tax Returns for Transfer Taxes as required by law and shall
notify the other when such filings have been made.  Sellers and Purchaser shall
cooperate and consult with each other prior to filing any Tax Returns for
Transfer Taxes to ensure that all such Tax Returns are filed in a consistent
manner.  Notwithstanding the foregoing, Sellers shall file all Tax Returns
required to be filed in conjunction with the transfer of the Owned Real Property
and Purchaser shall be solely liable for and shall pay all Colorado real
property Transfer Taxes related thereto and shall indemnify, defend and hold
harmless Sellers and their respective Affiliates from and against any and all
liability for the payment of such Colorado real property Transfer Taxes and the
filing of such Tax Returns related thereto. Purchaser shall reimburse Sellers
for any Colorado real property Transfer Taxes actually paid by Sellers within
five (5) Business Days of receipt of written request from Sellers therefor.
 
(d)           Tax Sharing or Similar Agreement.  Any Tax sharing or similar
agreement between a Company on the one hand and a Seller or an Affiliate of
Sellers on the other hand shall terminate as of the Closing Date, and no party
thereto shall have any rights or obligations thereunder with respect to any
past, current or future Tax period.
 
(e)           Reimbursement of Certain Taxes.  Any Tax (other than Transfer
Taxes that are the subject of Section 6.03(c)) with respect to the property or
operations of a Company that are due and payable with respect to any Tax period
that begins on or before the Closing Date and ends after the Closing Date (a
“Straddle Period”) will be apportioned between the portion of the Straddle
Period that ends on the Closing Date (the “Pre-Closing Straddle Period”) and the
portion of the Straddle Period that begins on the day after the Closing Date
(the “Post-Closing Straddle Period”) as follows:  (i) in the case of any ad
valorem real estate and personal property Taxes, on a per diem basis and (ii) in
the case of any sales Taxes, use or similar Taxes, excise Taxes, value added
Taxes and withholding Taxes, as determined from the books and records of each
Company as though the taxable period of each Company terminated at the close of
business on the Closing Date.  Sellers shall reimburse and pay over to Purchaser
the amount of any Taxes due and payable with respect to a Pre-Closing Straddle
Period within thirty (30) days of receipt of written request from the Purchaser
therefore (but in no case earlier than five (5) Business Days prior to the date
on which the relevant Taxes are required to be paid to the relevant Tax
 

 
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authority), except to the extent such Taxes were taken into account for purposes
of computing Adjusted Net Working Capital.
 
(f)           Refunds.  Any Tax refund (including any interest in respect
thereof) received by Purchaser or the Companies, and any amounts of overpayments
of Tax credited against Taxes which Purchaser, the Companies or any Affiliate
thereof otherwise would be or would have been required to pay that relate to
Taxes attributable to any Pre-Closing Tax Period or Pre-Closing Straddle Period
shall be for the account of Sellers, and Purchaser shall pay over to Sellers any
such refund or the amount of any such credit within thirty (30) days after
receipt or the application of any such refund or credit to reduce a Tax
liability of Purchaser, the Companies or any Affiliate thereof, except to the
extent such Tax refund was taken into account in the calculation of the Adjusted
Net Working Capital.
 
Section 6.04                      Public Announcements.  Sellers and Purchaser
shall not, without prior written consent of the other party, issue any press
release or make any public statement with respect to this Agreement and the
transactions contemplated hereby except as may be required by applicable Law or
any listing agreement with a national securities exchange or quotation system,
and will consult with each other before issuing, and provide each other a
reasonable opportunity to review and make reasonable comment upon such press
release or public statement.
 
Section 6.05                      Expenses and Fees.  Except as expressly
provided otherwise herein, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
Party incurring such expenses.
 
Section 6.06                      Agreement to Cooperate; Regulatory Approval.
 
(a)           Subject to the terms and conditions of this Agreement and
applicable Law, each Party shall use its commercially reasonable efforts to
take, or cause to be taken, all action and do, or cause to be done, all things
necessary, proper or advisable to obtain as promptly as reasonably practicable
all necessary or appropriate waivers, consents, approvals or authorizations of
Governmental Authorities and to satisfy all other conditions required in order
to consummate the transactions contemplated by this Agreement (and, in such
case, to proceed with the consummation of the transactions contemplated by this
Agreement as expeditiously as possible).
 
(b)           In addition to and without limitation of the foregoing, Purchaser,
on the one hand, and each Seller, on the other hand, shall file as soon as
practicable, but in no event later than forty-five (45) days following the
Execution Date, any application, form or report required by any Governmental
Authority to be filed prior to Closing relating to antitrust, competition, trade
or energy regulation matters.  Each of the Parties shall request expedited
treatment of any such filings and shall (i) respond as promptly as practicable
to any inquiries or requests received from any Governmental Authority for
additional information or documentation, (ii) not enter into any agreement with
any Governmental Authority not to consummate the transactions contemplated by
this Agreement, except with the prior consent of the other Party (which shall
not be unreasonably withheld, delayed or conditioned), (iii) subject to Section
6.06(c), provide the other Party with a copy of any proposed filing, or
amendment or supplement thereto, with any Governmental Authority concerning this
Agreement or the transactions contemplated  hereby for their review, except any
such filing, amendment or supplement that
 

 
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will not become a matter of public record, (iv) provide status updates to the
other Party in respect of any filings, investigation or inquiry concerning this
Agreement or the transactions contemplated hereby, as may be required by the
other Party from time to time, except in respect of any such filing,
investigation or inquiry that is not a matter of public record, and (v) at such
Party’s sole discretion, consult with the other Party in advance of or following
its participation in any in-person, substantive meeting with any Governmental
Authority in respect of any filings, investigation or inquiry concerning this
Agreement or the transactions contemplated hereby, and it being understood that
any such consultation with the other Party shall not constitute, or be construed
as constituting, the undertaking of an obligation to solicit or obtain the
consent or approval of the other Party.
 
(c)           Prior to filing any application, form or report required by FERC
with respect to the transactions contemplated by this Agreement, Purchaser and
Sellers, as the case may be, shall provide each other a copy of such proposed
filing for their review (except any such proposed filing that will not become a
matter of public record), provided that the Parties shall cooperate in the
preparation of, and have the joint right to approve, any such application, form
or report that must be submitted jointly by Sellers and Purchaser prior to
filing.
 
(d)           The application, form or report required by CPUC to be filed with
respect to the transactions contemplated by this Agreement shall request CPUC
approval of (i) the purchase of the applicable Interests by Purchaser pursuant
to the terms and conditions of this Agreement, (ii) the liquidation of the
Companies, and the transfer to Purchaser (including transfer by merger) of all
of the assets and liabilities of the Companies, immediately after the Closing,
and (iii) the placement of the assets of the Companies into Purchaser’s utility
rate base and interim rate relief for Purchaser to recover the revenue
requirements associated with such assets, either through a Purchase Capacity
Cost Adjustment rider or through an alternative recovery mechanism, until such
assets are actually reflected in the setting of Purchaser’s base rates.  Sellers
shall provide, and shall cause the Companies to provide, such assistance to
Purchaser as Purchaser may reasonably request in connection with obtaining such
CPUC approvals.
 
(e)           The application, form or report required by FERC to be filed with
respect to the transactions contemplated by this Agreement shall state that the
consummation of the transactions contemplated by this Agreement will have no
effect (or a neutral effect) on market concentration within all relevant markets
and that no further action, condition or obligation is required to satisfy the
requirements under Section 203 of the Federal Power Act and applicable FERC
regulations for approval for the consummation of the transactions contemplated
by the Agreement.
 
(f)           Purchaser shall bear the filing fees associated with any filings
made pursuant to this Section 6.06.
 
Section 6.07                      Further Assurances.  Subject to the terms and
conditions of this Agreement, at any time or from time to time after the
Closing, at any Party’s request and without further consideration, the other
Parties shall execute and deliver to such Party such other instruments of sale,
transfer, conveyance, assignment and confirmation, provide such materials and
information and take such other actions and execute and deliver such other
documents as
 

 
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such Party may reasonably request in order to consummate the transactions
contemplated by this Agreement.
 
Section 6.08                      Post-Closing Access to Information.  After the
Closing Date, each Seller and Purchaser shall grant each other (or their
respective designees), and Purchaser shall cause such Company to grant to each
Seller (or its designees), access at all reasonable times to all of the
information, books and records relating to the Companies and the Facilities 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
arising under, this Agreement.  Further, after the Closing Date, Purchaser shall
cause such Company to grant to each Seller (or its designees) the access and
right to take extracts and make copies described in the preceding sentence for
such other purposes as such Seller may reasonably request.  Without limiting the
foregoing, for a period of twenty-four (24) months after the Closing Date,
Sellers shall use commercially reasonable efforts to promptly furnish Purchaser
with such Excluded Electronic Records as Purchaser may reasonably request from
time to time.
 
Section 6.09                      Employee and Benefit Matters.
 
(a)           Sellers have provided Purchaser with a list (i) containing the
names of all active employees, contract employees and any other person with
reemployment rights with the Operator or its Affiliate, and employed at the
Facilities, and (ii) describing the job title, base and incentive compensation,
years of service, date of hire, and leave status of each such active employee,
inactive employee with the reason for inactive status, contract employee or any
such other person with reemployment rights as of the date such list is prepared,
who is employed at the Facilities.  Seller agrees to update such list from time
to time and as of the Closing Date.  Prior to the Closing Date, Purchaser or its
designee shall interview all Operator Facility Employees, who are “actively at
work” as of the Execution Date (for purposes of this Section 6.09 an employee is
not “actively at work” if the employee is receiving disability benefits under
any plan or program established or maintained by Operator for any reason,
including the employee having represented that he or she is unable to perform
any work).  Purchaser, or its designee, shall have the right, but not the
obligation, to offer employment (effective as of the Closing Date) to any, all
or none of the Operator Facility Employees to perform services at the
Facilities.  Each offer of employment shall be made not less than sixty (60)
days prior to the Closing Date and on terms and conditions determined by
Purchaser in its sole discretion.  Each Operator Facility Employee who accepts
Purchaser’s offer of employment shall be referred to herein as an (“Affected
Employee”).
 
(b)           Seller or its Affiliate shall retain responsibility under its
employee welfare benefit plans for all amounts payable by reason of claims
reported or submitted by Affected Employees and their eligible spouses and
dependents prior to the Closing Date, and Purchaser or its Affiliate shall be
responsible under its employee welfare benefit plans for all amounts payable by
reason of claims reported or submitted by Affected Employees and their eligible
spouses and dependents on or after the Closing Date.  Purchaser or its Affiliate
shall be solely responsible for compliance with the requirements of Section
4980B of the Code and part 6 of subtitle B of Title I of ERISA (“COBRA”),
including the provision of continuation coverage with respect to all Affected
Employees, and their spouses and dependents, for whom a qualifying event occurs
on
 

 
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or after the Closing Date.  For purposes of this Section 6.09(b), the terms
“continuation coverage’ and “qualifying event” shall have the meanings ascribed
to them in COBRA.
 
(c)           Nothing in this Section 6.09 or elsewhere in this Agreement is
intended to confer upon any Affected Employee or other Operator Facility
Employee any rights of any kind whatsoever under or by reason of this Agreement,
including but not limited to any rights to or of employment for a specified
period or any other form of employment security, or a right to participate in,
or to continue to participate in, any employee benefit plan or
program.  Purchaser shall not assume any obligation or liability for employment
practices or policies maintained by the Operator with respect to Operator
Facility Employees.  Purchaser and its Affiliates shall not assume any Benefit
Plan and shall have no liability or obligation with respect to the Benefit
Plans.  In addition, Purchaser shall have no obligation or liability nor incur
any cost or expense with respect to any claims, whether arising before, on or
after the Closing, by any employee or former employee, director or consultant of
the Operator arising by reason of the sale or purchase of the Interests in the
Companies pursuant to this Agreement or by reason of such employee or former
employee’s, director’s or consultant’s employment or service, or the termination
of his or her employment or service, by or with such Operator.  Without limiting
the generality of the foregoing, Operator shall honor and pay all unused
vacation, holiday, sickness and personal days accrued prior to the consummation
of the Closing by the Affected Employee under the policies and practices of such
employer.
 
Section 6.10                      Resignation of Members, Managers, Officers and
Directors.  At the Closing, such Seller shall cause the resignation of all
officers and directors or similar persons on any board or operating, management
or other committee established under such Company’s Charter Documents.
 
Section 6.11                      Use of Certain Names.  Within fifteen (15)
days following the Closing, Purchaser shall cause such Company to cease using
the word “Calpine” and any word or expression similar thereto or constituting an
abbreviation or extension thereof (the “Sellers’ Marks”), including eliminating
the Sellers’ Marks from all assets of the Companies and the disposing of any
unused stationery and literature of the Companies, and thereafter, Purchaser
shall not, and shall cause the Companies and the Facilities not to, use the
Sellers’ Marks or any logos, trademarks, trade names, patents or other
Intellectual Property rights belonging to Sellers or any of their Affiliates, or
which Sellers or any of their Affiliates have the right to use, and Purchaser
acknowledges that it, its Affiliates, the Companies and the Facilities have no
rights whatsoever to use such Intellectual Property.
 
Section 6.12                      Support Obligations.  At the Closing,
Purchaser shall effect the full and unconditional release of Sellers and their
Affiliates from any credit support obligations provided by Sellers or such
Affiliates with respect to the Companies, the Facilities or the operation
thereof, including the credit support obligations listed on Schedule 6.12.
 
Section 6.13                      Termination of Certain Services, Contracts,
Receivables and Payables.  Notwithstanding anything in this Agreement to the
contrary, during the Interim Period, Sellers shall take such actions as may be
necessary to terminate or sever as to the Companies or the Facilities (with
appropriate mutual releases) upon the Closing any services jointly shared or
used by any of the Companies, the Facilities and Sellers or any of their
Affiliates, including joint Tax
 

 
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services, joint legal services and joint banking services (to include the
severance of any centralized clearance accounts) operation and maintenance
services including each Contract listed on Schedule 6.13.
 
Section 6.14                      Insurance.  Purchaser shall be solely
responsible for providing insurance to such Company and the business of such
Facility as of the Closing.  Purchaser acknowledges that no insurance coverage
or policy maintained for the Companies or the Facilities will extend beyond the
Closing for the benefit of Purchaser.  For at least twenty-four (24) months
following Closing, Purchaser shall provide insurance no less favorable than the
coverage set forth in Schedule 6.14, to the extent available on commercially
reasonable terms.
 
Section 6.15                      Title Evidence.  Prior to the Execution Date,
Purchaser has been provided commitments for an ALTA owner’s title insurance
policy in respect of the Owned Real Property (collectively the “Title
Evidence”).  Prior to the Execution Date, Purchaser shall have notified Sellers
of any matters contained in the Title Evidence that would constitute a Lien that
is not a Permitted Lien or Purchaser’s failure to so notify Sellers shall be
deemed a waiver as of the Execution Date by Purchaser of any right not to close
or any right to indemnification pursuant to Article IX following the Closing, as
the case may be, by virtue of any matters shown by the Title Evidence.  In the
event that new or additional Liens are added by an updated title commitment
thereto prior to the Closing Date which are not Permitted Liens, Purchaser may
make objections thereto in writing within five (5) Business Days following
receipt of such updated commitment by Purchaser and Purchaser’s failure to so
object shall be deemed a waver of Purchaser’s right to object to such new or
additional Liens.  Sellers shall use commercially reasonable efforts to cure or
remove prior to Closing all said Liens which are not Permitted Liens to which
Purchaser shall have objected.
 
Section 6.16                      Fall 2010 RMEC Outage.
 
(a)           [***].3
 
(b)           Purchaser shall have the right to observe the Fall 2010 RMEC
Outage Work, subject to Section 6.01(b) hereof.
 
(c)           In the event that, during the course of performing the Fall 2010
RMEC Outage Work, Rocky Mountain Seller identifies any maintenance or repair
work that is not contemplated by the Fall 2010 RMEC Schedule and Scope and which
will not be completed during the RMEC Outage Work Period, Rocky Mountain Seller
shall promptly notify Purchaser in writing (“Sellers’ Additional Maintenance and
Repair Work Notice”) of (i) such work and (ii) whether it does or does not
regard such work as Discovery Work.  Within two (2) Business Days after its
receipt of a Sellers’ Additional Maintenance and Repair Work Notice, Purchaser
shall notify Rocky Mountain Seller in writing as to whether it does or does not
regard such work as Discovery Work.  If Rocky Mountain Seller and Purchaser do
not agree as to whether such work is Discovery Work, a dispute shall be deemed
to exist and shall be immediately referred to the
 

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3 Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. A series of three asterisks within brackets denotes omissions.
 

 
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Independent Engineer, who shall be instructed to determine whether any or all of
such work is Discovery Work.  The determination of the Independent Engineer
shall be final and binding on the Parties, and the cost of the Independent
Engineer shall be shared equally by the Parties.
 
(d)           Discovery Work shall be completed as follows:
 
(i)           Discovery Work that is capable of being completed during the RMEC
Outage Work Period shall be completed during such period.
 
(ii)           Upon the determination by Rocky Mountain Seller of any Discovery
Work that is not capable of being completed within the RMEC Outage Work Period,
Rocky Mountain Seller shall notify Purchaser in writing (“Sellers’ Incomplete
Discovery Work Notice”) of (1) such Discovery Work and (2) whether it does or
does not regard such work as Essential Discovery Work.  Within two (2) Business
Days after its receipt of a Sellers’ Incomplete Discovery Work Notice, Purchaser
shall notify Rocky Mountain Seller in writing as to whether it does or does not
regard such Discovery Work as Essential Discovery Work.  If Rocky Mountain
Seller and Purchaser do not agree as to whether such Discovery Work is Essential
Discovery Work, a dispute shall be deemed to exist and shall be immediately
referred to the Independent Engineer, who shall be instructed to determine
whether any or all of such Discovery Work is Essential Discovery Work.  The
determination of the Independent Engineer shall be final and binding on the
Parties, and the cost of the Independent Engineer shall be shared equally by the
Parties.  The RMEC Outage Work Period shall be extended as reasonably necessary
to accommodate Rocky Mountain Seller’s completion of any Essential Discovery
Work.
 
(iii)           [***].
 
In the event that the time required to complete Essential Discovery Work under
clause (ii) of this Section 6.16(d) extends beyond the Termination Date, Sellers
shall be entitled to reasonable extensions of the Termination Date, not to
exceed [***] in the aggregate, in order to complete such work.4
 
ARTICLE VII
 
CONDITIONS TO THE CLOSING
 
Section 7.01                      Conditions to the Obligations of Each
Party.  The obligations of the Parties to proceed with the Closing are subject
to the satisfaction on or prior to the Closing Date of all of the following
conditions, any one or more of which may be waived in writing, in whole or in
part, as to a Party by such Party:
 

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4 Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. A series of three asterisks within brackets denotes omissions.
 

 
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(a)           no permanent judgment, injunction, order or decree of a court or
other Governmental Authority of competent jurisdiction shall be in effect which
has the effect of making the transactions contemplated by this Agreement illegal
or otherwise restraining or prohibiting the consummation of the transactions
contemplated by this Agreement (each Party agreeing to use its reasonable
commercial efforts, including appeals to higher courts, to have any judgment,
injunction, order or decree lifted);
 
(b)           the Parties shall have obtained (i) an order from FERC that,
without any material limitation or qualification, authorizes the purchase and
sale of the applicable Interests pursuant to Section 203 of the Federal Power
Act, and does not subject either Party to any conditions or restrictions that
would be materially more burdensome than those proposed in the respective
applications for such order, and (ii) an order from CPUC that, without any
material limitation or qualification, grants all of the approvals described in
clauses (i), (ii) and (iii) of the first sentence in Section 6.06(d) and does
not subject Purchaser to any conditions or restrictions that are materially more
burdensome than those proposed in the respective applications for such order;
and
 
(c)           all required waiting periods applicable to this Agreement and the
transactions contemplated hereby under the HSR Act shall have expired or been
terminated; provided, however, that notwithstanding any other provision of this
Agreement or any implied duty of good faith or other legal or equitable
doctrine, Purchaser shall not be required, in order to obtain such expiration or
termination, to agree to (i) any prohibition of or limitation on the ownership
or operation of any portion of its or of any of its Affiliates’ or Sellers’
businesses or assets, (ii) any requirement that Purchaser or any of its
Affiliates or Sellers divest, hold separate or otherwise dispose of any of their
respective businesses or assets, (iii) any limitation on Purchaser’s ability to
acquire or hold or exercise full rights of ownership of the Interests or to
acquire or hold or exercise full rights of ownership of Sellers or their
respective businesses or assets, or (iv) any other limitation on Purchaser’s or
any of its Affiliates’ ability to effectively control their respective
businesses and assets.
 
Section 7.02                      Conditions to the Obligations of
Purchaser.  The obligation of Purchaser to proceed with the Closing is subject
to the satisfaction on or prior to the Closing Date of the following further
conditions, any one or more of which may be waived, in whole or in part, by
Purchaser:
 
(a)           each Seller shall have performed all of its obligations hereunder
required to be performed by it at or prior to the Closing Date, except (solely
for the purposes of this Section 7.02(a)) where the failure to perform would not
in the aggregate have a Material Adverse Effect;
 
(b)           the representations and warranties of the applicable Seller
contained in this Agreement (without regard to Material Adverse Effect or
similar qualifiers other than those in Section 4.19 (Change in Circumstances))
shall be true and correct as of the Closing Date (except to the extent such
representations and warranties expressly relate to an earlier date, in which
case as of such earlier date), except (solely for the purposes of this Section
7.02(b)) for failures of the representations and warranties to be true and
correct that have not in the aggregate resulted in a Material Adverse Effect;
 

 
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(c)           Purchaser shall have received a certificate signed on behalf of
the applicable Seller indicating that the conditions provided in Section 7.02(a)
and Section 7.02(b) have been satisfied;
 
(d)           the Purchaser Governmental Approvals shall have been obtained;
 
(e)           Purchaser shall have received the deliveries to be made by the
applicable Seller under Section 2.04;
 
(f)           the Facilities have not suffered any theft, damage, removal,
destruction or casualty loss of any portion of the Facilities, not covered by
insurance, which has resulted in a Material Adverse Effect; and
 
(g)           Rocky Mountain Seller shall have completed all of the Fall 2010
RMEC Outage Work.
 
Section 7.03                      Conditions to the Obligations of Sellers.  The
obligation of each Seller to proceed with the Closing is subject to the
satisfaction on or prior to the Closing Date of the following further
conditions, any one or more of which may be waived, in whole or in part, by such
Seller:
 
(a)           Purchaser shall have performed all of its obligations hereunder
required to be performed by it at or prior to the Closing Date, except (solely
for the purposes of this Section 7.03(a)) where the failure to perform would not
in the aggregate have a material adverse effect on Purchaser’s ability to
perform its obligations hereunder;
 
(b)           the representations and warranties of Purchaser contained in this
Agreement (without regard to material adverse effect or similar qualifiers)
shall be true and correct as of the Closing Date (except to the extent such
representations and warranties expressly relate to an earlier date, in which
case as of such earlier date), except (solely for the purposes of this Section
7.03(b)) for failures of the representations and warranties to be true and
correct that have not in the aggregate had a material adverse effect on
Purchaser’s ability to perform its obligations hereunder;
 
(c)           such Seller shall have received a certificate signed on behalf of
Purchaser indicating that the conditions provided in Section 7.03(a) and Section
7.03(b) have been satisfied;
 
(d)           the Seller Approvals for the applicable Company shall have been
obtained; and
 
(e)           the applicable Seller shall have received the deliveries to be
made by Purchaser under Section 2.05.
 
ARTICLE VIII
 
TERMINATION
 
Section 8.01                      Termination.  This Agreement may be terminated
and the consummation of the transactions contemplated hereby may be abandoned at
any time prior to the Closing:
 

 
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(a)           by mutual written consent of Purchaser and Sellers;
 
(b)           by either Purchaser or Sellers:
 
(i)            if the Closing has not occurred on or before the date that is 270
days after the later of the date of the public filing with CPUC of the
application for approval of the transactions contemplated hereby in accordance
with Section 6.06(d) and the date of the public filing with FERC of the
application for approval of the transactions contemplated hereby in accordance
with Section 6.06(e), subject to any extension as provided in Section 6.16 (the
“Termination Date”), regardless of the stage or status of any then current and
still ongoing regulatory approval process, proceeding, investigation or inquiry,
provided that the right to terminate this Agreement pursuant to this Section
8.01(b)(i) shall not be available to any Party whose breach of any provision of
this Agreement has been the cause of, or resulted in, the failure of the Closing
to occur by the Termination Date;
 
(ii)           [***]5; or
 
(iii)           if the United States Department of Justice, the United States
Federal Trade Commission or the Colorado Attorney General (1) informs either
Purchaser or Sellers in writing that it will file a lawsuit to challenge any of
the transactions contemplated by this Agreement under the Antitrust Laws or (2)
files such a lawsuit;
 
(c)           by Purchaser (i) if there has been a material breach by any Seller
of any representation, warranty, covenant or agreement contained in this
Agreement which would result in a failure of a condition set forth in Section
7.02, (ii) within five (5) days after receipt of any Supplemental Disclosure
which shows that there has been a Material Adverse Effect on the Companies or
the Facilities which Material Adverse Effect (1) was not caused by Purchaser’s
breach of any provision of this Agreement and (2) cannot be cured prior to the
Termination Date or (iii) if there is any insolvency, bankruptcy, reorganization
or other similar proceeding affecting Seller Guarantor, Sellers or the
Companies;
 
(d)           by Sellers if (i) there has been a material breach by Purchaser of
any representation, warranty, covenant or agreement contained in this Agreement
which (1) would result in a failure of a condition set forth in Section 7.03 and
(2) cannot be cured prior to the Termination Date, or (ii) if there is any
insolvency, bankruptcy, reorganization or other similar proceeding affecting
Purchaser;
 
The Party desiring to terminate this Agreement pursuant to this Section 8.01
(other than pursuant to Section 8.01(a)) shall give notice of such termination
to the other Party.
 

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5 Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. A series of three asterisks within brackets denotes omissions.
 

 
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Section 8.02                      Effect of Termination.  In the event of
termination of this Agreement by any Seller or by Purchaser prior to a Closing
pursuant to the provisions of Section 8.01, there shall be no liability or
further obligation on the part of Purchaser or Sellers or their respective
officers, managers or directors (except as set forth in this Section 8.02 and
Sections 6.01(b) (Access of Purchaser), 6.02(d), 6.04 (Public Announcements),
6.05 (Expenses and Fees), 9.03 (Waiver of Other Representations) and Article X
(Miscellaneous), all of which shall survive the termination hereof), provided
that nothing in this Section 8.02 shall relieve any Party from liability for any
breach of this Agreement by such Party prior to termination of this Agreement.
 
ARTICLE IX
 
INDEMNIFICATION
 
Section 9.01                      Survival.  All representations and warranties
and covenants and other obligations in this Agreement or in any other agreement,
instrument or other document delivered in connection herewith, and the right to
commence any Claim with respect thereto, shall survive the execution and
delivery hereof and the Closing Date, provided that (i) such representations and
warranties (which shall be deemed to have been made anew as of the Closing Date
for the purposes of Section 9.02, except to the extent such representations and
warranties expressly relate to an earlier date) and, (ii) except as otherwise
specifically provided in this Agreement or any other agreement, instrument or
other document delivered in connection herewith, such covenants and other
obligations, shall terminate on the date that is twenty-four (24) months after
the Closing Date (the “Survival Termination Date”), except that the
representations and warranties in Section 4.12 (Taxes) and the covenants in
Section 6.03 (Tax Matters) shall terminate on the expiration of the applicable
statute of limitations period plus thirty (30) days.  After the Survival
Termination Date or, in the case of the representations and warranties in
Section 4.12 (Taxes) and the covenants in Section 6.03 (Tax Matters), after the
expiration of the applicable statute of limitations period plus thirty (30) days
or, in the case of any other covenant or other obligation contained in this
Agreement or any other agreement, instrument or other document delivered in
connection herewith for which a different termination date or survival period is
specifically provided herein or therein, after such different termination date
or the expiration of such different survival period, as the case maybe, no Party
may make or assert any Claim for any breach of or inaccuracy in any
representation or warranty of any other Party, or for any breach by any other
Party of any covenant or other obligation, contained in this Agreement or in any
other agreement, instrument or other document delivered in connection herewith,
except that any claims made or asserted by a Party within the applicable time
period prescribed above setting forth such Claim in reasonable detail (including
a reasonable specification of the legal and factual basis for such Claim and the
Loss incurred) shall survive the Survival Termination Date or such different
termination date or the expiration of the applicable survival period, as the
case may be, until such Claim is finally resolved and all obligations with
respect thereto are fully satisfied.
 
Section 9.02                      Indemnification.
 
(a)           Subject to the provisions of this Article IX, Sellers, jointly and
severally from and after the Closing Date, shall indemnify and hold harmless
Purchaser and each Company from and against any and all Losses actually incurred
by any of them (i) that arise out of or result from the breach of any of
Sellers’ (1) representations and warranties (without giving
 

 
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effect to any “material”, “materiality”, “Material Adverse Effect” or similar
qualification) contained in this Agreement or in any other agreement, instrument
or other document delivered in connection herewith, as of the date when made, or
(2) covenants or other obligations contained in this Agreement or in any other
agreement, instrument or other document delivered in connection herewith and,
without duplication, (ii) for any and all Taxes (or the nonpayment thereof) of
the Companies that are due and payable with respect to any Pre-Closing Tax
Period and any Pre-Closing Straddle Period, except to the extent such Taxes were
taken into account for purposes of computing Adjusted Net Working Capital and
(iii) with respect to the Surviving Credit Agreement Indemnities and all related
Losses, any and all Surface Use Agreement Losses, and any and all BSEC 2007
Emissions Losses, none of which shall be subject to the survival limitations of
Section 9.01 or the liability limitations of Section 9.02(c) and Section
9.02(d).
 
(b)           Subject to the provisions of this Article IX, Purchaser from and
after the Closing Date shall indemnify and hold harmless Sellers from and
against any and all Losses actually incurred by Sellers that arise out of or
result from the breach of any of Purchaser’s (i) representations and warranties
contained in this Agreement or in any agreement, instrument or other document
delivered in connection herewith, as of the date when made, and (ii) covenants
or agreements contained in this Agreement or in any agreement, instrument or
other document delivered in connection herewith.
 
(c)           The total aggregate liability of Sellers for any claims for Losses
arising under Section 9.02(a) shall not exceed [***] of the Final Purchase
Price, except that (i) the total aggregate liability of Sellers for any claims
for Losses resulting from (1) the breach of or inaccuracy in any of the
representations or warranties set forth in Section 3.01 (Organization and
Qualification), Section 3.02 (Authority), Section 3.03 (No Conflicts; Consents
and Approvals), Section 3.04 (Ownership of Interests), Section 4.01
(Organization and Qualification), Section 4.02 (No conflicts; Consents and
Approvals), Section 4.03 (Subsidiaries; No Other Business), the fourth sentence
of Section 4.07(a)(ii) (Assets – Real Property), Section 4.07(b)(ii) (Assets –
Other Property – Title to Material Non-Real Estate Assets), Section 4.08
(Employee Benefit Plans), Section 4.09 (Labor and Employment Matters), Section
4.15 (Brokers), and Section 4.16 (Capital Structure) (collectively the
“Specified Representations”), and (2) the breach of any covenant or other
obligation contained in this Agreement or any other agreement, instrument or
other document delivered in connection herewith, shall not, in the aggregate,
exceed [***] of the Final Purchase Price and (ii) there shall be [***] on the
liability of Sellers for any claims for Losses resulting from the breach of or
inaccuracy in any of the representations or warranties set forth in Section 4.12
(Taxes) or from the breach of any of the covenants set forth in Section 6.03
(Tax Matters) or from the Surviving Credit Agreement Indemnities and related
Losses, the Surface Use Agreement Losses or the BSEC 2007 Emissions Losses
indemnified in Section 9.02(a)(iii).6
 
(d)           Except for indemnification obligations related to (i) breaches of
or inaccuracies in any of  the Specified Representations or in any of the
representations and warranties in Section 4.12 (Taxes), (ii) breaches of
covenants or other obligations contained in
 

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

 
6 Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. A series of three asterisks within brackets denotes omissions.
 

 
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this Agreement or any other agreement, instrument or other document delivered in
connection herewith, and (iii) the Surviving Credit Agreement Indemnities and
related Losses, the Surface Use Agreement Losses and the BSEC 2007 Emissions
Losses indemnified in Section 9.02(a)(iii), none of which are subject to the
following limitation in this Section 9.02(d), Sellers shall have no liability in
respect of their indemnification obligations under Section 9.02(a), and there
shall be no claim for indemnification asserted by Purchaser, until the aggregate
amount of all Losses under Section 9.02(a) exceeds, on a cumulative basis, [***]
(and then only to the extent of such excess).7
 
(e)           In calculating any amount of Losses recoverable pursuant to
Section 9.02(a) or 9.02(b), the amount of such Losses shall be reduced by (i)
any recoverable insurance proceeds relating to such Loss, net of any related
deductible and any expenses to obtain such proceeds, (ii) any prior or
subsequent recoveries from third-parties pursuant to indemnification (or
otherwise) with respect thereto, net of any expenses incurred by the Indemnified
Party in obtaining such third-party payment, and (iii) the amount of any net Tax
benefit actually realized from the incurrence or payment of such Losses.  The
Parties shall treat any indemnification payment pursuant to this Article IX as
an adjustment to the Final Purchase Price for all Tax purposes unless otherwise
required by applicable Law.  The Indemnified Party shall use its commercially
reasonable efforts to seek insurance recoveries in respect of losses to be
indemnified hereunder.  If any insurance proceeds or other recoveries from
third-parties or net Tax benefits are actually realized (in each case net of
expenses of such recoveries) by an Indemnified Party subsequent to the receipt
by such Indemnified Party of an indemnification payment hereunder in respect of
the claims to which such insurance proceedings, third-party recoveries or net
Tax benefits relate, appropriate refunds shall be made promptly to the
Indemnifying Party regarding the amount of such indemnification payment.
 
(f)            Each Party shall have a duty to use commercially reasonable
efforts to mitigate any Loss suffered by such Party in connection with this
Agreement.
 
(g)           Sellers shall have no liability for any Losses that represent the
cost of repair or replacement exceeding the reasonable cost of repair or
replacement.
 
(h)           The remedies for environmental claims set forth in this Agreement
shall be Purchaser’s sole and exclusive remedies and Purchaser expressly waive
all other rights of recovery against Sellers under any Environmental Law
including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act and the Resource Conservation and Recovery Act.
 
(i)            This Article IX shall be the sole and exclusive remedy of the
Parties hereto following the Closing for any Loss arising out of any
misrepresentation or breach of the representations, warranties, covenants or
agreements of the Parties contained in this Agreement.  In furtherance of the
foregoing, each of the Parties hereto hereby waives, to the fullest extent
permitted under applicable Law, any and all rights, claims and causes of action
it may have
 

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

 
7 Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. A series of three asterisks within brackets denotes omissions.
 

 
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against the other Parties hereto, arising under or based upon any Law, other
than the right to seek indemnity pursuant to this Article IX, except in the case
of intentional fraud.
 
Section 9.03                      Right to Specific Performance; Certain
Limitations.  Notwithstanding anything in this Agreement to the contrary:
 
(a)           Without limiting or waiving in any respect any rights or remedies
of a Party under this Agreement now or hereafter existing at law in equity or by
statute, each of the Parties hereto shall be entitled to specific performance of
the obligations to be performed by the other Party in accordance with the
provisions of this Agreement; and
 
(b)           Except as otherwise provided under the Seller Guaranty, no
Representative, Affiliate of, or direct or indirect equity owner in, any Seller
shall have any personal liability to Purchaser or any other Person as a result
of the breach of any representation, warranty, covenant, agreement or obligation
of Sellers in this Agreement, and no Representative, Affiliate of, or indirect
equity owner in, Purchaser shall have any personal liability to any Seller or
any other Person as a result of the breach of any representation, warranty,
covenant, agreement or obligation of Purchaser in this Agreement; and
 
(c)           No Party shall be liable for special, punitive, exemplary,
incidental, consequential or indirect damages, or lost profits or losses
calculated by reference to any multiple of earnings before interest, tax,
depreciation or amortization (or any other valuation methodology) 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 for any matter relating to this Agreement and the
transactions contemplated hereby.
 
Section 9.04                      Procedures for Indemnification.  Whenever a
Claim shall arise for indemnification under Section 9.02, the Person entitled to
indemnification (the “Indemnified Party”) shall promptly notify in writing the
Party from which indemnification is sought (the “Indemnifying Party”) of such
Claim and, when known, the facts constituting the basis of such Claim, provided
that in the event of a Claim for indemnification resulting from or in connection
with a Claim by a third party, the Indemnified Party shall give such written
notice thereof to the Indemnifying Party not later than ten (10) Business Days
prior to the time any response to the third party Claim is required, if
possible, and in any event within fifteen (15) Business Days following receipt
of notice thereof (provided, that failure to timely notify the Indemnifying
Party shall not relieve the Indemnifying Party of any liability it may have to
the Indemnified Party, except to the extent that the Indemnifying Party has been
actually prejudiced by such failure).  Following receipt of notice of any such
third party Claim, and unless counsel to the Indemnified Party shall have
reasonably determined in good faith that the assumption of such defense by the
Indemnifying Party would be inappropriate due to a conflict of interest, the
Indemnifying Party shall have the option, at its cost and expense, to assume the
defense of such matter and to retain counsel (not reasonably objected to by the
Indemnified Party) to defend any such claim or legal proceeding, and the
Indemnifying Party shall not be liable to the Indemnified Party for any fees of
other counsel or any other expenses (except as expressly provided to the
contrary herein) with respect to the defense of such Claim, other than
reasonable fees and expenses of counsel employed by the Indemnified Party for
any period during which the Indemnifying Party has not assumed the defense
thereof.  The Indemnified Party shall have the option of joining the defense
 

 
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of such Claim (which shall be at the sole cost and expense of the Indemnified
Party) with its own counsel and counsel for each Party shall, to the extent
consistent with such counsel’s professional responsibilities, cooperate with the
other Party and any counsel designated by that Party.  In effecting the
settlement or compromise of, or consenting to the entry of any judgment with
respect to, any such Claim, the Indemnifying Party, or the Indemnified Party, as
the case may be, shall act in good faith, shall consult with the other Party and
shall enter into only such settlement or compromise or consent to the entry of
any judgment as the other Party shall consent, such consent not to be
unreasonably withheld, conditioned or delayed.  An Indemnifying Party shall not
be liable for any settlement, compromise or judgment not made in accordance with
the preceding sentence.
 
ARTICLE X
 
MISCELLANEOUS
 
Section 10.01                    Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
to, or by nationally recognized overnight courier service, or mailed by
registered or certified mail (return receipt requested) if and when received by,
or sent via facsimile if and when received by, the Parties at the following
addresses (or at such other address for a Party as shall be specified by like
notice):
 
(a)           If to the Companies (prior to the Closing) or Sellers, to:
 
Calpine Corporation
717 Texas Avenue, Suite 1000
Houston, TX 77002
Attention: Chief Legal Officer
Facsimile:  (713) 830-2001
 
with a copy to:
 
Calpine Corporation
4160 Dublin Blvd., Suite 100
Dublin, CA 94568
Attn: Vice President, Origination
Facsimile: (925) 479-9560
 
and with a copy to:
 
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention:  Michael S. Shenberg, Esq.
Facsimile:  (212) 819-8535
 

(b)           If to Purchaser, to:
 
Public Service Company of Colorado

 
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414 Nicollet Mall, 7th Floor
Minneapolis, MN 55401-1927
Attention:  Paras M. Shah, Director,
Business Development
Facsimile:  (612) 215-4575
 
with a copy to:
 
Public Service Company of Colorado
414 Nicollet Mall
Minneapolis, MN 55401-1927
Attention:  Michael C. Connelly,
Vice President and
General Counsel
Facsimile:  (612) 215-9025
 

Section 10.02                    Headings.  The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
 
Section 10.03                    Assignment.  This Agreement (including the
documents and instruments referred to herein) shall not be assigned by operation
of Law or otherwise.
 
Section 10.04                    Supplements to Schedules.  With respect to
matters arising from circumstances first occurring after the date of this
Agreement or as to which a Party first acquires knowledge after the date of this
Agreement, Sellers and Purchaser shall have the right to make any changes or
additions to the Schedules (such changes or additions being referred to as
“Supplemental Disclosure”) that may be necessary to correct any matter that
would otherwise constitute a breach of any representation or warranty in this
Agreement.  Sellers agree to advise Purchaser promptly in writing of any matter
or occurrence of which either of the Sellers has or obtains knowledge, and
Purchaser agrees to advise each of the Sellers promptly in writing of any matter
of which Purchaser has or obtains knowledge, that, in either case, would
reasonably be expected to constitute a breach by such Party of any
representation, warranty or covenant contained in this Agreement.  Any
Supplemental Disclosure shall be deemed not to have been disclosed for the
purposes of determining whether or not the conditions to Closing set forth in
Section 7.02 or Section 7.03, as applicable, have been satisfied and, if the
Closing occurs, shall not be deemed to have cured any breach of any
representation, warranty, covenant or agreement relating to the matter set forth
in the Supplemental Disclosure for the purposes of indemnification pursuant to
Article IX; provided, however, that any Supplemental Disclosure by Purchaser in
respect of its representation and warranty in Section 5.09 (a) shall be deemed
to have cured any breach by Purchaser of such representation and warranty that,
but for such disclosure, would have otherwise existed, but (b) for the purposes
of indemnification pursuant to Article IX, shall not be deemed to have cured any
breach by Sellers of any of their representations and warranties so disclosed by
Purchaser under Section 5.09.
 
Section 10.05                    Governing Law; Jurisdiction; Waiver of Jury
Trial.  This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, applicable to agreements made and to be performed
entirely within such State, without regard to the conflict
 

 
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of laws principles thereof.  Any disputes or claims arising out of or in
connection with this Agreement and the transactions contemplated or documents
required hereby shall be submitted to the exclusive jurisdiction of the courts
of the State of  New York and the federal courts of the United States of America
located in the State of  New York, County of New York, and appropriate appellate
courts therefrom.  Each of the Parties hereto acknowledges and agrees that any
controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each such Party hereby
irrevocably and unconditionally waives any right such Party may have to a trial
by jury in respect of any litigation directly or indirectly arising or relating
to this Agreement or the transactions contemplated by this Agreement.  The
Parties hereby irrevocably waive, to the fullest extent permitted by applicable
Law, any objection which they may now or hereafter have to the laying of venue
of any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby brought in such court or any defense of
inconvenient forum for the maintenance of such dispute.  Each of the Parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
Law.  This consent to jurisdiction is being given solely for purposes of this
Agreement and the transactions contemplated hereunder, and is not intended to,
and shall not, confer consent to jurisdiction with respect to any other dispute
in which a Party to this Agreement may become involved.  Each of the Parties
hereto hereby consents to process being served by any Party to this Agreement in
any suit, action, or proceeding of the nature specified in this Section 10.05 by
the mailing of a copy thereof in the manner specified by the provisions of
Section 10.01.
 
Section 10.06                   Counterparts.  This Agreement may be executed in
two (2) or more counterparts, and by facsimile, each of which shall be deemed to
be an original, but all of which shall constitute one and the same agreement.
 
Section 10.07                    Amendments.  This Agreement may not be amended,
waived or modified except by an instrument in writing signed on behalf of
Purchaser and each Seller.
 
Section 10.08                    Entire Agreement.  This Agreement and the
Confidentiality and Non-Disclosure Agreement constitute the entire agreement
between the Parties with respect to the subject matter hereof and supersede all
prior agreements, understandings and negotiations, both written and oral,
between the Parties with respect to the subject matter of this Agreement.  No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by any Party.  Neither this
Agreement nor any provision hereof is intended to confer upon any person other
than the Parties hereto any rights or remedies hereunder except as expressly
provided otherwise in Section 6.01(b) and Article IX.
 
Section 10.09                    Severability.  If any term or other provision
of this Agreement is invalid, illegal, or incapable of being enforced by any
rule of applicable Law, or public policy, then such term or provision shall be
severed from the remaining terms and provisions of this Agreement, and such
remaining terms and provisions shall nevertheless remain in full force and
effect.
 
[Remainder of page intentionally left blank.  Signature page to follow.]
 
 
 
 
 
 
 
 
 
 
 
 

 
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
 
SELLERS:
PURCHASER:
               
CALPINE DEVELOPMENT
HOLDINGS, INC.
PUBLIC SERVICE COMPANY OF COLORADO
       
By:
/s/ JACK A. FUSCO
By:
/s/ DAVID M. SPARBY  
Name:  Jack A. Fusco
 
Name:  David M. Sparby
 
Title:  President and Chief Executive Officer
 
Title:  Vice President and CFO
                                 
RIVERSIDE ENERGY CENTER, LLC
                           
By:
/s/ JACK A. FUSCO      
Name:  Jack A. Fusco
     
Title:  President and Chief Executive Officer
   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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