Exhibit 10.1

 

Execution Version

 

PURCHASE AND SALE AGREEMENT

 

by and among

 

QUANTUM LAKE LP, LLC,
QUANTUM LAKE GP, LLC,
QUANTUM PASCO LP, LLC,
QUANTUM PASCO GP, LLC,
 QUANTUM AUBURNDALE LP, LLC and
QUANTUM AUBURNDALE GP, LLC,

 

as Buyers,

 

QUANTUM UTILITY GENERATION, LLC,
as Buyer Representative,

 

LAKE INVESTMENT, LP,
NCP LAKE POWER, LLC,
TETON NEW LAKE, LLC,
NCP DADE POWER, LLC,
DADE INVESTMENT, LP,
AUBURNDALE LP, LLC and
AUBURNDALE GP, LLC,

 

as Sellers,

 

and

 

ATLANTIC POWER CORPORATION,
as Seller Representative

 

dated as of

 

January 30, 2013

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

Article I DEFINITIONS AND RULES OF CONSTRUCTION

2

Section 1.1

Definitions

2

Section 1.2

Rules of Construction

15

Article II PURCHASE AND SALE; PURCHASE PRICE; CLOSING

15

Section 2.1

Purchase and Sale of Interests

15

Section 2.2

Purchase Price

15

Section 2.3

Deliverables upon Execution

16

Section 2.4

The Closing

16

Section 2.5

Closing Payment Estimates

18

Section 2.6

Post-Closing Payment Reconciliation

19

Article III REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLERS

21

Section 3.1

Organization

21

Section 3.2

Authorization; Enforceability

21

Section 3.3

No Conflict

22

Section 3.4

Litigation

22

Section 3.5

Brokers’ Fees

22

Section 3.6

Ownership of Interests

23

Article IV REPRESENTATIONS AND WARRANTIES RELATING TO THE PORTFOLIO COMPANIES

23

Section 4.1

Organization

23

Section 4.2

No Conflict

23

Section 4.3

Capitalization; Subsidiaries

24

Section 4.4

Financial Statements; No Undisclosed Liabilities

25

Section 4.5

Real Property

26

Section 4.6

Litigation

26

Section 4.7

Taxes

26

Section 4.8

Contracts

27

Section 4.9

Permits; Compliance with Laws

30

Section 4.10

No Employees

30

Section 4.11

Environmental Matters

30

Section 4.12

Insurance

32

Section 4.13

Personal Property

32

 

i

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Section 4.14

Business

32

Section 4.15

Bank Accounts

32

Section 4.16

Regulatory Status

33

Section 4.17

Intellectual Property

33

Section 4.18

Books and Records

34

Section 4.19

No Other Representations and Warranties

34

Article V REPRESENTATIONS AND WARRANTIES RELATING TO THE BUYERS

34

Section 5.1

Organization

34

Section 5.2

Authorization; Enforceability

34

Section 5.3

No Conflict

35

Section 5.4

Financial Ability; Solvency

35

Section 5.5

Investment Representation

35

Section 5.6

Broker’s Fees

36

Section 5.7

Litigation

36

Section 5.8

Regulatory Status

36

Section 5.9

HSR Act Matters

36

Article VI COVENANTS

36

Section 6.1

Conduct of Business (Pre-Closing)

36

Section 6.2

Access

38

Section 6.3

Confidentiality; Public Announcements

39

Section 6.4

Third-Party Approvals

40

Section 6.5

Closing Conditions; Regulatory Filings

40

Section 6.6

No Solicitation

42

Section 6.7

Update Information

42

Section 6.8

Permits

42

Section 6.9

Survey and Title

43

Section 6.10

Applicable Agreements

43

Section 6.11

Off-Site Assets

44

Section 6.12

Reserved

44

Section 6.13

Records

44

Section 6.14

Insurance

44

Section 6.15

Casualty

44

Section 6.16

Condemnation

46

Section 6.17

Affiliate Contracts; Intercompany Obligations

48

 

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Section 6.18

Further Assurances

48

Section 6.19

Release

48

Section 6.20

GE Turbine Blades

49

Section 6.21

Closing Consents

50

Article VII TAX MATTERS

50

Section 7.1

Tax Returns

50

Section 7.2

Cooperation

51

Section 7.3

Transfer Taxes

51

Section 7.4

Tax Proceedings

51

Section 7.5

Purchase Price Allocation

52

Section 7.6

Resolution of Disputed Purchase Price Allocation Schedule Items

53

Section 7.7

Termination of Tax Sharing Agreements

54

Section 7.8

Survival

54

Article VIII CONDITIONS TO OBLIGATIONS

54

Section 8.1

Conditions to the Obligations of the Transaction Parties

54

Section 8.2

Conditions to Obligations of the Buyers

54

Section 8.3

Conditions to the Obligations of the Sellers

55

Section 8.4

Frustration of Closing Conditions

56

Article IX INDEMNIFICATION

56

Section 9.1

Survival of Representations, Warranties and Covenants

56

Section 9.2

Indemnification

57

Section 9.3

Indemnification Procedures

59

Section 9.4

Limitations on Liability

61

Section 9.5

Purchase Price Adjustment

62

Section 9.6

Mitigation

62

Section 9.7

Exclusive Remedy

63

Section 9.8

Directors and Officer’s Indemnification

63

Article X TERMINATION

63

Section 10.1

Termination

63

Section 10.2

Effect of Termination

65

Article XI MISCELLANEOUS

66

Section 11.1

Seller Representative

66

Section 11.2

Buyer Representative

68

Section 11.3

Notices

69

 

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Section 11.4

Assignment

70

Section 11.5

Rights of Third Parties

70

Section 11.6

Expenses

70

Section 11.7

Counterparts

70

Section 11.8

Entire Agreement

70

Section 11.9

Disclosure Schedules

71

Section 11.10

Amendments

71

Section 11.11

Publicity

71

Section 11.12

Severability

71

Section 11.13

Governing Law; Jurisdiction

72

Section 11.14

Specific Performance

72

Section 11.15

No Consequential Damages

73

 

Exhibits

 

Exhibit A

 

Form of Assignment and Assumption Agreement

 

 

 

Exhibit B

 

Form of Letter of Credit

 

 

 

Exhibit C

 

Form of Seller Guaranty

 

 

 

Exhibit D

 

Form of Transition Services Agreement

 

iv

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Disclosure Schedules

 

Schedule 1.1(a)

 

—

 

Applicable Agreements

Schedule 1.1(b)

 

—

 

Current Assets

Schedule 1.1(c)

 

—

 

Current Liabilities

Schedule 1.1(d)

 

—

 

Knowledge Parties

Schedule 1.1(e)

 

—

 

Net Working Capital

Schedule 1.1(f)

 

—

 

Permitted Liens

Schedule 1.1(g)

 

—

 

Revenue Agreements

Schedule 3.3(a)

 

—

 

Seller and Portfolio Company Approvals

Schedule 3.3(b)

 

—

 

Lender Consents

Schedule 4.1(a)

 

—

 

Organizational Documents

Schedule 4.3

 

—

 

Capitalization; Subsidiaries

Schedule 4.4

 

—

 

Company Financial Statements

Schedule 4.4(a)

 

—

 

Certain Changes

Schedule 4.4(c)

 

—

 

Actions Since Financial Statement Date

Schedule 4.5

 

—

 

Real Property and Real Property Agreements

Schedule 4.6

 

—

 

Litigation

Schedule 4.7

 

—

 

Taxes

Schedule 4.8

 

—

 

Disclosed Contracts

Schedule 4.8(a)

 

—

 

Derivative Contracts

Schedule 4.9

 

—

 

Permits; Compliance with Laws

Schedule 4.10

 

—

 

Teton O&M Agreements

Schedule 4.11(a)

 

—

 

Environmental Reports

Schedule 4.11(b)

 

—

 

Environmental Issues

Schedule 4.11(c)

 

—

 

Environmental Permits

Schedule 4.11(d)

 

—

 

Environmental Emission Allocations, Allowances and Credits

Schedule 4.12

 

—

 

Company Policies

Schedule 4.13

 

—

 

Excluded Personal Property

Schedule 4.14

 

—

 

Sufficiency of Assets

Schedule 4.15

 

—

 

Bank Accounts

Schedule 4.16(c)

 

—

 

Non-Wholesale Sales

Schedule 4.17

 

—

 

Intellectual Property

Schedule 5.3

 

—

 

Buyer Approvals

Schedule 6.1(h)

 

—

 

Conduct of Business; Contracts

Schedule 6.1(k)

 

—

 

Conduct of Business; Capital Expenditures

Schedule 6.1(m)

 

—

 

Conduct of Business; Contingent Liabilities

Schedule 6.5

 

—

 

Regulatory Approvals

Schedule 6.8

 

—

 

Permits

Schedule 6.9

 

—

 

Property Covered by Title Commitments

Schedule 6.10

 

—

 

Credit Support Obligations

Schedule 6.12

 

—

 

O&M Agreements

Schedule 6.17

 

—

 

Affiliate Contracts

Schedule 6.21

 

—

 

Closing Consents

 

v

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PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of January 30,
2013, is entered into by and among:

 

(a)           (i) LAKE INVESTMENT, LP, a Delaware limited partnership (“Lake
Investment”), (ii) NCP LAKE POWER, LLC, a Delaware limited liability company
(“NCP Lake”), (iii) TETON NEW LAKE, LLC, a Delaware limited liability company
(“Teton New Lake”), (iv) NCP DADE POWER, LLC, a Delaware limited liability
company (“NCP Dade”), (v) DADE INVESTMENT, LP, a Delaware limited partnership
(“Dade Investment”), (vi) AUBURNDALE LP, LLC, a Delaware limited liability
company “(Auburndale LP”), and (vii) AUBURNDALE GP, LLC, a Delaware limited
liability company (“Auburndale GP”);

 

(b)           ATLANTIC POWER CORPORATION, a corporation continued under the laws
of the Province of British Columbia, Canada (“ATP,” or the “Seller
Representative”);

 

(c)           (i) QUANTUM LAKE LP, LLC, a Delaware limited liability company
(“Quantum Lake LP”), (ii) QUANTUM LAKE GP, LLC, a Delaware limited liability
company (“Quantum Lake GP”), (iii) QUANTUM PASCO LP, LLC, a Delaware limited
liability company (“Quantum Pasco LP”), (iv) QUANTUM PASCO GP, LLC, a Delaware
limited liability company (“Quantum Pasco GP”), (v) QUANTUM AUBURNDALE LP, LLC,
a Delaware limited liability company (“Quantum Auburndale LP”) and (vi) QUANTUM
AUBURNDALE GP, LLC, a Delaware limited liability company (“Quantum Auburndale
GP”); and

 

(d)           Quantum Utility Generation, LLC, a Delaware limited liability
company (the “Buyer Representative”).

 

Each of Quantum Lake LP, Quantum Lake GP, Quantum Pasco LP, Quantum Pasco GP,
Quantum Auburndale LP and Quantum Auburndale GP is referred to herein
individually as a “Buyer” and collectively as the “Buyers.”  Each of Lake
Investment, NCP Lake, Teton New Lake, NCP Dade, Dade Investment, Auburndale LP
and Auburndale GP is referred to herein individually as a “Seller” and
collectively as the “Sellers.” Each of the Sellers and the Buyers are referred
to herein individually as a “Transaction Party” and collectively as the
“Transaction Parties.”  Each of the Transaction Parties, the Seller
Representative and the Buyer Representative are referred to herein individually
as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, ATP indirectly owns 100% of the issued and outstanding equity interests
in each of the Sellers;

 

WHEREAS, Lake Investment owns a 48.9% limited partner interest in Lake Cogen,
Ltd., a Florida limited partnership (“Lake”), NCP Lake owns a 1% general partner
interest in Lake, and Teton New Lake owns a 50.1% limited partner interest in
Lake (collectively, the “Lake Interests”);

 

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

 

WHEREAS, NCP Dade owns a 2% general partner interest in Pasco Cogen, Ltd., a
Florida limited partnership (“Pasco”), and Dade Investment owns a 98% limited
partner interest in Pasco (collectively, the “Pasco Interests”);

 

WHEREAS, Auburndale GP owns a 1% general partner interest in Auburndale Power
Partners, Limited Partnership, a Delaware limited partnership (“Auburndale,”),
and Auburndale LP owns a 99% limited partner interest in Auburndale
(collectively, the “Auburndale Interests” and, together with the Lake Interests
and the Pasco Interests, the “Interests”);

 

WHEREAS, Lake is the owner of an approximately 121 MW (as defined herein)
dual-fuel, combined-cycle, cogeneration facility located in Umatilla, Florida
(the “Lake Facility”); Pasco is the owner of an approximately 121 MW dual-fuel,
combined-cycle facility located in Dade City, Florida (the “Pasco Facility”);
and Auburndale is the owner of an approximately 155 MW dual-fuel,
combined-cycle, cogeneration facility located in Polk County, Florida (the
“Auburndale Facility” and together with the Lake Facility and the Pasco
Facility, each a “Facility” and collectively, the “Facilities”);

 

WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, the Sellers desire to sell to the Buyers, and the Buyers desire to
purchase from the Sellers, all of the Interests.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows:

 

ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION

 

Section 1.1            Definitions.  As used herein, the following terms shall
have the following meaning:

 

“Adjustment Statement” has the meaning provided in Section 2.6(a).

 

“Administrative Services Agreement” means that certain Third Amended and
Restated Administrative Services Agreement dated as of September 30, 2009, by
and among Atlantic Power Holdings, Inc., a Delaware corporation (as successor in
interest to Atlantic Power Holdings, LLC) and Caithness Atlantic Services, as
amended by that certain First Amendment to Third Amended and Restated
Administrative Services Agreement dated as of December 29, 2011 (and as may be
further amended, modified or supplemented from time to time).

 

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with, such
specified Person through one or more intermediaries or otherwise.  For the
purposes of this definition, “control” means, where used with respect to any
Person, the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms
“controlling” and “controlled” have correlative meanings.

 

2

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“Affiliate Losses” has the meaning provided such term in Section 9.2(a)(iii).

 

“Agreement” has the meaning provided such term in the preamble to this
Agreement.

 

“Applicable Agreement” means any Contract that relates to any of the Facilities
or the Business pursuant to which credit support is currently being provided by
a Portfolio Company or any Affiliate of such Portfolio Company as of the date
hereof, all of which are set forth on Schedule 1.1(a).

 

“Applicable Portfolio Company” means (i) Lake, with respect to each of Lake
Investment, NCP Lake and Teton New Lake, (ii) Pasco, with respect to each of NCP
Dade and Dade Investment, and (iii) Auburndale, with respect to each of
Auburndale LP and Auburndale GP.

 

“Assignment and Assumption Agreement” means the Assignment and Assumption
Agreement to be executed by each of the Sellers and each of the Buyers at the
Closing, substantially in the form attached hereto as Exhibit A.

 

“ATP” has the meaning provided such term in the preamble to this Agreement.

 

“Auburndale” has the meaning provided such term in the recitals of this
Agreement.

 

“Auburndale Credit Agreement” means that certain Credit Agreement dated as of
November 21, 2008, between Auburndale and Union Bank of California, N.A.

 

“Auburndale Facility” has the meaning provided such term in the recitals of this
Agreement.

 

“Auburndale GP” has the meaning provided such term in the preamble to this
Agreement.

 

“Auburndale Interests” has the meaning provided such term in the recitals of
this Agreement.

 

“Auburndale LP” has the meaning provided such term in the preamble to this
Agreement.

 

“Audited Financial Statements” has the meaning provided such term in Section
4.4.

 

“Base Purchase Price” has the meaning provided such term in Section 2.2.

 

“Bill of Sale” means that certain Bill of Sale dated as of the date hereof by
and between Atlantic Power Generation, Inc., a Delaware corporation, and Lake
for the purchase of an automobile by Lake from Atlantic Power Generation, Inc.

 

“Books and Records” means all books and records relating to the Portfolio
Companies, the Facilities or the Business, whether maintained at the Facilities
or at any other location and whether in the possession or control of the
Sellers, the Portfolio Companies or any of their respective Affiliates,
including (a) sales and business records of the Portfolio Companies, (b) minute
books of the Portfolio Companies, (c) operating and maintenance records for the

 

3

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Facilities, (d) operating, safety and maintenance guides and manuals for the
Facilities, (e) engineering and design plans for the Facilities, (f) blueprints
and as-built plans for the Facilities, (g) records relating to Intellectual
Property owned by the Portfolio Companies, (h) service and warranty records, (i)
Permits, (j) records and filings made with any Governmental Authority regarding
the Business, (k) environmental reports, (l) NERC Documentation, (m) financial
and accounting records of the Portfolio Companies (which includes any available
supporting documentation such as invoices for operations and equipment, journal
entries, bank statements and details related to fixed assets), (n) customer
materials and records, (o) equipment logs, (p) records relating to Taxes and the
preparation of Tax Returns and (q) any and all bid or offer materials or
information relating to the Portfolio Companies or the Facilities.

 

“Business” means the business of owning and operating the Facilities in the
manner in which they are owned and operated by the Portfolio Companies,
including the generation and sale of electricity by the Portfolio Companies at
or from the Facilities, the receipt by the Portfolio Companies of natural gas
and the conduct of other activities by the Portfolio Companies incidental to the
foregoing.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in the city of Houston, Texas or Boston, Massachusetts,
are required or authorized by Law to remain closed.

 

“Buyer” or “Buyers” has the meaning provided such term in the preamble to this
Agreement.

 

“Buyer Approvals” has the meaning provided such term in Section 5.3.

 

“Buyer Fundamental Representations” has the meaning provided such term in
Section 9.4(b).

 

“Buyer Indemnified Parties” has the meaning provided such term in Section
9.2(a).

 

“Buyer Representative” has the meaning provided such term in the preamble to
this Agreement.

 

“Caithness” means Caithness Teton Operating Services, LLC, a Delaware limited
liability company, Caithness Atlantic Services, and their Affiliates.

 

“Caithness Atlantic Services” means Caithness Atlantic Services Company, LLC, a
Delaware limited liability company.

 

“Capital Expenditures” means expenditures made by any of the Sellers or any of
the Portfolio Companies to maintain the fixed assets, plant or equipment
(including any renewals, improvements or replacements) associated with any of
the Facilities, in each instance as typically capitalized by the Applicable
Portfolio Company and consistent with past practices.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. § 9601 et seq.

 

4

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“Claim Notice” has the meaning provided such term in Section 9.3(a).

 

“Closing” has the meaning provided such term in Section 2.4(a).

 

“Closing Adjustment” has the meaning provided such term in Section 2.5.

 

“Closing Date” has the meaning provided such term in Section 2.4(a).

 

“Closing Net Working Capital” has the meaning provided such term in Section
2.6(a).

 

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

 

“Company Financial Statements” has the meaning provided such term in Section
4.4.

 

“Company Policies” has the meaning provided such term in Section 4.12.

 

“Condemnation Value” has the meaning provided such term in Section 6.16(a).

 

“Confidential Information” has the meaning provided such term in Section 6.3(a).

 

“Confidentiality Agreement” means that certain Confidentiality Agreement, dated
as of August 23, 2012, by and between ATP, an affiliate of the Sellers, and
Quantum Utility Generation, LLC, an affiliate of the Buyers.

 

“Contract” means any legally binding agreement, arrangement, commitment, lease,
license or contract.

 

“Current Assets” means the current assets of each of the respective Portfolio
Companies, calculated in the same way and using the same methods as the
applicable line items on the respective balance sheet of each Portfolio Company,
specifically excluding: (i) any insurance policies of or on behalf of the
Portfolio Companies, (ii) any derivative assets, including interest rate swap
assets or interest rate swap settlements, and (iii) any spare parts and fuel
inventory of the Portfolio Companies.  Attached as Schedule 1.1(b), solely for
illustrative purposes, is a sample calculation of Current Assets for each of the
Portfolio Companies prepared by the Parties as of the Financial Statement Date.

 

“Current Liabilities” means the current liabilities of each of the respective
Portfolio Companies, calculated in the same way and using the same methods as
the applicable line items on the respective balance sheet of each Portfolio
Company, specifically excluding: (i) any non-cash liabilities associated with
derivative instruments, including interest rate swap assets or interest rate
swap settlements, (ii) intercompany payables among the Sellers and their
Affiliates, (iii) current indebtedness of Auburndale pursuant to the Auburndale
Credit Agreement and (iv) accrued interest.  Attached as Schedule 1.1(c), solely
for illustrative purposes, is a sample calculation of Current Liabilities for
each of the Portfolio Companies prepared by the Parties as of the Financial
Statement Date.

 

“Dade Investment” has the meaning provided such term in the preamble to this
Agreement.

 

5

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“Data Room” means the electronic documentation “file transfer protocol” (or
“FTP”) site established by ATP on behalf of the Sellers and made available to
the Buyers as of the last Business Day prior to the date hereof.

 

“Disclosed Contracts” has the meaning provided such term in Section 4.8(a).

 

“Disclosure Schedules” means the disclosure schedules attached hereto.

 

“Disputed Item” has the meaning provided such term in Section 7.6.

 

“Dollars” and “$” mean the lawful currency of the United States.

 

“Employee Benefit Plan” means the following: (a) any plan, fund or program that
provides health, medical, surgical, hospital or dental care or other welfare
benefits, or benefits in the event of sickness, accident or disability, or death
benefits, apprenticeship or other training programs, or day care centers,
scholarship funds, or prepaid legal services, (b) any plan, fund or program that
provides retirement income to employees or results in a deferral of income by
employees for periods extending to the termination of covered employment or
beyond, (c) any plan, fund or program that provides severance, unemployment,
vacation or fringe benefits (including dependent and health care accounts), (d)
any incentive compensation plan, deferred compensation plan, stock option or
stock-based incentive or compensation plan, or stock purchase plan, or (e) any
other “employee benefit plan” (as defined in Section 3(3) of ERISA, whether or
not subject to ERISA), and any other written or oral plan, agreement or
arrangement involving direct or indirect compensation including insurance
coverage, severance benefits, disability benefits, fringe benefits, pension or
retirement plans, profit sharing, deferred compensation, bonuses, stock options,
stock purchase, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement compensation.

 

“Environmental Claim” means any claim, action, cause of action, investigation or
notice by any Person alleging liability or potential liability (including
potential liability for investigatory tests, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from (i) the presence or
Release of any Hazardous Materials at any location, or (ii) any other
circumstance forming the basis of any violation, or alleged violation, of, or
liability or alleged liability under, any Environmental Law.

 

“Environmental Law” means any applicable Law relating to the protection of
public health and the environment and natural resources, including any
applicable provisions of the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. § 9601 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. § 5101 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. § 6901 et seq., the Clean Water Act, 33 U.S.C. § 1251 et
seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Toxic Substances Control
Act, 15 U.S.C. § 2601 et seq., the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. § 136 et seq., the Oil Pollution Act of 1990, 33
U.S.C. § 2701 et seq., the Emergency Planning and Community Right-to-Know Act of
1986 42 USC Section 11001 et seq. and all applicable analogous state or local
statutes or ordinances, including any applicable provisions of the Florida

 

6

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Electrical Power Plant Siting Act, 403.501-403.518 et seq., Florida Statutes,
and the regulations promulgated pursuant thereto.

 

“Environmental Permits” has the meaning provided such term in Section
4.11(b)(i).

 

“Environmental Reports” has the meaning provided such term in Section 4.11(a).

 

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

 

“Estimated Closing Net Working Capital” has the meaning provided such term in
Section 2.5.

 

“Facility” or “Facilities” has the meaning provided such term in the recitals of
this Agreement.

 

“FERC” has the meaning provided such term in Section 4.16(a).

 

“Final Adjustment Statement” has the meaning provided such term in Section
2.6(c).

 

“Final Closing Net Working Capital” has the meaning provided such term in
Section 2.6(c).

 

“Final Reconciliation Disputes” has the meaning provided such term in Section
2.6(c).

 

“Financial Statement Date” means September 30, 2012.

 

“FPA” has the meaning provided such term in Section 4.16(b).

 

“FPSC” means the Florida Public Service Commission.

 

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States.

 

“GE” has the meaning provided in Section 6.20(a).

 

“GE CSA” has the meaning provided in Section 6.20(a).

 

“GE Turbine Blades” has the meaning provided in Section 6.20(a).

 

“Governmental Authority” means any foreign, federal, national, regional, state,
municipal or local government, any political subdivision or any governmental,
judicial, public or statutory instrumentality, independent system operator,
electric reliability organization, tribunal, court, arbitral panel, agency, or
other regulatory bureau, authority, body or entity having legal jurisdiction
over the matter or Person in question.

 

“Hazardous Materials” means any hazardous waste as defined by 42 U.S.C. §
6903(5), any hazardous substance as defined by 42 U.S.C. § 9601(14), any
pollutant or contaminant as defined by 42 U.S.C. § 9601(33) or any toxic
substance, pollutant, contaminant, oil or hazardous

 

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material (including friable asbestos, urea formaldehyde insulation or
polychlorinated biphenyls), in each case regulated by any Environmental Laws.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.

 

“Indemnified Party” has the meaning provided such term in Section 9.3(a).

 

“Indemnifying Party” has the meaning provided such term in Section 9.3(a).

 

“Indenture” means that certain Indenture, dated as of November 4, 2011, by and
among ATP, the guarantors named therein and Wilmington Trust, National
Association.

 

“Independent Auditor” means a nationally recognized independent auditor that is
not the independent auditor for any Party or its respective Affiliates.

 

“Initial Reconciliation Disputes” has the meaning provided such term in Section
2.6(b).

 

“Intellectual Property” means the following intellectual property rights, both
statutory and, if applicable, common law rights: (a) registered and unregistered
copyrights, and applications for registration thereof, (b) registered and
unregistered trademarks, service marks, trade names, slogans, domain names,
logos, trade dress, and applications for registrations thereof, (c) patents, as
well as any reissued and reexamined patents and extensions corresponding to the
patents, and any patent applications, as well as any related continuation,
continuation in part and divisional applications and patents issuing therefrom,
(d) trade secrets, (e) know-how, and (f) any license, sub-license or other
authorization or right to use any of the foregoing.

 

“Interests” has the meaning provided such term in the recitals of this
Agreement.

 

“Interim Period” has the meaning provided such term in Section 6.1.

 

“IRS” means the United States Internal Revenue Service.

 

“Knowledge” or “Known” means actual knowledge of those individuals set forth on
Schedule 1.1(d), as applicable, after reasonable investigation of the applicable
Person’s direct reports.

 

“Lake” has the meaning provided such term in the recitals of this Agreement.

 

“Lake Facility” has the meaning provided such term in the recitals of this
Agreement.

 

“Lake Interests” has the meaning provided such term in the recitals of this
Agreement.

 

“Lake Investment” has the meaning provided such term in the preamble to this
Agreement.

 

“Law” means any applicable law, rule, regulation, ordinance, order, judgment or
decree of a Governmental Authority.

 

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“Lender Consents” has the meaning provided such term in Section 3.3(b).

 

“Letter Agreement” means that certain Letter Agreement, dated as of the date
hereof, by and among the Parties.

 

“Letter of Credit” means the letter of credit, substantially in the form
attached hereto as Exhibit B, issued to the Sellers on behalf of the Buyers in
the amount of $10,000,000.

 

“LIBOR” means the rate for any one-month loan appearing on Reuters Screen
LIBOR01 Page (or any successor page) as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London, England time) two (2)
Business Days prior to commencement of any period for which interest may be due
under this Agreement.

 

“Lien” means any charge, lien, pledge, option, encumbrance, mortgage, deed of
trust, hypothecation or security interest.

 

“Litigation” means any investigation or inquiry (in each case, with respect to
which written notice has been provided), action, claim, suit or proceeding by or
before any Governmental Authority.

 

“Losses” means all actual liabilities, losses, damages, fines, penalties,
judgments, settlements, awards, costs and expenses (including reasonable fees
and expenses of counsel, court or arbitration fees, and other costs and expenses
of investigation or defense).

 

“Material Adverse Effect” means, with respect to the Portfolio Companies, a
material adverse effect on the Business, operations, assets or condition
(financial or otherwise) of the Portfolio Companies, taken as a whole; provided,
however, that “Material Adverse Effect” shall exclude any adverse effect that
results or arises from: (i) any change generally affecting the industries or
markets in which any of the Portfolio Companies operates or conducts business,
including any changes generally affecting the markets for commodities or
supplies of the type used or produced by the applicable Facilities, (ii) any
change in national or international regulatory, economic or political
conditions, including (A) any engagement in or escalation of hostilities,
whether or not pursuant to the declaration of a national emergency or war, armed
hostilities, sabotage and the occurrence of any military or terrorist attack or
changes or additional security measures imposed by a Governmental Authority in
connection therewith, and (B) any general change in the financial, banking,
securities, currency, or financial markets, (iii) changes in industry standards,
Laws, regulatory policies or GAAP, (iv) changes in Tax or accounting
requirements or principles or the interpretation thereof, (v) any action taken
by any of the Portfolio Companies or their Affiliates at the request or with the
consent of the Buyers, (vi) any casualty loss or condemnation event subject to
Section 6.15 or Section 6.16, respectively, or (vii) the expiration of any
Contract according to its terms; provided, that “Material Adverse Effect” shall
not exclude any adverse effect described in clause (i), (ii), (iii) or (iv) that
has had a disproportionate effect on the Portfolio Companies as compared to
others similarly situated.

 

“MW” means megawatt, a standard term of measurement for bulk electricity.

 

“NCP Dade” has the meaning provided such term in the preamble to this Agreement.

 

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“NCP Lake” has the meaning provided such term in the preamble to this Agreement.

 

“NERC” means the North American Energy Reliability Corporation.

 

“NERC Documentation” means all documents related to or required by NERC with
respect to the Portfolio Companies or the Business, including any such
documentation providing evidence of NERC compliance (including descriptions of
and manuals for procedures and the compliance thereof).

 

“Net Working Capital” means an amount (which may be positive or negative) equal
to (a) Current Assets minus (b) Current Liabilities, all as calculated in
accordance with GAAP applied using the accounting principles, practices and
methods that were used in the preparation of the Company Financial Statements
and consistent with the methodology for each of the Portfolio Companies set
forth on Schedule 1.1(e), in each case, consistently applied.  Attached as
Schedule 1.1(e), solely for illustrative purposes, is a sample calculation of
Net Working Capital for each of the Portfolio Companies prepared by the Parties
as of the Financial Statement Date.

 

“Organizational Documents” means any charter, certificate of incorporation,
certificate of formation, certificate of limited partnership, articles of
association, bylaws, operating agreement, partnership agreement, limited
liability company agreement or similar formation or governing documents and
instruments.

 

“Outside Date” has the meaning provided such term in Section 10.1(f).

 

“Party” or “Parties” has the meaning provided such term in the preamble to this
Agreement.

 

“Pasco” has the meaning provided such term in the recitals of this Agreement.

 

“Pasco Facility” has the meaning provided such term in the recitals of this
Agreement.

 

“Pasco Interests” has the meaning provided such term in the recitals of this
Agreement.

 

“Percentage Ownership” means each Seller’s ownership percentage in its
Applicable Portfolio Company, as follows:  (i) with respect to Lake Investment,
a 48.9% limited partnership interest in Lake, (ii) with respect to NCP Lake, a
1% general partnership interest in Lake, (iii) with respect to Teton New Lake, a
50.1% limited partnership interest in Lake, (iv) with respect to NCP Dade, a 2%
general partnership interest in Pasco, (v) with respect to Dade Investment, a
98% limited partnership interest in Pasco, (vi) with respect to Auburndale LP, a
99% limited partnership interest in Auburndale, and (vii) with respect to
Auburndale GP, a 1% general partnership interest in Auburndale.

 

“Permits” means authorizations, licenses, permits, certificates, registrations
or filings issued by any Governmental Authority and necessary to conduct the
Business; provided, however, that rights of way and similar rights set forth in
the Real Property Agreements are not included in the definition of Permits.

 

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“Permitted Liens” means (a) Liens for current Taxes, impositions, assessments,
fees, rents or other governmental charges levied or assessed or imposed (i) not
yet due as of the Closing Date or (ii) being contested in good faith by
appropriate proceedings and for which adequate reserves have been established in
accordance with GAAP, (b) statutory Liens (including construction,
materialmen’s, warehousemen’s, mechanic’s, repairmen’s, landlord’s and other
similar Liens) arising in the ordinary course of business securing payments (i)
not yet delinquent or (ii) being contested in good faith by appropriate
proceedings and for which adequate reserves have been established in accordance
with GAAP, (c) restrictive covenants, easements, rights-of-way, including
utility rights-of-way, servitudes and similar burdens and defects, imperfections
or irregularities of title that do not, individually or in the aggregate,
materially interfere with the use of the property burdened thereby, (d)
purchase-money Liens arising in the ordinary course of business, (e) Liens
reflected in the Company Financial Statements, (f) pledges or deposits under
workers’ compensation legislation, unemployment insurance Laws or similar Laws,
(g) Liens set forth on Schedule 1.1(f), (h) Liens created by the Buyers or their
successors or assigns, and (i) other imperfections of title or Liens, if any,
that do not, individually or in the aggregate, materially detract from the value
of, or materially interfere with, the present use and enjoyment of the asset or
property subject thereto or affected thereby or the conduct of the Business.

 

“Person” means any individual, firm, corporation, partnership, limited liability
company, incorporated or unincorporated association, joint venture, joint stock
company, Governmental Authority or other entity of any kind.

 

“Portfolio Companies” means, collectively, Lake, Pasco and Auburndale.

 

“Portfolio Company Approvals” has the meaning provided such term in Section 4.2.

 

“Portfolio Company Lender Consents” has the meaning provided such term in
Section 4.2(b).

 

“Pre-Closing Tax Period” has the meaning provided such term in Section 7.1(a).

 

“Progress Energy” means Florida Power Corporation, d/b/a Progress Energy Florida
Inc.

 

“Prudent Industry Practices” means those practices, methods, equipment,
techniques, specifications and standards of safety and performance that are
commonly used by electric generation stations in the United States of America as
good, safe and prudent engineering and operating practices, which, in the
exercise of reasonable judgment in light of facts known at the time a particular
decision was made, would reasonably be expected to accomplish a desired result
at a reasonable cost in connection with the operation, maintenance, repair and
use of electric generating and other equipment, facilities and improvements of
such electric generation stations, with commensurate standards of safety,
performance, dependability, efficiency and economy having due regard for
applicable Laws, approvals from any Governmental Authority, recommendations or
requirements of original equipment manufacturers, requirements of any warranty
coverage and in compliance with all contractual obligations of the Portfolio
Companies and their Affiliates, and considering the state in which the Facility
is located and the type and size of the Facility.  “Prudent Industry Practices”
is not intended to be limited to the optimum

 

11

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practice, method or act to the exclusion of all others, but rather to be a
spectrum of possible practices, methods or acts having due regard for, among
other things, applicable Laws and approvals from any Governmental Authority.

 

“Purchase Price” has the meaning provided such term in Section 2.2.

 

“Purchase Price Allocation Schedule” has the meaning provided such term in
Section 7.5(a).

 

“Quantum Auburndale GP” has the meaning provided such term in the preamble to
this Agreement.

 

“Quantum Auburndale LP” has the meaning provided such term in the preamble to
this Agreement.

 

“Quantum Lake GP” has the meaning provided such term in the preamble to this
Agreement.

 

“Quantum Lake LP” has the meaning provided such term in the preamble to this
Agreement.

 

“Quantum Pasco GP” has the meaning provided such term in the preamble to this
Agreement.

 

“Quantum Pasco LP” has the meaning provided such term in the preamble to this
Agreement.

 

“Real Property” has the meaning provided such term in Section 4.5(a).

 

“Real Property Agreements” has the meaning provided such term in Section 4.5(b).

 

“Reference Date” means (i) with respect to Lake, November 18, 2004, (ii) with
respect to Pasco, November 18, 2004, and (iii) with respect to Auburndale,
November 21, 2008.

 

“Reimbursable Operating Expenses” means (i) any and all amounts payable by the
Applicable Portfolio Company to the Teton Operator pursuant to the applicable
Teton O&M Agreement, including without limitation, all management fees,
operating expenses, and any reimbursable expenses, and (ii) any administrative
services fees and any reimbursable expenses payable by any Affiliate of the
Sellers to Caithness Atlantic Services pursuant to the Administrative Services
Agreement to the extent that such amount is reimbursed to such Affiliate by the
Applicable Portfolio Company, in each case consistent with past practices.

 

“Release” means any release, spill, emission, leaking, pumping, pouring,
emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials in the outdoor
environment, including the movement of Hazardous Materials through or in the
air, soil, surface water, ground water or property.

 

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“Representatives” means, as to any Person, its officers, directors,
stockholders, members, partners, employees, counsel, accountants, financial
advisors, consultants and other representatives of such Person and such Person’s
Affiliates.

 

“Resolution Period” has the meaning provided such term in Section 2.6(c).

 

“Restoration Cost” has the meaning provided such term in Section 6.15(a).

 

“Revenue Agreements” means any tolling agreements, power purchase agreements,
steam agreements and other similar revenue-generating agreements to which a
Portfolio Company or any Affiliate of such Portfolio Company is a party that
relates to the Facilities or the Business, all of which are set forth on
Schedule 1.1(g).

 

“Schedule Supplement” has the meaning provided such term in Section 6.7.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“SEC” has the meaning provided such term in Section 6.3(b).

 

“Seller” or “Sellers” has the meaning provided such term in the preamble to this
Agreement.

 

“Seller Approvals” has the meaning provided such term in Section 3.3.

 

“Seller Fundamental Representations” has the meaning provided such term in
Section 9.4(a).

 

“Seller Guaranty” means a guaranty substantially in the form of Exhibit C.

 

“Seller Guarantor” means ATP.

 

“Seller Indemnified Parties” has the meaning provided such term in Section
9.2(b).

 

“Seller Representative” has the meaning provided such term in the preamble to
this Agreement.

 

“Straddle Period” has the meaning provided such term in Section 7.1(b).

 

“Survival Period” has the meaning provided such term in Section 9.1.

 

“Tax” or “Taxes” means (a) all federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Section 59A of
the Code), customs, duties, capital stock, franchise, margins, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, escheat, registration, value
added, wealth, net wealth, net worth, alternative or add-on minimum, estimated
or any other taxes, unclaimed property liabilities, any payments in lieu of
taxes or other similar payments, charges, fees, fines, levies, imposts, customs
or duties of any kind, whatsoever, including any interest, penalty, fines,

 

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or addition thereto, whether disputed or not and including any obligations to
indemnify or otherwise assume or succeed to the Tax liability of any other
Person or (b) any liability for the payment of any taxes, interest, penalty,
addition to tax or like additional amount resulting from the application of
Treasury Regulation Section 1.1502-6 or comparable federal, state or local Law.

 

“Tax Authority” means any Governmental Authority having jurisdiction over the
assessment, determination, collection or imposition of any Tax.

 

“Tax Contest” has the meaning provided such term in Section 7.4.

 

“Tax Proceeding” has the meaning provided such term in Section 7.2.

 

“Tax Return” means any return, declaration, report, claim for refund, property
rendition or information return or statement relating to Taxes, including any
schedule or attachment thereto and including any amendment thereof.

 

“Transaction Party” or “Transaction Parties” has the meaning provided such term
in the preamble to this Agreement.

 

“Transition Services Agreement” means the Transition Services Agreement by and
among the Parties, Atlantic Power Holdings, Inc., a Delaware corporation, and
the Portfolio Companies, including the Letter Agreement attached thereto as
Exhibit A, by and among Caithness Teton Operating Services, LLC and Caithness
Atlantic Services, on the one hand, and certain Affiliates of the Sellers, on
the other hand, each substantially in the form attached hereto as Exhibit D.

 

“Teton New Lake” has the meaning provided such term in the preamble to this
Agreement.

 

“Teton O&M Agreements” has the meaning provided such term in Section 4.10.

 

“Teton Operator” means Teton Operating Services, LLC, a Delaware limited
liability company.

 

“Third-Party Claim” has the meaning provided such term in Section 9.3(a).

 

“Third Party” means any Person other than (a) the Portfolio Companies, (b) any
Party, or (c) any Affiliate of the Portfolio Companies or any Party.

 

“Treasury Regulations” means the regulations promulgated by the United States
Treasury Department under the Code.

 

“Unaudited Financial Statements” has the meaning provided such term in Section
4.4.

 

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Section 1.2            Rules of Construction.

 

(a)           All article, section, schedule and exhibit references used in this
Agreement are to articles, sections, schedules and exhibits of or to this
Agreement unless otherwise specified.  The schedules and exhibits attached to
this Agreement constitute a part of this Agreement and are incorporated herein
for all purposes.  All references to “schedules” or “Schedules” herein shall be
deemed to be references to the Disclosure Schedules (or portion thereof, if
applicable) unless otherwise specified.

 

(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).  Terms defined in the singular have the corresponding meanings in the
plural, and vice versa.  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 term “includes” or “including” shall mean
“including without limitation.”  The words “hereof,” “hereto,” “hereby,”
“herein,” “hereunder” and words of similar import, when used in this Agreement,
shall refer to this Agreement as a whole and not to any particular section or
article in which such words appear.  The word “or” shall not be exclusive.

 

(c)           This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the
drafting Party or any Party causing any instrument to be drafted.

 

(d)           The captions and headings in this Agreement are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.

 

(e)           All references to currency herein shall be to, and all payments
required hereunder shall be paid in, Dollars.

 

(f)            All accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP.

 

(g)           Any event hereunder requiring the payment of cash or cash
equivalents on a day that is not a Business Day shall be deferred until the next
Business Day.

 

ARTICLE II
PURCHASE AND SALE; PURCHASE PRICE; CLOSING

 

Section 2.1            Purchase and Sale of Interests.  At the Closing, upon the
terms and subject to the conditions set forth in this Agreement, the Buyers
agree to purchase and acquire from the Sellers, and the Sellers agree to sell,
convey, assign, transfer and deliver to the Buyers, all of the Sellers’
respective rights, title and interests in and to the Interests, free and clear
of all Liens.

 

Section 2.2            Purchase Price.  The aggregate consideration (the
“Purchase Price”) to be paid by the Buyers to the Sellers hereunder shall be
$122,000,000 (the “Base Purchase Price”), as adjusted pursuant to Section 2.5
and Section 2.6.  The Purchase Price shall be payable to the Sellers in
consideration for the Interests.

 

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Section 2.3            Deliverables upon Execution.  Prior to or simultaneously
with the execution of this Agreement, (i) the Buyers shall have caused the
delivery of the Letter of Credit to the Seller Representative, which Letter of
Credit may be delivered by facsimile or electronic .pdf format; provided, that
the original Letter of Credit shall subsequently be delivered to the Seller
Representative within one (1) Business Day of execution of this Agreement; (ii)
Seller Guarantor shall have executed and delivered the Seller Guaranty to the
Buyer Representative, and such Seller Guaranty shall be in full force and
effect, and the representations and warranties of Seller Guarantor thereunder
shall be true and correct in all material respects; and (iii) all of the parties
to the Transition Services Agreement shall have executed and delivered to the
other parties the Transition Services Agreement, including Exhibit A thereto,
and it shall be in full force and effect.

 

Section 2.4            The Closing.

 

(a)           The closing of the transactions contemplated by this Agreement
(the “Closing”) shall take place at the offices of Andrews Kurth LLP, 600 Travis
Street, Suite 4200, Houston, Texas 77002, commencing at 10:00 a.m. Houston time
on the day that is two (2) Business Days after the date on which the last of the
conditions set forth in Article VIII below has been satisfied or waived (other
than those conditions that by their nature cannot be satisfied until the
Closing, but subject to the satisfaction or waiver of such conditions) or such
other date as the Buyer Representative and the Seller Representative may
mutually determine, or at such other time and place as shall be agreed by the
Buyer Representative and the Seller Representative (such date, the “Closing
Date”).  The Closing shall be deemed to have been consummated at 12:01 a.m.
Eastern time on the Closing Date.

 

(b)           At the Closing, the Seller Representative shall deliver, or cause
to be delivered, on behalf of and at the direction of the Sellers, to the Buyers
the following:

 

(i)            the Assignment and Assumption Agreement, duly executed by each of
the Sellers;

 

(ii)           copies of the Organizational Documents of each of the Sellers and
copies of the resolutions of the governing body of each of the Sellers
authorizing the consummation of the transactions contemplated by this Agreement,
in each case certified as of the Closing Date by an authorized officer of each
of the Sellers;

 

(iii)          certification of non-foreign status for, and executed by,
Atlantic Power Holdings, Inc., a Delaware corporation, in accordance with U.S.
Treasury Regulation § 1.1445-2(b)(2), in a form reasonably acceptable to the
Buyers;

 

(iv)          owners title insurance policies for each of the Facilities, as
described in Section 6.9(b);

 

(v)           the Letter of Credit and written notice from ATP and the Sellers
confirming their consent to the termination of the Letter of Credit in form and
substance reasonably acceptable to the Buyers;

 

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(vi)          evidence, in form and substance reasonably satisfactory to the
Buyers of the release of each of Lake and Pasco as a guarantor under the
Indenture;

 

(vii)         evidence, in form and substance reasonably satisfactory to the
Buyers, of (A) the release of each of the Portfolio Companies, the Interests and
the assets of each of the Portfolio Companies from any Liens under ATP’s
revolving credit facility, including any Liens created pursuant to the terms of
any pledge agreements, which release shall include (1) the filing of any UCC-3
termination statements in respect thereof and (2) to the extent that any
certificated securities are held as security, return of possession of
certificated securities and (B) a termination of such Portfolio Companies’
guaranties;

 

(viii)        (A) payoff letters or other evidence, in form and substance
satisfactory to the Buyers, evidencing that a portion of the funds delivered by
the Buyer Representative pursuant to Section 2.4(c)(ii) will satisfy all
liabilities under the Auburndale Credit Agreement at Closing and (B) releases
effective upon receipt of such funds in customary forms and otherwise in form
and substance reasonably satisfactory to the Buyers of all Liens relating to the
Auburndale Credit Agreement;

 

(ix)          (A) a good standing certificate or certificate of “active status,”
as applicable, of each of the Sellers and each of the Portfolio Companies,
issued by the Secretary of State of the applicable governing jurisdiction of
each of the Sellers and each of the Portfolio Companies and (B) a certificate
from the Secretary of State of the State of Florida stating that Auburndale is
registered as a foreign entity to do business in the State of Florida and has
active status therein, each certificate delivered pursuant to clauses (A) and
(B) to be as of a recent date not more than ten (10) days prior to the Closing
Date;

 

(x)           the certificate referred to in Section 8.2(k);

 

(xi)          executed documents, in form and substance reasonably satisfactory
to the Buyers, evidencing the resignation of, and release by, all officers,
directors, managers and similar Persons of the Portfolio Companies;

 

(xii)         an affidavit in recordable form signed by Auburndale stating that
the reference to “Auburndale Power Partners, L.P.” in the deed for the real
property owned in fee by Auburndale was an error and that Auburndale is the same
entity as “Auburndale Power Partners, L.P.”;

 

(xiii)        releases in customary forms and otherwise in form and substance
reasonably satisfactory to the Buyers of all Liens relating to any derivative
Contracts that any Portfolio Company is a party to, including any interest rate
swap Contracts; and

 

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(xiv)        such other certificates, instruments and documents as may be
reasonably requested by any Buyer to carry out the intent and purposes of this
Agreement.

 

(c)           At the Closing, the Buyer Representative shall deliver, or cause
to be delivered, on behalf of and at the direction of the Buyers, to the Sellers
the following:

 

(i)            the Assignment and Assumption Agreement, duly executed by each of
the Buyers;

 

(ii)           payment of an amount equal to the Base Purchase Price, as
adjusted pursuant to Section 2.5, by wire transfer of immediately available
funds, in Dollars, to the account or accounts designated by the Sellers to the
Buyers in writing at least two (2) Business Days prior to the Closing Date in
accordance with Section 2.2 and Section 2.5;

 

(iii)          the certificate referred to in Section 8.3(g); and

 

(iv)          such other certificates, instruments and documents as may be
reasonably requested by any Seller to carry out the intent and purposes of this
Agreement.

 

Section 2.5            Closing Payment Estimates.    At least five (5) Business
Days prior to the Closing Date, the Seller Representative shall prepare and
deliver or cause to be prepared and delivered to the Buyer Representative a
statement containing the Sellers’ good faith calculation, of the Net Working
Capital as of December 31, 2012 for each of the Portfolio Companies, based on
the Company Financial Statements (updated to include information from and
including the Financial Statement Date through December 31, 2012) and consistent
with the methodology for each of the Portfolio Companies set forth on Schedule
1.1(e), (collectively, the “Estimated Closing Net Working Capital”).  The
Sellers’ calculation of the Estimated Closing Net Working Capital shall be
determined in accordance with GAAP applied using the accounting principles,
practices and methods that were used in the preparation of the Company Financial
Statements and consistent with the methodology for each of the Portfolio
Companies set forth on Schedule 1.1(e).  The “Closing Adjustment” shall be an
amount equal to the Estimated Closing Net Working Capital for the Portfolio
Companies, (x) less the sum of (i) any distributions or dividends paid by the
Portfolio Companies between, and including, January 1, 2013 and the Closing
Date, (ii) any payments made by any of the Portfolio Companies to any of their
Affiliates between, and including, January 1, 2013 and the Closing Date to
settle intercompany account obligations (including indebtedness) but excluding
Reimbursable Operating Expenses and any amounts paid pursuant to the Bill of
Sale, (iii) any payments of principal and interest made by any of the Portfolio
Companies between, and including, January 1, 2013 and the Closing Date to repay
indebtedness of Auburndale pursuant to the Auburndale Credit Agreement, (iv) any
payments made by any of the Portfolio Companies between, and including,
January 1, 2013 and the Closing Date in connection with any derivative
Contracts, (v) any payments made by the Portfolio Companies between, and
including, January 1, 2013 and the Closing Date in connection with the retention
of any employees or staff of the Sellers, Caithness or any of their Affiliates
that provide services to the Facilities that have not been approved by the

 

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Buyers, and (vi) the amount of the actual rental expense for the leased units
incurred by any of the Portfolio Companies relating to the GE Turbine Blades but
in any event not to exceed $165,000 and (y) plus any capital contributions made
to any of the Portfolio Companies by any of the Sellers between, and including,
January 1, 2013 and the Closing Date. If the Closing Adjustment is a positive
number, the Base Purchase Price shall be increased by the amount of the Closing
Adjustment.  If the Closing Adjustment is a negative number, the Base Purchase
Price shall be reduced by the absolute value of the amount of the Closing
Adjustment.

 

Section 2.6            Post-Closing Payment Reconciliation.

 

(a)           Prior to or on the date that is ninety (90) days after the Closing
Date, the Buyer Representative shall prepare and deliver or cause to be prepared
and delivered to the Seller Representative a statement (the “Adjustment
Statement”) that shall set forth the Buyers’ good faith calculation of the Net
Working Capital as of December 31, 2012 for each of the Portfolio Companies,
based on the Company Financial Statements (updated to include information from
and including the Financial Statement Date through December 31, 2012) and
consistent with the methodology for each of the Portfolio Companies set forth on
Schedule 1.1(e) (collectively, the “Closing Net Working Capital”).  The Buyers’
calculation of the Closing Net Working Capital shall be determined in accordance
with GAAP applied using the accounting principles, practices and methods that
were used in the preparation of the Company Financial Statements and consistent
with the methodology for each of the Portfolio Companies set forth on Schedule
1.1(e).

 

(b)           After receipt of the Adjustment Statement, the Seller
Representative shall have thirty (30) days to review the factual basis,
mathematical calculations and accounting methods used therein.  On or prior to
the thirtieth (30th) day after receipt of the Adjustment Statement, the Seller
Representative shall deliver written notice to the Buyer Representative
specifying any disputed items (the “Initial Reconciliation Disputes”) and the
basis therefor and amount thereof.  If the Seller Representative fails to notify
the Buyer Representative of any Initial Reconciliation Disputes on or prior to
the thirtieth (30th) day after receipt of the Adjustment Statement, then all
calculations and valuations of the Closing Net Working Capital set forth on the
Adjustment Statement shall be deemed accepted by the Seller Representative and
the Sellers and shall be final, binding, conclusive and nonappealable for all
purposes of this Agreement.

 

(c)           If the Seller Representative notifies the Buyer Representative of
any Initial Reconciliation Disputes in accordance with Section 2.6(b), then the
Buyer Representative and the Seller Representative shall, over the fifteen (15)
days following the date of such notice (the “Resolution Period”), attempt in
good faith to resolve the Initial Reconciliation Disputes, and any written
resolution by them as to any disputed item shall be final, binding, conclusive
and nonappealable for all purposes of this Agreement.  If, at the conclusion of
the Resolution Period, the Buyer Representative and the Seller Representative
have not reached an agreement on the disputed items, then all Initial
Reconciliation Disputes then remaining in dispute (the “Final Reconciliation
Disputes”) shall be submitted by the Seller Representative and the Buyer
Representative to an Independent Auditor upon which the Buyer Representative and
the Seller Representative shall reasonably agree prior to expiration of the
Resolution Period.  All fees and expenses

 

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relating to the work, if any, to be performed by such Independent Auditor
pursuant to this Section 2.6 shall be borne by the Sellers, on the one hand, and
by the Buyers, on the other hand, based upon the percentage that the amount not
ultimately awarded to such Transaction Parties by such Independent Auditor bears
to the amount actually contested by such Transaction Parties in the Final
Reconciliation Disputes.  Except as provided in the preceding sentence, all
other costs and expenses incurred by the Transaction Parties in connection with
resolving any Final Reconciliation Disputes hereunder before such Independent
Auditor shall be borne by the Transaction Party incurring such cost and
expense.  With respect to each disputed line item of the Closing Net Working
Capital, such Independent Auditor’s final determination, if not in accordance
with the position of either the Seller Representative, on the one hand, or the
Buyer Representative, on the other hand, will not be in excess of the higher,
nor less than the lower, of the amounts advocated by the Buyer Representative in
its calculation of the Closing Net Working Capital or the corresponding amounts
claimed by the Seller Representative in the initial notice of any Initial
Reconciliation Disputes delivered by the Seller Representative pursuant to
Section 2.6(b).  For the avoidance of doubt, the Independent Auditor shall not
review any line item or make any determination with respect to any matter other
than the Final Reconciliation Disputes.  The Transaction Parties shall instruct
the Independent Auditor to render its reasoned written decision, acting as an
expert and not as an arbitrator, as soon as practicable but in no event later
than sixty (60) days after its engagement (which engagement shall be made no
later than ten (10) Business Days after the end of the Resolution Period).  Such
decision shall be determined in accordance with GAAP applied using the
accounting principles, practices and methods that were used in the preparation
of the Company Financial Statements and consistent with the methodology for each
of the Portfolio Companies set forth on Schedule 1.1(e), shall be set forth in a
written statement delivered to the Seller Representative and the Buyer
Representative and shall be final, binding, conclusive and nonappealable for all
purposes hereunder.  Notwithstanding anything else contained herein, no Party
may assert that any award issued by the Independent Auditor is unenforceable
because it has not been timely rendered.  The term “Final Adjustment Statement”
shall mean the definitive Adjustment Statement setting forth the final
determination of the Closing Net Working Capital (the “Final Closing Net Working
Capital”) and resulting from (i) agreement by the Seller Representative and the
Buyer Representative during the Resolution Period or otherwise, (ii) a deemed
acceptance pursuant to Section 2.6(b) or (iii) the determination by an
Independent Auditor in accordance with this Section 2.6(c).

 

(d)           If the Final Closing Net Working Capital is greater than the
Estimated Closing Net Working Capital, then the Buyers shall pay to the Sellers
an amount equal to such excess in the manner set forth in Section 2.6(f). 
Conversely, if the Final Closing Net Working Capital is less than the Estimated
Closing Net Working Capital, then the Sellers shall pay to the Buyers an amount
equal to such difference in the manner set forth in Section 2.6(f).

 

(e)           For purposes of calculating Closing Net Working Capital and
without limiting the provisions of Section 2.6(a) and the generality of
Section 6.2, during the period of any dispute contemplated in this Section 2.6,
the Buyers shall, and shall cause their Affiliates to, provide the Seller
Representative and its Representatives with

 

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reasonable access to the relevant Books and Records, facilities and employees,
and their accountants’ work papers, schedules and other supporting data during
normal business hours as may be reasonably requested by the Seller
Representative.

 

(f)           Any payment required pursuant to Section 2.6(d) shall be made by
wire transfer of immediately available funds, in Dollars, to the account or
accounts designated by the Seller Representative or the Buyer Representative, as
the case may be, within five (5) Business Days after the Final Adjustment
Statement is determined by (i) agreement by the Seller Representative and the
Buyer Representative during the Resolution Period or otherwise, (ii) a deemed
acceptance pursuant to Section 2.6(b) or (iii) the determination by an
Independent Auditor in accordance with Section 2.6(c).  Payments due pursuant to
Section 2.6(d) shall be paid to the applicable Parties together with interest on
the amount owed at a rate of interest equal to LIBOR (determined, as applicable,
at the Closing Date and at the end of each 30-day period thereafter) plus two
percent (2%) thereon (such interest accruing for the period commencing on, and
including, the Closing Date and continuing until, and excluding, the date of
payment).

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLERS

 

Each of the Sellers, severally and not jointly, hereby represents and warrants
to the Buyers solely with respect to itself, except with respect to references
to a specifically identified Seller, in which case only such specifically
identified Seller so represents and warrants, as of the date of this Agreement
and as of the Closing Date (except, in each case, where such representation and
warranty is made as of another specific date) as follows:

 

Section 3.1            Organization.  The Seller is a limited partnership or
limited liability company, as applicable, duly organized, validly existing and
in good standing under the Laws of the state of its formation.

 

Section 3.2            Authorization; Enforceability.  The Seller has the
requisite corporate, limited liability company or limited partnership, as
applicable, power and authority to conduct its business and to own, lease and
operate its properties, as presently conducted, owned or leased, and is duly
qualified to do business in each jurisdiction in which the nature of its
business or the location of its assets requires it to be so qualified.  The
Seller has the requisite corporate, limited liability company or limited
partnership, as applicable, power and authority to execute and deliver this
Agreement, to consummate the transactions contemplated hereby and to perform its
obligations hereunder.  The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized and approved by all requisite corporate, limited
liability company or limited partnership, as applicable, action on the part of
the Seller, and no other authorization on the part of the Seller is necessary to
authorize this Agreement.  This Agreement has been duly and validly executed and
delivered by the Seller and constitutes its valid and binding obligation,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar Laws relating to or
affecting creditors’ rights generally or general principles of equity.

 

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Section 3.3            No Conflict.

 

(a)           The execution, delivery and performance of this Agreement by the
Seller and the consummation of the transactions contemplated hereby by the
Seller, assuming all required filings, consents, approvals, authorizations and
notices required to be made, given or obtained by the Seller, as set forth on
Schedule 3.3 (collectively, the “Seller Approvals”), have been so made, given or
obtained, except with respect to any consent set forth on Schedule 6.21, do not
and will not:

 

(i)            conflict with or result in a violation of any provision of the
Organizational Documents of the Seller;

 

(ii)           violate any Law applicable to the Seller or the Business or
require any filing with, consent, approval or authorization of, or notice to,
any Governmental Authority, except for any filings required by FERC in its order
granting approval under FPA Section 203;

 

(iii)          require any consent under, constitute (with or without notice or
lapse of time or both) a default under, result in any breach or violation of, or
give any Person any rights of termination, acceleration or cancellation of, any
Contract to which the Seller or any of its Affiliates or any of its or their
assets, properties or businesses is bound; or

 

(iv)          result (with or without notice or lapse of time or both) in the
creation of any Lien on any of the Interests in the Seller’s Applicable
Portfolio Company;

 

(v)           except, with respect to clauses (b) and (c), for such violations,
defaults, terminations, accelerations, cancellations, conflicts, breaches or
defaults, or failures to make any such filing, obtain any such consent, approval
or authorization, or provide any such notice, which would not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the ability of the Seller to perform its obligations hereunder or to consummate
the transactions contemplated hereby.

 

(b)           Schedule 3.3(b) sets forth a list of all consents and waivers from
lenders and creditors of the Seller and its Affiliates required to consummate
the transactions contemplated herein (the “Lender Consents”) and all such Lender
Consents have been obtained by the Seller.

 

Section 3.4            Litigation.  There is no Litigation pending or, to the
Knowledge of the Seller or its Applicable Portfolio Company, threatened, that
seeks to prevent the consummation of the transactions contemplated hereby or
that would, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of the Seller to perform its obligations
hereunder or to consummate the transactions contemplated hereby.

 

Section 3.5            Brokers’ Fees.  No broker, finder, investment banker or
other Person is entitled to any brokerage fee, finders’ fee or other commission
in connection with the

 

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transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Seller, any of its Affiliates or its Applicable Portfolio
Company.

 

Section 3.6            Ownership of Interests.  The Seller holds of record and
owns beneficially, and holds good and valid title to, its respective Interests,
free and clear of any Liens.  The Interests constitute all of the partnership
interests of the Seller in its Applicable Portfolio Company and have been duly
authorized and validly issued and are fully paid and non-assessable.  The Seller
is not a party to any agreement or obligation (contingent or otherwise) to sell
or deliver any of the Interests, except as contemplated by this Agreement.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES
RELATING TO THE PORTFOLIO COMPANIES

 

Each of the Sellers, severally and not jointly, hereby represents and warrants
to the Buyers, except with respect to references to a specifically identified
Seller, in which case only such specifically identified Seller so represents and
warrants, as of the date of this Agreement and as of the Closing Date (except,
in each case, where such representation or warranty is made as of another
specific date) as follows:

 

Section 4.1            Organization.  The Applicable Portfolio Company is a
limited partnership duly organized, validly existing and in good standing under
the Laws of the State of Delaware or has active status under the Laws of the
State of Florida, as applicable, and has the requisite limited partnership power
and authority to own, lease and operate its assets and to conduct its portion of
the Business.  The Applicable Portfolio Company is duly qualified or licensed to
do business and is in good standing or has active status, as applicable, in each
jurisdiction in which the ownership or operation of its assets or the character
of its activities is such as to require such Portfolio Company to be so
qualified or licensed, and, in particular, Auburndale is duly qualified or
licensed to do business and has active status in the State of Florida.  Schedule
4.1(a) lists each of the Organizational Documents of the Applicable Portfolio
Company.

 

Section 4.2            No Conflict.

 

(a)           The execution, delivery and performance of this Agreement by the
Seller and the consummation of the transactions contemplated hereby by the
Seller, assuming all filings, consents, approvals, authorizations and notices
required to be made, given or obtained by the Applicable Portfolio Company, as
set forth on Schedule 3.3(a) (collectively, the “Portfolio Company Approvals”),
do not and will not:

 

(i)            conflict with or result in a violation of any provision of the
Organizational Documents of the Applicable Portfolio Company;

 

(ii)           violate any Law applicable to the Applicable Portfolio Company or
require any filing with, consent, approval or authorization of, or notice to,
any Governmental Authority, except for any filings required by FERC in its order
granting approval under FPA Section 203;

 

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(iii)          require any consent under, constitute (with or without notice or
lapse of time or both) a default under, result in any breach or violation of, or
give any Person any rights of termination, acceleration or cancellation of, any
Contract to which the Applicable Portfolio Company, or any of its assets,
properties or businesses, is bound; or

 

(iv)          result (with or without notice or lapse of time or both) in the
creation of any Lien under any Contract to which the Applicable Portfolio
Company, or any of its assets, properties or businesses, is bound;

 

except, with respect to clauses (b) and (c), for such violations, defaults,
terminations, accelerations, cancellations, conflicts, breaches or defaults, or
failures to make any such filing, obtain any such consent, approval or
authorization, or provide any such notice, which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b)           Schedule 3.3(b) sets forth a list of all consents and waivers from
lenders and creditors of the Applicable Portfolio Company and its Affiliates
required to consummate the transactions contemplated herein (the “Portfolio
Company Lender Consents”) and all such Portfolio Company Lender Consents have
been obtained by the Applicable Portfolio Company.

 

Section 4.3            Capitalization; Subsidiaries.

 

(a)           The Seller’s Interests in the Applicable Portfolio Company, as
well as the Applicable Portfolio Company’s legal name and place of formation,
are set forth on Schedule 4.3.  The Interests in the Applicable Portfolio
Company constitute all of the issued and outstanding partnership interests in
such Applicable Portfolio Company, and no Interests in the Applicable Portfolio
Company have been reserved for issuance upon exercise of outstanding options,
warrants or other similar rights.  There are no outstanding obligations of the
Applicable Portfolio Company to repurchase, redeem or otherwise acquire any of
the Interests in the Applicable Portfolio Company.  There are no options,
warrants, convertible securities, unit appreciation, phantom unit, profit
participation or other similar rights, agreements, arrangements or commitments
relating to the partnership interests (or other securities) of the Applicable
Portfolio Company that obligate the Applicable Portfolio Company to issue or
sell any partnership interests (or other securities) of the Applicable Portfolio
Company.  There are no voting trusts, voting agreements or similar agreements or
understandings with respect to any of the Interests in the Applicable Portfolio
Company.  Neither the Seller nor the Applicable Portfolio Company has violated
in any material respect any applicable federal or state securities laws in
connection with the offer, sale or issuance of any of the Interests in the
Applicable Portfolio Company.

 

(b)           The Applicable Portfolio Company does not have any subsidiaries or
own any equity interests in any other Person.

 

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Section 4.4            Financial Statements; No Undisclosed Liabilities. 
Schedule 4.4 sets forth true and complete copies of (a) the audited balance
sheet and related audited statements of operations, partners’ capital and cash
flows for Auburndale as of and for the fiscal years ended December 31, 2011 and
2010, (b) the audited balance sheet and related audited statements of
operations, partners’ capital and cash flows for Lake as of and for the fiscal
year ended December 31, 2011 (the financial statements referenced in
subparagraphs (a) and (b) collectively, the “Audited Financial Statements”),
(c) the unaudited balance sheet and related unaudited statements of operations
for Pasco as of and for the fiscal year ended December 31, 2011 and (d) the
unaudited balance sheet and related unaudited statements of operations of the
respective Portfolio Companies as of and for the period from January 1, 2012
through the Financial Statement Date (the financial statements referenced in
clauses (c) and (d) collectively, the “Unaudited Financial Statements,” and
together with the Audited Financial Statements, the “Company Financial
Statements”), in each case prepared in accordance with GAAP.  Except as
described in the notes thereto, the Company Financial Statements, together with
the related notes and schedules, have been prepared in conformity with GAAP
applied on a consistent basis and fairly present, in all material respects, the
financial position, results of operation and cash flows of each of the Portfolio
Companies as of the respective dates thereof or for the respective periods set
forth therein; provided, however, that the Unaudited Financial Statements are
subject to normal and recurring year-end adjustments and do not contain all of
the footnotes and schedules contained in the Audited Financial Statements. 
Except as set forth on Schedule 4.4(a), the Applicable Portfolio Company has no
debts, liabilities or obligations, secured or unsecured (whether accrued or
unaccrued, absolute, liquidated or unliquidated, executory, contingent or
otherwise and whether due or to become due) of a type required to be reflected
on a balance sheet (or the footnotes thereto) prepared in accordance with GAAP,
except (i) those that are reflected or reserved in the Unaudited Financial
Statements as of the Financial Statement Date and (ii) those that have been
incurred in the ordinary course of business since the Financial Statement Date
and which are not material in amount.  Since the Financial Statement Date:

 

(a)           Except as set forth on Schedule 4.4(a), no event, change, fact,
condition, circumstance, damage, destruction or loss (whether or not covered by
insurance) affecting the Business or the Applicable Portfolio Company has
occurred which has had, or would reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect.

 

(b)           Except as specifically contemplated by this Agreement, the
Applicable Portfolio Company has carried on its business in all material
respects in the ordinary and usual course of business consistent with past
practices.

 

(c)           Except as set forth on Schedule 4.4(c) and other than entering
into any intercompany obligations with any Affiliates that have been terminated
as of December 31, 2012, the Applicable Portfolio Company has not taken any
action or omitted to take any action that would have required any of the Buyers’
consent pursuant to Section 6.1 of this Agreement if such provisions had been in
effect at all times since the Financial Statement Date.

 

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Section 4.5            Real Property.

 

(a)           Schedule 4.5 sets forth, as of the date of this Agreement, a
complete and correct list of all real property owned in fee by the Applicable
Portfolio Company (the “Real Property”).  Except as set forth on Schedule 4.5,
(i) the Applicable Portfolio Company owns good and marketable title to its Real
Property, free and clear of Liens, except Permitted Liens, (ii) with respect to
the Real Property, the Applicable Portfolio Company has not leased or otherwise
granted any Person the right to use or occupy such Real Property or any material
portion thereof that is still in effect and (iii) the Applicable Portfolio
Company has not granted any outstanding options, rights of first refusal, rights
of first offer, rights of reverter or other third party rights to purchase any
of the Real Property.

 

(b)           Schedule 4.5 sets forth, as of the date of this Agreement, a
complete and correct list of all leases, easements and access agreements used by
the Applicable Portfolio Company in the conduct of the Business (the “Real
Property Agreements”).  Except as set forth on Schedule 4.5: (i) each Real
Property Agreement constitutes a valid, binding and enforceable obligation of
the Applicable Portfolio Company, and to the Knowledge of the Applicable
Portfolio Company and the Seller, each other party thereto, subject to
applicable bankruptcy, insolvency, moratorium or other similar Laws relating to
or affecting creditors’ rights generally or general principles of equity,
(ii) the Applicable Portfolio Company is not in material default or breach under
any Real Property Agreement and, to the Knowledge of the Applicable Portfolio
Company and the Seller, no other party thereto is in material default or breach
under any Real Property Agreement and no condition exists which, with notice or
lapse of time or both, would constitute a default under any Real Property
Agreement or by the Applicable Portfolio Company or, to the Knowledge of the
Applicable Portfolio Company or the Seller, any other party thereto, (iii) the
Applicable Portfolio Company has not subleased or otherwise granted to any
Person the right to use or occupy any property leased under any Real Property
Agreements, (iv) there are no claims affecting any such Real Property Agreement
made by the Seller or of which the Seller has received notice, and (v) the
Applicable Portfolio Company has good and valid rights in the Real Property
Agreements, free and clear of Liens, except Permitted Liens.

 

Section 4.6            Litigation.  Except as set forth on Schedule 4.6,
(a) there is no Litigation pending or, to the Knowledge of the Applicable
Portfolio Company or the Seller, threatened by any Person against or affecting
the Applicable Portfolio Company or any assets or properties thereof, and (b) to
the Knowledge of the Applicable Portfolio Company or the Seller, there is no
injunction, order or judgment issued by any Governmental Authority pending
against the Applicable Portfolio Company.

 

Section 4.7            Taxes.  Except as set forth on Schedule 4.7, (a) all
material Tax Returns required to be filed by the Applicable Portfolio Company
have been timely filed, all such Tax Returns have been prepared in material
compliance with all Laws and are true, correct and complete in all material
respects, (b) all Taxes required to be paid by the Applicable Portfolio Company
(whether or not shown to be due on such Tax Returns) have been timely paid,
(c) there are no Liens on any of the assets of the Applicable Portfolio Company
that have arisen as a result

 

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of any failure to pay any Taxes, other than any Permitted Liens, (d) the
Applicable Portfolio Company has withheld and paid all Taxes required to be
withheld and paid by it in connection with amounts paid or owing to any
employee, independent contractor, shareholder, member, partner or creditor of
the Applicable Portfolio Company, and all forms (including forms W-2 and 1099)
required with respect thereto have been properly completed and timely filed,
(e) there is no written claim pending by any applicable Tax Authority in
connection with any Tax Return of the Applicable Portfolio Company or its assets
and neither the Seller nor the Applicable Portfolio Company has any Knowledge of
any threatened audit, examination, investigation, or claim by any Tax Authority
against the Applicable Portfolio Company or its assets, (f) there are no
agreements or waivers providing for an extension of time with respect to the
filing of any Tax Returns of the Applicable Portfolio Company and none of the
Seller and the Applicable Portfolio Company has granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any Tax, imposed on the Applicable Portfolio Company, (g) at
Closing, the Applicable Portfolio Company will be classified for federal income
Tax purposes (and, where applicable, state income Tax purposes) as a disregarded
entity within the meaning of Treasury Regulations Section 301.7701-2(c)(2),
(h) no power of attorney that is currently in force has been granted with
respect to any matter relating to Taxes of the Applicable Portfolio Company,
(i) all of the property of the Applicable Portfolio Company that is subject to
property Tax has been properly listed and described, in all material respects,
on the property Tax rolls of the appropriate taxing jurisdiction for all periods
prior to Closing, and no portion of any of the Applicable Portfolio Company’s
property constitutes omitted property for property Tax purposes, (j) no claim
has ever been made by a Tax Authority in a jurisdiction where the Applicable
Portfolio Company does not file Tax Returns that the Applicable Portfolio
Company is or may be subject to taxation by that jurisdiction or the Applicable
Portfolio Company’s assets are or may be subject to such taxation, (k) the
Applicable Portfolio Company has not been a party to a transaction that is or is
substantially similar to a “reportable transaction,” within the meaning of
Treasury Regulation Section 1.6011-4(b), or any other transaction requiring
disclosure under analogous provisions of United States, state, local or foreign
Tax Law, (l) the entity or entities that own the Portfolio Companies that are
not classified as disregarded entities for federal income Tax purposes (and
where applicable, state income Tax purposes) are not foreign persons within the
meaning of Section 1445 of the Code, (m) there is no property or obligation of
the Applicable Portfolio Company, including uncashed checks to vendors,
customers or employees, non-refunded overpayments or credits, that is
escheatable or payable to any state or municipality under any applicable
escheatment or unclaimed property Laws or that may at any time become
escheatable to any state or municipality under any such Laws, (n) the Applicable
Portfolio Company has not elected at any time to be classified as an association
taxable as a corporation within the meaning of Treasury Regulation
Section 301.7701-3(a), and (o) the Applicable Portfolio Company does not have
any liability for the Taxes of any other Person as a transferee, by contract or
otherwise.

 

Section 4.8            Contracts.

 

(a)           Except as set forth on Schedule 4.8 or as entered into after the
date hereof in accordance with Section 6.1, there are no outstanding Contracts
(other than the Real Property Agreements) to which the Applicable Portfolio
Company is a party or by which the Applicable Portfolio Company is bound (or to
which an Affiliate of the Applicable Portfolio Company is a party or by which it
is bound and that relates to the applicable

 

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Facility, other than any Contracts that shall be terminated on or prior to
closing pursuant to Section 6.17): (i) other than Contracts addressed by
Section 4.8(a)(vii), (viii) and (xi) below, (A) that provide for the purchase or
sale of any asset or that grant a right or option to purchase or sell any asset,
other than in each case Contracts relating to assets with a nominal value of
less than $100,000 individually or $500,000 in the aggregate, and (B) for the
provision or receipt of any services or that grant a right or option to provide
or receive any services, other than in each case Contracts relating to services
with a nominal value of less than $100,000 individually or $500,000 in the
aggregate, (ii) that contain a covenant not to compete or other agreement
restricting the Applicable Portfolio Company from competing or engaging in any
line of business or competing in any geographic area, (iii) under which the
Applicable Portfolio Company has (A) created, incurred, assumed or guaranteed
(or may create, incur, assume or guarantee) any indebtedness for borrowed money,
(B) granted a Lien (other than a Permitted Lien) on its assets, whether tangible
or intangible, or agreed to any restriction or limitation on distributions,
dividends or return on equity, or extended credit to any Person (excluding trade
receivables in the ordinary course of business) or (C) given any guaranty of
payment or performance or any agreement to provide credit support or otherwise
make capital contributions, loans or advances, (iv) that constitute any current
Contract to which the Applicable Portfolio Company is a party for the purchase
or sale of any business, corporation, partnership, joint venture or other
business organization or that grant any Person a right of first refusal, right
of first offer or other preferential right to purchase any asset of the
Applicable Portfolio Company, (v) that are between or among the Applicable
Portfolio Company, on the one hand, and the Seller, any Affiliate of the Seller
(other than the Portfolio Companies) or any current or former officer, director,
equity owner or employee of the Seller or any of its Affiliates, on the other
hand, (vi) that provide employment, non-compete, severance, retention, change of
control, termination pay or other arrangements with any individual or employee,
excluding any that will terminate at or prior to Closing and that will not have
any financial or other impact on the Applicable Portfolio Company following
Closing, (vii) that provide the Applicable Portfolio Company the future right to
purchase, exchange or sell natural gas, (viii) that provide the Applicable
Portfolio Company the future right to purchase, exchange or sell electric power
or ancillary services, (ix) that constitute interconnection Contracts, (x) that
constitute transmission Contracts, (xi) that are for the transportation or
storage of natural gas, (xii) that are outstanding futures, swap, collar, put,
call, floor, cap, option or other similar Contracts, all of which are set forth
on Schedule 4.8, (xiii) under which the Applicable Portfolio Company has
created, incurred, assumed or guaranteed any capitalized lease obligation,
(xiv) that relate to material Intellectual Property, (xv) that are for
consulting services that, individually or through a series of Contracts, involve
payments to any Person (or its Affiliates) of more than Fifty Thousand Dollars
($50,000) over any one-year period and that are not terminable by their terms,
without penalty, on ninety (90) days or less notice, (xvi) that have been
entered into with any Governmental Authority and that relate to the payment or
nonpayment of any Taxes, (xvii) that settle or relate to the settlement of any
litigation with customers, (xviii) pursuant to which a Portfolio Company or any
Affiliate of such Portfolio Company has provided credit support with respect to
the Portfolio Companies or the Facilities, and (xix) that are any amendment,
supplement, restatement or other modification relating to any of the foregoing. 
Except as set forth on Schedule

 

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4.8 or as entered into after the date hereof in accordance with Section 6.1,
there are no outstanding Contracts to which an Affiliate of the Applicable
Portfolio Company is a party or by which it is bound and that relates to the
applicable Facility, other than any Contracts that shall be terminated on or
prior to closing pursuant to Section 6.17.  Contracts identified on Schedule 4.8
are hereafter referred to as the “Disclosed Contracts.”

 

(b)           Except as set forth on Schedule 4.8, (i) each Disclosed Contract
constitutes a valid, binding and enforceable obligation of the Applicable
Portfolio Company or, to the Knowledge of the Seller and the Applicable
Portfolio Company, each other party thereto, subject to applicable bankruptcy,
insolvency, moratorium or other similar Laws relating to or affecting creditors’
rights generally or general principles of equity, and (ii) none of the
Applicable Portfolio Company, any of its Affiliates or, to the Knowledge of the
Seller or the Applicable Portfolio Company, any other signatory is in default or
breach under any such Disclosed Contract.  Except as set forth on Schedule 4.8,
there does not exist any event that, with the giving of notice or the passage of
time or both, would constitute a breach or default by the Applicable Portfolio
Company, any of its Affiliates or, to the Knowledge of the Seller or the
Applicable Portfolio Company, any other signatory under any Disclosed Contract. 
No circumstance exists under or by virtue of any Disclosed Contract that (with
or without notice or lapse of time) would cause the creation of any material
Lien affecting the Applicable Portfolio Company or its assets.  All credit
support obligations of the Applicable Portfolio Company or any Affiliates of the
Applicable Portfolio Company with respect to the Applicable Portfolio Company or
the applicable Facility that are required by any Disclosed Contract are set
forth on Schedule 6.10 and such Schedule sets forth such credit support
obligations that are outstanding as of the date of this Agreement.

 

(c)           The Seller has made available to the Buyers complete and correct
copies of all Disclosed Contracts.

 

(d)           There are no material obligations under any Disclosed Contract
relating to prior periods of time that are due and owing and that have not been
performed.

 

(e)           The Applicable Agreements contain all credit support obligations
that are necessary to conduct the Business as currently conducted.

 

(f)            The Revenue Agreements are the only tolling agreements, power
purchase agreements, steam agreements or other similar revenue-generating
agreements that the Applicable Portfolio Company is a party to, and the
Applicable Portfolio Company and the applicable purchasing utilities have
received all required approvals from any Governmental Authority, including but
not limited to the FPSC necessary (x) to enter into such Revenue Agreements and
(y) to allow, pursuant to the terms of such approvals and the Revenue
Agreements, full recovery by the applicable purchasing utility party from its
customers of all payments that such purchasing utility party is required to make
to the Applicable Portfolio Company pursuant to the terms of such Revenue
Agreements.

 

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Section 4.9            Permits; Compliance with Laws.  Schedule 4.9 sets forth
all material Permits (other than Environmental Permits) held by the Applicable
Portfolio Company that are required for the Business.  Except as set forth on
Schedule 4.9, (a) such Permits constitute all of the material Permits required
for the Business, (b) all such Permits are in full force and effect, any
necessary renewals have been timely filed, and no action, claim or proceeding is
pending, nor to the Knowledge of the Seller or the Applicable Portfolio Company,
threatened, to suspend, revoke, or terminate any such Permit or declare any such
Permit invalid, (c) the Applicable Portfolio Company has complied with all such
Permits and has otherwise complied with all applicable Laws, in each case, in
all material respects, (d) the Applicable Portfolio Company has not received any
written notification alleging it is in violation of any of such Permits or Laws,
and (e) the Seller has provided the Buyers with complete and correct copies of
all such Permits.

 

Section 4.10          No Employees.  The Applicable Portfolio Company does not
have, nor will the Applicable Portfolio Company on the Closing Date have, nor
since the Reference Date has the Applicable Portfolio Company had, any
employees.  To the Knowledge of the Seller and the Applicable Portfolio Company,
the Applicable Portfolio Company has not at any time prior to the Reference Date
had any employees.  Except for any obligations of the Portfolio Companies for
operator-related costs specifically referenced by section as set forth on
Schedule 4.10, pursuant to those certain operations and maintenance agreements
between the Portfolio Companies and certain of the Sellers’ Affiliates, all of
which are set forth on Schedule 4.10 (the “Teton O&M Agreements”), the
Applicable Portfolio Company (a) does not have, nor can it reasonably be
expected to have, and since the Reference Date, the Applicable Portfolio Company
has not had, any liability with respect to any employees or former employees,
whether of the Seller, any of its Affiliates or otherwise, (b) does not have,
nor since the Reference Date has the Applicable Portfolio Company had, any
liability under any Employee Benefit Plan, and (c) is not subject to, nor can it
reasonably be expected to be subjected to, and since the Reference Date has not
been subject to, any Lien or liability under Title IV of ERISA.

 

Section 4.11          Environmental Matters.

 

(a)           The Seller has made available to the Buyers copies of all material
environmental reports in the possession of Seller or any of its Affiliates
relating to the applicable Facility, which reports are identified on Schedule
4.11(a) (the “Environmental Reports”).  To the Knowledge of the Seller, there
are no material environmental reports relating to the Facilities other than the
Environmental Reports.

 

(b)           Since the Reference Date, and at any time prior to the Reference
Date to the Knowledge of the Seller and the Applicable Portfolio Company, except
as set forth on Schedule 4.11(b) or as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect:

 

(i)            The Applicable Portfolio Company and the applicable Facility have
complied and currently are in compliance with all applicable Environmental Laws,
which compliance includes the possession of and compliance with the terms and
conditions of any Permits required under applicable Environmental Laws to
operate the Business as currently operated (collectively, “Environmental
Permits”).  There are not any proceedings pending, or, to the Knowledge of the

 

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Applicable Portfolio Company or the Seller, threatened against any Applicable
Portfolio Company or its Affiliates in respect of any of the Environmental
Permits.

 

(ii)           The Applicable Portfolio Company is not subject to, there is not
now and there has not been, any pending or, to the Knowledge of the Applicable
Portfolio Company or the Seller, threatened Environmental Claim (i) against the
Applicable Portfolio Company directly or indirectly or (ii) relating to the
Facilities or the Real Property, in each case, for which such Environmental
Claim remains unresolved.

 

(iii)          No Release of Hazardous Materials has occurred or to the
Knowledge of the Applicable Portfolio Company or the Seller, is threatened at,
on, under or from any location currently owned or leased by the Applicable
Portfolio Company or as a result of activities of the Applicable Portfolio
Company, in violation of any Environmental Laws, or in a manner that would
reasonably be expected to result in liability to the Applicable Portfolio
Company under any Environmental Law.

 

(iv)          The applicable Facility is not listed or proposed for listing on
the National Priorities List pursuant to CERCLA, or listed on the Comprehensive
Environmental Response Compensation Liability Information System List, or any
similar state list of sites.

 

(v)           The Applicable Portfolio Company is not subject to any settlement
agreements, consent orders, judgments and decrees in connection with any alleged
liability or violation arising under Environmental Law.

 

(c)           Schedule 4.11(c) sets forth all material Environmental Permits,
and the Seller has delivered to the Buyers complete and correct copies of all
such material Environmental Permits.

 

(d)           Schedule 4.11(d) sets forth all material environmental emission
allocations, allowances and credits held by, or attributable to, the Applicable
Portfolio Company as of a date not more than five (5) Business Days in advance
of the date of this Agreement.  Except as set forth on Schedule 4.11(d) or as
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, (A) all Environmental Permits held by the Applicable
Portfolio Company are in full force and effect, any necessary renewals have been
timely filed, and no action, claim or proceeding is pending, nor to the
Knowledge of the Applicable Portfolio Company or the Seller, threatened, to
suspend, revoke or terminate any Environmental Permit or declare any
Environmental Permit invalid, (B) since the Reference Date, and at any time
prior to the Reference Date to the Knowledge of the Seller and the Applicable
Portfolio Company, the Applicable Portfolio Company has complied with all
Environmental Permits held by the Applicable Portfolio Company other than any
such non-compliance that has been resolved, and (C) since the Reference Date,
and at any time prior to the Reference Date to the Knowledge of the Seller and
the Applicable Portfolio Company, the Applicable

 

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Portfolio Company has not received any written notification alleging it is in
violation of any of such Environmental Permits other than any such
non-compliance that has been resolved.

 

The representations and warranties of the Seller in this Section 4.11 are the
sole and exclusive representations and warranties of the Seller with respect to
environmental matters, Environmental Laws, Environmental Permits and Hazardous
Materials.

 

Section 4.12          Insurance.  Schedule 4.12 sets forth a list of all of the
policies of insurance carried as of the date of this Agreement by or on behalf
of the Applicable Portfolio Company that directly insure the Applicable
Portfolio Company, the applicable Facility, the Business or any material assets
of the Applicable Portfolio Company (collectively, the “Company Policies”). 
Schedule 4.12 sets forth a list of all pending claims under any Company
Policies.  All premiums due and payable under the Company Policies as of the
date of this Agreement have been paid in a timely manner, and the holders of
such policies are otherwise in material compliance with the terms and conditions
of each of the Company Policies.  No notice of cancellation or non-renewal of
any Company Policy has been received by the holders of such policies and there
is no claim under any Company Policy as to which coverage has been denied or
disputed by the underwriters or issuers thereof.

 

Section 4.13          Personal Property.  Except as otherwise indicated on
Schedule 4.13, (i) all tangible personal property used or held for use by the
Applicable Portfolio Company that is material to the Business is owned or leased
by the Applicable Portfolio Company, (ii) as to such tangible personal property
that is owned by the Applicable Portfolio Company, the Applicable Portfolio
Company has good and marketable title to such property, free and clear of all
Liens except Permitted Liens, and (iii) as to such tangible personal property
that is leased by the Applicable Portfolio Company, the Applicable Portfolio
Company has valid leasehold interests in such property, and no event has
occurred that constitutes, or that with the giving of notice or the passage of
time or both would constitute, a default by the Applicable Portfolio Company or
any other party thereto under any such lease.

 

Section 4.14          Business.  The Business is the only business operation
carried on by the Applicable Portfolio Company.  Except as set forth on Schedule
4.14, the Applicable Portfolio Company has, and as of the Closing will have, all
assets and rights necessary to conduct the Business in a manner substantially
consistent with the Applicable Portfolio Company’s past practices during 2011
and 2012.  Except as set forth on Schedule 4.14, the applicable Facility and the
machinery and equipment related to such Facility are in good and working order,
subject to normal wear and tear.

 

Section 4.15          Bank Accounts.  Schedule 4.15 sets forth an accurate and
complete list of the names and locations of banks, trust companies and other
financial institutions at which the Applicable Portfolio Company maintains bank
accounts or safe deposit boxes and the names of all Persons authorized to draw
thereon, make withdrawals therefrom or have access thereto.  Unless otherwise
requested by the Buyers, each such Person will no longer have such authority as
of the Closing.

 

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Section 4.16          Regulatory Status.

 

(a)           Pasco is an “exempt wholesale generator” within the meaning of the
Public Utility Holding Company Act of 2005, as amended, and Part 366 of the
regulations of the Federal Energy Regulatory Commission (“FERC”).  To the
Knowledge of the Applicable Portfolio Company or the Seller, there are no facts
that are reasonably likely to cause Pasco to lose its status as an “exempt
wholesale generator” within the meaning of the Public Utility Holding Company
Act of 2005, as amended, and Part 366 of FERC’s regulations.

 

(b)           Each of the Lake Facility and the Auburndale Facility is a
“qualifying facility” as such term is defined in Section 3(17)(A) of the Federal
Power Act, as amended (the “FPA”) pursuant to the self-recertifications filed on
July 11, 2008 in FERC Docket No. QF92-198 and on December 19, 2008 in FERC
Docket No. QF93-29, respectively.  To the Knowledge of the Applicable Portfolio
Company or the Seller, there are no facts that are reasonably likely to cause
the applicable Facility to lose its status as a “qualified facility” within the
meaning of Part 292 of FERC’s regulations.

 

(c)           Except as set forth on Schedule 4.16(c), all electrical output
from each of the Pasco Facility, the Lake Facility and the Auburndale Facility
is sold at wholesale, and none of the electrical output from the Facilities is
sold at retail to an ultimate consumer of electricity, such as a residential
consumer, a commercial or industrial consumer, or a governmental or
institutional consumer.

 

(d)           The Applicable Portfolio Company has received authorization from
FERC to charge market-based rates for wholesale sales of electric power,
capacity and ancillary services in a final order, no longer subject to rehearing
or appeal.  The Applicable Portfolio Company’s market-based rate authority is
not subject to any pending challenge, investigation, complaint or other
proceeding, and the Applicable Portfolio Company is in compliance in all
material respects with the requirements under the FPA, applicable to a “public
utility” with authority to sell wholesale electric power, capacity and ancillary
services at market-based rates.  To the Knowledge of the Applicable Portfolio
Company, there has been no action or conduct by any Person that would serve as
the basis for an investigation, complaint or proceeding against the Applicable
Portfolio Company or the applicable Facility before FERC.

 

Section 4.17          Intellectual Property.  Except as set forth on Schedule
4.17, the Applicable Portfolio Company owns all right, title and interest in and
to, or has valid licenses to use in the manner in which currently being used,
any Intellectual Property that is material to the Business, in each case free
and clear of all Liens except Permitted Liens.  The Applicable Portfolio Company
has not received any written claim, notice or correspondence alleging that
Applicable Portfolio Company or the Business is infringing or violating, or has
infringed, violated or misappropriated, any Intellectual Property, or
challenging the Applicable Portfolio Company’s ownership or use of, or rights
to, any Intellectual Property used in or material to the Business.  Neither the
Applicable Portfolio Company nor the Business is infringing or violating, or has
infringed, violated or misappropriated, any material Intellectual Property of
any Third Party and, to the Knowledge of the Applicable Portfolio Company or the
Seller, no Third Party is infringing

 

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or violating, or has infringed, violated or misappropriated, any material
Intellectual Property of the Applicable Portfolio Company.

 

Section 4.18          Books and Records.  The Seller has made available to the
Buyers a true, complete and correct copy of the Books and Records of the
Applicable Portfolio Company.  The Books and Records have been kept and
maintained in all material respects as required by applicable Laws.

 

Section 4.19          No Other Representations and Warranties. Except for the
representations and warranties of the Seller contained in this Agreement
(including the related portions of the Disclosure Schedules), neither the Seller
nor the Applicable Portfolio Company has made or makes any other express or
implied representation or warranty, either written or oral, on behalf of the
Seller or the Applicable Portfolio Company or otherwise, including any
representation or warranty as to the accuracy or completeness of any information
regarding the Applicable Portfolio Company furnished or made available to the
Buyers and their Representatives (including any information, documents or
material made available to the Buyers in the Data Room, management presentations
or in any other form in expectation of the transactions contemplated hereby) or
as to the future revenue, profitability or success of the Applicable Portfolio
Company, or any representation or warranty arising from statute or otherwise in
Law.

 

ARTICLE V
REPRESENTATIONS AND WARRANTIES RELATING TO THE BUYERS

 

Each of the Buyers, jointly and severally, hereby represents and warrants to the
Sellers as of the date of this Agreement and as of the Closing Date (except
where such representation or warranty is made as of another specific date) as
follows:

 

Section 5.1            Organization.  Each of the Buyers is a limited liability
company duly organized, validly existing and in good standing under the Laws of
the State of Delaware and has the requisite limited liability company power and
authority to own, lease and operate its assets and to conduct its business as
now being conducted.  Each of the Buyers is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the ownership or
operation of its assets or the character of its activities is such as to require
such Buyer to be qualified or licensed, except where the failure to be so
qualified or licensed would not reasonably be expected to have a material
adverse effect on each of the Buyers’ ability to perform its obligations
hereunder or to consummate the transactions contemplated hereby.

 

Section 5.2            Authorization; Enforceability.  Each of the Buyers has
the requisite limited liability company power and authority to execute and
deliver this Agreement, to consummate the transactions contemplated hereby and
to perform its obligations hereunder.  The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized and approved by all requisite limited
liability company action on the part of each of the Buyers, and no other
authorization on the part of any of the Buyers is necessary to authorize this
Agreement.  This Agreement has been duly and validly executed and delivered by
each of the Buyers and constitutes its valid and binding obligation, enforceable
against it in accordance with its terms,

 

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subject to applicable bankruptcy, insolvency, moratorium or other similar Laws
relating to or affecting creditors’ rights generally or general principles of
equity.

 

Section 5.3            No Conflict.  The execution, delivery and performance of
this Agreement by each of the Buyers and the consummation of the transactions
contemplated hereby by each of the Buyers, assuming all required filings,
consents, approvals, authorizations and notices set forth on Schedule 5.3
(collectively, the “Buyer Approvals”) required to be made, given or obtained by
it have been so made, given or obtained, do not and will not:

 

(a)           conflict with or result in a violation of any provision of the
Organizational Documents of any of the Buyers;

 

(b)          violate any Law applicable to any of the Buyers or require any
filing with, consent, approval or authorization of, or notice to, any
Governmental Authority, except for any filings required by FERC in its order
granting approval under FPA Section 203; or

 

(c)           require any consent under, constitute (with or without notice or
lapse of time or both) a default under, result in any breach or violation of, or
give any Person any rights of termination, acceleration or cancellation of, any
Contract to which any of the Buyers or any of their respective assets,
properties or businesses is bound;

 

except, with respect to clauses (b) and (c), for such violations, defaults,
terminations, accelerations, cancellations, conflicts, breaches or defaults, or
failures to make any such filing, obtain any such consent, approval or
authorization, or provide any such notice, which would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of any of the Buyers to perform its obligations hereunder or to
consummate the transactions contemplated hereby.

 

Section 5.4            Financial Ability; Solvency.  At Closing, the Buyers will
have sufficient immediately available funds to pay in cash the amount of the
Purchase Price and to consummate all of the transactions contemplated to occur
at Closing.

 

Section 5.5            Investment Representation.

 

(a)           The Buyers are acquiring the Interests for their own account as an
investment and not with a view towards any unlawful public distribution thereof,
including to sell, transfer or otherwise distribute all or any part thereof to
any other Person in any transaction that would constitute a “distribution”
within the meaning of the Securities Act.  The Buyers acknowledge that they can
bear the economic risk of their investment in the Interests, and are capable of
evaluating the merits and risks or an investment in all of the Interests.  The
Buyers understand and acknowledge that neither the offer nor sale of the
Interests has or will have been registered pursuant to the Securities Act or any
applicable state securities Laws or any other applicable securities Laws, that
all of the Interests will be characterized as “restricted securities” under
federal securities Laws and that, under such Laws and applicable regulations,
none of the Interests can be sold or otherwise disposed of without registration
under the Securities Act or an exemption thereunder.

 

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(b)           Each of the Buyers acknowledges that (i) it has been afforded
access to and the opportunity to inspect the Facilities and other due diligence
items made available by the Sellers with respect to the Portfolio Companies,
(ii) it has received materials that it deems necessary to make its determination
whether to proceed with the transactions contemplated hereby, and (iii) it is
not relying on any statements, representations or warranties made by the Sellers
or any Affiliate of the Sellers, whether in writing or orally, other than the
express representations and warranties of the Sellers in this Agreement.

 

Section 5.6            Broker’s Fees.  No broker, finder, investment banker or
other Person is entitled to any brokerage fee, finders’ fee or other commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of any of the Buyers or any of their
Affiliates.

 

Section 5.7            Litigation. There is no Litigation pending or, to the
Knowledge of any of the Buyers, threatened, that seeks to prevent the
consummation of the transactions contemplated hereby or that would, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the ability of each of the Buyers to perform its obligations hereunder or to
consummate the transactions contemplated hereby.

 

Section 5.8            Regulatory Status.  The Buyers are not public utility
holding companies within the meaning of the Public Utility Holding Company Act
of 2005 or, if the Buyers are public utility holding companies, each of the
Buyers is a public utility holding company solely by virtue of its ownership in
exempt wholesale generators, foreign utility companies or qualifying
facilities.  The Buyers are not public utilities within the meaning of the
Federal Power Act.

 

Section 5.9            HSR Act Matters.  The Ultimate Parent Entities (UPEs) of
the Buyers, as defined under 16 C.F.R. § 801.1(a)(3), which were newly formed
for purposes of the transactions contemplated by this Agreement, do not satisfy
the thresholds described in 15 U.S.C. § 18a(a)(2)(B)(ii).

 

ARTICLE VI
COVENANTS

 

Section 6.1            Conduct of Business (Pre-Closing).  During the period
from the date of this Agreement and continuing until the earlier of termination
of this Agreement pursuant to Section 10.1 or the Closing (the “Interim
Period”), the Sellers shall, and shall cause each of the Portfolio Companies to,
operate the Business in the ordinary course and use commercially reasonable
efforts to preserve intact the Business and relationships with Governmental
Authorities, employees, customers, suppliers and others having business
relationships with the Sellers, any of the Portfolio Companies and their
Affiliates related to the Business.  Notwithstanding the first sentence of this
Section 6.1, during the Interim Period, except as necessary to comply with
requirements under Auburndale Credit Agreement, without the prior written
consent of the Buyers (which consent shall not be unreasonably withheld,
conditioned or delayed), each of the Sellers shall not, and shall cause its
Affiliates not to, permit any Portfolio Company to:

 

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(a)           amend its Organizational Documents;

 

(b)           liquidate, dissolve, recapitalize or otherwise wind up such
Portfolio Company or any substantial portion of the Business;

 

(c)           change its accounting methods, policies or practices, except as
required by GAAP;

 

(d)           sell, assign, transfer, lease or otherwise dispose of any material
assets, except in the ordinary course of business;

 

(e)           merge or consolidate with, or purchase substantially all of the
assets or businesses of, or equity interests in, or make an investment in, any
Person;

 

(f)            issue or sell any equity interests, notes, bonds or other
securities of such Portfolio Company, or any option, warrant or right to acquire
the same;

 

(g)           declare, set aside, make or pay any dividends or distributions,
except cash dividends or cash distributions;

 

(h)           except (i) as required in case of any emergency, (ii) as required
to operate the Facilities in accordance with Prudent Industry Practices and
applicable Law or (iii) as set forth on Schedule 6.1(h), enter into any Contract
that if in effect on the date hereof would be a Disclosed Contract or Real
Property Agreement or terminate or materially amend, or settle or compromise any
material claim under any Disclosed Contract or Real Property Agreement;

 

(i)            amend any Tax Returns, or make any election, or take any position
in any Tax Returns of any of the Portfolio Companies that is inconsistent with
any such election or position previously made, adopted or taken with respect to
any of the Portfolio Companies, if such amendment, election, adoption or other
action reasonably could be expected to have an adverse Tax impact on a Portfolio
Company or any of the Buyers in a Tax period or portion thereof beginning after
the Closing Date;

 

(j)            amend or modify any material Permit (including any Environmental
Permit);

 

(k)           agree to make any Capital Expenditure, other than (i) Capital
Expenditures made in the ordinary course of business prior to Closing and not in
excess of $200,000, individually or in the aggregate, or (ii) any Capital
Expenditures set forth on Schedule 6.1(k);

 

(l)            enter into any Contract with any of its Affiliates;

 

(m)          except as set forth on Schedule 6.1(m), incur any indebtedness or
become contingently liable for any contingency or liability of others;

 

(n)           enter into a new line of business;

 

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(o)           fail to maintain in full force and effect insurance policies
covering the Facilities, in the form and amounts consistent with past practice;

 

(p)           enter into, or authorize Caithness or any of its Affiliates to
enter into, any Contract in connection with the retention of employees or staff
of the Sellers, Caithness or any of their Affiliates that provide services to
the Facilities that would create any obligations or liabilities of the Portfolio
Companies;

 

(q)           terminate the Transition Services Agreement; or

 

(r)            agree, whether in writing or otherwise, to do any of the
foregoing.

 

Section 6.2            Access.

 

(a)           Prior to the Closing Date, or if earlier, until the date this
Agreement is terminated pursuant to Section 10.1, each of the Sellers shall
afford (and shall cause their Affiliates and the Portfolio Companies to afford)
to the Buyers and their authorized Representatives reasonable access, during
normal business hours, to the properties (including the Facilities), books,
contracts and records of the Sellers and the Portfolio Companies with respect to
the Business, and to the appropriate officers and employees of the Sellers and
their Affiliates, in each case, as reasonably requested by the Buyer
Representative; provided, however, that such access shall only be upon
reasonable advance written notice to the Seller Representative and shall not
unreasonably disrupt personnel or operations of the Business and shall be at the
Buyers’ sole cost and expense and shall not include any invasive sampling of any
environmental media without the prior written consent of the Seller
Representative, which consent shall not be unreasonably withheld, conditioned or
delayed.  During the Interim Period, each of the Buyers and each of the Sellers
shall cooperate to allow the Buyers and their authorized Representatives to
visit the Facilities during normal business hours and confirm the presence of
the spare parts and equipment at the Facilities.  Knowledge acquired by the
Buyers in exercising their right to access pursuant to this Section 6.2 shall
not affect the Buyers’ right to claim indemnification in accordance with
Section 9.2(a)(i).  To the extent the Buyers, in exercising their rights of
access pursuant to this Section 6.2, obtain any third-party reports in
connection with any invasive sampling, the Buyers shall promptly provide copies
of such reports to the Seller Representative.

 

(b)           The Buyers shall indemnify, defend and hold harmless the Seller
Indemnified Parties, from and against any Losses incurred by such Seller
Indemnified Parties, as a result of, in respect of, or arising out of any injury
to any Person or property resulting from or relating to the activities of the
Buyer Representative  or its Representatives under this Section 6.2, other than
Losses resulting from or arising out of the gross negligence or willful
misconduct of such Seller Indemnified Party or the discovery of conditions or
defects by the Seller Indemnified Parties that already existed on or with
respect to the assets or properties of the Portfolio Companies at the time of
access by the Buyers (excluding any exacerbation of any such condition or defect
caused by any of the Buyers or their Representatives).

 

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Section 6.3            Confidentiality; Public Announcements.

 

(a)           The terms of the Confidentiality Agreement are hereby incorporated
by reference, and subject to Section 6.3(b) and Section 6.3(c) of this
Agreement, the Confidentiality Agreement shall continue in full force and effect
in accordance with its terms until the Closing, when it shall be automatically
terminated.  From and after the Closing, each of the Sellers shall, and shall
cause each of their Affiliates to, (i) treat and hold as confidential any
information concerning the business and affairs (including know-how and trade
secrets) of the Portfolio Companies (the “Confidential Information”), except
(A) as expressly permitted hereunder, (B) to the extent such information comes
into the public domain after the Closing through no fault of any of the Sellers,
any of their Affiliates or any Person to whom any of the Sellers released or
disclosed such information, or (C) to the extent such information was or becomes
available to any of the Sellers or any of their Affiliates after the Closing
Date on a non-confidential basis from a source other than one of the Portfolio
Companies or any of the Buyers or their Affiliates, (ii) refrain from using any
of the Confidential Information other than to prepare Taxes and pursue rights
under this Agreement, and (iii) deliver promptly to the Buyer Representative or
destroy, at the request and option of the Buyer Representative, all tangible
embodiments of the Confidential Information that are in the possession or under
the control of any of the Sellers or any of their Affiliates, and shall certify
such delivery or destruction upon request in a written certificate given by an
officer of each of the Sellers.  Each of the Sellers and their Affiliates
acknowledges and agrees that the Confidential Information is the property of the
Portfolio Companies; provided that the Sellers may retain one copy of the
Confidential Information that it shall treat as confidential pursuant to the
terms of this Section 6.3.  In the event that any of the Sellers or their
Affiliates is requested or required (by oral question or request for information
or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information, such Person shall notify the Buyer Representative promptly of the
request or requirement so that the Buyer Representative may seek an appropriate
protective order or waive compliance with the provisions of this Section 6.3. 
If, in the absence of a protective order or the receipt of a waiver hereunder,
such Person is, on the advice of counsel, compelled to disclose any Confidential
Information to any Governmental Authority or else stand liable for contempt,
such Person may disclose such Confidential Information to the tribunal; provided
that the Sellers shall use their commercially reasonable efforts to obtain, at
the expense and request of the Buyers or the Portfolio Companies, an order or
other assurance that confidential treatment shall be accorded to such portion of
the Confidential Information required to be disclosed as the Buyers or the
Portfolio Companies shall designate.

 

(b)           Notwithstanding anything to the contrary in this Agreement or the
Confidentiality Agreement, the Seller Representative, the Sellers, or any of
their Affiliates may file with the U.S. Securities and Exchange Commission (the
“SEC”) any summary or other information regarding this Agreement in any Form 8-K
or other SEC filing provided that the Seller Representative, the Sellers or any
of their Affiliates provide the Buyer Representative a reasonable opportunity to
review and provide comments thereon, and any of the Seller Representative, the
Sellers, or any of their Affiliates may, if

 

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required by Form 8-K, Form 10-Q or Form 10-K, file this Agreement (and any
exhibits hereto) as an exhibit to such Form 8-K, Form 10-Q or Form 10-K, as
applicable; provided, however, that the Disclosure Schedules to this Agreement
shall not be filed with the SEC unless such filing is required by the SEC.

 

(c)           Without giving at least five (5) Business Days’ prior notice and
obtaining the prior written approval of the Seller Representative (in the case
of a release or statement by any Buyer) or the Buyer Representative (in the case
of a release or statement by any Seller), no Party will issue, or permit any
agent or Affiliate of such Party to issue, any press releases or otherwise make,
cause or allow any agent or Affiliate of such Party to make, any public
statements with respect to this Agreement and the transactions contemplated
hereby or use the name of any Seller or Buyer or any of their respective
Affiliates (whether in connection with this transaction or otherwise), except
when such release or statement is deemed in good faith by the releasing Party to
be required by Applicable Law or under the applicable rules and regulations of a
stock exchange or market on which the securities of the releasing Party or any
of its Affiliates are listed.  In each case to which such exception applies, the
releasing Party will use its reasonable efforts to provide a copy of such
release or statement to the non-releasing Party prior to issuing such release or
statement and incorporate any reasonable changes which are suggested by the
Buyer Representative or the Seller Representative, as applicable.

 

Section 6.4            Third-Party Approvals.  From the date hereof through the
Closing Date, each of the Buyers and the Sellers shall, and shall each cause
their respective Affiliates to, use commercially reasonable efforts to obtain
all of the Buyer Approvals, Portfolio Company Approvals and Seller Approvals,
and maintain such approvals in full force and effect once obtained. 
Notwithstanding the foregoing or any other provision of this Agreement, none of
the Buyers or any of their Affiliates shall be obligated to make any payments or
otherwise pay any consideration to any Person, to commence or participate in any
Litigation or to offer or grant any accommodation to any Third Party in
connection with any such Buyer Approvals, Portfolio Company Approvals or Seller
Approvals.  Each Transaction Party shall use its commercially reasonable efforts
to cooperate with the reasonable requests of any other Transaction Party in
seeking to obtain as promptly as practicable all such Buyer Approvals, Portfolio
Company Approvals or Seller Approvals.  Neither the Sellers nor the Buyers shall
take, or cause to be taken, any action that they are aware or should reasonably
be aware would have the effect of delaying, impairing or impeding the receipt of
any such Buyer Approvals, Portfolio Company Approvals or Seller Approvals.

 

Section 6.5            Closing Conditions; Regulatory Filings.  From the date of
this Agreement until the Closing, each of the Buyers and the Sellers shall, and
shall cause their respective Affiliates to, use commercially reasonable efforts
to take such actions as are necessary to expeditiously satisfy the closing
conditions set forth in this Agreement and to cause the Closing to occur, as
promptly as practicable, including to: (a) make or cause to be made the filings
required of such Transaction Party or any of its Affiliates under any Laws with
respect to the transactions contemplated by this Agreement, all of which are set
forth on Schedule 6.5 as promptly as is reasonably practicable, and in any event
within ten (10) Business Days after the date hereof, and to pay any fees due
from it in connection with such filings, (b) cooperate with

 

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the other Parties and furnish all information in such Transaction Party’s
possession or in the possession of such Transaction Party’s Affiliates that is
necessary in connection with any other Transaction Party’s filings, (c) use
commercially reasonable efforts to cause the expiration of the notice or waiting
periods under the HSR Act, if applicable, and any other Laws with respect to the
transactions contemplated by this Agreement as promptly as is reasonably
practicable, (d) promptly inform the other Parties of any communication from or
to, and any proposed understanding or agreement with, any Governmental Authority
in respect of such filings, and permit the other Transaction Parties to review
in advance any proposed communication by such Transaction Party or its
Affiliates to any Governmental Authority, (e) consult and cooperate with the
other Transaction Parties in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments and opinions made or submitted by or
on behalf of any Transaction Party or its Affiliates in connection with all
meetings, actions and proceedings with Governmental Authorities relating to such
filings, (f) comply, promptly as is reasonably practicable, with any requests
received by such Transaction Party or any of its Affiliates for additional
information, documents or other materials in connection with such filings,
(g) use commercially reasonable efforts to resolve any objections as may be
asserted by any Governmental Authority with respect to the transactions
contemplated by this Agreement, and (h) use commercially reasonable efforts to
contest and resist any action or proceeding instituted (or threatened in writing
to be instituted) by any Governmental Authority challenging the transactions
contemplated by this Agreement as being in violation of any Law.  In connection
with filings to be made and actions taken under the HSR Act, if any, the Buyers,
on the one hand, and the Sellers, on the other hand, shall each bear half of the
filing fees with respect thereto; provided, however, each Transaction Party
shall bear its own attorneys’ fees and expenses otherwise incurred in connection
with any filings, including as a result of any investigation or Litigation
initiated by the Department of Justice Antitrust Division or the Federal Trade
Commission.  None of the Transaction Parties to this Agreement shall agree to
participate in any meeting with any Governmental Authority in respect of any
filings, investigation or other inquiry unless it consults with the other
Transaction Parties in advance and, to the extent permitted by such Governmental
Authority, gives the other Transaction Parties the opportunity to attend and
participate at such meeting.  Subject to the Confidentiality Agreement,
(i) prior to transmitting any material to any Governmental Authority or members
of its staff, each Transaction Party shall permit counsel for the other
Transaction Parties a reasonable opportunity to review and provide comments
thereon, and consider in good faith the views of the other Transaction Parties
in connection with, any proposed written communication to any Governmental
Authority (or members of their respective staffs) to the extent permitted by
Law, and (ii) the Transaction Parties will provide each other with copies of all
correspondence, filings or communications between them or any of their
representatives, on the one hand, and any Governmental Authority or members of
its staff, on the other hand, with respect to this Agreement and the
transactions contemplated hereby; provided, however, that each Transaction Party
may redact from any filings provided to the other Transaction Parties hereunder,
and shall not be required to provide any materials or information hereunder, to
the extent such filings, materials or information relate solely to the redacting
Transaction Party and not to the Portfolio Companies or the transactions
contemplated hereby.  Notwithstanding any other provisions of this Agreement, no
Transaction Party or its Affiliates will have any obligation to resolve any
objections of any Governmental Authority to the transactions contemplated
hereby, to agree to any divestitures of the assets, properties or rights of the
Portfolio Companies, such Transaction

 

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Party or any Affiliates of either of the foregoing, or to enter into any “hold
separate” or similar agreements or agree to any other changes to the business,
operations or activities of such Party or any of its Affiliates.

 

Section 6.6            No Solicitation.  During the Interim Period, each of the
Sellers shall not and shall cause their Affiliates and officers, directors and
employees not to, and each of the Sellers shall direct and use their
commercially reasonable efforts to cause their and their Affiliates’ other
Representatives not to, directly or indirectly, initiate, solicit, entertain or
negotiate, enter into an agreement with respect to, or provide nonpublic or
confidential information to facilitate, any proposal or offer with respect to
any sale, redemption, disposition, reorganization, exchange, consolidation or
similar transaction directly or indirectly involving the Portfolio Companies, or
any purchase of any voting or other securities or partnership interests of the
Portfolio Companies in a single transaction or a series of related transactions,
or any combination of the foregoing.

 

Section 6.7            Update Information.  Prior to the Closing, the Buyer
Representative, on the one hand, and the Seller Representative, on the other
hand, shall give the other Party prompt written notice of any development that
is reasonably likely to result in a failure of a condition to the Closing.  From
time to time prior to the Closing, the Sellers shall supplement or amend the
Disclosure Schedules hereto with respect to any matter (regardless of whether
such matter arose prior to, on or after the date hereof) if necessary to remedy
any inaccuracy of any representation or warranty of any of the Sellers (each a
“Schedule Supplement”); provided that, except as specifically provided in this
Section 6.7, no Schedule Supplement shall be deemed to be incorporated into or
to supplement, amend or modify the Disclosure Schedules.  In the event the
Sellers notify the Buyer Representative that such event, development or
occurrence which is the subject of the Schedule Supplement arose after the date
of this Agreement and was not the result of a breach of this Agreement by the
Sellers and constitutes or relates to something that has had a Material Adverse
Effect, then the Buyers shall have the right to terminate this Agreement for
failure to satisfy the closing condition set forth in Section 8.2(b); provided,
that if the Buyers have the right to, but do not elect to terminate this
Agreement and the Closing occurs, then (i) the Buyers shall be deemed to have
irrevocably waived any right to terminate this Agreement with respect to the
matters specifically set forth in such Schedule Supplement that constituted or
otherwise had a Material Adverse Effect, (ii) such Schedule Supplement shall be
deemed to be incorporated into and to supplement, amend and modify the
Disclosure Schedules, and (iii) the Buyers shall have irrevocably waived their
rights to indemnification under Section 9.2 solely with respect to the matters
specifically set forth in such Schedule Supplement.  For purposes of clarity,
the Buyers and the Sellers acknowledge and agree that any Schedule Supplement
that reflects an event, development or underlying occurrence that either
(A) occurred prior to the execution of this Agreement and should have been set
forth on the Disclosure Schedules as of the execution of this Agreement or
(B) that does not give the Buyers the right to terminate the Agreement for
failure to satisfy the closing condition set forth in Section 8.2(b) shall be
deemed to have been provided for information purposes only and shall not be
deemed to cure any breach of this Agreement or affect the conditions to Closing
or indemnification rights set forth in this Agreement.

 

Section 6.8            Permits.  Each Transaction Party shall promptly provide
all notices and otherwise take all commercially reasonable actions required to
transfer or reissue the Permits set

 

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forth on Schedule 6.8, which constitute all of the Permits (including
Environmental Permits) that need to be transferred or reissued so that the
Portfolio Companies can operate the Business upon the Closing in a manner
consistent with the Portfolio Companies’ past practices during 2011 and 2012. 
Each Transaction Party shall use commercially reasonable efforts to effect any
such transfer or reissuance, including cooperating with the other Transaction
Parties and furnishing all information in such Transaction Party’s possession
that is necessary in connection therewith.

 

Section 6.9            Survey and Title.

 

(a)           Each of the Sellers shall cause to be procured and delivered to
the Portfolio Companies and the Buyers as soon as reasonably practicable
following the execution of this Agreement one or more plats of survey prepared
and certified in accordance with (i) the Florida minimum technical standards for
surveying and mapping and (ii) the Minimum Standard Detail for ALTA/ACSM Land
Title Surveys (2012) in respect of the Real Property, including (x) Table A
items 1, 2, 3, 4, 6(b), 7, 8, 9, 11(b), 13, 16, 17, 18, 19, 20 and 21 and
(y) the Real Property Agreements and the plant improvements located on the Real
Property and the real property subject to the Real Property Agreements.  The
Sellers, on the one hand, and the Buyers, on the other hand, shall each bear
fifty percent (50%) of any costs and expenses associated with the preparation
and delivery of such surveys.

 

(b)           As soon as reasonably practicable following the execution of this
Agreement, each of the Sellers shall cause a commitment for title insurance for
each of the Portfolio Companies to be issued by a nationally recognized title
company reasonably acceptable to the Buyers, addressing the status of title of
the Real Property and the Real Property Agreements described on Schedule 6.9 for
the Applicable Portfolio Company.  Such commitments for title insurance
(i) shall be subject to no condition to the issuance of title policies
thereunder other than payment of the initial premium, (ii) shall include
endorsements for survey coverage, access, contiguity and such other endorsements
as may be reasonably requested by the Buyers, and (iii) shall include a
nonimputation endorsement for matters known to the Sellers with the Sellers
providing, or causing to be provided, to the title company the necessary owner
affidavits and nonimputation indemnity required to provide nonimputation
coverage to the Buyers under the applicable owners title insurance policies. 
The Buyers on the one hand, and the Sellers, on the other hand, shall each bear
half of the costs, expenses and premiums associated with procuring an owners
title insurance policy for each of the Portfolio Companies in an amount to be
mutually agreed upon by the Parties (and in the aggregate for all Portfolio
Companies in an amount equal to the Base Purchase Price) issued pursuant to such
commitments for title insurance or otherwise.

 

Section 6.10          Applicable Agreements.  The Buyers recognize that certain
Affiliates of the Portfolio Companies have provided credit support with respect
to the Portfolio Companies or the Facilities in satisfaction of the credit
support obligations under the Applicable Agreements, all of which support
obligations that are outstanding as of the date hereof being set forth on
Schedule 6.10.  On or prior to the Closing Date, the Buyers shall, or shall
cause their Affiliates to, provide replacement credit support on behalf of the
Portfolio Companies with respect to such Applicable Agreements, all on terms and
conditions required pursuant to the respective

 

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Applicable Agreement and reasonably acceptable to the counterparty to such
Applicable Agreement; provided, that, if any counterparty to such Applicable
Agreement has not accepted the Buyers’ replacement credit support, then the
Buyers shall have the right to extend the Outside Date as provided for in
Section 10.1.  The Buyers shall use their commercially reasonable efforts to
(i) provide to the Seller Representative, on or prior to the Closing Date,
written evidence of acceptance of such replacement credit support by the
counterparty to such Applicable Agreement in exchange for the existing credit
support and (ii) provide to the Seller Representative, on or prior to the
Closing Date, evidence of arrangements for the prompt return of the existing
credit support to the Seller Representative.  The Sellers shall, and shall cause
their Affiliates to, use commercially reasonable efforts to assist and cooperate
with the Buyers in interacting with the applicable counterparties for the
purpose of the Buyers, or their Affiliates, providing the replacement credit
support on behalf of the Portfolio Companies with respect to any of the
Applicable Agreements.

 

Section 6.11          Off-Site Assets.  Each of the Sellers shall deliver or
cause to be delivered to the Facilities prior to the Closing Date all spare
parts, equipment, inventory and other assets allocated for use by the Facilities
that are not located at the Facilities, other than any spare parts, equipment,
inventory and other assets that may be under the custody and control of a third
party service provider for purposes of storage, repair or maintenance; provided,
that such assets are held by such third party service provider for the benefit
of, and use by, the Facilities.

 

Section 6.12          Reserved.

 

Section 6.13          Records.  As soon as reasonably practicable following the
Closing Date, but in no event more than ten (10) days after the Closing Date,
the Seller Representative shall deliver to the Buyer Representative or cause to
be present at the Facilities, all Books and Records; provided, however, that
each of the Sellers shall cause all NERC Documentation required to be maintained
in respect of the Facilities to be present at the Facilities on the Closing
Date.

 

Section 6.14          Insurance.  Each of the Sellers shall, and shall cause
their Affiliates to, maintain or cause to be maintained in full force and effect
the insurance policies described on Schedule 4.12 until the Closing Date.  All
such insurance coverage shall be terminated as of the Closing Date.  The Buyers
shall be solely responsible for providing insurance to the Portfolio Companies
for any claims related to events or occurrences after the Closing Date.  Upon
the Closing, the Buyers shall be entitled to any cash recoveries received by
ATP, its Affiliates or the Portfolio Companies with respect to any of the
Portfolio Companies after the date of this Agreement.

 

Section 6.15          Casualty.

 

(a)           If any assets or properties of the Portfolio Companies are damaged
or destroyed by any casualty loss event or events after the date hereof and
prior to the Closing Date, and the total cost of restoring such damaged or
destroyed assets or properties to a condition reasonably comparable to their
prior condition (such costs with respect to such assets or properties, along
with all expected lost revenues of the Portfolio Companies associated with such
casualty loss constituting capacity payments under the

 

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Revenue Agreements, after giving effect to any Third-Party insurance coverage
under which the insurer has accepted the claim for such costs, the “Restoration
Cost”) is greater than Five Hundred Thousand Dollars ($500,000) but does not
exceed ten percent (10%) of the Base Purchase Price and such restoration can be
made without material uninsured impairment to the Business, the Seller
Representative may elect, by written notice to the Buyer Representative
delivered before the Outside Date, to:

 

(i)            reduce the amount of the Purchase Price by the estimated
Restoration Cost (as determined by the Seller Representative and reasonably
confirmed by the Buyer Representative; provided that the Buyers or the Portfolio
Companies receive the benefit of all insurance proceeds taken into account in
determining the Restoration Cost, or such amounts are added back to determine
the estimated Restoration Cost), or

 

(ii)          restore such damaged or destroyed assets or properties to a
condition equivalent to their prior condition.

 

If the Seller Representative makes the election contemplated by
Section 6.15(a)(i), then, subject to the satisfaction or waiver of the
conditions set forth in Article VIII, the Closing shall occur on or before the
Outside Date and the Purchase Price shall be so reduced.  If the Seller
Representative makes the election contemplated by Section 6.15(a)(ii), then,
subject to the satisfaction or waiver of the conditions set forth in
Article VIII, the Closing shall occur on or before the Outside Date.  If the
Seller Representative does not make either such election before the Outside
Date, then any Transaction Party may terminate this Agreement by written notice
to the other Parties.

 

(b)           If the Restoration Cost is in excess of ten percent (10%) of the
Base Purchase Price or such restoration cannot be made without material
uninsured impairment to the Business, the Seller Representative may elect, by
written notice to the Buyer Representative delivered promptly after determining
the Restoration Cost to:

 

(i)            reduce the amount of the Purchase Price by the estimated
Restoration Cost (as determined by the Seller Representative and reasonably
confirmed by the Buyer Representative; provided that the Buyers or the Portfolio
Companies receive the benefit of all insurance proceeds taken into account in
determining the Restoration Cost, or such amounts are added back to determine
the estimated Restoration Cost), or

 

(ii)          restore such damaged or destroyed assets or properties to a
condition equivalent to their prior condition.

 

If the Seller Representative makes the election contemplated by
Section 6.15(b)(i), then, subject to the satisfaction or waiver of the
conditions set forth in Article VIII, the Closing shall occur on or before the
Outside Date and the Purchase Price shall be so reduced; provided that the
Buyers may terminate this Agreement, by written notice to the Seller
Representative, within thirty (30) days of receipt by the Buyer Representative
of the Seller Representative’s notice regarding such election.  If the Seller
Representative makes the election contemplated by Section 6.15(b)(ii), the

 

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Closing shall occur on or before the Outside Date, subject to the satisfaction
or waiver of the conditions set forth in Article VIII.  If the Seller
Representative does not elect either option within thirty (30) days after the
casualty loss, then any Transaction Party may terminate this Agreement by
written notice to the other Parties.

 

(c)           If the Restoration Cost is Five Hundred Thousand Dollars
($500,000) or less, then (i) none of the Buyers or the Sellers shall have the
right or option to terminate this Agreement under this Section 6.15 and
(ii) there shall be no reduction in the amount of the Purchase Price as a direct
result thereof; however, the Buyers or the Portfolio Companies shall receive the
benefit of all insurance proceeds related to such casualty event.

 

(d)           If the Buyer Representative, in the exercise of reasonable
judgment, does not confirm the Seller Representative’s calculation of the
Restoration Costs, then it shall promptly, but not less than ten (10) Business
Days after receipt of the Seller Representative’s calculation, deliver written
notice to the Seller Representative setting forth the Buyer Representative’s
calculation of the Restoration Costs.  If the Buyer Representative fails to
timely deliver such notice, then the Seller Representative’s calculation of the
Restoration Costs shall be deemed final, binding and conclusive for all purposes
of this Agreement.  If the Buyer Representative so notifies the Seller
Representative in accordance with this Section 6.15(d), then the Buyer
Representative and the Seller Representative shall, over the next ten
(10) Business Days, attempt in good faith to resolve the disputed calculations,
and any written resolution by them as to the agreed calculation of the
Restoration Costs shall be deemed final, binding and conclusive for all purposes
of this Agreement.  If, at the conclusion of the ten (10) Business Day
resolution period, the Buyer Representative and the Seller Representative have
not agreed on the calculation of Restoration Costs, then the Restoration Costs
shall be estimated by a qualified firm reasonably acceptable to the Buyer
Representative and the Seller Representative.  Subject to the limitations set
forth in Section 10.1(f), the Outside Date shall be extended on a day-for-day
basis while the procedures set forth in this Section 6.15(d) are followed.

 

Section 6.16          Condemnation.

 

(a)           If any of the assets or properties of the Portfolio Companies are
taken or noticed for taking by a condemnation event after the date hereof and
prior to the Closing Date and such assets or properties have a condemnation
value (such value with respect to any such assets or properties after giving
effect to any condemnation proceeds awarded to the Portfolio Companies for such
condemnation event, the “Condemnation Value”) greater than Five Hundred Thousand
Dollars ($500,000) but not in excess of ten percent (10%) of the Base Purchase
Price, any Transaction Party may elect, by written notice to the other
Transaction Parties delivered before the Outside Date, to reduce the amount of
the Purchase Price by the estimated Condemnation Value (as determined by the
Seller Representative and reasonably confirmed by the Buyer Representative).  If
any Transaction Party makes the election contemplated by the foregoing sentence,
then, subject to the satisfaction or waiver of the conditions set forth in
Article VIII, the Closing shall occur on or before the Outside Date and the
Purchase Price shall be so reduced.  If

 

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none of the Transaction Parties makes such election before the Outside Date,
then any Transaction Party may terminate this Agreement by written notice to the
other Parties.

 

(b)           If the Condemnation Value is in excess of ten percent (10%) of the
Base Purchase Price, the Seller Representative may elect, by written notice to
the Buyer Representative delivered before the Outside Date, to:

 

(i)            reduce the amount of the Purchase Price by the estimated
Condemnation Value (as determined by the Seller Representative and reasonably
confirmed by the Buyer Representative), or

 

(ii)           terminate this Agreement.

 

If the Seller Representative makes the election contemplated by
Section 6.16(b)(i), then, subject to the satisfaction or waiver of the
conditions set forth in Article VIII, the Closing shall occur on or before the
Outside Date and the Purchase Price shall be so reduced; provided that the
Buyers may terminate this Agreement, by written notice to the Seller
Representative, within thirty (30) days of receipt by the Buyer Representative
of the Seller Representative’s notice regarding such election.  If the Seller
Representative makes the election contemplated by Section 6.16(b)(ii), then this
Agreement shall terminate.

 

(c)           If the Condemnation Value is Five Hundred Thousand Dollars
($500,000) or less, then (i) neither the Buyers nor the Sellers shall have the
right or option to terminate this Agreement under this Section 6.16 and
(ii) there shall be no reduction in the amount of the Purchase Price as a direct
result thereof.

 

(d)           If the Buyer Representative, in the exercise of reasonable
judgment, does not confirm the Seller Representative’s calculation of the
Condemnation Value, then it shall promptly, but not less than five (5) Business
Days after receipt of the Seller Representative’s calculation, deliver written
notice to the Seller Representative setting forth the Buyer Representative’s
calculation of the Condemnation Value.  If the Buyer Representative fails to
timely deliver such notice, then the Seller Representative’s calculation of the
Condemnation Value shall be deemed final, binding and conclusive for all
purposes of this Agreement.  If the Buyer Representative so notifies the Seller
Representative in accordance with this Section 6.16(d), then the Buyer
Representative and the Seller Representative shall, over the next five
(5) Business Days, attempt in good faith to resolve the disputed calculations,
and any written resolution by them as to the agreed calculation of the
Condemnation Value shall be deemed final, binding and conclusive for all
purposes of this Agreement.  If, at the conclusion of the five (5) Business Day
resolution period, the Buyer Representative and the Seller Representative have
not agreed on the calculation of Condemnation Value, then the Condemnation Value
shall be estimated by a qualified firm reasonably acceptable to the Buyer
Representative and the Seller Representative.  Subject to the limitations set
forth in Section 10.1(f), the Outside Date shall be extended on a day-for-day
basis while the procedures set forth in this Section 6.16(d) are followed.

 

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Section 6.17                             Affiliate Contracts; Intercompany
Obligations.

 

(a)                                 At or prior to the Closing, each of the
Sellers shall terminate or cause to be terminated any Contract, other than any
Contracts referenced in the Transition Services Agreement, between the Portfolio
Companies, on one hand, and any of the Sellers, their Affiliates or any current
or former officer, director, equity owner or employee of any of the foregoing,
on the other hand, all of which are set forth on Schedule 6.17, and the Sellers
shall ensure that none of the Portfolio Companies has any liability or
obligations under any such Contracts from and after the applicable termination
dates of such Contracts.

 

(b)                                 At or prior to the Closing, each of the
Sellers shall cause all intercompany account obligations (including
indebtedness) involving any of the Sellers or any of their Affiliates and the
Portfolio Companies to be settled, at the election of the Sellers, by either
causing such accounts and obligations to be (a) paid and discharged, including
by netting of payables and receivables involving the same parties, or (b) with
respect to payables by the Portfolio Companies, cancelled without any of the
Sellers or any of the Portfolio Companies paying any consideration therefor or
any of the Portfolio Companies incurring any additional liability to any Person.

 

(c)                               At or prior to the Closing, each of the
Sellers shall, and shall cause its Affiliates to, assign, or cause to be
assigned, all environmental emission allowances and credits associated with the
Facilities, including those set forth on Schedule 4.11(d), to the Portfolio
Companies on a cost-free basis, such that the Portfolio Companies own such
allowances and credits free and clear of all Liens, except Permitted Liens.

 

Section 6.18                             Further Assurances.  Subject to the
terms and conditions of this Agreement, at any time or from time to time after
the Closing, at the request of the Buyers or any of the Sellers, and without
further consideration, the other Transaction Parties shall execute and deliver
to the requesting Transaction Party such other instruments of sale, transfer,
conveyance, assignment and confirmation and provide such materials and
information and take such other actions and execute and deliver such other
documents as the requesting Transaction Party may reasonably request in order to
consummate and to make effective the transactions contemplated by this
Agreement.

 

Section 6.19                             Release.  Effective as of the Closing,
each of the Sellers hereby remises, releases and forever discharges, for
themselves and their Affiliates and their respective successors, assigns,
directors, officers, employees, agents, representatives, parent corporations,
and subsidiary corporations, the Portfolio Companies from and against any and
all claims and actions whatsoever, whether known or unknown and whether arising
in law or in equity, which any of the Sellers or such Affiliates and such other
persons have had, now have or hereafter will or may have against the Portfolio
Companies arising from, relating to, or otherwise founded upon the
indemnification obligations of any of the Portfolio Companies pursuant to the
Organizational Documents of any of the Portfolio Companies or otherwise.

 

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Section 6.20                             GE Turbine Blades.

 

(a)                                 During the Interim Period, except (i) as
required in case of any emergency, (ii) as required to operate the Facilities in
accordance with Prudent Industry Practices and applicable Law, (iii) as required
pursuant to Section 6.20(b) below, or (iv) with the prior written consent of the
Buyers (which consent shall not be unreasonably withheld, conditioned or
delayed), none of the Sellers shall, and the Sellers shall cause their
respective Affiliates not to, make any outage, repair, inspection or operational
decision related to the High Pressure Turbine Stage 1 blades on engine 191-315
or the High Pressure Turbine Stage 2 nozzles on engine 191-235 or any associated
components (the “GE Turbine Blades”) that would be reasonably expected to cause
any warranty provided by General Electric International Inc. (“GE”) under its
existing warranty coverage policy applicable to the GE Turbine Blades or that
certain Contractual Service Agreement between Lake and GE dated as of May 5,
2003, as amended (the “GE CSA”), to be reduced, rendered void or unavailable.

 

(b)                                 During the Interim Period, the Sellers
shall, and shall each cause their respective Affiliates to (i) perform any and
all inspections related to the GE Turbine Blades requested of or recommended to
the Sellers or any of their Affiliates by GE in writing, (ii) perform one
borescope inspection per month (iii) take all actions recommended in writing to
the Sellers or any of their Affiliates by GE with respect to continued
operations, repair, inspection and maintenance of the GE Turbine Blades, and
(iv) afford the Buyers an opportunity to participate in any discussions with GE
regarding the GE Turbine Blades or the CSA.  If the Sellers or any of their
Affiliates receive any suggestions or recommendations in writing by GE with
respect to the GE Turbine Blades, the Sellers shall (x) promptly notify the
Buyer Representative of any such suggestions or recommendations and (y) afford
the Buyers the reasonable opportunity to participate in discussions with GE and
to provide input and suggestions with respect to any course of action to be
taken by the Sellers or their Affiliates as a result of such suggestions or
recommendations; provided, that none of the Sellers or any of their Affiliates
shall undertake any outage, repair, inspection or operational decision arising
out of such suggestions or recommendations pursuant to
Section 6.20(b)(iii) above with respect to the GE Turbine Blades without the
written consent of the Buyers, which shall not be unreasonably withheld,
conditioned or delayed; provided further that if the Buyers or the Buyer
Representative fail to respond to a notice provided pursuant to clause (x) above
within three (3) days of receipt of such notice, then the Buyers and the Buyer
Representative shall have been deemed to have consented to the actions of the
Sellers or any of their Affiliates set forth in such notice in undertaking any
outage, repair, inspection or operational decision arising out of such
suggestions or recommendations; provided, however, that for purposes of this
Section 6.20(b), any notices delivered after 5:00 pm Eastern Time on any day
shall be deemed given on the next succeeding day.

 

(c)                                  The Sellers shall promptly provide to the
Buyer Representative copies of all written inspection reports, documents and
other communications related to the GE Turbine Blades.

 

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Section 6.21                             Closing Consents.  The Sellers shall
use commercially reasonable efforts to obtain the consents and approvals set
forth on Schedule 6.21 at or prior to the Closing.

 

ARTICLE VII
TAX MATTERS

 

Section 7.1                                    Tax Returns.

 

(a)                                 The Seller Representative shall prepare, or
cause to be prepared, and file, or cause to be filed, subject to the review and
reasonable approval of the Buyer Representative, all Tax Returns of the
Portfolio Companies for all periods ending on or prior to the Closing Date (each
such period a “Pre-Closing Tax Period”) that are required to be filed after the
Closing Date.  The Sellers shall reimburse, or cause to be reimbursed, the
Buyers for Taxes of the Portfolio Companies with respect to all periods within
fifteen (15) days before payment by the Buyers and/or the Portfolio Companies of
such Taxes, but only to the extent that the Taxes were not taken into account in
the Final Adjustment Statement.  All such Tax Returns shall be prepared in a
manner that is consistent with the past custom and practice of the Portfolio
Companies, except as required by a change in applicable Law.

 

(b)                                 The Buyer Representative shall prepare, or
cause to be prepared, and file, or cause to be filed, subject to the review and
reasonable approval of the Seller Representative, any Tax Returns of the
Portfolio Companies for Tax periods which begin before the Closing Date and end
after the Closing Date (each such period a “Straddle Period”).  All such Tax
Returns shall be prepared in a manner that is consistent with the past custom
and practice of the Portfolio Companies, except as required by a change in
applicable Law.  The Sellers shall pay, or cause to be paid, to the Buyers,
within fifteen (15) days before the date on which Taxes are to be paid with
respect to such Straddle Periods, an amount equal to the portion of such Taxes
that relates to the portion of such Straddle Period ending on the Closing Date. 
For purposes of this Section 7.1 and Section 9.2, in the case of any Taxes that
are imposed on a periodic basis and are payable for a Straddle Period, the
portion of such Tax that relates to the portion of such Straddle Period ending
on the Closing Date shall (x) in the case of any Taxes other than Taxes based
upon or related to income, gains or receipts (including sales and use Taxes), or
employment or payroll Taxes, be deemed to be the amount of such Tax for the
entire Straddle Period multiplied by a fraction the numerator of which is the
number of days in the Straddle Period ending on the date immediately prior to
the Closing Date and the denominator of which is the number of days in the
entire Straddle Period, and (y) in the case of any Tax based upon or related to
income, gains or receipts (including sales and use Taxes), or employment or
payroll Taxes, be deemed equal to the amount that would be payable if the
relevant Straddle Period ended on the date immediately prior to the Closing
Date.  All determinations necessary to give effect to the foregoing allocations
shall be made in a manner consistent with reasonable prior practice of the
Portfolio Companies.

 

(c)                                  The Buyer Representative shall prepare or
cause to be prepared and file or cause to be filed all other Tax Returns of the
Portfolio Companies.

 

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Section 7.2                                    Cooperation.  The Buyer
Representative and the Seller Representative shall cooperate fully, and the
Buyers shall cause the Portfolio Companies to cooperate fully, as and to the
extent reasonably requested by the other Transaction Party, in connection with
the preparation and filing of Tax Returns pursuant to Section 7.1 and any audit,
litigation or other proceeding (each, a “Tax Proceeding”) with respect to
Taxes.  Such cooperation shall include access to, the retention and (upon the
other Party’s request) the provision of records and information that are
reasonably relevant to any such Tax Return or Tax Proceeding, and the making
available of employees on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.  The Seller
Representative shall and shall cause the Sellers to, and the Buyers shall and
shall cause the Portfolio Companies to, retain all books and records with
respect to Tax matters pertinent to the Portfolio Companies relating to any
taxable period beginning before the Closing Date until the later of six
(6) years after the Closing Date and the expiration of the applicable statute of
limitations of the respective taxable periods, and to abide by all record
retention agreements entered into with any Tax Authority.  The Seller
Representative shall provide the Buyer Representative reasonable written notice
prior to the Sellers transferring, destroying or discarding any books and
records, and, if the Buyer Representative so requests, the Sellers shall allow
the Buyer Representative to take possession of such books and records at the
Buyers’ expense.  The Buyers and the Sellers each agree, upon request, to use
commercially reasonable efforts to obtain any certificate or other document from
any Tax Authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed with respect to the transactions
contemplated by this Agreement.

 

Section 7.3                                    Transfer Taxes.  All state and
local transfer, sales, use, stamp, registration or other similar Taxes, if any,
resulting from the transactions contemplated by this Agreement shall be borne
and paid fifty percent (50%) by the Buyers and fifty percent (50%) by the
Sellers.  The Buyer Representative shall, at the Buyers’ expense, timely file
any Tax Return or other document with respect to such Taxes (and the Seller
Representative and each of the Sellers shall cooperate with respect thereto as
necessary).  The Buyers and the Sellers shall cooperate in good faith to
minimize, to the extent permissible under applicable Law, the amount of any such
Taxes.

 

Section 7.4                                    Tax Proceedings.  The Buyer
Representative shall inform the Seller Representative of the commencement of any
audit, examination or proceeding (“Tax Contest”) relating in whole or in part to
Taxes for which the Buyers may be entitled to indemnity from the Sellers
hereunder.  With respect to any Tax Contest for which the Seller Representative
acknowledges in writing that the Sellers are liable under Article IX for all
Losses relating thereto the Seller Representative shall be entitled to control,
in good faith, all proceedings taken in connection with such Tax Contest;
provided, however, that (i) the Seller Representative shall promptly notify the
Buyer Representative in writing of its intention to control such Tax Contest,
(ii) in the case of a Tax Contest relating to Taxes of the Portfolio Companies
for a Straddle Period, the Seller Representative and the Buyer Representative
shall jointly control all proceedings taken in connection with any such Tax
Contest and (iii) if any Tax Contest solely controlled by the Seller
Representative could reasonably be expected to have an adverse effect on the
Buyers, the Portfolio Companies, or any of their related Persons in any Tax
period beginning after the Closing Date, the Tax Contest shall not be settled or
resolved without the Buyer Representative’s consent, which consent shall not be
unreasonably withheld, conditioned or delayed.  Notwithstanding the foregoing,
if notice is given to the Seller Representative  of the commencement of any Tax
Contest and the Seller Representative does not, within twenty (20)

 

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Business Days after the Buyer Representative’s notice is given, give notice to
the Buyer Representative of the Seller Representative’s election to assume the
defense thereof (and in connection therewith, acknowledge in writing the
indemnification obligations hereunder of the Sellers), the Sellers shall be
bound by any determination made in such Tax Contest or any compromise or
settlement thereof effected by the Buyer Representative; provided, however, that
if any Tax Contest solely controlled by the Buyer Representative could
reasonably be expected to have an adverse effect on the Sellers or any of their
related Persons for any Tax period, the Tax Contest shall not be settled or
resolved without the Seller Representative’s consent, which consent shall not be
unreasonably withheld, conditioned or delayed.  The failure of the Buyer
Representative to give reasonably prompt notice of any Tax Contest shall not
release, waive or otherwise affect the Sellers’ obligations with respect thereto
except to the extent that the Sellers can demonstrate actual loss and prejudice
as a result of such failure.  The Buyers and the Portfolio Companies shall use
their commercially reasonable efforts to provide the Seller Representative with
such assistance as may be reasonably requested by the Seller Representative in
connection with a Tax Contest controlled solely or jointly by the Seller
Representative.  The Seller Representative shall, and shall cause the Sellers
and their Affiliates to, use their commercially reasonable efforts to provide
the Buyers with such assistance as may reasonably be requested by the Buyers in
connection with a Tax Contest controlled solely or jointly by the Buyers.

 

Section 7.5                                    Purchase Price Allocation.  The
purchase and sale of the Interests under this Agreement shall be treated for
federal and all applicable state and local income Tax purposes as a deemed sale
of the assets of the Portfolio Companies.

 

(a)                                 The Purchase Price shall be allocated among
the assets acquired by the Buyers under this Agreement in accordance with an
allocation schedule (the “Purchase Price Allocation Schedule”) agreed upon by
the Buyer Representative and the Seller Representative.  The Buyer
Representative shall prepare the initial draft of the Purchase Price Allocation
Schedule in the manner required by Section 1060 of the Code and any other
applicable Law and shall deliver it to the Seller Representative at least
fifteen (15) days before the scheduled Closing Date (or such shorter period as
the Parties may mutually agree) for review and comment by the Sellers.  The
Transaction Parties shall revise the Purchase Price Allocation Schedule to the
extent necessary to reflect any post-Closing payments or adjustments made under
or in connection with this Agreement and report any adjustments in accordance
with Treasury Regulation Section 1.1060-1(c).  In the case of any payment or
adjustment referred to in the preceding sentence, the Buyer Representative shall
propose a revised Purchase Price Allocation Schedule within forty-five (45) days
after the payment or adjustment (or such shorter period as the Parties may
mutually agree), and the Transaction Parties shall follow the procedures
outlined in Section 7.5(b) with respect to review, dispute and resolution of
such revision.

 

(b)                                 If the Transaction Parties are unable to
agree upon the Purchase Price Allocation Schedule within five (5) days before
the scheduled Closing Date, then either Transaction Party may refer the dispute
to an Independent Auditor and such Independent Auditor shall conclusively
determine the Purchase Price Allocation Schedule (including any valuations) in
accordance with Section 7.6.

 

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(c)                                  The Sellers and the Buyers shall each
prepare, or cause to be prepared, mutually acceptable and substantially
identical IRS Forms 8594 consistent with the Purchase Price Allocation Schedule,
which the Transaction Parties shall use to report the transaction pursuant to
this Agreement to the applicable Tax Authorities; provided, however, that
(i) the Buyers’ cost for the assets that they are deemed to acquire may differ
from the total amount allocated hereunder to reflect the inclusion in the total
cost of items (for example, capitalized acquisition costs) not included in the
amount so allocated and (ii) the amount realized by the Sellers or their
Affiliates may differ from the total amount allocated hereunder to reflect
transaction costs that reduce the amount realized for federal income tax
purposes.  Each Transaction Party shall promptly provide the other Transaction
Party with any other information required to complete Form 8594.  Neither
Transaction Party, without the consent of the other Transaction Party, shall
take a position on any Tax Return, or before any Tax Authority in connection
with the examination of any Tax Return or in any subsequent judicial proceeding,
that is in any manner inconsistent with the terms of the Purchase Price
Allocation Schedule unless specifically required by a determination of an
applicable Tax Authority.  The Transaction Parties shall promptly advise each
other of the existence of any Tax audit, controversy or litigation related to
any allocation under this Section 7.5.

 

Section 7.6                                    Resolution of Disputed Purchase
Price Allocation Schedule Items.  The Independent Auditor reasonably agreed by
the Transaction Parties pursuant to Section 7.5 shall determine, if required by
Section 7.5, any disputes involving the Purchase Price Allocation Schedule
(including any valuations) (such disputed document or amount (a “Disputed
Item”), in accordance with the following:

 

(a)                                 The Independent Auditor shall be instructed
to deliver to the Buyer Representative and the Seller Representative a written
determination of the Disputed Item within ten (10) days from the date the matter
is referred to it.

 

(b)                                 The Independent Accountant may determine the
issues in dispute with respect to any Disputed Item following those procedures,
consistent with the provisions of this Agreement, that it deems appropriate in
the circumstances and with reference to the amounts in issue.  The Transaction
Parties do not intend to impose any particular procedures upon such Independent
Auditor, it being the desire of the Transaction Parties that any such
disagreement will be resolved as expeditiously and inexpensively as reasonably
practicable.

 

(c)                                  The Independent Auditor shall have no
liability to the Transaction Parties in connection with its services, except for
acts of bad faith, willful misconduct or gross negligence, and the Transaction
Parties shall provide indemnification to the Independent Auditor as it may
reasonably request.

 

(d)                                 All fees and expenses relating to the work,
if any, to be performed by the Independent Auditor pursuant to this Section 7.6
shall be borne equally by the Sellers, on the one hand, and the Buyers, on the
other hand.

 

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Section 7.7                                    Termination of Tax Sharing
Agreements.  Any tax allocation, indemnity, sharing or other similar agreement
or arrangement, whether or not written, that may have been entered into by the
Sellers or any of their Affiliates (other than the Portfolio Companies), on the
one hand, and any of the Portfolio Companies, on the other hand, shall be
terminated as to the Portfolio Companies as of the Closing Date, and no payments
that are owed by or to the Portfolio Companies pursuant thereto shall be payable
thereafter.

 

Section 7.8                                    Survival.  The covenants
contained in this Article VII shall survive until sixty (60) days following the
expiration of the applicable statute of limitations.

 

ARTICLE VIII
CONDITIONS TO OBLIGATIONS

 

Section 8.1                                    Conditions to the Obligations of
the Transaction Parties.  The obligations of the Transaction Parties to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions, any one or more of which may be waived
in writing by the Transaction Parties:

 

(a)                                 There shall not be in force any Law
restraining or prohibiting the consummation of the transactions contemplated by
this Agreement;

 

(b)                                 All waiting periods (and any extensions
thereof) applicable to the consummation of the transactions contemplated by this
Agreement by Law shall have expired or been terminated; and

 

(c)                                  All approvals set forth on Schedule 6.5
shall have been duly made, given or obtained and shall be in full force and
effect.

 

Section 8.2                                    Conditions to Obligations of the
Buyers.  The obligation of the Buyers to consummate the transactions
contemplated by this Agreement is subject to the satisfaction of the following
conditions, any one or more of which may be waived in writing by the Buyer
Representative:

 

(a)                                 The Seller Representative shall have
delivered to the Buyers all agreements, instruments and documents required to be
delivered by the Seller Representative pursuant to Section 2.4(b);

 

(b)                                 Each of the representations and warranties
of each of the Sellers contained in this Agreement shall be true and correct as
of the Closing Date as though made at and as of such time (other than
representations and warranties that speak as of another specific date or time
(including, for the avoidance of doubt, any representation or warranty specified
herein as being made as of or through the date of this Agreement), which need
only be true and correct as of such date or time), except to the extent that any
and all failures of such representations and warranties to be so true and
correct, taken as a whole, would not have a Material Adverse Effect or
reasonably be expected to have a material adverse effect on the ability of any
of the Sellers to perform its obligations hereunder or to consummate the
transactions contemplated hereby;

 

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(c)                                  Each of the Sellers shall have performed or
complied, in all material respects, with all of the covenants and agreements
required by this Agreement to be performed or complied with by each of the
Sellers at or before the Closing;

 

(d)                                 There shall have been no Material Adverse
Effect since the date of this Agreement;

 

(e)                                  The form of surveys contemplated by
Section 6.9(a) shall be in form and substance reasonably satisfactory to the
Buyers in all respects;

 

(f)                                   The form of the owners title insurance
policy as contemplated by Section 6.9(b) shall be in form and substance
reasonably satisfactory to the Buyers in all respects and shall contain all
endorsements reasonably requested by the Buyers;

 

(g)                                  Each of the Portfolio Companies shall have
no debt;

 

(h)                                 All Seller Approvals and Portfolio Company
Approvals shall have been duly made, given or obtained and shall be in full
force and effect;

 

(i)                                     The Buyers or their Affiliates shall
have provided the replacement credit support on behalf of the Portfolio
Companies pursuant to the Applicable Agreements as contemplated in Section 6.10;

 

(j)                                    The Lender Consents and the Portfolio
Company Lender Consents shall be effective, shall not have been suspended,
revoked, or stayed, and all conditions therein shall have been met;

 

(k)                                 Each of the Sellers shall have delivered to
the Buyers a certificate, dated as of the Closing Date, certifying that the
conditions specified in Section 8.2(b) and Section 8.2(c) have been fulfilled;

 

(l)                                     The Transition Services Agreement,
including Exhibit A thereto, shall be in full force and effect and shall not
have been modified or amended without the prior written consent of the Buyers;
and

 

(m)                             Any derivative Contracts, including interest
rate swap Contracts, of any of the Portfolio Companies shall have been
terminated and none of the Portfolio Companies shall have any further
obligations or liabilities with respect to such derivative Contracts except for
any obligations or liabilities that are subtracted from the amount of the
Estimated Net Working Capital in the calculation of the Closing Adjustment as
set forth in Section 2.5(iv).

 

Section 8.3                                    Conditions to the Obligations of
the Sellers.  The obligation of the Sellers to consummate the transactions
contemplated by this Agreement is subject to the satisfaction of the following
conditions, any one or more of which may be waived in writing by the Sellers:

 

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(a)                                 The Buyer Representative shall have
delivered to the Sellers all agreements, instruments, documents and funds
required to be delivered by the Buyer Representative pursuant to Section 2.4(c);

 

(b)                                 Each of the representations and warranties
of the Buyers contained in this Agreement shall be true and correct as of the
Closing Date as though made at and as of such time (other than representations
and warranties that speak as of another specific date or time (including, for
the avoidance of doubt, any representation or warranty specified herein as being
made as of or through the date of this Agreement), which need only be true and
correct as of such date or time), except to the extent that any and all failures
of such representations and warranties to be so true and correct, taken as a
whole, would not reasonably be expected to have a material adverse effect on the
Buyers’ ability to perform their obligations hereunder or to consummate the
transactions contemplated hereby;

 

(c)                                  The Buyers shall have performed or
complied, in all material respects, with all of the covenants and agreements
required by this Agreement to be performed or complied with by the Buyers on or
before the Closing;

 

(d)                                 All the Buyer Approvals shall have been duly
made, given or obtained and shall be in full force and effect;

 

(e)                                  The Sellers and their Affiliates shall have
satisfied all conditions set forth in any Lender Consent or Portfolio Company
Lender Consent;

 

(f)                                   The Buyers shall have delivered to the
Seller Representative written evidence of acceptance of the replacement credit
support in satisfaction of the credit support obligations under the Applicable
Agreements by the counterparty to each such Applicable Agreement in exchange for
the existing credit support as contemplated in Section 6.10; and

 

(g)                                  The Buyers shall have delivered to the
Sellers a certificate, dated as of the Closing Date, certifying that the
conditions specified in Section 8.3(b) and Section 8.3(c) have been fulfilled.

 

Section 8.4                                    Frustration of Closing
Conditions.  None of the Transaction Parties may rely on the failure of any
condition set forth in Section 8.1, Section 8.2 or Section 8.3, as the case may
be, to be satisfied if such failure was caused by such Transaction Party’s
failure to act in good faith or to use its commercially reasonable efforts to
cause the Closing to occur, as required by Section 6.5.

 

ARTICLE IX
INDEMNIFICATION

 

Section 9.1                                    Survival of Representations,
Warranties and Covenants.  The respective representations and warranties of the
Parties contained in this Agreement (or in any certificate delivered in
connection herewith), and all waivers, disclaimers and limitations of the
Parties’ liability contained in this Agreement, shall survive the Closing for a
period of eighteen (18) months after the Closing Date (other than the
representations and warranties in Section 3.1

 

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(Organization), Section 3.2 (Authorization; Enforceability), Section 3.5
(Brokers’ Fees), Section 3.6 (Ownership of Interests), Section 4.1
(Organization), and Section 4.3 (Capitalization; Subsidiaries), which shall
survive the Closing Date indefinitely, Section 4.7 (Taxes), which shall survive
until sixty (60) days following the expiration of the applicable statute of
limitations, Section 4.11 (Environmental Matters), which shall survive for a
period of three (3) years after the Closing Date.  The respective covenants and
agreements of the Parties contained in this Agreement that by their terms do not
contemplate performance after the Closing shall survive the Closing for a period
of eighteen (18) months after the Closing Date and the remaining covenants and
agreements (including those contained in Section 7.8) shall survive in
accordance with their respective terms until such covenant or agreement has been
performed, plus ninety (90) days thereafter.  The applicable period set forth
above for each such representation, warranty, covenant and agreement is referred
to herein as the “Survival Period”.  No Party shall have any liability for
indemnification claims made under this Article IX with respect to any such
representation, warranty, covenant or agreement after the applicable Survival
Period, unless a written notice of claim (describing in reasonable detail the
claim, including an estimate of Losses attributable to such claim) is provided
prior to the expiration of such applicable Survival Period.

 

Section 9.2                                    Indemnification.

 

(a)                                 Subject to the provisions of this
Article IX, from and after the Closing, each of the Sellers, jointly and
severally, shall indemnify and hold harmless the Buyers, each of the Buyers’
Affiliates (which includes, for the avoidance of doubt, the Portfolio Companies
from and after the Closing) and their respective Representatives (collectively,
the “Buyer Indemnified Parties”) from and against all Losses that the Buyer
Indemnified Parties incur arising from or out of or relating to:

 

(i)                                     any breach of any representation or
warranty of any of the Sellers in this Agreement made as of the date of this
Agreement or as if such representation or warranty were made on and as of the
Closing Date (or in any certificate delivered in connection herewith);

 

(ii)                                  any breach of any covenant of any of the
Sellers in this Agreement (or in any certificate delivered in connection
herewith);

 

(iii)                               any Contract that is terminated on or prior
to the Closing Date pursuant to Section 6.17 (“Affiliate Losses”);

 

(iv)                              all Taxes of the Sellers or their Affiliates,
as applicable, and the Portfolio Companies for all Pre-Closing Tax Periods;

 

(v)                                 with respect to any Straddle Period, all
Taxes of the Sellers or its Affiliates, as applicable, and the Portfolio
Companies attributable to the portion of such Straddle Period that ends on or
prior to the Closing Date;

 

(vi)                              all Taxes of any Person imposed on any of the
Portfolio Companies as a transferee or successor, by contract or pursuant to any
Law (including, but not limited to, Treasury Regulation Section 1.1502-6) with
respect to obligations

 

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or relationships existing on or prior to the Closing Date or by agreements
entered into or transactions entered into on or prior to the Closing Date;

 

(vii)                           all Taxes on any income resulting from any
election by any of the Sellers or its Affiliates, as applicable, and the
Portfolio Companies under Section 108(i) of the Code prior to the Closing Date;
and

 

(viii)                        any and all claims incurred by any of the
Portfolio Companies or the Buyer Indemnified Parties attributable to the Taxes
described in the preceding clauses (iv) through (vii).

 

(b)                                 Subject to the provisions of this
Article IX, from and after the Closing, the Buyers, jointly and severally, shall
indemnify and hold harmless each of the Sellers, each of the Sellers’ Affiliates
and their respective Representatives (collectively, the “Seller Indemnified
Parties”) from and against all Losses that the Seller Indemnified Parties incur
arising from or out of or relating to:

 

(i)                                     any breach of any representation or
warranty of any of the Buyers in this Agreement made as of the date of this
Agreement or as if such representation or warranty were made on and as of the
Closing Date (or in any certificate delivered in connection herewith);

 

(ii)                                  any breach of any covenant of any of the
Buyers in this Agreement (or in any certificate delivered in connection
herewith);

 

(iii)                               otherwise arising out of any Contract
entered into by the Buyers after the Closing Date;

 

(iv)                              all Taxes of the Buyers and the Portfolio
Companies for all periods after the Closing Date (other than any Straddle
Period);

 

(v)                                 with respect to any Straddle Period, all
Taxes of the Buyers and the Portfolio Companies attributable to the portion of
such Straddle Period that begins after the Closing Date;

 

(vi)                              all Taxes of any Person imposed on any of the
Portfolio Companies as a transferee or successor, by contract or pursuant to any
Law (including, but not limited to, Treasury Regulation Section 1.1502-6) with
respect to obligations or relationships created after the Closing Date or by
agreements entered into or transactions entered into after the Closing Date;

 

(vii)                           all Taxes on any income resulting from any
election by any of the Buyers and the Portfolio Companies under
Section 108(i) of the Code after the Closing Date; and

 

(viii)                        any and all claims incurred by any of the
Portfolio Companies or the Seller Indemnified Parties attributable to the Taxes
described in the preceding clauses (iv) through (vii).

 

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None of the Sellers or its Affiliates shall have any right to seek contribution
from any of the Portfolio Companies with respect to all or any part of any of
the Sellers’ indemnification obligations hereunder.

 

(c)                                  THE INDEMNIFICATION PROVISIONS IN THIS
SECTION 9.2 SHALL BE ENFORCEABLE REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE
PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE,
CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING
INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE
PERSON SEEKING INDEMNIFICATION OR ANY OTHER PERSON.

 

(d)                                 The Transaction Parties have agreed upon a
threshold (as provided in Section 9.4(a)) and a deductible (as provided in
Section 9.4(b)) as a means of applying a materiality standard to the amount of
any post-Closing claim that (x) any Buyer Indemnified Party may have against any
of the Sellers resulting from a breach of a representation or warranty by any of
the Sellers, or (y) any Seller Indemnified Party may have against any of the
Buyers resulting from a breach of a representation or warranty by any of the
Buyers.  Therefore, for purposes of (i) applying the post-closing
indemnification remedies provided in this Article IX, (ii) determining whether
any breach of a representation or warranty of any of the Sellers or Buyers, as
applicable, has occurred and (iii) calculating the amount any Losses relating
thereto, the Sellers’ or Buyers’, as applicable, representations and warranties
shall be considered and applied without regard to any reference as to
materiality, materially, material respects, Material Adverse Effect or similar
materiality qualifiers set forth therein, except for Section 4.11(c); provided,
however, that this Section 9.2 shall in no respect modify the other provisions
of this Agreement for purposes of determining whether any conditions to Closing
have been satisfied.

 

Section 9.3                                    Indemnification Procedures. 
Claims for indemnification under this Agreement shall be asserted and resolved
as follows:

 

(a)                                 Any Buyer Indemnified Party or Seller
Indemnified Party claiming indemnification under this Agreement (an “Indemnified
Party”) with respect to any claim asserted against the Indemnified Party by a
Third Party (a “Third-Party Claim”) in respect of any matter that is subject to
indemnification under Section 9.2 shall promptly (i) notify the other Party (the
“Indemnifying Party”) of the Third-Party Claim and (ii) transmit to the
Indemnifying Party a written notice (a “Claim Notice”) describing in reasonable
detail the nature of the Third-Party Claim, a copy of all papers served with
respect to such Third-Party Claim (if any), the Indemnified Party’s best
estimate of the amount of Losses attributable to the Third-Party Claim and the
basis of the Indemnified Party’s request for indemnification under this
Agreement.  Failure to timely provide such Claim Notice shall not affect the
right of the Indemnified Party’s indemnification hereunder, except to the extent
the Indemnifying Party is materially prejudiced by such delay or omission.

 

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(b)                                 Following receipt of the Claim Notice, and
unless (i) the control of the defense by the Indemnifying Party would be
inappropriate due to a conflict of interest, (ii) such Third-Party Claim (or the
facts or allegations related to such Third-Party Claim) involves criminal
allegations or seeks equitable or injunctive relief, (iii) such Third-Party
Claim, if adversely determined, could reasonably be expected to materially
adversely affect the business or reputation of the Indemnified Party or its
Affiliates or (iv) such Third-Party Claim, if adversely determined, could
reasonably be expected to result in Losses exceeding the applicable limitations
set forth in Section 9.4(c), the Indemnifying Party shall have the right to
control the defense of the Indemnified Party against such Third-Party Claim in
accordance with the following.  If the Indemnifying Party notifies the
Indemnified Party that the Indemnifying Party elects to assume the defense of
the Third-Party Claim within five (5) Business Days following receipt of the
Claim Notice, then the Indemnifying Party shall have the right to defend such
Third-Party Claim with counsel selected by the Indemnifying Party (who shall be
reasonably satisfactory to the Indemnified Party), by all appropriate
proceedings, to a final conclusion or settlement at the discretion of the
Indemnifying Party in accordance with this Section 9.3(b).  The Indemnifying
Party shall have full control of such defense and proceedings, including any
compromise or settlement thereof; provided, however, that the Indemnifying Party
shall not enter into any settlement agreement without the written consent of the
Indemnified Party (which consent shall not be unreasonably withheld, conditioned
or delayed); provided, further, that such consent shall not be required if
(x) the settlement agreement contains a complete and unconditional release by
the Third Party asserting the Third-Party Claim of the Indemnified Party,
(y) the settlement agreement obligates the Indemnifying Party to pay the full
amount of any Losses attributable to the Indemnified Party in connection with
the Third-Party Claim, and (z) the settlement agreement does not contain any
direct or indirect requirements upon or provisions for the Indemnified Party. 
If requested by the Indemnifying Party the Indemnified Party agrees, at the sole
cost and expense of the Indemnifying Party, to cooperate reasonably with the
Indemnifying Party and its counsel in contesting any Third-Party Claim the
defense of which is being controlled by the Indemnifying Party pursuant hereto. 
The Indemnified Party may otherwise participate in, but not control, any defense
or settlement of any Third-Party Claim controlled by the Indemnifying Party
pursuant to this Section 9.3(b), and the Indemnified Party shall bear its own
costs and expenses with respect to such participation.

 

(c)                                  If the Indemnifying Party (i) does not have
the right to control the defense of the Indemnified Party pursuant to
Section 9.3(b) or (ii) does not notify the Indemnified Party within five
(5) Business Days following receipt of the Claim Notice that the Indemnifying
Party elects to defend the Indemnified Party pursuant to Section 9.3(b), then
the Indemnified Party shall have the right to defend, and be reimbursed for its
reasonable costs and expenses in regard to the Third-Party Claim with counsel
selected by the Indemnified Party (who shall be reasonably satisfactory to the
Indemnifying Party), by all appropriate proceedings.  In such circumstances, the
Indemnified Party shall have full control of the defense of such Third-Party
Claim.  The Indemnifying Party may participate in, but not control, any defense
or settlement controlled by the Indemnified Party pursuant to this
Section 9.3(c), and the Indemnifying Party shall bear its own costs and expenses
with respect to such participation.

 

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(d)                                 Subject to the other provisions of this
Article IX, in the event that an Indemnified Party determines that it has a
claim for indemnifiable Losses against an Indemnifying Party hereunder (other
than as a result of a Third-Party Claim), the Indemnified Party shall give
written notice thereof to the Indemnifying Party, specifying, in reasonable
detail, the amount of such claim, the nature and basis of the alleged breach or
act giving rise to such claim and all relevant facts and circumstances relating
thereto.  The Indemnified Party shall provide the Indemnifying Party with full
access to its books and records (and, if the Sellers are the Indemnifying Party,
the Portfolio Companies’ books and records) during normal business hours for the
purpose of allowing the Indemnifying Party a reasonable opportunity to verify
any such claim for indemnifiable Losses.  The Indemnifying Party shall notify
the Indemnified Party within thirty (30) days following its receipt of such
notice and granting of such access if the Indemnifying Party disputes its
liability to the Indemnified Party under this Article IX.  If the Indemnifying
Party does not so notify the Indemnified Party, the claim specified by the
Indemnified Party in such notice shall be a liability of the applicable
Indemnifying Party under this Article IX, and the Indemnifying Party shall pay
the amount of such claim to the Indemnified Party on demand or, in the case of
any notice in which the amount of the claim (or any portion of the claim) is
estimated, on such later date when the amount of such claim (or such portion of
such claim) becomes finally determined.  If the Indemnifying Party has timely
disputed its liability with respect to such claim as provided above, the
Indemnifying Party and the Indemnified Party shall negotiate in good faith to
resolve such dispute.  Promptly following the final determination of the amount
of indemnifiable Losses to which the Indemnified Party is entitled (whether
determined in accordance with this Section 9.3(d) or by a court of competent
jurisdiction), the Indemnifying Party shall pay such indemnifiable Losses to the
Indemnified Party by wire transfer or certified check made payable to the order
of the Indemnified Party.

 

Section 9.4                                    Limitations on Liability. 
Notwithstanding anything to the contrary stated in this Agreement:

 

(a)                                 a breach of any representation or warranty
of any of the Sellers in this Agreement (or in any certificate delivered in
connection with this Agreement), subject to the provisions of Section 9.1, in
connection with any single item or group of related items that results in Losses
of less than Fifty Thousand Dollars ($50,000) shall be deemed, for all purposes
of this Article IX not to be a breach of such representation or warranty;
provided, however, that the limitation set forth in this Section 9.4(a) shall
not apply to Losses arising from (i) any breach of any of the Sellers’
representations and warranties contained in Section 3.1, Section 3.2,
Section 3.5, Section 3.6, Section 4.1, Section 4.3, and Section 4.7
(collectively, the “Seller Fundamental Representations”), or Section 4.11 or
(ii) the matters described in Section 9.2(a)(ii), (iii), (iv), (v), (vi), (vii),
or (viii);

 

(b)                                 the Sellers shall have no liability arising
out of or relating to Section 9.2(a) and the Buyers shall have no liability
arising out of or relating to Section 9.2(b) except if the aggregate Losses
actually incurred by the Buyer Indemnified Parties or the Seller Indemnified
Parties, as applicable, exceed 0.75% of the Purchase Price respectively (and
then, subject to Section 9.4(c), only to the extent such aggregate Losses exceed
such amount); provided, however, that the limitation set forth in this
Section 9.4(b) shall not

 

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apply to Losses arising from (i) any breach of any of the Sellers’
representations and warranties contained in the Seller Fundamental
Representations or Section 4.11 (in the case of the Sellers), or Section 5.1,
Section 5.2 or Section 5.6 (collectively, the “Buyer Fundamental
Representations”) (in the case of the Buyers) or (ii) the matters described in
Section 9.2(a)(ii), (iii), (iv), (v), (vi), (vii), or (viii);

 

(c)                                  (i) neither the Sellers’ liability arising
out of or relating to Section 9.2(a)(i) (other than breaches of the Seller
Fundamental Representations or Section 4.11) nor the Buyers’ liability arising
out of or relating to Section 9.2(b)(i) (other than breaches of the Buyer
Fundamental Representations) shall exceed fifteen percent (15%) of the Purchase
Price, (ii) the Sellers’ liability for breaches of the representations and
warranties contained in Section 4.11 shall not exceed twenty percent (20%) of
the Purchase Price, and (iii) neither the Sellers’ liability for breaches of any
of the Seller Fundamental Representations nor the Buyers’ liability for breaches
of any of the Buyer Fundamental Representations shall exceed the Purchase Price;
provided, however, that in no event shall either the Sellers’ aggregate
liability or the Buyers’ aggregate liability for breaches of any representation,
warranty, covenant or agreement in this Agreement exceed the Purchase Price; and

 

(d)                                 the amount of any Losses subject to
indemnification under this Article IX shall be reduced or reimbursed, as the
case may be, by the amount of any Third-Party insurance coverage the proceeds of
which have been collected by the Portfolio Companies with respect to any such
Losses, or third-party indemnity, third-party contribution or similar payments
or other similar recovery or offset actually realized, directly or indirectly,
by the Indemnified Party with respect to any such Losses, net of expenses paid
to third parties in procuring such contributions or recovery, including
materially increased premiums or deductibles, and net of any non-indemnifiable
amounts related to such claim (e.g., any amounts not recoverable as a result of
the limitations set forth in this Article IX), but such recoveries shall not
count against the caps, deductibles or other limitations described in this
Section 9.4.  If a Buyer Indemnified Party or Seller Indemnified Party, as
applicable, receives an amount under Third-Party insurance coverage or receives
or realizes, directly or indirectly, third party indemnity, third party
contribution or similar payments with respect to Losses that were the subject of
indemnification under this Article IX at any time subsequent to indemnification
provided hereunder, then such Buyer Indemnified Party or Seller Indemnified
Party, as applicable, shall promptly reimburse the Buyers or the Sellers, as
applicable, to the extent of the amount received.

 

Section 9.5                                    Purchase Price Adjustment.  The
Transaction Parties agree to treat all payments made pursuant to
Section 2.6(d) and this Article IX as adjustments to the Purchase Price for Tax
purposes.

 

Section 9.6                                    Mitigation.  Each Indemnified
Party shall use, and cause its Affiliates to use, commercially reasonable
efforts to mitigate any Losses that may be subject to indemnification under this
Article IX upon becoming aware of any event or circumstance that would be
reasonably expected to, or does, give rise to such Losses, solely to the extent
that such Party would attempt to mitigate such Losses in the ordinary course of
business if such Party did

 

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not have a right to indemnification hereunder; provided, that such obligation to
mitigate on the part of the Buyers or the Portfolio Companies (from and after
the Closing Date) (i) shall not require the Buyers, the Portfolio Companies or
their respective Affiliates to take any action inconsistent with the past
practices of the Sellers and (ii) shall arise only at such time as the Buyers’
management has actual knowledge of the event, fact, circumstance or matter
giving rise to such Losses.

 

Section 9.7                                    Exclusive Remedy.  From and after
the Closing, and except in the event of fraud or willful misconduct, the
indemnification and remedies set forth in this Article IX shall constitute the
sole and exclusive remedies of the Transaction Parties with respect to any
breach of representation or warranty or non-performance, partial or total, of
any covenant or agreement contained in this Agreement (or in any certificate
delivered in connection herewith); provided, however, that nothing in this
Section 9.7 shall prevent any Transaction Party from seeking injunctive or
equitable relief in pursuit of its indemnification claims under this Article IX;
and provided, further, that in the event a Transaction Party should assert
rights or obligations in connection with the transactions contemplated by this
Agreement under any Law or cause of action not based on the interpretation or
application of this Agreement, the Parties agree that the provisions of this
Article IX shall in all instances apply to such claim or cause of action. 
Except with respect to claims identified above in this Article IX, and to the
extent allowed by applicable Law, each Transaction Party hereby waives,
releases, acquits and forever discharges the other Party and their respective
Affiliates and Representatives from any and all claims, actions, causes of
action, demands, rights, damages, costs, expenses, Losses or compensation
whatsoever, whether direct or indirect, known or unknown, foreseen or
unforeseen, that such Party may have following the Closing against the other
Transaction Parties and their respective Affiliates and Representatives with
respect to the transactions contemplated by this Agreement.

 

Section 9.8                                    Directors and Officer’s
Indemnification.  For a period of not less than six (6) years after the Closing
Date, the Buyers shall cause the Organizational Documents of each Portfolio
Company to contain provisions substantially similar to the provisions concerning
the exculpation, indemnification, advancement of expenses to, and holding
harmless of, all past and present employees, officers or agents of such
Portfolio Company for acts or omissions occurring at or prior to the Closing as
are contained in such documents as of the date of execution of this Agreement,
and the Buyers shall cause each Portfolio Company to honor all such provisions,
including making any indemnification payments and expense advancement
thereunder.  In the event that any indemnifiable claim is asserted or made
within such six-year period, all rights to indemnification and advancement of
expenses in respect of such claim shall continue to the extent currently
permitted under the relevant Portfolio Company’s Organizational Documents until
such claim is disposed of, or all orders, injunctions, judgments, decrees,
ruling, writs, assessments or arbitration awards in connection with such claim
are fully satisfied.

 

ARTICLE X
TERMINATION

 

Section 10.1                             Termination.  Prior to the Closing,
this Agreement may be terminated and the transactions contemplated hereby
abandoned:

 

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(a)                                 by the mutual consent of each of the Buyers
and the Sellers as evidenced in a writing signed by each of the Buyer
Representative and the Seller Representative;

 

(b)                                 by the Buyers (provided the Buyers are not
then in material breach of any of their obligations under this Agreement), if
there has been a material breach by (i) any of the Sellers of any
representation, warranty or covenant contained in this Agreement such that the
conditions set forth in Section 8.1 or Section 8.2 would not be satisfied as of
the time of such termination or (ii) ATP under the Seller Guaranty, and any such
breach under clauses (i) or (ii) is incapable of being cured or has not been
cured by any of the Sellers or ATP, as applicable, within twenty (20) days after
written notice thereof from the Buyers;

 

(c)                                  by the Sellers (provided the Sellers are
not then in material breach of any of their obligations under this Agreement),
if (i) there has been a material breach by the Buyers of any representation,
warranty or covenant contained in this Agreement (x) such that the conditions
set forth in Section 8.1 or Section 8.3 would not be satisfied as of the time of
such termination and (y) such breach is incapable of being cured or has not been
cured by the Buyers within twenty (20) days after written notice thereof from
the Sellers, or (ii) each of the conditions set forth in Section 8.1 and
Section 8.2 (other than those conditions that are to be satisfied at Closing and
the condition in Section 8.2(j) that all conditions in the Lender Consents and
the Portfolio Company Lender Consents have been met solely to the extent that
such conditions are to be satisfied at Closing, though any such conditions in
Section 8.2 or in the Lender Consents and the Portfolio Company Lender Consent
are then able to be satisfied (A) solely by making delivery thereof if the
Closing were then to occur, and (B) as to Section 8.2(j), assuming for the
purposes of this Clause (B) only, that the Buyers have or would have satisfied
the conditions in Section 8.3(f)) are satisfied and the Buyers fail to satisfy
as of the Outside Date (as such date may be extended pursuant to
Section 10.1(f)) each of the conditions set forth in Section 8.3 (other than the
conditions in Section 8.3(e) and Section 8.3(f) and the conditions that are to
be satisfied at Closing, though such conditions that are to be satisfied at
Closing are then able to be satisfied solely by making delivery thereof if the
Closing were then to occur, but, as to Section 8.3(f), only to the extent that
the Buyers have delivered the replacement credit support contemplated in, and
otherwise satisfied the requirements of clauses (i) and (ii) of, Section 6.10)
and not otherwise waived in writing by the Sellers; provided, however, that in
any event, the Sellers cannot terminate under clause (ii) above based upon the
Buyers’ failure to pay the Purchase Price if the sole reason for such failure to
pay the Purchase Price is due to the Sellers’ failure to satisfy the conditions
in Section 8.2(j) and the Buyers have delivered the replacement credit support
contemplated in, and otherwise satisfied the requirements of clauses (i) and
(ii) of, Section 6.10.

 

(d)                                 by either the Buyers or the Sellers if any
Governmental Authority having competent jurisdiction has issued a final and
non-appealable order, decree, ruling or injunction (other than a temporary
restraining order) or taken any other action permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement;

 

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(e)                                  by either the Buyers or the Sellers in
accordance with Section 6.15 or Section 6.16, or as otherwise contemplated by
Section 6.15 or Section 6.16; or

 

(f)                                   by either the Buyers or the Sellers if the
Closing has not occurred on or before April 30, 2013 (as such date may be
adjusted pursuant to this Section 10.1(f), the “Outside Date”) or such later
date as the Parties may agree upon; provided, however, that the Outside Date may
be extended for a period not to exceed sixty (60) days by either the Buyers or
the Sellers by written notice to the other Parties if the transactions
contemplated by this Agreement shall not have been consummated as a result of
the conditions set forth in Section 8.1(b) and Section 8.1(c) failing to have
been satisfied and the Transaction Parties requesting such extension reasonably
believe(s) that the relevant approvals will be obtained during such extension
period; provided, further, that the Outside Date may be extended for a period
not to exceed sixty (60) days in the aggregate by the Sellers in the event that
a casualty loss event has occurred for which the Sellers has elected to restore
damaged or destroyed assets or properties pursuant to Section 6.15 and has
commenced and is reasonably pursuing restoration; provided, further, that the
Outside Date may be extended for a period not to exceed sixty (60) days in the
aggregate by the Sellers in the event that a condemnation event has occurred for
which the Sellers are entitled to make an election pursuant to Section 6.16 and
have not yet done so; provided, further, that the Outside Date may be extended
for a period not to exceed sixty (60) days in the aggregate by the Buyers by
written notice to the Seller Representative if the transactions contemplated by
this Agreement shall not have been consummated solely as a result of the
condition set forth in Section 8.3(f) failing to have been satisfied (but only
to the extent that the Buyers have delivered the replacement credit support
contemplated in, and otherwise satisfied the requirements of clauses (i) and
(ii) of, Section 6.10) and such conditions are not otherwise waived by the
Sellers, in which case the Buyers and the Sellers shall use commercially
reasonable efforts to cause the applicable counterparty to any Applicable
Agreement to provide a written evidence of acceptance; provided, further, that
the right to terminate this Agreement under this Section 10.1(f) shall not be
available to any Seller on the one hand or any Buyer on the other hand, if the
failure of any Seller or Buyer, respectively, to fulfill any obligation under
this Agreement shall have been the cause of, or shall have resulted in, the
failure of the Closing to occur on or prior to the Outside Date.

 

Section 10.2                             Effect of Termination.

 

(a)                                 In the event of termination and abandonment
of this Agreement pursuant to Section 10.1, this Agreement shall forthwith
become null and void and have no effect, and the obligations of the Parties
under this Agreement shall terminate, except for the obligations set forth in
this Section 10.2(a) and the provisions set forth in Article XI, each of which
shall survive termination of this Agreement; provided, however, that (i) if this
Agreement is validly terminated by the Buyers pursuant to Section 10.1(b), the
Buyers shall be entitled to all rights and remedies available at Law or in
equity, and (ii) if this Agreement is validly terminated by the Sellers pursuant
to Section 10.1(c), the Seller Representative, on behalf of the Sellers, shall
be entitled to draw under the Letter of Credit in the full amount of
$10,000,000, and such amount drawn under the Letter of Credit shall constitute a
termination fee paid by the Buyers to the Sellers.  The Parties

 

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acknowledge and agree that the termination fee provided under the Letter of
Credit is a reasonable determination of losses in the event of termination of
this Agreement pursuant to Section 10.1(c) and upon termination, none of the
Buyers shall have any other liability or obligation to any of the Sellers, the
Seller Representative or their Affiliates related to this Agreement or the
transactions contemplated hereby.  In the event (i) the Parties are disputing
whether this Agreement has been validly terminated by the Sellers and the Letter
of Credit is set to expire within five (5) Business Days or (ii) the Letter of
Credit is set to expire within five (5) Business Days and such date is prior to
the Outside Date, as may be extended pursuant to  Section 10.1(f), then the
Seller Representative, on behalf of the Sellers, may draw under the Letter of
Credit and hold such proceeds pending resolution of such dispute in the case of
clause (i), or until the earlier of the Closing Date or termination of this
Agreement in the case of clause (ii), whereupon any amount of such proceeds to
which the Sellers are not entitled shall be promptly refunded to the Buyers;
provided, however, that the Buyers shall have the right to extend or replace the
Letter of Credit at any time prior to its expiration. Further, if termination of
this Agreement occurs other than pursuant to Section 10.1(c), the Seller
Representative shall deliver to the Buyer Representative the Letter of Credit
and written notice from the Sellers confirming their consent to the termination
of the Letter of Credit in form and substance reasonably acceptable to the Buyer
Representative.

 

(b)                                 Except as otherwise provided by Law, no
delay or forbearance by a Party in the exercise or enforcement of any right or
remedy hereunder shall be deemed a waiver by such Party of its right hereunder
to exercise or enforce such right or remedy.  For the avoidance of doubt, as an
alternative to termination of this Agreement pursuant to the provisions of
Section 10.1 and the exercise of any right or remedy pursuant to this
Section 10.2, the Parties shall have the right to seek specific performance
pursuant to the provisions of Section 11.14.

 

(c)                                  No termination of this Agreement shall
affect the obligations of the Parties contained in the Confidentiality
Agreement, all of which obligations shall survive termination of this Agreement
in accordance with their terms.

 

ARTICLE XI
MISCELLANEOUS

 

Section 11.1                             Seller Representative.

 

(a)                                 The Seller Representative is hereby
constituted and appointed as exclusive proxy, representative, agent and
attorney-in-fact for and on behalf of each of the Sellers, with full power of
substitution, to make all decisions and determinations and to act and execute,
deliver and receive all documents, instruments and consents on behalf of and as
agent for each of the Sellers at any time in connection with, and that may be
necessary or appropriate to accomplish the intent and implement the provisions
of this Agreement. Without limiting the generality of the foregoing, the Seller
Representative has full power and authority, on behalf of each Seller and its
successors and assigns, to (i) interpret the terms and provisions of this
Agreement and the documents to be executed and delivered by the Sellers in
connection herewith, (ii) execute and deliver and receive deliveries of all

 

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agreements, certificates, statements, notices, approvals, extensions, waivers,
undertakings, amendments and other documents required or permitted to be given
in connection with the consummation of the transactions contemplated by this
Agreement, (iii) receive service of process in connection with any claims under
this Agreement, (iv) agree to, negotiate and enter into settlements and
compromises of, assume the defense of claims and comply with orders with respect
to such claims, and to take all actions necessary or appropriate in the judgment
of the Seller Representative for the accomplishment of the foregoing, (v) give
and receive notices and communications, (vi) take all actions necessary or
appropriate in the judgment of the Seller Representative on behalf of the
Sellers in connection with this Agreement, and (vii) make any determinations and
settle any matters in connection with the adjustments to the Purchase Price in
Section 2.5 and Section 2.6. By executing this Agreement, the Seller
Representative accepts the appointment, authority and power contemplated by this
Section 11.1.

 

(b)                                 The Seller Representative will not be liable
for any act done or omitted under this Agreement as Seller Representative while
acting at the direction of the Sellers or otherwise in good faith, and any act
taken or omitted to be taken pursuant to the advice of counsel will be
conclusive evidence of such good faith. Each of the Buyers agrees that it will
not look to the personal assets of the Seller Representative, acting in such
capacity, for the satisfaction of any obligations to be performed by any of the
Sellers and the Seller Representative will not look to the Buyers or,
post-Closing, any of the Portfolio Companies for any of the Sellers’
indemnification obligations hereunder. In performing any of its obligations
under this Agreement or any agreements or documents executed and delivered in
connection herewith, the Seller Representative will not be liable to the Sellers
for any losses that such Person may incur as a result of any act, or failure to
act, by the Seller Representative under this Agreement or any agreements or
documents executed and delivered in connection herewith, and the Seller
Representative will be indemnified and held harmless by the Sellers for all
losses, except to the extent that the actions or omissions of the Seller
Representative were taken or omitted not at the direction of the Sellers or
otherwise in good faith. The limitation of liability and indemnification
provisions of this Section 11.1(b) will survive the termination of this
Agreement.  For the avoidance of doubt, the provisions herein relating to ATP’s
obligations and limitations on liability in its capacity as the Seller
Representative shall not affect or limit ATP’s obligations or liabilities as a
guarantor under the Seller Guaranty.  If the Seller Representative is dissolved
or for any other reason cannot fulfill the obligations set forth in this
Section 11.1, the Sellers agree to appoint a new entity as the successor Seller
Representative within ten (10) Business Days of the dissolution or incapacity of
the original Seller Representative.

 

(c)                                  The appointment of the Seller
Representative is coupled with an interest and may not be revoked in whole or in
part. Such appointment shall be binding upon the officers, directors, security
holders, successors and assigns of each of the Sellers. All decisions of the
Seller Representative shall be final and binding on all of the Sellers and no
securityholder shall have the right to object, dissent, protest or otherwise
contest the same. The Buyers shall be entitled to rely upon, without independent
investigation, any act, notice, instruction or communication from the Seller
Representative and any

 

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document executed by the Seller Representative on behalf of any of the Sellers
and shall be fully protected in connection with any action or inaction taken or
omitted to be taken in reliance thereon.

 

Section 11.2                             Buyer Representative.

 

(a)                                 The Buyer Representative is hereby
constituted and appointed as exclusive proxy, representative, agent and
attorney-in-fact for and on behalf of each of the Buyers, with full power of
substitution, to make all decisions and determinations and to act and execute,
deliver and receive all documents, instruments and consents on behalf of and as
agent for each of the Buyers at any time in connection with, and that may be
necessary or appropriate to accomplish the intent and implement the provisions
of this Agreement. Without limiting the generality of the foregoing, the Buyer
Representative has full power and authority, on behalf of each Buyer and its
successors and assigns, to (i) interpret the terms and provisions of this
Agreement and the documents to be executed and delivered by the Buyers in
connection herewith, (ii) execute and deliver and receive deliveries of all
agreements, certificates, statements, notices, approvals, extensions, waivers,
undertakings, amendments and other documents required or permitted to be given
in connection with the consummation of the transactions contemplated by this
Agreement, (iii) receive service of process in connection with any claims under
this Agreement, (iv) agree to, negotiate and enter into settlements and
compromises of, assume the defense of claims and comply with orders with respect
to such claims, and to take all actions necessary or appropriate in the judgment
of the Buyer Representative for the accomplishment of the foregoing, (v) give
and receive notices and communications, (vi) take all actions necessary or
appropriate in the judgment of the Buyer Representative on behalf of the Buyers
in connection with this Agreement, and (vii) make any determinations and settle
any matters in connection with the adjustments to the Purchase Price in
Section 2.5 and Section 2.6. By executing this Agreement, the Buyer
Representative accepts the appointment, authority and power contemplated by this
Section 11.2.

 

(b)                                 The Buyer Representative will not be liable
for any act done or omitted under this Agreement as Buyer Representative while
acting at the direction of the Buyers or otherwise in good faith, and any act
taken or omitted to be taken pursuant to the advice of counsel will be
conclusive evidence of such good faith. Each of the Sellers agrees that it will
not look to the personal assets of the Buyer Representative, acting in such
capacity, for the satisfaction of any obligations to be performed by the any of
the Buyers and the Buyer Representative will not look to the Sellers for any of
the Buyers’ indemnification obligations hereunder. In performing any of its
obligations under this Agreement or any agreements or documents executed and
delivered in connection herewith, the Buyer Representative will not be liable to
the Buyers for any losses that such Person may incur as a result of any act, or
failure to act, by the Buyer Representative under this Agreement or any
agreements or documents executed and delivered in connection herewith, and the
Buyer Representative will be indemnified and held harmless by the Buyers for all
losses, except to the extent that the actions or omissions of the Buyer
Representative were taken or omitted not at the direction of the Buyers or
otherwise in good faith. The limitation of liability and indemnification
provisions of this Section 11.1(b) will survive the

 

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termination of this Agreement.  In the event the Buyer Representative dissolves,
is no longer an Affiliate of the Portfolio Companies or for any other reason
cannot fulfill the obligations set forth in this Section 11.2, the Buyers agree
to appoint a new entity as the successor Buyer Representative within ten
(10) Business Days of such event.

 

(c)                                  The appointment of the Buyer Representative
is coupled with an interest and may not be revoked in whole or in part. Such
appointment shall be binding upon the officers, directors, security holders,
successors and assigns of each of the Buyers. All decisions of the Buyer
Representative shall be final and binding on all of the Buyers and no
securityholder shall have the right to object, dissent, protest or otherwise
contest the same. The Buyers shall be entitled to rely upon, without independent
investigation, any act, notice, instruction or communication from the Buyer
Representative and any document executed by the Buyer Representative on behalf
of any of the Buyers and shall be fully protected in connection with any action
or inaction taken or omitted to be taken in reliance thereon.

 

Section 11.3                             Notices.  All notices, requests,
claims, demands and other communications required or permitted hereunder shall
be in writing and shall be deemed to have been duly given or made by delivery in
person by an internationally recognized courier service, by facsimile or
electronic mail with receipt confirmed (followed by delivery of an original via
an internationally recognized courier service) or by registered or certified
mail (postage prepaid, return receipt requested) to the respective Parties at
the following addresses (or at such other addresses for a Party as shall be
specified in a notice given in accordance with this Section 11.3):

 

If to the Seller Representative or any of the Sellers, to:

 

Atlantic Power Corporation
One Federal Street, 30th Floor
Boston, MA 02110
Attention: Jeffrey S. Levy
Fax: (617) 977-2410
Email: jlevy@atlanticpower.com

 

with a copy (which shall not constitute notice) to:

 

Morgan, Lewis & Bockius LLP
225 Franklin Street, 16th Floor
Boston, MA 02110
Attention: Mitchell D. Carroll
Fax: (617) 341-7701
Email: mcarroll@morganlewis.com

 

If to the Buyer Representative or any of the Buyers or, after
Closing, the Portfolio Companies, to:

 

Quantum Utility Generation, LLC

1401 McKinney St., Suite 1800

 

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Houston, TX 77010
Attention: W. Lance Schuler, General Counsel
Fax: (713) 485-8641
Email: lschuler@quantumug.com

 

with a copy (which shall not constitute notice) to:

 

Andrews Kurth LLP
600 Travis, Suite 4200
Houston, TX 77002
Attention: Jon W. Daly
Fax: (713) 238-7492
Email: jondaly@akllp.com

 

Section 11.4                             Assignment.  No Party shall assign this
Agreement or any part hereof, by operation of law or otherwise, without the
prior written consent of the other Parties.  Notwithstanding the foregoing,
(i) the Buyers may, without the prior written consent of the other Parties,
assign their rights and obligations under this Agreement in whole or in part to
any one or more Affiliates of the Buyers, but in no event shall such assignment
relieve the Buyers of any of their obligations under this Agreement, and
(ii) each of the Sellers may, without the prior written consent of the other
Parties, assign its rights and obligations under this Agreement in whole or in
part to any one or more Affiliates of such Seller, provided that any such
Affiliate assumes all of the obligations of such Seller under this Agreement and
only if the Seller Guarantor guarantees all obligations of such Affiliate under
this Agreement.  Any attempted assignment in violation of this Section 11.4
shall be void.  Subject to the foregoing, this Agreement shall be binding upon
and inure to the benefit of the Parties and their respective permitted
successors and assigns.

 

Section 11.5                             Rights of Third Parties.  Except for
the provisions of Article IX, which are intended to be enforceable by the
Persons respectively referred to therein, nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give any Person,
other than the Parties and their permitted successors and assigns, any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.

 

Section 11.6                             Expenses.  Except as otherwise provided
herein, each Party shall bear its own expenses incurred in connection with this
Agreement and the transactions contemplated hereby whether or not such
transactions shall be consummated, including all fees of its legal counsel,
financial advisors and accountants.

 

Section 11.7                             Counterparts.  This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.  Any
facsimile or electronic copies hereof or signatures hereon shall, for all
purposes, be deemed originals.

 

Section 11.8                             Entire Agreement.  This Agreement
(together with the Disclosure Schedules and exhibits to this Agreement), the
Letter Agreement and the Confidentiality Agreement constitute the entire
agreement among the Parties and supersede any other agreements, whether written
or oral, that may have been made or entered into by or among any

 

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of the Parties or any of their respective Affiliates relating to the
transactions contemplated hereby.  No representations, warranties, covenants,
understandings or agreements, oral or otherwise, relating to the transactions
contemplated by this Agreement exist between the Buyers or their Affiliates, on
the one hand, and the Sellers or their Affiliates, on the other hand, except as
expressly set forth in this Agreement or in any document delivered at Closing.

 

Section 11.9                             Disclosure Schedules.  Unless the
context otherwise requires, all capitalized terms used in the Disclosure
Schedules shall have the respective meanings assigned to such terms in this
Agreement.  No reference to or disclosure of any item or other matter in the
Disclosure Schedules shall be construed as an admission or indication that such
item or other matter is material or that such item or other matter is required
to be referred to or disclosed in the Disclosure Schedules.  No disclosure in
the Disclosure Schedules relating to any possible breach or violation of any
agreement or Law shall be construed as an admission or indication that any such
breach or violation exists or has actually occurred.  The inclusion of any
information in the Disclosure Schedules shall not be deemed to be an admission
or acknowledgment by the Sellers that in and of itself, such information is
material to or outside the ordinary course of the business of the Portfolio
Companies or is required to be disclosed on the Disclosure Schedules.  Each
numbered Schedule in the Disclosure Schedules qualifies only the correspondingly
numbered representation, warranty or covenant to the extent specified therein
and such other representations, warranties or covenants to the extent a matter
in such numbered Schedule is disclosed in such a way as to make its relevance to
such other representation, warranty or covenant reasonably apparent.

 

Section 11.10                      Amendments.  This Agreement may be amended or
supplemented at any time by additional written agreements signed by each Party
hereto, as may mutually be determined by the Parties to be necessary, desirable
or expedient to further the purpose of this Agreement or to clarify the
intention of the Parties.

 

Section 11.11                      Publicity.  No Party or any Affiliate or
Representative of such Party shall issue or cause the publication of any press
release or public announcement or otherwise communicate with any news media in
respect of this Agreement or the transactions contemplated hereby without the
prior written consent of the other Parties (which consent shall not be
unreasonably withheld, conditioned or delayed), except as may be required by Law
or applicable securities exchange rules and except with respect to customary
investor and analyst presentations, meetings and conference calls, in which
case, the Party issuing or publishing such press release or making such public
announcement shall provide, to the extent reasonably practicable, the other
Parties with a copy of such press release or public announcement (including any
slides or transcripts to be used in any investor or analyst presentation or
conference) in advance of its issuing or publishing such press release or making
such public announcement, as applicable.

 

Section 11.12                      Severability.  If any term or other provision
of this Agreement is illegal, invalid or unenforceable under any Law or as a
matter of public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any Party.  Upon such determination
that any term or other provision contained herein is, to any extent, invalid or
unenforceable in any respect under the

 

71

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Laws governing this Agreement, the Parties to this Agreement shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated by this Agreement be consummated as originally
contemplated to the greatest extent possible.

 

Section 11.13                      Governing Law; Jurisdiction.

 

(a)                                 This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York (without regard
to the conflict of laws principles thereof).  Each of the Parties irrevocably
agrees that any legal action or proceeding with respect to this Agreement or the
transactions contemplated hereby shall be brought and determined in any state or
federal court in the Borough of Manhattan, New York, New York, and each of the
Parties hereto irrevocably submits to the exclusive jurisdiction of such courts
solely in respect of any legal proceeding arising out of or related to this
Agreement.  The Parties further agree that the Parties shall not bring suit with
respect to any disputes arising out of this Agreement or the transactions
contemplated hereby in any court or jurisdiction other than the above specified
courts; provided, however, that the foregoing shall not limit the rights of the
Parties to obtain execution of judgment in any other jurisdiction.  The Parties
further agree, to the extent permitted by Law, that a final and unappealable
judgment against a Party in any action or proceeding contemplated above shall be
conclusive and may be enforced in any other jurisdiction within or outside the
United States by suit on the judgment, a certified copy of which shall be
conclusive evidence of the fact and amount of such judgment.  The Parties agree
that all judicial determinations or findings by a state or federal court in the
Borough of Manhattan, New York, New York with respect to any matter under this
Agreement shall be binding.

 

(b)                                 To the extent that any Party hereto has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, each such Party hereby irrevocably (i) waives such immunity in
respect of its obligations with respect to this Agreement and (ii) submits to
the personal jurisdiction of any court described in this Section 11.13.

 

(c)                                  THE PARTIES HERETO AGREE THAT THEY HEREBY
IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION TO ENFORCE OR
INTERPRET THE PROVISIONS OF THIS AGREEMENT.

 

Section 11.14                      Specific Performance.  Each Party agrees that
the other Parties would suffer irreparable damage in the event that there has
been a material breach by such Party of any representation, warranty or covenant
contained in this Agreement and that any remedy at law for any such breach would
be inadequate.  Accordingly, it is agreed that in the event of such a breach,
the non-breaching Party shall be entitled to an injunction or injunctions to
enforce specifically the terms and provisions hereof in any state or federal
court in the Borough of Manhattan, New York, New York, in addition to any other
remedies it may have at law or in equity.

 

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Section 11.15                      No Consequential Damages.  NOTWITHSTANDING
ANYTHING TO THE CONTRARY STATED IN THIS AGREEMENT OR AS PROVIDED FOR UNDER ANY
APPLICABLE LAW, NO PARTY SHALL BE LIABLE FOR SPECIAL, PUNITIVE,
EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES, WHETHER BASED ON
CONTRACT, TORT, STRICT LIABILITY, OTHER LAW OR OTHERWISE AND WHETHER OR NOT
ARISING FROM ANY OTHER PARTY’S SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT
LIABILITY OR OTHER FAULT; PROVIDED THAT THE FOREGOING SHALL NOT APPLY TO THIRD
PARTY CLAIMS FOR WHICH ONE PARTY IS OBLIGATED TO INDEMNIFY THE OTHER PARTY
HEREUNDER.

 

[SIGNATURE PAGE FOLLOWS]

 

73

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by each
Party as of the date first above written.

 

 

SELLERS:

 

 

 

LAKE INVESTMENT, LP

 

By:

NCP Lake Power, LLC, its General Partner

 

 

By:

Teton East Coast Generation, LLC, its Sole Member

 

 

 

By:

/s/ Terrence Ronan

 

Name:

Terrence Ronan

 

Title:

Vice President

 

 

 

NCP LAKE POWER, LLC

 

By:

Teton East Coast Generation, LLC, its Sole Member

 

 

 

By:

/s/ Terrence Ronan

 

Name:

Terrence Ronan

 

Title:

Vice President

 

 

 

TETON NEW LAKE, LLC

 

 

 

By:

/s/ Terrence Ronan

 

Name:

Terrence Ronan

 

Title:

Vice President

 

 

 

NCP DADE POWER, LLC

 

 

 

By:

/s/ Terrence Ronan

 

Name:

Terrence Ronan

 

Title:

Vice President

 

 

 

DADE INVESTMENT, LP

 

By:

NCP Dade Power, LLC, its General Partner

 

 

 

By:

/s/ Terrence Ronan

 

Name:

Terrence Ronan

 

Title:

Vice President

 

Signature Page to Purchase and Sale Agreement

 

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AUBURNDALE LP, LLC

 

By:

Atlantic Auburndale, LLC, its Sole Member

 

 

 

By:

/s/ Terrence Ronan

 

Name:

Terrence Ronan

 

Title:

Vice President

 

 

 

 

 

AUBURNDALE GP, LLC

 

By:

Auburndale LP, LLC, its Sole Member

 

 

By:

Atlantic Auburndale, LLC, its Sole Member

 

 

 

By:

/s/ Terrence Ronan

 

Name:

Terrence Ronan

 

Title:

Vice President

 

 

 

SELLER REPRESENTATIVE:

 

 

 

ATLANTIC POWER CORPORATION

 

solely in its capacity as Seller Representative

 

 

 

By:

/s/ Barry E. Welch

 

Name:

Barry E. Welch

 

Title:

President and Chief Executive Officer

 

Signature Page to Purchase and Sale Agreement

 

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BUYERS:

 

 

 

 

 

QUANTUM LAKE LP, LLC

 

 

 

By:

/s/ Larry M. Kellerman

 

Name:

Larry M. Kellerman

 

Title:

Chief Executive Officer

 

 

 

 

 

QUANTUM LAKE GP, LLC

 

 

 

By:

/s/ Larry M. Kellerman

 

Name:

Larry M. Kellerman

 

Title:

Chief Executive Officer

 

 

 

 

 

QUANTUM PASCO LP, LLC

 

 

 

By:

/s/ Larry M. Kellerman

 

Name:

Larry M. Kellerman

 

Title:

Chief Executive Officer

 

 

 

 

 

QUANTUM PASCO GP, LLC

 

 

 

By:

/s/ Larry M. Kellerman

 

Name:

Larry M. Kellerman

 

Title:

Chief Executive Officer

 

 

 

 

 

QUANTUM AUBURNDALE LP, LLC

 

 

 

By:

/s/ Larry M. Kellerman

 

Name:

Larry M. Kellerman

 

Title:

Chief Executive Officer

 

 

 

 

 

QUANTUM AUBURNDALE GP, LLC

 

 

 

By:

/s/ Larry M. Kellerman

 

Name:

Larry M. Kellerman

 

Title:

Chief Executive Officer

 

Signature Page to Purchase and Sale Agreement

 

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BUYER REPRESENTATIVE:

 

 

 

QUANTUM UTILITY GENERATION, LLC

 

 

 

By:

/s/ Larry M. Kellerman

 

Name:

Larry M. Kellerman

 

Title:

Chief Executive Officer

 

Signature Page to Purchase and Sale Agreement

 

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EXHIBIT A

 

Form of Assignment and Assumption Agreement

 

A-1

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

 

EXHIBIT A

 

FORM OF

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”) is made and entered
into this          day of                     , 2013 (the “Effective Date”), by
and between                               , a                               
(“Assignor”), and                               , a
                               (“Assignee”).  Each of Assignor and Assignee may
be referred to collectively as the “Parties” or individually as a “Party”.

 

RECITALS

 

WHEREAS, Assignor owns a       % [limited] [general] partner interest (the
“Partnership Interests”) in                               , a [Delaware]
[Florida] limited partnership (the “Partnership”);

 

WHEREAS, upon the terms and subject to the conditions set forth in that certain
Purchase and Sale Agreement, dated as of January 30, 2013, by and among
Assignee, Assignor and the other parties named therein (the “Purchase
Agreement”), Assignor has agreed to sell to Assignee, and Assignee has agreed to
purchase from Assignor, the Partnership Interests;

 

WHEREAS, capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Purchase Agreement; and

 

WHEREAS, this Agreement is executed and delivered by Assignor and Assignee in
connection with the Closing under, and in accordance with, the Purchase
Agreement.

 

NOW, THEREFORE, BE IT KNOWN THAT:

 

1.             Conveyance and Assignment.  For good and valuable consideration
as set forth in the Purchase Agreement, effective as of 12:01 a.m. Eastern time
on the Effective Date, Assignor does hereby ASSIGN, TRANSFER, SET OVER, DELIVER
AND CONVEY to Assignee, free and clear of all Liens, all of the rights,
benefits, and privileges of Assignor in the Partnership Interests, including,
without limitation, (a) all of Assignor’s [limited] [general] partner interest
in the Partnership, (b) all of Assignor’s right to receive allocations of
income, gain, loss, deduction or credit, as well as future distributions, of the
Partnership, in liquidation or otherwise, (c) all of Assignor’s rights to
consent to, approve of or vote on any decisions of the Partnership attributable
to the Partnership Interests, (d) all of Assignor’s direct or indirect interest
in the assets of the Partnership and (e) all other rights, titles, interests and
benefits of whatsoever kind or character now or hereafter accruing to the
Partnership Interests.

 

2.             Assumption.  Effective as of 12:01 a.m. Eastern time on the
Effective Date, Assignee accepts the assignment, transfer, set over, delivery
and conveyance of the Partnership Interests as set forth above and agrees to
become [a] [the sole] [limited] [general] partner of the Partnership and to be
bound by all of the provisions of the certificate of limited partnership and
agreement of limited partnership of the Partnership.  The Parties hereby
acknowledge and agree that Assignor shall not be liable for any obligation of a
[limited] [general] partner of the

 

A-2

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Partnership under the agreement of limited partnership of the Partnership which
may arise from and after the Effective Date.

 

3.             Conflict Among Agreements.  In the event of a conflict between
the terms and conditions of this Agreement and the terms and conditions of the
Purchase Agreement, the terms and conditions of the Purchase Agreement shall
govern, supersede and prevail.

 

4.             Captions and Headings.  The captions and headings in this
Agreement are for convenience only and shall not be considered a part of or
affect the construction or interpretation of any provision of this Agreement.

 

5.             Successors and Assigns.  This Agreement shall bind and benefit
the respective successors and permitted assigns of the Parties.

 

6.             Counterparts.  This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.  Any facsimile or electronic copies
hereof or signatures hereon shall, for all purposes, be deemed originals.

 

7.             Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of New York (without regard to the
conflict of laws principles thereof).

 

[SIGNATURE PAGE FOLLOWS]

 

A-3

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by each
Party as of the date first written above.

 

 

 

ASSIGNOR:

 

 

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

ASSIGNEE:

 

 

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Signature Page to Assignment and Assumption Agreement

 

A-4

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EXHIBIT B

 

Form of Letter of Credit

 

B-1

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

 

EXHIBIT B

 

Form of Letter of Credit

 

Citibank, N.A.

 

Date:  January 30, 2013

 

Beneficiary:

 

Atlantic Power Corporation

One Federal Street, 30th Floor

Boston, MA 02110

Attention:  Paul Rapisarda

Fax: (617) 977-2410

Email: prapisarda@atlanticpower.com

 

Applicant:

 

Quantum Energy Partners V, LP

1401 McKinney St., Suite 2700

Houston, Texas  77010

 

Gentlemen:

 

By order of our client, Quantum Energy Partners V, LP (the “Applicant”), we,
Citibank, N.A. having its business address at
[                                   ADDRESS] (“Issuer”), hereby issue this
Irrevocable Standby Letter of Credit No. [                        ], in favor of
Atlantic Power Corporation (“Beneficiary”) for an amount not to exceed USD
10,000,000.00 (Ten Million and No/100 United States Dollars), effective
immediately and expiring on the earlier of (1) 5:00 p.m. Eastern time on
June 29, 2013 or (2) our receipt of written confirmation from you indicating
your consent to the termination of this Irrevocable Standby Letter of Credit
along with the return of this original Irrevocable Standby Letter of Credit.

 

Issuer undertakes to Beneficiary to pay Beneficiary’s demand for payment upon
presentation of Beneficiary’s sight draft in the form of Exhibit “A” hereto,
accompanied by Beneficiary’s written and dated statement, signed by an officer
of Beneficiary’s company, in the form of Exhibit “B” hereto.  Presentation of
such drawing documents may be made (a) by fax transmission to 813-604-7187 or
such other fax number identified by Issuer in a written notice to Beneficiary or
(b) at the office of Issuer’s servicer, Citicorp North America, Inc., at 3800
Citibank Center, Building B, 3rd Floor, Tampa, Florida 33610, Attn:  U.S.
Standby Dept., or such other office as Issuer may advise Beneficiary by written
notice from time to time (the “Office”).

 

B-2

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To the extent a presentation is made by fax transmission, Beneficiary should
(i) provide telephone notification thereof to Citibank, N.A. to 866-498-8670
prior to or simultaneously with the sending of such fax transmission and
(ii) send the original of such drawing document(s) to Citibank, N.A., c/o
Citicorp North America, Inc., at the same address provided above for
presentation of documents, provided, however, that Citibank, N.A.’s receipt of
such telephone notice or original document(s) shall not be a condition to
payment hereunder.

 

Issuer hereby agrees with Beneficiary to honor each draft drawn under and in
compliance with the terms and conditions of this Irrevocable Standby Letter of
Credit if presented, together with the documents specified above, at this office
on or before the stated expiration time.  If the requisite documents are
presented in any manner provided herein before expiration of this Irrevocable
Standby Letter of Credit, Issuer will honor the draft(s) drawn under and in
compliance with the terms of this Irrevocable Standby Letter of Credit upon
presentation, and payment will be effected within one business day after such
presentation by wire transfer to a duly requested account of Beneficiary.

 

As used herein “business day” shall mean any day other than a Saturday or Sunday
or a day on which banking institutions in New York City are authorized or
required to close by law.

 

Should Beneficiary have occasion to communicate with Issuer regarding this
Irrevocable Standby Letter of Credit, Beneficiary should direct any
correspondence to Issuer at the Office, making specific mention of the
Irrevocable Standby Letter of Credit Number indicated above.

 

Except as otherwise expressly stated herein, this Irrevocable Standby Letter of
Credit is subject to the International Standby Practices
(“ISP98”), International Chamber of Commerce, Publication No. 590, and as to
matters not governed by the ISP98, shall be governed by and construed in
accordance with the laws of the State of New York and applicable U.S. Federal
Law.

 

 

 

 

 

Authorized Signature(s)

 

Citibank, N.A.

 

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EXHIBIT “A”
TO IRREVOCABLE STANDBY LETTER OF CREDIT
NO. [                ]
SIGHT DRAFT

 

[DATE]

 

Citibank, N.A.

c/o Its Servicer, Citicorp North America, Inc.

3800 Citibank Center, Building B, 3rd Floor

Tampa, Florida  33610

 

Attn:  US Standby Dept.

 

Re:                             Irrevocable Standby Letter of Credit
No. [                        ]

 

On Sight

 

Demand is hereby made upon you for payment to the undersigned Beneficiary of
                                                       United States Dollars
(USD                       ) in immediately available funds by deposit to our
Account No.                     at [Insert Name of Bank and Wire Transfer
Details] on or before the first business day following the date hereof, pursuant
to Irrevocable Standby Letter of Credit No. [                        ] of
Citibank, N.A.

 

 

ATLANTIC POWER CORPORATION

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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EXHIBIT “B”
TO IRREVOCABLE STANDBY LETTER OF CREDIT
NO. [              ]

 

[DATE]

 

Citibank, N.A.

c/o Its Servicer, Citicorp North America, Inc.

3800 Citibank Center, Building B, 3rd Floor

Tampa, Florida  33610

 

Attn:  US Standby Dept.

 

Re:                             Irrevocable Standby Letter of Credit
No. [                        ]

 

Gentlemen:

 

This is a Certificate presented in accordance with your Irrevocable Standby
Letter of Credit No. [                        ] held by the undersigned
Beneficiary.

 

The undersigned Beneficiary hereby certifies as follows:

 

Atlantic Power Corporation (“ATP”) is entitled to draw under the Irrevocable
Standby Letter of Credit No. [                        ] in the amount set forth
in the Sight Draft accompanying this Certificate for amounts payable pursuant to
Section 10.2 of the Purchase and Sale Agreement, dated as of January 30, 2013,
by and among (i) LAKE INVESTMENT, LP, (ii) NCP LAKE POWER, LLC, (iii) TETON NEW
LAKE, LLC, (iv) NCP DADE POWER, LLC, (v) DADE INVESTMENT, LP, (vi) AUBURNDALE
LP, LLC, (vii) AUBURNDALE GP, LLC, (viii) QUANTUM LAKE LP, LLC, (ix) QUANTUM
LAKE GP, LLC, (x) QUANTUM PASCO LP, LLC, (xi) QUANTUM PASCO GP, LLC,
(xii) QUANTUM AUBURNDALE LP, LLC, (xiii) QUANTUM AUBURNDALE GP, LLC, (xiv) ATP,
solely in its capacity as the Seller Representative, and (xv) Quantum Utility
Generation, LLC, solely in its capacity as the Buyer Representative.

 

IN WITNESS WHEREOF, this Certificate has been executed and delivered by a duly
authorized officer of the undersigned on the date first above written.

 

B-5

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ATLANTIC POWER CORPORATION

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

B-6

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EXHIBIT C

 

Form of Seller Guaranty

 

C-1

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EXECUTION COPY

 

GUARANTY AGREEMENT

 

This Guaranty Agreement (this “Guaranty”) is made as of January 30, 2013 by
Atlantic Power Corporation, a corporation continued under the laws of the
Province of British Columbia, Canada (“Guarantor”), in favor of each of Quantum
Lake LP, LLC, a Delaware limited liability company (“Quantum Lake LP”), Quantum
Lake GP, LLC, a Delaware limited liability company (“Quantum Lake GP”), Quantum
Pasco LP, LLC, a Delaware limited liability company (“Quantum Pasco LP”),
Quantum Pasco GP, LLC, a Delaware limited liability company (“Quantum Pasco
GP”), Quantum Auburndale LP, LLC, a Delaware limited liability company (“Quantum
Auburndale LP”), Quantum Auburndale GP, LLC, a Delaware limited liability
company (“Quantum Auburndale GP”) and Quantum Utility Generation, LLC, a
Delaware limited liability company (the “Buyer Representative”).  Each of
Quantum Lake LP, Quantum Lake GP, Quantum Pasco LP, Quantum Pasco GP, Quantum
Auburndale LP and Quantum Auburndale GP is referred to herein individually as a
“Beneficiary” and collectively the “Beneficiaries.”  Capitalized terms used
herein without definition shall have the meanings ascribed to them in the
Purchase and Sale Agreement (defined below).

 

RECITALS

 

WHEREAS, each of the Beneficiaries, the Buyer Representative, solely in its
capacity as the Buyer Representative, Lake Investment, LP, a Delaware limited
partnership (“Lake Investment”), NCP Lake Power, LLC, a Delaware limited
liability company (“NCP Lake”), Teton New Lake, LLC, a Delaware limited
liability company (“Teton New Lake”), NCP Dade Power, LLC, a Delaware limited
liability company (“NCP Dade”), Dade Investment, LP, a Delaware limited
partnership (“Dade Investment”), Auburndale LP, LLC, a Delaware limited
liability company (“Auburndale LP”), Auburndale GP, LLC, a Delaware limited
liability company (“Auburndale GP”), and Guarantor, solely in its capacity as
the Seller Representative, have entered into that certain (a) Purchase and Sale
Agreement of even date herewith (the “Purchase and Sale Agreement”), pursuant to
which the Buyers shall acquire from the Sellers one hundred percent (100%) of
the outstanding general and limited partnership interests in each of (i) Lake
Cogen, Ltd., a Florida limited partnership (“Lake”), (ii) Pasco Cogen, Ltd., a
Florida limited partnership (“Pasco”), and (iii) Auburndale Power Partners,
Limited Partnership, a Delaware limited partnership (“Auburndale”, and together
with Lake and Pasco, the “Portfolio Companies”) and (b) Letter Agreement
relating to the Purchase and Sale Agreement of even date herewith (the “Letter
Agreement”);

 

WHEREAS, Guarantor indirectly owns 100% of the issued and outstanding equity
interests in each of Lake Investment, NCP Lake, Teton New Lake, NCP Date, Dade
Investment, Auburndale LP and Auburndale GP (each a “Seller” and collectively,
the “Sellers”) and will therefore receive financial and other benefits from the
transactions contemplated by the Purchase and Sale Agreement and the Letter
Agreement;

 

WHEREAS, in connection with the Purchase and Sale Agreement, the Beneficiaries,
the Buyer Representative, solely in its capacity as Buyer Representative, the
Portfolio Companies, Atlantic Power Holdings, Inc., a Delaware corporation
(“APH”), the Sellers and the Guarantor, solely in its capacity as Seller
Representative, have entered into that certain Transition Services

 

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Agreement of even date herewith (the “Transition Services Agreement”);

 

WHEREAS, the Buyers have required as a condition, among others, to entering into
the Purchase and Sale Agreement and the Letter Agreement that Guarantor execute
and deliver this Guaranty to the Buyer Representative; and

 

WHEREAS, Guarantor has agreed to enter into this Guaranty to provide assurance
for the payment obligations of (i) each of the Sellers in connection with the
Purchase and Sale Agreement, the Letter Agreement and the Transition Services
Agreement and (ii) APH in connection with the Transition Services Agreement, and
to induce each of the Buyers to enter into the Purchase and Sale Agreement and
Letter Agreement.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the premises set forth above, the terms and
conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

 

1.                                      Guaranty.

 

(a)                                                                                
For value received and in consideration of the transactions contemplated by the
Purchase and Sale Agreement and the Letter Agreement, Guarantor absolutely,
unconditionally and irrevocably guarantees for the benefit of each of the
Beneficiaries and their permitted successors and assigns, the full and prompt
payment of all payment obligations of (i) the Sellers under the Purchase and
Sale Agreement, the Letter Agreement and the Transition Services Agreement, and
(ii) APH under the Transition Services Agreement (collectively, the “Guaranteed
Obligations”) as and when the same shall become due in accordance with the
Purchase and Sale Agreement, the Letter Agreement and the Transition Services
Agreement, as applicable.  Guarantor hereby agrees that this Guaranty is an
absolute guaranty of payment and is not a guaranty of collection.

 

(b)                                                                                
Any and all payments by Guarantor hereunder shall be made free and clear of, and
without reduction for, any and all taxes, levies, imposts, deductions, charges,
withholdings, and all stamp or documentary taxes, excise taxes, ad valorem taxes
and other taxes, charges or levies which arise from the payment of Guarantor
hereunder.

 

(c)                                                                                 
Notwithstanding anything herein to the contrary:

 

(i)                                     Guarantor shall not be required to make
a payment in respect of any Guaranteed Obligation while the validity and
existence of such Guaranteed Obligation is being disputed in good faith by any
Seller in accordance with the relevant provisions of the Purchase and Sale
Agreement, the Letter Agreement or the Transition Services Agreement, as
applicable; and

 

(ii)                                  Guarantor’s liability in respect of any
Guaranteed Obligation shall not exceed the liability of any Seller with respect
to such Guaranteed Obligation under the Purchase and Sale Agreement, the Letter
Agreement or the Transition Services Agreement, as applicable.

 

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2.                                      Obligations Absolute and Unconditional. 
Guarantor hereby agrees that its obligations under this Guaranty shall be
irrevocable, continuing, absolute, and unconditional, irrespective of, and the
Guaranteed Obligations of Guarantor shall not be discharged or impaired or
otherwise effected by, and Guarantor hereby irrevocably waives any defenses to
enforcement it may have (now in the future) by reason of:

 

(a)                                                                                
the illegality, lack of validity, enforceability, avoidance, or subordination of
any of the Guaranteed Obligations, the Purchase and Sale Agreement, the Letter
Agreement or the Transition Services Agreement;

 

(b)                                                                                
the absence of any attempt by, or on behalf of, any of the Beneficiaries, to
collect, or to take any other action to enforce, all or any part of the
Guaranteed Obligations whether from or against any Seller or any other Person;

 

(c)                                                                                 
the election of any remedy available under the Purchase and Sale Agreement, the
Letter Agreement, the Transition Services Agreement or applicable Laws by, or on
behalf of, any of the Beneficiaries with respect to all or any part of the
Guaranteed Obligations;

 

(d)                                                                                
the waiver, consent, extension, forbearance or granting of any indulgence by, or
on behalf of, any of the Beneficiaries, with respect to any provision of the
Purchase and Sale Agreement, the Letter Agreement or the Transition Services
Agreement;

 

(e)                                                                                 
any change in the legal or beneficial ownership, or the existence or structure
as a partnership or other entity, of any Seller or any other Person now or
hereafter liable with respect to any of the Guaranteed Obligations (including,
without limitation, any consolidation or amalgamation with, any merger with or
into, or any transfer of all or substantially all the assets of such Seller or
such other Person to, another Person);

 

(f)                                                                                  
the disallowance, under Section 502 of the Chapter 11 of the United States
Bankruptcy Code (the “Bankruptcy Code”), of all or any portion of the claims
against any Seller held by any of the Beneficiaries, for payment of all or any
part of the Guaranteed Obligations;

 

(g)                                                                                 
the operation of the automatic stay under Section 362(a) of the Bankruptcy Code
with respect to any Seller; or

 

(h)                                                                                
to the fullest extent permitted by applicable Law, any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor.

 

3.                                      Enforcement; Application of Payments. 
In the case of any failure by any Seller to pay any Guaranteed Obligation in
accordance with the terms of the Purchase and Sale Agreement, the Letter
Agreement or the Transition Services Agreement, as applicable, Guarantor hereby
agrees that, upon receipt of written notice from the Buyer Representative, on
behalf of the Beneficiaries, of such failure, Guarantor will promptly make
payment of such Guaranteed Obligations owing to the Beneficiaries to the Buyer
Representative for the benefit of the Beneficiaries, without first proceeding
against such Seller or any other Person.  Any amounts

 

C-4

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received by the Buyer Representative hereunder shall be applied to the
Guaranteed Obligations.

 

4.                                      Waivers and Acknowledgments.

 

(a)                                                                                
Guarantor unconditionally and irrevocably hereby waives any right to revoke this
Guaranty, diligence, presentment, demand of payment, filing of claims with a
court in the event of receivership or bankruptcy of any Seller or any other
Person (other than Guarantor to the extent required by the Bankruptcy Code),
protest or notice with respect to the Guaranteed Obligations, all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor and notices of acceptance of this Guaranty, and all
other notices or demands whatsoever (and shall not require that the same be made
on any Seller as a condition precedent to Guarantor’s obligations hereunder).

 

(b)                                                                                
The Beneficiaries and the Buyer Representative are hereby authorized, without
notice or demand and without affecting the liability of Guarantor hereunder,
from time to time, (i) to renew, extend, accelerate or otherwise change the time
for payment of, or other terms relating to, all or any part of the Guaranteed
Obligations, or to otherwise modify, amend or change the terms of the Purchase
and Sale Agreement, the Letter Agreement or the Transition Services Agreement
(including, in each case, the addition or substitution of any Person now or
hereafter liable with respect to any Guaranteed Obligation); (ii) to accept
partial payments on all or any part of the Guaranteed Obligations; (iii) to take
and hold security or collateral for the payment of all or any part of the
Guaranteed Obligations, this Guaranty, or any other guaranties of all or any
part of the Guaranteed Obligations; (iv) to exchange, enforce, waive and release
any such security or collateral; (v) to apply such security or collateral and
direct the order or manner of sale thereof as in its discretion it may
determine; and (vi) to settle, release, exchange, enforce, waive, compromise or
collect or otherwise liquidate all or any part of the Guaranteed Obligations or
any other guaranty of all or any part of the Guaranteed Obligations, and any
security or collateral for the Guaranteed Obligations or for any such guaranty,
irrespective of the effect on the contribution or subrogation rights of
Guarantor.  Any of the foregoing may be done in any manner, without affecting or
impairing the obligations of Guarantor hereunder.

 

5.                                      Reinstatement.  Guarantor further agrees
that, to the extent that any Seller makes a payment or payments of Guaranteed
Obligations to any of the Beneficiaries or to the Buyer Representative for the
benefit of the Beneficiaries, which payment or payments of Guaranteed
Obligations, or any part thereof are subsequently rescinded, invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to such Seller, or its trustee, receiver or any other party, including,
without limitation, Guarantor under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or repayment,
the part of the Guaranteed Obligations which has been paid, reduced or satisfied
by such amount shall be reinstated and continued in full force and effect as of
the time immediately preceding such initial payment, reduction or satisfaction.

 

6.                                      Subrogation.  Guarantor will not
exercise any rights that it may acquire by way of subrogation under this
Guaranty, by any payment made hereunder or otherwise, until all of the
Guaranteed Obligations shall have been paid in full.  If any amount shall be
paid to Guarantor on account of such subrogation rights at any time when all of
the Guaranteed

 

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Obligations shall not have been paid in full, such amount shall be held in trust
for the benefit of the Beneficiaries and shall forthwith be paid to the Buyer
Representative for the benefit of the Beneficiaries to be credited and applied
to such Guaranteed Obligations in accordance with the terms of the Purchase and
Sale Agreement, the Letter Agreement or the Transition Services Agreement, as
applicable.  If (i) Guarantor shall make payment to the Buyer Representative of
all or any part of the Guaranteed Obligations and (ii) all of the Guaranteed
Obligations shall be paid in full, the Buyer Representative, on behalf of the
Beneficiaries, will, at Guarantor’s request and expense, execute and deliver, or
will cause to be executed and delivered, to Guarantor appropriate documents,
without recourse and without representation or warranty, necessary to evidence
the transfer by subrogation to Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by Guarantor.

 

7.                                      Enforcement; Amendments; Waivers.  No
delay on the part of any Beneficiary or the Buyer Representative in the exercise
of any right or remedy arising under this Guaranty, the Purchase and Sale
Agreement, the Letter Agreement, the Transition Services Agreement or otherwise
with respect to all or any part of the Guaranteed Obligations shall operate as a
waiver thereof, and no single or partial exercise by any Beneficiary or the
Buyer Representative of any such right or remedy shall preclude any further
exercise thereof.  No modification or waiver of any of the provisions of this
Guaranty shall be binding upon the Beneficiaries, the Buyer Representative or
Guarantor, except as expressly set forth in a writing duly signed and delivered
by the Buyer Representative, on behalf of the Beneficiaries, and Guarantor. 
Failure by the Beneficiaries or the Buyer Representative at any time or times
hereafter to require strict performance by any Seller of all or any part of the
Guaranteed Obligations or any other Person of any of the provisions, warranties,
terms and conditions contained in the Purchase and Sale Agreement, the Letter
Agreement or the Transition Services Agreement, as applicable, shall not waive,
affect or diminish any right of the Beneficiaries or the Buyer Representative at
any time or times hereafter to demand strict performance thereof and such right
shall not be deemed to have been waived by any act or knowledge of any
Beneficiary or the Buyer Representative (or their agents, officers or
employees), unless such waiver is contained in an instrument in writing from the
Buyer Representative, directed and delivered to such Seller or Guarantor, as
applicable, specifying such waiver, and is signed by the Buyer Representative on
behalf of such Beneficiary.  No waiver of any default in the Guaranteed
Obligations by the Buyer Representative or the Beneficiaries shall operate as a
waiver of any other default of the Guaranteed Obligations or the same default of
the Guaranteed Obligations on a future occasion.

 

8.                                      Effectiveness; Termination.  This
Guaranty shall become effective against Guarantor upon its execution by
Guarantor and shall continue in full force and effect and may not be terminated
or otherwise revoked until (and, notwithstanding anything contrary continued
herein, Guarantor shall be automatically released and this Guaranty shall be
automatically terminated without further act of Guarantor, the Beneficiaries, or
the Buyer Representative upon) the earliest to occur of (i) payment in full of
the Guaranteed Obligations, subject to automatic reinstatement if any payment by
the Sellers in respect of the Guaranteed Obligations is rescinded or returned,
(ii) the date on which all indemnification obligations of the Sellers and APH,
as applicable, have been terminated pursuant to the terms of the Purchase and
Sale Agreement, the Letter Agreement and the Transition Services Agreement,
(iii) the date of termination of the Purchase and Sale Agreement if terminated
pursuant to Section 10.1(c) thereof, and (iv) the date

 

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of termination of this Guaranty in writing by and among Guarantor and the Buyer
Representative.

 

9.                                      Successors and Assigns.  This Guaranty
shall be binding upon Guarantor and upon the successors and permitted assigns of
Guarantor and shall inure to the benefit of the Beneficiaries, the Buyer
Representative and their respective successors and permitted assigns under and
in accordance with the terms of the Purchase and Sale Agreement, the Letter
Agreement and the Transition Services Agreement.

 

10.                               Consent to Assignment; Exceptions.  Guarantor
may not assign its rights or delegate its obligations under this Guaranty, in
whole or in part, without the prior written consent of Buyer Representative, on
behalf of the Beneficiaries, and any purported assignment or delegation absent
such consent is void, except for an assignment and delegation of all of
Guarantor’s rights and obligations hereunder in whatever form Guarantor
determines may be appropriate to a partnership, corporation, trust or other
organization in whatever form that succeeds to all or substantially all of
Guarantor’s assets and business and that assumes such obligations by contract,
operation of law or otherwise.  Upon any such delegation and assumption of
obligations, Guarantor shall be relieved of and fully discharged from all
obligations hereunder, whether such obligations arose before or after such
delegation and assumption.

 

11.                               Governing Law. This Guaranty shall be governed
by and construed in accordance with the Laws of the State of New York, without
regard to any conflict of laws provisions thereof that would result in the
application of the Law of another Jurisdiction.

 

12.                               Certain Consents and Waivers.

 

(a)                                 Jurisdiction and Venue.  Each of Guarantor,
the Beneficiaries and the Buyer Representative hereby irrevocably and
unconditionally submits, for itself and its property, to the non-exclusive
jurisdiction of any state or federal court in the Borough of Manhattan, New
York, New York, in any action or proceeding arising out of or relating to this
Guaranty.  Each of Guarantor, the Beneficiaries and the Buyer Representative
waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety or other security that might
be required of any other party with respect thereto.  Each of Guarantor, the
Beneficiaries and the Buyer Representative agrees that service of summons and
complaint or any other process that might be served in any action or proceeding
may be made on such party by sending or delivering a copy of the process to the
party to be served at the address of the party and in the manner provided for
the giving of notices in Section 13.  Nothing in this Section 12, however, shall
affect the right of any party to serve legal process in any other manner
permitted by Law.  Each of Guarantor, the Beneficiaries and the Buyer
Representative agrees that a final, non-appealable judgment in any action or
proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by Law.

 

(b)                                 Waiver of Jury Trial.  EACH OF GUARANTOR,
THE BENEFICIARIES AND THE BUYER REPRESENTATIVE WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT

 

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OF ANY CLAIM BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY
OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

13.                               Notices.  All notices and other communications
required or desired to be served, given or delivered hereunder shall be in
writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered United States mail or sent by telecopier or other
electronic means as follows:

 

(i)                                     if to Guarantor, to:

 

Atlantic Power Corporation
One Federal Street, 30th Floor
Boston, MA 02110

Facsimile No.: 617-977-2410

Attention:  Jeffrey S. Levy, Vice President, Legal

Email: jlevy@atlanticpower.com

 

with a copy (which shall not constitute notice) to:

 

Morgan, Lewis & Bockius LLP

225 Franklin Street, 16th Floor

Boston, MA 02110

Facsimile No.: 617-341-7701

Attention: Mitchell D. Carroll

Email: mcarroll@morganlewis.com

 

(ii)                                  if to the Buyer Representative or any
Beneficiary, to:

 

Quantum Utility Generation, LLC

1401 McKinney St., Suite 1800

Houston, TX 77010

Facsimile: (713) 485-8641

Attention: W. Lance Schuler, General Counsel

Email: lschuler@quantumug.com

 

with a copy (which shall not constitute notice) to:

 

Andrews Kurth LLP

600 Travis, Suite 4200

Houston, TX 77002

Facsimile: (713) 238-7492

Attention: Jon W. Daly

Email: jondaly@akllp.com

 

or, as to each party, at such other address as designated by such party in a
written notice to the other party.  Notice given by personal delivery, mail or
overnight courier pursuant to this Section 13 shall be effective upon physical
receipt.  Notice given by facsimile or electronic

 

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means pursuant to this Section 13 shall be effective as of (i) the date of
confirmed delivery if delivered before 5:00 p.m. Eastern Time on any Business
Day or (ii) the next succeeding Business Day if confirmed delivery is after
5:00 p.m. Eastern Time on any Business Day or during any non-Business Day;
provided, in each case, such transmission is promptly confirmed by either
personal delivery, mail or overnight courier.

 

14.                               Severability.  Wherever possible, each
provision of this Guaranty shall be interpreted in such manner as to be
effective and valid under applicable Law, but if any provision of this Guaranty
shall be prohibited by or invalid under such Law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Guaranty.

 

15.                               Merger.  This Guaranty represents the final
agreement of Guarantor and the Buyer Representative, on behalf of the
Beneficiaries, with respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous agreements, or subsequent
oral agreements, by and among Guarantor, the Beneficiaries and the Buyer
Representative.

 

16.                               Execution in Counterparts.  This Guaranty may
be executed by the parties hereto in multiple counterparts and shall be
effective as of the date set forth above when each party shall have executed and
delivered a counterpart hereof, whether or not the same counterpart is executed
and delivered by each party.  When so executed and delivered, each such
counterpart shall be deemed an original, and all such counterparts shall be
deemed one and the same document.  Transmission of images of signed signature
pages by facsimile, e-mail or other electronic means shall have the same effect
as the delivery of manually signed documents in person.

 

[Signature pages follow.]

 

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IN WITNESS WHEREOF, this Guaranty has been duly executed as of the date and year
first set forth above.

 

 

GUARANTOR:

 

 

 

 

 

ATLANTIC POWER CORPORATION

 

 

 

 

 

 

By:

 

 

 

 

Barry E. Welch

 

 

 

President

 

[Signature Page to Guaranty]

 

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ACCEPTED AND AGREED TO BY THE BENEFICIARIES:

 

 

 

 

 

QUANTUM LAKE LP, LLC

 

 

 

 

By:

 

 

Name:

Larry M. Kellerman

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

QUANTUM LAKE GP, LLC

 

 

 

 

By:

 

 

Name:

Larry M. Kellerman

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

QUANTUM PASCO LP, LLC

 

 

 

 

By:

 

 

Name:

Larry M. Kellerman

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

QUANTUM PASCO GP, LLC

 

 

 

 

By:

 

 

Name:

Larry M. Kellerman

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

QUANTUM AUBURNDALE LP, LLC

 

 

 

 

By:

 

 

Name:

Larry M. Kellerman

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

QUANTUM AUBURNDALE GP, LLC

 

 

 

 

By:

 

 

Name:

Larry M. Kellerman

 

Title:

Chief Executive Officer

 

Signature Page to Seller Guaranty

 

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

 

 

ACCEPTED AND AGREED TO BY THE BUYER REPRESENTATIVE:

 

 

 

 

QUANTUM UTILITY GENERATION, LLC

 

 

 

 

By:

 

 

Name:

Larry M. Kellerman

 

Title:

Chief Executive Officer

 

Signature Page to Seller Guaranty

 

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EXHIBIT D

 

Form of Transition Services Agreement

 

D-1

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EXHIBIT D

 

FORM OF

 

TRANSITION SERVICES AGREEMENT

 

This TRANSITION SERVICES AGREEMENT (this “Agreement”) is made and entered into
as of January 30, 2013, by and among:

 

(A) Lake Investment LP, a Delaware limited partnership, NCP Lake Power, LLC, a
Delaware limited liability company, Teton New Lake, LLC, a Delaware limited
liability company, NCP Dade Power, LLC, a Delaware limited liability company,
Dade Investment, LP, a Delaware limited partnership, Auburndale LP, LLC, a
Delaware limited liability company, and Auburndale GP, LLC, a Delaware limited
liability company (collectively, the “Sellers”), and Atlantic Power Corporation,
a corporation continued under the laws of the Province of British Columbia,
Canada (the “Seller Representative”);

 

(B) Atlantic Power Holdings, Inc., a Delaware corporation (“APH”);

 

(C) Lake Cogen, Ltd., a Florida limited partnership (“Lake”), Pasco Cogen, Ltd.,
a Florida limited partnership (“Pasco”), and Auburndale Power Partners, Limited
Partnership, a Delaware limited partnership (“Auburndale”, and together with
Lake and Pasco, the “Portfolio Companies”); and

 

(D) Quantum Lake LP, LLC, a Delaware limited liability company, Quantum Lake GP,
LLC, a Delaware limited liability company, Quantum Pasco LP, LLC, a Delaware
limited liability company, Quantum Pasco GP, LLC, a Delaware limited liability
company, Quantum Auburndale LP, LLC, a Delaware limited liability company, and
Quantum Auburndale GP, LLC, a Delaware limited liability company (collectively,
the “Buyers”), and Quantum Utility Generation, LLC, a Delaware limited liability
company (the “Buyer Representative”).

 

Each of the Sellers, the Seller Representative, APH, the Portfolio Companies,
the Buyers and the Buyer Representative are each sometimes referred to herein as
a “party” and collectively, as the “parties.”  Capitalized terms used herein but
not otherwise defined shall have the meanings assigned such terms in the
Purchase Agreement (as defined below).

 

RECITALS

 

A.                                    The Sellers, the Seller Representative,
the Buyers, and the Buyer Representative have entered into that certain Purchase
and Sale Agreement (the “Purchase Agreement”), dated as of the date hereof,
whereby each of the Sellers has agreed to sell to the Buyers, effective on the
Closing Date, 100% of the outstanding limited and general partner interests held
by each of the Sellers, as applicable, in each of the Portfolio Companies, all
on the terms and subject to the conditions set forth in the Purchase Agreement.

 

B.                                    (i) Lake owns an approximately 121
megawatt (“MW”) dual-fuel, combined-cycle, cogeneration facility located in
Umatilla, Florida (the “Lake Facility”);

 

(ii) Pasco owns an approximately 121 MW dual fuel, combined-cycle facility
located in Dade City, Florida (the “Pasco Facility”); and

 

D-2

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(iii) Auburndale owns an approximately 155 MW dual-fuel, combined-cycle,
cogeneration facility located in Polk County, Florida (the “Auburndale
Facility”) (each of the Auburndale Facility, Lake Facility and Pasco Facility
being referred to herein as a “Facility” and collectively, the “Facilities”).

 

C.                                    (i)  Pasco is a party to that certain
Cogeneration Facility Operation and Maintenance Agreement between Pasco and GPU
Generation Services — Pasco, Inc. (“GPU”), dated July 1, 1999, as assigned
pursuant to that certain Assignment and Assumption Agreement (Pasco Operation
and Maintenance Agreement) among Aquila Services Inc. (“Aquila”, as successor to
GPU), Teton Operating Services, LLC (“TOS”) and Teton Power Funding LLC
(“Funding”) dated May 6, 2004 (as it may be further amended or modified from
time to time, the “Pasco O&M Agreement”);

 

(ii) Lake is a party to that certain Facilities Operation, Maintenance and
Marketing Agreement between Lake and Aquila dated December 31, 2002, as assigned
pursuant to that certain Operator Assignment, Acknowledgement and Assumption
Agreement among Aquila, Funding, TOS, Lake, The Bank of New York, as owner
trustee under the Trust Agreement described therein, and TIFD III-C Inc., a
Delaware corporation, dated March 12, 2004, and as amended pursuant to (x) that
Letter Agreement re: Renewal of Facilities Operation, Maintenance and Marketing
Agreement for Lake Cogen Project dated June 9, 2004, (y) that Letter Agreement
re: Renewal of Facilities Operation, Maintenance and Marketing Agreement for
Lake Cogen Project dated December 31, 2004, and (z) that First Amendment to
Facilities Operation, Maintenance and Marketing Agreement between Lake and TOS
dated June 15, 2005 (as it may be further amended or modified from time to time,
the “Lake O&M Agreement”); and

 

(iii) Auburndale is a party to that certain Operation and Maintenance Agreement
between Auburndale and TOS dated November 21, 2008 (as it may be amended from
time to time, the “Auburndale O&M Agreement”, and together with the Pasco O&M
Agreement and the Lake O&M Agreement, the “O&M Agreements” and the services
performed by TOS and Funding under the O&M Agreements, the “O&M Services”).  The
O&M Services and those transition services set forth on Exhibit B attached
hereto and incorporated herein by reference, the “Services”.

 

D.                                    Caithness Teton Operating Services, LLC, a
Delaware limited liability company (“CTOS”), has been engaged to perform each of
the O&M Agreements pursuant to:

 

(i) the Fourth Amended and Restated Operations and Maintenance Agreement among
Funding, TOS and CTOS dated September 30, 2009, as amended by First Amendment to
Fourth Amended and Restated Operations and Maintenance Agreement dated
December 29, 2011 (as it may be further amended or modified from time to time,
the “Lake Engagement Agreement”);

 

(ii) the Second Amended and Restated Pasco Operations and Maintenance Agreement
among Funding, TOS and CTOS dated January 1, 2007, as amended by First Amendment
to Second Amended and Restated Pasco Operations and Maintenance Agreement dated
December 29, 2011 (as it may be further amended or modified from time to time,
the “Pasco Engagement Agreement”); and

 

(iii) the Auburndale Operations and Maintenance Agreement among TOS,

 

D-3

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Atlantic Power Holdings, LLC and CTOS dated November 21, 2008, as amended by
First Amendment to Auburndale Operations and Maintenance Agreement dated
December 29, 2011 (as it may be further amended or modified from time to time,
the “Auburndale Engagement Agreement”, and together with the Lake Engagement
Agreement and the Pasco Engagement Agreement, the “Engagement Agreements”, and
the services performed by CTOS thereunder, the “Caithness O&M Services”).

 

E.                                     Caithness Atlantic Services Company, LLC,
a Delaware limited liability company (“CASC”), and APH have entered into that
certain Third Amended and Restated Administrative Services Agreement, dated
September 30, 2009, as amended by First Amendment to Third Amended and Restated
Administrative Services Agreement dated December 29, 2011 (as it may be further
amended from time to time, the “Administrative Services Agreement”), wherein
CASC has agreed to perform certain administrative services on behalf of the
Portfolio Companies, among other properties and projects owned, controlled or
invested in by APH.  The services performed by CASC under the Administrative
Services Agreement on behalf of the Portfolio Companies are referred to herein
as the “Caithness Administrative Services”, and the Caithness O&M Services and
the Caithness Administrative Services are referred to herein together as the
“Caithness Services”.

 

F.                                      APH, Funding and TOS have entered into
that certain Letter Agreement (the “Caithness Side Letter”) with CTOS and CASC
(CASC and CTOS, collectively “Caithness”), dated as of even date herewith and
attached hereto and incorporated herein by reference as Exhibit A, whereby
Caithness has agreed to (i) waive its rights to terminate any of the Engagement
Agreements or the Administrative Services Agreement upon giving effect to the
consummation of the transactions contemplated under the Purchase Agreement,
(ii) continue to provide (x) the Caithness Services to the Facilities pursuant
to the Engagement Agreements and (y) the Caithness Administrative Services to
the Facilities pursuant to the Administrative Service Agreement, until the end
of the Service Period (as defined below).  The Caithness Side Letter, the
Administrative Services Agreement (solely insofar as it relates to the Caithness
Administrative Services), the O&M Agreements and the Engagement Agreements are
herein referred to as the “Caithness Operative Agreements”.

 

G.                                    In connection with the transactions
contemplated by the Purchase Agreement, and subject to the terms and conditions
of this Agreement, the parties agree that each of the Sellers, APH and, as
necessary, certain of their and its Affiliates (collectively, the “Service
Provider”) will provide Services to the Buyers and the Portfolio Companies, and,
to the full extent permitted under the Caithness Operative Agreements, cause the
Caithness Services to be provided by Caithness to the Buyers and the Portfolio
Companies, in each case, in order to facilitate the transition of such services
to the Buyers and as may be reasonably necessary for the operation of the
Facilities by the Buyers until the end of the Service Period (as defined below).

 

AGREEMENT

 

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
contained in this Agreement and in the Purchase Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

D-4

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1.                                      Term and Services.

 

(a)                                 This Agreement shall become effective as of
the date hereof, except for the provisions of Sections 1(b), 1(c) (other than
the last sentence thereof, which shall become effective as of the date hereof),
2, 3(a), 3(b), 4(a), 4(b) and 7 of this Agreement, which shall become effective
as of the Closing Date, unless otherwise specifically provided in this
Agreement, and, unless sooner terminated as hereinafter provided, shall continue
until, and including, the earlier of (i) June 30, 2013 or (ii) the date all
Services of Service Provider and Caithness Services of Caithness are terminated
pursuant to Section 4.

 

(b)                                 During the period from the Closing Date
until, and including June 30, 2013 (the “Service Period”), (i) Service Provider
shall provide to the Buyers and each of the Portfolio Companies the Services,
and (ii) APH, Funding and TOS shall use commercially reasonable efforts to cause
Caithness to continue to provide the Caithness O&M Services to the Facilities
pursuant to the Engagement Agreements (but in no event past the Applicable O&M
Services End Date, as defined below) and the Caithness Administrative Services
to the Facilities pursuant to the Administrative Services Agreement, as
applicable.

 

(c)                                  From and after the Closing Date, each of
the Sellers, the Seller Representative and APH hereby waives, on behalf of each
of the Sellers and any of their Affiliates party thereto, any obligations of
Caithness set forth in the Caithness Operative Agreements with respect to
confidentiality (including any confidentiality obligations specifically related
to the Books and Records of the Portfolio Companies or the Facilities) solely to
the extent necessary to provide information to the Buyers relating to any
services that Caithness has performed under the Caithness Operative Agreements
for the Portfolio Companies or the Facilities.  Following the Closing Date, each
of the Sellers, the Seller Representative and APH shall use its commercially
reasonable efforts to have Caithness and its Affiliates provide to the Buyers as
soon as reasonably practicable but by no later than twenty (20) days following
the Closing Date all Books and Records of the Portfolio Companies and other
information relating to any services that Caithness has performed for the
Portfolio Companies or the Facilities under the Caithness Operative Agreements;
provided, that Caithness shall have the right to retain, or be given access to,
all such Books and Records required by Caithness to perform the Caithness
Services until the end of the Service Period (or, with respect to the Caithness
O&M Services, if earlier, until the date the Caithness O&M Services are
terminated with respect to the Lake Facility, the Pasco Facility, or the
Auburndale Facility, as applicable (the “Applicable O&M Services End Date”)),
and Caithness shall not be liable for failure to perform any Caithness Services
for which such Books and Records would be required and are not available to
Caithness as a result of its obligation to turn over such books and records to
the Buyers.  From and after the Closing Date, each of the Sellers, the Seller
Representative and APH agrees to provide and agrees that Caithness may provide,
and hereby waives any restrictions set forth in the Caithness Operative
Agreements that would restrict Caithness from providing information relating to
any services that Caithness has performed under the Caithness Operative
Agreements for the Portfolio Companies or the Facilities.  At all times from the
date hereof until the end of the Service Period or, if earlier, the Applicable
O&M Services End Date, the Sellers and APH shall, and shall use their
commercially reasonable efforts to cause Caithness to, grant the Buyers access
to the employees of Caithness or its Affiliates performing any of the Caithness
O&M Services

 

D-5

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for the purpose of interviewing, making offers and otherwise transitioning such
employees to the Buyers or the Buyers’ selected service provider.

 

2.                                      Fees, Reimbursable Costs and Payment.

 

(a)                                 Fees.  The Buyers shall pay, or cause the
Portfolio Companies to pay, to the Seller Representative, a flat fee of $2,500
per Service Month (as hereinafter defined) for each Service Month following the
Closing Date (the “Fees”).  As used herein, the term “Service Month” shall mean
the thirty (30) day period beginning on the Closing Date and each successive
thirty (30) day period thereafter until the end of the Service Period.  If, due
to early termination of this Agreement, a Service Month is less than thirty (30)
days, the Fees with respect to such Service Month shall be payable on a pro rata
basis based on the number of days in such Service Month.

 

(b)                                 Reimbursable Costs.  The Buyers shall pay,
or cause the Portfolio Companies to pay, (i) to the Seller Representative, the
reasonable out-of-pocket costs and expenses actually incurred by Service
Provider during each Service Month related to the Services provided to the
Buyers or the Portfolio Companies, and (ii) to Caithness, (x) all amounts due
and owing to Caithness from or on behalf of the Sellers, APH, TOS, Funding, the
Portfolio Companies or the Buyers pursuant to the Caithness Side Letter,
including without limitation pursuant to Section 3, Section 5, Section 6 and
Section 7 thereof, except for that amount identified in Section 6.d. of the
Caithness Side Letter payable to Caithness to cover a portion of Mr. Collins’
severance benefits, the amount of any liabilities of the Sellers, APH, TOS,
Funding or any of their Affiliates related to or arising out of the breach of
their obligations under the Caithness Operative Agreements or claims made by the
Buyers or their Affiliates in connection with the Caithness Services and $25,000
of that amount identified in Section 7 of the Caithness Side Letter payable to
Caithness for services provided by Caithness to the Sellers outside the scope of
the Caithness Services, and (y) the reasonable out-of-pocket costs and expenses
actually incurred by Caithness during such Service Month related to the
Caithness Services provided to the Buyers or the Portfolio Companies, including
(1) any costs, fees and expenses arising pursuant to the Caithness Operative
Agreements (to extent not duplicative of (x) above), and (2) such costs arising
out of and including the transfer of connectivity and information technology
infrastructure (including the procurement system, work management system and
inventory system, but not including any such connectivity or infrastructure
provided by the Buyers) used to perform the Services or the Caithness Services
(the “Reimbursable Costs”), accompanied by commercially reasonable documentation
supporting the Reimbursable Costs.  The Reimbursable Costs shall be due and
payable in accordance with Section 2(c) below.  The Seller Representative shall
provide advance written notice to the Buyers if Service Provider engages any
third party to help provide Services or Caithness engages any third party to
help provide Caithness Services, in each case where the costs and expenses of
such third party would constitute Reimbursable Costs.

 

(c)                                  Payment.  Within five (5) days after the
end of each Service Month, the Seller Representative shall submit to the Buyer
Representative a written invoice relating to the Fees and the Reimbursable
Costs.  The Buyers shall pay, or cause the Portfolio Companies to pay, within
thirty (30) days following the date of receipt of such invoice, all invoiced
amounts related to the Services directly to the Service Provider.  The Buyers
shall pay, or cause the

 

D-6

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Portfolio Companies to pay, (i) all amounts due Caithness pursuant to
Section 2(b)(ii)(x) and Section 5 of this Agreement (to extent not duplicative)
directly to Caithness in accordance with the terms and conditions of the
Caithness Side Letter, and (ii) pursuant to the terms and conditions of the
Caithness Operative Agreements and in any event, no later than twenty (20) days
following receipt of such invoice.

 

(d)                                 Audit.  Each of the Sellers, the Seller
Representative and APH shall, for one (1) year after the expiration or
termination of this Agreement, maintain records and other evidence sufficient to
accurately and properly reflect the performance of the Services and the amounts
invoiced by the Seller Representative to the Buyers and the Portfolio Companies
with respect thereto.  The Buyers shall have access at all reasonable times
during such one (1) year period to examine and obtain copies of such records for
the purpose of auditing and verifying the accuracy of the invoices submitted by
the Seller Representative regarding the amounts due the Sellers and APH.  Any
such audits performed by or on behalf of any of the Buyers or the Portfolio
Companies shall be at the Buyers’ sole cost and expense.

 

3.                                      Covenants.

 

(a)                                 Standards for the Provision of Services and
Caithness Services.  During the Service Period (but with respect to the
Caithness O&M Services, in no event past the Applicable O&M Services End Date),
the Sellers and APH shall (i) devote to the performance of the Services the
personnel historically necessary to perform such Services, and (ii) use
commercially reasonable efforts to cause Caithness to devote to the performance
of (x) the Caithness Services, the personnel historically necessary to perform
such Caithness Services, and (y) the Caithness Administrative Services, the
personnel historically necessary to perform such Caithness Administrative
Services.  During the Service Period (but with respect to the Caithness O&M
Services, in no event past the Applicable O&M Services End Date), the Services
shall be performed by Service Provider in a diligent and prudent manner, with
the degree of skill and judgment normally exercised by persons performing
services of a similar nature, and in a manner and quality that are substantially
consistent with Service Provider’s past practice in performing the Services for
the Sellers’ benefit.  The Sellers and APH shall use commercially reasonable
efforts to cause Caithness to perform the Caithness Services during the Service
Period (but with respect to the Caithness O&M Services, in no event past the
Applicable O&M Services End Date) in a diligent and prudent manner, with the
degree of skill and judgment normally exercised by persons performing services
of a similar nature, and in a manner and quality that are substantially
consistent with Caithness’s past practice in performing the Caithness Services
for the Sellers’ benefit.  Unless otherwise agreed in writing by the parties,
during the Service Period (but with respect to the Caithness O&M Services, in no
event past the Applicable O&M Services End Date), the Service Provider shall,
and the Sellers and APH shall use commercially reasonable efforts to cause
Caithness to, (a) furnish everything necessary and proper for, and incidental
to, the performance of the Services or the Caithness Services, as applicable,
including all labor, supervision, materials, equipment and related services,
(b) secure all necessary third-party consents, permits and governmental
approvals required to provide the Services or the Caithness Services, as
applicable, and (c) report and pay all Taxes, including payroll, sales, use,
excise and occupational taxes, applicable to the Services or the Caithness
Services, as applicable.  In addition, Service Provider shall, and the Sellers
and APH shall use commercially reasonable efforts to cause Caithness to, at all
times during the Service Period (but with respect to the

 

D-7

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Caithness O&M Services, in no event past the Applicable O&M Services End Date),
comply with (x) as may be provided under the O&M Agreements or the Caithness
Operative Agreements, as applicable, the written instructions and policies of
any of the Buyers, the Portfolio Companies or the Buyer Representative which
have been provided to the Seller Representative and (y) any applicable Permits
and Laws relating to the Services or the Caithness Services, as applicable,
provided hereunder and shall promptly notify the Buyers upon receiving notice of
any investigation or notice regarding any noncompliance or alleged violation
with respect thereto.  The Buyer Representative shall furnish, or cause to be
furnished, to the Seller Representative and Caithness, as applicable, such
access, information, documentation, services and materials as are reasonably
requested by Service Provider or Caithness to enable Service Provider or
Caithness to perform the Services and the Caithness Services, as applicable.

 

(b)                                 DISCLAIMER.  EXCEPT AS SET FORTH IN
SECTION 3(a), NONE OF THE SELLERS NOR APH MAKES ANY REPRESENTATION, WARRANTY OR
GUARANTY, EXPRESS OR IMPLIED, OF ANY KIND CONCERNING THE SERVICES OR THE
CAITHNESS SERVICES OR ANY RESULTS AND SPECIFICALLY MAKES NO WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND NONE SHALL BE IMPLIED. 
ALL OTHER REPRESENTATIONS, WARRANTIES OR GUARANTEES, WRITTEN OR ORAL, EXPRESS OR
IMPLIED IN FACT OR IN LAW, AND WHETHER OR NOT BASED ON STATUTE ARE HEREBY
DISCLAIMED AND EXCLUDED.

 

(c)                                  APH shall, and shall cause each of TOS and
Funding to, comply with its and their obligations under, and enforce, the
Caithness Operative Agreements in accordance with their respective terms and
shall promptly notify the Buyer Representative of any default by APH, TOS,
Funding or Caithness thereunder.  APH shall not, and shall cause each of TOS and
Funding not to, amend, modify, grant any waiver under or terminate the Caithness
Operative Agreements without the prior written consent of the Buyer
Representative in its sole discretion.  APH shall not, and shall cause each of
TOS and Funding not to, terminate pursuant to the Caithness Operative Agreements
the provision by Caithness of any of the Caithness Services to the Facilities
unless such termination is requested in writing by the Buyer Representative. 
APH shall, and shall cause each of TOS and Funding to, copy the Buyer
Representative on, or promptly provide the Buyer Representative with copies of,
any correspondence regarding the foregoing that it or they may have with
Caithness.  The Buyers acknowledge and agree that the Service Provider’s
compliance with and enforcement of the terms of the Caithness Operative
Agreements shall constitute sufficient use of its commercially reasonable
efforts to cause Caithness to undertake all actions contemplated in this
Agreement relating to Caithness and the Caithness Services.

 

4.                                      Termination of the Services.

 

(a)                                 Option to Terminate Services.  The Buyers
may elect for any reason, by giving written notice to Service Provider at least
thirty (30) days in advance, to terminate the provision by Service Provider or
Caithness of all or any category of the Services or the Caithness Services, as
applicable, provided to the Buyers and the Portfolio Companies; provided that
any termination of any category of the Caithness O&M Services or the Caithness
Administrative Services, as applicable, shall not reduce the fees payable to
Caithness hereunder and under the

 

D-8

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Caithness Operative Agreements during the Service Period; provided, further,
that, in the event of any termination of the Caithness O&M Services or the
Caithness Administrative Services with respect to a particular Facility, the
Buyers shall have no obligation to pay for such Caithness O&M Services or
Caithness Administrative Services with respect to such Facility hereunder.

 

(b)                                 Buyers’ Right to Terminate the Agreement.
The Buyers shall have the right to terminate this Agreement in the event that
any of the Sellers or APH has failed to perform or observe any material term,
covenant or agreement contained in this Agreement, and any such failure shall
not have been cured within ten (10) days after delivery of written notice of
such failure to the Seller Representative.

 

(c)                                  Sellers’ and APH’s Right to Suspend
Performance.  The Sellers and APH shall have the rights to suspend the
performance of the Services and to cause the suspension of the performance of
the Caithness Services in the event of the failure of the Buyers and the
Portfolio Companies to make payments due and owing or to perform or observe any
material term, covenant or agreement contained in this Agreement that have not
been cured within ten (10) days after delivery of written notice of such failure
to the Buyer Representative.

 

(d)                                 Automatic Termination.  This Agreement shall
automatically terminate in the event that the Purchase Agreement is terminated
pursuant to its terms, and the obligations of the parties hereunder shall
terminate.

 

(e)                                  Effect of Termination.  Applicable
provisions of this Agreement shall survive expiration or early termination of
this Agreement to the extent necessary to enforce or complete the duties,
obligations or responsibilities of the parties arising prior to such expiration
or termination and, as applicable, to provide for final billings related to the
period prior to expiration or termination and indemnification obligations
provided in this Agreement.

 

5.                                      Employee Transfer.

 

(a)                                 The Buyers (or an entity designated by the
Buyers) (the “New O&M Provider”) shall offer employment to each of the employees
of Caithness Generation Services, LLC (“CGS”) as set forth on Exhibit A to the
Caithness Side Letter (the “Employees”) no later than thirty (30) days, or such
longer notice period required by law, prior to the first to occur of (i) the
Applicable O&M Services End Date and (ii) the Services End Date (as defined in
the Caithness Side Letter) (as to each such respective Employee, the “Transfer
Date”), with annual compensation and benefits that are, in the aggregate,
substantially similar to each such respective Employee’s compensation and
benefits as of the date of this Agreement on an overall economic basis;
provided, that the Buyers (or an entity designed by the Buyers) shall have no
obligation to offer employment, to any Employee set forth on Exhibit A to the
Caithness Side Letter who (A) has engaged in gross negligence, gross
incompetence or willful misconduct in the performance of his or her duties,
(B) has willfully engaged in conduct that is injurious to the Portfolio
Companies (monetarily or otherwise), (C) has failed to adhere to the employment
policies and standards of the Portfolio Companies, (D) has committed an act of
fraud, embezzlement or willful breach of a fiduciary duty to the Portfolio
Companies, (E) has been convicted of, pled guilty to, or pleaded no contest to,
a crime involving fraud, dishonesty or moral turpitude, (F) has failed any drug
test administered by the Buyers (or the Buyers’ selected

 

D-9

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service provider) or (G) is on long-term disability; provided, that with respect
to any Employee on short-term disability, the Buyers’ offer of employment to
such Employee may be conditioned upon their return to regular employment prior
to the Applicable O&M Services End Date.  The parties hereby acknowledge that
the Buyers will perform background checks on the Employees and, if any issue
arises with respect to any Employee in connection with such background check,
the Buyers will consider such issue in good faith in conjunction with the
Sellers.  Upon such consideration, if the Buyers decide not to hire such
Employee, the Sellers shall pay to Caithness the amount contemplated in clause
(ii) below of this Section 5(a) with respect to such Employee.  Each Employee
who accepts such offer (the “Transferred Employees”) shall be transferred to the
New O&M Provider effective not later than the Transfer Date applicable to such
Employee.  The Buyers agree and acknowledge that any Employee who is not made an
offer, does not accept such offer or is otherwise not transferred to the New O&M
Provider shall be terminated by CGS as of the Applicable O&M Services End Date
(as defined in the Caithness Side Letter) (“Terminated Employees”).  Buyers
agree and acknowledge that if the Buyers do not offer employment to an Employee
in accordance with the terms of this paragraph (each such Employee, a “Non-Offer
Employee”), then CGS shall notify each such Employee no later than thirty (30)
days, or such longer notice period required by law, prior to the date such
Non-Offer Employee’s employment shall be terminated in accordance with the terms
of the Caithness Side Letter.  In such case, the Buyers shall (i) continue to
pay, or cause to be paid to, Caithness an amount representing pay and benefits
for each Non-Offer Employee through the date that such Non-Offer Employee’s
employment is terminated in accordance with the terms of the Caithness Side
Letter; and (ii) shall pay, or cause to be paid to, Caithness an amount for each
Non-Offer Employee equal to the product of (x) one week of pay and benefits for
each such Non-Offer Employee, and (y) the number of years of service of such
Non-Offer Employee, in each instance of (i) and (ii), in readily available
funds, on the date such Non-Offer Employee’s employment is terminated in
accordance with the terms of the Caithness Side Letter.  Exhibit A to the
Caithness Side Letter sets forth a list of all employees who provide services to
the Facilities pursuant to the Caithness Operative Agreements.

 

(b)                                 From the date of this Agreement though the
Services End Date (as defined in the Caithness Side Letter), each of the Sellers
and APH shall, and shall use their commercially reasonable efforts to cause
Caithness to, only incur compensation, severance, benefits costs and related
payroll costs relating to the Employees, Transferred Employees and Terminated
Employees that are in the ordinary course of business and consistent with the
Sellers, APH’s and Caithness’ past practices with respect to the Employees, and
the Sellers and APH shall use their commercially reasonable efforts to cause
Caithness to seek any consents of APH, TOS or Funding required under the
Caithness Operative Agreements; provided, that, other than the severance for
Non-Offer Employees from Caithness described in Section 6.a(ii) of the Caithness
Side Letter, the Seller and APH shall not, and shall use their commercially
reasonable efforts to cause Caithness not to, incur any severance costs,
retention bonus costs or any related costs, in the case of the Sellers and APH,
without the prior written consent of the Buyer Representative, and in the case
of Caithness, without the prior written consent of APH, TOS or Funding.  The
Buyers shall pay to Caithness all compensation, severance, benefit costs and
related payroll costs relating to the Employees, Transferred Employees and
Terminated Employees, including but not limited to all pre-Transfer Date costs
and any post-termination costs, solely to the extent such costs are incurred in
accordance with the terms of the Caithness Side Letter, and the Buyers shall

 

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indemnify Service Provider from and against such costs and any Losses relating
to such Employees, Transferred Employees and Terminated Employees.

 

(c)                                  The Buyers acknowledge and agree that
Service Provider shall not be deemed to be in violation of this Agreement if
Service Provider is unable to cause Caithness to provide the Caithness Services
under this Agreement consistent with past practices as a result of any Employee
resigning his or her employment prior to the Transfer Date; provided, that
neither Service Provider nor Caithness shall have caused or induced such
Employee to resign.

 

(d)                                 The Buyers, or an entity designated by the
Buyers, shall consider hiring Kevin Collins, an employee of Caithness
Corporation, with compensation and benefits for Mr. Collins that are, in the
aggregate, substantially similar to his current compensation and benefits.  The
parties acknowledge that the Buyers shall not have an obligation to make such an
offer, or hire, Mr. Collins.

 

6.                                      Relationships Among the Parties. 
Service Provider shall be an independent contractor with respect to the Services
it provides hereunder.  Nothing in this Agreement shall cause the relationship
between Service Provider, on the one hand, and the Buyers, the Portfolio
Companies and the Buyer Representative, on the other hand, to be deemed to
constitute an agency, partnership or joint venture, or to cause any of Service
Provider, the Buyers, the Portfolio Companies or the Buyer Representative to be
treated as a co-employer with respect to employees, or to cause any of the
Sellers or APH or any of their Affiliates to have any burdens or obligations of
ownership or similar responsibilities with respect to the Facilities after the
Closing.  None of the Sellers, APH, any of their or its Affiliates or any of
their respective officers or employees shall have any right, power or authority
to make any warranty or representation on behalf of any of the Buyers or, after
the Closing, the Portfolio Companies, contract for the Buyers or, after the
Closing, the Portfolio Companies, or commit the Buyers or, after the Closing,
the Portfolio Companies to any obligation or undertaking other than actions
taken reasonably by the Sellers or APH in connection with an emergency situation
of which any of the Sellers or APH notify the Buyer Representative within a
reasonable time after its occurrence (and the Buyers or the Portfolio Companies
shall indemnify the Sellers and APH for all reasonable and necessary
out-of-pocket costs, expenses and liabilities incurred in connection with such
emergency response).

 

7.                                      Indemnity.

 

(a)                                 Indemnification by the Buyers and the
Portfolio Companies.  Each of the Buyers shall or shall cause the Portfolio
Companies to indemnify, defend and hold harmless the Sellers, APH, the Seller
Representative and their and its Affiliates and their respective officers,
directors, employees and agents (each, a “Seller Indemnified Party”) from and
against any and all Losses (as defined below) arising from or in connection with
(i) a breach of this Agreement by the Buyers or, after the Closing, the
Portfolio Companies or (ii) a third party claim arising out of the Services,
EVEN IF SUCH LOSSES ARISE OUT OF THE SOLE, JOINT OR CONCURRENT NEGLIGENCE,
STRICT LIABILITY OR OTHER FAULT OF ANY SELLER INDEMNIFIED PARTY, BUT EXCLUDING
SUCH LOSSES TO THE EXTENT RESULTING FROM THE FRAUD, BREACH OF CONTRACT OR
WILLFUL MISCONDUCT OF ANY SELLER INDEMNIFIED PARTY.  “Losses” means any and all
liabilities, claims, losses,

 

D-11

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damages, reasonable and out-of-pocket costs and expenses, causes of action or
judgments of any kind or character, including any interest, penalty, reasonable
attorneys’ fees, investigation expenses and other costs and expenses incurred in
connection therewith or in the defense thereof.

 

(b)                                 Indemnification by the Sellers and APH. 
Each of the Sellers and APH shall indemnify, defend and hold harmless the
Buyers, the Portfolio Companies, the Buyer Representative and any of their
Affiliates and their respective officers, directors, employees and agents (each,
a “Buyer Indemnified Party”) from and against any and all Losses arising from or
in connection with a breach of this Agreement by any of the Sellers, the Seller
Representative, APH or Service Provider, EVEN IF SUCH LOSSES ARISE OUT OF THE
SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF ANY
BUYER INDEMNIFIED PARTY, BUT EXCLUDING SUCH LOSSES TO THE EXTENT RESULTING FROM
THE FRAUD, BREACH OF CONTRACT OR WILLFUL MISCONDUCT OF ANY BUYER INDEMNIFIED
PARTY.

 

(c)                                  Remedy.  EXCEPT AS SET FORTH IN SECTION 4
AND FOR SEEKING EQUITABLE RELIEF, THE SOLE REMEDY OF A PARTY IN CONNECTION WITH
ANY FAILURE BY A PARTY TO PERFORM OR OBSERVE ANY TERM, PROVISION, COVENANT OR
AGREEMENT ON THE PART OF SUCH PARTY TO BE PERFORMED OR OBSERVED UNDER THIS
AGREEMENT SHALL, IN EACH CASE, BE AS SET FORTH IN THIS SECTION 6.

 

(d)                                 Limit on Liability.  THE AGGREGATE LIABILITY
OF THE SELLERS, APH AND ANY OTHER SERVICE PROVIDER UNDER THIS AGREEMENT TO THE
BUYER INDEMNIFIED PARTIES, FOR ANY ACT, OMISSION OR OTHERWISE OF THE SELLERS,
APH OR ANY OTHER SERVICE PROVIDER (OTHER THAN WITH RESPECT TO FRAUD, WILLFUL
MISCONDUCT OR BREACH OF THIS AGREEMENT), SHALL NOT EXCEED THE AGGREGATE AMOUNT
OF FEES RECEIVED BY THE SELLER REPRESENTATIVE PURSUANT TO SECTION 2(A) FOR THE
SERVICES (EXCLUDING PAYMENTS RECEIVED BY THE SELLER REPRESENTATIVE IN
REIMBURSEMENT OF PAYMENTS MADE OR TO BE MADE BY THE SELLERS AND APH TO CAITHNESS
FOR THE CAITHNESS SERVICES, VENDORS AND OTHER THIRD PARTIES).

 

(e)                                  Waiver.  IN NO EVENT SHALL ANY PARTY BE
LIABLE TO ANOTHER PARTY FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE LOSSES, DAMAGES OR EXPENSES (INCLUDING LOST PROFITS) ARISING FROM THIS
AGREEMENT OR THE PERFORMANCE OR NON-PERFORMANCE OF SERVICES OR CAUSING OR
FAILING TO CAUSE THE PERFORMANCE OR NON-PERFORMANCE OF THE CAITHNESS SERVICES
HEREUNDER, OTHER THAN TO THE EXTENT SUCH DAMAGES ARE AWARDED PURSUANT TO THIRD
PARTY CLAIMS FOR WHICH ONE PARTY IS OBLIGATED TO INDEMNIFY THE OTHER PARTY
HEREUNDER, AND EACH OF THE BUYERS, THE SELLERS, THE PORTFOLIO COMPANIES AND APH
EXPRESSLY WAIVE ANY RIGHTS EACH OF THEM MAY HAVE TO SEEK OR CLAIM ANY SUCH
AMOUNTS.

 

D-12

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8.                                      Miscellaneous Provisions.

 

(a)                                 Entire Agreement.  This Agreement
constitutes the entire understanding and agreement of the parties with respect
to the subject matter hereof, and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations among the
parties with respect to the subject matter hereof, except for the Purchase
Agreement, the documents and instruments and other agreements specifically
referred to therein or delivered pursuant thereto, including the Exhibits,
Schedules and ancillary agreements thereto insofar as they are applicable with
respect to the parties.

 

(b)                                 Notices.  All notices, requests, claims,
demands and other communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly given or made by delivery in
person by an internationally recognized courier service, by facsimile or
electronic mail with receipt confirmed (followed by delivery of an original via
an internationally recognized courier service) or by registered or certified
mail (postage prepaid, return receipt requested) to the respective parties at
the following addresses (or such other addresses for a party as shall be
specified in a notice given in accordance with this Section 7(b)):

 

If to APH, the Seller Representative or any Seller, to:

 

Atlantic Power Corporation
One Federal Street, 30th Floor
Boston, MA 02110
Attention:  Jeffrey S. Levy
Fax:  (617) 977-2410

 

with a copy (which shall not constitute notice) to:

 

Morgan, Lewis & Bockius LLP

225 Franklin Street, 16th Floor

Boston, MA 02110

Attention: Mitchell D. Carroll

Fax: (617) 341-7701

Email: mcarroll@morganlewis.com

 

If to any Buyer, the Buyer Representative or any Portfolio Company, to:

 

Quantum Utility Generation, LLC

1401 McKinney St., Suite 1800
Houston, TX 77010
Attention:  Sean O’Donnell
Fax:  (713) 485-8621
Email:  sodonnell@quantumug.com

 

Copy to: Dirk Straussfeld

Fax:  (713) 485-8651

Email: dstraussfeld@quantumug.com

 

D-13

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(c)                                  Force Majeure.  Service Provider’s
obligations to provide Services and the Sellers and APH obligations to use
commercially reasonable efforts to cause Caithness to provide the Caithness
Services, shall be suspended during the period, and to the extent that Service
Provider or Caithness, as applicable, is prevented or hindered, in whole or in
part, from complying therewith by any cause beyond its reasonable control,
including, without limitation, extreme weather, fire, flood, earthquakes, other
elements of nature or acts of God, civil disturbances, riots, rebellions,
revolutions, accidents, labor disputes, court orders, acts of a governmental
entity, acts of war, terrorist activity, or conditions arising out of or
attributable to war (whether declared or undeclared) or terrorist activity,
significant spread of contagious disease(s), or shortages of equipment,
materials, labor or other resources (in each case, a “Force Majeure Event”).  In
such event, Service Provider shall give written notice of suspension to the
Buyers and the Portfolio Companies, as soon as reasonably practicable,
specifying the Force Majeure Event and the Services or Caithness Services
affected and stating the date and extent of such suspension.  Service Provider
shall use commercially reasonable efforts to resume, and Sellers and APH shall
use commercially reasonable efforts to cause Caithness to use commercially
reasonable efforts to resume, the suspended Services or Caithness Services, as
applicable, as soon as reasonably practicable, and shall notify the Buyers and
the Portfolio Companies in writing of the date of resumption of the provision of
the Services or Caithness Services, as applicable.

 

(d)                                 Transfer and Assignment; Successors. 
Without the prior written consent of the other parties, which consent may be
withheld in such other party’s sole discretion, this Agreement and the rights
and obligations hereunder shall not be assigned by any party.  This Agreement
shall be binding upon, and inure to the benefit of, the respective successors
and permitted assigns of each of the parties.

 

(e)                                  Headings.  The headings in this Agreement
are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.

 

(f)                                   Governing Law.

 

i.                                          This Agreement shall be governed by
and construed in accordance with the Laws of the State of New York (without
regard to the conflict of laws principles thereof).  Each of the parties
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or the transactions contemplated hereby shall be brought and
determined in any state or federal court in the Borough of Manhattan, New York,
New York, and each of the parties irrevocably submits to the exclusive
jurisdiction of such courts solely in respect of any legal proceeding arising
out of or related to this Agreement.  The parties further agree that the parties
shall not bring suit with respect to any disputes arising out of this Agreement
or the transactions contemplated hereby in any court or jurisdiction other than
the above specified courts; provided, however, that the foregoing shall not
limit the rights of the parties to obtain execution of judgment in any other
jurisdiction.  The parties further agree, to the extent permitted by Law, that a
final and unappealable judgment against a party in any action or proceeding
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified copy of which shall be conclusive evidence of the fact and amount of
such judgment.  Except to the extent that a different

 

D-14

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determination or finding is mandated due to the applicable Law being that of a
different jurisdiction, the parties agree that all judicial determinations or
findings by a state or federal court in the Borough of Manhattan, New York, New
York with respect to any matter under this Agreement shall be binding.

 

ii.                                       To the extent that any party has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, each such party hereby irrevocably (x) waives such immunity in
respect of its obligations with respect to this Agreement and (y) submits to the
personal jurisdiction of any court described in this Section 7(f).

 

iii.                                    THE PARTIES HERETO AGREE THAT THEY
HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION TO ENFORCE OR
INTERPRET THE PROVISIONS OF THIS AGREEMENT.

 

(g)                                  Amendments; Waiver.  This Agreement cannot
be terminated, altered or amended except pursuant to an instrument in writing
signed by all the parties.  No waiver by any party of any of the provisions
hereof shall be effective unless explicitly set forth in writing and signed by
the party so waiving.  No failure to exercise, or delay in exercising, any
right, remedy, power or privilege arising from this Agreement shall operate or
be construed as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.

 

(h)                                 Buyer Representative. The Buyer
Representative is signing this Agreement solely for the purpose of giving and
receiving notices hereunder on behalf of the Buyers and the Portfolio
Companies.  Any notice given by the Buyer Representative hereunder shall have
the same force and effect as if given by the party on whose behalf the Buyer
Representative is providing such notice.  Each party hereby releases and waives
the Buyer Representative from any and all liabilities, losses and claims arising
under or with respect to this Agreement.

 

(i)                                     No Third Party Beneficiaries.  Except
for the provisions of Sections 6(a) and 6(b), which are intended to be
enforceable by the Seller Indemnified Parties and the Buyer Indemnified Parties
respectively referred to therein, nothing in this Agreement is intended or shall
be construed to give any person, other than the parties, their successors and
permitted assigns, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.

 

(j)                                    Negotiated Agreement.  This Agreement has
been negotiated by the parties and the fact that any draft will have been
prepared by any party shall not give rise to any presumption for or against any
party or be used in any respect or forum in the construction or interpretation
of this Agreement or any of its provisions.

 

(k)                                 Reasonable Cooperation.  Each of the parties
shall reasonably cooperate with each other to perform its obligations under this
Agreement.

 

D-15

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(l)                                     Counterparts.  This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
and all of which shall constitute one and the same instrument.  Any facsimile or
electronic copies hereof or signatures hereon shall, for all purposes, be deemed
originals.

 

(m)                             Further Assurances.  In connection with this
Agreement and all transactions contemplated by this Agreement, by execution of
this Agreement each party agrees to execute and deliver such additional
documents and instruments as may be necessary or appropriate to effectuate,
carry out and perform all of the terms, provisions and conditions of this
Agreement.

 

[Signatures appear on next page]

 

D-16

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by each
party as of the date first above written.

 

 

 

SELLERS:

 

 

 

LAKE INVESTMENT, LP

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

NCP LAKE POWER, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

TETON NEW LAKE, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

NCP DADE POWER, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

DADE INVESTMENT, LP

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

AUBURNDALE LP, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

AUBURNDALE GP, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Signature Page to Transition Services Agreement (ATP)

 

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

 

 

SELLER REPRESENTATIVE:

 

 

 

ATLANTIC POWER CORPORATION

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

APH:

 

 

 

ATLANTIC POWER HOLDINGS, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Signature Page to Transition Services Agreement (ATP)

 

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PORTFOLIO COMPANIES:

 

 

 

LAKE COGEN, LTD.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

PASCO COGEN, LTD.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

AUBURNDALE POWER PARTNERS, LIMITED PARTNERSHIP

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Signature Page to Transition Services Agreement (ATP)

 

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BUYERS:

 

 

 

QUANTUM LAKE LP, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

QUANTUM LAKE GP, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

QUANTUM PASCO LP, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

QUANTUM PASCO GP, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

QUANTUM AUBURNDALE LP, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

QUANTUM AUBURNDALE GP, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

BUYER REPRESENTATIVE:

 

 

 

QUANTUM UTILITY GENERATION, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Signature Page to Transition Services Agreement (ATP)

 

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