CENTENNIAL POWER, INC. and COLORADO ENERGY MANAGEMENT, LLC
 
PURCHASE AND SALE AGREEMENT
 
BY AND BETWEEN
 
CENTENNIAL ENERGY RESOURCES LLC, as SELLER,
 
and
 
MONTANA ACQUISITION COMPANY LLC, as BUYER
 

Dated as of April 25, 2007
 

TABLE OF CONTENTS
 

 
 ARTICLE I DEFINITIONS
 

 
1.1
Definitions

 
1.2
Certain Interpretive Matters

 
 ARTICLE II PURCHASE AND SALE
 

 
2.1
Transfer of Stock and Membership Interests

 
2.2
Excluded Assets

 
2.3
Transfer of Excluded Assets and Discharge of Certain Liabilities

 
2.4
Guarantee Liabilities

 
 ARTICLE III THE CLOSING
 

 
3.1
Closing

 
3.2
Payment of Purchase Price

 
3.3
Purchase Price Adjustment

 
3.4
Deliveries by Seller

 
3.5
Deliveries by Buyer

 
3.6
Mutual Delivery

 
 ARTICLE IV REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLER
 

 
4.1
Organization; Qualification

 
4.2
Authority Relative to this Agreement

 
4.3
Consents and Approvals; No Violation

 
4.4
Insurance

 
4.5
Title and Related Matters

 
4.6
Real Property Leases

 
4.7
Labor Matters

 
4.8
Benefit Plans

 
4.9
Contracts and Leases

 
4.10
Legal Proceedings, etc. 

 
4.11
Tax Matters

 
4.12
Compliance With Laws

 
4.13
Undisclosed Liabilities

 
4.14
Subsidiaries

 
4.15
Capitalization

 
4.16
Financial Statements

 
4.17
Absence of Certain Changes

 
4.18
Bankruptcy

 
4.19
Books and Records

 
4.20
Project Companies

 
4.21
Disclaimers

 
 ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER
 

 
5.1
Organization

 
5.2
Authority Relative to this Agreement

 
5.3
Consents and Approvals; No Violation

 
5.4
Legal Proceedings

 
5.5
Inspections

 
5.6
Securities Laws

 
 ARTICLE VI COVENANTS OF THE PARTIES
 

 
6.1
Conduct of Business

 
6.2
Access to Information

 
6.3
Public Statements

 
6.4
Expenses

 
6.5
Further Assurances

 
6.6
Consents and Approvals

 
6.7
Use of Centennial Marks

 
6.8
Fees and Commissions

 
6.9
Tax Matters

 
6.10
Advice of Changes

 
6.11
Consents

 
6.12
Buyer Financial Assurance

 
6.13
Financing Cooperation

 
6.14
Employee and Benefit Plans

 
6.15
Audited Financial Statements

 
6.16
Hartwell Partnership Distributions

 
 ARTICLE VII CONDITIONS
 

 
7.1
Conditions to Obligations of Buyer

 
7.2
Conditions to Obligations of Seller

 
 ARTICLE VIII INDEMNIFICATION
 

 
8.1
Indemnification

 
8.2
Defense of Claims

 
8.3
Survival

 
 ARTICLE IX TERMINATION
 

 
9.1
Termination

 
9.2
Procedure and Effect of No-Default Termination

 
9.3
Termination Fee; Letter of Credit

 
 ARTICLE X MISCELLANEOUS PROVISIONS
 

 
10.1
Amendment and Modification

 
10.2
Waiver of Compliance; Consents

 
10.3
Notices

 
10.4
Assignment

 
10.5
Governing Law; Venue; Waiver of Jury Trial

 
10.6
Counterparts

 
10.7
Interpretation

 
10.8
Schedules and Exhibits

 
10.9
Entire Agreement

 
10.10
U.S. Dollars

 
PURCHASE AND SALE AGREEMENT
 
PURCHASE AND SALE AGREEMENT, dated as of April 25, 2007, by and between
Centennial Energy Resources LLC, a Delaware limited liability company (“Seller”)
and Montana Acquisition Company, LLC, a Delaware limited liability company
(“Buyer”). Seller and Buyer are referred to individually as a “Party,” and
collectively as the “Parties.”
 
W I T N E S S E T H
 
WHEREAS, Seller owns the CPI Stock and the CEM Membership Interests (each as
defined herein);
 
WHEREAS, Buyer desires to purchase, and Seller desires to sell, the CPI Stock
and the CEM Membership Interests upon the terms and conditions hereinafter set
forth in this Agreement; and
 
WHEREAS, in order to induce Seller to enter into this Agreement, and as
additional consideration therefor, concurrently with the execution and delivery
hereof, Buyer is providing to Seller the Buyer LC (as hereinafter defined) in
the form attached as Exhibit A hereto, to secure Buyer’s payment of the
Termination Fee (as hereinafter defined).
 
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements hereinafter set forth, and intending to be legally
bound hereby, the Parties agree as follows.
 
 
ARTICLE I  
 
DEFINITIONS
 
1.1  Definitions.  As used in this Agreement, the following terms have the
meanings specified in this Section 1.1.
 
(1)  “338 Allocation” has the meaning set forth in Section 6.9(a)(ii).
 
(2)  “338(h)(10) Election Entities” has the meaning set forth in Section
6.9(a)(i).
 
(3)  “754 Allocation Schedule” has the meaning set forth in Section 6.9(a)(iii).
 
(4)  “Adjustment” has the meaning set forth in section 3.3(a).
 
(5)  “Affiliate” has the meaning set forth in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended.
 
(6)  “Affiliated Group” means, with respect to any entity, a group of entities
required or permitted to file consolidated, combined or unitary Tax Returns
including such entity.
 
(7)  “Agreement” means this Purchase and Sale Agreement together with the
Schedules and Exhibits hereto, as the same may be from time to time amended.
 
(8)  “Assumption Agreement” has the meaning set forth in Section 2.4.
 
(9)  “AT&T CAISO ECN Agreement” has the meaning set forth in Section 2.2(i).
 
(10)  “Audits” has the meaning set forth in Section 4.11(iv).
 
(11)  “Benefit Agreements” has the meaning set forth in Section 4.8.
 
(12)  “Benefit Plans” has the meaning set forth in Section 4.8.
 
(13)  “BIV Generation” means BIV Generation Company, L.L.C., a Delaware limited
liability company.
 
(14)  “Brush 1&3 Project” means that certain 75 megawatt gas-fired facility
(consisting of one 50 megawatt combined-cycle unit and one 25 megawatt
simple-cycle unit) located approximately 90 miles northeast of Denver, Colorado
near Brush, Colorado.
 
(15)  “Brush 4D Project” means that certain 138 megawatt gas-fired
combined-cycle facility located approximately 90 miles northeast of Denver,
Colorado near Brush, Colorado.
 
(16)  “Business Day” means any day other than Saturday, Sunday and any day on
which banking institutions in the State of New York are authorized by law or
other governmental action to close.
 
(17)  “Buyer” has the meaning set forth in the Preamble.
 
(18)  “Buyer Fundamental Representations” means the representations and
warranties contained in Sections 5.1, 5.2 and 5.3.
 
(19)  “Buyer Indemnitee” has the meaning set forth in Section 8.1(b).
 
(20)  “Buyer LC” has the meaning set forth in Section 6.12.
 
(21)  “Buyer Material Adverse Effect” has the meaning set forth in Section
5.3(a).
 
(22)  “Buyer Required Regulatory Approvals” has the meaning set forth in
Section 5.3(b).
 
(23)  “Buyer 338 Liability” has the meaning set forth in Section 6.9(a)(i).
 
(24)  “CEM” means Colorado Energy Management, LLC, a Colorado limited liability
company and wholly-owned subsidiary of Seller.
 
(25)  “CEM Agreements” means each contract, license, agreement or personal
property lease to which CEM or any of its Subsidiaries is a party, other than
those which involve expenditures by CEM or any such Subsidiary of less than
$250,000 per year.
 
(26)  “CEM Membership Interests” means all of the issued and outstanding
membership interests in CEM.
 
(27)  “Centennial Marks” means the name “CENTENNIAL” and other registered or
unregistered trademarks, services marks, trade names, logos, designs or color
schemes featuring the name “CENTENNIAL”, or any derivative, abbreviation or
variation thereof owned or used by Seller.
 
(28)  “Closing” has the meaning set forth in Section 3.1.
 
(29)  “Closing Date” has the meaning set forth in Section 3.1.
 
(30)  “Closing Statement” has the meaning set forth in Section 3.3(b).
 
(31)  “Code” means the Internal Revenue Code of 1986, as amended.
 
(32)  “Commercially Reasonable Efforts” means efforts which are reasonably
necessary to cause, or assist in, the consummation of the transactions
contemplated by this Agreement and which do not require the performing Party to
expend funds, incur expenses or assume liabilities other than those which are
reasonable in nature and amount within the context of the transactions
contemplated by this Agreement in order for the performing Party to satisfy its
obligations hereunder.
 
(33)  “Confidentiality Agreement” means the Confidentiality Agreement, dated
January 23, 2007, by and between MDU Resources Group, Inc. and CES Acquisition
Corp.
 
(34)  “Continuing Employees” has the meaning set forth in Section 6.14(a).
 
(35)  “CPI” means Centennial Power, Inc., a Delaware corporation and
wholly-owned subsidiary of Seller.
 
(36)  “CPI Agreements” means each contract, license, agreement or personal
property lease to which CPI or any of its Subsidiaries (other than the Project
Companies) is a party, other than those which involve expenditures by CPI or any
such Subsidiary of less than $250,000 per year.
 
(37)  “CPI Stock” means all of the issued and outstanding shares of common
stock, no par value, of CPI.
 
(38)  “CPP” means Colorado Power Partners, a Colorado general partnership.
 
(39)  “Default Interest Rate” means a rate of interest payable at the lesser of
LIBOR plus 200 basis points, or the maximum rate permitted by applicable law.
 
(40)  “Direct Claim” has the meaning set forth in Section 8.2(c).
 
(41)  “Designated Independent Accounting Firm” has the meaning set forth in
Section 3.3(d).
 
(42)  “Election” has the meaning set forth in Section 6.9(a)(i).
 
(43)  “Environmental Claim” means any and all pending and/or threatened
administrative or judicial actions, suits, orders, claims, liens, notices,
notices of violations, investigations, complaints, requests for information,
proceedings, or other written communication, whether criminal or civil, pursuant
to or relating to any applicable Environmental Law based upon, alleging,
asserting, or claiming any actual or potential (a) violation of, or liability
under any Environmental Law, (b) violation of any Environmental Permit, or (c)
liability for investigatory costs, cleanup costs, removal costs, remedial costs,
response costs, natural resource damages, property damage, personal injury,
fines, or penalties arising out of, based on, resulting from, or related to the
presence, Release, or threatened Release of any Hazardous Substances at any site
owned, leased or operated by CPI, CEM or any of their respective Subsidiaries.
 
(44)  “Environmental Condition” means the presence or Release to the environment
at the site of the Project Facilities of Hazardous Substances, including any
migration of those Hazardous Substances through air, soil or groundwater to or
from the site of the Project Facilities.
 
(45)  “Environmental Laws” means all applicable Federal, state and local, civil
and criminal laws, regulations, rules, ordinances, codes, decrees, judgments,
directives, or judicial or administrative orders relating to pollution or
protection of the environment, natural resources or human health and safety,
including, without limitation, laws relating to Releases or threatened Releases
of Hazardous Substances (including, without limitation, Releases to ambient air,
surface water, groundwater, land, surface and subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
Release, transport, disposal or handling of Hazardous Substances. “Environmental
Laws” include, without limitation, CERCLA, the Hazardous Materials
Transportation Act (49 U.S.C. §§ 1801 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. §§ 6901 et seq.), the Federal Water Pollution Control
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 Oil Pollution
Act (33 U.S.C. §§ 2701 et seq.), the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. §§ 11001 et seq.), and all applicable other state
laws analogous to any of the above.
 
(46)  “Environmental Permit” has the meaning set forth in Section 4.20(n)(v).
 
(47)  “Equity Commitment Letter” has the meaning set forth in Section 6.12.
 
(48)  “Excluded Assets” has the meaning set forth in Section 2.2.
 
(49)  “Excluded Agreements” means the AT&T CAISO ECN Agreement, the Hobbs
Agreement, the Intercompany Benefit Plans and the Wolcon Closure Agreement.
 
(50)  “Excluded Liabilities” has the meaning set forth in Section 8.1(h).
 
(51)  “Excluded Taxes” has the meaning set forth in Section 8.1(h)(i).
 
(52)  “FERC” means the Federal Energy Regulatory Commission or any successor
agency thereto.
 
(53)  “Financial Statements” has the meaning set forth in Section 4.16.
 
(54)  “GAAP” means United States generally accepted accounting principles as in
effect on the date of this Agreement.
 
(55)  “Governmental Authority” means any federal, state or local governmental,
regulatory or administrative agency, commission, department or board, court or
arbitrating body.
 
(56)  “Guarantee Liabilities” has the meaning set forth in Section 2.4.
 
(57)  “Hardin Project” means that certain 120 megawatt (gross) coal-fired
facility located approximately 40 miles southeast of Billings, Montana and two
miles north of the city of Hardin, Montana.
 
(58)  “Hartwell Partnership” means Hartwell Energy Limited Partnership, a
Delaware limited partnership.
 
(59)  “Hartwell Project” means that certain 310 megawatt simple-cycle gas-fired
facility located approximately 100 miles northeast of Atlanta, Georgia near
Hartwell, Georgia.
 
(60)  “Hazardous Substances” means (a) any petrochemical or petroleum products,
oil, radioactive materials, radon gas, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation and transformers or other
equipment that contain dielectric fluid which may contain levels of
polychlorinated biphenyls; (b) any chemicals, materials or substances defined as
or included in the definition of “hazardous substances,” “hazardous wastes,”
“hazardous materials,” “hazardous constituents,” “restricted hazardous
materials,” “extremely hazardous substances,” “toxic substances,”
“contaminants,” “pollutants,” “toxic pollutants” or words of similar meaning and
regulatory effect under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law.
 
(61)  “Hobbs Agreement” has the meaning set forth in Section 2.2(c).
 
(62)  “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
 
(63)  “Income Tax” means any federal, state or local Tax (a) based upon,
measured by or calculated with respect to net income, profits or receipts
(including, without limitation, capital gains Taxes and minimum Taxes) or (b)
based upon, measured by or calculated with respect to multiple bases (including,
without limitation, corporate franchise taxes) if one or more of the bases on
which such Tax may be based, measured by or calculated with respect to, is
described in clause (a), in each case together with any interest, penalties, or
additions to such Tax.
 
(64)  “Indebtedness” means, without duplication, all obligations of CEM, CPI or
its Subsidiaries (a) for borrowed money; (b) evidenced by bonds, debentures,
notes or similar instruments; (c) in respect of the deferred purchase price of
property or services (excluding accounts payable and other current liabilities
incurred in the ordinary course of business consistent with past practice which
would be reflected in Working Capital); (d) in respect of capital lease
obligations; (e) with respect to interest rate and currency cap, collar, hedging
or swap agreements; (f) conditional sale or other title retention agreements;
(g) reimbursement obligations with respect to letters of credit, bankers
acceptances and surety bonds; and (h) under guarantee by CEM, CPI or any
Subsidiary on account of any of the foregoing types of indebtedness of any other
Person.
 
(65)  “Indemnifiable Loss” has the meaning set forth in Section 8.1(a).
 
(66)  “Indemnifying Party” has the meaning set forth in Section 8.1(d).
 
(67)  “Indemnitee” has the meaning set forth in Section 8.1(c)(i).
 
(68)  “Independent Accounting Firm” means an independent accounting firm of
national reputation.
 
(69)  “Initial Closing Statement” has the meaning set forth in Section 3.3(b).
 
(70)  “Inspection” means all tests, reviews, examinations, inspections,
investigations, verifications, samplings and similar activities conducted by
Buyer or its agents or Representatives with respect to the Project Facilities.
 
(71)  “Intellectual Property Rights” means all common law and statutory rights
associated with patents and industrial designs, copyrights, trademarks, trade
names, service marks, service names, know-how, processes, trade secrets,
inventions, proprietary rights, formulae, research, databases and computer
programs.
 
(72)  “Intercompany Benefit Plans” has the meaning set forth in Section 2.2(g).
 
(73)  “Investor Subsidiaries” means the Persons listed as such in Schedule 4.14.
 
(74)  “IRS” means the United States Internal Revenue Service or any successor
agency thereto.
 
(75)  “Knowledge” means the actual knowledge of Paul Gatzemeier, Bill Connors,
Darcy Neigum, Kari Knudson, Jim Nolan, Trevor Hastings or Rodney Bellendir,
assuming Commercially Reasonable Efforts to acquire such knowledge.
 
(76)  “LIBOR” means a rate per annum (rounded upwards if necessary, to the
nearest 1/16th of 1%) equal to the arithmetic mean of the offered rate for three
month deposits in dollars in the London Interbank Market at approximately 11:00
a.m. (London time), which appears on the Telerate Screen designated as Page 3570
of the Reuters Monitor Money Rates Service.
 
(77)  “Liens” means any mortgages, pledges, liens, security interests,
conditional and installment sale agreements, activity and use limitations,
conservation or other easements, restrictive covenants, deed restrictions,
leases, licenses, other rights of occupancy and any other encumbrances or
charges of any kind.
 
(78)  “Major Project Contracts” means all of the Project Contracts, with respect
to each Project Company, other that those which involve expenditures by such
Project Company of less than $250,000 per year.
 
(79)  “Material Adverse Effect” means any matter that individually or taken as a
whole with all other matters that has had or is reasonably likely to cause a
material and adverse change in, or effect on, the assets or financial condition
of CEM and CPI, or the business or operations of CEM and CPI, provided however,
that the term Material Adverse Effect shall not include any state of facts,
circumstance, change, development, effect, condition or occurrence to the extent
resulting from: (a) conditions that generally affect the electric generation
industry or the construction services industry, (b) economic conditions
affecting the United States securities markets generally and (c) new legal,
accounting or regulatory requirements or limitations, except to the extent such
matters have an effect on CPI and CEM that is disproportionate in any material
respect to the effect on other similarly situated participants in their
respective industry.
 
(80)  “Material Contract” has the meaning set forth in Section 6.1.
 
(81)  “MDU Affiliated Group” has the meaning set forth in Section 6.9(b)(i).
 
(82)  “Mountain View Project” means that certain 67 megawatt wind power project
consisting of 111 wind turbines and associated equipment located in the San
Gorgonio Pass near Palm Springs, California.
 
(83)  “MVPP” means Mountain View Power Partners, LLC, a Delaware limited
liability company.
 
(84)  “New 125 Plan” has the meaning set forth in Section 6.14(b).
 
(85)  “Objection Notice” has the meaning set forth in Section 3.3(d).
 
(86)  “Party” or “Parties” has the meaning set forth in the Preamble.
 
(87)  “Permitted Liens” means (a) Liens on property existing at the time of the
acquisition thereof by a Project Company, (b) statutory Liens for taxes and
other governmental charges not yet due and payable, (c) Liens securing the
payment of Taxes that are either due but not delinquent or being contested in
good faith and for which adequate reserves in accordance with GAAP have been
established, (d) mechanics’, carriers’, workers’, warehouse and other similar
Liens arising in the ordinary course of business relating to obligations as to
which a Project Company is not in default, (e) zoning, entitlement, conservation
restriction and other land use and environmental regulations by Governmental
Authorities, (f) Liens, imperfections in title, charges, easements and
restrictions which, in the aggregate, do not materially detract from the value
of the CPI Stock and the CEM Membership Interests or materially impair the
intended use of the property subject thereto, and (g) Liens created by or
arising by reason of this Agreement, the Major Project Contracts, the CEM
Agreements, the CPI Agreements or the Project Company Agreements.
 
(88)  “Person” means any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization, or governmental
entity or any department or agency thereof.
 
(89)  “Pre-Closing Tax Period” means any Tax period ending on or prior to the
Closing Date.
 
(90)  “Project” means one or all of the following, as the case may require: the
Brush 1&3 Project, the Brush 4D Project, the Mountain View Project, the Hardin
Project, the San Joaquin Project, and the Hartwell Project.
 
(91)  “Project Companies” means BIV Generation, CPP, Hartwell Partnership, MVPP,
RMP and SJC.
 
(92)  “Project Company Agreement” means, for each of the Project Companies, the
limited liability company agreement, partnership agreement, by-laws or other
organizational document of such Project Company.
 
(93)  “Project Company Interests” means, in respect of each Project Company, the
ownership interest of each Person listed as a direct parent with respect to such
Project Company as set forth in Schedule 4.14, together with all of the rights
and obligations of such Person under the Project Company Agreement for such
Project Company, including without limitation, its rights and obligations as a
member, shareholder, or general or limited partner, as the case may be, under
such Project Company Agreement or applicable law.
 
(94)  “Project Contracts” means, with respect to a Project Company, all
contracts, agreements and commitments, including without limitation, mortgages,
indentures and loan agreements, to which such Project Company is a party.
 
(95)  “Project Facilities” means those facilities, land, fixtures, equipment and
other assets owned or leased by the Project Companies.
 
(96)  “Project Permits” means, with respect to each Project Company, the
material permits, licenses, or similar authorizations from any Governmental
Authority required with respect to the business or property of such Project
Company as presently conducted or owned.
 
(97)  “Proprietary Information” of a Party means all information about the Party
or its Affiliates, including their respective properties or operations,
furnished to the other Party or its Representatives by the Party or its
Representatives regardless of the manner or medium in which it is furnished,
including information provided to a Party pursuant to the Confidentiality
Agreement. In addition, after the Closing Date, Proprietary Information includes
any non-public information regarding CEM, CPI, the Investor Subsidiaries, the
Service Subsidiaries, the Project Companies or the transactions contemplated by
this Agreement. Proprietary Information does not include information that: (a)
is or becomes generally available to the public (other than as a result of a
disclosure by the other Party or its Representatives in violation of a
confidentiality agreement); (b) was available to the other Party on a
nonconfidential basis prior to its disclosure by the Party or its
Representatives; (c) becomes available to the other Party on a nonconfidential
basis from a person, other than the Party or its Representatives, who is not
otherwise bound by a confidentiality agreement, or is not under any obligation
not to transmit the information to the other Party or its Representatives; or
(d) is independently developed by the other Party.
 
(98)  “Purchase Price” has the meaning set forth in Section 3.2.
 
(99)  “Real Property Leases” has the meaning set forth in Section 4.6.
 
(100)  “Release” means release, spill, leak, discharge, dispose of, pump, pour,
emit, empty, inject, leach, dump or allow to escape into or through the
environment.
 
(101)  “Replacement PPA” has the meaning set forth in Section 6.1(b).
 
(102)  “Representatives” of a Party means its directors, officers, employees,
agents, partners, advisors (including, without limitation, accountants, counsel,
environmental consultants, financial advisors and other authorized
representatives) and the Party’s Affiliates, parents and other controlling
persons.
 
(103)  “RMP” means Rocky Mountain Power, Inc., a Montana corporation.
 
(104)  “San Joaquin Project” means that certain 48 megawatt simple-cycle
gas-fired facility located approximately 73 miles east of San Francisco in
Lathrop, California.
 
(105)  “SEC” means the Securities and Exchange Commission and any successor
agency thereto.
 
(106)  “Section 338(h)(10) Elections” has the meaning set forth in
Section 6.9(a)(i).
 
(107)  “Securities Act” has the meaning set forth in Section 5.6.
 
(108)  “Seller” has the meaning set forth in the Preamble.
 
(109)  “Seller 125 Plan” has the meaning set forth in Section 6.14(b).
 
(110)  “Seller 401(k) Plan” has the meaning set forth in Section 6.14(c).
 
(111)  “Seller Fundamental Representations” means the representations and
warranties of Seller contained in Sections 4.1, 4.2, 4.3, 4.5, 4.9(a)(A), 4.14,
4.15 and 4.20(a)-(d) and (k)(iv).
 
(112)  “Seller Health Plan” has the meaning set forth in Section 6.14(a).
 
(113)  “Seller’s Indemnitee” has the meaning set forth in Section 8.1(a).
 
(114)  “Seller’s Required Regulatory Approvals” has the meaning set forth in
Section 4.3(b).
 
(115)  “Service Subsidiaries” means the Persons listed as such on Schedule 4.14.
 
(116)  “Shared Assets and Services” means (a) any equipment, hardware, software,
materials, technologies; (b) services, including those required for
telecommunications, human resources, logistics and accounting; and (c) their
related Intellectual Property Rights, purchased or licensed by Seller for the
benefit of, and/or which are shared among, CEM, CPI, Seller and/or any
Affiliates or Subsidiaries of Seller.
 
(117)  “SJC” means San Joaquin Cogen, L.L.C, a Delaware limited liability
company.
 
(118)  “Straddle Period” means any Tax period beginning on or prior to and
ending after the Closing Date.
 
(119)  “Subsidiary” when used in reference to any Person means any entity: (a)
of which outstanding securities having ordinary voting power to elect a majority
of the Board of Directors or other Persons performing similar functions of such
entity are owned directly or indirectly by such Person; or (b) that does not
have outstanding shares or securities but whose ownership interest representing
the right to manage such entity is now or hereafter owned and controlled by such
Person directly or indirectly.
 
(120)  “Target Entities” has the meaning set forth in Section 6.9(b)(i).
 
(121)  “Tax Contest” has the meaning set forth in Section 6.9(d)(i).
 
(122)  “Taxes” means (a) all taxes, charges, fees, levies, penalties or other
assessments imposed by any federal, state or local taxing authority, including,
but not limited to, income, excise, real or personal property, sales, transfer,
franchise, payroll, withholding, social security, gross receipts, license,
stamp, occupation, employment or other taxes, including any interest, penalties
or additions imposed with respect thereto, and (b) any transferee liability in
respect of any items described in clause (a) above resulting from a transfer of
assets that occurred prior to the Closing Date.
 
(123)  “Tax Return” means any return, report, information return, declaration or
other document filed or required to be filed with a taxing authority with
respect to Taxes, including any schedule or attachment thereto or amendment
thereof.
 
(124)  “Termination Date” has the meaning set forth in Section 9.1(b).
 
(125)  “Third Independent Accounting Firm” has the meaning set forth in Section
3.3(d).
 
(126)  “Third Party Claim” has the meaning set forth in Section 8.2(a).
 
(127)  “Transfer Taxes” has the meaning set forth in Section 6.9(f).
 
(128)  “Treasury Regulations” means the income tax regulations promulgated by
the United States Department of Treasury under the Code, including temporary
regulations, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
 
(129)  “Wolcon Closure Agreement” has the meaning set forth in Section 2.2(h).
 
(130)  “Working Capital” means the total current assets less total current
liabilities, as determined in accordance with GAAP, except that (a) cash and
cash equivalents, cash held by CEM for third parties, loan origination fees
currently being amortized, prepaid insurance that is non-transferable, Income
Tax assets, accounts receivable related to the sale of Lea Power Partners and
all intercompany receivables shall be excluded from the calculation of current
assets and (b) all deferred revenue amounts (billings in excess of cost)
associated with the sale of Lea Power Partners and revenue recognition for the
Hobbs project, Brush 4D deferred revenue (EITF 91-6), third party payables
associated with third party cash accounts, accrued interest payable on debt,
current portion of long-term debt due in one year, accrued employee bonuses,
Income Taxes payable, Taxes payable resulting from any transaction or event that
is not in the ordinary course of business and occurs after the Closing on the
Closing Date, intercompany payables, SO2 emission credits payable (net of
related intangible asset) and accrued allocable payroll Taxes and employee
benefit costs for Seller’s employees shall be excluded from the calculation of
current liabilities.
 
(131)  “Working Capital Amount” has the meaning set forth in Section 3.3.
 
1.2  Certain Interpretive Matters.  In this Agreement, unless the context
otherwise requires, the singular shall include the plural, the masculine shall
include the feminine and neuter, and vice versa. The term “includes” or
“including” shall mean “including without limitation.” References to a Section,
Article, Exhibit or Schedule shall mean a Section, Article, Exhibit or Schedule
of this Agreement, and reference to a given agreement or instrument shall be a
reference to that agreement or instrument as modified, amended, supplemented and
restated through the date as of which such reference is made.
 
ARTICLE II  
 
PURCHASE AND SALE
 
2.1  Transfer of Stock and Membership Interests.  Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, at the Closing
Seller will sell, assign, convey, transfer and deliver to Buyer, and Buyer will
purchase and acquire from Seller, free and clear of all Liens, and subject to
Section 2.2 and the other terms and conditions of this Agreement, all of
Seller’s right, title and interest in and to the CPI Stock and the CEM
Membership Interests.
 
2.2  Excluded Assets.  Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement will constitute or be construed as
conferring on Buyer, and Buyer is not acquiring, any right, title or interest in
or to the following specific assets of CPI and CEM and their respective
Subsidiaries, which are hereby specifically excluded from the sale (the
“Excluded Assets”):
 
(a)  All cash and cash equivalents, other than cash accounts maintained by CEM
for third parties, checkbooks, canceled checks and bank deposits;
 
(b)  All refunds or credits of or against Excluded Taxes or any other Taxes that
are the responsibility of Seller pursuant to this Agreement;
 
(c)  The LLC Membership Interest Purchase and Sale Agreement by and between CPI
and Hobbs Power Funding, LLC, dated October 20, 2006 (the “Hobbs Agreement”),
and any and all rights of CPI thereunder;
 
(d)  Any and all rights of CPI to receive distributions or payments, directly or
indirectly, from the Hartwell Partnership with respect or to the extent
allocable to all periods prior to the Closing Date as provided in Section 6.16;
 
(e)  The Centennial Marks;
 
(f)  The assets of any employee benefit plan covering employees of CPI, CEM or
any of their respective Affiliates, other than the assets of the Seller 125 Plan
and the Seller 401(k) Plan held for the benefit of employees of CPI or CEM;
 
(g)  The Benefit Plans identified as the MDU Plans and the Payflex Agreement on
Schedule 4.8 (collectively, the “Intercompany Benefit Plans”);
 
(h)  The Wolcon Closure Agreement between RMP and Wolcon, dated March 28, 2005
(the “Wolcon Closure Agreement”), and any and all rights of RMP thereunder;
 
(i)  The First Amended and Restated Form of Connected Entity Access Services
Agreement between AT&T Corp. and MVPP, dated July 22, 2004 (the “AT&T CAISO ECN
Agreement”), and any and all rights of MVPP thereunder;
 
(j)  All Shared Assets and Services;
 
(k)  The assets set forth on Schedule 2.2(k); and
 
(l)  The insurance policies set forth on Schedules 4.4 and 4.20(k)(ii).
 
2.3  Transfer of Excluded Assets and Discharge of Certain Liabilities.  Not
later than immediately prior to the Closing, Seller shall cause each of CPI, CEM
and their respective Affiliates, as applicable, to transfer all Excluded Assets,
except for those portions of the Shared Assets and Services required for
continued use by CPI or CEM (the terms and use of which the Parties shall agree
to in good faith prior to the Closing), to Seller or one or more of Seller’s
Affiliates, and Seller shall cause CPI, CEM and their respective Affiliates, as
applicable, to be discharged and released from all liabilities and obligations
arising under the Excluded Agreements. All costs and expenses, including Taxes
associated with such transfer shall be for the Seller’s account.
 
2.4  Guarantee Liabilities.  Seller and Buyer shall use their Commercially
Reasonable Efforts to cause the release and discharge of Seller and any
Affiliate of Seller (other than CEM, CPI, the Investor Subsidiaries, the Service
Subsidiaries and the Project Companies) from their obligations under the
guarantee or other credit support agreements listed on Schedule 2.4 (the
“Guarantee Liabilities”) as of the Closing Date. To the extent that Seller or
any such Affiliate of Seller is not fully released and discharged from its
obligations under the Guarantee Liabilities, Buyer shall indemnify, defend and
hold harmless Seller and any such Affiliates of Seller from and against any and
all Indemnifiable Losses asserted against or suffered by Seller or any such
Affiliates of Seller relating to or arising out of the Guarantee Liabilities as
provided in Section 8.1, and at the Closing, Buyer shall deliver to Seller an
Assumption Agreement substantially in the form attached hereto as Exhibit B (the
“Assumption Agreement”) pursuant to which Buyer shall assume and agree to
discharge when due each and every obligation and liability arising on or after
the Closing Date under each of the Guarantee Liabilities.
 
ARTICLE III  
 
THE CLOSING
 
3.1  Closing.  Upon the terms and subject to the satisfaction of the conditions
contained in Article VII of this Agreement, the sale and delivery of the CPI
Stock and the CEM Membership Interests to Buyer, the payment of the Purchase
Price to Seller, and the consummation of the other respective obligations of the
Parties contemplated by this Agreement shall take place at a closing (the
“Closing”), to be held at the offices of Thelen Reid Brown Raysman & Steiner
LLP, 875 Third Avenue, New York, New York at 10:00 a.m. local time, or another
mutually acceptable time and location, on the date that is five (5) Business
Days (or such later date as may be provided by Section 6.15 hereof) following
the date on which the last of the conditions precedent to Closing set forth in
Article VII of this Agreement have been either satisfied or waived by the Party
for whose benefit such conditions precedent exist or such other date as the
Parties may mutually agree. The date of Closing is hereinafter called the
“Closing Date.” The Closing shall be effective for all purposes as of 12:01 a.m.
on the Closing Date.
 
3.2  Payment of Purchase Price.  Upon the terms and subject to the satisfaction
of the conditions contained in this Agreement, in consideration of the aforesaid
sale, assignment, conveyance, transfer and delivery of the CPI Stock and CEM
Membership Interests, Buyer will pay or cause to be paid to Seller at the
Closing an aggregate amount of Six Hundred Million United States Dollars (U.S.
$600,000,000) subject to adjustment as provided in Section 3.3 (the “Purchase
Price”) by wire transfer of immediately available funds denominated in U.S.
Dollars or by such other means as are agreed upon by Seller and Buyer, as
adjusted pursuant to Section 3.3.
 
3.3  Purchase Price Adjustment.
 
(a)  The Purchase Price is premised upon CEM and CPI having as of the Closing
Date and delivering to Buyer an aggregate Working Capital of Zero Dollars ($0)
(the “Working Capital Amount”). Accordingly, the Purchase Price shall be (i)
increased by the amount, if any, by which the aggregate Working Capital of CEM
and CPI as of the Closing Date is greater than the Working Capital Amount, or
(ii) decreased by the amount, if any, by which the aggregate Working Capital of
CEM and CPI as of the Closing Date is less than the Working Capital Amount. Any
such adjustment to the Purchase Price shall be effected in accordance with this
Section 3.3 (the “Adjustment”).
 
(b)  Seller agrees to prepare and deliver to Buyer at least five (5) Business
Days prior to the Closing Date an unaudited consolidated balance sheet and
income statement for each of CEM and CPI reflecting the financial condition of
each of CEM and CPI as of the most recent month end prior to the Closing Date,
together with a statement setting forth (i) the estimated aggregate Working
Capital of CEM and CPI as of the Closing Date and (ii) the Adjustment, if any,
pursuant to clauses (i) and (ii) of Section 3.3(a), above (the “Initial Closing
Statement”). Within sixty (60) days after the Closing Date, Buyer shall prepare
and deliver to Seller an unaudited consolidated balance sheet and income
statement reflecting the financial condition of each of CEM and CPI as of the
Closing Date, together with a statement setting forth (i) the aggregate Working
Capital of CEM and CPI as of the Closing Date and (ii) the Adjustment, if any,
pursuant to clauses (i) and (ii) of Section 3.3(a) above (the “Closing
Statement”). The Initial Closing Statement and the Closing Statement shall be
prepared in a manner consistent with the application of the accounting
principles, practices and procedures of the Financial Statements and the
provisions of this Agreement.
 
(c)  If the Initial Closing Statement sets forth an aggregate Working Capital of
CEM and CPI greater than the Working Capital Amount and a corresponding upward
adjustment to the Purchase Price, then the Purchase Price payable on the Closing
Date shall be increased by an amount equal to such Adjustment. If the Initial
Closing Statement sets forth the aggregate Working Capital of CEM and CPI less
than the Working Capital Amount and a corresponding downward adjustment to the
Purchase Price, then the Purchase Price payable on the Closing Date shall be
decreased by an amount equal to such Adjustment. If the aggregate Working
Capital of CEM and CPI as set forth on the Closing Statement is different than
that included on the Initial Closing Statement, then (i) to the extent that the
Working Capital on the Closing Statement is greater than the Working Capital on
the Initial Closing Statement, Buyer shall pay to Seller an amount equal to the
absolute value of such difference, and (ii) to the extent that the Working
Capital on the Closing Statement is less than the Working Capital on the Initial
Closing Statement, Seller shall pay to Buyer an amount equal to the absolute
value of such difference, subject to Section 3.3(d) below. In each case, such
payment shall be made in cash in immediately available funds within twenty (20)
days after the date the Closing Statement becomes final under Section 3.3(d).
The Purchase Price shall be deemed to be increased or decreased (as the case may
be) by the amounts calculated under this Section 3.3(c). The Parties agree that
for Income Tax and all other Tax purposes, the Parties shall and shall cause
their Affiliates to calculate and timely report such increase or decrease with
respect to CPI and CEM on a separate entity basis. The Parties shall promptly
agree upon revisions to all of the allocations prepared pursuant to Section
6.9(a) to reflect such increase or decrease, and the Parties shall and shall
cause their Affiliates to not take a position on any Tax Return, with any Tax
authority, or otherwise that is inconsistent with such calculations and revised
allocations, except to the extent specifically required pursuant to this
Agreement.
 
(d)  Each Party shall make available to the other Party its work papers used to
prepare its respective closing statement, and shall cooperate with the other
Party in connection with the preparation thereof. Seller shall notify Buyer in
writing within twenty (20) days after receipt by Seller of the Closing Statement
of any objection to the items set forth therein, which notice shall include a
reasonably detailed explanation of the reasons for each objection by Seller (an
“Objection Notice”), provided, that the Seller may only object to the items
contained in the Closing Statement to the extent any such item was not prepared
in accordance with this Agreement or contains mathematical errors. Any item not
so objected to by Seller shall be conclusively deemed to have been approved by
Seller and shall be conclusive and binding upon the Parties. If the Parties are
unable to resolve such dispute within thirty (30) days after the date of receipt
by Seller of the Closing Statement, then Buyer and Seller shall agree upon and
designate an Independent Accounting Firm (the “Designated Independent Accounting
Firm”) and the Designated Independent Accounting Firm shall, within fifteen (15)
days of its appointment, make a final and binding determination solely of the
matters that remain in dispute and were properly included in the Objection
Notice, and, based on such resolution, a final and binding determination of the
Adjustment amount, if any. If Buyer and Seller are unable to agree upon a
Designated Independent Accounting Firm, then each of the Buyer and Seller shall
designate one Independent Accounting Firm and the two Independent Accounting
Firms so selected shall, within ten (10) days after the date on which the later
of the two Independent Accounting Firms are appointed, appoint a third
Independent Accounting Firm (the “Third Independent Accounting Firm”) and the
Third Independent Accounting firm shall, within fifteen (15) days of its
appointment, make a final and binding determination solely of the matters that
remain in dispute and were properly included in the Objection Notice, and, based
on such resolution, a final and binding determination of the Adjustment amount,
if any. The Designated Independent Accounting Firm or the Third Independent
Accounting Firm, as the case may be, shall act on the following basis: such
Independent Accounting Firm shall act as an expert and not as an arbitrator; its
terms of reference shall be to determine the appropriate Adjustment within
fifteen (15) days of its appointment, having strict regard to the application of
the terms of this Agreement to the same (and, for the avoidance of doubt,
disregarding other means of calculating the same, to the extent that such means
are inconsistent with or not provided for in this Agreement); Buyer and Seller
shall each provide such Independent Accounting Firm with all such information as
it reasonably requires and the Independent Accounting Firm shall base its
decision solely on such written submissions by Buyer and Seller and their
respective representatives; such Independent Accounting Firm shall not hold any
hearings, hear any oral testimony or otherwise seek or require any other
evidence and it may not assign a value greater than the greatest value for such
item claimed by either Party or smaller than the smallest value for such item
claimed by either Party. The final written determination of such Independent
Accounting Firm shall (in the absence of fraud or manifest error) be conclusive
and binding on the Parties. The Independent Accounting Firms shall not have the
power to amend or modify any terms of this Agreement. The costs of the
Independent Accounting Firms shall be borne pro rata by Seller and Buyer in
proportion to the difference between the Designated Independent Accounting
Firm’s or the Third Independent Accounting Firm’s, as the case may be, final
determination of any Adjustment amount and each of Buyer’s and Seller’s
determination of such Adjustment amount. For example, if Buyer calculated an
Adjustment amount of $100,000, Seller calculated an Adjustment amount of $50,000
and the Designated Independent Accounting Firm or the Third Independent
Accounting Firm, as the case may be, calculated an Adjustment amount of $60,000,
Buyer would pay that portion of the Independent Accounting Firms’ fees
determined by dividing $40,000 ($100,000 - $60,000) by $50,000 ($100,000 -
$50,000) (i.e., 80%) and Seller would pay the remaining 20% of such fees.
 
(e)  Any disputed amounts or any amounts not paid within five (5) days of when
due and owing, plus interest thereon at the Default Interest Rate which shall
have accrued from the due date until the date of payment, shall be paid in
accordance with Section 3.3(c) above within ten (10) days after the date the
Designated Independent Accounting Firm or the Third Independent Accounting Firm,
as the case may be, provides to both Parties its final written determination
pursuant to Section 3(d) above. In addition, any amount not paid within ten (10)
days of when due if not disputed in accordance with Section 3.3(d) above shall
accrue interest at the Default Interest Rate.
 
(f)  Each of the Parties agrees and undertakes to the other to provide all
reasonable access, necessary data and information, and to assist in the
calculations referred to in this Section 3.3.
 
3.4  Deliveries by Seller.  At the Closing, Seller will deliver, or cause to be
delivered, the following to Buyer:
 
(a)  A stock certificate or certificates representing the CPI Stock accompanied
by a stock power duly endorsed to Buyer;
 
(b)  The CEM ownership ledger marked with appropriate notations evidencing the
transfer of the CEM Membership Interests to Buyer;
 
(c)  Resignations of all directors and officers of CPI, CEM, the Investor
Subsidiaries, the Service Subsidiaries and the Project Companies (other than the
Hartwell Partnership) effective upon the Closing, and written resignations of
any member of the management committee of the Hartwell Partnership designated by
Seller or any Affiliate thereof effective upon the Closing.
 
(d)  Copies of any and all governmental and other third party consents, waivers
or approvals required with respect to the transfer of the CPI Stock, the CEM
Membership Interests, or the consummation of the transactions contemplated by
this Agreement;
 
(e)  The opinions of counsel and officer’s certificates contemplated by
Section 7.1;
 
(f)  Copies, certified by the Secretary or Assistant Secretary of Seller, of
corporate resolutions authorizing the execution and delivery of this Agreement
and all of the agreements and instruments to be executed and delivered by Seller
in connection herewith, and the consummation of the transactions contemplated
hereby;
 
(g)  A certificate of the Secretary or Assistant Secretary of Seller identifying
the name and title and bearing the signatures of the officers of Seller
authorized to execute and deliver this Agreement and the other agreements and
instruments contemplated hereby;
 
(h)  A Certificate of Good Standing with respect to Seller issued by the
Secretary of State of the State of Delaware;
 
(i)  A Certificate of Good Standing with respect to CPI issued by the Secretary
of State of the State of Delaware;
 
(j)  A Certificate of Good Standing with respect to CEM issued by the Secretary
of State of the State of Colorado;
 
(k)  To the extent available, originals of all CPI Agreements, CEM Agreements,
Major Project Contracts, Real Property Leases and corporate and limited
liability company records of CPI and CEM, respectively, and, if not available,
true and correct copies thereof;
 
(l)  Copies of all Project Permits and Environmental Permits held by the Project
Companies; and
 
(m)  Such other agreements, documents, instruments and writings as are required
to be delivered by Seller at or prior to the Closing Date pursuant to this
Agreement or otherwise reasonably required in connection herewith.
 
3.5  Deliveries by Buyer.  At the Closing, Buyer will deliver, or cause to be
delivered, the following to Seller:
 
(a)  The Purchase Price by wire transfer of immediately available funds in
accordance with Seller’s instructions or by such other means as may be agreed to
by Seller and Buyer;
 
(b)  The opinions of counsel and officer’s certificates contemplated by
Section 7.2;
 
(c)  Copies, certified by the Secretary or Assistant Secretary of Buyer, of
resolutions authorizing the execution and delivery of this Agreement, and all of
the agreements and instruments to be executed and delivered by Buyer in
connection herewith, and the consummation of the transactions contemplated
hereby;
 
(d)  A certificate of the Secretary or Assistant Secretary of Buyer, identifying
the name and title and bearing the signatures of the officers of Buyer
authorized to execute and deliver this Agreement, and the other agreements
contemplated hereby;
 
(e)  Copies of any and all governmental and other third party consents, waivers
or approvals obtained by Buyer with respect to the transfer of the CPI Stock,
the CEM Membership Interests or the consummation of the transactions
contemplated by this Agreement; and
 
(f)  Such other agreements, documents, instruments and writings (including
without limitation the Assumption Agreement) as are required to be delivered by
Buyer at or prior to the Closing Date pursuant to this Agreement or otherwise
reasonably required in connection herewith.
 
3.6  Mutual Delivery.  At the Closing, Seller and Buyer shall execute and
deliver to Barclays Bank PLC a notice of termination of the Buyer LC signed by
an authorized officer of each of Seller and Buyer in the form of Annex B to the
Buyer LC.
 
ARTICLE IV  
 
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLER
 
Seller represents and warrants to Buyer as follows (each such representation and
warranty in respect of the Hartwell Partnership being further limited to the
Knowledge of Seller):
 
4.1  Organization; Qualification.  Each of Seller, CEM, CPI, the Investor
Subsidiaries and the Service Subsidiaries is a corporation or limited liability
company duly incorporated or formed, validly existing and in good standing under
the laws of the jurisdiction under which it was incorporated or formed as
indicated on Schedule 4.14. CEM, CPI, and each Investor Subsidiary and Service
Subsidiary have all requisite corporate or limited liability company power and
authority to own, lease, and operate their material properties and assets and to
carry on their businesses as is now being conducted. Each of CEM, CPI, the
Investor Subsidiaries and Service Subsidiaries is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction in which its business, as now being conducted, shall require it to
be so qualified, except where the failure to be so qualified has not had, and is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect. Seller has heretofore delivered to Buyer true, complete and
correct copies of its, CEM’s, CPI’s, each Investor Subsidiary’s and each Service
Subsidiary’s certificate of incorporation and bylaws or certificate of formation
and limited liability company agreement, as applicable, as currently in effect.
 
4.2  Authority Relative to this Agreement.  Seller has full limited liability
company power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by it hereby. The execution and
delivery of this Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate or limited liability company action required on the part of
Seller and this Agreement has been duly and validly executed and delivered by
Seller. Subject to the receipt of Seller’s Required Regulatory Approvals, this
Agreement constitutes the legal, valid and binding agreement of Seller,
enforceable against Seller in accordance with its terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting or relating to enforcement of creditors’ rights generally and general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
 
4.3  Consents and Approvals; No Violation.
 
(a)  Except as set forth on Schedule 4.3(a), and other than obtaining Seller’s
Required Regulatory Approvals, neither the execution and delivery of this
Agreement by Seller nor the consummation by Seller, CEM or CPI of the
transactions contemplated hereby will (i) conflict with or result in any breach
or violation of any provision of the Amended and Restated Certificate of
Incorporation or Bylaws of CPI or the Certificate of Formation or Limited
Liability Company Agreement of Seller or CEM, or (ii) require any material
consent, approval, authorization, waiver of any right of first refusal, right of
first offer or similar preemptive right, or permit of, or filing with, any
Person, or (iii) result in a default (or give rise to any right of termination,
consent, cancellation or acceleration) under any of the terms, conditions or
provisions of any material note, bond, mortgage, indenture, material agreement
or other instrument or obligation to which Seller, CEM, CPI, any Investor
Subsidiary or any Service Subsidiary is a party or by which it may be bound, or
(iv) constitute violations in any material respect of any law, regulation,
order, judgment or decree applicable to Seller, CEM, CPI or any Investor
Subsidiary or Service Subsidiary.
 
(b)  Except as set forth on Schedule 4.3(b), (the filings and approvals referred
to in Schedule 4.3(b) are collectively referred to as the “Seller’s Required
Regulatory Approvals”), no consent or approval of, filing with, or notice to,
any Governmental Authority by or for Seller, CEM, CPI, any Investor Subsidiary
or any Service Subsidiary is necessary for the execution and delivery of this
Agreement by Seller, or the consummation by Seller of the transactions
contemplated hereby, other than (i) such consents, approvals, filings or notices
which, if not obtained or made, will not prevent Seller, CEM or CPI from
performing its material obligations hereunder and (ii) such consents, approvals,
filings or notices which become applicable to Seller, CEM, CPI, any Investor
Subsidiary or any Service Subsidiary as a result of the specific regulatory
status of Buyer (or any of its Affiliates) or as a result of any other facts
that specifically relate to the business or activities in which Buyer (or any of
its Affiliates) is or proposes to be engaged.
 
4.4  Insurance.  Schedule 4.4 lists all material policies of fire, liability,
workers’ compensation and other forms of insurance owned or held by, or on
behalf of, Seller, CEM, CPI, any Investor Subsidiary or any Service Subsidiary
with respect to the business, operations or employees of CEM, CPI, any Investor
Subsidiary or any Service Subsidiary, each of which is in full force and effect,
all premiums with respect thereto covering all periods up to and including the
date hereof have been paid (other than retroactive premiums which may be payable
with respect to comprehensive general liability and workers’ compensation
insurance policies), and no notice of cancellation or termination has been
received with respect to any such policy which was not replaced on substantially
similar terms prior to the date of such cancellation.
 
4.5  Title and Related Matters.  Seller has good and valid title to the CPI
Stock and the CEM Membership Interests, free and clear of all Liens. Except as
set forth on Schedule 4.5, each Person listed on Schedule 4.14 as being the
direct parent of the Investor Subsidiaries and the Service Subsidiaries is the
record and beneficial owner of all of the issued and outstanding shares of
capital stock or membership interests, as applicable, of the such Investor
Subsidiaries and Service Subsidiaries and has good and valid title to such
capital stock or membership interests, as applicable, free and clear of all
Liens. Except as set forth on Schedule 4.5, each Person listed on Schedule 4.14
as being the direct parent of a Project Company is the record and beneficial
owner of all such Project Company Interests free and clear of all Liens.
 
4.6  Real Property Leases.  Schedule 4.6 lists, as of the date of this
Agreement, all real property leases, easements, licenses and other rights in
real property (collectively, the “Real Property Leases”) to which CEM, CPI, any
Investor Subsidiary or any Service Subsidiary is a party and which provide for
annual payments of more than $50,000. Except as set forth on Schedule 4.6, all
such Real Property Leases are valid, binding and enforceable in accordance with
their terms, and are in full force and effect; there are no existing material
defaults by CEM, CPI or any Investor Subsidiary or Service Subsidiary or, to the
Knowledge of Seller, any other party thereunder; and no event has occurred which
(whether with or without notice, lapse of time or both) would constitute a
material default by CEM, CPI, any Investor Subsidiary or any Service Subsidiary
or, to the Knowledge of Seller, any other party thereunder.
 
4.7  Labor Matters.  There are no collective bargaining agreements to which CEM,
CPI, any Investor Subsidiary or any Service Subsidiary is a party or is subject.
With respect to the business or operations of CEM, CPI, any Investor Subsidiary
or any Service Subsidiary, except to the extent set forth on Schedule 4.7 and
except such matters as have not had, and are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect, CEM, CPI, each
Investor Subsidiary and each Service Subsidiary is in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours.
 
4.8  Benefit Plans.  Schedule 4.8 lists all (i) deferred compensation,
profit-sharing, retirement and pension plans, including multi-employer plans,
and all material bonus, fringe benefit and other employee benefit plans or
arrangements maintained or with respect to which contributions are made by CEM
or CPI or any of their respective Affiliates in respect of the current or former
employees of CEM or CPI, any of the Investor Subsidiaries, any of the Service
Subsidiaries or any of the Project Companies connected with the business or
operations of CEM and CPI or with respect to which any of CEM, CPI, any Investor
Subsidiary, any Service Subsidiary or Project Company has any actual or
contingent liability (“Benefit Plans”) and (ii)  each employment, consulting,
change in control or severance agreement in respect of the employees of CEM,
CPI, any Investor Subsidiary, any Service Subsidiary or any Project Company and
with respect to which CEM, CPI, any Investor Subsidiary, any Service Subsidiary
or any Project Company may have any actual or contingent liability
(collectively, “Benefit Agreements”). All Benefit Plans and Benefit Agreements
have been operated in accordance with their terms and applicable law in all
material respects. True and complete copies of all Benefit Agreements have been
made available to Buyer.
 
4.9  Contracts and Leases.
 
(a)  Schedule 4.9(a) lists (i) each CEM Agreement and (ii) each CPI Agreement,
other than any contract, license, agreement or personal property lease which is
listed or described on another Schedule or which is an Excluded Asset or
Excluded Agreement. Schedule 4.9(a) contains a list of all of the following
contracts to which CEM, CPI, any Investor Subsidiary or any Service Subsidiary
is a party or by which their respective assets are bound:
 
(A) contracts respecting Indebtedness; (B) joint venture agreements, partnership
agreements, limited liability company agreements and each similar type of
contract involving a sharing of profits, losses, costs or liabilities with any
other person; (C) contracts not otherwise disclosed herein which materially
restrict the ability of CEM, CPI or any of their Subsidiaries to engage in the
type of business in which they are currently principally engaged; (D) stock
option contracts, warrants and convertible securities for the issuance of
capital stock of CEM, CPI or any of their Subsidiaries; (E) contracts
restricting the transfer of capital stock of CEM, CPI or any of their
Subsidiaries, obligating CEM, CPI or any of their Subsidiaries to issue or
repurchase its capital stock or relating to the voting or the election of
directors of CEM or CPI; (F) contracts relating to the acquisition or sale by
CEM, CPI or any of their Subsidiaries of any operating business or the capital
stock or other ownership interest of any other person under which CEM, CPI or
any of their Subsidiaries has a continuing liability or obligation;
(G) contracts under which there is a continuing obligation to pay any “earnout”
payment or deferred or contingent purchase price or any similar payment
respecting the purchase of any business or assets; (H) contracts with Seller,
any officer or director of CEM, CPI or any of their Subsidiaries, or in the case
of any individual any immediate family member of any of the foregoing; and
(I) contracts which CEM, CPI or any of their Subsidiaries guarantees the
liabilities or obligations of another person.
 
(b)  Except as disclosed in Schedule 4.9(b), each CEM Agreement and CPI
Agreement listed on Schedule 4.9(a) (i) constitutes a legal, valid and binding
obligation of CEM, CPI, the Investor Subsidiary or the Service Subsidiary party
thereto and, to the Knowledge of Seller, constitutes a valid and binding
obligation of the other parties thereto and (ii) is in full force and effect.
 
(c)  Except as set forth on Schedule 4.9(c), there are not, under the CEM
Agreements or the CPI Agreements, any material defaults or events which, with
notice or lapse of time or both, would constitute a material default on the part
of CEM, CPI, any Investor Subsidiary or any Service Subsidiary or, to the
Knowledge of Seller, any of the other parties thereto.
 
4.10  Legal Proceedings, etc.  Except as set forth on Schedule 4.10, there are
no claims, actions, investigations or proceedings pending (or to the Knowledge
of Seller overtly threatened) against CEM, CPI, any Investor Subsidiary or any
Service Subsidiary before any court, arbitrator or Governmental Authority and to
the Knowledge of Seller, there are no facts or circumstances that are reasonably
expected to give rise to any such claim, action, proceeding or investigation
which, individually or in the aggregate, (a) would reasonably be expected to
result, or has resulted, in (i) the institution or threat of legal proceedings
to prohibit or restrain the performance by the Seller of this Agreement or the
consummation of the transactions contemplated hereby, or (ii) a material
impairment of the ability of Seller to perform its obligations under this
Agreement or (iii) a material impairment of Buyer’s ability to own, operate and
maintain CEM and CPI in the same manner as it is owned, operated and maintained
on the Closing Date; or (b) would be reasonably likely to result in losses
exceeding One Million Dollars ($1,000,000). Except as set forth on
Schedule 4.10, neither CEM, CPI, any Investor Subsidiary nor any Service
Subsidiary is subject to any outstanding judgments, rules, orders, writs,
injunctions or decrees of any court, arbitrator or Governmental Authority which
would, individually or in the aggregate, create a Material Adverse Effect.
 
4.11  Tax Matters.  Except as set forth on Schedule 4.11:
 
(a)  CEM, CPI, each Investor Subsidiary and each Service Subsidiary has duly and
timely filed (or there has been filed on its behalf) with the appropriate taxing
authorities all material Tax Returns required to be filed by it (after giving
effect to any valid extension of time in which to make such filings), and all
such Tax Returns were correct in all material respects at the time of filing;
 
(b)  CEM, CPI, each Investor Subsidiary and each Service Subsidiary has,
complied in all material respects with applicable laws relating to the
withholding of Taxes on payments made to employees, independent contractors,
creditors, stockholders, members and third parties and the remittance of such
withheld amounts to proper Governmental Authorities;
 
(c)  There are no Liens for Taxes upon the assets or properties of CEM, CPI, any
Investor Subsidiary or any Service Subsidiary, except for Permitted Liens;
 
(d)  No federal, state or local audits or examinations (“Audits”) have been
initiated and are currently in progress with regard to any Taxes or Tax Returns
of CEM, CPI, any Investor Subsidiary or any Service Subsidiary and, to the
Knowledge of Seller, none of such entities has received any notice from any
taxing authority that any such Audit is currently pending or threatened;
 
(e)  CEM, CPI, the Investor Subsidiaries and the Service Subsidiaries are not
parties to, are not bound by, and have no obligation under, any Tax sharing
agreement (other than an agreement solely among members of an Affiliated Group
the common parent of which is MDU Resources Group, Inc.);
 
(f)  No power of attorney has been granted by CEM, CPI, any Investor Subsidiary
or any Service Subsidiary relating to Taxes of such entities, which power of
attorney is currently in force;
 
(g)  CEM, CPI, each Investor Subsidiary and each Service Subsidiary have fully
and timely paid all material Taxes that are due and payable by such companies to
Governmental Authorities (whether or not shown on any Tax Return), and have
established adequate reserves in accordance with GAAP for any material Taxes
that are not yet due and payable to Governmental Authorities, for all taxable
periods, or portions thereof, ending on or before the date hereof;
 
(h)  There are no outstanding agreements entered into by Seller or any of its
Affiliates extending or waiving the statutory period of limitations applicable
to any claim for, or the period for the collection or assessment or reassessment
of, Taxes due from CEM, CPI, any Investor Subsidiary or any Service Subsidiary
for any taxable period and no request by Seller or any of its Affiliates for any
such waiver or extension is currently pending;
 
(i)  None of CEM, CPI, the Investor Subsidiaries or the Service Subsidiaries has
taken any reporting position on a Tax Return, which reporting position (i) if
not sustained would be reasonably likely, absent adequate disclosure in
accordance with Section 6662(d)(2)(B) of the Code, to subject such entity to a
penalty for substantial understatement of federal income Tax under Section 6662
of the Code, and (ii) has not adequately been disclosed on such Tax Return in
accordance with Section 6662(d)(2)(B) of the Code;
 
(j)  None of CEM, CPI, the Investor Subsidiaries or the Service Subsidiaries has
constituted a “distributing corporation” or a “controlled corporation” (within
the meaning of Section 355(a)(1)(A) of the Code) in a distribution of shares
described in Section 355 of the Code (i) in the two years prior to the date of
this Agreement or (ii) in a distribution that could otherwise be reasonably
expected to constitute part of a “plan” or “series of related transactions”
(within the meaning of Section 355(e) of the Code) that includes the purchase by
Buyer of the CPI Stock and the CEM Membership Interests pursuant to this
Agreement;
 
(k)  None of CEM, CPI, the Investor Subsidiaries or the Service Subsidiaries (i)
has executed or entered into a closing agreement pursuant to Section 7121 of the
Code or any similar provision of state, local or foreign law that would have
continuing effect after the Closing Date or (ii) has received any private letter
ruling of the IRS or comparable ruling of any other Governmental Authority, in
either case that would have continuing effect after the Closing Date;
 
(l)  There is no contract, agreement, plan, or arrangement to which CEM, CPI,
any Investor Subsidiary or any Service Subsidiary is a party, covering any
employee or former employee of any such entity that, individually or
collectively, could reasonably be expected to give rise to the payment of any
amount that would not be deductible by Buyer, CEM, CPI, the Investor
Subsidiaries or the Service Subsidiaries by reason of Section 280G of the Code;
 
(m)  The Hartwell Partnership has made the election to adjust the basis of its
assets described in Section 754 of the Code, and such election is currently in
effect; and
 
(n)  Schedule 4.11(n) sets forth the December 31, 2005 adjusted tax basis for
federal income tax purposes of CEM, CPI, the Investor Subsidiaries, the Service
Subsidiaries and the Project Companies.
 
4.12  Compliance With Laws.  CEM, CPI, each Investor Subsidiary and each Service
Subsidiary is in compliance with all applicable laws, rules and regulations with
respect to its business or operations except where the failure to be in
compliance has not had, and is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect.
 
4.13  Undisclosed Liabilities.  Except as set forth on Schedule 4.13, neither
CEM nor CPI is subject to any material liability or obligation (whether
absolute, contingent or otherwise) that has not been accrued or reserved against
its Financial Statements, except (a) liabilities arising in the ordinary course
of business under any contract or commitment, (b) those liabilities or
obligations incurred in the ordinary course of business since December 31, 2006,
(c) liabilities that have not had, and are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect and (d) liabilities
or obligations disclosed on any of the Schedules to this Agreement.
 
4.14  Subsidiaries.  Except as set forth on Schedule 4.14, none of CPI, CEM, any
Investor Subsidiary or any Service Subsidiary owns any preferred, common or
other equity securities of any kind nor any equity or other interests in any
other business, legal entity or arrangement.
 
4.15  Capitalization.
 
(a)  The CPI Stock, which consists of 1,000 shares of common stock, no par
value, constitutes all of the issued and outstanding shares of capital stock of
CPI and is owned beneficially and of record by Seller, free and clear of all
Liens. The CPI Stock has been duly authorized and validly issued, and is fully
paid and non-assessable. There are no other authorized shares of capital stock
of CPI other than the 1,000 shares of common stock comprising the CPI Stock.
Neither Seller nor CPI has any obligation, contingent or otherwise, to issue,
sell, repurchase, redeem or otherwise acquire any of the CPI Stock or other
capital stock of CPI or any equity or debt securities of CPI.
 
(b)  The CEM Membership Interests constitute 100% of the membership interests of
CEM and are owned beneficially and of record by Seller, free and clear of all
Liens. The CEM Membership Interests have been duly authorized and validly
issued, and are fully paid and non-assessable. There are no other authorized
membership interests of CEM other than the membership interests comprising the
CEM Membership Interests. Seller has no obligation, contingent or otherwise, to
issue, sell, repurchase, redeem or otherwise acquire any of the CEM Membership
Interests or other ownership interests of CEM or any equity or debt securities
of CEM.
 
(c)  None of the membership interests constituting the CEM Membership Interests
nor the shares of common stock constituting the CPI Stock have been issued in
violation of, or is subject to, any preemptive or subscription rights, rights of
first refusal or offer, options, put or call rights, consent rights, restrictive
covenants or agreements with any third party other than Buyer. There are no
outstanding securities convertible into or exchangeable for the capital stock of
CPI or the membership interests of CEM. Except as set forth on Schedule 4.15(c),
there are no outstanding options, warrants or other rights (including conversion
or preemptive rights and rights of first refusal) or agreements for the purchase
from CEM or CPI of any capital stock or other equity interests.
 
4.16  Financial Statements.  Attached hereto as Schedule 4.16 are the unaudited
balance sheets and income statements of CEM, CPI, each Project Company, each
Investor Subsidiary and each Service Subsidiary and the unaudited combined
statements of cash flows of CEM and CPI as of and for the year ended
December 31, 2006, and the three-month period ending March 31, 2007
(collectively, the “Financial Statements”). The Financial Statements have been
prepared in accordance with GAAP and present fairly the financial condition of
CEM, CPI, each Project Company, each Investor Subsidiary and each Service
Subsidiary, respectively, as applicable, as of the dates set forth therein and
their respective results of operations for the periods set forth therein.
 
4.17  Absence of Certain Changes.  Except as set forth on Schedule 4.17, since
December 31, 2006:
 
(a)  Neither CEM, CPI, any Investor Subsidiary nor any Service Subsidiary has
suffered any damage, destruction or loss which has not been disclosed to Buyer,
whether or not covered by insurance, which has had a Material Adverse Effect;
 
(b)  Without limiting any other representation made by Seller herein, to the
Knowledge of Seller, neither CEM, CPI, any Investor Subsidiary nor any Service
Subsidiary has suffered or experienced any Material Adverse Effect which has not
been disclosed to Buyer which would constitute a breach of any other
representation made by Seller herein;
 
(c)  Neither CEM, CPI, any Investor Subsidiary nor any Service Subsidiary has
issued or agreed to issue any additional common stock, membership interests or
general or limited partnership interests or other equity interests in such
Person;
 
(d)  Neither CEM, CPI, any Investor Subsidiary nor any Service Subsidiary has
encumbered any of its assets or incurred any Indebtedness, other than unsecured
liabilities incurred in the ordinary course of business and consistent with past
practice and Permitted Liens;
 
(e)  Neither CEM, CPI, any Investor Subsidiary nor any Service Subsidiary has
entered into any contract or agreement, including, without limitation, new loans
or capital expenditures, that will bind such Person beyond the Closing and will
involve aggregate expenditures in excess of $250,000, except the CEM Agreements
and CPI Agreements;
 
(f)  Neither CEM, CPI, any Investor Subsidiary nor any Service Subsidiary has
acquired, sold or transferred any material asset of any such Person other than
in the ordinary course of business and consistent with past practice; and
 
(g)  Neither CEM, CPI, any Investor Subsidiary nor any Service Subsidiary has
amended or changed any of its governing corporate, limited liability company,
general partnership or limited partnership documents.
 
4.18  Bankruptcy.  There are no bankruptcy, reorganization, or arrangement
proceedings pending against, being contemplated by, or, to the Knowledge of
Seller, threatened against CEM or CPI.
 
4.19  Books and Records.  The company records of CEM and CPI have been made
available to Buyer prior to the execution of this Agreement and contain a true
and complete records, in all material respects, of all material action taken at
all meetings and by all written consents in lieu of meetings of boards of
directors and other similar governing bodies of said entities.
 
4.20  Project Companies.
 
(a)  Organization; Good Standing. Each of the Project Companies is a limited
partnership, limited liability company or corporation duly organized, validly
existing and in good standing under the laws of the state of its formation or
incorporation, is qualified to do business and is in good standing under the
laws of each jurisdiction in which its business as now being conducted shall
require it to be so qualified, except where the failure to be so qualified has
not had, and is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect.
 
(b)  Validity of Agreement. Except as set forth on Schedule 4.20(b), the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated hereby, do not and will not require any material
consent or waiver by any Person, or give rise to any rights of first refusal or
similar preemptive rights under, conflict with, result in a material breach of
any provision of, constitute a material default under, result in the material
modification or cancellation of, or give rise to any right of termination or
acceleration in respect of, any Project Contracts.
 
(c)  Subsidiaries. Except as set forth on Schedule 4.20(c), none of the Project
Companies has any Subsidiaries or otherwise owns or controls, directly or
indirectly, any equity interest in any corporation, partnership, joint venture,
limited liability company, association or other business entity.
 
(d)  No Options. Except as set forth on Schedule 4.20(d), there are no
outstanding options, warrants or other rights (including conversion or
preemptive rights and rights of first refusal) or agreements for the purchase
from any Project Company of any general or limited partnership interests,
membership interests, capital stock or other equity interests, other than any
such rights or agreements, if any, set forth in the Project Company Agreement of
such Project Company.
 
(e)  Financial Statements; Liabilities. Except as and to the extent (A) shown or
provided for in the Financial Statements for the year ended December 31, 2006
with respect to the Project Companies, (B) set forth on Schedule 4.20(e),
(C) arising under the Project Contracts, or (D) the existence of which would not
constitute a breach of any other representation or warranty made herein to by
the Knowledge of Seller, each of the Project Companies has no liabilities or
obligations (whether accrued, absolute or contingent) arising prior to December
31, 2006 which are or which would reasonably be expected to become a claim
against such Project Company or a Lien, other than a Permitted Lien, against any
of the assets or properties of such Project Company, in each case, that has not
had, and is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect.
 
(f)  Absence of Certain Changes. Except as set forth on Schedule 4.20(f), since
December 31, 2006:
 
(i)  To the Knowledge of Seller, none of the Project Companies has suffered any
damage, destruction or loss which has not been disclosed to Buyer, whether or
not covered by insurance, which has had a Material Adverse Effect;
 
(ii)  Without limiting any other representation made by Seller herein, to the
Knowledge of Seller, none of the Project Companies has suffered or experienced
any Material Adverse Effect which has not been disclosed to Buyer which would
constitute a breach of any other representation made by Seller herein;
 
(iii)  None of the Project Companies has issued or agreed to issue any
additional common stock, membership interests or general or limited partnership
interests or other equity interests in such Project Company;
 
(iv)  None of the Project Companies has encumbered any of its assets or incurred
any Indebtedness, other than unsecured liabilities incurred in the ordinary
course of business and Permitted Liens; and
 
(v)  None of the Project Companies has entered into any contract or agreement,
including, without limitation, new loans or capital expenditures, that will bind
such Project Company beyond the Closing and will involve annual expenditures in
excess of $250,000, except the Major Project Contracts and the Replacement PPA.
 
(g)  Ownership or Lease of Project Facilities and Equipment. Each Project
Company owns, leases or otherwise has the right to use all real property,
including all fixtures and improvements situated thereon, and owns, leases or
otherwise has the right to use all equipment and personal property, tangible and
intangible, in each case which is used in the day to day operations of the
business of such Project Company and which is necessary to conduct the business
of such Project Company in the manner in which it is presently conducted except
where the failure to so own, lease or have the right to use would not materially
and adversely effect the business or operation of such Project Company.
 
(h)  Taxes. Except as set forth on Schedule 4.20(h), each of the Project
Companies has (i) duly and timely filed (or there has been filed on its behalf)
with the appropriate taxing authorities all material Tax Returns required to be
filed by it, and all such Tax Returns were correct in all material respects at
the time of filing, and (ii) timely paid or caused to have been paid on its
behalf all Taxes shown as due on filed Tax Returns.
 
(i)  Rights of Third Parties. Except as set forth on Schedule 4.20(i), none of
the Project Companies has entered into any leases, licenses, easements or other
agreements, recorded or unrecorded, granting rights to third parties in, or with
respect to, any real or personal property of such Project Company other than in
the ordinary course of business, and no person or entity has any right to
possession or occupancy of any property of such Project Company, in each case
except to the extent arising under Permitted Liens, the Major Project Contracts
or any leases, licenses, easements or other agreements entered into in the
ordinary course of business.
 
(j)  Title to Properties.
 
(i)  Except as set forth on Schedule 4.20(j)(i), each Project Company has good
and valid title to all of the properties which such Project Company owns as
reflected in the Financial Statements as of and for the period ended December
31, 2006 with respect to the Project Companies, and such properties are not
subject to any Lien, other than Permitted Liens.
 
(ii)  Except as set forth on Schedule 4.20(j)(ii), all material leases pursuant
to which each Project Company leases personal or real property are valid and are
enforceable against such Project Company and, to the Knowledge of Seller,
enforceable by such Project Company, in each case in accordance with their
respective terms, except to the extent enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect, affecting the enforcement of creditors’ rights
generally and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
 
(k)  Additional Information. The following additional information concerning the
Project Companies is set forth on Schedule 4.20(k):
 
(i)  Major Project Contracts. A list of all of the Major Project Contracts;
 
(ii)  Insurance. A list of all of the current insurance policies for each
Project Company;
 
(iii)  Litigation. A description of all litigation and other administrative,
arbitration, grievance or other proceedings which, to the Knowledge of Seller,
is pending or overtly threatened, in each such case in which any Project Company
is a party or is reasonably likely to become a party, or involving any Project
Company, its business, its properties, or the Project Company Interests, except
actions, if any, instituted by Buyer or any of its Affiliates;
 
(iv)  Indebtedness. A list of all indebtedness for borrowed money of each
Project Company in excess of $100,000; and
 
(v)  Project Permits. A list of the Project Permits with respect to each Project
Company.
 
(l)  Insurance. The insurance policies listed on Schedule 4.20(k) are in full
force and effect.
 
(m)  Default. Except as set forth on Schedule 4.20(m), none of the Project
Companies nor, to the Knowledge of Seller, any of the other parties to the
Project Contracts, is in material default under, nor has any event occurred
which, with notice or the lapse of time or both, would result in a material
default on the part of any Project Company under, any of the material Project
Contracts. Except as set forth on Schedule 4.20(m), each of the Project
Contracts is valid, legally binding and enforceable against the Project Company
a party thereto and, to the Knowledge of Seller, enforceable by such Project
Company, in each case in accordance with its terms, except to the extent
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect, affecting
the enforcement of creditors’ rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
 
(n)  Environmental Matters. Except as set forth on Schedule 4.20(n):
 
(i)  To the Knowledge of Seller, no Releases of Hazardous Substances have
occurred at, onto, from, under or in any of the Project Facilities with respect
to which remedial action is required by law which has not been completed;
 
(ii)  To the Knowledge of Seller, there are no Environmental Conditions at any
of the Project Facilities for which remedial action is required by law which has
not been completed;
 
(iii)  There are no Environmental Claims against any Project Company or relating
to one or more of the Project Facilities, which are pending or, to the Knowledge
of Seller, overtly threatened;
 
(iv)  To the Knowledge of Seller, no underground storage tanks are currently
located at any of the Project Facilities;
 
(v)  All material permits, licenses, approvals, consents and orders required
under Environmental Laws for the operation of the Project Facilities (each an
“Environmental Permit”) as of the date hereof have been obtained, are in effect
and are being complied with in all material respects; and
 
(vi)  Seller has (A) disclosed, or upon obtaining Knowledge thereof will
disclose prior to Closing, to Buyer all environmental investigation reports of
which Seller has Knowledge which have been prepared by any third party since
January 1, 2004 relating to environmental conditions at the Project Facilities,
and (B) provided, or upon obtaining Knowledge thereof will disclose prior to
Closing, to Buyer copies of, and have listed in Schedule 4.20(n), all such
reports which, to the Knowledge of Seller, are currently in the Project
Companies’ possession.
 
(o)  Labor Matters. There are no collective bargaining agreements to which any
of the Project Companies are subject.
 
(p)  Legal and Regulatory Compliance. Except (i) as set forth on
Schedule 4.20(p), each Project Company operates its businesses in compliance in
all material respects with, and the Project Facilities conform to, all
applicable federal, state and local laws and all governmental regulations, and
none of the Project Companies has received any written notice of noncompliance
with any such laws or regulations relating to events, conditions or occurrences
which if not remedied would have a Material Adverse Effect. Except as set forth
on Schedule 4.20(p), each Project Company holds the Project Permits with respect
to such Project Company, each Project Permit is in full force and effect, and
each Project Company is in material compliance with the terms and conditions of
its respective Project Permits. The consummation of the transactions
contemplated by this Agreement will not give rise to any right of termination,
cancellation or consent under the terms, conditions or provisions of any Project
Permit.
 
4.21  Disclaimers.  EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN
THIS ARTICLE IV, THE PROJECT FACILITIES AND ANY OTHER ASSETS OF CPI, CEM, THE
INVESTOR SUBSIDIARIES, THE SERVICE SUBSIDIARIES AND THE PROJECT COMPANIES ARE
BEING ACQUIRED BY BUYER “AS IS” AND “WHERE IS”, AND EXCEPT FOR SUCH
REPRESENTATIONS AND WARRANTIES, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATIONS
OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS, IMPLIED, AT COMMON LAW, STATUTORY
OR OTHERWISE, AS TO LIABILITIES, OPERATIONS OF THE PROJECT FACILITIES AND ANY
OTHER ASSETS OF CPI, CEM, THE INVESTOR SUBSIDIARIES, THE SERVICE SUBSIDIARIES
AND THE PROJECT COMPANIES (COLLECTIVELY, THE “ACQUIRED ASSETS”), THE TITLE,
CONDITION, VALUE OR QUALITY OF THE ACQUIRED ASSETS OR THE PROSPECTS (FINANCIAL
AND OTHERWISE), RISKS AND OTHER INCIDENTS OF THE ACQUIRED ASSETS, AND SELLER
SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE,
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE ACQUIRED
ASSETS, OR ANY PART THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF
ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, OR COMPLIANCE WITH ENVIRONMENTAL
REQUIREMENTS, OR THE APPLICABILITY OF ANY GOVERNMENTAL REQUIREMENTS, INCLUDING
BUT NOT LIMITED TO ANY ENVIRONMENTAL LAWS, OR WHETHER SELLER POSSESSES
SUFFICIENT REAL PROPERTY OR PERSONAL PROPERTY TO OPERATE THE PURCHASED ASSETS.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE IV,
SELLER FURTHER SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING
THE ABSENCE OF HAZARDOUS SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING
UNDER ENVIRONMENTAL LAWS WITH RESPECT TO THE FOREGOING.
 
ARTICLE V  
 
REPRESENTATIONS AND WARRANTIES OF BUYER
 
Buyer represents and warrants to Seller as follows:
 
5.1  Organization. Buyer is a limited liability company, duly organized, validly
existing and in good standing under the laws of the state of its organization
and has all requisite limited liability company power and authority to own,
lease and operate its properties and to carry on its business as is now being
conducted. Buyer has heretofore delivered to Seller complete and correct copies
of its operating agreement (or other similar governing documents) as currently
in effect.
 
5.2  Authority Relative to this Agreement.  Buyer has full organizational power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Buyer and the consummation by Buyer of the transactions contemplated hereby
have been duly and validly authorized by all necessary limited liability company
action required on the part of Buyer. This Agreement has been duly and validly
executed and delivered by Buyer. Subject to the receipt of Buyer Required
Regulatory Approvals, this Agreement constitutes a legal, valid and binding
agreement of Buyer, enforceable against Buyer in accordance with its terms,
except that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws affecting or relating to enforcement of creditors’ rights generally and
general principles of equity (regardless of whether enforcement is considered in
a proceeding at law or in equity).
 
5.3  Consents and Approvals; No Violation.
 
(a)  Except as set forth on Schedule 5.3(a), and other than obtaining Buyer
Required Regulatory Approvals, neither the execution and delivery of this
Agreement by Buyer nor the consummation by Buyer of the transactions
contemplated hereby will (i) conflict with or result in any breach or violation
of any provision of the operating agreement (or other similar governing
documents) of Buyer, or (ii) require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority prior
to the Closing, or (iii) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, material agreement or other
instrument or obligation to which Buyer or any of its Subsidiaries is a party or
by which any of their respective assets may be bound, except for such defaults
(or rights of termination, cancellation or acceleration) as to which requisite
waivers or consents have been obtained or which do not have, and would not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the ability of the Buyer to consummate the transactions
contemplated by this Agreement (“Buyer Material Adverse Effect”) or (iv) violate
any law, regulation, order, judgment or decree applicable to Buyer, which
violations, individually or in the aggregate, would create a Buyer Material
Adverse Effect.
 
(b)  Except as set forth on Schedule 5.3(b) (the filings and approvals referred
to in such Schedule are collectively referred to as the “Buyer Required
Regulatory Approvals”), no consent or approval of, filing with, or notice to,
any Governmental Authority is necessary for Buyer’s execution and delivery of
this Agreement, or the consummation by Buyer of the transactions contemplated
hereby, other than such consents, approvals, filings or notices, which, if not
obtained or made, will not prevent Buyer from performing its obligations under
this Agreement.
 
5.4  Legal Proceedings.  There are no actions or proceedings pending against
Buyer before any court or arbitrator or Governmental Authority, which,
individually or in the aggregate, would reasonably be expected to create a Buyer
Material Adverse Effect. Buyer is not subject to any outstanding judgments,
rules, orders, writs, injunctions or decrees of any court, arbitrator or
Governmental Authority which would, individually or in the aggregate, create a
Buyer Material Adverse Effect.
 
5.5  Inspections.  Buyer acknowledges and agrees that it has, prior to its
execution of this Agreement, had full opportunity to conduct and has completed
to its satisfaction Inspections of the Project Facilities. Buyer acknowledges
that it is satisfied through such review and Inspections that no further
investigation and study on or of the Project Facilities are necessary for the
purposes of acquiring the CPI Stock and the CEM Membership Interests.
 
5.6  Securities Laws.  Buyer is an experienced and knowledgeable investor in the
U.S. power generation and development business. Prior to entering into this
Agreement, Buyer was advised by its counsel, accountants, financial advisors,
and such other Persons it has deemed appropriate concerning this Agreement and
has relied solely on Seller’s representations and warranties expressly contained
herein and an independent investigation and evaluation of, and appraisal and
judgment with respect to, the CPI Stock and the CEM Membership Interests and the
revenue, price, and expense assumptions applicable thereto. Buyer hereby
acknowledges that neither the CPI Stock nor the CEM Membership Interests have
been registered under the Securities Act of 1933, as amended (the “Securities
Act”), or registered or qualified for sale under any state securities laws and
cannot be resold without registration thereunder or exemption therefrom. Buyer
is an “accredited investor,” as such term is defined in Regulation D of the
Securities Act, and will acquire the CPI Stock and the CEM Membership Interests
for its own account and not with a view to a sale or distribution thereof in
violation of the Securities Act, and the rules and regulations thereunder, any
applicable state blue sky laws or any other applicable securities laws. Buyer
has sufficient knowledge and experience in financial and business matters to
enable it to evaluate the risks of investment in the CPI Stock and the CEM
Membership Interests and has the ability to bear the economic risk of this
investment for an indefinite period of time.
 
ARTICLE VI  
 
COVENANTS OF THE PARTIES
 
6.1  Conduct of Business.
 
(a)  From the date of this Agreement through the Closing Date, except as Buyer
may otherwise approve (which approval shall not be unreasonably withheld) or as
otherwise expressly contemplated by this Agreement, CEM and CPI shall, and shall
cause its Subsidiaries to, (a) conduct their businesses in the ordinary course
in accordance with past practice, (b) use Commercially Reasonable Efforts to
preserve intact their respective business organizations and goodwill and assets,
(c) use Commercially Reasonable Efforts to keep available the services provided
by their respective present officers and key employees, and (d) use their
Commercially Reasonable Efforts to maintain satisfactory relationships with
others having business relationships with CEM and CPI and their Subsidiaries.
Except as described in Schedule 6.1(a) or as expressly contemplated by this
Agreement or to the extent Buyer otherwise consents in writing, during the
period from the date of this Agreement to the Closing Date (which consent shall
not be unreasonably withheld), Seller shall not cause or permit CPI, CEM, any
Investor Subsidiary, and Service Subsidiary or any Project Company, other than
the Hartwell Partnership, to take, and Seller shall not cause or permit CPI or
any Investor Subsidiary to exercise any rights under the Hartwell Partnership’s
Project Company Agreement to cause the Hartwell Partnership to take, any of the
following actions: (i) incur indebtedness for borrowed money, (ii) grant any
Liens on its assets, other than Permitted Liens, (iii) enter into any Material
Contract or terminate or amend any Material Contract to which any such Person
becomes or is a party, (iv) dispose of any material assets of any such Person,
(v) make any distribution in respect of the equity securities of or other
ownership interest in such Person, except in the ordinary course of business and
consistent with past practice of such Person, or as required by such Person’s
Project Company Agreement or other governing documents, or as contemplated by,
or required to effectuate the provisions of, Section 2.2 of this Agreement,
(vi) revoke any election under Section 754 of the Code, (vii) issue any equity
or debt securities, (viii) amend its respective Project Company Agreement or
other governing documents, (ix) waive, compromise, or settle any material claim,
or (x) voluntarily incur any material liability except in the ordinary course of
business. For purposes of this Section 6.1, a “Material Contract” shall mean any
Major Project Contract and any contract entered into in the ordinary course of
business that (x) requires payments by any such Person in excess of $250,000 in
the aggregate, or (y) does not provide, either, that the term thereof is three
(3) months or less, or that it may be terminated without liability on three (3)
months or less notice. Notwithstanding the foregoing, Seller may, from the date
hereof and prior to the Closing, take or cause to be taken any such action with
respect to the Project Facilities which Seller in good faith determines is
necessary, appropriate and advisable to respond to emergency or similar
conditions or, in accordance with prudent utility practice to avoid substantial
impairment to the Project Facilities. Seller shall give Buyer prompt notice of
Seller’s taking any such action and, to the extent practicable under the
circumstances, advance notice thereof. On or prior to the Closing, Seller shall
assign or cause to be assigned at Seller’s sole cost and expense any Major
Project Contracts, CEM Agreements and CPI Agreements to which Seller or any
Affiliates or Subsidiaries of Seller is a party to the appropriate Project
Company, CEM or CPI.
 
(b)  The Parties hereby acknowledge and agree that Seller shall be entitled to
cause and permit the Project Companies to enter into a replacement or extension
power purchase agreement for the Brush 4D Project and the right of first offer
agreement referred to therein substantially in the form of the drafts thereof
referenced on Schedule 6.1(b) with such changes therein as the Parties shall
mutually agree, such agreement not to be unreasonably withheld or delayed
(collectively, the “Replacement PPA”).
 
6.2  Access to Information.
 
(a)  Between the date of this Agreement and the Closing Date, Seller will, at
reasonable times and upon reasonable notice and subject to compliance with all
applicable laws and, in the case of the Hartwell Partnership, the Hartwell
Partnership’s Project Company Agreement: (i) give Buyer and its Representatives
reasonable access to CEM and CPI’s managerial personnel and to all books,
records, plans, equipment, offices and other facilities and properties of CEM
and CPI and the Project Facilities; (ii) furnish Buyer with such financial and
operating data and other information with respect to CEM and CPI as Buyer may
from time to time reasonably request, and permit Buyer to make such reasonable
Inspections of the properties of CEM and CPI and the Project Facilities as Buyer
may request; (iii) furnish Buyer at its request a copy of each material report,
schedule or other document filed by CEM or CPI or any of their respective
Affiliates with respect to the business or operations of CEM, CPI and the
Project Companies with any Governmental Authority; and (iv) furnish Buyer with
all such other information as shall be reasonably necessary to enable Buyer to
verify the accuracy of the representations and warranties of Seller contained in
this Agreement; provided, however, that (A) any such Inspections and
investigations shall be conducted in such a manner as not to interfere
unreasonably with the business or operations of CEM or CPI or any Project
Company, (B) Seller shall not be required to take any action which would
constitute a waiver of the attorney-client privilege, and (C) Seller need not
supply Buyer with any information which Seller is under a legal or contractual
obligation not to supply. Buyer shall not, however, have the right to perform or
conduct any environmental sampling or testing at, in, on or underneath any of
the Project Facilities.
 
(b)  Each Party shall, and shall use its best efforts to cause its
Representatives to, (i) keep all Proprietary Information of the other Party
confidential and not to disclose or reveal any such Proprietary Information to
any person other than such Party’s Representatives and (ii) not use such
Proprietary Information other than in connection with the consummation of the
transactions contemplated hereby. The obligations of the Parties under this
Section 6.2(b) shall be in full force and effect for two (2) years from the date
hereof and will survive the termination of this Agreement, the discharge of all
other obligations owed by the Parties to each other and the closing of the
transactions contemplated by this Agreement.
 
(c)  For a period of seven (7) years after the Closing Date (or such longer
period as may be required by applicable law or by any other provision of this
Agreement), Seller and its Representatives shall have reasonable access to all
of the books and records of CEM and CPI and/or any of their Subsidiaries, in the
possession of Buyer to the extent that such access may reasonably be required by
Seller in connection with matters relating to or affected by the business of
CEM, CPI or any of their respective Subsidiaries conducted prior to the Closing
Date. Such access shall be afforded by Buyer upon receipt of reasonable advance
written notice and during normal business hours. Seller shall be solely
responsible for any costs or expenses incurred by it or Buyer with respect to
such access. If Buyer shall desire to dispose of any books and records upon or
prior to the expiration of such seven-year period (or any such longer period),
Buyer shall, prior to such disposition, give Seller a reasonable opportunity at
Seller’s reasonable expense, to segregate and remove such books and records as
Seller may select.
 
(d)  For a period of seven (7) years after the Closing Date (or such longer
period as may be required by applicable law or by any other provision of this
Agreement), Buyer and its Representatives shall have reasonable access to all of
the books and records of Seller and/or any Subsidiaries of Seller, in the
possession of Seller to the extent that such access may reasonably be required
by Buyer in connection with matters relating to or affected by the business of
CEM, CPI or any of their respective Subsidiaries. Such access shall be afforded
by Seller upon receipt of reasonable advance written notice and during normal
business hours. Buyer shall be solely responsible for any costs or expenses
incurred by it or Seller with respect to such access. If Seller shall desire to
dispose of any books and records upon or prior to the expiration of such
seven-year period (or any such longer period), Seller shall, prior to such
disposition, give Buyer a reasonable opportunity at Buyer’s reasonable expense,
to segregate and remove such books and records as Buyer may select.
 
(e)  Notwithstanding the terms of Section 6.2(b) above, the Parties agree that
prior to the Closing Buyer may reveal or disclose Proprietary Information to any
other Persons in connection with Buyer’s financing of its purchase of the CPI
Stock and CEM Membership Interests or any equity participation in Buyer’s
purchase of the CPI Stock and CEM Membership Interests, provided that such
Persons are obligated to maintain the confidentiality of the Proprietary
Information in accordance with this Agreement.
 
(f)  Upon the other Party’s prior written approval (which will not be
unreasonably withheld or delayed), either Party may provide Proprietary
Information of the other Party to the SEC, FERC or any other Governmental
Authority with jurisdiction or any stock exchange, as may be necessary to obtain
Seller’s Required Regulatory Approvals, or Buyer Required Regulatory Approvals,
respectively, or to comply generally with any relevant law or regulation. The
disclosing Party will seek confidential treatment for the Proprietary
Information provided to any Governmental Authority and the disclosing Party will
notify the other Party as far in advance as is practicable of its intention to
release to any Governmental Authority any Proprietary Information.
 
(g)  Except as specifically provided herein or in the Confidentiality Agreement,
nothing in this Section shall impair or modify any of the rights or obligations
of Buyer or its Affiliates under the Confidentiality Agreement, all of which
remain in effect until termination of such agreement in accordance with its
terms.
 
(h)  Except as may be permitted in the Confidentiality Agreement, Buyer agrees
that, prior to the Closing Date, it will not contact any vendors, off-takers,
suppliers, employees, or other contracting parties of CEM, CPI or their
respective Affiliates with respect to any aspect of the business or operations
of CEM, CPI or any Project Company or the transactions contemplated hereby,
without the prior written consent of Seller, which consent shall not be
unreasonably withheld.
 
(i)  Buyer shall not contact any Governmental Authority regarding any pending,
threatened or potential Environmental Claim or with respect to any Environmental
Permit relating to the Project Companies without Seller’s prior written consent.
 
(j)  At Buyer’s request, prior to the Closing Date, Seller shall permit Buyer to
have one representative located at each of CPI’s and CEM’s main offices for the
purpose of observing their business operations. Seller shall cause CPI and CEM
to provide Buyer’s representatives with reasonable use of office space,
telephone and similar communications and office services and shall provide
Buyer’s representatives with reasonable access to representatives of CPI and CEM
in order to assist Buyer in making an orderly transition of CPI and CEM and
their respective Subsidiaries following the Closing.
 
6.3  Public Statements.  Subject to the requirements imposed by any applicable
law or any Governmental Authority or stock exchange, no press release or other
public announcement or public statement or comment in response to any inquiry
relating to the transactions contemplated by this Agreement shall be issued or
made by any Party without the prior approval of the other Parties (which
approval shall not be unreasonably withheld). The Parties agree to cooperate in
preparing such announcements.
 
6.4  Expenses.  Except to the extent specifically provided herein, whether or
not the transactions contemplated hereby are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be borne by the Party incurring such costs and expenses.
Notwithstanding anything to the contrary herein, Buyer will be responsible for
all filing fees under the HSR Act.
 
6.5  Further Assurances.  Subject to the terms and conditions of this Agreement,
each of the Parties hereto shall use its best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the purchase and sale of the CPI Stock and the CEM Membership
Interests pursuant to this Agreement, including without limitation using its
best efforts to ensure satisfaction of the conditions precedent to each Party’s
obligations hereunder, including obtaining all necessary consents, approvals,
and authorizations of third parties and Governmental Authorities required to be
obtained in order to consummate the transactions hereunder. Buyer agrees to
perform all conditions required of Buyer in connection with Seller’s Required
Regulatory Approvals, other than those conditions which would create a Material
Adverse Effect on the Buyer or its Subsidiaries after giving effect to the
transactions contemplated by this Agreement. None of the Parties hereto shall,
without prior written consent of the other Party, take or fail to take any
action, which might reasonably be expected to prevent or materially impede,
interfere with or delay the transactions contemplated by this Agreement.
 
6.6  Consents and Approvals.
 
(a)  As promptly as practicable after the date of this Agreement, Seller and
Buyer, as applicable, shall each file or cause to be filed with the Federal
Trade Commission and the United States Department of Justice any notifications
required to be filed under the HSR Act and the rules and regulations promulgated
thereunder with respect to the transactions contemplated hereby. The Parties
shall use their respective Commercially Reasonable Efforts to respond promptly
to any requests for additional information made by either of such agencies, and
to cause the waiting periods under the HSR Act to terminate or expire at the
earliest possible date after the date of filing. Buyer will pay all filing fees
under the HSR Act, but each Party will bear its own costs of the preparation and
prosecution of any filing.
 
(b)  As promptly as practicable, and in any case within ten (10) days after the
date of this Agreement, Seller and Buyer, as applicable, shall file or cause to
be filed with the FERC such applications as are necessary to obtain required
FERC approval for the various transactions contemplated hereby. The Parties
shall consult with each other regarding such filings and shall consider and
incorporate in such filings all reasonable comments, if any, submitted by the
other Party with respect thereto. If appropriate, the Parties will submit a
joint application to the FERC seeking such required approvals. The Parties shall
respond promptly to any requests for additional information made by the FERC,
and use their respective best efforts to cause regulatory approval to be
obtained at the earliest possible date after the date of filing. Each Party will
bear its own costs of the preparation and prosecution of any such filing.
 
(c)  As promptly as practicable after the date of this Agreement, Buyer and
Seller shall make all such other filings and applications with Governmental
Authorities seeking any other approval or authorization as may be required for
the consummation of the transactions contemplated hereby. The Parties shall
respond promptly to any requests for additional information made by any such
Governmental Authority and shall use their respective best efforts to obtain any
such approval at the earliest possible date after the date of the filing. Each
Party shall bear its own costs of the preparation and prosecution of such
filings.
 
6.7  Use of Centennial Marks.  Effective upon the Closing Date, Seller grants
Buyer a perpetual, irrevocable, royalty-free license to use the name and
trademark “CENTENNIAL POWER”. Buyer acknowledges and agrees that Seller is the
owner of the Intellectual Property Rights in the trademark “CENTENNIAL POWER”
when used in connection with the provision of energy, power and other related
services. Buyer further acknowledges and agrees that it obtains no Intellectual
Property Rights to or any other right to use the Centennial Marks other than as
provided in this Section 6.7. Buyer agrees never to challenge Seller’s (or its
Affiliates’) ownership of the Centennial Marks or any application for
registration thereof or any existing registration thereof or any other rights of
Seller or its Affiliates therein as a result, directly or indirectly, of Buyer’s
ownership of the CPI Stock and the CEM Membership Interests. Buyer further
agrees never to apply for, either directly or through its Affiliates and/or
successors and permitted assigns, any federal or state trademark, service mark
or any other Intellectual Property Right featuring the term “CENTENNIAL POWER”
or any variation, deviation, modification or abbreviation thereof. Buyer
warrants that its provision of services or products under the trade name
“CENTENNIAL POWER” shall conform to the quality and standards adhered to by
Seller and that Seller shall have the right, upon reasonable request, to review
and modify, for quality assurance purposes, Buyer’s use of the trademark
“CENTENNIAL POWER” in Buyer’s advertising and marketing. Within sixty (60) days
after the Closing Date, Buyer shall, except for the trademark “CENTENNIAL
POWER”, (i) remove the Centennial Marks from the assets of CPI, CEM, the Project
Companies, the Investor Subsidiaries and the Service Subsidiaries, including
signage at the Project Facilities, and provide written verification thereof to
Seller promptly after completing such removal and (ii) return or destroy (with
proof of destruction) all other assets of CPI, CEM, the Project Companies, the
Investor Subsidiaries and the Service Subsidiaries that contain any Centennial
Marks that are not removable.
 
6.8  Fees and Commissions.  Seller, on the one hand, and Buyer, on the other
hand, represent and warrant to the other that, no broker, finder or other Person
is entitled to any brokerage fees, commissions or finder’s fees in connection
with the transaction contemplated hereby by reason of any action taken by the
Party making such representation, except that Seller has engaged, and shall bear
the liability for the commissions and fees of, Goldman, Sachs & Co. in
connection with the transactions contemplated hereby. Seller, on the one hand,
and Buyer, on the other hand, will pay to the other or otherwise discharge, and
will indemnify and hold the other harmless from and against, any and all claims
or liabilities for all brokerage fees, commissions and finder’s fees incurred by
reason of any action taken by the indemnifying party.
 
6.9  Tax Matters.
 
(a)  Section 338(h)(10) Elections.
 
(i)  Seller and Buyer shall jointly make or cause to be made timely and
irrevocable elections under Section 338(h)(10) of the Code (the “Election”) with
respect to the sale of each of CPI and CEM and the deemed sale of each of the
Investor Subsidiaries, the Service Subsidiaries and the Project Companies
constituting corporations for federal income Tax purposes, except that no such
elections shall be made with respect to Hartwell Power Company (such entities
for which elections shall be made, the “338(h)(10) Election Entities”). In
addition, Seller and Buyer shall jointly make all elections under state and
local Tax law comparable to the elections under Section 338(h)(10) or
Section 338(g) as available, unless such state or locality does not have a
provision comparable to Section 338(h)(10) or Section 338(g), in which case no
election shall be made in such state or locality (together with the Election,
the “Section 338(h)(10) Elections”). Seller and Buyer shall and shall cause
their respective Subsidiaries and Affiliates to (i) treat the Section 338(h)(10)
Elections as valid, (ii) file all Tax Returns in a manner consistent with such
Section 338(h)(10) Elections and (iii) take no position contrary thereto. Seller
shall be responsible for and shall timely pay or cause to be timely paid to
applicable Governmental Authorities all Income Taxes imposed on Seller and all
338(h)(10) Election Entities that are attributable to the making of the Section
338(h)(10) Elections, provided, however, that for any state or local
jurisdiction that imposes Income Tax on both the sale (or deemed sale) of the
stock of a 338(h)(10) Election Entity and the deemed sale of assets of such
338(h)(10) Election Entity, Seller shall be responsible for only the Income Tax
imposed on the sale (or deemed sale) of the stock of such 338(h)(10) Election
Entity and Buyer shall be responsible for and shall timely pay or cause to be
timely paid to applicable Governmental Authorities all Income Taxes imposed on
the deemed sale of assets of such 338(h)(10) Election Entity (such Taxes for
which Buyer is responsible, the “Buyer 338 Liability”).
 
(ii)  Prior to the Closing, Buyer shall (A) determine the amount of the adjusted
grossed-up basis and aggregate deemed sales price with respect to each of the
338(h)(10) Election Entities and the allocation of such amounts among the assets
of each of the 338(h)(10) Election Entities on a separate entity basis in
accordance with Section 338(h)(10) of the Code and applicable Treasury
Regulations thereunder and (B) deliver a schedule of all such determinations to
Seller and provide Seller with a reasonable opportunity to review, comment on,
and consent to such schedule prior to the Closing, which consent shall not be
unreasonably withheld or delayed (the “338 Allocation”). Buyer shall promptly
revise the 338 Allocation to reflect the Adjustment, as finally determined
pursuant to Section 3.3 of the Agreement and Buyer shall promptly forward a
draft of the revised 338 Allocation to Seller for Seller’s consent, which
consent shall not be unreasonably withheld or delayed. Seller and Buyer shall
take, and shall cause their respective Affiliates to take, no action
inconsistent with, or fail to take any action necessary for the validity of each
Section 338(h)(10) Election, and shall adopt and utilize, and cause their
respective Affiliates to adopt and utilize, the asset values prescribed in the
338 Allocation (as revised by Seller and Buyer) in making such allocations for
the purpose of all Tax Returns filed by them, and shall not voluntarily take any
action inconsistent therewith upon examination of any Tax Return, in any refund
claim, in any litigation or otherwise with respect to such Tax Returns. Buyer
and Seller shall notify and provide the other with reasonable assistance in the
event of an examination, audit or other proceeding regarding the agreed upon
allocations.
 
(iii)  The Purchase Price allocable to Hartwell Independent Power Partners, Inc.
and Hart County IPP, Inc. and the share of each such entity of the liabilities
of the Hartwell Partnership shall be allocated among the assets of the Hartwell
Partnership as of the Closing Date in accordance with a schedule to be prepared
in accordance with the rules under Code Sections 743(b), 751, 755 and 1060 (the
“754 Allocation Schedule”). Buyer shall deliver a draft of the 754 Allocation
Schedule to Seller and the Hartwell Partnership as soon as practicable after the
date of this Agreement, and Buyer, Seller and the Hartwell Partnership shall
mutually agree upon the 754 Allocation Schedule at or prior to the Closing.
Buyer and Seller shall not, and Seller shall use all Commercially Reasonable
Efforts to cause the Hartwell Partnership to not, unreasonably withhold its
approval and consent with respect to the 754 Allocation Schedule. Buyer and
Seller agree that the 754 Allocation Schedule shall be amended to reflect any
post-Closing adjustments to the allocation that are required by applicable
federal income Tax law. Unless otherwise required by applicable law, Buyer and
Seller agree to act, and to cause their Affiliates and the Hartwell Partnership
to act, in accordance with the computations and allocations contained in the 754
Allocation Schedule (taking into account any such amendment thereto) in any
relevant Tax Returns or similar filings (including forms or reports, if any,
required to be filed pursuant to Code Section 1060), to cooperate in the
preparation of any such filings, to timely file such filings in the manner
required by applicable law and to not take any position inconsistent with such
754 Allocation Schedule in any Tax Return, in any refund claim, in any
litigation, or otherwise.
 
(b)  Return Filing, Payments, Refunds and Credits.
 
(i)  Seller shall prepare or cause to be prepared and file or cause to be filed
all Federal, state and local Tax Returns for (x) CEM, CPI, the Investor
Subsidiaries, the Service Subsidiaries and the Project Companies (other than
Hartwell Partnership) (the “Target Entities”) for all Pre-Closing Tax Periods of
such entities, including the consolidated federal income Tax Return of MDU
Resources Group, Inc. for the Tax period ending on December 31, 2007, and (y)
any Affiliated Group that includes any of the Target Entities (other than an
Affiliated Group that has no members other than two or more of the Target
Entities) (an “MDU Affiliated Group”). Each such Tax Return shall be prepared in
a manner consistent with past practice. Buyer shall not, and shall cause its
Affiliates not to, amend, refile, modify or revoke such Tax Returns (or any
notification or election relating thereto) without the prior written consent of
Seller, which consent shall not be unreasonably withheld or delayed; provided,
for the avoidance of doubt, that the Seller shall be deemed to have reasonably
withheld its consent if any such action by Buyer or its Affiliates could
reasonably be expected to have an adverse impact upon any Taxes or Tax Returns
(or Tax attribute) of Seller or any of its Affiliates for any Tax period ending
on or prior to the Closing Date or any Straddle Period. Buyer and Seller shall
act in good faith to resolve any disputes, but in the event Buyer and Seller do
not resolve any disputed items by agreement, either Buyer or Seller may refer
such dispute to an Independent Accounting Firm for resolution, and the decision
of the Independent Accounting Firm shall be final and binding on Buyer and
Seller and their respective Affiliates. The costs, expenses and fees of the
Independent Accounting Firm shall be borne equally by Seller, on the one hand,
and Buyer, on the other hand. Buyer shall and shall cause its Affiliates to
timely provide Seller with all information as Seller shall reasonably request in
connection with the preparation of such Tax Returns. Seller and its Affiliates
shall be responsible for payment of any Income Taxes, and shall be entitled to
any refunds or credits of Income Taxes, shown as due on such Tax Returns, except
that Buyer and its Affiliates shall be responsible for the timely payment of any
Buyer 338 Liability and any Income Taxes resulting from any transaction or event
that is not in the ordinary course of business and occurs after the Closing on
the Closing Date. Buyer shall timely pay or cause to be timely paid all Taxes
(other than Income Taxes) shown as due on such Tax Returns. The income or loss
or other items to be reported on the federal income Tax Return to be filed for
CEM, CPI, the Investor Subsidiaries, the Service Subsidiaries and the Project
Companies (other than the Hartwell Partnership) for the period that began on
January 1, 2007 and ends on the Closing Date shall be based upon a closing of
the books as of the close of business on the Closing Date, consistent with
Treasury Regulation Section 1.1502-76(b). Buyer and Seller shall use
Commercially Reasonable Efforts to cause the Investor Subsidiaries’ distributive
shares of the income or loss of the Hartwell Partnership for the fiscal year
that includes the Closing Date to be reported in the Tax Return described in the
preceding sentence and determined based upon a hypothetical closing of the books
of Hartwell Partnership as of the Closing Date, consistent with Treasury
Regulation Section 1.1502-76(b)(2)(vi)(A). Notwithstanding anything in this
Agreement to the contrary, Buyer and Seller agree that all transactions and
events in respect of any of the Target Entities and the Hartwell Partnership
that are not in the ordinary course of business and occur after the Closing on
the Closing Date shall be reported on the Tax Return(s) of Buyer and its
Affiliates to the extent required or permitted by Treasury Regulation section
1.338-1(d) or 1.1502-76(b)(1)(ii)(B) or other applicable federal or state Tax
law.
 
(ii)  Buyer shall, except to the extent that such Tax Returns are the
responsibility of Seller under Section 6.9(b)(i), timely prepare and file or
cause to be timely prepared and filed all Tax Returns of CEM, CPI, the Investor
Subsidiaries, the Service Subsidiaries and the Project Companies (other than
Hartwell Partnership). For any Straddle Period Tax Return that is the
responsibility of Buyer under this Section 6.9(b)(ii), Buyer shall, and shall
cause its Affiliates to, prepare such Tax Return in a manner consistent with
past practices and with all Tax Returns prepared or caused to be prepared by
Seller pursuant to Section 6.9(b)(i) with respect to the entity in question, and
Buyer shall deliver to Seller for its review, comment and approval (which
approval shall not be unreasonably withheld) a copy of each such proposed Tax
Return (accompanied, in the case of each Income Tax Tax Return, by an allocation
of the Income Taxes shown to be due on such Tax Return between the portion of
such Straddle Period ending on the Closing Date and the portion of such Straddle
Period beginning after the Closing Date) at least thirty Business Days prior to
(a) the due date for filing such Tax Return (giving effect to any validly
obtained extensions), or (b) if there is no due date for filing, the actual
filing date thereof. Buyer shall and shall cause its Affiliates to not
unreasonably fail to reflect any comments received from Seller. Buyer shall
timely pay or cause to be timely paid all Taxes shown as due on such Tax
Returns. Seller shall reimburse Buyer for Income Taxes shown to be due on such
Tax Returns as filed, to the extent allocable to the portion of such Straddle
Period ending on the Closing Date, and Buyer shall promptly pay to Seller the
amount of Income Taxes allocable to the portion of such Straddle Period
beginning after the Closing Date to the extent such Income Taxes were paid on or
prior to the Closing Date. Buyer shall promptly pay to Seller the amount of any
refunds or credits of Income Taxes allocable to the portion of such Straddle
Period ending on the Closing Date. For purposes of this Agreement, in the case
of any Straddle Period, Income Taxes allocable to the portion of such Straddle
Period ending on the Closing Date shall be computed as if the Tax period ended
on the Closing Date, except that any Buyer 338 Liability and any Income Taxes
resulting from any transaction or event that is not in the ordinary course of
business and occurs after the Closing on the Closing Date shall be allocable to
the portion of such Straddle Period beginning after the Closing Date. Buyer
shall not, and shall cause its Affiliates to not, amend, refile, modify or
revoke any Straddle Period Tax Return (or any notification or election relating
thereto) without the prior written consent of Seller, which consent shall not be
unreasonably withheld; provided, for the avoidance of doubt, that the Seller
shall be deemed to have reasonably withheld its consent if any such action by
Buyer or its Affiliates could reasonably be expected to have an adverse impact
upon any Taxes or Tax Returns (or Tax attribute) of Seller or any of its
Affiliates for any Tax period ending on or prior to the Closing Date or any
Straddle Period. Buyer and Seller shall act in good faith to resolve any
disputes, but in the event Buyer and Seller do not resolve any disputed items by
agreement, either Buyer or Seller may refer such dispute to an Independent
Accounting Firm for resolution, and the decision of the Independent Accounting
Firm shall be final and binding on Buyer and Seller and their respective
Affiliates. The costs, expenses and fees of the Independent Accounting Firm
shall be borne equally by Seller, on the one hand, and Buyer, on the other hand.
 
(iii)  Seller and its Affiliates shall be entitled to any refunds or credits of
or against any Excluded Taxes and any other Taxes for which Seller or its
Affiliates are responsible pursuant to this Agreement. Buyer shall, at Seller's
reasonable request, file or cause the relevant entity to file for and use
Commercially Reasonable Efforts to obtain any refund or credit to which Seller
and its Affiliates are entitled.
 
(iv)  Buyer shall, and shall cause its Affiliates to, promptly forward to Seller
and its Affiliates or reimburse Seller and its Affiliates for any refunds or
credits of Taxes due Seller and its Affiliates (pursuant to the terms of this
Section 6.9) after receipt thereof.
 
(v)  Buyer shall, and shall cause its Affiliates to, elect, where permitted by
applicable law, to carry forward any item of loss, deduction or credit which
arises in any Tax period beginning after the Closing Date.
 
(c)  Cooperation on Tax Matters.
 
(i)  Buyer and Seller shall (and each shall cause CEM, CPI, the Investor
Subsidiaries, the Service Subsidiaries and the Project Companies to) cooperate
fully, as and to the extent reasonably requested by the other Party, in
connection with the preparation and filing of Tax Returns pursuant to this
Section and in connection with any audit, litigation or other proceeding with
respect to Taxes for any Tax period ending on or prior to the Closing Date. Such
cooperation shall include the retention and (upon the other Party’s request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees (to the extent such
employees were responsible for the preparation, maintenance or interpretation of
information and documents relevant to Tax matters or to the extent required as
witnesses in any Tax proceedings), available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. The Parties agree (A) to retain, and (in the case of Buyer) to cause
CEM, CPI, the Investor Subsidiaries, the Service Subsidiaries and the Project
Companies to retain, all books and records with respect to Income Tax matters
pertinent to CEM, CPI, the Investor Subsidiaries, the Service Subsidiaries and
the Project Companies relating to any Tax period beginning before the Closing
Date until six months after the expiration of the statute of limitations (and,
to the extent notified by Buyer or Seller, any extensions thereof) of the
respective Tax periods, and to abide by all record retention obligations imposed
by law or pursuant to agreements entered into with any taxing authority, and
(B) to give the other Party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if the other Party so
requests, Buyer or Seller, as the case may be, shall allow the other Party to
take possession of such books and records.
 
(ii)  Buyer and Seller further agree, upon request, to use their best efforts to
obtain any certificate or other document from any Governmental 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 hereby.
 
(iii)  At Seller's request, Buyer shall cause CEM, CPI, the Investor
Subsidiaries, the Service Subsidiaries and the Project Companies to make and/or
join with Seller and any of Seller’s Affiliates in making after Closing any
election for which such entity’s consent is required for any Tax period (or
portion thereof) ending on or prior to the Closing Date, if the making of such
election does not have a material adverse impact on Buyer (or any of its
Affiliates) for any Tax period beginning after the Closing Date.
 
(d)  Contests.
 
(i)  Seller and Buyer shall notify the other Party in writing within fourteen
(14) days or such shorter period as may be required thereby of receipt by it or
any of its Affiliates of written notice of any pending or threatened Tax
examination, audit or other administrative or judicial proceeding (a “Tax
Contest”) that could reasonably be expected to result in an indemnification
obligation of such other Party pursuant to this Agreement and such timely notice
shall specify in reasonable detail the basis for any claim included therein and
shall include a copy of the relevant portion of any correspondence received from
the taxing authority. If the recipient of such notice of a Tax Contest fails to
provide such timely notice to such other Party, it shall not be entitled to
indemnification for any Taxes arising in connection with such Tax Contest, but
only to the extent, if any, that such failure or delay shall have adversely
affected the indemnifying Party’s ability to defend against, settle, or satisfy
any action, suit or proceeding against it, or any damage, loss, claim, or demand
for which the indemnified Party is entitled to indemnification hereunder, and
the indemnifying Party’s indemnity obligations shall be reduced to the extent of
any Tax or other liability incurred as a result of the delay or failure to
receive such timely notice.
 
(ii)  If a Tax Contest relates to any Taxes for which Seller is liable in full
hereunder, Seller shall at its expense control the defense and settlement of
such Tax Contest. If such Tax Contest relates to any Taxes for which Buyer is
liable in full hereunder, Buyer shall at its own expense control the defense and
settlement of such Tax Contest. The Party not in control of the defense shall
have the right to observe the conduct of any Tax Contest at its expense,
including through its own counsel and other professional experts. Buyer and
Seller shall jointly represent CEM, CPI, any Investor Subsidiary, any Service
Subsidiary or any Project Company in any Tax Contest relating to Taxes for which
both are liable hereunder, and fees and expenses related to such representation
shall be paid equally by Buyer and Seller.
 
(iii)  Notwithstanding anything to the contrary in Section 6.9(d)(ii), to the
extent that an issue raised in any Tax Contest controlled by one Party or
jointly controlled could materially affect the liability for Taxes of the other
Party, the controlling Party shall not, and neither Party in the case of joint
control shall, enter into a final settlement without the consent of the other
Party, which consent shall not be unreasonably withheld. Where a Party
reasonably withholds its consent to any final settlement, that Party may
continue or initiate further proceedings, at its own expense, and the liability
of the Party that wished to settle (as between the consenting and the
non-consenting Party) shall not exceed the liability that would have resulted
from the proposed final settlement including interest, additions to Tax, and
penalties that have accrued at that time, and the non-consenting Party shall
indemnify the consenting Party for any liability in excess of liability that
would have resulted from the proposed final settlement.
 
(iv)  Notwithstanding any other provision of this Agreement to the contrary, if
a Tax Contest results in an increase in Income Taxes for which Seller is liable
hereunder and such increase is attributable to adjustments based on timing
differences which will reverse in Tax periods ending subsequent to the Closing
Date, Buyer shall promptly pay to Seller, upon Seller's written request, an
amount equal to the present value of the reduction in Income Taxes payable by
the Buyer and its Affiliates in future Tax periods by reason of such reversal,
determined by using a discount rate of 6% and an assumed Tax rate of 40%, and by
assuming that such reduction in Income Taxes will occur in the year or years of
reversal.
 
(e)  Tax Sharing Agreements. Any Tax sharing agreement or similar arrangement
between Seller or any Affiliate of Seller (other than CEM, CPI, the Investor
Subsidiaries, the Service Subsidiaries and the Project Companies) on the one
hand, and any of CEM, CPI, the Investor Subsidiaries, the Service Subsidiaries
or the Project Companies on the other hand shall be terminated with respect to
CEM, CPI, the Investor Subsidiaries, the Service Subsidiaries and the Project
Companies, as applicable, as of the Closing Date.
 
(f)  Certain Taxes. Notwithstanding anything in this Agreement to the contrary,
all transfer, documentary, sales, use, stamp, registration and other such Taxes
and fees (including any penalties and interest) incurred in connection with this
Agreement, whether imposed upon Seller, Buyer, CEM, CPI, any Investor
Subsidiary, any Service Subsidiary or any Project Company (“Transfer Taxes”),
shall be borne 50 percent by Seller and 50 percent by Buyer. Seller and Buyer
shall, and shall cause their respective Affiliates, to prepare and timely file
all necessary Tax Returns and other documentation with respect to all such
Transfer Taxes, and, if required by applicable law, Buyer shall, and shall cause
CEM, CPI, the Investor Subsidiaries, Service Subsidiaries and Project Companies
to, join in the execution of all such Tax Returns and other documentation. All
costs and expenses incurred in connection with the filing of all such Tax
Returns and documentation hereunder shall be borne by Buyer.
 
(g)  Disputes. In the event that a dispute arises between Seller and Buyer as to
the amount of Taxes, or indemnification, whether or not attributable to CEM or
CPI, the Parties shall attempt in good faith to resolve such dispute, and any
agreed upon amount shall be paid to the appropriate Party. If such dispute is
not resolved thirty (30) days thereafter, the Parties shall submit the dispute
to an Independent Accounting Firm mutually appointed by Seller and Buyer for
resolution, which resolution shall be final, conclusive and binding on the
Parties. Notwithstanding anything in this Agreement to the contrary, the fees
and expenses of the Independent Accounting Firm in resolving the dispute shall
be borne equally by Seller and Buyer. Any payment required to be made as a
result of the resolution of the dispute by the Independent Accounting Firm shall
be made within ten (10) days after such resolution, together with any interest
determined by the Independent Accounting Firm to be appropriate.
 
(h)  Alternative Structure. The Parties agree to discuss in good faith
alternative structures to complete the transactions contemplated by this
Agreement, but Buyer acknowledges that (x) no such alternatives shall delay the
Closing Date or increase the risks or costs of the transactions to Seller or
decrease the net after-tax proceeds received by Seller from the transactions and
(y) that Seller shall have no obligation to agree to any such alternative
structure.
 
6.10  Advice of Changes.  Prior to the Closing, each Party will promptly advise
the other in writing with respect to any matter arising after execution of this
Agreement of which that Party obtains knowledge and which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth in this Agreement, including any of the Schedules hereto, or of any breach
of any representation or warranty or of any other condition or circumstance that
would excuse a Party of timely performance of its obligations hereunder. Subject
to Buyer’s consent, Seller may cause CEM, CPI, the Investor Subsidiaries, the
Service Subsidiaries or the Project Companies to amend, substitute or otherwise
modify any CEM Agreement, CPI Agreement or Project Contract to the extent that
any such agreement expires by its terms prior to the Closing Date. Nothing
contained herein shall relieve Seller or Buyer of any breach of representation,
warranty or covenant under this Agreement existing as of the date hereof or any
subsequent date as of which such representation, warranty or covenant shall have
been made; provided, however, that Seller shall have no liability to Buyer for
any breach of any representation, warranty or covenant hereunder which results
from Buyer withholding its consent under the immediately preceding sentence.
Notwithstanding the foregoing, Seller shall be entitled to cause BIV Generation
and Brush Power, LLC to enter into the Replacement PPA subject to Section 6.1(b)
hereof.
 
6.11  Consents.  Seller shall use Commercially Reasonable Efforts to obtain all
consents and approvals for the consummation of the transactions contemplated
hereby required under any CEM Agreement, CPI Agreement or Major Project
Contract, and all required waivers of any rights of first refusal, rights of
first offer, or similar preemptive rights with respect to any of the Project
Company Interests necessary in order to consummate the transactions contemplated
by this Agreement.
 
6.12  Buyer Financial Assurance. Simultaneous with the execution and delivery of
this Agreement, Buyer is providing to Seller (a) an irrevocable standby letter
of credit from Barclays Bank PLC in the stated amount of $50 million (the “Buyer
LC”) which shall permit, subject to the terms and conditions of this Agreement,
Seller to draw up to $50 million in payment of the Termination Fee, and (b) an
equity commitment letter (the “Equity Commitment Letter”) from Natural Gas
Partners VIII L.P. dated the date hereof, addressed to Buyer confirming the
commitment and availability of not less than $120 million, which funds will be
provided to Buyer on or before the Closing Date in order to fund a portion of
the payment of the Purchase Price.
 
6.13  Financing Cooperation.  At Buyer’s request, Seller shall, and shall use
its reasonable efforts to cause CEM, CPI and their respective Subsidiaries to,
provide reasonable cooperation with Buyer and Buyer’s lenders in connection with
Buyer obtaining debt financing for the consummation of the transactions
contemplated hereby, including making representatives of such parties available
at reasonable times in connection with the syndication of such debt financing
and related activities.
 
6.14  Employee and Benefit Plans.
 
(a)  Except as specifically provided in this Section 6.14, Seller shall, and
shall cause, CEM, CPI, the Investor Subsidiaries, the Service Subsidiaries and
the Project Companies to take all necessary actions, including compliance with
all applicable Laws, such that (i) immediately prior to the Closing, none of
these entities shall sponsor, maintain, participate in, contribute to or have an
obligation to contribute to any Benefit Plan or Benefit Agreement on or after
the Closing, and (ii) Seller shall retain all Liabilities with respect to the
Benefit Plans and Benefit Agreements, including but not limited to liability for
all employer contributions required to be made to a Benefit Plan which is a cash
or deferred arrangement qualified under Section 401(a) and 401(k) of the Code.
As of the Closing Date, Buyer shall waive all pre-existing condition limitations
under Buyer’s health care plan for employees continuing in employment with Buyer
on and after the Closing Date (“Continuing Employees”) and covered by the health
care plan in which CEM, CPI, the Investor Subsidiaries, Service Subsidiaries and
any of the Project Companies participated immediately prior to the Closing Date
(the “Seller Health Plan”), and shall provide such health care coverage
substantially similar in the aggregate to the Seller Health Plan effective as of
the Closing Date without the application of any eligibility period for coverage.
In addition, with respect to Continuing Employees, Buyer shall cause its health
care plan to credit all employee payments toward deductible and co-payment
obligations limits under the Seller Health Plan for the plan year that includes
the Closing Date as if such payments had been made for similar purposes under
Buyer’s health care plan during the plan year that includes the Closing Date.
 
(b)  Notwithstanding the provisions of Section 6.14(a), Seller shall spin-off
and transfer all of the obligations and liabilities of any Benefit Plan that is
a Section 125 flexible spending plan (the “Seller 125 Plan”) attributable to
employees of CPI and CEM and their dependents and beneficiaries to a Section 125
flexible spending plan to be established by CEM (the “New 125 Plan”) immediately
prior to the Closing Date, and the New 125 Plan shall credit each such
employee's flexible spending account with the balance so transferred. Each
employee eligible to participate in the New 125 Plan shall be permitted to
continue his or her election in effect under the New 125 Plan for the remainder
of the calendar year in which the Closing shall occur, subject to the limitation
on contributions contained in the Seller 125 Plan, and CEM shall honor any such
election, and the New 125 Plan shall honor (and shall be solely liable for) any
claims incurred by an employee in the calendar year, which would otherwise be an
eligible expense under the Seller 125 Plan, whether or not such expense was
incurred before, on or after the Closing Date. Seller shall provide Buyer with
all information reasonably requested by Buyer in order for CEM and the New 125
Plan to satisfy the obligations set forth in this Section 6.14(b). As soon as
administratively practicable following the Closing Date, Seller shall pay to
Buyer the balance of CPI and CEM employees’ accounts under the Seller 125 Plan;
provided, however, that if the balance of CPI and CEM employees’ accounts under
the Seller 125 Plan is less than zero, Buyer shall pay to Seller the amount by
which such balance is less than zero.
 
(c)  Notwithstanding the provisions of Section 6.14(a), as soon as practicable
following the Closing Date, Seller shall fully vest the account balances of each
CPI and CEM employee who is a participant in the Benefit Plan that is a 401(k)
plan (the “Seller 401(k) Plan”) and shall offer each such participant the
opportunity to rollover such participant’s account balance to a defined
contribution 401(k) plan established or maintained by Buyer or CEM that is a
qualified tax or deferred arrangement under Code Sections 401(a) and 401(k).
Such rollover shall be in the form of a direct rollover in accordance with
Section 401(a)(31) of the Code and other applicable provisions of ERISA and the
Code and shall include the opportunity for participants to rollover all
participant loan accounts and liabilities under the Seller 401(k) Plan.
 
6.15  Audited Financial Statements.  Seller shall deliver to Buyer the audited
balance sheet, income statement and statement of cash flows of CEM and CPI as of
and for the year ended December 31, 2006, (which audited financial statements
shall not vary in any material respect from the Financial Statements), as
promptly as possible, but in no event later than one (1) Business Day after such
audited financial statements are available. Seller agrees that Buyer may, upon
written request, postpone the Closing Date by one day for each day beyond May 1,
2007 that Buyer has not received such audited financial statements.
 
6.16  Hartwell Partnership Distributions.  Promptly (but in any event not later
than three (3) Business Days) after Buyer’s receipt thereof, Buyer shall remit
to Seller by wire transfer in immediately available funds, Seller’s share of
Hartwell Partnership distributions or payments with respect to or to the extent
allocable to all periods prior to the Closing Date. The Parties agree that
Seller’s allocable share of such distributions or payments shall be based on the
number of days of Seller’s indirect ownership of the Hartwell Partnership during
the period to which such distribution or payment relates divided by the total
number of days during such period.
 
ARTICLE VII
  
CONDITIONS
 
7.1  Conditions to Obligations of Buyer.  The obligation of Buyer to effect the
purchase of the CPI Stock and the CEM Membership Interests and the other
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing Date (or the waiver in writing by Buyer) of the
following conditions:
 
(a)  The waiting period under the HSR Act applicable to the consummation of the
sale of the CPI Stock and the CEM Membership Interests contemplated hereby shall
have expired or been terminated;
 
(b)  No preliminary or permanent injunction or other order or decree by any
federal or state court or Governmental Authority which prevents the consummation
of the sale of the CPI Stock and the CEM Membership Interests contemplated
herein shall have been issued and remain in effect (each Party agreeing to use
its best efforts to have any such injunction, order or decree lifted) and no
statute, rule or regulation shall have been enacted by any state or federal
government or Governmental Authority which prohibits the consummation of the
sale of the CPI Stock and the CEM Membership Interests;
 
(c)  Buyer shall have received all of Buyer’s Required Regulatory Approvals, and
such approvals shall be in form and substance reasonably satisfactory (including
no materially adverse conditions) to Buyer;
 
(d)  Seller shall have performed and complied in all material respects with the
covenants and agreements contained in this Agreement which are required to be
performed and complied with by Seller on or prior to the Closing Date;
 
(e)  Each of the Seller Fundamental Representations shall have been true and
correct as of the date of this Agreement and shall be true and correct as of the
Closing Date as if made at and as of such date (except those representations and
warranties that address matters only as of a specified date, the truth and
correctness of which shall be determined as of that specified date); and
Seller’s other representations and warranties made in Article IV (without regard
to any materiality or Material Adverse Effect qualification therein) shall have
been true and correct as of the date of this Agreement and shall be true and
correct on the Closing Date as if made at and as of the Closing Date (except
those representations and warranties that address matters only as of a specified
date, the truth and correctness of which shall be determined as of that
specified date), except for such failures to be true and correct which could not
reasonably be expected to constitute, individually or in the aggregate, a
Material Adverse Effect;
 
(f)  Buyer shall have received certificates from an authorized officer of
Seller, dated the Closing Date, to the effect that, to such officer’s knowledge,
the conditions set forth in Section 7.1(d) and (e) have been satisfied by
Seller;
 
(g)  Buyer shall have received an opinion from Seller’s counsel reasonably
acceptable to Buyer, dated the Closing Date and reasonably satisfactory in form
and substance to Buyer and its counsel, substantially to the effect that:
 
(i)  Seller is a limited liability company validly existing and in good standing
under the laws of the State of Delaware and has the limited liability company
power and authority to execute and deliver the Agreement and to consummate the
transactions contemplated thereby; and the execution and delivery of the
Agreement by Seller and the consummation of the sale of the CPI Stock and the
CEM Membership Interests and the other transactions contemplated thereby have
been duly and validly authorized by all necessary limited liability company
action required on the part of Seller;
 
(ii)  The Agreement has been duly and validly executed and delivered by Seller
and constitutes a legal, valid and binding agreement of Seller enforceable in
accordance with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors’ rights generally and general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity);
 
(iii)  The execution, delivery and performance of the Agreement by Seller does
not (A) conflict with the Certificate of Formation or Limited Liability Company
Agreement of Seller or (B) to the knowledge of such counsel, constitute a
violation of or default under those agreements or instruments set forth on a
schedule attached to the opinion and which have been identified to such counsel
as all the agreements and instruments which are material to the business or
financial condition of Seller;
 
(iv)  No consent or approval of, filing with, or notice to, any Governmental
Authority is necessary for the execution and delivery of this Agreement by
Seller, or the consummation by Seller of the transactions contemplated hereby,
other than (i) such consents, approvals, filings or notices set forth on
Schedule 4.3(b) each of which have been obtained or made or which, if not
obtained or made, will not prevent Seller from performing its material
obligations hereunder and (ii) such consents, approvals, filings or notices
which become applicable to Seller as a result of the specific regulatory status
of Buyer (or any of its Affiliates) or as a result of any other facts that
specifically relate to the business or activities in which Buyer (or any of its
Affiliates) is or proposes to be engaged; and
 
(v)  The CPI Stock and the CEM Membership Interests are owned of record, and to
such counsel’s knowledge, beneficially by Seller free and clear of all Liens.
Each of the CPI Stock and the CEM Membership Interests has been duly authorized
and validly issued, and is fully paid and non-assessable. There are no
authorized shares of capital stock of CPI other than the 1,000 shares of common
stock comprising the CPI Stock and there are no other authorized membership
interests of CEM other than the membership interests comprising the CEM
Membership Interests. Upon the consummation of the transactions contemplated in
the Agreement, Buyer will have good and valid title to the CPI Stock and the CEM
Membership Interests, to such counsel’s knowledge, free and clear of all Liens.
 
In rendering the foregoing opinion, Seller’s counsel may rely on opinions of
in-house counsel and counsel as to local laws reasonably acceptable to Buyer.
 
(h)  Seller shall have delivered, or caused to be delivered, to Buyer at the
Closing, Seller’s closing deliveries described in Section 3.4;
 
(i)  Since the date of this Agreement, no Material Adverse Effect shall have
occurred and be continuing;
 
(j)  Seller’s Required Regulatory Approvals shall contain no conditions or terms
which could reasonably be expected to have a Material Adverse Effect;
 
(k)  All consents and approvals for the consummation of the transactions
contemplated hereby required under any CEM Agreement, CPI Agreement or Major
Project Contract, and all waivers of any rights of first refusal, rights of
first offer, or similar preemptive rights with respect to any of the Project
Company Interests arising in connection with the transactions contemplated by
this Agreement, shall have been obtained; and
 
(l)  Each of CPI, CEM and RMP, as applicable, shall have been discharged and
released from all liabilities and obligations arising under the Excluded
Agreements.
 
7.2  Conditions to Obligations of Seller.  The obligation of Seller to effect
the sale of the CPI Stock and CEM Membership Interests and the other
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing Date (or the waiver by Seller) of the following
conditions:
 
(a)  The waiting period under the HSR Act applicable to the consummation of the
sale of the CPI Stock and the CEM Membership Interests contemplated hereby shall
have expired or been terminated;
 
(b)  No preliminary or permanent injunction or other order or decree by any
federal or state court which prevents the consummation of the sale of the CPI
Stock and the CEM Membership Interests contemplated herein shall have been
issued and remain in effect (each Party agreeing to use its best efforts to have
any such injunction, order or decree lifted) and no statute, rule or regulation
shall have been enacted by any state or federal government or Governmental
Authority in the United States which prohibits the consummation of the sale of
the CPI Stock and the CEM Membership Interests;
 
(c)  Seller shall have received all of Seller’s Required Regulatory Approvals
applicable to it, in form and substance reasonably satisfactory (including no
materially adverse conditions) to Seller;
 
(d)  All consents and approvals for the consummation of the sale of the CPI
Stock and the CEM Membership Interests contemplated hereby required under the
terms of any note, bond, mortgage, indenture, material agreement or other
instrument or obligation to which Seller is a party or by which Seller, CEM or
CPI may be bound, shall have been obtained, other than those which if not
obtained, would not, individually and in the aggregate, create a Material
Adverse Effect;
 
(e)  Buyer shall have performed and complied in all material respects with the
covenants and agreements contained in this Agreement which are required to be
performed and complied with by Buyer on or prior to the Closing Date;
 
(f)  Each of the Buyer Fundamental Representations shall have been true and
correct as of the date of this Agreement and shall be true and correct as of the
Closing Date as if made at and as of such date (except those representations and
warranties that address matters only as of a specified date, the truth and
correctness of which shall be determined as of that specified date); and Buyer’s
other representations and warranties made in Article V (without regard to any
materiality or Material Adverse Effect qualification therein) shall have been
true and correct as of the date of this Agreement and shall be true and correct
on the Closing Date as if made at and as of the Closing Date (except those
representations and warranties that address matters only as of a specified date,
the truth and correctness of which shall be determined as of that specified
date), except for such failures to be true and correct which could not
reasonably be expected to constitute, individually or in the aggregate, a
Material Adverse Effect;
 
(g)  Seller shall have received a certificate from an authorized officer of
Buyer, dated the Closing Date, to the effect that, to such officer’s knowledge,
the conditions set forth in Sections 7.2(e) and (f) have been satisfied by
Buyer;
 
(h)  Seller shall have received an opinion from Buyer’s counsel reasonably
acceptable to Seller, dated the Closing Date and satisfactory in form and
substance to Seller and its counsel, substantially to the effect that:
 
(i)  Buyer is a Delaware limited liability company duly organized, validly
existing and in good standing under the laws of the state of its organization
and has the full limited liability company power and authority to own, lease and
operate its material assets and properties and to carry on its business as is
now conducted, and to execute and deliver the Agreement and to consummate the
transactions contemplated thereby; and the execution and delivery of the
Agreement by Buyer and the consummation of the transactions contemplated thereby
have been duly authorized by all necessary corporate action required on the part
of Buyer;
 
(ii)  The Agreement has been duly and validly executed and delivered by Buyer,
and constitutes a legal, valid and binding agreement of Buyer, enforceable
against Buyer, in accordance with its terms, except that such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws affecting or relating to enforcement
of creditor’s rights generally and general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity);
 
(iii)  The execution, delivery and performance of the Agreement by Buyer does
not (A) conflict with the operating agreement (or other organizational
documents), as currently in effect, of Buyer or (B) to the knowledge of such
counsel, constitute a violation of or default under those agreements or
instruments set forth on a Schedule attached to the opinion and which have been
identified to such counsel as all the agreements and instruments which are
material to the business or financial condition of Buyer; and
 
(iv)  No consent or approval of, filing with, or notice to, any Governmental
Authority is necessary for Buyer’s execution and delivery of the Agreement, or
the consummation by Buyer of the transactions contemplated hereby, other than
(a) Buyer’s Required Regulatory Approvals each of which has been obtained or
made and (b) such consents, approvals, filings or notices, which, if not
obtained or made, will not prevent Buyer from performing its obligations under
the Agreement.
 
(i)  Buyer shall have delivered, or caused to be delivered, to Seller at the
Closing, Buyer’s closing deliveries described in Section 3.5.
 
ARTICLE VIII  
 
INDEMNIFICATION
 
8.1  Indemnification.
 
(a)  Buyer shall indemnify, defend and hold harmless Seller, its officers,
directors, employees, shareholders, Affiliates, their respective successors,
permitted assigns and agents (each, a “Seller’s Indemnitee”) from and against
any and all claims, demands, suits, losses, liabilities, damages, obligations,
payments, costs and expenses (including, without limitation, the costs and
expenses of any and all actions, suits, proceedings, assessments, judgments,
settlements and compromises relating thereto, costs of investigation and
enforcement under this Article VIII and reasonable attorneys’ fees and
reasonable disbursements in connection therewith) (each, an “Indemnifiable
Loss”), asserted against or suffered by any Seller’s Indemnitee relating to,
resulting from or arising out of (i) any breach by Buyer of any representation,
warranty, covenant or agreement of Buyer contained in this Agreement or in any
certificate delivered by or on behalf of Buyer pursuant to this Agreement, (ii)
any loss or damages directly resulting from or arising out of any negligent act
or omission or willful misconduct of Buyer or Buyer’s Representatives in
connection with Buyer’s Inspections, (iii) any Third Party Claims against any
Seller’s Indemnitee arising out of or in connection with Buyer’s ownership or
operation of CEM or CPI on or after the Closing Date, (iv) any Third Party Claim
asserted against any Seller’s Indemnitee by any member or partner of any Project
Company resulting from or arising out of any deemed sale or exchange of an
interest in such Project Company resulting from any of the Section 338(h)(10)
Elections made or caused to be made by Seller and Buyer pursuant to Section
6.9(a) and (v) the Guarantee Liabilities.
 
(b)  Seller shall indemnify, defend and hold harmless Buyer, its officers,
directors, employees, shareholders, Affiliates, their respective successors,
permitted assigns and agents (each, a “Buyer Indemnitee”) from and against any
and all Indemnifiable Losses asserted against or suffered by any Buyer
Indemnitee relating to, resulting from or arising out of (i) any breach by
Seller of any representation, warranty, covenant or agreement of Seller
contained in this Agreement or in any certificate delivered by or on behalf of
Seller pursuant to this Agreement, (ii) the Excluded Liabilities and (iii) any
Third Party Claims against a Buyer Indemnitee arising out of or in connection
with (x) Seller’s ownership or operation of CEM or CPI prior to the Closing
Date, (y) CEM, CPI or Seller’s ownership or operation of the Excluded Assets
prior to, on or after the Closing Date and (z) the Excluded Liabilities.
 
(c)  Notwithstanding anything to the contrary contained herein:
 
(i)  Any Person entitled to receive indemnification under this Agreement (an
“Indemnitee”) shall use Commercially Reasonable Efforts to mitigate all losses,
damages and the like relating to a claim under these indemnification provisions,
including availing itself of any defenses, limitations, rights of contribution,
claims against third Persons and other rights at law or equity. The Indemnitee’s
Commercially Reasonable Efforts shall include the reasonable expenditure of
money to mitigate or otherwise reduce or eliminate any loss or expenses for
which indemnification would otherwise be due, and the Indemnitor shall reimburse
the Indemnitee for the Indemnitee’s reasonable expenditures in undertaking the
mitigation; and
 
(ii)  Any Indemnifiable Loss shall be net of (A) the dollar amount of any
insurance or other proceeds, net of any reasonable expenses, actually received
by the Indemnitee or any of its Affiliates with respect to the Indemnifiable
Loss, and (B) Tax benefits to the Indemnitee or any of its Affiliates, to the
extent realized or reasonably expected to be realized by the Indemnitee or any
of its Affiliates. Any Party seeking indemnity hereunder shall use Commercially
Reasonable Efforts to seek coverage (including both costs of defense and
indemnity) under applicable insurance policies with respect to any such
Indemnifiable Loss and the reasonable costs of such Commercially Reasonable
Efforts shall be an indemnifiable claim under this Agreement.
 
(d)  The expiration or termination of any representation, warranty or covenant
or agreement shall not affect the Parties’ obligations under this Section 8.1 if
the Indemnitee provided the Person required to provide indemnification under
this Agreement (the “Indemnifying Party”) with proper notice of the claim or
event for which indemnification is sought prior to such expiration, termination
or extinguishment.
 
(e)  Except to the extent otherwise provided in Article IX, the rights and
remedies of Seller and Buyer under this Article VIII are exclusive and in lieu
of any and all other rights and remedies which Seller and Buyer may have under
this Agreement or otherwise for monetary relief, with respect to (i) any breach
of or failure to perform any covenant, agreement, or representation or warranty
set forth in this Agreement, after the occurrence of the Closing, or (ii)
liabilities of CEM or CPI being assumed by Buyer or the Excluded Liabilities, as
the case may be; provided, however, that the provisions of this Section 8.1(e)
shall not prevent or limit (i) a claim of, or a cause of action arising from,
fraud or (ii) a cause of action to obtain equitable remedies. The
indemnification obligations of the Parties set forth in this Article VIII apply
only to matters arising out of this Agreement.
 
(f)  Notwithstanding anything to the contrary herein, no Party (including an
Indemnitee) shall be entitled to recover from any other Party (including an
Indemnifying Party) for any liabilities, damages, obligations, payments losses,
costs, or expenses under this Agreement any amount in excess of the actual
compensatory damages, court costs and reasonable attorney’s and other advisor
fees suffered by such Party. Buyer and Seller waive any right to recover
punitive, incidental, special, exemplary and consequential damages arising in
connection with or with respect to this Agreement. The provisions of this
Section 8.1(f) shall not apply to (i) a claim of or cause of action arising from
fraud or (ii) indemnification for a Third Party Claim or (iii) with respect to
the Guarantee Liabilities.
 
(g)  Notwithstanding anything to the contrary herein, (i) except as provided in
(ii) - (iv) below, neither Party shall be liable to the other Party for
Indemnifiable Losses relating to, resulting from or arising out of a breach of
representation or warranty (other than the Seller Fundamental Representations
and the Buyer Fundamental Representations), unless and until the amount of such
Indemnifiable Losses exceeds Two Hundred Fifty Thousand Dollars ($250,000), in
the aggregate, in which event the respective Party shall then only be liable for
the amount of such excess, but only up to the aggregate amount of 5% of the
Purchase Price, provided that such Party’s liability and obligation must be
asserted by the other Party within the applicable survival period specified in
Section 8.3, (ii) Seller’s liability and obligation to Buyer for an
Indemnifiable Loss relating to, resulting from or arising out of a breach of
representation or warranty with respect to (A) Sections 4.11 (Tax Matters) and
4.20(h) (Taxes) and (B) Section 4.8 (Benefit Plans) shall not be limited in
amount but must be asserted by Buyer on or before the termination of the related
survival period set forth in Section 8.3; (iii) Buyer’s liability and obligation
for Indemnifiable Losses arising out of the Guarantee Liabilities shall not be
limited in either amount or the time when Seller may assert a claim with respect
thereto; and (iv) and Seller’s liability and obligation for Indemnifiable Losses
arising out of the Excluded Liabilities shall not be limited in either amount or
the time when Buyer may assert a claim with respect thereto.
 
(h)  “Excluded Liabilities” means
 
(i)  Any liabilities or obligations in respect of (A) Income Taxes of CEM, CPI,
or any of the Investor Subsidiaries, Service Subsidiaries or Project Companies
for Tax periods (or portions thereof) beginning before and ending on or before
the Closing Date, determined in a manner consistent with the provisions of
Section 6.9(b) (other than Buyer 338 Liability and Income Taxes resulting from
any transaction or event that occurs after the Closing on the Closing Date and
is not in the ordinary course of business), (B)  Income Taxes payable by CEM,
CPI, any Investor Subsidiary, any Service Subsidiary or any Project Company
solely by reason of being severally liable for the Income Tax of Seller or any
MDU Affiliated Group pursuant to Treasury Regulation Section 1.1502-6 or any
analogous state or local Tax law, (C) any Income Taxes arising out of the deemed
sale of assets resulting from the Section 338(h)(10) Elections (other than Buyer
338 Liability), (D) Transfer Taxes for which Seller is responsible pursuant to
Section 6.9(f), and (E) Taxes (other than Income Taxes and Transfer Taxes) of
CEM, CPI, or any of the Investor Subsidiaries, Service Subsidiaries, or Project
Companies for Tax periods (or portions thereof) beginning before and ending on
or before the Closing Date, which in the case of any Straddle Period, shall 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 during the portion of
the Straddle Period ending on the Closing Date and the denominator of which is
the total number of days in the Straddle Period, (F) any losses incurred by
Buyer based upon CEM, CPI or any of their Subsidiaries being affiliated under
Code Section 414 or ERISA Section 4001(a)(14) on or prior to the Closing Date
with Seller and/or any Affiliates or Subsidiaries of Seller; provided, however,
that in the case of clauses (D) and (E), such liability or obligation only to
the extent that it exceeds the accrual for such Taxes reflected as a liability
in Working Capital, as finally determined pursuant to Section 3.3 (collectively,
“Excluded Taxes”) and (G) any liability or obligation with respect to
Indebtedness of CEM, CPI or any of their Subsidiaries, on the one hand, to their
Affiliates, on the other hand (other than Affiliates which are either Investor
Subsidiaries, Project Companies or Service Subsidiaries);
 
(ii)  Any fines, penalties or costs imposed by a Governmental Authority
resulting from (A) an investigation, proceeding, request for information or
inspection before or by a Governmental Authority either pending prior to or
arising after the Closing Date but only regarding acts which occurred prior to
the Closing Date, or (B) illegal acts, willful misconduct or gross negligence of
CEM or CPI prior to the Closing Date; and
 
(iii)  Liabilities and obligations arising at anytime under the Excluded
Agreements.
 
(i)  For purposes of determining the amount of Indemnifiable Losses arising from
a breach of any representation, warranty, covenant or obligation of the Parties
to this Agreement, but not for purposes of determining whether any such
representation, warranty, covenant or obligation has been breached or is
inaccurate, limitations or qualifications as to dollar amount, materiality or
Material Adverse Effect (or similar concept) set forth in such representation,
warranty, covenant or obligation shall be disregarded.
 
8.2  Defense of Claims.
 
(a)  If any Indemnitee receives notice of the assertion of any claim or of the
commencement of any claim, action, or proceeding made or brought by any Person
who is not a party to this Agreement or any Affiliate of a Party to this
Agreement (a “Third Party Claim”) with respect to which indemnification is to be
sought from an Indemnifying Party, the Indemnitee shall give such Indemnifying
Party reasonably prompt written notice thereof, but in any event such notice
shall not be given later than ten (10) calendar days after the Indemnitee’s
receipt of written notice of such Third Party Claim. Such notice shall describe
the nature of the Third Party Claim in reasonable detail and shall indicate the
estimated amount, if practicable, of the Indemnifiable Loss that has been or may
be sustained by the Indemnitee. The Indemnifying Party will have the right to
participate in or, by giving written notice to the Indemnitee, to elect to
assume the defense of any Third Party Claim at such Indemnifying Party’s expense
and by such Indemnifying Party’s own counsel, provided that the counsel for the
Indemnifying Party who shall conduct the defense of such Third Party Claim shall
be reasonably satisfactory to the Indemnitee. The Indemnitee shall cooperate in
good faith in such defense at such Indemnitee’s own expense. If an Indemnifying
Party elects not to assume the defense of any Third Party Claim, the Indemnitee
may compromise or settle such Third Party Claim over the objection of the
Indemnifying Party, which settlement or compromise shall conclusively establish
the Indemnifying Party’s liability pursuant to this Agreement.
 
(b)  If, within ten (10) calendar days after an Indemnitee provides written
notice to the Indemnifying Party of any Third Party Claims, the Indemnitee
receives written notice from the Indemnifying Party that such Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided in
Section 8.2(a), the Indemnifying Party will not be liable for any legal expenses
subsequently incurred by the Indemnitee in connection with the defense thereof
for so long as the Indemnifying Party shall continue the diligent defense of
such Third Party Claim. Without the prior written consent of the Indemnitee, the
Indemnifying Party shall not enter into any settlement of any Third Party Claim
which would lead to liability or create any financial or other obligation or
restriction on the part of the Indemnitee. If a firm offer is made to settle a
Third Party Claim would not lead to liability or the creation of a financial or
other obligation or restriction on the part of the Indemnitee and the
Indemnifying Party desires to accept and agree to such offer, the Indemnifying
Party shall give written notice to the Indemnitee to that effect. If the
Indemnitee fails to consent to such firm offer within ten (10) calendar days
after its receipt of such notice, the Indemnifying Party shall be relieved of
its obligations to defend such Third Party Claim and the Indemnitee may contest
or defend such Third Party Claim. In such event, the maximum liability of the
Indemnifying Party as to such Third Party Claim will be the amount of such
settlement offer plus reasonable costs and expenses paid or incurred by
Indemnitee up to the date of said notice.
 
(c)  Any claim by an Indemnitee on account of an Indemnifiable Loss which does
not result from a Third Party Claim (a “Direct Claim”) shall be asserted by
giving the Indemnifying Party reasonably prompt written notice thereof, stating
the nature of such claim in reasonable detail and indicating the estimated
amount, if practicable, but in any event such notice shall not be given later
than ten (10) calendar days after the Indemnitee becomes aware of such Direct
Claim, and the Indemnifying Party shall have a period of thirty (30) calendar
days within which to respond to such Direct Claim. If the Indemnifying Party
does not respond within such thirty (30) calendar day period, the Indemnifying
Party shall be deemed to have accepted such claim. If the Indemnifying Party
fails to accept such claim, the Indemnitee will be free to seek enforcement of
its right to indemnification under this Agreement.
 
(d)  If the amount of any Indemnifiable Loss, at any time subsequent to the
making of an indemnity payment in respect thereof, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance coverage, or pursuant
to any claim, recovery, settlement or payment by, from or against any other
entity, the amount of such reduction, less any costs, expenses or premiums
incurred in connection therewith (together with interest thereon from the date
of payment thereof at the publicly announced prime rate then in effect as
published in the Wall Street Journal shall promptly be repaid by the Indemnitee
to the Indemnifying Party.
 
(e)  A failure to give timely notice as provided in this Section 8.2 shall not
affect the rights or obligations of any Party hereunder except if, and only to
the extent that, as a result of such failure, the Party which was entitled to
receive such notice was actually prejudiced as a result of such failure.
 
(f)  Notwithstanding the foregoing, the Parties agree and acknowledge that (i)
Seller shall be entitled exclusively to control, defend and settle any
litigation, administrative or regulatory proceeding arising out of or related to
any Excluded Liabilities, and Buyer agrees to cooperate fully at Seller’s
expense in connection therewith and (ii) Buyer shall be entitled exclusively to
control, defend and settle any litigation, administrative or regulatory
proceeding, arising out of or related to any Guarantee Liabilities, and Seller
agrees to cooperate fully at Buyer’s expense in connection therewith.
 
8.3  Survival.  The representations and warranties given or made by any Party to
this Agreement or in any certificate or other writing furnished in connection
herewith shall survive the Closing for a period of 575 days after the Closing
Date and shall thereafter terminate and be of no further force or effect, except
that (i) the Seller Fundamental Representations and the Buyer Fundamental
Representations shall survive indefinitely, (ii) all representations and
warranties relating to Sections 4.11 and 4.20(h) shall survive the Closing for a
period of thirty (30) days following the applicable statutes of limitation
taking into account any extensions or waivers thereof, and (iii) the
representations and warranties in Section 4.20(n) shall survive the Closing for
a period of 36 months after the Closing Date.
 
The covenants and obligations of Seller and Buyer set forth in this Agreement,
including without limitation the indemnification obligations of the Parties
under Article VIII hereof, shall survive the Closing indefinitely, and each
Party shall be entitled to the full performance thereof by the other Party
hereto without limitation as to time or amount (except as otherwise specifically
set forth herein).
 
ARTICLE IX  
 
TERMINATION
 
9.1  Termination.
 
(a)  This Agreement may be terminated at any time prior to the Closing Date by
mutual written consent of Seller and Buyer.
 
(b)  This Agreement may be terminated by Seller or Buyer if (i) any Federal or
state court of competent jurisdiction shall have issued an order, judgment or
decree permanently restraining, enjoining or otherwise prohibiting the Closing,
and such order, judgment or decree shall have become final and nonappealable or
(ii) any statute, rule, order or regulation shall have been enacted or issued by
any Governmental Authority which, directly or indirectly, prohibits the
consummation of the Closing; or (iii) the Closing contemplated hereby shall have
not occurred on or before the day which is 120 days from the date of this
Agreement (the “Termination Date”), provided, however, that so long as such
Party has complied with Section 6.5 of this Agreement, the Termination Date (x)
may be extended by Buyer for up to thirty (30) days if any of Buyer Required
Regulatory Approvals shall not have been obtained and (y) may be extended by
Seller for up to thirty (30) days if any of Seller Required Regulatory Approvals
shall not have been obtained; and provided, further, that the right to terminate
this Agreement under this Section 9.1(b)(iii) shall not be available to any
Party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or before such
date.
 
(c)  So long as such Party has complied with Section 6.5 of this Agreement, this
Agreement may be terminated by Buyer if any of Buyer Required Regulatory
Approvals, the receipt of which is a condition to the obligation of Buyer to
consummate the Closing as set forth in Section 7.1(c), shall have been denied
(and a petition for rehearing or refiling of an application initially denied
without prejudice shall also have been denied) or shall have been granted but
contains terms or conditions which do not satisfy the closing condition in
Section 7.1(c).
 
(d)  So long as such Party has complied with Section 6.5 of this Agreement, this
Agreement may be terminated by Seller, if any of Seller’s Required Regulatory
Approvals, the receipt of which is a condition to the obligation of Seller to
consummate the Closing as set forth in Section 7.2(c), shall have been denied
(and a petition for rehearing or refiling of an application initially denied
without prejudice shall also have been denied) or shall have been granted but
contains terms or conditions which do not satisfy the closing condition in
Section 7.2(c).
 
(e)  This Agreement may be terminated by Buyer if there has been a material
violation or breach by Seller of any covenant, representation or warranty
contained in this Agreement which has resulted in a Material Adverse Effect and
such violation or breach is not cured by the earlier of the Closing Date or the
date thirty (30) days after receipt by Seller of notice specifying particularly
such violation or breach, and such violation or breach has not been waived by
Buyer.
 
(f)  This Agreement may be terminated by Seller, if there has been a material
violation or breach by Buyer of any covenant, representation or warranty
contained in this Agreement and such violation or breach is not cured by the
earlier of the Closing Date or the date thirty (30) days after receipt by Buyer
of notice specifying particularly such violation or breach, and such violation
or breach has not been waived by Seller.
 
(g)  This Agreement may be terminated by Seller if either the Equity Commitment
Letter or the Buyer LC shall no longer remain in full force and effect.
 
9.2  Procedure and Effect of No-Default Termination.  In the event of
termination of this Agreement by either or both of the Parties pursuant to
Section 9.1, written notice thereof shall forthwith be given by the terminating
Party to the other Party, whereupon, if this Agreement is terminated pursuant to
any of Sections 9.1(a) through (d), the liabilities of the Parties hereunder
will terminate, except as otherwise expressly provided in this Agreement, and
thereafter neither Party shall have any recourse against the other by reason of
this Agreement.
 
9.3  Termination Fee; Letter of Credit.  Seller may immediately draw upon the
Buyer LC in an amount equal to $50 million (the “Termination Fee”) if this
Agreement is terminated by Seller pursuant to Sections 9.1(b)(iii), 9.1(f) or
9.1(g); provided, that Seller shall not be in breach of this Agreement in such a
manner that would entitle Buyer to terminate this Agreement in accordance with
Section 9.1(e), and provided further, that in the case of termination pursuant
to Section 9.1(b)(iii), the failure of the Closing Date to occur was due to the
breach by Buyer of its obligations to complete the transactions contemplated
hereby when required to do so in accordance with this Agreement. The Parties
acknowledge and agree that if Seller shall terminate this Agreement as provided
immediately above, Seller’s damages would be difficult or impossible to quantify
with reasonable certainty, and accordingly the payment provided for in this
Section 9.3 is a payment of liquidated damages (and not penalties) which is a
based on the Parties’ estimate of the damages Seller will suffer or incur as a
result of the event giving rise to such payment and the resultant termination of
this Agreement. Buyer irrevocably waives any right it may have to raise as a
defense that any such liquidated damages are excessive or punitive. For greater
certainty, the Parties agree that the right to receive payment of the amount
determined pursuant to this Section 9.3 in the manner provided herein is the
sole and exclusive remedy of Seller. There shall be no liability of any
shareholder, partner, member, director, officer, employee, advisor or
representative of Buyer or Seller or any Affiliate thereof, whether to Buyer or
Seller, as the case may be, or any other Person (including any shareholder,
partner, member, director, officer, employee, advisor or representative thereof)
in connection with any liability or other obligation of Buyer or Seller or any
Affiliate thereof, whether hereunder or otherwise in connection with the
transactions contemplated hereby.
 
ARTICLE X  
 
MISCELLANEOUS PROVISIONS
 
10.1  Amendment and Modification.  Subject to applicable law, this Agreement may
be amended, modified or supplemented only by written agreement of Seller and
Buyer.
 
10.2  Waiver of Compliance; Consents.  Except as otherwise provided in this
Agreement, any failure of any of the Parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the Party entitled to
the benefits thereof only by a written instrument signed by the Party granting
such waiver, but such waiver of such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent failure to comply therewith.
 
10.3  Notices.  All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by facsimile
transmission, or mailed by overnight courier or registered or certified mail
(return receipt requested), postage prepaid, to the recipient Party at its
address (or at such other address or facsimile number for a Party as shall be
specified by like notice; provided, however, that notices of a change of address
shall be effective only upon receipt thereof):
 
(a)  If to Seller, to:
 
Centennial Energy Resources LLC
1200 West Century Avenue
Bismarck, North Dakota 58503
Attention: General Counsel
Facsimile: (701) 530-1731
 
with a copy to:

Thelen Reid Brown Raysman & Steiner LLP
875 Third Avenue
New York, New York 10022
Attention: Douglas E. Davidson, Esq.
Facsimile: (212) 603-2001
 
(b)  if to Buyer, to:
 
c/o CES Acquisition Corp.
575 Broadway, 3rd Floor
New York, New York 10012
Attention: Christopher L. Ryan
Facsimile: (212) 343-9949
 
with a copy to:
 
National Gas Partners
125 East John Carpenter Freeway, Suite 600
Irving, Texas 75062
Attention: Christopher Ray
Facsimile: (972) 432-1441
 
and
 
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Carl L. Reisner, Esq.
Facsimile: (212) 492-0017

10.4  Assignment.  This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by either Party
hereto, including by operation of law, without the prior written consent of the
other Party. Notwithstanding the foregoing, Buyer may (i) assign its rights
pursuant to this Agreement to its Affiliates, (ii) designate one or more of its
Affiliates to perform its obligations hereunder with the prior written consent
of Seller (which consent shall not be unreasonably withheld) and (iii) assign
its rights, but not its obligations, under this Agreement to any of its
financing sources without the consent of the Seller. This Agreement is not
intended to confer upon any other Person except the Parties hereto any rights,
interests, obligations or remedies hereunder. No provision of this Agreement
shall create any third party beneficiary rights in any employee or former
employee of Seller (including any beneficiary or dependent thereof) in respect
of continued employment or resumed employment, and no provision of this
Agreement shall create any rights in any such Persons in respect of any benefits
that may be provided, directly or indirectly, under any employee benefit plan or
arrangement except as expressly provided for thereunder.
 
10.5  Governing Law; Venue; Waiver of Jury Trial.  This Agreement shall be
governed by and construed in accordance with the law of the State of New York
(without giving effect to conflict of law principles) as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies. THE PARTIES HERETO AGREE THAT VENUE IN ANY AND ALL
ACTIONS AND PROCEEDINGS RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT SHALL BE
IN THE STATE AND FEDERAL COURTS IN AND FOR NEW YORK COUNTY, NEW YORK, WHICH
COURTS SHALL HAVE EXCLUSIVE JURISDICTION FOR SUCH PURPOSE, AND THE PARTIES
HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND
IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY
SUCH ACTION OR PROCEEDING. SERVICE OF PROCESS MAY BE MADE IN ANY MANNER
RECOGNIZED BY SUCH COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
 
10.6  Counterparts.  This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
 
10.7  Interpretation.  The articles, section and schedule headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
 
10.8  Schedules and Exhibits.  Except as otherwise provided in this Agreement,
all Exhibits and Schedules referred to herein are intended to be and hereby are
specifically made a part of this Agreement. Each Schedule to this Agreement
shall be deemed to include and incorporate all disclosures made on the other
Schedules to this Agreement.
 
10.9  Entire Agreement.  This Agreement and the Confidentiality Agreement,
including the Exhibits, Schedules, documents, certificates and instruments
referred to herein or therein, embody the entire agreement and understanding of
the Parties hereto in respect of the transactions contemplated by this
Agreement. There are no restrictions, promises, representations, warranties,
covenants or undertakings, other than those expressly set forth or referred to
herein or therein. It is expressly acknowledged and agreed that there are no
restrictions, promises, representations, warranties, covenants or undertakings
contained in any material made available to Buyer pursuant to the terms of the
Confidentiality Agreement including, without limitation, the Confidential
Information Memorandum dated January 2007. This Agreement supersedes all prior
agreements and understandings between the Parties (other than the
Confidentiality Agreement) with respect to such transactions.
 
10.10  U.S. Dollars.  Unless otherwise stated, all dollar amounts set forth
herein are United States (U.S.) dollars.

IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be signed by
their respective duly authorized officers as of the date first above written.
 
CENTENNIAL ENERGY RESOURCES LLC
MONTANA ACQUISITION COMPANY LLC
 
 
 
By: /s/ Paul Gatzemeier
Name: Paul Gatzemeier
Title: President and CEO
 
 
 
By: /s/ Paul B. Prager
Name: Paul B. Prager
Title: President