**Exhibit10-tt**

 

 

ASSET PURCHASE AGREEMENT

 

 

BY AND AMONG

 

 

CINERGY CAPITAL &TRADING, INC.,

 

CINCAP MADISON, LLC

 

 

AND

 

 

PSI ENERGY, INC.

 

 

Dated as of February 5,2003

 

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| ARTICLE  I                      |                                                 |
|---------------------------------|------------------------------------------------------|
| DEFINITIONS                     |                                                 |
|                            |                                                 |
| ARTICLE  II                     |                                                 |
| PURCHASE AND SALE               |
|                            |                                                 |
| Section 2.01.                   | Transfer of Assets                                   |
| Section 2.02.                   | Excluded Assets                                      |
| Section 2.03.                   | Assumed Liabilities                                  |
| Section 2.04.                   | Excluded Liabilities                                 |
|                            |                                                 |
| ARTICLE III                     |                                                 |
| PURCHASE PRICE; CLOSING         |
|                            |                                                 |
| Section 3.01.                   | Purchase Price                                       |
| Section 3.02.                   | Inventory                                            |
| Section 3.03.                   | Proration                                            |
| Section 3.04.                   | Closing                                              |
| Section 3.05.                   | Closing Deliveries                                   |
|                            |                                                 |
| ARTICLE  IV                     |                                                 |
| REPRESENTATIONS AND  WARRANTIES |
|                            |                                                 |
| Section 4.01.                   | Representations and Warranties of Parent  and Seller |
| Section 4.02.                   | Representations and Warranties of Buyer              |
|                            |                                                 |
| ARTICLE  V                      |                                                 |
| COVENANTS                       |                                                 |
|                            |                                                 |
| Section 5.01.                   | Books and Records                                    |
| Section 5.02.                   | Finder’s Fees                                   |
| Section 5.03.                   | Tax Matters                                          |
| Section 5.04.                   | Further Assurances                                   |
|                            |                                                 |
| ARTICLE  VI                     |                                                 |
| INDEMNIFICATION                 |
|                            |                                                 |
| Section 6.01.                   | Survival                                             |
| Section 6.02.                   | Indemnification                                      |
| Section 6.03.                   | Procedure for  Indemnification                       |
|                            |                                                 |
| ARTICLE VII                     |                                                 |
| MISCELLANEOUS PROVISIONS        |
|                            |                                                 |
| Section 7.01                    | Notices                                              |

 

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| Section 7.02.        | Waiver                                                        |
|----------------------|---------------------------------------------------------------|
| Section 7.03.        | Entire Agreement;  Amendment etc.                             |
| Section 7.04.        | Assignment                                                    |
| Section 7.05.        | Severability                                                  |
| Section 7.06.        | Bulk Sales Laws                                               |
| Section 7.07.        | Governing Law                                                 |
| Section 7.08.        | Counterparts;  Facsimile Execution                            |
| Section 7.09.        | Schedules                                                     |
| Section 7.10         | U.S. Dollars                                                  |
| Section 7.11.        | Dispute Resolution                                            |
| Section 7.12.        | Ratemaking                                                    |
| Section 7.13.        | State Review                                                  |
|                 |                                                          |
| SCHEDULES            |
|                 |                                                          |
| Schedule  I          | Form  of Deed                                                 |
| Schedule II          | Form of Bill of Sale                                          |
| Schedule III         | Form of Assumption Agreement                                  |
|                 |                                                          |
| DISCLOSURE SCHEDULES |
|                 |                                                          |
| Schedule 2.01(b)     | Tangible Personal Property                                    |
| Schedule 2.01(d)     | Transferred Contracts                                         |
| Schedule 2.01(e)     | Transferred Permits                                           |
| Schedule 4.01(c)(ii) | Seller’s Required Governmental  and Third Party Consents |
| Schedule 4.01(g)(i)  | Real Property                                                 |
| Schedule 4.01(k)     | Environmental Permits                                         |
| Schedule 4.01(m)     | Seller Contracts                                              |
| Schedule 4.01(o)     | Permits                                                       |
| Schedule 4.02(c)(ii) | Buyer’s Required Governmental and  Third Party Consents  |
|                      |                                                               |  |

 

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ASSET PURCHASE AGREEMENT

 

 

ASSET PURCHASE AGREEMENT (this “Agreement”), dated asof February 5, 2003, by and among Cinergy Capital & Trading, Inc., anIndiana corporation (“Parent”), CinCap Madison, LLC, a Delaware limitedliability company and indirect wholly-owned subsidiary of Parent (“Seller”), and PSI Energy, Inc., an Indianacorporation (“Buyer” and, togetherwith Parent and Seller, “Parties”and individually, a “Party”).

 

WITNESSETH

 

WHEREAS, Seller owns the Madison Generating Station(“Madison Station”), a simple cycle, natural gas-fired electric generatingstation located in Madison Township, Butler County, Ohio, comprised of eight GEModel 7EA combustion turbines with an aggregate summer rated capacity ofapproximately 576 megawatts, together with certain other assets, properties,facilities and rights associated therewith or ancillary thereto; and

 

WHEREAS, Buyer desires to purchase and assume fromSeller, and Seller desires to sell and assign to Buyer, the Purchased Assets(as hereinafter defined) and certain associated liabilities, upon the terms andconditions hereinafter set forth;

 

NOW, THEREFORE, in consideration of the premises andthe mutual covenants, agreements, representations and warranties hereinafterset forth, the Parties, intending to be legally bound, hereby agree as follows:

 

ARTICLE I

#  

DEFINITIONS

 

SECTION 1.01.                                 Definitions.                  (a)                                  As used in thisAgreement, the following terms have the following meanings::

 

“Affiliate” means a Person that directly, or indirectly through oneor more intermediaries, controls, or is controlled by, or is under commoncontrol with, the Person specified.  Theterm “control” (including the terms “controlling,” “controlled by” and “undercommon control with”) means the possession, direct or indirect, of the power todirect or cause the direction of the management and policies of a Person,whether through the ownership of voting securities, by contract or otherwise.

 

“Ancillary Agreements” means the AssumptionAgreement, the Bill of Sale and the Deed.

 

“Assumption Agreement” means the form ofAssumption Agreement of Buyer in favor of Seller attached hereto as ScheduleIII.

 

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“Assumed Liabilities” has the meaning set forthin Section 2.03.

 

“Bill of Sale” means the form of Bill of Salefrom Seller to Buyer attached hereto as Schedule II.

 

“Buyer” has themeaning set****in the first paragraph of this Agreement.

 

“Buyer Indemnitee”has the meaning set forth in Section 6.02.

 

“Buyer’sRequired Consents” means Buyer’s Required Governmental Consents andBuyer’s Required Third-Party Consents.

 

“Buyer’s Required Governmental Consents” meansthe consents, approvals, filings and/or notices of, with, from or toGovernmental Authorities listed in Section I of Schedule 4.02(c)(ii).

 

“Buyer’s Required Third-Party Consents” meansthe consents, approvals, filings and/or notices of, with, from or to ThirdParties (other than Governmental Authorities) listed in Section II of Schedule4.02(c)(ii).

 

“Carrying Costs” means an amount in dollarsequal to the financing costs associated with Madison Station incurred from theearlier of (1) the date of the Indiana Utility Regulatory Commission Order inCause No. 42145 granting Buyer a certificate of public convenience andnecessity to purchase the Madison Station, or (2) December 1, 2002, to andincluding the Closing Date, to be calculated at Buyer’s weighted cost ofcapital using the return on equity from Buyer’s last retail base rate case (11%ROE).

 

“CERCLA” means the Comprehensive EnvironmentalResponse, Compensation, and Liability Act of 1980, as amended from time totime.

 

“Closing” has themeaning set forth in Section 3.04.

 

“Closing Date” hasthe meaning set forth in Section 3.04.

 

“Closing Inventory” means an amount in dollarsequal to all Inventories on the Closing Date.

 

“Deed” means the form ofWarranty Deed and Assignment of Adjoining Easement and License Interests fromSeller to Buyer attached hereto as Schedule I.

 

“Direct Claim” hasthe meaning set forth in Section 6.03(c).

 

“Encumbrance” means anysecurity interest, pledge, mortgage, lien, charge, option to purchase, lease,claim, restriction, covenant, title defect, hypothecation, assignment, depositarrangement or other encumbrance of any kind or any preference,

 

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priority or other security agreement or preferential arrangement of anykind or nature whatsoever (including any conditional sale or title retentionagreement).

 

“Environmental Condition” means the presence orRelease****tothe environment, whether at the Real Property or otherwise, of HazardousSubstances, including any migration of Hazardous Substances through air, soilor groundwater at, to or from the Real Property or at, to or from any Off-SiteLocation, regardless of when such presence or Release occurred or isdiscovered.

 

“EnvironmentalLaws” means all (a) Laws relating to pollution or protection of theenvironment, natural resources or human health and safety, including Lawsrelating to Releases or threatened Releases of Hazardous Substances orotherwise relating to the manufacture, formulation, generation, processing,distribution, use, treatment, storage, Release, transport, Remediation,abatement, cleanup or handling of Hazardous Substances, (b) Laws with regard torecordkeeping, notification, disclosure and reporting requirements respectingHazardous Substances and (c) Laws relating to the management or use of naturalresources.

 

“Environmental Liabilities” has the meaning setforth in Section 2.03.

 

“EnvironmentalPermit” has the meaning set forth in Section 4.01(k).

 

“Excluded Assets” has the meaning set forth inSection 2.02.

 

“Excluded Liabilities” has the meaning setforth in Section 2.04.

 

“GAAP” means****UnitedStates generally accepted accounting principles as in effect from time to time,applied on a consistent basis.

 

“GoodUtility Practice” means any of the practices, methods and actsengaged in or approved by a significant portion of the electric utilityindustry during the relevant time period, or any of the practices, methods oracts which, in the exercise of reasonable judgment in light of the facts knownat the time the decision was made, could have been expected to accomplish thedesired result at a reasonable cost consistent with good business practices,reliability, safety and expedition.

 

“Governmental Authority”means any: (a) nation, state, county, city, town, village, district, orother jurisdiction of any nature; (b) federal, state, local, municipal,foreign, or other government; (c) governmental or quasi-governmental authorityof any nature (including any governmental agency, branch, department, official,or entity and any court or other tribunal); (d) multi-national organization orbody; or (e) body exercising, or entitled to exercise, any administrative,executive, judicial, legislative, police, regulatory, or taxing authority orpower of any nature.

 

“HazardousSubstances” means (a) any petrochemical or petroleum products, oilor coal ash, radioactive materials, radon gas, asbestos in any form that is orcould become

 

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friable, urea formaldehyde foam insulation and transformers or otherequipment that contain dielectric fluid which may contain levels ofpolychlorinated biphenyls; (b) any chemicals, materials or substances definedas or included in the definition of “hazardous substances,” “hazardous wastes,”“hazardous materials,” “hazardous constituents,” “restricted hazardousmaterials,” “extremely hazardous substances,” “toxic substances,”“contaminants,” “pollutants,” “toxic pollutants,” or words of similar meaningand regulatory effect under any applicable Environmental Law; and (c) any otherchemical, material or substance, exposure to which is prohibited, limited orregulated by any applicable Environmental Law.

 

“Improvements” means all buildings,structures,  machinery and equipment, fixtures,construction in progress, and other improvements, including all piping, cablesand similar equipment forming part of the mechanical, electrical, plumbing orHVAC infrastructure of any building, structure or equipment, located on andaffixed to the Real Property.

 

“IndemnifiableLoss” has the meaning set forth in Section 6.02(a).

 

“IndemnifyingParty” has the meaning set forth in Section 6.02(d).

 

“Indemnitee” has the meaning set forth inSection 6.02(c).

 

“Inventories” means all inventories of fuels,supplies, materials and spare parts of Seller located on or in transit to theReal Property.

 

“Knowledge” means theactual knowledge of the corporate officer or officers of the specified Personcharged with responsibility for the particular function as of the date of thisAgreement, or, with respect to any certificate delivered pursuant to thisAgreement, the date of delivery of the certificate, after reasonable inquiry byeach such officer of selected employees of the specified Person whom suchofficer believes, in good faith, to be the persons generally responsible forthe subject matters to which the knowledge is pertinent.

 

“Laws” means alllaws, statutes, rules, regulations, ordinances and other pronouncements havingthe effect of law of the United States, any foreign country and any domestic orforeign state, county, city or other political subdivision or of anyGovernmental Authority.

 

“Liability” means any liability or obligation,whether known or unknown, whether asserted or unasserted, whether absolute orcontingent, whether accrued or unaccrued, whether liquidated or unliquidated,whether incurred or consequential, and whether due or to become due.

 

“Madison Station” has the meaning given in therecitals to this Agreement.

 

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“Material Adverse Effect”means (i) any event, circumstance or condition materially impairing theability of Seller or Parent to perform its obligations under this Agreement orany Ancillary Agreement, or (ii) any change in or effect on Seller or thePurchased Assets that is materially adverse to the Purchased Assets, other than(a) any change resulting from changes in the international, national, regionalor local wholesale or retail markets for electricity, (b) any change resultingfrom changes in the international, national, regional or local markets for fuelused at Madison Station, (c) any change resulting from changes in the NorthAmerican, national, regional or local electric transmission system, and (d) anychange in Law generally applicable to similarly situated Persons.

 

“Net Book Value” means an amount in dollars, as setforth in the balance sheet of Seller as of the applicable date, equal to totalfixed assets net of accrued depreciation.

 

“Off-Site Location” means any real propertyother than the Real Property.

 

“Organizational Documents”means (a) the articles or certificate of incorporation and the bylaws ofa corporation; (b) the limited liability company or operating agreement andcertificate of formation of a limited liability company; (c) the partnershipagreement and any statement of partnership of a general partnership; (d) thelimited partnership agreement and the certificate of limited partnership of alimited partnership; (e) any charter or similar document adopted or filed inconnection with the creation, formation, or organization of a Person; and (f)any amendment to any of the foregoing.

 

“Parent” has the meaning set forth in the firstparagraph of this Agreement.

 

“Party” has the meaning set forth in the firstparagraph of this Agreement.

 

“Permits”has the meaning set forth in Section 4.01(o).

 

“Permitted Encumbrances”means (i) the respective rights and obligations of the Parties underthis Agreement and the Ancillary Agreements; (ii) all matters that would bedisclosed in a current title commitment or title policy or survey for the RealProperty; (iii) Encumbrances for Taxes not yet due or which are being contestedin good faith by appropriate proceedings and that would not, individually or inthe aggregate, reasonably be expected to have a Material Adverse Effect; (iv)carriers’, warehousemen’s, materialmen’s, mechanics’, repairman’s or other likeEncumbrances arising in the ordinary course of business that would not,individually or in the aggregate, reasonably be expected to have a MaterialAdverse Effect; (v) zoning, planning, conservation restriction and other landuse and environmental regulations by Governmental Authorities; (vi)Encumbrances resulting from legal proceedings being contested in good faith byappropriate proceedings that would not, individually or in the aggregate,reasonably be expected to have a Material Adverse Effect; and (vii) otherEncumbrances that would not, individually or in the aggregate, reasonably beexpected to have a Material Adverse Effect.

 

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“Person” means anyindividual, corporation (including any non-profit corporation), general orlimited partnership, limited liability company, joint venture, estate, trust,association, organization, labor union, or other entity or GovernmentalAuthority.

 

“Prime Rate” means as of any date, the primerate as published in The Wall Street Journal on such date or, if not publishedon such date, on the most recent date of publication.

 

“Purchase Price” has the meaning set forth inSection 3.01.

 

“Purchased Assets” has the meaning set forth inSection 2.01.

 

“Real Property” has the meaning set forth inSection 4.01(g)(i).

 

“Real PropertyLease” has the meaning set forth in Section 4.01(g)(ii).

 

“Release”means any release, spill, leak, discharge, disposal of, pumping, pouring,emitting, emptying, injecting, leaching, dumping or allowing to escape into orthrough the environment.

 

“Remediation” means an action of any kind toaddress an Environmental Condition or a Release of Hazardous Substances or thepresence of Hazardous Substances at the Real Property or an Off-Site Location,including the following activities to the extent they relate to, result from orarise out of the presence of a Hazardous Substance at the Real Property or anOff-Site Location:  (a) monitoring,investigation, assessment, treatment, cleanup, containment, removal,mitigation, response or restoration work; (b) obtaining any permits, consents,approvals or authorizations of any Governmental Authority necessary to conductany such activity; (c) preparing and implementing any plans or studies for anysuch activity; (d) obtaining a written notice from a Governmental Authoritywith jurisdiction over the Real Property or an Off-Site Location underEnvironmental Laws that no material additional work is required by suchGovernmental Authority; (e) the use, implementation, application, installation,operation or maintenance of removal actions on the Real Property or an Off-SiteLocation, remedial technologies applied to the surface or subsurface soils,excavation and treatment or disposal of soils at an Off-Site Location, systemsfor long-term treatment of surface water or groundwater, engineering controlsor institutional controls; and (f) any other activities reasonably determinedby a Party to be necessary or appropriate or required under Environmental Lawsto address an Environmental Condition or a Release of Hazardous Substances orthe presence of Hazardous Substances at the Real Property or an Off-SiteLocation.

 

“Representatives”means, with respect to a Party, such respective directors (or partiesperforming similar functions), officers, employees, representatives, agents andadvisors (including accountants, legal counsel, environmental consultants andfinancial advisors).

 

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**“**Seller” has the meaning set forth in thefirst paragraph of this Agreement.

 

“Seller Indemnitee”has the meaning set forth in Section 6.02(a).

 

“Seller’s Required Consents” means Seller’sRequired Governmental Consents and Seller’s Required Third-Party Consents.

 

“Seller’s Required Governmental Consents” meansthe consents, approvals, filings and/or notices of, with, from or toGovernmental Authorities listed in Section I of Schedule 4.01(c)(ii).

 

“Seller’s Required Third-Party Consents” meansthe consents, approvals, filings and/or notices of, with, from or to ThirdParties (other than Governmental Authorities) listed in Section II of Schedule4.01(c)(ii).

 

“Tax” means anytax, charge, fee, levy, penalty or other assessment imposed by any federal,state, local or foreign taxing authority, including, but not limited to, anyincome, gross receipts, excise, property, sales, transfer, use, franchise,payroll, withholding, social security or other tax, including any interest,penalty or addition attributable thereto.

 

“Third Party Claim”has the meaning set forth in Section 6.03(a).

 

“Transferred Contracts”has the meaning set forth in Section 2.01(d).

 

“Transferred IntellectualProperty” has the meaning set forth in Section 2.01(h).

 

“Transferred Permits” hasthe meaning set forth in Section 2.01(e).

 

(b)                                 Interpretation.                    In this Agreement, unless otherwise specified orwhere the context otherwise requires:

 

(i)                                     areference, without more, to a recital is to the relevant recital to thisAgreement, to an Article or  Section isto the relevant Article or Section of this Agreement, and to a Schedule is tothe relevant Schedule to this Agreement;

 

(ii)                                  wordsimporting any gender shall include other genders;

 

(iii)                               words importing thesingular only shall include the plural and vice versa;

 

(iv)                              thewords “include,” “includes” or “including” shall be deemed to be followed bythe words “without limitation;”

 

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(v)                                 reference to any agreement,document or instrument means such agreement, document or instrument as amendedor modified and in effect from time to time in accordance with the termsthereof;

 

(vi)                              reference to any applicable Lawmeans, if applicable, such Law as amended, modified, codified, replaced orreenacted, in whole or in part, and in effect from time to time, includingrules and regulations promulgated thereunder,

 

(vii)                           “or” is used in the inclusive sense of “and/or”;

 

(viii)                        references to documents, instruments or agreements shall be deemedto refer as well to all addenda, exhibits, schedules or amendments thereto;

 

(ix)                                thewords “hereof,” “herein” and “herewith” and words of similar import shall,unless otherwise stated, be construed to refer to this Agreement as a whole andnot to any particular provision of this Agreement; and

 

(x)                                   referencesto any party hereto or any other agreement or document shall include suchparty’s successors and permitted assigns, but, if applicable, only if such successors and assigns are notprohibited by this Agreement.

 

ARTICLE II

 

PURCHASE AND SALE

 

Section 2.01.                         Transfer of Assets.                        Upon the terms and conditions set forth in this Agreement, at theClosing, Seller shall sell, convey, assign, transfer and deliver to Buyer, andBuyer shall purchase and acquire from Seller, free and clear of allEncumbrances other than Permitted Encumbrances, all of Seller’s right, titleand interest in, to and under the real and personal property, tangible andintangible, constituting, or used in connection with the operation of, MadisonStation, except as otherwise provided in Section 2.02, each as of the ClosingDate, including all of Seller’s right, title and interest in, to and under thefollowing assets (collectively, the “Purchased Assets”):

 

(a)                                  the Real Property;

 

(b)                                 the machinery, fixtures, equipment(including communications equipment), vehicles, furniture and other personalproperty located on the Real Property, including the items of tangible personalproperty listed on Schedule 2.01(b);

 

(c)                                  all Inventories;

 

(d)                                 subject to the receipt of anynecessary consents and approvals, the contracts or agreements (including anylicenses or real or personal property leases, other

 

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than any thereof constitutingTransferred Permits or Transferred Intellectual Property) listed on Schedule2.01(d) (the “Transferred Contracts”);

 

(e)                                  subject to the receipt of anynecessary consents and approvals, the permits, licenses, certificates,certifications, orders and other governmental authorizations listed on Schedule2.01(e) (the “Transferred Permits”);

 

(f)                                    allunexpired, transferable warranties and guarantees from manufacturers, vendorsand other third parties with respect to any item of real or tangible personalproperty referred to in clauses (a), (b) and (c) of this Section 2.01;

 

(g)                                 allbooks, expired purchase orders, operating records, operating, safety andmaintenance manuals, engineering design plans, blueprints and as-built plans,specifications, procedures, studies, reports, equipment repair, safety,maintenance or service records, and similar items (subject to the right ofSeller to retain copies of same for its use), other than such items that are proprietaryto third parties and accounting records (to the extent that any of theforegoing is contained in an electronic format, Seller shall cooperate withBuyer to transfer such items to Buyer in a format that is reasonably acceptableto Buyer); and

 

(h)                                 subject to the receipt of anynecessary consents and approvals, any Intellectual Property (the “TransferredIntellectual Property”).

 

Notwithstandingthe foregoing, the transfer of the Purchased Assets pursuant to this Agreementshall not include the assumption of any Liability related to the PurchasedAssets unless Buyer expressly assumes that Liability pursuant to Section 2.03.

 

Section 2.02.                             ExcludedAssets.          Notwithstanding anything to thecontrary contained in Section 2.01 or elsewhere in this Agreement, thefollowing assets of Seller (collectively, the “Excluded Assets”) are not partof the sale and purchase contemplated hereunder, are excluded from thePurchased Assets and shall remain the property of Seller after the Closing:

 

(a)                                  all cash, cash equivalents, bankdeposits, accounts and notes receivables (trade or otherwise), prepaid expensesand any income, sales, payroll or other Tax receivables;

 

(b)                                 all minute books, limited liabilitycompany interest transfer books, corporate seals and other corporate records;

 

(c)                                  anyrefund, credit penalty payment, adjustment or reconciliation (i) related toTaxes paid prior to the Closing Date in respect of the Purchased Assets,whether such refund, adjustment or reconciliation is received as a payment or,subject to Section 3.03, as a credit against future Taxes payable, or (ii)arising under Assigned Contract and relating to a period before the ClosingDate;

 

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(d)                                 therights of Seller in, to and under all contracts, agreements, arrangements,permits or licenses of any nature, of which the obligations of Sellerthereunder are not expressly assumed by Buyer pursuant to Section 2.03;

 

(e)                                  anyinsurance policies; and

 

(f)                                    therights of Seller under this Agreement and the AncillaryAgreements.

 

Section 2.03.                             AssumedLiabilities.                                    Onthe Closing Date, Buyer shall execute and deliver in favor of Seller theAssumption Agreement, pursuant to which Buyer shall assume and agree to pay,perform and discharge, without recourse to Seller or Parent, the followingLiabilities of Seller, solely to the extent such Liabilities accrue or arisefrom and after the Closing, other than Excluded Liabilities (as defined below),in accordance with the respective terms and subject to the respectiveconditions thereof (collectively, the “Assumed Liabilities”):

 

(a)                                  AllLiabilities of Seller under the Transferred Contracts, Transferred Permits andTransferred Intellectual Property, in each case in accordance with the termsthereof, except to the extent that such Liabilities, but for a breach ordefault by Seller, would have been paid, performed or otherwise discharged onor prior to the Closing Date or to the extent the same arise out of any suchbreach or default or out of any event which after the giving of notice wouldconstitute a default by Seller;

 

(b)                                 allLiabilities with respect to Madison Station arising under or relating toEnvironmental Laws or relating to any claim in respect of EnvironmentalConditions or Hazardous Substances, including settlements, judgments, costs andexpenses, including reasonable attorneys fees, whether based on common law orEnvironmental Laws (collectively, “Environmental Liabilities”), but in eachcase solely to the extent accruing or arising from and after the Closing Date,with respect to (i) any violation or alleged violation of Environmental Lawswith respect to the ownership, lease, maintenance or operation of any of thePurchased Assets, including any fines or penalties that arise in connection withthe ownership, lease, maintenance or operation of the Purchased Assets, and thecosts associated with correcting any such violations; (ii) loss of life, injuryto persons or property or damage to natural resources caused (or allegedlycaused) by any Environmental Condition or the presence or Release of HazardousSubstances at, on, in, under, adjacent to or migrating from the PurchasedAssets, including any Environmental Condition or Hazardous Substances containedin building materials at or adjacent to the Purchased Assets or in the soil,surface water, sediments, groundwater, landfill cells, or in otherenvironmental media at or near the Purchased Assets; (iii) any Remediation ofany Environmental Condition or Hazardous Substances that are present or havebeen Released at, on, in, under, adjacent to or migrating from, the PurchasedAssets or in the soil, surface water, sediments, groundwater, landfill cells orin other environmental media at or adjacent to the

 

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Purchased Assets; (iv) any bodily injury, loss of life, propertydamage, or natural resource damage arising from the storage, transportation,treatment, disposal, discharge, recycling or Release, at any Off-Site Location,or arising from the arrangement for such activities, of Hazardous Substancesgenerated in connection with the ownership, lease, maintenance or operation ofthe Purchased Assets; (v) any Remediation of any Environmental Condition orRelease of Hazardous Substances arising from the storage, transportation,treatment, disposal, discharge, recycling or Release, at any Off-Site Location,or arising from the arrangement for such activities, of Hazardous Substancesgenerated in connection with the ownership, lease, maintenance or operation ofthe Purchased Assets; and (vi) any obligation to repower, replace,decommission, deactivate, dismantle, demolish or close the Purchased Assets orany portion thereof, or any surface impoundments or other waste or effluenthandling or storage units on owned or leased adjacent properties used inconnection with the operation of the Purchased Assets;

 

(c)                                  allliabilities or obligations to third parties for personal injury or tort, orsimilar causes of action arising solely out of the ownership, lease, maintenanceor operation of the Purchased Assets, (collectively, “Tort Liabilities”), butin each case solely to the extent accruing or arising from and after theClosing Date; and

 

(d)                                 anyTax that may be imposed by any federal, state or local government on theownership, sale, operation or use of the Purchased Assets on or after theClosing Date, except for any income Taxes attributable to income received bySeller.

 

Section 2.04.                             ExcludedLiabilities.                                       Exceptfor the Assumed Liabilities, Buyer shall not assume by virtue of thisAgreement, the Assumption Agreement or any other Ancillary Agreement, or thetransactions contemplated hereby or thereby, or otherwise, and shall have noliability for, any Liabilities of Seller (the “Excluded Liabilities”),including any of the following Liabilities:

 

(a)                                  anyLiabilities of Seller in respect of any Excluded Assets or other assets ofSeller that are not Purchased Assets, except to the extent caused by the actsor omissions of Buyer or its Representatives or Buyer’s ownership, lease,maintenance or operation of the Purchased Assets;

 

(b)                                 anyLiabilities in respect of Taxes attributable to the Purchased Assets fortaxable periods ending before the Closing Date;

 

(c)                                  anyLiabilities of Seller (i) arising from the breach or default by Seller, priorto the Closing Date, of any Transferred Contract, Transferred Permit orTransferred Intellectual Property or (ii) in respect of any other contract,agreement, personal property lease, permit, license or other arrangement orinstrument entered into by Seller;

 

(d)                                 subjectto Section 3.03, any payment obligations of Seller, including accounts or notespayable, arising prior to the Closing Date;

 

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(e)                                  anyfines and penalties imposed by any Governmental Authority resulting from anyact or omission by Seller that occurred prior to the Closing Date;

 

(f)                                    anyincome Taxes attributable to income received by Seller;

 

(g)                                 anyLiability of Seller arising as a result of its execution and delivery of thisAgreement or any Ancillary Agreement, the performance of its obligationshereunder or thereunder, or the consummation by Seller of the transactionscontemplated hereby or thereby; and

 

(h)                                 anyLiability of Seller based on Seller’s acts or omissions after the Closing; and

 

(i)                                     anyand all Environmental Liabilities and Tort Liabilities accruing, arising,existing or occurring prior to the Closing Date.

 

ARTICLE III

 

PURCHASE PRICE; CLOSING

 

Section 3.01.                             PurchasePrice.               The purchase pricepayable by Buyer to Seller for the Purchased Assets is $306,366,920.30, suchamount being equal to (a) the Net Book Value at the earlier of (1) the date ofthe Indiana Utility Regulatory Commission Order in Cause No. 42145 grantingBuyer a certificate of public convenience and necessity to purchase the MadisonStation, or (2) December 1, 2002, plus (b) the Carrying Costs (collectively,the “Purchase Price”).

 

Section 3.02.                             Inventory.                                        AtClosing, in addition to payment of the Purchase Price, Buyer shall alsocompensate Seller for the Closing Inventory, at cost.

 

Section 3.03.                             Proration.                                            (a)                                  Buyerand Seller agree that all of the items normally prorated, including thoselisted below, relating to the business and operation of the Purchased Assetsshall be prorated as of the Closing Date, with Seller liable to the extent suchitems relate to any time period through the Closing Date, and Buyer liable tothe extent such items relate to periods subsequent to the Closing Date:

 

(i)                                     personalproperty, real estate, occupancy and any other Taxes, assessments and othercharges, if any, on or with respect to the business and operation of thePurchased Assets;

 

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(ii)                                  rent,Taxes and other items payable by or to Seller under any of the SellerAgreements to be assigned to and assumed by the Buyer hereunder;

 

(iii)                               any permit, license orregistration fees with respect to any Environmental Permit or other Permit; and

 

(iv)                              sewerrents and charges for water, telephone, electricity and other utilities.

 

(b)                                 Inconnection with such proration, in the event that actual figures are notavailable at the Closing Date, the proration shall be based upon the actualamount of such Taxes or fees for the preceding year (or appropriate period) forwhich actual Taxes or fees are available and such Taxes or fees shall bereprorated upon request of either the Seller or the Buyer made within 60 daysof the date that the actual amounts become available.  Seller and Buyer agree to furnish each other with such documentsand other records as may be reasonably requested in order to confirm alladjustment and proration calculations made pursuant to this Section 3.03.

 

Section 3.04.                             Closing.          Thesale, assignment, conveyance, transfer and delivery of the Purchased Assets,the payment of the Purchase Price, and the consummation of the othertransactions contemplated by this Agreement shall take place at a closing (the“Closing”), to be held at the offices of Cinergy Corp., 139 East Fourth Street,Cincinnati Ohio 45201 at 10:00 a.m. eastern standard time (or another mutuallyacceptable time and location), on the date of execution and delivery of thisAgreement by each of the Parties (or on such other date as may be mutuallyagreed upon by the Parties) (the “Closing Date”)  The Closing shall be effective for all purposes as of the closeof business on the Closing Date.

 

Section 3.05.                             ClosingDeliveries.                                            (a)                                  Atthe Closing, Parent will deliver, or cause to be delivered, to Buyer:

 

(i)                                     theDeed, duly executed and acknowledged by Seller and in recordable form;

 

(ii)                                  theBill of Sale, duly executed by Seller;

 

(iii)                               copies of all Seller’sRequired Consents obtained by Parent or Seller ;

 

(iv)                              thecertificate of incorporation, certificate of formation or similar formationdocument of each of Parent and Seller, certified as of a date not earlier than15 days prior to the Closing Date, by the office of the Secretary of State ofsuch entity’s organization;

 

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(v)                                 acertificate of good standing with respect to (A) Seller , dated as of a datenot earlier than 20 days prior to the Closing Date, from the office of theSecretary of State of such entity’s organization and from the office ofSecretary of State of each state in which Seller is qualified or licensed to dobusiness as a foreign limited liability company, and (B) Parent, dated as of adate not earlier than 20 days prior to the Closing Date, from the office of theSecretary of State of such entity’s organization;

 

(vi)                              copies,certified on the Closing Date by the Secretary or Assistant Secretary of eachof Parent and Seller of corporate or limited liability company resolutions, asapplicable, authorizing the execution and delivery of this Agreement and eachAncillary Agreement to which Parent or Seller is a party, and the consummationof the transactions contemplated hereby and thereby;

 

(vii)                           a certificate dated the Closing Date of the Secretary orAssistant Secretary of each of Parent and Seller identifying the name and titleand bearing the signatures of the respective officers thereof authorized toexecute and deliver this Agreement and each Ancillary Agreement to which Parentor Seller is a party;

 

(viii)                        a complete copy of theOrganizational Documents as in effect on the Closing Date of each of Parent andSeller, certified by the Secretary or Assistant Secretary of each of Parent andSeller; and

 

(ix)                                suchother documents as Buyer may reasonably request to carry out the purposes ofthis Agreement.

 

(b)                                 Atthe Closing, Buyer will issue to Cinergy Corp. in full satisfaction of thePurchase Price one or more promissory notes, each in substantially the formattached as Exhibit A to the Buyer’s Petition filed with the Indiana UtilityRegulatory Commission in Cause No. 42311 on October 18, 2002.  In addition, Buyer will deliver, or cause tobe delivered, to Seller:

 

(i)                                     theAssumption Agreement, duly executed by Buyer;

 

(ii)                                  copiesof all Buyer’s Required Consents obtained by Buyer;

 

(iii)                               the certificate ofincorporation, certificate of formation or similar formation document of Buyer, certified as of a date not earlier than 20 days prior to the Closing Date, bythe office of the Secretary of State of such entity’s organization;

 

(iv)                              copies,certified on the Closing Date by the Secretary or Assistant Secretary of Buyer,of corporate resolutions authorizing the execution and delivery of thisAgreement and each Ancillary Agreement to which Buyer is a party, and theconsummation of the transactions contemplated hereby and thereby;

 

(v)                                 acertificate dated the Closing Date of the Secretary or Assistant Secretary ofBuyer identifying the name and title and bearing the signatures of the

 

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officers thereof authorized to execute and deliver this Agreement andeach Ancillary Agreement to which Buyer is a party;

 

(vi)                              acomplete copy of the Organizational Documents as in effect on the Closing Dateof Buyer, certified by the Secretary or Assistant Secretary of Buyer; and

 

(vii)                           such other documents asSeller or Parent may reasonably request to carry out the purposes of thisAgreement.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.01.                             Representationsand Warranties of Parent and Seller. Parent and Seller jointly and severally represent and warrant to Buyeras follows:

 

(a)                                  Organization andGood Standing; Qualification.                                    Parent is acorporation duly formed, validly existing and in good standing under the lawsof the State of Indiana.  Seller is alimited liability company duly formed, validly existing and in good standingunder the laws of the State of Delaware. Seller has all requisite power and authority to own, lease or operatethe Purchased Assets and to carry on its business as it is now beingconducted.  Parent has all requisitepower and authority to own the outstanding limited liability company interestsof Seller and to carry on its business with respect to Seller as it is nowbeing conducted.  Seller does not own,directly or indirectly, any capital stock or other equity securities of, orhave any other direct or indirect equity or other ownership interest in, anyother corporation, limited liability company, partnership, entity orbusiness.  Seller is duly qualified orlicensed to do business as a foreign limited liability company and is in goodstanding as a foreign limited liability company in each jurisdiction in whichthe character or location of the properties owned or used by it or the natureof the business conducted by it makes such qualification or license necessary,except for jurisdictions in which the failure to be so qualified, licensed orin good standing would not, individually or in the aggregate, reasonably beexpected to have a Material Adverse Effect.

 

(b)                                 Authority andEnforceability.                                    Each of Parent andSeller has full corporate or limited liability company (as applicable)power and authority to execute and deliver, and carry out its obligationsunder, this Agreement and each Ancillary Agreement to which it is a party andto consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance byParent and Seller of this Agreement and each Ancillary Agreement to which it isa party, and the consummation of the transactions contemplated hereby andthereby, have been duly and validly authorized by all necessary corporate orlimited liability company (as applicable) action on the part of Parent andSeller .  Assuming the dueauthorization, execution and delivery of this Agreement and each AncillaryAgreement to which it is a party by Buyer, and

 

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subject to the receipt of Seller’s Required Consents, each of thisAgreement and each such Ancillary Agreement constitutes a legal, valid andbinding obligation of Parent and/or Seller, as the case may be, enforceableagainst Parent and/or Seller in accordance with its terms, except as suchenforceability may be limited by applicable bankruptcy, insolvency and othersimilar laws affecting the rights and remedies of creditors generally and bygeneral principles of equity.

 

(c)                                  No Violation;Consents and Approvals.                             (i)                                     Subjectto obtaining Seller’s Required Consents, neither the execution, delivery andperformance by Parent and Seller of this Agreement and each Ancillary Agreementto which Parent or Seller is a party, nor the consummation by Parent and Sellerof the transactions contemplated hereby and thereby, will (A) conflict with orresult in any breach of any provision of the Organizational Documents of Parentor Seller; (B) result in a default (or give rise to any right of termination,cancellation or acceleration), or require a consent, under any of the terms,conditions or provisions of any note, bond, mortgage, indenture, materialagreement or other instrument or obligation to which Parent or Seller is aparty or by which it or any of the Purchased Assets may be bound, except forany such defaults or consents (or rights of termination, cancellation oracceleration) as to which requisite waivers or consents have been obtained orwhich would not, individually or in the aggregate, reasonably be expected tohave a Material Adverse Effect; or (C) constitute a violation of any law,regulation, order, judgment or decree applicable to Parent or Seller, exceptfor any such violations as would not, individually or in the aggregate,reasonably be expected to have a Material Adverse Effect.

 

(ii)                                  Exceptas set forth in Section I of Schedule 4.01(c)(ii) (listing each of Seller’sRequired Governmental Consents) or Section II thereof (listing each of Seller’sRequired Third-Party Consents), no consent or approval of, filing with, ornotice to, any Governmental Authority or other Person is necessary for theexecution, delivery and performance of this Agreement by Parent or Seller or ofany Ancillary Agreement to which Parent or Seller is a party, or theconsummation by Parent or Seller of the transactions contemplated hereby andthereby, other than such consents, approvals, filings or notices which, if notobtained or made, would not, individually or in the aggregate, reasonably beexpected to have a Material Adverse Effect.

 

(d)                                 Ownership.                                   Parent owns beneficially and of record all the outstanding limitedliability company interests of CinCap VIII, LLC, a Delaware limited liabilitycompany (“CinCap VIII”), free and clear of all Encumbrances.  CinCap VIII owns beneficially and of recordall the outstanding limited liability company interests of Seller, free andclear of all Encumbrances.

 

(e)                                  FinancialStatements; No Material Adverse Effect; No Undisclosed Liabilities.                   (i)                                     Seller has delivered to Buyer a balance sheet of Seller as at December 31,2001, and the related statement of income for the fiscal year then ended,including the notes thereto.  Suchfinancial statements fairly present the financial condition and the results ofoperations of Seller as of the date and for the period referred to in suchfinancial statements, all in accordance with GAAP.

 

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(ii)                                  SinceDecember 31, 2001, there has not been any Material Adverse Effect and, to theKnowledge of Parent and Seller, no event has occurred or circumstance existsthat, individually or in the aggregate, would reasonably be expected to have aMaterial Adverse Effect.

 

(iii)                               Seller has noliabilities or obligations of any nature except for (A) liabilities orobligations reflected in the financial statements referred to in paragraph (i)of this Section 4.01(e), including the notes thereto; (B) liabilities orobligations incurred in the ordinary course of business, whether before orafter the respective dates of the financial statements referred to in paragraph(i) of this Section 4.01(e); and (C) liabilities or obligations which in theaggregate are not material to the Purchased Assets.

 

(f)                                    Insurance.                                        Allmaterial policies of fire, liability, workers’ compensation and other forms ofinsurance owned or held by, or on behalf of, Parent or Seller and insuring thePurchased Assets are in full force and effect, all premiums with respectthereto covering all periods up to and including the date hereof have been paid(other than retroactive premiums which may be payable with respect tocomprehensive general liability and workers’ compensation insurance policies),and no notice of cancellation or termination has been received with respect toany such policy which was not replaced on substantially similar terms prior tothe date of such cancellation.

 

(g)                                 Real Property.                     (i)                                     Schedule4.01(g)(i) sets forth all real property owned, used or occupied by Seller (the“Real Property”), including a description of all land, and all encumbrances,easements or rights of way of record (or, if not of record, of which Seller orParent has Knowledge) granted on or appurtenant to or otherwise affecting suchReal Property, and all plants, buildings, structures or other Improvementslocated thereon.  To the Knowledge ofParent and Seller, encumbrances, easements or rights of way which are not ofrecord, if any, would not have a Material Adverse Effect.  There are now in full force and effect dulyissued certificates of occupancy permitting the Real Property and Improvementslocated thereon to be legally used and occupied as the same are nowconstituted.  To the Knowledge of Parentand Seller, no fact or condition exists which would prohibit or adverselyaffect the ordinary rights of access to and from the Real Property from and tothe existing highways and roads and there is no pending or, to the Knowledge ofParent or Seller, threatened restriction or denial, governmental or otherwise,upon such ingress and egress.  To theKnowledge of Parent and Seller, there is not (i) any claim of adversepossession or prescriptive rights involving any of the Real Property, (ii) anystructure located on any Real Property which encroaches on or over the boundariesof neighboring or adjacent properties or (iii) any structure of any other partywhich encroaches on or over the boundaries of any such Real Property.  To the Knowledge of Parent and Seller, nopublic improvements have been commenced and none are planned which in eithercase may result in special assessments or otherwise would, individually or inthe aggregate, reasonably be expected to have a Material Adverse Effect.

 

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(ii)                                  Thereare no material Real Property leases (the “Real Property Leases”) relating to the Purchased Assets underwhich the Seller is a lessee, lessor or under which Seller has any interest.

 

(h)                                 Conveyanceof Real Property.                                 Nostate, municipal, or other governmental approval regarding the division,platting, or mapping of real estate is required as a prerequisite to theconveyance by Seller to Buyer (or as a prerequisite to the recording of anyconveyance document) of any Real Property pursuant to the terms hereof.

 

(i)                                     Improvements.                 Neither Sellernor any Affiliate thereof has received any written notices from anyGovernmental Authority stating or alleging that any Improvements have not beenconstructed in compliance with applicable Laws.  No written notice has been received by the Seller or anyAffiliate thereof from any Governmental Authority requiring or advising as tothe need for any repair, alteration, restoration or improvement in connectionwith the Purchased Assets.

 

(j)                                     Title;Condition and Sufficiency of Assets.            (i)                                     Subjectto Permitted Encumbrances, Seller is the holder of record title to the RealProperty and has good and valid title to the other Purchased Assets which itpurports to own, free and clear of all Encumbrances.

 

(ii)                                  Thetangible assets (real and personal) at, related to, or used in connection withMadison Station, taken as a whole, (A) are in good operating and usablecondition and repair, free from any defects (except for ordinary wear and tear,in light of their respective ages and historical usages, and except for suchdefects as do not materially interfere with the use thereof in the conduct ofthe normal operation and maintenance of the Purchased Assets taken as a whole)and (B) have been maintained consistent with Good Utility Practice.

 

(iii)                               Except for immaterialomissions, the PurchasedAssets (A) constitute all of the assets, tangible and intangible, of any naturewhatsoever, necessary to operate Seller’s business in the manner presentlyoperated by Seller and (B) include all of the operating assets of Seller.

 

(k)                                  EnvironmentalMatters.                   (i)                                     Selleror its Affiliate, Cinergy Power Generation Services, LLC, adel1 limitedliability company (“GGPS”) holds, and is in compliance with, all permits,certificates, certifications, licenses and other authorizations issued byGovernmental Authorities under Environmental Laws (collectively, “Environmental Permits”) that arerequired for Seller to conduct the business and operations of the PurchasedAssets, and Seller is otherwise in compliance with all applicable EnvironmentalLaws with respect to the business and operations of the Purchased Assets,except for any such failures to hold or comply with required EnvironmentalPermits, or such failures to be in compliance with applicable EnvironmentalLaws, as would not, individually or in the aggregate, reasonably be expected tohave a Material Adverse Effect;

 

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(ii)                                  neitherSeller nor Parent has received any written request for information, or beennotified of any violation, or that it is a potentially responsible party, underCERCLA or any other Environmental Law for contamination or air emissions atMadison Station or the Real Property, except for any such requests or noticesthat would result in liabilities under such laws as would not, individually orin the aggregate, reasonably be expected to have a Material Adverse Effect, andthere are no claims, actions, proceedings or investigations pending or, to theKnowledge of Seller or Parent, threatened against Seller before anyGovernmental Authority or body acting in an adjudicative capacity relating inany way to any Environmental Laws or against Seller or Parent concerningcontamination or air emissions at Madison Station or the Real Property; and

 

(iii)                               there are no outstandingjudgments, decrees or judicial orders relating to the Purchased Assetsregarding compliance with any Environmental Law or to the investigation orcleanup of Hazardous Substances under any Environmental Law relating to thePurchase Assets, except for such outstanding judgments, decrees or judicialorders as would not, individually or in the aggregate, reasonably be expectedto have a Material Adverse Effect.

 

(iv)                              SectionI of Schedule 4.01(k) lists all Environmental Permits.

 

The representations and warranties made in thisSection 4.01(k) are the exclusive representations and warranties of Parent andSeller relating to environmental matters.

 

(l)                                     Condemnation.               There are nopending or, to the Knowledge of Parent or Seller, threatened proceedings orgovernmental actions to condemn or take by power of eminent domain all or anypart of the Purchased Assets.

 

(m)                               Contractsand Leases.                          (i)                                     Schedule4.01(m) lists all written contracts, agreements, licenses (other thanEnvironmental Permits, Permits or Intellectual Property) or personal propertyleases that are material to the business or operations of the Purchased Assets,other than any such agreements, licenses, or personal property leases that areexpected to expire or terminate on or prior to the Closing Date.

 

(ii)                                  Exceptas disclosed in Schedule 4.01(m), each Transferred Contract (A) constitutes alegal, valid and binding obligation of Seller and, to Parent’s and Seller’sKnowledge, constitutes a valid and binding obligation of the other partiesthereto, (B) is in full force and effect and Seller has not delivered orreceived any written notice of termination thereunder, and (C) may betransferred to Buyer pursuant to this Agreement without the consent of theother parties thereto and will continue in full force and effect thereafter, ineach case without breaching the terms thereof or resulting in the forfeiture orimpairment of any rights thereunder.

 

(iii)                               Except as set forth inSchedule 4.01(m), there is not under any Transferred Contract any default orevent which, with notice or lapse of time or both, (A) would constitute adefault by Seller or, to Parent’s or Seller’s Knowledge, any other party

 

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thereto, (B) would constitute a default by Seller or, to Parent’s orSeller’s Knowledge, any other party thereto which would give rise to anautomatic termination, or the right of discretionary termination, thereof, or(C) would cause the acceleration of any of Seller’s obligations thereunder orresult in the creation of any Encumbrance (other than any PermittedEncumbrance) on any of the Purchased Assets. There are no claims, actions, proceedings or investigations pending or,to the Knowledge of Seller or Parent, threatened against Seller or any other partyto any Transferred Contract before any Governmental Authority or body acting inan adjudicative capacity relating in any way to any Transferred Contract or thesubject matter thereof.  Seller andParent have no Knowledge of any defense, offset or counterclaim arising underany Transferred Contract.

 

(n)                                 LegalProceedings.                                           Thereare no actions or proceedings pending or, to the Knowledge of Seller or Parent,threatened against Seller before any court, arbitrator or GovernmentalAuthority, which, individually or in the aggregate, would reasonably beexpected to have a Material Adverse Effect. Seller is not subject to any outstanding judgments, rules, orders,writs, injunctions or decrees of any court, arbitrator or GovernmentalAuthority which, individually or in the aggregate, would reasonably be expectedto have a Material Adverse Effect.

 

(o)                                 Permits.     (i)                            Sellerhas all permits, licenses, franchises-and other governmental authorizations,consents and approvals (other than Environmental Permits, which are addressedin Section 4.01(k)) (collectively, “Permits”) necessary to own and operate thePurchased Assets, except where any failures to have such Permits would not,individually or in the aggregate, reasonably be expected to have a MaterialAdverse Effect.  Neither Seller norParent has received any written notification that Seller is in violation, nordoes Parent or Seller have Knowledge of any violations, of any such Permits, orany Law or judgment of any Government Authority applicable to Seller withrespect to the Purchased Assets, except for violations that would not,individually or in the aggregate, reasonably be expected to have a MaterialAdverse Effect.

 

(ii)                                  Schedule4.01(o) lists all material Permits.

 

(p)                                 Taxes.              Seller has-filed allTax Returns that are required to be filed by it with respect to any Tax, andSeller has paid all Taxes that have become due as indicated thereon, exceptwhere such Tax is being contested in good faith by appropriate proceedings, orwhere any failures to so file or pay would not, individually or in theaggregate, reasonably be expected to have a Material Adverse Effect.  There are no Encumbrances for Taxes on thePurchased Assets that are not Permitted Encumbrances.

 

(q)                                 IntellectualProperty.                                 Sellerhas such ownership of or such rights by license or other agreement to use allIntellectual Property necessary to permit Seller to conduct its business ascurrently conducted, except where any failures to have such ownership, licenseor right to use would not, individually or in the aggregate, reasonably beexpected to have a Material Adverse Effect. Seller is not, nor has Parent or Seller received any notice that Selleris, in default (or with the giving of notice or lapse of time

 

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or both, would be in default) under any contract to use suchIntellectual Property, and there are no material restrictions on the transferof any material contract, or any interest therein, held by Seller in respect ofsuch Intellectual Property.  NeitherParent nor Seller has received notice that Seller is infringing anyIntellectual Property of any other Person in connection with the operation orbusiness of the Purchased Assets.

 

(r)                                    Compliancewith Laws.                      Selleris in compliance with all applicable Laws with respect to the ownership oroperation of the Purchased Assets, except where any such failures to be incompliance would not, individually or in the aggregate, reasonably be expectedto have a Material Adverse Effect.

 

(s)                                  EWGStatus.                            Selleris an “exempt wholesale generator” and Madison Station is an “eligiblefacility,” each within the meaning of Section 32(a) of the Public UtilityHolding Company Act of 1935.

 

(t)                                    Employees.                                   Sellerhas no employees or employee benefit plans nor has had any employees oremployee benefit plans since the date of its formation.  Seller has not assumed (voluntarily or byoperation of Law or order) or incurred any liabilities associated withemployees or employee benefit plans, including without limitation under orpursuant to the Employee Retirement Income Security Act of 1974, as amended.

 

(u)                                 Limitation ofRepresentations and Warranties.                                           EXCEPTFOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT AND IN ANYANCILLARY AGREEMENT, PARENT AND SELLER ARE NOT MAKING, AND HEREBY DISCLAIM, ANYOTHER REPRESENTATIONS AND WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS ORIMPLIED, CONCERNING SELLER, PARENT, MADISON STATION OR THE PURCHASED ASSETS ORANY PART THEREOF.

 

Section 4.02.                             Representationsand Warranties of Buyer.  Buyerrepresents and warrants to Seller and Parent as follows:

 

(a)                                  Organizationand Good Standing.               Buyeris a corporation duly formed, validly existing and in good standing under thelaws of the State of Indiana and has all requisite power and authority to own,lease or operate its properties and to carry on its business as it is now beingconducted.

 

(b)                                 Authority andEnforceability.                                    Buyerhas full corporate power and authority to execute and deliver and carry out itsobligations under this Agreement and each Ancillary Agreement to which it is aparty, and to consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance byBuyer of this Agreement and each such Ancillary Agreement, and the consummationof the transactions contemplated hereby and thereby, have been duly and validlyauthorized by all necessary corporate action by Buyer.  Assuming the due authorization, executionand delivery of this Agreement and each such Ancillary Agreement by the otherparty or

 

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parties thereto, and subject to the receipt of Buyer’s RequiredConsents, each of this Agreement and each such Ancillary Agreement constitutesa legal, valid and binding obligation of Buyer , enforceable against Buyer inaccordance with its terms, except as such enforceability may be limited byapplicable bankruptcy, insolvency and other similar laws affecting the rightsand remedies of creditors generally and by general principles of equity.

 

(c)                                  NoViolation; Consents and Approvals.                             (i)                                     Subjectto obtaining Buyer’s Required Consents, neither the execution, delivery andperformance by Buyer of this Agreement and each Ancillary Agreement to whichBuyer is a party, nor the consummation by Buyer of the transactionscontemplated hereby and thereby, will (A) conflict with or result in any breachof any provision of the Organizational Documents of Buyer; (B) result in adefault (or give rise to any right of termination, cancellation or acceleration),or require a consent, under any of the terms, conditions or provisions of anynote, bond, mortgage, indenture, material agreement or other instrument orobligation to which Buyer is a party or by which any of their respectivematerial properties or assets may be bound, except for any such defaults orconsents (or rights of termination, cancellation or acceleration) as to whichrequisite waivers or consents have been obtained or which would not,individually or in the aggregate, reasonably be expected to have a materialadverse effect on the ability of Buyer to perform its obligations under thisAgreement and the Ancillary Agreements; or (iii) constitute a violation of anylaw, regulation, order, judgment or decree applicable to Buyer, except for anysuch violations as would not, individually or in the aggregate, reasonably beexpected to have a material adverse effect on the ability of Buyer to performits obligations under this Agreement and the Ancillary Agreements.

 

(ii)                                  Exceptas set forth in Section I of Schedule 4.02(c)(ii) (listing each of Buyer’sRequired Governmental Consents) or Section II thereof (listing each of Buyer’sRequired Third-Party Consents), no consent or approval of, filing with, ornotice to, any Governmental Authority or other Person is necessary for theexecution and delivery of this Agreement or any Ancillary Agreement by Buyer,or the consummation by Buyer or Company of the transactions contemplated herebyand thereby, except for any such consents, approvals, filings or notices which,if not obtained or made, would not, individually or in the aggregate,reasonably be expected to have a material adverse effect on the ability ofBuyer to perform its obligations under this Agreement and the AncillaryAgreements.

 

(d)                                 LegalProceedings.                                           Thereare no actions or proceedings pending or, to the Knowledge of Buyer, threatenedagainst Buyer before any court, arbitrator or Governmental Authority, which,individually or in the aggregate, would reasonably be expected to have amaterial adverse effect on the ability of Buyer to perform its obligationsunder this Agreement and the Ancillary Agreements.  Buyer is not subject to any outstanding judgments, rules, orders,writs, injunctions or decrees of any court, arbitrator or GovernmentalAuthority which, individually or in the aggregate, would reasonably be expectedto have a material adverse effect on the ability of Buyer to perform itsobligations under this Agreement and the Ancillary Agreements.

 

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(e)                                  Availabilityof Funds.                            Buyerhas or will have liquid capital or committed sources therefor sufficient topermit Buyer to perform in full when due all of its obligations under thisAgreement and any Ancillary Agreement to which it is a party.

 

ARTICLE V

 

COVENANTS

 

Section 5.01.                             Booksand Records.                                     Fora period of 7 years after the Closing Date (or such other date as the Partiesmay mutually determine), each Party and its Representatives shall havereasonable access to all books and records of the Purchased Assets , to theextent that such access may reasonably be required by such Party in connectionwith the Assumed Liabilities or the Excluded Liabilities, or other mattersaffected by the operation of the Purchased Assets.  Such access shall be afforded by the Party in possession of anysuch books and records upon receipt of reasonable advance notice and duringnormal business hours.  The Partyexercising this right of access shall be solely responsible for any costs orexpenses incurred by it or the other Party with respect to such access pursuantto this Section 5.01.  If the Party inpossession of such books and records desires to dispose of any such books andrecords upon or prior to the expiration of such seven-year period, such Partyshall, prior to such disposition, give the other Party a reasonableopportunity, at such other Party’s expense, to segregate and remove such booksand records as such other Party may select.

 

Section 5.02.                             Finder’sFees.                     Seller andParent, on the one hand, and Buyer, on the other hand, represent and warrant tothe other that no broker, finder or other Person is entitled to any brokeragefees, commissions or finder’s fees in connection with the transactionscontemplated hereby by reason of any action taken by the Party making suchrepresentation.  Seller and Parent, onthe one hand, and Buyer, on the other hand, will pay to the other or otherwisedischarge, and will indemnify and hold the other harmless from and against, anyand all claims or liabilities for all brokerage fees, commissions and finder’sfees incurred by reason of any action taken by the indemnifying party.

 

Section 5.03.                             TaxMatters.                             Alltransfer, use, stamp, sales and similar Taxes incurred in connection with thisAgreement and the transactions contemplated hereby shall be the soleresponsibility of Seller and, to the extent paid by Buyer, Seller shallpromptly reimburse Buyer upon request.

 

Section 5.04.                             FurtherAssurances.                                   (a)                                  Subjectto the terms and conditions of this Agreement, each of Seller and Parent, onthe one hand, and Buyer, on the other hand, shall use commercially reasonableefforts to take, or cause to be taken, all actions, and to do, or cause to bedone, all things necessary, proper or advisable under applicable Laws toconsummate and make effective the transfer of the Purchased Assets pursuant tothis Agreement and the assumption of the Assumed Liabilities, including using

 

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commercially reasonable efforts with a view to obtaining all necessaryconsents, approvals and authorizations of, and making all required notices orfilings with, third parties required to be obtained or made in order toconsummate the transactions hereunder, including the transfer of theTransferred Permits to Buyer.  NeitherSeller and Parent, on the one hand, nor Buyer, on the other hand, shall,without prior written consent of the other, take or fail to take any actionwhich might reasonably be expected to prevent or materially impede, interferewith or delay the transactions contemplated by this Agreement.

 

(b)                                 Inthe event that any portion of the Purchased Assets shall not have been conveyedto Buyer at the Closing, Seller shall, subject to paragraphs (c) and (d)immediately below, convey such asset to Buyer as promptly as practicable afterthe Closing.

 

(c)                                  Tothe extent, if any, that Seller’s rights under any Transferred Contract may notbe assigned without the consent of any other party thereto, which consent hasnot been obtained by the Closing Date, this Agreement shall not constitute anagreement to assign the same if an attempted assignment would constitute abreach thereof or be unlawful.  Sellerand Buyer agree that if any consent to an assignment of any Transferred Contracthas not been obtained at the Closing Date, or if any attempted assignment wouldbe ineffective or would impair Buyer’s rights and obligations under theTransferred Contract in question, so that Buyer would not in effect acquire thebenefit of all such rights and obligations, Seller, at its option and to themaximum extent permitted by law and such Transferred Contract, shall, after theClosing Date, (i) appoint Buyer to be Seller’s agent with respect to suchTransferred Contract or (ii) to the maximum extent permitted by law and suchTransferred Contract, enter into such reasonable arrangements with Buyer ortake such other commercially reasonable actions to provide Buyer with the sameor substantially similar rights and obligations of such Transferred Contract.  From and after the Closing Date, Seller,Parent and Buyer shall cooperate and use commercially reasonable efforts toobtain an assignment to Buyer of any such Transferred Contract.

 

(d)                                 Tothe extent that Seller’s rights under any warranty or guaranty described inSection 2.01(f) may not be assigned without the consent of another Person,which consent has not been obtained by the Closing Date, this Agreement shallnot constitute an agreement to assign the same, if an attempted assignmentwould constitute a breach thereof or be unlawful.  The Parties agree that if any consent to an assignment of anysuch warranty or guaranty has not been obtained or if any attempted assignmentwould be ineffective or would impair Buyer’s rights and obligations under thewarranty or guaranty in question, so that Buyer would not in effect acquire thebenefit of all such rights and obligations, Seller shall use commerciallyreasonable efforts to the extent permitted by law and such warranty orguaranty, to enforce such warranty or guaranty for the benefit of Buyer to themaximum extent possible so as to provide Buyer with the benefits andobligations of such warranty or guaranty. Notwithstanding the foregoing, Seller shall not be obligated to bring orfile suit against any third party, provided that if Seller determines not tobring or file suit after being requested by Buyer to do so, Seller shallassign, to the

 

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extent permitted by law or any applicable agreement, its rights inrespect of the claims so that Buyer may bring or file such suit.

 

ARTICLE VI

 

INDEMNIFICATION

 

Section 6.01.                             Survival.                                                 (a)                                  Therepresentations and warranties of the Parties contained herein shall survivethe Closing for a period of one year and thereafter shall be of no further forceand effect, except that (i) the representations and warranties set forth inSection 4.01(k) shall survive the Closing for a period of three years, (ii) therepresentations and warranties set forth in Section 4.01(p) shall survive theClosing for the period of the applicable statute of limitations, (iii) therepresentations and warranties set forth in Section 4.01(a), (b) and (c) andSection 4.02(a), (b) and (c) shall survive indefinitely, and (iv) anyrepresentation or warranty as to which a claim has been asserted during thesurvival period shall continue in effect with respect to such claim until suchclaim has been finally resolved or settled.

 

(b)                                 Thecovenants and agreements of the Parties contained in this Agreement shallsurvive the Closing in accordance with their respective terms.

 

Section 6.02.                             Indemnification.          (a)                                  From andafter the Closing, Buyer shall indemnify, defend and hold harmless Seller andParent and their Representatives (each, a “Seller Indemnitee”) from and against any and all claims, demands,suits, losses, liabilities, penalties, damages, obligations, payments, costsand expenses (including, without limitation, the costs and expenses of any andall actions, suits, proceedings, assessments, judgments, settlements andcompromises relating thereto and reasonable attorneys’ fees and reasonabledisbursements in connection therewith) (each, an “Indemnifiable Loss”) asserted against or suffered by any SellerIndemnitee relating to, resulting from or arising out of (i) any breach byBuyer of any representation, warranty, covenant or agreement of Buyer containedin this Agreement or the Ancillary Agreements, or (ii) the Assumed Liabilities.

 

(b)                                 Fromand after the Closing, Parent and Seller shall indemnify, defend and holdharmless Buyer and its Representatives (each, a “Buyer Indemnitee”) from and against any and all IndemnifiableLosses asserted against or suffered by any Buyer Indemnitee relating to,resulting from or arising out of (i) any breach by Parent or Seller of any oftheir representations, warranties, covenants or agreements contained in thisAgreement or the Ancillary Agreements, (ii) the Excluded Liabilities, or (iii)noncompliance with any bulk sales or transfer laws as provided in Section 7.06.

 

(c)                                  Theamount of any Indemnifiable Loss shall be reduced (i) to the extent that anyPerson entitled to receive indemnification under this Agreement (an “Idemnitee”) receives any insuranceproceeds with respect to such Indemnifiable Loss,

 

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and (ii) to take into account any net Tax benefit realized by theIndemnitee arising from the recognition of such Indemnifiable Loss (but only tothe extent that the Parties, following good faith negotiations for a period of30 days, jointly agree that such Tax benefit would be realized by theIndemnitee).

 

(d)                                 Theexpiration or termination of any covenant, agreement, representation orwarranty shall not affect the Parties’ obligations under this Section 6.02 ifthe Indemnitee provided the Person required to provide indemnification underthis Agreement (the “Indemnifying Party”) with proper notice of the claim orevent for which indemnification is sought prior to such expiration, terminationor extinguishment.

 

(e)                                  Therights and remedies of the Parties under this Article VI are exclusive and inlieu of any and all other rights and remedies which the Parties may have underthis Agreement or otherwise for declaratory, injunctive or monetary relief withrespect to any breach of or failure to perform any representation, warranty,covenant or agreement set forth in this Agreement, after the occurrence of theClosing.

 

(f)                                    EachParty waives any provision of law to the extent that it would limit or restrictthe agreements contained in this Section 6.02. Notwithstanding any provisions in this Agreement to the contrary, eachParty retains its remedies at law or in equity with respect to willful, knowingor intentional misrepresentations or breaches of this Agreement.

 

(g)                                 Notwithstandinganything to the contrary herein, no Party (including an Indemnitee) shall beentitled to recover from any other Party (including an Indemnifying Party) forany liabilities, damages, obligations, payments, losses, costs, or expensesunder this Agreement or any amount in excess of the actual compensatorydamages, court costs and reasonable attorney’s fees suffered by suchparty.  The Parties waive any right torecover punitive, special, exemplary and consequential damages arising inconnection with or with respect to this Agreement.  The provisions of this Section 6.02(g) shall not apply toindemnification for a Third Party Claim.

 

(h)                                 AnIndemnitee shall use commercially reasonable efforts to mitigate allIndemnifiable Losses, including availing itself of any defenses, limitations,rights of contribution, claims against third parties and other rights at law orequity.  Commercially reasonable effortsshall include the reasonable expenditure of money to mitigate or otherwisereduce or eliminate any losses or expenses for which indemnification wouldotherwise be due hereunder, and, in addition to its other obligationshereunder, the Indemnifying Party shall reimburse the Indemnitee for theIndemnitee’s reasonable expenditures in undertaking such mitigation.

 

(i)                                     Therights and obligations of indemnification under this Section 6.02 shall not belimited or subject to set-off based on any violation or alleged violation ofany obligation under this Agreement or otherwise, including but not limited tobreach or alleged breach by the Indemnitee of any representation, warranty,covenant or agreement contained in this Agreement.

 

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Section 6.03.                             Procedure forIndemnification.                               (a)                                  If any Indemniteereceives notice of the assertion of any claim or of the commencement of anyclaim, action, or proceeding made or brought by any Person who is not a partyto this Agreement or any Affiliate of a Party to this Agreement (a “Third Party Claim”) with respect towhich indemnification is to be sought from an Indemnifying Party, theIndemnitee shall give such Indemnifying Party reasonably prompt written noticethereof, but in any event such notice shall not be given later than 20 daysafter the Indemnitee’s receipt of notice of such Third Party Claim.  Such notice shall describe the nature of theThird Party Claim in reasonable detail and shall indicate the estimated amount,if practicable, of the Indemnifiable Loss that has been or may be sustained bythe Indemnitee.  The Indemnifying Partywill have the right to participate in or, by giving written notice to theIndemnitee, to elect to assume the defense of any Third Party Claim at suchIndemnifying Party’s expense and by such Indemnifying Party’s own counsel,provided that the counsel for the Indemnifying Party who shall conduct thedefense of such Third Party Claim shall be reasonably satisfactory to theIndemnitee.  The Indemnitee shallcooperate in good faith in such defense at such Indemnitee’s own expense.  If an Indemnifying Party elects not toassume the defense of any Third Party Claim, the Indemnitee may compromise orsettle such Third Party Claim over the objection of the Indemnifying Party,which settlement or compromise shall conclusively establish the IndemnifyingParty’s liability pursuant to this Agreement.

 

(b)                                 If,within 20 days after an Indemnitee provides written notice to the IndemnifyingParty of any Third Party Claims, the Indemnitee receives written notice fromthe Indemnifying Party that such Indemnifying Party has elected to assume thedefense of such Third Party Claim as provided in Section 6.03(a), theIndemnifying Party will not be liable for any legal expenses subsequentlyincurred by the Indemnitee in connection with the defense thereof; provided,however, that if the Indemnifying Party shall fail to take reasonable stepsnecessary to defend diligently such Third Party Claim within 20 days afterreceiving notice from the Indemnitee that the Indemnitee believes theIndemnifying Party has failed to take such steps, the Indemnitee may assume itsown defense and the Indemnifying Party shall be liable for all reasonableexpenses thereof.  Without the priorwritten consent of the Indemnitee, the Indemnifying Party shall not enter intoany settlement of any Third Party Claim which would lead to liability or createany financial or other obligation on the part of the Indemnitee for which theIndemnitee is not entitled to indemnification hereunder.  If a firm offer is made to settle a ThirdParty Claim without leading to liability or the creation of a financial orother obligation on the part of the Indemnitee for which the Indemnitee is notentitled to indemnification hereunder and the Indemnifying Party desires toaccept and agree to such offer, the Indemnifying Party shall give writtennotice to the Indemnitee to that effect. If the Indemnitee fails to consent to such firm offer within 10 daysafter its receipt of such notice, the Indemnifying Party shall be relieved ofits obligations to defend such Third Party Claim and the Indemnitee may contestor defend such Third Party Claim.  Insuch event, the maximum liability of the Indemnifying Party as to such ThirdParty Claim will

 

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be the amount of such settlement offer plus reasonable costs or expensespaid or incurred by Indemnitee up to the date of said notice.

 

(c)                                  Anyclaim by an Indemnitee on account of an Indemnifiable Loss which does notresult from a Third Party Claim (a “DirectClaim”) shall be asserted by giving the Indemnifying Party reasonablyprompt written notice thereof, stating the nature of such claim in reasonabledetail and indicating the estimated amount, if practicable, but in any eventsuch notice shall not be given later than 30 days after the Indemnitee becomesaware of such Direct Claim, and the Indemnifying Party shall have a period of30 days within which to respond to such Direct Claim.  If the Indemnifying Party does not respond within such thirty 30day period, the Indemnifying Party shall be deemed to have accepted such claim.  If the Indemnifying Party rejects suchclaim, the Indemnitee will be free to seek enforcement of its right toindemnification under this Agreement.

 

(d)                                 Ifthe amount of any Indemnifiable Loss, at any time subsequent to the making ofan indemnity payment in respect thereof, is reduced by recovery, settlement orotherwise under or pursuant to any insurance coverage, or pursuant to anyclaim, recovery, settlement or payment by, from or against any other entity,the amount of such reduction, less any costs, expenses or premiums incurred inconnection therewith (together with interest thereon from the date of paymentthereof at the Prime Rate) shall promptly be repaid by the Indemnitee to theIndemnifying Party.  Upon making anyindemnity payment, the Indemnifying Party, to the extent of such indemnitypayment, shall be subrogated to all rights of the Indemnitee against any thirdparty in respect of the Indemnifiable Loss to which the indemnity paymentrelates; provided, however, that (i) the Indemnifying Party shall then be incompliance with its obligations under this Agreement in respect of suchIndemnifiable Loss and (ii) until the Indemnitee recovers full payment of itsIndemnifiable Loss, any and all claims of the Indemnifying Party against suchthird party on account of said indemnity payment are hereby made subordinate inright of payment to the Indemnitee’s rights against such third party.  Without limiting the generality or effect ofany other provision hereof, each such Indemnitee and Indemnifying Party shallduly execute upon request all instruments reasonably necessary to evidence andperfect the above-described subrogation and subordination rights, and otherwisecooperate in the prosecution of such claims at the direction of theIndemnifying Party.  Nothing in thisSection 6.03(d) shall require any Party hereto to obtain or maintain anyinsurance coverage.

 

(e)                                  Afailure to give timely notice as provided in this Section 6.03 shall not affectthe rights or obligations of any Party hereunder except if, and only to theextent that, as a result of such failure, the Party which was entitled toreceive such notice was actually and materially prejudiced as a result of suchfailure.

 

ARTICLE VII

 

MISCELLANEOUS PROVISIONS

 

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Section 7.01                                Notices.          Allnotices and other communications hereunder shall be in writing and shallbe deemed given (i) on the day when delivered personally or by e-mail (withconfirmation) or facsimile transmission (with confirmation), (ii) on the nextbusiness day when delivered to a nationally recognized overnight deliveryservice, or (iii) 5 business days after deposited as registered or certifiedmail (return receipt requested), in each case, postage prepaid, addressed to therecipient Party at its address set forth below (or to such other addresses ande-mail and facsimile numbers for a Party as shall be specified by like notice;provided, however, that any notice of a change of address or e-mail or  facsimile number shall be effective onlyupon receipt thereof):

 
|   | If to Seller or Parent, to: |
|--------|-----------------------------|
|   |                        |
|   |                        | Cinergy Capital & Trading, Inc. |
|   |                        | c/o CinCap Madison, LLC |
|   |                        | 139 East Fourth Street |
|   |                        | Cincinnati, OH 45202 |
|   |                        | M. Stephen Harkness |
|   |                        | Vice President, Chief Operating and |
|   |                        | Financial Officer |
|   |                        | Facsimile No.: 513-419-5719 |
|   |                        | e-mail: sharkness@cinergy.com |
|   |                        |
|   | If to Buyer, to:            |
|   |                        |
|   |                        | PSI Energy, Inc. |
|   |                        | 1000 East Main Street |
|   |                        | Plainfield, Indiana   46168 |
|   |                        | Douglas F. Esamann/President |
|   |                        | Facsimile No: 317/838-2987 |
|   |                        | e-mail: desamann@cinergy.com |
|        |                             |  |  |

 

Section 7.02.                             Waiver.          Therights and remedies of the Parties are cumulative and not alternative.  Neither the failure nor any delay by anyParty in exercising any right, power, or privilege under this Agreement or thedocuments referred to in this Agreement will operate as a waiver of such right,power, or privilege, and no single or partial exercise of any such right,power, or privilege will preclude any other or further exercise of such right,power, or privilege or the exercise of any other right, power, orprivilege.  To the maximum extentpermitted by applicable Law, (a) no claim or right arising out of thisAgreement or the documents referred to in this Agreement can be discharged by oneParty, in whole or in part, by a waiver or renunciation of the claim or rightunless in writing signed by each other Party; (b) no waiver that may be givenby a Party will be applicable except in the specific instance for which it isgiven; and (c) no notice to or demand on one Party will be deemed to be awaiver of any obligation of such Party or of the right of the Party giving suchnotice or demand to take further action

 

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without notice or demand as provided in this Agreement or the documentsreferred to in this Agreement.

 

Section 7.03.                             Entire Agreement;Amendment etc.

(a)                                  ThisAgreement and the Ancillary Agreements, including the Schedules, documents,certificates and instruments referred to herein or therein, embody the entireagreement and understanding of the Parties hereto in respect of thetransactions contemplated by this Agreement. There are no restrictions, promises, representations, warranties,covenants or undertakings, other than those expressly set forth or referred toherein or therein.  This Agreementsupersedes all prior agreements and understandings between the Parties, whetherwritten or oral, with respect to the transactions contemplated hereby.

 

(b)                                 ThisAgreement may not be amended, supplemented, terminated or otherwise modifiedexcept by a written agreement executed by Seller, Parent and Buyer.  In addition, any proposed amendment heretois subject to Section 7.13.

 

(c)                                  ThisAgreement shall be binding upon and inure solely to the benefit of each Partyhereto and, other than with respect to Sections 7.12 and 7.13, nothing in thisAgreement, express or implied, is intended to or shall confer upon any otherPerson any right, benefit or remedy of any nature whatsoever under or by reasonof this Agreement.

 

Section 7.04.                             Assignment.                            ThisAgreement and all the of the provisions hereof shall be binding upon and inureto the benefit of the Parties hereto and their respective successors andpermitted assigns, but neither this Agreement nor any of the rights, interestsor obligations hereunder may be assigned by, on the one hand, Seller andParent, and on the other hand, Buyer, in whole or in part (whether by operationof law or otherwise), without the prior written consent of the other Party, andany attempt to make any such assignment without such consent will be null andvoid.  Notwithstanding the foregoing,Seller or Buyer may assign or otherwise transfer its rights hereunder and underany Ancillary Agreement to any bank, financial institution or other lenderproviding financing to Seller or Buyer, as applicable, as collateral securityfor such financing; provided, however, that no such assignment shall (x) impairor materially delay the consummation of the transactions contemplated hereby or(y) relieve or discharge Seller or Buyer, as the case may be, from any of itsobligations hereunder and thereunder.

 

Section 7.05.                             Severability.                              If any termor other provision of this Agreement is invalid, illegal or incapable of beingenforced by any law or public policy, all other terms and provisions of thisAgreement will nevertheless remain in full force and effect so long as theeconomic or legal substance of the transactions contemplated hereby is notaffected in any manner materially adverse to any party hereto.  Upon such determination that any  term or other provision is invalid, illegalor incapable of being enforced, the Parties will negotiate in good faith tomodify this Agreement so as to effect the original intent of the

 

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Parties as closely as possible in an acceptable manner in order thatthe transactions contemplated hereby are consummated as originally contemplatedto the greatest extent possible.

 

Section 7.06.                             Bulk Sales Laws.      Buyerhereby acknowledges that, notwithstanding anything in this Agreement to thecontrary, Seller will not comply with the provisions of the bulk sales laws ofany jurisdiction in connection with the transactions contemplated by thisAgreement; and Buyer hereby irrevocably waives compliance by Seller with theprovisions of the bulk sales laws of all applicable jurisdictions.

 

Section 7.07.                             Governing Law.     ThisAgreement will be governed by and construed in accordance with the laws of theState of Ohio, without giving effect to choice of law principlesthereof.

 

Section 7.08.                             Counterparts;Facsimile Execution.   This Agreement may beexecuted in one or more counterparts, all of which will be considered one andthe same agreement and will become effective when one or more counterparts havebeen signed by each of the Parties and delivered to each other Party, it beingunderstood that the Parties need not sign the same counterpart.  This Agreement may be executed by facsimilesignature(s).

 

Section 7.09.                             Schedules.                                      TheSchedules to this Agreement are intended to be and hereby are specifically madea part of this Agreement

 

Section 7.10                                U.S. Dollars.                              Unlessotherwise stated, all dollar amounts set forth herein are United States (U.S.)dollars.

 

Section 7.11.                             DisputeResolution.                                      (a)                                  Ifa dispute arises between the Parties relating to this Agreement, the Partiesagree to use the following alternative dispute resolution (“ADR”) proceduresprior to any Party pursuing other available remedies:

 

(i)                                     Ameeting shall be held promptly between the Parties, attended by individualswith decision-making authority regarding the dispute, to attempt in good faithto negotiate a resolution of the dispute.

 

(ii)                                  If,within 30 days after such meeting, the Parties have not succeeded innegotiating a resolution of the dispute, they will jointly appoint a mutuallyacceptable neutral person not affiliated with either Party (the “Neutral”) toact as a mediator.  If the Parties areunable to agree on the Neutral within 20 days, they shall seek

 

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assistance in such regard from the CPR Institute for DisputeResolution, Inc. (“CPR”).  The Partiesshall share the fees of the Neutral and all other common fees and expensesequally.

 

(iii)                               The mediation mayproceed in accordance with CPR’s Model Procedure for Mediation of BusinessDisputes, or the Parties may establish their own procedure.

 

(iv)                              TheParties shall pursue mediation in good faith and in a timely manner.  In the event the mediation does not resultin resolution of the dispute within 60 days, then, upon 7 days” written noticeto the other Party, either Party may propose another form of ADR (e.g.,arbitration, a mini-trial, or a summary jury trial) or may pursue otheravailable remedies.

 

(b)                                 AllADR proceedings shall be strictly confidential and used solely for the purposesof settlement.  Any materials preparedby one Party for the ADR proceedings shall not be used as evidence by the otherParty in any subsequent litigation; provided, however, that the underlyingfacts supporting such materials may be subject to discovery.

 

(c)                                  EachParty fully understands its specific obligations under the ADR provisions ofthis Agreement.  Neither Party considerssuch obligations to be vague or in any way unenforceable, and neither Partywill contend to the contrary at any future time or in any future proceeding.

 

Section 7.12.                             Ratemaking.                               Buyershall not seek to overturn, reverse, set aside, change or enjoin, whetherthrough appeal or the initiation or maintenance of any action in any forum, adecision or order of the Indiana Utility Regulatory Commission (“IURC”) whichpertains to recovery, disallowance, deferral or ratemaking treatment of anyexpense, charge, cost or allocation incurred or accrued by Buyer in or as aresult of this Agreement (or any amendment hereto) on the basis that thisAgreement and any such expense, charge, cost or allocation was filed with orapproved by the Securities and Exchange Commission (“SEC”).

 

Section 7.13.                             StateReview.                        In theevent the Parties execute an amendment to this Agreement, the Parties shallfulfill the following obligations, where applicable (it being understood thatnone of such obligations are intended to detract from the authority of the SECunder the Public Utility Holding Company Act of 1935):

 

(a)                                  Priorto filing any amendment with the SEC, the Parties shall file with the IURC andprovide to the Indiana Utility Consumer Counselor (and, provide, upon request,to other appropriate parties) a copy of such amendment.

 

(b)                                 Inthe event that the amendment is finally rejected or disapproved or found to beunreasonable by the IURC prior to filing with the SEC, the amendment shall notbecome effective and the Parties shall not request SEC approval of theamendment.

 

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(c)                                  Inthe event that the amendment is rejected or disapproved or found to beunreasonable by IURC after it has been filed with but before it has beenapproved by the SEC, the amendment shall be terminated and the Parties agree torequest withdrawal of the filing.

 

(d)                                 Notwithstanding“(b)” and “(c)” immediately above, in the event that the amendment is rejected,disapproved or found to be unreasonable by IURC before it has been approved bythe SEC, the Parties shall have the right to request further revisions of theamendment in order to cure or remove the cause of the IURC’s rejection,disapproval or finding of unreasonableness. Upon request by a Party, the other Parties shall agree promptly tonegotiate in good faith to revise the amendment and thereafter to file for anynecessary regulatory authorization of the renegotiated amendment.  If the Parties are unable to reach agreementsatisfactory to each of them and to the IURC after good faith negotiations,then “(b)” or “(c)” immediately above, as applicable, shall apply.

 

(e)                                  Inthe event that the IURC has previously approved the amendment prior to SECapproval, “(f)” immediately below shall not apply.

 

(f)                                    Inthe event that an amendment has become effective and is subsequently rejected,disapproved or found to be unreasonable by IURC, the Parties shall make a goodfaith effort to terminate, amend or modify the amendment in a manner whichremedies the IURC’s adverse findings without adverse impact on any of theParties.  The Parties shall request tomeet with representatives of the IURC and make a good faith attempt to resolveany differences regarding the subject amendment.  If agreement can be reached to terminate the amendment or amendor modify the amendment in a manner satisfactory to the Parties and to therepresentatives of the IURC, then the Parties shall file such amendment withthe appropriate state and federal regulatory agencies, seeking all necessaryregulatory authorizations.  If theParties are unable to reach agreement satisfactory to each of them and to theIURC after good faith negotiations, then they shall be under no furtherobligation to amend the amendment.

 

[REMAINDER OF PAGE LEFTINTENTIONALLY BLANK]

 

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IN WITNESS WHEREOF, each of the Parties has causedthis Asset Purchase Agreement to be executed on its behalf by its respectiveofficer thereunto duly authorized, all as of the day and year first abovewritten.

 
|   | CINERGY CAPITAL & TRADING, INC. |
|--------|-------------------------------------|
|   |                                |
|   |                                |
|   | By:                                 | /s/ M. Stephen Harkness |   |
|   |                                | M. Stephen Harkness |
|   |                                | Vice President, Chief Operations and  Financial Officer |
|   |                                |
|   |                                |
|   | CINCAP MADISON, LLC                 |
|   |                                |
|   |                                |
|   | By:                                 | /s/ M. Stephen Harkness |   |
|   |                                | M. Stephen Harkness |
|   |                                | Vice President, Chief Operating and  Financial Officer |
|   |                                |
|   |                                |
|   | PSI ENERGY, INC.                    |
|   |                                |
|   |                                |
|   | By:                                 | /s/ Douglas F. Esamann |   |
|   |                                | Douglas F. Esamann |
|   |                                | President |
|        |                                     |  |  |  |  |

 

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**SCHEDULE I****:  FORM OF DEED**

 

**CinCap Madison, LLC**, a foreign limited liability company, organizedand existing under the laws of the State of Delaware, and formerly named *Duke EnergyMadison, LLC*(hereinafter referred to as “Grantor”), for valuableconsideration paid, grants, with general warranty covenants, to **PSI Energy,Inc.**, an Indiana corporation, whose tax-mailing address is 1000 EastMain Street, Plainfield, Indiana 46168, Attn: Tax Dept. (hereinafter referredto as “Grantee”), the following REAL PROPERTY:

 

Situate in Section 7, Town 1, Range 4, MadisonTownship, Butler County, Ohio, and being more particularly described as follows:

 

Beginning at a set iron pin in the south line ofSection 7, said point being in the north line of the lands conveyed toCincinnati Gas and Electric Company by Deed Book 1682 Page 485, Butler County,Ohio Recorder’s Office, said point also being North 89° 58’ 54” West, 1176.81feet from the southeast corner of said Section 7; thence continuing along saidsouth line of Section 7 and the north line of the lands of said Cincinnati Gasand Electric Company, North 89° 58’ 54” West, passing concrete monuments at238.53 feet and 941.46 feet, a total distance of 946.46 feet to an existingiron pin, said point being witnessed by a concrete monument lying South 00° 20’25” West, 5.00 feet; thence along the east and north line of the lands conveyedto Philip Morris Companies by Deed Book 6207 Page 1298, Butler County, OhioRecorder’s Office, North 00° 20’ 25” East, 2389.12 feet to an existing iron pinand North 87° 11’ 45” West, passing a concrete monument at 5.00 feet, a totaldistance of 1045.20 feet to an existing stone; thence along the west line ofthe lands conveyed to Dorothy L. Wintersteed by Deed Book 6267 Page 866, ButlerCounty, Ohio Recorder’s’s Office, North 00° 20’ 25” East, passing a set ironpin at 1593.41, a total distance of 1608.42 feet to a point in the centerlineof Kennel Road; thence along said centerline, South 87° 44’ 16” East, 75.04feet to a point; thence leaving said centerline, South 00° 20’ 25” West,passing a set iron pin at 15.01 feet, a total distance of 1534.06 feet to a setiron pin; thence South 87° 11’ 45” East, 1045.20 feet to a set iron pin; thenceSouth 00° 20’ 25” West, 1079.75 feet to a set iron pin; thence South 89° 58’54” East, 871.45 feet to a set iron pin in the west line of the lands conveyedto First National Bank of Southwest Ohio by Deed Book 1722 Page 501, ButlerCounty, Ohio Recorder’s Office; thence along said west line, South 00° 20’ 25”West, 1380.79 feet to a point of beginning.

 

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Containing 36.303 acres of land.

 

Subject to all legal highways, easements andrestrictions of record.

 

Being the same premises conveyed to Grantor in **Deed Book6376, Page 323**, Butler County, Ohio Recorder’s Office.

 

Bearings are based on State Plane Coordinates.

 

The above description is the result of a field surveyperformed by McGill Smith Punshon, Inc. under the direction of Richard D.Nichols, P.S. No. 7929 dated November 25, 1998, the survey of which is recordedin Plat Book Volume 37 at Page 22, Butler County Engineer’s Record of LandSurveys.

 

and all the **Estate, Right, Title and Interest**ofGrantor in and to the REAL PROPERTY; **To Have and To Hold**the same, with all theprivileges and appurtenances thereunto belonging, to Grantee, its successorsand assigns forever.  Grantor does hereby**Covenantand Warrant**that the title so conveyed to Grantee is **Clear, Freeand Unencumbered**, and that it will **Defend** the same against alllawful claims of all persons whomsoever.

 

Grantor also assigns and transfers to Grantee, and itssuccessors and assigns, all right, title and interest which Grantor derivesfrom the following easement or license interests:

 

1.                                       EasementAgreement granted by Miller Brewing Company to Grantor dated November 8,1999 and filed for record on January 12, 2000 as *Instrument No. 200000002350*in **OfficialRecord 6440, Page 1955** in the Office of the Recorder of ButlerCounty, Ohio;

 

2.                                       Grantof Easement granted by The Cincinnati Gas & Electric Company to Grantordated January 10, 2000 and filed for record on January 13, 2000 as *InstrumentNo. 200000002693* in **Official Record 6441, Page 646** in theOffice of the Recorder of Butler County, Ohio; and

 

3.                                       OperatingLicense Agreement granted by The Cincinnati Gas & Electric Company toGrantor dated December 21, 1999, a Memorandum of

 

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said Agreement beingunder date of March 31, 2000 and recorded on April 12, 2000 as *InstrumentNo. 200000019856* in **Official Record 6464, Page 2212** in theOffice of the Recorder of Butler County, Ohio.

 

 

[REMAINDER OF PAGEINTENTIONALLY LEFT BLANK.]

 

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IN WITNESS WHEREOF, CinCapMadison, LLC has caused this instrument to be executed by its duly authorizedofficer, this         day of            ,200 .

 

 
|   | **CinCap Madison, LLC** |
|--------|-------------------------|
|   |                    |
|   |                    |
|   | By                      |   |   |
|   |                    | M.  Stephen Harkness |
|   |                    | Its  Vice President, and Chief  Operating and Financial Officer |

 

STATEOF OHIO, HAMILTON COUNTY, ss:

 

Before me, a Notary Public inand for said State, personally appeared  M.  Stephen Harkness, VicePresident, and Chief Operating and Financial Officer of CinCap Madison, LLC,who acknowledged that he did sign said instrument as such officer on behalf ofsaid limited liability company, and that said instrument is his free act anddeed individually and as such officer, and the free and act and deed of CinCapMadison, LLC.

 

**INTESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial sealthis           day of               ,200  .**

 
|   |                          |   |
|--------|-------------------------------|--------|
|   | Notary Public                 |   |
|   |                          |   |
|   | Printed  Name:                |   |   |
|   |                          |   |
|   | In  and for the State of Ohio |   |
|   |                          |   |
|   | My  Commission Expires:       |   |   |
|        |                               |        |  |  |  |  |

 

This instrument prepared byJanice Walker, Attorney at Law.

 

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**SCHEDULE II:****  FORM OF BILLOF SALE**

 

BILL OF SALE made, executed and delivered as of this     day of          ,200    by CinCap Madison, LLC, a Delaware limited liabilitycompany (“Seller”) to PSI Energy, Inc., an Indiana corporation (“Buyer”).  (Capitalized terms used herein but notdefined herein have the respective meanings assigned in that certain AssetPurchase Agreement of even date herewith (the “Asset Purchase Agreement”) byand among Seller, Buyer and Cinergy Capital & Trading, Inc., an Indianacorporation (“CC&T”).)

 

WHEREAS, Seller, Buyer andCC&T are parties to the Asset Purchase Agreement providing for, among otherthings, the sale and transfer to Buyer of all of Seller’s right, title andinterest in, to and under the real and personal property, tangible andintangible, constituting, or used in connection with the operation of, thatcertain natural gas-fired electric generating station known as the MadisonGenerating Station, located in Madison Township, Butler County, Ohio (as morefully described in the Asset Purchase Agreement), in exchange for theconsideration, and subject to the other terms and conditions, specified in theAsset Purchase Agreement; and

 

WHEREAS, the parties to the Asset Purchase Agreementhaving executed and delivered such agreement contemporaneously herewith, Sellernow desires to carry out the intent and purposes of the Asset PurchaseAgreement by its execution and delivery to Buyer of this instrument, evidencingthe vesting in Buyer (together with such other instruments as Buyer shall haveotherwise received concurrently herewith or may hereafter request, includingthe Deed and certain Assignment and Assumption Agreements) of substantially allof the properties and assets constituting, or used in connection with theoperation of, the Madison Generating Station;

 

NOW, THEREFORE, in considerationof the premises, and for good and valuable consideration paid by Buyer, thereceipt, adequacy and legal sufficiency of which are hereby acknowledged,Seller, intending to be legally bound, hereby agrees as follows:

 

ARTICLE I

SALE AND TRANSFEROF ASSETS

 

Seller hereby irrevocably and unconditionally sells,transfers, assigns, conveys, grants and delivers to Buyer, effective as of theexecution and delivery hereof, free and clear of all Encumbrances (other thanPermitted Encumbrances), all of Seller’s right, title and interest in and tothe following (collectively, the “Purchased Assets”):

 

(a)                                  the machinery, fixtures, equipment(including communications equipment), vehicles, furniture and other personalproperty located on the Real Property, including the items of tangible personalproperty listed on Schedule 2.01(b) of the Asset Purchase Agreement;

 

(b)                                 all Inventories;

 

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(c)                                  subject to the receipt of anynecessary consents and approvals, the contracts or agreements (including anylicenses or real or personal property leases, other than any thereofconstituting Transferred Permits or Transferred Intellectual Property) listedon Schedule 2.01(d) of the Asset Purchase Agreement;

 

(d)                                 subject to the receipt of anynecessary consents and approvals, the permits, licenses, certificates,certifications, orders and other governmental authorizations listed on Schedule2.01(e) of the Asset Purchase Agreement;

 

(e)                                  allunexpired, transferable warranties and guarantees from manufacturers, vendorsand other third parties with respect to any item of real or tangible personalproperty referred to in the preceding clauses (a) and (b);

 

(f)                                    allbooks, expired purchase orders, operating records, operating, safety andmaintenance manuals, engineering design plans, blueprints and as-built plans,specifications, procedures, studies, reports, equipment repair, safety,maintenance or service records, and similar items (subject to the right ofSeller to retain copies of same for its use), other than such items that areproprietary to third parties and accounting records (to the extent that any ofthe foregoing is contained in an electronic format, Seller shall cooperate withBuyer to transfer such items to Buyer in a format that is reasonably acceptableto Buyer);

 

(g)                                 subject to the receipt of anynecessary consents and approvals, any intellectual property; and .

 

(h)                                 allother assets and properties used in connection with the Madison GeneratingStation.

 

ARTICLE II

FURTHER ACTIONS

 

Seller covenants and agrees to warrant and defend the sale, transfer,assignment, conveyance, grant and delivery of the Purchased Assets hereby madeagainst all persons whomsoever, to take all steps reasonably necessary toestablish the record of Buyer’s title to the Purchased Assets and, at therequest of Buyer, to execute and deliver such further instruments of transferand assignment and take such other actions as Buyer may reasonably request tomore effectively transfer and assign to and vest in Buyer each of the PurchasedAssets, all at the sole cost and expense of Seller.

 

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ARTICLE III

POWER OF ATTORNEY

 

Without limitingArticle 2 hereof, Seller hereby constitutes and appoints Buyer the true andlawful agent and attorney in fact of Seller, with full power of substitutionand resubstitution, in whole or in part, in the name and stead of Seller but onbehalf and for the benefit of Buyer and its successors and assigns, from timeto time:

 

(a)                                  to demand, receive and collect anyand all of the Purchased Assets and to give receipts and releases for and withrespect to the same, or any part thereof;

 

(b)                                 to institute and prosecute, in thename of Seller or otherwise, any and all proceedings at law, in equity orotherwise, that Buyer or its successors and assigns may deem proper in order tocollect or reduce to possession any of the Assets and in order to collect orenforce any claim or right of any kind hereby assigned or transferred, orintended so to be; and

 

(c)                                  to do all things legallypermissible, required or reasonably deemed by Buyer to be required to recoverand collect the Assets and to use Seller’s name in such manner as Buyer mayreasonably deem necessary for the collection and recovery of same,

 

Seller hereby declaring that theforegoing powers are coupled with an interest and are and shall be irrevocableby Seller.

 

ARTICLE IV

TERMS OF ASSETPURCHASE AGREEMENT

 

The terms of the Asset Purchase Agreement, including but notlimited to Seller’s representations, warranties, covenants, agreements andindemnities relating to the Purchased Assets, are incorporated herein by thisreference.  Seller acknowledges andagrees that the representations, warranties, covenants, agreements and indemnitiescontained in the Asset Purchase Agreement shall not be superseded hereby butshall remain in full force and effect to the full extent provided therein.  In the event of any conflict orinconsistency between the terms of the Asset Purchase Agreement and the termshereof, the terms of the Asset Purchase Agreement shall govern.

 

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IN WITNESS WHEREOF, Seller has caused this Bill ofSale to be duly signed on its behalf as of the date first above written.

 
|   | CINCAP  MADISON, LLC |
|--------|----------------------|
|   |                 |
|   |                 |
|   | By:                  |   |   |
|   |                 | Name:  Michael J. Cyrus |
|   |                 | Title:  President |

 

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**SCHEDULE III:****  FORM OFASSUMPTION AGREEMENT**

 

ASSUMPTION AGREEMENT made and effective as of          , 200  by PSI Energy, Inc., an Indiana corporation (“Buyer”), in favor of CinCapMadison, LLC, a Delaware limited liability company (“Seller”).  (Capitalizedterms used herein but not defined herein have the respective meanings assignedin that certain Asset Purchase Agreement of even date herewith (the “AssetPurchase Agreement”) by and among Buyer, Seller and Cinergy Capital &Trading, Inc., an Indiana corporation (“Parent”).)

 

WHEREAS, pursuant to the Asset Purchase Agreement, andby means of various agreements and instruments executed and delivered in connectiontherewith (including without limitation the Deed, Bill of Sale and certainassignment and assumption agreements), concurrently with the execution anddelivery hereof, Seller is selling and conveying to Buyer, and Buyer ispurchasing from Seller, for the consideration and upon the terms and conditionsset forth in the Asset Purchase Agreement, all of Seller’s right, title andinterest in and to the assets (tangible and intangible) comprising, or used inconnection with, the Madison Generating Station (the “Purchased Assets”); and

 

WHEREAS, the Asset Purchase Agreement contemplates inSection 2.03 thereof that, on the Closing Date, in consideration of theforegoing, Buyer shall also execute this instrument in favor of Seller,agreeing to assume various liabilities and obligations of Seller relating tothe Purchased Assets, as more specifically set forth below;

 

NOW, THEREFORE, in considerationof the premises and the transactions contemplated by the Asset PurchaseAgreement, including without limitation the execution and deliverysimultaneously herewith of the Bill of Sale and the Deed, Buyer, intending tobe legally bound, hereby agrees as follows:

 

ARTICLE I

ASSUMPTION OFASSUMED LIABILITIES

 

Section 1.1                                      Assumption ofAssumed Liabilities.  Effective uponthe execution and delivery hereof, Buyer hereby assumes and agrees to pay,perform and discharge, without recourse to Seller or Parent, the followingLiabilities of Seller (excluding, however, for the avoidance of doubt, for allpurposes whatsoever any Excluded Liabilities), solely to the extent suchLiabilities accrue or arise from and after the Closing, in each case inaccordance with the respective terms and subject to the respective conditionsthereof (collectively, the “Assumed Liabilities”):

 

(a)                                  AllLiabilities of Seller under the Transferred Contracts, Transferred Permits andTransferred Intellectual Property, in each case in accordance with the termsthereof, except to the extent that such Liabilities, but for a breach ordefault by Seller, would have been paid, performed or otherwise discharged onor prior to the Closing Date or to the extent the same arise out of any suchbreach or default or out of any event which after the giving of notice wouldconstitute a default by Seller;

 

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(b)                                 allLiabilities with respect to Madison Station arising under or relating toEnvironmental Laws or relating to any claim in respect of EnvironmentalConditions or Hazardous Substances, including settlements, judgments, costs andexpenses, including reasonable attorneys fees, whether based on common law orEnvironmental Laws, but in each case solely to the extent accruing or arisingfrom and after the Closing Date, with respect to (i) any violation or allegedviolation of Environmental Laws with respect to the ownership, lease,maintenance or operation of any of the Purchased Assets, including any fines orpenalties that arise in connection with the ownership, lease, maintenance oroperation of the Purchased Assets, and the costs associated with correcting anysuch violations; (ii) loss of life, injury to persons or property or damage tonatural resources caused (or allegedly caused) by any Environmental Conditionor the presence or Release of Hazardous Substances at, on, in, under, adjacentto or migrating from the Purchased Assets, including any EnvironmentalCondition or Hazardous Substances contained in building materials at oradjacent to the Purchased Assets or in the soil, surface water, sediments,groundwater, landfill cells, or in other environmental media at or near thePurchased Assets; (iii) any Remediation of any Environmental Condition orHazardous Substances that are present or have been Released at, on, in, under,adjacent to or migrating from, the Purchased Assets or in the soil, surfacewater, sediments, groundwater, landfill cells or in other environmental mediaat or adjacent to the Purchased Assets; (iv) any bodily injury, loss of life,property damage, or natural resource damage arising from the storage,transportation, treatment, disposal, discharge, recycling or Release, at anyOff-Site Location, or arising from the arrangement for such activities, ofHazardous Substances generated in connection with the ownership, lease,maintenance or operation of the Purchased Assets; (v) any Remediation of anyEnvironmental Condition or Release of Hazardous Substances arising from thestorage, transportation, treatment, disposal, discharge, recycling or Release,at any Off-Site Location, or arising from the arrangement for such activities,of Hazardous Substances generated in connection with the ownership, lease,maintenance or operation of the Purchased Assets; and (vi) any obligation torepower, replace, decommission, deactivate, dismantle, demolish or close thePurchased Assets or any  portionthereof, or any surface impoundments or other waste or effluent handling orstorage units on owned or leased adjacent properties used in connection withthe operation of the Purchased Assets;

 

(c)                                  allliabilities or obligations to third parties for personal injury or tort, orsimilar causes of action arising solely out of the ownership, lease,maintenance or operation of the Purchased Assets, but in each case solely tothe extent accruing or arising from and after the Closing Date; and

 

(d)                                 anyTax that may be imposed by any federal, state or local government on theownership, sale, operation or use of the Purchased Assets on or after theClosing Date, except for any income Taxes attributable to income received bySeller.

 

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ARTICLE II

FURTHER ACTIONS

 

Buyer herebycovenants and agrees, at its own expense, to execute and deliver, at therequest of Seller, from time to time after the Closing Date, such furtherinstruments of assumption and to take such other actions as Seller mayreasonably request to more effectively consummate the assumptions provided inthis Assumption Agreement.

 

ARTICLE III

TERMS OF ASSETPURCHASE AGREEMENT

 

The terms of theAsset Purchase Agreement, including but not limited to Buyer’s representations,warranties, covenants, agreements and indemnities relating to the AssumedLiabilities, are incorporated herein by this reference.  Buyer acknowledges and agrees that itsrepresentations, warranties, covenants, agreements and indemnities contained inthe Asset Purchase Agreement shall not be superseded hereby but shall remain infull force and effect to the full extent provided therein.  In the event of any conflict or inconsistencybetween the terms of the Asset Purchase Agreement and the terms hereof, theterms of the Asset Purchase Agreement shall govern.

 

 

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

 

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IN WITNESS WHEREOF, Buyer has caused this Assumption Agreementin favor of CinCap Madison, LLC, as Seller, to be duly signed on its behalf asof the date first above written.

 

 
|   | PSI  ENERGY, INC. |
|--------|-------------------|
|   |              |
|   |              |
|   | By:               |   |   |
|   |              | Name:  Douglas F. Esamann |
|   |              | Title:  President |

 

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**SCHEDULE 2.01(B)****:  TANGIBLEPERSONAL PROPERTY**

 

•                  EightGeneral Electric Model PG712EA gas turbine generator units:

 

•                  Fuelsystem, including eight gas heaters;

 

•                  Planthigh voltage power system & interconnection, including four three-windinggenerator step-up transfomers;

 

•                  Watersupply and treatment systems, including 200,000 gallon demineralized waterstorage tank;

 

•                  Fireprotection system, including CO2 suppression systems, 220,000 gallon raw watertank, fire water loop, sprinkler system

 

•                  Plantauxiliary power system, including auxiliary transformers, DC power supplysystem and AC uninterruptible power supply system;

 

•                  Blackstart diesel generators, including two black start diesel generators capable ofproducing 1.2 MW each and fuel oil storage tanks;

 

•                  Continuousemissions monitoring;

 

•                  Plantcontrol systems;

 

•                  Communicationssystems;

 

•                  Securityand access, including chain link security fence topped with barbed wireenclosing plant site and electronically operated access gate;

 

•                  Stormwater drainage; and

 

•                  Maintenance/warehousefacilities

 

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**SCHEDULE 2.01(D):****  TRANSFERREDCONTRACTS**

 

Fuel Supply and Management Agreement, dated as of September 1, 2001(“Fuel Management Agreement”), between Seller and Cinergy Marketing &Trading, LP (“CMT”)

 

Water Purchase Agreement, dated as of March 10, 2000, between Sellerand The Cincinnati Gas & Electric Company

 

Operational Balancing Agreement, dated as of March 1, 2000 (“OBA”),between Seller and Texas Eastern Transmission Company (“TETCO”)

 

Service Agreement for Rate Schedule FT-1, Contract # 830098, datedFebruary 2000, between Seller and TETCO (“Service Agreement”)

 

Letter Agreement dated February 1, 2000 between Seller and TETCO reService Agreement

 

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**SCHEDULE 2.01(E):****  TRANSFERREDPERMITS**

 

Air construction permit (No. 14-4682) issued by Hamilton CountyDepartment of Environmental Protection of the State of Ohio (“HCDEP”)

 

Title V operating permit (permit pending) issued by HCDEP

 

Title IV acid rain permit (permit pending) issued by HCDEP

 

Call sign no. WPTE533 issued by the Federal Communications Commission(Wireless Telecommunications Bureau) (“FCC”)

 

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**SCHEDULE 4.01(C)(II):****  SELLER’SREQUIRED GOVERNMENTAL AND THIRD PARTY CONSENTS**

 

Section I: Seller’s Required Governmental Consents

 

Federal Energy Regulatory Commission under Section 203 of Federal PowerAct

 

FCC with respect to the transfer to Buyer of rights to Call Sign No.WPTE533

 

Section II: Seller’s Required Third-Party Consents

 

TETCO with respect to the assignment to Buyer of the OBA and theService Agreement

 

CMT with respect to Fuel Management Agreement

 

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**SCHEDULE 4.01(G)(I):****  REAL PROPERTY**

 

1.               For a descriptionof all land owned, used or occupied by Seller, see Schedule I to this AssetPurchase Agreement.

 

2.               EasementAgreement granted by Miller Brewing Company to Seller upon adjoining land datedNovember 8, 1999 and filed for record on January 12, 2000 as Instrument No. 200000002350 in Official Record 6440, Page 1955 inthe Office of the Recorder of Butler County, Ohio.

 

3.               Grant ofEasement granted by The Cincinnati Gas & Electric Company to Sellerupon adjoining land dated January 10, 2000 and filed for record on January 13,2000 as Instrument No. 200000002693 in Official Record 6441, Page 646 in the Office of the Recorderof Butler County, Ohio.

 

4.               OperatingLicense Agreement granted by The Cincinnati Gas & Electric Company toSeller upon adjoining land dated December 21, 1999, a Memorandum of saidAgreement being under date of March 31, 2000 and filed for record on April 12,2000 as Instrument No. 200000019856 in Official Record 6464, Page 2212 in the Office of the Recorderof Butler County, Ohio.

 

5.               Restrictivecovenant as to the use of the land for the operation of an electric generationfacility and ancillary uses directly related to such operation and for no otherpurpose without the prior written consent of First National Bank ofSouthwestern Ohio, Trustee, as contained in that certain Fiduciary Deeddated June 21, 1999 and filed for record on June 21, 1999 as Instrument No.9900049174 in Official Record 6376, Page 323 in the Office of theRecorder of Butler County, Ohio.

 

6.               Easement granted toThe Cincinnati Gas & Electric Company dated May 3, 1944 and filed forrecord on July 11, 1944 as Instrument No. 5043 in Miscellaneous Record 15, Page 70 in the Office of the Recorderof Butler County, Ohio.

 

7.               Grantgranted to The Cincinnati Gas & Electric Company dated March 19, 1953 andfiled for record on April 4, 1953 as Instrument No. 380 in Miscellaneous Record 28, Page 170in the Office of the Recorder of Butler County, Ohio.

 

8.               Grant ofEasement granted to The Cincinnati Gas & Electric Company dated June 1,1990 and filed for record on June 20, 1990 in Deed Record 1698, Page 499 in the Office of the Recorder ofButler County, Ohio.

 

9.               Easement granted toTexas Eastern Transmission, LP dated July 3, 2001 and filed for record onAugust 13, 2001 as Instrument No. 200100057845 in Official Record 6655, Page 1556 in the Office of the Recorderof Butler County, Ohio.

 

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10.         For a description ofplants, buildings, structures or other Improvements located on the RealProperty, see Schedule 2.01(b) to this Asset Purchase Agreement.

 

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**SCHEDULE 4.01(K):****  ENVIRONMENTALPERMITS**

 

The permits listed in Schedule 2.01(e) are hereby incorporated byreference herein.

 

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**SCHEDULE 4.01(M):****  SELLERCONTRACTS**

 

The contracts listed in Schedule 2.01(d) are hereby incorporated byreference herein.

 

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**SCHEDULE 4.01(0):****  PERMITS**

 

EWG certification (Duke Energy Madison, LLC, 91 FERC par. 62,068(2000))

 

Market-based wholesale rate authority (CinCap Madison, LLC, FERC DocketNos. ER00-1784 and ER02-322 (letter order, April 19, 2002)

 

In addition, the permits listed in Schedule 2.01(e) are herebyincorporated by reference herein.

 

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**SCHEDULE 4.02(C)(II):****  BUYER’SREQUIRED GOVERNMENTAL AND THIRD PARTY CONSENTS**

 

**Section I: Buyer’s RequiredGovernmental Consents**

 

Federal Energy Regulatory Commission under Section 203 of Federal PowerAct

 

Indiana Utility Regulatory Commission under applicable provisions ofthe Indiana Code in respect of (i) the purchase of the Madison Station by Buyerand (ii) the issuance by Buyer of long-term promissory notes in considerationtherefor.

 

FCC with respect to the transfer to Buyer of rights to Call Sign No.WPTE533

 

**Section II: Buyer’s RequiredThird-Party Consents**

 

TETCO with respect to the assignment to Buyer of the OBA and theService Agreement

 

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