Document:

Exhibit 10.1 - Claims Settlement Agreement

     

    
      

      

    

    Exhibit
      10.1

      

      CLAIMS
        SETTLEMENT AGREEMENT

      

      

      

      This
        Claims Settlement Agreement (the “Claims
        Settlement Agreement”)
        is
        made as of April 23, 2007, by and among Calpine Corporation (“Calpine”),
        Calpine Acadia Holdings, LLC (“CAH”)
        and
        Calpine Energy Services, L.P. (“CES”),
        as
        debtors and debtors in possession (and together with their affiliated domestic
        debtor-subsidiaries, the “Debtors”),
        and
        Acadia Power Partners, LLC (“APP”)
        and
        Acadia Power Holdings, LLC (“APH”)
        (APP,
        APH, Calpine, CAH and CES are each referred to herein as a “Party”
or
        collectively as the “Parties”).

       

      Recitals

       

      WHEREAS,
        APP owns and operates a natural gas fueled electrical generation plant located
        in Acadia Parish, south of Eunice, Louisiana, which consists of two combined
        cycle units with a nominal rating of 1000 MW (tested at 1160 MW) (the
“Acadia
        Project”);
        

       

      WHEREAS,
        APH and CAH are each 50% owners of APP;

       

      WHEREAS,
        the conduct of APP’s business is governed by that certain Second Amended and
        Restated Limited Liability Company Agreement of Acadia Power Partners, LLC,
        dated as of May 9, 2003, between APH and CAH (as amended, supplemented or
        otherwise modified from time to time, the “LLC
        Agreement”);
        

       

      WHEREAS,
        on July 27, 2001, CES and APP entered into that certain twenty (20) year
        term
        Power Purchase Agreement (as amended, supplemented or otherwise modified
        from
        time to time, the “2001
        PPA”),
        pursuant to which APP was to sell and CES was to purchase electrical capacity,
        associated energy and other services related to the Acadia Project in accordance
        with the terms and conditions set forth in the 2001 PPA;

       

      WHEREAS,
        on July 27, 2001, Calpine executed a guaranty in favor of APP (the “2001
        PPA Guaranty”),
        pursuant to which Calpine guaranteed timely payment when due of the obligations
        of CES under the 2001 PPA;

       

      WHEREAS,
        on July 1, 2005, APP, APH, CES and CAH executed that certain settlement
        agreement (the “Settlement
        Agreement”)
        pursuant to which APP and CES settled certain disputes regarding capacity
        payments to be made by CES under the 2001 PPA;

       

      WHEREAS,
        in accordance with the Settlement Agreement (i) CES and APH entered into
        that
        certain 2001 PPA Payment Agreement (the “2001
        PPA Payment Agreement”),
        pursuant to which CES agreed to make payments to APH in connection with certain
        of its obligations under the 2001 PPA; (ii) CAH executed a guaranty in favor
        of
        APH, dated August 9, 2005 (the “CAH
        Guaranty”),
        pursuant to which CAH guaranteed 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      CES’s
        payment obligations under the 2001 PPA Payment Agreement; and (iii) APP executed
        a guaranty in favor of APH, dated August 9, 2005 (the “APP
        Guaranty”),
        pursuant to which APP guaranteed CES’s payment obligations under the 2001 PPA
        Payment Agreement in the event that CES and CAH failed to make such payments;
        

       

      WHEREAS,
        on May 9, 2003, CES and APP entered into an approximately nineteen (19) year
        term Power Purchase Agreement (as amended, supplemented or otherwise modified
        from time to time, the “2003
        PPA”),
        pursuant to which APP was to sell and CES was to purchase electrical capacity,
        associated energy and other services related to the Acadia Project in accordance
        with the terms and conditions set forth in the 2003 PPA; 

       

      WHEREAS,
        on May 3, 2003, Calpine executed a guaranty in favor of APP (the “2003
        PPA Guaranty”),
        pursuant to which Calpine guaranteed timely payment when due of the obligations
        of CES under the 2003 PPA;

       

      WHEREAS,
        on or about December 20, 2005 (the “Petition
        Date”),
        the
        Debtors, including Calpine, CES and CAH, filed voluntary petitions for relief
        pursuant to chapter 11 of title 11 of the United States Code, as amended
        by the
        Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (the
“Bankruptcy
        Code”),
        which
        cases are being jointly administered in the United States Bankruptcy Court
        for
        the Southern District of New York (the “Bankruptcy
        Court”),
        Case
        No. 05-60200 (collectively, the “Chapter
        11 Cases”);

       

      WHEREAS,
        APP has filed the following proofs of claim against CES, Case No. 05-60222:
        (a)
        proof of claim number 3726, for an alleged general unsecured claim relating
        to
        the 2001 PPA (“POC
        3726”);
        and
        (b) proof of claim number 3725, for an alleged general unsecured claim relating
        to the 2003 PPA (“POC
        3725”);

       

      WHEREAS,
        APP has filed the following proofs of claim against Calpine, Case No. 05-60200:
        (a) proof of claim number 3723, for an alleged general unsecured claim relating
        to the 2001 PPA Guaranty (“POC
        3723”);
        and
        (b) proof of claim number 3724, for an alleged general unsecured claim relating
        to the 2003 PPA Guaranty (“POC
        3724”
and
        together with POC 3026, POC 3725 and POC 3723, the “Proofs
        of Claims”);

       

      WHEREAS,
        APH has filed proof of claim number 3720 against CES, Case No. 05-60222,
        for an
        alleged contingent, unliquidated claim relating to the 2001 PPA Payment
        Agreement (“POC
        3720”);

       

      WHEREAS,
        APH has filed proof of claim number 3719 against CAH, Case No. 05-60265,
        for an
        alleged contingent, unliquidated claim relating to the CAH Guaranty
        (“POC
        3719,”
and
        together with POC 3720, the “2001
        PPA Payment POCs”);
        

       

      WHEREAS,
        APP has asserted that it is owed amounts for capacity payments by CES under
        the
        2001 PPA and 2003 PPA, which amounts allegedly constitute administrative
        expense
        claims against CES (the “Administrative
        Expense Claim”),
        and
        pursuant to the “Order Approving Amendments to Power Purchase Agreements and
        Resolving, In Part, Motion to Compel Payment of Administrative Claims Filed
        by
        Acadia 

       

      
        
        

        
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      Power
        Partners, LLC,” entered by the Bankruptcy Court on March 22, 2006 [Docket No.
        1102], APP has reserved certain of its rights to assert and litigate the
        right
        to payment by CES on account of the Administrative Expense Claim;

       

      WHEREAS,
        Calpine, CAH and CES dispute the Proofs of Claims filed by APP, the 2001
        PPA
        Payment POCs filed by APH and the alleged Administrative Expense Claim asserted
        by APP; 

       

      WHEREAS,
        APH has rights to certain Priority Distributions (as defined in the LLC
        Agreement) set forth in Sections 12.1 and 13.1 of the LLC Agreement (the
        “Priority
        Distributions”);

       

      WHEREAS,
        CAH desires to sell its ownership interests in APP (the “CAH
        Interests”)
        pursuant to a Bankruptcy Court approved auction process (the “Auction”),
        and
        APH has agreed to serve as the stalking horse bidder at the Auction;

       

       

      WHEREAS,
        on even date herewith, APH and CAH executed that certain Purchase Agreement
        (as
        may be amended, supplemented or modified from time to time, the “Purchase
        Agreement”),
        pursuant to which CAH will sell its CAH Interests to APH, subject to higher
        and
        better bids at the Auction and Bankruptcy Court approval; and

       

      WHEREAS,
        in connection with the proposed sale of the CAH Interests at the Auction,
        and in
        order to avoid the uncertainties, risks and expenses attendant upon further
        litigation, the
        Parties now desire (a) to globally resolve, compromise,
        settle, and release, once and forever, the
        Proofs of Claim, the Administrative Expense Claim, and any and all other
        outstanding prepetition and postpetition obligations owed under the 2001
        PPA,
        the 2003 PPA, the 2001 PPA Guaranty and the 2003 PPA Guaranty, known and
        unknown
        (but excluding claims relating to the 2001 PPA Payment Agreement, the CAH
        Guaranty and the APP Guaranty), and (b) as a compromise and settlement, to
        give
        the right to CAH to pay a fixed liquidated amount for APH’s rights to receive,
        collect or otherwise assert any claim (both prepetition and postpetition,
        and
        known and unknown) for or on account of the Priority Distributions, the 2001
        PPA
        Payment Agreement, the CAH Guaranty and the APP Guaranty, and to release,
        once
        and forever, the 2001 PPA Payment POCs, all pursuant to the terms and conditions
        herein (including Bankruptcy Court approval).

       

      NOW,
        THEREFORE, in consideration of the representations, acknowledgments, promises
        and covenants contained herein, and for other good and valuable consideration,
        the sufficiency of which is hereby acknowledged, each Party hereby voluntarily,
        intentionally, and upon the advice and guidance of counsel, agrees as
        follows:

       

       

      PART
        I

       

      DENIAL
        OF LIABILITY 

       

      1.  This
        Claims Settlement Agreement is entered into only for purposes of settlement
        and
        compromise of the matters covered by this Claims Settlement Agreement in
        order
        to avoid the uncertainties, risks and expenses attendant upon continued
        litigation between the Parties. Neither this Claims Settlement Agreement,
        nor
        anything contained 

       

      
        
        

        
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      herein,
        nor any act or thing done in connection herewith, is intended to be, or shall
        be
        construed or deemed to be, an admission by any of the Parties of any liability,
        fault or wrongdoing. 

       

      PART
        II

       

      RESOLUTION
        OF CLAIMS

       

      2.  POC
        3726
        shall be deemed settled and allowed as a prepetition general unsecured claim
        against the estate of CES in the aggregate amount of $185,000,000 in full
        and
        complete satisfaction of any and all claims and damages arising under or
        relating to the 2001 PPA and the 2003 PPA, including, without limitation,
        on
        account of the rejection of such agreements, but excluding claims and damages
        relating to the 2001 PPA Payment Agreement, the CAH Guaranty and the APP
        Guaranty (the “Allowed
        CES Claim”).
        

       

      3.  POC
        3723
        shall be deemed settled and allowed as a prepetition general unsecured claim
        against the estate of Calpine in the aggregate amount of $185,000,000 in
        full
        and complete satisfaction of any and all claims and damages arising under
        or
        relating to the 2001 PPA Guaranty and the 2003 PPA Guaranty, including, without
        limitation, on account of any claims arising under such guaranties on account
        of
        the rejection or suspension of the 2001 PPA and the 2003 PPA, but excluding
        claims and damages relating to the 2001 PPA Payment Agreement, the CAH Guaranty
        and the APP Guaranty (the “Allowed
        Calpine Claim”).

       

      4.  Notwithstanding
        anything else to the contrary herein, APP shall not be entitled to collect
        in
        excess of $185,000,000, plus any interest due and payable to APP pursuant
        to and
        in accordance with CES’s and/or Calpine’s plan(s) of reorganization if and when
        such interest is ever due and payable to the class of creditors of which
        APP is
        a member under such plan(s), in the aggregate on account of the Allowed CES
        Claim and the Allowed Calpine Claim (together, the “Settled
        PPA Claims”).
        

       

      5.  POC
        3725
        and POC 3724 shall be deemed disallowed and expunged in their
        entirety.

       

      6.  Effective
        upon the Settlement Effective Date, APP hereby transfers to CAH $100,000,000
        of
        each of (i) the Allowed CES Claim and (ii) the Allowed Calpine Claim; provided,
        however, that CAH shall not be entitled to collect in excess of $100,000,000,
        plus any interest due and payable to CAH pursuant to and in accordance with
        CES’s and/or Calpine’s plan(s) of reorganization if and when such interest is
        ever due and payable to the class of creditors of which CAH is a member under
        such plan(s), in the aggregate on account of such transferred
        claim.

       

      7.  Effective
        upon the Settlement Effective Date, APP hereby transfers to APH $85,000,000
        of
        each of (i) the Allowed CES Claim and (ii) the
        Allowed
        Calpine Claim; provided, however, that APH shall not be entitled to collect
        in
        excess of $85,000,000, plus any interest due and payable to APH pursuant
        to and
        in accordance with CES’s and/or Calpine’s plan(s) of reorganization if and when
        such interest is ever due and payable to the 

       

      
        
        

        
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      class
        of
        creditors of which APH is a member under such plan(s), in the aggregate on
        account of such transferred claim.

       

      8.  Effective
        upon the Settlement Effective Date, APP hereby fully and forever waives,
        releases and discharges the Administrative Expense Claim, and shall be forever
        enjoined and barred from raising or asserting such Administrative Expense
        Claim
        against CES, Calpine their estates and any of their affiliates.

       

      9.  EFFECTIVE
        AS OF THE SETTLEMENT EFFECTIVE DATE, (I) CALPINE, CES AND CAH HEREBY FULLY
        AND
        FINALLY WAIVE, RELEASE, ACQUIT AND FOREVER DISCHARGE APH AND ITS RELATED
        PERSONS
        (AS DEFINED IN THE PURCHASE AGREEMENT) AND APP, AND (II) APH AND APP HEREBY
        FULLY AND FINALLY WAIVE, RELEASE, ACQUIT AND FOREVER DISCHARGE CALPINE, CES
        AND
        CAH AND THEIR RELATED PERSONS (AS DEFINED IN THE PURCHASE AGREEMENT) FROM
        ANY
        AND ALL CAUSES OF ACTION, CLAIMS, COUNTERCLAIMS, SUITS, ATTORNEYS’ FEES, COSTS,
        CONTROVERSIES, DEMANDS AND OTHER OBLIGATIONS AND LIABILITIES OF ANY KIND,
        WHETHER IN LAW OR EQUITY, AND WHETHER KNOWN OR UNKNOWN, THAT SUCH RELEASING
        PARTY HAD OR NOW HAS, AND ANY KIND THAT WAS OR MIGHT HAVE BEEN ALLEGED BY
        ANY
        SUCH RELEASING PARTY, IN CONNECTION WITH, ARISING OUT OF OR RELATING TO THE
        2001
        PPA, THE 2003 PPA, THE 2001 PPA GUARANTY AND THE 2003 PPA GUARANTY (EXCEPT
        TO
        THE EXTENT ARISING OUT OF OR RELATING TO THE 2001 PPA PAYMENT AGREEMENT,
        THE CAH
        GUARANTY OR THE APP GUARANTY) (IN EACH CASE, IN RESPECT OF THE PERIOD PRIOR
        TO,
        ON OR AFTER THE SETTLEMENT EFFECTIVE DATE), INCLUDING, BUT NOT LIMITED TO,
        THE
        ADMINISTRATIVE EXPENSE CLAIM AND ANY CLAIM BY CALPINE, CES OR CAH FOR REFUND
        OF,
        OR OTHERWISE IN RESPECT OF, THE DRAW BY APH OF $15,000,000 UNDER THE LETTER
        OF
        CREDIT POSTED IN RESPECT OF THE 2001 PPA, THE 2003 PPA , THE 2001 PPA GUARANTY
        AND/OR THE 2003 PPA GUARANTY, NOTWITHSTANDING THE FAULT, STRICT LIABILITY,
        BREACH OF CONTRACT OR NEGLIGENCE, WHETHER SOLE, JOINT OR CONCURRENT OR ACTIVE
        OR
        PASSIVE, OF THE PERSON RELEASED BY THIS PARAGRAPH 9 OR WHETHER ASSERTED IN
        CONTRACT, IN WARRANTY, IN TORT, BY STATUTE OR OTHERWISE; PROVIDED, HOWEVER,
        THAT
        THIS SECTION 9 SHALL NOT APPLY TO THE SETTLED PPA CLAIMS, THE ALLOWED CLAIM
        IDENTIFIED IN PARAGRAPH 11 BELOW AND THE METERING CLAIM (AS DEFINED IN THE
        RELEASE AGREEMENT). 

       

      10.  Effective
        as of the Settlement Effective Date, the Parties expressly waive their
        respective rights under section 502(j) of the Bankruptcy Code to have the
        claims
        described in Paragraphs 2,3, 9 and 11 reconsidered.

       

      11.  Effective
        as of the Settlement Effective Date, proof
        of claim
        number 2837 filed by Cleco Power LLC against CES shall be deemed allowed
        as a
        prepetition general unsecured claim against the estate of CES in the aggregate
        amount of $21,814.84.

       

      
        
        

        
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      12.  In
        the
        event that CAH does not consummate an Alternative Transaction (as defined
        in the
        Purchase Agreement) or a sale with APH, CAH shall have the right to pay the
        Priority Present Value Payment (as defined in the Purchase Agreement) on
        or
        before December 31, 2007. Upon the indefeasible payment to, and receipt by,
        APH
        of the Priority Present Value Payment, without offset or deduction and free
        and
        clear of all liens, by wire transfer or other immediately available funds
        (the
“Priority
        Distribution Effective Date”),
        APH
        and APP, as applicable, shall be deemed to have: 

       

      	a.  	
              waived
                any and all (i) rights to receive, collect or otherwise assert any
                claim
                for or on account of the Priority Distribution and (ii) rights to
                receive,
                collect or otherwise assert any claim under or on account of the
                2001 PPA
                Payment Agreement, and all guaranties thereof (including the CAH
                Guaranty
                and the APP Guaranty), and, with respect to both subclauses (i) and
                (ii),
                APH and APP shall be forever barred and enjoined from asserting such
                rights or claims against CAH, its estate, and any affiliate of CAH
                and the
                2001
                PPA Payment POCs
                shall be deemed disallowed and expunged in their entirety;
                and

            

       

      	b.  	
              consented
                to amending the LLC Agreement to delete any Priority Distribution
                rights
                of APH from Sections 12.1 and 13.1 of the LLC
                Agreement.

            

       

       

      13.  EFFECTIVE
        AS OF THE OCCURRENCE OF BOTH THE SETTLEMENT EFFECTIVE DATE AND THE PRIORITY
        DISTRIBUTION EFFECTIVE DATE, (I) CALPINE, CES AND CAH HEREBY FULLY AND FINALLY
        WAIVE, RELEASE, ACQUIT AND FOREVER DISCHARGE APH AND ITS RELATED PERSONS
        (AS
        DEFINED IN THE PURCHASE AGREEMENT) AND APP, AND (II) APH AND APP HEREBY FULLY
        AND FINALLY WAIVE, RELEASE, ACQUIT AND FOREVER DISCHARGE CALPINE, CES AND
        CAH
        AND THEIR RELATED PERSONS (AS DEFINED IN THE PURCHASE AGREEMENT) FROM ANY
        AND
        ALL CAUSES OF ACTION, CLAIMS, COUNTERCLAIMS, SUITS, ATTORNEYS’ FEES, COSTS,
        CONTROVERSIES, DEMANDS AND OTHER OBLIGATIONS AND LIABILITIES OF ANY KIND,
        WHETHER IN LAW OR EQUITY, AND WHETHER KNOWN OR UNKNOWN, THAT SUCH RELEASING
        PARTY HAD OR NOW HAS, AND ANY KIND THAT WAS OR MIGHT HAVE BEEN ALLEGED BY
        ANY
        SUCH RELEASING PARTY, IN CONNECTION WITH, ARISING OUT OF OR RELATING TO THE
        PRIORITY DISTRIBUTIONS, THE 2001 PPA PAYMENT AGREEMENT, THE CAH GUARANTY
        AND THE
        APP GUARANTY (IN EACH CASE, IN RESPECT OF THE PERIOD PRIOR TO, ON OR AFTER
        THE
        SETTLEMENT EFFECTIVE DATE), NOTWITHSTANDING THE FAULT, STRICT LIABILITY,
        BREACH
        OF CONTRACT OR NEGLIGENCE, WHETHER SOLE, JOINT OR CONCURRENT OR ACTIVE OR
        PASSIVE, OF THE PERSON RELEASED BY THIS PARAGRAPH 13 OR WHETHER ASSERTED
        IN
        CONTRACT, IN WARRANTY, IN TORT, BY STATUTE OR OTHERWISE. 

       

      14.  Effective
        as of the occurrence of both the Settlement Effective Date and the Priority
        Distribution Effective Date, the Parties expressly waive their respective
        rights

       

      
        
        

        
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      under
        section 502(j) of the Bankruptcy Code to have the claims
        described in Paragraphs 12 and 13 reconsidered.

       

      15.  Effective
        as of the Settlement Effective Date, the Parties hereby agree and acknowledge
        that the 2001 PPA, the 2003 PPA and all guarantees relating thereto (other
        than
        the CAH Guaranty and the APP Guaranty) shall be automatically terminated
        and
        shall be of no further force and effect. 

       

      PART
        III

       

      FURTHER
        AGREEMENTS OF THE PARTIES

       

      16.  Each
        of
        the Parties hereto shall
        use
        its commercially reasonable efforts to cooperate, assist and consult with
        each
other
        to
        (a) procure the entry of an order by the Bankruptcy Court approving this
        Claims
        Settlement Agreement as
        promptly as practicable, (b) bring about the occurrence of the Settlement
        Effective Date
        and (c)
        to undertake and complete all actions provided for or contemplated by this
        Claims Settlement Agreement.
        Without
        limiting the generality or specificity of any other provision of this Claims
        Settlement Agreement, no Party shall take (or fail to take) any action prior
        to
        the Settlement Effective Date that is inconsistent with a good faith effort
        to
        obtain all orders, approvals, confirmations, and authorizations that may
        be
        required to put the Claims Settlement Agreement fully into effect as promptly
        as
        practicable in accordance with all of its terms and conditions.

       

      17.  Each
        of
        the Parties further agrees to execute and deliver any further documents which
        may be required to effectuate and/or carry out the terms of this Claims
        Settlement Agreement.

       

      18.  Prior
        to
        the earlier of the Settlement Effective Date or termination of this Claims
        Settlement Agreement pursuant to Paragraph 20 below, the Parties agree to
        take
        (or fail to take) any action in connection with each of the claims that are
        the
        subject matter hereof, so as to ensure that the Parties
        maintain their status
        quo ante
        with
        respect to such claims. Following the Settlement Effective Date, APP and
        APH
agree
        to
        cooperate with the Selling Debtor and its affiliates in any efforts to oppose,
        prosecute and/or dismiss the pending appeal relating to the 2001 PPA and
        2003
        PPA. 

       

      PART
        IV

       

      SETTLEMENT
        EFFECTIVE DATE; TERMINATION

       

      19.  Settlement
        Effective Date.
        Notwithstanding anything to the contrary, the compromises and settlements
        of the
        Parties hereunder, including the resolution of the claims as set forth in
        Paragraphs 2 through 9 and 11 through 13, shall not become effective until
        the
        date (if any) (the “Settlement
        Effective Date”)
        when
        both: (i) an order approving this Claims Settlement Agreement shall have
        been
        entered by the Bankruptcy Court and shall have become a Final Order (as defined
        in the Purchase Agreement) and (ii) the Bankruptcy Court enters the Bidding
        Procedures Order (as defined in the Purchase Agreement) and such order shall
        not
        be stayed, reversed, modified or amended as of such 

       

      
        
        

        
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      date;
        provided, however that the compromise and settlement of the Parties under
        Paragraphs 12 and 13 shall not become effective until both the Settlement
        Effective Date and the Priority Distribution Effective Date occur.

       

      20.  Termination.
        This
        Claims Settlement Agreement shall terminate: (i) automatically if the Bankruptcy
        Court denies entering an order approving this Claims Settlement Agreement,
        and
        such denial becomes a Final Order (as that term is defined in the Purchase
        Agreement); or (ii) at the election of Calpine, CAH or CES (upon written
        notice
        to APP and APH), provided that the Settlement Effective Date has not already
        occurred, if CAH terminates the Purchase Agreement pursuant to Section 12.3
        of
        the Purchase Agreement, provided that CAH is not actively working towards
        the
        consummation of an Alternative Transaction (as that term is defined in the
        Purchase Agreement). 

       

      21.  Reservation
        of Rights.
        In the
        event that the Claims Settlement Agreement is terminated as provided in
        Paragraph 20, the Claims Settlement Agreement shall be of no further force
        and
        effect and the compromises and settlements provided herein shall not be
        effective, and any and all actions taken in connection with this Claims
        Settlement Agreement prior to such termination shall be unwound, whereby
        returning the Parties to status
        quo ante.
        In the
        event of such termination, the Parties reserve all of their rights and defenses
        with respect to the claims that are the subject matter hereof. 

       

      PART
        V

       

      MERGER
        AND INTEGRATION

       

      22.  Merger
        And Integration.
        The
        Parties agree and acknowledge that this Claims Settlement Agreement and the
        Purchase Agreement and the other Transaction Documents (as defined in the
        Purchase Agreement) constitute the entire agreement of the Parties with respect
        to the subject matter contained herein. There are no other agreements,
        representations, warranties, or other understandings between the Parties
        with
        regard to the subject matter hereof which are not set forth in this Claims
        Settlement Agreement and the Purchase Agreement and the other Transaction
        Documents (as defined in the Purchase Agreement). This Claims Settlement
        Agreement is made and entered into without any reliance on any statement,
        promise, inducement, or consideration not recited in this Claims Settlement
        Agreement.

       

      23.  No
        Mistake Of Fact.
        The
        Parties agree and acknowledge that this Claims Settlement Agreement shall
        not be
        subject to any claim of mistake of fact. The terms of this Claims Settlement
        Agreement are contractual and not a mere recital, and merge all prior
        discussions, agreements, and transactions of all kinds pertaining to the
        matters
        discussed in this Claims Settlement Agreement.

       

      
        
        

        
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      PART
        VI

       

      CONSTRUCTION

       

      24.  Claims
        Settlement Agreement Jointly Drafted.
        The
        Parties agree that this Claims Settlement Agreement shall not be construed
        against any Party to this Claims Settlement Agreement on the grounds that
        such
        Party drafted this Claims Settlement Agreement, but shall be construed as
        if all
        Parties jointly prepared this Claims Settlement Agreement, and any uncertainty
        or ambiguity shall not on that ground be interpreted against any one
        Party.

       

      25.  Advice
        Of Counsel Obtained.
        The
        Parties each have obtained the advice of legal counsel prior to executing
        this
        Claims Settlement Agreement, and each enter into this Claims Settlement
        Agreement freely and voluntarily and with a full understanding of its terms
        and
        significance. 

       

      26.  Choice
        of Law.
        To the
        extent not governed by the Bankruptcy Code, this Claims Settlement Agreement
        shall be construed and enforced in accordance with the laws of the State
        of New
        York without giving effect to principles of conflicts of law thereof that
        would
        result in the application of the laws of another jurisdiction.

       

      27.  Consent
        to Venue.
        The
        Parties hereby agree that any and all matters related to the interpretation
        and
        enforcement of this Claims Settlement Agreement shall be subject to the
        jurisdiction of the Bankruptcy Court and the Parties hereby consent to such
        venue. 

       

      28.  Severability.
        If any
        of the provisions, terms, clauses, or waivers or releases of claims or rights
        contained in this Claims Settlement Agreement are declared illegal,
        unenforceable, or ineffective in a legal or other forum or proceeding, the
        Parties agree to negotiate in good faith substitute provisions, terms, clauses,
        or waivers or releases that would have, to the maximum extent possible,
        identical effect and that would be enforceable. 

       

      29.  Assignability.
        No
        Party shall assign this Claims Settlement Agreement or any rights or obligations
        hereunder without the prior written consent of the other Parties, and any
        such
        attempted assignment without such prior written consent shall be void and
        of no
        force and effect; provided that (a) APH may assign this Claims Settlement
        Agreement in connection with a sale of all of APH’s interests in the Company
        with the prior written consent of the other Parties, such consent not to
        be
        unreasonably withheld, and (b) this Paragraph 29 shall not restrict the transfer
        of the Settled PPA Claims. 

       

      PART
        VII

       

      MODIFICATION

       

      30.  Writing
        Required.
        This
        Claims Settlement Agreement may not be altered or amended except in writing
        signed by the Parties, which writing, if required by applicable law, is approved
        by order of the Bankruptcy Court.

       

      
        
        

        
          9

          
            

          

        

        
        

      

       

      31.  No
        Waiver.
        The
        failure of any Party hereto at any time to require performance of any provisions
        hereof shall in no manner affect the right to enforce the same. No waiver
        by any
        Party hereto of any condition, or the breach of any term, provision, warranty,
        representation, agreement or covenant contained in this Claims Settlement
        Agreement, whether by conduct or otherwise, in any one or more instances
        shall
        be deemed or construed as a further or continuing waiver of any such condition
        or breach or a waiver of any other condition or of the breach of any other
        term,
        provision, warranty, representation, agreement or covenant herein contained.
        

       

       

      PART
        VIII

       

      AUTHORITY
        AND ASSURANCES

       

      32.  Authority
        To Execute Claims Settlement Agreement.
        Subject
        to the Bankruptcy Court’s approval of this Claims Settlement Agreement, each
        Party represents, warrants and covenants that it has the full right and
        authority to enter into this Claims Settlement Agreement and has the full
        right
        and authority to fully bind itself to the terms and obligations of this Claims
        Settlement Agreement, which Claims Settlement Agreement is enforceable against
        it in accordance with its terms, except as such enforceability may be limited
        by
        applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
        moratorium or other similar laws affecting or relating to the enforcement
        of
        creditors’ rights generally and subject, as to enforceability, to general
        principles of equity; and that it has not heretofore assigned, encumbered
        or in
        any other manner transferred to any person or entity all or any portion of
        the
        claims released or to be released by this Claims Settlement Agreement, and
        will
        not assign, encumber or in any other manner transfer to any person or entity
        all
        or any portion of the claims released or to be released by this Claims
        Settlement Agreement (except as otherwise expressly set forth herein with
        respect to the Settled PPA Claims).

       

      33.  Binding
        Effect.
        This
        Claims Settlement Agreement shall be binding upon the Parties and their
        respective legal representatives, heirs, successors and assigns, and upon
        the
        successful purchaser of the CAH Interests at the Auction. This Claims Settlement
        Agreement shall inure to the benefit of the Parties and their respective
        legal
        representatives, heirs. Other than as explicitly set forth in this Claims
        Settlement Agreement, nothing in this Settlement Claims Agreement is intended
        to, or does, create any rights in third parties, except that Cleco Power
        LLC is
        a third party beneficiary of Paragraph 11.

       

      PART
        IX

       

      EXECUTION

       

      34.  This
        Claims Settlement Agreement may be executed by each Party under a separate
        copy,
        and in such case one counterpart of this Claims Settlement Agreement shall
        consist of enough of such copies to reflect the signatures of all of the
        Parties. This Claims Settlement Agreement may be executed in two or more
        counterparts, each of which shall 

       

      
        
        

        
          10

          
            

          

        

        
        

      

       

       

      be
        deemed
        an original, and it shall not be necessary in making proof of this Claims
        Settlement Agreement or the terms of this Claims Settlement Agreement to
        produce
        or account for more than one of such counterparts.

       

       

      PART
        X

       

      NOTICES

       

      35.  All
        notices, requests, demands and other communications under this Claims Settlement
        Agreement shall be in writing and shall be deemed to have been duly given:
        (a)
        on the date of service if served personally on the Party to whom notice is
        to be
        given; (b) on the day of transmission if sent via facsimile transmission
        to the
        facsimile number given below and confirmation of successful transmission
        is
        obtained (for this purpose, an activity report of the sender’s facsimile machine
        showing the confirmation of successful transmission is sufficient); (c) on
        the business day after delivery to Federal Express or similar overnight courier
        or the Express Mail service maintained by the United States Postal Service
        or
        (d) on the third business day after mailing, if mailed to the Party to whom
        notice is to be given, by first class mail, registered or certified, postage
        prepaid and properly addressed, to the party as follows:

       

      If
        to
        Calpine, CES or CAH:

       

      

      c/o
        Calpine Corporation

      50
        West
        San Fernando Street

      San
        Jose,
        California 95113

      Attention:
        General Counsel

      Facsimile:
        (408) 794-2434

       

      Copy
        to:

       

      Kirkland
        & Ellis LLP

      655
        Fifteenth Street, NW Suite 1200

      Washington,
        DC 20005

      Attention:
        Mitchell F. Hertz

      Facsimile:
        (202) 879-5200

       

      Kirkland
        & Ellis LLP

      777
        South
        Figueroa Street

      Los
        Angeles, CA 90017

      Attention:
        Bennett L. Spiegel 

      Facsimile:
        (213) 680-8500 

       

      
        
        

        
          11

          
            

          

        

        
        

      

       

       

      If
        to
        APH:

       

      Acadia
        Power Holdings, LLC

      2030
        Donahue Ferry Road

      Pineville,
        LA 71361-5226

      Attention:
        W. Keith Johnson

      Facsimile:
        (318) 484-7685

      

      Copy
        to:

      

      Pillsbury
        Winthrop Shaw Pittman LLP

      2
        Houston
        Center

      909
        Fannin, Suite 2000

      Houston,
        TX 77010-1018

      Attention:
        Sergio Pozzerle

      Facsimile:
        281-667-3893

      

      King
        & Spalding LLP

      1185
        Avenue of the Americas

      New
        York,
        NY 10036

      Attention:
        Barry N. Seidel

      Facsimile:
        (212) 556-2222 

      

       

       

      Any
        Party
        may change its address for the purpose of this Paragraph 35 by giving the
        other
        Party written notice of its new address in the manner set forth
        above.

       

      [The
        remainder of this page is intentionally left blank.]

       

       

      
        
        

        
          12

          
            

          

        

        
        

         

      

      IN
        WITNESS WHEREOF, the Parties, by and through their duly authorized
        representatives, have hereunder set their hands and entered into this Claims
        Settlement Agreement on the day and year first written above.

       

       

      CALPINE
        CORPORATION      

      

      BY
        :
    /s/
        James J.
        Shield                         

      NAME:   James
        J.
        Shield                           

      TITLE:    Senior
        Vice
        President                

      

      

      CALPINE
        ENERGY SERVICES, L.P.    

      

      BY
        :
    /s/
        James J.
        Shield                         

      NAME:   James
        J.
        Shield                           

      TITLE:    Senior
        Vice
        President                

      

      

      CALPINE
        ACADIA HOLDINGS, LLC

      

      BY
        :
    /s/
        James J.
        Shield                         

      NAME:   James
        J.
        Shield                           

      TITLE:    Senior
        Vice
        President                

      

      

      ACADIA
        POWER PARTNERS, LLC

      

      BY
        :    /s/
        Samuel H. Charlton
        III             

      NAME:   Samuel
        H. Charlton
        III               

      TITLE:    Management
        Committee Rep.  

      

      

      ACADIA
        POWER HOLDINGS, LLC

      

      BY
        :    /s/
        Samuel H. Charlton
        III             

      NAME:   Samuel
        H. Charlton
        III               

      TITLE:    Board
        of
        ManagersExhibit 10.2 - Purchase Agreement

    
      

      

    

    Exhibit
      10.2

     

    EXECUTION
      VERSION
 

    
      

    

    
      	
               

              PURCHASE
                AGREEMENT

               

               

              BY
                AND AMONG

               

               

              CALPINE
                ACADIA HOLDINGS, LLC 

               

               

              AS
                SELLER

               

               

               

              AND

               

               

              ACADIA
                POWER HOLDINGS, LLC

               

               

              AS
                BUYER

               

               

               

               

               

              Dated
                as of April 23, 2007

               

            

    

    
      
        

      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

    Page
      

     

    
      	ARTICLE 1 PURCHASE AND SALE
              OF THE
              OWNERSHIP INTERESTS AND RELATED ASSETS	
               6

            

    

     

    
      	     1.1. Transfer
              of Ownership Interests and Related Assets	
              6

            
	     1.2. Excluded
              Assets	
              6

            
	     1.3. Assumption
              of Liabilities	
              7

            
	     1.4. Excluded
              Liabilities	
              8

            
	     1.5. Non-Assignment
              of Assigned Contracts	
              8

            

    

    
       

    

    
      	
              ARTICLE
                2 CONSIDERATION

            	
               8

            

    

     

    
      	     2.1. Consideration	
              8

            
	     
2.2. Deposits   	
              8

            
	     2.3. Signing
              Date Deliverables	
              9

            

    

     

    
      	
              ARTICLE
                3 CLOSING AND DELIVERIES

            	
               9

            

    

     

    
      	     3.1. Closing	
              9

            
	     
3.2. Seller’s
              Deliveries	
              9

            
	     3.3. Buyer’s
              Deliveries	
              10

            

    

     

    
      	
              ARTICLE
                4 REPRESENTATIONS AND WARRANTIES OF SELLER

            	
               10

            

    

     

    
      	     4.1. Corporate
              Organization	
              10

            
	     4.2. Authorization
              and Validity	
              10

            
	     4.3. No
              Conflict or Violation	
              11

            
	     4.4. Seller
              Consents	
              11

            
	     4.5. Seller’s
              Ownership Interests	
                      11

            
	     4.6. Corporate
              Organization	
               11

            
	     4.7. No
              Unauthorized Action	
               12

            
	     4.8. Ownership
              of Property at Power Plant Site	
               12

            
	     4.9. Capitalization
              of the Company	
               12

            
	     4.10. Compliance
              with Law	
               12

            
	     4.11. Litigation	
               12

            
	     4.12. Material
              Contracts	
               13

            
	     4.13. Permits	
               13

            
	     4.14. Environmental
              Matters	
               13

            
	     4.15. Owned
              Real Property	
               13

            

    

     

    
       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

    

     

    
      	     4.16. Regulatory
              Status	
              14

            

    

     

    
      	
              ARTICLE
                5 REPRESENTATIONS AND WARRANTIES OF BUYER

            	
               14

            

    

     

    
      	     5.1. Corporate
              Organization	
              14

            
	     5.2. Authorization
              and Validity	
              14

            
	     5.3. No
              Conflict or Violation	
              14

            
	     5.4. Consents,
              Approvals and Notifications	
              15

            
	     5.5. Availability
              of Funds	
                      15

            
	     5.6. Licenses,
              Permits, etc.	
               15

            
	     5.7. Investigation
              by Buyer	
               15

            
	     5.8. Acquisition
              as Investment	
               16

            
	     5.9. Adequate
              Assurances Regarding Assigned Contracts	
               16

            
	     5.10. Knowledge
              of Claims	
               16

            

    

     

    
      	ARTICLE 6 COVENANTS OF
              SELLER	
               16

            

    

     

    
      	     6.1. Actions
              Before Closing	
              16

            
	     6.2. Conduct
              of Business Before the Closing Date	
              16

            
	     6.3. Orders	
              17

            
	     6.4. Consents
              and Approvals	
              17

            
	     6.5. Access
              to Properties and Records; Confidentiality	
                      17

            
	     6.6. Rejection
              of Assigned Contracts	
               18

            
	     6.7. Further
              Assurances	
               18

            
	     6.8. Notices	
               18

            
	     6.9. Provision
              of Data; Transfer of Software	
               18

            

    

     

    
      	
              ARTICLE
                7 COVENANTS OF BUYER

            	
               18

            

    

     

    
      	     7.1. Actions
              Before Closing Date	
              18

            
	     7.2. Consents,
              Approvals and Notifications	
              18

            
	     7.3. Notices	
              19

            
	     7.4. Payment
              Obligations; Claims   	
              19

            
	     7.5. Settlement
              of Certain Claims	
                      19

            
	     7.6. Reasonable
              Assistance	
               19

            
	     7.7. Waiver
              of Confidentiality	
               19

            
	     7.8. Metering
              Claim Payment	
               20

            

    

     

    
      	ARTICLE 8 BANKRUPTCY
              PROCEDURES	
               20

            

    

     

    
      	     8.1. Bankruptcy
              Actions	
              20

            

    

     

    
       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

    

     

    
      	     8.2. Bidding
              Procedures	
              20

            
	     8.3. Review
              of Filings	
              20

            

    

     

    
      	ARTICLE 9 REGULATORY
              MATTERS	
               21

            

    

     

    
      	     9.1. Regulatory
              Filings	
              21

            
	     
              9.2. Cooperation;
              Confidentiality Agreement    	
              21

            
	     9.3. Objections
              or Other Challenges	
               22

            

    

     

    
      	ARTICLE 10 TAXES	
               22

            

    

     

    
      	    10.1. Taxes
              Related to Purchase of Ownership Interests and Related
              Assets 	
              22

            
	    10.2. Proration
              of Real and Personal Property Taxes	
              23

            
	    10.3. Cooperation
              on Tax Matters	
              23

            
	    10.4. Retention
              of Tax Records       	
              23

            
	    
              10.5. Allocation
              of Purchase Price and Purchase Price Allocation
              Forms     	
                      24

            
	    10.6. Unbilled
              Transactional Taxes	
               24

            
	    10.7. Aquila
              Termination Fee	
              24

            

    

     

    
      	
              ARTICLE
                11 CONDITIONS PRECEDENT TO PERFORMANCE BY PARTIES

            	
               24

            

    

     

    
      	     11.1. Conditions
              Precedent to Performance by Seller and Buyer	
              24

            
	     11.2. Conditions
              Precedent to Performance by Seller	
              25

            
	     11.3. Conditions
              Precedent to the Performance by Buyer	
              25

            

    

     

    
      	ARTICLE 12 TERMINATION AND
              EFFECT OF
              TERMINATION	
               26

            

    

     

    
      	     12.1. Right
              of Termination	
              26

            
	     12.2. Termination
              Without Default	
              26

            
	     12.3. Effect
              of Failure of Seller’s Conditions to Closing	
              27

            
	     12.4. Effect
              of Failure of Buyer’s Conditions to Closing	
              28

            
	     12.5. Termination
              on Alternative Transaction	
               28

            

    

     

    
      	ARTICLE 13
              MISCELLANEOUS	
              30

            

    

     

    
      	     13.1. Successors
              and Assigns	
              30

            
	     13.2. Governing
              Law; Jurisdiction	
              30

            
	     13.3. Disclosure
              Schedule Supplements	
              30

            
	     13.4. Warranties
              Exclusive	
              30

            
	     13.5. Survival
              of Representations and Warranties	
               31

            
	     13.6. No
              Recourse Against Third Parties	
               31

            
	     13.7. Mutual
              Drafting	
               31

            

    

     

    
       

      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

    

     

    
      	     13.8. Expenses	
              31

            
	     13.9. Broker’s
              and Finder’s Fees	
              32

            
	     13.10. Severability	
              32

            
	     13.11. Notices	
              32

            
	     13.12. Amendments;
              Waivers	
               33

            
	     13.13. Schedules	
               34

            
	     13.14. Public
              Announcements	
               34

            
	     13.15. Entire
              Agreement	
               34

            
	     13.16. Parties
              in Interest	
               34

            
	     13.17. Headings	
               34

            
	     13.18. Construction	
               34

            
	     13.19. Currency	
               35

            
	     13.20. Time
              of Essence	
               35

            
	     13.21. Counterparts	
               35

            
	     13.22. Damages	
               35

            

    

     

    
      	ARTICLE 14
              DEFINITIONS	
              35

            

    

     

    
      	     14.1. Certain
              Terms Defined	
              35

            
	     14.2. All
              Terms Cross-Referenced	
              45

            

    

     

    
       

      
        
          
          

        

        
          iv

          
            

          

        

        
          
          

      

    

    EXHIBITS

     

     

    
      	 Exhibit A-1	
               Form
                of Guaranty

            
	 Exhibit A-2	
               Form
                of Management Committee
                Resolutions

            
	 Exhibit B-1	
               Form
                of Membership Transfer
                Agreement

            
	 Exhibit B-2 	
               Form
                of Bill of Sale

            
	 Exhibit B-3 	
               Form
                of Assumption
                Agreement

            
	 Exhibit B-4	
               Non-Foreign
                Status Certificate

            
	 Exhibit B-5	
               Release
                Agreement

            
	 Exhibit C	
               [RESERVED]

            
	 Exhibit D	
               Form
                of Sale Order

            
	 Exhibit E	
               Form
                of Bidding Procedures
                Order

            
	 Exhibit F  	
               Claims
                Settlement
                Agreement

            
	 Exhibit G	
               O&M
                Transfer
                Agreement

            
	 Exhibit H	
               Confidentiality
                Agreement

            
	 Exhibit I 	
               Funding
                Side Letter

            
	 Exhibit J	
               Claims
                Settlement
                Order

            

    

     

        

    DISCLOSURE
      SCHEDULES

     

    
      	 Schedule 1.1(a) 	Related Assets
	 Schedule 1.1(b)	Assigned Contracts
	 Schedule 1.2(b)	Calpine Marks
	 Schedule 1.2(d) 	Excluded Assets
	 Schedule 1.4 	Excluded
              Liabilities
	 Schedule 4.4	Seller Consents
	 Schedule 4.9	Capitalization of the Company
	 Schedule 4.10 	Compliance with Law
	 Schedule 4.11 	Litigation
	 Schedule 4.12 	Material Contracts
	 Schedule 4.13 	Permits
	 Schedule 4.14 	Environmental
              Matters
	 Schedule 4.15 	Owned Real Property
	 Schedule 5.4	Buyer Consents
	 Schedule 10.5	Allocation of Purchase Price
	 Schedule 11.1(b)	Antitrust and Regulatory
              Approvals

    

     

    
       

      
        
          
          

        

        
          v

          
            

          

        

        
          
          

        

      

    

    

     

    PURCHASE
      AGREEMENT

     

    THIS
      PURCHASE AGREEMENT (this “Agreement”),
      dated
      as of April 23, 2007, is made by and between Calpine
      Acadia Holdings, LLC,
      a
      Delaware limited liability company (the
      “Seller”),
      and
Acadia
      Power Holdings, LLC,
      a
      Louisiana limited liability company (“Buyer”).
      Capitalized terms used in this Agreement are defined or cross-referenced in
      Article
      14.

     

    BACKGROUND
      INFORMATION

     

    WHEREAS,
      Seller
      is
      an indirect wholly owned subsidiary of Calpine Corporation (“Calpine”),
      a
      Delaware corporation;

     

    WHEREAS,
      on December 20, 2005, Calpine and its debtor Affiliates, including Seller,
      filed
      voluntary petitions for relief under the Bankruptcy Code in the Bankruptcy
      Court; 

     

    WHEREAS,
      on the terms and subject to the conditions set forth in this Agreement, Buyer
      desires to purchase from Seller, and Seller desires to sell to Buyer, the
      Ownership Interests and Related Assets, in a sale authorized by the Bankruptcy
      Court pursuant to, inter
      alia,
      sections 105, 363, and 365 of the Bankruptcy Code;

     

    WHEREAS,
      it is intended that the acquisition of the Ownership Interests and Related
      Assets would be accomplished through the sale, transfer and assignment of the
      Ownership Interests and Related Assets by Seller to Buyer;

     

    WHEREAS,
      Buyer is willing to assume (or cause one of its Affiliates to assume), and
      Seller desires to assign and transfer to Buyer (or one of its Affiliates),
      the
      Assumed Liabilities;

     

    NOW,
      THEREFORE, in consideration of the foregoing and of their respective
      representations, warranties, covenants and undertakings herein contained, and
      of
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, Seller and Buyer hereby agree as follows:

     

     

    ARTICLE
      1  

    PURCHASE
      AND SALE OF THE OWNERSHIP INTERESTS
      AND RELATED ASSETS

     

    1.1.  Transfer
      of Ownership Interests
      and
      Related Assets.
      At the
      Closing, and upon the terms and subject to the conditions set forth herein,
      Seller shall sell, assign and transfer to Buyer free and clear of all Liens
      (other than Permitted Liens and Assumed Liabilities), and Buyer shall acquire
      from Seller, all of Seller’s right, title and interest in, to and under the
      Ownership Interests and the Related Assets. 

     

    1.2.  Excluded
      Assets.
      Notwithstanding anything to the contrary in this Agreement, the Ownership
      Interests and the Related Assets are the only properties and assets transferred
      to Buyer under this Agreement. Without limiting the generality of the foregoing,
      the Ownership Interests and Related Assets do not include (i) any right, title
      or interest of any Person 

     

    
      
      

      
        6

        
          

        

      

      
      

    

     

    other
      than Seller in any property or asset, or (ii) the properties and assets of
      Seller listed or described in this Section
      1.2,
      any of
      which Seller may transfer to its Affiliates prior to Closing (all properties
      and
      assets not being acquired by Buyer are herein referred to as the “Excluded
      Assets”):

     

    (a)  without
      in any way limiting the effect of, and subject to, the Release Agreement, any
      and all rights, demands, claims, credits, allowances, rebates, causes of action,
      known or unknown, pending or threatened (including all causes of action arising
      under sections 510, 544 through 551 and 553 of the Bankruptcy Code or under
      similar state Laws including fraudulent conveyance claims, and all other causes
      of action of a trustee and debtor-in-possession under the Bankruptcy Code)
      or
      rights of set-off (collectively, “Claims”),
      of
      Seller or any Affiliate of Seller, including (i) Claims arising out of or
      relating in any way to the Chapter 11 Case or any of the transactions
      contemplated thereby or entered into as a consequence thereof, including any
      claims (as defined in section 101(5) of the Bankruptcy Code) filed, scheduled
      or
      otherwise arising in the Chapter 11 Case, and (ii) all rights and Claims of
      Seller against any Affiliate of Seller, including, following the effectiveness
      of the Claims Settlement Agreement, the Seller CES Claim and the Seller Calpine
      Claim;

     

    (b)  all
      rights to or goodwill represented by or pertaining to all names, marks, trade
      names, trademarks and service marks incorporating the name Calpine, the Calpine
      “C” or any other name set forth on Schedule
      1.2(b)(I)
      (the
“Calpine
      Marks”),
      including those in the locations set forth on Schedule
      1.2(b)(II)
      and any
      brand names or derivatives thereof no matter how used, whether as a corporate
      name, domain name or otherwise and including the corporate design logo
      associated with any Calpine Mark or variant of any Calpine Mark 

     

    (c)  all
      Retained Books and Records;
      and

     

    (d)  all
      assets set forth on Schedule
      1.2(d).

     

    1.3.  Assumption
      of Liabilities.
      At the
      Closing, Buyer shall assume (or cause one of its Affiliates to assume), and
      Buyer (or such Affiliate) shall thereafter pay, perform and discharge when
      due
      the following liabilities (collectively, the “Assumed
      Liabilities”):

     

    (a)  without
      in any way limiting the effect of, and subject to, the Release Agreement, all
      liabilities and obligations of Seller under the LLC Agreement and of Calpine
      Central, L.P. and Calpine Operating Services Company, Inc. under the other
      Assigned Contracts;

     

    (b)  all
      liabilities and obligations of Seller for Transaction Taxes payable in
      connection with the transactions contemplated by this Agreement;

     

    (c)  all
      liabilities and obligations of Seller, any of its Affiliates or any of their
      respective Related Persons, including vicarious liability, arising under or
      relating to any environmental, health or safety matter (including any liability
      or obligation arising under 

     

    
      
      

      
        7

        
          

        

      

      
      

    

     

    any
      Environmental Law) attributable to such Person’s ownership (directly or
      indirectly) or operation of the Company and the Business; and

     

    (d)  all
      liabilities and obligations relating to or arising from the operation of the
      Business or the ownership of the Ownership Interests and Related Assets after
      the Closing Date, including all liabilities and obligations for any Taxes
      relating to the Ownership Interests and Related Assets for periods after the
      Closing Date.

     

    Effective
      upon the Release Effective Date, the parties acknowledge and agree that all
      liabilities and obligations of the Company, including all liabilities and
      obligations of the Company for real estate Taxes and assessments that are not
      yet due and payable and all liabilities and obligations of the Company that
      are
      assessed against Buyer or Seller on a theory of piercing the corporate veil,
      shall, following the Release Effective Date, be retained by the Company (but,
      for the avoidance of doubt, without limiting Seller’s obligations pursuant to
      the last sentence of Section 10.2).

     

    1.4.  Excluded
      Liabilities.
      Seller
      shall retain all liabilities and obligations that are not Assumed Liabilities
      (the “Excluded
      Liabilities”),
      including those listed on Schedule
      1.4
      of the
      Disclosure Schedules. 

     

    1.5.  Non-Assignment
      of Assigned Contracts.
      Notwithstanding anything contained herein to the contrary: (i) this Agreement
      shall not constitute an agreement to assign any Assigned Contract if, after
      giving effect to the provisions of sections 363 and 365 of the Bankruptcy Code,
      an attempted assignment thereof, without obtaining a Consent, would constitute
      a
      breach thereof or in any way negatively affect the rights of Seller or Buyer,
      as
      the assignee of such Assigned Contract and (ii) no breach of this Agreement
      shall have occurred by virtue of such nonassignment. Any assignment to Buyer
      of
      any Assigned Contract that shall, after giving effect to the provisions of
      sections 363 and 365 of the Bankruptcy Code, require the Consent of any third
      party for such assignment as aforesaid shall be made subject to such Consent
      being obtained.

     

     

    ARTICLE
      2 

    CONSIDERATION

     

    2.1.  Consideration
      If the
      Closing occurs, the aggregate consideration for the sale, assignment and
      transfer of the Ownership Interests and Related Assets shall be (a)
      $60,000,000.00 in cash (the “Closing
      Purchase Price”)
      which
      amount is payable and deliverable at the Closing in accordance with Section
      3.3
      plus (b)
      the RFP Success Payment, if applicable, and (c) the Asset Transfer Payment,
      if
      applicable (clauses (a) through (c) collectively the “Purchase
      Price”),
      plus
      (d) the Priority Present Value plus (e) the assumption by Buyer of the
      Assumed Liabilities.

     

    2.2.  Deposits.
      On the
      date hereof, Buyer and Seller have executed and delivered the Purchase Notice,
      and Buyer has deposited with the Escrow Agent $5,000,000.00 (the “Initial
      Deposit”).
      Upon
      the Bankruptcy Court’s entry of the Sale Order, or if a qualifying bid has been
      received in accordance with the Bidding Procedures, no later than the Business
      Day prior to the Auction, Buyer shall deposit with the Escrow Agent an
      additional $5,000,000.00, (the 

     

    
      
      

      
        8

        
          

        

      

      
      

    

     

     

    “Additional
      Deposit,”
and
      together with the Initial Deposit, the “Deposits”).
      The
      Deposits and interest thereon shall be held and disbursed pursuant to the terms
      of the Master Escrow Agreement, the Purchase Notice, and this
      Agreement.

     

    2.3.  Signing
      Date Deliverables.
      On the
      date hereof, (a) the Guarantor shall execute and deliver to Seller the Guaranty
      substantially in the form of Exhibit
      A-1
      hereto;
      (b) each of Buyer and Seller shall execute and deliver and have caused the
      Company and their Affiliates to execute, as applicable, a copy of (i) the
      Management Committee Resolutions, in the form attached hereto as Exhibit
      A-2,
      (ii) the
      Claims Settlement Agreement, in the form attached hereto as Exhibit
      F,
      (iii)
      the O&M Transfer Agreement, in the form attached hereto as Exhibit
      G;
      and
      (iv) the Funding Side Letter, in the form attached hereto as Exhibit I (the
      “Funding
      Side Letter”)
      and
      (c) each of Calpine Corporation and Cleco Corporation shall have executed and
      delivered and have caused the Company and their respective Affiliates, as
      applicable, to execute and deliver a copy of the Release Agreement in the form
      attached hereto as Exhibit B-5 (the “Release
      Agreement”).

     

     

    ARTICLE
      3

    CLOSING
      AND DELIVERIES

     

    3.1.  Closing.
      The
      consummation of the transactions contemplated hereby (the “Closing”)
      shall
      take place at the offices of Kirkland & Ellis LLP, 153 East 53rd
      Street,
      New York, New York at 9:00 a.m. on the third Business Day following the
      satisfaction or waiver by the appropriate party of all the conditions contained
      in Article
      11
      hereof,
      or on such other date or at such other place and time as may be agreed to by
      the
      parties hereto (the “Closing
      Date”).

     

    3.2.  Seller’s
      Deliveries.
      On the
      Closing Date, Seller shall deliver to Buyer the following items:

     

    (a)  
      a
      membership transfer agreement for the Ownership Interests, duly executed by
      Seller and in the form attached hereto as Exhibit
      B-1;

     

    (b)  a
      bill of
      sale with respect to the Related Assets, duly executed by Seller and in the
      form
      attached hereto as Exhibit
      B-2.

     

    (c)  an
      assumption agreement, duly executed by Seller and in the form attached hereto
      as
Exhibit
      B-3;

     

    (d)  an
      affidavit of non-foreign status that complies with section 1445 of the Code,
      duly executed by CPN Acadia, Inc. and in the form attached hereto as
Exhibit
      B-4;
      and

     

    (e)  the
      Business Records (it being understood that any Business Records located at
      the
      Power Plant need not be physically delivered, but shall be deemed delivered
      at
      the Closing).

     

    
      
      

      
        9

        
          

        

      

      
      

    

     

    3.3.  Buyer’s
      Deliveries.
      On the
      Closing Date, in payment for the Ownership Interests and Related Assets (other
      than the Metering Claims Payment, which is for the consideration described
      in
      the definition thereof):

     

    (a)  the
      Escrow Agent shall pay to Seller the Deposits in accordance with the terms
      of
      the Master Escrow Agreement and the Purchase Notice, by wire transfer of
      immediately available funds to a bank account designated by Seller in writing
      to
      the Escrow Agent and Buyer (the “Seller’s
      Account”)
      (with
      interest on the Deposit being paid by the Escrow Agent to Buyer according to
      the
      Master Escrow Agreement);

     

    (b)  Buyer
      shall pay to Seller the Closing Purchase Price, reduced by the amount of the
      Deposits paid pursuant to Section
      3.3(a)
      and by
      the amount payable by Seller under Section
      10.2,
      by wire
      transfer of immediately available funds to Seller’s Account;

     

    (c)  Buyer
      shall deliver to Seller (i) a membership transfer agreement with respect to
      the
      Ownership Interests, duly executed by Buyer and substantially in the form
      attached as Exhibit
      B-1
      hereto,
      and (ii) an assumption agreement, duly executed by Buyer and substantially
      in
      the form attached hereto as Exhibit
      B-3;
      and

     

    (d)  Buyer
      shall pay to Seller the Metering Claims Payment by wire transfer of immediately
      available funds to Seller’s Account.

     

     

    ARTICLE
      4

    REPRESENTATIONS
      AND WARRANTIES OF SELLER

     

    Seller
      hereby represents and warrants to Buyer as follows, except in all cases as
      disclosed in the Disclosure Schedules, as the same may be amended or modified
      in
      accordance with Section
      13.3
      hereof:

     

    4.1.  Corporate
      Organization.
      Seller
      is duly organized and validly existing under the Laws of the jurisdiction of
      its
      organization. Subject to any necessary authority from the Bankruptcy Court,
      Seller has all requisite power and authority to own its properties and assets
      and to conduct its business as now conducted.

     

    4.2.  Authorization
      and Validity.
      Subject
      to the Bankruptcy Court’s entry of the Sale Order and the receipt of the
      Consents set forth on Schedule 4.4
      of the
      Disclosure Schedules, Seller has all requisite power and authority to enter
      into
      this Agreement and the Transaction Documents to which it is or will be a party
      and to carry out its obligations hereunder and thereunder. Subject to the entry
      of the Sale Order, the execution and delivery of this Agreement and the
      Transaction Documents and the performance by Seller of its obligations hereunder
      and thereunder have been duly authorized by all necessary action by the board
      of
      managers of Seller, and no other proceedings on the part of Seller are necessary
      to authorize such execution, delivery and performance. This Agreement and the
      Transaction Documents have been or will be duly executed by Seller and, subject
      to the Bankruptcy Court’s entry of the Sale Order, constitutes or will
      constitute, when executed, its valid and binding obligation, enforceable against
      it in accordance with the terms herein and therein.

     

    
      
      

      
        10

        
          

        

      

      
      

    

     

    4.3.  No
      Conflict or Violation.
      Subject
      to (a) the receipt of all Consents set forth on Schedule 4.4
      of the
      Disclosure Schedules, (b) the Bankruptcy Court’s entry of the Sale Order
      and (c) the receipt of the Antitrust Approvals, the execution, delivery and
      performance by Seller of this Agreement and the Transaction Documents do not
      and
      will not (i) violate or conflict with any provision of the certificate of
      incorporation or by-laws (or equivalent organizational documents) (collectively,
      the “Organizational
      Documents”)
      of
      Seller or (ii) violate any provision of law, regulation, rule or other
      legal requirement of any Government (“Law”)
      or any
      order, judgment or decree of any court or Government (“Order”)
      applicable to Seller, or (iii) violate or result in a breach of or constitute
      (with due notice or lapse of time or both) a default under any Assigned
      Contract, which violation, conflict, breach or default in any such case would
      constitute, individually or in the aggregate, a Material Adverse Effect.

     

    4.4.  Seller
      Consents.
      Schedule 4.4
      of the
      Disclosure Schedules sets forth a true and complete list of each Consent and
      each declaration to or filing or registration with any Government that is
      required in connection with the execution and delivery of this Agreement and
      the
      Transaction Documents by Seller or the performance by Seller of its obligations
      hereunder or thereunder, the failure of which to obtain would constitute,
      individually or in the aggregate, a Material Adverse Effect.

     

    4.5.  Seller’s
      Ownership Interests.
      At
      Closing, Seller shall hold of record and own beneficially good and valid title
      to the Ownership Interests (which shall constitute a 50% membership interest)
      and Related Assets, free and clear of any restrictions on transfer (other than
      restrictions under the 1933 Act and state securities laws), taxes, Liens,
      options, warrants, purchase rights, contracts, commitments, equities, claims,
      and demands. Seller is not a party to any option, warrant, purchase right,
      or
      other contract or commitment (other than this Agreement) that could require
      Seller to sell, transfer, or otherwise dispose of the Ownership Interests or
      Related Assets (or restrict Seller from doing so). Seller is not a party to
      any
      voting trust, proxy, or other agreement or understanding with respect to the
      voting of the Ownership Interests. All
      of
      the Ownership Interests shall be duly authorized, validly issued and fully
      paid
      and nonassessable. None of the Ownership Interests was or will be issued in
      violation of applicable Laws or any third-party preemptive or subscription
      rights, rights of first refusal or offer, options, put or call rights, warrants,
      consent rights, restrictive covenants or any other agreements or arrangements
      with any third party, it being understood that the Seller must obtain Bankruptcy
      Court approval of this Agreement and the proposed sale of the Ownership
      Interests and Related Assets as contemplated in Article
      8.
      Except
      for the Ownership Interests, the Related Assets or the rights and assets being
      conveyed to the Buyer under the O&M Transfer Agreement, none of Seller nor
      any of its Related Persons has any legal or beneficial interest in the Company
      or any of its assets except for de minimis assets.

     

    Furthermore,
      Seller makes the following representations regarding the Company, except in
      all
      cases as disclosed in the Disclosure Schedules, as the same may be amended
      or
      modified in accordance with Section
      13.3
      hereof:

     

    4.6.  Corporate
      Organization
      The
      Company is duly organized and validly existing under the Laws of the
      jurisdiction of its organization. The Company has all requisite corporate power
      and authority to own its properties and assets and to conduct its business
      as
      now conducted.

     

    
      
      

      
        11

        
          

        

      

      
      

    

     

    4.7.  No
      Unauthorized Action
      To
      Seller’s Knowledge, none of Seller nor any of its Related Persons has caused the
      Company to take any action that is not in compliance with the Company’s
      Organizational Documents, the LLC Agreement or any other agreement between
      the
      parties or to fail to take any action which is required by the Company’s
      Organizational Documents, the LLC Agreement or any other agreement between
      the
      parties except to the extent such action or failure to act would not constitute,
      individually or in the aggregate, a Material Adverse Effect.

     

    4.8.  Ownership
      of Property at Power Plant Site
      Except
      as set forth on the Disclosure Schedules or in the Transaction Documents,
      neither the Seller nor any of its Affiliates has any legal or beneficial
      interests in the Power Plant site or any personal property or improvements
      located at the Power Plant site, except to the extent such legal or beneficial
      interests are not, individually or in the aggregate, a Material Adverse Effect
      (including because the legal or beneficial interests are in an asset that is
      not
      material to the operation of the Power Plant or that is replaceable without
      undue delay or expense).

     

    4.9.  Capitalization
      of the Company.
      Schedule
      4.9
      sets
      forth the percentage interests of all Persons holding interests in the Company.
      Except for the interests set forth on Schedule
      4.9,
      there
      are no Equity Securities of the Company issued, reserved for issuance or
      outstanding. All outstanding membership interests of the Company have been
      duly
      authorized and validly issued and are fully-paid and nonassessable, and are
      held
      of record and owned beneficially as set forth on Schedule
      4.9.
      All of
      the issued and outstanding membership interests of the Company were issued
      in
      compliance with all applicable federal and state securities laws. There are
      no
      outstanding or authorized options, warrants, subscriptions, rights, calls,
      commitments, conversion rights, rights of exchange, plans or other agreements
      of
      the Company providing for the purchase, issuance or sale of any Equity
      Securities of the Company, other than the transactions contemplated by this
      Agreement. There are no outstanding stock appreciation, phantom stock or similar
      rights with respect to the Company. The Company has no obligation of any kind
      to
      issue any additional Equity Securities to any Person other than as set forth
      in
      the LLC Agreement. There are no voting trusts, proxies or other agreements,
      or
      understandings with respect to the voting of the Equity Securities of the
      Company.

     

    4.10.  Compliance
      with Law.
      Except
      as set forth on Schedule 4.10
      of the
      Disclosure Schedules and as may result from the Chapter 11 Case, since January
      1, 2006, Seller has not received written notice of any violation of any Law
      by
      the Company (other than with respect to Environmental Law, as to which the
      only
      representations and warranties made by Seller are those contained in
Section 4.14 of
      the
      Disclosure Schedules), nor is the Company in default with respect to any Order,
      applicable to the Business or any of the Company’s assets, properties or
      operation of the Power Plant, other than violations and defaults the
      consequences of which would not reasonably be expected to have, individually
      or
      in the aggregate, a Material Adverse Effect.

     

    4.11.  Litigation.
      As of
      the date of this Agreement and except as set forth on Schedules 4.11
      of the
      Disclosure Schedules, there are no Claims, suits or proceedings pending or,
      to
      the Knowledge of Seller, threatened in writing, before any Government brought
      by
      or against the Company that, if adversely determined, could reasonably be
      expected to have, 

     

    
      
      

      
        12

        
          

        

      

      
      

    

     

    individually
      or in the aggregate, a Material Adverse Effect or materially impair the ability
      of Seller to consummate the transactions contemplated by this
      Agreement.

     

    4.12.  Material
      Contracts.
      Schedule
      4.12
      of the
      Disclosure Schedules sets forth a complete and correct
      list
      of each contract of the Company that the consequences of a default under or
      termination of such contract would reasonably be expected to have, individually
      or in the aggregate, a Material Adverse Effect (collectively, the “Material
      Contracts”).
      Other
      than as set forth on Schedule
      4.12
      of the
      Disclosure Schedules, neither the Company nor, to Seller’s Knowledge, any other
      party to any of the Material Contracts has commenced any action against any
      of
      the parties to such Material Contracts or given or received any written notice
      of any material default or violation under any Material Contract that was not
      withdrawn or dismissed. To Seller’s Knowledge, each of the Material Contracts
      is, or will be at the Closing, valid, binding and in full force and effect
      against the Company, except as otherwise set forth on Schedule
      4.12
      of the
      Disclosure Schedules.

     

    4.13.  Permits.
      Schedule 4.13(a)
      of the
      Disclosure Schedules sets forth a complete and correct list of all material
      Permits and all pending applications therefor obtained by the Company in
      connection with the Business. As of the date of this Agreement, except as set
      forth on Schedule
      4.13(b)
      and as
      would not reasonably be expected to have, individually or in the aggregate,
      a
      Material Adverse Effect, each such Permit is valid and in full force and effect,
      and is not subject to any pending or, to Seller’s Knowledge, threatened
      administrative or judicial proceeding to revoke, cancel, suspend or declare
      such
      Permit invalid in any respect.

     

    4.14.  Environmental
      Matters.
      To
      Seller’s Knowledge, except as set forth on Schedule 4.14
      of the
      Disclosure Schedules:

     

    (a)  The
      Company is in compliance with applicable Environmental Laws, except where such
      non-compliance would not reasonably be expected to have, individually or in
      the
      aggregate, a Material Adverse Effect.

     

    (b)  Since
      January 1, 2006, the Company has not received a written complaint, Order,
      directive, Claim, citation or notice of violation from any Government or any
      other Person with respect to any release, spill, leak, discharge or emission
      of
      any Hazardous Materials to the air, surface water, groundwater or soil of the
      real Property, except where such matter would not reasonably be expected to
      have, individually or in the aggregate, a Material Adverse Effect.

     

    (c)  The
      representations and warranties contained in this Section
      4.14
      are the
      only representations and warranties made by Seller with respect to matters
      arising under Environmental Laws or relating to Hazardous
      Materials.

     

    4.15.  Owned
      Real Property.
      Schedule 4.15
      of the
      Disclosure Schedules sets forth a complete and correct list of all material
      real
      property owned in whole or in part (and states the ownership percentage of
      all
      partially owned real property) by the Company and used in connection with the
      operation of the Power Plant. Seller has used commercially reasonable efforts
      to
      make available to Buyer, to the extent within Seller’s possession or control, a
      copy of all certificates of occupancy for such real property and a copy of
      any
      variance granted with 

     
      
      
      

      
        13

        
          

        

      

      
      

    

     

     

    respect
      to such real property pursuant to applicable zoning laws or ordinances, all
      of
      which documents are true and complete copies thereof. Seller has used
      commercially reasonable efforts to make available to Buyer all material existing
      surveys or topographical maps for the real property, title policies, engineering
      reports and Environmental Reports in Seller’s possession or
      control.

     

    4.16.  Regulatory
      Status.
      The
      Company has authorization from the FERC to sell power at market based rates
      and
      such authorization is in full force and effect, subject to proceedings of
      general applicability relating to sellers of power in the geographic location
      where the Power Plant is located.

     

     

    ARTICLE
      5

    REPRESENTATIONS
      AND WARRANTIES OF BUYER

     

    Buyer
      hereby represents and warrants to Seller as follows, except in all cases as
      disclosed in the Disclosure Schedules.

     

    5.1.  Corporate
      Organization.
      Buyer
      is duly organized, validly existing and in good standing under the Laws of
      the
      jurisdiction of its organization, and has all requisite limited liability
      company power and authority to own its properties and assets and to conduct
      its
      business as now conducted.

     

    5.2.  Authorization
      and Validity.
      Buyer
      has all requisite limited liability company power and authority to enter into
      this Agreement and the Transaction Documents to which it is a party and to
      carry
      out its obligations hereunder and thereunder. The execution and delivery of
      this
      Agreement and the Transaction Documents and the performance of Buyer’s
      obligations hereunder and thereunder have been duly authorized by all necessary
      action by the board of managers of Buyer, and no other proceedings on the part
      of Buyer are necessary to authorize such execution, delivery and performance.
      This Agreement and the Transaction Documents to which Buyer is or will be a
      party have been or will be duly executed by Buyer and constitute or will, when
      executed, constitute its valid and binding obligation, enforceable against
      it in
      accordance with the terms herein and therein, except that such enforceability
      may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
      conveyance, moratorium or other similar laws affecting or relating to the
      enforcement of creditors’ rights generally and subject, as to enforceability, to
      general principles of equity.

     

    5.3.  No
      Conflict or Violation.
      Subject
      to (a) the receipt of all Consents set forth on Schedule
      5.4
      and (b)
      the receipt of the Antitrust Approvals, the execution, delivery and performance
      by Buyer of this Agreement and the execution and delivery of the Transaction
      Documents and the operation of the Business by Buyer do not and will not (i)
      violate or conflict with any provision of the Organizational Documents of Buyer,
      or (ii) violate any provision of Law, or any Order applicable to Buyer or (iii)
      violate or result in a breach of or constitute (with due notice or lapse of
      time
      or both) a default under any material contract to which Buyer is a party or
      by
      which it is bound or to which any of its properties or assets is subject,
which
      violation, conflict, breach or default in any such case would reasonably be
      expected to have a material adverse effect on Buyer’s ability to consummate the
      transactions contemplated by this Agreement. 

     

     
      
      

      
        14

        
          

        

      

      
      

    

     

    5.4.  Consents,
      Approvals and Notifications.
      The
      execution, delivery and performance by Buyer of this Agreement and the
      Transaction Documents to which it is a party and the operation of the Business
      by Buyer do not require the Consent of, or filing with or notification of,
      any
      Government or any other Person except: (a) as required under any Antitrust
      Law; (b) for entry of the Sale Order by the Bankruptcy Court; (c) for the
      Consents set forth on Schedule
      5.4
      and
      (d) for such Consents and filings, the failure to obtain or make would not
      reasonably be expected to have a material adverse effect on the ability of
      Buyer
      to consummate the transactions contemplated hereby.

     

    5.5.  Availability
      of Funds.
      Buyer
      has, and on the Closing Date will have, sufficient funds available to finance
      and consummate the transactions contemplated by this Agreement.

     

    5.6.  Licenses,
      Permits, etc. 
      Subject
      to (a) the receipt of all Consents set forth on Schedule 5.4 and (b) the receipt
      of the Antitrust Approvals, if applicable, Buyer has, or will have as of the
      Closing Date, all licenses, permits, franchises and authority, whether from
      a
      Government or otherwise, including Regulatory Approvals, and has provided any
      requisite notice to customers necessary to purchase the Ownership Interests
      and
      Related Assets and to assume the Assumed Liabilities and to operate the
      Business, except for any license, permit, franchise, authority or notice the
      failure to obtain or make would not reasonably be expected to have a material
      adverse effect on the ability of Buyer to consummate the transactions
      contemplated hereby.

     

    5.7.  Investigation
      by Buyer.
      Buyer
      has conducted its own independent review and analysis of the Ownership
      Interests, Related Assets and the Assumed Liabilities, of the value of such
      Ownership Interests and Related Assets and of the business, operations,
      technology, assets, liabilities, financial condition and prospects of the
      Business and Buyer acknowledges that Seller has provided Buyer with access
      to
      the personnel, properties, premises and records of the Business for this
      purpose. Buyer has conducted its own independent review of all Orders of, and
      all motions, pleadings, and other submissions to, the Bankruptcy Court in
      connection with the Chapter 11 Case. In entering into this Agreement, Buyer
      has
      relied solely upon its own investigation and analysis, and Buyer acknowledges
      that (a) neither Seller nor any of its Related Persons or Affiliates makes
      or has made any representation or warranty, either express or implied, as to
      the
      accuracy or completeness of any of the information provided or made available
      to
      Buyer or any of its Related Persons or Affiliates, except as and only to the
      extent expressly set forth in Article
      4
      (which
      are subject to the limitations and restrictions contained in this Agreement),
      and (b) to the fullest extent permitted by Law, neither Seller nor any of
      its Related Persons or Affiliates shall have any liability or responsibility
      whatsoever to Buyer or its Related Persons or Affiliates on any basis (including
      in contract or tort, under securities Laws or otherwise) based upon any
      information provided or made available, or statements made, to Buyer or Related
      Persons or Affiliates (or any omissions therefrom), including in respect of
      the
      specific representations and warranties of Seller set forth in this Agreement,
      except, with regard to Seller, as and only to the extent expressly set forth
      in
Article
      4
      (which
      are subject to the limitations and restrictions contained in this
      Agreement).
      To the
      best of Buyer’s Knowledge, except as notified to Seller pursuant to Section
      7.3,
      it does
      not know of any condition, event or circumstance that constitutes a breach
      of
      any representation, warranty or covenant of Seller in this
      Agreement.

     

     
      
      

      
        15

        
          

        

      

      
      

    

    5.8.  Acquisition
      as Investment.
      Buyer
      is acquiring the Ownership Interests for its own account as an investment
      without the present intent to engage in any distribution of the same to any
      other Person. Buyer acknowledges that the Ownership Interests are not registered
      pursuant to the 1933 Act and that none of the Ownership Interests may be
      transferred, except pursuant to an applicable exception under the 1933 Act.
      Buyer is an “accredited investor” as defined under Rule 501 promulgated under
      the 1933 Act.

     

    5.9.  Adequate
      Assurances Regarding Assigned Contracts.
      Buyer is
      and will be capable of satisfying the conditions contained in sections
      365(b)(1)(C) and 365(f) of the Bankruptcy Code with respect to the Assigned
      Contracts.

     

    5.10.  Knowledge
      of Claims.
      To
      Buyer’s Knowledge, other than the claim relating to the Metering Claim Payment
      and claims that may be made with respect to amounts due for goods sold or
      services provided to the Company in the ordinary course of business, Buyer
      is
      not aware of any claims or causes of action that the Company has against Acadia
      Power Holdings, LLC (“APH”)
      or
      Cleco Corporation or their respective Affiliates.

     

     

    ARTICLE
      6

    COVENANTS
      OF SELLER

     

    Seller
      hereby covenants to Buyer as follows:

     

    6.1.  Actions
      Before Closing.
      Seller
      shall use commercially reasonable efforts to perform and satisfy all conditions
      to either party’s obligations to consummate the transactions contemplated by
      this Agreement that are to be performed or satisfied by Seller under this
      Agreement.

     

    6.2.  Conduct
      of Business Before the Closing Date.
      Except
      as may be required by the Bankruptcy Court, from the date hereof until the
      Closing, Seller shall vote the Ownership Interests in favor of the Company
      operating the Power Plant and conducting the Business in the ordinary course;
      provided that,
      except
      as otherwise provided in the Funding Side Letter, nothing herein shall require
      Seller to contribute any capital to the Company.
      Seller
      agrees that Buyer shall have the right, but not the obligation, to provide
      to
      the Company advances of funds from time to time necessary or appropriate to
      conduct operations or maintenance of the Business in the ordinary course,
      consistent with the historical operation and maintenance of the Power Plant.
      If
      Buyer so provides one or more advances to the Company, the Seller hereby agrees
      to vote the Ownership Interest to cause the Company to repay each such advance
      to Buyer with any cash on-hand at the Company, each time there is cash on-hand,
      after payment of then-due operating expenses and liabilities and reservation
      of
      $500,000 for working capital and, for the avoidance of doubt, prior to payment
      of any distributions to the members of the Company. 

     

    6.3.  Orders.
      Seller
      shall use commercially reasonable efforts to obtain entry by the Bankruptcy
      Court of Orders in substantially the form of Exhibit
      D
      hereto
      (the “Sale
      Order”),
      Exhibit
      E
      hereto
      (the “Bidding
      Procedures Order”),
      and
Exhibit
      J
      hereto
      (the “Claims
      Settlement Order”).

     

     
      
      

      
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    6.4.  Consents
      and Approvals.
      Seller
      shall use commercially reasonable efforts to obtain all Consents required to
      be
      obtained by Seller in connection with the execution, delivery and performance
      by
      Seller and its Affiliates of this Agreement
      and the
      Transaction Documents.

     

    6.5.  Access
      to
      Properties and Records; Confidentiality. 

     

    (a)  Seller
      shall use commercially reasonable efforts to afford to Buyer, and to the
      accountants, counsel and representatives of Buyer, reasonable access during
      normal business hours throughout the period prior to the Closing Date (or the
      earlier termination of this Agreement pursuant to Article
      12)
      to all
      books and records of the Company relating to the Business if (w) permitted
      under
      Law (x) such books and records are not subject to confidentiality agreements,
      (y) disclosing such books and records would not adversely affect any attorney
      client, work product or like privilege and (z) such books and records do not
      relate to any confidential proprietary models or other information of Seller
      or
      any of its Affiliates pertaining to energy project evaluation, energy or natural
      gas price curves or projections or other economic or other predictive models.
      Upon reasonable prior notice, Seller shall also use commercially reasonable
      efforts to afford Buyer reasonable access, during normal business hours, to
      the
      Business, all operations of the Business and to any Related Assets throughout
      the period prior to the Closing Date. The rights of access contained in this
      Section 6.5(a)
      are
      granted subject to, and on, the following terms and conditions: (A) any
      such investigation shall not include physical testing or samplings of the Power
      Plant or the real property associated with the Plant, and shall be exercised
      in
      such a manner as not to interfere unreasonably with the operation of the
      Business; (B) during the period from the date hereof to the Closing Date,
      all information provided to Buyer or its agents or representatives by or on
      behalf of Seller, the Company or their agents or representatives (whether
      pursuant to this Section
      6.5(a)
      or
      otherwise) shall be governed by and subject to the Confidentiality Agreement,
      dated as of April 23, 2007, by and among Buyer, Calpine and Seller (the
“Confidentiality
      Agreement”);
      (C) such rights of access shall not affect or modify the conditions set
      forth in Article
      11
      in any
      way; and (D) all such rights of access shall be at Buyer’s sole cost, expense
      and risk; and Buyer shall indemnify Seller and the Company for any Losses that
      Seller, the Company or any third party may suffer as a result of Buyer’s
      exercise of its rights under this Section
      6.5(a)
      except
      to the extent such Losses are due to Seller’s gross negligence or willful
      misconduct; and (E) Buyer shall comply with and adhere to all of the Company’s
      safety policies and procedures.

     

    (b)  Notwithstanding
      the foregoing, consistent with past practices and to facilitate Seller’s and
      APH’s joint business relationship, Seller shall, and shall cause its Affiliates
      to, continue to afford to APH, and to the accountants, counsel and
      representatives of APH, reasonable access during normal business hours to all
      books, records, personnel, accountants, offices, properties and facilities
      of
      the Company and, to the extent exclusively relating to the Company, the
      Business, the Related Assets or the Assumed Liabilities, of Seller, its
      Affiliates and the subcontractors (of any tier) of Seller and its Affiliates
      and
      shall, consistent with past practices, promptly provide to APH such information
      relating to the Company, the Business, the Related Assets or the Assumed
      Liabilities as APH may reasonably request.

     

     
      
      

      
        17

        
          

        

      

      
      

    

     

    6.6.  Rejection
      of Assigned Contracts.
      Seller
      shall not reject any Assigned Contracts pursuant to the Chapter 11 Case without
      the prior written consent of Buyer.

     

    6.7.  Further
      Assurances.
      Upon the
      request and at the sole expense of Buyer at any time on or after the Closing
      Date, Seller shall execute and deliver such documents, and take such actions,
      as
      Buyer or its counsel may reasonably request to effectuate the purposes of this
      Agreement.

     

    6.8.  Notices.
      Seller
      shall provide Buyer with prompt written notice of Seller’s Knowledge of (i) any
      breach of any representation or warranty by Buyer or (ii) any other material
      failure by Buyer to comply with the obligations of this Agreement.

     

    6.9.  Provision
      of Data; Transfer of Software.
      Seller
      agrees to cooperate with such reasonable requests during normal business hours
      as Buyer may make prior to and following the Closing (which requests shall
      not
      interfere in any material respect with the responsibilities of Seller’s
      employees) so as to assist Buyer with the integration from and after the Closing
      of the existing operational data, software and systems relating to the Power
      Plant into Buyer’s software and systems. Notwithstanding the foregoing, the
      parties acknowledge and agree that Buyer is not acquiring any software on any
      computer or other electronic equipment transferred to the Buyer as part of
      the
      Related Assets unless and only to the extent that Buyer or the Company shall
      have obtained prior to the Closing any necessary licenses or rights to use
      such
      software from and after the Closing. Seller also agrees to cooperate with such
      reasonable requests during normal business hours as Buyer may make in order
      to
      facilitate Buyer’s acquisition of such licenses or rights.

     

     

    ARTICLE
      7

    COVENANTS
      OF BUYER

     

    Buyer
      hereby covenants to Seller as follows:

     

    7.1.  Actions
      Before Closing Date.
      Buyer
      shall use commercially reasonable efforts to perform and satisfy all conditions
      to either party’s obligations to consummate the transactions contemplated by
      this Agreement that are to be performed or satisfied by Buyer under this
      Agreement.

     

    7.2.  Consents,
      Approvals and Notifications.
      Buyer
      shall use all commercially reasonable efforts to obtain all Consents required
      to
      be obtained by Buyer and provide notifications to all Persons required to be
      notified by Buyer to effect the transactions contemplated by this Agreement.
      Buyer shall, as promptly as practicable, take all actions as are reasonably
      requested by Seller to assist in obtaining the Bankruptcy Court’s entry of the
      Sale Order, including furnishing affidavits, financial information or other
      documents or information for filing with the Bankruptcy Court and making Buyer’s
      employees and representatives available to testify before the Bankruptcy
      Court.

     

    7.3.  Notices.
      Buyer
      shall provide Seller with prompt written notice of Buyer’s Knowledge of (i) any
      breach of any representation or warranty by Seller or (ii) any other material
      failure by Seller to comply with the obligations of this Agreement.

     

     
      
      

      
        18

        
          

        

      

      
      

    

     

    7.4.  Payment
      Obligations; Claims.
      Notwithstanding anything to the contrary in this Agreement and for the avoidance
      of doubt, Buyer’s obligations to make the RFP Success Payment (if applicable)
      and the Asset Transfer Payment (if applicable) shall survive the Closing. If
      the
      Closing occurs, (a) upon execution of a Qualifying PPA, Buyer shall become
      obligated to make the first $2,000,000 RFP Success Payment six (6) months after
      executing the Qualifying PPA and shall make the subsequent $2,000,000 payments
      on each anniversary of such date for the subsequent four (4) years and (b)
      upon
      closing of a Qualifying Entergy Sale, Buyer shall become obligated to make
      the
      Asset Transfer Payment within five (5) days after closing the Qualifying Entergy
      Sale. Seller agrees that Buyer has the right to pursue or not pursue a
      Qualifying PPA and/or a Qualifying Entergy Sale in its sole
      discretion.

     

    7.5.  Settlement
      of
      Certain Claims.
      Notwithstanding anything else to the contrary in this Agreement, Buyer agrees
      to
      the following obligations and requirements set forth in the Bidding Procedures
      Order in connection with being selected as the stalking horse purchaser at
      the
      Auction, all of which shall survive termination of this Agreement and all of
      which shall be binding on the Purchaser in accordance with the Bidding
      Procedures Order irrespective of whether the Purchaser is the successful bidder
      at the Auction: Paragraphs 2 (Buyer’s
      obligation to direct the Company to transfer to Seller the Seller Calpine Claim
      and the Seller CES Claim)
      10,11,
      16, 17, 18, 19, 21 and 23 of the Bidding Procedures Order.

     

    7.6.  Reasonable
      Assistance
      . Buyer
      shall use its commercially reasonable efforts to assist Seller in obtaining
      entry of the Bidding Procedures Order and the Sale Order, including providing
      testimony as required at any hearing before the Bankruptcy Court. Buyer shall
      undertake such actions, or refrain from taking action, as applicable, and shall
      vote its interests in the Company so that the Company shall do the same, so
      as
      not to intentionally cause a default under or violation of, any of the Material
      Contracts. In
      the
      event of an objection or threatened objection to the transactions set forth
      herein and to the Sale Order by a taxing authority asserting a lien on the
      Ownership Interests or the Related Assets, Buyer shall use its commercially
      reasonable efforts to take, or cause to be taken, all actions and to do, or
      cause to be done, all things necessary to resolve such objection in order to
      consummate the transactions contemplated by this Agreement, including to
      effectuate the intent of the parties hereto that any Liens for Taxes,
      assessments and Government or other similar charges that are not yet due and
      payable or that, although due and payable, are being contested in good faith,
      would attach to the Ownership Interests and Related Assets if and only to the
      extent Buyer is responsible for such Taxes post-Closing under this
      Agreement.

     

    7.7.  Waiver
      of Confidentiality.
      Buyer
      shall be deemed to, and shall be deemed to have voted its interests in the
      Company to, subject only to the execution of a confidentiality agreement which
      names the Company and APH as third party beneficiaries, substantially in the
      form attached hereto as Exhibit
      H,
      have
      waived any confidentiality provisions in any agreements executed by the Company
      and/or Buyer that Seller desires to provide to prospective bidders in the
      Auction and sale of the Ownership Interests and Related Assets. Buyer shall
      assist Seller in obtaining waivers of confidentiality from any counterparty
      to
      an agreement with the Company, and Seller shall obtain such counterparty waiver
      before it provides any such agreement executed by the Company to a prospective
      purchaser.

     

     
      
      

      
        19

        
          

        

      

      
      

    

     

    7.8.  Metering
      Claim Payment.
      Buyer
      shall make the Metering Claim Payment on the Release Effective Date. If the
      Claims Settlement Order is not final and non-appealable on the first Business
      Day following the 10th day after entry of the Claims Settlement Order on the
      Bankruptcy Court’s docket (the “Appeal
      Period Expiration Date”),
      the
      Metering Claim Payment shall be reduced by $8,333.33 per day for each day
      starting on the first day following the Appeal Period Expiration Date until
      such
      time as the Claims Settlement Order becomes final and non-appealable; provided
      that, the Metering Claim Payment shall not be reduced below $500,000. Buyer
      covenants that (i) it shall not cause, directly or indirectly, an appeal of
      the
      Claims Settlement Order to be filed; and (ii) if an appeal of the Claims
      Settlement Order is filed, that it shall use all commercially reasonable efforts
      to assist Seller in timely opposing and dismissing such appeal.

     

     

    ARTICLE
      8

    BANKRUPTCY
      PROCEDURES

     

    8.1.  Bankruptcy
      Actions.
      Seller
      shall use its reasonable best efforts to obtain the entry of the Bidding
      Procedures Order, the Claims Settlement Order and the Sale Order on the
      Bankruptcy Court’s docket. Seller shall file all pleadings with the Bankruptcy
      Court as are necessary or appropriate to secure entry of the Bidding Procedures
      Order, the Claims Settlement Order and the Sale Order, shall serve all parties
      entitled to notice of such pleadings under applicable provisions of the
      Bankruptcy Code and Rules and shall diligently pursue the obtaining of such
      orders. Seller covenants that (i) it shall not cause, directly or indirectly,
      an
      appeal of the Bidding Procedures Order, the Claims Settlement Order or the
      Sale
      Order to be filed; and (ii) if an appeal of the Bidding Procedures Order, the
      Claims Settlement Order or the Sale Order is filed, that it shall use reasonable
      efforts to cause the timely opposing and dismissing of such appeal and to cause
      such Order to become a Final Order. This Section 8.1, as it relates to the
      Claims Settlement Order, shall survive any termination of this
      Agreement.

     

    8.2.  Bidding
      Procedures.
      The
      bidding procedures (the “Bidding
      Procedures”)
      to be
      employed with respect to this Agreement shall be those reflected in the Bidding
      Procedures Order. Buyer acknowledges that the Bidding Procedures may be
      supplemented by other customary procedures not inconsistent with the matters
      otherwise set forth therein and the other terms of this Agreement. 

     

    8.3.  Review
      of Filings
      To the
      extent practicable, Seller shall provide Buyer, at least three (3) days in
      advance of filing with the Bankruptcy Court, a draft of any motions, orders
      or
      other pleadings that Seller proposes to file with the Bankruptcy Court seeking
      approval of this Agreement and the Transaction Documents, including the motions
      to approve the Bidding Procedures Order, the Claims Settlement Order and the
      Sale Order. To the extent practicable, Seller shall reasonably cooperate with
      Buyer, and consider in good faith the views of Buyer, with respect to all such
      filings.

     

     

    ARTICLE
      9

    REGULATORY
      MATTERS

     

    Buyer
      hereby covenants to Seller, and Seller hereby covenants to Buyer, as
      follows:

     

     
      
      

      
        20

        
          

        

      

      
      

    

     

    9.1.  Regulatory
      Filings.
      Subject
      to the terms and conditions of this Agreement, each party shall use its
      reasonable best efforts to (a)
      take, or
      cause to be taken, all actions and to do, or cause to be done, all things
      necessary under applicable Laws to consummate the transactions contemplated
      by
      this Agreement, which shall include each party’s reasonable best efforts to
      obtain any consents required pursuant to Section 203 of the FPA, including
      filing the Section 203 application with FERC within thirty days after the date
      hereof; (b)
      if
      applicable, file a Notification and Report Form pursuant to the HSR Act with
      respect to the transactions contemplated hereby within five Business Days after
      the date hereof; (c)
      supply
      as promptly as practicable any additional information and documentary material
      that may be requested or required pursuant to any Antitrust Law, including
      the
      HSR Act (if applicable), and (d)
      cause
      the expiration or termination of the applicable waiting periods (if applicable)
      under the HSR Act or any other Antitrust Law as soon as practicable.
      Buyer
      and Seller agree that (i) Seller shall prepare and file with FERC the
      application required under Section 203 of the FPA, (ii) Buyer will be given
      ample time to review and comment on the application before the planned date
      of
      filing, and (iii) Seller will not file the application with FERC until Buyer
      has
      given its approval. 

     

    9.2.  Cooperation;
      Confidentiality Agreement.
      In
      connection with the efforts referenced in Section
      9.1
      to
      obtain all requisite approvals and authorizations for the transactions
      contemplated by this Agreement under the FPA, the HSR Act (if applicable),
      any
      other Antitrust Law, or any state law, each of the parties shall use reasonable
      best efforts to (a)
      cooperate with each other in connection with any filing or submission and in
      connection with any investigation or other inquiry, including any proceeding
      initiated by a private party; (b)
      keep the
      other party informed in all material respects of any material communication
      received by such party from, or given by such party to, any Government and
      of
      any material communication received or given in connection with any proceeding
      by a private party, in each case regarding any of the transactions contemplated
      hereby and (c)
      permit
      the other party to review any material communication given to it by, and consult
      with the other party advance of any written communication to or meeting or
      conference with any Government, including in connection with any proceeding
      by a
      private party regarding any of the transactions contemplated hereby and, to
      the
      extent permitted by such Government, give the other party the opportunity to
      attend and participate in such meeting or conference. The obligations in this
      Section 9.2
      shall be
      subject to the Confidentiality Agreement and any attorney-client, work product
      or other privilege, and each of the parties shall coordinate and cooperate
      fully
      with the other parties hereto in exchanging such information and providing
      such
      assistance as such other parties may reasonably request in connection with
      the
      foregoing and in seeking early termination of any applicable waiting periods
      under Antitrust Law. The parties will not take any action that will have the
      effect of delaying, impairing or impeding the receipt of any required
      authorizations, consents, Orders or approvals. “Antitrust
      Law”
means
      the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
      Federal Trade Commission Act, as amended, and all other Laws and Orders that
      are
      designed or intended to prohibit, restrict or regulate actions having the
      purpose or effect of monopolization or restraint of trade or lessening of
      competition through merger or acquisition.“Antitrust
      Approval”
      means
      any approval or consent of any Government required under any applicable
      Antitrust Law or the expiration or termination of any applicable waiting period
      under any applicable Antitrust Law.

     

    9.3.  Objections
      or Other Challenges.
      If any
      objections are asserted with respect to the transactions contemplated hereby
      under any Antitrust Law or if any suit is instituted by any Government or any
      private party challenging any of the transactions contemplated hereby
      as 

     

     
      
      

      
        21

        
          

        

      

      
      

    

    violative
      of any Antitrust Law or if the filing pursuant to Section
      9.1
      is
      reasonably likely to be rejected or conditioned by the FERC or a state
      Government, each of the parties shall use reasonable best efforts to resolve
      such objections or challenge as such Government or private party may have to
      such transactions, including to vacate, lift, reverse or overturn any Order,
      whether temporary, preliminary or permanent, so as to permit consummation of
      the
      transactions contemplated by this Agreement. Without limiting the generality
      of
      the foregoing, Buyer shall
      promptly
      take and diligently pursue any or all of the following actions to the extent
      necessary to eliminate any concerns on the part of, or to satisfy any conditions
      imposed by, any Government with jurisdiction over the enforcement of any
      applicable Law, including any Antitrust Law, the FPA and applicable state Law,
      regarding the legality of Buyer’s acquisition of the Business or any portion
      thereof, the Ownership Interests and Related Assets or the Assumed Liabilities:
      (a) using
      its
      reasonable best efforts to prevent the entry in a judicial or administrative
      proceeding brought under any Law, including any Antitrust Law, the FPA or
      applicable state Law, by any Government or any other Person of any permanent,
      temporary or preliminary injunction or other Order that would make consummation
      of the acquisition of the Business or any portion thereof, the Ownership
      Interests and Related Assets or the Assumed Liabilities in accordance with
      the
      terms of this Agreement unlawful or that would prevent or delay such
      consummation; (b)
      to the
      extent required by reasonable best efforts, taking promptly and diligently
      pursuing, in the event that an injunction or Order has been issued as referred
      to in Section
      9.3(a),
      any and
      all steps, including the appeal thereof, the posting of a bond and/or the steps
      contemplated by Section
      9.3(a),
      necessary to vacate, modify or suspend such injunction or Order so as to permit
      such consummation as promptly as possible and (c)
      to the
      extent required by reasonable best efforts, promptly taking and diligently
      pursuing all other actions and do all other things necessary and proper to
      avoid
      or eliminate each and every impediment under any Law, including any Antitrust
      Law and the FPA, that may be asserted by any Government or any other Person
      to
      the consummation of the acquisition of the Business or any portion thereof,
      the
      Ownership Interests and Related Assets or the Assumed Liabilities by Buyer
      in
      accordance with the terms of this Agreement. 

     

     

    ARTICLE
      10

    TAXES

     

    10.1.  Taxes
      Related to Purchase of Ownership Interests and Related Assets.
      All
      state and local sales, use, gross-receipts, transfer, excise, value-added or
      other similar Taxes on the transfer of the Ownership Interests and Related
      Assets and the assumption of the Assumed Liabilities (but excluding (i) capital
      gains of Seller or its Affiliates and (ii) other Taxes based on or measured
      by
      income or revenues), and all recording and filing fees that may be imposed
      by
      reason of the sale, transfer, assignment and delivery of the Ownership Interests
      and Related Assets (collectively, “Transaction
      Taxes”),
      shall
      be paid by Buyer
      on or
      prior to their due date.

     

    10.2.  Proration
      of Real and Personal Property Taxes.
      All real
      and personal property taxes and assessments on the Ownership Interests and
      Related Assets (not including taxes of the Company) for any taxable period
      commencing prior to the Closing Date and ending on or after the Closing Date
      (a
“Straddle
      Period”)
      shall
      be prorated between Buyer and Seller as of the Closing Date based on the best
      information then available, with (a)
      Seller
      being liable for such Taxes attributable to any portion of a Straddle Period
      ending prior to the Closing Date and (b)

     
      
      
      

      
        22

        
          

        

      

      
      

    

     

    Buyer
      being liable for such Taxes attributable to any portion of a Straddle Period
      beginning on or after the Closing Date. Information available after the Closing
      Date that alters the amount of Taxes due with respect to the Straddle Period
      will be taken into account and any change in the amount of such Taxes shall
      be
      prorated between Buyer and Seller as set forth in the next sentence. All such
      prorations shall be allocated so that items relating to the portion of a
      Straddle Period ending prior to the Closing Date shall be allocated to Seller
      based upon the number of days in the Straddle Period prior to the Closing Date
      and items related to the portion of a Straddle Period beginning on or after
      the
      Closing Date shall be allocated to Buyer based upon the number of days in the
      Straddle Period from and after the Closing Date; provided,
      however,
      that
      the parties shall allocate any real property Tax in accordance with Section
      164(d) of the Code. The amount of all such prorations shall be calculated and
      paid on the Closing Date; prorations resulting from information after the
      Closing shall be calculated and paid as soon as practicable
      thereafter.
      Upon
      receiving information confirming the Company’s tax liability under the Acadia
      Parish sales and use tax audit described in the letter from Gary W. Lambert
      and
      Company to the Company dated April 3, 2006, Seller shall pay to the Company
      one
      half of the Company’s obligation regarding any such tax liability on the Closing
      or as soon as practicable thereafter.

     

    10.3.  Cooperation
      on Tax Matters.
      Seller
      and Buyer shall (and shall cause their respective Affiliates to) cooperate
      fully
      with each other and make available or cause to be made available to each other
      for consultation, inspection and copying (at such other party’s expense) in a
      timely fashion such personnel, Tax data, relevant Tax Returns or portions
      thereof and filings, files, books, records, documents, financial, technical
      and
      operating data, computer records and other information as may be reasonably
      required (a) for the preparation by such other party of any Tax Returns or
      (b)
      in connection with any Tax audit or proceeding including one party (or an
      Affiliate thereof) to the extent such Tax audit or proceeding relates to or
      arises from the transactions contemplated by this Agreement.

     

    10.4.   Retention
      of Tax Records.
      After
      the Closing Date and until 4 years after the Closing Date, Buyer shall retain
      possession of all accounting, business, financial and Tax records and
      information in Buyer’s possession that (a) relate to the Ownership
      Interests and Related Assets and are in existence on the Closing Date and
      (b) come into existence after the Closing Date but relate to the Ownership
      Interests and Related Assets before the Closing Date, and Buyer shall give
      Seller notice and a reasonable opportunity to retain any such records in the
      event that Buyer determines to destroy or dispose of them during such period.
      In
      addition, from and after the Closing Date, Buyer shall provide to Seller and
      their Related Persons (after reasonable notice and during normal business hours
      and without charge to Seller) access to the books, records, documents and other
      information relating to the Ownership Interests and Related Assets as Seller
      may
      reasonably deem necessary to (i) properly prepare for, file, prove, answer,
      prosecute and defend any Tax Return, claim, filing, tax audit, tax protest,
      suit, proceeding or answer or (ii) administer or complete any cases under
      chapter 11 of the Bankruptcy Code of or including Seller. Such access shall
      include access to any computerized data regarding the Ownership Interests and
      Related Assets (to the extent relating to the period before the Closing
      Date).

     

    10.5.  Allocation
      of Purchase Price and Purchase Price Allocation Forms.
      The
      Purchase Price, the Assumed Liabilities and other relevant items shall be
      allocated among the Ownership Interests and Related Assets as provided in
      Schedule 10.5 (the “Allocation
      Schedule”).
      Each
      of Buyer and Seller agrees that it will report the federal, state, local and
      other 

     

     
      
      

      
        23

        
          

        

      

      
      

    

     

    Tax
      consequences of the purchase and sale hereunder (including in filings on IRS
      Form 8594) in a manner consistent with such allocation and that it will not
      take
      any position inconsistent therewith in connection with any Tax Return, refund
      claim, litigation or otherwise, unless and to the extent required to do so
      pursuant to applicable Law. Notwithstanding any other provision of this
      Agreement, this Section
      10.5
      shall
      survive any termination or expiration of this Agreement.

     

    10.6.  Unbilled
      Transactional Taxes.
      If a
      Tax assessment is levied upon any party by an authorized tax jurisdiction for
      unbilled Transaction Taxes that are the obligation of the other party under
      this
      Agreement, then the non-assessed party shall reimburse the assessed party for
      those taxes including any interest and penalty.

     

    10.7.  Aquila
      Termination Fee. 
      For the
      avoidance of doubt, Buyer and Seller agree that for U.S. federal income tax
      purposes the sale of the Ownership Interests pursuant to this Agreement shall
      cause the Company to recognize income with respect to the unamortized balance
      of
      the Aquila Termination Fee and that all such income shall be allocated to and
      reported by Seller.

     

     

    ARTICLE
      11

    CONDITIONS
      PRECEDENT TO PERFORMANCE BY PARTIES

     

    11.1.  Conditions
      Precedent to Performance by Seller and Buyer.
      The
      respective obligations of Seller and Buyer to consummate the transactions
      contemplated by this Agreement are subject to the satisfaction or waiver by
      both
      parties (other than the condition contained in Section
      11.1(a),
      the
      satisfaction of which cannot be waived), on or prior to the Closing Date, of
      the
      following conditions:

     

    (a)  Sale
      Order.
      The
      Bankruptcy Court shall have entered the Sale Order, and no Order staying,
      reversing, modifying or amending the Sale Order shall be in effect on the
      Closing Date.

     

    (b)  Antitrust
      and Regulatory Approvals.
      The
      applicable waiting periods for the transactions contemplated by this Agreement
      under the HSR Act (if applicable), and any other Antitrust Law shall have
      expired or terminated and the Regulatory Approvals on Schedule
      11.1(b)
      shall
      have been obtained and requisite notice has been provided by Buyer to relevant
      Government authorities.

     

    (c)  No
      Violation of Orders.
      No
      preliminary or permanent injunction or other Order that declares this Agreement,
      the Master Escrow Agreement, or the Purchase Notice invalid or unenforceable
      in
      any respect or that prevents the consummation of the transactions contemplated
      hereby or thereby shall be in effect.

     

    (d)  Bidding
      Procedures Order.
      The
      Bankruptcy Court shall have entered the Bidding Procedures Order, which shall
      provide for, among other things, the approval of the Priority Present Value
      Payment, the Break-Up Fee and the Expense Reimbursement, and no Order staying,
      reversing, modifying or amending the Bidding Procedures Order shall be in effect
      on the Closing Date.

     

     

      
      

      
        24

        
          

        

      

      
      

    

     

    (e)  Claims
      Settlement Order.
      The
      Bankruptcy Court shall have entered the Claims Settlement Order and such order
      shall have become a Final Order.

     

    11.2.  Conditions
      Precedent to Performance by Seller.
      The
      obligations of Seller to consummate the transactions contemplated by this
      Agreement are subject to the satisfaction, on or before the Closing Date, of
      the
      following conditions, any one or more of which may be waived by Seller in its
      sole discretion:

     

    (a)  Representations
      and Warranties of Buyer.
      All
      representations and warranties made by Buyer in this Agreement shall be true
      and
      correct in all material respects on and as of the Closing Date as if again
      made
      by Buyer on and as of such date (or, if made as of a specific date, at and
      as of
      such date), and Seller shall have received a certificate dated the Closing
      Date
      and signed by the President or a Vice President of Buyer to that
      effect.

     

    (b)  Performance
      of the Obligations of Buyer.
      Buyer
      shall have performed in all material respects all obligations required under
      this Agreement to be performed by it on or before the Closing Date (except
      with
      respect to the obligation to pay the Closing Purchase Price and the other
      payments to be made in accordance with the terms of this Agreement, which
      obligations shall be performed in all respects as required under this
      Agreement), and Seller shall have received a certificate dated the Closing
      Date
      and signed by a Manager of Buyer to that effect.

     

    (c)  Buyer’s
      Deliveries.
      Buyer
      shall have delivered, and Seller shall have received, all of the items set
      forth
      in Section
      3.3.

     

    11.3.  Conditions
      Precedent to the Performance by Buyer.
      The
      obligations of Buyer to consummate the transactions contemplated by this
      Agreement are subject to the satisfaction, on or before the Closing Date, of
      the
      following conditions, any one or more of which may be waived by Buyer in its
      sole discretion:

     

    (a)  Representations
      and Warranties of Seller.
      The
      representations and warranties made by Seller in Article
      4
      of this
      Agreement shall be true and correct as of the Closing, in each case as though
      made at and as of such time (or, if made as of a specific date, at and as of
      such date), except to the extent such failures to be true and correct do not
      constitute a Material Adverse Effect; provided,
      however,
      that
      representations and warranties made by Seller and qualified as to Material
      Adverse Effect shall be true and correct as of the Closing Date, and Buyer
      shall
      have received a certificate dated the Closing Date and signed by the President
      or a Vice President of Seller to that effect.

     

    (b)  Performance
      of the Obligations of Seller.
      Seller
      shall have performed in all respects all obligations required under this
      Agreement to be performed by it on or before the Closing Date, except for such
      failures to perform that do not constitute a Material Adverse Effect, and Buyer
      shall have received a certificate dated the Closing Date and signed by the
      President or a Vice President of Seller to that effect.

     

     
      
      

      
        25

        
          

        

      

      
      

    

     

    (c)  Seller’s
      Deliveries.
      Seller
      shall have delivered, and Buyer shall have received, all of the items set forth
      in Section
      3.2,
      except
      such Business Records which Seller's failure to deliver would not constitute,
      individually or in the aggregate, a Material Adverse Effect.

     

    (d)  Material
      Adverse Effect.
      No
      Material Adverse Effect shall have occurred and be continuing.

     

    Promptly
      after the Closing Date, Seller shall deliver to Buyer any Business Records
      not
      delivered to Buyer on or prior to the Closing Date.

     

     

    ARTICLE
      12

    TERMINATION
      AND EFFECT OF TERMINATION

     

    12.1.  Right
      of Termination.»
      Notwithstanding anything to the contrary contained herein, this Agreement may
      be
      terminated only
      as
      provided in this Article
      12.
      In the
      case of any such
      termination, the terminating party shall give notice to the other party
      specifying the provision pursuant to which the Agreement is being
      terminated.

     

    12.2.  Termination
      Without Default

     

    (a)  This
      Agreement may be terminated at any time before Closing:

     

    
      	(i)  	
              by
                mutual written consent of Seller and Buyer;

            

    

     

    
      	(ii)  	
              by
                Buyer, if the Claims Settlement Order has not been entered within
                the
                earlier of (A) 60 days after the date hereof or (B) within 48 hours
                of the
                entry of the Bidding Procedures
                Order;

            

    

     

    
      	(iii)  	
              by
                Buyer, if the Bidding Procedures Order has not been entered within
                60 days
                after the date hereof;

            

    

     

    
      	(iv)  	
              by
                Buyer, if a Sale Order has not been entered within 90 days after
                the entry
                of the Bidding Procedures Order;

            

    

     

    
      	(v)  	
              if
                the Auction takes place, by Buyer, on any date that is more than
                120 days
                after the entry of the Sale Order or, if the Auction does not take
                place,
                by Buyer, on any date that is more than 365 days
                after the date hereof (in either case, the “Buyer’s Termination
                Date”),
                if any condition contained in Section 11.1
                is
                not satisfied or waived as of such date; provided, however,
                that Buyer shall not have the right to terminate this Agreement under
                this
                Section
                12.2(a)(v)
                if
                Buyer’s failure to fulfill any of its obligations under this Agreement
                is
                the reason that the relevant
                condition is not satisfied as of such
                date;

            

    

     

    
      	(vi)  	
              if
                the Auction takes place, by Seller, on any date that is more than
                30 days
                after the entry of the Sale Order, or, if the Auction does not take
                place,
                by Seller, on any date that is more than 365 days
                after the date hereof (in either 

            

    

     

    
      
      

      
        26

        
          

        

      

      
      

    

     

     

    
      	 	
              case,
                the “Seller’s
                Termination Date”),
                if any condition contained in Section
                11.1
                is
                not satisfied or waived as of such date; provided,
                however,
                that Seller shall not have the right to terminate this Agreement
                under
                this Section
                12.2(a)(vi)
                if
                Seller’s failure to fulfill any of its obligations under this Agreement
                is
                the reason that the relevant
                condition is not satisfied as of such date; or

            

    

     

    
      	(vii)  	
               by
                either Buyer or Seller, immediately upon an Order becoming final
                and
                non-appealable that declares this Agreement or any of the Transaction
                Documents invalid or unenforceable in any material respect or that
                prevents the consummation of the transactions contemplated hereby
                or
                thereby
                (a
                “Termination
                Order”);
                provided,
                however,
                that neither Seller nor Buyer shall have the right to terminate this
                Agreement pursuant to this Section
                12.2(a)(vii)
                if
                such party or any of its Affiliates has sought entry of, or has failed
                to
                use all commercially reasonable efforts to oppose entry of, such
                Termination Order.

            

    

     

    (b)  If
      this
      Agreement is terminated pursuant to Section
      12.2(a),
      (i) the
      Deposits, together with any interest accrued thereon less Buyer’s share of the
      fees and expenses of the Escrow Agent, pursuant to the Master Escrow Agreement,
      shall be returned to Buyer, (ii) this Agreement shall become null and void
      and
      have no effect (other than Section
      7.5,
      Section
      7.7,
      Section
      7.8,
      Section
      8.1,
      this
Article
      12,
      Article
      13
      and
Article
      14,
      which
      shall survive termination; provided,
      however,
      that
      Seller’s obligation to pay the Expense Reimbursement pursuant to Section
      12.5(c)
      shall
      not survive such termination) and (iii) except pursuant to such surviving
      provisions, none of Seller, Buyer or any of their respective Related Persons
      shall have any liability or obligation arising under or in connection with
      this
      Agreement. 

     

    12.3.  Effect
      of Failure of Seller’s Conditions to Closing.

     

    (a)  Seller
      may terminate this Agreement at any time after the Seller’s Termination Date and
      before Closing if any condition contained in Section
      11.2,
      except
      for those obligations to be performed at Closing, which are not capable of
      satisfaction until Closing, is not satisfied or waived by Seller as of such
      time; provided,
      however,
      that
      Seller shall not have the right to terminate this Agreement under this
Section
      12.3
      if
      Seller’s failure to fulfill any of its obligations under this Agreement is the
      reason that the relevant condition is not satisfied as of such
      date.

     

    (b)  If
      this
      Agreement is terminated pursuant to this Section
      12.3,
      Buyer
      acknowledges that a monetary remedy may be inadequate or impracticable and
      that
      Seller may have been caused irreparable harm and, if Seller so determines,
      Seller
      shall have the right, subject to the waiver by Seller or satisfaction of the
      conditions contained in Section 11.1,
      to
      obtain an Order requiring Buyer to specifically perform all of its obligations
      under this Agreement.

     

    (c)   If
      Seller
      determines that a monetary remedy is adequate and practicable, Seller may
      terminate this Agreement, retain the Deposits, together with any interest
      accrued thereon and pursue any other remedies available to Seller at
      Law;
      provided that,
      

     

    
      
      

      
        27

        
          

        

      

      
      

    

     

    (i)
      if
      Seller’s actual direct damages are less than the Deposit, plus accrued interest,
      Seller shall return any amounts in excess of its actual direct damages plus
      the
      interest accrued on such excess to Buyer and (ii) such monetary remedy shall
      be
      limited to actual direct damages,
      not to exceed the amount of the Closing Purchase Price. In
      the
      case of such termination, (i) this Agreement shall become null and void and
      have
      no effect (other than Section
      7.5,
      Section
      7.7,
      Section
      7.8,
      Section
      8.1,
      this
Article
      12,
      Article
      13
      and
Article
      14,
      which
      shall survive termination; provided, however, that Seller’s obligation to pay
      the Expense Reimbursement pursuant to Section
      12.5(c)
      shall
      not survive such termination) and (iii) except pursuant to such surviving
      provisions, none of Seller, Buyer or any of their respective Related Persons
      shall have any liability or obligation arising under or in connection with
      this
      Agreement.

     

    
      	12.4.  	
              Effect
                of Failure of Buyer’s Conditions to Closing. (a)
                Buyer may terminate this Agreement at any time after the Buyer’s
                Termination Date and before Closing if any condition contained in
                Section
                11.3
                is
                not satisfied or waived as of such time, except for those obligations
                to
                be performed at Closing, which are not capable of satisfaction until
                Closing; provided,
                however,
                that Buyer shall not have the right to terminate this Agreement under
                this
                Section
                12.4
                if
                Buyer’s failure to fulfill any of its obligations under this Agreement
                is
                the reason that the relevant condition is not satisfied as of such
                date. 

            

    

     

    (b)  If
      this
      Agreement is terminated pursuant to this Section
      12.4
      and
      Seller does not consummate an Alternative Transaction: (i) the Deposits,
      together with any interest accrued thereon less Buyer’s share of any fees and
      expenses of the Escrow Agent pursuant to the Master Escrow Agreement, shall
      be
      returned to Buyer, (ii)
      this
      Agreement shall become null and void and have no effect (other than Section
      7.5,
      Section 7.7,
      Section
      7.8,
      Section
      8.1,
      this
Article
      12,
      Article
      13
      and
Article
      14,
      which
      shall survive termination; provided,
      however,
      that
      Seller’s obligation to pay the Expense Reimbursement pursuant to Section
      12.5(c)
      shall
      not survive such termination) and (iii) except
      pursuant to such surviving provisions, none of Seller, Buyer or any of their
      respective Related Persons shall have any liability or obligation arising under
      or in connection
      with this Agreement.

     

    12.5.  Termination
      on Alternative Transaction.  

     

    (a)  This
      Agreement may be terminated at any time before Closing by either Buyer or
      Seller, upon Seller’s entering into any Alternative Transaction.

     

    (b)  If
      this
      Agreement is terminated pursuant to Section
      12.4,
      provided that Seller consummates an Alternative Transaction, including an
      Alternative Transaction with a Back-up Bidder (as that term is defined in the
      Bidding Procedures Order), or Section
      12.5(a):
      (i) the
      Deposits, together with any interest accrued thereon less Buyer’s share of the
      fees and expenses of the Escrow Agent pursuant to the Master Escrow Agreement,
      shall be returned to Buyer, (ii) upon consummation of an Alternative
      Transaction, Seller shall pay Buyer the Expense Reimbursement in accordance
      with
Section
      12.5(c),
      (iii)
      provided that Seller consummates an Alternative Transaction, the Break-Up Fee
      and the Priority Present Value Payment shall be paid to Buyer in accordance
      with
      Paragraph 13 of the Bidding Procedures Order, and (iv) this Agreement

     

    
      
      

      
        28

        
          

        

      

      
      

    

     

     

    shall
      become null and void and of no effect (other than Sections
      7.5
      through
7.8,
      Section
      8.1,
      Article
      12,
      Article
      13
      and
Article
      14,
      which
      shall survive termination, provided that Section
      7.6
      shall
      only survive termination until the earlier of termination of each Alternative
      Transaction or consummation of an Alternative Transaction), and (v) except
      as
      provided in such surviving provisions, this Section
      12.5(b)
      and
Section
      12.5(c),
      none of
      Buyer, Seller or their respective Related Persons shall have any liability
      or
      obligation arising under or in connection with this Agreement. 

     

    (c)  Termination
      Fees.

     

    
      	(i)  	
              If
                this Agreement is terminated pursuant to Section
                12.4,
                provided that Seller consummates an Alternative Transaction, including
                an
                Alternative Transaction with a Back-up Bidder (as that term is defined
                in
                the Bidding Procedures Order), or Section
                12.5(a),
                provided that Seller later consummates an Alternative Transaction,
                then:
                (y) $2,900,000.00 (the “Break-Up
                Fee”)
                and the Priority Present Value Payment shall be paid to Buyer in
                accordance with Paragraph 13 of the Bidding Procedures Order and
                (z)
                Seller shall pay to Buyer, from the sale proceeds of such Alternative
                Transaction, reasonable and documented attorney’s fees and out-of-pocket
                expenses actually incurred by or on behalf of Buyer after January
                5, 2007
                in connection with the negotiation of this Agreement and the Auction,
                not
                to exceed $350,000.00 (the “Expense
                Reimbursement”). 

            

    

     

    
      	(ii)  	
              Without
                limiting Section 12.5(b), Seller’s obligation to pay the Expense
                Reimbursement pursuant to this Section
                12.5(c)
                shall survive termination of this Agreement and shall constitute
                an
                administrative expense of Seller. 

            

    

     

    
      	(iii)  	
              The
                Expense Reimbursement, paid under the circumstances provided in
                Section
                12.5(c)(i)
                shall be the exclusive remedy of Buyer and its Affiliates against
                Seller
                or any of its respective Affiliates or Related Persons for any termination
                of this Agreement pursuant to Section
                12.5.
                In no event shall Seller or any of its respective Affiliates or Related
                Persons have any liability to Buyer or its Affiliates in excess of
                the
                Expense Reimbursement in the event that this Agreement terminates
                pursuant
                to Section
                12.5,
                and any claim, right or cause of action by Buyer or any of its Affiliates
                against Seller or its respective Affiliates or Related Persons for
                any
                termination of this Agreement pursuant to Section 12.5 in excess
                of the
                Expense Reimbursement is hereby fully waived, released and forever
                discharged. This
                Section
                12.5(c)(iii)
                does not in any way limit Buyer’s rights to the Break-Up Fee and the
                Priority Present Value Payment in accordance with Paragraph 13 of
                the
                Bidding Procedures Order.

            

    

     

     

    ARTICLE
      13

    MISCELLANEOUS

     

    13.1.  Successors
      and Assigns.
      Except
      as otherwise provided in this Agreement, no party hereto shall assign this
      Agreement or any rights or obligations hereunder without the prior 

     

    
      
      

      
        29

        
          

        

      

      
      

    

     

    written
      consent of the other party hereto, and any such attempted assignment without
      such prior written consent shall be void and of no force and effect;
provided that,
      Buyer
      may assign this Agreement to a purchaser of all of its interests in the Company
      with the prior written consent of Seller, such consent not to be unreasonably
      withheld. This Agreement shall inure to the benefit of and shall be binding
      upon
      the successors and permitted assigns of the parties hereto.

     

    13.2.  Governing
      Law; Jurisdiction.
      This
      Agreement shall be construed, performed and enforced in accordance with, and
      governed by, the Laws of the State of New York (without giving effect to the
      principles of conflicts of Laws thereof), except to the extent that the Laws
      of
      such State are superseded by the Bankruptcy Code.
      For so
      long as Seller is subject to the jurisdiction of the Bankruptcy Court, the
      parties hereto irrevocably elect as the sole judicial forum for the adjudication
      of any matters arising under or in connection with the Agreement, and consent
      to
      the exclusive jurisdiction of, the Bankruptcy Court. After Seller is no longer
      subject to the jurisdiction of the Bankruptcy Court, any
      legal
      action or proceeding with respect to this Agreement or the transactions
      contemplated hereby may be brought in the courts of the State of New York
      sitting in Manhattan or of the United States for the Southern District of New
      York, and by execution and delivery of this Agreement, each of the Parties
      consents to the non-exclusive jurisdiction of those courts. Each of the Parties
      irrevocably waives any objection, including any objection to the laying of
      venue
      or based on the grounds of forum
      non conveniens,
      which
      it may now or hereafter have to the bringing of any action or proceeding in
      such
      jurisdiction in respect of this Agreement or the transactions contemplated
      hereby.

     

    13.3.  Disclosure
      Schedule Supplements.
      From
      time to time prior to the Closing, Seller shall supplement or amend the
      Disclosure Schedules to this Agreement with respect to any matter that, if
      existing, occurring or known at the date of this Agreement, would have been
      required to be set forth or described in the Disclosure Schedules. The
      Disclosure Schedules shall be deemed amended by all such supplements and
      amendments for all purposes, unless the facts described in such supplement
      or
      amendment will constitute, individually or in the aggregate, a Material Adverse
      Effect.

     

    13.4.  Warranties
      Exclusive.
      The
      representations and warranties contained herein and in the Transaction Documents
      are the only representations or warranties given by Seller and all other express
      or implied warranties are disclaimed. Without limiting the foregoing, Buyer
      acknowledges that, except for the representations and warranties contained
      herein and in the Transaction Documents, the Ownership Interests and Related
      Assets are conveyed “AS IS,’’ “WHERE IS” and “WITH ALL FAULTS” and that, except
      for the representations and warranties contained herein and in the Transaction
      Documents, all warranties of merchantability, usage or suitability or fitness
      for a particular purpose are disclaimed. Without limiting the foregoing, Buyer
      further acknowledges that, except for and limited to the specific
      representations and warranties contained herein and in the Transaction
      Documents, no material or information provided by or communications made by
      Seller or its agents will create any representation or warranty of any kind,
      whether express or implied, with respect to the Ownership Interests and Related
      Assets and the title thereto, the operation of the Business, or the prospects
      (financial and otherwise), risks and other incidents of the Business, including
      the actual or rated generating capability of the Power Plant or the ability
      of
      Buyer to generate or sell electrical energy.

     

    13.5.  Survival
      of Representations and Warranties.

     

    
      
      

      
        30

        
          

        

      

      
      

    

     

    None
      of
      the representations or warranties of Seller set forth in this Agreement, the
      Transaction Documents, or in any certificate delivered pursuant to Section
      11.3(a)
      or
Section
      11.3(b)
      shall
      survive the Closing.

     

    13.6.  No
      Recourse Against Third Parties.

     

    Each
      of
      Buyer and Seller agrees for itself, its Related Persons and any other parties
      making any claim by, through or under the rights of such persons (each
      collectively, the “Buyer
      Group”
or
      “Seller
      Group”
as
      applicable) that no member of the Buyer Group or the Seller Group shall have
      any
      rights against a Related Person of the other party or any Affiliate of the
      other
      party (including, for Seller, Calpine), (each, individually, a “Non-Recourse
      Person”)
      for
      any Losses that any member of the Buyer Group or the Seller Group may suffer
      in
      connection with this Agreement. If any member of the Buyer Group or the Seller
      Group makes a claim against any person or entity that is not a Non-Recourse
      Person (a “Third
      Person”)
      that
      in any way gives rise to a claim by such Third Person against any Non-Recourse
      Person asserting that such Non-Recourse Person is or may be liable to such
      Third
      Person with respect to any Losses arising in connection with this Agreement
      (whether by way of indemnification, contribution, or otherwise on any theory
      whatever) (a “Claim
      Over”),
      such
      member of the Buyer Group or the Seller Group shall reduce or credit against
      any
      judgment or settlement such member of the Buyer Group or the Seller Group may
      obtain against such Third Person the full amount of any judgment or settlement
      such Third Person may obtain against the Non-Recourse Person on such Claim
      Over,
      and shall, as part of any settlement with such Third Person, obtain from such
      Third Person for the benefit of such Non-Recourse Person a satisfaction in
      full
      of such Third Person’s Claim Over against the Non-Recourse Person.

     

    13.7.  Mutual
      Drafting.
      This
      Agreement is the result of the joint efforts of Buyer and Seller, and each
      provision hereof has been subject to the mutual consultation, negotiation and
      agreement of the parties and there is to be no construction against either
      party
      based on any presumption of that party’s involvement in the drafting
      thereof.

     

    13.8.  Expenses.
      Except
      as otherwise provided herein, each of the parties hereto shall pay its own
      expenses in connection with this Agreement and the transactions contemplated
      hereby, including any legal and accounting fees, whether or not the transactions
      contemplated hereby are consummated. Buyer shall pay all Transaction Taxes
      and
      all
      filing fees required to be paid in connection with any filings made or notices
      given pursuant to any Antitrust Law for purposes of the transactions
      contemplated by this Agreement.

     

    13.9.  Broker’s
      and Finder’s Fees.
      Each of
      the parties represents and warrants that it has not dealt with any broker or
      finder in connection with any of the transactions contemplated by this Agreement
      in a manner so as to give rise to any claims against the other party for any
      brokerage commission, finder’s fees or other similar payout, except that Seller
      has retained Miller Buckfire & Co., LLC and will pay Miller Buckfire &
Co. LLC such fees as are approved by the Bankruptcy Court.

     

    13.10.  Severability.
      In the
      event that any part of this Agreement is declared by any court or other judicial
      or administrative body to be null, void or unenforceable, said provision shall
      survive to the extent it is not so declared, and all of the other provisions
      of
      this Agreement 

     

    
      
      

      
        31

        
          

        

      

      
      

    

     

     

    shall
      remain in full force and effect only if, after excluding the portion deemed
      to
      be unenforceable, the remaining terms shall provide for the consummation of
      the
      transactions contemplated hereby in substantially the same manner as originally
      set forth at the later of the date this Agreement was executed or last
      amended.

     

    13.11.  Notices.
      All
      notices, requests, demands and other communications under this Agreement shall
      be in writing and shall be deemed to have been duly given: (a) on the date
      of
      service if served personally on the party to whom notice is to be given; (b)
      on
      the day of transmission if sent via facsimile transmission to the facsimile
      number given below and confirmation of successful transmission is obtained
      (for
      this purpose, an activity report of the sender’s facsimile machine showing the
      confirmation of successful transmission is sufficient); (c) on the day
      after delivery to Federal Express or similar overnight courier or the Express
      Mail service maintained by the United States Postal Service or (d) on the fifth
      day after mailing, if mailed to the party to whom notice is to be given, by
      first class mail, registered or certified, postage prepaid and properly
      addressed, to the party as follows:

     

    If
      to
      Seller:

    

    c/o
      Calpine Corporation

    50
      West
      San Fernando Street

    San
      Jose,
      California 95113

    Attention:
      General Counsel

    Facsimile:
      (408) 794-2434

    

    Copy
      to:

    

    Kirkland
      & Ellis LLP

    655
      Fifteenth Street, NW Suite 1200

    Washington,
      DC 20005

    Attention:
      Mitchell F. Hertz

    Facsimile:
      (202) 879-5200

     

    Kirkland
      & Ellis LLP

    777
      South
      Figueroa Street

    Los
      Angeles, CA 90017

    Attention:
      Bennett L. Spiegel 

    Facsimile:
      (213) 680-8500 

    

    If
      to
      Buyer:

    

    Acadia
      Power Holdings, LLC

    2030
      Donahue Ferry Road

    Pineville,
      LA 71361-5226

    Attention:
      W. Keith Johnson

    Facsimile:
      (318) 484-7685

     

    
      
      

      
        32

        
          

        

      

      
      

    

     

    Copy
      to:

    

    Pillsbury
      Winthrop Shaw Pittman LLP

    2
      Houston
      Center

    909
      Fannin, Suite 2000

    Houston,
      TX 77010-1018

    Attention:
      Sergio Pozzerle

    Facsimile:
      281-667-3893

    

    King
      & Spalding LLP

    1185
      Avenue of the Americas

    New
      York,
      NY 10036

    Attention:
      Barry N. Seidel

    Facsimile:
      (212) 556-2222 

    

    Any
      party
      may change its address for the purpose of this Section
      13.11
      by
      giving the other party written notice of its new address in the manner set
      forth
      above.

     

    13.12.  Amendments;
      Waivers.
      This
      Agreement may be amended or modified, and any of the terms, covenants,
      representations, warranties or conditions hereof may be waived, only by a
      written instrument executed by the parties hereto, or in the case of a waiver,
      by the party waiving compliance. Any waiver by any party of any condition,
      or of
      the breach of any provision, term, covenant, representation or warranty
      contained in this Agreement, in any one or more instances, shall not be deemed
      to be nor construed as a furthering or continuing waiver of any such condition,
      or of the breach of any other provision, term, covenant, representation or
      warranty of this Agreement.

     

    13.13.  Schedules.
      Seller
      may, at its option, include in the Disclosure Schedules items that are not
      material, and any such inclusion, or any references to dollar amounts, shall
      not
      be deemed to be an acknowledgment or representation that such items are material
      or would cause a Material Adverse Effect, to establish any standard of
      materiality or to define further the meaning of such terms for purposes of
      this
      Agreement. Information disclosed in the Disclosure Schedules shall constitute
      a
      disclosure for all purposes of the Section for which such disclosure was made
      and each other section for which such disclosure is readily apparent.

     

    13.14.  Public
      Announcements.
      No party
      shall make any press release or public announcement concerning the transactions
      contemplated by this Agreement without the prior written approval of the other
      parties, unless a press release or public announcement is required by Law or
      Order of the Bankruptcy Court. If any such announcement or other disclosure
      is
      required by Law or Order of the Bankruptcy Court, the disclosing party shall
      give the nondisclosing party or parties prior notice of, and an opportunity
      to
      comment on, the proposed disclosure. The parties acknowledge that Seller shall
      file this Agreement and the Claims Settlement Agreement with the Bankruptcy
      Court in connection with obtaining the Sale Order and Bidding Procedures
      Order.

     

    
      
      

      
        33

        
          

        

      

      
      

    

     

    13.15.  Entire
      Agreement.
      This
      Agreement and the Transaction Documents contain the entire understanding among
      the parties hereto with respect to the transactions contemplated hereby and
      supersede and replace all prior and contemporaneous agreements and
      understandings, oral or written, with regard to such transactions. All
      Disclosure Schedules and Exhibits hereto and any documents and instruments
      delivered pursuant to any provision hereof are expressly made a part of this
      Agreement as fully as though completely set forth herein.

     

    13.16.  Parties
      in Interest.
      Nothing
      in this Agreement is intended to confer any rights or remedies under or by
      reason of this Agreement on any Persons other than Seller and Buyer and their
      respective successors and permitted assigns, except
      the rights of the Buyer Entities and Seller Entities (as applicable) to the
      indemnities and other releases and the waivers, allocations and disclaimers
      of,
      and limitations on, liability or remedies set forth in this
      Agreement.
      Nothing
      in this Agreement is intended to relieve or discharge the obligations or
      liability of any third Persons to Seller or Buyer. No provision of this
      Agreement shall give any third Persons any right of subrogation or action over
      or against Seller or Buyer.

     

    13.17.  Headings.
      The
      article and section headings in this Agreement are for reference purposes only
      and shall not affect the meaning or interpretation of this
      Agreement.

     

    13.18.  Construction.
      Unless
      the context of this Agreement otherwise requires, (i) words of any gender
      include the other gender, (ii) words using the singular or plural number also
      include the plural or singular number, respectively, (iii) the terms “hereof,”
“herein,” “hereby,” and derivative or similar words refer to this entire
      Agreement as a whole and not to any other particular Article, Section or other
      subdivision, (iv) the words “include,” “includes” and “including” shall be
      deemed to be followed by the phrase “without limitation,” (v) “shall,” “will,”
or “agrees” are mandatory, and “may” is permissive, and (vi) “or” is not
      exclusive.

     

    13.19.  Currency.
      Except
      where otherwise expressly provided, all amounts in this Agreement are stated
      and
      shall be paid in United States currency.

     

    13.20.  Time
      of Essence.
      Time is
      of the essence in this Agreement.

     

    13.21.  Counterparts.
      This
      Agreement may be executed in counterparts, each of which shall be deemed an
      original, but all of which shall constitute the same agreement. The
      delivery of an executed counterpart of this Agreement by facsimile or .pdf
      shall
      be deemed to be valid delivery thereof. It shall be sufficient in making proof
      of this Agreement to produce or account for a facsimile or .pdf copy of an
      executed counterpart of this Agreement.

     

    13.22.  Damages.

     

    IN
      NO
      EVENT SHALL BUYER OR ITS RELATED PERSONS BE LIABLE TO SELLER OR ANY OF ITS
      RELATED PERSONS, NOR SHALL SELLER OR ITS RELATED PERSONS BE LIABLE TO BUYER
      OR
      ANY OF ITS RELATED PERSONS, FOR SPECIAL, PUNITIVE, INCIDENTAL, INDIRECT,
      EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY NATURE WHATSOEVER ARISING OUT OF
      OR IN
      CONNECTION WITH THIS AGREEMENT, NOTWITHSTANDING THE FAULT, STRICT LIABILITY,
      BREACH OF CONTRACT OR NEGLIGENCE, WHETHER SOLE, JOINT OR CONCURRENT, ACTIVE
      

     

    
      
      

      
        34

        
          

        

      

      
      

    

     

    OR
      PASSIVE, OF THE BENEFICIARY OF THIS LIMITATION OR WHETHER ASSERTED IN CONTRACT,
      IN WARRANTY, IN TORT, BY STATUTE OR OTHERWISE. ANY
      SUCH
      CLAIM, RIGHT OR CAUSE OF ACTION FOR ANY DAMAGES THAT ARE SPECIAL, PUNITIVE,
      INCIDENTAL, INDIRECT, EXEMPLARY, OR CONSEQUENTIAL DAMAGES IS HEREBY FULLY
      WAIVED, RELEASED AND FOREVER DISCHARGED.

     

    

     

     

    ARTICLE
      14

    DEFINITIONS

     

    14.1.  Certain
      Terms Defined.
      As used
      in this Agreement, the following terms shall have the following
      meanings:

     

    “1933
      Act”
      means
      the Securities Act of 1933.

     

    “2001
      PPA Payment Agreement”
      means
      the 2001 PPA Payment Agreement dated as of August 9, 2005, between Calpine
      Energy Services, L.P. and Acadia Power Holdings LLC.

     

    “Affiliate”
      means,
      with respect to any Person, any other Person directly or indirectly controlling,
      controlled by or under direct or indirect common control with such first Person
      where “control” means the possession, directly or indirectly, of the power to
      direct or cause the direction of the management policies of a Person, through
      the ownership of voting securities, by contract, as trustee, executor or
      otherwise.

     

    “Allowed
      Calpine Claim”
      has the
      meaning set forth in the Claims Settlement Agreement.

     

    “Allowed
      CES Claim”
has
      the
      meaning set forth in the Claims Settlement Agreement.

     

    “Alternative
      Transaction”
means
      a
      sale or other transfer or disposition (including by sale of the ownership
      interest in Seller or Persons directly or indirectly owning or controlling
      Seller) of all or part of the Ownership Interests and Related Assets to a
      purchaser or purchasers (other than Buyer) arising out of the Auction in which
      the Buyer is the stalking horse purchaser.

     

    “Aquila
      Termination Fee”
means
      the $105 million special distribution to the Seller that Aquila Long Term,
      Inc.
      paid on May 12, 2003 to be released from any and all obligations under the
      Aquila Power Purchase Agreement, dated October 9, 2000, as amended on January
      31, 2001, and all associated guarantees. 

     

    “Asset
      Transfer Payment”
means,
      if and only if the Closing occurs, the Company executes an agreement for a
      Qualifying Entergy Sale within 12 months after the Closing and such Qualifying
      Entergy Sale closes, a payment by Buyer to Seller of (a) $10,000,000.00
plus
      (b) 25%
      of the difference equal to (i) the proceeds of the Qualifying Entergy Sale
      multiplied by a fraction, the numerator of which is 50% and the denominator
      of
      which is the percentage of the assets of the Company sold in such Qualifying
      Entergy Sale, minus
      (ii) the
      higher of $155,000,000.00 or the final sale price of the Ownership Interests
      and
      Related Assets to Buyer at the Auction.

     

    
      
      

      
        35

        
          

        

      

      
      

    

     

    “Assigned
      Contracts”
means
      those agreements listed on Schedule
      1.1(b).

     

    “Assumption
      Agreement”
means
      the agreement substantially in the form of Exhibit
      B
      hereto.

     

    “Auction”
means
      the auction conducted by Seller pursuant to the Bidding Procedures
      Order.

     

    “Bankruptcy
      Code”
means
      Title 11 of the United States Code.

     

    “Bankruptcy
      Court”
means
      the United States Bankruptcy Court for the Southern District of New York or
      such
      other court having jurisdiction over the Chapter 11 Case originally administered
      in the United States Bankruptcy Court of the Southern District of New
      York.

     

    “Business”
means
      the business of generating and selling electric power from the Power Plant
      to
      the Company’s customers and any business activities of the Company incidental to
      the foregoing.

     

    “Business
      Day”
means
      any day other than Saturday, Sunday and any day that is a legal holiday or
      a day
      on which banking institutions in New York, New York are authorized by Law or
      other Governmental action to close.

     

    “Business
      Records”
means
      (a) the following items to the extent they are currently in existence and are
      in
      the possession or reasonable control of Seller or its Affiliates and to the
      extent Seller or its Affiliates do not possess originals but have a copy of
      the
      same, such copy shall be provided:

     

    
      	(i)  	
              all
                original copies of contracts currently in effect between the Company
                and
                any counterparty;

            

    

     

    
      	(ii)  	
              all
                management committee meeting
                minutes;

            

    

     

    
      	(iii)  	
              to
                the extent currently located at the Power Plant, copies of all purchase
                orders issued by the Company for which the work has not yet been
                fully
                performed, and those for which the Company has not fully
                paid;

            

    

     

    
      	(iv)  	
              all
                (A) annual audited financial statements, and quarterly unaudited
                financial
                statements, (B) tax filings (Federal, State, property, etc.), and
                (C)
                current budgets;

            

    

     

    
      	(v)  	
              the
                following information to the extent currently located at the Power
                Plant:
                project performance data, test data, environmental data, operating
                data
                and reports;

            

    

     

    
      	(vi)  	
              the
                following information to the extent currently located at the Power
                Plant:
                original Power Plant construction contracts, drawings, test results,
                warranty data, correspondence, change orders and engineering
                files;

            

    

     

    
      
      

      
        36

        
          

        

      

      
      

    

     

    
      	(vii)  	
              all
                material correspondence between the Company and any governmental
                or
                regulatory agency relating to the
                project;

            

    

     

    
      	(viii)  	
              all
                outstanding invoices issued by or received by the
                Company;

            

    

     

    
      	(ix)  	
              all
                permits and licenses of the
                Company;

            

    

     

    
      	(x)  	
              a
                description of the Company’s insurance policies and a list of any
                outstanding insurance claims;

            

    

     

    
      	(xi)  	
              inventory
                listing for the Power Plant;

            

    

     

    
      	(xii)  	
              operating
                manuals; and

            

    

     

    
      	(xiii)  	
              all
                right of way and easement agreements for the Power Plant and/or the
                pipeline;

            

    

     

    and
      (b)
      other records to the extent they apply exclusively to the Company, the Business,
      the Ownership Interests, the Related Assets or the Assumed Liabilities,
      excluding any Retained Books and Records.

     

    “Buyer
      Entities”
means
      (i) Buyer, (ii) its Related Persons and (iii) the Company.

     

    “Buyer’s
      Knowledge”
means
      the present actual knowledge of Sam Charlton or W. Keith Johnson.

     

    “Chapter
      11 Case”
means,
      collectively, the cases commenced by Seller and its debtor affiliates under
      chapter 11 of the Bankruptcy Code in the Bankruptcy Court being jointly
      administered as Case No. 05-60200.

     

    “Claims
      Settlement Agreement”
means
      the agreement attached to this Agreement as Exhibit
      F.

     

    “Clayton
      Act”
      means
      Title 15 of the United States Code §§ 12-27 and Title 29 of the United States
      Code §§ 52-53, as amended.

     

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

     

    “Company”
means
      Acadia Power Partners, LLC.

     

    “Consent”
means
      any consent, approval, authorization, qualification, waiver or notification
      of a
      Government or other Person.

     

    “Contract”
means
      any written or oral contract, agreement, license, sublicense, lease, sublease,
      mortgage, instruments, guaranties, commitment, undertaking or other similar
      arrangement, whether express or implied.

     

    “Disclosure
      Schedules”
means
      the disclosure schedules attached hereto.

     

    
      
      

      
        37

        
          

        

      

      
      

    

     

     

    “Entergy”
means
      Entergy Services, Inc, as agent for the Entergy Operating Companies, or its
      Affiliate.

     

    “Entergy
      2006 Long Term RFP”
means
      Long-Term Tolling PPA, Load-Following CCGT for 2006 Request For Proposal (RFP)
      for Long-Term Supply-Side Resources dated April 17, 2006 and Ownership
      Acquisition of Load-Following CCGT for 2006 Request For Proposals (RFP) for
      Long-Term Supply-Side Resources dated April 17, 2006.

     

    “Environmental
      Laws”
means
      all currently existing and future federal, state, provincial, municipal, local
      and foreign statutes, ordinances, rules, Orders, regulations, remediation
      standards, and other provisions having the force of law for protection of the
      environment, including the Federal Comprehensive Environmental Response,
      Compensation and Liability Act of 1980, 42 U.S.C. Sec. 9601 et
      seq.,
      as
      amended, the federal Resource Conservation and Recovery Act, 42 U.S.C. Sec.
      6901
et
      seq.,
      as
      amended, and related state statutes.

     

    “Environmental
      Reports”
means
      any environmental sampling or report performed specifically to test compliance
      with any Environmental Laws, and any and all Phase I or II environmental
      assessments, in each case which Seller has received from an un-Affiliated third
      party within the last thee (3) years with respect to the Power Plant and its
      associated real property; provided,
      Environmental Reports shall not include any safety, health and environmental
      audit reports, or internal investigation reports, prepared under the direction
      of Seller’s legal department and privileged under the attorney-client privilege,
      attorney work-product privilege, or state or federal environmental self-auditing
      privilege or policy.

     

    “Equity
      Securities”
means
      (a) any of the Company’s membership interests and (b) options, warrants or other
      rights convertible into, or exercisable or exchangeable for, directly or
      indirectly, or otherwise entitling any Person to acquire, directly or
      indirectly, any such membership interest.

     

    “Escrow
      Agent”
means
      Union Bank of California, N.A., the escrow agent under the Master Escrow
      Agreement.

     

    “Federal
      Trade Commission Act”
means
      the Federal Trade Commission Act (15 U.S.C. § 41 et
      seq.),
      as
      amended, and the rules and regulations promulgated thereunder. 

     

    “FERC”
means
      the Federal Energy Regulatory Commission, or any successor agency
      thereto.

     

    “Final
      Order”
means
      an order of the Bankruptcy Court (a) as to which no appeal or notice of appeal
      shall have been timely filed and no motion to amend or make additional findings
      of fact, motion to alter or amend judgment, motion for rehearing or motion
      for
      new trial, request for stay, motion or petition for reconsideration, application
      or request for review, or other similar motion, application, notice or request
      shall have been filed within the time for appeal or notice of appeal
      (collectively, a “challenge”),
      or,
      if there has been a challenge, it has been disposed of in a manner that upholds
      and affirms the subject order in all respects without the possibility for any
      further appeal therefrom; (b) as to which the time for instituting or filing
      an
      appeal shall have expired; and (c) as to which no stay, reversal, modification
      or amendment is in effect.

     

    
      
      

      
        38

        
          

        

      

      
      

    

     

    “FPA”
means
      the Federal Power Act (16 U.S.C. § 791a et
      seq.),
      as
      amended, and the rules and regulations promulgated thereunder.

     

    “Government”
means
      any agency, division, subdivision, audit group, procuring office or governmental
      or regulatory authority in any event or any adjudicatory body thereof, of the
      United States, any state thereof or any foreign government.

     

    “Guarantor”
means
      Cleco Corporation.

     

    “Guaranty”
means
      the Guaranty of the Guarantor substantially in the form of Exhibit
      A
      hereto.

     

    “Hazardous
      Materials” means
      and
      includes any hazardous or toxic substance or waste or any contaminant or
      pollutant regulated under Environmental Laws, including, but not limited to,
      “hazardous substances” as currently defined by the Federal Comprehensive
      Environmental Response Compensation and Liability Act of 1980, as amended,
      “hazardous wastes” as currently defined by the Resource Conservation and
      Recovery Act, as amended, natural gas, petroleum products or
      byproducts.

     

    “HSR
      Act”
means
      the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C.
§§ 15c-15h, 18a), as amended.

     

    “IRS”
means
      the United States Internal Revenue Service.

     

    “Knowledge
      of Seller”,
      “Seller’s
      Knowledge”
or
      any
      other similar term or knowledge qualification means the present actual knowledge
      of William Valagura, Billy Miller or Thomas (Mark) Johnson.

     

    “Lien”
means
      any mortgage, pledge, charge, security interest, encumbrance, lien (statutory
      or
      other) or conditional sale agreement.

     

    “LLC
      Agreement”
means
      the Second Amended and Restated Limited Liability Company Agreement of Acadia
      Power Partners, LLC between Seller and Buyer dated as of May 9,
      2003.

     

    “Losses”
means
      damages, suits, claims, proceedings, fines, judgments, costs or expenses
      (including attorneys’ fees).

     

    “Master
      Escrow Agreement”
means
      the escrow agreement by and between Calpine, acting on behalf of Seller, and
      Union Bank of California, N.A., dated as of June 22, 2006, as
      amended.

     

    “Material
      Adverse Effect”
means
      a
      state of facts, event, change, effect or other circumstance that has had or
      could reasonably be expected to have a material adverse effect on the Business
      and Assumed Liabilities (including cure amounts in respect of the Assigned
      Contracts) taken as a whole, but excluding any state of facts, event, change
      or
      effect caused by events, changes or developments relating to: (i) changes of
      Laws, including those governing national, regional, state or local electric
      transmission or distribution systems, unless such Law specifically affects
      the
      transmission or distribution service attached to the Power Plant; (ii)

     

    
      
      

      
        39

        
          

        

      

      
      

    

     

    strikes,
      work stoppages or other labor disturbances; (iii) increases in costs of
      commodities or supplies, including fuel; (iv) effects of weather or
      meteorological events other than such events that cause physical damage to
      the
      Power Plant, transmission service to the Power Plant or the gas lateral attached
      to the Power Plant; (v) the transactions contemplated by this Agreement or
      the
      announcement thereof; (vi) changes or conditions generally affecting the
      industries of which the Business is a part (including any change or condition
      (x) generally affecting the international, national or regional or local
      electric generating, transmission or distribution industry (y) generally
      affecting the international, national, regional or local wholesale or retail
      markets for electric power or (z) resulting from changes in the international,
      national, regional or local fuel markets for the type of fuel used at the Power
      Plant); (vii) changes in economic, regulatory or political conditions generally;
      (viii) changes resulting from the Chapter 11 Case or any motion, application,
      pleading or Order filed by any Government applicable to providers of generation,
      transmission or distribution of electricity generally; (ix) any act(s) of war
      or
      of terrorism other than such events that cause physical damage to the Power
      Plant, transmission service to the Power Plant or the gas lateral attached
      to
      the Power Plant; (x) the effects or costs associated with planned maintenance
      at
      the Power Plant and its associated facilities, or (xi) the consequences of
      Seller, in the exercise of its reasonable business judgment and good faith,
      voting its interests in the Company to enter into or reject any agreements
      or
      other obligations. 

     

    “Metering
      Claim Payment”
means
      the payment by Buyer to Seller of $1,250,000 (subject to reduction in accordance
      with Section
      7.8)
      in
      consideration of Seller assigning to Buyer (pursuant to the Release Agreement)
      the portion of any claims the Company may have to assert claims against Cleco
      Power LLC relating to inaccurate metering equipment that is transferred to
      Seller pursuant to the Release Agreement.

     

    “Notification
      and Report Form”
means
      the Notification and Report Form of the HSR Act.

     

    “Ownership
      Interests”
means
      Seller’s ownership interest in the Company, but shall exclude the Excluded
      Assets.

     

    “Permits”
means
      permits, authorizations, approvals, registrations, and licenses relating
      exclusively to the Business issued by any Government (and pending applications
      for the foregoing) listed on Schedule
      4.13
      of the
      Disclosure Schedules

     

    “Permitted
      Liens”
      means:
      (i) Liens included in the Assumed Liabilities; (ii) mechanics,
      materialmen’s, warehousemen’s and similar Liens on the Related Assets; (iii)
      restrictions and regulations imposed by any Government authority or any local,
      state, regional, national or international reliability council, or any
      independent system operator or regional transmission organization with
      jurisdiction over Seller or the Power Plant and (iv) exceptions, restrictions,
      easements, charges, rights-of-way and monetary and non-monetary encumbrances
      which are set forth in any license.

     

    “Person”
means
      any individual, corporation, partnership, joint venture, association,
      joint-stock company, trust, limited liability company unincorporated
      organization, Government or other entity.

     

    
      
      

      
        40

        
          

        

      

      
      

    

     

    “Power
      Plant”
means
      the nominal 1000 MW (tested to 1160 MW) gas-fired combined cycle electric
      generating facility primarily located in Acadia Parish, Louisiana including
      all equipment, electrical transformers, pipeline and electrical interconnection
      facilities (including water discharge facilities and water injection facilities)
      related thereto.

     

    “Priority
      Present Value”
means
      the waiver and release set forth in Paragraphs 11 of the Bidding Procedures
      Order by Buyer of its right to priority distributions under the LLC Agreement
      and its claims under the 2001 PPA Payment Agreement and any guarantees thereof,
      valued at $85,000,000.

     

    “Priority
      Present Value Payment”
means
      the payment of $85,000,000 as consideration for the waiver and release set
      forth
      in Paragraphs 11 of the Bidding Procedures Order by Buyer of its right to
      priority distributions under the LLC Agreement and its claims under the 2001
      PPA
      Payment Agreement and any guarantees thereof.

     

    “Purchase
      Notice”
means
      Exhibit A of the Master Escrow Agreement, as executed and delivered by Buyer
      and
      Seller.

     

    “Qualifying
      Entergy Sale”
means
      a
      sale, directly or indirectly (including by sale of the ownership interests
      in
      entities owning or controlling Buyer’s interest in the Company), of 50% or more
      of the assets of or equity in the Company to Entergy for which an agreement
      is
      entered into with Entergy within 12 months after the Closing.

     

    “Qualifying
      PPA”
means
      a
      power purchase agreement with Entergy for at least 40% of the Power Plant’s
      output (determined for this purpose to be 1160 MW) (i) based on Entergy’s 2006
      Long Term RFP or (ii) pursuant to the displacement analysis following Entergy’s
      LPSC 2006 Transmission Study utilizing the Company’s bid into Entergy’s 2006
      Long Term RFP, as described in the letter to Cleco Midstream Services LLC dated
      January 31, 2007.

     

    “Regulatory
      Approvals”
means
      state public utility commission and the FERC approvals and/or notifications
      of
      other related Government authorities with respect to the consummation of the
      transactions contemplated hereby.

     

    “Related
      Assets”
means
      all right, title and interest of Seller in, to and under the Assigned Contracts
      and those assets listed on Schedule 1.1(a).

     

    “Related
      Person”
means,
      with respect to any Person, all past, present and future directors, officers,
      members, managers, stockholders, employees, controlling persons, agents,
      professionals, attorneys, accountants, investment bankers, Affiliates or
      representatives of any such Person.

     

    “Release
      Effective Date”
means
      the Closing Date or the closing of an Alternative Transaction, provided that,
      as
      of such date, (a) the Claims Settlement Order (approving, among other things,
      the Release Agreement) shall have been entered by the Bankruptcy Court and
      shall
      have become a Final Order, (b) the Bidding Procedures Order (approving, among
      other things, the O&M Transfer Agreement) shall have been entered by the
      Bankruptcy Court, (c) the Sale Order or an order approving the sale of the
      Ownership Interests and Related Assets to an Alternative Transaction purchaser
      (either, a “Sale
      Approval Order”)
      shall
      have been entered by 

     

    
      
      

      
        41

        
          

        

      

      
      

    

     

    the
      Bankruptcy Court and (d) no Order staying, reversing, modifying or amending
      the
      Bidding Procedures Order or the Sale Approval Order shall be in
      effect.

     

    “Retained
      Books and Records”
means
      (i) all corporate seals, minute books, charter documents, corporate stock record
      books, original tax and financial records and such other files, books and
      records to the extent they relate to any of the Excluded Assets or Excluded
      Liabilities or the organization, existence, capitalization or debt financing
      of
      Seller or of any Affiliate of Seller, (ii) all books, files and records that
      would otherwise constitute a Business Record but for the fact that disclosure
      of
      books, files or records could (w) violate any legal constraints or obligations
      regarding the confidentiality thereof, (x) waive any attorney client, work
      product or like privilege, (y) disclose information about Seller or any of
      its
      Affiliates that is unrelated to the Company, Power Plant or the Business or
      (z)
      disclose information about Seller or any of its Affiliates pertaining to energy
      or project evaluation, energy or natural gas price curves or projections or
      other economic predictive models, or (iii) all books and records prepared in
      connection with or relating in any way to the transactions contemplated by
      this
      Agreement, including bids received from other parties and analyses relating
      in
      any way to the Ownership Interests and Related Assets and the Assumed
      Liabilities.

     

    “RFP
      Success Payment”
means
      a
      payment from Buyer to Seller of $2,000,000 per year for five years (totaling
      $10,000,000) payable according to Section
      7.4
      if and
      only if the Closing occurs and the Company enters into a Qualifying
      PPA.

     

    “Rule”
or
      “Rules”
means
      the Federal Rules of Bankruptcy Procedure.

     

    “Seller
      Calpine Claim”
means
      $100,000,000.00 of the Allowed Calpine Claim to be transferred to Seller from
      the Company.

     

    “Seller
      CES Claim”
means
      $100,000,000.00 of the Allowed CES Claim to be transferred to Seller from the
      Company.

     

    “Seller
      Entities”
means
      (i) Seller and (ii) its Related Persons, but does not include the
      Company.

     

    “Sherman
      Act”
means
      title 15 of the United States Code §§ 1-7, as amended.

     

    “Subsidiary”
means,
      with respect to any Person, any corporation, partnership, limited liability
      company, association or other business entity of which (a) if a corporation,
      a
      majority of the total voting power of shares of stock entitled (without regard
      to the occurrence of any contingency) to vote in the election of directors,
      managers or trustees thereof is at the time owned or controlled, directly or
      indirectly, by that Person or one or more of the other Subsidiaries of that
      Person or a combination thereof, or (b) if a partnership, limited liability
      company, association or other business entity, a majority of the partnership
      or
      other similar ownership interest thereof is at the time owned or controlled,
      directly or indirectly, by any Person or one or more Subsidiaries of that Person
      or a combination thereof. For purposes hereof, a Person or Persons shall be
      deemed to have a majority ownership interest in a partnership, limited liability
      company, association or other business entity if such Person or Persons shall
      be
      allocated a majority of partnership, limited liability company, association
      or
      other business entity 

     

    
      
      

      
        42

        
          

        

      

      
      

    

     

    gains
      or
      losses or shall be or control the managing director or general partner of such
      partnership, limited liability company, association or other business
      entity.

     

    “Tax
      Return”
means
      any report, return, information return, filing or other information, including
      any schedules, exhibits or attachments thereto, and any amendments to any of
      the
      foregoing required to be filed or maintained in connection with the calculation,
      determination, assessment or collection of any Taxes (including estimated
      Taxes).

     

    “Taxes”
means
      all taxes,
      fees,
      levies, duties and charges,
      however
      denominated, including any interest, penalties or additions to such
      taxes,
      fees,
      levies, duties and charges
      that may
      become payable in respect thereof, imposed by any Government, which
      taxes,
      fees,
      levies, duties and charges
      shall
      include all income taxes, Transaction Taxes, payroll and employee withholding,
      unemployment insurance, social security (or similar), sales and use, excise,
      franchise, gross receipts, occupation, real and personal property, stamp,
      transfer, workmen’s compensation, customs duties, registration, documentary,
      value added, alternative or add-on minimum, estimated, environmental (including
      taxes under section 59A of the Code) and other obligations of the same or a
      similar nature, whether arising before, on or after the Closing
      Date.

     

    “Transaction
      Documents”
means
      the Guaranty, Management Committee Resolutions, Membership Transfer Agreement,
      Bill of Sale, Assumption Agreement, Non-Foreign Investment Status Affidavit,
      Release Agreement, Claims Settlement Agreement, O&M Transfer Agreement,
      Confidentiality Agreement, Funding Side Letter, Purchase Notice and any other
      agreements, instruments, documents and other writings required to be executed
      and delivered by Buyer and/or Seller under this Agreement.

     

    

    
      
      

      
        43

        
          

        

      

      
      

    

     

    14.2.  All
      Terms Cross-Referenced.
      Each of
      the following terms is defined in the Section set forth opposite such
      term:

     

    
      
        	Term	
                 Section

              
	 	
              
	
                 

                1933 Act

              	
                 

                14.1

              
	
                 

                2001 PPA Payment Agreement

              	
                 

                14.1

              
	
                 

                Additional Deposit

              	
                 

                2.2

              
	
                 

                Affiliate

              	
                 

                14.1

              
	
                 

                Agreement

              	
                 

                Preamble

              
	
                 

                Allocation Schedule

              	
                 

                10.5

              
	
                 

                Allowed Calpine Claim

              	
                 

                14.1

              
	
                 

                Allowed CES Claim

              	
                 

                14.1

              
	
                 

                Alternative Transaction

              	
                 

                14.1

              
	
                 

                Antitrust Approval

              	
                 

                9.2

              
	
                 

                Antitrust Law

              	
                 

                9.2

              
	
                 

                Appeal Period Expiration Date

              	
                 

                7.8

              
	
                 

                Asset Transfer Payment

              	
                 

                14.1

              
	
                 

                Assigned Contracts

              	
                 

                14.1

              
	
                 

                Assumed Liabilities

              	
                 

                1.3

              
	
                 

                Assumption Agreement

              	
                 

                14.1

              
	
                 

                Auction

              	
                 

                14.1

              
	
                 

                Bankruptcy Code

              	
                 

                14.1

              
	
                 

                Bankruptcy Court

              	
                 

                14.1

              
	
                 

                Bidding Procedures

              	
                 

                8.2

              
	
                 

                Bidding Procedures Order

              	
                 

                1.2

              
	
                 

                Break-Up Fee

              	
                 

                12.5(c)(i)

              
	
                 

                Business

              	
                 

                14.1

              
	
                 

                Business Day

              	
                 

                14.1

              
	
                 

                Business Records

              	
                 

                14.1

              
	
                 

                Buyer

              	
                 

                Preamble

              
	
                 

                Buyer Entities

              	
                 

                14.1

              
	
                 

                Buyer Group

              	
                 

                13.6

              
	
                 

                Buyer’s Knowledge

              	
                 

                14.1

              
	
                 

                Buyer’s Termination Date

              	
                 

                12.2(a)(iii)

              

      

    

    

      
      

      
        44

        
          

        

      

      
      

    

     

     

    
      	
               

              Calpine

            	
               

              Preamble

            
	
               

              Calpine Marks

            	
               

              1.2(b)

            
	
               

              Chapter 11 Case

            	
               

              14.1

            
	
               

              Claim Over

            	
               

              13.6

            
	
               

              Claims

            	
               

              1.2(a)

            
	
               

              Claims Settlement Agreement

            	
               

              14.1

            
	
               

              Clayton Act

            	
               

              14.1

            
	
               

              Closing

            	
               

              3.1

            
	
               

              Closing Date

            	
               

              3.1

            
	
               

              Closing Purchase Price

            	
               

              2.1

            
	
               

              Code

            	
               

              14.1

            
	
               

              Confidentiality Agreement

            	
               

              6.5

            
	
               

              Consent

            	
               

              14.1

            
	
               

              Contract

            	
               

              14.1

            
	
               

              Deposits

            	
               

              2.2

            
	
               

              Disclosure Schedules

            	
               

              14.1

            
	
               

              Entergy

            	
               

              14.1

            
	
               

              Entergy Long Term RFP

            	
               

              14.1

            
	
               

              Environmental Laws

            	
               

              14.1

            
	
               

              Environmental Reports

            	
               

              14.1

            
	
               

              Equity Securities

            	
               

              14.1

            
	
               

              Escrow Agent

            	
               

              14.1

            
	
               

              Excluded Assets

            	
               

              1.2

            
	
               

              Excluded Liabilities

            	
               

              1.4

            
	
               

              Expense Reimbursement

            	
               

              12.5(c)

            
	
               

              Federal Trade Commission Act

            	
               

              14.1

            
	
               

              FERC

            	
               

              14.1

            
	
               

              FPA

            	
               

              14.1

            
	
               

              Government

            	
               

              14.1

            
	
               

              Guarantor

            	
               

              14.1

            
	
               

              Guaranty

            	
               

              14.1

            
	
               

              Hazardous Materials

            	
               

              14.1

            
	
               

              HSR Act

            	
               

              14.1

            
	
               

              Initial Deposit

            	
               

              2.2

            

    

     

    
      
      

      
        45

        
          

        

      

      
      

    

     

     

    
      	
               

              IRS

            	
               

              14.1

            
	
               

              Knowledge of Seller

            	
               

              14.1

            
	
               

              Law

            	
               

              4.3

            
	
               

              Lien

            	
               

              14.1

            
	
               

              Losses

            	
               

              14.1

            
	
               

              Master Escrow Agreement

            	
               

              14.1

            
	
               

              Material Contracts

            	
               

              4.12

            
	
               

              Metering Claim Payment

            	
               

              14.1

            
	
               

              Non-Recourse Person

            	
               

              13.6

            
	
               

              Notification and Report Form

            	
               

              14.1

            
	
               

              Order

            	
               

              4.3

            
	
               

              Organizational Documents

            	
               

              4.3

            
	
               

              Ownership Interests

            	
               

              14.1

            
	
               

              Partnership

            	
               

              14.1

            
	
               

              Partnership Agreement

            	
               

              14.1

            
	
               

              Permit

            	
               

              14.1

            
	
               

              Permitted Liens

            	
               

              14.1

            
	
               

              Person

            	
               

              14.1

            
	
               

              Power Plant

            	
               

              14.1

            
	
               

              Priority Present Value

            	
               

              14.1.
                14.1

            
	
               

              Purchase Notice

            	
               

              14.1

            
	
               

              Purchase Price

            	
               

              2.1

            
	
               

              Regulatory Approvals

            	
               

              14.1

            
	
               

              Related Assets

            	
               

              14.113.1

            
	
               

              Related Person

            	
               

              14.1

            
	
               

              Retained Books and Records

            	
               

              14.1

            
	
               

              RFP Success Payment

            	
               

              14.1

            
	
               

              Rule

            	
               

              14.1

            
	
               

              Rules

            	
               

              14.1

            
	
               

              Sale Order

            	
               

              6.3

            
	
               

              Seller

            	
               

              Preamble

            
	
               

              Seller Calpine Claim

            	
               

              14.1

            
	
               

              Seller CES Claim

            	
               

              14.1

            
	
               

              Seller Entities

            	
               

              14.1

            

    

     

    
      
        46

        
          

        

      

      
      

    

     

     

    
      	
               

              Seller Group

            	
               

              13.6

            
	
               

              Seller’s Account

            	
               

              3.3

            
	
               

              Seller’s Knowledge

            	
               

              14.1

            
	
               

              Seller’s Termination Date

            	
               

              12.2(a)(vii)

            
	
               

              Sherman Act

            	
               

              14.1

            
	
               

              Straddle Period

            	
               

              10.2

            
	
               

              Subsidiary

            	
               

              14.1

            
	
               

              Tax Return

            	
               

              14.1

            
	
               

              Taxes

            	
               

              14.1

            
	
               

              Termination Order

            	
               

              12.2(a)(vii)

            
	
               

              Third Person1

            	
               

              3.6

            
	
               

              Transaction Documents

            	
               

              14.1

            
	
               

              Transaction Taxes

            	
               

              10.1

            

    

     

    

 

     

    (Signatures
      are on the following page.)

     

    

     

    
      
      

      
        47

        
          

        

      

      
      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      by
      their respective officers thereunto duly authorized as of the date first above
      written.

     

    

     

    

     

    CALPINE
      ACADIA HOLDINGS, LLC

     

    

     

    By:
      /s/
      James J.
      Shield                                       

     

    Name:
      James
      J. Shield
                                       

     

    Title:
      Senior
      Vice
      President                                

     

    

     

    

     

    ACADIA
      POWER HOLDINGS, LLC

     

    

     

    By:
      /s/
      Samuel H. Charlton
      III                           

     

    Name:
      Samuel
      H. Charlton
      III                            

     

    Title:
      Board
      of
      Managers

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