Document:

Exhibit 10
(ww)

Execution Copy

 

ASSET
PURCHASE AGREEMENT

dated December 21, 2006

By and Between

DPL Energy, LLC

and

Buckeye Power, Inc.

 

TABLE OF
CONTENTS

	
  

  	
  Page

  
	
  ARTICLE I

  	
   

  
	
   

  	
   

  
	
  Definitions

  	
  1

  
	
   

  	
   

  
	
  1.01

  	
  Definitions

  	
  1

  
	
  1.02

  	
  Interpretation

  	
  8

  
	
  1.03

  	
  Knowledge

  	
  8

  
	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  
	
  Purchase and Sale, Purchase Price, Allocation and
  Other Related Matters

  	
  9

  
	
   

  	
   

  
	
  2.01

  	
  Purchase and
  Sale

  	
  9

  
	
  2.02

  	
  Purchase Price

  	
  9

  
	
  2.03

  	
  Initial Purchase
  Price

  	
  9

  
	
  2.04

  	
  Purchase Price
  Holdback

  	
  9

  
	
  2.05

  	
  Assumed
  Liabilities and Retained Liabilities

  	
  9

  
	
  2.06

  	
  Sales and
  Transfer Taxes

  	
  10

  
	
  2.07

  	
  Allocation of
  Purchase Price

  	
  10

  
	
  2.08

  	
  Parent Guaranty

  	
  10

  
	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  
	
  Closing and Closing Date Deliveries

  	
  11

  
	
   

  	
   

  
	
  3.01

  	
  Closing

  	
  11

  
	
  3.02

  	
  Closing
  Deliveries by Seller

  	
  11

  
	
  3.03

  	
  Closing
  Deliveries by Purchaser

  	
  11

  
	
  3.04

  	
  Cooperation

  	
  12

  
	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  
	
  Pre-Closing Filings

  	
  12

  
	
   

  	
   

  
	
  4.01

  	
  Government
  Filings

  	
  12

  
	
  4.02

  	
  FERC Regulatory
  Filing

  	
  12

  
	
  4.03

  	
  Cooperation in
  Regulatory Review Process

  	
  13

  
	
  4.04

  	
  PJM Notification
  of Sale and Scheduling and Bidding for day of Closing

  	
  13

  
	
  4.05

  	
  2007/2008 RPM
  Bidding

  	
  13

  
	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  
	
  Pre-Closing Covenants

  	
  14

  
	
   

  	
   

  
	
  5.01

  	
  Due Diligence
  Review

  	
  14

  
	
  5.02

  	
  Pending Closing

  	
  14

  
	
  5.03

  	
  Cooperation

  	
  15

  
	
  5.04

  	
  No Shop

  	
  15

  

 

 i
 

 

	
  5.05

  	
  Workforce

  	
  15

  
	
  5.06

  	
  Tax Abatement
  Agreement

  	
  16

  
	
  5.07

  	
  EFT Service
  Agreement

  	
  16

  
	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
   

  	
   

  
	
  Pre-Closing Deliveries

  	
  16

  
	
   

  	
   

  
	
  6.01

  	
  Pre-Closing
  Title Policy and Survey Delivery

  	
  16

  
	
   

  	
   

  
	
  ARTICLE VII

  	
  17

  
	
   

  	
   

  
	
  Warranties and Representations of Seller

  	
   

  
	
   

  	
   

  
	
  7.01

  	
  Organization and
  Good Standing

  	
  17

  
	
  7.02

  	
  Authority

  	
  17

  
	
  7.03

  	
  No Violations
  and Consents

  	
  17

  
	
  7.04

  	
  Brokers

  	
  18

  
	
  7.05

  	
  Required Assets

  	
  18

  
	
  7.06

  	
  Contracts

  	
  18

  
	
  7.07

  	
  Insurance

  	
  18

  
	
  7.08

  	
  Title to Real
  Property

  	
  19

  
	
  7.09

  	
  Title to
  Purchased Assets

  	
  19

  
	
  7.10

  	
  Intellectual
  Property

  	
  19

  
	
  7.11

  	
  Litigation

  	
  19

  
	
  7.12

  	
  Compliance With
  Laws

  	
  19

  
	
  7.13

  	
  Labor Matters

  	
  20

  
	
  7.14

  	
  Taxes

  	
  20

  
	
  7.15

  	
  Licenses and
  Permits

  	
  20

  
	
  7.16

  	
  Environmental
  Compliance

  	
  21

  
	
  7.17

  	
  Purchaser
  Pipeline Acquisition Costs

  	
  21

  
	
  7.18

  	
  Disclaimer of
  Warranties

  	
  21

  
	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  
	
  Warranties and Representations of Purchaser

  	
  22

  
	
   

  	
   

  	
   

  
	
  8.01

  	
  Due
  Incorporation

  	
  22

  
	
  8.02

  	
  Authority

  	
  22

  
	
  8.03

  	
  No Violations

  	
  22

  
	
  8.04

  	
  Brokers

  	
  22

  
	
  8.05

  	
  Litigation

  	
  22

  
	
  8.06

  	
  Financing

  	
  22

  
	
   

  	
   

  
	
  ARTICLE IX

  	
   

  
	
   

  	
   

  
	
  Conditions to Closing Applicable to Purchaser

  	
  23

  
	
   

  	
   

  
	
  9.01

  	
  No Termination

  	
  23

  
	
  9.02

  	
  Bring-Down of
  Seller Warranties

  	
  23

  
	
  9.03

  	
  No Material
  Adverse Effect

  	
  23

  
	
  9.04

  	
  Pending Actions

  	
  23

  

 

 ii
 

 

	
  9.05

  	
  Material
  Contracts

  	
  23

  
	
  9.06

  	
  Assigned Permits

  	
  23

  
	
  9.07

  	
  Other Consents
  and Approvals

  	
  23

  
	
  9.08

  	
  All Necessary
  Documents

  	
  24

  
	
  9.09

  	
  Title Policy

  	
  24

  
	
  9.10

  	
  Brokers and
  Consultants

  	
  24

  
	
   

  	
   

  
	
  ARTICLE X

  	
   

  
	
   

  	
   

  
	
  Conditions to Closing Applicable to Seller

  	
  24

  
	
   

  	
   

  
	
  10.01

  	
  No Termination

  	
  24

  
	
  10.02

  	
  Bring-Down of
  Purchaser Warranties

  	
  24

  
	
  10.03

  	
  Pending Actions

  	
  25

  
	
  10.04

  	
  Consents and
  Approvals

  	
  25

  
	
  10.05

  	
  All Necessary
  Documents

  	
  25

  
	
   

  	
   

  
	
  ARTICLE XI

  	
   

  
	
   

  	
   

  
	
  Termination

  	
  25

  
	
   

  	
   

  
	
  11.01

  	
  Termination

  	
  25

  
	
   

  	
   

  
	
  ARTICLE XII

  	
   

  
	
   

  	
   

  
	
  Indemnification

  	
  26

  
	
   

  	
   

  	
   

  
	
  12.01

  	
  Seller
  Indemnification

  	
  26

  
	
  12.02

  	
  Limitation

  	
  26

  
	
  12.03

  	
  Purchaser
  Indemnification

  	
  27

  
	
  12.04

  	
  Indemnification
  Notice

  	
  27

  
	
  12.05

  	
  Indemnification
  Procedure

  	
  28

  
	
  12.06

  	
  Effect of
  Indemnity Payments

  	
  28

  
	
   

  	
   

  
	
  ARTICLE XIII

  	
   

  
	
   

  	
   

  
	
  Confidentiality

  	
  28

  
	
   

  	
   

  
	
  13.01

  	
  Confidentiality
  of Materials

  	
  28

  
	
  13.02

  	
  Remedy

  	
  29

  
	
   

  	
   

  
	
  ARTICLE XIV

  	
   

  
	
   

  	
   

  
	
  Certain Other Understandings

  	
  29

  
	
   

  	
   

  
	
  14.01

  	
  Post Closing
  Access to Records and Records Retention

  	
  29

  
	
  14.02

  	
  Obligations not
  Performed by Closing

  	
  30

  
	
  14.03

  	
  Avoidance of
  Double Withholding Taxes

  	
  30

  
	
  14.04

  	
  Removal of
  Trademarks, Etc

  	
  30

  
	
  14.05

  	
  [Intentionally
  left blank.]

  	
  30

  
	
  14.06

  	
  Tax Matters.

  	
  30

  
	
  14.07

  	
  O&M
  Transition Services Agreement Option

  	
  32

  

 

 iii
 

 

	
  

  	
   

  
	
  ARTICLE XV

  	
   

  
	
   

  	
   

  
	
  Miscellaneous

  	
  32

  
	
   

  	
   

  
	
  15.01

  	
  Cost and
  Expenses

  	
  32

  
	
  15.02

  	
  Entire Agreement

  	
  32

  
	
  15.03

  	
  Counterparts

  	
  32

  
	
  15.04

  	
  Assignment,
  Successors and Assigns

  	
  32

  
	
  15.05

  	
  Savings Clause

  	
  33

  
	
  15.06

  	
  Headings

  	
  33

  
	
  15.07

  	
  Risk of Loss

  	
  33

  
	
  15.08

  	
  Governing Law

  	
  33

  
	
  15.09

  	
  Dispute
  Resolution

  	
  33

  
	
  15.10

  	
  Press Releases

  	
  34

  
	
  15.11

  	
  U.S. Dollars

  	
  34

  
	
  15.12

  	
  Survival

  	
  34

  
	
  15.13

  	
  Notices

  	
  34

  
	
  15.14

  	
  No Third Party
  Beneficiaries

  	
  35

  
	
  15.15

  	
  Jurisdiction and
  Consent to Service

  	
  35

  
	
  15.16

  	
  WAIVER OF A JURY
  TRIAL

  	
  35

  
	
  15.17

  	
  No Presumption
  Against Drafter

  	
  36

  

 

 iv

ASSET
PURCHASE AGREEMENT

This Asset Purchase Agreement made and entered into this 21st day of
December, 2006 (this “Agreement”) by and between Buckeye Power, Inc., an
Ohio corporation not-for-profit (“Purchaser”), and DPL Energy, LLC, an
Ohio limited liability company (“Seller”).

Recitals:

A.            Seller owns the
Greenville, Ohio peaking power generation facility, as more fully described in
Schedule I attached hereto (the “Facility”).

B.            Seller desires to
sell the Facility and the assets and properties exclusively relating to the
Facility hereinafter described as Purchased Assets and Purchaser desires to
acquire the Facility and the Purchased Assets, on the terms and subject to the
conditions hereinafter set forth.

Now, therefore, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:

ARTICLE I

Definitions

1.01         Definitions.  The following terms shall have the meanings
set forth below unless otherwise expressly provided or unless the context
clearly requires otherwise:

“AAA Rules” has the meaning set forth in
Section 15.09.

“Additional Contracts” has the meaning set forth in clause (v)
of the definition of “Purchased Assets.”

 “Affiliate” shall mean a
Person which, directly or indirectly is controlled by, controls, or is under
common control with another Person.  As
used in the preceding sentence, “control” shall mean (i) the ownership of more
than 50% of the voting securities or other voting interest of any Person, or
(ii) the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise.

“Arbitration Notice” has the meaning set forth in Section
15.09(b).

“Assigned Contracts” has the meaning set forth in clause (v) of
the definition of “Purchased Assets.”

“Assigned Intellectual Property” has the meaning set forth in
clause (vi) of the definition of “Purchased Assets.”

“Assigned Permits” has the meaning set forth in clause (vii) of
the definition of “Purchased Assets.”

“Assumed Liabilities” has the meaning set forth
in Section 2.05(a).

 1
 

“Closing” has the meaning set forth in Section
3.01.

“Closing Date” has the meaning set forth in
Section 3.01.

“Code” shall mean the Internal Revenue Code of 1986, as amended,
and the final and temporary Treasury Regulations promulgated thereunder.

“Compensation Agreements” has the meaning set forth in Section
7.14(c).

“Date of the Notice of Claim” has the meaning
set forth in Section 12.05(c).

“Disclosure Schedule” shall mean the schedules attached to this
Agreement.

“Dispute” has the meaning set forth in Section 15.09(a).

“DOJ” shall mean the United States Department of Justice.

“DP&L” shall mean The Dayton Power & Light Company, an
Ohio corporation.

“Easements” has the meaning set forth in clause (iv) of the
definition of “Purchased Assets.”

“EFT Service Agreement” shall mean that Rate Schedule EFT
Enhanced Firm Transportation Service Form of Transportation Agreement (Contract
No. 20552) dated as of April 1, 2006, between Panhandle and Seller, including
the letter agreement dated December 15, 2005 between Panhandle and Seller.

“Electric Interconnection Agreement” has the meaning set forth
in clause (ix) of the definition of “Retained Assets”.

“Environmental Laws” shall mean any applicable
federal, state or local Law relating to: 
(a) releases or threatened releases of Hazardous Substances; (b) the
exposure to, manufacture, handling, transport, use, treatment, storage or disposal
of Hazardous Substances or materials containing Hazardous Substances; (c)
pollution or protection of the environment or human health; (d) natural
resources or natural resource damages; or (e) occupational safety or health.

“Facility” has the meaning set forth in the
Recitals and Schedule I hereto.

“FERC” shall mean the Federal Energy Regulatory
Commission.

“FERC Regulatory Filing” has the meaning set
forth in Section 4.02.

“First Half” shall mean, with respect to any
Tax year, the period from and including January 1 to and including June 30 of
such year.

“Governmental Authority” shall mean the
government of the United States or any foreign country or any state or
political subdivision of any thereof and any entity, body or authority
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any quasi-governmental
entities established to perform such functions.

“Guarantor” means DPL Inc.

 2
 

“Hazardous Substances” shall mean (a) any
pollutant, contaminant, waste or chemicals, materials, compounds, constituents
or substances, subject to regulation under any Environmental Laws, including
without limitation those defined or designated under the following federal
statutes and their state counterparts, as well as such statutes’ implementing
regulations:  the Hazardous Materials
Transportation Act, the Comprehensive Environmental Response, Compensation and
Liability Act, the Atomic Energy Act, the Toxic Substances Control Act, and the
Federal Insecticide, Fungicide, and Rodenticide Act; (b) petroleum and
petroleum products including crude oil and any fractions thereof; (c) natural
gas, synthetic gas and any mixtures thereof; (d) asbestos in any form; and (e)
polychlorinated biphenyls.

 “Holdback
Amount” has the meaning set forth in Section 2.04.

“Indemnified Party” has the meaning set forth
in Section 12.04.

“Indemnifying Party” has the meaning set forth
in Section 12.04.

“Information” has the meaning set forth in
Section 13.01.

“Initial Purchase Price” has the meaning set
forth in Section 2.03.

“Insured Parcels” has the meaning set forth in
Section 6.01(a).

“Inventory” has the meaning set forth in clause
(ii) of the definition of Purchased Assets.

“IRS” shall mean the Internal Revenue Service.

“Law” shall mean any law (including common
law), statute, regulation, ordinance, rule, order, decree, judgment, consent
decree, settlement agreement or governmental requirement enacted, promulgated
or imposed or entered into or agreed with by any Governmental Authority.

“Lien” shall mean any mortgage, lien (except
for any lien for taxes not yet due and payable), charge, restriction, pledge,
security interest, option, lease or sublease, claim, right of any third party,
easement, encroachment or encumbrance.

“Material Adverse Effect” shall mean (a) any
change in, or effect on, the Facility as currently operated by Seller that is
or is reasonably likely to be materially adverse to the results of operations
or financial condition of the Facility, after giving effect to this Agreement,
or (b) any materially adverse change in the ability of Seller to perform its
obligations under this Agreement or any of the Exhibits hereto, except that the
term “Material Adverse Effect” shall not include changes, events, conditions,
restrictions or burdens caused by or resulting from (i) conditions affecting
the electric generation industry generally but not affecting the Facility or
the Purchased Assets in any manner or degree significantly different from the
electric generation industry as a whole, (ii) United States or global economic
conditions or financial markets generally, or (iii) the announcement of the
transactions contemplated by this Agreement.

“Material Contracts” has the meaning set forth
in Section 7.06(a).

“Notice of Claim” has the meaning set forth in
Section 12.04.

 3
 

“O&M Transition Services Agreement” means
the O&M Transition Services Agreement between Purchaser and Seller
substantially in the form attached hereto as Exhibit F.

“Panhandle” shall mean Panhandle Eastern Pipe
Line Company, LP.

“Parent Guaranty” means the guaranty of the
Guarantor attached hereto as Exhibit A.

“Permitted Exceptions” shall mean, with respect
to the Real Property, the following:

(a)           liens
or encumbrances relating to the Assumed Liabilities;

(b)           all
liens for Taxes, assessments, both general and special, and other governmental
charges which are not due and payable as of the Closing Date;

(c)           all
building codes and zoning ordinances and other Laws of any Governmental
Authority heretofore, now or hereafter enacted, made or issued by any such
Governmental Authority affecting the Real Property;

(d)           all
easements, rights-of-way, covenants, conditions, restrictions, reservations,
licenses, agreements, and other similar matters of record in the appropriate
governmental offices;

(e)           all
encroachments, overlaps, boundary line disputes, shortages in area, drainage
and other easements, cemeteries and burial grounds and other similar matters
not of record that would be disclosed by an accurate survey or inspection of
the Real Property;

(f)            all
electric, telephone, gas, sanitary sewer, storm sewer, water and other utility
lines, pipelines, service lines and facilities of any nature now located on,
over or under the Real Property, and all licenses, easements, rights-of-way and
other similar agreements relating thereto that would be disclosed by an
accurate survey or inspection of the Real Property;

(g)           all
existing public and private roads and streets (whether dedicated or
undedicated), and all railroad lines and rights-of-way affecting the Real
Property;

(h)           all
rights with respect to the ownership, mining, extraction and removal of
minerals of whatever kind and character (including, without limitation, all
coal, iron ore, oil, gas, sulfur, methane gas in coal seams, limestone and
other minerals, metals and ores) that have been granted, leased, excepted or
reserved prior to the date hereof; and

(i)            inchoate
mechanic’s and materialmen’s liens for construction in progress and workmen’s,
repairmen’s, warehousemen’s and carrier’s liens arising in the ordinary course
of business.

“Permitted Real Estate Exceptions” has the meaning set forth in
Section 6.01(a).

“Person” shall mean any natural person, corporation, limited
liability company, partnership, joint venture, trust, association or unincorporated
entity of any kind.

 4
 

“Pipeline” shall mean the approximately 42.5 mile long natural
gas pipeline and associated easements and rights-of-way, that extends from an
interconnection with Panhandle’s main pipeline at Glen Karn, Ohio to Harden,
Ohio, and interconnects with a pipeline lateral that serves the Facility, all
as more particularly described in the Pipeline Agreements.

“Pipeline Agreements” shall mean that certain agreement dated as
of July 9, 1993, by and between DP&L and Panhandle, as amended on November
1, 1994, and as further amended by agreement among Panhandle, DP&L and
Seller on December 22, 1999, certain portions of which have been assigned by
DP&L to Vectren pursuant to that certain Asset Purchase Agreement dated
December 14, 1999; that certain agreement dated as of November 1, 1999 by and
between DP&L and Seller, certain portions of which have been assigned by
DP&L to Vectren pursuant to that certain Asset Purchase Agreement dated
December 14, 1999; that certain Operational Agreement for Z-51 Pipeline by and
between DP&L and Seller, certain portions of which have been assigned by
DP&L to Vectren pursuant to that certain Asset Purchase Agreement dated
December 14, 1999; that certain Construction, Ownership and Operation Agreement
by and between Panhandle and Seller dated as of July 7, 2000; and that certain
Reimbursement, Construction, Ownership and Operation Agreement by and among
Panhandle, TETCO, and Seller dated June 23, 2000.  For the avoidance of doubt, any DP&L
interests in the Pipeline Agreements that were not transferred to Vectren were
transferred to Seller, and DP&L no longer has any interest in the Pipeline
Agreements.

“PJM” shall mean PJM Interconnection, LLC, a FERC-approved
regional transmission organization and energy market.

“Pratt & Whitney Repair Report” shall mean the report
delivered by Pratt & Whitney to Seller generally evidencing the completion
of the repair of the damage to unit 1B at the Facility identified in the Pratt
& Whitney Greenville 1B Borescope Inspection Report dated September 1,
2006, and the Pratt & Whitney Revised Borescope Inspection Report dated
September 13, 2006.

“Properties” has the meaning set forth in
clause (iv) of definition of Purchased Assets.

“Purchase Price” has the meaning set forth in
Section 2.02.

“Purchased Assets” shall mean the following described assets,
rights and properties, except for the Retained Assets:

(i)            the Facility;

(ii)           except as otherwise set forth on
Schedule II, all inventories for use exclusively in connection with the Facility,
including all such inventories of demineralized water, chemicals, supplies, raw
materials, work-in-progress and finished goods (“Inventory”);

(iii)          except as otherwise set forth on
Schedule III, the tangible assets, machinery, equipment, tools, dies, molds,
spare parts, vehicles, transportation equipment, furniture and office
equipment, construction-in-progress, and computer hardware of Seller that
constitute the Facility or are used exclusively in connection with the Facility
or that are located on the Real Property;

(iv)          Seller’s rights, title and interest
(A) in and to the real properties described in Schedule IV (“Real Property”)
together with all buildings, other improvements, fixtures and appurtenances,
and all other rights and privileges thereunto belonging or appertaining, (B)
under the real property leases described in the Schedule V (“Real Property
Leases”), and (C) under the

 5
 

easements, rights of way, real property
licenses described in Schedule VI (“Easements”; together with the Real
Property and the Real Property Leases, the “Properties”);

(v)           Seller’s right, title and interest
in, to or under (A) the Material Contracts and (B) the personal property
leases and other contracts, agreements and commitments arising from and
relating exclusively to the Purchased Assets or the Facility that would be
required to be described on Schedule 7.06(a) but for the exceptions set forth
in Section 7.06(a) below, including those contracts listed on Schedule VII (the
“Additional Contracts,” and together with the Material Contracts, the “Assigned
Contracts”);

(vi)          Seller’s right, title and interest in
and to the following intellectual property to the extent related exclusively to
the Facility and set forth in Schedule VIII: trade names, trademarks, trademark
registrations, trademark applications, service marks, service mark
registrations, service mark applications; copyrights, copyright registrations,
copyright applications; patent rights (including, without limitation, issued
patents, applications, divisions, continuations and continuations-in-part,
reissues, patents of addition, utility models and inventors’ certificates);
licenses with respect to any of the foregoing; trade secrets, proprietary
manufacturing information and inventions, operating and systems software,
drawings and designs; customer and vendor lists and the goodwill associated
with any of the foregoing (the “Assigned Intellectual Property”);

(vii)         any governmental licenses and permits
of Seller relating exclusively to the Facility to the extent any of the same
are transferable or assignable to Purchaser and as described on Schedule IX
(the “Assigned Permits”);

(viii)        except for Retained Books and Records,
at least one copy (in its existing hard copy or electronic form) of each of the
following:  the operating and maintenance
records; operating, safety and maintenance manuals; engineering design plans
and specifications; blueprints and as-built drawings; procedures; environmental
data and reports; governmental filings; and inspection and test reports related
exclusively to the Facility that are in Seller’s possession (subject to the
right of Seller to redact information in such records that is not related
exclusively to the Facility and to retain archival copies).  This is not to include accounting records of
Seller or third party proprietary items for which consent to transfer cannot be
obtained as listed on Schedule X.  The
foregoing is not intended to require Seller to modify or reformat any of the
information provided pursuant to this subparagraph or to search or produce
database or email archives, routine correspondence, SEC or FERC filings,
records relating to internal project approvals, negotiations with contractors
or vendors, or any other materials that are not necessary to the future ownership,
operation or maintenance of the Facility or the Purchased Assets; and

(ix)           to the extent acquired by Seller from
Panhandle prior to Closing, Seller’s 50% ownership interest in the Pipeline.

“Real Property” has the meaning set forth in clause (iv) of the
definition of “Purchased Assets.”

“Real Property Leases” has the meaning set forth in clause (iv)
of the definition of “Purchased Assets”.

“Retained Assets” shall mean the following described assets,
rights and properties of Seller:

 6
 

(i)            all cash and cash equivalents,
including, without limitation, bank overdrafts and marketable securities;

(ii)           any accounts receivable or
intercompany obligations owed to Seller by any Affiliate of Seller;

(iii)          all insurance policies of Seller or
acquired or assumed by Seller prior to the Closing Date pertaining to the
Facility and all rights of Seller of every nature and description under or
arising out of such insurance policies;

(iv)          all rights to use the name “DPL Energy”
and all derivatives thereof;

(v)           claims for refunds of Taxes paid by
Seller;

(vi)          all past, present and future claims,
causes of action, choses in action, rights of recovery and rights of set-off of
any kind arising out of or relating to events prior to the Closing Date, except
to the extent, but only to the extent, such claims or causes of action offset
the liabilities assumed by Purchaser pursuant to this Agreement or the
Assignment and Assumption Agreement;

(vii)
any rights, interest or assets not included in the Purchased Assets;

(viii)        the assets, properties, rights and
interests of Seller not related to the Facility;

(ix)           all rights, if any, of Seller for
refunds of transmission credits under the Interconnection Service Agreement
dated June 2006 among PJM Interconnection, LLC, Seller, and DP&L (“Electric
Interconnection Agreement”), relating to payments, if any, made by Seller
under such agreement for upgrades to the transmission system of DP&L;

(x)            all rights of Seller under this
Agreement and the agreements and instruments delivered to Seller by Purchaser
pursuant to this Agreement;

(xi)           the Retained Contracts; and

(xii)          the other assets listed on Schedule
XI.

“Retained
Contracts” means those contracts set forth on Schedule 7.06(b).

“Retained Books and Records” shall mean (i) all corporate seals,
minute books, charter documents, entity ownership records, original tax and
financial records and such other files, books and records to the extent they
relate to any of the Retained Assets or Retained Liabilities or the
organization, existence, capitalization or debt financing of Seller or of any
Affiliate of Seller and (ii) all books and records of Seller prepared in
connection with or relating in any way to the transactions contemplated by this
Agreement.

“Retained Liabilities” has the meaning set forth in Section
2.05(b).

“Second Half” shall mean, with respect to any Tax year, the
period from and including July 1 to and including December 31 of such year.

“Tax Abatement Agreement” has the meaning set
forth in Section 7.14(c).

 7
 

“Taxes” shall mean all taxes, charges, fees,
duties (including custom duties), levies or other assessments, including
income, commercial activity, gross receipts, net proceeds, capital gains,
capital stock, ad valorem, turnover, real, personal and other property
(tangible and intangible), sales, use, franchise, excise, value added, stamp,
leasing, lease, user, transfer, fuel, excess profits, occupational, interest
equalization, windfall profits, unitary, license, payroll, environmental,
disability, severance, employees’ income withholding, other withholding
unemployment and Social Security taxes, duties, assessments, charges (including
recapture of tax items or benefits) and any payments in lieu of taxes or fees
pursuant to compensation agreements or otherwise, which are imposed by, or pursuant
to agreements with, any Governmental Authority, and such term shall include any
interest, penalties or additions to tax attributable thereto.

“Tax Period” shall mean any period prescribed
by any Governmental Authority for which a Tax Return is required to be filed or
a Tax is required to be paid.

“Tax Return” shall mean all returns and reports
of or with respect to Taxes required to be filed with any Governmental
Authority or depository.

“TETCO” shall mean Texas Eastern Transmission
Corporation.

“Threshold” has the meaning set forth in
Section 12.02(b).

“Unassigned Contracts” has the meaning set
forth in Section 14.02(b).

“Vectren” shall mean Vectren Energy Delivery of
Ohio, Inc., Vectren Corporation, and/or Indiana Gas Company, Inc., as the
context requires.

1.02         Interpretation.  Unless the context of this Agreement
otherwise requires, (a) words of any gender shall be deemed to include each
other gender, (b) words using the singular or plural number shall also include
the plural or singular number, respectively, (c) references to “hereof”, “herein”,
“hereby” and similar terms shall refer to this entire Agreement; and (d) all
references in this Agreement to Articles, Sections, Schedules and Exhibits
shall mean and refer to Articles, Sections, Schedules and Exhibits of this
Agreement, (e) all references to statutes and related regulations shall include
all amendments of the same and any successor or replacement statutes and
regulations, (f) references to any Person shall be deemed to mean and include the
successors and permitted assigns of such Person (or, in the case of a
Governmental Authority, Persons succeeding to the relevant functions of such
Person); and (g) the words, “include,” “includes” and “including” shall be
deemed to be followed by the words “without limitation.”

1.03         Knowledge.  As used herein the terms “knowledge” or “best
knowledge” shall have the same meaning and shall mean the actual knowledge of
Gary Stephenson, Vice President of Seller; Mandy Goubeaux, Manager, Generation
Investment Planning, DP&L, Randall Griffin, Chief Regulatory Counsel,
DP&L, and Chris Hergenrather, Tax Manager of DP&L, as it relates to
Seller; and Patrick O’Loughlin as it relates to Purchaser, in each instance
after due inquiry and reasonable investigation.

 8
 

ARTICLE II

Purchase and Sale, Purchase Price,

Allocation and Other Related Matters

2.01         Purchase and Sale. 
Upon the terms and subject to the conditions of this Agreement, at the
Closing Seller shall sell, assign, convey, transfer and deliver to Purchaser
and Purchaser shall acquire from Seller the Purchased Assets.

2.02         Purchase
Price.  The aggregate purchase price
(the “Purchase Price”) payable by Purchaser for the Purchased Assets
shall be Forty-Nine Million One Hundred Eighty Thousand Dollars ($49,180,000),
which price is inclusive of Inventory.

2.03         Initial
Purchase Price.  At the Closing,
Purchaser shall pay to Seller, by wire transfer of immediately available funds
to a bank account designated by Seller prior to the Closing, an amount equal to
the Purchase Price, less the Holdback Amount, if any (the “Initial Purchase
Price”).

2.04         Purchase
Price Holdback.  In the event that
the repairs to unit 1B of the Facility are not completed (which completion
shall be evidenced by delivery to Purchaser of the Pratt & Whitney Repair
Report) and paid for by Seller as contemplated by Section 5.02(i) prior to the
Closing Date, Purchaser shall hold back from the Purchase Price One Million
Dollars ($1,000,000) (the “Holdback Amount”).  In such event, the Holdback Amount will be
paid to Seller, or retained by Purchaser, when, as and to the extent provided
in Section 14.02(a) of this Agreement.

2.05         Assumed
Liabilities and Retained Liabilities. 
(a)  As additional consideration
for the purchase of the Purchased Assets, Purchaser shall, at the Closing,
assume, agree to perform, and in due course pay and discharge, the following
debts, obligations and liabilities of Seller relating to the Facility, in each
case in accordance with the terms thereof, except to the extent that such debts,
obligations or liabilities, but for a breach or default by Seller, would have
been paid, performed or otherwise discharged on or prior to the Closing Date or
to the extent the same arise out of any such 
breach or default or out of any event that, after the giving of notice
or with the lapse of time, or both, would constitute a breach or default by
Seller (the “Assumed Liabilities”):

(i)            all liabilities and
obligations arising or accruing after the Closing under the Assigned Contracts,
to the extent that such Assigned Contracts are either assigned to Purchaser as
of the Closing Date or, if not so assigned, Purchaser receives the benefits
thereof as contemplated by Section 14.02(b) of this Agreement;

(ii)           all liabilities and
obligations to comply with the Assigned Permits in connection with the
operation of the Facility after the Closing;

(iii)          all liabilities and
obligations arising out of the ownership of the Assigned Intellectual Property
after the Closing;

(iv)          Purchaser’s share of
any prorated Taxes as provided in Section 14.06 below; and

(v)           all other
liabilities and obligations arising out of the ownership or operation of the
Facility accruing after the Closing on the Closing Date and related to any
period after the Closing.

(b)           Except for the Assumed Liabilities, Purchaser shall not
assume by virtue of this Agreement, the Assumption Agreement, or any other
ancillary agreement, or the transactions contemplated hereby or thereby, and
shall have no liability for, any debts, liabilities or obligations of

 9
 

Seller of any nature, fixed or contingent,
known or unknown, relating to the Facility or otherwise (the “Retained
Liabilities”), including the following:

(i)            all liabilities and
obligations arising out of or relating to the Retained Assets;

(ii)           all liabilities and
obligations to comply with the Assigned Permits in connection with the
operation of the Facility prior to the Closing;

(iii)          all liabilities and
obligations arising out of the ownership of the Assigned Intellectual Property
prior to the Closing;

(iv)          all liabilities and
obligations of Seller for any federal, state, local or foreign Taxes for any
periods prior to the Closing whether or not relating to the Facility, including
liability for any tax adjustment relating to a period prior to the Closing that
arises after the Closing Date and Seller’s share of any prorated Taxes as
provided in Section 14.06 below;

(v)           all of Seller’s or
its Affiliates’ liabilities and obligations for Seams Elimination Cost/Charge
Adjustment/Assignment (SECA) charges under the Electric Interconnection
Agreement or otherwise;

(vi)          all liabilities and obligations
arising or accruing under the Assigned Contracts prior to the Closing; and

(vii)         all other liabilities and obligations
arising out of the ownership or operation of the Facility accruing prior to the
Closing.

(c)           This Section 2.05 is not intended to and shall not benefit
any Person other than Seller and Purchaser.

(d)           All of the Retained Liabilities shall remain and be the
debts, obligations and liabilities of Seller, and Purchaser shall have no
liability or responsibility for any of the debts, obligations or liabilities
arising therefrom.

2.06         Sales
and Transfer Taxes.  (a) Purchaser
and Seller shall each pay one-half of 
the cost of any real property transfer or similar tax imposed by any
Governmental Authority which arises out of the transfer or recordation of the
Real Property; and (b) Purchaser shall pay all other transfer, sales, purchase,
use, value added, excise or similar taxes imposed by any Governmental Authority
which arises out of the transfer of any of the other Purchased Assets.

2.07         Allocation
of Purchase Price.  The Purchase
Price shall be allocated among the Purchased Assets in accordance with Schedule
2.07.  Each party shall complete IRS Form
8594 consistently with such allocation and cooperate with the other party in
the preparation of Form 8594 and furnish the other party with a copy of such
form prepared in draft form, within a reasonable period before the filing due
date of such form, and neither Seller nor Purchaser shall file any tax return
or take a position with a tax authority that is inconsistent with such
allocation.  If Seller and Purchaser are
not able to agree as to the allocation of the Purchase Price, then each party
shall make its own allocation of the Purchase Price and file IRS Form 8594 as
it shall determine.

2.08         Parent
Guaranty.  On the date hereof, the
Guarantor has executed and delivered to Purchaser the Parent Guaranty.

 

 10

ARTICLE III

Closing and
Closing Date Deliveries

3.01         Closing.  The term “Closing” as used herein
shall refer to the actual conveyance, transfer, assignment and delivery of the
Purchased Assets to Purchaser in exchange for the Initial Purchase Price to
Seller pursuant to Section 2.03 of this Agreement.  The Closing shall take place at the offices
of Thompson Hine LLP, 10 West Broad St., Columbus, Ohio, at 10:00 a.m. local
time on the fifth business day following the date upon which all of the
conditions precedent set forth in Articles IX and X of this Agreement are
satisfied or waived by the appropriate party hereto, subject to Article XI of
this Agreement, or at such other place and time or on such other date as is
mutually agreed to in writing by Seller and Purchaser (“Closing Date”).

3.02         Closing Deliveries
by Seller.  At the Closing, Seller
shall deliver to Purchaser:

(a)           A general warranty
deed in substantially the form attached hereto as Exhibit B, duly executed by
Seller, for all Real Property conveying to Purchaser good, marketable and
insurable (at regular rates) title to the Real Property, free and clear of any
and all Liens, except the Permitted Real Estate Exceptions;

(b)           An Easements Assignment
and Assumption Agreement in substantially the form attached hereto as Exhibit
C, duly executed by Seller, conveying to Purchaser good and marketable title to
the Easements, free and clear of any and all Liens, except the Permitted Real
Estate Exceptions;

(c)           All such bills of sale, lease assignments, trademark
assignments, copyright assignments, patent assignments, contract assignments
and other documents and instruments of sale, assignment, conveyance and
transfer, as Purchaser or its counsel may deem necessary or desirable, duly
executed by Seller, including a Bill of Sale in substantially the form attached
hereto as Exhibit D, duly executed by Seller, for the Facility, an Assignment
and Assumption Agreement in substantially the form attached hereto as Exhibit
E, duly executed by Seller, for the Real Property Leases, the Assigned
Contracts, the Assigned Intellectual Property and the Assigned Permits;

(d)           Certified copies of minutes or unanimous written consents
of the Board of Managers of Seller approving the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement;

(e)           A Certificate, dated the Closing Date, executed by the
appropriate officers of Seller, required by Section 9.02 of this Agreement; and

(f)            Such other documents, agreements, instruments and
certificates as Purchaser, its financing providers, or its counsel may
reasonably request to carry out the purposes of this Agreement, including, but
not limited to, the documents to be delivered pursuant to Article IX of this
Agreement and, if Purchaser has informed Seller in writing during the option
period set forth in Section 14.07 that Purchaser intends to enter into the
O&M Transition Services Agreement, such agreement duly executed by Seller.

3.03         Closing
Deliveries by Purchaser.  At the
Closing, Purchaser shall deliver to Seller:

 11
 

(a)           The
Initial Purchase Price;

(b)           Certified
copies of minutes or unanimous written consents of the Board of Trustees of
Purchaser approving the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated under this Agreement;

(c)           A Certificate, dated the Closing Date, executed by the
appropriate officers of Purchaser, required by Section 10.02 of this Agreement;

(d)           The Assignment and
Assumption Agreement, duly executed by Purchaser, reflecting the assumption by
Purchaser of the liabilities set forth in Section 2.05(a) of this Agreement;

(e)           Ohio direct pay permit; and

(f)            Such other documents, agreements, instruments and
certificates as Seller or its counsel may reasonably request to carry out the
purposes of this Agreement, including, but not limited to, the documents to be
delivered pursuant to Article X of this Agreement and, if Purchaser has
informed Seller in writing during the option period set forth in Section 14.07
that Purchaser intends to enter into the O&M Transition Services Agreement,
such agreement duly executed by Purchaser.

3.04         Cooperation.  Seller and Purchaser shall, on request, on
and after the Closing Date, cooperate with one another by furnishing any
additional information, executing and delivering any additional documents
and/or instruments and doing any and all such other things as may be reasonably
required by the parties or their counsel to consummate or otherwise implement
the transactions contemplated by this Agreement.

ARTICLE IV

Pre-Closing Filings

4.01         Government
Filings.  Seller and Purchaser
covenant and agree with each other (a) subject to the allocation of
responsibility set forth in Section 4.02, promptly to file, or  cause to be promptly filed, with any
Governmental Authority, all such notices, applications or other documents as
may be necessary to consummate the transactions contemplated hereby, including
any required filings with FERC, and (b) thereafter diligently to pursue all consents
or approvals from any such Governmental Authorities as may be necessary to
consummate the transactions contemplated hereby.

4.02           FERC Regulatory Filing.

(a)           Seller
shall have primary responsibility for the preparation and filing of the
regulatory filing(s) to be made to FERC requesting approval under Section 203
(and Section 205, if necessary) of the Federal Power Act (the “FERC
Regulatory Filing”).  Upon the
request of Seller, Purchaser shall use its commercially reasonable efforts to
cooperate with the Seller to prepare and file the FERC Regulatory Filing.  The parties hereto acknowledge and agree that
no filings with the Public Utilities Commission of Ohio have been made, nor are
they required or intended to be made, nor are such filings a condition
precedent to the Closing.

 12
 

(b)           Purchaser
and Seller shall use commercially reasonable efforts to file as soon as
practicable after the date hereof the FERC Regulatory Filing, and execute all
agreements and documents, in each case, to obtain as promptly as practicable
approval under Section 203 (and Section 205, if necessary) of the Federal Power
Act.  Purchaser and Seller shall act
diligently, and shall coordinate in completing and submitting the FERC
Regulatory Filing.  Purchaser and Seller
shall each have the right to review and approve (which approval shall not be
unreasonably delayed or withheld) in advance all of the information relating to
the transactions contemplated by this Agreement which appears in the FERC
Regulatory Filing.  Purchaser and Seller
agree that all telephonic calls and meetings with the FERC regarding the
transactions contemplated by this Agreement shall be conducted by Purchaser and
Seller jointly.

4.03         Cooperation
in Regulatory Review Process.  Each
party shall consult and cooperate in the regulatory review process.  Notwithstanding anything in this Agreement to
the contrary, each party agrees not to oppose, obstruct, or otherwise interfere
with, in any manner whatsoever, the efforts of the other party to obtain
consent, clearance or approval required by any Governmental Authority or
applicable Law with respect to the transactions contemplated hereby.

4.04         PJM Notification of Sale and Scheduling and
Bidding for day of Closing.

(a)           Seller
and Purchaser shall cooperate in the transfer of the Facility from Seller’s
account with PJM to Purchaser’s account with PJM which cooperation shall
include the transfer of ownership of the Facility on the Closing Date and the
allocation of costs and revenues related to the Facility for the Closing
Date.  Seller has provided to or shall
provide to Purchaser as of the Closing Date access to all historical GADS data
related to the Facility.

(b)           For
any Facility bids submitted to PJM that will be effective on the Closing Date,
Seller agrees to bid the Facility units in accordance with the following
guidelines:

(i)            At
the Seller’s calculated maximum allowable cost pursuant to PJM Manual 15 - Cost
Development Guideline (or such other guideline that may replace the PJM Manual
15 — Cost Development Guideline) for the units at the Facility plus the
allowable 10% markup, and

(ii)           Using
a delivered gas price equivalent to the average Intercontinental Exchange (“ICE”)
high trade/settlement (as determined by Seller in its discretion) for “Dominion
South” and “TCO Pool” for a gas flow day that coincides with the Closing Date plus
the applicable adders for pipeline fuel, transportation, storage/balancing, and
other adders deemed appropriate by Seller to deliver fuel to the Facility.

4.05         2007/2008
RPM Bidding.  The parties agree and
acknowledge that capacity rights within PJM’s current capacity market construct
as well as its proposed Reliability Pricing Model (“RPM”) construct shall flow
to Purchaser as of the Closing Date.  If
the Closing Date occurs after the bidding window for the 2007/2008 delivery
year base residual auction, Seller shall bid the units into the RPM process at
a value that in Seller’s sole discretion approximates the avoidable cost (as
defined by PJM and calculated in a manner consistent with how Seller calculates
avoidable cost for its other peaking facilities) of making the Facility
available for the 2007/2008 PJM delivery year. 
Seller shall then transfer the Facility to Purchaser in the PJM system
as of the Closing Date. The parties shall transfer both the RPM capacity
benefits and PJM market seller responsibilities relating to the Facility to
Purchaser as of the Closing Date.

 13
 

ARTICLE V

Pre-Closing Covenants

5.01         Due
Diligence Review.  (a)  Pending Closing, Seller shall at all
reasonable times and upon reasonable prior notice make the properties, assets,
books and records pertaining exclusively to the Facility available for
examination, inspection and review by Purchaser and its lenders, agents and
representatives; provided, however, Purchaser’s inspections and
examinations shall not unreasonably disrupt the normal operations of the
Facility, and provided further, the scope of Purchaser’s
inspections and examinations shall not include Seller’s employee records,
Seller’s accounting records that do not relate to the future operation of the
Facility or commercially sensitive information not related exclusively to the
Facility, as reasonably determined by Seller. 
In addition, Seller shall use commercially reasonable efforts to provide
Purchaser with reasonable access, to the extent Seller has such access, to all
books and records relating to the Pipeline in order for Purchaser to perform
due diligence on the Pipeline.

(b)           Purchaser covenants and agrees with Seller to promptly
notify Seller if Purchaser or its representatives in the course of their
pre-Closing due diligence determine that there are any inaccuracies in, or
breaches or violations of, any of Seller’s representations, warranties or
covenants contained in this Agreement.

5.02         Pending
Closing.  Pending the Closing, and
unless otherwise consented to by Purchaser, Seller shall:

(a)           conduct and carry on operations at the Facility in the
ordinary course, consistent with past practices;

(b)           not purchase, sell, lease, mortgage, pledge or otherwise
acquire or dispose of any material properties or assets of or in connection
with the Facility, except for tangible personal property purchased, sold or
otherwise disposed of in the ordinary course, consistent with past practices,
and not unusual in type or amount;

(c)           not enter into, or become obligated under, any lease,
contract, agreement or commitment with respect to the Facility, except (i) for
any agreements for the purchase of supplies (including gas) or Inventory or the
sale of Inventory in the ordinary course, consistent with past practices, and
not unusual in type or amount, (ii) for any other lease, contract, agreement or
commitment having a term of one (1) year or less and involving either a payment
by or to Seller of less than $50,000, or (iii) as otherwise set forth in
Schedule 5.02;

(d)           not materially change, amend, or otherwise modify or
terminate any Material Contract;

(e)           maintain in full force and effect with respect to the
Facility, policies of insurance of the same type, character and coverage as the
policies currently carried and described in Schedule 7.07;

(f)            not make any material changes in its accounting systems,
policies, principles or practices related solely to the Facility, except as
required by Law;

 14
 

(g)           except as set forth in Schedule 5.02, not authorize or
make any capital expenditures related to the Facility which individually or in
the aggregate are in excess of $100,000;

(h)           not agree to do any of the items prohibited by Section
5.02(b), (c), (d), (f) or (g);

(i)            diligently pursue the repair of the damage to unit 1B at
the Facility identified in the Pratt & Whitney Greenville 1B Borescope
Inspection Report dated September 1, 2006, and the Pratt & Whitney Revised
Borescope Inspection Report dated September 13, 2006, and pay and otherwise be
fully responsible for the cost of such repairs (including repair work in the
following areas:  the 3rd, 4th, 5th and 6th stages of the Low Pressure Compressor; the 7th, 8th and 9th stages of the High Pressure Compressor; and
the Turbine Exhaust Case); and

5.03         Cooperation.  (a) Pending the Closing Date, the parties
shall proceed with all reasonable diligence and use commercially reasonable
efforts to obtain the written consents, authorizations or approvals required
for the consummation of transactions contemplated by this Agreement, including
the consents, authorizations or approvals of any third parties required to
assign the Material Contracts and Assigned Permits to Purchaser; provided,
however, Seller shall have no obligation to pay any third Person a fee
to obtain any such consent, authorization or approval not already provided for
by the applicable agreement or Law.

(b)           From the date of this Agreement and until the first to
occur of the Closing or the termination of this Agreement in accordance with
its terms, unless otherwise agreed in writing by the parties, Purchaser and
Seller will use all reasonable efforts to satisfy the conditions to closing
stated in Article IX and Article X. 
Purchaser and Seller will notify each other of any event that occurs, or
condition that comes to their attention, that may delay the Closing or that
constitutes a breach of their respective representations, warranties, covenants
or agreements in this Agreement and will use all reasonable efforts to mitigate
any such delay or to cure any such breach.

5.04         No
Shop.  Seller will not, and will
cause its Affiliates and its and their respective directors, officers,
employees, agents, and advisors not to, solicit offers from, negotiate with,
execute agreements with, or provide non-public information to, any party other
than Purchaser with respect to the possible sale or other disposition of the
Facility or the Purchased Assets or any interest therein and will, and will
cause its Affiliates and its and their respective directors, officers,
employees, agents, and advisors to, cease any current discussions with any
party other than Purchaser concerning any such sale or other disposition; provided,
however, that the foregoing shall not preclude communications or
disclosures necessary to implement the provisions of this Agreement or to
comply with accounting or Securities and Exchange Commission disclosure
obligations or the rules of any stock exchange.

5.05         Workforce.  Pending Closing and at times determined by
Seller in its reasonable discretion after prior written notice from Purchaser
to Seller of Purchaser’s desire to interview and/or make an offer of employment
to one or more of the employees of Seller listed on Schedule 7.13, Purchaser
(or any of its Affiliates or agents or contractors) may (a) interview Seller’s
employees who are employed at the Facility to determine whether Purchaser (or
any of its Affiliates or agents or contractors) wishes to make offers of
employment to any such employee(s), and (b) make offers of employment to any
such employee(s); provided, however, that to the extent any such
employee accepts an offer of employment from Purchaser (or any of its
Affiliates or agents or contractors), Purchaser agrees not to permit, or to
cause its Affiliates or agents or contractors not to permit, such employees to
commence employment with Purchaser (or any of its Affiliates or agents or
contractors) prior to the later of the Closing Date and the termination or
expiration of the O&M Transition Services Agreement.

 15
 

5.06         Tax Abatement Agreement.  Pending Closing and, if necessary, after the
Closing Date, Seller shall use good faith and commercially reasonable efforts
to assist Purchaser in obtaining the written approval of Greenville Township
and the Darke County Board of Commissioners (and/or other applicable
governmental entity) in the transfer of Seller’s Tax Abatement Agreement to
Purchaser at, or if necessary, after the Closing.  In the event that such approval is obtained,
the Tax Abatement Agreement and the Compensation Agreements shall be
transferred and assigned to Purchaser at the Closing or as soon thereafter as
is reasonably practicable. In the event that (i) the Tax Abatement Agreement is
transferred to Purchaser or (ii) Purchaser enters into a replacement agreement
with Greenville Township and the Darke County Board of Supervisors providing
for substantially similar benefits as provided to Seller in the Tax Abatement
Agreement, then Purchaser agrees to assume at such time all of Seller’s rights
and obligations under the Compensation Agreements accruing on and after such
date, subject to any required counterparty approval(s) to the transfer thereof.
Until Seller and Purchaser are able to obtain written approval of Greenville
Township and Darke County (and/or applicable governmental entity) to transfer
the Tax Abatement Agreement to Purchaser, the Seller shall be responsible for
all obligations (but in no event including property taxes for periods after the
Closing) with respect to the Tax Abatement Agreement and the Compensation
Agreements until the transfer is completed or each agreement expires or is
otherwise cancelled or voided.  In the
event that the O&M Transition Services Agreement (if entered into between
Seller and Purchaser) would prevent Purchaser from obtaining the benefits of
the Tax Abatement Agreement, Purchaser may terminate the O&M Transition
Services Agreement in its reasonable discretion.  Notwithstanding anything in this Agreement to
the contrary, neither the assignment of the Tax Abatement Agreement nor
Purchaser’s entry into any replacement agreement shall be a condition precedent
to the obligations of either party under this Agreement.

5.07         EFT
Service Agreement.  Seller shall use
good faith and commercially reasonable efforts to obtain the written consent of
Panhandle to assign to Purchaser Seller’s rights and obligations relating to
the Facility under the EFT Service Agreement.

ARTICLE VI

Pre-Closing Deliveries

6.01         Pre-Closing
Title Policy and Survey Delivery.  At
least twenty (20) days prior to the Closing Date, Seller shall obtain and
deliver to Purchaser:

(a)           With respect to the Real Property described on Schedule IV
(“Insured Parcels”), an owner’s preliminary title report on title
covering a date subsequent to the date hereof, issued by a title insurance
company reasonably acceptable to Purchaser, which preliminary report shall
contain a commitment of such title insurance company to (i) issue an owner’s
title insurance policy on ALTA  Owner’s
Form (10-17-1992) insuring Purchaser as to the fee simple title in each Insured
Parcel in an amount set forth in Schedule 6.01 and subject only to, (A)
Permitted Exceptions, (B) such other minor encumbrances or imperfections, if
any, which are not substantial in nature or amount and which do not detract
from the value of such parcels of real estate as presently used or impair the
operations of the Facility; and (C) such other matters as may be disclosed in
Schedule 6.01 or consented to in writing by Purchaser (clauses (A), (B) and (C)
are collectively referred to as “Permitted Real Estate Exceptions”); and
(ii) affirmatively insure that each such parcel of real estate adjoins a public
road or highway and that entrance to and exit from such premises may be had via
such public road or highway; and

(b)           ALTA/ACSM Land Title Surveys certified to Purchaser and
the title company by a registered land surveyor (registered in the jurisdiction
where the property is located) and prepared in

 16
 

conformity with Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys jointly established and adopted
by ALTA and NSPS in 2005, as of a date subsequent to the date hereof, of each
Insured Parcel.

(c)           The costs and expenses of the title insurance policies
referred to in Section 6.01(a) of this Agreement and the surveys referred to in
Section 6.01(b) of this Agreement, shall be paid by Purchaser, whether or not
the transactions contemplated under this Agreement are consummated.

ARTICLE VII

Warranties and Representations of Seller

Seller warrants and represents to Purchaser as follows:

7.01         Organization
and Good Standing.  Seller is a
limited liability company duly formed, validly existing and in good standing
under the laws of the State of Ohio. 
Seller is duly qualified to transact business and is in good standing in
each jurisdiction where such qualification is necessary, except where the
failure to be so qualified or in good standing could not reasonably be expected
to have a Material Adverse Effect.

7.02         Authority.  Seller has the right and power to enter into,
and perform its obligations under this Agreement; and has taken all requisite
action to authorize its execution and delivery of this Agreement and the
performance of its obligations under this Agreement; and this Agreement has
been duly authorized, executed and delivered by Seller and is binding upon, and
enforceable against, Seller in accordance with its terms; except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors’ rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).

7.03         No
Violations and Consents.  (a)  The execution, delivery and performance of
this Agreement by Seller does not and will not, after the giving of notice, or
the lapse of time, or otherwise, (i) conflict with, result in a breach of, or
constitute a default under, the Certificate of Formation or Operating Agreement
of Seller, or to Seller’s knowledge, any Law or any Material Contract to which
Seller is a party; (ii) result in the creation of any Lien upon any of the
Purchased Assets; (iii) to Seller’s knowledge, terminate, amend or modify or,
except as disclosed on Schedule 7.03, require the consent of any party under,
or give any party the right to terminate, amend, modify, abandon, refuse to
perform, any Material Contract to which Seller is a party; or (iv) to Seller’s
knowledge, accelerate or modify, or give any party the right to accelerate or
modify, the time within which, or the terms under which, any duties or
obligations are to be performed by Seller, or any rights or benefits are to be
received by any Person, under any Material Contract to which Seller is a party.

(b)           The execution and delivery by Seller of this Agreement
does not, and the performance by Seller of its obligations hereunder, including
the transfer of the Pipeline to Purchaser if Seller obtains ownership of a 50%
interest in the Pipeline prior to Closing, and the transfer of the EFT Service
Agreement to Purchaser, will not, require Seller to obtain any consent,
approval, authorization or other action of, or make any filing with or give any
notice to, any Governmental Authority or Person, except (i) as disclosed in
Schedule 7.03, (ii) where failure to obtain such consents, approvals,
authorizations or actions, make such filings or give such notices would not
have a Material Adverse Effect and (iii) as may be necessary as a result of any
facts or circumstances relating solely to Seller. Schedule 7.03 sets forth a
true and complete list of each consent, approval, authorization or other action
of, or filing with or notice to, any Governmental Authority or Person that is
required in connection with

 17
 

the execution and delivery by Seller of this
Agreement or the performance by Seller of its obligations hereunder (including
the assignment of the Material Contracts and the Assigned Permits to
Purchaser), except for such consents, approvals, authorizations, actions,
filings or notices the failure of which to obtain or make, as applicable, would
not have a Material Adverse Effect.

7.04         Brokers.  Except as otherwise set forth in Schedule
7.04, neither this Agreement nor the sale of the Purchased Assets or any other
transaction contemplated by this Agreement was induced or procured through any Person
acting on behalf of, or representing, Seller or any of its Affiliates as
broker, finder, investment banker, financial advisor or in any similar
capacity. Seller shall be responsible for the payment of all fees, costs,
expenses and other charges to the Persons identified on Schedule 7.04, as well
as Pace Global Energy Services, required in connection with the transactions
contemplated by this Agreement.

7.05         Required
Assets.

(a)           (a)           Except
for the Retained Assets described in paragraphs (i)-(vi) and (viii)-(xii) of
the definition of “Retained Assets,” all of the material rights, properties and
assets required by Seller in connection with owning and operating (including
obtaining natural gas transportation services for) the Facility are (i) either
owned by Seller or licensed or leased to Seller under one of the contracts or
agreements conveyed to Purchaser under this Agreement (except as otherwise
contemplated by Section 14.02 hereof) and (ii) included in the Purchased
Assets; and

(b)           Except for the Retained Assets described in paragraphs
(i)-(vi) and (viii)-(xii) of the definition of “Retained Assets,” and except as
set forth in Schedule 7.05(b), the Purchased Assets are sufficient for the
operation and maintenance of the Facility in substantially the same manner as
historically operated and maintained by Seller.

7.06         Contracts.  (a) Schedule 7.06(a) contains a true and
complete schedule setting forth all personal property leases and all other
contracts, agreements and commitments to which Seller is a party and relating
to the Purchased Assets or operation of the Facility, except (i) any
agreements for the purchase of supplies or inventory; (ii) leases, contracts,
agreements or commitments which may be terminated by Seller on thirty (30) days
or less written notice without penalty to Seller, unless such are material to
the operation and maintenance of the Facility, in which case such shall be
listed on Schedule 7.06(a); (iii) leases, contracts, agreements or commitments
which have a term of one (1) year or less or involve payment by or to Seller of
$100,000 or less, unless such are material to the operation and maintenance of
the Facility, in which case such shall be listed on Schedule 7.06(a); (iv) the
Retained Contracts set forth on Schedule 7.06(b); or (v) the Tax Abatement
Agreement and the Compensation Agreements. 
The Pipeline Agreements, the Assigned Intellectual Property, and the
leases, contracts, agreements and commitments set forth in Schedule 7.06(a) are
collectively referred to herein as the “Material Contracts.”

(b)           Other than as set forth in Schedule 7.06(b), neither
Seller, nor to Seller’s knowledge, any other party to any of the Material
Contracts, has commenced any action against any of the parties to the 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 Seller, except as
is otherwise set forth on Schedule 7.06(a). Correct and complete copies of the
Material Contracts have been made available to Purchaser prior to the date
hereof.

7.07         Insurance.  All material properties and risks associated
with the Facility are covered by valid and currently effective insurance
policies or binders of insurance or programs of

 18
 

self-insurance in such types and amounts as
are consistent with customary practices and standards in Seller’s
industry.  Schedule 7.07 contains a
complete list of all material liability, property, accident, casualty, fire,
flood, workers’ compensation or other insurance policies and arrangements
affecting or relating to the ownership, use or operations of the Purchased
Assets or the Facility.

7.08         Title
to Real Property.  Seller has good
and marketable fee simple title to the Real Property free and clear of all
Liens, except for the Permitted Real Estate Exceptions.  Each parcel of Real Property adjoins a public
road or highway and entrance to and exit from such premises may be had via such
public road or highway. Schedules IV, V and VI contain a true and complete
schedule setting forth all real property, real property leases, easements,
rights of way, and real property licenses which Seller owns, leases, operates,
occupies, subleases or uses relating to the Purchased Assets or operation of
the Facility.  Schedule 7.08 contains a
complete list of all Permitted Real Estate Exceptions that are of record as of
the date of this Agreement.

7.09         Title
to Purchased Assets.  Seller has good
and marketable title to all the material Purchased Assets consisting of
tangible personal property owned by Seller and valid and subsisting leases with
respect to all of the material Purchased Assets consisting of tangible personal
property leased by Seller and in each case used exclusively in the
Facility.  All such owned tangible
personal property is owned free and clear of all Liens, except: (a) as set
forth in Schedule 7.09; (b) liens for Taxes and assessments not yet payable;
(c) liens for Taxes, assessments and charges and other claims, the validity of
which Seller is contesting in good faith, provided, however, that
Seller shall indemnify Purchaser against and hold it harmless from all
liabilities of and damages to Purchaser resulting from such liens; (d) liens
securing or relating to liabilities or obligations which are to be assumed by
Purchaser pursuant to this Agreement or the Assumption Agreement; and (e) such
other minor imperfections of title, Liens, claims and other charges and
encumbrances the existence of which would not have a Material Adverse Effect.

7.10         Intellectual
Property.  (a)  To Seller’s knowledge, except as set forth in
Schedule 7.10, there is not now and has not been during the past three (3) years
any infringement or misappropriation by Seller of any valid patent, trademark,
trade name, servicemark, copyright or trade secret which relates to the
Facility and which is owned by any third party, and there is not now any
existing or, to the knowledge of Seller, threatened claim (asserted in writing)
against Seller of infringement or misappropriation of any patent, trademark,
trade name, servicemark, copyright or trade secret, which relates to the
Facility and which is owned by any third party.

(b)           There is no pending or threatened claim by Seller against
others for infringement or misappropriation of any trademark, trade name,
servicemark, copyright or trade secret owned by Seller and which is utilized in
the conduct of the Facility and included in the Purchased Assets.

7.11         Litigation.  Except as set forth in Schedule 7.11,
(a) there are no actions, claims or proceedings pending against Seller
relating to the Facility or any of the Purchased Assets at law or in equity,
before or by any Governmental Authority, or by any other Person; and (b)
neither Seller in respect of the Facility nor any of the Purchased Assets is
subject to any order, judgment or decree of any Governmental Authority having
or which could reasonably be expected to have a Material Adverse Effect.

7.12         Compliance
With Laws.  To the best of Seller’s
knowledge, Seller is not in material violation of any Law applicable to the
Facility or by which any of the Purchased Assets are bound or subject, except
(a) as set forth in Schedule 7.12 and (b) for violations the existence of which
would not have a Material Adverse Effect. 
Notwithstanding the foregoing, compliance with Environmental Laws is
exclusively and solely governed by Section 7.16 hereof.

 19
 

7.13         Labor Matters.  Schedule 7.13 contains a list of all of the
employees of Seller whose primary responsibility relates to the operation or
maintenance of the Facility.  All
employees employed at the Facility are employees of Seller; provided, however,
that certain employees of DP&L may from time to time work at the Facility
in connection with their primary responsibilities elsewhere.  There are no collective bargaining agreements
to which Seller is a party, relating to employees employed by Seller in
connection with the Facility.  To Seller’s
knowledge, there are no material organizing efforts presently being made
involving any of the employees at the Facility.

7.14         Taxes.  (a) Except as set forth in Schedule 7.14,
Seller has duly and timely filed all federal, state and local Tax Returns
required to be filed by it with respect to the operation, ownership, assets or
activities of, or related to, the Facility or the Purchased Assets and paid all
Taxes due (whether or not shown thereon to be due on such Tax Returns).  To the best of Seller’s knowledge, all such
Tax Returns were correct and complete.

(b)           There is no lien, or to Seller’s knowledge proposed lien
(other than for current Taxes not yet due and payable), against the Facility or
the Purchased Assets that arose in connection with any failure, or alleged
failure, to file any Tax Returns or to pay any Tax; and

(c)           Seller has not breached any representation or warranty, or
failed to perform any covenant or agreement with respect to, or set forth in
(i) the Ohio Enterprise Zone Agreement originally dated November 19, 1999 (and
subsequently amended), by and between Greenville Township, Darke County Board
of Commissioners and DPL Energy, Inc. (the “Tax Abatement Agreement”) or
(ii) the certain Compensation Agreements by and between DPL Energy, LLC and the
Darke County Board of Commissioners, the Greenville Township and the Greenville
School District, respectively, (the “Compensation Agreements”) or
otherwise taken any act, or failed to perform any act, that may require the
payment or the repayment of the amount of Taxes (or payments or fees under the
Compensation Agreements) including any Taxes that would have been payable had
the Facility and the Purchased Assets not been exempted from taxation under the
Tax Abatement Agreement.

(d)           The term “Seller” for purposes of this Section 7.14 and
Section 14.06, relating to Tax Matters, shall include DPL Inc., an Ohio
corporation, the owner of the membership interest of Seller

7.15         Licenses
and Permits.  (a) Schedule IX(a) sets
forth all material governmental licenses and permits acquired or held by Seller
or any of its Affiliates in connection with the ownership, operation,
maintenance or use of the Facility or the Purchased Assets, except for those
required by the Environmental Laws, which are exclusively and solely governed
by Section 7.16 hereof.

(b)           Except as set forth in Schedule 7.15 and except for those
required by the Environmental Laws which are exclusively and solely governed by
Section 7.16 hereof, Seller has, or has applied for, all governmental licenses
and permits necessary to own, operate, maintain or use the Facility as it is
currently conducted, except for such governmental licenses and permits, the
absence of which would not have a Material Adverse Effect.

(c)           Except as set forth in Schedule 7.15 and except as relates
to compliance with Environmental Laws which is exclusively and solely governed
by Section 7.16 hereof, Seller is in material compliance with each such
governmental license and permit and has received no written notice or violation
or noncompliance from any Governmental Authority, and Seller has received no
written notice or claim asserting or alleging that any of same (i) is not in
full force and effect or (ii) is subject to any legal proceeding or unsatisfied
condition that (A) is not reasonably expected to be satisfied or (B) if not
satisfied could be reasonably expected to allow material modification or
revocation.

 20
 

7.16         Environmental
Compliance.  (a) Schedule IX(b) sets
forth all material permits, licenses and approvals of Governmental Authorities
under Environmental Laws acquired or held by Seller or any of its Affiliates in
connection with the ownership, operation, maintenance or use of the Facility or
the Purchased Assets.

(b)           Except as set forth in Schedule 7.16, Seller currently holds
or has applied for all permits, licenses and approvals of Governmental
Authorities required under Environmental Laws with respect to the Purchased
Assets and the Facility except for such permits, licenses or approvals the
absence of which would not, individually or in the aggregate, have a Material
Adverse Effect, and all such permits, licenses and approvals are transferable
to Purchaser at or soon after the Closing. 
To the knowledge of Seller, except as set forth in Schedule 7.16, Seller
is not in violation of any of such permits, licenses, and approvals, and such
permits, licenses and approvals are valid and in good standing.  Seller has not been notified in writing by
any Governmental Authority of any actual or potential change in the status or
terms and conditions of any such permits, licenses or approvals.

(c)           To the knowledge of Seller, except as set forth in
Schedule 7.16, Seller is not in violation of and has no liability under any
Environmental Laws with respect to the Purchased Assets, the Facility or the
business conducted by Seller therewith. 
Seller is not obligated to perform any action or otherwise incur any
expense under Environmental Law pursuant to any order, decree, judgment or
agreement by which it is bound or has assumed by contract or agreement, and
there are no written notices from third parties, nor any actions, claims or
proceedings pending or, to the knowledge of Seller, threatened against Seller
relating to any Environmental Law, in each case with respect to the Purchased
Assets, the Facility or the business conducted by Seller therewith.  To the knowledge of Seller, there has been no
release or threatened release of Hazardous Substances on, at, under or from the
Facility that could reasonably be expected to result in material liability of
Purchaser under any Environmental Law. 
Seller has made available to Purchaser all material records and files in
the possession, custody or control of, or otherwise reasonably available to,
Seller concerning compliance with or liability under Environmental Law,
including those concerning the existence of Hazardous Substances in connection
with the Purchased Assets, the Facility or the business conducted by Seller
therewith.

7.17         Purchaser
Pipeline Acquisition Costs.  Subject
to the assignment and transfer of the Pipeline Agreements to Purchaser
(including obtaining all required consents thereto), and in the event that the
Pipeline has not been transferred by Panhandle to Vectren and Seller prior to
the Closing, Panhandle has no right to require Purchaser to make any payments
to Panhandle to obtain therefrom a fifty percent (50%) undivided ownership
interest in the Pipeline; provided, however, that Purchaser shall
be responsible for any and all title or other recordation fees and expenses
associated with its acquisition of the Pipeline from Panhandle.

7.18         Disclaimer
of Warranties.  EXCEPT WITH RESPECT
TO THE WARRANTIES AND REPRESENTATIONS SPECIFICALLY SET FORTH IN THIS AGREEMENT
AND THE DEED OR DEEDS CONVEYING THE REAL PROPERTY, SELLER MAKES NO WARRANTY,
EXPRESS OR IMPLIED, WHETHER OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, OR QUALITY AS TO THE PURCHASED ASSETS, OR ANY PART THEREOF,
OR AS TO THE CONDITION OR WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS
THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD THAT THE PURCHASED
ASSETS ARE TO BE CONVEYED HEREUNDER “AS IS” AND “WHERE IS” ON THE CLOSING DATE,
AND IN THEIR THEN PRESENT CONDITION. 
PURCHASER SHALL RELY UPON ITS OWN EXAMINATION THEREOF.

 

 21

ARTICLE VIII

Warranties and
Representations of Purchaser

Purchaser warrants and represents to Seller as follows:

8.01         Due Incorporation.  Purchaser is an Ohio corporation not for
profit duly incorporated, validly existing and in good standing under the laws
of the State of its incorporation.

8.02         Authority.  Purchaser has the corporate right and power
to enter into, and perform its obligations under this Agreement, and has taken
all requisite corporate action to authorize its execution and delivery of this Agreement
and the performance of its obligations under this Agreement; and this Agreement
has been duly executed and delivered by Purchaser and is binding upon, and
enforceable against, Purchaser in accordance with its terms; except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors’ rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).

8.03         No Violations.  (a) 
The execution, delivery or performance of this Agreement by Purchaser
does not and will not, after the giving of notice, or the lapse of time, or
otherwise: conflict with, result in a breach of, or constitute a default under,
the Articles of Incorporation or Code of Regulations of Purchaser, or to
Purchaser’s knowledge any Law or any material contract, agreement, commitment
or plan to which Purchaser is a party.

(b)           The
execution and delivery by Purchaser of this Agreement does not, and the
performance by Purchaser of its obligations hereunder will not, require
Purchaser to obtain any consent, approval, authorization or other action of, or
make any filing with or give any notice to, any Governmental Authority or
Person, except (i) as disclosed in Schedule 8.03, (ii) where failure to
obtain such consents, approvals, authorizations or actions, make such filings
or give such notices would not have a Material Adverse Effect and (iii) as may
be necessary as a result of any facts or circumstances relating solely to
Purchaser. Schedule 8.03 sets forth a true and complete list of each consent,
approval, authorization or other action of, or filing with or notice to, any
Governmental Authority or Person that is required in connection with the
execution and delivery by Purchaser of this Agreement or the performance by
Purchaser of its obligations hereunder.

8.04         Brokers.  Neither this Agreement nor the purchase of
the Purchased Assets or any other transaction contemplated by this Agreement
was induced or procured through any Person, acting on behalf of, or
representing, Purchaser or any of its Affiliates as broker, finder, investment
banker, financial advisor or in any similar capacity.

8.05         Litigation.  There are no actions, claims or proceedings
pending against Purchaser or any of its assets or properties at law or in
equity, before or by any Governmental Authority, or by any other Person, which,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on Purchaser or its ability to consummate the
transactions contemplated hereby.

8.06         Financing.  Purchaser has received indicative commitment
letters from multiple institutional funding sources expressing interest in
providing to Purchaser, subject to documentation and other usual and customary
conditions, amounts that would be sufficient to fulfill Purchaser’s obligation
to pay the Purchase Price hereunder, and Purchaser has no reason to believe
that it will be unable to obtain funding in such amounts from such or other
sources by the Closing.  Purchaser
acknowledges and agrees

 22
 

that (i) the transactions contemplated herein are not subject to any
type of financing contingency and (ii) the Closing will not be delayed in
any manner as a result of Purchaser’s inability to obtain financing.

ARTICLE IX

Conditions to
Closing Applicable to Purchaser

The obligations of Purchaser hereunder (including the obligation of
Purchaser to close the transactions herein contemplated) are subject to the
following conditions precedent:

9.01         No Termination.  Neither Purchaser nor Seller shall have
terminated this Agreement pursuant to Section 11.01 hereof.

9.02         Bring-Down of
Seller Warranties.  The warranties
and representations made by Seller herein to Purchaser that are qualified by
materiality shall be true and correct in all respects, and the warranties and
representations made by Seller herein to Purchaser that are not so qualified
shall be true and correct in all material respects, in each case on and as of
the Closing Date with the same effect as if such warranties and representations
had been made on and as of the Closing Date and Seller shall have performed and
complied with, in all material respects, all agreements, covenants and
conditions on its part required to be performed or complied with on or prior to
the Closing Date; and at the Closing, Purchaser shall have received a
certificate executed by the President or any Vice President of Seller to the
foregoing effect.

9.03         No Material
Adverse Effect.  Except as set forth
in Schedule 9.03, between May 31, 2006, and the Closing Date, there shall have
been no Material Adverse Effect.

9.04         Pending Actions.  No investigation, action, suit or proceeding
by any Governmental Authority and no action, suit or proceeding by any other
Person, shall be pending on the Closing Date which challenges this Agreement
and seeks to modify, prohibit or enjoin the consummation of the transactions
contemplated hereby.

9.05         Material Contracts.  There will be no outstanding material
breaches under any Material Contracts, and all consents of any Governmental
Authorities or Persons whose consent is required to assign or transfer the
Material Contracts to Purchaser shall have been obtained.  Without limiting the generality of the
foregoing, Panhandle shall have confirmed in writing to Seller and Purchaser
that (a) Panhandle has not provided notice of any outstanding material breaches
by Seller of any of its obligations under the Pipeline Agreements to which
Panhandle is a party, (b) none of Seller’s rights under the Pipeline Agreements
to which Panhandle is a party have been waived expressly or by implication by
Seller, and (c) Panhandle agrees and acknowledges via its consent that
Purchaser shall obtain from Seller those same rights and be subject to those
same obligations that Seller possessed and was subject to immediately prior to
the assignment of the Pipeline Agreements to Purchaser, including the right to
obtain from Panhandle a fifty percent (50%) undivided ownership interest in the
Pipeline.

9.06         Assigned Permits.  The Assigned Permits will be in effect, there
will be no outstanding material violations under any of the Assigned Permits,
and all consents, approvals or authorizations of any Governmental Authorities
or Persons required to assign or transfer the Assigned Permits to Purchaser
shall have been obtained.

9.07         Other Consents and
Approvals.  All consents, approvals
or authorizations of the Governmental Authorities and other Persons set forth
in Schedule 7.03 shall have been obtained; provided, however,
that, notwithstanding anything to the contrary in this Agreement, it shall not
be a condition precedent to the obligations of either party under this
Agreement that any consents or approvals

 23
 

required for the assignment to Purchaser of either the Tax Abatement
Agreement or any of the Compensation Agreements shall have been obtained.  Any applicable process by which Seller,
Panhandle and Purchaser agree to the assignment of Seller’s rights and
obligations relating to capacity for the Facility under the EFT Service
Agreement shall have been completed, and Panhandle shall have acknowledged that
the rate discount pursuant to that certain Letter Agreement dated December 15,
2005, that is appended to the EFT Service Agreement shall continue to be
available to Purchaser with respect to such capacity notwithstanding Section 9
of such Letter Agreement and that Purchaser shall have the right of first
refusal provided in Section 8 of such Letter Agreement, to the extent Seller
has such right.

9.08         All Necessary
Documents.  All proceedings to be
taken in connection with the consummation of the transactions contemplated by
this Agreement, and all documents incident thereto, shall be reasonably
satisfactory in form and substance to Purchaser and its counsel, and Purchaser
shall have received copies of such documents as Purchaser and its counsel may
reasonably request in connection with said transactions, including without
limitation, those documents to be delivered pursuant to Sections 3.02 and 4.01
hereof.

9.09         Title Policy.  At the Closing, Seller shall have delivered
to Purchaser owner’s title insurance policies dated the Closing Date on ALTA
Owner’s Form (10-17-1992) with extended coverage and deletion of the standard
exceptions to title customarily contained in such policies, covering the real
estate covered by the commitments referred to in Section 6.01(a) hereof issued
by the title insurance company which issued such commitments insuring, as of
the Closing Date, the fee simple estate of Purchaser in such real estate in the
amount set forth in the Schedule 6.01, subject only to the Permitted Real
Estate Exceptions.

9.10         Brokers and
Consultants.  Seller shall have on or
prior to the Closing paid all fees, costs, expenses and other charges to the
Persons identified on Schedule 7.04, as well as Pace Global Energy Services,
required in connection with the transactions contemplated by this Agreement.

Purchaser shall have the right to waive any of the
foregoing conditions precedent.

ARTICLE X

Conditions to
Closing Applicable to Seller

The obligations of Seller hereunder (including the
obligation of Seller to close the transactions herein contemplated) are subject
to the following conditions precedent:

10.01       No Termination.  Neither Purchaser nor Seller shall have
terminated this Agreement pursuant to Section 11.01 hereof.

10.02       Bring-Down of
Purchaser Warranties.  All warranties
and representations made by Purchaser herein to Seller that are qualified by
materiality shall be true and correct in all respects, and all warranties and
representations made by Purchaser herein to Seller that are not so qualified
shall be true and correct in all material respects, in each case on and as of
the Closing Date with the same effect as if such warranties and representations
had been made on and as of the Closing Date, and Purchaser shall have performed
and complied in all material respects (except for the payment of money which
shall be absolute) with all agreements, covenants and conditions on its part
required to be performed or complied with on or prior to the Closing Date, and
at the Closing, Seller shall have received a certificate executed by the
President or any Vice President of Purchaser to the foregoing effect.

 24
 

10.03       Pending Actions.  No investigation, action, suit or proceeding
by any Governmental Authority and no action, suit or proceeding by any other
Person shall be pending on the Closing Date which challenges this Agreement and
seeks to modify, prohibit or enjoin the consummation of the transactions
contemplated hereby.

10.04       Consents and
Approvals.  All consents, approvals
or authorizations of the Governmental Authorities and other Persons set forth
in Schedule 8.03 shall have been obtained; provided, however,
that it shall not be a condition precedent to the obligations of either party
under this Agreement that any consents or approvals required for the assignment
to Purchaser of the Tax Abatement Agreement or any of the Compensation
Agreements shall have been obtained.

10.05       All Necessary
Documents.  All proceedings to be
taken in connection with the consummation of the transactions contemplated by
this Agreement, and all documents incident thereto, shall be reasonably
satisfactory in form and substance to Seller and its counsel, and Seller and
its counsel shall have received copies of such documents as it and its counsel
may reasonably request in connection with said transactions, including without
limitation, those documents to be delivered pursuant to Section 3.03 hereof.

Seller shall have the right to waive any of the
foregoing conditions precedent.

ARTICLE XI

Termination

11.01       Termination.  This Agreement may be terminated at any time
prior to the Closing as follows, and in no other manner:

(a)           by
mutual written consent of Purchaser and Seller;

(b)           by
Purchaser or by Seller, at any time before the Closing, upon written notice of
termination by the other party, in the event (i) of a breach hereof by the
non-terminating party that would reasonably be expected to give rise to a
Material Adverse Effect, if the non-terminating party fails to cure such breach
within thirty (30) days following written notification of such breach by the
other party; or (ii) any condition to the terminating party’s obligations
under this Agreement (other than the payment of money to the non-terminating
party) becomes impossible or impracticable to satisfy with the use of
commercially reasonable efforts, so long as such impossibility or
impracticability is not caused by a breach hereof by such party; provided,
however, that if it is reasonably possible that the circumstances giving rise
to the impossibility or impracticability may be removed prior to the expiration
of the time period provided in Section 11.01(c), then notification of
termination by the terminating party may not be given until such time as the
removal of such circumstances is no longer reasonably possible or practicable
within such time period; or

(c)           by
Purchaser or by Seller if the Closing of the transactions contemplated by this
Agreement shall not have occurred on or before September 30, 2007, or such
later date as may have been agreed upon in writing by the parties hereto;
provided, the party seeking to terminate is not in material breach of, or
material default under, this Agreement.

 25
 

ARTICLE XII

Indemnification

12.01       Seller
Indemnification.  Seller agrees to
indemnify and hold Purchaser and its successors and permitted assigns, harmless
against any loss, damage or expense (including reasonable attorneys’ fees),
which arises out of or is in respect of (a) any inaccuracy or misrepresentation
in or breach of any of the warranties or representations made by Seller in this
Agreement or any other certificate, document, instrument or affidavit furnished
by Seller in accordance with the provisions of this Agreement, (b) any breach
or failure to perform any of the covenants made by Seller in this Agreement or
any other certificate, document, instrument or affidavit furnished by Seller in
accordance with the provisions of this Agreement, and (c) any and all Retained
Liabilities.

12.02       Limitation.  Purchaser’s right to indemnification pursuant
to Article XII of this Agreement is subject to the following limitations:

(a)           Purchaser
shall not be entitled to assert any right of indemnification pursuant to
Section 12.01(a) or (b) of this Article XII for any loss, damage or expense
suffered by Purchaser after eighteen (18) months from the Closing Date, except
that (i) indemnification claims arising from Sections 7.01 and 7.02, shall not
be limited as to time; (ii) indemnification claims arising from Sections 7.04,
7.10, 7.12, 7.15 and 7.16 may be asserted until the third (3rd) anniversary date of the
Closing Date; (iii) indemnification claims arising from Sections 7.08 and
7.09 may be asserted until the fifth (5th) anniversary of the Closing Date; (iv) indemnification
claims arising from Section 7.14 may be asserted until six (6) months following
the expiration of the applicable statute of limitations pursuant to which a
Governmental Authority may make an assessment for Tax; (v) indemnification
claims arising from any covenant hereunder which by its nature survives the
Closing may be asserted until the third (3rd) anniversary of the Closing Date;
(vi) indemnification claims arising from any pre-Closing covenants
hereunder may be asserted until six (6) months after the Closing Date; and
(vii) any claim by Purchaser for indemnification pursuant to Section 12.01(a)
or (b) of this Article XII made prior to the expiration of the applicable time
period provided in this Section 12.02(a) shall continue to survive until the
final resolution of such claim, and Purchaser shall continue to have the right
to be indemnified with respect to any such claim.

(b)           No
indemnification claim may be made against Seller for indemnification pursuant
to Section 12.01(a) of this Article XII with respect to any individual item of
loss, damage or expense, unless such item exceeds $50,000 and unless the
aggregate of all such losses, damages and expenses (which individually exceed
$50,000) of Purchaser with respect to this Article XII shall exceed $250,000 (“Threshold”),
and then Seller shall only be required to pay or be liable for the excess over
the Threshold, except that the limitations set forth in this Section 12.02(b)
shall not apply to any warranty or representation relating to any Tax.

(c)           Seller’s
maximum liability to Purchaser pursuant to Section 12.01(a) of this Article XII
shall be thirty percent (30%) of the Initial Purchase Price.

(d)           For
the avoidance of doubt, the provisions of Sections 12.02(a), (b) and (c) of
this Article XII shall not apply to indemnification claims made against Seller
pursuant to Section 12.01(c) of this Article XII or to indemnification claims
alleging a breach of Seller’s obligations to indemnify Purchaser under this
Article XII; and the provisions of Sections 12.02(b) and (c) of this Article
XII shall not apply to indemnification claims made against Seller pursuant to
Section 12.01(b) of this Article XII.

 26
 

(e)           For
the purposes of the limitations of liability set forth in Sections 12.02(b) and
(c), in computing such individual or aggregate amounts of claims, the amount of
each claim shall be deemed to be an amount (i) net of any tax benefit
realizable by Purchaser or any Affiliate thereof by reason of deductibility of
such loss, damage or expense (determined by multiplying such deductible amount
by the then applicable highest effective corporate income tax rate) and any
deferred tax benefit attributable to such loss, damage or expense (determined
on the same basis but present valued to the extent obtained through
depreciation or amortization deductions) and (ii) net of any insurance proceeds
and any indemnity, contribution or other similar payment recoverable by
Purchaser or any Affiliate from any third party with respect thereto.

(f)            Purchaser
hereby acknowledges and agrees that its sole and exclusive remedy with respect
to any and all claims relating to the subject matter of this Agreement and the
Assumption Agreement shall be pursuant to the indemnification provisions set
forth in this Article XII.  In
furtherance of the foregoing, Purchaser hereby waives, to the fullest extent
permitted under applicable Law, any and all rights, claims and causes of action
it may have against Seller arising under or based upon any Law (including,
without limitation, any such rights, claims or causes of action arising under
or based upon common law or otherwise) or Environmental Laws, including, but
not limited to, the Resource Conservation and Recovery Act and the
Comprehensive Environmental Response, Compensation and Liability Act, except
for any claims permitted under Article XII of this Agreement.

(g)           Except
as set forth in this Agreement, Seller is not making any representation,
warranty, covenant or agreement with respect to the matters contained
herein.  Anything herein to the contrary
notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein shall give rise to any right on the part of
Purchaser, after the consummation of the purchase and sale of the Facility and
the Purchased Assets contemplated hereby, to rescind this Agreement or any of
the transactions contemplated hereby.

(h)           Except
for any post-closing obligations of Seller or Purchaser expressly set forth in
this Agreement, neither Seller nor Purchaser shall have any liability under any
provision of this Agreement for any liabilities and damages to the extent that
such liabilities and damages relate to actions taken or not taken by the other
party or its Affiliates after the Closing Date. 
In no event shall Seller or Purchaser be liable for consequential or
punitive damages.  Each party shall take
all reasonable steps to mitigate all such liabilities and damages upon and
after becoming aware of any event which could reasonably be expected to give
rise to such losses, damages and expenses.

12.03       Purchaser
Indemnification.  Purchaser agrees to
indemnify and hold Seller harmless against any loss, damage or expense
(including reasonable attorneys’ fees), which arises out of or is in respect of
(a) any material inaccuracy or misrepresentation in or material breach of any
of the warranties, representations, covenants or agreements made by Purchaser
in this Agreement or in any certificate, document, instrument or affidavit
furnished by Purchaser in accordance with the provisions of this Agreement, and
(b) any and all Assumed Liabilities, except that the materiality limitation set
forth in this Section 12.03 shall not apply to any warranty, representation,
covenant or agreement relating to any Tax.

12.04       Indemnification
Notice.  Promptly upon obtaining
knowledge of any claim, event, facts or demand which gives rise to, or could
reasonably be expected to give rise to, a claim for indemnification hereunder
(including in the case of a claim pursuant to Section 12.01(a) any claim which
is not payable due to the limitations set forth in Section 12.02(b) hereof),
any party seeking

 27
 

indemnification under this Article XII (an “Indemnified
Party”) shall give written notice of such claim or demand (“Notice of
Claim”) to the party from which indemnification is sought (an “Indemnifying
Party”), setting forth the amount of the claim.  The Indemnified Party shall furnish to the
Indemnifying Party, in reasonable detail, such information as it may have with
respect to such indemnification claim (including copies of any summons, complaint
or other pleading which may have been served on it and any written claim,
demand, invoice, billing or other document evidencing or asserting the
same).  No failure or delay by the
Indemnified Party in the performance of the foregoing shall reduce or otherwise
affect the obligation of any Indemnifying Party to indemnify and hold the
Indemnified Party harmless, except to the extent that such failure or delay
shall have adversely affected the Indemnifying Party’s ability to defend
against, settle or satisfy any loss, damage or expense for which the
Indemnified Party is entitled to indemnification hereunder.

12.05       Indemnification
Procedure.  (a) If the claim or
demand set forth in the Notice of Claim given by the Indemnified Party pursuant
to Section 12.04 of this Agreement is a claim or demand asserted by a third
party, the Indemnifying Party shall have fifteen (15) days after the Date of
the Notice of Claim to notify the Indemnified Party in writing of its election
to defend such third party claim or demand on behalf of the Indemnified
Party.  If the Indemnifying Party elects
to defend such third party claim or demand, the Indemnified Party shall make
available to the Indemnifying Party and its agents and representatives all
records and other materials which are reasonably required in the defense of
such third party claim or demand and shall otherwise cooperate with, and assist
the Indemnifying Party in the defense of, such third party claim or demand, and
so long as the Indemnifying Party is defending such third party claim or demand
in good faith, the Indemnified Party shall not pay, settle or compromise such
third party claim or demand.  If the
Indemnifying Party elects to defend such third party claim or demand, the
Indemnified Party shall have the right to participate in the defense of such
third party claim or demand, at its own expense.  If the Indemnifying Party does not elect to
defend such third party claim or demand, or does not defend such third party claim
in good faith, the Indemnified Party shall have the right, in addition to any
other right or remedy it may have hereunder, at the Indemnifying Party’s
expense, to defend such third party claim or demand; provided, however, that
(i) the Indemnified Party shall not have any obligation to participate in the
defense of, or defend, any such third party claim or demand; and (ii) the
Indemnified Party’s defense of or its participation in the defense of any such
third party claim or demand shall not in any way diminish or lessen the
obligations of the Indemnifying Party under the agreements of indemnification
set forth in this Article XII.

(b)           Except
for third party claims being defended in good faith, the Indemnifying Party
shall satisfy its obligations hereunder in cash within thirty (30) days after
the Date of Notice of Claim.

(c)           The
term “Date of the Notice of Claim” as used in this Article XII shall
mean the date the Notice of Claim is deemed delivered pursuant to Section 15.13
hereof.

12.06       Effect
of Indemnity Payments.  The parties
agree to treat all payments made under the indemnity provisions of Article XII
of this Agreement as adjustments to the Purchase Price for Tax purposes and
that such agreed treatment shall govern for purposes hereof.

ARTICLE XIV

Confidentiality

13.01       Confidentiality
of Materials.  The parties hereto
agree with respect to all technical, commercial and other information that is
furnished or disclosed by the other party to this

 28
 

Agreement, including, but not limited to,
information regarding such party’s (and its subsidiaries’ and affiliates’)
organization, personnel, business activities, customers, policies, assets,
finances, costs, sales, revenues, technology, rights, obligations, liabilities
and strategies (“Information”), that, unless and until the transaction
contemplated by this Agreement shall have been consummated or this Agreement is
terminated by either party in accordance with its terms, (a) such Information
is confidential and/or proprietary to the furnishing/disclosing party and
entitled to and shall receive treatment as such by the receiving party; (b) the
receiving party will hold in confidence and not disclose nor use (except in
respect of the transactions contemplated by this Agreement) any such
Information, treating such Information with the same degree of care and
confidentiality as it accords its own confidential and proprietary Information;
provided, however, that the receiving party shall not have any restrictive
obligation with respect to any Information which (i) is available to the
general public, (ii) is or becomes publicly known through no wrongful act or
omission of the receiving party, or (iii) is or becomes known by the receiving
party without any proprietary restrictions by the furnishing/disclosing party
at the time of receipt of such Information; and (c) all such Information
furnished to either party by the other, unless otherwise specified in writing,
shall remain the property of the furnishing/disclosing party and, in the event
this Agreement is terminated, shall be returned to it, together with any and
all copies made thereof, upon request for such return by it (except for
documents submitted to a governmental agency with the consent of the
furnishing/disclosing party or upon subpoena and which cannot be retrieved with
reasonable effort) and in the case of (i) oral information furnished to any
party by the other which shall have been reduced to writing by the receiving
party and (ii) all internal documents of any party describing, analyzing or
otherwise containing Information furnished by the other party, all such
writings and documents shall be destroyed, upon request, in the event this
Agreement is terminated, and each party shall confirm in writing to the other
compliance with any such request.

13.02       Remedy.  Each party hereto acknowledges that the
remedy at law for any breach by either party of its obligations under Section
13.01 of this Agreement is inadequate and that the other party shall be
entitled to equitable remedies, including an injunction, in the event of breach
by any other party.

ARTICLE XV

Certain Other
Understandings

14.01       Post Closing Access
to Records and Records Retention. 
(a)  Each party agrees to provide
the other with access to all relevant documents and other information relating
to the Facility which may be needed by such other party for purposes of
preparing tax returns or responding to an audit by any Governmental Authority
or for any other reasonable purpose. 
Such access will be during normal business hours and not unreasonably interfere
with the business or operations of the other party.

(b)           Without limiting
Section 14.01(a) above, in order to facilitate the resolution of any claims
made by or against or incurred by Seller after the Closing, upon reasonable
notice, Purchaser shall, after the Closing: 
(i) afford the officers, employees and authorized agents and
representatives of Seller reasonable access, during normal business hours, to
the offices, properties, books and records of Purchaser with respect to the
Facility, (ii) furnish to the officers, employees and authorized agents and
representatives of Seller such additional financial and other information
regarding the Facility as Seller may from time to time reasonably request and
(iii) make available to Seller, the employees of Purchaser whose assistance,
testimony or presence of such persons as witnesses in hearings or trials for
such purposes is required; provided, however, that such
investigation shall not unreasonably interfere with the business or operations
of Purchaser and Purchaser shall not be required to furnish any confidential or
privileged materials to Seller.

 29

(c)           Purchaser
agrees for a period extending five (5) years after the Closing Date not to
destroy or otherwise dispose of any records relating to the Facility for the
period prior to its acquisition of the Purchased Assets, provided that
Purchaser acquired such records from Seller in connection with this
Agreement.  After such five (5) year
period, Purchaser may destroy or otherwise dispose of such records if Purchaser
shall offer in writing to surrender such records to Seller and Seller shall
fail to agree in writing to take possession thereof during the thirty (30) day
period after such offer is made.

14.02       Obligations
not Performed by Closing.  (a)  In the event that Seller has not on or prior
to the Closing Date completed or caused the completion of the repairs described
in Section 5.02(i) of this Agreement (as evidenced by delivery to Purchaser of
the Pratt and Whitney Repair Report), Seller will, after the Closing, continue
to diligently pursue such repairs until such repairs are completed and shall pay
and be fully responsible for the cost of such repairs. At such time as such
repairs are completed to the reasonable satisfaction of Purchaser, Purchaser
shall pay the Unit 1B Holdback Amount to Seller.

(b)           After
the Closing, each of Seller and Purchaser agree to attempt diligently to obtain
any necessary consents and take all other commercially reasonable actions which
may be required to effect the assignment to Purchaser of any of the Assigned
Contracts (other than the Material Contracts), and any of the Material
Contracts as to which Purchaser waives the conditions set forth in Section 9.05
of this Agreement, that cannot be effectively assigned to Purchaser as of the
Closing Date (the “Unassigned Contracts”), and each party will diligently
cooperate with the other in obtaining and taking the same, and will take such
steps as reasonably requested by such party with respect thereto, all at Seller’s
cost.  This Agreement, to the extent
permitted by law, shall constitute an equitable assignment by Seller to Purchaser
of all of Seller’s rights, benefits, title and interest in and to the
Unassigned Contracts, and Purchaser, to the extent of such equitable
assignment, shall be deemed to be Seller’s agent for the purpose of completing,
fulfilling and discharging all of Seller’s rights and liabilities arising after
the Closing Date under the Unassigned Contracts, and Seller shall make
commercially reasonable efforts to provide Purchaser with the benefits of the
Unassigned Contracts at Seller’s cost.

(c)           In
the event that Seller has acquired the 50% ownership interest in the Pipeline
pursuant to the Pipeline Agreements prior to Closing, Seller shall assign such
ownership interest to Purchaser at Closing.

14.03       Avoidance of Double
Withholding Taxes.  Purchaser and
Seller hereby acknowledge that the standard procedure described in Section 4 of
the Revenue Procedure 2004-53 as promulgated by the IRS with respect to wage
reporting, and F.I.C.A., withholding and similar tax and other collections is
applicable to Seller’s employees who become employees of Purchaser or its
Affiliates.

14.04       Removal of
Trademarks, Etc.  As promptly as
practicable after the Closing, and in no event later than thirty (30) days
after the Closing Date, Purchaser agrees not to use and to delete, remove or
otherwise obliterate from the Purchased Assets all trade names and trademarks
of Seller or its Affiliates, including, but not limited to, references to “DPL
Energy, LLC” and derivatives thereof, including, without limitation, all logos.

14.05       [Intentionally
left blank.]

14.06       Tax Matters.

(a)           Seller’s
Responsibilities.  Seller shall (i)
timely prepare and file when due any Tax Return that is required to include the
operations, ownership, assets or activities of, or related to, the

 30
 

Facility or the Purchased Assets for any Tax Period
ending on or before the Closing Date and (ii) pay all Taxes shown to be due on
such Tax Returns or otherwise owing (including payments in lieu of taxes or
fees pursuant to the Compensation Agreements or any Taxes for the “Straddle
Period” defined below) that are allocable to the Tax Period prior to and
including the Closing Date.

(b)           Purchaser’s
Responsibilities.  Purchaser shall
(i) prepare and file when due all Tax Returns that are required to include the
operations, ownership, assets or activities of, or related to, the Facility or
the Purchased Assets for any Tax Period ending after the Closing Date
(including the “Straddle Period” as hereinafter defined) and (ii) pay all taxes
shown to be due on such Tax Returns or otherwise owing (including payments in
lieu of taxes or fees pursuant to the Compensation Agreements (to the extent
such Compensation Agreements have been assigned to Purchaser under Section
5.06) or any Taxes for the “Straddle Period” as defined below) that are
allocable to the Tax Period after the Closing Date.

(c)           Straddle
Period.  The “Straddle Period” is any
Tax Period beginning before and ending after the Closing Date.  Except as otherwise provided in Section
14.06(d), Taxes and payments in lieu of taxes or fees pursuant to Compensation
Agreements for the Straddle Period shall be allocated to Seller and Purchaser,
respectively, by multiplying the total amount of such Taxes, payments or fees,
by a fraction, the numerator of which is the number of days of the Straddle
Period for which each party is responsible for the payment of such Taxes and
the denominator of which is the total number of days in the Straddle
Period.  To the extent that (i) the
Compensation Agreements have been assigned to Purchaser and (ii) Seller has
made any payment in 2006 pursuant to such Compensation Agreements which result
in a prepayment allocable to any date after the Closing Date, Purchaser shall
reimburse Seller for the portion of such prepayment allocable to any date after
the Closing Date.  Purchaser agrees that
amounts payable under the Compensation Agreements (to the extent such
Compensation Agreements have been assigned to Purchaser under Section 5.06)
after the Closing Date are solely the responsibility of the Purchaser.

(d)           Ohio Real Property Taxes.  Seller shall pay, or reimburse Purchaser if
Purchaser pays, the Ohio real property taxes for the first half of 2006 (billed
in December 2006) and the second half of 2006 (billed in June 2007) with
respect to the land and buildings comprising the Facility and the Purchased
Assets.  Purchaser shall pay the Ohio
real property tax for the first half of 2007 (billed in December 2007) and the
second half of 2007 (billed in June 2008) with respect to the land and
buildings comprising the Facility and the Purchased Assets (“2007 First Half
Real Property Taxes” and “2007 Second Half Real Property Taxes,”
respectively).  Seller shall reimburse
Purchaser for its pro rata share of the 2007 First Half Real Estate Taxes and
the 2007 Second Half Real Estate Taxes. 
The amount of Seller’s reimbursement to Purchaser for Seller’s pro rata
share of the 2007 First Half Real Property Taxes, shall be computed as
follows:  multiply the total bill for
2007 First Half Real Property Taxes, as finally determined or adjusted, by a
fraction the numerator of which is the number of days from January 1, 2007, to
and including the earlier of the Closing Date and June 30, 2007, and the
denominator or which is one hundred eighty-three (183) days.  The 
amount of Seller’s reimbursement to Purchaser for Seller’s pro rata
share of the 2007 Second Half Real Property Taxes, if any, shall be computed as
follows:  multiply the total bill for
2007 Second Half Real Property Taxes, as finally determined or adjusted, by a
fraction the numerator of which is the number of days from July 1, 2007, to and
including the earlier of the Closing Date and December 31, 2007, and the
denominator or which is one hundred eighty-three (183) days.  Seller shall pay to Purchaser such
reimbursement promptly upon receipt of a copy of the bill for the 2007 First
Half Real Property Taxes or 2007 Second Half Real Property Taxes, as
applicable, and a computation of the amount of Seller’s reimbursement.

(e)           Ohio Personal Property Taxes.  With respect to the calendar year that begins
after December 31, 2006 and includes the Closing Date, the Ohio personal
property taxes will be allocated to each party as set forth in this Section
14.06(e).  For Seller’s pro rata share,
multiply the total Ohio personal property tax bills for the calendar year,
which includes the Closing Date, as finally determined or adjusted, by a
fraction the numerator of which is the number of days from the first day of
such calendar year to and including the Closing Date and the denominator of
which is three hundred and sixty-five

 31
 

(365) days, and for the Purchaser’s pro rata share,
the total Ohio personal property tax bills for the calendar year that includes
the Closing Date, as finally determined and adjusted, less the Seller’s pro
rata share.  Seller shall pay the
Purchaser Seller’s pro rata share if Purchaser pays the Ohio personal property
tax bills for the calendar year that includes the Closing Date, or Purchaser
shall pay to Seller Purchaser’s pro rata share if Seller pays the Ohio personal
property taxes for the calendar year that includes the Closing Date in each
case promptly upon receipt of a copy of the Ohio personal property tax bills
for the calendar year that includes the Closing Date and a computation of each
party’s pro rata share.  Purchaser agrees
that all Ohio personal property taxes for any calendar year beginning after the
Closing Date are solely the responsibility of the Purchaser.

14.07     O&M
Transition Services Agreement Option. 
Unless Purchaser has notified Seller in writing within thirty (30) days
after the date hereof of Purchaser’s irrevocable commitment to enter into the
O&M Transition Services Agreement, Seller shall have no obligation to enter
into such agreement with Purchaser.

 

ARTICLE XV

Miscellaneous

15.01       Cost and Expenses. 
Purchaser will pay its own costs and expenses (including attorneys’
fees, accountants’ fees and other professional fees and expenses) in connection
with the negotiation, preparation, execution and delivery of this Agreement and
the consummation of the purchase of the Purchased Assets and the other
transactions contemplated by this Agreement (except as otherwise specifically
provided for herein); and Seller will pay its own costs and expenses (including
attorneys’ fees, accountants’ fees and other professional fees and expenses) in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the consummation of the sale of the Purchased Assets and the
other transactions contemplated by this Agreement (except as otherwise
specifically provided for herein).

15.02       Entire Agreement.  The Schedules and the Exhibits referenced in
this Agreement are incorporated into this Agreement and together contain the
entire agreement between the parties hereto with respect to the transactions
contemplated hereunder, and supersede all negotiations, representations,
warranties, commitments, offers, contracts and writings prior to the date
hereof.  No waiver and no modification or
amendment of any provision of this Agreement shall be effective unless
specifically made in writing and duly signed by the party to be bound thereby.

15.03       Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute one and the same instrument.

15.04       Assignment,
Successors and Assigns.  The
respective rights and obligations of the parties hereto shall not be assignable
without the prior written consent of the other parties; provided, however, that
Purchaser may assign all or part of its rights under this Agreement and
delegate all or part of its obligations under this Agreement to one or more
corporations or other entities who are Affiliates, in which event all the
rights and powers of Purchaser and remedies available to it under this
Agreement shall extend to and be enforceable by each such Affiliate.  Any such assignment and delegation shall not
release Purchaser from its obligations under this Agreement, and further Purchaser
guarantees to Seller the performance by each such Affiliate of its obligations
under this Agreement.  In the event of
any such assignment and delegation the term “Purchaser” as used in this
Agreement shall be deemed to refer to each such Affiliate of Purchaser where
reference is made to actions to be taken with respect to the

 32
 

acquisition of the Facility or Purchased Assets, and
shall be deemed to include both Purchaser and each such Affiliate where
appropriate.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
successors and permitted assigns.

15.05       Savings Clause. 
If any provision hereof shall be held invalid or unenforceable by any
court of competent jurisdiction or as a result of future legislative action,
such holding or action shall be strictly construed and shall not affect the
validity or effect of any other provision hereof.

15.06       Headings.  The captions of the various Articles and
Sections of this Agreement have been inserted only for convenience of reference
and shall not be deemed to modify, explain, enlarge or restrict any of the
provisions of this Agreement.

15.07       Risk
of Loss.  Risk of loss, damage or
destruction to the Purchased Assets shall be upon Seller until the Closing, and
shall thereafter be upon Purchaser.

15.08       Governing
Law.  The validity, interpretation
and effect of this Agreement shall be governed exclusively by the laws of the
State of Ohio.

15.09       Dispute
Resolution.

(a)           If
any issue, dispute, claim or controversy should arise out of or relate to this
Agreement involving the parties hereto (“Dispute”) and the parties
hereto are unable to resolve the Dispute on or before the thirtieth (30th) day
following written notice of such Dispute by a party to the other party, which
notice describes in reasonable detail the nature of the Dispute and the facts
and circumstances relating thereto, Purchaser shall nominate a member of its
senior management team and Seller shall nominate a member of its senior
management team for the purpose of a meeting between such representatives at a
mutually agreeable time and place to resolve such Dispute.  Such meeting shall take place on or before
forty-five (45) days following the date of the notice of the Dispute by a party
to the other party, and if the Dispute has not been resolved within fifteen
(15) days following such meeting, any party may submit such Dispute to binding
arbitration under this Section 15.09.

(b)           Upon
demand of any party hereto made within thirty (30) days after the expiration of
the fifteen (15)-day period provided in Section 15.09(a), any Dispute shall be
resolved by binding arbitration as provided herein.  A party may demand and commence arbitration
by delivering to the other party an arbitration notice (“Arbitration Notice”)
that includes a general description of the Dispute and a reference to the fact
that such Dispute is being referred to arbitration under this Section 15.09.

(c)           Promptly
following the delivery of an Arbitration Notice, the parties hereto shall
request the American Arbitration Association to designate three disinterested
arbitrators pursuant to its Commercial Arbitration Rules (“AAA Rules”).  If any arbitrator resigns, becomes
incapacitated, or otherwise refuses or fails to serve or to continue to serve
as an arbitrator, the parties hereto shall request the American Arbitration
Association to designate a successor pursuant to the AAA Rules.

(d)           The
arbitration shall be conducted in the English language in Dayton, Ohio.  The arbitrators shall set the date, the time,
and the place of hearing, which must commence on or before ninety (90) days
following the designation of the third arbitrator.  The arbitration shall be conducted under the
AAA Rules not inconsistent with the provisions of the Agreement.  In connection with any such arbitration, the
arbitrators shall construe the Agreement in a manner consistent with the choice
of law provisions set forth herein.  The
arbitrators shall render their decision on or before ninety (90) days following
the commencement of the hearing.  The
arbitrators’ decision shall be set forth in writing that

 33
 

includes an allocation of the fees and expenses of the
arbitrators to the parties and of the legal fees and costs of the parties in
connection with the Dispute based on the relative extent to which they do not
prevail on their positions.  Each party
against which the decision assesses a monetary obligation shall pay that
obligation on or before thirty (30) days following the announcement of the
decision or such other date as the decision may provide.  The decisions of the arbitrators are final
and binding on all parties hereto and are not subject to appeal.  The decisions of the arbitrators may be
enforced in any court of competent jurisdiction, and any party may authorize
any such court to enter judgment on the arbitrators’ decisions.  Pending the outcome of any arbitration
conducted pursuant to this Section 15.09, the parties shall be obligated to
continue to perform their respective obligations hereunder.  Except as provided in any arbitrators’
decision rendered in accordance with this Section 15.09, each of the parties
hereby undertakes to carry out without delay the provisions of any arbitral
award or decision and to bear its own legal fees and costs in connection with
any Dispute.

(e)           Notwithstanding
the binding arbitration provisions in this Section 15.09, the parties hereto
agree to preserve, without diminution, the following remedies that the parties
may employ or exercise freely, independently or in connection with an
arbitration proceeding or after an arbitration action is brought.  Each party shall have the right to proceed in
any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies:  (a) all rights to
obtain possession of property; (b) all rights to foreclose against any property
or other security by exercising a power of sale granted under the Agreement or
under applicable Law or by a judicial foreclosure and sale; (c) all rights of
self-help including set-off and peaceful possession of personal property; and
(d) obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of a receiver and filing an
involuntary bankruptcy proceeding. 
Preservation of these remedies does not limit the power of the
arbitrators to grant similar remedies.

15.10       Press
Releases.  Pending Closing, all
notices to third parties and all other publicity relating to the transactions
contemplated by this Agreement shall be jointly planned, coordinated, and
agreed to by Purchaser and Seller, except to the extent disclosures are
required by Law.

15.11       U.S.
Dollars.  All amounts expressed in
this Agreement and all payments required by this Agreement are in United States
dollars.

15.12       Survival.  All representations and warranties made by
any party in this Agreement shall be deemed made for the purpose of inducing
the other party to enter into this Agreement and shall survive the Closing,
subject to Section 12.02(a) hereof.

15.13       Notices.  (a) 
All notices, requests, demands and other communications under this
Agreement shall be in writing and delivered in person or by air courier, or
sent by facsimile or sent by certified mail, postage prepaid, and properly
addressed as follows:

To The Seller:

DPL Energy, LLC

1065 Woodman Drive

Dayton, OH  45432

Fax:  (937) 259-7848

Attention:  Gary G. Stephenson

 

With Copy To:

Winston & Strawn LLP

1700 K Street, NW

Washington, DC  20006

 34
 

Fax:  (202) 282-5100

Attention:  Gerald P. Farano

 

To Purchaser:

Buckeye Power,
Inc.

6677 Busch
Boulevard

Columbus, Ohio
43229

Fax: (614)
846-7108

Attention: Patrick
O’Loughlin

 

With Copy To:

Thompson Hine LLP

10 West Broad St.

Columbus, Ohio
43215

Fax: (614)
469-3361

Attention: Kurt P.
Helfrich

 

(b)            Any party may from time to time
change its address for the purpose of notices to that party by a similar notice
specifying a new address, but no such change shall be deemed to have been given
until it is actually received by the party sought to be charged with its
contents.

(c)            All notices and other communications
required or permitted under this Agreement which are addressed as provided in
this Section 15.13 if delivered personally or by air courier, shall be
effective upon delivery; if sent by facsimile, shall be delivered upon receipt
of proof of transmission and if delivered by mail, shall be effective upon
deposit in the United States mail, postage prepaid.

15.14       No
Third Party Beneficiaries.  This
Agreement is solely for the benefit of Seller and its successors and permitted
assigns with respect to the obligations of Purchaser under this Agreement, and
for the benefit of Purchaser and its successors and permitted assigns with
respect to the obligations of Seller under this Agreement.  This Agreement shall not be deemed to confer
upon or give to any other third party any remedy, claim, liability,
reimbursement, cause of action or other right.

15.15       Jurisdiction
and Consent to Service.  Subject to
the provisions of Section 15.09, each of Seller and Purchaser (i) agrees that
any suit, action or proceeding arising out of or relating to this Agreement
shall be brought solely in the state or federal courts of the State of Ohio;
(ii) consents to the exclusive jurisdiction of each such court in any suit,
action or proceeding relating to or arising out of this Agreement; (iii) waives
any objection that it may have to the laying of venue in any such suit, action
or proceeding in any such court; and (iv) agrees that service of any court
paper may be made in such manner as may be provided under applicable laws or
court rules governing service of process.

15.16       WAIVER
OF A JURY TRIAL.  EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

 35
 

15.17       No
Presumption Against Drafter.  Each of
the parties hereto has jointly participated in the negotiation and drafting of
this Agreement.  In the event of an
ambiguity or a question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by each of the parties hereto and no
presumptions or burdens of proof shall arise favoring any party by virtue of
the authorship of any of the provisions of this Agreement.

 36

IN WITNESS WHEREOF, the parties hereto have executed
this Asset Purchase Agreement the day and year first above written.

	
  

  	
  DPL ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

	
  .

  	
  BUCKEYE POWER, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 37

Exhibits and Schedules

 

	
  Exhibit

  	
   

  	
  Description

  
	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  Parent Guaranty

  
	
  B

  	
   

  	
  Form of General Warranty Deed

  
	
  C

  	
   

  	
  Form of Easements Assignment and Assumption
  Agreement

  
	
  D

  	
   

  	
  Form of Bill of Sale

  
	
  E

  	
   

  	
  Form of Assignment and Assumption Agreement

  
	
  F

  	
   

  	
  Form of O&M Transition Services Agreement

  

 

 

 

	
  Schedule

  	
   

  	
  Description

  
	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Facility

  
	
  II

  	
   

  	
  Retained Inventory

  
	
  III

  	
   

  	
  Retained Materials

  
	
  IV

  	
   

  	
  Real Property

  
	
  V

  	
   

  	
  Real Property Leases

  
	
  VI

  	
   

  	
  Easements

  
	
  VII

  	
   

  	
  Additional Contracts

  
	
  VIII

  	
   

  	
  Assigned Intellectual Property

  
	
  IX

  	
   

  	
  Assigned Permits

  
	
  X

  	
   

  	
  Proprietary Items

  
	
  XI

  	
   

  	
  Other Retained Assets

  
	
  2.07

  	
   

  	
  Allocation of Purchase Price

  
	
  5.02

  	
   

  	
  Permitted Contracts and Expenditures Pending Closing

  
	
  6.01

  	
   

  	
  Preliminary Title Report

  
	
  7.03

  	
   

  	
  Seller’s Required Consents and Approvals

  
	
  7.04

  	
   

  	
  Brokers

  
	
  7.05

  	
   

  	
  Required Assets

  
	
  7.06(a)

  	
   

  	
  Material Contracts

  
	
  7.06(b)

  	
   

  	
  Retained Contracts

  
	
  7.07

  	
   

  	
  Insurance

  
	
  7.08

  	
   

  	
  Permitted Real Estate Exceptions of Record

  
	
  7.09

  	
   

  	
  Liens Against Personal Property

  
	
  7.10

  	
   

  	
  Intellectual Property Infringement

  
	
  7.11

  	
   

  	
  Litigation

  
	
  7.12

  	
   

  	
  Compliance with Laws

  
	
  7.13

  	
   

  	
  Employees

  
	
  7.14

  	
   

  	
  Taxes

  
	
  7.15

  	
   

  	
  Licenses and Permits

  
	
  7.16

  	
   

  	
  Environmental Compliance

  
	
  8.03

  	
   

  	
  Purchaser’s Required Consents and Approvals

  
	
  9.03

  	
   

  	
  Material Adverse Effects

  

 

 38Exhibit
10(xx)

Execution
Copy

ASSET
PURCHASE AGREEMENT

dated November 28, 2006

By and Between

DPL Energy, LLC

and

Columbus Southern Power Company

 

TABLE OF CONTENTS

	
  

  	
   

  	
  Page

  
	
  ARTICLE I Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.01 Definitions

  	
   

  	
  1

  
	
  1.02 Interpretation

  	
   

  	
  11

  
	
  1.03 Knowledge

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE II Purchase and Sale, Purchase Price,
  Allocation and Other Related Matters

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  2.01 Purchase
  and Sale

  	
   

  	
  12

  
	
  2.02 Purchase
  Price

  	
   

  	
  12

  
	
  2.03 Assumed
  Liabilities.

  	
   

  	
  12

  
	
  2.04 Sales and
  Transfer Taxes

  	
   

  	
  13

  
	
  2.05 Allocation
  of Purchase Price

  	
   

  	
  13

  
	
  2.06 Prorations

  	
   

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE III Closing and Closing Date Deliveries

  	
   

  	
  13

  
	
   

  	
   

  	
   

  
	
  3.01 Closing

  	
   

  	
  13

  
	
  3.02 Closing
  Deliveries by Seller

  	
   

  	
  14

  
	
  3.03 Closing
  Deliveries by Purchaser

  	
   

  	
  15

  
	
  3.04 Cooperation

  	
   

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV Pre-Closing Filings

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  4.01 Government
  Approvals; Consents

  	
   

  	
  16

  
	
  4.02 HSR and
  Other Filings

  	
   

  	
  16

  
	
  4.03 FERC
  Regulatory Filing.

  	
   

  	
  17

  
	
  4.04 Cooperation
  in Regulatory Review Process

  	
   

  	
  17

  
	
  4.05 Conditions
  or Limitations

  	
   

  	
  17

  
	
  4.06 PJM
  Notification of Sale and Scheduling and Bidding for day of Closing.

  	
   

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE V Covenants

  	
   

  	
  18

  
	
   

  	
   

  	
   

  
	
  5.01 Due
  Diligence Review

  	
   

  	
  18

  

 

 

 

	
  5.02 Pending Closing

  	
   

  	
  18

  
	
  5.03 Consents

  	
   

  	
  19

  
	
  5.04
  Environmental Assessments

  	
   

  	
  19

  
	
  5.05 Notice of
  Breach

  	
   

  	
  20

  
	
  5.06 Workforce

  	
   

  	
  20

  
	
  5.07
  Cooperation.

  	
   

  	
  20

  
	
  5.08 Tax Matters

  	
   

  	
  21

  
	
  5.09 Market
  Power Study

  	
   

  	
  23

  
	
  5.10 Microwave
  Tower and Substation Easement Agreement

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI Title and Survey

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  6.01 Pre-Closing
  Title Policy and Survey Delivery

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII Warranties and Representations of the
  Seller

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  7.01
  Organization and Good Standing

  	
   

  	
  24

  
	
  7.02 Authority

  	
   

  	
  25

  
	
  7.03 No
  Violations and Consents

  	
   

  	
  25

  
	
  7.04 Brokers

  	
   

  	
  25

  
	
  7.05 Required
  Assets

  	
   

  	
  26

  
	
  7.06 Contracts

  	
   

  	
  26

  
	
  7.07 Insurance

  	
   

  	
  27

  
	
  7.08 Title to
  Real Property

  	
   

  	
  27

  
	
  7.09 Title to
  Purchased Assets

  	
   

  	
  27

  
	
  7.10
  Intellectual Property

  	
   

  	
  27

  
	
  7.11 Litigation

  	
   

  	
  28

  
	
  7.12 Compliance
  With Laws

  	
   

  	
  28

  
	
  7.13 Labor
  Matters

  	
   

  	
  28

  
	
  7.14 Taxes

  	
   

  	
  28

  
	
  7.15 Licenses
  and Permits

  	
   

  	
  28

  
	
  7.16
  Environmental Compliance

  	
   

  	
  29

  
	
  7.17 No Misrepresentation
  in Due Diligence Materials

  	
   

  	
  29

  
	
  7.18 Properties.

  	
   

  	
  29

  
	
  7.19 Absence of
  Material Adverse Effect

  	
   

  	
  30

  

 

 

 

	
  7.20 Disclaimer of
  Warranties

  	
   

  	
  30

  
	
  7.21 Good
  Utility Practice

  	
   

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII Warranties and Representations of the
  Purchaser

  	
   

  	
  30

  
	
   

  	
   

  	
   

  
	
  8.01 Due
  Incorporation

  	
   

  	
  30

  
	
  8.02 Authority

  	
   

  	
  30

  
	
  8.03 No
  Violations

  	
   

  	
  31

  
	
  8.04 Brokers

  	
   

  	
  31

  
	
  8.05 Litigation

  	
   

  	
  31

  
	
  8.06 Financing

  	
   

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX Conditions to Closing Applicable to
  Purchaser

  	
   

  	
  31

  
	
   

  	
   

  	
   

  
	
  9.01 No
  Termination

  	
   

  	
  31

  
	
  9.02 Bring-Down
  of Seller Warranties

  	
   

  	
  31

  
	
  9.03 No Material
  Adverse Effect

  	
   

  	
  32

  
	
  9.04 Pending
  Actions

  	
   

  	
  32

  
	
  9.05 Consents
  and Approvals

  	
   

  	
  32

  
	
  9.06 HSR Act

  	
   

  	
  32

  
	
  9.07 All
  Necessary Documents

  	
   

  	
  32

  
	
  9.08 Title
  Policy

  	
   

  	
  32

  
	
  9.09 Estoppel
  Certificates

  	
   

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE X Conditions to Closing Applicable to Seller

  	
   

  	
  33

  
	
   

  	
   

  	
   

  
	
  10.01 No
  Termination

  	
   

  	
  33

  
	
  10.02 Bring-Down
  of Purchaser Warranties

  	
   

  	
  33

  
	
  10.03 Pending
  Actions

  	
   

  	
  33

  
	
  10.04 Consents
  and Approvals

  	
   

  	
  33

  
	
  10.05 HSR Act

  	
   

  	
  33

  
	
  10.06 All
  Necessary Documents

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI Termination

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  11.01
  Termination

  	
   

  	
  34

  
	
  11.02 Effect of
  Termination

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII Indemnification

  	
   

  	
  35

  

 

 

 

	
  12.01 Seller Indemnification

  	
   

  	
  35

  
	
  12.02 Purchaser
  Indemnification

  	
   

  	
  35

  
	
  12.03 Limitation

  	
   

  	
  35

  
	
  12.04
  Indemnification Notice

  	
   

  	
  37

  
	
  12.05
  Indemnification Procedure

  	
   

  	
  37

  
	
  12.06 Effect of
  Indemnity Payments

  	
   

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII Confidentiality

  	
   

  	
  38

  
	
   

  	
   

  	
   

  
	
  13.01
  Confidentiality of Materials

  	
   

  	
  38

  
	
  13.02 Remedy

  	
   

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV Certain Other Understandings

  	
   

  	
  39

  
	
   

  	
   

  	
   

  
	
  14.01 Post
  Closing Access to Records and Records Retention

  	
   

  	
  39

  
	
  14.02 Consents
  Not Obtained at Closing

  	
   

  	
  40

  
	
  14.03 Avoidance
  of Double Withholding Taxes

  	
   

  	
  40

  
	
  14.04
  Use/Removal of Trademarks, Etc.

  	
   

  	
  40

  
	
  14.05
  Supplemental Disclosure Schedule

  	
   

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV Miscellaneous

  	
   

  	
  41

  
	
   

  	
   

  	
   

  
	
  15.01 Cost and
  Expenses

  	
   

  	
  41

  
	
  15.02 Entire
  Agreement

  	
   

  	
  41

  
	
  15.03
  Counterparts

  	
   

  	
  41

  
	
  15.04
  Assignment, Successors and Assigns

  	
   

  	
  41

  
	
  15.05 Savings
  Clause

  	
   

  	
  42

  
	
  15.06 Headings

  	
   

  	
  42

  
	
  15.07 Risk of
  Loss

  	
   

  	
  42

  
	
  15.08 Governing
  Law

  	
   

  	
  42

  
	
  15.09 Dispute
  Resolution.

  	
   

  	
  42

  
	
  15.10 Press
  Releases

  	
   

  	
  44

  
	
  15.11 U.S.
  Dollars

  	
   

  	
  44

  
	
  15.12 Survival

  	
   

  	
  44

  
	
  15.13 Notices

  	
   

  	
  44

  
	
  15.14 No Third
  Party Beneficiaries

  	
   

  	
  45

  
	
  15.15
  Jurisdiction and Consent to Service

  	
   

  	
  45

  
	
  15.16 WAIVER OF
  A JURY TRIAL

  	
   

  	
  46

  
	
  15.17 No
  Presumption Against Drafter

  	
   

  	
  46

  
	
  15.18 Parent
  Guaranty

  	
   

  	
  46

  

 

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement made and entered into
this 28th day of November, 2006 (this “Agreement”) by and between
Columbus Southern Power Company, an Ohio corporation (“Purchaser”), and
DPL Energy, LLC, an Ohio limited liability company (“Seller”).

Recitals:

A.            Seller
owns a peaking power generation facility, the Darby Facility,  as more fully described herein (collectively,
the “Facility”).

B.            Seller
desires to sell the Facility and the assets and properties relating to the Facility
hereinafter described as Purchased Assets and Purchaser desires to acquire the
Purchased Assets, on the terms and subject to the conditions hereinafter set
forth.

Now, therefore, in consideration of the covenants and
agreements hereinafter set forth, the parties hereto agree as follows:

ARTICLE I

Definitions

1.01         Definitions.  The following terms shall have the meanings
set forth below unless otherwise expressly provided or unless the context
clearly requires otherwise:

“AAA Rules” has the meaning set forth in
Section 15.09(c).

 “Affiliate”
shall mean a Person which, directly or indirectly is controlled by, controls,
or is under common control with another Person. 
As used in the preceding sentence, “control” shall mean (i) the
ownership of more than 50% of the voting securities or other voting interest of
any Person or (ii) the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.

“Arbitration Notice” has the meaning set forth
in Section 15.09(b).

“Agreement” has the meaning set forth in the
first paragraph hereof.

“Assumed Liabilities” has the meaning set forth
in Section 2.03(b).

“Assumption Agreement” has the meaning set
forth in Section 3.03(d) hereof.

“Closing” has the meaning set forth in Section
3.01.

 

“Closing Date” has the meaning set forth in
Section 3.01.

“Code” shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder.

“Compensation Agreement” shall mean the
agreement between Seller and Westfall Local Schools, dated June 30, 2000, and
attached as Exhibit F.

“Cure Period” has the meaning set forth in
Section 6.01(c).

“Darby Facility” means the gas-fired facility,
with oil-firing capability,  and related
facilities, equipment, and near Mount Sterling, Ohio in Pickaway County, owned
by Seller, including but not limited to six GE 7EA simple cycle combustion
turbines.

“Date of the Notice of Claim” has the meaning
set forth in Section 12.05(c).

“Disclosure Schedules” shall mean the
disclosure schedules attached to this Agreement.

“Dispute” has the meaning set forth in Section
15.09(a).

“DOJ” shall mean the United States Department
of Justice.

“DP&L” shall mean The Dayton Power &
Light Company, an Ohio corporation.

“Due Diligence Materials” means those due
diligence materials relating to the Facility and made available to Purchaser in
the virtual data room for the Facility, including that certain information
memorandum dated May 2006.  Note:    DPL to update materials in data room with
supplemental materials provided to AEP.

“Effective Time” shall mean 9:00 a.m. local
time at the Facility on the Closing Date.

“Enterprise Zone Agreement” shall mean that
Enterprise Zone Agreement No. 361-00-01 executed as of August 15, 2000, between
Pickaway County, Ohio, and Seller including amendments and attached as Exhibit
G.

“Environmental Laws” shall mean any federal,
state, local, or foreign law, statute, common law, ordinance, rule, regulation,
code, treaty or international agreement having the force of law, license,
Permits, authorization, approval, consent, judicial or administrative order,
judgment, decree, directive, injunction, requirement, or agreement with any
Governmental Authority relating to (a) the pollution, protection, preservation,
or restoration of the environment

 2
 

 

(including
air,  surface water, groundwater,
drinking water supply, surface land, subsurface land, structures, plant and
animal life, or any other natural resource), (b) human health or safety, or (c)
the exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, distribution,
disposal, release, or threatened release, of Hazardous Substances (including
releases to ambient air, surface water, groundwater, land, surface and
subsurface strata), including, but not limited to: the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et
seq.; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the
Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air
Act, 42 U.S.C. § 7401 et seq.; the Hazardous Materials Transportation Act, 49
U.S.C. § 1471 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601
through 2629; the Oil Pollution Act, 33 U.S.C. § 2701 et seq.; the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq.; the Safe
Drinking Water Act, 42 U.S.C. §§ 300f through 300j; the Occupational Safety and
Health Act, 29 U.S.C. § 651 et seq.; the Surface Mining Control and Reclamation
Act of 1977, 30 U.S.C. § 1201 et seq.; the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. § 136 et seq.; and any similar state or federal law.

 “Facility”
has the meaning set forth in the Recitals hereto.

“FERC” means the Federal Energy Regulatory
Commission.

“FERC Regulatory Filing” has the meaning set
forth in Section 4.03.

“FTC” shall mean the Federal Trade Commission.

“Gas Feeder Line” shall mean that gas feeder
line consisting of approximately 3,200 feet of 20-inch pipe from the Columbia
tap to the gas regulator station located at the Facility.

“Good Utility Practice” shall mean any of the
practices, methods and acts engaged in or approved by a significant portion of
the electric utility industry during the relevant time period, or any of the
practices, methods and acts which, in the exercise of reasonable judgment in
light of the facts known at the time the decision was made, could have been
expected to accomplish the desired result at a reasonable cost consistent with
good business practices, reliability, safety and expedition.  Good Utility Practice is not intended to be
limited to the optimum practice.

“Governmental Approval” shall mean a Seller
Governmental Approval or a Purchaser Governmental Approval, as the case may be.

“Governmental Authority” shall mean the
government of the United States or any foreign country or any state or
political subdivision thereof, any tribal authority and any department,
commission, agency, bureau, entity, body or authority exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government,

 3
 

 

including
any quasi-governmental entities established to perform such functions.

“Hazardous Substances” shall mean any substance
presently listed, defined, designated, or classified as a contaminant,
hazardous substance, toxic substance, hazardous waste or special waste, or that
is otherwise regulated under any Environmental Law, including petroleum
products, asbestos, urea formaldehyde foam insulation, and lead-containing
paints or coatings.

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

“Indemnified Party” has the meaning set forth
in Section 12.04.

“Indemnifying Party” has the meaning set forth
in Section 12.04.

“Information” has the meaning set forth in
Section 13.01.

“Inventory” has the meaning set forth in clause
(ii) of the definition of Purchased Assets.

“IRS” shall mean the Internal Revenue Service.

“Law” shall mean any
statute, law, ordinance, executive order, rule, or regulation (including a
regulation that has been formally promulgated in a rule making proceeding but,
pending final adoption, is in proposed or temporary form having force of law);
notice having force of law; or judgment, order, decree, injunction, or writ of
any Governmental Authority, as in effect from time to time.

“Lien” shall mean any mortgage, lien (except
for any lien for Taxes not yet due and payable), charge, restriction, pledge,
security interest, option, lease or sublease, collateral assignment, mineral interest,
claim, right of any third party, easement, encroachment or other encumbrance.

“Material Adverse Effect” shall mean any change
in, or effect on, the Purchased Assets related to the Facility or on the
ownership, operation, maintenance, or repair of such Purchased Assets as
currently conducted by Seller, or on the ability to make sales of power and
ancillary services from the Facility and arrange for the transmission thereof,
that is or is reasonably likely to be materially adverse to the condition,
value, utility, or useful life of the Purchased Assets related to such
Facility, after giving effect to this Agreement, other than changes or effects
caused by or resulting from (i) conditions affecting the electric generation
industry generally, (ii) United States or global economic conditions or
financial markets generally, or (iii) the announcement of the transactions
contemplated by this Agreement.

 4
 

 

“Microwave Tower” shall mean that microwave
tower and related equipment owned by DP&L and located at the Facility.

“Microwave Tower and Substation Easement Agreement”
shall mean the easement agreement in substantially the form attached hereto as
Exhibit A by and between DP&L and Purchaser pursuant to which Purchaser
will grant to DP&L a right of access to the Microwave Tower and the
Substation on the terms and conditions set forth therein.

“Non-Assumed Liabilities” has the meaning set
forth in Section 2.03(b).

“Notice of Claim” has the meaning set forth in
Section 12.04.

“Objection Notice” has the meaning set forth in
Section 6.01(c).

“Parent Guaranty”
shall mean that certain Guaranty dated as of the date hereof executed by DPL
Inc. in favor of Purchaser, as supplemented and amended from time to time, a
form of which is attached hereto as Exhibit D.

 “Permits” shall mean permits, consents,
licenses, franchises, certificates, authorizations, registrations, or waivers,
extensions, renewals, or variances relating thereto, in each case issued by any
Governmental Authority.

“Permitted Exceptions” shall mean, with respect
to the Real Property, the following:

(a)           liens or encumbrances securing the
Assumed Liabilities;

(b)           all liens for Taxes, assessments,
both general and special, and other governmental charges which are not due and
payable as of the Closing Date;

(c)           all building codes and zoning
ordinances and other Laws of any Governmental Authority heretofore, now or
hereafter enacted, made or issued by any such Governmental Authority affecting
the Real Property;

(d)           the easements, rights-of-way,
covenants, conditions, restrictions, reservations, licenses, agreements, and
other similar matters of record in the appropriate governmental offices that do
not materially impair the value or the utility of the Purchased Assets;

(e)           all encroachments, overlaps, boundary
line disputes, shortages in area, drainage and other easements, cemeteries and
burial grounds and other similar matters that do not materially impair the
value or the utility of the Purchased Assets;

 5
 

 

(f)            all electric, telephone, gas,
sanitary sewer, storm sewer, water and other utility lines, pipelines, service
lines and facility of any nature now located on, over or under the Real
Property, and all licenses, easements, rights-of-way and other similar
agreements relating thereto that do not materially impair the value or the
utility of the Purchased Assets;

(g)           all existing public and private roads
and streets (whether dedicated or undedicated), and all railroad lines and
rights-of-way affecting the Real Property that do not materially impair the
value or the utility of the Purchased Assets;

(h)           all rights with respect to the
ownership, mining, extraction and removal of minerals of whatever kind and
character (including all coal, iron ore, oil, gas, sulfur, methane gas in coal
seams, limestone and other minerals, metals and ores) which have been granted,
leased, excepted or reserved prior to the date hereof that do not materially
impair the value or the utility of the Purchased Assets; and

(i)            mechanic’s and materialmen’s liens
for construction in progress and workmen’s, repairmen’s, warehousemen’s and
carrier’s liens arising in the ordinary course of business securing obligations
not yet due.

“Permitted Real Estate Exceptions” has the
meaning set forth in Section 6.01(a).

“Person” shall mean any natural person,
corporation, limited liability company, partnership, joint venture, trust,
association or unincorporated entity of any kind and any Governmental Authority
or instrumentality.

“Phase I Environmental
Site Assessment” has the meaning set forth in Section 5.04.

“Properties” has the meaning set forth in
clause (iii) of definition of Purchased Assets.

“Proration Period” has the meaning set forth in
Section 2.05.

“Purchase Price” has the meaning set forth in
Section 2.02.

“Purchased Assets” shall mean the following
described assets, rights and properties owned by Seller or in which Seller has
an interest as of the date hereof or may prior to the Closing Date acquire an
interest, and used exclusively in connection with the Facility, except for the
Retained Assets:

(i)            the
deposits and advances, prepaid expenses and other prepaid items of Seller under
any of the Purchased Contracts;

 6
 

 

(ii)           except
as otherwise set forth on Schedule I, all inventories (including inventories of
raw materials, work-in-progress and finished goods), the tangible assets,
machinery and equipment (including the metering equipment located on that
portion designated as property of “DPL Energy” on the single-line diagram
attached hereto as Exhibit C, turbine generator units, gas fuel conditioning
facility, transformers and other electrical switchgear, pumps, piping and
fittings, and including also the fuel forwarding skids moved to the Facility in
connection with the transactions contemplated herein), tools, dies, molds,
spare parts as set forth on Schedule IA, vehicles, transportation equipment,
furniture and office equipment, construction-in-progress, computer hardware and
computer software located at the Facility, lubricants, chemicals, fluids, and
oils owned by Seller located on the Properties or otherwise held or used in the
ownership, operation, maintenance or repair of the Properties, Facility or
Inventory or in the pursuit of transactions under the Purchased Contracts (“Inventory”);

(iii)          (A)
the Seller’s rights, title and interest in and to the real properties
(including easements, rights-of-way and water rights) described in Schedule II
(“Real Property”) together with all buildings, other improvements,
fixtures and appurtenances, and all other rights, privileges and entitlements
thereunto belonging or appertaining and (B) Seller’s right, title, and interest
in and to the real property leases described in Schedule III (together with the
Real Property, the “Properties”);

(iv)          the
Seller’s rights, title and interest in and under the Purchased Contracts and
any claims thereunder;

(v)           the
Seller’s right, title and interest in and to the following intellectual
property to the extent related to the Purchased Assets: copyrights, copyright
registrations, copyright applications; patent rights (including issued patents,
applications, divisions, continuations and continuations-in-part, reissues, patents
of addition, utility models and inventors’ certificates); trade secrets,
proprietary manufacturing information and inventions, drawings and designs;
customer and vendor lists, the goodwill associated with any of the foregoing
and the rights of Seller as licensee under licenses with respect to any of the
foregoing;

(vi)          unexpired
warranties, if any, as of the Effective Time from third Persons (and claims
thereunder) which relate specifically to any of the Purchased Assets and which
are transferable to Purchaser;

(vii)         the
right of Seller to receive, to the extent transferable, Tax exemptions, Tax
credits, Tax reductions, Tax rebates, or other amounts from a Governmental
Authority with respect to the Purchased Assets, and all pending applications
therefor, that are attributable to the ownership or operation of the Purchased
Assets after Closing;

(viii)        rights
to insurance proceeds not received before the Effective Time

 7
 

 

relating to any insured loss of the Purchased Assets incurred before
the Effective Time, less any costs incurred by Seller or any of its Affiliates
before the Effective Time in the investigation or repair of damage from any
such loss;

(ix)           any
Permits of the Seller relating to the Purchased Assets, and all pending
applications for the issuance or renewal of any of the same, to the extent any
of the same are transferable or assignable to the Purchaser;

(x)            all
existing allowances for air and water emissions and all greenhouse gas, NOx,
and other similar credits, and all pending applications therefor, relating to
the Facility to the extent any of the same are transferable or assignable to
the Purchaser; provided, however, that this provision is not
intended to apply to unused NOx allowances for 2005 and 2006 that are removed
by the Ohio EPA from the Seller’s accounts prior to Closing;

(xi)           At
least one copy (in its existing hard copy or electronic form) of each of the
following:  the operating and maintenance
records; maintenance plans and schedules; operating, safety and maintenance
manuals; engineering design plans and specifications; construction records as
to what was built and where it was built; blueprints and as-built drawings;
procedures; environmental data and reports; governmental filings; and
inspection and test reports related to the Facility or concerning the Purchased
Assets, whether or not exclusively related, that are in Seller’s possession
(subject to the right of Seller to redact information in such records that is
not related to the Facility and the Purchased Assets and to retain archival
copies).  This is not to include third
party proprietary items for which consent to transfer cannot be obtained as
listed on Schedule IV and accounting records of Seller.  The foregoing is not intended to require
Seller to modify or reformat any of the information provided pursuant to this
subparagraph or to search or produce database or email archives, routine
correspondence, SEC or FERC filings, records relaing to internal project
approvals, negotiations with contractors or vendors, or any other materials
that are not necessary to the future ownership, operation or maintenance of the
Facility or the Purchased Assets.

(xii)          the
Seller’s right, title and interest in and to the Gas Feeder Line.

“Purchased Contracts” means those contracts
described on Schedule 7.06(a) hereto.

“Purchaser” has the meaning set forth in the
first paragraph hereof.

“Purchaser Governmental Approval” shall mean
the consents, approvals, filings, notices, authorizations and other actions
disclosed in Schedule 8.03 and the applicable requirements of the HSR Act.

 8
 

 

“Real Property” has the meaning set forth in
clause (iii) of the definition of “Purchased Assets.”

“Retained Assets” shall mean the following
described assets, rights and properties of Seller or, as specifically denoted
below, DP&L:

(i)            all
cash and cash equivalents, including bank overdrafts and marketable securities;

(ii)           any
accounts receivable or intercompany obligations owed to Seller by any Affiliate
of Seller other than those under any Purchased Contract;

(iii)          all
insurance policies of Seller or acquired or assumed by Seller prior to the
Closing Date pertaining to the Facility and (except for claims described in
clause (viii) of the definition of Purchased Assets) all rights of Seller of
every nature and description under or arising out of such insurance policies;

(iv)          all
rights to use the name “DPL Energy” and all derivatives thereof;

(v)           claims
for refunds (including any refunds that may be associated with contested tax
items related to Units 5 and 6 of the Facility) of Taxes paid by Seller (except
for items described in clause (vii) of the definition of Purchased Assets);

(vi)          all
past, present and future claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind, except to the extent related to or
arising under the Purchased Contracts or otherwise included in the definition
of Purchased Assets or to the extent, but only to the extent, such claims or
causes of action offset the liabilities assumed by Purchaser pursuant to this
Agreement;

(vii)         any
rights, interest or assets not included in the Purchased Assets;

(viii)        all
rights of Seller under this Agreement and the agreements and instruments
delivered to Seller by Purchaser pursuant to this Agreement;

(ix)           the
Seller’s corporate seal, minute books and stock record books, the general
ledgers and books of original entry, all income Tax returns and other income
Tax records, reports, data, files and documents;

(x)            the
Microwave Tower and the Substation, and such other equipment related thereto
that is owned by DP&L and located on or adjacent to the Real Property;

(xi)           the
Retained Contracts; and

 9
 

 

(xii)          the
other assets listed on Schedule V.

“Retained Contracts” means those contracts
described on Schedule 7.06(b).

“Sales Tax” shall mean any sales, use, value
added, excise, and other similar Tax, if any, together with all recording or
filing fees, notarial fees, and other similar costs that may be imposed upon,
or payable, collectible, or incurred in connection with or as a result of the
transfer of the Purchased Assets to Purchaser.

“Seller” has the meaning set forth in the first
paragraph hereof.

“Seller Governmental Approval” shall mean the
consents, approvals, filings, notices, authorizations and other actions
disclosed in Schedule 7.03 and the applicable requirements of the HSR Act.

“Seller’s Federal Tax Owner” shall mean DPL
Inc., an Ohio corporation.

“Substation” shall mean that Darby Adkins
Substation owned by DP&L and located at the Facility.

“Supplemental Disclosure Schedule” has the
meaning set forth in Section 14.05.

“Survey” shall have the meaning set forth in
Section 6.01(b).

“Tax Incentive Donation Agreement” shall mean
the agreement between Seller and Darby Township, dated July 17, 2000, and
attached as Exhibit H.

“Tax Proceeding” or “Tax
Proceedings” has the meaning set forth in Section 5.08(e).

“Taxes” shall mean all federal, state, local,
or foreign taxes, charges, fees, duties (including custom duties), levies or
other assessments, including income, alternative or add-on, gross receipts, net
proceeds, capital gains, real or personal ad valorem, turnover, real and
personal property (tangible and intangible), sales, use, franchise, excise,
value added, stamp, leasing, lease, user, transfer, title, documentary, registration,
fuel, excess profits, occupational, interest equalization, windfall profits,
license, payroll, environmental (including Taxes under Code section 59A),
capital stock, disability, severance, employee’s income withholding, other
withholding unemployment and Social Security taxes, which are imposed by any
Governmental Authority.  “Taxes” shall
include (i) any liability for the payment of any amounts described in the
preceding sentence or as a result of being a member of an affiliated,
consolidated, combined, or unitary group for any taxable period, (ii) any
liability for the payment of any amount described in the preceding sentence as
a result of being a Person required to withhold or collect

 10
 

 

Taxes
imposed on another Person, (iii) any liability for the payment of any amount
described in the preceding sentence or in clause (i) of (ii) of this sentence
as a result of being a transferee of, or successor in interest to, any Person
or as a result of an express or implied obligation to indemnify any Person, and
(iv) any and all interest, penalties, additions to tax, or additional amounts
imposed in connection with or with respect to any amount described in this
definition.

“Taxing Authority” shall mean with respect to any Tax,
the Governmental Authority or political subdivision thereof that imposes such
Tax, and the agency (if any) charged with the collection of such Tax for such
entity or subdivision, or any agency that grants or administers any exemption,
abatement, rebate, or reduction of any Tax or any credit with respect thereto.

“Threshold” has the meaning set forth in
Section 12.03(b).

“Title Policy” shall have the meaning set forth
in Section 6.01(a).

“Transfer Taxes” shall mean any transfer, real
property transfer, goods and services, recordation, documentary, stamp duty,
gross receipts, excise, and conveyance Tax and other similar Tax, duty, fee or
charge (other than Sales Taxes), as levied by any Taxing Authority in
connection with or as a result of the transfer of the Purchased Assets to
Purchaser.

1.02         Interpretation.  Unless the context of this Agreement
otherwise requires, (a) words of any gender shall be deemed to include
each other gender, (b) words using the singular or plural number shall also
include the plural or singular number, respectively, (c) references to
“hereof”, “herein”, “hereby” and similar terms shall refer to this entire
Agreement; (d) the words “include” and “including” mean “including without
limitation”, (e) all references in this Agreement to Articles, Sections,
Schedules and Exhibits shall mean and refer to Articles, Sections, Schedules
and Exhibits of this Agreement, (f) all references to statutes and related
regulations shall include all amendments of the same and any successor or
replacement statutes and regulations, (g) references to any Person shall be
deemed to mean and include the successors and permitted assigns of such Person
(or, in the case of a Governmental Authority, Persons succeeding to the
relevant functions of such Person), and (h) references to any agreement shall
include a reference to all schedules, exhibits and other attachments thereto as
such agreement and schedules, exhibits, and other attachments may be amended or
supplemented from time to time.

1.03         Knowledge.  As used herein the terms “knowledge” or “best
knowledge” shall have the same meaning and shall mean the actual knowledge of
Gary Stephenson, Mandy Goubeaux, Randall Griffin and Chris Hergenrather as it
relates to Seller and Tim Light, Toby Thomas and Cynthia Butler Carson as it
relates to Purchaser, in each instance after due inquiry and reasonable
investigation.

 11
 

 

ARTICLE II

Purchase and Sale, Purchase Price,

Allocation and Other Related Matters

2.01         Purchase and Sale.  Upon the terms and subject to the conditions
of this Agreement, at the Closing the Seller shall sell, assign, convey,
transfer and deliver to Purchaser or its designees and Purchaser or such
designees shall acquire from Seller the Purchased Assets.

2.02         Purchase Price.  The aggregate purchase price (the “Purchase
Price”) payable by Purchaser for the Purchased Assets shall be One Hundred
Two Million Dollars ($102,000,000), less the amount of any insurance proceeds received by Seller or any
of its Affiliates whether directly or as a beneficiary after the date hereof
and before the Effective Time relating to any insured loss of the Purchased
Assets incurred before the Effective Time, after reducing such proceeds by any
costs incurred by Seller or any of its Affiliates before the Effective Time in
the investigation or repair of damage from any such loss.

2.03         Assumed Liabilities.

(a)           As additional consideration for the
purchase of the Purchased Assets, Purchaser hereby agrees to assume on the
Closing Date but as of the Effective Time and discharge in accordance with
their terms or as otherwise provided by this Agreement only those obligations
of Seller related to the Purchased Assets (including the Purchased Contracts) arising and attributable to the period after
the Effective Time, other than those obligations arising out of or attributable
to any breach or other violation in connection therewith by Seller or incurred
as a result of an act or omission of Seller in contravention of the provisions
of this Agreement.  Assumed
Liabilities are limited to the items expressly described in this Section 2.03.  The foregoing provisions of this Section 2.03
notwithstanding, Purchaser shall not be obligated to assume any liability or
obligation as to which Seller, its Affiliate, or the counterparty is in default
in any material respect on the Closing Date.

(b)           The debts, liabilities and
obligations to be assumed by Purchaser under this Agreement are hereinafter
sometimes referred to as the “Assumed Liabilities” and the debts,
liabilities and obligations that are not assumed by Purchaser under this
Agreement are hereinafter sometimes referred to as “Non-Assumed Liabilities.”

(c)           This Section 2.03 is not intended to
and shall not benefit any Person other than Seller and Purchaser.

(d)           All of the Non-Assumed Liabilities
shall remain and be the debts, obligations and liabilities of the Seller, and
Purchaser shall have no liability or responsibility for any of the debts,
obligations or liabilities arising therefrom. 
Seller covenants and agrees with

 12
 

 

Purchaser that it shall perform
and discharge the Non-Assumed Liabilities.

2.04         Sales and Transfer Taxes.  Purchaser and Seller shall share equally the
cost of any (a) real property transfer or similar tax imposed by any
Governmental Authority which arises out of the transfer of the Real Property,
including any excise tax assessed on any deed conveying the Real Property; and
(b) all other transfer, sales, purchase, use, value added, excise or similar
taxes imposed by any Governmental Authority which arises out of the transfer of
any of the Purchased Assets.

2.05         Allocation of Purchase Price.  The parties agree that the Purchase Price
shall be allocated among the Purchased Assets in accordance with Schedule
2.05.  After the Closing, the parties
will make consistent use of the allocation, fair market value, and useful lives
specified in Schedule 2.05 for all Tax purposes and in all Tax returns,
including those required by section 1060 of the Code.  Purchaser agrees to complete IRS Form 8594
consistently with such allocation within 45 days after the Closing Date and to
furnish Seller with a copy of such form prepared in draft form, within a
reasonable period before the filing due date of such form.  The Form 8594 will be amended from time to
time in accordance with Schedule 2.05. 
Except to the extent required by applicable Law, neither Seller nor
Purchaser shall file any Tax return or take a position with a Tax authority
that is inconsistent with such allocation.

2.06         Prorations. 
The parties will prorate, as of Closing, all items under those Purchased
Contracts that relate to a period that begins prior to the Effective Time and
ends after the Effective Time (each a “Proration Period”) (other than
Taxes, which are to be prorated as provided in Section 5.08) as follows:  any amount that is appropriately attributed
to transactions or activities before Closing will be borne or enjoyed by
Seller, and any amount that is appropriately attributed to transactions or
activities on or after Closing will be borne or enjoyed by Purchaser.  Any amounts that cannot be so attributed will
be borne or enjoyed by the parties in proportion to the number of days, during
the billing period related to that amount, that are before Closing and on or
after Closing, respectively.  Within
ninety (90) days after the Closing, the parties, based upon any and all
invoices relating to all Proration Periods, shall agree upon the relative
amounts allocable to each party and as required adjust the amount paid by
Purchaser to Seller at Closing to reflect such amounts.

ARTICLE III

Closing and Closing Date Deliveries

3.01         Closing.  The term “Closing” as used herein
shall refer to the actual conveyance, transfer, assignment and delivery of the
Purchased Assets to Purchaser in exchange for the Purchase Price to the Seller
pursuant to Section 2.02 of this Agreement. 
The Closing shall take place at the offices of Winston & Strawn LLP,
1700 K Street NW, Washington, DC, at 9:00 a.m. local time on the fifth business
day following the date upon which all of the conditions precedent set forth in
Articles IX and X of this Agreement (other than those that are to be

 13
 

 

satisfied at Closing) are satisfied or waived
by the appropriate party hereto, subject to Article XI of this Agreement, or at
such other place and time or on such other date as is mutually agreed to in
writing by Seller and Purchaser (“Closing Date”).  The Closing shall be effective as of the
Effective Time.

3.02         Closing Deliveries by Seller.  At the Closing, the Seller shall deliver to
the Purchaser:

(a)           With respect to the Purchased Assets
related to the Facility, a general warranty deed for all Real Property,
including an assignment with general warranty covenants of all of the easements
upon which the Gas Feeder Line is situated;

(b)           With respect to the Purchased Assets
related to the Facility, all such bills of sale, lease assignments, trademark
assignments, copyright assignments, patent assignments, contract assignments
and other documents and instruments of sale, assignment, conveyance and
transfer, as the Purchaser or its counsel may deem necessary or desirable;

(c)           Certified copies of minutes or
unanimous written consents of the Board of Directors and if required, the
members and/or managers of the Seller approving the execution, delivery and
performance of this Agreement and the consummation of the transactions contemplated
by this Agreement;

(d)           A Certificate, dated the Closing
Date, executed by the appropriate officers of the Seller, required by Section
9.02 of this Agreement;

(e)            a non-foreign affidavit dated as of
the Closing Date, sworn under penalty of perjury and in form and substance
required under the Treasury Regulations issued pursuant to Code §1445 stating
that Target is not a “foreign person” as defined in Code §1445 (the “FIRPTA Affidavit”);

(f)            a certificate from the Secretary of
State of the Seller’s state of formation certifying as to Seller’s existence
and good standing certificates of Seller to the extent provided under the laws
of its state of formation and the states in which the Facility is located;

(g)           a reaffirmation of the Parent
Guaranty executed by the Guarantor hereunder in form and substance reasonably
acceptable to Purchaser;

(h)           a copy of the data room contents on
CD; and

(i)            such other documents as the
Purchaser or its counsel may reasonably request to carry out the purposes of
this Agreement, including the documents to be delivered pursuant to Article IX
of this Agreement.

 14
 

 

The items
described in clause (x) of the definition of Purchased Assets shall be
delivered to Purchaser’s offices in Columbus, Ohio or to the Facility and shall
include a general directory of contents and their location.

3.03         Closing Deliveries by Purchaser.  At the Closing, the Purchaser shall deliver
to the Seller:

(a)           The Purchase Price, subject to
proration and other adjustments and credits as herein provided;

(b)           Certified copies of minutes or
unanimous written consents of the Board of Directors, and if required, the
stockholders of the Purchaser approving the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated under
this Agreement;

(c)           The Certificate, dated the Closing
Date, executed by the appropriate officer of the Purchaser, required by Section
10.02 of this Agreement;

(d)           An assumption agreement executed by
the Purchaser or the Purchaser’s designee reflecting the assumption of the
liabilities set forth in Section 2.03(a) of this Agreement, in the form
attached hereto as Exhibit E (the “Assumption Agreement”);

(e)           a certificate from the Secretary of
State of the Purchaser’s state of formation and that of each of Purchaser’s
designees certifying as to such entity’s existence and good standing
certificates of such entity to the extent provided under the laws of its state
of formation and the states in which the Facility is located;

(f)            Ohio direct pay permit;

(g)           the Microwave Tower and Substation
Easement Agreement executed by Purchaser; and

(h)           such other documents as the Seller or
its counsel may reasonably request to carry out the purposes of this Agreement,
including the documents to be delivered pursuant to Article X of this
Agreement.

3.04         Cooperation.  Subject to the provisions of Section 4.04,
the Seller and the Purchaser shall, on request, on and after the Closing Date,
cooperate with one another by

 15
 

 

furnishing any additional information,
executing and delivering any additional documents and/or instruments and doing
any and all such other things as may be reasonably required by the parties or
their counsel to consummate or otherwise implement the transactions
contemplated by this Agreement.

ARTICLE IV

Pre-Closing Filings

4.01         Government Approvals; Consents.  Subject to the terms and conditions of this
Agreement and applicable Law, prior to the Closing each party shall, at its own
expense, use its commercially reasonable efforts to take or cause to be taken
all actions necessary, proper, or advisable, including all possible appeals, to
obtain such party’s Governmental Approvals and all other necessary or
appropriate filings, registrations, consents, approvals, certifications,
determinations, authorizations, or waivers (including the transfer or
re-issuance of Permits) required in order to consummate the transactions
contemplated hereby and to take or cause to be taken all actions necessary to
comply with the terms upon which any of the same are granted.  The parties hereto acknowledge and
agree that no filings with the Public Utilities Commission of Ohio have been
made, nor are they required or intended to be made, nor are such filings a
condition precedent to the Closing.

4.02         HSR and Other Filings.  Without limitation of the foregoing, each
party undertakes and agrees to (i) file (and each party agrees to cause any
Person that may be deemed to be the ultimate parent entity or otherwise to
control such party to file, if such filing is required by applicable Law) as
soon as practicable following the date hereof, a Notification and Report Form
under the HSR Act with the FTC and the Antitrust Division of the DOJ (the
filing fees payable in connection therewith to be paid by Purchaser); (ii)
subject to the allocation of responsibility set forth in Section 4.03, file as
soon as practicable after the date hereof any forms or reports required by FERC
and any applicable state or local government public utility regulatory bodies;
(iii) submit as soon as practicable after the date hereof a request for each
other Governmental Approval to be sought by that party; (iv) file as soon as
practicable any form or report required by any other Governmental Authority
relating to antitrust, competition, trade, Tax, or energy or utility regulation
matters; and (v) subject to Section 4.05, take any action and agree to any
undertaking necessary to receive any clearance or approval required by any
Governmental Authority or applicable Law, in each case, with respect to the
transactions contemplated hereby.  Each
party shall (and shall cause any such parent entity to) (vi) respond as
promptly as practicable to any inquiries or requests received from any
Governmental Authority for additional information or documentation; and (vii)
not extend any waiting period under the HSR Act or enter into any agreement
with any Governmental Authority not to consummate the transactions contemplated
hereby, except with the prior consent of the other party.

 16
 

 

4.03         FERC Regulatory Filing.

(a)           The Purchaser shall have primary
responsibility for the preparation and filing of the regulatory filing(s) to be
made to FERC requesting approval under Section 203 (and Section 205, if
necessary) of the Federal Power Act (the “FERC Regulatory Filing”).  Upon the request of the Purchaser, the Seller
shall use its commercially reasonable efforts to cooperate with the Purchaser
to prepare and file the FERC Regulatory Filing.

(b)           The Purchaser and the Seller shall
use commercially reasonable efforts to file as soon as practicable after the
date hereof the FERC Regulatory Filing, and execute all agreements and
documents, in each case, to obtain as promptly as practicable approval under
Section 203 (and Section 205, if necessary) of the Federal Power Act.  The Purchaser and the Seller shall act
diligently, and shall coordinate in completing and submitting the FERC
Regulatory Filing.  The Purchaser and the
Seller shall each have the right to review and approve (which such approval
shall not be unreasonably delayed or withheld) in advance all of the
information relating to the transactions contemplated by this Agreement which
appears in the FERC Regulatory Filing. 
The Purchaser and the Seller agree that all telephonic calls and
meetings with the FERC regarding the transactions contemplated by this
Agreement shall be conducted by the Purchaser and the Seller jointly.

4.04         Cooperation in Regulatory Review Process.  Each party shall consult and cooperate in the
regulatory review process. 
Notwithstanding anything in this Agreement to the contrary, each party
agrees not to oppose, obstruct, or otherwise interfere with, in any manner
whatsoever, the efforts of the other party to obtain such party’s Governmental
Approvals and all other clearance or approval required by any Governmental Authority
or applicable Law with respect to the transactions contemplated hereby.

4.05         Conditions or Limitations.  Nothing in this Agreement will require any
party to accept any condition to, limitation on, or other term concerning the
grant of any Governmental Approval if such condition, limitation, or other
term, alone or in the aggregate with other such conditions, limitations, or
other terms would (i) require the disposition by Purchaser of any material
asset(s); (ii) have a material adverse effect on either party or any of its
Affiliates in its acquisition, ownership, use, operation, or disposition of any
property other than the Purchased Assets; or (iii) would materially change or
impair the commercial expectation of the Purchaser with respect to the sale or
transmission of power from the Facility.

4.06         PJM Notification of Sale and Scheduling and
Bidding for day of Closing.

(a)           Seller and Purchaser shall cooperate
in the transfer of the Facility from Seller’s account with PJM to Purchaser’s
account with PJM which cooperation shall include the transfer of ownership of
the Facility on the Closing Date and the allocation of costs and revenues
related to the Facility for the Closing Date. 
Seller has provided to or shall provide to Purchaser as of the Closing Date
access to all historical GADS data related to the Facility.

 17
 

 

(b)           For any Facility bids submitted to
PJM that will be effective on the Closing Date, Seller agrees to bid the
Facility units in accordance with the following guidelines:

(i)            At the Seller’s calculated maximum
allowable cost pursuant to PJM Manual 15 - Cost Development Guideline (or such
other guideline that may replace the PJM Manual 15 – Cost Development
Guideline) for the units at the Facility plus the allowable 10% markup,
and

(ii)           Using a delivered gas price
equivalent to the Intercontinental Exchange (“ICE”) “TCO Pool” high
trade/settlement (as determined by Seller in its discretion) for a gas flow day
that coincides with the Closing Date plus the applicable adders for
pipeline fuel, transportation, storage/balancing, and other adders deemed
appropriate by Seller to deliver fuel to the Facility.

ARTICLE V

Covenants

5.01         Due Diligence Review.  Pending Closing, the Seller shall at all
reasonable times and upon reasonable prior notice make the Facility,
properties, assets, books and records, and involved personnel pertaining to the
Purchased Assets available for examination, inspection and review by the
Purchaser and its lenders, agents and representatives; provided, however,
Purchaser’s inspections and examinations shall not unreasonably disrupt the
normal operations of the Facility and any interview by the Purchaser of such
involved personnel shall require the prior written approval of the Seller.  Neither the representations and warranties of
Seller, nor the indemnification obligations of Seller, shall be affected,
qualified, modified or deemed waived by reason of the Purchaser’s exercise or
failure to exercise its rights under this Section.

5.02         Pending Closing.  Pending the Closing, and unless otherwise
consented to by the Purchaser in writing, the Seller shall:

(a)           conduct and carry out operations at
the Facility consistent with Good Utility Practices and, in all events,
maintain the Purchased Assets in the same condition in all material respects as
existed on July 31, 2006;

(b)           not sell, lease, mortgage, pledge or
otherwise dispose of any of the Purchased Assets or other material properties
or assets of or in connection with the Facility, except for tangible personal
property purchased, sold or otherwise disposed of in the ordinary course and
the disposal of which does not materially impair the value or the utility of
the Purchased Assets;

 18

 

(c)           except as set forth on Schedule
5.02(c), not enter into, or become obligated under, any lease, contract,
agreement or commitment with respect to the Facility, Properties or Inventory
that cannot be terminated by Seller without penalty at or before Closing;

(d)           not materially change, amend, or
otherwise modify or terminate any Purchased Contract;

(e)           maintain in full force and effect
with respect to the Facility, Properties and Inventory, policies of insurance
of the same type, character and coverage as the policies currently carried and
described in Schedule 7.07;

(f)            if a spare part set forth on
Schedule IA and worth more than $50,000 is used or removed from the inventory
of spare parts, replace such spare part with its equivalent before Closing;

(g)           use Inventory and spare parts
comprising part of the Purchased Assets only in connection with the Facility,
in the ordinary course of business, and in accordance with Good Utility
Practice;

(h)           not enter into any labor or
collective bargaining agreement with employees at the Facility;

(i)            not enter into, modify, or renew any
contract with respect to the sale of electric power or ancillary services from
the Facility that will call for the delivery of electric power or ancillary
services after the Closing; or

(j)            not agree to do any of the items
prohibited by Section 5.02(b), (c), (d), (e) (f), (g), (h), or (i).

5.03         Consents.  Pending the Closing Date, the parties shall
proceed with all reasonable diligence and use commercially reasonable efforts
to obtain the written consents, authorizations or approvals required for the
consummation of transactions contemplated by this Agreement (including the
assignment and assumption of the Purchased Contracts); provided, however,
neither party shall have any obligation to pay any third Person a fee to obtain
any such consent, authorization or approval not already provided for by the
applicable agreement or Law.

5.04         Environmental Assessments.  Purchaser shall have the right to obtain, at
Purchaser’s expense and from environmental consultants selected by Purchaser,
environmental assessments of any of the Properties and all structures thereon
for the purpose of determining whether there exists any Hazardous Substance on,
about or underneath the Properties or any structure thereon or thereunder, or
migrating or threatening to migrate from any of the Properties or any structure
thereon or thereunder, or any condition, circumstance, or activity which
constitutes a violation of or noncompliance with any Environmental Laws (“Phase
I

 19
 

 

Environmental Site Assessment”). 
Prior to Closing, if Purchaser’s Phase I Environmental Site Assessment
concludes that further investigation is warranted, Purchaser shall provide to
Seller a copy of the proposal for a Phase II investigation, which Seller may
approve in its sole discretion. 
Purchaser shall provide Seller copies of any Phase I or Phase II
Environmental Site Assessment reports to Seller, upon Seller’s request.  Seller shall provide to Purchaser and
Purchaser’s consultants access to the Facility during normal business hours and
upon reasonable notice.

5.05         Notice of Breach. 
Pending Closing, each party shall provide notice to the other party
within ten (10) days of becoming aware of any material breach of (x) any
representations or warranties of such notifying party contained in this
Agreement or (y) any of the covenants of such notifying party contained in this
Agreement.

5.06         Workforce. 
Pending Closing and subject to Seller’s prior written consent, Purchaser
may interview Seller’s employees who are employed at the Facility to determine
whether Purchaser wishes to make offers of employment to any such employee(s); provided,
however, that to the extent any such employee accepts an offer of
employment from Purchaser (or any of its Affiliates or agents), Purchaser
agrees not to permit, or to cause its Affiliates or agents not to permit, such
employees to commence employment with Purchaser (or any of its Affiliates or
agents) prior to the Closing Date.

5.07         Cooperation.

(a)           Each party agrees that after the
Closing Date it will use its commercially reasonable efforts to cooperate with
and make available to the other party, upon reasonable notice and during normal
business hours, books and records and information of or relating to the
Purchased Assets and other matters relevant to this Agreement which are
necessary or useful in connection with Purchaser’s operation or maintenance of
the Purchased Assets, any proceeding by a Governmental Authority, preparation
of tax returns, or any claim by or against a third party involving the
Purchased Assets (other than in connection with disputes between the
parties).  The party requesting any such
books and records, information, or cooperation shall bear all of the out-of-pocket
costs and expenses of the other party reasonably incurred in connection
therewith (including out-of-pocket expenses to third parties incurred by any
party).

(b)           Purchaser and Seller shall cooperate
in good faith pending the Closing Date to insure that there is no interruption
in phone or electrical service to the Facility.

(c)           Purchaser and Seller shall cooperate
in good faith pending the Closing Date to provide to Purchaser the benefits
referenced in that letter dated October 10, 2003, from General Electric
International, Inc., pertaining to the replacement of R-17 blades.

(d)           Seller shall provide written notice
to Columbia Gas Transmission Corporation of the assignment (to be effective as
of the Closing) to Purchaser of Seller’s interest in the NTS Service Agreement
dated as of May 14, 2001, by and between Columbia Gas

 20
 

 

Transmission Corporation and
Seller, as amended, and shall provide a copy of such written notice to
Purchaser.

5.08         Tax Matters. 
(a) Except as provided in clause (b) of this Section 5.08 or with
respect to items included in Purchased Assets as described in clause (vii) of
the definition of Purchased Assets, in respect of Taxes on or with respect to
the Purchased Assets, (i) with respect to a taxable period, or portion
thereof, that ends before or as of the Closing Date, Seller shall be liable and
indemnify Purchaser for all Taxes arising out of
or related to a breach of any of the representations and warranties set forth
in Section 7.14 of this Agreement or the Covenants of Seller in this Article V,
and (ii) Purchaser shall be liable and indemnify Seller for all such
Taxes with respect to a taxable period, or portion thereof, that begins on or
after the Closing Date.

(b)  Ad valorem property Taxes imposed on or with
respect to the Purchased Assets for the Taxable Period that contains the
Effective Time shall be prorated between Seller and Purchaser based on their
relative number of days of ownership during the Taxable Period, with Seller
being responsible for such prorated ad valorem property Taxes for the period
ending as of the end of the Closing Date and Purchaser being responsible for
such prorated ad valorem property Taxes for the period after the Closing
Date.  At the election of either party,
the amount to be paid by Purchaser at Closing shall be adjusted by an estimated
proration based on the previous year’s Taxes. 
The amount of any post-Closing invoice for pro-rated ad valorum
property Taxes shall include an adjustment for any settlement or closing of any
Tax Proceeding related to the Enterprise Zone Agreement and shall take into
account any ad valorem property Taxes previously pro-rated pursuant to this
Section 5.08(b).  All amounts receivable
or payable between the parties under this Section 5.08(b) will be an adjustment
to the Purchase Price.

(c)  Any Tax return to be prepared pursuant to the
provisions of this Section 5.08 shall be prepared in a manner consistent with
practices followed in prior years with respect to similar Tax returns and in
compliance with the applicable Law of each respective jurisdiction, except for
changes required by changes in applicable Law.  
Purchaser shall not file an amended Tax Return relating to the
Purchased Assets for any period ending on or prior to the Closing Date without
the consent of Seller, which may be withheld in Seller’s reasonable discretion,
and Seller shall not file any Tax Return relating to the Purchased Assets for
any period ending after the Closing Date without the prior consent of
Purchaser, which may be withheld in Purchaser’s reasonable discretion.

(d)    Seller and Purchaser agree that the
transaction pursuant to this Agreement is not subject to Sales Tax in
accordance with Title LVII, Chapter 5739 Sales Tax, Sec. 5739.02(B)(8) [Ohio
Revised Code] (casual sale exemption) and Title LVII, Chapter 5739 Sales Tax,
Sec. 5739.02(B)(40) [Ohio Revised Code] (sale to a provider of electricity).

(e)  Purchaser and Seller shall cooperate fully,
and shall cause their respective Affiliates to cooperate fully, as and to the
extent reasonably requested by either party, in

 21
 

 

connection with the filing of Tax returns and any
audit, litigation, examination, or other
proceeding (“Tax Proceeding”) (including, but not limited to, the Tax
Proceedings regarding ad valorem property taxes and the Enterprise Zone
Agreement) with respect to Taxes of or relating to the Purchased Assets and in
connection with the filing of any application with any Taxing authority for
approval of the transfer or assignment of any item described in clause (vii) of
the definition of Purchased Assets.  Such
cooperation shall include the retention and (upon a party’s request) the
provision of records and information which are reasonably relevant to any such
Tax return, Tax Proceeding, or application and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder.

(f)  Seller shall use good faith efforts to assist
Purchaser in obtaining the written approval of Pickaway County (and/or
applicable governmental entity) in the transfer of Seller’s Enterprise Zone
Agreement to Purchaser: (i) in the event that the Enterprise Zone Agreement is
transferred to Purchaser and pursuant to the provisions of this Section 5.08,
Seller will take no position in its Tax Proceedings that would have an adverse material
effect upon Purchaser’s enjoyment of the benefits of the transferred Enterprise
Zone Agreement (provided that in no event shall resolution of the Tax
Proceedings by Seller for less than the full amount of Seller’s claim be
considered to materially adversely affect Purchaser’s future tax benefits); and
(ii) if Seller and Purchaser are unable to obtain written approval of Pickaway
County (and/or applicable governmental entity) to transfer the Enterprise Zone
Agreement to Purchaser, the Seller shall be responsible for all obligations
(but in no event including property taxes for periods after the Closing) with
respect to the Enterprise Zone Agreement, the Compensation Agreement and, the
Tax Incentive Donation Agreement until each agreement expires or is otherwise
cancelled or voided.  Notwithstanding
anything in this Agreement to the contrary, neither the assignment of the
Enterprise Zone Agreement nor Purchaser’s entry into any replacement agreement
shall be a condition precedent to the obligations of either party under this
Agreement.  In the event that the
Enterprise Zone Agreement is transferred to Purchaser but the Tax Proceedings
(and any appeals) regarding the Enterprise Zone Agreement fail such that any
one or more CT Units is excluded from the Enterprise Zone Agreement, Purchaser
shall be responsible for any and all payments required in connection with the
Compensation Agreement for periods after Closing based upon the total number of
CT Units covered by the Enterprise Zone Agreement until such time as the
Compensation Agreement expires or is otherwise cancelled or voided.

(g)  Seller shall notify Purchaser within 30 days
of Seller’s receipt of notice of a Tax Proceeding related to the Purchased
Assets or to Seller but only if the Tax Proceeding could reasonably be expected
to affect Purchaser’s ownership or operation of the Purchased Assets after the
Closing or result in the imposition of any Tax for which Purchaser is
responsible.  Purchaser, at its expense,
shall have the right to control the defense and settlement of any such Tax
proceeding.

(h)  Except with respect to items included in
Purchased Assets as described in clause (vii) of the definition thereof, Seller
shall be entitled to any refunds or credits for any

 22
 

 

Taxes relating to the Purchased Assets for periods
ending prior to or as of the Closing Date, and Purchaser shall be entitled to
any refunds or credits for any Taxes relating to the Purchased Assets for
periods on and after the Closing Date. 
Any party receiving a refund or the right to a credit to which the other
party is entitled shall immediately notify the party so entitled and remit the
refund or the value of the credit, as the case may be, within thirty (30) days
of receipt of such refund or entitlement to the credit.

(i)  Subject to Section 2.04, Seller shall file
all Tax returns required to be filed to report Transfer Taxes imposed on or
with respect to the transactions contemplated hereby, shall solely be liable
for and shall pay all such Transfer Taxes, and shall indemnify, defend and hold
harmless Purchaser and its Affiliates from and against any and all liability
for the payment of such Transfer Taxes and the filing of such Tax returns.

5.09         Market Power Study.  Purchaser shall have the right to obtain, at
Purchaser’s sole expense and from a consultant selected by Purchaser, a market
power study for purposes of determining whether there exist any issues
concerning market power or the need to mitigate such market power in connection
with Purchaser’s acquisition of the Facility.

5.10         Microwave Tower and Substation
Easement Agreement.  Purchaser shall
enter into the Microwave Tower and Substation Easement Agreement with DP&L.

ARTICLE VI

Title and Survey

6.01         Pre-Closing Title Policy and Survey
Delivery.  No more than thirty (30)
days after the date hereof, the Seller shall obtain and deliver to the
Purchaser:

(a)           With respect to the Properties, an
owner’s preliminary title report covering a date subsequent to the date hereof,
issued by a title insurance company reasonably acceptable to the Purchaser,
which preliminary report shall contain a commitment of such title insurance
company to (i) issue an owner’s title insurance policy (the “Title Policy”)
on ALTA 1990 Owner’s Form B insuring the Purchaser as to the fee simple title
or other applicable estate in each parcel comprising the Properties, and the
grantee’s rights set forth in the easements upon which the Gas Feeder Line is
situated,  in an amount set forth in
Schedule 6.01 and subject only to, (A) Permitted Exceptions, (B) such other
minor encumbrances or imperfections, if any, which are not substantial in
nature or amount and which do not detract from the value or utility of the
Purchased Assets; and (C) such other matters as are disclosed in Schedule 6.01
or consented to in writing by the Purchaser, including the Microwave Tower and
Substation Easement Agreement (clauses (A), (B) and (C) are collectively
referred to as “Permitted Real Estate Exceptions”), together with a true, correct, and legible
copy of each document referred to in the commitment; and (ii) guarantee
that each such parcel of real estate adjoins a public road or highway and that
entrance to and exit from such premises may be had via such public road or
highway; and

 23
 

 

(b)           A current as-built survey and metes
and bounds description of the Properties prepared by a registered land surveyor
or engineer, duly licensed in the applicable state (i) in accordance with the “Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys”, jointly
established and adopted by ALTA, ACSM and NSPS in 1999, and including items
1-4, 6, 7(a), 8-10, 11(a) and (b), and 14-16 of Table A thereof, and (ii)
pursuant to the Accuracy Standards (as adopted by ALTA, NSPS and ACSM and in
effect on the date thereof), with survey measurements made in accordance with
the “Minimum Angle Distance and Closure Requirements for survey measurements
which control land boundaries for ALTA/ACSM Land Title Surveys” (the “Survey”).

(c)           No later than fifteen (15) days after
Purchaser has received the last of the title report and commitment (and copies
of referenced documents) and the Survey, Purchaser shall provide a written
notice (“Objection Notice”) to Seller of any material defects or
exceptions disclosed by the commitment, any secured transaction search
undertaken by Purchaser, or Survey that is not a Permitted Real Estate
Exception.  Purchaser shall be deemed to
have accepted all defects and exceptions disclosed by the commitment, any
secured transaction search undertaken by Purchaser, and Survey to which
Purchaser does not object in a timely Objection Notice, and such accepted
defects and exceptions shall be deemed to be Permitted Real Estate Exceptions
hereunder.  Seller shall have thirty (30)
days (the “Cure Period”) from receipt of the Objection Notice to cure any
defect or exception which is the subject of an Objection Notice, failing which
Purchaser shall have the option to either (i) terminate this Agreement as
provided in Section 11.01 by giving written notice to Seller no later than
fifteen (15) days following the expiration of the Cure Period or (ii) be deemed
to have accepted the Properties subject to all such uncured defects and
exceptions disclosed by the commitment, any secured transaction search
undertaken by the Purchaser, or Survey, all of which shall be Permitted Real
Estate Exceptions hereunder.

(d)           The costs and expenses of the title
report, the Title Policy and all endorsements, and the Survey shall be borne by
Purchaser, whether or not the transactions contemplated under this Agreement
are consummated.  All costs and expenses
incurred by Seller in response to any Objection Notice shall be borne by
Seller.

ARTICLE VII

Warranties and Representations of the Seller

The Seller
warrants and represents to the Purchaser as follows:

7.01         Organization and Good Standing.  The Seller is a limited liability company
duly formed, validly existing and in good standing under the laws of the State
of Ohio.  Seller is duly qualified to
transact business and is in good standing in each jurisdiction where such
qualification is necessary, except where the failure to be so qualified or in
good standing could not reasonably expected to have a Material Adverse Effect
or impair the Seller’s ability to

 24
 

 

perform its obligations hereunder in any
material respect.

7.02         Authority.  The Seller has the right and power to enter
into, and perform its obligations under this Agreement; and has taken all
requisite action to authorize its execution and delivery of this Agreement and
the performance of its obligations under this Agreement; and this Agreement has
been duly authorized, executed and delivered by the Seller and is binding upon,
and enforceable against, the Seller in accordance with its terms; except as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors’ rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).

7.03         No Violations and Consents.  (a) 
The execution, delivery and performance of this Agreement by the Seller
does not and will not, after the giving of notice, or the lapse of time, or
otherwise, (i) conflict with, result in a breach of, or constitute a default
under, the Certificate of Formation or Operating Agreement of the Seller or any
of its Affiliates or any Law or any Purchased Contract; (ii) result in the
creation of any Lien upon any of the Purchased Assets; (iii) terminate, amend
or modify, or give any party the right to terminate, amend, modify, abandon, or
refuse to perform, any Purchased Contract; (iv) accelerate or modify, or give
any party the right to accelerate or modify, the time within which, or the
terms under which, any duties or obligations are to be performed by Seller or
any of its Affiliates, or any rights or benefits are to be received by any
Person, under any Purchased Contract; or (v) violate or result in a
default (or give rise to any right of termination, suspension, modification,
cancellation, or acceleration) in any material respect under any other
indebtedness or obligation, lease, contract, other agreement, commitment,
indenture, mortgage, deed of trust, or other instrument, document, or
arrangement to which Seller or any of its Affiliates is a party or by which any
of the Purchased Assets is bound.

(b)           The execution and delivery by Seller
of this Agreement does not, and the performance by Seller or any of its
Affiliates of its obligations hereunder will not, require Seller or any of its
Affiliates to obtain any consent, approval, authorization or other action of,
or make any filing with or give any notice to, any Governmental Authority,
except (a) as disclosed in Schedule 7.03, (b) pursuant to the applicable
requirements of the HSR Act, (c) where failure to obtain such consents, approvals,
authorizations or actions, make such filings or give such notices would not
have a Material Adverse Effect or impair the Seller’s ability to perform its
obligations hereunder in any material respect and (d) as may be necessary as a
result of any facts or circumstances relating solely to Purchaser.

7.04         Brokers.  Except as otherwise set forth in Schedule
7.04, neither this Agreement nor the sale of the Purchased Assets or any other
transaction contemplated by this Agreement was induced or procured through any
Person acting on behalf of, or representing, the Seller or any of its
Affiliates as broker, finder, investment banker, financial advisor or in any
similar capacity.

 25
 

 

7.05         Required Assets.  Except for the items set forth on Schedule
7.05 and the Retained Assets, all of the material rights, properties and assets
required by the Seller in connection with the ownership, operation,
maintenance, and repair of the Facility, the delivery of fuel thereto from the
Columbia tap and the delivery of power and ancillary services therefrom to the
Substation, each as of the date hereof, are (a) owned by the Seller or licensed
or leased to the Seller under one of the Purchased Contracts (except as
otherwise contemplated by Section 14.02 hereof); and (b) included in the Purchased
Assets.

7.06         Contracts. 
Except for the Purchased Contracts set forth in Schedule 7.06(a) (a
complete copy of each of which has been made available to Purchaser), the
Retained Contracts set forth in Schedule 7.06(b) and the Enterprise Zone
Agreement, Compensation Agreement, and Tax Incentive Donation Agreement, Seller
is not a party to, and its properties are not subject to, any contract
materially pertaining to the Purchased Assets that meets any of the following
descriptions and has a term extending beyond the anticipated Closing Date:  (a) contracts for the purchase, exchange, or
sale of electric power or ancillary services; (b) contracts for the
transmission of electric power; (c) with respect to the Facility, interconnection
contracts, including generation imbalance agreements and similar agreements
with the transmission grid operator; (d) other than contracts of the nature
addressed by clauses (a), (b), and (c) of this Section 7.06, contracts for the
sale, lease, or use of any Purchased Asset or that grant a right or option to
purchase, lease, or use any Purchased Asset, or otherwise involving a sharing
of profits, losses, costs, or liabilities of the Purchased Assets with any
other Person, other than in each case contracts entered into in the ordinary
course of business consistent with past practices with an annual or aggregate
cost or value of less than $50,000 individually or $150,000 in the aggregate;
(e) other than contracts of the nature addressed by clauses (a), (b), and (c)
of this Section 7.06, contracts for the future provision or receipt of goods or
services relating to the Purchased Assets requiring annual or aggregate
payments in excess of $50,000for each individual
contract; (f) outstanding futures, swap, collar, put, call, floor, cap, option,
or other contracts that are intended to benefit from or reduce or eliminate the
risk of fluctuations in the price of commodities (including electric power or
gas) the value of securities, interest rates, or the cost or availability of
transmission rights; (g) contracts that purport to limit the Facility’s
freedom to be used to compete with, or be used in, any business or line of
business in any geographic area; or (h) any amendment, supplement, and
modification (whether oral or written) in respect of any of the foregoing.

Except
as set forth in Schedule 7.06: (a) each Purchased Contract is in full force and
effect and is valid and enforceable against all parties thereto in accordance
with its terms; (b) except as to Seller Governmental Approvals and the
approvals and consents described in Schedule 7.06, each Purchased Contract is
assignable by Seller to Purchaser without the consent of any other Person; (c)
(i) Seller and, to Seller’s knowledge, each other Person that has or had any
obligation or liability under any Purchased Contract is, and at all times since
September 30, 2006, has been, in compliance with all applicable terms and
requirements of each Purchased Contract in all material respects, and (ii)
Seller has not given to or received from any other Person, at any time since
September 30, 2006, any written notice or other written communication

 26
 

 

regarding any actual,
alleged, possible, or potential violation or breach of, or default under, any
Purchased Contract; (d) to Seller’s knowledge, no event has occurred or
circumstance exists that in any material respect (with or without notice or
lapse of time) may conflict with or give Seller or another Person the right to
cancel, modify, terminate, or accelerate the maturity or performance of or
payment under any Purchased Contract; (e) there are no renegotiations of,
attempts to renegotiate, or outstanding rights or obligations to renegotiate
any amounts paid or payable to Seller or any of its Affiliates under any
Purchased Contract; and (f) no Affiliate of Seller is the counterparty to any
Purchased Contract.

7.07         Insurance.  All material properties and risks associated
with the Properties and Facility are covered and shall remain covered through
the Closing Date, by valid and currently effective insurance policies or
binders of insurance or programs of self-insurance in such types and amounts as
are consistent with customary practices and standards in the Seller’s
industry.  Schedule 7.07 contains a complete list
of all material liability, property, accident, casualty, fire, flood, workers’
compensation or other insurance policies and arrangements affecting or relating
to the ownership, use or operations of the Purchased Assets or the Facility.

7.08         Title to Real Property.  Seller has good and indefeasible title to the
Real Property and a valid and subsisting leasehold estate to the Properties
other than the Real Property, free and clear of all Liens, except for
the Permitted Real Estate Exceptions.

7.09         Title to Purchased Assets.  Seller has good and marketable title to all
the material Purchased Assets consisting of tangible personal property owned by
Seller and valid and subsisting leases with respect to all of the material
Purchased Assets consisting of tangible personal property leased by Seller.  All such owned tangible personal property is
owned free and clear of all Liens, except: (a) as set forth in Schedule 7.09;
(b) liens for Taxes and assessments not yet payable; (c) liens securing or
relating to liabilities or obligations which are to be assumed by Purchaser
pursuant to this Agreement or the Assumption Agreement; and (d) imperfections
of title, Liens, claims and other charges and encumbrances the existence of
which would not materially impair the value or utility of such property.

7.10         Intellectual Property.   (a) Except as set forth in Schedule 7.10, to
Seller’s knowledge there has not been in the past six (6) years, nor is there
currently, any infringement or misappropriation arising out of the
construction, operation, maintenance, repair, modification, or other activities
at or relating to the Facility of any patents, trademarks, service marks, trade
names, copyright, or trade secrets owned or controlled by a third-party.

(b)  Except as set forth in Schedule 7.10, to Seller’s knowledge there has not been in
the past six (6) years, nor is there currently, any claim or threatened claim,
that the operation, maintenance, repair, modification, or other activities at
or relating to the Facility infringe or misappropriate any patents, trademarks,
service marks, trade names, copyright, or trade secrets owned or controlled by
a third-party, nor has there been in the same period of time, any request or
demand that a license of any patents, trademarks, service marks, trade names,
copyright, or

 27
 

 

trade secrets owned or controlled by a third-party
is necessary to continue operation, maintenance, repair, modification, or other
activities at or relating to the Facility.

7.11         Litigation.  Except as set forth in Schedule 7.11,
(a) there are no actions, claims or proceedings pending against the Seller
relating to the Facility or any of the Purchased Assets at law or in equity,
before or by any Governmental Authority, or by any other Person, which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; and (b) there is no action, claim, proceeding, order,
writ, judgment or decree that seeks to restrain or prohibit or restrains or
prohibits the consummation of the transactions contemplated hereby or seeks to
impose or imposes any material limitation or restriction on the operation or
maintenance of the Purchased Assets or the sale or delivery of electric power
or ancillary services therefrom.

7.12         Compliance With Laws.  Seller is not in material violation (and has
not received any written notice or allegation of material violation) of any Law
applicable to the Purchased Assets or by which any of the Purchased Assets are
bound or subject, except as set forth in Schedule 7.12.  Notwithstanding the foregoing, compliance
with Environmental Laws is exclusively and solely governed by Sections 7.15 and
7.16 hereof.

7.13         Labor Matters.  All employees employed at the Facility (“Facility
Employees”) are employees of Seller; provided, however, that
certain employees of DP&L may from time to time work at the Facility in
connection with their primary responsibilities at the Substation or
elsewhere.  No labor organization has
representation rights with respect to the Facility Employees; and there are no
collective bargaining agreements relating to the Facility Employees.  To Seller’s knowledge, there are no material
organizing efforts presently being made involving any of the employees at the
Facility.

7.14         Taxes. 
Except as set forth in Schedule 7.14, Seller has duly and timely filed
all federal, state and local Tax reports and returns required to be filed by it
in respect of the Purchased Assets and Seller’s trade or business with respect
thereto and paid all Taxes shown thereon to be due.  There
are not pending or threatened in writing any Tax audits or examinations of, or
with respect to, the Purchased Assets, and there are no written notices of
deficiency, proposed deficiency, or assessment from any Tax authority with
respect to Taxes of, or relating to, the Purchased Assets.  All material deficiencies asserted or
assessments made for Taxes due with respect to the Purchased Assets as a result
of any completed and settled examinations or any concluded litigation have been
fully paid.  Seller is disregarded as an
entity separate from its owner within the meaning of Treasury Regulation
Section 301.7701-3 and neither Seller nor Seller’s Federal Tax Owner has made
any elections to the contrary. 
Notwithstanding the preceding in this Section 7.14, Seller is currently
engaged in Tax Proceedings concerning its Enterprise Zone Agreement.

7.15         Licenses and Permits.  Seller has, or has applied for, all material
Permits (including Permits under Environmental Laws) necessary for the
ownership, lease, use,

 28
 

 

operation, and maintenance of the Purchased
Assets, and all of such Permits are described in Schedule 7.15.  Each such Permit is in full force and effect,
and Seller is not in violation of any such Permit in any material respect.  There are no pending or, to Seller’s
knowledge, threatened proceedings challenging the validity of, or seeking to
revoke, withdraw, suspend, cancel, terminate, or modify any of such Permits.

7.16         Environmental Compliance.  Except as set forth on Schedule 7.16, (a) the
Purchased Assets and their operation and maintenance as presently conducted are
in compliance with all applicable Environmental Laws in all material respects;
(b) Seller has not received any written notice, demand, or request for
information from any Governmental Authority indicating that the Purchased
Assets or their operation and maintenance may be in violation of any
Environmental Law; (c) to Seller’s knowledge, Seller has not disposed of,
released, or transported, or arranged for the disposal, release, or
transportation of, any Hazardous Substance from the Purchased Assets in
violation of any Environmental Law, or in a manner giving rise to material
liability or any reporting obligation under any Environmental Law; (d) Seller
is not subject to material liabilities or expenditures (fixed or contingent)
relating to any suit, settlement, court order, administrative order, regulatory
requirement, judgment, or claim asserted or arising under any Environmental Law
with respect to the Purchased Assets; (e) Seller has made available to
Purchaser copies of all environmental assessments in Seller’s possession or
available to Seller involving the Purchased Assets that have been prepared by
third parties; and (f) no underground storage tanks regulated by Ohio’s Bureau
of Underground Storage Tank Regulations are located on any of the Properties.

7.17         No Misrepresentation in Due Diligence
Materials.  To Seller’s knowledge, the Due Diligence
Materials contain no material false statement or misrepresentation with respect
to the information such Due Diligence Materials purport to present.

7.18         Properties.

(a)           Except as set forth on Schedule 7.18,
to Seller’s Knowledge, (i) none of the Properties consists of “wetlands” under
applicable federal or state law; (ii) the Properties are zoned for industrial
or agricultural purposes; and (iii) no part of the Properties is located in a
flood prone area.

(b)           Except as set forth on Schedule 7.18,
(i) Seller has not received and has no actual knowledge of any notice or
request, formal or informal, from any insurance company or board of fire
underwriters identifying any defects in the Properties that would adversely
affect the insurability of the Properties; 
(ii) all required, material building permits, occupancy permits or other
approvals or consents of governmental authorities or public or private utilities
having jurisdiction have been obtained with respect to the Properties; (iii)
adequate supplies of all public utilities, including, but not limited to,
electricity, telephone and other utilities required by law or by the normal use
and operation of the Properties (x) are installed to the property lines of the
Properties, (y) are connected pursuant to valid permits, (z) are adequate to
service the Properties,

 29
 

 

(xx) are adequate to permit
full compliance with all requirements of law and normal usage of the Properties
by the occupants and their licensees and invitees, and (yy) either enter the
Properties through adjoining public streets, or if they pass through adjoining
private land, do so in accordance with valid public easements or private
easements that inure to the benefit of Seller and its successors in title to
the Properties.

7.19         Absence of Material Adverse Effect.  Since July 31, 2006, there has not been a
Material Adverse Effect.

7.20         Disclaimer of Warranties.  EXCEPT WITH RESPECT TO THE WARRANTIES AND
REPRESENTATIONS SPECIFICALLY SET FORTH IN THIS AGREEMENT, SELLER MAKES NO
WARRANTY, EXPRESS OR IMPLIED, WHETHER OF MERCHANTABILITY, SUITABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY AS TO THE PURCHASED ASSETS, OR ANY
PART THEREOF, OR AS TO THE CONDITION OR WORKMANSHIP THEREOF, OR THE ABSENCE OF
ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD THAT THE
PURCHASED ASSETS ARE TO BE CONVEYED HEREUNDER “AS IS” AND “WHERE IS” ON THE
CLOSING DATE, AND IN THEIR THEN PRESENT CONDITION.  THE PURCHASER SHALL RELY UPON ITS OWN
EXAMINATION THEREOF.

7.21         Good Utility Practice.  Except as set forth on Schedule 7.21, the
Facility has been operated and maintained in accordance with Good Utility
Practice and applicable manufacturers’ operating manuals.

ARTICLE VIII

Warranties and Representations of the Purchaser

The Purchaser warrants and represents to the Seller as
follows:

8.01         Due Incorporation.  The Purchaser is an Ohio corporation duly
incorporated, validly existing and in good standing under the laws of the State
of its incorporation.

8.02         Authority.  The Purchaser has the corporate right and
power to enter into, and perform its obligations under this Agreement, and has
taken all requisite corporate action to authorize its execution and delivery of
this Agreement and the performance of its obligations under this Agreement; and
this Agreement has been duly executed and delivered by the Purchaser and each
is binding upon, and enforceable against, the Purchaser in accordance with its
terms; except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement of
creditors’ rights generally and by general principles of equity (whether
applied in a proceeding at law or in equity).

 30
 

 

8.03         No Violations.  (a) 
The execution, delivery or performance of this Agreement by the
Purchaser does not and will not, after the giving of notice, or the lapse of
time, or otherwise: conflict with, result in a breach of, or constitute a
default under, the Certificate of Incorporation or By-laws of the
Purchaser, or to Purchaser’s knowledge any Law or any material contract,
agreement, commitment or plan to which the Purchaser is a party.

(b)           The execution and delivery by
Purchaser and its Affiliates of this Agreement does not, and the performance by
Purchaser and its Affiliates of its obligations hereunder will not, require
Purchaser to obtain any consent, approval, authorization or other action of, or
make any filing with or give any notice to, any Governmental Authority, except
(a) as disclosed in Schedule 8.03, (b) pursuant to the applicable requirements
of the HSR Act, (c) where failure to obtain such consents, approvals,
authorizations or actions, make such filings or give such notices would not
impair the Purchaser’s ability to perform its obligations hereunder in any
material respect and (d) as may be necessary as a result of any facts or
circumstances relating solely to Seller.

8.04         Brokers.  Neither this Agreement nor the purchase of
the Purchased Assets or any other transaction contemplated by this Agreement
was induced or procured through any Person, acting on behalf of, or
representing, the Purchaser or any of its Affiliates as broker, finder,
investment banker, financial advisor or in any similar capacity.

8.05         Litigation.  There are no actions, claims or proceedings
pending against Purchaser or any of its assets or properties at law or in
equity, before or by any Governmental Authority, or by any other Person, which,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on Purchaser’s ability to consummate the transactions
contemplated hereby.

8.06         Financing.  Purchaser has all the funds necessary to
consummate the transactions contemplated by this Agreement.

ARTICLE IX

Conditions to Closing Applicable to Purchaser

The obligations of Purchaser hereunder (including the
obligation of Purchaser to close the transactions herein contemplated) are
subject to the following conditions precedent:

9.01         No Termination.  Neither Purchaser nor Seller shall have
terminated this Agreement pursuant to Section 11.01 hereof.

9.02         Bring-Down of Seller Warranties.  The warranties and representations made by
the Seller herein to Purchaser shall have been true and correct in all material
respects on

 31
 

 

the date hereof and shall be true and correct
in all material respects (except that, in each such case, representations and
warranties containing a materiality standard shall have been and shall be true
and correct within the materiality standard set forth therein) on and as of the
Closing Date with the same effect as if such warranties and representations had
been made on and as of the Closing Date and the Seller shall have performed and
complied with, in all material respects, all agreements, covenants and
conditions on its part required to be performed or complied with in all
material respects on or prior to the Closing Date; and at the Closing,
Purchaser shall have received a certificate executed by the Board of Directors
of Seller to the foregoing effect.

9.03         No Material Adverse Effect.  Between the date hereof and the Effective
Time, there shall have been no Material Adverse Effect.

9.04         Pending Actions.  No investigation, action, suit or proceeding
by any Governmental Authority and no action, suit or proceeding by any other
Person, shall be pending on the Closing Date which challenges this Agreement
and seeks to modify, prohibit or enjoin the consummation of the transactions
contemplated hereby.

9.05         Consents and Approvals.  All Seller Governmental Approvals and
Purchaser Governmental Approvals and other consents, approvals or
authorizations of other Persons set forth in Schedule 9.05 shall have been
obtained; provided, however, that if Purchaser’s breach of its obligations
hereunder caused the failure to obtain any such consent, approval, or
authorization Purchaser shall be deemed to have waived this condition to the
extent of such failure.

9.06         HSR Act.  The waiting period applicable to the
consummation of the transactions contemplated hereunder required pursuant to
the provisions of the HSR Act shall have expired.

9.07         All Necessary Documents.  All proceedings to be taken in connection
with the consummation of the transactions contemplated by this Agreement and
all documents incident thereto, shall be reasonably satisfactory in form and
substance to Purchaser and its counsel, and Purchaser shall have received
copies of such documents as Purchaser and its counsel may reasonably request in
connection with said transactions, including those documents to be delivered
pursuant to Section 3.02 hereof.

9.08         Title Policy.  At the Closing, the Seller shall have
delivered to Purchaser the Title Policies dated the Closing Date with extended
coverage guaranteeing over the standard exceptions to title customarily
contained in such policies, survey exceptions, parties in possession exception,
and mechanic’s and materialman’s lien exceptions, issued by the title insurance
company which issued such commitments insuring, as of the Closing Date, the fee
simple or other applicable estate of the Purchaser in the Properties in the
amount set forth in Schedule 6.01, subject only to the Permitted Real Estate
Exceptions.

 32

 

9.09         Estoppel Certificates.  Seller shall have delivered to Purchaser an
estoppel certificate executed by the lessor with respect to each Property that
is not a Real Property certifying that the lease with respect to such Property
is in full force and effect, that the lessee thereunder is not in default under
such lease, and such other statements as Purchaser may reasonably request.

Purchaser shall have the right to waive any of the
foregoing conditions precedent, except for the condition set forth in Section
9.06 hereof.

ARTICLE X

Conditions to Closing Applicable to Seller

The obligations of Seller hereunder (including the
obligation of Seller to close the transactions herein contemplated) are subject
to the following conditions precedent:

10.01       No Termination.  Neither Purchaser nor Seller shall have
terminated this Agreement pursuant to Section 11.01 hereof.

10.02       Bring-Down of Purchaser Warranties.  All warranties and representations made by
Purchaser herein to the Seller shall have been true and correct in all material
respects on the date hereof and shall be true and correct in all material
respects (except that, in each such case, representations and warranties
containing a materiality standard shall have been and shall be true and correct
within the materiality standard set forth therein) on and as of the Closing
Date with the same effect as if such warranties and representations had been
made on and as of the Closing Date, and Purchaser shall have performed and
complied in all material respects (except for the payment of money which shall
be absolute) with all agreements, covenants and conditions on its part required
to be performed or complied with on or prior to the Closing Date, and at the
Closing, Seller shall have received a certificate executed by the President or
any Vice President of Purchaser to the foregoing effect.

10.03       Pending Actions.  No investigation, action, suit or proceeding
by any Governmental Authority and no action, suit or proceeding by any other
Person shall be pending on the Closing Date which challenges this Agreement and
seeks to modify, prohibit or enjoin the consummation of the transactions
contemplated hereby.

10.04       Consents and Approvals.  All Seller Governmental Approvals and
Purchaser Governmental Approvals and other consents, approvals or
authorizations of other Persons set forth in Schedule 10.04 shall have been
obtained; provided, however, that if Seller’s breach of its obligations
hereunder caused the failure to obtain any such consent, approval, or
authorization Seller shall be deemed to have waived this condition to the
extent of such failure.

10.05       HSR Act.  The waiting period applicable to the
consummation of the

 33
 

 

transactions contemplated hereunder required
pursuant to the HSR Act shall have expired.

10.06       All Necessary Documents.  All proceedings to be taken in connection
with the consummation of the transactions contemplated by this Agreement, and
all documents incident thereto, shall be reasonably satisfactory in form and
substance to Seller and its counsel, and Seller and its counsel shall have
received copies of such documents as it and its counsel may reasonably request
in connection with said transactions, including those documents to be delivered
pursuant to Section 3.03 hereof.

Seller shall have the right to waive any of the
foregoing conditions precedent, except for the condition set forth in Section
10.05 hereof.

ARTICLE XI

Termination

11.01       Termination.  This Agreement may be terminated at any time
prior to the Closing as follows, and in no other manner:

(a)           by mutual written consent of
Purchaser and Seller;

(b)           by Purchaser or by Seller, if at or
before the Closing any condition set forth herein for the benefit of the
Purchaser or Seller, respectively, shall not have been timely met in all
material respects or cannot be timely met in all material respects; provided,
the party seeking to terminate is not in material breach of, or material
default under, this Agreement;

(c)           by Purchaser or by the Seller if the
Closing of the transactions contemplated by this Agreement shall not have
occurred on or before June 30, 2007, or such later date as may have been agreed
upon in writing by the parties hereto; provided, the party seeking to terminate
is not in material breach of, or material default under, this Agreement;

(d)           by Purchaser as provided in Section
6.01(c); or

(e)           by Purchaser or by Seller if any
representation or warranty made herein for the benefit of Purchaser or Seller,
respectively, or in any certificate, schedule or documents furnished to
Purchaser or Seller, respectively, pursuant to this Agreement is untrue in any
material respect (except that, in each such case, representations and
warranties containing a materiality standard shall have been and be true and
correct within the materiality standard set forth therein), or Purchaser or
Seller, respectively, shall have defaulted in any material respect in the
performance of any material obligation under this Agreement.

11.02       Effect of Termination. 
If a party terminates this Agreement in accordance with Section 11.01,
such termination will be without liability to such party or to any Affiliate,

 34
 

 

member, shareholder, partner, director, manager,
officer, employee, agent, consultant, attorney, or other representative of such
party.  Upon a termination of this Agreement,
the obligations of the parties hereunder shall be of no further force or
effect, provided that:

(a)           the obligations of the parties under Article XII, Article
XIII,  15.01, 15.02 and 15.13 and under
shall survive such termination; and

(b)           such termination shall be without prejudice to the rights
of the parties to any payments due under this Agreement existing at the time of
termination; any remedies which either party may then have hereunder or at law;
and either party’s right to obtain performance of any obligations provided for
in this Agreement which survive termination.

ARTICLE XII

Indemnification

12.01       Seller Indemnification.  The Seller agrees to indemnify, defend and
hold the Purchaser and its successors and permitted assigns, harmless against
any loss, damage or expense (including reasonable attorneys’ fees), which
arises out of or is in respect of (a) any inaccuracy or misrepresentation in or
breach of any of the warranties, representations, covenants or agreements made
by the Seller in this Agreement, or any other certificate, document, instrument
or affidavit furnished by the Seller in accordance with the provisions of this
Agreement, (b) any and all Non-Assumed Liabilities, (c) any failure of Seller
to notify Purchaser under Section 5.08(g) and (d) fraud or intentional
misconduct on the part of Seller or any of its Affiliates in connection with
this Agreement or the transactions contemplated hereby.

12.02       Purchaser Indemnification.  The Purchaser agrees to indemnify, defend and
hold the Seller harmless against any loss, damage or expense (including
reasonable attorneys’ fees), which arises out of or is in respect of (a) any
inaccuracy or misrepresentation in or breach of any of the warranties,
representations, covenants or agreements made by the Purchaser in this
Agreement or in any certificate, document, instrument or affidavit furnished by
the Purchaser in accordance with the provisions of this Agreement, (b) any and
all Assumed Liabilities, and (c) fraud or intentional misconduct on the part of
Purchaser or any of its Affiliates in connection with this Agreement or the
transactions contemplated hereby.

12.03       Limitation.  The parties’ rights to indemnification
pursuant to Article XII of this Agreement is subject to the following
limitations:

(a)           The Indemnified Party shall not be
entitled to assert any right of indemnification pursuant to this Article XII
for any loss, damage or expense suffered by such party after the second
anniversary date of the Closing Date, except (i) that indemnification
claims arising from Section 7.16 may be asserted at any time before the earlier
of (x) the

 35
 

 

expiration of the statute of
limitations applicable to the underlying claim, charge, or cause of action, or
(y) the tenth anniversary of the Closing Date; (ii) that indemnification claims
arising from Section 7.14 may be asserted at any time before the expiration of
the statute of limitations applicable to the underlying claim, charge, or cause
of action; (iii) that indemnification claims arising from Sections 7.04, 7.12,
7.15 or 7.17 may be asserted at any time before the third anniversary of the
Closing Date; (vi) that indemnification claims (A) arising from Section 13.01
or 7.08, (B) for breach of Seller’s obligations with respect to Non-Assumed
Liabilities, (C) for breach of Purchaser’s obligations with respect to Assumed
Liabilities or (D) for fraud or intentional misconduct shall not be limited by
this Agreement;  and (iv) that if notice
of any claim shall have been given before the end of the applicable period
under this paragraph (a), the Indemnified Party shall continue to have the
right to be indemnified with respect to such claim.

(b)           No indemnification claim (other than
a claim for breach of Seller’s obligations with respect to Non-Assumed
Liabilities or fraud or intentional misconduct or Purchaser’s obligations with
respect to Assumed Liabilities or fraud or intentional misconduct) may be made
against a party for indemnification pursuant to this Article XII unless the
aggregate of all indemnifiable losses, damages and expenses with respect to
this Article XII shall exceed $250,000 (“Threshold”), and then the
Indemnifying Party shall only be required to pay or be liable for the excess
over the Threshold.  For purposes of
applying this paragraph (b) in determining the losses, damages and expenses
resulting from any breach of a representation or warranty that contains a
materiality standard, such representation or warranty shall be read as if it
did not contain such materiality standard.

(c)           The Indemnifying Party’s maximum
liability to the other party pursuant to this Agreement other than
indemnification claims based on fraud or intentional misconduct shall be thirty
percent (30%) of the Purchase Price.

(d)           For the purposes of this Article XII,
in computing such aggregate amounts of claims, the amount of each claim shall
be deemed to be an amount net of any insurance proceeds and any indemnity,
contribution or other similar payment recoverable by the Indemnified Party or
any Affiliate from any third party with respect thereto.

(e)           Each party hereby acknowledges and
agrees that its sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement and the Assumption Agreement
shall be pursuant to the indemnification provisions set forth in this Article
XII.  In furtherance of the foregoing,
each party hereby waives, to the fullest extent permitted under applicable Law,
any and all rights, claims and causes of action it may have against the other
party arising under or based upon any Law (including any such rights, claims or
causes of action arising under or based upon common law or otherwise) or
Environmental Laws, including the Resource Conservation and Recovery Act and
the Comprehensive Environmental Response, Compensation and Liability Act.

(f)            Except as set forth in this
Agreement or any other certificate, document,

 36
 

 

instrument or affidavit
furnished by a party in accordance with the provisions of this Agreement, such
party is not making any representation, warranty, covenant or agreement with
respect to the matters contained herein. 
Anything herein to the contrary notwithstanding, no breach of any
representation, warranty, covenant or agreement contained herein or any other
certificate, document, instrument or affidavit furnished by a party in
accordance with the provisions of this Agreement shall give rise to any right
on the part of the other party, after the consummation of the purchase and sale
of the Facility and the Purchased Assets contemplated hereby, to rescind this
Agreement or any of the transactions contemplated hereby.

(g)           Seller shall have no liability under
any provision of this Agreement for any liabilities and damages to the extent
that such liabilities and damages relate to actions taken or not taken by Purchaser
or its Affiliates after the Closing Date. 
In no event shall either party be liable to the other party for
consequential or punitive damages.  Each
party shall take all reasonable steps to mitigate all such liabilities and
damages upon and after becoming aware of any event which could reasonably be
expected to give rise to such losses, damages and expenses.

12.04       Indemnification Notice.  Promptly upon obtaining knowledge of any
claim, event, facts or demand which gives rise to, or could reasonably be
expected to give rise to, a claim for indemnification hereunder (including in
the case of a claim pursuant to Section 12.01 or 12.02 any claim which is not
payable due to the limitations set forth in Section 12.03(b) hereof), any party
seeking indemnification under this Article XII (an “Indemnified Party”)
shall give written notice of such claim or demand (“Notice of Claim”) to
the party from which indemnification is sought (an “Indemnifying Party”),
setting forth the amount of the claim. 
The Indemnified Party shall furnish to the Indemnifying Party, in
reasonable detail, such information as it may have with respect to such
indemnification claim (including copies of any summons, complaint or other
pleading which may have been served on it and any written claim, demand,
invoice, billing or other document evidencing or asserting the same).  No failure or delay by the Indemnified Party
in the performance of the foregoing shall reduce or otherwise affect the
obligation of any Indemnifying Party to indemnify, defend and hold the
Indemnified Party harmless, except to the extent that such failure or delay
shall have adversely affected the Indemnifying Party’s ability to defend
against, settle or satisfy any loss, damage or expense for which the
Indemnified Party is entitled to indemnification hereunder.

12.05       Indemnification Procedure.  (a) If the claim or demand set forth in the
Notice of Claim given by the Indemnified Party pursuant to Section 12.04 of
this Agreement is a claim or demand asserted by a third party, the Indemnifying
Party shall have fifteen (15) days after the Date of the Notice of Claim to
notify the Indemnified Party in writing of its election to defend such third
party claim or demand on behalf of the Indemnified Party.  If the Indemnifying Party elects to defend such third party
claim or demand, the Indemnified Party shall at the expense of the Indemnifying
Party make available to the Indemnifying Party and its agents and
representatives all records and other materials which are reasonably required
in the defense of such third party claim or demand and shall otherwise
cooperate with, and assist the Indemnifying Party in the defense of, such third
party claim or demand, and so long as the Indemnifying Party

 37
 

 

is defending such third party claim or demand
in good faith, the Indemnified Party shall not pay, settle or compromise such
third party claim or demand.  If the
Indemnifying Party elects to defend such third party claim or demand, the
Indemnified Party shall have the right to participate in the defense of such
third party claim or demand, at its own expense.  If the Indemnifying Party does not elect to
defend such third party claim or demand, or does not defend such third party
claim in good faith, the Indemnified Party shall have the right, in addition to
any other right or remedy it may have hereunder, at the Indemnifying Party’s
expense, to defend such third party claim or demand; provided, however, that
(i) the Indemnified Party shall not have any obligation to participate in
the defense of, or defend, any such third party claim or demand; and (ii) the
Indemnified Party’s defense of or its participation in the defense of any such
third party claim or demand shall not in any way diminish or lessen the
obligations of the Indemnifying Party under the agreements of indemnification
set forth in this Article XII.  Without
the Indemnified Party’s written consent, the Indemnifying Party shall not enter
into any settlement of a third party claim unless (i) there is no finding or
admission of any violation of legal requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
Indemnified Party or its Affiliates; (ii) the settlement includes a complete
and unconditional release of the Indemnified Party with respect to the third
party claim; and (iii) the sole relief provided under the settlement is
monetary damages that are paid in full by the Indemnifying Party.

(b)           Except for third party claims being
defended in good faith, the Indemnifying Party shall satisfy its obligations
hereunder in cash within thirty (30) days after the Date of Notice of Claim.

(c)           The term “Date of the Notice of
Claim” as used in this Article XII shall mean the date the Notice of Claim
is deemed delivered pursuant to Section 15.13(c) hereof.

12.06       Effect of Indemnity Payments.  The parties agree to treat all payments made
under the indemnity provisions of Article XII of this Agreement as adjustments
to the Purchase Price for Tax purposes and that such agreed treatment shall
govern for purposes hereof.

ARTICLE XIII

Confidentiality

13.01       Confidentiality of Materials.  The parties hereto agree with respect to all
technical, commercial and other information that is furnished or disclosed by
another party, including information regarding such party’s (and its
subsidiaries’ and affiliates’) organization, personnel, business activities,
customers, policies, assets, finances, costs, sales, revenues, technology,
rights, obligations, liabilities and strategies (“Information”), that
(a) such Information is confidential and/or proprietary to the
furnishing/disclosing party and entitled to and shall receive treatment as such
by the receiving party; (b) the receiving party will hold in confidence
and not disclose nor use (except in respect of the transactions contemplated by
this

 38
 

 

Agreement) any such Information, treating
such Information with the same degree of care and confidentiality as it accords
its own confidential and proprietary Information; provided, however, that the
receiving party shall not have any restrictive obligation with respect to any
Information which (i) was prior to the date of its disclosure contained in a
printed publication available to the general public, (ii) is or becomes
publicly known through no wrongful act or omission of the receiving party, or
(iii) is known by the receiving party without any proprietary restrictions by
the furnishing/disclosing party at the time of receipt of such Information; and
(c) all such Information furnished to either party by the other, unless
otherwise specified in writing, shall remain the property of the
furnishing/disclosing party and, in the event this Agreement is terminated,
shall be returned to it, together with any and all copies made thereof, upon
request for such return by it (except for documents submitted to a governmental
agency with the consent of the furnishing/disclosing party or upon subpoena and
which cannot be retrieved with reasonable effort) and in the case of (i) oral
information furnished to any party by the other which shall have been reduced
to writing by the receiving party and (ii) all internal documents of any party
describing, analyzing or otherwise containing Information furnished by the
other party, all such writings and documents shall be destroyed, upon request,
in the event this Agreement is terminated, and each party shall confirm in
writing to the other compliance with any such request.  The recipient of confidential Information may
disclose such confidential Information if required pursuant to a subpoena by a
court of competent jurisdiction or by order of a governmental agency or other
applicable Law, so long as the party required to disclose the confidential
Information provides the other party prior notice (unless such notice is
prohibited) of such requirement to permit such party time to seek appropriate
relief against such disclosure. 
Notwithstanding the foregoing. 
Seller’s confidential Information that relates exclusively to the
Purchased Assets or is included in the Purchased Assets shall, after closing,
be treated as Purchaser’s confidential Information to be protected as provided
in this Section from use or disclosure by Seller.

13.02       Remedy.  Each party hereto acknowledges that the
remedy at law for any breach by either party of its obligations under Section
13.01 of this Agreement is inadequate and that the other party shall be
entitled to equitable remedies, including an injunction, in the event of breach
by any other party.

ARTICLE XIV

Certain Other Understandings

14.01       Post Closing Access to Records and
Records Retention

The Purchaser
agrees for a period extending five (5) years after the Closing Date not to
destroy or otherwise dispose of any records relating to the period prior to its
acquisition of the Purchased Assets. 
After such five (5) year period, the Purchaser may destroy or otherwise
dispose of such records if the Purchaser shall offer in writing to surrender
such records to the Seller and the Seller shall fail to agree in writing to
take possession thereof during the thirty (30)

 39
 

 

day period after such offer is made.

14.02       Consents Not Obtained at Closing.  Each of the Seller and the Purchaser agree to
attempt diligently to obtain any necessary consents which may be required to
effect the assignment to the Purchaser of the contract obligations transferred
under this Agreement and each party will diligently cooperate with the other in
obtaining the same, and will take such steps as reasonably requested by such
party with respect thereto.  In such
cases where such consents have not been obtained by the Closing Date, this
Agreement, to the extent permitted by law and if elected by Buyer, shall
constitute an equitable assignment by the Seller to the Purchaser of all of the
Seller’s rights, benefits, title and interest in and to the assigned contracts
and commitments, and the Purchaser shall be deemed to be the Seller’s agent for
the purpose of completing, fulfilling and discharging all of the Seller’s
rights and liabilities arising after the Closing Date under such assigned
contracts and commitments, and the Seller shall take all necessary steps and
actions to provide the Purchaser with the benefits of such contracts and
commitments.

14.03       Avoidance of Double Withholding Taxes.  The Purchaser and the Seller hereby
acknowledge that the standard procedure described in Section 4 of the Revenue
Procedure 2004-53 as promulgated by the IRS with respect to wage reporting, and
F.I.C.A. withholding and similar tax and other collections is applicable to the
Seller’s employees who become employees of Purchaser or its Affiliates.

14.04       Use/Removal of Trademarks, Etc..  Purchaser acknowledges and agrees that it has
and, upon consummation of the transactions contemplated hereby shall have, no
right, title, interest, license, or any other right whatsoever to use the trade
names and trademarks of Seller or its Affiliates, including references to “DPL
Energy, LLC” and derivatives thereof, including all logos (“DPL Marks”).   Purchaser shall promptly after the Closing
Date but in no event later than sixty (60) days after the Closing Date,  return or destroy all Purchased Assets that
are not necessary to the operation or maintenance of the Facility that contain
any DPL Marks that are not removable and remove or permanently cover any DPL
Marks from the Purchased Assets that are removable.  Purchaser agrees never to challenge Seller’s
(or its Affiliates’) ownership of the DPL Marks or any application for
registration thereof or any registration thereof or any rights of Seller or its
Affiliates therein as a result, directly or indirectly, of its ownership of the
Purchased Assets.   Purchaser will not
conduct any business or offer any goods or services under any DPL Marks.  Purchaser will not send, or cause to be sent,
any correspondence or other materials to any Person on any stationery that
contains any DPL Marks or otherwise operate the Facility in any manner which
would or might reasonably be expected to confuse any person into believing that
Purchaser has any right, title, interest, or license to use any DPL Marks.

14.05       Supplemental Disclosure Schedule.  Seller may supplement the Disclosure
Schedules delivered pursuant hereto (as so supplemented, the “Supplemental
Disclosure Schedules”) from time to time on or prior to the Closing
Date.  Such Supplemental Disclosure

 40
 

 

Schedules shall not be considered in
determining whether the condition set forth in Section 9.02 has been met; provided,
however, that in determining whether there is a breach of any
representation, warranty, covenant or agreement of Seller contained in this
Agreement for purposes of the indemnification to be provided by Seller pursuant
to Section 12.01 hereof, such representation, warranty, covenant or agreement
shall be qualified by the Supplemental Disclosure Schedules.

ARTICLE XV

Miscellaneous

15.01       Cost and Expenses.  The Purchaser will pay its own costs and
expenses (including attorneys’ fees, accountants’ fees and other professional
fees and expenses) in connection with the negotiation, preparation, execution
and delivery of this Agreement and the consummation of the purchase of the
Purchased Assets and the other transactions contemplated by this Agreement
(except as otherwise specifically provided for herein); and the Seller will pay
its own costs and expenses (including attorneys’ fees, accountants’ fees and
other professional fees and expenses) in connection with the negotiation,
preparation, execution and delivery of this Agreement and the consummation of
the sale of the Purchased Assets and the other transactions contemplated by
this Agreement (except as otherwise specifically provided for herein).

15.02       Entire Agreement.  The Disclosure Schedules and the Exhibits
referenced in this Agreement are incorporated into this Agreement and together
contain the entire agreement between the parties hereto with respect to the
transactions contemplated hereunder, and supersede all negotiations,
representations, warranties, commitments, offers, contracts and writings prior
to the date hereof.  No waiver and no
modification or amendment of any provision of this Agreement shall be effective
unless specifically made in writing and duly signed by the party to be bound
thereby.

15.03       Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute one and the same instrument.

15.04       Assignment, Successors and Assigns.  The respective rights and obligations of the
parties hereto shall not be assignable without the prior written consent of the
other parties; provided, however, that the Purchaser may assign all or part of
its rights under this Agreement and delegate all or part of its obligations
under this Agreement to one or more of its Affiliates, in which event all the
rights and powers of the Purchaser and remedies available to it under this
Agreement shall extend to and be enforceable by each such Affiliate.  Any such assignment and delegation shall not
release the Purchaser from its obligations under this Agreement, and further the
Purchaser guarantees to the Seller the performance by each such Affiliate of
its obligations under this Agreement.  In
the event of any such assignment and

 41
 

 

delegation the term “Purchaser” as
used in this Agreement shall be deemed to refer to each such Affiliate of the
Purchaser where reference is made to actions or to be taken with respect to the
acquisition of the Facility or Purchased Assets, and shall be deemed to include
both the Purchaser and each such Affiliate where appropriate.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and permitted
assigns.

15.05       Savings Clause.  If any provision hereof shall be held invalid
or unenforceable by any court of competent jurisdiction or as a result of
future legislative action, such holding or action shall be strictly construed
and shall not affect the validity or effect of any other provision hereof.

15.06       Headings.  The captions of the various Articles and
Sections of this Agreement have been inserted only for convenience of reference
and shall not be deemed to modify, explain, enlarge or restrict any of the
provisions of this Agreement.

15.07       Risk of Loss.  Risk of loss, damage or destruction to the
Purchased Assets shall be upon the Seller until the Closing, and shall
thereafter be upon the Purchaser.

15.08       Governing Law.  The validity, interpretation and effect of
this Agreement shall be governed exclusively by the laws of the State of New
York, including Sections 5-1401 and 5-1402 of the New York General Obligations
Law.

15.09       Dispute Resolution.

(a)           If any issue, dispute, claim or
controversy should arise out of or relate to this Agreement involving the
parties hereto (“Dispute”) and the parties hereto are unable to resolve
the Dispute on or before the thirtieth (30th) day following written notice of
such Dispute by a party to the other party, which notice describes in
reasonable detail the nature of the Dispute and the facts and circumstances
relating thereto, the Purchaser shall nominate a member of its senior
management team and the Seller shall nominate a member of its senior management
team for the purpose of a meeting between such representatives at a mutually
agreeable time and place to resolve such Dispute.  Such meeting shall take place on or before
forty-five (45) days following the date of the notice of the Dispute by a party
to the other party.  If the Dispute has
not been resolved within sixty (60) days following the date of the notice of
the Dispute, any party may commence legal proceedings or submit such Dispute to
binding arbitration under this Section 15.09.

(b)           Upon demand of any party hereto made
before or within thirty (30) days after institution of any judicial proceeding
relating to a Dispute, any Dispute shall be resolved by binding arbitration as
provided herein.  Institution of a
judicial proceeding by a party does not waive the right of that party to demand
arbitration hereunder.  A party may
demand and commence arbitration by delivering to the other party an arbitration
notice (“Arbitration Notice”) that includes a general description of the
Dispute and a reference to the fact that such Dispute is

 42
 

 

being referred to arbitration under this
Section 15.09.

(c)           Promptly following the delivery of an
Arbitration Notice, the parties hereto shall endeavor to agree upon a panel of
three arbitrators.  If on or before
thirty (30) days following the delivery of an Arbitration Notice to the other
party they have not so agreed, then the Purchaser, by notice to the Seller, may
designate one arbitrator (who shall not be an agent or employee of the
Purchaser or any of its Affiliates), and the Seller, by notice to the
Purchaser, may designate one arbitrator (who shall not be an agent or employee
of the Seller or any of its Affiliates). 
The two arbitrators designated as provided in the immediately preceding
sentence shall endeavor to designate promptly a third arbitrator.  If either the Purchaser or the Seller have
not designated an initial arbitrator on or before thirty (30) days following
the delivery of an Arbitration Notice to the other party, or if the two
initially designated arbitrators have not designated a third arbitrator within
fifteen (15) days of the date for designation of the two arbitrators initially
designated, any party may request the American Arbitration Association to designate
the remaining arbitrator(s) pursuant to its Commercial Arbitration Rules (“AAA
Rules”).  If any arbitrator resigns,
becomes incapacitated, or otherwise refuses or fails to serve or to continue to
serve as an arbitrator, the party entitled to designate that arbitrator shall
designate a successor.

(d)           The arbitration shall be conducted in
the English language in Cleveland, Ohio. 
The arbitrators shall set the date, the time, and the place of hearing,
which must commence on or before ninety (90) days following the designation of
the third arbitrator.  The arbitration
shall be conducted under the AAA Rules not inconsistent with the provisions of
the Agreement.  In connection with any
such arbitration, the arbitrators shall construe the Agreement in a manner
consistent with the choice of law provisions set forth herein.  The arbitrators shall render their decision
on or before ninety (90) days following the commencement of the hearing.  The arbitrators’ decision shall be set forth
in a writing that includes an explanation of the reason for such decision and
an allocation of the fees and expenses of the arbitrators to the parties based
on the relative extent to which they do not prevail on their positions.  Each party against which the decision
assesses a monetary obligation shall pay that obligation on or before thirty
(30) days following the announcement of the decision or such other date as the
decision may provide.  The decisions of
the arbitrators are final and binding on all parties hereto and are not subject
to appeal.  The decisions of the
arbitrators may be enforced in any court of competent jurisdiction, and any
party may authorize any such court to enter judgment on the arbitrators’
decisions.  Pending the outcome of any
arbitration conducted pursuant to this Section 15.09, the parties shall be
obligated to continue to perform their respective obligations hereunder.  Except as provided in any arbitrators’
decision rendered in accordance with this Section 15.09, each of the parties
hereby undertakes to carry out without delay the provisions of any arbitral
award or decision.  Except as provided in
this Section 15.09, each party shall bear its own legal fees and costs in
connection with any Dispute.

(e)           Notwithstanding the binding
arbitration provisions in this Section 15.09, the parties hereto agree to
preserve, without diminution, the following remedies that the parties

 43
 

 

may employ or exercise freely, independently
or in connection with an arbitration proceeding or after an arbitration action
is brought.  Each party shall have the
right to proceed in any court of proper jurisdiction or by self-help to
exercise or prosecute the following remedies: 
(a) all rights to obtain possession of property; (b) all rights to
foreclose against any property or other security by exercising a power of sale
granted under the Agreement or under applicable Law or by a judicial
foreclosure and sale; (c) all rights of self-help including set-off and
peaceful possession of personal property; and (d) obtaining provisional or ancillary
remedies including injunctive relief, sequestration, garnishment, attachment,
appointment of a receiver and filing an involuntary bankruptcy proceeding.  Preservation of these remedies does not limit
the power of the arbitrators to grant similar remedies.

15.10       Press Releases.  Pending Closing, all notices to third parties
and all other publicity relating to the transactions contemplated by this
Agreement shall be jointly planned, coordinated, and agreed to by the Purchaser
and the Seller, except to the extent disclosures are required by Law or any listing agreement with the NYSE;
provided, however, that Seller on the one hand and Purchaser on the other hand
may confirm information previously made public in compliance with this
Agreement.

15.11       U.S. Dollars.  All amounts expressed in this Agreement and
all payments required by this Agreement are in United States dollars.

15.12       Survival.  All representations and warranties made by
any party in this Agreement shall be deemed made for the purpose of inducing
the other party to enter into this Agreement and shall survive the Closing,
subject to Section 12.03 hereof.

15.13       Notices.  (a) 
All notices, requests, demand and other communications under this
Agreement shall be in writing and delivered in person, or sent by facsimile or
sent by certified mail, postage prepaid, and properly addressed as follows:

To
The Seller:

DPL
Energy, LLC

1065
Woodman Drive

Dayton,
OH  45432

Fax:  (937) 259-7848

Attention:  Gary
G. Stephenson

With
Copy To:

Winston
& Strawn LLP

1700 K
Street, NW

Washington,
DC  20006

Fax:  (202) 282-5100

Attention: 
Gerald P. Farano

 44
 

 

To
The Purchaser:

Columbus
Southern Power Company

c/o
Commercial Operations

155
West Nationwide Blvd

Columbus,
OH  43215

Ph:  614-583-7430

Fax:  614-583-1601

Attention: 
Brian X. Tierney

With
Copy To:

AEP
Service Corporation

1
Riverside Plaza

Columbus,
OH  43215

Ph:  614-716-2929

Fax:  614-716-2014

Attention: 
General Counsel

(b)           Any party may from time to time
change its address for the purpose of notices to that party by a similar notice
specifying a new address, but no such change shall be deemed to have been given
until it is actually received by the party sought to be charged with its
contents.

(c)           All notices and other communications
required or permitted under this Agreement which are addressed as provided in
this Section 15.13 if delivered personally or air courier, shall be effective
upon delivery; if sent by facsimile, shall be delivered upon receipt of proof
of transmission and if delivered by mail, shall be effective upon deposit in
the United States mail, postage prepaid.

15.14       No Third Party Beneficiaries.  This Agreement is solely for the benefit of
Seller and its successors and permitted assigns with respect to the obligations
of Purchaser under this Agreement, and for the benefit of Purchaser and its
successors and permitted assigns with respect to the obligations of Seller
under this Agreement.  This Agreement
shall not be deemed to confer upon or give to any other third party any remedy,
claim, liability, reimbursement, cause of action or other right.

15.15       Jurisdiction and Consent to Service.  Subject to the provisions of Section 15.09,
each of the Seller and the Purchaser (i) agree that any suit, action or
proceeding arising out of or relating to this Agreement shall be brought solely
in the state or federal courts of the State of Ohio; (ii) consents to the
exclusive jurisdiction of each such court in any suit, action or proceeding
relating to or arising out of this Agreement; (iii) waives any objection that
it may have to the laying of venue in any such suit, action or proceeding in
any such court; and (iv) agrees that service of any court paper may be made in
such manner as may be provided under

 45
 

 

applicable laws or court rules governing
service of process.

15.16       WAIVER OF A JURY TRIAL.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

15.17       No Presumption Against Drafter.  Each of the parties hereto has jointly
participated in the negotiation and drafting of this Agreement.  In the event of an ambiguity or a question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by each of the parties hereto and no presumptions or burdens of
proof shall arise favoring any party by virtue of the authorship of any of the
provisions of this Agreement.

15.18       Parent Guaranty. 
The obligations of Seller under this Agreement and the documents to be
executed and delivered by Seller at Closing is guaranteed by DPL Inc. under the
Parent Guaranty.

 46
 

 

IN WITNESS WHEREOF, the parties hereto have executed
this Asset Purchase Agreement the day and year first above written.

	
   

  	
  DPL ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  COLUMBUS
  SOUTHERN POWER

  COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

 47
 

 

 

Exhibits and Schedules

	
  Exhibit

  	
   

  	
  Description

  
	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  Microwave Tower and Substation Easement Agreement

  
	
  B

  	
   

  	
  [Exhibit intentionally left blank]

  
	
  C

  	
   

  	
  Darby Site Diagram

  
	
  D

  	
   

  	
  Parent Guaranty

  
	
  E

  	
   

  	
  Assumption Agreement

  
	
  F

  	
   

  	
  Compensation Agreement

  
	
  G

  	
   

  	
  Enterprise Zone Agreement

  
	
  H

  	
   

  	
  Tax Incentive Donation Agreement

  

 

	
  Schedule

  	
   

  	
  Description

  
	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Excluded Inventory

  
	
  IA

  	
   

  	
  Spare Parts

  
	
  II

  	
   

  	
  Real Property

  
	
  III

  	
   

  	
  Real Property Leases

  
	
  IV

  	
   

  	
  Proprietary Items

  
	
  V

  	
   

  	
  Other Retained Assets

  
	
  2.05

  	
   

  	
  Allocation of Purchase Price

  
	
  5.02

  	
   

  	
  Pending Closing

  
	
  6.01

  	
   

  	
  Title Policy and Survey

  
	
  7.03

  	
   

  	
  Seller Governmental Approvals

  
	
  7.04

  	
   

  	
  Brokers

  
	
  7.06(a)

  	
   

  	
  Purchased Contracts

  
	
  7.06(b)

  	
   

  	
  Retained Contracts

  
	
  7.07

  	
   

  	
  Insurance

  
	
  7.09

  	
   

  	
  Title to Purchased Assets

  
	
  7.10

  	
   

  	
  Intellectual Property

  
	
  7.11

  	
   

  	
  Litigation

  
	
  7.12

  	
   

  	
  Compliance with Laws

  
	
  7.14

  	
   

  	
  Taxes

  
	
  7.15

  	
   

  	
  Licenses and Permits

  
	
  7.16

  	
   

  	
  Environmental Compliance

  
	
  8.03

  	
   

  	
  Purchaser Governmental Approvals

  
	
  9.05

  	
   

  	
  Other Consents as Conditions Precedent to Purchaser
  Obligations

  
	
  10.04

  	
   

  	
  Other Consents as Conditions Precedent to Seller
  Obligations

  

 

 48

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