Document:

Exhibit 10.21

CHANGE IN CONTROL
AGREEMENT

FOR

THERESA TREAT

This Agreement is entered into this 24th day of March,
2003, by and between Cutter & Buck Inc. (the “Company”) and THERESA
TREAT (“Executive”). Executive is an at-will employee of the Company. The
parties wish to provide Executive with severance benefits if Executive’s
employment is terminated in connection with a change in control of the Company.
The Company is willing to provide such benefits if Executive enters into the
Company’s form of Confidentiality and Non-Competition Agreement for executive
officers.

NOW, THEREFORE, in
consideration of the foregoing recitals and the covenants and conditions
contained herein, the parties hereby agree as follows:

1.                 CHANGE
IN CONTROL.

(a)    If, within
the period commencing 90 days prior to the date of occurrence (the “Event Date”)
of a Control Event and ending on the date eighteen (18) months after the Event
Date (the “Window”), the Company terminates Executive’s employment (other than
for Cause) or Executive resigns for Good Reason, the Company shall pay to
Executive the Severance Payment in immediately available funds. If the
termination occurs prior to the Control Event, the Severance Payment is due on
the twentieth business day following the Event Date; if the termination occurs
on or subsequent to the Event Date, the Severance Payment is due on the
twentieth business day following the date of termination (the “Termination Date”).

(b)    The
Severance Payment shall be equal to 150% of Executive’s annual base salary as
of the Termination Date. If the Termination Date occurs during the Window but
prior to the Control Event, the Severance Payment shall be reduced by the sum
of any severance payments previously received by Executive from the Company
(but not below zero).

(c)    Each of
the following shall constitute a “Control Event”:

(1)    the
acquisition of Common Stock of the Company (the “Common Stock”) by any “Person”
(as such term is defined in the Rights Agreement dated as of November 20,
1998 between the Company and Mellon Investor Services LLC (the “Rights Plan”),
together with all Affiliates and Associates (as such terms are defined in the
Rights Plan) of such Person, such that such Person becomes, after the date of
this Agreement, the Beneficial Owner (as defined in the Rights Plan) of
twenty-five percent (25%) or more of the shares of Common Stock then
outstanding, but shall not include any such acquisition by (i) the
Company, (ii) any subsidiary of the Company, (iii) any employee or
director of the Company as of the date hereof, or (iv) any employee
benefit plan of the Company or of any subsidiary of the Company or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such employee benefit plan; or

 

(2)    the consummation
of any merger, consolidation, reorganization or other transaction providing for
the conversion or exchange of twenty-five percent (25%) or more of the
outstanding shares of Common Stock into securities of any Person, or cash, or
property, or a combination of any of the foregoing; or

(3)    the
consummation of any sale or other disposition of all or substantially all of
the assets of the Company; or

(4)    individuals
who, as of the date hereof, constitute the Company’s Board of Directors (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Company’s
Board of Directors; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for the election by
the Company’s shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board of Directors.

(d)    Each of
the following shall constitute “Good Reason”, provided that it occurs during
the Window:

(1)    the
material diminution of Executive’s position, duties, responsibilities or status
with the Company or its successor, as compared with the position, duties,
responsibilities or status of Executive with the Company immediately prior to
the Event Date, except in connection with the termination of Executive for
Cause;

(2)    the
Company’s assignment of Executive on a substantially full-time basis to work at
a location where the distance between the new location and Executive’s
principal residence is at least 20 miles greater than the distance between the
former location and such residence; provided, however, that this paragraph
shall not apply to travel in the furtherance of the Company’s business to an
extent substantially consistent with Executive’s business travel obligations as
of the date hereof;

(3)    the
Company’s failure to obtain an assumption of the obligations of the Company to
perform this Agreement by any successor to the Company;

(4)    any
reduction in Executive’s base salary, or a material reduction in benefits
payable to Executive or failure of the Company to pay Executive any earned
salary, bonus or benefits except with the prior written consent of Executive;

(5)    the
exclusion or limitation of Executive from participating in some form of
variable compensation plan which provides the Executive the opportunity to
achieve a level of total compensation (base salary plus variable compensation)
consistent with what the Executive had the opportunity to earn at the Event
Date; or

 2
 

 

(6)    any demand
by any director or officer of the Company that Executive take any action or
refrain from taking any action where such action or inaction, as the case may
be, would violate any law, rule, regulation or other governmental
pronouncement, court order, decree or judgment, or breach any agreement or
fiduciary duty.

(e)    Each of
the following shall constitute “Cause”:

(1)    any
violation by Executive of any material obligation under this Agreement or the
attached Confidentiality and Non-Disclosure Agreement;

(2)    conviction
for commitment of a felony;

(3)    any
violation of law which has a material adverse effect on the Company;

(4)    habitual
abuse of alcohol or a controlled substance under circumstances that adversely
affect the Executive’s performance of his or her duties in any way;

(5)    theft or
embezzlement from the Company;

(6)    repeated
unexcused absence from work;

(7)    Disability
of Executive (as defined below); and

(8)    repeated
failure or refusal by Executive to carry out the reasonable directives, orders
or resolutions of the Company’s Board of Directors or any officer to whom he or
she reports.

(f)     “Disability”
shall mean any physical, mental or other health condition which renders the
Executive unable to perform the essential functions of his or her position with
or without reasonable accommodation. Any disagreement as to whether Executive
is disabled shall be resolved by a physician selected by the Company after an
examination of Executive. Executive hereby consents to such physical
examination and to the examination of all medical records of Executive
necessary, in the judgment of the examining physician, to make the
determination of disability.

(g)    Notwithstanding
any other provision of this Agreement to the contrary, in the event that any
severance or other payment, benefit or right payable or accruing to Executive
hereunder or under any of the Company’s benefit plans (the “Benefit Plans”)
would constitute a “parachute payment” as defined in Section 280G(b)(2) of
the Internal Revenue Code of 1986, as amended (the “Code”), then the total
amount of severance and other payments or benefits payable to Executive
hereunder and under the Benefit Plans which is deemed to constitute a “parachute
payment” shall not exceed and shall, if necessary, be reduced to an amount (the
“Revised Severance Payment”) equal to 2.99 times Executive’s “base amount” as
defined in Code Section 280G(b)(3). In the event of a disagreement between
the Company and Executive 

 3
 

 

as to whether the provisions of Code Section 280G
are applicable or the amount of the Revised Severance Payment, such
determination shall be made by the Company’s independent public accountants or,
if such firm is unable or unwilling to render such a determination, then by a
law firm mutually acceptable to Executive and the Company. All costs relating
to such determination shall be borne by the Company. The Company and the
Executive shall cooperate in good faith to make the determination required by
this Section 1(g) by mutual agreement not later than the later
of:  (i) the fifth day preceding the
date that the Severance Payment is or would be due or (ii) the earlier of (x) the
tenth day following the expiration of any period of accelerated vesting of
options to purchase the Company’s Common Stock provided by Section 5(n) of
the Benefit Plan or (y) the tenth day following the date of exercise by
Executive of his or her last remaining option which was exercisable solely due
to the application of Section 5(n) of the Benefit Plan. Pending the
final calculation of the Severance Payment or Revised Severance Payment, the
Company shall pay the amounts described under subsection (b) above at
the time and in the manner provided herein; provided that, pending such
determination, such payments shall be reduced by such amounts as the Company
estimates in good faith to be necessary to satisfy its tax (including excise
tax) withholding obligations and effect the reduction in the amount of the
Severance Payment, as contemplated by this subsection 1(g). The aggregate
amount of any compensation actually paid or provided to Executive under the
terms of this Agreement and in excess of the Revised Severance Payment shall be
deemed, to the extent of such excess, a loan to Executive payable upon demand
and bearing interest at the rate of 8% per annum.

2.      CONFIDENTIALLY
AND NON-COMPETITION AGREEMENT. In consideration of the obligations undertaken
by the Company pursuant to this Agreement, contemporaneously with the execution
of this Agreement, Executive and the Company shall enter into the form of
Confidentiality and Non-Competition Agreement attached hereto as EXHIBIT A
and each agreement shall be effective only if both agreements have been
executed.

3.      TERM OF
AGREEMENT. The Company’s obligations under Section 1 of this Agreement
shall expire with respect to Control Events occurring on or after the second
anniversary of the date of this Agreement (“Initial Expiration Date”), provided
however, that such obligations shall automatically extend for one (1) year
on each anniversary of the Initial Expiration Date unless terminated by the
Company effective as of the last day of the then current one (1) year
extension by written notice to that effect delivered to the Executive not fewer
than ninety (90) days prior to such anniversary of the Expiration Date.

4.      AT WILL
EMPLOYMENT. Unless and to the extent otherwise agreed by the Company and
Executive in a separate written employment agreement, Executive’s employment
shall be “at will”, with either party permitted to terminate the employment at
any time, with or without cause. No term of any employment agreement between
the Company and Executive shall be construed to conflict with, lessen or expand
the obligations of the parties under this Agreement.

5.      NOTICES. All
notices and other communications called for or required by this Agreement shall
be in writing and shall be addressed to the parties at their respective
addresses stated below or to such other address as a party may subsequently
specify by written notice and 

 4
 

 

shall be deemed to have been received (i) upon
delivery in person, (ii) five days after mailing it by U.S. certified or
registered mail, return receipt requested and postage prepaid, or (iii) two
days after depositing it with a commercial overnight carrier which provides
written verification of delivery:

	
  To the Company:

  	
   

  	
  701 N. 34th Street, Suite 400

  Seattle, Washington 98103

  Attention: Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  To Executive:

  	
   

  	
  Theresa Treat

  26811 SE Duthie Road

  Issaquah, Washington 98029

  

 

6.      WITHHOLDING.
Except as described in subsection 1(g) of this Agreement, all
payments due to and all benefits to be provided to Executive hereunder shall be
subject to reduction for any applicable withholding taxes, including excise
taxes.

7.      ASSIGNMENT.
Executive’s rights and duties hereunder are personal to Executive and are not
assignable to others, but Executive’s obligations hereunder will bind his
heirs, successors, and assigns. The Company may assign its rights under this
Agreement in connection with any merger or consolidation of the Company or any
sale of all or any portion of the Company’s assets (including, without
limitation, any division or product line), provided that any such successor or
assignee expressly assumes in writing the Company’s obligations hereunder.

8.      NO DUTY
TO MITIGATE. Executive shall not be required to mitigate the amount of any
payment made or benefit provided hereunder. The Company may offset any payment
due hereunder by the amount of damages to the Company resulting from any breach
of this Agreement by Executive.

9.      GENERAL. This
Agreement constitutes the exclusive agreement of the parties with respect to
the subject matter hereof and supersedes all prior agreements or understandings
of the parties. No waiver of or forbearance to enforce any right or provision
hereof shall be binding unless in writing and signed by the party to be bound,
and no such waiver or forbearance in any instance shall apply to any other
instance or to any other right or provision. This Agreement will be governed by
the local laws of the State of Washington without regard to its conflicts of
laws rules to the contrary. The parties hereby consent to the exclusive
jurisdiction and venue of the state and federal courts sitting in King County,
Washington for all matters and actions arising under this Agreement. The
prevailing party shall be entitled to reasonable attorneys’ fees and costs
incurred in connection with such litigation. No term hereof shall be construed
to limit or supersede any other right or remedy of the Company under applicable
law with respect to the protection of trade secrets or otherwise. If any
provision of this Agreement is held to be invalid or unenforceable to any
extent in any context, it shall nevertheless be enforced to the fullest extent
allowed by law in that and other contexts, and the validity and force of the
remainder of this Agreement shall not be affected thereby.

 5
 

 

IN WITNESS
WHEREOF, the parties have caused this Agreement to be signed as of the date
first above written.

	
  CUTTER & BUCK INC.

  	
   

  	
  EXECUTIVE: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ FRANCES M. CONLEY

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Frances M. Conley

  	
   

  	
  Signature

  	
  /s/ THERESA S. TREAT

  
	
  Its:

  	
   

  	
  Chief Executive Officer

  	
   

  	
  Printed Name:

  	
  Theresa S. Treat

  

 

 6
 

 

Exhibit A

CONFIDENTIALITY
AND NON-COMPETITION AGREEMENT

FOR

THERESA TREAT

This Agreement is entered into this _____ day of
March, 2003, by and between Cutter & Buck Inc. (the “Company”) and
THERESA TREAT (“Executive”). Executive is an at-will employee of the
Company. In consideration of entering into an agreement to provide Executive
with severance benefits if Executive’s employment is terminated in connection
with a change in control in the Company, Executive promises, on the terms set
forth herein, at all times to protect the Company’s proprietary information and
to not compete with the Company following termination of Executive’s employment
in connection with a change in control.

NOW, THEREFORE, in
consideration of the foregoing recitals and the covenants and conditions
contained herein, the parties hereby agree as follows:

1.      Non-competition
and Non-solicitation.

(a)    Executive
agrees that during the term of Executive’s employment with the Company and,
subject to receipt of the Severance Payment (as defined below) by the
Executive, until eighteen (18) months following the Termination Date (as
defined below), Executive will not in any capacity directly or indirectly
engage in, assist others to engage in or own a material interest in any
business or activity that is, or is preparing to be, in competition with the
Company with respect to any product or service sold or service provided by the
Company up to the time of termination of employment in any geographical area in
which at the time of termination of employment such product or service is sold
or is actively engaged in. For the purposes of this Agreement, the terms “Severance
Payment” and “Termination Date” shall have the meanings assigned to them in the
Change in Control Agreement (as defined in Section 6 below).

(b)    Executive
further agrees that during the period stated above, he/she will not directly or
indirectly call on, reveal the name of, or otherwise solicit, accept business
from or attempt to entice away from the Company any actual or identified
potential customer of the Company, nor will he/she assist others in doing so. Executive
further agrees that he/she will not, during the period stated above, encourage
or solicit any other employee or consultant of the Company to leave such
employment for any reason, nor will he/she assist others to do so.

(c)    Executive
acknowledges that the covenants in this Section 1 are necessary and
reasonable to protect the Company in the conduct of its business and that
compliance with such covenants will not prevent him/her from pursuing his/her
livelihood. However, should any court find that any provision of such covenants
is unreasonable, invalid or unenforceable, whether in period of time,
geographical area, or otherwise, then in that event the parties hereby agree
that such covenants shall be interpreted and enforced to the maximum extent
which the court deems reasonable.

 7
 

 

2.      Trade
Secrets and Confidential Information.

(a)    Executive
acknowledges that the Company’s business and future success depend upon the
preservation of the trade secrets and other confidential information of the
Company and its suppliers and customers (the “Secrets”). The Secrets may
include, without limitation, existing and to-be-developed or
acquired product designs, new product plans or ideas, market surveys, the
identities of past, present or potential customers, business and financial
information, pricing methods or data, terms of contracts with present or past
customers, proposals or bids, marketing plans, personnel information, procedural
and technical manuals and practices, servicing routines, and parts and supplier
lists proprietary to the Company or its customers or suppliers, and any other
sorts of items or information of the Company or its customers or suppliers
which are not generally known to the public at large. Executive agrees to
protect and to preserve as confidential during and after the term of his
employment all of the Secrets at any time known to Executive or in his/her
possession or control (whether wholly or partially developed by Executive or
provided to Executive, and whether embodied in a tangible medium or merely
remembered).

(b)    Executive
shall mark all items containing any of the Secrets with prominent
confidentiality notices acceptable to the Company. Executive shall neither use
nor allow any other person to use any of the Secrets in any way, except for the
benefit of the Company and as directed by Executive’s supervisor. All material
containing or disclosing any portion of the Secrets shall be and remain the
property of the Company, shall not be removed from the Company’s premises
without specific consent from an officer of the Company, and shall be returned
to the Company upon the termination of Executive’s employment or the earlier
request of Executive’s supervisor. At such time, Executive shall also assemble
all materials in his possession or control which contain any of the Secrets,
and promptly deliver such items to the Company.

3.      Intellectual
Properties.

(a)    All
ownership, copyright, patent, trade secrecy and other rights in all works,
designs, inventions, ideas, manuals, improvements, discoveries, processes,
customer lists or other properties (the “Intellectual Properties”) made or
conceived by Executive during the term of his/her employment by the Company
shall be the rights and property solely of the Company, whether developed
independently by Executive or jointly with others, and whether or not developed
or conceived during regular working hours or at the Company’s facilities, and
whether or not the Company uses, registers, or markets the same.

(b)    In
accordance with the Company’s policy and RCW 49.44.140 and RCW 49.44.150, this
Agreement (other than Subsection 3(c)) does not apply to, and Executive
has no obligation to assign to the Company, any invention for which no Company
trade secrets and no equipment, supplies, services, or facilities of the
Company were used and which was developed entirely on Executive’s own time,
unless: (i) the invention relates directly to the business of the Company,
(ii) the invention relates to actual or demonstrably anticipated research
or 

 8
 

 

development work of the Company, or (iii) the
invention results from any work performed by Executive for the Company.

(c)    If and to
the extent that Executive makes use, in the course of his employment, of any
items or Intellectual Properties previously developed by Executive or developed
by Executive outside of the scope of this Agreement, Executive hereby grants
the Company a nonexclusive, royalty-free, perpetual, irrevocable,
worldwide license (with right to sublicense) to make, use, sell, copy,
distribute, modify, and otherwise to practice and exploit any and all such
items and Intellectual Properties.

(d)    Executive
will assist the Company as reasonably requested during and after the term of his
employment to further evidence and perfect, and to enforce, the Company’s
rights in and ownership of the Intellectual Properties covered hereby,
including without limitation, the execution of additional instruments of
conveyance and assisting the Company with applications for patents or copyright
or other registrations.

4.      Authority
and Non-Infringement. Executive warrants that any and all items,
technology, and Intellectual Properties of any nature developed or provided by
Executive under this Agreement and in any way for or related to the Company
will be original to Executive and will not, as provided to the Company or when
used and exploited by the Company and its contractors and customers and its and
their successors and assigns, infringe in any respect on the rights or property
of Executive or any third party. Executive will not, without the prior written
approval of the Company, use any equipment, supplies, facilities, or
proprietary information of any other party. Executive warrants that Executive
is fully authorized to enter into employment with the Company and to perform
under this Agreement, without conflicting with any of Executive’s other
commitments, agreements, understandings or duties, whether to prior employers
or otherwise. Executive will indemnify the Company for all losses, claims, and
expenses (including reasonable attorneys’ fees) arising from any breach of by
him/her of this Agreement.

5.      Remedies.
The harm to the Company from any breach of Executive’s obligations under this
Agreement may be wholly or partially irreparable, and Executive agrees that
such obligations may be enforced by injunctive relief and other appropriate
remedies, as well as by damages. If any bond from the Company is required in
connection with such enforcement, the parties agree that a reasonable value of
such bond shall be $5,000. Any amounts received by Executive or by any other
through Executive in breach of this Agreement shall be held in constructive
trust for the benefit of the Company.

6.      Executive
Agreement. In consideration of the obligations undertaken by Executive
pursuant to this Agreement, contemporaneously with the execution of this
Agreement, Executive and the Company are entering into a Change in Control
Agreement (the “Change in Control Agreement”), and each agreement shall be
effective only if both agreements have been executed.

7.      At
Will Employment. Unless and to the extent otherwise agreed by the Company
and Executive in a separate written employment agreement, Executive’s
employment shall be “at 

 9
 

 

will”, with either party permitted to terminate the
employment at any time, with or without cause. No term of any employment
agreement between the Company and Executive shall be construed to conflict with
or lessen Executive’s obligations under this Agreement.

8.      Notices. All notices and other communications called for
or required by this Agreement shall be in writing and shall be addressed to the
parties at their respective addresses stated below or to such other address as
a party may subsequently specify by written notice and shall be deemed to have
been received (i) upon delivery in person, (ii) five days after
mailing it by U.S. certified or registered mail, return receipt requested and
postage prepaid, or (iii) two days after depositing it with a commercial
overnight carrier which provides written verification of delivery:

	
  To the Company:

  	
   

  	
  701 N. 34th Street, Suite 400

  Seattle, Washington 98103

  Attention: Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  To Executive:

  	
   

  	
  Theresa Treat

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

9.      Assignment.
Executive’s rights and duties hereunder are personal to Executive and are not
assignable to others, but Executive’s obligations hereunder will bind his/her
heirs, successors, and assigns. The Company may assign its rights under this
Agreement in connection with any merger or consolidation of the Company or any
sale of all or any portion of the Company’s assets (including, without
limitation, any division or product line), provided that any such successor or
assignee expressly assumes in writing the Company’s obligations under the
Executive Agreement.

10.    General.
This Agreement constitutes the exclusive agreement of the parties with respect
to the subject matter hereof and supersedes all prior agreements or understandings
of the parties. No waiver of or forbearance to enforce any right or provision
hereof shall be binding unless in writing and signed by the party to be bound,
and no such waiver or forbearance in any instance shall apply to any other
instance or to any other right or provision. This Agreement will be governed by
the local laws of the State of Washington without regard to its conflicts of
laws rules to the contrary. The parties hereby consent to the exclusive
jurisdiction and venue of the state and federal courts residing in King County,
Washington for all matters and actions arising under this Agreement. The
prevailing party shall be entitled to reasonable attorneys’ fees and costs
incurred in connection with such litigation. No term hereof shall be construed
to limit or supersede any other right or remedy of the Company under applicable
law with respect to the protection of trade secrets or otherwise. If any
provision of this Agreement is held to be invalid or unenforceable to any
extent in any context, it shall nevertheless be enforced to the fullest extent
allowed by law in that and other contexts, and the validity and force of the
remainder of this Agreement shall not be affected thereby.

 10
 

 

IN
WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the
date first above written.

	
  CUTTER & BUCK INC.

  	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  Signature

  	
   

  
	
   

  	
  Frances M. Conley

  	
   

  	
  Printed Name:

  	
  Theresa S. Treat

  
	
  Its:

  	
  Chief Executive Officer

  	
   

  	
   

  	
   

  

 

 11Exhibit 10.1
  EXECUTION VERSION
 

 

 

PURCHASE AND
SALE AGREEMENT

by and among

Cinergy Capital &
Trading, Inc.,

as Seller,

and

Fortis Bank
S.A./N.V.,

as Buyer

dated as of June 26,
2006

 

   
 

 

TABLE OF
CONTENTS

	
  

  	
   

  	
  ARTICLE
  I

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEFINITIONS
  AND CONSTRUCTION

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  	
   

  
	
  1.2

  	
   

  	
  Rules of
  Construction

  	
   

  	
  15

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE
  II

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PURCHASE
  PRICE; DELIVERY OF DOCUMENTS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Purchase and Sale

  	
   

  	
  16

  	
   

  
	
  2.2

  	
   

  	
  Purchase Price

  	
   

  	
  16

  	
   

  
	
  2.3

  	
   

  	
  Deliverables on the
  Signing Date

  	
   

  	
  16

  	
   

  
	
  2.4

  	
   

  	
  Closing

  	
   

  	
  17

  	
   

  
	
  2.5

  	
   

  	
  Closing Deliveries by
  Seller to Buyer

  	
   

  	
  17

  	
   

  
	
  2.6

  	
   

  	
  Closing Deliveries by
  Buyer to Seller

  	
   

  	
  19

  	
   

  
	
  2.7

  	
   

  	
  Adjustments to MTM
  Value and Net Working Capital

  	
   

  	
  20

  	
   

  
	
  2.8

  	
   

  	
  Allocation of Purchase
  Price

  	
   

  	
  22

  	
   

  
	
  2.9

  	
   

  	
  True Up for Deferred
  Incentive Plan Amount

  	
   

  	
  22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE III

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REPRESENTATIONS AND WARRANTIES REGARDING SELLER

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Organization

  	
   

  	
  23

  	
   

  
	
  3.2

  	
   

  	
  Authority

  	
   

  	
  23

  	
   

  
	
  3.3

  	
   

  	
  No Conflicts

  	
   

  	
  23

  	
   

  
	
  3.4

  	
   

  	
  Capitalization

  	
   

  	
  24

  	
   

  
	
  3.5

  	
   

  	
  Legal Proceedings

  	
   

  	
  24

  	
   

  
	
  3.6

  	
   

  	
  Brokers’ Fees

  	
   

  	
  24

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE
  IV

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE
  COMPANIES AND CG&E

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Organization

  	
   

  	
  24

  	
   

  
	
  4.2

  	
   

  	
  No Conflict

  	
   

  	
  25

  	
   

  
	
  4.3

  	
   

  	
  Capitalization

  	
   

  	
  25

  	
   

  
	
  4.4

  	
   

  	
  Legal Proceedings

  	
   

  	
  26

  	
   

  
	
  4.5

  	
   

  	
  Compliance with Laws

  	
   

  	
  26

  	
   

  
	
  4.6

  	
   

  	
  No Default or
  Termination

  	
   

  	
  26

  	
   

  
	
  4.7

  	
   

  	
  Market Based Rate
  Authority

  	
   

  	
  26

  	
   

  
	
  4.8

  	
   

  	
  Taxes

  	
   

  	
  26

  	
   

  
	
  4.9

  	
   

  	
  Real Property

  	
   

  	
  28

  	
   

  
	
  4.10

  	
   

  	
  Insurance

  	
   

  	
  28

  	
   

  
	
  4.11

  	
   

  	
  Intellectual Property
  and Software

  	
   

  	
  28

  	
   

  
	
  4.12

  	
   

  	
  Brokers’ Fees

  	
   

  	
  30

  	
   

  
	
  4.13

  	
   

  	
  Employees and Labor
  Matters

  	
   

  	
  30

  	
   

  
	
  4.14

  	
   

  	
  Employee Benefits

  	
   

  	
  31

  	
   

  
	
  4.15

  	
   

  	
  Liabilities

  	
   

  	
  31

  	
   

  
	
  4.16

  	
   

  	
  Other Assets

  	
   

  	
  31

  	
   

  
	
  4.17

  	
   

  	
  Licenses

  	
   

  	
  32

  	
   

  
	
  4.18

  	
   

  	
  Financial Information

  	
   

  	
  32

  	
   

  

 

 

 

	
  4.19

  	
   

  	
  No Adverse Changes

  	
   

  	
  32

  	
   

  
	
  4.20

  	
   

  	
  Contracts and
  Commitments

  	
   

  	
  32

  	
   

  
	
  4.21

  	
   

  	
  No Conflicting
  Contracts

  	
   

  	
  33

  	
   

  
	
  4.22

  	
   

  	
  Trading

  	
   

  	
  33

  	
   

  
	
  4.23

  	
   

  	
  TRS Agreement

  	
   

  	
  33

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE
  V

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REPRESENTATIONS AND WARRANTIES OF BUYER

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Organization

  	
   

  	
  34

  	
   

  
	
  5.2

  	
   

  	
  Authority

  	
   

  	
  34

  	
   

  
	
  5.3

  	
   

  	
  No Conflicts

  	
   

  	
  34

  	
   

  
	
  5.4

  	
   

  	
  Legal Proceedings

  	
   

  	
  35

  	
   

  
	
  5.5

  	
   

  	
  Brokers’ Fees

  	
   

  	
  35

  	
   

  
	
  5.6

  	
   

  	
  Acquisition as
  Investment

  	
   

  	
  35

  	
   

  
	
  5.7

  	
   

  	
  Financial Resources

  	
   

  	
  35

  	
   

  
	
  5.8

  	
   

  	
  No Conflicting
  Contracts

  	
   

  	
  35

  	
   

  
	
  5.9

  	
   

  	
  Opportunity for
  Independent Investigation

  	
   

  	
  35

  	
   

  
	
  5.10

  	
   

  	
  Federal Reserve Board
  Filing

  	
   

  	
  36

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE
  VI

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COVENANTS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Novation and Assignment
  of CG&E Transactions

  	
   

  	
  36

  	
   

  
	
  6.2

  	
   

  	
  Regulatory and Other
  Approvals

  	
   

  	
  38

  	
   

  
	
  6.3

  	
   

  	
  Access of Buyer and
  Seller

  	
   

  	
  39

  	
   

  
	
  6.4

  	
   

  	
  Certain Restrictions

  	
   

  	
  40

  	
   

  
	
  6.5

  	
   

  	
  Migration Services

  	
   

  	
  42

  	
   

  
	
  6.6

  	
   

  	
  Use of Certain Names

  	
   

  	
  43

  	
   

  
	
  6.7

  	
   

  	
  Support Obligations

  	
   

  	
  43

  	
   

  
	
  6.8

  	
   

  	
  Excluded Items

  	
   

  	
  46

  	
   

  
	
  6.9

  	
   

  	
  Employee and Benefit
  Matters

  	
   

  	
  46

  	
   

  
	
  6.10

  	
   

  	
  Termination of Certain
  Services and Contracts

  	
   

  	
  53

  	
   

  
	
  6.11

  	
   

  	
  Intercompany
  Indebtedness; Distributions

  	
   

  	
  53

  	
   

  
	
  6.12

  	
   

  	
  Transfer Taxes

  	
   

  	
  53

  	
   

  
	
  6.13

  	
   

  	
  Transition Services
  Arrangements

  	
   

  	
  54

  	
   

  
	
  6.14

  	
   

  	
  Tax Matters

  	
   

  	
  54

  	
   

  
	
  6.15

  	
   

  	
  Affiliate Contracts

  	
   

  	
  57

  	
   

  
	
  6.16

  	
   

  	
  Further Assurances

  	
   

  	
  57

  	
   

  
	
  6.17

  	
   

  	
  Periodic Reports

  	
   

  	
  57

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE
  VII

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BUYER’S
  CONDITIONS TO CLOSING

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Representations and
  Warranties

  	
   

  	
  57

  	
   

  
	
  7.2

  	
   

  	
  Performance

  	
   

  	
  58

  	
   

  
	
  7.3

  	
   

  	
  Officer’s Certificate

  	
   

  	
  58

  	
   

  
	
  7.4

  	
   

  	
  Orders and Laws

  	
   

  	
  58

  	
   

  
	
  7.5

  	
   

  	
  Buyer Approvals

  	
   

  	
  58

  	
   

  
	
  7.6

  	
   

  	
  Casualty

  	
   

  	
  58

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

	
  

  	
   

  	
  ARTICLE
  VIII

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SELLER’S
  CONDITIONS TO CLOSING

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Representations and
  Warranties

  	
   

  	
  58

  	
   

  
	
  8.2

  	
   

  	
  Performance

  	
   

  	
  58

  	
   

  
	
  8.3

  	
   

  	
  Officer’s Certificate

  	
   

  	
  58

  	
   

  
	
  8.4

  	
   

  	
  Orders and Laws

  	
   

  	
  59

  	
   

  
	
  8.5

  	
   

  	
  Seller Approvals

  	
   

  	
  59

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE
  IX

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TERMINATION

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Termination

  	
   

  	
  59

  	
   

  
	
  9.2

  	
   

  	
  Effect of Termination

  	
   

  	
  59

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE
  X

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INDEMNIFICATION, LIMITATIONS OF LIABILITY,
  WAIVERS AND ARBITRATION

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Indemnification

  	
   

  	
  60

  	
   

  
	
  10.2

  	
   

  	
  Limitations of
  Liability

  	
   

  	
  61

  	
   

  
	
  10.3

  	
   

  	
  Indirect Claims

  	
   

  	
  63

  	
   

  
	
  10.4

  	
   

  	
  Waiver of Other
  Representations

  	
   

  	
  63

  	
   

  
	
  10.5

  	
   

  	
  Waiver of Remedies

  	
   

  	
  64

  	
   

  
	
  10.6

  	
   

  	
  Procedure with Respect
  to Third-Party Claims

  	
   

  	
  64

  	
   

  
	
  10.7

  	
   

  	
  Tax Treatment of
  Indemnity Payment

  	
   

  	
  65

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE
  XI

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MISCELLANEOUS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Notices

  	
   

  	
  66

  	
   

  
	
  11.2

  	
   

  	
  Entire Agreement

  	
   

  	
  66

  	
   

  
	
  11.3

  	
   

  	
  Expenses

  	
   

  	
  67

  	
   

  
	
  11.4

  	
   

  	
  Disclosure

  	
   

  	
  67

  	
   

  
	
  11.5

  	
   

  	
  Waiver

  	
   

  	
  67

  	
   

  
	
  11.6

  	
   

  	
  Amendment

  	
   

  	
  67

  	
   

  
	
  11.7

  	
   

  	
  No Third Party
  Beneficiary

  	
   

  	
  67

  	
   

  
	
  11.8

  	
   

  	
  Assignment; Binding
  Effect

  	
   

  	
  67

  	
   

  
	
  11.9

  	
   

  	
  Headings

  	
   

  	
  67

  	
   

  
	
  11.10

  	
   

  	
  Invalid Provisions

  	
   

  	
  67

  	
   

  
	
  11.11

  	
   

  	
  Acknowledgment by Buyer

  	
   

  	
  68

  	
   

  
	
  11.12

  	
   

  	
  Publicity

  	
   

  	
  68

  	
   

  
	
  11.13

  	
   

  	
  Counterparts; Facsimile

  	
   

  	
  68

  	
   

  
	
  11.14

  	
   

  	
  Governing Law; Venue;
  and Jurisdiction

  	
   

  	
  68

  	
   

  
	
  11.15

  	
   

  	
  Attorneys’ Fees

  	
   

  	
  68

  	
   

  

 

 

 

EXHIBITS

	
  Exhibit A-1

  	
  Form of Company Assignment Agreement - CMT

  
	
  Exhibit A-2

  	
  Form of Company Assignment Agreement - CCI

  
	
  Exhibit B

  	
  Form of Assignment and Assumption Agreement

  
	
  Exhibit C

  	
  Form of TRS Agreement

  
	
  Exhibit D

  	
  Form of Services Agreement

  
	
  Exhibit E

  	
  Form of CG&E Novation Agreement

  
	
  Exhibit F

  	
  Form of CG&E Assignment Agreement

  
	
  Exhibit G

  	
  Form of CG&E Novation/Assignment Progress
  Report

  
	
  Exhibit H

  	
  Form of Transition Services Agreement

  
	
  Exhibit I

  	
  Form of Seller Guaranty

  
	
  Exhibit J

  	
  Form of Assignment and Bill of Sale Agreement

  
	
  Exhibit K

  	
  Form of Software and Intellectual Property
  License

  
	
  Exhibit L

  	
  Specified Financial Statements

  

 

SCHEDULES

	
  1.1-AC

  	
  Affiliate Contracts

  
	
  1.1-CC

  	
  Cornerstone Contracts

  
	
  1.1-KS

  	
  Seller Knowledge

  
	
  1.1-KB

  	
  Buyer Knowledge

  
	
  1.1-NWC

  	
  Sample NWC Calculation

  
	
  2.3(b)

  	
  Signing Date Transactions

  
	
  2.3(c)

  	
  Support Obligations on Signing Date

  
	
  2.5(d)

  	
  Closing Date Transactions

  
	
  2.5(e)

  	
  Support Obligations on Closing Date

  
	
  2.8

  	
  Purchase Price Allocation

  
	
  3.3(c)

  	
  Seller Approvals

  
	
  3.5

  	
  Legal Proceedings of Seller or Parent Companies

  
	
  4.2

  	
  Company Consents

  
	
  4.3

  	
  Capitalization of Companies

  
	
  4.4

  	
  Legal Proceedings

  
	
  4.6

  	
  Notice of Defaults or Termination

  
	
  4.7

  	
  Market Based Rate Authority

  
	
  4.8

  	
  Taxes

  
	
  4.9(b)

  	
  Real Property Leases

  
	
  4.10

  	
  Insurance

  
	
  4.11(a)

  	
  Excepted Intellectual Property

  
	
  4.11(b)

  	
  Registered Intellectual Property

  
	
  4.11(c)

  	
  Proprietary Applications

  
	
  4.11(e)

  	
  Infringement and Misappropriation Claims

  
	
  4.11(f)

  	
  Transferred Equipment

  
	
  4.11(g)

  	
  Material Software Licenses

  
	
  4.13

  	
  Canadian Employees

  
	
  4.14

  	
  Canadian Employee Benefit Plans

  
	
  4.15

  	
  Liabilities

  
	
  4.19

  	
  Adverse Changes

  
	
  4.20

  	
  Material Contracts

  

 

 

 

	
  5.3

  	
  Buyer Approvals

  
	
  6.4

  	
  Exceptions to Certain Restrictions

  
	
  6.5

  	
  Migration Services

  
	
  6.8

  	
  Excluded Items

  
	
  6.10

  	
  Terminated Contracts

  

 

 

 

PURCHASE AND
SALE AGREEMENT

This Purchase
and Sale Agreement (this “Agreement”)
dated as of June 26, 2006 (“Signing Date”) is made and entered into by
and between Cinergy Capital & Trading, Inc., an Indiana
corporation (“Seller”) and Fortis Bank
S.A./N.V., a Belgian corporation with its registered office at Warandeberg 3,
1000 Brussels, RPM/RPR 0403.199.702 (“Buyer”).

RECITALS

WHEREAS, Seller
desires to sell or cause the Parent Companies to sell to Buyer, and Buyer
desires to purchase from Seller and the Parent Companies, (i) 100% of the
partnership interests in Cinergy Marketing & Trading, LP, a Delaware
limited partnership (“CMT”),
and (ii) 100% of the outstanding shares of Cinergy Canada, Inc., an
Alberta corporation (“CCI”)
(such partnership interests in CMT and shares in CCI being collectively the “Purchased Interests”),
all on the terms and subject to the conditions set forth herein.

WHEREAS, The
Cincinnati Gas & Electric Company, an Ohio Corporation (d/b/a Duke
Energy Ohio, Inc.) (together with its successors and permitted assigns, “CG&E”), CMT and
CCI, have entered into and may continue to enter into transactions for the
purchase and sale of electric energy and capacity, other commodities and/or
related products, including transactions providing for physical delivery and/or
transactions providing for financial settlement (“Marketing and Trading Transactions”);

WHEREAS, as of
the Closing Date, upon the terms and subject to the conditions set forth in
this Agreement, the TRS Agreement and the Services Agreement (each as defined
below), CG&E desires to provide to CMT, and CMT desires to assume from
CG&E, the economic equivalent of the benefits and burdens associated with
certain Marketing and Trading Transactions entered into by CG&E with the intent
to put CMT and CG&E in substantially the same economic position as if such
Marketing and Trading Transactions had been novated or assigned from CG&E
to CMT as of the Closing Date; and

WHEREAS, CMT,
CG&E and Buyer desire to effect the novation or assignment of the CG&E
Transactions (as defined below) from CG&E to CMT upon the terms and subject
to the conditions set forth in this Agreement.

STATEMENT OF
AGREEMENT

Now, therefore,
in consideration of the premises and the mutual representations, warranties,
covenants and agreements in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties agree as follows:

ARTICLE
I

DEFINITIONS AND CONSTRUCTION

                1.1          Definitions. As used in this Agreement, the following capitalized terms
have the meanings set forth below:

“1933 Act” has the meaning given to
it in Section 5.6.

 1
 

 

“ADSP” has
the meaning given to it in Section 6.14(a).

“AGUB” has the meaning given to it in
Section 6.14(a).

“Affiliate” means any Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Person specified. For
purposes of this definition, control of a Person means the power, direct or
indirect, to direct or cause the direction of the management and policies of
such Person whether through ownership of voting securities or ownership
interests, by contract or otherwise, and specifically with respect to a
corporation, partnership or limited liability company, also includes direct or
indirect ownership of more than 50% of the voting securities in such
corporation or of the voting interest in a partnership or limited liability
company.

“Affiliate Contracts”
means, collectively, those Contracts listed on Schedule 1.1-AC.

“Agreement” has the meaning given to it in the
introduction to this Agreement.

“Allocation Schedule”
has the meaning given to it in Section 6.14(a).

“Ancillary Agreements”
means the TRS Agreement, the Services Agreement, each Company Assignment
Agreement, each Assignment and Assumption Agreement, each CG&E Novation
Agreement, each CG&E Assignment Agreement, the Transition Services
Agreement, the Software and Intellectual Property License, the Seller Guaranty,
the Assignment and Bill of Sale Agreement and the TRS Guaranty.

“Assigned Contracts”
means, collectively, each Affiliate Contract, other than a Terminated Contract,
for which the applicable Counterparty has consented to (or for which no consent
is required for) the assignment thereof by the Assignor to the Assignee as
contemplated by Section 2.5(b).

“Assignee” has the meaning given to it in Section 2.5(b).

“Assignment and Assumption Agreement”
has the meaning given to it in Section 2.5(b).

“Assignment and Bill of Sale
Agreement” has the meaning given to it in Section 2.5(j).

“Assignor” has the meaning given to it in Section 2.5(b).

“Available Employees” has the meaning
given to it in Section 6.9(a).

“Bankruptcy Code”
means title 11 of the United States Code, 11 U.S.C. 101, et seq.

“Base Purchase Price”
has the meaning given to it in Section 2.2(a).

“Benefit Plan” means (a) each “employee benefit
plan,” as such term is defined in Section 3(3) of ERISA, (b) each
plan that would be an “employee benefit plan”, as such term is defined in Section 3(3) of
ERISA, if it was subject to ERISA, such as foreign plans and plans for 

 2
 

 

directors,
(c) each stock bonus, stock ownership, stock option, stock purchase, stock
appreciation rights, phantom stock, or other stock plan (whether qualified or
nonqualified), and (d) each bonus or incentive compensation plan,
provided, however, that the term Benefit Plan shall not refer to any of the
Canadian Employee Benefit Plans.

“Business Day” means a day other than Saturday, Sunday or
any day on which banks located in the State of New York or the State of Texas
are authorized or obligated to close.

“Buyer” has the meaning given to it in the introduction
to this Agreement.

“Buyer Approvals” has the meaning given to it in Section 5.3(c).

“Buyer Indemnified Parties”
has the meaning given to it in Section 10.1(a).

“Canadian Employee Benefit Plans”
means all plans, arrangements, agreements, programs, policies, practices or
undertakings, whether oral or written, formal or informal, funded or unfunded,
insured or uninsured, registered or unregistered to which CCI is a party or
bound or in which the Canadian Employees participate or under which CCI has, or
will have, any liability or contingent liability, or pursuant to which payments
are made, or benefits are provided to, or an entitlement to payments or
benefits may arise with respect to any of the Canadian Employees or former
Canadian Employees, excluding Statutory Plans.

“Canadian Employees”
means those individuals employed by CCI as of the Closing Date.

“Canadian Tax Act”
means the Income Tax Act (Canada), as amended.

“Capital Stock” means capital stock,
partnership or membership interests or units (whether general or limited), and
any other interest or participation that confers on a person the right to
receive a share of the profits and losses of, or distribution of assets of, the
issuing entity.

“CCI” has the meaning given to it in the recitals to this
Agreement.

“CG&E” has the meaning given to it in the recitals to
this Agreement.

“CG&E Assignment Agreement” means each
Assignment and Assumption Agreement substantially in the form of Exhibit F
executed and delivered with respect to a CG&E Transaction pursuant to Section 6.1.

“CG&E Novation Agreement” means each Novation Agreement
substantially in the form of Exhibit E executed and delivered with respect
to a CG&E Transaction pursuant to Section 6.1.

“CG&E Transactions”
means the Marketing and Trading Transactions entered into by CG&E (together
with the Contracts evidencing the terms and conditions of such Marketing and
Trading Transactions) that will be subject to the TRS Agreement as of the
Closing Date. As of the Signing Date, the CG&E Transactions are those
Marketing and Trading Transactions set forth on Schedule 2.3(b) to
the extent having settlement and/or delivery dates on or after 

 3
 

 

September 1,
2006 and to which CG&E is a party, and, as of the Closing Date, the
CG&E Transactions are those Marketing and Trading Transactions set forth on
Schedule 2.5(d) to the extent having settlement and/or delivery
dates on or after the later of the Closing Date and September 1, 2006 to
which CG&E is a party. For
purposes of clarification, upon the novation or assignment of a CG&E
Transaction from CG&E to CMT, it shall no longer be a CG&E Transaction.

“CG&E Transferred Percentage”
has the meaning given to it in Section 6.1(d).

“Charter Documents” means, with respect to any Person,
the articles of incorporation, continuance, amalgamation or organization,
memorandum or association, by-laws, the limited partnership agreement, the
partnership agreement or the limited liability company agreement, or such other
organizational documents of such Person which establish the legal personality
of such Person.

“Claim” means any
demand, claim, action, investigation, legal proceeding (whether at law or in
equity) or arbitration.

“Claiming Party” has
the meaning given to it in Section 10.6(a).

“Closing” means the closing of the transactions
contemplated by this Agreement, as provided for in Section 2.4.

“Closing Date” means the date on which Closing occurs.

“Closing Date Transactions” means those Marketing and
Trading Transactions of CCI, CMT and CG&E as of the Closing Date set forth
on Schedule 2.5(d).

“CMT” has the meaning given to it in the recitals to this
Agreement.

“Code” means the Internal Revenue
Code of 1986, as amended, and the U.S. Treasury Regulations promulgated
thereunder.

“Companies” means, collectively, CMT and
CCI, and each of CMT and CCI may be referred to as a “Company”.

“Company Assignment Agreement” has the meaning given to
it in Section 2.5(a).

“Company Consents” has
the meaning given to it in Section 4.2(b).

“Competition Act (Canada)” means the
Competition Act (Canada) R.S.C. 1985, c.C-34 and the regulations
promulgated thereunder, as amended.

“Confidentiality Agreement”
means that certain Confidentiality Agreement between Fortis Brussels S.A./N.V.,
acting in its own name and in the name of its subsidiaries, and Duke Energy
Corporation dated as of April 10, 2006.

“Continued Employee” has the meaning set forth in Section 6.9(b).

 4
 

 

“Continuing Support Obligation” has the meaning given to it in
Section 6.7(d).

“Contract” means any legally binding written agreement.

“Cornerstone Contracts” means those contracts set forth
on Schedule 1.1-CC.

“Counterparty” means,
with respect to any Contract, each party to such Contract (other than Seller
and its Affiliates).

“Credit Rating” means, with respect to any Person, each
rating given to such Person’s long-term unsecured debt obligations by S&P
or Moody’s, as applicable.

“Credit Support” means
all cash, guaranties, letters of credit, surety bonds, treasury securities, and
other credit support posted or provided by a Person in support of the
obligations of any Person.

“Credit Support Payment” means an amount (which may be
positive or negative), calculated using the applicable values as of the end of
the Business Day immediately preceding the Closing Date (the “CS Calculation Date”),
equal to the difference between (a) the amount of Credit Support (other
than in the form of guaranties) then posted by a Duke Credit Support Provider (i) on
behalf of either Company, (ii) with respect to any CG&E Transaction,
or (iii) with respect to any Affiliate Contracts being assigned to a
Company as of the Closing Date, in each case as of the CS Calculation Date minus (b) the amount of Credit
Support in the form of cash collateral then held by a Non-Company Affiliate (i) on
behalf of either Company, (ii) with respect to any CG&E Transaction or
(iii) with respect to any Affiliate Contracts being assigned to a Company
as of the Closing Date, in each case calculated as of the CS Calculation Date; provided that (A) the Credit Support
described in clause (a) of this definition shall not include Credit
Support in the form of a letter of credit posted by a Duke Credit Support
Provider to the extent the applicable Counterparty and the beneficiary of such
letter of credit have agreed in writing, effective as of or prior to Closing,
to (1) release as of Closing the applicable Duke Credit Support Provider
from all obligations under such letter of credit, and (2) terminate as of
Closing such letter of credit and (B) the Credit Support described in
clause (a)(i) and clause (b)(i) of this definition shall exclude any
Credit Support that is included in the calculation of Net Working Capital.

“Credit Support Payment Estimate” has the meaning given
to it in Section 2.6.

“Daily Operating Reports”
means the operating reports prepared by the Companies in the ordinary course of
their business consistent with past practice in a format similar to the
operating reports contained in the Intralinks data room in connection with the
transactions contemplated by this Agreement.

“Data” means all the available data in digital
format that is used in the operations and business of the Companies (and the
CG&E Transactions) as currently conducted, including any Transaction data
in digital format.

“Deductible Amount” has the meaning given to it in Section 10.2(c).

 5
 

 

“Deferred Incentive Plan Amount”
means (i) the aggregate amount (including, for this purpose, an amount
equal to the employers’ share of FICA and FUTA Taxes with respect thereto to
the extent not paid at or prior to Closing by Seller or an Affiliate of Seller)
of 2005 deferred bonuses payable in 2007 under the Incentive Plan to the
Available Employees as described under the heading “Deferred 2005 Bonus Amounts”
in the information delivered by Seller to Buyer on the Signing Date pursuant to
the second sentence of Section 6.9(n) and (ii) the aggregate
amounts (including, for this purpose, amounts equal to the employers’ share of
FICA and FUTA Taxes with respect thereto to the extent not paid at or prior to
Closing by Seller or an Affiliate of Seller) payable under letter agreements
and similar written commitments and arrangements between Available Employees
and Seller and Non-Company Affiliates of Seller (including sign-on bonuses and
guaranteed payment amounts) as described under the heading “Other Deferred
Amounts” in the information delivered by Seller to Buyer on the Signing Date
pursuant to the last sentence of Section 6.9(n).

“Disagreement” has the
meaning given to it in Section 2.7(c).

“Dispute Notice” has
the meaning given to it in Section 2.7(a).

“Duke Credit Support Providers”
means Seller or any Non-Company Affiliates (including Cinergy Corp. and Duke
Capital LLC) that provide Credit Support (a) on behalf of either Company
(including with respect to any Marketing and Trading Contract of such Company),
(b) with respect to any CG&E Transaction or (c) with respect to
any Affiliate Contract.

“Equipment” means the
computers and related equipment, including central processing units and other
processors (e.g., microprocessors and embedded processors), controllers,
modems, communications and telecommunications equipment (e.g., voice, data and
video), cables, storage devices, printers, terminals, other peripherals and
input and output devices and other tangible mechanical and electronic equipment
intended for the input, output, storage, communication and retrieval of
information and data,

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

“ERISA Affiliate” means any entity,
trade or business that is a member of a group described in Section 414(b),
(c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA
that includes Seller or the Companies, or that is a member of the same “controlled
group” as Seller or the Companies pursuant to Section 4001(a)(14) of
ERISA; provided, however, that
the Companies shall not be considered to be ERISA Affiliates from and after the
Closing.

“Excluded Items” has the meaning given to it in Section 6.8.

“Federal Reserve Board”
means the Board of Governors of the Federal Reserve System.

“FERC” means the Federal Energy
Regulatory Commission.

“FICA” means the
Federal Insurance Contributions Act, as amended, and the regulations
promulgated thereunder.

 6
 

 

“FPA” means the Federal Power Act.

“FUTA” means the
Federal Unemployment Tax Act, as amended, and the regulations promulgated
thereunder.

“GAAP” means generally accepted accounting principles in
the United States of America, applied on a consistent basis.

“Governmental Authority” means any applicable federal,
state, provincial, municipal, local or other governmental authority, agency,
board, bureau, commission, court, department, official or other instrumentality
in the United States or Canada.

“Hire Date” has the
meaning given to it in Section 6.9(b).

“Hired Employee” has
the meaning given to it in Section 6.9(b).

“HSR Act” means the
Hart Scott Rodino Antitrust Improvement Act of 1976.

“Incentive Plan Payment Amount”
means the aggregate amount payable by Seller (or a Non-Company Affiliate of
Seller) to Hired Employees under the Incentive Plan for the portion of fiscal
year 2006 of the Companies ending prior to Closing as determined in good faith
by the Seller.

“Incentive Plan” means the Cinergy
Corp. Commercial Business Unit Annual Incentive Plan.

“Indemnified Parties”
has the meaning given to it in Section 10.1(b).

“Independent Accountant”
means (a) Ernst & Young LLP and its successors, or (b) if
Ernst & Young LLP is (i) unable or unwilling to serve in such
capacity or (ii) engaged by either Seller, Buyer or their respective
Affiliates as its accounting
auditor during the two-year period preceding the date of the selection of an
Independent Auditor under Section 2.7, such other independent accounting
firm of nationally recognized standing that is mutually selected by Buyer and
Seller and has not been engaged to act as an accounting auditor for Buyer,
Seller or their respective Affiliates during the two-year period preceding such
selection.

“Intellectual Property” means the following intellectual
property, whether arising by statute or under common law: (a) copyrights,
registrations and applications for registration thereof, (b) trademarks,
service marks, trade names, slogans, domain names, logos, trade dress, and
registrations and applications for registrations thereof, (c) patents, as
well as any reissued and reexamined patents and extensions corresponding to the
patents, and any patent applications, as well as any related continuation,
continuation in part and divisional applications and patents issuing therefrom
and (d) trade secrets and confidential information, including data, ideas,
designs, concepts, compilations of information, methods, techniques,
procedures, processes and other know-how, whether or not patentable.

“Interim Period” has the meaning
given to it in Section 6.2.

 7
 

 

“Knowledge” when used with respect to Seller, means the
actual knowledge of the individuals listed on Schedule 1.1-KS and,
when used with respect to the Buyer, means the actual knowledge of the
individuals listed on Schedule 1.1-KB.

“Laws” means all laws, rules, regulations, ordinances,
court orders of general application, and other pronouncements of general
application having the effect of law of any Governmental Authority.

“Letter of Credit”
means an irrevocable, standby letter of credit issued by a commercial bank with
Credit Ratings at least equal to the Required Rating, which shall (a) include
customary terms and conditions (including terms and conditions substantially
similar to or more favorable than those in the Support Obligation which is
being replaced or backstopped by such Letter of Credit), (b) contain
customary rights permitting the beneficiary of such Letter of Credit to draw
upon such Letter of Credit upon any event or omission that would have allowed
the Support Obligation being replaced by such Letter of Credit to be drawn or
called upon, including upon certification of any breach of the underlying
contract if applicable, and (c) contain the right for the beneficiary
thereof to draw on such Letter of Credit if such Letter of Credit has not been
renewed or replaced at least thirty (30) days prior to the expiration thereof
(or such lesser period as may be specified in the underlying contract to which
such Letter of Credit relates).

“Licensed Intellectual Property”
means
Intellectual Property owned by Seller or any Non-Company Affiliate and that is
used in the operations and business of the Companies (including the CG&E
Transactions) as currently conducted, including Intellectual Property embodied
in the Proprietary Applications (in both source and object code form) and all
Related Documentation, but excluding Seller’s Marks, Excluded Items and the
items listed on Schedule 4.11(a).

“Lien” means any charge, purchase option, mortgage, pledge, deed of trust (or in the
case of CCI, any deemed or statutory trust), security interest, encumbrance or
other lien of any kind.

“Loss” means any and all judgments, losses, liabilities,
amounts paid in settlement, damages, fines, penalties, deficiencies, costs and
expenses (including interest, court costs, reasonable fees of attorneys,
accountants and other experts or other reasonable expenses of litigation or
other proceedings or of any claim, default or assessment) but in each case only
to the extent such Losses are not covered by a payment from a third party or by
insurance, it being understood and agreed that the Indemnified Parties shall
use their commercially reasonable efforts to seek insurance and other third-party
recoveries in respect of Losses to be indemnified hereunder. For all purposes
in this Agreement the term “Losses” does not
include any Non-reimbursable Damages.

“Management Reports”
means the reports titled “Cinergy Performance Management Reporting (Gas
Portfolio Business Unit) EBIT” and/or “Cinergy Performance Management Reporting
(Gas & Power Portfolio Business Unit) EBIT” relating to periods in
fiscal year 2005 and the portion of the fiscal year 2006 ended March 31,
2006.

“Marketing and Trading Transaction” has the meaning given
to it in the recitals to this Agreement.

 8
 

 

“Master Agreement” means forms of
master agreements or general terms and conditions as have been accepted by a
significant portion of the applicable market for trading the products or
commodities covered by such agreements or such general terms and conditions.

“Material Adverse Effect”
means a material adverse effect, either individually or in the aggregate, on (a) the
business, financial condition, or results of operations of the Companies, the
CG&E Transactions, and the Affiliate Contracts considering this clause (a) taken
as a whole, as applicable to periods after Closing or (b) the consummation
of the transactions contemplated by this Agreement; provided, however, that any effect arising from the
following shall not be considered when determining whether a Material Adverse
Effect has occurred:  (i) any change
generally applicable to the industry or market in which a Company or CG&E
operates, (ii) any change in general political, regulatory or economic
conditions, including the financial and securities markets and including any
acts of war or terrorist activities, (iii) any continuation of an adverse
trend or condition, (iv) any change in any Laws, (v) the failure of
Seller or any Non-Company Affiliate to effect the assignment of any Contract to
either Company; (vi) any changes in the mark-to-market value of any
Transaction after the Signing Date, (vii) any changes in the general
market prices of commodities, including natural gas and electricity, (viii) any
change in the financial condition or results of operation of a Company or
CG&E caused by the transactions contemplated by this Agreement, (ix) any
actions taken or omitted with the consent of Buyer or pursuant to or in
accordance with this Agreement, and (x) the announcement or pendency of
the transactions contemplated by this Agreement.

“Material Contracts” has the meaning
given to it in Section 4.20.

“Material Economic Terms” means, with
respect to any Closing Date Transaction and the Trading Contracts related
thereto, the identity of the buyer and the seller, the commodity or product,
the contract or notional quantity, the contract price, and, if applicable, the
period of delivery and the delivery point(s), and, for a Closing Date
Transaction involving an option, the option type, premium, strike price and
expiration date.

“Material Software Licenses” means
the Contracts for the Software set forth on Schedule 4.11(g).

“Migration Plan” has
the meaning given to it in Section 6.5.

“Migration Services”
has the meaning given to it in Section 6.5.

“Moody’s” means Moody’s
Investors Services, Inc. and any successors thereto.

“MTM Estimate” means
Seller’s good faith estimate of the MTM Value of the Trading Book delivered in
writing to Buyer at least three (3) Business Days prior to Closing.

“MTM Sample Calculation” means
the sample calculation as of June 7, 2006 of the MTM Value of the Trading
Book delivered by Seller to Buyer on the Signing Date pursuant to Section 2.3(e).

“MTM Value of the Trading Book”
means the mark-to-market value of the Closing Date Transactions calculated
as of the Closing Date based on the mid-market prices (net of reserves) 

 

 9
 

 

determined
in a manner consistent with the past practices of the Companies and in
accordance with the methodology and sample calculation used to reflect the MTM
Value of the Trading Book as of June 7, 2006 set forth on the MTM Sample
Calculation.

“Net Working Capital”
means (without duplication), the sum of the following calculations made with respect
to each Company as of the Closing Date (expressed as a positive or negative
number): the difference between (a) the total current assets of such
Company (including any current assets associated with Credit Support provided
with respect to the Closing Date Transactions other than (x) in the form
of a letter of credit or (y) with respect to the CG&E Transactions,
but otherwise excluding any current assets expressly included in and any
reserves associated with the MTM Value of the Trading Book and/or the
Transactions), minus (b) the total current liabilities of such Company
(including any current liabilities associated with Credit Support provided with
respect to the Closing Date Transactions other than the CG&E Transactions,
but otherwise excluding any current liabilities expressly included in and any
reserves associated with the MTM Value of the Trading Book and/or the
Transactions); and in the case of clauses (a) and (b) above, (i) excluding
(A) any Excluded Items, (B) any current income Tax asset or deferred income Tax asset or liability
reflecting differences between the treatment of items for accounting and income
Tax purposes, or carryforwards (other than any deferred income Tax asset or
liability (net of any valuation allowance) reflecting the MTM Value of the
Trading Book with respect to any Transactions of CCI), and (C) any
liabilities associated with employee compensation, including accruals or
reserves for employee incentive, bonus or retention payments (other than
current liabilities associated with employee compensation (other than
incentive, bonus or retention payments or similar payments) for employees of
CCI), (ii) measured as of the time immediately
prior to the consummation of, and without giving effect to, the transactions
contemplated hereby (but after giving effect to any items contemplated to occur
as of the Closing under Sections 6.10 and 6.11), (iii) determined in
accordance with the methodology and sample calculation used to reflect the
components of Net Working Capital as of March 31, 2006 set forth on Schedule
1.1- NWC, (iv) otherwise
determined in accordance with GAAP, (v) for purposes of clarification, any
account receivable or account payable relating to a Marketing and Trading
Transaction of either Company (whether relating to (1) a Marketing and
Trading Transaction of either Company that has been closed out or terminated as
of Closing or (2) a Closing Date Transaction of either Company) shall be included in Net Working Capital, and (vi) without duplication of any matters
for which Buyer has otherwise been compensated pursuant to this Agreement,
whether through the calculation of, or any adjustment to, the Purchase Price or
MTM Value of the Trading Book (including any adjustments thereto in accordance
with the MTM Sample Calculation), through the presence of accruals or reserves or otherwise.

“Non-Company Affiliate” means any
Affiliate of Seller, except for the Companies.

“Non-reimbursable Damages” has the
meaning given to it in Section 10.5(b).

“NWC Estimate” means Seller’s good faith
estimate of Net Working Capital delivered in writing to Buyer at least three (3) Business
Days prior to the Closing.

“Omitted Counterparty Transaction”
has the meaning given to it in Section 2.7(a).

 

 10

 

“Parent Companies”
means, collectively, Cinergy Limited Holdings, LLC and Cinergy General
Holdings, LLC, together with their successors.

“Parties” means each of the parties that is a signatory
to this Agreement and, for purposes of Article X, shall include the
parties that are signatories to the Software and Intellectual Property License
Agreement.

“Payment Date has the
meaning given to it in Section 6.7(e).

“Permitted
Tax Liens”
mean (i) Liens securing the payment of Taxes which are either not
delinquent or are being contested in good faith by appropriate proceedings and (ii) Liens
for current Taxes not yet due or payable.

“Person” means any natural person, corporation, general
partnership, limited partnership, limited liability company, unlimited
liability corporation, joint venture, proprietorship, other business
organization, trust, union, association or Governmental Authority.

“Pre-Closing Tax Period”
means any Tax period ending on or before the Closing Date.

“Prevailing Party” has
the meaning given to it in Section 2.7(c).

“Proceeding” means any complaint,
lawsuit, action, suit, claim (including claim of a violation of Law) or other
proceeding at Law or in equity or order or ruling by any Governmental Authority
or arbitral tribunal.

“Proprietary Applications” means
the Software that is owned by the Seller or the Non-Company Affiliates and
licensed to Buyer and its Affiliates pursuant to the Software and Intellectual
Property License Agreement.

“Purchase Price” has the meaning given to it in Section 2.2.

“Purchased Interests”
has the meaning given to it in the recitals to this Agreement.

“Real Property Leases”
has the meaning given to it in Section 4.9(b)

“Referral Date” has
the meaning given to it in Section 2.7(c).

“Referral Notice” has
the meaning given to it in Section 2.7(c).

“Registered Intellectual Property”
has the meaning given to it in Section 4.11(b).

“Related Documentation”
means, with respect to Software, all materials, documentation, specifications,
technical manuals, user manuals, flow diagrams, file descriptions and other
information that describes the function and use of such Software, in each case
that is reasonably available.

“Representatives” means, as to any Person, its and its
Affiliates’ officers, directors, partners, members, employees, counsel,
accountants, financial advisers and consultants.

 11
 

 

“Required
ISO/RTO Membership” means, with respect to any Transaction, any membership or
participant status in any Independent System Operator, Regional Transmission
Organization or similar organized market for sales of electric energy, capacity
and ancillary services required for CMT to perform its obligations under such
Transaction.

“Required Rating” means a Credit Rating of at least “A-”
from S&P and at least “A3” from Moody’s.

“Resolution” has the
meaning given to it in Section 2.7(c).

“Resolution Date” has
the meaning given to it in Section 2.7(d).

“Responding Party” has
the meaning given to it in Section 10.6(a).

“Retention Plan” means the Duke
Energy Americas (DEA) Cinergy Marketing and Trading (CMT) Retention Plan.

“Risk Management Policies”
means the risk management policies applicable to the Companies and set forth in
the Cinergy Commercial Business Unit Risk Management Control Policy Manual
dated as of November 9, 2005, the Duke Energy Marketing Risk Limits dated
as of April 1, 2006 and the Duke Energy Marketing Approved Products and
Instruments Risk Addendum dated as of April 1, 2006.

“S&P” means
Standard & Poor’s Ratings Group (a division of McGraw Hill, Inc.)
and any successors thereto.

“Schedules” means the disclosure
schedules prepared by Seller and attached to this Agreement.

“Section 338(g) Election”
has the meaning given to it in Section 6.14(f).

“Section 338(h)(10) Election”
has the meaning given to it in Section 6.14(a).

“Seller” has the meaning given to it in the introduction
to this Agreement.

“Seller Guaranty” means the Guaranty Agreement
substantially in the form of Exhibit I executed and delivered pursuant to Section 2.3.

“Seller Approvals” has the meaning given to it in Section 3.3(c).

“Seller Group” means
the affiliated group of corporations which includes Seller.

“Seller Marks” has the meaning given
to it in Section 6.6.

“Seller Plans” or “Seller Plan” has the meaning given
to it in Section 6.9(d).

“Seller Indemnified Parties”
has the meaning given to it in Section 10.1(b).

“Seller’s Determination”
has the meaning given to it in Section 2.7(b).

 12
 

 

“Services Agreement” means the Services Agreement
substantially in the form of Exhibit D executed and delivered pursuant to Section 2.5.

“Shared Capacity”
means that computing capacity in the Equipment used for both: (a) the
operations and business of the Companies (and the CG&E Transactions)
(except for the computing capacity used for the functions and services listed
in item 2 of Schedule 4.11(a) other than disaster recovery
services) as currently conducted; and (b) the operations and business of
any Non-Company Affiliate as currently conducted.

“Signing Date” has the
meaning given to it in the introduction to this Agreement.

“Signing Date Transactions”
means those Marketing and Trading Transactions of CCI, CMT and CG&E as of June 23,
2006 set forth on Schedule 2.3(b) to the extent having settlement
and/or delivery dates on or after September 1, 2006.

“Software” means any
instruction or set of instructions that is used (e.g., read, compiled,
processed or manipulated) by, in or on Equipment, including application
programming interfaces, source code and object code versions of applications
programs, operating system software, software tools, computer software
languages and utilities software; in each case, in whatever form or media,
including the tangible media upon which they are recorded or printed, together
with all corrections, improvements, enhancements, modifications, updates and releases
thereof prior to the Closing.

“Software and Intellectual Property
License Agreement” means the Software and Intellectual Property
License Agreement substantially in the form of Exhibit K executed and
delivered pursuant to Section 2.5(i) pursuant to which the Licensed
Intellectual Property and Proprietary Applications are licensed to the
Companies.

“Statutory Plans”
means statutory benefit plans which CCI is required to participate in or comply
with, including the Canada and Quebec Pension Plans and plans administered
pursuant to applicable health tax, workplace safety insurance and employment
insurance legislation.

“Straddle Period”
means any Tax period that includes, but does not end on, the Closing Date.

“Support Obligations” has the meaning given to it in Section 6.7(a).

“Tax” or “Taxes”
means (i) any federal, state, provincial, local or foreign income, gross
receipts, ad valorem, sales and use, goods and services, employment, social
security, disability, occupation, property, severance, value added, transfer,
Capital Stock, excise, withholding, premium, federal or provincial capital
taxes, occupation or other taxes, levies or other like assessments, customs,
duties, imposts, charges, surcharges or fees imposed by or on behalf of any
Taxing Authority, including any interest, penalty or addition attributable
thereto or to the non-payment thereof and (ii) liability for Taxes of any
other Person of a kind described in clause (i) imposed (A) under U.S.
Treasury Regulation Section 1.1502-6 (or any similar provision of
state, provincial, local or foreign tax law), or otherwise as a result of being
or having been before the Closing Date a member of an affiliated, consolidated,
combined or unitary group for federal, state, provincial, local or foreign tax
purposes, and (B) as a successor by contract or otherwise as 

 13
 

 

a
result of being party to any agreement or any express or implied obligation to
indemnify any other Person.

“Taxing Authority” means, with
respect to any Tax, the governmental entity 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.

“Tax Return” means any return, report
or similar statement or form required to be filed with respect to any Tax
(including any attached schedules and related or supporting information),
including any information return, claim for refund, amended return or
declaration of estimated Tax.

“Terminated Contracts”
has the meaning given to it in Section 6.10.

“Third Party Software”
has the meaning given to it in Section 6.5.

“Title and Authority Representations”
has the
meaning given to such term in Section 10.2(a).

“Trading Contracts”
means, with respect to a Transaction, all master agreements, confirmations,
Credit Support documents, schedules, credit support annexes, cover sheets,
master netting agreements, master collateral agreements or similar or related
agreements to which either Company, CG&E and/or a Duke Credit Support
Provider is a party, in each case that relate to such Transaction.

“Transactions” means,
during the applicable period specified in this definition, the following: (i) as
of the Signing Date, the Signing Date Transactions, (ii) on any date after
the Signing Date and prior to the Closing Date, the Marketing and Trading
Transactions to which CMT or CCI is a party as of such date and any CG&E
Transactions existing as of such date, and (iii) as of and after the
Closing Date, the Closing Date Transactions.

“Transfer Taxes” means
all transfer, sales, use, goods and services, value added, documentary, stamp
duty, gross receipts, excise, transfer and conveyance Taxes and other similar
Taxes, duties, fees or charge, but excluding any income, capital gains or
similar Taxes related to any such transfer.

“Transferred Capacity”
means the portion of the Shared Capacity used in the operations and business of
the Companies (and the CG&E Transactions) (except for the computing
capacity used for the functions and services listed in item 2 of Schedule
4.11(a) other than disaster recovery services) as currently conducted.
The form of the foregoing “Transferred Capacity” is not required to match the
form of the Shared Capacity but is required to provide the same function and
performance as provided by the foregoing Transferred Capacity.

“Transferred Equipment”
means all Equipment solely used in the operations and business of the Companies
(including the CG&E Transactions) as currently conducted that is not owned
by the Companies.

 14
 

 

“Transition Services Agreement”
means an agreement for the provision of services after Closing from the Seller
and/or its Affiliates to the Companies substantially in the form of Exhibit H
to be executed and delivered pursuant to Section 2.5.

“TRS Agreement” means the Total Return Swap Agreement
substantially in the form of Exhibit C executed and delivered pursuant to Section 2.5.

“TRS Guaranty” has the meaning given to it in Section 2.6.

“Welfare Benefits” has the meaning
given to it in Section 6.9(f).

Rules of
Construction.

(a)           All article, section, subsection,
schedules and exhibit references used in this Agreement are to articles,
sections, subsections, schedules and exhibits to this Agreement unless
otherwise specified. The exhibits and schedules attached to this Agreement
constitute a part of this Agreement and are incorporated herein for all
purposes.

(b)           If a term is defined as one part of
speech (such as a noun), it shall have a corresponding meaning when used as
another part of speech (such as a verb). Unless the context of this Agreement
clearly requires otherwise, words importing the masculine gender shall include
the feminine and neutral genders and vice versa. The words “includes” or “including”
shall mean “including without limitation,” the words “hereof,” “hereby,” “herein,”
“hereunder” and similar terms in this Agreement shall refer to this Agreement
as a whole and not any particular section or article in which such words appear.
All references to any agreement, instrument, or document shall include such
agreement, instrument or document as the same may be amended, modified or
supplemented from time to time in accordance with its terms and the terms of
this Agreement.

(c)           Currency amounts referenced herein
are in U.S. Dollars unless otherwise specified. In all cases where it is necessary to determine the amount of a Loss or
whether a monetary limit or threshold set out herein has been reached or
exceeded and the value of the relevant Loss or underlying value is expressed in
a currency other than U.S. Dollars, the value of each such Loss or underlying
value shall be converted into U.S. Dollars at an exchange rate equal to the
most recent exchange rate published by The
Financial Times on the date such payment is due hereunder (or, if no
such exchange rate is published by The
Financial Times, then the most recent exchange rate published by The Wall Street Journal  on the date such payment is due hereunder).

(d)           It is the understanding of the
Parties that the intention of the determination and application of Net Working
Capital and MTM Value of the Trading Book is solely to provide for their
calculation and is not being effected to permit the introduction of different
judgments, accounting methods, policies, practices, procedures, classifications
or estimation methodologies when making such determination. If there is a
conflict between GAAP and the methodologies set forth herein, then the
methodologies set forth herein shall control for purposes of the foregoing
definitions. Except as otherwise set forth herein, all accounting terms used
herein and not expressly defined herein shall have the meanings given to them
under GAAP.

 15
 

 

(e)           Time is of the essence in this
Agreement. Whenever this Agreement refers to a number of days, such number
shall refer to calendar days unless Business Days are specified. Whenever any
action must be taken hereunder on or by a day that is not a Business Day, then
such action may be validly taken on or by the next day that is a Business Day.

(f)            Each Party acknowledges that it and
its attorneys have been given an equal opportunity to negotiate the terms and
conditions of this Agreement and that any rule of construction to the
effect that ambiguities are to be resolved against the drafting Party or any
similar rule operating against the drafter of an agreement shall not be
applicable to the construction or interpretation of this Agreement.

ARTICLE
II

PURCHASE PRICE; DELIVERY OF DOCUMENTS

                2.1          Purchase and Sale. On the terms and subject to the
conditions set forth in this Agreement, at the Closing:

(a)           Buyer agrees to purchase from Seller
and the applicable Parent Companies, and Seller agrees to convey or cause the
Parent Companies to convey to Buyer, the Purchased Interests.

(b)           Pursuant to the execution and
delivery of the applicable Assignment and Assumption Agreements referenced in Section 2.5,
Buyer agrees to assume (or cause one of the Companies to assume), at Closing
from each of the Non-Company Affiliates that are party to an Assigned Contract,
and Seller agrees to cause such Non-Company Affiliates to assign to Buyer (or
such Company), all of the rights and obligations of such Non-Company
Affiliates, as applicable, under the Assigned Contracts.

                2.2          Purchase Price. The purchase price (the “Purchase Price”) for
the purchase and sale described in Section 2.1 and other undertakings and
agreements set forth in this Agreement is equal to the sum of:

(a)           $210,000,000 (the “Base Purchase Price”);

(b)           plus, the MTM Value of the
Trading Book;

(c)           plus, the Net Working Capital.

2.3          Deliverables on the Signing Date. On the Signing Date:

(a)           Buyer and Seller shall execute and
deliver to each other this Agreement;

(b)           Seller shall deliver Schedule 2.3(b) to
Buyer, which schedule shall set forth the Signing Date Transactions;

(c)           Seller shall deliver Schedule 2.3(c) to
Buyer, which schedule shall set forth the Support Obligations as of the Signing
Date;

 16
 

 

(d)           Seller shall deliver to Buyer a
counterpart of the Seller Guaranty executed by Cinergy Corp.; and

(e)           Seller shall deliver to Buyer the MTM
Sample Calculation and the lists of information to be provided by Seller to
Buyer on the Signing Date pursuant to Section 6.9(a), (e) and (n).

                2.4          Closing. The Closing shall take place at the offices of Vinson &
Elkins L.L.P., 1001 Fannin Street, Houston, Texas 77002 at 10:00 A.M.
local time, on the third Business Day after the conditions to Closing set forth
in ARTICLE VII and ARTICLE VIII (other than actions to be taken or items to be
delivered at Closing) have been satisfied or waived, or on such other date and
at such other time and place as Buyer and Seller mutually agree in writing. The
Closing shall for all purposes be deemed to have been consummated at 12:01 A.M.
Houston time on the Closing Date.

                2.5          Closing Deliveries by Seller to Buyer. At the Closing, Seller shall
deliver, or shall cause to be delivered, to Buyer the following:

(a)           a counterpart (i) executed by
the Parent Companies of an assignment of the Capital Stock of CMT in the form
attached hereto as Exhibit A-1 and (ii) executed by Seller of
an assignment of the Capital Stock of CCI in the form attached hereto as Exhibit A-2
(each a “Company
Assignment Agreement”) evidencing the assignment and transfer to
Buyer of the Purchased Interests owned by Seller or such Parent Company, as
applicable;

(b)           a counterpart executed by each
applicable Non-Company Affiliate of one or more assignment and assumption
agreements each substantially in the form attached as Exhibit B (each an “Assignment and Assumption Agreement”)
which shall effect the assignment to Buyer or one of the Companies, as
designated by Buyer within thirty (30) days following the Signing Date (as
applicable, the “Assignee”),
of each Assigned Contract by the Non-Company Affiliate that is party thereto
(the “Assignor”)
and the assumption by the Assignee of all obligations of the Assignor under each
Assigned Contract;

(c)           a certification of non-foreign status
in the form prescribed by Treasury Regulation Section 1.1445-2(c) with
respect to Seller and each Parent Company (or the owner of each Parent Company
that is treated as a disregarded entity for U.S. federal income Tax purposes);

(d)           Schedule 2.5(d), which
schedule shall set forth the Closing Date Transactions;

(e)           Schedule 2.5(e), which
schedule shall set forth the Support Obligations as of the Closing Date;

(f)            Schedule 2.8, which schedule
shall set forth the allocation of the Purchase Price;

(g)           a counterpart executed by Seller and
the Companies of the Transition Services Agreement;

 17
 

 

(h)           a counterpart of the TRS Agreement
and the Services Agreement executed by CG&E and CMT;

(i)            a counterpart executed by CMT and
the applicable Non-Company Affiliate(s) identified therein of the Software
and Intellectual Property License Agreement;

(j)            an executed counterpart of one or
more assignment and bill of sale agreements, each substantially in the form attached
as Exhibit J (each an “Assignment and Bill of Sale Agreement”), which shall
effect the transfer of ownership to the Assignee of the Transferred Equipment
by Seller or the Non-Company Affiliate that is the owner thereof;

(k)           the books and records of each Company
not present at such Company on the Closing Date and in the possession of Seller
or a Non-Company Affiliate (it being agreed that Seller may retain a copy
thereof); and

(l)            a “clearance certificate” under
s.116 of the Canadian Tax Act satisfactory to Buyer to evidence that no
withholding is required for the payment to Seller; provided that:

(i)                    if
a certificate issued by the Minister of National Revenue (Canada) pursuant to
subsection 116(2) of the Canadian Tax Act in respect of the disposition of
the CCI shares to Buyer, specifying a certificate limit in an amount which is
not less than the portion of the Purchase Price allocable to the CCI shares, is
not delivered to Buyer at or before the Closing, Buyer shall be entitled to
withhold from the Purchase Price payable to Seller at the Closing the amount
that it may be required to remit pursuant to subsection 116(5) of the
Canadian Tax Act in connection with such purchase;

(ii)                   if,
prior to the 28th day after the end of the month in which the Closing occurs
(or such later time if the Canada Revenue Agency confirms in writing that Buyer
may continue to hold the amount withheld pursuant to Section ((l))
hereof), Seller delivers to Buyer:

(A)          a certificate issued by the Minister
of National Revenue under Section 116(2) of the Canadian Tax Act in
respect of the disposition of the CCI shares to Buyer, Buyer shall promptly pay
to Seller the lesser of (I) the amount withheld pursuant to Section 2.5(l) hereof,
and (II) the amount withheld pursuant to Section 2.5(l) hereof
less the amount, if any, by which the portion of the Purchase Price allocable
to the CCI shares exceeds the amount specified in such certificate as the
certificate limit, multiplied by the percentage specified in subsection 116(5) of
such Act, together with any interest earned on the amount so withheld to the
date of such payment (less any applicable withholding Tax), or

(B)           a certificate issued by the Minister
of National Revenue under Section 116(4) of the Canadian Tax Act in
respect of the disposition of the CCI shares to Buyer, Buyer shall promptly pay
the amount withheld pursuant to Section (l) hereof to Seller,
together with any interest earned thereon (less any applicable withholding
Tax);

(iii)                  if
Buyer has withheld an amount pursuant to Section 2.5(l)(i) hereof and
Seller does not deliver to the Buyer, prior to the 28th day after the end of
the month in which the Closing occurs (or such later time if the Canada Revenue
Agency 

 18
 

 

confirms
in writing that Buyer may continue to hold the amount withheld pursuant to Section 2.5(l)(i) hereof):

(A)          a certificate issued by the Minister
of National Revenue under Section 116(2) of the Canadian Tax Act in
respect of the disposition of the CCI shares to Buyer specifying a certificate
limit equal or greater than the portion of the Purchase Price allocable to the
CCI shares; or

(B)           a certificate issued by the Minister
of National Revenue under Section 116(4) of the Canadian Tax Act in
respect of the disposition of the CCI shares to Buyer;

(iv)                  Buyer
shall remit to the Receiver General of Canada the amount required to be
remitted pursuant to subsection 116(5) of the Canadian Tax Act (and the
amount so remitted shall be credited to the Buyer as a payment to Seller on
account of the Purchase Price) and Buyer shall pay to Seller any remaining
portion of the amount withheld pursuant to Section 2.5(l)(i) hereof,
together with interest earned on the amount withheld pursuant to Section 2.5(l)(i) hereof,
prior to such remittance (less any applicable withholding Tax); and

(m)          For the avoidance of doubt, any net
Tax withheld by Buyer pursuant to this Section 2.5(l) shall be
treated for all purposes of this Agreement as having been paid to Seller.

                2.6          Closing Deliveries by Buyer to Seller. At the Closing, Buyer shall
deliver to Seller (or, in the case of clause (d), to the applicable
beneficiary) the following:

(a)           a wire transfer of immediately
available funds (to such account as Seller shall have notified Buyer of at
least three (3) Business Days prior to the Closing Date) in an amount
equal to the result of:

(i)                    the
sum of (A) the Base Purchase Price, plus (B) the MTM Estimate, plus (C) the
NWC Estimate;

(ii)                   plus,
Seller’s good faith estimate (“Credit Support Payment Estimate”) of the Credit Support
Payment;

(iii)                  minus,
the portion of the Deferred Incentive Plan Amount that applies to the Hired
Employees;

(iv)                  minus,
any withholding required under Section 2.5(l)(i);

(b)           an executed counterpart of each
Company Assignment Agreement;

(c)           a counterpart executed by each
Assignee referenced in Section 2.5(b) of each Assignment and
Assumption Agreement;

 19
 

 

(d)           without duplication of the Credit
Support Payment referred to in Section 2.6(a)(ii), all guaranties, cash,
letters of credit or other replacement credit support required to be delivered
at the Closing to Seller, any of its Affiliates or any beneficiary of a Support
Obligation pursuant to Section 6.7;

(e)           a counterpart executed by Buyer of
the Transition Services Agreement;

(f)            a counterpart executed by Buyer of
the Software and Intellectual Property License Agreement; and

(g)           a counterpart executed by Fortis Bank
SA/NV Cayman Islands Branch of the guaranty of CMT’s obligations under the TRS
Agreement and the Services Agreement, substantially in the form required by the
TRS Agreement and the Services Agreement (the “TRS Guaranty”).

                2.7          Adjustments to MTM Value and Net Working Capital.

(a)           Adjustments to Schedule 2.5(d).
If a Party in good faith believes that there is (i) any inaccuracy and/or omission with respect to
a Material Economic Term of any Closing Date Transaction as set forth on Schedule
2.5(d) or (ii) a Closing Date Transaction of CMT or CCI that was
omitted from Schedule 2.5(d) that is with a Counterparty other than
a Counterparty to a Closing Date Transaction or a Cornerstone Transaction (each
such omitted Closing Date Transactions described in this clause (ii) being
an “Omitted Counterparty
Transaction”), then such Party shall deliver to the other Party
on or prior to the 120th day following the Closing Date (or, in the case of (A) a
Closing Date Transaction that was entered into after the Signing Date and prior
to Closing, the 180th day following the Closing Date and (B) an Omitted
Counterparty Transaction, the 18-month anniversary of the Closing) a
written notice (“Dispute
Notice”) containing a detailed description of such inaccuracy or
omission. If no Party provides a Dispute Notice to the other Party on or prior
to the date set forth in the preceding sentence applicable to such Transaction,
the Parties shall be deemed to have accepted Schedule 2.5(d), which
shall then be deemed final, binding and conclusive for all purposes hereunder. If
a Dispute Notice is timely provided, then the Parties shall each use their
respective good faith efforts for a period of fifteen (15) days after delivery
of such Dispute Notice to agree on (1) whether such an inaccuracy or
omission exists and, if so, what revisions should be made to Schedule 2.5(d) to
correct the same, and (2) what, if any, adjustments need to be made to the
Purchase Price to reflect such corrections; provided that any such adjustment
to the Purchase Price shall be consistent with the methodology and calculations
set forth on the MTM Sample Calculation. If the Parties are unable to agree on
such revisions or adjustments by the end of such fifteen (15) day period, then
any such disagreement shall be resolved in accordance with Section 2.7(c).
Promptly following the Resolution Date, the Parties shall prepare a revised Schedule
2.5(d), which shall correct any such inaccuracy or omission in accordance
with the resolution reached pursuant to this Section 2.7 (including clause
(c) hereof) and such revised Schedule 2.5(d) shall be used as
a replacement for Schedule 2.5(d) for all purposes hereunder.

(b)           Adjustments to Net Working
Capital, MTM Value, and Credit Support Payment. Within ninety (90) days
after the Closing Date in the case of Net Working Capital, within ten (10) Business
Days after the Closing Date in the case of MTM Value of the Trading

 

 20

 

Book,
and within five (5) Business Days after the Closing Date in the case of
the Credit Support Payment, Seller shall determine the actual Net Working
Capital, MTM Value of the Trading Book, and Credit Support Payment and shall
provide Buyer with written notice of such determination, along with reasonable
supporting information and calculations (each, a “Seller’s Determination”). If Buyer
objects to any Seller’s Determination above, then it shall provide Seller
written notice thereof within twenty-one (21) days after receiving the
applicable Seller’s Determination, specifying the specific matters in dispute. If
the Parties are unable to agree on the Net Working Capital, MTM Value of the
Trading Book, or Credit Support Payment within fourteen (14) days after the
applicable date on which the Buyer objects to Seller’s Determination pursuant
to the preceding sentence, then any such disagreement shall be resolved in
accordance with Section 2.7(c). If Buyer does not object to Seller’s
Determination within the time period and in the manner set forth in the second
sentence of this Section 2.7(b) or if Buyer accepts Seller’s
Determination, the Net Working Capital, MTM Value of the Trading Book, or
Credit Support Payment, as applicable, as set forth in Seller’s Determination
shall become final and binding upon the Parties for all purposes hereunder. If
the actual Net Working Capital, MTM Value of the Trading Book, or Credit
Support Payment (as agreed between the Parties or as determined pursuant to
clause (c) below) is greater than the NWC Estimate, MTM Estimate, or
Credit Support Payment Estimate, as applicable, then Buyer shall pay Seller an
amount equal to the difference between such amounts in accordance with Section 2.7(d).
If the actual Net Working Capital, MTM Value of the Trading Book, or Credit
Support Payment (as agreed between the Parties or as determined pursuant to
clause (c) below) is less than the NWC Estimate, MTM Estimate, or Credit
Support Payment Estimate, as applicable, then Seller shall pay Buyer the absolute
value of the difference between such amounts in accordance with Section 2.7(d).

(c)           Dispute Resolution by Senior
Management and Independent Accountants. If the Parties are unable to
resolve any disagreement with respect to the matters described in Section 2.7(a)or
(b)(each a “Disagreement”)
within the time periods and through the procedures set forth therein, then
Buyer, on the one hand, and Seller, on the other hand, shall each nominate
promptly (and in any event within five (5) Business
Days) an officer from their senior management to use commercially reasonable
efforts to resolve such Disagreement on or before the tenth day following such
nomination. If such senior management representatives are unable to resolve
such Disagreement by the end of such ten (10) day period, then any Party
may refer such Disagreement to the Independent Accountant, and such referring
Party shall give prompt written notice (“Referral Notice”) to the other Party (with a
copy to such Independent Accountant) of its referral of such Disagreement to
such Independent Accountant (the date of delivery of such notice to the other
Parties being the “Referral
Date”), which notice shall identify the Independent Accountant,
state that it is a Referral Notice under this Section 2.7(c) and
contain a detailed description of any Disagreement being then referred to such
Independent Accountant. The Independent Accountant shall execute a
confidentiality agreement, in form and substance reasonably satisfactory to
Buyer and Seller, with each of Buyer and Seller with respect to any
confidential or proprietary information that may be provided to it in
connection with its role under Section 2.7(c). The Parties shall cooperate
with the Independent Accountant during the term of its engagement. Within ten (10) Business
Days after the Referral Date, each of Buyer, on the one hand, and Seller, on
the other hand, shall submit a written proposal to the Independent Accountant
identifying its proposed resolution of the Disagreement and any resulting
adjustment to the Purchase Price. The Independent Accountant shall resolve each

 21
 

 

Disagreement
as promptly as practicable and in any event within thirty (30) days of the
Referral Date by notifying the Parties in writing of its resolution of the
Disagreement, which resolution shall be in accordance with the calculations and
methodologies set forth herein (the “Resolution”). The Independent Accountant
shall be required to make its determination (i) in accordance with the
guidelines and procedures set forth in this Agreement (i.e., not on the basis
of an independent review) and (ii) only with respect to Disagreements
specifically set forth in the applicable Referral Notice. The Resolution by the
Independent Accountant of any Disagreement, may, in the Independent Accountant’s
discretion, identify the prevailing Party (the “Prevailing Party”) and shall become
final and binding on the Parties on the date the Independent Accountant
delivers to the Parties its written notice of Resolution with respect to such
Disagreement. The fees and expenses of the Independent Accountant shall be paid
by the non-Prevailing Party unless no Prevailing Party is identified, in which
case the fees and expenses of the Independent Accountant shall be shared
equally by Buyer, on the one hand, and Seller, on the other hand.

(d)           Resolution Date; Payments. With
respect to any matter described in Section 2.7, the earliest date on which
either (i) such matter is resolved pursuant to Section 2.7(a) or
(b)or (ii) the last disputed item with respect to a Disagreement on such
matter is resolved in accordance with Section 2.7(c) shall be
referred to herein as the “Resolution
Date” for such matter. Upon the Resolution Date, the Party owing
any amount to the other Party pursuant to any such adjustment to the Purchase
Price pursuant to this Section 2.7 shall pay such other Party within three
(3) Business Days following such Resolution Date such amount by wire
transfer of immediately available funds to an account designated in writing by
the Party that is to receive such payment. Any such payment shall include
interest on such amount accrued from the Closing Date to but excluding the date
of such payment at a rate of 7% per annum.

                2.8          Allocation of Purchase Price.
Seller and Buyer agree that the Purchase Price shall be allocated between the
Companies in accordance with the allocation set forth on Schedule 2.8. Following
the sale of the Purchased Interests, Buyer and Seller in connection with their
respective U.S. federal, state, and local tax returns and other filings
(including without limitation Internal Revenue Service Form 8594), shall
not take any position inconsistent with such allocation (or any adjustment to
such allocations). Any adjustment to the Purchase Price (including as a result
of Section 10.7) shall be allocated as provided by Treas. Reg. §1.1060-1(c),
as applicable.

2.9          True Up for Deferred Incentive Plan
Amount. Promptly
following payment to Hired Employees of the Deferred Incentive Plan Amount
required to be paid to them by Buyer pursuant to Buyer’s covenant in Section 6.9(n) (and
in no event later than April 30, 2007 (or, if later, in the case of
amounts described under clause (ii) of the definition of Deferred
Incentive Plan Amount, on the date of the last payment to the applicable Hired
Employee of the amounts required to be paid by Buyer pursuant to the last
sentence of Section 6.9(n)), Buyer and Seller shall compare the Deferred
Incentive Plan Amount applicable to each Hired Employee to the amounts actually
paid by Buyer to such Hired Employee pursuant to Section 6.9(n), and if
the amount paid to such Hired Employee by Buyer pursuant to Section 6.9(n) is
less than the Deferred Incentive Plan Amount applicable to such Hired Employee,
then Buyer shall promptly (and in any event within five (5) Business Days)
pay the difference to the Seller, by wire transfer of immediately available
funds to an account designated by Seller.

 22
 

 

ARTICLE
III

REPRESENTATIONS AND WARRANTIES REGARDING SELLER

Seller hereby
represents and warrants to Buyer that:

                3.1          Organization. Each of Seller and each Non-Company Affiliate (other than
CG&E) that is a party to an Ancillary Agreement is duly organized, validly
existing and in good standing under the Laws of its jurisdiction of
organization.

                3.2          Authority.

(a)           Seller has all requisite corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements to which it is or will be a party and to perform its obligations
hereunder and thereunder. The execution and delivery by Seller of this
Agreement and the Ancillary Agreements to which it is or will be a party, and
the performance by Seller of its obligations hereunder and thereunder, have
been duly and validly authorized by all necessary corporate action. This
Agreement and the Ancillary Agreements to which Seller is or will be a party
are, or when executed will have been, duly and validly executed and delivered
by such Seller, and this Agreement and the Ancillary Agreements to which it is
or will be a party constitute, or when executed will constitute, the legal,
valid and binding obligation of Seller enforceable against Seller in accordance
with its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, arrangement, moratorium or other similar
Laws relating to or affecting the rights of creditors generally, or by general
equitable principles.

(b)           Each Non-Company Affiliate (other
than CG&E) that is a party to an Ancillary Agreement has all requisite company power and
authority to execute and deliver the Ancillary Agreements to which it is or
will be a party and to perform its obligations thereunder. The execution and
delivery by such Non-Company Affiliate of the Ancillary Agreements to which it
is or will be a party, and the performance by such Non-Company Affiliate of its
obligations thereunder, have been duly and validly authorized by all necessary
corporate, partnership or company action. The Ancillary Agreements to which
such Non-Company Affiliate is or will be a party are, or when executed will have
been, duly and validly executed and delivered by such Non-Company Affiliate,
and the Ancillary Agreements to which it is or will be a party constitute, or
when executed will constitute, the legal, valid and binding obligation of such
Non-Company Affiliate enforceable against such Non-Company Affiliate in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, arrangement, moratorium or
other similar Laws relating to or affecting the rights of creditors generally,
or by general equitable principles.

                3.3          No Conflicts. The execution and delivery by Seller, and each Non-Company
Affiliates (other than CG&E) that is a party to any Ancillary Agreement, of
this Agreement and the Ancillary Agreements to which it is or will be a party,
and the performance by such Person of its obligations hereunder and thereunder,
as applicable, do not:

(a)           violate or result in a breach of the
Charter Documents of Seller or such Non-Company Affiliate;

 23
 

 

(b)           assuming all of the Company Consents
have been made, given or obtained, violate, breach or result in a default under
any Contract to which Seller or such Non-Company Affiliate is a party; and

(c)           assuming all required filings,
waivers, approvals, consents, authorizations and notices set forth on Schedule 3.3(c) (collectively,
the “Seller Approvals”),
the Company Consents and other customary notifications provided in connection
with the consummation of the transactions contemplated by this Agreement have
been made, given, or obtained (i) violate or result in a breach of any Law
applicable to Seller or such Non-Company Affiliate or (ii) require any
consent or approval of any Governmental Authority under any Law applicable to
Seller or such Non-Company Affiliate.

                3.4          Capitalization. Cinergy Limited Holdings, LLC
and/or its successors is the record and beneficial holder of a 99.9% limited
partner’s interest in CMT and Cinergy General Holdings, LLC and/or its
successors is the record and beneficial holder of a 0.1% general partner’s
interest in CMT. Except as set forth on Schedule 4.3, the Seller is the record
and beneficial holder of 100% of the shares of the stock of CCI. All of the
ownership interests described in this Section 3.4 are held by the
applicable entity free and clear of all Liens other than those (a) arising
pursuant to this Agreement or applicable securities Laws or (b) for Taxes
not yet due or delinquent or being contested in good faith.

                3.5          Legal Proceedings. Except as disclosed in Schedule
3.5, (a) there are no Proceedings pending or, to Seller’s Knowledge,
threatened against Seller or any Parent Company before or by any Governmental
Authority and (b) there are no unsatisfied judgments or open injunctions
binding upon Seller or such Parent Company.

                3.6          Brokers’ Fees. No broker, finder, investment
banker or other Person is entitled to any brokerage fee, finders’ fee or other
commission with respect to the transactions contemplated by this Agreement
based upon arrangements made by Seller or any of its Affiliates, except for
fees that will be paid by Seller or its Non-Company Affiliates.

ARTICLE
IV

REPRESENTATIONS AND WARRANTIES REGARDING

THE COMPANIES AND CG&E

Seller hereby
represents and warrants to Buyer that:

                4.1          Organization.

(a)           Each of the Companies and CG&E is
a corporation or limited partnership, as applicable, duly organized, validly
existing and in good standing under the Laws of its jurisdiction of
organization. Each of the Companies has all requisite company power and
authority to conduct its business as it is now being conducted and to own and
operate its assets. 

 24
 

 

Each
of the Companies is duly licensed or qualified to transact business as a
foreign or extra provincial corporation or foreign limited partnership, as
applicable, in each jurisdiction in which the ownership or operation of its
assets make such qualification or licensing necessary.

(b)           Each of the Companies and CG&E
has all requisite corporate or partnership, as applicable, power and authority
to execute and deliver the Ancillary Agreements to which it is or will be a
party and to perform its obligations thereunder. The execution and delivery by
each of the Companies and CG&E of the Ancillary Agreements to which it is
or will be a party, and the performance by each of the Companies and CG&E
of its obligations thereunder, have been duly and validly authorized by all
necessary corporate or partnership action, as applicable. The Ancillary
Agreements to which each of the Companies or CG&E is or will be a party
are, or when executed will have been, duly and validly executed and delivered
by such Company or CG&E, as applicable, and such Ancillary Agreements
constitute, or when executed will constitute, the legal, valid and binding
obligation of such Company or CG&E, as applicable, enforceable against such
Company or CG&E, as applicable, in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, arrangement, moratorium or other similar Laws relating to or
affecting the rights of creditors generally, or by general equitable
principles.

                4.2          No Conflict. The execution and delivery by the Companies and CG&E of
the Ancillary Agreements to which it is or will be a party, and the performance
by such Person of its obligations thereunder, do not:

(a)           violate or result in a breach of the
Charter Documents of such Company or CG&E, as applicable,

(b)           assuming the consents set forth on Schedule
4.2 (the “Company
Consents”) have been made, given or obtained, breach or result
in a default in any respect under any Contract (but excluding in any event the
Contracts relating to the Transactions) to which such Company or CG&E is a
party; and

(c)           assuming the Seller Approvals, the
Company Consents and other customary notifications provided in connection with
the consummation of the transactions contemplated by this Agreement have been
made, given, or obtained (i) violate or result in a breach of any Law
applicable to such Company or CG&E, as applicable, or (ii) require any
consent or approval of any Governmental Authority under any material Law
applicable to such Company or CG&E, as applicable.

                4.3          Capitalization. Except as set forth on Schedule
4.3, no Company is a party to any Contract for the purchase, subscription,
allotment or issue of any unissued interests, units or other securities
(including convertible securities, warrants or convertible obligations of any
nature) of either Company. CMT has no subsidiaries and CCI has no subsidiaries.
Prior to the Signing Date, CMT has transferred the limited liability company
interests in Ohio River Valley Propane, LLC to Seller or one or more
Non-Company Affiliates. True and correct copies of the Charter Documents of the
Companies in effect as of the date of this Agreement have been delivered to
Buyer by Seller.

 25
 

 

                4.4          Legal Proceedings. Except as set forth on Schedule 4.4,
(a) there are no Proceedings pending or, to Seller’s Knowledge, threatened
against either Company or, with respect to the CG&E Transactions only,
CG&E before or by any Governmental Authority and (b) there are no
unsatisfied judgments or open injunctions binding upon either Company or, with
respect to the CG&E Transactions only, CG&E.

                4.5          Compliance with Laws. Each Company is in compliance
with all Laws, including environmental laws, applicable to it; provided that
this Section 4.5 does not address matters relating to Taxes, which are
exclusively addressed by Section 4.8, matters relating to employee matters
or Benefit Plans, which are exclusively addressed by Sections 4.13 and 4.14, or
matters relating to permits and licenses which are exclusively addressed in Section 4.17.

                4.6          No Default or Termination. Except as set forth on Schedule
4.6 to the Knowledge of Seller, (i) none of the Companies nor CG&E
has delivered to or received from any Counterparty to a Transaction or a
Cornerstone Contract during the nine-month
period preceding the respective date on which this Section 4.6
representation is being made, any written notice of default or written notice
of termination with respect to such Transaction or Cornerstone Contracts, to
which such Company or CG&E is a party and (ii) there is no event of
default or termination resulting from a failure to make a payment when due or
to post cash or letters of credit as credit support when due, in each case with
respect to a Transaction or a Cornerstone Contract, as applicable, to which
such Company or CG&E is a party, that has not been cured.

                4.7          Market Based Rate Authority. Except as set forth on Schedule
4.7, each of CMT and CG&E represents that it has on file with FERC
effective rate schedules to make sales of electric energy, capacity, and
ancillary services at market-based rates in compliance with the FPA and that
such rate schedules are in full force and effect. Except as set forth on Schedule
4.7, each of the Transactions which is subject to rate regulation by a
Governmental Authority is authorized to take place at market-based rates.

4.8          Taxes. Except as set forth on Schedule 4.8: 

(a)           all Tax Returns that are required to
be filed on or before the Closing Date by each Company have been or will be
duly and timely filed and such returns are true, complete and correct;

(b)           all Taxes of each Company that are
due and payable on or before the Closing Date have been or will be timely paid
in full;

(c)           all withholding Tax requirements
(whether monetary or informational in nature) imposed on each Company that are
due and payable on or before the Closing Date have been or will be satisfied,
and each Company has withheld and collected all amounts required by applicable
Law to be withheld or collected by it on account of Taxes and has remitted all
such amounts to the appropriate Governmental Authority within the time
prescribed under any applicable Law;

(d)           neither Company has in force any
waiver of any statute of limitations in respect of Taxes or any extension of
time with respect to a Tax assessment or deficiency;

 26
 

 

(e)           as of the date of this Agreement,
there are no pending or active audits or legal proceedings involving Tax
matters or, to Seller’s Knowledge, threatened audits or proposed deficiencies
or other claims for unpaid Taxes of either Company, and Seller will notify
Buyer of any audits, deficiency, or legal proceedings involving Tax matters
that arises during the period beginning the date of this Agreement and ending
on the Closing Date;

(f)            there are no Liens on any of the
assets of the Companies with respect to Taxes other than Permitted Tax Liens;

(g)           each of CMT and CCI is classified as
an association taxable as a corporation for U.S. federal income tax purposes;

(h)           each of the Parent Companies is
classified as an entity disregarded as separate from Seller for U.S. federal
income tax purposes;

(i)            CMT is a member of the Seller Group,
and CMT has never filed a consolidated or combined Tax return for federal,
state or local income Tax purposes other than as a member of the Seller Group;

(j)            neither CMT nor CCI has received a
written Tax opinion with respect to any transaction relating to CMT and CCI;
and as of the date of this Agreement, there are no requests for rulings or
determinations pending between or with respect to CMT or CCI on the one hand,
and any Taxing Authority on the other hand, and Seller will notify Buyer of any
request for such a ruling or determination that arises following this Agreement
and up to and including the Closing Date;

(k)           neither CMT nor CCI has engaged in
any transaction that would be reportable pursuant to Treasury Regulation Section 1.6011-4
or any predecessor thereto;

(l)            neither CMT nor CCI will be required
to include in any period ending after the Closing Date any income that accrued
in a prior period but was not recognized in any prior period, including as a
result of the installment method of accounting, the completed contract method
of accounting, the long-term contract method of accounting, the cash method of
accounting, any adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary change in accounting method, or the claiming of any
reserve under the Canadian Tax Act, other than any income resulting from the
marking-to-market for financial accounting purposes of Contracts that are not
also marked-to-market for Tax purposes;

(m)          for Tax purposes, each of CMT and CCI
is and has been resident only in the jurisdiction in which it is currently
organized and has never had a permanent establishment or other taxable presence
in any jurisdiction other than the jurisdiction in which it is resident for Tax
purposes, and no claim has ever been made in a jurisdiction where a Company
does not file Tax Returns that such Company is or may be subject to Tax in that
jurisdiction;

(n)           there are no Tax sharing, Tax
indemnity, Tax allocation or similar agreements with respect to Taxes in effect
to which CMT is a party, except for any agreement among members of the Seller
Group (and except for this Agreement);

 27
 

 

(o)           there are no circumstances existing
which could result in the application of section 17, section 78, section 79, or
sections 80 to 80.04 of the Canadian Tax Act, or any equivalent provision under
applicable provincial law, to either Company;

(p)           neither Company is subject to any
liability for Taxes of any other Person imposed by a Taxing Authority in
Canada;

(q)           neither Company has acquired property
or services from, or disposed of property or provided services to, a person
with whom it does not deal at arm’s length (within the meaning of the Canadian
Tax Act) for an amount that is other than the fair market value of such
property or services, nor has either Company been deemed to have done so for
purposes of the Canadian Tax Act; and

(r)            for all transactions between
CCI, on the one hand, and any non-resident Person with whom CCI was not dealing
at arm’s length, for the purposes of the Canadian Tax Act, on the other hand,
during a taxation year commencing after 2004 and ending on or before the
Closing Date, CCI has made or obtained records or documents that satisfy the
requirements of paragraphs 247(4)(a) and (b) of the Canadian Tax Act.

                4.9          Real Property.

(a)           None of the Companies owns any real
property.

(b)           None of the Companies is the tenant
(and none of the Non-Company Affiliates is a tenant on behalf of the Companies)
of any real property, except for the real property leased to the Companies (or
a Non-Company Affiliate on behalf of the Companies) under the leases set forth
on Schedule 4.9(b) or any replacement or substitute lease executed
after the Signing Date and providing substantially similar benefits to the
Companies as those set forth on Schedule 4.9(b) (the “Real Property Leases”).

(c)           (i) The Real Property Leases are
in full force and effect, and (ii) each of the Companies (or a Non-Company
Affiliate on behalf of the Companies) has paid all rent and other charges due
and complied with all of its respective obligations under the Real Property
Leases.

                4.10        Insurance. Schedule 4.10 sets
forth a list of all insurance policies held by or issued specifically on behalf
of and for the benefit of the Companies as of the date of this Agreement, other
than any such insurance policies (a) related to Benefit Plans, (b) provided
through self-insurance by a Non-Company Affiliate or (c) that are for the
general benefit of the Companies and their Affiliates.

                4.11        Intellectual Property and Software.

(a)           To Seller’s Knowledge, except as set
forth on Schedule 4.11(a) and except for the Excluded Items,
immediately prior to the Closing, the Companies will own, or have the license
or right to use, all Intellectual Property, Software and Data used in the operations and 

 28
 

 

business
of the Companies (including the CG&E Transactions), as currently conducted
and the Transferred Equipment and Transferred Capacity.

(b)           Schedule 4.11(b) sets
forth a complete and accurate list as of the date of this Agreement of (i) all
patents and patent applications, trademark registrations and copyright
registrations, and applications for trademark and copyright registrations, in
each case that are owned by either of the Companies, and (ii) all patents
and patent applications, trademark and copyright registrations and applications
for trademark and copyright registrations, in the case of clauses (i) and (ii) that
are owned by Seller or any Non-Company Affiliate and are used in the operations
and business of the Companies (including the CG&E Transactions) as
currently conducted (other than the Seller’s Marks, the Excluded Items, and the
items on Schedule 4.11(a)) (the “Registered Intellectual Property”). All
required fees to register and maintain the Registered Intellectual Property
that are due have been paid, and none of the Registered Intellectual Property
is the subject of any pending opposition proceedings, pending cancellation
proceedings, pending interference proceedings or any other similar
administrative challenge.

(c)           As of the date of this Agreement, the
Proprietary Applications are listed on Schedule 4.11(c).

(d)           The Seller, applicable Non-Company
Affiliates and the Companies have taken reasonable measures to protect and
preserve the confidentiality of the Companies’ trade secrets and confidential
information. To Seller’s Knowledge, Persons involved in the development and
authoring of the Intellectual Property owned by the Companies have executed
agreements vesting or assigning the ownership rights of any Intellectual
Property of such Persons in such Intellectual Property to either of the Companies
or to a Person granting the Software and Intellectual Property License
Agreement.

(e)           Except as disclosed on Schedule
4.11(e): (i) to Seller’s Knowledge, neither of the Companies have
misappropriated or infringed upon any Intellectual Property of any third
Person; (ii) no Claim of any such misappropriation or infringement has
been made or asserted against either Company; and (iii) none of the Seller
or the Non-Company Affiliates has received any written notice of any such Claim.
Except as disclosed on Schedule 4.11(e): (i) to Seller’s Knowledge,
no Person has misappropriated or infringed upon any Intellectual Property owned
by the Companies; and (ii) no Claim of any such misappropriation or
infringement has been made or asserted by either Company against any Person.

(f)            As of the date of this Agreement,
the Transferred Equipment used in the operations of the Companies, the absence
of which would be reasonably likely to cause a material disruption to the
operations and business of the Companies (including the CG&E Transactions)
as currently conducted, is listed on Schedule 4.11(f).

(g)           The Buyer has been provided with, or
access to, copies of all Material Software Licenses, as amended through the
date of this Agreement. Neither of the Companies nor any Non-Company Affiliate,
as applicable, are in breach or default under any Material Software License.

 29
 

 

                4.12        Brokers’ Fees. No broker, finder, investment banker or other Person is
entitled to any brokerage fee, finders’ fee or other commission with respect to
the transactions contemplated by this Agreement based upon arrangements made by
Seller or any of its Affiliates except for fees that will be paid by Seller or
its Non-Company Affiliates.

                4.13        Employees and Labor Matters. CMT does not have employees and,
except as described on Schedule 4.13, has never had any employees. Seller
shall provide Buyer as soon as practicable after Signing Date and shall update
as appropriate up to Closing Date, a complete list as of the date of this
Agreement of each of the Canadian Employees employed or retained by CCI,
whether actively at work or not, their salaries, wage rates, commissions and
consulting fees, bonus arrangements, positions, status as full-time or
part-time employees, location of employment and length of service. With respect
to all Canadian Employees and Available Employees and except as described on Schedule
4.13:

(a)           no Canadian Employees or Available
Employees are represented by a union or other collective bargaining entity in a
manner affecting the Companies and no collective bargaining agreement to which
either Company is a party is currently being negotiated in respect of such
employees;

(b)           there has not occurred, nor, to
Seller’s Knowledge has there been threatened, a labor strike, request for
representation, organizing campaign, work stoppage, slowdown, or lockout or
other labor dispute by or involving the Canadian Employees or the Available
Employees in the past two years prior to the Signing Date;

(c)           neither Seller nor any of its
Affiliates has received notice of any charges against either Company before any
Governmental Authority responsible for the prevention of unlawful employment
practices involving any of the Available Employees or the Canadian Employees
and the Companies are in compliance with all applicable Laws respecting
employment practices, labor relations, terms and conditions of employment and
similar Laws;

(d)           to Seller’s Knowledge, as of the date
of this Agreement, there are no internal investigations into allegations
brought by or against any Available Employees or Canadian Employees of unlawful
employment practices, breach of any terms or conditions of employment,
employment discrimination or harassment claims, breach of fiduciary duties,
fraud, or any other claim arising out of or related to the employment
relationship;

(e)           no unfair labor practice complaint,
grievance or arbitration proceeding is pending or, to Seller’s Knowledge,
threatened, against either Company before any Governmental Authority with
respect to the Available Employees or the Canadian Employees;

(f)            as of the date of this Agreement no
Canadian Employee or Available Employee has any agreement to which either
Company is a party as to length of notice or severance payment required to
terminate his or her employment, other than such as results by Law from the
employment of an employee without an agreement as to notice or severance; and

(g)           with respect to the Available
Employees or the Canadian Employees, there are no outstanding assessments,
penalties, fines, liens charges, surcharges or other amounts due or owing by
either Company pursuant to any workplace safety and insurance Laws.

 

 30

 

                4.14        Employee Benefits.

(a)           Canadian Employee Benefit Plans.
Schedule 4.14 sets forth a complete list of the Canadian Employee
Benefit Plans as of the date of this Agreement. Copies of all Canadian Employee
Benefit Plans have been made available to Buyer. Except as disclosed in Schedule
4.14, Seller and CCI have no formal plans and have made no promise to
improve or change the benefits provided under any Canadian Employee Benefit
Plan since March 31, 2006. Each of the Canadian Employee Benefit Plans has
been established, registered and administered in compliance with the terms and
conditions of such Canadian Employee Benefit Plan and all applicable Laws. All
employer and employee contributions and premiums that are required in respect
of each Canadian Employee Benefit Plan have been paid when due. Other than
routine claims for benefits, there are no Proceedings pending or, to Seller’s
Knowledge, threatened against either Company before any Governmental Authority
involving any Canadian Employee Benefit Plan. CCI does not sponsor, maintain,
or participate in, and has no liability, contingent or otherwise, with respect
to a registered pension plan as defined in Section 248(1) of the
Income Tax Act (Canada) or with respect to a pension plan for which
registration has been revoked.

(b)           United States Benefit Plans. CMT does not sponsor, maintain or contribute
to any Benefit Plan. Except as set forth on Schedule 4.14, as
of the date of this Agreement, CMT is not a party to nor obligated under any
employment or severance agreements providing for payments upon a change in
control. With respect to any “employee benefit plan,” within the meaning of Section 3(3) of
ERISA, that is sponsored, maintained or contributed to, or has been sponsored,
maintained or contributed to within six years prior to the date of this
Agreement by Seller or any ERISA Affiliate, (a) no withdrawal liability,
within the meaning of Section 4201 of ERISA, has been incurred, which
withdrawal liability has not been satisfied, (b) no liability to the Pension
Benefit Guaranty Corporation has been incurred by any such entity (other than
routine Pension Benefit Guaranty Corporation premiums), which liability has not
been satisfied, (c) no accumulated funding deficiency, whether or not
waived, within the meaning of Section 302 of ERISA or Section 412 of
the Code has been incurred, and (d) all contributions (including
installments) to such plan required by Section 302 of ERISA and Section 412
of the Code have been timely made. None of the Available Employees is covered
by an employment agreement or otherwise which could result in CMT being
obligated to pay compensation or benefits which are excess parachute payments
pursuant to section 280G of the Code.

                4.15        Liabilities. As of the date of this Agreement, except for liabilities
disclosed on Schedule 4.15, neither Company has liabilities in excess of
$500,000 that would be required to be reflected on an unaudited balance sheet
of such Company prepared in accordance with GAAP.

                4.16        Other Assets. Neither of the Companies owns tangible assets for the
generation, transmission or distribution of electricity or the gathering,
transportation, distribution or storage of natural gas or crude oil.

 31
 

 

                4.17        Licenses. Excluding any Intellectual Property licenses or permits, the
Companies hold, or have the right to use, all licenses or permits necessary in
the operation of the business as currently conducted.

                4.18        Financial Information.

(a)           The Management Reports of the
Companies relating to periods in fiscal year 2005 and the portion of the fiscal
year 2006 ended on or prior to March 31, 2006, taken as a whole, fairly
present in a manner consistent with the past practices of the Companies the
economic gross margin and direct operating costs on an aggregate basis for the
Companies (and including, for purposes of this Section 4.18(a), the
CG&E Transactions) for the fiscal year ended on December 31, 2005 and
for the three-month period ended on March 31, 2006; provided that, for
purposes of clarification, such economic gross margin has not been prepared in
accordance with GAAP.

(b)           Except as set forth or described
in the work papers prepared by Deloitte & Touche supporting such
financial statements, the unaudited balance sheets and the related unaudited
statements of income and cash flows
for CMT (Houston gas trading) and of CCI (Canada gas trading) as of and for the
12-month period ended December 31, 2005 and the three-month period
ended March 31, 2006, and attached hereto as Exhibit L, fairly
present in all material respects, substantially in accordance with GAAP, the
financial condition, results of operations and cash flows, taken as a whole, of CMT for the Houston gas
trading business and of CCI for the Canadian gas trading business as of such
dates and for the periods indicated, subject, in the case of such financial
statements for the three-month period ended March 31, 2006, to normal year
end adjustments.

                4.19        No Adverse Changes. Except as disclosed in Schedule
4.19, from March 31, 2006 through the Signing Date, there has been no
Material Adverse Effect.

                4.20        Contracts and Commitments.

(a)           Excluding (i) the Transactions
and any Contracts and/or Trading Contracts relating to the Transactions, (ii) Affiliate
Contracts, (iii) Cornerstone Contracts, (iv) any Credit Support
associated with the items listed in Section 4.20(a)(i) through (iii),
(iv) Contracts pursuant to which neither the Company nor any of its assets
will be bound or have liability after Closing (including any Contracts
associated with or relating to any Excluded Items), and (v) Benefit Plans,
Schedule 4.20 sets forth a list as of the date of this Agreement of the
following Contracts (including any waiver granted with respect to the material
terms of such Contracts) to which the Company is a party or by which the Company’s
assets are bound (the Contracts listed on Schedule 4.20 that meet the
descriptions in this Section 4.20, being collectively, the “Material Contracts”):

(A)          each Contract under which it has
incurred, assumed or guaranteed any outstanding indebtedness for borrowed
money, whether as borrower, lender or guarantor, in excess of $1,000,000 and
all related security agreements or similar agreements granting Liens securing
such indebtedness for borrowed money;

 32
 

 

(B)           Contracts containing covenants
limiting the freedom of the Companies to engage in any line of business or
compete with any Person or operate in any geographic location;

(C)           Any Contract pending for the
acquisition or disposition, directly or indirectly (by merger or otherwise) of
any of the Capital Stock of the Companies;

(D)          Any Contracts between the Companies,
on one hand, and the Seller or any Non-Company Affiliate on the other hand;

(E)           Contracts relating to the licensing
of Intellectual Property (other than the Excluded Items) having an annual fee of
at least $100,000, but specifically excluding any licensing agreements
generally available, off-the-shelf or non-customized software; and

(F)           Any (1) employment Contract or
consulting contract with a natural person, in each case requiring annual
compensation (including base salary, bonuses and benefits) in excess of
$600,000, and (2) any employee, officer or director indemnification
Contract (other than any Charter Documents), and in the case of clauses (1) and
(2) excluding all Contracts relating to the Incentive Plan Payment Amount
or the Deferred Incentive Plan Amount.

(b)           The Companies have provided Buyer
with, or access to, copies of all Material Contracts, as amended through the
date of this Agreement.

(c)           The Companies are not in breach or
default under any Material Contract.

(d)           To the Knowledge of Seller, there are
no legally binding oral contracts (other than oral contracts relating to or
associated with the Marketing and Trading Transactions, such as oral
confirmations) to which any Company is a party.

                4.21        No Conflicting Contracts. Neither Seller nor any of its
Affiliates is a party to any Contract or conducts any business, in each case
that would reasonably be expected to cause a delay or refusal in any
Governmental Authority’s granting of a Buyer Approval or a Seller Approval, and
neither Seller nor any of its Affiliates has any plans to enter into any such
Contract or conduct any such business.

                4.22        Trading. The Companies have established risk parameters, limits and
guidelines in compliance with the Risk Management Policies to restrict the
level of risk that the Companies are authorized to take with respect to the net
position resulting from the physical and financial commodity transactions,
exchange-traded futures and options transactions, over-the-counter transactions
and derivatives thereof and similar transactions.

                4.23        TRS Agreement. The TRS Agreement is a “swap agreement” as such term is
defined in the Bankruptcy Code.

 33
 

 

ARTICLE
V

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby
represents and warrants to Seller that:

                5.1          Organization. Each of Buyer and each of its Affiliates that is a party to
an Ancillary Agreement is duly organized and validly existing under the Laws of
its jurisdiction of organization.

                5.2          Authority. Each of Buyer and each of its Affiliates that is a party to
any Ancillary Agreement has all requisite corporate power and authority to
execute and deliver this Agreement and the Ancillary Agreements, as applicable,
to which it is or will be a party and to perform its obligations hereunder and
thereunder, as applicable. The execution and delivery by Buyer, and each of its
Affiliates that is a party to any Ancillary Agreement, of this Agreement and
the Ancillary Agreements to which it is or will be a party, and the performance
by Buyer and such Affiliate of its obligations hereunder and thereunder, as
applicable, have been duly and validly authorized by all necessary corporate,
partnership or company action. This Agreement and the Ancillary Agreements to
which it is or will be a party have been, or when executed will have been, duly
and validly executed and delivered by Buyer and such Affiliate, and this
Agreement and the Ancillary Agreements to which it is or will be a party
constitute, or when executed will constitute, the legal, valid and binding
obligation of Buyer or such Affiliate, as applicable, enforceable against Buyer
or such Affiliate, as applicable, in accordance with their terms, except as the
same may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, arrangement, moratorium or other similar Laws relating to or
affecting the rights of creditors generally, or by general equitable principles

                5.3          No Conflicts. The execution and delivery by each of Buyer, and each of its
Affiliates that is a party to an Ancillary Agreement, of this Agreement and the
Ancillary Agreements, as applicable, to which it is or will be a party, and the
performance by Buyer or such Affiliate of its obligations hereunder and
thereunder do not:

(a)           violate or result in a breach of the
Charter Documents of Buyer or such Affiliate;

(b)           violate, breach or result in a
default under any Contract to which Buyer or such Affiliate is a party, except
for any such violations, breaches or defaults that would not reasonably be expected
to result in a material adverse effect on Buyer’s ability to perform its
obligations hereunder;

(c)           assuming all required filings,
waivers, approvals, consents, authorizations and notices set forth in Schedule
5.3 (collectively, the “Buyer Approvals”) and other customary notifications
provided in connection with the consummation with the transaction contemplated
by this Agreement have been made, given, or obtained (i) violate or result
in a breach of any Law applicable to Buyer or such Affiliate or (ii) require
any consent or approval of any Governmental Authority under any Law applicable
to Buyer or such Affiliate, except such violations, breaches, consents or
approvals that would not reasonably be expected to result in a material adverse
effect on Buyer’s and such Affiliates’, taken as whole, ability to perform its
obligations hereunder.

 34
 

 

                5.4          Legal Proceedings. (a) There are no
Proceedings pending or, to Buyer’s Knowledge, threatened against Buyer before
or by any Governmental Authority that would reasonably be expected to have a
material and adverse effect on the ability of Buyer to enter into and perform
its obligations under this Agreement and (b) there are no unsatisfied
judgments or open injunctions binding upon Buyer that would reasonably be expected
to have a material adverse effect on the consummation of the transactions
contemplated by this Agreement. Neither Buyer nor any of its Affiliates is
subject to any supervisory actions by federal bank regulatory authorities under
12 USC 1818(b).

                5.5          Brokers’ Fees. No broker, finder, investment banker or other Person is
entitled to any brokerage fee, finders’ fee or other commission with respect to
the transactions contemplated by this Agreement based upon arrangements made by
Buyer or any of its Affiliates except for fees that will be paid by Buyer or
its Affiliates.

                5.6          Acquisition as Investment. Buyer is acquiring the Purchased
Interests for its own account as an investment without the present intent to
sell, transfer or otherwise distribute the same to any other Person. Buyer has
made, independently and without reliance on Seller (except to the extent that
Buyer has relied on the representation and warranties of Seller in this
Agreement), its own analysis of the Purchased Interests, the Companies, the
Assigned Contracts, the Transactions and the associated Contracts, assets and
employees for the purpose of entering into this Agreement and consummating the
transactions contemplated by this Agreement, and Buyer has had reasonable and
sufficient access to documents, other information and materials as it considers
appropriate to make its evaluations. Buyer acknowledges that the Purchased
Interests are not registered pursuant to the Securities Act of 1933 (the “1933 Act”) and that none of the
Purchased Interests may be transferred, except pursuant to an applicable
exception under the 1933 Act. Buyer is an “accredited investor” as defined
under Rule 501 promulgated under the 1933 Act.

                5.7          Financial Resources. Buyer has and, at Closing, will
have sufficient cash on hand to enable it to purchase the Purchased Interests
and satisfy the other obligations of Buyer under this Agreement on the terms
hereof.

                5.8          No Conflicting Contracts. Neither Buyer nor any of its
Affiliates is a party to any Contract or conducts any business, in each case
that would reasonably be expected to cause a delay or refusal in any
Governmental Authority’s granting of a Buyer Approval or a Seller Approval, and
neither Buyer nor any of its Affiliates has any plans to enter into any such Contract
or conduct any such business. Buyer is a “well capitalized” organization within
the meaning of 12 CFR 225.2(r) and is a “well managed” organization within
the meaning of 12 CFR 225.2(s).

                5.9          Opportunity for Independent Investigation. Prior to its execution of this
Agreement, Buyer has conducted to its satisfaction an independent investigation
and verification of the current condition, assets and affairs of the Companies,
the Affiliate Contracts, the Purchased Interests, the Transactions and the Contracts
associated therewith, and the assets and employees associated with the
Companies. In making its decision to execute this Agreement and the Ancillary
Agreements to which it is, or will be, a party and consummate the transactions
contemplated hereby or thereby, Buyer has relied and will rely solely upon the
results of such 

 

 35
 

 

independent
investigation and verification and the terms and conditions of this Agreement,
including the Schedules.

                5.10        Federal Reserve Board Filing. On or prior to the Signing Date,
Buyer has filed with the Federal Reserve Board its application for approval under Section 4 of the Bank Holding Company Act
and Regulation Y to permit Buyer to expand its scope of permitted activities to
engage in physical commodity trading in the United States.

ARTICLE
VI

COVENANTS

The
Parties hereby covenant and agree as follows:

                6.1          Novation and Assignment of CG&E Transactions. From the Signing Date through
the first date on which all CG&E Transactions have been assigned or novated
to CMT or have expired or terminated:

(a)           Cooperation of Parties:  Buyer agrees to use its commercially
reasonable efforts (and to cooperate and provide Seller, CMT and CG&E with
reasonable assistance) to cause, subject to the receipt of any applicable
Required ISO/RTO Membership for CMT, the novation (or, with the consent of
Seller or CG&E, the assignment) of the CG&E Transactions from CG&E
to CMT (with a goal of achieving a CG&E Transferred Percentage of at least
95% by October 15, 2006) and to obtain any requisite regulatory and any
requisite Counterparty consents (and, if needed, the consent of any Person
providing credit support on behalf of such Counterparty) so that (i) all
right, title and interest of CG&E with respect to the applicable CG&E
Transaction for periods accruing from and after Closing (other than accounts
receivable relating to amounts arising under the CG&E Transactions prior to
the Closing) shall be novated or assigned to CMT, provided that any transfer
requiring prior approval from a Governmental Authority shall be subject to the
receipt or waiver of such approval from such Governmental Authority, (ii) all
liabilities and obligations of CG&E and any Duke Credit Support Provider
arising out of or relating to such CG&E Transaction for periods accruing from
and after Closing (regardless of the nature of such liabilities) shall in the
case of an assignment be assumed by CMT and in all cases such obligations and
liabilities shall, effective as of Closing, be assumed or guarantied by Buyer
(or if Buyer does not have the Required Rating, assumed or guarantied by a
Person with a Credit Rating at least equal to the Required Rating), (iii) each
Counterparty and any beneficiary of any Credit Support provided with respect to
such CG&E Transaction shall provide a valid and binding written release of
CG&E and any Duke Credit Support Provider with respect to all liabilities
and obligations of CG&E and any Duke Credit Support Provider arising out of
or relating to such CG&E Transaction for periods accruing from and after
Closing (regardless of the nature of such liabilities), and (iv) any items
of Credit Support being posted by a Duke Credit Support Provider with respect
to such CG&E Transaction are returned to the applicable Person. It being
understood that Seller, CG&E and each Duke Credit Support Provider are
entitled to require that terms substantially similar to those set forth in
items (i) through (vi) above are contained in each CG&E Novation
Agreement and each CG&E Assignment Agreement. Seller agrees to (and to cause
CG&E and, prior to Closing, CMT to) use commercially reasonable efforts to
cooperate with and assist Buyer (and, after Closing, CMT) with the novation or
assignment of such CG&E Transactions pursuant to this Section 6.1. 

 36
 

 

Buyer
agrees from and after Closing to cause CMT to use reasonably commercial efforts
to cooperate with and assist Buyer, CG&E and Seller with respect to such
novations or assignments. Upon the effective date of each such novation and
assignment of such CG&E Transactions, the corresponding rights and
obligations of CG&E and CMT under the TRS Agreement with respect to such
CG&E Transaction shall terminate, all in accordance with and subject to the
terms and conditions of Section 2.2 of the TRS Agreement.

(b)           Process for Obtaining Counterparty
Consent. Buyer shall offer (or, when applicable, cause CMT to offer) to
each Counterparty to a CG&E Transaction promptly following the Signing Date
(i) a form of cover letter and novation agreement (or with the consent of
Seller or CG&E, an assignment agreement) that (A) is substantially in
the form of Exhibit E (or, in the case of any assignment agreement,
substantially in the form of Exhibit F), with such modifications, if any,
thereto that have been mutually agreed to by Seller and Buyer acting reasonably,
and (B) provides that CMT shall be the transferee or assignee, as
applicable, thereunder effective as of Closing, (ii) a guaranty to be
effective as of Closing, in form and substance reasonably satisfactory to
Seller of all obligations under such CG&E Transaction issued by a Person
with Credit Ratings of at least the Required Rating, and (iii) if a
CG&E Transaction is to be novated to CMT but CMT and the applicable
Counterparty are not parties to a Master Agreement corresponding to the type of
Master Agreement then in effect for such CG&E Transaction, a proposed
Master Agreement between CMT and such Counterparty of a type similar to that
governing such CG&E Transaction containing terms that are at least as
favorable in all respects (including terms, amount and conditions) to such
Counterparty as those existing on the earlier of (x) the date such
proposed Master Agreement is being offered and (y) the Closing and
contained in the corresponding Master Agreement that is to be replaced between
CG&E and such Counterparty. Buyer agrees in connection with the novation or
assignment of such CG&E Transaction (and its associated Contracts) pursuant
to this Section 6.1: (A) to offer to and, effective as of Closing,
accept from the Counterparty to such CG&E Transaction terms and conditions,
and (B) to provide or cause CMT to receive credit support, effective as of
the Closing, that, in the case of clauses (A) and (B) above, are at
least as favorable to such Counterparty as those contained in such CG&E
Transaction (and its associated Contracts) on the earlier of (x) the date
such credit support is being offered and (y) the Closing.

(c)           Progress Reports. Buyer shall
provide to Seller on the first and fifteenth day of each month (unless such day
is not a Business Day, in which case such report shall be delivered on the
immediately succeeding Business Day) a report substantially in the form of Exhibit G
showing the status of the novation or assignment process with respect to each
CG&E Transaction broken out by Counterparty and type of Master Agreement
and the actions that have been taken since the prior report and showing such
other information as may be reasonably requested by Seller and reasonably
available to Buyer.

(d)           Senior Management Involvement. If on the date that is the
later of the Closing Date and October 15, 2006, the quotient of (i) the
absolute value the expected gross cash flow of the CG&E Transactions (in
effect at the Closing) that have been novated or assigned to CMT in accordance
with this Agreement divided by (ii) the absolute value of the expected
gross cash flow of the CG&E Transactions (in effect at the Closing) (such
quotient being the “CG&E
Transferred Percentage”) is less than 95%, then Buyer, on the
one hand, and Seller, on the other hand, shall each nominate promptly (and in
any event within five (5) Business Days after such 

 37
 

 

date)
an officer from their senior management, and such senior management
representatives shall promptly thereafter meet (and shall thereafter continue
to meet at agreed upon intervals) to in good faith devise and implement
additional commercially reasonable procedures of Buyer (including the use of
additional personnel of Buyer) to cause the prompt novation, assignment or
termination of any remaining CG&E Transactions.

(e)           Option to Assign CG&E
Transactions. If
the CG&E Transferred Percentage is less than 95% on December 15, 2006,
then Seller shall have the option, in its sole discretion, at any time after
such date to unilaterally assign to CMT, or negotiate the termination of, any
CG&E Transaction (other than CG&E Transactions that are “Into Cinergy
Seller’s Choice” Contracts) that has not been novated or assigned from CG&E
to CMT by such date.

(f)            Ability to Appoint CMT as Agent
for CG&E Transactions. Subject
to the receipt of any required approval from a Governmental Authority, the
Parties agree that CG&E shall have the right at any time after the Closing
Date to appoint CMT (or, with the consent of Buyer, another Affiliate of Buyer)
as its agent with respect to the CG&E Transactions.

                6.2          Regulatory and Other Approvals.
From the date
of this Agreement until Closing (the “Interim Period”):

(a)           The Parties shall (and shall cause
their respective Affiliates to) use commercially reasonable efforts to obtain
as promptly as practicable all Seller Approvals, Company Consents and Buyer
Approvals and all other material consents and approvals that any of Seller,
Buyer or their respective Affiliates are required to obtain in order to
consummate the transactions contemplated hereby (including the novation and/or
assignment of the CG&E Transactions to CMT).

(b)           The Parties shall, and shall cause
their respective Affiliates to, (i) make or cause to be made the filings
required of such party or any of its Affiliates under any Laws with respect to
the transactions contemplated by this Agreement and to pay any fees due of it
in connection with such filings, as promptly as is reasonably practicable, (ii) cooperate
with the other Party and furnish the information in such Party’s possession that
is necessary in connection with such other Party’s filings, (iii) use
commercially reasonable efforts to cause the expiration of the notice or
waiting periods under any Laws with respect to the transactions contemplated by
this Agreement as promptly as is reasonably practicable, (iv) promptly
inform the other Party of any communication from or to, and any proposed
understanding or agreement with, any Governmental Authority in respect of such
filings, (v) reasonably consult and cooperate with the other Party in
connection with any analyses, appearances, presentations, memoranda, briefs,
arguments and opinions made or submitted by or on behalf of any Party in
connection with all meetings, actions and proceedings with Governmental
Authorities relating to such filings, (vi) comply, as promptly as is
reasonably practicable, with any requests received by such Party or any of its
Affiliates under any Laws for additional information, documents or other
materials, (vii) use commercially reasonable efforts to resolve any
objections as may be asserted by any Governmental Authority with respect to the
transactions contemplated by this Agreement and (viii) use commercially
reasonable efforts to contest and resist any action or proceeding instituted
(or threatened in writing to be instituted) by any Governmental Authority
challenging the transactions contemplated by this Agreement as violative of any
Law. If a Party intends to 

 38
 

 

participate
in any meeting with any Governmental Authority with respect to such filings and
if permitted by, or acceptable to, the applicable Governmental Authorities, it
shall give the other Party reasonable prior notice of, and an opportunity to
participate in, such meeting.

(c)           In connection with any such filings,
Buyer shall cooperate in good faith with Governmental Authorities and undertake
promptly any and all commercially reasonable action
required to complete lawfully the transactions contemplated by this Agreement;
provided that nothing in this Section 6.2 shall require Buyer to make any
divestiture of any of its assets or any portion of its business.

(d)           The Parties shall provide prompt
notification to each other when any such consent or approval referred to in
this Section 6.2 is obtained, taken, made, given or denied, as applicable.

(e)           In furtherance of the foregoing
covenants:

(i)                    Each
Party shall prepare, as soon as is practical following the Signing Date, all
necessary filings in connection with the transactions contemplated by this
Agreement that may be required by FERC or the Federal Reserve Board, or under
the HSR Act, the Competition Act (Canada) or any other federal, state,
provincial or local Laws. Each Party shall submit such filings as soon as
practicable, but in no event later than five (5) Business Days (subject to
extension by mutual agreement) after the execution hereof for filings with the
FERC for authorization of the transactions contemplated by this Agreement
(including the TRS Agreement, the Transition Services Agreement and the
Services Agreement) pursuant to Section 203 of the FPA. The Parties shall
request expedited treatment of any such filings, shall promptly furnish each
other with copies of any notices, correspondence or other written communication
from the relevant Governmental Authority, shall promptly make any appropriate
or necessary subsequent or supplemental filings and shall cooperate in the
preparation of such filings as is reasonably necessary and appropriate.

(ii)                   Buyer
and Seller shall not, and shall each cause its respective Affiliates not to,
take any action that could reasonably be expected to adversely affect the
approval of any Governmental Authority of any of the filings referred to in
this Section 6.2.

6.3          Access of Buyer and Seller. During
the Interim Period, Seller will provide Buyer and its authorized
Representatives with reasonable access, upon reasonable prior notice and during
normal business hours, to the properties, books, Contracts, records and
appropriate officers and employees of, or employees performing actions on
behalf of, the Companies, but only to the extent that such access (i) does
not unreasonably interfere with the normal operation of the business of Seller
or the Companies and (ii) is
reasonably related to the requesting Party’s obligations and rights hereunder; provided, however, that Seller
shall have the right to (A) have a Representative present for any
communication with officers or employees of, or employees performing actions on
behalf of, the Companies and (B) impose reasonable restrictions and
requirements for safety purposes.  Additionally, Buyer shall hold in confidence
all such information on the terms and subject to the conditions contained in
the Confidentiality Agreement. Notwithstanding the foregoing, Buyer shall have
no right of access to, and Seller shall have no obligation to provide or cause
either of the Companies to provide to Buyer, any 

 39
 

 

information
the disclosure of which (1) would jeopardize any privilege available to
such Company, Seller, or any Non-Company Affiliate, (2)  would cause
such Company, Seller, or any Non-Company Affiliate to breach a confidentiality
obligation or (3) would result in a violation of Law.

(b)           Buyer agrees to indemnify and hold
harmless Seller, its Affiliates and their Representatives for any and all
Losses incurred by Seller, its Affiliates or their Representatives arising out
of the access rights under Section 6.3(a), including any claims by any of
Buyer’s Representatives for any injuries or property damage during such access
by Buyer to the property of the Companies or CG&E other than due to the
gross negligence or willful misconduct of Seller and its Representatives.

(c)           For a period of eighteen (18) months
following Closing, Buyer agrees, upon reasonable prior notice from Seller and
during normal business hours, to provide to Seller and its Representatives
copies of books and records of the Companies or relating to the Hired Employees
(or, to the extent such copies are not available, reasonable access to the
copies and records of the Companies and the Hired Employees) solely to the
extent relating to events that occurred prior to Closing and to the extent
needed for a legitimate business purpose as requested in reasonable detail in
writing by Seller, but only to the extent that such access or copies do not
unreasonably interfere with the normal operation of the business of Buyer or
the Companies; provided, however, that Seller shall initiate no
contact under this Section 6.3 with the Hired Employees other than through
Buyer’s designated representatives and Buyer shall have (A) the right to
have a Representative present for any communication with employees or officers
of the Companies and (B) the right to impose reasonable restrictions and
requirements for safety purposes. Additionally, Seller shall hold in confidence
all such information on the terms and subject to the conditions contained in
the Confidentiality Agreement to the same extent as such terms and conditions
applied to Buyer. Notwithstanding the foregoing, Seller shall have no access
to, and Buyer shall have no obligation to provide or cause either of the
Companies to provide to Seller, any information the disclosure of which (1) would
jeopardize any privilege available to such Company, Buyer or its Affiliates, (2)  would
cause such Company, Buyer or its Affiliates to breach a confidentiality
obligation or (3) would result in a violation of Law. Seller agrees to
indemnify and hold harmless Buyer, its Affiliates and their Representatives for
any and all Losses incurred by Buyer, its Affiliates or their Representatives
arising out of the access rights under this Section 6.3, including any
claims by any of Seller’s Representatives for any injuries or property damage
during such access by Seller to the property of the Companies other than due to
the gross negligence or willful misconduct of Buyer and its Representatives.

                6.4          Certain Restrictions.

(a)           During the Interim Period, except as
set forth on Schedule 6.4, as contemplated by this Agreement or as
consented to in writing by Buyer (which consent shall not be unreasonably
withheld, conditioned or delayed), Seller shall cause the Companies and, with
respect to the CG&E Transactions only, CG&E to (i) operate in the
ordinary course of business and in compliance with the material provisions of
the Risk Management Policies, (ii) use commercially reasonable efforts to
preserve intact the business of the Companies and its relationship with
material customers and others having material business relationships with the

 

 40

 

Companies,
(iii) use commercially reasonable efforts to maintain their tangible
properties and facilities in good working order and condition, ordinary wear
and tear excepted, and (iv) not to:

(A)          repurchase, redeem or otherwise
acquire any of the Capital Stock of the Companies;

(B)           amend or change the Charter Documents
of the Companies, liquidate, dissolve, or otherwise wind up the business of the
Companies or merge or consolidate the Companies with any other Person;

(C)           enter into any joint venture, partnership
or similar arrangements; provided that
for purposes of clarification, energy management agreements, energy marketing
agreements and Marketing and Trading Transactions shall not be considered joint
ventures, partnerships or similar arrangements for purposes of this clause (C);

(D)          fail to use commercially reasonable
efforts to renew any permit necessary for the operation of the business of the
Companies;

(E)           make any new, or change any existing,
material election with respect to Taxes of the Companies, other than with
respect to sales and use taxes filings;

(F)           except as may be required to meet the
requirements of applicable Law or GAAP, change any accounting method or
practice of the Companies in a manner that is inconsistent with past practice
in a way that would adversely affect the Companies or their business after
Closing;

(G)           authorize any capital expenditure of
the Companies in excess of $2,000,000 other than in the ordinary course of
business consistent with past practice or as needed in connection with the
consummation of the transactions contemplated by this Agreement;

(H)          grant any proxy with respect to the
Purchased Interests or deposit any of the Purchased Interests into a voting
trust or enter into any voting agreement with respect to any of the Purchased
Interests;

(I)            make any loan of cash to any Person
(other than a Company) other than (1) loans that will be repaid at or
prior to Closing, (2) loans associated with Marketing and Trading
Transactions, the Cornerstone Contracts or any Credit Support provided in
connection therewith or (3) loans to employees entered into in the
ordinary course of business consistent with past practice; provided that for
purposes of clarification in no event will any Marketing and Trading
Transaction of a Company or the purchase or sale of any commodity by a Company
be deemed to be a loan under this clause (I);

(J)            incur any indebtedness for borrowed
money other than (1) such indebtedness that will be repaid at or prior to
Closing, (2) such indebtedness that will be (or that Seller, at its
option, elects to be) treated as a current liability in Net Working Capital, (3) such
indebtedness associated with Marketing and Trading Transactions, the
Cornerstone Contracts or any Credit Support provided in connection therewith,
or (4) such indebtedness 

 41
 

 

relating to
equipment used in the operations and business of the Companies incurred in the
ordinary course of business consistent with past practice; provided that for
purposes of clarification in no event will any Marketing and Trading
Transaction of a Company or the purchase or sale of any commodity by a Company
be deemed to be the incurrence of indebtedness for borrowed money under this
clause (J);

(K)          enter into any employment agreement or
any consulting agreement with a natural person, in each case that requires
annual compensation (including base salary, bonuses and benefits) in excess of
$600,000

(L)           exercise any rights under Section 2
of the Exclusivity Agreement dated September 20, 2005 by and between CMT
and HNG LNG Ventures LLC, HNG Storage, LP and HNG LNG Ventures LP (as amended
or extended) to acquire any interest in the Project (as defined therein); or

(M)         commit to do any of the foregoing.

(b)           Notwithstanding the foregoing,
nothing in the Agreements shall prevent either Company or CG&E from (i) taking
commercially reasonable actions with respect to emergency situations and
regulatory requirements or other requirements of Law so long as Seller shall,
upon receipt of notice of any such actions, promptly inform Buyer of any such
actions taken outside the ordinary course of business, (ii) taking actions
as are reasonably necessary to allow the Companies to operate their businesses
(as currently conducted and after taking into account the transactions
contemplated by this Agreement) on a stand alone basis separate from Seller and
the Non-Company Affiliates, including actions to enable the Companies to enter
into Marketing and Trading Transactions with respect to power, coal, emissions
and firm transportation rights and including, at Seller’s option, terminating (A) Contracts
between a Company and a Non-Company Affiliate or Contracts to which CG&E is
a party and (B) any Marketing and Trading Transaction between CG&E and
a third party associated with such Contracts described in clause (A), and (iii) taking
any actions that would not reasonably be expected to adversely affect the
Companies after Closing.

                6.5          Migration Services. During the Interim Period,
Seller shall provide or cause to be provided to the Companies the migration
services described on Schedule 6.5 (the “Migration Services”) and shall use
commercially reasonable efforts to transfer to CMT or obtain on behalf of CMT
licenses for all third party Software used in the operations and business of
the Companies (and the CG&E Transactions) as currently conducted (the “Third Party Software”).
The Migration Services shall be performed in accordance with a written plan
(the “Migration Plan”). Seller
shall be responsible for preparing, revising and finalizing the Migration Plan
within ten (10) days following the Signing Date; provided that Seller
shall cooperate and work closely with Buyer in developing the Migration Plan
(including incorporating Buyer’s reasonable suggestions) and the Migration Plan
shall be subject to Buyer’s reasonable approval, such approval not be
unreasonably withheld. Until Closing or the completion of the Migration
Services, whichever occurs first, Seller shall review with Buyer at least on a
weekly basis, or as often as otherwise may be reasonably requested by Buyer,
the status of the Migration Services. If the Migration Services are not
successfully completed as of the Closing Date, then the Migration Services
shall be performed by Seller under the terms of the Transition Services 

 42
 

 

Agreement and
at Seller’s sole cost and expense to the extent specified in the Transition
Services Agreement. If the Seller has not successfully transferred to, or
obtained on behalf of, CMT licenses to any Third Party Software as of the
Closing Date, Seller shall continue (for a period of 90 days after the Closing
Date) to use commercially reasonable efforts to transfer to, or obtain on
behalf of, CMT such licenses at Seller’s sole cost and expense. For purposes of
clarification, the failure to complete the Migration Services and/or transfer
to (or obtain on behalf of) CMT the Third Party Software shall not delay or
prevent Closing. If Seller has not successfully transferred to, or obtained on
behalf of, CMT licenses to any Third Party Software by the 90th day after the
Closing Date, Buyer shall have the right to obtain a license to such Third
Party Software and shall be entitled to indemnification from Seller for the
reasonable cost thereof pursuant to Section 10.1(a)(vi).

                6.6          Use of Certain Names. Within forty-five (45) days
following Closing, Buyer shall cause the Companies to cease using the words “Cinergy,”
“CMT”, “CCI”, “Duke”, “Duke Energy”, and any word or expression similar thereto
or constituting an abbreviation or extension thereof (the “Seller
Marks”), including eliminating the Seller Marks from the
property of the Companies and disposing of any unused stationery and literature
of the Companies bearing the Seller Marks, and thereafter, Buyer shall not, and
shall cause the Companies and their Affiliates not to, use the Seller Marks or
any logos, trademarks, trade names, trade dress or other similar Intellectual
Property rights belonging to Seller or any Affiliate thereof, and Buyer
acknowledges that it, its Affiliates and the Companies have no rights
whatsoever to use the Seller Marks or related Intellectual Property. Notwithstanding
the foregoing, Buyer shall have seventy-five (75) days following Closing to
effect the changes in the name “CMT” as reflected in the market-based tariff on
file with the FERC. Without limiting the foregoing:

(a)           Within five (5) Business Days
after the Closing Date, Buyer shall cause each Company whose name contains any
of the Seller Marks to change its name to a name that does not contain any of
the Seller Marks.

(b)           Within forty-five (45) days after the
Closing Date, Buyer shall provide evidence to Seller, in a format that is
reasonably acceptable to Seller, that Buyer has made all governmental filings
required pursuant to clause (a) above and has provided notice to all
applicable Governmental Authorities and all counterparties to any material
Contracts regarding the sale of the Companies to Buyer and the new addresses
for notice purposes.

                6.7          Support Obligations.

(a)           Buyer recognizes that certain of the
Non-Company Affiliates have provided and/or will provide Credit Support (i) to
the Companies, (ii) with respect to the Affiliate Contracts, and/or (iii) with
respect to the CG&E Transactions pursuant to certain Credit Support
obligations (the “Support
Obligations”).

(b)           Prior to Closing, Buyer shall use
commercially reasonable efforts to effect the full and unconditional release,
effective as of the Closing, of the Non-Company Affiliates 

 43
 

 

from
all Support Obligations, including by undertaking the following promptly
following the Signing Date:

(i)                    offering
to each beneficiary thereof a guaranty from a Person with Credit Ratings at
least equal to the Required Rating to replace each existing guaranty that is a
Support Obligation, which shall contain terms at least as favorable to such
beneficiary thereof in all respects (including terms, amount and conditions)
than such existing guaranty (other than with respect to the credit rating of
the guarantor); provided, that if
the beneficiary of any existing guaranty does not accept such a replacement
guaranty by the date that is ninety (90) days after the Signing Date (A) and
the terms of such existing guaranty or of any Contract or Law requiring such
existing guaranty to be maintained permit the replacement of such existing
guaranty with another form of credit support, Buyer will offer the beneficiary
of such existing guaranty such other form of credit support in order to obtain
the release of such existing guaranty or (B) if the terms of such existing
guaranty or of any such Contract or Law requiring such existing guaranty to be
maintained do not so permit the replacement of such existing guaranty, Buyer
will offer to replace such existing guaranty with a Letter of Credit or cash in
the amount of such existing guaranty in substitution therefor;

(ii)                   furnishing
a Letter of Credit to replace each existing letter of credit that is a Support
Obligation (including all such letters of credit posted by or on behalf of any
Duke Credit Support Provider with respect to the Transactions) containing terms
and conditions that are substantially identical to the terms and conditions of
such existing letter of credit;

(iii)                  instituting
an escrow arrangement to replace each existing escrow arrangement that is a
Support Obligation with terms at least as favorable to the counterparty
thereunder than the terms of such existing escrow arrangement;

(iv)                  posting
a surety or performance bond to replace each existing surety or performance
bond that is a Support Obligation issued by a Person having a net worth and
Credit Rating at least equal to those of the issuer of such existing surety or
performance bond, and containing terms and conditions that are substantially
identical to the terms and conditions of such existing surety or performance
bond;

(v)                   posting
cash to replace any cash that is a Support Obligation provided by a Non-Company
Affiliate; provided that Buyer shall have the option to offer a Letter of
Credit to replace such cash so long as such Letter of Credit is (A) non-recourse
to Seller or any Non-Company Affiliate, (B) issued by Buyer in favor of
the applicable Counterparty, (C) in a form acceptable to the applicable
Counterparty and Buyer (with a copy of such form of such Letter of Credit
provided by Buyer to Seller prior to such Letter of Credit being offered to such
Counterparty) and (D) not reasonably expected to delay the consent of the
applicable Counterparty to the release of such Credit Support; and

(vi)                  replacing
any other security agreement or arrangement on substantially identical terms
and conditions to the existing security agreement or arrangement that is a
Support Obligation.

 44
 

 

(c)           Buyer shall use commercially
reasonable efforts to cause the beneficiary or beneficiaries of the Support
Obligations to (i) remit any cash to Seller or one of its Affiliates, as
applicable, held under any escrow arrangement that is a Support Obligation
promptly following the replacement of such escrow arrangement pursuant to Section 6.7(b)(iii) and
(ii) terminate and redeliver to Seller or one of its Affiliates each
original copy of each original guaranty, letter of credit or other instrument
constituting or evidencing such Support Obligations; provided that if a party
is unable to return such item of Credit Support (in the form of guaranties,
letters of credit or other instruments constituting or evidencing such Support
Obligations (other than cash)) because such items of Credit Support cannot be
located after diligent efforts, then in lieu of returning such item of Credit
Support the party obligated to make such return may, with the consent of the
Person entitled to receive such Credit Support, provide an affidavit of lost
guaranty, letter of credit or such other instrument, which shall contain an
indemnity reasonably satisfactory to such receiving party and which shall
acknowledge that such Credit Support is terminated and no further obligations
exist thereunder.

(d)           If Buyer is not successful, following
the use of commercially reasonable efforts, in obtaining the complete and
unconditional release of the Non-Company Affiliates from any Support
Obligations as of Closing (each such Support Obligation, until such time as
such Support Obligation is released in accordance with this Section 6.7(d)(i),
a “Continuing Support
Obligation”), then:

(i)                    from
and after the Closing, Buyer shall use its commercially reasonable efforts to
obtain promptly the full and unconditional release of Seller and the
Non-Company Affiliates from each Continuing Support Obligation;

(ii)                   Buyer
shall indemnify Seller and the Non-Company Affiliates for any Losses incurred
by it or the Non-Company Affiliates in connection with each Continuing Support
Obligation;

(iii)                  Buyer
shall not, and shall cause the Companies not to, effect any amendments or
modifications or any other changes to the contracts or obligations to which any
of the Continuing Support Obligations relate, or to otherwise take any action,
in each case that increases, extends or accelerates the liability of the
Non-Company Affiliates under any Continuing Support Obligation, without Seller’s
prior written consent; and

(e)           Until such time as all
Continuing Support Obligations in the form of guaranties have been fully and
unconditionally released in accordance with Section 6.7(d), Buyer shall
pay to Seller or Seller’s designee on the last Business Day of each month
beginning on the last Business Day of the three month anniversary of the
Closing Date (each, a “Payment
Date”) a fee of 0.55% (on a per annum basis) on (i) the
maximum aggregate exposure (determined solely by reference to the maximum
amount that may be guaranteed under Continuing Support Obligations in
accordance with the terms thereof with respect to Continuing Support
Obligations that are capped, and determined solely by reference to the
mark-to-market exposure thereunder with respect to Continuing Support
Obligations that are not capped), calculated as of the 15th day of such month
in which the applicable Payment Date occurs, of the applicable Seller or
Non-Company Affiliates providing such Continuing Support Obligations. Buyer
shall deliver to 

 45
 

 

Seller
on each Payment Date a listing of any releases of Continuing Support
Obligations pursuant to Section 6.7(d) obtained since the prior
Payment Date.

(f)            Notwithstanding anything in this
Agreement to the contrary, Seller and the Non-Company Affiliates may not
terminate any Continuing Support Obligations at any time after the Closing
until such Continuing Support Obligations terminate or expire by their terms or
by consent of the applicable beneficiary or are replaced pursuant to this Section 6.7.

(g)           Buyer shall have the right to contact
and have discussions with each beneficiary of a Support Obligation in order to
satisfy its obligations under this Section 6.7; provided, however, that Buyer shall give Seller prior notice
before making any such contact and Seller shall have the right to be present
during any such discussions.

(h)           From and after Closing, Buyer shall
provide or cause to be provided all Credit Support required to be provided with
respect to the CG&E Transactions pursuant to the terms of the TRS
Agreement.

(i)            Promptly following the effective
date of the termination or expiration in full of any Continuing Support
Obligation in the form of a letter of credit (i) that was posted by a Duke
Credit Support Provider on behalf of a Company (which, for purposes of
clarification, shall not include any Credit Support provided with respect to
the CG&E Transactions) and (ii) to the extent that such letter of
credit was included in the calculation of the Credit Support Payment made by
Buyer to Seller pursuant to Article II, Seller shall return to Buyer an
amount of cash equal to the portion of the Credit Support Payment allocated to
such letter of credit in the calculation thereof minus the amount of any
drawings made on such letter of credit on or after Closing and prior to the
date of the termination or expiration of such letter of credit.

                6.8          Excluded Items. Notwithstanding anything in this
Agreement to the contrary, Buyer and Seller agree that the Purchased Interests
shall exclude those items listed on Schedule 6.8 (collectively,
the “Excluded Items”), Seller shall retain all
benefits and liabilities with respect to the Excluded Items, and Seller shall, prior to the Closing, cause the Companies to distribute, transfer or assign each
Excluded Item to Seller or a Non-Company Affiliate. With respect to the
Excluded Item identified as item 1 on Schedule 6.8, Seller shall use its
commercially reasonable efforts (before and, if necessary, for a reasonable
period after the Closing) to effect a release of CCI from any liabilities
thereunder in connection with or following such distribution, transfer or
assignment.

                6.9          Employee and Benefit Matters. (a) Seller shall provide
Buyer as soon as practicable after the Signing Date and shall update as
appropriate through the Closing Date a list of certain employees of Seller or
its Non-Company Affiliates (the “Available Employees”) that Seller and its
Affiliates will make available to Buyer to discuss potential employment with
Buyer (which discussions the Parties agree shall not violate Section 6.9(c)).
In addition, Seller shall provide Buyer as soon as practicable after the
Signing Date and shall update as appropriate until and through the Closing Date
a list of the Affiliates of Seller which employ each such employee. As requested
by Buyer and within five (5) Business
Days of any such request following the Signing Date, Seller will provide to
Buyer (i) to the extent permitted by any applicable Contract and Laws,
aggregated employee information (with ranges and averages) as described in
Buyer’s 

 46
 

 

request
relating to employee compensation and benefits of the Available Employees and (ii) to
the extent permitted by any applicable Contract and Laws, specific information
as described in Buyer’s request relating to each Available Employee as of a
specified date regarding such employee’s name, salary, job title and work
location for the sole purpose of assisting Buyer to comply with this Agreement
and to evaluate Available Employees for potential employment, and for no other
purpose. Buyer agrees that such information shall be maintained in a
confidential manner and shall be made available only to those with a business
need-to-know the information, and that Buyer shall have sole responsibility for
its selection decisions of new employees without any other input or involvement
in any manner from Seller. Buyer is not obligated to hire any Available
Employee but may interview all Available Employees. It is understood and agreed
that (i) Buyer’s expressed intention to extend offers of employment as set
forth in this Section shall not constitute any commitment, Contract or
understanding (expressed or implied) of any obligation on the part of Buyer to
a post-Closing employment relationship of any fixed term or duration or upon
any terms or conditions other than those that Buyer may establish pursuant to
individual offers of employment, and (ii) employment offered by Buyer is “at
will” and may be terminated by Buyer or by an employee at any time for any
reason (subject to any written commitments to the contrary made by Buyer or an
employee and applicable requirements of law).

(b)           Within sixty (60) days after the
Signing Date, Buyer shall make offers of employment to each of the Available
Employees that Buyer desires to employ after Closing and such offer shall
include terms and provisions that are consistent with the provisions of this Section 6.9,
as reasonably determined by Buyer. Within sixty (60) days after the Signing
Date, Buyer shall provide Seller with a list of the Available Employees to whom
it has made offers of employment. Within seventy-five (75) days after the
Signing Date (and in no event later than three (3) Business Days prior to
Closing), Buyer shall notify Seller as to each Available Employee who has
accepted employment with Buyer or any of its Affiliates (each a “Continued Employee”),
which acceptance may be conditioned upon the occurrence of the Closing and
other typical hiring policies, and each Available Employee who has rejected
Buyer’s offer of employment. Buyer shall indemnify and hold harmless Seller and
its Affiliates with respect to all claims and liabilities directly relating to
or arising out of Buyer’s employee selection and employment offer process
described in this Section 6.9(b) (including any claim of discrimination
or other illegality in such selection and offer process, except for any claims
of illegality by Seller or its Affiliates in identifying the Available
Employees eligible for potential employment with Buyer under Section 6.9(a)).
As soon as administratively practicable after Buyer provides Seller with a list
of the Continued Employees in accordance with this Section 6.9(b), Seller
shall provide to Buyer as reasonably requested by Buyer, with respect to each
Continued Employee on such list and subject to the consent of any such employee
that Seller determines is required by Law, information as of a specified date
regarding such employee’s current base salary or wages, hire date, and
vacation, personal time and other compensation accrual to the extent such information
has not previously been provided by Seller to Buyer. The employment with Buyer
or an Affiliate of Buyer of each Continued Employee shall be effective as of
the Closing Date; provided, however, that with respect to a Continued Employee
who is not actively at work on the Closing Date because he or she is on a leave
of absence approved by the Seller or the Affiliate employing such Continued
Employee immediately prior the Closing Date, the employment by Buyer or an
Affiliate of Buyer of such Continued Employee shall be effective as of a date
mutually agreed upon by Buyer (or Buyer’s Affiliate) and such Continued
Employee, provided 

 47
 

 

that
the Continued Employee is available to actively work for Buyer or an Affiliate
of Buyer as of such date. Each Continued Employee who becomes employed by Buyer
or an Affiliate of Buyer in accordance with the foregoing provisions of this Section 6.9(b) is
hereinafter referred to as a “Hired Employee”, and the date on which such Hired
Employee becomes an employee of the Buyer or an Affiliate of Buyer is
hereinafter referred to as such employee’s “Hire Date”. Nothing in the foregoing
shall affect the right of Seller, or any Affiliate of Seller, to terminate the
employment of an Available Employee for any reason or at any time.  In no event shall the terms “Available
Employees” or “Continued Employees” or “Hired Employees” as used in this
Agreement be deemed to refer to Canadian Employees.

(c)           Buyer agrees that for the one-year
period following the Closing Date or the date of termination of this Agreement
pursuant to Section 9.1, whichever is applicable, it will not employ, and
will cause its Affiliates not to employ, any employees or contractors of the
Seller or its Affiliates (other than the hiring of the Available Employees in
accordance with Section 6.9(b)) without Seller’s prior written consent and
that neither the Buyer nor any of its Affiliates will, directly or indirectly,
in any manner whatsoever, solicit for hire or employment any officer, employee
or contractor of the Seller or any of its Affiliates whom Buyer or its
Affiliates learned of in connection with the acquisition contemplated hereby
(other than as provided in Section 6.9(b)) for the one-year period
following the Closing Date or the date of termination of this Agreement
pursuant to Section 9.1; provided,
however, that this sentence shall not apply to any solicitation (or
any hiring as a result of any solicitation) that consists of advertising in a
newspaper or periodical of general circulation or through the Internet and
shall further not apply to any unsolicited attempt by any such employee or
contractor to secure an employment relationship with the Buyer. Seller agrees,
if the Closing occurs, for the one-year period following the Closing Date, that
it will not employ, and will cause its Affiliates not to employ, any of the
Hired Employees without Buyer’s prior written consent and that neither the
Seller nor any of its Affiliates will, directly or indirectly, in any manner
whatsoever, solicit for hire or employment any of the Hired Employees for the
one-year period following the Closing Date; provided,
however, that this sentence shall not apply to any solicitation (or
any hiring as a result of any solicitation) that consists of advertising in a
newspaper or periodical of general circulation or through the Internet and
shall further not apply to any unsolicited attempt by any such employee to
secure an employment relationship with the Seller.

(d)           Effective as of the Closing Date (or,
if later, effective as of the Hire Date with respect to those Continued
Employees who are on an approved leave of absence on the Closing Date) the
Hired Employees shall cease to participate in all Benefit Plans (except for the
Retention Plan and except for the payments described in Section 6.9(n)) of
Seller or its Affiliates providing benefits to any of the Hired Employees (the “Seller Plans” or a “Seller Plan” as applicable). Without limiting
the generality of the foregoing, Seller or its respective Affiliates shall be
responsible for the payment of all amounts due to Hired Employees under the “Duke
Energy Americas Annual Incentive Target Plan”. Except as specifically provided
herein, Buyer shall not assume any of the Seller Plans, and Seller or its
Affiliates shall retain all liabilities and obligations with respect to all of
the Seller Plans. Except as specifically provided otherwise herein, neither the
Buyer, the Companies, nor any of their Affiliates shall have any liability or
obligation relating to any Hired Employee, Continued Employee or Available
Employee with respect to periods prior to the Closing Date.

 48
 

 

(e)           From and after the Closing Date,
Buyer shall cause each Hired Employee to be provided with compensation and
benefits on a basis substantially similar to those provided to similarly
situated employees of Buyer and its Affiliates; provided, however, that if the employment of any Hired
Employee is terminated by Buyer or an Affiliate of Buyer for a reason other
than “cause”, as such term is defined below, within one year after the Hired
Employee’s Hire Date, then Buyer shall provide such Hired Employee with
severance benefits at least equal to the severance benefits set forth in a list
delivered to Buyer by Seller on the Signing Date and which may be updated by
Seller before the Closing Date as appropriate to add additional employees who
became Available Employees after the Signing Date; and, provided further, that
if a Hired Employee is subject to an employment agreement with Buyer or an
Affiliate of Buyer that provides severance benefits to such Hired Employee,
then such Hired Employee will be entitled to only those severance benefits
provided under the employment agreement unless such employment agreement
specifically provides otherwise. For purposes of this Section 6.9(e), “cause”
means:  (i) the willful and
continued failure, refusal or neglect by the employee to substantially perform
his or her duties and obligations; (ii) gross misconduct by the employee,
including without limitation, gross insubordination, in respect to the duties
or obligations of the employee; (iii) any intentional or negligent act by
the employee having the effect of materially injuring the business or
reputation of Buyer, or any of its Affiliates, and which causes economic harm
to any such entity; or (iv) the employee’s conviction, plea of nolo contendre, or deferred adjudication
for a felony or misdemeanor involving moral turpitude. Notwithstanding the
foregoing, Buyer shall cause each Hired Employee and his or her eligible
dependents (including all such Hired Employee’s dependents covered immediately
prior to the Closing Date by a group health plan maintained by Seller or an
Affiliate of Seller) to be eligible to be covered under a group health plan
maintained by Buyer or an Affiliate of Buyer that (1) provides major
medical and dental benefits coverages to the Hired Employee and such eligible
dependents effective immediately upon the Closing Date and (2) credits
such Hired Employee, for the year during which such coverage under such group
health plan begins, with any deductibles and co-payments already incurred
during such year under a group health plan maintained by Seller or an Affiliate
of Seller; provided, however, that
if credit for deductibles and co-payments is not permitted by the insurer for
the Buyer’s group health plan, then Buyer shall reimburse the Hired Employee
for the duplicative cost of deductibles and co-payments incurred by the Hired
Employee; and provided further
that for purposes of applying this clause (2) with respect to any Hired
Employee, the Hired Employee shall be responsible for providing the necessary
information to Buyer based on explanation of benefit forms received by the
Hired Employee from the group health plan maintained by Seller or an Affiliate
of Seller. From and after the Closing Date, Buyer shall (and shall cause the
Companies and their respective Affiliates, as the case may be to) recognize
each Hired Employee’s years of company service prior to the Closing Date with
Seller and its Affiliates and any other Person that was acquired by Seller or
an Affiliate of Seller (whether through purchase, merger or other combination)
for purposes of terms of employment, compensation and eligibility, vesting or
other benefit/coverage eligibility, benefit accrual and benefit determination
under all employee benefit and compensation plans and programs maintained after
the Closing by Buyer, the Companies, and their respective Affiliates in which
such Hired Employee is permitted to participate (other than for benefit accrual
purposes under any defined benefit pension plan), including paid vacation, paid
sick time and severance benefits except for Buyer’s medical flexible spending
account plan, and except for Buyer’s long-term disability plan, to the extent
such service crediting is inconsistent with the terms of Buyer’s long-

 49
 

 

term
disability plan. Buyer shall cause each employee welfare benefit plan or
program sponsored by Buyer or an Affiliate of Buyer that the Hired Employees
may be eligible to participate in on or after the Closing Date to waive any
preexisting condition exclusion or restriction with respect to participation
and coverage requirements applicable to such Hired Employees. From and after
the Closing Date, Buyer shall (and shall cause the Companies and their
respective Affiliates, as the case may be to) recognize and give each Hired
Employee credit for his or her accumulated personal time (but not in excess of
twenty (20) days) as of the
Closing Date under the personal time program maintained by Seller and its
Affiliates, which accumulated personal time is set forth on a list delivered by
Seller to Buyer on the Signing Date and which may be updated by Seller before
the Closing Date as appropriate to reflect additional accruals of such time for
the period between the Signing Date and the Closing Date and to add additional
employees who became Available Employees after the Signing Date.

(f)            Claims of Hired Employees and their
eligible beneficiaries and dependents for medical, dental, prescription drug,
life insurance or other welfare benefits (“Welfare Benefits”) (other than disability
benefits) that are incurred before the Hire Date of such Hired Employee (and to
the extent a Hired Employee elects to continue to be covered by a Seller Plan
in accordance with Code section 4980B, on and after the Hire Date, claims under
the applicable Seller’s Plan for the period during which such Hired Employee is
covered by the applicable Seller’s Plan pursuant to such section 4980B
election) shall be the sole responsibility of Seller and the Seller Plans. Except
as described in the preceding sentence, claims of Hired Employees and their
eligible beneficiaries and dependents for Welfare Benefits (other than
disability benefits) that are incurred from and after the Hire Date of such
Hired Employees shall be the sole responsibility of Buyer and its Affiliates. For
purposes of this paragraph, a medical/dental claim shall be considered incurred
on the date when the medical/dental services are rendered or medical/dental
supplies are provided, and not when the condition arose or when the course of
treatment began. Claims of individuals receiving long-term disability benefits
under a Seller Plan as of the Closing Date shall be the sole responsibility of
Seller and the Seller Plans. Claims made by the Hired Employees and their
eligible beneficiaries and dependents for short-term or long-term disability
benefits from and after the Closing Date shall be the sole responsibility of
Buyer and its Affiliates (without regard to whether the circumstances giving
rise to such claim occurred before, on or after the Closing Date).

(g)           All claims for health care and
dependent care flexible spending account benefits submitted after the Hire Date
for expenses incurred prior to the Hire Date (and to the extent a Hired
Employee elects to continue to be covered by a Seller Plan in accordance with
Code section 4980B, for expenses incurred on and after the Hire Date for the
period during which such Hired Employer continues to be covered by Seller’s
Plan pursuant to such section 4980B election) by Hired Employees shall be paid
by Seller’s or its Affiliates’ health care and dependent care flexible spending
account plan to the extent permitted in accordance with the terms of such plan.

(h)           Claims for workers’ compensation
benefits for Hired Employees arising out of injuries or illnesses occurring
prior to their respective Hire Dates shall be the responsibility of Seller. Claims
for workers’ compensation benefits for Hired Employees arising out of injuries
or illnesses occurring on or after their respective Hire Dates shall be the
responsibility of Buyer.

 

 50

 

(i)            Notwithstanding anything to the
contrary in this Section 6.9, Buyer shall have the right to use an
Affiliate of Buyer as operator to hire Available Employees and to perform
certain actions on behalf of Buyer under this Section 6.9, provided that
in no event will such use of or performance by an Affiliate release Buyer from
any of its obligations under this Section 6.9. Further, to the extent that
Buyer uses an Affiliate for hiring purposes, Buyer shall require such Affiliate
to comply with all obligations arising from this Agreement or applicable law
relating to the confidentiality and privacy of information of the Available
Employees.

(j)            Upon the request of Buyer, Seller
shall obtain the written resignation of any Hired Employee from any
directorship or officer position with any of the Companies effective as of the
Closing Date. Nothing herein shall preclude Seller from obtaining employment
resignations without Buyer’s consent.

(k)           Buyer will recognize, and will cause
CCI to continue to recognize, all service of the Canadian Employees with CCI or
its Affiliates accrued prior to the Closing Date for all purposes of the
employment or termination of employment of the Canadian Employees and under any
Canadian Employee Benefit Plan and for purposes of eligibility for
participation in any compensation or benefit plan instituted by CCI or Buyer
for the benefit of the Canadian Employees following Closing. Buyer will
maintain, or cause CCI to maintain, in full force and effect the Canadian
Employee Benefit Plans for the benefit of the Canadian Employees for a period
of one (1) year following the Closing Date, on terms at least as favorable
to the Canadian Employees as provided under such plans prior to Closing. Seller
shall have no liability for severance or other damages to any such Canadian
Employee and Buyer shall indemnify, defend and hold the Seller Indemnified
Parties harmless in respect thereof in accordance with the provisions of Section 10.1(b).
Seller and Buyer agree that each of them shall use and disclose any personal
information that comprises part of the documents and the schedules referred to
in Sections 4.13 or 4.14 and any other personal information that comprises part
of the Purchased Interests only for those purposes for which the personal
information was initially collected from or in respect of the individuals. Nothing
in this Section 6.9 shall be construed so as to restrict either Party from
obtaining consent of an individual to the collection, use or disclosure of
personal information about the individual for purposes that are beyond the
purposes for which the information was initially collected.

(l)            Nothing in this Agreement shall
affect the right of Seller or any other Affiliate of Seller  to terminate
the employment of an Available Employee or Canadian Employee for any reason or
at any time prior to Closing Date. This Section 6.9 shall not be construed
to alter the at-will status of any Available Employee or otherwise interfere
with any rights of either Seller, the Available Employees or the Canadian
Employees to sever the employment relationship. Nothing in this Agreement shall
be deemed to prevent or restrict in any way the right of Buyer after the
Closing to terminate, reassign, promote or demote any of the Hired Employees or
to change adversely or favorably the title, powers, duties, responsibilities,
functions, locations, salaries, other compensation or terms or conditions of
employment of such employees.

(m)          Notwithstanding any other provision of
this Agreement to the contrary, Buyer will incur no liability under or with
respect to the Retention Plan; provided,
however, that if, following the
Closing Date, a Hired Employee’s employment with the Buyer is terminated for 

 51
 

 

any
reason prior to the end of the month following that date which is three months
after the Closing Date, Buyer will promptly notify Seller of such Hired
Employee’s termination of employment and provide Seller with such information
regarding the circumstances of such termination as Seller may reasonably
request to the extent that Buyer is permitted to provide such information under
applicable Laws. Except as provided in Section 6.9(n), Buyer will not
assume, and will have no obligations under or with respect to, any employment
agreements or employment offer letters with any Available Employee and Seller
or any of its Affiliates.

(n)           Seller shall pay or cause an
Affiliate of Seller to pay at or promptly following Closing to the Hired
Employees annual bonuses for 2006 at least equal to the aggregate amount of the
Incentive Plan Payment Amount. In addition, Buyer shall assume and pay or cause
an Affiliate of Buyer to assume and pay to each Hired Employee during March of
2007 the portion of the Deferred Incentive Plan Amounts that is payable to such
Hired Employee pursuant to the terms of the Incentive Plan and in accordance
with information Seller shall provide to Buyer regarding the portion of such
Deferred Incentive Plan Amount that is payable to such Hired Employee as set
forth in a list under the heading “Deferred 2005 Bonus Amounts” to be delivered
by Seller to Buyer on the Signing Date. Except as otherwise described in this Section 6.9(n),
Buyer will not assume, and will have no obligations or rights under or with
respect to, the Incentive Plan. Buyer will not assume, and will have no rights
or obligations under or with respect to, letter agreements or similar written
commitments or arrangements between any Hired Employee and Seller or any of its
Non-Company Affiliates, except that, with respect to such letter agreements or
similar written commitments or arrangements, Buyer shall pay or cause an
Affiliate of Buyer to pay to each Hired Employee, at the times and in the forms
as set forth in the applicable letter agreements or written commitments or
arrangements (including those entered into by the Seller or any such Affiliate
after the Signing Date and prior to Closing), the portion of the Deferred
Incentive Plan Amount described in clause (ii) of the definition thereof
that is payable to such Hired Employee pursuant to the terms of such applicable
letter agreement or written commitment or arrangement providing for such
payments, and in accordance with the information regarding the Hired Employees
and the amounts payable with respect to such letter agreements or written
commitments or arrangements contained in a list under the heading “Other
Deferred Amounts” to be delivered by Seller to Buyer on the Signing Date. Buyer
agrees to withhold or to cause an Affiliate of Buyer to withhold from the
amounts paid by Buyer or such Affiliate of Buyer to Hired Employees pursuant to
this paragraph all applicable taxes required to be withheld from such amounts
and to pay employer employment tax obligations with respect to such amounts and
remit such tax withholdings and tax payments to the applicable tax agencies and
authorities in accordance with applicable tax laws.

(o)           Upon the terms and subject to the
conditions set forth in this Agreement, Buyer and Seller each agree to use
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with each other in
doing, all things necessary, proper or advisable to carry out the provisions of
this Section 6.9 and other provisions of this Agreement relating to
employees and employee benefit plans and arrangements and Seller shall promptly
provide Buyer with such information regarding Available Employees as Buyer
shall reasonably request to exercise its rights under this Section 6.9 and
to carry out its obligations under this Section 6.9 and this Agreement. Buyer
shall have the right to review in advance, and to the extent practicable the
parties will consult with each other on, any communications with or information
provided to Available Employees with respect 

 52
 

 

to
their employment or possible employment with Buyer and the transactions
contemplated by this Agreement. In order to permit Seller to make the payments
required pursuant to this Section 6.9, or any other payments, Buyer shall (i) notify
Seller within three (3) Business Days after the employment of any Hired
Employee terminates, which notice shall specify whether the Hired Employee
terminated employment voluntarily or involuntarily, (ii) if such
termination occurred involuntarily, the Buyer shall provide Seller with such
additional information as the Seller shall reasonably request in order to allow
it to determine whether the Hired Employee is entitled to payments as described
in this Section 6.9 as a result of such termination and (iii) provide
such additional information as is reasonably requested by Seller to enable it
to determine whether a Hired Employee is entitled to payments from Seller and
its Affiliates, provided in the case of clause (ii) or (iii) that
Buyer is permitted to provide the requested information in accordance with
applicable Laws.

(p)           Notwithstanding any other provision
of this Agreement, nothing shall prevent Seller or its Affiliates from amending
(after obtaining the consent of any Hired Employee, if necessary) any Benefit
Plan and any other agreement or plan referenced in this Section 6.9.,
except to the extent any such amendment would increase the amounts payable by
Buyer or its Affiliates hereunder.

                6.10        Termination of Certain Services and
Contracts. Notwithstanding
anything in this Agreement to the contrary, prior to the Closing, Seller shall (i) terminate,
sever, or assign to Seller or a Non-Company Affiliate effective upon or before
the Closing any services provided to any of the Companies by Seller or a
Non-Company Affiliate, including the termination or severance of insurance
policies, Tax services, legal services and banking services (including the
severance of any centralized clearance accounts), (ii) use commercially
reasonable efforts to terminate or assign to Seller or a Non-Company Affiliate
each Contract listed on Schedule 6.10, and (iii) cause all Claims
or obligations (contingent or otherwise) between a Company, on one hand, and
Seller or any Non-Company Affiliate, on the other, to be released effective
immediately prior to Closing (collectively such Contracts listed, the “Terminated Contracts”).

6.11        Intercompany Indebtedness; Distributions.
Notwithstanding
anything in this Agreement to the contrary:

(a)           Seller shall cause any and all
indebtedness for borrowed money between a Company, on the one hand, and a
Non-Company Affiliate, on the other hand, to be paid in full.

(b)           Seller shall have the right on or
prior to Closing (i) to cause the Companies to pay dividends and make
distributions with respect to the Capital Stock of the Companies and (ii) to
make or cause to be made contributions to the Companies.

                6.12        Transfer Taxes. Notwithstanding anything in this Agreement to the contrary,
Seller and Buyer shall each pay any Transfer Taxes imposed on it by Law as a
result of the sale of the Purchased Interests, but, notwithstanding such
requirement at Law, each of Seller and Buyer shall bear half of the total of
all such Transfer Taxes. Accordingly, if either Party is required at Law to pay
more than its half of any such Transfer Taxes, the other Party shall promptly
reimburse such first Party for amounts in excess of such half. Seller and Buyer
shall timely file their own Transfer Tax Returns as required by Law and shall
notify the other Party 

 

 53
 

 

when such
filings have been made. Seller and Buyer shall cooperate and consult with each
other prior to filing such Transfer Tax Returns to ensure that all such returns
are filed in a consistent manner. Seller’s Transfer Tax obligation under this Section 6.12
is limited to those Transfer Taxes arising from Buyer’s purchase of the
Purchased Interests and any actions occurring prior to the Closing, and Buyer
is solely responsible for any Transfer Taxes arising from any action to
dissolve, terminate or restructure either Company or to convey, distribute or
transfer any assets, properties or other rights by deed, bill of sale or
otherwise to or from either Company after the Closing.

                6.13        Transition Services Arrangements. The applicable parties shall
enter into the Transition Services Agreement at Closing to be delivered
pursuant to Section 2.5. For purposes of clarification, any payments for
services provided under the Services Agreement with respect to the CG&E
Transactions shall be governed by the Services Agreement rather than the
Transition Services Agreement.

                6.14        Tax Matters.

(a)           Section 338(h)(10) Election.  Seller and Buyer shall (i) join in
making an election under Section 338(h)(10) of the Code (and any
election corresponding to Section 338(h)(10) of the Code under
foreign, state or local laws) with respect to the purchase of CMT (the “Section 338(h)(10) Election”);
(ii) provide to the other party the necessary information to permit the Section 338(h)(10) Election
to be made; and (iii) take all actions necessary and appropriate
(including filing any necessary forms, returns, elections, schedules and other
documents) as may be required to effect and preserve timely the Section 338(h)(10) Election
in accordance with the provisions of Treasury Regulation Section 1.338(h)(10)-1
(or any provisions comparable to Section 338(h)(10) of state or local
Tax law). The “aggregate deemed sales price” (as defined in Treasury Regulation
Section 1.338-4) (the “ADSP”) and
the “adjusted gross-up basis” (as defined in Treasury Regulation Section 1.338-5)
(the “AGUB”) shall be allocated among the
assets of CMT in accordance with Treasury Regulation Section 1.338-6
and Treasury Regulation Section 1.338-7. Buyer shall determine the
ADSP and deliver to Seller an allocation of the ADSP among the assets of CMT
within ninety (90) days after the Closing Date (the “Allocation
Schedule”). If within thirty (30) days of receipt of the
Allocation Schedule, Seller notifies Buyer in writing that Seller objects to
one or more items reflected on the Allocation Schedule, Seller and Buyer shall
negotiate in good faith to resolve such dispute. If Seller and Buyer fail to
resolve any such dispute within thirty (30) days after Buyer’s receipt of
Seller’s notice, the parties shall submit the dispute for resolution to the
Independent Accountant, and the Independent Accountant’s resolution of the
dispute shall be final and binding on both parties and shall be deemed to amend
the Allocation Schedule. Seller and Buyer shall file Internal Revenue Service Form 8023
and Form 8883 and any other state, local and foreign forms required for
the Section 338(h)(l0) Election in accordance with the Allocation Schedule.
The parties agree not to take any position inconsistent with the Allocation
Schedule for Tax reporting purposes. In the event the Allocation Schedule is
disputed by any Taxing Authority, the Party receiving notice of the dispute
shall promptly notify the other Party hereto concerning such dispute.

(b)           Consolidated Returns.  Seller shall cause to be included in the
consolidated federal income Tax Return (and in the state income Tax Returns of
any state in 

 54
 

 

which
consolidated, combined or unitary income Tax Returns are filed) of the Seller
Group for any Pre-Closing Tax Period, all items of income, gain, loss,
deduction and credit of CMT that are required to be included therein, shall
cause such Tax Returns to be timely filed with the appropriate Taxing
Authorities, and shall be responsible for the timely payment of and indemnify
the Buyer Indemnified Parties against, and shall be entitled to all refunds or
credits of, all Taxes (except for Taxes resulting from any transaction
occurring on the Closing Date after the Closing) due with respect to the
periods covered by such Tax Returns (including any such Taxes resulting from
the Section 338(h)(10) Election). To the extent permitted by law or
administrative practice, (i) the taxable year of CMT that includes the
Closing Date shall be treated as closing on (and including) the Closing Date
and (ii) all transactions occurring on the Closing Date but after the
Closing shall have occurred shall be reported on the Tax Returns for the
succeeding taxable year. At or prior to the Closing, Seller shall have the
right to cause CMT to pay to Seller or members of the Seller Group an amount
equal to Seller’s estimate of all Taxes due by CMT with respect to the Tax
Returns described in this Section 6.14(b); provided that any payment made
pursuant to this last sentence of Section 6.14(b) shall be
appropriately reflected in calculating Net Working Capital.

(c)           Preparation of Other Tax Returns.
With respect to any Tax Return (other than a Tax Return described in paragraph (b) above)
covering a Pre-Closing Tax Period that is required to be filed after the
Closing Date with respect to a Company, (i) Seller shall cause such Tax
Return to be prepared and shall deliver such Tax Return as so prepared to Buyer
at least fifteen (15) days prior to the due date (including extensions) for
filing such Tax Return, and (ii) Buyer shall cause such Tax Return to be
executed and duly and timely filed with the appropriate Taxing Authority and
shall pay or cause to be paid all Taxes shown as due on such Tax Return. With
respect to any Tax Return covering a Straddle Period that is required to be
filed after the Closing Date with respect to a Company, (i) Buyer shall
cause such Tax Return to be prepared (in a manner consistent with practices
followed in prior taxable periods except as required by a change in Law or
fact) and shall deliver a draft of such Tax Return to Seller for Seller’s
review and approval at least thirty (30) days prior to the due date (including
extensions) for filing such Tax Return, (ii) Seller and Buyer shall
cooperate and consult with each other in order to finalize such Tax Return, and
(iii) thereafter Buyer shall cause such Tax Return to be executed and duly
and timely filed with the appropriate Taxing Authority and shall pay or cause
to be paid all Taxes shown as due on such Tax Return.

(d)           Liability for Taxes. Seller
shall be responsible for and indemnify Buyer and the Companies against, and
Seller shall be entitled to all refunds and credits of, (i) any Tax with
respect to a Company that is attributable to a Pre-Closing Tax Period or to
that portion of a Straddle Period that ends on the Closing Date (including any
Tax resulting from any audit or proceeding that closes or concludes following
the Closing Date, even where such audit or proceeding was disclosed to Seller
in Section 4.8 or on Schedule 4.8), but only to the extent that the
aggregate amount of such Taxes exceeds the amounts reflected as a current
liability (and, in the case of CCI, the current and deferred liability) for
Taxes in the computation of Net Working Capital, and (ii) any liability of
a Company under Treas. Reg. §1.1502-6 (or any similar provision under
state, local or foreign law) for Taxes attributable to any Pre-Closing Tax
Period or to that portion of a Straddle Period that ends on the Closing Date. With
respect to a Straddle Period, Seller and Buyer shall determine the Tax
attributable to the portion of the Straddle Period that ends on the Closing
Date by an interim closing of the books of the Company as of the 

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Closing
Date, except for ad valorem or property Taxes and franchise Taxes based solely
on capital which shall be prorated on a daily basis to the Closing Date. Buyer
shall be responsible for and indemnify Seller against, and Buyer shall be
entitled to all refunds and credits of (such entitlement being subject to the
following sentence), all other Taxes with respect to the Companies. If after
the Closing (i) Buyer or a Company receives a refund or utilizes a credit
of any Tax with respect to a Company that is attributable to a Pre-Closing Tax
Period or to that portion of a Straddle Period ending on the Closing Date or (ii) the
amount of any Tax paid with respect to a Company is less than the amount
reflected as a current liability (and, in the case of CCI, the current and
deferred liability) for such Tax in the computation of Net Working Capital,
Buyer shall pay to Seller within ten (10) days after such receipt,
utilization or reduction an amount equal to such refund, credit or reduction,
together with any interest received or credited thereon.

(e)           Access to Records.  Seller shall grant to Buyer (or its designees)
access at all reasonable times to all of the information, books and records
relating to the Companies within the possession of Seller (including workpapers
and correspondence with Taxing Authorities), and shall afford Buyer (or its
designees) the right (at Buyer’s expense) to take extracts therefrom and to
make copies thereof, to the extent reasonably necessary to permit Buyer (or its
designees) to prepare Tax Returns, respond to Tax audits and investigations,
prosecute Tax protests, appeals and refund claims and to conduct negotiations
with Taxing Authorities. Buyer shall grant or cause the Companies to grant to
Seller (or its designees) access at all reasonable times to all of the
information, books and records relating to the Companies within the possession
of Buyer (including workpapers and correspondence with Taxing Authorities) and
to the employees of the Companies, and shall afford Seller (or its designees)
the right (at Seller’s expense) to take extracts therefrom and to make copies
thereof, in each case to the extent reasonably necessary to permit Seller (or
its designees) to prepare Tax Returns, respond to Tax audits and
investigations, prosecute Tax protests, appeals and refund claims and to
conduct negotiations with Taxing Authorities. After the Closing Date, Seller
and Buyer will preserve all information, records or documents in their
respective possessions relating to liabilities for Taxes of the Companies for
taxable years or portions thereof ending on or before the Closing Date until
six months after the expiration of any applicable statute of limitations
(including extensions thereof) with respect to the assessment of such Taxes;
provided, that neither Party shall dispose of any of the foregoing items
without first offering such items to the other Party.

(f)            Section 338(g) Election.  Buyer shall make a timely and effective
election under section 338(g) of the Code (the “Section 338(g) Election”)
with respect to Buyer’s purchase of the CCI shares. To facilitate the Section 338(g) Election,
at the Closing Buyer shall deliver to Seller Internal Revenue Service Form 8023
with respect to CCI, which Form shall have been duly executed by an
authorized person for Buyer. Buyer and Seller shall cooperate in completing
Internal Revenue Service Form 8883 with respect to Buyer’s purchase of the
CCI shares, including a determination and an allocation of the ADSP and AGUP in
accordance with Treasury Regulation Sections 1.338-4 through 1.338-7.

(g)           Procedure.  In the case that a Tax claim is made against
the Buyer or a Company that would, if successful, result in an indemnification
of the Buyer by Seller under 

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Section 6.14(d),
the procedures set forth in Section 10.6 shall apply but not the
limitation set forth in Sections 10.2(b),
(c) and (d).

(h)           Exemption Documentation. Buyer
and Seller shall cooperate in obtaining all necessary sales and use Tax
exemption documentation in respect of the transactions that are the subject of
the agreements attached hereto as Exhibit E and Exhibit F.

                6.15        Affiliate Contracts. From and after the date hereof,
Buyer and Seller shall use commercially reasonable efforts to obtain the
written consent from each Counterparty to each Affiliate Contract that is not a
Terminated Contract to the assignment and assumption or novation of such
Affiliate Contract by each Assignor to a Company, provided, however, that the
failure to obtain such consent shall not delay or prevent Closing, and any
obligation to seek such consent by Buyer or Seller shall terminate within one hundred eighty (180) days after the
Closing. Without limiting the foregoing, Buyer’s efforts shall include offering
to replace any credit support posted or maintained by Seller or a Non-Company
Affiliate in favor of any Counterparty to any Affiliate Contract in accordance
with the requirements of Section 6.7, and in the case of Affiliate
Contracts with respect to which none of Seller or any Non-Company Affiliate has
posted or maintains any credit support or where the Counterparty requests a
different amount or type of credit support than is currently being provided,
Buyer shall comply with all commercially reasonable requests from any
Counterparty under such Affiliate Contracts to post or maintain credit support
as security for the performance of the obligations of the Assignee thereof.

                6.16        Further Assurances. Subject to the terms and
conditions of this Agreement, at any time or from time to time after the
Closing, at either Party’s request and without further consideration, the other
Party shall execute and deliver to such Party such other instruments of sale,
transfer, conveyance, assignment and confirmation, provide such materials and
information and take such other actions as such Party may reasonably request in
order to consummate the transactions contemplated by this Agreement.

                6.17        Periodic Reports. During the Interim Period,
Seller will cause each Company to promptly provide to Buyer copies of the Daily
Operating Reports with respect to the Companies (including the CG&E
Transactions) prepared in the ordinary course of business; provided that Seller
shall have the right to redact such Daily Operating Reports as may be needed to
comply with Law or applicable confidentiality restrictions.

ARTICLE
VII

BUYER’S CONDITIONS TO CLOSING

The obligation
of Buyer to consummate the Closing is subject to the fulfillment of each of the
following conditions (except to the extent waived in writing by Buyer in its
sole discretion):

                7.1          Representations and Warranties. The representations and
warranties made by Seller in ARTICLE III and ARTICLE IV shall be true at the
Closing, except for any failures of 

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such
representations and warranties to be true that would not reasonably be expected
to result in a Material Adverse Effect.

                7.2          Performance. Seller shall have performed and complied (or caused the
Companies, CG&E or any applicable Non-Company Affiliate to perform or
comply) with the agreements, covenants and obligations required by this
Agreement to be so performed or complied with by Seller at or before the
Closing, except for any such failure to perform or comply that would not reasonably
be expected to result in a Material Adverse Effect.

                7.3          Officer’s
Certificate. Seller
shall have delivered to Buyer at the Closing a certificate of an officer of
Seller, dated as of the Closing Date, as to the matters set forth in Sections
7.1 and 7.2.

                7.4          Orders and Laws. There shall not be any
Proceeding (filed by a Person other than Buyer or its Affiliates) or Law or
order restraining, enjoining or otherwise prohibiting or making illegal or
threatening to restrain, enjoin or otherwise prohibit or make illegal the
consummation of the transactions contemplated by this Agreement.

                7.5          Buyer Approvals. The Buyer Approvals have been
duly made, given or obtained, and all terminations or expirations of waiting
periods imposed by any Governmental Authority shall have occurred; provided, however, that the absence of any appeals and the
expiration of any appeal period with respect to any of the foregoing shall not
constitute a condition to Closing hereunder.

                7.6          Casualty. The absence of any occurrence on or after the Signing Date
but prior to Closing of any act of God, war or terrorism that results in (a) the
death or incapacity of a sufficient number of Available Employees and/or (b) damage
to a sufficient portion of the Equipment of the Companies that, in the case of
clauses (a) and (b), would result in the Companies being incapable of
conducting their businesses, taken as a whole, as currently conducted for a
period of more than sixty (60) days from the date of such occurrence.

ARTICLE
VIII

SELLER’S CONDITIONS TO CLOSING

The obligation
of Seller to consummate the Closing is subject to the fulfillment of each of
the following conditions (except to the extent waived in writing by Seller in
its sole discretion):

                8.1          Representations and Warranties. The representations and
warranties made by Buyer in ARTICLE V shall
be true and correct in all material respects at the Closing.

                8.2          Performance. Buyer shall have performed and complied in all material
respects with the agreements, covenants and obligations required by this
Agreement to be so performed or complied with by Buyer at or before the
Closing.

                8.3          Officer’s Certificate. Buyer shall have delivered to
Seller at the Closing a certificate of an officer of Buyer, dated as of the
Closing Date, as to the matters set forth in Sections 8.1 and 8.2.

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                8.4          Orders and Laws. There shall not be any
Proceeding (filed by a Person other than Seller or its Affiliates) or Law or
order restraining, enjoining or otherwise prohibiting or making illegal or
threatening to restrain, enjoin or otherwise prohibit or make illegal the
consummation of the transactions contemplated by this Agreement.

                8.5          Seller Approvals. The Seller Approvals shall have
been duly made, given or obtained, and all terminations or expirations of
waiting periods imposed by any Governmental Authority shall have occurred; provided, however, that the absence of any appeals and the
expiration of any appeal period with respect to any of the foregoing shall not
constitute a condition to Closing hereunder.

ARTICLE
IX

TERMINATION

                9.1          Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, as follows:

(a)           at any time before the Closing, by
either Party, by written notice from one Party to the other Party if any Law or
final order restrains, enjoins or otherwise prohibits or makes illegal the
transactions contemplated pursuant to this Agreement;

(b)           at any time before the Closing, by
either Party, by notice from one Party to the other, if such other Party has
materially breached its obligations hereunder and such breach (other than a
breach of Buyer’s obligation to pay the Purchase Price in accordance with the
terms of ARTICLE II, which for purposes of clarification shall have no
cure period) has not been cured within thirty (30) days following written
notification thereof; provided, however, that if, at the end of such thirty
(30) day period, the breaching Party is endeavoring in good faith, and
proceeding diligently, to cure such breach, then the breaching Party shall have
an additional thirty (30) days in which to effect such cure;

(c)           on or after December 15, 2006 if the Closing has not occurred by such
date, unless the Parties mutually agree in writing (i) to extend the
period in which such Closing must occur or (ii) to waive or amend the
provisions of this Section 9.1(c);

(d)           at any time before the Closing, by
Seller by written notice to Buyer, if authorization of the transactions
contemplated by this Agreement pursuant to Section 203 of the FPA has not
been granted by FERC on or before September 15, 2006;

(e)           at any time before the Closing, by
Buyer or Seller by written notice
to the other Party, if authorization of the transactions contemplated by this
Agreement have not been approved by the Federal Reserve Board on or before one
hundred twenty (120) days following the Signing Date; and

(f)            by mutual written consent of the
Parties.

                9.2          Effect of Termination. If this Agreement is validly
terminated pursuant to Section 9.1, notwithstanding anything in this
Agreement to the contrary, there will be no liability or obligation on the part
of Seller or Buyer (or any of their respective Representatives or 

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Affiliates), provided that (a) Sections 6.3(b),
9.2, 10.5, 11.3, 11.4, and 11.14 will survive any such termination and (b) each
Party shall continue to be liable for any willful and intentional breach of
this Agreement by it occurring prior to such termination.

ARTICLE X

INDEMNIFICATION, LIMITATIONS OF LIABILITY, WAIVERS AND ARBITRATION

                10.1        Indemnification. (a)  Subject to Section 10.2, from and
after Closing, Seller shall indemnify, defend and hold harmless Buyer, each of
the Companies, and their respective partners, members, officers, employees,
Affiliates and Representatives (collectively, the “Buyer Indemnified Parties”) from and
against all Losses incurred or suffered by any Buyer Indemnified Party arising
from:

(i)                    any
breach or inaccuracy as of the Closing (as though made as of the Closing except
to the extent otherwise provided in this Agreement) of any representation or
warranty of Seller contained in this Agreement, the Software and Intellectual
Property License Agreement or any certificate delivered pursuant to Section 7.3;

(ii)                   any
breach of any covenant or agreement of Seller contained in this Agreement or
the Software and Intellectual Property License Agreement;

(iii)                  the
Assigned Contracts and the CG&E Transactions to the extent due to actions
or omissions prior to Closing and not included in the calculation of Net
Working Capital;

(iv)                  any
termination by Kerr-McGee Oil & Gas Corporation, Kerr-McGee Oil &
Gas Onshore LP and Oryx Gas Marketing Limited Partnership (collectively, the “Kerr-McGee Parties”)
under Section 9.1 of the Amended and Restated Gas Purchase Agreement,
dated as of July 1, 1998, between the Kerr-McGee Parties and CMT, as
amended prior to the date hereof, to the extent such termination results solely
from the sale of the Capital Stock of CMT pursuant to this Agreement; provided
that in no event shall the Losses under this clause (iv) exceed the difference
between (A) the portion of the MTM Value of the Trading Book allocated to
such Amended and Restated Gas Purchase Agreement as of Closing minus (B) the
termination payment payable pursuant to such Section 9.1;

(v)                   the
Excluded Items;

(vi)                  with
respect to any Third Party Software that Seller fails to transfer to (or obtain
on behalf of) CMT prior to the Closing Date pursuant to Section 6.5
hereof, (A) any claim of infringement or misappropriation based on the use
by CMT after the Closing, in a manner consistent with CMT’s use prior to the
Closing, of such Third Party Software, but such indemnity shall apply only to
any such use that occurs prior to the earlier of (1) the 90th day
following the Closing Date and (2) the date on which Seller transfers to (or
obtains on behalf of) CMT such Third Party Software and (B) the reasonable
cost of obtaining a license to such Third Party Software pursuant to Section 6.5;

 

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(vii)                 the
Proceedings identified as item 1 on Schedule 4.4; and

(viii)                any
CG&E Transaction that is an “Into Cinergy Seller’s Choice” Contract to the
extent that (A) CMT (or CMT on behalf of CG&E) has received delivery
of physical power at a location within the “Into Cinergy” control area other
than “CinHub” from a Counterparty under another “Into Cinergy Seller’s Choice”
Contract and (B) CMT (or CMT on behalf of CG&E) does not have another “Into
Cinergy Seller’s Choice” Contract that would permit CMT (or CMT on behalf of
CG&E) to deliver physical power to the location in the “Into Cinergy”
control area other than “CinHub” at which CMT (or CMT on behalf of CG&E)
has received such delivery (and for purposes of this Section 10.1(a)(viii),
the “Losses” incurred or suffered by the Buyer Indemnified Parties shall be
calculated as the excess, if any, of the amount paid by CMT for the applicable
physical power delivered to it at such location and the price received by CMT
from the sale of such physical power in accordance with the terms hereof).

(b)           Subject to Section 10.2, from
and after Closing, Buyer shall indemnify, defend and hold Seller and its
partners, members, officers, employees, Affiliates and Representatives
(collectively, the “Seller
Indemnified Parties” and, together with Buyer Indemnified
Parties, the “Indemnified
Parties”) harmless from and against all Losses incurred or
suffered by any Seller Indemnified Party arising from:

(i)                    any
breach or inaccuracy as of the Closing (as though made as of the Closing except
to the extent otherwise provided in this Agreement) of any representation or
warranty of Buyer contained in this Agreement, the Software and Intellectual
Property License Agreement or any certificate delivered pursuant to Section 8.3;

(ii)                   any
breach of any covenant or agreement of Buyer contained in this Agreement or the
Software and Intellectual Property License Agreement;

(iii)                  the
Assigned Contracts and the CG&E Transactions to the extent due to actions
or omissions from or after Closing;

(iv)                  the
Closing Date Transactions (other than the CG&E Transactions and other than
any Tax liability resulting from such transactions); and

(v)                   the
Continuing Support Obligations.

                10.2        Limitations of Liability. Notwithstanding anything in this
Agreement to the contrary:

(a)           the representations, warranties,
covenants, agreements and obligations in this Agreement shall survive the
Closing, provided however that no
Party may make or bring any Claim for liability with respect to (i) any
representation or warranty contained in this Agreement or the Software and
Intellectual Property License Agreement (other than those representations and
warranties contained in Sections 3.1 (Organization), 3.2 (Authority), 3.4
(Capitalization), 4.1 (Organization), 4.3 (Capitalization), 5.1 (Organization)
and 5.2 (Authority) (collectively,
the “Title and Authority
Representations”)) or any covenants in Section 6.4, after
the 18-month anniversary of the Closing Date, (ii) the Title and
Authority Representations, after the five-year 

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anniversary
of the Closing Date, (iii) the representation and warranty contained in Section 4.6
after the 180th day following the Closing Date, and (iv) the
representations and warranties contained in Section 4.8 (Taxes) and the
covenants in Section 6.14 after the expiration of sixty (60) days
following the expiration of the applicable statute of limitations (including
extensions thereof consented to in writing by Seller, such consent not to be
unreasonably withheld) and (iv) any covenants, agreements or obligations
of the Parties that by their terms are to be performed prior to Closing (other
than those contained in Sections 6.3(b), the last sentence of Section 6.3(c),
and Sections 6.4, 6.6, 6.10 and 6.11(a)), after the Closing;

(b)           any breach of a representation
or warranty in this Agreement or the Intellectual Property License Agreement in
connection with any single item or group of related items that results in
Losses of less than $150,000 shall be deemed, for purposes of this Article X,
not to be a breach of such representation or warranty; provided, however, that
for the purposes of this Section 10.2(b), any group of related items that
results in Losses of $150,000 or more shall not be “disaggregated” so that any
individual items comprising any portion or portions of such group of related
items is less than $150,000;

(c)           Seller shall have no liability for
breaches of representations, warranties and covenants in this Agreement or the
Software and Intellectual Property License Agreement until the aggregate amount
of all Losses incurred by Buyer equals or exceeds $4,000,000 (the “Deductible Amount”), in which event
Seller shall be obligated to indemnify the Buyer Indemnified Parties from and
against all such Losses (including those less than the Deductible Amount) in
accordance with this Article X, but subject to the other limitations set
forth in this Article X;

(d)           in no event shall Seller’s aggregate
liability (i) arising out of or relating to this Agreement or the Software
and Intellectual Property License Agreement, taken as a whole, whether relating
to breach of representation and warranty, covenant, agreement or obligation in
this Agreement or the Software and Intellectual Property License Agreement and
whether based on contract, tort, strict liability, other Laws or otherwise,
exceed 20% of the Base Purchase Price, except as set forth in Section 10.2(d)(ii) or
Section 10.2(i); and (ii) arising out of or relating to any breach of
a Title or Authority Representation (together with the aggregate liability pursuant
to Section 10.2(d)(i)) exceed 100% of the Base Purchase Price;

(e)           Neither Party shall have any
liability for any breach of a representation, warranty, covenant, agreement or
obligation in this Agreement or the Software and Intellectual Property License
Agreement by such Party (i) of which the other Party had Knowledge prior
to the date of this Agreement or (ii) (x) of which the other Party
had Knowledge on or prior to the Closing Date and (y) in the case of this
Agreement where due to such breach such other Party’s conditions to closing in Article VII
or Article VIII, as applicable, were not met;

(f)            no matter shall be the subject of
any Claim hereunder or under the Software and Intellectual Property License
Agreement to the extent the Party bringing such Claim has otherwise been
compensated therefore, whether through calculation of the Purchase Price, Net
Working Capital, or MTM Value of the Trading Book, through the presence of
accruals or reserves or otherwise;

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(g)           a Party must give written notice to
the other Party within a reasonable period of time after becoming aware of any
material breach by such other Party of any representation, warranty, covenant,
agreement or obligation in this Agreement or the Software and Intellectual
Property License Agreement;

(h)           the Parties shall have a duty to
mitigate any Loss in connection with this Agreement or the Software and
Intellectual Property License Agreement;

(i)            the limitations set forth in Section 10.2(b),
(c) and (d) shall not apply to Seller’s indemnification obligations
pursuant to (i) Section 10.1(a)(ii) solely to the extent
relating to Section 6.7(i) or Section 6.9(d), (f), (g), (h), (m) or
(n), or (ii) Section 10.1(a)(iii) through (viii).

(j)            Seller shall have no liability for
any Losses for repairs, replacements or improvements which enhance the value of
the repaired, replaced or improved asset above the value of such asset at the
Closing if such asset had not been damaged or otherwise impaired or which
exceed the lowest reasonable cost of repair or replacement.

                10.3        Indirect Claims. From and after the Closing, Buyer agrees to release,
indemnify and hold harmless Seller, its Affiliates and the officers, directors
and employees of the Companies (acting in their capacity as such) from and
against any Claims for controlling stockholder liability or breach of any
fiduciary duty relating to any pre-Closing actions or failures to act
(including negligence or gross negligence) by Seller or any of its Affiliates
in connection with the business of the Companies prior to the Closing.

                10.4        Waiver of Other Representations. (a)  NOTWITHSTANDING
ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IT IS THE EXPLICIT INTENT OF EACH
PARTY, AND THE PARTIES HEREBY AGREE, THAT NONE OF SELLER OR ANY OF ITS
AFFILIATES OR REPRESENTATIVES HAS MADE OR IS MAKING ANY REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING ANY IMPLIED
REPRESENTATION OR WARRANTY AS TO THE CONDITION, MERCHANTABILITY, USAGE,
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE
COMPANIES, THE PURCHASED INTERESTS OR ANY OF THE COMPANIES’ ASSETS, OR ANY PART THEREOF,
EXCEPT THOSE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLES III AND IV. IN
PARTICULAR, AND WITHOUT IN ANY WAY LIMITING THE FOREGOING, SELLER AND ITS
AFFILIATES MAKES NO REPRESENTATION OR WARRANTY TO BUYER WITH RESPECT TO ANY
FINANCIAL PROJECTIONS OR FORECASTS RELATING TO THE COMPANIES, THE PURCHASED
INTERESTS OR ANY OF THE COMPANIES’ ASSETS, OR ANY PART THEREOF.

(b)           EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN THE REPRESENTATIONS AND WARRANTIES IN ARTICLES III AND IV, SELLER’S
AND THE PARENT COMPANIES’ INTERESTS IN THE COMPANIES ARE BEING TRANSFERRED “AS
IS, WHERE IS, WITH ALL FAULTS,” AND SELLER EXPRESSLY DISCLAIMS ON BEHALF OF
ITSELF AND ITS AFFILIATES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR
NATURE, EXPRESS OR IMPLIED, AS TO THE 

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CONDITION,
VALUE OR QUALITY OF THE COMPANIES, THE PURCHASED INTERESTS OR ANY OF THE
COMPANIES’ ASSETS, OR ANY PART THEREOF OR THE PROSPECTS (FINANCIAL OR
OTHERWISE), RISKS AND OTHER INCIDENTS OF THE COMPANIES, THE PURCHASED INTERESTS
OR ANY OF THE COMPANIES’ ASSETS, OR ANY PART THEREOF.

                10.5        Waiver of Remedies. (a)  The Parties hereby
agree that neither Party shall have any liability, and neither Party shall make
any Claim, for any Loss or other matter, under, relating to or arising out of
this Agreement or the Software and Intellectual Property License Agreement or
any other document, agreement, certificate or other matter delivered pursuant
hereto, whether based on contract, tort, strict liability, other Laws or
otherwise, except as provided in Articles IX and X.

(b)           NOTWITHSTANDING ANYTHING IN THIS
AGREEMENT OR THE SOFTWARE AND INTELLECTUAL PROPERTY LICENSE AGREEMENT TO THE
CONTRARY, NO PARTY SHALL BE LIABLE FOR SPECIAL, PUNITIVE, EXEMPLARY,
INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES OR LOST PROFITS, WHETHER BASED ON
CONTRACT, TORT, STRICT LIABILITY, OTHER LAW OR OTHERWISE AND WHETHER OR NOT
ARISING FROM THE OTHER PARTY’S SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT
LIABILITY OR OTHER FAULT (“Non-reimbursable Damages”).

(c)           Notwithstanding anything in this
Agreement or the Software and Intellectual Property License Agreement to the
contrary, no Representative or Affiliate of a Party shall have any liability to
another Party or any other Person as a result of the breach of any
representation, warranty, covenant, agreement or obligation of such Party in
this Agreement or the Software and Intellectual Property License Agreement.

                10.6        Procedure with Respect to Third-Party Claims. (a)  If any Party (or as to
Buyer after Closing, either Company) becomes subject to a pending or threatened
Claim of a third party and such Party (the “Claiming Party”) believes it has a claim
against the other Party (the “Responding Party”) as a result, then the Claiming Party
shall notify the Responding Party in writing of the basis for such Claim
setting forth the nature of the Claim in reasonable detail. The failure of the
Claiming Party to so notify the Responding Party shall not relieve the
Responding Party of liability hereunder except to the extent that the defense
of such Claim is prejudiced by the failure to give such notice.

(b)           If any Proceeding is brought by a
third party against a Claiming Party and the Claiming Party gives notice to the
Responding Party pursuant to Section 10.6,
the Responding Party shall be entitled to participate in such proceeding and,
to the extent that it wishes, to assume the defense of such proceeding, if (i) the
Responding Party provides written notice to the Claiming Party that the
Responding Party intends to undertake such defense, (ii) the Responding
Party conducts the defense of the third-party Claim actively and diligently
with counsel reasonably satisfactory to the Claiming Party and (iii) if
the Responding Party is a party to the proceeding, the Responding Party or the
Claiming Party has not determined in good faith that joint representation would
be inappropriate because of a conflict in interest. The Claiming Party shall,
in its sole discretion, have the right to employ separate counsel (who may be
selected 

 64
 

 

by
the Claiming Party in its sole discretion) in any such action and to
participate in the defense thereof, and the fees and expenses of such counsel
shall be paid by such Claiming Party. The Claiming Party shall fully cooperate
with the Responding Party and its counsel in the defense or compromise of such
Claim. If the Responding Party assumes the defense of a proceeding, no
compromise or settlement of such Claims may be effected by the Responding Party
without the Claiming Party’s consent unless (A) there is no finding or
admission of any violation of Law or any violation of the rights of any Person
and no effect on any other Claims that may be made against the Claiming Party
and (B) the sole relief provided is monetary damages that are paid in full
by the Responding Party.

(c)           If (i) notice is given to the
Responding Party of the commencement of any third-party legal proceeding and
the Responding Party does not, within thirty (30) days after the Claiming Party’s
notice is given, give notice to the Claiming Party of its election to assume
the defense of such legal proceeding, (ii) any of the conditions set forth
in clauses (i) through (iii) of Section 10.6(b) above become unsatisfied or (iii) a
Claiming Party determines in good faith that there is a reasonable probability
that a legal proceeding may adversely affect it other than as a result of
monetary damages for which it would be entitled to indemnification from the
Responding Party under this Agreement or the Software and Intellectual Property
License Agreement, then the Claiming Party shall (upon notice to the Responding
Party) have the right to undertake the defense, compromise or settlement of
such claim; provided, however, that
the Responding Party shall reimburse the Claiming Party for the costs of
defending against such third-party claim (including reasonable attorneys’ fees
and expenses) and shall remain otherwise responsible for any liability with
respect to amounts arising from or related to such third-party claim, in both
cases to the extent it is ultimately determined that such Responding Party is
liable with respect to such third-party claim for a breach under this Agreement.
The Responding Party may elect to participate in such legal proceedings,
negotiations or defense at any time at its own expense.

(d)           For purposes of this Section 10.6,
Seller shall be deemed to have assumed the defense of the Claim described in Section 10.1(a)(vii).

                10.7        Tax Treatment of Indemnity Payment. Any payment made pursuant to
this Article X or Section 6.14(d) shall be treated as an
adjustment to the Purchase Price.

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ARTICLE
XI

MISCELLANEOUS

                11.1        Notices. (a) Unless this Agreement specifically requires
otherwise, any notice, demand or request provided for in this Agreement, or
served, given or made in connection with it, shall be in writing and shall be
deemed properly served, given or made if delivered in person or sent by
facsimile or sent by registered or certified mail, postage prepaid, or by a nationally
recognized overnight courier service that provides a receipt of delivery, in
each case, to the Parties at the addresses specified below:

If to Buyer,
to:

Fortis Bank
S.A./N.V.

c/o Fortis Capital Corporation

153 East 53rd Street, 27th floor

New York, New York 10022

Facsimile No.:  (212)
340-6170

Attn:  Executive Vice President/General
Counsel

If to Seller,
to:

Cinergy Capital &
Trading, Inc.,

c/o Duke Energy Americas

5400 Westheimer Court

Houston, Texas 77056-5310

Attn:  Chief Financial Officer

Facsimile No.:  (713)627-6012

with a copy to:

Duke Energy
Corporation

400 South Tryon Street, Suite 1800

Charlotte, NC  28202

Facsimile No.:

Attn: Vice President and General Counsel - Corporate Legal Group

(b)          
Notice given by personal delivery, mail or overnight courier pursuant to this Section 11.1
shall be effective upon physical receipt. Notice given by facsimile pursuant to
this Section 11.1 shall be effective as of 
the date of confirmed delivery if delivered before 5:00 p.m. on any
Business Day at the place of receipt or the next succeeding Business Day if
confirmed delivery is after 5:00 p.m. on any Business Day at the place of
receipt or during any non-Business Day at the place of receipt.

                11.2        Entire Agreement. Except for the Confidentiality
Agreement,
this Agreement together with the Schedules and the Ancillary Agreements
supersedes all prior discussions and agreements between the Parties and their
respective Affiliates with respect to the subject matter hereof and contains
the sole and entire agreement among the Parties and their respective Affiliates
with respect to the subject matter hereof. No representations, warranties,
covenants, understandings, agreements, oral or otherwise, relating to the
transactions contemplated by this Agreement exist between Buyer and its
Affiliates, on the one hand, and Seller and its Affiliates, on the other hand,
or any of their respective Affiliates, except as expressly set forth in this
Agreement or the Ancillary Agreements. Nothing in any of the Ancillary
Agreements shall be deemed to alter, amend or otherwise modify any obligation
of Seller or Buyer under this Agreement. In the event of any conflict between
the terms of any Ancillary Agreement and the terms of this Agreement, the terms
of this Agreement shall control.

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                11.3        Expenses. Except as otherwise expressly provided in this Agreement,
whether or not the transactions contemplated hereby are consummated, each Party
will pay its own costs and expenses incurred in anticipation of, relating to
and in connection with the negotiation and execution of this Agreement and the
transactions contemplated hereby.

                11.4        Disclosure. Seller may, at its option, include in information delivered
pursuant to Section 2.3(e) or the Schedules items that are not
material in order to avoid any misunderstanding, and any such inclusion, or any
references to dollar amounts, shall not be deemed to be an acknowledgment or
representation that such items are material, to establish any standard of
materiality or to define further the meaning of such terms for purposes of this
Agreement. Information disclosed in any information delivered pursuant to Section 2.3(e) or
in any Schedule shall constitute a disclosure for purposes of all other
Schedules notwithstanding the lack of specific cross-reference thereto.

                11.5        Waiver. Any term or condition of this Agreement may be waived at any
time by the Party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the Party waiving such term or condition. No waiver by either
Party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion.

                11.6        Amendment. This Agreement may be amended or supplemented only by a
written instrument duly executed by or on behalf of each Party.

                11.7        No Third Party Beneficiary. Except for the provisions of
Sections 6.1, 6.3(b) and (c), 6.7(d), the fourth sentence of Section 6.9(b),
Sections 6.9(k), 6.14(d), 10.1(a) and (b) and 10.3 (which are
intended for the benefit of the Persons identified therein), the terms and
provisions of this Agreement are intended solely for the benefit of the Parties
and their respective successors or permitted assigns, and it is not the
intention of the Parties to confer third-party beneficiary rights upon any
other Person, including, any employee of the Company, any beneficiary or
dependents thereof, or any collective bargaining representative thereof.

                11.8        Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by either Party without
the prior written consent of the other Party, and any attempt to do so will be
void, except for assignments and transfers by operation of Law except that
either Seller or Buyer shall be entitled to assign this Agreement or any part
thereof to one or more of its Affiliates (which assignment shall not, without
the consent of the other Party, release the assigning Party from its
obligations hereunder). Subject to this Section 11.8, this Agreement is
binding upon, inures to the benefit of and is enforceable by the Parties and
their respective successors and permitted assigns.

                11.9        Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.

                11.10      Invalid Provisions. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present or
future Law, and if the rights or obligations of any Party under this Agreement
will not be materially and adversely affected thereby, such provision 

 67
 

 

will be fully
severable, this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.

                11.11      Acknowledgment by Buyer. Buyer has not relied on any
representation or warranty from Seller or any of its Affiliates except as
expressly set forth in this Agreement.

                11.12      Publicity. The Parties agree to cooperate and consult with each other
with respect to press releases or other public communications relating to the
transactions contemplated by this Agreement, and the method of the release for
publication thereof; provided, however,
that nothing herein shall affect or otherwise limit either Party from
publishing such press releases or other public communications as such Party
reasonably considers necessary in order to satisfy such Party’s obligations at
Law or under the rules of any stock or commodities exchange.

                11.13      Counterparts; Facsimile. This Agreement may be executed
in any number of counterparts, each of which will be deemed an original, but
all of which together will constitute one and the same instrument. Any
facsimile copies hereof or signature hereon shall, for all purposes, be deemed
originals.

                11.14      Governing Law; Venue; and Jurisdiction. (a) This Agreement shall be
governed by and construed in accordance with the Laws of the State of New York,
without giving effect to any conflict or choice of law provision that would
result in the imposition of another jurisdiction’s Law.

(b)           WITH RESPECT TO THE ENFORCEMENT OF
THIS AGREEMENT, (i) THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF FEDERAL COURT IN THE SOUTHERN DISTRICT OF NEW YORK AND (ii) EACH
PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY.

                11.15      Attorneys’ Fees. If either of the Parties shall bring an action to enforce
the provisions of this Agreement, the prevailing Party shall be entitled to
recover its reasonable attorneys’ fees and expenses incurred in such action
from the unsuccessful Party.

[signature page follows]

 68

 

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

	
  

  	
  SELLER

  
	
   

  	
   

  	
   

  
	
   

  	
  CINERGY CAPITAL & TRADING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul H. Barry

  
	
   

  	
  Name:

  	
  Paul H. Barry

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
				

 

 

SIGNATURE PAGE

PURCHASE AGREEMENT

 

 

	
  

  	
  BUYER

  
	
   

  	
   

  
	
   

  	
  FORTIS BANK S.A./N.V.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Filip Dierckx

  
	
   

  	
  Name:

  	
  Filip Dierckx

  
	
   

  	
  Title:

  	
  Managing Director

  

 

SIGNATURE PAGE

PURCHASE AGREEMENT

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