Document:

Exhibit 10.1

 

 [NOTICE:  This Document Contains A Waiver Of Any Claims
You Might Have Under The Age Discrimination In Employment Act. You are Advised
to Consult With an Attorney Before Signing This Document]

 

GENERAL RELEASE & SEPARATION AGREEMENT

 

THIS GENERAL RELEASE & SEPARATION AGREEMENT is made and entered
into by and between SIRVA, Inc., its subsidiaries and their subsidiaries
including, but not limited to, Allied Van Lines, Inc. and North American Van
Lines, Inc. (hereafter collectively referred to as “Company”) and Ralph A. Ford
(“Associate”).

 

Recitals

 

A.            Associate’s
employment with Company is terminating, and Associate wishes to receive certain
compensation and benefit enhancements as described in this Agreement.

 

B.            Associate’s employment
relationship with Company is covered by the Age Discrimination in Employment
Act of 1967, as amended.

 

C.            As a condition to
receipt of the compensation and benefit enhancements to which Associate is not
otherwise entitled, the Company requires the Associate to execute a General
Release & Separation Agreement satisfactory to Company.

 

NOW, THEREFORE, in consideration of the matters set forth in the
Recitals, the parties agree as follows:

 

Terms and Conditions

 

1.             Separation. Associate
hereby submits, and the Company hereby accepts, Associate’s resignation from
his employment with Company, and his status as an officer, effective February
28, 2006  
(“Termination Date”). Associate shall continue to receive his
current pay and benefits through that date.

 

2.             Severance
Pay and Benefits. In consideration of the execution and non-revocation of
this Agreement, the Company shall pay Associate severance pay at his current
base rate of pay including car allowance, beginning on the first regular pay
period following the Termination Date and the expiration of this Agreement’s
seven-day revocation period, and continuing for twelve (12) months. (the “Severance
Period”).

 

Associate’s health benefits previously elected under
the Company’s Benefits Plus program, including AYCO Financial Counseling and an
annual Executive Physical, but excluding short and long term disability
benefits and life insurance benefits, shall continue during the Severance
Period. Additionally, on the first regular pay-period following the expiration
of this Agreement’s seven-day revocation period, Company shall pay Associate a

 

 

one-time lump-sum payment
of Forty-Eight Thousand Dollars ($48,000) less applicable taxes and withholding
in lieu of payment or reimbursement for any health insurance premiums to be paid
by Associate after the expiration of the Severance Period.

 

For informational purposes only, Associate is entitled
to any amounts due for unused Earned Paid Time Off (“PTO”).

 

If Associate had established direct deposit for his
payment of wages, then the severance payments will be directly deposited into
the same account and financial institution where Associate’s previous payment
of wages had been directly deposited by Company, unless Associate provides
otherwise below:

 

Name of Institution:                                                          

 

Account Number:                                                              

 

[NOTE TO ASSOCIATE: only complete the above information if you wish to change
the account to where you want your severance payments directly deposited from
where you currently have your payment of wages directly deposited.]

 

The Company shall pay to Associate, as additional
consideration, the net amount of One Hundred Fifty-Four Thousand Seven Hundred
Twenty-Two Dollars and 00/100s ($154,722.00). This payment shall be made within
thirty (30) days following Associate’s execution of this Agreement and the
expiration of the revocation period, provided the Associate has not revoked
this Agreement during the revocation period.

 

3.             Associate
acknowledges and agrees that the consideration set forth in Paragraph 2 of this
Agreement is the only severance and benefit enhancement Associate shall receive
by electing to execute this Agreement. Associate further acknowledges and
agrees that upon payment of the amounts expressly provided for in this
Agreement and payment of the amount, if any, determined by the Compensation
Committee to be payable to Associate under the Company’s 2005 Management
Incentive Plan, Associate shall have received full payment for all services
rendered on behalf of the Company, including any amounts Associate would be
otherwise entitled to receive from Company under any other compensation or
incentive programs; provided, however, that nothing in this Agreement shall be
construed as a waiver of Associate’s rights to exercise vested stock options,
to any vested benefits under the Company’s 401(k) plan and the SIRVA Executive
Retirement & Savings Plan, to continue group health insurance coverage
pursuant to COBRA, or to convert group life insurance coverage to an individual
policy pursuant to the terms of the applicable group policy. Company will
provide Associate at Company’s expense, beginning on or about June 1, 2006,
twelve (12) months of Company paid outplacement services at Kensington
International. Company also acknowledges and agrees to provide Associate with
written notice when he is permitted to exercise any vested stock options
pursuant to the terms of the governing Stock Option Plans.

 

2

 

4.             In
consideration of the benefits received, and to be received by Associate
hereunder, Associate hereby IRREVOCABLY, VOLUNTARILY,
UNCONDITIONALLY AND GENERALLY RELEASES, ACQUITS, AND FOREVER DISCHARGES
Company, and each of Company’s owners, stockholders, predecessors, successors,
assigns, agents, directors, officers, employees, representatives, attorneys,
divisions, subsidiaries, affiliates (and agents, directors, officers,
employees, representatives and attorneys of such divisions, subsidiaries and
affiliates), and all persons acting by, through, under or in concert with any
of them (collectively “Releasees”), or any of them, from any and all charges,
complaints, claims, damages, actions, causes of action, suits, rights, demands,
grievances, costs, losses, debts, and expenses (including attorneys’ fees and
costs incurred), of any nature whatsoever, arising out of the termination of
Associate’s employment with Company, known or unknown, which Associate now has,
owns, or holds, or claims to have, own, or hold, or which Associate at any time
heretofore had, owned, or held, or claimed to have, own, or hold from the
beginning of time to the date of this Agreement, provided, however, that
nothing herein shall release Company from its indemnity obligations to
Associate in accordance with the Company’s Articles of Incorporation and
By-Laws.

 

5.             By way
of specification and not by way of limitation, Associate specifically waives,
releases and agrees to forego any rights or claims that Associate may now have,
or may have heretofore had, against each or any of the Releasees, under tort,
contract or other law of the State of Illinois or other state (including, but
by no means limited to, claims arising out of or alleging wrongful discharge,
breach of contract, breach of implied covenant of good faith and fair dealing,
misrepresentation, interference with contractual or business relations,
personal injury, slander, libel, emotional distress, mental suffering or damage
to professional reputation), under the Age
Discrimination in Employment Act of 1967 (ADEA), under the Worker Adjustment
& Retraining Notification Act, under the Employee Retirement Income
Security Act of 1974, under Title VII of the Civil Rights Act of 1964, under
the Equal Pay Act, under 42 U.S.C. Section 1981, under 42 U.S.C. Section 1983,
under 42 U.S.C. Section 1985, under the Vocational Rehabilitation Act of 1977,
under the Illinois Human Rights Act or any other applicable state or local
anti-discrimination law, under the Americans with Disabilities Act, under the
Family Medical Leave Act, or under any other laws, ordinances,
executive orders, rules, regulations or administrative or judicial case law
arising under the statutory or common laws of the United States, any state, or
any political subdivision of any state. Associate also voluntarily waives any
claims or rights Associate may otherwise have against Releasees for severance,
travel and expense reimbursement, or for other payments or compensation, such
as under Company’s Management and/or Performance Incentive Plans, PTO Policy,
Car Allowance Program and/or Severance Plan, except as otherwise set forth
herein. The parties intend that the claims released be construed as broadly as
possible. This is not a waiver of any claims that may arise after the date this
Agreement is executed.

 

6.             It is understood by
Associate that this Agreement is confidential, and its terms and conditions are
not to be released to anyone, except where otherwise required by law, required
for legitimate law enforcement or compliance purposes or where released to
Associate’s immediate family, legal counsel, and tax advisor, and, with respect
to the release of such information to any of them, Associate will inform them
of this confidentiality provision.

 

3

 

7.             Associate represents
and warrants that Associate has not filed any complaints or claims against
Company or Releasees with any local, state or federal court or agency, and
that, except as otherwise provided by law, Associate will not do so at any time
hereafter for claims which arose prior to the date Associate signs this
Agreement, and that if any such court or agency assumes jurisdiction on any
complaint or claim against Company or Releasees which arose prior to the
execution of this Agreement, Associate shall immediately request such court or
agency to dismiss the matter and take all such additional steps at Associate’s
sole cost and expense necessary to facilitate such dismissal with prejudice. Nothing
in this Agreement shall be construed to prohibit Associate from filing a charge
or complaint, including a challenge to the validity of this Agreement, with the
Equal Employment Opportunity Commission or participating in any investigation
or proceeding conducted by the Equal Employment Opportunity Commission.

 

8.             By and in
consideration of the benefits to be provided by the Company hereunder,
including particularly the benefits described in Paragraph 2 hereof, Associate
covenants and agrees that:

 

A.                                   Confidentiality.
Without the prior written consent of the Company, or except to the extent
required by an order of a court having competent jurisdiction or under subpoena
from an appropriate government agency, Associate shall not disclose any trade
secrets, customer lists, designs, information regarding product development,
marketing plans, sales plans, projected acquisitions or dispositions of
properties or management agreements, management organization information
(including data and other information relating to members of the Board and
management), operating policies or manuals, business plans, purchasing
agreements, financial records, or other financial, commercial, business or
technical information relating to the Company or any of its subsidiaries or
information designated as confidential or proprietary that the Company or any
of its subsidiaries may receive belonging to suppliers, customers or others who
do business with the Company or any of its subsidiaries (collectively, “Confidential
Information”) to any third person unless such Confidential Information has been
previously disclosed to the public by the Company or is in the public domain
other than by reason of Associate’s breach of this subparagraph.

 

B.                                     Non-Solicitation
of Employees and Agents. Except if Associate is directly approached by
another Associate of the Company, for the twelve (12) month period commencing
from the effective date of this Agreement (the “Non-Solicitation Period”),
Associate shall not directly or indirectly solicit, encourage or induce any
person who provides services to the Company or any of its subsidiaries, whether
as an employee, consultant, independent contractor or agent, or any entity
which provides services to the Company or any of its subsidiaries under an
agency relationship (including, without limitation, under a relationship
governed by an Agency Contract) to terminate his, her or its relationship with
or services for the Company or any such subsidiary and shall not directly or

 

4

 

indirectly, either individually or as owner, agent, employee,
consultant or otherwise, employ or offer employment to any person who is or was
employed by the Company or a subsidiary thereof unless such person, agent or
entity shall have ceased to provide services to the Company and its
subsidiaries or to have had a legal relationship with the Company and each of
its subsidiaries for a period of at least six (6) months. Notwithstanding the
foregoing, Associate further covenants and agrees he shall not solicit during
the Non-Solicitation Period any business, in competition with Company, from any
person or entity who has entered into an agency relationship (including,
without limitation, a relationship governed by an Agency Contract) with either
Allied Van Lines, Inc., North American Van Lines, Inc., and/or Global Van
Lines, Inc. This subparagraph B specifically excludes responses to any general
advertisements or solicitations for employment made to the general public.

 

C.                                     Remedies with
Respect to Covenants. Associate understands and agrees that if he breaches
or threatens to breach the covenants and obligations contained in Paragraphs 6,
7 or 8 of this Agreement, Company shall be entitled to the following remedies:

 

i.                                          Associate
acknowledges and agrees that the covenants and obligations of Associate with
respect to Paragraphs 6, 7, and 8 of this Agreement relate to special, unique
and extraordinary matters and that a violation of any of the terms of such
covenants and obligations will cause the Company irreparable injury for which
adequate remedies are not available at law. Therefore, Associate understands
and agrees that if he breaches or threatens to breach the covenants and
obligations of Paragraphs 6, 7, or 8 of this Agreement, in any respect, Company
shall be entitled to seek an injunction, restraining order or other equitable
relief (without the requirement to post bond) to restrain such breach or
threatened breach or otherwise specifically enforce the covenants and
obligations set forth therein.

 

ii.                                       Associate and
Company acknowledge and agree that the damages resulting from Associate’s
breach of the covenants and obligations contained in Paragraphs 6, 7, and 8 of
this Agreement, would be uncertain and difficult to ascertain. Associate agrees
to indemnify and hold each and all of the Releasees harmless from and against
any and all loss, cost, damage, or expense, including, but not limited to,
attorneys’ fees, incurred by Releasees, or any of them, provided the Releasees
are the prevailing party in any such legal action, as a result of Associate’s
breach of the covenants and obligations contained in Paragraphs 6, 7, or 8 of
this Agreement, or by the fact that any representations made by Associate in
this Agreement were false when made; or

 

5

 

iii.                                    Associate shall
forfeit any remaining severance benefits in the event of his breach of this
Agreement.

 

9.             Associate agrees that
Associate has had sufficient opportunity to review and consider this Agreement
and to discuss it with anyone Associate desires and that Associate has
carefully read it and fully understands all its provisions. Associate further
represents and agrees that Associate has not been under any duress, coercion,
or undue influence from Company or any of its representatives either during the
communications which led to this Agreement or at the time of the execution of
this Agreement.

 

10.           This Agreement sets
forth the entire agreement between the parties and fully supersedes any and all
prior agreements or understandings, written or oral, between the parties
pertaining to the subject matter of this Agreement. Additionally, Associate
represents and acknowledges that in executing this Agreement Associate does not
rely on, and has not relied on, any representation or statement made by Company
or any of its directors, officers, Associates, agents or representatives, or
their attorneys with regard to the subject matter, basis or effect of this
Agreement or otherwise, other than those specifically stated in this written
Agreement.

 

11.           This Agreement shall be
binding upon Associate and upon Associate’s heirs, administrators,
representatives, executors, and successors and shall inure to the benefit of
the Releasees and to their heirs, administrators, representatives, executors
and successors.

 

12.           Should Associate file any claim against
Company or any Releasee or should Associate sue Company, any Releasee or any of
their directors, officers, associates, agents or representatives, or their
attorneys in any administrative or judicial forum, local, state or federal, in
contravention of the terms of this Agreement, Associate shall immediately
forfeit the right to any further consideration provided or paid to Associate
under the terms of this Agreement and shall be obligated to reimburse Company
all costs and expenses, including reasonable attorneys’ fees, incurred by
Company in bringing about dismissal of the claim or complaint, unless Associate
promptly dismisses with prejudice such claim or complaint at no cost or expense
to the Company.

 

13.           This
Agreement is made under and shall be governed by the laws of the States of
Illinois.

 

14.           Associate has
represented and hereby reaffirms that Associate has disclosed to Company any
information in Associate’s possession or within Associate’s knowledge
concerning any conduct involving Company, or any of its affiliates, employees,
associates, officers, directors, or agents that Associate has any reason to
believe involves any false claims to the United States or is or may be unlawful
or violates Company policy in any respect. Within seven (7) days of the
execution of this Agreement, Associate also agrees to return all notes, reports
sketches, plans, books, keys, credit cards, unpublished memoranda or other
documents or property which were created, developed, generated or held or
controlled by Associate and which concern or are related to the Company’s
business and are the property of the Company.

 

6

 

Associate may retain the use of
his Company issued laptop and cell phone during the Severance Period.

 

15.           Associate agrees to provide the Company with his full cooperation, as
requested by the Company from time to time, subject to reimbursement by the
Company of reasonable out-of pocket costs and expenses in accordance with the
Company’s travel and expense reimbursement policies (and including advancement
of attorneys’ fees, costs and other expenses as provided by the Company’s By–Laws
in effect as of December 31, 2005) regarding any matter including any
litigation, claims, governmental proceeding, investigation or independent
review, which relates to matters with which Associate was involved or which
Associate had knowledge during the term of his employment with the Company;
provided, however, that such cooperation shall not materially or unreasonably
interfere with Associate’s future employment or business affairs. In any
proceeding involving Associate, Company will provide Associate with any
documents or information reasonably requested by Associate to enable him to
provide such cooperation or to otherwise participate in such proceeding. Company
shall compensate Associate at the rate of $200.00 per hour for any consulting
or litigation support in excess of ten (10) hours after the Termination Date.
The Company agrees that it shall indemnify, defend and hold harmless Associate,
to the full extent allowed by the Company’s By-Laws as in effect as of February
28, 2006 (including advancement of attorneys’ fees, costs and other expenses),
for Associate’s actions taken on behalf of the Company and/or executing
Associate’s duties in the course of his employment and other positions held
with the Company.

 

16.          Knowing
and Voluntary. Associate acknowledges that Company: (i) provided Associate this
Agreement on January 23, 2006; (ii)
advised Associate to consult an attorney prior to signing this Agreement; (iii)
informed Associate that Associate could have twenty-one (21) days to consider
this Agreement; and (iv) advised Associate that this Agreement shall not be
effective or enforceable against Associate or Company if Associate revokes it
by giving written notice to Company not later than seven (7) days after the
date of signing this Agreement. Associate and Company agree that any change to
this Agreement, whether material or not, will not change or re-start the
twenty-one (21) day period described above. Associate further states and
acknowledges that Associate has been provided 21 days by the Company to review
this Agreement, and that, to the extent Associate signs the Agreement prior to
the expiration of such 21 day period, Associate has done so knowingly and
voluntarily in accordance with 29 C.F.R. § 1625.22(e)(6), and that in making
such an election to sign the Agreement prior to the expiration of said 21 day
period of time, Associate has not been induced by any fraud or
misrepresentation by Company or by any threat by Company to withdraw or alter
the terms of the Agreement prior to the expiration of said 21 day period of
time.

 

17.           Except
pursuant to Paragraph 15, Associate
agrees that at no time hereafter will he make, issue release, or authorize any
written or oral statements, derogatory or defamatory in nature about the
Company, its directors, officers, employees, agents or related entities. No
member of the Company’s Board or Senior Management Team (defined as the Chief
Executive Officer, and his or her direct reports) shall at any time make,
issue, release or authorize any written or oral statements, derogatory or
defamatory in nature, about the Associate.

 

7

 

18.           It
is the parties understanding that none of the payments under this Agreement
will result in Associate being subject to the payment of interest and/or taxes
under Internal Revenue Code Section 409A. In the event the parties subsequently
determine, whether in connection with the issuance of final regulations under
Code Section 409A or otherwise, that one or more of the payments under this
Agreement will result in Associate being subject to the payment of interest
and/or taxes under Internal Revenue Code Section 409A, the parties shall use
their best efforts to amend this Agreement in order to avoid the imposition of
any such interest or additional tax, provided that the Company shall have no
obligation to agree to any amendment that would materially increase its
obligations hereunder.

 

IN WITNESS WHEREOF, the parties do hereby KNOWINGLY and VOLUNTARILY enter
into this General Release & Separation Agreement on the date last signed by
both parties.

 

	
  Ralph
  A. Ford

  	
  Company

  
	
   

  	
   

  
	
  /s/
  Ralph A. Ford

  	
   

  	
  By:

  	
    /s/
  Todd W. Schorr

  	
   

  
	
  Associate’s
  Signature

  	
   

  
	
  Print
  Name:

  	
  Ralph
  A. Ford

  	
   

  	
  Its:

  	
  SVP
  - HR

  	
   

  
	
  Date:

  	
  May
  15, 2006

  	
   

  	
  Date:

  	
  May
  22, 2006

  	
   

  
										

 

8Exhibit 10.1

 

PURCHASE
AGREEMENT

 

by
and between

 

DYNEGY
INC.

 

and

 

ROCKINGHAM
POWER, L.L.C.

 

as
Sellers,

 

and

 

DUKE
POWER COMPANY LLC d/b/a Duke Energy Carolinas, LLC

 

as
Purchaser

 

 

May 21,
2006

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  	
  DEFINITIONS;
  USAGE

  	
   

  	
  1

  
	
   

  	
  Section 1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
  Section 1.2

  	
   

  	
  Rules as
  to Usage

  	
   

  	
  12

  
	
   

  	
  Section 1.3

  	
   

  	
  Schedules
  and Exhibits

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  SALE
  AND PURCHASE; PRICE; CLOSING

  	
   

  	
  13

  
	
   

  	
  Section 2.1

  	
   

  	
  Sale and
  Purchase; Definition of Purchased Assets; Assumed Liability

  	
   

  	
  13

  
	
   

  	
  Section 2.2

  	
   

  	
  Purchase
  Price

  	
   

  	
  15

  
	
   

  	
  Section 2.3

  	
   

  	
  Allocation
  of Purchase Price for Income Tax Purposes

  	
   

  	
  15

  
	
   

  	
  Section 2.4

  	
   

  	
  The Closing

  	
   

  	
  15

  
	
   

  	
  Section 2.5

  	
   

  	
  Further
  Assurances; Post-Closing Cooperation

  	
   

  	
  18

  
	
   

  	
  Section 2.6

  	
   

  	
  Prorations

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  	
  20

  
	
   

  	
  Section 3.1

  	
   

  	
  Representations
  and Warranties of Sellers

  	
   

  	
  20

  
	
   

  	
  Section 3.2

  	
   

  	
  Representations
  and Warranties of Purchaser

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  COVENANTS

  	
   

  	
  29

  
	
   

  	
  Section 4.1

  	
   

  	
  Efforts to
  Close

  	
   

  	
  29

  
	
   

  	
  Section 4.2

  	
   

  	
  Preservation
  of Purchased Assets

  	
   

  	
  37

  
	
   

  	
  Section 4.3

  	
   

  	
  Purchaser’s
  Inspection Right

  	
   

  	
  38

  
	
   

  	
  Section 4.4

  	
   

  	
  Equipment
  Warranties

  	
   

  	
  38

  
	
   

  	
  Section 4.5

  	
   

  	
  Risk of Loss

  	
   

  	
  38

  
	
   

  	
  Section 4.6

  	
   

  	
  Employee
  Matters

  	
   

  	
  39

  
	
   

  	
  Section 4.7

  	
   

  	
  Emission
  Allowances

  	
   

  	
  42

  
	
   

  	
  Section 4.8

  	
   

  	
  Notification

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
  CONDITIONS
  TO CLOSING

  	
   

  	
  43

  
	
   

  	
  Section 5.1

  	
   

  	
  Purchaser’s
  Conditions Precedent

  	
   

  	
  43

  
	
   

  	
  Section 5.2

  	
   

  	
  Sellers’
  Conditions Precedent

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  TERMINATION

  	
   

  	
  46

  
	
   

  	
  Section 6.1

  	
   

  	
  Termination
  Prior to Closing

  	
   

  	
  46

  
	
   

  	
  Section 6.2

  	
   

  	
  Effect of
  Termination or Breach Prior to Closing

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  INDEMNIFICATION

  	
   

  	
  47

  
	
   

  	
  Section 7.1

  	
   

  	
  Indemnification
  by Sellers

  	
   

  	
  47

  
	
   

  	
  Section 7.2

  	
   

  	
  Indemnification
  by Purchaser

  	
   

  	
  47

  
	
   

  	
  Section 7.3

  	
   

  	
  Method of
  Asserting Claims

  	
   

  	
  48

  
	
   

  	
  Section 7.4

  	
   

  	
  Limitations
  of Liability

  	
   

  	
  49

  

 

i

 

	
   

  	
  Section 7.5

  	
   

  	
  Indemnification
  in Case of Strict Liability or Indemnitee Negligence

  	
   

  	
  50

  
	
   

  	
  Section 7.6

  	
   

  	
  Exclusive
  Remedy

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
  TAX
  MATTERS

  	
   

  	
  50

  
	
   

  	
  Section 8.1

  	
   

  	
  Representations
  and Warranties

  	
   

  	
  50

  
	
   

  	
  Section 8.2

  	
   

  	
  Transfer
  Taxes

  	
   

  	
  51

  
	
   

  	
  Section 8.3

  	
   

  	
  Real and
  Personal Property Taxes

  	
   

  	
  51

  
	
   

  	
  Section 8.4

  	
   

  	
  Sellers’ Tax
  Indemnification

  	
   

  	
  52

  
	
   

  	
  Section 8.5

  	
   

  	
  Purchaser
  Tax Indemnification

  	
   

  	
  52

  
	
   

  	
  Section 8.6

  	
   

  	
  Contests

  	
   

  	
  52

  
	
   

  	
  Section 8.7

  	
   

  	
  Information

  	
   

  	
  53

  
	
   

  	
  Section 8.8

  	
   

  	
  Tax Returns

  	
   

  	
  53

  
	
   

  	
  Section 8.9

  	
   

  	
  Survival of
  Obligations

  	
   

  	
  53

  
	
   

  	
  Section 8.10

  	
   

  	
  Adjustments
  to Purchase Price

  	
   

  	
  54

  
	
   

  	
  Section 8.11

  	
   

  	
  Application
  of Indemnity Limitations

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  	
  SURVIVAL;
  NO OTHER REPRESENTATIONS

  	
   

  	
  54

  
	
   

  	
  Section 9.1

  	
   

  	
  Survival of
  Representations and Warranties

  	
   

  	
  54

  
	
   

  	
  Section 9.2

  	
   

  	
  No Other
  Representations

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
  DISPUTE
  RESOLUTION

  	
   

  	
  54

  
	
   

  	
  Section 10.1

  	
   

  	
  Dispute
  Resolution

  	
   

  	
  54

  
	
   

  	
  Section 10.2

  	
   

  	
  Submission
  to Jurisdiction; Waiver of Jury Trial

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  	
  LIMITED
  REMEDIES AND DAMAGES

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 11.1

  	
   

  	
  Limitation
  of Liability

  	
   

  	
  55

  
	
   

  	
  Section 11.2

  	
   

  	
  Specific
  Performance

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  56

  
	
   

  	
  Section 12.1

  	
   

  	
  Notices

  	
   

  	
  56

  
	
   

  	
  Section 12.2

  	
   

  	
  Payments

  	
   

  	
  57

  
	
   

  	
  Section 12.3

  	
   

  	
  Entire Agreement

  	
   

  	
  57

  
	
   

  	
  Section 12.4

  	
   

  	
  Expenses

  	
   

  	
  57

  
	
   

  	
  Section 12.5

  	
   

  	
  Public
  Announcements

  	
   

  	
  57

  
	
   

  	
  Section 12.6

  	
   

  	
  Confidentiality

  	
   

  	
  57

  
	
   

  	
  Section 12.7

  	
   

  	
  Waivers

  	
   

  	
  58

  
	
   

  	
  Section 12.8

  	
   

  	
  Amendment

  	
   

  	
  59

  
	
   

  	
  Section 12.9

  	
   

  	
  No
  Construction Against Drafting Party

  	
   

  	
  59

  
	
   

  	
  Section 12.10

  	
   

  	
  No
  Third-Party Beneficiary

  	
   

  	
  59

  
	
   

  	
  Section 12.11

  	
   

  	
  Headings

  	
   

  	
  59

  
	
   

  	
  Section 12.12

  	
   

  	
  Invalid
  Provisions

  	
   

  	
  59

  
	
   

  	
  Section 12.13

  	
   

  	
  Governing
  Law

  	
   

  	
  59

  
	
   

  	
  Section 12.14

  	
   

  	
  Court Costs;
  Interest

  	
   

  	
  59

  
	
   

  	
  Section 12.15

  	
   

  	
  No
  Assignment; Binding Effect

  	
   

  	
  59

  
	
   

  	
  Section 12.16

  	
   

  	
  Counterparts

  	
   

  	
  60

  

 

ii

 

PURCHASE
AGREEMENT

 

THIS PURCHASE AGREEMENT is made and entered into effective as of May 21, 2006 (the “Effective
Date”), by and between DYNEGY INC.,
an Illinois corporation (“Dynegy”), ROCKINGHAM
POWER, L.L.C., a Delaware limited liability company (“Rockingham”),
and DUKE POWER COMPANY LLC  d/b/a Duke Energy Carolinas, LLC, a North
Carolina limited liability company (“Purchaser”). Dynegy and Rockingham
are also each referred to herein individually as a “Seller” and
collectively as the “Sellers.” 
Dynegy and Rockingham, on one hand, and Purchaser, on the other hand,
are also each referred to herein as a “Party” and collectively as the “Parties.”

 

RECITALS

 

Rockingham owns an electric generation plant
in Rockingham County, North Carolina.

 

Dynegy owns indirectly all the outstanding
membership interests in Rockingham.

 

Purchaser desires to purchase Rockingham’s
electric generation plant and substantially all of the other assets of
Rockingham and to assume certain obligations and liabilities in connection
therewith.

 

The Parties have determined to set forth in
this Agreement the terms and conditions of their agreements regarding the
foregoing.

 

AGREEMENTS

 

For and in consideration of the Recitals set
forth above, the respective covenants and agreements of the Parties herein set
forth, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the Parties, the Parties, intending to be
legally bound, do hereby agree as follows:

 

ARTICLE I

DEFINITIONS; USAGE

 

Section 1.1                                   Definitions. Unless
the context shall otherwise require, capitalized terms used in this Agreement
shall have the meanings assigned to them in this Section 1.1.

 

“Absentee List” has the meaning given
to it in Section 4.6(c).

 

“Acceptable Disposition” shall have
the meaning given to it in Section 4.1.1(d).

 

“Affiliate” of any Person means any
other Person directly or indirectly Controlling, directly or indirectly
Controlled by or under direct or indirect common Control with such Person.

 

“Agreement” means this Purchase
Agreement by and between Sellers and Purchaser, as amended from time to time.

 

“Assignment Agreements” has the
meaning given to it in  Section 2.4.1(a)(i).

 

 

“Assumed Agreements” means the
agreements and obligations that are listed on Schedule 1.1(a) attached
hereto, as the same may be updated at Closing pursuant to Section 2.4.1; provided, however,
that the Capacity Contracts shall be deemed Assumed Agreements only in
accordance with the terms of Section 4.1.1(d).

 

“Assumed Liabilities” has the meaning
given to it in Section 2.1.2.

 

“Bill of Sale” has the meaning given
to it in Section 2.4.1(b)(i).

 

“Business” means the business of
owning the Site and the Facility, maintaining and operating the Facility and
generating electric energy and ancillary services from the Facility, but shall
not include fuel procurement or power marketing activities.

 

“Business Day” means any day except
Saturday, Sunday or a weekday that banks in Charlotte, North Carolina or New
York, New York are closed.

 

“Capacity Contracts” means (i) Confirmation
Letter, dated June 28, 2004, pursuant to that certain ISDA Master
Agreement, dated November 13, 2003, by and between Morgan Stanley Capital
Group, Inc. and Dynegy Power Marketing, Inc., as amended by that
certain First Amendment Agreement, dated as of June 16, 2004, by that
certain Second Amendment Agreement, dated as of July 29, 2004, by that
certain Third Amendment Agreement, dated as of August 8, 2005, by that
certain Amendment Agreement Adopting the Conversion Convention for an INTO AEP
Product, dated September 28, 2004, and by that certain Fourth Amendment
Agreement, dated December 1, 2005 (hereinafter, the “Morgan Stanley ISDA Master Agreement”), (ii) Confirmation
Letter, dated June 21, 2005, pursuant to the Morgan Stanley ISDA Master
Agreement,  (iii) Master Power Purchase and Sale Agreement Confirmation Letter, dated
January 16, 2004, pursuant to that certain EEI Master
Power Purchase and Sale Agreement, dated May 29, 2001, by and between
North Carolina Municipal Power Agency 1 and Dynegy Power Marketing, Inc.
(hereinafter, the “NCMPA1 EEI Master Agreement”) and (iv) Master
Power Purchase and Sale Agreement Confirmation Letter, dated May 7, 2002,
as amended by that certain Amendment No. 1 to the Master Power Purchase and
Sales Agreement Confirmation Letter, dated July 12, 2002, and by that
certain Amendment No. 2 to the Master Power Purchase and Sales Agreement
Confirmation Letter, dated August 19, 2005, pursuant to the NCMPA1 EEI
Master Agreement; provided that in no event shall “Capacity Contracts” be
deemed to include the Morgan Stanley ISDA Master Agreement or the NCMPA1 EEI
Master Agreement.

 

“Closing” has the meaning given to it
in Section 2.4.

 

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

 

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

 

“Consumables” means any and all of the
following items intended to be consumed in the operation of the Business or
needing regular periodic replacements at the Facility in the ordinary course of
the operation of the Business:  fuel oil,
lubricants, chemicals, fluids, lubricating oils, filters, seals, gaskets and
other similar expendable materials; maintenance, shop and office

 

2

 

supplies; and all other expendable materials,
supplies and other items consumed at the Facility in the ordinary course of the
operation of the Business.

 

“Control” of any Person means the
possession, directly or indirectly, of the power either to (a) vote more
than fifty percent (50%) of the securities or interests having ordinary voting
power for the election of directors (or other comparable controlling body) of
such Person or (b) direct or cause the direction of management or policies
of such Person, whether through the ownership of voting securities or
interests, by contract or otherwise.

 

“Curative Period” has the meaning
given to it in Section 4.1.1(b).

 

“Deed” has the meaning given to it in Section 2.4.1(b)(v).

 

“Default Rate” has the meaning given
to it in Section 12.2.

 

“Duke-Related Termination Agreement”
has the meaning given to it in Section 2.4.1(a)(iii).

 

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

 

“Dynegy Benefit Plans” has the meaning
given it in Section 4.6(e).

 

“Dynegy Power Marketing” means Dynegy
Power Marketing, Inc., a wholly owned indirect subsidiary of Dynegy.

 

“Easement” means the 60’ access
easement shown on plat of survey for Dynegy Power Corporation, New Bethel
Township, Rockingham County, North Carolina, dated July 17, 1998, by C.E.
Robertson and Associates, R.L.S., Eden NC.

 

“Effective Date” has the meaning given
to it in the preamble to this Agreement.

 

“Emissions Allowances” means an
authorization by a state or federal regulatory agency, as authorized by laws
and regulations applicable to the Facility, to emit a specified amount of air
pollutant under an emissions budget trading program. This specifically includes
the definition of SO2 and NOx allowances under the Federal Acid Rain program
(40 CFR 72), the NOX Budget Trading Program (40 CFR 96), the CAIR NOx Trading
Program (40 CFR 96 Subpart AA), and the CAIR SO2 Trading Program (40 CFR
96 Subpart AAA), and any approved regulations implementing these
provisions as adopted by the NC State Implementation Plan.

 

“Employee Transition Date” has the
meaning given to it in Section  4.6(a).

 

“Employees” has the meaning given to
it in Section 3.1.16.

 

“Environmental Condition” means any
Release or threat of a Release of a Hazardous Material into the environment at,
from or with the respect to the Facility, the Real Property or the Site
(wherever migrating), in each case for which there is a Remediation requirement
under Environmental Law.

 

3

 

“Environmental Law” means the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq.; the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq.; the Federal Water Pollution Control Act, 33
U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section 7401
et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1471
et seq.; the Toxic Substances Control Act, 15 U.S.C. Sections 2601 through
2629; the Oil Pollution Act, 33 U.S.C. Section 2701 et seq.; the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001 et seq.;
the Safe Drinking Water Act, 42 U.S.C. Section 300f through 300j; N.C.
Gen. Stat. § 130A-310.1 et seq.; N.C. Gen. Stat. § 143-214.1 et seq.;
N.C. Gen. Stat. § 143-215.1 et seq.; N.C. Gen. Stat. § 143-215.81 et
seq.; N.C. Gen. Stat. § 143-215.94A et seq.; N.C. Gen. Stat. § 130A-309.15
et seq.; N.C. Gen. Stat. § 130A-310.9 et seq.; and all other applicable statutes
or regulations that govern the management of Hazardous Materials or the
environment and all amendments thereto and those regulations implementing any
of the foregoing.

 

“Equipment Warranties” means any and
all agreements of manufacturers, assemblers, overhaulers, refurbishers, sellers
or any other Person, whether provided in connection with the purchase of
equipment or entered into independently of such purchase, under which such
Person agrees to repair, maintain or furnish parts or supplies with respect to
any Materials and Equipment, other than any Excluded Assets.

 

“Excluded Assets” has the meaning
given to it in Section 2.1.3.

 

“Excluded Liabilities” has the meaning
given to it in Section 2.1.4.

 

“Facility” means the simple-cycle
electric generating facility consisting of five combustion turbine generators,
together with the pipeline interconnections, electrical connections (including
but not limited to all of Customer’s Interconnection Facilities as defined in
the Interconnection and Operating Agreement) and all other related equipment
and other associated property located adjacent to or within the Site, other
than equipment and improvements owned by utilities providing services to the
Site and the fuel pipeline interconnection and power transmission
interconnection equipment and improvements owned by the pipeline and power
transmission line operations.

 

“Facility Books and Records” means all
books, records, files, documents, instruments, papers, journals, deeds,
licenses, supplier lists, contractor and subcontractor lists, computer files
and programs, retrieval programs, environmental samples, monitoring and
studies, chemical inventories, operating data, purchase orders, safety and
maintenance manuals, operations manuals, engineering or design plans, blue
prints and as-built plans, drawings, specifications, test reports, quality
documentation and reports, Maximo and PI records and reports, process and
instrumentation diagrams, CEMS activity logs, regulatory correspondence (to the
extent located at the Facility), hazardous waste disposal records, procedures
and similar items relating to the construction, ownership, operation or
maintenance of the Facility, whether in electronic or physical form, owned by
and in the Sellers’ possession or control on the Effective Date or subsequently
acquired or obtained by Sellers prior to Closing, other than those relating to
Employees, fuel procurement or power marketing and the accounting books and
records of Rockingham or Dynegy.

 

4

 

“Facility Intellectual Property” has
the meaning given to it in Section 3.1.18.

 

“Facility Permits” has the meaning
given to it in Section 3.1.13.

 

“Federal Power Act” means the Federal
Power Act of 1935, as amended, and the regulations thereunder.

 

“FERC” means the Federal Energy
Regulatory Commission.

 

“FERC Approvals” means the FERC 203
Approval, the FERC Capacity Contract Assignment Approval and the FERC
Jurisdictional Agreement Termination Approval.

 

“FERC 203 Approval” means the order
issued by FERC under section 203 of the Federal Power Act that approves
Purchaser’s acquisition of the Facility and related FERC jurisdictional assets
and Sellers’ divestiture of the Facility and related FERC jurisdictional assets
as contemplated by this Agreement, but without the requirement for the
expiration of any applicable rehearing or appeal period.

 

“FERC Capacity Contract Assignment
Approval” means the order issued by FERC under the Federal Power Act that
approves, contingent upon Closing, the assignment by Dynegy Power Marketing to
Purchaser and the assumption by Purchaser of all of Dynegy Power Marketing’s
obligations under the Capacity Contracts from and after Closing and that
authorizes Purchaser to sell power under the Capacity Contracts, but without
the requirement for the expiration of any applicable rehearing or appeal
period.

 

“FERC Jurisdictional Agreement Termination
Approval” means the order issued by FERC under the Federal Power Act that
approves, contingent upon Closing, the termination of the FERC Jurisdictional
Agreements effective as of Closing, but without the requirement for the
expiration of any applicable rehearing or appeal period.

 

“FERC Jurisdictional Agreements” means
(i) the Interconnection and Operating Agreement, (ii) Rockingham
Power, L.L.C. Tariff for Emergency Redispatch Service, Designated Rate Schedule FERC
No. 1, and (iii) Agreement Between Rockingham Power, L.L.C. and Duke
Energy Corporation for the Provision of Reactive Power Supply and Voltage
Control from Generation Sources Service by Rockingham Power, L.L.C., and
Designated Rate Schedule FERC No. 4.

 

“First Reported Day” has the meaning
given to it in Section 4.6(d).

 

“Former Tax Parent” means Dry Creek
Power, Inc., a Delaware corporation.

 

“Good Operating Practices” means the
practices, methods, and acts engaged in by a significant portion of the
independent electric power generation industry in North America during the
relevant time period that, in the exercise of reasonable judgment by those
Persons engaged in or approving such practices, methods and acts, in the light
of the facts known at the time the decision was made, would have been expected
to accomplish the desired result at a reasonable cost consistent with good
business practices, reliability, safety, and expedition. Good Operating Practices
does not require the use of the optimum practice, method or act, but only

 

5

 

requires the use of those practices, methods
or acts generally accepted by the independent electric power generation
industry in North America.

 

“Governmental Authority” means any
federal, state or local governmental entity, authority or agency, court,
tribunal, regulatory commission or other body, whether legislative, judicial or
executive (or a combination or permutation thereof) with jurisdiction over the
operation of the Facility.

 

“Hazardous Materials” means any
substance or material defined under Environmental Law as “petroleum,” “oil,” a “hazardous
substance,” “toxic substance,” “regulated substance,” “hazardous material,” “solid
waste” or “hazardous waste” including by reason of ignitability, corrosivity,
reactivity or toxicity as defined by Environmental Law.

 

“Hired Employees” has the meaning
given to it in Section 4.6(a).

 

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

 

“Identified Environmental Liabilities”
shall mean Liabilities based upon or arising from those facts, circumstances,
or events that evidence noncompliance or violations of Environmental Law or
other Liabilities arising under Environmental Law or indicating the presence of
Environmental Conditions or Remediation obligations that are disclosed on
Sellers’ Disclosure Schedule or are identified in the written report
embodying the results of the Phase I Environmental Assessment (and any Phase II
Work) to be commissioned by the Parties pursuant to Section 4.1.1(c);
provided, however, that Identified Environmental Liabilities shall not in any
event include any Liability that constitutes a breach of any representation or
warranty set forth in Section 3.1.15,
without giving effect to any supplementing of the Sellers’ Disclosure Schedule that
Purchaser has not waived pursuant to Section 4.8.3.

 

“Indemnification Cap Amount” has the
meaning given to it in Section 7.4.1.

 

“Indemnified Party” has the meaning
given to it in Section 7.3.1.

 

“Indemnifying Party” has the meaning
given to it in Section 7.3.1.

 

“Intellectual Property” means patents
and industrial designs (including any continuations, divisionals,
continuations-in-part, renewals, reissues, and applications for any of the
foregoing); copyrights (including any registrations and applications for any of
the foregoing); software (whether in source code or object code form);
information technology and information systems; technology, trade secrets or
other confidential information, equipment, know-how, proprietary processes,
formulae, algorithms, models, or methodologies.

 

“Interconnection and Operating Agreement”
means the Interconnection and Operating Agreement by and between Rockingham
Power, L.L.C. and Duke Electric Transmission, a Division of Duke Energy
Corporation, Designated Substitute First Service Agreement No. 170 under Duke
Energy Corporation FERC Electric Tariff Second Revised Volume No. 4.

 

6

 

“Knowledge” or any similar phrase in
this Agreement means (i) in the case of Sellers, the actual knowledge of
those Persons listed in Section 3.1
of Sellers’ Disclosure Schedule, and (ii) in the case of Purchaser, the actual
knowledge of Purchaser’s officers and employees listed in Section 3.2 of Purchaser’s Disclosure
Schedule; provided, however, a Party shall be deemed to have
Knowledge of a matter of which such Party has received written notice.

 

“Law” means any statute, law, treaty,
rule, code, common law, ordinance, regulation, permit, certificate or binding
order of any Governmental Authority, or any binding judgment, decision, decree,
injunction, writ, order or like action of any court, arbitrator or other
Governmental Authority.

 

“Liability” means any indebtedness,
obligation and other liability, including without limitation, strict liability
whether arising under Law or Environmental Law or otherwise, of a Person
(whether absolute, accrued, contingent, fixed or otherwise, and whether due or
to become due).

 

“Lien” means any pledge, deed of
trust, mortgage, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), charge, or preference, priority or other security
grant, including without limitation any conditional sale or other title
retention agreement, any financing lease having substantially the same effect
as any of the foregoing, and the filing of any financing statement or similar
instrument under the Uniform Commercial Code as in effect in any relevant
jurisdiction or comparable law of any jurisdiction, domestic or foreign, and
any other lease, and any easement, restriction, condition, covenant,
right-of-way or other encumbrance or title exception.

 

“Lien Releases” means such UCC
termination statements and release of lien instruments in recordable form as
may be necessary to evidence, effective on or before Closing, the
termination and release of any and all financing statements, security
agreements, deeds of trust or mortgages which encumber the Purchased Assets and
which secure indebtedness of Sellers or their Affiliates as at Closing.

 

“Loss” means any damage, fine,
penalty, loss or expense (including cost of investigation and reasonable
attorneys’ fees), whether or not involving a third-party claim.

 

“LTD Determination Date” has the
meaning given to it in Section 4.6(d).

 

“Material Adverse Effect” means (a) a
material adverse effect on (i) the assets, operation or condition of the
Facility, the Purchased Assets or the Business, or (ii) the ability of
Sellers to perform their obligations under, or the validity or
enforceability of this Agreement or any of the other Transaction Agreements or
the Transco Interconnect Agreement; or (b) any other adverse condition,
restriction or burden that imposes a material cost on Purchaser’s ownership or
operation of the Facility or conduct of the Business (materiality to be
determined in the context of the transactions contemplated by this Agreement
taken as a whole); provided, however, that the term Material
Adverse Effect shall not include (i) any change to the extent such change
results from changes in general international, national, regional or local
economic, financial or market conditions, including, but not limited to, (w) changes
in the availability or cost of natural gas or other fuels, (x) changes in the
availability or cost of transportation of natural gas or other

 

7

 

fuel, (y) changes in the availability or cost
of power transmission, or (z) the market prices for electricity, electric
generating capacity or ancillary services, and/or (ii) Purchaser’s
inability to obtain regulatory approval for inclusion of the cost of the
Facility in retail rates.

 

“Materials and Equipment” means all
equipment, including five 501F Siemens-Westinghouse combustion turbine
generators, machinery, tools, parts, materials, supplies, inventory, apparatus,
Consumables and other tangible personal property owned or leased by Rockingham
and required or used by Sellers in connection with Rockingham’s operation or
maintenance of the Facility.

 

“NCUC” means the North Carolina
Utilities Commission.

 

“NCUC Approvals” means final orders
issued by the NCUC that: (i) approve the transfer by Rockingham to Purchaser
of the existing Certificate of Public Convenience and Necessity held by
Rockingham, and (ii) grant to Purchaser a Certificate of Public
Convenience and Necessity with respect to Purchaser’s acquisition of the
Facility, a simple-cycle electric generating facility consisting of five
combustion turbine generators reflecting a nominal rating of not less than
800-megawatts, as contemplated by this Agreement, but without the requirement
for the expiration of any applicable rehearing or appeal period, and without
regard to whether such final orders include any approval of any valuation,
accounting treatment, or any regulatory determination about the inclusion of
the cost of Facility in retail rates.

 

“Objectionable Survey Matters” has the
meaning given to it in Section 4.1.1(b).

 

“Objectionable Title Matters” has the
meaning given to it in Section 4.1.1(b).

 

“Overlap Period” has the meaning given
to it in Section 8.4.

 

“Overlap Period Taxes” has the meaning
given to it in Section 8.4.

 

“Party” or “Parties” has the
meaning given to it in the preamble to this Agreement.

 

“Permits” means permits, licenses,
approvals, certificates, and other authorizations of any Governmental
Authority.

 

“Permitted Liens” means (i) mechanics’,
materialmen’s, warehousemen’s, carriers’, workers’, or repairmen’s liens or
other similar common law or statutory Liens arising or incurred in the ordinary
course of the Business, in each case that are not material in amount or effect
on the Facility or the Business or are being contested in good faith by
appropriate proceedings; (ii) Liens for Taxes, assessments and other
governmental charges that are not due or payable or are being contested in good
faith by appropriate proceedings; (iii) those exceptions to title to the
Real Property set forth on Schedule 1.1(b), (iv) with respect
to the Real Property, (A) easements, quasi-easements, licenses, covenants
running with the land, rights-of-way, rights of re-entry, restrictions or other
similar encumbrances, conditions or restrictions that would be disclosed on
current title reports or surveys, that do not, individually or in the aggregate
with one or more other Liens, interfere in any material respect with the right
or ability to own, use, enjoy or operate such real property as currently used
or operated or to convey good and indefeasible fee simple title to the same or
materially detract from the value of such Real Property for similar use

 

8

 

as that used by Seller at the Effective Date,
and (B) zoning, building, subdivision or other similar requirements or
restrictions: provided, however, that the same are not violated in any material
respect by the existing improvements or the current use and operation of the
Facility; and (v) any consensual Lien that secures indebtedness of the
Sellers but only to the extent such Lien shall be discharged and released in
full at Closing.

 

“Person” means any individual,
corporation, partnership, joint venture, association, joint stock company,
trust, limited liability company, unincorporated organization, Governmental
Authority or any other form of legal entity.

 

“Phase I Environmental Assessment”
means a Phase I environmental assessment that complies with ASTM standard
E1527-05 (or its predecessor standards) and/or the federal All Appropriate
Inquiries Rule (40 CFR Part 312) promulgated by the United States
Environmental Protection Agency.

 

“Post-Closing Goods and Services” has
the meaning given to it in Section 2.5.5.

 

“Pre-Closing Environmental Liabilities” means all Liabilities, other than
Identified Environmental Liabilities, for Remediation or Environmental
Conditions created, arising from, or occurring as the result of activities
conducted or conditions existing at or with respect to the Site, the Facility
or the Business prior to the Closing, to the extent the same (i) arise
under Environmental Laws or (ii) constitute violations of Environmental
Laws, including any such Liabilities arising under Environmental Laws that
arise or result from, or relate to, the transportation, treatment, storage or
disposal of any Hazardous Materials at any location other than the Site.

 

“Pre-Closing Goods and Services” has
the meaning given to it in Section 2.5.5.

 

“Pre-Closing Taxes” has the meaning
given to it in Section 8.4.

 

“Pre-Closing Tax Period” means any
taxable period ending on or before the Closing Date, or, with respect to any
taxable period that begins on or before the Closing Date and ends after the
Closing Date, the portion of such taxable period ending on and including the
Closing Date.

 

“Prepaid Items” means all advance
payments, prepayments, prepaid expenses, deposits and the like to the extent
related to the Facility or the Business, other than cash deposits, letters of
credit, or other property posted by Sellers or any of their Affiliates as
performance assurance or security for performance of any Assumed Agreement.

 

“Prime Rate” has the meaning given to
it in Section 12.2.

 

“Property Taxes” has the meaning given
to it in Section 8.3.

 

“Purchase Price” has the meaning given
to it in Section 2.2.1.

 

“Purchased Assets” has the meaning
given to it in Section 2.1.1.

 

9

 

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

 

“Purchaser Indemnified Party” has the
meaning given to it in Section 7.1.

 

“Purchaser’s Disclosure Schedule”
means the schedule delivered to Sellers by Purchaser herewith and dated as
of the Effective Date, containing all lists, descriptions, exceptions and other
information and materials as are required to be included therein by Purchaser
pursuant to this Agreement, attached hereto as Schedule 3.2.

 

“Real Property” means the Site,
together with all buildings, structures and other improvements constructed
thereon); the Easement; all rights, title and interests of Sellers or either of
them, if any, in and to all other easements, benefits, privileges and other
rights appurtenant to the Site or in any way appertaining thereto, and all
strips and gores and any land lying in the bed of any street or road, open or
closed, adjoining the Site; and all rights of Sellers or either of them, if
any, in any licenses, approvals, development rights, plans, specifications,
drawings, surveys, warranties and guarantees, if any, relating to the
foregoing.

 

“Related Person” means, with respect
to any Person, such Person’s Affiliates, and the employees, officers,
directors, agents, representatives, licensees and invitees of such Person and
its Affiliates.

 

“Release” shall have the meaning
ascribed to it in the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. § 9601 et seq.

 

“Remediation” means any action required
by Environmental Law to monitor, investigate, assess, treat, clean up,
remediate or remove (i) Hazardous Materials or (ii) otherwise address
any Environmental Condition.

 

“Required Consents” means Required
Counterparty Consents and Required Governmental Consents.

 

“Required Counterparty Consents” means
all consents required by contract to be obtained from third parties (other than
Governmental Authorities) to permit Sellers or their Affiliates to assign and
Purchaser to assume the Assumed Agreements without violation or breach of or
penalty under, such agreements, including all such consents as set forth on Section 3.1.5 of Sellers’ Disclosure
Schedule.

 

“Required Governmental Consents” means
all consents required by Law or the terms of a Facility Permit to be obtained
from Governmental Authorities to permit Sellers to sell and Purchaser to
purchase the Purchased Assets, including all such consents as set forth on Section 3.1.5 of Sellers’ Disclosure
Schedule.

 

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

 

“Seller” and “Sellers” have the
meanings given to them in the preamble to this Agreement.

 

“Seller Indemnified Party” has the
meaning given to it in Section 7.2.

 

10

 

“Sellers’ Disclosure Schedule” means
the schedule delivered to Purchaser by Sellers herewith and dated as of
the Effective Date, containing all lists, descriptions, exceptions and other
information and materials as are required to be included therein by Sellers
pursuant to this Agreement and attached hereto as Schedule 3.1.

 

“Site” means the approximately
82.073-acre site owned by Rockingham in Rockingham County, North Carolina upon
which the Facility is located, as further described in Section 3.1.10(a) of
Sellers’ Disclosure Schedule.

 

“Survey” has the meaning given to it
in Section 4.1.1(b).

 

“Tax” or “Taxes” means any and
all taxes, including any interest, penalties, and other additions to tax that may become
payable in respect thereof, imposed by any federal, state, local, or foreign
government or any agency or political subdivision of any such government, which
taxes shall include all income taxes, profits taxes, taxes on gains,
alternative minimum taxes, estimated taxes, payroll and employee withholding
taxes, unemployment insurance taxes, social security taxes, welfare taxes,
disability taxes, severance taxes, license charges, taxes on stock, sales and
use taxes, ad valorem taxes, value-added taxes, excise taxes, franchise taxes,
gross receipts taxes, business license taxes, occupation taxes, real or
personal property taxes, stamp taxes, environmental taxes, transfer taxes,
workers’ compensation taxes, and other taxes, fees, duties, levies, customs,
tariffs, imposts, assessments, obligations and charges of the same or of a
similar nature to any of the foregoing.

 

“Tax Claim” has the meaning given to
it in Section 8.6.

 

“Tax Returns” means any return,
report, information return, claim for refund or other document (including any
related or supporting information) supplied to or required to be supplied to
any Taxing Authority with respect to Taxes, including any attachments,
amendments and supplements thereto.

 

“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.

 

“Technology Transfer Agreement” has
the meaning given to it in Section 2.4.1(a)(iv).

 

“Title V Air Emissions Permit” shall
mean that certain Title V air emission permit, permit number 08731T05 having an
effective date of March 15, 2005, issued by the North Carolina Department
of Environment and Natural Resources, as the same may be amended on or
before the Closing on a basis consistent with that certain draft permit
forwarded on or about May 18, 2006 from Laura S. Butler of the North
Carolina Department of Environment and Natural Resources.

 

“Title Insurance Commitment” has the
meaning given to it in Section 4.1.1(b).

 

“Title Policy” has the meaning given
to it in Section 5.1.14.

 

11

 

“Transaction Agreements” means the
following agreements:

 

(a)                                  this Agreement;

 

(b)                                 the Bill of Sale;

 

(c)                                  the Deed;

 

(d)                                 the Assignment Agreements;

 

(e)                                  Technology Transfer Agreement;

 

(f)                                    the Required Consents; and

 

(g)                                 the Duke-Related Termination Agreement.

 

“Transco Interconnect Agreement” means
the Interconnect, Reimbursement and Operating Agreement, dated March 15,
1999, by and between Transcontinental Gas Pipe Line Corporation and Rockingham,
as amended by that certain Amendment to the Interconnect, Reimbursement and
Operating Agreement, dated December 29, 1999.

 

“Transfer Taxes” has the meaning given
to it in Section 8.2.

 

“Transferable Facility Permits” means (i) those
Facility Permits that are freely transferable without any consent of the
applicable Governmental Authority by Sellers to Purchaser in connection with
the Sellers’ sale of the Purchased Assets to Purchaser and (ii) those
Facility Permits for which the applicable Governmental Authority has given its
written consent to the transfer thereof by Sellers to Purchaser.

 

Section 1.2                                   Rules as
to Usage. Except as otherwise expressly provided herein, the following rules shall
apply to the usage of terms in this Agreement:

 

(a)                                  The terms defined above have the meanings set forth above for all
purposes, and such meanings are equally applicable to both the singular and
plural forms of the terms defined.

 

(b)                                 “Include,” “includes” and “including” shall be deemed to be
followed by “without limitation” whether or not they are in fact followed by
such words or words of like import.

 

(c)                                  “Writing,” “written” and comparable terms refer to printing,
typing, and other means of reproducing in a visible form.

 

(d)                                 Except as otherwise expressly provided, any Law defined or referred
to above means such Law as from time to time amended, modified or supplemented.

 

(e)                                  References to a Person are also to its successors and assigns.

 

12

 

(f)                                    Any term defined above by reference to any agreement, instrument or
Law has such meaning whether or not such agreement, instrument or Law is in
effect.

 

(g)                                 “Hereof,” “herein,” “hereunder” and comparable terms refer, unless
otherwise expressly indicated, to the entire agreement or instrument in which
such terms are used and not to any particular article, section or other
subdivision thereof or attachment thereto. References in an instrument to “Article,”
“Section,” or another subdivision or to an attachment are, unless the context
otherwise requires, to the relevant article, section, subsection or
subdivision of or an attachment to such agreement or instrument. If such
reference in this Agreement to “Article,” “Section,” or other subdivision does
not specify an agreement or document, such reference refers to an article, section or
other subdivision of this Agreement. All references to exhibits or schedules in
any agreement or instrument that is governed by this Agreement are to exhibits
or schedules attached to such instrument or agreement.

 

(h)                                 Pronouns, whenever used in any agreement or instrument that is
governed by this Agreement and of whatever gender, shall include natural
Persons, corporations, limited liability companies, partnerships and
associations of every kind and character.

 

(i)                                     References to any gender include, unless the context otherwise
requires, references to all genders.

 

(j)                                     “Shall” and “will” have equal force and effect.

 

Section 1.3                                   Schedules
and Exhibits. This Agreement consists of the
Articles contained herein and the Schedules and Exhibits attached hereto, all
of which constitute one and the same agreement with equal force and effect.

 

ARTICLE II

SALE AND PURCHASE; PRICE; CLOSING

 

Section 2.1                                   Sale and Purchase; Definition of Purchased Assets; Assumed
Liability.

 

2.1.1                        Purchased Assets. On the terms and
subject to the conditions set forth in this Agreement, at the Closing,
Rockingham shall, and Dynegy shall cause each of its Affiliates who own
Purchased Assets (as defined below) to sell, transfer, convey, assign and
deliver to Purchaser, free and clear of all Liens (other than Permitted Liens),
and Purchaser shall purchase and pay for, the Facility and all Real Property,
Materials and Equipment, Facility Books and Records, Assumed Agreements,
Transferable Facility Permits, Facility Intellectual Property, Equipment
Warranties, Prepaid Items, Emissions Allowances described in Schedule 2.1.1, and all other
assets owned, leased, licensed or contracted for by Rockingham and used in the
conduct of the Business as of the Closing Date, whether or not located on the
Site, including the Materials and Equipment listed in Schedule 2.1.1,
but excluding the Excluded Assets (collectively, the “Purchased Assets”).

 

13

 

2.1.2                        Assignment and Assumption of Assumed Agreements and Easement and
Assumption by Purchaser of other Assumed Liabilities. On the terms and subject to the conditions set forth in this
Agreement, effective as of the Closing, Sellers shall assign, and shall cause
each of their applicable Affiliates who own Purchased Assets to assign to
Purchaser all of Sellers’ and such applicable Affiliates’ rights under the
Assumed Agreements and Easement. Purchaser shall assume, pay, discharge, perform and
be responsible for (i) all obligations arising after the Closing under the
Assumed Agreements and Easement, except to the extent such obligations shall be
attributable to any failure by either of the Sellers prior to the Closing to
comply with the terms of any Assumed Agreement and Easement, and (ii) the obligations
and Liabilities set forth on Schedule 2.1.2
(collectively, the “Assumed Liabilities”). For purposes of
clarification, the Parties specifically agree that Pre-Closing Environmental
Liabilities shall not be Assumed Liabilities hereunder.

 

2.1.3                        Excluded Assets. The Purchased Assets
shall not include Rockingham’s interests in the following agreements, assets
and properties (the “Excluded Assets”), and Purchaser shall have no
Liability with respect thereto:

 

(a)                                  Except for the Facility Books and Records, books and records of
Sellers, including Rockingham’s minute books and limited liability company
interest records;

 

(b)                                 Cash, cash equivalents, bank deposits, and accounts and notes
receivable, trade or otherwise, and any collateral posted to Sellers or their
Affiliates or by Sellers or their Affiliates under the Assumed Agreements or
otherwise;

 

(c)                                  Any amount received after the Closing for capacity, electricity,
ancillary services and fuel (including supply and transportation imbalances and
settlements) sold and delivered prior to the Closing;

 

(d)                                 Rights of Sellers arising under this Agreement, the Transaction
Agreements and any other instrument or document executed and delivered pursuant
to this Agreement; and

 

(e)                                  Any of the assets, properties, rights or interests owned, used,
occupied or held by or for the benefit of Rockingham or the Business that are
listed or described in Schedule 2.1.3 attached hereto.

 

2.1.4                        Excluded Liabilities. Except for the
Assumed Liabilities, Purchaser shall not assume and is not assuming pursuant to
this Agreement any liability or obligation whatsoever of Sellers for the Pre-Closing
Environmental Liabilities, Identified Environmental Liabilities or for any
other of Sellers’ other duties, obligations or Liabilities, whether incurred or
arising before or after Closing, and whether or not related to the Facility or
the Business (the Pre-Closing Environmental Liabilities, Identified
Environmental Liabilities and all of such other retained duties, obligations
and Liabilities being referred to herein as the “Excluded Liabilities”);
provided, however, that nothing in this Section 2.1.4
shall operate or be construed to limit Sellers’ rights or Purchaser’s
obligations under Section 7.2.

 

14

 

Section 2.2                                   Purchase Price.

 

2.2.1                        Amount. In consideration of the sale,
assignment, conveyance, transfer and delivery to Purchaser as of the Closing of
the Sellers’ right, title and interest in and to the Purchased Assets,
Purchaser shall pay to Rockingham an amount equal to One Hundred Ninety-five
Million and No/100 Dollars ($195,000,000.00) (the “Purchase Price”) and
shall assume the Assumed Liabilities.

 

2.2.2                        Method of Payment of Purchase Price. At
Closing, Purchaser shall deliver to the closing escrow agent, as provided in Section 2.4.1(c) the Purchase
Price, as adjusted for the pro rations and other adjustments hereunder, in
United States dollars, by wire transfer of immediately available federal funds.

 

Section 2.3                                   Allocation of Purchase Price for
Income Tax Purposes. The Purchase Price shall
be allocated among the Purchased Assets as of the Closing in accordance with a schedule to
be prepared by Purchaser, using the allocation method provided by Section 1060
of the Code and the regulations thereunder. The consent of Sellers under this section shall
not be a condition to the Closing. The Parties shall cooperate to comply with
all substantive and procedural requirements of Section 1060 of the Code
and the regulations thereunder. In that regard, Purchaser shall provide Sellers
with Purchaser’s proposed allocation of the Purchase Price to the Purchased
Assets within thirty (30) days after Closing. Sellers shall then consult with
Purchaser regarding such allocation and propose any adjustments within a
reasonable time thereafter. If Purchaser and Sellers are unable to agree on
such allocation, Purchaser and Sellers may allocate the Purchase Price as each
Party determines using the allocation method provided by Section 1060 of
the Code and the regulations thereafter (but in any event subject to Section 8.2). Transfer Tax on the Deed shall be
calculated based on the allocation set forth in Section 8.2.

 

Section 2.4                                   The Closing. The closing of the transactions contemplated herein (the “Closing”)
will take place at Purchaser’s offices in Charlotte, North Carolina, on the date
as soon as practicable (but in no event more than ten (10) Business Days)
after all conditions to the Closing set forth in Section 5.1
and Section 5.2 have been satisfied or
waived.

 

2.4.1                        Closing.

 

(a)                                  At the Closing, Purchaser shall (i) pay to the closing escrow
agent as provided in Section 2.4.1(c) below
the Purchase Price in accordance with Section 2.2
and (ii) execute (as applicable) and deliver the following items to
Sellers:

 

(i)                                     one or more assignment and assumption agreements in substantially the
form of Exhibit A attached hereto (the “Assignment
Agreements”), pursuant to which Rockingham (or its Affiliates, as
applicable) will assign and Purchaser will assume the Assumed Liabilities under
the Assumed Agreements;

 

(ii)                                  the Required Consents obtained as of Closing to the extent
Purchaser is the beneficiary, recipient or grantee thereof;

 

15

 

(iii)                               a Termination and Indemnification Agreement in substantially the form of
Exhibit B attached hereto with respect to (1) that certain
Power Sales Agreement
dated February 6, 2004, by and between Purchaser, formerly known as Duke
Power, a Division of Duke Energy Corporation and Dynegy Power Marketing, (2) that
certain Parent Guaranty Agreement, dated February 4,
2004, in the amount of $30,000,000, by Dynegy Holdings, Inc, as guarantor, in
favor of Purchaser,
formerly known as Duke Power, a Division of Duke
Energy Corporation, as beneficiary, and (3) the FERC Jurisdictional
Agreements (the “Duke-Related Termination Agreement”);

 

(iv)                              a Technology Transfer Agreement in substantially the form of Exhibit C
attached hereto with respect to the closed loop ignition control system
developed by Sellers’ Affiliate described in Part VIII(B) of Schedule 2.1.3
hereof (the “Technology Transfer Agreement”);

 

(v)                                 a Certificate of Existence with respect to Purchaser, as of a
recent date, issued by the Secretary of State of the State of North Carolina;

 

(vi)                              copies, certified by the Secretary or Assistant Secretary of
Purchaser, of resolutions of Purchaser’s Board of Directors authorizing the
execution and delivery of this Agreement and all of the other agreements and
instruments, in each case, to be executed and delivered by Purchaser in
connection herewith;

 

(vii)                           a certificate of the Secretary or Assistant Secretary of Purchaser
identifying the name and title and bearing the signatures of the officers of
Purchaser authorized to execute and deliver this Agreement and the other
agreements and instruments contemplated hereby;

 

(viii)                        a certificate addressed to Sellers dated the Closing Date executed
by the duly authorized officer of Purchaser to the effect that the conditions
set forth in Section 5.2.1
and Section 5.2.2 have been
satisfied by Purchaser; and

 

(ix)                                Fully executed originals of all Assumed Agreements.

 

(b)                                 At the Closing, Sellers shall, or will cause each of their
applicable Affiliates to execute (as applicable) and deliver to Purchaser the
following items:

 

(i)                                     the Required Consents obtained as of Closing to the extent Sellers,
or either of them, is the beneficiary, recipient or grantee thereof;

 

(ii)                                  a bill of sale in substantially the form of Exhibit D
attached hereto (the “Bill of Sale”);

 

(iii)                               an amended Schedule 1.1(a), updated through the Closing
Date to include those new contracts entered into by Seller since the Effective
Date in accordance with the terms of Section 4.2(b);

 

16

 

(iv)                              the Assignment Agreements;

 

(v)                                 a special warranty deed (the “Deed”) in substantially the form of
Exhibit E attached hereto and any other documents necessary to
convey all of Rockingham’s right, title and interest in and to the Real
Property;

 

(vi)                              the Duke-Related Termination Agreement;

 

(vii)                           the Technology Transfer Agreement;

 

(viii)                        the Lien Releases;

 

(ix)                                a certification of non-foreign status for Rockingham in the form and
manner which complies with the requirements of Section 1445 of the Code
and the regulations promulgated thereunder, and information sufficient for the
closing escrow agent to complete an IRS Form 1099 and any other required
tax filings;

 

(x)                                   affidavits addressed to Purchaser’s title insurer from Sellers, in form reasonably
satisfactory to Purchaser and such title insurer, and reflecting the forms of
affidavits typically provided by sellers and contractors in connection with
issuance of title insurance to remove standard exceptions for mechanics’ liens,
the gap period from the latest update of Purchaser’s title insurance commitment
and parties in possession, and such other affidavits and documents as may be
reasonably required by Purchaser’s title insurer for issuance of the Title
Policy;

 

(xi)                                certificates of title for the titled vehicles and equipment that
are part of the Purchased Assets, duly executed by Sellers or their
Affiliates, as applicable,  for transfer
to Purchaser;

 

(xii)                             certificates of existence and good standing with respect to each of
the Sellers, as of a recent date, issued by the Secretary of State of the State
of Delaware for Rockingham and by the Secretary of State of the State of
Illinois for Dynegy, and a certificate issued by the Secretary of State of
North Carolina evidencing that Rockingham is qualified to transact business in
North Carolina;

 

(xiii)                          copies, certified by the Secretary or Assistant Secretary of each
Seller, of resolutions of the Board of Directors of Dynegy and the consent of
Dynegy Power Corp. as sole member of Rockingham authorizing the execution and
delivery of this Agreement and all of the other agreements and instruments, in
each case, to be executed and delivered by Sellers in connection herewith;

 

(xiv)                         a certificate of the Secretary or Assistant Secretary of each
Seller identifying the name and title and bearing the signatures of the
officers of each Seller authorized to execute and deliver this Agreement and
the other agreements and instruments contemplated hereby, and such other
evidence of the approval of the transactions provided for hereunder, Sellers’
authority, due

 

17

 

execution of
documents and due organization as may be reasonably required by Purchaser’s
title insurer for issuance of the Title Policy;

 

(xv)                            a certificate addressed to Purchaser dated the Closing Date
executed by the duly authorized officers of each Seller to the effect that the
conditions set forth in Section 5.1.1 and Section 5.1.2
have been satisfied by Sellers; and

 

(xvi)                         exclusive possession of the Purchased Assets, subject only to the
Permitted Liens.

 

(c)                                  Unless Purchaser agrees otherwise, the Closing shall be consummated
through Chicago Title Insurance Company (Charlotte, North Carolina office) as
closing escrow agent and escrow holder to hold the items in Sections 2.4.1(a) and Section 2.4.1(b) and payment to the escrow holder
of the Purchase Price, Transfer Taxes and any amounts owing under Section 8.2, and any applicable prorations pursuant to Section 2.6, notwithstanding other provisions in this
Agreement to the contrary. Escrow shall close once all conditions to Closing
have been satisfied or waived and the escrow holder shall have recorded the
Deed. Sellers and Purchaser agree to provide escrow instructions to the closing
escrow agent, and if requested by such escrow agent, execute a closing escrow
agreement in reasonable form, consistent with the requirements of this
paragraph to facilitate Closing.

 

The Closing shall be deemed effective as of
11:59 P.M. Charlotte, North Carolina time on the Closing Date.

 

Section 2.5                                   Further Assurances; Post-Closing Cooperation.

 

2.5.1                        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
deem necessary or desirable in order more effectively (A) to transfer,
convey and assign to Purchaser, and to confirm Purchaser’s acceptance of and
title to, the Purchased Assets, (B) to the full extent permitted by Law,
to put Purchaser in actual possession of the Purchased Assets, and (C) otherwise
to consummate the transactions contemplated by this Agreement.

 

2.5.2                        Books and Records. Following Closing,
each Party shall afford the other Party, its counsel and its accountants,
during normal business hours, reasonable access to the Facility Books and
Records in its possession with respect to periods prior to or after Closing and
the right to make copies and request data extracts therefrom, to the extent
that such access, copies and requests for data extracts may be reasonably
required by the requesting Party in connection with (i) the preparation of
Tax Returns, or (ii) compliance with the requirements of any Governmental
Authority. The Parties will use commercially reasonable efforts to provide
requested data extracts in a reasonable time. Any information obtained by such
Party in

 

18

 

accordance
with this Section 2.5.2 shall
be held confidential by such Party in accordance with Section 12.6.

 

2.5.3                        Delivery of Facility Books and Records.
No later than thirty (30) days after the Closing Date, Sellers shall deliver
the Facility Books and Records to Purchaser at the Site or, at Purchaser’s
request and expense, at Purchaser’s offices in Charlotte, North Carolina, or
such other location as designated by Purchaser in or near Charlotte, North
Carolina.

 

2.5.4                        [Intentionally omitted.]

 

2.5.5                        True-Up of Payments Received. If
Purchaser receives any payment after Closing that constitutes payment from a
third party in whole or in part for goods, services, electricity,
capacity, ancillary services, fuel supplies or transportation of same to the
Facility or other things of value delivered from or with respect to the
Business or the Facility prior to the Closing (“Pre-Closing Goods and
Services”), Purchaser shall promptly remit such payment, to the extent it
is for Pre-Closing Goods and Services, to Rockingham. If either of the Sellers
receives any payment after Closing that constitutes payment from a third party
in whole or in part for goods, services, electricity, capacity, ancillary
services, fuel supplies or transportation of same to the Facility or other
things of value delivered from or with respect to the Business or the Facility
after the Closing (“Post-Closing Goods and Services”), such Seller shall
promptly remit such payment, to the extent it is for Post-Closing Goods and
Services, to Purchaser. If Purchaser receives any invoice for Pre-Closing Goods
and Services or other expenses that relate in whole or in part to the
operation of the Facility or conduct of the Business prior to the Closing,
Purchaser shall at its option deliver a copy of such invoice to Sellers and
notify Sellers of the amount of such invoice that relates to the period prior
to the Closing and Sellers shall promptly pay such amount to Purchaser. If
Sellers receive any invoice for Post-Closing Goods and Services or other
expenses that relate in whole or in part to the operation of the Facility
or conduct of the Business after the Closing, Sellers shall at their option
deliver a copy of such invoice to Purchaser and notify Purchaser of the amount
of such invoice that relates to the period prior to the Closing and Purchaser
shall promptly pay such amount to Sellers. Any dispute about such payments
shall be subject to the provisions of  ARTICLE X.

 

2.5.6                        Release and Replacement of Performance Assurance and Guarantees. As promptly as practicable after the Effective Date, the Sellers
(and their Affiliates, as applicable) and Purchaser shall provide written
notice to the counterparties to the Assumed Agreements and the Capacity
Contracts of the sale of the Facility. In connection with or shortly after such
written notice, the Sellers and Purchaser shall use commercially reasonable
efforts to obtain any required consents to the assignment or novation of such
Assumed Agreements and the assignment or novation of the Capacity Contracts. Purchaser
shall use commercially reasonable efforts to assist the Sellers in obtaining
such consents or novations; provided, however, that before the Closing Date, Purchaser shall not
directly or indirectly contact or solicit any such counterparties without the
Sellers’ prior written consent. With respect to any Assumed Agreements
(including the Capacity Contracts to the extent the same become Assumed
Agreements) with respect to which either Seller or any Affiliate of Seller has
provided any guarantee, performance assurance or other credit support,
including, but not limited to, the credit support posted by Sellers or their
Affiliates as described in Part VI(A) of Schedule 2.1.3,
Purchaser shall offer to provide substitute credit support sufficient to cause
such counterparty to release and return to Sellers or Sellers’

 

19

 

Affiliates,
as applicable, effective as of Closing, all credit support posted by Sellers or
their Affiliates; provided, however, that Purchaser shall not in
any event be required to post substitute credit support in excess of the amount
of credit support actually posted by Sellers or their Affiliates as of the date
such credit support is replaced by Purchaser as required hereunder.

 

Section 2.6                                   Prorations. Utility charges,
including municipal or other water, sanitary sewer and storm water charges with
respect to the Purchased Assets shall be prorated on a daily basis between
Sellers and Purchaser as of the Closing Date, such that Sellers shall be
responsible for all expenses of the Purchased Assets, and shall be entitled to
all income from the Purchased Assets, attributable to the period ending on and
including the Closing Date, and Purchaser shall be responsible for expenses of
the Purchased Assets assumed by Purchaser (expressly excluding the Excluded
Liabilities) and be entitled to all income from the Purchased Assets after the
Closing Date. Sellers agree to cooperate in transferring utilities services to
Purchaser without interruption, and provided that Purchaser shall be
responsible for any charges or deposit requirements associated with such
transfer. All prorations and adjustments shall be made at Closing, provided
that to the extent any charge or receipt to be prorated at Closing is not known
as of the Closing Date, the Parties shall make the applicable proration and
adjusting payments as soon as possible after Closing.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Section 3.1                                   Representations and Warranties of Sellers. Except
as specifically set forth in Sellers’ Disclosure Schedule attached hereto
as Schedule 3.1, Rockingham hereby represents and warrants to
Purchaser that all of the statements contained in this Section 3.1
with respect to it, and Dynegy hereby represents and warrants to Purchaser that
all of the statements contained in this Section 3.1
with respect to it or Rockingham, are true and correct as of the Effective Date.
Each exception and other response to this Agreement set forth in Sellers’
Disclosure Schedule is identified by reference to, or has been grouped
under a heading referring to, a specific individual section or subsection of
this Agreement, and, except as otherwise specifically stated or as is
reasonably apparent with respect to such exception, relates only to such section or
subsection.

 

3.1.1                        Existence. Dynegy is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Illinois. Rockingham is a limited liability company duly formed,
validly existing and in good standing under the Laws of the State of Delaware,
is authorized to transact business as a limited liability company in the State
of North Carolina, and has full limited liability company power and authority
to own, use and lease, as applicable, and transfer the Purchased Assets owned
by them.

 

3.1.2                        Authority. Each Seller has full
corporate or limited liability company power and authority to execute and
deliver this Agreement and the Transaction Agreements to which it is or will be
a party, to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by Rockingham of this Agreement and the Transaction Agreements to
which it is or will be a party, and the performance by Rockingham of its
obligations hereunder and thereunder, have been duly and validly authorized by
all required action by the sole member of Rockingham, and no other

 

20

 

action
on the part of Rockingham or its sole member is necessary. The execution
and delivery by Dynegy of this Agreement and the Transaction Agreements to
which it is or will be a party, and the performance by Dynegy of its
obligations hereunder and thereunder, have been duly and validly authorized by
all required corporate action by Dynegy, and no other action on the part of
Dynegy, its directors or stockholders is necessary.

 

3.1.3                        Binding Agreement. This Agreement and
the Transaction Agreements to which each Seller is or will be a party have been
or will be when delivered duly executed and delivered by each Seller and,
assuming due and valid authorization, execution and delivery thereof by
Purchaser, this Agreement and the Transaction Agreements to which each Seller
is or will be a party are or will be when delivered valid and binding
obligations of such Seller enforceable against such Seller in accordance with
their terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws of
general application affecting enforcement of creditors’ rights generally, and (ii) to
the extent that the availability of the remedy of specific performance or
injunctive or other forms of equitable relief may be subject to equitable
defenses or would be subject to the discretion of the court before which any
proceeding therefor may be brought.

 

3.1.4                        No Conflicts. The execution and
delivery by each Seller of this Agreement do not, and the execution and
delivery by such Seller of the Transaction Agreements to which it is or will be
a party, the performance by such Seller of its obligations under this Agreement
and such Transaction Agreements, and the consummation of the transactions
contemplated hereby and thereby shall not:

 

(a)                                  conflict with or result in a violation or breach of any of the
terms, conditions or provisions of such Seller’s certificate of incorporation,
certificate of formation, bylaws or limited liability company agreement, as
applicable;

 

(b)                                 assuming all of the Required Consents have been obtained, result in
a default, penalty, or any adjustment in required payments (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any Assumed Agreement, or any material note, bond,
deed of trust, indenture, license, agreement, lease or other material instrument
or obligation to which such Seller is a party and to which any of the Purchased
Assets may be bound, except for defaults, penalties or adjustments (or
rights of termination, cancellation or acceleration) as to which requisite
waivers or consents have been obtained in writing (true and correct copies of
which waivers or consents have been furnished to Purchaser); or

 

(c)                                  assuming all of the Required Consents have been obtained, conflict
with or result in a violation or breach of any term or provision of any Law
applicable to such Seller or the Purchased Assets after the Closing, except for
such violations or breaches that would not individually or in the aggregate
constitute a Material Adverse Effect.

 

3.1.5                        Approvals and Filings. Except for the
consents and approvals set forth in Section 3.1.5
of Sellers’ Disclosure Schedule, no consent, approval or action of, filing with
or notice to any Governmental Authority or other Person by either Seller is
required in connection

 

21

 

with
the execution, delivery and performance by either Seller of this Agreement or
any of the Transaction Agreements to which it is a party or the consummation of
the transactions contemplated hereby or thereby, including the assignment of
the Assumed Agreements and the transfer of the Facility Permits to Purchaser.

 

3.1.6                        [Intentionally omitted.]

 

3.1.7                        Legal Proceedings. Except as set forth
in Section 3.1.7 of Sellers’
Disclosure Schedule, there are no actions or proceedings (including orders,
judgments and writs) outstanding or pending in or before any court, regulatory
agency, body, Governmental Authority, or, to the Sellers’ Knowledge, threatened
against a Seller that would reasonably be expected (i) to result in the
issuance of an order restraining, enjoining or otherwise prohibiting or making
illegal the consummation of the transactions contemplated by this Agreement or
any of the Transaction Agreements, or (ii) individually or in the
aggregate, to have a Material Adverse Effect.

 

3.1.8                        Compliance with Laws. Except as set
forth in Section 3.1.8 of Seller’s Disclosure Schedule, (i) Rockingham has not
received written notification alleging that it is in violation in any material
respect of any Law applicable to Rockingham, the Business or the Purchased
Assets to Sellers’ Knowledge, and (ii) to Sellers’ Knowledge, Rockingham
is not in violation of in any material respect or in default in any material
respect under any Law applicable to Rockingham, the Business or the Purchased
Assets. At Closing, Sellers will not be liable for any unpaid North Carolina
sales tax.

 

3.1.9                        Title to Personal Property. Rockingham
and/or its applicable Affiliate transferring Purchased Assets pursuant to this
Agreement possess good and valid title to all the Purchased Assets (tangible
and intangible) constituting personal property, free and clear of all Liens
except Permitted Liens.

 

3.1.10                  Real Property.

 

(a)                                  Section 3.1.10(a) of Sellers’ Disclosure Schedule contains a legal description
of the Real Property that, to Seller’s Knowledge, is accurate. Rockingham
has (i) good and valid fee simple title to the Real Property (other
than the Easement), and (ii) good, valid and perpetual easements under the
Easement, in each case free and clear of all Liens other than Permitted Liens. Except
for easements in favor of utilities providing service to the Site and easements
in favor of third parties for fuel pipeline interconnections and power transmission
interconnection facilities, no real property other than the Real Property is
owned, leased or used by Rockingham in connection with the Facility or the
Business. Neither Seller is, nor to the Knowledge of the Sellers is any other
party, in default, violation or breach in any material respect under any easement,
and, to the Knowledge of Sellers, no event has occurred and is continuing that
constitutes or, with notice or the passage of time or both, would constitute
such a material default, violation or breach. The Easement has not been
assigned, partially or in whole.

 

(b)                                 Except as set forth on Section 3.1.10(b) of
the Disclosure Schedule, Sellers have received no written notice of, and have
no Knowledge of, any

 

22

 

pending or
threatened action, litigation, condemnation or other proceeding of any kind
with respect to or concerning the Real Property. Sellers have not received any
notice, and have no Knowledge, that the Real Property (or any portion of it) is
in violation of any applicable zoning, flood, building or other code or
ordinance or restrictive covenant affecting the Real Property.

 

(c)                                  To the Sellers’ Knowledge, the Real Property does not contain any
archeological artifacts, human remains or other historical or archeological
materials that are regulated under any Laws.

 

(d)                                 Neither Seller has received any written notice of, or has any
Knowledge of, any action, proceeding or litigation pending or threatened (i) to
modify the zoning of, or other governmental rules or restrictions
applicable to, the Real Property or the use or development thereof; or (ii) for
any street widening or changes in highway or traffic lanes or patterns in the
immediate vicinity of the Real Property, in each case, except for such actions,
proceedings or litigations that, individually or in the aggregate, would not be
reasonably expected to have a Material Adverse Effect.

 

(e)                                  The parcels constituting the Site are assessed separately from all
other adjacent property for purposes of Property Taxes. To Sellers’ Knowledge,
the Site complies with all applicable subdivision, land parcelization and local
governmental taxation or separate assessment requirements.

 

(f)                                    Other than Permitted Liens and as set forth in Section 3.1.10(f) of
Sellers’ Disclosure Schedule, there are no commitments to or agreements with
any Governmental Authority affecting the use or ownership of the Real Property,
or that would impose any obligation on Purchaser to make contributions of money
or land, or to install or maintain any improvements.

 

(g)                                 Other than utilities serving the Real Property and/or the Facility,
no improvement on the Real Property other than any interconnection for fuel
receipt or power delivery is dependent for its access, operation or utility on
any land, building or other improvement not included in the Real Property.

 

3.1.11                  Assets. Except for the Excluded Assets
(for which Purchaser shall be solely responsible for obtaining substitutes or
replacements deemed necessary by Purchaser for the operation of the Facility
and the conduct of the Business) and for dispositions allowed by Section 4.2(b), the Purchased Assets together with the Intellectual
Property that is the subject of the Technology Transfer Agreement (i) constitute
materially all of the assets used by the Sellers in connection with the
operation of the Facility and the conduct of the Business substantially as
operated and conducted by Seller as of the Effective Date, and (ii) are
sufficient for the continued operation of 
the Facility and the conduct of the Business, in each case, in substantially
the same manner as operated and conducted by Sellers as of the Effective Date.

 

3.1.12                  Assumed Agreements.

 

(a)                                  True and complete copies of all Assumed Agreements (together with
all amendments, supplements, schedules and exhibits) have heretofore been

 

23

 

furnished or
made available to Purchaser. Except as set forth in Section 3.1.12(a) of Sellers’ Disclosure Schedule, (i) each
Assumed Agreement is in full force and effect and constitutes a legal, valid
and binding agreement of Rockingham (except Capacity Contracts which are
covered by subsection (c) below) and of each other party thereto,
enforceable in accordance with its terms, and no material term or condition
thereof has been amended from the form thereof delivered to the Purchaser
or waived, and (ii) neither Rockingham nor, to Sellers’ Knowledge, any
other party to any Assumed Agreement is in violation or breach of or default
under any such Assumed Agreement (or with notice or lapse of time or both,
would be in violation or breach of or default under any such Assumed
Agreement).

 

(b)                                 Except for the Assumed Agreements and the Excluded Assets, there
are no agreements, leases (other than the Easement), licenses, indentures,
security agreements, deeds of trust and other contracts relating to the
development, design, construction, ownership, operation or maintenance of the
Facility or the conduct of the Business, to which Rockingham or any Affiliate
of Rockingham is a party, that will not be terminated, discharged or fully
performed on or before the Closing or that would be binding upon Purchasers or
the Purchased Assets after the Closing.

 

(c)                                  Dynegy Power Marketing is a wholly owned indirect subsidiary of
Dynegy, in existence and good standing under the laws of the State of Texas and
is party to the Capacity Contracts. Sellers hereby make the representations
made in (a) and (b) above with respect to the Capacity Contracts by
restating all such representations except that “Rockingham” is deemed to refer
to Dynegy Power Marketing. The Capacity Contract with the North Carolina
Municipal Power Agency Number 1 (“NCMPA”) dated May 7, 2002 will terminate
on December 31, 2006; NCMPA has not exercised any option to extend the
term of such Capacity Contract and has no remaining rights to do so.

 

3.1.13                  Permits.

 

(a)                                  Section 3.1.13(a) of Sellers’ Disclosure Schedule sets forth all material Permits
acquired or held by or in the name of either Dynegy or Rockingham or any of
their Affiliates in connection with the ownership, operation, maintenance or
use of the Facility or the conduct of the Business (the “Facility Permits”).
To Sellers’ Knowledge, the Facility Permits constitute all of the Permits
required by Law for the operation, maintenance and use of the Facility and the
Real Property and the conduct of the Business by Sellers.

 

(b)                                 Except as set forth on Section 3.1.13(b) of
Sellers’ Disclosure Schedule, Rockingham is in material compliance with each
Facility Permit and has received no written notice of violation or
noncompliance from any Governmental Authority, and Sellers have received no
written notice or claim asserting or alleging that any such Facility Permit (i) is
not in full force and effect, or (ii) is subject to any legal proceeding
or to any unsatisfied condition that (A) is not reasonably expected to be
satisfied or (B) if not satisfied could reasonably be expected to allow
material modification or revocation thereof.

 

24

 

 

3.1.14                  Insurance. Section 3.1.14 of Sellers’ Disclosure Schedule sets
forth a true and complete list and description of all insurance policies in
force on the Effective Date with respect to the Purchased Assets, together with
a statement of the aggregate amount of claims paid out and claims pending with
respect to Rockingham or the Facility under each such insurance policy. All
policies are in full force and effect, all premiums due thereon have been paid
and the Sellers are otherwise in compliance in all material respects with the
terms and provisions of such policies. Furthermore, Sellers have not received
any written notice of cancellation or non-renewal of any such policy.

 

3.1.15                  Environmental Matters. Except as set
forth in Section 3.1.15 of Seller’s
Disclosure Schedule:

 

(a)                                  Sellers have not received from any third party any notice of
violation or other claim of noncompliance with Environmental Laws regarding
Sellers’ operation of the Facility and conduct of the Business and the use of
the Purchased Assets. To Sellers’ Knowledge, the operation of the Facility,
conduct of the Business and use of the Purchased Assets are currently in
compliance with Environmental Laws, except where the failure to comply would
not, individually and in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

(b)                                 Sellers have obtained and own or possess all permits required under
Environmental Laws to operate the Facility and to conduct the Business as it is
presently conducted, except for those permits the absence of which would not
reasonably be expected to have a Material Adverse Effect.

 

(c)                                  To Sellers’ Knowledge during the period that Rockingham or any
Affiliate of Dynegy has owned the Real Property, there has been no Release of
Hazardous Materials, or threatened Release of Hazardous Materials by Sellers,
into the environment at the Real Property that is reasonably likely to have a
Material Adverse Effect.

 

(d)                                 Section 3.1.15(d) of the Sellers’ Disclosure Schedule lists all Emissions
Allowances for 2006 through 2008 that have been (i) issued or allocated by
the U.S. Environmental Protection Agency or the North Carolina Department of
Natural Resources specifically for the Facility and are identified in its
account with the appropriate Governmental Authority or (ii) purchased on
or before the Effective Date by the Sellers specifically for the Facility and
are identified in its account with the appropriate Governmental Authority.
Sellers have not sold, assigned or transferred, or granted any option or right
with respect to, any such Emissions Allowances described on Section 3.1.15(d) of the Sellers’ Disclosure
Schedule.

 

(e)                                  There are no Liens (other than Permitted Liens), declarations or
deed restrictions that have arisen or been imposed pursuant to any
Environmental Law on the Real Property.

 

(f)                                    To Seller’s Knowledge, Sellers have provided Purchaser with copies
of all final Phase I Environmental Assessments prepared by third party

 

25

 

independent
consultants retained by Sellers or their Affiliates with respect to the Real
Property.

 

(g)                                 Neither Seller is a party to any consent decree, order or similar
document relating to Liability arising under Environmental Laws, involving the
Facility or the Real Property.

 

The representations and warranties contained
in Section 3.1.13(a) which
relate to Facility Permits arising under Environmental Laws and the
representations and warranties in this Section 3.1.15
shall be the exclusive representations and warranties with respect to
Environmental Law and Hazardous Materials and, notwithstanding any other
provision in this Agreement to the contrary, no other representation or
warranty is made in this Agreement with respect to environmental matters.

 

3.1.16                  Employees. Section 3.1.16 of Sellers’ Disclosure Schedule sets
forth the name and position of all current employees of Sellers or their
Affiliates working at the Facility (the “Employees”) and whether any
such Employees are subject to any employment agreements. As of the Effective
Date, no Employee has given written notice of such Employee’s intent to
terminate employment. Except as set forth in Section 3.1.16
of Sellers’ Disclosure Schedule, no Employee is absent from work on any form of
leave, including medical leave, disability, leave under the Family and Medical
Leave Act of 1993 or otherwise or has notified Rockingham in writing of his or
her intent to take such leave.

 

3.1.17                  Brokers. All negotiations relative to
this Agreement and the transactions contemplated hereby have been carried out
by Sellers directly with Purchaser without the intervention of any Person on
behalf of Sellers in such manner as to give rise to any valid claim by any
Person against Purchaser for a finder’s fee, brokerage commission or similar
payment.

 

3.1.18                  Intellectual Property. Section 3.1.18 of Sellers’ Disclosure Schedule sets
forth a complete list of all Intellectual Property to be transferred to
Purchaser pursuant to this Agreement (“Facility Intellectual Property”).
The Facility Intellectual Property, together with the Technology Transfer
Agreement, constitutes all of the Intellectual Property necessary or required
for the operation or maintenance of the Facility or the conduct of the Business
in substantially the same manner as operated or conducted by Sellers as of the
Effective Date. Except as set forth on Section 3.1.18
of Sellers’ Disclosure Schedule, the Sellers have not received written notice
by any Person of any pending or threatened claims, suits, actions, mediations,
arbitrations, orders or other adversarial proceedings (i) alleging
infringement (or other violation) by the Sellers of Intellectual Property or
other rights of any Person or (ii) challenging the Sellers’ ownership or
use of, or the validity, enforcement, registrability or maintenance of, any
Facility Intellectual Property. Rockingham has not entered into any consents,
judgments, orders, indemnifications, forbearances to sue, settlement
agreements, licenses or other arrangements that (i) restrict Rockingham’s
right to use any Facility Intellectual Property, (ii) restrict the
transfer or licensing by Rockingham of the Facility Intellectual Property, (iii) restrict
the Business in order to accommodate a third Person’s intellectual property
rights, or (iv) permit any third party to use any Facility Intellectual
Property. To Sellers’ Knowledge, the use by the Sellers of any Facility
Intellectual Property is in accordance with any and all applicable grants,
licenses, agreements, instruments or other arrangements pursuant to

 

26

 

which
the Sellers acquired the right to use such Facility Intellectual Property and
service fees to be paid by Sellers with respect to the Facility Intellectual
Property have been paid as required to any software vendor and licensor.

 

3.1.19                  Operating Data. The operating records
at the Facility identified in Section 3.1.19
of the Sellers’ Disclosure Schedule are complete and accurate in all
material respects.

 

Section 3.2                                   Representations and Warranties of Purchaser. Except
as specifically set forth in the Purchaser’s Disclosure Schedule attached
hereto as Schedule 3.2, Purchaser hereby represents and warrants to
Sellers that all of the statements contained in this Section 3.2
are true and correct as of the Effective Date (unless another date is expressly
indicated). Each exception and other response to this Agreement set forth in
the Purchaser’s Disclosure Schedule is identified by reference to, or has
been grouped under a heading referring to, a specific individual section or
subsection of this Agreement, and, except as otherwise specifically stated
or as is reasonably apparent with respect to such exception, relates only to
such section or subsection.

 

3.2.1                        Legal Existence. Purchaser is a North
Carolina limited liability company in existence under the Laws of the State of
North Carolina and has full power and authority to conduct its business as it
is now being conducted and to own, lease and operate its assets and properties.

 

3.2.2                        Authority. Purchaser has full limited
liability company power and authority to execute and deliver this Agreement and
the Transaction Agreements to which it is or will be a party, to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Purchaser of
this Agreement and the Transaction Agreements to which it is or will be a
party, and the performance by Purchaser of its obligations hereunder and
thereunder, have been duly and validly authorized by its board of directors,
and no other action on the part of Purchaser or its member is necessary.

 

3.2.3                        Binding Agreement. This Agreement and
the Transaction Agreements to which Purchaser is or will be a party have been
or will be when delivered duly and validly executed and delivered by Purchaser
and, assuming due and valid authorization, execution and delivery thereof by
Sellers, this Agreement and the Transaction Agreements to which Purchaser is or
will be a party are or will be when delivered valid and binding obligations of
Purchaser, enforceable against Purchaser in accordance with their terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws of general application
affecting enforcement of creditors’ rights generally and (ii) to the
extent that the availability of the remedy of specific performance or
injunctive or other forms of equitable relief may be subject to equitable
defenses and would be subject to the discretion of the court before which any
proceeding therefor may be brought.

 

3.2.4                        No Conflicts. The execution and
delivery by Purchaser of this Agreement do not, and the execution and delivery
by the Purchaser of the Transaction Agreements to which it is or will be a
party, the performance by Purchaser of its obligations under this Agreement and

 

27

 

such
Transaction Agreements and the consummation of the transactions contemplated
hereby and thereby shall not:

 

(a)                                  conflict with or result in a violation or breach of any of the
terms, conditions or provisions of Purchaser’s articles of organization and
operating agreement;

 

(b)                                 result in a default, penalty, or any adjustment in required payments
(or give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any note, bond, deed of trust,
indenture, license, agreement, lease or other instrument or obligation to which
Purchaser or any of its Affiliates is a party or by which any of their
respective assets and properties may be bound, except for such defaults,
penalties or adjustments (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained; or

 

(c)                                  assuming the Required Consents have been obtained, conflict with or
result in a violation or breach of any term or provision of any Law applicable
to Purchaser or any of its Affiliates or any of their respective assets and
properties.

 

3.2.5                        Approvals and Filings. Except as set
forth in Section 3.2.5 of Purchaser’s
Disclosure Schedule, and except for the NCUC Approvals, FERC Approvals and
compliance with the requirements of the HSR Act, no consent, approval or action
of, filing with or notice to any Governmental Authority or other Person is
required in connection with the execution, delivery and performance by
Purchaser of this Agreement or any of the Transaction Agreements to which it is
a party or the consummation by Purchaser of the transactions contemplated
hereby or thereby.

 

3.2.6                        Legal Proceedings. Except as set forth
in Section 3.2.6 of Purchaser’s
Disclosure Schedule, there are no actions or proceedings pending or, to
Purchaser’s Knowledge, threatened against Purchaser or any of its assets and
properties that would be reasonably expected to result in the issuance of an
order restraining, enjoining or otherwise prohibiting or making illegal the
consummation of the transactions contemplated by this Agreement or any of the Transaction
Agreements.

 

3.2.7                        Brokers. All negotiations relative to
this Agreement and the transactions contemplated hereby have been carried out
by Purchaser directly with Sellers without the intervention of any Person on
behalf of Purchaser in such manner as to give rise to any valid claim by any
Person against Sellers for a finder’s fee, brokerage commission or similar
payment.

 

3.2.8                        Funding of Purchase Price. Purchaser
has available cash reserves or has secured financing as necessary to permit
Purchaser to fund the Purchase Price at Closing.

 

3.2.9                        Experience. Purchaser is experienced
in the development, construction, ownership and operation of electric power
generation facilities and the conduct of businesses similar to the Business.
Except for express representations and warranties of Sellers set forth herein
and the special warranty of title set forth in the Deed, any of the Transaction
Agreements and any other agreement delivered in connection with Purchaser’s
purchase of the Purchased Assets and Purchaser’s assumption of the Assumed
Liabilities, Purchaser has relied and is

 

28

 

relying
solely on its own inspections, investigation and analyses of the Purchased
Assets and the Assumed Liabilities.

 

ARTICLE IV

COVENANTS

 

Section 4.1                                   Efforts to Close. After the Effective Date and prior to Closing:

 

4.1.1                        Required Consents; Other Covenants.

 

(a)                                  Each Party shall provide reasonable cooperation to the other Party
in obtaining consents, approvals or actions of, making all filings with and
giving all notices to Governmental Authorities or other Persons required of the
other Party in connection with obtaining any Required Consents with respect to
the transactions contemplated hereby and by the Transaction Agreements,
including the following.

 

(i)                                     As promptly as practicable and, in any event, within thirty (30)
days of the Effective Date, Purchaser and Dynegy shall each file, with the
appropriate Governmental Authority, such filings as are required by the HSR Act
and shall take all actions reasonably necessary to cause early termination of
the applicable waiting period under the HSR Act.

 

(ii)                                  As promptly as practicable and, in any event, within thirty (30)
days of the Effective Date, the Purchaser and Rockingham shall jointly file,
with Purchaser having primary responsibility therefor, with the NCUC all
documents reasonably required to obtain the NCUC Approvals, and the Purchaser
and the Sellers shall use their commercially reasonable efforts to cause the
NCUC Approvals to be issued as soon as practicable after the Effective Date.
The Parties shall consult on and coordinate all principal filings submitted by
Purchaser and Rockingham to the NCUC in connection with the NCUC Approvals.

 

(iii)                               As promptly as practicable and, in any event, within sixty (60)
days of the Effective Date, the Purchaser and Rockingham shall jointly file,
with Purchaser having primary responsibility therefor, with the FERC all
documents reasonably required to obtain the FERC Approvals, and the Purchaser
and Rockingham shall use their commercially reasonable efforts to cause the
FERC Approvals to be issued as soon as practicable after the Effective Date.
The Parties shall consult on and coordinate all principal filings submitted by
Purchaser and Rockingham to the FERC in connection with the FERC Approvals.

 

(iv)                              As promptly as practicable and, in any event, within sixty (60)
days of the Effective Date, the Purchaser and Rockingham shall jointly prepare,
with Purchaser having primary responsibility therefor, and execute all
documents reasonably required to obtain the transfer or reissuance of the Title
V Air Emissions Permit for the Facility, contemporaneously with the Closing.
Notwithstanding the foregoing, in no event shall Sellers have any obligation to
expend any funds to assure the transfer or re-issuance of the Title V Air
Emissions Permit. The Parties shall reasonably consult on and coordinate all

 

29

 

filings
intended to be submitted by Purchaser and Rockingham to Governmental
Authorities in connection therewith.

 

(v)                                 Regarding Environmental Permits, as promptly as practicable and, in
any event, within sixty (60) days of the Effective Date, Sellers and Purchaser
shall file, or jointly file, such applications and other documents reasonably
required to obtain approval of the transfer of all Facility Permits (other than
the Title V Air Emission Permit) or to obtain any Required Governmental
Consents effective as of Closing or as soon as possible thereafter.
Notwithstanding the foregoing, in no event shall Sellers have any obligation to
expend any funds to assure the transfer or re-issuance of any Facility Permit.
The Parties shall reasonably consult on and coordinate all filings intended to
be submitted by Purchaser and Rockingham to Governmental Authorities in
connection therewith.

 

The Parties
shall furnish to each other’s counsel such necessary information and assistance
as the other party may request in connection with its preparation of any
such filing or submission that is necessary to obtain the foregoing consents,
approvals or actions. The Parties shall consult with each other as to the
appropriate time of making such filings and submissions and shall make such
filings and submissions at the agreed upon time. The Parties shall keep each
other apprised of the status of any communications with and any inquiries or
requests for additional or supplemental information from applicable
Governmental Authorities, shall provide any such additional or supplemental
information that may be reasonably requested in connection with any such
filings or submissions.

 

(b)                                 Purchaser, at its sole cost and expense, shall use commercially
reasonable efforts to obtain, as promptly as practicable but in any event
within forty-five (45) days after the Effective Date, from a title company of
Purchaser’s choice, and that is reasonably acceptable to Sellers (Sellers
hereby confirm Chicago Title Insurance Company as an acceptable title company),
a commitment for title insurance covering the Real Property (the “Title
Insurance Commitment”) and a survey (the “Survey”) of the Real
Property (or update of an existing survey) prepared by a licensed professional
surveyor selected by Purchaser, and who is reasonably acceptable to Sellers (Sellers
hereby confirm C.E. Robertson as an acceptable surveyor). Rockingham shall
provide Purchaser and its employees and agents access to the Real Property upon
reasonable advance notice to conduct the Survey. In the event (i) any
exceptions appear in the Title Insurance Commitment (other than Permitted Liens
and the standard pre-printed exceptions, which standard exceptions Sellers
shall cause to be deleted at Closing by appropriate title company affidavits
and customary indemnities) or the Title Insurance Commitment reflects any
requirements or conditions that must be satisfied for the deletion of all
standard and general exceptions (other than the customary seller affidavits and
indemnities which Sellers shall deliver at Closing) and for issuance of the Title
Policy with the following endorsements to the Title Policy to be issued
pursuant to the Title Insurance Commitment: comprehensive, contiguity (with
respect to Tract #1, Tract #2, Tract #3 and Tract #4 as described on Schedule 3.1.10(a),
Purchaser acknowledging that Tract #5 described thereon is not contiguous with
the others) zoning, same as survey, separate tax parcel, access, subdivision
and easement (collectively, “Objectionable Title

 

30

 

Matters”), or (ii) the Survey shows any easements, rights-of-way,
encroachments, or other matters affecting the Site (other than Permitted Liens)
(“Objectionable Survey Matters”), Purchaser shall notify Sellers in
writing of such fact within thirty (30) days of the later of the receipt of the
Title Insurance Commitment or the Survey, which notice must be accompanied by a
copy of the Title Insurance Commitment, the Survey and descriptions of any
Objectionable Title Matters and Objectionable Survey Matters. If Purchaser fails
to give Sellers timely notice of any Objectionable Title Matters or
Objectionable Survey Matters, then the matters revealed by the Title Commitment
and/or the Survey, as the case may be, and not timely identified by
Purchaser as Objectionable Title Matters or Objectionable Survey Matters, shall
be deemed to be additional “Permitted Liens.” 
If Purchaser has given Sellers timely notice of any Objectionable Title
Matters or Objectionable Survey Matters, then Sellers shall have the right, but
not the obligation, to cure such Objectionable Title Matters or Objectionable
Survey Matters. If Sellers have not (I) cured such Objectionable Title Matters
or Objectionable Survey Matters within thirty (30) days after Seller’s receipt
of Purchaser’s notice thereof (the “Curative Period”) or confirmed in
writing to Purchaser that such Objectionable Title Matters will be cured by
Sellers on or before Closing, or notified Purchaser of Sellers’ election not to
cure the same, then within fifteen (15) Business Days following the end of such
thirty (30) day period or, if earlier, the date that Sellers notify Purchaser
of their election to cure or not to cure, Purchaser shall deliver to Sellers
its notice to the effect that it has completed such examination of Seller’s
title to the Real Property as it deems appropriate under the circumstances, and
that based on such examination Purchaser has either (1) found that title
to the Real Property is acceptable and that Purchaser desires to proceed with
the Closing without reduction in Purchase Price (in which event the uncured
Objectionable Title Matters and Objectionable Survey Matters shall become and
be Permitted Liens; provided, however, that in no event shall
Liens securing indebtedness of Sellers or Sellers’ Affiliates become Permitted
Liens and Sellers shall pay and cause such Liens to be released) and that
Purchaser agrees to accept the issuance of a title policy at closing that is
subject to exceptions for the Permitted Liens and, if applicable, without the
deletion of any general or standard exceptions that are attributable to any
uncured Objectionable Title Matter or Objectionable Survey Matter and without
issuance of any of the above listed endorsements thereto to the extent such
endorsements may not be issued as a result of any uncured Objectionable
Title Matter or uncured Objectionable Survey Matter, or (2) found that
title to the Real Property is not acceptable and that because of such
nonacceptable title Purchaser has elected to terminate this Agreement,
whereupon this Agreement shall terminate and the Real Property and other
Purchased Assets shall cease to be subject to this Agreement. If Purchaser
fails to give notice of its election, Purchaser shall be deemed to have elected
to proceed to Closing as described in clause (1) above, notwithstanding
such Objectionable Title Matters or Objectionable Survey Matters, and
notwithstanding that the title policy to be 
issued at Closing pursuant to the Title Insurance Commitment may be
subject to general or standard exceptions that would be deleted but for such
uncured Objectionable Title Matter or Objectionable Survey Matter and may be
issued without one or more of the above listed endorsements as a result of an
uncured Objectionable Title Matter or uncured Objectionable Survey Matter .

 

31

 

(c)                                  Purchaser shall, at Purchaser’s sole cost and expense, engage a
nationally or regionally recognized independent environmental consultant to
perform, on or before sixty (60) days
after the Effective Date, a Phase I Environmental Assessment with respect to
the Real Property. The consultant shall be selected by Purchaser subject to
Sellers’ approval which shall not be unreasonably withheld. In addition, with
Sellers’ prior written approval, Purchaser shall engage such consultant to perform any
other assessment that Purchaser reasonably deems necessary to determine
compliance with or risks arising under Environmental Law with respect to a
condition identified in such Phase I Environmental Assessment, including
assessments that require sampling of any media at the Real Property (“Phase
2 Work”). If Sellers withhold their written approval for any such Phase 2
Work as described in the preceding sentence, Purchaser shall have the option of
terminating this Agreement by giving written notice to Sellers. If Sellers give
their written approval for such Phase 2 Work, Rockingham shall provide
Purchaser and its employees and agents reasonable access to the Real Property
after receipt of reasonable advance written notice of Purchaser’s intent to
conduct such Phase 2 Work; provided, however, Purchaser shall not unreasonably
interfere with the conduct of Seller’s Business. Purchaser shall allow Sellers’
representatives (at Sellers’ option) to be present at any physical inspection
of the Real Property in connection with such Phase I Environmental Assessment
and Phase 2 Work, and to discuss with such consultant or Purchaser’s employees
at any time (during reasonable business hours) such assessment or Phase 2 Work,
and to review all written materials, including drafts of any written reports,
as Purchaser shall from time to time request. At Sellers’ request, any final
report prepared by an environmental consultant shall be certified to both
Sellers and Purchaser. Upon completion of the Phase I Environmental Assessment
and the Phase 2 Work (as the case may be), Purchaser shall provide to
Sellers’ copies of all draft and final reports prepared in connection therewith
and promptly inform Sellers of any determination that it makes, based on
such assessments that the condition to Closing set forth in Section 5.1.11 has not been met. If such condition to
Closing has not been met, Purchaser shall have the option of terminating this
Agreement by so stating in such notice, whereupon this Agreement shall
automatically terminate and the Real Property and other Purchased Assets shall
not be subject to this Agreement. Purchaser shall advise Sellers if any matters
disclosed by such Phase I Environmental Assessment or Phase 2 Work would, in
its reasonable judgment, render the representations and warranties set forth in
Section 3.1.13 or Section 3.1.15 false or misleading in any respect. If
Purchaser does not exercise its option to terminate this Agreement as provided
in this subsection, any such matters so disclosed to Sellers shall be deemed to
be included in all relevant sections of the Sellers’ Disclosure Schedule and
shall be deemed to be Identified Environmental Liabilities.

 

(d)                                 The provisions of this Section 4.1.1(d) set
forth the obligations of the Parties with respect to the Capacity Contracts.
Notwithstanding any other provision in this Agreement, the Capacity Contracts
shall not be included in the Assumed Agreements except to the extent
contemplated by, and in accordance with, the provisions of this Section 4.1.1(d). For purposes of this Section 4.1.1(d), the obligations of Sellers include
the obligations of Dynegy to cause Dynegy Power Marketing to take the actions
described. For clarification, any references to assignment of the Capacity
Contracts to Purchaser or assumption of any obligations under or with respect
to the Capacity

 

32

 

Contracts
refer only to those specific agreements for sale and delivery of power included
in the definition of the term “Capacity Contracts,” and do not include the
master agreements related to such transactions or any schedules, annexes or
exhibits to such master agreement.

 

(i)                                     As promptly as practicable after the Effective Date:

 

(A)                              the Purchaser, Rockingham and Dynegy Power Marketing shall jointly
file, with Purchaser having primary responsibility therefor, with the FERC all
documents reasonably required to obtain the FERC Capacity Contract Assignment
Approval; and

 

(B)                                Sellers shall use their commercially reasonable efforts to obtain
consents from the counterparties to the Capacity Contracts to (1) the
assignment of the Capacity Contracts to Purchaser, and the assumption by
Purchaser of Dynegy Power Marketing’s obligations thereunder from and after the
Closing, (2) the release of Dynegy Power Marketing and any Affiliate of
Dynegy from any Liability under such Capacity Contracts incurred after the
Closing, and (3) the return, at or within a reasonable time after the
Closing, of all collateral (including any letter of credit) posted by Dynegy
Power Marketing or any Affiliate of Dynegy with respect to any such Capacity
Contract. Purchaser shall cooperate with Sellers, to the extent reasonably
requested by Sellers, in discussions with the counterparties to the Capacity
Contracts and shall, in connection with such discussions, negotiate in good
faith to enter into master agreements with such counterparties (or modification
of Purchaser’s existing master agreements, if applicable) to govern the terms
and conditions under which the Capacity Contracts would be governed if assigned
to and assumed by Purchaser.

 

(C)                                If (1) a FERC Capacity Contract Assignment Approval is
received and such approval shall not have (I) 
imposed or required any material adverse condition or restriction on
Purchaser, Sellers, Dynegy Power Marketing, the Facility or the Business and
(II) been reversed, stayed, enjoined, set aside, annulled or suspended; and (2) consent
has been obtained from the counterparty to such Capacity Contract as described
in subsection (B) above, then such Capacity Contract shall be deemed
an Assumed Agreement hereunder and, at Closing, Purchaser shall, and Sellers
shall cause Dynegy Power Marketing to, enter into an Assignment Agreement with
respect to such Capacity Contract in a form reasonably acceptable to the
Parties.

 

(ii)                                  With respect to any Capacity Contract that is not assigned to and
assumed by Purchaser in accordance with subsection (i) above, Seller
and Purchaser shall negotiate in good faith (but in no event shall they be
required to so negotiate for more than 30 days) regarding an alternative
arrangement among the Parties with respect to such Capacity Contracts, which may include
effecting a

 

33

 

termination of
such Capacity Contract, entering into one or more “back-to-back” agreements
whereby Purchaser agrees to provide power to Dynegy Power Marketing to the
extent and at the times required under such Capacity Contract, or some other
arrangement, if any, upon which the Parties may mutually agree in their
discretion.

 

(iii)                               If Purchaser and Sellers do not effect a mutually acceptable
alternative arrangement as provided in subsection (ii) above, Sellers
may give written notice to Purchaser that they shall terminate this
Agreement effective upon the earlier of Purchaser’s written acceptance of such
termination and the end of the 60-day negotiation period described in the
succeeding sentence. Notwithstanding Sellers’ notice of termination as provided
in the immediately preceding sentence, Purchaser shall have a period of 60 days
after delivery of Sellers’ termination notice in which Purchaser may negotiate
directly with the counterparties to any such Capacity Contract, with respect to
the terms and conditions of an arrangement, acceptable to Purchaser and at
Purchaser’s cost, under which Dynegy Power Marketing and any Affiliate of
Dynegy would be released from all Liabilities under such Capacity Contract from
and after the Closing and under which any collateral posted by any of them
would be returned at or within a reasonable time after the Closing. If
Purchaser reaches agreement with respect to such an arrangement, it shall give
notice to Sellers of the same within such 60-day period, and Sellers’ notice of
termination shall automatically become null and void and have no effect.

 

(iv)                              With respect to any Capacity Contract, an “Acceptable
Disposition” of such Capacity Contract shall mean any of the following: (A) such
Capacity Contract shall have been deemed an Assumed Agreement and an assignment
agreement with respect thereto executed and delivered in accordance with subsection (i) above;
(B) Sellers and Purchaser shall have reached a mutually acceptable
alternative arrangement as described in subsection (ii) above, or (C) Dynegy
Power Marketing and any and all Affiliates of Dynegy have been released from
all Liabilities under such Capacity Contract and any collateral posted with
respect to such Capacity Contract shall have been or will be returned in
accordance with subsection (iii) above. The Parties agree that the
achievement of an Acceptable Disposition for all Capacity Contracts shall be a
condition to Sellers’ obligations hereunder as provided in Section 5.2.
hereof.

 

(e)                                  Purchaser’s rights to enter the Real Property to conduct the
survey, inspection and  environmental
assessment described in this Section 4.1.1,
and any other entry of the Real Property by Purchaser contemplated by this
Agreement, shall be subject to the following terms and conditions:

 

(i)                                     All work Purchaser wishes to perform on the Real Property, including
all inspections and tests, and work associated therewith, shall be fully
identified in writing to Sellers prior to the commencement of any such work,
and all such work shall be performed during normal business hours and in
accordance and compliance with Sellers’ customary security and safety
procedures.

 

34

 

(ii)                                  If Sellers so elect, Sellers’ designated representative shall
accompany any such surveyor, engineer or others during any such inspections and
assessments. As part of the consideration for Sellers’ consent to allow
Purchaser to enter the Real Property, Purchaser shall deliver to Sellers a copy
of all surveys and written reports obtained by Purchaser as a result of
Purchaser’s exercise of its rights under this Agreement relating to the Real
Property, or as a result of any work relating to the Real Property.

 

(iii)                               Purchaser shall obtain and pay for all permits and approvals
required by any Governmental Authority with jurisdiction over any work performed
by or on behalf of Purchaser on the Real Property.

 

(iv)                              Purchaser shall be solely responsible and liable for payment of all
costs and expenses associated with the work performed in connection with the
exercise of its rights of entry and Purchaser shall promptly pay all such costs
and expenses. Purchaser shall not permit any Lien to be placed against any
portion of the Real Property as a result of Purchaser’s exercise of its rights
of entry or performance of work on the Real Property. Within five (5) Business
Days after Purchaser’s receipt of any notice to Purchaser that a Lien has been
placed or claimed against any portion of the Real Property as a result of
Purchaser’s exercise of its rights under this Agreement or the performance of
any work in connection therewith, Purchaser shall pay, bond or otherwise
discharge the Lien and remove it as an encumbrance or cloud on Rockingham’s
title to the Real Property. If Purchaser fails so to pay, bond or discharge the
Lien, Sellers shall have the right, but not the obligation, to pay, bond or
otherwise discharge the Lien and all costs incurred by Seller in so doing,
including, without limitation, Sellers’ reasonable and actual attorneys’ fees
and costs, shall be reimbursed to Seller by Purchaser within five (5) Business
Days of Purchaser’s receipt of written demand for same from Sellers.

 

(v)                                 Purchaser shall save harmless, indemnify and defend Sellers from
any and all claims, losses, penalties, demands, judgments, damages, injuries,
or expenses, (including attorneys’ and paralegals’ fees and costs), for bodily
injury or property damage that Sellers incur as a result of the entry upon the
Real Property by Purchaser or Purchaser’s employees, agents, contractors or
representatives or as a result of any of the work performed by or for
Purchaser, but not including any such claims arising from an Environmental
Condition identified by Purchaser or from Sellers’ gross negligence or willful
misconduct. Purchaser’s indemnification obligations contained in this section shall
survive any assignment, cancellation or termination of this Agreement.

 

(vi)                              Purchaser warrants that, upon completion of the work or termination
of this Agreement, whichever occurs first, Purchaser shall repair any damage
caused by Purchaser and/or its agents, contractors, and employees on or to the
Real Property and Purchaser shall restore the Real Property to its pre-existing
condition. Purchaser shall be solely liable and responsible for all costs and
expenses associated with such repair and restoration. If Purchaser’s activities

 

35

 

on the Real
Property create a violation of any Laws, including, but not limited to, any
Environmental Law, then Purchaser shall either (i) take all necessary and
appropriate action to restore the Real Property to its former condition at
Purchaser’s sole cost and expense; or (ii) if Purchaser fails so to
promptly restore the Real Property to its pre-existing condition following
Purchaser’s receipt of notice of the need therefor, then Purchaser shall pay
all costs and expenses incurred by Sellers or their agents for all remediation
and restoration required as a result of any such changed condition.
Notwithstanding the foregoing, except for the repair and restoration
obligations of Purchaser expressly set forth in this Section 4.1.1(e)(vi),
Purchaser shall have no Liability or obligation under this Section 4.1.1(e) with
respect to any Environmental Condition it identifies on the Real Property.
Purchaser shall reimburse Seller for all such obligations, costs and expenses
within ten (10) days of Seller’s demand therefor. All such sums not paid
when due shall incur interest at the Default Rate.

 

(vii)                           Upon any termination of this Agreement other than termination by
reason of Sellers’ default or breach, Purchaser shall promptly deliver to
Sellers copies of all reports, surveys, studies, and other materials obtained
by Purchaser as a result of its entry upon the Real Property, together with
satisfactions or waivers of lien for all person or entities supplying labor,
materials or professional services to Purchaser relating to Purchaser’s entry
upon the Real Property.

 

(viii)                        Purchaser’s obligations under this Section 4.1.1(e) shall
survive Closing or termination of this Agreement.

 

(f)                                    At the request of a Party, (i) the other Party shall use
commercially reasonable efforts to effectuate, to the extent not effectuated on
or before Closing, the assignment by Sellers of the Assumed Agreements, the
assumption by Purchaser of the Assumed Liabilities, and the release of Sellers
and their Affiliates from Liability under the Assumed Agreements for the period
after Closing; and (ii) the Parties shall use their commercially
reasonable efforts to obtain Required Consents not obtained on or before
Closing.

 

4.1.2                        Fulfillment of Conditions.

 

(a)                                  Each Party shall use commercially reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under Law to consummate and make effective the
purchase, sale, assignment, conveyance, transfer and delivery of the Purchased
Assets and the assumption of the Assumed Liabilities pursuant to this
Agreement. Such actions shall include each Party’s using its commercially
reasonable efforts to ensure satisfaction of the conditions precedent to its
obligations hereunder.

 

(b)                                 Each Party shall give notice to the other promptly after becoming
aware of (i) the occurrence or non-occurrence of any event whose
occurrence or non-occurrence would be likely to cause any representation or
warranty contained in this

 

36

 

Agreement to
be untrue or inaccurate in any material respect at any time from the Effective
Date to the Closing Date and (ii) any failure of a Party to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder.

 

Section 4.2                                   Preservation of Purchased Assets.

 

(a)                                  Except as otherwise provided in this Section 4.2,
after the Effective Date and prior to Closing, Sellers shall (i) preserve
and maintain the Purchased Assets in accordance with Good Operating Practices
and (ii) purchase and maintain insurance insuring against physical loss or
damage to the Purchased Assets consistent with Sellers’ prior practice.

 

(b)                                 Except as set forth on Schedule 4.2, after the
Effective Date and prior to Closing, the Sellers shall not, without the written
consent of Purchaser: (i) dispose of or assign (other than in the ordinary
course of the Business consistent with Sellers’ past practice), or incur or
permit to exist any Lien (other than a Permitted Lien) on, any of the Purchased
Assets; (ii) enter into, amend, modify, terminate, grant any waiver of any
term under or give any consent with respect to any Easement, any Permitted
Lien, any Assumed Agreement, or any new contract or any Permit related to the
Facility; (iii) permit to lapse any rights to any Facility Intellectual
Property; (iv) amend the Rockingham certificate of formation or operating
agreement in any way that would have an adverse effect on the transactions
contemplated by this Agreement; (v) issue any new limited liability
company interests in Rockingham or grant any options or other rights to acquire
such interests, including any securities convertible into such interests; (vi) take
any action that adversely alters the FERC or NCUC regulatory status of
Rockingham, the Site or the Facility; (vii) except in the ordinary course
of the Business and consistent with Sellers’ past practice, enter into or amend
any employment, severance, change in control, retention, consulting,
termination or other compensation-related agreement or arrangement with or with
respect to the Employees; or (viii) enter into any agreement to do or
engage in any of the foregoing within the scope permitted by this Section 4.2(b); provided, however, that
with respect to clause (ii) above, (A) Purchaser’s consent shall be
deemed to have been given to Sellers in the event Purchaser shall not have
responded within ten (10) Business Days of Seller’s written request for
such consent (which consent shall be provided by Sellers to the addresses shown
on Schedule 4.2(b)), and (B) the consent of Purchaser shall
not be required in connection with any amendment, modification, termination, or
waiver of, consent to, or obtaining of, any Permit related to the Facility (1) in
emergency situations in which Sellers must take action to prevent injury to
Persons or physical loss or damage to the Purchased Assets or (2) as
required to comply with applicable Law. Any new contracts entered into by
Sellers within the scope permitted by this Section 4.2(b) shall
be deemed to be Assumed Agreements for purposes of this Agreement.

 

(c)                                  The Sellers shall ensure that the inventory of Consumables on the
Closing Date is not materially less than the inventory of Consumables
maintained by Sellers consistent with Sellers’ past practices.

 

37

 

(d)                                 The Sellers shall not use or remove any fuel oil at or from the
Facility, except (i) to the extent requested by a counterparty to a
Capacity Contract in compliance with the terms of such Capacity Contract; or (ii) in
the ordinary course of the Business consistent with Sellers’ past practice, and
Sellers shall replace or replenish such fuel oil in the ordinary course of the
Business consistent with Sellers’ past practice.

 

(e)                                  Sellers shall use commercially reasonable efforts to effectuate, on
or before Closing, the conveyance of that portion of the Real Property that is
described as “Tract #5” on Schedule 3.1.10(a) pursuant to the
proposed Donation Agreement described in Schedule 3.1.10(f). Sellers
shall notify Purchaser if such conveyance is completed on or before Closing, in
which case, such conveyed property shall be deemed to be an Excluded Asset and
the description of the Real Property set forth on Schedule 3.1.10(a) shall
be deemed amended to delete said Tract #5.

 

(f)                                    Sellers shall use commercially reasonable efforts to obtain the
written consent of Siemens Westinghouse to permit Sellers to disclose and make
available to Purchaser all Siemens Westinghouse technical advisories received
by Sellers or their Affiliates  with
respect to the Facility. If such consent is obtained, Sellers agree to disclose
such technical advisories to Purchaser and shall advise Purchaser of any action
taken by Sellers in response thereto.

 

Section 4.3                                   Purchaser’s Inspection Right. After the Effective Date and prior to Closing, Purchaser and its
Related Persons shall have access subject to the terms and conditions of Section 4.1.1(d) hereof and upon reasonable prior
written notice, to the Site and the Facility and, if requested, to the Facility
Books and Records, all for purposes of inspection and review. During any
inspection or review, Purchaser shall comply, and shall cause its Related
Persons to comply, with all of the applicable safety and security procedures
applicable to the Site and to conduct any inspection or review in a manner
causing minimum interference with the Sellers’ activities.

 

Section 4.4                                   Equipment Warranties. In
connection with the conveyance of the Purchased Assets at Closing, Sellers
shall transfer to Purchaser, without recourse, any non-expired Equipment
Warranties relating to the Purchased Assets not expressly contained in the
Assumed Agreements, together with any non-expired warranties under any
agreement related to the purchase of any Materials and Equipment. In the event
any Equipment Warranties are granted pursuant to agreements relating to the
Purchased Assets as well as assets of either Seller not included in the
Purchased Assets, to the extent the same are freely transferable and not
expired, Seller shall transfer such warranties to the extent they apply to the
relevant Purchased Assets.

 

Section 4.5                                   Risk of Loss. Prior to the Closing, all risk of loss, damage or other casualty
to the Purchased Assets shall be borne by Sellers, and Sellers shall promptly
notify Purchaser of any such loss, damage or casualty or any other change in
condition of the Purchased Assets. Prior to the Closing, Sellers shall repair
to the previous condition of the Purchased Assets any damage, loss or casualty
to the Purchased Assets or breakage of any component of the Purchased Assets
that occurs; provided, however, that if the amount of such
damage, loss or breakage would reasonably be expected to exceed $10,000,000,
and the Parties are unable to

 

38

 

reach
an agreement on a remedy for such damage, loss or breakage within thirty (30)
days of the occurrence of such loss, damage or breakage, either Party shall be
entitled to terminate this Agreement upon notice to the other Party; and
provided further, however, that during the period prior to such agreement on a
remedy, Sellers shall not be obligated to remedy such loss but shall take
commercially reasonable steps to prevent any additional loss.

 

Section 4.6                                   Employee Matters.

 

(a)                                  Purchaser agrees to provide written offers of employment to all
Employees at least 30 days prior to the Employee Transition Date (defined
below) and to hire the Employees who wish to accept such offers of employment
(the “Hired Employees”). The offers shall provide employees at least 5
days to accept or reject such offers in writing. The effective date of such
employment shall be effective at 12:00 a.m. on the day immediately
following the day of Closing (the “Employee Transition Date”).
Notwithstanding the foregoing, Purchaser shall not be required to employ any
Employee who does not satisfy Purchaser’s general policies for employment
relating to drug testing, physical examination (for craft positions) and
criminal record.

 

(b)                                 Purchaser shall provide to Sellers copies of any written offers of
employment made to the Employees. Within seven (7) days preceding the
Employee Transition Date, Purchaser shall notify Seller in writing of the
Employees who have accepted offers of employment with Purchaser.

 

(c)                                  Notwithstanding anything in this Agreement to the contrary, the
Parties acknowledge that certain Hired Employees may not actively report
to work on the first Employee Transition Date immediately following the day of
Closing. Within 30 days following the day of Closing, Purchaser will provide
Sellers with a list (the “Absentee List”) of such Hired Employees who
did not actively report to work for the Purchaser on the Employee Transition
Date. With respect to any Hired Employees who are not scheduled to report to
work on the first Business Day following the day of Closing because of (i) an
absence under the applicable personal paid time or similar policy, or (ii) a
work schedule that did not identify such day as a work day for such Hired
Employee, the first day such Hired Employee is scheduled to return to work
shall be used for preparation of the Absentee List instead of the Employee
Transition Date. The Absentee List shall be prepared by Purchaser in accordance
with their then current practice for recording time or otherwise accounting for
employee attendance. Purchaser shall provide such reasonable documentation to
Sellers as Sellers may reasonably request to validate the correctness of
the Absentee List.

 

(d)                                 Purchaser agrees to employ the Hired Employees on terms that are in
the aggregate, during the initial 12 months of employment from the Employee
Transition Date (a) generally as favorable as such Employees’ current
employment terms with respect to salary, benefits, bonuses, base hours and
vacation and (b) no less favorable than those afforded to similarly
situated employees of Purchaser and its Affiliates (with credit for any prior
payments toward benefit deductibles based upon satisfactory documentation
provided by the employee). Purchaser will pay employees at a rate of pay that
is comparable to other similarly situated employees at their place of

 

39

 

employment. To
the extent that this results in a pay reduction based upon the base salary in
effect as of the Closing Date, the employee will be offered a signing bonus
that is equal to lost base wages for a twelve month time frame based upon a
forty hour work week.

 

The Parties agree that, with respect to all
Hired Employees identified on the final Absentee List, as approved by Sellers, (i) Purchaser
will notify Sellers as soon as reasonably practicable following the day on
which each such Hired Employee actively reports to work for Purchaser (the “First
Reported Day”) and (ii) Purchaser will be solely responsible for and
pay each such Hired Employee, from and after the Closing Date through the First
Reported Day, such leave of absence payments as such Hired Employee was
receiving immediately prior to the Closing Date and provide such Hired Employee
with benefits as provided under Section 4.6(f),
including but not limited to, medical benefits; provided, however, that if the
First Reported Day for any Hired Employee does not occur within sixty (60) days
following the Closing Date, Purchaser agrees to notify Sellers of this fact and
each of Purchaser and Sellers agree to cooperate as reasonably appropriate if
it becomes necessary for such Hired Employee to apply for long-term disability
under the applicable Dynegy Benefit Plan (defined below) as a result of a
pre-Closing claim giving rise to liability for long-term disability benefits
under Dynegy Benefit Plans as provided in Section 4.6(h);
and provided, further, that if such Hired Employee applies for and is
determined to be eligible for long-term disability benefits under the
applicable Dynegy Benefit Plans, then as of the date of determination of such
long-term disability (the “LTD Determination Date”), Purchaser and
Sellers agree to take such action as is necessary for Sellers to provide
long-term disability, medical, dental and other applicable benefits to such
Hired Employee from and after the LTD Determination Date, for as long as
Sellers provide such benefits under the applicable Sellers’ Benefit Plans to
similarly situated employees.]

 

(e)                                  Effective immediately preceding the Employee Transition Date and
except as otherwise provided herein, the Hired Employees’ employment with
Sellers or Sellers’ Affiliate shall terminate and the Hired Employees shall no
longer participate in Sellers’ or their Affiliates’ employee benefit plans,
programs, practices and arrangements, whether written or oral (the “Dynegy
Benefit Plans”), except as provided in such Dynegy Benefit Plans for
similarly situated employee plan participants.

 

(f)                                    Effective immediately upon the Employee Transition Date and except
as otherwise provided herein, the Hired Employees’ employment with the
Purchaser shall commence and the Hired Employees shall be eligible to
participate in the Purchaser’s employee benefit plans, programs, practices and
arrangements under the terms of each such plan, program, practice and
arrangement consistent with the requirements of Section 4.6(d) and
Section 4.6(i).

 

(g)                                 Notwithstanding anything herein to the contrary, Purchasers shall
provide severance benefits no less favorable to the Hired Employees than those
maintained by the Sellers and their Affiliates until at least the first (1st)
anniversary of the Employee Transition Date. However, this provision shall not
apply to any Hired Employee who voluntarily resigns or who is terminated by the
Buyer for poor

 

40

 

performance or
misconduct. With respect to Employees who do not become Hired Employees,
Purchaser shall reimburse Seller for the costs of any severance benefits
provided to such Employees under the terms of the Dynegy Inc. Severance Pay
Plan.

 

(h)                                 Purchaser shall not assume any of the Dynegy Benefit Plans and
shall have no obligations and shall have no liabilities with respect to the
Dynegy Benefit Plans. Claims for workers’ compensation or long-term disability
benefits arising out of occurrences prior to the Employee Transition Date shall be the responsibility of Sellers.
Claims for workers’ compensation or Long-Term Disability benefits for Hired
Employees arising out of occurrences on or subsequent to the Employee
Transition Date shall be the
responsibility of Purchaser. Nothing herein shall be deemed or construed to (i) give
rise to any rights, claims, benefits, or causes of action to any Employee, (ii) constitute
an amendment of any Purchaser’s employee benefit plans, or (iii) prevent,
restrict, or limit Purchaser or Sellers or Sellers’ Affiliates following the
Employee Transition Date from modifying or terminating its pension or other
benefit plans, programs or policies from time to time as it may deem
appropriate.

 

(i)                                     Hired Employees shall be credited with the same number of years of
service as they are credited by Dynegy, or an Affiliate of Dynegy, for
severance, eligibility, vesting purposes, access to retiree medical (to the
extent Purchaser has such a plan) and benefit accrual except (i) for
benefit accrual under a defined benefit pension plan or (ii) to the extent
such credit would result in a duplication of benefits. Hired Employees shall
(if permitted by the Purchaser’s plan) be permitted to roll-over any 401(k)
account balances and associated loans (if permitted by the Purchaser’s plan)
they may have as of the Employee Transition Date into plans sponsored by
Purchaser. Purchaser and Sellers shall cooperate in good faith to permit the
transition of Hired Employees from flexible spending accounts maintained by
Sellers and their affiliates to similar accounts maintained by Purchasers and
their affiliates in a manner that is fair to the Hired Employees.

 

(j)                                     Sellers shall be responsible for compliance with and liability
under Section 4980B of the Code and Sections 601 through 608 of Title I of
the Employee Retirement Income Security Act of 1974, as amended (“COBRA”)
with respect to any COBRA-qualifying events that occur on or prior to the
Closing to the extent mandated by COBRA with respect to the Employees, Sellers’
or Sellers’ Affiliates former employees, and the spouses and dependents of both
of the foregoing. Purchaser shall be responsible for compliance with and
liability under COBRA with respect to any COBRA-qualifying events that occur
after the Closing with respect to Hired Employees, and with respect to the spouses
and dependents of such Employees.

 

(k)                                  Notwithstanding anything in this Agreement to the contrary,
Purchaser shall be solely responsible for and shall pay all bonuses and
incentive payments applicable to the Hired Employees who remain employed by the
Purchaser or its Affiliates through the earlier of March 1, 2007, or the
date on which Purchaser otherwise pays its annual bonuses and incentive
payments to similarly situated employees (the “2006 Bonus Payment Date”).
Such bonuses and incentive payments shall be paid to applicable Hired Employees
on the 2006 Bonus Payment Date in accordance with the

 

41

 

bonus and
incentive plans or programs of Purchaser, but in no event in an amount less
than the target amount that would have been earned by such Hired Employees
under Sellers’ bonus and incentive plans and programs (which are listed on Schedule 3.1.16
– “Employees”) for 2006 regardless of whether all applicable targets
under such Sellers’ bonus and incentive plans and programs had been satisfied.

 

Section 4.7                                   Emission Allowances. Notwithstanding anything to the contrary herein, Purchaser and
Sellers shall use commercially reasonable efforts, including executing any
required forms and providing appropriate notices to Governmental Authorities,
in a timely fashion, to ensure that Purchaser will obtain any legally available
rights to those Emission Allowances described in Schedule 2.1.1
attached hereto that are to be transferred to it pursuant to Section 2.1.1; provided, however,
in no event shall Sellers have any obligation to expend any funds to assure the
transfer of such Emission Allowances. Furthermore, Purchaser covenants that
Purchaser shall not sell or transfer any Emission Allowances transferred to
Purchaser pursuant to this Agreement until such time as Purchaser has satisfied
applicable Governmental Authorities that sufficient Emissions Allowances exist
in the Facility account to satisfy all Emissions Allowance obligations of the
Facility for the year in which the Closing occurs at the time when due.

 

Section 4.8                                   Notification.

 

4.8.1                        Company and Sellers. Prior to the
Closing, each Seller shall promptly notify Purchaser in writing if it becomes
aware of any fact or condition that (i) causes or constitutes a breach of
any representation or warranty set forth in Section 3.1
or (ii) would have caused or constituted a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in Sellers’ Disclosure Schedule, Sellers
shall promptly deliver to Purchaser a supplement to Sellers’ Disclosure Schedule specifying
such change. During the same period, each Seller shall promptly notify
Purchaser of the occurrence of any breach of any covenant of Sellers or of the
occurrence of any event that would reasonably be expected to make the
satisfaction of the conditions set forth in ARTICLE V
impossible or unlikely.

 

4.8.2                        Purchaser. Prior to the Closing,
Purchaser shall promptly notify Sellers in writing if Purchaser becomes aware
of any fact or condition that (i) causes or constitutes a breach of any
representation or warranty set forth in Section 3.2
or (ii) would have caused or constituted a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in Purchaser’s Disclosure Schedule,
Purchaser shall promptly deliver to Sellers a supplement to the Purchaser’s
Disclosure Schedule specifying such change. During the same period,
Purchaser shall promptly notify Sellers of the occurrence of any breach of any
covenant of Purchaser or of the occurrence of any event that would reasonably
be expected to make the satisfaction of the conditions in ARTICLE V
impossible or unlikely.

 

4.8.3                        Effect of Supplemental Disclosure. Any
notice delivered by a Party pursuant to this Section 4.8
or in a certificate delivered pursuant to Section 2.4.1(a)(viii) or
Section 2.4.1(b)(xv) shall be
disregarded for purposes of determining an inaccuracy or breach of

 

42

 

a
representation or warranty made by such Party in this Agreement or in Sellers’
Disclosure Schedule or Purchaser’s Disclosure Schedule, as the case may be;
provided, however, that if such supplemental disclosure causes a
condition to the obligation of the other Party under ARTICLE V
not to be satisfied, and the Party making such supplemental disclosure (at the
time of making such disclosure) expressly identifies such condition that will
not be satisfied in the notice delivered pursuant to this Section 4.8
or in a certificate delivered pursuant to Section 2.4.1(a)(viii) or
Section 2.4.1(b)(xv), then in the event the Party receiving such supplemental
disclosure nevertheless proceeds to close notwithstanding the failure of such
condition to be satisfied, then such supplemental disclosure shall be given
effect as if disclosed on the date of this Agreement. Notwithstanding the
foregoing, any supplemental disclosure of information of which (i) either
Seller had actual knowledge on the Effective Date, (ii) which either
Seller knew was a breach of a representation or warranty in Section 3.1 as of the Effective Date and (iii) that
such Seller intentionally failed to disclose on the Effective Date shall be
disregarded for all purposes under this Agreement.

 

ARTICLE V

CONDITIONS TO CLOSING

 

Section 5.1                                   Purchaser’s Conditions Precedent.
The obligations of Purchaser hereunder to execute or deliver the items it is
required to deliver pursuant to Section 2.4.1(a) are
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by
Purchaser in its sole discretion):

 

5.1.1                        Representations and Warranties.
Subject to Section 4.8.3, (i) each
of the representations and warranties made by Sellers in this Agreement and
qualified as to materiality or Material Adverse Effect shall be true and
correct on and as of the Closing as though made at and as of the Closing, and (ii) each
of the representations and warranties made by Sellers in this Agreement and not
qualified as to materiality or Material Adverse Effect shall be true in all
material respects at and as of the Closing as though made at and as of the
Closing.

 

5.1.2                        Performance. Each of the Sellers shall
have performed and complied with the agreements, covenants and obligations
required by this Agreement to be so performed or complied with by it at or
before the Closing.

 

5.1.3                        Law. There shall not be in effect at
the Closing any Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of the transactions contemplated by this Agreement.

 

5.1.4                        NCUC Approvals. The NCUC Approvals
shall each have been duly obtained, made or given and shall be in full force
and effect and shall not have been reversed, stayed, enjoined, set aside,
annulled or suspended, and shall not have imposed or required any condition or
restriction on Purchaser or the Facility or the Business that would reasonably
be expected to interfere in any material respect with Purchaser’s right or
ability to own and operate the Facility or conduct the Business or otherwise
impose on Purchaser any material condition, restriction, burden or cost
(materiality to be determined in the context of the transactions contemplated
by this Agreement taken as a whole).

 

43

 

5.1.5                        FERC 203 Approval. The FERC 203
Approval shall have been duly issued and be in full force and effect and shall
not have been reversed, stayed, enjoined, set aside, annulled or suspended, and
such FERC 203 Approval shall not have imposed or required any condition or
restriction on Purchaser or the Facility or the Business that would reasonably
be expected to interfere in any material respect with Purchaser’s right or
ability to own and operate the Facility or conduct the Business or otherwise
impose on Purchaser any material condition, restriction, burden or cost
(materiality to be determined in the context of the transactions contemplated
by this Agreement taken as a whole).

 

5.1.6                        Required Consents. Purchaser shall
have obtained evidence reasonably satisfactory to Purchaser that (i) the
Required Governmental Consents set forth on Schedule 5.1.6(a) have
been obtained or assurances reasonably satisfactory to Purchaser that such
Required Governmental Consents will be obtained promptly after Closing, and the
Facility Permits related to such Required Governmental Consents shall not be
subject to any conditions or stipulations that did not exist as of the
Effective Date that would reasonably be expected to result in or give rise to a
Material Adverse Effect, and (ii) the Required Counterparty Consents set
forth on Schedule 5.1.6(b) have been obtained.

 

5.1.7                        Title V Air Emissions Permit. No
Governmental Authority shall have provided notice that the Title V Air
Emissions Permit may be modified so as to make such permit (or the
transfer, reissuance or renewal thereof made) subject to any condition or
restriction on Purchaser or the Facility or the Business not in effect as of
the Effective Date, or as reasonably contemplated by the draft Title V air
emissions permit received on or about May 18, 2006 from Laura S. Butler of
the North Carolina Department of Environment and Natural Resources, that would
reasonably be expected to interfere in any material respect with Purchaser’s
right or ability to own and operate the Facility or conduct the Business or
otherwise impose on Purchaser any adverse condition, restriction or burden that
imposes a material cost on Purchaser’s ownership or operation of the Facility
or conduct of the Business, materiality to be determined in the context of the
transactions contemplated by this Agreement taken as a whole.

 

5.1.8                        Emissions Allowances. Sellers shall
have delivered evidence reasonably satisfactory to Purchaser of the transfer to
Purchaser as agent for the Facility account of the Emissions Allowances
described in Section 2.1.1 hereof that are
not otherwise Excluded Assets.

 

5.1.9                        HSR Act. The waiting period under the
HSR Act applicable to the consummation of the sale and purchase of the
Purchased Assets contemplated hereby shall have expired or been terminated.

 

5.1.10                  Deliveries. Sellers shall have
executed and delivered to Purchaser the items set forth in Section 2.4.1(b).

 

5.1.11                  Environmental Review. Purchaser shall
have received, at its expense, the assessments contemplated by Section 4.1.1(c) and the same
shall not reflect or indicate any Environmental Condition at the Real Property
that was both (i) not previously disclosed in the materials identified in Section 3.1.15 of Sellers’ Disclosure Schedule without
regard to the inclusion in Sellers’ Disclosure Schedule of any matters in
accordance with the last sentence of

 

44

 

Section 4.1.1(c) and
(ii) would reasonably be expected to result in or give rise to a Material
Adverse Effect.

 

5.1.12                  Material Adverse Change. There shall
not have been or occurred, since the Effective Date, any event, occurrence or
circumstance that would reasonably be expected to result in or give rise to a
Material Adverse Effect.

 

5.1.13                  [Intentionally omitted.]

 

5.1.14                  Title Insurance and Survey. Unless
waived or deemed waived by Purchaser pursuant to Section 4.1.1(b),
Sellers shall have remedied all Objectionable Title Matters and all
Objectionable Survey Matters to Purchaser’s satisfaction. In addition,
Purchaser shall have received the Title Insurance Commitment marked effective
as a title insurance policy (the “Title Policy”) such that Purchaser is
assured, without any further conditions or requirements other than Purchaser’s
payment of the premium therefor, of receiving a fully effective title insurance
policy in an amount up to the Purchase Price and in the form required
pursuant to Section 4.1.1(b).

 

Section 5.2                                   Sellers’ Conditions Precedent. The
obligations of Sellers hereunder to execute or deliver the items they are
required to deliver pursuant to Section 2.4.1(b) are
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by
Sellers in their sole discretion):

 

5.2.1                        Representations and Warranties. Each
of the representations and warranties made by Purchaser in this Agreement and
qualified by materiality or Material Adverse Effect shall be true and correct
at and as of the Closing as though made at and as of the Closing. Each of the
representations and warranties made by Purchaser in this Agreement and not
qualified by materiality or Material Adverse Effect shall be true in all
material respects at and as of the Closing as though made at and as of the
Closing.

 

5.2.2                        Performance. Purchaser shall have
performed and complied with the agreements, covenants and obligations required
by this Agreement to be so performed or complied with by Purchaser at or before
the Closing.

 

5.2.3                        Law. There shall not be in effect on
the Closing Date any Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of the transactions contemplated by this
Agreement.

 

5.2.4                        NCUC Approvals. The NCUC Approvals
shall each have been duly obtained, made or given and shall be in full force
and effect and shall not have been reversed, stayed, enjoined, set aside,
annulled or suspended.

 

5.2.5                        FERC Approvals. The FERC Approvals
shall have been duly issued and be in full force and effect and shall not have
been reversed, stayed, enjoined, set aside, annulled or suspended.

 

45

 

 

5.2.6                        Governmental Authorities. All
terminations or expirations of waiting periods imposed by any Governmental
Authority necessary for the consummation of the transactions contemplated by
this Agreement shall have occurred.

 

5.2.7                        Capacity Contracts. An Acceptable
Disposition of all Capacity Contracts shall have been completed.

 

5.2.8                        HSR Act. The waiting period under the
HSR Act applicable to the consummation of the sale of the Purchased Assets
contemplated hereby shall have expired or been terminated.

 

5.2.9                        Deliveries. Purchaser shall have
executed and delivered to Sellers the items set forth in Section 2.4.1(a).

 

5.2.10                  Required Consents. Sellers shall have
received evidence reasonably satisfactory to Seller that all Required Consents
set forth on Schedule 5.1.6 have been or will be obtained.

 

ARTICLE VI

TERMINATION

 

Section 6.1                                   Termination
Prior to Closing. This Agreement may be
terminated, and the transactions contemplated hereby may be abandoned:

 

(a)                                  at any time before the Closing, by Sellers or Purchaser upon notice
to the other Party, in the event that any Law becomes effective restraining,
enjoining, or otherwise prohibiting or making illegal the consummation of the
transactions contemplated by this Agreement;

 

(b)                                 at any time before the Closing as provided in Sections
4.1.1(b), (c) and (d), and Section 4.5;

 

(c)                                  at any time before the Closing, by Sellers or Purchaser upon notice
to the other Party, in the event (i) of a breach hereof by the
non-terminating Party that would reasonably be expected to give rise to a
Material Adverse Effect, if the non-terminating Party fails to cure such breach
within thirty (30) days following notification thereof by the terminating
Party; or (ii) any condition to such Party’s obligations under this
Agreement (other than the payment of money to the other Party) becomes
impossible or impracticable to satisfy with the use of commercially reasonable
efforts, or best efforts where applicable, so long as such impossibility or
impracticability is not caused by a breach hereof by such Party; provided
further, however, that if it is reasonably possible that the circumstances
giving rise to the impossibility or impracticability may be removed prior
to the expiration of the time period provided in this Section 6.1(c),
then such notification may not be given until such time as the removal of
such circumstances is no longer reasonably possible or practicable within such
time period; or

 

(d)                                 at any time following March 31, 2007, by Sellers or Purchaser
upon notice to the other Party if the Closing shall not have occurred on or
before such

 

46

 

date and such
failure to consummate is not caused by a breach of this Agreement by the
terminating Party.

 

Section 6.2                                   Effect of Termination or Breach Prior to Closing. If this Agreement is validly terminated pursuant to Section 6.1, there shall be no liability or obligation
on the part of Sellers or Purchaser (or any of their respective Related
Persons), except that the provisions of ARTICLE X, ARTICLE XI
and Sections 12.1, 12.2, 12.3, 12.4, 12.5, 12.6, 12.7, 12.9, 12.10, 12.11, 12.12, 12.13, 12.14 and 12.15, Section 4.1.1(e) and
this Section 6.2 shall continue to apply following any such termination.
Notwithstanding any other provision in this Agreement to the contrary, if this
Agreement is validly terminated by Purchaser or Sellers pursuant to Section 6.1(c) as
a result of the willful breach by the other Party, the terminating Party may exercise
such remedies as may be available at law or in equity.

 

ARTICLE VII

INDEMNIFICATION

 

Section 7.1                                   Indemnification by Sellers. Subject to the limitations set forth in Section 6.2,
Section 7.4, ARTICLE IX
and Section 11.1, after Closing
Sellers jointly and severally agree to indemnify, defend and hold Purchaser and
its Related Persons (each, a “Purchaser Indemnified Party”) harmless
from and against (and to reimburse each Purchaser Indemnified Party as the same
are incurred for) any and all Losses incurred by any Purchaser Indemnified
Party resulting from any of the following:

 

(a)                                  any inaccuracy or breach of a representation or warranty made by
Sellers in this Agreement, any Transaction Agreement and any other agreement
delivered pursuant to this Agreement, or in any certificate delivered pursuant
to this Agreement;

 

(b)                                 the breach by Sellers of, or default in the performance by Sellers
of, any covenant, agreement or obligation to be performed by Sellers pursuant
to this Agreement or any of the other Transaction Agreements; and

 

(c)                                  the Excluded Liabilities, other than the Pre-Closing Environmental
Liabilities and/or Identified Environmental Liabilities.

 

Notwithstanding anything in this Agreement to
the contrary, for purposes of determining Losses for which Sellers shall be
obligated to indemnify any Purchaser Indemnified Party pursuant to this Section 7.1, with respect to each representation and
warranty made by Sellers in ARTICLE III
of this Agreement that is subject to a materiality qualification (including any
qualification referring to a Material Adverse Effect), whether an “inaccuracy”
or “breach” of such representation or warranty shall be deemed to have
occurred, and the amount of Losses arising therefrom (including, without
limitation, for purposes of aggregating Losses to determine when the minimum
amount as described in Section 7.4.2
has been exceeded) shall be determined without taking such materiality
qualification into account.

 

Section 7.2                                   Indemnification by Purchaser. Subject to the limitations set forth in Section 6.2,
Section 7.4, ARTICLE IX
and Section 11.1, after Closing
Purchaser hereby agrees to indemnify, defend and hold Sellers and their Related
Persons (each, a “Seller Indemnified Party”), harmless from and against
(and to reimburse each Seller Indemnified Party as the same

 

47

 

are
incurred for) any and all Losses incurred by any Seller Indemnified Party
resulting from any of the following:

 

(a)                                  any inaccuracy or breach of a representation or warranty made by
Purchaser in this Agreement, Purchaser’s Disclosure Schedule or in any
certificate delivered pursuant to this Agreement;

 

(b)                                 the breach by Purchaser of, or default in the performance by
Purchaser of, any covenant, agreement or obligation to be performed by
Purchaser pursuant to this Agreement or any of the other Transaction
Agreements;

 

(c)                                  the Assumed Liabilities;

 

(d)                                 all Liabilities arising out of the ownership, possession, use,
maintenance or operation of the Purchased Assets or Purchaser’s or any of its
Affiliates’ conduct of the Business from and after Closing (for clarification,
the Liabilities described in this Section 7.2(d) do
not include Pre-Closing Environmental Liabilities); and

 

(e)                                  the Identified Environmental Liabilities.

 

Section 7.3                                   Method of Asserting Claims.

 

7.3.1                        Notification of Claims. Subject to the
provisions of Section 8.6, which shall
apply to any Tax Claims, if any Purchaser Indemnified Party or Seller
Indemnified Party (each, an “Indemnified Party”) asserts that a Party
has become obligated to the Indemnified Party pursuant to Section 7.1 or Section 7.2
above (as so obligated, an “Indemnifying Party”), or if any
suit, action, investigation, claim or proceeding is begun, made or instituted
as a result of which the Indemnifying Party may become obligated to the
Indemnified Party hereunder, the Indemnified Party shall notify the
Indemnifying Party promptly and shall cooperate with the Indemnifying Party, at
the Indemnifying Party’s expense, to the extent reasonably necessary for the
resolution of such claim or in the defense of such suit, action or proceeding,
including making available any information, documents and things in the
possession of the Indemnified Party. Notwithstanding the foregoing notice
requirement, the right to indemnification hereunder shall not be affected by
any failure to give, or delay in giving, notice unless, and only to the extent
that, the rights and remedies of the Indemnifying Party shall have been
materially prejudiced as a result of such failure or delay.

 

7.3.2                        Defense of Claims. In fulfilling its
obligations under this Section 7.3,
after the Indemnifying Party has provided each Indemnified Party with a written
notice of its agreement to indemnify each Indemnified Party under this Section 7.3, as between such Indemnified Party and the
Indemnifying Party, the Indemnifying Party shall have the right to investigate,
defend, settle or otherwise handle, with the aforesaid cooperation, any claim,
suit, action or proceeding, brought by a third party in such manner as the
Indemnifying Party may reasonably deem appropriate; provided, however,
that (i) counsel retained by the Indemnifying Party is reasonably
satisfactory to the Indemnified Party and (ii) the Indemnifying Party will
not consent to any settlement or entry of judgment imposing any obligations on
any Indemnified Party, other than financial obligations for which such Person
will be indemnified hereunder, unless such Person has consented in writing to
such settlement or judgment (which consent may

 

48

 

be
given or withheld in its sole discretion) and (iii) the Indemnifying Party
will not consent to any settlement or entry of judgment unless, in connection
therewith, the Indemnifying Party obtains a full and unconditional release of
the Indemnified Party from all liability with respect to such suit, action,
investigation, claim or proceeding. Notwithstanding the Indemnifying Party’s
election to assume the defense or investigation of such claim, action or
proceeding, the Indemnified Party shall have the right to employ separate
counsel and to participate in the defense or investigation of such claim,
action or proceeding, which participation shall be at the expense of the
Indemnifying Party, if (a) on the advice of counsel to the Indemnified
Party, use of counsel of the Indemnifying Party’s choice could reasonably be
expected to give rise to a material conflict of interest, (b) the
Indemnifying Party shall not have employed counsel reasonably satisfactory to
the Indemnified Party to represent the Indemnified Party within a reasonable
time after notice of the assertion of any such claim or institution of any such
action or proceeding, or (c) if the Indemnifying Party shall authorize the
Indemnified Party to employ separate counsel at the Indemnifying Party’s
expense.

 

Section 7.4                                   Limitations of Liability.

 

7.4.1                        Indemnification Cap Amount. (i) The
Sellers shall have no liability under Section 7.1(a) or under Section 7.1(b) or
ARTICLE VIII to the extent the
total aggregate amount of Losses under such Section 7.1(a) and Section 7.1(b) and
ARTICLE VIII exceeds $35,000,000
(the “Indemnification Cap Amount”), in the aggregate; provided,
however, that the foregoing limitation shall not apply to any breach of any
representation or warranty set forth in Section 3.1.9
or in the special warranty of title set forth in the Deed, and there shall be
substituted therefor a limitation in an amount equal to the Purchase Price; and
(ii) the Purchaser shall have no liability under Section 7.2(a) or
under Section 7.2(b) or ARTICLE VIII to the extent the total aggregate amount
of Losses under such Section 7.2(a) and Section 7.2(b) and ARTICLE VIII
exceeds the Indemnification Cap Amount.

 

7.4.2                        Minimum Claim. Neither Seller shall be
required to indemnify the Purchaser with respect to (i) any Loss of less
than $25,000 for any single event or occurrence or (ii) any other Loss
that would otherwise be indemnifiable under Section 7.1(a) unless
and until the total amount of such other Losses under such Section 7.1(a) exceeds
$2,000,000, after which the Sellers shall have the obligation to indemnify for
the full amount of any such Losses that exceed such limitation (subject to the
limitations set forth in Section 7.4.1).

 

7.4.3                        Insurance Coverage. All Losses
recoverable by an Indemnified Party shall be net of any proceeds such
Indemnified Party recovers, or is entitled to recover, under any applicable
insurance coverage.

 

7.4.4                        Tax Savings. The amount of any Losses
shall be reduced by any Tax savings realized by the Indemnified Party arising
from the occurrence or payment of any such Losses in the taxable year in which
such Losses are incurred, in any preceding taxable year as a result of the use
of net operating loss carrybacks, or in future taxable years. In computing the
amount of any such tax benefit, the Indemnified Party shall be deemed to
recognize all other income, gain, loss, deduction, or credit before recognizing
any item arising from the incurrence or payment of any indemnified Losses. If
the Indemnified Party is expected to realize a Tax savings in a future year,
the Losses shall be reduced by the present value of the Tax savings

 

49

 

expected
to be received, determined by discounting the expected savings by the Prime
Rate in effect on the date of the Indemnified Party’s incurrence of the Losses.

 

7.4.5                        Indemnification Payment as Purchase Price Adjustment. Any indemnification payment under this Agreement shall be treated
as an adjustment to the Purchase Price for Tax purposes to the maximum extent
permitted by applicable Law.

 

Section 7.5                                   Indemnification in Case of Strict Liability or Indemnitee
Negligence. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE INDEMNIFICATION PROVISIONS IN ARTICLE VIII
AND IN THIS ARTICLE VII SHALL BE
ENFORCEABLE REGARDLESS OF WHETHER THE LIABILITY IS BASED ON PAST, PRESENT OR
FUTURE ACTS, CLAIMS OR LAWS (INCLUDING ANY PAST, PRESENT OR FUTURE ENVIRONMENTAL
LAW, FRAUDULENT TRANSFER ACT, OCCUPATIONAL SAFETY AND HEALTH LAW, OR PRODUCTS
LIABILITY, SECURITIES OR OTHER LAW), AND REGARDLESS OF WHETHER ANY PERSON
(INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES
THE SOLE, JOINT, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE
PERSON SEEKING INDEMNIFICATION, OR THE SOLE, JOINT, OR CONCURRENT STRICT
LIABILITY IMPOSED ON THE PERSON SEEKING INDEMNIFICATION.

 

Section 7.6                                   Exclusive Remedy. A
Party’s right to indemnification provided in this ARTICLE VII,
as applicable, is the sole and exclusive remedy of that Party from and after
the Closing with respect to any Losses arising out of or relating to the
negotiation, execution, delivery, performance or non-performance of this
Agreement, the transactions contemplated hereby or any Liability otherwise
arising or resulting from the ownership or operation of the Business, Site,
Real Property and/or the Purchased Assets; it being the Parties’ intent that to
the fullest extent permitted by Law, the Parties waive any claim or cause of
action they may have against the other Party under any applicable
statutory authority, including without limitation Environmental Laws; provided, however, that nothing in this Section 7.6
shall restrict or prohibit any Party from bringing any action (i) for
injunctive relief or specific performance to the extent legally available, (ii) in
the event of fraud by a Party or (iii) to enforce the rights and
obligations set forth in the other Transaction Agreements. Each Party waives
any provision of applicable Law to the extent it would initiate, limit or
restrict the agreement of the Parties as set forth in this Section 7.6.

 

ARTICLE VIII

TAX MATTERS

 

Section 8.1                                   Representations and Warranties.. Sellers represent and warrant to Purchaser, except as set forth
on Schedule 8.1, as follows:

 

(a)                                  Each of Rockingham and Former Tax Parent (i) has filed or will
file when due all Tax Returns that are required to be filed on or before the
Closing Date with respect to the Business and the Purchased Assets and has paid
or will pay in full all Taxes required to be paid with respect to the Business
and the Purchased Assets; and (ii) such Tax Returns were prepared or will
be prepared in the manner required by all

 

50

 

material
applicable Laws. Neither Rockingham nor Former Tax Parent has received any
written notice that any Taxes relating to any period prior to the Closing Date
are owing that have not been paid on or before the Closing Date.

 

(b)                                 To Sellers’ Knowledge, true and complete copies of all Tax Returns
and all schedules thereto filed by, or on behalf of, Rockingham and copies of
all material written communications to or from any Taxing Authority for all
prior taxable years have been made available to Purchaser for inspection.

 

(c)                                  Neither Rockingham nor Former Tax Parent has extended or waived the
application of any statute of limitations of any jurisdiction regarding the
assessment or collection of any Tax of the Sellers with respect to the
Purchased Assets.

 

(d)                                 None of the Purchased Assets are subject to any Liens for Taxes,
other than Permitted Liens.

 

(e)                                  There are no audits, claims, assessments, levies, administrative or
judicial proceedings pending and Seller has received no written notice of any
threatened, proposed or contemplated audits, claims, assessments, levies or
administrative or judicial proceedings against Rockingham or with respect to
the Purchased Assets by any tax authority.

 

(f)                                    Each of Rockingham and Former Tax Parent has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor, member or other
third party.

 

(g)                                 Other than the Water Supply Agreement, neither Seller is party to
any agreement with a Governmental Authority with respect to any economic or
financial incentive affecting the Facility.

 

Section 8.2                                   Transfer Taxes. Sellers shall bear
all sales, use, transfer, real property transfer, recording and other similar
taxes and fees (“Transfer Taxes”), if any, arising out of or in
connection with the sale of the Purchased Assets by Sellers or any other
transactions pursuant to this Agreement. Rockingham shall file all necessary
documentation and Tax Returns with respect to the Transfer Taxes and cause such
Taxes, if any, to be timely paid to the relevant Taxing Authorities. The
Parties shall cooperate to comply with all Tax Return requirements for any and
all Transfer Taxes and shall provide such documentation and take such other
reasonable actions as may be necessary to minimize the amount of any
Transfer Taxes; notwithstanding the foregoing, Purchaser shall not be obligated
to take any action that would cause Purchaser to incur or bear the cost of any
Transfer Taxes. For all purposes under this Section 8.2,
the Parties agree that the fair market value of Real Property shall be
$3,500,000.00.

 

Section 8.3                                   Real and Personal Property Taxes.
Real and personal property ad valorem taxes with respect to the Purchased
Assets (“Property Taxes”) will be prorated on a calendar year basis
through the Closing Date. Any special assessments or roll-back taxes on or
against the Real Property shall be paid by Sellers on or prior to the Closing
Date. If the actual amount of Property Taxes is not known on the Closing Date,
such taxes shall be prorated on the basis of the amount of such taxes payable
for the prior year, and shall be adjusted between the

 

51

 

Parties
when the actual amount of such taxes payable in the year of Closing is known to
Purchaser and Sellers. Within thirty (30) days after the Property Tax liability
is known for the calendar year in which the Closing occurs, Purchaser and
Sellers shall make such payments or credits between themselves as are necessary
so that each Party bears only its pro rata
portion of the actual Property Tax liability for the calendar year in which the
Closing occurs.

 

All prorations shall be made as adjustments
to the Purchase Price, provided that to the extent any charge or receipt to be
prorated at Closing is not known as of the Closing Date, the Parties shall make
the applicable proration and adjusting payments as soon as possible after
Closing.

 

Section 8.4                                   Sellers’ Tax Indemnification. Sellers shall defend, indemnify and hold harmless Purchaser from
and against (i) any and all Taxes imposed on or incurred in respect of the
income, business, assets and properties or operations of the Sellers or Former
Tax Parent with respect to the Purchased Assets, attributable to any taxable
period ending on or prior to the Closing Date (“Pre-Closing Taxes”), (ii) with
respect to any taxable period beginning before and ending after the Closing
Date (the “Overlap Period”), any and all Taxes imposed on or incurred in
respect of the income, business, assets and properties or the operations of the
Sellers or Former Tax Parent with respect to the Purchased Assets, attributable
to the period ending on the Closing Date (“Overlap Period Taxes”), (iii) any
and all Transfer Taxes, and (iv) any Liabilities arising from a breach by
Sellers of their covenants in this ARTICLE VIII.
For purposes of the Overlap Period, Taxes shall be attributable to the period
ending on the Closing Date, and:  (A) in
the case of Taxes imposed on a periodic basis or otherwise measured by the
level of any item, deemed to be the amount of such Taxes for the entire period
(or, in the case of such Taxes determined on an arrears basis, the amount of
such Taxes for the immediately preceding period), multiplied by a fraction the
numerator of which is the number of days in the Pre-Closing Tax Period and the
denominator of which is the number of days in the entire taxable period; and (B) in
the case of all other Taxes, to the extent of any Taxes that would be payable
if the taxable year ended on the Closing Date.

 

Section 8.5                                   Purchaser Tax Indemnification.
Purchaser shall indemnify and hold harmless Sellers from and against (a) any
Taxes with respect to the Purchased Assets attributable to the time period
after the Closing Date, and (b) any Liability arising from a breach by
Purchaser of its covenants set forth in this ARTICLE VIII.
Notwithstanding anything to the contrary in this Agreement, Purchaser shall not
be liable for and shall not indemnify Sellers against any liability for any
Transfer Taxes, if any, arising out of or in connection with the sale of the
Purchased Assets by Sellers pursuant to this Agreement.

 

Section 8.6                                   Contests. In the event Purchaser, Sellers or Former Tax Parent receives
written notice of any audit, 
examination, claim, settlement, proposed adjustment, administrative or
judicial proceeding, or other matter (“Tax Claim”) related to any
Pre-Closing Taxes, Transfer Taxes or Overlap Period Taxes, Purchaser, Sellers
or Former Tax Parent, as the case may be, shall notify the other Parties
in writing as soon as reasonably practical (but in no event more than ten (10) Business
Days) after receipt of such notice. If either Seller or Former Tax Parent
notifies Purchaser in writing within thirty (30) Business Days following
receipt of such written notice that they intend to exercise their rights
pursuant to this Section 8.6, they shall be
entitled to control the defense, prosecution, settlement or compromise of such
Tax Claim, at their own

 

52

 

expense.
Purchaser shall take such action in contesting such Tax Claim as Sellers shall
reasonably request from time to time, including the selection of counsel and
experts and execution of powers of attorney. Purchaser shall not make any
payments of such Tax Claim for at least thirty (30) days (or such shorter
period as may be required by applicable Law) after giving the notice
required by this Section 8.6, shall give the
Sellers and Former Tax Parent any information requested relating to such Tax
Claim, shall give any Tax Authority any information requested by Sellers or
Former Tax Parent relating to such Tax Claim, and otherwise shall cooperate
with and make internal resources available to the Sellers and Former Tax Parent
in good faith in order to effectively contest any such Tax Claim. Purchaser
shall not settle or otherwise compromise any such Tax Claim with any Taxing
Authority or prosecute such contest to a determination in court or other
tribunal or initial or appellate jurisdiction unless instructed to do so by the
Sellers or Former Tax Parent. Any of the Sellers or Former Tax Parent may settle
or otherwise compromise any such Tax Claim without Purchaser’s prior written
consent, except that if as a result of such settlement or compromise the Taxes
payable by Purchaser would be materially increased, none of Sellers or Former
Tax Parent may settle or compromise such matter without Purchaser’s prior
written consent, which consent shall not be unreasonably withheld; provided,
however, that in the event Purchaser does not promptly consent to such
settlement or compromise, Sellers may pay to Purchaser such settled or
compromised amount and Purchaser shall agree to assume all obligations for such
Tax Claim Liability. In connection with any proceeding taken with respect to
such matters, (i) Sellers shall keep Purchaser informed of all material
developments and events relating to such matters if involving a material
liability for Taxes, and (ii) Purchaser shall have the right, at its sole
expense, to participate in any such proceedings. Purchaser shall cooperate with
Sellers and Former Tax Parent by giving them and their representatives, on
prior reasonable notice, reasonable access and cooperation during normal
business hours to all information, books and records pertaining to Transfer
Taxes, Pre-Closing Taxes and Overlap Period Taxes.

 

Section 8.7                                   Information. After the Closing, Sellers and Purchaser will
make available to each other as requested, all information, records, or
documents relating to liability or potential liability for Pre-Closing Taxes,
Overlap Period Taxes and Transfer Taxes and will preserve such information,
records or documents until thirty (30) days after the expiration of the
applicable statute of limitations (including extensions) with respect to such
Taxes.

 

Section 8.8                                   Tax Returns. Except as otherwise provided in Section 8.3,
Sellers shall be responsible for preparing and filing all Tax Returns and
paying all Taxes due with respect to the Purchased Assets relating to Tax
periods ending on or prior to the Closing Date. Subject to and without
limitation of Purchaser’s rights under Section 8.4,
Purchaser shall be responsible for preparing and filing all Tax Returns and
paying all Taxes due with respect to the Purchased Assets relating to Tax
periods ending after the Closing Date. Each Party shall cooperate with the
other Party with respect to preparing and filing such Tax Returns and shall
provide all information reasonably requested by the other Party necessary to
prepare and file such Tax Returns.

 

Section 8.9                                   Survival of Obligations. The obligations of the Parties set forth in this ARTICLE VIII shall be unconditional and absolute and
shall remain in effect until thirty (30) days after expiration of the
applicable statutes of limitation (giving effect to any extensions or waivers
thereof) relating to the Tax or Tax Return in question.

 

53

 

Section 8.10                            Adjustments to Purchase Price. The Parties hereby agree that any and all indemnity payments made
pursuant to this Agreement shall, to the maximum extent permitted by applicable
law, be treated for all Tax purposes as an adjustment to the Purchase Price.

 

Section 8.11                            Application
of Indemnity Limitations. Any obligations of
the Parties under this ARTICLE VIII
shall in all events be subject to the limitations of Section 7.4
hereof.

 

ARTICLE IX

SURVIVAL; NO OTHER REPRESENTATIONS

 

Section 9.1                                   Survival of Representations and
Warranties. The representations and warranties
of Sellers and Purchaser contained in this Agreement shall survive the Closing
and shall expire on the date that is eighteen (18) months after the Closing
Date. Notwithstanding the preceding sentence, (i) the representations and
warranties contained in Sections 3.1.1,
3.1.2, 3.1.3,
3.1.9, 3.2.1,
3.2.2 and 3.2.3, and the
representations and warranties set forth in the Deed shall survive indefinitely
after the Closing, (ii) the representations and warranties contained in ARTICLE VIII shall be governed solely by the terms
therein and (iii) the obligations set forth in Section 8.4
and Section 8.5 shall survive as
provided in Section 8.9. The expiration,
termination or extinguishment of any representation or warranty pursuant to
this Section 9.1 shall not affect the
Parties’ obligations under ARTICLE VII
or ARTICLE VIII if the Indemnified
Party provided the Indemnifying Party with proper notice of the claim or event
for which indemnification is sought prior to such expiration, termination or
extinguishment.

 

Section 9.2                                   No Other Representations. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, IT IS THE EXPLICIT INTENT OF EACH PARTY HERETO THAT, EXCEPT FOR
THOSE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III
AND ARTICLE VIII OR IN ANY
CERTIFICATE, INSTRUMENT OR DOCUMENT DELIVERED BY SELLERS AT CLOSING, (i) NEITHER
PARTY IS MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO ANY IMPLIED REPRESENTATION OR WARRANTY AS TO
CONDITION, MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE WITH RESPECT TO THE FACILITY, OR ANY PART THEREOF, AND (ii) THE
PURCHASED ASSETS ARE CONVEYED “AS IS, WHERE IS”.

 

ARTICLE X

DISPUTE RESOLUTION

 

Section 10.1                            Dispute Resolution. Any dispute or claim arising under this Agreement that is not
resolved in the ordinary course of business shall be referred to a panel
consisting of a senior executive (President or a Vice President) of Purchaser
and Dynegy, with authority to decide or resolve the matter in dispute, for
review and resolution. Such senior executives shall meet and in good faith
attempt to resolve the dispute within thirty (30) days. If the Parties are
unable to resolve a dispute pursuant to this Section 10.1, either Party may enforce
its rights at law or in equity subject to the provisions of this Agreement,
including Section 10.2 below.

 

54

 

Section 10.2                            Submission to Jurisdiction; Waiver of Jury
Trial. Each Party hereto irrevocably submits
to the exclusive jurisdiction of the federal court in the State of North
Carolina for the purposes of any action arising out of or based upon this
Agreement or relating to the subject matter hereof. If, for any reason, the
Parties fail to qualify for the jurisdiction of the federal court in the State
of North Carolina, then each Party hereto irrevocably submits to the exclusive
jurisdiction of the state courts of the State of North Carolina for the
purposes of any action arising out of or based on this Agreement or relating to
the subject matter hereof. Each Party hereto further agrees that service of any
process, summons, notice or document by U.S. registered mail to such Party’s
respective address set forth in Section 12.1
shall be effective service of process for any action, suit or proceeding in
North Carolina with respect to any matters to which it has submitted to
jurisdiction in this Section 10.2.
Each Party hereto irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding in the federal court in North
Carolina, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, THE
TRANSACTION AGREEMENTS OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.

 

ARTICLE XI

LIMITED REMEDIES AND DAMAGES

 

Section 11.1                            Limitation of Liability. NOTWITHSTANDING ANY OTHER PROVISION HEREOF, NO PARTY SHALL, UNDER
ANY CIRCUMSTANCES, BE LIABLE UNDER THIS AGREEMENT OR THE TRANSACTION AGREEMENTS
FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE OR EXEMPLARY DAMAGES, WHETHER BY
STATUTE, IN TORT OR CONTRACT OR OTHERWISE. THE LIMITATIONS HEREIN IMPOSED ON
REMEDIES AND THE MEASURE OF DAMAGES SHALL BE WITHOUT REGARD TO THE CAUSE OR
CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY.

 

Section 11.2                            Specific Performance. EACH PARTY AGREES THAT DAMAGE REMEDIES SET FORTH IN THIS
AGREEMENT MAY BE DIFFICULT OR IMPOSSIBLE TO CALCULATE OR OTHERWISE
INADEQUATE TO PROTECT ITS INTERESTS AND THAT IRREPARABLE DAMAGE MAY OCCUR
IN THE EVENT THAT PROVISIONS OF THIS AGREEMENT ARE NOT PERFORMED BY THE PARTIES
IN ACCORDANCE WITH THE SPECIFIC TERMS OF THIS AGREEMENT. ANY PARTY MAY SEEK
TO REQUIRE THE PERFORMANCE OF ANY OTHER PARTY’S OBLIGATIONS UNDER THIS
AGREEMENT THROUGH AN ORDER OF SPECIFIC PERFORMANCE RENDERED BY THE FEDERAL
COURT IN THE STATE OF NORTH CAROLINA OR THE STATE COURTS IN THE STATE OF NORTH
CAROLINA AS PROVIDED IN SECTION 10.2.

 

55

 

ARTICLE XII

MISCELLANEOUS

 

Section 12.1                            Notices.

 

12.1.1                  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 fax 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 a Party
at its address specified below:

 

If
to Purchaser, to:

 

Duke
Power Company LLC

526
South Church Street, Mail Code EC2XA

Charlotte,
NC  28202

Facsimile
No.:  (980) 373-5393

Attn:  Ellen T. Ruff, President

 

with
a copy to:

 

Duke
Power Company LLC

526
South Church Street, Mail Code EC03T

Charlotte,
NC  28202

Facsimile
No.:  (980) 382-5090

Attn:  Paul R. Newton, GVP & General
Counsel –

U.S.
Franchised Electric & Gas

 

If
to Sellers, to:

 

Dynegy
Inc.

1000
Louisiana, Suite 5800

Houston,
Texas  77002

Facsimile
No.:  (713) 767-3181

Attn:  Lynn A. Lednicky, Executive Vice President

 

with
a copy to:

 

Dynegy
Inc.

1000
Louisiana, Suite 5800

Houston,
Texas  77002

Facsimile
No.:  (713) 507-6834

Attn:  Alisa B. Johnson, Senior Vice President

 

12.1.2                  Effective Time of Notices. Notice
given by personal delivery, mail or overnight courier pursuant to this Section 12.1 shall be effective upon physical receipt.
Notice given by fax pursuant to this Section 12.1
shall be effective as of (i) the date of confirmed

 

56

 

delivery
if delivered before 5:00 p.m. local time on any Business Day, or (ii) the
next succeeding Business Day if confirmed delivery is after 5:00 p.m.
local time on any Business Day or during any non-Business Day.

 

Section 12.2                            Payments. Except
for payments due at Closing, if either Party is required to make any payment
under this Agreement on a day other than a Business Day, the date of payment
shall be extended to the next Business Day. In the event a Party does not make
any payment required or approved by the Parties under this Agreement on or
before the due date, interest on the unpaid amount shall be due and paid at a
rate that is the lesser of (a) the prime rate under “Money Rates” as
reported in the Wall Street Journal on the first Business Day of the month (the
“Prime Rate”) plus two percent (2%) or (b) the maximum rate of
interest permitted to be charged by applicable Law (such lesser rate, the “Default
Rate”) from the date such payment is due until the date such payment is
made in full. Any payment of such interest at the Default Rate pursuant to this
Agreement shall not excuse or cure any default hereunder. All payments shall
first be applied to the payment of accrued but unpaid interest.

 

Section 12.3                            Entire Agreement. This Agreement and the Transaction Agreements supersede all prior
discussions and agreements between the Parties with respect to the subject
matter hereof and thereof, including, in each case, all schedules and exhibits
thereto, and contain the sole and entire agreement between the Parties hereto
with respect to the subject matter hereof and thereof.

 

Section 12.4                            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 connection with the negotiation, execution and
performance under this Agreement and the Transaction Agreements and the
transactions contemplated hereby and thereby; provided, however, that Sellers,
jointly and severally, shall promptly reimburse Purchaser for one-half of
the HSR Act filing fee.

 

Section 12.5                            Public
Announcements. Sellers and Purchaser will not
issue or make any press releases or similar public announcements concerning
this Agreement or the transactions contemplated hereby without the consent of
the other, which consent shall not be unreasonably withheld. If either Party is
unable to obtain the approval of its press release or similar public statement
from the other Party and such press release or similar public statement is, in
the opinion of legal counsel to such Party, required by Law in order to
discharge such Party’s disclosure obligations, then such Party may make or
issue the legally required press release or similar public statement and
promptly furnish the other Party with a copy thereof. Sellers and Purchaser
will also obtain the other Party’s prior approval, which approval shall not be
unreasonably withheld, of any press release to be issued immediately following
the execution of this Agreement or the Closing announcing either the execution
of this Agreement or the consummation of the transactions contemplated by this
Agreement.

 

Section 12.6                            Confidentiality. Each Party hereto will hold, and will use commercially reasonable
efforts to cause its Related Persons to hold, in strict confidence from any
Person (other than any such Related Persons), unless (i) compelled to
disclose by judicial or administrative process (including in connection with
obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of Governmental Authorities) or by other

 

57

 

requirements
of Law or necessary or desirable to disclose in order to obtain the NCUC
Approvals and the FERC Approvals or (ii) disclosed in an action or
proceeding brought by a Party hereto in pursuit of its rights or in the
exercise of its remedies hereunder, all documents and information concerning
the other Party or any of its Related Persons furnished to it by the other
Party or such other Party’s Related Persons in connection with this Agreement
or the transactions contemplated hereby, except to the extent that such
documents or information can be shown to have been (a) previously known by
the Party receiving such documents or information, (b) in the public
domain (either prior to or after the furnishing of such documents or
information hereunder) through no fault of such receiving Party or (c) later
acquired by the receiving Party from another source if the receiving Party is
not aware that such source is under an obligation to another Party hereto to
keep such documents and information confidential. In the event the transactions
contemplated hereby are not consummated, upon the request of the other Party,
each Party hereto will, and will use commercially reasonable efforts to cause
its Related Persons to, promptly (and in no event later than five (5) Business
Days after such request) destroy or cause to be destroyed all copies of
confidential documents and information furnished by the other Party in
connection with this Agreement or the transactions contemplated hereby and
destroy or cause to be destroyed all notes, memoranda, summaries, analyses,
compilations and other writings related thereto or based thereon prepared by
the Party furnished such documents and information or its Related Persons. The
obligations contained in this Section 12.6 shall
not survive Closing or, if this Agreement is terminated pursuant to ARTICLE VI, such obligations shall survive for one year
following the termination of this Agreement.

 

Section 12.7                            Waivers.

 

12.7.1                  Grant of Waivers. 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 any 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. All remedies, either under this Agreement or by Law or
otherwise afforded, will be cumulative and not alternative.

 

12.7.2                  Exercise of Remedies. No failure or
delay of any Party, in any one or more instances, (i) in exercising any
power, right or remedy (other than failure or unreasonable delay in giving
notice of default) under this Agreement or (ii) in insisting upon the
strict performance by the other Party of such other Party’s covenants,
obligations or agreements under this Agreement, shall operate as a waiver,
discharge or invalidation thereof, nor shall any single or partial exercise of
any such right, power or remedy or insistence on strict performance, or any
abandonment or discontinuance of steps to enforce such a right, power or remedy
or to enforce strict performance, preclude any other or future exercise thereof
or insistence thereupon or the exercise of any other right, power or remedy. The
covenants, obligations, and agreements of a defaulting Party and the rights and
remedies of the other Party upon a default shall continue and remain in full
force and effect with respect to any subsequent breach, act or omission.

 

58

 

Section 12.8                            Amendment. This Agreement and any of the Transaction Agreements may be
amended, supplemented or modified only by a written instrument duly executed by
or on behalf of each Party hereto.

 

Section 12.9                            No
Construction Against Drafting Party. The
language used in this Agreement is the product of both Parties’ efforts, and
each Party hereby irrevocably waives the benefits of any rule of contract
construction that disfavors the drafter of a contract or the drafter of specific
words in a contract.

 

Section 12.10                     No Third-Party Beneficiary. The terms and provisions of this Agreement are intended solely
for the benefit of each Party hereto 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.

 

Section 12.11                     Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.

 

Section 12.12                     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 hereto under this Agreement
will not be materially and adversely affected thereby, (a) such provision
will be fully severable, (b) this Agreement will be construed and enforced
as if such illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) 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 (d) Purchaser and Sellers shall
negotiate an equitable adjustment in the provisions of the Agreement with a
view toward effecting the purposes of the Agreement, and the validity and
enforceability of the remaining provisions, or portions or applications
thereof, shall not be affected thereby.

 

Section 12.13                     Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NORTH CAROLINA APPLICABLE TO A CONTRACT EXECUTED
AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF.

 

Section 12.14                     Court Costs;
Interest. With respect to any court proceeding
between the Parties, the non-prevailing Party shall pay the prevailing Party (i) all
court costs, and (ii) pre- and post-judgment interest on the amount
awarded from the date of the applicable breach until paid.

 

Section 12.15                     No Assignment; Binding Effect. Neither this Agreement nor any right, interest or obligation
hereunder may be assigned by any Party hereto without the prior written
consent of the other Party hereto and any attempt to do so will be void, except
for assignments and transfers by operation of Law. This Agreement is binding
upon, inures to the benefit of and is enforceable by the Parties and their
respective successors and assigns.

 

59

 

Section 12.16                     Counterparts. 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. Each Party expressly
acknowledges the effectiveness of facsimile signatures as originals.

 

[Signature Page Follows]

 

60

 

IN WITNESS WHEREOF, this
Agreement has been executed by the Parties as of the Effective Date.

 

	
   

  	
   

  	
  DYNEGY INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Lynn A.
  Lednicky

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Lynn A.
  Lednicky

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ROCKINGHAM POWER, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Stephen
  A. Furbacher

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Stephen A.
  Furbacher

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DUKE POWER COMPANY LLC d/b/a Duke

  Energy Carolinas, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Ellen T.
  Ruff

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Ellen T.
  Ruff

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00104-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00104-of-00352.parquet"}]]