Document:

Exhibit 4-zzz

 

	
  No. 
  R-2003-2

  	
   

  	
  $175,968,944.94

  

 

 

PSI ENERGY,
INC.

6.403% Subordinated Note

Due 2004

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR THE SECURITIES OR BLUE SKY LAWS OF ANY JURISDICTION OF
THE UNITED STATES OF AMERICA (“BLUE SKY LAWS”)
AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR PURSUANT TO A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE ACT AND, IN EACH
CASE, IN ACCORDANCE WITH ALL APPLICABLE BLUE SKY LAWS.

 

PSI Energy, Inc., a corporation
duly organized and existing under the laws of the state of Indiana (herein
called the “Company”), for value received, hereby promises to pay to CINERGY
CORP., or registered assigns, the principal sum of One Hundred and Seventy Five
Million Nine Hundred and Sixty Eight Thousand Nine Hundred and Forty Four and
94/100 Dollars ($175,968,944.94) on September 1, 2004, and to pay interest
thereon from February 5, 2003 or from the most recent interest payment date to
which interest has been paid or duly provided for, semiannually on March 1 and
September 1 in each year, commencing March 1, 2003, at the rate of 6.403% per
annum, until the principal hereof is paid or made available for payment.

 

Payment of the principal of and interest on this Note will be made at
the office or agency of the Company maintained for that purpose in Cincinnati,
Ohio, in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made by
check.

 

Interest on this Note shall be computed on the basis
of a 360-day year of twelve 30-day months.

 

Any payment on
this Note due on any day which is not a Business Day in the City of Cincinnati,
Ohio need not be made on such day, but may be made on the next succeeding
Business Day with the same force and effect as if made on the due date and no
interest shall accrue for the period from and after such date.  For purposes of this Note “Business Day,”
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day
on which banking institutions in Cincinnati, Ohio are authorized or obligated
by law or executive order to close.

 

 

Redemption

 

This Note is
subject to redemption upon not less than 30 days’ notice by mail, at a
redemption price equal to 100% of the principal amount, as a whole or in part,
at the election of the Company, together with accrued interest to the
redemption date.

 

In the event of redemption of this Note in part only, a new Note of
like tenor for the unredeemed portion hereof will be issued in the name of the
holder hereof upon the cancellation hereof.

 

Subordination

 

The
indebtedness evidenced by this Note is, to the extent and in the manner
provided herein, expressly subordinate and subject in right of payment to the
prior payment in full of all Senior Debt of the Company (as defined
hereinbelow) whether outstanding at the date hereof or hereafter incurred.  Each holder and owner of this Note, by
accepting the same, agrees to and shall be bound by such provisions.

 

For purpose
hereof, the “Senior Debt” of the Company means the principal of, premium, if
any, interest on and any other payment due pursuant to any of the following,
whether outstanding at the date of execution of this Note or thereafter
incurred, created or assumed: (a) all indebtedness of the Company evidenced by
notes, debentures, bonds or other securities sold by the Company for money,
excluding this Note, but including all first mortgage bonds of the Company
outstanding from time to time; (b) all indebtedness of others of the kinds
described in the preceding clause (a) assumed by or guaranteed in any manner by
the Company, including through an agreement to purchase, contingent or
otherwise; and (c) all renewals, extensions or refundings of indebtedness of
the kinds described in any of the preceding clauses (a) and (b); unless, in the
case of any particular indebtedness, renewal, extension or refunding, the
instrument creating or evidencing the same or the assumption or guarantee of
the same expressly provides that such indebtedness, renewal, extension or
refunding is not superior in right of payment to or is pari passu with this
Note.

 

In the event
and during the continuation of any default in the payment of principal,
premium, interest or any other payment due on any Senior Debt continuing beyond
the period of grace, if any, specified in the instrument evidencing such Senior
Debt, unless and until such default shall have been cured or waived or shall
have ceased to exist, or in the event that the maturity of any Senior Debt has
been accelerated because of a default, then no payment shall be made by the Company
with respect to the principal of or interest on this Note.

 

2

 

In the event
that, notwithstanding the foregoing, any payment shall be received by the
holder of this Note when such payment is prohibited by the preceding paragraph,
such payment shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Senior Debt or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear.

 

Upon any
payment by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon any dissolution
or winding-up or liquidation or reorganization of the Company, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership or other
proceedings, all amounts due or to become due upon all Senior Debt shall first
be paid in full, or payment thereof provided for in money in accordance with
its terms, before any payment is made on account of the principal or interest
on this Note; and upon any such dissolution or winding-up or liquidation or
reorganization any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the holder of this Note would be entitled, except for the provisions of
this Note, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, or by the holder of this Note if received by it, directly to the
holders of Senior Debt (pro rata to such holders on the basis of the respective
amounts of Senior Debt held by such holders, as calculated by the Company) or
their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing any Senior Debt may
have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Debt in full, in money or money’s worth, after
giving effect to any concurrent payment or distribution to or for the holders
of Senior Debt, before any payment or distribution is made to the holder of
this Note.

 

In the event
that, notwithstanding the foregoing, any payment or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
prohibited by the foregoing, shall be received by the holder of this Note
before all Senior Debt is paid in full, or provision is made for such payment
in money in accordance with its terms, such payment or distribution shall be
held in trust for the benefit of and shall be paid over or delivered to the
holders of Senior Debt or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Debt may have been issued, as their respective interests
may appear, as calculated by the Company, for application to the payment of all
Senior Debt remaining unpaid to the extent necessary to pay all Senior Debt in
full in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior Debt.

 

3

 

For purposes
of this Note, the words, “cash, property or securities” shall not be deemed to
include shares of stock of the Company as reorganized or readjusted, or
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is subordinated with
respect to this Note to the payment of all Senior Debt which may at the time be
outstanding; provided that (i) the Senior Debt is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment,
and (ii) the rights of the holders of the Senior Debt are not, without the
consent of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company into, another
corporation or the liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided for in
this Note shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes hereunder if such other corporation shall, as a
part of such consolidation, merger, conveyance or transfer, comply with the
conditions stated hereunder.

 

Subject to the
payment in full of all Senior Debt, the rights of the holder of this Note shall
be subrogated to the rights of the holders of Senior Debt to receive payments
or distributions of cash, property or securities of the Company applicable to
the Senior Debt; and, for the purposes of such subrogation, no payment or
distributions to the holders of the Senior Debt of any cash, property or
securities to which the holder of this Note would be entitled except for the
provisions hereunder, and no payment over to or for the benefit of the holders
of Senior Debt by the holder of this Note, shall, as between the Company, its
creditors other than holders of Senior Debt, and the holder of this Note, be
deemed to be a payment by the Company to or on account of the Senior Debt.  It is understood that the subordination
provisions of this Note are and are intended solely for the purposes of
defining the relative rights of the holder of this Note, on the one hand, and
the holders of the Senior Debt on the other hand.

 

Nothing
contained in this Note is intended to or shall impair, as between the Company,
its creditors other than the holders of Senior Debt, and the holder of this
Note, the obligation of the Company, which is absolute and unconditional, to
pay the principal of and interest on this Note as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the holder of this Note and creditors of the
Company other than the holders of the Senior Debt, nor shall anything herein or
therein prevent the holder of this Note from exercising all remedies otherwise
permitted by applicable law upon default hereunder, subject to the rights, if
any, of the holders of Senior Debt in respect of cash, property or securities
of the Company received upon the exercise of any such remedy.

 

4

 

Events of
Default

 

“Event of Default,” wherever used herein with respect to this Note,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

 

(1)           default in the
payment of any interest upon this Note when it becomes due and payable, and
continuance of such default for a period of 30 days; or

 

(2)           default in the
payment of the principal of this Note at its maturity; or

 

(3)           default in the
performance, or breach, of any covenant or warranty of the Company in this Note
(other than a covenant or warranty a default in whose performance or whose
breach is elsewhere specifically dealt with) and continuance of such default or
breach for a period of 90 days after there has been given, by registered or
certified mail, to the Company by the holder of the Note a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a “Notice of Default” 
hereunder; or

 

(4)           the entry by a court
having jurisdiction in the premises of (A) a decree or order for relief in
respect of the Company in an involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company under
any applicable Federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the
Company or of any substantial part of its property, or ordering the winding up
or  liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 90 consecutive days; or

 

(5)           the commencement by the Company of a
voluntary case or proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to
the entry of a decree or order for relief in respect of the Company in an  involuntary case or proceeding  under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking reorganization or
relief under any applicable Federal or state law, or the consent by it to the
filing of such petition or to the appointment of, or taking possession of the
Company or of any substantial part of its property by, a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official  or the making by the Company of an
assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such action; or

 

5

 

If an Event of
Default (other than an Event of Default specified in paragraphs (4) or (5) above)
occurs and is continuing, then the holder of this Note may declare the
principal amount to be due and payable immediately, by a notice in writing to
the Company, and upon any such declaration such principal amount shall become
immediately due and payable.  If an
Event of Default specified in paragraphs (4) or (5) above occurs, the principal
amount of this Note shall automatically, and without any declaration or other
action on the part of the holder, become immediately due and payable.

 

No delay or omission
of the holder of this Note to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Note or
by law to the holder may be exercised from time to time, and as often as may be
deemed expedient, by the holders.

 

Consolidations and Mergers Permitted

 

Nothing contained in this Note shall prevent any consolidation or
merger of the Company with or into any other corporation or corporations
(whether or not affiliated with the Company), or successive consolidations or
mergers in which the Company or its successor or successors shall be a party or
parties, or shall prevent any sale, conveyance, transfer or other disposition
of the property of the Company or its successor or successors as an entirety,
or substantially as an entirety, to any other corporation (whether or not
affiliated with the Company or its successor or successors) authorized to acquire
and operate the same; provided, however, the Company hereby covenants and
agrees that, upon any such consolidation, merger, sale, conveyance, transfer or
other disposition, the due and punctual payment of the principal of and
interest on this Note in accordance with its terms, according to its tenor, and
the due and punctual performance and observance of all the covenants and
conditions of hereunder to be kept or performed by the Company, shall be
expressly assumed, by written agreement satisfactory in form to the holder
executed and delivered to the holder by the entity formed by such
consolidation, or into which the Company shall have been merged, or by the
entity which shall have acquired such property.

 

In case of any such consolidation, merger, sale, conveyance, transfer
or other disposition and upon the assumption by the successor corporation of
the due and punctual payment of the principal of and interest on this Note and
the due and punctual performance of all of the covenants and conditions hereunder
to be performed by the Company, such successor corporation shall succeed to and
be substituted for the Company, with the same effect as if it had been named
herein as the party of the first part, and thereupon the predecessor
corporation shall be relieved of all obligations and covenants under this Note.

 

6

 

Nothing
contained in this Note shall prevent the Company from merging into itself or
acquiring by purchase or otherwise all or any part of the property of any other
corporation  (whether or not affiliated
with the Company).

 

 

IN WITNESS
WHEREOF, the Company has caused this instrument to be duly executed.

 

Dated:  February 5, 2003

 

	
   

  	
  PSI ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ WENDY L. AUMILLER

  	
   

  
	
   

  	
   

  	
   Wendy L. Aumiller

  
	
   

  	
   

  	
   Treasurer

  

 

7Exhibit
10-tt

 

 

ASSET PURCHASE AGREEMENT

 

 

BY AND AMONG

 

 

CINERGY CAPITAL &
TRADING, INC.,

 

CINCAP MADISON, LLC

 

 

AND

 

 

PSI ENERGY, INC.

 

 

Dated as of February 5,
2003

 

 

	
  ARTICLE
  I

  	
   

  
	
  DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  II

  	
   

  
	
  PURCHASE AND SALE

  
	
   

  	
   

  
	
  Section 2.01.

  	
  Transfer of Assets

  
	
  Section 2.02.

  	
  Excluded Assets

  
	
  Section 2.03.

  	
  Assumed Liabilities

  
	
  Section 2.04.

  	
  Excluded Liabilities

  
	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
  PURCHASE PRICE; CLOSING

  
	
   

  	
   

  
	
  Section 3.01.

  	
  Purchase Price

  
	
  Section 3.02.

  	
  Inventory

  
	
  Section 3.03.

  	
  Proration

  
	
  Section 3.04.

  	
  Closing

  
	
  Section 3.05.

  	
  Closing Deliveries

  
	
   

  	
   

  
	
  ARTICLE
  IV

  	
   

  
	
  REPRESENTATIONS AND
  WARRANTIES

  
	
   

  	
   

  
	
  Section 4.01.

  	
  Representations and Warranties of Parent
  and Seller

  
	
  Section 4.02.

  	
  Representations and Warranties of Buyer

  
	
   

  	
   

  
	
  ARTICLE
  V

  	
   

  
	
  COVENANTS

  	
   

  
	
   

  	
   

  
	
  Section 5.01.

  	
  Books and Records

  
	
  Section 5.02.

  	
  Finder’s Fees

  
	
  Section 5.03.

  	
  Tax Matters

  
	
  Section 5.04.

  	
  Further Assurances

  
	
   

  	
   

  
	
  ARTICLE
  VI

  	
   

  
	
  INDEMNIFICATION

  
	
   

  	
   

  
	
  Section 6.01.

  	
  Survival

  
	
  Section 6.02.

  	
  Indemnification

  
	
  Section 6.03.

  	
  Procedure for
  Indemnification

  
	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
  MISCELLANEOUS PROVISIONS

  
	
   

  	
   

  
	
  Section 7.01

  	
  Notices

  

 

 

	
  Section 7.02.

  	
  Waiver

  
	
  Section 7.03.

  	
  Entire Agreement;
  Amendment etc.

  
	
  Section 7.04.

  	
  Assignment

  
	
  Section 7.05.

  	
  Severability

  
	
  Section 7.06.

  	
  Bulk Sales Laws

  
	
  Section 7.07.

  	
  Governing Law

  
	
  Section 7.08.

  	
  Counterparts;
  Facsimile Execution

  
	
  Section 7.09.

  	
  Schedules

  
	
  Section 7.10

  	
  U.S. Dollars

  
	
  Section 7.11.

  	
  Dispute Resolution

  
	
  Section 7.12.

  	
  Ratemaking

  
	
  Section 7.13.

  	
  State Review

  
	
   

  	
   

  
	
  SCHEDULES

  
	
   

  	
   

  
	
  Schedule
  I

  	
  Form
  of Deed

  
	
  Schedule II

  	
  Form of Bill of Sale

  
	
  Schedule III

  	
  Form of Assumption Agreement

  
	
   

  	
   

  
	
  DISCLOSURE SCHEDULES

  
	
   

  	
   

  
	
  Schedule 2.01(b)

  	
  Tangible Personal Property

  
	
  Schedule 2.01(d)

  	
  Transferred Contracts

  
	
  Schedule 2.01(e)

  	
  Transferred Permits

  
	
  Schedule 4.01(c)(ii)

  	
  Seller’s Required Governmental
  and Third Party Consents

  
	
  Schedule 4.01(g)(i)

  	
  Real Property

  
	
  Schedule 4.01(k)

  	
  Environmental Permits

  
	
  Schedule 4.01(m)

  	
  Seller Contracts

  
	
  Schedule 4.01(o)

  	
  Permits

  
	
  Schedule 4.02(c)(ii)

  	
  Buyer’s Required Governmental and
  Third Party Consents

  
			

 

 

ASSET PURCHASE AGREEMENT

 

 

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

 

W  I  T  N  E  S
S  E  T  H

 

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

 

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

 

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

 

ARTICLE I

 

DEFINITIONS

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

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

 

“Buyer’s Required Third-Party Consents” means
the consents, approvals, filings and/or notices of, with, from or to Third
Parties (other than Governmental Authorities) listed in Section II of Schedule
4.02(c)(ii).

 

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

 

“CERCLA” means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended from time to
time.

 

“Closing” has the
meaning set forth in Section 3.04.

 

“Closing Date” has
the meaning set forth in Section 3.04.

 

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

 

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

 

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

 

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

 

2

 

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

 

“Environmental Condition” means the presence or
Release  to
the environment, whether at the Real Property or otherwise, of Hazardous
Substances, including any migration of Hazardous Substances through air, soil
or groundwater at, to or from the Real Property or at, to or from any Off-Site
Location, regardless of when such presence or Release occurred or is
discovered.

 

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

 

“Environmental Liabilities” has the meaning set
forth in Section 2.03.

 

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

 

“Excluded Assets” has the meaning set forth in
Section 2.02.

 

“Excluded Liabilities” has the meaning set
forth in Section 2.04.

 

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

 

“Good
Utility Practice” means any of the practices, methods and acts
engaged in or approved by a significant portion of the electric utility
industry during the relevant time period, or any of the practices, methods or
acts which, in the exercise of reasonable judgment in light of the facts known
at the time the decision was made, could have been expected to accomplish the
desired result at a reasonable cost consistent with good business practices,
reliability, safety and expedition.

 

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

 

“Hazardous
Substances” means (a) any petrochemical or petroleum products, oil
or coal ash, radioactive materials, radon gas, asbestos in any form that is or
could become

 

3

 

friable, urea formaldehyde foam insulation and transformers or other
equipment that contain dielectric fluid which may contain levels of
polychlorinated biphenyls; (b) any chemicals, materials or substances defined
as or included in the definition of “hazardous substances,” “hazardous wastes,”
“hazardous materials,” “hazardous constituents,” “restricted hazardous
materials,” “extremely hazardous substances,” “toxic substances,”
“contaminants,” “pollutants,” “toxic pollutants,” or words of similar meaning
and regulatory effect under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Laws” means all
laws, statutes, rules, regulations, ordinances and other pronouncements having
the effect of law of the United States, any foreign country and any domestic or
foreign state, county, city or other political subdivision or of any
Governmental Authority.

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

“Purchase Price” has the meaning set forth in
Section 3.01.

 

“Purchased Assets” has the meaning set forth in
Section 2.01.

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

“Seller’s Required Third-Party Consents” means
the consents, approvals, filings and/or notices of, with, from or to Third
Parties (other than Governmental Authorities) listed in Section II of Schedule
4.01(c)(ii).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(ii)                                  words
importing any gender shall include other genders;

 

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

 

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

 

7

 

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

 

(vi)                              reference to any applicable Law
means, if applicable, such Law as amended, modified, codified, replaced or
reenacted, in whole or in part, and in effect from time to time, including
rules and regulations promulgated thereunder,

 

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

 

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

 

(ix)                                the
words “hereof,” “herein” and “herewith” and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement as a whole and
not to any particular provision of this Agreement; and

 

(x)                                   references
to any party hereto or any other agreement or document shall include such
party’s successors and permitted assigns, but, if applicable, only if such successors and assigns are not
prohibited by this Agreement.

 

ARTICLE II

 

PURCHASE AND SALE

 

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

 

(a)                                  the Real Property;

 

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

 

(c)                                  all Inventories;

 

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

 

8

 

than any thereof constituting
Transferred Permits or Transferred Intellectual Property) listed on Schedule
2.01(d) (the “Transferred Contracts”);

 

(e)                                  subject to the receipt of any
necessary consents and approvals, the permits, licenses, certificates,
certifications, orders and other governmental authorizations listed on Schedule
2.01(e) (the “Transferred Permits”);

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

(e)                                  any
insurance policies; and

 

(f)                                    the
rights of Seller under this Agreement and the Ancillary  Agreements.

 

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

 

(a)                                  All
Liabilities of Seller under the Transferred Contracts, Transferred Permits and
Transferred Intellectual Property, in each case in accordance with the terms
thereof, except to the extent that such Liabilities, but for a breach or
default by Seller, would have been paid, performed or otherwise discharged on
or prior to the Closing Date or to the extent the same arise out of any such
breach or default or out of any event which after the giving of notice would
constitute a default by Seller;

 

(b)                                 all
Liabilities with respect to Madison Station arising under or relating to
Environmental Laws or relating to any claim in respect of Environmental
Conditions or Hazardous Substances, including settlements, judgments, costs and
expenses, including reasonable attorneys fees, whether based on common law or
Environmental Laws (collectively, “Environmental Liabilities”), but in each
case solely to the extent accruing or arising from and after the Closing Date,
with respect to (i) any violation or alleged violation of Environmental Laws
with respect to the ownership, lease, maintenance or operation of any of the
Purchased Assets, including any fines or penalties that arise in connection with
the ownership, lease, maintenance or operation of the Purchased Assets, and the
costs associated with correcting any such violations; (ii) loss of life, injury
to persons or property or damage to natural resources caused (or allegedly
caused) by any Environmental Condition or the presence or Release of Hazardous
Substances at, on, in, under, adjacent to or migrating from the Purchased
Assets, including any Environmental Condition or Hazardous Substances contained
in building materials at or adjacent to the Purchased Assets or in the soil,
surface water, sediments, groundwater, landfill cells, or in other
environmental media at or near the Purchased Assets; (iii) any Remediation of
any Environmental Condition or Hazardous Substances that are present or have
been Released at, on, in, under, adjacent to or migrating from, the Purchased
Assets or in the soil, surface water, sediments, groundwater, landfill cells or
in other environmental media at or adjacent to the

 

10

 

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

 

(c)                                  all
liabilities or obligations to third parties for personal injury or tort, or
similar causes of action arising solely out of the ownership, lease, maintenance
or operation of the Purchased Assets, (collectively, “Tort Liabilities”), but
in each case solely to the extent accruing or arising from and after the
Closing Date; and

 

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

 

Section 2.04.                             Excluded
Liabilities.                                       Except
for the Assumed Liabilities, Buyer shall not assume by virtue of this
Agreement, the Assumption Agreement or any other Ancillary Agreement, or the
transactions contemplated hereby or thereby, or otherwise, and shall have no
liability for, any Liabilities of Seller (the “Excluded Liabilities”),
including any of the following Liabilities:

 

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

 

(b)                                 any
Liabilities in respect of Taxes attributable to the Purchased Assets for
taxable periods ending before the Closing Date;

 

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

 

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

 

11

 

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

 

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

 

(g)                                 any
Liability of Seller arising as a result of its execution and delivery of this
Agreement or any Ancillary Agreement, the performance of its obligations
hereunder or thereunder, or the consummation by Seller of the transactions
contemplated hereby or thereby; and

 

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

 

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

 

ARTICLE III

 

PURCHASE PRICE; CLOSING

 

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

 

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

 

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

 

(i)                                     personal
property, real estate, occupancy and any other Taxes, assessments and other
charges, if any, on or with respect to the business and operation of the
Purchased Assets;

 

12

 

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

 

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

 

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

 

(b)                                 In
connection with such proration, in the event that actual figures are not
available at the Closing Date, the proration shall be based upon the actual
amount of such Taxes or fees for the preceding year (or appropriate period) for
which actual Taxes or fees are available and such Taxes or fees shall be
reprorated upon request of either the Seller or the Buyer made within 60 days
of the date that the actual amounts become available.  Seller and Buyer agree to furnish each other with such documents
and other records as may be reasonably requested in order to confirm all
adjustment and proration calculations made pursuant to this Section 3.03.

 

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

 

Section 3.05.                             Closing
Deliveries.                                            (a)                                  At
the Closing, Parent will deliver, or cause to be delivered, to Buyer:

 

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

 

(ii)                                  the
Bill of Sale, duly executed by Seller;

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

(ix)                                such
other documents as Buyer may reasonably request to carry out the purposes of
this Agreement.

 

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

 

(i)                                     the
Assumption Agreement, duly executed by Buyer;

 

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

 

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

 

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

 

(v)                                 a
certificate dated the Closing Date of the Secretary or Assistant Secretary of
Buyer identifying the name and title and bearing the signatures of the

 

14

 

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

 

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

 

(vii)                           such other documents as
Seller or Parent may reasonably request to carry out the purposes of this
Agreement.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.01.                             Representations
and Warranties of Parent and Seller. 
Parent and Seller jointly and severally represent and warrant to Buyer
as follows:

 

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

 

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

 

15

 

subject to the receipt of Seller’s Required Consents, each of this
Agreement and each such Ancillary Agreement constitutes a legal, valid and
binding obligation of Parent and/or Seller, as the case may be, enforceable
against Parent and/or Seller in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency and other
similar laws affecting the rights and remedies of creditors generally and by
general principles of equity.

 

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

 

(ii)                                  Except
as set forth in Section I of Schedule 4.01(c)(ii) (listing each of Seller’s
Required Governmental Consents) or Section II thereof (listing each of Seller’s
Required Third-Party Consents), no consent or approval of, filing with, or
notice to, any Governmental Authority or other Person is necessary for the
execution, delivery and performance of this Agreement by Parent or Seller or of
any Ancillary Agreement to which Parent or Seller is a party, or the
consummation by Parent or Seller of the transactions contemplated hereby and
thereby, other than such consents, approvals, filings or notices which, if not
obtained or made, would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

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

 

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

 

16

 

(ii)                                  Since
December 31, 2001, there has not been any Material Adverse Effect and, to the
Knowledge of Parent and Seller, no event has occurred or circumstance exists
that, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.

 

(iii)                               Seller has no
liabilities or obligations of any nature except for (A) liabilities or
obligations reflected in the financial statements referred to in paragraph (i)
of this Section 4.01(e), including the notes thereto; (B) liabilities or
obligations incurred in the ordinary course of business, whether before or
after the respective dates of the financial statements referred to in paragraph
(i) of this Section 4.01(e); and (C) liabilities or obligations which in the
aggregate are not material to the Purchased Assets.

 

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

 

(g)                                 Real Property.                     (i)                                     Schedule
4.01(g)(i) sets forth all real property owned, used or occupied by Seller (the
“Real Property”), including a description of all land, and all encumbrances,
easements or rights of way of record (or, if not of record, of which Seller or
Parent has Knowledge) granted on or appurtenant to or otherwise affecting such
Real Property, and all plants, buildings, structures or other Improvements
located thereon.  To the Knowledge of
Parent and Seller, encumbrances, easements or rights of way which are not of
record, if any, would not have a Material Adverse Effect.  There are now in full force and effect duly
issued certificates of occupancy permitting the Real Property and Improvements
located thereon to be legally used and occupied as the same are now
constituted.  To the Knowledge of Parent
and Seller, no fact or condition exists which would prohibit or adversely
affect the ordinary rights of access to and from the Real Property from and to
the existing highways and roads and there is no pending or, to the Knowledge of
Parent or Seller, threatened restriction or denial, governmental or otherwise,
upon such ingress and egress.  To the
Knowledge of Parent and Seller, there is not (i) any claim of adverse
possession or prescriptive rights involving any of the Real Property, (ii) any
structure located on any Real Property which encroaches on or over the boundaries
of neighboring or adjacent properties or (iii) any structure of any other party
which encroaches on or over the boundaries of any such Real Property.  To the Knowledge of Parent and Seller, no
public improvements have been commenced and none are planned which in either
case may result in special assessments or otherwise would, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

 

17

 

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

 

(h)                                 Conveyance
of Real Property.                                 No
state, municipal, or other governmental approval regarding the division,
platting, or mapping of real estate is required as a prerequisite to the
conveyance by Seller to Buyer (or as a prerequisite to the recording of any
conveyance document) of any Real Property pursuant to the terms hereof.

 

(i)                                     Improvements.                 Neither Seller
nor any Affiliate thereof has received any written notices from any
Governmental Authority stating or alleging that any Improvements have not been
constructed in compliance with applicable Laws.  No written notice has been received by the Seller or any
Affiliate thereof from any Governmental Authority requiring or advising as to
the need for any repair, alteration, restoration or improvement in connection
with the Purchased Assets.

 

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

 

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

 

(iii)                               Except for immaterial
omissions, the Purchased
Assets (A) constitute all of the assets, tangible and intangible, of any nature
whatsoever, necessary to operate Seller’s business in the manner presently
operated by Seller and (B) include all of the operating assets of Seller.

 

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

 

18

 

(ii)                                  neither
Seller nor Parent has received any written request for information, or been
notified of any violation, or that it is a potentially responsible party, under
CERCLA or any other Environmental Law for contamination or air emissions at
Madison Station or the Real Property, except for any such requests or notices
that would result in liabilities under such laws as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect, and
there are no claims, actions, proceedings or investigations pending or, to the
Knowledge of Seller or Parent, threatened against Seller before any
Governmental Authority or body acting in an adjudicative capacity relating in
any way to any Environmental Laws or against Seller or Parent concerning
contamination or air emissions at Madison Station or the Real Property; and

 

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

 

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

 

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

 

(l)                                     Condemnation.               There are no
pending or, to the Knowledge of Parent or Seller, threatened proceedings or
governmental actions to condemn or take by power of eminent domain all or any
part of the Purchased Assets.

 

(m)                               Contracts
and Leases.                          (i)                                     Schedule
4.01(m) lists all written contracts, agreements, licenses (other than
Environmental Permits, Permits or Intellectual Property) or personal property
leases that are material to the business or operations of the Purchased Assets,
other than any such agreements, licenses, or personal property leases that are
expected to expire or terminate on or prior to the Closing Date.

 

(ii)                                  Except
as disclosed in Schedule 4.01(m), each Transferred Contract (A) constitutes a
legal, valid and binding obligation of Seller and, to Parent’s and Seller’s
Knowledge, constitutes a valid and binding obligation of the other parties
thereto, (B) is in full force and effect and Seller has not delivered or
received any written notice of termination thereunder, and (C) may be
transferred to Buyer pursuant to this Agreement without the consent of the
other parties thereto and will continue in full force and effect thereafter, in
each case without breaching the terms thereof or resulting in the forfeiture or
impairment of any rights thereunder.

 

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

 

19

 

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

 

(n)                                 Legal
Proceedings.                                           There
are no actions or proceedings pending or, to the Knowledge of Seller or Parent,
threatened against Seller before any court, arbitrator or Governmental
Authority, which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect. 
Seller is not subject to any outstanding judgments, rules, orders,
writs, injunctions or decrees of any court, arbitrator or Governmental
Authority which, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect.

 

(o)                                 Permits.     (i)                            Seller
has all permits, licenses, franchises-and other governmental authorizations,
consents and approvals (other than Environmental Permits, which are addressed
in Section 4.01(k)) (collectively, “Permits”) necessary to own and operate the
Purchased Assets, except where any failures to have such Permits would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  Neither Seller nor
Parent has received any written notification that Seller is in violation, nor
does Parent or Seller have Knowledge of any violations, of any such Permits, or
any Law or judgment of any Government Authority applicable to Seller with
respect to the Purchased Assets, except for violations that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(ii)                                  Schedule
4.01(o) lists all material Permits.

 

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

 

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

 

20

 

or both, would be in default) under any contract to use such
Intellectual Property, and there are no material restrictions on the transfer
of any material contract, or any interest therein, held by Seller in respect of
such Intellectual Property.  Neither
Parent nor Seller has received notice that Seller is infringing any
Intellectual Property of any other Person in connection with the operation or
business of the Purchased Assets.

 

(r)                                    Compliance
with Laws.                      Seller
is in compliance with all applicable Laws with respect to the ownership or
operation of the Purchased Assets, except where any such failures to be in
compliance would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

 

(s)                                  EWG
Status.                            Seller
is an “exempt wholesale generator” and Madison Station is an “eligible
facility,” each within the meaning of Section 32(a) of the Public Utility
Holding Company Act of 1935.

 

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

 

(u)                                 Limitation of
Representations and Warranties.                                           EXCEPT
FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT AND IN ANY
ANCILLARY AGREEMENT, PARENT AND SELLER ARE NOT MAKING, AND HEREBY DISCLAIM, ANY
OTHER REPRESENTATIONS AND WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR
IMPLIED, CONCERNING SELLER, PARENT, MADISON STATION OR THE PURCHASED ASSETS OR
ANY PART THEREOF.

 

Section 4.02.                             Representations
and Warranties of Buyer.  Buyer
represents and warrants to Seller and Parent as follows:

 

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

 

(b)                                 Authority and
Enforceability.                                    Buyer
has full corporate power and authority to execute and deliver and carry out its
obligations under this Agreement and each Ancillary Agreement to which it is a
party, and to consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance by
Buyer of this Agreement and each such Ancillary Agreement, and the consummation
of the transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action by Buyer.  Assuming the due authorization, execution
and delivery of this Agreement and each such Ancillary Agreement by the other
party or

 

21

 

parties thereto, and subject to the receipt of Buyer’s Required
Consents, each of this Agreement and each such Ancillary Agreement constitutes
a legal, valid and binding obligation of Buyer , enforceable against Buyer in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency and other similar laws affecting the rights
and remedies of creditors generally and by general principles of equity.

 

(c)                                  No
Violation; Consents and Approvals.                             (i)                                     Subject
to obtaining Buyer’s Required Consents, neither the execution, delivery and
performance by Buyer of this Agreement and each Ancillary Agreement to which
Buyer is a party, nor the consummation by Buyer of the transactions
contemplated hereby and thereby, will (A) conflict with or result in any breach
of any provision of the Organizational Documents of Buyer; (B) result in a
default (or give rise to any right of termination, cancellation or acceleration),
or require a consent, under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, material agreement or other instrument or
obligation to which Buyer is a party or by which any of their respective
material properties or assets may be bound, except for any such defaults or
consents (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained or which would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of Buyer to perform its obligations under this
Agreement and the Ancillary Agreements; or (iii) constitute a violation of any
law, regulation, order, judgment or decree applicable to Buyer, except for any
such violations as would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of Buyer to perform
its obligations under this Agreement and the Ancillary Agreements.

 

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

 

(d)                                 Legal
Proceedings.                                           There
are no actions or proceedings pending or, to the Knowledge of Buyer, threatened
against Buyer before any court, arbitrator or Governmental Authority, which,
individually or in the aggregate, would reasonably be expected to have a
material adverse effect on the ability of Buyer to perform its obligations
under this Agreement and the Ancillary Agreements.  Buyer is not subject to any outstanding judgments, rules, orders,
writs, injunctions or decrees of any court, arbitrator or Governmental
Authority which, individually or in the aggregate, would reasonably be expected
to have a material adverse effect on the ability of Buyer to perform its
obligations under this Agreement and the Ancillary Agreements.

 

22

 

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

 

ARTICLE V

 

COVENANTS

 

Section 5.01.                             Books
and Records.                                     For
a period of 7 years after the Closing Date (or such other date as the Parties
may mutually determine), each Party and its Representatives shall have
reasonable access to all books and records of the Purchased Assets , to the
extent that such access may reasonably be required by such Party in connection
with the Assumed Liabilities or the Excluded Liabilities, or other matters
affected by the operation of the Purchased Assets.  Such access shall be afforded by the Party in possession of any
such books and records upon receipt of reasonable advance notice and during
normal business hours.  The Party
exercising this right of access shall be solely responsible for any costs or
expenses incurred by it or the other Party with respect to such access pursuant
to this Section 5.01.  If the Party in
possession of such books and records desires to dispose of any such books and
records upon or prior to the expiration of such seven-year period, such Party
shall, prior to such disposition, give the other Party a reasonable
opportunity, at such other Party’s expense, to segregate and remove such books
and records as such other Party may select.

 

Section 5.02.                             Finder’s
Fees.                     Seller and
Parent, on the one hand, and Buyer, on the other hand, represent and warrant to
the other that no broker, finder or other Person is entitled to any brokerage
fees, commissions or finder’s fees in connection with the transactions
contemplated hereby by reason of any action taken by the Party making such
representation.  Seller and Parent, on
the one hand, and Buyer, on the other hand, will pay to the other or otherwise
discharge, and will indemnify and hold the other harmless from and against, any
and all claims or liabilities for all brokerage fees, commissions and finder’s
fees incurred by reason of any action taken by the indemnifying party.

 

Section 5.03.                             Tax
Matters.                             All
transfer, use, stamp, sales and similar Taxes incurred in connection with this
Agreement and the transactions contemplated hereby shall be the sole
responsibility of Seller and, to the extent paid by Buyer, Seller shall
promptly reimburse Buyer upon request.

 

Section 5.04.                             Further
Assurances.                                   (a)                                  Subject
to the terms and conditions of this Agreement, each of Seller and Parent, on
the one hand, and Buyer, on the other hand, 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 applicable Laws to
consummate and make effective the transfer of the Purchased Assets pursuant to
this Agreement and the assumption of the Assumed Liabilities, including using

 

23

 

commercially reasonable efforts with a view to obtaining all necessary
consents, approvals and authorizations of, and making all required notices or
filings with, third parties required to be obtained or made in order to
consummate the transactions hereunder, including the transfer of the
Transferred Permits to Buyer.  Neither
Seller and Parent, on the one hand, nor Buyer, on the other hand, shall,
without prior written consent of the other, take or fail to take any action
which might reasonably be expected to prevent or materially impede, interfere
with or delay the transactions contemplated by this Agreement.

 

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

 

(c)                                  To
the extent, if any, that Seller’s rights under any Transferred Contract may not
be assigned without the consent of any other party thereto, which consent has
not been obtained by the Closing Date, this Agreement shall not constitute an
agreement to assign the same if an attempted assignment would constitute a
breach thereof or be unlawful.  Seller
and Buyer agree that if any consent to an assignment of any Transferred Contract
has not been obtained at the Closing Date, or if any attempted assignment would
be ineffective or would impair Buyer’s rights and obligations under the
Transferred Contract in question, so that Buyer would not in effect acquire the
benefit of all such rights and obligations, Seller, at its option and to the
maximum extent permitted by law and such Transferred Contract, shall, after the
Closing Date, (i) appoint Buyer to be Seller’s agent with respect to such
Transferred Contract or (ii) to the maximum extent permitted by law and such
Transferred Contract, enter into such reasonable arrangements with Buyer or
take such other commercially reasonable actions to provide Buyer with the same
or substantially similar rights and obligations of such Transferred Contract.  From and after the Closing Date, Seller,
Parent and Buyer shall cooperate and use commercially reasonable efforts to
obtain an assignment to Buyer of any such Transferred Contract.

 

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

 

24

 

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

 

ARTICLE VI

 

INDEMNIFICATION

 

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

 

(b)                                 The
covenants and agreements of the Parties contained in this Agreement shall
survive the Closing in accordance with their respective terms.

 

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

 

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

 

(c)                                  The
amount of any Indemnifiable Loss shall be reduced (i) to the extent that any
Person entitled to receive indemnification under this Agreement (an “Idemnitee”) receives any insurance
proceeds with respect to such Indemnifiable Loss,

 

25

 

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

 

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

 

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

 

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

 

(g)                                 Notwithstanding
anything to the contrary herein, no Party (including an Indemnitee) shall be
entitled to recover from any other Party (including an Indemnifying Party) for
any liabilities, damages, obligations, payments, losses, costs, or expenses
under this Agreement or any amount in excess of the actual compensatory
damages, court costs and reasonable attorney’s fees suffered by such
party.  The Parties waive any right to
recover punitive, special, exemplary and consequential damages arising in
connection with or with respect to this Agreement.  The provisions of this Section 6.02(g) shall not apply to
indemnification for a Third Party Claim.

 

(h)                                 An
Indemnitee shall use commercially reasonable efforts to mitigate all
Indemnifiable Losses, including availing itself of any defenses, limitations,
rights of contribution, claims against third parties and other rights at law or
equity.  Commercially reasonable efforts
shall include the reasonable expenditure of money to mitigate or otherwise
reduce or eliminate any losses or expenses for which indemnification would
otherwise be due hereunder, and, in addition to its other obligations
hereunder, the Indemnifying Party shall reimburse the Indemnitee for the
Indemnitee’s reasonable expenditures in undertaking such mitigation.

 

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

 

26

 

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

 

(b)                                 If,
within 20 days after an Indemnitee provides written notice to the Indemnifying
Party of any Third Party Claims, the Indemnitee receives written notice from
the Indemnifying Party that such Indemnifying Party has elected to assume the
defense of such Third Party Claim as provided in Section 6.03(a), the
Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnitee in connection with the defense thereof; provided,
however, that if the Indemnifying Party shall fail to take reasonable steps
necessary to defend diligently such Third Party Claim within 20 days after
receiving notice from the Indemnitee that the Indemnitee believes the
Indemnifying Party has failed to take such steps, the Indemnitee may assume its
own defense and the Indemnifying Party shall be liable for all reasonable
expenses thereof.  Without the prior
written consent of the Indemnitee, the Indemnifying Party shall not enter into
any settlement of any Third Party Claim which would lead to liability or create
any financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder.  If a firm offer is made to settle a Third
Party Claim without leading to liability or the creation of a financial or
other obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder and the Indemnifying Party desires to
accept and agree to such offer, the Indemnifying Party shall give written
notice to the Indemnitee to that effect. 
If the Indemnitee fails to consent to such firm offer within 10 days
after its receipt of such notice, the Indemnifying Party shall be relieved of
its obligations to defend such Third Party Claim and the Indemnitee may contest
or defend such Third Party Claim.  In
such event, the maximum liability of the Indemnifying Party as to such Third
Party Claim will

 

27

 

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

 

(c)                                  Any
claim by an Indemnitee on account of an Indemnifiable Loss which does not
result from a Third Party Claim (a “Direct
Claim”) shall be asserted by giving the Indemnifying Party reasonably
prompt written notice thereof, stating the nature of such claim in reasonable
detail and indicating the estimated amount, if practicable, but in any event
such notice shall not be given later than 30 days after the Indemnitee becomes
aware of such Direct Claim, and the Indemnifying Party shall have a period of
30 days within which to respond to such Direct Claim.  If the Indemnifying Party does not respond within such thirty 30
day period, the Indemnifying Party shall be deemed to have accepted such claim.  If the Indemnifying Party rejects such
claim, the Indemnitee will be free to seek enforcement of its right to
indemnification under this Agreement.

 

(d)                                 If
the amount of any Indemnifiable Loss, at any time subsequent to the making of
an indemnity payment in respect thereof, is reduced by recovery, settlement or
otherwise under or pursuant to any insurance coverage, or pursuant to any
claim, recovery, settlement or payment by, from or against any other entity,
the amount of such reduction, less any costs, expenses or premiums incurred in
connection therewith (together with interest thereon from the date of payment
thereof at the Prime Rate) shall promptly be repaid by the Indemnitee to the
Indemnifying Party.  Upon making any
indemnity payment, the Indemnifying Party, to the extent of such indemnity
payment, shall be subrogated to all rights of the Indemnitee against any third
party in respect of the Indemnifiable Loss to which the indemnity payment
relates; provided, however, that (i) the Indemnifying Party shall then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of its
Indemnifiable Loss, any and all claims of the Indemnifying Party against such
third party on account of said indemnity payment are hereby made subordinate in
right of payment to the Indemnitee’s rights against such third party.  Without limiting the generality or effect of
any other provision hereof, each such Indemnitee and Indemnifying Party shall
duly execute upon request all instruments reasonably necessary to evidence and
perfect the above-described subrogation and subordination rights, and otherwise
cooperate in the prosecution of such claims at the direction of the
Indemnifying Party.  Nothing in this
Section 6.03(d) shall require any Party hereto to obtain or maintain any
insurance coverage.

 

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

 

ARTICLE VII

 

MISCELLANEOUS PROVISIONS

 

28

 

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

 

	
   

  	
  If to Seller or Parent, to:

  
	
   

  	
   

  
	
   

  	
   

  	
  Cinergy Capital & Trading, Inc.

  
	
   

  	
   

  	
  c/o CinCap Madison, LLC

  
	
   

  	
   

  	
  139 East Fourth Street

  
	
   

  	
   

  	
  Cincinnati, OH 45202

  
	
   

  	
   

  	
  M. Stephen Harkness

  
	
   

  	
   

  	
  Vice President, Chief Operating and

  
	
   

  	
   

  	
  Financial Officer

  
	
   

  	
   

  	
  Facsimile No.: 513-419-5719

  
	
   

  	
   

  	
  e-mail: sharkness@cinergy.com

  
	
   

  	
   

  
	
   

  	
  If to Buyer, to:

  
	
   

  	
   

  
	
   

  	
   

  	
  PSI Energy, Inc.

  
	
   

  	
   

  	
  1000 East Main Street

  
	
   

  	
   

  	
  Plainfield, Indiana 
  46168

  
	
   

  	
   

  	
  Douglas F. Esamann/President

  
	
   

  	
   

  	
  Facsimile No: 317/838-2987

  
	
   

  	
   

  	
  e-mail: desamann@cinergy.com

  
				

 

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

 

29

 

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

 

Section 7.03.                             Entire Agreement;
Amendment etc.

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

 

(b)                                 This
Agreement may not be amended, supplemented, terminated or otherwise modified
except by a written agreement executed by Seller, Parent and Buyer.  In addition, any proposed amendment hereto
is subject to Section 7.13.

 

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

 

Section 7.04.                             Assignment.                            This
Agreement and all the of the provisions hereof shall be binding upon and inure
to the benefit of the Parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned by, on the one hand, Seller and
Parent, and on the other hand, Buyer, in whole or in part (whether by operation
of law or otherwise), without the prior written consent of the other Party, and
any attempt to make any such assignment without such consent will be null and
void.  Notwithstanding the foregoing,
Seller or Buyer may assign or otherwise transfer its rights hereunder and under
any Ancillary Agreement to any bank, financial institution or other lender
providing financing to Seller or Buyer, as applicable, as collateral security
for such financing; provided, however, that no such assignment shall (x) impair
or materially delay the consummation of the transactions contemplated hereby or
(y) relieve or discharge Seller or Buyer, as the case may be, from any of its
obligations hereunder and thereunder.

 

Section 7.05.                             Severability.                              If any term
or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any law or public policy, all other terms and provisions of this
Agreement will nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party hereto.  Upon such determination that any  term or other provision is invalid, illegal
or incapable of being enforced, the Parties will negotiate in good faith to
modify this Agreement so as to effect the original intent of the

 

30

 

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

 

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

 

Section 7.07.                             Governing Law.     This
Agreement will be governed by and construed in accordance with the laws of the
State of Ohio, without giving effect to choice of law principles
thereof.

 

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

 

Section 7.09.                             Schedules.                                      The
Schedules to this Agreement are intended to be and hereby are specifically made
a part of this Agreement

 

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

 

Section 7.11.                             Dispute
Resolution.                                      (a)                                  If
a dispute arises between the Parties relating to this Agreement, the Parties
agree to use the following alternative dispute resolution (“ADR”) procedures
prior to any Party pursuing other available remedies:

 

(i)                                     A
meeting shall be held promptly between the Parties, attended by individuals
with decision-making authority regarding the dispute, to attempt in good faith
to negotiate a resolution of the dispute.

 

(ii)                                  If,
within 30 days after such meeting, the Parties have not succeeded in
negotiating a resolution of the dispute, they will jointly appoint a mutually
acceptable neutral person not affiliated with either Party (the “Neutral”) to
act as a mediator.  If the Parties are
unable to agree on the Neutral within 20 days, they shall seek

 

31

 

assistance in such regard from the CPR Institute for Dispute
Resolution, Inc. (“CPR”).  The Parties
shall share the fees of the Neutral and all other common fees and expenses
equally.

 

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

 

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

 

(b)                                 All
ADR proceedings shall be strictly confidential and used solely for the purposes
of settlement.  Any materials prepared
by one Party for the ADR proceedings shall not be used as evidence by the other
Party in any subsequent litigation; provided, however, that the underlying
facts supporting such materials may be subject to discovery.

 

(c)                                  Each
Party fully understands its specific obligations under the ADR provisions of
this Agreement.  Neither Party considers
such obligations to be vague or in any way unenforceable, and neither Party
will contend to the contrary at any future time or in any future proceeding.

 

Section 7.12.                             Ratemaking.                               Buyer
shall not seek to overturn, reverse, set aside, change or enjoin, whether
through appeal or the initiation or maintenance of any action in any forum, a
decision or order of the Indiana Utility Regulatory Commission (“IURC”) which
pertains to recovery, disallowance, deferral or ratemaking treatment of any
expense, charge, cost or allocation incurred or accrued by Buyer in or as a
result of this Agreement (or any amendment hereto) on the basis that this
Agreement and any such expense, charge, cost or allocation was filed with or
approved by the Securities and Exchange Commission (“SEC”).

 

Section 7.13.                             State
Review.                        In the
event the Parties execute an amendment to this Agreement, the Parties shall
fulfill the following obligations, where applicable (it being understood that
none of such obligations are intended to detract from the authority of the SEC
under the Public Utility Holding Company Act of 1935):

 

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

 

(b)                                 In
the event that the amendment is finally rejected or disapproved or found to be
unreasonable by the IURC prior to filing with the SEC, the amendment shall not
become effective and the Parties shall not request SEC approval of the
amendment.

 

32

 

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

 

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

 

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

 

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

 

[REMAINDER OF PAGE LEFT
INTENTIONALLY BLANK]

 

33

 

IN WITNESS WHEREOF, each of the Parties has caused
this Asset Purchase Agreement to be executed on its behalf by its respective
officer thereunto duly authorized, all as of the day and year first above
written.

 

	
   

  	
  CINERGY CAPITAL & TRADING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ M. Stephen Harkness

  	
   

  
	
   

  	
   

  	
  M. Stephen Harkness

  
	
   

  	
   

  	
  Vice President, Chief Operations and

  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CINCAP MADISON, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ M. Stephen Harkness

  	
   

  
	
   

  	
   

  	
  M. Stephen Harkness

  
	
   

  	
   

  	
  Vice President, Chief Operating and

  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PSI ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas F. Esamann

  	
   

  
	
   

  	
   

  	
  Douglas F. Esamann

  
	
   

  	
   

  	
  President

  
						

 

34

 

SCHEDULE I:  FORM OF DEED

 

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

 

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

 

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

 

35

 

Containing 36.303 acres of land.

 

Subject to all legal highways, easements and
restrictions of record.

 

Being the same premises conveyed to Grantor in Deed Book
6376, Page 323, Butler County, Ohio Recorder’s Office.

 

Bearings are based on State Plane Coordinates.

 

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

 

and all the Estate, Right, Title and Interest of
Grantor in and to the REAL PROPERTY; To Have and To Hold the same, with all the
privileges and appurtenances thereunto belonging, to Grantee, its successors
and assigns forever.  Grantor does hereby
Covenant
and Warrant that the title so conveyed to Grantee is Clear, Free
and Unencumbered, and that it will Defend the same against all
lawful claims of all persons whomsoever.

 

Grantor also assigns and transfers to Grantee, and its
successors and assigns, all right, title and interest which Grantor derives
from the following easement or license interests:

 

1.                                       Easement
Agreement granted by Miller Brewing Company to Grantor dated November 8,
1999 and filed for record on January 12, 2000 as Instrument No. 200000002350
in Official
Record 6440, Page 1955 in the Office of the Recorder of Butler
County, Ohio;

 

2.                                       Grant
of Easement granted by The Cincinnati Gas & Electric Company to Grantor
dated January 10, 2000 and filed for record on January 13, 2000 as Instrument
No. 200000002693 in Official Record 6441, Page 646 in the
Office of the Recorder of Butler County, Ohio; and

 

3.                                       Operating
License Agreement granted by The Cincinnati Gas & Electric Company to
Grantor dated December 21, 1999, a Memorandum of

 

36

 

said Agreement being
under date of March 31, 2000 and recorded on April 12, 2000 as Instrument
No. 200000019856 in Official Record 6464, Page 2212 in the
Office of the Recorder of Butler County, Ohio.

 

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK.]

 

37

 

IN WITNESS WHEREOF, CinCap
Madison, LLC has caused this instrument to be executed by its duly authorized
officer, this         day of
            ,
200 .

 

 

	
   

  	
  CinCap Madison, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  M.
  Stephen Harkness

  
	
   

  	
   

  	
  Its
  Vice President, and Chief

  Operating and Financial Officer

  

 

STATE
OF OHIO, HAMILTON COUNTY, ss:

 

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

 

IN
TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal
this           day of
               ,
200  .

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Printed
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  In
  and for the State of Ohio

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  My
  Commission Expires:

  	
   

  	
   

  
							

 

This instrument prepared by
Janice Walker, Attorney at Law.

 

38

 

SCHEDULE II:  FORM OF BILL
OF SALE

 

BILL OF SALE made, executed and delivered as of this     
day of          ,
200    by CinCap Madison, LLC, a Delaware limited liability
company (“Seller”) to PSI Energy, Inc., an Indiana corporation (“Buyer”).  (Capitalized terms used herein but not
defined herein have the respective meanings assigned in that certain Asset
Purchase Agreement of even date herewith (the “Asset Purchase Agreement”) by
and among Seller, Buyer and Cinergy Capital & Trading, Inc., an Indiana
corporation (“CC&T”).)

 

WHEREAS, Seller, Buyer and
CC&T are parties to the Asset Purchase Agreement providing for, among other
things, the sale and transfer to Buyer of all of Seller’s right, title and
interest in, to and under the real and personal property, tangible and
intangible, constituting, or used in connection with the operation of, that
certain natural gas-fired electric generating station known as the Madison
Generating Station, located in Madison Township, Butler County, Ohio (as more
fully described in the Asset Purchase Agreement), in exchange for the
consideration, and subject to the other terms and conditions, specified in the
Asset Purchase Agreement; and

 

WHEREAS, the parties to the Asset Purchase Agreement
having executed and delivered such agreement contemporaneously herewith, Seller
now desires to carry out the intent and purposes of the Asset Purchase
Agreement by its execution and delivery to Buyer of this instrument, evidencing
the vesting in Buyer (together with such other instruments as Buyer shall have
otherwise received concurrently herewith or may hereafter request, including
the Deed and certain Assignment and Assumption Agreements) of substantially all
of the properties and assets constituting, or used in connection with the
operation of, the Madison Generating Station;

 

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

 

ARTICLE I

SALE AND TRANSFER
OF ASSETS

 

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

 

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

 

(b)                                 all Inventories;

 

39

 

(c)                                  subject to the receipt of any
necessary consents and approvals, the contracts or agreements (including any
licenses or real or personal property leases, other than any thereof
constituting Transferred Permits or Transferred Intellectual Property) listed
on Schedule 2.01(d) of the Asset Purchase Agreement;

 

(d)                                 subject to the receipt of any
necessary consents and approvals, the permits, licenses, certificates,
certifications, orders and other governmental authorizations listed on Schedule
2.01(e) of the Asset Purchase Agreement;

 

(e)                                  all
unexpired, transferable warranties and guarantees from manufacturers, vendors
and other third parties with respect to any item of real or tangible personal
property referred to in the preceding clauses (a) and (b);

 

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

 

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

 

(h)                                 all
other assets and properties used in connection with the Madison Generating
Station.

 

ARTICLE II

FURTHER ACTIONS

 

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

 

40

 

ARTICLE III

POWER OF ATTORNEY

 

Without limiting
Article 2 hereof, Seller hereby constitutes and appoints Buyer the true and
lawful agent and attorney in fact of Seller, with full power of substitution
and resubstitution, in whole or in part, in the name and stead of Seller but on
behalf and for the benefit of Buyer and its successors and assigns, from time
to time:

 

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

 

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

 

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

 

Seller hereby declaring that the
foregoing powers are coupled with an interest and are and shall be irrevocable
by Seller.

 

ARTICLE IV

TERMS OF ASSET
PURCHASE AGREEMENT

 

The terms of the Asset Purchase Agreement, including but not
limited to Seller’s representations, warranties, covenants, agreements and
indemnities relating to the Purchased Assets, are incorporated herein by this
reference.  Seller acknowledges and
agrees that the representations, warranties, covenants, agreements and indemnities
contained in the Asset Purchase Agreement shall not be superseded hereby but
shall remain in full force and effect to the full extent provided therein.  In the event of any conflict or
inconsistency between the terms of the Asset Purchase Agreement and the terms
hereof, the terms of the Asset Purchase Agreement shall govern.

 

41

 

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

 

	
   

  	
  CINCAP
  MADISON, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:
  Michael J. Cyrus

  
	
   

  	
   

  	
  Title:  President

  

 

42

 

SCHEDULE III:  FORM OF
ASSUMPTION AGREEMENT

 

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

 

WHEREAS, pursuant to the Asset Purchase Agreement, and
by means of various agreements and instruments executed and delivered in connection
therewith (including without limitation the Deed, Bill of Sale and certain
assignment and assumption agreements), concurrently with the execution and
delivery hereof, Seller is selling and conveying to Buyer, and Buyer is
purchasing from Seller, for the consideration and upon the terms and conditions
set forth in the Asset Purchase Agreement, all of Seller’s right, title and
interest in and to the assets (tangible and intangible) comprising, or used in
connection with, the Madison Generating Station (the “Purchased Assets”); and

 

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

 

NOW, THEREFORE, in consideration
of the premises and the transactions contemplated by the Asset Purchase
Agreement, including without limitation the execution and delivery
simultaneously herewith of the Bill of Sale and the Deed, Buyer, intending to
be legally bound, hereby agrees as follows:

 

ARTICLE I

ASSUMPTION OF
ASSUMED LIABILITIES

 

Section 1.1                                      Assumption of
Assumed Liabilities.  Effective upon
the execution and delivery hereof, Buyer hereby assumes and agrees to pay,
perform and discharge, without recourse to Seller or Parent, the following
Liabilities of Seller (excluding, however, for the avoidance of doubt, for all
purposes whatsoever any Excluded Liabilities), solely to the extent such
Liabilities accrue or arise from and after the Closing, in each case in
accordance with the respective terms and subject to the respective conditions
thereof (collectively, the “Assumed Liabilities”):

 

(a)                                  All
Liabilities of Seller under the Transferred Contracts, Transferred Permits and
Transferred Intellectual Property, in each case in accordance with the terms
thereof, except to the extent that such Liabilities, but for a breach or
default by Seller, would have been paid, performed or otherwise discharged on
or prior to the Closing Date or to the extent the same arise out of any such
breach or default or out of any event which after the giving of notice would
constitute a default by Seller;

 

43

 

(b)                                 all
Liabilities with respect to Madison Station arising under or relating to
Environmental Laws or relating to any claim in respect of Environmental
Conditions or Hazardous Substances, including settlements, judgments, costs and
expenses, including reasonable attorneys fees, whether based on common law or
Environmental Laws, but in each case solely to the extent accruing or arising
from and after the Closing Date, with respect to (i) any violation or alleged
violation of Environmental Laws with respect to the ownership, lease,
maintenance or operation of any of the Purchased Assets, including any fines or
penalties that arise in connection with the ownership, lease, maintenance or
operation of the Purchased Assets, and the costs associated with correcting any
such violations; (ii) loss of life, injury to persons or property or damage to
natural resources caused (or allegedly caused) by any Environmental Condition
or the presence or Release of Hazardous Substances at, on, in, under, adjacent
to or migrating from the Purchased Assets, including any Environmental
Condition or Hazardous Substances contained in building materials at or
adjacent to the Purchased Assets or in the soil, surface water, sediments,
groundwater, landfill cells, or in other environmental media at or near the
Purchased Assets; (iii) any Remediation of any Environmental Condition or
Hazardous Substances that are present or have been Released at, on, in, under,
adjacent to or migrating from, the Purchased Assets or in the soil, surface
water, sediments, groundwater, landfill cells or in other environmental media
at or adjacent to the Purchased Assets; (iv) any bodily injury, loss of life,
property damage, or natural resource damage arising from the storage,
transportation, treatment, disposal, discharge, recycling or Release, at any
Off-Site Location, or arising from the arrangement for such activities, of
Hazardous Substances generated in connection with the ownership, lease,
maintenance or operation of the Purchased Assets; (v) any Remediation of any
Environmental Condition or Release of Hazardous Substances arising from the
storage, transportation, treatment, disposal, discharge, recycling or Release,
at any Off-Site Location, or arising from the arrangement for such activities,
of Hazardous Substances generated in connection with the ownership, lease,
maintenance or operation of the Purchased Assets; and (vi) any obligation to
repower, replace, decommission, deactivate, dismantle, demolish or close the
Purchased Assets or any  portion
thereof, or any surface impoundments or other waste or effluent handling or
storage units on owned or leased adjacent properties used in connection with
the operation of the Purchased Assets;

 

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

 

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

 

44

 

ARTICLE II

FURTHER ACTIONS

 

Buyer hereby
covenants and agrees, at its own expense, to execute and deliver, at the
request of Seller, from time to time after the Closing Date, such further
instruments of assumption and to take such other actions as Seller may
reasonably request to more effectively consummate the assumptions provided in
this Assumption Agreement.

 

ARTICLE III

TERMS OF ASSET
PURCHASE AGREEMENT

 

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

 

 

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

 

45

 

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

 

 

	
   

  	
  PSI
  ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:
  Douglas F. Esamann

  
	
   

  	
   

  	
  Title:  President

  

 

46

 

SCHEDULE 2.01(B):  TANGIBLE
PERSONAL PROPERTY

 

•                  Eight
General Electric Model PG712EA gas turbine generator units:

 

•                  Fuel
system, including eight gas heaters;

 

•                  Plant
high voltage power system & interconnection, including four three-winding
generator step-up transfomers;

 

•                  Water
supply and treatment systems, including 200,000 gallon demineralized water
storage tank;

 

•                  Fire
protection system, including CO2 suppression systems, 220,000 gallon raw water
tank, fire water loop, sprinkler system

 

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

 

•                  Black
start diesel generators, including two black start diesel generators capable of
producing 1.2 MW each and fuel oil storage tanks;

 

•                  Continuous
emissions monitoring;

 

•                  Plant
control systems;

 

•                  Communications
systems;

 

•                  Security
and access, including chain link security fence topped with barbed wire
enclosing plant site and electronically operated access gate;

 

•                  Storm
water drainage; and

 

•                  Maintenance/warehouse
facilities

 

47

 

SCHEDULE 2.01(D):  TRANSFERRED
CONTRACTS

 

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

 

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

 

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

 

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

 

Letter Agreement dated February 1, 2000 between Seller and TETCO re
Service Agreement

 

48

 

SCHEDULE 2.01(E):  TRANSFERRED
PERMITS

 

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

 

Title V operating permit (permit pending) issued by HCDEP

 

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

 

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

 

49

 

SCHEDULE 4.01(C)(II):  SELLER’S
REQUIRED GOVERNMENTAL AND THIRD PARTY CONSENTS

 

Section I: Seller’s Required Governmental Consents

 

Federal Energy Regulatory Commission under Section 203 of Federal Power
Act

 

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

 

Section II: Seller’s Required Third-Party Consents

 

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

 

CMT with respect to Fuel Management Agreement

 

50

 

SCHEDULE 4.01(G)(I):  REAL PROPERTY

 

1.               For a description
of all land owned, used or occupied by Seller, see Schedule I to this Asset
Purchase Agreement.

 

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

 

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

 

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

 

5.               Restrictive
covenant as to the use of the land for the operation of an electric generation
facility and ancillary uses directly related to such operation and for no other
purpose without the prior written consent of First National Bank of
Southwestern Ohio, Trustee, as contained in that certain Fiduciary Deed
dated June 21, 1999 and filed for record on June 21, 1999 as Instrument No.
9900049174 in Official Record 6376, Page 323 in the Office of the
Recorder of Butler County, Ohio.

 

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

 

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

 

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

 

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

 

51

 

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

 

52

 

SCHEDULE 4.01(K):  ENVIRONMENTAL
PERMITS

 

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

 

53

 

SCHEDULE 4.01(M):  SELLER
CONTRACTS

 

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

 

54

 

SCHEDULE 4.01(0):  PERMITS

 

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

 

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

 

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

 

55

 

SCHEDULE 4.02(C)(II):  BUYER’S
REQUIRED GOVERNMENTAL AND THIRD PARTY CONSENTS

 

Section I: Buyer’s Required
Governmental Consents

 

Federal Energy Regulatory Commission under Section 203 of Federal Power
Act

 

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

 

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

 

Section II: Buyer’s Required
Third-Party Consents

 

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

 

56

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