EXHIBIT 10-1 MEMBERSHIP INTERESTS PURCHASE AGREEMENT between CET TWO, LLC and TENASKA POWER FUND, L.P.

Exhibit 10.1

 

 

 

 

 

______________________________________________________________________________

MEMBERSHIP INTERESTS PURCHASE AGREEMENT

between

CET TWO, LLC

and

TENASKA POWER FUND, L.P.

Dated as of March 24, 2005

______________________________________________________________________________

 

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	TABLE OF CONTENTS
		Page
ARTICLE 1.	DEFINITIONS; RULES OF INTERPRETATION	1
1.1	Definitions	1
1.2	Rules of Interpretation	10
ARTICLE 2.	SALE AND PURCHASE	11
2.1	Sale and Purchase of the Purchased Interests	11
2.2	Closing	11
2.3	Working Capital Reconciliation	11
2.4	Buyer Security	12
ARTICLE 3.	REPRESENTATIONS AND WARRANTIES OF SELLER	12
3.1	Corporate Status, etc.	12
3.2	Capitalization	13
3.3	Conflicts; Consents	13
3.4	Project Assets	14
3.5	Brokers and Finders	14
3.6	Compliance with Law	14
3.7	Litigation	14
3.8	Bankruptcy	15
3.9	Public Utility	15
ARTICLE 4.	REPRESENTATIONS AND WARRANTIES REGARDING PROJECT COMPANIES	15
4.1	Corporate Status, etc	15
4.2	Company Permits	15
4.3	Capitalization	15
4.4	Taxes	16
4.5	ERISA	17
4.6	Operators	17
4.7	Conflicts; Consents	18
4.8	Compliance with Law	18
4.9	Litigation	19
4.10	Bankruptcy	19
4.11	Title to Property; Absence of Encumbrances	19
4.12	Contracts	20
4.13	Insurance	22
4.14	Environmental Matters	22
4.15	Bank Accounts	22
4.16	Financial Statements and Working Capital	22
4.17	Books and Records	23
4.18	Regulatory Status	23
4.19	Undisclosed Liabilities	24

 

 

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4.20	Disclaimer of Representations and Warranties		24
	TABLE OF CONTENTS
	(continued)
		Page
ARTICLE 5.	REPRESENTATIONS AND WARRANTIES OF BUYER	24
5.1	Corporate Status, etc.	25
5.2	Conflicts; Consents	25
5.3	Financing	26
5.4	Purchase for Investment	26
5.5	Material Permits	26
5.6	Brokers and Finders	26
5.7	Compliance with Law	26
5.8	Litigation	26
5.9	Bankruptcy	26
5.10	Knowledgeable Buyer	26
ARTICLE 6.	PRE-CLOSING MATTERS	27
6.1	Conduct of Business	27
6.2	Efforts to Consummate Sale	28
6.3	No Delay	29
6.4	Access and Information; Physical Inventory	29
6.5	Operators	30
6.6	Publicity	31
6.7	Transfer Taxes	31
6.8	Notification of Certain Matters	31
6.9	Replacement Security	31
6.10	Casualty and Condemnation	32
6.11	Environmental Insurance	33
6.12	Gas Costs	33
ARTICLE 7.	CONDITIONS TO THE SALE	33
7.1	Conditions to the Obligations of Both Parties	33
7.2	Conditions to the Obligations of Buyer	34
7.3	Conditions to the Obligation of Seller	36
ARTICLE 8.	POST-CLOSING MATTERS	36
8.1	Allocation	36
8.2	Tax Matters	37
8.3	Severance Payments	38
8.4	Excluded Items	38
8.5	Insurance Claims	38

 

 

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ARTICLE 9.	SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION	38
9.1	Survival of Representations, Warranties and Covenants	38
	TABLE OF CONTENTS
	(continued)
		Page
9.2	Indemnification by Seller	39
9.3	Indemnification by Buyer	40
9.4	Matters Involving Third Parties	40
9.5	Limitations on Indemnification	41
9.6	Expiry and Survival of Indemnities	42
ARTICLE 10.	TERMINATION	43
10.1	Termination	43
10.2	Effect of Termination	43
ARTICLE 11.	GENERAL PROVISIONS	44
11.1	Expenses	44
11.2	Further Actions	44
11.3	Notices	44
11.4	Binding Effect; Assignment	45
11.5	No Third-Party Beneficiaries	45
11.6	Amendment; Waivers, etc.	45
11.7	Entire Agreement	46
11.8	Exclusive Remedies; Enforcement	46
11.9	Severability	46
11.10	Headings	46
11.11	Counterparts	46
11.12	Governing Law	46
11.13	Disputes	46
11.14	Consent to Jurisdiction, etc.	46
11.15	Waiver of Punitive and Other Damages and Jury Trial	47
11.16	Confidentiality	47

 

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	TABLE OF CONTENTS
	(continued)
	SCHEDULES
		Page
SCHEDULE 1.1 EXCLUDED ITEMS		50
SCHEDULE 3.3 CONSENTS		51
SCHEDULE 4.2 PROJECT PERMITS		53
SCHEDULE 4.4 TAXES		55
SCHEDULE 4.9 LITIGATION		56
SCHEDULE 4.11(A) TITLE COMMITMENT AND REAL PROPERTY LIENS		57
SCHEDULE 4.11(B) OTHER LIENS		58
SCHEDULE 4.11(C) SURVEY REVISIONS		59
SCHEDULE 4.12 CONTRACTS		62
SCHEDULE 4.13(A) INSURANCE (CURRENTLY EFFECTIVE)		66
SCHEDULE 4.13(B) INSURANCE (PROPOSED RENEWALS AS OF APRIL 1, 2005)		67
SCHEDULE 4.14 ENVIRONMENTAL MATTERS		68
SCHEDULE 4.15 ACCOUNTS		71
SCHEDULE 4.16 WORKING CAPITAL		72
SCHEDULE 4.17 FIXED ASSETS		73
SCHEDULE 4.18 REGULATORY STATUS		80
SCHEDULE 4.19 UNDISCLOSED LIABILITIES		81
SCHEDULE 6.5 OPERATORS AND QUALIFIED OFFERS		82
SCHEDULE 6.9 REPLACEMENT SECURITY		84
SCHEDULE 6.11 ENVIRONMENTAL INSURANCE INDICATIONS		85

 

 

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	TABLE OF CONTENTS
	(continued)
	EXHIBITS
		Page
EXHIBIT A	Form of Assignment	93
EXHIBIT B	Form of Closing Notice	95
EXHIBIT C	Form of Seller Officer Certificate	96
EXHIBIT D	Form of Seller Secretary Certificate	97
EXHIBIT E	Form of Project Company Secretary Certificate	99
EXHIBIT F	Certificate of Non-Foreign Status	101
EXHIBIT G	Form of Buyer Officer Certificate	103
EXHIBIT H	Form of Buyer Secretary Certificate	104
EXHIBIT I	Form of Termination and Release Agreement	106
EXHIBIT J	Form of WEC Guaranty	112

 

 

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MEMBERSHIP INTERESTS PURCHASE AGREEMENT

This Membership Interests Purchase Agreement dated as of March 24, 2005 (" Agreement "), is between CET Two, LLC, a Delaware limited liability company (" Seller "), and Tenaska Power Fund, L.P., a Delaware limited partnership (" Buyer ").

W I T N E S S E T H:

WHEREAS, Seller owns all of the issued and outstanding membership interests in Calumet Energy Team, LLC, a Delaware limited liability company (" CET "), and in CET One, LLC, a Delaware limited liability company (" CET One "), which together own, directly or indirectly, all of the assets and business of an approximately 300 MW generating facility located in Chicago, Illinois, known as the Calumet Energy Center (the " Facility "); and

WHEREAS, subject to the terms and conditions set forth herein, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the issued and outstanding membership interests in CET and CET One.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties (as defined in Section 1.1 ), intending to be legally bound, hereby agree as follows:

ARTICLE 1.

DEFINITIONS; RULES OF INTERPRETATION

1.1 Definitions . As used in this Agreement, the following terms shall have the following meanings:

" Accounts " means the accounts identified in Schedule 4.15 .

" Affected Soils and Groundwater " means any soils or groundwater containing Hazardous Substances that were Released at or from the Site prior to Closing.

" Affiliate " means, with respect to any Person, (i) each entity that such Person Controls, (ii) each Person that Controls such Person, and (iii) each entity that is under common Control with such Person.

" Agreement " has the meaning set forth in the preamble to this Agreement.

" Ancillary Documents " means the Assignments and the Termination and Release Agreement.

" Assignments " means two assignments, each substantially in the form set forth on Exhibit A for each of CET and CET One, whereby Seller will transfer the Purchased Interests to Buyer.

 

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" Base Price " has the meaning set forth in Section 2.1(b) .

" Blades and Vanes Payments " means the monetary payments made or to be made by Seller or CET Three for , inter alia , blades and vanes pursuant to the Equipment Sales Agreement.

" Business Day " means any day other than a Saturday, Sunday or any day on which commercial banks in Chicago, Illinois are not authorized to open or are required to close.

" Buyer " has the meaning set forth in the preamble to this Agreement.

" Buyer Indemnified Party " means Buyer, each of its Affiliates, and each of their respective Representatives.

" Capacity Reservation Agreement " means that certain Capacity Reservation Agreement dated as of February 20, 2003,

between Midwest Generation, LLC and CET.

" CERCLA " means the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980.

" CET " has the meaning set forth in the recitals to this Agreement.

" CET One " has the meaning set forth in the recitals to this Agreement.

" CET Three " means CET Three, LLC, a Delaware limited liability company and wholly owned direct Subsidiary of CET One.

" City " means the City of Chicago.

" City Capacity Reservation Agreement " means that certain Capacity Reservation Agreement dated as of November 30, 1999, between CET and the City.

" Claim " means any claim, counterclaim, cross-claim, demand, cause of action, suit, notice of violation, or governmental order, in each case made against an Indemnified Party by a Person that is not an Indemnified Party in respect of such claim, counterclaim, cross-claim, demand, cause of action, suit, notice of violation, or governmental order, whether any of the foregoing be founded or unfounded, of any kind and nature whatsoever, including for remedial action; provided , that any claim, counterclaim, cross-claim, demand, cause of action, or suit by (i) a Representative of a Project Company, Seller, or a Seller Affiliate against a Buyer Indemnified Party arising out of the acts or omissions of a Project Company, Seller, or a Seller Affiliate prior to Closing shall be a Claim for the purposes hereof, and (ii) (A) an Affiliate of Buyer against Buyer or against another Affiliate of Buyer or (B) an Affiliate of Seller that is not a Project Company against Seller or against another Affiliate of Seller that is not a Project Company, shall not, in each case, be a Claim for purposes hereof.

" Closing " has the meaning set forth in Section 2.2 .

" Closing Date " has the meaning set forth in Section 2.2 .

 

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" Closing Gas Estimate " means the value calculated pursuant to Section 6.12(b) of all natural gas in storage owned by CET as of fifteen (15) calendar days prior to Closing.

" Closing Severance Payments " means an amount that is equal to six (6) months' base salary for each Operator (i) who was not given a Qualified Offer by Buyer or a Buyer Affiliate, and (ii) who did not accept an offer of employment by Buyer or a Buyer Affiliate.

" Code " means the Internal Revenue Code of 1986.

" Consent " means any consent, approval, authorization, notification, waiver, order, application, filing, license, registration or qualification of or with any Person required pursuant to the Sale.

" Contract " means any written contract, agreement, instrument, undertaking, lease, license, evidence of indebtedness, mortgage, indenture, purchase order, binding bid, letter of credit, security agreement or other legally binding arrangement.

" Control " means (and including, with correlative meaning, the verb form of such term), as applied to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by contract or otherwise.

" decatherm " means one million (1,000,000) British thermal units.

" Disclosures " means all written or electronic information or documentation (including any computer disk and CD ROMs) made available by Seller to Buyer as part of the sale process of the Project Companies, which contain information as to, inter alia , the Project Companies, the Facility, the Site, the Purchased Interests, the Excluded Items, the Project Assets, and the Former Real Property.

" Employee Benefit Plan " means an "employee benefit plan" within the meaning of Section 3(3) of ERISA.

" Environment " means soil, surface water, ground water, land surface, subsurface strata, ambient air, wildlife, plants and other natural resources.

" Environmental Claim " means a written Claim , including for personal injury or property damage, arising out of or related to Environmental Conditions or pursuant to Environmental Laws.

" Environmental Conditions " means Environmental Former Property Conditions and Environmental Site Conditions.

" Environmental Former Property Conditions " means, with respect to or affecting any Former Real Property, except to the extent caused or contributed to by any Buyer Indemnified Party after the Closing, (i) any Releases of Hazardous Substance s, (ii) the handling, storage, treatment, disposal, recycling, generation or transportation of any Hazardous Substance, (iii) any

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exposure of individuals to Hazardous Substances and (iv) all matters and conditions subject to or regulated under Environmental Laws.

" Environmental Insurance " means one or more insurance policies, or binders of coverage issued in anticipation of such insurance policies, reasonably satisfactory to Buyer, as to which Buyer and the Project Companies are named insureds (subject to Buyer's obligation in Section 6.11 to include Seller, Seller Parent, WEC, and their Affiliates as named insureds), and providing reasonably acceptable coverages in relation to Environmental Site Conditions ; provided , that one or more insurance policies, or binders of coverage, issued pursuant to the indication in Schedule 6.11 , shall be deemed to be acceptable insurance policies or binders of coverage.

" Environmental Laws " means all applicable federal, state, and local Laws , having the force and effect of law, relating to protection of the Environment and/or protection of the health and safety of individuals from exposures to Hazardous Substances in the Environment, other than the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq .) and any similar state laws, and any regulations promulgated thereunder.

" Environmental Site Conditions " means (i) Affected Soils or Groundwater, (ii) any Releases of Hazardous Substances arising out of the handling, storage, treatment, disposal, recycling, or generation of any Hazardous Substances transported from the Site prior to Closing by or on behalf of any Project Company, and (iii) any exposure prior to Closing of individuals to Hazardous Substances in the work place or of individuals or property to Hazardous Substances at the Site or otherwise migrating or emanating from the Site.

" Equipment Sales Agreement " means that certain Equipment Sales Agreement dated as of September 12, 2001 by and between Siemens Westinghouse Power Corporation and CET Three.

" Equivalent Support Obligation " has the meaning set forth in Section 6.9 .

" ERISA " means the Employee Retirement Income Security Act of 1974.

" Estimated Working Capital " means (i) the Working Capital calculated as of the last day of the most recent calendar month that ended at least fifteen (15) days prior to the Closing with respect to all items on Schedule 4.16 , other than the value of any natural gas in storage owned by CET plus (ii) the Closing Gas Estimate.

" EWG " means exempt wholesale generator, as that term is defined in Section 32 of PUHCA.

" Excluded Items " means the items listed in Schedule 1.1 .

" Facility " has the meaning set forth in the recitals to this Agreement, and is a natural gas fired peaking plant located on the Site and consisting of two Siemens V84.3A2 heavy frame gas turbine generator sets in simple cycle configuration.

" Final Working Capital " means the Working Capital as of the Closing Date.

 

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" FERC " means the Federal Energy Regulatory Commission.

" FERC Approvals " means the approvals of the FERC pursuant to Sections 203 and 205 of the FPA, for the change in control over the Facility's jurisdictional assets and the change in status that will be effected by the Sale.

" FPA " means the Federal Power Act.

" Former Real Property " means any and all real property assets that were owned or leased by any Project Company at any time prior to Closing and that are not owned or leased by such Project Company as of the Closing, including the real property located at or on (i) 103rd and Doty Avenue in Chicago, Illinois (as more fully described in that certain Agreement for the Lease, Sale and Redevelopment of Land dated November 30, 1999, between the City and CET) and (ii) the electrical substation site located at 11433 South Torrence Avenue in Chicago, Illinois (as more fully described in that certain Purchase and Sale Agreement dated January 15, 2002, between Seller Parent and Commonwealth Edison Company).

" GAAP " means generally accepted accounting principles in the United States applied on a consistent basis.

" Gas Interconnection Agreement " means that certain Interconnection Agreement dated September 26, 2001, between The Peoples Gas Light and Coke Company, an Illinois corporation, and CET.

" Governmental Authority " means any applicable foreign, federal, state, county, municipal or other government, quasi-government or regulatory authority, agency, board, body, commission, instrumentality, court or tribunal, or any political subdivision of any of the foregoing, or any arbitrator or panel of arbitrators.

" Hazardous Substance " means a substance that is regulated by any Governmental Authority or Law as radioactive, toxic, hazardous or otherwise as a danger to health or the environment, including PCBs, asbestos, petroleum, urea-formaldehyde and all substances that are designated as "hazardous substances" pursuant to CERCLA or defined as a "hazardous waste" pursuant to the federal Resource Conservation and Recovery Act of 1976.

" Indemnified Party " means either a Buyer Indemnified Party or a Seller Indemnified Party.

" Indemnifying Party " has the meaning set forth in Section 9.4(a) .

" Insurance Policies " has the meaning set forth in Section 4.13 .

" Intercompany Obligation " means any Contract between any Project Company and , without giving effect to the Closing, any Affiliate of a Project Company (other than another Project Company), including in respect of income taxes and any indebtedness between any Project Company and any Affiliate of a Project Company (other than another Project Company).

 

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" Interconnection Agreement " means that certain Interconnection Agreement dated as of March 2, 2001, between Commonwealth Edison Company and CET.

" Interim Financials " has the meaning set forth in Section 6.4(c) .

" Law " means any statute, law, regulation, ordinance, rule, judgment, order, decree, permit, concession, grant, franchise, license, agreement, directive, guideline, policy, requirement, or other restriction or any similar form of decision of or determination by, or any interpretation or administration of any of the foregoing, by any Governmental Authority having jurisdiction over the Site, the Former Real Property, the Project Companies, the Parties, the obligations of the Parties under this Agreement or the Facility, including deliveries of fuel thereto and transmission of electricity therefrom.

" Lien " means, with respect to any property, any mortgage, lien, pledge, charge, lease, easement, servitude, right of others, security interest or encumbrance of any kind in respect of such property; provided , that in respect of the Purchased Interests and Project Assets, no Permitted Lien shall be deemed a Lien.

" Loss " means any judgment, loss, liability, obligation, amount paid in settlement, damage, fine, penalty, deficiency, or expense (including costs of legally required remediation, interest, court costs, reasonable fees of attorneys, accountants and other experts or other reasonable expenses of litigation or other proceedings).

" Management Services Agreement " means that certain Management Services Agreement between CET and Seller Parent dated as of November 24, 1999.

" Material Adverse Effect " means a material adverse effect on (a) the business, operations, prospects, condition (financial or otherwise) or property of a Party, a Project Company or the Facility or (b) the ability of a Party to perform its obligations (including payment obligations) hereunder; provided , that, for avoidance of doubt, any effect resulting from any of the following shall not be considered when determining whether a Material Adverse Effect has occurred: (i) any change in economic conditions in general or in conditions generally affecting the natural gas, electric generation, power marketing or electric utility industries; (ii) any continuation of an adverse trend or condition generally affecting the natural gas, electric generation, power marketing or electric utility industries; (iii) any change after the date hereof in any Laws applicable to any Party or any Project Company; (iv) any change after the date hereof in the rules, procedures, requirements or guidelines applicable to the Facility for operation, interconnection, transmission, marketing, or sales in respect of capacity, energy, or ancillary services, including the Amended and Restated Operating Agreement of the PJM Interconnection, L.L.C. ("PJM"), the PJM Open Access Transmission Tariff, the governing agreements of the applicable regional reliability council, the Reliability Assurance Agreement, the Reliability Assurance Agreement-West, the West Transmission Owners Agreement, the East Transmission Owners Agreement, and the PJM Manuals (all such documents as amended from time to time and having the meanings given to them by PJM); and (v) any increases in the costs of commodities or supplies, including fuel; provided , however , that an effect resulting from any change after the date hereof in any Laws applicable to any Party or any Project Company may be

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considered when determining whether a Material Adverse Effect has occurred pursuant to Section 3.6 , 3.7 , 4.2 , 4.8 , or 4.9 .

" MW " means megawatt.

" Operator " means any Person listed in Schedule 6.5 , each of whom pursuant to the Management Services Agreement, manages the operations of the Facility as of the date hereof.

" Organic Documents " means: (i) with respect to any Person who is a corporation, its certificate of incorporation, its by-laws and all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized shares of capital stock; (ii) with respect to any Person who is a limited partnership, its certificate of limited partnership and partnership agreement; and (iii) with respect to any Person who is a limited liability company, its certificate of formation and its limited liability company agreement, in each case, as amended, supplemented, amended and restated, or otherwise modified and in effect from time to time.

" Party " means Seller or Buyer.

" Party Confidential Information " has the meaning set forth in Section 11.16(a) .

" Permit " means any waiver, franchise, variance, permit, authorization, license or order of or from any Governmental Authority having jurisdiction over Seller, the Site, the Project Companies, the obligations of the Parties under this Agreement, or the Facility, including deliveries of fuel thereto and transmission of electricity therefrom.

" Permitted Liens " means, in respect of the Project Assets and Purchased Interests:

1. Liens for Taxes, assessments or governmental charges not due and delinquent;
2. to the extent disclosed in Schedule 4.4 , Liens for Taxes, assessments or governmental charges already due, but whose validity or amount is being contested in good faith, by appropriate proceedings initiated timely and diligently prosecuted, and for which adequate reserves in accordance with GAAP are maintained against any adverse determination of such contest;
3. carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business or incident to the construction or improvement of such property in respect of obligations which are not overdue for a period of more than 30 days or which are being contested in good faith, by appropriate proceedings initiated timely and diligently prosecuted, and for which adequate reserves in accordance with GAAP are maintained against any adverse determination of such contest;
4. (i) easements, rights of way, reservations, restrictions, covenants, party-wall agreements, agreements for joint or common use, landlords' rights of distraint and other similar encumbrances affecting such property, granted in the ordinary course of business, and (ii) minor defects and irregularities in title to such property, which in each

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such case would not, individually or in the aggregate, materially detract from the value of such property or impair the use of such property for the purposes for which it is held;

5. all exceptions set forth in the Title Commitment;
6. court proceedings affecting such property; provided , that the execution or other enforcement thereof is effectively stayed and the Claims secured thereby are being contested in good faith, by appropriate proceedings initiated timely and diligently prosecuted, and for which adequate reserves in accordance with GAAP are maintained against any adverse determination of such contest or a bond in the full amount thereof has been posted;
7. any Liens created pursuant to or contemplated by this Agreement; and
8. any Lien by another Project Company on an asset or interest of a Project Company .

" Permitted Transferee " has the meaning set forth in Section 11.4 .

" Person " means any individual, corporation, partnership, limited liability company, association, joint-stock company, joint venture, trust, unincorporated organization or Governmental Authority.

" Post-closing Severance Payments " means an amount that is equal to six (6) months' base salary for each Operator whose employment with Buyer or a Buyer Affiliate is terminated without cause within one (1) year of commencement of such employment.

" Pre-Closing Tax Period " means any Tax period that ends on or before the Closing Date, or with respect to any Tax period that begins before and ends after the Closing Date, that portion of such Tax period that is allocable to the portion that begins before and ends on the Closing Date.

" Project Assets " means all of the real, personal and mixed properties and assets, whether tangible or intangible and wherever situated and whether owned or leased, of the Project Companies, including the goodwill related thereto, excluding the Excluded Items.

" Project Company " means any of CET, CET One and CET Three; provided , that Project Companies means all three of CET, CET One and CET Three.

" Project Confidential Information " has the meaning set forth in Section 11.16(a) .

" Project Permits " has the meaning set forth in Section 4.2(a) .

" PUHCA " means the Public Utility Holding Company Act of 1935.

" Purchase Price " has the meaning set forth in Section 2.1(b) .

 

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" Purchased Interests " means all of the issued and outstanding membership interests in CET and CET One.

" Qualified Offer " has the meaning set forth in Section 6.5(b) .

" Release " means any unpermitted releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing, or dumping into the Environment .

" Representatives " means, as to any Person, its agents, members, managers, officers, directors, employees, counsel, accountants, financial advisers and consultants.

" Sale " means the sale pursuant hereto of the Purchased Interests to Buyer from Seller.

" Sale Consents " means, in respect of a particular Person, the Consents identified as applicable to such Person in Schedule 3.3 .

" Securities Act " means the Securities Act of 1933.

" Seller " has the meaning set forth in the preamble to this Agreement.

" Seller Indemnified Party " means Seller, each of its Affiliates, and each of their respective Representatives.

" Seller Parent " means Wisvest Corporation, a Wisconsin corporation.

" Site " means the real property described in Schedule A of the Title Commitment, and generally located at 11653 South Torrence Avenue, Chicago, Illinois.

" Subsidiary " means, with respect to any Person, any other Person (other than any individual) Controlled by such Person.

" Survey " means the ALTA survey of the Site prepared by Advance Surveying & Mapping dated February 9, 2005, drawn February 28, 2005, Job No. 535003 , to be revised in accordance with the requirements set forth in Schedule 4.11(C) , and as may be reasonably requested by either Party.

" Taxes " means any and all fees, including documentation, recording, license and registration fees, taxes, including income (whether net, gross or adjusted gross), gross receipts, lease, sublease, sales, rental, use, turnover, value-added, property, transfer, franchise, license, withholding, payroll, employment, severance, occupation, premium, capital stock, profits, social security (or similar), unemployment, disability, registration, estimated, alternative, custom duties, excise, and stamp taxes, levies, imposts, duties, charges, assessments or charges of any nature, together with any penalties, fines or interest thereon or additions thereto, in the case of each of the foregoing that is imposed by any Governmental Authority.

" Tax Parcels " has the meaning set forth in Section 7.2(p) .

 

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" Tax Return " means any return, declaration, report, claim for refund, information return or other document (including any related or supporting estimates, elections, schedules, statements or information) filed or required to be filed in connection with the determination, assessment, or collection of any Tax or the administration of any Laws relating to any Tax.

" Termination and Release Agreement " means an agreement substantially in the form set forth on Exhibit I by and among Buyer, Seller, Seller Parent and the Project Companies.

" Title Commitment " means the title commitment to be issued by the Chicago Title Insurance Company substantially in the form of Schedule 4.11(A) , but specifically including the endorsements attached thereto and satisfying the requirements of Section 6.2(e) .

" Transportation Agreement " means that certain Transportation, Storage and Balancing Service Contract dated September 26, 2001, between The Peoples Gas Light and Coke Company, an Illinois corporation, and CET One.

" Unaudited Financials " has the meaning set forth in Section 4.16(a) .

" Unreleased Support Obligations " has the meaning set forth in Section 6.9 .

" WEC " means Wisconsin Energy Corporation, a Wisconsin corporation.

" Working Capital " means, as of a date certain, the aggregate current assets of the Project Companies less the aggregate current liabilities of the Project Companies determined in accordance with GAAP and in a form substantially similar to Schedule 4.16 .

1.2 Rules of Interpretation .

1. 1. The singular includes the plural and vice versa.
   2. 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 its terms and the terms of this Agreement.
   3. Reference to a Law means such Law as amended, modified, codified, replaced or reenacted, in whole or in part, including rules and regulations promulgated thereunder, and reference to any section or other provision of a Law means that provision of such Law and constituting the substantive amendment, modification, codification, replacement or re-enactment of such section or other provision.
   4. Unless otherwise stated, references to Articles, Sections, Schedules and Exhibits are to the articles, sections, schedules and exhibits to this Agreement. The Schedules and Exhibits hereto constitute a part of this Agreement and are incorporated herein for all purposes.
   5. "Hereunder", "hereof", "hereto" and words of similar import are references to this Agreement as a whole and not to any particular part of this Agreement.

 

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1. 6. The words "include," "includes," and "including" are not limiting.
   7. The symbol "$" refers to United States dollars only.
   8. Month means calendar month, and day means calendar day.
   9. For purposes of computation of periods of time, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding".
   10. All accounting terms used herein and not expressly defined herein have the meanings given to them under GAAP.

ARTICLE 2.

SALE AND PURCHASE

2.1 Sale and Purchase of the Purchased Interests.

1. 1. 1. Subject to the terms and conditions of this Agreement, at the Closing, Seller agrees to sell, convey, assign, transfer and deliver to Buyer, and Buyer agrees to purchase and accept from Seller, all of Seller's rights, title and interest in and to the Purchased Interests free and clear of any Liens. Subject to the terms and conditions of this Agreement, Buyer agrees to deliver to Seller, and Seller agrees to accept, the Purchase Price plus the Closing Severance Payments (if any) , in cash, without deduction or setoff of any kind other than the amount of the cash deposit previously paid by Buyer (if any) in accordance with Section 2.4 , including accrued simple interest earned thereon of six percent (6%), which delivery will be made by wire transfer in immediately available funds to the bank account or accounts identified in a notice delivered by Seller to Buyer prior to the Closing.
      2. " Purchase Price " means (i) the sum of (A) $ 35,000,000.00 for the Purchased Interests (the " Base Price "), plus (B) $775,619.00 for Blades and Vanes Payments paid by CET Three prior to the date hereof pursuant to the Equipment Sales Agreement, plus (ii) the Estimated Working Capital.

2.2 Closing . Subject to satisfaction or waiver of the conditions set forth in ARTICLE 7 , the closing of the Sale (the " Closing ") shall take place at the offices of Baker & McKenzie LLP, 130 East Randolph Drive, Chicago, Illinois, at 10:00 a.m., local time, five Business Days after the delivery by Buyer to Seller of a notice substantially similar to that set forth on Exhibit B (the " Closing Date "), or at such other place, time and date as the Parties may agree; provided , that if (i) the conditions set forth in Section 7.1 have been satisfied or waived by the respective Parties, (ii) Buyer does not timely provide such notice to Seller, and (iii) Seller is able to satisfy or cause to be satisfied each of the conditions set forth in Section 7.2 , Seller may provide such notice in substantially similar form to Buyer, and the Closing shall occur five Business Days thereafter.

 

2.3        Working Capital Reconciliation . After the Closing Date, the Purchase Price shall be adjusted as follows:

 

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1. 2. Within 30 days after the Closing, Seller shall provide to Buyer, and Buyer shall cooperate with Buyer in the preparation of the same, a statement of the Final Working Capital.
   3. Within 30 days after Seller's delivery to Buyer of the statement described in Section 2.3(a) , Buyer may either accept or reject such statement. If Buyer does not, by notice to Seller, accept or reject such statement, then Buyer shall be deemed to have accepted such statement as of the last day of such 30 day period. If Buyer rejects such statement, it must provide a written explanation of its reasons for such rejection to Seller and concurrently propose an alternate statement in writing; provided , that Buyer shall pay any undisputed amounts to Seller within five Business Days.
   4. If the statement described in Section 2.3(a) is rejected pursuant to Section 2.3(b) and the Parties cannot otherwise resolve their differences, either Party may, at any time 15 days after Buyer's delivery of its alternate statement pursuant to Section 2.3(b) , retain PricewaterhouseCoopers for the limited purpose of selecting either (i) Seller's statement delivered pursuant to Section 2.3(a) or (ii) Buyer's statement pursuant to Section 2.3(b) as the accepted statement, and each Party hereby covenants and agrees to cooperate with PricewaterhouseCoopers in its determination. PricewaterhouseCoopers shall render its determination within 30 days after being retained.
   5. If the statement described in Section 2.3(a) is accepted pursuant to Section 2.3(b) or when a statement is selected pursuant to Section 2.3(c) , then (i) Seller shall pay to Buyer within five Business Days the excess of the Estimated Working Capital over the Final Working Capital as set forth in such statement, or (ii) Buyer shall pay to Seller within five Business Days the excess of the Final Working Capital as set forth in such statement over the Estimated Working Capital.

2.4        Buyer_Security . To support its obligations under this Agreement, Buyer has made arrangements with Tenaska Energy, Inc. for such Affiliate to deliver to Seller upon execution of this Agreement security in the amount of One Million Fifty Thousand Dollars ($1,050,000) either (i) by an irrevocable letter of credit in form and substance and issued by a bank in each case reasonably acceptable to Seller, or (ii) by a cash deposit by wire transfer of immediately available funds to a bank account of Seller or an Affiliate designated by Seller. Seller's obligation to return the letter of credit or the cash deposit plus accrued interest to Buyer pursuant to Section 10.2(c) shall be subject to delivery by Seller to Buyer of a separate guarantee provided to Buyer by Seller Parent on the date hereof.

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as otherwise set forth in the Schedules , Seller represents and warrants to Buyer as follows:

3.1 Corporate Status, etc.

 

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1. 5. 1. 1. Organization . It is a limited liability company duly formed, validly existing and in good standing under the Laws of Delaware, and it has full limited liability company power and authority to own, lease and operate its assets and to carry on its business as presently conducted.
         2. Authority . It has all necessary limited liability company power to enter into and deliver this Agreement and the Ancillary Documents and to perform its obligations hereunder and thereunder. The execution, delivery and performance by it of this Agreement and each Ancillary Document, and the consummation by it of the Sale and all other transactions contemplated hereby and thereby, have been duly authorized by all necessary limited liability company action on its part, and no other limited liability company proceedings on its part are necessary to authorize this Agreement or any of the Ancillary Documents or to consummate the Sale or any other transaction contemplated hereby or thereby.
         3. Validity . This Agreement has been, and each Ancillary Document will be, duly and validly executed and delivered by it, and this Agreement constitutes, and each Ancillary Document will constitute when duly executed and delivered by it, the legally valid and binding obligation of Seller, enforceable against it in accordance with its respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or hereinafter in effect relating to creditors' rights generally, and general equitable principles (whether considered in a proceeding in equity or at law).

3.2 Capitalization .

1. 5. 1. 4. Valid Title and Issuance . It owns all of the issued and outstanding membership interests of each of CET and CET One, free and clear of Liens, and all such membership interests (i) have been duly authorized and validly issued, (ii) are fully paid and nonassessable, and (iii) were issued in compliance with applicable securities Laws. It is the sole beneficial and record owner of all such interests, and neither of CET or CET One has ownership interests issued, outstanding or authorized other than those owned by Seller, Seller is not obligated to any Person, and no Person has the right to require Seller, to create any such interests.
         5. Agreements with Respect to the Purchased Interests . Except as contemplated by this Agreement, there is no (i) voting trust or agreement, membership agreement, pledge agreement, buy-sell agreement, right of first refusal, preemptive right, stock appreciation right, redemption or repurchase right, antidilutive right or proxy relating to the Purchased Interests, (ii) Contract restricting the transfer of, or requiring the registration for sale of, the Purchased Interests (except as to which the conditions to any transfer of the Purchased Interests will be satisfied on or prior to the Closing Date), or (iii) option, warrant, call, right or other Contract to issue, deliver, grant, convert, exchange, sell, subscribe for, purchase, redeem or acquire any equity securities of CET or CET One.
         6. Subsidiaries . Its only Subsidiaries are the Project Companies.

3.3 Conflicts; Consents .

1. 5. 1. 7. Conflicts . Subject to receipt of its Sale Consents and except to the extent that it would not reasonably be expected to cause a Material Adverse Effect, neither the

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execution and delivery by it of this Agreement or any Ancillary Document, nor the consummation of the Sale will:

1. 5. 1. 7. 1. conflict with or result in any violation of or default under (or constitute an event that, with notice or lapse of time or both, would constitute a default under), or give rise to a right of termination, cancellation, modification or acceleration of any obligation, to any put or call or similar rights, or to loss of a benefit under, any provision of its Organic Documents;
            2. result in the creation of any Lien upon the Purchased Interests or the Project Assets;
            3. violate any Law;
            4. violate, conflict with, or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Contract; or
            5. violate, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Authority any right that it would not otherwise have to revoke, withdraw, suspend, cancel, terminate, or modify, any Permit.
         8. Consents . Except to the extent that it would not reasonably be expected to cause a Material Adverse Effect, no Consent is required to be obtained by it prior to the consummation of the Sale in connection with its execution and delivery of this Agreement or the consummation by it of the Sale, except for the Sale Consents applicable to it.

3.4 Project_Assets . The Project Assets constitute all of Seller's material interests (whether direct or through any Project Company) in the Facility and the business of the Facility.

3.5 Brokers_and_Finders. Neither it nor any of its Affiliates has engaged any broker, finder or agent in connection with the Sale so as to give rise to any claim against Buyer, any of its Affiliates or a Project Company for any brokerage or finder's commission, fee or similar compensation.

3.6 Compliance_with_Law. Except to the extent that it would not reasonably be expected to cause a Material Adverse Effect, it is not in violation of or in default under any Law.

3.7 Litigation. There is no claim, counterclaim, cross-claim, demand, cause of action, suit, notice of violation, or governmental order of any nature pending or to its knowledge threatened against it, its assets or any of its officers, managers or member, which, if adversely determined, would reasonably be expected to have a Material Adverse Effect on it or on a Project Company.

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3.8 Bankruptcy. There are no bankruptcy, reorganization, or arrangement proceedings pending against, being contemplated by, or, to its knowledge, threatened against, it.

3.9 Public Utility. Neither it nor any of its "subsidiary companies" as that term is defined in PUHCA, is subject to, or is not exempt from, regulation as a "holding company," a "subsidiary company" of a holding company or a "public-utility company," as those terms are defined in PUHCA. It is not subject to regulation as a public utility or public service company (or similar designation) by the United States or any state of the United States.

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES REGARDING PROJECT COMPANIES

Except as otherwise set forth in the Schedules , Seller represents and warrants to Buyer, in respect of each Project Company, as follows:

4.1 Corporate_Status . Each Project Company is a limited liability company duly formed, validly existing and in good standing under the Laws of Delaware, and has all necessary limited liability company power and authority to own, lease and operate its assets and properties and to carry on its business as presently conducted. Each of the Project Companies is duly qualified, licensed or admitted to transact business, and is in good standing, in Illinois.

4.2 Company_Permits. Except to the extent that it would not reasonably be expected to cause a Material Adverse Effect:

1. 5. 2. Schedule 4.2 lists each Permit issued to the Project Companies, which is required for the operation of the Facility as presently being operated or for Seller's ownership of the Project Companies (collectively, the " Project Permits "), and the Project Permits were duly and validly obtained and issued and are in full force and effect.
      3. The Project Companies are in compliance with all Project Permits, and no Project Company has received any notification from any Governmental Authority that (i) it is in violation of any Project Permit or (ii) except in the case of a Project Permit expiring solely due to the passage of time, threatens to terminate, cancel, revoke or modify any Project Permit.

4.3 Capitalization.

1. 5. 3. 1. Valid Title and Issuance . CET One owns all of the issued and outstanding membership interests of CET Three, free and clear of Liens, and all such membership interests (i) have been duly authorized and validly issued, (ii) are fully paid and nonassessable, and (iii) were issued in compliance with applicable securities Laws. CET One is the sole beneficial and record owner of all such interests; CET Three has no ownership interests issued, outstanding or authorized other than those owned by CET One; and CET Three is not obligated to any Person, nor does any Person have the right to require CET Three, to create any such interests.
         2. Agreements with Respect to CET Three Interests . There is no (i) voting trust or agreement, membership agreement, pledge agreement, buy-sell agreement, right of first

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refusal, preemptive right, stock appreciation right, redemption or repurchase right, antidilutive right or proxy relating to the membership interests of CET Three, or (ii) option, warrant, call, right or other Contract to issue, deliver, grant, convert, exchange, sell, subscribe for, purchase, redeem or acquire any equity securities of CET Three.

1. 5. 3. 3. Subsidiaries . Other than CET One's ownership of all of the issued and outstanding membership interests of CET Three, no Project Company has any Subsidiaries nor any other equity or other ownership interest in any Person, directly or indirectly.

4.4        Taxes

1. 5. 3. 4. Except as set forth in Schedule 4.4 , each Project Company has:
         5. 1. filed all Tax Returns that are required to be filed by it;
            2. paid in full all Taxes that are due and owing by the Project Companies , whether or not shown to be due on any Tax Return, except for amounts whose validity or amount is being contested in good faith, by appropriate proceedings initiated timely and diligently prosecuted, and for which adequate reserves in accordance with GAAP are maintained against any adverse determination of such contest, and which amounts and proceedings are set forth in Schedule 4.4 ;
            3. satisfied in full in all respects all withholding Tax requirements imposed on it , and Seller Parent has satisfied in full in all respects all withholding requirements imposed on it, with respect to Operators and to employees, customers, or independent contractors of the Project Companies, including withholding and paying to the appropriate Governmental Authority all Taxes required to have been withheld and paid in connection with amounts paid or owing to Operators, employees, customers, independent contractors, creditors, holders of interests or other third parties, including income, social security and employment tax withholding for all types of compensation, backup withholding and withholding on payments to non-U.S. persons, except for amounts that are being diligently contested in good faith and which amounts and proceedings are set forth in Schedule 4.4 ;
            4. no waiver in force of any statute of limitations in respect of Taxes relating to the operation or ownership of the Assets or any extension of time with respect to a Tax assessment or deficiency relating to the ownership or operation of the Project Assets;
            5. no pending or active audits or, to Seller's knowledge, threatened audits or proposed deficiencies or other claims for unpaid Taxes with respect to the operation or ownership of the Project Assets; and

 

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1. 5. 3. 4. 6. not elected under Treasury Regulation Section 301.7701-3 to be classified as a corporation for federal income tax purposes and since its formation has been classified as a disregarded entity for such purposes.
         5. Except as set forth in Schedule 4.4 , no claim has been made by a Governmental Authority in a jurisdiction where a Project Company does not file Tax Returns that such Project Company is or may be subject to taxation by that jurisdiction, and no power of attorney has been executed with respect to Taxes of the Project Companies which is currently in force.
         6. There are no Liens for Taxes on the Project Assets other than (i) Liens for Taxes, assessments or governmental charges not due and payable and (ii) Liens for Taxes, assessments or governmental charges already due, but whose validity or amount is being contested in good faith, by appropriate proceedings initiated timely and diligently prosecuted, and for which adequate reserves in accordance with GAAP are maintained against any adverse determination of such contest, and which amounts and proceedings are set forth in Schedule 4.4 .
         7. Except as set forth in Schedule 4.4 , no Project Company:
         8. 1. has made an election, or is required, to treat any of its assets as owned by another Person pursuant to the provisions of former Section 168(f) of the Code or as tax-exempt bond financed property or tax-exempt use property within the meaning of Section 168 of the Code;
            2. has acquired or owns any assets that directly or indirectly secure any debt the interest on which is tax exempt under Section 103(a) of the Code or are subject to a "467 rental agreement" within the meaning of Section 467 of the Code, or
            3. has made any of the elections described in this Section 4.4(d) or is required to apply any of the rules described in this Section 4.4(d) under any comparable state or local Tax Laws.
         9. Except as set forth in Schedule 4.4 , no Project Company is a party to, or is bound by, or has any obligation under any Tax allocation or sharing agreement (including indemnity arrangements).

4.5        ERISA. No Project Company (i) has or has had employees, or (ii) currently maintains, sponsors, participates in, or contributes to, or is required to contribute to, nor has ever, maintained, sponsored, participated in, or contributed to, or been required to contribute to, any Employee Benefit Plan for the benefit of any employee or manager of a Project Company. No Project Company has incurred any liability under ERISA or the Code with respect to any Employee Benefit Plan, which would reasonably be expected to become a liability of Buyer.

4.6        Operators. Each Operator is currently an employee of Seller Parent whose sole employment obligations consist of operating the Facility pursuant to the Management Services

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Agreement. With respect to each Operator and each other employee or former employee of Seller or Affiliate of Seller who has performed services for the Project Companies or the Facility, Seller Parent, Seller and each Affiliate of Seller has been and is in material compliance with all applicable Laws concerning labor, employment, fair employment practices, terms and conditions of employment, workers' compensation, occupational safety, plant closings, and wages and hours, and no Project Company has any liability for breach of any of the foregoing. No Project Company has any liability to the Operators or to any other employees of Seller or any Affiliates of Seller as a co-employer.

4.7        Conflicts; Consents.

1. 5. 4. Conflicts . Subject to receipt of the Sale Consents applicable to the Project Companies, neither the execution and delivery by Seller of this Agreement or any Ancillary Document, nor the consummation of the Sale will:

                                                                                 i.             conflict with or result in any violation of or default under (or constitute an event that, with notice or lapse of time or both, would constitute a default under), or give rise to a right of termination, cancellation, modification or acceleration of any obligation, to any put or call or similar rights, or to loss of a benefit under, any provision of (A) the Organic Documents of the Project Companies, or (B) except to the extent that it would not reasonably be expected to cause a Material Adverse Effect, any Contract by which any asset of any Project Company is bound; or

                                                                               ii.             except to the extent that it would not reasonably be expected to cause a Material Adverse Effect, result in the creation of any Lien upon any material asset of any Project Company.

1. 5. 5. Consents . No Consent is required to be obtained by a Project Company prior to the consummation of the Sale in connection with the execution and delivery of this Agreement or any Ancillary Document by Seller or the consummation by Seller of the Sale, except (i) for the Sale Consents applicable to it, (ii) as may be required due to the regulatory status of Buyer, or (iii) unless the failure to obtain such Consent would not reasonably be expected to have a Material Adverse Effect on a Project Company or Seller.

4.8        Compliance_with_Law. Except to the extent that it would not reasonably be expected to cause a Material Adverse Effect, ( i) neither any Project Company nor the Facility has ( A) been in violation of or in default under any Law (including any Environmental Law) or ( B) received any notice or other communication (whether written or, to Seller's knowledge, oral) from any Governmental Authority or other Person regarding any actual, alleged, possible, or potential Environmental Claim or violation of, or failure to comply with, any Law, and ( ii) no event has occurred or circumstance exists that (with or without notice or lapse of time) may constitute or result in a violation by any Project Company of, or a failure on the part of any Project Company to comply with, any Law (including any Environmental Law).

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4.9 Litigation . Schedule 4.9 sets forth all pending or, to Seller's knowledge, threatened, claims, counterclaims, cross-claims, demands, causes of action, suits or Governmental Authority investigations of any nature, including Environmental Claims, in each case, by or against any Project Company, the Facility or any Project Asset, none of which (if any), individually or in the aggregate, if adversely determined, would reasonably be expected to have a Material Adverse Effect.

4.10      Bankruptcy. There are no bankruptcy, reorganization, or arrangement proceedings pending against, being contemplated by, or, to the knowledge of Seller, threatened against, any Project Company.

4.11 Title to Property; Absence of Encumbrances.

1. 5. 6. CET owns good and marketable title to the Site, free and clear of any Liens not disclosed in Schedule B of the Title Commitment or otherwise in Schedule 4.11(A) . No Project Company owns, leases, licenses or otherwise has any interests in any other real property other than the Former Real Property.
      7. Each Project Company has good and marketable title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its respective Project Assets, free and clear of any Liens, except for those Liens set forth in Schedule 4.11(B) .
      8. Except for Project Assets used or held for use in connection with the Transportation Agreement, the Interconnection Agreement, the Equipment Sale Agreement, and the Gas Interconnection Agreement, and any contractual and other intangible rights owned by the Project Companies, all of the Project Assets, including all of the Project Assets set forth in Schedule 4.17 , will be located at the Site as of the Closing.
      9. Neither Seller nor any Project Company has received written notice of any, or otherwise has knowledge of any, existing or threatened: (i) special tax or special assessment to be levied against the Facility or the Site or (ii) change in the zoning classification of the Facility or the Site (or any portion thereof) from that in effect on the date of this Agreement, in each case which would reasonably be expected to cause a Material Adverse Effect.
      10. Except to the extent that it would not reasonably be expected to cause a Material Adverse Effect, Seller has not received any written:

                                                                                  .             Claim or allegation from any Governmental Authority having jurisdiction over the Site or Facility or from any Person who provides utility service to the Site or Facility that Seller does not have sufficient easements and rights-of-way required for the operation of the Facility in the ordinary course or to provide vehicular and pedestrian ingress and egress to and from the Site and Facility;

 

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                                                                                 i.             Notice from any Governmental Authority having jurisdiction over the Site or Facility that any applicable Law has or will change the permitted use of all or any portion the Site; and

                                                                               ii.             Claim or allegation from any adjacent landowners that there exists unrecorded easements burdening all or any portion of the Site, or that the Site encroaches upon the real property of such adjacent landowners.

4.12      Contracts.

1. 5. 11. Except as set forth in Schedule 4.12 , or unless such Contract is with another Project Company, no Project Company is a party to, bound by or subject to (and none of the Project Assets is subject to) any Contract:

                                                                                  .             with any officer, employee, manager or member of such Project Company or of Seller;

                                                                                 i.             that is a fidelity or surety bond or completion bond;

                                                                               ii.             that is a lease, rental or occupancy agreement, license, installment and conditional sale agreement, or other Contract affecting the ownership of, leasing of, title to, use of, or any leasehold or other interest in, any real or personal property having a value individually in excess of $100,000 per annum or which is not cancelable by such Project Company without penalty or will not be cancelled as of the Closing Date;

                                                                              iii.             that is a warranty or an agreement of indemnification;

                                                                             iv.             that is a payment guaranty, guarantee of performance, or letter of credit;

                                                                               v.             that relates to capital expenditures involving future payments in excess of $500,000;

                                                                             vi.             that relates to the disposition of material assets, other than in the ordinary course of such Project Company's business;

                                                                            vii.             that is a promissory note, mortgage, indenture, loan or credit agreement, security agreement, letter of credit, or otherwise relates to the borrowing of money or extension of credit, including any agree