Exhibit 10.1

EXECUTION VERSION

ONCOR ELECTRIC DELIVERY HOLDINGS COMPANY LLC

ONCOR ELECTRIC DELIVERY COMPANY LLC

1616 Woodall Rogers Freeway

Dallas, Texas 75202

July 7, 2017

Berkshire Hathaway Energy Company

O.E. Merger Sub Inc.

O.E. Merger Sub II, LLC

O.E. Merger Sub III, LLC

c/o Berkshire Hathaway Energy Company

666 Grand Avenue

Des Moines, IA 50306

Attention: Pat Goodman

 

Re: Oncor Letter Agreement

Ladies and Gentlemen:

Reference is made to that certain Agreement and Plan of Merger dated July 7,
2017 (the “Merger Agreement”), by and among (i) Energy Future Holdings Corp., a
Texas corporation (the “Company”), (ii) Energy Future Intermediate Holding
Company LLC, a Delaware limited liability company (“EFIH”), (iii) Berkshire
Hathaway Energy Company (“Parent”), (iv) O.E. Merger Sub Inc., a Delaware
corporation (“EFH Merger Sub”), (v) O.E. Merger Sub II, LLC, a Delaware limited
liability company (“EFIH Merger Sub”) and (vi) O.E. Merger Sub III, LLC a
Delaware limited liability company (“Oncor Holdings Merger Sub” and, together
with EFH Merger Sub and EFIH Merger Sub, the “Merger Subs” and the Merger Subs
together with Parent, “Purchasers”), which agreement has been approved by the
board of directors of the Company, the board of managers of EFIH, the board of
directors of Parent and the managers of the Merger Subs and will be submitted
for approval by the United States Bankruptcy Court for the District of Delaware
(the “Bankruptcy Court”). In addition, reference is made to the amended Plan of
Reorganization (the “Plan of Reorganization”) attached to the Merger Agreement
and filed or to be filed with the Bankruptcy Court on or about the date hereof
by Purchasers, the Company, EFIH and other Debtors (as defined below) in
connection with the Chapter 11 Cases (as defined below), which, among other
things, provided for the transactions contemplated by the Merger Agreement. Upon
the terms and conditions of the Merger Agreement, among other things, Purchasers
plan to acquire, pursuant to certain transactions described therein (the
“Purchase”), direct or indirect equity interests in the Company and EFIH that
indirectly represent all of the outstanding equity interests in Oncor Electric
Delivery Holdings Company LLC (“Oncor Holdings”) and at least 80.03% of the
outstanding equity interests in Oncor Electric Delivery Company LLC (“Oncor”
and, together

 

--------------------------------------------------------------------------------

with Oncor Holdings (and following the Purchase Closing Date, Oncor Holdings
Surviving Company) and their respective Subsidiaries, the “Oncor Entities”). A
full and complete copy of the Merger Agreement (including the Plan of
Reorganization, which is attached as an exhibit thereto) has been provided to
Oncor Holdings and Oncor.

WHEREAS, the Oncor Entities are “ring-fenced” from the Company and EFIH and
their respective Affiliates (as defined below), as a result of which, among
other things, (i) the boards of directors of Oncor Holdings and Oncor are
comprised of a majority of independent directors and (ii) certain arrangements
are in place to maintain the separateness of the business and operations of the
Company and EFIH from the business and operations of the Oncor Entities (such
limitations collectively, the “Ring-Fence”);

WHEREAS, in furtherance of the Purchase and in light of the Ring-Fence, the
Order on Rehearing entered in PUCT Docket No. 34077, the limited liability
company agreements (as amended) of Oncor Holdings and Oncor (the “LLC
Agreements”), the 2007 Separation Agreement (as defined below) and the Investor
Rights Agreement (as defined below), the Company and EFIH have requested that
Oncor Holdings and Oncor enter into this letter agreement (“Letter Agreement”)
and have provided their prior written consent before execution of this Letter
Agreement, as the sole shareholder of Oncor Holdings (in the case of EFIH) and
as the direct or indirect 80.03% equity interest holders of Oncor to Oncor
Holdings and Oncor with respect to their entry into and performance of this
Letter Agreement;

WHEREAS, this Letter Agreement sets forth certain rights and obligations of the
Oncor Entities and Purchasers to cooperate in the manner set forth herein with
respect to initial steps to be taken in connection with the Mergers (as defined
below) (the “Purchase Transaction”);

WHEREAS, this Letter Agreement is not intended to give any Purchaser, directly
or indirectly, the right to control or direct the operations of any Oncor Entity
prior to the receipt of all approvals required by the Bankruptcy Court, the PUCT
(as defined below) and other Governmental Entities (as defined below) and the
consummation of the Purchase Transaction (if and when such transactions are
consummated);

WHEREAS, Oncor Holdings and Oncor (i) have not endorsed or approved any
transactions proposed by the Purchasers, (ii) have not endorsed or approved any
of Purchasers’ plans that assume that Texas Transmission Investment LLC will not
continue to hold Oncor equity interests nor that same assumption reflected in
the Key Regulatory Terms attached as Exhibit B hereto, (iii) are not parties to
or bound by the Merger Agreement and (iv) have not approved and are not required
to approve the Merger Agreement; provided, however, that Oncor Holdings will
engage in the Oncor Holdings Merger on the terms provided in the Merger
Agreement, subject to (x) obtaining approval of the Bankruptcy Court as to the
Merger Agreement and confirmation of a Plan of Reorganization, and PUCT
Approval, (y) receipt of a Merger Agreement that is not inconsistent with this
Letter Agreement, and (z) Oncor Holdings Surviving Company being renamed Oncor
Electric Delivery Holdings Company LLC and operated and governed in the same
manner as Oncor Holdings subject to the PUCT Approval;

 

Page 2

--------------------------------------------------------------------------------

WHEREAS, except as otherwise approved by the PUCT, following the date hereof,
Oncor Holdings shall continue to operate and be governed in substantially the
same manner;

WHEREAS, Oncor and Purchasers will cooperate to prepare and support any filings
and appearances made before the PUCT, as appropriate, in support of Purchasers’
proposal to acquire Oncor and Oncor Holdings and Purchasers, Oncor and Oncor
Holdings agree to use reasonable best efforts to make a single filing by the
parties seeking prior approval by the PUCT of the Purchase Transaction;

WHEREAS, Oncor Holdings and Oncor have agreed to operate in the ordinary course
of business and materially consistent with the 2017-2018 Plan upon signing of
this Letter Agreement, and they have preserved the right to take reasonable
actions consistent with prudent industry practices to respond to emergency
situations and/or to comply and respond to any requirement, or reasonable
request, in a Governmental Request or Order (as defined below); and

WHEREAS, in exchange for the agreements of Oncor Holdings and Oncor in this
Letter Agreement, Purchasers have agreed to certain commitments set forth herein
with respect to the implications of the Purchase Transaction for Oncor Holdings,
Oncor and their employees;

NOW, THEREFORE, in consideration of the premises, representations, warranties,
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:

Section 1. Definitions.

(a) Capitalized terms used in this Letter Agreement but not defined herein have
the respective meanings ascribed to them in Exhibit A. All capitalized terms
used but not defined herein or in Exhibit A shall have the meanings ascribed to
them in the Merger Agreement. In the event that a term defined herein or in
Exhibit A is defined and ascribed a different meaning in the Merger Agreement,
the definition provided herein or in Exhibit A, as applicable, shall control.

 

Page 3

--------------------------------------------------------------------------------

(b) Each term below has the meaning ascribed to such term in the Section set
forth opposite such term:

 

Defined Term

   Section   2007 Separation Agreement      Exhibit A   2017-2018 Plan     
§3(a)   Affiliate      Exhibit A   Alternative Proposal      §4(e)(1)  
Applications      §5(a)(iv)   Bankruptcy and Equity Exception      Exhibit A  
Bankruptcy Court      Preamble   Benefit Plan      Exhibit A   Business Day     
Exhibit A   CBA      §8(d)   Chapter 11 Cases      Exhibit A   Company     
Preamble   Confidentiality Agreement      Exhibit A   Continuation Period     
§8(a)   Contract      Exhibit A   control      Exhibit A   Costs      Exhibit A
  Debtors      Exhibit A   Effective Time      §8(a)   EFH Merger      Exhibit A
  EFH Merger Sub      Preamble   EFH Surviving Companies      Exhibit A   EFIH
     Preamble   EFIH Merger      Exhibit A   EFIH Merger Sub      Preamble  
Environment      Exhibit A   ERISA      Exhibit A   FCC Approval      Exhibit A
  FCC/FERC Applications      §5(a)(iv)   FERC      Exhibit A   FERC Approval   
  Exhibit A   Financing      §12(a)   Governmental Entity      Exhibit A  
Governmental Request or Order      Exhibit A   Indemnified Parties      Exhibit
A   Interim Period      §3(a)   Investor Rights Agreement      Exhibit A   IRS
     Exhibit A   Key Regulatory Terms      §5(a)(v)   Knowledge      Exhibit A  

 

Page 4

--------------------------------------------------------------------------------

Defined Term

   Section   Law      Exhibit A   Letter Agreement      Recitals   License     
Exhibit A   Lien      Exhibit A   LLC Agreements      Recitals   Merger
Agreement      Preamble   Merger Subs      Preamble   Mergers      Exhibit A  
Minority Member Directors      §4(a)   Oncor      Preamble   Oncor Entities     
Preamble   Oncor Employee      §8(a)   Oncor Holdings      Preamble   Oncor
Holdings Merger      Exhibit A   Oncor Holdings Merger Sub      Preamble   Oncor
Holdings Surviving Company      Exhibit A   Oncor Material Contract      Exhibit
A   Parent      Preamble   Permitted Alternative Proposal      §4(e)(ii)  
Person      Exhibit A   Plan of Reorganization      Preamble   PUCT      Exhibit
A   PUCT Approval      Exhibit A   PUCT Filing      §5(a)(iii)   Purchase     
Preamble   Purchase Closing Date      §3(a)   Purchase Transaction      Recitals
  Purchasers      Preamble   Registration Statement      Exhibit A   Reorganized
TCEH      Exhibit A   Representatives      §4(a)   Ring-Fence      Recitals  
SEC      Exhibit A   Securities Act      Exhibit A   Split Participant Agreement
     §9   Subsidiary      Exhibit A   Termination Date      Exhibit A  

 

Page 5

--------------------------------------------------------------------------------

Section 2. Representations and Warranties of Oncor Holdings and Oncor. As of the
date hereof Oncor Holdings and Oncor hereby represent and warrant to Purchasers
as follows:

(a) Organization, Good Standing and Qualification. Each of Oncor Holdings and
Oncor is a limited liability company duly formed, validly existing and in good
standing under the Delaware Limited Liability Company Act and has all requisite
limited liability company power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing as a foreign limited liability
company in each jurisdiction where the ownership, leasing or operation of its
assets or properties or conduct of its business requires such qualification,
except where the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to prevent, materially
impair or materially delay the ability of Oncor Holdings or Oncor to perform the
actions contemplated by, and to fulfill its obligations under, this Letter
Agreement.

(b) Corporate Authority. Oncor Holdings and Oncor have each approved by all
necessary limited liability company action the execution and delivery of this
Letter Agreement and the actions contemplated hereby to be taken by the Oncor
Entities. Each of Oncor Holdings and Oncor has all requisite limited liability
company power and authority and has taken all limited liability company action
necessary in order to execute, deliver and perform its obligations under this
Letter Agreement. This Letter Agreement has been duly executed and delivered by
each of Oncor Holdings and Oncor and is a valid and binding obligation of Oncor
Holdings and Oncor. This Letter Agreement is enforceable against each of Oncor
Holdings and Oncor in accordance with its terms, subject, as to the enforcement
of remedies, to the Bankruptcy and Equity Exception.

(c) No Conflicts. As of the date hereof, the execution, delivery and performance
by Oncor Holdings and Oncor of this Letter Agreement does not and will not
constitute or result in (i) a breach or violation of, or a default under, or
otherwise contravene or conflict with, the certificate of formation of Oncor or
Oncor Holdings, the LLC Agreements or the comparable governing documents of any
other Oncor Entity (ii) with or without notice, lapse of time or both, a breach
or violation of, or a default under, or the creation of a Lien on any of the
assets of Oncor Holdings or Oncor or any of their Subsidiaries pursuant to, any
Contract binding upon Oncor Holdings or Oncor or any of their Subsidiaries, or
their respective assets, or any License held by Oncor Holdings or Oncor or any
of its Subsidiaries or to which Oncor Holdings or Oncor or any of their
Subsidiaries, or any of their respective assets, is subject or (iii) a violation
of any Law to which Oncor Holdings or Oncor or any of their Subsidiaries, or

 

Page 6

--------------------------------------------------------------------------------

any of their respective assets is subject, except, in the case of clause (ii) or
(iii) above, for any such breach, violation, termination, cancellation, default,
creation, acceleration, consent, loss or change as would not, individually or in
the aggregate, reasonably be expected to prevent, materially impair or
materially delay the ability of Oncor Holdings or Oncor to fulfill its
obligations under this Letter Agreement.

Section 3. Interim Operation.

(a) Except (i) as otherwise required or specifically permitted by the provisions
of this Letter Agreement, (ii) as Parent may approve in writing (such approval,
not to be unreasonably withheld, delayed or conditioned), or (iii) as part of an
asset swap for substantially similar value, each of Oncor Holdings and Oncor
covenants and agrees as to itself and each of its Subsidiaries that, upon the
signing of this Letter Agreement and ending on the earlier of the date of the
consummation of the Purchase and other transactions contemplated by the Merger
Agreement (the “Purchase Closing Date”) or the Termination Date (the “Interim
Period”), each of them will operate in the ordinary course of business and
materially consistent with the plan for 2017 and 2018 contained in the May 2016
updated long range business plan of Oncor (the “2017-2018 Plan”) that was
provided to the Purchasers (including as to any action or the incurrence of any
costs or expenses provided for therein).

(b) Notwithstanding anything herein to the contrary, in order (i) to prevent the
occurrence of, or mitigate the existence of, an emergency situation involving
endangerment of life, human health, safety, the Environment or material
property, equipment or other assets or (ii) to comply with or otherwise
appropriately respond to any requirement, or reasonable request without
solicitation, in a Governmental Request or Order, any Oncor Entity may take
reasonable actions consistent with prudent industry practices that would
otherwise be prohibited pursuant to Section 3(a); provided, however, that Oncor
and Oncor Holdings shall provide Purchasers with notice of such emergency
situation or Governmental Request or Order as soon as reasonably practicable
after obtaining Knowledge thereof.

(c) Nothing contained in this Letter Agreement is intended (i) to give
Purchasers, directly or indirectly, the right to control or direct the
operations of any Oncor Entity prior to the Purchase Closing Date or (ii) modify
or amend the obligations of the parties under either LLC Agreement.

 

Page 7

--------------------------------------------------------------------------------

Section 4. Alternative Proposals.

(a) Notwithstanding anything to the contrary herein, except as specifically
permitted by Section 4(c) with respect to a Permitted Alternative Proposal,
during the Interim Period, Oncor Holdings and Oncor shall not, shall cause each
of their respective Subsidiaries not to, and shall cause the directors (other
than the Minority Member Directors (as defined in the Oncor LLC Agreement)),
officers, employees, investment bankers, attorneys, accountants and other
advisors, consultants, agents or representatives of any Oncor Entity
(collectively, “Representatives”) not to, (i) initiate, solicit, propose,
knowingly encourage or knowingly induce, the submission of, any Alternative
Proposal; provided, however, that an Oncor Entity may interact with its
equityholders in order to satisfy its fiduciary obligations and its obligations
pursuant to the LLC Agreements and the Investor Rights Agreement and may, in
response to communications from (without otherwise limiting the provisions of
this Section 4) any of its direct equityholders or any third party who makes or
seeks to make an unsolicited Alternative Proposal, make available public and
non-public information (but only if such equityholder or third party has
executed a confidentially agreement with Oncor on terms no less favorable in the
aggregate to the Oncor Entities than terms of the Confidentiality Agreement) so
long as such Oncor Entity promptly provides or makes available to the Purchasers
such non-public information made available to such equityholder or third party
(to the extent it has not already been provided or made available to the
Purchasers), (ii) enter into, maintain or continue negotiations with any Person
with respect to, any Alternative Proposal, or (iii) enter into any written
letter of intent, agreement in principle or other agreement (whether or not
legally binding and whether or not oral or written) with respect to an
Alternative Proposal. In addition, during the Interim Period, Oncor Holdings and
Oncor shall promptly advise Parent in writing of any Alternative Proposal,
including, unless prohibited by applicable Law, the material terms and
conditions of such Alternative Proposal (including any subsequent material
modification to such material terms and conditions) and the identity of the
Person making the same. Unless prohibited by applicable Law, Oncor Holdings and
Oncor shall keep Parent reasonably informed on a reasonably current basis of the
status and material details (including material modifications) of any
Alternative Proposal. During the Interim Period, neither Oncor Holdings nor
Oncor shall enter into any agreement with any Person which prohibits any Oncor
Entity from providing information to the Purchasers that they are expressly
entitled to receive from Oncor Holdings or Oncor in accordance with this
Section 4(a); provided, that for all purposes of this Letter Agreement, the
reasonable best efforts of Oncor Holdings and Oncor shall not include the
expenditure of any fees or expenses or the undertaking of, or response to, any
action, suit, claim, cause of action or other form of litigation.

(b) Oncor Holdings and Oncor represent that they are not in negotiations with
any Person with respect to any Alternative Proposal and there is no agreement
that would prevent Oncor Holdings or Oncor from complying with their respective
obligations under Section 4(a).

 

Page 8

--------------------------------------------------------------------------------

(c) Notwithstanding anything to the contrary contained in Section 4(a), any of
Oncor Holdings and Oncor and their Subsidiaries may, but only upon the request
of the Company or EFIH, (i) negotiate with stakeholders of the Debtors,
facilitate and document the terms of a Permitted Alternative Proposal and
(ii) enter into an agreement or agreements with the stakeholders of the Debtors
regarding support for and/or financing of such Permitted Alternative Proposal;
provided, however, that other than any required disclosure to the Purchasers
hereunder, the Oncor Entities shall use reasonable best efforts (x) to keep
confidential any solicitation, negotiation, facilitation, and documentation by
the applicable Oncor Entities of a Permitted Alternative Proposal and (y) to
enter into confidentiality agreements with any counterparty to any agreement
regarding support for and/or financing of a Permitted Alternative Proposal,
which confidentiality agreement provides that the existence and terms of such
Alternative Proposal shall be kept confidential and shall not be publicly
disclosed, except in each case to the extent required by applicable Law or
pursuant to such confidentiality agreements (including any “cleansing”
provisions set forth in such confidentiality agreements) as determined by the
applicable Oncor Entities in their sole and absolute discretion.

(d) Notwithstanding anything to the contrary contained in Section 4(c), such
provisions shall not be construed to permit, and Oncor Holdings and Oncor and
their Subsidiaries shall not, and shall cause their respective Representatives
not to, make or support any filings with or submissions or inquiries to any
Governmental Entity, including the PUCT, the FCC and the FERC, or make or
support any public statements with respect to any Alternative Proposal or any
Permitted Alternative Proposal at any time during the Interim Period; provided,
however, that the Oncor Entities and their Representatives may (i) respond to
requests, communications, or directives received from any Governmental Entity,
whether in writing or otherwise, with respect to any Alternative Proposal or
Permitted Alternative Proposal, and (ii) take such action as required, or
reasonably requested without solicitation, by a Governmental Request or Order
with respect to such Alternative Proposal or Permitted Alternative Proposal. The
Oncor Entities shall, unless otherwise prohibited by Law, provide prompt notice
to the Purchasers of any requests, communications or directives received by them
of the type described in clause (i) or (ii) above and keep the Purchasers
reasonably informed on a reasonably prompt basis of material developments in
connection therewith to the extent not prohibited by applicable Law or
confidentiality agreements with third parties.

 

Page 9

--------------------------------------------------------------------------------

(e) For purposes of this Letter Agreement:

(i) “Alternative Proposal” means any inquiry, proposal, expression of interest
or offer from or by a Person other than the Purchasers or their respective
representatives (or, to the extent that the Purchasers consent in writing to any
Affiliate of the Purchasers being treated in the same manner as the Purchasers,
any such Affiliate of the Purchasers) with respect to (i) a merger, acquisition,
consolidation, dissolution, equity investment, liquidation, winding up,
reorganization, tender offer, recapitalization, plan of reorganization or
liquidation, joint venture, partnership, restructuring, asset purchase, share
purchase, share exchange, business combination or similar transaction regarding
the Company, EFIH, Oncor Holdings or Oncor or one or more of their Subsidiaries
or any of their assets, properties or businesses, (ii) any other transaction in
which any Person would acquire in any manner any direct or indirect equity
interests in Oncor Holdings or Oncor or any of their assets, properties or
businesses or (iii) any other transaction that is inconsistent in any material
respect with, or an alternative that prevents consummation of, the Purchase
Transaction.

(ii) “Permitted Alternative Proposal” means any Alternative Proposal but with
respect to which members of Oncor who hold at least a majority of the
outstanding units representing limited liability company interests in Oncor have
delivered to Oncor Holdings and Oncor (with a copy to the Purchasers) a written
notice (i) requesting that Oncor enter into, maintain or continue discussions or
negotiations with one or more third parties and (ii) certifying that, in the
case of a notice delivered by Oncor Holdings, the Company and EFIH are permitted
to cause Oncor Holdings to deliver such request under the terms of the Merger
Agreement.

Section 5. Filings; Other Actions; Notification.

(a) Cooperation.

(i) Subject to the terms and conditions set forth in this Letter Agreement, the
Oncor Entities and Purchasers shall use their respective reasonable best efforts
to cooperate and to take or cause to be taken all actions, and to do or cause to
be done, all things reasonably requested by the Purchasers to negotiate, prepare
and file as promptly as reasonably practicable all documentation to effect all
necessary notices, reports and other filings and assist the Purchasers in
obtaining as promptly as reasonably practicable all consents, registrations,
approvals, permits and authorizations necessary to be obtained from any third
party and/or any Governmental Entity in connection with the Purchase
Transaction.

 

Page 10

--------------------------------------------------------------------------------

(ii) Subject to the terms and conditions set forth in this Letter Agreement,
including Section 5(a)(xi), each party hereto shall use its reasonable best
efforts to file with the FERC a joint application for the FERC Approval as
promptly as reasonably practicable following the date hereof. In furtherance of
the foregoing, each party shall furnish to the other parties in a timely
fashion, all documents, pleadings, testimony and other information sufficient
for such application to be made.

(iii) Subject to the terms and conditions set forth in this Letter Agreement,
including Section 5(a)(xi), each party hereto shall use its reasonable best
efforts to submit to the PUCT a single filing (on behalf of the parties) in
which the Purchasers will seek prior approval by the PUCT of the Purchase
Transaction (the “PUCT Filing”) as promptly as reasonably practicable following
the date hereof. In furtherance of the foregoing, each party shall furnish to
the other parties in a timely fashion, all documents, pleadings, testimony and
other information sufficient for the PUCT Filing to be made.

(iv) In connection with any PUCT Filing or application submitted to the FCC or
FERC with respect to the Purchase Transaction (together, the “FCC/FERC
Applications” and, together with the PUCT Filing, the “Applications”), Oncor
Holdings and Oncor shall not be required to endorse, or cause any of their
Subsidiaries to endorse, as their or their Subsidiaries’ own strategy or take
actions to support any modification of their or their Subsidiaries’ strategy and
business plan that Oncor Holdings or Oncor, as applicable, determines in good
faith that it would not support as being in the best interest of Oncor if the
Purchase Transaction was not to be completed; provided, however, that nothing in
this Section 5(a)(iv) shall affect any Oncor Entity’s obligation to include the
Key Regulatory Terms in the Applications, subject to Section 5(a)(v) below.
Nothing contained in this Section 5(a)(iv) is intended to give Parent or Merger
Subs, directly or indirectly, the right to control or direct any Oncor Entity’s
operations.

(v) Each of Oncor and Oncor Holdings agrees that (A) the Applications shall
include the information concerning the Purchase Transaction, the Oncor Entities,
and the Purchasers required by applicable Laws of the State of Texas and other
applicable jurisdictions, (B) the Applications and any amendments or supplements
thereto shall include the key terms and undertakings set forth in Exhibit B (the
“Key Regulatory Terms”) and the jurisdictions relevant thereto and such
additional agreements or commitments by the Purchasers as the Purchasers
believe, after consultation with the Oncor Entities, are advisable to obtain the
PUCT Approval, FERC Approval or FCC

 

Page 11

--------------------------------------------------------------------------------

Approval, (C) it will cooperate with the efforts of the Purchasers to seek
approval of the Key Regulatory Terms in the Applications; provided, however,
that neither Oncor Holdings nor Oncor shall be required to endorse or approve
any of Purchasers’ plans that assume that Texas Transmission Investment LLC will
not continue to hold Oncor equity interests nor that same assumption as
reflected in the Key Regulatory Terms attached as Exhibit B hereto, (D) no Oncor
Entity shall accept any agreements, commitments or conditions in connection with
the Purchase Transaction pursuant to any settlement or other agreement with any
Governmental Entity without the prior written consent of Parent and (E) prior to
termination of this Letter Agreement, it will not withdraw any filing made by it
in connection with the Purchase Transaction without the prior written consent of
Parent, such consent to not be unreasonably withheld, conditioned or delayed.
Notwithstanding any provision in this Letter Agreement, neither Oncor Holdings
nor Oncor have taken any position in regards to any action, proposed action, or
approvals sought relating to the equity interests held by Texas Transmission
Investment LLC.

(vi) Subject to the terms and conditions set forth in this Letter Agreement,
each party hereto shall appear formally (including by providing testimony) or
informally before any Governmental Entity if reasonably requested by the other
parties hereto or required by such Governmental Entity in connection with any
filings contemplated by this Letter Agreement.

(vii) Subject to applicable Law and clauses (c) and (e) of this Section 5
relating to the exchange of information and the protection of legal privilege,
each of the parties hereto shall provide the other parties hereto a reasonable
opportunity to review in advance and, to the extent practicable, each will
consult with the other parties hereto on and consider in good faith the views
and comments of the other parties hereto in connection with, all material
information relating to the Oncor Entities that appears in any filing made with,
or written materials or written testimony submitted to, or oral presentations or
testimony made to any Governmental Entity in connection with the Purchase
Transaction. In exercising the foregoing rights and performing the foregoing
obligations, each party hereto shall act reasonably, promptly and as reasonably
practicable.

(viii) Each party hereto agrees not to schedule, to the extent reasonably
practicable, any substantive meetings or substantive communications with the
PUCT or the FERC regarding the Purchase Transaction without giving the other
parties hereto or their respective Representatives a reasonable opportunity to
participate in such meeting or communication to the extent permitted by such
Governmental Entity, and in any event the parties hereto shall keep each other
reasonably apprised of all material substantive communications with Governmental
Entities of which such party is aware regarding the Purchase Transaction.

 

Page 12

--------------------------------------------------------------------------------

(ix) In connection with the Purchase Transaction, Oncor and Purchasers will be
the primary advocates in the PUCT on Purchasers’ proposal to acquire Oncor, will
jointly lead the efforts to obtain PUCT Approval, subject to the terms of this
Letter Agreement, and in good faith will cooperate on: (A) the scheduling and
conducting of all formal meetings with all Governmental Entities and the staffs
thereof, (B) the coordination, terms, commitments, requests, and making of the
Applications (and any amendment or supplement thereto), subject to
Section 5(a)(xi), and the process for obtaining any consents, registrations,
approvals, permits and authorizations of any Governmental Entity, in each case,
as may be necessary or advisable in connection with the Applications, filings
and approvals contemplated by this Letter Agreement, and (C) the resolution of
any investigation or other inquiry of any Governmental Entity (and the staffs
thereof), including the PUCT, in each case, as may be necessary or advisable in
connection with the Applications, filings and approvals contemplated by this
Letter Agreement. Prior to making any decisions pursuant to the preceding
sentence, Parent shall consult in good faith with the Oncor Entities with
respect to such decisions and consider in good faith the views of the Oncor
Entities.

(x) The Oncor Entities shall use their reasonable best efforts to cooperate with
respect to Purchasers’ efforts to obtain the Supplemental Rulings (as defined in
the Merger Agreement).

(xi) Nothing in this Section 5(a) shall (A) prevent, limit or restrict an Oncor
Entity or its Affiliates from interacting, communicating or making filings or
applications with, or resolving any investigation or other inquiry of, any
agency or other Governmental Entity in the ordinary course of business related
to matters other than the Purchase Transaction, (B) prevent, limit or restrict
an Oncor Entity or its Affiliates from responding to unsolicited inquiries
related to the Purchase Transaction from any agency or other Governmental Entity
or interacting with any such agency or other Governmental Entity in response to
unsolicited communications related to the Purchase Transaction initiated by any
such Person, or (C) require an Oncor Entity or any officer, director, employee
or Representative of an Oncor Entity to take any action that would violate any
applicable Law or rule of any Governmental Entity, provided, that each Oncor
Entity will provide Parent with a reasonable advance opportunity to

 

Page 13

--------------------------------------------------------------------------------

review and comment upon any written communication, filing or application related
to the Applications and the Oncor Entities will consider in good faith the views
of Parent in connection with all such written communications, filings or
applications. For avoidance of doubt Oncor shall prepare, present and have final
approval over any testimony or presentations that will be proffered or given to
any Governmental Entity by any Oncor officers, directors, employees or
representatives and any responses to discovery, Oncor pleadings, any
presentation of evidence, or other communications between any Oncor Entity and
any Governmental Entity, including in connection with the filings referenced in
clauses (ii) through (iv) above (except that such filings shall be prepared in
accordance with and contain the provisions required by the applicable provisions
of this Section 5).

(xii) Notwithstanding anything herein to the contrary, if either the Merger
Agreement and/or the Plan of Reorganization has been terminated, each of Oncor
and Oncor Holdings may defer performance of its obligations under this
Section 5(a) or may withdraw any application or filing previously made by Oncor.
Further, Oncor shall be entitled, following notice to and consultation with
Purchasers, to withdraw any application or filing previously made by Oncor with
any Governmental Entity pursuant to this Section 5 in order to comply with any
requirement, or reasonable request without solicitation, in a Governmental
Request or Order; provided that Oncor’s board of directors determines in good
faith after consultation with its outside financial advisors and outside legal
counsel, and based on advice of such counsel, that not withdrawing any such
application or filing would be inconsistent with its fiduciary duties.

(b) Information. Subject to applicable Laws and Section 5(e), Oncor and Oncor
Holdings, on the one hand, and Purchasers, on the other hand, shall, upon
request by the other, furnish such party with all reasonably requested
information concerning itself, its Subsidiaries, directors, officers and
equityholders and such other matters as may be reasonably necessary or advisable
in connection with any statement, filing, notice or application made by or on
behalf of Purchasers, Oncor or Oncor Holdings or any of their respective
Subsidiaries to or with any third party and/or any Governmental Entity in
connection with the Purchase Transaction, including any information reasonably
requested by Parent for inclusion in any Registration Statement.

 

Page 14

--------------------------------------------------------------------------------

(c) Status. Subject to applicable Laws and Section 5(e), and the instructions of
any Governmental Entity, each party hereto shall keep the other parties
reasonably apprised of the status of the filings and applications made pursuant
to this Section 5, including, upon reasonable request, promptly furnishing the
other parties with copies of notices or other communications received by any
party hereto from any Governmental Entity with respect to the Purchase
Transaction.

(d) Terms and Conditions. Notwithstanding the obligations set forth in this
Section 5, but subject to the other obligations set forth in this Letter
Agreement, Parent and Merger Subs shall make all determinations with respect to
any term or condition in connection with obtaining the FCC Approval, the FERC
Approval and the PUCT Approval or any approval or consent of a Governmental
Entity sought by the Purchasers in connection with the Purchase Transaction
(whether arising due to a change in Law after the date of this Letter Agreement
or otherwise). In addition, each of Oncor Holdings and Oncor acknowledges and
agrees that the Purchasers shall have the right to approve or disapprove of any
settlement with respect to the FCC Approval, the FERC Approval, and the PUCT
Approval.

(e) Confidentiality. Notwithstanding the foregoing, all information disclosed
pursuant to this Section 5 shall be subject to the Confidentiality Agreement and
nothing in this Section 5 shall require any party (i) to violate any of its
binding obligations with respect to confidentiality, (ii) to disclose any
privileged information or (iii) to fail to comply with any requirement, or
reasonable request without solicitation, in a Governmental Request or Order;
provided, that, as applicable, each party shall, to the extent permitted by
applicable Law, provide notice to the requesting parties that any information is
being withheld pursuant to this provision and such parties shall use their
respective reasonable best efforts to find a mutually agreeable solution to any
such confidentiality and/or privilege concerns, including, if applicable, by
sharing privileged information as requested pursuant to a common interest
agreement with respect to the Applications to be mutually agreed and executed
between the applicable parties.

Section 6. Access and Reports (a) . Subject to applicable Law, upon reasonable
notice, each of Oncor Holdings and Oncor shall, and each shall cause its
respective Subsidiaries to, afford the officers and other Representatives of
Parent reasonable access, during normal business hours throughout the Interim
Period, to its executive officers, properties, books, contracts and records and,
during such period, each of Oncor Holdings and Oncor shall, and each shall cause
its Subsidiaries to, furnish to Parent information in its control concerning its
business, properties, facilities, operations and personnel as Parent reasonably
requests, in each case solely to the extent reasonably necessary to effect the
Purchase Transaction; provided that no investigation pursuant to this Section 6
shall (a) unreasonably interfere with the ongoing operations of any Oncor Entity
or (b) affect or be deemed to modify any representation or warranty made by an
Oncor Entity herein; and provided, further,

 

Page 15

--------------------------------------------------------------------------------

that the foregoing shall not require any Oncor Entity to (i) permit any
inspection, or to disclose any information, that in the reasonable judgment of
such Oncor Entity would result in the disclosure of any trade secrets of third
parties or violate any of its or any of its Subsidiaries’ obligations with
respect to confidentiality if such Oncor Entity shall have used reasonable best
efforts to furnish such information in a manner that does not result in any such
disclosure or violation, including obtaining the consent of such third party to
such inspection or disclosure, (ii) disclose any privileged information of the
Oncor Entities if such Oncor Entity shall have used reasonable best efforts to
furnish such information in a manner that does not result in the loss of such
privilege (including, if applicable, by sharing privileged information as
requested pursuant to a common interest agreement with respect to the
Applications to be mutually agreed and executed between the applicable parties),
(iii) permit any invasive environmental investigation or sampling, including a
Phase II environmental assessment or (iv) require disclosure of information that
it reasonably determines is competitively sensitive information, including
detailed information with respect to transmission development projects, or
relates to facilities and infrastructure security procedures. All requests for
information made pursuant to this Section 6 shall be directed to the individuals
set forth in Exhibit C. All such information shall be governed by the terms of
the Confidentiality Agreement.

Section 7. Publicity. The Oncor Entities and Purchasers shall consult with one
another prior to issuing any press releases or making any other public
announcements with respect to this Letter Agreement or any filings with the
Securities and Exchange Commission or submissions to the Bankruptcy Court that
specifically relate to this Letter Agreement; provided, however, that nothing
herein shall restrict or otherwise limit any party from making any disclosures
that such party determines is required by applicable Law.

Section 8. Employees and Employee Benefits.

(a) During the period commencing at the effective time of the Mergers (the
“Effective Time”) and ending on the two-year (2) anniversary of the Effective
Time (the “Continuation Period”), Purchasers and the EFH Surviving Companies
shall cause Oncor or Oncor Holdings Surviving Company to provide each individual
who is an employee of Oncor prior to and as of the Effective Time (each, an
“Oncor Employee”) with (i) a base salary or wage rate that is no less favorable
than that provided to such Oncor Employee immediately prior to the Effective
Time, (ii) aggregate incentive compensation opportunities that are substantially
comparable, in the aggregate, to those provided to such Oncor Employee
immediately prior to the Effective Time and (iii) employee benefits that are
substantially comparable, in the aggregate, to those provided to such Oncor
Employee immediately prior to the Effective Time.

 

Page 16

--------------------------------------------------------------------------------

(b) During the Continuation Period, Oncor Holdings Surviving Company and Oncor
shall not, and Purchasers and the EFH Surviving Companies shall cause each of
Oncor Holdings Surviving Company and Oncor not to, implement any material
involuntary workforce reductions (with respect to either field or corporate
personnel) of the Oncor Employees.

(c) From and after the Effective Time, each of Oncor Holdings Surviving Company
and Oncor shall, and Purchasers shall exercise all rights as a direct or
indirect equityholder of Oncor Holdings Surviving Company and Oncor to cause
Oncor Holdings and Oncor to, fully satisfy, fulfill and discharge any
obligations to current and former Oncor Employees under the Assumed Plans;
provided that, nothing herein shall prevent the amendment or termination of any
such plans in accordance with their terms by Oncor Holdings (or after the
Effective Time, Oncor Holdings Surviving Company) and/or Oncor, and Oncor
Holdings (and after the Effective Time, Oncor Holdings Surviving Company) and
Oncor shall each continue to have any rights, privileges or powers under the
Assumed Plans.

(d) Notwithstanding any other provision of this Section 8 with respect to any
Oncor Employee immediately following the Effective Time whose terms and
conditions of employment are covered by a collective bargaining agreement
(“CBA”), the terms and conditions of such Oncor Employee’s employment shall be
governed by the terms of the applicable CBA, as may be modified from time to
time.

(e) Each party hereto hereby acknowledges that, with respect to any employee
listed on Exhibit D hereto, a “change in control” or “change of control” within
the meaning of each Assumed Plan in which such employee is a participant or to
which such employee is a party will occur as a result of the consummation of the
Purchase Transaction. For each employee listed on Exhibit D who chooses to
retire from or terminate his or her service with the Oncor Entities in
connection with the closing of the Purchase Transaction and so notified
Purchaser within three (3) months following the Purchase Closing Date,
Purchasers agree to pay any and all benefits (including change in control
benefits) to which such individual would be entitled in connection with such
retirement or termination, treating such retirement or termination as a
resignation with “good reason,” a termination “without cause,” or a retirement
under the relevant Assumed Plans.

(f) In the event that any Oncor Employee becomes a participant in any employee
benefit plan of Purchasers or its Subsidiaries, Purchasers shall use
commercially reasonable efforts to cause any employee benefit plans in which
such Oncor Employee is entitled to participate to take into account for purposes
of eligibility and vesting thereunder, service of such Oncor Employees with
Oncor Holdings or Oncor, as applicable, prior to the Effective Time as if such
service were with Purchasers

 

Page 17

--------------------------------------------------------------------------------

or its Subsidiaries to the extent provided in accordance with the terms of such
employee benefit plans (except (i) with respect to any Oncor Employee who incurs
a break in service after the Purchase Closing Date and is subsequently hired,
such service will only be credited to the extent such service would have been
credited and/or restored in accordance with the terms of a comparable benefit
plan immediately prior to the Purchase Closing Date, or (ii) to the extent that
it would result in (A) a duplication of benefits, (B) benefit accruals under any
defined benefit pension plan (other than utilizing such years of service in
order to satisfy any requirements for future benefit accrual only under any
defined benefit pension plan), or (C) service accrual for any purpose under any
post-retirement welfare benefit plan).

(g) The provisions of this Section 8 are solely for the benefit of the parties
to this Letter Agreement, and no Oncor Employee or former Oncor Employee or any
other individual associated therewith shall be regarded for any purpose as a
third party beneficiary of this Letter Agreement, and nothing herein shall
(i) be construed as an amendment to any Benefit Plan for any purpose, (ii) give
any Oncor Employee or former Oncor Employee or any other individual associated
therewith or any employee benefit plan or trustee thereof or any other third
party any right to enforce the provisions of this Section 8 or (iii) obligate
the EFH Surviving Companies, Oncor Holdings Surviving Company or Oncor or any of
their respective Affiliates (A) to, subject to Section 8(a)(iii), and as
provided in the Split Participant Agreement (as defined below), maintain any
particular benefit plan, (B) to retain the employment of any particular employee
or (C) to refrain from promoting or demoting any particular employee (or
otherwise refrain from reassigning such employee to a new position).

Section 9. Split Participant Agreement. Oncor shall not amend the Split
Participant Agreement, dated October 3, 2016, by and between Oncor and
Reorganized TCEH (the “Split Participant Agreement”) without the consent of
Parent, such consent not to be unreasonably withheld, conditioned or delayed.

Section 10. Indemnification; Directors’ and Officers’ Insurance.

(a) Nothing herein shall impair or restrict the ability of any Oncor Entity to
honor and perform any of its indemnification obligations to any Representative
under any Contract.

(b) Effective as of the Effective Time, each of Oncor Holdings Surviving Company
and Oncor shall, and the EFH Surviving Companies shall exercise all rights as a
direct or indirect equityholder of Oncor Holdings Surviving Company and Oncor to
cause Oncor Holdings Surviving Company and Oncor to comply with (i) any
indemnification agreement between any Indemnified Party and an Oncor Entity and
(ii) the indemnification obligations and exculpation provisions in the LLC
Agreements as in effect as of the date hereof.

 

Page 18

--------------------------------------------------------------------------------

(c) Nothing contained in this Letter Agreement shall be construed to prohibit
the Oncor Entities from obtaining, with the approval of their respective boards
of directors, and fully paying the premium for the extension of (i) the
directors’ and officers’ liability coverage of the Oncor Entities’ existing
directors’, managers’ and officers’ insurance policies, and (ii) Oncor’s
existing fiduciary liability insurance policies, in each case for a claims
reporting or discovery period of at least six (6) years from and after the
Purchase Closing Date with respect to any claim related to any period of time at
or prior to the Purchase Closing Date, which policies may be issued by an
insurance carrier selected by the Oncor Entities and may contain terms,
conditions, retentions and limits of liability that are acceptable to the Oncor
Entities in their sole discretion with respect to any actual or alleged error,
misstatement, misleading statement, act, omission, neglect, breach of duty or
any matter claimed against a director or officer of any of the Oncor Entities by
reason of him or her serving in such capacity that existed or occurred at or
prior to the Purchase Closing Date (including in connection with this Letter
Agreement or the transactions or actions contemplated hereby); provided, that,
the premiums for the extension of such insurance policies shall not exceed 250%
of the annual premiums currently paid by the Oncor Entities for such insurance
policies.

(d) If, within six (6) years of the Purchase Closing Date, the EFH Surviving
Companies or any of their successors or assigns shall (i) consolidate with or
merge into any other corporation or entity and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii) transfer
all or substantially all of its properties and assets to any individual,
corporation or other entity, then, and in each such case, the EFH Surviving
Companies or their successors or assigns shall make, to the extent not provided
for under applicable Law, proper provisions so that the successors and assigns
of the EFH Surviving Companies, as the case may be, assume all of the
obligations of the EFH Surviving Companies set forth in this Section 10.

(e) The provisions of this Section 10 are intended to be for the benefit of, and
shall be enforceable by, each of the Indemnified Parties.

(f) The rights of the Indemnified Parties under this Section 10 shall be in
addition to any rights such Indemnified Parties may have under the certificate
of formation, operating agreement or comparable governing documents of any Oncor
Entity, or under any applicable Contracts or Laws. All rights to indemnification
and exculpation from liabilities for acts or omissions occurring at or prior to
the Purchase Closing Date and rights to advancement of expenses relating thereto
now existing in favor of any Indemnified Party as provided in the certificate of
formation, operating

 

Page 19

--------------------------------------------------------------------------------

agreement or comparable governing documents of any Oncor Entity or the Company
or any existing indemnification agreement between such Indemnified Party and any
of the foregoing shall not be amended, repealed or otherwise modified in any
manner that would adversely affect any right thereunder of any such Indemnified
Party with respect to any acts or omissions occurring at or prior to the
Purchase Closing Date.

(g) To the extent that any Indemnified Parties are entitled to indemnification
under both this Letter Agreement and any other contract, agreement or instrument
(including the certificate of formation, operating agreement or comparable
governing documents of any Oncor Entity or the Company or any indemnification
agreement between such Indemnified Party and any of the foregoing) in respect of
any services performed by such Indemnified Party as a director, manager, or
officer of any of the Oncor Entities, the fact that any such contract, agreement
or instrument also provides for indemnification of such Indemnified Parties
shall not (i) be construed to diminish or otherwise limit any right or remedy
granted to such Indemnified Parties hereunder or (ii) require that any other
sources of indemnification or available insurance be primary over the
indemnification obligations set forth in this Letter Agreement, any
indemnification agreement previously entered with the Indemnified Parties or in
the organizational documents of any Oncor Entity.

Section 11. Notice of Current Events.

(a) At all times during the Interim Period, each of the parties hereto shall
notify the other parties hereto orally and in writing upon: (i) receipt of any
written communication from any Person that is a party to an Oncor Material
Contract alleging that the consent of such Person (or another Person) is
required in connection with the Purchase Transaction; (ii) becoming aware of any
occurrence, or non-occurrence, of any event that, individually or in the
aggregate, would cause any of the representations or warranties of such party or
parties contained in this Letter Agreement to be untrue or inaccurate in any
material respect; or (iii) becoming aware of any failure of any such party to
comply with or satisfy, in any material respect, any covenant, condition or
agreement to be complied with or satisfied by it pursuant to this Letter
Agreement.

(b) Parent shall notify Oncor Holdings and Oncor in writing as promptly as
practicable (but in no event later than twenty-four (24) hours) after the
termination of the Merger Agreement and/or the Plan of Reorganization by any
party thereto.

 

Page 20

--------------------------------------------------------------------------------

Section 12. Financing.

(a) During the Interim Period, Oncor Holdings and Oncor each agree to use
reasonable best efforts to timely provide, and to use reasonable best efforts to
cause their Subsidiaries and their respective officers and Representatives to
timely provide, reasonable cooperation in connection with the arrangement of any
debt or equity issuance contemplated by the Merger Agreement or the Plan of
Reorganization (each, a “Financing”) (provided that Parent shall use reasonable
best efforts to provide Oncor Holdings and Oncor with notice of any information
needed by Parent as soon as reasonably practicable), which cooperation shall be
limited to the following: (i) participation by appropriate members of senior
management of the Oncor Entities, which participation will be limited to
providing Oncor financial and operational information in meetings,
presentations, road shows, due diligence sessions, and sessions with prospective
lenders, investors and rating agencies, in each case, at mutually agreeable
times and locations and upon reasonable notice; (ii) providing information in
its control to Purchasers that is necessary for Purchasers to prepare materials
for rating agencies and rating agency presentations, offering documents, private
placement memoranda, bank information memoranda, prospectuses and similar
documents required in connection with any such Financing, together with
procuring customary authorization letters authorizing the distribution of Oncor
information to prospective lenders or investors; (iii) furnishing (A) all
information and data reasonably requested by Parent to prepare all pro forma
financial statements required to be prepared or are otherwise customary in
connection with any Financing registered on Form S-1, Form S-4 or other
available Form (as applicable) and (B) all financial statements and financial
data of the type and form required to be prepared in accordance with Regulation
S-X and Regulation S-K under the Securities Act for offerings of the debt and/or
equity securities (as the case may be) contemplated in the respective Financings
registered on Form S-1, Form S-4 or other available Form (as applicable) under
the Securities Act, including all information required to be incorporated
therein, provided, that, if no registration statement is required to be filed
for each of the Financings, such financial statements and financial data shall
be included to the extent customary to consummate the Financing (subject to
exceptions customary for a private Rule 144A offering); (iv) using reasonable
best efforts to assist Parent and the lenders and investors for such Financing
or their respective Affiliates in obtaining corporate, facilities and securities
ratings, as applicable, in connection with the Financing prior to the launch of
the Financing; (v) providing information in its control that is necessary for
the preparation of customary schedules and exhibits in connection with the
Financing; (vi) furnishing Parent and its Affiliates and the lenders or
investors or their respective Affiliates providing or arranging Financing
promptly, in a timely manner, with all documentation and other information which
any lender or investor providing or arranging the Financing has reasonably
requested, including under applicable “know your customer” and anti-money
laundering rules and regulations, including without limitation the PATRIOT Act
(which cooperation shall be required notwithstanding the reasonable best efforts
standard required of Oncor Holdings and Oncor above); (vii) providing customary
management representation

 

Page 21

--------------------------------------------------------------------------------

letters to the independent accountants and causing Oncor’s independent auditors
to cooperate in connection with the Financing (including providing accountants’
comfort letters and consents to use their audit reports from Oncor’s independent
auditors to the extent required in connection with such Financing); and
(viii) otherwise assisting Parent to satisfy any express conditions precedent to
the Financing that require Oncor information, provided that with respect to the
foregoing clauses (i)-(viii), (A) Oncor shall not be required to endorse any
particular strategy or structure, (B) the Purchasers shall be responsible for
any projections, (C) such requested cooperation shall not unreasonably interfere
with the ongoing operations of any Oncor Entity, (D) no Oncor Entity shall be
required to pay any commitment or other similar fee or incur any other liability
or obligation in connection with the Financing, (E) other than customary
authorization letters, no Oncor Entity or any of their respective officers,
directors, or employees shall be required to execute or enter into or perform
any agreement with respect to the Financing that is not contingent upon the
consummation of the Mergers or that would be effective prior to the Purchase
Closing Date, (F) Persons who are on the board of directors or the board of
managers (or similar governing body) of any Oncor Entity prior to the Purchase
Closing Date in their capacity as such shall not be required to pass resolutions
or consents to approve or authorize the execution of the Financing, and (G) no
Oncor Entity or any of their respective officers, directors, or employees shall
be required to execute any solvency certificate in connection with the
Financing. Nothing contained in this Section 12 or otherwise shall require any
Oncor Entity to be an issuer or other obligor with respect to the Financing.

(b) During the Interim Period, it is understood that Parent may seek to market
and consummate all or a portion of the Financing. In this regard, and for the
avoidance of doubt, Oncor Holdings and Oncor acknowledge that their cooperation
obligations set forth in Section 12(a) include the obligation to use their
reasonable best efforts to cooperate with any such efforts, provided such
cooperation obligations are limited to those set forth in Section 12(a).

(c) Notwithstanding anything herein to the contrary, none of the Oncor Entities
or their respective Representatives shall be required to take any action that
would subject such Person to actual or potential liability, to bear any cost or
expense or to pay any commitment or other similar fee or make any other payment
or incur any other liability or provide or agree to provide any indemnity in
connection with the Financing or their performance of their respective
obligations under this Section 12 or any information utilized in connection
therewith. Parent shall indemnify and hold harmless the Oncor Entities and their
respective Representatives from and against any and all Costs suffered or
incurred by them in connection with the arrangement of the Financing and the
performance of their respective obligations under this Section 12 and any
information utilized in connection therewith (other than Costs arising from

 

Page 22

--------------------------------------------------------------------------------

any untrue statement of a material fact in information provided by any Oncor
Entity or any omission of a material fact required to be stated in such
information or necessary in order to make such information not misleading).
Parent shall, promptly upon request of Oncor Holdings or Oncor, reimburse any
Oncor Entity for all reasonable and documented out-of-pocket costs and expenses
incurred by such Oncor Entity (including those of its Representatives) in
connection with the cooperation required by this Section 12. Each of Oncor
Holdings and Oncor hereby consents to the use of the logos of the Oncor Entities
in connection with the Financing; provided that such logos are used solely in a
manner that is not intended to or reasonably likely to harm or disparage any
Oncor Entity or the reputation or goodwill of any Oncor Entity.

Section 13. Headquarters. From and after the Purchase Closing Date, Parent shall
cause the Oncor Entities to maintain their headquarters in Dallas, Texas.

Section 14. Implementation of Key Regulatory Terms. Each of Oncor Holdings and
Oncor agree, subject to Bankruptcy Court Approval and PUCT Approval, to take all
actions necessary or appropriate to effect changes to the LLC Agreements of
Oncor Holdings and Oncor that are required or permitted to be requested or
implemented by Purchasers, with such changes to be effective at the Effective
Time to the extent consistent with the PUCT Approval.

Section 15. Oncor Holdings Merger. Oncor Holdings agrees to engage in the Oncor
Holdings Merger and deliver all certificates, instruments and documents
necessary in connection therewith, subject to (a) obtaining PUCT Approval,
(b) obtaining Bankruptcy Court Approval, (c) receipt of a Merger Agreement that
is not inconsistent with this Letter Agreement, (d) the Oncor Holdings Surviving
Company being renamed Oncor Electric Delivery Holdings Company LLC (to be
effective at the Effective Time), and (e) Purchasers agreeing that Oncor
Holdings Surviving Company shall be operated and governed in all respects in
compliance with its LLC Agreement (as amended in accordance with Section 14),
except as otherwise approved by the PUCT.

Section 16. Miscellaneous.

(a) Survival. This Section 16 and the covenants and agreements of the parties
hereto contained in Section 8 (Employees and Employee Benefits), Section 10
(Indemnification; Directors’ and Officers’ Insurance), Section 12(c) (Financing)
and Section 13 (Headquarters) and the Confidentiality Agreement shall survive
the consummation of the Purchase Transaction. This Section 16 and the covenants
and agreements of the parties hereto contained in the Confidentiality Agreement
shall survive the termination of this Letter Agreement. Subject to the
foregoing, all other representations, warranties, covenants and agreements in
this Letter Agreement shall not survive the consummation of the Mergers.

 

Page 23

--------------------------------------------------------------------------------

(b) Modification or Amendment. Subject to the provisions of the applicable Laws,
at any time prior to the Purchase Closing Date, the parties hereto may modify or
amend this Letter Agreement by written agreement executed and delivered by duly
authorized officers of the respective parties.

(c) Counterparts. This Letter Agreement may be executed in any number of
counterparts (including by electronic means), each such counterpart being deemed
to be an original instrument, and all such counterparts taken together
constituting one and the same agreement.

(d) GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.

(i) THIS LETTER AGREEMENT, TOGETHER WITH ANY CLAIM, DISPUTE, REMEDY OR LEGAL
PROCEEDING ARISING FROM OR RELATING TO THIS LETTER AGREEMENT OR ANY RELIEF OR
REMEDIES SOUGHT BY ANY PARTY HERETO, AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER, SHALL BE CONSTRUED, PERFORMED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR
RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE
OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. Each of the
parties hereto (A) submits to the exclusive jurisdiction of any state or federal
court sitting in Dallas County, Texas in any action or proceeding arising out of
or relating to this Letter Agreement, (B) agrees that all claims in respect of
such action or proceeding may be heard and determined in any such court and
(C) agrees not to bring any action or proceeding arising out of or relating to
this Letter Agreement (whether on the basis of a claim sounding in contract,
equity, tort or otherwise) in any other court. Each of the parties hereto agrees
that a final judgment (subject to any appeals therefrom) in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by Law. Each of the parties
hereto hereby irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Letter Agreement or the Purchase Transaction in any court
specified in accordance with the provisions of this Section 16(d)(i). Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
Law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court. Each of the parties hereto hereby irrevocably and
unconditionally consents to service of process in the manner provided for
notices in Section 16(e). Nothing in this Letter Agreement will affect the right
of any party to this Letter Agreement to serve process in any other manner
permitted by Law.

 

Page 24

--------------------------------------------------------------------------------

(ii) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS LETTER AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (W) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (X) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (Y) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (Z) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 16(d)(ii).

(e) Notices. Any notice, request, instruction or other document to be given
hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, by email or
overnight courier:

 

If to Oncor Holdings or Oncor:

Oncor Electric Delivery Holdings Company LLC

1616 Woodall Rodgers Freeway

Dallas, Texas 75202

   Attention:    E. Allen Nye, Jr.    Kevin R. Fease    Michael L. Davitt Email:
   allen.nye@oncor.com    kevin.fease@oncor.com    michael.davitt@oncor.com with
copies (which shall not constitute notice) to:   

Jones Day

222 East 41st Street

New York, New York 10017

   Attention:    Corinne Ball Email:    cball@jonesday.com

 

Page 25

--------------------------------------------------------------------------------

and   

Jones Day

2727 North Harwood Street

Dallas, Texas 75201

   Attention:    Patricia J. Villareal Email:    pjvillareal@jonesday.com If to
Purchasers:    Berkshire Hathaway Energy Company   

825 NE Multnomah, Suite 2000

Portland, OR 97232

   Attention:    Natalie Hocken Email:    NLHocken@berkshirehathawayenergyco.com
with copies (which shall not constitute notice) to:    Gibson, Dunn & Crutcher
LLP   

200 Park Avenue

New York, NY 10166

   Attention: Email:    Peter Hanlon    phanlon@gibsondunn.com and   

Gibson, Dunn & Crutcher LLP

333 South Grand Avenue

Los Angeles, CA 90071

   Attention:    Jeffrey C. Krause Email:    jkrause@gibsondunn.com

or to such other Persons or addresses as may be designated in writing by the
party to receive such notice as provided above. Any notice, request, instruction
or other document given as provided above shall be deemed given to the receiving
party upon actual receipt, if delivered personally; three (3) Business Days
after deposit in the mail, if sent by registered or certified mail; upon receipt
if sent by email and received by 5:00 pm (Eastern Time), on a Business Day
(otherwise the next Business Day) (provided that if given by email such notice,
request, instruction or other document shall be followed up within one
(1) Business Day by dispatch pursuant to one of the other methods described
herein); or on the next Business Day after deposit with an overnight courier, if
sent by an overnight courier.

 

Page 26

--------------------------------------------------------------------------------

(f) Termination. Notwithstanding anything to the contrary herein, this Letter
Agreement may be terminated at any time prior to the closing of the Purchase
Transaction, (A) by mutual written consent of the parties hereto,
(B) automatically, and without any action of any of the parties hereto, upon
(x) any valid termination of the Merger Agreement by any party thereto or
(y) the withdrawal of the Plan of Reorganization or any event that renders the
Plan of Reorganization or an order approving the Plan of Reorganization null or
void, (C) by Oncor Holdings, if the board of directors of Oncor Holdings
determines in good faith after consultation with its outside financial advisors
and outside legal counsel, and based on the advice of such counsel, that
proceeding with this Letter Agreement would be inconsistent with its applicable
fiduciary duties or (D) by Oncor, if the board of directors of Oncor determines
in good faith after consultation with its outside financial advisors and outside
legal counsel, and based on the advice of such counsel, that proceeding with
this Letter Agreement would be inconsistent with its applicable fiduciary
duties.

(g) Entire Agreement. This Letter Agreement and the Confidentiality Agreement
embody the entire agreement and understanding of the parties in respect of the
subject matter contained herein and supersedes all prior agreements and
understandings between the parties with respect to such subject matter, and
reflect all contractual obligations or commitments with Parent and Merger Subs.
The parties hereby further represent that, in entering into this Letter
Agreement (i) they have been represented and advised by counsel in connection
with this Letter Agreement, which they have entered into voluntarily and of
their own choice, and not under coercion or duress; (ii) they are relying upon
their own knowledge and the advice of counsel; (iii) they knowingly waive any
claim that this Letter Agreement was induced by any misrepresentation or
nondisclosure which could have been or was discovered before signing this Letter
Agreement; and (iv) they knowingly waive any right to rescind or avoid this
Letter Agreement based upon presently existing facts, known or unknown.

(h) Severability. The provisions of this Letter Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Letter Agreement, or the application thereof to any Person or
any circumstance, is invalid or unenforceable, (i) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (ii) the remainder of this Letter Agreement and the application of
such provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.

 

Page 27

--------------------------------------------------------------------------------

(i) Assignment. This Letter Agreement shall not be assignable by operation of
law or otherwise without the written consent of the non-assigning parties
hereto. Any purported assignment in violation of this Letter Agreement is void.

(j) No Third Party Beneficiaries. Except as provided in Section 10
(Indemnification; Directors’ and Officers’ Insurance) and Section 12(c)
(Financing), Purchasers, Oncor Holdings and Oncor hereby agree that their
respective representations, warranties and covenants set forth herein are solely
for the benefit of the other parties hereto, in accordance with and subject to
the terms of this Letter Agreement, and this Letter Agreement is not intended
to, and does not, confer upon any Person other than the parties hereto any
rights or remedies hereunder, including the right to rely upon the covenants set
forth herein. Without limiting the generality of the foregoing, the Company and
EFIH shall not have any right to rely on or enforce any of the representations,
warranties, covenants or agreements set forth herein.

(k) Specific Performance; Limitation of Damages. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Letter Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, each of the parties shall be entitled to
specific performance and injunctive relief (but not any other form of equitable
relief) to prevent or remedy breaches of this Letter Agreement, without the
proof of irreparable damage or any actual damages or losses whatsoever. Without
limiting the foregoing, the parties hereto agree that a party hereto may not
assert that another party to this Letter Agreement is in breach of this Letter
Agreement unless such non-breaching party provides the purported breaching party
with written notice of such allegation within five (5) Business Days of the
non-breaching party or its Affiliates first becoming aware of such purported
breach. Prior to the non-breaching party seeking an injunction pursuant to this
Section 16(k), the purported breaching party shall have five (5) Business Days
after receiving such notice to cure any such breach. Within that five
(5) Business Day period, the parties to this Letter Agreement also agree that
senior management level designees of each party shall meet and confer in an
attempt to resolve any claim of a breach. Each party irrevocably agrees to waive
any requirement for the security or posting of any bond in connection with such
specific performance or injunctive relief. Regardless of any other provision in
this Letter Agreement, the Merger Agreement, and/or any related transaction, the
parties specifically agree that neither Oncor, Oncor Holdings, or their
representatives, nor Purchasers shall be held

 

Page 28

--------------------------------------------------------------------------------

liable in any event for monetary damages hereunder; provided that Purchasers
agree that they may be held liable for monetary damages for a breach of their
obligations under Section 10 and Section 12. Each party also agrees that in the
event that any Purchaser asserts any claim against any Oncor Entity or its
representatives based upon or reflecting in any manner any provisions of the
Merger Agreement and/or related documents, such claim, if any will be subject to
and limited by this Section 16(k). Notwithstanding anything to the contrary in
this Letter Agreement, in no event shall any party hereto or their
representatives be liable to any other party hereunder for any punitive,
incidental, consequential, special or indirect damages, including loss of future
revenue or income or opportunity, relating to the breach or alleged breach of
this Letter Agreement.

(l) Interpretation; Construction. The headings herein are for convenience of
reference only, do not constitute part of this Letter Agreement and shall not be
deemed to limit or otherwise affect any of the provisions hereof. Where a
reference in this Letter Agreement is made to a section or exhibit, such
reference shall be to a section of or exhibit to this Letter Agreement unless
otherwise indicated. Whenever the words “include,” “includes” or “including” are
used in this Letter Agreement, they shall be deemed to be followed by the words
“without limitation.” The words “hereof,” “hereto,” “hereby,” “herein” and
“hereunder” and words of similar import when used in this Letter Agreement shall
refer to this Letter Agreement as a whole and not any particular provision of
this Letter Agreement. The words “will” and “shall” have the same meaning. The
parties have participated jointly in negotiating and drafting this Letter
Agreement. In the event that an ambiguity or a question of intent or
interpretation arises, this Letter Agreement shall be construed as if drafted
jointly by the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Letter Agreement.

(m) No Recourse. Notwithstanding any other provision of this Letter Agreement
(except for Section 16 herein) or any rights of a party at law or in equity,
this Letter Agreement may only be enforced against, and any claim or cause of
action based upon, arising out of or related to this Letter Agreement may only
be brought against, the parties hereto and then only with respect to the
specific obligations set forth herein with respect to such party. None of the
Affiliates of the Company, EFIH, Purchasers, Oncor or Oncor Holdings, nor any of
their respective representatives shall have any liability under this Letter
Agreement.

 

Page 29

--------------------------------------------------------------------------------

(n) Effectiveness. The obligations, covenants and representations of Oncor and
Oncor Holdings hereunder will not be effective unless and until the Bankruptcy
Court enters an order approving the Merger Agreement, with the exception of the
obligations undertaken in (i) Section 2 (Representations and Warranties),
(ii) Section 3 (Interim Operations), (iii) Section 5 (Filings; Other Actions;
Notifications), (iv) Section 11 (Notice of Current Events) and (v) Section 16
(Miscellaneous) which will be effective as of the signing of this Letter
Agreement.

[Signature Page Follows]

 

Page 30

--------------------------------------------------------------------------------

If the parties are in agreement with the terms of this Letter Agreement, please
execute one copy of this Letter Agreement in the space provided below and return
it to the undersigned, whereupon this Letter Agreement will represent the
binding agreement of the parties hereto.

Very Truly yours,

 

ONCOR ELECTRIC DELIVERY HOLDINGS COMPANY LLC

By: /s/ Robert S. Shapard                                      

Name: Robert S. Shapard Title: CEO ONCOR ELECTRIC DELIVERY COMPANY LLC

By: /s/ Robert S. Shapard                                      

Name: Robert S. Shapard Title: CEO

 

--------------------------------------------------------------------------------

AGREED TO AND ACCEPTED as of the date first set forth above: BERKSHIRE HATHAWAY
ENERGY COMPANY By:  

/s/ Patrick Goodman

Name:   Patrick Goodman Title:   Executive Vice President & Chief Financial
Officer O.E. MERGER SUB INC. By:  

/s/ Patrick Goodman

Name:   Patrick Goodman Title:   Chairman & President O.E. MERGER SUB II, LLC
By:  

/s/ Patrick Goodman

Name:   Patrick Goodman Title:   Manager O.E. MERGER SUB III, LLC By: O.E.
Merger Sub II, LLC, its sole member By:  

/s/ Patrick Goodman

Name:   Patrick Goodman Title:   Manager

 

--------------------------------------------------------------------------------

Exhibit A

Definitions

Capitalized terms used in this Letter Agreement without definition shall have
the following respective meanings:

“2007 Separation Agreement” means the Separation Agreement, dated October 10,
2007, by and between TXU Corp. and Oncor Holdings.

“Affiliate” means, with respect to any Person, any other Person, directly or
indirectly, controlling, controlled by, or under common control with, such
Person.

“Bankruptcy and Equity Exception” means the bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar Laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.

“Benefit Plan” means all material benefit and compensation plans, programs,
policies or arrangements covering Oncor Employees, including “employee benefit
plans” within the meaning of Section 3(3) of ERISA and deferred compensation,
change in control, severance, stock option, stock purchase, stock appreciation
rights, stock based, incentive and bonus plans, agreements, employment
agreements (but only such employment agreements that would reasonably be
expected to provide for annual compensation of $100,000 or more), programs,
policies or arrangements sponsored, contributed to, or entered into by Oncor
Holdings or Oncor or their Subsidiaries.

“Business Day” means any day ending at 11:59 p.m. (Eastern Time) other than a
Saturday or Sunday or a day on which banks are required or authorized to close
in New York, New York.

“Chapter 11 Cases” means the voluntary cases of the Debtors under chapter 11 of
title 11 of the United States Code, 11 U.S.C. § 101 et seq. in the Bankruptcy
Court.

“Confidentiality Agreement” means the confidentiality agreement, dated as of
June 7, 2016, among Parent, the Company and EFIH and, pursuant to a Joinder
Agreement, dated as of June 7, 2016, Oncor.

“Contract” means an agreement, lease, license, franchise, contract, note,
mortgage, indenture, credit agreement, arrangement or other obligation.

“control” (including the correlative terms “controlling”, “controlled by” and
“under common control with”) means the possession, directly or indirectly, 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.

--------------------------------------------------------------------------------

“Costs” means any costs or expenses (including reasonable attorneys’ fees),
judgments, fines, losses, claims, damages or liabilities.

“Debtors” means, collectively, the Company, EFIH and certain entities in which
the Company, directly or indirectly, holds an equity interest, that commenced
voluntary cases under chapter 11 of title 11 of the United States Code, 11
U.S.C. § 101 et seq.

“EFH Merger” shall mean the merger of EFH Merger Sub with and into the Company
with the Company surviving as a wholly owned Subsidiary of Parent.

“EFH Surviving Companies” shall mean the surviving company in the EFH Merger and
the surviving company in the EFIH Merger.

“EFIH Merger” shall mean the merger of EFIH with and into EFIH Merger Sub, with
EFIH Merger Sub surviving as an indirect Subsidiary of Parent.

“Environment” means any and all ambient air, indoor air, surface water and
groundwater (including navigable water and wetlands), the land surface or
subsurface strata or sediment and flora and fauna.

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

“FCC Approval” means the consent of the Federal Communications Commission for
the assignment and/or transfer of control as applicable, of radio licenses,
including point-to-point private microwave licenses held by the Company and/or
its Subsidiaries.

“FERC” means the Federal Energy Regulatory Commission.

“FERC Approval” means an order issued by FERC approving the transactions
contemplated hereby under section 203 of the Federal Power Act and the FERC’s
regulations thereunder.

“Governmental Entity” means any federal, state or local, domestic or foreign
governmental or regulatory authority, agency, commission, body, arbitrator,
court, regional reliability entity (including the Texas Reliability Entity,
Inc.), Electric Reliability Council of Texas, Inc. or any other legislative,
executive or judicial governmental entity, excluding in each case, the
Bankruptcy Court.

“Governmental Request or Order” means any formal or informal request, action,
Law, directive or order (whether temporary, preliminary or permanent), whether
written or not, made, enacted, issued, promulgated, enforced or entered by any
court, other Governmental Entity of competent jurisdiction, or governmental
authority, including without limitation the PUCT, ERCOT, FERC, the Texas
Reliability Entity, the Office of the Attorney General of Texas, or any
Representative thereof.

--------------------------------------------------------------------------------

“Indemnified Parties” means directors, managers and officers of the Oncor
Entities.

“Investor Rights Agreement” means the Investor Rights Agreement, dated as of
November 5, 2008, among Oncor and certain of its direct and indirect
equityholders.

“IRS” means the Internal Revenue Service.

“Knowledge” means, when used with respect to Oncor Holdings and Oncor, the
actual knowledge after reasonable inquiry of Robert S. Shapard, David M. Davis,
Allen Nye, James A. Greer, Walter Mark Carpenter and Deborah L. Dennis.

“Law” means any federal, state, local or foreign law, statute or ordinance,
common law, or any rule, regulation, legally binding standard, judgment, order,
writ, injunction, decree, arbitration award, agency requirement or License of
any Governmental Entity.

“License” means all permits, certifications, approvals, registrations,
clearances, consents, authorizations, franchises, variances, exemptions and
orders issued or granted by a Governmental Entity.

“Lien” means any lien, charge, pledge, security interest, claim or other
encumbrance.

“Mergers” means the mergers contemplated pursuant to the Merger Agreement.

“Oncor Holdings Merger” means the merger of Oncor Holdings with and into Oncor
Holdings Merger Sub with Oncor Holdings Merger Sub surviving as an indirect
Subsidiary of Parent (“Oncor Holdings Surviving Company”).

“Oncor Material Contract” means any Contract, other than a Benefit Plan, that
(A) would be required to be filed by Oncor as a “material contract” as such term
is defined in item 601(b)(10) of Regulation S-K of the Securities Act.

“Person” means any individual, corporation (including not-for-profit), general
or limited partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity or other entity of any kind or
nature.

“PUCT” means the Public Utility Commission of Texas.

“PUCT Approval” means the PUCT’s approval, as applicable, of the transactions
contemplated by the Merger Agreement pursuant to authority asserted by the PUCT
pursuant to the Public Utility Regulatory Act and the PUCT’s regulations
thereunder.

--------------------------------------------------------------------------------

“Registration Statement” means the Registration Statement to be filed with the
SEC, if applicable, relating to the Parent Preferred Stock to be issued in
connection with the transactions contemplated by the Merger Agreement.

“Reorganized TCEH” means a new Subsidiary of TCEH formed by TCEH pursuant to the
Plan of Reorganization.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Subsidiary” means, with respect to any Person, any other Person of which at
least a majority of the securities or other ownership interests having by their
terms ordinary voting power to elect a majority of the board of directors or
other Persons performing similar functions, is directly or indirectly owned or
controlled by such Person and/or by one or more of its Subsidiaries.

“Termination Date” means the date on which the Merger Agreement is validly
terminated in accordance with its terms.

--------------------------------------------------------------------------------

Exhibit B

Key Regulatory Terms

BOARD

 

  1. Separate Board Commitment. At closing and thereafter, Oncor Electric
Delivery Company LLC (“Oncor”) will have a separate board of directors that will
not include any employees of Berkshire Hathaway Energy Company (“BHE”)
competitive affiliates in Texas, any members from the boards of directors of
BHE’s competitive affiliates in Texas, or any individuals other than the
Chairman of the Board of BHE with direct responsibility for the management or
strategies of the competitive affiliates.

 

  2. Independent Board Commitment. Each of Oncor and Oncor Electric Delivery
Holdings Company LLC (“Oncor Holdings”) will have a board of directors comprised
of at least ten (10) directors. A majority of the Oncor Holdings’ board members
and Oncor’s board members will qualify as “independent” in all material respects
in accordance with the rules and regulations of the New York Stock Exchange
(“NYSE”) (which are set forth in Section 303A of the NYSE Listed Company
Manual), from BHE and its subsidiaries (including BHE’s affiliated retail
electric provider (“REP”) and generation company). Oncor Holdings’ and Oncor’s
boards of directors will not include any employees of BHE’s competitive
affiliates in Texas or any members from the boards of directors of BHE’s
competitive affiliates in Texas.

 

  a. The Oncor Board shall have six (6) Independent/Disinterested Directors, two
(2) directors who will be officers of Oncor, and two (2) directors who will be
designated by BHE.

 

  b. The Oncor Holdings Board shall have six (6) Independent/Disinterested
Directors, two (2) directors who will be officers of Oncor Holdings, and two
(2) directors who will be designated by BHE.

 

  c. The duties of the Board members of Oncor Holdings and Oncor will be to act
in the best interests of Oncor consistent with the approved ring-fence and
Delaware Law.

 

  3. Independence of Board Commitment. Oncor Holdings’ and Oncor’s Boards cannot
be overruled by the board of BHE or any of its subsidiaries on dividend policy,
debt issuance, capital expenditures, management and service fees, and
appointment or removal of board members, provided that such actions may also
require the additional approval of Oncor Holdings’ Board.

 

  a. The appointment or removal of the Chief Executive Officer or the Chief
Financial Officer of Oncor shall require a majority vote of Oncor board of
directors, which vote must include the unanimous vote of the BHE directors.

--------------------------------------------------------------------------------

  b. Neither Oncor Holdings nor Oncor nor any of their subsidiaries may without
the prior written consent of BHE: (1) enter into or authorize any material
transactions with a third party outside ordinary course of business nor enter
into any contract, or other similar agreement to effectuate such material
transactions; or (2) institute an Oncor bankruptcy filing.

 

  c. Only the Oncor Holdings Nominating Committee can replace or remove any of
the Independent/Disinterested Directors on the Oncor or Oncor Holdings Boards.
If the Oncor Holdings Nominating Committee is required to fill a vacancy of an
Independent Director on either the Oncor Holdings or Oncor Boards, the
Nominating Committee will nominate a new director who is Disinterested.
“Disinterested Directors” must: (1) be independent from BHE and its subsidiaries
and affiliated entities in all material respects in accordance with the rules
and regulations of the NYSE; and (2) have no material relationship with BHE or
its subsidiaries or affiliated entities currently or within the previous ten
years. Former officers of Oncor who otherwise meet these qualifications qualify
as “Disinterested Directors.”

 

  d. The Independent/Disinterested Directors may make recommendations to the
Oncor Holdings Nominating Committee for any new Disinterested Directors. The
Oncor Holdings Nominating Committee will always have a majority of
Independent/Disinterested Directors. The appointment of new disinterested
directors to either the Oncor Holdings or Oncor Boards shall be subject to the
approval by a majority vote of Independent/Disinterested Directors.

 

  e. A majority vote of the Independent and/or Disinterested Directors must
approve an annual budget if the aggregate amount of such capital and operating
and maintenance expenditures in such annual budget is more than a 10% decrease
from the capital and operating and maintenance budget for the immediately prior
fiscal year.

 

  f. The Independent and/or Disinterested Directors have the right to approve
any amendments or changes to the key provisions of LLC Agreements relating to:
(1) the Independent Board; (2) the rights and powers of
Independent/Disinterested Directors; (3) removal of Directors; and (4) Delaware
as controlling law. Changes to the key provisions of the LLC Agreements shall be
subject to Commission approval.

DIVIDENDS

 

  4. Oncor Board’s Right to Determine Dividends Commitment. The Oncor Board,
comprised of a majority of Independent/Disinterested Directors, will have the
sole right to determine dividends.

 

  a. Any amendments or changes to the Dividend Policy have to be approved by a
majority vote of the Independent/Disinterested Directors.

 

  b. The Independent/Disinterested Directors, acting by majority vote, shall
have the authority to prevent Oncor or Oncor Holdings from making any dividend
if they determine that it is in the best interest of Oncor to retain such
amounts to meet expected future requirements of Oncor (including continuing
compliance with the debt-to-equity ratio described in Section 10).

--------------------------------------------------------------------------------

  5. Oncor Credit Ratings and Dividends Commitment. To eliminate concerns
regarding a negative impact on Oncor resulting from BHE’s acquisition of Oncor,
and in lieu of providing specifics regarding acquisition funding, BHE commits to
the following:

 

  a. BHE will ensure that, as of the closing of the transaction, Oncor’s credit
ratings at all three major ratings agencies (Standard & Poor’s, Moody’s Investor
Service, or Fitch Ratings) will be at or above Oncor’s credit ratings as of
June 30, 2017; and

 

  b. If the credit rating by any one of the three major ratings agencies
(Standard & Poor’s, Moody’s Investor Service, or Fitch Ratings) fall below BBB
(Baa2) for Oncor senior secured debt, then Oncor will suspend payment of
dividends until otherwise allowed by the Commission.

DEBT

 

  6. Existing Legacy Debt and Liabilities. BHE will extinguish all debt that
resides above Oncor at EFIH and EFH, reducing it to zero immediately following
the closing of the transaction and maintaining it at zero going forward.

 

  7. No Debt Solely Dependent on Oncor Commitment. Without prior approval of the
Commission, BHE will not incur, guaranty, or pledge assets in respect of any
incremental new debt at the closing or thereafter that is dependent on: (1) the
revenues of Oncor in more than a proportionate degree than the other revenues of
BHE; or (2) the stock of Oncor.

 

  8. No Transaction-Related Debt at Oncor Commitment. Oncor will not incur,
guaranty, or pledge assets in respect of any incremental new debt related to
financing the transaction at the closing or thereafter. Oncor’s financial
integrity will be protected from the separate operations of BHE’s affiliated REP
or generation company.

 

  9. Cross-Default Provisions, Financial Covenants or Rating Agency Triggers.
Oncor will not include in any of its debt or credit agreements cross-default
provisions between Oncor’s securities and the securities of BHE or any of its
affiliates or subsidiaries. Oncor will not include in its debt or credit
agreements any financial covenants or rating agency triggers related to BHE or
any other BHE affiliate.

 

  10. Debt-to-Equity Ratio Commitment. Oncor’s debt will be limited so that its
regulatory debt-to-equity ratio (as determined by the Commission) is at or below
the assumed debt-to-equity ratio established from time to time by the Commission
for ratemaking purposes. Oncor’s payment of dividends to BHE will be limited by
compliance with the Commission-approved regulatory debt-to-equity ratio.

 

  11. No Inter-Company Debt Commitment. Oncor will not enter into any
inter-company debt transactions with BHE affiliates following consummation of
the transaction.

--------------------------------------------------------------------------------

  12. No Inter-Company Lending Commitment. Oncor will not lend money to or
borrow money from BHE or BHE’s affiliates.

 

  13. Credit Facility Commitment. Oncor will not share credit facilities with
BHE or BHE’s affiliates.

 

  14. No Pledging of Assets/Stock Commitment. Oncor’s assets or stock shall not
be pledged for any entity other than Oncor.

 

  15. No Recovery of Affiliate REP Bad Debt Commitment. So long as any BHE REP
is affiliated with Oncor, Oncor will not seek to recover from its customers any
costs incurred as a result of a bankruptcy of any BHE REP.

 

  16. Credit Rating Registration Commitment. BHE and Oncor will be registered
with major nationally and internationally recognized bond rating agencies, such
as Standard & Poor’s, Moody’s Investor Service, or Fitch Ratings. Oncor’s
ratings shall reflect the ring-fence provision contemplated herein in order to
provide Oncor with a stand-alone (non-linked) credit rating.

BANKRUPTCY LIABILITIES

 

  17. Bankruptcy Expenses and Liabilities. Oncor will not seek recovery in rates
of any expenses or liabilities related to EFH’s bankruptcy. This commitment
includes the agreement that Oncor will not seek recovery in rates of amounts
resulting from any: (1) tax liabilities resulting from the spin-off of Texas
Competitive Electric Holdings Company LLC; (2) asbestos claims relating to
non-Oncor operations of or under EFH; or (3) make-whole claims by creditors of
EFH or EFIH set forth in the EFH and EFIH Plan of Reorganization. Oncor’s
customers will not be required to pay for these items.

NON-CONSOLIDATION

 

  18. Non-Consolidation Legal Opinion. BHE agrees to obtain a non-consolidation
legal opinion that provides that, in the event of a bankruptcy of BHE or any
affiliate of BHE, a bankruptcy court would not consolidate the assets and
liabilities of Oncor with BHE or any affiliate of BHE.

CAPEX

 

  19. Capital Expenditure Commitment. Oncor shall make minimum capital
expenditures equal to a budget of at least $7.5 billion over the five-year
period beginning January 1, 2018, and ending December 31, 2022, subject to the
following adjustments to the extent reported to the Commission in Oncor’s
quarterly earnings monitor report: Oncor may reduce capital spending due to
conditions not under Oncor’s control, including, without limitation, siting
delays, cancellations of projects by third-parties, weaker than expected
economic conditions, or if Oncor determines that a particular expenditure would
not be prudent.

--------------------------------------------------------------------------------

CYBERSECURITY

 

  20. Cybersecurity Expenditure Commitment. Oncor shall make minimum
cybersecurity expenditures equal to a budget of $35 million over the five-year
period beginning January 1, 2018, and ending December 31, 2022. Oncor shall work
cooperatively with other BHE entities with respect to cybersecurity issues.

AFFILIATE ISSUES

 

  21. Affiliate Asset Transfer Commitment. Neither Oncor Holdings nor Oncor will
transfer any material assets or facilities to any affiliates (other than Oncor
Holdings, Oncor, and their subsidiaries, which are hereinafter referred to as
the “ring-fenced entities”), other than a transfer that is on an arm’s-length
basis consistent with the Commission’s affiliate standards applicable to Oncor,
regardless of whether such affiliate standards would apply to the particular
transaction.

 

  22. Arm’s-Length Relationship Commitment. Each of the ring-fenced entities
will maintain an arm’s-length relationship with BHE or BHE’s affiliates
consistent with the Commission’s affiliate standards applicable to Oncor.

 

  23. Separate Books and Records Commitment. Each of the ring-fenced entities
will maintain accurate, appropriate, and detailed books, financial records and
accounts, including checking and other bank accounts, and custodial and other
securities safekeeping accounts that are separate and distinct from those of any
other entity.

 

  24. FERC Preemption. Neither Oncor nor BHE or BHE’s affiliates will assert
before the Commission or a Texas court of competent jurisdiction that the
Commission is preempted pursuant to the Federal Power Act (e.g., under a FERC
tariff) from making a determination regarding the prudence of affiliate costs
sought to be allocated to Oncor.

ADDITIONAL COMMITMENTS

 

  25. Holding Company Commitment. Oncor Holdings will be retained between BHE
and Oncor.

 

  26. Continued Ownership Commitment. BHE will hold a majority of its ownership
interest in Oncor for a period of more than five years after the closing date of
the transaction.

 

  27. Compliance Report Commitment. For a period of five years after the closing
date of the transaction, Oncor will make annual reports to the Commission
regarding its compliance with these commitments.

 

  28. Name/Logo Commitment. BHE commits to maintaining a name and logo for Oncor
that is separate and distinct from the names of BHE’s REP and wholesale
generation companies, if any.

--------------------------------------------------------------------------------

  29. Headquarters/Management Commitment. Oncor will maintain its separate
headquarters and management in Dallas, Texas. Local management will remain the
primary point of contact on all regulatory and operational matters.

 

  30. Oncor Senior Management Succession Plan. Effective upon closing of the
transaction, Robert S. Shapard will assume the role of Executive Chairman of the
Oncor Board, and E. Allen Nye, Jr. will assume the role of Chief Executive
Officer of Oncor.

 

  31. Texas Utility Commitment. Oncor will continue to operate solely within the
state of Texas as a public utility subject to the continuing jurisdiction of the
Commission.

 

  32. Reliability. For purposes of Substantive Rule 25.52, system average
interruption duration index (“SAIDI”) and system average interruption frequency
index (“SAIFI”) standards should be calculated for Oncor’s current service area
based on Oncor’s forced interruption performance for years 2014, 2015, and 2016.
These standards should go into effect starting with the calendar year 2018.

 

  33. Reports of SAIDI and SAIFI to Commission. Oncor will report its actual
system-level SAIDI and SAIFI statistics to the Commission in its Quarterly
Performance Reports and yearly Service Quality Reports filed pursuant to 16 Tex.
Admin Code (“TAC”) §25.81.

 

  34. Transaction Costs. None of the transaction costs will be borne by Oncor’s
customers, nor will Oncor seek to include transaction costs in rates. For
purposes of this commitment, “Transaction Costs” are those incremental costs
paid to advance or consummate the Proposed Transaction. Examples of Transaction
Costs include, but are not limited to: BHE employee time and expenses; Oncor
change of control payments; certain executive severance costs related to the
transaction; and third party costs, including bank advisors, external legal
advisors, rating agencies, and expert witnesses and consultants in each case
paid to advance or consummate the Proposed Transaction. Transaction Costs do not
include Oncor employee time.

 

  35. Transition Costs. No BHE employee time and expenses, third party costs,
fees, expenses or costs of the transition (“Transition Costs”) will be borne by
Oncor’s customers, nor will Oncor seek to include Transition Costs in rates.
Transition Costs are those costs necessary to integrate the two companies for
Day 1 Readiness, including the one-time transition costs being incurred whether
directly or indirectly through affiliate charges to transition Oncor to
ownership by BHE and to integrate Oncor’s operations and systems with those of
BHE. Provided, however, that Transition Costs do not include Oncor employee
time, costs to achieve savings or synergies or costs that reflect reasonable and
necessary costs in providing service to the public. “Costs to achieve” reflect
amounts incurred to realize operating enhancements, efficiency gains, or costs
reduction initiatives.

--------------------------------------------------------------------------------

  36. Workforce. For two years after closing, each current Oncor employee who is
employed on the closing date will be provided; (a) a base salary or wage rate no
less favorable than the base salary or wage rate provided to such employee
immediately prior to the closing date; (b) aggregate incentive compensation
opportunities that are substantially comparable in the aggregate to those
provided to such employee immediately prior to the closing date; and
(c) employee benefits that are substantially comparable in the aggregate to
those provided to such employee immediately prior to the closing date. Oncor
will not implement any material involuntary workforce reductions (with respect
to either field or corporate personnel) of Oncor employees.

 

  37. Collective Bargaining Agreements. With respect to any Oncor employee whose
terms and conditions of employment are covered by a collective bargaining
agreement, the terms and conditions of such employment will continue to be
governed by the terms of the applicable collective bargaining agreement, as may
be modified from time to time.

 

  38. Code of Conduct. Oncor will continue to conduct its activities in
compliance with its existing code of conduct.

 

  39. Commission Jurisdiction. Oncor and Oncor Holdings will not own, operate,
or construct capital assets outside of ERCOT without prior approval from the
Commission or take any other action that would impair the Commission’s
regulatory jurisdiction. Neither Oncor, Oncor Holdings, BHE nor their respective
affiliates will take any action that would subject ERCOT assets to the
jurisdiction of the Federal Energy Regulatory Commission (“FERC”); provided,
however, that FERC continues to have jurisdiction under sections 210, 211, and
212 of the Federal Power Act (“FPA”) and may direct transmission and
interconnection services over certain existing facilities outside of ERCOT;
provided further that the existing reliability and critical infrastructure
standards administered by the North American Electric Reliability Corporation
(“NERC”), through delegation of authority from FERC, may affect the operations
of assets that are deemed part of the bulk electric system.

 

  40. Texas Reliability Entity. Oncor will not seek to have another NERC
Regional Entity other than the Texas Reliability Entity serve as the lead
regional entity responsible for monitoring Oncor’s activities and ensuring
compliance with NERC Reliability Standards.

 

  41. Goodwill. Any costs of goodwill of BHE or its affiliates (including the
pre-existing goodwill recognized by Oncor) will not be included in rate base,
cost of capital, or operating expenses in future Oncor ratemaking proceedings.
Write-downs or write-offs of goodwill will not be included in the calculation of
net income for dividend payment purposes.

 

  42. Pushdown Accounting. BHE will not elect to apply pushdown accounting for
the merger, i.e., the merger will have no impact on Oncor’s assets being
acquired; and any incremental goodwill will not be allocated to, or recognized
within, Oncor’s balance sheet.

--------------------------------------------------------------------------------

  43. Tangible and Quantifiable Benefits. At a minimum, Oncor will provide the
following tangible and quantifiable benefits associated with the merger. Oncor
will provide monthly bill credits to electric delivery rates for ultimate
credits to customers in an amount equal to 90% of any interest rate savings
achieved until: final rates are set in the next Oncor base rate case after the
Oncor base rate case currently filed. Savings will not be included in credits if
already realized in rates. Interest Rate Savings refers to the improvement in
Oncor’s borrowing costs post-close relative to those costs as of June 30, 2017
due to improvement in credit ratings and/or improvement in market spreads. Until
final rates are set in the next Oncor base rate case after the Oncor base rate
case that is currently filed, Oncor will file a report with the Commission every
six months detailing any interest rate savings determined by the amount of debt
issued by Oncor by at least 0.15% (amounts above 0.15% being based on actual
interest rate savings by Oncor) and demonstrating a calculation of the credit.
BHE and Oncor agree to work in good faith with interested parties to determine
an acceptable method for implementation of any bill credit to effectuate this
commitment, as approved by the Commission. At a minimum, Oncor shall provide
retail electric providers 45-day notice of the amount of any customer credits
(e.g., for each customer class, the amount per kwh or per-customer credit that
would apply) prior to the effective date of the credits and shall implement
updated bill credits simultaneously with other changes in Oncor’s rates. In
addition, one year after closing, Oncor will present a merger synergy savings
analysis to the Commission and provide monthly bill credits to electric rates
for inclusion in customer bills in an amount equal to 90% of any synergy savings
until final rates are set in the next Oncor base rate proceeding, in which any
total synergy savings shall be reflected in Oncor’s rates.

 

  44. LLC Agreements. The Oncor Holdings and Oncor LLC Agreements shall be
amended to the extent necessary to effect all of the commitments herein.

 

--------------------------------------------------------------------------------

The undersigned parties agree to support approval of a transaction by Berkshire
Hathaway Energy Company to acquire 100% of Oncor Electric Delivery Company LLC
(the “Transaction”), subject to review of the Application presented to the
Public Utility Commission of Texas and confirmation that the Transaction
(a) includes the foregoing Proposed Regulatory Commitments (the “Commitments”)
and (b) the transaction otherwise meets the applicable Public Utility Commission
of Texas requirements necessary to find that the Transaction is in the public
interest.

AGREED:

 

STAFF OF THE PUBLIC UTILITY COMMISSION OF TEXAS

By:  

/s/ Brian Lloyd            

  Brian Lloyd, Executive Director

OFFICE OF PUBLIC UTILITY COUNSEL

By:  

/s/ Tonya Baer            

  Tonya Baer, Public Counsel

TEXAS INDUSTRIAL ENERGY CONSUMERS

By:  

/s/ Phillip Oldham            

  Phillip Oldham, Counsel for TIEC

STEERING COMMITTEE OF CITIES SERVED BY ONCOR

By:  

/s/ Geoffrey Gay            

  Geoffrey Gay, Counsel for Cities

--------------------------------------------------------------------------------

Exhibit C

Requests for Information

Robert S. Shapard

E. Allen Nye, Jr.

David M. Davis

--------------------------------------------------------------------------------

Exhibit D

Change of Control Individuals

Walter Mark Carpenter

Don J. Clevenger

David M. Davis

Deborah L. Dennis

James A. Greer

Michael E. Guyton

E. Allen Nye, Jr.

Robert S. Shapard