Exhibit 10(d)

DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT

FINANCING STATEMENT AND FIXTURE FILING

 

STATE OF TEXAS  

§       

 

§       

COUNTY OF FREESTONE  

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This Deed of Trust, Assignment of Rents, Security Agreement, Financing Statement
and Fixture Filing (this “Deed of Trust”) is dated as of August 28, 2006 from:

TXU BIG BROWN COMPANY LP, a Texas limited partnership (the “Grantor”), whose
address is 1601 Bryan, Dallas, Texas 75201,

to:

JACK MAULDIN, JR., as deed of trust trustee (together with his successors and
assigns in such capacity, the “Trustee”), whose address is 121 East Commerce,
Fairfield, Texas 75840, for the use and benefit of THE BANK OF NEW YORK, in its
capacity as collateral agent for and on behalf of the Secured Parties and not in
its individual capacity (together with its successors and assigns in such
capacity, the “Beneficiary”), whose address is 600 East Las Colinas Blvd., Suite
1300, Irving, Texas 75039, Attn. Director of Agent Services,

and is also a security agreement between Grantor, as debtor, and Beneficiary, as
secured party. Capitalized terms used in the Deed of Trust but not defined
herein have the meanings ascribed to them in the Intercreditor Agreement
(hereinafter defined).

NOTICE:

This instrument contains or secures inter alia obligations which may provide
for: (a) a variable rate of interest and/or (b) future and/or revolving
extensions of credit, which, when made, shall have the same priority as
extensions of credit made on the date hereof whether or not (i) any extensions
of credit were made on the date hereof and (ii) any indebtedness is outstanding
at the time any extension of credit is made.

 

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R E C I T A L S

A. Grantor currently owns and operates two coal and/or lignite-fired electric
generation plants located in Freestone County, Texas, known as Big Brown Units 1
and 2 (“Units 1 and 2”).

B. TXU Generation Development Company LLC, a Delaware limited liability company
(together with its successors and assigns, “Generation Development”) is
developing a portfolio of coal and/or lignite fired electric generation plants
to be located throughout the State of Texas (the “Portfolio”) including a coal
and/or lignite-fired electric generation plant in Freestone County, Texas to be
located near Units 1 and 2, which additional facility is to be known as Big
Brown Unit 3 (“Unit 3”).

C. Generation Development has entered into and intends to enter into Commodity
Hedge and Power Sales Agreements and other Secured Hedge Documents in order to
secure favorable terms for the financing of the development and construction of
the Portfolio.

D. Grantor, as credit support party, entered into a credit support letter
agreement with Generation Development (as amended, amended and restated,
supplemented or otherwise modified and in effect from time to time, the “Credit
Support Letter”) and in conjunction therewith agreed to provide this Deed of
Trust, creating liens and a security interest, on a first priority basis, upon
the Collateral (as herein defined).

E. Generation Development, Grantor, Beneficiary and others are concurrently
herewith entering into that certain Collateral Agency and Intercreditor
Agreement, dated as of the date of this Deed of Trust (as amended, amended and
restated, supplemented or otherwise modified and in effect from time to time,
the “Intercreditor Agreement”) to reflect the sharing of the liens and security
interest upon the Collateral created by this Deed of Trust with all Secured
Parties who may from time to time become counterparties thereto and to appoint
Beneficiary as Collateral Agent for the purposes of holding and administering
the Collateral.

F. In conjunction with the development, construction and operation of the
Portfolio, it is contemplated that Grantor shall create liens and security
interests, on a first and second priority basis, upon Unit 3 and that portion of
the Collateral which constitutes Shared Facilities (as herein defined).

G. Grantor has duly authorized the execution, delivery and performance of this
Deed of Trust.

 

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W I T N E S S E T H :

ARTICLE 1

IDENTIFICATION OF THE COLLATERAL

AND ITS CONVEYANCE TO THE TRUSTEE

Section 1.1 Grantor’s Conveyance of the Collateral to the Trustee to Secure the
Secured Obligations. To secure the Secured Obligations described and defined in
Article 2, in consideration of the uses and trusts (the “Trust”) established by
this Deed of Trust and in consideration of valuable consideration paid before
delivery of this Deed of Trust by the Trustee, Generation Development and
Beneficiary to Grantor, who hereby acknowledges its receipt and that it is
reasonably equivalent value for this Deed of Trust and all other security and
rights given by Grantor, Grantor hereby Grants, Bargains, Sells, Conveys,
Transfers, Assigns, Sets Over, Confirms, Delivers and Warrants, subject to the
Permitted Encumbrances (hereinafter defined), unto the Trustee, his successors
or substitutes in the Trust, with POWER OF SALE and right of entry and
possession, for use and benefit of Beneficiary, as Collateral Agent for the
Secured Parties, all of its right, title and interest in and to the following
property (collectively, the “Collateral”):

(a) Real Property. All of the real estate, immovable property and premises
described on Exhibit A (the “Land”) together with all and singular the
tenements, rights, easements, hereditaments, rights of way, privileges,
liberties, appendages and appurtenances now or hereafter belonging or in any way
pertaining to the Land, including without limitation those easements, rights and
appurtenances established pursuant to the Easement Agreement (hereinafter
defined); all estate, claim, demand, right, title or interest of the Grantor in
and to any street, road, highway or alley, vacated or other, adjoining the Land
or any part thereof; all strips and gores belonging, adjacent or pertaining to
the Land; all development rights, riparian rights, water, and water rights; and
any after-acquired title to any of the foregoing (collectively, the “Real
Property”);

(b) Buildings and Improvements. All buildings and other improvements now or
hereafter located on the Land, including all water, sewage and drainage
facilities, fire suppression systems, paving, and all building materials and
building equipment and fixtures now or hereafter delivered to and intended to be
installed in or on the Land and other improvements now or hereafter placed,
erected, constructed or developed on the Land or attached to, contained in or
used in any such buildings and other improvements, and all additions thereto and
betterments, substitutions and replacements thereon (collectively, the
“Improvements”);

(c) Fixtures and Equipment. All fixtures, machinery, apparatus, boilers,
combustors, turbines, generators, condensers, materials handling, storage and
conveying equipment, bunkers, hoppers, crushers, dust suppression equipment,
precipitators, scrubbers, baghouses, ash collection and disposal systems,
exhaust systems, control rooms, control systems, diesel generators, fire pumps,
fuel storage tanks, cooling towers, other equipment, and other tangible
property, now owned or hereafter acquired by Grantor and now or

 

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hereafter located on or at, or installed in the Land or Improvements, and which
are used for, or in connection with, the construction, maintenance, operation or
repair of the Land or Improvements, or which are necessary or useful for the
complete use and occupancy of the Land or Improvements as an electric power
generation facility for the purposes for which they were or are to be attached,
placed, erected, constructed or developed, and all renewals and replacements of
them, all substitutions for them and all additions and accessions to them which
are located on the Land (collectively, the “Fixtures and Equipment”);

(d) Remote Facilities. All buildings, improvements, fixtures and equipment
described as Remote Facilities in the Easement Agreement recorded in Vol. 1372,
Page 644 of the Official Records of Freestone County, Texas (collectively, the
“Remote Facilities”) on the land described in Exhibit C attached hereto (the
“Grantor Land”).

(e) Rents. All rents, revenues, proceeds, issues, profits, income or other
benefits of the Land, the Improvements and the Fixtures and Equipment,
including, without limitation, cash or securities deposited pursuant to leases
of all or any part of the Land, Improvements or Fixtures and Equipment; subject
to the right, power and authority hereinafter given to the Grantor to collect
and apply the same (collectively, the “Rents”);

(f) Leases. All rights of the Grantor in, to and under all leases, licenses,
occupancy agreements, concessions and other arrangements, oral or written, now
existing or hereafter entered into, whereby any Person agrees to pay money or
any other consideration for the use, possession or occupancy of, or any estate
in, the Land or any portion thereof or interest therein (herein collectively
referred to as the “Leases”), and the right, subject to applicable law, upon the
occurrence of any Trigger Event, to receive and collect the Rents paid or
payable thereunder;

(g) Damage Rights. All claims or demands Grantor now has or may hereafter
acquire with respect to any damage to the Land, the Improvements, the Fixtures
and Equipment, or the Remote Facilities and any and all proceeds of insurance
(including premium refunds) in effect with respect to the Land, the Improvements
or the Fixtures and Equipment, and any and all proceeds from the taking of the
Land, the Improvements or the Fixtures and Equipment or any part thereof or any
interest or right or estate appurtenant thereto by eminent domain or by purchase
in lieu thereof, including, without limitation, any awards resulting from a
change of grade of streets or as the result of any other damage to the Land, the
Improvements or the Fixtures and Equipment for which compensation shall be given
by any Governmental Authority (collectively, the “Damage Rights”);

(h) Permits and Licenses. To the full extent assignable, all permits, licenses,
franchises, certificates and other rights and privileges obtained and held by
Grantor in connection with the Real Property, the Improvements, the Fixtures and
Equipment, or the Remote Facilities (collectively, the “Permits and Licenses”);

(i) Construction Rights. To the full extent assignable, all plans,
specifications, maps, surveys, reports, architectural, engineering drawings and
other documents, of whatever

 

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kind or character, relating to the use, construction upon, occupancy, leasing or
operation of the Real Property, Improvements or Fixtures and Equipment
(collectively, the “Construction Rights”);

(j) Air and Zoning Rights. To the full extent assignable, all air rights,
emissions rights, zoning rights or other similar rights or interests with
respect to the Land or the Improvements (collectively, the “Air and Zoning
Rights”);

(k) Contract Rights. To the full extent assignable, all rights (but not
obligations, unless the Beneficiary acts to obtain benefits thereunder) under
all contracts, agreements, consents and other rights and privileges entered into
by Grantor in connection with the Real Property, the Improvements or the
Fixtures and Equipment or the management, possession, operation, protection and
preservation thereof, including the Easement Agreement, the Services Agreement,
all Shared Facilities Agreements, and all procurement, transportation, and
interconnection agreements relating to the use or operation thereof as an
electric power generation facility, together with any and all intangibles
related to the foregoing (collectively, the “Contract Rights”);

(l) Miscellaneous. All engineering, accounting, title, legal and other technical
or business data now owned or at any time hereafter acquired concerning the
Collateral described in Subparagraphs (a)-(k) above, and all books, files,
records, magnetic media or other forms of recording or obtaining access to such
data;

(m) Personal Property. All other personal property of every kind and nature
utilized or to be utilized in connection with the management, possession,
operation, protection, maintenance, and preservation of any of the foregoing;

(n) Other Estates and Interests. All replacements or substitutions in and to any
of the foregoing and all other property and rights of the Grantor of every kind
and character relating to any of the foregoing; and

(o) Proceeds. All proceeds, products, substitutions, and accessions of the
foregoing of every type, except for proceeds derived from dispositions
authorized pursuant to the provisions of Section 7.14(c).

provided, however, Grantor hereby reserves an interest in that portion of the
Collateral designated as a Shared Facility, as provided in Section 1.3.

Section 1.2 Habendum and Title Warranty. TO HAVE AND TO HOLD the Collateral,
together with every right, privilege, hereditament and appurtenance belonging or
appertaining to it, unto the Trustee, his successors or substitutes in the Trust
and his or their assigns, for the benefit of Beneficiary, forever. Grantor
hereby binds Grantor and Grantor’s successors to forever WARRANT and DEFEND the
Collateral and every part of it unto the Trustee, his successors or substitutes
in the Trust, and his or their assigns, against the claims and demands of every
person whomsoever SUBJECT, HOWEVER, to Permitted Encumbrances.

 

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Section 1.3 Shared Facilities.

(a) The Land does not include the land upon which the Remote Facilities are
located; however, as provided in Section 1.1(d), those Remote Facilities are
subject to the lien and security interest of this Deed of Trust and are
accessible to the owner of Unit 1 and 2 and the Beneficiary pursuant to the
Easement Agreement. By its acceptance of this Deed of Trust, Beneficiary
acknowledges that, in connection with the development, construction and
operation of Unit 3, Generation Development (or its Affiliates) may require the
use and enjoyment on a shared basis with the owner of Units 1 and 2 of
(i) certain designated Remote Facilities (“Shared Remote Facilities”) and
(ii) certain other designated facilities that are located on the Land, but which
shall not include the facilities set forth on Schedule 1A (“Excluded Unit 1 and
2 Plant Island Facilities”), but may include the facilities set forth on
Schedule 1B and such additional facilities located on the Land that are
reasonably necessary or advisable to be shared in connection with the
development or operation of Unit 3 (the “Unit 1 and 2 Plant Island Shared
Facilities”), as set forth in this Section 1.3. By acceptance of this Deed of
Trust, Beneficiary acknowledges and agrees that, subject to the terms of this
Section 1.3, Grantor and Generation Development (or its Affiliates) may enter
into one or more agreements (collectively, the “Shared Facilities Agreements”)
that allow Generation Development (or its Affiliates) to use and enjoy such
designated Shared Remote Facilities and/or Unit 1 and 2 Plant Island Shared
Facilities (collectively referred to as “Shared Facilities”) together with the
owner of Unit 1 and 2.

(b) In furtherance of the foregoing, Beneficiary acknowledges and agrees that
the lien and security interest of this Deed of Trust as to such Shared Remote
Facilities which are to be or shall be used by Generation Development (or its
Affiliates) in connection with the development, construction or operation of
Unit 3 shall be released upon request by Grantor; provided, however, (i) no such
release shall become effective unless and until a Shared Facilities Agreement
has been entered into with respect thereto; (ii) Grantor has provided
Beneficiary with written notice of, and a copy of, such proposed Shared
Facilities Agreement not less than twenty (20) calendar days prior to the
proposed effective date of such agreement; and (iii) Beneficiary (acting at the
direction of the Required Creditors) has consented in writing to such Shared
Facilities Agreement, which consent, so long as no Trigger Event has occurred
and is continuing, shall not be unreasonably withheld, conditioned or delayed.
Beneficiary shall not be deemed to have unreasonably withheld its consent if the
proposed Shared Facilities Agreement contains terms that are inconsistent with
the Commercially Reasonable Terms set forth in Section 1.3(d). Beneficiary shall
have no obligation to release any lien granted by this Deed of Trust or consent
to a Shared Facilities Agreement as set forth in this Section 1.3(b) if a
Trigger Event has occurred and is continuing.

(c) Beneficiary acknowledges and agrees that Grantor and Generation Development
(or its Affiliates) may enter into one or more Shared Facilities Agreements with
respect to designated Unit 1 and 2 Plant Island Shared Facilities (other than
Excluded Unit 1 and 2 Plant Island Facilities); provided that (i) Grantor has
furnished Beneficiary with written notice of, and a copy of, such proposed
Shared Facilities Agreement not less than twenty

 

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(20) calendar days prior to the proposed effective date of such agreement; and
(ii) Beneficiary has consented in writing to such Shared Facilities Agreement,
which consent, so long as no Trigger Event has occurred and is continuing, shall
not be unreasonably withheld, conditioned or delayed. Beneficiary shall not be
deemed to have unreasonably withheld its consent if the proposed Shared
Facilities Agreement pertaining to such Unit 1 and 2 Plant Island Shared
Facilities contains terms that are inconsistent with the Commercially Reasonable
Terms set forth in Section 1.3(d). Grantor acknowledges and agrees that Shared
Facilities Agreements pertaining to such Unit 1 and 2 Plant Island Shared
Facilities shall be on Commercially Reasonable Terms, to the extent such terms
are applicable. Grantor and Beneficiary agree that Beneficiary will not be
required to release its lien on any Unit 1 and 2 Plant Island Shared Facilities;
provided, however, that Beneficiary acknowledges and agrees that its lien on any
such Unit 1 and 2 Plant Island Shared Facility will be subject and subordinate
to the terms and conditions of the related Shared Facilities Agreement and will,
more specifically, be subject to any easement granted to Generation Development
in favor of Unit 3 in the related Shared Facilities Agreement. Beneficiary shall
have no obligation to consent to a Shared Facilities Agreement pertaining to
facilities at Units 1 and 2 or subordinate its lien to any Shared Facilities
Agreement easement as set forth in this Section 1.3(c) if a Trigger Event has
occurred and is continuing.

(d) For purposes of any Shared Facilities Agreement applicable to Remote Shared
Facilities and Unit 1 and 2 Plant Island Shared Facilities, “Commercially
Reasonable Terms” means that such agreement:

 

  (i) contains customary perpetual, non-exclusive reciprocal (if appropriate)
easements appurtenant for access, ingress, egress, utilities, control systems
and plant operations by the owner of Units 1 and 2 and the owner of Unit 3;
provided, however, that no such easement need be granted for the benefit of the
owner of Units 1 and 2 if such grant would be redundant of easements existing
under the Easement Agreement with respect to the Remote Facility;

 

  (ii) provides that, from and after the effective date of the Shared Facilities
Agreement, Beneficiary, on the one hand, and the holders of the First Lien
Credit Facilities and Second Lien Credit Facilities, on the other hand, shall
each have, or be entitled to have, a lien on the Shared Facilities Agreement and
such easements;

 

  (iii) identifies the holders of the First Lien Credit Facilities and Second
Lien Credit Facilities (or their respective collateral agents) as permitted
successor obligors of Generation Development (or the owner of Unit 3, if
different), and as permitted successor beneficiaries, under such Shared
Facilities Agreement and obligates the owner of the Land to execute a consent to
assignment to such holders or collateral agents in customary form;

 

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  (iv) identifies Beneficiary as a permitted successor obligor of Grantor, and
as a permitted successor beneficiary, under such Shared Facilities Agreement and
obligates the owner of the land upon which Remote Facilities are currently
located to execute a consent to assignment to such holders or collateral agents
in customary form;

 

  (v) provides that any Shared Facility may not be sold, scrapped or disposed of
except for (A) a Shared Facility that is obsolete, damaged or not used or useful
in the operation of Units 1 and 2 so long as the fair market value of all such
Shared Facilities does not exceed, in the aggregate, in the case of Shared
Remote Facilities, twenty million dollars ($20,000,000), and in the case of Unit
1 and 2 Plant Island Shared Facilities, ten million dollars ($10,000,000), over
any rolling twelve-month period; (B) a Shared Facility that is disposed of in
the ordinary course of business in accordance with prudent operating practices
for power generation facilities, so long as the fair market value of all such
Shared Facilities does not exceed, in the aggregate, in the case of Shared
Remote Facilities, twenty million dollars ($20,000,000), and in the case of Unit
1 and 2 Plant Island Shared Facilities, ten million dollars ($10,000,000), over
any rolling twelve-month period; (C) Shared Facilities that are replaced by
substantially equivalent Shared Facilities as reasonably determined by Grantor
acting in good faith; or (D) Shared Facilities with respect to which the
Beneficiary has consented to such release (which, provided that no Trigger Event
has occurred and is continuing, shall not be unreasonably withheld, conditioned
or delayed);

 

  (vi) with respect to Unit 1 and 2 Plant Island Shared Facilities, subject to
the provisions of Section 1.3(d)(viii), provides that the Unit 3 owner’s use of
such Unit 1 and 2 Plant Island Shared Facilities shall not otherwise restrict,
impair, limit, interfere with or hinder Units 1 and 2 from operating and
performing (including, but not limited to, with respect to their capacity and
output) in a manner consistent, in all substantive respects, with the historical
performance of such units;

 

  (vii) does not materially increase the net cost of operating Units 1 and 2 in
the ordinary course of such operations (as compared to the net cost of operating
Units 1 and 2 in the ordinary course of such operations prior to the
effectiveness of the Shared Facilities Agreement) and fairly and reasonably
allocates the costs to operate and maintain the Shared Facilities between the
owners of Units 1 and 2 and Unit 3, respectively;

 

  (viii) generally provides for a pro-rata sharing of any decrease in the
capacity or output of the Shared Facilities and does not otherwise give
preferences to Unit 3 to the detriment of Units 1 and 2, except those
preferences that are pursuant to a reasonable objective metric fairly and
consistently applied; and

 

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  (ix) has a perpetual term and may not be terminated or materially amended or
modified without the prior written consent of Beneficiary (which consent may not
be unreasonably withheld, conditioned or delayed).

(e) Beneficiary (acting at the direction of the Required Creditors), by its
acceptance of this Deed of Trust, covenants and agrees to cooperate in good
faith from time to time, upon request by Grantor, (i) to identify the specific
Remote Facilities and facilities of Units 1 and 2 (excluding, however, Excluded
Unit 1 and 2 Plant Facilities) which will become Shared Facilities, (ii) to
allocate the correlative rights and duties of the owners of Units 1 and 2 and
the owner of Unit 3 as to such Shared Facilities, and (iii) to document the
release thereof from the lien and security interest of this Deed of Trust, as
set forth in this Section 1.3 and Section 7.14.

ARTICLE 2

THE OBLIGATIONS SECURED

Section 2.1 Deed of Trust to Secure Secured Obligations. This conveyance to the
Trustee is in trust to secure the Secured Obligations as defined in the
Intercreditor Agreement.

Section 2.2 Future Advances. If any remedy or right of the Beneficiary pursuant
hereto is acted upon by the Beneficiary or if any actions or proceedings
(including any bankruptcy, insolvency or reorganization proceedings) are
commenced in which the Beneficiary is made a party and is obliged to defend or
uphold or enforce this Deed of Trust or the rights of the Beneficiary hereunder,
Grantor shall pay, or cause to be paid, all commercially reasonable sums,
including reasonable attorneys’ fees and disbursements, incurred by the
Beneficiary related to the exercise of any remedy or right of the Beneficiary
pursuant hereto or for the expense of any such action or proceeding together
with all statutory costs and such sums shall constitute a portion of the Secured
Obligations and shall, to the extent permissible by law, be a lien on the
Collateral prior to any right, title to, interest in or claim upon the
Collateral attaching or accruing subsequent to the recording of this Deed of
Trust, except as provided in Section 1.3, and shall be secured by this Deed of
Trust, to the extent permitted by law.

ARTICLE 3

REPRESENTATIONS, WARRANTIES,

COVENANTS AND AGREEMENTS OF GRANTOR

FURTHER to secure the full, timely and proper payment and performance of the
Secured Obligations, Grantor hereby represents, warrants, covenants and agrees
with and warrants to Beneficiary as follows:

Section 3.1 Representations and Warranties. Grantor does hereby represent and
warrant to Beneficiary as follows:

 

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(a) Financial Matters. Grantor is solvent, is not bankrupt and has no
outstanding bankruptcies, and, to Grantor’s knowledge, has no outstanding liens,
suits, garnishments, bankruptcies or court actions which would render Grantor
insolvent or bankrupt. There has not been filed by or, to Grantor’s knowledge,
against Grantor a petition in bankruptcy or a petition or answer seeking an
assignment for the benefit of creditors, the appointment of a receiver, a
trustee, custodian or liquidator with respect to Grantor or any substantial
portion of Grantor’s property, reorganization, arrangement, rearrangement,
composition, extension, liquidation or dissolution or similar relief under the
United States Bankruptcy Code or any state law.

(b) Title and Authority. Grantor is (i) the lawful owner of good and marketable
indefeasible fee simple title to the Land described on Exhibit A, to the
Improvements located thereon and to the land upon which the Remote Facilities
are located, and (ii) the lawful owner of good and marketable title to the
Fixtures and Equipment and Remote Facilities, and has good right and authority
to grant, bargain, sell, transfer, assign and mortgage the Real Property,
Improvements, Fixtures and Equipment and Remote Facilities. Concurrently with
the execution and delivery of this Deed of Trust, the Grantor, at its expense,
has obtained and delivered to the Beneficiary a loan policy or policies of title
insurance issued by First American Title Insurance Company (the “Title Insurer”)
in an amount and in form and substance reasonably satisfactory to the Required
Creditors and naming the Beneficiary as the insured, insuring the title to and
the first mortgage lien of this Deed of Trust on the Land and Improvements and
the easements and rights created pursuant to the Easement Agreement (the “Title
Policy”). The Grantor has duly paid in full all premiums and other charges due
in connection with the issuance of such Title Policy. All proceeds received by
and payable to the Beneficiary for any loss under the Title Policy, or under any
policy or policies of title insurance delivered to the Beneficiary in
substitution therefor or replacement thereof, shall be the property of the
Beneficiary and shall be applied by the Beneficiary in accordance with the
Intercreditor Agreement.

(c) Permitted Encumbrances. The Collateral is free and clear from all liens,
security interests and encumbrances arising by, through or under Grantor except
(i) the lien and security interest evidenced hereby and the only encumbrances
thereupon are title exceptions more particularly set forth in Exhibit B attached
hereto and made a part hereof, (ii) the rights of parties to Shared Facilities,
as provided herein and (iii) all the Liens permitted to be incurred on the
Collateral under the Intercreditor Agreement (collectively, the “Permitted
Encumbrances”). Grantor has not consented to any person conducting any
operations to explore for, drill, produce or recover oil and gas reserved in the
deed referred to in item “b” of Exhibit B.

(d) No Homestead. No portion of the Collateral is being used as Grantor’s
business or residential homestead.

(e) Organization. Grantor is duly organized and validly existing under the laws
of the State of Texas.

 

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(f) Enforceability. This Deed of Trust constitutes the legal, valid and binding
obligations of Grantor enforceable in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to enforcement of creditors’ rights generally
and by general principles of equity. The execution and delivery of, and
performance under, this Deed of Trust are within Grantor’s powers and have been
duly authorized by all requisite action and are not in contravention of the
powers of Grantor’s partnership agreement or other partnership documentation.

(g) Not a Foreign Person. Grantor is not a “foreign person” within the meaning
of the Internal Revenue Code of 1986, as amended (hereinafter called the
“Code”), Sections 1445 and 7701 (i.e., Grantor is not a non-resident alien,
foreign corporation, foreign partnership, foreign trust or foreign estate, as
those terms are defined in the Code and regulations promulgated thereunder).

(h) Sufficiency of Collateral. The Collateral includes every item of real or
personal property that is owned by the Grantor and used by Grantor in the
operation of Units 1 and 2.

Section 3.2 Covenants and Agreements. So long as the Secured Obligations or any
part thereof remains unperformed or unpaid, Grantor covenants and agrees with
Beneficiary as follows:

(a) Existence. Grantor will continuously maintain its existence and its right to
do business in the State of Texas.

(b) Taxes on Deed of Trust. Grantor will promptly pay all income, franchise and
other taxes owing by Grantor and any stamp taxes which may be required to be
paid with respect to this Deed of Trust except to the extent the same are not
due and payable or are contested by Grantor in good faith.

(c) Maintenance of Collateral. Grantor will maintain, repair, replace and
upgrade the Collateral in accordance with prudent operating practices customary
for the electric power generation industry and in a manner consistent with its
historic practice (including such historic practice with respect to Grantor and
its Affiliate’s portfolio of similar generation facilities) including taking
appropriate immediate action in the case of an emergency which threatens health
or safety or to damage the Collateral. While recognizing that the use of the
Shared Facilities will, of necessity, be subject to the terms and conditions of
Shared Facilities Agreements, neither Grantor nor any Affiliate, including
Generation Development, will take any action (without the consent of the
Beneficiary, acting at the direction of the Required Creditors, which consent
shall not be unreasonably withheld, conditioned or delayed, provided no Trigger
Event shall have occurred and be continuing), except in connection with upgrades
or additions to emissions or other environmental controls (in compliance with
applicable legal or regulatory requirements or agreements with governmental
authorities or regulators and implemented in accordance with prudent

 

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operating practices customary for the electric power generation industry) that
would restrict, impair, limit, interfere with or hinder Units 1 and 2 from
operating and performing (including, but not limited to, their capacity and
output) in a manner consistent, in all substantive respects, with the historical
performance of such units.

(d) Design and Construction of Unit 3. While recognizing that the use of the
Shared Facilities will, of necessity, be subject to the terms and conditions of
the Shared Facilities Agreements, without the consent of Beneficiary, acting at
the direction of the Required Creditors (which consent may not be unreasonably
withheld, conditioned or delayed, provided no Trigger Event shall have occurred
and be continuing), Grantor and its Affiliates, including Generation
Development, will not design and construct Unit 3 in such a manner that would
diminish the historic capacity or output of Units 1 and 2 except, prior to any
Trigger Event occurring and continuing, for reasonable temporary outages that
occur at Units 1 and 2 in conjunction with the construction of Unit 3 which
would not reasonably be expected to decrease the long term value of the
Collateral; provided, however, that should a Trigger Event occur during any such
temporary outage, Grantor shall be liable to Beneficiary for any damages
suffered by Beneficiary as a result of such outage following the occurrence and
during the continuation of said Trigger Event.

(e) Permitted Encumbrances. Grantor shall not create, incur or suffer to exist
any liens on the Collateral other than Permitted Encumbrances nor consent to any
person conducting any operations to explore for, drill, produce or recover oil
and gas reserved in the deed referred to in item “b” of Exhibit B.

(f) Condemnation. Promptly upon obtaining knowledge of the institution of any
proceedings for the condemnation of the Real Property or any portion thereof, or
any other proceedings arising out of injury or damage to the Collateral, or any
portion thereof, Grantor will notify Beneficiary of the pendency of such
proceedings except where such proceedings could not reasonably be expected,
individually or in the aggregate, to result in a material adverse effect on
Grantor. Beneficiary may participate in any such proceedings, and Grantor shall
from time to time deliver to Beneficiary all instruments reasonably requested by
it to permit such participation. Grantor shall, at its expense, diligently
prosecute any such proceedings, and shall consult with Beneficiary, its
attorneys and experts, and cooperate with them in the carrying on or defense of
any such proceedings.

(g) Ad Valorem Taxes. Grantor will cause to be paid prior to delinquency all
taxes and assessments heretofore or hereafter levied or assessed against the
Collateral except to the extent the same are not due and payable or are
contested by Grantor in good faith to the extent permitted by applicable law.

(h) Protection and Defense of Lien. Except, in each case, to the extent that the
failure to do so would not reasonably be expected, individually or in the
aggregate, to result in a material adverse effect upon the value of the
Collateral or its usefulness in the operation of Units 1 and 2, if the validity
or priority of this Deed of Trust or of any rights, titles, liens or security
interests created or evidenced hereby with respect to the Collateral or any part

 

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thereof shall be endangered or questioned or shall be attacked directly or
indirectly or if any legal proceedings are instituted against Grantor with
respect thereto, Grantor will give prompt written notice thereof to Beneficiary
and at Grantor’s own cost and expense will diligently endeavor to cure any
defect that may be developed or claimed, and will take all commercially
reasonable, necessary and proper steps for the defense of such legal
proceedings, including, without limitation, the employment of counsel, the
prosecution or defense of litigation and the release or discharge of all adverse
claims, and Trustee and Beneficiary, or either of them (whether or not named as
parties to legal proceedings with respect thereto) are hereby authorized and
empowered to take such commercially reasonable additional steps as in their
judgment and discretion may be necessary or proper for the defense of any such
legal proceedings or the protection of the validity or priority of this Deed of
Trust and the rights, titles, liens and security interests created or evidenced
hereby, including, without limitation, the employment of counsel, the
prosecution or defense of litigation, the compromise or discharge of any adverse
claims made with respect to the Collateral, the purchase of any tax title and
the removal of prior liens or security interests (including, without limitation,
the payment of debts as they mature or the payment in full of matured or
unmatured debts, which are secured by these prior liens or security interests),
and all commercially reasonable expenses so incurred of every kind and character
shall be subject to and covered by the provisions of Section 2.2 hereof.

(i) Insurance and Casualty.

 

  (i) Concurrent with the delivery of this Deed of Trust, Grantor shall deliver
the Certificates of Insurance listed on Schedule 2 (together with all other
insurance policies Grantor or its Affiliates hold on the Collateral), together
with appropriate Endorsements or Appendices identifying Beneficiary as
Additional Insured or Loss Payee, as applicable, under such policies.

 

  (ii) At all times, Grantor shall keep the Collateral insured against loss or
damage with insurance policies (in each case naming Beneficiary as Additional
Insured or Loss Payee, as applicable, to the extent allowable under such
insurance policies) in such amounts, with such carriers, and with such
deductibles as are consistent with the policies, carriers, aggregate amounts and
deductibles in place on the date of this Deed of Trust and identified on
Schedule 2, with such modifications from time to time as are consistent with
customary and prudent operating standards customary for the electric power
generation industry and have been previously notified in writing to the
Beneficiary.

(j) Warranty. Grantor will warrant and forever defend the title to the
Collateral against the claims of all persons whomsoever claiming or to claim the
same or any part thereof.

(k) Legal Compliance. Grantor shall promptly comply with, or cause to be
complied with, and conform to all present and future Laws of Governmental
Authorities now existing

 

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or subsequently created, unless Grantor is diligently proceeding to challenge
the validity of said Law or its applicability to the Collateral, and all
covenants, restrictions and conditions now or later of record which may be
applicable to any of the Collateral, or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration, repair or reconstruction of any
of the Collateral, except to the extent that failure to comply therewith could
not, in the aggregate, reasonably be expected to have a material adverse effect
upon the value of the Collateral or its usefulness in the operation of Units 1
and 2. Furthermore, Grantor shall not be deemed to have failed to comply with
the provisions of any Laws of Governmental Authorities so long as (a) Grantor is
diligently and in good faith pursuing an appropriate challenge to the validity
of such Laws or the applicability of such Laws to the Collateral (provided the
Grantor shall (x) indemnify, protect, defend and hold the Trustee and
Beneficiary harmless from and against any damages, losses, expenses, costs,
suits or judgments arising from or relating to such non-compliance and (y) cease
such challenge and comply therewith prior to the entry of a final non-appealable
judgment) or (b) compliance therewith shall have been excused or exempted by a
non-conforming use permit, waiver, extension or forbearance.

(l) Leases. Grantor shall not (i) execute an assignment or pledge of any Lease
relating to all or any portion of the Collateral other than in favor of
Beneficiary, or (ii) except as expressly permitted under the Intercreditor
Agreement, without the prior written consent of Beneficiary (which consent shall
not be unreasonably withheld or delayed), execute any Lease of the Collateral or
permit to exist any Lease of any of the Collateral not already in existence
prior to the date of this Deed of Trust.

(m) Further Assurances. To further assure Beneficiary’s rights under this Deed
of Trust, Grantor agrees upon demand of Beneficiary to do any act or execute any
additional documents (including, but not limited to, security agreements on any
personalty included or to be included in the Collateral and a separate
assignment of each Lease in recordable form) as may be reasonably required by
Beneficiary to confirm the lien of this Deed of Trust and all other rights or
benefits conferred on Beneficiary.

(n) Beneficiary’s Right to Perform. If Grantor fails to perform any of the
covenants or agreements of Grantor hereunder, Beneficiary, without waiving or
releasing Grantor from any obligation or default under this Deed of Trust, may,
at any time (but shall be under no obligation to) pay or perform the same, and
the amount or cost thereof, with interest at the Default Rate, shall immediately
be due from Grantor to Beneficiary and the same shall be secured by this Deed of
Trust and shall be a lien on the Collateral prior to any right, title to,
interest in or claim upon the Collateral attaching subsequent to the lien of
this Deed of Trust. No payment or advance of money by Beneficiary under this
Section 3.2(n) shall be deemed or construed to cure Grantor’s default or waive
any right or remedy of Beneficiary.

(o) Inspection. Grantor shall permit the duly authorized representatives of
Beneficiary, at any reasonable time and upon reasonable advance notice to make
such inspection of the Collateral.

 

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(p) Reports. At all times from the date hereof until the termination of the lien
of this Deed of Trust, Grantor, at its own expense, shall furnish to
Beneficiary, with a copy to the Secured Parties, the following reports and
information at the times indicated below.

(i) As soon as available and in any event within 120 days after the end of each
fiscal year of Grantor, Grantor shall furnish financial statements of Grantor
relating to Units 1 and 2 as at the end of, and for, such fiscal year, setting
forth in each case in comparative form the corresponding figures for the
preceding fiscal year, prepared in accordance with GAAP in all material respects
(“Annual Report”), accompanied by a certificate of an officer of Grantor stating
that the financial statements fairly represent, in all material respects, the
results of operations of Grantor as to Units 1 and 2 as at the end of, and for,
such fiscal year;

(ii) As soon as available and in any event within 60 days after the end of each
of the first three fiscal quarterly periods of each fiscal year of Grantor,
commencing with the first quarter of 2007, Grantor shall furnish financial
statements of Grantor relating to Units 1 and 2 for such quarterly period
prepared in a manner consistent with the Annual Report;

Upon reasonable advance notice, Beneficiary shall have the right from time to
time, at its own expense, except in the case of a Trigger Event existing and
continuing in which it shall be at Grantor’s expense, to audit the books and
records of Grantor with respect to Units 1 and 2. Such audits shall be conducted
by Beneficiary so as to result in a minimum disruption in the ongoing business
and affairs of Grantor and shall be conducted during normal business hours at
Grantor’s offices or at the offices where Grantor maintains the records relating
to the items set forth above.

Notwithstanding the foregoing to the contrary, with respect to Sections 3.2
(b)-(p), in the event that the Grantor has failed to comply with the obligations
set forth in such sections, such failure shall not constitute a breach hereof so
long as such failure is remedied within sixty (60) days of notice from the
Beneficiary of such failure.

ARTICLE 4

SECURITY AGREEMENT

Section 4.1 Grant of Security Interest. Without limiting any of the provisions
of this Deed of Trust, Grantor, as debtor, hereby grants to Beneficiary, as
secured party, a security interest in all of Grantor’s remedies, powers,
privileges, rights, titles and interests (including all of Grantor’s power, if
any, to pass greater title than it has itself) of every kind and character now
owned or hereafter acquired, created or arising in and to the Collateral
(including both now and hereafter existing or acquired) to the full extent that
the Collateral may be subject to the Uniform Commercial Code of the State of
Texas (the “UCC”).

Section 4.2 UCC Rights are not Exclusive. Beneficiary shall have all the rights
and remedies of a secured party under the UCC. Should Beneficiary elect to
exercise its rights under

 

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the UCC as to part of the personal property or fixtures described in this Deed
of Trust, such election shall not preclude Beneficiary or the Trustee from
exercising any or all of the rights and remedies granted by the other Articles
of this Deed of Trust as to the remaining personal property or fixtures.

Section 4.3 Deed of Trust is Also Financing Statement. Beneficiary may, at its
election, at any time after delivery of this Deed of Trust, file an original of
this Deed of Trust as a financing statement or sign one or more copies of this
Deed of Trust to use as a UCC financing statement. Beneficiary’s signature may
be placed between the last sentence of this Deed of Trust and Grantor’s
acknowledgment or may follow Grantor’s acknowledgment. Beneficiary’s signature
need not be acknowledged and is not necessary to the effectiveness of this Deed
of Trust as a deed of trust, assignment, pledge, security agreement or (unless
otherwise required by applicable law) as a financing statement.

Section 4.4 Beneficiary May File Financing and Continuation Statements.
Beneficiary is authorized to file this Deed of Trust, a financing statement or
statements and one or more continuation statements in any jurisdiction where
Beneficiary deems it reasonably necessary, and at Beneficiary’s request, Grantor
will join Beneficiary in executing one or more financing statements,
continuation statements or both pursuant to the UCC, in form reasonably
satisfactory to Beneficiary, and will pay the costs of filing or recording them.

ARTICLE 5

ASSIGNMENT OF RENTS

Section 5.1 Assignment of Rents. Grantor does hereby absolutely and
unconditionally assign, transfer and set over to Beneficiary all Rents under all
Leases; subject however to a license hereby granted by Beneficiary to Grantor to
collect and receive all of the foregoing (such license evidenced by
Beneficiary’s acceptance of the Deed of Trust), subject to the terms and
conditions hereof. Notwithstanding anything contained herein to the contrary,
the assignment in this Section 5.1 is an absolute, unconditional and presently
effective assignment and not merely a security interest; provided, however, upon
the occurrence of a Trigger Event hereunder such license shall automatically and
immediately terminate. It shall not be necessary for Beneficiary to institute
any type of legal proceedings or take any other action whatsoever to enforce the
assignment provisions in this Section 5.1.

Section 5.2 Beneficiary in Possession. Beneficiary’s acceptance of this
assignment shall not, prior to entry upon and taking possession of the
Collateral by Beneficiary, be deemed to constitute Beneficiary a “mortgagee in
possession”, nor obligate Beneficiary to appear in or defend any proceedings
relating to any of the Leases or to the Collateral, take any action hereunder,
expend any money, incur any expenses, or perform any obligation or liability
under the Leases, or assume any obligation for any deposits delivered to Grantor
by any tenant and not delivered to Beneficiary.

 

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ARTICLE 6

REMEDIES

Section 6.1 Remedies. Upon the occurrence and continuance of any Trigger Event
(as such term is defined in the Intercreditor Agreement):

(a) Acceleration. Beneficiary shall have the option of declaring all Secured
Obligations in their entirety to be immediately due and payable, and the liens
evidenced hereby shall be subject to foreclosure in any manner provided for
herein or provided for by law as Beneficiary may elect.

(b) Pre-Foreclosure Step-In Rights. If a Trigger Event has occurred and is
continuing after the expiration of any applicable notice and cure period and
Beneficiary reasonably determines that such Trigger Event is likely to impair
the production of electricity at the Collateral, then Beneficiary, acting at the
direction of the Required Creditors, in Grantor’s name or in its own name, may,
but shall not be obligated to, act to operate and manage the operation of the
Collateral (“Step-In Rights”). Beneficiary shall operate and maintain the
Collateral during any Step-In period in accordance with prudent operating
practices customary for the electric power generation industry and in compliance
with applicable legal requirements; provided, however, that if Beneficiary
exercises its rights under the Big Brown Services Agreement, it being under no
obligation to do so, then Beneficiary shall be deemed to have conclusively
complied with the terms of this Section 6.1(b) to the extent of the services
provided thereunder and further provided, that in no event shall Beneficiary be
liable for any loss of actual or anticipated business or profits or any special,
indirect or consequential damages as the result of the exercise of its Step-In
Rights. All costs, expenses and liabilities of every character incurred by
Trustee and/or Beneficiary in administering, managing, operating and controlling
the Collateral shall constitute a demand obligation (which obligation Grantor
hereby expressly promises to pay) owing by Grantor to Trustee and/or Beneficiary
and shall bear interest from the date of expenditure until paid at the Default
Rate, all of which shall constitute a portion of the Secured Obligations and
shall be secured by this Deed of Trust. If all costs associated with its
operation of the Collateral have been advanced by Beneficiary (the repayment of
which shall be secured by this Deed of Trust), then during any Step-In period,
all revenues and profits derived from the operation of the Collateral shall be
applied as set forth in the Intercreditor Agreement. Beneficiary shall exercise
the Step-In Rights as the Grantor’s agent (to the extent necessary to comply
with the terms and conditions of any licenses or permits applicable to the
operation of Units 1 and 2) and solely in a capacity as mortgagee in possession
and the exercise of the Step-In Rights shall not operate, or be deemed, to
transfer to Beneficiary any equity or ownership rights in or to the Collateral,
or any obligation in connection therewith. The Step-In Rights provided for
herein shall cease upon the earlier of (1) such time, if ever, as Beneficiary
consents that the Grantor may resume operation of the Collateral or (2) the date
on which the Trigger Event giving rise to the exercise of such Step-In Rights
has been cured to Beneficiary’s reasonable satisfaction or expressly waived in
writing by Beneficiary. The terms in this Section 6.1(b) shall apply with
respect to each exercise by Beneficiary of any Step-In Rights. Beneficiary
agrees that

 

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in connection with any exercise of Beneficiary’s Step-In Rights, it shall take
reasonable precautions to preserve the confidentiality or proprietary nature of
any of Grantor’s files or records.

(c) Foreclosure. The liens and security interests created or intended to be
created hereby shall be subject to foreclosure, repossession and sale in any
manner provided for herein or provided for by law, as Beneficiary may elect, and
Beneficiary may exercise any and all of its rights under this Deed of Trust, the
UCC and otherwise available at law or in equity. Upon the occurrence of a
Trigger Event, Trustee, his successor or substitute, is authorized and empowered
and it shall be his special duty at the request of Beneficiary to sell the
Collateral or any part thereof situated in the State of Texas at the courthouse
of any county in the State of Texas in which any part of the Collateral is
situated, at public venue to the highest bidder for cash. The sale shall take
place at such area of the courthouse as shall be properly designated from time
to time by the commissioners court (or, if not so designated by the
commissioners court, at the courthouse door) of the specified county, between
the hours of 10 o’clock a.m. and 4 o’clock p.m. (the commencement of such sale
to occur within three hours following the time designated in the hereinafter
described notice of sale as the earliest time at which such sale shall occur, if
required by Applicable Laws) on the first Tuesday in any month after having
given notice of such sale at least twenty-one (21) days before the day of sale
of the time, place and terms of said sale (including the earliest time at which
such sale shall occur) in accordance with the statutes of the State of Texas
then in force governing sales of real estate under powers conferred by deeds of
trust. Notice of a sale of all or part of the Collateral by Trustee shall be
given by posting written notice thereof at the courthouse door (or other area in
the courthouse as may be designated for such public notices) of the county in
which the sale is to be made, and by filing a copy of the notice in the office
of the county clerk of the county in which the sale is to be made at least
twenty-one (21) days preceding the date of the sale, and if the Collateral to be
sold is in more than one county, a notice shall be posted at the courthouse door
and filed with the county clerk of each county in which the Collateral is
situated. In addition, Beneficiary shall, at least twenty-one (21) days
preceding the date of sale, serve written notice of the proposed sale by
certified mail on Grantor and each debtor obligated to pay the Secured
Obligations or any portion thereof according to the records of Beneficiary.
Service of such notice shall be completed upon deposit of the notice, enclosed
in a postpaid certified mail wrapper, properly addressed to Grantor and each
such debtor at the most recent address as shown by the records of Beneficiary,
in a post office or official depository under the care and custody of the United
States Postal Service. The affidavit of any person having knowledge of the facts
to the effect that such service was completed shall be prima facie evidence of
the fact of service. After such sale, Trustee shall make to the purchaser or
purchasers at such sale good and sufficient conveyances in the name of Grantor,
conveying the property so sold to the purchaser or purchasers in fee simple with
special warranty of title, and shall receive the proceeds of said sale or sales
and apply the same as herein provided. Payment of the purchase price to Trustee
shall satisfy the obligation of purchaser at such sale therefor, and such
purchaser shall not be responsible for the application thereof. In the event any
sale hereunder is not completed or is defective in the opinion of Beneficiary,
such sale shall not exhaust the power of sale hereunder and Beneficiary shall

 

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have the right to cause a subsequent sale or sales to be made hereunder. Any and
all statements of fact or other recitals made in any deed or deeds given by
Trustee or any successor or substitute appointed hereunder as to nonpayment or
nonperformance of the Secured Obligations, or as to Beneficiary having declared
all of such Secured Obligations to be due and payable, or as to the request to
sell, or as to notice of time, place and terms of sale and of the properties to
be sold having been duly given, or as to the refusal, failure or inability to
act of Trustee or any substitute or successor, or as to the appointment of any
substitute or successor Trustee, or as to any other act or thing having been
duly done by Beneficiary or by Trustee or any substitute or successor, shall be
taken as prima facie evidence of the truth of the facts so stated and recited.
Trustee, his successor or substitute, may appoint or delegate any one or more
persons as agent to perform any act or acts necessary or incident to any sale
held by Trustee, including, without limitation, the posting of notices and the
conducting of sales, but in the name and on behalf of Trustee, his successor or
substitute.

Section 6.2 Judicial Foreclosure. Upon the occurrence of a Trigger Event, the
Deed of Trust may be foreclosed as to any of the Collateral in any manner
permitted by the laws of the State of Texas or of any other state in which any
part of the Collateral is situated, and any foreclosure suit may be brought by
Trustee or by Beneficiary. In the event a foreclosure hereunder shall be
commenced by Trustee, or his substitute or successor, Beneficiary may at any
time before the sale of the Collateral direct Trustee to abandon the sale, and
may then institute suit for the collection of the Secured Obligations and for
foreclosure under this Deed of Trust. It is agreed that if Beneficiary should
institute a suit for the collection of the Secured Obligations and for
foreclosure under this Deed of Trust, Beneficiary may at any time before the
entry of a final judgment in said suit dismiss the same, and require Trustee,
his substitute or successor to sell the Collateral in accordance with the
provisions of this Deed of Trust.

Section 6.3 Successor or Substitute Trustee. In case of absence, death,
inability, refusal or failure of the Trustee in this Deed of Trust named to act,
or in case he should resign (and he is hereby authorized to resign without
notice to or consent of Grantor), or if Beneficiary shall desire, with or
without cause, to replace the Trustee in this Deed of Trust named, or to replace
any successor or substitute previously named, Beneficiary or any agent or
attorney-in-fact for Beneficiary may name, constitute and appoint a successor
and substitute trustee (or another one) without formality other than an
appointment and designation in writing, which need not be acknowledged, filed or
recorded to be effective, except only in those circumstances, if any, where
acknowledgment, filing and/or recording is required by applicable law and such
law also precludes Grantor from effectively waiving such requirement. Upon such
appointment, this conveyance shall automatically vest in such substitute
trustee, as Trustee, the estate in and title to all of the Collateral, and such
substitute Trustee so appointed and designated shall thereupon hold, possess and
exercise all the title, rights, powers and duties in this Deed of Trust
conferred on the Trustee named and any previous successor or substitute Trustee,
and his conveyance to the purchaser at any such sale shall be equally valid and
effective as if made by the Trustee named in this Deed of Trust. Such right to
appoint a substitute Trustee shall exist and may be exercised as often and
whenever from any of said causes, or without cause, as aforesaid, Beneficiary or
Beneficiary’s agent or attorney-in-fact elects to exercise it.

 

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Section 6.4 Right to Receiver. In addition to all other remedies herein provided
for, upon the occurrence and continuance of a Trigger Event, to the extent
authorized by applicable law, Beneficiary shall as a matter of right be entitled
to the appointment of a receiver or receivers for all or any part of the
Collateral, whether such receivership be incident to a proposed sale of the
Collateral or otherwise, and without regard to the value of the Collateral or
the solvency of any person or persons liable for the payment of the Secured
Obligations, and Grantor does hereby consent to the appointment of such receiver
or receivers, waives any and all defenses to such appointment and agrees not to
oppose any application therefor by Beneficiary, but nothing herein is to be
construed to deprive Beneficiary of any other right, remedy or privilege it may
now have under the law to have a receiver appointed; provided, however, that the
appointment of such receiver, trustee or other appointee by virtue of any court
order, statute or regulation shall not impair or in any manner prejudice the
rights of Beneficiary to receive payment of any sum due to Beneficiary with
respect to the Secured Obligations. Any such receiver or receivers shall have
all the usual powers and duties of receivers in like or similar cases, including
the full power to possess, rent, maintain, repair and operate the Collateral
upon such terms and conditions as may be approved by the court.

Section 6.5 Separate Sales. To the extent allowed by applicable law, the
Collateral may be sold in one or more parcels and in such manner and order as
Beneficiary, in its sole discretion, may elect, it being expressly understood
and agreed that the right of sale arising out of any Trigger Event shall not be
exhausted by any one or more sales.

Section 6.6 Occupancy After Foreclosure. In the event that there is a
foreclosure sale hereunder and at the time of such sale Grantor or Grantor’s
representatives, successors or assigns or any other Person claiming any interest
in the Collateral by, through or under Grantor, are occupying or using the
Collateral or any part thereof, each and all shall immediately become the tenant
of the purchaser at such sale, which tenancy shall be a tenancy from day to day,
terminable at the will of either the landlord or tenant, at a rent to be
determined by Beneficiary and, if Beneficiary has not set forth the amount of
such rent, at a reasonable rental per day based upon the value of the property
occupied, such rental to be due daily to the purchaser. To the extent permitted
by applicable law, the purchaser at such sale shall, notwithstanding any
language herein to the contrary, have the sole option to demand immediate
possession following the sale or to permit the occupants to remain as tenants at
will. In the event that the tenant fails to surrender possession of said
property upon demand, the purchaser shall be entitled to institute and maintain
a summary action for possession of the Collateral (such as an action for
forcible entry and detainer) in any court having appropriate jurisdiction.

Section 6.7 Injunctive Relief. In the event of any breach of any of the
covenants, agreements, terms or conditions contained in this Deed of Trust, and
notwithstanding to the contrary any exculpatory or non-recourse language which
may be contained herein, Beneficiary shall be entitled to enjoin such breach and
obtain specific performance of any covenant, agreement, term or condition and
Beneficiary shall have the right to invoke any equitable right or remedy as
though other remedies were not provided for in this Deed of Trust.

 

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Section 6.8 Enforcement Expenses. In case of foreclosure of this Deed of Trust
or the exercise of the power of sale, and as often as any proceedings shall be
instituted relating thereto, Grantor will pay to Beneficiary a reasonable
attorneys’ fee, together, in the case of a judicial foreclosure, with the cost
of continuing the abstract of title to the Real Property to the date of filing
such foreclosure, court costs and all other expenses incurred in connection with
such proceedings, all of which will be due and payable when suit is filed and
will be and become a part of the Secured Obligations to be paid or collected in
such foreclosure.

Section 6.9 Waivers. Except as expressly provided in this Article, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
Grantor hereby waives the benefit of any and all laws relative to the
appraisement of the Collateral seized and sold under executory process or other
legal process, and consents to the Collateral being sold at Beneficiary’s
option, with or without appraisal, to the highest bidder for cash or on such
terms as Beneficiary may direct.

Section 6.10 Right of Beneficiary to Credit Sale. Upon the occurrence of any
sale made under this Deed of Trust, whether made under the power of sale or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale, Beneficiary may bid for and acquire the Collateral or any part thereof. In
lieu of paying cash therefor, Beneficiary may make settlement for the purchase
price by crediting upon the Secured Obligations or other sums secured by this
Deed of Trust the net sales price after deducting therefrom the expenses of sale
and the cost of the action and any other sums which Beneficiary is authorized to
deduct under this Deed of Trust or the Intercreditor Agreement. In such event,
this Deed of Trust, the Intercreditor Agreement and documents evidencing
expenditures secured hereby may be presented to the person or persons conducting
the sale in order that the amount so used or applied may be credited upon the
Secured Obligations as having been paid.

Section 6.11 Remedies Cumulative. All remedies herein expressly provided for are
cumulative of any and all other remedies existing at law or in equity or
otherwise benefiting Beneficiary, or any Secured Party, and Trustee and
Beneficiary shall, in addition to the remedies herein provided, be entitled to
avail themselves of all such other remedies as may now or hereafter exist at law
or in equity for the collection and enforcement of the Secured Obligations and
the enforcement of the covenants herein and the foreclosure of the liens and
security interests evidenced hereby, and resort to any remedy provided for
hereunder or under the Intercreditor Agreement or provided for by law, which
shall not prevent the concurrent or subsequent employment of any other
appropriate remedy or remedies.

Section 6.12 Indemnity.

(a) Grantor’s indemnity obligations in this Section 6.12 shall survive
termination of this Deed of Trust, provided that Grantor has no obligation under
this Section 6.12 to indemnify the Indemnitees for any Claims arising after the
earlier of (a) termination of this Deed of Trust or (b) the Secured Parties
foreclose upon the Collateral under Section 6.1(c).

 

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(b) Grantor agrees to indemnify, protect, defend and hold harmless the Trustee,
the Beneficiary and each Secured Party and their respective successors,
permitted assigns, employees and agents (individually, an “Indemnitee” and
collectively, “Indemnitees”) from and against any and all actions, suits,
awards, judgments, amounts paid in settlement with the consent of Grantor (such
consent not to be unreasonably withheld, conditioned or delayed), penalties,
fines, claims and demands and reasonable out-of-pocket liabilities, losses,
costs and expenses (collectively, “Claims”) which may be imposed on, incurred by
or asserted against an Indemnitee in any way relating to or arising or
reasonably alleged to arise out of: (i) the financing, ownership, operation or
maintenance of the Collateral, or any part thereof; (ii) any latent or other
defects in the Collateral whether or not discoverable by an Indemnitee; (iii) a
violation of any Environmental Laws; (iv) any material breach by Grantor of any
of its representations or warranties under this Deed of Trust or any other
Collateral Documents or failure by Grantor to perform or observe in any material
respect any covenant or agreement to be performed by it under this Deed of Trust
or any of the Collateral Documents; (v) personal injury, death or property
damage relating to the Collateral, including Claims based on strict liability in
tort, and (vi) the transactions contemplated hereby (including the performance
by the Beneficiary of its duties, rights and obligations hereunder); provided,
that the foregoing indemnities in clauses (i) through (vi) shall not, as to any
Indemnitee, apply to Claims to the extent they arise out of or result from the
gross negligence or willful misconduct of such Indemnitee as determined in a
final, non-appealable judgment by a court of competent jurisdiction. If a Claim
is asserted against an Indemnitee by a third party, the Indemnitee shall give
Grantor prompt written notice of the Claim and Grantor shall thereupon notify
the Indemnitee whether it desires to defend the Indemnitee against the Claim
(provided that Grantor’s failure to or delay in providing such notice shall
reduce Grantor’s indemnity obligations hereunder only to the extent Grantor was
actually prejudiced by such failure or delay) and, if so, Grantor shall have the
right to defend the Indemnitee in all proceedings with counsel of its own
choosing (but reasonably acceptable to the Indemnitee).

(c) All liquidated amounts due under the foregoing paragraph which is
(i) determined in a final, non-appealable judgment by a court of competent
jurisdiction or (ii) not being contested by Grantor, shall be payable not later
than thirty (30) days after written demand therefor. To the extent that the
undertakings to defend, indemnify, pay and hold harmless set forth in the
foregoing paragraph may be unenforceable in whole or in part because they are
violative of any law or public policy, Grantor shall contribute the maximum
portion that it is permitted to pay and satisfy under applicable laws to the
payment and satisfaction of all indemnified liabilities incurred pursuant to
such paragraph by any Indemnitee.

Section 6.13 NO CONSEQUENTIAL DAMAGES. NEITHER PARTY IS LIABLE TO THE OTHER
UNDER THIS DEED OF TRUST FOR ANY SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES OR
INJURY THAT MAY OCCUR, IN WHOLE OR IN PART, AS A RESULT OF THE BREACH OF ANY
CONTRACT, A TORT, OR ANY OTHER CAUSE, WHETHER OR NOT A PARTY HAD KNOWLEDGE OF
THE CIRCUMSTANCES THAT RESULTED IN THE SPECIAL, INDIRECT, OR CONSEQUENTIAL
DAMAGES, OR COULD HAVE FORESEEN THAT SUCH DAMAGES WOULD OCCUR. SPECIAL,
INDIRECT, OR CONSEQUENTIAL DAMAGES INCLUDE—AS REPRESENTATIVE

 

DEED OF TRUST

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EXAMPLES AND WITHOUT LIMITING THE PHRASE—LOST PROFITS, LOST PRODUCTION TIME,
LOST BUSINESS, LOST WORK-IN-PROCESS, CLAIMS OF CUSTOMERS, VALUE OF EMPLOYEES’
LOST TIME, LOSS OF GOODWILL, INCREASED COSTS, INCREASED INTEREST EXPENSE,
PUNITIVE DAMAGES AND INABILITY TO MAKE REQUIRED PAYMENTS.

ARTICLE 7

GENERAL AND MISCELLANEOUS PROVISIONS

Section 7.1 Grantor Waives All Stay, Extension, Appraisement and Redemption
Rights. To the extent permitted by applicable law, Grantor will not at any time
insist upon or plead or in any manner whatever claim or take the benefit or
advantage of any stay or extension law now or at any time hereafter in force in
any locality where the Real Property or any part thereof may or shall be
situated, nor will Grantor claim, take or insist on any benefit or advantage
from any law now or hereafter in force providing for the valuation or
appraisement of the Real Property or any part thereof before any sale or sales
thereof to be made pursuant to any provision of this Deed of Trust, or to decree
of any court of competent jurisdiction, nor after any such sale or sales made
pursuant to any provision of this Deed of Trust will Grantor claim or exercise
any right conferred by any law now or at any time hereafter in force to redeem
the property so sold or any part of it, and Grantor hereby WAIVES all benefit
and advantage of any such law or laws and WAIVES the appraisement of the Real
Property or any part of it and covenants that Grantor will not hinder, delay or
impede the execution of any power in this Deed of Trust granted and delegated to
the Trustee or Beneficiary, but that Grantor will suffer and permit the
execution of every such power as though no such law or laws had been made or
enacted.

Section 7.2 Notices. Service of any notice to Grantor or Beneficiary required or
permitted under this Deed of Trust shall be completed in the manner set forth
for administrative notices in the Intercreditor Agreement with a copy, in the
case of notices directed to Grantor to TXU Big Brown Company LP, 1601 Bryan,
Dallas, Texas 75201, Attn: General Counsel; provided, however, that service of a
notice required by Texas Property Code § 51.002 shall be considered complete
when the requirements of that section are satisfied.

Section 7.3 Beneficiary and Grantor. The term “Beneficiary” as used in this Deed
of Trust shall include all successors of Beneficiary under the Intercreditor
Agreement. The term “Grantor” shall mean and include all successors of Grantor
under the Credit Support Agreement.

Section 7.4 Article, Section and Exhibit References, Numbers and Headings.
References in this Deed of Trust to Articles, Sections and Exhibits refer to
Articles, Sections and Exhibits in and to this Deed of Trust unless otherwise
specified. The Article and Section numbers, Exhibit designations and headings
used in this Deed of Trust are included for convenience of reference only and
shall not be considered in interpreting, applying or enforcing this Deed of
Trust.

 

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Section 7.5 Exhibits Incorporated. All exhibits, annexes, appendices and
schedules referred to any place in the text of this Deed of Trust are hereby
incorporated into it at that place in the text, to the same effect as if set out
there verbatim.

Section 7.6 “Including” is not Limiting. Wherever the term “including” or a
similar term is used in this Deed of Trust, it shall be read as if it were
written, “including by way of example only and without in any way limiting the
generality of the clause or concept referred to.”

Section 7.7 Gender. The masculine and neuter pronouns used in this Deed of Trust
each includes the masculine, feminine and neuter genders.

Section 7.8 Negation of Partnership. Nothing contained in this Deed of Trust is
intended to create any partnership, joint venture or association between Grantor
and Beneficiary, or in any way make Beneficiary a co-principal with Grantor with
reference to the Collateral, and any inferences to the contrary are hereby
expressly negated.

Section 7.9 Entire Agreement. This Deed of Trust and the Intercreditor Agreement
constitute the entire agreement and understanding between Grantor and
Beneficiary with respect to the matters set forth herein in connection with the
transactions relating to the Secured Obligations and supersede all prior written
or oral understandings and agreements between Grantor and Beneficiary with
respect thereto. Pursuant to the requirements of Section 26.02 of the Texas
Business and Commerce Code “This written loan agreement represents the entire
agreement between the parties and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.”

Section 7.10 Severability. If any provision of this Deed of Trust is held to be
illegal, invalid or unenforceable under present or future laws, the legality,
validity and enforceability of the remaining provisions of this Deed of Trust
shall not be affected thereby, and this Deed of Trust shall be liberally
construed so as to carry out the intent of the parties to it. Each waiver in
this Deed of Trust is subject to the overriding and controlling rule that it
shall be effective only if and to the extent that (a) it is not prohibited by
applicable law and (b) applicable law neither provides for nor allows any
sanctions to be imposed against Beneficiary for having bargained for and
obtained it.

Section 7.11 Governing Law. THIS DEED OF TRUST AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAWS OF THE STATE OF TEXAS.

Section 7.12 Conflict. Notwithstanding anything to the contrary contained
herein, to the extent of any conflict between this Deed of Trust and the
Intercreditor Agreement, the Intercreditor Agreement shall control.

Section 7.13 Waiver of Jury Trial. GRANTOR AND, BY ITS ACCEPTANCE, BENEFICIARY,
EACH HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT

 

DEED OF TRUST

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PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS DEED
OF TRUST, OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH OF GRANTOR AND, BY ITS ACCEPTANCE, BENEFICIARY,
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.

Section 7.14 Releases.

(a) This Deed of Trust shall terminate and be of no further force or effect
immediately and automatically upon the Termination Date (as defined in the
Intercreditor Agreement); provided, however that the obligations under Sections
3.2(h) and 3.2(j) shall survive termination of this Deed of Trust. Beneficiary
shall deliver a release and satisfaction of this Deed of Trust in recordable
form within ten (10) days after the Termination Date.

(b) By its acceptance of this Deed of Trust, Beneficiary agrees to deliver a
partial release of the liens and security interests created by this Deed of
Trust in recordable form in accordance with the provisions of Section 1.3.

(c) Unless a Trigger Event shall have occurred and be continuing, Grantor may,
at any time and from time to time, without any release or consent by, or report
to, the Beneficiary, subject, however, to Section 3.1(h) as to the continued
sufficiency of the Collateral, Section 3.2(c) and Section 3.2(d), sell or
otherwise dispose of, free from the lien and security interest of this Deed of
Trust, Fixtures and Equipment, Remote Facilities, or any other personalty, then
subject to the lien and security interests hereof, which, in the reasonable
determination of Grantor and in accordance with prudent operating practice
customary for the electric power generation industry, shall have become old,
inadequate, obsolete, worn out, unfit, unadapted, unserviceable, undesirable or
unnecessary for use in the operation of Units 1 and 2 or which were merely
temporary facilities, and, if they are to be replaced, then effective upon
replacing the same by, or substituting the same with, not less than functionally
equivalent Fixtures and Equipment, Remote Facilities or other personalty. In
furtherance thereof, Beneficiary shall, upon request by Grantor, deliver a
partial release of the liens and security interests created by this Deed of
Trust in recordable form as to any such released or substituted Fixtures and
Equipment, Remote Facilities or other personalty.

Section 7.15 Beneficiary Not Liable. Beneficiary is acting solely as collateral
agent for the Secured Parties (other than the Collateral Agent) and, except as
otherwise provided in the Intercreditor Agreement, shall not be liable or
responsible for its acts or omissions hereunder, INCLUDING THE NEGLIGENCE AND/OR
STRICT LIABILITY OF Beneficiary, nor shall beneficiary be liable or responsible,
except as otherwise provided in the Intercreditor Agreement, for any acts or
omissions or any Beneficiary’s officers, directors, employees, agents,
attorneys,

 

DEED OF TRUST

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attorneys-in-fact or affiliates INCLUDING THE NEGLIGENCE AND/OR STRICT LIABILITY
OF SUCH PARTIES and Beneficiary shall be entitled to all of the benefits,
exculpatory provisions and indemnities contained in the Intercreditor Agreement
including but not limited to those contained in Section 8 and 11(m) thereof.
Without limiting the generality of the foregoing, as between Grantor and
Beneficiary, Beneficiary shall not be deemed to have unreasonably withheld,
conditioned or delayed its consent if it has done so in accordance with, or
pending receipt of, a written request from the Required Creditors.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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EXECUTED as of August 28, 2006.

 

TXU BIG BROWN COMPANY LP By:   TXU Big Brown Management Company LLC   as General
Partner   By:  

 

  Name:   Anthony Horton   Title:   Treasurer and Assistant Secretary

 

STATE OF TEXAS

   §    §

COUNTY OF DALLAS

   §

The foregoing instrument was acknowledged before me this 25th day of August,
2006 by Anthony Horton, as Treasurer and Assistant Secretary of TXU Big Brown
Management Company LLC, a Delaware limited liability company and general partner
of TXU Big Brown Company LP, a Texas limited partnership, on behalf of such
limited liability company and limited partnership.

 

 

Notary Public in and for the State of Texas

 

DEED OF TRUST

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EXHIBIT A

BEING a 605,426 square foot tract of land located in the Juan Nepomoceno Acosta
Grant, Abstract No. 1, Freestone County, Texas, and being part of the tract of
land described by deed as recorded in Volume 376, Page 649, Freestone County
Deed Records, (F.C.D.R.), and being more particularly described as follows:

COMMENCING at a US Coast and Geodetic Survey (USC&GS) Benchmark disk set in a
concrete post stamped “D 410 1947” as described by the National Geodetic Survey
(NGS) PID # BZ0334 data sheet, said point having Texas State Plane Central Zone
4203 Grid Coordinates of North 10,652,677.5991 and East 3,623,496.3465;

THENCE South 39 degrees 06 minutes 54 seconds East, a distance of 1,401.26 feet
to a set PK nail with shiner for the POINT OF BEGINNING of the herein described
tract of land;

THENCE North 62 degrees 10 minutes 50 seconds East, a distance of 751.09 feet to
a set 60d nail for corner;

THENCE South 27 degrees 46 minutes 33 seconds East, a distance of 803.48 feet to
a set 60d nail for corner;

THENCE South 61 degrees 23 minutes 46 seconds West, a distance of 746.44 feet to
a set PK nail with shiner for corner;

THENCE North 28 degrees 06 minutes 30 seconds West, a distance of 813.71 feet to
the POINT OF BEGINNING AND CONTAINING 605,426 square feet or 13.90 acres of
land, more or less.

-

 

DEED OF TRUST

   EXHIBIT A - PAGE 1

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EXHIBIT B

Permitted Encumbrances

 

a. Any appurtenant easements affecting the subject property as set out in
Special Warranty Deed executed by TXU Electric Company to TXU Big Brown Company
LP, et al of record in Vol. 1181, Page 56, Official Records of Freestone County,
Texas.

 

b. Mineral reservation contained in Deed dated February 8, 1968, executed by
Noah Keeton to Henry E. Jones, Trustee, of record in Vol. 376, Page 649, Deed
Records of Freestone County, Texas.

 

c. The overhead electric lines and power poles at the Southwest side of the
subject property; the patrol road along all sides of the subject property; as
set out on Surveyor’s Plat prepared by Colin J. Henry, R.P.L.S. #5230 and dated
June 28, 2006.

 

d. An easement reserved by Grantor appurtenant to the Grantor Land as to all of
the subject property which any sounds, vapors, emissions or vibrations emanating
from Unit 3 may affect, for plant noise, vapor, emission and vibration purposes,
which easement is subject to the terms of Section 3.2(d) of this Deed of Trust.

 

DEED OF TRUST

   EXHIBIT B - PAGE 1

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EXHIBIT C

All of the real property owned by Grantor, being that which is situated in
Freestone County, Texas and which is described as the BB Genco Land in that
certain Special Warranty Deed from TXU Electric Company to Grantor and others,
acknowledged on December 14, 2001, filed for record on December 20, 2001, and
recorded as document number 1008383 in Volume 1181, Page 56 of the Official
Records of Freestone County, Texas, SAVE and EXCEPT the Plant Island, described
on Exhibit A to this Deed of Trust.

 

DEED OF TRUST

   EXHIBIT C - PAGE 1

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SCHEDULE 1A

Excluded Unit 1 And 2 Plant Island Facilities

 

1. Compressed Air.

 

2. Flue Gas.

 

3. Compressed Gas Storage.

 

4. Equipment Cooling.

 

5. Feedwater.

 

6. Generator.

 

7. Information – Vibration Monitoring.

 

8. Auxiliary / Start-up Steam.

 

9. Sampling and Analysis.

 

10. Steam Generation.

 

11. Turbine Generator and Associated Equipment and Systems (including Turbine,
Generator and Excitation, Turbine Lube Oil, Generator Cooling and Purge, and
Turbine Control and Instrumentation).

 

12. Coal Handling System.

 

13. Ash Handling System.

 

14. High Energy Piping System.

 

DEED OF TRUST

   SCHEDULE 1A PAGE 1

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SCHEDULE 1B

Potential Unit 1 and 2 Plant Island Shared Facilities

 

1. Facility fire protection systems

 

2. Communications systems

 

3. Potable water systems

 

4. Waste water interconnect

 

5. Condensate supply/storage

 

6. Electric utilities delivery systems

 

DEED OF TRUST

   SCHEDULE 1B PAGE 1

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SCHEDULE 2

Description of Insurance Coverage

Property Coverage:

Property & Machinery Breakdown with limits of $1 billion per occurrence and $5
million per occurrence deductible.

Factory Mutual Insurance Company (“FM Global”) Policy JT692 participation being
75% of the first $150,000,000; 0% : participation of $250,000,000 excess of
$150,000,000; and, 100% of $600,000,000 excess of $400,000,000.

Various insurers: Policy PE0600640 – QBE Insurance (Europe) Limited / Wellington
Syndicate 2020; Policy PE0600639 – Ace Global Markets; Policy 310150-06GP –
Energy Insurance Mutual (EIM); and, Policy 8755014 – Lexington Insurance
Company: participation being 25% of the first $150,000,000.

OIL Insurance Limited Policy 2001-191: participation being 100% of $250,000,000
excess of $150,000,000.

Primary Liability Coverage, Including Pollution:

Old Republic Insurance Company Policy MWZY57145 with limits of $3 million per
occurrence and aggregate [no retention].

Excess Liability Coverage, Including Pollution:

First layer: AEGIS Excess Liability Policy X0197A1A06 with limits of $35 million
per occurrence and aggregate excess of the primary policy described above.

Second layer excess: Energy Insurance Mutual (“EIM”) Excess Liability Policy
250221-06GL with limits of $100 million per occurrence and aggregate excess of
the first-layer excess policy described above.

Third layer: AEGIS Lloyds Syndicate 1225 Excess Liability Policy NRS10610035
with limits of $25 million per occurrence and aggregate excess of the
second-layer excess policy described above.

Fourth layer: Oil Casualty Insurance, Ltd (“OCIL”) Excess Liability Policy
U920022-0804 with limits of $140 million per occurrence and aggregate excess of
the third-layer excess policy described above.

 

DEED OF TRUST

   SCHEDULE 2 PAGE 2