Exhibit 10(a)

Execution Version

 

 

PURCHASE AND SALE AGREEMENT

by and between

La Frontera Ventures, LLC

as Seller,

and

Luminant Holding Company LLC

as Buyer

dated as of November 25, 2015

 

 

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TABLE OF CONTENTS

 

     Page   ARTICLE I DEFINITIONS AND CONSTRUCTION      1   

Section 1.1

 

Definitions

     1   

Section 1.2

 

Rules of Construction

     1    ARTICLE II PURCHASE AND SALE AND CLOSING      2   

Section 2.1

 

Purchase and Sale

     2   

Section 2.2

 

Purchase Price

     3   

Section 2.3

 

Closing

     3   

Section 2.4

 

Seller’s Closing Deliverables

     3   

Section 2.5

 

Buyer’s Closing Deliverables

     4   

Section 2.6

 

Aggregate Net Working Capital Adjustment Amount

     5   

Section 2.7

 

Tax Treatment; Allocation of Purchase Price

     8   

ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING SELLER

     8   

Section 3.1

 

Organization

     8   

Section 3.2

 

Authority

     9   

Section 3.3

 

No Conflicts; Consents and Approvals

     9   

Section 3.4

 

Interests

     9   

Section 3.5

 

Legal Proceedings

     9   

Section 3.6

 

Compliance with Laws and Orders

     10   

Section 3.7

 

Brokers

     10    ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING THE ACQUIRED
COMPANIES      10   

Section 4.1

 

Organization

     10   

Section 4.2

 

No Conflicts; Consents and Approvals

     10   

Section 4.3

 

Capitalization

     11   

Section 4.4

 

Business; Title to Assets

     11   

Section 4.5

 

Bank Accounts

     11   

Section 4.6

 

Subsidiaries

     11   

Section 4.7

 

Legal Proceedings

     12   

Section 4.8

 

Compliance with Laws and Orders

     12   

Section 4.9

 

Liabilities

     12   

Section 4.10

 

Taxes

     12   

Section 4.11

 

Regulatory Status

     13   

Section 4.12

 

Contracts

     14   

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TABLE OF CONTENTS

(continued)

 

     Page  

Section 4.13

 

Real Property

     15   

Section 4.14

 

Permits

     15   

Section 4.15

 

Environmental Matters

     16   

Section 4.16

 

Intellectual Property

     16   

Section 4.17

 

Brokers

     17   

Section 4.18

 

Employees and Labor Matters

     17   

Section 4.19

 

Employee Benefits

     17   

Section 4.20

 

Financial Statements

     17   

Section 4.21

 

Absence of Certain Changes

     18   

Section 4.22

 

Related Party Transactions

     18   

Section 4.23

 

Insurance

     18   

ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER

     18   

Section 5.1

 

Organization

     18   

Section 5.2

 

Authority

     18   

Section 5.3

 

No Conflicts; Consents and Approvals

     18   

Section 5.4

 

Legal Proceedings

     19   

Section 5.5

 

Compliance with Laws and Orders

     19   

Section 5.6

 

Brokers

     19   

Section 5.7

 

Acquisition as Investment

     19   

Section 5.8

 

Financial Resources

     20   

Section 5.9

 

No Conflicting Contracts

     20   

Section 5.10

 

Opportunity for Independent Investigation

     20   

Section 5.11

 

Buyer Benefit Plans

     20   

Section 5.12

 

Regulatory Status

     20   

Section 5.13

 

Ownership in ERCOT

     20   

ARTICLE VI COVENANTS

     21   

Section 6.1

 

Regulatory and Other Approvals

     21   

Section 6.2

 

Access of Buyer

     23   

Section 6.3

 

Certain Restrictions

     24   

Section 6.4

 

Use of Certain Names

     26   

Section 6.5

 

Support Obligations

     26   

Section 6.6

 

Excluded Items

     27   

Section 6.7

 

Employee and Employee Benefit Matters

     28   

 

ii

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TABLE OF CONTENTS

(continued)

 

     Page  

Section 6.8

 

Termination of Certain Services, Excluded Contracts and Other Affiliate
Transactions

     28   

Section 6.9

 

Spare Parts

     29   

Section 6.10

 

Insurance

     29   

Section 6.11

 

Casualty

     29   

Section 6.12

 

Condemnation

     30   

Section 6.13

 

Transfer Taxes

     31   

Section 6.14

 

Tax Matters

     31   

Section 6.15

 

Appointment of Primary Representatives

     34   

Section 6.16

 

Updating; Notification of Certain Matters

     34   

Section 6.17

 

Announcements

     35   

Section 6.18

 

Further Assurances

     35   

Section 6.19

 

Reserved

     35   

Section 6.20

 

Qualified Scheduling Entity

     35   

Section 6.21

 

Exclusivity

     35   

Section 6.22

 

Additional Assets Contribution

     36   

Section 6.23

 

Forney Rotor

     36   

Section 6.24

 

Gas Supply Agreement

     36   

ARTICLE VII BUYER’S CONDITIONS TO CLOSING

     36   

Section 7.1

 

Representations and Warranties

     36   

Section 7.2

 

Performance

     37   

Section 7.3

 

Seller’s Certificate

     37   

Section 7.4

 

Orders and Laws

     37   

Section 7.5

 

Consents and Approvals

     37   

Section 7.6

 

Seller Deliverables

     37   

Section 7.7

 

No Material Adverse Effect

     37   

ARTICLE VIII SELLER’S CONDITIONS TO CLOSING

     37   

Section 8.1

 

Representations and Warranties

     37   

Section 8.2

 

Performance

     37   

Section 8.3

 

Buyer’s Certificate

     38   

Section 8.4

 

Orders and Laws

     38   

Section 8.5

 

Consents and Approvals

     38   

Section 8.6

 

Release of NEER Guaranty

     38   

Section 8.7

 

Buyer Deliverables

     38   

 

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TABLE OF CONTENTS

(continued)

 

     Page  

ARTICLE IX TERMINATION

     38   

Section 9.1

 

Termination

     38   

Section 9.2

 

Effect of Termination

     39   

Section 9.3

 

Break-up Fee

     39   

Section 9.4

 

Regulatory Break-up Fee

     40   

Section 9.5

 

Extension of Break-up Fee Security

     42   

ARTICLE X INDEMNIFICATION, LIMITATIONS OF LIABILITY AND WAIVERS

     42   

Section 10.1

 

Indemnification

     42   

Section 10.2

 

Limitations of Liability

     42   

Section 10.3

 

[Reserved]

     44   

Section 10.4

 

Notice; Duty to Mitigate

     44   

Section 10.5

 

Indirect Claims

     44   

Section 10.6

 

Waiver of Other Representations

     45   

Section 10.7

 

Environmental Waiver and Release

     46   

Section 10.8

 

Remedies; Waiver of Remedies

     46   

Section 10.9

 

Indemnification Procedures

     47   

Section 10.10

 

Access to Information

     49   

ARTICLE XI CONFIDENTIALITY

     49   

Section 11.1

 

Pre-Closing Confidential Information

     49   

Section 11.2

 

Post-Closing Seller Confidential Information

     49   

Section 11.3

 

Post-Closing Buyer Confidential Information

     50   

Section 11.4

 

Limitations on Confidential Information

     50   

ARTICLE XII MISCELLANEOUS

     51   

Section 12.1

 

Notices

     51   

Section 12.2

 

Entire Agreement

     52   

Section 12.3

 

Expenses

     52   

Section 12.4

 

Schedules

     52   

Section 12.5

 

Waiver

     53   

Section 12.6

 

Amendment

     53   

Section 12.7

 

No Third Party Beneficiary

     53   

Section 12.8

 

Assignment or Delegation; Binding Effect

     53   

Section 12.9

 

Headings

     54   

Section 12.10

 

Invalid Provisions

     54   

Section 12.11

 

Counterparts; Facsimile

     54   

Section 12.12

 

Governing Law; Jurisdiction; Waiver of Jury Trial.

     54   

 

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TABLE OF CONTENTS

(continued)

 

EXHIBITS

  

Exhibit A

  

Definitions

Exhibit B

  

Additional Assets

Exhibit C

  

Aggregate Net Working Capital Calculations

DISCLOSURE SCHEDULES

3.3

  

Seller Approvals

4.2

  

Company Consents

4.3

  

Capitalization

4.4

  

Purchased Assets

4.5

  

Bank Accounts

4.7

  

Legal Proceedings

4.8

  

Compliance with Laws and Orders

4.9

  

Liabilities

4.10

  

Taxes

4.12

  

Material Contracts

4.13(i)

  

Real Property

4.14

  

Permits

4.15(a)

  

Material Environmental Permits

4.15(b)

  

Environmental Laws and Permits Material Compliance

4.15(c)

  

Material Environmental Claims, Actions, Proceedings or Investigations

4.15(d)

  

Certain Releases of Hazardous Materials

4.15(e)

  

Emissions Allowances and Credits

4.16(a)

  

Intellectual Property

4.18

  

Employee and Labor Matters

4.19

  

ERISA Employee Benefit Plans

4.21

  

Absence of Certain Changes

4.22

  

Related Party Transactions

4.23

  

Insurance

5.3

  

Buyer Approvals

6.3

  

Exceptions to Conduct of Business

6.6

  

Excluded Items

6.8

  

Excluded Contracts

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PURCHASE AND SALE AGREEMENT

This PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of November 25,
2015 (the “Effective Date”), is by and between La Frontera Ventures, LLC, a
Delaware limited liability company (“Seller”), and Luminant Holding Company LLC,
a Delaware limited liability company (“Buyer”).

RECITALS

WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, one hundred percent (100%) of the membership interests in La Frontera
Holdings, LLC, a Delaware limited liability company (the “Company”), the
indirect owner of two (2) natural gas-fired power plants and an approximately
1,000 foot, 24 inch diameter natural gas pipeline, together with certain related
entities, all on the terms and subject to the conditions set forth herein and in
the other Transaction Documents;

WHEREAS, prior to the Closing (as defined herein), an Affiliate or Affiliates of
Seller, will cause the Assets (as defined herein) identified in Exhibit B hereto
(the “Additional Assets”) to be contributed to one or more of the Acquired
Companies (as defined herein) (the “Additional Assets Contribution”); and

WHEREAS, simultaneously with the execution and delivery of this Agreement, Buyer
has delivered to Seller a copy of the Buyer Parent Guaranty duly executed by
Texas Competitive Electric Holdings Company LLC (“Buyer Parent Guarantor”);

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the Parties
hereby agree as follows:

ARTICLE I

DEFINITIONS AND CONSTRUCTION

Section 1.1 Definitions. Terms defined in the preamble, recitals or other
Sections of this Agreement shall have the meanings set forth therein and the
terms defined in Exhibit A shall have the meanings set forth therein.

Section 1.2 Rules of Construction.

(a) All “Article,” “Section,” “Schedule” and “Exhibit” references used in this
Agreement are to articles, sections, schedules and exhibits to this Agreement
unless otherwise specified. The Exhibits and Schedules attached to this
Agreement constitute a part of this Agreement and are incorporated herein for
all purposes and references to this Agreement shall include a reference to all
Schedules, as the same may be amended, modified or supplemented from time to
time as permitted by this Agreement.

(b) A term defined as one part of speech (such as a noun) shall have a
corresponding meaning when used as another part of speech (such as a verb).
Unless the context of this Agreement clearly requires otherwise words importing
the masculine gender shall include the feminine and neutral genders and vice
versa. A term defined in the singular number shall include the correlative
plural and vice versa. The words “includes” or “including” shall mean “including
without limitation,” the words “hereof,” “hereby,” “herein,” “hereunder” and
similar terms in this Agreement shall refer to this Agreement as a whole and not
any particular section or article in which such words appear and unless
otherwise specified, any reference to a Law shall include any amendment thereof
or any

 

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successor thereto and any rules and regulations promulgated thereunder. All
references to a particular entity shall include a reference to such entity’s
successors and assigns but, if applicable, only if such successors and assigns
are permitted by this Agreement. References to any agreement, document or
instrument shall mean a reference to such agreement, document or instrument as
the same may be amended, modified, supplemented or replaced from time to time.
The word “or” will have the inclusive meaning represented by the phrase
“and/or.” “Shall” and “will” mean “must”, and shall and will have equal force
and effect and express an obligation. “Writing,” “written” and comparable terms
refer to printing, typing, and other means of reproducing in a visible form.
References to documents or other materials “provided” or “made available” to
Buyer shall mean that such documents or other materials were (i) present at
least two (2) Business Days prior to the Effective Date in the on-line data room
maintained by Seller for purposes of the transactions contemplated by this
Agreement and accessible by Buyer or (ii) delivered in physical form or by
electronic means directly to one of the Persons on Exhibit J prior to the
execution of this Agreement. The titles, captions or headings of the Articles
and Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.

(c) Time is of the essence in this Agreement. Whenever this Agreement refers to
a number of days, such number shall refer to calendar days unless Business Days
are specified. Whenever any action must be taken hereunder on or by a day that
is not a Business Day, then such action may be validly taken on or by the next
day that is a Business Day. Relative to the determination of any period of time,
“from” means “including and after,” “to” means “to but excluding” and “through”
means “through and including.”

(d) All accounting terms used herein and not expressly defined herein shall have
the meanings given to them under, and all accounting determinations hereunder
shall be made in accordance with, GAAP.

(e) Each Party acknowledges that this Agreement and each of the other
Transaction Documents was negotiated by it with the benefit of representation by
legal counsel, and any rule of construction or interpretation otherwise
requiring this Agreement or any of the other Transaction Documents to which such
Party is a party to be construed or interpreted against any Party shall not
apply to any construction or interpretation hereof.

ARTICLE II

PURCHASE AND SALE AND CLOSING

Section 2.1 Purchase and Sale.

(a) On the terms and subject to the conditions set forth in this Agreement,
Seller agrees to sell, assign, transfer and deliver to Buyer, and Buyer agrees
to purchase and accept from Seller, all of the Interests, free and clear of all
Encumbrances other than (i) those arising under the Organizational Documents of
the Company and (ii) those arising under any applicable securities Laws of any
jurisdiction, which Interests shall be sold, assigned, transferred and delivered
to Buyer for the consideration specified in Section 2.2 below.

(b) At least three Business Days prior to the Closing, the Seller shall obtain
from Bank of America, N.A., as Administrative Agent under the Project Financing
Agreement (the “Project Financing Administrative Agent”) or other parties (if
applicable) to the other Project Financing Documents (as applicable), executed
payoff letters with respect to the Project Financing Documents (the “Project
Financing Payoff Letters”) indicating that upon payment of the amount specified
therein (the “Project Financing Payoff Amount”), the debt outstanding thereunder
shall be repaid, discharged

 

2

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and extinguished in full, all of the obligations of the Acquired Companies
thereunder shall be terminated, and U.S. Bank, National Association, as
Collateral Agent and Depositary Agent under the Project Financing Agreement and
the other parties (if applicable) to the other Project Financing Documents,
shall automatically release, on behalf of itself and the other parties under the
Project Financing Documents, all guarantees, Encumbrances and other security
interests in, and agree to execute or authorize the execution of Uniform
Commercial Code Termination Statements, mortgage releases, deed of trust
releases, terminations of landlord waivers, bailee waiver terminations, account
control agreement terminations, releases of any security interests in any
intellectual property rights and other agreements, filings, and notices as
necessary or reasonably requested to release of record its Encumbrances and
other security interest in, the Purchased Assets and the equity interests in the
Acquired Companies, in each case, in form and substance reasonably satisfactory
to Buyer.

Section 2.2 Purchase Price. The aggregate purchase price (the “Purchase Price”)
for all of the Interests shall be an amount equal to:

(a) $1,589,738,659 which amount shall include (i) the Aggregate Target Net
Working Capital Amount and (ii) payment for the Additional Assets (the “Base
Purchase Price”); plus

(b) the adjustment to reflect the Final Aggregate Net Working Capital Amount
(whether a positive or a negative amount) in accordance with Section 2.6; minus

(c) the amount of the Project Financing Payoff Amount.

An illustrative calculation of the Purchase Price is set forth as Table II in
Exhibit C attached hereto.

Section 2.3 Closing. The consummation of the transactions contemplated by this
Agreement and the other Transaction Documents (the “Closing”) shall take place
at the offices of Hogan Lovells US LLP, 875 Third Avenue, New York, New York at
10:00 A.M. local time, on the third (3rd) Business Day after the conditions to
Closing set forth in Article VII and Article VIII (other than, but subject to,
those conditions which, by their terms, are to be satisfied or waived at
Closing) have been satisfied or waived, or on such other date and at such other
time and place as Buyer and Seller mutually agree in writing (the “Closing
Date”). All actions listed in Section 7.6 or Section 8.7 that occur on the
Closing Date shall be deemed to occur simultaneously at the Closing. The Closing
shall be deemed effective as of 12:01 A.M. (Eastern Prevailing Time) on the
Closing Date.

Section 2.4 Seller’s Closing Deliverables. At or prior to the Closing, Seller
shall deliver, or cause to be delivered, to Buyer each of the following:

(a) a counterpart, executed by Seller, of an assignment of membership interests
evidencing the assignment and transfer to Buyer of all of the Interests, in the
form of Exhibit D (the “Interests Assignment and Assumption Agreement”),
together with any membership interest certificates representing the Interests
and an endorsement executed by Seller evidencing the sale, assignment and
transfer of the Interests from Seller to Buyer;

(b) an executed counterpart of each of the O&M Agreement, the Energy Management
Agreement and the Transition Services Agreement;

(c) a certification of non-foreign status in the form prescribed by Treasury
Regulation Section 1.1445-2(b) with respect to Seller;

(d) the certificate required to be delivered pursuant to Section 7.3 hereof;

 

3

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(e) an executed Seller Parent Guaranty;

(f) executed counterparts of documents that evidence the termination of the
Existing Affiliate Contracts effective as of the Closing;

(g) such resolutions, certificates and other documents reasonably satisfactory
to Buyer evidencing the completion of the Additional Assets Contribution;

(h) such resolutions, certificates or other documents as Buyer may reasonably
request to establish the authorization, execution, delivery, validity, binding
effect or enforceability of any Transaction Document to be delivered at Closing
by Seller and NEER;

(i) all other previously undelivered certificates, agreements and other
documents required by this Agreement to be delivered by Seller prior to the
Closing in connection with the transactions contemplated by this Agreement or
the other Transaction Documents;

(j) an Internal Revenue Service Form 8023 with respect to each of the
Section 338(h)(10) elections required by Section 6.14(j) in a form acceptable to
the Parties (the “Form 8023”) signed by an authorized representative of the
“common parent” of the “selling consolidated group” within the meaning of such
Form 8023;

(k) written documentation of the resignation or removal of all members,
managers, officers and directors of each of the Acquired Companies;

(l) the Title Insurance Commitments;

(m) the ALTA Surveys; and

(n) written documentation required to remove as signatories or authorized
persons for all accounts or safe deposit boxes set forth on Schedule 4.5; and

(o) the Project Financing Payoff Letters.

Section 2.5 Buyer’s Closing Deliverables. At the Closing, Buyer shall deliver,
or cause to be delivered:

(a) to Seller each of the following:

(i) a wire transfer of immediately available funds (to such account as Seller
shall have given notice to Buyer not less than two (2) Business Days prior to
the Closing Date) in an amount equal to the sum of (i) the Base Purchase Price
plus (ii) the Closing Date Aggregate Net Working Capital Adjustment Amount
(whether a positive or a negative amount) minus (iii) the amount of the Project
Financing Payoff Amount;

(ii) the certificate required to be delivered pursuant to Section 8.3 hereof;

(iii) an executed counterpart of the Interests Assignment and Assumption
Agreement;

(iv) an executed counterpart of the O&M Agreement, the Energy Management
Agreement and the Transition Services Agreement;

 

4

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(v) the Form 8023 signed by an authorized representative of Buyer or its
applicable Affiliate as required by such Form 8023;

(vi) such resolutions, certificates or other documents as Seller may reasonably
request to establish the authorization, execution, delivery, validity, binding
effect or enforceability of any Transaction Document to be delivered at Closing
by Buyer;

(vii) the Continuing Support Letter of Credit if required under Section 6.5(b);
and

(viii) all other previously undelivered certificates, agreements and other
documents required by this Agreement to be delivered by Buyer at or prior to the
Closing in connection with the transactions contemplated by this Agreement and
the other Transaction Documents; and

(b) to the Project Financing Administrative Agent and any other Persons required
to receive funds pursuant a Project Financing Payoff Letter, wire transfers of
immediately available funds (to such accounts as the Persons entitled to receive
funds pursuant to the Project Financing Payoff Letters shall have given notice
to Buyer not less than two (2) Business Days prior to the Closing Date) in an
aggregate amount equal to the Project Financing Payoff Amount.

Section 2.6 Aggregate Net Working Capital Adjustment Amount.

(a) At least ten (10) Business Days prior to the scheduled Closing Date, Seller
will prepare (at Seller’s expense) and deliver to Buyer a worksheet setting
forth Seller’s good faith estimate of the Aggregate Net Working Capital as of
the Closing Date (the “Estimated Aggregate Net Working Capital Amount”), as well
as a computation thereof (which computation shall be prepared in accordance with
GAAP applied on a basis consistent with the preparation of the Balance Sheet
(provided that in the event of a conflict between GAAP and consistent
application thereof, GAAP shall prevail), subject to such difference in
accounting principles, policies and procedures as are set forth on Exhibit C
(the “Accounting Principles”)), together with a reasonably detailed explanation
of, and documentation sufficient to confirm the accuracy of the computation of,
such Estimated Aggregate Net Working Capital Amount. Buyer shall have the right
to reasonably and in good faith object to the amounts contained in Seller’s
calculation of Estimated Aggregate Net Working Capital Amount within three
(3) Business Days after Seller’s delivery thereof to Buyer. Seller shall in good
faith consider any such objections of Buyer and, if Buyer has made any
reasonable objections, shall re-issue Seller’s good faith estimate of the
Estimated Aggregate Net Working Capital Amount no later than three (3) Business
Days prior to the Closing Date with any such revisions that Seller has
determined in good faith are appropriate. Notwithstanding the foregoing, the
failure of the Parties to agree on the Estimated Aggregate Net Working Capital
Amount shall in no way delay the Closing and the Parties hereby agree that any
pre-Closing disagreement with respect to the Estimated Aggregate Net Working
Capital Amount will be handled with the post-Closing adjustment mechanisms
contained herein. If (i) the Estimated Aggregate Net Working Capital Amount is
greater than the Aggregate Target Net Working Capital Amount, the Base Purchase
Price payable at Closing will be increased by an amount equal to the difference
between the Estimated Aggregate Net Working Capital Amount minus the Aggregate
Target Net Working Capital Amount; and (ii) the Estimated Aggregate Net Working
Capital Amount is less than the Aggregate Target Net Working Capital Amount, the
Base Purchase Price payable at Closing will be decreased by an amount equal to
the difference between the Aggregate Target Net Working Capital Amount minus the
Estimated Aggregate Net Working Capital Amount (such amount under either (i) or
(ii) is referred to as the “Closing Date Aggregate Net Working Capital
Adjustment Amount”).

 

5

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(b) Within sixty (60) days after the Closing Date, Buyer will prepare (at
Buyer’s expense) and deliver to Seller a worksheet setting forth Buyer’s good
faith computation of the actual amount of the Aggregate Net Working Capital as
of the Closing Date (the “Proposed Aggregate Net Working Capital Amount”), which
computation shall be prepared in accordance with the Accounting Principles and
on the same format as set forth on Exhibit C, together with a reasonably
detailed explanation of, and documentation sufficient to confirm the accuracy of
the computation of, such Proposed Aggregate Net Working Capital Amount. If
within forty-five (45) days following delivery of such worksheet and supporting
documentation, Seller does not object in writing thereto to Buyer, then the
Proposed Aggregate Net Working Capital Amount shall constitute the actual amount
of the Aggregate Net Working Capital as of the Closing Date for purposes of this
Agreement (the “Final Aggregate Net Working Capital Amount”). If, within
forty-five (45) days following delivery of such worksheet and supporting
documentation, Seller objects in writing thereto to Buyer (describing in
reasonable detail the specific line items and values that are in dispute and the
reasons for such dispute, and proposing alternative values with respect to such
specific line items) such Proposed Aggregate Net Working Capital Amount shall be
subject to the objection and resolution provisions set forth in Section 2.6(e)
below.

(c) If the Proposed Aggregate Net Working Capital Amount is not prepared and
delivered by Buyer within the sixty (60) day period set forth in Section 2.6(b)
above, Seller shall be entitled (but not obligated) during the forty-five
(45) day period commencing on the sixty-first (61st) day after the Closing Date
to prepare (at Seller’s expense) and deliver to Buyer a worksheet setting forth
Seller’s good faith computation of the Proposed Aggregate Net Working Capital
Amount, which computation shall be prepared in accordance with the Accounting
Principles and on the same format as set forth on Exhibit C, and based upon
information available to Seller, together with a reasonably detailed explanation
of, and documentation sufficient to confirm the accuracy of the computation of,
such Proposed Aggregate Net Working Capital Amount. If within thirty (30) days
following delivery of such worksheet and supporting documentation, Buyer does
not object in writing thereto to Seller, then the Proposed Aggregate Net Working
Capital Amount submitted by Seller pursuant to this Section 2.6(c) shall
constitute the Final Aggregate Net Working Capital Amount. If, within thirty
(30) days following delivery of such worksheet and supporting documentation,
Buyer objects in writing thereto to Seller (describing in reasonable detail the
specific line items and values that are in dispute and the reasons for such
dispute, and proposing alternative values with respect to such specific line
items), such Proposed Aggregate Net Working Capital Amount shall be subject to
the objection and resolution provisions set forth in Section 2.6(e) below.

(d) If neither Buyer nor Seller prepares and timely delivers a Proposed
Aggregate Net Working Capital Amount in accordance with Section 2.6(b) or
Section 2.6(c), above, the Estimated Aggregate Net Working Capital Amount
delivered at Closing shall become the Final Aggregate Net Working Capital Amount
for all purposes hereunder.

(e) If Seller timely objects to Buyer’s Proposed Aggregate Net Working Capital
Amount pursuant to Section 2.6(b) or if Buyer timely objects to Seller’s
Proposed Aggregate Net Working Capital Amount pursuant to Section 2.6(c), then
Buyer and Seller shall negotiate in good faith and attempt to resolve the
particular items and values that are identified in the applicable written notice
of objection over a twenty (20) day period commencing on delivery of written
notice of objection pursuant to Section 2.6(b) or Section 2.6(c), as the case
may be. Should such negotiations not result in an agreement as to the Final
Aggregate Net Working Capital Amount within such twenty (20) day period (or such
longer period as Buyer and Seller may mutually agree), then either party may
submit such disputed items and values to the Neutral Auditor. Each Party agrees
to promptly execute a reasonable engagement letter, if requested to do so by the
Neutral Auditor. Buyer and Seller, and their respective Representatives, shall
cooperate fully with the Neutral Auditor. The Neutral Auditor, acting

 

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as an expert and not an arbitrator, shall resolve such disputed items and
determine the values to be ascribed thereto, and using those values (together
with other items not in dispute) determine the Final Aggregate Net Working
Capital Amount as of the Closing Date only (prepared in accordance with the
Accounting Principles). The Parties hereby agree that the Neutral Auditor shall
only decide the specific disputed items, the values ascribed thereto and using
those values (together with the other items included in the applicable Proposed
Aggregate Net Working Capital Amount) determine the Final Aggregate Net Working
Capital Amount, and the Neutral Auditor’s decision with respect to such disputed
items and values must be within the range of values assigned to each such item
in the applicable Proposed Aggregate Net Working Capital Amount and the notice
of objection, respectively. All fees and expenses relating to the work, if any,
to be performed by the Neutral Auditor will be borne equally by Buyer and
Seller. The Neutral Auditor shall be directed to resolve the disputed items and
amounts and deliver to Buyer and Seller a written determination of the Final
Aggregate Net Working Capital Amount (such determination to made consistent with
this Section 2.6(e), to include a worksheet setting forth all material
calculations used in arriving at such determination and to be based solely on
information provided to the Neutral Auditor by Buyer or Seller) within thirty
(30) days after being retained, which determination will be final, binding and
conclusive on the Parties and their respective Affiliates, and their respective
Representatives, successors and assigns. Notwithstanding anything herein to the
contrary, the dispute resolution mechanism contained in this Section 2.6(e)
shall be the exclusive mechanism for resolving disputes, if any, regarding the
Aggregate Net Working Capital, if any, and neither Seller nor Buyer shall be
entitled to indemnification pursuant to Article X for Losses reflected in the
amount of the Aggregate Net Working Capital or the determination of Aggregate
Net Working Capital.

(f) The “Final Aggregate Net Working Capital Adjustment Amount” shall be
calculated by computing the Closing Date Aggregate Net Working Capital
Adjustment Amount in accordance with Section 2.6(a), but substituting the Final
Aggregate Net Working Capital Amount for the Estimated Aggregate Net Working
Capital Amount. The “Post-Closing Aggregate Net Working Capital Adjustment
Amount” shall be the amount (positive or negative) equal to (i) the Final
Aggregate Net Working Capital Adjustment Amount minus (ii) the Closing Date
Aggregate Net Working Capital Adjustment Amount. If the Post-Closing Aggregate
Net Working Capital Adjustment Amount is a positive amount, then Buyer shall pay
in cash to Seller the amount of the Post-Closing Aggregate Net Working Capital
Adjustment Amount. If the Post-Closing Aggregate Net Working Capital Adjustment
Amount is a negative amount, then Seller shall pay in cash to Buyer the amount
equal to the absolute value of the Post-Closing Aggregate Net Working Capital
Adjustment Amount. Any such net excess or deficit payment in respect of the
Final Aggregate Net Working Capital Amount will be due and payable within five
(5) Business Days after the Final Aggregate Net Working Capital Amount is
finally determined as provided in this Section 2.6(f) and will be payable by
wire transfer of immediately available funds to such account or accounts as
shall be specified by Buyer or Seller, as applicable. Any payments made pursuant
to this Section 2.6(f) shall be treated as an adjustment to the Tax Allocation
Purchase Price by the parties for Tax purposes, unless otherwise required by
applicable Law.

(g) Following the Closing, Seller and Buyer shall cooperate and provide each
other and, if applicable the Neutral Auditor, and their respective
Representatives, reasonable assistance and access to such books, records and
employees (including those of the Acquired Companies) as are reasonably
requested in connection with the matters addressed in this Section 2.6.
Consistent with the foregoing, following the Closing and until the finalization
of the Final Aggregate Net Working Capital Adjustment Amount pursuant to this
Section 2.6, Buyer shall, at Seller’s expense, provide or provide reasonable
access (in a manner not unreasonably disruptive to its business) to Seller or
the Neutral Auditor (as applicable) to review the books and records, documents
and work papers related to the preparation of the worksheet and computation of
the Final Aggregate Net Working Capital Amount. Seller and the Neutral Auditor
shall be entitled to make reasonable inquiries and information requests of

 

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Buyer regarding the worksheet setting forth the computation Amount and the
calculations set forth therein, provided that, notwithstanding anything to the
contrary in this Section 2.6(g), such access shall not include (i) access to
materials that are subject to the attorney-client, work-product or other similar
privilege or (ii) access to any working papers of any independent accountant
unless customary confidentiality and hold harmless agreements have been first
executed.

Section 2.7 Tax Treatment; Allocation of Purchase Price.

(a) Buyer and Seller acknowledge that, since the Acquired Companies other than
FPLE Forney and Lamar are classified as entities disregarded from their owners
for federal income tax purposes, and (b) an election pursuant to
Section 338(h)(10) of the Code shall be made with respect to the acquisition of
the membership interests in FPLE Forney and Lamar, the purchase and sale of the
Interests is intended to be treated for federal income tax purposes as a
purchase and sale of the Assets and liabilities of the Acquired Companies.

(b) Buyer shall prepare and provide to Seller within sixty (60) days after all
adjustments to the Purchase Price pursuant to Section 2.6 have been completed in
accordance with the terms thereof, a schedule (the “Purchase Price Allocation
Schedule”) allocating the amounts paid and the liabilities assumed in connection
with the transactions contemplated by this Agreement, adjusted as necessary to
determine the purchase price of the Purchased Assets for federal income tax
purposes (the “Tax Allocation Purchase Price”), among the Purchased Assets.

(c) The Purchase Price Allocation Schedule shall be prepared in accordance with
the general principles of Sections 338 and 1060 of the Code and the Treasury
Regulations pursuant thereto or any successor provision. Unless Seller objects
to Buyer’s allocation schedule within thirty (30) days after receipt thereof,
such schedule shall become final. If Seller objects to Buyer’s allocation within
thirty (30) days of receipt, then the Parties shall use Commercially Reasonable
Efforts to agree, within thirty (30) days of Seller’s objection to the Purchase
Price Allocation Schedule, to an allocation of the Tax Allocation Purchase Price
among the Assets of the Acquired Companies that is consistent with the
allocation methodology provided by Sections 338 and 1060 of the Code and the
Treasury Regulations promulgated thereunder (the “Allocation”). In the event
such mutual agreement cannot be achieved, Buyer shall engage a
nationally-recognized accounting firm to serve as an independent valuation
expert to determine the Allocation, the costs of which are to be shared equally
among Buyer, on the one hand, and Seller, on the other hand. Once the Allocation
becomes final, whether by virtue of Seller’s deemed acquiescence, by express
mutual agreement of the Parties, or by determination of the independent
valuation expert, the Parties agree that neither Buyer, Seller, nor any of their
Affiliates shall take any position (whether in audits, Tax Returns or otherwise)
that is inconsistent with such final Allocation. The Allocation shall be revised
to take into account subsequent adjustments to the Tax Allocation Purchase
Price, including any indemnification payments (which shall be treated for Tax
purposes as adjustments to the Purchase Price), in accordance with the
provisions of Sections 338 and 1060 of the Code and the Treasury Regulations
pursuant thereto or any successor provision.

ARTICLE III

REPRESENTATIONS AND WARRANTIES REGARDING SELLER

Except as disclosed in, or qualified by any matter set forth in, the Schedules
provided by Seller, Seller hereby represents and warrants to Buyer as follows:

Section 3.1 Organization. Seller is a limited liability company, duly formed,
validly existing and in good standing under the Laws of its jurisdiction of
formation.

 

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Section 3.2 Authority. Seller has all requisite limited liability company power
and authority to execute and deliver this Agreement and the other Transaction
Documents to which Seller is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by Seller of this Agreement and the other Transaction
Documents to which Seller is a party, and the performance by Seller of its
obligations hereunder and thereunder, have been duly and validly authorized by
all necessary limited liability company action. This Agreement and the other
Transaction Documents to which Seller is a party have been duly and validly
executed and delivered by Seller and constitute the legal, valid and binding
obligations of Seller enforceable against Seller in accordance with their terms,
except as the same may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, arrangement, moratorium or other similar Laws relating to
or affecting the rights of creditors generally, or by general equitable
principles.

Section 3.3 No Conflicts; Consents and Approvals. The execution and delivery by
Seller of this Agreement and the other Transaction Documents to which Seller is
a party do not, and the performance by Seller of its obligations under this
Agreement and the Transaction Documents to which Seller is or will be a party
will not:

(a) result in a violation or breach of any of the terms, conditions or
provisions of the Organizational Documents of Seller;

(b) assuming all required Consents set forth on Schedule 3.3 (collectively, the
“Seller Approvals”) and the Company Consents have been obtained, result in a
violation of or a breach of or default, or give rise to any right of
termination, cancellation or acceleration), or require any consent of or notice
to any Person, under (with or without the giving of notice, the lapse of time,
or both) any Contract to which Seller is a party, except for any such violations
or defaults (or rights of termination, cancellation or acceleration) which would
not, individually or in the aggregate, have a material adverse effect on
Seller’s ability to perform its obligations under this Agreement or any of the
other Transaction Documents to which Seller is or will be a party; and

(c) assuming all the Seller Approvals and the Company Consents have been
obtained or given, (i) result in a violation of, or breach any term or provision
of, any Law applicable to Seller, except as would not have a material adverse
effect on Seller’s ability to perform its obligations under this Agreement or
any other Transaction Document to which Seller is a party or (ii) require any
Consent of any Governmental Authority under any applicable Law, other than such
Consents which, if not made or obtained, would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on Seller’s
ability to perform its obligations under this Agreement or any of the other
Transaction Documents to which Seller is or will be a party.

Section 3.4 Interests. Seller is the sole Member (as defined in the
Organizational Documents of the Company) of the Company, and holds its
membership interest in the Company free of all Encumbrances other than
(i) restrictions on “Change of Control” pursuant to (and as defined in) the
Project Financing Agreement until the Project Financing Payoff Amount has been
paid in full, (ii) those arising under the Organizational Documents of the
Company, (iii) those arising under this Agreement, (iv) those securing Taxes not
yet due and payable and (v) those arising under any applicable securities Laws
of any jurisdiction. Seller is the only Person that owns any interest in the
profits, losses, distributions and capital of the Company. Except for the
membership interest held by Seller, the Company has no outstanding Equity
Securities.

Section 3.5 Legal Proceedings. As of the Effective Date, there is no Claim
pending or, to Seller’s Knowledge, threatened against Seller, which seeks a
writ, judgment, injunction, order, decree, determination or award (any of the
foregoing, an “Order”) restraining, enjoining or otherwise prohibiting or making
illegal any of the transactions contemplated by this Agreement and the other
Transaction Documents.

 

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Section 3.6 Compliance with Laws and Orders. Seller is not in violation of or in
default under any Law or Order applicable to Seller or its Assets the effect of
which, in the aggregate, would reasonably be expected to hinder, prevent or
delay Seller from performing its obligations hereunder.

Section 3.7 Brokers. Seller has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement and the other Transaction Documents for which
Buyer or any Acquired Company could become liable or obligated.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES REGARDING THE ACQUIRED COMPANIES

Except as disclosed in, or qualified by any matter set forth in, the Schedules
provided by Seller, Seller hereby represents and warrants to Buyer as follows:

Section 4.1 Organization.

(a) Each Acquired Company is a limited liability company duly formed, validly
existing and in good standing under the Laws of its jurisdiction of formation,
and has all requisite limited liability company power and authority to conduct
its business as it is now being conducted and to own, lease and operate its
Assets. Each Acquired Company is duly qualified or licensed to do business in
each jurisdiction in which the ownership or operation of its Assets make such
qualification or licensing necessary, except in those jurisdictions where the
failure to be so duly qualified or licensed would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.

(b) Seller has furnished to Buyer true and correct copies of the Organizational
Documents of each Acquired Company. The Organizational Documents of each
Acquired Company are in full force and effect.

Section 4.2 No Conflicts; Consents and Approvals. The execution and delivery by
Seller of this Agreement and the other Transaction Documents to which Seller is
a party do not, and the performance by Seller of its obligations under this
Agreement and the other Transaction Documents to which Seller is or will be a
party will not:

(a) result in a violation or breach of any of the terms, conditions or
provisions of the Organizational Documents of any Acquired Company;

(b) assuming all of the Consents set forth on Schedule 4.2 (the “Company
Consents”) have been obtained, except as set forth in Schedule 4.2(b), result in
a violation of or a breach of or default, or give rise to any right of
termination, cancellation, amendment or modification or acceleration, result in
the creation of any Encumbrance (other than Permitted Encumbrances) on any
Purchased Asset, or require any consent of or notice to any Person, in each case
with or without the giving of notice, the lapse of time, or both (any of the
foregoing, a “Conflict”) pursuant to any Material Contract, except for any
Conflict which (i) would not, individually or in the aggregate, reasonably be
expected to be material and adverse to the Acquired Companies, taken as a whole,
or (ii) would result solely as a result of the specific legal, regulatory or
financial status of Buyer or its Affiliates, or as a result of any other facts
or circumstances that specifically relate to the business or activities in which
Buyer or its Affiliates is or proposes to be engaged, other than the Business;
and

 

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(c) assuming the Seller Approvals and the Company Consents have been obtained or
given, (i) result in a violation or breach of any term or provision of any Law
applicable to any Acquired Company or any of the Purchased Assets or
(ii) require the Consent of any Governmental Authority under any applicable Law,
other than such Consents which, in each case (A) if not made or obtained, would
not, individually or in the aggregate, reasonably be expected to be material and
adverse to the Acquired Companies, taken as a whole, or (B) are required solely
as a result of the specific legal, regulatory or financial status of Buyer or
its Affiliates, or as a result of any other facts or circumstances that
specifically relate to the business or activities in which Buyer or its
Affiliates is or proposes to be engaged, other than the Business.

Section 4.3 Capitalization. Schedule 4.3 accurately sets forth the ownership
structure and capitalization of each Acquired Company. Except as set forth on
Schedule 4.3, there are no outstanding Equity Securities of any Acquired
Company. Except as set forth on Schedule 4.3, no Acquired Company has granted to
any Person any agreement or option, or any right or privilege capable of
becoming an agreement or option, for the purchase, subscription, allotment or
issue of any unissued interests, units or other securities (including
convertible securities, warrants or convertible obligations of any nature) of
any Acquired Company. None of the Equity Securities of any Acquired Company are
subject to any voting trust, member or partnership agreement or voting agreement
or other agreement, right, instrument or understanding with respect to any
purchase, sale, issuance, transfer, repurchase, redemption or voting of any
Equity Securities of any Acquired Company, other than the Organizational
Documents of any Acquired Company.

Section 4.4 Business; Title to Assets.

(a) The Business of each Acquired Company is the only business operation carried
on by each such Acquired Company. Except for (i) the matters disclosed in
Schedule 4.4, (ii) the Excluded Items or (iii) Excluded Contracts, the Purchased
Assets owned, leased or licensed by each Acquired Company and the Purchased
Assets that each Project Company otherwise has the right to use constitute the
material tangible Assets used or held for use in connection with the operation
of its Business as operated immediately prior to the Effective Date. The
Acquired Companies (x) have good title to the Assets they purport to own
(including all Assets reflected on the Balance Sheet or subsequently added in
the ordinary course of business), and (y) at Closing will have good title to
each of the Additional Assets, in each case free and clear of any Encumbrances
(other than Permitted Encumbrances) and have valid leases, licenses,
registrations or other rights to use the other Assets used in the operation of
the Business as currently operated, except for matters that would not, in the
aggregate, reasonably be expected to result in a material and adverse impact on
an Acquired Company.

(b) All tangible Purchased Assets are in all material respects in good operating
condition and repair, ordinary wear and tear excepted.

(c) None of the software applications or the information technology applications
set forth on Schedule 6.6 is reasonably necessary for the safe and reliable
operation of the Projects.

Section 4.5 Bank Accounts. Schedule 4.5 sets forth an accurate and complete list
of the names and locations of banks, trust companies and other financial
institutions at which each Acquired Company maintains accounts of any nature or
safe deposit boxes and the names of all Persons authorized to draw thereon, make
withdrawals therefrom or have access thereto.

Section 4.6 Subsidiaries. None of the Acquired Companies have subsidiaries or
own Equity Interests in any Person other than as set forth on Schedule 4.3.

 

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Section 4.7 Legal Proceedings. Except as set forth on Schedule 4.7, there is no
Claim pending, or to Seller’s Knowledge, threatened against any Acquired Company
that (a) affects any Acquired Company or the Purchased Assets and would, if
adversely determined, individually or in the aggregate, reasonably be expected
to be material to the Acquired Companies, taken as a whole or (b) seeks an Order
restraining, enjoining or otherwise prohibiting or making illegal any of the
transactions contemplated by this Agreement and the other Transaction Documents.
Except as set forth on Schedule 4.7, there are no condemnation or similar
proceedings affecting any of the Acquired Companies or the Purchased Assets that
are currently pending or, to Seller’s Knowledge, threatened. As of the Effective
Date, none of the Acquired Companies has initiated any Claims against any
Person.

Section 4.8 Compliance with Laws and Orders. Except as set forth on Schedule
4.8, each Acquired Company is, and during the two (2) years prior to the
Effective Date has been, in compliance in all material respects with all Laws
and Orders applicable to it; provided, however, that this Section 4.8 does not
address Taxes, which are exclusively addressed by Section 4.10; employees and
labor matters, which are exclusively addressed by Section 4.18 and Section 4.19;
or Environmental Laws, which are exclusively addressed by Section 4.15. Except
as set forth on Schedule 4.8, neither Seller nor any Acquired Company has
received during the past two (2) years any notice, Order, complaint or other
communication from any Governmental Authority (or in any earlier period if the
matters raised in such notice, Order, complaint or other communication remain
pending and would reasonably be expected to be material to the Acquired
Companies, taken as a whole) that any Acquired Company is not in compliance in
any material respect with any Law applicable to it, other than regarding any
such non-compliance that is no longer pending or would not reasonably be
expected to be material to the Acquired Companies, taken as a whole.

Section 4.9 Liabilities. Except as and to the extent adequately accrued or
reserved against in the Financial Statements or as disclosed in Schedule 4.9, no
Acquired Company has any liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, whether known or unknown and whether or not
required by GAAP to be reflected in the Balance Sheet or disclosed in the notes
thereto, except for liabilities and obligations (i) reflected on the Balance
Sheet, (ii) which have arisen since the Balance Sheet Date in the ordinary
course of business, or (iii) arising under Material Contracts, Permits or any
Contract not included in the Material Contracts because such Contract is not
required by this Agreement to be included therein (other than liabilities or
obligations related to or arising out of breaches of Material Contracts, Permits
or such other Contracts).

Section 4.10 Taxes. Except as set forth on Schedule 4.10: (a) all material Tax
Returns that are required to be filed on or before the Closing Date by each
Acquired Company have been or will have been duly and timely filed, (b) all such
Tax Returns are true, correct and complete in all material respects, (c) all
Taxes that are shown to be due on such Tax Returns and all other Taxes whether
or not shown as due on such Tax Returns (including estimated Tax payments) that
are due and owing have been or will have been timely paid in full or have been
or will be adequately reserved, (d) all material withholding Tax requirements
and information reporting requirements imposed on the Acquired Companies have
been satisfied in all material respects, (e) no Acquired Company has in force
any waiver of any statute of limitations in respect of Taxes or any extension of
time with respect to a Tax assessment or deficiency, (f) (A) there are no
pending or active audits or legal proceedings involving Tax matters or, to
Seller’s Knowledge, threatened audits or proposed deficiencies or other Claims
for unpaid Taxes of the Acquired Companies and (B) any deficiency resulting from
any completed audit or examination relating to Taxes by any Taxing Authority has
been timely paid, (g) there are no liens for Taxes upon any of the Assets of the
Acquired Companies, except for statutory Encumbrances for Taxes or other charges
or assessments not yet past due or delinquent or the validity of which are being
contested in good faith by appropriate proceedings, (h) none of the Acquired
Companies (A) is a party to or has any liability under any Tax sharing, Tax
indemnification or similar agreement, or (B) has any liability for Taxes of any
other Person

 

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(including liability as a transferee or successor, liability by contract or
otherwise, or liability under Treasury Regulations Section 1.1502-6 or any
corresponding provision of income Tax Law), (i) (A) each of the Company, La
Frontera Generation, and FPLE Forney Pipeline is classified as an entity
disregarded as separate from its owner for federal income Tax purposes, and
(B) each of FPLE Forney and Lamar is classified as a corporation for federal
income Tax purposes, (j) no claim has been made by any Taxing Authority
(domestic or foreign) in any jurisdiction where the Acquired Companies do not
file Tax Returns that any such entity (or its owner for Tax purposes in the case
of a disregarded entity) may be subject to Tax by that jurisdiction, (k) each of
the Acquired Companies has complied in all material respects with all applicable
Laws pertaining to Taxes, (l) no issues relating to Taxes were raised by a
Taxing Authority in any completed audit or examination that would or would
reasonably be expected to recur in a later taxable period that would be material
to the Acquired Companies, taken as a whole, (m) there are no matters under
discussion with any Taxing Authority with respect to the liability of any of the
Acquired Companies for any Taxes, (n) none of the Acquired Companies is a party
to or bound by any closing agreement, offer in compromise, gain recognition
agreement, or other agreement with any Taxing Authority, and (o) none of the
Acquired Companies will be required to include in a taxable period ending after
the Closing Date taxable income attributable to income that accrued in a prior
taxable period but was not recognized for Tax purposes in any prior taxable
period as a result of the installment method of accounting, the completed
contract method of accounting, the long-term contract method of accounting or
the cash method of accounting or comparable provisions of any other Tax Laws, or
for any other reason.

All references to the Acquired Companies in this Section 4.10 shall include
reference to any Person which had previously merged with and into or liquidated
into the Acquired Companies, as applicable.

Section 4.11 Regulatory Status.

(a) Each of FPLE Forney and Lamar meet the requirements for, and has been
determined by FERC to be, an “Exempt Wholesale Generator” (an “EWG”) within the
meaning of the Public Utility Holding Company Act of 2005, as amended and the
regulations of FERC thereunder (the “PUHCA”).

(b) Neither FPLE Forney nor Lamar is a “public utility” as that term is defined
under the Federal Power Act, as amended, including the regulations of FERC
thereunder (the “FPA”), nor does either FPLE Forney or Lamar directly or
indirectly own, operate or control any subsidiary that is a “public utility,”
whether or not such subsidiary is otherwise disclosed pursuant to Section 4.3 or
Section 4.6 of this Agreement.

(c) Seller is not subject to regulation under PUHCA as an “electric utility
company” or a “holding company” or is exempt from FERC’s regulations under PUHCA
for access to books and records, waivers of accounting, records-retention and
reporting requirements (except, with respect to Seller’s, compliance obligations
associated with the status of FPLE Forney and Lamar as EWGs). Seller is an EWG
with a valid and effective certification on file with FERC which is not subject
to rehearing or appeal and, to Seller’s Knowledge, is not subject to any pending
challenge, investigation or enforcement action by FERC.

(d) Each of the Forney Project and the Lamar Project is a NERC registered
“Generator Operator” and “Generator Owner” through the NEER registrations in the
Texas RE, and such registrations are valid and in full force and effect.

(e) FPLE Forney Pipeline is a “gas utility” as that term is defined in Texas
Utilities Code Chapter 121 including RRC Rules promulgated thereunder.

 

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(f) FPLE Forney Pipeline is an intrastate pipeline subject to the applicable
standards set forth in Texas Administrative Code Chapter 8 and is not subject to
the Natural Gas Act (15 USC 717) or the Pipeline Safety Act (49 USC 60101)
provisions properly delegated to the State of Texas.

Section 4.12 Contracts.

(a) Excluding the Excluded Contracts, the Excluded Items and any Contracts
entered into after the Effective Date in accordance with Section 6.3,
Section 4.12 sets forth a list of the following Contracts to which an Acquired
Company is a party or by which the Acquired Company may be bound (collectively,
the “Material Contracts”):

(i) Contracts for the future purchase, exchange or sale of natural gas or other
fuel for a Project;

(ii) Contracts for the future purchase, exchange or sale of electric power or
ancillary services;

(iii) Contracts for the future transportation of natural gas or other fuel for a
Project;

(iv) Contracts for the future transmission of electric power;

(v) interconnection Contracts;

(vi) other than Contracts of the nature addressed by Section 4.12(a)(i) - (iv),
Contracts (A) for the sale of any Asset or (B) that grant a right or option to
purchase or sell any Asset, other than in each case Contracts entered into in
the ordinary course of business relating to Assets with a value of less than
$1,000,000 individually or $5,000,000 in the aggregate;

(vii) other than Contracts of the nature addressed by Section 4.12(a)(i) - (iv),
Contracts for the future receipt of any Assets or services requiring payments in
excess of $1,000,000 for each individual Contract;

(viii) Contracts under which it has created, incurred, assumed or guaranteed any
outstanding indebtedness for borrowed money or any capitalized lease obligation,
or under which it has imposed a security interest on any of its Assets, tangible
or intangible, which security interest secures outstanding indebtedness for
borrowed money, including the Project Financing Documents;

(ix) outstanding agreements of guaranty, surety or indemnification (excluding
indemnification provisions customarily included in Contracts entered into in the
ordinary course of business), direct or indirect, by such Acquired Company;

(x) Contracts for consulting services providing annual compensation in excess of
$100,000 and which are not cancelable by such Acquired Company on notice of
ninety (90) days or less;

(xi) Hedging Agreements;

(xii) Contracts that purport to limit an Acquired Company’s freedom to compete
in any line of business or in any geographic area or that restrict the right of
each Acquired Company to sell to or purchase from any Person or to hire any
Person, or that grant the other party or any third person “most favored nation”
status or any type of special discount rights;

 

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(xiii) partnership, joint venture or limited liability company agreements; and

(xiv) Contracts under which each Acquired Company owns, leases or holds an
easement interest, license or permit to use, the Property listed on Schedule
4.13(i) (the “Real Property Documents”).

(b) Seller has made available to Buyer accurate and complete copies of all
Material Contracts.

(c) Other than, as of Closing, the Contracts that will be terminated pursuant to
Section 6.8 or otherwise will expire in accordance with their respective terms,
each of the Material Contracts is, in all material respects, in full force and
effect and constitutes a valid and binding obligation of the Acquired Company
party thereto and, to Seller’s Knowledge, of each of the other parties thereto.

(d) (i) No Acquired Company is in breach or default in any material respect
under any Material Contract and (ii) to Seller’s Knowledge, no other party to
any of the Material Contracts is in breach or default thereunder.

Section 4.13 Real Property. Each Acquired Company owns, leases or holds an
easement interest, license or permit to use, the Property listed on Schedule
4.13(i) and identified as being owned, held, leased or licensed by such Acquired
Company, or over which the identified Acquired Company holds an easement or
permit, in each case, free and clear of all Encumbrances (except for Permitted
Encumbrances) created by, through or under such Acquired Company, except
pursuant to the Contracts listed, and as otherwise noted, on Schedule 4.13(i).

Section 4.14 Permits.

(a) Except as to Environmental Law, which is addressed in Section 4.15, Schedule
4.14(a) sets forth all Permits that are required for the ownership, use or
operation of the Projects by, and the Business of, the Acquired Companies in the
manner in which they are currently owned and operated, and consistent with each
Project’s design capacity and that are material to such Project (the “Material
Permits”). The Acquired Companies hold, and have timely applied for renewal of
and have paid if due any applicable fees associated with, all Material Permits.
All of the Material Permits are in full force and effect. There are no
proceedings pending or, to Seller’s Knowledge, threatened, that might reasonably
result in the revocation, suspension, or adverse modification of any of the
Material Permits.

(b) Except as set forth on Schedule 4.14(b), each Acquired Company is, and
during the two (2) years prior to the Effective Date has been, in compliance in
all material respects with all Material Permits set forth on Schedule 4.14(a),
and neither Seller nor any Acquired Company has received during the past two
(2) years any written notification from any Governmental Authority alleging that
any Acquired Company is in material violation of any Material Permits, other
than in respect of any allegation that no longer remains pending.

(c) This Section 4.14 does not address Permits under Environmental Law, which
are exclusively addressed by Section 4.15.

 

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Section 4.15 Environmental Matters.

(a) The Acquired Companies hold, and have timely applied for renewal of, all
Permits under Environmental Law that are required for the ownership, use or
operation of the Projects by the Acquired Companies in the manner in which they
are currently owned and operated and consistent with each Project’s design
capacity, except any such Permits, the absence of which would not, in the
aggregate, reasonably be expected to result in a Material Adverse Effect. All
such Permits under Environmental Law in effect on the Effective Date are set
forth on Schedule 4.15(a) and are in full force and effect.

(b) Except as set forth in Schedule 4.15(b), or as would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect,
each Acquired Company and the Project owned by each such Acquired Company is,
and during the two (2) years prior to the Effective Date has been, in compliance
with all Environmental Laws and Permits under Environmental Law. Except as set
forth in Schedule 4.15(b), to Seller’s Knowledge, there are no existing events,
conditions, or circumstances that would reasonably be expected to materially and
adversely affect the Acquired Companies’ ability to comply with Environmental
Laws or Permits in the future or increase the cost of such compliance.

(c) Except as set forth in Schedule 4.15(c), no Acquired Company has received
notice of any material Environmental Claims, actions, proceedings or
investigations that are currently outstanding, and to Seller’s Knowledge, no
Environmental Claims are threatened, against an Acquired Company by any Person
under any Environmental Laws.

(d) Except as set forth in Schedule 4.15(d), there has been no Release of any
Hazardous Material within the last five (5) years at or from a Project to any
other location in connection with an Acquired Company’s operations at such
Project that would reasonably be expected to result in an Environmental Claim
that would reasonably be expected to result in a Material Adverse Effect.

(e) Schedule 4.15(e) lists, as of the Effective Date, all air pollutant
emissions allowances and credits currently allocated for the Projects’ use, and
neither Seller nor any of the Acquired Companies has entered into any contracts
or commitments to transfer or sell any such allowances. All such emissions
allowances and credits are owned solely by the Acquired Companies and constitute
Purchased Assets hereunder.

Section 4.16 Intellectual Property.

(a) Schedule 4.16(a) sets forth a true and complete list of all issued and
applied-for patents, registered and applied-for trademarks, registered
copyrights and registered domain names, in each case owned by the Acquired
Companies.

(b) The Acquired Companies own, or have the licenses or rights to use for their
respective Businesses, all material Intellectual Property (other than the
Excluded Contracts and Excluded Items) currently used in their respective
Businesses (the “Business IP”). The completion of the transactions contemplated
by this Agreement will not alter or impair the ownership or right of the
Acquired Companies to use any of the Business IP.

(c) To Seller’s Knowledge, the operation by the Acquired Companies of their
respective Businesses does not infringe upon, misappropriate or violate any
Intellectual Property of any third party in any material respect. Neither Seller
nor any Acquired Company has received from any Person a claim in writing that
any Acquired Company is infringing in any material respect the Intellectual
Property of such Person.

 

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Section 4.17 Brokers. The Acquired Companies have no liability or obligation to
pay fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement and the other Transaction Documents.

Section 4.18 Employees and Labor Matters. Neither Seller nor any of the Acquired
Companies have any employees. A list of employees employed by NEER Operating or
another Non-Acquired Company Affiliate of Seller and assigned to each Project as
of the Effective Date is set forth in Schedule 4.18 (“Project Employees”).
Except as described on Schedule 4.18:

(a) With respect to Project Employees,

(i) as of the Effective Date, no Project Employees are represented by a union or
other collective bargaining entity;

(ii) as of the Effective Date, there is no pending and during the past three
(3) years, there has not occurred, nor, to Seller’s Knowledge has there been
threatened, a labor strike, request for representation, grievance, work stoppage
or lockout by Project Employees;

(iii) in the past three (3) years, Seller has not received written notice of any
charges before any Governmental Authority responsible for the prevention of
unlawful employment practices; and

(iv) there is no pending, or to Seller’s Knowledge threatened, and during the
past three (3) years Seller has not received written notice of any,
investigation by a Governmental Authority responsible for the enforcement of
labor or employment regulations and, during the past three (3) years Seller has
not been found by any Governmental Authority to have engaged in any unfair labor
practice, as defined in the National Labor Relations Act or other applicable
Laws, in connection with the Projects; and

(b) With respect to any employee or former employee of Seller or its Affiliates,
the Acquired Companies do not have any liability with respect to the
compensation or employee benefits of, or any other employment-related liability
with respect to, any employee or former employee of Seller or its Affiliates.

Section 4.19 Employee Benefits. Neither Seller nor any of the Acquired Companies
sponsor or maintain any Benefit Plan. Schedule 4.19 sets forth a true and
complete list of all ERISA Benefit Plans that cover any Project Employees. With
respect to any ERISA Benefit Plan that is sponsored, maintained or contributed
to, or has been sponsored, maintained or contributed (or is or was required to
be contributed to) to within five (5) years prior to the Effective Date, by any
ERISA Affiliate and in which Project Employees are or were eligible to
participate: (a) no such ERISA Benefit Plan is a plan in respect of which any
ERISA Affiliate could incur liability under Section 4212(c) of ERISA; (b) no
such ERISA Benefit Plan is a multiemployer plan within the meaning of
Section 3(37) or 4001(a)(3) of ERISA or a single employer pension plan within
the meaning of Section 4001(a)(15) of ERISA for which any Acquired Company or
any of its Subsidiaries could incur liability under Section 4063 or 4064 of
ERISA; and (c) no condition exists or event or transaction has occurred with
respect to any such plan which would reasonably be expected to result in any
Encumbrance (other than Permitted Encumbrances) on any Asset of an Acquired
Company.

Section 4.20 Financial Statements. Seller has made available to Buyer (i) the
consolidated audited financial statements of La Frontera Generation and its
subsidiaries consisting of the consolidated balance sheet for the period year
ended December 31, 2014, and the related consolidated statement of operations
and consolidated statement of cash flows for the period then ended, and (ii) the
consolidated

 

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unaudited financial statements of La Frontera Generation and its subsidiaries,
consisting of a consolidated balance sheet (the “Balance Sheet”) for the period
ending September 30, 2015 (the “Balance Sheet Date”) and the related
consolidated statement of operations and consolidated statement of cash flows
for the period then ended (the “Financial Statements”). Each of the Financial
Statements was prepared in accordance with GAAP applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and fairly present, in all material respects, the financial condition,
results of operations and cash flows of La Frontera Generation and its
subsidiaries as of the respective dates for the respective periods set forth
therein (subject, in the case of the unaudited Financial Statements, to the
absence of notes and normal year-end adjustments which are not material, either
individually or in the aggregate). Other than the Equity Interests of La
Frontera Generation, the Company has no Assets or liabilities.

Section 4.21 Absence of Certain Changes. Except as set forth in Schedule 4.21,
since the Balance Sheet Date (a) to the Effective Date, each Acquired Company
has operated, in all material respects, in the ordinary course of business and
consistent with past practices, and (b) a Material Adverse Effect has not
occurred.

Section 4.22 Related Party Transactions. Except as set forth in Schedule 4.22,
there is no agreement, arrangement or understanding between or among (a) any
Acquired Company, on the one hand and (b)(i) Seller, or any Affiliate of Seller,
or (ii) any of their respective officers, directors, or employees, on the other
hand (each of the foregoing, including Seller, a “Related Party”).

Section 4.23 Insurance. Seller or its Affiliates maintain insurance policies or
other arrangements with respect to the Projects consistent with the insurance
coverage described on Schedule 4.23.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

Except as disclosed in, or qualified by any matter set forth in, the Schedules
provided by Buyer, Buyer hereby represents and warrants to Seller as of the
Effective Date as follows:

Section 5.1 Organization. Buyer is a limited liability company duly formed,
validly existing and in good standing under the Laws of Delaware.

Section 5.2 Authority. Buyer has all requisite limited liability company power
and authority to execute and deliver this Agreement and the other Transaction
Documents to which Buyer is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by Buyer of this Agreement and the other Transaction
Documents to which Buyer is a party and the performance by Buyer of its
obligations hereunder and thereunder have been duly and validly authorized by
all necessary limited liability company action. This Agreement and the other
Transaction Documents to which Buyer is a party have been duly and validly
executed and delivered by Buyer and constitute or will constitute the legal,
valid and binding obligations of Buyer enforceable against Buyer in accordance
with their terms.

Section 5.3 No Conflicts; Consents and Approvals. The execution and delivery by
Buyer of this Agreement and the other Transaction Documents to which Buyer is a
party do not, and the performance by Buyer of its obligations under this
Agreement and the Transaction Documents to which Buyer is or will be a party
will not:

(a) result in a violation or breach of any of the terms, conditions or
provisions of the Organizational Documents of Buyer;

 

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(b) assuming all required Consents set forth in Schedule 5.3 (collectively, the
“Buyer Approvals”) have been made, obtained or given, result in a material
violation of or a material breach of or default, or give rise to any right of
termination, cancellation, material amendment or modification or acceleration
under any material Contract to which Buyer is a party, except for any such
violations, breaches or defaults (or rights of termination, cancellation,
material amendment or modification or acceleration) which would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on Buyer’s ability to perform its obligations under this
Agreement or any of the other Transaction Documents to which Buyer is or will be
a party; and

(c) assuming all Buyer Approvals have been obtained or given, (i) result in a
violation of, or breach any term or provision of, any Law applicable to Buyer,
except as would not have a material adverse effect on Buyer’s ability to perform
its obligations under this Agreement or any other Transaction Document to which
Buyer is a party or (ii) require any Consent of any Governmental Authority under
any applicable Law, other than such Consents which, if not made or obtained,
would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on Buyer’s ability to perform its obligations under this
Agreement or any of the other Transaction Documents to which Buyer is or will be
a party.

Section 5.4 Legal Proceedings. As of the Effective Date, there is no Claim
pending or, to Buyer’s Knowledge, threatened, against Buyer which seeks an Order
restraining, enjoining or otherwise prohibiting or making illegal any of the
transactions contemplated by this Agreement.

Section 5.5 Compliance with Laws and Orders.

(a) During the pendency of the Bankruptcy Cases, the Bankruptcy Court Order is
in full force and effect.

(b) During the pendency of the Bankruptcy Cases, the DIP Order is in full force
and effect.

(c) Buyer is not in violation of, or in default under, (i) during the pendency
of the Bankruptcy Cases, the Bankruptcy Court Order, (ii) during the pendency of
the Bankruptcy Cases, the DIP Order, or (iii) Law or any other Order applicable
to Buyer or its Assets, in each case the effect of any of which, in the
aggregate, would reasonably be expected to hinder, prevent or delay Buyer from
performing its obligations hereunder.

(d) As of the Effective Date, there is no outstanding Order of, or investigation
pending, or to Buyer’s Knowledge, threatened by any Governmental Authority
against Buyer the effect of any of which, individually or in the aggregate,
would reasonably be expected to hinder, prevent or delay Buyer from performing
its obligations hereunder. No party has filed any notice, objection, statement
or other pleading in the Bankruptcy Cases seeking to stay, enjoin or overturn
the relief granted by the Bankruptcy Court Order or the DIP Order and, to
Buyer’s Knowledge, no party has threatened to stay, enjoin or overturn the
relief granted by the Bankruptcy Court Order or the DIP Order, in each case the
effect of any of which, individually or in the aggregate, would be expected to
hinder, prevent or delay Buyer from performing its obligations hereunder.

Section 5.6 Brokers. Buyer does not have any liability or obligation to pay fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement for which Seller could become liable or
obligated.

Section 5.7 Acquisition as Investment. Buyer is acquiring the Interests for its
own account as an investment without the present intent to sell, transfer or
otherwise distribute the same to any other

 

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Person. Buyer has made, independently and without reliance on Seller (except to
the extent that Buyer has relied on the express representations and warranties
of Seller in this Agreement), its own analysis of the Interests, the Acquired
Companies, the Projects and the Purchased Assets for the purpose of acquiring
the Interests, and Buyer has had reasonable and sufficient access to documents,
other information and materials as it considers appropriate to make its
evaluations. Buyer acknowledges that the Interests are not registered pursuant
to the Securities Act of 1933 (the “1933 Act”) and that none of the Interests
may be transferred, except pursuant to an applicable exemption under the 1933
Act. Buyer is an “accredited investor” as defined in Rule 501 promulgated under
the 1933 Act.

Section 5.8 Financial Resources. Buyer and its Affiliates have, and at the
Closing, Buyer will have, sufficient funds and other financial resources
available to pay the Purchase Price and otherwise effect the transactions in
accordance with this Agreement. Buyer acknowledges that receipt or availability
of funds or financing by Buyer or any of its Affiliates shall not be a condition
to Buyer’s obligations hereunder. Buyer represents and warrants that all funds
paid to Seller shall not have been derived from, or constitute, either directly
or indirectly, the proceeds of any criminal activity under the anti-money
laundering laws of the United States.

Section 5.9 No Conflicting Contracts. Neither Buyer nor any of Energy Future
Holdings Corp.’s controlled Affiliates is a party to any Contract to build,
develop, acquire or operate any power facility, or otherwise owns Assets or is
engaged in a business, that would reasonably be expected to hinder or cause a
delay in any Governmental Authority’s granting of a Buyer Approval or a Seller
Approval or in obtaining a Company Consent, and neither Buyer nor any of Energy
Future Holdings Corp.’s controlled Affiliates has any plans to enter into any
such Contract, acquire any such Assets or engage in any such business prior to
the Closing Date.

Section 5.10 Opportunity for Independent Investigation. Prior to its execution
of this Agreement, Buyer has conducted to its satisfaction an independent
investigation and verification of the current condition and affairs of the
Acquired Companies, the Purchased Assets and the Projects. In making its
decision to execute this Agreement and to purchase the Interests, Buyer has
relied and will rely solely upon the results of such independent investigation
and verification and the express representations, warranties, terms and
conditions of this Agreement.

Section 5.11 Buyer Benefit Plans. Except as set forth on Schedule 5.11, as of
the Effective Date, the Benefit Plans which Buyer Affiliates and other Persons
engaged by Buyer to operate any Project (“Buyer Service Companies”) sponsor,
maintain or provide for employees of Buyer Affiliates and Buyer Service
Companies with positions and responsibilities similar to the Transferrable Plant
Employees are, taken as a whole, comparable in all material respects to the
Benefit Plans which Seller has advised Buyer are provided by Seller and its
Affiliates to the Transferrable Plant Employees.

Section 5.12 Regulatory Status. Buyer is authorized to acquire the Interests as
provided for in this Agreement under Section 203(a) of the Federal Power Act, 16
U.S.C. § 824b(a), pursuant blanket authorizations provided for in
Section 33.1(c) of FERC’s regulations, 18 C.F.R. § 33.1(c).

Section 5.13 Ownership in ERCOT. As of the Effective Date, Energy Future
Holdings Corp. and its controlled Affiliates own and control approximately
13,250 MW of total installed generating capacity in ERCOT for purposes of
calculating the 20% limitation on ownership and control of installed generating
capacity under Section 39.154 of the PURA.

 

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ARTICLE VI

COVENANTS

The Parties hereby covenant and agree as follows:

Section 6.1 Regulatory and Other Approvals. During the Interim Period:

(a) The Parties will, in order to consummate the transactions contemplated
hereby, (i) proceed diligently and in good faith and use all reasonable best
efforts, as promptly as practicable, to obtain the Seller Approvals, Company
Consents and Buyer Approvals in form and substance reasonably satisfactory to
Seller and Buyer, and to make all required filings with, and to give all
required notices to, the applicable Governmental Authorities and (ii) cooperate
in good faith with the applicable Governmental Authorities and provide promptly
such other information and communications to such Governmental Authorities or
other Persons as such Governmental Authorities or other Persons may reasonably
request in connection therewith; provided, however, notwithstanding anything to
the contrary in this Agreement, except as otherwise contemplated in
Section 6.1(c)(iv), the Parties acknowledge and agree that neither Buyer nor
Seller shall have any obligation to pay any consideration, other than customary
fees imposed by Governmental Authorities, or to offer to grant, or agree to, any
financial or other accommodation in order to obtain any of the Seller Approvals,
Company Consents and Buyer Approvals and, provided, further, that to the extent
Buyer is required to file an application with the PUCT pursuant to Sections
39.158 and 39.154 of Texas Public Utility Regulatory Act, Buyer shall have the
duty to file the application, and any failure to file the application that
results in penalties to Buyer or Seller shall be the sole responsibility of
Buyer;

(b) The Parties will provide prompt notification to each other when any such
approval referred to in Section 6.1(a) is obtained, taken, made, given or
denied, as applicable, and will advise each other of any material communications
with any Governmental Authority or other Person regarding any of the
transactions contemplated by this Agreement; and

(c) In furtherance of the foregoing covenants:

(i) Each Party shall prepare, or with respect to any required HSR Act filings
cause its ultimate parent entity (as that term is defined in the HSR Act) to
prepare, as soon as is practical following the Effective Date, all necessary
filings in connection with the transactions contemplated by this Agreement and
the other Transaction Documents under the HSR Act or any other federal, state or
local Laws. Each Party shall submit, or with respect to any required HSR Act
filings cause its ultimate parent entity (as that term is defined in the HSR
Act) to submit, such filings as soon as practicable, but, with respect to
filings under the HSR Act, in no event later than ten (10) Business Days after
the Effective Date. The Parties shall request expedited treatment of any such
filings, shall promptly make any appropriate or necessary subsequent or
supplemental filings, and shall cooperate with each other in the preparation of
such filings in such manner as is reasonably necessary and appropriate. The
Parties shall consult with each other and shall agree in good faith upon the
timing of such filings. Buyer will pay all of the filing fees under the HSR Act;

(ii) Neither Party shall, and each Party shall cause its Affiliates not to, take
any action that could reasonably be expected to adversely affect or materially
delay the approval of any Governmental Authority of any of the aforementioned
filings, and Seller shall neither cause nor permit FPLE Forney or Lamar to be or
become a “public utility” as that term is defined under the Federal Power Act,
as amended, including the regulations of the FERC thereunder, nor shall Buyer
be, or take any action to become, a “public utility” as defined in this
provision;

 

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(iii) Subject to applicable confidentiality restrictions or restrictions
required by Law, Buyer and Seller will notify the other Party promptly upon the
receipt of (A) any comments or questions from any officials of any Governmental
Authority in connection with any filings made pursuant to this Section 6.1 or
the transactions contemplated by this Agreement and (B) any request by any
officials of any Governmental Authority for amendments or supplements to any
filings made pursuant to any Laws of any Governmental Authority or answers to
any questions, or the production of any documents, relating to an investigation
of the transactions contemplated by this Agreement by any Governmental
Authority. Whenever any event occurs that is required to be set forth in an
amendment or supplement to any filing made pursuant to this Section 6.1, each
Party will promptly inform the other of such occurrence and cooperate in filing
promptly with the applicable Governmental Authority such amendment or
supplement. Without limiting the generality of the foregoing, each Party shall
provide to the other (or the other’s respective advisors) upon request copies of
all correspondence between such Party and any Governmental Authority and any
productions made by such Party or its Affiliates to any Governmental Authority
relating to the transactions contemplated by this Agreement. The Parties may, as
they deem advisable and necessary, designate any competitively sensitive
materials provided to the other under this Section 6.1 as “outside counsel
only.” Such materials and the information contained therein shall be given only
to outside counsel of the recipient and will not be disclosed by such outside
counsel to employees, officers, or directors of the recipient without the
advance written consent of the party providing such materials. In addition, to
the extent reasonably practicable, all discussions, telephone calls, and
meetings with a Governmental Authority regarding the transactions contemplated
by this Agreement shall include Representatives of both Parties. Subject to
applicable Law, the Parties will consult and cooperate with each other in
connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, and proposals made or submitted to any Governmental Authority
regarding the transactions contemplated by this Agreement by or on behalf of any
Party; and

(iv) Buyer shall use all reasonable best efforts to take, in order to consummate
the transactions contemplated by this Agreement, all actions reasonably
necessary to (A) keep Seller apprised, during the pendency of the Bankruptcy
Cases, of all material developments and filings made with respect to the
Bankruptcy Court Order and the DIP Order in the Bankruptcy Cases, (B) comply in
all material respects with, during the pendency of the Bankruptcy Cases, the
Bankruptcy Court Order, the DIP Order, and any other Orders of the Bankruptcy
Court to the extent applicable to the transactions contemplated by this
Agreement, (C) respond to and seek to resolve as promptly as reasonably
practicable any objections asserted by any Person with respect to the Bankruptcy
Court Order or the DIP Order during the pendency of the Bankruptcy Cases,
(D) secure the expiration or termination of any applicable waiting period under
any Seller Approvals, Company Consents and Buyer Approvals from a Governmental
Authority, (E) resolve any objections asserted with respect to the transactions
contemplated by this Agreement raised by any Governmental Authority, and
(F) otherwise to obtain the Buyer Approvals in form and substance reasonably
satisfactory to Seller and Buyer and to respond to and seek to resolve as
promptly as reasonably practicable any objections asserted by any Governmental
Authority with respect to the transactions contemplated by this Agreement.
Notwithstanding anything in this Agreement to the contrary, nothing in this
Agreement shall require (and reasonable best efforts as used in this paragraph
shall not require) Buyer to prevent the entry of any court order or to have
vacated, lifted, reversed or overturned, or appeal, any decree, judgment,
injunction or other order that would prevent, prohibit, restrict, or delay the
consummation of the transactions contemplated by this Agreement or to take or
agree to undertake any action, including entering into any consent decree, hold
separate order or other arrangement, that would (w) require the divestiture of
any Assets of Buyer, any of its Affiliates, or any of the Acquired Companies,
(x) limit Buyer’s freedom of action with respect to, or its ability to
consolidate and control, any of the Acquired Companies or any of their Assets or
businesses or any of Buyer’s or its Affiliates’ other Assets or Business,
(y) limit Buyer’s ability to acquire or hold, or exercise full rights of
ownership with respect to, the Interests or (z) require the payment of funds to
any Person (other than routine application fees payable to a Governmental
Authority) (any of the foregoing clauses (w)-(z),

 

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unless specifically waived in writing by Buyer at its discretion, a “Burdensome
Condition”). Without the prior written consent of Seller, which shall not be
unreasonably withheld, conditioned or delayed, Buyer shall not seek (or assist
any other Person in seeking) to alter or enjoin the terms of, during the
pendency of the Bankruptcy Cases, the Bankruptcy Court Order or the DIP Order in
a manner that would reasonably be expected to prevent Buyer from performing its
obligations hereunder.

(d) Promptly following the Effective Date, Buyer will seek authorization from
the PUCT to acquire the Interests under Sections 39.158 and 39.154 of the PURA.

Section 6.2 Access of Buyer.

(a) During the Interim Period, Seller will provide, and will cause the Acquired
Companies to provide, Buyer and its Representatives with reasonable access, upon
reasonable prior notice (but in no event less than five (5) Business Days’ prior
written notice) and during normal business hours, to the properties, books and
records of the Acquired Companies and the appropriate officers and employees of
Seller and its Affiliates who have significant responsibility for one or more
Acquired Companies, but only to the extent that such access does not
unreasonably interfere with the business of Seller and its Affiliates or the
Businesses of the Acquired Companies, that such access is reasonably related to
the requesting Party’s obligations and rights hereunder, and subject to
compliance with applicable Laws and Seller’s or any of its Affiliates’ safety
policies, protocols and requirements; provided, however, that Seller shall have
the right to (i) have a Representative present for any permitted communication
with employees or officers of Seller or its Affiliates and (ii) impose
reasonable restrictions and requirements for safety purposes. Buyer shall be
entitled, at its sole cost and expense, to have the Property surveyed and to
conduct non-invasive physical inspections; provided, however, that Buyer shall
not be entitled to collect any air, soil, surface water or ground water samples
nor to perform any invasive or destructive sampling on the Property. Promptly
upon completion of any such entry, Buyer shall repair any damage caused by such
entry. Any disclosure to Buyer pursuant to the foregoing shall be subject to
such disclosure (w) not violating any applicable Laws, (x) not resulting in the
waiver of any attorney/client, work product, or similar privilege, (y) not being
of confidential information concerning the activities of Seller or its
Affiliates (other than the Acquired Companies) that is unrelated to the Acquired
Companies, the Business of any Acquired Company, or the Projects, or (z) not
being of proprietary models of Seller or any of its Affiliates pertaining to
energy project evaluation, energy, natural gas, fuel oil or other fuel price
curves or projections, or other economic predictive models.

(b) During the Interim Period, in no event shall Buyer or any of Buyer’s
Affiliates hold any meetings with, or otherwise communicate with, any suppliers,
other vendors or customers of any Acquired Company, or any Representatives of
any Governmental Authority, regarding any Project or Acquired Company without
the prior consent of Seller (which consent will not be unreasonably withheld,
conditioned or delayed). At any such meeting consented to by Seller, a
Representative of Seller shall be entitled to participate therein.

(c) Buyer assumes any and all risks of Loss associated with or arising out of
the access and other rights under this Section 6.2, and Buyer agrees to
indemnify and hold harmless Seller, its Affiliates and their respective
Representatives for any and all liabilities or Losses incurred by Seller, its
Affiliates or their respective Representatives, or by any of Buyer’s
Representatives, for any injuries or property damage arising out of the access
and other rights under this Section 6.2, caused by any of Buyer’s
Representatives while present on the Property.

(d) In connection with Buyer’s and its Affiliates financing activities during
the Interim Period, Seller shall, and shall use Commercially Reasonable Efforts
to cause the Acquired

 

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Companies, and its and their respective Representatives, to provide to Buyer, at
Buyer’s sole cost and expense, all cooperation reasonably requested by Buyer and
that is customary in connection with such financing activities; provided,
however, that (i) nothing in this Section 6.2(d) shall require any cooperation
to the extent that it would unreasonably interfere with the business or
operations of Seller or its Affiliates, including the Acquired Companies, or
otherwise impair, in any material respect, the ability of any Representative of
Seller or the Acquired Companies to carry out their respective duties as such
and (ii) none of Seller, its Affiliates or the Acquired Companies shall be
required to pay any commitment or other similar fee for which it is not advanced
funds or incur any other liability in connection with such financing activities.
Buyer shall promptly, upon request, reimburse Seller for all documented
out-of-pocket costs and expenses (including reasonable advisor’s fees and
expenses) incurred by Seller or its Affiliates, including the Acquired
Companies, in connection with the cooperation provided pursuant to this
Section 6.2(d). All non-public information regarding Seller and its Affiliates
provided to Buyer, its Affiliates or its Representatives pursuant to this
Section 6.2(d) shall be kept confidential by them in accordance with the
Confidentiality Agreement, except for disclosure to potential lenders,
investors, attorneys, accountants, rating agencies or their respective
Representatives in connection with such financing activities subject, where
applicable, to customary confidentiality provisions as approved in advance in
writing by Seller (which approval shall not be unreasonably withheld,
conditioned or delayed). Buyer shall indemnify, defend and hold harmless Seller,
its Affiliates and their respective Representatives from and against any and all
Losses actually suffered or incurred by Seller or any of its Affiliates, to the
extent arising out of or relating to (i) any action taken or cooperation
provided by Seller or its Affiliates pursuant to this Section 6.2(d) or in
connection with such financing activities or (ii) any information utilized in
connection therewith (other than information provided to Buyer in writing by
Seller or the Companies). This Section 6.2(d) shall survive the termination of
this Agreement.

Section 6.3 Certain Restrictions. Except as required or permitted hereby, or as
otherwise set forth in Schedule 6.3, during the Interim Period, Seller will
cause the Acquired Companies and the Projects to operate in the ordinary course
of business and consistent with past practice. Without limiting the foregoing,
except as otherwise set forth in Schedule 6.3, required or permitted hereby or
required by applicable Laws or any Material Contract in effect as of the
Effective Date or amended as permitted hereby or as consented to by Buyer, which
consent shall not be unreasonably withheld, conditioned or delayed (except that
this Section 6.3 shall not restrict (i) the transfer of Excluded Items, (ii) the
termination or assignment of Excluded Contracts, (iii) the taking of any action
otherwise listed below to the extent reasonably required to accomplish any of
the Permitted Transactions or (iv) the termination of the services contemplated
by Section 6.8, and no consent of Buyer will be required with respect to any
matter set forth in this Section 6.3 or elsewhere in this Agreement to the
extent that the requirement of such consent would reasonably be expected to
violate any applicable Law), Seller will, during the Interim Period, cause the
Acquired Companies not to:

(a) permit or allow any Encumbrances (other than Permitted Encumbrances) to be
imposed on or against any of the Purchased Assets or Interests, except with
respect to the Interests as described in Section 3.4;

(b) grant any waiver of any term under, exercise any option under, or give any
consent with respect to, any Material Contract;

(c) sell, transfer, convey or otherwise dispose of any material Purchased Assets
outside the ordinary course of business as of the Effective Date;

(d) other than accounts payable incurred in the ordinary course of business or
otherwise incurred pursuant to the Material Contracts or short term, unsecured
borrowings or

 

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intercompany loans or guarantees that are paid in full and discharged prior to
the Closing, incur, create, assume or otherwise become liable for indebtedness
for borrowed money or issue any debt securities or assume or guarantee the
obligations of any other Person;

(e) except as may be required to meet the requirements of applicable Laws or
GAAP, change any accounting method or practice in a manner that is inconsistent
with past practice in a way that would reasonably be expected to have a material
and adverse impact on the Acquired Companies, taken as a whole;

(f) fail to maintain its existence or consolidate or merge with any other Person
or acquire all or substantially all of the Assets of any other Person;

(g) issue or sell any equity ownership interests;

(h) (i) commence any case, proceeding or other action under any existing or
future Debtor Relief Law, seeking (A) to have an order for relief entered with
respect to it, or (B) to adjudicate it as bankrupt or insolvent, or
(C) reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or
(D) appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets, or (ii) make a
general assignment for the benefit of its creditors, or take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in this Section 6.3(h);

(i) purchase any securities of any Person, except for short-term investments
made in the ordinary course of business;

(j) enter into, terminate or amend (i) any Material Permit other than in the
ordinary course of business, (ii) any Material Contract (including any Project
Financing Document), or (iii) any Contract involving total consideration
throughout its term in excess of $1,000,000 (except, in the case of the
foregoing clauses (ii) and (iii), Contracts entered into in the ordinary course
of business, consistent with past practice, which will be fully performed prior
to Closing and under which the Acquired Companies will have no further
obligations or liabilities following the Closing);

(k) waive any claims having a value in excess of $1,000,000, individually or in
the aggregate;

(l) make any material election with respect to Taxes;

(m) amend or modify its Organizational Documents;

(n) commence or settle any Claim;

(o) enter into any partnership, joint venture, strategic alliance or similar
contract or arrangement;

(p) increase the compensation payable or to become payable or the benefits
provided to the Transferrable Project Employees, except (i) to the extent
required by applicable Law or by a Governmental Authority, (ii) for normal merit
and cost of living increases consistent with past practice, or (iii) changes in
salary to the extent necessary as determined by Seller in good faith to retain
Transferrable Project Employees not to exceed 5% increases on an individual
basis, or (iv) changes to any Plant Employee’s Benefit Plan effective January 1,
2016 that have been communicated to Transferrable Project Employees and made
available to Buyer as of the Effective Date;

 

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(q) declare, set aside, make or pay any cash or non-cash dividend or other
distribution on or with respect to any of its ownership interests (other than
distributions solely among the Acquired Companies) except for NAPS Dispositions
(as defined in the Project Financing Agreement);

(r) enter into any Contract with any Related Party;

(s) delay, defer, reduce or otherwise alter in any material respect any capital
expenditures in a manner not consistent with the capital budget of the Acquired
Companies provided to Buyer as the Effective Date, except as would be consistent
with prudent operating practice and directives from ERCOT and other Governmental
Authorities; or

(t) agree or commit to do any of the foregoing.

Notwithstanding the foregoing, Seller may permit the Acquired Companies to take
commercially reasonable actions with respect to emergency situations so long as
Seller shall, upon receipt of notice of any such actions, promptly inform Buyer
of any such actions taken outside the ordinary course of business.

Section 6.4 Use of Certain Names. Within forty-five (45) days following Closing,
Buyer shall cause the Acquired Companies to cease using the words “FPL”, “FPLE”,
“ESI”, “NextEra”, “NextEra Energy”, “Energy Resources” and “FPL Energy” and any
trademark confusingly similar thereto or constituting an abbreviation thereof,
and any logos associated therewith (the “Seller Marks”), including eliminating
or covering the Seller Marks from the Property and Purchased Assets and
disposing of any unused stationery and literature of the Acquired Companies
bearing the Seller Marks, and thereafter, Buyer shall not, and shall cause the
Acquired Companies and their Affiliates not to, use the Seller Marks or any
logos, trademarks or trade names belonging to Seller or any Affiliate thereof,
and Buyer acknowledges that it, its Affiliates and the Acquired Companies have
no rights whatsoever to use such Intellectual Property. Without limiting the
foregoing:

(a) Within ten (10) days after the Closing Date, Buyer shall cause any Acquired
Company whose name contains any of the Seller Marks to change its name to a name
that does not contain any of the Seller Marks.

(b) Within sixty (60) days after the Closing Date, Buyer shall provide evidence
that is reasonably acceptable to Seller, that Buyer has made all filings
required pursuant to paragraph (a) above with, and has provided notice to, all
applicable Governmental Authorities and all counterparties to the Material
Contracts regarding the sale of the Acquired Companies and the Purchased Assets
to Buyer and the new addresses for notice purposes.

Section 6.5 Support Obligations.

(a) With respect to the NEER Guaranty, during the Interim Period, Seller and
Buyer shall, and Buyer shall cause Buyer’s Affiliates to, use their respective
Commercially Reasonable Efforts to work together to procure the full and
unconditional release, effective as of the Closing Date, of NEER’s obligations
under the NEER Guaranty. For purposes of this subsection, Commercially
Reasonable Efforts shall require (i) jointly approaching Kinder Morgan to
discuss and negotiate alternative arrangements for satisfying Kinder Morgan’s
credit support requirements, and (ii) in support of any such alternative credit
support arrangements, Buyer offering to replace the NEER Guaranty with a
substitute guarantee from Buyer or Buyer Parent Guarantor on terms acceptable to
Kinder Morgan (provided that the maximum principal amount guaranteed may not be
increased) and, if the foregoing is not accepted by Kinder Morgan, Buyer or
Buyer Parent Guarantor offering to deliver to Kinder Morgan

 

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a letter of credit from a creditworthy United States bank acceptable to Kinder
Morgan for the account of Buyer or Buyer Parent Guarantor as applicant in an
amount (x) sufficient to cover the entire amount that may be payable under the
NEER Guaranty or (y) such lesser amount deemed sufficient by Kinder Morgan, and,
if such offer is accepted by Kinder Morgan, providing such letter of credit to
Kinder Morgan in connection with the Closing.

(b) If Buyer and Seller are not successful in obtaining the complete and
unconditional release of NEER from its obligations under the NEER Guaranty prior
to Closing as contemplated in Section 6.5(a), then Seller or its Affiliates, as
applicable, shall cause NEER to keep in place the NEER Guaranty, and Buyer shall
deliver to Seller at the Closing, and shall keep in place, an irrevocable,
standby letter of credit in form and substance reasonably satisfactory to Seller
and in an amount equal to the maximum amount of exposure under the NEER Guaranty
and issued by Citibank N.A. pursuant to Buyer Parent Guarantor’s
debtor-in-possession credit agreement authorized by the DIP Order or another
irrevocable, standby letter of credit on substantially similar terms from a
creditworthy financial institution reasonably acceptable to Seller (the
“Continuing Support Letter of Credit”); provided, however, that as a condition
to the continuing maintenance of the NEER Guaranty:

(i) From and after the Closing, Buyer hereby agrees to indemnify and hold
harmless Seller and its Affiliates from and against any and all Losses that may
be suffered, incurred or sustained by any of them or to which any of them become
subject, resulting from, arising out of or relating to the NEER Guaranty being
in effect on or after the Closing Date (including as a result of any draw or
demand for or making of any payment by NEER under the NEER Guaranty) with
respect to the full extent of the NEER Guaranty. In furtherance, and not
limitation, of the forgoing, if the NEER Guaranty is drawn upon in accordance
with its terms after the Closing Date, upon receipt of written notice thereof
from Seller, Buyer shall pay Seller or its designee the amount so drawn upon in
accordance with its terms within five (5) Business Days after the date of such
written notice. If Buyer fails to pay Seller or its designee within such five
(5) Business Day period, Seller may draw upon or otherwise enforce the terms of
the Continuing Support Letter of Credit in accordance with the terms thereof;

(ii) from and after the Closing, Buyer and Seller shall continue to use
Commercially Reasonable Efforts to obtain the full and unconditional release of
NEER from its obligations under the NEER Guaranty as contemplated by
Section 6.5(a); and

(iii) Buyer shall not, and shall cause the Acquired Companies not to, effect any
amendments or modifications or any other changes to the Contracts or obligations
to which any of the obligations under the NEER Guaranty relates to the extent
such amendment or modification would increase the liability of NEER under the
NEER Guaranty or extend the stated maturity of any obligation to which the NEER
Guaranty relates, without Seller’s prior written consent (which consent may be
withheld in its sole and absolute discretion).

(c) If a Continuing Support Letter of Credit is provided pursuant to
Section 6.5(b), at the expiration or termination of the NEER Guaranty (such that
it is no longer subject to restoration or reinstatement), Seller shall deliver
or cause to be delivered to Buyer the Continuing Support Letter of Credit for
cancellation.

Section 6.6 Excluded Items. Notwithstanding anything in this Agreement to the
contrary, Buyer and Seller agree that the Purchased Assets shall exclude those
items listed on Schedule 6.6 (the “Excluded Items”). Seller shall retain all
benefits and liabilities with respect to the Excluded Items, and Seller shall,
prior to the Closing Date, use Commercially Reasonable Efforts to cause the
Acquired Companies to distribute, transfer or assign each Excluded Item to
Seller or a Non-Acquired Company Affiliate. Buyer acknowledges that the
inability of Seller to have any Excluded Item distributed,

 

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transferred or assigned from any Acquired Company for any reason shall not delay
Closing and any Excluded Item that Seller is unable to so distribute, transfer
or assign by the Closing shall be referred to as a “Non-Transferred Excluded
Item.” As soon as is reasonably practicable after the Closing Date, at Seller’s
cost and expense, the Parties will take such actions as are reasonably required
to cause the transfer to Seller or a Non-Acquired Company Affiliate of the
Non-Transferred Excluded Items, and the removal thereof from the sites of the
Projects, if applicable. From and after the Closing, except as set forth in the
immediately preceding sentence, Buyer and its Affiliates (including the Acquired
Companies) shall have no obligations with respect to the Non-Transferred
Excluded Items, including any obligation to preserve or protect the
Non-Transferred Excluded Items.

Section 6.7 Employee and Employee Benefit Matters.

(a) During the Interim Period, the Project Employees who are providing services
directly relating to the Projects may, in Seller or Seller Affiliate’s sole
discretion, continue in the same role following Closing as employees of Seller
or a Seller Affiliate. Nothing in this Section 6.7 shall affect the right of
Seller, or any Affiliate of Seller, to terminate the employment of any Project
Employee for any reason or at any time. At all times prior to Closing, Seller,
or an Affiliate of Seller, shall continue to have the exclusive right to control
the Project Employees and make any and all employment decisions regarding
Project Employees as it shall deem appropriate. Seller or its Affiliates shall
be exclusively responsible for the payment of all wages, provision of all
benefits and compliance with all applicable Laws with respect to the Project
Employees until such Project Employees are no longer employed by Seller or its
Affiliates.

(b) Except as expressly contemplated herein or in the O&M Agreement, from the
Effective Date through the latter of a period of two (2) years from and after
the O&M Expiration or the date of termination of this Agreement (pursuant to
Section 9.1 if a Closing does not occur hereunder), Buyer agrees not to solicit
for hire or employment or employ, and to use Commercially Reasonable Efforts to
cause Buyer Service Companies and their Affiliates not to solicit for hire or
employment or employ, any Project Employee, without Seller’s prior written
consent; provided, however, that the restrictions set forth in this
Section 6.7(b) shall not apply to any solicitation (or any hiring as a result of
any solicitation) that consists of advertising in a newspaper or periodical of
general circulation or through similar general circulation on the internet or
otherwise not specifically directed toward any Project Employee.

Section 6.8 Termination of Certain Services, Excluded Contracts and Other
Affiliate Transactions. Notwithstanding anything in this Agreement to the
contrary and except as contemplated with respect to the Contracts listed on Part
I of Schedule 6.8 (the “Existing Affiliate Contracts”) and as contemplated in
the O&M Agreement, the Energy Management Agreement or the Transition Services
Agreement, prior to the Closing, Seller shall, or shall cause an Affiliate of
Seller, as applicable, to (i) terminate, sever, or assign to Seller or a
Non-Acquired Company Affiliate effective upon or before the Closing any services
provided to any of the Acquired Companies by Seller or a Non-Acquired Company
Affiliate, including the severance of the Acquired Companies from the insurance
policies of the Non-Acquired Company Affiliates (including those policies
referred in Section 6.10, in accordance with Section 6.10), Tax services, legal
services and banking services (to include the severance of any centralized
clearance accounts) in each case for periods prior to the Closing, (ii) (A) use
Commercially Reasonable Efforts to terminate or assign to Seller or a
Non-Acquired Company Affiliate each Contract listed on Part II of Schedule 6.8
as specified therein and (B) terminate or assign all Contracts between any
Acquired Company and Seller or any Non-Acquired Company Affiliate (collectively
such Contracts described in this clause (ii), the “Excluded Contracts”), and
(iii) release the applicable Acquired Company from any and all liability under
the applicable Excluded Contract, in each case without any liability of any kind
on the part of any Acquired Company arising from any such termination,
severance,

 

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assignment or otherwise. In addition to the foregoing, prior to the Closing, any
liability of an Acquired Company to Seller or a Non-Acquired Company Affiliate,
or any receivable from an Acquired Company to Seller or a Non-Acquired Company
Affiliate, shall be satisfied or otherwise eliminated in full.

Section 6.9 Spare Parts. Notwithstanding anything in this Agreement to the
contrary, as may be permitted under the Project Financing Documents, prior to
the Closing, Seller shall have the right to use Spare Parts in the ordinary
course of business of the Acquired Companies or in connection with the
activities of any Project, in each case consistent with past practice. Prior to
the Closing, Seller shall cause the then current inventory of the Spare Parts to
be owned by the Acquired Companies.

Section 6.10 Insurance. Seller shall maintain or cause to be maintained in full
force and effect insurance coverage consistent with past practice for the
Acquired Companies until the Closing. From and after the Closing, all such
insurance coverage for the Acquired Companies and the Purchased Assets relating
to periods subsequent to the Closing shall no longer be provided or maintained
for any of the Acquired Companies or such Purchased Assets. For the avoidance of
doubt, the Acquired Companies and the Purchased Assets will continue to be
insured under any occurrence based third party liability policies under which
they were insured prior to Closing for any claims which relate to events or
circumstances prior to Closing, without regard to when such claim is reported to
the Acquired Companies and Purchased Assets. Buyer shall be solely responsible
for providing insurance to the Acquired Companies after the Closing. If any
claims are actually made prior to the Closing Date under any liability insurance
policy for any of the Acquired Companies, or if there are any matters reportable
under any claims made liability insurance policy for events or circumstances
relating to pre-Closing events which are known to Seller, then Seller shall use
Commercially Reasonable Efforts to ensure that the applicable Acquired Company
can file, notice and otherwise continue to pursue such claims and recover
proceeds under the terms of such policies, and Seller will promptly pay over to
the applicable Acquired Company any proceeds of any insurance recovery under any
such policy by Seller. If any casualty loss occurs prior to the Closing which is
insured under any property or casualty insurance policy for any of the Acquired
Companies and claims associated with such losses have been made prior to the
Closing, then Seller shall use Commercially Reasonable Efforts to ensure that
the applicable Acquired Company can file, notice and otherwise continue to
pursue such claims and recover proceeds under the terms of such policies and
reasonably cooperate with the filing and pursuit of any such claim, and Seller
will promptly pay over to the applicable Acquired Company any such proceeds of
any insurance recovery under any such policy by Seller, other than any such
proceeds that have been applied to repair or replace the property subject to
such claim.

Section 6.11 Casualty. If any of the Purchased Assets are damaged or destroyed
by casualty loss during the Interim Period, and the sum of (a) the cost of
restoring such damaged or destroyed Purchased Assets to a condition reasonably
comparable to their prior condition, and (b) the net present value (calculated
using the Discount Rate) of the amounts of any lost net revenues reasonably
expected to accrue after the Closing as a result of such damage or destruction
to such Purchased Assets, (a) and (b) above as estimated by a qualified firm
reasonably acceptable to Buyer and Seller (and with the costs of such firm being
paid by Buyer and Seller in equal proportion), and such sum being net of and
after giving effect to any insurance proceeds available to the Acquired
Companies for such restoration and lost profits and any Tax benefits to the
Acquired Companies related thereto (such sum, the “Restoration Cost” and the
date of such estimation, the “Restoration Cost Estimation Date”), is greater
than $15,000,000 but does not exceed $131,303,723, Seller may elect either
(i) to restore, repair or replace such damaged or destroyed Purchased Assets to
a condition reasonably comparable to their prior condition (any of the
foregoing, a “Restoration,” and Seller’s election of a Restoration, the
“Restoration Option”), or (ii) reduce the amount of the Purchase Price by such
Restoration Cost. If Seller elects the Restoration Option, it shall notify Buyer
of such election in writing, and Seller shall use its Commercially Reasonable
Efforts to complete, or cause to be completed, such Restoration prior to the
Closing, and if the Restoration

 

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can be completed on or before the date that is one hundred eighty (180) days
after the Outside Date (the “Extended Outside Date”), the Closing Date shall be
postponed for the amount of time reasonably necessary to complete such
Restoration; provided, however, that if the Closing Date is so extended and such
Restoration is not completed in full by the Extended Outside Date, the Closing
shall occur on or before the Extended Outside Date and the Purchase Price will
be reduced by the amount of the remaining Restoration Cost as of the Closing (as
estimated by a qualified firm reasonably acceptable to Buyer and Seller);
provided, further, that if Seller elects the Restoration Option, Buyer shall be
entitled to waive Seller’s obligation to complete the Restoration at any time
within twenty (20) days following Seller’s written notice to Buyer of such
election by written notice to Seller and proceed to Closing upon satisfaction or
waiver of the conditions to Closing set forth in Article VII and Article VIII,
in which case Seller shall pay the applicable insurance proceeds with respect to
such casualty to Buyer promptly upon receipt and such casualty loss shall not
affect the Closing. If Seller elects the Restoration Option or to reduce the
Purchase Price, such casualty loss shall not affect the Closing. If Seller does
not provide Buyer written notice of its election within forty-five (45) days
after the applicable Restoration Cost Estimation Date (but in any event at least
twenty (20) days prior to the Closing Date), Buyer may elect to terminate this
Agreement within ten (10) Business Days after the end of such forty-five
(45) day period by written notice to Seller. If the Restoration Cost is in
excess of $131,303,723, Seller may, by written notice to Buyer within forty-five
(45) days after the applicable Restoration Cost Estimation Date (but in any
event at least twenty (20) days prior to the Closing Date), elect to (i) reduce
the Purchase Price by the estimated Restoration Cost or (ii) terminate this
Agreement, in each case by providing written notice to Buyer; provided, however,
that if Seller does not elect to terminate this Agreement as provided in this
sentence, then Buyer may elect, by written notice to Seller, to terminate this
Agreement within ten (10) Business Days of receipt by Buyer of Seller’s notice
regarding its election. If the Restoration Cost is $15,000,000 or less,
(A) Seller shall not be obligated to repair or replace the damaged or destroyed
Purchased Assets (but shall be obligated to cooperate in the pursuit of any
applicable insurance proceeds in accordance with Section 6.10), (B) there shall
be no reduction in the amount of the Purchase Price, and (C) neither Buyer nor
Seller shall have the right or option to terminate this Agreement and such
casualty event shall not affect the Closing. Any cash insurance proceeds
received by the Acquired Companies with respect to any casualty subject to this
Section 6.11 shall be disregarded for purposes of any Aggregate Net Working
Capital calculation hereunder.

Section 6.12 Condemnation. If any of the Purchased Assets are taken by
condemnation during the Interim Period and the sum of (a) the value of such
Purchased Assets in a condemnation proceeding and (b) to the extent not included
in the preceding clause (a), the net present value (calculated using the
Discount Rate) of the amounts of any lost net revenues reasonably expected to
accrue after the Closing as a result of such condemnation of such Purchased
Assets, (a) and (b) above as determined by a qualified firm reasonably
acceptable to Buyer and Seller (and with the costs of such firm being paid by
Buyer and Seller in equal proportion), and such sum being net of and after
giving effect to any condemnation award proceeds to be paid to the Acquired
Companies and any Tax benefits to the Acquired Companies related thereto (such
sum, the “Condemnation Value” and the date of such estimation, the “Condemnation
Value Estimation Date”), is greater than $15,000,000 but do not have a
Condemnation Value in excess of $131,303,723, Seller may elect either (i) to
replace the Purchased Assets that were taken by such condemnation with
reasonably comparable Assets, or (ii) to reduce the Purchase Price by such
Condemnation Value (less, to the extent not taken into account in calculating
the Condemnation Value, the amount of any condemnation award proceeds to be paid
to the Acquired Companies and any Tax benefits to the Acquired Companies related
thereto). If Seller elects to replace the Purchased Assets or reduce the
Purchase Price, such condemnation shall not affect the Closing. If Seller does
not provide Buyer notice of its election within forty-five (45) days after the
applicable Condemnation Value Estimation Date (but in any event at least twenty
(20) days prior to the Closing Date), Buyer may elect to terminate this
Agreement within ten (10) Business Days after the end of such forty-five
(45) day period by written notice to Seller. If the Condemnation Value is in
excess of

 

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$131,303,723, Seller may, by written notice to Buyer within forty-five (45) days
after the applicable Condemnation Value Estimation Date (but in any event at
least twenty (20) days prior to the Closing Date), elect to (a) reduce the
Purchase Price by such Condemnation Value less, to the extent not taken into
account in calculating the Condemnation Value, the amount of any condemnation
award proceeds to be paid to the Acquired Companies and any Tax benefits to the
Acquired Companies related thereto), or (b) terminate this Agreement, in each
case by providing written notice to Buyer; provided, however, that if Seller
does not elect to terminate this Agreement as provided in this sentence, then
Buyer may, by written notice to Seller, terminate this Agreement within ten
(10) Business Days of receipt by Buyer of Seller’s notice regarding its
election. If the Condemnation Value is $15,000,000 or less, (A) Seller shall not
have the obligation to replace the Purchased Assets (but shall be obligated to
cooperate in the pursuit of any applicable condemnation proceeds), (B) there
shall be no reduction in the amount of the Purchase Price, and (C) neither Buyer
nor Seller shall have the right or option to terminate this Agreement and such
condemnation shall not affect the Closing. Any condemnation proceeds received by
the Acquired Companies with respect to any condemnation subject to this
Section 6.12 shall be disregarded for purposes of any Aggregate Net Working
Capital calculation hereunder.

Section 6.13 Transfer Taxes. Seller and Buyer shall each pay any Transfer Taxes
imposed on it or any Acquired Company by Law as a result of the transactions
contemplated by this Agreement, but, notwithstanding any such requirement of
Law, each of Seller and Buyer shall bear half of the total of all such Transfer
Taxes. Accordingly, if either Party is required at Law to pay more than its half
of any such Transfer Taxes, the other Party shall promptly reimburse such first
Party for amounts in excess of such half. Seller and Buyer shall timely file
their own Transfer Tax Returns as required by Law and shall notify the other
Party when such filings have been made. Seller and Buyer shall cooperate and
consult with each other prior to filing such Transfer Tax Returns to ensure that
all such returns are filed in a consistent manner. Without limiting the
foregoing, Buyer shall be solely responsible for any Transfer Taxes arising from
any action to dissolve, terminate or restructure any Acquired Company or to
convey, distribute or transfer any Assets or other rights by deed, bill of sale
or otherwise to or from any Acquired Company on or after the Closing.

Section 6.14 Tax Matters. Except as provided in Section 6.13 relating to
Transfer Taxes:

(a) With respect to any Tax Return covering a taxable period ending on or before
the Closing Date (a “Pre-Closing Taxable Period”) that is required to be filed
after the Closing Date with respect to any Acquired Company, (i) Seller shall
cause such Tax Return to be prepared and shall deliver such Tax Return as so
prepared to Buyer not later than seven (7) days prior to the due date for filing
such Tax Return, and (ii) Buyer shall cause such Tax Return to be executed and
duly and timely filed with the appropriate Taxing Authority and shall, subject
to Section 6.14(b), pay all Taxes due with respect to the period covered by such
Tax return. For the avoidance of doubt, the immediately preceding sentence shall
not apply to income Tax Returns that report the income and deductions of any
Acquired Company for a Pre-Closing Taxable Period but that are required to be
filed by a Person that is a direct or indirect owner of such Acquired Company
but that is not itself an Acquired Company; such income Tax Returns shall be
filed by such Person and shall not be provided to Buyer. With respect to any Tax
Return covering a taxable period beginning on or before the Closing Date and
ending after the Closing Date (a “Straddle Taxable Period”) that is required to
be filed after the Closing Date with respect to an Acquired Company, (A) Buyer
shall cause such Tax Return to be prepared (in a manner consistent with
practices followed in prior taxable periods, except as required by applicable
Law or a change in Law) and shall deliver a draft of such Tax Return to Seller
for Seller’s review and approval at least fourteen (14) days prior to the due
date for filing such Tax Return, (B) Seller and Buyer shall cooperate and
consult with each other in order to finalize such Tax Return, and (C) thereafter
Buyer shall cause such Tax Return to be executed and duly and timely filed with
the appropriate Taxing Authority and shall, subject to Section 6.14(b), pay all
Taxes due with respect to the period covered by such Tax Return.

 

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(b) As between Seller and Buyer, Seller shall be responsible for and indemnify
Buyer against any Tax with respect to an Acquired Company that is attributable
to a Pre-Closing Taxable Period or to that portion of a Straddle Taxable Period
that ends on the Closing Date, in each case to the extent that such Tax exceeds
the amount (if any) reflected as a current liability for such Tax pursuant to
the Final Aggregate Net Working Capital Adjustment Amount computation in
accordance with Section 2.6. Within five (5) days prior to the due date for the
payment of any such Tax, if (i) the amount of such Tax for which Seller is
responsible, exceeds (ii) the amount reflected as a current liability for such
Tax in such Final Aggregate Net Working Capital Amount, Seller shall pay to
Buyer an amount equal to such excess; if the amount described in clause
(ii) exceeds the amount described in clause (i), Buyer shall pay to Seller the
amount of such excess. With respect to a Straddle Taxable Period, Seller shall
determine the Tax attributable to the portion of the Straddle Taxable Period
that ends on the Closing Date by an interim closing of the books of the relevant
Acquired Company as of the Closing Date, except for ad valorem or property Taxes
(“Property Taxes”) and franchise Taxes based solely on capital which shall be
prorated on a daily basis to the Closing Date (such that the Property Taxes or
franchise Taxes attributable to the pre-Closing portion of a Straddle Taxable
Period shall be equal to the amount of such Taxes for such entire Straddle
Taxable Period multiplied by a fraction, the numerator of which is the number of
days during the Straddle Taxable Period that are in the Pre-Closing Taxable
Period and the denominator of which is the actual number of days in the Straddle
Taxable Period). For this purpose, any franchise Tax paid or payable not based
solely on capital with respect to such Acquired Company shall be allocated to
the taxable period for which the income, operations, Assets or capital
comprising the base of such Tax is measured, regardless of whether the right to
do business for another period is obtained by the payment of such Tax.

(c) Buyer shall be responsible for and indemnify Seller and its applicable
Affiliates against, and Buyer shall be entitled to all refunds (including, but
not limited to, property tax refunds) and credits of, all Taxes of any Acquired
Company that are not the responsibility of Seller pursuant to Section 6.14(b).

(d) With respect to any Tax for which Seller is responsible, Seller shall have
the right, at its sole cost and expense, to initiate any claim for refund and to
control (in the case of a Pre-Closing Taxable Period) or participate in (in the
case of a Straddle Taxable Period) the prosecution, settlement or compromise of
any proceeding involving such Tax, including the determination of the value of
property for purposes of real and personal property ad valorem Taxes; provided,
however, that to the extent that any such claim or proceeding could reasonably
be expected to have a post-Closing impact on Buyer or on any of the Acquired
Companies (a) Buyer shall be entitled to participate in such proceeding and
(b) Seller shall not initiate, settle or otherwise compromise such proceeding
without Buyer’s written consent, such consent not to be unreasonably withheld or
delayed. Buyer shall (and shall cause the relevant Acquired Company to) take
such action in connection with any such proceeding as Seller shall reasonably
request from time to time to implement the preceding sentence, including the
selection of counsel and experts and the execution of powers of attorney. Buyer
shall (and shall cause the relevant Acquired Company to) give written notice to
Seller of its receipt of any notice of any audit, examination, claim or
assessment for any Tax for which Seller is responsible within ten (10) days
after its receipt of such notice; failure to give any such written notice within
such ten (10) day period shall cause Buyer to forfeit any rights it may have by
reason of Section 4.10 or this Section 6.14 to the extent Seller is actually
prejudiced by such failure.

(e) Seller shall grant to Buyer (or its designees) access at all reasonable
times to all of the information, books and records relating to the Acquired
Companies within the possession of

 

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Seller (including workpapers and correspondence with Taxing Authorities), and
shall afford Buyer (or its designees) the right (at Buyer’s expense) to take
extracts therefrom and to make copies thereof, to the extent reasonably
necessary to permit Buyer (or its designees) to prepare Tax Returns, respond to
Tax audits and investigations, prosecute Tax protests, appeals and refund claims
and to conduct negotiations with Taxing Authorities. The previous sentence
shall, under no circumstances, be construed to grant Buyer access to the
consolidated United States federal income tax or any consolidated or unitary
state Tax Returns which include Seller or any of its Affiliates for any taxable
year. Buyer shall grant or cause the Acquired Companies to grant to Seller (or
its designees) access at all reasonable times to all of the information, books
and records relating to the Acquired Companies within the possession of Buyer
(including workpapers and correspondence with Taxing Authorities) and to the
employees of the Acquired Companies, and shall afford Seller (or its designees)
the right (at Seller’s expense) to take extracts therefrom and to make copies
thereof, to the extent reasonably necessary to permit Seller (or its designees)
to prepare Tax Returns, respond to Tax audits and investigations, prosecute Tax
protests, appeals and refund claims and to conduct negotiations with Taxing
Authorities. After the Closing Date, Seller and Buyer will preserve all
information, records or documents in their respective possessions relating to
liabilities for Taxes of the Acquired Companies until six (6) months after the
expiration of any applicable statute of limitations (including extensions
thereof) with respect to the assessment of such Taxes.

(f) If after the Closing Buyer or any Acquired Company actually receives a
refund of any Tax or utilizes a credit for any overpayment of any Tax of any
Acquired Company for a Pre-Closing Taxable Period or that portion of a Straddle
Taxable Period ending on the Closing Date, Buyer shall pay to Seller within ten
(10) Business Days after such receipt or utilization an amount equal to such
refund received or credit utilized, together with any interest received or
credited thereon to the extent that such refund or credit exceeds the amount (if
any) reflected as a current asset for such refund or credit pursuant to the
Final Aggregate Net Working Capital Adjustment Amount computation in accordance
with Section 2.6. Buyer shall, and shall cause the relevant Acquired Company to,
take such action to obtain a refund of any Tax or a credit for any overpayment
of any Tax of such Acquired Company for a Pre-Closing Taxable Period or that
portion of a Straddle Taxable Period ending on the Closing Date or to mitigate,
reduce or eliminate any such Tax that could be imposed for a Pre-Closing Taxable
Period or that portion of a Straddle Taxable Period ending on the Closing Date
(including with respect to the transactions contemplated hereby) as is
reasonably requested by Seller; provided, however, for the avoidance of doubt
and without limitation, that Buyer’s obligation to cooperate with Seller’s
reasonable requests to mitigate, reduce or eliminate any Tax for a Pre-Closing
Taxable Period shall not be construed to require Buyer to carryback net
operating losses or other tax attributes that arise following the Closing to a
Pre-Closing Taxable Period or to take any other similar action that could have a
negative impact on Buyer.

(g) In the event that Seller initiates a claim for refund from a Taxing
Authority with regard to any Tax of any Acquired Company attributable to a
Pre-Closing Taxable Period or that portion of a Straddle Taxable Period ending
on the Closing Date, whether the initiation of such claim begins prior to or
after the Closing, Seller shall have all rights to and interest in such refund.
Buyer shall, upon request, provide Seller a limited power of attorney allowing
Seller to pursue such claim for refund with and collect such refund from such
Taxing Authority. If after the Closing Buyer or any Acquired Company receives a
refund or utilizes a credit of any such Tax with regard to a claim so initiated
by Seller, Buyer shall pay to Seller within ten (10) Business Days after such
receipt or utilization an amount equal to such refund received or credit
utilized, together with any interest received or credited thereon, less any
expenses Buyer has incurred as a result of such action.

(h) In the event that Seller initiates a claim for refund from a third party who
improperly withheld sales and use Tax, or withheld excessive sales and use Tax,
with regard to an

 

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Acquired Company attributable to a Pre-Closing Taxable Period or that portion of
a Straddle Taxable Period ending on the Closing Date, whether the initiation of
such claim begins prior to or after the Closing, Seller shall have all rights to
and interest in such refund. Buyer shall, upon request, provide Seller a limited
power of attorney allowing Seller to pursue such claim for refund with and
collect such refund from such third party. If after the Closing, Buyer or an
Acquired Company receives a refund of any such Tax with regard to a claim so
initiated by Seller, Buyer shall pay to Seller within ten (10) Business Days
after such receipt an amount equal to such refund received, together with any
interest received or credited thereon, less any expenses Buyer has incurred as a
result of such action.

(i) Prior to the Closing, Seller shall deliver to Buyer a written certificate,
prepared and executed in accordance with the requirements of Treasury Regulation
section 1.1445-2(b), certifying that Seller (or owner of Seller if Seller is a
disregarded entity for federal income tax purposes) is not a foreign person
within the meaning of said Treasury Regulation.

(j) The Parties acknowledge that, since (i) the Acquired Companies, other than
FPLE Forney and Lamar, are classified as disregarded from their owners for
federal income tax purposes, and (ii) an election pursuant to Section 338(h)(10)
of the Code shall be made with respect to the purchase and sale of the
membership interests of FPLE Forney and Lamar (from a federal income tax
perspective), the purchase and sale of the Interests is intended to be treated
for federal income tax purposes as a purchase and sale of the Assets and
liabilities of the Acquired Companies. Buyer, Seller, and their Affiliates shall
(a) cooperate in the preparation and filing of (and shall properly execute and
file) elections under Section 338(h)(10) of the Code with respect to the sale of
the membership interests in each of FPLE Forney and Lamar (from a federal income
tax perspective), and (b) take all such actions as are required in order to give
effect to those elections for state and local Tax purposes to the greatest
extent permitted by law. Neither Buyer, the Acquired Companies, nor any of their
Affiliates shall make any election under Section 338(g) of the Code with respect
to the sale of the membership interests in each of FPLE Forney and Lamar (from a
federal income tax perspective).

Section 6.15 Appointment of Primary Representatives. In order to facilitate the
consummation of the transactions contemplated by this Agreement, each Party
shall designate a primary Representative (each, a “Primary Representative”) to
act as the primary point of contact to coordinate communications and other
interaction between the Parties during the Interim Period. Either Party may
designate a new Primary Representative by providing written notice to the other
Party.

Section 6.16 Updating; Notification of Certain Matters.

(a) Prior to the Closing, each Party shall promptly notify the other Party in
writing of (a) the existence or occurrence, or failure to occur, of any fact or
event of which it has knowledge that would be reasonably likely to cause any
representation or warranty of such Party contained in this Agreement to be
untrue or inaccurate at any time from the Effective Date to the Closing assuming
such representation or warranty is made at such time, (b) the failure of such
Party to comply with or satisfy in any material respect any covenant to be
complied with by it hereunder, (c) any written notice or other written
communication from any Person alleging that the consent or approval of such
Person is or may be required in connection with the transactions contemplated
hereby, and (d) any written notice or other written communication from any
Governmental Authority in connection with the transactions contemplated hereby.

(b) Seller may provide to Buyer changes or additions to any of the Schedules (a
“Schedule Supplement”) solely to correct any matter that would otherwise
constitute a breach or inaccuracy of any representation or warranty of Seller in
Article III or Article IV such that the closing condition in Section 7.1 cannot
be satisfied. A Schedule Supplement shall only disclose facts or events

 

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that first occurred or arose after the Effective Date. No such Schedule
Supplement shall be deemed to cure any breach or inaccuracy of any
representation or warranty made in this Agreement for purposes of Section 7.1 or
otherwise alter the Parties’ rights under Section 9.1(b) unless Buyer
specifically agrees thereto in writing; provided, however, that if the Closing
shall occur despite the fact that Seller had provided Buyer, as contemplated
above, a Schedule Supplement such that the closing condition in Section 7.1
could not be satisfied, then notwithstanding anything to the contrary in this
Agreement (including Article X) no matters disclosed by Seller prior to the
Closing in the Schedule Supplement that constituted breaches of, or inaccuracies
in, one or more representations or warranties of Seller in Article III or
Article IV as of the Effective Date or as of the Closing Date shall be the basis
for any indemnification by Seller pursuant to Section 10.1(a).

Section 6.17 Announcements. No press release or other public announcement, or
public statement or comment in response to any inquiry, relating to this
Agreement or the transactions contemplated hereby shall be issued or made by
either Buyer or Seller, or any of their Affiliates or Representatives, without
the consent of Buyer or Seller, as the case may be, such consent not to be
unreasonably withheld, conditioned or delayed; provided, however, that a press
release or other public announcement, regulatory filing, statement or comment
made without such consent, including in furtherance of the requirements of
Section 6.1, shall not be in violation of this Section 6.17 if it is made in
order to comply with applicable Laws or stock exchange rules and in the
reasonable judgment of the Party or Affiliate making such release or
announcement, based upon advice of counsel, prior review and joint approval,
despite reasonable efforts to obtain the same, would prevent dissemination of
such release or announcement in a sufficiently timely fashion to comply with
such applicable Laws or rules; provided, further, that in all instances Buyer or
Seller, as the case may be, shall provide prompt notice of any such release,
announcement, statement or comment to the other Party.

Section 6.18 Further Assurances. Subject to the terms and conditions of this
Agreement, each Party shall (at its own cost and expense) at any time and from
time to time, upon reasonable request, (a) do, execute, acknowledge and deliver,
and cause to be done, executed, acknowledged and delivered, all such further
acts, transfers or assignments as may be required to consummate the transactions
in accordance with the terms hereof and to cause to be fulfilled the closing
conditions set forth in Article VII and Article VIII and (b) take such other
actions as may be reasonably required in order to carry out the intent of this
Agreement; provided that in no event shall any Party be required to take any
action which (i) increases in any way the liability or obligations of such
Party, (ii) in the opinion of its counsel, is unlawful or would or could
constitute a violation of any applicable Law or require the approval of any
Governmental Authority (other than a Buyer Approval, a Seller Approvals or a
Company Consent) or (iii) could reasonably be expected to prevent or materially
impede, interfere with or delay the transactions contemplated by this Agreement.

Section 6.19 Reserved.

Section 6.20 Qualified Scheduling Entity. Buyer acknowledges that the Affiliate
of Seller that serves as the Qualified Scheduling Entity with respect to the
Projects is not one of the Acquired Companies and upon the occurrence of the
Closing such Affiliate will continue to act as the Qualified Scheduling Entity
with respect to the Projects, and that Buyer and the Acquired Companies shall be
responsible for appointing and maintaining a Qualified Scheduling Entity with
respect to the Projects after the Closing.

Section 6.21 Exclusivity.

(a) Seller agrees that during the Interim Period, Seller shall not, and shall
take all action necessary to ensure that none of the Acquired Companies or any
of their respective Affiliates or

 

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Representatives shall, directly or indirectly, solicit, initiate or accept any
other proposals or offers from any Person (A) relating to any direct acquisition
or purchase of all or any portion of the equity or ownership interest of any of
the Acquired Companies or Purchased Assets other than inventory to be sold in
the ordinary course of business consistent with past practice, (B) to enter into
any merger, consolidation or other business combination with any of the Acquired
Companies or (C) to enter into a recapitalization, reorganization or any other
extraordinary business transaction directly involving any of the Acquired
Companies; or

(b) Seller shall immediately cease and cause to be terminated all existing
discussions, conversations, negotiations and other communications with any
Persons conducted heretofore with respect to any of the foregoing; provided,
however, the foregoing shall not be required Seller to direct or otherwise cause
any such Person to return or destroy information heretofore provided to such
Person prior to the Closing.

Section 6.22 Additional Assets Contribution. Prior to the Closing, Seller shall
cause its applicable Affiliates to contribute to one or more of the Acquired
Companies good and valid title free and clear of all Encumbrances to each of the
Additional Assets.

Section 6.23 Forney Rotor. Promptly following the Closing, Seller will make
available for purchase by Buyer, under mutually agreeable terms and conditions,
the compressor section of an upgraded combustion turbine rotor (a “Compressor
Section”). If Buyer purchases a Compressor Section from Seller, Seller will use
Commercially Reasonable Efforts to procure the turbine section of an upgraded
combustion turbine rotor (a “Turbine Section”) for Buyer under mutually
agreeable terms and conditions, which terms and conditions the Parties agree to
negotiate in good faith prior to the Closing. If Seller is unable to procure a
Turbine Section, or the Parties are unable to agree on terms and conditions for
the purchase and sale of a Turbine Section, then Seller will make its
Affiliate’s spare rotor available for purchase to Buyer under mutually agreeable
terms and conditions no earlier than January 1, 2017.

Section 6.24 Gas Supply Agreement. Promptly following the Effective Date, Seller
and Buyer shall endeavor to negotiate in good faith a mutually agreeable gas
supply agreement between NextEra Energy Power Marketing, LLC and FPLE Forney,
LLC and a completion payment by Buyer or the Acquired Companies to Seller or an
Affiliate of Seller with respect to the pipeline project to be constructed and
owned in part by an Affiliate of Seller and connecting with the KM Facilities,
with the amount of such payment and the terms and conditions upon which it would
be made to be set forth in such gas supply agreement.

ARTICLE VII

BUYER’S CONDITIONS TO CLOSING

The obligations of Buyer to consummate the transactions contemplated by this
Agreement and the other Transaction Documents are subject to the fulfillment, on
or prior to the Closing Date, of each of the following conditions (any or all of
which may be waived in writing by Buyer in whole or in part to the extent
permitted by applicable Law):

Section 7.1 Representations and Warranties.

(a) The representations and warranties made by Seller in Article III and Article
IV other than the representations and warranties made in Section 3.2,
Section 3.4, Section 3.7, Section 4.3, and Section 4.17 (collectively, the
“Fundamental Representations”) (without regard to any materiality or Material
Adverse Effect qualification therein) shall be true and correct in all respects
on and as of the Closing Date as though made on and as of the Closing Date
(except for such representations and

 

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warranties expressly made as of another stated date, which shall be true and
correct as of such date), except where the failure of such representations and
warranties to be true and correct has not had, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

(b) The Fundamental Representations shall be true and correct in all respects on
and as of the Closing Date as though made on and as of the Closing Date.

Section 7.2 Performance. Seller shall have performed and complied, in all
material respects, with the agreements, covenants and obligations required by
this Agreement and any of the other Transaction Documents to be performed or
complied with by Seller at or before the Closing.

Section 7.3 Seller’s Certificate. Seller shall have delivered to Buyer at the
Closing a certificate of an officer or other authorized Representative of
Seller, dated as of the Closing Date, certifying as to the matters set forth in
Section 7.1 and Section 7.2.

Section 7.4 Orders and Laws. There shall not be any Law or Order restraining,
enjoining or otherwise prohibiting or making illegal, or litigation or
proceedings filed by a Governmental Authority threatening in writing to
restrain, enjoin or otherwise prohibit or make illegal, the consummation of the
transactions contemplated by this Agreement or any other Transaction Document.

Section 7.5 Consents and Approvals. The Buyer Approvals, the Seller Approvals
and the Company Consents shall have been duly obtained, made or given and shall
be in full force and effect, and all terminations or expirations of waiting
periods imposed by any Governmental Authority shall have occurred.

Section 7.6 Seller Deliverables. Seller shall have delivered, or caused to have
been delivered, to Buyer each of the items listed in Section 2.4.

Section 7.7 No Material Adverse Effect. Since the Effective Date, no Material
Adverse Effect shall have occurred and be continuing.

ARTICLE VIII

SELLER’S CONDITIONS TO CLOSING

The obligations of Seller to consummate the transactions contemplated by this
Agreement and the other Transaction Documents are subject to the fulfillment, on
or prior to the Closing Date, of each of the following conditions (any or all of
which may be waived in writing by Seller in whole or in part to the extent
permitted by applicable Law):

Section 8.1 Representations and Warranties. The representations and warranties
made by Buyer in Article V shall be true in all material respects on and as of
the Closing Date (except for any such representations and warranties that are
qualified by materiality or Material Adverse Effect which shall be true and
correct in all respects) as though made on and as of the Closing Date (except
those representations and warranties that address matters only as of a specified
date, the truth and correctness of which shall be determined as of that
specified date).

Section 8.2 Performance. Buyer shall have performed and complied, in all
material respects, with the agreements, covenants and obligations required by
this Agreement and any of the other Transaction Documents to be so performed or
complied with by Buyer at or before the Closing.

 

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Section 8.3 Buyer’s Certificate. Buyer shall have delivered to Seller at the
Closing a certificate of an officer or other authorized Representative of Buyer,
dated as of the Closing Date, as to the matters set forth in Section 8.1 and
Section 8.2.

Section 8.4 Orders and Laws. There shall not be any Law or Order restraining,
enjoining or otherwise prohibiting or making illegal, or any litigation or
proceedings filed by a Governmental Authority threatening in writing to
restrain, enjoin or otherwise prohibit or make illegal, the consummation of the
transactions contemplated by this Agreement or any other Transaction Document.
During the pendency of the Bankruptcy Cases, Buyer is in compliance with the
Bankruptcy Court Order in all respects and the DIP Order in all material
respects, except in each case as would not reasonably be expected to hinder,
prevent or delay Buyer from consummating the transactions contemplated by this
Agreement.

Section 8.5 Consents and Approvals. The Buyer Approvals, Seller Approvals and
Company Consents shall have been duly obtained, made or given and shall be in
full force and effect, and all terminations or expirations of waiting periods
imposed by any Governmental Authority shall have occurred.

Section 8.6 Release of NEER Guaranty. (a) Seller and Buyer shall have effected
the full and unconditional release of NEER from its obligations under the NEER
Guaranty as provided in Section 6.5(a) or (b) Buyer shall have provided to
Seller the Continuing Support Letter of Credit in accordance with
Section 6.5(b).

Section 8.7 Buyer Deliverables. Buyer shall have delivered, or caused to have
been delivered, to Seller each of the items listed in Section 2.5.

ARTICLE IX

TERMINATION

Section 9.1 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, as follows:

(a) at any time before the Closing, (i) by Seller or Buyer, by written notice to
the other, in the event that any Law or Order restrains, enjoins or otherwise
prohibits or makes illegal the sale of the Interests pursuant to this Agreement
or (ii) by Buyer, by written notice to Seller, if a Governmental Authority seeks
to restrain, enjoin or otherwise prohibit or make illegal the sale of the
Interests pursuant to this Agreement;

(b) at any time before the Closing, by Seller or Buyer, by written notice to the
other, if the other has breached its obligations or there is an inaccuracy in
its representations and warranties hereunder, where the effect of such breach or
inaccuracy would be to cause the conditions to the obligation to consummate the
Closing of the terminating Party not to be capable of being satisfied (assuming
the Closing were otherwise to occur on the date the terminating Party delivers
notice of termination), and such breach or inaccuracy (other than a breach of
Buyer’s obligation to pay the Purchase Price in accordance with the terms of
Article II), if capable of being cured, has not been cured within forty-five
(45) days following written notification thereof; provided, however, that if, at
the end of such forty-five (45) day period, the breaching Party is endeavoring
in good faith, and proceeding diligently, to cure such breach or inaccuracy, the
breaching Party shall have an additional thirty (30) days in which to effect
such cure;

(c) at any time before the Closing, by Buyer or Seller, by written notice to the
other, on or after the date that is two hundred seventy (270) days after the
Effective Date, as the same

 

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may be extended pursuant to Section 6.11 (the “Initial Outside Date”); provided,
that the right to terminate this Agreement under this Section 9.1(c) shall not
be available to a Party if such Party is in material breach of any of its
representations, warranties, covenants or agreements under this Agreement;
provided, further, that, subject to Section 9.5, if on the Initial Outside Date,
the conditions set forth in either Section 7.5 or Section 8.5 are not satisfied
but all of the other conditions to Closing are satisfied (other than those
conditions that by their nature are to be satisfied at the Closing) and the
conditions set forth in either Section 7.5 or Section 8.5, as the case may be,
remain capable of being satisfied, then Buyer may, at its option exercisable by
delivering written notice to Seller before the Initial Outside Date, extend the
Initial Outside Date until the date that is 90 days after the Initial Outside
Date (such date as it may be extended (the “Outside Date”));

(d) at any time before the Closing, by Seller, by written notice to Buyer, if
all of the conditions to close set forth in Article VII and Article VIII have
been satisfied (other than such closing conditions that by their nature are to
be satisfied at the Closing which are then capable of being satisfied) or waived
in writing by the applicable Party and Buyer fails to consummate the
transactions contemplated hereby at the Closing;

(e) by Buyer or Seller to the extent contemplated by Section 6.11 or
Section 6.12, by notice to the other Party in accordance with such Sections; or

(f) by mutual written consent of Buyer and Seller.

Section 9.2 Effect of Termination. If this Agreement is validly terminated
pursuant to Section 9.1, except as set forth in Section 9.3 and Section 9.4,
there will be no liability or obligation on the part of Seller or Buyer (or any
of their respective Representatives or Affiliates), provided that (a) Section
6.2(c), Section 6.7(b), Section 6.17, Section 9.2, Section 9.3, Section 10.4,
Section 10.6, Section 10.8, Section 11.1 and Article XII (to the extent
applicable to such surviving sections) will survive any such termination and
(b) each Party shall continue to be liable for any willful and intentional
material breach of this Agreement by it occurring prior to such termination. For
purposes of this Section 9.2, “willful and intentional material breach” shall
mean a material breach or material default that is a consequence of an act
knowingly undertaken by the breaching Party with the intent of causing a
material breach of this Agreement.

Section 9.3 Break-up Fee.

(a) If this Agreement is terminated (i) by Seller pursuant to Section 9.1(b) or
Section 9.1(d) or (ii) by Seller or Buyer if all of the conditions to Closing,
other than the conditions in Section 8.6(b), have been satisfied or are capable
of being satisfied on the Closing Date and this Agreement is terminated pursuant
to Section 9.1(c) or Section 9.1(f) as a result of Buyer failing to satisfy the
conditions in Section 8.6(b), then, in any such case, and notwithstanding any
other provision of this Agreement Buyer shall pay Seller, by wire transfer of
immediately available funds within three (3) Business Days following the date of
termination, as liquidated damages, an amount of $131,303,723 (the “Break-up
Fee”).

(b) As security for Buyer’s obligations pursuant to Section 9.3(a),
Section 9.4(b) or Section 9.4(c), on the Effective Date, Buyer has provided the
Break-up Fee Security in the amount equal to $131,303,723. If Buyer shall fail
to pay to Seller when due the full amount of the Break-up Fee, Seller shall be
entitled to draw from the Break-up Fee Security the unpaid portion of the
Break-up Fee. At the Closing, Seller shall deliver or cause to be delivered to
Buyer the Break-up Fee Security for cancellation.

 

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(c) Notwithstanding anything to the contrary in this Agreement, in the event
that Buyer is required to pay the Break-up Fee pursuant to Section 9.3(a) and
Buyer pays the full Break-up Fee, payment of such fee shall be the sole and
exclusive remedy of Seller and its Affiliates against Buyer and any of its
former, current and future Affiliates, representatives, shareholders, members,
managers, partners, successors and assigns for any losses, damages or
liabilities suffered or incurred as a result of or under this Agreement or the
transactions contemplated by this Agreement and the other Transaction Documents,
including the failure of the Closing to occur, and Buyer shall have no further
liability or obligation to Seller or its Affiliates relating to or arising out
of this Agreement or the failure of the transactions contemplated by this
Agreement to be consummated, or in respect of any oral representation made or
alleged to be have been made in connection herewith or therewith, whether in
equity or at law, in contract, in tort or otherwise, and in such event, Seller
shall not bring or permit any of its Affiliates to bring any action, suit or
other proceeding to seek to recover any money damages or obtain any equitable
relief from Buyer or any of its Affiliates in connection therewith.

(d) The provision for payment of liquidated damages in this Section 9.3 has been
included because, in the event of the termination of this Agreement as described
in Section 9.3(a), the actual damages to be incurred by Seller can reasonably be
expected to approximate the Break-up Fee and because the actual amount of such
damages would be difficult if not impossible to measure accurately. The Parties
further expressly acknowledge and agree that the liquidated damages in this
Section 9.3 are an integral part of the transactions contemplated by this
Agreement and are intended not as a penalty, but as full liquidated damages, in
the event of Seller’s termination of this Agreement in the manner contemplated
in Section 9.3(a) and as compensation for all of Seller’s losses and other
expenses associated with this Agreement. In addition, the Parties acknowledge
and agree that, in the event Buyer shall fail to pay the Break-up Fee specified
in this Section 9.3 when due, and Seller (or Buyer) commences a proceeding which
results in a judgment or similar award against Buyer for the Break-up Fee, then
Buyer shall also pay to Seller its reasonable costs and expenses (including
reasonable attorneys’ fees and expenses of enforcement) in connection with such
proceeding.

(e) For the avoidance of doubt, notwithstanding anything else in this Agreement,
but subject to Section 10.8(a), in no event shall (i) Buyer’s aggregate
liability arising out of or related to this Agreement, whether relating to
breach of a representation or warranty, covenant, agreement or obligation in
this Agreement and whether based in tort, contract, strict liability or other
Laws or otherwise, exceed the amount of the Break-up Fee or (ii) Seller be
entitled to collect both the Break-up Fee and the Regulatory Break-up Fee.

Section 9.4 Regulatory Break-up Fee.

(a) If (i) either Buyer or Seller terminates this Agreement pursuant to
Section 9.1(a) (if, and only if, the applicable Order giving rise to such
termination arises solely in connection with the Seller Approvals from a
Governmental Authority set forth as #1 on Schedule 3.3, and Buyer Approvals from
a Governmental Authority set forth as #1 and #2 on Schedule 5.3 (collectively,
the “Regulatory Approvals”), or (ii) either Buyer or Seller terminates this
Agreement pursuant to Section 9.1(c) and, at the time of such termination, any
of the conditions set forth in Section 7.4, Section 7.5, Section 8.4 or
Section 8.5 or shall have not been satisfied and such failure to be satisfied
arises solely in connection with the Regulatory Approvals, and, at the time of
such termination, all other conditions to the Closing set forth in Article VII
and Article VIII shall have been satisfied or waived or are capable of being
satisfied, Buyer shall pay to Seller a fee of $98,477,792 (the “Regulatory
Break-up Fee”).

(b) Notwithstanding Section 9.4(a), in the case of the termination of this
Agreement as described in clause (i) or (ii) of Section 9.4(a), the amount of
the Regulatory Break-up Fee shall be $131,303,723 if the applicable Order
includes Burdensome Conditions requiring, or the

 

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Governmental Authority shall have required Burdensome Conditions as a condition
to the granting of the applicable Regulatory Approval, the taking by Buyer or
its Affiliates or the Acquired Companies of such efforts or action, individually
or in the aggregate, that would not reasonably be expected to result in a
Material Adverse Effect (measured on a scale relative to a company the size of
the Company), without giving effect to the exclusions set forth in clauses
(g) or (h) of the definition of “Material Adverse Effect”.

(c) If Buyer shall fail to pay to Seller when due the full amount of the
Regulatory Break-up Fee, Seller shall be entitled to draw from the Break-up Fee
Security the unpaid portion of the Regulatory Break-up Fee.

(d) Notwithstanding anything to the contrary in this Agreement, in the event
that Buyer is required to pay the Regulatory Break-up Fee pursuant to
Section 9.4(a) or Section 9.4(b) and Buyer pays the full Regulatory Break-up
Fee, payment of such fee shall be the sole and exclusive remedy of Seller and
its Affiliates against Buyer and any of its former, current and future
Affiliates, representatives, shareholders, members, managers, partners,
successors and assigns for any losses, damages or liabilities suffered or
incurred as a result of or under this Agreement or the transactions contemplated
by this Agreement and the other Transaction Documents, including the failure of
the Closing to occur, and Buyer shall have no further liability or obligation to
Seller or its Affiliates relating to or arising out of this Agreement or the
failure of the transactions contemplated by this Agreement to be consummated, or
in respect of any oral representation made or alleged to be have been made in
connection herewith or therewith, whether in equity or at law, in contract, in
tort or otherwise, and in such event, Seller shall not bring or permit any of
its Affiliates to bring any action, suit or other proceeding to seek to recover
any money damages or obtain any equitable relief from Buyer or any of its
Affiliates in connection therewith.

(e) The provision for payment of liquidated damages in this Section 9.4 has been
included because, in the event of the termination of this Agreement as described
in Section 9.4, the actual damages to be incurred by Seller can reasonably be
expected to approximate the Regulatory Break-up Fee and because the actual
amount of such damages would be difficult if not impossible to measure
accurately. The Parties further expressly acknowledge and agree that the
liquidated damages in this Section 9.4 are an integral part of the transactions
contemplated by this Agreement and are intended not as a penalty, but as full
liquidated damages, in the event of Seller’s termination of this Agreement in
the manner contemplated in Section 9.4(a) and Section 9.4(b) and as compensation
for all of Seller’s losses and other expenses associated with this Agreement. In
addition, the Parties acknowledge and agree that, in the event Buyer shall fail
to pay the Regulatory Break-up Fee specified in Section 9.4(a) or Section 9.4(b)
when due, and Seller (or Buyer) commences a proceeding which results in a
judgment or similar award against Buyer for the Regulatory Break-up Fee, then
Buyer shall also pay to Seller its reasonable costs and expenses (including
reasonable attorneys’ fees and expenses of enforcement) in connection with such
proceeding.

 

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Section 9.5 Extension of Break-up Fee Security. As a condition to Buyer’s
ability to exercise its right to extend the Initial Outside Date pursuant to
Section 9.1(c), the termination date of the Break-up Fee Security must be no
earlier than three months following the Outside Date.

ARTICLE X

INDEMNIFICATION, LIMITATIONS OF LIABILITY AND WAIVERS

Section 10.1 Indemnification.

(a) Subject to the terms and conditions of this Article X, from and after
Closing, Seller shall defend, indemnify and hold harmless Buyer and its
Affiliates (including the Acquired Companies) and the respective
Representatives, successors and assigns of each of the foregoing from and
against all Losses incurred or suffered by any of them to the extent resulting
from:

(i) any breach of any representation or warranty of Seller contained in this
Agreement;

(ii) any breach of any covenant or agreement of Seller contained in this
Agreement; and

(iii) Excluded Items and Excluded Contracts.

(b) Subject to the terms and conditions of this Article X, from and after
Closing, Buyer shall indemnify and hold harmless Seller and its Affiliates and
the respective Representatives, successors and assigns of each of the foregoing
from and against all Losses incurred or suffered by Seller resulting from:

(i) any breach of any representation or warranty of Buyer contained in this
Agreement; and

(ii) any breach of any covenant or agreement of Buyer contained in this
Agreement.

Section 10.2 Limitations of Liability.

(a) Notwithstanding anything in this Agreement to the contrary:

(i) claims for breach of the representations and warranties contained in this
Agreement must be brought no later than the date that is twelve (12) months
after the Closing Date, except that such limitation on the period to bring
claims shall not apply to (A) claims for breach of the Fundamental
Representations, which must be brought within six (6) years following the
Closing Date, (B) claims for breach of the representations and warranties in
Section 4.10, which must be brought no later than sixty (60) days following the
expiration of the applicable statute of limitations, and (C) claims for breach
of the representations and warranties in Section 4.15, which must be brought
within three (3) years following the Closing Date;

(ii) claims for breach of the covenants and agreements in this Agreement (other
than claims with respect to Taxes) that by their nature are required to be
performed at or prior to the Closing must be brought on or prior to the date
that is one hundred eighty (180) days after the Closing Date, and claims for
breach of the covenants and agreements in this Agreement (other than claims with
respect to Taxes) that by their nature are required to be performed following
the Closing Date must be brought on or prior to the date that is one hundred
eighty (180) days after the last date on which the

 

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applicable covenant was required to be fully performed, and claims for breach of
the covenants and agreements in this Agreement with respect to Taxes must be
brought no later than sixty (60) days following the expiration of the applicable
statute of limitations with respect to such Taxes;

(iii) Seller shall have no liability pursuant to Section 10.1(a)(i) until the
aggregate amount of all Losses that are subject to indemnification pursuant to
Section 10.1(a)(i) equals or exceeds $19,695,558.42 (the “Deductible Amount”),
in which event Seller shall be liable for Losses only to the extent they are in
excess of the Deductible Amount;

(iv) Seller shall have no liability pursuant to Section 10.1(a)(i) in connection
with any single item or group of related items that results in Losses that are
subject to indemnification pursuant to Section 10.1(a)(i) in the aggregate of
less than $500,000; and

(v) in no event shall Seller’s aggregate liability pursuant to
Section 10.1(a)(i) exceed $131,303,723 (“Liability Cap”);

provided, however, that (A) the indemnification limitations set forth in
Section 10.2(a)(iii) to (v) shall not apply to any claim with respect to a
breach of a Fundamental Representation or a breach with respect to Taxes (which
shall not exceed $1,313,037,228) and (B) no indemnification limitation set forth
in Section 10.2(a) shall apply to any claim based upon Fraud; and provided
further, subject to Section 10.8(a), that in no event shall Seller’s aggregate
liability arising out of or relating to this Agreement, whether relating to a
breach of a representation and warranty, covenant, agreement or obligation in
this Agreement and whether based on contract, tort, strict liability, other Laws
or otherwise, exceed $1,313,037,228.

(b) Notwithstanding the foregoing, if a written claim or written notice is duly
given in good faith under this Article X with respect to any representation,
warranty, covenant or agreement prior to the expiration of the applicable
survival period set forth in Section 10.2(a)(i) or Section 10.2(a)(ii), the
claim with respect to such representation, warranty, covenant or agreement shall
continue indefinitely until such claim is finally resolved pursuant to this
Article X.

(c) If any fact, circumstance or condition forming a basis for a claim for
indemnification under this Article X shall overlap with any fact, circumstance,
condition, agreement or event forming the basis of any other claim for
indemnification under this Article X, there shall be no duplication in the
calculation of the amount of the Losses. In addition, Seller shall not have any
liability under this Article X for Losses to the extent included in the
calculation of Aggregate Net Working Capital (other than the failure to pay
amounts (if any) that become due and payable by Seller pursuant to Section 2.6)
in accordance with the terms of Section 2.6.

(d) All materiality qualifications (including the term Material Adverse Effect)
contained in any representation or warranty herein shall be taken into account
under this Article X solely for purposes of determining whether a breach or
violation of such representation and warranty has occurred for which an
indemnity obligation exists. All such materiality qualifications will be ignored
and not given effect for purposes of determining the amount of Losses resulting
from any such breach or violation.

(e) An indemnifying Party shall not be required to indemnify a Party seeking
indemnification to the extent of any Losses that a court of competent
jurisdiction or arbitrator shall have determined by final judgment to have
resulted from the Fraud, gross negligence or willful misconduct of the Party
seeking indemnification.

 

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(f) Neither Seller nor any of its Affiliates shall have any rights of
contribution (or similar rights) regarding Losses against any Acquired Company
for any claim arising out of or otherwise related to this Agreement or any other
Transaction Document.

Section 10.3 [Reserved].

Section 10.4 Notice; Duty to Mitigate.

(a) Each Party shall give written notice to the other Party as soon as
practicable after becoming aware of any breach by such other Party of any
representation, warranty, covenant, agreement or obligation in this Agreement.
The failure to deliver such a notice, however, shall not release the other Party
from any of its obligations under this Article X except to the extent that such
other Party is materially and irreversibly prejudiced by such failure.

(b) Each Person entitled to indemnification pursuant to Section 10.1 shall use
its Commercially Reasonable Efforts to mitigate Losses for which indemnification
may be sought pursuant to this Article X, including, (i) using its Commercially
Reasonable Efforts to secure payment from insurance policies available and
existing on the Closing Date that provide coverage with respect to such Losses
(an “Insurance Payment”) and (ii) using its Commercially Reasonable Efforts to
secure reimbursement, indemnity or other payment from any third Person obligated
by contract or otherwise to reimburse, indemnify or pay the Person entitled to
indemnification pursuant to Section 10.1 with respect to such Losses (a “Third
Party Payment” and, together with an Insurance Payment, a “Mitigation Payment”).
Notwithstanding anything to the contrary contained herein, the recovery by a
Person entitled to indemnification pursuant to Section 10.1 from any Party
providing such indemnification shall not relieve the Person entitled to
indemnification pursuant to Section 10.1 of its obligation to mitigate Losses
pursuant to applicable Law or this Section 10.4(b).

(c) Any amounts payable to a Person entitled to indemnification pursuant to
Section 10.1 with respect to any Losses pursuant to this Article X shall be
reduced by the amount of the Mitigation Payment, if any, received by the Person
entitled to indemnification pursuant to Section 10.1 with respect to such
Losses. In the event a payment is made to a Person entitled to indemnification
pursuant to Section 10.1 with respect to any Losses and thereafter such Person
receives a Mitigation Payment with respect to such Losses, such Person shall
reimburse the Party providing such indemnification an amount equal to the lesser
of (i) the Mitigation Payment and (ii) the amount so paid by the Party providing
such indemnification.

(d) Any amounts payable to a Person entitled to indemnification pursuant to
Section 10.1 with respect to any Losses pursuant to this Article X shall be
reduced by the amount of any net Tax benefits actually received by such Person
as a result of the payment, incurrence or accrual of such Losses.

Section 10.5 Indirect Claims. From and after the Closing, Buyer hereby releases
and agrees to indemnify and hold harmless Seller, its Affiliates and the
officers, directors, managers, agents and employees of the Acquired Companies
(acting in their capacity as such) from and against any Losses for controlling
stockholder liability or breach of any fiduciary or other duty relating to any
pre-Closing actions or failures to act (including negligence or gross negligence
but excluding Fraud) in connection with the Acquired Companies or any of them
and the business of the Acquired Companies or any of them prior to the Closing,
provided that the foregoing shall not relieve Seller of its indemnity
obligations under Section 10.1(a).

 

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Section 10.6 Waiver of Other Representations.

(a) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY AND EXCEPT THOSE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN Article III AND Article IV
AND THE CERTIFICATE DELIVERED PURSUANT TO SECTION 7.3, IT IS THE EXPLICIT INTENT
OF EACH PARTY, AND THE PARTIES HEREBY AGREE, THAT NONE OF SELLER OR ANY OF ITS
AFFILIATES OR THEIR RESPECTIVE REPRESENTATIVES HAS MADE OR IS MAKING ANY
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, AT COMMON LAW,
STATUTORY OR OTHERWISE, WRITTEN OR ORAL WITH RESPECT TO (I) THE INTERESTS, THE
ACQUIRED COMPANIES OR ANY OF THE PURCHASED ASSETS, OR ANY PART THEREOF AND
(II) THE ACCURACY OR COMPLETENESS OF THE INFORMATION, RECORDS, AND DATA NOW,
HERETOFORE, OR HEREAFTER MADE AVAILABLE TO BUYER IN CONNECTION WITH THIS
AGREEMENT (INCLUDING ANY DESCRIPTION OF THE ACQUIRED COMPANIES, THE PURCHASED
ASSETS, REVENUE, PRICE AND EXPENSE ASSUMPTIONS, FINANCIAL PROJECTIONS OR
FORECASTS, ELECTRICITY DEMAND FORECASTS, OR ENVIRONMENTAL INFORMATION, OR ANY
OTHER INFORMATION FURNISHED TO BUYER BY SELLER OR ANY AFFILIATE OF SELLER
(INCLUDING THE ACQUIRED COMPANIES) OR ANY OF THE RESPECTIVE REPRESENTATIVES
THEREOF) AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY
DISCLAIMED. BUYER HAS NOT EXECUTED OR AUTHORIZED THE EXECUTION OF THIS AGREEMENT
IN RELIANCE UPON ANY SUCH PROMISE, REPRESENTATION OR WARRANTY NOT EXPRESSLY SET
FORTH HEREIN.

(B) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, SELLER’S INTERESTS IN THE
ACQUIRED COMPANIES AND THE PURCHASED ASSETS ARE BEING TRANSFERRED THROUGH THE
SALE OF THE INTERESTS “AS IS, WHERE IS, WITH ALL FAULTS,” AND SELLER EXPRESSLY
DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR
IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF THE ACQUIRED COMPANIES OR THE
PURCHASED ASSETS OR THE PROSPECTS (FINANCIAL OR OTHERWISE), RISKS AND OTHER
INCIDENTS OF THE ACQUIRED COMPANIES OR THE PURCHASED ASSETS AND ANY SUCH OTHER
REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. WITHOUT LIMITING
THE GENERALITY OF THE IMMEDIATELY PRECEDING SENTENCE, EXCEPT AS EXPRESSLY
PROVIDED IN THIS AGREEMENT OR ANY CERTIFICATE DELIVERED PURSUANT HERETO, SELLER
HEREBY EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, AT COMMON LAW, STATUTORY, OR OTHERWISE, RELATING TO (I) THE
CONDITION OF THE PURCHASED ASSETS (INCLUDING ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, USE, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR THE PRESENCE OR ABSENCE OF ANY
HAZARDOUS MATERIALS IN OR ON, OR DISPOSED OR DISCHARGED FROM, THE PURCHASED
ASSETS) OR (II) ANY INFRINGEMENT BY SELLER, THE ACQUIRED COMPANIES, OR ANY OF
THEIR AFFILIATES OF ANY PATENT OR PROPRIETARY RIGHT OF ANY THIRD PARTY. BUYER
HAS AGREED NOT TO RELY ON ANY REPRESENTATION MADE BY SELLER WITH RESPECT TO THE
CONDITION, QUALITY, OR STATE OF THE PURCHASED ASSETS, EXCEPT FOR THOSE EXPRESSLY
SET FORTH IN THIS AGREEMENT OR ANY CERTIFICATE DELIVERED PURSUANT HERETO, BUT
RATHER, AS A SIGNIFICANT PORTION OF THE CONSIDERATION GIVEN TO SELLER FOR THIS
PURCHASE AND SALE, HAS AGREED TO RELY SOLELY AND EXCLUSIVELY UPON ITS OWN
EVALUATION OF THE ACQUIRED COMPANIES OR THE PURCHASED ASSETS, EXCEPT AS PROVIDED
HEREIN. THE PROVISIONS CONTAINED IN THIS AGREEMENT ARE THE RESULT OF EXTENSIVE
NEGOTIATIONS BETWEEN BUYER AND

 

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SELLER AND NO OTHER ASSURANCES, REPRESENTATIONS OR WARRANTIES ABOUT THE QUALITY,
CONDITION, OR STATE OF THE ACQUIRED COMPANIES OR THE PURCHASED ASSETS WERE MADE
BY SELLER IN THE INDUCEMENT THEREOF, EXCEPT AS PROVIDED HEREIN. EXCEPT AS
EXPRESSLY PROVIDED FOR IN THIS AGREEMENT, SELLER SHALL NOT HAVE OR BE SUBJECT TO
ANY LIABILITY TO BUYER OR ANY OTHER PERSON RESULTING FROM THE DISTRIBUTION TO
BUYER, OR BUYER’S USE OF OR RELIANCE ON, ANY INFORMATION, DOCUMENTS OR MATERIAL
MADE AVAILABLE TO BUYER IN EXPECTATION OF, OR IN CONNECTION WITH, THE
TRANSACTIONS CONTEMPLATED HEREBY.

Section 10.7 Environmental Waiver and Release. FROM AND AFTER CLOSING, EXCEPT AS
PROVIDED IN THIS AGREEMENT AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL
RIGHTS OR REMEDIES WHICH BUYER MAY HAVE AGAINST SELLER AT OR UNDER LAW WITH
RESPECT TO ANY ENVIRONMENTAL LIABILITIES OR ANY OTHER ENVIRONMENTAL MATTERS ARE
WAIVED. TO THE EXTENT PERMITTED BY APPLICABLE LAW, FROM AND AFTER CLOSING,
EXCEPT AS PROVIDED IN THIS AGREEMENT OR ANY CERTIFICATE DELIVERED PURSUANT
HERETO, BUYER DOES HEREBY AGREE, WARRANT, AND COVENANT TO (AND BUYER SHALL CAUSE
THE ACQUIRED COMPANIES TO) RELEASE, ACQUIT, AND FOREVER DISCHARGE SELLER AND ANY
AFFILIATE OF SELLER OR ANY REPRESENTATIVE THEREOF FROM ANY AND ALL LOSSES,
INCLUDING ALL CLAIMS, DEMANDS, AND CAUSES OF ACTION FOR CONTRIBUTION AND
INDEMNITY UNDER STATUTE OR COMMON LAW, WHICH COULD BE ASSERTED NOW OR IN THE
FUTURE AND THAT RELATE TO OR IN ANY WAY ARISE OUT OF ENVIRONMENTAL LIABILITIES
OR ANY OTHER ENVIRONMENTAL MATTERS OF THE ACQUIRED COMPANIES OR THE PURCHASED
ASSETS. FROM AND AFTER CLOSING, BUYER AND THE ACQUIRED COMPANIES WARRANT, AGREE,
AND COVENANT NOT TO SUE SELLER OR ANY AFFILIATE OF SELLER (INCLUDING THE
ACQUIRED COMPANIES) OR ANY REPRESENTATIVE THEREOF UPON ANY CLAIM, DEMAND, OR
CAUSE OF ACTION FOR INDEMNITY AND CONTRIBUTION THAT HAVE BEEN ASSERTED OR COULD
BE ASSERTED FOR ANY SUCH ENVIRONMENTAL LIABILITIES, EXCEPT TO THE EXTENT BUYER
OR ANY AFFILIATE OF BUYER (INCLUDING THE ACQUIRED COMPANIES OR ANY
REPRESENTATIVE THEREOF) IS ENTITLED TO INDEMNITY FOR SUCH MATTERS UNDER THIS
Article X.

Section 10.8 Remedies; Waiver of Remedies.

(a) The Parties agree that damages at Law shall be an inadequate remedy for the
breach of any of the covenants, promises and agreements contained in this
Agreement by Buyer or Seller, and, accordingly, the Parties shall be entitled to
injunctive relief with respect to any such breach, including specific
performance of such covenants, promises or agreements or an order enjoining such
other party from any threatened, or from the continuation of any actual, breach
of the covenants, promises or agreements contained in this Agreement, all
without the necessity of proving the inadequacy of money damages as a remedy and
without the necessity of posting bond. The rights set forth in this
Section 10.8(a) shall be in addition to any other rights which the Parties may
have at Law or in equity pursuant to this Agreement; provided, however, that in
no case shall Seller or any of its Affiliates be entitled to both injunctive
relief and the Break-up Fee or the Regulatory Break-up Fee. Except for specific
performance or other injunctive or equitable relief to the extent that specific
performance or such other relief would otherwise be available to the Parties
hereunder, Buyer and Seller acknowledge and agree that, from and after Closing,
the indemnification provisions in this Article X, Section 6.2(c),
Section 6.2(d), Section 6.5(b), Section 6.6, Section 6.14(b), Section 6.14(c)
and Section 2.6 shall be the exclusive remedy of Buyer and Seller with respect
to the transactions contemplated by this Agreement, except for Fraud.

 

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(b) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NO PARTY OR ITS
AFFILIATES, OR THEIR RESPECTIVE REPRESENTATIVES SHALL BE LIABLE FOR SPECIAL,
PUNITIVE, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES OR LOSS OF
REVENUE, INCOME OR PROFITS, DIMINUTION OF VALUE OR LOSS OF BUSINESS REPUTATION
OR OPPORTUNITY OF ANY OTHER PARTY OR ANY OF SUCH PARTY’S AFFILIATES, WHETHER
BASED ON CONTRACT, TORT, STRICT LIABILITY, OTHER LAW OR OTHERWISE AND WHETHER OR
NOT ARISING FROM THE OTHER PARTY’S OR ITS AFFILIATE’S, OR ANY OF THEIR
RESPECTIVE OFFICER’S, DIRECTOR’S, EMPLOYEE’S OR REPRESENTATIVE’S SOLE, JOINT OR
CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT, AND IN PARTICULAR, NO
“MULTIPLE OF PROFITS” OR “MULTIPLE OF CASH FLOW” OR SIMILAR VALUATION
METHODOLOGY SHALL BE USED IN CALCULATING THE AMOUNT OF ANY LOSSES, PROVIDED THE
FOREGOING SHALL NOT APPLY TO THIRD-PARTY CLAIMS FOR WHICH ANY PARTY IS OBLIGATED
TO INDEMNIFY ANOTHER PARTY HEREUNDER (“Non-Reimbursable Damages”).

(c) Notwithstanding anything in this Agreement to the contrary, no
Representative or Affiliate of Seller (other than NEER pursuant to the Seller
Parent Guaranty) shall have any personal liability (whether in equity or at law,
in contract, in tort or otherwise) to Buyer or any other Person as a result of
the breach of any representation, warranty, covenant, agreement or obligation of
Seller in this Agreement, and no Representative or Affiliate of Buyer (other
than Buyer Parent Guarantor pursuant to the Buyer Parent Guaranty) shall have
any personal liability (whether in equity or at law, in contract, in tort or
otherwise) to Seller or any other Person as a result of the breach of any
representation, warranty, covenant, agreement or obligation of Buyer in this
Agreement.

Section 10.9 Indemnification Procedures.

(a) In the event that (i) a Party seeking indemnification (the “Indemnified
Party”) becomes aware of the existence of any claim in respect of which payment
may be sought under this Article X (an “Indemnification Claim”), or (ii) any
legal proceedings shall be instituted, or any claim shall be asserted, by any
Person not party to this Agreement in respect of an Indemnification Claim (a
“Third Party Claim”), the Indemnified Party shall promptly cause written notice
thereof (a “Claim Notice”) to be delivered to the party from whom
indemnification is sought (the “Indemnifying Party”); provided that, so long as
such notice is given within the applicable time period described in
Section 10.2(a)(i) or Section 10.2(a)(ii), no delay on the part of the
Indemnified Party in giving any such notice shall relieve the Indemnifying Party
of any indemnification obligation hereunder unless (and then solely to the
extent that) the Indemnifying Party is materially prejudiced by such delay. Each
Claim Notice shall be in writing and (A) shall specify the basis for
indemnification claimed by the Indemnified Party, (B) if such Claim Notice is
being given with respect to a Third Party Claim, shall describe in reasonable
detail such Third Party Claim and shall be accompanied by copies of all relevant
pleadings, demands and other papers served on the Indemnified Party, and
(C) shall specify the amount of (or if not finally determined, a good faith
estimate of) the Losses being incurred by, or imposed upon, the Indemnified
Party on account of the basis for the claim for indemnification.

(b) The Indemnifying Party shall have the right, at its sole option and expense,
to be represented by counsel of its choice and to defend against, negotiate,
settle or otherwise handle any Indemnification Claim and if the Indemnifying
Party elects to defend against, negotiate, settle or otherwise handle any
Indemnification Claim, it shall within fifteen (15) days after receipt of notice
of

 

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the underlying Third Party Claim (or sooner, if the nature of the
Indemnification Claim so requires) (the “Dispute Period”) notify the Indemnified
Party of its intent to do so, provided that the Indemnifying Party shall not be
entitled to assume control of such defense (unless otherwise agreed to in
writing by the Indemnified Party) and shall pay the reasonable fees and expenses
of counsel retained by the Indemnified Party if (i) the claim for
indemnification relates to or arises in connection with any criminal or quasi
criminal action or proceeding or (ii) the claim seeks an injunction or equitable
relief against the Indemnified Party (any Indemnification Claim the defense of
which is assumable by an Indemnifying Party hereunder, an “Assumable Claim”). If
the Indemnifying Party does not elect within the Dispute Period to defend
against, negotiate, settle or otherwise handle any Assumable Claim, the
Indemnified Party may defend against, negotiate, settle or otherwise handle such
Assumable Claim. If the Indemnifying Party elects to defend against, negotiate,
settle with or otherwise handle any Assumable Claim, the Indemnified Party may
participate, at its own expense, in the defense of such Assumable Claim;
provided, however, that such Indemnified Party shall be entitled to participate
in any such defense with separate counsel at the reasonable expense of the
Indemnifying Party if (i) so requested by the Indemnifying Party to participate,
or (ii) in the reasonable opinion of counsel to the Indemnified Party, a
conflict exists between the Indemnified Party and the Indemnifying Party; and
provided, further, that the Indemnifying Party shall not be required to pay for
more than one such counsel for all Indemnified Parties in connection with any
Assumable Claim. Seller, on the one hand, and Buyer, on the other hand, agree to
cooperate with each other in connection with the defense, negotiation or
settlement of any such Assumable Claim. Notwithstanding anything in this
Section 10.9 to the contrary, the Indemnifying Party shall not, without the
written consent of the applicable Indemnified Party, settle or compromise any
Assumable Claim or permit a default or consent to entry of any judgment (each a
“Settlement”) unless (A) the claimant and such Indemnifying Party provide to
such Indemnified Party an unqualified release from all liability in respect of
the Assumable Claim, (B) such Settlement does not impose any liabilities or
obligations on the Indemnified Party, and (C) with respect to any non-monetary
provision of such Settlement, such provisions would not, in the Indemnified
Party’s reasonable judgment, have or be reasonably expected to have any material
adverse effect on the business, Assets, condition (financial or otherwise),
results of operations or prospects of the Indemnified Party.

(c) After any final decision, judgment or award shall have been rendered by a
Governmental Authority of competent jurisdiction and the expiration of the time
in which to appeal therefrom, or a Settlement or arbitration shall have been
consummated, or the Indemnified Party and the Indemnifying Party shall have
arrived at a mutually binding agreement with respect to an Indemnification Claim
hereunder, the Indemnified Party shall forward to the Indemnifying Party notice
of any sums due and owing by the Indemnifying Party pursuant to this Agreement
with respect to such matter and the Indemnifying Party shall make prompt payment
thereof pursuant to the terms of the agreement reached with respect to the
Indemnification Claim.

(d) If the Indemnifying Party does not undertake within the Dispute Period to
defend against an Assumable Claim, then the Indemnifying Party shall have the
right to participate in any such defense at its sole cost and expense, but, in
such case, the Indemnified Party shall control the investigation and defense.
Notwithstanding the foregoing or anything in this Section 10.9(d) to the
contrary, the Indemnified Party shall not effect a Settlement without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, conditioned or delayed.

(e) In the event that an Indemnified Party has delivered a Claim Notice in
respect of an Indemnification Claim that does not involve a Third Party Claim,
the Indemnifying Party and the Indemnified Party shall attempt in good faith to
resolve any disputes with respect to such Claim Notice within forty-five
(45) days of the delivery by the Indemnifying Party thereof, and if not resolved
in such forty-five (45) day period, such Indemnification Claim may be resolved
through judicial actions, suits or proceedings brought by either such party or
by such other means as such parties mutually agree.

 

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Section 10.10 Access to Information. After the Closing Date, Seller and Buyer
shall grant each other (or their respective designees), and Buyer shall cause
the Acquired Companies to grant to Seller (or its designees), access at all
reasonable times upon reasonable notice to all of the information, books and
records relating to the Acquired Companies in its possession, and shall afford
such party the right (at such party’s expense) to take extracts therefrom and to
make copies thereof, to the extent reasonably necessary to implement the
provisions of, or to investigate or defend any claims between the Parties
arising under, this Agreement other than (a) information relating to
post-Closing periods that is commercially sensitive, trade secret or otherwise
confidential or (b) in the case of claims between the Parties, any information
that is subject to any attorney-client, work product or other privilege or that
otherwise would not be required to be provided pursuant to a subpoena or other
civil discovery procedure. At or promptly after the Closing, Seller shall
deliver to Buyer all books, records, correspondence, files, and other
information of or relating to the Acquired Companies or their properties,
business, operations or condition (other than any of the foregoing items that
relate to Excluded Contracts and Excluded Items) to the extent such information
is not in the custody or possession of the Acquired Companies on the Closing
Date other than (i) information relating to pre-Closing periods in respect of
any Non-Acquired Company Affiliate that is commercially sensitive, trade secret
or otherwise confidential or (ii) in the case of claims between the Parties, any
information that is subject to any attorney client, work product or other
privilege or that otherwise would not be required to be provided pursuant to a
subpoena or other civil discovery procedure.

ARTICLE XI

CONFIDENTIALITY

Section 11.1 Pre-Closing Confidential Information. The Confidentiality Agreement
shall terminate on the Closing Date. Prior to the Closing, the Confidentiality
Agreement shall cover any and all information provided or otherwise made
available to, or collected by, Buyer in accordance with Section 6.2. If this
Agreement is terminated, the Confidentiality Agreement shall continue in full
force in accordance with its terms.

Section 11.2 Post-Closing Seller Confidential Information.

(a) Buyer acknowledges that Seller Confidential Information is valuable and
proprietary to Seller and Buyer agrees from and after the Closing not to,
directly or indirectly, use, publish, disseminate, describe or otherwise
disclose any Seller Confidential Information without the prior written consent
of Seller or except as required by Law. Information shall not be deemed to be
Seller Confidential Information if (i) it has become generally known or
available within the industry or the public though no act or omission of Buyer;
(ii) Buyer can demonstrate that, prior to disclosure in connection with the
transactions contemplated hereby, such information was already in the possession
of Buyer; (iii) it was received by Buyer from a third party who became aware of
it through no act or omission of Buyer and who is not known to Buyer to be under
an obligation of confidentiality to Seller; or (iv) Buyer can demonstrate it was
independently developed by employees or consultants of Buyer.

(b) From and after the Closing, Buyer shall maintain any Seller Confidential
Information which has been or will be disclosed directly or indirectly to Buyer
by or on behalf of Seller in confidence by it and shall not disclose or cause to
be disclosed by Buyer or any third party without Seller’s prior express written
consent (such consent not to be unreasonably withheld, conditioned or delayed);
provided, however, that Buyer may disclose Seller Confidential Information to
persons who provide financial analysis, financial ratings, banking, legal,
accounting, or other services to Buyer in connection with Buyer’s evaluation or
implementation of the transactions contemplated by this Agreement; provided,
further, that such persons have been informed of the duties required hereby.

 

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Section 11.3 Post-Closing Buyer Confidential Information.

(a) Seller acknowledges that Buyer Confidential Information is valuable and
proprietary to Buyer and Seller agrees from and after the Closing not to,
directly or indirectly, use, publish, disseminate, describe or otherwise
disclose any Buyer Confidential Information without the prior written consent of
Buyer or except as required by Law. Information shall not be deemed to be Buyer
Confidential Information if it has become generally known or available within
the industry or the public though no act or omission of Seller.

(b) From and after the Closing, Seller shall maintain any Buyer Confidential
Information which has been or will be disclosed directly or indirectly to Seller
by or on behalf of Buyer in confidence by it and shall not disclose or cause to
be disclosed by Seller or any third party without Buyer’s prior express written
consent (such consent not to be unreasonably withheld, conditioned or delayed);
provided, however, that Seller may disclose Buyer Confidential Information to
persons who provide financial analysis, financial ratings, banking, legal,
accounting, or other services to Seller in connection with the implementation of
the transactions contemplated by this Agreement; provided, further, that such
persons have been informed of the duties required hereby.

(c) Notwithstanding anything to the contrary in this Agreement, the provisions
of this Section 11.3 shall not prohibit the disclosure of Buyer Confidential
Information by Seller to the extent reasonably required (i) to prepare or
complete any required Tax returns or financial statements, (ii) in connection
with audits or other proceedings by or on behalf of a Governmental Authority,
(iii) to comply with applicable Law, (iv) to provide services to Buyer or its
Affiliates, pursuant to this Agreement or any of the other Transaction
Documents, or (v) to assert any rights or remedies or perform any obligations
under this Agreement or any of the other Transaction Documents.

Section 11.4 Limitations on Confidential Information.

(a) Notwithstanding Section 11.2(b) and Section 11.3(b), from and after the
Closing, Seller Confidential Information and Buyer Confidential Information may
be disclosed if required by any Governmental Authority or court or otherwise by
Law; provided, however, that: (i) such Seller Confidential Information and Buyer
Confidential Information is submitted under any and all applicable provisions
for confidential treatment and (ii) if the disclosing Party is permitted to do
so, the other Party is given written notice of the requirement for disclosure
promptly after such disclosure is requested, so that it may take whatever action
it deems appropriate, including intervention in any proceeding and seeking a
protective order or an injunction, to prohibit such disclosure. If Seller
Confidential Information or Buyer Confidential Information is disclosed under
the provisions of this Section 11.4(a), the disclosing Party shall notify the
other Party of the same in writing not later than five (5) Business Days
following the disclosure.

(b) Each Party hereby agrees that from and after the Closing it will not make
any use of any Seller Confidential Information or Buyer Confidential
Information, as applicable, received pursuant to this Agreement, except in
connection with the transactions contemplated by this Agreement and the other
Transaction Documents, unless specifically authorized to do so in writing by the
other Party, and this Agreement shall not be construed as a license or
authorization to either Party to utilize Seller Confidential Information or
Buyer Confidential Information, as applicable, except for such purpose.

 

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(c) From and after the Closing, upon a Party’s request, the other Party shall
return or destroy as promptly as practicable, but in a period not to exceed ten
(10) Business Days, (i) all Seller Confidential Information or Buyer
Confidential Information (as applicable) provided to such Party, as appropriate,
including all copies of such Seller Confidential Information, or Buyer
Confidential Information (as applicable) and (ii) all notes or other documents
in digital or other format in their possession or in the possession of other
persons to whom Seller Confidential Information or Buyer Confidential
Information (as applicable) was properly provided by such Party. Non-destruction
of electronic copies of materials or summaries containing or reflecting Seller
Confidential Information or Buyer Confidential Information (as applicable) that
are automatically generated through data backup or archiving systems and which
are not readily accessible by a Party’s business personnel shall not be deemed
to violate this Agreement, so long as Seller Confidential Information or Buyer
Confidential Information (as applicable) contained in or reflected in such
electronic backup records is not disclosed or used in violation of the other
terms of this Agreement.

(d) The obligations of the parties under Section 11.2(b) and Section 11.3(c)
shall not apply to the tax treatment or tax structure of the transactions
contemplated by this Agreement and each Party (and any employee, Representative,
or agent of any party) may disclose to any and all Persons, without limitation
of any kind, the tax treatment and tax structure of the of the transactions
contemplated by this Agreement and all other materials of any kind (including
opinions or other tax analysis) that are provided to a Party relating to such
tax treatment and tax structure (all such information that may be disclosed
being the “Tax Information”). The preceding sentences are intended to cause the
transactions contemplated by this Agreement not to be treated as having been
offered under conditions of confidentiality for purposes of Sections
1.6011-4(b)(3) and 301.6111-2(a)(2)(ii) (or any successor provision) of the
Treasury Regulations issued under the Code and shall be construed in a manner
consistent with such purpose. For purposes of this provision, the Tax
Information includes only those facts that may be relevant to understanding the
purported or claimed United States federal income tax treatment or tax structure
of the transactions contemplated by this Agreement and, to eliminate any doubt,
therefore specifically does not include information that either reveals or
standing alone or in the aggregate with other information so disclosed tends of
itself to reveal or allow the recipient of the information to ascertain the
identity of Seller or Buyer, or any third parties involved in any of the
transactions contemplated by this Agreement or the other Transaction Documents.

ARTICLE XII

MISCELLANEOUS

Section 12.1 Notices.

(a) Unless this Agreement specifically requires otherwise, any notice, demand or
request provided for in this Agreement, or served, given or made in connection
with it, shall be in writing and shall be deemed properly served, given or made
if delivered in person or sent by registered or certified mail, postage prepaid,
or by a nationally recognized overnight courier service that provides a receipt
of delivery, in each case, to the Parties at the addresses specified below or to
such other place and with such other copies as a Party may designate as to
itself by written notice to the other Party:

If to Buyer, to:

Luminant Holding Company LLC

c/o Texas Competitive Electric Holdings Company LLC

1601 Bryan, 43rd Floor

Dallas, Texas 75201

Attn: Stacey Dore

 Andrew M. Wright

 

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with copies to:

Gibson, Dunn & Crutcher LLP

2100 McKinney Avenue

Dallas, Texas 75201-6912

Attn: Robert Little

and

Kirkland & Ellis LLP

300 North LaSalle

Chicago, Illinois 60654

Attn: Chad Husnick

 Linda Myers

 Michelle Kilkenney

If to Seller, to:

La Frontera Ventures, LLC

c/o NextEra Energy Resources, LLC

700 Universe Boulevard

Juno Beach, Florida 33408-2683

Attn: Cindy Tindell

with a copy to:

La Frontera Ventures, LLC

c/o NextEra Energy Resources, LLC

700 Universe Boulevard

Juno Beach, Florida 33408-2683

Attn: Vice President and General Counsel

(b) Notice given by personal delivery, mail or overnight courier pursuant to
this Section 12.1 shall be effective upon physical receipt.

Section 12.2 Entire Agreement. Except for the Confidentiality Agreement, this
Agreement supersedes all prior discussions and agreements between the Parties
with respect to the subject matter hereof and contains the sole and entire
agreement between the Parties hereto with respect to the subject matter hereof.

Section 12.3 Expenses. Except as otherwise expressly provided in this Agreement,
whether or not the transactions contemplated hereby are consummated, each Party
will pay its own costs and expenses incurred in anticipation of, relating to and
in connection with the negotiation and execution of this Agreement and the
transactions contemplated hereby.

Section 12.4 Schedules. Seller may, at its option, include in the Schedules
items that are not material in order to avoid any misunderstanding, and any such
inclusion, or any references to dollar amounts, shall not be deemed to be an
acknowledgment or representation that such items are material, to

 

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establish any standard of materiality or to define further the meaning of such
terms for purposes of this Agreement. Any reference to a Contract, Asset,
statement, plan, report or other document or item of any kind in the Schedules
shall be deemed a full disclosure of all of the terms of such document and it
shall not be necessary to identify or reference specific provisions of such
Contracts, Assets, statements, plans, reports or other documents or items in
order to make a full disclosure thereof. Information disclosed in any Schedule
shall constitute a disclosure for purposes of all other Schedules and each
Section of this Agreement where such information is relevant notwithstanding the
lack of specific cross-reference thereto, but only to the extent the
applicability of such disclosure to such other Schedule is reasonably apparent
on its face. In no event shall the inclusion of any matter in the Schedules be
construed as constituting a representation or warranty of a Party or be deemed
or interpreted to broaden a Party’s contained in this Agreement. No reference to
or disclosure of any item or other matter in the Schedules shall be construed as
an admission, indication or evidence that such item or other matter is material,
that such item is reasonably likely to result in a Material Adverse Effect or
that such item or other matter is required to be referred to or disclosed in the
Schedules. No reference in the Schedules to any agreement or document shall be
construed as an admission or indication that such agreement or document is
enforceable or currently in effect or that there are any obligations remaining
to be performed or any rights that may be exercised under such agreement or
document except to the extent that any such agreement or document is referred to
by reference to the Schedules in an express representation or warranty to that
effect set forth in this Agreement. No disclosure in the Schedules relating to
any possible breach or violation of any agreement, Law or regulation shall be
construed as an admission or indication that any such breach or violation exists
or has actually occurred. The headings and descriptions of the disclosures in
the Schedules are for convenience of reference only and are not intended to and
do not alter the meaning of any provision of this Agreement or of the Schedules.
The information provided in the Schedules is solely for the use of the Parties
in connection with the purchase and sale of the Interests and the other
transactions contemplated by this Agreement and the other Transaction Documents,
shall be subject to the terms of this Agreement, and may not be used or relied
upon by any other Person or for any other purpose.

Section 12.5 Waiver. Any term or condition of this Agreement may be waived at
any time by the Party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the Party waiving such term or condition. No waiver by any
Party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion.

Section 12.6 Amendment. This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of each Party.

Section 12.7 No Third Party Beneficiary. Except for the provisions of
Section 6.2(c), Section 6.5, Section 6.6, Section 6.14(c), and Article X, which
are intended to be for the benefit of the Persons identified therein, the terms
and provisions of this Agreement are intended solely for the benefit of the
Parties and their respective successors or permitted assigns, and it is not the
intention of the Parties to confer third-party beneficiary rights upon any other
Person.

Section 12.8 Assignment or Delegation; Binding Effect. Neither this Agreement
nor any right, interest or obligation hereunder may be assigned or delegated by
any Party without the prior written consent of the other Party, except that
Buyer may (without the consent of Seller) collaterally assign this Agreement or
any of its rights, interests or obligations hereunder to any Person providing
financing to Buyer or its Affiliates, but no such collateral assignment shall
release Buyer of its obligations under this Agreement. Subject to this
Section 12.8, this Agreement is binding upon, inures to the benefit of and is
enforceable by the Parties and their respective successors and permitted
assigns.

 

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Section 12.9 Headings. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.

Section 12.10 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any Party under this Agreement will not be materially
and adversely affected thereby, such provision will be fully severable, this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom and in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.

Section 12.11 Counterparts; Facsimile. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument. Any facsimile or
electronically transmitted copies hereof or signature hereon shall, for all
purposes, be deemed originals.

Section 12.12 Governing Law; Jurisdiction; Waiver of Jury Trial.

(a) This Agreement and any dispute or controversy arising out of or relating to
this Agreement or the transactions contemplated hereby shall be governed by and
construed in accordance with the Law of the State of New York, without giving
effect to any conflict or choice of law provision that would result in the
application of another state’s Law.

(b) Each of the Parties hereby submits to the exclusive jurisdiction of the
State and Federal courts located in the Borough of Manhattan in the City and
State of New York with respect to any action or proceeding relating to this
Agreement and the transactions contemplated hereby.

(c) EACH OF THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREUNDER, OR ANY COURSE OF CONDUCT, COURSE OF DEALING
OR STATEMENTS (WHETHER VERBAL OR WRITTEN) RELATING TO THE FOREGOING (INCLUDING,
ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT AND ANY CLAIMS OR DEFENSES
ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR
VOIDABLE). THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES HERETO TO
ENTER INTO THIS AGREEMENT, AND SHALL SURVIVE THE CLOSING OR TERMINATION OF THIS
AGREEMENT.

[signature page follows]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officer of each Party as of the date first above written.

 

SELLER LA FRONTERA VENTURES, LLC By:  

/s/ Michael O’Sullivan

Name:   Michael O’Sullivan Title:   Vice President BUYER LUMINANT HOLDING
COMPANY LLC By:  

/s/ M. A. McFarland

Name:   M.A. McFarland Title:   President and Chief Executive Officer

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

EXHIBIT A

DEFINITIONS

“1933 Act” has the meaning set forth in Section 5.7.

“Accounting Principles” has the meaning set forth in Section 2.6(a).

“Acquired Companies” means, collectively, each of the Company, La Frontera
Generation, FPLE Forney, FPLE Forney Pipeline and Lamar.

“Additional Assets” means those Assets identified in Exhibit B.

“Additional Assets Contribution” has the meaning set forth in the Recitals of
this Agreement.

“Affiliate” means any Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with the
Person specified. For purposes of this definition, control of a Person means the
power, direct or indirect, to direct or cause the direction of the management
and policies of such Person whether through ownership of voting securities or
ownership interests, by contract or otherwise.

“Aggregate Net Working Capital” means (without duplication) the sum of the net
working capital of the Acquired Companies as determined in accordance with the
methodology used in the preparation of Aggregate Target Net Working Capital
Amount set forth on Exhibit C, and otherwise in accordance with GAAP as of 12:01
A.M. (Eastern Prevailing Time) on the Closing Date. In the event the Closing
does not occur on the last day of a month, then each item included as a
proration item on Exhibit C and included in the calculation of Aggregate Net
Working Capital shall be prorated to the extent applicable as of the Closing
Date by multiplying the amount of each such item for the full calendar month by
a fraction, the numerator of which is the number of days elapsed from and
including the first day of the month in which the Closing Date occurs to but
excluding the Closing Date, and the denominator of which is the total number of
days in such month, provided that to the extent items may be determined on a
daily basis, such amounts will be allocated on a daily basis.

“Aggregate Target Net Working Capital Amount” means $276,701,431, calculated as
set forth on Exhibit C.

“Agreement” has the meaning set forth in the introductory paragraph to this
Agreement.

“Allocation” has the meaning set forth in Section 2.7(c).

“ALTA Surveys” means, collectively, the existing ALTA/ACSM Land Title Surveys of
the Forney Project and the Lamar Project made available to Buyer.

“Assets” of any Person means all assets and properties of every kind, nature,
character and description (whether real, personal or mixed, whether tangible or
intangible and wherever situated), including the goodwill related thereto,
operated, owned or leased by such Person.

“Assumable Claim” has the meaning set forth in Section 10.9(b).

“Balance Sheet” has the meaning set forth in Section 4.20.

“Balance Sheet Date” has the meaning set forth in Section 4.20.

 

A-1

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“Bankruptcy Cases” means the chapter 11 cases commenced by EFH Corp. and its
debtor-in-possession subsidiaries under the Bankruptcy Code in the Bankruptcy
Court, which cases are currently pending before the Honorable Christopher S.
Sontchi and jointly administered for procedural purposes only under Case
No. 14-10979, and any proceedings related thereto.

“Bankruptcy Code” means Title 11 of the United States Code, as amended from time
to time, or any similar federal or state law for the relief of debtors.

“Bankruptcy Court” means the United States Bankruptcy Court for the District of
Delaware.

“Bankruptcy Court Order” means the Order Authorizing, But Not Requiring, The
Debtors (A) To Participate In A Competitive Bidding Process, and (B) If Selected
As the Winning Bidder, To Consummate A Proposed Transaction entered by the
Bankruptcy Court on October 27, 2015, as amended through the Effective Date.

“Base Purchase Price” has the meaning set forth in Section 2.2(a).

“Benefit Plan” means (a) each “employee benefit plan,” as such term is defined
in Section 3(3) of ERISA, (b) each plan that would be an “employee benefit
plan”, as such term is defined in Section 3(3) of ERISA, if it was subject to
ERISA, including foreign plans and plans for directors, (c) each stock bonus,
stock ownership, stock option, stock purchase, stock appreciation rights,
phantom stock, or other stock plan (whether qualified or nonqualified), (d) each
bonus or incentive compensation plan, and (e) each fringe, voluntary or other
benefit program or policy.

“Break-up Fee” has the meaning set forth in Section 9.3(a).

“Break-up Fee Security” the irrevocable stand-by letter of credit for the
benefit of Seller, substantially in the form attached hereto as Exhibit L or an
irrevocable stand-by letter of credit on substantially similar terms from a
creditworthy financial institution reasonably acceptable to Seller.

“Burdensome Condition” has the meaning set forth in Section 6.1(c)(iv).

“Business” as to any Acquired Company, means the ownership, lease or operation,
as applicable, of such Acquired Company and of its respective Project, as
applicable, including the generation and sale of electricity and capacity by
such Acquired Company at or from the Project, the receipt by such Acquired
Company of natural gas and other fuel and the conduct of other activities by
such Acquired Company related or incidental to the foregoing.

“Business Day” means a day other than Saturday, Sunday or any day on which banks
located in New York are authorized or required to close.

“Business IP” has meaning set forth in Section 4.16(b).

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

“Buyer Approvals” has the meaning set forth in Section 5.3(b).

“Buyer Confidential Information” means, from and after the Closing, any and all
non-public information of a technical, commercial or business nature that
relates to the Acquired Companies or the Purchased Assets, excluding any
information relating to the Excluded Items.

“Buyer Parent Guarantor” has the meaning set forth in the Recitals of this
Agreement.

 

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“Buyer Parent Guaranty” means the Buyer Parent Guaranty duly executed by Texas
Competitive Electric Holdings Company LLC and delivered to Seller as of the
Effective Date.

“Buyer Service Companies” has the meaning set forth in Section 5.11.

“Claim” means any demand, claim, action, investigation, legal proceeding
(whether at law or in equity) or arbitration.

“Claim Notice” has the meaning set forth in Section 10.9(a).

“Closing” has the meaning set forth in Section 2.3.

“Closing Date” has the meaning set forth in Section 2.3.

“Closing Date Aggregate Net Working Capital Adjustment Amount” has the meaning
set forth in Section 2.6(a).

“Code” means the Internal Revenue Code of 1986.

“Commercially Reasonable Efforts” means efforts that are designed to enable a
Party to satisfy a condition to, or otherwise assist in the consummation of, the
transactions contemplated by this Agreement and which do not require the
performing Party to expend any funds or assume liabilities other than
expenditures and liabilities which are customary and reasonable in nature and
amount in the context of the transactions contemplated by this Agreement or the
other Transaction Documents.

“Company” has the meaning set forth in the Recitals of this Agreement.

“Company Consents” has the meaning set forth in Section 4.2(b).

“Completion Date” means the date which is the later of (i) the date on which the
Pipeline has been placed into service, or (ii) physical interconnections between
the Pipeline, the KM Facilities and the Lamar Project have been energized.

“Compressor Section” has the meaning set forth in Section 6.23.

“Condemnation Value” has the meaning set forth in Section 6.12.

“Condemnation Value Estimation Date” has the meaning set forth in Section 6.12.

“Confidentiality Agreement” means that certain Confidentiality Agreement between
Buyer and Texas Competitive Electric Holdings Company LLC, dated as of
September 11, 2015.

“Conflict” has the meaning set forth in Section 4.2(b).

“Consents” means all consents, waivers, approvals, allowances, authorizations,
declarations, filings, recordings, registrations, validations or exemptions and
notifications.

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

“Continuing Support Letter of Credit” has the meaning set forth in
Section 6.5(b).

 

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“Debtor Relief Laws” means the Bankruptcy Code and all other liquidation,
bankruptcy, assignment for the benefit of creditors, conservatorship,
moratorium, receivership, insolvency, rearrangement, reorganization or similar
debtor relief laws of the United States or other applicable jurisdictions in
effect from time to time.

“Deductible Amount” has the meaning set forth in Section 10.2(a)(iii).

“DIP Order” means the Final Order (A) Approving Postpetition Financing For Texas
Competitive Electric Holdings Company LLC And Certain Of Its Debtor Affiliates,
(B) Granting Liens and Providing Superpriority Administrative Expense Claims,
And (C) Modifying The Automatic Stay entered by the Bankruptcy Court on June 6,
2014.

“Discount Rate” means three percent (3%).

“Dispute Period” has the meaning set forth in Section 10.9(b).

“Dollars” and “$” mean United States dollars.

“Effective Date” has the meaning set forth in the introductory paragraph to this
Agreement.

“Encumbrances” means any mortgages, pledges, liens, security interests, charges,
claims, equitable interests, infringements of a third party patent, copyrights,
trade secrets or other intellectual property rights, restrictions on transfer,
conditional sales or other title retention devices or arrangements (including a
capital lease), or restrictions on the creation of any of the foregoing, whether
relating to any property or right or the income or profits therefrom.

“Energy Management Agreement” means the Energy Management Agreement, entered
into by and among NEER Power Marketing and each of the Project Companies,
substantially in the form of Exhibit F.

“Environmental Claim” means any Claim, Loss, cost, expense, liability, fine,
penalty or damage arising out of or related to any violation of, or liability
under, Environmental Law.

“Environmental Law” means all applicable Law relating to pollution or protection
of public health and the environment, including, but not limited to the Federal
Water Pollution Control Act (33 U.S.C. §1251 et seq.), Resources Conservation
and Recovery Act (42 U.S.C. §6901 et. seq.), Safe Drinking Water Act (42 U.S.C.
§3000(f) et. seq.), Toxic Substances Control Act (15 U.S.C. §2601 et seq.),
Clean Air Act (42 U.S.C. §7401 et. seq.), Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. §9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. §5101, et seq.), the Clean Water Act (33
U.S.C. §1311, et seq.), the Emergency Planning and Community Right-to-Know Act
of 1986 (42 U.S.C. §11001, et seq.) and the Occupational Safety and Health Act
of 1970 (29 U.S.C. §651, et seq.).

“Equity Interests” means capital stock, partnership or membership interests,
trust interests or units (whether general or limited), and any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distribution of Assets of, the issuing entity.

“Equity Securities” means (a) Equity Interests, (b) subscriptions, calls,
warrants, options or commitments of any kind or character relating to, or
entitling any Person to acquire, any Equity Interests and (c) securities
convertible into or exercisable or exchangeable for Equity Interests.

“ERCOT” means the Electric Reliability Council of Texas.

 

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“ERCOT Protocols and Other Binding Documents” mean the documents adopted by
ERCOT, including any attachments or exhibits referenced therein, as amended from
time to time, that contain the scheduling, operating, planning, reliability, and
settlement (including registration) policies, rules, guidelines, procedures,
standards, and criteria of ERCOT. Other Binding Documents include the ERCOT
Market Guides. The version of the ERCOT Protocols or Other Binding Document in
effect at the time of the performance or non-performance of an action shall
govern with respect to that action.

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

“ERISA Affiliate” means any entity, trade or business that is a member of a
group described in Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA that includes Seller, or that is a member of the
same “controlled group” as Seller pursuant to Section 4001(a)(14) of ERISA;
provided, however, that the Acquired Companies shall not be considered to be
ERISA Affiliates from and after the Closing Date.

“ERISA Benefit Plan” means each “employee benefit plan,” as such term is defined
in Section 3(3) of ERISA.

“Estimated Aggregate Net Working Capital Amount” has the meaning set forth in
Section 2.6(a).

“EWG” has the meaning set forth in Section 4.11(a).

“Excluded Contracts” has the meaning set forth in Section 6.8.

“Excluded Items” has the meaning set forth in Section 6.6.

“Existing Affiliate Contracts” has the meaning set forth in Section 6.8.

“Extended Outside Date” has the meaning set forth in Section 6.11.

“FERC” means the Federal Energy Regulatory Commission.

“Final Aggregate Net Working Capital Amount” has the meaning set forth in
Section 2.6(b).

“Final Aggregate Net Working Capital Adjustment Amount” has the meaning set
forth in Section 2.6(f).

“Financial Statements” has the meaning set forth in Section 4.20.

“Forney Pipeline” means the approximately 1,000 foot, 24 inch diameter natural
gas pipeline connecting the Forney Project to the pipeline owned by Kinder
Morgan North Texas Pipeline, L.P. and the bi-directional pipeline owned by Atmos
Pipeline – Texas, a division of Atmos Energy Corporation.

“Forney Project” means the approximately 1,792 megawatt (nominal nameplate)
natural gas-fired combined-cycle electric generating plant located in Forney,
Texas known as the “Forney Energy Center,” together with all auxiliary
equipment, ancillary and associated facilities and equipment, electrical
transformers, pipeline and electrical interconnection and metering facilities
(whether owned or leased by FPLE Forney) used for the receipt of fuel and water
and the delivery of the electrical output of said generating plant, and all
other improvements related to the ownership, operation and maintenance of said
generating plant and associated equipment.

“FPA” has the meaning set forth in Section 4.11(b).

 

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“FPLE Forney” means FPLE Forney, LLC, a Delaware limited liability company.

“FPLE Forney Pipeline” means FPLE Forney Pipeline, LLC, a Delaware limited
liability company.

“Fraud” means a willful and intentional misrepresentation of material facts
which constitutes common law fraud under the Laws of the State of New York.

“Fundamental Representations” has the meaning set forth in Section 7.1(a).

“GAAP” means generally accepted accounting principles in the United States of
America, applied on a consistent basis.

“Governmental Authority” means any court, tribunal, arbitrator, authority,
agency, commission, legislative body, official or other instrumentality of the
United States or any state, county, city or other political subdivision or
similar governing entity, including any governmental, self-regulatory,
quasi–governmental or non-governmental body administering, regulating or having
general oversight over natural gas and other fuel, electricity or power markets.
For the avoidance of doubt, Governmental Authority includes the United States
Bankruptcy Court for the District of Delaware, the PUCT, ERCOT, the IMM, Texas
RE, RRC, NERC, and FERC.

“Hazardous Material” means and includes each substance designated as a hazardous
waste, hazardous substance, hazardous material, pollutant, contaminant or toxic
substance under any Environmental Law and any petroleum or petroleum products
that have been released into the environment in concentrations or locations for
which remedial action is required under any applicable Environmental Law.

“Hedging Agreements” shall mean (a) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement or any other master agreement, including any such
obligations or liabilities under any such master agreement or related schedules.

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

“IMM” means the Independent Market Monitor, as defined in the PUCT Rules.

“Indemnified Party” has the meaning set forth in Section 10.9(a).

“Indemnification Claim” has the meaning set forth in Section 10.9(a).

“Indemnifying Party” has the meaning set forth in Section 10.9(a).

 

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“Insurance Payment” has the meaning set forth in Section 10.4(b).

“Intellectual Property” means the following intellectual property rights, both
statutory and common law rights, if applicable: (a) works of authorship,
copyrights, and registrations and applications for registration thereof,
(b) trademarks, service marks, trade names, slogans, domain names, business
names, logos, trade dress, and registrations and applications for registrations
thereof, (c) patents, as well as any reissued and reexamined patents and
extensions corresponding to the patents, and any patent applications, as well as
any related continuation, continuation in part and divisional applications and
patents issuing therefrom and (d) trade secrets and confidential information,
including ideas, designs, concepts, compilations of information, methods,
techniques, procedures, processes and other know-how, whether or not patentable.

“Interests” means one hundred percent (100%) of the membership interests of the
Company.

“Interests Assignment and Assumption Agreement” has the meaning set forth in
Section 2.4(a).

“Interim Period” means the period of time from the Effective Date until either
(a) the Closing Date or (b) the date any valid termination of this Agreement
becomes effective.

“Kinder Morgan” means Kinder Morgan North Texas Pipeline LLC, a Delaware limited
liability company.

“KM Facilities” means the gas pipeline facilities owned and operated by Kinder
Morgan or its Affiliates and through which Kinder Morgan delivers natural gas to
the Forney Project and the Lamar Project under any transportation agreement.

“Knowledge” when used (i) in a particular representation and warranty in this
Agreement with respect to Seller, means the actual knowledge after due inquiry
of the individuals listed on Exhibit I, and (ii) with respect to Buyer, means
the actual knowledge after due inquiry of the individuals listed on Exhibit J.

“La Frontera Generation” means La Frontera Generation, LLC, a Delaware limited
liability company.

“Lamar” means Lamar Power Partners, LLC, a Delaware limited liability company.

“Lamar Project” means the approximately 1,000 megawatt (nominal nameplate)
natural gas-fired combined-cycle electric generating plant located in Paris,
Texas known as the “Lamar Energy Center,” together with all auxiliary equipment,
ancillary and associated facilities and equipment, electrical transformers,
pipeline and electrical interconnection and metering facilities (whether owned
or leased by Lamar) used for the receipt of fuel and water and the delivery of
the electrical output of said generating plant, and all other improvements
related to the ownership, operation and maintenance of said generating plant and
associated equipment.

“Laws” means all applicable laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of any Governmental Authority and
all Debtor Relief Laws. For the avoidance of doubt, Laws include PUCT Rules,
ERCOT Protocols and Other Binding Documents, RRC Rules, and Reliability
Standards.

“Liability Cap” has the meaning set forth in Section 10.2(a)(v).

 

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“Loss” means any and all judgments, losses, liabilities, amounts paid in
settlement, damages, fines, penalties, deficiencies and expenses (including
interest, court costs, reasonable fees of attorneys, accountants and other
experts or other reasonable expenses of litigation or other proceedings or of
any claim, default or assessment). For all purposes in this Agreement the term
“Losses” does not include any Non-Reimbursable Damages.

“Material Adverse Effect” means, unless the context expressly provides
otherwise, a material adverse effect on the business, operations, properties or
condition (financial or otherwise) of the Acquired Companies taken together as a
whole; provided, however, that in determining whether a Material Adverse Effect
has occurred, there shall not be taken into account any effect resulting from
(a) any change in economic or business conditions generally, financial markets
generally or in the industry or markets in which an Acquired Company operates or
is involved, (b) any change in general legal, regulatory or political
conditions, including any commencement, continuation or escalation of war,
material armed hostilities or terrorist activities or other material
international or national calamity or act of terrorism directly or indirectly
involving or affecting the United States, (c) any changes in accounting rules or
principles (or any interpretations thereof), including changes in GAAP, (d) any
change in any Laws (including Environmental Laws), (e) any increases in the
costs of commodities or supplies, including fuel, or decreases in the price of
electricity, (g) the announcement of the execution of this Agreement (or any
other agreement to be entered into pursuant to this Agreement) or the sale of
the Acquired Companies, or the pendency of or consummation of the transactions
contemplated by this Agreement or any other Transaction Document, or any actions
required to be taken hereunder or thereunder, including any termination of,
reduction in or similar negative impact on relationships, contractual or
otherwise, with any customers, suppliers, distributors, partners or employees of
any of the Acquired Companies or Non-Acquired Company Affiliates, to the extent
due to the announcement and performance of this Agreement (or any other
agreement to be entered into pursuant to this Agreement) or the identity of
Buyer, or the consummation of the transactions contemplated by this Agreement or
any other Transaction Document, and (h) any actions to be taken or not taken
pursuant to or in accordance with this Agreement or any other Transaction
Document; provided that, in the case of clauses (a), (b) or (e), only to the
extent such changes do not have a disproportionately adverse effect on the
Acquired Companies, taken as a whole, compared to other Persons operating in the
same industry and jurisdictions in which the Acquired Companies operate.

“Material Contracts” has the meaning set forth in Section 4.12(a).

“Material Permits” has the meaning set forth in Section 4.14(a).

“Mitigation Payment” has the meaning set forth in Section 10.4(b).

“NEER” means NextEra Energy Resources, LLC, a Delaware limited liability
company.

“NEER Guaranty” means that certain Guaranty, dated as of August 17, 2001, in
favor of Kinder Morgan.

“NEER Operating” means NextEra Energy Operating Services, LLC, a Delaware
limited liability company.

“NEER Power Marketing” means NextEra Energy Power Marketing, LLC, a Delaware
limited liability company.

“NEER Support Agreement” means that certain Project Document Security Support
Agreement, dated as of May 10, 2013, among NEER, FPLE Forney and U.S. Bank
National Association, as collateral agent for the benefit of the Secured Parties
(as defined in the Project Financing Agreement).

 

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“NERC” means the North American Electric Reliability Corporation.

“Neutral Auditor” means Duff & Phelps Corporation or, if Duff & Phelps
Corporation is unable to serve, an impartial nationally recognized firm of
independent certified public accountants other than Seller’s accountants or
Buyer’s accountants, mutually agreed to by Buyer and Seller.

“Non-Acquired Company Affiliate” means any Affiliate of Seller, except for the
Acquired Companies.

“Non-Reimbursable Damages” has the meaning set forth in Section 10.8(b).

“Non-Transferred Excluded Item” has the meaning set forth in Section 6.6.

“O&M Agreement” means the O&M Agreement, entered into by and among NEER
Operating and each of the Project Companies, substantially in the form of
Exhibit E.

“O&M Expiration” has the meaning set forth in Section 6.7(b).

“Order” has the meaning set forth in Section 3.5.

“Organizational Documents” means with respect to any Person, the certificate or
articles of incorporation, organization or formation and by-laws, the limited
partnership agreement, the partnership agreement, the limited liability company
agreement or the trust agreement, or such other organizational documents of such
Person, including those that are required to be registered or kept in the
jurisdiction of incorporation, organization or formation of such Person and
which establish the legal personality of such Person.

“Outside Date” has the meaning set forth in Section 9.1(c), as the same may be
extended pursuant to Section 9.1(c).

“Party” means each of Buyer and Seller and “Parties” means Buyer and Seller,
collectively.

“Permits” means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted by a Governmental Authority.

“Permitted Encumbrances” means (a) those exceptions to title for the Property
identified in Schedule 4.13(ii); (b) Encumbrances created by any mortgage
indenture that will be released prior to or at the Closing; (c) statutory
Encumbrance for Taxes or other governmental charges or assessments not yet due
or delinquent or the validity of which are being contested in good faith by
appropriate proceedings; (d) mechanics’, materialmen’s, carriers’, workers’,
repairers’ and other similar liens arising or incurred in the ordinary course of
business relating to obligations as to which there is no default on the part of
Seller or the validly of which are being contested in good faith; (e) zoning,
entitlement, environmental or conservation restrictions and other land use and
environmental regulations imposed by Governmental Authorities; (f) recorded
Encumbrances, easements, restrictions, covenants and licenses affecting real
property incurred in the ordinary course of business, that do not secure
monetary obligations and do not materially interfere with the conduct of the
business as historically and currently operated at the affected Project or
materially detract from the value of the applicable Project; (g) the covenants
and restrictions set forth in this Agreement or in any other Transaction
Document; (h) any Encumbrances arising in the ordinary course of business by
operation of Law with respect to a liability that is not yet due or delinquent
or which is being contested in good faith by Seller or an Acquired Company;
(i) all matters that are disclosed (whether or not subsequently deleted or
endorsed over) in the Title Insurance Commitments in the form made available to
Buyer prior to the Effective Date; (j) non-exclusive licenses with respect to

 

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intellectual property granted in the ordinary course of business; (k) the terms
and conditions of the Material Contracts or the Contracts listed on Schedule
4.12; (l) any Encumbrance to be released on or prior to Closing; (m) any other
non-real estate related matters identified on Schedule 4.13(ii); and (n) any
Encumbrances arising under the Project Financing Documents or any other
documents entered into in connection with the Project Financing Indebtedness and
any Encumbrance that is a “Permitted Lien” under (and as defined in) the Project
Financing Agreement.

“Permitted Transactions” means (a) any scheduled or unscheduled outage at any of
the Projects consistent with prudent operating practice or directives from ERCOT
or other Governmental Authorities, (b) the purchase, disposal, replacement or
refurbishment of Spare Parts in connection with maintenance activities in the
ordinary course of business, (c) the Additional Assets Contribution, (d) the
transfer of Excluded Items to Non-Acquired Company Affiliates in accordance with
Section 6.6, (e) the termination, severance or assignment, as applicable, of
services or Excluded Contracts in accordance with Section 6.8, and
(f) environmental permit renewals and amendments in the ordinary course of
business.

“Person” means any natural person, corporation, general partnership, limited
partnership, limited liability company, proprietorship, other business
organization, trust, union, association or Governmental Authority.

“Pipeline” means any pipeline project to be constructed and owned in part by an
Affiliate of Seller and connecting with the KM Facilities.

“Plant Employees’ Benefit Plans” means (a) each “employee benefit plan,” as such
term is defined in Section 3(3) of ERISA, (b) each plan that would be an
“employee benefit plan”, as such term is defined in Section 3(3) of ERISA, if it
was subject to ERISA, such as foreign plans and plans for directors, (c) each
stock bonus, stock ownership, stock option, stock purchase, stock appreciation
rights, phantom stock, or other stock plan (whether qualified or nonqualified),
(d) each bonus or incentive compensation plan and (e) each fringe, voluntary or
other benefit program or policy offered or provided to Project Employees.

“Post-Closing Aggregate Net Working Capital Adjustment Amount” has the meaning
set forth in Section 2.6(f).

“Pre-Closing Taxable Period” has the meaning set forth in Section 6.14(a).

“Primary Representative” has the meaning set forth in Section 6.15.

“Project” means each of the Forney Project, the Forney Pipeline and the Lamar
Project and “Projects” means the Forney Project, the Forney Pipeline and the
Lamar Project, collectively.

“Project Companies” means, collectively, each of FPLE Forney, FPLE Forney
Pipeline and Lamar.

“Project Employees” has the meaning set forth in Section 4.18.

“Project Financing Agreement” means the Credit Agreement dated as of May 10,
2013, by and among La Frontera Generation, as Borrower, La Frontera Holdings, as
Parent Guarantor, Lamar, FPLE Forney and FPLE Forney Pipeline (collectively, as
Subsidiary Guarantors), and Various Financial Institutions, as Lenders, Bank of
America, N.A., as Administrative Agent and U.S. Bank, National Association, as
Collateral Agent and Depositary Agent, as the same may be now or hereafter
amended, amended and restated or otherwise modified.

 

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“Project Financing Administrative Agent” has the meaning set forth in
Section 2.1(b).

“Project Financing Documents” means all “Financing Documents” as defined in the
Project Financing Agreement.

“Project Financing Indebtedness” means, at any time, the unpaid balance of
principal and accrued interest on the Loans (as defined in the Project Financing
Agreement) at such time outstanding under the Project Financing Agreement.

“Project Financing Payoff Amount” has the meaning set forth in Section 2.1(b).

“Project Financing Payoff Letters” has the meaning set forth in Section 2.1(b).

“Property” means the real property on which a Project is located, including
leasehold interests, easements and rights-of-way appertaining or related
thereto.

“Property Taxes” has the meaning set forth in Section 6.14(b).

“Proposed Aggregate Net Working Capital Amount” has the meaning set forth in
Section 2.6(b).

“Purchase Price” has the meaning set forth in Section 2.2.

“Purchase Price Allocation Schedule” has the meaning set forth in
Section 2.7(b).

“Purchased Assets” means all of the Assets of the Acquired Companies, including
the Additional Assets.

“PUCT” means the Public Utility Commission of Texas.

“PUCT Rules” mean the substantive rules of the PUCT set forth in Title 16,
Chapter 25 of the Texas Administrative Code.

“PUHCA” has the meaning set forth in Section 4.11(a).

“PURA” means the Texas Public Utility Regulatory Act.

“Qualified Scheduling Entity” has the meaning set forth in the ERCOT Nodal
Protocols, Section 2.1, Definitions and Acronyms, dated October 1, 2011, as the
same may be hereafter amended, supplemented or replaced.

“Real Property Documents” has the meaning set forth in Section 4.12(a)(xiv).

“Regulatory Break-up Fee” has the meaning set forth in Section 9.4(a).

“Related Party” has the meaning set forth in Section 4.22.

“Release” means any release, spill, emission, migration, leaking, pumping,
injection, deposit, disposal or discharge of any Hazardous Materials into the
environment, to the extent giving rise to liability under applicable
Environmental Laws.

“Reliability Standards” mean the enforceable NERC or Texas RE Reliability
Standard that has been approved by FERC.

 

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“Representatives” means, as to any Person, its officers, directors, managers,
employees, agents, counsel, accountants, financial advisers, insurers, financing
sources and consultants.

“Restoration” has the meaning set forth in Section 6.11.

“Restoration Cost” has the meaning set forth in Section 6.11.

“Restoration Cost Estimation Date” has the meaning set forth in Section 6.11.

“Restoration Option” has the meaning set forth in Section 6.11.

“RRC” means the Railroad Commission of Texas.

“RRC Rules” mean the substantive rules of the RRC set forth in Title 16,
Chapters 8 and 18 of the Texas Administrative Code.

“Schedules” means the disclosure schedules attached to this Agreement.

“Schedule Supplement” has the meaning set forth in Section 6.16(b).

“Seller” has the meaning set forth in the introductory paragraph to this
Agreement.

“Seller Approvals” has the meaning set forth in Section 3.3(b).

“Seller Confidential Information” means, from and after the Closing, (a) any and
all information provided by Seller to Buyer and identified by Seller as
confidential to the extent it is not related to the Acquired Companies or the
Purchased Assets, including information relating to the Excluded Contracts and
Excluded Items and (b) any and all other information provided by Seller to Buyer
relating to the operation of Seller’s or its other Affiliates’ businesses.

“Seller Marks” has the meaning set forth in Section 6.4.

“Seller Parent Guaranty” means a guaranty of NEER substantially in the form of
Exhibit H.

“Settlement” has the meaning set forth in Section 10.9(b).

“Spare Parts” means those spare parts and equipment for use at the Projects
identified on Exhibit K.

“Straddle Taxable Period” has the meaning set forth in Section 6.14(a).

“Tax” or “Taxes” means: (a) all federal, state, local or foreign taxes, charges,
fees, imposts, levies or other assessments, including all net income, gross
receipts, capital, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation, property
and estimated taxes, customs duties, fees and assessments of any kind
whatsoever, and any interest, penalty, addition to tax or additional amount with
respect thereto, that are imposed, assessed, or collected by any Taxing
Authority; (b) any liability for payment of amounts described in clause
(a) whether as a result of transferee liability, of being a member of an
affiliated, consolidated, combined or unitary group for any period or otherwise
through operation of law; (c) any liability for the payment of amounts described
in clauses (a) or (b) as a result of any tax sharing, tax indemnity or tax
allocation agreement or any other express or implied agreement to indemnify any
other Person; and (d) any loss in connection with the determination, settlement,
or litigation of any of the foregoing.

 

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“Tax Information” has the meaning set forth in Section 11.4(d).

“Tax Allocation Purchase Price” has the meaning set forth in Section 2.7(b).

“Tax Return” means any return, declaration, report, statement, information
statement, worksheet, schedule and any other document filed, required to be
filed or required to be prepared (including any documentation required to be
prepared in connection with any applicable transfer pricing law) with respect to
Taxes, including any claims for refunds of Taxes and any amendments or
supplements of any of the foregoing.

“Taxing Authority” means, with respect to any Tax, the Governmental Authority or
that imposes such Tax, and the Governmental Authority charged with the
collection of such Tax for such entity or subdivision.

“Texas RE” means the Texas Reliability Entity, Inc.

“Third Party Claim” has the meaning set forth in Section 10.9(a).

“Third Party Payment” has the meaning set forth in Section 10.4(b).

“Title Company” means Chicago Title Insurance Company.

“Title Insurance Commitments” means, collectively, the commitments for ALTA
extended (2006) or Texas Form T-1 owner’s title insurance policies with respect
to the Forney Project and the Lamar Project , either (a) in form and substance
reasonably acceptable to Buyer or (b) in form and substance of (i) the
Commitment for Title Insurance for the Forney Project dated July 12, 2015
prepared by Chicago Title Insurance Company, File Reference No. CTIC-15003211;
and (ii) the Commitment for Title Insurance for the Lamar Project dated July 23,
2015 prepared by Chicago Title Insurance Company, File Reference No.
CTIC-15003212. Such commitments shall include, without limitation,
non-imputation endorsement coverage in respect of the transactions contemplated
by this Agreement.

“Treasury Regulations” means one or more treasury regulations promulgated under
the Code by the Treasury Department of the United States.

“Transaction Documents” means this Agreement, each of the officer certificates
required by this Agreement to be delivered pursuant to Article VII and Article
VIII as conditions to Closing, and each other document delivered pursuant to
this Agreement, including each of the Contracts which are Exhibits to this
Agreement.

“Transfer Taxes” means all transfer, sales, use, goods and services, value
added, documentary, stamp duty, gross receipts, excise, transfer and conveyance
Taxes and other similar Taxes, duties, fees or charges.

“Transferrable Project Employees” has the meaning set forth in Section 6.7(b).

“Transition Services Agreement” means the Transition Services Agreement
substantially in the form of Exhibit G.

“Turbine Section” has the meaning set forth in Section 6.23.

 

A-13

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EXHIBIT C

AGGREGATE NET WORKING CAPITAL CALCULATIONS

Aggregate Target Net Working Capital Calculations/Balance Sheet Items:

All Aggregate Target Net Working Capital calculations will be based upon the
balance sheet categories set forth below.

(1) The Aggregate Target Net Working Capital Amount has been calculated using
the following balance sheet items on the unaudited pro forma selected balance
sheet of the Acquired Companies on a consolidated basis as of December 31, 2015,
as adjusted to give effect to the transactions contemplated by this Agreement
and average LTM working capital adjustments.

(2) The Estimated Aggregate Net Working Capital Amount and the Final Aggregate
Net Working Capital Amount will be calculated using the following balance sheet
items on the unaudited pro forma selected balance sheet of the Acquired
Companies on a consolidated basis as of the Closing Date, as adjusted to give
effect to the transactions contemplated by this Agreement.

For the avoidance of doubt, references to adjustments to give effect to the
transactions contemplated by this Agreement above are limited to those reflected
in the definitions in this Exhibit C and Table I.

Current Assets include:

 

  •   Cash and “cash equivalents.” For the avoidance of doubt, any cash
management guarantee or other guarantee shall not be deemed “cash and cash
equivalents” and the applicable amounts in any accounts shall only be deemed
“cash and cash equivalents” for the calculation of “Current Assets” if deposited
in cash prior to the Closing.

 

  •   “Accounts receivable - Third party” to the extent that any one or more of
the Acquired Companies will receive the benefits thereof after the Closing Date.

 

  •   “Materials and Supplies inventory” located at the Acquired Companies’
facilities.

 

  •   “Prepaid other” including expenses made by the Acquired Companies, or by
Affiliates on behalf of an Acquired Company, at or prior to the Closing Date (to
the extent that any one or more the Acquired Companies will receive the benefits
thereof after the Closing Date).

Current Assets exclude:

 

  •   Other current assets relating to (a) deferred income tax assets and income
tax receivables, (b) derivative assets, and (c) insurance prepayments.

 

  •   Other equipment including any equipment not included in Materials and
Supplies inventory.

 

  •   Amounts due from related parties.

 

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  •   Assets (positive impacts to cash or receivables) related to the
termination or acceleration of Hedging Agreements from the Closing Date forward.

Current Liabilities include:

 

  •   “Accounts payable - Third party” including any accrued expenses for costs
incurred, but invoices not received, prior to the Closing Date.

 

  •   “Accrued property taxes.”

 

  •   “Accrued interest.”

Current Liabilities exclude:

 

  •   Other current liabilities relating to (a) deferred income tax liabilities
and income tax payables and (b) derivative liabilities.

 

  •   Environmental liabilities, if any.

 

  •   Amounts due to related parties.

 

  •   Current maturities of long-term debt.

 

  •   Liabilities (negative impacts to payables) related to the termination or
acceleration of the Hedging Agreements from the Closing Date forward.

Calculation of Aggregate Target Net Working Capital Amount:

The following Table I sets forth the calculation of the Aggregate Target Net
Working Capital Amount for purposes of this Agreement and shall be used in the
calculation and delivery of the Estimated Aggregate Net Working Capital Amount,
the Proposed Aggregate Net Working Capital Amount, and the Final Aggregate Net
Working Capital Amount pursuant to Section 2.4 of the Agreement, except that for
the avoidance of doubt, (a) Accrued interest was excluded from Aggregate Target
Net Working Capital Amount, but will be included in Proposed Aggregate Net
Working Capital Amount, and the Final Aggregate Net Working Capital Amount; and
(b) the $34,000,000 normalization Adjustment to Net Working Capital in Table I
is included in the Aggregate Target Net Working Capital Amount only, and will
not be added to Proposed Aggregate Net Working Capital Amount or the Final
Aggregate Net Working Capital Amount.

 

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Table I

La Frontera Holdings, LLC and all Subsidiaries

Aggregate Target Net Working Capital Amount

 

                      12/31/2015                         Aggregate           
Estimated      Working     Target Net            12/31/2015      Capital    
Working Capital            Balance Sheet      Adjustments     Amount  

Current Assets

         

Cash and cash equivalents - Project Revenues Collection Account

   (a)   $ 111,500,000       $ —        $ 111,500,000   

Cash and cash equivalents - Operating Accounts

   (b)     55,038,658         —          55,038,658   

Cash and cash equivalents - Liquidity Reserve Account

   (c)     30,000,000         —          30,000,000   

Cash and cash equivalents - Major Maintenance Reserve Account

   (d)     15,000,000         —          15,000,000   

Cash and cash equivalents - Debt Service Reserve Account

   (e)     28,200,001         —          28,200,001   

Accounts receivable - Third party

   (f)     25,718,426         —          25,718,426   

Due from related parties

   (g)     —           —          —     

Materials and supplies inventory

   (h)     12,161,716         —          12,161,716   

Prepaid insurance

   (i)     3,071,041         (3,071,041 )      —     

Prepaid other

   (j)     39,500         —          39,500   

Derivative and income tax assets

   (k)     —           —          —          

 

 

    

 

 

   

 

 

 

Total current assets

       280,729,342         (3,071,041 )      277,658,301        

 

 

    

 

 

   

 

 

 

Current Liabilities

         

Accounts payable - Third party

   (l)     21,694,346         —          21,694,346   

Due to related parties

   (m)     20,309,161         (20,309,161 )      —     

Accrued property taxes

   (n)     13,262,524         —          13,262,524   

Accrued professional fees

   (o)     90,000         (90,000 )      —     

Accrued interest

   (p)     119,094         (119,094 )      —     

Current maturities of long-term debt

   (q)     111,500,000         (111,500,000 )      —     

Derivative and income tax liabilities

   (k)     —           —          —          

 

 

    

 

 

   

 

 

 

Total current liabilities

       166,975,125         (132,018,255 )      34,956,870        

 

 

    

 

 

   

 

 

 

Net Working Capital

     $ 113,754,217      $ 128,947,214     $ 242,701,431       

 

 

    

 

 

   

 

 

 

Adjustment to Net Working Capital [(r)([s])]

          $ 34,000,000            

 

 

 

Aggregate Target Net Working Capital

          $ 276,701,431            

 

 

 

Notes:

 

(a) Represents excess cash available to fund future operating needs or required
principal and interest payments. Such excess cash is typically swept to parent
and replaced with a cash management guarantee. There will be no amounts
outstanding under the cash management guarantee at closing, as any amounts
previously drawn on the guarantee shall be returned in cash prior to closing.
For the avoidance of doubt, any such cash management guarantee or other
guarantee shall not be deemed “cash and cash equivalents” for any such accounts
and the applicable amounts in such accounts shall only be deemed “cash and cash
equivalents” for the calculation of “Current Assets” if deposited in cash prior
to the closing.

(b) Represents cash available in the Bank of America operating account (net of
any outstanding checks) to cover next month’s estimated O&M cash disbursements.
This account is funded on a monthly basis from cash available in the Project
Revenues Collection Account.

(c) Represents cash that may be transferred to the Project Revenues Collection
Account at any time.

(d) Represents estimated cash required to fund the next 12 months of Major
Maintenance Expenditures, as defined in the Credit Agreement. This account is
replenished on a quarterly basis, and any cash not required to pay for next
month’s major maintenance expenditures is typically swept to parent and replaced
with a major maintenance reserve guarantee. There will be no amounts outstanding
under the major maintenance reserve guarantee at closing, as any amounts
previously drawn on the guarantee shall be returned in cash prior to closing.

(e) Represents cash required to cover the next two estimated quarterly minimum
principal and interest payments as of each Debt Service and Reserve Funding
Date, as defined in the Credit Agreement. This amount is adjusted on a quarterly
basis with funds transferred to or from the Project Revenues Collection Account
and is in the form of a debt service reserve guarantee. There will be no amounts
outstanding under the debt service reserve guarantee at closing, as the Debt
Service Reserve Account will be funded with cash prior to closing.

(f) Primarily represents estimated receivables for monthly settlements due from
hedge counterparty and daily energy settlements due from ERCOT that will be
collected in the following month.

(g) Primarily consists of amounts due from NextEra Energy Power Marketing, LLC
(“NEPM”) for monthly energy sales based on the day-ahead index pricing. Such
sales and receivables are not forecasted, but any actual amounts will be assumed
to be collected upon closing and excluded from working capital (removed from
Buyer’s opening trial balance).

(h) Consists of all spare parts included on Exhibit K.

(i) Property and casualty insurance premiums are paid by parent and allocated
down to the various benefitted entities, including La Frontera. These insurance
policies are non-transferable, so any related prepaid amounts do not benefit the
Buyer and have been excluded from working capital (removed from Buyer’s opening
trial balance).

 

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(j) Consists of prepaid administrative and rating agency fees paid annually in
connection with the financing.

(k) Derivative and income tax assets and liabilities are excluded from working
capital (removed from Buyer’s opening trial balance).

(l) This amount is intended to cover all third party trade payables, including
accrued expenses for any invoices received on or after the closing date for
costs incurred prior to the closing date (excluding other current liabilities
specifically identified herein).

(m) Primarily consists of amounts due to 1) NEPM for estimated fuel purchases
for the current month and 2) other related parties for estimated payroll and
other operating costs for the current month, including accrued payroll taxes and
incentives for 2015. Amount is assumed to be paid to related parties upon
closing and excluded from working capital (removed from Buyer’s opening trial
balance).

(n) Consists of the estimated property tax assessments for the 2015 calendar
year that are paid in arrears (tax bills due in January 2016).

(o) Consists of estimated 2015 audit fees in connection with financing
requirement. Parent will pay all such audit fees directly on behalf of La
Frontera, so this amount has been excluded from working capital (removed from
Buyer’s opening trial balance).

(p) Consists of interest on the outstanding principal balance of the debt for 1
day (12/31/15) that is not included in the minimum principal and interest
payment scheduled to be made on 12/31/15. Daily interest in the same amount will
continue to be accrued after 12/31/15 until closing on or before 3/31/16.

(q) All outstanding principal balances associated with long-term debt
obligations are excluded from working capital.

(r) Consists of Adjustments to balance sheet to provide a normalized amount of
working capital based on LTM average amounts plus growth based on financial
projections provided. For the avoidance of doubt the $34,000,000 normalization
Adjustment to Net Working Capital in Table I is included Aggregate Target Net
Working Capital Amount only, and will not be added to Proposed Aggregate Net
Working Capital Amount or the Final Aggregate Net Working Capital Amount.

 

C-4

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Table II

Illustrative Aggregate Purchase Price Calculation

 

$    Dec 31, 2015 (3)     Jan 31, 2016 (3)  

Enterprise value excluding Aggregate Target NWC Capital Amount

     1,313,037,228        1,313,037,228   

Aggregate Target NWC Capital Amount excluding Cash

     36,962,772        36,962,772   

Enterprise value excluding Cash

     1,350,000,000        1,350,000,000   

Cash

     239,738,659        239,738,659   

Base Purchase Price

     1,589,738,659        1,589,738,659    $    Dec 31, 2015 (3)     Jan 31,
2016 (3)  

Enterprise value excluding Aggregate Target NWC Capital Amount

     1,313,037,228        1,313,037,228   

Aggregate Target NWC Capital Amount

     276,701,431        276,701,431   

Base Purchase Price

     1,589,738,659        1,589,738,659   

Plus: Illustrative Final Aggregate Net Working Capital Adjustment Amount (1)

     (34,000,000 )      (7,890,431 ) 

Minus: Project Finance Pay Off Amount (2)

     (952,700,000 )      (952,700,000 ) 

Total Purchase Price

     603,038,659        629,148,228   

Aggregate Target NWC Capital Amount

     276,701,431        276,701,431   

Illustrative Final Aggregate Net Working Capital Amount

     242,701,431        268,811,000   

Illustrative Final Aggregate Net Working Capital Adjustment Amount (1)

     (34,000,000 )      (7,890,431 ) 

Footnotes:

 

(1) The adjustment to reflect the Final Aggregate Net Working Capital Adjustment
Amount (whether a positive or a negative amount) in accordance with Section 2.6

(2) The amount of the Project Financing Payoff Amount

(3) December 31, 2015 and January 31, 2016 Final Agggregate Net Working Capital,
Final Agggregate Net Working Capital Adjustment Amount,

Project Finance Pay Off Amount are illustrative amounts only.

 

C-1

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Table III

Aggregate Net Working Capital

Aggregate Net Working Capital

 

$ in actuals    Dec 31, 2015 (3)     Jan 31, 2016 (3)  

Cash - Project Revenue Account

     111,500,000        111,500,000   

Cash - Operating Account

     55,038,658        47,672,809   

Cash - Liqudity Reserve Account

     30,000,000        30,000,000   

Cash - Major Maintenance Reserve Account

     15,000,000        12,000,000   

Cash - Debt Service Reserve Account

     28,200,001        28,200,001   

Cash

     239,738,659        229,372,810   

Accounts receivable - Third Party

     25,718,426        46,606,013   

Materials & supplies inventory

     12,161,716        12,590,244   

Prepaid other

     39,500        28,000   

Current Assets

     277,658,301        288,597,067   

Accounts Payable 3rd Party

     (21,694,346 )      (18,495,179 ) 

Accrued Prop Tax

     (13,262,524 )      (1,290,888 ) 

Accrued Interest (4)

     —          —     

Current Liabilities

     (34,956,870 )      (19,786,067 ) 

Aggregate Net Working Capital Amount

     242,701,431        268,811,000   

Adjustment to normalize for Aggregate Target NWC Amount only (5)

     34,000,000     

Aggregate Target NWC Capital Amount

     276,701,431     

 

(4) To reflect any amount of accrued interest not reflected in the Project
Finance Pay Off Amount

(5) Normalization amount for the purposes of the Aggregate Target Working
Capital Amount only, and not Estimated or Final Aggregate Net Working Capital
amounts

 

C-1