Exhibit 10.1

 

Execution Copy

 

 

 

TERMINATION AND TRANSFER AGREEMENT

 

dated as of May 12, 2011

 

among

 

Sempra Energy Trading LLC,

 

MXenergy Inc.

 

MXenergy Electric Inc.

 

MXenergy Holdings Inc.

 

and

 

Constellation Energy Commodities Group, Inc.

 

 

 

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Table of Contents

 

 

Page

 

 

ARTICLE I REDEMPTION, TERMINATION, TRANSFER AND RELEASE

2

 

 

Section 1.01 Redemption and Termination of Sempra Interests

2

Section 1.02 Termination of Supply Arrangements

3

Section 1.03 Termination of SET Collateral Arrangements

3

Section 1.04 Payment; Allocation of Payment

3

Section 1.05 Termination of Third Party Credit Support

4

Section 1.06 Performance, Transfer and Termination of Transactions

4

Section 1.07 Gas Adder and Energy Adder

7

Section 1.08 Transfer and Release of Gas Assets and Electricity Assets; Purchase
of Stored Gas

7

Section 1.09 Termination of Scheduling Obligations

8

Section 1.10 Mutual Release

8

 

 

ARTICLE II REPLACEMENT CREDIT SUPPORT

8

 

 

Section 2.01 Replacement Credit Support

8

Section 2.02 Letter of Credit

8

 

 

ARTICLE III REGULATORY APPROVALS AND FEES

9

 

 

Section 3.01 Regulatory Approvals and Filings

9

Section 3.02 Monthly Transition Fee

10

 

 

ARTICLE IV EVENTS OF DEFAULT; REMEDIES

10

 

 

Section 4.01 Events of Default

10

Section 4.02 Remedies

11

Section 4.03 Indemnity

12

 

 

ARTICLE V DEFINITIONS

12

 

 

Section 5.01 Definitions

12

 

 

ARTICLE VI CLOSING; CONDITIONS PRECEDENT

18

 

 

Section 6.01 Conditions Precedent to Obligations of SET

18

Section 6.02 Closing

18

Section 6.03 Consent to Merger

19

Section 6.04 Release or Assignment of Liens

19

 

 

ARTICLE VII CONSENTS, COOPERATION AND REPORTING; FURTHER ASSURANCES; ETC.

20

 

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Section 7.01 Consent

20

Section 7.02 No Third Party Consents

21

Section 7.03 Cooperation; Transaction Progress Reporting

21

Section 7.04 Further Assurances

21

Section 7.05 No Merger Before Closing Date

21

Section 7.06 Amendment to Original ISDAs

21

Section 7.07 No Amendment

21

 

 

ARTICLE VIII MISCELLANEOUS

21

 

 

Section 8.01 Interpretation

21

Section 8.02 Representations and Warranties of the Parties

22

Section 8.03 Representations and Warranties of MX Holdings and the MX Companies

23

Section 8.04 Representation and Warranty of CECG

23

Section 8.05 Representations and Warranties of SET

23

Section 8.06 Notices

23

Section 8.07 No Joint Venture or Joint Liability

24

Section 8.08 Headings

24

Section 8.09 Severability

24

Section 8.10 Entire Agreement

24

Section 8.11 Successors and Assigns

25

Section 8.12 No Third-Party Beneficiaries

25

Section 8.13 Amendment and Modification; Waiver

25

Section 8.14 Governing Law; Submission to Jurisdiction

25

Section 8.15 Waiver of Jury Trial

25

Section 8.16 Counterparts

26

 

EXHIBITS AND SCHEDULES

 

Exhibit A

Merger Agreement

Exhibit B

Transferee Certificate

 

 

Schedule 1.02(A)

Form of Amended and Restated Electric ISDA

Schedule 1.02(B)

Form of Amended and Restated Gas ISDA

Schedule 1.04

Allocation of Consideration

Schedule 1.06(k)

SET Hedges; MX Load Forecasts

Schedule 1.06(k)(2)

Process for Entering Into and Confirming all New SET Hedges

Schedule 2.02

Form of Letter of Credit

 

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Execution Copy

 

TERMINATION AND TRANSFER AGREEMENT

 

Termination and Transfer Agreement, dated as of May 12, 2011 (this “Agreement”),
among Sempra Energy Trading LLC, a Delaware limited liability company (“SET”),
MXenergy Inc., a Delaware corporation (“MX”), MXenergy Electric Inc., a Delaware
corporation (“MX Electric”), MXenergy Holdings Inc., a Delaware corporation (“MX
Holdings”), and Constellation Energy Commodities Group, Inc., a Delaware
corporation (“CECG”).

 

RECITALS:

 

WHEREAS, MX Holdings is entering into a transaction (the “Merger”) pursuant to
which all of the issued and outstanding shares of MX Holdings will be acquired
in the manner described in the Merger Agreement (as defined below);

 

WHEREAS, SET owns the Class B Shares, the Class C Shares and certain restricted
share units (“RSUs”) issued by MX Holdings pursuant to its equity compensation
plan;

 

WHEREAS, SET and MX (an Affiliate of MX Holdings) have entered into that certain
ISDA Master Agreement, dated as of September 22, 2009, (as amended, restated or
otherwise modified from time to time and together with all schedules, annexes
and amendments thereto, the “Original Gas ISDA”);

 

WHEREAS, SET and MX Electric (an Affiliate of MX Holdings) have entered into
that certain ISDA Master Agreement, dated as of September 22, 2009, as amended,
restated or otherwise modified from time to time and together with all
schedules, annexes and amendments thereto, the “Original Electric ISDA”, and
together with the Gas ISDA, the “Original ISDAs”);

 

WHEREAS, the parties have determined that the services provided by SET to the MX
Companies pursuant to the Original ISDAs will no longer be necessary;

 

WHEREAS, in connection with SET’s termination of services to the MX Companies,
CECG will enter into hedging arrangements with SET and agrees to accept the
novation of certain transactions executed by SET on behalf of the MX Companies;

 

WHEREAS, the parties desire to provide in this Agreement for, among other
things: (i) the termination of certain commercial arrangements related to, and
the amendment and restatement of, the Original ISDAs; (ii) the termination or
transfer of certain transactions entered into under the Original ISDAs and
certain corresponding hedge transactions; (iii) the termination of MX’s and MX
Electric’s obligation to provide credit support to SET with respect to the
obligations of the MX Companies under the Original ISDAs; (iv) the redemption of
all Shares and the termination of all RSUs held by SET; and (v) certain other
obligations of the MX Companies related to the transactions contemplated by this
Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements and covenants
hereinafter set forth, the parties hereby agree as follows:

 

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ARTICLE I
REDEMPTION, TERMINATION, TRANSFER AND RELEASE

 

Section 1.01         Redemption and Termination of Sempra Interests.

 

(a)           At the Closing, SET shall: (i) sell, transfer, assign and deliver
to MX Holdings and MX Holdings shall purchase and redeem all of the Shares;
(ii) deliver to MX Holdings all of the certificates representing the Shares,
free and clear of any Liens, duly endorsed in blank or accompanied by a stock
proxy or other instrument of transfer acceptable to MX Holdings; and
(iii) acknowledge (by documentation reasonably acceptable to MX Holdings) that
the RSUs have been terminated.

 

(b)           SET hereby acknowledges and agrees that:

 

(i)            MX Holdings is simultaneously entering into the Merger Agreement
pursuant to which all of the issued and outstanding shares of MX Holdings will
be acquired;

 

(ii)           SET is fully aware of the consideration to be paid to the
stockholders of MX Holdings as specified in the Merger Agreement;

 

(iii)          the amount payable to SET upon the redemption of the Shares and
the termination of the RSUs pursuant to this Agreement may be less than the
amount that would be payable to SET upon the consummation of the Merger if SET
were a stockholder of MX Holdings at the closing of the Merger;

 

(iv)          as a result of the redemption of the Shares and the termination of
the RSUs pursuant to this Agreement, SET will not be a “Securityholder” under
the Merger Agreement and will not have any right to receive any portion of the
consideration payable to the stockholders of MX Holdings pursuant to the terms
of the Merger Agreement, and the Shares shall irrevocably be deemed to be
redeemed and cancelled in full for all purposes and all of SET’s right title and
interest in and to the RSUs shall be deemed to be terminated and cancelled in
full for all purposes.

 

(c)           At the Closing, SET shall deliver to MX Holdings and CECG a
written release stating that it irrevocably releases, acquits and forever
discharges MX Holdings, CECG, their respective Affiliates and their respective
officers, directors, stockholders, trustees, employees, principals, agents,
personal or legal representatives, insurers and attorneys from any and all
Claims, past, present or future, whether known or unknown, contingent or
otherwise, relating to or arising out of: (i) the ownership of the Sempra
Interests or any other interests in MX Holdings (including any right to receive
any portion of the amount payable to the stockholders of MX Holdings upon the
consummation of the Merger) or the governance or operation of the business and
affairs of MX Holdings and its subsidiaries; and (ii) subject to compliance by
MX Holdings and CECG with Section 7.05 and Section 7.07, the execution and
delivery by MX Holdings and any Affiliate of CECG of the Merger Agreement or the
consummation of the Merger.

 

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Section 1.02         Termination of Supply Arrangements.  Effective as of the
Closing, but subject to compliance by the MX Companies with Section 1.04, the
Original Electric ISDA and the Original Gas ISDA shall each be amended and
restated in the forms attached hereto as Schedule 1.02(A) and Schedule 1.02(B),
respectively (the Original Electric ISDA and the Original Gas ISDA, as so
amended, the “A&R Electric ISDA” and the “A&R Gas ISDA,” respectively), and,
except as set forth in the A&R ISDAs, the obligations of SET to supply Gas and
Products to MX or MX Electric shall be terminated and of no further force and
effect.  In the event the Closing Date occurs on or before July 1, 2011, the MX
Companies shall be entitled to a credit in the amount of one hundred
seventy-five thousand dollars ($175,000) toward any payment obligations under
the A&R ISDAs.

 

Section 1.03         Termination of SET Collateral Arrangements.  Effective upon
the Closing and SET’s receipt of the Replacement Credit Support:

 

(a)           all ISDA Security Documents (as defined in the Original ISDAs)
shall be terminated and shall be of no further force and effect;

 

(b)           immediately upon payment pursuant to Section 1.04, SET shall
release its liens and security interest in the personal property of MX, MX
Electric and each Specified Entity (with UCC-3 Financing Statements to be filed
by MX or MX Electric);

 

(c)           immediately upon issuance of directions pursuant to
Section 6.03(f)(v), SET shall terminate its control over the Collateral Accounts
(as defined in the Original ISDAs) pursuant to a termination letter that is in
form and substance acceptable to the MX Companies; and

 

(d)           SET shall deliver to MX and MX Electric, upon request, executed
instructions to MX’s and MX Electric’s payors, in form and substance
satisfactory to SET, MX and MX Electric, terminating SET’s irrevocable payment
instructions previously delivered to such payors and permitting MX and MX
Electric or their respective designees to provide such payors with new payment
instructions.

 

Section 1.04         Payment; Allocation of Payment.  At the Closing, the MX
Companies shall:

 

(a)           pay to SET in immediately available funds $16,050,000;

 

(b)           pay to SET all principal and accrued and unpaid interest and fees
on all Loans (as defined in the Original ISDAs) outstanding, if any, but
excluding any “SG Exposure Fees” (as defined in the Original ISDAs), which are
reflected in the payment amount set forth in clause (a)); and

 

(c)           pay to SET other amounts, if any (other than for the purchase of
Gas in storage), the Settlement Dates (as defined in the applicable Original
ISDA) of which have occurred on or before the Closing Date, including any
accrued Financing Fees (as defined in the Original ISDAs) owed with respect
thereto;

 

provided, however, that the MX Companies agree that, at the Closing, SET shall
apply any cash margin in SET’s possession pursuant to the Original ISDAs to
satisfy the obligations of the MX

 

3

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Companies pursuant to clauses (a), (b) and (c) above, and that the MX Companies
shall be responsible for the payment of any remaining balance with respect to
such amount.  The parties hereto agree that the payment made pursuant to
Section 1.04(a) shall be allocated between the redemption price for the Sempra
Interests and other consideration as set forth on Schedule 1.04.

 

Section 1.05         Termination of Third Party Credit Support.

 

(a)           The MX Companies and SET shall each use commercially reasonable
efforts and cooperate to terminate and extinguish, as soon as practicable
following the Closing Date: (i) SET’s obligations pursuant to Third Party Credit
Support; and (ii) SET’s potential liability to any ISOs, EDCs, LDCs,
Transmission Providers and Transporters arising in connection with (A) the
service of load by SET for the MX Companies or any of their Affiliates, or
(B) SET’s acting as a Qualified Scheduling Entity for MX Electric.

 

(b)           Without limiting Section 1.05(a), the MX Companies and SET shall:
(i) execute all documents as may be reasonably necessary to evidence the
replacement of SET as a provider of services on behalf of the MX Companies to
ISOs, EDCs, LDCs, Transmission Providers and Transporters; (ii) exercise
commercially reasonable efforts (without the obligation of any party to make any
additional payment to any third party) to cause each holder of Third Party
Credit Support and each third party to whom a potential liability may be owed by
SET (as described in Section 1.05(a)) to acknowledge in writing to SET that
SET’s obligations under any Third Party Credit Support held by such third party
and/or any such liabilities have been terminated and extinguished and that SET
has no liability with respect to such Third Party Credit Support and/or
liabilities for any period on, before or after the Closing Date (such
acknowledgement, a “Termination Acknowledgement”).

 

Section 1.06         Performance, Transfer and Termination of Transactions.

 

(a)           Exchange Traded Transactions.  Promptly following the Closing Date
(and in no event later than the settlement date for any Exchange Traded
Transactions for delivery after the First Month), all SET Hedges that that are
cleared or traded on or through an exchange (the “Exchange Traded Transactions”)
shall be transferred via one or more ex-pit transactions by SET to CECG.  Such
ex-pit transactions shall be on such terms and conditions as may be agreed
between SET and CECG.  SET shall have no obligation to post any margin and each
party to such transfer shall be responsible for payment of any transactions
costs imposed on it in connection with such transfer.  Upon the transfer of each
Exchange Traded Transaction to CECG pursuant to this Section 1.06(a): (i) any
corresponding MX Transactions that have not been novated as of such time shall
simultaneously be novated by SET to CECG; and (ii) CECG shall settle with SET,
and SET shall settle with CECG, for any change between the original (nominal)
price paid by SET and the ex-pit transfer price.  Such settlement may require
payment by either SET or CECG, depending on the direction of the change in
price.

 

(b)           Continuing Performance.  All Outstanding Transactions that are
outstanding as of the Closing Date shall be performed and settled in accordance
with their terms by SET, MX and/or MX Electric, in each case as applicable,
until such time as they are novated, terminated or liquidated in accordance with
the terms of this Agreement.

 

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(c)           Novation of Financially-Settled Transactions.  On the Closing
Date, SET shall novate to CECG SET’s positions under all of the
financially-settled MX Gas Transactions and all of the financially-settled MX
Electric Transactions (excluding any portion of such transactions that hedge
MX’s or MX Electric’s delivery obligations during the First Month).  Such
novations shall be at no cost to any party other than that provided in
Section 1.06(f).

 

(d)           Novation of Transactions for Physical Delivery.  SET, CECG and the
MX Companies shall use their commercially reasonable efforts to novate to CECG
as soon as reasonably practicable after the Closing Date, SET’s positions under
all of the MX Gas Transactions and all of the MX Electric Transactions that
involve the physical delivery of Gas or Products in any month following the
First Month; provided that this Section 1.06(d) shall not apply to transactions
for the delivery of Gas from inventory.  Such novations shall be at no cost to
any party other than that provided in Section 1.06(f).

 

(e)           Novation of SET Hedges.  SET and CECG shall use their commercially
reasonable efforts to novate to CECG as soon as reasonably practicable after the
Closing Date, SET’s positions under the SET Hedges.

 

(f)            Novation Payments.  With respect to each MX Electric Transaction
and MX Gas Transaction novated to CECG pursuant to Sections 1.06(c) and 1.06(d),
the MX Companies shall pay to SET an amount equal to the buy/sell spread between
the contract price in such transaction (less any price adjustment for the
elimination of Gas Adders and Energy Adders as described in Section 1.07 and, in
the case of MX Gas Transactions, any component of such price associated with
storage withdrawal or transportation to the applicable city-gate) and the
contract price in the corresponding SET Hedge discounted to present value as of
the effective date of the novation at a rate equal to the LIBOR Rate plus
2.25%.  The parties acknowledge and agree that any Outstanding Transaction that
is to be novated shall be novated pursuant to a novation agreement that is in
form and substance acceptable to SET.

 

(g)           SET Counter-Hedges.  If, as a result of SET’s novation of any MX
Gas Transaction or any MX Electric Transaction pursuant to Section 1.06(c) or
1.06(d), SET would hold any Unmatched SET Hedges, CECG shall, simultaneously
with such novation, execute transactions (each, an “SET Counter-Hedge”) with SET
pursuant to the CECG ISDA Agreement.  Each such SET Counter-Hedge shall: (i) be
at the same prices and shall include all of the same economic terms as set forth
in the corresponding Unmatched SET Hedge; and (ii) terminate upon the novation
or termination of such corresponding Unmatched SET Hedge.

 

(h)           Transfer Deadline and Liquidation.  If on or before the date that
is forty-five (45) days after the Closing Date CECG or SET reasonably expect
that one or more of the Outstanding Transactions will not be novated to CECG
prior to the date that is the earlier of ninety-one (91) days after the Closing
Date and October 31, 2011 (such date, the “Trigger Date”), SET and CECG shall
negotiate in good faith the terms and conditions that would govern CECG’s
appointment as SET’s agent to service such Outstanding Transactions (including
any corresponding SET Counter-Hedges) from the Trigger Date forward at no cost
to SET.  If CECG and SET have not agreed on the terms and conditions that would
govern such agency arrangement by the Trigger Date, then, with respect to any
Outstanding Transaction that has not been novated to CECG as of such date, for
any reason other than the failure of SET to act in

 

5

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good faith and use its commercially reasonable efforts to accomplish such
novation (without the obligation for SET to make any additional payment to any
third party), SET, at its option, may:  (i) novate its position under such
Outstanding Transaction (and in the case of SET Hedges, any corresponding SET
Counter-Hedge, if applicable) to The Royal Bank of Scotland plc or such other
Creditworthy Third Party as may be reasonably acceptable to CECG (such
acceptance not to be unreasonably withheld, conditioned or delayed), in which
case the MX Companies or CECG, as applicable, will provide credit support to the
assignee that is materially the same as that provided to SET pursuant to the A&R
ISDAs or the CECG ISDA Agreement, as applicable, with respect to such
transactions or otherwise reasonably acceptable to the MX Companies and/or CECG,
as applicable; (ii) continue to perform such Outstanding Transaction and, if
applicable, any corresponding SET Counter-Hedge for a monthly fee of $200,000 as
set forth in Section 3.02; or (iii) terminate and liquidate such Outstanding
Transaction and, if applicable, any corresponding SET Counter-Hedge in
accordance with Section 1.06(i).

 

(i)            Termination and Liquidation.  With respect to the termination and
liquidation of any MX Gas Transaction or any MX Electric Transaction pursuant to
clause (iv) of Section 1.06(h), the MX Companies shall pay to SET an amount
equal to the buy/sell spread between the contract price in such transaction
(less any price adjustment for the elimination of Gas Adders and Energy Adders
as described in Section 1.07 and, in the case of MX Gas Transactions, any
component of such price associated with storage withdrawal or transportation to
the applicable city-gate) and the contract price in the corresponding SET Hedge
discounted to present value as of the effective date of the novation at a rate
equal to the LIBOR Rate plus 2.25%.  With respect to the termination and
liquidation of any SET Hedges pursuant to clause (iv) of Section 1.06(h), SET
shall negotiate the terms of such termination and liquidation in good faith (and
without any consideration, stated or unstated, pertaining to any other
transaction) and in the event SET incurs any out-of-pocket costs or losses on
the liquidation of such SET Hedge, MX or MX Electric, as the case may be, shall
pay SET 50% of such costs and losses, if any.

 

(j)            Minimum Quantities; Extension.  In consideration of a portion of
the amount being paid to SET pursuant to Section 1.04(a) (as described in
Schedule 1.04), SET agrees that, effective as of the occurrence of the Closing,
the “Minimum Gas Quantity” (as defined in Part 7(a)(ii) of the Schedule to the
Original Gas ISDA) and the “Minimum Energy Quantity” (as defined in
Part 7(a)(v) of the Schedule to the Original Electric ISDA) shall cease to be
applicable for any reason, including in connection with determining payments to
be made with respect to any terminated or novated transaction.  Effective as of
the date hereof, SET agrees that it will not exercise its right to extend the
“Termination Date” (as defined in and as contemplated by Part 5(h) of the
Schedules to the Original ISDAs) on or prior to the Drop-Dead Date; provided,
however, that if the Closing Date does not occur on or prior to the Drop-Dead
Date, SET shall be permitted to exercise its right to extend such “Termination
Date” as contemplated by Part 5(h) of the Schedule to the Original Gas ISDA and
Part 5(h) of the Schedule to the Original Electric ISDA.

 

(k)           New SET Hedges.  Part I of Schedule 1.06(k) sets forth all of the
SET Hedges in place as of May 11, 2011.  On and after the effective date of this
Agreement until the earlier of the Closing Date or the Drop-Dead Date:  (i) SET
shall execute all new SET Hedges with CECG in the manner specified in Schedule
1.06(k)(2); and (ii) so long as the purchases of MX and MX Electric do not
exceed their respective load forecasts as shown in Part II of Schedule 1.06(k),

 

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SET shall execute corresponding MX Gas Transactions with MX and corresponding MX
Electric Transactions with MX Electric on the same prices as those set forth in
such SET Hedges.

 

(l)            Effective Date of Novations.  All novations executed by the
parties pursuant to Section 1.06 shall be effective as of the first day of the
calendar month following execution thereof.

 

Section 1.07         Gas Adder and Energy Adder.  The parties acknowledge and
agree that from the date hereof through the Closing Date, all financially
settled MX Gas Transactions and MX Electric Transactions shall not include any
Gas Adder or Energy Adder; provided, however, that if the Closing Date does not
occur on or before the Drop-Dead Date, SET shall be permitted to include the Gas
Adder and Energy Adder in any financially settled MX Gas Transactions and MX
Electric Transactions executed after such date.  The parties further acknowledge
and agree that, to the extent any MX Transactions executed after the date hereof
provide for physical delivery after the Closing Date, the MX Companies shall be
entitled to a price credit for the full amount of all Gas Adders and Energy
Adders applicable to such deliveries after the Closing Date; provided, however,
that such credit shall not apply to MX Transactions for the purchase of Gas in
inventory as described in Section 1.08(b).

 

Section 1.08         Transfer and Release of Gas Assets and Electricity Assets;
Purchase of Stored Gas.

 

(a)           Transfer and Release of Gas Assets and Electricity Assets.  SET
and the MX Companies will work together with CECG and all applicable ISOs, EDCs,
LDCs, Transporters, Transmission Providers and regulatory bodies in a timely,
cooperative and efficient manner, and will each execute all necessary documents
required to: (i) effect the transfer to CECG of all of the Electricity Assets;
(ii) effect the transfer, release to CECG of all of the Gas Assets (or the
termination of control over such Gas Assets by SET, in form and substance
acceptable to MX); and (iii) transfer the load associated with MX Electric’s
retail customers from SET’s account(s) to the account(s) of CECG, in each case
effective as soon as reasonably practicable after the Closing Date (but, in any
event, no later than October 31, 2011).  SET shall cease to be the financially
responsible party or Qualified Scheduling Entity with respect to MX Electric’s
customer load in an ISO upon the release of the Electricity Assets with respect
to such ISO.  Promptly after all of the Gas Assets have been transferred or
released by SET, SET and MX shall terminate the Asset Management Agreement and
SET hereby consents to such termination.

 

(b)           Purchase of Stored Gas.  Effective as of the transfer of any Gas
Asset to CECG (or the termination of control over such Gas Asset by SET, in form
and substance reasonably acceptable to MX), SET shall sell to MX, MX Holdings
and/or CECG and MX, MX Holdings and/or CECG, as applicable, shall purchase from
SET all of the Gas in inventory that is owned by SET for the purposes of
satisfying any outstanding MX Gas Transactions and held in storage in or on such
Gas Asset.  With respect to any Gas in inventory sold pursuant to this
Section 1.08(b), the MX Companies shall pay to SET an amount equal to the
purchase price for such Gas, as reflected in the applicable MX Gas Transaction
(less any component of such price associated with storage withdrawal or
transportation to the applicable city-gate), plus any accrued “Finance Fees”
owed pursuant to the A&R Gas ISDA.  Upon the purchase and sale of

 

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any Gas pursuant to this Section 1.08(b), SET shall novate the corresponding MX
Gas Transaction to CECG at no cost to CECG.

 

Section 1.09         Termination of Scheduling Obligations.  Following the
Closing Date and until such time as the applicable Electricity Assets or Gas
Assets are transferred to CECG, SET shall be responsible for the scheduling,
nominating and other operational obligations with respect to the delivery of Gas
and Products as set forth in the A&R ISDAs.  As the Electricity Assets and Gas
Assets are transferred to CECG, SET shall be relieved of such responsibility
with respect to the transferred Electricity Assets and/or Gas Assets.

 

Section 1.10         Mutual Release.  At the Closing, each of the MX Companies
and MX Holdings shall execute and deliver to SET, and SET shall execute and
deliver to each of the MX Companies and MX Holdings a written acknowledgement,
in form and substance reasonably acceptable to the recipient, irrevocably
releasing, acquitting and forever discharging the recipient party(ies), its or
their Affiliates and their respective officers, directors, stockholders,
trustees, employees, principals, agents, personal or legal representatives,
insurers and attorneys from any and all Claims past, present or future, whether
known or unknown, contingent or otherwise, sounding in tort that relate to or
arise out of the Original ISDAs or the business relationship between SET and the
MX Companies and MX Holdings with respect to such Original ISDAs; provided,
however, that such release shall not affect in any way any contract Claim that a
party to either of the A&R ISDAs may have pursuant to the terms of such
agreements, regardless of whether such Claim arose prior to the Closing Date.

 

ARTICLE II
REPLACEMENT CREDIT SUPPORT

 

Section 2.01         Replacement Credit Support.  On the Closing Date, CECG
shall provide to SET: (i) a Letter of Credit satisfying the conditions of
Section 2.02 that will be available to reimburse SET for any draws under any
Third Party Credit Support and as credit support for the payment obligations
specified in Section 3.02; and (ii) any additional credit support required
pursuant to the A&R ISDAs.

 

Section 2.02         Letter of Credit.

 

(a)           The Letter of Credit shall be: (i) substantially in the form of
Schedule 2.02 with such changes to the terms in that form as the Issuer of the
Letter of Credit may require and as may be acceptable to SET or such other form
as may be reasonably acceptable to SET; and (ii) in an amount equal to the sum
of (A) the aggregate amount of SET’s Third Party Credit Support obligations as
of the Closing Date, plus (B) $525,000 to secure the fees payable pursuant to
Section 3.02 (the total of such amounts described in clauses (A) and (B), the
“Letter of Credit Amount”).

 

(b)           The Letter of Credit shall be delivered by the Issuer to such
address as SET shall specify and shall be maintained for the benefit of SET. 
CECG shall: (i) cause the renewal of the Letter of Credit on a timely basis as
provided in the Letter of Credit; (ii) if the Issuer has indicated its intent
not to renew such Letter of Credit, provide a substitute Letter of Credit at
least twenty (20) Business Days prior to the expiration of the outstanding
Letter of Credit; (iii) if

 

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the Issuer fails to honor SET’s properly documented request to draw on the
Letter of Credit, provide for the benefit of SET a substitute Letter of Credit
that is issued by an Eligible Bank within one (1) Business Day after such
refusal; and (iv) within one (1) Business Day of any draw made by SET against
the Letter of Credit, amend, or cause the Issuer of the Letter of Credit to
amend, the Letter of Credit to increase the amount available to be drawn to an
amount equal to the Letter of Credit Amount.

 

(c)           Upon the occurrence of a Letter of Credit Default, CECG shall
cause another Issuer to deliver to SET a substitute Letter of Credit on or
before the second Business Day after the occurrence thereof (or on or before the
third Business Day after the occurrence thereof if only clause (i) under the
definition of Letter of Credit Default applies).

 

(d)           In the event that twenty (20) or fewer Business Days remain prior
to the expiration of the Letter of Credit and the Issuer has failed to either
extend such Letter of Credit or issue a replacement Letter of Credit, SET may
draw the entire undrawn portion of such outstanding Letter of Credit upon
presentation to the Issuer of one or more certificates in accordance with the
specific requirements of any such Letter of Credit.  In such event, SET shall
retain such proceeds as cash collateral securing the obligations of the MX
Companies pursuant to this Agreement and the MX Companies and CECG each hereby
grant to SET first priority continuing security interest in, lien on such cash
collateral.

 

(e)           Within two (2) Business Days of a written request from CECG, SET
shall calculate the Letter of Credit Amount as of the date of such calculation
(such date, the “Valuation Date”).  To the extent that the face amount of the
Letter of Credit exceeds the Letter of Credit Amount on the Valuation Date by
$5,000,000 or more, CECG shall have the right to provide a replacement Letter of
Credit in the amount of the Letter of Credit Amount rounded down to the nearest
integral multiple of $500,000.  CECG may make a written request pursuant to this
Section 2.02(e) no more frequently than twice every thirty (30) days.  SET shall
return the Letter of Credit (and any cash held by SET pursuant to
Section 2.02(d)) to CECG promptly after (i) the aggregate amount of SET’s Third
Party Credit Support obligations equals zero, and (ii) the MX Companies have
made all payments required by Section 3.02.

 

ARTICLE III
REGULATORY APPROVALS AND FEES

 

Section 3.01         Regulatory Approvals and Filings.  Each of the parties
shall use commercially reasonable efforts to: (i) make or cause to be made all
filings and to obtain all approvals or authorizations required by it or any of
its Affiliates with the FERC, any other governmental body having jurisdiction
with respect to the transactions contemplated herein and any other relevant
third parties; (ii) comply at the earliest practicable date with any request for
any additional information, documents or other materials received by it or any
of its Affiliates with respect to the transactions contemplated herein;
(iii) cooperate with the other parties in connection with any such filing as may
be required in order to consummate the transactions contemplated herein; and
(iv) comply with any applicable requirements or restrictions as may be imposed
on it from time to time by the FERC or any other governmental body having
jurisdiction with respect to the transactions contemplated therein. 
Notwithstanding anything herein to the contrary, no party shall have any
obligation to enter into any of the transactions

 

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described herein, to provide any of the services or to enter into any
Transactions described in the Original ISDAs, the A&R ISDAs or the CECG ISDA to
the extent that the consummation of such transactions or the provision of such
services would result in a violation of, or cause any party to be unable to
comply with, any applicable law or any rule or regulation issued by any ISO,
LDC, EDC, transmission provider, transporter or governmental authority, in each
case as determined by such party in its reasonable judgment.

 

Section 3.02         Monthly Transition Fee.  The MX Companies shall pay SET a
monthly fee equal to sixty-two thousand five hundred dollars ($62,500) per month
commencing as of the Closing Date (unless the Closing Date occurs on a date
other than the first day of a calendar month, in which case, such fee shall be
payable commencing on the first day of the month in which the Closing Date
occurs) and continuing through and including the earlier to occur of:  (i) the
date as of which all of the Outstanding Transactions have been novated,
terminated or have expired; or (ii) October 31, 2011; provided, however, that
(x) in the event the Closing Date occurs after September 1, 2011 the monthly fee
shall be two hundred thousand dollars ($200,000), and (y) to the extent SET
continues to perform any Outstanding Transactions and, if applicable, any
corresponding SET Counter-Hedge pursuant to Section 1.06(h)(ii), the MX
Companies shall, notwithstanding anything to the contrary in this Section 3.02,
continue to pay SET a monthly fee of two hundred thousand dollars ($200,000)
until such transaction(s) is ultimately novated to CECG, terminated, or
expires.  Such monthly fee shall be payable in arrears on or before the tenth
(10th) day of the month following the month to which the fee applies.

 

ARTICLE IV
EVENTS OF DEFAULT; REMEDIES

 

Section 4.01         Events of Default.  Notwithstanding any other provision of
this Agreement, an event of default (each, an “Event of Default”) shall be
deemed to occur with respect to a party if:

 

(a)           such party shall fail to make any payment when due of any amount
owed by it under this Agreement within three (3) Business Days following written
demand therefor;

 

(b)           such party fails to perform or observe any covenant or obligation
applicable to such party under this Agreement (excluding the covenants set forth
in Section 6.04, Section 7.05 and Section 7.07) and such failure is not cured
within ten (10) Business Days following written notice thereof;

 

(c)           such party breaches any representation or warranty made, repeated
or deemed to have been made or repeated by such party, or any representation or
warranty proves to have been incorrect in any material respect when made,
repeated or deemed to have been made or repeated under this Agreement;

 

(d)           such party: (i) is dissolved (other than pursuant to a
consolidation, amalgamation or merger); (ii) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability generally to pay its
debts as they become due; (iii) makes a general assignment, arrangement or
composition with or for the benefit of its creditors; (iv) institutes or has
instituted

 

10

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against it a proceeding seeking a judgment of insolvency or bankruptcy or any
other relief under any bankruptcy or insolvency law or other similar law
affecting creditors’ rights, or a petition is presented for its winding up or
liquidation, unless such proceeding or petition is withdrawn, dismissed,
discharged, stayed or restrained within (A) thirty (30) days, if as of and
during the pendency of such proceeding or petition, the party has a long term
unsecured debt Rating of at least BBB+ by S&P or Baa1 by Moody’s or (B) in all
cases other than as set forth in clause (A) of this Section 4.01(b)(i)(iv),
fifteen (15) days; (v) has a resolution passed for its winding up, official
management or liquidation (other than pursuant to a consolidation, amalgamation
or merger); (vi) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver, trustee, custodian
or other similar official for it or for all or substantially all its assets;
(vii) has a secured party take possession of all or substantially all its assets
or has a distress, execution, attachment, sequestration or other legal process
levied, enforced or sued on or against all or substantially all its assets;
(viii) causes or is subject to any event with respect to it which, under the
applicable laws of any jurisdiction, has an analogous effect to any of the
events specified in clauses (i) to (vii) inclusive; or (ix) takes any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the foregoing acts;

 

(e)           an “Event of Default” (as defined in the Original ISDAs, the A&R
ISDAs or the CECG ISDA Agreement, as applicable) occurs with respect to such
party (in which case such event shall constitute an Event of Default hereunder
only with respect to the party(ies) to such ISDA agreement(s) that has/have
committed such “Event of Default;”

 

(f)            a party fails to perform its covenants set forth in Section 6.04;

 

(g)           with respect to MX, MX Electric, MX Holdings or CECG, a Letter of
Credit Default shall have occurred and not been cured within the time frame
specified in Section 2.02; or

 

(h)           with respect to MX Holdings or CECG, such party fails to perform
its covenants set forth in Section 7.05 or Section 7.07.

 

Section 4.02         Remedies.  Notwithstanding any other provision of this
Agreement, upon the occurrence of an Event of Default with respect to a party,
in addition to any rights and remedies set forth in this Agreement, each other
party hereto shall be entitled to its rights and remedies at law or in equity. 
Upon the occurrence of an Event of Default pursuant to Section 4.01(h) and in
addition to and not in limitation of any rights or remedies that SET may have as
set forth in this Section 4.02, SET shall have the right to suspend performance
of its obligations under Parts 7 and 8 of the Original ISDAs or the A&R ISDAs,
as applicable, including any obligations to supply Gas or Products to the MX
Companies, to provide or maintain Third Party Credit Support or to provide
scheduling, nomination or other operational services to the MX Companies.  The
parties acknowledge and agree that the occurrence of an Event of Default with
respect to MX, MX Electric or MX Holdings hereunder will be deemed an Event of
Default with respect each of MX, MX Electric and MX Holdings.

 

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Section 4.03         Indemnity.

 

(a)           The MX Companies and MX Holdings shall indemnify, defend and hold
harmless SET and CECG, their Affiliates and their respective officers,
directors, employees and agents, from and against any and all third-party losses
resulting from Claims based on the breach by the MX Companies or MX Holdings of
their respective obligations under this Agreement.

 

(b)           SET shall indemnify, defend and hold harmless the MX Companies, MX
Holdings and CECG, their Affiliates and their respective officers, directors,
employees and agents, from and against any and all third-party losses resulting
from Claims based on the breach by SET of its obligations under this Agreement.

 

(c)           CECG shall indemnify, defend and hold harmless the MX Companies,
MX Holdings and SET, their Affiliates and their respective officers, directors,
employees and agents, from and against any and all third-party losses resulting
from Claims based on the breach by CECG of its obligations under this Agreement.

 

(d)           The indemnities provided in this Section 4.03 shall survive until
the date that is one year after the Closing Date; provided, however, that a
party’s indemnification obligation shall survive beyond such date with respect
to any Claims asserted against it for which it has sought indemnification
pursuant hereto.

 

ARTICLE V
DEFINITIONS

 

Section 5.01         Definitions.  The following terms have the meanings set
forth below:

 

(a)           “Affiliate” means, with respect to any Person, another Person that
directly or indirectly controls, is under common control with, or is controlled
by, such Person or any successor thereto; provided, however, that for purposes
of this definition: (i) control of a Person shall mean the power, direct or
indirect, to (A) vote fifty percent (50%) or more of the securities having
ordinary voting power for the election of the governing body of such Person, or
(B) direct or cause the direction of the management and policies of such Person,
whether by contract or otherwise; and (ii) neither SET nor any of direct or
indirect parent or subsidiaries shall be an Affiliate of any of the MX Companies
or any of their direct or indirect parents or subsidiaries; and provided
further, that for purposes of this Agreement, none of CECG nor any of the
entities that are its Affiliates prior to the Closing Date shall be deemed to be
an Affiliate of MX Holdings or any of the entities that are its Affiliates prior
to the Closing Date.

 

(b)           “A&R Electric ISDA” has the meaning set forth in Section 1.02.

 

(c)           “A&R Gas ISDA” has the meaning set forth in Section 1.02.

 

(d)           “A&R ISDAs” means the A&R Electric ISDA and the A&R Gas ISDA.

 

(e)           “Agreement” has the meaning set forth in the preamble to this
Agreement.

 

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(f)            “Asset Management Agreement” means the Asset Management Agreement
entered into as of October 13, 2009 between SET and MX.

 

(g)           “Business Day” means any day, other than a Saturday, Sunday or a
day on which commercial banks in New York are authorized or obligated by
applicable law or executive order to close.

 

(h)           “CECG” has the meaning set forth in the preamble to this
Agreement.

 

(i)            “CECG ISDA Agreement” means that certain ISDA Master Agreement,
dated as of June 26, 2001, by and between CECG and SET, including the schedules
and annexes thereto.

 

(j)            “Certificate of Incorporation” means the Second Amended and
Restated Certificate of Incorporation of MX Holdings.

 

(k)           “Claims” means, collectively, claims, controversies, actions,
causes of action, cross-claims, counter-claims, rights, demands, debts,
compensatory damages, liquidated damages, punitive or exemplary damages, other
damages, costs, expenses (including attorneys’ fees and disbursements) or
liabilities of any nature whatsoever.

 

(l)            “Class B Shares” means all of the Class B Common Stock of MX
Holdings owned by SET.

 

(m)          “Class C Shares” means all of the Class C Common Stock of MX
Holdings owned by SET.

 

(n)           “Closing” means the consummation of the transactions described in
Section 6.02.

 

(o)           “Closing Date” means the date on which the Closing occurs.

 

(p)           “Creditworthy Third Party” means any entity having, or an entity
with a guarantor having, a long term unsecured debt Rating equal to at least
BBB- by S&P or Baa3 by Moody’s.

 

(q)           “Drop-Dead Date” means September 15, 2011 or such later date as
may be agreed to in writing by SET in its sole discretion.

 

(r)            “EDC” means the local distribution company responsible for
delivering electric energy or Products to MX Electric’s customers in a
particular geographic area.

 

(s)           “Electricity Assets” means all transmission capacity, congestion
revenues rights, auction revenue rights, ISO load IDs and tags associated with
MX Electric’s customer load that are held in the name of SET on or prior to the
Closing Date.

 

(t)            “Eligible Bank” means a major U.S. commercial bank or a U.S.
branch of a foreign bank which:

 

 (i)

satisfies all regulatory capital requirements applicable to it (including any
individual regulatory capital requirements);

 

 

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 (ii)

is “well capitalized” within the meaning of Section 38 of the Federal Deposit
Insurance Act, as amended, or any successor statute, and any applicable
regulations thereunder;

 

 

 (iii)

is not an affiliate of MX or MX Electric;

 

 

 (iv)

is a Qualified Institution; and

 

 

 (v)

meets the applicable criteria of SET (as consistently applied) for letter of
credit issuers as in effect at such time, including credit, legal and risk
management criteria.

 

 

(u)           “Energy Adder” has the meaning specified in the Original Electric
ISDA or the Original Gas ISDA, as applicable.

 

(v)           “ERCOT” means the Electric Reliability Council of Texas.

 

(w)          “Event of Default” has the meaning set forth in Section 4.01.

 

(x)            “Exchange Traded Transactions” has the meaning set forth in
Section 1.06(a).

 

(y)           “FERC” means the United States Federal Energy Regulatory
Commission.

 

(z)            “First Month” means the first full calendar month immediately
following the Closing Date; provided, however, that if the Closing Date occurs
on the first day of a calendar month, the First Month shall be the calendar
month in which the Closing Date occurs.

 

(aa)         “Gas” means any mixture of hydrocarbons and noncombustible gases in
a gaseous state consisting primarily of methane.

 

(bb)         “Gas Adder” has the meaning specified in the Original Electric ISDA
or the Original Gas ISDA, as applicable.

 

(cc)         “Gas Assets” means, for any date of determination, all Gas
transportation and storage capacity held by SET as of such date that MX:
(i) directed or caused to be released to SET by any LDCs; or (ii) released or
re-released to SET.

 

(dd)         “Intercreditor Agreement”  means the Intercreditor and
Subordination Agreement, dated as of September 22, 2009, by and among MX
Holdings, the pledgors from time to time party thereto, SET, in its capacity as
facility agent, and Law Debenture Trust Company of New York, in its capacity as
indenture trustee, as it may be amended from time to time.

 

(ee)         “ISDA Cash Collateral” means any cash held by SET as collateral
pursuant to the terms of the Original ISDAs.

 

(ff)           “ISO” means any independent electric system operator, regional
transmission operator or similar entity including the NY-ISO, ERCOT, PJM and
ISO-New England.

 

(gg)         “ISO New England” means ISO New England Inc.

 

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(hh)         “Issuer” means any bank issuing a Letter of Credit.

 

(ii)           “LDC” means the local distribution company responsible for
delivering Gas to MX’s customers in a particular geographic area.

 

(jj)           “Letter of Credit” means an irrevocable, standby letter of
credit, issued by an Eligible Bank in accordance with Section 2.02.

 

(kk)         “Letter of Credit Amount” has the meaning set forth in
Section 2.02(a).

 

(ll)           “Letter of Credit Default” means, with respect to an outstanding
Letter of Credit, the occurrence of any of the following events: (i) the Issuer
shall cease to be an Eligible Bank; (ii) the Issuer shall fail to comply with or
perform its obligations under such Letter of Credit if such failure shall be
continuing after the lapse of any applicable grace period; (iii) the Issuer
shall disaffirm, disclaim, repudiate or reject, in whole or in part, or
challenge the validity of, such Letter of Credit; or (iv) such Letter of Credit
shall expire or terminate, or shall fail or cease to be in full force and
effect, at any time during the term of this Agreement; provided, however, that
no Letter of Credit Default shall be deemed to occur during any period after the
time such Letter of Credit is required to be canceled or returned in accordance
with the terms of this Agreement.

 

(mm)       “LIBOR Rate” means the rate of interest per annum (rounded upwards if
necessary to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page or
http://www.bba.org.uk/bba/ (or any successor page) as the British Bankers
Association London Interbank offered rate deposits in U.S. Dollars for the
relevant tenor at approximately 11 a.m. London time two Business Days prior to
the date of determination.

 

(nn)         “Lien” means any charge, claim, “adverse claim” (as defined in
Section 8-102(a)(1) of the New York Uniform Commercial Code), community property
interest, equitable interest, easement, encumbrance, option, lien, pledge,
hypothecation, assignment, deposit arrangement, security interest (including a
preference, priority or other security agreement or preferential arrangement of
any kind), mortgage, deed of trust, retention of title agreement, right of first
refusal, right of first offer, preemptive right or other restriction or granting
of any rights of any kind (including any restriction on, or right granted with
respect to, the use, voting, transfer, receipt of income or exercise of any
other attribute of ownership).

 

(oo)         “Merger” has the meaning set forth in the recitals to this
Agreement.

 

(pp)         “Merger Agreement” means the Agreement and Plan of Merger, dated
May 12, 2011, together with all exhibits, schedules and annexes thereto, among
Constellation Energy Resources, LLC, a Maryland limited liability company,
Nutmeg Merger Sub, Inc., a Delaware corporation, and MX Holdings Inc.

 

(qq)         “Moody’s” means Moody’s Investor Service, Inc. or its successor.

 

(rr)           “MX” has the meaning set forth in the preamble to this Agreement.

 

(ss)          “MX Companies” means MX and MX Electric.

 

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(tt)           “MX Electric” has the meaning set forth in the preamble to this
Agreement.

 

(uu)         “MX Electric Transactions” means all Transactions between MX
Electric and SET under (and as defined in) the Original Electric ISDA or the A&R
Electric ISDA, as applicable.

 

(vv)         “MX Gas Transactions” means all Transactions between MX and SET
under (and as defined in) the Original Gas ISDA or the A&R Gas ISDA, as
applicable.

 

(ww)       “MX Holdings” has the meaning set forth in the preamble to this
Agreement.

 

(xx)          “MX Transaction” means an MX Gas Transaction or an MX Electric
Transaction.

 

(yy)         “New Secured Party” has the meaning set forth in Section 6.04(b).

 

(zz)          “NY-ISO” means the New York independent system operator.

 

(aaa)       “Original Electric ISDA” has the meaning set forth in the recitals
to this Agreement.

 

(bbb)      “Original Gas ISDA” has the meaning set forth in the recitals to this
Agreement.

 

(ccc)       “Original ISDAs” has the meaning set forth in the recitals to this
Agreement.

 

(ddd)      “Outstanding Transactions” means all MX Gas Transactions, MX Electric
Transactions and SET Hedges that are outstanding as of a specified date.

 

(eee)       “Person” means an individual, partnership, corporation, association,
business, trust, limited liability company, government agency or authority or
other legal entity.

 

(fff)         “PJM” means PJM Interconnection, L.L.C.

 

(ggg)      “Product” has the meaning set forth in the Original ISDAs and the A&R
ISDAs.

 

(hhh)      “Qualified Institution” means a Bank (as defined in the Federal
Deposit Insurance Act) whose rating with respect to its long term unsecured,
unsubordinated indebtedness is at least A- by S&P and A3 by Moody’s.

 

(iii)          “Qualified Scheduling Entity” means an ERCOT market participant
that is qualified by ERCOT in accordance with Section 16 of the ERCOT Protocols
(Registration and Qualification of Market Participants).

 

(jjj)          “Rating” means, with respect to any entity, the ratings assigned
to such entity by each of the Rating Agencies.

 

(kkk)       “Rating Agencies” means Moody’s and/or S&P.

 

(lll)          “Replacement Credit Support” means a Letter of Credit in the
amount of the Letter of Credit Amount calculated as of the Closing Date.

 

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(mmm)    “RSUs” has the meaning set forth in the recitals to this Agreement.

 

(nnn)      “S&P” means Standard and Poor’s Ratings Group (a division of The
McGraw Hill Companies, Inc.) or its successor.

 

(ooo)      “Sempra Interests” means the Shares and the RSUs.

 

(ppp)      “SET” has the meaning set forth in the preamble to this Agreement.

 

(qqq)      “SET Counter-Hedge” has the meaning set forth in Section 1.06(g).

 

(rrr)         “SET Hedges” means and all transactions between SET and its
hedging counterparts that hedge the MX Gas Transactions or MX Electric
Transactions.

 

(sss)       “SET Liens” has the meaning set forth in Section 6.04(a).

 

(ttt)         “Shares” means the Class B Shares and the Class C Shares.

 

(uuu)      “Specified Entity” means each signatory to this Agreement other than
MX, MX Electric, MX Holdings, SET and CECG.

 

(vvv)      “Specified Transaction” means any transaction contemplating the
acquisition by a third party, whether by purchase, merger, consolidation,
reorganization or otherwise, of equity interests in, or all or a substantial
portion of the assets (not in the ordinary course of business) of, MX Holdings
or any Subsidiary of MX Holdings.

 

(www)    “Stockholders Agreement” means the Stockholders Agreement, dated
September 22, 2009, among MX Holdings and the stockholders party thereto, as
such agreement is in effect on the date hereof.

 

(xxx)        “Termination Acknowledgement” has the meaning set forth in
Section 1.05(b).

 

(yyy)      “Third Party Credit Support” means any letter of credit posted by or
on behalf of SET to a third party in support of obligations (other than any SET
Hedge) incurred by MX or MX Electric to such third parties.

 

(zzz)        “Transaction” means, as the context requires, a transaction entered
into under the Original ISDAs or the A&R ISDAs.

 

(aaaa)     “Trigger Date” has the meaning specified in Section 1.06(h).

 

(bbbb)    “Unmatched SET Hedge” means any SET Hedge held by SET after SET
novates the MX Gas Transaction or MX Electric Transaction that corresponds to
such SET Hedge.

 

(cccc)     “Valuation Date” has the meaning set forth in Section 2.02(e).

 

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ARTICLE VI
CLOSING; CONDITIONS PRECEDENT

 

Section 6.01         Conditions Precedent to Obligations of SET.  The obligation
of SET to consummate the Closing is subject to satisfaction (or waiver by SET in
writing in its sole discretion) of the following condition:

 

(a)           SET shall have received confirmation from each of CECG and MX
Holdings that all conditions precedent to the Merger (other than the
satisfaction of the conditions precedent to this Agreement and any other
conditions dependent upon the execution and delivery of this Agreement) have
been satisfied and that the Merger shall occur immediately following the
Closing.  SET shall not be obligated to consummate the Closing on any Closing
Date after the Drop-Dead Date.

 

Section 6.02         Closing.

 

(a)           The MX Companies shall:

 

(i)            notify SET and CECG when and where the Closing will take place at
least three (3) days prior to the Closing Date;

 

(ii)           at Closing, authorize SET to apply any ISDA Cash Collateral
against the payment obligations set forth in Section 1.04 and, to the extent
such ISDA Cash Collateral is insufficient to satisfy such payment obligations,
pay to SET the remaining balance of such obligations; and

 

(iii)          at least five Business Days prior to the Closing Date, provide
SET with the identities of up to three payees (including their respective wire
instructions) to which SET shall distribute the remaining balance of the ISDA
Cash Collateral as set forth in 6.02(e)(iv).

 

(b)           At the Closing, MX Electric shall:

 

(i)            deliver to SET duly executed counterparts of the A&R Electric
ISDA; and

 

(ii)           deliver to SET the release in accordance with Section 1.10.

 

(c)           At the Closing, MX shall:

 

(i)            deliver to SET duly executed counterparts of the A&R Gas ISDA;
and

 

(ii)           deliver to SET the release in accordance with Section 1.10.

 

(d)           At the Closing, CECG shall:

 

(i)            deliver to SET the Replacement Credit Support.

 

(e)           At the Closing, SET shall:

 

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(i)            deliver to MX Holdings all of the certificates representing the
Shares, duly endorsed in blank or accompanied by a stock proxy or other
instrument of transfer reasonably acceptable to MX Holdings;

 

(ii)           deliver to MX duly executed counterparts of the A&R Gas ISDA;

 

(iii)          deliver to MX Electric duly executed counterparts of the A&R
Electric ISDA.

 

(iv)          apply any ISDA Cash Collateral against the payment obligations set
forth in Section 1.04 and distribute the remaining balance of such ISDA Cash
Collateral, by wire transfer, to one or more payees specified by the MX
Companies pursuant to Section 6.02(a)(iii) pursuant to, and in the amounts
specified in, a written notice jointly delivered by the MX Companies to SET no
later than three (3) Business Days prior to the Closing Date;

 

(v)           immediately following the disbursement of funds pursuant to
Section 6.02(e)(iv), execute a written termination of the Account Control
Agreements (as defined in the Original ISDAs) in form and substance reasonably
acceptable to the MX Companies and CECG;

 

(vi)          deliver to the MX Companies the termination letter in accordance
with Section 1.03(c);

 

(vii)         deliver to the MX Companies a written termination of payment
instructions in accordance with Section 1.03(d);

 

(viii)        deliver to MX Holdings written resignations of any individual (in
form and substance reasonably acceptable to MX Holdings and CECG) appointed to
the MX Holdings board of directors by SET;

 

(ix)           deliver to MX Holdings and CECG the release in accordance with
Section 1.01(c);

 

(x)            deliver to the MX Companies and MX Holdings the release in
accordance with Section 1.10.

 

Section 6.03         Consent to Merger.  No later than three (3) Business Days
after the date of the execution of this Agreement and the Merger Agreement, SET
shall deliver to MX Holdings a written consent to the Merger in accordance with
the procedures set forth in the Merger Agreement.

 

Section 6.04         Release or Assignment of Liens.

 

(a)           Unless the MX Companies deliver a notice pursuant to
Section 6.04(b), effective as of the Closing, all the security interests, Liens
and pledges in favor of SET securing any of the debts, liabilities or other
obligations owed by the MX Companies, the Specified Entities or any

 

19

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of their Affiliates under the Original ISDAs (collectively, the “SET Liens”)
shall be automatically released with no further action on SET’s part.

 

(b)           No later than three (3) Business Days prior to the Closing Date,
the MX Companies may deliver written notice to SET, requesting SET to authorize
the filing by MX, MX Electric or their designee of: (i) UCC-3 financing
statement amendments with respect to the UCC-1 financing statements or other
financing statements evidencing the SET Liens; or (ii) amendments with respect
to any other collateral filings evidencing the SET Liens, which amendments shall
change the “Secured Party” designated therein from SET to a Person or Persons
designated by CECG (the “New Secured Party”).  SET hereby agrees to take such
action as may be reasonably requested by CECG to facilitate and evidence such
amendment and the assignment of the SET Liens contemplated thereby.  The MX
Companies shall be responsible for any out-of-pocket costs and expenses
reasonably incurred by SET pursuant to this Section 6.04(b) to amend the
financing statements and effect the assignment of the SET Liens contemplated
thereby, and SET shall not be obligated to make any representations or
warranties, or incur any liability to the MX Companies or CECG, in connection
with such amendment(s).

 

(c)           Subject to SET’s receipt of payment in accordance with
Section 1.04, SET shall deliver to CECG or the MX Companies, on or prior to the
Closing Date, all possessory collateral of the MX Companies or any of the
Specified Entities held by SET that is the subject of the SET Liens.

 

(d)           SET hereby authorizes and consents to: (i) the filing of UCC-3
termination statements (or UCC-3 amendments, if applicable) immediately
following the Closing Date; and (ii) the execution, delivery, and/or filing of
any other statement, filing, notice, or agreement necessary or desirable to
effect the release of Liens (or assignment of Liens to the New Secured Party)
contemplated hereby immediately following the Closing Date.  SET agrees that it
shall take any and all actions reasonably necessary to evidence the consummation
of the Lien release (or assignment of Liens to the New Secured Party)
contemplated hereby, including terminating any other agreements creating or
perfecting a security interest in any collateral, including any intellectual
property filings and control agreements over deposit accounts.  SET hereby
authorizes either or both of the MX Companies to file the above-referenced
termination statements (or amendments, if applicable) on or after the Closing
Date.

 

(e)           The parties acknowledge and agree that (i) if CECG and MX Holdings
have not delivered the confirmation required by Section 6.01(a), and (ii) the
Merger does not occur on or before the Drop-Dead Date, then no party hereto
shall have any liability under this Agreement for the failure of the Merger to
so occur on or before the Drop-Dead Date.

 

ARTICLE VII
CONSENTS, COOPERATION AND REPORTING; FURTHER ASSURANCES; ETC.

 

Section 7.01         Consent.  In the event the Closing Date shall not have
occurred on or before the Drop-Dead Date, MX, MX Electric, MX Holdings and the
Specified Entities hereby consent to the assignment, novation and transfer by
SET at any time following the Drop-Dead Date to a Creditworthy Third Party of:
(i) all (but not less than all) of the Sempra Interests, including all of the
rights of SET under all shareholder related agreements, including the

 

20

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Certificate of Incorporation, the bylaws of MX Holdings and the Stockholders
Agreement (so long as such transfer constitutes a “Wholesale Transfer” pursuant
to such Stockholders Agreement); (ii) SET’s rights and obligations under the
Original ISDAs; and (iii) SET’s rights and obligations under the Intercreditor
Agreement.  MX Holdings hereby agrees that a transferee of SET shall satisfy the
requirements of Section 2.1(d) of the Stockholder Agreement by the delivery to
MX Holdings of a certificate substantially in the form of Exhibit B.

 

Section 7.02         No Third Party Consents.  Each of the MX Companies and MX
Holdings represents and warrants that in the event SET undertakes the
transactions contemplated by Section 7.01, no additional corporate action,
governmental or regulatory consents required to be obtained by MX Holdings or
the MX Companies, or consents of the shareholders, bondholders or other
creditors of MX Holdings or the MX Companies will be required to consummate such
transactions.

 

Section 7.03         Cooperation; Transaction Progress Reporting.  Promptly
following a request from SET, MX Holdings shall provide SET with the status of,
and MX Holdings’ progress with respect to, its negotiations of the Merger
Agreement and shall supply SET such documents and information with respect to
the Merger as SET may reasonably request.

 

Section 7.04         Further Assurances.  Subject to the terms and conditions of
this Agreement, each of MX, MX Energy, CECG and SET agrees to use all
commercially reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws or otherwise to consummate and make effective the transactions
contemplated by this Agreement.

 

Section 7.05         No Merger Before Closing Date.  CECG agrees that it shall
not, and it shall cause its Affiliates to not, consummate the Merger prior to
the Closing.  MX Holdings agrees that it shall not consummate the Merger prior
to the Closing.

 

Section 7.06         Amendment to Original ISDAs.  Part 1 (i)(vii)(I) of the
Schedule of each of the Original ISDAs is amended by deleting the text
“[Intentionally Omitted]” and inserting in lieu thereof the following:

 

“The occurrence of any Event of Default under the Termination and Transfer
Agreement, dated as of May 12, 2011 among Party A, MXenergy Inc., MXenergy
Electric Inc., MXenergy Holdings Inc. and Constellation Energy Commodities
Group, Inc.”

 

Section 7.07         No Amendment.  Each of CECG and MX Holdings agrees that,
prior to the Closing, it shall not amend any terms of the Merger Agreement that
materially affect the Sempra Interests or the economic terms of the Merger
without the consent of the holders of the Shares.

 

ARTICLE VIII
MISCELLANEOUS

 

Section 8.01         Interpretation.  The following rules of construction shall
apply when interpreting this Agreement.

 

21

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(a)           all references in this Agreement to Articles, Sections and
Schedules refer to Articles, Sections and Schedules of this Agreement unless
expressly provided otherwise;

 

(b)           the headings appearing in this Agreement are for convenience only,
do not constitute any part of this Agreement and shall be disregarded in
construing the language contained herein;

 

(c)           the terms “herein,” “hereby,” “hereto,” “hereunder,” “hereof” and
terms of similar import in this Agreement refer to the Agreement as a whole and
not to any particular subdivision unless expressly so limited and the term “this
Section” refers only to the Section hereof in which such words occur;

 

(d)           the word “including” (in its various forms) means “including
without limitations”;

 

(e)           each Schedule to this Agreement shall be deemed to be incorporated
herein by reference as if such Schedule were set forth in its entirety herein;
and

 

(f)            no term of this Agreement shall be construed in favor of, or
against, a party as a consequence of one party having had a greater role in the
preparation or drafting of this Agreement, but shall be construed as if the
language were mutually drafted by both parties with full assistance of counsel.

 

Section 8.02         Representations and Warranties of the Parties.  Each of
SET, CECG, MX, MX Electric, MX Holdings and the Specified Entities represents
and warrants as of the date hereof and as of the Closing Date, except to the
extent that a representation and warranty expressly relates to a specified date
in which case such representation and warranty shall be true and correct as of
such date, as follows:

 

(a)           it is duly organized, validly existing and in good standing under
the laws of its respective jurisdiction and it has the full power and legal
authority to execute and deliver this Agreement and to perform its obligations
(if any) hereunder;

 

(b)           the execution, delivery and performance of this Agreement by it
have been and remain duly authorized by all necessary corporate action and do
not contravene: (i) any provision of its organizational documents; or (ii) any
law or regulation;

 

(c)           all governmental or regulatory consents, authorizations,
approvals, registrations and declarations required for the due execution,
delivery and performance of this Agreement by it has been obtained from or, as
they case may be, filed with the relevant governmental authorities having
jurisdiction over it and remains in full force and effect, and all conditions
thereof have been duly complied with and no other action by, and no notice to or
filing with, any governmental authority having jurisdiction is required for such
execution, delivery or performance of this Agreement by it;

 

(d)           this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with the terms hereof, except
as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors’
rights generally or by general equity principles;

 

22

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(e)           there are no proceedings at law or in equity, or before or by any
court or other government authority that are pending or, to its knowledge
threatened against or affecting its or any of its property and that,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on it; and

 

(f)            it is not: (i) in violation of any applicable laws that,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on its ability to perform hereunder; or (ii) subject to
or in default with respect to any final judgments, writs, injunctions, decrees,
rules or regulations of any court or other government authority that,
individually or in the aggregate, could reasonably be expected to result in a
material adverse effect on its ability to perform hereunder.

 

Section 8.03         Representations and Warranties of MX Holdings and the MX
Companies.  Each of MX Holdings, the MX Companies represents and warrants to SET
as of the date hereof and of the Closing Date as follows:

 

(a)           except for the Merger Agreement, neither MX Holdings nor any
Affiliate of MX Holdings has entered into a letter of intent, memorandum of
understanding, agreement or other document regarding a Specified Transaction;

 

(b)           the document attached hereto as Exhibit A is a true, complete and
correct copy of the Merger Agreement.

 

Section 8.04         Representation and Warranty of CECG.  CECG represents and
warrants to SET as of the date hereof and of the Closing Date as follows:

 

(a)           the document attached hereto as Exhibit A is a true, complete and
correct copy of the Merger Agreement.

 

Section 8.05         Representations and Warranties of SET.  SET represents and
warrants to the MX Companies, MX Holdings and CECG as of the date hereof and as
of the Closing Date as follows:

 

(a)           it is the owner of the Sempra Interests, free and clear of any and
all Liens;

 

(b)           the Sempra Interests represent all of SET’s equity interests in MX
Holdings or any of its Affiliates.

 

Section 8.06         Notices.  Except as otherwise specified in this Agreement,
any notice required or authorized by this Agreement to be given to a party shall
be given in writing and shall be sufficiently given if delivered by overnight
mail, overnight courier or hand delivery against written receipt, in each case
to the address set forth below or to such other address as such party may
designate for itself by prior notice given in accordance with this
Section 8.06.  Any such notice shall be effective only upon receipt thereof (or
upon refusal to accept delivery), provided that such notice is received during
the normal business hours of the addressee, and if not received during such
normal business hours, then on the first Business Day following such receipt. 
The address for the delivery of notices and bills to each party and the
respective telephone numbers are as follows:

 

23

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Notices to SET:

Sempra Energy Trading LLC

58 Commerce Road

Stamford, Connecticut 06902

Attn:

Legal Dept.

Facsimile No.: 203-355-5410

Telephone No.: 203-355-5403

 

Notices to MX Holdings, MX or MX Electric:

c/o MXenergy Holdings Inc.

595 Summer Street, Suite 300

Stamford, CT 06901-1407

Attn:

Chief Financial Officer

 

Chief Legal Officer

Facsimile No.: 203-425-9562

Telephone No.: 203-356-1318

 

Notices to CECG:

Constellation Energy Commodities Group, Inc.

100 Constellation Way, Suite 500C

Baltimore, MD 21202

Attn:

General Counsel

Facsimile No.: 410-470-2600

Telephone No.: 410-470-3121

 

Section 8.07         No Joint Venture or Joint Liability.  Neither this
Agreement, nor the Merger, shall create or be construed to create any
partnership or joint venture or operation among any of the parties hereto and
each party hereto acknowledges and agrees that each other party shall be solely
responsible for the performance of any obligations of such other party.

 

Section 8.08         Headings.  The headings in this Agreement are for reference
only and shall not affect the interpretation of this Agreement.

 

Section 8.09         Severability.  If any term or provision of this Agreement
is invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or provision in
any other jurisdiction.  Upon such determination that any term or other
provision is invalid, illegal or unenforceable, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.

 

Section 8.10         Entire Agreement.  This Agreement constitutes the sole and
entire agreement of the parties to this Agreement with respect to the subject
matter contained herein

 

24

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and supersedes all prior and contemporaneous understandings and agreements, both
written and oral, with respect to such subject matter.

 

Section 8.11         Successors and Assigns.  This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.  No party to this Agreement may assign its
rights or obligations hereunder without the prior written consent of each other
party, which consent shall not be unreasonably withheld or delayed.

 

Section 8.12         No Third-Party Beneficiaries.  This Agreement is for the
sole benefit of the parties hereto and their respective successors and permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other person any legal or equitable right, benefit or remedy of any
nature whatsoever, under or by reason of this Agreement.

 

Section 8.13         Amendment and Modification; Waiver.  This Agreement may
only be amended, modified or supplemented by an agreement in writing signed by
each of parties hereto.  No waiver by any party of any of the provisions hereof
shall be effective unless explicitly set forth in writing and signed by the
party so waiving.  No failure to exercise, or delay in exercising, any right,
remedy, power or privilege arising from this Agreement shall operate or be
construed as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.

 

Section 8.14         Governing Law; Submission to Jurisdiction.  All questions
concerning the construction, validity and interpretation of this Agreement and
any and all disputes or controversies arising out of the subject matter hereof
(whether by contract, tort or otherwise) shall be governed by and construed in
accordance with the domestic laws of the State of New York, without giving
effect to any choice of law or conflict of law provision (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York.  THE PARTIES AGREE
THAT JURISDICTION AND VENUE IN ANY ACTION BROUGHT BY ANY PARTY PURSUANT TO THIS
AGREEMENT SHALL PROPERLY (AND EXCLUSIVELY) LIE IN ANY FEDERAL OR STATE COURT
LOCATED IN NEW YORK COUNTY, NEW YORK.  BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY WITH RESPECT TO SUCH ACTION.  THE PARTIES
IRREVOCABLY AGREE THAT VENUE WOULD BE PROPER IN SUCH COURT, AND HEREBY WAIVE ANY
OBJECTION THAT SUCH COURT IS AN IMPROPER OR INCONVENIENT FORUM FOR THE
RESOLUTION OF SUCH ACTION.  THE PARTIES FURTHER AGREE THAT THE MAILING BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, OF ANY PROCESS REQUIRED
BY ANY SUCH COURT SHALL CONSTITUTE VALID AND LAWFUL SERVICE OF PROCESS AGAINST
THEM, WITHOUT NECESSITY FOR SERVICE BY ANY OTHER MEANS PROVIDED BY STATUTE OR
RULE OF COURT.

 

Section 8.15         Waiver of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE

 

25

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TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS
IN THIS SECTION 8.15.

 

Section 8.16         Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed to be one and the same agreement.  A signed copy of
this Agreement delivered by facsimile, e-mail or other means of electronic
transmission shall be deemed to have the same legal effect as delivery of an
original signed copy of this Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

26

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IN WITNESS WHEREOF, the parties hereto have caused this Termination and Transfer
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.

 

 

 

SEMPRA ENERGY TRADING LLC

 

 

 

 

By:

/s/ Wendy Lewis

 

 

Name: Wendy Lewis

 

 

Title: Vice President

 

 

 

 

 

 

 

MXENERGY INC.

 

 

 

By:

/s/ Chaitu Parikh

 

 

Name: Chaitu Parikh

 

 

Title: Executive V.P and Chief Financial Officer

 

 

 

 

MXENERGY ELECTRIC INC.

 

 

 

 

 

 

 

By:

/s/ Chaitu Parikh

 

 

Name: Chaitu Parikh

 

 

Title: Executive V.P. and Chief Financial Officer

 

 

 

 

 

 

 

MXENERGY HOLDINGS INC.

 

 

 

 

By:

/s/ Chaitu Parikh

 

 

Name: Chaitu Parikh

 

 

Title: Executive V.P. and Chief Financial Officer

 

 

 

 

 

 

 

CONSTELLATION ENERGY COMMODITIES GROUP, INC.

 

 

 

 

By:

/s/ Bryan P. Wright

 

 

Name: Bryan P. Wright

 

 

Title: Controller

 

[Signature Page to the Termination and Transfer Agreement]

 

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

 

Acknowledged and Agreed:

 

 

 

 

MXENERGY (CANADA) LTD.

 

 

 

 

 

 

 

By:

/s/ Chaitu Parikh

 

 

Name: Chaitu Parikh

 

 

Title: Executive V.P and Chief Financial Officer

 

 

 

 

ONLINECHOICE, INC.

 

 

 

 

 

 

 

By:

/s/ Chaitu Parikh

 

 

Name: Chaitu Parikh

 

 

Title: Executive V.P and Chief Financial Officer

 

 

 

 

MXENERGY GAS CAPITAL HOLDINGS CORP.

 

 

 

 

 

 

 

By:

/s/ Chaitu Parikh

 

 

Name: Chaitu Parikh

 

 

Title: Executive V.P and Chief Financial Officer

 

 

 

 

 

 

 

MXENERGY ELECTRIC CAPITAL HOLDINGS CORP.

 

 

 

 

 

 

 

By:

/s/ Chaitu Parikh

 

 

Name: Chaitu Parikh

 

 

Title: Executive V.P and Chief Financial Officer

 

 

 

 

 

 

 

MXENERGY GAS CAPITAL CORP.

 

 

 

 

 

 

 

By:

/s/ Chaitu Parikh

 

 

Name: Chaitu Parikh

 

 

Title: Executive V.P and Chief Financial Officer

 

 

[Signature Page to the Termination and Transfer Agreement]

 

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MXENERGY ELECTRIC CAPITAL CORP.

 

 

 

 

 

 

 

By:

/s/ Chaitu Parikh

 

 

Name: Chaitu Parikh

 

 

Title: Executive V.P. and Chief Financial Officer

 

 

 

 

 

 

 

MXENERGY CAPITAL HOLDINGS CORP.

 

 

 

 

 

 

 

By:

/s/ Chaitu Parikh

 

 

Name: Chaitu Parikh

 

 

Title: Executive V.P. and Chief Financial Officer

 

 

 

 

 

 

 

INFOMETER.COM INC.

 

 

 

 

 

 

 

By:

/s/ Chaitu Parikh

 

 

Name: Chaitu Parikh

 

 

Title: Executive V.P. and Chief Financial Officer

 

 

[Signature Page to the Termination and Transfer Agreement]

 

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Exhibit A

 

Form of Merger Agreement

 

[Filed with the SEC as Exhibit 2.1 to Holdings’ Current Report on Form 8-K,
filed on May 18, 2011 and incorporated by reference herein]

 

E-1

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Exhibit B

 

Form of Transferee Certificate

 

Transferee’s Representations and Warranties Certificate
Pursuant to Section 2.1(d) of the Stockholders Agreement

 

[Date]

 

1              Definitions.

 

(a)           The following terms have the indicated meanings when used herein.

 

(i)            “Act” shall have the meaning set forth in Section 2(f).

 

(ii)           “Company” means MX Holdings Inc., a Delaware corporation.

 

(iii)          “Joinder Agreement” means the joinder agreement, in the form
attached as Annex A to the Stockholders Agreement, executed by the Transferee.

 

(iv)          “Regulation S” shall have the meaning set forth in Section 2(f).

 

(v)           “SET” means Sempra Energy Trading LLC, a Delaware limited
liability company.

 

(vi)          “Share Acquisition” means the acquisition by the Transferee of
shares of Class B Common Stock and Class C Common Stock, in each case, held by
SET in a transaction to which the provisions of Article II of the Stockholders
Agreement apply.

 

(vii)         “Shares” means the shares of Class B Common Stock and Class C
Common Stock to be acquired by the Transferee in the Share Acquisition.

 

(viii)        “Stockholders Agreement” means that certain stockholders
agreement, dated as of September 22, 2009, among the Company, the Stockholders
listed on Schedules I, II, III and IV thereto and any other Stockholder that
becomes a party thereto after the date thereof pursuant to the terms thereof.

 

(ix)           “Transferee” means the undersigned Transferee.

 

(b)           Capitalized terms defined in the Stockholders Agreement and used
herein but not defined herein shall have the meanings assigned to such terms in
the Stockholders Agreement.

 

2              Transferee’s Representations and Warranties.  The Transferee
hereby certifies that the following representations and warranties are true and
correct as of the date first set forth above.

 

E-2

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(a)           The Transferee is duly organized and validly existing under the
laws of the State of                      and is in good standing under such
laws.

 

(b)           The Transferee has the requisite limited liability company power
and authority to enter into the Joinder Agreement and to carry out the
transactions contemplated hereby; and the Joinder Agreement has been duly
executed and delivered by the Transferee and constitutes the Transferee’s valid
and binding obligation enforceable against the Transferee in accordance with its
terms, except as the enforceability thereof may be subject to or limited by
(A) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting rights of creditors and (B) general equitable principles,
regardless of whether enforcement is sought in a proceeding at law or in equity.

 

(c)           The execution, delivery and performance of the Joinder Agreement
by the Transferee and the consummation of the transactions contemplated thereby
will not (i) violate any provision of applicable law, (ii) violate any provision
of the Transferee’s governing documents, effective as of the date hereof, or
(iii) violate any order, judgment, injunction, determination, award or decree of
any court or other governmental agency.

 

(d)           The purchase of the Shares by the Transferee will not require any
consent, approval or authorization of, any notice to, or filing, registration or
qualification with any court or administrative or governmental body other than
with respect to applicable state securities or blue sky laws and the filing of a
Form D with the Securities and Exchange Commission.

 

(e)           The Transferee has all necessary power and authority to execute,
deliver and perform the Joinder Agreement.  All action on the Transferee’s part
required for the lawful execution and delivery of the Joinder Agreement has been
taken.  Upon execution and delivery by the Transferee, the Joinder Agreement
will be a valid and binding obligation of the Transferee, enforceable in
accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors’ rights and (b) as limited by general
principles of equity that restrict the availability of equitable remedies.

 

(f)            The Transferee understands that the Shares have not been and will
not be registered under the Securities Act of 1933, as amended (the “Act”).  The
Transferee also understands that the Shares are being offered and sold pursuant
to an exemption from registration contained in the Act based in part upon the
Transferee’s representations contained in this Agreement.  The Transferee
further acknowledges and understands that the Shares may not be offered or sold
within the United States or to, or for the account or benefit of a U.S.  Person
(as defined in Regulation S promulgated under the Act (the “Regulation S”))
within the meaning of Regulation S, except in accordance with Regulation S or
pursuant to a duly available exemption from the registration requirements of the
Act, unless the Shares are subsequently registered under the Act.  The
Transferee acknowledges

 

E-3

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and agrees that the Company has no obligation or intention to register the
Shares under the Act.  The Transferee acknowledges and agrees that it is solely
responsible for obtaining such legal, including tax, advice as it considers
necessary and appropriate in connection with the execution, delivery and
performance of the Joinder Agreement and the purchase by it of the Shares.

 

(g)           The Transferee hereby represents, warrants and undertakes as
follows:

 

(i)            The Transferee is a highly sophisticated investor and has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company so that it is
capable of evaluating, and has independently evaluated, the merits and risks of
its investment in the Company and has the capacity to protect its own
interests.  The Transferee may be required to bear the economic risk of this
investment indefinitely and has independently concluded that it is financially
able to bear those risks indefinitely.  The Transferee understands that the
Company has no obligation or present intention of registering the Shares in the
United States pursuant to the Act.

 

(ii)           The Transferee is purchasing the Shares for the Transferee’s own
account for investment only, and not with a view towards their distribution or
resale.  The Transferee has not purchased the Shares for the purpose of selling
or transferring them, or granting, issuing or transferring interests in, or
options over, them.

 

(iii)          The Transferee represents that by reason of its, or of its
management’s, business or financial experience, the Transferee has the capacity
to protect its own interests in connection with the transactions contemplated in
this Agreement.  Further, the Transferee is not aware of any general
solicitation or publication of any advertisement, as such teens are defined in
Regulation D under the Act, in connection with the transactions contemplated in
the Joinder Agreement.

 

(iv)          The Transferee is an accredited investor, within the meaning of
Regulation D under the Act.

 

(v)           The Transferee is aware of the Company’s business affairs and
financial condition and has acquired sufficient information about the Company,
including publicly available information concerning the Company, to reach an
informed and knowledgeable decision to purchase the Shares.  The Transferee has
had an opportunity to discuss the Company’s business, management and financial
affairs with directors, officers and management of the Company.  The Transferee
has also had the opportunity to ask questions of and receive answers from, the
Company and its management regarding the terms and conditions of the purchase. 
The Transferee has not been provided with, nor has it requested, an offering
memorandum or

 

E-4

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similar document in connection with its decision to enter into this Agreement
and purchase the Shares.

 

(vi)                              The Transferee acknowledges and agrees that
the Shares are “restricted securities” as defined in Rule 144 promulgated under
the Act as in effect from time to time and understands that neither the Company,
nor any of its affiliates, or any person acting on its behalf makes any
representation as to the availability of Rule 144 or any other exemption under
the Act for the reoffer, resale, pledge or transfer of the Shares.

 

(vii)                           The Transferee acknowledges and agrees that the
Shares are subject to restrictions on transfer contained in the Stockholders
Agreement, dated as of the date hereof, among the Company and the stockholders
of the Company party thereto, including the Transferee, and the Transferee
agrees to comply with such restrictions and not transfer any of the Shares in
violation thereof.

 

[Remainder of Page Intentionally Left Blank]

 

E-5

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IN WITNESS WHEREOF, the undersigned Transferee has executed this certificate or
caused this certificate to be executed on its behalf as of the date first set
forth above.

 

TRANSFEREE

 

[Name of Transferee]
[Entity signature block]

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

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