Exhibit 10(ww)

EXECUTION COPY

 

 

 

COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT

Dated as of October 10, 2007

Among

ENERGY FUTURE COMPETITIVE HOLDING COMPANY,

TEXAS COMPETITIVE ELECTRIC HOLDINGS COMPANY LLC,

THE SUBSIDIARY GUARANTORS

CITIBANK, N.A.,

as Administrative Agent

and Collateral Agent,

LEHMAN BROTHERS COMMODITY SERVICES INC.,

J. ARON & COMPANY,

MORGAN STANLEY CAPITAL GROUP INC.,

CITIGROUP ENERGY INC., and

each other Secured Commodity Hedge Counterparty

from time to time party hereto

and

any other Person that becomes a Secured Party pursuant hereto

 

 

 

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

TABLE OF CONTENTS

 

          Page

SECTION 1.

   Definitions    6

1.1

   Defined Terms    6

1.2

   Credit Agreement Definitions    16

1.3

   Other Definitional Provisions    17

1.4

   Certifications, Etc.    17 SECTION 2.    Lien Priorities    17

2.1

   Pari Passu    17

2.2

   Prohibition on Contesting Liens    17

2.3

   No New Liens    17

2.4

   Acknowledgement of Releases    18

SECTION 3.

   Enforcement    18

3.1

   Enforcement of Liens    18 SECTION 4.    Payments    21

4.1

   Application of Proceeds    21

4.2

   Limitations on Payment Post Default    22

4.3

   Secured Obligation Balances    22

4.4

   Application of Other Credit Support    23

4.5

   Limitations on Obligations under Secured Commodity Hedge and Power Sales
Agreements With Respect to Specified Hedge Collateral    23 SECTION 5.    Other
Agreements    23

5.1

   Releases    23

5.2

   Amendments to Financing Documents    24

5.3

   Refinancings of Credit Agreement    26

5.4

   Notices; Certain Actions    26

5.5

   Letters of Credit; Cash Collateral Accounts; Acknowledgment of Security
Interest    27

5.6

   Additional Obligations    28 SECTION 6.    Insolvency or Liquidation
Proceedings    29

6.1

   Finance and Sale Issues    29

6.2

   Avoidance Issues    29

6.3

   Certain Bankruptcy Rights of Secured Commodity Hedge Counterparties    30
SECTION 7.    Collateral Agent    30

7.1

   Appointment    30

7.2

   Delegation of Duties    30

7.3

   Exculpatory Provisions    31

 

2

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

7.4

   Notice of Event of Default    32

7.5

   Non-Reliance on Collateral Agent and Other Secured Parties    32

7.6

   Collateral Agent in Individual Capacity    33

7.7

   Successor Collateral Agents    33

7.8

   Security Documents    34

7.9

   Indemnification    34 SECTION 8.    Reliance; Waivers; Etc.    35

8.1

   Reliance    35

8.2

   No Warranties or Liability    36

8.3

   Obligations Unconditional    36 SECTION 9.    Miscellaneous    36

9.1

   Conflicts    36

9.2

   Effectiveness; Continuing Nature of this Agreement; Severability    36

9.3

   Amendments; Waivers    37

9.4

   Voting    38

9.5

   Information Concerning Financial Condition of the Borrower and its
Subsidiaries    38

9.6

   Submission to Jurisdiction    38

9.7

   WAIVER OF JURY TRIAL    39

9.8

   Notices    39

9.9

   Further Assurances    39

9.10

   APPLICABLE LAW    39

9.11

   Binding on Successors and Assigns    39

9.12

   Specific Performance    40

9.13

   Headings    40

9.14

   Counterparts    40

9.15

   Authorization    40

9.16

   No Third Party Beneficiaries    40

9.17

   Provisions Solely to Define Relative Rights    40

9.18

   Additional Guarantors    40

9.19

   Permitted Secured Commodity Hedge and Power Sales Agreement    40

9.20

   No Applicability to Instruments Not Secured by Collateral    40

 

EXHIBITS

          Exhibit A    –    Form of Accession Agreement

 

3

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

COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT

This COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT, dated as of October 10,
2007, is entered into by and among TEXAS COMPETITIVE ELECTRIC HOLDINGS COMPANY
LLC, a Delaware limited liability company (the “Borrower”), ENERGY FUTURE
COMPETITIVE HOLDING* COMPANY, a Texas corporation (“US Holdings”), the
Subsidiary Guarantors (as defined below), CITIBANK, N.A. (“Citibank”), in its
capacity as collateral agent for the Secured Parties (as defined below) (in such
capacity, and including its successors and assigns from time to time, the
“Collateral Agent”), CITIBANK, N.A., as Administrative Agent (as defined below),
LEHMAN BROTHERS COMMODITY SERVICES INC. (“Lehman Brothers Commodity Services”)
in its capacity as a Secured Commodity Hedge Counterparty, J. ARON & COMPANY
(“J. Aron”) in its capacity as a Secured Commodity Hedge Counterparty, MORGAN
STANLEY CAPITAL GROUP INC. (“MS Capital”) in its capacity as a Secured Commodity
Hedge Counterparty, CITIGROUP ENERGY INC. (“Citi Energy”) in its capacity as a
Secured Commodity Hedge Counterparty, and the other Persons party hereto from
time to time in accordance with the terms hereof.

RECITALS

WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of February 25,
2007 (the “Acquisition Agreement”), among TXU Corp., a Texas corporation, Texas
Energy Future Holdings Limited Partnership, a Delaware limited partnership, and
Texas Energy Future Merger Sub Corp., a Texas corporation, Texas Energy Future
Merger Sub Corp. will merge with and into TXU Corp. (the “Merger”), with TXU
Corp. surviving the Merger as a wholly-owned subsidiary of Texas Energy Future
Holdings Limited Partnership;

WHEREAS, in order to finance, in part, the Merger, US Holdings, the Borrower,
the several banks and other financial institutions or entities from time to time
parties thereto (the “Lenders”), Citibank, N.A., as administrative agent (in
such capacity, and including its successors and assigns from time to time, the
“Administrative Agent”) and as Collateral Agent, and the other agents and
entities party thereto, are entering into a Credit Agreement, dated as of the
date hereof (the “Credit Agreement”), which provides, among other things, for
the borrowing of Loans and Posting Advances and the issuance of Letters of
Credit, in each case for uses as contemplated by the Credit Agreement;

WHEREAS, the Borrower (as assignee of TXU Generation Development Company LLC)
has entered into (i) an amended and restated Confirmation dated October 10, 2007
(as the same may be amended, restated, supplemented or otherwise modified from
time to time), each transaction confirmed pursuant to the foregoing, the ISDA
Master Agreement incorporated by reference in such Confirmation and each related
schedule, exhibit or annex attached to any of the foregoing, in each case with
Lehman Brothers Commodity Services, Inc., in its capacity as a Secured Commodity
Hedge Counterparty (the “Lehman Commodity Hedge Agreement”); (ii) an amended and
restated Confirmation dated October 10, 2007 (as the same may be amended,
restated, supplemented or otherwise modified from time to time), each
transaction confirmed pursuant to the foregoing, the ISDA Master Agreement
incorporated by reference in such Confirmation and each related schedule,
exhibit or annex attached to any of the foregoing, in each case with Citi
Energy, in its capacity as a Secured Commodity Hedge Counterparty (the “Citi
Commodity Hedge Agreement”); (iii) an amended and restated Confirmation dated
October 10, 2007 (as the same may be amended, restated, supplemented or
otherwise modified from time to time), each transaction confirmed pursuant to
the foregoing, an amended and restated ISDA Master Agreement

 

4

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

dated as of August 28, 2006, the Amended and Restated MS ISDA Schedule dated as
of February 23, 2007 thereto (as the same may be amended, restated, supplemented
or otherwise modified from time to time), and each related schedule, exhibit or
annex attached to any of the foregoing, in each case with MS Capital, in its
capacity as a Secured Commodity Hedge Counterparty (the “MS Commodity Hedge
Agreement”); and (iv) an amended and restated Confirmation dated October 10,
2007 (as the same may be amended, restated, supplemented or otherwise modified
from time to time), each confirmation confirmed pursuant to the foregoing, the
ISDA Master Agreement incorporated by reference in such Confirmation and each
related schedule, exhibit or annex attached to any of the foregoing, in each
case with J. Aron, in its capacity as a Secured Commodity Hedge Counterparty
(the “J. Aron Commodity Hedge Agreement”, and collectively with the Lehman
Commodity Hedge Agreement, the MS Commodity Hedge Agreement, and the Citi
Commodity Hedge Agreement, the “Initial Secured Commodity Hedge and Power Sales
Agreements”);

WHEREAS, US Holdings, the Borrower and the Subsidiary Guarantors may from time
to time after the date hereof enter into additional Secured Commodity Hedge and
Power Sales Agreements to the extent permitted (if addressed therein, or,
otherwise, not prohibited) under the Credit Agreement and the other applicable
Financing Documents, in each case which may be secured on a first priority basis
by the First Lien on all or a portion of the Collateral (as defined herein)
pursuant to the terms of the Security Documents;

WHEREAS, US Holdings, the Borrower and the Subsidiary Guarantors may from time
to time after the date hereof enter into additional agreements evidencing
Indebtedness or other obligations to the extent permitted (if addressed therein,
or, otherwise, not prohibited) under the Credit Agreement and under the other
applicable Financing Documents, in each case which may be secured on a first
priority basis by the First Lien on all or a portion of the Collateral pursuant
to the terms of the Security Documents;

WHEREAS, pursuant to the Guarantee, dated as of the date hereof (as the same may
be amended, restated, supplemented or otherwise modified, refinanced or replaced
from time to time, the “Guarantee”), US Holdings and each Subsidiary Guarantor
party thereto has unconditionally and irrevocably guaranteed, as primary obligor
and not merely as surety, to the Collateral Agent for the ratable benefit of the
Secured Parties the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the Secured
Obligations;

WHEREAS, pursuant to (a) the Security Agreement, dated as of the date hereof (as
the same may be amended, restated, supplemented or otherwise modified,
refinanced or replaced from time to time, the “Security Agreement”), (b) the
Pledge Agreement, dated as of the date hereof (as the same may be amended,
restated, supplemented or otherwise modified, refinanced or replaced from time
to time, the “Pledge Agreement”) and (c) the other Security Documents, US
Holdings (in the case of the Pledge Agreement), the Borrower and each Subsidiary
Guarantor party thereto has granted a security interest on a first priority
basis in the Collateral to secure the Secured Obligations;

WHEREAS, the Credit Agreement and the Initial Secured Commodity Hedge and Power
Sales Agreements provide, among other things, that the parties thereto shall
enter into this Agreement to, among other things, define the rights, duties,
authorities and responsibilities of the Collateral Agent and the respective
rights and remedies among the Secured Parties with respect to the Collateral;
and

WHEREAS, in order to induce the Secured Parties to enter into the transactions
contemplated by the Financing Documents, each of the parties hereto has agreed
to the agency, intercreditor and other provisions set forth in this Agreement.

 

5

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

AGREEMENT

In consideration of the foregoing, the mutual covenants and obligations herein
set forth and for other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:

SECTION 1. Definitions.

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

“Accession Agreement”: an Accession Agreement substantially in the form attached
hereto as Exhibit A.

“Acquisition Agreement”: as defined in the recitals to this Agreement.

“Additional Obligations”: any Indebtedness or other obligations incurred by US
Holdings, the Borrower or any Subsidiary Guarantor after the Closing Date and
secured by a First Lien on all or a portion of the Collateral, in each case to
the extent permitted (if addressed therein, or, otherwise, not prohibited) under
the Credit Agreement and the other applicable Financing Documents; provided that
the holder of such Indebtedness or other obligations shall either be a party
hereto or shall have executed and delivered to the Collateral Agent an Accession
Agreement in accordance with Section 5.6 pursuant to which such holder has
become a party to this Agreement and has agreed to be bound by the obligations
of a “Secured Party” under the terms hereof.

“Administrative Agent”: as defined in the recitals to this Agreement.

“Affiliate”: shall mean, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control another Person if
such Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such other Person, whether through
the ownership of voting securities, by contract or otherwise. The terms
“controlling” and “controlled” shall have meanings correlative thereto.

“Agent”: the Collateral Agent or the Administrative Agent, as the context may
require.

“Agreement”: this Collateral Agency and Intercreditor Agreement.

“Applicable Laws”: as to any Person, any law (including common law), statute,
regulation, ordinance, rule, order, permit, registration, license,
certification, decree, judgment, consent decree, writ, injunction, settlement
agreement or governmental requirement enacted, promulgated or imposed or entered
into or agreed by any Governmental Authority, in each case applicable to or
binding on such Person or any of its property or assets or to which such Person
or any of its property or assets is subject.

“Available Amount”: with respect to any Letter of Credit, at any time, the
maximum amount (whether or not such maximum amount is then in effect under such
Letter of Credit if such maximum amount increases periodically pursuant to the
terms of such Letter of Credit) available to be drawn under such Letter of
Credit at such time (assuming compliance at such time with all conditions to
drawing).

 

6

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

“Bankruptcy Code”: Title 11 of the United States Code entitled “Bankruptcy”, as
now and hereafter in effect, or any successor statute.

“Bankruptcy Law”: the Bankruptcy Code and any similar federal, state or foreign
law for the relief of debtors.

“Big Brown Collateral”: the coal or lignite-fired electric generation facility
located in Freestone Country, Texas, and owned by TXU Big Brown Company LP, a
Texas limited partnership, and all associated fixtures, contracts, inventory,
general intangibles, appurtenances and easements that are reasonably necessary
to operate such facilities, and all proceeds therefrom, on which a Lien has been
granted by the Borrower (or any affiliate thereof) to Secured Commodity Hedge
Counterparties party to the Initial Secured Commodity Hedge and Power Sales
Agreements to secure the obligations of the Borrower (or any affiliate thereof)
thereunder.

“Borrower”: as defined in the preamble to this Agreement.

“Breakage Costs”: with respect to any Loan, any amount payable with respect to
such Loan pursuant to Section 2.11 of the Credit Agreement.

“Capital Stock”: any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation), including
partnership interests and membership interests, and any and all warrants, rights
or options to purchase or other arrangements or rights to acquire any of the
foregoing.

“Citi Commodity Hedge Agreement”: as defined in the preamble to this Agreement.

“Citi Pre-Closing Commodity Hedge Agreement”: means that certain Confirmation,
dated as of April 26, 2007 (as the same was amended, restated, supplemented or
otherwise modified on or before October 10, 2007), each transaction confirmed
pursuant to the foregoing, an ISDA Master Agreement incorporated by reference in
such Confirmation, and each related schedule, exhibit or annex attached to any
of the foregoing, in each case between Generation Development Company LLC (f/k/a
TXU Generation Development Company LLC) and Citi Energy.

“Citibank”: as defined in the preamble to this Agreement.

“Citi Energy”: as defined in the preamble to this Agreement.

“Collateral Agent”: as defined in the preamble to this Agreement.

“Commitments”: the commitment of any Lender Party to make Loans or Posting
Advances or issue Letters of Credit under the Loan Documents.

“Commodity Hedge and Power Sales Secured Obligations”: with respect to any
Secured Commodity Hedge and Power Sales Agreement and any related guaranty (but
without duplication), as of any date of determination, the sum of (a) the
outstanding amount (including Ordinary Course Settlement Payments and any
Termination Payments) then due and owing by the Loan Parties to the relevant
Secured Commodity Hedge Counterparty under such Secured Commodity Hedge and
Power Sales Agreement plus (b) without duplication, any and all other
obligations of any Loan Party of any kind thereunder, whether fixed or
contingent, matured or unmatured as of such date of determination.

 

7

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

“Commodity Hedge Counterparty”: any Person (other than any Loan Party) that is a
party to a Permitted Commodity Hedge and Power Sales Agreement.

“Commodity Hedge Covenants”: any covenant or similar term in any Secured
Commodity Hedging and Power Sales Agreement that is identical to, or
incorporates, is intended to incorporate or calls for incorporating by
reference, a covenant or similar term in the Credit Agreement (but in the case
of an identical covenant, only if such identical covenant was in the Credit
Agreement on the Closing Date).

“Contractual Obligations”: as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

“Credit Agreement”: as defined in the recitals to this Agreement, including as
Refinanced pursuant to Section 5.3.

“DIP Financing”: as defined in Section 6.1.

“Discharge of Secured Obligations”: except to the extent otherwise expressly
provided for in Section 5.3 and Section 6.2:

(a) payment in full in cash of (i) the outstanding principal amount of Loans and
Posting Advances, (ii) Reimbursement Obligations with respect to amounts drawn
under any Letter of Credit issued under the Loan Documents, (iii) interest
(including, without limitation, interest accruing at the then applicable rate
provided in the applicable Loan Document after the maturity of the Loans and
Posting Advances or other relevant Secured Obligations and Post-Petition
Interest) on all Indebtedness outstanding under the Loan Documents and
(iv) commitment fees, letter of credit fees, participation fees, maintenance
fees and breakage costs, due and payable or otherwise accrued under the Loan
Documents;

(b) the termination or expiration of all (i) Commitments, if any, to extend
credit (including the issuance of any Letter of Credit) that would constitute
Secured Obligations, (ii) Secured Commodity Hedge and Power Sales Agreements,
(iii) Secured Hedging Agreements, and (iv) Secured Cash Management Agreements;

(c) cancellation, termination or Cash Collateralization of all Letters of Credit
issued and outstanding under the Loan Documents; and

(d) payment in full in cash of all other Secured Obligations that are then due
and payable or otherwise accrued, including, without limitation, all Interest
Expenses, outstanding Commodity Hedge and Power Sales Secured Obligations and
all obligations outstanding under Secured Hedging Agreements and Secured Cash
Managements Agreements and full and final payment and discharge of all other
outstanding Secured Obligations, whether or not then due and payable (other than
any inchoate indemnity obligations that expressly survive the termination of the
underlying Financing Documents).

“Early Termination Event”: with respect to any Secured Commodity Hedge and Power
Sales Agreement, the designation or occurrence of an “Early Termination Date”
(as defined in such Secured Commodity Hedge and Power Sales Agreement) or the
occurrence of any event of default (howsoever defined) under any Secured
Commodity Hedge and Power Sales Agreement which results in the termination of
such Secured Commodity Hedge and Power Sales Agreement.

 

8

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

“Eligible Hedge Voting Amount”: as of any date of determination with respect to
any Secured Commodity Hedge and Power Sales Agreement: the greater of (i) the
Floor Amount (if any) applicable to such Secured Commodity Hedge and Power Sales
Agreement and (ii) an amount equal to (A) the Permitted Secured Hedge Amount (if
any) applicable to such Secured Commodity Hedge and Power Sales Agreement at
such time less (B) (to the extent no Other Credit Support Exception has occurred
with respect to all or a portion thereof) the aggregate amount of Other Credit
Support Amounts under any Other Credit Support issued or pledged in favor of the
applicable Secured Commodity Hedge Counterparty to support the obligations of US
Holdings, the Borrower and/or the Subsidiary Guarantors under such Secured
Commodity Hedge and Power Sales Agreement.

“Event of Default”: (x) an “Event of Default” under and as defined in the Credit
Agreement or (y) any Early Termination Event under any Secured Commodity Hedge
and Power Sales Agreement with respect to which the Borrower or any other Loan
Party is the “defaulting party” or “affected party”, as the case may be.

“Financing Documents”: shall mean, collectively (without duplication), each Loan
Document, each Secured Commodity Hedge and Power Sales Agreement and any other
agreement, document or instrument providing for or evidencing any Secured
Obligations.

“First Lien”: a first priority Lien granted pursuant to the Security Documents
to the Collateral Agent (for the benefit of the Secured Parties) on the
Collateral to secure the Secured Obligations.

“Floor Amount”: shall mean (a) with respect to Citi Energy in respect of the
Citi Commodity Hedge Agreement, an amount equal to $0, (b) with respect to
Lehman Brothers Commodity Services in respect of the Lehman Commodity Hedge
Agreement, an amount equal to $65,000,000, (c) with respect to J. Aron in
respect of the J. Aron Commodity Hedge Agreement, an amount equal to
$235,000,000, (d) with respect to MS Capital in respect of the MS Commodity
Hedge Agreement, an amount equal to $320,000,000, and (e) with respect to any
Secured Commodity Hedge and Power Sales Agreement entered into or modified after
the date hereof (including, without limitation, any such agreement to which Citi
Energy, Lehman Brothers Commodity Services, J. Aron or MS Capital is a party),
the amount identified (if any) as the “Floor Amount” for such Secured Commodity
Hedge and Power Sales Agreement in the Accession Agreement pursuant to which the
Secured Commodity Hedge Counterparty party thereto shall become (or confirm its
continuing status as) a party hereto, which Floor Amount shall be based on the
potential exposure of the relevant Secured Commodity Hedge and Power Sales
Agreement as determined by the parties thereto on an arms-length, good faith
basis as reasonably calculated in a manner consistent with market practice or in
the ordinary course of the counterparty’s business.

“General Commodity Hedge and Power Sales Agreement”: shall mean a “Commodity
Hedging Agreement” as defined in the Credit Agreement as in effect on the
Closing Date (without reference to any subsequent amendment, restatement,
modification or Refinance).

“Guarantee”: as defined in the recitals to this Agreement.

“Initial Secured Commodity Hedge and Power Sales Agreements”: as defined in the
recitals to this Agreement.

 

9

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

“Insolvency or Liquidation Proceeding”:

(a) any voluntary or involuntary case or proceeding under any Bankruptcy Law
with respect to any Loan Party;

(b) any other voluntary or involuntary insolvency, reorganization or bankruptcy
case or proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding with respect to any Loan Party or with respect to a
material portion of their respective assets;

(c) any liquidation, dissolution, reorganization or winding up of any Loan Party
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy; or

(d) any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of any Loan Party.

“Interest Expense”: for any period, all interest, commitment fees, letter of
credit fees, participation fees, maintenance fees and Breakage Costs in respect
of outstanding Secured Obligations accrued, capitalized or payable during such
period (whether or not actually paid during such period).

“Issuing Lender”: a “Letter of Credit Issuer” under and as defined in the Credit
Agreement as in effect on the Closing Date (without reference to any subsequent
amendment, restatement, modification or Refinance).

“J. Aron”: as defined in the preamble to this Agreement.

“J. Aron Commodity Hedge Agreement”: as defined in the preamble to this
Agreement.

“J. Aron Pre-Closing Commodity Hedge Agreement”: means that certain
Confirmation, dated as of February 23, 2007 (as the same was amended, restated,
supplemented or otherwise modified on or before October 10, 2007), each
transaction confirmed pursuant to the foregoing, an ISDA Master Agreement
incorporated by reference in such Confirmation, and each related schedule,
exhibit or annex attached to any of the foregoing, in each case between
Generation Development Company LLC (f/k/a TXU Generation Development Company
LLC) and J. Aron.

“Lehman Brothers Commodity Services”: as defined in the preamble to this
Agreement.

“Lehman Commodity Hedge Agreement”: as defined in the preamble to this
Agreement.

“Lehman Pre-Closing Commodity Hedge Agreement”: means that certain Confirmation,
dated as of June 1, 2007 (as the same was amended, restated, supplemented or
otherwise modified on or before October 10, 2007), each transaction confirmed
pursuant to the foregoing, an ISDA Master Agreement dated as of June 1, 2007 (as
the same was amended, restated, supplemented or otherwise modified on or before
October 10, 2007), and each related schedule, exhibit or annex attached to any
of the foregoing, in each case between Generation Development Company LLC (f/k/a
TXU Generation Development Company LLC) and Lehman Brothers Commodity Services.

“Lender Party”: means each Lender, each Issuing Lender or the Swingline Lender,
as the context may require.

“Lenders”: as defined in the recitals to this Agreement.

 

10

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

“Letter of Credit”: means a “Letter of Credit” as defined in and issued under
the Credit Agreement.

“Lien”: any mortgage, pledge, security interest, hypothecation, assignment, lien
(statutory or other) or similar encumbrance (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement or any
lease or license in the nature thereof); provided that in no event (a) shall an
operating lease be deemed to be a Lien or (b) shall any netting or set-off
arrangements under any Contractual Obligation otherwise permitted under the
terms of this Agreement be deemed to be a Lien.

“Loan Documents”: means the “Credit Documents” as defined in the Credit
Agreement as in effect on the Closing Date (without reference to any subsequent
amendment, restatement, modification or Refinance).

“Loan Party”: means the Borrower, US Holdings and each Subsidiary Guarantor.

“Merger”: as defined in the recitals to this Agreement.

“Mortgages”: a collective reference to each mortgage, deed of trust and other
document or instrument under which any Lien on real property owned or leased by
any Loan Party is granted by a Loan Party to secure any Secured Obligations or
under which rights or remedies with respect to any such Liens are governed,
including, without limitation, the Mortgages (as defined in the Credit
Agreement).

“MS Capital: as defined in the recitals to this Agreement.

“MS Commodity Hedge Agreement”: as defined in the recitals to this Agreement.

“MS Pre-Closing Commodity Hedge Agreement”: means (i) that certain amended and
restated Confirmation, dated as of February 23, 2007 (as the same was amended,
restated, supplemented or otherwise modified on or before October 10, 2007) (the
“February 23, 2007 Confirmation”), each transaction confirmed pursuant to the
foregoing, an amended and restated ISDA Master Agreement dated as of August 28,
2006, the Amended and Restated MS ISDA Schedule dated as of February 23, 2007
(as the same was amended, restated, supplemented or otherwise modified on or
before October 10, 2007), and each related schedule, exhibit or annex attached
to any of the foregoing, in each case between Generation Development Company LLC
(f/k/a TXU Generation Development Company LLC) and MS Capital and (ii) the
transactions between Luminant Energy Company LLC (f/k/a TXU Portfolio Management
Company LP) and MS Capital listed in Schedule X to the February 23, 2007
Confirmation.

“New Administrative Agent”: as defined in Section 5.3.

“New Collateral Agent”: as defined in Section 5.3.

“New Debt Notice”: has the meaning set forth in Section 5.3.

“Ordinary Course Settlement Payments”: all regularly scheduled payments due
under any Secured Commodity Hedge and Power Sales Agreement calculated in
accordance with the terms of such Secured Commodity Hedge and Power Sales
Agreement, including any “Settlement Amounts” under any Secured Commodity Hedge
and Power Sales Agreement and any liquidated damages payments under any Secured
Commodity Hedge and Power Sales Agreement which settle physically and including
any Interest Expense due and payable by any of the Loan Parties in connection
with any such regularly scheduled or liquidated damage payments, but excluding,
for the avoidance of doubt any “Termination Payments” due and payable under any
Secured Commodity Hedge and Power Sales Agreement.

 

11

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

“Other Credit Support”: with respect to any Secured Commodity Hedge and Power
Sales Agreement, any (a) Letter of Credit or other letter of credit,
(b) guaranty or (c) cash collateral issued or pledged, as applicable, in favor
of any Secured Commodity Hedge Counterparty to the extent not shared among all
Secured Parties and in each case to the extent permitted under the Credit
Agreement and permitted (if addressed herein, or, otherwise, not prohibited)
under all of the other applicable Financing Documents, to support the
obligations of US Holdings, the Borrower or any Subsidiary Guarantor under such
Secured Commodity Hedge and Power Sales Agreement (other than any such guaranty
issued by a Loan Party, including the Guarantee) which in any case satisfies the
requirements of such Secured Commodity Hedge and Power Sales Agreement with
respect to Letters of Credit and other letters of credit, guaranties or cash, as
applicable. For the avoidance of doubt, it is expressly understood and agreed
that any separate insurance, credit default swap protection or other protection
against loss arranged by any Secured Commodity Hedge Counterparty for its own
account in respect of any Secured Obligations owed to it shall not be considered
“Other Credit Support” hereunder.

“Other Credit Support Amount”: at any time, with respect to any Secured
Commodity Hedge and Power Sales Agreement, the sum of the following, in each
case to the extent constituting Other Credit Support: (a) the Available Amount
of any Letter of Credit or other letter of credit issued in favor of the
relevant Secured Commodity Hedge Counterparty to support the Obligations of the
Loan Parties under such Secured Commodity Hedge and Power Sales Agreement (with
such Available Amount being calculated at the amount then available to be drawn
under the applicable Letter of Credit, notwithstanding anything to the contrary
contained in the definition of Available Amount) plus (b) the undrawn amount of
any guaranty issued in favor of the relevant Secured Commodity Hedge
Counterparty to support the Obligations of the Loan Parties under such Secured
Commodity Hedge and Power Sales Agreement (other than any such guaranty issued
by a Loan Party, including the Guarantee) plus (c) the amount of any cash
collateral pledged to the benefit of the relevant Secured Commodity Hedge
Counterparty to support the Obligations of the Loan Parties under such Secured
Commodity Hedge and Power Sales Agreement, and which, in each case, satisfies
the requirements of such Secured Commodity Hedge and Power Sales Agreement with
respect to Letters of Credit or other letters of credit, guaranties or cash, as
applicable.

“Other Credit Support Exception”: (a) with respect to any Other Credit Support
constituting a guaranty, the guarantor thereunder fails to make payment after
receipt of a demand for payment thereunder made in accordance with the terms of
such guaranty, within three Business Days of its receipt of such demand (or such
longer period permitted for payment under such guarantee) and (b) with respect
to any Other Credit Support constituting a Letter of Credit or other letter of
credit, the occurrence and continuance of any of the following: (i) a restraint
or injunction shall be threatened or pending against the issuer of such Letter
of Credit or other letter of credit or the Secured Commodity Hedge Counterparty
that is the beneficiary thereof that restrains or limits or seek to restrain or
limit a draw upon, or the application of proceeds from, such Letter of Credit or
such other letter of credit prior to, concurrent with, or following such draw or
application, (ii) the issuing bank of such Letter of Credit or such other letter
of credit shall be subject to an Insolvency Proceeding, or (iii) the issuing
bank shall have disavowed, repudiated or dishonored its obligations under such
Letter of Credit or such other letter of credit after, if applicable, delivery
to such issuing bank of a conforming draw request thereunder.

“Outstanding Amount”: means, with respect to any Financing Document, at any
time, an amount equal to the sum of, without duplication, (a) the aggregate
principal amount of the Loans outstanding under such Financing Document at such
time plus (b) the Applicable Posting Facility Amount at such time plus (c) the
excess of (x) the aggregate Available Amount of all Letters of Credit (other
than Deposit Letters of Credit) issued under such Financing Document and
outstanding at such

 

12

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

time over (y) any cash collateral referred to in Section 5.5(b) then held in
respect of any Letters of Credit plus (d) the aggregate amount of all
outstanding unexpired Commitments to extend credit that which, when funded or
issued, would constitute Loans, Posting Advances or Letters of Credit, at such
time; provided, however, that if any Lender shall be a “Defaulting Lender”
howsoever defined in the relevant Financing Document at such time, there shall
be excluded from the determination of the “Outstanding Amount” under such
Financing Document: (i) the aggregate principal amount of Loans and Posting
Advances owing to such Lender, (ii) such Lender’s pro rata share of the
aggregate Available Amount of all Letters of Credit issued under such Financing
Document and (iii) such Lender’s pro rata share of the outstanding Commitments
to extend credit that which, when funded would constitute Loans, Posting
Advances or Letters of Credit, at such time.

“Permitted Commodity Hedge and Power Sales Agreement”: (a) each Initial Secured
Commodity Hedge and Power Sales Agreement and (b) any other General Commodity
Hedge and Power Sales Agreement entered into from time to time by the Borrower
or any of its Restricted Subsidiaries to the extent permitted (if addressed
therein, or, otherwise, not prohibited) under the Credit Agreement and the other
applicable Financing Documents at the time it is entered into.

“Permitted Secured Hedge Amount”: with respect to any Secured Commodity Hedge
and Power Sales Agreement and any related guaranty (but without duplication), as
of any date of determination, the full amount of all obligations of every nature
outstanding and then owed to the Secured Commodity Hedge Counterparty under such
Secured Commodity Hedge and Power Sales Agreement as of such date of
determination (including any outstanding Ordinary Course Settlement Payments and
Termination Payments), together with (without duplication) any and all other
obligations of any Loan Party of any kind thereunder, whether fixed or
contingent, matured or unmatured as of such date of determination; provided,
that for purposes of calculating the “Eligible Hedge Voting Amount” or
“Permitted Secured Hedge Amount” in respect of any Secured Commodity Hedge and
Power Sales Agreement, the “Termination Payment” shall be calculated as the
amount that would be payable by the relevant Loan Party under any such Secured
Commodity Hedge and Power Sales Agreement if such Secured Commodity Hedge and
Power Sales Agreement were terminated as the result of an event of default with
respect to such Loan Party under such Secured Commodity Hedge and Power Sales
Agreement on the Business Day immediately preceding the applicable date of
determination or, if such Commodity Hedge and Power and Sale Agreement was
previously terminated, the Termination Payment which remains unpaid as of the
applicable date of determination.

“Pledge Agreement”: as defined in the recitals to this Agreement.

“Pledged Collateral”: as the context may require, (a) any Collateral, to the
extent that possession or control thereof is necessary to perfect a Lien thereon
under the UCC, including any deposit account or securities account (as such
terms are defined in the UCC), (b) any rights to receive payments under any
insurance policy that constitute Collateral and with respect to which a secured
party is required to be named as an additional insured or a loss payee in order
to perfect a Lien thereon and/or (c) any other Collateral with respect to which
a secured party must be listed on a certificate of title in order to perfect a
Lien thereon.

“Post-Petition Interest”: any interest or entitlement to fees or expenses or
other charges that accrues after the commencement of any Insolvency or
Liquidation Proceeding, whether or not allowed or allowable in any such
Insolvency or Liquidation Proceeding.

“Pre-Closing Secured Commodity Hedge and Power Sales Agreement”: means the Cit
Pre-Closing Commodity Hedge Agreement, the J. Aron Pre-Closing Commodity Hedge
Agreement, the Lehman Pre-Closing Commodity Hedge Agreement and the MS
Pre-Closing Commodity Hedge Agreement.

 

13

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

“Recovery”: as defined in Section 6.2.

“Refinance”: in respect of any Indebtedness, (a) such Indebtedness (in whole or
in part) as extended, renewed, defeased, refinanced, replaced, refunded or
repaid and (b) any other Indebtedness issued in exchange or replacement for or
to refinance such Indebtedness, in whole or in part, whether with the same or
different lenders, arrangers and/or agents and whether with a larger or smaller
aggregate principal amount and/or a longer or shorter maturity, in each case to
the extent permitted (if addressed therein, or, otherwise, not prohibited) under
the terms of the Credit Agreement and under the terms of the other applicable
Financing Documents. “Refinanced” and “Refinancing” shall have correlative
meanings.

“Reimbursement Obligations”: with respect to any Letter of Credit then
outstanding, at any time, an amount equal to the sum of (a) the aggregate then
undrawn and unexpired amount of such Letter of Credit and (b) the aggregate
amount of drawings under such Letter of Credit that have not then been
reimbursed pursuant to the Credit Agreement.

“Related Parties”: with respect to any specified Person, such Person’s
Affiliates and the directors, officers, employees, agents, trustees and advisors
of such Person and any Person that possesses, directly or indirectly, the power
to direct or cause the direction of the management or policies of such Person,
whether through the ability to exercise voting power, by contract or otherwise.

“Remedy Event”: has the meaning set forth in Section 4.2.

“Replacement Credit Agreement”: as defined in Section 5.3.

“Required Alternative Commodity Hedge Counterparties”: at any time, Secured
Commodity Hedge Counterparties owed or holding more than 50% of the sum of the
Eligible Hedge Voting Amounts (disregarding clause (i) of the definition
thereof) under all Secured Commodity Hedge and Power Sales Agreement outstanding
at such time.

“Required Commodity Hedge Counterparties”: at any time, Secured Commodity Hedge
Counterparties owed or holding more than 50% of the sum of the Eligible Hedge
Voting Amounts under all Secured Commodity Hedge and Power Sales Agreement
outstanding at such time.

“Required Secured Parties”: at any time, Secured Parties owed or holding more
than 50% of the sum of (without duplication):

(a) the Outstanding Amount under the Credit Agreement at such time; and

(b) in the case of each Secured Commodity Hedge and Power Sales Agreement, the
Eligible Hedge Voting Amount thereunder at such time.

For purposes of this definition, Secured Obligations registered in the name of,
or beneficially owned by, the Borrower or any Affiliate of the Borrower (other
than investors in the Borrower’s Affiliates that are investment funds, provided
that such investors are not themselves Affiliates of the Borrower or any other
Loan Party) will be deemed not to be outstanding and neither the Borrower nor
any Affiliate of the Borrower (other than investors in the Borrower’s Affiliates
that are investment funds, provided that such investors are not themselves
Affiliates of the Borrower or any other Loan Party) will be entitled to vote to
direct the Collateral Agent or relevant Secured Debt Representative.

 

14

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

“Responsible Officer”: as to any Person, any individual holding the position of
chairman of the board (if an officer), president, chief executive officer or one
of its vice presidents and such Person’s treasurer or chief financial officer.

“Restricted Subsidiary”: any Subsidiary of the Borrower other than an
Unrestricted Subsidiary.

“Secured Cash Management Agreement”: any agreement relating to Cash Management
Services that is entered into by and between the Borrower or any Restricted
Subsidiary and any Cash Management Bank.

“Secured Commodity Hedge Counterparty”: any Commodity Hedge Counterparty (other
than any Loan Party) that is a party to a Secured Commodity Hedge and Power
Sales Agreement.

“Secured Commodity Hedge and Power Sales Agreement”: (i) each Initial Secured
Commodity Hedge and Power Sales Agreement and (ii) any Permitted Commodity Hedge
and Power Sales Agreement entered into by the Borrower or any Subsidiary
Guarantor with a Secured Commodity Hedge Counterparty after the date hereof
which requires that the obligations of the Borrower or the Subsidiary Guarantor
party thereto be secured by the First Lien, to the extent such Permitted
Commodity Hedge and Power Sales Agreement is permitted (if addressed therein,
or, otherwise, not prohibited) to be entered into by the Borrower or such
Subsidiary Guarantor and secured by the First Lien under the Credit Agreement
and the other applicable Financing Documents at the time it is entered into;
provided that the Secured Commodity Hedge Counterparty party thereto shall
either be a party hereto or shall have executed and delivered to the Collateral
Agent an Accession Agreement in accordance with Section 5.6 pursuant to which
such Secured Commodity Hedge Counterparty has become a party to this Agreement
and has agreed to be bound by the obligations of a Secured Party under the terms
hereof.

“Secured Debt Representative”: (a) with respect to the Lenders Parties, the
Administrative Agent and (b) with respect to any Secured Commodity Hedge and
Power Sales Agreement, the Secured Commodity Hedge Counterparty party thereto.

“Secured Hedging Agreement” shall mean any Hedging Agreement that is entered
into by and between the Borrower or any Restricted Subsidiary and any Hedge
Bank.

“Secured Obligations”: collectively, (a) all advances to, and debts,
liabilities, obligations, covenants and duties of, any Loan Party arising under
any Loan Document or otherwise with respect to any Loan, Posting Advance or
Letter of Credit or under any Secured Cash Management Agreement, Secured
Commodity Hedge and Power Sales Agreement or Secured Hedging Agreement, in each
case, entered into with US Holdings, the Borrower or any other Restricted
Subsidiary of the Borrower, whether direct or indirect (including those acquired
by assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the
commencement by or against any Loan Party of any proceeding under any bankruptcy
or insolvency law naming such Person as the debtor in such proceeding,
regardless of whether such interest and fees are allowed claims in such
proceeding. Without limiting the generality of the foregoing, the Secured
Obligations of the Loan Parties under the Loan Documents include the obligation
(including guarantee obligations) to pay principal, interest, charges, expenses,
fees, attorney costs, indemnities and other amounts payable by any Loan Party
under any Loan Document and (b) all obligations of every nature outstanding
under any Additional Obligations, whether fixed or contingent, matured or
unmatured, in each case whether or not allowed or allowable in an Insolvency or
Liquidation Proceeding. “Secured Obligations” shall include, without limitation,
interest accruing at the then applicable rate provided in the applicable
Financing Document after the maturity of the relevant Secured Obligations and
any Post-Petition Interest.

 

15

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

“Secured Parties”: shall have the meaning ascribed to it in the Credit Agreement
as in effect on the Closing Date (without reference to any subsequent amendment,
restatement, modification or Refinance); provided that, in the case of any
Secured Commodity Hedge Counterparty or holder of Additional Obligations that is
not a party hereto as of the date hereof, such Secured Commodity Hedge
Counterparty or holder of Additional Obligations, as applicable, shall have
executed and delivered to the Collateral Agent an Accession Agreement in
accordance with Section 5.6 pursuant to which it has become a party to this
Agreement and has agreed to be bound by the obligations of a Secured Party under
the terms hereof.

“Security Agreement”: as defined in the recitals to this Agreement.

“Specified Collateral Permitted Commodity Hedge and Power Sales Agreement”: any
Secured Commodity Hedge and Power Sales Agreement that by its terms provides
that it is to be secured by specific properties of the Loan Parties constituting
Collateral but is not required to be secured by all of the Collateral (excluding
for this purpose and for the avoidance of doubt, any Collateral that is solely
for the benefit of certain Secured Parties pursuant to Section 5.5(b)). As of
the date hereof, none of the Initial Secured Commodity Hedge and Power Sales
Agreements is a Specified Collateral Permitted Commodity Hedge and Power Sales
Agreement.

“Specified Hedge Collateral”: with respect to any Specified Collateral Permitted
Commodity Hedge and Power Sales Agreement, those properties of the Loan Parties
constituting the portion (but not all) of the Collateral required under the
terms of such Specified Collateral Permitted Commodity Hedge and Power Sales
Agreement to be pledged in favor of the Secured Commodity Hedge Counterparty
party thereto.

“Supplemental Collateral Agent”: as defined in Section 7.2(b).

“Termination Payment”: any amount payable to or by US Holdings, the Borrower or
any of the Subsidiary Guarantors in connection with a termination (whether as a
result of the occurrence of an event of default or other termination event) of
any Secured Commodity Hedge and Power Sales Agreement or any Secured Hedging
Agreement, including any “Settlement Amount” or “Termination Payment”, together
with any Interest Expense due and payable by any of the Loan Parties in
connection with such amounts; provided that for the avoidance of doubt,
“Termination Payments” shall not include any Ordinary Course Settlement Payments
due under any such Secured Commodity Hedge and Power Sales Agreement or Secured
Hedging Agreement that have been paid prior to such date of determination.

“UCC”: the Uniform Commercial Code as in effect from time to time in the State
of New York or, when the context implies, the Uniform Commercial Code as in
effect from time to time in any other applicable jurisdiction.

“US Holdings”: as defined in the preamble hereto.

1.2 Credit Agreement Definitions. The following terms shall have the meanings
assigned to them in the Credit Agreement as it is in effect on the Closing Date
(without reference to any subsequent amendment, restatement, modification or
Refinance): Applicable Posting Facility Amount, Business Day, Cash Collateral
Account, Cash Collateralize, Cash Management Agreement, Cash Management Bank,
Cash Management Services, Closing Date, Collateral, Commitments, Default,
Deposit L/C Collateral, Deposit L/C Obligations, Deposit Letter of Credit,
Deposit Letter of Credit Issuer, Disposition, Existing Oncor Notes, GAAP,
Governmental Authority, Guarantee Obligations, Hedge Bank, Hedging Agreements,
Indebtedness, Loan, Oncor Credit Facility, Oncor Subsidiaries, Permitted Liens,
Person, Posting Advance, Required Deposit L/C Loan Lenders, Replacement
Facility, Required Lenders, Revolving Letter of Credit, Security Documents,
Subsidiary, Subsidiary Guarantor, Swingline Lender, Unpaid Drawings, and
Unrestricted Subsidiary.

 

16

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

1.3 Other Definitional Provisions. With reference to this Agreement, unless
otherwise specified herein:

(a) The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.

(b) The words “herein”, “hereto”, “hereof” and “hereunder” and words of similar
import shall refer to this Agreement as a whole and not to any particular
provision thereof.

(c) The term “including” is by way of example and not limitation.

(d) The term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.

(e) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including”; the words “to” and
“until” each mean “to but excluding”; and the word “through” means “to and
including”.

(f) Section headings herein are included for convenience of reference only and
shall not affect the interpretation of this Agreement or any other Security
Document.

1.4 Certifications, Etc. All certifications, notices, declarations,
representations, warrants and statements made by any officer, director or
employee or a Loan Party pursuant to or in connection with this Agreement or any
other Security Document shall be made in such person’s capacity as officer,
director or employee on behalf of the Loan Party and not in such Person’s
individual capacity.

SECTION 2. Lien Priorities.

2.1 Pari Passu. As among the Secured Parties, all Liens on the Collateral shall
rank pari passu, no Secured Party shall be entitled to any preferences or
priority over any other Secured Party with respect to the Collateral (except as
otherwise provided in Section 4.1) and the Secured Parties shall share in the
Collateral and all Proceeds thereof in accordance with the terms of this
Agreement.

2.2 Prohibition on Contesting Liens. Each Secured Party agrees that it will not
(and hereby waives any right to) object to or contest or support any other
Person in objecting to or contesting, in any proceeding (including any
Insolvency or Liquidation Proceeding), (a) the priority, validity, extent,
perfection or enforceability of a Lien held by the Collateral Agent on behalf of
any of the Secured Parties in the Collateral in accordance with the terms of
this Agreement or (b) any or all of the provisions of this Agreement; provided
that nothing in this Agreement shall be construed to prevent or impair the
rights of Collateral Agent or any other Secured Party to enforce this Agreement.

2.3 No New Liens. The parties hereto agree that neither US Holdings, the
Borrower nor any Subsidiary Guarantor shall grant or permit any additional Liens
on any property or assets to secure any Secured Obligation unless it has granted
or concurrently grants a Lien on such property or assets to secure all Secured
Obligations on a pari passu basis.

 

17

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

2.4 Acknowledgement of Releases. Each of the Secured Commodity Hedge
Counterparties party to an Initial Secured Commodity Hedge and Power Sales
Agreement hereby acknowledges the termination and release of all Liens on the
Big Brown Collateral granted pursuant to the Pre-Closing Secured Commodity Hedge
and Power Sales Agreements, and any related intercreditor agreements, if any,
entered into in connection therewith.

 

  SECTION 3. Enforcement.

3.1 Enforcement of Liens. (a) The Required Secured Parties will have, subject to
the terms of this Agreement, the right to authorize and direct the Collateral
Agent with respect to the Security Documents and the Collateral, including,
without limitation, the exclusive right to authorize or direct the Collateral
Agent to enforce, collect or realize on any Collateral or exercise any other
right or remedy with respect to the Collateral. Such exercise and enforcement
shall include the rights of Collateral Agent to sell or otherwise dispose of
Collateral upon foreclosure, to incur reasonable expenses in connection with
such sale or disposition, and to exercise all the rights and remedies of a
secured creditor under the UCC and the Security Documents and of a secured
creditor under the Bankruptcy Code and other applicable law; provided that
unless and until the Collateral Agent shall have received such direction, the
Collateral Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, in order to preserve or protect its Liens on
and the value of the Collateral as it shall deem advisable in the best interests
of the Secured Parties.

(b) Until the date of Discharge of Secured Obligations, except to the extent
otherwise directed or consented to by the Required Secured Parties, none of the
Collateral Agent, any Secured Debt Representative or any other Secured Party
will:

(i) request judicial relief, in any Insolvency or Liquidation Proceeding or in
any other court, that would hinder, delay, limit or prohibit the lawful exercise
or enforcement of any right or remedy otherwise available to the Secured Parties
in respect of the Liens granted to the Collateral Agent, for the benefit of the
Secured Parties;

(ii) oppose or otherwise contest any motion for relief from the automatic stay
or for foreclosure or enforcement of Liens granted to the Collateral Agent, for
the benefit of the Secured Parties, made by the Collateral Agent, acting at the
direction of, or as consented to by, the Required Secured Parties, in any
Insolvency or Liquidation Proceeding;

(iii) oppose or otherwise contest any lawful exercise by the Collateral Agent,
acting at the direction of, or as consented to by, the Required Secured Parties,
of the right to credit bid the Secured Obligations at any sale in foreclosure of
the Liens granted to the Collateral Agent, for the benefit of the Secured
Parties; or

(iv) oppose or otherwise contest any other request for judicial relief made in
any court by the Collateral Agent, acting at the direction of, or as consented
to by, the Required Secured Parties, relating to the lawful enforcement of any
First Lien;

provided, however, that the Collateral Agent may take such actions as it deems
desirable to create, prove, preserve or protect the Liens upon any Collateral.
Notwithstanding the foregoing, both before and during an Insolvency and
Liquidation Proceeding, any Secured Party and any Secured Debt Representative
may take any actions and exercise any and all rights that they would have as an
unsecured creditor, including, without limitation, the commencement of an
Insolvency or Liquidation Proceeding against any Loan Party in accordance with
applicable law and the termination of any Financing Document in accordance with
the terms thereof; provided that the Secured Parties and the Secured Debt
Representatives may not

 

18

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

take any of the actions prohibited by clauses (i) through (iv) above or oppose
or contest any other claim that it has agreed not to oppose or contest under
Section 6; and provided, further, that, in the event that any Secured Party
becomes a judgment Lien creditor in respect of Collateral as a result of its
enforcement of its rights as an unsecured creditor with respect to the Secured
Obligations, such judgment Lien shall be subject to the terms of this Agreement
for all purposes as the other Liens securing the Secured Obligations are subject
to this Agreement.

(c) In exercising rights and remedies with respect to the Collateral after the
occurrence and during the continuance of any Event of Default, the Secured Debt
Representatives may, at the direction of the Required Secured Parties, instruct
the Collateral Agent to enforce (or to refrain from enforcing) the provisions of
the Security Documents in respect of the Secured Obligations and exercise (or
refrain from exercising) remedies thereunder or any such rights and remedies,
all in such order and in such manner as the Collateral Agent may determine,
unless otherwise directed by the Required Secured Parties, including:

(i) the exercise or forbearance from exercise of all rights and remedies in
respect of the Collateral;

(ii) the enforcement or forbearance from enforcement of any Lien in respect of
the Collateral;

(iii) the exercise or forbearance from exercise of rights and powers of a holder
of Capital Stock or any other form of securities included in the Collateral to
the extent provided in the Security Documents;

(iv) the acceptance of the Collateral in full or partial satisfaction of the
Secured Obligations; and

(v) the exercise or forbearance from exercise in respect of the Collateral of
all rights and remedies of a secured lender under the UCC or any similar law of
any applicable jurisdiction or in equity.

(d) Without in any way limiting the generality of clause (c) above (but subject
to the rights of the Borrower and the other Loan Parties under the Financing
Documents and the provisions of Section 5.2(a)), the Collateral Agent, the
Administrative Agent, each Secured Commodity Hedge Counterparty and each other
Secured Party and any of them may, at any time and from time to time in
accordance with the Financing Documents and/or applicable law, without the
consent of or notice to any other Secured Party (to the extent no such consent
or notice is otherwise required hereunder), without incurring responsibility to
any other Secured Party and without impairing or releasing the Lien priorities
and other benefits provided in this Agreement (even if any right of subrogation
or other right or remedy of any other Secured Party is affected, impaired or
extinguished thereby), do one or more of the following:

(i) change the manner, place or terms of payment or change or extend the time of
payment of, or amend, renew, exchange, increase or alter, the terms of any of
the Secured Obligations or any Lien on any Collateral or guaranty thereof or any
liability of the Borrower or any other Loan Party, or any liability incurred
directly or indirectly in respect thereof (including any increase in (pursuant
to any incremental facilities under the Credit Agreement or otherwise) or
extension of the Secured Obligations, without any restriction as to the tenor or
terms of any such increase or extension) or otherwise amend, renew, exchange,
extend, modify or supplement in any manner any Liens held by the Collateral
Agent or any of the Secured Parties, the Secured Obligations or any of the
Financing Documents, including pursuant to Section 5.3;

 

19

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

(ii) sell, exchange, release, surrender, realize upon, enforce or otherwise deal
with in any manner and in any order any part of the Collateral or any liability
of the Borrower or any other Loan Party to the Secured Parties or the
Collateral, or any liability incurred directly or indirectly in respect thereof,
to the extent, in all such cases, that such Person has the right to take and is
not prohibited from taking such actions under any or all of the Financing
Documents;

(iii) settle or compromise any Secured Obligation or any other liability of the
Borrower or any other Loan Party or any security therefor or any liability
incurred directly or indirectly in respect thereof and apply any sums by
whomsoever paid and however realized to any liability (including the Secured
Obligations) in any manner or order; and

(iv) exercise or delay in or refrain from exercising any right or remedy against
the Borrower or any security or any other Loan Party or any other Person, elect
any remedy and otherwise deal freely with the Borrower, any other Loan Party or
any Collateral and any security and any guarantor or any liability of the
borrower or any other Loan Party to the Secured Parties or any liability
incurred directly or indirectly in respect thereof.

(e) Following notice of any Event of Default received pursuant to Section 5.4,
any Secured Debt Representative may request in writing that the Collateral Agent
pursue any lawful action in respect of the Collateral in accordance with the
terms of the Security Documents. Upon any such written request, the Collateral
Agent shall seek the consent of the Required Secured Parties to pursue such
action (it being understood that the Collateral Agent shall not be required to
advise the Required Secured Parties to pursue any such action). Following
receipt of any notice that a Event of Default has occurred, the Collateral Agent
may await direction from the Required Secured Parties and will act, or decline
to act, as directed by the Required Secured Parties, in the exercise and
enforcement of the Collateral Agent’s interests, rights, powers and remedies in
respect of the Collateral or under the Security Documents or applicable law and,
following the initiation of such exercise of remedies, the Collateral Agent will
act, or decline to act, with respect to the manner of such exercise of remedies
as directed by the Required Secured Parties. Subsequent to the Collateral Agent
receiving written notice that any Event of Default has occurred entitling the
Collateral Agent to foreclose upon, collect or otherwise enforce the First Liens
then, unless it has been directed to the contrary by the Required Secured
Parties, the Collateral Agent in any event may (but will not be obligated to)
take all lawful and commercially reasonable actions permitted under the Security
Documents that it may deem necessary or advisable in its reasonable judgment to
protect or preserve its interest in the Collateral and the interests, rights,
powers and remedies granted or available to the Collateral Agent under, pursuant
to or in connection with the Security Documents.

Notwithstanding anything to the contrary contained herein, nothing contained
herein shall be construed to impair the rights of any of the Collateral Agent or
the Deposit Letter of Credit Issuer to exercise their rights and remedies in
respect of Deposit L/C Collateral, and each of the parties hereto acknowledges
and agrees that the Lien and rights of any of the Collateral Agent or the
Deposit Letter of Credit Issuer, to and under Deposit L/C Collateral shall be
solely for the benefit of the specific beneficiaries thereof. With respect to
the Deposit L/C Loan Collateral, references in this Agreement to Required
Secured Parties shall be deemed references to the Required Deposit L/C Loan
Lenders until proceeds from the Deposit L/C Loan Collateral have been applied
pursuant to Section 4.1(b) to satisfaction of all priorities except “last”.

 

20

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

SECTION 4. Payments.

4.1 Application of Proceeds. Regardless of any Insolvency or Liquidation
Proceeding which has been commenced by or against the Borrower or any other Loan
Party, Collateral or any proceeds thereof received in connection with the sale
or other disposition of, or collection on, such Collateral upon the exercise of
remedies under the Security Documents by the Collateral Agent shall be applied
in the following order (it being agreed that the Collateral Agent shall apply
such amounts in the following order as promptly as is reasonably practicable
after the receipt thereof; provided that such amounts shall not be so applied
until such time as the amount of the Secured Obligations has been determined in
accordance with the terms hereof and under the terms of the relevant Financing
Document, including and subject to Sections 4.3 and 4.4 below)

(a) with respect to all Collateral other than Deposit L/C Collateral:

first, on a pro rata basis, to the payment of all amounts due to the Collateral
Agent, the Administrative Agent, and the Issuing Lenders (in such capacities)
(other than amounts constituting Interest Expenses) under any of the Financing
Documents, excluding in the case of the Issuing Lenders, amounts payable in
connection with any unreimbursed amount under any Letter of Credit;

second, on a pro rata basis to any Secured Party which has theretofore advanced
or paid any fees to any Agent or Issuing Lender, other than any amounts covered
by priority first, an amount equal to the amount thereof so advanced or paid by
such Secured Party and for which such Secured Party has not been previously
reimbursed;

third, on a pro rata basis, to the payment of, without duplication, (a) all
principal and other amounts then due and payable in respect of the Secured
Obligations (including Cash Collateralization of all outstanding Revolving
Letters of Credit as required under the Credit Agreement) and (b) the payment of
Permitted Secured Hedge Amounts then due and payable to any Secured Commodity
Hedge Counterparty under any Secured Commodity Hedge and Power Sales Agreement;
and

last, the balance, if any, after all of the Secured Obligations have been
indefeasibly paid in full in cash, to the Loan Parties or as otherwise required
by applicable law.

(b) with respect to Deposit L/C Collateral:

first, on a pro rata basis, to the payment of all amounts due to the Deposit
Letter of Credit Issuer under any of the Financing Documents, excluding amounts
payable in connection with any unreimbursed amount under any Letter of Credit;

second, on a pro rata basis, to the payment of all amounts due to the Deposit
Letter of Credit Issuer in an amount equal to 100% of the Unpaid Drawings under
any Deposit Letter of Credit;

third, on a pro rata basis, to any Secured Party which has theretofore advanced
or paid any fees to the Deposit Letter of Credit Issuer, other than any amounts
covered by priority second, an amount equal to the amount thereof so advanced or
paid by such Secured Party and for which such Secured Party has not been
previously reimbursed;

fourth, on a pro rata basis, to the payment of all other Deposit L/C
Obligations; and last, the balance, if any, after all of the Deposit L/C
Obligations have been indefeasibly paid in full in cash, as set forth above in
Section 4.1(a).

 

21

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

4.2 Limitations on Payment Post Default. After (a) the commencement of any
Insolvency or Liquidation Proceeding in respect of any Loan Party or (b) (i) any
of the Secured Obligations outstanding under any of the Financing Documents has
become due and payable in full (whether at maturity, upon acceleration or
otherwise) or any Secured Obligations outstanding under any of the Financing
Documents has not been paid when due and (ii) the Required Secured Parties have
instructed the Collateral Agent to enforce, collect or realize on any Collateral
or exercise any other right or remedy with respect to the Collateral (in the
case of either clause (a) or clause (b), a “Remedy Event”), no payment of cash
(or the equivalent of cash) shall be made from the proceeds of Collateral by any
Loan Party to the Collateral Agent for the benefit of any Secured Party, except
as provided for in Section 4.1.

4.3 Secured Obligation Balances. (a) Upon the written request of the Collateral
Agent, each Secured Debt Representative shall promptly (and, in any event,
within five Business Days) give the Collateral Agent written notice of the
aggregate amount of the Secured Obligations then outstanding and owed by the
Borrower or any other Loan Party to the Secured Parties represented by such
Secured Debt Representative under the applicable Financing Documents and any
other information that the Collateral Agent may reasonably request.

(b) Without limiting the foregoing, upon receipt of any of the monies referred
to in Section 4.1 above, the Collateral Agent shall promptly provide notice to
each Secured Debt Representative of the receipt of such monies. Within 10
Business Days of the receipt of such notice, each Secured Debt Representative
shall give the Collateral Agent written certification by an authorized officer
or representative thereof of the aggregate amount of the Secured Obligations
then outstanding owed by the Borrower or any other Loan Party to the Secured
Parties represented by such Secured Debt Representative under the applicable
Financing Documents to be certified to as presently due and owing and, as
applicable, after giving effect to the application of any Other Credit Support
in respect of such Secured Obligations as contemplated by Section 4.4 (and,
promptly upon receipt thereof, the Collateral Agent shall provide a copy of each
such certification to each other Secured Debt Representative). Unless otherwise
directed by a court of competent jurisdiction or each Secured Debt
Representative, the Collateral Agent shall use the information provided for in
such notices as the basis for applying such monies in accordance with
Section 4.1 above. Notwithstanding anything herein to the contrary, (i) the
proceeds of any Collateral shall not be applied to the Secured Obligations until
each Secured Commodity Hedge Counterparty shall have applied any Other Credit
Support to the Secured Obligations owing to such Secured Commodity Hedge
Counterparty, as contemplated by Section 4.4, and (ii) the proceeds of any
Collateral (other than Deposit L/C Collateral) shall not be applied to the
Deposit L/C Obligations until the full amount of the Deposit L/C Collateral
shall have been applied to the outstanding Deposit L/C Obligations.

(c) In calculating the amount of Secured Obligations owed to any Secured
Commodity Hedge Counterparty, Hedge Bank or Cash Management Bank, the applicable
Permitted Secured Hedge Amount and/or Termination Payment owed under any Secured
Commodity Hedge and Power Sales Agreement, Secured Hedging Agreement or Secured
Cash Management Agreement shall be determined by the relevant Secured Commodity
Hedge Counterparty, Hedge Bank or Cash Management Bank in accordance with the
terms of the relevant Secured Commodity Hedge and Power Sales Agreement, Secured
Hedging Agreement or Secured Cash Management Agreement, as applicable. In the
event that such Secured Commodity Hedge and Power Sales Agreement includes a
confirmed transaction that constitutes a Specified Collateral Permitted
Commodity Hedge and Power Sales Agreement, the relevant Secured Commodity Hedge
Counterparty shall determine the amount of the Termination Payment that is
either then due and payable or would be due and payable under

 

22

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

such Specified Collateral Permitted Commodity Hedge and Power Sales Agreement
and shall only setoff and net all Termination Payments that are entitled to the
relevant Specified Hedge Collateral, and such Termination Payments shall be
distinct from any other Termination Payment owed to the relevant Secured
Commodity Hedge Counterparty under any Secured Commodity Hedge and Power Sales
Agreement that does not constitute a Specified Collateral Permitted Commodity
Hedge and Power Sales Agreement or a Specified Collateral Permitted Commodity
Hedge and Power Sales Agreement that is secured by different Specified Hedge
Collateral.

4.4 Application of Other Credit Support. If following the occurrence of an Early
Termination Event under any Secured Commodity Hedge and Power Sales Agreement
any Loan Party shall fail to pay any of the Secured Obligations owing under such
Secured Commodity Hedge and Power Sales Agreement as and when required
thereunder, then each applicable Secured Commodity Hedge Counterparty agrees
that it shall, to the extent permitted under such Secured Commodity Hedge and
Power Sales Agreement and the terms of the applicable Other Credit Support, but
subject to the occurrence of any Other Credit Support Exception, promptly
(i) make a demand for payment under any Other Credit Support consisting of a
Letter of Credit or other letter of credit, cash collateral or a guarantee
issued in favor of such Secured Commodity Hedge Counterparty to support the
Secured Obligations of the Loan Parties under such Secured Commodity Hedge and
Power Sales Agreement and (ii) apply the proceeds received under any Other
Credit Support consisting of a Letter of Credit or other letters of credit, cash
collateral or guarantee and any cash consisting of Other Credit Support pledged
in favor of such Secured Commodity Hedge Counterparty to reduce the outstanding
amount of such Secured Obligations or enforcement action in connection
therewith.

4.5 Limitations on Obligations under Secured Commodity Hedge and Power Sales
Agreements With Respect to Specified Hedge Collateral. Notwithstanding anything
herein to the contrary in connection with any exercise of remedies, each Secured
Commodity Hedge Counterparty that is party to any Specified Collateral Permitted
Commodity Hedge and Power Sales Agreement shall only be entitled to amounts in
respect of its Secured Obligations arising thereunder to the extent that
proceeds from Collateral being applied pursuant to Section 4.1 constitute the
proceeds of Specified Hedge Collateral in respect of such Specified Collateral
Permitted Commodity Hedge and Power Sales Agreement.

SECTION 5. Other Agreements.

5.1 Releases. (a) Upon the request of any Loan Party in connection with any
Disposition of Collateral or any other transaction involving a proposed release
of Collateral or any guarantee (other than in connection with the exercise of
any Collateral Agent’s rights and remedies in respect of the Collateral provided
for herein) by any Loan Party, in each case to the extent permitted (if
addressed therein, or, otherwise, not prohibited) by the terms of the Credit
Agreement and by the terms of the other applicable Financing Documents
(including pursuant to Section 10.4 of the Credit Agreement) and in accordance
with the requirements (if any) of the relevant Security Documents, the
Collateral Agent will, at the Borrower’s request and sole cost and expense,
execute and deliver to such Loan Party such releases and other documents
(including UCC termination statements, reconveyances, customary pay off letters
and return of Collateral) as such Loan Party may reasonably request to evidence
and effectuate the concurrent release of (A) with respect to any Disposition,
any Lien granted under any of the Security Documents in any Collateral being
disposed of in connection with such Disposition, (B) with respect to any
Disposition in respect of all of the Capital Stock in, or assets of, such Loan
Party, such Loan Party from its Secured Obligations under the Financing
Documents and/or such assets from the Lien granted under any of the Security
Documents, or (C) with respect to any Subsidiary Guarantor that is designated as
an Unrestricted Subsidiary or where it is otherwise expressly provided that such
Subsidiary is no longer required to be a Guarantor under the Credit Agreement
and the other applicable Financing Documents, such Subsidiary from its Secured
Obligations under the Financing Documents and/or the assets of such Subsidiary
from the Lien granted under any of the Security Documents.

 

23

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

(b) Upon the Discharge of Secured Obligations, all rights to the Collateral
shall revert to the applicable Loan Party, and, upon the written request of the
Borrower, the Collateral Agent will, at the Borrower’s expense, (x) promptly
cause to be transferred and delivered, without any recourse, warranty or
representation whatsoever, any Collateral and any proceeds received in respect
thereof, (y) execute and deliver to the Borrower and the other Loan Parties such
UCC termination statements and other documentation as the Borrower or any other
Loan Party may reasonably request to effect the termination and release of the
Liens on the Collateral and (z) execute and deliver to the Borrower and the
other Loan Parties such other documentation as the Borrower or any other Loan
Party may reasonably request to affect the termination of such Loan Party’s
obligations under the Security Documents to which it is a party (other than any
such obligation which is intended by its terms to survive the Discharge of
Secured Obligations).

(c) Notwithstanding anything herein to the contrary, the Collateral Agent, on
behalf of the Secured Parties, will have the exclusive right (but subject to the
provisions of the Financing Documents) to make determinations regarding the
release or disposition of any of the Collateral, without any consultation with,
consent of, or notice to, with respect to any of the Collateral that does not
constitute Specified Hedge Collateral under any applicable Specified Collateral
Permitted Commodity Hedge and Power Sales Agreement, the Secured Commodity Hedge
Counterparty party thereto.

(d) Each of the Secured Commodity Hedge Counterparties party to a Specified
Collateral Permitted Commodity Hedge and Power Sales Agreement agrees that it
shall promptly, upon the written request of the Borrower, at the Borrower’s
expense, execute and deliver to the Borrower and other Loan Parties such
documentation as the Borrower may request from time to time to release any Lien
for their benefit in such capacity on any of the Collateral that does not
constitute Specified Hedge Collateral under the terms of Specified Collateral
Permitted Commodity Hedge and Power Sales Agreement to which it is a party.

(e) Subject to any requirements of the Financing Documents, including, without
limitation, Section 13.1 of the Credit Agreement, without further written
consent or authorization from any Secured Party, the Collateral Agent shall
execute any documents or instruments necessary to release any Collateral or
guarantee to the extent the relevant Secured Parties have consented to such
release in accordance with the terms of the Financing Documents.

5.2 Amendments to Financing Documents. (a) Terms of the Secured Obligations and
the Financing Documents may be amended, modified, supplemented or extended from
time to time, and the aggregate amount of the Secured Obligations may be
increased or Refinanced, in each event, without notice to or consent by any
Secured Party that is not a party to such Financing Document and without
affecting the provisions hereof, and the Lien priorities provided herein shall
not be altered or otherwise affected by any such amendment, modification,
supplement, extension, increase or Refinancing of the Secured Obligations, or
any portion thereof; provided, however, that (1) the holders of any such
Indebtedness that has been Refinanced under the Loan Documents (or any agent or
trustee therefor) execute and deliver an Accession Agreement to the Collateral
Agent in accordance with Section 5.3, and (2) any amendments to any Secured
Commodity Hedge and Power Sales Agreements shall be subject to Section 5.2(c).

(b) Notwithstanding anything herein to the contrary, during the continuance of
any Event of Default, to the extent permitted by the applicable Financing
Documents, any Secured Party shall be entitled in its reasonable discretion to
make payments or advances to the Collateral Agent, any Loan Party or any third
party for the purpose of protecting, preserving or defending the value of the
Collateral.

 

24

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

(c) Notwithstanding anything to the contrary in the Financing Documents but
subject to Sections 13.1 of the Credit Agreement and Section 5.2(e) below, if
the Lenders whose consent is required under Section 13.1 of the Credit Agreement
consent to any amendment, modification, termination or waiver of any provision
of the Financing Documents (other than any Secured Commodity Hedge and Power
Sales Agreement), or consent to any departure by any Loan Party therefrom, then
such amendment, modification, termination, waiver or consent shall apply
automatically to the comparable (if any) provision in any other Financing
Document (other than any Secured Commodity Hedge and Power Sales Agreement)
without the consent of any other Secured Party; provided that that (A) with
respect to any Secured Commodity Hedge and Power Sales Agreement, any such
amendment, modification, termination or waiver shall apply automatically to any
Commodity Hedge Covenant under such Secured Commodity Hedge and Power Sales
Agreement (except to the extent that such Secured Commodity Hedge and Power
Sales Agreement specifically provides otherwise), and (B) no amendment,
modification, termination or waiver shall be made to any provision of any Letter
of Credit issued as Other Credit Support in favor of any Secured Commodity Hedge
Counterparty without the prior written consent of such Secured Commodity Hedge
Counterparty.

(d) Notwithstanding anything to the contrary in this Agreement, and subject to
Section 5.2(e) below, in addition the consent of the Borrower, US Holdings and
the Subsidiary Guarantors required by Section 9.3(a), the consent of the
Required Secured Parties shall be required for all amendments, modifications,
waivers or terminations of this Agreement, other than as permitted pursuant to
Section 9.3(b) and (c) hereof.

(e) Notwithstanding anything to the contrary in this Agreement or in any of the
Security Documents, in any case where the Secured Commodity Hedge Counterparties
would be materially and adversely affected thereby, without the written consent
of the Required Commodity Hedge Counterparties and the Required Alternative
Commodity Hedge Counterparties (or, if less than all of the Secured Commodity
Hedge Counterparties are so disadvantaged or otherwise discriminated against,
the prior written consent of each such Secured Commodity Hedge Counterparty that
would be materially and adversely affected thereby), no amendment, modification,
termination or consent in respect of this Agreement or the Security Documents
shall be effective if the effect thereof would (directly or indirectly,
including through definitional terms used in any of the following): (A) amend
the definition of “Commodity Hedge and Power Sales Secured Obligations”, “Early
Termination Event”, “Eligible Hedge Voting Amount”, “Secured Commodity Hedge and
Power Sales Agreement”, “Obligations”, “Secured Parties”, “Floor Amount” (as it
applies to such Secured Commodity Hedge Counterparty), “Ordinary Course
Settlement Payments”, “Other Credit Support”, “Other Credit Support Amount”,
“Other Credit Support Exception”, “Permitted Secured Hedge Amount”, “Required
Secured Parties”, “Required Commodity Hedge Counterparties”, “Required
Alternative Commodity Hedge Counterparties”, “Secured Hedging Agreement” or
“Termination Payment”; (B) change the order of application of proceeds of
Collateral and other payments set forth in Section 4.1 or any other provision
setting forth a priority of payment in respect of the Secured Obligations (to
the extent such provisions relate to a Secured Commodity Hedge and Power Sales
Agreement); or (C) in the case of any Secured Commodity Hedge and Power Sales
Agreement, cause the Secured Obligations owed under any such Secured Commodity
Hedge and Power Sales Agreement to cease to be secured on a First Lien, pari
passu basis with all other Secured Obligations with respect to Collateral.
Notwithstanding the foregoing or anything to the contrary contained herein, no
amendment, modification, waiver, supplement, termination or consent shall be
made or given with respect to this

 

25

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

Agreement or any Security Document which has the effect of disproportionately
disadvantaging, or otherwise discriminating against, the Secured Commodity Hedge
Counterparties without the prior written consent of the Required Commodity Hedge
Counterparties and the Required Alternative Commodity Hedge Counterparties, or,
if less than all of the Secured Commodity Hedge Counterparties are so
disadvantaged or otherwise discriminated against, the prior written consent of
each such Secured Commodity Hedge Counterparty that would be materially and
adversely affected thereby.

5.3 Refinancings of Credit Agreement. (a) Subject to the limitations set forth
in the applicable Financing Documents (if any), each Loan Party and each Secured
Party acknowledges and agrees that the Credit Agreement may be Refinanced in
accordance with this Section 5.3. At any time concurrently with or after the
Discharge of Secured Obligations, the Borrower thereafter enters into a
Refinancing of the Credit Agreement (a “Replacement Credit Agreement”) and any
related Loan Documents (as defined in the Replacement Credit Agreement), then
such Discharge of Secured Obligations shall automatically be deemed not to have
occurred for all purposes of this Agreement (other than with respect to any
actions taken as a result of the occurrence of such first Discharge of Secured
Obligations) and, the Replacement Credit Agreement and related Loan Documents
(as defined in the Replacement Credit Agreement) and the obligations under such
Replacement Credit Agreement and related Loan Documents (as defined in the
Replacement Credit Agreement) shall automatically be treated as “Secured
Obligations”, “Loans”, “Posting Advances”, a “Credit Agreement”, and “Loan
Documents”, as applicable, and the parties and agents thereto “Lenders”, “Lender
Parties” and “Secured Parties”, as applicable, for all purposes of this
Agreement, including for purposes of the Lien priorities and rights in respect
of Collateral set forth herein, and the new administrative agent or trustee
thereunder, if any (the “New Administrative Agent”) shall automatically be
treated as the “Administrative Agent” hereunder and the New Collateral Agent (as
defined below) shall be appointed hereunder as the “Collateral Agent” for all
purposes of this Agreement. Upon receipt of a notice (the “New Debt Notice”)
stating that the Borrower has entered into a new Financing Document, which
notice shall include the identify of the new collateral agent (such agent, the
“New Collateral Agent”), the Secured Commodity Hedge Counterparties and all
other Secured Parties party hereto at such time shall promptly (a) enter into
such documents and agreements (including amendments or supplements to this
Agreement) as the Borrower or such New Collateral Agent shall reasonably request
in order to provide to the New Collateral Agent the rights contemplated hereby,
in each case consistent in all material respects with the terms of this
Agreement and (b) deliver to the New Collateral Agent any Pledged Collateral
held by it together with any necessary endorsements (or otherwise allow the New
Collateral Agent to obtain control of such Pledged Collateral).

(b) Upon termination of the Credit Agreement, including in connection any
amendment and restatement or Refinancing, the Liens securing the Secured
Commodity Hedge Counterparties shall survive.

5.4 Notices; Certain Actions. So long as any Secured Obligations remain
outstanding in respect of more than one class of Secured Parties, the following
provisions shall apply:

(a) Each Secured Debt Representative hereby agrees to give, pursuant to the
terms set forth in the Financing Documents, the Collateral Agent and each other
Secured Debt Representative prompt written notice of the occurrence of (i) any
Event of Default under such Person’s Financing Documents, as applicable, of
which such Person has written notice, and (ii) acceleration of the maturity of
any Secured Obligations under any of the Financing Documents for which it acts
as a Secured Debt Representative wherein such Secured Obligations have been
declared to be or have automatically become due and payable prior to the
scheduled maturity thereof or termination date thereunder (or similar remedial
actions including demands for cash collateral, have been taken) and setting
forth the aggregate amount of Secured Obligations that have been so

 

26

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

accelerated under such Financing Documents, in each case, as soon as practicable
after the occurrence thereof (and, in any event, within five Business Days after
the occurrence thereof); provided, however, that the failure to provide such
notice shall not limit or impair the rights of the Secured Parties, or the
obligations of the Borrower or any other Loan Party, hereunder or under the
other Financing Documents. No Agent shall be deemed to have knowledge or notice
of the occurrence of an Event of Default under the Financing Documents to which
it is a party until such Agent has received a written notice of such Event of
Default from any other Agent, the Borrower, the other Loan Parties or any other
Secured Party for whom such Agent is acting as agent or trustee.

(b) The Collateral Agent hereby agrees to give each Secured Debt Representative
written notice of the occurrence of an Event of Default following receipt
thereof of written notice to it and provide a copy of all other information
provided to it by the Borrower or any other Loan Party under the Security
Documents upon request.

(c) Each Loan Party hereby agrees that, at any time and from time to time, at
its sole cost and expense, it shall promptly execute and deliver all further
agreements, instruments, documents and certificates and take all further action
that may be necessary in order to fully effect the purposes of this Agreement
and the Security Documents (including, to the extent required by any Security
Document, the delivery of possession of any Collateral represented by
certificated securities that hereafter comes into existence or is acquired in
the future to the Collateral Agent as pledgee for the benefit of the Secured
Parties) and to enable the Collateral Agent to exercise and enforce their rights
and remedies under the Security Documents with respect to the Collateral or any
part thereof.

(d) Each of the Secured Commodity Hedge Counterparties agrees that if, at any
time and from time to time, any or all of the Credit Agreement is Refinanced in
whole or in part, and in connection with any such Refinancing it is necessary
(as reasonably determined by the Borrower) for the parties to enter into one or
more new agreement(s) setting forth the agreements of the parties with respect
to certain intercreditor arrangements, guarantees or new collateral or security
documents, it shall execute such agreements and documents as the Borrower may
reasonably request in respect thereof to the extent that such agreements and
documents are otherwise in accordance with the terms of the Secured Commodity
Hedge and Power Sales Agreement to which it is a party (it being acknowledged
and agreed that any intercreditor arrangements, guarantees or new collateral or
security documents which contain materially the same provisions as the then
existing comparable agreements and that do not have the effect of
disproportionately disadvantaging, or otherwise discriminating against, such
Secured Commodity Hedge Counterparty to any greater extent than in the existing
comparable agreements, shall be deemed to be acceptable to such Secured
Commodity Hedge Counterparty); provided, that, notwithstanding any provision in
this clause to the contrary, no Secured Commodity Hedge Counterparty shall be
obligated to execute any intercreditor, collateral, security, guarantee or other
document unless any applicable Security Documents secure the Loan Parties’
obligations to such Secured Commodity Hedge Counterparty on a first lien pari
passu basis with the other Secured Obligations as contemplated by this Agreement
as in effect on the date hereof.

5.5 Letters of Credit; Cash Collateral Accounts; Acknowledgment of Security
Interest . (a) Subject to the terms of this Section 5.5(a), nothing contained in
this Agreement shall be construed (i) to impair the rights of any Secured
Commodity Hedge Counterparty to exercise its rights and remedies with respect to
any cash collateral pledged for its sole benefit or as a beneficiary under and
pursuant to any Other Credit Support issued or pledged in its favor in
accordance with the terms of all of the Financing Documents, (ii) to impair the
rights of any Commodity Hedging Counterparty to exercise any of its rights and
remedies as an unsecured creditor under any or all Secured Hedging Agreements,
subject to Section 3.1(b), or (iii) to impair the rights of any Secured
Commodity Hedge Counterparty to exercise its rights to setoff and net amounts
under and among any Secured Hedging Agreement to which

 

27

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

it is a party in accordance with the terms thereof; provided that each Secured
Commodity Hedge Counterparty agrees that it shall only exercise such rights of
setoff and netting, in the case of any Secured Commodity Hedge Counterparty,
among amounts owing by or to such Secured Commodity Hedge Counterparty under any
Secured Hedging Agreements to which it is a party.

(b) Notwithstanding anything to the contrary, in the event any Cash Collateral
Accounts are established in connection with cash collateralizing Letters of
Credit as contemplated by the definition of Discharge of Secured Obligations or
as otherwise contemplated by the Financing Documents, such collateral account
shall only be for the benefit of the particular Secured Party or Secured Parties
who issued or have participation interests in such Letters of Credit being cash
collateralized.

(c) Each of the Secured Commodity Hedge Counterparties hereby acknowledges and
consents to the applicable Loan Party’s collateral assignment (subject to
Section 5.5(a)) for the benefit of the Secured Parties of such Loan Party’s
rights, title and interest, in, to and under each of the Secured Commodity Hedge
and Power Sales Agreements to which it is a party.

5.6 Additional Obligations. (a) Subject to the limitations set forth in the
Financing Documents, each Loan Party and each Secured Party acknowledges and
agrees that the Collateral may secure additional obligations of the Borrower and
the other Loan Parties in respect of (i) the Refinancing of the Credit
Agreement, which shall be subject to Section 5.3, (ii) additional Secured
Commodity Hedge and Power Sales Agreements, and (iii) Additional Obligations, in
each case subject to compliance with this Section 5.6. Upon (x) execution and
delivery to the Collateral Agent of an Accession Agreement by the Persons to
whom the obligations referred to in the immediately precedent sentence are owed
(or by the agent or trustee representing such Person), (y) compliance with the
procedures set forth in clause (b) below, and (z) upon satisfaction of all
requirements set forth in this Agreement and the Security Documents as to the
confirmation, grant or perfection of the Collateral Agent’s Lien to secure such
obligations, such Persons shall become “Secured Parties” hereunder, and the Loan
Parties’ obligations to such Persons shall become “Secured Obligations”
hereunder, and the agreements representing such obligations shall become
“Financing Documents” hereunder. Each Loan Party and each Secured Party agrees
that this Agreement and the applicable Security Documents may be amended by the
Loan Parties and the Collateral Agent without the consent of any Secured Party
to the extent necessary or desirable to (i) effectuate the intent of this
Section 5.6, (ii) cause the Liens granted thereby to be in favor of such Persons
(to the extent Liens in favor of such Persons are permitted (if addressed
therein, or, otherwise, not prohibited) by the terms of the Credit Agreement and
by the terms of all of the other applicable Financing Documents) and (iii) cause
such Persons to be treated in the same manner as the other Secured Parties under
this Agreement and the other Security Documents.

(b) With respect to any additional obligations referred to in Section 5.6(a)
above to be secured hereunder after the date hereof, the Borrower will be
permitted to designate as an additional holder of Secured Obligations hereunder
each Person who is, or who becomes, the holder of Secured Obligations incurred
by the Borrower or a Subsidiary Guarantor in accordance with and as permitted
(if addressed therein, or, otherwise, not prohibited) by the terms of the Credit
Agreement and by the terms of the other applicable Financing Documents. The
Borrower may effect such designation by delivering to the Collateral Agent, with
copies to each Secured Debt Representative, each of the following:

(1) a certificate of a Responsible Officer of the Borrower stating that the
Borrower or the relevant Subsidiary Guarantor intends, as applicable,

 

28

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

(A) to enter into an additional Secured Commodity Hedge and Power Sales
Agreement, and that such additional obligations will be Secured Obligations and
are permitted (if addressed therein, or, otherwise, not prohibited) by the terms
of the Credit Agreement and by the terms of the other applicable Financing
Documents to be incurred by the relevant Loan Party and secured by a First Lien
equally and ratably with all previously existing and future Security
Obligations, or

(B) to incur Additional Obligations, which obligations will be Secured
Obligations, and are permitted (if addressed therein, or, otherwise, not
prohibited) by the terms of the Credit Agreement and by the terms of the other
applicable Financing Documents to be incurred by the relevant Loan Party and
secured with a First Lien equally and ratably with all previously existing and
future Secured Obligations; and

(2) a written notice specifying the name and address of the Secured Debt
Representative for such additional obligations for purposes of this Agreement.

(c) Notwithstanding the foregoing, nothing in this Agreement will be construed
to allow any Loan Party to incur additional Indebtedness or grant additional
Liens unless in each case otherwise permitted (if addressed therein, or,
otherwise, not prohibited) by the terms of the Credit Agreement and by the terms
of all other applicable Finance Documents.

SECTION 6. Insolvency or Liquidation Proceedings.

6.1 Finance and Sale Issues. If the Borrower or any other Loan Party shall be
subject to any Insolvency or Liquidation Proceeding and the Collateral Agent
(acting at the direction of the Required Lenders) shall desire to permit the use
of “Cash Collateral” (as such term is defined in Section 363(a) of the
Bankruptcy Code), on which the Collateral Agent or any other creditor has a Lien
(other than Deposit L/C Collateral) or to permit the Borrower or any other Loan
Party to obtain financing, whether from the Secured Parties or any other Person
under Section 364 of the Bankruptcy Code or any similar Bankruptcy Law (“DIP
Financing”), then the Administrative Agent (on behalf of itself and the Lender
Parties), each Secured Commodity Hedge Counterparty, and each other Secured
Party agrees that such Secured Party (a) will be deemed to have consented to,
will raise no objection to, nor support any other Person objecting to, the use
of such Cash Collateral or such DIP Financing so long as (i) each Secured Party
retains the right to object to such use of Cash Collateral or to the granting of
any priming liens over any Collateral if the terms thereof, including the terms
of adequate protection (if any) granted to the Secured Parties in connection
therewith, do not provide for materially equal treatment to all Secured Parties,
(ii) the DIP Financing does not expressly require the liquidation of any
Collateral prior to a default under the DIP Financing documentation and (iii) if
any Cash Collateral order contemplates the liquidation of Collateral, such order
provides that the Liens of the Secured Parties will attach to the proceeds of
such liquidation equally and ratably, (b) will not request or accept adequate
protection or any other relief in connection with the use of such Cash
Collateral or such DIP Financing, and (c) agrees that notice received two
calendar days prior to the entry of an order approving such usage of Cash
Collateral or approving such DIP Financing shall be adequate notice.

6.2 Avoidance Issues. If any Secured Party is required in any Insolvency or
Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate
of the Borrower or any other Loan Party for any reason, including without
limitation because it was found to be a fraudulent or preferential transfer, any
amount paid in respect of the Secured Obligations (a “Recovery”), whether
received as proceeds of security, enforcement of any right of set-off or
otherwise, then such Secured Party shall be entitled to a reinstatement of
Secured Obligations with respect to all such recovered amounts. In such event
(a) the Discharge of Secured Obligations shall be deemed not to have occurred
and (b) if this Agreement shall have been terminated prior to such Recovery,
this Agreement shall be reinstated in full force and effect, and such prior
termination shall not diminish, release, discharge, impair or otherwise affect
the obligations of the parties hereto from such date of reinstatement. To the
extent that such

 

29

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

recovered amount had previously reduced the Eligible Hedge Voting Amount of any
Secured Commodity Hedge Counterparty, then upon reinstatement pursuant to this
Section 6.2, such amount shall be added back to such Secured Party’s Eligible
Hedge Voting Amount.

6.3 Certain Bankruptcy Rights of Secured Commodity Hedge Counterparties.
Notwithstanding anything to the contrary contained herein, but without prejudice
to any requirement to distribute Collateral or the proceeds of Collateral among
the parties in accordance with the terms hereof, nothing in this Agreement shall
constitute a waiver of, or otherwise impair the exercise of, any rights which
the Secured Commodity Hedge Counterparties may have under the following
provisions of the Bankruptcy Code: Section 362(b)(6), (17) and (27),
Section 546(e), (g) and (j), Section 556, Section 560 and/or Section 561.

SECTION 7. Collateral Agent.

7.1 Appointment. (a) Citibank is hereby appointed Collateral Agent hereunder and
under the other Financing Documents and each of the Administrative Agent (for
itself and on behalf of each Lender Party), each Secured Commodity Hedge
Counterparty and each other Secured Party hereby authorizes Citibank to act as
Collateral Agent in accordance with the terms hereof and the other Security
Documents. The Collateral Agent hereby agrees to act in its capacity as such
upon the express conditions contained herein and the other Security Documents,
as applicable. In performing its functions and duties hereunder, the Collateral
Agent shall act solely as an agent of the Secured Parties and does not assume
and shall not be deemed to have assumed any obligation towards or relationship
of agency or trust with or for any Loan Party or any of its Subsidiaries. Each
of the Administrative Agent (for itself and on behalf of each Lender Party),
each Secured Commodity Hedge Counterparty and each other Secured Party
irrevocably authorizes the Collateral Agent to take such action on their behalf
and to exercise such powers, rights and remedies hereunder and under the other
Security Documents as are specifically delegated or granted to the Collateral
Agent by the terms hereof and thereof, together with such powers, rights and
remedies as are reasonably incidental thereto. The Collateral Agent shall have
only those duties and responsibilities that are expressly specified herein and
the other Financing Documents. The Collateral Agent may exercise such powers,
rights and remedies and perform such duties by or through its agents or
employees. The Collateral Agent shall not have, by reason hereof or any of the
other Financing Documents, a fiduciary relationship in respect of any Secured
Party, and nothing herein or in any of the other Financing Documents, expressed
or implied, is intended to or shall be so construed as to impose upon the
Collateral Agent any obligations in respect hereof or any of the other Financing
Documents except as expressly set forth herein or in the other Security
Documents.

(b) Except as expressly set forth in this Section 7, the provisions of this
Section 7 are solely for the benefit of the Collateral Agent and the Secured
Parties, and no Loan Party shall have any rights as a third party beneficiary of
any of the provisions hereof.

7.2 Delegation of Duties. (a) The Collateral Agent may execute any of its duties
under this Agreement and the Financing Documents (including for purposes of
holding or enforcing any Lien on the Collateral or any portion thereof granted
under the Security Documents or of exercising any rights or remedies thereunder)
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel and other consultants or experts of its choice concerning all matters
pertaining to such duties. The Collateral Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact selected by it with
reasonable care.

(b) The Collateral Agent may also from time to time, when the Collateral Agent
deems it to be necessary or desirable, appoint one or more trustees,
co-trustees, collateral co-agents, collateral subagents or attorneys-in-fact
(each, a “Supplemental Collateral Agent”) with respect to all

 

30

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

or any part of the Collateral; provided, however, that no such Supplemental
Collateral Agent shall be authorized to take any action with respect to any
Collateral unless and except to the extent expressly authorized in writing by
such Collateral Agent. Should any instrument in writing from US Holdings, the
Borrower or any other Loan Party be required by any Supplemental Collateral
Agent so appointed by the Collateral Agent to more fully or certainly vest in
and confirm to such Supplemental Collateral Agent such rights, powers,
privileges and duties, US Holdings or the Borrower shall, or shall cause such
Loan Party to, execute, acknowledge and deliver any and all such instruments
promptly upon request by the Collateral Agent. If any Supplemental Collateral
Agent, or successor thereto, shall die, become incapable of acting, resign or be
removed, all rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall automatically vest in
and be exercised by the Collateral Agent until the appointment of a new
Supplemental Collateral Agent. No Agent shall be responsible for the negligence
or misconduct of any agent, attorney-in-fact or Supplemental Collateral Agent
that it selects in accordance with the foregoing provisions of this
Section 7.2(b) in the absence of such Agent’s gross negligence or willful
misconduct (as determined by a final non-appealable judgment of a court of
competent jurisdiction).

(c) Any notice, request or other writing given to the Collateral Agent shall be
deemed to have been given to each Supplemental Collateral Agent. Every
instrument appointing any Supplemental Collateral Agent shall refer to this
Agreement and the conditions of this Section 7.2.

(d) Any Supplemental Collateral Agent may at any time appoint the Collateral
Agent as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf or in its name.

7.3 Exculpatory Provisions. (a) The Neither the Collateral Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(a) liable for any action lawfully taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Financing Document
(except for its or such Person’s own gross negligence or willful misconduct, as
determined in the final non-appealable judgment of a court of competent
jurisdiction, in connection with its duties expressly set forth herein) or
(b) responsible in any manner to any of the Secured Parties for any recitals,
statements, representations or warranties made by any of US Holdings, the
Borrower, any other Guarantor, any other Loan Party or any officer thereof
contained in this Agreement or any other Financing Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Collateral Agent under or in connection with, this Agreement
or any other Financing Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Financing Document, or the perfection or priority of any Lien or security
interest created or purported to be created under any of the Financing
Documents, or for any failure of US Holdings, the Borrower, any other Guarantor
or any other Loan Party to perform its obligations hereunder or thereunder. The
Collateral Agent shall not be under any obligation to any Lender Party to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Financing
Document, or to inspect the properties, books or records of any Loan Party or
any Affiliate thereof. The Collateral Agent shall not be under any obligation to
the Administrative Agent, Secured Commodity Hedge Counterparty or any other
Secured Party to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Financing Document, or to inspect the properties, books or records of any
Loan Party.

(b) The Collateral Agent shall be entitled to refrain from any act or the taking
of any action (including the failure to take an action) in connection herewith
or any of the other Security Documents or from the exercise of any power,
discretion or authority vested in it hereunder or thereunder unless and until
the Collateral Agent shall have received a direction of the Required

 

31

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

Secured Parties and, upon receipt of such direction the Collateral Agent shall
be entitled to act or (where so instructed) refrain from acting, or to exercise
such power, discretion or authority, in accordance with such directions. Without
prejudice to the generality of the foregoing; (i) the Collateral Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper Person or Persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for a Loan Party), accounts, experts and other
professional advisors selected by it; (ii) no Secured Party shall have any right
of action whatsoever against the Collateral Agent as a result of the Collateral
Agent acting or (where so instructed) refraining from acting hereunder or any of
the other Security Documents in accordance with a direction of the Required
Secured Parties; and (iii) the Collateral Agent shall be fully protected in
performing (and is hereby authorized by the Secured Parties to perform) the
ministerial and administrative acts contemplated by or expressly provided in the
Collateral Documents. Whenever in the administration of this Agreement the
Collateral Agent shall deem it necessary or desirable that a factual or legal
matter be proved or established in connection with the Collateral Agent taking,
suffering or omitting to take any action hereunder, such matter (unless other
evidence in respect thereof is herein specifically prescribed) may be deemed to
be conclusively proved or established by a certificate of a Responsible Officer
of the Borrower or, if appropriate, from a legal opinion from counsel to the
Borrower.

(c) Beyond the exercise of reasonable care in the custody thereof and is
otherwise specifically set forth herein, the Collateral Agent shall not have any
duty as to any of the Collateral in its possession or control or in the
possession or control of any agent or a bailee or any income thereon or as to
preservation of rights against prior parties or any other rights pertaining
thereto and the Collateral Agent shall not be responsible for filing any
financing or continuation statements or recording any documents or instruments
in any public office at an time or times or otherwise perfecting or maintaining
the perfection of any security interest in the Collateral. The Collateral Agent
shall not be liable or responsible for any loss or diminution in the value of
any of the Collateral, by reason of the act or omission of any carrier
forwarding agency or other agent or bailee selected by the Collateral Agent in
good faith.

(d) The Collateral Agent shall be fully justified in failing or refusing to take
any action under this Agreement or under any other Security Document (i) if such
action would, in the reasonable opinion of the Collateral Agent, be contrary to
applicable law or the terms of this Agreement or (ii) if such action is not
specifically provided for in this Agreement or under any other Collateral
Document, it shall not have received a direction of the Required Secured Parties
to take such action.

7.4 Notice of Event of Default. The Collateral Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless
the Collateral Agent has received notice from a Secured Party or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a “notice of default”. In the event that the
Collateral Agent receives such a notice, it shall give notice thereof to the
other Secured Parties.

7.5 Non-Reliance on Collateral Agent and Other Secured Parties. Each of the
Administrative Agent (on behalf of itself and each Lender Party), each Secured
Commodity Hedge Counterparty and each other Secured Party expressly acknowledges
that neither the Collateral Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates has made any representations or
warranties to it and that no act by the Collateral Agent hereinafter taken,
including any review of the affairs of US Holdings, the Borrower, any other
Guarantor or any other Loan Party, shall be deemed to constitute any
representation or warranty by the Collateral Agent to such Person. Each of the

 

32

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

Administrative Agent (on behalf of itself and each Lender Party), each Secured
Commodity Hedge Counterparty and each other Secured Party represents to the
Collateral Agent that it has, independently and without reliance upon the
Collateral Agent or any other Secured Party, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of US Holdings, the Borrower, each other
Guarantor and each other Loan Party and made its own decision to make its
extensions of credit under the Financing Documents and enter into this
Agreement. Each of the Administrative Agent (on behalf of itself and each Lender
Party), each Secured Commodity Hedge Counterparty and each other Secured Party
also represents that it will, independently and without reliance upon the
Collateral Agent or any other Secured Party, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Financing Documents, and to make such investigation
as it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of US Holdings, the Borrower,
each other Guarantor and each other Loan Party. The Collateral Agent shall have
no duty or responsibility to provide any Secured Party with any credit or other
information concerning the business, assets, operations, properties, financial
condition, prospects or creditworthiness of US Holdings, the Borrower, any other
Guarantor or any other Loan Party that may come into the possession of the
Collateral Agent any of its respective officers, directors, employees, agents,
attorneys-in-fact or Affiliates.

7.6 Collateral Agent in Individual Capacity. The Collateral Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with US Holdings, the Borrower, any other Guarantor, and any
other Loan Party as though the Collateral Agent were not a Collateral Agent
hereunder and under the other Financing Documents. With respect to the loans
made by it, the Collateral Agent shall have the same rights and powers under the
Credit Agreement and the other Financing Documents as any Secured Party and may
exercise the same as though it were not a Collateral Agent, and the terms
“Lender Party” and “Lender Parties” shall include the Collateral Agent in its
individual capacity and under the Loan Documents.

7.7 Successor Collateral Agents. The Collateral Agent may at any time give
notice of its resignation to the Secured Parties and the Borrower. Upon receipt
of any such notice of resignation, the Required Secured Parties shall have the
right, subject to the consent of the Borrower (not to be unreasonably withheld
or delayed) so long as no Default under Section 11.1 or 11.5 of the Credit
Agreement is continuing, to appoint a successor, which shall be a bank with an
office in the United States, or an Affiliate of any such bank with an office in
the United States. If no such successor shall have been so appointed by the
Required Secured Parties and shall have accepted such appointment within 30 days
after the retiring Collateral Agent gives notice of its resignation, then the
retiring Collateral Agent may on behalf of the Secured Parties, appoint a
successor Collateral Agent meeting the qualifications set forth above; provided
that if the Collateral Agent shall notify the Secured Parties and the Borrower
that no qualifying person has accepted such appointment, then such resignation
shall nonetheless become effective in accordance with such notice and (x) the
retiring Collateral Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
collateral security held by the Collateral Agent on behalf of the Secured
Parties under any of the Loan Documents, the retiring Collateral Agent shall
continue to hold such collateral security, until such time as a successor
Collateral Agent is appointed and (y) all payments, communications and
determinations provided to be made by, to or through such Collateral Agent shall
instead be made by or to each Secured Party under any of the Loan Documents
directly, until such time as the Required Secured Parties with (except after the
occurrence and during the continuation of a Default or Event of Default) the
consent of the Borrower (not to be unreasonably withheld) appoint a successor
Collateral Agent as provided for above in this paragraph. Upon the acceptance of
a successor’s appointment as the Collateral Agent hereunder, and upon the
execution and filing or recording of such financing statements, or amendments

 

33

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

thereto, and such amendments or supplements to the Mortgages, and such other
instruments or notices, as may be necessary or desirable, or as the Required
Secured Parties may request, in order to continue the perfection of the Liens
granted or purported to be granted by the Security Documents, such successor
shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring (or retired) Collateral Agent, and the retiring
Collateral Agent shall be discharged from all of its duties and obligations
hereunder or under the other Financing Documents (if not already discharged
therefrom as provided above in this Section). The fees payable by the Borrower
(following the effectiveness of such appointment) to such Collateral Agent shall
be the same as those payable to its predecessor unless otherwise agreed between
the Borrower and such successor. After the retiring Collateral Agent’s
resignation hereunder and under the other Financing Documents, the provisions of
this Section 7 shall continue in effect for the benefit of such retiring
Collateral Agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while the retiring
Collateral Agent was acting as an Collateral Agent.

7.8 Security Documents. (a) Agents under Security Documents and Guarantee. Each
of the Administrative Agent (on behalf of itself and each Lender Party), each
Secured Commodity Hedge Counterparty and each other Secured Party hereby further
authorizes the Collateral Agent, on behalf of and for the benefit of the Secured
Parties, to be the agent for and representative of the Secured Parties with
respect to the Collateral and the Security Documents. Subject to Section 5.1,
without further written consent or authorization from any Secured Party, the
Collateral Agent may execute any documents or instruments necessary to in
connection with a sale or disposition of assets permitted the Credit Agreement
and an other applicable Financing Document, (i) release any Lien encumbering any
item of Collateral that is the subject of such sale or other disposition of
assets, or with respect to which Required Secured Parties (or such other Secured
Parties as may be required to give such consent) have otherwise consented or
(ii) release any Guarantor from the Guarantee, or with respect to which Required
Secured Parties (or such other Secured Parties as may be required to give such
consent) have otherwise consented.

(b) Right to Realize on Collateral and Enforce Guarantee. Anything contained in
any of the Financing Documents to the contrary notwithstanding, US Holdings, the
Borrower, the Collateral Agent and each Secured Party hereby agree that (i) no
Secured Party shall have any right individually to realize upon any of the
Collateral or to enforce the Guarantee, it being understood and agreed that all
powers, rights and remedies hereunder may be exercised solely by the Collateral
Agent, on behalf of the Secured Parties in accordance with the terms hereof and
all powers, rights and remedies under the Security Documents and Guarantee may
be exercised solely by the Collateral Agent, on behalf of the Secured Parties,
and (ii) in the event of a foreclosure by the Collateral Agent on any of the
Collateral pursuant to a public or private sale or other disposition, the
Collateral Agent or any Secured Party may be the purchaser or licensor of any or
all of such Collateral at any such sale or other disposition and the Collateral
Agent, as agent for and representative of the Secured Parties (but not any
Secured Party or Secured Parties in its or their respective individual
capacities unless Required Secured Parties shall otherwise agree in writing)
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at any such
public sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any collateral payable by the Collateral Agent
at such sale or other disposition.

7.9 Indemnification. Each Lender Party (through the Administrative Agent), each
Secured Commodity Hedge Counterparty and each other Secured Party agrees to
indemnify the Collateral Agent, in its capacity as such (to the extent not
reimbursed by the Loan Parties and without limiting the obligation of the Loan
Parties to do so), ratably according to their respective portions of the Secured
Obligations in effect on the date on which indemnification is sought, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or

 

34

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

disbursements of any kind whatsoever that may at any time occur, be imposed on,
incurred by or asserted against the Collateral Agent in any way relating to or
arising out of this Agreement, any of the other Financing Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Collateral
Agent under or in connection with any of the foregoing; provided that no Secured
Party shall be liable to the Collateral Agent for the payment of any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Collateral Agent’s
gross negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction (SUBJECT TO THE PROVISO BELOW,
WHETHER OR NOT CAUSED BY OR ARISING IN WHOLE OR IN PART, OUT OF THE COMPARATIVE,
CONTRIBUTORY OR SOLE ORDINARY NEGLIGENCE OF THE INDEMNIFIED PARTY); provided,
further, that no action taken in accordance with the directions of the Required
Secured Parties (or such other number or percentage of the Secured Parties as
shall be required) shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section 7.9. In the case of any investigation,
litigation or proceeding giving rise to any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever that may at any time occur, this Section 7.9 applies
whether any such investigation, litigation or proceeding is brought by any
Secured Party or any other Person. Without limitation of the foregoing, each
Secured Party shall reimburse the Collateral Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including attorneys’ fees)
incurred by the Collateral Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice
rendered in respect of rights or responsibilities under, this Agreement, any
other Financing Document, or any document contemplated by or referred to herein,
to the extent that the Collateral Agent is not reimbursed for such expenses by
or on behalf of the Borrower; provided that such reimbursement by the Secured
Party shall not affect the Borrower’s continuing reimbursement obligations with
respect thereto. If any indemnity furnished to the Collateral Agent for any
purpose shall, in the opinion of the Collateral Agent, be insufficient or become
impaired, the Collateral Agent may call for additional indemnity and cease, or
not commence, to do the acts indemnified against until such additional indemnity
is furnished; provided in no event shall this sentence require any Secured Party
to indemnify the Collateral Agent against any liability, obligation, loss,
damage, penalty, action, judgment, suit, cost, expense or disbursement in excess
of such Secured Party’s pro rata portion thereof; and provided further, this
sentence shall not be deemed to require any Secured Party to indemnify the
Collateral Agent against any liability, obligation, loss, damage, penalty,
action, judgment, suit, cost, expense or disbursement resulting from the
Collateral Agent’s gross negligence or willful misconduct (as determined by a
final non-appealable judgment of a court of competent jurisdiction). The
agreements in this Section 7.9 shall survive the termination of this Agreement.

SECTION 8. Reliance; Waivers; Etc.

8.1 Reliance. Other than any reliance on the terms of this Agreement, the
Administrative Agent (on behalf of itself and each Lender Party) acknowledges
that it has, independently and without reliance on any Secured Commodity Hedge
Counterparty and based on documents and information deemed by it appropriate,
made its own credit analysis and decision to enter into such Financing Documents
and be bound by the terms of this Agreement and it will continue to make its own
credit decision in taking or not taking any action under the Financing Document
or this Agreement. Each Secured Commodity Hedge Counterparty acknowledges that
it has independently and without reliance on the Administrative Agent or any
other Secured Party, and based on documents and information deemed by it
appropriate, made its own credit analysis and decision to enter into each of the
Financing Documents and be bound by the terms of this Agreement and it will
continue to make its own credit decision in taking or not taking any action
under the Financing Documents.

 

35

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

8.2 No Warranties or Liability. (a) The Administrative Agent (on behalf of
itself and each Lender Party) acknowledges and agrees that no Secured Commodity
Hedge Counterparty has made any express or implied representation or warranty,
including with respect to the execution, validity, legality, completeness,
collectibility or enforceability of any of any Secured Commodity Hedge and Power
Sales Agreement, the ownership of any Collateral or the perfection or priority
of any Liens thereon. Except as otherwise expressly provided herein, the Secured
Parties will be entitled to manage and supervise their respective loans and
extensions of credit under the Financing Documents in accordance with law and as
they may otherwise, in their sole discretion, deem appropriate.

(b) Except as otherwise provided herein, each Secured Commodity Hedge
Counterparty acknowledges and agrees that none of the Administrative Agent nor
any Lender Party has made express or implied representation or warranty,
including with respect to the execution, validity, legality, completeness,
collectibility or enforceability of any of the Loan Documents, the ownership of
any Collateral or the perfection or priority of any Liens thereon. Except as
otherwise expressly provided herein, the Secured Commodity Hedge Counterparty
will be entitled to manage and supervise their respective transactions under
their respective Secured Commodity Hedge and Power Sales Agreement in accordance
with law and as they may otherwise, in their sole discretion, deem appropriate.

8.3 Obligations Unconditional. All rights, interests, agreements and obligations
of each of the Collateral Agent, the Administrative Agent and the Secured
Parties, respectively, hereunder shall remain in full force and effect
irrespective of:

(a) any lack of validity or enforceability of any Financing Documents;

(b) except as otherwise expressly set forth in this Agreement, any change in the
time, manner or place of payment of, or in any other terms of, all or any of the
Secured Obligations or any amendment or waiver or other modification, including
any increase in the amount thereof, whether by course of conduct or otherwise,
of the terms of any Financing Document;

(c) except as otherwise expressly set forth in this Agreement, any exchange of
any security interest in any Collateral or any other collateral, or any
amendment, waiver or other modification, whether in writing or by course of
conduct or otherwise, of all or any of the Secured Obligations or any guarantee
thereof;

(d) the commencement of any Insolvency or Liquidation Proceeding in respect of
the Borrower or any other Loan Party; or

(e) any other circumstances which otherwise might constitute a defense available
to, or a discharge of, US Holdings, the Borrower or any other Loan Party in
respect of the Collateral Agent, the Secured Obligations, or any Secured Party.

SECTION 9. Miscellaneous.

9.1 Conflicts. In the event of any conflict between the provisions of this
Agreement and the provisions of any other Financing Document, the provisions of
this Agreement shall govern and control.

9.2 Effectiveness; Continuing Nature of this Agreement; Severability. (a) This
Agreement shall become effective when executed and delivered by each of the
parties hereto. The terms of this Agreement shall survive, and shall continue in
full force and effect, in any Insolvency or Liquidation Proceeding.

 

36

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

(b) Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. All references to any Loan Party shall include such Loan
Party as debtor and debtor-in-possession and any receiver or trustee for such
Loan Party (as the case may be) in any Insolvency or Liquidation Proceeding.

(c) This Agreement shall terminate and be of no further force and effect on the
date of Discharge of Secured Obligations, subject to the rights of the
Collateral Agent, the Administrative Agent and the Secured Parties under
Sections 5.3 and 6.2.

9.3 Amendments; Waivers. (a) Subject to Section 9.3(b), Section 9.3(c),
Section 9.3(d) and Section 5.6, no amendment, modification or waiver of any of
the provisions of this Agreement shall be deemed to be made unless the same
shall be in writing signed on behalf of each party required to consent thereto
or their authorized agents and each waiver, if any, shall be a waiver only with
respect to the specific instance involved and shall in no way impair the rights
of the parties making such waiver in any other respect or at any other time.

(b) Notwithstanding the other provisions of this Section 9.3 or any other
provision of the Security Documents, the Borrower, US Holdings, the Subsidiary
Guarantors and the Collateral Agent may (but shall have no obligation to) amend
or supplement this Agreement or the Security Documents without the consent of
any other Secured Party: (i) to cure any ambiguity, defect or inconsistency;
(ii) to make any change that would provide any additional rights or benefits to
the Secured Parties; (iii) to make, complete or confirm any grant of Collateral
permitted or required by this Agreement or any of the Security Documents or any
release of any Collateral or guarantee that is otherwise permitted under the
terms of this Agreement and the Credit Agreement and permitted (if addressed
therein, or, otherwise, not prohibited) by the terms of the other applicable
Financing Documents; (iv) to correct any typographical errors, drafting mistakes
or other similar mistakes that do not modify the intended rights and obligations
of the parties hereto; (v) to provide for additional obligations of the Loan
Parties or Liens securing such obligations to the extent permitted (if addressed
therein, or, otherwise, not prohibited) by the terms of the Credit Agreement and
by the terms of the other applicable Financing Documents (including with respect
to Liens on only a portion of the Collateral), including to reflect such
obligations and Liens in the definitions in Section 1.1, the relative priority
of Liens and payments and the provisions herein regarding voting, consents,
amendments and waivers; (vi) to modify any provisions relating to the Deposit
L/C Collateral to account for the incurrence of a Replacement Facility; and
(vii) to provide for, evidence or effectuate other actions that are permitted by
the Credit Agreement and not otherwise prohibited by this Agreement and the
other applicable Financing Documents.

(c) Notwithstanding the other provisions of this Section 9.3 or any other
provision of the Security Documents, the Borrower, US Holdings, the Subsidiary
Guarantors and the Collateral Agent (at the direction of the Administrative
Agent) may (but shall have no obligation to) amend or amend and restate this
Agreement without the consent of any other Secured Party in order to provide for
additional obligations of the Borrower or any Restricted Subsidiary and liens
securing such obligations on all or any portion of the Collateral with a
priority junior to that of the Secured Parties hereunder, so long as the
incurrence of such obligations and liens is not prohibited by the terms of any
Financing Document.

 

37

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

(d) Notwithstanding the other provisions of this Section 9.3 or any other
provision of the Security Documents, but subject to the provisions of
Section 5.2 hereof, this Agreement may be amended by a writing executed by the
Borrower and the Collateral Agent (at the direction of the Required Secured
Parties).

9.4 Voting. (a) Without limiting anything contained herein and other than
ministerial and administrative acts contemplated by the Security Documents to
which it is a party, until the Discharge of Secured Obligations, the Collateral
Agent shall not take any other action (including the exercise of remedies, the
amendment of Security Documents, the granting of waivers under such Security
Documents), or grant its consent under any Security Documents, unless and to the
extent directed to do so by the Required Secured Parties. If the Collateral
Agent determines that direction is needed in the taking of any action, it may
refrain from taking such action until such directions or instructions are
received and shall have no liability to the Secured Parties for so refraining.

(b) In connection with any act or decision by the Required Secured Parties, or
Required Lenders or Required Commodity Hedge Counterparties under this Agreement
or any of the Security Documents, (i) the vote of each Lender Party shall be
calculated based on the amount of the Outstanding Amount owed to such Lender
Party, as applicable at the time the applicable matter is presented for a vote,
and (ii) the vote of each Secured Commodity Hedge Counterparty shall be
calculated based on the amount of the Eligible Hedge Voting Amount under the
relevant Secured Commodity Hedge and Power Sales Agreement at the time the
applicable matter is presented for a vote.

9.5 Information Concerning Financial Condition of the Borrower and its
Subsidiaries. The Collateral Agent, the Administrative Agent and the other
Secured Parties shall each be responsible for keeping themselves informed of
(a) the financial condition of US Holdings, the Borrower and its Subsidiaries
and all endorsers and/or guarantors of the Secured Obligations and (b) all other
circumstances bearing upon the risk of nonpayment of the Secured Obligations. No
Agent or Secured Party shall have any duty to advise any other Agent or Secured
Party of information known to it or them regarding such condition or any such
circumstances or otherwise. In the event that any Agent or Secured Party, in its
or their sole discretion, undertakes at any time or from time to time to provide
any such information to any other Agent or Secured Party, it or they shall be
under no obligation:

(a) to make, and the Agents and the Secured Parties shall not make, any express
or implied representation or warranty, including with respect to the accuracy,
completeness, truthfulness or validity of any such information so provided;

(b) to provide any additional information or to provide any such information on
any subsequent occasion;

(c) to undertake any investigation; or

(d) to disclose any information, which pursuant to accepted or reasonable
commercial finance practices, such party wishes to maintain confidential or is
otherwise required to maintain confidential.

9.6 Submission to Jurisdiction. Each party hereto irrevocably and
unconditionally:

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York and appellate courts from any thereof;

 

38

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

(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Person at its
address set forth on Annex I at such other address of which the Collateral Agent
shall have been notified pursuant to Section 9.8;

(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction;

(e) waives, to the maximum extent not prohibited by Applicable Law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section 9.6 any special, exemplary, punitive or consequential damages; and

(f) agrees that a final judgment in any action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by Applicable Law.

9.7 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.

9.8 Notices. All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by facsimile), and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered, or three Business Days after being deposited in the mail,
postage prepaid, or, in the case of telecopy notice, when received, addressed to
the parties hereto at the addresses set forth on Annex I hereto or, in the case
of any Loan Party, at the Borrower’s address set forth in on Annex I hereto, or,
as to each party, at such other address as may be designated by such party in a
written notice to all of the other parties.

Each party hereto may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

9.9 Further Assurances. The Collateral Agent, on behalf of the Secured Parties,
and the Borrower, agree that each of them shall take such further action and
shall execute and deliver such additional documents and instruments (in
recordable form, if requested) as the Collateral Agent may reasonably request to
effectuate the terms contemplated by this Agreement.

9.10 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED UNDER,
THE LAWS OF THE STATE OF NEW YORK.

9.11 Binding on Successors and Assigns. This Agreement shall be binding upon the
Collateral Agent, the Secured Parties, and their respective successors and
assigns.

 

39

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

9.12 Specific Performance. Each Secured Party may demand specific performance of
this Agreement. Each party hereto hereby irrevocably waives any defense based on
the adequacy of a remedy at law and any other defense which might be asserted to
bar the remedy of specific performance in any action which may be brought by any
other Secured Party.

9.13 Headings. The Section headings used in this Agreement are for convenience
of reference only and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.

9.14 Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. Delivery of an executed counterpart of a
signature page of this Agreement or any document or instrument delivered in
connection herewith by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement or such other document or instrument, as
applicable.

9.15 Authorization. By its signature, each Person executing this Agreement on
behalf of a party hereto represents and warrants to the other parties hereto
that it is duly authorized to execute this Agreement.

9.16 No Third Party Beneficiaries. This Agreement and the rights and benefits
hereof shall inure to the benefit of each of the parties hereto and its
respective successors and assigns and shall inure to the benefit of each of the
Secured Parties.

9.17 Provisions Solely to Define Relative Rights. The provisions of this
Agreement are and are intended for the purpose of defining the relative rights
of Secured Parties. None of the Borrower, any Guarantor or any other creditor
thereof shall have any rights hereunder and neither the Borrower nor any
Guarantor may rely on the terms hereof. Nothing in this Agreement is intended to
or shall impair the obligations of the Borrower or any Guarantor, which are
absolute and unconditional, to pay the Secured Obligations as and when the same
shall become due and payable in accordance with their terms.

9.18 Additional Guarantors. US Holdings, the Borrower and each Subsidiary
Guarantor shall cause each direct or indirect Subsidiary of the Borrower that
becomes a Subsidiary Guarantor at the election of the Borrower or is required by
the terms of any Financing Document to become a Subsidiary Guarantor to become a
party to this Agreement by causing such Subsidiary to execute and deliver to the
parties hereto an Accession Agreement, whereupon such Subsidiary shall be bound
by the terms hereof to the same extent as if it had executed and delivered this
Agreement as of the date hereof. US Holdings, the Borrower and each Subsidiary
Guarantor shall promptly provide the Collateral Agent and each Secured Debt
Representative with a copy of each Accession Agreement executed and delivered
pursuant to this Section.

9.19 Permitted Secured Commodity Hedge and Power Sales Agreement. Each of the
parties acknowledges that nothing in this Agreement limits the Borrower’s or any
Subsidiary Guarantor’s rights under any Secured Commodity Hedge and Power Sales
Agreement.

9.20 No Applicability to Instruments Not Secured by Collateral. If the Borrower
or any Restricted Subsidiary secures its obligations under any General Commodity
Hedge and Power Sales Agreement by granting a Lien on assets not constituting
Collateral, then this Agreement shall not apply to such General Commodity Hedge
and Power Sales Agreement and the rights and remedies of the counterparty
thereto (including rights of foreclosure, setoff and netting) shall not in any
way be limited by this Agreement.

[rest of page intentionally left blank]

 

40

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

IN WITNESS WHEREOF, the parties hereto have executed this Intercreditor
Agreement as of the date first written above.

[SIGNATURES ON FOLLOWING PAGE]

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

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

 

ENERGY FUTURE COMPETIVE HOLDINGS COMPANY, as US Holdings By:   /s/ Anthony R.
Horton   Name: Anthony R. Horton   Title: Authorized Signatory TEXAS COMPETITIVE
ELECTRIC HOLDINGS COMPANY, as Borrower By:   /s/ Anthony R. Horton   Name:
Anthony R. Horton   Title: Authorized Signatory

Signature Page to the Intercreditor Agreement

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

BIG BROWN 3 POWER COMPANY LLC

BIG BROWN LIGNITE COMPANY LLC

BIG BROWN POWER COMPANY LLC

COLLIN POWER COMPANY LLC

DECORDOVA POWER COMPANY LLC

GENERATION MT COMPANY LLC

GENERATION SVC COMPANY

LAKE CREEK 3 POWER COMPANY LLC

LUMINANT BIG BROWN MINING COMPANY LLC

LUMINANT ENERGY COMPANY LLC

LUMINANT ENERGY SERVICES COMPANY

LUMINANT GENERATION COMPANY LLC

LUMINANT HOLDING COMPANY LLC

LUMINANT MINERAL DEVELOPMENT COMPANY LLC

LUMINANT MINING COMPANY LLC

LUMINANT MINING SERVICES COMPANY

LUMINANT POWER SERVICES COMPANY

LUMINANT RENEWABLES COMPANY LLC

MARTIN LAKE 4 POWER COMPANY LLC

MONTICELLO 4 POWER COMPANY LLC

MORGAN CREEK 7 POWER COMPANY LLC

NCA RESOURCES DEVELOPMENT COMPANY LLC

OAG GROVE MANAGEMENT COMPANY LLC

OAK GROVE MINING COMPANY LLC

OAK GROVE POWER COMPANY LLC

SANDOW POWER COMPANY LLC

TRADINGHOUSE 3 & 4 POWER COMPANY LLC

TRADINGHOUSE POWER COMPANY LLC

TXU CHILLED WATER SOLUTIONS COMPANY

TXU ENERGY RETAIL COMPANY LLC

TXU ENERGY RETAIL MANAGEMENT COMPANY LLC

TXU ENERGY SOLUTIONS COMPANY LLC

TXU ENERGY TRADING (CALIFORNIA) COMPANY

TXU ET SERVICES COMPANY

TXU RETAIL SERVICES COMPANY

TXU SEM COMPANY

TXU SESCO COMPANY LLC

TXU SESCO ENERGY SERVICES COMPANY

VALLEY NG POWER COMPANY LLC

VALLEY POWER COMPANY LLC

WICHITA/VICTORY AVE., LLC

As Subsidiary Guarantors

 

By:   /s/ Anthony R. Horton   Name: Anthony R. Horton   Title: Authorized
Signatory

Signature Page to the Intercreditor Agreement

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

TCEH FINANCE, INC.

As Subsidiary Guarantor

By:   /s/ Anthony R. Horton   Name: Anthony R. Horton   Title: Authorized
Signatory

Signature Page to the Intercreditor Agreement

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

CITIBANK, N.A.,

as Administrative Agent and Collateral Agent

By:   /s/ Aaron Dannenberg   Name: Aaron Dannenberg   Title: Vice-President

Signature Page to the Intercreditor Agreement

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

J. ARON & COMPANY, as Secured Commodity Hedge Counterparty By:   /s/   Name:  
Title:

Signature Page to the Intercreditor Agreement

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

CITIGROUP ENERGY INC., as Secured Commodity Hedge Counterparty By:   /s/ Aaron
Dannenberg   Name: Aaron Dannenberg   Title: Director

Signature Page to the Intercreditor Agreement

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

LEHMAN BROTHERS COMMODITY SERVICES INC., as Secured Commodity Hedge Counterparty
By:   /s/ Frank Napolitano   Name: Frank Napolitano   Title: Managing Director

Signature Page to the Intercreditor Agreement

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

MORGAN STANLEY CAPITAL GROUP, as Secured Commodity Hedge Counterparty By:   /s/
Simon T.W. Greenshields   Name: Simon T.W. Greenshields   Title: Vice President

Signature Page to the Intercreditor Agreement

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

ANNEX I

ADDRESSES OF PARTIES

Texas Competitive Electric Holdings Company LLC

[address]

Energy Future Competitive Holding Company

[address]

Subsidiary Guarantors:

[address]

Citibank, N.A.

[address]

Lehman Brothers Commodity Services, Inc.

[address]

J. Aron & Company

[address]

Citigroup Energy Inc.

[address]

Morgan Stanley Capital Group

[address]

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

EXHIBIT A

FORM OF ACCESSION AGREEMENT

THIS ACCESSION AGREEMENT (this “Agreement”), dated as of             , 20    ,
is entered into by             , a             , as an [Additional Secured
Party][Additional Loan Party] (as defined below), and acknowledged by TEXAS
COMPETITIVE ELECTRIC HOLDINGS COMPANY LLC, a Delaware limited liability company
(the “Borrower”), and CITIBANK, N.A. (“Citibank”), in its capacity as Collateral
Agent for the Secured Parties, under the Intercreditor Agreement (as defined
below).

Reference is made to that certain Collateral Agency and Intercreditor Agreement
(as amended, modified, restated or supplemented from time to time, the
“Intercreditor Agreement”), dated as of October 10, 2007, by and among the
Borrower, Energy Future Competitive Holding Company, a Texas Corporation (“US
Holdings”), the Subsidiary Guarantors party thereto from time to time, the
Collateral Agent, the Secured Commodity Hedge Counterparties, and certain other
Persons party thereto from time to time. Capitalized terms used herein without
definition shall have the meaning assigned to them in the Intercreditor
Agreement.

OPTION #1:1

Pursuant to Section 5.6 of the Intercreditor Agreement, the Borrower may
designate under the Intercreditor Agreement additional obligations as Secured
Obligations on the terms and conditions set forth therein. The Intercreditor
Agreement requires that any holder of additional obligations that are designated
as Secured Obligations must become a party to the Intercreditor Agreement by
executing and delivering this Accession Agreement.

The undersigned is entering into this Accession Agreement pursuant to
Section 5.6 of the Intercreditor Agreement in order to become a Secured Party
under the Intercreditor Agreement and the Security Documents, and to benefit
from the Collateral under and in accordance with the terms of the Intercreditor
Agreement and the Security Documents (an “Additional Secured Party”).

The undersigned is [acting as trustee/agent/Administrative Agent/Collateral
Agent for] [[a] Lender(s)] [an additional Secured Party] [a Secured Commodity
Hedge Counterparty] under the [describe Replacement Credit Agreement, other
agreement(s) evidencing Refinanced Indebtedness, Additional Obligations, Secured
Commodity Hedge and Power Sales Agreement, as applicable] (the “Additional
Document”).

Pursuant to Section 5.6, attached hereto as Annex 1 is a copy of the certificate
to be delivered by a Responsible Officer of the Borrower in accordance with
Section 5.6(b)(1) of the Intercreditor Agreement.

 

1

Use Option #1 if party acceding to the Intercreditor Agreement is a Secured
Party.

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

The Additional Secured Party hereby becomes a Secured Party as [Administrative
Agent/Collateral Agent] [Secured Debt Representative] [a holder of Additional
Obligations] [a Secured Commodity Hedge Counterparty].

The Additional Secured Party hereby agrees for the benefit of the Collateral
Agent and the Secured Parties as follows:

The Additional Secured Party hereby acknowledges, agrees and confirms that, by
its execution of this Agreement, the Additional Secured Party will be deemed to
be a party to the Intercreditor Agreement, and, from and after the date hereof,
shall have all of the obligations of [a Administrative Agent/Collateral Agent]
[Secured Debt Representative] [an additional Secured Party] [a Secured Commodity
Hedge Counterparty] thereunder as if it had executed the Intercreditor
Agreement. The Additional Secured Party hereby ratifies, as of the date hereof,
and accedes to and agrees to be bound by, all of the terms, provisions and
conditions applicable to a Secured Party and [an Administrative Agent/Collateral
Agent] [Secured Debt Representative] [a holder of Additional Obligations] [a
Secured Commodity Hedge Counterparty] contained in the Intercreditor Agreement
and the other Security Documents.

To the extent the Additional Secured Party is an agent or trustee for one or
more Secured Parties, the Additional Secured Party acknowledges that it has the
authority to bind such Secured Parties to the Intercreditor Agreement and such
Secured Parties are hereby bound by the terms and conditions of the
Intercreditor Agreement. The Additional Secured Party hereby agrees (on behalf
of itself and any Secured Party claiming through it) to comply with the terms of
the Intercreditor Agreement.

[As of the date hereof, Schedule I hereto sets forth the “Floor Amount” of the
Additional Secured Party.]2

The address of the Additional Secured Party (and any Secured Debt Representative
for such Additional Secured Party) for purposes of all notices and other
communications is             ,             , Attention of             
(Facsimile No.             , electronic mail address:             ).

The amount of credit to be extended to the Borrower or the applicable Subsidiary
Guarantor under Additional Document will be $[            ].3

[In accordance with Sections 5.6 and 9.3(b(v) of the Intercreditor Agreement,
the Intercreditor Agreement is hereby amended as follows: [            ].]4

OPTION #2:5

Pursuant to Section 9.18 of the Intercreditor Agreement, each direct or indirect
Subsidiary of the Borrower that becomes a Subsidiary Guarantor at the election
of the Borrower or is required to become a Subsidiary Guarantor (an “Additional
Loan Party”) is required to become a party to the Intercreditor Agreement.

 

 

2

Include this provision as applicable with respect to any Secured Commodity Hedge
and Power Sales Agreement.

 

3

Applicable to Additional Obligations only

 

4

Insert if necessary

 

5

Use Option #2 if party acceding to the Intercreditor Agreement is a Subsidiary
Guarantor.

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

The Additional Loan Party has agreed to execute and deliver this Agreement in
order to become a party to the Intercreditor Agreement and hereby becomes a
Subsidiary Guarantor and a Loan Party thereunder.

The Additional Loan Party hereby agrees for the benefit of the Collateral Agent
and the Secured Parties as follows:

1. The Additional Loan Party hereby acknowledges, agrees and confirms that, by
its execution of this Agreement, the Additional Loan Party will be deemed to be
a party to the Intercreditor Agreement and, from and after the date hereof,
shall have all of the obligations of a Subsidiary Guarantor and a Loan Party
thereunder as if it had executed the Intercreditor Agreement. The Additional
Loan Party hereby ratifies, as of the date hereof, and accedes to and agrees to
be bound by, all of the terms, provisions and conditions applicable to, and
assumes all obligations of, the Subsidiary Guarantors and the Loan Parties
contained in the Intercreditor Agreement.

2. The address of the Additional Loan Party for purposes of all notices and
other communications is             ,             , Attention of (Facsimile
No.             , electronic mail address:             ).

[3][7]. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute one contract.

[4][8]. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED UNDER, THE LAWS OF
THE STATE OF NEW YORK.

[Signature Page Follows]

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

IN WITNESS WHEREOF, the [Additional Secured Party][Additional Loan Party] has
caused this Accession Agreement to be duly executed by its authorized
representative, and each of the Borrower and the Collateral Agent have caused
the same to be accepted by its authorized representative, as of the day and year
first above written.

 

[ADDITIONAL SECURED PARTY]

[ADDITIONAL LOAN PARTY]

By:     Name:   Title:  

 

Acknowledged: TEXAS COMPETITIVE ELECTRIC HOLDINGS COMPANY LLC By:     Name:  
Title:  

 

Acknowledged and accepted: CITIBANK, N.A., as Collateral Agent By:     Name:  
Title:  

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

ANNEX 1

Borrower’s Certificate/New Debt Notice

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

SCHEDULE I

Floor Amount