Exhibit 10(zz)

EXECUTION COPY

$6,750,000,000

SENIOR UNSECURED INTERIM LOAN AGREEMENT

Dated as of October 10, 2007

among

ENERGY FUTURE COMPETITIVE HOLDINGS COMPANY,

TEXAS COMPETITIVE ELECTRIC HOLDINGS COMPANY LLC

and

TCEH FINANCE, INC.

as the Borrower,

The Several Lenders

from Time to Time Parties Hereto,

MORGAN STANLEY SENIOR FUNDING, INC.,

as Administrative Agent

and

GOLDMAN SACHS CREDIT PARTNERS L.P.,

as Syndication Agent

 

 

CITIBANK, N.A.,

CREDIT SUISSE SECURITIES (USA) LLC,

JPMORGAN CHASE BANK, N.A.,

and LEHMAN COMMERCIAL PAPER INC.

as Co-Documentation Agents

GOLDMAN SACHS CREDIT PARTNERS L.P.,

MORGAN STANLEY SENIOR FUNDING, INC.,

CITIGROUP GLOBAL MARKETS INC.,

CREDIT SUISSE SECURITIES (USA) LLC,

J.P. MORGAN SECURITIES INC.

and LEHMAN BROTHERS INC.

as Joint Lead Arrangers and Bookrunners

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TABLE OF CONTENTS

 

           Page

SECTION 1. Definitions

   8

1.1.

   Defined Terms    8

1.2.

   Other Interpretive Provisions    63

1.3.

   Accounting Terms    64

1.4.

   [Reserved]    64

1.5.

   References to Agreements, Laws, Etc.    64

1.6.

   Times of Day    64

1.7.

   Timing of Payment or Performance    64 SECTION 2. Amount and Terms of Credit
   64

2.1.

   Commitments    64

2.2.

   Maximum Number of Borrowings    65

2.3.

   Notice of Borrowing    66

2.4.

   Disbursement of Funds    66

2.5.

   Repayment of Loans; Evidence of Debt    67

2.6.

   Conversions and Continuations    67

2.7.

   Pro Rata Borrowings    68

2.8.

   Interest    69

2.9.

   Interest Periods    70

2.10.

   Increased Costs, Illegality, Etc.    71

2.11.

   Compensation    73

2.12.

   Change of Lending Office    73

2.13.

   Notice of Certain Costs    73

2.14.

   Permanent Refinancing    74 SECTION 3. [Reserved]    76 SECTION 4. Mandatory
Termination of Commitments    76

4.1.

   [Reserved]    76

4.2.

   [Reserved]    76

4.3.

   Mandatory Termination of Commitments    76 SECTION 5. Payments    76

5.1.

   Voluntary Prepayments    76

5.2.

   Mandatory Prepayments    77

5.3.

   Method and Place of Payment    78

5.4.

   Net Payments    79

5.5.

   Computations of Interest    82

5.6.

   Limit on Rate of Interest    82

 

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SECTION 6. Conditions Precedent to Initial Borrowing

   82

6.2.

   Guarantee    83

6.3.

   Legal Opinions    83

6.4.

   Debt Repayments    83

6.5.

   Equity Investments    83

6.6.

   Closing Certificates    83

6.7.

   Authorization of Proceedings of Each Loan Party    83

6.8.

   Fees    83

6.9.

   Representations and Warranties    84

6.10.

   Acquisition Agreement    84

6.11.

   Solvency Certificate    84

6.12.

   Merger    84

6.13.

   Pro Forma Financial Statements    84

6.14.

   Patriot Act    84

6.15.

   Notice of Borrowing    84 SECTION 7. [Reserved]    85 SECTION 8.
Representations, Warranties and Agreements    85

8.1.

   Corporate Status; Compliance with Laws    85

8.2.

   Corporate Power and Authority    85

8.3.

   No Violation    85

8.4.

   Litigation    86

8.5.

   Margin Regulations    86

8.6.

   Governmental Approvals    86

8.7.

   Investment Company Act    86

8.8.

   True and Complete Disclosure    86

8.9.

   Financial Condition; Financial Statements    87

8.10.

   Tax Matters    87

8.11.

   Compliance with ERISA    87

8.12.

   Subsidiaries    88

8.13.

   Intellectual Property    88

8.14.

   Environmental Laws    88

8.15.

   Properties    89

8.16.

   Solvency    89 SECTION 9. Covenants    89

9.1.

   Reports and Other Information    89

9.2.

   Compliance Certificate    90

9.3.

   Taxes    91

9.4.

   Stay, Extension and Usury Laws    91

9.5.

   Limitation on Restricted Payments    91

9.6.

   Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries   
100

 

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9.7.

   Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock    102

9.8.

   Asset Sales    108

9.9.

   Transactions with Affiliates    111

9.10.

   Liens    113

9.11.

   Corporate Existence    114

9.12.

   Offer to Repurchase upon Change of Control    114

9.13.

   Limitation on Guarantees of Indebtedness by Restricted Subsidiaries    116

9.14.

   Merger, Consolidation or Sale of All or Substantially All Assets    116

9.15.

   Successor Corporation Substituted    119

9.16.

   Limitations on Business Activities of TCEH Finance    119 SECTION 10.
[Reserved]    119 SECTION 11. Events of Default    119

11.1.

   Event of Default    119

11.2.

   [Reserved]    121

11.3.

   [Reserved]    121

11.4.

   [Reserved]    122

11.5.

   [Reserved]    122

11.6.

   [Reserved]    122

11.7.

   [Reserved]    122

11.8.

   [Reserved]    122

11.9.

   [Reserved]    122

11.10.

   [Reserved]    122

11.11.

   [Reserved]    122

11.12.

   [Reserved]    122

11.13.

   [Reserved]    122

11.14.

   [Reserved]    122

11.15.

   [Reserved]    122

11.16.

   Remedies upon Event of Default, Waivers of Past Defaults    122

11.17.

   Application of Proceeds    123 SECTION 12. The Agents    123

12.1.

   Appointment    123

12.2.

   Delegation of Duties    124

12.3.

   Exculpatory Provisions    124

12.4.

   Reliance by Agents    125

12.5.

   Notice of Default    126

12.6.

   Non-Reliance on Administrative Agent and Other Lenders    126

12.7.

   Indemnification    127

12.8.

   Agents in their Individual Capacity    128

12.9.

   Successor Agents    128

12.10.

   Withholding Tax    129

12.11.

   Trust Indenture Act    129

 

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12.12.

   Guarantee    129

SECTION 13. Miscellaneous

   130

13.1.

   Amendments, Waivers and Releases    130

13.2.

   Notices    132

13.3.

   No Waiver; Cumulative Remedies    132

13.4.

   Survival of Representations and Warranties    132

13.5.

   Payment of Expenses; Indemnification    133

13.6.

   Successors and Assigns; Participations and Assignments    134

13.7.

   Replacements of Lenders under Certain Circumstances    139

13.8.

   Adjustments; Set-off    139

13.9.

   Counterparts    140

13.10.

   Severability    140

13.11.

   Integration    140

13.12.

   GOVERNING LAW    141

13.13.

   Submission to Jurisdiction; Waivers    141

13.14.

   Acknowledgments    141

13.15.

   WAIVERS OF JURY TRIAL    142

13.16.

   Confidentiality    143

13.17.

   Direct Website Communications    143

13.18.

   USA PATRIOT Act    145

13.19.

   Payments Set Aside    145

13.20.

   Separateness    145

SCHEDULES

 

Schedule 1.1(a)

  

Commitments and Addresses of Lenders

Schedule 1.1(f)

  

Existing Credit Facilities

Schedule 1.1(g)

  

Non-Oncor Undertakings

Schedule 8.4

  

Litigation

Schedule 8.12

  

Subsidiaries

Schedule 8.15

  

Title to Properties

Schedule 13.2

  

Notice Addresses

EXHIBITS

 

Exhibit A

  

Form of Notice of Borrowing

Exhibit B    Form of Senior Unsecured Guarantee Exhibit C    Form of Senior
Refinancing Indenture Exhibit D    Form of Senior Refinancing Registration
Rights Agreement Exhibit E-1    Form of Exchange Notice for Senior Cash Pay
Loans Exhibit E-2    Form of Exchange Notice for Senior Toggle Loans Exhibit F-1
   Form of Legal Opinion of Simpson Thacher & Bartlett LLP Exhibit F-2    Form
of Legal Opinion of Vinson & Elkins LLP Exhibit F-3    Form of Legal Opinion of
Hunton & Williams LLP

 

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Exhibit F-4

   Form of Legal Opinion of Covington & Burling LLP

Exhibit G

   Form of Loan Party Closing Certificate

Exhibit H

   Form of Assignment and Acceptance

Exhibit I-1

   Form of Cash-Pay Promissory Note

Exhibit I-2

   Form of Toggle Promissory Note

Exhibit J

   Form of Non-U.S. Lender Certification

 

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SENIOR UNSECURED INTERIM LOAN AGREEMENT, dated as of October 10, 2007, among
ENERGY FUTURE COMPETITIVE HOLDINGS COMPANY, a Texas corporation (“US Holdings”),
TEXAS COMPETITIVE ELECTRIC HOLDINGS COMPANY LLC, a Delaware limited liability
company (“TCEH”), TCEH FINANCE, INC., a Delaware Corporation (“TCEH Finance” and
together with TCEH, the “Borrower”), the lending institutions from time to time
parties hereto (each a “Lender” and, collectively, the “Lenders”), MORGAN
STANLEY SENIOR FUNDING, INC., as Administrative Agent (such terms and each other
capitalized term used but not defined in this preamble having the meaning
provided in Section 1.1), GOLDMAN SACHS CREDIT PARTNERS L.P., as Syndication
Agent, GOLDMAN SACHS CREDIT PARTNERS L.P., MORGAN STANLEY SENIOR FUNDING, INC.,
CITIGROUP GLOBAL MARKETS INC., CREDIT SUISSE SECURITIES (USA) LLC, J.P. MORGAN
SECURITIES INC. and LEHMAN BROTHERS INC., as Joint Lead Arrangers and
Bookrunners, and CITIBANK, N.A., CREDIT SUISSE SECURITIES (USA) LLC, JPMORGAN
CHASE BANK, N.A. and LEHMAN COMMERCIAL PAPER INC., as Co-Documentation Agents.

RECITALS:

WHEREAS, pursuant to the Agreement and Plan of Merger (the “Acquisition
Agreement”), dated as of February 25, 2007, by and among TXU Corp., a Texas
corporation (the “Parent”), Holdings and Merger Sub, Merger Sub will merge with
and into the Borrower (the “Merger”), with the Borrower surviving the Merger as
a wholly-owned Subsidiary of Holdings;

WHEREAS, to fund, in part, the Merger Funds, it is intended that the Sponsors
and certain other investors (collectively, the “Initial Investors”) will
directly or indirectly make cash equity contributions (the “Equity
Contribution”) to Holdings and/or a direct or indirect parent thereof in
exchange for Stock (which cash will be contributed to Merger Sub) in an
aggregate amount equal to, when combined with the fair market value of the Stock
of management and existing shareholders of the Parent rolled over or invested in
connection with the Transactions, at least 15% (the “Minimum Equity Amount”) of
the total sources (including the Existing Notes, the Existing Parent Notes and
the Existing Oncor Notes, but excluding any transition bonds) required to
consummate the Merger (the “Merger Consideration”), to redeem, refinance or
repay certain existing indebtedness or repurchase receivables of the Parent and
its Subsidiaries, including the Repaid Indebtedness (the “Refinancing”), and to
pay fees, premiums and expenses incurred in connection with the Transactions
(such fees, premiums and expenses, together with the Merger Consideration and
the Refinancing payment, the “Merger Funds”);

WHEREAS, in connection with the foregoing, the Borrower has requested that the
Lenders extend credit to the Borrower in the form of Senior Interim Loans on the
Closing Date, in an aggregate principal amount of $6,750,000,000, which shall
initially consist of (a) $5,000,000,000 of Senior Interim Cash Pay Loans and
(b) $1,750,000,000 of Senior Interim Toggle Loans;

 

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WHEREAS, in order to fund, in part, the Merger Funds (a) TCEH will enter into a
senior secured credit agreement, dated as of the Closing Date, by and among
TCEH, US Holdings, the lenders from time to time party thereto, Citibank, N.A.,
as administrative agent, collateral agent, swingline lender, revolving letter of
credit issuer and deposit letter of credit issuer, Goldman Sachs Credit Partners
L.P., as posting agent, posting syndication agent and posting documentation
agent, J. Aron & Company, as posting calculation agent, JPMorgan Chase Bank,
N.A., as syndication agent and revolving letter of credit issuer, Credit Suisse
Securities (USA) LLC, Goldman Sachs Credit Partners L.P., Lehman Commercial
Paper Inc. and Morgan Stanley Senior Funding, Inc., as co-documentation agents,
Citigroup Global Markets Inc., J.P. Morgan Securities Inc., Goldman Sachs Credit
Partners L.P., Lehman Brothers Inc., Morgan Stanley Senior Funding, Inc. and
Credit Suisse Securities (USA) LLC, as joint lead arrangers and bookrunners and
Goldman Sachs Credit Partners L.P., as Posting Lead Arranger and Bookrunner (the
“Senior Secured Credit Agreement”), pursuant to which TCEH (i) will borrow term
loans in an aggregate principal amount of $16,450,000,000 on the Closing Date
(the “Senior Secured Initial Term Loans”), (ii) may borrow term loans in an
aggregate principal amount of up to $4,100,000,000 at any time and from time to
time prior to the Delayed Draw Term Loan Commitment Termination Date (as defined
in the Senior Secured Credit Agreement) (the “Senior Secured Delayed Draw Term
Loans”), (iii) will borrow $1,250,000,000 in aggregate principal amount of
deposit letter of credit loans on the Closing Date (the “Senior Secured Deposit
L/C Loans”), (iv) may borrow revolving credit loans (the “Senior Secured
Revolving Credit Loans”) in aggregate principal amount of up to $2,700,000,000
at any time and from time to time prior to the Revolving Credit Termination Date
(as defined in the Senior Secured Credit Agreement); and (v) will borrow under a
senior revolving credit facility, the principal amount of which is capped by the
MTM Exposures (as defined in the Senior Secured Credit Agreement) (the “Posting
Facility”); and (b) the Parent will enter into a senior unsecured interim loan
agreement, dated as of the Closing Date, by and among the Parent, the lenders
from time to time party thereto, Morgan Stanley Senior Funding, Inc., as
administrative agent, Goldman Sachs Credit Partners L.P., as syndication agent,
Citibank, N.A., Credit Suisse Securities (USA) LLC, JPMorgan Chase Bank, N.A.
and Lehman Commercial Paper Inc., as co-documentation agents, and Morgan Stanley
Senior Funding, Inc., Goldman Sachs Credit Partners L.P., Citigroup Global
Markets Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities Inc.,
and Lehman Brothers Inc., as joint lead arrangers and bookrunners (the “Parent
Senior Unsecured Interim Loan Agreement”), pursuant to which the Parent will
borrow senior unsecured interim loans in an aggregate principal amount of
$4,500,000,000, which shall initially consist of (a) $2,000,000,000 of senior
interim cash pay loans (the “Parent Senior Interim Cash Pay Loans”) and
(b) $2,500,000,000 of senior interim toggle loans (the “Parent Senior Interim
Toggle Loans” and, together with the Parent Senior Interim Cash Pay Loans, the
“Parent Senior Interim Loans”);

WHEREAS, the net proceeds of the Senior Interim Loans will be used by the
Borrower for the Merger Funds and contributed by the Parent to TCEH and used by
TCEH, together with (a) the net proceeds of the Senior Secured Initial Term
Loans, less $400,000,000, (b) the net proceeds of up to $250,000,000 of Senior
Secured Revolving Credit Loans, (c) the net proceeds of the Equity Contribution,
(d) the net proceeds of the Parent Senior Interim Loans and (e) cash on hand at
TCEH, on the Closing Date (or, in the case of the Refinancing, such later date
as may be necessary to effect certain of the Refinancings in accordance with the
tender offers therefor). Up to $400,000,000 of proceeds of the Senior Secured
Initial Term Loans will be used by TCEH for general corporate purposes. The
proceeds of the Posting Facility will be used by TCEH (a) to fund margin
payments on over-the-counter natural gas fixed for floating swap transactions
between TCEH and the Restricted Subsidiaries, on the one hand, and various

 

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counterparties, on the other, (b) to fund margin payments on NYMEX futures and
swap positions maintained by TCEH and its Restricted Subsidiaries and (c) for
other general corporate purposes of TCEH and the Restricted Subsidiaries
(provided that such funds will be applied first to fund margin on Dealer Swaps
(as defined in the Senior Secured Credit Agreement) to the extent such
transactions are outstanding and any margin is due thereon and second for any
such other purposes; and

WHEREAS, the Lenders are willing to make available to the Borrower the Senior
Interim Loans upon the terms and subject to the conditions provided herein;

AGREEMENT:

NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:

SECTION 1. Definitions

1.1. Defined Terms.

(a) As used herein, the following terms shall have the meanings specified in
this Section 1.1 unless the context otherwise requires:

“ABR” shall mean for any day a fluctuating rate per annum equal to the higher of
(a) the Federal Funds Effective Rate plus 1/2 of 1% and (b) the rate of interest
published by the Wall Street Journal, from time to time, as the prime or base
commercial lending rate. If the Administrative Agent is unable to ascertain the
Federal Funds Effective Rate due to its inability to obtain sufficient
quotations in accordance with the definition thereof, after notice is provided
to the Borrower, the ABR shall be determined without regard to clause (a) above
until the circumstances giving rise to such inability no longer exist. Any
change in the ABR due to a change in such rate published in the Wall Street
Journal or in the Federal Funds Effective Rate shall take effect at the opening
of business on the day specified in the public announcement of such change.

“ABR Loan” shall mean each Loan bearing interest based on ABR.

“Acquired Indebtedness” shall mean, with respect to any specified Person,

(1) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including Indebtedness incurred in connection with, or in contemplation of, such
other Person merging with or into or becoming a Restricted Subsidiary of such
specified Person, and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.

“Acquisition Agreement” shall have the meaning provided in the recitals to this
Agreement.

 

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“Additional Senior Cash Pay Notes” shall mean additional Senior Cash Pay Notes
(other than Initial Senior Cash Pay Notes (as defined in the Senior Refinancing
Indenture) and Exchange Notes (as defined in the Senior Refinancing Indenture)
issued in exchange for such Initial Senior Cash Pay Notes) issued from time to
time under the Senior Refinancing Indenture, as part of the same series as the
Initial Senior Cash Pay Notes.

“Additional Senior Toggle Notes” shall mean additional Senior Toggle Notes
(other than the Initial Senior Toggle Notes (as defined in the Senior
Refinancing Indenture), any PIK Notes issued as a result of a PIK Payment on
such Initial Senior Notes (as defined in the Senior Refinancing Indenture) and
Exchange Notes (as defined in the Senior Refinancing Indenture) issued in
exchange for such Initial Senior Toggle Notes and such PIK Notes) issued from
time to time under the Senior Refinancing Indenture, as part of the same series
as the Initial Senior Toggle Notes.

“Administrative Agent” shall mean Morgan Stanley Senior Funding, Inc., as the
administrative agent for the Lenders under this Agreement and the other Loan
Documents, or any successor administrative agent pursuant to Section 13.

“Administrative Agent’s Office” shall mean the Administrative Agent’s address
and, as appropriate, account as provided in Schedule 13.2, or such other address
or account as the Administrative Agent may from time to time notify to the
Borrower and the Lenders.

“Administrative Questionnaire” shall have the meaning provided in
Section 13.6(b).

“Affiliate” of any specified Person shall mean any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, “control”
(including, with correlative meanings, the terms “controlling,” “controlled by”
and “under common control with”), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.

“Agent Parties” shall have the meaning provided in Section 13.17(d).

“Agents” shall mean the Administrative Agent, the Syndication Agent, each
Co-Documentation Agent, each Joint Lead Arranger and each Joint Bookrunner.

“Agreement” shall mean this Senior Unsecured Interim Loan Agreement.

“Applicable ABR Margin” shall mean at any date, with respect to each ABR Loan,
(a) 2.25% per annum with respect to Senior Cash Pay Loans and (b) 2.50% per
annum with respect to Senior Toggle Loans. If the Loans are not paid within the
six-month period following the Closing Date, the Applicable ABR Margin will
increase by 0.50% per annum at the end of such six-month period and shall
increase by an additional 0.25% per annum at the end of each three-month period
thereafter until the Interim Loan Conversion Date. At the Interim Loan
Conversion Date the Applicable ABR Margin will increase by 0.25% per annum and
shall increase by an additional 0.25% per annum at the end of each three month
period thereafter until

 

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the applicable Term Loan Maturity Date. Notwithstanding the foregoing, the
Applicable ABR Margin shall be capped such that the applicable interest rate
(exclusive of interest at the Default Rate) (i) in the case of Senior Cash Pay
Loans, shall not exceed the Senior Cash Pay Fixed Rate and (ii) in the case of
Senior Toggle Loans, excluding the effect of the PIK Margin, shall not exceed
the Senior Toggle Fixed Rate.

“Applicable Laws” shall mean, as to any Person, any law (including common law),
statute, regulation, ordinance, rule, order, decree, judgment, consent decree,
writ, injunction, settlement agreement or governmental requirement enacted,
promulgated or imposed or entered into or agreed by any Government Authority
(including the PUCT and ERCOT), 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. Applicable Laws shall also include commitments,
undertakings and stipulations (a) relating to Oncor and its Subsidiaries set
forth in the Joint Report and Application of Oncor Electric Delivery Company and
Texas Energy Future Holdings Limited Partnership pursuant to Public Utility
Regulatory Act 14.101 before the PUCT, to the extent such commitments,
undertakings and stipulations are embodied in a final order issued by PUCT and
(b) relating to the Loan Parties and their Affiliates other than Oncor and its
Subsidiaries as set forth on Schedule 1.1(g) hereto.

“Applicable LIBOR Margin” shall mean at any date, with respect to each LIBOR
Loan, (a) 3.25% per annum with respect to Senior Cash Pay Loans and (b) 3.50%
per annum with respect to Senior Toggle Loans. If the Loans are not paid within
the six-month period following the Closing Date, the Applicable LIBOR Margin
will increase by 0.50% per annum at the end of such six-month period and shall
increase by an additional 0.25% per annum at the end of each three-month period
thereafter until the Interim Loan Conversion Date. At the Interim Loan
Conversion Date the Applicable LIBOR Margin will increase by 0.25% per annum and
shall increase by an additional 0.25% per annum at the end of each three month
period thereafter until the applicable Term Loan Maturity Date. Notwithstanding
the foregoing, the Applicable LIBOR Margin shall be capped such that the
applicable interest rate (exclusive of interest at the Default Rate) (i) in the
case of Senior Cash Pay Loans, shall not exceed the Senior Cash Pay Fixed Rate
and (ii) in the case of Senior Toggle Loans, excluding the effect of the PIK
Margin, shall not exceed the Senior Toggle Fixed Rate.

“Approved Fund” shall mean any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.

“Asset Sale” shall mean:

(1) the sale, conveyance, transfer or other disposition, whether in a single
transaction or a series of related transactions, of property or assets
(including by way of a Sale and Lease-Back Transaction) of TCEH or any of its
Restricted Subsidiaries (each referred to in this definition as a
“disposition”); or

 

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(2) the issuance or sale of Equity Interests of any Restricted Subsidiary,
whether in a single transaction or a series of related transactions (other than
Preferred Stock of Restricted Subsidiaries issued in compliance with
Section 9.7);

in each case, other than:

(a) any disposition of Cash Equivalents or Investment Grade Securities or
obsolete or worn out equipment (including any such equipment that has been
refurbished in contemplation of such disposition) in the ordinary course of
business or any disposition of inventory or goods (or other assets) held for
sale in the ordinary course of business;

(b) the disposition of all or substantially all of the assets of TCEH in a
manner permitted pursuant to the provisions of Section 9.14 or any disposition
that constitutes a Change of Control pursuant to this Agreement;

(c) the making of any Restricted Payment or Permitted Investment that is
permitted to be made, and is made, under Section 9.5;

(d) any disposition of assets or issuance or sale of Equity Interests of any
Restricted Subsidiary in any transaction or series of related transactions with
an aggregate fair market value of less than (x) prior to the Interim Loan
Conversion Date, $50,000,000 and (y) thereafter, $75,000,000;

(e) any disposition of property or assets or issuance of securities by a
Restricted Subsidiary of TCEH to TCEH or by TCEH or a Restricted Subsidiary of
TCEH to another Restricted Subsidiary of TCEH;

(f) to the extent allowable under Section 1031 of the Code or any comparable or
successor provision, any exchange of like property (excluding any boot thereon)
for use in a Similar Business;

(g) the lease, assignment or sublease of any real or personal property in the
ordinary course of business;

(h) any issuance or sale of Equity Interests in, or Indebtedness or other
securities of, an Unrestricted Subsidiary;

(i) foreclosures on assets;

(j) sales of accounts receivable, or participations therein, in connection with
any Receivables Facility for the benefit of TCEH or any of its Restricted
Subsidiaries;

(k) any financing transaction with respect to property built or acquired by TCEH
or any Restricted Subsidiary after the Closing Date, including Sale and
Lease-Back Transactions and asset securitizations permitted by this Agreement;

(l) [Reserved];

(m) sales, transfers and other dispositions (i) of Investments in joint ventures
to the extent required by, or made pursuant to, customary buy/sell or put/call
arrangements between the joint venture parties set forth in joint venture
arrangements and similar binding arrangements or (ii) to joint ventures in
connection with the dissolution or termination of a joint venture to the extent
required pursuant to joint venture and similar arrangements;

 

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(n) [Reserved];

(o) [Reserved];

(p) [Reserved];

(q) any Casualty Event provided the net proceeds therefrom are deemed to be Net
Asset Sale Proceeds and are applied in accordance with Section 9.8(b) or TCEH or
such Restricted Subsidiary delivers to the Administrative Agent a Restoration
Certificate with respect to plans to invest (and reinvests within 450 days from
the date of receipt of the Net Asset Sale Proceeds) and;

(r) the execution of (or amendment to), settlement of or unwinding of any
Hedging Obligation in the ordinary course of business;

(s) any disposition of mineral rights (other than coal and lignite mineral
rights); provided the net proceeds therefrom are deemed to be Net Asset Sale
Proceeds and are applied in accordance with Section 9.8(b);

(t) any sale, transfer or other disposal of any real property that is
(i) primarily used or intended to be used for mining which has either been
reclaimed, or has not been used for mining in a manner which requires
reclamation, and in either case has been determined by TCEH not to be necessary
for use for mining, (ii) used as buffer land, but no longer serves such purpose
or its use is restricted such that it will continue to be buffer land, or
(iii) was acquired in connection with power generation facilities, but has been
determined by TCEH to no longer be commercially suitable for such purpose;

(u) [Reserved];

(v) dispositions of power, capacity, heat rate, renewable energy credits, waste
by-products, energy, electricity, coal and lignite, oil and other petroleum
based liquids, emissions and other environmental credits, ancillary services,
fuel (including all forms of nuclear fuel and natural gas) and other related
assets or products of services, including assets related to trading activities
or the sale of inventory or contracts related to any of the foregoing, in each
case in the ordinary course of business;

(w) [Reserved];

(x) any disposition of assets in connection with salvage activities, provided
the net proceeds therefrom are deemed to be Net Asset Sale Proceeds and are
applied in accordance with Section 9.8(b); and

(y) any sale, transfer or other disposition of any assets required by any
Government Authority; provided the net proceeds therefrom are deemed to be Net
Asset Sale Proceeds and applied in accordance with Section 9.8(b).

 

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“Asset Sale Offer” shall have the meaning provided in Section 9.8(c).

“Assignment and Acceptance” shall mean an assignment and acceptance
substantially in the form of Exhibit H, or such other form as may be approved by
the Administrative Agent.

“Authorized Officer” shall mean the President, the Chief Executive Officer, the
Chief Financial Officer, the Chief Operating Officer, the Treasurer, the
Assistant Treasurer, with respect to certain limited liability companies or
partnerships that do not have officers, any manager, managing member or general
partner thereof, any other senior officer of US Holdings, the Borrower or any
other Loan Party designated as such in writing to the Administrative Agent by
US Holdings, the Borrower or any other Loan Party, as applicable, and, with
respect to any document (other than the solvency certificate) delivered on the
Closing Date, the Secretary or the Assistant Secretary of any Loan Party. Any
document delivered hereunder that is signed by an Authorized Officer shall be
conclusively presumed to have been authorized by all necessary corporate,
limited liability company, partnership and/or other action on the part of
US Holdings, the Borrower or any other Loan Party and such Authorized Officer
shall be conclusively presumed to have acted on behalf of such Person.

“Bankruptcy Code” shall mean Title 11 of the United States Code, as amended.

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

“benefited Lender” shall have the meaning provided in Section 13.8(a).

“Board” shall mean the Board of Governors of the Federal Reserve System of the
United States (or any successor).

“Borrower” shall have the meaning provided in the preamble to this Agreement.

“Borrowing” shall mean and include the incurrence of the Loans on the Closing
Date (or resulting from conversions on a given date after the Closing Date)
having, in the case of LIBOR Loans, the same Interest Period (provided that ABR
Loans incurred pursuant to Section 2.10(b) shall be considered part of any
related Borrowing of LIBOR Loans).

“Business Day” shall mean any day excluding Saturday, Sunday and any other day
on which banking institutions in New York City are authorized by law or other
governmental actions to close, and, if such day relates to (a) any interest rate
settings as to a LIBOR Loan, (b) any fundings, disbursements, settlements and
payments in respect of any such LIBOR Loan, or (c) any other dealings pursuant
to this Agreement in respect of any such LIBOR Loan, such day shall be a day on
which dealings in deposits in Dollars are conducted by and between banks in the
London interbank eurodollar market.

“Capital Stock” shall mean:

(1) in the case of a corporation, corporate stock;

 

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(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock;

(3) in the case of a partnership or limited liability company, partnership or
membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.

“Capitalized Lease Obligation” shall mean, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability on
a balance sheet (excluding the footnotes thereto) in accordance with GAAP;
provided that any obligations existing on the Closing Date (i) that were not
included on the balance sheet of TCEH as capital lease obligations and (ii) that
are subsequently recharacterized as capital lease obligations due to a change in
accounting treatment shall for all purposes not be treated as Capitalized Lease
Obligations.

“Capitalized Software Expenditures” shall mean, for any period, the aggregate of
all expenditures (whether paid in cash or accrued as liabilities) by a Person
and its Restricted Subsidiaries during such period in respect of purchased
software or internally developed software and software enhancements that, in
conformity with GAAP, are or are required to be reflected as capitalized costs
on the consolidated balance sheet of a Person and its Restricted Subsidiaries.

“Cash Equivalents” shall mean:

(1) Dollars;

(2) euros or any national currency of any participating member state of the EMU
or such local currencies held by TCEH and its Restricted Subsidiaries from time
to time in the ordinary course of business;

(3) securities issued or directly and fully and unconditionally guaranteed or
insured by the U.S. government (or any agency or instrumentality thereof the
securities of which are unconditionally guaranteed as a full faith and credit
obligation of the U.S. government) with maturities, unless such securities are
deposited to defease Indebtedness, of 24 months or less from the date of
acquisition;

(4) certificates of deposit, time deposits and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers’
acceptances with maturities not exceeding one year and overnight bank deposits,
in each case with any commercial bank having capital and surplus of not less
than $500,000,000 in the case of U.S. banks and $100,000,000 (or the Dollar
equivalent as of the date of determination) in the case of non-U.S. banks;

(5) repurchase obligations for underlying securities of the types described in
clauses (3) and (4) entered into with any financial institution meeting the
qualifications specified in clause (4) above;

 

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(6) commercial paper rated at least P-1 by Moody’s or at least A-1 by S&P and in
each case maturing within 24 months after the date of creation thereof;

(7) marketable short-term money market and similar securities having a rating of
at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time
neither Moody’s nor S&P shall be rating such obligations, an equivalent rating
from another Rating Agency) and in each case maturing within 24 months after the
date of creation thereof;

(8) investment funds investing 95% of their assets in securities of the types
described in clauses (1) through (7) above;

(9) readily marketable direct obligations issued by any state, commonwealth or
territory of the United States or any political subdivision or taxing authority
thereof having an Investment Grade Rating from either Moody’s or S&P with
maturities of 24 months or less from the date of acquisition;

(10) Indebtedness or Preferred Stock issued by Persons with a rating of A or
higher from S&P or A2 or higher from Moody’s with maturities of 24 months or
less from the date of acquisition; and

(11) Investments with average maturities of 24 months or less from the date of
acquisition in money market funds rated AAA- (or the equivalent thereof) or
better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s.

Notwithstanding the foregoing, Cash Equivalents shall include amounts
denominated in currencies other than those provided in clauses (1) and
(2) above; provided that such amounts are converted into any currency listed in
clauses (1) and (2) as promptly as practicable and in any event within ten
Business Days following the receipt of such amounts.

“Cash Interest” shall have the meaning provided in Section 2.8(a)(ii).

“Casualty Event” shall mean any taking under power of eminent domain or similar
proceeding and any insured loss; provided that any such taking or similar
proceeding or insured loss that results in Net Asset Sale Proceeds of less than
(x) prior to the Interim Loan Conversion Date, $50,000,000 and (y) thereafter,
$75,000,000 shall not be deemed a Casualty Event.

“Change in Law” shall mean (a) the adoption of any Applicable Laws after the
date of this Agreement, (b) any change in any Applicable Laws or in the
interpretation or application thereof by any Government Authority after the date
of this Agreement or (c) compliance by any party with any guideline, request,
directive or order issued or made after the date hereof by any central bank or
other governmental or quasi-governmental authority (whether or not having the
force of law).

 

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“Change of Control” shall mean the occurrence of any of the following:

(1) the sale, lease or transfer, in one or a series of related transactions, of
all or substantially all of the assets of US Holdings or TCEH and its
Subsidiaries, taken as a whole, to any Person other than a Permitted Holder;

(2) TCEH becomes aware (by way of a report or any other filing pursuant to
Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) of
the acquisition by any Person or group (within the meaning of Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act or any successor provision), including
any group acting for the purpose of acquiring, holding or disposing of
securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act or any
successor provision), other than the Permitted Holders, in a single transaction
or in a related series of transactions, by way of merger, consolidation or other
business combination or purchase of beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or more of
the total voting power of the Voting Stock of TCEH or any of its direct or
indirect parent companies; or

(3) at any time, the Parent shall cease to own directly or indirectly
beneficially and of record at least a majority of the total voting power of the
voting stock of TCEH.

“Change of Control Offer” shall have the meaning provided in Section 9.12(a).

“Change of Control Prepayment” shall have the meaning provided in
Section 9.12(a).

“Change of Control Prepayment Date” shall have the meaning provided in
Section 9.12(a)(2).

“Class”, when used in reference to any Loan or Borrowing, shall refer to whether
such Loan, or the Loans comprising such Borrowing, are Senior Cash Pay Loans or
Senior Toggle Loans and, when used in reference to any Commitment, refers to
whether such Commitment is a Senior Interim Cash Pay Loan Commitment or a Senior
Interim Toggle Loan Commitment.

“Closing Date” shall mean the date of the initial Borrowings hereunder.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time. Section references to the Code are to the Code as in effect at the date of
this Agreement, and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.

“Co-Documentation Agents” shall mean Citibank, N.A., Credit Suisse Securities
(USA) LLC, JPMorgan Chase Bank, N.A. and Lehman Commercial Paper Inc.

“Collateral Posting Facility” shall mean any senior cash posting credit
facility, the size of which is capped by the mark-to-market loss, inclusive of
any unpaid settlement amounts, of TCEH and its Subsidiaries on a hypothetical
portfolio of commodity swaps, forwards and futures transactions that correspond
to or replicate all or a portion of actual transactions by TCEH and its
Subsidiaries that are outstanding on, or entered into from time to time on or
after, the Closing Date.

 

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“Commitment Letter” shall mean the amended and restated commitment letter, dated
July 20, 2007, as amended by that certain Letter Agreement dated October 10,
2007, among TCEH (as successor in interest to Merger Sub) and Citigroup Global
Markets Inc., Credit Suisse Cayman Islands Branch, Credit Suisse Securities
(USA) LLC, Goldman Sachs Credit Partners L.P., JPMorgan Chase Bank, N.A., J.P.
Morgan Securities Inc., Lehman Brothers Inc., Lehman Brothers Holdings Inc.,
Lehman Commercial Paper Inc., Lehman Brothers Commercial Bank and Morgan Stanley
Senior Funding, Inc.

“Commitments” shall mean, with respect to each Lender (to the extent
applicable), such Lender’s Senior Interim Cash Pay Loan Commitment and/or Senior
Interim Toggle Loan Commitment, as the context requires.

“Committed Lenders” shall mean Citibank, N.A., Credit Suisse Cayman Islands
Branch, Credit Suisse Securities (USA) LLC, Goldman Sachs Credit Partners L.P.,
JPMorgan Chase Bank, N.A., Lehman Loan Funding, LLC and Morgan Stanley Senior
Funding, Inc.

“Communications” shall have the meaning provided in Section 13.17.

“Confidential Information” shall have the meaning provided in Section 13.16.

“Consolidated Depreciation and Amortization Expense” shall mean with respect to
any Person for any period, the total amount of depreciation and amortization
expense, including the amortization of deferred financing fees, nuclear fuel
costs, depletion of coal or lignite reserves, debt issuance costs, commissions,
fees and expenses and Capitalized Software Expenditures, of such Person and its
Restricted Subsidiaries for such period on a consolidated basis and otherwise
determined in accordance with GAAP.

“Consolidated Interest Expense” shall mean, with respect to any Person for any
period, without duplication, the sum of:

(1) consolidated interest expense of such Person and its Restricted Subsidiaries
for such period, to the extent such expense was deducted (and not added back) in
computing Consolidated Net Income (including (a) amortization of original issue
discount resulting from the issuance of Indebtedness at less than par, (b) all
commissions, discounts and other fees and charges owed with respect to letters
of credit or bankers’ acceptances or any Collateral Posting Facility or similar
facilities, (c) non-cash interest payments (but excluding any non-cash interest
expense attributable to the movement in the mark to market valuation of Hedging
Obligations or other derivative instruments pursuant to GAAP), (d) the interest
component of Capitalized Lease Obligations, and (e) net payments, if any,
pursuant to interest rate Hedging Obligations with respect to Indebtedness, and
excluding, (u) accretion of asset retirement obligations and accretion or
accrual of discounted liabilities not constituting Indebtedness, (v) any expense
resulting from the discounting of the Existing Notes or other Indebtedness in
connection with the application of purchase accounting, (w) “additional
interest” with respect to the Senior Refinancing Registration Rights Agreement
and any comparable “additional interest” with respect to other securities,
(x) amortization of reacquired Indebtedness, deferred financing fees, debt
issuance costs, commissions, fees and expenses, (y) any expensing of bridge,
commitment and other financing fees and (z) commissions, discounts, yield and
other fees and charges (including any interest expense) related to any
Receivables Facility); plus

 

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(2) consolidated capitalized interest of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued; less

(3) interest income of such Person and its Restricted Subsidiaries for such
period.

For purposes of this definition, interest on a Capitalized Lease Obligation
shall be deemed to accrue at an interest rate reasonably determined by such
Person to be the rate of interest implicit in such Capitalized Lease Obligation
in accordance with GAAP.

“Consolidated Net Income” shall mean, with respect to any Person for any period,
the aggregate of the Net Income of such Person for such period, on a
consolidated basis, and otherwise determined in accordance with GAAP; provided,
however, that, without duplication,

(1) any after-tax effect of extraordinary, non-recurring or unusual gains or
losses (less all fees and expenses relating thereto) or expenses (including
Transaction fees and expenses to the extent incurred on or prior to December 31,
2008), severance, relocation costs, consolidation and closing costs, integration
and facilities opening costs, business optimization costs, transition costs,
restructuring costs, signing, retention or completion bonuses, and curtailments
or modifications to pension and post-retirement employee benefit plans shall be
excluded;

(2) the cumulative effect of a change in accounting principles during such
period shall be excluded;

(3) any after-tax effect of income (loss) from disposed, abandoned or
discontinued operations and any net after-tax gains or losses on disposal of
disposed, abandoned, transferred, closed or discontinued operations shall be
excluded;

(4) any after-tax effect of gains or losses (less all fees and expenses relating
thereto) attributable to asset dispositions or abandonments other than in the
ordinary course of business, as determined in good faith by TCEH, shall be
excluded;

(5) the Net Income for such period of any Person that (a) is not a Subsidiary,
(b) is an Unrestricted Subsidiary or (c) is accounted for by the equity method
of accounting, shall be excluded; provided that Consolidated Net Income of TCEH
shall be increased by the amount of dividends or distributions or other payments
that are actually paid in cash (or to the extent converted into cash) to the
referent Person or a Restricted Subsidiary thereof in respect of such period;

(6) solely for the purpose of determining the amount available for Restricted
Payments under clause (3)(a) of Section 9.5(a) hereof, the Net Income for such
period of any Restricted Subsidiary (other than any Guarantor) shall be excluded
to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of its

 

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Net Income is not at the date of determination wholly permitted without any
prior governmental approval (which has not been obtained) or, directly or
indirectly, by the operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule, or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, unless such
restriction with respect to the payment of dividends or similar distributions
has been legally waived; provided that Consolidated Net Income of TCEH will be
increased by the amount of dividends or other distributions or other payments
actually paid in cash (or to the extent converted into cash) or Cash Equivalents
to TCEH or a Restricted Subsidiary thereof in respect of such period, to the
extent not already included therein;

(7) effects of all adjustments (including the effects of such adjustments pushed
down to TCEH and its Restricted Subsidiaries) in such Person’s consolidated
financial statements pursuant to GAAP resulting from the application of purchase
accounting in relation to the Transactions or any consummated acquisition or the
amortization or write-off of any amounts thereof, net of taxes, shall be
excluded;

(8) any net after-tax effect of income (loss) attributable to the early
extinguishment of Indebtedness (other than Hedging Obligations) shall be
excluded;

(9) any impairment charge or asset write-off, including, without limitation,
impairment charges or asset write-offs related to intangible assets, long-lived
assets or investments in debt and equity securities, in each case, pursuant to
GAAP and the amortization of intangibles arising pursuant to GAAP shall be
excluded;

(10) any non-cash compensation expense recorded from grants of stock
appreciation or similar rights, stock options, restricted stock or other rights,
and any cash charges associated with the rollover, acceleration or payout of
Equity Interests by management of TCEH or any of its direct or indirect parent
companies in connection with the Transactions, shall be excluded;

(11) any fees and expenses incurred during such period, or any amortization
thereof for such period, in connection with any acquisition, Investment, Asset
Sale, issuance or repayment of Indebtedness, issuance of Equity Interests,
refinancing transaction or amendment or modification of any debt instrument (in
each case, including any such transaction consummated prior to the Closing Date
and any such transaction undertaken but not completed) and any charges or
non-recurring merger costs incurred during such period as a result of any such
transaction shall be excluded;

(12) accruals and reserves that are established or adjusted within twelve months
after the Closing Date that are so required to be established as a result of the
Transactions in accordance with GAAP, or changes as a result of adoption or
modification of accounting policies, shall be excluded;

(13) to the extent covered by insurance and actually reimbursed, or, so long as
TCEH has made a determination that there exists reasonable evidence that such
amount will in fact be reimbursed by the insurer and only to the extent that
such amount is (a) not denied by the applicable carrier in writing within
180 days and (b) in fact reimbursed within 365 days of the date of such evidence
(with a deduction for any amount so added back to the extent not so reimbursed
within 365 days), expenses with respect to liability or casualty events or
business interruption shall be excluded;

 

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(14) any net after-tax effect of unrealized income (loss) attributable to
Hedging Obligations or other derivative instruments shall be excluded; and

(15) any benefit from any fair market value of any contract as recorded on the
balance sheet at the time of the Transactions shall be excluded.

(16) Notwithstanding the foregoing, for the purpose of Section 9.5(a) hereof
only (other than clause (3)(d) thereof), there shall be excluded from
Consolidated Net Income any income arising from any sale or other disposition of
Restricted Investments made by TCEH and its Restricted Subsidiaries, any
repurchases and redemptions of Restricted Investments from TCEH and its
Restricted Subsidiaries, any repayments of loans and advances which constitute
Restricted Investments by TCEH or any of its Restricted Subsidiaries, any sale
of the stock of an Unrestricted Subsidiary or any distribution or dividend from
an Unrestricted Subsidiary, in each case only to the extent such amounts
increase the amount of Restricted Payments permitted under clause (3)(d) of
Section 9.5(a) hereof.

“Consolidated Secured Debt Ratio” shall mean, as of any date of determination,
the ratio of (x) Consolidated Secured Indebtedness computed as of the end of the
most recent fiscal quarter for which internal financial statements are available
immediately preceding the date on which such event for which such calculation is
being made shall occur to (y) the aggregate amount of EBITDA of TCEH for the
period of the most recently ended four full consecutive fiscal quarters for
which internal financial statements are available immediately preceding the date
on which such event for which such calculation is being made shall occur, in
each case with such pro forma adjustments to Consolidated Secured Indebtedness
and EBITDA as are appropriate and consistent with the pro forma adjustment
provisions provided in the definition of “Fixed Charge Coverage Ratio”.

“Consolidated Secured Indebtedness” shall mean Consolidated Total Indebtedness
secured by a Lien on any assets of TCEH or any of its Restricted Subsidiaries

“Consolidated Total Assets” shall mean, as of any date of determination, the
amount that would, in conformity with GAAP, be set forth opposite the caption
“total assets” (or any like caption), after intercompany eliminations, on a
consolidated balance sheet of TCEH and the Restricted Subsidiaries at such date.

“Consolidated Total Indebtedness” shall mean, as at any date of determination,
an amount equal to (1) the aggregate amount of all outstanding Indebtedness of
TCEH and its Restricted Subsidiaries on a consolidated basis consisting of
Indebtedness for borrowed money, debt obligations evidenced by promissory notes
and similar instruments, letters of credit (only to the extent of any
unreimbursed drawings thereunder) and Obligations in respect of Capitalized
Lease Obligations, plus (2) the aggregate amount of all outstanding Disqualified
Stock of TCEH and all Disqualified Stock and Preferred Stock of its Restricted
Subsidiaries on a consolidated basis, with the amount of such Disqualified Stock
and Preferred Stock equal to the greater of

 

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their respective voluntary or involuntary liquidation preferences and maximum
fixed repurchase prices, in each case determined on a consolidated basis in
accordance with GAAP, less (3) the aggregate amount of all Unrestricted Cash and
less (4) all Deposit L/C Loans and Incremental Deposit L/C Loans outstanding on
such date of determination. For purposes hereof, the “maximum fixed repurchase
price” of any Disqualified Stock or Preferred Stock that does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Stock or Preferred Stock as if such Disqualified Stock or Preferred
Stock were purchased on any date on which Consolidated Total Indebtedness shall
be required to be determined, and if such price is based upon, or measured by,
the fair market value of such Disqualified Stock or Preferred Stock, such fair
market value shall be determined reasonably and in good faith by TCEH.

“Contingent Obligations” shall mean, with respect to any Person, any obligation
of such Person guaranteeing any leases, dividends or other obligations that do
not constitute Indebtedness (“primary obligations”) of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,

(1) to purchase any such primary obligation or any property constituting direct
or indirect security therefor,

(2) to advance or supply funds,

(a) for the purchase or payment of any such primary obligation, or

(b) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, or

(3) to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation against loss in respect
thereof.

“Contractual Requirement” shall have the meaning provided in Section 8.3.

“Covered Commodity” shall mean any energy, electricity, generation capacity,
power, heat rate, congestion, natural gas, nuclear fuel (including enrichment
and conversion), diesel fuel, fuel oil, other petroleum-based liquids, coal,
lignite, weather, emissions and other environmental credits, waste by-products,
renewable energy credit, or any other energy related commodity or service
(including ancillary services and related risks (such as location basis).

“Credit Event” shall mean and include the making (but not the conversion or
continuation) of a Loan, provided that the accrual of PIK Interest shall not
constitute a Credit Event.

“Credit Facilities” shall mean, with respect to TCEH or any of its Restricted
Subsidiaries, one or more debt facilities, including the facilities hereunder,
the TCEH Senior Secured Facilities or other financing arrangements (including,
without limitation, commercial paper facilities or indentures) providing for
revolving credit loans, term loans, letters of credit or

 

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other long-term indebtedness, including any notes, mortgages, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and any amendments, supplements, modifications, extensions, renewals,
restatements or refundings thereof and any indentures or credit facilities or
commercial paper facilities that replace, refund or refinance any part of the
loans, notes, other credit facilities or commitments thereunder, including any
such replacement, refunding or refinancing facility or indenture that increases
the amount permitted to be borrowed thereunder or alters the maturity thereof
(provided that such increase in borrowings is permitted under Section 9.7
hereof) or adds Restricted Subsidiaries as additional borrowers or guarantors
thereunder and whether by the same or any other agent, lender or group of
lenders.

“Debt Incurrence Prepayment Event” shall mean any issuance or incurrence by
TCEH, TECH Finance, US Holdings or any other Guarantor, of any Refinancing
Indebtedness (excluding any Indebtedness permitted to be issued or incurred
under Section 9.7(b) other than Section 9.7(b)(2) or 9.7(b)(13)) with respect to
any refinancing of Indebtedness incurred under Section 9.7(b)(2).

“Default” shall mean any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.

“Default Rate” shall have the meaning provided in Section 2.8(d).

“Defaulting Lender” shall mean any Lender with respect to which a Lender Default
is in effect.

“Deposit L/C Loan” shall mean Deposit L/C Loans under, and as defined in, the
TCEH Senior Secured Facilities.

“Designated Non-Cash Consideration” shall mean the fair market value of non-cash
consideration received by TCEH or a Restricted Subsidiary in connection with an
Asset Sale that is so designated as Designated Non-Cash Consideration pursuant
to an Officer’s Certificate, setting forth the basis of such valuation, executed
by the principal financial officer of TCEH, less the amount of cash or Cash
Equivalents received in connection with a subsequent sale of or collection on
such Designated Non-Cash Consideration.

“Designated Preferred Stock” shall mean Preferred Stock of TCEH or any parent
corporation thereof (in each case other than Disqualified Stock) that is issued
for cash (other than to a Restricted Subsidiary or an employee stock ownership
plan or trust established by TCEH or any of its Subsidiaries) and is so
designated as Designated Preferred Stock, pursuant to an Officer’s Certificate
executed by the principal financial officer of TCEH or the applicable parent
corporation thereof, as the case may be, on the issuance date thereof, the cash
proceeds of which are excluded from the calculation provided in clause (3) of
Section 9.5(a) hereof.

“Disqualified Stock” shall mean, with respect to any Person, any Capital Stock
of such Person which, by its terms, or by the terms of any security into which
it is convertible or for which it is putable or exchangeable, or upon the
happening of any event, matures or is mandatorily redeemable (other than solely
as a result of a change of control or asset sale) pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof
(other than solely as a result of a change of control or asset sale), in whole
or in part, in

 

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each case prior to the date 91 days after the earlier of October 15, 2016 or the
date the Loans are no longer outstanding; provided, however, that if such
Capital Stock is issued to any plan for the benefit of employees of TCEH or its
Subsidiaries or by any such plan to such employees, such Capital Stock shall not
constitute Disqualified Stock solely because it may be required to be
repurchased by TCEH or its Subsidiaries in order to satisfy applicable statutory
or regulatory obligations.

“Dollars” and “$” shall mean dollars in lawful currency of the United States of
America.

“Domestic Subsidiary” shall mean each Subsidiary of TCEH that is organized under
the laws of the United States, any state thereof or the District of Columbia.

“EBITDA” shall mean, with respect to any Person for any period, the Consolidated
Net Income of such Person for such period

(1) increased (without duplication) by:

(a) provision for taxes based on income or profits or capital gains, including,
without limitation, foreign, federal, state, franchise, excise, value-added and
similar taxes and foreign withholding taxes (including penalties and interest
related to such taxes or arising from tax examinations) of such Person paid or
accrued during such period, deducted (and not added back) in computing
Consolidated Net Income; plus

(b) Fixed Charges of such Person for such period (including (x) net losses on
Hedging Obligations or other derivative instruments entered into for the purpose
of hedging interest rate risk and (y) costs of surety bonds in connection with
financing activities, in each case, to the extent included in Fixed Charges),
together with items excluded from the definition of “Consolidated Interest
Expense” pursuant to clauses (1)(u), (v), (w), (x), (y) and (z) of the
definition thereof, and, in each such case, to the extent the same were deducted
(and not added back) in calculating such Consolidated Net Income; plus

(c) Consolidated Depreciation and Amortization Expense of such Person for such
period to the extent the same was deducted (and not added back) in computing
Consolidated Net Income; plus

(d) any fees, expenses or charges (other than depreciation or amortization
expense) related to any Equity Offering, Permitted Investment, acquisition,
disposition, recapitalization or the incurrence of Indebtedness permitted to be
incurred by such Person and its Restricted Subsidiaries, by this Agreement
(including a refinancing transaction or amendment or other modification of any
debt instrument) (whether or not successful), including (i) such fees, expenses
or charges related to the offering of the Senior Notes, the TCEH Senior Secured
Facilities, this Agreement and any Receivables Facility, (ii) any amendment or
other modification of the Senior Interim Loans, (iii) any such transaction
consummated prior to the Closing Date and any such transaction undertaken but
not completed and (iv) any charges or non-recurring merger costs as a result of
any such transaction, in each case, deducted (and not added back) in computing
Consolidated Net Income; plus

 

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(e) the amount of any restructuring charge or reserve deducted (and not added
back) in such period in computing Consolidated Net Income, including any costs
incurred in connection with acquisitions after the Closing Date, costs related
to the closure and/or consolidation of facilities; plus

(f) any other non-cash charges, including any write-offs or write-downs,
reducing Consolidated Net Income for such period (provided that if any such
non-cash charges represent an accrual or reserve for potential cash items in any
future period, the cash payment in respect thereof in such future period shall
be subtracted from EBITDA to such extent, and excluding amortization of a
prepaid cash item that was paid in a prior period); plus

(g) the amount of any minority interest expense consisting of Subsidiary income
attributable to minority equity interests of third parties in any non-Wholly
Owned Subsidiary deducted (and not added back) in such period in calculating
Consolidated Net Income; plus

(h) the amount of management, monitoring, consulting and advisory fees and
related indemnities and expenses paid in such period to the Sponsors to the
extent otherwise permitted under Section 9.9 hereof and deducted (and not added
back) in calculating Consolidated Net Income; plus

(i) the amount of net cost savings projected by TCEH in good faith to be
realized as a result of specified actions taken or to be taken prior to or
during such period (calculated on a pro forma basis as though such cost savings
had been realized on the first day of such period and added to EBITDA until
fully realized), net of the amount of actual benefits realized during such
period from such actions; provided that (w) such cost savings are reasonably
identifiable and factually supportable, (x) such actions have been taken or are
to be taken within 12 months after the date of determination to take such action
and some portion of the benefit is expected to be realized within 12 months of
taking such action, (y) no cost savings shall be added pursuant to this
clause (i) to the extent duplicative of any expenses or charges relating to such
cost savings that are included in clause (e) above with respect to such period
and (z) the aggregate amount of cost savings added pursuant to this clause (i)
shall not exceed $150,000,000 for any four consecutive quarter period (which
adjustments may be incremental to pro forma adjustments made pursuant to the
second paragraph of the definition of “Fixed Charge Coverage Ratio”); plus

(j) the amount of loss on sales of receivables and related assets to the
Receivables Subsidiary in connection with a Receivables Facility deducted (and
not added back) in calculating Consolidated Net Income; plus

(k) any costs or expense incurred by TCEH or a Restricted Subsidiary pursuant to
any management equity plan or stock option plan or any other management or
employee benefit plan or agreement or any stock subscription or shareholder
agreement, to the extent that such cost or expenses are funded with cash
proceeds contributed to the capital of TCEH or net cash proceeds of an issuance
of Equity Interests (other than Disqualified Stock) of TCEH (or any direct or
indirect parent thereof) solely to the extent that such net cash proceeds are
excluded from the calculation provided in clause (3) of Section 9.5(a) hereof;
plus

 

24

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(l) Expenses Relating to a Unit Outage; provided that the only Expenses Relating
to a Unit Outage that may be included in EBITDA shall be, without duplication
(i) up to $250,000,000 per fiscal year of Expenses Relating to a Unit Outage
incurred within the first 12 months after any planned or unplanned outage of any
Unit by reason of any action by any regulatory body or other Government
Authority or to comply with any applicable law and (ii) up to $100,000,000 per
fiscal year of Expenses Relating to a Unit Outage incurred within the first
12 months after any planned outage of any Unit for purposes of expanding or
upgrading such Unit; plus

(m) cash receipts (or any netting arrangements resulting in increased cash
receipts) not added in arriving at EBITDA or Consolidated Net Income in any
period to the extent the non-cash gains relating to such receipts were deducted
in the calculation of EBITDA pursuant to paragraph (2) below for any previous
period and not added; and

(2) decreased by (without duplication) (a) non-cash gains increasing
Consolidated Net Income of such Person for such period, excluding any non-cash
gains to the extent they represent the reversal of an accrual or reserve for a
potential cash item that reduced EBITDA in any prior period, (b) cash
expenditures (or any netting arrangements resulting in increased cash
expenditures) not deducted in arriving at EBITDA or Consolidated Net Income in
any period to the extent non-cash losses relating to such expenditures were
added in the calculation of EBITDA pursuant to paragraph (1) above for any
previous period and not deducted, and (c) the amount of any minority interest
income consisting of Subsidiary losses attributable to minority equity interests
of third parties in a non-Wholly Owned Subsidiary to the extent such minority
interest income is included in Consolidated Net Income.

“Employee Benefit Plan” shall mean an employee benefit plan (as defined in
Section 3(3) of ERISA), other than a Foreign Plan, that is maintained or
contributed to by the Parent, US Holdings, TCEH or any Subsidiary (or, with
respect to an employee benefit plan subject to Title IV of ERISA, any ERISA
Affiliate).

“EMU” shall mean the economic and monetary union as contemplated in the Treaty
on European Union.

“Energy Future Holding Company” shall mean Energy Future Intermediate Holding
Company LLC, a Delaware limited liability company.

“Engagement Letter” shall mean the amended and restated Engagement Letter, dated
as of July 20, 2007, as amended by that certain Letter Agreement dated
October 10, 2007, among the TCEH (as successor in interest to Merger Sub),
Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman,
Sachs & Co., J.P. Morgan Securities Inc., Lehman Brothers Inc. and Morgan
Stanley & Co. Incorporated.

“Environmental CapEx Debt” shall mean Indebtedness of TCEH or any of its
Restricted Subsidiaries incurred for the purpose of financing Environmental
Capital Expenditures.

“Environmental Capital Expenditures” shall mean capital expenditures deemed
necessary by TCEH or its Restricted Subsidiaries to comply with, or in
anticipation of having to comply with, Environmental Law or otherwise undertaken
voluntarily by TCEH or any of its Restricted Subsidiaries in connection with
environmental matters.

 

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“Environmental Claims” shall mean any and all actions, suits, proceedings,
orders, decrees, demands, demand letters, claims, liens, notices of
noncompliance, violation or potential responsibility or investigation (other
than reports prepared by or on behalf of the Borrower or any of its Subsidiaries
(a) in the ordinary course of such Person’s business or (b) as required in
connection with a financing transaction or an acquisition or disposition of Real
Estate) or proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereinafter, “Claims”), including (i) any and all Claims by Government
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (ii) any and
all Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief relating to the presence,
release or threatened release into the environment of Hazardous Materials or
arising from alleged injury or threat of injury to human health or safety (to
the extent relating to human exposure to Hazardous Materials), or to the
environment, including, ambient air, indoor air, surface water, groundwater,
land surface and subsurface strata and natural resources such as wetlands.

“Environmental Law” shall mean any applicable Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code and rule of common law now or
hereafter in effect and in each case as amended, and any binding judicial or
administrative interpretation thereof, including any binding judicial or
administrative order, consent decree or judgment, relating to the protection of
the environment, including, ambient air, indoor air, surface water, groundwater,
land surface and sub-surface strata and natural resources such as wetlands, or
to human health or safety (to the extent relating to human exposure to Hazardous
Materials), or Hazardous Materials.

“Equity Contribution” shall have the meaning provided in the recitals to this
Agreement.

“Equity Interests” shall mean Capital Stock and all warrants, options or other
rights to acquire Capital Stock, but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock.

“Equity Offering” shall mean any public or private sale of common stock or
Preferred Stock of TCEH or any of its direct or indirect parent companies
(excluding Disqualified Stock), other than:

(1) public offerings with respect to TCEH’s or any direct or indirect parent
company’s common stock registered on Form S-8;

(2) issuances to any Subsidiary of TCEH; and

(3) any such public or private sale that constitutes an Excluded Contribution.

“ERCOT” shall mean the Electric Reliability Council of Texas.

 

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“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA as in effect
at the date of this Agreement and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.

“ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA)
that together with TCEH or any Subsidiary of TCEH would be deemed to be a
“single employer” within the meaning of Section 414(b) or (c) of the Code or,
solely for purposes of Section 302 of ERISA and Section 412 of the Code, is
treated as a single employer under Section 414 of the Code.

“euro” shall mean the single currency of participating member states of the EMU.

“Event of Default” shall have the meaning provided in Section 11.

“Excess Proceeds” shall have the meaning provided in Section 9.8(c) hereof.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.

“Exchange Date” shall have the meaning provided in Section 2.14(b)(i).

“Exchange Notice” shall have the meaning provided in Section 2.14(b)(ii).

“Excluded Contribution” shall mean net cash proceeds, marketable securities or
Qualified Proceeds received by TCEH after the Closing Date from

(1) contributions to its common equity capital, and

(2) the sale (other than to a Subsidiary of TCEH or to any management equity
plan or stock option plan or any other management or employee benefit plan or
agreement of TCEH) of Capital Stock (other than Disqualified Stock and
Designated Preferred Stock) of TCEH,

in each case designated as Excluded Contributions pursuant to an Officer’s
Certificate executed by the principal financial officer of TCEH on the date such
capital contributions are made or the date such Equity Interests are sold, as
the case may be, which are excluded from the calculation provided in clause (3)
of Section 9.5(a) hereof.

“Excluded Taxes” shall mean, with respect to any Agent or any Lender, (a) net
income taxes and franchise and excise taxes (imposed in lieu of net income
taxes) imposed on such Agent or Lender, (b) any Taxes imposed on any Agent or
any Lender as a result of any current or former connection between such Agent or
Lender and the jurisdiction of the Government Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising from such Agent or Lender having executed, delivered or
performed its obligations or received a payment under, or having been a party to
or having enforced, this Agreement or any other Loan Document), (c) any U.S.
federal withholding tax that is imposed on amounts payable to any Lender under
the law in effect at the time such

 

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Lender becomes a party to this Agreement; provided that this subclause (c) shall
not apply to the extent that (x) the indemnity payments or additional amounts
any Lender would be entitled to receive (without regard to this subclause (c))
do not exceed the indemnity payment or additional amounts that the person making
the assignment, participation or transfer to such Lender would have been
entitled to receive in the absence of such assignment or (y) any Tax is imposed
on a Lender in connection with an interest in any Loan or other obligation that
such Lender was required to acquire pursuant to Section 13.8(a) or that such
Lender acquired pursuant to Section 13.7 (it being understood and agreed, for
the avoidance of doubt, that any withholding tax imposed on a Lender as a result
of a Change in Law occurring after the time such Lender became a party to this
Agreement (or designates a new lending office) shall not be an Excluded Tax) and
(d) any Tax to the extent attributable to such Lender’s failure to comply with
Section 5.4(d) and (e) (in the case of any Non-U.S. Lender) or Section 5.4(h)
(in the case of a U.S. Lender).

“Existing Notes” shall mean

 

  •  

US Holdings’ Floating Rate Junior Subordinated Debentures, Series D due 2037;

 

  •  

US Holdings’ 8.175% Fixed Junior Subordinated Debentures, Series E due 2037;

 

  •  

TCEH’s 6.125% Senior Notes due 2008;

 

  •  

TCEH’s 7.000% Senior Notes due 2013;

 

  •  

US Holdings’ 7.460% Fixed Secured Bonds with amortizing payments to 2015;

 

  •  

US Holdings’ 7.480% Fixed Secured Bonds;

 

  •  

US Holdings’ 9.580% Fixed Notes due in semi-annual installments to 2019;

 

  •  

US Holdings’ 8.254% Fixed Notes due in quarterly installments to 2021;

Pollution Control Revenue Bonds—Brazos River Authority:

 

  •  

5.400% Fixed Series 1994A due May 1, 2029;

 

  •  

7.700% Fixed Series 1999A due April 1, 2033;

 

  •  

6.750% Fixed Series 1999B due September 1, 2034;

 

  •  

7.700% Fixed Series 1999C due March 1, 2032;

 

  •  

Floating Rate Series 2001A due October 1, 2030;

 

  •  

5.750% Fixed Series 2001C due May 1, 2036;

 

  •  

Floating Rate Series 2001D due May 1, 2033;

 

  •  

Floating Rate Taxable Series 2001I due December 1, 2036;

 

  •  

Floating Rate Series 2002A due May 1, 2037;

 

  •  

6.750% Fixed· Series 2003A due April 1, 2038;

 

  •  

6.300% Fixed Series 2003B due July 1, 2032;

 

  •  

6.750% Fixed Series 2003C due October 1, 2038;

 

  •  

5.400% Fixed Series 2003D due October 1, 2029, remarketing date October 1, 2014;

 

  •  

5.000% Fixed Series 2006 due March 1, 2041;

 

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Pollution Control Revenue Bonds—Sabine River Authority of Texas:

 

  •  

6.450% Fixed Series 2000A due June 1, 2021;

 

  •  

5.500% Fixed Series 2001A due May 1, 2022, remarketing date November 1, 2011;

 

  •  

5.750% Fixed Series 2001B due May 1, 2030, remarketing date November 1, 2011;

 

  •  

5.200% Fixed Series 2001C due May 1, 2028;

 

  •  

5.800% Fixed Series 2003A due July 1, 2022;

 

  •  

6.150% Fixed Series 2003B due August 1, 2022

Pollution Control Revenue Bonds—Trinity River Authority of Texas:

 

  •  

6.250% Fixed Series 2000A due May 1, 2028;

in each case to the extent outstanding on the Closing Date.

“Existing Notes Indentures” shall mean each of the indentures or other documents
containing the terms of the Existing Notes.

“Existing Parent Notes” means

 

  •  

Parent’s 5.550% Fixed Senior Notes Series P due 2014;

 

  •  

Parent’s 6.500% Fixed Senior Notes Series Q due 2024;

 

  •  

Parent’s 6.550% Fixed Senior Notes Series R due 2034;

 

  •  

Parent’s Floating Convertible Senior Notes due 2033;

 

  •  

Parent’s 6.375% Series C Senior Notes due 2008;

 

  •  

Parent’s 4.800% Series O Senior Notes due 2009;

in each case to the extent outstanding on the Closing Date.

“Existing US Holdings Notes” shall mean:

 

  •  

US Holdings’ Floating Rate Junior Subordinated Debentures, Series D due 2037;

 

  •  

US Holdings’ 8.175% Fixed Junior Subordinated Debentures, Series E due 2037;

 

  •  

US Holdings’ 7.460% Fixed Secured Bonds with amortizing payments to 2015;

 

  •  

US Holdings’ 7.480% Fixed Secured Bonds;

 

  •  

US Holdings’ 9.580% Fixed Notes due in semi-annual installments to 2019;

 

  •  

US Holdings’ 8.254% Fixed Notes due in quarterly installments to 2021;

in each case to the extent outstanding on the Closing Date.

 

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“Expenses Relating to a Unit Outage” shall mean any expenses or other charges as
a result of any outage or shut-down of any Unit, including any expenses or
charges relating to (a) restarting any such Unit so that it may be placed back
in service after such outage or shut-down, (b) purchases of power, natural gas
or heat rate to meet commitments to sell, or offset a short position in, power,
natural gas or heat rate that would otherwise have been met or offset from
production generated by such Unit during the period of such outage or shut-down,
net of the expenses not in fact incurred (including fuel and other operating
expenses) that would have been incurred absent such outage or shut down and
(c) starting up, operating, maintaining and shutting down any other Unit that
would not otherwise have been operating absent such outage or shut-down,
including the fuel and other operating expenses to the extent in excess of the
expenses not in fact incurred (including fuel and other operating costs) that
would have been incurred absent such outage or shut down, incurred to start-up,
operate, maintain and shut-down such Unit and that are required during the
period of time that the shut-down or outaged Unit is out of service in order to
meet the commitments of such shut-down or outaged Unit to sell, or offset a
short position in, power, natural gas or heat rate.

“Federal Funds Effective Rate” shall mean, for any day, the weighted average of
the per annum rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers on such day, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York; provided that (a) if such day is not a Business Day, the Federal Funds
Effective Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business Day, the
Federal Funds Effective Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the
Administrative Agent on such day on such transactions as determined by the
Administrative Agent.

“Fee Letter” shall mean the amended and restated fee letter, dated July 20,
2007, and as amended pursuant to that certain Letter Agreement dated October 10,
2007, among TCEH (as successor in interest to Merger Sub) and Citigroup Global
Markets Inc., Credit Suisse Cayman Islands Branch, Credit Suisse Securities
(USA) LLC, Goldman Sachs Credit Partners L.P., JPMorgan Chase Bank, N.A., J.P.
Morgan Securities Inc., Lehman Commercial Paper Inc., Lehman Brothers Commercial
Bank and Lehman Brothers Holdings Inc., Lehman Brothers Inc. and Morgan Stanley
Senior Funding, Inc.

“Fees” shall mean all amounts payable pursuant to, or referred to in,
Section 4.1.

“Fixed Charge Coverage Ratio” shall mean, with respect to any Person for any
period, the ratio of EBITDA of such Person for such period to the Fixed Charges
of such Person for such period. In the event that TCEH or any Restricted
Subsidiary incurs, assumes, guarantees, redeems, retires or extinguishes any
Indebtedness (other than Indebtedness incurred under any revolving credit
facility unless such Indebtedness has been permanently repaid and has not been
replaced) or issues or redeems Disqualified Stock or Preferred Stock subsequent
to the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated but prior to or simultaneously with the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the “Fixed Charge
Coverage Ratio Calculation Date”), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, guarantee,
redemption, retirement or extinguishment of Indebtedness, or such issuance or
redemption of Disqualified Stock or Preferred Stock, as if the same had occurred
at the beginning of the applicable four-quarter period.

 

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For purposes of making the computation referred to above, Investments,
acquisitions, dispositions, mergers, consolidations and disposed operations (as
determined in accordance with GAAP) that have been made by TCEH or any of its
Restricted Subsidiaries during the four-quarter reference period or subsequent
to such reference period and on or prior to or simultaneously with the Fixed
Charge Coverage Ratio Calculation Date shall be calculated on a pro forma basis
assuming that all such Investments, acquisitions, dispositions, mergers,
consolidations and disposed operations (and the change in any associated fixed
charge obligations and the change in EBITDA resulting therefrom) had occurred on
the first day of the four-quarter reference period. If, since the beginning of
such period, any Person that subsequently became a Restricted Subsidiary or was
merged with or into TCEH or any of its Restricted Subsidiaries since the
beginning of such period shall have made any Investment, acquisition,
disposition, merger, consolidation or disposed operation that would have
required adjustment pursuant to this definition, then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect thereto for such period as if
such Investment, acquisition, disposition, merger, consolidation or disposed
operation had occurred at the beginning of the applicable four-quarter period.

For purposes of this definition, whenever pro forma effect is to be given to a
transaction, the pro forma calculations shall be made in good faith by a
responsible financial or accounting officer of TCEH. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest on
such Indebtedness shall be calculated as if the rate in effect on the Fixed
Charge Coverage Ratio Calculation Date had been the applicable rate for the
entire period (taking into account any Hedging Obligations applicable to such
Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to
accrue at an interest rate reasonably determined by a responsible financial or
accounting officer of TCEH to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP. For purposes of making the
computation referred to above, interest on any Indebtedness under a revolving
credit facility computed on a pro forma basis shall be computed based upon the
average daily balance of such Indebtedness during the applicable period except
as provided in the first paragraph of this definition. Interest on Indebtedness
that may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate or other rate shall
be deemed to have been based upon the rate actually chosen, or, if none, then
based upon such optional rate chosen as TCEH may designate.

“Fixed Charges” shall mean, with respect to any Person for any period, the sum
of:

(1) Consolidated Interest Expense of such Person for such period;

(2) all cash dividends or other distributions paid (excluding items eliminated
in consolidation) on any series of Preferred Stock during such period; and

 

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(3) all cash dividends or other distributions paid (excluding items eliminated
in consolidation) on any series of Disqualified Stock during such period.

“Foreign Plan” shall mean any employee benefit plan, program, policy,
arrangement or agreement maintained or contributed to by TCEH or any of its
Subsidiaries with respect to employees employed outside the United States.

“Foreign Subsidiary” shall mean, with respect to any Person, any Restricted
Subsidiary of such Person that is not organized or existing under the laws of
the United States, any state or territory thereof or the District of Columbia
and any Restricted Subsidiary of such Foreign Subsidiary.

“Fund” shall mean any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course.

“GAAP” shall mean generally accepted accounting principles in the United States
which are in effect on the Closing Date.

“Government Authority” shall mean any nation or government, any state, province,
territory or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including without limitation ERCOT.

“Granting Lender” shall have the meaning provided in Section 13.6(g).

“guarantee” shall mean a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including letters of credit and reimbursement
agreements in respect thereof), of all or any part of any Indebtedness or other
obligations.

“Guarantee” shall mean (a) the Guarantee made by each Guarantor in favor of the
Administrative Agent for the benefit of the Guaranteed Parties, substantially in
the form of Exhibit B, and (b) any other guarantee of the Obligations made by a
Restricted Subsidiary that is a Domestic Subsidiary in form and substance
reasonably acceptable to the Administrative Agent.

“Guaranteed Parties” shall mean the Administrative Agent, any other Agent and
each Lender, in each case, with respect to the Obligations or any Guarantee, and
each sub-agent appointed by the Administrative Agent pursuant to Section 12 with
respect to matters relating to the Obligations.

“Guarantor” shall mean US Holdings and each other Restricted Subsidiary that
provides a Guarantee hereunder pursuant to Section 9.13 or otherwise.

“Hazardous Materials” shall mean (a) any petroleum or petroleum products,
radioactive materials, friable asbestos, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid containing
regulated levels of polychlorinated biphenyls and radon gas; (b) any chemicals,
materials or substances defined as or included in the definition

 

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of “hazardous substances,” “toxic substances,” “toxic pollutants,”
“contaminants,” or “pollutants” or words of similar import, under any applicable
Environmental Law; and (c) any other chemical, material or substance, which is
prohibited, limited or regulated by any Environmental Law.

“Hedging Obligations” shall mean with respect to any Person, the obligations of
such Person under (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options,
bond or bond price or bond index swaps or options or forward bond or forward
bond price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions,
currency options, spot contracts, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master agreement, (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed by,
any form of master agreement published by the International Swaps and
Derivatives Association, Inc., any International Foreign Exchange Master
Agreement or any other master agreement (any such master agreement, together
with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement and (c) physical or
financial commodity contracts or agreements, power purchase or sale agreements,
fuel purchase or sale agreements, environmental credit purchase or sale
agreements, power transmission agreements, commodity transportation agreements,
fuel storage agreements, netting agreements (including Netting Agreements),
capacity agreements and commercial or trading agreements, each with respect to
the purchase, sale, exchange of (or the option to purchase, sell or exchange),
transmission, transportation, storage, distribution, processing, sale, lease or
hedge of, any Covered Commodity price or price indices for any such Covered
Commodity or services or any other similar derivative agreements, and any other
similar agreements.

“Historical Financial Statements” shall mean, as of the Closing Date, (a) the
audited consolidated balance sheets of TCEH as of December 31, 2004,
December 31, 2005 and December 31, 2006 and the audited consolidated statements
of income, stockholders’ equity and cash flows of TCEH for each of the fiscal
years in the three year period ending on December 31, 2006 and (b) the unaudited
consolidated balance sheets of TCEH for each subsequent fiscal quarter ended at
least 45 days before the Closing Date and the unaudited consolidated statements
of income, stockholders’ equity and cash flows of TCEH for each such fiscal
quarter.

“Holdings” shall mean Texas Energy Future Holdings Limited Partnership, a
Delaware limited partnership and its successors.

“Incremental Deposit L/C Loans” shall mean Incremental Deposit L/C Loans under
the TCEH Senior Secured Facilities.

 

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“Indebtedness” shall mean, with respect to any Person, without duplication:

(1) any indebtedness (including principal and premium) of such Person, whether
or not contingent:

(a) in respect of borrowed money;

(b) evidenced by bonds, notes, debentures or similar instruments or letters of
credit or bankers’ acceptances (or, without duplication, reimbursement
agreements in respect thereof);

(c) representing the balance deferred and unpaid of the purchase price of any
property (including Capitalized Lease Obligations), except (i) any such balance
that constitutes a trade payable or similar obligation to a trade creditor, in
each case accrued in the ordinary course of business and (ii) any earn-out
obligations until such obligation becomes a liability on the balance sheet of
such Person in accordance with GAAP; or

(d) representing any Hedging Obligations;

if and to the extent that any of the foregoing Indebtedness (other than letters
of credit and Hedging Obligations) would appear as a liability upon a balance
sheet (excluding the footnotes thereto) of such Person prepared in accordance
with GAAP;

(2) to the extent not otherwise included, any obligation by such Person to be
liable for, or to pay, as obligor, guarantor or otherwise on, the obligations of
the type referred to in clause (1) of a third Person (whether or not such items
would appear upon the balance sheet of the such obligor or guarantor), other
than by endorsement of negotiable instruments for collection in the ordinary
course of business; and

(3) to the extent not otherwise included, the obligations of the type referred
to in clause (1) of a third Person secured by a Lien on any asset owned by such
first Person, whether or not such Indebtedness is assumed by such first Person;
provided that the amount of Indebtedness of such first Person for purposes of
this clause (3) shall be deemed to be equal to the lesser of (i) the aggregate
unpaid amount of such Indebtedness and (ii) the fair market value of the
property encumbered thereby as determined by such first Person in good faith;

provided, however, that notwithstanding the foregoing, Indebtedness shall be
deemed not to include (a) Contingent Obligations incurred in the ordinary course
of business or (b) obligations under or in respect of Receivables Facilities or
(c) amounts payable by TCEH and any Restricted Subsidiary in connection with
retail clawback or other regulatory transition issues.

“indemnified liabilities” shall have the meaning provided in Section 13.5.

“Indemnified Taxes” shall mean all Taxes (including Other Taxes) other than
(i) Excluded Taxes and (ii) any interest, penalties or expenses caused by an
Agent’s or Lender’s gross negligence or willful misconduct.

“Independent Financial Advisor” shall mean an accounting, appraisal, investment
banking firm or consultant to Persons engaged in Similar Businesses of
nationally recognized standing that is, in the good faith judgment of TCEH,
qualified to perform the task for which it has been engaged.

 

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“Initial Investors” shall have the meaning provided in the recitals to this
Agreement.

“Intercompany Loan” means a senior, unsubordinated loan by TCEH or any of its
Restricted Subsidiaries to the Parent, with an interest rate commensurate with
an arm’s length relationship, guaranteed by any Subsidiary of the Parent that
has guaranteed any Indebtedness of the Parent and (if outstanding at the time
any such proceeds are received) requiring repayment with up to $1,250,000,000 of
proceeds received by the Parent or any of its Subsidiaries (other than the Oncor
Subsidiaries) from the sale of Equity Interests in, Indebtedness of, or all or
substantially all of the assets (in one transaction or a series of related
transactions) the Oncor Subsidiaries or any direct or indirect parent of the
Oncor Subsidiaries.

“Interest Election Notice” shall have the meaning provided in Section 2.8(c).

“Interest Period” shall mean, with respect to any Loan, the interest period
applicable thereto, as determined pursuant to Section 2.9.

“Interim Loan Conversion Date” shall mean October 10, 2008 or, if such date is
not a Business Day, the next succeeding Business Day.

“Investment Grade Rating” shall mean a rating equal to or higher than Baa3 (or
the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or an equivalent
rating by any other Rating Agency.

“Investment Grade Securities” shall mean:

(1) securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof (other than Cash
Equivalents);

(2) debt securities or debt instruments with an Investment Grade Rating, but
excluding any debt securities or instruments constituting loans or advances
among TCEH (or any of its direct or indirect parent companies) and its (or
their) Subsidiaries;

(3) investments in any fund that invests exclusively in investments of the type
described in clauses (1) and (2) which fund may also hold immaterial amounts of
cash pending investment or distribution; and

(4) corresponding instruments in countries other than the United States
customarily utilized for high quality investments.

“Investments” shall mean, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding accounts receivable,
trade credit, advances to customers, commissions, travel and similar advances to
officers and employees, in each case made in the ordinary course of business),
purchases or other acquisitions for consideration of

 

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Indebtedness, Equity Interests or other securities issued by any other Person
and investments that are required by GAAP to be classified on the balance sheet
(excluding the footnotes) of TCEH in the same manner as the other investments
included in this definition to the extent such transactions involve the transfer
of cash or other property. For purposes of the definition of “Unrestricted
Subsidiary” and Section 9.5 hereof:

(1) “Investments” shall include the portion (proportionate to TCEH’s equity
interest in such Subsidiary) of the fair market value of the net assets of a
Subsidiary of TCEH at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, TCEH shall be deemed to continue to have
a permanent “Investment” in an Unrestricted Subsidiary in an amount (if
positive) equal to:

(a) TCEH’s “Investment” in such Subsidiary at the time of such redesignation;
less

(b) the portion (proportionate to TCEH’s equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time of such
redesignation; and

(2) any property transferred to or from an Unrestricted Subsidiary shall be
valued at its fair market value at the time of such transfer, in each case as
determined in good faith by TCEH.

“Joint Lead Arrangers and Bookrunners” shall mean Goldman Sachs Credit Partners
L.P., Morgan Stanley Senior Funding, Inc., Citigroup Global Markets Inc., Credit
Suisse Securities (USA) LLC, J.P. Morgan Securities Inc. and Lehman Brothers
Inc.

“KKR” shall mean each of Kohlberg Kravis Roberts & Co., L.P. and KKR Associates,
L.P.

“Lender” and “Lenders” shall have the meanings provided in the preamble to this
Agreement.

“Lender Default” shall mean (a) the failure (which has not been cured) of a
Lender to make available its portion of any Borrowing that it is required to
make hereunder or (b) a Lender having notified the Administrative Agent and/or
the Borrower that it does not intend to comply with the obligations under
Section 2.1(a), or (c) a Lender being deemed insolvent or becoming the subject
of a bankruptcy or insolvency proceeding.

“LIBOR Loan” shall mean any Loan bearing interest at a rate determined by
reference to the LIBOR Rate.

“LIBOR Rate” shall mean, for any Interest Period with respect to a LIBOR Loan,
the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA
LIBOR”), as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as designated by the Administrative Agent from
time to time) at approximately 11:00 a.m., London time, two Business Days prior
to the commencement of such Interest Period, for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term

 

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equivalent to such Interest Period. If such rate is not available at such time
for any reason, then the “LIBOR Rate” for such Interest Period shall be the rate
per annum as may be agreed by the Borrower and the Administrative Agent to be a
rate at which deposits in Dollars for delivery on the first day of such Interest
Period in same day funds in the approximate amount of the LIBOR Loan being made,
continued or converted by the Administrative Agent and with a term equivalent to
such Interest Period would be offered by the Administrative Agent’s London
Branch to major banks in the applicable London interbank eurocurrency market at
their request at approximately 11:00 a.m. (London time) two Business Days prior
to the commencement of such Interest Period.

“Lien” shall mean, with respect to any asset, any mortgage, lien (statutory or
otherwise), pledge, hypothecation, charge, security interest, preference,
priority or encumbrance of any kind in respect of such asset, whether or not
filed, recorded or otherwise perfected under Applicable Laws, including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction; provided that in
no event shall an operating lease be deemed to constitute a Lien.

“Loan” shall mean any Senior Interim Loan or Senior Term Loan made by any Lender
hereunder and any Loan made as a result of the accrual of PIK Interest.

“Loan Documents” shall mean this Agreement, the Guarantee and any promissory
notes issued by the Borrower hereunder.

“Loan Parties” shall mean TCEH, TCEH Finance, US Holdings and each other
Guarantor.

“Master Agreement” shall have the meaning provided in the definition of the term
“Hedging Obligations”.

“Material Adverse Effect” shall mean any circumstances or conditions affecting
the business, assets, operations, properties or financial condition of TCEH and
its Subsidiaries, taken as a whole, that would, individually or in the
aggregate, materially adversely affect (a) the ability of the Borrower and the
other Loan Parties, taken as a whole, to perform their payment obligations under
this Agreement or any of the other Loan Documents or (b) the rights and remedies
of the Administrative Agent and the Lenders under this Agreement or any of the
other Loan Documents.

“Material Subsidiary” shall mean, at any date of determination, each Restricted
Subsidiary of TCEH (a) whose total assets (when combined with the assets of such
Restricted Subsidiary’s Subsidiaries, after eliminating intercompany
obligations) at the last day of the most recent Test Period for which
Section 9.1 Financials have been delivered were equal to or greater than 2.5% of
the Consolidated Total Assets of TCEH and the Restricted Subsidiaries at such
date or (b) whose total revenues (when combined with the revenues of such
Restricted Subsidiary’s Subsidiaries after eliminating intercompany obligations)
during such Test Period were equal to or greater than 2.5% of the consolidated
revenues of TCEH and the Restricted Subsidiaries for

 

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such period, in each case determined in accordance with GAAP; provided that if,
at any time and from time to time after the Closing Date, Restricted
Subsidiaries that are not Material Subsidiaries have, in the aggregate,
(x) total assets (when combined with the assets of such Restricted Subsidiary’s
Subsidiaries, after eliminating intercompany obligations) at the last day of
such Test Period equal to or greater than 10.0% of the Consolidated Total Assets
of TCEH and the Restricted Subsidiaries at such date or (y) total revenues (when
combined with the revenues of such Restricted Subsidiary’s Subsidiaries, after
eliminating intercompany obligations) during such Test Period equal to or
greater than 10.0% of the consolidated revenues of TCEH and the Restricted
Subsidiaries for such period, in each case determined in accordance with GAAP,
then TCEH shall, on the date on which financial statements for such quarter are
delivered pursuant to this Agreement, designate in writing to the Administrative
Agent one or more of such Restricted Subsidiaries as “Material Subsidiaries” so
that such condition no longer exists. It is agreed and understood that no
Receivables Subsidiary shall be a Material Subsidiary.

“Maturity Date” shall mean (a) if the Loans have not been converted to Senior
Term Loans, October 10, 2008 or, if such date is not a Business Day, the next
succeeding Business Day, or (b) if the Loans have been converted to Senior Term
Loans, (i) October 10, 2015 in respect of Senior Cash Pay Loans (the “Cash Pay
Loan Maturity Date”), (ii) October 10, 2016 in respect of Senior Toggle Loans
(the “Toggle Loan Maturity Date”) or, if either date referred to in this
clause (b) is not a Business Day, the next succeeding Business Day
(collectively, the Cash Pay Loan Maturity Date and the Toggle Loan Maturity
Date, the “Term Loan Maturity Date”).

“Merger” shall have the meaning provided in the recitals to this Agreement.

“Merger Funds” shall have the meaning provided in the recitals to this
Agreement.

“Merger Sub” shall mean Texas Energy Future Merger Sub Corp., a Texas
corporation.

“Minimum Equity Amount” shall have the meaning provided in the recitals to this
Agreement.

“Moody’s” shall mean Moody’s Investors Service, Inc. and any successor to its
rating agency business.

“Multiemployer Plan” shall mean a plan that is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA (i) to which any of TCEH, any Subsidiary of TCEH
or any ERISA Affiliate is then making or has an obligation to make contributions
or (ii) with respect to which TCEH, any Subsidiary of TCEH or any ERISA
Affiliate could incur liability pursuant to Title IV of ERISA.

 

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“Necessary CapEx Debt” means Indebtedness of TCEH or any of its Restricted
Subsidiaries incurred for the purpose of financing Necessary Capital
Expenditures.

“Necessary Capital Expenditures” means capital expenditures by TCEH and its
Restricted Subsidiaries that are required by applicable law (other than
Environmental Law) or otherwise undertaken voluntarily for health and safety
reasons (other than as required by Environmental Law). The term “Necessary
Capital Expenditures” does not include any capital expenditure undertaken
primarily to increase the efficiency of, expand or re-power any power generation
facility.

“Net Asset Sale Proceeds” shall mean the aggregate cash proceeds received by
TCEH or any of its Restricted Subsidiaries in respect of any Asset Sale
(including a Casualty Event), including any cash received upon the sale or other
disposition of any Designated Non-Cash Consideration received in any Asset Sale
(including a Casualty Event), net of the direct costs relating to such Asset
Sale (including a Casualty Event) and the sale or disposition of such Designated
Non-Cash Consideration, including legal, accounting and investment banking fees,
and brokerage and sales commissions, any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of principal,
premium, if any, and interest on Senior Indebtedness required (other than
required by clause (1) of Section 9.8(b) hereof) to be paid as a result of such
transaction and any deduction of appropriate amounts to be provided by TCEH or
any of its Restricted Subsidiaries as a reserve in accordance with GAAP against
any liabilities associated with the asset disposed of in such transaction and
retained by TCEH or any of its Restricted Subsidiaries after such sale or other
disposition thereof, including pension and other post-employment benefit
liabilities and liabilities related to environmental matters or against any
indemnification obligations associated with such transaction.

“Net Cash Proceeds” shall mean, with respect to any Debt Incurrence Prepayment
Event, (a) the gross cash proceeds (including payments from time to time in
respect of installment obligations, if applicable) received by or on behalf of
TCEH or any of the Restricted Subsidiaries in respect of such Debt Incurrence
Prepayment Event, as the case may be, less (b) the sum of:

(i) the amount, if any, of all taxes paid or estimated to be payable by TCEH or
any of the Restricted Subsidiaries in connection with such Debt Incurrence
Prepayment Event, and

(ii) reasonable and customary fees paid by TCEH or a Restricted Subsidiary in
connection with the foregoing,

in each case only to the extent not already deducted in arriving at the amount
referred to in clause (a) above.

“Net Income” shall mean, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends.

 

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“Netting Agreement” shall mean a netting agreement, master netting agreement or
other similar document having the same effect as a netting agreement or master
netting agreement and, as applicable, any collateral annex, security agreement
or other similar document related to any master netting agreement or Permitted
Contract.

“Non-Consenting Lender” shall have the meaning provided in Section 13.7(b).

“Non-Defaulting Lender” shall mean and include each Lender other than a
Defaulting Lender.

“Non-U.S. Lender” shall mean any Agent or Lender that is not, for United States
federal income tax purposes, (a) an individual who is a citizen or resident of
the United States, (b) a corporation, partnership or entity treated as a
corporation or partnership created or organized in or under the laws of the
United States, or any political subdivision thereof, (c) an estate whose income
is subject to U.S. federal income taxation regardless of its source or (d) a
trust if a court within the United States is able to exercise primary
supervision over the administration of such trust and one or more United States
persons have the authority to control all substantial decisions of such trust or
a trust that has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a United States person.

“Notice of Borrowing” shall have the meaning provided in Section 2.3(a).

“Notice of Conversion or Continuation” shall have the meaning provided in
Section 2.6.

“Obligations” shall mean any principal, interest (including any interest
accruing subsequent to the filing of a petition in bankruptcy, reorganization or
similar proceeding at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under applicable
state, federal or foreign law), premium, penalties, fees, indemnifications,
reimbursements (including reimbursement obligations with respect to letters of
credit and bankers’ acceptances), damages and other liabilities, and guarantees
of payment of such principal, interest, penalties, fees, indemnifications,
reimbursements, damages and other liabilities, payable under the documentation
governing any Indebtedness.

“Officer’s Certificate” shall mean a certificate signed on behalf of TCEH by an
Authorized Officer of TCEH, who must be the principal executive officer, the
principal financial officer, the treasurer or the principal accounting officer
of TCEH that meets the requirements provided in this Agreement.

“Oncor” shall mean Oncor Electric Delivery Company LLC, a Delaware limited
liability company.

“Oncor Electric Delivery Facility” shall mean the revolving credit agreement to
be entered into as of the Closing Date by and among Oncor, as borrower, the
lenders party thereto in their capacities as lenders thereunder and JPMorgan
Chase Bank, N.A., as Administrative Agent, including any guarantees, collateral
documents, instruments and agreements executed in connection therewith, and any
amendments, supplements, modifications, extensions, renewals, restatements,
refundings or refinancings thereof and any indentures or credit facilities or
commercial paper facilities with banks or other institutional lenders or
investors that replace, refund or refinance any part of the loans, notes, other
credit facilities or commitments thereunder, including any such replacement,
refunding or refinancing facility or indenture that increases the amount
borrowable thereunder or alters the maturity thereof.

 

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“Oncor Holdings” shall mean Oncor Electric Delivery Holdings Company LLC, a
Delaware limited liability company.

“Oncor Subsidiaries” shall mean the Subsidiaries of Energy Future Holding
Company, including Oncor Holdings and its Subsidiaries.

“Opinion of Counsel” shall mean a written opinion from legal counsel who is
acceptable to the Administrative Agent. The counsel may be an employee of or
counsel to the Borrower or the Administrative Agent.

“Optional Interest Repayment” shall have the meaning provided in Section 5.1(b).

“Optional Interest Repayment Amount” shall have the meaning provided in
Section 5.1(b).

“Organizational Documents” shall mean, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and, if applicable, any agreement, instrument, filing or notice
with respect thereto filed in connection with its formation or organization with
the applicable Government Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

“Other Taxes” shall mean any and all present or future stamp, registration,
documentary or any other excise, property or similar taxes (including interest,
fines, penalties, additions to tax and related expenses with regard thereto)
arising from any payment made or required to be made under this Agreement or any
other Loan Document or from the execution or delivery of, registration or
enforcement of, consummation or administration of, or otherwise with respect to,
this Agreement or any other Loan Document.

“Overnight Rate” shall mean, for any day, the greater of (i) the Federal Funds
Effective Rate and (ii) an overnight rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation.

“Parent” shall have the meaning provided in the recitals to this Agreement.

“Parent PIK Notes” shall have the meaning assigned to the term “PIK Notes” in
the senior refinancing indenture in respect of the Parent Senior Notes.

 

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“Parent Senior Cash Pay Notes” shall mean senior notes due 2017, to be issued by
the Parent in connection with the refinancing of the Parent Senior Interim Cash
Pay Loans or the exchange of the Parent’s senior cash pay term loans under the
senior refinancing indenture referred to in the Parent Senior Unsecured Interim
Loan Agreement, in an aggregate principal amount of up to $2,000,000,000 (less
the amount of any Parent Senior Interim Cash Pay Loans and senior cash pay term
loans of the Parent under the Parent Senior Unsecured Interim Loan Agreement
that remain outstanding after the issuance of the Parent Senior Cash Pay Notes),
together with interest, fees and all other amounts payable in connection
therewith.

“Parent Senior Interim Cash Pay Loans” shall have the meaning provided in the
recitals to this Agreement.

“Parent Senior Interim Facilities” means the Parent Senior Unsecured Interim
Loan Agreement, including any guarantees, instruments and agreements executed in
connection therewith, and any amendments, supplements, modifications or
restatements thereof.

“Parent Senior Interim Loans” shall mean the Parent Senior Interim Loans defined
in the recitals to this Agreement.

“Parent Senior Interim Toggle Loans” shall have the meaning provided in the
recitals to this Agreement.

“Parent Senior Notes” shall mean the Parent Senior Cash Pay Notes and the Parent
Senior Toggle Notes.

“Parent Senior Toggle Notes” shall mean senior toggle notes due 2017, to be
issued by the Parent in connection with the refinancing of the Parent Senior
Interim Toggle Loans or the exchange of the Parent’s senior toggle term loans
under the senior refinancing indenture referred to in the Parent Senior
Unsecured Interim Loan Agreement, in an aggregate principal amount of up to
$2,500,000,000 (less the amount of any Parent Senior Interim Toggle Loans and
Parent Senior Toggle Term Loans that remain outstanding after the issuance of
the Parent Senior Toggle Notes), together with interest (including any PIK
Interest), fees and all other amounts payable in connection therewith.

“Parent Senior Unsecured Interim Loan Agreement” shall have the meaning provided
in the recitals to this Agreement.

“Participant” shall have the meaning provided in Section 13.6(c).

“Participant Register” shall have the meaning provided in Section 13.6(c)(iii).

“Patriot Act” shall have the meaning provided in Section 13.18.

“Pension Act” shall mean the Pension Protection Act of 2006, as it presently
exists or as it may be amended from time to time.

“Permitted Asset Swap” shall mean the concurrent purchase and sale or exchange
of Related Business Assets or a combination of Related Business Assets and cash
or Cash Equivalents between TCEH or any of its Restricted Subsidiaries and
another Person; provided, that any cash or Cash Equivalents received must be
applied in accordance with Section 9.8 hereof.

 

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“Permitted Holders” shall mean each of the Sponsors, members of management
(including directors) of the Parent or its Subsidiaries who on the Closing Date
are (or will be at any time prior to the first anniversary of the Closing Date)
holders of Equity Interests of TCEH (or any of its direct or indirect parent
companies) and any group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act or any successor provision) of which any of
the foregoing are members; provided that, in the case of such group and without
giving effect to the existence of such group or any other group, such Sponsors
and members of management, collectively, have beneficial ownership of more than
50% of the total voting power of the Voting Stock of TCEH or any of its direct
or indirect parent companies.

“Permitted Investments” shall mean:

(1) any Investment in TCEH or any of its Restricted Subsidiaries;

(2) any Investment in cash and Cash Equivalents or Investment Grade Securities;

(3) any Investment by TCEH or any of its Restricted Subsidiaries in a Person
that is engaged in a Similar Business if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary; or

(b) such Person, in one transaction or a series of related transactions, is
merged or consolidated with or into, or transfers or conveys substantially all
of its assets to, or is liquidated into, TCEH or a Restricted Subsidiary,

and, in each case, any Investment held by such Person; provided that such
Investment was not acquired by such Person in contemplation of such acquisition,
merger, consolidation or transfer;

(4) any Investment in securities or other assets not constituting cash, Cash
Equivalents or Investment Grade Securities and received in connection with an
Asset Sale made pursuant to Section 9.8 or any other disposition of assets not
constituting an Asset Sale;

(5) any Investment existing on the Closing Date;

(6) any Investment acquired by TCEH or any of its Restricted Subsidiaries:

(a) in exchange for any other Investment or accounts receivable held by TCEH or
any such Restricted Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer of such
other Investment or accounts receivable; or

 

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(b) as a result of a foreclosure by TCEH or any of its Restricted Subsidiaries
with respect to any secured Investment or other transfer of title with respect
to any secured Investment in default;

(7) Hedging Obligations permitted under clause (10) of Section 9.7(b);

(8) any Investment in a Similar Business having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause (8) that
are at that time outstanding, not to exceed (x) prior to the Interim Loan
Conversion Date, $750,000,000 and (y) thereafter, 3.5% of Total Assets at the
time of such Investment (in each case, with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value);

(9) Investments the payment for which consists of Equity Interests (exclusive of
Disqualified Stock) of TCEH or any of its direct or indirect parent companies;
provided, however, that such Equity Interests will not increase the amount
available for Restricted Payments under clause (3) of Section 9.5(a);

(10) guarantees of Indebtedness of TCEH or any of its Restricted Subsidiaries
permitted under Section 9.7;

(11) any transaction to the extent it constitutes an Investment that is
permitted and made in accordance with the provisions of Section 9.9(b) (except
transactions described in clauses (2), (5) and (9) of Section 9.9(b));

(12) Investments consisting of purchases and acquisitions of inventory, fuel
(including all forms of nuclear fuel), supplies, material or equipment;

(13) additional Investments having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (13) that are
at that time outstanding (without giving effect to the sale of an Investment to
the extent the proceeds of such sale do not consist of cash or marketable
securities), not to exceed (x) prior to the Interim Loan Conversion date,
$750,000,000 and (y) thereafter, 3.5% of Total Assets at the time of such
Investment (in each case, with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in
value);

(14) Investments relating to a Receivables Subsidiary that, in the good faith
determination of TCEH, is necessary or advisable to effect any Receivables
Facility for the benefit of TCEH or any of its Restricted Subsidiaries;

(15) advances to, or guarantees of Indebtedness of, employees not in excess of
$25,000,000 outstanding at any one time, in the aggregate;

(16) loans and advances to officers, directors and employees for
business-related travel expenses, moving expenses and other similar expenses, in
each case incurred in the ordinary course of business or consistent with past
practices or to fund such Person’s purchase of Equity Interests of TCEH or any
direct or indirect parent company thereof;

 

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(17) any Investment in any Subsidiary or any joint venture in connection with
intercompany cash management arrangements or related activities arising in the
ordinary course of business;

(18) any loans, letters of credit issued on behalf of the Parent or any of its
Restricted Subsidiaries under the Parent Senior Interim Facilities and any
refinancings thereof for working capital purposes, in each case made in the
ordinary course of business and consistent with past practices;

(19) any Investment in Shell Wind in an aggregate amount not to exceed (x) prior
to the Interim Loan Conversion Date, $250,000,000 and (y) thereafter,
$1,500,000,000; and

(20) one or more letters of credit in an aggregate amount not to exceed
$170,000,000 posted by a Restricted Subsidiary in favor of an Oncor Subsidiary
to secure that Restricted Subsidiary’s contractual obligations to that
Subsidiary.

“Permitted Liens” shall mean, with respect to any Person:

(1) pledges or deposits by such Person under workmen’s compensation laws,
unemployment insurance laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits of cash or U.S.
government bonds to secure surety or appeal bonds to which such Person is a
party, or deposits as security for contested taxes or import duties or for the
payment of rent, in each case incurred in the ordinary course of business
(including in connection with the construction or restoration of facilities for
the generation, transmission or distribution of electricity) or otherwise
constituting Permitted Investments;

(2) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’
Liens, in each case for sums not yet overdue for a period of more than 30 days
or being contested in good faith by appropriate proceedings or other Liens
arising out of judgments or awards against such Person with respect to which
such Person shall then be proceeding with an appeal or other proceedings for
review if adequate reserves with respect thereto are maintained on the books of
such Person in accordance with GAAP;

(3) Liens for taxes, assessments or other governmental charges not yet overdue
for a period of more than 30 days or payable or subject to penalties for
nonpayment or which are being contested in good faith by appropriate proceedings
diligently conducted, if adequate reserves with respect thereto are maintained
on the books of such Person in accordance with GAAP;

 

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(4) Liens in favor of issuers of performance and surety bonds or bid bonds or
with respect to other regulatory requirements or letters of credit issued
pursuant to the request of and for the account of such Person in the ordinary
course of its business;

(5) minor survey or title exceptions or irregularities, minor encumbrances,
easements or reservations of, or rights of others for, licenses, permits,
conditions, covenants, rights-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real properties or Liens incidental to the conduct of the business
of such Person or to the ownership of its properties which were not incurred in
connection with Indebtedness and which do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in
the operation of the business of such Person;

(6) Liens securing Indebtedness permitted to be incurred pursuant to clause (4),
(12) or (13) of Section 9.7(b) hereof; provided that (a) Liens securing
Indebtedness, Disqualified Stock or Preferred Stock permitted to be incurred
pursuant to clause (13) relate only to Refinancing Indebtedness that serves to
refund or refinance Indebtedness, Disqualified Stock or Preferred Stock incurred
under clause (4) or (12) of Section 9.7(b) hereof, and (b) Liens securing
Indebtedness, Disqualified Stock or Preferred Stock permitted to be incurred
pursuant to clause (4) of Section 9.7(b) hereof extend only to the assets so
financed, purchased, constructed or improved;

(7) Liens existing on the Closing Date (other than Liens in favor of the lenders
under the TCEH Senior Secured Facilities);

(8) Liens on property or shares of stock of a Person at the time such Person
becomes a Subsidiary; provided, however, such Liens are not created or incurred
in connection with, or in contemplation of, such other Person becoming such a
Subsidiary; provided, further, however, that such Liens may not extend to any
other property owned by TCEH or any of its Restricted Subsidiaries;

(9) Liens on property at the time TCEH or a Restricted Subsidiary acquired the
property, including any acquisition by means of a merger or consolidation with
or into TCEH or any of its Restricted Subsidiaries; provided, however, that such
Liens are not created or incurred in connection with, or in contemplation of,
such acquisition; provided, further, however, that the Liens may not extend to
any other property owned by TCEH or any of its Restricted Subsidiaries;

(10) Liens securing Indebtedness or other obligations of a Restricted Subsidiary
owing to TCEH or another Restricted Subsidiary permitted to be incurred in
accordance with Section 9.7 hereof;

(11) Liens securing Hedging Obligations, of TCEH or its Restricted Subsidiaries
incurred under clause (10) of Section 9.7(b) hereof, provided that such
agreements were entered into in the ordinary course of business and not for
speculative purposes (as determined by TCEH in its reasonable discretion (acting
in good faith) and, in the case of any commodity Hedging Obligations or any
Hedging Obligation of the type described in clause (c) of the definition of
“Hedging Obligation,” entered into in order to hedge against or manage
fluctuations in the price or availability of any Covered Commodity);

 

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(12) Liens on specific items of inventory or other goods and proceeds of any
Person securing such Person’s obligations in respect of bankers’ acceptances
issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or other goods;

(13) leases, subleases, licenses or sublicenses granted to others in the
ordinary course of business which do not materially interfere with the ordinary
conduct of the business of TCEH or any of its Restricted Subsidiaries;

(14) Liens arising from Uniform Commercial Code financing statement filings
regarding operating leases entered into by TCEH and its Restricted Subsidiaries
in the ordinary course of business;

(15) Liens in favor of TCEH or any Restricted Subsidiary that is a Guarantor;

(16) [Reserved];

(17) Liens on accounts receivable, other Receivables Facility assets, or
accounts into which collections or proceeds of Receivables Facility assets are
deposited, in each case in connection with a Receivables Facility for the
benefit of TCEH or its Restricted Subsidiaries;

(18) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancing, refunding, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (6), (7), (8) and (9); provided, however,
that (a) such new Lien shall be limited to all or part of the same property that
secured the original Lien (plus improvements on such property), and (b) the
Indebtedness secured by such Lien at such time is not increased to any amount
greater than the sum of (i) the outstanding principal amount or, if greater,
committed amount of the Indebtedness described under clauses (6), (7), (8), and
(9) at the time the original Lien became a Permitted Lien under this Agreement,
and (ii) an amount necessary to pay any fees and expenses, including premiums,
related to such refinancing, refunding, extension, renewal or replacement;

(19) deposits made in the ordinary course of business to secure liability to
insurance carriers;

(20) other Liens securing obligations incurred in the ordinary course of
business which obligations do not exceed $100,000,000 at any one time
outstanding;

(21) Liens securing judgments for the payment of money not constituting an Event
of Default under clause (f) of Section 11.1 hereof so long as such Liens are
adequately bonded and any appropriate legal proceedings that may have been duly
initiated for the review of such judgment have not been finally terminated or
the period within which such proceedings may be initiated has not expired;

 

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(22) Liens in favor of customs and revenue authorities arising as a matter of
law to secure payment of customs duties in connection with the importation of
goods in the ordinary course of business;

(23) Liens (i) of a collection bank arising under Section 4-210 of the Uniform
Commercial Code, or any comparable or successor provision, on items in the
course of collection, and (ii) in favor of banking institutions arising as a
matter of law encumbering deposits (including the right of set-off) and which
are within the general parameters customary in the banking industry;

(24) Liens deemed to exist in connection with Investments in repurchase
agreements permitted under Section 9.7 hereof; provided that such Liens do not
extend to any assets other than those that are the subject of such repurchase
agreements;

(25) ground leases or subleases, licenses or sublicenses in respect of real
property on which facilities owned or leased by TCEH or any of its Subsidiaries
are located;

(26) Liens that are contractual rights of set-off (i) relating to the
establishment of depository relations with banks not given in connection with
the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts
of TCEH or any of its Restricted Subsidiaries to permit satisfaction of
overdraft or similar obligations incurred in the ordinary course of business of
TCEH and its Restricted Subsidiaries or (iii) relating to purchase orders and
other agreements entered into with customers of TCEH or any of its Restricted
Subsidiaries in the ordinary course of business;

(27) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale or purchase of goods entered into by TCEH or
any Restricted Subsidiary in the ordinary course of business;

(28) rights reserved to or vested in others to take or receive any part of, or
royalties related to, the power, gas, oil, coal, lignite or other minerals or
timber generated, developed, manufactured or produced by, or grown on, or
acquired with, any property of TCEH or any of its Restricted Subsidiaries and
Liens upon the production from property of power, gas, oil, coal, lignite or
other minerals or timber, and the by-products and proceeds thereof, to secure
the obligations to pay all or a part of the expenses of exploration, drilling,
mining or development of such property only out of such production or proceeds;

(29) Liens arising out of all presently existing and future division and
transfer orders, advance payment agreements, processing contracts, gas
processing plant agreements, operating agreements, gas balancing or deferred
production agreements, pooling, unitization or communitization agreements,
pipeline, gathering or transportation agreements, platform agreements, drilling
contracts, injection or repressuring agreements, cycling agreements,
construction agreements, salt water or other disposal agreements, leases or
rental agreements, farm-out and farm-in agreements, exploration and development
agreements, and any and all other contracts or agreements covering, arising out
of, used or useful in connection with or pertaining to the exploration,
development, operation, production, sale, use, purchase, exchange, storage,
separation, dehydration, treatment, compression, gathering, transportation,
processing, improvement, marketing, disposal or handling of any property of TCEH
or any of its Restricted Subsidiaries, provided that such agreements are entered
into in the ordinary course of business (including in respect of construction
and restoration activities);

 

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(30) any restrictions on any stock or stock equivalents or other joint venture
interests of TCEH or any of its Restricted Subsidiaries providing for a breach,
termination or default under any owners, participation, shared facility, joint
venture, stockholder, membership, limited liability company or partnership
agreement between such Person and one or more other holders of such stock or
stock equivalents or interest of such Person, if a security interest or other
Lien is created on such stock or stock equivalents or interest as a result
thereof and other similar Liens;

(31) [Reserved];

(32) Liens and other exceptions to title, in either case on or in respect of any
facilities of TCEH or any of its Restricted Subsidiaries, arising as a result of
any shared facility agreement entered into with respect to such facility, except
to the extent that any such Liens or exceptions, individually or in the
aggregate, materially adversely affect the value of the relevant property or
materially impair the use of the relevant property in the operation of business
of TCEH or any of its Restricted Subsidiaries, taken as a whole;

(33) Liens on cash and Cash Equivalents (i) deposited by TCEH or any of its
Restricted Subsidiaries in margin accounts with or on behalf of brokers, credit
clearing organizations, independent system operators, regional transmission
organizations, pipelines, state agencies, federal agencies, futures contract
brokers, customers, trading counterparties, or any other parties or issuers of
surety bonds or (ii) pledged or deposited as collateral by TCEH or any of its
Restricted Subsidiaries with any of the entities described in clause (i) above
to secure their respective obligations, in the case of each of clauses (i) and
(ii) above, with respect to: (A) any contracts and transactions for the
purchase, sale, exchange of, or the option (whether physical or financial) to
purchase, sell or exchange (1) natural gas, (2) electricity, (3) coal and
lignite, (4) petroleum-based liquids, (5) oil, (6) nuclear fuel (including
enrichment and conversion), (7) emissions or other environmental credits,
(8) waste byproducts, (9) weather, (10) power and other generation capacity,
(11) heat rate, (12) congestion, (13) renewal energy credit, or (14) any other
energy-related commodity or services or derivative (including ancillary services
and related risk (such as location basis); (B) any contracts or transactions for
the purchase, processing, transmission, transportation, distribution, sale,
lease, hedge or storage of, or any other services related to any commodity or
service identified in subparts (1)—(14) above, including any capacity agreement;
(C) any financial derivative agreement (including but not limited to swaps,
options or swaptions) related to any commodity identified in subparts (1)—(14)
above, or to any interest rate or currency rate management activities; (D) any
agreement for membership or participation in an organization that facilitates or
permits the entering into or clearing of any netting agreement or any agreement
described in this clause (33); (E) any agreement combining part or all of a
netting agreement or part or all of any of the agreements described in this
clause (33); (E) any document relating to any agreement described in this
clause (33) that is filed with a Government Authority and any related service
agreements; or (F) any commercial or trading agreements, each with respect to,
or involving the purchase, transmission, distribution, sale, lease or hedge of,
any energy, generation capacity or fuel, or any

 

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other energy related commodity or service, price or price indices for any such
commodities or services or any other similar derivative agreements, and any
other similar agreements (such agreements described in clauses (A) through
(F) of this clause (33) being collectively, “Permitted Contracts”), Netting
Agreements, Hedging Obligations and letters of credit supporting Permitted
Contracts, Netting Agreements and Hedging Obligations;

(34) Liens arising under Section 9.343 of the Texas Uniform Commercial Code or
similar statutes of states other than Texas;

(35) Liens created in the ordinary course of business in favor of banks and
other financial institutions over credit balances of any bank accounts of TCEH
and its Subsidiaries held at such banks or financial institutions, as the case
may be, to facilitate the operation of cash pooling and/or interest set-off
arrangements in respect of such bank accounts in the ordinary course of
business;

(36) any zoning, land use, environmental or similar law or right reserved to or
vested in any Government Authority to control or regulate the use of any real
property that does not materially interfere with the ordinary conduct of the
business of TCEH or any of its Restricted Subsidiaries, taken as a whole;

(37) any Lien arising by reason of deposits with or giving of any form of
security to any Government Authority for any purpose at any time as required by
Applicable Laws as a condition to the transaction of any business or the
exercise of any privilege or license, or to enable TCEH or any of its Restricted
Subsidiaries to maintain self-insurance or participate in any fund for liability
on any insurance risks;

(38) Liens, restrictions, regulations, easements, exceptions or reservations of
any Government Authority applying particularly to nuclear fuel;

(39) rights reserved to or vested in any Government Authority by the terms of
any right, power, franchise, grant, license or permit, or by any provision of
applicable law, to terminate or modify such right, power, franchise, grant,
license or permit or to purchase or recapture or to designate a purchaser of any
of the property of such person;

(40) Liens arising under any obligations or duties affecting any of the property
of TCEH or any of its Restricted Subsidiaries to any Government Authority with
respect to any franchise, grant, license or permit which do not materially
impair the use of such property for the purposes for which it is held;

(41) rights reserved to or vested in any Government Authority to use, control or
regulate any property of such person;

(42) any obligations or duties, affecting the property of TCEH or any of its
Restricted Subsidiaries, to any Government Authority with respect to any
franchise, grant, license or permit;

 

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(43) a set-off or netting rights granted by TCEH or any Subsidiary of TCEH
pursuant to any agreements related to Hedging Obligations, Netting Agreements or
Permitted Contracts solely in respect of amounts owing under such agreements;

(44) Liens (i) on cash advances in favor of the seller of any property to be
acquired in an Investment described under “Permitted Investments” to be applied
against the purchase price for such Investment and (ii) consisting of an
agreement to sell, transfer, lease or otherwise dispose of any property in a
transaction excluded from the definition described under “Asset Sale,” in each
case, solely to the extent such Investment or sale, disposition, transfer or
lease, as the case may be, would have been permitted on the date of the creation
of such Lien;

(45) rights of first refusal and purchase options in favor of Aluminum Company
of America (“Alcoa”) to purchase Sandow Unit 4 and/or the real property related
thereto, as described in (i) the Sandow Unit 4 Agreement dated August 13, 1976,
as amended, between Alcoa and Texas Power & Light Company (“TPL”) and (ii) Deeds
dated March 14, 1978 and July 21, 1980, as amended, executed by Alcoa conveying
to TPL the Sandow Four Real Estate; and

(46) any amounts held by a trustee in the funds and accounts under any indenture
securing any revenue bonds issued for the benefit of TCEH or any of its
Restricted Subsidiaries.

For purposes of this definition, the term “Indebtedness” shall be deemed to
include interest on such Indebtedness.

“Person” shall mean any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

“PIK Interest” shall have the meaning provided in Section 2.8(a)(ii).

“PIK Interest Amount” shall mean (i) the aggregate principal amount of all
increases in outstanding principal amount of Senior Toggle Notes and issuances
of PIK Notes (as defined in the Senior Refinancing Indenture) in connection with
an election by the Borrower to pay interest on the Senior Toggle Notes in kind
and (ii) the aggregate principal amount of all increases in outstanding
principal amount of Senior Toggle Loans in connection with an election by the
Borrower to pay interest on the Senior Toggle Loans in kind.

“PIK Interest Termination Date” shall have the meaning provided in
Section 2.8(a)(ii).

“PIK Margin” shall mean 0.75% per annum.

“PIK Notes” shall mean additional Senior Toggle Notes issued under the Senior
Refinancing Indenture on the same terms and conditions as the Senior Toggle
Notes in connection with a PIK Payment. For purposes of this Agreement, all
references to “PIK Notes” shall include the Related PIK Notes.

 

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“PIK Payment” shall mean an interest payment with respect to the Senior Toggle
Notes made by increasing the outstanding principal amount of the Senior Toggle
Notes or issuing PIK Notes.

“Plan” shall mean an employee pension benefit plan (other than a Multiemployer
Plan) which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code or Section 302 of ERISA and is
maintained or contributed to by TCEH, any Subsidiary or ERISA Affiliate or with
respect to which TCEH or any Subsidiary could incur liability pursuant to Title
IV of ERISA.

“Platform” shall have the meaning provided in Section 13.17(c).

“Preferred Stock” shall mean any Equity Interest with preferential rights of
payment of dividends or upon liquidation, dissolution or winding up.

“prime rate” shall mean the “prime rate” referred to in the definition of “ABR”.

“Pro Forma Balance Sheet” shall have the meaning provided in Section 8.9.

“Pro Forma Financial Statements” shall have the meaning provided in Section 8.9.

“PUCT” shall mean the Public Utility Commission of Texas or any successor.

“Purchase Money Obligations” shall mean any Indebtedness incurred to finance or
refinance the acquisition, leasing, construction, repair, restoration,
replacement, expansion or improvement of property (real or personal) or assets
(other than Capital Stock), and whether acquired through the direct acquisition
of such property or assets, or otherwise, incurred in respect of capital
expenditures (including Environmental CapEx Debt and Necessary CapEx Debt).

“Qualified Proceeds” shall mean assets that are used or useful in, or Capital
Stock of any Person engaged in, a Similar Business; provided that the fair
market value of any such assets or Capital Stock shall be determined by TCEH in
good faith.

“Rating Agencies” means Moody’s and S&P or if Moody’s or S&P or both shall not
make a rating on the applicable security or other investment publicly available,
a nationally recognized statistical rating agency or agencies, as the case may
be, selected by TCEH which shall be substituted for Moody’s or S&P or both, as
the case may be.

“Real Estate” shall mean any interest in land, buildings and improvements owned,
leased or otherwise held by any Loan Party but excluding all operating fixtures
and equipment.

“Receivables Facility” shall mean any of one or more receivables financing
facilities as amended, supplemented, modified, extended, renewed, restated or
refunded from time to time, the Obligations of which are non-recourse (except
for customary representations, warranties, covenants and indemnities made in
connection with such facilities) to TCEH or any

 

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of its Restricted Subsidiaries (other than a Receivables Subsidiary) pursuant to
which TCEH or any of its Restricted Subsidiaries purports to sell its accounts
receivable to either (a) a Person that is not a Restricted Subsidiary or (b) a
Receivables Subsidiary that in turn funds such purchase by purporting to sell
its accounts receivable to a Person that is not a Restricted Subsidiary or by
borrowing from such Person or from another Receivables Subsidiary that in turn
funds itself by borrowing from such Person.

“Receivables Fees” shall mean distributions or payments made directly or by
means of discounts with respect to any accounts receivable or participation
interest therein issued or sold in connection with, and other fees paid to a
Person that is not a Restricted Subsidiary in connection with any Receivables
Facility.

“Receivables Subsidiary” shall mean any Subsidiary formed for the purpose of
facilitating or entering into one or more Receivables Facilities, and in each
case engages only in activities reasonably related or incidental thereto.

“Refinancing” shall have the meaning provided in the recitals to this Agreement.

“Refinancing Indebtedness” shall have the meaning provided in
Section 9.7(b)(13).

“Register” shall have the meaning provided in Section 13.6(b)(iv).

“Regulation T” shall mean Regulation T of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.

“Regulation U” shall mean Regulation U of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.

“Regulation X” shall mean Regulation X of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.

“Related Business Assets” shall mean assets (other than cash or Cash
Equivalents) used or useful in a Similar Business; provided that any assets
received by TCEH or a Restricted Subsidiary in exchange for assets transferred
by TCEH or a Restricted Subsidiary will not be deemed to be Related Business
Assets if they consist of securities of a Person, unless upon receipt of the
securities of such Person, such Person would become a Restricted Subsidiary.

“Related Parties” shall mean, 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.

“Related PIK Notes” shall mean, with respect to a Senior Toggle, (i) each PIK
Note issued in connection with a PIK Payment on such Senior Toggle Note and
(ii) each additional PIK Note issued in connection with a PIK Payment on a
Related PIK Note with respect to such Senior Toggle Note.

 

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“Repaid Indebtedness” shall mean:

 

  •  

the portion of the Parent’s 4.800% Fixed Senior Notes Series O due 2009
tendered;

 

  •  

the portion of TCEH’s 6.125% Fixed Senior Notes due 2008 tendered;

 

  •  

the portion of TCEH’s 7.000% Fixed Senior Notes due 2013 tendered;

 

  •  

TCEH’s Floating Rate Senior Notes due 2008;

 

  •  

Oncor’s Floating Senior Notes due 2008; and

 

  •  

the credit facilities listed on Schedule 1.1(f).

“Reportable Event” shall mean an event described in Section 4043 of ERISA and
the regulations thereunder, other than any event as to which the thirty day
notice period has been waived.

“Required Debt” shall mean, with respect to any action, on any date, the
outstanding principal amount at such date of (1) the Senior Term Loans
(excluding the Loans of Defaulting Lenders), (2) the Senior Notes (including any
Additional Senior Notes (as defined in the Senior Refinancing Indenture)) and
(3) any other senior unsecured securities issued by the Borrower to refinance or
replace any of the items described in clauses (1) and (2) of this definition
(including any additional securities of the same series), other than, in each
case any such debt beneficially owned by the Borrower or its Affiliates, voting
as a single class, except to the extent prohibited by law; provided that
(a) Required Debt shall only include debt described in clauses (2) and (3) of
this definition to the extent such debt would require the consent of the holders
of the debt described in this definition voting as a single class to take such
action, except to the extent described in clauses (b) and (c) below, (b) if any
amendment, waiver or other action would disproportionately affect the holders of
the Senior Term Loans, Required Debt shall mean the Senior Term Loans voting as
a single class and the debt described in clauses (1) through (3) voting as a
single class, and (c) if any amendment, waiver or other action would only affect
the Senior Term Loans, Required Debt shall mean the Senior Term Loans voting as
a single class without the debt described in clauses (2) and (3).

“Required Lenders” shall mean (a) on any date on or prior to the Interim Loan
Conversion Date, Non-Defaulting Lenders having or holding a majority of the
Senior Interim Loans (excluding the Loans of Defaulting Lenders) in the
aggregate at such date, and (b) on any date after the Interim Loan Conversion
Date, holdiers (other than Defaulting Lenders) of a majority in aggregate
principal amount of the Required Debt.

“Restoration Certificate” shall mean, with respect to any Casualty Event, an
Officer’s Certificate provided to the Administrative Agent prior to the
365th day after such Casualty Event has occurred certifying (a) that TCEH or
such Restricted Subsidiary intends to use the proceeds received in connection
with such Casualty Event to repair, restore or replace the property or assets in
respect of which such Casualty Event occurred, (b) the approximate costs of
completion of such repair, restoration or replacement and (c) that such repair,
restoration or replacement will be completed within the later of (x) 450 days
after the date on which cash proceeds with respect to such Casualty Event were
received and (y) 180 days after delivery of such Restoration Certificate.

 

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“Restricted Investment” shall mean an Investment other than a Permitted
Investment.

“Restricted Subsidiary” shall mean, at any time, any direct or indirect
Subsidiary of TCEH (including TCEH Finance and any Foreign Subsidiary) that is
not then an Unrestricted Subsidiary; provided, however, that upon an
Unrestricted Subsidiary’s ceasing to be an Unrestricted Subsidiary, such
Subsidiary shall be included in the definition of “Restricted Subsidiary.”

“S&P” shall mean Standard & Poor’s, a division of The McGraw-Hill Companies,
Inc., and any successor to its rating agency business.

“Sale and Lease-Back Transaction” shall mean any arrangement providing for the
leasing by TCEH or any of its Restricted Subsidiaries of any real or tangible
personal property, which property has been or is to be sold or transferred by
TCEH or such Restricted Subsidiary to a third Person in contemplation of such
leasing.

“SEC” shall mean the Securities and Exchange Commission.

“Section 9.1 Financials” shall mean the financial statements delivered, or
required to be delivered, pursuant to Section 9.1(a)(i) or (ii).

“Secured Indebtedness” shall mean any Indebtedness of TCEH or any of its
Restricted Subsidiaries secured by a Lien.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.

“Securitization” shall mean a public or private offering by a Lender or any of
its Affiliates or their respective successors and assigns of securities or notes
which represent an interest in, or which are collateralized, in whole or in
part, by the Loans and the Lender’s rights under the Credit Documents.

“Senior Cash Pay Fixed Rate” shall mean 10.25% per annum.

“Senior Cash Pay Loans” shall mean Senior Interim Cash Pay Loans and/or Senior
Cash Pay Term Loans, as the context requires.

“Senior Cash Pay Notes” shall mean senior notes due 2015, to be issued in
connection with the refinancing of the Senior Interim Cash Pay Loans or the
exchange of the Senior Cash Pay Term Loans under the Senior Refinancing
Indenture, in an aggregate principal amount of up to $5,000,000,000 (less the
amount of any Senior Interim Cash Pay Loans and Senior Cash Pay Term Loans that
remain outstanding after the issuance of the Senior Cash Pay Notes), together
with interest, fees and all other amounts payable in connection therewith.

“Senior Cash Pay Term Loans” shall have the meaning provided in
Section 2.14(a)(i).

 

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“Senior Indebtedness” shall mean:

(1) all Indebtedness of TCEH, TCEH Finance or any Guarantor (other than
US Holdings) outstanding under this Agreement and each related Guarantee
thereof, the TCEH Senior Secured Facilities and each related guarantee, the
Senior Notes and related guarantees (including interest accruing on or after the
filing of any petition in bankruptcy or similar proceeding or for reorganization
of TCEH, TCEH Finance or any such Guarantor (at the rate provided for in the
documentation with respect thereto, regardless of whether or not a claim for
post-filing interest is allowed in such proceedings)), and any and all other
fees, expense reimbursement obligations, indemnification amounts, penalties, and
other amounts (whether existing on the Closing Date or thereafter created or
incurred) and all obligations of TCEH, TCEH Finance or any such Guarantor to
reimburse any bank or other Person in respect of amounts paid under letters of
credit, acceptances or other similar instruments;

(2) all Hedging Obligations (and guarantees thereof) of TCEH or any Guarantor
(other than the Parent Guarantor) owing to a Lender (as defined in the TCEH
Senior Secured Facilities) or any Affiliate of such Lender (or any Person that
was a Lender or an Affiliate of such Lender at the time the applicable agreement
giving rise to such Hedging Obligation was entered into); provided that such
Hedging Obligations are permitted to be incurred under the terms of this
Agreement;

(3) any other Indebtedness of TCEH or any Guarantor (other than US Holdings)
permitted to be incurred under the terms of this Agreement, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is subordinated in right of payment to the Indebtedness outstanding under the
Loans or any related Guarantee; and

(4) all Obligations with respect to the items listed in the preceding
clauses (1), (2) and (3);

provided, however, that Senior Indebtedness shall not include:

(a) any obligation of such Person to TCEH or any of its Subsidiaries;

(b) any liability for federal, state, local or other taxes owed or owing by such
Person;

(c) any accounts payable or other liability to trade creditors arising in the
ordinary course of business;

(d) any Indebtedness or other Obligation of such Person which is subordinate or
junior in any respect to any other Indebtedness or other Obligation of such
Person; or

(e) that portion of any Indebtedness which at the time of incurrence is incurred
in violation of this Agreement.

“Senior Interim Cash Pay Loan” shall have the meaning provided in
Section 2.1(a)(i).

 

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“Senior Interim Cash Pay Loan Commitment” shall mean (a) in the case of each
Lender that is a Lender on the date hereof, the amount set forth opposite such
Lender’s name on Schedule 1.1(a) as such Lender’s “Senior Interim Cash Pay Loan
Commitment” and (b) in the case of any Lender that becomes a Lender after the
date hereof, the amount specified as such Lender’s “Senior Interim Cash Pay Loan
Commitment” in the Assignment and Acceptance pursuant to which such Lender
assumed a portion of the Total Senior Interim Loan Commitment, in each case as
the same may be changed from time to time pursuant to the terms hereof. The
aggregate amount of the Senior Interim Cash Pay Loan Commitments as of the
Closing Date is $5,000,000,000.

“Senior Interim Cash Pay Loans Requested Amount” shall have the meaning provided
in Section 2.3(a).

“Senior Interim Loan Commitment” shall mean, with respect to each Lender, such
Lender’s Senior Interim Cash Pay Loan Commitment and Senior Interim Toggle Loan
Commitment.

“Senior Interim Loans” shall mean the Senior Interim Cash Pay Loans and/or
Senior Interim Toggle Loans, as the context requires.

“Senior Interim Toggle Loan” shall have the meaning provided in
Section 2.1(a)(ii).

“Senior Interim Toggle Loan Commitment” shall mean (a) in the case of each
Lender that is a Lender on the date hereof, the amount set forth opposite such
Lender’s name on Schedule 1.1(a) as such Lender’s “Senior Interim Toggle Loan
Commitment” and (b) in the case of any Lender that becomes a Lender after the
date hereof, the amount specified as such Lender’s “Senior Interim Toggle Loan
Commitment” in the Assignment and Acceptance pursuant to which such Lender
assumed a portion of the Total Senior Interim Loan Commitment, in each case as
the same may be changed from time to time pursuant to the terms hereof. The
aggregate amount of the Senior Interim Toggle Loan Commitments as of the Closing
Date is $1,750,000,000.

“Senior Interim Toggle Loans Requested Amount” shall have the meaning provided
in Section 2.3(a).

“Senior Notes” shall mean Senior Cash Pay Notes and/or Senior Toggle Notes, as
the context requires.

“Senior Refinancing Indenture” shall mean the indenture substantially in the
form attached as Exhibit C to be entered into in connection with the exchange of
the Senior Term Loans, among TCEH, TCEH Finance, the Guarantors and a trustee,
pursuant to which the Senior Notes shall be issued on or after the Interim Loan
Conversion Date.

“Senior Refinancing Registration Rights Agreement” shall mean the registration
rights agreement substantially in the form attached as Exhibit D to be entered
into in connection with the exchange of the Senior Term Loans, among TCEH, TCEH
Finance, the Guarantors and the Administrative Agent, relating to rights given
by TCEH, TCEH Finance and the Guarantors to the holders of Senior Notes issued
under the Senior Refinancing Indenture to register such notes under the
Securities Act.

 

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“Senior Secured Credit Agreement” shall have the meaning provided in the
recitals to this Agreement.

“Senior Secured Delayed Draw Term Loans” shall have the meaning provided in the
recitals to this Agreement.

“Senior Secured Deposit L/C Loans” shall have the meaning provided in the
recitals to this Agreement.

“Senior Secured Initial Term Loans” shall have the meaning provided in the
recitals to this Agreement.

“Senior Secured Revolving Credit Loans” shall have the meaning provided in the
recitals to this Agreement.

“Senior Term Loans” shall mean Senior Cash Pay Term Loans and/or Senior Toggle
Term Loans, as the context requires.

“Senior Toggle Fixed Rate” shall mean 10.50% per annum.

“Senior Toggle Loans” shall mean Senior Interim Toggle Loans and/or Senior
Toggle Term Loans, as the context requires.

“Senior Toggle Fixed Rate” shall mean 10.50% per annum.

“Senior Toggle Loans” shall mean Senior Interim Toggle Loans and/or Senior
Toggle Term Loans, as the context requires.

“Senior Toggle Notes” shall mean senior toggle notes due 2016, to be issued in
connection with the refinancing of the Senior Interim Toggle Loans or the
exchange of the Senior Toggle Term Loans under the Senior Refinancing Indenture,
in an aggregate principal amount of up to $1,750,000,000 (less the amount of any
Senior Interim Toggle Loans and Senior Toggle Term Loans that remain outstanding
after the issuance of the Senior Toggle Notes), together with interest
(including any PIK Interest), fees and all other amounts payable in connection
therewith.

“Senior Toggle Term Loans” shall have the meaning provided in
Section 2.14(a)(ii).

“Shell Wind” shall mean a joint venture with Shell WindEnergy Inc. (or similar
entity) in which TCEH and its Restricted Subsidiaries have up to a 50% ownership
interest relating to the joint development of a 3,000 megawatt wind project in
Texas and other renewable energy projects in Texas.

“Significant Subsidiary” shall mean any Restricted Subsidiary that would be a
“significant subsidiary” as defined in Article 1, Rule 1-02 of the Regulation
S-X, promulgated pursuant to the Securities Act, as such regulation is in effect
on the Closing Date.

 

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“Similar Business” shall mean any business conducted or proposed to be conducted
by TCEH and its Subsidiaries on the Closing Date or any business that is
similar, reasonably related, incidental or ancillary thereto.

“Solvent” shall mean, with respect to any Person, that as of the Closing Date,
(a) (i) the sum of such Person’s debt (including contingent liabilities) does
not exceed the present fair saleable value of such Person’s present assets;
(ii) such Person’s capital is not unreasonably small in relation to its business
as contemplated on the Closing Date; and (iii) such Person has not incurred and
does not intend to incur, or believe that it will incur, debts including current
obligations beyond its ability to pay such debts as they become due (whether at
maturity or otherwise); and (b) such Person is “solvent” within the meaning
given that term and similar terms under Applicable Laws relating to fraudulent
transfers and conveyances. For purposes of this definition, the amount of any
contingent liability at any time shall be computed as the amount that, in light
of all of the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability
(irrespective of whether such contingent liabilities meet the criteria for
accrual under Statement of Financial Accounting Standard No. 5).

“Sponsors” shall mean any of KKR, TPG, J.P. Morgan Ventures Corporation,
Citigroup Global Markets Inc., Morgan Stanley & Co. Incorporated, Goldman
Sachs & Co., and LB I Group and each of their respective Affiliates but not
including, however, any portfolio companies of any of the foregoing.

“Sponsor Management Agreement” shall mean the management agreement between
certain of the management companies associated with the Sponsors and the Parent.

“SPV” shall have the meaning provided in Section 13.6(g).

“Stock” shall mean shares of capital stock or shares in the capital, as the case
may be (whether denominated as common stock or preferred stock or ordinary
shares or preferred shares, as the case may be), beneficial, partnership or
membership interests, participations or other equivalents (regardless of how
designated) of or in a corporation, partnership, limited liability company or
equivalent entity, whether voting or non-voting.

“Stock Equivalents” shall mean all securities convertible into or exchangeable
for Stock and all warrants, options or other rights to purchase or subscribe for
any Stock, whether or not presently convertible, exchangeable or exercisable.

“Subordinated Indebtedness” shall mean,

(1) any Indebtedness of TCEH or TCEH Finance which is by its terms subordinated
in right of payment to the Loans, and

(2) any Indebtedness of any Guarantor which is by its terms subordinated in
right of payment to the Guarantee of such entity of the Loans.

 

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“Subsidiary” shall mean, with respect to any Person:

(1) any corporation, association, or other business entity (other than a
partnership, joint venture, limited liability company or similar entity) of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time of
determination owned or controlled, directly or indirectly, by such Person or one
or more of the other Subsidiaries of that Person or a combination thereof; and

(2) any partnership, joint venture, limited liability company or similar entity
of which

(x) more than 50% of the capital accounts, distribution rights, total equity and
voting interests or general or limited partnership interests, as applicable, are
owned or controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of that Person or a combination thereof whether in the
form of membership, general, special or limited partnership or otherwise, and

(y) such Person or any Restricted Subsidiary of such Person is a controlling
general partner or otherwise controls such entity.

Unless otherwise expressly provided, all references herein to a “Subsidiary”
shall mean a Subsidiary of TCEH.

“Syndication Agent” shall mean Goldman Sachs Credit Partners L.P., together with
its Affiliates, as syndication agent for the Lenders under this Agreement and
the other Loan Documents.

“Taxes” shall mean any and all present or future taxes, duties, levies, imposts,
assessments, deductions, withholdings or other similar charges imposed by any
Government Authority whether computed on a separate, consolidated, unitary,
combined or other basis and any interest, fines, penalties or additions to tax
with respect to the foregoing.

“TCEH” shall have the meaning provided in the preamble to this Agreement.

“TCEH Finance” shall have the meaning provided in the preamble to this
Agreement.

“TCEH Senior Secured Facilities” shall mean the TCEH Senior Secured Credit
Agreement, including any guarantees, collateral documents, instruments and
agreements executed in connection therewith, and any amendments, supplements,
modifications, extensions, renewals, restatements, refundings or refinancings
thereof and any indentures or credit facilities or commercial paper facilities
with banks or other institutional lenders or investors that replace, refund or
refinance any part of the loans, notes, other credit facilities or commitments
thereunder, including any such replacement, refunding or refinancing facility or
indenture that increases the amount borrowable thereunder or alters the maturity
thereof (provided that such increase in borrowings is permitted under
Section 9.7).

“Term Loan Maturity Dates” shall have the meaning provided such term in the
definition of “Maturity Date.”

 

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“Test Period” shall mean, for any determination under this Agreement, the four
consecutive fiscal quarters of TCEH then last ended and for which Section 9.1
Financials have been or were required to have been delivered.

“Total Assets” shall mean the total assets of TCEH and its Restricted
Subsidiaries on a consolidated basis, as shown on the most recent consolidated
balance sheet of TCEH or such other Person as may be expressly stated.

“Total Credit Exposure” shall mean, at any date, the aggregate outstanding
principal amount of all Loans at such date.

“Total Senior Interim Loan Commitment” shall mean the sum of Senior Interim Cash
Pay Loan Commitments and Senior Interim Toggle Loan Commitments of all Lenders.

“TPG” shall mean TPG Capital, L.P.

“Transactions” shall mean, collectively, the transactions contemplated by this
Agreement (including the entering into and funding hereunder), the TCEH Senior
Secured Facilities, the Parent Senior Unsecured Interim Loan Agreement, the
Oncor Electric Delivery Facility, the Receivables Facility entered into on the
Closing Date, the Merger and the Equity Contribution, the Refinancing, the
payment of fees and expenses in connection therewith and the consummation of any
other transaction connected with the foregoing.

“Transferee” shall have the meaning provided in Section 13.6(e).

“Trustee” shall have the meaning provided in Section 2.14(b)(iv).

“Type” shall mean as to any Loan, its nature as an ABR Loan or a LIBOR Loan.

“Unfunded Current Liability” of any Plan shall mean the amount, if any, by which
the Accumulated Benefit Obligation (as defined under Statement of Financial
Accounting Standards No. 87 (“SFAS 87”)) under the Plan as of the close of its
most recent plan year, determined in accordance with SFAS 87 as in effect on the
date hereof, exceeds the fair market value of the assets allocable thereto.

“Unit” shall mean an individual power plant generation system comprised of all
necessary physically connected generators, reactors, boilers, combustion
turbines and other prime movers operated together to independently generate
electricity.

“Unrestricted Cash” shall mean, as of any date, without duplication, (a) all
cash and Cash Equivalents (in each case, free and clear of all Liens, other than
nonconsensual Liens permitted by Section 9.10 and Liens permitted by
clause (23), subclauses (i) and (ii) of clause (26) and clause (33) of the
definition of “Permitted Liens”, included in the cash and cash equivalents
accounts listed on the consolidated balance sheet of TCEH and its Restricted
Subsidiaries as of such date and (b) all unrestricted margin deposits related to
commodity positions listed on the consolidated balance sheet of TCEH and the
Restricted Subsidiaries

 

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“Unrestricted Subsidiary” shall mean:

(1) any Subsidiary of TCEH (other than TCEH Finance) which at the time of
determination is an Unrestricted Subsidiary (as designated by TCEH, as provided
below); and

(2) any Subsidiary of an Unrestricted Subsidiary.

TCEH may designate any Subsidiary of TCEH (including any existing Subsidiary and
any newly acquired or newly formed Subsidiary but excluding TCEH Finance) to be
an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries
owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any
property of, TCEH or any Subsidiary of TCEH (other than solely any Subsidiary of
the Subsidiary to be so designated); provided that

(1) any Unrestricted Subsidiary must be an entity of which the Equity Interests
entitled to cast at least a majority of the votes that may be cast by all Equity
Interests having ordinary voting power for the election of directors or Persons
performing a similar function are owned, directly or indirectly, by TCEH;

(2) such designation complies with Section 9.5 hereof; and

(3) each of:

(a) the Subsidiary to be so designated; and

(b) its Subsidiaries

has not at the time of designation, and does not thereafter, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable with
respect to any Indebtedness pursuant to which the lender has recourse to any of
the assets of TCEH or any Restricted Subsidiary.

TCEH may designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that, immediately after giving effect to such designation, no Default
shall have occurred and be continuing and either:

(1) TCEH would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to Section 9.7(a) hereof; or

(2) the Fixed Charge Coverage Ratio for TCEH and its Restricted Subsidiaries
would be greater than such ratio for TCEH and its Restricted Subsidiaries
immediately prior to such designation, in each case on a pro forma basis taking
into account such designation.

Any such designation by TCEH shall be notified by TCEH to the Administrative
Agent by promptly filing with the Administrative Agent a copy of the resolution
of the Board of Directors of TCEH or any committee thereof giving effect to such
designation and an Officer’s Certificate certifying that such designation
complied with the foregoing provisions.

 

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“U.S.” or “United States” shall mean the United States of America.

“US Holdings” shall mean Energy Future Competitive Holdings Company, a Texas
corporation.

“U.S. Lender” shall have the meaning provided in Section 5.4(h).

“Voting Stock” of any Person as of any date shall mean the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

“Weighted Average Life to Maturity” shall mean, when applied to any
Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, at any
date, the quotient obtained by dividing:

(1) the sum of the products of the number of years from the date of
determination to the date of each successive scheduled principal payment of such
Indebtedness or redemption or similar payment with respect to such Disqualified
Stock or Preferred Stock multiplied by the amount of such payment; by

(2) the sum of all such payments.

“Wholly Owned Subsidiary” of any Person shall mean a Subsidiary of such Person,
100% of the outstanding Equity Interests of which (other than directors’
qualifying shares) shall at the time be owned by such Person or by one or more
Wholly-Owned Subsidiaries of such Person.

1.2. Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:

(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 when used in any Loan Document shall refer to such Loan Document as a
whole and not to any particular provision thereof.

(c) Article, Section, Exhibit and Schedule references are to the Loan Document
in which such reference appears.

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

(e) 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.

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

 

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

(h) To the extent any provision of the Senior Refinancing Indenture is deemed to
be incorporated and set forth in this Agreement, (i) any reference to the
“Issuer” or the “Company” in the Senior Refinancing Indenture shall be deemed to
be a reference to the Borrower, (ii) any reference to a “Holder” in the Senior
Refinancing Indenture shall be deemed to be a reference to a Lender, (iii) any
reference to the “Trustee” in the Senior Refinancing Indenture shall be deemed
to be a reference to the Administrative Agent, (iv) any reference to the “Notes”
in the Senior Refinancing Indenture shall be deemed to be a reference to the
Loans and (v) any reference to “this Indenture” in the Senior Refinancing
Indenture shall be deemed to be a reference to this Agreement and the other Loan
Documents, in each case as the context may require.

1.3. Accounting Terms. All accounting terms not specifically or completely
defined herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial calculations) required to be
submitted pursuant to this Agreement shall be prepared in conformity with, GAAP.

1.4. [Reserved].

1.5. References to Agreements, Laws, Etc. Unless otherwise expressly provided
herein, (a) references to organizational documents, agreements (including the
Loan Documents) and other Contractual Requirements shall be deemed to include
all subsequent amendments, restatements, amendment and restatements, extensions,
supplements and other modifications thereto, but only to the extent that such
amendments, restatements, amendment and restatements, extensions, supplements
and other modifications are permitted by any Loan Document; and (b) references
to any Applicable Laws shall include all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such
Applicable Law.

1.6. Times of Day. Unless otherwise specified, all references herein to times of
day shall be references to Eastern time (daylight or standard, as applicable).

1.7. Timing of Payment or Performance. When the payment of any obligation or the
performance of any covenant, duty or obligation is stated to be due or
performance required on a day which is not a Business Day, the date of such
payment (other that as described in the definition of Interest Period) or
performance shall extend to the immediately succeeding Business Day.

SECTION 2. Amount and Terms of Credit.

2.1. Commitments.

(a) Subject to and upon the terms and conditions herein set forth,

 

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(i) each Lender having a Senior Interim Cash Pay Loan Commitment severally, but
not jointly, agrees to make a loan or loans (each a “Senior Interim Cash Pay
Loan”) in a single draw on the Closing Date to the Borrower in Dollars, which
Senior Interim Cash Pay Loans shall not exceed (A) for any such Lender the
Senior Interim Cash Pay Loan Commitment of such Lender and (B) in the aggregate
shall not exceed $5,000,000,000; and

(ii) each Lender having a Senior Interim Toggle Loan Commitment severally, but
not jointly, agrees to make a loan or loans (each a “Senior Interim Toggle
Loan”) in a single draw on the Closing Date to the Borrower in Dollars, which
Senior Interim Toggle Loans shall not exceed (A) for any such Lender the Senior
Interim Toggle Loan Commitment of such Lender and (B) in the aggregate shall not
exceed $1,750,000,000.

Such Senior Interim Loans (i) shall be incurred and maintained (except as
provided in Section 2.6 and Section 2.10) as LIBOR Loans, (ii) may be repaid or
prepaid in accordance with the provisions hereof, but once repaid or prepaid,
may not be reborrowed, (iii) shall not exceed for any such Lender the Senior
Interim Loan Commitment of such Lender and (iv) shall not exceed in the
aggregate the Total Senior Interim Loan Commitment.

On the applicable interest payment dates with respect to Borrowings under Senior
Toggle Loans closest to April 15, 2017, the Borrower shall repay in full in
Dollars an amount of Senior Toggle Loans equal to the product of (x) $50,000,000
and (y) the percentage equal to the aggregate principal amount of outstanding
Senior Toggle Loans divided by the aggregate principal amount of outstanding
Senior Toggle Loans and Senior Toggle Notes on such date, as determined in good
faith by the Borrower rounded to the nearest $1,000. Prepayments of Senior
Toggle Loans made pursuant to the preceding sentence shall be made on a pro rata
basis based on the aggregate principal amount of Senior Toggle Loans
outstanding. On the Maturity Date, the Borrower shall repay all then unpaid
Loans in full in Dollars.

(b) Each Lender may at its option make any LIBOR Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan, provided that
(i) any exercise of such option shall not affect the obligation of the Borrower
to repay such Loan and (ii) in exercising such option, such Lender shall use its
reasonable efforts to minimize any increased costs to the Borrower resulting
therefrom (which obligation of the Lender shall not require it to take, or
refrain from taking, actions that it determines would result in increased costs
for which it will not be compensated hereunder or that it determines would be
otherwise disadvantageous to it and in the event of such request for costs for
which compensation is provided under this Agreement, the provisions of
Section 2.10 shall apply).

2.2. Maximum Number of Borrowings. More than one Borrowing may be incurred on
any date, provided that at no time shall there be outstanding more than
10 Borrowings of LIBOR Loans under this Agreement.

 

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2.3. Notice of Borrowing.

(a) The Borrower shall give the Administrative Agent at the Administrative
Agent’s Office prior to 9:00 a.m. (New York City time) at least (x) in the case
of LIBOR Loans, one Business Days’ prior written notice (or telephonic notice
promptly confirmed in writing) of the Borrowing of the Senior Interim Loans and
(y) in the case of ABR Loans, one Business Day’s prior written notice (or
telephonic notice promptly confirmed in writing) of the Borrowing of the Senior
Interim Loans. Such notice, which shall be in the form of Exhibit A (a “Notice
of Borrowing”) shall specify (i) the aggregate principal amount of the Senior
Interim Loans to be borrowed, $5,000,000,000 of which shall be allocated to the
Senior Interim Cash Pay Loans (the “Senior Interim Cash Pay Loans Requested
Amount”) (such Senior Interim Cash Pay Loans Requested Amount not to exceed the
aggregate Senior Interim Cash Pay Loan Commitments of all Lenders) and
$1,750,000,000 of which shall be allocated to the Senior Interim Toggle Loans
(the “Senior Interim Toggle Loans Requested Amount”) (such Senior Interim Toggle
Loans Requested Amount not to exceed the aggregate Senior Interim Toggle Loan
Commitments of all Lenders), (ii) the date of the Borrowing and (iii) the
Interest Period to be initially applicable thereto. The Administrative Agent
shall promptly give each Lender written notice (or telephonic notice promptly
confirmed in writing) of the proposed Borrowing of Senior Interim Loans, of such
Lender’s proportionate share thereof and of the other matters covered by the
related Notice of Borrowing.

(b) Without in any way limiting the obligation of the Borrower to confirm in
writing any notice it may give hereunder by telephone, the Administrative Agent
may act prior to receipt of written confirmation without liability upon the
basis of such telephonic notice believed by the Administrative Agent in good
faith to be from an Authorized Officer of the Borrower.

2.4. Disbursement of Funds.

(a) No later than 2:00 p.m. (New York City time) on the date specified in the
Notice of Borrowing, each Lender will make available its pro rata portion, if
any, of each Borrowing requested to be made on such date in the manner provided
below, provided that such funds may be made available at such earlier time as
may be agreed among the Lenders, the Borrower and the Administrative Agent for
the purpose of consummating the Transactions.

(b) Each Lender shall make available all amounts it is to fund to the Borrower
under the Borrowing for its applicable Commitments in immediately available
funds to the Administrative Agent at the Administrative Agent’s Office, and the
Administrative Agent will make available to the Borrower, by depositing to an
account designated by the Borrower to the Administrative Agent the aggregate of
the amounts so made available in Dollars. Unless the Administrative Agent shall
have been notified by any Lender prior to the date of the Borrowing that such
Lender does not intend to make available to the Administrative Agent its portion
of the Borrowing to be made on such date, the Administrative Agent may assume
that such Lender has made such amount available to the Administrative Agent on
the date of the Borrowing, and the Administrative Agent, in reliance upon such
assumption, may (in its sole discretion and without any obligation to do so)
make available to the Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the Administrative Agent by such Lender
and the Administrative Agent has made available such amount to the Borrower, the
Administrative Agent shall be entitled to recover such corresponding amount from
such Lender. If such Lender does not pay such corresponding amount forthwith
upon the Administrative Agent’s demand therefor, the Administrative Agent shall
promptly notify the Borrower and the Borrower shall immediately pay such
corresponding amount to the Administrative Agent in Dollars. The Administrative
Agent shall also be entitled to recover from such Lender or the

 

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Borrower interest on such corresponding amount in respect of each day from the
date such corresponding amount was made available by the Administrative Agent to
the Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (i) if paid by such Lender,
the Overnight Rate or (ii) if paid by the Borrower, the then-applicable rate of
interest, calculated in accordance with Section 2.8, for the respective Loans.

(c) Nothing in this Section 2.4 shall be deemed to relieve any Lender from its
obligation to fulfill its commitments hereunder or to prejudice any rights that
the Borrower may have against any Lender as a result of any default by such
Lender hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to fulfill its commitments
hereunder).

2.5. Repayment of Loans; Evidence of Debt.

(a) The Borrower shall repay to the Administrative Agent, for the benefit of the
Lenders, on the Term Loan Maturity Date, the then-outstanding Loans, in Dollars.

(b) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness of the Borrower to the appropriate
lending office of such Lender resulting from each Loan made by such lending
office of such Lender from time to time, including the amounts of principal and
interest payable and paid to such lending office of such Lender from time to
time under this Agreement.

(c) The Administrative Agent shall maintain the Register pursuant to
Section 13.6(b), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount of each Loan made
hereunder, the Class and Type of each Loan made and the Interest Period, if any,
applicable thereto, (ii) the amount of any principal (including any PIK Interest
Amounts) or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from the Borrower and each Lender’s share
thereof.

(d) The entries made in the Register and accounts and subaccounts maintained
pursuant to clauses (b) and (c) of this Section 2.5 shall, to the extent
permitted by Applicable Laws, be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded; provided, however,
that the failure of any Lender or the Administrative Agent to maintain such
account, such Register or such subaccount, as applicable, or any error therein,
shall not in any manner affect the obligation of the Borrower to repay (with
applicable interest) the Loans made to the Borrower by such Lender in accordance
with the terms of this Agreement.

2.6. Conversions and Continuations.

(a) Subject to the penultimate sentence of this clause (a), (x) the Borrower
shall have the option, subject to Section 2.10, on any Business Day to convert
all or a portion equal to at least $5,000,000 of the outstanding principal
amount of a Borrowing or Borrowings of one Type into a Borrowing or Borrowings
of another Type (provided, that any conversion of a LIBOR Loan to an ABR Loan
shall be effected solely on the last day of the then applicable Interest Period
thereof) and (y) the Borrower shall have the option on any Business Day to
continue the outstanding principal amount of any LIBOR Loans as LIBOR Loans for
an

 

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additional Interest Period; provided that (i) ABR Loans may not be converted
into LIBOR Loans if a Default or Event of Default is in existence on the date of
the conversion and the Administrative Agent has or the Required Lenders have
determined in its or their sole discretion not to permit such conversion,
(ii) LIBOR Loans may not be continued as LIBOR Loans for an additional Interest
Period if a Default or Event of Default is in existence on the date of the
proposed continuation and the Administrative Agent has or the Required Lenders
have determined in its or their sole discretion not to permit such continuation
and (iii) Borrowings resulting from conversions pursuant to this Section 2.6
shall be limited in number as provided in Section 2.2. Each such conversion or
continuation shall be effected by the Borrower by giving the Administrative
Agent at the Administrative Agent’s Office prior to 1:00 p.m. (New York City
time) at least (A) three Business Days’ prior written notice (or telephonic
notice promptly confirmed in writing), in the case of a continuation of or
conversion to LIBOR Loans (other than in the case of a notice delivered on the
Closing Date pursuant to clause (c), which shall be deemed to be effective on
the Closing Date) or (B) one Business Day’s prior written notice (or telephonic
notice promptly confirmed in writing) in the case of a conversion into ABR Loans
(each, a “Notice of Conversion or Continuation”) specifying the Loans to be so
converted or continued, the Type of Loans to be converted into or continued and,
if such Loans are to be converted into or continued as LIBOR Loans, the Interest
Period to be initially applicable thereto. The Administrative Agent shall give
each applicable Lender notice as promptly as practicable of any such proposed
conversion or continuation affecting any of its Loans.

(b) If any Default or Event of Default is in existence at the time of any
proposed continuation of any LIBOR Loans and the Administrative Agent has or the
Required Lenders have determined in its or their sole discretion not to permit
such continuation, such LIBOR Loans shall be automatically converted on the last
day of the current Interest Period into ABR Loans. If upon the expiration of any
Interest Period in respect of LIBOR Loans, the Borrower has failed to elect a
new Interest Period to be applicable thereto as provided in clause (a) of this
Section 2.6, the Borrower shall be deemed to have elected to continue such
Borrowing of LIBOR Loans as LIBOR Loans with an Interest Period of one month,
effective as of the expiration date of such current Interest Period.

(c) Notwithstanding anything to the contrary herein, the Borrower may deliver a
Notice of Conversion or Continuation pursuant to which the Borrower elects to
irrevocably continue the outstanding principal amount of any Loans subject to a
Hedging Obligation in respect of interest rates as LIBOR Loans for each Interest
Period until the expiration of the term of such applicable Hedging Obligation.

2.7. Pro Rata Borrowings. Each Borrowing of Senior Interim Cash Pay Loans under
this Agreement shall be made by the Lenders pro rata on the basis of their
then-applicable Senior Interim Cash Pay Loan Commitments. Each Borrowing of
Senior Interim Toggle Loans under this Agreement shall be made by the Lenders
pro rata on the basis of their then-applicable Senior Interim Toggle Loan
Commitments. It is understood that (a) no Lender shall be responsible for any
default by any other Lender in its obligation to make Loans hereunder and that
each Lender severally but not jointly shall be obligated to make the Loans
provided to be made by it hereunder, regardless of the failure of any other
Lender to fulfill its commitments hereunder and (b) failure by a Lender to
perform any of its obligations under any of the Loan Documents shall not release
any Person from performance of its obligation under any Loan Document.

 

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2.8. Interest.

(a) The unpaid principal amount of each Senior Cash Pay Loan that is an ABR Loan
shall bear interest from the date of the Borrowing thereof until maturity
thereof (whether by acceleration or otherwise) at a rate per annum that shall at
all times be the Applicable ABR Margin plus the ABR, in effect from time to
time.

(i) The unpaid principal amount of each Senior Toggle Loan that is an ABR Loan
shall bear interest (A) for any Interest Period from the date of the Borrowing
thereof until but not including the fifth anniversary of the Closing Date (the
“PIK Interest Termination Date”) at the Borrower’s election: (1) entirely in
cash (“Cash Interest”), (2) entirely by increasing the principal amount of the
outstanding Senior Toggle Loans (“PIK Interest”) or (3) 50% as Cash Interest and
50% as PIK Interest (on a pro rata basis among the Lenders holding Senior Toggle
Loans) and (B) for any Interest Period from the PIK Interest Termination Date
until the Term Loan Maturity Date (whether by acceleration or otherwise)
entirely as Cash Interest. Any Cash Interest shall accrue for each day during
such Interest Period at a rate per annum that shall at all times be the
Applicable ABR Margin plus the ABR, in effect from time to time. Any PIK
Interest shall accrue for each day during such Interest Period at a rate per
annum that shall at all times be the Applicable ABR Margin plus the ABR, in
effect from time to time, plus the PIK Margin.

(b) The unpaid principal amount of each Senior Cash Pay Loan that is a LIBOR
Loan shall bear interest from the date of the Borrowing thereof until maturity
thereof (whether by acceleration or otherwise) at a rate per annum that shall at
all times be the Applicable LIBOR Margin plus the relevant LIBOR Rate in effect
from time to time.

(i) The unpaid principal amount of each Senior Toggle Loan that is a LIBOR Loan
shall bear interest (A) for any Interest Period from the date of the Borrowing
thereof until the PIK Interest Termination Date at the Borrower’s election:
(1) entirely as Cash Interest, (2) entirely as PIK Interest or (3) 50% as Cash
Interest and 50% as PIK Interest (on a pro rata basis among the Lenders holding
Senior Toggle Loans) and (B) for any Interest Period from the PIK Interest
Termination Date until the Term Loan Maturity Date (whether by acceleration or
otherwise) entirely as Cash Interest. Any Cash Interest shall accrue for each
day during such Interest Period at a rate per annum that shall at all times be
the Applicable LIBOR Margin plus the relevant LIBOR Rate, in effect from time to
time. Any PIK Interest shall accrue for each day during such Interest Period at
a rate per annum that shall at all times be the Applicable LIBOR Margin plus the
relevant LIBOR Rate in effect from time to time, plus the PIK Margin.

(c) Prior to the PIK Interest Termination Date, the Borrower may elect the form
of interest payment with respect to Senior Toggle Loans for each Interest Period
by delivering a notice (the “Interest Election Notice”) five Business Days prior
to the commencement of the related Interest Period. Each Interest Election
Notice shall include

 

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information to the following effect: (1) the relevant interest payment date;
(2) whether interest shall be paid on such interest payment date entirely as
Cash Interest, entirely as PIK Interest or 50% as Cash Interest and 50% as PIK
Interest; and (3) if interest shall be paid as PIK Interest, the increase in the
principal amount of the Senior Toggle Loans to be effective upon the relevant
interest payment date as a result of such payment and the principal amount of
the Senior Toggle Loans to be outstanding as of such interest payment date after
giving effect to such payment. If the Borrower does not deliver an Interest
Election Notice, the interest on the Senior Toggle Loans will be payable on the
related interest payment date in the form elected pursuant to the Interest
Election Notice for the immediately preceding Interest Period. Notwithstanding
the foregoing, interest on the Senior Toggle Loans for the first Interest Period
will be payable entirely as Cash Interest.

(d) If all or a portion of (i) the principal amount of any Loan or (ii) any
interest payable thereon or any other amount hereunder shall not be paid when
due (whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum that is (the “Default Rate”)
(x) in the case of overdue principal, the rate that would otherwise be
applicable thereto plus 2% or (y) in the case of any overdue interest or other
amounts due hereunder, to the extent permitted by Applicable Laws, the rate
described in Section 2.8(a)(i) plus 2% from the date of such non-payment to the
date on which such amount is paid in full (after as well as before judgment).

(e) Interest on each Loan shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable in Dollars; provided that any Loan that is repaid on the same date on
which it is made shall bear interest for one day. Except as provided below,
interest shall be payable (i) in respect of each ABR Loan, quarterly in arrears
on the tenth Business Day following the end of each March, June, September and
December (provided that the first such payment shall be on December 31, 2007),
(ii) in respect of each LIBOR Loan, on the last day of each Interest Period
applicable thereto and, in the case of an Interest Period in excess of three
months, on each date occurring at three-month intervals after the first day of
such Interest Period, and (iii) in respect of each Loan, (A) on any prepayment,
(B) at maturity (whether by acceleration or otherwise) and (C) after such
maturity, on demand.

(f) All computations of interest hereunder shall be made in accordance with
Section 5.5.

(g) The Administrative Agent, upon determining the interest rate for any
Borrowing of LIBOR Loans, shall promptly notify the Borrower and the Lenders
thereof. Each such determination shall, absent clearly demonstrable error, be
final and conclusive and binding on all parties hereto.

2.9. Interest Periods. At the time the Borrower gives a Notice of Borrowing or
Notice of Conversion or Continuation in respect of the making of, or conversion
into or continuation as, a Borrowing of LIBOR Loans in accordance with
Sections 2.3(a) and 2.6(a), the Borrower shall give the Administrative Agent
written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower be a one, two, three or six month period.

 

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Notwithstanding anything to the contrary contained above:

(a) the initial Interest Period for any Borrowing of LIBOR Loans shall commence
on the date of such Borrowing (including the date of any conversion from a
Borrowing of ABR Loans) and each Interest Period occurring thereafter in respect
of such Borrowing shall commence on the day on which the next preceding Interest
Period expires;

(b) if any Interest Period relating to a Borrowing of LIBOR Loans begins on the
last Business Day of a calendar month or begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period, such Interest Period shall end on the last Business Day of the calendar
month at the end of such Interest Period;

(c) if any Interest Period would otherwise expire on a day that is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day; provided that if any Interest Period in respect of a LIBOR Loan would
otherwise expire on a day that is not a Business Day but is a day of the month
after which no further Business Day occurs in such month, such Interest Period
shall expire on the next preceding Business Day; and

(d) the Borrower shall not be entitled to elect any Interest Period in respect
of any LIBOR Loan if such Interest Period would extend beyond the Maturity Date
of such Loan.

2.10. Increased Costs, Illegality, Etc.

(a) In the event that (x) in the case of clause (i) below, the Administrative
Agent or (y) in the case of clauses (ii) and (iii) below, any Lender shall have
reasonably determined (which determination shall, absent clearly demonstrable
error, be final and conclusive and binding upon all parties hereto):

(i) on any date for determining the LIBOR Rate for any Interest Period that
(x) deposits in the principal amounts and currencies of the Loans comprising
such LIBOR Loan Borrowing are not generally available in the relevant market or
(y) by reason of any changes arising on or after the Closing Date affecting the
interbank LIBOR market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
“LIBOR Rate”; or

(ii) at any time, that such Lender shall incur increased costs or reductions in
the amounts received or receivable hereunder with respect to any LIBOR Loans
(other than any increase or reduction attributable to (A) Taxes indemnifable
under Section 5.4, (B) net income taxes and franchise and excise taxes (imposed
in lieu of net income taxes) imposed on any Agent or Lender or (C) Taxes
included under clauses (c) and (d) of the definition of “Excluded Taxes”)
because of (x) any change since the date hereof in any Applicable Laws (or in
the interpretation or administration thereof and including the introduction of
any new Applicable Laws), such as, for example, without limitation, a change in
official reserve requirements, and/or (y) other circumstances affecting the
interbank LIBOR market or the position of such Lender in such market; or

 

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(iii) at any time, that the making or continuance of any LIBOR Loan has become
unlawful as a result of compliance by such Lender in good faith with any
Applicable Laws (or would conflict with any such Applicable Laws not having the
force of law even though the failure to comply therewith would not be unlawful),
or has become impracticable as a result of a contingency occurring after the
date hereof that materially and adversely affects the interbank LIBOR market;

then, and in any such event, such Lender (or the Administrative Agent, in the
case of clause (i) above) shall within a reasonable time thereafter give notice
(if by telephone, confirmed in writing) to the Borrower and to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in
the case of clause (i) above, LIBOR Loans shall no longer be available until
such time as the Administrative Agent notifies the Borrower and the Lenders that
the circumstances giving rise to such notice by the Administrative Agent no
longer exist (which notice the Administrative Agent agrees to give at such time
when such circumstances no longer exist), and any Notice of Borrowing or Notice
of Conversion or Continuation given by the Borrower with respect to LIBOR Loans
that have not yet been incurred shall be deemed rescinded by the Borrower,
(y) in the case of clause (ii) above, the Borrower shall pay to such Lender,
promptly after receipt of written demand therefor such additional amounts (in
the form of an increased rate of, or a different method of calculating, interest
or otherwise, as such Lender in its reasonable discretion shall determine) as
shall be required to compensate such Lender for such increased costs or
reductions in amounts receivable hereunder (it being agreed that a written
notice as to the additional amounts owed to such Lender, showing in reasonable
detail the basis for the calculation thereof, submitted to the Borrower by such
Lender shall, absent clearly demonstrable error, be final and conclusive and
binding upon all parties hereto) and (z) in the case of subclause (iii) above,
the Borrower shall take one of the actions specified in Section 2.10(b) as
promptly as possible and, in any event, within the time period required by
Applicable Laws.

(b) At any time that any LIBOR Loan is affected by the circumstances described
in Section 2.10(a)(ii) or (iii), the Borrower may (and in the case of a LIBOR
Loan affected pursuant to Section 2.10(a)(iii) shall) either (x) if the affected
LIBOR Loan is then being made pursuant to a Borrowing, cancel such Borrowing by
giving the Administrative Agent telephonic notice (confirmed promptly in
writing) thereof on the same date that the Borrower was notified by a Lender
pursuant to Section 2.10(a)(ii) or (iii) or (y) if the affected LIBOR Loan is
then outstanding, upon at least three Business Days’ notice to the
Administrative Agent, require the affected Lender to convert each such LIBOR
Loan into an ABR Loan; provided that if more than one Lender is affected at any
time, then all affected Lenders must be treated in the same manner pursuant to
this Section 2.10(b).

(c) If, after the date hereof, any Change in Law relating to capital adequacy of
any Lender or compliance by any Lender or its parent with any Change in Law
relating to capital adequacy occurring after the date hereof, has or would have
the effect of reducing the rate of return on such Lender’s or its parent’s or
its Affiliate’s capital or assets as a consequence of such Lender’s commitments
or obligations hereunder to a level below that which such Lender or its parent
or its Affiliate could have achieved but for such Change in Law (taking into
consideration such Lender’s or its parent’s policies with respect to capital
adequacy), then from time to time, promptly after demand by such Lender (with a
copy to the Administrative Agent), the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or its parent for
such reduction, it being understood and agreed, however, that a Lender shall not
be

 

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entitled to such compensation as a result of such Lender’s compliance with, or
pursuant to any request or directive to comply with, any Applicable Laws as in
effect on the date hereof. Each Lender, upon determining in good faith that any
additional amounts will be payable pursuant to this Section 2.10(c), will give
prompt written notice thereof to the Borrower, which notice shall set forth in
reasonable detail the basis of the calculation of such additional amounts,
although the failure to give any such notice shall not, subject to Section 2.13,
release or diminish the Borrower’s obligations to pay additional amounts
pursuant to this Section 2.10(c) upon receipt of such notice.

2.11. Compensation. If (i) any payment of principal of any LIBOR Loan is made by
the Borrower to or for the account of a Lender other than on the last day of the
Interest Period for such LIBOR Loan as a result of a payment or conversion
pursuant to Section 2.5, 2.6, 2.10, 5.1, 5.2 or 13.7, as a result of
acceleration of the maturity of the Loans pursuant to Section 11.15 or for any
other reason, (ii) any Borrowing of LIBOR Loans is not made as a result of a
withdrawn Notice of Borrowing, (iii) any ABR Loan is not converted into a LIBOR
Loan as a result of a withdrawn Notice of Conversion or Continuation, (iv) any
LIBOR Loan is not continued as a LIBOR Loan, as the case may be, as a result of
a withdrawn Notice of Conversion or Continuation or (v) any prepayment of
principal of any LIBOR Loan is not made as a result of a withdrawn notice of
prepayment pursuant to Section 5.1 or 5.2, the Borrower shall, after receipt of
a written request by such Lender (which request shall set forth in reasonable
detail the basis for requesting such amount), pay to the Administrative Agent
for the account of such Lender any amounts required to compensate such Lender
for any additional losses, costs or expenses that such Lender may reasonably
incur as a result of such payment, failure to convert, failure to continue or
failure to prepay, including any loss, cost or expense (excluding loss of
anticipated profits) actually incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such LIBOR Loan.

2.12. Change of Lending Office. Each Lender agrees that, upon the occurrence of
any event giving rise to the operation of Section 2.10(a)(ii), 2.10(a)(iii),
2.10(b) or 5.4 with respect to such Lender, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such
event, provided that such designation is made on such terms that such Lender and
its lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequence of the event giving rise to the operation
of any such Section. Nothing in this Section 2.12 shall affect or postpone any
of the obligations of the Borrower or the right of any Lender provided in
Section 2.10 or 5.4.

2.13. Notice of Certain Costs. Notwithstanding anything in this Agreement to the
contrary, to the extent any notice required by Section 2.10, 2.11 or 5.4 is
given by any Lender more than 180 days after such Lender has knowledge (or
should have had knowledge) of the occurrence of the event giving rise to the
additional cost, reduction in amounts, loss, tax or other additional amounts
described in such Sections, such Lender shall not be entitled to compensation
under Section 2.10, 2.11 or 5.4, as the case may be, for any such amounts
incurred or accruing prior to the 181st day prior to the giving of such notice
to the Borrower.

 

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2.14. Permanent Refinancing.

(a)On the Interim Loan Conversion Date:

(i) all outstanding Senior Interim Cash Pay Loans shall be automatically
converted into term loans (each, a “Senior Cash Pay Term Loan”) having an
aggregate principal amount equal to the unpaid principal amount of such Senior
Interim Cash Pay Loans, in each case to the extent such Loans are not repaid in
whole or in part in cash on or prior to such date; and

(ii) all outstanding Senior Interim Toggle Loans shall be automatically
converted into term loans (each, a “Senior Toggle Term Loan”) having an
aggregate principal amount equal to the unpaid principal amount of such Senior
Interim Toggle Loans, in each case to the extent such Loans are not repaid in
whole or in part in cash on or prior to such date.

(b) On the fifteenth (15th) day of each calendar month (each, an “Exchange
Date”), or if such day is not a Business Day, the preceding Business Day, on or
after the Interim Loan Conversion Date, at the option of the applicable Lender,
(A) the Senior Cash Pay Term Loans may be exchanged in whole or in part for one
or more Senior Cash Pay Notes issued pursuant to the Senior Refinancing
Indenture having an aggregate principal amount equal to the unpaid principal
amount of such Senior Cash Pay Term Loans and (B) the Senior Toggle Term Loans
may be exchanged in whole or in part for one or more Senior Toggle Notes issued
pursuant to the Senior Refinancing Indenture having an aggregate principal
amount equal to the unpaid principal amount of such Senior Toggle Term Loans;
provided, however, that the Borrower shall not be required to issue Senior Cash
Pay Notes or Senior Toggle Notes, as the case may be, until the Borrower shall
have received requests to issue at least $150,000,000 in aggregate principal
amount of each of Senior Cash Pay Notes and Senior Toggle Notes and that the
amount of Senior Term Loans exchanged for Senior Notes must be in excess of
$1,000,000 in principal amount.

(i) Such Lender shall provide the Borrower prior irrevocable written notice of
such election (each such notice, an “Exchange Notice”), substantially in the
form of Exhibit E-1 or Exhibit E-2, as applicable, at least five Business Days
prior to the date of exchange. The Exchange Notice shall specify the principal
amount of Senior Term Loans to be exchanged (which shall be at least $1,000,000
and integral multiples in excess thereof for each Class of Loans or the entire
remaining aggregate principal amount of Loans of such Lender) and, subject to
the terms of the Senior Refinancing Indenture, the name of the proposed
registered holder and the amount of each Senior Note requested. Senior Term
Loans exchanged for Senior Notes pursuant to this Section 2.14 shall be deemed
repaid and canceled, and the Senior Notes so issued shall be governed by and
construed in accordance with the provisions of the Senior Refinancing Indenture.
The Senior Notes shall be issued in the form set forth in the Senior Refinancing
Indenture.

(ii) As more particularly provided in the Senior Refinancing Indenture,
(A) Senior Cash Pay Notes issued pursuant to the Senior Refinancing Indenture
shall bear interest at the rate applicable to Senior Cash Pay Term Loans (unless
a Lender shall elect to have the interest rate fixed at the rate applicable to
Senior Cash Pay Term Loans in effect on the date of such exchange if necessary
to effect an actual bona fide sale of such Senior Cash Pay Notes on such date to
a third party that is not an Affiliate of such Lender), (B) Senior Toggle Notes
issued

 

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pursuant to the Senior Refinancing Indenture shall bear interest at the rate
applicable to Senior Toggle Term Loans (unless a Lender shall elect to have the
interest rate fixed at the rate applicable to Senior Toggle Term Loans in effect
on the date of such exchange if necessary to effect an actual bona fide sale of
such Senior Toggle Notes on such date to a third party that is not an Affiliate
of such Lender), and (C) Senior Cash Pay Notes and the Senior Toggle Notes
issued pursuant to the Senior Refinancing Indenture (I) shall mature on
October 15, 2015 and October 15, 2016, respectively, and (II) shall be
redeemable as set forth in the Senior Refinancing Indenture and the applicable
form of Senior Notes attached thereto.

(iii) Not later than five Business Days after the Exchange Date following
delivery of any Exchange Notice, the Borrower shall (A) deliver a written notice
to the trustee under the Senior Refinancing Indenture (the “Trustee”), directing
such Trustee to authenticate and deliver Senior Cash Pay Notes and/or Senior
Toggle Notes as specified in the Exchange Notice and (B) use all commercially
reasonable efforts to effect delivery of such Senior Cash Pay Notes and/or
Senior Toggle Notes to the requesting Lender.

(c) The Borrower agrees that as a condition to the effectiveness of the exchange
of Senior Term Loans for Senior Notes:

(i) The Borrower shall have selected a bank or trust company reasonably
acceptable to the Lenders to act as Trustee.

(ii) The Borrower shall have issued the Senior Notes pursuant to the Senior
Refinancing Indenture substantially in the applicable form set forth therein,
and the Borrower and each Guarantor shall have executed and delivered the Senior
Refinancing Indenture.

(iii) The Borrower and each Guarantor shall have provided to the Administrative
Agent copies of resolutions of its Board of Directors approving the execution
and delivery of the Senior Refinancing Indenture and, in the case of the
Borrower, the issuance of the Senior Notes, together with a customary
certificate of the secretary of the Borrower or such Guarantor certifying such
resolutions.

(iv) The Borrower and each Guarantor shall have executed and delivered the
Senior Refinancing Registration Rights Agreement.

(v) The Borrower and each Guarantor shall have provided to the Lenders copies of
resolutions of its Board of Directors approving the execution and delivery of
the Senior Refinancing Registration Rights Agreement, together with a customary
certificate of the secretary of the Borrower or such Guarantor certifying such
resolutions.

(vi) The Borrower shall have caused its counsel to deliver to the Administrative
Agent an executed legal opinion in form and substance customary for a
transaction of that type to be mutually agreed upon by the Borrower and the
Administrative Agent (including, without limitation, with respect to due
authorization, execution and delivery, validity and enforceability of the Senior
Refinancing Indenture and the Senior Refinancing Registration Rights Agreement).

 

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(d) If the foregoing conditions set forth in Section 2.14(c) are not satisfied
on the Interim Loan Conversion Date, then the Lenders shall retain all of their
rights and remedies with respect to the Senior Term Loans pursuant to this
Agreement until such conditions are satisfied and the Senior Term Loans are so
exchanged for Senior Notes. The Borrower agrees to satisfy the conditions set
forth in Section 2.14(c) no later than ten Business Days after receipt of the
first Exchange Notice.

(e) Nothing in this Section 2.14 shall prevent or limit the ability of the
Borrower from repaying or refinancing, the Loans in any other manner not
otherwise prohibited by this Agreement.

(f) It is understood and agreed that the Senior Term Loans exchanged for Senior
Notes constitute the same indebtedness as such Senior Notes and that no novation
shall be effected by any such exchange.

SECTION 3. [Reserved].

SECTION 4. Mandatory Termination of Commitments.

4.1. [Reserved].

4.2. [Reserved].

4.3. Mandatory Termination of Commitments. The Senior Interim Loan Commitments
shall terminate on the earlier of (i) 5:00 p.m. (New York City time) on July 10,
2008 and (ii) 5:00 p.m. (New York time) upon making of the Senior Interim Loans
on the Closing Date.

SECTION 5. Payments.

5.1. Voluntary Prepayments.

(a) The Borrower shall have the right to prepay Loans, without premium or
penalty, in whole or in part, from time to time on the following terms and
conditions: (a) the Borrower shall give the Administrative Agent at the
Administrative Agent’s Office written notice (or telephonic notice promptly
confirmed in writing) of its intent to make such prepayment, the amount of such
prepayment and, in the case of LIBOR Loans, the specific Borrowing(s) pursuant
to which made, which notice shall be given by the Borrower no later than
1:00 p.m. (New York City time) (i) in the case of LIBOR Loans, three Business
Days prior to or (ii) in the case of ABR Loans, one Business Day prior to, the
date of such prepayment and shall promptly be transmitted by the Administrative
Agent to each of the Lenders (b) each partial prepayment of (i) any Borrowing of
LIBOR Loans shall be in a minimum amount of $5,000,000 and in multiples of
$1,000,000 in excess thereof and (ii) any ABR Loans shall be in a minimum amount
of $1,000,000 and in multiples of $100,000 in excess thereof, provided that no
partial prepayment of LIBOR Loans made pursuant to a single Borrowing shall
reduce the outstanding LIBOR Loans made pursuant to such Borrowing to an amount
less than $5,000,000 and (c) any prepayment of LIBOR Loans pursuant to this
Section 5.1 on any day other than the last day of an Interest Period applicable
thereto shall be subject to compliance by the Borrower with the

 

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applicable provisions of Section 2.11. Each prepayment in respect of any Loans
pursuant to this Section 5.1 shall be applied to the Loans on a pro rata basis
based on the aggregate principal amount of Loans outstanding at such time. At
the Borrower’s election in connection with any prepayment pursuant to this
Section 5.1, such prepayment shall not be applied to any Loan of a Defaulting
Lender.

(b) At the end of any “accrual period” (as defined in Section 1272(a)(5) of the
Code) ending after October 10, 2012 (each, an “Optional Interest Repayment
Date”), the Borrower may pay in cash, without duplication, all accrued and
unpaid interest, if any, and all accrued but unpaid “original issue discount”
(as defined in Section 1273(a)(1) of the Code) on each Senior Toggle Term Loan
and/or Senior Toggle Note then outstanding up to the Optional Interest Repayment
Amount, minus $50,000,000 (each such redemption, an “Optional Interest
Repayment”). The “Optional Interest Repayment Amount” shall mean, as of each
Optional Interest Repayment Date, the excess, if any, of (i) the aggregate
amount of accrued and unpaid interest and all accrued but unpaid “original issue
discount” (as defined in Section 1273(a)(1) of the Code) with respect to the
applicable Senior Toggle Term Loan or Senior Toggle Note, over (ii) an amount
equal to the product of (A) the “issue price” (as defined in Sections 1273(b)
and 1274(a) of the Code) of the applicable Senior Toggle Term Loan or Senior
Toggle Note multiplied by (B) the “yield to maturity” (as defined in the
Treasury Regulation Section 1.1272-1(b)(1)(i)) of such Senior Toggle Term Loan
or Senior Toggle Note.

5.2. Mandatory Prepayments.

(a) Prepayments. (i) Prior to the Interim Loan Conversion Date on each occasion
that a Debt Incurrence Prepayment Event occurs, the Borrower shall, (within
three Business Days after its receipt of the Net Cash Proceeds of a Debt
Incurrence Prepayment Event, cause to be prepaid, in accordance with clause (c)
below Loans with principal amount equal to 100% of the Net Cash Proceeds from
such Debt Incurrence Prepayment Event; provided that the Borrower may, to the
extent required by the Senior Secured Credit Agreement, apply such Net Cash
Proceeds to prepay, repay or repurchase Indebtedness outstanding under the
Senior Secured Credit Agreement within three Business Days after receipt
thereof, prior to the application of such Net Cash Proceeds to prepay Loans.

(ii) At any time on or after the Interim Loan Conversion Date, the provisions of
Section 5.2(a)(i) shall no longer be operative.

(b) [Reserved].

(c) Application of Amounts. Subject to Section 5.2(h), each prepayment of Senior
Interim Loans required by Section 5.2(a)(i) the proceeds of which are derived
from the sale of Senior Cash Pay Notes shall be applied on a pro rata basis to
the aggregate principal amount of outstanding Senior Cash Pay Loans and the
proceeds of which are derived from the sale of Senior Toggle Notes shall be
applied on a pro rata basis to the aggregate principal amount of outstanding
Senior Toggle Loans; provided, however, that if US Holdings is the issuer of the
Indebtedness in respect of such Debt Incurrence Prepayment Event, the applicable
of the Net Cash Proceeds shall be applied on a pro rata basis to the aggregate
principal amount of outstanding Loans and the aggregate principal amount of
outstanding Parent Senior Interim

 

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Loans. Subject to Section 5.2(h), with respect to each such prepayment, the
Borrower will, not later than the date specified in the applicable clause of
Section 5.2(a)(i) for making such prepayment, give the Administrative Agent
telephonic notice (promptly confirmed in writing) requesting that the
Administrative Agent provide notice of such prepayment to each Lender.

(d) Application to Loans. With respect to each prepayment of Loans required by
Section 5.2(a) (but subject to clause (c)) or required or permitted by
Section 9.8(b) the Borrower may, if applicable, designate the Types of Loans
that are to be prepaid and the specific Borrowing(s) pursuant to which made. In
the absence of a designation by the Borrower as described in the preceding
sentence, the Administrative Agent shall, subject to the above, make such
designation in its reasonable discretion with a view, but no obligation, to
minimize breakage costs owing under Section 2.11.

(e) [Reserved].

(f) LIBOR Interest Periods. In lieu of making any payment pursuant to this
Section 5.2 or pursuant to Section 9.8(b) in respect of any LIBOR Loan other
than on the last day of the Interest Period therefor so long as no Event of
Default shall have occurred and be continuing, the Borrower at its option may
deposit with the Administrative Agent an amount equal to the amount of the LIBOR
Loan to be prepaid and such LIBOR Loan shall be repaid on the last day of the
Interest Period therefor in the required amount. Such deposit shall be held by
the Administrative Agent in a corporate time deposit account established on
terms reasonably satisfactory to the Administrative Agent, earning interest at
the then-customary rate for accounts of such type. Such deposit shall constitute
cash collateral for the LIBOR Loans to be so prepaid, provided that the Borrower
may at any time direct that such deposit be applied to make the applicable
payment required pursuant to this Section 5.2.

(g) [Reserved].

(h) Notification of Mandatory Prepayment. The Borrower shall notify the
Administrative Agent in writing of any mandatory prepayment of Loans required to
be made pursuant to Section 5.2(a), in each case at least three Business Days
prior to the date of such prepayment. Each such notice shall specify the date of
such prepayment and provide a reasonably detailed calculation of the amount of
such prepayment. The Administrative Agent will promptly notify each Lender
holding Loans of the Class required to be prepaid in accordance with
Section 5.2(c) of the contents of the Borrower’s prepayment notice and of such
Lender’s pro rata share of the prepayment.

5.3. Method and Place of Payment.

(a) Except as otherwise specifically provided herein, all payments under this
Agreement shall be made by the Borrower, without set-off, counterclaim or
deduction of any kind, to the Administrative Agent for the ratable account of
the Lenders entitled thereto not later than 2:00 p.m. (New York City time), in
each case, on the date when due and shall be made in immediately available funds
at the Administrative Agent’s Office or at such other office as the
Administrative Agent shall specify for such purpose by notice to the Borrower,
it being understood that written or facsimile notice by the Borrower to the
Administrative Agent to make

 

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a payment from the funds in the Borrower’s account at the Administrative Agent’s
Office shall constitute the making of such payment to the extent of such funds
held in such account. All repayments or prepayments of any Loans (whether of
principal, interest or otherwise) hereunder, and all other payments under each
Loan Document shall be made in Dollars. The Administrative Agent will thereafter
cause to be distributed on the same day (if payment was actually received by the
Administrative Agent prior to 2:00 p.m. (New York City time) or, otherwise, on
the next Business Day) like funds relating to the payment of principal or
interest ratably to the Lenders entitled thereto.

(b) Any payments under this Agreement that are made later than 2:00 p.m. (New
York City time) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day that is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.

5.4. Net Payments.

(a) Any and all payments made by or on behalf of the Borrower or any Guarantor
under this Agreement or any other Loan Document shall be made free and clear of,
and without deduction or withholding for or on account of, any Indemnified
Taxes; provided that if the Borrower or any Guarantor or the Administrative
Agent shall be required by Applicable Laws to deduct or withhold any Indemnified
Taxes from such payments, then (i) the sum payable by the Borrower or any
Guarantor shall be increased as necessary so that after making all required
deductions and withholdings (including deductions or withholdings applicable to
additional sums payable under this Section 5.4) the Administrative Agent or any
Lender, as the case may be, receives an amount equal to the sum it would have
received had no such deductions or withholdings been made, (ii) the Borrower or
such Guarantor or the Administrative Agent, shall make such deductions or
withholdings and (iii) the Borrower or such Guarantor or the Administrative
Agent shall timely pay the full amount deducted or withheld to the relevant
Government Authority within the time allowed and in accordance with Applicable
Laws. Whenever any Indemnified Taxes are payable by the Borrower or such
Guarantor, as promptly as possible thereafter, the Borrower or Guarantor shall
send to the Administrative Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt (or
other evidence acceptable to such Lender, acting reasonably) received by the
Borrower or such Guarantor showing payment thereof.

(b) The Borrower shall timely pay and shall indemnify and hold harmless each
Agent and each Lender with regard to any Other Taxes (whether or not such Other
Taxes were correctly or legally imposed or asserted by the relevant Government
Authority).

(c) The Borrower shall indemnify and hold harmless the Administrative Agent and
each Lender within fifteen Business Days after written demand therefor, for the
full amount of any Indemnified Taxes imposed on the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrower or any Guarantor hereunder or under any other
Loan Document (including Indemnified Taxes imposed or asserted on or
attributable to amounts payable under this Section 5.4) and any

 

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reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes were correctly or legally imposed or asserted by the
relevant Government Authority. A certificate setting forth reasonable detail as
to the amount of such payment or liability delivered to the Borrower by a Lender
or the Administrative Agent (as applicable) on its own behalf or on behalf of a
Lender shall be conclusive absent manifest error.

(d) Any Non-U.S. Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
resident for tax purposes, or under any treaty to which such jurisdiction is a
party, with respect to payments hereunder or under any other Loan Document
shall, to the extent it is legally able to do so, deliver to the Borrower (with
a copy to the Administrative Agent), at the time or times prescribed by
Applicable Laws or reasonably requested by the Borrower or the Administrative
Agent, such properly completed and executed documentation prescribed by
Applicable Laws as will permit such payments to be made without withholding or
at a reduced rate of withholding. A Lender’s obligation under the prior sentence
shall apply only if the Borrower or the Administrative Agent has made a request
for such documentation. In addition, any Lender, if requested by the Borrower or
the Administrative Agent, shall deliver such other documentation prescribed by
Applicable Laws or reasonably requested by the Borrower or the Administrative
Agent as will enable the Borrower or the Administrative Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements.

(e) Each Non-U.S. Lender with respect to any Loan made to the Borrower shall, to
the extent it is legally entitled to do so:

(i) deliver to the Borrower and the Administrative Agent, prior to the date on
which the first payment to the Non-U.S. Lender is due hereunder, two copies of
(x) in the case of a Non-U.S. Lender claiming exemption from U. S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of “portfolio interest,” United States Internal Revenue Service Form
W-8BEN (together with a certificate substantially in the form of Exhibit J
representing that such Non-U.S. Lender is not a bank for purposes of
Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning
of Section 871(h)(3)(B) of the Code) of the Borrower, any interest payment
received by such Non-U.S. Lender under this Agreement or any other Loan Document
is not effectively connected with the conduct of a trade or business in the
United States and is not a controlled foreign corporation related to the
Borrower (within the meaning of Section 864(d)(4) of the Code)), (y) Internal
Revenue Service Form W-8BEN or Form W-8ECI, in each case properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from, or
reduced rate of, U. S. Federal withholding tax on payments by the Borrower under
this Agreement or (z) if a Non U.S. Lender does not act or ceases to act for its
own account with respect to any portion of any sums paid or payable to such
Lender under any of the Loan Documents (for example, in the case of a typical
participation or where a Non U.S. Lender is a pass through entity) Internal
Revenue Service Form W-8IMY and all necessary attachments (including the forms
described in clauses (x) and (y) above, as required); and

(ii) deliver to the Borrower and the Administrative Agent two further copies of
any such form or certification (or any applicable successor form) on or before
the date that any such form or certification expires or becomes obsolete, and
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower;

 

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If in any such case any Change in Law has occurred prior to the date on which
any such delivery would otherwise be required that renders any such form
inapplicable or would prevent such Non-U.S. Lender from duly completing and
delivering any such form with respect to it, such Non-U.S. Lender shall promptly
so advise the Borrower and the Administrative Agent.

(f) If any Lender or the Administrative Agent, as applicable, determines, in its
sole discretion, that it had received and retained a refund of an Indemnified
Tax (including an Other Tax) for which a payment has been made by the Borrower
pursuant to this Agreement, which refund in the good faith judgment of such
Lender or the Administrative Agent, as the case may be, is attributable to such
payment made by the Borrower, then the Lender or the Administrative Agent, as
the case may be, shall reimburse the Borrower for such amount (net of all
out-of-pocket expenses of such Lender or the Administrative Agent, as the case
may be, and without interest other than any interest received thereon from the
relevant Government Authority with respect to such refund) as the Lender or the
Administrative Agent, as the case may be, determines in its sole discretion to
be the proportion of the refund as will leave it, after such reimbursement, in
no better or worse position (taking into account expenses or any taxes imposed
on the refund) than it would have been in if the payment had not been required;
provided that the Borrower, upon the request of the Lender or the Administrative
Agent, agrees to repay the amount paid over to the Borrower (plus any penalties,
interest or other charges imposed by the relevant Government Authority) to the
Lender or the Administrative Agent in the event the Lender or the Administrative
Agent is required to repay such refund to such Government Authority. A Lender or
the Administrative Agent shall claim any refund that it determines is available
to it, unless it concludes in its sole discretion that it would be adversely
affected by making such a claim. Neither the Lender nor the Administrative Agent
shall be obliged to disclose any information regarding its tax affairs or
computations to any Loan Party in connection with this clause (f) or any other
provision of this Section 5.4.

(g) If the Borrower determines that a reasonable basis exists for contesting a
Tax, each Lender or Agent, as the case may be, shall use reasonable efforts to
cooperate with the Borrower as the Borrower may reasonably request in
challenging such Tax. Subject to the provisions of Section 2.12, each Lender and
Agent agrees to use reasonable efforts to cooperate with the Borrower as the
Borrower may reasonably request to minimize any amount payable by the Borrower
or any Guarantor pursuant to this Section 5.4. The Borrower shall indemnify and
hold each Lender and Agent harmless against any out-of-pocket expenses incurred
by such Person in connection with any request made by the Borrower pursuant to
this Section 5.4(g). Nothing in this Section 5.4(g) shall obligate any Lender or
Agent to take any action that such Person, in its sole judgment, determines may
result in a material detriment to such Person.

(h) Each Lender and Agent with respect to any Loan made to the Borrower that is
a United States person under Section 7701(a)(30) of the Code (each, a “U.S.
Lender”) shall deliver to the Borrower and the Administrative Agent two United
States Internal Revenue Service Forms W-9 (or substitute or successor form),
properly completed and duly executed, certifying that such Lender or Agent is
exempt from United States backup withholding (i) on or prior to the Closing Date
(or on or prior to the date it becomes a party to this Agreement), (ii) on

 

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or before the date that such form expires or becomes obsolete, (iii) after the
occurrence of a change in the Agent’s or Lender’s circumstances requiring a
change in the most recent form previously delivered by it to the Borrower and
the Administrative Agent, and (iv) from time to time thereafter if reasonably
requested by the Borrower or the Administrative Agent.

(i) The agreements in this Section 5.4 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

5.5. Computations of Interest.

(a)(i) Interest on LIBOR Loans shall be calculated on the basis of a 360-day
year for the actual days elapsed and (ii) interest on ABR Loans and interest on
overdue interest shall be calculated on the basis of a 365-(or 366-, as the case
may be) day year for the actual days elapsed.

5.6. Limit on Rate of Interest.

(a) No Payment Shall Exceed Lawful Rate. Notwithstanding any other term of this
Agreement, the Borrower shall not be obligated to pay any interest or other
amounts under or in connection with this Agreement or otherwise in respect of
the Obligations in excess of the amount or rate permitted under or consistent
with any Applicable Laws.

(b) Payment at Highest Lawful Rate. If the Borrower is not obliged to make a
payment that it would otherwise be required to make as a result of
Section 5.6(a), the Borrower shall make such payment to the maximum extent
permitted by or consistent with Applicable Laws.

(c) Adjustment if Any Payment Exceeds Lawful Rate. If any provision of this
Agreement or any of the other Loan Documents would obligate the Borrower to make
any payment of interest or other amount payable to any Lender in an amount or
calculated at a rate that would be prohibited by any Applicable Laws, then
notwithstanding such provision, such amount or rate shall be deemed to have been
adjusted with retroactive effect to the maximum amount or rate of interest, as
the case may be, as would not be so prohibited by Applicable Laws, such
adjustment to be effected, to the extent necessary, by reducing the amount or
rate of interest required to be paid by the Borrower to the affected Lender
under Section 2.8.

(d) Notwithstanding the foregoing, and after giving effect to all adjustments
contemplated thereby, if any Lender shall have received from the Borrower an
amount in excess of the maximum permitted by any Applicable Laws, then the
Borrower shall be entitled, by notice in writing to the Administrative Agent to
obtain reimbursement from that Lender in an amount equal to such excess, and
pending such reimbursement, such amount shall be deemed to be an amount payable
by that Lender to the Borrower.

SECTION 6. Conditions Precedent to Initial Borrowing.

The initial Borrowing under this Agreement is subject to the satisfaction of the
following conditions precedent, except as otherwise agreed between the Borrower
and the Administrative Agent.

 

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6.1 Loan Documents. The Administrative Agent shall have received:

(a) this Agreement, executed and delivered by a duly authorized officer of
US Holdings, TCEH, TCEH Finance, each Agent and each Lender; and

(b) the Guarantee, executed and delivered by a duly authorized officer of each
Guarantor as of the Closing Date.

6.2. Guarantee. The Guarantee shall be in full force and effect.

6.3. Legal Opinions. The Administrative Agent shall have received the executed
legal opinions of (a) Simpson Thacher & Bartlett LLP, special New York counsel
to US Holdings and the Borrower, substantially in the form of Exhibit F-1,
(b) Vinson & Elkins LLP, special Texas counsel to US Holdings and the Borrower,
substantially in the form of Exhibit F-2, (c) Hunton & Williams LLP, special
Texas regulatory counsel to US Holdings and the Borrower, substantially in the
form of Exhibit F-3 and (d) Covington & Burling LLP, special FERC and NRC
regulatory counsel to US Holdings and the Borrower, substantially in the form of
Exhibit F-4. US Holdings, the Borrower, the other Loan Parties and the
Administrative Agent hereby instruct such counsel to deliver such legal
opinions.

6.4. Debt Repayments. Concurrently with the initial Borrowing hereunder, the
Refinancing shall have been consummated.

6.5. Equity Investments. The Equity Contribution, which, to the extent
constituting Stock or Stock Equivalents of the Parent other than common Stock,
shall be on terms and conditions and pursuant to documentation reasonably
satisfactory to the Joint Lead Arrangers and Bookrunners to the extent material
to the interests of the Lenders, in an amount not less than the Minimum Equity
Amount shall have been made, or substantially simultaneously with the initial
Credit Event hereunder, shall be made.

6.6. Closing Certificates. The Administrative Agent shall have received a
certificate of the Loan Parties, dated the Closing Date, substantially in the
form of Exhibit G, with appropriate insertions, executed by an Authorized
Officer of each Loan Party, and attaching the documents referred to in
Section 6.7.

6.7. Authorization of Proceedings of Each Loan Party. The Administrative Agent
shall have received (a) a copy of the resolutions, in form and substance
reasonably satisfactory to the Administrative Agent, of the board of directors,
other managers or general partner of each Loan Party (or a duly authorized
committee thereof) authorizing (i) the execution, delivery and performance of
the Loan Documents (and any agreements relating thereto) to which it is a party
and (ii) in the case of the Borrower, the extensions of credit contemplated
hereunder and (b) true and complete copies of the Organizational Documents of
each Loan Party as of the Closing Date.

6.8. Fees. The Agents shall have received the fees in the amounts previously
agreed in writing by the Agents to be received on the Closing Date and all
expenses (including the reasonable fees, disbursements and other charges of
counsel) payable by the Loan Parties for which invoices have been presented
prior to the Closing Date shall have been paid.

 

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6.9. Representations and Warranties. On the Closing Date, (a) there shall be no
breach of any representation made by the Parent in the Acquisition Agreement
that is (i) material to the interests of the Lenders and (ii) the breach of
which would give Holdings and/or Merger Sub the right to terminate their
respective obligations thereunder, and (b) the representations and warranties
made by the Loan Parties in Section 8.1(a), Section 8.2, Section 8.5 and
Section 8.7, as they relate to the Loan Parties at such time, shall be true and
correct in all material respects.

6.10. Acquisition Agreement. The Administrative Agent shall have received a
fully executed or conformed copy of the Acquisition Agreement which shall be in
full force and effect.

6.11. Solvency Certificate. On the Closing Date, the Administrative Agent shall
have received a certificate from an Authorized Officer of TCEH to the effect
that after giving effect to the consummation of the Transactions, TCEH on a
consolidated basis with its Subsidiaries is Solvent.

6.12. Merger. Concurrently with the initial Credit Event hereunder, the Merger
shall have been consummated in accordance with the terms of the Acquisition
Agreement, without giving effect to any modifications, amendments or express
waivers thereto that are materially adverse to the Lenders (including, without
limitation, the definition of, and representations, warranties and conditions
relating to, the absence of any “Company Material Adverse Effect” therein)
without the reasonable consent of the Joint Lead Arrangers and Bookrunners.

6.13. Pro Forma Financial Statements. The Administrative Agent shall have
received the Pro Forma Financial Statements.

6.14. Patriot Act. The Joint Lead Arrangers and Bookrunners shall have received
such documentation and information as is reasonably requested in writing at
least 10 days prior to the Closing Date by the Administrative Agent about TCEH
and TCEH Finance mutually agreed to be required by U.S. regulatory authorities
under applicable “know your customer” and anti-money laundering rules and
regulations, including, without limitation, the Patriot Act.

6.15. Notice of Borrowing. The Administrative Agent shall have received a Notice
of Borrowing (whether in writing or by telephone) meeting the requirements of
Section 2.3.

The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by each Loan Party to each of the Lenders that all
the applicable conditions specified in Section 6 have been satisfied as of that
time.

 

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SECTION 7. [Reserved].

SECTION 8. Representations, Warranties and Agreements.

In order to induce the Lenders to enter into this Agreement and to make the
Loans as provided for herein, each of US Holdings, TCEH and TCEH Finance makes
(on the Closing Date) the following representations and warranties to, and
agreements with, the Lenders, all of which shall survive the execution and
delivery of this Agreement and the making of the Loans:

8.1. Corporate Status; Compliance with Laws. Each of US Holdings, the Borrower
and each Material Subsidiary of TCEH that is a Restricted Subsidiary (a) is a
duly organized and validly existing corporation or other entity in good standing
(as applicable) under the laws of the jurisdiction of its organization and has
the corporate or other organizational power and authority to own its property
and assets and to transact the business in which it is engaged, (b) has duly
qualified and is authorized to do business and is in good standing (if
applicable) in all jurisdictions where it is required to be so qualified, except
where the failure to be so qualified could not reasonably be expected to result
in a Material Adverse Effect and (c) is in compliance with all Applicable Laws,
except to the extent that the failure to be in compliance could not reasonably
be expected to result in a Material Adverse Effect.

8.2. Corporate Power and Authority. Each Loan Party has the corporate or other
organizational power and authority to execute, deliver and carry out the terms
and provisions of the Loan Documents to which it is a party and has taken all
necessary corporate or other organizational action to authorize the execution,
delivery and performance of the Loan Documents to which it is a party. Each Loan
Party has duly executed and delivered each Loan Document to which it is a party
and each such Loan Document constitutes the legal, valid and binding obligation
of such Loan Party enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization and
other similar laws relating to or affecting creditors’ rights generally and
general principles of equity (whether considered in a proceeding in equity or
law).

8.3. No Violation. Neither the execution, delivery or performance by any Loan
Party of the Loan Documents to which it is a party nor the compliance with the
terms and provisions thereof nor the consummation of the Merger and the other
transactions contemplated hereby and thereby will (a) contravene any applicable
provision of any material Applicable Laws (including any material Environmental
Laws), (b) result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of the
property or assets of US Holdings, TCEH or any Restricted Subsidiary (other than
Liens created under the TCEH Senior Secured Facilities or Liens subject to the
Intercreditor Agreement referred to in the TCEH Senior Secured Credit Agreement)
pursuant to the terms of any material indenture (including the Existing Notes
Indentures), loan agreement, lease agreement, mortgage, deed of trust or other
material agreement or instrument to which US Holdings, TCEH or any Restricted
Subsidiary is a party or by which it or any of its property or assets is bound
(any such term, covenant, condition or provision, a “Contractual Requirement”)
other than any such breach, default or Lien that could not reasonably be
expected to result in a Material Adverse Effect, or (c) violate any provision of
the Organization Documents of US Holdings, the Borrower or any of the Restricted
Subsidiaries.

 

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8.4. Litigation. Except as set forth on Schedule 8.4, there are no actions,
suits or proceedings (including Environmental Claims) pending or, to the
knowledge of TCEH, threatened with respect to US Holdings, TCEH or any of the
Restricted Subsidiaries that could reasonably be expected to result in a
Material Adverse Effect.

8.5. Margin Regulations. Neither the making of any Loan hereunder nor the use of
the proceeds thereof will violate the provisions of Regulation T, U or X of the
Board.

8.6. Governmental Approvals. The execution, delivery and performance of the
Acquisition Agreement or any Loan Document does not require any consent or
approval of, registration or filing with, or other action by, any Government
Authority, except for (i) such as have been obtained or made and are in full
force and effect, (ii) such licenses, approvals, authorizations or consents the
failure of which to obtain or make could not reasonably be expected to have a
Material Adverse Effect and (iii) the PUCT filing reporting the Merger and
actions regarding the commitments made to the PUCT and state legislature of the
State of Texas relating to the Merger.

8.7. Investment Company Act. None of the Loan Parties is an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.

8.8. True and Complete Disclosure.

(a) None of the written factual information and written data (taken as a whole)
heretofore or contemporaneously furnished by or on behalf of US Holdings, TCEH,
any of the Subsidiaries of TCEH or any of their respective authorized
representatives to the Administrative Agent, any Joint Lead Arranger and
Bookrunner, and/or any Lender on or before the Closing Date (including all such
information and data contained in the Loan Documents) for purposes of or in
connection with this Agreement or any transaction contemplated herein contained
any untrue statement of any material fact or omitted to state any material fact
necessary to make such information and data (taken as a whole) not materially
misleading at such time in light of the circumstances under which such
information or data was furnished, it being understood and agreed that for
purposes of this Section 8.8(a), such factual information and data shall not
include projections or estimates (including financial estimates, forecasts and
other forward-looking information) and information of a general economic or
general industry nature.

(b) The projections (including financial estimates, forecasts and other
forward-looking information) contained in the information and data referred to
in Section 8.8(a) were prepared in good faith based upon estimates and
assumptions believed by such Persons to be reasonable at the time made, it being
recognized by the Agents and Lenders that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results
and such differences may be material.

 

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8.9. Financial Condition; Financial Statements. The Historical Financial
Statements present fairly in all material respects the consolidated financial
position of TCEH and its consolidated Subsidiaries at the respective dates of
said information, statements and results of operations for the respective
periods covered thereby subject, in the case of the unaudited financial
information, to changes resulting from audit, normal year-end audit adjustments
and the absence of footnotes. The unaudited pro forma consolidated balance sheet
of US Holdings and its consolidated Subsidiaries as at June 30, 2007 (including
the notes thereto) (the “Pro Forma Balance Sheet”) and the unaudited pro forma
consolidated statement of operations of US Holdings and its consolidated
Subsidiaries for the 12-month period ending on such date (together with the Pro
Forma Balance Sheet, the “Pro Forma Financial Statements”), copies of which have
heretofore been furnished to the Administrative Agent, have been prepared based
on the historical financial statements of US Holdings and have been prepared in
good faith, based on assumptions believed by US Holdings to be reasonable as of
the date of delivery thereof, and, subject to the qualifications and limitations
contained in the notes attached thereto, present fairly in all material respects
on a pro forma basis the estimated financial position of US Holdings and its
consolidated Subsidiaries as at June 30, 2007 and their estimated results of
operations for the period covered thereby. The financial statements referred to
in this Section 8.9 have been prepared in accordance with GAAP consistently
applied except to the extent provided in the notes to said financial statements.
There has been no Material Adverse Effect since the Closing Date.

8.10. Tax Matters. Except where the failure of which could not be reasonably
expected to have a Material Adverse Effect, (a) each of US Holdings, TCEH and
each of the Restricted Subsidiaries has filed all federal income Tax returns and
all other Tax returns, domestic and foreign, required to be filed by it and has
paid all material Taxes payable by it that have become due (whether or not shown
on such Tax return), other than those (i) not yet delinquent or (ii) contested
in good faith as to which adequate reserves have been provided to the extent
required by law and in accordance with GAAP, (b) each of US Holdings, TCEH and
each of the Restricted Subsidiaries has provided adequate reserves in accordance
with GAAP for the payment of, all federal, state, provincial and foreign Taxes
not yet due and payable and (c) each of US Holdings, TCEH and the Restricted
Subsidiaries has satisfied all of its Tax withholding obligations.

8.11. Compliance with ERISA.

(a) Each Employee Benefit Plan is in compliance with ERISA, the Code and any
Applicable Laws; no Reportable Event has occurred (or is reasonably likely to
occur) with respect to any Plan; no Multiemployer Plan is insolvent or in
reorganization (or is reasonably likely to be insolvent or in reorganization),
and no written notice of any such insolvency or reorganization has been given to
TCEH or any ERISA Affiliate; no Plan has an accumulated or waived funding
deficiency (or is reasonably likely to have such a deficiency); on and after the
effectiveness of the Pension Act, each Plan has satisfied the minimum funding
standards (within the meaning of Section 412 of the Code or Section 302 of
ERISA) applicable to such Plan, and there has been no determination that any
such Plan is, or is expected to be, in “at risk” status (within the meaning of
Section 4010(d)(2) of ERISA); none of TCEH or any ERISA Affiliate has incurred
(or is reasonably likely to incur) any liability to or on account of a Plan
pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or
4204 of ERISA or Section 4971 or 4975 of the Code; no proceedings have been
instituted (or are reasonably likely to be instituted) to terminate or to
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Plan, and no written notice of any such proceedings has been given to TCEH or
any ERISA Affiliate; and no Lien imposed under the Code or ERISA on the assets
of TCEH or any ERISA Affiliate exists (or is reasonably likely to exist) nor has
TCEH or any ERISA Affiliate been notified in writing that such a Lien will be
imposed on the assets of the Parent, US Holdings, TCEH or any ERISA Affiliate on
account of any Plan, except to the extent that a breach of any of the
representations, warranties or agreements in this Section 8.11(a) would not
result, individually or in the aggregate, in an amount of liability that would
be reasonably likely to have a Material Adverse Effect. No Plan has an Unfunded
Current Liability that would, individually or when taken together with any other
liabilities referenced in this Section 8.11(a), be reasonably likely to have a
Material Adverse Effect. With respect to Plans that are Multiemployer Plans the
representations and warranties in this Section 8.11(a), other than any made with
respect to (i) liability under Section 4201 or 4204 of ERISA or (ii) liability
for termination or reorganization of such Multiemployer Plans under ERISA, are
made to the best knowledge of TCEH.

(b) All Foreign Plans are in compliance with, and have been established,
administered and operated in accordance with, the terms of such Foreign Plans
and Applicable Laws, except for any failure to so comply, establish, administer
or operate the Foreign Plans as would not reasonably be expected to have a
Material Adverse Effect. All contributions or other payments which are due with
respect to each Foreign Plan have been made in full and there are no funding
deficiencies thereunder, except to the extent any such events would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

8.12. Subsidiaries. Schedule 8.12 lists each Subsidiary of US Holdings (and the
direct and indirect ownership interest of US Holdings therein), in each case
existing on the Closing Date (after giving effect to the Transactions). Each
Material Subsidiary as of the Closing Date has been so designated on
Schedule 8.12.

8.13. Intellectual Property. Each of US Holdings, TCEH and the Restricted
Subsidiaries has good and marketable title to, or a valid license or right to
use, all patents, trademarks, servicemarks, trade names, copyrights and all
applications therefor and licenses thereof, and all other intellectual property
rights, free and clear of all Liens (other than Liens permitted by
Section 9.10), that are necessary for the operation of their respective
businesses as currently conducted, except where the failure to have any such
title, license or rights could not reasonably be expected to have a Material
Adverse Effect.

8.14. Environmental Laws.

Except as could not reasonably be expected to have a Material Adverse Effect:
(i) US Holdings, TCEH and the Restricted Subsidiaries and all Real Estate are in
compliance with all Environmental Laws; (ii) US Holdings, TCEH and the
Restricted Subsidiaries have, and have timely applied for renewal of, all
permits under Environmental Law to construct and operate their facilities as
currently constructed; (iii) except as set forth on Schedule 8.4 neither
US Holdings, TCEH nor any Restricted Subsidiary is subject to any pending or, to
the knowledge of the Borrower, threatened Environmental Claim or any other
liability under any Environmental Law including, any such Environmental Claim
or, to the knowledge of TCEH, any other liability under Environmental Law
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operations of any predecessor in interest of any of them; (iv) neither
US Holdings, TCEH nor any Restricted Subsidiary is conducting or financing or is
required to conduct or finance, any investigation, removal, remedial or other
corrective action pursuant to any Environmental Law at any location; (v) to the
knowledge of the Borrower, no Hazardous Materials have been released into the
environment at, on or under any Real Estate currently owned or leased by
US Holdings, TCEH or any Restricted Subsidiary; (vi) neither US Holdings, TCEH
nor any Restricted Subsidiary has treated, stored, transported, released or
disposed or arranged for disposal or transport for disposal of Hazardous
Materials at, on, under or from any currently or formerly owned or leased Real
Estate and (vii) neither US Holdings, TCEH nor any Restricted Subsidiary has
treated, stored, transported, released or disposed or arranged for disposal or
transport for disposal of Hazardous Materials at, on, under or from any
currently, or to the knowledge of the Borrower, formerly owned or leased Real
Estate or facility.

8.15. Properties. Except as set forth on Schedule 8.15, US Holdings, the
Borrower and the Restricted Subsidiaries have good and indefeasible title to or
valid leasehold or easement interests in all properties that are necessary for
the operation of their respective businesses as currently conducted, free and
clear of all Liens (other than any Liens permitted by this Agreement) and except
where the failure to have such good title, could not reasonably be expected to
have a Material Adverse Effect.

8.16. Solvency. On the Closing Date (after giving effect to the Transactions),
immediately following the making of each Loan and after giving effect to the
application of the proceeds of such Loans, TCEH on a consolidated basis with its
Subsidiaries will be Solvent.

SECTION 9. Covenants.

9.1. Reports and Other Information.

(a) Notwithstanding that US Holdings may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on
an annual and quarterly basis on forms provided for such annual and quarterly
reporting pursuant to rules and regulations promulgated by the SEC, US Holdings
shall file with the SEC (and make available to the Administrative Agent and the
Lenders (without exhibits), without cost to any Lender, within 15 days after
US Holdings files them with the SEC) from and after the Closing Date,

(i) within 90 days (or any other time period then in effect under the rules and
regulations of the Exchange Act with respect to the filing of a Form 10-K by a
non-accelerated filer) after the end of each fiscal year, annual reports on Form
10-K, or any successor or comparable form, containing the information required
to be contained therein, or required in such successor or comparable form;

(ii) within 45 days after the end of each of the first three fiscal quarters of
each fiscal year, reports on Form 10-Q containing all quarterly information that
would be required to be contained in Form 10-Q, or any successor or comparable
form;

(iii) promptly from time to time after the occurrence of an event required to be
therein reported, such other reports on Form 8-K, or any successor or comparable
form; and

 

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(iv) any other information, documents and other reports which TCEH would be
required to file with the SEC if it were subject to Section 13 or 15(d) of the
Exchange Act;

in each case in a manner that complies in all material respects with the
requirements specified in such form; provided that TCEH shall not be so
obligated to file such reports with the SEC if the SEC does not permit such
filing, in which event TCEH shall make available such information to the
Administrative Agent and the Lenders, in each case within 15 days after the time
TCEH would be required to file such information with the SEC if it were subject
to Section 13 or 15(d) of the Exchange Act.

(b) Notwithstanding the foregoing, the requirements of Section 9.1(a), shall be
deemed satisfied (1) by the filing with the SEC of a registration statement or
shelf registration statement (or any other similar registration statement), and
any amendments thereto, with such financial information that satisfies
Regulation S-X, subject to exceptions consistent with the presentation of
financial information in an offering memorandum relating to securities sold in
reliance on Rule 144A of the Securities Act, to the extent filed within the
times specified in Section 9.1(a), or (2) by posting reports that would be
required to be filed substantially in the form required by the SEC on TCEH’s
website (or that of any of its parent companies) or providing such reports to
the Administrative Agent within 15 days after the time TCEH would be required to
file such information with the SEC if it were subject to Section 13 or 15(d) of
the Exchange Act or the financial information that would be required to be
included in such reports. Additionally, in the event that any direct or indirect
parent company of TCEH becomes a Guarantor of the Loans (including US Holdings),
TCEH may satisfy its obligations under this Section 9.1 with respect to
financial information relating to TCEH by furnishing financial information
relating to such parent; provided that the same is accompanied by consolidating
information that explains in reasonable detail the differences between the
information relating to such parent, on the one hand, and the information
relating to TCEH and its Restricted Subsidiaries on a standalone basis, on the
other hand.

Notwithstanding anything herein to the contrary, US Holdings will not be deemed
to have failed to comply with any of its obligations hereunder for purposes of
clause (c) of Section 11.1(I) until 60 days after the date any report hereunder
is due.

9.2. Compliance Certificate.

(a) TCEH shall deliver to the Administrative Agent, within 90 days after the end
of each fiscal year ending after the Closing Date, a certificate from the
principal executive officer, principal financial officer or principal accounting
officer stating that a review of the activities of TCEH and its Restricted
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Authorized Officer with a view to determining whether
TCEH has kept, observed, performed and fulfilled its obligations under this
Agreement, and further stating, as to such Authorized Officer signing such
certificate, that to the best of his or her knowledge TCEH has kept, observed,
performed and fulfilled each and every condition and covenant contained in this
Agreement and is not in default in the performance or observance of any of the
terms, provisions, covenants and conditions of this Agreement (or, if a Default
shall have occurred, describing all such Defaults of which he or she may have
knowledge and what action TCEH is taking or proposes to take with respect
thereto).

 

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(b) When any Default has occurred and is continuing under this Agreement, or if
the Administrative Agent or the holder of any other evidence of Indebtedness of
TCEH or any Subsidiary gives any notice or takes any other action with respect
to a claimed Default, TCEH shall promptly (which shall be no more than five
(5) Business Days) deliver to the Administrative Agent by registered or
certified mail or by facsimile transmission an Officer’s Certificate specifying
such event and what action the Borrower proposes to take with respect thereto.

9.3. Taxes. TCEH shall pay, and shall cause each of its Restricted Subsidiaries
to pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate
negotiations or proceedings or where the failure to effect such payment is not
adverse in any material respect to the Lenders.

9.4. Stay, Extension and Usury Laws. The Borrower and each of the Guarantors
covenant (to the extent that they may lawfully do so) that they shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Agreement; and the Borrower and each of the Guarantors (to the extent that
they may lawfully do so) hereby expressly waive all benefit or advantage of any
such law, and covenant that they shall not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Administrative
Agent, but shall suffer and permit the execution of every such power as though
no such law has been enacted.

9.5. Limitation on Restricted Payments.

(a) TCEH shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly:

(I) declare or pay any dividend or make any payment or distribution on account
of TCEH’s, or any of its Restricted Subsidiaries’ Equity Interests, including
any dividend or distribution payable in connection with any merger or
consolidation, other than:

(A) dividends or distributions by TCEH payable solely in Equity Interests (other
than Disqualified Stock) of TCEH; or

(B) dividends or distributions by a Restricted Subsidiary so long as, in the
case of any dividend or distribution payable on or in respect of any class or
series of securities issued by a Restricted Subsidiary other than a Wholly-Owned
Subsidiary, TCEH or a Restricted Subsidiary receives at least its pro rata share
of such dividend or distribution in accordance with its Equity Interests in such
class or series of securities;

(II) purchase, redeem, defease or otherwise acquire or retire for value any
Equity Interests of TCEH or any direct or indirect parent of TCEH, including in
connection with any merger or consolidation;

 

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(III) make any principal payment on, or redeem, repurchase, defease or otherwise
acquire or retire for value in each case, prior to any scheduled repayment,
sinking fund payment or maturity, any Subordinated Indebtedness, other than:

(A) Indebtedness permitted under clauses (7) and (8) of Section 9.7(b) hereof;
or

(B) the purchase, repurchase or other acquisition of Subordinated Indebtedness
purchased in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the date of
purchase, repurchase or acquisition; or

(IV) make any Restricted Investment

(all such payments and other actions set forth in clauses (I) through (IV) above
(other than any exception thereto) being collectively referred to as “Restricted
Payments”), unless, at the time of such Restricted Payment (which Restricted
Payment shall be permitted to be made only after the Interim Loan Conversion
Date):

(1) no Default shall have occurred and be continuing or would occur as a
consequence thereof;

(2) immediately after giving effect to such transaction on a pro forma basis,
TCEH could incur $1.00 of additional Indebtedness under the provisions of
clause (ii) of Section 9.7(a); and

(3) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by TCEH and its Restricted Subsidiaries after the
Closing Date (including Restricted Payments permitted by clauses (1), (2) (with
respect to the payment of dividends on Refunding Capital Stock pursuant to
clause (b) thereof only), (6)(c), (9) and (14) of Section 9.5(b) hereof but
excluding all other Restricted Payments permitted by Section 9.5(b) hereof), is
less than the sum of (without duplication):

(a) 50% of the Consolidated Net Income of TCEH for the period (taken as one
accounting period) beginning October 1, 2007, to the end of TCEH’s most recently
ended fiscal quarter for which internal financial statements are available at
the time of such Restricted Payment, or, in the case such Consolidated Net
Income for such period is a deficit, minus 100% of such deficit; plus

(b) 100% of the aggregate net cash proceeds and the fair market value, as
determined in good faith by TCEH, of marketable securities or other property
received by TCEH since immediately after the Closing Date (other than net cash
proceeds to the extent such net cash proceeds have been used to incur
Indebtedness, Disqualified Stock or Preferred Stock pursuant to
clause (12)(y)(i) of Section 9.7(b) hereof) from the issue or sale of:

 

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(i)(A) Equity Interests of TCEH, including Treasury Capital Stock, but excluding
cash proceeds and the fair market value, as determined in good faith by TCEH, of
marketable securities or other property received from the sale of:

(x) Equity Interests to members of management, directors or consultants of TCEH,
any direct or indirect parent company of TCEH and TCEH’s Subsidiaries after the
Closing Date to the extent such amounts have been applied to Restricted Payments
made in accordance with clause (4) of Section 9.5(b) below; and

(y) Designated Preferred Stock; and

(B) to the extent such net cash proceeds are actually contributed to the capital
of TCEH, Equity Interests of TCEH’s direct or indirect parent companies
(excluding contributions of the proceeds from the sale of Designated Preferred
Stock of such companies or contributions to the extent such amounts have been
applied to Restricted Payments made in accordance with clause (4) of
Section 9.5(b) below); or

(ii) debt securities of TCEH that have been converted into or exchanged for such
Equity Interests of TCEH;

provided, however, that this clause (b) shall not include the proceeds from
(V) Refunding Capital Stock, (W) Equity Interests or debt securities of TCEH
sold to a Restricted Subsidiary, as the case may be, (X) Disqualified Stock or
debt securities that have been converted into or exchanged for Disqualified
Stock or (Y) Excluded Contributions; plus

(c) 100% of the aggregate amount of cash and the fair market value, as
determined in good faith by TCEH, of marketable securities or other property
contributed to the capital of TCEH following the Closing Date (other than net
cash proceeds to the extent such net cash proceeds (i) have been used to incur
Indebtedness, Disqualified Stock or Preferred Stock pursuant to clause
(12)(y)(i) of Section 9.7(b) hereof, (ii) are contributed by a Restricted
Subsidiary, or (iii) constitute Excluded Contributions); plus

(d) 100% of the aggregate amount received in cash and the fair market value, as
determined in good faith by TCEH, of marketable securities or other property
received by means of:

(i) the sale or other disposition (other than to TCEH or a Restricted
Subsidiary) of Restricted Investments made by TCEH or its Restricted
Subsidiaries after the Closing Date and repurchases and redemptions of such
Restricted Investments from TCEH or its Restricted Subsidiaries and repayments
of loans or advances, and releases of guarantees, which constitute Restricted
Investments by TCEH or its Restricted Subsidiaries after the Closing Date; or

 

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(ii) the sale (other than to TCEH or a Restricted Subsidiary) of the stock of an
Unrestricted Subsidiary (other than to the extent the Investment in such
Unrestricted Subsidiary was made by TCEH or a Restricted Subsidiary pursuant to
clause (7) of Section 9.5(b) below or to the extent such Investment constituted
a Permitted Investment or a distribution or dividend from an Unrestricted
Subsidiary after the Closing Date; plus

(e) in the case of the redesignation of an Unrestricted Subsidiary as a
Restricted Subsidiary after the Closing Date, the fair market value of the
Investment in such Unrestricted Subsidiary, as determined by TCEH in good faith
(or if such fair market value exceeds $200,000,000, in writing by an Independent
Financial Advisor), at the time of the redesignation of such Unrestricted
Subsidiary as a Restricted Subsidiary other than to the extent the Investment in
such Unrestricted Subsidiary was made by TCEH or a Restricted Subsidiary
pursuant to clause (7) of Section 9.5(b) below or to the extent such Investment
constituted a Permitted Investment.

(b) The foregoing provisions of Section 9.5(a) shall not prohibit:

(1) the payment of any dividend within 60 days after the date of declaration
thereof, if at the date of declaration such payment would have complied with the
provisions of this Agreement;

(2) the redemption, repurchase, retirement or other acquisition of any Equity
Interests (“Treasury Capital Stock”) or Subordinated Indebtedness of TCEH or a
Guarantor or any Equity Interests of any direct or indirect parent company of
TCEH, in exchange for, or out of the proceeds of the substantially concurrent
sale (other than to a Restricted Subsidiary) of, Equity Interests of TCEH or any
direct or indirect parent company of TCEH to the extent contributed to the
capital of TCEH (in each case, other than any Disqualified Stock) (“Refunding
Capital Stock”) and (b) if immediately prior to the retirement of Treasury
Capital Stock, the declaration and payment of dividends thereon was permitted
under clause (6) of this Section 9.5(b), the declaration and payment of
dividends on the Refunding Capital Stock (other than Refunding Capital Stock the
proceeds of which were used to redeem, repurchase, retire or otherwise acquire
any Equity Interests of any direct or indirect parent company of TCEH) in an
aggregate amount per year no greater than the aggregate amount of dividends per
annum that were declarable and payable on such Treasury Capital Stock
immediately prior to such retirement;

 

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(3) the redemption, repurchase or other acquisition or retirement of
Subordinated Indebtedness of the Borrower or a Guarantor (other than
US Holdings) made in exchange for, or out of the proceeds of the substantially
concurrent sale of, new Indebtedness of the Borrower or a Guarantor, as the case
may be, which is incurred in compliance with Section 9.7 hereof so long as:

(a) the principal amount (or accreted value) of such new Indebtedness does not
exceed the principal amount of (or accreted value, if applicable), plus any
accrued and unpaid interest on, the Subordinated Indebtedness being so redeemed,
repurchased, acquired or retired for value, plus the amount of any reasonable
premium (including reasonable tender premiums), defeasance costs and any
reasonable fees and expenses incurred in connection with the issuance of such
new Indebtedness;

(b) such new Indebtedness is subordinated to the Loans or the applicable
Guarantee at least to the same extent as such Subordinated Indebtedness so
purchased, exchanged, redeemed, repurchased, acquired or retired for value;

(c) such new Indebtedness has a final scheduled maturity date equal to or later
than the final scheduled maturity date of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired; and

(d) such new Indebtedness has a Weighted Average Life to Maturity equal to or
greater than the remaining Weighted Average Life to Maturity of the Subordinated
Indebtedness being so redeemed, repurchased, acquired or retired;

(4) a Restricted Payment to pay for the repurchase, retirement or other
acquisition or retirement for value of Equity Interests (other than Disqualified
Stock) of TCEH or any of its direct or indirect parent companies held by any
future, present or former employee, director or consultant of TCEH, any of its
Subsidiaries or any of its direct or indirect parent companies pursuant to any
management equity plan or stock option plan or any other management or employee
benefit plan or agreement, including any Equity Interests rolled over by
management of TCEH or any of its direct or indirect parent companies in
connection with the Transactions; provided, however, that the aggregate
Restricted Payments made under this clause (4) do not exceed (x) from the
Closing Date through the Interim Loan Conversion Date, $50,000,000 and
(y) thereafter, $25,000,000 (which amount in this clause (y) shall increase to
$50,000,000 subsequent to the consummation of an underwritten public Equity
Offering by TCEH or any direct or indirect parent entity of TCEH) (with unused
amounts in any calendar year being carried over to succeeding calendar years
subject to a maximum (without giving effect to the following proviso) of
$75,000,000 in any calendar year (which shall increase to $150,000,000
subsequent to the consummation of an underwritten public Equity Offering by TCEH
or any direct or indirect parent corporation of TCEH)); provided, further, that
such amount in any calendar year may be increased by an amount not to exceed:

(a) the cash proceeds from the sale of Equity Interests (other than Disqualified
Stock) of TCEH and, to the extent contributed to TCEH, Equity Interests of any
of TCEH’s direct or indirect parent companies, in each case to members of
management, directors or consultants of TCEH, any of its

 

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Subsidiaries or any of its direct or indirect parent companies that occurs after
the Closing Date, to the extent the cash proceeds from the sale of such Equity
Interests have not otherwise been applied to the payment of Restricted Payments
by virtue of clause (3) of Section 9.5(a) above; plus

(b) the cash proceeds of key man life insurance policies received by TCEH or its
Restricted Subsidiaries after the Closing Date; less

(c) the amount of any Restricted Payments previously made with the cash proceeds
described in clauses (a) and (b) of this clause (4);

and provided, further, that cancellation of Indebtedness owing to TCEH or any
Restricted Subsidiary from members of management of TCEH, any of TCEH’s direct
or indirect parent companies or any of TCEH’s Restricted Subsidiaries in
connection with a repurchase of Equity Interests of TCEH or any of its direct or
indirect parent companies will not be deemed to constitute a Restricted Payment
for purposes of this Section 9.5 or any other provision of this Agreement;

(5) the declaration and payment of dividends to holders of any class or series
of Disqualified Stock of TCEH or any of its Restricted Subsidiaries or any class
or series of Preferred Stock of any Restricted Subsidiary issued in accordance
with Section 9.7 hereof to the extent such dividends are included in the
definition of “Fixed Charges”;

(6) the declaration and payment of dividends to holders of any class or series
of Designated Preferred Stock (other than Disqualified Stock) issued by TCEH
after the Closing Date;

(a) the declaration and payment of dividends to a direct or indirect parent
company of TCEH, the proceeds of which will be used to fund the payment of
dividends to holders of any class or series of Designated Preferred Stock (other
than Disqualified Stock) of such parent corporation issued after the Closing
Date; provided that the amount of dividends paid pursuant to this clause (b)
shall not exceed the aggregate amount of cash actually contributed to the
capital of TCEH from the sale of such Designated Preferred Stock; or

(b) the declaration and payment of dividends on Refunding Capital Stock that is
Preferred Stock in excess of the dividends declarable and payable thereon
pursuant to clause (2) of this Section 9.5(b);

provided, however, in the case of each of (a) and (c) of this clause (6), that
for the most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of issuance of
such Designated Preferred Stock or the declaration of such dividends on
Refunding Capital Stock that is Preferred Stock, after giving effect to such
issuance or declaration on a pro forma basis, TCEH and its Restricted
Subsidiaries on a consolidated basis would have had a Fixed Charge Coverage
Ratio of at least 2.00 to 1.00;

 

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(7) Investments in Unrestricted Subsidiaries having an aggregate fair market
value, taken together with all other Investments made pursuant to this
clause (7) that are at the time outstanding, without giving effect to the sale
of an Unrestricted Subsidiary to the extent the proceeds of such sale do not
consist of cash or marketable securities, not to exceed (A) prior to the Interim
Loan Conversion Date, $250,000,000 and (B) thereafter, 1.0% of Total Assets, in
each case at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value);

(8) repurchases of Equity Interests deemed to occur upon exercise of stock
options or warrants if such Equity Interests represent a portion of the exercise
price of such options or warrants;

(9) the declaration and payment of dividends on TCEH’s common stock (or the
payment of dividends to any direct or indirect parent entity to fund a payment
of dividends on such entity’s common stock), following consummation of the first
public offering of TCEH’s common stock or the common stock of any of its direct
or indirect parent companies after the Closing Date, of up to 6% per annum of
the net cash proceeds received by or contributed to TCEH in or from any such
public offering, other than public offerings with respect to TCEH’s common stock
registered on Form S-4 or Form S-8 and other than any public sale constituting
an Excluded Contribution;

(10) Restricted Payments that are made with Excluded Contributions;

(11)(A) other Restricted Payments in an aggregate amount taken together with all
other Restricted Payments made pursuant to this clause (A) not to exceed
(x) prior to the Interim Loan Conversion Date, $200,000,000 and (y) thereafter,
2.0% of Total Assets, in each case at the time made; and (B) dividends to or,
the making of loans to, the Parent in an aggregate amount not to exceed
(x) prior to the Interim Loan Conversion Date, $500,000,000 and (y) thereafter,
$1,000,000,000, to the extent the proceeds of such loans or dividends are
invested in any of the Oncor Subsidiaries; provided that no more than (x) prior
to the Interim Loan Conversion Date, $250,000,000 and (y) thereafter,
$500,000,000, of payments under this clause (B) may be made other than by
Intercompany Loans;

(12) distributions or payments of Receivables Fees;

(13) any Restricted Payment made as part of or in connection with the
Transactions (including any payments made after the Closing Date in respect of
TCEH’s and its Subsidiaries’ long-term incentive plan or in respect of tax
gross-ups and other deferred compensation) and the fees and expenses related
thereto or used to fund amounts owed to Affiliates (including dividends to any
direct or indirect parent of TCEH to permit payment by such parent of such
amount), in each case to the extent permitted by Section 9.9 hereof;

 

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(14) the repurchase, redemption or other acquisition or retirement for value of
any Subordinated Indebtedness in accordance with provisions similar to those
described under Sections 9.8 and 9.12 hereof; provided that all Loans subject to
prepayment under Section 9.8(c) or 9.12(a) hereof which have been accepted for
repayment by the applicable Lender, have been repaid; and

(15) the declaration and payment of dividends or distribution by TCEH to, or the
making of loans to, any direct or indirect parent in amounts required for any
direct or indirect parent companies to pay, in each case without duplication,

(a) franchise and excise taxes and other fees, taxes and expenses required to
maintain their corporate existence;

(b) foreign, federal, state and local income taxes (including any amounts
reimbursable to the Oncor Subsidiaries in respect of such taxes pursuant to a
tax sharing agreement), to the extent such income taxes are attributable to the
income of (i) the Parent and its Subsidiaries (other than Oncor Subsidiaries) in
amounts required to pay such taxes to the extent attributable to the income of
such Unrestricted Subsidiaries and (ii) the Oncor Subsidiaries, to the extent
the Oncor Subsidiaries have not reimbursed the Parent or such direct or indirect
parent of TCEH for such payments in amounts required to pay such taxes; provided
that the amount of such payments in any fiscal year does not exceed the amount
that the Parent and its Subsidiaries is required to pay in respect of foreign,
federal, state and local income taxes for such fiscal year (including any
amounts reimbursable to the Oncor Subsidiaries in respect of such taxes pursuant
to a tax sharing agreement);

(c) customary salary, bonus and other benefits payable to officers and employees
of the Parent or any direct or indirect parent company of the Parent that are
paid in the ordinary course of business to the extent such salaries, bonuses and
other benefits are attributable to (i) the ownership or operation of the Parent
and its Restricted Subsidiaries or (ii) the ownership and operation of the Oncor
Subsidiaries, to the extent the Oncor Subsidiaries have not reimbursed the
Parent or such direct or indirect parent company of the Parent for such
payments;

(d) general corporate operating and overhead costs and expenses of the Parent or
any direct or indirect parent company of the Parent that are incurred in the
ordinary course of business to the extent such costs and expenses are
attributable to (i) the ownership or operation of the Parent and its Restricted
Subsidiaries or (ii) the ownership and operation of the Oncor Subsidiaries, to
the extent the Oncor Subsidiaries have not reimbursed the Parent or such direct
or indirect parent company of the Parent for such payments; and

(e) fees and expenses other than to Affiliates of TCEH related to any
unsuccessful equity or debt offering of such parent entity;

(16) after the Interim Loan Conversion Date, Restricted Payments that are made
with Excess Proceeds remaining after the completion of any Asset Sale Offer in
an amount not to exceed $200,000,000;

 

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(17) the making of Intercompany Loans to the Parent so long as TCEH is a
Subsidiary of the Parent (A) in amounts required for the Parent to pay, in each
case without duplication, principal, premium and interest when due on (x) the
Parent Senior Interim Facilities and any Indebtedness incurred to replace,
refund or refinance such debt and (y) Indebtedness of the Parent and US Holdings
in existence on the Closing Date, including the Existing Parent Notes, the
Existing Parent Guarantee Notes and the Existing US Holdings Notes, and any
Indebtedness incurred to replace, refund or refinance such debt and (B) in
amounts required for the Parent and its Subsidiaries (other than TCEH and its
Subsidiaries) that guarantee debt of the Parent to pay, without duplication,
principal, premium and interest when due on any Indebtedness incurred after the
Closing Date by the Parent or such Subsidiaries after the Closing Date; provided
that the aggregate amount of Intercompany Loans to the Parent pursuant to this
subclause (B) shall not exceed $600,000,000;

(18) any distributions of, or Investments in, accounts receivable for purposes
of inclusion in any Receivables Facility for the benefit of TCEH or its
Restricted Subsidiaries, in each case made in the ordinary course of business or
consistent with past practices; or

(19) making of Intercompany Loans to the Parent in an amount sufficient to
permit the Parent to make any Optional Interest Repayment (as defined in the
Parent Senior Interim Facilities), permitted by the terms of the Parent Senior
Interim Facilities or any similar payments on Indebtedness incurred to replace,
refund or refinance such debt; provided that in connection with any such
replacement, refunding or refinancing, the aggregate principal amount of such
Indebtedness is not increased (except by an amount equal to accrued interest,
fees and expenses payable in connection therewith);

provided, however, that at the time of, and after giving effect to, (A) any
Restricted Payment permitted under clauses (7), (11) and (19) of this
Section 9.5(b) no Default shall have occurred and be continuing or would occur
as a consequence thereof and (B) any Restricted Payment permitted under
clause (17) of this Section 9.5(b), no Default under clauses (a) or (b) of
Section 11.1 shall have occurred and be continuing or would occur as a
consequence thereof or any payment default or bankruptcy event of default under
the Parent Senior Interim Facilities (or any Indebtedness incurred to replace,
refund or refinance such debt) shall have occurred and be continuing.

(c) As of the Closing Date, all of TCEH’s Subsidiaries shall be Restricted
Subsidiaries. TCEH shall not permit any Unrestricted Subsidiary to become a
Restricted Subsidiary except pursuant to the last sentence of the definition of
“Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary
as an Unrestricted Subsidiary, all outstanding Investments by TCEH and its
Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so
designated shall be deemed to be Restricted Payments in an amount determined as
set forth in the last sentence of the definition of “Investment.” Such
designation shall be permitted only if a Restricted Payment in such amount would
be permitted at such time, whether pursuant to Section 9.5(a) hereof or under
clause (7), (10) or (11) of Section 9.5(b) hereof, or pursuant to the definition
of “Permitted Investments,” and if such Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.

 

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9.6. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.

(a) TCEH will not, and will not permit any of its Restricted Subsidiaries that
are not Guarantors to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or consensual
restriction on the ability of any such Restricted Subsidiary to:

(1) pay dividends or make any other distributions to TCEH or any of its
Restricted Subsidiaries on its Capital Stock or with respect to any other
interest or participation in, or measured by, its profits, or

(2) pay any Indebtedness owed to TCEH or any of its Restricted Subsidiaries;

(3) make loans or advances to TCEH or any of its Restricted Subsidiaries; or

(4) sell, lease or transfer any of its properties or assets to TCEH or any of
its Restricted Subsidiaries.

(b) The restrictions in Section 9.6(a) hereof shall not apply to encumbrances or
restrictions existing under or by reason of:

(1) contractual encumbrances or restrictions in effect on the Closing Date,
including pursuant to the TCEH Senior Secured Facilities and the related
documentation and the Existing Notes Indentures;

(2) this Agreement, the Loans, the Guarantees, the Senior Refinancing Indenture
and the Senior Notes;

(3) purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature discussed in clause (3) of
Section 9.6(a) hereof on the property so acquired;

(4) applicable law or any applicable rule, regulation or order;

(5) any agreement or other instrument of a Person acquired by TCEH or any
Restricted Subsidiary in existence at the time of such acquisition (but not
created in contemplation thereof), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person and its Subsidiaries, or the property or assets of the Person and its
Subsidiaries, so acquired;

(6) contracts for the sale of assets, including customary restrictions with
respect to a Subsidiary of TCEH pursuant to an agreement that has been entered
into for the sale or disposition of all or substantially all of the Capital
Stock or assets of such Subsidiary;

 

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(7) Secured Indebtedness that limits the right of the debtor to dispose of the
assets securing such Indebtedness that is otherwise permitted to be incurred
pursuant to Section 9.7 hereof and Section 9.10 hereof;

(8) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business;

(9) other Indebtedness, Disqualified Stock or Preferred Stock of Foreign
Subsidiaries permitted to be incurred subsequent to the Closing Date pursuant to
Section 9.7 hereof;

(10) customary provisions in joint venture agreements and other agreements or
arrangements relating solely to such joint venture;

(11) customary provisions contained in leases or licenses of intellectual
property and other agreements, in each case entered into in the ordinary course
of business;

(12) any encumbrances or restrictions of the type referred to in clauses (1),
(2) and (3) of Section 9.6(a) hereof imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings of the contracts, instruments or obligations referred to in
clauses (1) through (11) of this Section 9.6(b); provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of TCEH, no more
restrictive with respect to such encumbrance and other restrictions taken as a
whole than those prior to such amendment, modification, restatement, renewal,
increase, supplement, refunding, replacement or refinancing;

(13) restrictions created in connection with any Receivables Facility for the
benefit of TCEH or any of its Restricted Subsidiaries that, in the good faith
determination of TCEH are necessary or advisable to effect the transactions
contemplated under such Receivables Facility; and

(14) restrictions or conditions contained in any trading, netting, operating,
construction, service, supply, purchase, sale, hedging or similar agreement to
which TCEH or any Restricted Subsidiary of TCEH is a party entered into in the
ordinary course of business; provided that such agreement prohibits the
encumbrance solely to the property or assets of TCEH or such Restricted
Subsidiary that are the subject of such agreement, the payment rights arising
thereunder and/or the proceeds thereof and does not extend to any other asset or
property of TCEH or such Restricted Subsidiary or the assets or property of any
other Restricted Subsidiary.

 

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9.7. Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock
and Preferred Stock.

(a) TCEH shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise (collectively,
“incur” and collectively, an “incurrence”), with respect to any Indebtedness
(including Acquired Indebtedness), and TCEH shall not issue any shares of
Disqualified Stock and shall not permit any Restricted Subsidiary to issue any
shares of Disqualified Stock or Preferred Stock; provided, however, that after
the Interim Loan Conversion Date, TCEH may incur Indebtedness (including
Acquired Indebtedness) or issue shares of Disqualified Stock, and any of its
Restricted Subsidiaries may incur Indebtedness (including Acquired
Indebtedness), issue shares of Disqualified Stock and issue shares of Preferred
Stock, if the Fixed Charge Coverage Ratio on a consolidated basis for TCEH and
its Restricted Subsidiaries’ most recently ended four fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified Stock or
Preferred Stock is issued would have been at least 2.00 to 1.00 determined on a
pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock or Preferred Stock had been issued, as the case may be, and
the application of proceeds therefrom had occurred at the beginning of such
four-quarter period; provided, further, that Restricted Subsidiaries that are
not Guarantors may not incur Indebtedness or issue Disqualified Stock or
Preferred Stock if, after giving pro forma effect to such incurrence or issuance
(including a pro forma application of the net proceeds therefrom), more than an
aggregate of $1,250,000,000 of Indebtedness or Disqualified Stock or Preferred
Stock of Restricted Subsidiaries that are not Guarantors would be outstanding
pursuant to this paragraph and clauses (a)(12) and (a)(14) of this Section 9.7
at such time.

(b) The limitations of Section 9.7(a) hereof shall not apply to:

(1) the incurrence of Indebtedness under (x) Credit Facilities by TCEH or any of
its Restricted Subsidiaries and the issuance and creation of letters of credit
and bankers’ acceptances thereunder (with letters of credit and bankers’
acceptances being deemed to have a principal amount equal to the face amount
thereof), up to an aggregate principal amount of (i) prior to the Interim Loan
Conversion Date, $25,200,000,000 outstanding at any one time and
(ii) thereafter, $26,500,000,000 outstanding at any one time and (y) any
Collateral Posting Facility;

(2) the incurrence by TCEH and any Guarantor of Indebtedness arising under
(a) this Agreement (including any Guarantee) and (b) the Senior Notes (including
any PIK Notes and any guarantee thereof) (other than any Additional Senior Notes
or guarantees thereof);

(3) Indebtedness of TCEH and its Restricted Subsidiaries in existence on the
Closing Date (other than Indebtedness described in clauses (1) and (2) of this
Section 9.7(b)), including the Existing Notes;

(4) Indebtedness consisting of Capitalized Lease Obligations and Purchase Money
Obligations so long as such Indebtedness (except Environmental CapEx Debt)
exists at the date of such purchase, lease or improvement or is created within
270 days thereafter; provided that prior to the Interim Loan Conversion Date,
the amount of Indebtedness outstanding under this clause (4) shall not exceed
$1,000,000,000;

 

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(5) Indebtedness incurred by TCEH or any of its Restricted Subsidiaries
constituting reimbursement obligations with respect to letters of credit issued
in the ordinary course of business, including letters of credit in respect of
workers’ compensation or employee health claims, or other Indebtedness with
respect to reimbursement-type obligations regarding workers’ compensation or
employee health claims; provided, however, that upon the drawing of such letters
of credit or the incurrence of such Indebtedness, such obligations are
reimbursed within 30 days following such drawing or incurrence;

(6) Indebtedness arising from agreements of TCEH or its Restricted Subsidiaries
providing for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or a Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or a Subsidiary for the purpose of financing such acquisition;
provided, however, that such Indebtedness is not reflected on the balance sheet
of TCEH or any of its Restricted Subsidiaries (contingent obligations referred
to in a footnote to financial statements and not otherwise reflected on the
balance sheet will not be deemed to be reflected on such balance sheet for
purposes of this clause (6));

(7) Indebtedness of TCEH to a Restricted Subsidiary; provided that any such
Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a
Guarantor is expressly subordinated in right of payment to the Loans; provided,
further, that any subsequent issuance or transfer of any Capital Stock or any
other event which results in any Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any other subsequent transfer of any such Indebtedness
(except to TCEH or another Restricted Subsidiary) shall be deemed, in each case,
to be an incurrence of such Indebtedness not permitted by this clause (7);

(8) Indebtedness of a Restricted Subsidiary to TCEH or another Restricted
Subsidiary; provided that if the Borrower or a Guarantor incurs such
Indebtedness to a Restricted Subsidiary that is not the Borrower or a Guarantor,
such Indebtedness is expressly subordinated in right of payment to the Guarantee
of the Loans of such Guarantor; provided, further, that any subsequent issuance
or transfer of any Capital Stock or any other event which results in any
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other
subsequent transfer of any such Indebtedness (except to the Borrower or another
Restricted Subsidiary) shall be deemed, in each case, to be an incurrence of
such Indebtedness not permitted by this clause (8);

(9) shares of Preferred Stock of a Restricted Subsidiary issued to TCEH or
another Restricted Subsidiary; provided that any subsequent issuance or transfer
of any Capital Stock or any other event which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent
transfer of any such shares of Preferred Stock (except to TCEH or another of its
Restricted Subsidiaries) shall be deemed in each case to be an issuance of such
shares of Preferred Stock not permitted by this clause 9);

 

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(10) Hedging Obligations; provided that (i) other than in the case of commodity
Hedging Obligations, such Hedging Obligations are not entered into for
speculative purposes (as determined by TCEH in its reasonable discretion acting
in good faith) and (ii) in the case of speculative commodity Hedging
Obligations, such Hedging Obligation are entered into in the ordinary course of
business and are consistent with past practice;

(11) obligations in respect of performance, bid, appeal and surety bonds and
completion guarantees provided by TCEH or any of its Restricted Subsidiaries in
the ordinary course of business;

(12)(a) prior to the Interim Loan Conversion Date, Indebtedness or Disqualified
Stock of TCEH and Indebtedness, Disqualified Stock or Preferred Stock of TCEH or
any Restricted Subsidiary not otherwise permitted hereunder in an aggregate
principal amount or liquidation preference which does not at any one time
outstanding $500,000,000 and (b) thereafter, Indebtedness or Disqualified Stock
of TCEH and Indebtedness, Disqualified Stock or Preferred Stock of TCEH or any
Restricted Subsidiary equal to (x) 100.0% of the net cash proceeds received by
TCEH since immediately after the Closing Date from the issue or sale of Equity
Interests of TCEH or cash contributed to the capital of TCEH (in each case,
other than Excluded Contributions or proceeds of Disqualified Stock or sales of
Equity Interests to TCEH or any of its Subsidiaries) as determined in accordance
with clauses (3)(b) and (3)(c) of Section 9.5(a) hereof to the extent such net
cash proceeds or cash have not been applied pursuant to such clauses to make
Restricted Payments or to make other Investments, payments or exchanges pursuant
to Section 9.5(b) hereof or to make Permitted Investments (other than Permitted
Investments specified in clauses (1) and (3) of the definition thereof) and
(y) an aggregate principal amount or liquidation preference, which when
aggregated with the principal amount and liquidation preference of all other
Indebtedness, Disqualified Stock and Preferred Stock then outstanding and
incurred pursuant to this clause (12)(y)(ii), does not at any one time
outstanding exceed $1,750,000,000 (it being understood that any Indebtedness,
Disqualified Stock or Preferred Stock incurred pursuant to this
clause (12)(y)(ii) shall cease to be deemed incurred or outstanding for purposes
of this clause (12)(y)(ii) but shall be deemed incurred for the purposes of
Section 9.7(a) hereof from and after the first date on which TCEH or such
Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock
or Preferred Stock under Section 9.7(a) hereof without reliance on this
clause (12); provided, however, that on a pro forma basis, together with any
amounts incurred and outstanding by Restricted Subsidiaries that are not
Guarantors pursuant to the first paragraph of this covenant and clause (14), no
more than (x) prior to the Interim Loan Conversion Date, $750,000,000 and
(y) thereafter, $1,250,000,000 of Indebtedness, Disqualified Stock or Preferred
Stock at any one time outstanding and incurred pursuant to this clause (12)
shall be incurred by Restricted Subsidiaries that are not Guarantors;

(13) the incurrence or issuance by TCEH or any Restricted Subsidiary of
Indebtedness, Disqualified Stock or Preferred Stock which serves to refund or
refinance, any Indebtedness, Disqualified Stock or Preferred Stock of TCEH or
any Restricted Subsidiary incurred as permitted under Section 9.7(a) hereof and
clauses (2), (3), (4) and

 

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(12) of this Section 9.7(b) above, this clause (13) and clause (14) of this
Section 9.7(b) or any Indebtedness, Disqualified Stock or Preferred Stock of
TCEH or any Restricted Subsidiary issued to so refund or refinance such
Indebtedness, Disqualified Stock or Preferred Stock of TCEH or any Restricted
Subsidiary including additional Indebtedness, Disqualified Stock or Preferred
Stock incurred to pay premiums (including reasonable tender premiums),
defeasance costs and fees in connection therewith (the “Refinancing
Indebtedness”) prior to its respective maturity; provided, however, that such
Refinancing Indebtedness:

(a) has a Weighted Average Life to Maturity at the time such Refinancing
Indebtedness is incurred which is not less than the remaining Weighted Average
Life to Maturity of the Indebtedness, Disqualified Stock or Preferred Stock
being refunded or refinanced,

(b) to the extent such Refinancing Indebtedness refinances (i) Indebtedness
subordinated or pari passu to the Loans or any Guarantee thereof, such
Refinancing Indebtedness is subordinated or pari passu to the Loans or the
Guarantee at least to the same extent as the Indebtedness being refinanced or
refunded or (ii) Disqualified Stock or Preferred Stock, such Refinancing
Indebtedness must be Disqualified Stock or Preferred Stock, respectively, and

(c) shall not include Indebtedness, Disqualified Stock or Preferred Stock of a
Subsidiary of TCEH that is not TCEH Finance or a Guarantor that refinances
Indebtedness, Disqualified Stock or Preferred Stock of TCEH or a Guarantor;

and, provided further, that subclause (a) of this clause (13) will not apply to
any refunding or refinancing of any Obligations under Credit Facilities secured
by Permitted Liens or the Loans; and provided further, that with respect to any
pollution control revenue bonds or similar instruments, the maturity of any
series thereof shall be deemed to be the date set forth in any instrument
governing such Indebtedness for the remarketing of such Indebtedness;

(14) Indebtedness, Disqualified Stock or Preferred Stock of (x) TCEH or a
Restricted Subsidiary incurred to finance an acquisition or (y) Persons that are
acquired by TCEH or any Restricted Subsidiary or merged into TCEH or a
Restricted Subsidiary in accordance with the terms of this Agreement, (i) prior
to the Interim Loan Conversion Date, not to exceed $750,000,000 outstanding at
any one time and (ii) thereafter, provided that after giving effect to such
acquisition or merger, either

(a) TCEH would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in Section 9.7(a)
hereof; or

(b) such Fixed Charge Coverage Ratio of TCEH and the Restricted Subsidiaries is
greater than immediately prior to such acquisition or merger;

 

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provided, however that on a pro forma basis, together with any amounts incurred
and outstanding by Restricted Subsidiaries that are not Guarantors pursuant to
clause (a) of Section 9.7(a) and clause (12) of this Section 9.7(b), no more
than (x) prior to the Interim Loan Conversion Date, $750,000,000 and
(y) thereafter, $1,250,000,000 of Indebtedness, Disqualified Stock or Preferred
Stock at any one time outstanding and incurred pursuant to this clause (14)
shall be incurred by Restricted Subsidiaries that are not Guarantors;

(15) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business; provided that such Indebtedness is
extinguished within two Business Days of its incurrence;

(16) Indebtedness of TCEH or any of its Restricted Subsidiaries supported by a
letter of credit issued pursuant to any Credit Facilities, in a principal amount
not in excess of the stated amount of such letter of credit;

(17)(a) any guarantee by TCEH or a Restricted Subsidiary of Indebtedness or
other obligations of any Restricted Subsidiary, so long as the incurrence of
such Indebtedness incurred by such Restricted Subsidiary is permitted under the
terms of this Agreement, or (b) any guarantee by a Restricted Subsidiary of
Indebtedness of TCEH; provided that such guarantee is incurred in accordance
with Section 9.13 hereof;

(18) Indebtedness of TCEH or any of its Restricted Subsidiaries consisting of
(i) the financing of insurance premiums or (ii) take-or-pay obligations
contained in supply arrangements, in each case, incurred in the ordinary course
of business;

(19) Indebtedness consisting of Indebtedness issued by TCEH or any of its
Restricted Subsidiaries to current or former officers, directors and employees
thereof, their respective estates, spouses or former spouses, in each case to
finance the purchase or redemption of Equity Interests of TCEH or any direct or
indirect parent company of TCEH to the extent described in clause (4) of
Section 9.5(b) hereof; and

(20) Indebtedness of TCEH or any Restricted Subsidiary to the Parent or any of
its Subsidiaries consistent with past practice in an aggregate amount not to
exceed $25 million; provided, that at the time of incurring, and after giving
effect to, such Indebtedness, no Default described in clauses (a) and (b) of
Section 11.1 shall have occurred and be continuing or would occur as a
consequence thereof; provided, further, that any such Indebtedness owing to an
entity that is not a Guarantor is expressly subordinated in right of payment to
the Loans.

(c) For purposes of determining compliance with this Section 9.7:

(x) in the event that an item of Indebtedness, Disqualified Stock or Preferred
Stock (or any portion thereof) meets the criteria of more than one of the
categories of permitted Indebtedness, Disqualified Stock or Preferred Stock
described in clauses (b)(1) through (20) of this Section 9.7(b) or is entitled
to be incurred pursuant to Section 9.7(a) hereof, TCEH, in its sole discretion,
will classify or reclassify such item of Indebtedness, Disqualified Stock or
Preferred Stock (or any portion thereof) and shall only be required to include
the amount and type of such Indebtedness, Disqualified Stock or Preferred Stock
in one of the above clauses (b)(1) through (20) of this Section 9.7(b) or under
Section 9.7(a) hereof; and

 

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(y) at the time of incurrence, TCEH will be entitled to divide and classify an
item of Indebtedness in more than one of the types of Indebtedness described in
Sections 9.7(a) and 9.7(b) hereof;

provided that all Indebtedness outstanding under the TCEH Senior Secured
Facilities on the Closing Date shall be treated as incurred on the Closing Date
under clause (1) of Section 9.7(b) hereof.

(d) Accrual of interest, the accretion of accreted value and the payment of
interest in the form of additional Indebtedness, Disqualified Stock or Preferred
Stock shall not be deemed to be an incurrence of Indebtedness, Disqualified
Stock or Preferred Stock for purposes of this Section 9.7.

(e) For purposes of determining compliance with any U.S. dollar-denominated
restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent
principal amount of Indebtedness denominated in a foreign currency shall be
calculated based on the relevant currency exchange rate in effect on the date
such Indebtedness was incurred, in the case of term debt, or first committed, in
the case of revolving credit debt; provided that if such Indebtedness is
incurred to refinance other Indebtedness denominated in a foreign currency, and
such refinancing would cause the applicable U.S. dollar-denominated restriction
to be exceeded if calculated at the relevant currency exchange rate in effect on
the date of such refinancing, such U.S. dollar-denominated restriction shall be
deemed not to have been exceeded so long as the principal amount of such
refinancing Indebtedness does not exceed the principal amount of such
Indebtedness being refinanced.

The principal amount of any Indebtedness incurred to refinance other
Indebtedness, if incurred in a different currency from the Indebtedness being
refinanced, shall be calculated based on the currency exchange rate applicable
to the currencies in which such respective Indebtedness is denominated that is
in effect on the date of such refinancing.

(f) Notwithstanding anything to the contrary, (i) TCEH shall not, and shall not
permit TCEH Finance Inc. or any Guarantor to, directly or indirectly, incur any
Indebtedness (including Acquired Indebtedness) that is subordinated or junior in
right of payment to any Indebtedness of TECH, TCEH Finance or such Guarantor, as
the case may be, unless such Indebtedness is expressly subordinated in right of
payment to the Loans or such Guarantor’s Guarantee to the extent and in the same
manner as such Indebtedness is subordinated to other Indebtedness of TECH, TCEH
Finance or such Guarantor, as the case may be and (ii) (1) no unsecured
Indebtedness shall be treated as subordinated or junior to Secured Indebtedness
merely because it is unsecured and (2) Senior Indebtedness shall be treated as
subordinated or junior to any other Senior Indebtedness merely because it has a
junior priority with respect to the same collateral.

 

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9.8. Asset Sales.

(a) TCEH shall not, and shall not permit any of its Restricted Subsidiaries to
consummate, directly or indirectly, an Asset Sale, unless:

(1) TCEH or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined in good faith by TCEH) of the assets sold or otherwise
disposed of; and

(2) except in the case of a Permitted Asset Swap, at least 75% of the
consideration therefor received by TCEH or such Restricted Subsidiary, as the
case may be, is in the form of cash or Cash Equivalents; provided that the
amount of:

(A) any liabilities (as shown on TCEH’s or such Restricted Subsidiary’s most
recent balance sheet or in the footnotes thereto) of TCEH or such Restricted
Subsidiary, other than liabilities that are by their terms subordinated to the
Loans or that are owed to TCEH or an Affiliate of TCEH, that are assumed by the
transferee of any such assets and for which TCEH and all of its Restricted
Subsidiaries have been validly released by all applicable creditors in writing,

(B) any securities received by TCEH or such Restricted Subsidiary from such
transferee that are converted by TCEH or such Restricted Subsidiary into cash
(to the extent of the cash received) within 180 days following the closing of
such Asset Sale, and

(C) any Designated Non-Cash Consideration received by TCEH or such Restricted
Subsidiary in such Asset Sale having an aggregate fair market value, taken
together with all other Designated Non-Cash Consideration received pursuant to
this clause (C) that is at that time outstanding, not to exceed (x) prior to the
Interim Loan Conversion Date, 1.5% of Total Assets at the time of the receipt of
such Designated Non-Cash Consideration and (y) thereafter, 5% of Total Assets at
the time of the receipt of such Designated Non-cash Consideration, in each case
with the fair market value of each item of Designated Non-Cash Consideration
being measured at the time received and without giving effect to subsequent
changes in value,

shall be deemed to be cash for purposes of this provision and for no other
purpose.

(b) Within 450 days after the receipt of any Net Asset Sale Proceeds, TCEH or
such Restricted Subsidiary, at its option, may apply such Net Asset Sale
Proceeds,

(1) to permanently reduce:

(A) Obligations under Senior Indebtedness which is Secured Indebtedness
permitted by this Agreement, and to correspondingly reduce commitments with
respect thereto;

 

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(B) Obligations under (i) this Agreement, or (ii) other Senior Indebtedness (and
to correspondingly reduce commitments with respect thereto); provided that to
the extent the Borrower or such Guarantor reduces or makes an offer to prepay,
as applicable, Obligations under Senior Indebtedness other than the Loans,
including by making an offer in accordance with the procedures set forth in
Section 4.10 of the Senior Refinancing Indenture (such provisions of which are
incorporated herein for purposes of this Section 9.8), the Borrower shall
equally and ratably reduce or make an offer to prepay, as applicable, the Loans
at 100% of the principal amount thereof, plus the amount of accrued but unpaid
interest, if any, on the amount of the Loans that would otherwise be prepaid;

(C) after the Interim Loan Conversion Date, Obligations under the Existing Notes
which have a final maturity date (as in effect on the Closing Date) on or prior
to October 15, 2016; provided that, at the time of, and after giving effect to,
such repurchase, redemption or defeasance, the aggregate amount of Net Asset
Sale Proceeds used to repurchase, redeem or defease Existing Notes pursuant to
this subclause (C) following the Closing Date shall not exceed 3.5% of Total
Assets at such time; or

(D) Indebtedness of a Restricted Subsidiary (other than TCEH Finance) that is
not a Guarantor, other than Indebtedness owed to the Borrower or another
Restricted Subsidiary (or any Affiliate thereof);

(2) to make (a) an Investment in any one or more businesses, provided that such
Investment in any business is in the form of the acquisition of Capital Stock
and results in TCEH or another of its Restricted Subsidiaries, as the case may
be, owning an amount of the Capital Stock of such business such that it
constitutes a Restricted Subsidiary, (b) capital expenditures or
(c) acquisitions of other assets, in each of clauses (a) through (c), that are
used or useful in a Similar Business; or

(3) to make an Investment in (a) any one or more businesses; provided that such
Investment in any business is in the form of the acquisition of Capital Stock
and results in TCEH or another of its Restricted Subsidiaries, as the case may
be, owning an amount of the Capital Stock of such business such that it
constitutes a Restricted Subsidiary, (b) properties or (c) acquisitions of other
assets, in each of clauses (a) through (c), that replace the businesses,
properties and/or assets that are the subject of such Asset Sale;

provided that, in the case of clauses (2) and (3) above, a binding commitment
shall be treated as a permitted application of the Net Asset Sale Proceeds from
the date of such commitment so long as TCEH or such other Restricted Subsidiary
enters into such commitment with the good faith expectation that such Net Asset
Sale Proceeds will be applied to satisfy such commitment within 180 days of such
commitment (an “Acceptable Commitment”) (and reinvest within the later of
450 days from the date of receipt of Net Asset Sale Proceeds and 180 days of
receipt of such commitment), and, in the event any Acceptable Commitment is
later cancelled or terminated for any reason before the Net Asset Sale Proceeds
are applied in connection therewith, the Borrower or such Restricted Subsidiary
enters into another Acceptable Commitment (a) “Second Commitment”) within the
later of (a) 180 days of such cancellation or termination or (b) the initial
450-day period; provided, further, that if any Second Commitment is later
cancelled or terminated for any reason before such Net Asset Sale Proceeds are
applied, then such Net Asset Sale Proceeds shall constitute Excess Proceeds.

 

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Notwithstanding the preceding paragraph, in the event that regulatory approval
is necessary for an asset or investment, or replacement, repair or restoration
on any asset or investment, then TCEH or any Restricted Subsidiary shall have an
additional 365 days to apply the Net Asset Sale Proceeds from such Asset Sale in
accordance with the preceding paragraph.

(c) Any Net Asset Sale Proceeds from Asset Sales that are not invested or
applied as provided and within the time period set forth in Section 9.8(b) shall
be deemed to constitute “Excess Proceeds.” When the aggregate amount of Excess
Proceeds exceeds $200,000,000, the Borrower shall make an offer to all Lenders
or holders of the Senior Notes, as applicable, and, if required or permitted by
the terms of any Senior Indebtedness, to the holders of such Senior Indebtedness
(an “Asset Sale Offer”), to purchase the maximum aggregate principal amount of
the Loans or Senior Notes, as applicable, and such Senior Indebtedness that is a
minimum of $2,000 or an integral multiple of $1,000 in excess thereof that may
be purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof, plus accrued and unpaid interest,
to the date fixed for the closing of such offer, in accordance with the
procedures set forth in this Agreement. The Borrower will commence an Asset Sale
Offer with respect to Excess Proceeds within 10 Business Days after the date
that Excess Proceeds exceed $200,000,000 by mailing the notice required pursuant
to the terms of this Agreement or the Senior Refinancing Indenture, as
applicable, with a copy to the Administrative Agent.

To the extent that the aggregate amount of Loans or Senior Notes, as applicable,
and any other Senior Indebtedness tendered pursuant to an Asset Sale Offer is
less than the Excess Proceeds, TCEH may, after the Interim Loan Conversion Date,
use any remaining Excess Proceeds for general corporate purposes, subject to
other covenants contained in this Agreement or the Senior Refinancing Indenture,
as applicable. If the aggregate principal amount of Loans or Senior Notes, as
applicable, or the Senior Indebtedness surrendered by such holders thereof
exceeds the amount of Excess Proceeds, the Administrative Agent shall select the
Loans or Senior Notes, as applicable, and such other Senior Indebtedness to be
purchased on a pro rata basis based on the accreted value or principal amount of
the Loans or Senior Notes, as applicable, or such Senior Indebtedness which have
been accepted for repayment by the applicable Lender. Additionally, the Borrower
may, at its option, make an Asset Sale Offer using proceeds from any Asset Sale
at any time after consummation of such Asset Sale; provided that such Asset Sale
Offer shall be in an aggregate amount of not less than $25,000,000. Upon
consummation of such Asset Sale Offer, any Net Asset Sale Proceeds not required
to be used to purchase Loans or Senior Notes, as applicable, shall not be deemed
Excess Proceeds and any remaining amounts may be used to make Restricted
Payments to the extent permitted by clause (b)(16) of Section 9.5.

(d) Pending the final application of any Net Asset Sale Proceeds pursuant to
this Section 9.8, the holder of such Net Asset Sale Proceeds may apply such Net
Asset Sale Proceeds temporarily to reduce Indebtedness outstanding under a
revolving credit facility or otherwise invest such Net Asset Sale Proceeds in
any manner not prohibited by this Agreement.

 

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9.9. Transactions with Affiliates.

(a) TCEH shall not, and shall not permit any of its Restricted Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate of TCEH (each of
the foregoing, an “Affiliate Transaction”) involving aggregate payments or
consideration in excess of $25,000,000, unless:

(1) such Affiliate Transaction is on terms that are not materially less
favorable to TCEH or its relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by TCEH or such Restricted
Subsidiary with an unrelated Person on an arm’s-length basis; and

(2) TCEH delivers to the Administrative Agent with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
payments or consideration in excess of $50,000,000, a resolution adopted by the
majority of the Board of Directors of TCEH approving such Affiliate Transaction
and set forth in an Officer’s Certificate certifying that such Affiliate
Transaction complies with clause (1) of this Section 9.9(a).

(a) The provisions of Section 9.9(a) hereof shall not apply to the following:

(1) transactions between or among TCEH or any of its Restricted Subsidiaries or
between or among TCEH and its Restricted Subsidiaries and the Parent and any of
its Subsidiaries in the ordinary course of business;

(2) Restricted Payments permitted by Section 9.5 hereof and the definition of
“Permitted Investments”;

(3) the payment of management, consulting, monitoring and advisory fees and
related expenses to the Sponsors pursuant to the Sponsor Management Agreement
(plus any unpaid management, consulting, monitoring and advisory fees and
related expenses accrued in any prior year) and the termination fees pursuant to
the Sponsor Management Agreement, in each case as in effect on the Closing Date,
or any amendment thereto (so long as any such amendment is not disadvantageous,
in the good faith judgment of the Board of Directors of TCEH to the Lenders when
taken as a whole as compared to the Sponsor Management Agreement in effect on
the Closing Date);

(4) the payment of reasonable and customary fees paid to, and indemnities
provided for the benefit of, officers, directors, employees or consultants of
TCEH, any of its direct or indirect parent companies or any of its Restricted
Subsidiaries;

(5) transactions in which TCEH or any of its Restricted Subsidiaries, as the
case may be, delivers to the Administrative Agent a letter from an Independent
Financial Advisor stating that such transaction is fair to TCEH or such
Restricted Subsidiary from a financial point of view or stating that the terms
are not materially less favorable to TCEH or its relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction by TCEH or
such Restricted Subsidiary with an unrelated Person on an arm’s-length basis;

 

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(6) any agreement as in effect as of the Closing Date, or any amendment thereto
(so long as any such amendment is not disadvantageous to the Lenders when taken
as a whole as compared to the applicable agreement as in effect on the Closing
Date);

(7) the existence of, or the performance by TCEH or any of its Restricted
Subsidiaries of its obligations under the terms of, any stockholders agreement
(including any registration rights agreement or purchase agreement related
thereto) to which it is a party as of the Closing Date and any similar
agreements which it may enter into thereafter; provided, however, that the
existence of, or the performance by TCEH or any of its Restricted Subsidiaries
of obligations under any future amendment to any such existing agreement or
under any similar agreement entered into after the Closing Date shall only be
permitted by this clause (7) to the extent that the terms of any such amendment
or new agreement are not otherwise disadvantageous to the Lenders when taken as
a whole;

(8) the Transactions (including any payments made after the Closing Date in
respect of TCEH’s and its Subsidiaries’ long-term incentive plan or in respect
of tax gross-ups and other deferred compensation) and the payment of all fees
and expenses related to the Transactions;

(9) transactions with customers, clients, suppliers, or purchasers or sellers of
goods or services, including the Parent and its subsidiaries, in each case in
the ordinary course of business and otherwise in compliance with the terms of
this Agreement which are fair to TCEH and its Restricted Subsidiaries, in the
reasonable determination of the Board of Directors of TCEH or the senior
management thereof, or are on terms at least as favorable as might reasonably
have been obtained at such time from an unaffiliated party;

(10) the issuance of Equity Interests (other than Disqualified Stock) of TCEH to
any Permitted Lender or to any director, officer, employee or consultant of
TCEH;

(11) sales of accounts receivable, or participations therein, in connection with
any Receivables Facility for the benefit of TCEH or any of its Restricted
Subsidiaries;

(12) payments by TCEH or any of its Restricted Subsidiaries to any of the
Sponsors made for any financial advisory, financing, underwriting or placement
services or in respect of other investment banking activities, including,
without limitation, in connection with acquisitions or divestitures, which
payments are approved by a majority of the Board of Directors of TCEH in good
faith;

(13) payments or loans (or cancellation of loans) to employees or consultants of
TCEH, any of its direct or indirect parent companies or any of its Restricted
Subsidiaries and employment agreements, stock option plans and other similar
arrangements with such employees or consultants which, in each case, are
approved by TCEH in good faith;

 

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(14) investments by the Sponsors in securities of TCEH or any of its Restricted
Subsidiaries so long as (i) the investment is being offered generally to other
investors on the same or more favorable terms and (ii) the investment
constitutes less than 5% of the proposed or outstanding issue amount of such
class of securities; and

(15) payments by TCEH (and any direct or indirect parent thereof) and its
Subsidiaries pursuant to tax sharing agreements among TCEH (and any such parent)
and its Subsidiaries on customary terms to the extent attributable to the
ownership or operation of TCEH and its Subsidiaries; provided that in each case
the amount of such payments in any fiscal year does not exceed the amount that
TCEH, its Restricted Subsidiaries and its Unrestricted Subsidiaries (to the
extent of amounts received from Unrestricted Subsidiaries) would be required to
pay in respect of foreign, federal, state and local taxes for such fiscal year
were TCEH and its Subsidiaries (to the extent described above) to pay such taxes
separately from any such parent entity.

9.10. Liens. TCEH shall not, and shall not permit TCEH Finance or any Guarantor
to, directly or indirectly, create, incur, assume or suffer to exist any Lien
(except Permitted Liens) that secures obligations under any Indebtedness or any
related guarantee, on any asset or property of the Borrower or any Guarantor, or
any income or profits therefrom, or assign or convey any right to receive income
therefrom, unless:

(1) in the case of Liens securing Subordinated Indebtedness, the Loans and
related Guarantees are secured by a Lien on such property, assets or proceeds
that is senior in priority to such Liens; or

(2) in all other cases, the Loans or the Guarantees are equally and ratably
secured or are secured by a Lien on such property, assets or proceeds that is
senior in priority to such Liens;

except that the foregoing shall not apply to (a) Liens securing the Loans, the
Senior Notes and the related Guarantees, (b) Liens securing Indebtedness
permitted to be incurred under Credit Facilities, including any letter of credit
relating thereto, that are permitted by the terms of this Agreement to be
incurred pursuant to clause (1) of Section 9.7(b) (provided, that prior to the
Interim Loan Conversion Date, such Liens shall only secure Obligations in
respect of Indebtedness not exceeding in the aggregate $25,200,000,000
outstanding at any one time) and (c) after the Interim Loan Conversion Date,
Liens incurred to secure Obligations in respect of any Indebtedness permitted to
be incurred pursuant to the covenant described above under Section 9.7; provided
that, with respect to Liens securing Obligations permitted under this
subclause (c), at the time of incurrence and after giving pro forma effect
thereto, the Consolidated Secured Debt Ratio for the most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such event for which such calculation is
being made shall occur, in each case with such pro forma adjustments to
Indebtedness and EBITDA as are appropriate and consistent with the pro forma
adjustment provisions set forth in the definition of Fixed Charge Coverage Ratio
would be no greater than 5.0 to 1.0. Any Lien which is granted to secure the
Loans under this Section 9.10 shall be discharged at the same time as the
discharge of the Lien (other than through the exercise of remedies with respect
thereto) that gave rise to the obligation to so secure the Loans.

 

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9.11. Corporate Existence. Subject to Sections 9.14 and 9.15, TCEH shall do or
cause to be done all things necessary to preserve and keep in full force and
effect (i) its corporate existence, and the corporate, partnership or other
existence of each of its Restricted Subsidiaries, in accordance with the
respective organizational documents (as the same may be amended from time to
time) of TCEH or any such Restricted Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of TCEH and its Restricted Subsidiaries;
provided that TCEH shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Restricted Subsidiaries, if TCEH in good faith shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
TCEH and its Restricted Subsidiaries, taken as a whole.

9.12. Offer to Repurchase upon Change of Control.

(a) If a Change of Control occurs, unless otherwise prepaid in accordance with
Section 5.2(a) or Section 9.8 hereof, the Borrower shall make an offer to prepay
all of the Loans pursuant to the offer described below (the “Change of Control
Offer”) at a price in cash (the “Change of Control Prepayment”) equal to 100% of
the aggregate principal amount thereof plus accrued and unpaid interest, to the
date of prepayment, subject to the right of Lenders of record on the relevant
record date to receive interest due on the relevant interest payment date.
Within 30 days following any Change of Control, the Borrower shall send notice
of such Change of Control Offer by first-class mail, with a copy to the
Administrative Agent, to each Lender to the address of such Lender appearing in
the Register with a copy to the Administrative Agent, with the following
information:

(1) that a Change of Control Offer is being made pursuant to this Section 9.12
and that such Lender has the right to require the Borrower to prepay such
Lender’s Loans;

(2) the prepayment amount and the prepayment date, which will be no earlier than
30 days nor later than 60 days from the date such notice is mailed (the “Change
of Control Prepayment Date”);

(3) that any Loans not properly accepted for prepayment pursuant to this
Section 9.12 will remain outstanding and continue to accrue interest;

(4) that unless the Borrower defaults in the prepayment of the Change of Control
Prepayment, all Loans accepted for prepayment pursuant to the Change of Control
Offer will cease to accrue interest on the Change of Control Prepayment Date;

(5) that Lenders shall be entitled to withdraw their election to require the
Borrower to prepay such Loans, provided that the Borrower receives, not later
than the close of business on the expiration date of the Change of Control
Offer, a facsimile transmission or letter setting forth the name of the Lender,
the principal amount of Loans accepted for prepayment, and a statement that such
Lender is withdrawing its election to have such Loans prepaid; and

 

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(6) the other instructions, as determined by the Borrower, consistent with this
Section 9.12, that a Lender must follow.

The notice, if mailed in a manner herein provided, shall be conclusively
presumed to have been given, whether or not the Lender receives such notice. If
(a) the notice is mailed in a manner herein provided and (b) any Lender fails to
receive such notice or a Lender receives such notice but it is defective, such
Lender’s failure to receive such notice or such defect shall not affect the
validity of the proceedings for the purchase of the Loans as to all other
Lenders that properly received such notice without defect.

(b) On the Change of Control Prepayment Date, the Borrower shall, to the extent
permitted by law,

(i) prepay all Loans, or portions thereof, accepted for prepayment in accordance
with this Section 9.12, pursuant to the Change of Control Offer;

(ii) deposit with the Administrative Agent an amount equal to the aggregate
Change of Control Prepayment in respect of all Loans or portions thereof so
accreted for prepayment; and

(iii) deliver, or cause to be delivered, to the Administrative Agent, an
Officer’s Certificate to the Administrative Agent stating that such Loans or
portions thereof have been prepaid by the Borrower.

(c) The Borrower shall not be required to make a Change of Control Offer
following a Change of Control if a third-party makes the Change of Control Offer
in the manner, at the times and otherwise in compliance with the requirements
set forth in this Section 9.12 applicable to a Change of Control Offer made by
the Borrower and repays all Loans accepted for prepayment pursuant to such
Change of Control Offer. Notwithstanding anything to the contrary herein, a
Change of Control Offer may be made in advance of a Change of Control,
conditional upon such Change of Control, if a definitive agreement is in place
for the Change of Control at the time of making of the Change of Control Offer.

(d) Other than as specifically provided in this Section 9.12, any prepayment
pursuant to this Section 9.12 shall be made pursuant to the provisions of
Sections 5.2, 5.5 and 5.6 hereof.

 

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9.13. Limitation on Guarantees of Indebtedness by Restricted Subsidiaries. TCEH
shall not permit any of its Wholly-Owned Subsidiaries that are Restricted
Subsidiaries (and non-Wholly-Owned Subsidiaries if such non-Wholly-Owned
Subsidiaries guarantee capital markets debt securities of TCEH, TCEH Finance or
any Guarantor), other than TCEH Finance, Inc., a Guarantor, a Foreign Subsidiary
or a Receivables Subsidiary, to guarantee the payment of any Indebtedness of
TCEH, TCEH Finance or any other Guarantor unless:

(1) such Restricted Subsidiary within 30 days executes and delivers a Guarantee
substantially in the form of Exhibit A hereto providing for a Guarantee by such
Restricted Subsidiary, except that with respect to a guarantee of Indebtedness
of the Borrower or any Guarantor:

(a) if the Loans or such Guarantor’s Guarantee is subordinated in right of
payment to such Indebtedness, the Guarantee shall be subordinated to such
Restricted Subsidiary’s guarantee with respect to such Indebtedness
substantially to the same extent as the Loans are subordinated to such
Indebtedness; and

(b) if such Indebtedness is by its express terms subordinated in right of
payment to the Loans or such Guarantor’s Guarantee, any such guarantee by such
Restricted Subsidiary with respect to such Indebtedness shall be subordinated in
right of payment to such Guarantee substantially to the same extent as such
Indebtedness is subordinated to the Loans or such Guarantor’s Guarantee; and

(2) such Restricted Subsidiary waives, and shall not in any manner whatsoever
claim or take the benefit or advantage of, any rights of reimbursement,
indemnity or subrogation or any other rights against TCEH or any other
Restricted Subsidiary as a result of any payment by such Restricted Subsidiary
under its Guarantee;

provided that this Section 9.13 shall not be applicable to any guarantee of any
Restricted Subsidiary that existed at the time such Person became a Restricted
Subsidiary and was not incurred in connection with, or in contemplation of, such
Person becoming a Restricted Subsidiary.

9.14. Merger, Consolidation or Sale of All or Substantially All Assets.

(a) Neither TCEH nor US Holdings will consolidate or merge with or into or wind
up into (whether or not TCEH or US Holdings, as the case may be, is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets, in one or more
related transactions, to any Person unless:

(1) either TCEH or US Holdings, as the case may be, is the surviving corporation
or the Person formed by or surviving any such consolidation or merger (if other
than TCEH or US Holdings, as the case may be) or to which such sale, assignment,
transfer, lease, conveyance or other disposition will have been made is a
corporation, partnership, limited liability corporation or trust organized or
existing under the laws of the jurisdiction of organization of TCEH or the laws
of the United States, any state thereof, the District of Columbia or any
territory thereof (such Person, as the case may be, being herein called the
“Successor Borrower”);

(2) the Successor Borrower, if other than TCEH or US Holdings, as the case may
be, expressly assumes (i) all the obligations of TCEH or US Holdings, as the
case may be, under this Agreement, the Loans, the Senior Refinancing Indenture
and the Senior Notes, as applicable, pursuant to a supplemental agreement or
other documents or instruments in form reasonably satisfactory to the
Administrative Agent and (ii) the Senior Registration Rights Agreement;

 

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(3) immediately after such transaction, no Default exists;

(4) in the case of TCEH, immediately after giving pro forma effect to such
transaction and any related financing transactions, as if such transactions had
occurred at the beginning of the applicable four quarter period,

(A) the Successor Borrower would be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in Section 9.7(a) hereof, or

(B) such Fixed Charge Coverage Ratio for the Successor Borrower and its
Restricted Subsidiaries would be greater than such ratio for TCEH and its
Restricted Subsidiaries immediately prior to such transaction;

(5) each Guarantor, unless it is the other party to the transactions described
above, in which case Section 9.14(c)(1)(B) hereof shall apply, shall have by
supplemental agreement confirmed that its Guarantee shall apply to such Person’s
obligations under this Agreement and the Loans; and

(6) TCEH shall have delivered to the Administrative Agent an Officer’s
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental agreements, if any, comply with this
Agreement and, if a supplemental agreement is required in connection with such
transaction, such supplement shall comply with the applicable provisions of this
Agreement.

(b) The Successor Borrower shall succeed to, and be substituted for TCEH or
US Holdings , as the case may be, under this Agreement, the Guarantees, the
Loans, the Senior Refinancing Indenture and the Senior Notes, as applicable.
Notwithstanding clauses (3) and (4) of Section 9.14(a) hereof,

(1) any Restricted Subsidiary may consolidate with or merge into or transfer all
or part of its properties and assets to TCEH, and

(2) TCEH may merge with an Affiliate of TCEH solely for the purpose of
reincorporating TCEH in a State of the United States, the District of Columbia
or any territory thereof so long as the amount of Indebtedness of TCEH and its
Restricted Subsidiaries is not increased thereby.

 

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(c) Subject to certain limitations described in this Agreement governing release
of a Guarantee upon the sale, disposition or transfer of a Guarantor (other than
US Holdings), no Guarantor shall, and TCEH shall not permit any Guarantor to,
consolidate or merge with or into or wind up into (whether or not TCEH or the
Guarantor is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets, in one or more related transactions, to any Person unless:

(1)(A) such Guarantor is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation, partnership, limited partnership, limited
liability corporation or trust organized or existing under the laws of the
jurisdiction of organization of such Guarantor, as the case may be, or the laws
of the United States, any state thereof, the District of Columbia, or any
territory thereof (such Guarantor or such Person, as the case may be, being
herein called the “Successor Person”);

(B) the Successor Person, if other than such Guarantor, expressly assumes all
the obligations of such Guarantor under this Agreement and such Guarantor’s
related Guarantee pursuant to supplemental agreements or other documents or
instruments in form reasonably satisfactory to the Administrative Agent;

(C) immediately after such transaction, no Default exists; and

(D) TCEH shall have delivered to the Administrative Agent an Officer’s
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental agreements, if any, comply with this
Agreement; or

(2) the transaction is made in compliance with Section 9.8 hereof.

(d) Subject to certain limitations described in this Agreement, the Successor
Person shall succeed to, and be substituted for, such Guarantor under this
Agreement and such Guarantor’s Guarantee. Notwithstanding the foregoing, any
Guarantor may (i) merge into or transfer all or part of its properties and
assets to another Guarantor or TCEH, (ii) merge with an Affiliate of TCEH solely
for the purpose of reincorporating such Guarantor in the United States, any
state thereof, the District of Columbia or any territory thereof or
(iii) convert into a corporation, partnership, limited partnership, limited
liability corporation or trust organized or existing under the laws of the
jurisdiction of organization of such Guarantor.

(e) TCEH Finance may not consolidate or merge with or into or wind up into
(whether or not TCEH Finance is the Successor Borrower), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of TECH
Finance Inc.’s properties or assets, in one or more related transactions, to any
Person unless:

(1)(a) concurrently therewith, a corporate Wholly-Owned Subsidiary of TCEH that
is a Restricted Subsidiary organized or existing under the laws of the United
States, any state thereof, the District of Columbia, or any territory thereof
expressly assumes (i) all the obligations of TCEH Finance under this Agreement,
the Senior Notes and the Senior Refinancing Indenture pursuant to a supplemental
agreement, supplemental indenture or other documents or instruments in form
reasonably satisfactory to the Administrative Agent and the Trustee and (ii) the
Senior Registration Rights Agreement; or

(b) after giving effect thereto, at least one obligor on the Loans shall be a
corporation organized or existing under the laws of the United States, any state
thereof, the District of Columbia, or any territory thereof;

 

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(2) immediately after such transaction, no Default exists; and

(3) TCEH Finance shall have delivered to the Administrative Agent an Officer’s
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental agreement, if any, comply with this
Agreement and, if a supplemental agreement is required in connection with such
transaction, such supplement shall comply with the applicable provisions of this
Agreement.

(f) Notwithstanding anything to the contrary, the Transactions contemplated by
the Agreement shall be permitted without compliance with this Section 9.14.

9.15. Successor Corporation Substituted. Upon any consolidation or merger, or
any sale, assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the assets of the Borrower in accordance with Section 9.14
hereof, the successor corporation formed by such consolidation or into or with
which the Borrower is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted for
(so that from and after the date of such consolidation, merger, sale, lease,
conveyance or other disposition, the provisions of this Agreement referring to
the Borrower shall refer instead to the successor corporation and not to the
Borrower), and may exercise every right and power of the Borrower under this
Agreement with the same effect as if such successor Person had been named as the
Borrower herein; provided that the predecessor Borrower shall not be relieved
from the obligation to pay the principal of and interest, if any, on the Loans
except in the case of a sale, assignment, transfer, conveyance or other
disposition of all of the Borrower’s assets that meets the requirements of
Section 9.14 hereof.

9.16. Limitations on Business Activities of TCEH Finance. TCEH Finance will not
hold assets, become liable for any obligations or engage in any business
activities; provided that it may be a co-obligor with respect to the Loans or
any other Indebtedness issued by TCEH, and may engage in any activities directly
related thereto or necessary in connection therewith. TCEH Finance shall be a
Wholly-Owned Subsidiary of TCEH at all times.

SECTION 10. [Reserved].

SECTION 11. Events of Default.

11.1. Event of Default. (I) Any of the following events referred to in any of
Sections 11.1(a) through (i) shall constitute an “Event of Default”:

(a) default in payment when due and payable, upon redemption, acceleration or
otherwise, of principal of, or premium, if any, on the Loans;

(b) default for 30 days or more in the payment when due of interest on or with
respect to the Loans;

(c)(1) failure by the Borrower or any Restricted Subsidiary for 60 days after
receipt of written notice given by the Administrative Agent or (x) prior to the
Interim Loan Conversion Date, the Required Lenders or (y) on or after the
Interim Loan Conversion Date, holders of at least 30% in aggregate principal
amount of the Required Debt, to comply with any

 

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of its obligations, covenants or agreements (other than a default referred to in
clauses (a) and (b) above) contained in this Agreement or the Loans or
(2) failure by the Borrower or any Guarantor in the due performance of its
obligation to issue Senior Notes as contemplated in Section 2.14 and such
default shall continue unremedied for a period of at least 30 days;

(d) default under any mortgage, indenture or instrument under which there is
issued or by which there is secured or evidenced any Indebtedness for money
borrowed by the Borrower or any of its Restricted Subsidiaries or the payment of
which is guaranteed by TCEH or any of its Restricted Subsidiaries, other than
Indebtedness owed to TCEH or a Restricted Subsidiary, whether such Indebtedness
or guarantee now exists or is created after the issuance of the Loans, if both:

(i) such default either results from the failure to pay any principal of such
Indebtedness at its stated final maturity (after giving effect to any applicable
grace periods) or relates to an obligation other than the obligation to pay
principal of any such Indebtedness at its stated final maturity and results in
the holder or holders of such Indebtedness causing such Indebtedness to become
due prior to its stated maturity; and

(ii) the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness in default for failure to pay principal at
stated final maturity (after giving effect to any applicable grace periods), or
the maturity of which has been so accelerated, aggregate $250,000,000 or more at
any one time outstanding;

(e) failure by the Borrower or any Significant Subsidiary (or any group of
Restricted Subsidiaries that together would constitute a Significant Subsidiary)
to pay final judgments aggregating in excess of $250,000,000, which final
judgments remain unpaid, undischarged and unstayed for a period of more than
60 days after such judgment becomes final, and in the event such judgment is
covered by insurance, an enforcement proceeding has been commenced by any
creditor upon such judgment or decree which is not promptly stayed;

(f) the Borrower or any Significant Subsidiary (or any group of Restricted
Subsidiaries that together would constitute a Significant Subsidiary), pursuant
to or within the meaning of any Bankruptcy Law:

(i) commences proceedings to be adjudicated bankrupt or insolvent;

(ii) consents to the institution of bankruptcy or insolvency proceedings against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under applicable Bankruptcy Law;

(iii) consents to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator or other similar official of it or for all or substantially all of
its property;

(iv) makes a general assignment for the benefit of its creditors; or

(v) generally is not paying its debts as they become due;

 

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(g) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:

(i) is for relief against the Borrower or any Significant Subsidiary (or any
group of Restricted Subsidiaries that together would constitute a Significant
Subsidiary), in a proceeding in which the Borrower or any Significant Subsidiary
(or any group of Restricted Subsidiaries that together would constitute a
Significant Subsidiary), is to be adjudicated bankrupt or insolvent;

(ii) appoints a receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Borrower or any Significant Subsidiary (or any group of
Restricted Subsidiaries that together would constitute a Significant
Subsidiary), or for all or substantially all of the property of the Borrower or
any Significant Subsidiary (or any group of Restricted Subsidiaries that
together would constitute a Significant Subsidiary); or

(iii) orders the liquidation of the Borrower or any Significant Subsidiary (or
any group of Restricted Subsidiaries that together would constitute a
Significant Subsidiary);

and the order or decree remains unstayed and in effect for 60 consecutive days;
or

(h) the Guarantee of US Holdings or any Significant Subsidiary (or group of
Restricted Subsidiaries that together would constitute a Significant Subsidiary)
shall for any reason cease to be in full force and effect or be declared null
and void or any responsible officer of any Guarantor that is a Significant
Subsidiary (or group of Restricted Subsidiaries that together would constitute a
Significant Subsidiary), as the case may be, denies that it has any further
liability under its Guarantee or gives notice to such effect, other than by
reason of the termination of this Agreement or the release of any such Guarantee
in accordance with this Agreement.

(II) In the event of any Event of Default specified in clause (d) of
Section 11.1(I) hereof, such Event of Default and all consequences thereof
(excluding any resulting payment default, other than as a result of acceleration
of the Senior Interim Loans) shall be annulled, waived and rescinded,
automatically and without any action by the Administrative Agent or the Required
Lenders, if within 20 days after such Event of Default arose:

(a) the Indebtedness or guarantee that is the basis for such Event of Default
has been discharged; or

(b) holders thereof have rescinded or waived the acceleration, notice or action
(as the case may be) giving rise to such Event of Default; or

(c) the default that is the basis for such Event of Default has been cured.

11.2. [Reserved].

11.3. [Reserved].

 

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11.4. [Reserved].

11.5. [Reserved].

11.6. [Reserved].

11.7. [Reserved].

11.8. [Reserved].

11.9. [Reserved].

11.10. [Reserved].

11.11. [Reserved].

11.12. [Reserved].

11.13. [Reserved].

11.14. [Reserved].

11.15. [Reserved].

11.16. Remedies upon Event of Default, Waivers of Past Defaults.

(a) If any Event of Default (other than an Event of Default specified in
clause (f) or (g) of Section 11.1(I) hereof) occurs and is continuing under this
Agreement, (x) prior to the Interim Loan Conversion Date, the Administrative
Agent may and, upon the written request of the Required Lenders, shall and
(y) on or after the Interim Loan Conversion Date, the Administrative Agent may,
and upon written request of Lenders holding at least 30% in aggregate principal
amount of the total Loans and Senior Notes then outstanding shall declare the
principal, premium, if any, interest and any other monetary obligations on all
the then outstanding Loans to be due and payable immediately. Upon the
effectiveness of such declaration, such principal and interest shall be due and
payable immediately.

Notwithstanding the foregoing, in the case of an Event of Default arising under
clause (f) or (g) of Section 11.1(I) hereof, all outstanding Loans shall be due
and payable immediately without further action or notice.

(b) The Required Lenders by notice to the Administrative Agent may on behalf of
all Lenders waive any existing Default and its consequences hereunder, except a
continuing Default in the payment of the principal of, premium, if any, or
interest on, any Loans (held by a Non-Consenting Lender) and rescind any
acceleration with respect to the Loans and its consequences (provided such
rescission would not conflict with any judgment of a court of competent
jurisdiction; and that the Required Lenders may rescind an acceleration and its
consequences, including any related payment default that resulted from such
acceleration. Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Agreement; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.

 

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11.17. Application of Proceeds. Any amount received by the Administrative Agent
from any Loan Party following any acceleration of the Obligations under this
Agreement or any Event of Default with respect to the Borrower under
Section 11.1(I)(f) or (g) shall be applied:

(i) first, to the payment of all reasonable and documented costs and expenses
incurred by the Administrative Agent in connection with any collection or sale
or otherwise in connection with any Loan Document, including all court costs and
the reasonable fees and expenses of its agents and legal counsel, the repayment
of all advances made by the Administrative Agent hereunder or under any other
Loan Document on behalf of any Loan Party and any other reasonable and
documented costs or expenses incurred in connection with the exercise of any
right or remedy hereunder or under any other Loan Document;

(ii) second, to the Guaranteed Parties, an amount (x) equal to all Obligations
owing to them on the date of any distribution and such moneys shall be
insufficient to pay such amounts in full, then ratably (without priority of any
one over any other) to such Guaranteed Parties in proportion to the unpaid
amounts thereof; and

(iii) third, any surplus then remaining shall be paid to the applicable Loan
Parties or their successors or assigns or to whomsoever may be lawfully entitled
to receive the same or as a court of competent jurisdiction may direct.

SECTION 12. The Agents.

12.1. Appointment.

(a) Each Lender hereby irrevocably designates and appoints the Administrative
Agent as the agent of such Lender under this Agreement and the other Loan
Documents and irrevocably authorizes the Administrative Agent, in such capacity,
to take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Administrative Agent by the terms of this Agreement
and the other Loan Documents, together with such other powers as are reasonably
incidental thereto. The provisions of this Section 12 (other than Sections 12.9
and 12.11 with respect to TCEH) are solely for the benefit of the Agents and the
Lenders, and none of US Holdings, TCEH nor TCEH Finance shall have any rights as
a third party beneficiary of such provision. Notwithstanding any provision to
the contrary elsewhere in this Agreement, no Agent shall have any duties or
responsibilities, except those expressly set forth herein, or in any other Loan
Document, any fiduciary relationship with any Lender or any agency or trust
obligations with respect to any Loan Party, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against such Agent.

(b) [Reserved].

 

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(c) Each of the Syndication Agent, the Joint Lead Arrangers and Bookrunners and
the Co-Documentation Agents, each in its capacity as such, shall not have any
obligations, duties or responsibilities under this Agreement but shall be
entitled to all benefits of this Section 12.

12.2. Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents,
sub-agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents,
sub-agents or attorneys-in-fact selected by it in the absence of gross
negligence or willful misconduct (as determined in the final judgment of a court
of competent jurisdiction).

12.3. Exculpatory Provisions.

(a) No Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (i) 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 Loan Document (except for its or such Person’s own gross
negligence or willful misconduct, as determined in the final judgment of a court
of competent jurisdiction, in connection with its duties expressly set forth
herein) or (ii) responsible in any manner to any of the Lenders or any
participant for any recitals, statements, representations or warranties made by
US Holdings, TCEH, TCEH Finance, any other Guarantor or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by such Agent under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document or for any failure
of US Holdings, TCEH, TCEH Finance or any other Guarantor to perform its
obligations hereunder or thereunder. No Agent shall be under any obligation to
any Lender 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
Loan Document, or to inspect the properties, books or records of any Loan Party
or Affiliate thereof.

(b) Each Lender confirms to the Administrative Agent, each other Lender and each
of their respective Related Parties that it (i) possesses (individually or
through its Related Parties) such knowledge and experience in financial and
business matters that it is capable, without reliance on the Administrative
Agent, any other Lender or any of their respective Related Parties, of
evaluating the merits and risks (including tax, legal, regulatory, credit,
accounting and other financial matters) of (x) entering into this Agreement,
(y) making Loans and other extensions of credit hereunder and under the other
Loan Documents and (z) in taking or not taking actions hereunder and thereunder,
(ii) is financially able to bear such risks and (iii) has determined that
entering into this Agreement and making Loans and other extensions of credit
hereunder and under the other Loan Documents is suitable and appropriate for it.

 

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(c) Each Lender acknowledges that (i) it is solely responsible for making its
own independent appraisal and investigation of all risks arising under or in
connection with this Agreement and the other Loan Documents, (ii) that it has,
independently and without reliance upon the Administrative Agent, any other
Lender or any of their respective Related Parties, made its own appraisal and
investigation of all risks associated with, and its own credit analysis and
decision to enter into, this Agreement based on such documents and information,
as it has deemed appropriate and (iii) it will, independently and without
reliance upon the Administrative Agent, any other Lender or any of their
respective Related Parties, continue to be solely responsible for making its own
appraisal and investigation of all risks arising under or in connection with,
and its own credit analysis and decision to take or not take action under, this
Agreement and the other Loan Documents based on such documents and information
as it shall from time to time deem appropriate, which may include, in each case:

(i) the financial condition, status and capitalization of TCEH and each other
Loan Party;

(ii) the legality, validity, effectiveness, adequacy or enforceability of this
Agreement and each other Loan Document and any other agreement, arrangement or
document entered into, made or executed in anticipation of, under or in
connection with any Loan Document;

(iii) determining compliance or non-compliance with any condition hereunder to
the making of a Loan and the form and substance of all evidence delivered in
connection with establishing the satisfaction of each such condition;

(iv) the adequacy, accuracy and/or completeness of any information delivered by
the Administrative Agent, any other Lender or by any of their respective Related
Parties under or in connection with this Agreement or any other Loan Document,
the transactions contemplated hereby and thereby or any other agreement,
arrangement or document entered into, made or executed in anticipation of, under
or in connection with any Loan Document.

12.4. Reliance by Agents. The Administrative Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex, electronic mail or
teletype message, statement, order or other document or instruction believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including
counsel to US Holdings and/or the Borrower), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent may deem
and treat the Lender specified in the Register with respect to any amount owing
hereunder as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans;

 

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provided that the Administrative Agent shall not be required to take any action
that, in its opinion or in the opinion of its counsel, may expose it to
liability or that is contrary to any Loan Document or Applicable Laws. For
purposes of determining compliance with the conditions specified in Section 6 on
the Closing Date, each Lender that has signed this Agreement shall be deemed to
have consented to, approved or accepted or to be satisfied with, each document
or other matter required thereunder to be consented to or approved by or
acceptable or satisfactory to a Lender unless the Administrative Agent shall
have received notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.

12.5. Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender,
US Holdings or TCEH 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 Administrative Agent receives such a notice, it shall give notice
thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders, provided that unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as is within its authority to take
under this Agreement and others as it shall deem advisable in the best interests
of the Lenders except to the extent that this Agreement requires that such
action be taken only with the approval of the Required Lenders or each of the
Lenders, as applicable.

12.6. Non-Reliance on Administrative Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Administrative 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 Administrative
Agent hereinafter taken, including any review of the affairs of US Holdings,
TCEH, TCEH Finance, any other Guarantor or any other Loan Party, shall be deemed
to constitute any representation or warranty by the Administrative Agent to any
Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any other
Guaranteed 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, TCEH, TCEH Finance and each other Guarantor and made its own
decision to make its Loans hereunder and enter into this Agreement. Each Lender
also represents that it will, independently and without reliance upon the
Administrative Agent or any Lender, 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 Loan 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, TCEH, TCEH
Finance, any other Guarantor and any other Loan Party. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, assets, operations, properties, financial
condition, prospects or creditworthiness of the Parent, US Holdings, TCEH, TCEH
Finance, any other Guarantor or any other Loan Party that may come into the
possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.

 

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12.7. Indemnification. The Lenders agree to indemnify each Agent, each 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 Total Credit Exposure in effect on the date on
which indemnification is sought (or, if indemnification is sought after the date
upon which the Commitments shall have terminated and the Loans shall have been
paid in full, ratably in accordance with their respective portions of the Total
Credit Exposure in effect immediately prior to such date), from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever that
may at any time occur (including at any time following the payment of the Loans)
or be imposed on, incurred by or asserted against such Agent in any way relating
to or arising out of the Commitments, this Agreement, any of the other Loan
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 such Agent under or in connection with any of the foregoing (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 that no Lender shall be liable to such Agent for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from such
Agent’s gross negligence or willful misconduct as determined by a final judgment
of a court of competent jurisdiction; provided, further, that no action taken in
accordance with the directions of the Required Lenders (or such other number or
percentage of the Lenders as shall be required by the Loan Documents) shall be
deemed to constitute gross negligence or willful misconduct for purposes of this
Section 12.7. 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 or be imposed upon, incurred by or asserted against any
Agent in any way relating to or arising out of the Commitments, this Agreement,
any of the other Loan 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 such Agent under or in connection with any of the
foregoing (including at any time following the payment of the Loans), this
Section 12.7 applies whether any such investigation, litigation or proceeding is
brought by any Lender or any other Person. Without limitation of the foregoing,
each Lender shall reimburse such Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including attorneys’ fees) incurred by such
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 Loan Document, or any document
contemplated by or referred to herein, to the extent that such Agent is not
reimbursed for such expenses by or on behalf of TCEH or TCEH Finance; provided
that such reimbursement by the Lenders shall not affect TCEH’s and TCEH
Finance’s continuing reimbursement obligations with respect thereto. If any
indemnity furnished to any Agent for any purpose shall, in the opinion of such
Agent, be insufficient or become impaired, such 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
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Lender to indemnify any Agent against any liability, obligation, loss, damage,
penalty, action, judgment, suit, cost, expense or disbursement in excess of such
Lender’s pro rata portion thereof; and provided further, this sentence shall not
be deemed to require any Lender to indemnify any Agent against any liability,
obligation, loss, damage, penalty, action, judgment, suit, cost, expense or
disbursement resulting from such Agent’s gross negligence or willful misconduct
(as determined by a final judgment of a court of competent jurisdiction). The
agreements in this Section 12.7 shall survive the payment of the Loans and all
other amounts payable hereunder.

12.8. Agents in their Individual Capacity. Each Agent and its Affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with US Holdings, TCEH, TCEH Finance, any other Guarantor, and any other Loan
Party as though such Agent were not an Agent hereunder and under the other Loan
Documents. With respect to the Loans made by it, each Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an Agent, and the terms
“Lender” and “Lenders” shall include each Agent in its individual capacity.

12.9. Successor Agents. The Administrative Agent may resign at any time by
notifying the Lenders and TCEH. Upon receipt of any such notice of resignation,
the Required Lenders shall have the right, subject to the consent of TCEH (not
to be unreasonably withheld or delayed), 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 Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation, then
the retiring Agent may, on behalf of the Lenders, appoint a successor Agent
meeting the qualifications set forth above; provided that if the Administrative
Agent shall notify TCEH and the Lenders that no qualifying person has accepted
such appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (x) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents and (y) all payments, communications and determinations provided to be
made by, to or through such Agent shall instead be made by or to each Lender
directly, until such time as the Required Lenders with (except after the
occurrence and during the continuation of a Default or Event of Default) the
consent of TCEH (not to be unreasonably withheld) appoint a successor
Administrative Agent as provided for above in this paragraph. Upon the
acceptance of a successor’s appointment as the Administrative Agent hereunder,
and upon the transfer by the retiring (or retired) Agent to the successor Agent
of all sums, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Agent under the Loan Documents, such successor shall succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring (or
retired) Agent, and the retiring Agent shall be discharged from all of its
duties and obligations hereunder or under the other Loan Documents (if not
already discharged therefrom as provided above in this Section 12.9). The fees
payable by TCEH and TCEH Finance (following the effectiveness of such
appointment) to such Agent shall be the same as those payable to its predecessor
unless otherwise agreed between TCEH and such successor. After the retiring
Agent’s resignation hereunder and under the other Loan Documents, the provisions
of this Section 12 (including 12.7) and Section 13.5 shall continue in effect
for the benefit of such retiring 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 Agent was acting as an Agent.

 

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12.10. Withholding Tax. To the extent required by any Applicable Laws, the
Administrative Agent may withhold from any interest payment to any Lender an
amount equivalent to any applicable withholding tax. If the Internal Revenue
Service or any authority of the United States or other jurisdiction asserts a
claim that the Administrative Agent did not properly withhold tax from amounts
paid to or for the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
the Administrative Agent of a change in circumstances that rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason), such Lender shall indemnify the Administrative Agent (to the extent
that the Administrative Agent has not already been reimbursed by TCEH and/or
TCEH Finance (solely to the extent required by this Agreement) and without
limiting the obligation of TCEH and TCEH Finance to do so) fully for all amounts
paid, directly or indirectly, by the Administrative Agent as tax or otherwise,
including penalties and interest, together with all expenses incurred, including
legal expenses, allocated staff costs and any out of pocket expenses.

12.11. Trust Indenture Act. In the event that Morgan Stanley Senior Funding,
Inc. or any of its Affiliates shall be or become an indenture trustee under the
Trust Indenture Act of 1939 (as amended, the “Trust Indenture Act”) in respect
of any securities issued or guaranteed by any Loan Party, and agree that any
payment or property received in satisfaction of or in respect of any Obligation
of such Loan Party hereunder or under any other Loan Document by or on behalf of
Morgan Stanley Senior Funding, Inc., in its capacity as the Administrative Agent
for the benefit of any Lender under any Loan Document (other than Morgan Stanley
Senior Funding, Inc. or an Affiliate of Morgan Stanley Senior Funding, Inc.) and
which is applied in accordance with the Loan Documents shall be deemed to be
exempt from the requirements of Section 311 of the Trust Indenture Act pursuant
to Section 311(b)(3) of the Trust Indenture Act.

12.12. Guarantee.

(a) Agent under Guarantee. Each Guaranteed Party hereby further authorizes the
Administrative Agent, on behalf of and for the benefit of the Guaranteed
Parties, to be the agent for and representative of the Guaranteed Parties with
respect to the Guarantee. Subject to Section 13.1, without further written
consent or authorization from any Guaranteed Party, the Administrative Agent may
execute any documents or instruments necessary to, in connection with a sale or
disposition of assets permitted by this Agreement, release any Guarantor from
the Guarantee or elect any such release with respect to which Required Lenders
(or such other Lenders as may be required to give such consent under
Section 13.1) have otherwise consented.

(b) Right to Enforce Guarantee. Anything contained in any of the Loan Documents
to the contrary notwithstanding, US Holdings, TCEH, TCEH Finance, the Agents and
each Guaranteed Party hereby agree that no Guaranteed Party shall have any right
individually to enforce the Guarantee, it being understood and agreed that all
powers, rights and remedies hereunder may be exercised solely by the
Administrative Agent, on behalf of the Guaranteed Parties in accordance with the
terms hereof and all powers, rights and remedies under the Guarantee may be
exercised solely by the Administrative Agent on behalf of the Guaranteed
Parties.

 

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SECTION 13. Miscellaneous.

13.1. Amendments, Waivers and Releases. (a) Neither this Agreement nor any other
Loan Document, nor any terms hereof or thereof, may be amended, supplemented, or
modified except in accordance with the provisions of this Section 13.1. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (a) enter into with the relevant
Loan Party or Loan Parties written amendments, supplements or modifications
hereto and to the other Loan Documents for the purpose of adding any provisions
to this Agreement or the other Loan Documents or changing in any manner the
rights of the Lenders or of the Loan Parties hereunder or thereunder or
(b) waive in writing, on such terms and conditions as the Required Lenders or
the Administrative Agent, as the case may be, may specify in such instrument,
any of the requirements of this Agreement or the other Loan Documents or any
Default or Event of Default and its consequences or (c) consent to amendments,
supplements or modifications to the form of the Senior Refinancing Indenture
prior to the Interim Loan Conversion Date; provided, however, that each such
waiver and each such amendment, supplement or modification shall be effective
only in the specific instance and for the specific purpose for which given; and
provided, further, that no such waiver and no such amendment, supplement or
modification shall (i) forgive or reduce any portion of any Loan or extend the
final scheduled maturity date of any Loan or reduce the stated rate (it being
understood that only the consent of the Required Lenders shall be necessary to
waive any obligation of the Borrower to pay interest or principal at the
“Default Rate” or amend Section 2.8(d)), or forgive any portion, or extend the
date for the payment, of any interest or Fee payable hereunder (other than as a
result of waiving the applicability of any post-default increase in interest
rates), or extend the final expiration date of any Lender’s Commitment, or
increase the aggregate amount of the Commitments of any Lender, or amend or
modify any provisions of Section 5.3(a) (with respect to the ratable allocation
of any payments only) and 13.8(a) and 13.19, or make any Loan, interest, fee or
other amount payable in any currency other than Dollars, in each case without
the written consent of each Lender directly affected thereby, or (ii) amend,
modify or waive any provision of this Section 13.1 or reduce the percentages
specified in the definitions of the term “Required Lenders,” consent to the
assignment or transfer by US Holdings, TCEH or TCEH Finance of its rights and
obligations under any Loan Document to which it is a party (except as permitted
pursuant to Section 9.14) or alter the order of application set forth in the
final paragraph of Section 11 or in Section 5.2(c), in each case without the
written consent of each Lender directly affected thereby, or (iii) amend,
modify, terminate or waive any provision of Section 12 without the written
consent of the then-current Administrative Agent or any other former or current
Agent to whom Section 12 then applies in a manner that directly affects such
Person, or (iv) release all or substantially all of the Guarantors under the
Guarantee (except as expressly permitted by the Guarantee or this Agreement)
without the prior written consent of each Lender, or (v) amend, modify or waive
any provision of Section 2.14, or (vi) amend or modify any provision of the
Senior Refinancing Indenture that requires (or would, if any Senior Notes were
outstanding thereunder require) the approval of all holders of Senior Notes
thereunder, without the written consent of each Lender directly and adversely
affected thereby, or (vii) affect the rights or duties of, or any fees or other
amounts payable to, any Agent under this Agreement or any other Loan Document
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written consent of such Agent. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the affected Lenders
and shall be binding upon US Holdings, TCEH, TCEH Finance, the other applicable
Loan Parties, such Lenders, the Administrative Agent and all future holders of
the affected Loans. In the case of any waiver, US Holdings, TCEH, TCEH Finance,
the applicable Loan Parties, the Lenders and the Administrative Agent shall be
restored to their former positions and rights hereunder and under the other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing, it being understood that no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereon. In connection with the foregoing provisions, the
Administrative Agent may, but shall have no obligations to, with the concurrence
of any Lender, execute amendments, modifications, waivers or consents on behalf
of such Lender.

(b) Notwithstanding the foregoing, without notice to or the consent of any
Lenders and without any further action necessary by the parties hereto,
effective as of the date set forth in clause (a) of the definition of “Maturity
Date,” in the event of any inconsistency between the terms contained in
Sections 8, 9 and 11 of this Agreement and the corresponding terms contained in
the Senior Refinancing Indenture, such provisions of this Agreement shall be
replaced with corresponding provisions of the Senior Refinancing Indenture, and,
to the extent necessary to give effect to the foregoing, each defined term used
in the sections of the Senior Refinancing Indenture shall have the meaning set
forth in the Senior Refinancing Indenture, subject to the terms of
Section 1.2(h), as applicable. The applicable provisions of the Indenture as
described in Exhibit C shall be deemed incorporated and set forth in this
Agreement to the extent necessary to give effect to the foregoing. In
furtherance of the foregoing, the Administrative Agent will (and the Lenders
hereby authorize and direct the Administrative Agent to), at the request of
TCEH, enter into such technical amendments and other modifications to this
Agreement as are reasonably necessary to effect the foregoing.

(c) Notwithstanding anything to the contrary herein, no Defaulting Lender shall
have any right to approve or disapprove any amendment, modification, supplement,
waiver or consent hereunder, except that the Commitment of such Lender may not
be increased or extended without the consent of such Lender (it being understood
that any Commitments or Loans held or deemed held by any Defaulting Lender shall
be excluded for a vote of the Lenders hereunder requiring any consent of the
Lenders), except as expressly provided for by this Agreement.

(d) The Lenders hereby irrevocably agree that a Guarantor shall be released from
its Guarantee and no further action by such Guarantor, TCEH, TCEH Finance or the
Administrative Agent is required for the release of such Guarantor’s Guarantee,
upon: (1)(A) any sale, exchange or transfer (by merger or otherwise) of the
Capital Stock of such Guarantor (including any sale, exchange or transfer, after
which the applicable Guarantor is no longer a Restricted Subsidiary) or a sale
of all or substantially all the assets of such Guarantor which sale, exchange or
transfer is made in compliance with the applicable provisions of this Agreement;
(B) the release or discharge of the guarantee by such Guarantor of the Senior
Secured Credit Agreement or such other guarantee that resulted in the creation
of such Guarantee, except a discharge or release by or as a result of payment
under such Guarantee; (C) the designation of any Restricted Subsidiary that is a
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in compliance with Section 9.5 hereof and the definition of “Unrestricted
Subsidiary” hereunder; or (D) any Loan Party’s obligations under this Agreement
being discharged or released in accordance with the terms of this Agreement; and
(2) such Guarantor delivering to the Administrative Agent an Officer’s
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for in this Agreement relating to such transaction have been
complied with.

(e) The Lenders hereby authorize the Administrative Agent to execute and deliver
any instruments, documents, and agreements necessary or desirable to evidence
and confirm the release of any Guarantor pursuant to the foregoing provisions of
clause (c), all without the further consent or joinder of any Lender

13.2. Notices. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder or under any other Loan Document shall be
in writing (including by facsimile or other electronic transmission). All such
written notices shall be mailed, faxed or delivered to the applicable address,
facsimile number or electronic mail address, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be
made to the applicable telephone number, as follows:

(a) if to US Holdings, TCEH, TCEH Finance or the Administrative Agent to the
address, facsimile number, electronic mail address or telephone number specified
for such Person on Schedule 13.2 or to such other address, facsimile number,
electronic mail address or telephone number as shall be designated by such party
in a notice to the other parties; and

(b) if to any other Lender, to the address, facsimile number, electronic mail
address or telephone number specified in its Administrative Questionnaire or to
such other address, facsimile number, electronic mail address or telephone
number as shall be designated by such party in a notice to US Holdings, TCEH and
the Administrative Agent.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, three Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail, when delivered; provided that notices and other communications to the
Administrative Agent or the Lenders pursuant to Sections 2.3, 2.6, 2.9 and 5.1
shall not be effective until received.

13.3. No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

13.4. Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
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13.5. Payment of Expenses; Indemnification. The Borrower agrees (a) to pay or
reimburse the Agents for all their reasonable and documented out-of-pocket costs
and expenses incurred in connection with the development, preparation, execution
and delivery of, and any amendment, supplement or modification to, this
Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation, and administration of
the transactions contemplated hereby and thereby, including the reasonable and
documented fees, disbursements and other charges of Shearman & Sterling LLP,
Haynes and Boone, LLP and one counsel in each relevant local jurisdiction,
(b) to pay or reimburse each Agent for all their respective reasonable out of
pocket costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including the reasonable fees, disbursements and other
charges of one firm of counsel, and, if necessary, one firm of regulatory
counsel and/or one firm of local counsel in each appropriate jurisdiction, in
each case to the Administrative Agent and the other Agents (and in the case of
an actual or perceived conflict of interest where the Person affected by such
conflict informs TCEH of such conflict and thereafter, after receipt of the
consent of the Borrower (which consent shall not be unreasonably withheld or
delayed) retains its own counsel, of another firm of counsel for such affected
Person) (c) to pay, indemnify, and hold harmless each Lender and Agent from, any
and all recording and filing fees and (d) to pay, indemnify, and hold harmless
each Lender and Agent and their respective Affiliates, directors, officers,
partners, employees and agents from and against any and all other liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever,
including reasonable and documented fees, disbursements and other charges of one
firm of primary counsel and, if necessary, one firm of regulatory counsel and/or
one firm of local counsel in each appropriate jurisdiction, in each case, to
such indemnified Persons (and in the case of an actual or perceived conflict of
interest where the Person affected by such conflict informs TCEH of such
conflict and thereafter, after receipt of the consent of the Borrower (which
consent shall not be unreasonably withheld or delayed), retains its own counsel,
of another firm of counsel for such affected Person), related to the
Transactions or, with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including any of the foregoing relating to the
violation of, noncompliance with or liability under, any Environmental Law
(other than by such indemnified person or any of its Related Parties (other than
any trustees or advisors)) or to any actual or alleged presence, release or
threatened release into the environment of Hazardous Materials attributable to
the operations of US Holdings, TCEH, any of TCEH’s Subsidiaries or any of the
Real Estate (all the foregoing in this clause (d), collectively, the
“indemnified liabilities”) (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 that neither of TCEH nor
TCEH Finance shall have no obligation hereunder to any Agent or any Lender or
any of their respective Related Parties with respect to indemnified liabilities
to the extent it has been determined by a final non-appealable judgment of a
court of competent jurisdiction to have resulted from (A) the gross negligence,
bad faith or willful misconduct of such Indemnified Party or any of its Related
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such Indemnified Party or any of its Related Parties (other than trustees and
advisors) under the Loan Documents or (C) disputes not involving an act or
omission of US Holdings, TCEH, TCEH Finance or any other Loan Party or any of
their respective Affiliates and that is brought by an Indemnified Party against
any other Indemnified Party. All amounts payable under this Section 13.5 shall
be paid within ten Business Days of receipt by TCEH or TCEH Finance of an
invoice relating thereto setting forth such expense in reasonable detail. The
agreements in this Section 13.5 shall survive repayment of the Loans and all
other amounts payable hereunder.

No Loan Party nor any Indemnified Party shall have any liability for any special
punitive, indirect or consequential damages resulting from this Agreement or any
other Loan Document or arising out of its activities in connection herewith or
therewith (whether before or after the Closing Date) (except, in the case of the
Borrower’s obligation hereunder to indemnify and hold harmless the Indemnified
Parties, to the extent any Indemnified Party is found liable for special,
punitive, indirect or consequential damages to a third party). No Indemnified
Party shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby, except to the extent that such damages have
resulted from the willful misconduct, bad faith or gross negligence of any
Indemnified Party or any of its Related Parties (as determined by a final
non-appealable judgment of a court of competent jurisdiction).

13.6. Successors and Assigns; Participations and Assignments.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) except as expressly permitted by Section 9.14,
none of US Holdings, TCEH and TCEH Finance, may assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of the
Administrative Agent and each Lender (and any attempted assignment or transfer
by any of US Holdings, TCEH or TCEH Finance without such consent shall be null
and void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section 13.6. Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants (to the extent provided in clause (c) of this
Section 13.6) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent and the Lenders and each other
Person entitled to indemnification under Section 13.5) and, to the extent
expressly contemplated by Section 13.21, the Oncor Subsidiaries) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

(b) Subject to the conditions set forth in clause (b)(ii) below, any Lender may
at any time assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitments
and the Loans at the time owing to it) with the prior written consent (such
consent not be unreasonably withheld or delayed) of the Administrative Agent
(which consent shall not be unreasonably withheld or delayed) provided that no
consent of the Administrative Agent shall be required for any assignment of any
Loan to a Lender, an Affiliate of a Lender or an Approved Fund.

 

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Notwithstanding the foregoing, no such assignment shall be made to a natural
person.

(i) Assignments shall be subject to the following additional conditions:

(A) except (1) in the case of an assignment to a Lender, an Affiliate of a
Lender or an Approved Fund or an assignment of the entire remaining amount of
the assigning Lender’s Commitment or Loans of any Class, (2) an assignment to a
Federal Reserve Bank or (3) in connection with the initial syndication of the
Commitments and Loans, the amount of the Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 and increments of
$1,000,000 in excess thereof, unless each of TCEH and the Administrative Agent
otherwise consents (which consents shall not be unreasonably withheld or
delayed), provided that no such consent of TCEH shall be required if an Event of
Default under clause (a), (b), (f) or (g) of Section 11.1(I) has occurred and is
continuing with respect to US Holdings, or TCEH or TCEH Finance; provided,
further, that contemporaneous assignments to a single assignee made by
Affiliates of Lenders and related Approved Funds shall be aggregated for
purposes of meeting the minimum assignment amount requirements stated above;

(B) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement;
provided that this clause shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender’s rights and obligations in
respect of one Class of Commitments or Loans;

(C) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance;

(D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an administrative questionnaire in a form approved by the
Administrative Agent (the “Administrative Questionnaire”); and

(E) prior to the Interim Loan Conversion Date, no Committed Lender shall assign
to another Lender (other than an Affiliate of such Lender or an Approved Fund)
any Loans without TCEH’s prior consent (it being understood that, without
limitation, TCEH shall have the right to withhold or delay its consent to any
assignment if, in order for such assignment to comply with Applicable Laws, TCEH
would be required to obtain the consent of, or make any filing or registration
with, any Government Authority) if, after giving effect to such assignment, the
Committed Lenders (together with their respective Affiliates) would hold, in the
aggregate, less than 51% (on a pro rata basis) of the aggregate principal amount
of outstanding Loans (it being understood that, as provided in clause
(b)(ii)(A)(3) of this Section 13.6, the Borrower’s consent shall not otherwise
be required in connection with the initial syndication of the Commitments and
the Loans).

 

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(ii) Subject to acceptance and recording thereof pursuant to clause (b)(iv) of
this Section 13.6, from and after the effective date specified in each
Assignment and Acceptance, the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of
Sections 2.10, 2.11, 5.4 and 13.5). Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
Section 13.6 shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
clause (c) of this Section 13.6.

(iii) The Administrative Agent, acting for this purpose as an agent of TCEH and
TCEH Finance, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitments of, and principal
amount of the Loans owing to, each Lender pursuant to the terms hereof from time
to time (the “Register”). Further, the Register shall contain the name and
address of the Administrative Agent and the lending office through which each
such Person acts under this Agreement. The entries in the Register shall be
conclusive, and US Holdings, TCEH, TCEH Finance, the Administrative Agent and
the Lenders shall treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by US Holdings, TCEH, TCEH Finance and any Lender at
any reasonable time and from time to time upon reasonable prior notice.

(iv) Upon its receipt of a duly completed Assignment and Acceptance executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder) and any
written consent to such assignment required by clause (b) of this Section 13.6,
the Administrative Agent shall accept such Assignment and Acceptance and record
the information contained therein in the Register.

(c)(i) Any Lender may, without the consent of US Holdings, TCEH, TCEH Finance or
the Administrative Agent, sell participations to one or more banks or other
entities (each, a “Participant”) in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitments
and the Loans owing to it), provided that (i) such Lender’s obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
and (iii) US Holdings, TCEH, TCEH Finance, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to

 

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which a Lender sells such a participation shall provide that such Lender shall
retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement or any other Loan
Document; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any consent,
amendment, modification, supplement or waiver described in clause (i), or
(vii) of the proviso to Section 13.1 that affects such Participant. Subject to
clause (c)(ii) of this Section 13.6, each of US Holdings, TCEH and TCEH Finance
agrees that each Participant shall be entitled to the benefits of Sections 2.10,
2.11 and 5.4 to the same extent as if it were a Lender, and provided that such
Participant agrees to be subject to the requirements of those Sections as though
it were a Lender and had acquired its interest by assignment pursuant to clause
(b) of this Section 13.6. To the extent permitted by law, each Participant also
shall be entitled to the benefits of Section 13.8(b) as though it were a Lender,
provided such Participant agrees to be subject to Section 13.8(a) as though it
were a Lender.

(ii) A Participant shall not be entitled to receive any greater payment under
Section 2.10, 2.11 or 5.4 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with TCEH’s prior written
consent (which consent shall not be unreasonably withheld or delayed).

(iii) Each Lender that sells a participation shall, acting for this purpose as
an agent of TCEH and TCEH Finance, maintain a register on which it enters the
name and address of each participant and the principal amounts of each
participant’s interest in the Loans (or other rights or obligations held by it)
(the “Participant Register”). The entries in the Participant Register shall be
conclusive, and such Lender shall treat each Person whose name is recorded in
the Participant Register as the owner of such Loan or other obligation hereunder
as the owner thereof for all purposes of this Agreement notwithstanding any
notice to the contrary. Any such Participant Register shall be available for
inspection by the Administrative Agent and US Holdings, TCEH and TCEH Finance at
any reasonable time and from time to time upon reasonable prior notice.

(d) Any Lender may, without the consent of US Holdings, TCEH and TCEH Finance or
the Administrative Agent, at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section 13.6 shall not apply to any such pledge
or assignment of a security interest; provided that no such pledge or assignment
of a security interest shall release a Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto. In order to facilitate such pledge or assignment or for any other
reason, each of TCEH and TCEH Finance hereby agrees that, upon request of any
Lender at any time and from time to time after the Closing Date, each of TCEH
and TCEH Finance shall provide to such Lender, at its own expense, a promissory
note, substantially in the form of Exhibit I-1 or I-2, as the case may be
evidencing the Loans owing to such Lender.

 

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(e) Subject to Section 13.16, each of TCEH and TCEH Finance authorizes each
Lender to disclose to any Participant, secured creditor of such Lender or
assignee (each, a “Transferee”), any prospective Transferee and any prospective
direct or indirect contractual counterparties to any swap or derivative
transaction to be entered into in connection with or relating to Loans made
hereunder any and all financial information in such Lender’s possession
concerning TCEH and its Affiliates that has been delivered to such Lender by or
on behalf of TCEH and its Affiliates pursuant to this Agreement or that has been
delivered to such Lender by or on behalf of TCEH and its Affiliates in
connection with such Lender’s credit evaluation of the Borrower and such
Affiliates prior to becoming a party to this Agreement.

(f) The words “execution,” “signed,” “signature,” and words of like import in
any Assignment and Acceptance shall be deemed to include electronic signatures
or the keeping of records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed signature or the
use of a paper-based recordkeeping system, as the case may be, to the extent and
as provided for in any applicable law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic
Signatures and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.

(g) SPV Lender. Notwithstanding anything to the contrary contained herein, any
Lender (a “Granting Lender”) may grant to a special purpose funding vehicle (a
“SPV”), identified as such in writing from time to time by the Granting Lender
to the Administrative Agent and TCEH, the option to provide to the Borrower all
or any part of any Loan that such Granting Lender would otherwise be obligated
to make the Borrower pursuant to this Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPV to make any Loan and (ii) if an
SPV elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPV hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if,
such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPV shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPV, it shall not institute
against, or join any other person in instituting against, such SPV any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this Section 13.6, any SPV
may (i) with notice to, but without the prior written consent of, US Holdings,
TCEH, TCEH Finance and the Administrative Agent, assign all or a portion of its
interests in any Loans to the Granting Lender or to any financial institutions
(consented to by TCEH and Administrative Agent) providing liquidity and/or
credit support to or for the account of such SPV to support the funding or
maintenance of Loans and (ii) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper dealer
or provider of any surety, guarantee or credit or liquidity enhancement to such
SPV. This Section 13.6(g) may not be amended without the written consent of the
SPV. Notwithstanding anything to the contrary in this Agreement, (x) no SPV
shall be entitled to any greater rights under Sections 2.10, 2.11 and 5.4 than
its Granting Lender would have been entitled to absent the use of such SPV and
(y) each SPV agrees to be subject to the requirements of Sections 2.10, 2.11 and
5.4 as though it were a Lender and has acquired its interest by assignment
pursuant to clause (b) of this Section 13.6.

 

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13.7. Replacements of Lenders under Certain Circumstances.

(a) The Borrower shall be permitted to replace any Lender that (i) requests
reimbursement for amounts owing pursuant to Section 2.10 or 5.4, (ii) is
affected in the manner described in Section 2.10(a)(iii) and as a result thereof
any of the actions described in such Section is required to be taken or
(iii) becomes a Defaulting Lender, with a replacement bank or other financial
institution; provided that (A) such replacement does not conflict with any
Applicable Laws, (B) no Event of Default under clause (a), (b), (f) or (g) of
Section 11.1(I) shall have occurred and be continuing at the time of such
replacement, (C) the Borrower shall repay (or the replacement bank or
institution shall purchase, at par,) all Loans and other amounts (other than any
disputed amounts), pursuant to Section 2.10, 2.11 or 5.4, as the case may be,
owing to such replaced Lender prior to the date of replacement, (D) the
replacement bank or institution, if not already a Lender, and the terms and
conditions of such replacement, shall be reasonably satisfactory to the
Administrative Agent, (E) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of Section 13.6 and (F) any such
replacement shall not be deemed to be a waiver of any rights that the Borrower,
the Administrative Agent or any other Lender shall have against the replaced
Lender.

(b) If any Lender (such Lender, a “Non-Consenting Lender”) has failed to consent
to a proposed amendment, modification, supplement, waiver, discharge or
termination that pursuant to the terms of Section 13.1 requires the consent of
all of the Lenders or all Lenders affected and with respect to which the
Required Lenders shall have granted their consent, then provided no Event of
Default then exists, the Borrower shall have the right (unless such
Non-Consenting Lender grants such consent) to replace such Non-Consenting Lender
by requiring such Non-Consenting Lender to assign its Loans and its Commitments
hereunder to one or more assignees reasonably acceptable to the Administrative
Agent: provided that (i) all Obligations of the Borrower owing to such
Non-Consenting Lender being replaced shall be paid in full to such
Non-Consenting Lender concurrently with such assignment, and (ii) the
replacement Lender shall purchase the foregoing by paying to such Non-Consenting
Lender a price equal to the principal amount thereof plus accrued and unpaid
interest thereon. In connection with any such assignment, each of TCEH, TCEH
Finance, the Administrative Agent, such Non-Consenting Lender and the
replacement Lender shall otherwise comply with Section 13.6.

13.8. Adjustments; Set-off.

(a) If any Lender (a “benefited Lender”) shall at any time receive any payment
of all or part of its Loans, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in clause (f) or (g) of
Section 11.1(I), or otherwise), in a greater proportion than any such payment to
or collateral received by any other Lender, if any, in respect of such other
Lender’s Loans, or interest thereon, such benefited Lender shall purchase for
cash from the other Lenders a participating interest in such portion of each
such other Lender’s Loan, or shall provide such other Lenders with the benefits
of any such collateral, or the proceeds thereof, as shall be necessary to cause
such benefited Lender to share the excess payment or benefits of such collateral
or proceeds ratably with each of the Lenders; provided, however, that if all or
any portion of such excess payment or benefits is thereafter recovered from such
benefited Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest.

 

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(b) After the occurrence and during the continuance of an Event of Default, in
addition to any rights and remedies of the Lenders provided by Applicable Laws,
each Lender shall have the right, without prior notice to US Holdings, TCEH or
TCEH Finance, any such notice being expressly waived by US Holdings, TCEH and
TCEH Finance to the extent permitted by Applicable Laws, upon any amount
becoming due and payable by the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of the
Borrower. Each Lender agrees promptly to notify TCEH and the Administrative
Agent after any such set-off and application made by such Lender; provided that
the failure to give such notice shall not affect the validity of such set-off
and application.

13.9. Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts (including by facsimile
or other electronic transmission), and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. A set of the copies
of this Agreement signed by all the parties shall be lodged with TCEH and the
Administrative Agent.

13.10. Severability. 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.

13.11. Integration. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE AGREEMENT OF THE PARENT, US HOLDINGS, TCEH, TCEH FINANCE, THE
ADMINISTRATIVE AGENT AND THE LENDERS WITH RESPECT TO THE SUBJECT MATTER HEREOF,
AND (1) THERE ARE NO PROMISES, UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES BY
THE PARENT, US HOLDINGS, TCEH, TCEH FINANCE, THE ADMINISTRATIVE AGENT OR ANY
LENDER RELATIVE TO SUBJECT MATTER HEREOF NOT EXPRESSLY SET FORTH OR REFERRED TO
HEREIN, IN THE OTHER LOAN DOCUMENTS, IN THE FEE LETTER OR THE ENGAGEMENT LETTER,
(2) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES
AND (3) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARENT AND THE
PARTIES; PROVIDED, THAT THE FEE LETTER, THE ENGAGEMENT LETTER AND THE
SYNDICATION PROVISIONS AND THE BORROWER’S AND THE PARENT’S CONFIDENTIALITY
OBLIGATIONS IN THE COMMITMENT LETTER SHALL REMAIN IN FULL FORCE AND EFFECT. IT
IS SPECIFICALLY AGREED THAT PROVISION OF THE CREDIT FACILITIES HEREUNDER BY THE
LENDER SUPERSEDES AND IS IN SATISFACTION OF THE OBLIGATIONS OF THE AGENTS (AS
DEFINED IN THE COMMITMENT LETTER) TO PROVIDE THE COMMITMENTS SET FORTH IN
EXHIBIT C OF THE COMMITMENT LETTER.

 

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13.12. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

13.13. Submission to Jurisdiction; Waivers. Each party hereto irrevocably and
unconditionally:

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
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;

(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 Schedule 13.2 or at such other address of which the
Administrative Agent shall have been notified pursuant to Section 13.2;

(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) subject to the last paragraph of Section 13.5, waives, to the maximum extent
not prohibited by Applicable Laws, any right it may have to claim or recover in
any legal action or proceeding referred to in this Section 13.13 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 Laws.

13.14. Acknowledgments. Each of US Holdings, TCEH and TCEH Finance hereby
acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents;

 

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(b)(i) the Loans provided for hereunder and any related arranging or other
services in connection therewith (including in connection with any amendment,
waiver or other modification hereof or of any other Loan Document) are an
arm’s-length commercial transaction between US Holdings, TCEH, TCEH Finance and
the other Loan Parties, on the one hand, and the Administrative Agent, the
Lenders and the other Agents on the other hand, and US Holdings, TCEH, TCEH
Finance and the other Loan Parties are capable of evaluating and understanding
and understand and accept the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents (including any amendment,
waiver or other modification hereof or thereof); (ii) in connection with the
process leading to such transaction, each of the Administrative Agent and the
other Agents is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary for any of US Holdings, TCEH, TCEH
Finance, any other Loan Party or any of their respective Affiliates,
stockholders, creditors or employees or any other Person; (iii) neither the
Administrative Agent nor any other Agent has assumed or will assume an advisory,
agency or fiduciary responsibility in favor of US Holdings, TCEH, TCEH Finance
or any other Loan Party with respect to any of the transactions contemplated
hereby or the process leading thereto, including with respect to any amendment,
waiver or other modification hereof or of any other Loan Document (irrespective
of whether the Administrative Agent or any other Agent has advised or is
currently advising US Holdings, TCEH, TCEH Finance, the other Loan Parties or
their respective Affiliates on other matters) and neither the Administrative
Agent or any other Agent has any obligation to US Holdings, TCEH, TCEH Finance,
the other Loan Parties or their respective Affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth
herein and in the other Loan Documents; (iv) the Administrative Agent, each
other Agent and each Affiliate of the foregoing may be engaged in a broad range
of transactions that involve interests that differ from those of US Holdings,
TCEH, TCEH Finance and their respective Affiliates, and neither the
Administrative Agent nor any other Agent has any obligation to disclose any of
such interests by virtue of any advisory, agency or fiduciary relationship; and
(v) neither the Administrative Agent nor any other Agent has provided and none
will provide any legal, accounting, regulatory or tax advice with respect to any
of the transactions contemplated hereby (including any amendment, waiver or
other modification hereof or of any other Loan Document) and each of
US Holdings, TCEH and TCEH Finance has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate. Each of
US Holdings, TCEH and TCEH Finance agrees not to claim that the Administrative
Agent or any other Agent has rendered advisory services of any nature or
respect, or owes a fiduciary or similar duty to US Holdings, TCEH, TCEH Finance
or any other Affiliates, in connection with the transactions contemplated hereby
or the process leading hereto; and

(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among US Holdings, TCEH and TCEH Finance, on the one hand, and any
Lender, on the other hand.

13.15. WAIVERS OF JURY TRIAL. US HOLDINGS, TCEH, TCEH FINANCE, EACH AGENT AND
EACH LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.

 

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13.16. Confidentiality. The Administrative Agent, each other Agent and each
Lender shall hold all non-public information furnished by or on behalf of
US Holdings, TCEH, TCEH Finance or any other Subsidiary of TCEH in connection
with such Lender’s evaluation of whether to become a Lender hereunder or
obtained by such Lender, the Administrative Agent or such other Agent pursuant
to the requirements of this Agreement (“Confidential Information”), confidential
in accordance with its customary procedure for handling confidential information
of this nature and (in the case of a Lender that is a bank) in accordance with
safe and sound banking practices and in any event may make disclosure as
required or requested by any governmental, regulatory or self-regulatory agency
or representative thereof or pursuant to legal process or Applicable Laws or
(a) to such Lender’s or the Administrative Agent’s or such other Agent’s
attorneys, professional advisors, independent auditors, trustees or Affiliates,
(b) to an investor or prospective investor in a Securitization that agrees its
access to information regarding the Loan Parties, the Loans and the Loan
Documents is solely for purposes of evaluating an investment in a Securitization
and who agrees to treat such information as confidential, (c) to a trustee,
collateral manager, servicer, backup servicer, noteholder or secured party in
connection with the administration, servicing and reporting on the assets
serving as collateral for a Securitization and who agrees to treat such
information as confidential and (d) to a nationally recognized ratings agency
that requires access to information regarding the Loan Parties, the Loans and
Loan Documents in connection with ratings issued with respect to a
Securitization; provided that unless specifically prohibited by Applicable Laws
or court order, each Lender, the Administrative Agent and each other Agent shall
use commercially reasonable efforts to notify TCEH of any request made to such
Lender, the Administrative Agent or such other Agent, as applicable, by any
governmental, regulatory or self-regulatory agency or representative thereof
(other than any such request in connection with a routine examination of such
Lender by such governmental, regulatory or self-regulatory agency) for
disclosure of any such non-public information prior to disclosure of such
information; and provided further that in no event shall any Lender, the
Administrative Agent or any other Agent be obligated or required to return any
materials furnished by US Holdings, TCEH or any Subsidiary of TCEH. Each Lender,
the Administrative Agent and each other Agent agrees that it will not provide to
prospective Transferees or to any pledgee referred to in Section 13.6 or to
prospective direct or indirect contractual counterparties to any swap or
derivative transaction to be entered into in connection with, or relating to
Loans made hereunder any of the Confidential Information unless such Person is
advised of and agrees to be bound by the provisions of this Section 13.16 or
confidentiality provisions at least as restrictive as those set forth in this
Section 13.16.

13.17. Direct Website Communications.

(a) Each of US Holdings, TCEH and TCEH Finance may, at their option, provide to
the Administrative Agent any information, documents and other materials that
they are obligated to furnish to the Administrative Agent pursuant to the Loan
Documents, including all notices, requests, financial statements, financial and
other reports, certificates and other information materials, but excluding any
such communication that (A) relates to a request for a new, or a conversion of
an existing, Borrowing or other extension of credit (including any election of
an interest rate or Interest Period relating thereto), (B) relates to the
payment of any principal or other amount due under this Agreement prior to the
scheduled date therefor, (C) provides notice of any Default or Event of Default
under this Agreement or (D) is required to be delivered to satisfy any condition
precedent to the effectiveness of this Agreement and/or any Borrowing (all such
non-excluded communications being referred to herein collectively as
“Communications”), by transmitting the Communications in an electronic/soft
medium in a

 

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format reasonably acceptable to the Administrative Agent to the Administrative
Agent at the e-mail address as set forth on Schedule 13.2; provided that:
(i) upon written request by the Administrative Agent, US Holdings, TCEH and TCEH
Finance shall deliver paper copies of such documents to the Administrative Agent
for further distribution to each Lender until a written request to cease
delivering paper copies is given by the Administrative Agent and
(ii) US Holdings, TCEH and TCEH Finance shall notify (which may be by facsimile
or electronic mail) the Administrative Agent of the posting of any such
documents and provide to the Administrative Agent by electronic mail electronic
versions (i.e., soft copies) of such documents. Each Lender shall be solely
responsible for timely accessing posted documents or requesting delivery of
paper copies of such documents from the Administrative Agent and maintaining its
copies of such documents. Nothing in this Section 13.17 shall prejudice the
right of US Holdings, TCEH, TCEH Finance, the Administrative Agent, any other
Agent or any Lender to give any notice or other communication pursuant to any
Loan Document in any other manner specified in such Loan Document.

(b) The Administrative Agent agrees that the receipt of the Communications by
the Administrative Agent at its e-mail address set forth on Schedule 13.2 shall
constitute effective delivery of the Communications to the Administrative Agent
for purposes of the Loan Documents. Each Lender agrees that notice to it (as
provided in the next sentence) specifying that the Communications have been
posted to the Platform shall constitute effective delivery of the Communications
to such Lender for purposes of the Loan Documents. Each Lender agrees (A) to
notify the Administrative Agent in writing (including by electronic
communication) from time to time of such Lender’s e-mail address to which the
foregoing notice may be sent by electronic transmission and (B) that the
foregoing notice may be sent to such e-mail address.

(c) Each of US Holdings, TCEH and TCEH Finance further agree that the Agents may
make the Communications available to the Lenders by posting the Communications
on Intralinks or a substantially similar electronic transmission system (the
“Platform”), so long as the access to such Platform is limited (i) to the
Agents, the Lenders or any bona fide or potential transferee and (ii) remains
subject to the confidentiality requirements set forth in Section 13.16.

(d) THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENT PARTIES (AS
DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS
OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN
OR OMISSIONS FROM THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED
OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM
VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE
COMMUNICATIONS OR THE PLATFORM. In no event shall any Agent or any of its
Related Parties (collectively, the “Agent Parties” and each an “Agent Party”)
have any liability to US Holdings, TCEH, TCEH Finance, any Lender or any other
Person for losses, claims, damages, liabilities or expenses of any kind (whether
in tort, contract or otherwise) arising out of US Holdings’, TCEH’s, TCEH
Finance’s or any Agent’s transmission of communications by electronic
Communication (including e-mail and internet or intranet websites, including the

 

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Platform), except to the extent the liability of any Agent Party resulted from
such Agent Party’s (or any of its Related Parties’ (other than trustees or
advisors)) gross negligence, bad faith or willful misconduct or material breach
of the Loan Documents as determined in a final non-appealable judgment of a
court of competent jurisdiction).

(e) Each of US Holdings, TCEH, TCEH Finance and each Lender acknowledge that
certain of the Lenders may be “public-side” Lenders (Lenders that do not wish to
receive material non-public information with respect to US Holdings, the
Subsidiaries of TCEH or their respective securities) and, if documents or
notices required to be delivered pursuant to the Loan Documents or otherwise are
being distributed through the Platform, any document or notice that US Holdings,
TCEH or TCEH Finance has indicated contains only publicly available information
with respect to US Holdings, TCEH and the Subsidiaries of TCEH and their
securities may be posted on that portion of the Platform designated for such
public-side Lenders. If US Holdings, TCEH, TCEH Finance has not indicated
whether a document or notice delivered contains only publicly available
information, the Administrative Agent shall post such document or notice solely
on that portion of the Platform designated for Lenders who wish to receive
material nonpublic information with respect to US Holdings, TCEH, the
Subsidiaries of TCEH and their securities. Notwithstanding the foregoing,
US Holdings, TCEH and TCEH Finance shall use commercially reasonable efforts to
indicate whether any document or notice contains only publicly available
information.

13.18. USA PATRIOT Act. Each Lender hereby notifies TCEH that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and
record information that identifies each Loan Party, which information includes
the name and address of each Loan Party and other information that will allow
such Lender to identify each Loan Party in accordance with the Patriot Act.

13.19. Payments Set Aside. To the extent that any payment by or on behalf of the
Borrower is made to any Agent or any Lender, or any Agent or any Lender
exercises its right of setoff, and such payment or the proceeds of such setoff
or any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by such Agent or such Lender in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any proceeding or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred, and (b) each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share of any amount so recovered from or repaid
by any Agent, plus interest thereon from the date of such demand to the date
such payment is made at a rate per annum equal to the applicable Overnight Rate
from time to time in effect.

13.20. Separateness. (b) The Guaranteed Parties hereby acknowledge (i) the legal
separateness of US Holdings, TCEH and the Subsidiaries of TCEH from the Oncor
Subsidiaries, (ii) that the lenders under the Oncor Electric Delivery Facility
and the noteholders under the Existing Oncor Notes and under the transition
bonds have likely advanced funds thereunder in reliance upon the separateness of
the Oncor Subsidiaries from US Holdings, TCEH and the Subsidiaries of TCEH,
(iii) that the Oncor Subsidiaries have assets and liabilities that are

 

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separate from those of US Holdings, TCEH and the Subsidiaries of TCEH, (iv) that
the Obligations are obligations and liabilities of the Borrower and the other
Loan Parties only, and are not the obligations or liabilities of any of the
Oncor Subsidiaries, (v) that the Guaranteed Parties shall look solely to TCEH
and the Guarantors and such Person’s assets, and not to any assets, or to the
pledge of any assets, owned by any of the Oncor Subsidiaries, for the repayment
of any amounts payable pursuant to this Agreement and for the satisfaction of
any other Obligations and (vi) that none of the Oncor Subsidiaries shall be
personally liable to the Guaranteed Parties for any amounts payable, or any
other Obligation, under the Loan Documents.

(b) The Guaranteed Parties hereby acknowledge and agree that the Guaranteed
Parties shall not (i) initiate any legal proceeding to procure the appointment
of an administrative receiver, or (ii) institute any bankruptcy, reorganization,
insolvency, winding up, liquidation, or any like proceeding under applicable
law, against any of the Oncor Subsidiaries, or against any of the Oncor
Subsidiaries’ assets. The Guaranteed Parties further acknowledge and agree that
each of the Oncor Subsidiaries is a third party beneficiary of the foregoing
covenant and shall have the right to specifically enforce such covenant in any
proceeding at law or in equity.

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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Agreement to be duly executed and delivered as of the date first above written.

 

TEXAS COMPETITIVE ELECTRIC HOLDINGS COMPANY LLC By:   /s/ Anthony R. Horton  
Name:   Anthony R. Horton   Title:   Authorized Signatory

[Signature Page to TCEH Senior Unsecured Interim Loan Agreement]

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TCEH FINANCE, INC. By:   /s/ Jonathan Smidt   Name:   Jonathan Smidt   Title:  
President and Treasurer

[Signature Page to TCEH Senior Unsecured Interim Loan Agreement]

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ENERGY FUTURE COMPETITIVE HOLDINGS COMPANY By:   /s/ Anthony R. Horton   Name:  
Anthony R. Horton   Title:   Authorized Signatory

[Signature Page to TCEH Senior Unsecured Interim Loan Agreement]

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MORGAN STANLEY SENIOR FUNDING, INC., as Administrative Agent By:   /s/ Henry F.
D’Alessandro   Name:   Henry F. D’Alessandro   Title:   Vice President

 

MORGAN STANLEY SENIOR FUNDING, INC., as a Lender By:   /s/ Henry F. D’Alessandro
  Name:   Henry F. D’Alessandro   Title:   Vice President

 

MORGAN STANLEY SENIOR FUNDING, INC., as Joint Lead Arranger and Bookrunner By:  
/s/ Henry F. D’Alessandro   Name:   Henry F. D’Alessandro   Title:   Vice
President

TCEH Interim Loan Agreement

Signature Pages

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GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Syndication Agent By:   /s/ Bruce H. Mendelsohn   Name:   Bruce H. Mendelsohn
  Title:   Authorized Signatory

 

GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Joint Lead Arranger and Bookrunner By:   /s/ Bruce H. Mendelsohn   Name:  
Bruce H. Mendelsohn   Title:   Authorized Signatory

 

GOLDMAN SACHS CREDIT PARTNERS L.P.,
as a Lender By:   /s/ Bruce H. Mendelsohn   Name:   Bruce H. Mendelsohn   Title:
  Authorized Signatory

TCEH Interim Loan Agreement

Signature Pages

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CITIGROUP GLOBAL MARKETS INC., as Joint Lead Arranger and Bookrunner By:   /s/
Aaron Dannenberg   Name: Aaron Dannenberg   Title: Director

TCEH Interim Loan Agreement

Signature Pages

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CITIBANK, N.A., as Co-Documentation Agent By:   /s/ Aaron Dannenberg   Name:
Aaron Dannenberg   Title: Vice - President

 

CITIBANK, N.A., as a Lender By:   /s/ Aaron Dannenberg   Name: Aaron Dannenberg
  Title: Vice - President

TCEH Interim Loan Agreement

Signature Pages

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CREDIT SUISSE SECURITIES (USA) LLC,

as a Lender

By:   /s/ Neha Patel   Name: Neha Patel   Title: Vice President

TCEH Interim Loan Agreement

Signature Pages

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CREDIT SUISSE SECURITIES (USA) LLC,
as Joint Lead Arranger, Bookrunner and

Co-Documentation Agent

By:   /s/ Neha Patel Name:   Neha Patel Title:   Vice President CREDIT SUISSE
CAYMAN ISLANDS BRANCH, as a Lender By:   /s/ James Moran Name:   James Moran
Title:   Managing Director By:   /s/ SoVonna Day-Goins Name:   SoVonna Day-Goins
Title:   Managing Director

TCEH Interim Loan Agreement

Signature Pages

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J.P. MORGAN SECURITIES INC., as Joint Lead Arranger and Bookrunner By:   /s/  
Name:   Title:

TCEH Interim Loan Agreement

Signature Pages

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J.P. MORGAN CHASE BANK, N.A.,
as Co-Documentation Agent By:   /s/ Robert W. Traband   Name: Robert W. Traband
  Title: Executive Director J.P. MORGAN CHASE BANK, N.A.,
as a Lender By:   /s/ Robert W. Traband Name:   Robert W. Traband Title:  
Executive Director

TCEH Interim Loan Agreement

Signature Pages

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LEHMAN BROTHERS INC., as Joint Lead Arranger and Bookrunner By:   /s/ Laurie
Perper   Name: Laurie Perper   Title: Senior Vice President

TCEH Interim Loan Agreement

Signature Pages

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LEHMAN COMMERCIAL PAPER INC.,

as Co-Documentation Agent

By:   /s/ Laurie Perper   Name: Laurie Perper   Title: Senior Vice President

TCEH Interim Loan Agreement

Signature Pages

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LEHMAN LOAN FUNDING, LLC, as a Lender By:   /s/ Laurie Perper Name:   Laurie
Perper Title:   Senior Vice President

TCEH Interim Loan Agreement

Signature Pages