Exhibit 10.1

EXECUTION COPY
Privileged and Confidential

 
PURCHASE AND SALE AGREEMENT
 
BY AND BETWEEN
 
PPL HOLTWOOD, LLC
 
and
 
LSP SAFE HARBOR HOLDINGS, LLC
 
Dated as of September 9, 2010
 
 

 

 
 

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LIST OF EXHIBITS AND SCHEDULES
 

EXHIBITS
Exhibit A
Form of Assignment and Assumption Agreement
Exhibit B
Form of Indemnification Agreement
Exhibit C
Form of Intercreditor Agreement
Exhibit D
Form of Security Agreement
Exhibit E
Form of Master Power Sale Agreement

SCHEDULES
 
1.1(11)
Assigned Agreements
1.1(40)
Excluded Liabilities
1.1(56)
Initial Amount
1.1(58)(a)
Seller’s Knowledge
1.1(58)(b)
Buyer’s Knowledge
1.1(68)
Permitted Encumbrances
1.1(92)
Senior Members of Management of Safe Harbor
3.2
Safe Harbor Corporate Organization Information
3.3
Safe Harbor Changes and Events
3.4
Safe Harbor Legal Proceedings
3.5
Safe Harbor Compliance with Laws; Sufficiency of Assets
3.6(a)
Safe Harbor Material Contracts
3.6(c)
Safe Harbor Defaults under Material Contracts
3.7
Safe Harbor Liens
3.8(a)
Safe Harbor Employee Benefit Plans
3.8(d)
Safe Harbor Other Employee Benefit Matters
3.9
Safe Harbor Environmental Matters
3.10
Safe Harbor Insurance
3.11
Safe Harbor Tax Proceedings
3.12
Safe Harbor Intellectual Property
3.13
Safe Harbor Personal Property Condition
3.14
Safe Harbor Undisclosed Liabilities
4.3(a)
Seller’s Defaults and Violations; Consents
4.3(b)
Seller’s Required Regulatory Approvals
4.5(b)
Defaults under Assigned Agreements
4.7
Brokers; Finders
5.3(a)
Buyer’s Defaults and Violations; Consents
5.3(b)
Buyer’s Required Regulatory Approvals
6.4(d)
Buyer Restrictions
6.8(b)(i)
Security Agreement Matters
6.8(b) (ii)
Buyer Letter of Credit Terms
6.8(d)
Seller’s Letters of Credit, Guarantees or Other Credit Support
6.9(a)
Conduct of Business Pending the Closing
6.11
Additional Actions
7.1(c)(i)
Certain Buyer’s Required Regulatory Approvals
7.1(c)(ii)
Certain Seller’s Required Regulatory Approvals
7.1(i)
Buyer’s Required Third Party Consents
7.2(g)
Seller’s Required Third Party Consents
7.2(h)
Safe Harbor/Holtwood Separation Matters

 
 

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TABLE OF CONTENTS
         
ARTICLE I
Page
 
DEFINITIONS
 
1.1.
Definitions
1
1.2.
Construction
10
1.3.
U.S. Dollars
11
       
ARTICLE II
   
PURCHASE AND SALE
 
2.1.
Closing
11
2.2.
Payment of Purchase Price
11
2.3.
Adjustment to Purchase Price
12
2.4.
Deliveries by Seller
13
2.5.
Deliveries by Buyer
14
       
ARTICLE III
   
REPRESENTATIONS AND WARRANTIES REGARDING SAFE HARBOR
 
3.1.
Organization and Existence
14
3.2.
Company
15
3.3.
Absence of Certain Changes or Events
15
3.4.
Legal Proceedings
15
3.5.
Compliance with Laws; Sufficiency of Permits and Assets
15
3.6.
Material Contracts
16
3.7.
Properties; No Liens
16
3.8.
Employee Benefits
16
3.9.
Environmental Matters
17
3.10.
Insurance
17
3.11.
Taxes
17
3.12.
Intellectual Property
18
3.13.
Personal Property
19
3.14.
Financial Statements; Absence of Undisclosed Liabilities
19
3.15.
Regulatory Status
19
3.16.
Exclusive Representations and Warranties
19
       
ARTICLE IV
   
REPRESENTATIONS AND WARRANTIES OF SELLER
 
4.1.
Organization; Qualification
20
4.2.
Authority
20
4.3.
Consents and Approvals; No Violation
20
4.4.
Title and Related Matters
21
4.5.
Assigned Agreements
21
4.6.
Legal Proceedings
22
4.7.
Brokers; Finders
22
       
ARTICLE V
   
REPRESENTATIONS AND WARRANTIES OF BUYER
 
5.1.
Organization; Qualification
22
5.2.
Authority
22
5.3.
Consents and Approvals; No Violation
22
5.4.
Buyer’s Permits
23
5.5.
Availability of Funds
23
5.6.
Legal Proceedings
23
5.7.
Inspections
23
5.8.
Brokers; Finders
24
5.9.
Investment Intent
24
       
ARTICLE VI
   
COVENANTS OF THE PARTIES
 
6.1.
Access to Information
24
6.2.
Public Statements
26
6.3.
Further Assurances
26
6.4.
Governmental Consents and Approvals
26
6.5.
Transfer Taxes
28
6.6.
PJM Transfer Date
28
6.7.
Assigned Agreements
28
6.8.
Senior Notes Guarantee, Indemnification Agreement, Security Agreement and
Intercreditor Agreement
30
6.9.
Conduct of Business Pending the Closing
30
6.10.
Post-Closing Dividend Payment
32
6.11.
Additional Actions
32
       
ARTICLE VII
   
CONDITIONS
 
7.1.
Conditions to Obligation of Buyer
32
7.2.
Conditions to Obligation of Seller
34
7.3.
Failure Caused by Party’s Failure to Comply
35
       
ARTICLE VIII
   
INDEMNIFICATION AND DISPUTE RESOLUTION
 
8.1.
Indemnification
35
8.2.
Defense of Claims
37
       
ARTICLE IX
   
TERMINATION
 
9.1.
Termination
38
9.2.
Effect of Termination
40
       
ARTICLE X
   
MISCELLANEOUS PROVISIONS
 
10.1.
Amendment and Modification
40
10.2.
Expenses
40
10.3.
Waiver of Compliance; Consents
40
10.4.
Survival
40
10.5.
Disclaimers
40
10.6.
Notices
41
10.7.
Assignment
42
10.8.
Governing Law; Forum; Service of Process
42
10.9.
Counterparts
43
10.10.
Interpretation
43
10.11.
Schedules and Exhibits
43
10.12.
Disclosure
43
10.13.
Entire Agreement
44
10.14.
Severability
44

 
 

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PURCHASE AND SALE AGREEMENT
 
PURCHASE AND SALE AGREEMENT, dated as of September 9, 2010 (this “Agreement”),
by and between PPL Holtwood, LLC, a Delaware limited liability company
(“Seller”), and LSP Safe Harbor Holdings, LLC, a Delaware limited liability
company (“Buyer”). Seller and Buyer may each be referred to herein individually
as a “Party,” and together as the “Parties.”
 
W I T N E S S E T H
 
WHEREAS, Seller is the record and beneficial owner of 100,000 shares of Class B
Stock (“Seller’s Interest”) of Safe Harbor Water Power Corporation (“Safe
Harbor”), par value $0 per share (“Voting Stock”), which constitute fifty
percent (50%) of the authorized voting stock of Safe Harbor and one third of the
total authorized capital stock of Safe Harbor;
 
WHEREAS, Seller and certain of its Affiliates are parties to certain agreements
relating to Safe Harbor and the Seller’s Interest (as further defined below, the
“Assigned Agreements”);
 
WHEREAS, Buyer desires to purchase and assume, and Seller desires to sell and
assign, or cause to be sold and assigned, Seller’s Interest and the Assigned
Agreements upon the terms and conditions hereinafter set forth in this
Agreement;
 
WHEREAS, LS Power Equity Partners II, L.P., a Delaware limited partnership
(“Buyer Parent”), has executed and delivered the Buyer Parent Guarantee (as
defined below);
 
WHEREAS, PPL Energy Supply, LLC, a Delaware limited liability company (“PPL
Energy Supply”), has executed and delivered the PPL Energy Supply Guarantee (as
defined below); and
 
WHEREAS, in connection with this Agreement, pursuant to that certain Purchase
and Sale Agreement, dated as of the date hereof, by and between PPL Generation
(as defined below), an Affiliate of Seller, and Harbor Gen Holdings, LLC, an
Affiliate of Buyer (the “Affiliate PSA”), upon the terms and subject to the
conditions therein, the parties thereto have agreed to the purchase and sale of
certain membership interests together with the assignment of certain agreements
to be consummated simultaneously with the Closing (as defined below).
 
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants,
representations, warranties and agreements set forth herein, and intending to be
legally bound hereby, the Parties hereby agree as follows:
 
ARTICLE I
 
DEFINITIONS
 
1.1. Definitions. As used in this Agreement, the following capitalized terms
have the meanings specified in this Section 1.1.
 
(1) “Action” means a suit, claim, action, administrative, arbitral, litigation
or other proceeding, inquiry, audit, hearing, petition, grievance, complaint or
governmental or regulatory investigation.
 
(2) “Additional Agreements” means the Buyer Parent Guarantee, the PPL Energy
Supply Guarantee, the Assignment and Assumption Agreements, the Indemnification
Agreement, the Intercreditor Agreement and the Security Agreement.
 
(3) “Adjustment Amount” means an amount equal to the sum of (i) the Dividend
Adjustment Amount, minus (ii) the Power Bill Adjustment Amount, and plus or
minus (iii) the True-Up Adjustment Amount.
 
(4) “Affiliate” has the meaning set forth in Rule 12b-2 of the General Rules and
Regulations promulgated under the Exchange Act.
 
(5) “Affiliate PSA” has the meaning set forth in the recitals to this Agreement.
 
(6) “Affiliate PSA Closing” means the closing of the transactions contemplated
by the Affiliate PSA.
 
(7) “Affiliate PSA Outside Date” means the “Outside Date” as defined in the
Affiliate PSA.
 
(8) “Agreement” means this Purchase and Sale Agreement together with the
Schedules and Exhibits hereto.
 
(9) “Antitrust Authorities” has the meaning set forth in Section 6.4(a).
 
(10) “Assets” means assets, properties, rights, claims, contracts and interests
of every type and description, real, personal or mixed, tangible and intangible.
 
(11) “Assigned Agreements” means the agreements listed on Schedule 1.1(11),
which will be assigned pursuant to the Assignment and Assumption Agreement(s).
 
(12) “Assignment and Assumption Agreements” means the assignment and assumption
agreements between Seller (and, to the extent applicable, its Affiliates) and
Buyer, to be delivered at the Closing, substantially in the form of Exhibit A
hereto, pursuant to which Seller or its Affiliates shall assign the Assigned
Agreements and Buyer shall accept such assignment and assume the Assumed
Liabilities.
 
(13) “Assumed Liabilities” means any and all Liabilities of Seller or its
Affiliates arising under the Assigned Agreements, other than the Excluded
Liabilities.
 
(14) “Benefit Plans” has the meaning set forth in Section 3.8(a).
 
(15) “Business” means the business of ownership, operation and maintenance of
the Safe Harbor Station by Safe Harbor.
 
(16) “Business Day” means any day other than Saturday, Sunday and any day on
which banking institutions in the State of New York are authorized or required
by Law to close.
 
(17) “Buyer” has the meaning set forth in the preamble to this Agreement.
 
(18) “Buyer Closing Statement” has the meaning set forth in Section 2.3(a).
 
(19) “Buyer Letter of Credit” has the meaning set forth in Section 6.8(b)(ii).
 
(20) “Buyer Material Adverse Effect” has the meaning set forth in Section
5.3(a).
 
(21) “Buyer Parent” has the meaning set forth in the recitals to this Agreement.
 
(22) “Buyer Parent Guarantee” means the guarantee dated as of the date hereof of
Buyer Parent, for the benefit of Seller.
 
(23) “Buyer’s Indemnitee” has the meaning set forth in Section 8.1(b).
 
(24) “Buyer’s Required Regulatory Approvals” has the meaning set forth in
Section 5.3(b).
 
(25) “Closing” has the meaning set forth in Section 2.1.
 
(26) “Closing Date” has the meaning set forth in Section 2.1.
 
(27) “Closing Payment” has the meaning set forth in Section 2.2(c).
 
(28) “Code” means the Internal Revenue Code of 1986, as amended.
 
(29) “Confidentiality Agreement” means the Confidentiality Agreement, dated June
1, 2010, between PPL Services Corporation and LS Power Equity Advisors, LLC.
 
(30) “Consent” means consent, approval or authorization of any Person.
 
(31) “Contract” means any contract, lease, license, evidence of Indebtedness,
mortgage, indenture, purchase order, binding bid, letter of credit, security
agreement, undertaking or other agreement that is legally binding.
 
(32) “CPSG” means Constellation Power Source Generation, Inc.
 
(33) “Credit Rating” means, with respect to any Person, the rating then assigned
to such Person’s unsecured, senior long-term debt obligations not supported by
third party credit enhancements, or if such Person does not have such a rating,
then the rating then assigned to such Person as an issuer, by S&P or Moody’s, as
applicable.
 
(34) “Dividend Adjustment Amount” means an amount equal to (i) the first
dividend paid by Safe Harbor to Buyer following Closing, multiplied by (ii) a
fraction, the numerator of which is the number of calendar days between the
last-pre-Closing dividend record date through and including the date that is
immediately prior to the Closing Date, and the denominator of which is the
number of calendar days from the last Safe Harbor dividend payment preceding the
Closing Date to the date of the first post-Closing dividend payment.
 
(35) “Encumbrances” means any and all mortgages, pledges, liens, claims,
security interests, easements, deed restrictions, conditional and installment
sale agreements, activity and use limitations, restrictions, defects of title or
encumbrances of any kind.
 
(36) “Environmental Laws” means all applicable Laws relating to pollution or
protection of the environment.
 
(37) “ERISA” has the meaning set forth in Section 3.8(a).
 
(38) “Estimated Adjustment Amount” has the meaning set forth in Section 2.2(b).
 
(39) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
 
(40) “Excluded Liabilities” means all Liabilities (i) of Seller (or its
Affiliates  (excluding Safe Harbor)),  including all Liabilities under the
Assigned Agreements arising prior to the Closing Date, but excluding all
Liabilities under the Assigned Agreements arising on or after the Closing Date
or (ii) set forth on Schedule 1.1(40).
 
(41) “Federal Power Act” means the Federal Power Act, as amended, and the rules
and regulations promulgated thereunder.
 
(42) “FERC” means the U.S. Federal Energy Regulatory Commission, and any
successor agency thereto.
 
(43) “Filing” means any registration, declaration, notice or filing with any
Governmental Authority.
 
(44) “Final Order” means an action by a Governmental Authority as to which (i)
no request for stay of the action is pending, no such stay is in effect and if
any time period is permitted by statute or regulation for filing any request for
such stay, such time period has passed, (ii) no petition for rehearing of the
action is pending and the time for filing any such petition or application has
passed, (iii) such Governmental Authority does not have the action under
reconsideration on its own motion and (iv) no appeal to a court or a request for
stay by a court of the Governmental Authority’s action is pending or in effect
and the deadline for filing any such appeal or request has passed; provided that
an order of any Governmental Authority granting approval of the transactions
contemplated by this Agreement may be deemed a Final Order during the pendency
of any reconsideration or rehearing, application or request for review, or
notice of appeal or other judicial petition for review if Buyer’s and Seller’s
respective regulatory counsel in good faith agree that such proceedings are not
reasonably likely to result in a reversal of such order.
 
(45) “Financial Statements” has the meaning set forth in Section 3.14.
 
(46) “GAAP” means generally accepted accounting principles in the U.S.
 
(47) “Governmental Authority” means any executive, legislative, judicial,
regulatory, tribal or administrative agency, body, commission, department,
board, court, tribunal or authority of the U.S. or any foreign country, or any
entity properly delegated authority by such entities, or any state, local or
other governmental subdivision thereof, or any entity acting by duly delegated
authority granted from the foregoing, including without limitation any regional
transmission organization such as PJM, and the North American Electric
Reliability Corporation (including any applicable regional authorities thereof).
 
(48) “Hazardous Substances” means any petroleum, friable asbestos,
polychlorinated biphenyls or materials or substances defined as or included in
the definition of “hazardous substances,” “hazardous wastes,” “hazardous
materials,” “toxic substances,” or words of similar meaning and regulatory
effect under any applicable Environmental Law.
 
(49) “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
 
(50) “Indebtedness” means any of the following: (a) any indebtedness for
borrowed money and accrued but unpaid interest, premiums, penalties and similar
amounts relating thereto; (b) any obligations evidenced by bonds, debentures,
notes or other similar instruments; (c) any obligations to pay in installments,
or for the deferred purchase price, of property or services, except trade
accounts payable and other current liabilities arising in the ordinary course of
business consistent with past practices; (d) any obligations as lessee under
capitalized leases; (e) any indebtedness created or arising under any
conditional sale or other title retention agreement with respect to acquired
property; (f) any obligations, contingent or otherwise, under acceptance,
letters of credit or similar facilities; and (g) any guaranty, security interest
or Encumbrance upon any property or Asset related to any of the foregoing.
 
(51) “Indemnifiable Loss” has the meaning set forth in Section 8.1(a).
 
(52) “Indemnification Agreement” means the indemnification agreement between
Seller (or its Affiliates) and Buyer, to be delivered at the Closing,
substantially in the form of Exhibit B hereto or otherwise reasonably acceptable
to Seller.
 
(53) “Indemnifying Party” has the meaning set forth in Section 8.1(d).
 
(54) “Indemnitee” has the meaning set forth in Section 8.1(b).
 
(55) “Independent Accounting Firm” means such nationally recognized, independent
accounting firm as is mutually appointed by Seller and Buyer for purposes of
this Agreement.
 
(56) “Initial Amount” means the portion of the Total Purchase Price allocated to
the transactions contemplated by this Agreement as set forth in Schedule
1.1(56).
 
(57) “Intercreditor Agreement” means an agreement containing substantially the
terms set forth in the intercreditor agreement term sheet attached hereto as
Exhibit C among Seller (or its Affiliates), Buyer and the Second Lien
Acquisition Debt Holders, or otherwise reasonably acceptable to Seller.
 
(58) “Knowledge” means (i) in the case of Seller, the actual knowledge, after
reasonable inquiry, of the individuals listed on Schedule 1.1(58)(a), and (ii)
in the case of Buyer, the actual knowledge, after reasonable inquiry, of the
individuals listed on Schedule 1.1(58)(b).
 
(59) “Laws” means all laws, statutes, rules, regulations, ordinances and Orders
of any Governmental Authority.
 
(60) “Liability” or “Liabilities” means any liability or obligation (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated and
whether due or to become due), including Indebtedness and any liability for
Taxes.
 
(61) “Master Power Sale Agreement” means the Master Power Sale Agreement among
Seller, PPL EnergyPlus, LLC and Buyer and the related confirmations, to be
delivered at the Closing, substantially in the form of Exhibit E hereto or
otherwise reasonably acceptable to Buyer and Seller.
 
(62)  “Material Adverse Effect” means any change in or effect on the Business
that is materially adverse to the properties, results of operations or condition
(financial or otherwise) of the Business, taken as a whole, other than (a) any
change or effect affecting the international, national, regional or local
electric industry as a whole and not specific to the Business, (b) any change or
effect resulting from changes in the international, national, regional or local
wholesale or retail markets for electricity, including any change in or effect
on the structure, operating agreements, operations or procedures of PJM, (c) any
change or effect resulting from changes in the international, national, regional
or local electricity transmission or distribution systems or operations thereof,
(d) changes in general economic conditions, interest rates or credit or
securities markets in the U.S. or elsewhere, (e) changes in Law, or any
judgments, orders or decrees that apply generally to similarly situated Persons,
(f) any change or effect resulting from any condition imposed on any Party or
the Business by a Governmental Authority in connection with the grant of such
Governmental Authority’s Consent or approval of the transactions contemplated
hereby, (g) any acts of war or terrorist activities, (h) strikes, work stoppages
or other labor disturbances that are not specific to the Business, (i) any
matter to the extent that (I) it is disclosed in reasonable detail in any
Schedule delivered by Seller on the date hereof and (II) such disclosed matter
does not worsen in a material manner, (j) any change or effect arising directly
by reason of the announcement of the transactions provided for in this
Agreement, and (k) any change in or effect on the Business which is cured
(including by payment of money), without any material adverse impact before the
earlier of the Closing and the termination of this Agreement pursuant to Section
9.1; provided, that in each of clauses (a), (b), (c), (e), (g) and (h), only to
the extent such changes or effects do not have a disproportionate effect on the
Business that is adverse to the properties, results of operations or condition
(financial or otherwise) of the Business (taken as a whole) as compared to other
similarly situated businesses.
 
(63) “Material Contracts” means all Contracts to which Safe Harbor is a party or
by which the Assets of Safe Harbor are bound (i) requiring or guaranteeing
(including by collateral signature, surety, or joint and several debt) payments
by or to Safe Harbor in excess of $250,000 per annum or $750,000 in the
aggregate, (ii) for the sale, purchase, interconnection, supply or transmission
of fuel, energy, capacity, hydrology, or any ancillary services, (iii) with
Seller or any Affiliate thereof (including any employee, manager, officer or
director of Seller or any Affiliate), (iv) that are employment or collective
bargaining agreements, (v) that are partnership, joint venture or limited
liability company agreements, (vi) for the creation, incurrence, assumption or
guarantee of any outstanding Indebtedness, or under which Safe Harbor has
imposed a security interest on any of its Assets, which security interest
secures outstanding Indebtedness, (vii) for the acquisition, ownership, or
leasing of any real property, and for which any material obligations are
outstanding, or (viii) which contain any covenant restricting the ability of
Safe Harbor to compete or to engage in any activity or business, except, in each
case, for Contracts with respect to which Safe Harbor will not be bound or have
liability from or after the Closing or which are terminable on less than ninety
(90) days’ notice without penalty or payment.
 
(64) “Order” means any award, decision, injunction, judgment, order, writ,
decree, ruling, subpoena, or verdict entered, issued, made, or rendered by any
Governmental Authority that possesses competent jurisdiction.
 
(65) “Outside Date” has the meaning set forth in Section 9.1(b).
 
(66) “Party” and “Parties” have the respective meanings set forth in the
preamble to this Agreement.
 
(67) “Permit” means any permit, certificate, license, franchise, Consent,
approval, registration, franchise or similar authorization issued, made or
rendered by any Governmental Authority that possesses competent jurisdiction.
 
(68) “Permitted Encumbrances” means: (a) statutory liens for Taxes or other
charges or assessments of Governmental Authorities not yet due or delinquent, or
which are being contested in good faith by appropriate proceedings and for which
reserves have been established on the Financial Statements in accordance with
GAAP; (b) mechanics’, carriers’, workers’, repairers’ and other similar liens
arising or incurred in the ordinary course of business consistent with past
practices; (c) zoning, entitlement, conservation restriction and other land use
and environmental restrictions and regulations of Governmental Authorities that
are made public; (d) Encumbrances created by Buyer or its Representatives on
Buyer’s behalf; (e) Encumbrances listed on Schedule 1.1(68); and (f)
imperfections or irregularities of title and such other Encumbrances that are,
individually or in the aggregate, not reasonably likely to materially detract
from the value or use and enjoyment thereof in the Business as a whole as
currently conducted.
 
(69) “Person” means any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization, other entity,
business association or Governmental Authority.
 
(70) “PJM” means PJM Interconnection, L.L.C., and any successor entity thereto.
 
(71) “PJM Transfer Date” means such date as the transfer to Buyer of Seller’s
and/or its Affiliates’ entitlement to one-third of the capacity, energy and
ancillary services of the Safe Harbor Station is reflected in all applicable PJM
systems and databases.
 
(72) “Power Bill Adjustment Amount” means an amount equal to (i) the Safe Harbor
Power Bill for the month in which the Closing occurs (and which will be billed
by Safe Harbor in the month following Closing), multiplied by (ii) a fraction,
the numerator of which is the number of days in such month preceding the Closing
Date and the denominator of which is the total number of days in such month.  If
the Closing occurs in December 2010, the Safe Harbor Power Bill referred to in
clause (i) shall exclude any of the True-Up Amount for purposes of determining
the Power Bill Adjustment Amount.
 
(73) “PPL Energy Supply” means PPL Energy Supply, LLC, a Delaware limited
liability company.
 
(74) “PPL Energy Supply” has the meaning set forth in the recitals to this
Agreement.
 
(75) “PPL Energy Supply Guarantee” means the guarantee dated as of the date
hereof of PPL Energy Supply, for the benefit of Buyer.
 
(76) “PPL Generation” means PPL Generation, LLC, a Delaware limited liability
company.
 
(77) “Purchase Price” has the meaning set forth in Section 2.2(a).
 
(78) “Release” means any release, spill, leak, discharge, disposal of, pouring,
emptying, injecting, or dumping of a Hazardous Substance into the environment.
 
(79) “Representatives” of a Person means, collectively, such Person’s Affiliates
and its and their respective directors, managers, officers, partners, members,
employees, representatives, agents and advisors (including accountants, legal
counsel, environmental consultants, engineering consultants and financial
advisors).
 
(80) “Safe Harbor” has the meaning set forth in the recitals to this Agreement.
 
(81) “Safe Harbor Power Bill” shall mean the monthly amount billed to Seller by
Safe Harbor for amounts owed by Seller to Safe Harbor under the Safe Harbor PPA
for the preceding month.
 
(82) “Safe Harbor PPA” means the Safe Harbor Contract, dated as of September 1,
1982, effective November 1, 1982, by and between CPSG (as assignee of Baltimore
Gas and Electric Company), Seller (as assignee of Pennsylvania Power & Light
Company) and Safe Harbor.
 
(83) “Safe Harbor Station” means the hydroelectric plant known as Safe Harbor
Hydroelectric Station, located near Lancaster, Pennsylvania, and related
properties and assets owned or operated by Safe Harbor.
 
(84) “Second Lien Acquisition Debt Holders” means any second lien “Acquisition
Debt Lenders” (as defined in the Indemnification Agreement) from time to time.
 
(85) “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
 
(86) “Security Agreement” means the security agreement between Seller (or its
Affiliates) and Buyer to be delivered at the Closing, substantially in the form
of Exhibit D hereto or otherwise reasonably acceptable to Seller.
 
(87) “Seller” has the meaning set forth in the preamble to this Agreement.
 
(88) “Seller Closing Statement” has the meaning set forth in Section 2.3(b).
 
(89) “Seller’s Indemnitee” has the meaning set forth in Section 8.1(a).
 
(90) “Seller’s Interest” has the meaning set forth in the recitals to this
Agreement.
 
(91) “Seller’s Required Regulatory Approvals” has the meaning set forth in
Section 4.3(b).
 
(92) “Senior Members of Management of Safe Harbor” means those individuals whose
names are listed on Schedule 1.1(92).
 
(93) “Senior Notes” means the $65,000,000 principal amount 7.06% Series A Senior
Notes of Safe Harbor issued on June 25, 2008 and maturing on June 30, 2018.
 
(94) “Senior Notes Guarantee” has the meaning set forth in Section 6.8(a).
 
(95) “Subsidiary”, when used in reference to any Person, means any entity of
which outstanding securities or interests having ordinary voting power to elect
a majority of the board of directors or other governing body performing similar
functions of such entity are owned directly or indirectly by such Person.
 
(96) “Tax” or “Taxes” means all taxes, charges, fees, levies, penalties and
other assessments imposed by any Governmental Authority, including income, gross
receipts, gross revenues, gross earnings, gas, excise, property, sales,
transfer, use, franchise, payroll, withholding, social security and other taxes,
together with any interest, penalties or additions attributable thereto.
 
(97) “Tax Return” means any return, report, information return or other
document, together with all amendments and supplements thereto (including any
related or supporting information), required to be supplied to any Governmental
Authority responsible for the administration of Laws governing Taxes.
 
(98) “Third-Party Claim” has the meaning set forth in Section 8.2(a).
 
(99) “Total Purchase Price” means the sum of the Initial Amount plus the
“Initial Amount” (as defined in the Affiliate PSA), which in all cases shall
equal $381,000,000.
 
(100) “Transfer Taxes” has the meaning set forth in Section 6.5.
 
(101) “True-Up Adjustment Amount” shall mean (i) if the Closing occurs on or
before December 31, 2010, an amount equal to (A) one-third of the True-Up Amount
determined in January 2011 by Safe Harbor management in good faith consistent
with past practice, multiplied by (B) a fraction, the numerator of which is the
number of days in 2010 preceding the Closing Date, and the denominator of which
is 365; and (ii) if the Closing occurs after December 31, 2010, zero.
 
(102) “True-Up Amount” shall mean the annual true-up of the Safe Harbor Power
Bill determined by Safe Harbor management in January of each year, which amount
represents a reconciliation of amounts actually paid by the Safe Harbor
shareholders under the Safe Harbor PPA during the preceding calendar year
against Safe Harbor’s expenses for such calendar year.
 
(103) “Unintentional Safe Harbor Breach” means, with respect to the covenants
and agreements set forth in Section 6.9(a) of this Agreement, a breach thereof
by Seller resulting from the action or inaction of Safe Harbor, so long as (i)
prior to such action or inaction, the decision to take such action or permit
such inaction had not been presented to the board of directors of Safe Harbor or
a duly authorized representative of Seller for its consent or approval as an
owner of the Seller’s Interest, or (ii) if so presented, Seller or its
representative or designated director had not granted such consent or approval.
 
(104) “U.S.” means the United States of America.
 
(105) “Voting Stock” has the meaning set forth in the recitals to this
Agreement.
 
1.2. Construction. In construing this Agreement, together with the Schedules and
Exhibits hereto, the following principles shall be followed:
 
(a) the terms “herein,” “hereof,” “hereby,” “hereunder” and other similar terms
refer to this Agreement as a whole and not only to the particular Article,
Section or other subdivision in which any such terms may be employed;
 
(b) except as otherwise set forth herein, references to Articles, Sections,
Schedules, Exhibits and other subdivisions refer to the Articles, Sections,
Schedules, Exhibits and other subdivisions of this Agreement;
 
(c) a reference to any Person shall include such Person’s predecessors;
 
(d) all accounting terms not otherwise defined herein have the meanings assigned
to them in accordance with U.S. generally accepted accounting principles;
 
(e) no consideration shall be given to the captions of the Articles, Sections,
Schedules, Exhibits, subdivisions, subsections or clauses, which are inserted
for convenience in locating the provisions of this Agreement and not as an aid
in its construction;
 
(f) examples shall not be construed to limit, expressly or by implication, the
matter they illustrate;
 
(g) the word “includes” and “including” and their syntactical variants mean
“includes, but is not limited to” and “including, without limitation,” and
corresponding syntactical variant expressions;
 
(h) a defined term has its defined meaning throughout this Agreement, regardless
of whether it appears before or after the place in this Agreement where it is
defined; and
 
(i) the plural shall be deemed to include the singular and vice versa.
 
1.3. U.S. Dollars.  When used herein, the term “dollars” and the symbol “$”
refer to the lawful currency of the U.S.
 
ARTICLE II
 
PURCHASE AND SALE
 
2.1. Closing.  The purchase and sale of the Seller’s Interest, and the
consummation of the other transactions contemplated hereby (including the due
execution and delivery of the Assignment and Assumption Agreements), shall take
place at a closing (the “Closing”) to be held at the offices of Simpson Thacher
& Bartlett LLP, 425 Lexington Avenue, New York, NY 10017, on the same date and
simultaneously with the Affiliate PSA Closing, on the date that is five (5)
Business Days after the date on which the last of the conditions precedent to
the Closing set forth in Article VII of this Agreement (other than the Affiliate
PSA Closing and those other conditions that by their very nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of such
conditions) shall have been satisfied (provided that such Closing shall not
occur until the earlier of (i) the date that is five (5) Business Days after the
“Closing Date” as such term is defined in the Purchase and Sale Agreement, dated
as of April 28, 2010, by and among E.ON US Investments Corp., PPL Corporation
and E.ON AG and (ii) December 20, 2010) or, to the extent permitted by
applicable Law, waived by the Party for whose benefit such conditions precedent
exist, or at such other date, time and location as may be agreed upon in writing
between Buyer and Seller. The date on which the Closing actually occurs is
hereinafter called the “Closing Date.” The Closing shall be effective for all
purposes as of 12:01 a.m., New York City time, on the Closing Date.
 
2.2. Payment of Purchase Price.
 
(a) Upon the terms and subject to the conditions set forth in this Agreement, in
consideration of the aforesaid sale, assignment, conveyance, transfer and
delivery of the Seller’s Interest and the due execution and delivery of the
Assignment and Assumption Agreements, Buyer shall pay to Seller cash in an
aggregate amount equal to (A) the Initial Amount plus or minus (B) the
Adjustment Amount (collectively, the “Purchase Price”).
 
(b) At least three (3) Business Days prior to the Closing Date, Seller shall
provide to Buyer its good faith estimate of the Adjustment Amount (the
“Estimated Adjustment Amount”) based on consultation with Safe Harbor management
and the most recent financial information then available.
 
(c) At the Closing, in furtherance but not in duplication of Section 2.2(a),
Buyer shall pay to Seller cash in an aggregate amount equal to (A) the Initial
Amount plus or minus (B) the Estimated Adjustment Amount (the “Closing
Payment”). The Closing Payment shall be paid to Seller by Buyer at the Closing
by wire transfer of immediately available funds to the account designated by
Seller to Buyer at least two (2) Business Days prior to the Closing Date.
 
2.3. Adjustment to Purchase Price.
 
(a) Within ninety (90) days after the Closing Date, Buyer shall deliver to
Seller, at Buyer’s sole cost and expense, a statement setting forth its
calculation of the actual Adjustment Amount (the “Buyer Closing Statement”).
 
(b) In the event that Seller is in disagreement with the Buyer Closing
Statement, Seller shall, within thirty (30) days after receipt of the Buyer
Closing Statement, prepare and deliver to Buyer a computation of its own
analysis of the Buyer Closing Statement (the “Seller Closing Statement”). If
within thirty (30) days following delivery of such computation Buyer does not
object in writing thereto to Seller, then the Buyer Closing Statement shall be
as reflected on the computation provided by Seller pursuant to the immediately
preceding sentence.  If within such thirty (30) days Buyer objects to Seller in
writing to such computation, then Buyer and Seller shall negotiate in good faith
and attempt to resolve their disagreement.  Should such negotiations not result
in an agreement within thirty (30) days after receipt by Buyer of such written
objection from Seller, then the disputed items of the Buyer Closing Statement
(such items, the “disputed items”) shall be submitted to the Independent
Accounting Firm, and all other items on the Buyer Closing Statement shall be
final, binding and conclusive on the Parties.  The Independent Accounting Firm
will deliver to Buyer and Seller a written determination of the disputed items
(such determination to include a worksheet setting forth all material
calculations used in arriving at such determination and to be based solely on
information provided to the Independent Accounting Firm by Buyer and Seller)
within thirty (30) days of the submission of the dispute to the Independent
Accounting Firm, which determination will be final, binding and conclusive on
the Parties.  In resolving any disagreement, the Independent Accounting Firm may
not assign any value to a disputed item greater than the greatest value claimed
for such disputed item by any Party or lesser than the lowest value claimed for
such disputed item by any Party. All fees and expenses relating to the work, if
any, to be performed by the Independent Accounting Firm pursuant to this Section
2.3(b) will be allocated between Seller and Buyer in inverse proportion as each
shall prevail in respect of the dollar amount of disputed items so submitted (as
finally determined by the Independent Accounting Firm).  Within ten (10)
Business Days after the Buyer Closing Statement is finally determined as
provided in this Section 2.3(b) (as agreed between the Parties or as determined
by the Independent Accounting Firm), the difference between the actual
Adjustment Amount and the Estimated Adjustment Amount shall be paid by Seller to
Buyer or by Buyer to Seller, as applicable, by wire transfer of immediately
available funds to such account or accounts as shall be specified by Buyer or
Seller, as applicable.
 
2.4. Deliveries by Seller. At the Closing, Seller shall deliver, or cause to be
delivered, the following to Buyer:
 
(a) The Assignment and Assumption Agreements, duly executed by Seller (and, to
the extent applicable, its Affiliates);
 
(b) The stock certificate representing the Seller’s Interest or other documents
necessary to transfer the Seller’s Interest to Buyer;
 
(c) A letter of resignation for each of the directors of Safe Harbor appointed
by Seller or its Affiliates;
 
(d) Evidence, in form and substance reasonably satisfactory to Buyer,
demonstrating that Seller has obtained the Seller’s Required Regulatory
Approvals set forth on Schedule 7.1(c)(ii);
 
(e) An affidavit, duly executed by the appropriate Affiliate of Seller,
certifying facts as necessary to exempt the transactions hereunder from
withholding under Section 1445 of the Code;
 
(f) All books and records in Seller’s or its Affiliates’ (other than Safe
Harbor’s) possession and directly related to the Business and the Assigned
Agreements; provided such books and records shall not include (A) duplicate
copies of all records transferred to Buyer pursuant to this Agreement, (B)
documents or files relating to employees of Seller or its Affiliates as of the
date hereof who are not employees of Buyer or its Affiliates after Closing, (C)
employee documents or files afforded confidential treatment under any applicable
Laws, except to the extent the affected employee consents in writing to the
disclosure of the same to Buyer, (D) all records prepared in connection with the
sale of Safe Harbor (including bids received from third parties and analyses
relating to Safe Harbor) or (E) financial or other projections, other than
internal projections prepared by Safe Harbor, relating to the Business;
 
(g) Copies, certified by the Secretary or Assistant Secretary of Seller, of
resolutions authorizing the execution, delivery and performance of this
Agreement, each Additional Agreement to which Seller is a party and all of the
other agreements and instruments, in each case, to be executed, delivered and
performed by Seller in connection herewith;
 
(h) The Indemnification Agreement, duly executed by Seller (or its Affiliate),
if required pursuant to Section 6.8(b);
 
(i) The Intercreditor Agreement, duly executed by Seller (or its Affiliate), if
required pursuant to Section 6.8(b);
 
(j) The Security Agreement, duly executed by Seller (or its Affiliate), if
required pursuant to Section 6.8(b); and
 
(k) Such other agreements, documents, instruments and writings as are reasonably
required to be delivered by Seller at or prior to the Closing Date pursuant to
this Agreement or otherwise reasonably required in connection herewith.
 
2.5. Deliveries by Buyer.  At the Closing, Buyer shall deliver, or cause to be
delivered, the following to Seller:
 
(a) The Closing Payment, by wire transfer of immediately available funds in
accordance with Seller’s instructions to the account of Seller as designated by
Seller at least two (2) Business Days prior to the Closing Date;
 
(b) The Assignment and Assumption Agreements, duly executed by Buyer;
 
(c) Evidence, in form and substance reasonably satisfactory to Seller,
demonstrating that Buyer has obtained the Buyer’s Required Regulatory Approvals
set forth on Schedule 7.1(c)(i);
 
(d) The Senior Notes Replacement Guarantee and the Senior Notes Release;
 
(e) Copies, certified by the Secretary or Assistant Secretary of Buyer, of
resolutions authorizing the execution, delivery and performance of this
Agreement, each Additional Agreement to which Buyer is a party, and all of the
other agreements and instruments, in each case, to be executed, delivered and
performed by Buyer in connection herewith; and
 
(f) Either (i) the Indemnification Agreement, the Security Agreement and the
Intercreditor Agreement (if applicable as of the Closing), each duly executed by
Buyer and (if applicable) the Second Lien Acquisition Debt Holders and delivered
to Seller; or (ii) a Buyer Letter of Credit, duly executed, but in each case in
accordance with Section 6.8(b); and
 
(g) Such other permits, agreements, documents, instruments and writings as are
reasonably required to be delivered by Buyer at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably required in connection
herewith.
 
ARTICLE III 
 
REPRESENTATIONS AND WARRANTIES REGARDING SAFE HARBOR
 
To Seller’s Knowledge after reasonable inquiry of the President and
Secretary/Treasurer of Safe Harbor (except with respect to Section 3.1, Section
3.2, Section 3.3, Section 3.14 and Section 3.15, which are qualified by Seller’s
Knowledge only as expressly stated therein), and as an inducement to Buyer to
enter into this Agreement and consummate the transactions contemplated hereby,
Seller hereby represents and warrants to Buyer as follows:
 
3.1. Organization and Existence.  Safe Harbor is a corporation validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its Business as it is now being conducted. Safe
Harbor is duly qualified or licensed to do business in each other jurisdiction
where the actions required to be performed by it hereunder makes such
qualification or licensing necessary, except in those jurisdictions where the
failure to be so qualified or licensed would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
 
3.2. Company.  The legal name, place of organization and respective ownership
interest of Safe Harbor is accurately and completely set forth on Schedule
3.2.  Safe Harbor does not own any direct or indirect equity ownership,
participation or voting right or interest in any other Person or any options,
warrants, convertible securities, exchangeable securities, subscription rights,
conversion rights, exchange rights, stock appreciation rights, phantom stock,
profit participation or other similar rights in or issued by any other
Person.  Seller does not own any direct or indirect equity ownership,
participation or voting right or interest in Safe Harbor other than Seller’s
Interest, and to Seller’s Knowledge other than as set forth on Schedule 3.2, no
other Person owns any equity ownership, participation or voting right or
interest in or any options, warrants, convertible securities, exchangeable
securities, subscription rights, conversion rights, exchange rights, stock
appreciation rights, phantom stock, profit participation or other similar rights
in or issued by Safe Harbor.
 
3.3. Absence of Certain Changes or Events.  Except (a) as set forth on Schedule
3.3, and (b) for any action taken by Safe Harbor that would be permitted without
Buyer’s consent under Section 6.9, since December 31, 2009, the Business has
been conducted in accordance with the ordinary course of business consistent
with past practices, except in connection with any process relating to the sale
of Safe Harbor.  Since December 31, 2009, there has not been any change, event
or effect that, individually or in the aggregate with other changes, events or
effects, has resulted in, or would reasonably be expected to result in, a
Material Adverse Effect.
 
3.4. Legal Proceedings.  Except as disclosed on Schedule 3.4, there are no
suits, claims or other litigation, or any other material Actions pending or
threatened against or otherwise relating to Safe Harbor before any Governmental
Authority or any arbitrator.  Except as disclosed on Schedule 3.4, Safe Harbor
is not subject to any Order of any Governmental Authority or any arbitrator that
would, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect. This Section 3.4 does not relate to (i) matters related
to employee benefits, which matters are the subject of Section 3.8, (ii)
environmental matters, which matters are the subject of Section 3.9, or (iii)
matters related to Taxes, which matters are the subject of Section 3.11.
 
3.5. Compliance with Laws; Sufficiency of Permits and Assets.  Safe Harbor is in
compliance in all material respects with any Law applicable to it or its
Business or properties.  All Permits and all equipment, services, intellectual
property, real property and other Assets, that Safe Harbor requires in order to
own, lease, maintain, operate and conduct its Business in all material respects
as currently conducted, are held by Safe Harbor, except as set forth on Schedule
3.5.  Safe Harbor is in compliance in all material respects with the terms of
all Permits applicable to the Business.  Neither Seller nor Safe Harbor has
received notice of any material violation of Law with respect to Safe Harbor or
its Business or properties during the last five (5) years. This Section 3.5 does
not relate to (i) matters related to employee benefits, which matters are the
subject of Section 3.8, (ii) environmental matters, which matters are the
subject of Section 3.9, or (iii) matters related to Taxes, which matters are the
subject of Section 3.11.
 
3.6. Material Contracts.
 
(a) The contracts listed in Schedule 3.6(a) include all Material Contracts as of
the date hereof.
 
(b) Each Material Contract constitutes the valid and binding obligation, in full
force and effect, of Safe Harbor and the other parties thereto, except that in
each case (i) such enforceability may be subject to any bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other Laws now or hereafter
in effect affecting or relating to enforcement of creditors’ rights generally
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
 
(c) Except as set forth on Schedule 3.6(c), neither Safe Harbor nor any other
party thereto is in default in the performance or observance in any material
respect of the terms or provisions of, and no event has occurred which, with
lapse of time or action by a third party, would result in such a default under,
any Material Contract.
 
3.7. Properties; No Liens.  Except as set forth in Schedule 3.7, Safe Harbor has
good and marketable title to, or valid leasehold interests in or sufficient
other similar rights with respect to, all real property (including submerged
land rights) owned or leased by Safe Harbor or otherwise necessary to permit the
operation of its Business as a whole substantially as such Business has been
operated heretofore.  None of such properties or any other Assets of Safe Harbor
(whether real or personal) is subject to any Encumbrance, except for
(i) Encumbrances set forth on Schedule 3.7 and (ii) Permitted Encumbrances.
 
3.8. Employee Benefits.
 
(a) Schedule 3.8(a) sets forth a complete and accurate list of each material
“employee benefit plan” (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”)), and each material
severance, change in control, vacation, bonus, and equity incentive plan,
program, policy or agreement, in each case that is sponsored, contributed to or
maintained by Safe Harbor and in which present or former employees of Safe
Harbor participate (collectively, the “Benefit Plans”).  True and correct
copies, or materially accurate summaries, of each such Benefit Plan have been
made available to Buyer or its Representatives.
 
(b) Except as would not, individually or in the aggregate, be reasonably likely
to have a Material Adverse Effect: (x) the Benefit Plans are in compliance with
all applicable requirements of ERISA, the Code, and other applicable Law and are
administered in accordance with their terms and (y) each Benefit Plan that is
intended to be qualified within the meaning of Section 401 of the Code has (A)
received a favorable determination letter as to its qualification or (B) been
established under a standardized master and prototype or volume submitter plan
for which a current favorable Internal Revenue Service advisory letter or
opinion letter has been obtained by the plan sponsor and is valid as to the
adopting employer, and in either case nothing has occurred that would reasonably
be expected to result in the loss of such qualification.
 
(c) As of the date of this Agreement, there is no pending or threatened material
litigation with respect to any Benefit Plan, other than ordinary and usual
claims for benefits by participants and beneficiaries.
 
(d) Except as set forth on Schedule 3.8(d), or as would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect:
 
(i) no current employees of Safe Harbor are represented by a union or other
collective bargaining representative;
 
(ii) there are no pending or threatened, labor strikes, requests for
representation, work stoppages or lockouts involving employees of Safe Harbor;
 
(iii) Seller has not received notice of any pending charges against Safe Harbor
before any Governmental Authority responsible for the prevention of unlawful
employment practices;
 
(iv) Safe Harbor is in compliance with all Laws affecting the employment of
labor; and
 
(v) Seller has not received notice of any pending investigation by a
Governmental Authority relating to Safe Harbor employees or employment
practices.
 
3.9. Environmental Matters.  Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect and except
as disclosed on Schedule 3.9: (a) Safe Harbor is in compliance with all
Environmental Laws, (b) there are no claims pending or threatened against Safe
Harbor relating to any violation of, or liability under, any Environmental Law,
and (c) no Hazardous Substance has been Released at any real property owned by
Safe Harbor or used by it in the operation of the Safe Harbor Station in an
amount or condition that would reasonably be expected to result in liability
under any Environmental Law.  Safe Harbor does not transport any Hazardous
Substance off of its properties for disposal in a manner that would reasonably
be expected to result in any material liability under any Environmental
Law.  This Section 3.9 contains the sole and exclusive representations and
warranties of Seller relating to Environmental Laws, Hazardous Substances or
other environmental matters.
 
3.10. Insurance.  Safe Harbor and the Business or properties are insured as
specified under the insurance policies and in the amounts listed on Schedule
3.10.  No written notice of cancellation or termination has been received by
Safe Harbor with respect to any such material policies that have not been
replaced on substantially similar terms prior to the date of such cancellation
or termination.
 
3.11. Taxes.
 
(a) All material Tax Returns required to be filed by Safe Harbor have been filed
when due in accordance with all applicable Laws and all such Tax Returns are
true, correct and complete in all material respects.
 
(b) Safe Harbor has timely paid in full all material Taxes shown as due and
payable on such Tax Returns.
 
(c) Except as set forth on Schedule 3.11, there is no action, suit, proceeding,
investigation, audit or claim now pending with respect to any material Tax with
respect to Safe Harbor and Safe Harbor has not received any written notice of
deficiency or assessment from any Governmental Authority with respect to Taxes
which has not been fully paid or finally settled or which is being contested in
good faith through appropriate proceedings and for which adequate reserves have
been established in accordance with GAAP.
 
(d) Safe Harbor has timely and properly collected, withheld and remitted to the
taxing authority to whom such payment is due all amounts required to be
collected or withheld by Safe Harbor for the payment of material Taxes.
 
(e) Safe Harbor is not liable for the Taxes of any other Person, whether by Law,
by contract or as successor or as transferee in interest and neither Seller nor
any of its Affiliates is a party to a tax sharing, tax indemnity, tax allocation
or similar agreement to which Safe Harbor is also a party.
 
(f) There are not Liens for Taxes (other than Permitted Encumbrances) on any of
the assets of Safe Harbor.
 
(g) There are no waivers or outstanding agreements extending the applicable
statutory period of limitations of Taxes for Safe Harbor.
 
(h) Safe Harbor is in compliance with the normalized method of accounting rules
in accordance with Code Section 168(f)(2).
 
(i) Safe Harbor has not participated in and does not have any liability with
respect to any “reportable transaction” within the meaning of Treasury
Regulations Section 1.6011-4.
 
3.12. Intellectual Property.  Except as set forth on Schedule 3.12, Safe Harbor
possesses or has adequate rights to use all trademarks, trade names, patents,
service marks, brand marks, brand names, computer programs, databases,
industrial designs and copyrights necessary for the operation of the Business in
the manner in which it is currently being conducted by Safe Harbor, except for
the failure to possess or have adequate rights to use such properties that would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  Except as set forth on Schedule 3.12, there is no (a)
infringement or claimed infringement by Safe Harbor of any patent, trademark,
service mark or copyright of others or (b) infringement of any patent,
trademark, service mark or copyright owned by or under license to Safe Harbor
except for any such infringements of the type described in clause (a) or (b)
that are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect.
 
3.13. Personal Property.  Except as set forth on Schedule 3.13, the machinery
and equipment included as part of the Assets of Safe Harbor are in normal
operating condition and in a state of reasonable maintenance and repair and are
suitable in all material respects for the purposes for which they are now being
used in the conduct of the Business, in each case for machinery and equipment of
a similar vintage.
 
3.14. Financial Statements; Absence of Undisclosed Liabilities.  Seller has
previously furnished or made available to Buyer copies of the consolidated
audited financial statements of Safe Harbor as of and for the years ended
December 31, 2007, December 31, 2008 and December 31, 2009 and the consolidated
unaudited financial statements of Safe Harbor as of and for the months ended
January 31, 2010 through June 30, 2010 (the “Financial Statements”); and the
Financial Statements fairly present, in all material respects, in conformity
with GAAP, the financial position, the results of operations and cash flows of
Safe Harbor as of the dates and for the periods indicated, subject in the case
of any unaudited Financial Statements to normal year-end adjustments and the
absence of footnotes.  Except as disclosed on Schedule 3.14, Safe Harbor has no
Liability (whether accrued, absolute, contingent or otherwise) other than (i)
Liabilities reflected or reserved against in the Financial Statements, (ii)
Liabilities or obligations that have arisen since December 31, 2009 in the
ordinary course of business consistent with past practices, (iii) Liabilities
incurred as required by or under the terms of this Agreement (including
Liabilities to the extent paid or to be paid by Seller through the Safe Harbor
Power Bill or the Power Bill Adjustment Amount) or under any Material Contract
(excluding any breaches or defaults thereunder), or (iv) other Liabilities not
in excess of $100,000 individually or $500,000 in the aggregate.
 
3.15. Regulatory Status.  Safe Harbor operates the Safe Harbor Station pursuant
to and in compliance in all material respects with a project license issued by
FERC and designated Project No. 1025, expiring April 22, 2030.  Safe Harbor is
an “exempt wholesale generator” as such term is defined in the Public Utility
Holding Company Act of 2005, as amended, and the regulations of the FERC
promulgated thereunder.  Safe Harbor has been authorized by the FERC under the
Federal Power Act to make sales of electric capacity and energy at market-based
rates.  Seller has no Knowledge of any facts that are reasonably likely to cause
Safe Harbor to lose its status as an “exempt wholesale generator” or its
market-based rate authorization.  Safe Harbor currently sells the Safe Harbor
Station output to its stockholders at cost-based rates pursuant to a long-term
contract accepted by the FERC in Docket No. ER82-763.  Safe Harbor sells
reactive power and voltage control services to PJM at cost-based rates pursuant
to a rate schedule accepted in Docket No. ER03-423.
 
3.16. Exclusive Representations and Warranties.  It is the explicit intent of
each Party hereto that Seller is not making any representation or warranty
whatsoever, express or implied, except those representations and warranties
expressly set forth in this Article III and Article IV.
 
ARTICLE IV  
 
REPRESENTATIONS AND WARRANTIES OF SELLER
 
As an inducement to Buyer to enter into this Agreement and consummate the
transactions contemplated hereby, Seller hereby represents and warrants to Buyer
as follows:
 
4.1. Organization; Qualification.  Seller is a limited liability company validly
existing and in good standing under the laws of the State of Delaware and has
all requisite limited liability company power and authority to enter into this
Agreement and consummate the transactions contemplated hereby. Seller is duly
qualified or licensed to do business in each other jurisdiction where the
actions required to be performed by it hereunder makes such qualification or
licensing necessary, except in those jurisdictions where the failure to be so
qualified or licensed would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on Seller’s ability to consummate the
transactions contemplated hereby.
 
4.2. Authority.  Seller has full limited liability company power and authority
to execute and deliver this Agreement and each Additional Agreement to which it
is a party and to consummate the transactions contemplated hereby. The execution
and delivery by Seller of this Agreement and each Additional Agreement to which
it is a party and the consummation by Seller of the transactions contemplated
hereby have been duly authorized by all necessary limited liability company
action required on the part of Seller. This Agreement has been duly executed and
delivered by Seller; and this Agreement constitutes, and upon the execution and
delivery by Seller of each Additional Agreement to which it is a party, each
such Additional Agreement will constitute, the valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except that (a)
such enforceability may be subject to any bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other Laws now or hereafter
in effect affecting or relating to enforcement of creditors’ rights generally
and (b) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
 
4.3. Consents and Approvals; No Violation.
 
(a) Except as set forth on Schedule 4.3(a), subject to obtaining or making all
Seller’s Required Regulatory Approvals and obtaining or making all Consents and
Filings under the HSR Act, neither the execution and delivery by Seller of this
Agreement and the Additional Agreements to which it is a party nor the
consummation by Seller of the transactions contemplated hereby or thereby will
(i) conflict with or result in any breach of any provision of the certificate of
formation or operating agreement of Seller or the certificate or articles of
incorporation and bylaws or other organizational documents of Safe Harbor; (ii)
result in a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, material Contract or other instrument or obligation
to which Seller is a party or by which it may be bound or any Material Contract,
except for such defaults (or rights of termination, cancellation or
acceleration) (A) as to which requisite consents, approvals or waivers have
been, or will be prior to the Closing, obtained, or (B) which would not be
material to Safe Harbor and which would not, individually or in the aggregate,
materially impair Seller’s ability to consummate the transactions contemplated
hereby, or to perform its material obligations hereunder or under any Additional
Agreement; or (iii) constitute a violation of any Law applicable to Seller or
Safe Harbor which violation, individually or in the aggregate, would be material
to Safe Harbor or would materially impair Seller’s ability to consummate the
transactions contemplated hereby, or to perform its material obligations
hereunder or under any Additional Agreement.
 
(b) Except for Consents and Filings (i) required under the HSR Act or (ii) set
forth on Schedule 4.3(b) (the Consents and Filings referred to in clause (ii) of
this sentence are collectively referred to herein as the “Seller’s Required
Regulatory Approvals”), no Consent or Filing with any Governmental Authority is
necessary for the execution and delivery by Seller of this Agreement and the
Additional Agreements to which it is a party or the consummation by Seller of
the transactions contemplated hereby or thereby, other than (i) such Consents
and Filings which, if not obtained or made, would not be material to Safe Harbor
or materially impair Seller’s ability to perform its material obligations under
this Agreement; and (ii) such Consents and Filings which become applicable to
Safe Harbor or Seller as a result of the status of Buyer (or any of its
Affiliates) or as a result of any other facts that specifically relate to the
business or activities in which Buyer (or any of its Affiliates) is or proposes
to be engaged.
 
4.4. Title and Related Matters.  Seller is directly the legal and beneficial
owner of, and has good and marketable title to, the Seller’s Interest, free and
clear of all Encumbrances other than those arising pursuant to this Agreement,
and the Seller’s Interest is duly authorized and validly issued.  There are no
outstanding options, warrants or other rights of any kind including any
restrictions on transfers, relating to the sale, or voting of, such Seller’s
Interest, the subscription of additional shares of Voting Stock of Safe Harbor
or any securities convertible into or evidencing the right to purchase
additional shares of Voting Stock of Safe Harbor. Upon Closing, Buyer shall have
good and marketable title to such Seller’s Interest, free and clear of any
Encumbrances, restrictions on transfer and voting or preemptive rights, other
than those arising pursuant to this Agreement or under any Additional
Agreement.  Seller has no outstanding claims for expenses or reimbursement from
Safe Harbor that will remain outstanding from and after the Closing.
 
4.5. Assigned Agreements.  
 
(a) Each Assigned Agreement constitutes the valid and binding obligation, in
full force and effect, of Seller and/or of its Affiliates party thereto and, to
Seller’s Knowledge, the other parties thereto, except that in each case (i) such
enforceability may be subject to any bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other Laws now or hereafter in effect
affecting or relating to enforcement of creditors’ rights generally and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
 
(b) Except as set forth on Schedule 4.5(b), neither Seller nor any of its
Affiliates is in default and, to Seller’s Knowledge, no other party is in
default in the performance or observance in any material respect of any terms or
provisions of, and no event has occurred which, with lapse of time or action by
a third party, would result in such a default under any Assigned Agreement.
 
4.6. Legal Proceedings.  There are no suits, actions or proceedings pending or
threatened against Seller by or before any Governmental Authority, which would,
individually or in the aggregate, impair Seller’s ability to consummate the
transactions contemplated hereby. Seller is not subject to any Order of any
Governmental Authority which would, individually or in the aggregate, impair
Seller’s ability to consummate the transactions contemplated hereby.
 
4.7. Brokers; Finders.  Except as set forth on Schedule 4.7, Seller has not, and
none of Seller’s Affiliates have, retained any financial advisor, broker, agent,
or finder or paid or agreed to pay any financial advisor, broker, agent, or
finder on account of this Agreement or the transactions contemplated hereby.
None of Buyer and its Affiliates (including, following the Closing, Safe Harbor)
shall have any such responsibility or liability with respect to any Person set
forth on Schedule 4.7.
 
ARTICLE V 
 
REPRESENTATIONS AND WARRANTIES OF BUYER
 
As an inducement to Seller to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer hereby represents and warrants to Seller
as follows:
 
5.1. Organization; Qualification.  Buyer is a limited liability company, validly
existing and in good standing under the laws of Delaware and has all requisite
limited liability company power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted. Buyer has
heretofore delivered to Seller true and correct copies of its certificate of
formation and limited liability company agreement as currently in effect.
 
5.2. Authority.  Buyer has full limited liability company power and authority to
execute and deliver this Agreement and each Additional Agreement to which it is
a party and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and each such Additional Agreement by
Buyer and the consummation by Buyer of the transactions contemplated hereby have
been duly authorized by all necessary limited liability company action required
on the part of Buyer. This Agreement has been duly executed and delivered by
Buyer; and this Agreement constitutes, and upon the execution and delivery by
Buyer of each Additional Agreement to which it is a party, each such Additional
Agreement will constitute, the valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except that (a) such
enforceability may be subject to any bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other Laws now or hereafter in effect
affecting or relating to enforcement of creditors’ rights generally and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
 
5.3. Consents and Approvals; No Violation.
 
(a) Except as set forth on Schedule 5.3(a), and subject to obtaining or making
all Buyer’s Required Regulatory Approvals and obtaining or making all Consents
and Filings under the HSR Act, neither the execution and delivery by Buyer of
this Agreement and the Additional Agreements to which it is a party nor the
consummation by Buyer of the transactions contemplated hereby will (i) conflict
with or result in any breach of any provision of the certificate of formation
and limited liability company agreement of Buyer or any of its Subsidiaries;
(ii) result in a default (or give rise to any right of termination, cancellation
or acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, material agreement or other instrument or obligation
to which Buyer or any of its Subsidiaries is a party or by which Buyer, any such
Subsidiary or any of their respective Assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite consents, approvals or waivers have been or will be prior to the
Closing obtained, or which would not, individually or in the aggregate,
materially impair Buyer’s ability to consummate the transactions contemplated
hereby, or to perform its material obligations hereunder or under any Additional
Agreement (a “Buyer Material Adverse Effect”); or (iii) constitute a violation
of any Law applicable to Buyer or any of its Subsidiaries, which violation,
individually or in the aggregate, would have a Buyer Material Adverse Effect.
 
(b) Except for Consents and Filings (i) required under the HSR Act or (ii) set
forth on Schedule 5.3(b) (the Consents and Filings referred to in clause (ii) of
this sentence are collectively referred to herein as the “Buyer’s Required
Regulatory Approvals”), no Consent or Filing with any Governmental Authority is
necessary for the execution and delivery by Buyer of this Agreement and the
Additional Agreements to which it is a party or the consummation by Buyer of the
transactions contemplated hereby, other than such Consents and Filings which, if
not obtained or made, would not have a Buyer Material Adverse Effect.
 
5.4. Buyer’s Permits.  All Permits that Buyer requires in order to own and
exercise the rights and obligations with respect to the Seller’s Interest and to
perform the Assumed Liabilities are, or will be at or prior to the Closing, held
by Buyer.
 
5.5. Availability of Funds.  Buyer, together with Buyer Parent, has sufficient
funds available to it to permit Buyer on the Closing Date to pay the Purchase
Price, all other amounts payable by Buyer hereunder, and all fees and expenses
incurred by Buyer in connection with the transactions contemplated hereby, and
to permit Buyer to timely pay or perform all of its other obligations under this
Agreement and the Additional Agreements.
 
5.6. Legal Proceedings.  There are no suits, actions or proceedings pending or
to Buyer’s Knowledge threatened against Buyer by or before any Governmental
Authority, which would, individually or in the aggregate, have a Buyer Material
Adverse Effect. Buyer is not subject to any Orders of any Governmental Authority
which would, individually or in the aggregate, have a Buyer Material Adverse
Effect.
 
5.7. Inspections.  Buyer is a sophisticated entity, is knowledgeable about the
industry in which Safe Harbor operates, experienced in investments in such
business and able to bear the economic risk associated with the purchase of the
Seller’s Interest.  Buyer has such knowledge and experience as to be aware of
the risks and uncertainties inherent in the purchase of the type contemplated in
this Agreement, as well as the knowledge of Safe Harbor and its operations in
particular, and has independently, based on such information, made its own
analysis and decision to enter into this Agreement.  Buyer had access to the
books, records, facilities and personnel of Safe Harbor for purposes of
conducting its due diligence investigation of Safe Harbor.
 
5.8. Brokers; Finders.  Buyer has not, and none of Buyer’s Affiliates have,
retained any financial advisor, broker, agent, or finder or paid or agreed to
pay any financial advisor, broker, agent, or finder on account of this Agreement
or the transactions contemplated hereby.
 
5.9. Investment Intent.  Buyer is acquiring the Seller’s Interest for its own
account for investment and not with a view to, or for sale or other disposition
in connection with, any distribution of all or any part thereof in violation of
federal or state securities law. In acquiring the Seller’s Interest, Buyer is
not offering or selling, and will not offer or sell, for Seller or otherwise in
connection with any distribution of the Seller’s Interest, and Buyer will not
participate in any such undertaking or in any underwriting of such an
undertaking except in compliance with applicable federal and state securities
laws. Buyer acknowledges that it is able to fend for itself, can bear the
economic risk of its investment in the Seller’s Interest, and has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the Seller’s Interest. Buyer
is an “accredited investor” as such term is defined in Regulation D under the
Securities Act. Buyer understands that the Seller’s Interest have not been
registered pursuant to the Securities Act or any applicable state securities
laws, that the Seller’s Interest will be characterized as “restricted
securities” under federal securities laws and that under such laws and
applicable regulations the Seller’s Interest cannot be sold or otherwise
disposed of without registration under the Securities Act or an exemption
therefrom.
 
ARTICLE VI  
 
COVENANTS OF THE PARTIES
 
6.1. Access to Information.  
 
(a) Between the date of this Agreement and the Closing Date: (i) Seller shall
provide Buyer and its Representatives with information as to the Business, the
Seller’s Interest, the Assigned Agreements and Safe Harbor as reasonably
requested by Buyer and to the extent such information is readily available to
Seller or could readily be obtained by Seller (including through existing
information rights with respect to Safe Harbor) without any material cost or
expense or material interference with the Business; provided that,
notwithstanding the foregoing, Seller shall not be required to provide any
information (A) which Seller reasonably believes it, its Affiliates or Safe
Harbor is prohibited from providing to Buyer by reason of applicable Law or
Permit, (B) which constitutes or allows access to information protected by
attorney/client privilege, or (C) which Seller, its Affiliates or Safe Harbor is
required to keep confidential or prevent access to by reason of any contract or
agreement with a third party; and (ii) Seller shall provide Buyer and its
Representatives with reasonable access to the facilities, properties and
management of Safe Harbor as may be requested by Buyer, provided (A) such access
shall be conducted at a time and in a manner so as not to unreasonably interfere
with the operation of the Business, (B) Seller shall have the right to have one
or more of its Representatives present at all times during any such access, and
(C) any such access shall not include any invasive or destructive environmental
testing or sampling.  Seller shall provide Buyer with prompt written notice of
any meetings of the board of directors of Safe Harbor, including the written
schedules, written agenda and written minutes thereto, as well as copies of any
written resolutions adopted by the board of directors of Safe Harbor.
 
(b) All information furnished to or obtained by Buyer and Buyer’s
Representatives pursuant to this Section 6.1 shall be kept confidential in
accordance with the terms of the Confidentiality Agreement. Nothing in this
Section 6.1 is intended to or shall be deemed to amend, supplement or otherwise
modify the obligations of Buyer, its Representatives or its Affiliates under the
Confidentiality Agreement, all of which remain in effect until termination of
such agreement in accordance with its terms. Buyer shall be subject to and bound
by all obligations of LS Power Equity Advisors, LLC under the Confidentiality
Agreement as though Buyer were a party thereto.
 
(c) From and after the Closing Date, Buyer shall, and shall cause its
Representatives to, afford to Seller, including its Representatives and
Affiliates, reasonable access to all books, records, files and documents to the
extent they are related to Safe Harbor, the Business or the Assigned Agreements
in order to permit Seller and its Affiliates to prepare and file their Tax
Returns and to prepare for and participate in any investigation with respect
thereto, to prepare for and participate in any other investigation and defend
any Actions relating to or involving Seller or its Affiliates, to discharge its
obligations under this Agreement, to comply with financial reporting
requirements, and for other reasonable purposes, and will afford Seller and its
Affiliates reasonable assistance in connection therewith (including the books
and records of Safe Harbor).  From and after the Closing, Buyer shall, and Buyer
shall take such actions as are within its control to cause Safe Harbor to, cause
such records to be maintained for not less than seven years from the Closing
Date and not dispose of such records without first offering in writing to
deliver them to Seller.  In addition, on and after the Closing Date, at Seller’s
request, Buyer shall make available to Seller and its Affiliates and
Representatives those employees of Buyer (or Safe Harbor) reasonably requested
by Seller in connection with any Action, including to provide testimony, to be
deposed, to act as witnesses and to assist counsel; provided, however, that (i)
such access to such employees shall not unreasonably interfere with the normal
conduct of the operations of Buyer or Safe Harbor and (ii) Seller shall
reimburse Buyer for the out-of-pocket costs reasonably incurred by Buyer in
making such employees available to Seller and its Affiliates and
Representatives.
 
(d) From and after the Closing, Seller and its Affiliates shall be entitled to
retain copies (at Seller’s sole cost and expense) of all books and records
relating to its ownership or operation of Safe Harbor and its Business and the
Assigned Agreements.  For a period of two (2) years from and after the Closing
Date, Seller and its Affiliates shall keep confidential all nonpublic
information in any form or medium, written or oral, concerning Safe Harbor and
its Business and the Assigned Agreements, and shall not disclose such
information to any third parties, except those of Seller’s Representatives who
reasonably require access to such nonpublic information in connection with the
transactions contemplated by this Agreement, including in connection with the
enforcement hereof or for financial reporting, legal or regulatory compliance or
tax purposes (provided Seller shall be responsible for any breach of this
provision by any such Representative).  If Seller is requested pursuant to, or
required by, applicable law, regulation, or by legal or regulatory process or
governmental investigation, to disclose any such nonpublic information, Seller
shall provide Buyer, unless restricted by applicable law, with prompt notice of
such request or requirement in order to enable Buyer to (i) seek an appropriate
protective order or other remedy, (ii) consult with Seller with respect to
Seller taking steps to resist or narrow the scope of such request or legal
process, or (iii) waive compliance, in whole or in part, with the terms of this
Section 6.1(d).  In any such event, Seller shall use its commercially reasonable
efforts to ensure that all such nonpublic information will be accorded
confidential treatment and shall furnish only that portion of the nonpublic
information which is legally required.  This Section 6.1(d) shall not apply to
any information, documents or materials which are in the public domain or shall
come into the public domain, other than by reason of a breach by Seller of its
obligations hereunder.  Furthermore, nothing herein shall be deemed to limit or
restrict Seller from disclosing any information in any action or proceeding by
Seller or its Affiliates to the extent necessary to enforce any rights or
remedies against Buyer or its Affiliates in connection with the transactions
contemplated by this Agreement.
 
(e) Buyer shall not, prior to the Closing Date, contact any customer, vendor or
supplier of, or director, officer, partner, member or employee of, or any other
Person having business dealings with, Safe Harbor or Seller or its Affiliates
with respect to the Business or the transactions contemplated hereby, including
any Governmental Authority, without the prior written consent of Seller, which
shall not be unreasonably withheld or delayed.
 
6.2. Public Statements.  Except as required by applicable Law or by applicable
rules of any national securities exchange, in which event the Parties shall
consult with each other in advance, prior to the Closing Date, no press release
or other public announcement, statement or comment relating to the transactions
contemplated by this Agreement shall be issued, made or permitted to be issued
or made by any Party or its Representatives without the prior written consent of
the other Party.
 
6.3. Further Assurances.  Subject to the terms and conditions of this Agreement,
each of the Parties hereto shall use its commercially reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate and
make effective the purchase and sale of the Seller’s Interest pursuant to this
Agreement and the assumption of the Assumed Liabilities, including using its
commercially reasonable efforts to ensure satisfaction of the conditions
precedent to each Party’s obligations hereunder, including obtaining all
necessary Consents, and making all required Filings with, third parties required
to be obtained or made in order to consummate the transactions hereunder.
 
6.4. Governmental Consents and Approvals.  Without limiting the generality of
Section 6.3:
 
(a) As promptly as practicable, but in no event later than forty-five (45) days
after the date of this Agreement, Seller and Buyer shall each file or cause to
be filed with the U.S. Federal Trade Commission and the U.S. Department of
Justice (the “Antitrust Authorities”) all notifications required to be filed
under the HSR Act and the rules and regulations promulgated thereunder, as
amended, with respect to the transactions contemplated hereby. Buyer and Seller
shall supply as promptly as practicable any additional information or
documentary material that may be requested pursuant to the HSR Act and shall
take all other actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable.  Buyer and
Seller shall comply substantially with any additional requests for information,
including requests for production of documents and production of witnesses for
interviews or depositions, made by any Antitrust Authority and take all other
reasonable actions to obtain clearance from the Antitrust Authorities.  Buyer
and Seller shall each exercise commercially reasonable efforts to prevent the
entry in any proceeding brought by an Antitrust Authority or any Governmental
Authority of an order that would prohibit, make unlawful or delay the
consummation of the transactions contemplated by this Agreement. Each of Buyer
and Seller shall pay one-half of all Filing fees payable under the HSR Act but
each Party shall bear its own costs and expenses of the preparation of any such
Filing and any such response.
 
(b) As promptly as practicable, but in no event later than forty-five (45) days
after the date of this Agreement, Seller and Buyer shall take, or cause to be
taken, all actions, and do, or cause to be done, all things necessary, proper or
advisable under applicable Laws to obtain all required Consents of all other
Governmental Authorities, and make all other Filings required to be made prior
to the Closing with respect to the transactions contemplated hereby, including
with respect to the Seller’s Required Regulatory Approvals and Buyer’s Required
Regulatory Approvals.  Each Party shall bear its own costs and expenses of the
preparation of any such Filing.  Buyer and Seller will diligently pursue and use
their commercially reasonable efforts to obtain such Consents and will cooperate
with each other in seeking such Consents. To such end, the Parties agree to make
available the personnel and other resources of their respective organizations in
order to obtain all such Consents. Each Party will promptly inform the other
Party of any material communication received by such Party from, or given by
such party to, any Governmental Authority from which any such Consent is
required and of any material communication received or given in connection with
any proceeding by a private party, in each case regarding any of the
transactions contemplated hereby (unless prohibited by Law or by such
Governmental Authority), and will permit the other Party to review any
communication given by it to, and consult with each other in advance of any
meeting or conference with, any such Governmental Authority or, in connection
with any proceeding by a private party, with such other Person, and to the
extent permitted by such Governmental Authority or other Person, give the other
Party the opportunity to attend and to participate in such meetings and
conferences.
 
(c) Without limiting the generality of Section 6.4(b), each Party shall use its
reasonable best efforts to make all Filings required by such Party under Section
203 of the Federal Power Act as are required in connection with the consummation
of the transactions contemplated hereby as promptly as possible but in no event
later than forty-five (45) days after the date of this Agreement. Prior to
filing any application with the FERC, both Parties shall prepare such
application and shall incorporate into such application all revisions reasonably
requested by the other Party. Each Party shall be solely responsible for its own
cost of preparing and filing such application, as well as all petitions for
rehearing and all reapplications; provided, however, that Buyer shall bear all
costs and expenses associated with experts and consultants reasonably necessary
for the preparation of any required market power study or report. If any
required approval is denied by the FERC, the Parties shall petition the FERC for
rehearing or permission to re-submit an application with the FERC.
 
(d) Notwithstanding anything in this Agreement to the contrary, each of Buyer
and Seller agrees that the making of any required Filings or the obtaining of
any required Consents with or from any Governmental Authority are the equal
responsibility of both Parties, and that each Party shall use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to make such Filings
or obtain such Consents with or from any Governmental Authority as are required
in connection with the consummation of the transactions contemplated hereby and
the Parties shall comply with Schedule 6.4(d).
 
(e) The Parties agree that, to the greatest extent practicable, all Filings
required to be made and Consents required to be obtained under this Agreement
will be combined with the Filings and Consents required under the terms of the
Affiliate PSA, including through joint applications for all Consents under
Section 203 of the Federal Power Act and a single HSR Act Filing.
 
6.5. Transfer Taxes.  All transfer, sales and similar Taxes (“Transfer Taxes”)
incurred in connection with this Agreement and the Additional Agreements, and
the transactions contemplated hereby and thereby shall be borne equally by Buyer
and Seller. Buyer, at its expense, shall prepare and file, to the extent
required by, or permissible under, applicable Law, all necessary Tax Returns and
other documentation with respect to all such Transfer Taxes, and, if required by
applicable Law, Seller shall join in the execution of all such Tax Returns and
other documentation; provided, however, that prior to the Closing Date, to the
extent applicable, Buyer shall provide to Seller appropriate certificates of Tax
exemption from each applicable Governmental Authority.
 
6.6. PJM Transfer Date.  Seller and Buyer shall cooperate and use their
commercially reasonable efforts to cause the PJM Transfer Date to occur as of
the Closing Date or as promptly as practicable thereafter.  If the PJM Transfer
Date is not the Closing Date, Buyer and Seller (and, as applicable, their
respective Affiliates) will enter into appropriate arrangements designed to
provide that Buyer will receive all appropriate proceeds from the sale of
one-third of the capacity, energy and ancillary services from the Safe Harbor
Station following Closing.  Any such proceeds received by Seller or its
Affiliates attributable to post-Closing periods shall be promptly paid to Buyer,
and any proceeds received by Buyer or its Affiliates attributable to the sale of
one-third of the capacity, energy and ancillary services from the Safe Harbor
Station prior to Closing shall be promptly paid to Seller or its Affiliates.
 
6.7. Assigned Agreements.
 
(a) Subject to Section 6.7(b) and Section 6.7(c) and pursuant to the terms and
conditions of the Assignment and Assumption Agreements, effective as of the
Closing, (i) Seller and its Affiliates will transfer and assign to Buyer all of
their rights and obligations under the Assigned Agreements arising following the
Closing, and (ii) Buyer will accept the transfer and assignment of and agree to
assume, pay, perform and discharge from and after the Closing all of the rights
and obligations of the Assigned Agreements arising following the Closing.   From
the date of this Agreement through the Closing Date, except as otherwise
expressly contemplated by this Agreement or consented to by Buyer, which consent
shall not be unreasonably withheld, conditioned or delayed, Seller shall not
(and shall cause its Affiliates (other than Safe Harbor) not to) assign, amend,
terminate or waive any material term under any Assigned Agreement except to the
extent such assignment, amendment or waiver would not affect such Assigned
Agreement post-Closing or otherwise have any adverse impact, costs or impose any
other Liability on Safe Harbor or its Affiliates.
 
(b) Seller and its Affiliates and Buyer will, in order to consummate the
transactions contemplated in this Section 6.7, (i) proceed diligently and in
good faith and use all commercially reasonable efforts, as promptly as
practicable, to obtain any required Consents and, if applicable, make any
required Filings in connection with the assignments contemplated by Section
6.7(a), and (ii) reasonably cooperate in good faith with the applicable
counterparties to the Assigned Agreements and provide promptly such other
information and communications to such counterparties to the Assigned Agreements
as such counterparties to the Assigned Agreements may reasonably request in
connection therewith.  For the avoidance of doubt, it is specifically
acknowledged and agreed that no Party nor any of its Affiliates shall be
obligated to pay, reimburse or provide, or cause any of their respective
Affiliates to pay, reimburse or provide, any compensation, consideration or
charge to obtain any such Consent.  Seller and its Affiliates and Buyer will
provide prompt notification to each other when any such Consent is obtained (or
refused) and will advise each other of any material communications with any
counterparties to the Assigned Agreements regarding any of the transactions
contemplated by this Agreement.
 
(c) Notwithstanding anything to the contrary in this Agreement, this Section 6.7
shall not constitute an agreement to assign or assume any obligation, claim,
right or benefit arising under any Assigned Agreement or resulting therefrom if
an attempted assignment or assumption thereof, without the Consent of a third
party thereto, would constitute a breach thereof.  Any transfer or assignment to
Buyer by Seller and its Affiliates of any provision of any Assigned Agreement
that requires the Consent of any third party shall be made subject to such
Consent being obtained.  If such Consent is not obtained, or if an attempted
assignment thereof would be ineffective or would affect the rights or
obligations of any of Seller or its Affiliates thereunder such that Buyer would
not in fact receive all rights and obligations to be transferred to Buyer as
contemplated by Section 6.7(a) above, Buyer will reasonably cooperate with the
Seller and its Affiliates in any arrangement reasonably designed to provide that
Buyer will have all of the rights and obligations of Seller and its Affiliates
(including the economic benefits and risks thereof) following the Closing under
any such Assigned Agreement to the extent that such rights and obligations are
to be transferred to Buyer as contemplated by this Agreement.  The Seller and
its Affiliates and Buyer will execute and deliver such further instruments and
do such further acts and things as may be reasonably required to carry out the
intent and purpose of this Section 6.7, including such further acts and things
as may be reasonably required to assist any other party hereto in complying with
their respective obligations under any Assigned Agreement.
 
(d) Buyer and Seller agree that amounts payable to Seller or its Affiliates and
amounts payable and obligations to be performed by Seller or its Affiliates
under the Assigned Agreements for periods prior to Closing shall be for the
account of Seller or its Affiliates, and amounts payable and obligations to be
performed for periods following Closing shall be for the account of Buyer. Buyer
and Seller will instruct each applicable counterparty to pay amounts owed
thereunder for pre-Closing periods to Seller, and to pay amounts owed thereunder
for post-Closing periods to Buyer.  In any event, however, any such proceeds
received by Seller or its Affiliates attributable to post-Closing periods shall
be promptly paid to Buyer, and any such proceeds received by Buyer or its
Affiliates attributable to pre-Closing periods shall be promptly paid to Seller.
 
6.8. Senior Notes Guarantee, Indemnification Agreement, Security Agreement and
Intercreditor Agreement.
 
(a) Buyer acknowledges that PPL Energy Supply has provided a guarantee of the
obligations of Safe Harbor (the “Senior Notes Guarantee”) in connection with the
Senior Notes which will not be terminated in connection with consummation of the
transactions contemplated hereby.
 
(b) In consideration for the Senior Notes Guarantee remaining in place as of the
Closing, between the date hereof and the Closing, Buyer agrees (i) to enter into
the Indemnification Agreement, the Security Agreement (subject to the provisions
of Schedule 6.8(b)(i) and (if applicable as of the Closing) the Intercreditor
Agreement at Closing, and (ii) to use commercially reasonable efforts to cause
the Second Lien Acquisition Debt Holders, if any as of the Closing, to enter
into the Intercreditor Agreement.  If Buyer and Seller are unable to cause the
occurrence of the foregoing sentence after using commercially reasonable
efforts, Buyer shall, in lieu of entering into such agreements, obtain a letter
of credit to provide for reimbursement of any amounts drawn under the Senior
Notes Guarantee, which letter of credit shall be issued by a nationally
recognized financial institution with a Credit Rating of no less than A-/A3, in
amounts and subject to the terms and conditions set forth in Schedule 6.8(b)(ii)
(such letter of credit, the “Buyer Letter of Credit”).
 
(c) From and after the Closing, prior to the creation of any Second Lien Debt
Holders (including any additional Second Lien Debt Holders from time to time),
Buyer agrees to either (i) enter into the Intercreditor Agreement and to cause
the Second Lien Acquisition Debt Holders to enter into the Intercreditor
Agreement, or (ii) enter into the Buyer Letter of Credit.
 
(d) Schedule 6.8(d) sets forth all outstanding letters of credit, guarantees or
other forms of credit support posted by Seller or any of its Affiliates relating
to Safe Harbor or the Business.
 
6.9. Conduct of Business Pending the Closing.
 
(a) Between the date of this Agreement and the Closing Date, Seller shall take
such actions to cause Safe Harbor to (x) operate and maintain its Assets in the
ordinary course of business consistent with past practices, and (y) use
commercially reasonable efforts to preserve, maintain and protect its Assets in
material compliance with applicable Permits and Laws. Without limiting the
foregoing, except as set forth on Schedule 6.9(a), between the date of this
Agreement and the Closing Date, except as otherwise expressly contemplated by
this Agreement or as consented to by Buyer, which consent shall not be
unreasonably withheld, conditioned or delayed, Seller shall not (with respect to
the Business), and shall cause Safe Harbor not to:
 
(i) sell or dispose of (x) any material Business assets or any material Assets
or (y) any Assets in excess of $100,000 individually (or $500,000 in the
aggregate) of Safe Harbor, other than sales or dispositions of obsolete or
surplus Assets, sales and dispositions in connection with the normal and prudent
repair or replacement of Assets, or sales or dispositions in accordance with any
Material Contract (other than any Contract contemplated by clause (iii) of the
definition of Material Contract);
 
(ii) declare, set aside or pay any dividend or distribution or other capital
return in respect of the equity interests of Safe Harbor or redeem, purchase or
acquire any debt or equity interests of Safe Harbor, or otherwise distribute in
any form any cash or other assets of Safe Harbor to its equityholders; provided,
that Safe Harbor shall be permitted to declare and distribute cash dividends in
the ordinary course of business consistent with past practices;
 
(iii) create, incur or assume any Indebtedness;
 
(iv) merge or consolidate with any other Person or acquire all or substantially
all of the Assets of any other Person or enter into any joint venture,
partnership or similar venture with any other Person;
 
(v) grant, issue, sell, or otherwise dispose of any of its equity interests,
including granting options, warrants or other rights to acquire such equity
interests;
 
(vi) effect any recapitalization, reclassification or like change in its
capitalization;
 
(vii) liquidate, dissolve, reorganize or otherwise wind up its business or
operations;
 
(viii) purchase any equity securities of any Person, except for short-term
investments or cash equivalents made in the ordinary course of business
consistent with past practices;
 
(ix) amend or modify its organizational documents;
 
(x) engage in any new line of business;
 
(xi) enter into, assign, amend, terminate or waive any material term under any
Material Contract;
 
(xii) discharge, settle or satisfy any material Actions;
 
(xiii) defer the payment, discharge, settlement or satisfaction of any Liability
outside the ordinary course of business consistent with past practices;
 
(xiv) assign or terminate in any respect or amend in any material respect, or
give any waiver or consent with respect to, any Permit or Order;
 
(xv) enter into or amend any employment agreement, other than in the ordinary
course of business consistent with past practice or with newly hired or promoted
employees or as required by applicable Law; enter into any agreement with any
labor union or association representing any employee, or hire or fire any Senior
Members of Management of Safe Harbor, except as required by applicable Law;
 
(xvi) make any loan, advance or capital contribution to or investment in any
Person, other than to any present employee of Safe Harbor in the ordinary course
of business consistent with past practice;
 
(xvii) enter into any Contract with any Affiliate of Seller or any other holder
of Voting Stock of Safe Harbor (other than Contracts not relating to Safe Harbor
or to which Safe Harbor is neither a party nor bound);
 
(xviii) commence any litigation, arbitration or other material administrative or
other proceedings;
 
(xix) make, change or rescind any Tax election, amend, in any material respect,
any Tax Return, extend the statute of limitations with respect to any Tax,
settle or compromise any Tax audit or enter into or amend any real or personal
property Tax agreement, treaty or settlement that would affect the Tax liability
of Safe Harbor; or
 
(xx) agree or commit to do any of the foregoing.
 
(b) Notwithstanding Section 6.9(a) or any other provision herein, Seller may
take such actions within its control to cause Safe Harbor to take commercially
reasonable actions with respect to emergency situations or to comply with
applicable Laws or Permits; provided, however, that Seller shall provide Buyer
with notice of such action as soon as reasonably practicable.
 
6.10. Post-Closing Dividend Payment.  Following Closing, Buyer shall take all
actions within its control to cause Safe Harbor to pay the first dividend
following the Closing Date consistent with past practice.
 
6.11. Additional Actions.  Notwithstanding anything herein to the contrary,
including the limitations and qualifications set forth in Article VIII, Seller
shall take such actions and do such things as and when required under Schedule
6.11.
 
ARTICLE VII 
 
CONDITIONS
 
7.1. Conditions to Obligation of Buyer.  The obligation of Buyer to effect the
transactions contemplated by this Agreement shall be subject to the satisfaction
(or the waiver, to the extent permitted by applicable Law, by Buyer) at or prior
to the Closing of the following conditions:
 
(a) The waiting period under the HSR Act applicable to the consummation of the
transactions contemplated hereby shall have expired or been terminated;
 
(b) No preliminary or permanent injunction or other Order by any Governmental
Authority which prevents the consummation of the transactions contemplated
hereby or by the Additional Agreements shall have been issued and remain in
effect (Buyer agreeing to use commercially reasonable efforts to have any such
injunction or Order lifted), and no applicable Law shall be in effect which
prohibits the consummation of the transactions contemplated hereby;
 
(c) The Consents set forth (i) in the case of the Buyer’s Required Regulatory
Approvals on Schedule 7.1(c)(i) and (ii) in the case of Seller’s Required
Regulatory Approvals on Schedule 7.1(c)(ii), shall have been duly obtained by
Final Order, all terminations or expirations of applicable waiting periods
imposed by any Governmental Authority with respect to the transactions
contemplated hereby (including under the HSR Act) shall have occurred, and none
of such Consents shall impose additional terms or conditions that would
reasonably be expected to result in any material and adverse impact on Buyer,
its Affiliates or the Business, or would impose any material change or
modification to this Agreement;
 
(d) Seller shall have performed and complied in all material respects with the
covenants and agreements contained in this Agreement which are required to be
performed and complied with by Seller at or prior to the Closing, other than,
with respect to the covenants and agreements in Section 6.9(a), any
Unintentional Safe Harbor Breach that could not reasonably be expected to have a
Material Adverse Effect;
 
(e) The representations and warranties of Seller set forth in Article III and
Article IV hereof shall be true and correct in all material respects as though
made at and as of the Closing Date (other than such (i) representations and
warranties that are made as of a specific date, which shall have been true and
correct as of such date, and (ii) representations and warranties that are
qualified by reference to materiality or Material Adverse Effect, which shall be
true and correct in all respects);
 
(f) Between the date hereof and the Closing Date, no Material Adverse Effect
shall have occurred and be continuing;
 
(g) Seller shall have delivered or shall stand ready to deliver all of the items
required to be delivered by Seller hereunder, including pursuant to Section 2.4;
 
(h) Each of the Assigned Agreements shall have been assigned to Buyer or its
designee in accordance with the terms and conditions of Section 6.7(a) and the
Assignment and Assumption Agreements;
 
(i) Buyer shall have received all third party consents, waivers or approvals
with respect to the sale of the Seller’s Interests, assignment of the Assigned
Agreements or the consummation of the transactions contemplated by this
Agreement as set forth on Schedule 7.1(i);
 
(j) Buyer shall have received a certificate from an authorized officer of
Seller, dated the Closing Date, to the effect that, to Seller’s Knowledge, the
conditions set forth in Sections 7.1(d), (e) and (f) have been satisfied;
 
(k) (i) If Buyer shall have delivered a written request at least five (5)
Business Days prior to the Closing (provided that on or before such request, the
consent set forth in Item No. 2 to Schedule 4.3(a) has been obtained), Seller
shall have assigned, to a designee of Buyer, the Power Sale Agreement, dated
December 10, 2009, by and between PPL EnergyPlus, LLC and National Railroad
Passenger Corporation, including the related confirmations, or (ii) in all other
events, Seller shall have executed the Master Power Sale Agreement as of the
Closing; and
 
(l) The Affiliate PSA Closing shall occur simultaneously with the Closing on the
Closing Date.
 
7.2. Conditions to Obligation of Seller.  The obligation of Seller to effect the
transactions contemplated by this Agreement shall be subject to the satisfaction
(or the waiver, to the extent permitted by applicable Law, by Seller) at or
prior to the Closing of the following conditions:
 
(a) The waiting period under the HSR Act applicable to the consummation of the
transactions contemplated hereby shall have expired or been terminated;
 
(b) No preliminary or permanent injunction or other Order by any Governmental
Authority which prevents the consummation of the transactions contemplated
hereby or by the Additional Agreements shall have been issued and remain in
effect (Seller agreeing to use its commercially reasonable efforts to have any
such injunction or Order lifted), and no applicable Law shall be in effect which
prohibits the consummation of the transactions contemplated hereby;
 
(c) The Consents set forth (i) in the case of the Buyer’s Required Regulatory
Approvals on Schedule 7.1(c)(i) and (ii) in the case of Seller’s Required
Regulatory Approvals on Schedule 7.1(c)(ii), shall have been duly obtained by
Final Order, all terminations or expirations of applicable waiting periods
imposed by any Governmental Authority with respect to the transactions
contemplated hereby (including under the HSR Act) shall have occurred, and none
of such Consents shall impose additional terms or conditions that would
reasonably be expected to result in any material and adverse impact on the
Seller or its Affiliates, or would impose any material change or modification to
this Agreement;
 
(d) Buyer shall have performed and complied in all material respects with the
covenants and agreements contained in this Agreement which are required to be
performed and complied with by Buyer at or prior to the Closing;
 
(e) The representations and warranties of Buyer set forth in Article V hereof
shall be true and correct in all material respects as though made at and as of
the Closing Date (other than such (i) representations and warranties that are
made as of a specific date, which shall have been true and correct as of such
date, and (ii) representations and warranties that are qualified by reference to
materiality, Material Adverse Effect or Buyer Material Adverse Effect, which
shall be true and correct in all respects);
 
(f) Seller shall have received a certificate from an authorized officer of
Buyer, dated the Closing Date, to the effect that, to Buyer’s Knowledge, the
conditions set forth in Sections 7.2(d) and (e) have been satisfied;
 
(g) Seller shall have received all third party consents, waivers or approvals
with respect to the sale of the Seller’s Interests, assignment of the Assigned
Agreements or the consummation of the transactions contemplated by this
Agreement as set forth on Schedule 7.2(g);
 
(h) Seller (and, as applicable, its Affiliates) and Safe Harbor shall have
entered into agreements or other arrangements reasonably satisfactory to Buyer,
Seller and Safe Harbor addressing the separation matters described on Schedule
7.2(h);
 
(i) Buyer shall have delivered or shall stand ready to deliver all of the items
required to be delivered by Buyer hereunder, including pursuant to Section 2.5;
 
(j) (i) If Buyer shall have delivered a written request at least five (5)
Business Days prior to the Closing (provided that on or before such request, the
consent set forth in Item No. 2 to Schedule 4.3(a) has been obtained), Seller
shall have assigned, to a designee of Buyer, the Power Sale Agreement, dated
December 10, 2009, by and between PPL EnergyPlus, LLC and National Railroad
Passenger Corporation, including the related confirmations, or (ii) in all other
events, Buyer shall have executed the Master Power Sale Agreement as of the
Closing; and
 
(k) The Affiliate PSA Closing shall occur simultaneously with the Closing on the
Closing Date.
 
7.3. Failure Caused by Party’s Failure to Comply.  Neither Seller nor Buyer may
terminate the Agreement in reliance on the failure of any condition set forth in
Sections 7.1 or 7.2, as the case may be, if such failure was caused directly by
such Party’s or its Affiliate’s failure to comply with any provision of this
Agreement or the Affiliate PSA.
 
ARTICLE VIII  
 
INDEMNIFICATION AND DISPUTE RESOLUTION
 
8.1. Indemnification.
 
(a) From and after the Closing Date, Buyer shall indemnify, defend and hold
harmless Seller and its Representatives (each, a “Seller’s Indemnitee”) from and
against any and all claims, demands, suits, losses, liabilities, penalties,
Actions, damages, obligations, payments, costs and expenses (including
reasonable attorneys’ fees and expenses in connection therewith) (each, an
“Indemnifiable Loss”), asserted against or suffered by any Seller’s Indemnitee
relating to, resulting from or arising out of (i) any breach by Buyer of any (A)
representation and warranty set forth in Article V, or (B) any covenant or
agreement of Buyer contained in this Agreement, or (ii) the Assumed Liabilities
and Liabilities of Safe Harbor (other than the Excluded Liabilities); provided,
however, that Buyer shall be liable to the Seller’s Indemnitees pursuant to
clause (i) of this Section 8.1(a) only for Indemnifiable Losses for which any
Seller’s Indemnitee gives written notice to Buyer  (setting forth with
reasonable specificity the nature of the Indemnifiable Loss) during the period
for which such representations, warranties, covenants or agreements survive the
Closing in accordance with Section 10.4.
 
(b) From and after the Closing, Seller shall indemnify, defend and hold harmless
Buyer and its Representatives (which, for the avoidance of doubt, includes Safe
Harbor) (each, a “Buyer’s Indemnitee” and, together with Seller’s Indemnitees,
an “Indemnitee”) from and against any and all Indemnifiable Losses asserted
against or suffered by any Buyer’s Indemnitee relating to, resulting from or
arising out of, (i) any breach by Seller of any (A) representation and warranty
set forth in Article III or Article IV (without giving effect to clauses (ii) or
(iv) of the second sentence of Section 3.14), or (B) any covenant or agreement
of Seller set forth in this Agreement, or (ii) the Excluded Liabilities;
provided, however, that Seller shall be liable to the Buyer’s Indemnitees
pursuant to clause (i) of this Section 8.1(b) only for Indemnifiable Losses for
which any Buyer’s Indemnitee gives written notice to Seller (setting forth with
reasonable specificity the nature of the Indemnifiable Loss) during the period
for which such representations, warranties, covenants or agreements survive the
Closing in accordance with Section 10.4; and provided further that Seller shall
be liable to the Buyer’s Indemnitees pursuant to clause (i)(A) of this Section
8.1(b) for breaches of representations and warranties (and pursuant to clause
(i)(B) of this Section 8.1(b) solely for any Unintentional Safe Harbor Breaches
of the type contemplated by clause (i) of the definition of Unintentional Safe
Harbor Breach of the covenants and agreements contained in Section 6.9(a) of
this Agreement), (y) only after Indemnifiable Losses for such breaches, in the
aggregate, exceed one and a half percent (1.5%) of the Purchase Price (provided,
however, that once such threshold amount is exceeded, Buyer’s Indemnitees may
recover all Indemnifiable Losses for such breaches incurred from and after the
Closing Date without regard to such threshold amount), and (z) only for
Indemnifiable Losses for such breaches, in the aggregate, up to, but not in
excess of, twenty percent (20%) of the Purchase Price (other than, in each case,
for breaches of the representations and warranties set forth in Sections 3.1,
3.2, 3.11, 4.1, 4.2, 4.4 and 4.7 as to which no such limitations in this proviso
shall be applicable).
 
(c) The rights and remedies of Seller and Buyer set forth in this Article VIII
are (except in cases of fraud) exclusive and in lieu of any and all other rights
and remedies which Seller and Buyer may have under this Agreement, under
applicable Law, whether at common law or in equity, including Environmental Laws
and including for declaratory, injunctive or monetary relief, in each case, with
respect to any Indemnifiable Loss. Notwithstanding anything else in this
Agreement, each of Seller and Buyer agree that this Agreement shall not limit or
otherwise affect any non-monetary right or remedy which Seller or Buyer may have
under this Agreement or otherwise limit or affect either Seller’s or Buyer’s
right to seek equitable relief to enforce this Agreement, including the remedy
of specific performance.
 
(d) Notwithstanding anything to the contrary herein, no Person (including an
Indemnitee) shall be entitled to recover from any other Person (including any
Party required to provide indemnification under this Agreement (an “Indemnifying
Party”)) any amount in excess of the actual compensatory damages, court costs
and reasonable attorneys’ fees suffered by such Party. In furtherance of the
foregoing, Buyer and Seller hereby irrevocably waive any right to recover
punitive, indirect, special, exemplary and consequential damages arising in
connection with or with respect to this Agreement (other than with respect to
indemnification for a Third-Party Claim).  None of Seller nor any of its
Affiliates shall have any right to contribution or set-off from Safe Harbor or
its Affiliates following the Closing with respect to any claims made pursuant to
this Article VIII.
 
(e) Any Indemnitee shall use commercially reasonable efforts to mitigate all
losses, damages and the like relating to a claim under the indemnification
provisions in this Section 8.1, including availing itself of any defenses,
limitations, rights of contribution, claims against third Persons and other
rights at law or equity. For purposes of this Section 8.1(e), the Indemnitee’s
commercially reasonable efforts shall include the reasonable expenditure of
money to mitigate or otherwise reduce or eliminate any Indemnifiable Loss for
which indemnification would otherwise be due, and, in addition to its other
obligations hereunder, the Indemnifying Party shall reimburse the Indemnitee for
the Indemnitee’s reasonable costs and expenses incurred in undertaking any
mitigation, reduction or elimination.
 
(f) For the avoidance of doubt, with respect to any Indemnifiable Losses paid or
incurred by Safe Harbor or resulting from an Indemnifiable Loss of Safe Harbor
(regardless of the Buyer’s Indemnitee claiming such Indemnifiable Losses), such
Indemnifiable Losses with respect to Safe Harbor (i) shall only be paid or
reimbursable to Buyer and (ii) shall, if paid or incurred by Safe Harbor or
resulting from an Indemnifiable Loss of Safe Harbor (regardless of the Buyer’s
Indemnitee claiming such Indemnifiable Losses), be limited to one third of such
Indemnifiable Losses suffered in the aggregate by Safe Harbor in recognition
that Seller is transferring only a one third economic interest in Safe Harbor to
Buyer under this Agreement.
 
(g) Solely for purposes of any indemnification obligation of Seller under
Section 8.1(b)and solely for purposes of calculating any applicable
Indemnifiable Losses, the qualification as to Seller’s Knowledge with respect to
the representations and warranties contained in Section 3.7 shall be
disregarded.
 
8.2. Defense of Claims.
 
(a) If any Indemnitee receives notice of the assertion of any Indemnifiable Loss
or of the commencement of any Action made or brought by any Person who is not an
Indemnitee (a “Third-Party Claim”) with respect to which indemnification is to
be sought from an Indemnifying Party, the Indemnitee shall give such
Indemnifying Party prompt written notice thereof, but in no event later than
twenty (20) Business Days after the Indemnitee’s receipt of notice of such
Third-Party Claim; provided the failure to do so shall not relieve the
Indemnifying Party from any liability except to the extent that it is prejudiced
by the failure or delay in giving such notice. Such notice shall describe the
nature of the Third-Party Claim in reasonable detail and shall indicate (in each
case, to the extent known) (i) the bases of the claim for indemnification, (ii)
the amount or the method of computation of the amount of the Indemnifiable Loss
that has been or may be incurred by the Indemnitee and (iii) a reference to the
provision or provisions in this Agreement upon which such claim is based. Within
ten (10) Business Days after receiving such notice, the Indemnifying Party shall
have the right to participate in or, by giving written notice to the Indemnitee,
to elect to assume the defense of any Third-Party Claim at such Indemnifying
Party’s own cost and expense and by such Indemnifying Party’s own counsel.
 
(b) Pursuant to the notice requirement in the final sentence of Section 8.2(a),
in the case of a claim by a Buyer’s Indemnitee, Seller, and in the case of a
claim by a Seller’s Indemnitee, Buyer, shall be entitled to direct the defense
against a Third-Party Claim for which indemnification is sought hereunder, with
counsel selected by it and reasonably acceptable to the other and, in the case
of a claim by a Buyer’s Indemnitee, Seller, and in the case of a claim by a
Seller’s Indemnitee, Buyer, shall (and shall cause its respective Affiliates to)
provide reasonable assistance in such defense at the direction of the Party so
defending, including taking reasonable actions related to such defense
(including making filings with Governmental Authorities) at the direction of
such Party, provided that (i) Buyer or Seller (as applicable) is conducting a
good faith defense, (ii) Buyer (in the case of a claim by a Seller’s
Indemnitee), or Seller (in the case of a claim by a Buyer’s Indemnitee), has
irrevocably acknowledged in writing its obligation to provide indemnification
for such claim and (iii) the only relief sought by such Third-Party Claim is
monetary (rather than equitable) in nature, and provided, further, that such
party directing the defense shall not compromise or settle it without receiving
a release of the indemnified parties and the indemnified parties not becoming
subject to non-monetary penalties, obligations or restrictions as a result
thereof; in all other events, the indemnified parties (acting through the Buyer,
in the case of a Buyer’s Indemnitee, or through Seller, in the case of a
Seller’s Indemnitee) shall have the exclusive right to direct the defense
against such Third-Party Claim (at the expense of the Indemnifying Party), with
counsel selected by it and reasonably acceptable to the Indemnifying Party,
provided, that the indemnified parties shall not compromise or settle such
Third-Party Claim without receiving a release of the Indemnifying Party and the
Indemnifying Party not becoming subject to non-monetary penalties, obligations
or restrictions as a result thereof.  Parties who are not directing the defense
shall at all times have the right to participate in the defense of a Third-Party
Claim in reasonable respects and at their own expense directly or through
counsel of their choosing that is reasonably acceptable to the party directing
the defense; provided that if the named parties to the Action include both the
Indemnifying Party and one or more indemnified parties, the Indemnifying Party
is directing the defense, and an indemnified party is advised by counsel in
writing that representation of both parties by the same counsel would be
inappropriate under applicable standards of professional conduct, the
indemnified parties may engage one separate counsel to represent them at the
expense of the Indemnifying Party.
 
(c) If no such notice of intent to dispute and defend a Third-Party Claim is
given by Buyer or Seller (whichever is authorized to act on behalf of the
Indemnifying Party in accordance with the immediately preceding paragraph), or
if such good faith defense is not being, or ceases to be, conducted by Buyer or
Seller (as applicable), the other shall have the right, on behalf of the
indemnified parties and at the expense of the Indemnifying Party, to undertake
the defense of such claim (with counsel selected by it and reasonably acceptable
to the Indemnifying Party) and to compromise or settle it (at the Indemnifying
Party’s expense), subject to receipt of a release of the Indemnifying Party and
the Indemnifying Party not becoming subject to non-monetary penalties,
obligations or restrictions as a result thereof.  If the Third-Party Claim is
one that by its nature cannot be defended solely by the party directing the
defense, then the other party hereto shall make available such information and
assistance (including without limitation its officers, employees and agents) as
the party directing the defense may reasonably request and shall cooperate with
such party directing the defense in such defense (at the expense of the
Indemnifying Party).
 
ARTICLE IX
 
TERMINATION
 
9.1. Termination.
 
(a) This Agreement may be terminated at any time prior to the Closing by mutual
written consent of the Parties.
 
(b) This Agreement may be terminated by Seller, on the one hand, or Buyer, on
the other hand, upon written notice to the other Party, (i) at any time prior to
the Closing if any court of competent jurisdiction shall have issued an Order
permanently restraining, enjoining or otherwise prohibiting the Closing, and
such Order shall have become final and non-appealable; provided that the Party
seeking to terminate this Agreement pursuant to this Section 9.1(b) shall have
used its commercially reasonable efforts to seek relief from such Order; (ii) at
any time prior to the Closing if any Law shall have been enacted or issued by
any Governmental Authority which prohibits the consummation of the transactions
contemplated by this Agreement; or (iii) if the Closing shall not have occurred
or is not reasonably likely to occur within six (6) months after the date of
this Agreement (the “Outside Date”) (provided, that (x) if on the Outside Date
all the Consents required in order to satisfy the conditions set forth in
Section 7.1(c) or Section 7.2(c) have not been obtained and such Consents are
being diligently pursued by the appropriate Party, and all of the other
conditions to Closing contained in Article VII have been fulfilled or are
capable of being fulfilled, then, at the option of either Buyer or Seller (which
shall be exercised by written notice on or before the Outside Date), the Outside
Date shall be extended to nine (9) months after the date of this Agreement, and
(y) in all events, if the Affiliate PSA Outside Date is extended under the terms
of the Affiliate PSA, then the Outside Date shall automatically be extended to
the same date as the Affiliate PSA Outside Date); provided, however, that the
right to so terminate this Agreement under this Section 9.1(b) shall not be
available to any Party whose breach (or Affiliate’s breach) of this Agreement or
the Affiliate PSA has caused, or resulted in, the failure of the Closing to
occur on or before such date.
 
(c) This Agreement may be terminated by Seller upon written notice to Buyer if
the Buyer Parent Guarantee, duly executed by Buyer Parent as of the date hereof,
does not remain in full force and effect from and after the date hereof and
through the Closing.
 
(d) This Agreement may be terminated by Buyer upon written notice to Seller if
the PPL Energy Supply Guarantee, duly executed by PPL Energy Supply as of the
date hereof, does not remain in full force and effect from and after the date
hereof and through the Closing.
 
(e) Except as provided in Section 7.3, this Agreement may be terminated by
Buyer, upon written notice to Seller, if there has been a material breach by
Seller of any covenant, agreement, representation or warranty contained in this
Agreement, which breach causes the closing condition in Sections 7.1(d) or
7.1(e) to not be capable of being satisfied (absent waiver by Buyer) and such
breach is not cured (if subject to cure) by the earlier of the Closing Date or
the date that is thirty (30) days after receipt by Seller of notice specifying
in reasonable detail the nature of such breach, unless Buyer shall have
previously waived such breach in writing.
 
(f) Except as provided in Section 7.3, this Agreement may be terminated by
Seller, upon written notice to Buyer, if there has been a material breach by
Buyer of any covenant, agreement, representation or warranty contained in this
Agreement, which breach causes the closing condition in Sections 7.2(d) or
7.2(e) to not be capable of being satisfied (absent waiver by Seller) and such
breach is not cured (if subject to cure) by the earlier of the Closing Date or
the date that is thirty (30) days after receipt by Buyer of notice specifying in
reasonable detail the nature of such breach, unless Seller shall have previously
waived such breach in writing.
 
(g) This Agreement may be terminated by Seller, on the one hand, or Buyer, on
the other hand, upon written notice to the other Party at any time prior to
Closing, if the Affiliate PSA has been terminated for any reason.
 
9.2. Effect of Termination.  Upon termination of this Agreement prior to the
Closing in accordance with and pursuant to Section 9.1, this Agreement shall be
of no further force or effect (except that the provisions set forth in Section
6.1(b), Section 6.2, this Section 9.2 and Article X, and the Confidentiality
Agreement, shall remain in full force and effect in accordance with their
respective terms); and no Party shall have any further Liability under this
Agreement.
 
ARTICLE X   
 
MISCELLANEOUS PROVISIONS
 
10.1. Amendment and Modification.  This Agreement may be amended, supplemented
or otherwise modified only by written agreement entered into by both Parties.
 
10.2. Expenses.  Except to the extent provided herein, whether or not the
transactions contemplated hereby are consummated, all costs, fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be borne by the Party incurring such costs, fees and expenses.
 
10.3. Waiver of Compliance; Consents.  To the extent permitted by applicable
Law, any failure of any of the Parties to comply with any representation,
warranty, covenant, agreement or condition set forth herein may be waived by the
Party entitled to the benefit thereof only by a written instrument signed by
such Party, but any such waiver shall not operate as a waiver of, or estoppel
with respect to, any prior or subsequent failure to comply therewith or of any
other provision set forth herein.
 
10.4. Survival.  Other than (a) Section 3.1 (Organization and Existence),
Section 3.2 (Company), Section 3.11 (Taxes), Section 4.1 (Organization;
Qualification), Section 4.2 (Authority), Section 4.4 (Title and Related
Matters), and Section 4.7 (Brokers; Finders), which shall survive indefinitely,
and (b) Section 3.7 (Properties; No Liens), which shall survive the Closing
until the third anniversary of the Closing Date, the representations and
warranties of Seller set forth in this Agreement shall survive the Closing until
the first anniversary of the Closing Date.  The covenants and agreements of the
Parties contained in this Agreement shall not terminate on the Closing Date and
shall survive indefinitely until performed in accordance with this Agreement.
 
10.5. Disclaimers.  EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES, COVENANTS AND
AGREEMENTS EXPRESSLY SET FORTH HEREIN, THE SELLER’S INTEREST ARE SOLD “AS IS,
WHERE IS”, AND SELLER EXPRESSLY DISCLAIMS ALL OTHER REPRESENTATIONS AND
WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO SELLER OR ITS
AFFILIATES, THE SELLER’S INTEREST, THE BUSINESS, SAFE HARBOR OR THE ASSIGNED
AGREEMENTS.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT: SELLER
EXPRESSLY DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES REGARDING
LIABILITIES, OWNERSHIP, LEASE, MAINTENANCE OR OPERATION OF THE BUSINESS, THE
TITLE, CONDITION, VALUE OR QUALITY OF THE BUSINESS, THE SELLER’S INTEREST OR THE
ASSIGNED AGREEMENTS OR THE PROSPECTS (FINANCIAL AND OTHERWISE), RISKS AND OTHER
INCIDENTS OF THE BUSINESS; AND SELLER EXPRESSLY DISCLAIMS ALL REPRESENTATIONS
AND WARRANTIES OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE WITH RESPECT TO THE BUSINESS, THE SELLER’S INTEREST OR THE
ASSIGNED AGREEMENTS, OR ANY PART THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR
THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, OR COMPLIANCE WITH
ENVIRONMENTAL REQUIREMENTS, OR THE APPLICABILITY OF ANY GOVERNMENTAL AUTHORITY,
INCLUDING ANY ENVIRONMENTAL LAWS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN,
SELLER FURTHER EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES REGARDING
THE ABSENCE OF HAZARDOUS SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING
UNDER ENVIRONMENTAL LAWS WITH RESPECT TO THE BUSINESS OR THE ASSIGNED
AGREEMENTS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED HEREIN, SELLER EXPRESSLY DISCLAIMS ALL
REPRESENTATIONS AND WARRANTIES OF ANY KIND REGARDING THE CONDITION OF THE
BUSINESS OR THE SUITABILITY OF THE BUSINESS FOR OPERATION AS A POWER PLANT OR
OTHERWISE, AND NO SCHEDULE OR EXHIBIT TO THIS AGREEMENT, NOR ANY OTHER MATERIAL
OR INFORMATION PROVIDED, OR COMMUNICATIONS MADE, BY SELLER OR ITS
REPRESENTATIVES, INCLUDING ANY BROKER OR INVESTMENT BANKER, SHALL CONSTITUTE OR
CREATE ANY SUCH REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
CONDITION, VALUE OR QUALITY OF THE BUSINESS.
 
10.6. Notices.  All notices and other communications hereunder shall be in
writing and shall be deemed given on the day when delivered personally or by
facsimile transmission (with confirmation), on the next Business Day when
delivered to a nationally recognized overnight courier or five (5) Business Days
after deposited as registered or certified U.S. mail (return receipt requested),
in each case, postage prepaid, addressed to the recipient Party at its address
set forth below (or at such other address or facsimile number for a Party as
shall be specified by like notice; provided, however, that any such notice of a
change of address or facsimile number shall be effective only upon receipt
thereof):
 
(a)
If to Seller, to:
     
PPL Holtwood, LLC
c/o PPL Services Corporation
Office of General Counsel
Two North Ninth Street
Allentown, PA 18101
Attention: General Counsel
Facsimile: (610) 774-4455
     
and a copy (which shall not constitute notice) to:
 
 
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: David Lieberman, Esq.
Facsimile: (215) 455-2502
   
(b)
If to Buyer or Buyer Parent, to:
 
 
LS Power Development, LLC
1700 Broadway, 35th Floor
New York, New York  10019
Attention: General Counsel
Facsimile: (212) 615-3440
     
with a copy (which shall not constitute notice) to:
     
Latham & Watkins LLP
885 Third Avenue
New York, New York 10022-4802
Attn: David A. Kurzweil
Facsimile: (212) 751-4864

10.7. Assignment.  This Agreement shall be binding upon and inure solely to the
benefit of the Parties and their respective successors and permitted assigns,
but neither this Agreement nor any of the rights, interests, obligations or
remedies hereunder shall be assigned by any Party hereto, including by operation
of law, without the prior written consent of the other Party, nor is this
Agreement intended to confer upon any other Person any rights, interests,
obligations or remedies hereunder.  Notwithstanding the foregoing, Buyer may
transfer or assign (including by way of a pledge), in whole or from time to time
in part, any or all of its rights and obligations under this Agreement (i) to
one or more of its Affiliates or (ii) to its lenders or other financing sources
as collateral security; provided that no such transfer or assignment will
relieve Buyer of its obligations hereunder.
 
10.8. Governing Law; Forum; Service of Process.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
as to all matters, including validity, construction, effect, performance and
remedies. Each of the Parties hereto irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York located in the borough of Manhattan in the City of New York, or if such
court does not have jurisdiction, the Supreme Court of the State of New York,
New York County, for the purposes of any Action arising out of this Agreement or
any transaction contemplated hereby.  Each of the Parties hereto further agrees
that service of any process, summons, notice or document by U.S. certified mail
to such Party’s respective address set forth in Section 10.6 shall be effective
service of process for any Action in New York with respect to any matters to
which it has submitted to jurisdiction as set forth above in the immediately
preceding sentence.  Each of the Parties hereto irrevocably and unconditionally
waives any objection to the laying of venue of any Action arising out of this
Agreement or the transactions contemplated hereby in (a) the United States
District Court for the Southern District of New York or (b) the Supreme Court of
the State of New York, New York County, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Action brought in any such court has been brought in an inconvenient
forum.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
10.9. Counterparts.  This Agreement may be executed by facsimile transmission
(with confirmation) and in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
 
10.10. Interpretation.  The Article and Section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the Parties and shall not in any way affect the meaning or construction of
this Agreement. Ambiguities and uncertainties in the wording of this Agreement
shall not be construed for or against any Party, but shall be construed in the
manner that most accurately reflects the Parties’ intent as of the date of this
Agreement. Each Party acknowledges that it has been represented by counsel in
connection with the review and execution of this Agreement, and, accordingly,
there shall be no presumption that this Agreement or any provision hereof be
construed against the Party that drafted this Agreement. Notwithstanding any
provision of any Additional Agreement to the contrary, the provisions of this
Agreement shall govern and control any conflict or inconsistency between or
among the provisions of this Agreement and the provisions of any such Additional
Agreement.
 
10.11. Schedules and Exhibits.  Except as otherwise provided in this Agreement,
all Exhibits and Schedules referred to herein are intended to be and hereby are
made a part of this Agreement.
 
10.12. Disclosure.  Except as otherwise provided in this Agreement, all
Schedules referred to herein are intended to be and hereby are made a part of
this Agreement. Any disclosure in any Party’s Schedule under this Agreement
corresponding to and qualifying a specific numbered Schedule or Section hereof
shall be deemed to correspond to and qualify any other numbered Schedule or
Section relating to such Party to which the applicability of the disclosure is
reasonably apparent on its face from a reading of such disclosure. Certain
information set forth on the Schedules is included solely for informational
purposes, is not an admission of liability or materiality with respect to the
matters covered by the information, and may not be required to be disclosed
pursuant to this Agreement. The specification of any dollar amount in the
representations and warranties contained in this Agreement or the inclusion of
any specific item in the Schedules is not intended to imply that such amounts
(or higher or lower amounts) or such items are or are not material, and no Party
shall use the fact of the setting of such amounts or the fact of the inclusion
of any such item in the Schedules in any dispute or controversy among the
Parties as to whether any obligation, item or matter not described herein or
included in a Schedule is or is not material for purposes of this Agreement.
 
10.13. Entire Agreement.  This Agreement and the Affiliate PSA (including the
Schedules and Exhibits hereto and thereto), together with the Additional
Agreements (when executed and delivered by the Parties) and the Confidentiality
Agreement, constitute a single integrated agreement between the Parties and,
together, embody the entire agreement and understanding of the Parties hereto in
respect of the transactions contemplated hereby and thereby, and supersede all
prior agreements and understandings between the Parties with respect to such
transactions.
 
10.14. Severability.  The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.  If any provision of
this Agreement, or the application thereof to any Person or any circumstance, is
found to be invalid or unenforceable in any jurisdiction, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid or enforceable, such provision and (b) the remainder of this
Agreement and the application of such provision to other Persons or
circumstances shall not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction.

 
SIGNATURE PAGE FOLLOWS
 

 
 

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IN WITNESS WHEREOF, Seller and Buyer have caused this Purchase and Sale
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the date first above written.
 

 
 

 
PPL HOLTWOOD, LLC
 
 
By:
 
   
Name:
Title:

 
 
 
 

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LSP SAFE HARBOR HOLDINGS, LLC
 
 
By:
 
   
Name:
Title: