**Exhibit 10.80**EXECUTION COPY  ASSET PURCHASE AGREEMENTBy and AmongRELIANT ENERGY CHANNELVIEW LPAndRELIANT ENERGY SERVICES CHANNELVIEW LLCAS SELLERSAndKELSON ENERGY IV LLCAS BUYERDated as of February 25, 2008  
 

 
**TABLE OF CONTENTS**           **Page**        ARTICLE 1 DEFINITIONS AND CONSTRUCTION  1              1.1. Definitions  1       1.2. Construction.  13        ARTICLE 2 PURCHASE AND SALE OF THE ACQUIRED ASSETS  14        2.1. Transfer of Acquired Assets  14 2.2. Excluded Assets  15 2.3. Assumption of Liabilities  17 2.4. Excluded Liabilities  17 2.5. Non-Assignment of Assigned Contracts  18        ARTICLE 3 CONSIDERATION  20        3.1. Purchase Price  20 3.2. Deposit  20 3.3. Post-Closing Adjustment.  20 3.4. Allocation of Purchase Price  21 3.5. Equistar Payment  21        ARTICLE 4 CLOSING AND DELIVERIES  22        4.1. Closing  22 4.2. Closing Deliveries by Sellers to Buyer  22 4.3. Closing Deliveries by Buyer  23 4.4. RES Fuel Purchase Transactions  24        ARTICLE 5 REPRESENTATIONS AND WARRANTIES REGARDING THE ACQUIRED ASSETS  24        5.1. Organization and Qualification; Authority  24 5.2. No Conflicts; Consents and Approvals  25 5.3. Subsidiaries  25 5.4. Financial Statements  25 5.5. Absence of Undisclosed Liabilities; Certain Developments  25 5.6. Litigation  26 5.7. Compliance with Laws  26 5.8. Permits  26 5.9. Contracts.  26 5.10. Taxes  28 5.11. Employee Benefit Plans; ERISA.  29 5.12. Labor and Employment.  30 5.13. Environmental Matters  31 5.14. Intellectual Property  31 5.15. Real Estate  32 5.16. Insurance  32 5.17. Federal Regulation  32 
 

 
           **** 5.18. Brokers  32 5.19. Conduct of Business and Operations  32 5.20. Sufficiency of Assets  32        ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER  32        6.1. Organization and Qualification  32 6.2. Authority  33 6.3. No Conflicts; Consents and Approvals  33 6.4. Legal Proceedings  33 6.5. Compliance with Laws and Orders  33 6.6. Brokers  34 6.7. Financial Resources  34 6.8. No Knowledge of a Sellers’ Breach  34 6.9. Opportunity for Independent Investigation  34        ARTICLE 7 COVENANTS  34        7.1. Access.  34 7.2. Conduct of Business Pending the Closing.  35 7.3. Use of Certain Names  37 7.4. Support Obligations.  37 7.5. Termination of Certain Services, Contracts  38 7.6. Insurance  39 7.7. Tax Matters.  39 7.8. Confidentiality.  40 7.9. Employee and Benefit Matters.  40 7.10. Public Announcements  44 7.11. Expenses and Fees  45 7.12. Regulatory and Other Approvals  45 7.13. Further Assurances  46 7.14. Schedule Update  46 7.15. PUCT Matters  47 7.16. Equistar Consents  47 7.17. Boiler Feedwater Pump  47 7.18. Fulfillment of Conditions  47 7.19. Cure of Defaults  47 7.20. 2007 Financial Statements  47        ARTICLE 8 BANKRUPTCY PROCEDURES  48        8.1. Bankruptcy Actions.  48        ARTICLE 9 CONDITIONS TO THE CLOSING  49        9.1. Conditions to the Obligations of Each Party  49 9.2. Conditions to the Obligations of Buyer  49 9.3. Conditions to the Obligations of Sellers  50        ARTICLE 10 TERMINATION  51        10.1. Termination  51 
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           **** 10.2. Effect of Termination  52 10.3. Termination Fees.  52        ARTICLE 11 INDEMNIFICATION  53        11.1. Survival  53 11.2. Indemnification.  53 11.3. Waiver of Other Representations.  55 11.4. Waiver of Remedies; Certain Limitations  56 11.5. Procedures for Indemnification  58 11.6. Manner of Payment  59        ARTICLE 12 MISCELLANEOUS  59        12.1. Notices  59 12.2. Headings  60 12.3. Assignment  60 12.4. Governing Law  60 12.5. Jurisdiction  60 12.6. Counterparts  61 12.7. Amendments; Extensions.  61 12.8. Entire Agreement  61 12.9. Severability  61 12.10. Joint and Several  61 
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**EXHIBITS**   Exhibit A Form of Bill of SaleExhibit B Form of Assignment and Assumption Agreement (Contracts)Exhibit C Form of Assignment and Assumption Agreement (Lease)Exhibit D Form of RES Assignment and Assumption AgreementExhibit E Form of Sale OrderExhibit F Interim Period Capital ExpendituresExhibit G-1 Administrative Services Transition Services AgreementExhibit G-2 Fuel and Power Transition Services AgreementExhibit H Form of Escrow Agreement**DISCLOSURE SCHEDULES**   Schedule 1.1(x) Knowledge of SellersSchedule 1.1(y) Knowledge of BuyerSchedule 1.1(z) Buyer’s Energy ManagerSchedule 2.1(a) Real Estate LeasesSchedule 2.1(b) Entitled Real PropertySchedule 2.1(c) EquipmentSchedule 2.1(d) Supplier ContractsSchedule 2.1(e) Other ContractsSchedule 2.1(f) InventorySchedule 2.1(h) PermitsSchedule 2.1(g) Intellectual PropertySchedule 2.1(i) Business RecordsSchedule 2.2(m) Reliant MarksSchedule 2.2(p) Excluded AssetsSchedule 2.4 Excluded LiabilitiesSchedule 4.2(i) RES AgreementsSchedule 5.2(b) Company ConsentsSchedule 5.2(c) Sellers’ Governmental ApprovalsSchedule 5.4 Financial StatementsSchedule 5.5 Undisclosed LiabilitiesSchedule 5.6 LitigationSchedule 5.7 Compliance with LawsSchedule 5.8 PermitsSchedule 5.9(a) ContractsSchedule 5.9(c) Excluded ContractsSchedule 5.10 TaxesSchedule 5.11(a) Seller Affiliate PlansSchedule 5.11(c) Favorable Determination LettersSchedule 5.12(f) Seller Affiliate Plan Increases or AccelerationSchedule 5.13 Environmental MattersSchedule 5.14 Intellectual Property
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   Schedule 5.15 Real EstateSchedule 6.3(c) Buyer’s Governmental ApprovalsSchedule 7.2 Conduct of Business Pending the ClosingSchedule 7.4(a) Support ObligationsSchedule 7.9(b) Non-Collective Bargaining Contract EmployeesSchedule 8.1(b) PublicationsSchedule 8.1(d) Bid ProtectionsSchedule 9.1(c) Certain Consents
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**ASSET PURCHASE AGREEMENT**     THIS ASSET PURCHASE AGREEMENT (this “***Agreement***”), dated as of February 25, 2008 (the“***Execution Date***”), is made by and between Reliant Energy Channelview LP, a Delaware limitedpartnership (“***Channelview LP***”) and Reliant Energy Services Channelview LLC, a Delaware limitedliability company (“***RESC***” and together with Channelview LP, the “***Sellers***”) and Kelson Energy IVLLC, a Delaware limited liability company (the “***Buyer***”).**RECITALS**     WHEREAS, Channelview LP owns the Channelview Facility and certain other Acquired Assets;     WHEREAS, on August 20, 2007, Channelview LP filed a voluntary petition for relief under theBankruptcy Code in the Bankruptcy Court;     WHEREAS, RESC owns certain Acquired Assets;     WHEREAS, on August 20, 2007, RESC filed a voluntary petition for relief under the BankruptcyCode in the Bankruptcy Court;     WHEREAS, on the terms and subject to the conditions set forth in this Agreement, Buyer desiresto purchase from Sellers, and Sellers desire to sell to Buyer, the Acquired Assets, in a saleauthorized by the Bankruptcy Court pursuant to, *inter alia*, sections 105, 363, and 365 of theBankruptcy Code;     WHEREAS, Buyer also desires to assume, and Sellers desire to assign and transfer to Buyer, theAssumed Liabilities.     NOW, THEREFORE, in consideration of the foregoing and their respective representations,warranties, covenants and undertakings herein contained, and other good and valuable consideration,the receipt and sufficiency of which are hereby acknowledged, Sellers and Buyer hereby agree asfollows:**ARTICLE 1****DEFINITIONS AND CONSTRUCTION**     1.1. Definitions. As used in this Agreement, the following terms shall have thefollowing meanings:     “***2007 Financial Statements***” has the meaning set forth in Section 7.20.     “***Accounts Payable***” has the meaning set forth in Section 2.4.     “***Accounts Receivable***” has the meaning set forth in Section 2.2(c).     “***Acquired Assets***” has the meaning set forth in Section 2.1.
 

 
     “***Administrative Services Transition Services Agreement***” means that certain Transition ServicesAgreement, to be dated as of the Closing Date, by and among Operator and Buyer, in substantiallythe form of Exhibit G-1 hereto.     “***Adverse Ruling***” means relief granted by the Bankruptcy Court to a third party that the Buyerin good faith believes, based on the advice of counsel, would adversely impact the relief providedin the Sale Order under Section 363(m) of the Bankruptcy Code.     “***Affiliate***” means any Person that directly, or indirectly through one or more intermediaries,controls, is controlled by, or is under common control with, the Person specified. For purposes ofthis definition, control of a Person means the power, direct or indirect, to direct or cause thedirection of the management and policies of such Person whether through ownership of votingsecurities or ownership interests, by contract or otherwise, and specifically with respect to acorporation, partnership, trust or limited liability company, shall include direct or indirectownership of more than 50% of the voting securities in such corporation or of the voting interestin a partnership or limited liability company or of the beneficial interest in a trust.     “***Agreement***” has the meaning set forth in the Recitals to this Agreement.     “***Assigned Contracts***” has the meaning set forth in Section 2.1(e).     “***Assumed Liabilities***” has the meaning set forth in Section 2.3.     “***Assumption Agreements***” has the meaning set forth in Section 4.2(b).     “***Bankruptcy Code***” means Title 11 of the United States Code.     “***Bankruptcy Court***” means the United States Bankruptcy Court for the District of Delaware orsuch other court having jurisdiction over the Chapter 11 Cases originally administered in theUnited States Bankruptcy Court of the District of Delaware.     “***Base Purchase Price***” has the meaning set forth in Section 3.1(a).     “***Benefit Plan***” means: (a) each “employee benefit plan,” as such term is defined in Section3(3) of ERISA, (b) each plan or program that would be an employee benefit plan if it were subjectto ERISA, such as foreign plans and plans for directors, (c) each stock bonus, stock ownership,stock option, stock purchase, restricted stock, stock appreciation rights, phantom stock, or otherequity plan (whether qualified or nonqualified), (d) each bonus, deferred compensation or incentivecompensation plan, and (e) any other material employee benefit plan, program, contract, commitment,policy, agreement or arrangement of any kind (including, any employment, consulting, retention,disability, accident, savings and thrift, unemployment compensation, post-retirement, fringebenefits, cafeteria plans, change in control or severance plan, policy, arrangement or agreementproviding compensation or benefits to any employee (whether active or on leave of absence) and/orformer employee of the Operator, Sellers, their Affiliates or any Commonly Controlled Entity);provided, that such term shall not include (1) routine employment policies and procedures,including wage, vacation, holiday, and sick or otherleave policies, (2) workers compensation insurance, and (3) directors and officers liabilityinsurance.
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     “***Bid Procedures Order***” has the meaning set forth in Section 8.1(d).     “***Business***” means the business of generating and selling steam, electric power, capacity andancillary services from the Channelview Facility, as managed by Channelview LP, or its Affiliates,on the date hereof; or, as applicable, RESC’s business of purchasing power from third-parties andselling power to Equistar pursuant to the Energy Supply Agreement, and any business activities ofChannelview LP or RESC incidental to the foregoing.     “***Business Day***” means a day other than Saturday, Sunday or any day on which banks located inthe State of New York and the State of Texas are authorized or obligated to close.     “***Business Records***” means all books, files and records (whether in paper or electronic format)to the extent they apply to the Acquired Assets or the Business, including customer lists,historical customer files, reports, plans, data, accounting and tax records, test results, productspecifications, drawings, diagrams, training manuals, procedures manuals, logs, engineering data,safety and environmental reports and documents, maintenance schedules, operating and productionrecords, inventory records, business plans, and marketing and all other studies, documents andrecords but excluding any Retained Books and Records.     “***Buyer***” has the meaning set forth in the Recitals to this Agreement.     ***“Buyer Governmental Approvals”***has the meaning set forth in Section 6.3(c).     “***Buyer Indemnified Group***” means Buyer and Buyer’s Affiliates and their respective officers,directors, managers, members, employees and agents.     “***Buyer Savings Plan***” has the meaning set forth in Section 7.9(g).     “***Capital Expenditures***” means expenditures for capital additions to, or replacements of,property, plant and equipment included in the Channelview Facility and other expenditures forrepairs on property, plant and equipment included in the Channelview Facility that would becapitalized by Sellers in accordance with their normal capitalization policies, which are inaccordance with GAAP.     “***Change of Law***” means the adoption, implementation, promulgation, repeal, modification orreinterpretation of any Law of or by any Governmental Authority which occurs subsequent to theExecution Date.     “***Channelview Facility***” means the 830 MW combined cycle, cogeneration facility located inChannelview, Texas, and all facilities and equipment owned or leased by Channelview LP inconnection with the Business.     “***Channelview Facility Employees***” has the meaning set forth in Section 5.12(a).     “***Channelview LP***” has the meaning set forth in the Recitals to this Agreement.     “***Channelview September 30 Balance Sheet***” has the meaning set forth in Section 5.5.
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     “***Chapter 11 Cases***” means collectively, the cases commenced under Chapter 11 of the BankruptcyCode in the Bankruptcy Court by Channelview LP and RESC, and which are jointly administered undercase no. 07-11160 (MFW).     “***Charter Documents***” means, with respect to any Person, the articles of incorporation ororganization and by-laws, the limited partnership agreement, the partnership agreement or thelimited liability company agreement, and/or such other organizational documents of such Person,including those that are required to be registered or kept in the place of incorporation,organization or formation of such Person and which establish the legal personality of such Person.     “***Claims***” has the meaning set forth in Section 2.2(j).     “***Closing***” has the meaning set forth in Section 4.1.     “***Closing Date***” has the meaning set forth in Section 4.1.     “***Code***” means the Internal Revenue Code of 1986, as amended.     “***Collective Bargaining Contract***” means that certain Agreement, effective as of January 1,2004, between Reliant Energy Corporate Services, LLC, as successor by merger to Reliant EnergyPower Operations I, Inc., and the International Brotherhood of Electrical Workers Local Union No.66 Houston, Texas.     “***Commonly Controlled Entity***” means any trade or business, whether or not incorporated, that,together with either Seller, would be a “single employer” within the meaning of Section 4001(b) ofERISA.     “***Company Consents***” has the meaning set forth in Section 5.2(b).     “***Confidentiality Agreement***” has the meaning set forth in Section 7.8(a).     “***Consent***” means any consent, approval, authorization, qualification, waiver or notification ofa Governmental Authority or other Person.     “***Continuing Employee***” means each individual who accepts an offer of employment from Buyer orits designee as provided in Section 7.9(b), reports to work with Buyer or its designee, and ishired by Buyer or its designee.     “***Contract***” means any written contract, agreement, instrument, bond, commitment, lease,license, evidence of indebtedness, mortgage, indenture, purchase order, binding bid, letter ofcredit, security agreement or other written legally binding arrangement.     “***Court Auction Determination***” has the meaning set forth in Section 8.1(d).     “***Credit Agreement***” means that certain Credit Agreement, dated as of December 15, 1999, asamended, among Channelview LP, the Lenders parties thereto, The Bank of New York,
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as successorAdministrative Agent and Collateral Agent, and Teachers Insurance and Annuity Association ofAmerica, as Institutional Agent.     “***Credit Rating***” means, with respect to any Person, each rating given by Standard & Poor’s orMoody’s, as applicable, to such Person’s long-term, unsecured, unsubordinated debt obligations notsupported by third party credit enhancement.     “***Cure Cost Reserve Amount***” has the meaning set forth in Section 7.19.     “***Cure Costs***” means all (i) cure costs required to be paid and all defaults required to becured as a condition to assumption and assignment of the Assigned Contracts pursuant to section 365of the Bankruptcy Code and (ii) all contingent, unliquidated or unmatured liabilities under suchAssigned Contracts or under any subcontracts related thereto (whether or not such subcontracts areAssigned Contracts) arising prior to the Closing Date.     “***Deposit***” has the meaning set forth in Section 3.2.     “***Disclosure Schedules***” has the meaning set forth in Section 2.1(a).     “***Emission Allowances***” means authorizations to emit specified units of substances, whetherthose authorizations are described as allowances, offsets, credits or by another term, from theChannelview Facility that are allocated to the Channelview Facility and owned by Channelview LP asof the time of Closing, or to which the Channelview Facility becomes entitled to after Closing,which units are established by any Governmental Authority with jurisdiction over the ChannelviewFacility.     “***Energy Manager***” means any one of the entities set forth on Schedule 1.1(z) or anotherenergy manager, which may be an Affiliate of Buyer, reasonably satisfactory to Sellers or RES, asapplicable.     “***Energy Supply Agreement***” means that certain Second Amended and Restated Energy SupplyAgreement, dated as of December 15, 1999, by and between Equistar and RESC.     “***Entitled Real Property***” has the meaning set forth in Section 2.1(b).     “***Environmental Law***” means any federal, state, or local law, statute, ordinance, rule,regulation, code, directive, judicial or administrative order, judgment, decree, injunction, orrequirement of any Governmental Authority, relating to (a) pollution or the protection,preservation or restoration of the environment (including air, water vapor, surface water,groundwater, surface land, subsurface land and natural resources), as the same may be amended oradopted as of the Closing Date or any date prior to the Closing Date, (b) Releases or threatenedReleases (including, without limitation, Releases into the ambient air, surface water, groundwater,land, surface and subsurface strata) or otherwise relating to Hazardous Substances; or (c) the use,storage, recycling, treatment, generation, transportation, processing, handling, labeling, testing,discharge, control, cleanup, production, or disposal of Hazardous Substances.     “***Equipment***” has the meaning set forth in Section 2.1(c).
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     “***Equistar***” means Equistar Chemicals LP, a Delaware limited partnership.     “***ERCOT***” means the Electric Reliability Counsel of Texas.     “***ERISA***” means the Employee Retirement Income Security Act of 1974, as amended.     “***Escrow Agent***” means Wilmington Trust Company the escrow agent under the Escrow Agreement.     “***Escrow Agreement***” means the escrow agreement by and between Sellers, Buyer and the EscrowAgent, in substantially the form of Exhibit H.     “***Estimated Purchase Price***” has the meaning set forth in Section 4.3(a).     “***Excluded Assets***” has the meaning set forth in Section 2.2.     “***Excluded Liabilities***” has the meaning set forth in Section 2.4.     “***Execution Date***” has the meaning set forth in the Recitals to this Agreement.     “***FERC***” means the Federal Energy Regulatory Commission.     “***Final Purchase Price***” has the meaning set forth in Section 3.3(c).     “***Fuel and Power Transition Services Agreement***” means that certain Transition ServicesAgreement, to be dated as of the Closing Date, by and among RES and Buyer, in substantially theform of Exhibit G-2 hereto.     “***Fuel Purchase and Sale Agreement***” means that certain Fuel Purchase and Sale Agreement, datedas of December 15, 1999, by and among RES, Channelview LP and Equistar.     “***Fuel Supply Agreement***” has the meaning set forth in Section 2.5.     “***FutureCare Program***” has the meaning set forth in Section 7.9(b).     “***GAAP***” means generally accepted accounting principles in the United States of America.     “***Generator Operator***” has the meaning set forth in Section 5.7.     “***Governmental Authority***” means (i) any federal, state, local, or foreign government, (ii) anycourt, tribunal, arbitrator, authority, agency, administrative body, taxing authority, commission,official or other instrumentality of the United States or any state, county, city, municipality,local authority or other political subdivision or similar governing entity, and (iii) anygovernmental, quasi—governmental or non-governmental body administering, regulating or havinggeneral oversight over gas, electricity, power or other markets, including ERCOT, the TexasRegional Entity and NERC.
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     “***Hazardous Substance***” means any chemical, material or substance in any form, whether solid,liquid, gaseous, semisolid, or any combination thereof, whether waste material, raw material,chemical, finished product, byproduct, or any other material or article, listed, defined,designated, regulated or classified as a pollutant, contaminant, hazardous substance, toxicsubstance, hazardous waste, solid waste, or special waste, or that is otherwise listed orregulated, or as to which liability could be imposed under any Environmental Law; including withoutlimitation, petroleum products, and toxic mold.     “***HSR Act***” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.     “***Indemnified Party***” has the meaning set forth in Section 11.5.     “***Indemnifying Party***” has the meaning set forth in Section 11.5.     “***Indemnity Security***” has the meaning set forth in Section 11.2(c).     “***Intellectual Property***” means any and all (a) patents and patent applications, (b) marks(including trademarks, service marks, certification marks, collective marks, registered orunregistered), trade names, designs, expressions and works of authorship, logos, slogans, tradedress and applications for registration of the foregoing, (c) copyrights, mask works andapplications for registration of the foregoing, and (d) trade secrets and confidential information,including confidential know-how and any other similar property, whether or not embodied in tangibleform (including but not limited to technical drawings and specifications, shop drawings, manuals,forms, working notes and memos, technical and laboratory data, notebooks, samples, engineeringprototypes and computer software).     “***Interest Rate***” means the prime per annum rate of interest as published by *The Wall StreetJournal*.     “***Interim Period***” means the period of time from the Execution Date until the earlier of theClosing Date or termination of this Agreement.     “***Inventory***” has the meaning set forth in Section 2.1(f).     “***Investment Grade***” means an entity having long term, unsecured, unsubordinated debt notsupported by third party credit enhancement that is rated “BBB-” or higher by Standard & Poor’s,and “Baa3” or higher by Moody’s, and that in either case is not on negative credit watch.     “***IRS***” means the U.S. Internal Revenue Service.     “***Knowledge***” means, in the case of Sellers, the actual knowledge (as opposed to anyconstructive or imputed knowledge) of the individuals listed on Schedule 1.1(x), and in thecase of Buyer, the actual knowledge (as opposed to any constructive or imputed knowledge) of theindividuals listed on Schedule 1.1(y), in each case without inquiry.     “***Laws***” means all laws, codes, statutes, rules, regulations, ordinances, orders and otherlegally-binding pronouncements having the effect of law of any Governmental Authority.
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     “***Leased Real Property***” has the meaning set forth in Section 2.1(a).     “***Lenders***” means the lenders party to the Credit Agreement.     “***Lien***” means any mortgage, pledge, hypothecation, assessment, levy, imposition, charge, claim,assignment, security interest, easement, deed, restriction, transfer restriction, lien or othersimilar restriction or encumbrance of any kind.     “***Losses***” means any and all judgments, losses, liabilities, amounts paid in settlement,damages, fines, penalties, supplemental environmental project costs, deficiencies, losses andexpenses (including interest, court costs, reasonable fees of attorneys, accountants and otherexperts and other reasonable expenses of litigation, settlement, judgment or other proceedings orof any claim, default or assessment).     “***LTMA Support Obligations***” shall mean any Support Obligations arising under that certainGuaranty Agreement, dated as of September 30, 2002, by and between Reliant Energy Power Generation,Inc. and Siemens Power Generation, Inc.     “***Material Adverse Effect***” means any change, event or effect that is materially adverse to theAcquired Assets, taken as a whole, in each case, except for any such change, event or effectresulting from or arising out of (a) changes in economic conditions generally or in the industry inwhich the Channelview Facility operates, (b) changes in international, national, regional, state orlocal wholesale or retail markets for electric power or fuel or related products, including thosedue to actions by competitors (excluding any such change to the extent it only ordisproportionately affects the Acquired Assets relative to other combined-cycle cogenerationfacilities in ERCOT), (c) changes in general regulatory or political conditions, including any actsof war or terrorist activities, (d) changes in national, regional, state or local electrictransmission or distribution systems, (e) strikes, work stoppages or other labor disturbances, (f)increases in costs of commodities or supplies, including fuel, (g) effects of weather ormeteorological events, (h) any Change of Laws, (i) any actions to be taken pursuant to or inaccordance with this Agreement, (j) any changes, events or effects to which Sellers have curedprior to or as of Closing, and (k) the Chapter 11 Cases.     “***Material Contracts***” has the meaning set forth in Section 5.9.     “***Moody’s***” means Moody’s Investors Services, Inc., and its successors.     “***Multiemployer Plan***” has the meaning set forth in ERISA § 3(37).     “***NERC***” means North American Electric Reliability Corporation.     **“*****Operator*****”**means Reliant Energy Corporate Services, LLC, a Delaware limited liability company.     “***Other Contracts***” has the meaning set forth in Section 2.1(e).     “***Parties***” means each of Buyer and Sellers.
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     “***Permits***” means all licenses, permits, authorizations, approvals, registrations, variances,exemptions, concessions, franchises and similar consents granted or issued by any GovernmentalAuthority.     “***Permitted Exceptions***” means (i) all Liens and any defects, exceptions, restrictions,easements, rights of way and encumbrances (x) disclosed in the title commitment referenced inSchedule 5.15, (y) which are shown on that certain TSPS Category 5 Survey made by CarterBurgess, dated September 26, 2002, or (z) which a search of the public records would reveal; (ii)statutory liens for Taxes, assessments or other governmental charges not yet due and payable; (iii)mechanics’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the ordinarycourse of business that are not yet delinquent or, if delinquent, that are being contested in goodfaith; (iv) zoning, entitlement and other land use and environmental regulations by anyGovernmental Authority; (v) such other Liens, imperfections in title and easements, restrictionsand encumbrances which do not materially detract from the value of, or materially interfere withthe present use of, the Channelview Facility in the aggregate; (vi) Liens arising under fuelprocurement arrangements; (vii) any encumbrances or liens arising under the Credit Agreement infavor of the Lenders; (viii) liens for pre-petition ad valorem Taxes which will be satisfied bySellers upon Closing; and (ix) any rights of Equistar to purchase the partnership interests ofChannelview LP, pursuant to the Second Amended and Restated Agreement Steam Supply Agreement, datedas of December 15, 1999, between Channelview LP and Equistar.     “***Person***” means any natural person, corporation, general partnership, limited partnership,limited liability company, proprietorship, other business organization, trust, union, association,entity or Governmental Authority.     “***Pre-Closing Portion***” has the meaning set forth in Section 7.7(b).     “***Prudent Industry Practice***” means those practices, methods, equipment, specifications andstandards of safety and performance, as the same may change from time to time, as are commonly usedin the North American electric utility industry by independent operators of electric generationstations of a type and size similar to those constituting the Channelview Facility during aparticular time period as good, safe and prudent engineering practices in connection with theoperation, maintenance, repair and use of gas turbines, electrical generators and other equipmentand facilities with commensurate standards of safety, performance, dependability, efficiency andeconomy, and consistent with applicable Laws and Regulations. Prudent Industry Practices are notintended to be limited to the optimum practice or method to the exclusion of others, but rather tobe a spectrum of possible but reasonable practices and methods generally accepted in the NorthAmerican electric utility industry during the relevant time period in light of the circumstances.     “***PUCT***” means the Public Utility Commission of Texas.     “***Pump Payments***” has the meaning set forth in Section 7.17.     ***“Purchase Price Allocation”***has the meaning set forth in Section 3.4.     “***QF***” has the meaning set forth in Section 5.17.
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     “***QSE***” means a qualified scheduling entity qualified by ERCOT in accordance with ERCOT ProtocolSection 16, Registration and Qualification of Market Participants, to submit Balanced Schedules andAncillary Services bids and settle payments with ERCOT.     “***Real Estate Leases***” has the meaning set forth in Section 2.1(a).     “***Real Property***” has the meaning set forth in Section 2.1(b).     “***Related Person***” means, with respect to any Person, all past, present and future directors,officers, members, managers, stockholders, employees, controlling persons, agents, professionals,attorneys, accountants, investment bankers, Affiliates or representatives of any such Person.     “***Release***” means any release, spill, leak, discharge, abandonment, disposal, pumping, pouring,emitting, emptying, injecting, leaching, dumping, depositing, dispersing, allowing to escape ormigrate into or through the environment (including ambient air, surface water, ground water, landsurface and subsurface strata or within any building, structure, facility or fixture) of anyHazardous Substance, including the abandonment or discarding of Hazardous Substances in barrels,drums, or other containers.     “***Reliant Energy***” has the meaning set forth in Section 2.2(d).     “***Reliant Marks***” has the meaning set forth in Section 2.2(m).     “***Representatives***” means officers, directors, employees, counsel, accountants, financialadvisers or consultants of either Sellers or Buyer, as applicable.     “***RES***” means Reliant Energy Services, Inc.     “***RES Agreements***” has the meaning set forth in Section 4.2(i).     “***RES Assignment and Assumption Agreement***” has the meaning set forth in Section 4.2(i).     “***RES Fuel Purchase Transactions***” shall mean those fuel purchase transactions listed onSchedule 2 of the Fuel and Power Transition Services Agreement or entered into after the datehereof in accordance with such Schedule 2.     “***RESC***” has the meaning set forth in the Recitals to this Agreement.     “***Retained Books and Records***” means: (i) all corporate seals, minute books, charter documents,corporate stock record books, original tax and financial records and such other files, books andrecords to the extent that any of the foregoing relates to any of the Excluded Assets or ExcludedLiabilities or the organization, existence, capitalization or debt financing of a Seller or of anyAffiliate of a Seller; (ii) all books, files and records that would otherwise constitute a BusinessRecord but for the fact that disclosure of books, files or records could (v) disclose informationrelated to a Seller or any of its Affiliates concerning public utility regulatory matters,including matters before ERCOT, the FERC, or other similar bodies, (w) violate any legal
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constraints or obligations regarding the confidentiality thereof, provided that such Sellershall use its commercially reasonable efforts to obtain a waiver of any such confidentialityrestrictions in order to permit such disclosure, (x) waive any attorney client, work product orlike privilege, (y) disclose information about such Seller or any of its Affiliates that isunrelated to the Channelview Facility or the Business or (z) disclose information about such Selleror any of its Affiliates pertaining to energy or project evaluation, energy or natural gas pricecurves or projections or other economic predictive models; or (iii) all books and records preparedin connection with or relating in any way to the transactions contemplated by this Agreement,including bids received from other parties and analyses relating in any way to the Acquired Assetsor the Assumed Liabilities.     “***Rule***” or “***Rules***” means the Federal Rules of Bankruptcy Procedure.     “***Sale Motion***” has the meaning set forth in Section 8.1(b).     “***Sale Order***” means an order: (i) (x) in substantially the form of Exhibit E hereto, or(y) in such other form which is in form and substance reasonably acceptable to Sellers and Buyerapproving this Agreement and all of the terms and conditions hereof, and approving and authorizingSellers to consummate the transactions contemplated hereby. Without limiting the generality of theforegoing, such order shall find and provide, among other things, that (a) other than PermittedExceptions, the Acquired Assets sold to Buyer pursuant to this Agreement shall be transferred toBuyer free and clear of all Liens and liabilities of any Person, such Liens and liabilities toattach to the Purchase Price, (b) Buyer has acted in good faith within the meaning of section363(m) of the Bankruptcy Code and, as such, is entitled to the protections afforded thereby, (c)this Agreement was negotiated, proposed and entered into by the parties without collusion, in goodfaith and from arm’s length bargaining positions, (d) Buyer is not acquiring or assuming any ofSellers’ or any other Person’s liabilities except as expressly provided in this Agreement, (e) allAssigned Contracts shall be assumed by Sellers and assigned to Buyer pursuant to section 365 of theBankruptcy Code, (f) the Bankruptcy Court shall retain jurisdiction to resolve any controversy orclaim arising out of or relating to this Agreement, or the breach hereof as provided in Section8.1 hereof during the pendency of the Chapter 11 Cases, (g) this Agreement and the transactionsand instruments contemplated hereby shall be specifically enforceable against and binding upon, andnot subject to rejection or avoidance by, each Seller or any trustee of a Seller and its applicableestate, (h) is it not a principal purpose of any Person entering into this Agreement or anytransactions contemplated by this Agreement to evade liability to which such Person would besubject under Subtitle D of Title IV of ERISA, and (i) the provisions thereof are non-severable andmutually dependent; and (ii) that does not require the assignment and assumption of the Cash FlowParticipation Agreement, dated as of December 15, 1999, by and between Channelview LP and Equistar.     “***Schedule Update***” has the meaning set forth in Section 7.14.     “***Seller Affiliate Plan***” means each Benefit Plan that is sponsored, administered, maintained orcontributed to as of the date of this Agreement by any Affiliate of either Seller and which BenefitPlan provides benefits with respect to employees of the Operator who are employed at theChannelview Facility.
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     “***Seller Affiliate Savings Plans***” means the Reliant Energy, Inc. Savings Plan and the ReliantEnergy, Inc. Union Savings Plan.     “***Seller Indemnified Group***” means each Seller and such Seller’s Affiliates and their respectiveofficers, directors, employees and agents.     “***Sellers***” has the meaning set forth in the Recitals to this Agreement.     “***Sellers’ Governmental Approvals***” has the meaning set forth in Section 5.2(c).     “***Sellers’ Post-Closing Estimate***” has the meaning set forth in Section 3.3(a).     “***Settlement Agreement***” means that certain Settlement Agreement, dated as of July 10th, 2007,by and between Channelview LP, RESC, and Equistar.     “***Severance Plan*****”**means the Reliant Energy, Inc. 2003 Involuntary Severance Benefits Plan forEmployees With Annual Base Pay Less Than $150,000 As Amended and Restated Effective June 1, 2004.     “***Standard & Poor’s***” means Standard & Poor’s Ratings Group (a division of McGraw Hill, Inc.),and its successors.     “***Straddle Period***” has the meaning set forth in Section 7.7(b).     “***Supplier Contracts***” has the meaning set forth in Section 2.1(d).     “***Support Obligations***” has the meaning set forth in Section 7.4(a).     “***Tax***” or “***Taxes***” means any federal, state, local, or foreign income, profits, franchise,withholding, ad valorem, personal property (tangible and intangible), employment, payroll, salesand use, social security (or similar), disability, occupation, real property, severance, excise,gross receipts, utility, severance, license, transfer, stamp, premium, windfall profits,environmental (including taxes under Code § 59A), customs duties, capital stock, unemployment,registration, utility, production, value added, alternative or add-on minimum, estimated, and othertaxes imposed by a Taxing Authority of any kind whatsoever, whether computed on a separate orconsolidated, unitary or combined basis or in any other manner, including any interest, penalty oraddition thereto, whether disputed or not.     “***Tax Proceeding***” has the meaning set forth in Section 7.7(e).     “***Tax Returns***” means any and all returns, reports, statements, information returns or othersimilar filings filed or required to be filed with respect to any Taxes, including any supportinginformation, schedules, attachments or amendments thereof.     “***Taxing Authority***” means, with respect to any Tax, the Governmental Authority or politicalsubdivision thereof that imposes such Tax, and the agency (if any) charged with the collection ofsuch Tax for such entity or subdivision.
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     “***Termination Date***” has the meaning set forth in Section 10.1.     “***Texas Regional Entity***” means the Texas Regional Entity, a Division of ERCOT.     “***Third-Party Claim***” has the meaning set forth in Section 11.5.     “***Transfer Taxes***” means all transfer, Real Property transfer, goods and services, value added,recordation, documentary, stamp, duty, excise and conveyance Taxes and other similar Taxes, duties,fees or charges, as levied by any Taxing Authority in connection with the transactions contemplatedby this Agreement, provided, however, that for the avoidance of doubt, the term Transfer Taxesshall not include any income Taxes based on or measured by net income, including the Texasfranchise or margins tax.     “***Transition Services Agreements***” means the Administrative Services Transition ServicesAgreement and the Fuel and Power Transition Services Agreement.     “***Union***” has the meaning set forth in Section 7.9(c).     “***WARN Act***” means the Worker Adjustment and Retraining Notification Act of 1988, as amended andany similar foreign, state or local law, regulation or ordinance.     “***Welfare Benefits***” has the meaning set forth in Section 7.9(h).     1.2. Construction.          (a) All Article, Section, Subsection, Schedule and Exhibit references used in this Agreementare to Articles, Sections, Subsections, Schedules and Exhibits to this Agreement unless otherwisespecified. The Exhibits and Schedules attached to this Agreement constitute a part of thisAgreement and are incorporated herein for all purposes.          (b) If a term is defined as one part of speech (such as a noun), it shall have a correspondingmeaning when used as another part of speech (such as a verb). Unless the context of this Agreementclearly requires otherwise, words importing the masculine gender shall include the feminine andneutral genders and vice versa. The words “includes” or “including” shall mean “includes withoutlimitation” or “including without limitation,” the words “hereof,” “hereby,” “herein,” “hereunder”and similar terms in this Agreement shall refer to this Agreement as a whole and not any particularSection or Article in which such words appear and any reference to a Law shall include anyamendment thereof or any successor thereto and any rules and regulations promulgated thereunder.Currency amounts referenced herein are in U.S. Dollars.          (c) Time is of the essence in this Agreement. Whenever this Agreement refers to a number ofdays, such number shall refer to calendar days unless Business Days are specified. Whenever anyaction must be taken hereunder on or by a day that is not a Business Day, then such action may bevalidly taken on or by the next day that is a Business Day.          (d) Sellers may, at their option, include in the Schedules items that are not material, andany such inclusion, or any references to dollar amounts, shall not be deemed to be
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an acknowledgment or representation that such items are material or would be reasonablyexpected to cause a Material Adverse Effect, to establish any standard of materiality or to definefurther the meaning of such terms for purposes of this Agreement. Information disclosed in eachSchedule of the Sellers’ Disclosure Schedules shall be deemed to be disclosed in each otherSchedule therein, if it is disclosed in such a way as to make reasonably apparent its relevance orapplicability to another Section of this Agreement or any other Schedule (or subparts thereof) inorder to avoid a misrepresentation hereunder.          (e) Each Party acknowledges that it and its attorneys have been given an equal opportunity tonegotiate the terms and conditions of this Agreement and that any rule of construction to theeffect that ambiguities are to be resolved against the drafting Party or any similar rule operatingagainst the drafter of an agreement shall not be applicable to the construction or interpretationof this Agreement.**ARTICLE 2****PURCHASE AND SALE OF THE ACQUIRED ASSETS**     2.1. Transfer of Acquired Assets. At the Closing, and upon the terms and conditionsherein set forth, each Seller (as applicable) shall sell to Buyer (or Buyer’s designee, in the caseof the Energy Supply Agreement), and Buyer (or Buyer’s designee, in the case of the Energy SupplyAgreement) shall acquire from Sellers, all of each Seller’s right, title and interest in, to andunder the Acquired Assets free and clear of Liens, claims and other interests (except for PermittedExceptions) pursuant to sections 105, 363 and 365 of the Bankruptcy Code. “***Acquired Assets***” shallmean all of each Seller’s right, title and interest in, to and under all property (tangible orintangible), rights, goodwill, claims and assets to the extent relating to or used in or held foruse in connection with the Business (except for the Excluded Assets) as the same exist on theClosing Date including:          (a) subject to the receipt of any necessary consents or approvals, all of Sellers’ rightsunder the leases of real property (the “***Real Estate Leases***”), listed on Schedule 2.1(a) ofthe disclosure schedules accompanying this Agreement (the “***Disclosure Schedules***”) and the realproperty leased by Channelview LP pursuant to the Real Estate Leases, together with anyimprovements and fixtures owned by Channelview LP erected on the real property subject to the RealEstate Leases (the “***Leased Real Property***”);          (b) subject to the receipt of any necessary consents or approvals, all of Sellers’ rightsunder the easements, rights of way, real property licenses, and other real property entitlementsused in the Business or listed on Schedule 2.1(b) (the “***Entitled Real Property***” and,together with the Leased Real Property, the “***Real Property***”);          (c) all of (i) Sellers’ owned and leased equipment, spare parts, machinery, furniture,materials, supplies, fixtures, and other personal property used in the Business, and in connectionwith Channelview LP, located on the Real Property or listed on Schedule 2.1(c) (the“***Equipment***”); and (ii) any rights of Sellers to the warranties and licenses received fromthird parties with respect to the Equipment;
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          (d) subject to the receipt of any necessary consents or approvals, all of Sellers’ rightsunder outstanding purchase orders or other similar Contracts used exclusively in the Businessentered into by Channelview LP with any supplier that are listed on Schedule 2.1(d) of theDisclosure Schedules (“***Supplier Contracts***”);          (e) subject to the receipt of any necessary consents or approvals, all of Sellers’ rightsunder the Contracts that are listed on Schedule 2.1(e) of the Disclosure Schedules (the“***Other Contracts***” and, together with the Real Estate Leases, the Entitled Real Propertyconstituting Contracts, and the Supplier Contracts, the “***Assigned Contracts***”);          (f) all (i) inventories of fuel, chemicals and gas wherever located (including in transit tothe Channelview Facility) and owned by Channelview LP on the Closing Date, or listed onSchedule 2.1(f) (the “***Inventory***”), and (ii) any rights of Channelview LP to the warrantiesreceived from third parties with respect to such Inventory;          (g) any Intellectual Property, including any computer software or systems (i) located at theReal Property, the offices of RESC or listed on Schedule 2.1(g) and (ii) owned exclusivelyby either Seller and licenses held exclusively by either Seller, to the extent transferable, ineach case that pertain solely to the Business;          (h) to the extent transferable under applicable Law, all rights of either Seller under thePermits relating exclusively to the Business including those listed on Schedule 2.1(h);          (i) copies of all Business Records (including those listed on Schedule 2.1(i) to theextent they apply to the Acquired Assets) and the right to receive mail and other communicationsaddressed to the Sellers that pertain to the Channelview Facility or the Business;          (j) all accounts, rights, or allowances involving Emissions Allowances, and all rights to anyfuture Emission Allowances, if any, that will be granted or allocated with respect to theChannelview Facility (other than those Emission Allowances expended in the ordinary course ofoperation of the Channelview Facility prior to the Closing);          (k) subject to Section 2.2(o), all claims, causes of action, choses in action, rightsof set-off of any kind, rights of recovery, whether known or unknown, in favor of any of theSellers, and pertaining to, arising out of or relating to, the Acquired Assets or offsetting anyAssumed Liabilities, but excluding any of the same relating to any Affiliate of the Sellers, orrelating to any matter covered by the Settlement Agreement; and          (l) all of Channelview LP’s right, title and interest in the Channelview Facility.     2.2. Excluded Assets. Notwithstanding anything to the contrary in this Agreement, theAcquired Assets do not include the following (collectively, the “***Excluded Assets***”):          (a) any right, title or interest of any Person other than a Seller in any property or asset;
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          (b) all of Sellers’ cash and cash equivalents, marketable securities, prepaid expenses,advance payments, surety accounts, deposits and other similar prepaid items (including for thepurchase of natural gas), checks in transit and undeposited checks to the extent attributable tothe period prior to the Closing Date;          (c) all of Sellers’ accounts and notes receivable to the extent attributable to the periodprior to 11:59 pm on the day prior to the Closing Date (the “***Accounts Receivable***”);          (d) other than assets, property, and other rights specifically identified in any Schedulereferenced in Section 2.1 above, any assets, property and other rights held or owned byReliant Energy, Inc. (“***Reliant Energy***”) or its Affiliates to the extent not used in the operationof the Business;          (e) financial information or financial statements and proprietary manuals (except rights touse manuals specific to and necessary for the operation of the Business) prepared by or used byeither Seller or their Affiliates to the extent not relating exclusively to the Business;          (f) all of Sellers’ rights under Contracts that are not Assigned Contracts;          (g) all rights to Claims, refunds or adjustments with respect to Excluded Assets, relating toany proceeding before any Governmental Authority relating to the period prior to the Closing, andall rights to insurance proceeds or other insurance recoveries: (i) that are reimbursement for,either Seller’s or such Seller’s Affiliate’s expenditures made prior to the Closing Date for whichinsurance proceeds are available or due to a Seller or such Seller’s Affiliates or (ii) to theextent relating to Excluded Assets or Excluded Liabilities;          (h) any asset of a Seller that would constitute an Acquired Asset (if owned by such Seller onthe Closing Date) that is conveyed or otherwise disposed of during the period from the date hereofuntil the Closing Date either: (i) in the ordinary course of business of the Sellers, (ii) at thedirection of the Bankruptcy Court or (iii) as otherwise permitted by the terms of this Agreement;          (i) all losses, loss carry forwards and rights to receive refunds, credits and loss carryforwards with respect to any and all Taxes of Sellers incurred or accrued on or prior to theClosing Date, including interest receivable with respect thereto;          (j) any and all rights, demands, claims, credits, allowances, rebates, causes of action, knownor unknown, pending or threatened (including all causes of action arising under sections 510, 544through 551 and 553 of the Bankruptcy Code or under similar state Laws, including fraudulentconveyance claims, and all other causes of action of a trustee and debtor-in-possession under theBankruptcy Code) or rights of set-off (collectively, “***Claims***”), of a Seller or any Affiliate of aSeller: (i) in respect of the Excluded Assets or the Excluded Liabilities, or (ii) arising out ofor relating in any way to the Chapter 11 Cases or anyof the transactions contemplated thereby or entered into as a consequence thereof, includingany claims (as defined in section 101(5) of the Bankruptcy Code) filed, scheduled or otherwisearising in the Chapter 11 Cases;
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          (k) all shares of capital stock or other equity interests of either Seller and all Affiliatesof Sellers;          (l) all rights of either Seller arising under this Agreement and under any other agreementbetween either Seller and Buyer entered into in connection with this Agreement;          (m) all rights to or goodwill represented by or pertaining to all names, marks, trade names,trademarks and service marks incorporating the name Reliant Energy or any other name set forth onSchedule 2.2(m) (the ***“Reliant Marks”***) and any brand names or derivatives thereof no matterhow used, whether as a corporate name, domain name or otherwise and including the corporate designlogo associated with any Reliant Mark or variant of any Reliant Mark;          (n) all Retained Books and Records;          (o) all rights and Claims of a Seller against any Affiliate of such Seller relating to theAssigned Contracts that arose prior to the Closing Date; and          (p) any assets set forth on Schedule 2.2(p) of the Disclosure Schedules.     2.3. Assumption of Liabilities. At the Closing, Buyer shall assume, and Buyer shallhereafter pay, perform and discharge when due, the following liabilities and obligations(collectively, the “***Assumed Liabilities***”):          (a) all liabilities and obligations of Sellers under the Assigned Contracts, other thanExcluded Liabilities;          (b) all liabilities and obligations of Sellers under the Permits;          (c) to the extent provided in Section 7.7(a), Transfer Taxes;          (d) all liabilities and obligations of Sellers, any of their Affiliates or any of theirrespective Related Persons arising under or relating to any environmental matter (including anyliability or obligation arising under any Environmental Law) relating to the Acquired Assets          (e) any liability for any Taxes attributable to the Acquired Assets to the extent arising oraccruing (on a pro rata daily basis in the case of Taxes other than income Taxes) with respect to aperiod (or any portion thereof) beginning after the Closing Date; and          (f) all other liabilities and obligations relating to or arising from the operation of theBusiness or the ownership of the Acquired Assets (other than the Excluded Liabilities), but forpurposes of clarity, excluding liabilities or obligations under the Credit Agreement and any otherContract (written or oral) which is not an Assigned Contract, including those obligations ofSellers associated with that certain Channel Area Industrial District Agreement betweenLyondell Petrochemical Company and the City of Houston, dated as of June 17, 1997.     2.4. Excluded Liabilities. Buyer is assuming only the Assumed Liabilities, and allliabilities of Sellers not expressly assumed by Buyer pursuant to Section 2.3, whether ornot
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incurred or accrued, whether asserted before, on or after the Closing Date, shall be assumed orretained, as the case may be, by Sellers, who shall be responsible for paying, performing anddischarging such liabilities and Buyer shall not have any responsibility for such liabilities (suchliabilities are hereinafter referred to as the “***Excluded Liabilities***”), including: (i) all CureCosts and other liabilities and obligations with respect to accounts payable accrued under AssignedContracts as of 11:59 pm on the day prior to the Closing Date (the “***Accounts Payable***”); (ii)liabilities to the extent arising in connection with Excluded Assets; (iii) any liability for anyTaxes attributable to the Acquired Assets to the extent arising or accruing (on a pro rata dailybasis in the case of Taxes other than income Taxes) with respect to a period (or any portionthereof) ending on or before the Closing Date; (iv) liabilities with respect to Benefit Plans(including Seller Affiliate Plans); (v) all liabilities and obligations of Sellers or any Affiliatethereof representing indebtedness for money borrowed (or any refinancing thereof); (vi) liabilitieswith respect to loans made by and, other than with respect to transactions under the TransitionServices Agreements, accounts payable arising from transactions with Affiliates; (vii) anyliability of any of the Sellers for (a) transaction fees and expenses and fees and expenses payableto lenders, brokers, financial advisors, legal counsel, accountants and other professionals, and(b) except as provided otherwise in Section 7.7(a), Transfer Taxes; (viii) those listed onSchedule 2.4 of the Disclosure Schedules; (ix) all liabilities arising out of any exchange act orsecurities liability; (x) all costs and expenses associated with the Chapter 11 Cases; (xi) allliability for any claims discharged pursuant to the Chapter 11 Cases or for claims against eitherof the Sellers which are filed after the bar date or disallowed by the Bankruptcy Court; (xii) allliability for any rejection damages claim filed in the Chapter 11 Cases; and (xiii) all interestsand liabilities that have not been otherwise assumed pursuant to this Agreement, to the extent thatapplicable law permits this sale under Section 363 of the Bankruptcy Code to be free and clear ofsuch interests and liabilities.     2.5. Non-Assignment of Assigned Contracts. Anything contained herein to the contrarynotwithstanding, (i) this Agreement shall not constitute an agreement to assign any AssignedContracts if, after giving effect to the provisions of Sections 363 and 365 of the Bankruptcy Code,an attempted assignment thereof, without obtaining a Consent, would constitute a breach thereof orin any way negatively affect the rights of Sellers or Buyer, as the assignee of such AssignedContracts and (ii) unless Sellers have otherwise violated the provisions of this Section2.5, no breach of this Agreement or failure of a closing condition shall have occurred byvirtue of such nonassignment. Sellers shall use commercially reasonable efforts to obtain theconsent of the counterparties to each Assigned Contract, to the extent that after giving effect tothe provisions of Sections 363 and 365 of the Bankruptcy Code, such Consent is required; provided,that nothing in this Section 2.5 shall (x) require Sellers to make any significantexpenditure or incur any significant obligation on its own or on Buyer’s behalf or (y) prohibitSellers from ceasing operations or winding up its affairs following the Closing. Any assignment toBuyer of any Assigned Contracts that shall, after giving effect to the provisions of Sections 363and 365 of the Bankruptcy Code, require the Consent of any third party for such assignment asaforesaid shall be made subject to such Consent being obtained. Without limitingthe foregoing, the Parties agree that, if any required consent to the assignment or release ofRES’ obligations under the Fuel Purchase and Sale Agreement is not obtained, Buyer and Buyer’sEnergy Manager will enter into an agreement (the “***Fuel Supply Agreement***”) in form and substancereasonably acceptable to the Parties, in relation to the Fuel Purchase and Sale Agreement, pursuantto which (i) RES shall consult with Buyer (or Buyer’s Energy Manager)
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with respect to transactionsoccurring under the Fuel Purchase and Sale Agreement and keep Buyer and Buyer’s Energy Manageradvised of all transactions thereunder, and not take any material discretionary action thereunderwithout Buyer or Buyer’s Energy Manager’s consent, not to be unreasonably withheld; (ii) RES shallnot modify, amend or terminate the Fuel Purchase and Sale Agreement without Buyer’s consent, whichconsent shall not be unreasonably withheld or delayed; (iii) RES shall continue to perform and actsuch that the gas sold to RES under such agreement shall be resold to the Buyer through the Buyer’sEnergy Manager; (iv) RES shall agree that Buyer’s Energy Manager may be replaced from time to timein Buyer’s sole discretion with a new Energy Manager, and (v) RES shall use commercially reasonableefforts to obtain the execution and delivery by Equistar of the RES Assignment and AssumptionAgreement. The Parties agree further that if RES continues to be directly obligated to purchasegas from Equistar under the Fuel Purchase and Sale Agreement after the Closing Date, Buyer’s EnergyManager shall, pursuant to the Fuel Supply Agreement, accept and purchase from RES all such gasaccepted and purchased by RES from Equistar. The price for such gas shall be equal to the pricepaid for such gas by RES, and the terms and conditions of Buyer’s Energy Manager’s purchase of suchgas shall be substantially identical to the terms and conditions on which RES purchased such gasfrom Equistar, and, in turn, such gas shall be resold to the Buyer on such terms and conditions.The Fuel Supply Agreement shall require RES to indemnify, defend and hold Buyer (and Buyer’s EnergyManager) harmless from and against any and all claims, losses, damages, liabilities, suits,payments, costs and expenses, including reasonable attorneys’ fees and costs of investigationarising out of (i) the performance or breach of the Fuel Purchase and Sale Agreement by RES exceptto the extent that a liability arises out of the breach by Buyer or Buyer’s Energy Manager of theFuel Supply Agreement, and (ii) any breach or alleged breach of the Fuel Purchase and SaleAgreement as a result of the Fuel Supply Agreement (except to the extent that a liability arisesout of the breach by Buyer or Buyer’s Energy Manager of the Fuel Supply Agreement). Buyer shallindemnify defend and hold RES harmless from and against any and all claims, losses, damages,liabilities, suits, payments, costs and expenses, including attorneys’ fees and costs ofinvestigation arising out of Buyer’s (or Buyer’s Energy Manager’s) breach of the Fuel SupplyAgreement. At least 10 (ten) days prior to Closing, in the event the Parties will execute the FuelSupply Agreement as hereinabove provided at Closing, Buyer may request that Sellers deliver aguaranty of Reliant Energy of RES’ obligations under the indemnity described in the precedingsentence, such guaranty to be in form and substance reasonably satisfactory to Buyer and ReliantEnergy with a duration of two (2) years and an aggregate limit of liability of $10 million. IfReliant Energy, in its sole discretion does not, at least five (5) days prior to Closing, agree todeliver said guaranty, then Buyer shall have the right, exercisable during the three (3) day periodafter Reliant Energy has declined to deliver the guarantee, to terminate this Agreement without anyfurther obligation or liability of either Party hereunder, it being understood that nothing hereinshall in any way obligate Reliant Energy to deliver said guaranty if requested. Notwithstandinganything in this Section 2.5 to the contrary in using commercially reasonable efforts toobtain any consent described above, RESshall not be obligated to commence litigation or expend any sums of money to obtain suchconsent.
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**ARTICLE 3****CONSIDERATION**     3.1. Purchase Price. The purchase price to be paid by Buyer to Sellers for theAcquired Assets is equal to:          (a) Four Hundred Sixty Eight Million Dollars ($468,000,000) (the “***Base Purchase Price***”), plus          (b) the amount of Capital Expenditures paid or payable by the Sellers for work done during theInterim Period, subject to and in accordance with the budget for which is provided on ExhibitF hereto, plus or minus (as applicable)          (c) the amount of the LTMA Adjustment calculated in accordance with Item 6 on Schedule2.4 .     3.2. Deposit. On or before the later of (i) February 28, 2008 and (ii) the firstBusiness Day after the Escrow Agreement is executed by the Escrow Agent, Buyer will deposit withthe Escrow Agent Forty Million Dollars ($40,000,000) (the “***Deposit***”). The Deposit shall be heldand disbursed pursuant to the terms of the Escrow Agreement and this Agreement. The Parties shalluse commercially reasonable efforts to cause the execution and delivery of the Escrow Agreement assoon as possible after the date hereof.     3.3. Post-Closing Adjustment.          (a) As soon as practicable after the Closing, but no later than 90 days after the ClosingDate, Sellers shall determine the actual adjustment to the Base Purchase Price pursuant toSection 3.1 as of the Closing Date. Sellers and Buyer shall cooperate and provide eachother access to their respective books and records and those of Channelview LP as are reasonablyrequested in connection with the matters addressed in this Section 3.3. Sellers shallprovide Buyer with written notice of such determinations within such 90 days, along with reasonablesupporting information (the “***Sellers’ Post-Closing Estimate***”).          (b) If Buyer objects to any determinations set forth in Sellers’ Post-Closing Estimate, thenit shall provide Sellers written notice thereof within 10 Business Days after receiving Sellers’Post-Closing Estimate. Such notice shall specify in reasonable detail Buyer’s objections tospecific determinations, along with reasonable supporting documentation. Any objections not sospecified shall be deemed waived, and Sellers’ determinations to which specific objections were notso made shall prevail. If the Parties are unable to agree on the disputed amounts as of theClosing Date within 120 days after the Closing Date or such longer time as may be agreed by theParties, the Parties shall refer such dispute to an internationally recognized accounting firm thatis not the principal accounting firm of Buyer or either Seller, mutually acceptable to Buyer andSellers, which firm shall make a final and binding determination as to all such matters in dispute(and only such matters) on a timely basis (and such accounting firmshall be instructed to make such determination within 45 days of such engagement or as soonthereafter as reasonably practicable) and promptly shall notify the Parties in writing of itsresolution. Such firm shall not have the power to modify or amend any term or provision of this
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Agreement. The fees and disbursements of the accounting firm shall be allocated between Buyer andSellers in inverse proportion as they shall prevail on the amounts of such disputed items sosubmitted (as finally determined by such accounting firm).          (c) If the Base Purchase Price adjusted using such actual values (as agreed or determined bythe above-referenced accounting firm) (the “***Final Purchase Price***”) is greater than the EstimatedPurchase Price, then Buyer shall pay Sellers within 10 Business Days after such actual values areagreed or determined, by wire transfer of immediately available funds, the difference between theFinal Purchase Price and the Estimated Purchase Price plus interest thereon at the Interest Ratefrom the Closing Date through and including the date of such payment. If the Final Purchase Priceis less than the Estimated Purchase Price, then Sellers shall pay Buyer within 10 Business Daysafter such actual values are agreed or determined, by wire transfer of immediately available funds,the difference between the Estimated Purchase Price and the Final Purchase Price plus interestthereon at the Interest Rate from the Closing Date through and including the date of such payment.In each case, the recipient Party shall designate the account to which such payment is to be madeat least two Business Days prior to the date such payment is due.     3.4. Allocation of Purchase Price. Within thirty (30) days after the determination ofthe Final Purchase Price, Sellers and Buyer shall agree upon an allocation of the purchase price(as determined in accordance with US federal income tax principles) among the Acquired Assets inaccordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder (the***“Purchase Price Allocation”***), provided that the purchase price shall not be increased by orotherwise reflect the obligations under any of the Assigned Contracts. Buyer and Sellers shallwork in good faith to resolve any disagreements regarding the Purchase Price Allocation. If theParties fail to agree within such 30-day period upon Purchase Price Allocation, such dispute shallbe resolved by an independent accounting firm mutually acceptable to Buyer and Sellers, and thedecision of such independent accounting firm shall be final and binding on the Parties. Sellerstogether shall bear and pay one-half of such fees and other costs charged by such accounting firmand Buyer shall bear and pay one-half of such fees and other costs. Sellers and Buyer shall eachprepare and timely file IRS Form 8594 “Asset Acquisition Statement Under Section 1060” and anyother similar statements or forms as are prescribed under federal, state, local or foreign Tax Law(including any exhibits thereto) to report the Purchase Price Allocation. The Parties agree thatthey shall not, and shall not permit their Affiliates to take a position on any Tax Return or forany Tax purpose that is inconsistent with the Purchase Price Allocation unless otherwise requiredby applicable laws; provided, however, that neither Sellers nor Buyer shall be obligated tolitigate any challenge to the Purchase Price Allocation by any Governmental Authority. The Partiesagree to provide, and shall cause their Affiliates to provide, each other promptly with anyinformation required to complete such Tax forms or statements as are required under applicable lawto report the Purchase Price Allocation.     3.5. Equistar Payment. In accordance with the Settlement Agreement and provided theSettlement Agreement is then still in effect, Channelview LP agrees to apply $10,000,000 of itsportion of the Purchase Price payable at Closing either to (in Channelview LP’s discretion):(i) Equistar pursuant to paragraphs 2 and 6 of the Settlement Agreement, or (ii) into theescrow account contemplated by paragraph 6 of the Settlement Agreement.
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**ARTICLE 4****CLOSING AND DELIVERIES**     4.1. Closing. Subject to satisfaction or waiver of the conditions to the Closing setforth herein, unless the Parties mutually agree otherwise in writing, the closing of thetransactions contemplated by this Agreement (the “***Closing***”) shall take place at the offices ofReliant Energy, Inc., 1000 Main Street, 21st Floor, Houston, Texas 77002 at 10:00 A.M. local time,on the second Business Day after the conditions to the Closing set forth in Article 11(other than actions to be taken or items to be delivered at the Closing) have been satisfied orwaived by the applicable Party or Parties or such other date and at such other time and place asmay be mutually agreed to in writing (the “***Closing Date***”). All actions listed in Section4.2 and Section 4.3 that occur on the Closing Date shall be deemed to occursimultaneously at the Closing.     4.2. Closing Deliveries by Sellers to Buyer. At the Closing, the appropriate Sellershall deliver, or shall cause to be delivered, as applicable, to Buyer the following:          (a) subject to the receipt of applicable Company Consents and Sellers’ Governmental Approvals,a bill of sale with respect to the Acquired Assets, duly executed by the appropriate Seller andsubstantially in the form of Exhibit A hereto;          (b) subject to the receipt of applicable Company Consents and Sellers’ Governmental Approvals,one or more assignment and assumption agreements (the “***Assumption Agreements***”), in the formattached as Exhibit B hereto, duly executed by the appropriate Seller or Related Personwith respect to the Assigned Contracts and Assumed Liabilities;          (c) subject to the receipt of applicable Company Consents and Sellers’ Governmental Approvals,assignments of the Real Estate Leases and all Entitled Real Property interests held by ChannelviewLP, in the form attached as Exhibit C hereto, including, without limitation, all suchinterests set forth on Schedules 2.1(a) and 2.1(b), each duly executed byChannelview LP and in recordable form;          (d) the Business Records (either at Closing or as soon as practicable thereafter);          (e) (i) an executed copy of the Administrative Services Transition Services Agreement (to theextent Buyer notifies Sellers at least ten (10) days prior to the Closing Date that it intends toenter into the Administrative Services Transition Services Agreement), and (ii) subject toSection 4.4, an executed copy of the Fuel and Power Transition Services Agreement.          (f) a duly executed affidavit of non-foreign status that complies with Section 1445 of theCode;          (g) duly executed certificates referenced in Section 9.2(c);          (h) a copy of the Sale Order that has been entered on the docket by the clerk of theBankruptcy Court;
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          (i) unless Buyer has elected Gas Services under the Fuel and Power Transition ServicesAgreement (which services would include the sale of gas purchased by RES under the Fuel Purchaseand Sale Agreement), either (i) an assignment and assumption agreement executed by RES (the “***RESAssignment and Assumption Agreement***”), in substantially the form attached as Exhibit Dhereto, assigning to Buyer’s designee the agreements which RES is a party as set forth inSchedule 4.2(i) hereto (the “***RES Agreements***”), or (ii) if required by Section 2.5,the Fuel Supply Agreement executed by RES; if Buyer has elected such Gas Services, then Sellersshall deliver the RES Assignment and Assumption Agreement or the Fuel Supply Agreement, asapplicable, at the time such Gas Services terminate; and          (j) a joint direction letter executed by Sellers instructing the Escrow Agent to (i) transfer$40,000,000 of the funds held in the Deposit Escrow Account (as defined in the Escrow Agreement)into the Indemnity Escrow Account (as defined in the Escrow Agreement) and (ii) to transfer allinterest earned in the Deposit Escrow Account as directed by Sellers.     4.3. Closing Deliveries by Buyer. At the Closing, Buyer shall deliver to Sellers thefollowing:          (a) a wire transfer of immediately available funds (to such accounts as Sellers shall havenotified Buyer of at least two Business Days prior to the Closing Date) in an amount equal to theBase Purchase Price, reduced by the amount of the Deposit together with any interest earnedthereon, as adjusted pursuant to Sections 3.1(b) and 3.1(c), as estimated in goodfaith by Sellers (the “***Estimated Purchase Price***”). Sellers shall deliver the Estimated PurchasePrice in writing to Buyer at least two Business Days prior to the Closing Date and shall attach tothe calculation of the Estimated Purchase Price a schedule showing the estimated adjustments to theBase Purchase Price pursuant to Sections 3.1(b) and 3.1(c);          (b) an executed counterpart to the Assumption Agreements relating to the Assigned Contractsand Assumed Liabilities;          (c) (i) an executed copy of the Administrative Services Transition Services Agreement (to theextent Buyer notifies Sellers at least ten (10) days prior to the Closing Date that it intends toenter into the Administrative Services Transition Services Agreement), and (ii) subject toSection 4.4, an executed copy of the Fuel and Power Transition Services Agreement;          (d) a release of the LTMA Support Obligations (other than with respect to amounts owing priorto Closing) and unless Buyer has elected Gas Services under the Fuel and Power Transition ServicesAgreement, either (i) RES Assignment and Assumption Agreement executed by Buyer in substantiallythe form attached as Exhibit D hereto, assigning to Buyer’s designee the RES Agreements, or(ii) if required by Section 2.5, the Fuel Supply Agreement executed by Buyer and Buyer’sEnergy Manager; if Buyer has elected such Gas Services, then Buyer shall deliver the RES Assignmentand Assumption Agreement or the Fuel Supply Agreement, as applicable, at the time such Gas Servicesterminate;          (e) a joint direction letter executed by Buyer instructing the Escrow Agent to (i) transfer$40,000,000 of the funds held in the Deposit Escrow Account into the Indemnity
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Escrow Account and(ii) to transfer all interest earned in the Deposit Escrow Account as directed by Sellers; and          (f) a duly executed certificate as described in Section 9.3(c).     4.4. RES Fuel Purchase Transactions. If Buyer does not intend to utilize RES’services under the Fuel and Power Transition Services Agreement, the Parties shall nonethelessenter into the Fuel and Power Transition Services Agreement with respect to the sale to Buyer ofthe fuel purchased by RES under the RES Fuel Purchase Transactions from and after the Closing Datein accordance with the terms and conditions of the Fuel and Power Transition Services Agreement(including without limitation under Article VI thereto concerning the supplying of credit support)but without payment of the monthly fee set forth in Section 2.1 of the Fuel and Power TransitionServices Agreement. Notwithstanding the foregoing, if as of Closing or at anytime thereafter, theParties are able to cause one or more of the RES Fuel Purchase Transactions to be novated directlyto Buyer’s Energy Manager, then such transactions shall be excluded from the Fuel and PowerTransition Services Agreement. Each of the Parties shall use commercially reasonable efforts tocause such novations to occur. Each such novation shall include the acknowledgment of thecounterparty under such RES Fuel Purchase Transaction that it will look solely to RES for thepayments of amounts arising or accruing under such RES Fuel Purchase Transaction prior to theeffective time of such novation.**ARTICLE 5****REPRESENTATIONS AND WARRANTIES**