Filed by Bowne Pure Compliance





Exhibit 10.14




Execution Copy




 





DISSOLUTION AGREEMENT




 





By and Between




Dynegy Inc.

(Dynegy)




and




LS Power Associates, L.P.

(LS Power)




 






covering




the Distribution of

certain projects and project entities by

DLS Power Holdings, LLC and

DLS Power Development Company, LLC




and




the Dissolution of

DLS Power Holdings, LLC and

DLS Power Development Company, LLC




 







January 1, 2009





 


 









 







TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	1. Definitions; Rules of Construction
	 	 	1	 
	 
	 	 	 	 
	(a) Definitions
	 	 	1	 
	(b) Rules of Construction
	 	 	5	 
	 
	 	 	 	 
	2. Agreements
	 	 	6	 
	 
	 	 	 	 
	(a) Transactions
	 	 	6	 
	(b) Termination of Certain Arrangements
	 	 	6	 
	(c) Assumed Obligations
	 	 	7	 
	(d) Consent of Members
	 	 	8	 
	 
	 	 	 	 
	3. Representations and Warranties
	 	 	8	 
	 
	 	 	 	 
	(a) Representations and Warranties of Dynegy
	 	 	8	 
	(b) Representations and Warranties of LS Power
	 	 	10	 
	 
	 	 	 	 
	4. Post-Effective Date Covenants
	 	 	11	 
	 
	 	 	 	 
	(a) Transition Services
	 	 	11	 
	(b) Delivery and Retention of Records
	 	 	11	 
	(c) DLS Companies’ Termination and Dissolution Matters
	 	 	12	 
	 
	 	 	 	 
	5. Remedies
	 	 	13	 
	 
	 	 	 	 
	(a) Survival of Representations and Warranties
	 	 	13	 
	(b) Indemnification Provisions for Benefit of the LS Power Group.
	 	 	13	 
	(c) Indemnification Provisions for Benefit of the Dynegy Group
	 	 	14	 
	(d) Procedure; Notice
	 	 	14	 
	(e) Determination of Amount of Loss
	 	 	16	 
	 
	 	 	 	 
	6. Tax Matters
	 	 	16	 
	 
	 	 	 	 
	(a) Post-Dissolution Tax Returns
	 	 	16	 
	(b) Pre-Dissolution Tax Returns
	 	 	16	 
	(c) Cooperation on Tax Matters
	 	 	16	 
	(d) Certain Taxes
	 	 	17	 
	(e) Confidentiality
	 	 	17	 
	(f) Control of Proceedings
	 	 	17	 
	(g) Remittance of Refunds
	 	 	17	 
	(h) Characterization of Transactions
	 	 	17	 






 


 









 





	 	 	 	 	 
	 	 	Page	 
	 
	7. Miscellaneous
	 	 	17	 
	 
	 	 	 	 
	(a) Public Announcements
	 	 	17	 
	(b) Waiver of Compliance; Consents
	 	 	18	 
	(c) Assignment
	 	 	18	 
	(d) Specific Performance; No Punitive or Consequential Damages
	 	 	18	 
	(e) Professional Fees and Expenses
	 	 	18	 
	(f) Third Party Beneficiaries
	 	 	18	 
	(g) Time
	 	 	18	 
	(h) Counterparts; Electronic Transmission
	 	 	18	 
	(i) Headings
	 	 	18	 
	(j) Notices
	 	 	19	 
	(k) Governing Law
	 	 	19	 
	(l) Consent to Jurisdiction, Etc
	 	 	19	 
	(m) Amendment and Modification
	 	 	20	 
	(n) Severability
	 	 	20	 
	(o) Compliance With Laws
	 	 	20	 
	(p) Further Assurances
	 	 	21	 
	(q) Incorporation of Exhibits and Schedules
	 	 	21	 
	(r) Entire Agreement
	 	 	21	 
	(s) Limitations of Representations and Warranties
	 	 	21	 
	 
	 	 	 	 
	Exhibits and Schedules
	 	 	 	 
	 
	 	 	 	 
	Schedule 1(a): DLS Terminated Agreements
	 	 	 	 
	Schedule 1(b): Project Entities and Project Assets
	 	 	 	 
	Schedule 3(b)(iv): Project Obligations and Project Status
	 	 	 	 







 


ii









 







DISSOLUTION AGREEMENT




THIS DISSOLUTION AGREEMENT (this “Agreement”) dated as of January 1, 2009 is by and between
Dynegy Inc., a Delaware corporation (“Dynegy”), and LS Power Associates, L.P., a Delaware limited
partnership (“LS Power”). Dynegy and LS Power are sometimes referred to collectively herein as the
“Parties” and individually as a “Party.”



INTRODUCTION





	1.	 	Dynegy and LS Power each own a 50% membership interest in each of DLS Power Holdings, LLC, a
Delaware limited liability company (“DLS Holdings”), and DLS Power Development Company, LLC, a
Delaware limited liability company (“DLS Development” and, together with DLS Holdings, the
“DLS Companies”).







	2.	 	Dynegy and LS Power intend to wind up and dissolve the DLS Companies in accordance with
Delaware law.







	3.	 	Subject to the terms and conditions of this Agreement, the DLS Companies will distribute all
of their respective assets and terminate all of the DLS Terminated Agreements (as defined
herein), and Dynegy and LS Power will agree to certain transition and support services
arrangements as further described herein.






In consideration of the premises and the mutual promises herein made, and in consideration of
the representations, warranties, and covenants herein contained, the Parties agree as follows:



AGREEMENT




1. Definitions; Rules of Construction.



(a) Definitions. As used herein, the following terms have the following definitions:



“Action” means any action, complaint, claim, suit, demand, litigation, arbitration, mediation,
hearing, inquiry, investigation or similar event, occurrence or proceeding.



“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the
Exchange Act; provided, however, that (i) with respect to LS Power, the term “Affiliate” shall
exclude each member of the Dynegy Group, (ii) with respect to Dynegy, the term “Affiliate” shall
exclude each member of LS Power Group.




“Agreement” has the meaning set forth in the preamble.




“Code” means the Internal Revenue Code of 1986.




“Direct Claim” has the meaning set forth in Section 5(d).




“DLS Companies” has the meaning set forth in the Introduction.



“DLS Development” has the meaning set forth in the Introduction.


 


 









 





“DLS Development LLC Agreement” means the Limited Liability Company Agreement of DLS
Development dated April 2, 2007.




“DLS Holdings” has the meaning set forth in the Introduction.



“DLS Holdings LLC Agreement” means the Limited Liability Company Agreement of DLS Holdings
dated April 2, 2007.




“DLS Properties” has the meaning set forth in Section 3(b)(v).




“Dynegy” has the meaning set forth in the preamble.




“Dynegy Assumed Obligations” has the meaning set forth in Section 2(c)(i).



“Dynegy Group” means Dynegy and its subsidiaries, and its and their respective employees,
officers, directors, representatives, agents, contractors and subcontractors; provided, that the
term “Dynegy Group” specifically excludes each member of the LS Power Group.



“Dynegy Party” means Dynegy and each member of the Dynegy Group that is a party to any
Transaction Agreement.



“Dynegy Project Assets” means the Project Assets for which Schedule 1(b) indicates
Dynegy is the transferee.



“Dynegy Project Entities” means the Project Entities for which Schedule 1(b) indicates
Dynegy is the transferee.




“Dynegy Project Entity Contracts” has the meaning set forth in Section 3(b)(iv).



“Dynegy Projects Assignment” means the Dynegy Assignment and Assumption Agreement entered into
contemporaneously herewith.




“Dynegy Properties” has the meaning set forth in Section 3(a)(iv).




“Effective Date” means 12:01 a.m. on January 1, 2009.




“Exchange Act” means the Securities Exchange Act of 1934.



“Governmental Authority” means the United States or any agency thereof and any state, county,
city or other political subdivision, agency, court or instrumentality.



“Group” means, (i) with respect to any Dynegy Party, the Dynegy Group, and (ii) with respect
to any LS Power Party, the LS Power Group.




“Indemnitee” means any Person entitled to indemnity under this Agreement.



“Indemnifying Party” means the Party required to provide indemnification under this Agreement.


 


2









 





“Knowledge” means as follows: an individual shall be deemed to have “Knowledge” of a
particular fact or other matter if such individual is consciously aware of such fact or other
matter at the time of determination. A Person other than a natural person shall be deemed to have
“Knowledge” of a particular fact or other matter if (i) any natural person who is serving as a
director, executive officer, partner, member, executor, or trustee of such Person (or in any
similar capacity) or (ii) any employee (or any natural person serving in a similar capacity) who is
charged with the ultimate responsibility for a particular area of such Person’s operations, at the
time of determination had Knowledge of such fact or other matter.



“Law” or “Laws” means any statute, code, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any applicable Governmental Authority.



“Losses” means any losses, damages, Obligations, claims, demands, causes of action, judgments,
settlements, fines, penalties, sanctions, costs and expenses (including court costs and reasonable
attorney’s and experts’ fees) of any and every kind or character.




“LS Power” has the meaning set forth in the preamble.




“LS Power Assumed Obligations” has the meaning set forth in Section 2(c)(ii).



“LS Power Group” means LS Power and its Affiliates, subsidiaries, co-owners and joint
venturers, and its and their respective employees, officers, directors, representatives, agents,
contractors and subcontractors; provided, that the term “LS Power Group” specifically excludes
Dynegy and its subsidiaries.



“LS Power Party” means each of (i) LS Power and (ii) each member of the LS Power Group that is
a party to any Transaction Agreement.



“LS Project Assets” means the Project Assets for which Schedule 1(b) indicates LS
Power is the transferee.



“LS Project Entities” means the Project Entities for which Schedule 1(b) indicates LS
Power is the transferee.



“LS Projects Assignment” means the LSP Assignment and Assumption Agreement entered into
contemporaneously herewith.




“LS Power Properties” has the meaning set forth in Section 3(b)(v).



“Obligations” means duties, liabilities and obligations, whether vested, absolute or
contingent, known or unknown, asserted or unasserted, accrued or unaccrued, liquidated or
unliquidated, due or to become due, and whether contractual (oral or written), statutory (including
any duties, liabilities or obligations to pay Taxes) or otherwise.



“Organizational Documents” means the articles of incorporation, certificate of incorporation,
charter, bylaws, articles or certificate of formation, regulations, operating agreement,
certificate of limited partnership, partnership agreement, and all other similar
documents, instruments or certificates executed, adopted, or filed in connection with the
creation, formation, or organization of a Person, including any amendments thereto.



 


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“Party” and “Parties” have the meanings set forth in the preamble.



“Person” means an individual or entity, including any partnership, corporation, association,
joint stock company, trust, joint venture, limited liability company, unincorporated organization,
or Governmental Authority (or any department, agency or political subdivision thereof).



“Plum Point DRTA” means the Development Rights Transfer Agreement dated April 1, 2007 between
Plum Point Energy Associates, LLC and Plum Point Energy Associates II, LLC.




“Post-Dissolution Tax Period” means any Tax period ending after the Effective Date.



“Post-Dissolution Tax Return” means any Tax Return that is required to be filed for any of the
Dynegy Project Entities or the LS Project Entities with respect to a Post-Dissolution Tax Period.



“Pre-Dissolution Tax Period” means any Tax periods or portions thereof ending on or before,
and including, December 31, 2008.



“Project Assets” means the project assets owned by DLS Holdings and set forth on
Schedule 1(b).



“Project Entities” means the entities (and limited partner’s interest) owned by DLS Holdings
and set forth on Schedule 1(b).



“Real Estate Rights Agreement” means the Real Estate Rights Agreement between Dynegy Arlington
Valley, LLC and Arlington Valley Solar Energy, LLC entered into contemporaneously herewith.




“Securities Act” means the Securities Act of 1933.



“Services Agreements” means the three agreements listed on Schedule 1(a) under the heading
“Services Agreements”.



“Tax” or “Taxes” means any federal, state, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Code §59A), custom duties, capital stock, franchise, profits, withholding,
social security (or similar excises), unemployment, disability, ad valorem, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on minimum or other
tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed
or not.



“Tax Records” means all Tax Returns and Tax-related work papers relating to any Relevant
Asset.


 


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“Tax Return” means any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and including any
amendment thereof.



“Terminated Agreements” means (i) each of the agreements listed on Schedule 1(a) and
(ii) any other agreements entered into between the parties to such agreements (or Affiliates
thereof) concerning the properties or transactions that are the subject matter of the agreements
listed on Schedule 1(a), it being acknowledged, for the avoidance of doubt, that the Plum
Point DRTA is not a “Terminated Agreement” and will remain in full force and effect following the
Effective Date.




“Third Party Claim” has the meaning set forth in Section 5(d).



“Transaction Agreements” means this Agreement, the Dynegy Projects Assignment, the LS Projects
Assignment, the Real Estate Rights Agreement and all other agreements, documents, certificates or
instruments executed and delivered in connection with the transactions contemplated herein.



(b) Rules of Construction. All article, section, schedule and exhibit references used in
this Agreement are to articles, sections, schedules and exhibits to this Agreement unless otherwise
specified. The schedules and exhibits attached to this Agreement constitute a part of this
Agreement and are incorporated herein for all purposes. Unless the context of this Agreement
clearly requires otherwise, (i) if a term is defined as one part of speech (such as a noun), it
shall have a corresponding meaning when used as another part of speech (such as a verb), (ii) terms
defined in the singular have the corresponding meanings in the plural, and vice versa, and (iii)
words importing the masculine gender shall include the feminine and neutral genders and vice versa.
The terms “includes,” “include” and “including” shall be deemed to be followed by the words
“without limitation”. The words “hereof,” “hereto,” “hereby,” “herein,” “hereunder” and words of
similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to
any particular section or article in which such words appear. The Parties acknowledge that each
Party and its attorney has reviewed this Agreement and that any rule of construction to the effect
that any ambiguities are to be resolved against the drafting Party, or any similar rule operating
against the drafter of an agreement, shall not be applicable to the construction or interpretation
of this Agreement. The captions in this Agreement are for convenience only and shall not be
considered a part of or affect the construction or interpretation of any provision of this
Agreement. All references to currency herein shall be to, and all payments required hereunder shall
be paid in, United States dollars. Any reference to a statute, regulation or Law shall include any
amendment thereof or any successor thereto, and any rules and regulations promulgated thereunder.
Any reference to an agreement or instrument shall include any amendments or other modifications to
such agreement or instrument made in accordance with such agreement’s or instrument’s respective
terms.


 


5









 





2. Agreements. Subject to the terms and conditions of this Agreement, the Parties
acknowledge and agree as follows:



(a) Transactions.




(i) DLS Holdings has entered into the Dynegy Projects Assignment and the LS Projects
Assignment pursuant to which it has distributed (as liquidating distributions) all of the
Project Assets and Project Entities as of the Effective Date;




(ii) (1) If, after the distributions made pursuant to the Dynegy Projects Assignment
and the LS Projects Assignment, DLS Holdings has any accrued but unpaid Obligations, the
Parties shall cause DLS Holdings to promptly (and no later than January 30, 2009) pay such
Obligations; (2) if the LS Project Entities have any Obligations that accrued prior to the
Effective Date and remain unpaid, or if any members of the LS Power Group have any such
Obligations as result of the LS Projects Assignment, the Parties shall cause DLS Holdings to
promptly (and no later than January 30, 2009) pay to LS Power (or its designee) the accrued
amount of all such Obligations; (3) if the Dynegy Project Entities have any Obligations that
accrued prior to the Effective Date and remain unpaid, or if any members of the Dynegy Group
have any such Obligations as result of the Dynegy Projects Assignment, the Parties shall
cause DLS Holdings to promptly (and no later than January 30, 2009) pay to Dynegy (or its
designee) the accrued amount of all such Obligations; and (4) if DLS Holdings has any cash
remaining after the payments described in clauses (1) through (3) above, and the Parties
mutually agree that no further payments are required under (1) through (3) above, the
Parties shall cause DLS Holdings to distribute (as liquidating distributions) all such cash
to LS Power and Dynegy in equal proportions;




(iii) The Parties shall cause DLS Development to distribute any cash held by it to its
members as soon as reasonably practicable following the Effective Date, it being understood
that, upon termination of the Terminated Agreements, DLS Development will not have any
Obligations or assets other than cash;




(iv) Dynegy will pay, as early as reasonably practicable on January 2, 2009,
$18,875,000 to LS Power, via wire transfer of immediately available funds to an account
designated by LS Power; and




(v) The applicable affiliates of the Parties have executed and delivered the Real
Estate Rights Agreement.



(b) Termination of Certain Arrangements.




(i) Except with respect to the Plum Point DRTA, which shall remain in effect, Dynegy,
for itself and on behalf of each applicable member of the Dynegy Group, hereby (A)
terminates and discharges any and all Obligations of any LS Project Entity owed to any
member of the Dynegy Group, (B) terminates each of the Terminated Agreements, (C)
acknowledges that each such Terminated Agreement is of no further force or effect, and all
rights and obligations accruing to itself or any member of its Group thereunder are fully
satisfied and terminated (save and except with respect to the payment of any amounts accrued
prior to the Effective Date in respect of costs or expenses payable or reimbursable under
any of the Services Agreements), and (D) releases LS Power and each member of the LS Power
Group from any and all
Obligations such Person had, has or hereinafter may have arising out of or in
connection with any Terminated Agreement;


 


6









 






(ii) Except with respect to the Plum Point DRTA, which shall remain in effect, LS
Power, for itself and on behalf of each applicable member of the LS Power Group, hereby (A)
terminates and discharges any and all Obligations of any Dynegy Project Entity owed to any
member of the LS Power Group, (B) terminates each of the Terminated Agreements, (C)
acknowledges that each such Terminated Agreement is of no further force or effect, and all
rights and obligations accruing to itself or any member of its Group thereunder are fully
satisfied and terminated (save and except with respect to the payment of any amounts
accrued prior to the Effective Date in respect of costs or expenses payable or reimbursable
under any of the Services Agreements), and (D) releases Dynegy and each member of the Dynegy
Group from any and all Obligations such Person had, has or hereinafter may have arising out
of or in connection with any Terminated Agreement; and




(iii) The Parties, in their capacity as the only members of the DLS Companies and on
behalf of each DLS Company, hereby (A) terminate and discharge any and all Obligations of
any member of the LS Power Group or of the Dynegy Group owed to any DLS Company, (B)
terminate each of the Terminated Agreements, (C) acknowledge that each such Terminated
Agreement is of no further force or effect, and all rights and obligations accruing to
itself or any member of the LS Power Group or the Dynegy Group thereunder are fully
satisfied and terminated, and (D) releases each member of the LS Power Group and each member
of the Dynegy Group from any and all Obligations such Person had, has or hereinafter may
have arising out of or in connection with any Terminated Agreement.



(c) Assumed Obligations. From and after the Effective Date, subject to the other terms and
conditions of this Agreement (including the indemnification obligations in Section
4(c)(vi)):




(i) Dynegy agrees to assume and to fully and timely pay, perform and discharge in full,
and it is understood that neither LS Power nor any member of the LS Power Group shall have
any further responsibility for, any Obligations associated with the ownership and operation
of, or otherwise related to or arising from, the Dynegy Project Assets or the Dynegy Project
Entities, including any Obligations arising out of the governing documents of any Dynegy
Project Entity, and regardless of whether any such Obligation arose before or after the
Effective Date (collectively, the “Dynegy Assumed Obligations”). It is acknowledged that (A)
many if not all of the Dynegy Assumed Obligations constitute obligations of various of the
Dynegy Project Entities (and not Dynegy itself) and (B) this Section 2(c)(i) is for
the benefit of LS Power only, and nothing herein shall be construed to create any rights in
favor of any third parties with respect to the Dynegy Assumed Obligations.


 


7









 






(ii) LS Power agrees to assume and to fully and timely pay, perform and discharge in
full, and it is understood that neither Dynegy nor any member of the Dynegy Group shall have
any further responsibility for, any Obligations associated with
the ownership and operation of, or otherwise related to or arising from, the LS Power
Project Assets or the LS Power Project Entities, including any Obligations arising out of
the governing documents of any LS Power Project Entity, and regardless of whether any such
Obligation arose before or after the Effective Date (collectively, the “LS Power Assumed
Obligations”). It is acknowledged that (A) many if not all of the LS Power Assumed
Obligations constitute obligations of various of the LS Power Project Entities (and not LS
Power itself) and (B) this Section 2(c)(ii) is for the benefit of Dynegy only, and
nothing herein shall be construed to create any rights in favor of any third parties with
respect to the LS Power Assumed Obligations.



(d) Consent of Members. As evidenced by the execution and delivery of this Agreement,
Dynegy and LS Power, in their capacities as members of each DLS Company, unanimously agree,
acknowledge and resolve that:




(i) it is advisable and in the best interest of each DLS Company to dissolve each DLS
Company, and each such member hereby approves and consents to the winding up of the business
and affairs of the DLS Companies, and the dissolution of the DLS Companies, in accordance
with this Agreement;




(ii) to the Knowledge of each such member, no third party expenses are outstanding with
respect to any DLS Company, other than any of the Obligations referred to in Section
2(a)(ii) for which DLS Holdings is directly or indirectly liable;




(iii) LS Power shall prepare and file with the Secretary of State of the State of
Delaware a certificate of cancellation for each DLS Company, provided that if LS Power fails
to file such certificates of cancellation within a commercially reasonable amount of time,
Dynegy may, acting in good faith, file such certificates;




(iv) each DLS Company shall cease to conduct its affairs except in so far as may be
necessary to consummate the transactions contemplated hereby and to dissolve and wind up the
affairs of such DLS Company; and




(v) each officer of each DLS Company is hereby authorized and empowered in the name and
on behalf of such DLS Company to execute such documents and make such filings with
Governmental Authorities as may be necessary or appropriate in connection with the
dissolution and winding up of such DLS Company, provided that prior to filing any documents
with a Governmental Authority (including the certificates of cancellation described in
clause (iii) above), each Party shall give the other Party reasonable opportunity to review
and approve such document.



3. Representations and Warranties.



(a) Representations and Warranties of Dynegy. Dynegy hereby represents and warrants to LS
Power as follows as of the date hereof:




(i) Organization and Good Standing. Dynegy is a corporation, validly existing
and in good standing under the Laws of the state of Delaware. Dynegy is in good standing
under the Laws of each jurisdiction which requires such qualification, except
where the lack of such qualification would not have a material adverse effect on the
transactions contemplated hereby.


 


8









 






(ii) Authorization of Transaction. Each Dynegy Party has full entity power and
authority to execute and deliver each Transaction Agreement to which such Dynegy Party is a
party and to perform its obligations thereunder. Each Transaction Agreement to which any
Dynegy Party is a party constitutes the valid and legally binding obligation of such Dynegy
Party, enforceable against such Dynegy Party in accordance with its terms and conditions,
subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium or
similar Laws affecting creditors’ rights generally, and to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at
law). No Dynegy Party is required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Authority or any other Person in
order to consummate the transactions contemplated by this Agreement or any other Transaction
Agreement to which such Dynegy Party is a party.




(iii) Noncontravention. Neither the execution and delivery of any Transaction
Agreement to which a Dynegy Party is a party, nor the consummation of any of the
transactions contemplated thereby, shall (A) violate any Law to which such Dynegy Party is
subject or any provision of its Organizational Documents or (B) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in any Person
the right to accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which such Dynegy
Party is a party or by which it is bound or to which any of its assets are subject, and for
such violations, defaults, breaches, or other occurrences by a Dynegy Party that do not,
individually or in the aggregate, have a material adverse effect on the ability of Dynegy or
any other Dynegy Party to consummate the transactions contemplated by such Transaction
Agreement.




(iv) Acknowledgement of Risks; Due Diligence. Dynegy is familiar with
investments of the nature of the Dynegy Project Assets and the Dynegy Project Entities
(collectively, the “Dynegy Properties”), understands that ownership of the Dynegy Properties
involves substantial risks, has adequately investigated the Dynegy Properties, and has
substantial knowledge and experience in financial and business matters such that it is
capable of evaluating, and has evaluated, the merits and risks inherent in owning the Dynegy
Properties, and is able to bear the economic risks associated with the Dynegy Properties.
Dynegy has had the opportunity to visit with LS Power and its applicable Affiliates and meet
with their representative officers and other representatives to discuss the business,
assets, liabilities, financial condition, and operations of the Dynegy Properties, has
received all materials, documents and other information that Dynegy deems necessary or
advisable to evaluate the Dynegy Properties, and has made its own independent examination,
investigation, analysis and evaluation of the Dynegy Properties, including its own estimate
of the value of the Dynegy Properties. Dynegy has undertaken such due diligence (including
a review of the properties, liabilities, books, records and contracts associated with the
Dynegy Properties) as Dynegy deems adequate.


 


9









 





(b) Representations and Warranties of LS Power. LS Power hereby represents and warrants to
Dynegy as follows as of the date hereof:




(i) Organization of LS Power. LS Power is a limited partnership, validly
existing and in good standing under the Laws of the state of Delaware. LS Power is in good
standing under the Laws of each other jurisdiction which requires such qualification, except
where the lack of such qualification would not have a material adverse effect on the
transactions contemplated hereby.




(ii) Authorization of Transaction. Each LS Power Party has full entity power
and authority to execute and deliver each Transaction Agreement to which it is a party and
to perform its obligations thereunder. Each Transaction Agreement to which such LS Power
Party is a party constitutes the valid and legally binding obligation of such LS Power
Party, enforceable against such LS Power Party in accordance with its terms and conditions,
subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium or
similar Laws affecting creditors’ rights generally, and to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at
law). No LS Power Party is required to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any Governmental Authority or any other Person in
order to consummate the transactions contemplated by this Agreement or any other Transaction
Agreement.




(iii) Noncontravention. Neither the execution and delivery of any Transaction
Agreement to which a LS Power Party is a party, nor the consummation of any of the
transactions contemplated thereby, shall (A) violate any Law to which such LS Power Party is
subject or any provision of its Organizational Documents or (B) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in any Person
the right to accelerate, terminate, modify, or cancel, or require any notice, approval or
consent under any agreement, contract, lease, license, instrument, or other arrangement to
which such LS Power Party is a party or by which it is bound or to which any of its assets
is subject, and for such violations, defaults, breaches, or other occurrences that do not,
individually or in the aggregate, have a material adverse effect on the ability of any LS
Power Party to consummate the transactions contemplated by such Transaction Agreement.




(iv) Dynegy Project Entities; Obligations. To LS Power’s Knowledge,
Schedule 3(b)(iv) contains, with respect to each Dynegy Project Entity, a list of
all the material contracts, agreements, licenses, permits and other documents and
instruments to which such Dynegy Project Entity is party (the “Dynegy Project Entity
Contracts”), and, to LS Power’s Knowledge, each such Dynegy Project Entity Contract is in
full force and effect (except as may be otherwise indicated on Schedule 3(b)(iv)).
To LS Power’s Knowledge, the Dynegy Project Entities have performed all material obligations
required to be performed by them to date under the Dynegy Project Entity Contracts and are
not in default under any obligation of any such contract. To LS Power’s Knowledge, no
counterparty to any of the Dynegy Project Entity Contracts is in default under any of the
Dynegy Project Entity Contracts. To LS Power’s Knowledge, no Dynegy Project Entity has any
material tort Obligations or material contractual Obligations other than those
arising under or relating to (A) the Dynegy Project Entity Contracts or (B) such Dynegy
Project Entity’s Organization Documents.


 


10









 






(v) Acknowledgment of Risks; Due Diligence. LS Power is familiar with
investments of the nature of the LS Power Project Assets and the LS Power Project Entities
(collectively, the “LS Power Properties” and, together with the Dynegy Properties, the “DLS
Properties”), understands that ownership of the LS Power Properties involves substantial
risks, has adequately investigated the LS Power Properties, and has substantial knowledge
and experience in financial and business matters such that it is capable of evaluating, and
has evaluated, the merits and risks inherent in owning the LS Power Properties, and is able
to bear the economic risks associated with the LS Power Properties. LS Power has had the
opportunity to visit with Dynegy and its applicable Affiliates and meet with their
representative officers and other representatives to discuss the business, assets,
liabilities, financial condition, and operations of the LS Power Properties, has received
all materials, documents and other information that LS Power deems necessary or advisable to
evaluate the LS Power Properties, and has made its own independent examination,
investigation, analysis and evaluation of the LS Power Properties, including its own
estimate of the value of the LS Power Properties. LS Power has undertaken such due
diligence (including a review of the properties, liabilities, books, records and contracts
associated with the LS Power Properties) as LS Power deems adequate.



4. Post-Effective Date Covenants. The Parties agree as follows:



(a) Transition Services. From the Effective Date through May 15, 2009, LS Power will
provide reasonable transition services (for example, making appropriate personnel reasonably
available to answer questions, make introductions and otherwise provide relevant information)
related to the Dynegy Projects and the projects owned by the Dynegy Project Entities; provided,
however, that LS Power shall not be required to incur any out-of-pocket costs or expenses in
connection with the provision of such transition services unless Dynegy has agreed to reimburse
same. Each Party will endeavor to promptly transfer to the other Party all plant, project,
commercial, environmental, regulatory and other records and information held by such first Party
(or any other member of such Party’s Group) and related to the DLS Properties being transferred to
the other Party pursuant to this Agreement.



(b) Delivery and Retention of Records. On or promptly after the Effective Date, each Party
shall deliver or cause to be delivered to the other Party copies of Tax Records which are relevant
to the DLS Properties being transferred to the other Party. Each Party agrees to (i) hold the Tax
Records so delivered to it and not to destroy or dispose of any thereof for a period of ten years
from the Effective Date or such longer time as may be required by Law, provided that, if the
receiving Party desires to destroy or dispose of such Tax Records during such period, it shall
first offer in writing at least 60 days before such destruction or disposition to surrender them to
the other Party, and if the other Party does not accept such offer within 20 days after receipt of
such offer, the receiving Party may take such action and (ii) to afford the other Party, its
accountants, and counsel, during normal business hours, upon reasonable request, at any time, full
access to the Tax Records delivered to it and to its employees to the extent that such access may
be requested for any legitimate purpose at no cost to the requesting Party (other than for
reasonable out-of-pocket expenses); provided that such access shall not be construed to require the
disclosure of Tax Records that would cause the waiver of any attorney-client, work product, or like
privilege; provided, further that in the event of any litigation nothing herein shall limit any
Party’s rights of discovery under applicable Law.


 


11









 





(c) DLS Companies’ Termination and Dissolution Matters.




(i) Release; Dissolution. As of the Effective Date, each Party releases each member of the
LS Power Group and each member of the Dynegy Group from any and all Obligations such Person had,
has or hereinafter may have arising out of or in connection with the DLS Development LLC Agreement
and the DLS Holdings LLC Agreement prior to the Effective Date. Promptly after the Effective Date,
Dynegy and LS Power, in their capacity as members of the DLS Companies, shall take any and all
actions as may be necessary or appropriate in order to dissolve and wind up the affairs of the DLS
Companies in accordance with Delaware Law and Section 2(d);




(ii) Amendment to LLC Agreements. Dynegy and LS Power hereby agree (in their capacities as
the sole members of DLS Development) that Sections 4(c)(iii) and (iv) shall constitute
amendments, effective as of the Effective Date, to the DLS Development LLC Agreement and the DLS
Holdings LLC Agreement.




(iii) Amendment. Section 11.3 of the DLS Development LLC Agreement is hereby deleted and
replaced in its entirety with the following:




“Section 11.3 Outside Activities. Each Member and its
respective Affiliates and Managers may engage, directly or indirectly,
without the consent of the other Member or the Company, in other business
opportunities, transactions, ventures or other arrangements of any nature or
description, independently or with others, including business of a nature
which may be competitive with or the same as or similar to the business of
the Company, regardless of the geographic location of such business, and
without any duty or obligation to offer or account to the other Member or
the Company in connection therewith. Nothing herein is intended to create a
partnership, joint venture, agency, or other relationship creating fiduciary
or quasi-fiduciary duties or similar duties and obligations or to subject
the Members or Managers to joint and several or vicarious liability or to
impose any duty, obligation, or liability that would arise therefrom with
respect to any or all of the Members, Managers or their Affiliates.”




In connection with the foregoing amendment, (1) Dynegy acknowledges and agrees that,
unless explicitly agreed in writing after the Effective Date, no member of the LS Power
Group has any obligation to offer any business opportunity (including any development
project opportunity) to any member of the Dynegy Group and (2) LS Power acknowledges and
agrees that, unless explicitly agreed in writing after the date hereof, no member of the
Dynegy Group has any obligation to offer any business opportunity (including any development
project opportunity) to any member of the LS Power Group. It is acknowledged, for the
avoidance of doubt, that nothing in this paragraph is intended
to modify or supersede the terms and conditions of that certain Corporate Opportunity
Agreement dated as of September 14, 2006 between Dynegy Acquisition, Inc. and LS Power
Development, LLC.


 


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(iv) Further Action. Notwithstanding anything to the contrary in the DLS Development LLC
Agreement or the DLS Holdings LLC Agreement, without the consent of both Dynegy and LS Power, as
members of the respective DLS Companies, neither DLS Company (nor any representative of any DLS
Company) shall take any action other than actions expressly contemplated by this Agreement.




(v) Additional Information. LS Power shall provide to Dynegy reasonable records and/or
documentation supporting the amount of payments and distributions made (or to be made) by DLS
Holdings pursuant to Section 2(a)(ii).




(vi) No Further Use of “DLS” Name. From and after the Effective Date, neither
LS Power nor Dynegy (nor any other members of the LS Power Group or the Dynegy Group) shall
do business under the “DLS” name and, if the name of any member of the LS Power Group or the
Dynegy Group contains a reference to “DLS”, the name of such entity shall, as soon as
reasonably practicable following the Effective Date, be changed to a new name that does not
contain such reference.



5. Remedies.



(a) Survival of Representations and Warranties. All representations and warranties
contained in this Agreement shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby; provided, that the representations and
warranties set forth in Section 3(b)(iv) shall only survive until January 31, 2009, after
which date LS Power shall not have any obligation or liability with respect to any representation
or warranty set forth in Section 3(b)(iv) (excluding any liability that may arise from a
claim asserted for a breach of such a representation and warranty on or prior to January 31, 2009).




(b) Indemnification Provisions for Benefit of the LS Power Group. 




(i) Dynegy Assumed Obligations. Dynegy agrees to release, defend, indemnify and
hold harmless the LS Power Group from and against any Losses claimed against or otherwise
incurred or suffered by the LS Power Group after the Effective Date by reason of any of the
Dynegy Assumed Obligations.




(ii) Covenants and Obligations. In the event any of the representations,
warranties, covenants or obligations of Dynegy in this Agreement are breached, then, as LS
Power Group’s sole remedy, Dynegy agrees to release, indemnify and hold harmless the LS
Power Group from and against any Losses claimed against or otherwise suffered by the LS
Power Group by reason of all such breaches.


 


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(c) Indemnification Provisions for Benefit of the Dynegy Group.




(i) LS Power Assumed Obligations. LS Power agrees to release, defend, indemnify
and hold harmless the Dynegy Group from and against any Losses
claimed against or otherwise incurred or suffered by the Dynegy Group after the
Effective Date by reason of any of the LS Power Assumed Obligations.




(ii) Covenants and Obligations. Subject to Section 5(a), in the event
any of the representations, warranties, covenants or obligations of LS Power in this
Agreement are breached, then, as Dynegy Group’s sole remedy, LS Power agrees to release,
indemnify and hold harmless the Dynegy Group from and against any Losses claimed against or
otherwise suffered by the Dynegy Group by reason of all such breaches.



(d) Procedure; Notice.




(i) The rights and remedies of the Parties and the Indemnitees under this Section
4(c)(vi) are exclusive and in lieu of any and all other rights and remedies that any
Party or Indemnitee may have under this Agreement for monetary relief, with respect to any
breach of or failure to perform any covenant, agreement, or representation or warranty set
forth in this Agreement; or the assets, liabilities, obligations, business, or operations of
the Dynegy Project Assets, the Dynegy Project Entities, the LS Project Assets, or the LS
Project Entities, as the case may be.




(ii) Notwithstanding anything to the contrary in this Agreement, no Party (including an
Indemnitee) shall be entitled to recovery hereunder from any other Party (including an
Indemnifying Party), for any Losses caused by the gross negligence or willful misconduct of
such Party or Indemnitee. Except with respect to Third Party Claims made against any
Indemnitee, no Party shall have any indemnification obligation under this Section
4(c)(vi) to any other Person with respect to any Losses consisting of incidental,
indirect, consequential or punitive damages or lost profits.




(iii) If any Indemnitee receives notice of the assertion of any claim or of the
commencement of any Action made or brought by any Person who is not a Party or any Affiliate
of a Party (a “Third Party Claim”) with respect to which indemnification is to be sought
from an Indemnifying Party, the Indemnitee shall give such Indemnifying Party written notice
thereof as soon as reasonably practicable following the Indemnitee’s receipt of notice
thereof, but in any event such notice shall be given no later than 30 calendar days after
the Indemnitee’s receipt of notice of such Third Party Claim. Such notice shall describe the
nature of the Third Party Claim in reasonable detail and shall indicate the estimated
amount, if practicable, of the Losses that has been or may be sustained by the Indemnitee.
The Indemnifying Party will 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 expense and by such Indemnifying Party’s own counsel; provided that the counsel for
the Indemnifying Party who shall conduct the defense of such Third Party Claim shall be
reasonably satisfactory to the Indemnitee. The Indemnitee shall cooperate in good faith in
such defense at such Indemnitee’s own expense. If an Indemnifying Party elects not to assume
the defense of any Third Party Claim, the Indemnitee may compromise or settle such Third
Party Claim over the objection of the Indemnifying Party, which settlement or compromise
shall conclusively establish the Indemnifying Party’s liability pursuant to this Agreement.


 


14









 






(iv) If, within 30 calendar days after an Indemnitee provides written notice to the
Indemnifying Party of any Third Party Claim, the Indemnitee receives written notice from the
Indemnifying Party that such Indemnifying Party has elected to assume the defense of such
Third Party Claim as provided in Section 5(d)(iii), the Indemnifying Party will not
be liable for any legal expenses subsequently incurred by the Indemnitee in connection with
the defense thereof; provided, however, that if the Indemnifying Party shall fail to take
reasonable steps necessary to defend diligently such Third Party Claim within 30 calendar
days after receiving notice from the Indemnitee that the Indemnitee believes the
Indemnifying Party has failed to take such steps, the Indemnitee may assume its own defense
and the Indemnifying Party shall be liable for all reasonable expenses thereof; and
provided, further, that nothing herein shall prohibit an Indemnitee from retaining
co-counsel at its own expense.




(v) Without the prior written consent of the Indemnitee, the Indemnifying Party shall
not enter into any settlement of any Third Party Claim that would lead to liability or
create any financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder. If a firm offer is made to settle a
Third Party Claim without leading to liability or the creation of a financial or other
obligation on the part of the Indemnitee and the Indemnifying Party desires to accept and
agree to such offer, the Indemnifying Party shall give written notice to the Indemnitee to
that effect. If the Indemnitee fails to consent to such firm offer within 30 calendar days
after its receipt of such notice, the Indemnifying Party shall be relieved of its
obligations to defend such Third Party Claim and the Indemnitee may contest or defend such
Third Party Claim. In such event the maximum liability of the Indemnifying Party as to such
Third Party Claim will be the amount of such settlement offer plus reasonable costs and
expenses paid or incurred by the Indemnitee up to the date of said notice.




(vi) Any claim by an Indemnitee on account of Losses for which indemnification is
available under this Section 4(c)(vi) that does not result from a Third Party Claim
(a “Direct Claim”) shall be asserted as soon as reasonably practicable following the
Indemnitee becoming aware of such Direct Claim by giving the Indemnifying Party written
notice thereof, stating the nature of such claim in reasonable detail, but in any event such
notice shall not be given later than 30 calendar days after the Indemnitee becomes aware of
such Direct Claim, and the Indemnifying Party shall have a period of 30 calendar days within
which to respond to such Direct Claim. If the Indemnifying Party does not respond within
such 30 calendar day period, the Indemnifying Party shall be deemed to have accepted such
Direct Claim. If the Indemnifying Party rejects such Direct Claim, the Indemnitee will be
free to seek enforcement of its right to indemnification under this Agreement.




(vii) If the amount of any Losses for which an indemnification payment is made under
this Section 4(c)(vi), at any time subsequent to the making of an indemnity payment
in respect thereof, is reduced by recovery, settlement or otherwise under or pursuant to any
insurance coverage, or pursuant to any claim, recovery, settlement or payment by, from or
against any other Person, the amount of such reduction, less any costs, expenses or premiums
incurred in connection therewith (together with interest
thereon from the date of payment thereof by the insurer or third-party to the date of
repayment at the “prime rate” as published in The Wall Street Journal) shall promptly be
repaid by the Indemnitee to the Indemnifying Party.


 


15









 






(viii) Notwithstanding anything to the contrary in this Section 5(d), a failure
to give timely notice as provided in this Section 5(d) shall not affect the rights
or obligations of any Party hereunder except if, and only to the extent that, as a result of
such failure, the Party that was entitled to receive such notice was materially prejudiced
as a result of such failure.



(e) Determination of Amount of Loss. The Losses giving rise to any indemnification
obligation hereunder shall be limited to the actual loss suffered by the Indemnitee, but shall not
be reduced to reflect insurance proceeds paid or available to be paid to the Indemnitee or the tax
impact of any payment on the Indemnitee. The amount of the actual loss and the amount of the
indemnity payment shall be computed by taking into account the timing of the loss or payment, as
applicable, using a prime lending rate plus 2% interest or discount rate, as appropriate. Upon the
request of the Indemnifying Party, the Indemnitee shall provide the Indemnifying Party with
information sufficient to allow the Indemnifying Party to calculate the amount of the indemnity
payment in accordance with this Section 5(e). An Indemnitee shall take all reasonable steps
to mitigate damages in respect of any claim for which it is seeking indemnification and shall use
reasonable efforts to avoid any costs or expenses associated with such claim and, if such costs and
expenses cannot be avoided, to minimize the amount thereof.



6. Tax Matters.



(a) Post-Dissolution Tax Returns. LS Power shall prepare or cause to be prepared and file
or cause to be filed any Post-Dissolution Tax Returns with respect to the LS Project Assets and the
LS Project Entities and shall pay (or cause to be paid) any Taxes due with respect to such Tax
Returns. Dynegy shall prepare or cause to be prepared a file or cause to be filed any
Post-Dissolution Tax Returns with respect to the Dynegy Project Assets and the Dynegy Project
Entities and shall pay (or cause to be paid) any Taxes due with respect to such Tax Returns.



(b) Pre-Dissolution Tax Returns. All Pre-Dissolution Tax Returns and Taxes with respect to
the DLS Companies and their subsidiaries shall be handled in accordance with the DLS Companies’
Organizational Documents.



(c) Cooperation on Tax Matters.




(i) LS Power and Dynegy shall cooperate fully, as and to the extent reasonably
requested by the other Party, in connection with the filing of Tax Returns pursuant to this
Section 6(c) and any audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder.




(ii) LS Power and Dynegy further agree, upon request, to use commercially reasonable
efforts to obtain any certificate or other document from any Governmental Authority or any
other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including with respect to the transactions
contemplated hereby).


 


16









 





(d) Certain Taxes. If required by Applicable Law in connection with the transfer of any DLS
Properties being distributed to a Party hereunder, (i) the Party receiving such DLS Properties
shall file all necessary Tax Returns and other documentation with respect to all transfer,
documentary, sales, use, stamp, registration and other similar Taxes and fees, pay the related Tax,
and (ii) the other Party shall, and shall cause its Affiliates to, join in the execution of any
such Tax Returns and other documentation.



(e) Confidentiality. Any information shared in connection with Taxes shall be kept
confidential, except as may otherwise be necessary in connection with the filing of Tax Returns or
reports, refund claims, tax audits, tax claims and tax litigation, or as required by Law.



(f) Control of Proceedings. The Party responsible for any Tax under this Agreement shall
control audits and disputes (and costs and expenses) related to such Taxes (including action taken
to pay, compromise or settle such Taxes). Except as otherwise provided by this Agreement, the
noncontrolling party shall be afforded a reasonable opportunity to participate in such proceedings
at its own expense.



(g) Remittance of Refunds. If LS Power or any Affiliate of LS Power receives a refund of
any Taxes that Dynegy is entitled to hereunder, or if Dynegy or any Affiliate of Dynegy receives a
refund of any Taxes that LS Power is entitled to hereunder, the Party receiving such refund shall,
within 30 days after receipt of such refund, remit it to the Party who is entitled to such Taxes
hereunder. For the purpose of this Section 6(g), the term “refund” shall include a
reduction in Tax and the use of an overpayment as a credit or other Tax offset, and receipt of a
refund shall occur upon the filing of a Tax Return or an adjustment thereto using such reduction,
overpayment or offset or upon the receipt of cash.



(h) Characterization of Transactions . Dynegy and LS Power agree that neither they nor
their Affiliates shall file or cause to be filed with the Internal Revenue Service a Form 8594
(“Asset Acquisition Statement under Section 1060”) because the transactions contemplated hereby
constitute a liquidation of a tax partnership not subject to Section 1060 and does not require a
Form 8594 to be filed.



7. Miscellaneous.



(a) Public Announcements. Except as otherwise agreed to by the Parties, neither Party shall
(and each Party shall not permit its Affiliates to) issue any report, statement or press release or
otherwise make any public statement with respect to this Agreement or the transactions contemplated
hereby, except as may be required by Law (including any rules and regulations of the Securities and
Exchange Commission) or the rules of the NYSE (in the reasonable judgment of the applicable Party).
The Parties agree to cooperate in good faith to issue separate and simultaneous press releases
within 24 hours following the execution of this Agreement by all Parties. In the event either Party
determines that a report, statement or press release or other form of public statement with respect
to this Agreement or the transactions
contemplated hereby is required by applicable law, such Party shall offer the other Party
reasonable opportunity to review such statement or other disclosure prior to its public disclosure.



 


17









 





(b) Waiver of Compliance; Consents. Except as otherwise provided in this Agreement, any
failure of any Party to comply with any obligation, covenant, agreement or condition in this
Agreement may be waived by the Party entitled to the benefits thereof only by a written instrument
signed by the Party granting such waiver, but such waiver of such obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent failure
to comply therewith.



(c) Assignment. This Agreement and all of the provisions hereof shall be binding on and
inure to the benefit of the Parties and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned
by any Party without the prior written consent of each other Party.



(d) Specific Performance; No Punitive or Consequential Damages. The Parties agree that
irreparable damage would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It is accordingly
agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof. EXCEPT AS PROVIDED IN
SECTION 5(c)(ii), NEITHER PARTY NOR ITS AFFILIATES SHALL SEEK OR BE LIABLE FOR ANY PUNITIVE OR
CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF REVENUE OR INCOME, OR LOSS OF BUSINESS REPUTATION OR
OPPORTUNITY RELATING TO ANY BREACH OR ALLEGED BREACH OF THIS AGREEMENT.



(e) Professional Fees and Expenses. Except as expressly set forth in this Agreement, each
Party shall pay all legal, accounting, and other fees and expenses incurred by such Party in
connection with this Agreement and the transactions contemplated hereby.



(f) Third Party Beneficiaries. Other than those Persons entitled to indemnity under
Section 4(c)(vi), there are no third party beneficiaries having rights under or with
respect to this Agreement.



(g) Time. Time is of the essence in the performance of this Agreement



(h) Counterparts; Electronic Transmission. This Agreement may be executed in counterparts,
each of which shall be deemed an original but which together shall constitute one and the same
instrument. This Agreement may be validly executed and delivered by facsimile or in portable
document format (.pdf).



(i) Headings. The section headings contained in this Agreement are inserted for convenience
only and shall not affect in any way the meaning or interpretation of this Agreement.



 


18









 





(j) Notices. All notices, requests, demands, claims, and other communications hereunder
shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be
deemed properly given or made (1) when delivered, if given by personal
delivery or delivery service with proof of delivery, (2) upon receipt, if given by facsimile, or
(3) two business days after being sent by mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:



	 	 	 	 	 
	 

	 	If to Dynegy:
	 	Dynegy Inc.
	 

	 	 	 	Attn: General Counsel
	 

	 	 	 	 1000 Louisiana Street
	 

	 	 	 	Houston, Texas 77002
	 

	 	 	 	Facsimile: 713-356-2185
	 
	 	 	 	 
	 

	 	If to LS Power:
	 	LS Power Associates, L.P.
	 

	 	 	 	Attn: General Counsel
	 

	 	 	 	 1700 Broadway
	 

	 	 	 	 35th Floor
	 

	 	 	 	New York, NY 10019
	 

	 	 	 	Facsimile: 212-615-3440






Any Party may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party written notice in the manner
herein set forth.



(k) Governing Law. EXCEPT TO THE EXTENT PROVISIONS OF THIS AGREEMENT RELATE TO THE
DISSOLUTION OF A DLS COMPANY OR THE AMENDMENT OF A DLS COMPANY’S LIMITED LIABILITY AGREEMENT (WHICH
PROVISIONS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE), THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION.



(l) Consent to Jurisdiction, Etc.




(i) Each of the Parties hereby irrevocably and unconditionally submits, for itself and
its property, to the exclusive jurisdiction of any court of the State of New York or any
Federal court of the United States of America sitting in the Southern District of New York
and any appellate court from any thereof, in any Action arising out of or relating to this
Agreement or the transactions contemplated hereby or for recognition or enforcement of any
judgment relating to such transactions, and each of the Parties hereby irrevocably and
unconditionally agrees that all claims in respect of any such Action shall be heard and
determined in such court of the State of New York or, to the extent permitted by Applicable
Law, in such Federal court. Each of the Parties agrees that a final judgment in any such
Action shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by Law.



 


19









 






(ii) Each of the Parties hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or hereafter
have to the laying of venue of any Action arising out of or related to this
Agreement or the transactions contemplated hereby in any such New York state or federal
court. Each of the Parties hereby irrevocably waives, to the fullest extent permitted by
Law, the defense of an inconvenient forum to the maintenance of such Action in any such
court. Each of the Parties shall designate and appoint an agent for the service of process
in the State of New York in connection with any dispute arising under this Agreement, and
agrees to consider any legal process or any demand or notice made or served on such agent as
being made to it.




(iii) THE PARTIES EACH HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO JURY TRIAL OF
ANY DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS RELATING
HERETO OR ANY DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. The scope of this waiver is intended to be all encompassing of any transaction
contemplated hereby, including contract claims, tort claims, breach of duty claims, and all
other material inducement to enter into a business relationship and that they will continue
to rely on the waiver in their related future dealings. Each Party further represents and
warrants that it has reviewed this waiver with its legal counsel, and that each knowingly
and voluntarily waives its jury trial rights following consultation with legal counsel.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED ORALLY OR IN WRITING, AND THE WAIVER WILL APPLY TO ANY AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING HERETO. In the event of an Action, this Agreement may be filed as a
written consent to trial by a court.



(m) Amendment and Modification. Subject to applicable Law, this Agreement may be amended,
modified or supplemented only by written agreement of the Parties.



(n) Severability. Any term or provision of this Agreement that is invalid or unenforceable
in any situation in any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.



(o) Compliance With Laws. This Agreement and the performance of all obligations
contemplated herein are and will be subject to all applicable Laws. The Parties are entitled to act
in accordance with each such Laws. The Parties will cooperate with respect to compliance with all
governmental authorizations, including obtaining and maintaining all necessary regulatory
authorizations or any reasonable exchange or provision of information needed for filing or
reporting requirements.



 


20









 




(p) Further Assurances. The Parties agree to (and to cause their applicable Affiliates to)
execute such further assignments, releases, consents, notifications and other documents as may be
reasonably requested by the other Party for the purpose of giving effect to, or evidencing or
giving notice of, the matters contemplated by this Agreement. Each Party shall use commercially
reasonable efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable Laws, to consummate the
transactions contemplated in this Agreement.



(q) Incorporation of Exhibits and Schedules. The Exhibits and Schedules identified in this
Agreement are incorporated herein by reference and made a part hereof.



(r) Entire Agreement. THIS AGREEMENT (INCLUDING THE DOCUMENTS REFERRED TO HEREIN)
CONSTITUTES THE ENTIRE AGREEMENT AMONG THE PARTIES AND SUPERSEDES ANY PRIOR UNDERSTANDINGS,
AGREEMENTS, OR REPRESENTATIONS BY OR AMONG THE PARTIES, WRITTEN OR ORAL, TO THE EXTENT THEY HAVE
RELATED IN ANY WAY TO THE SUBJECT MATTER HEREOF.



(s) Limitations of Representations and Warranties. EXCEPT FOR THE EXPRESS REPRESENTATIONS
AND WARRANTIES SET FORTH IN THIS AGREEMENT, NEITHER PARTY IS MAKING ANY OTHER REPRESENTATIONS OR
WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, CONCERNING ANY OF THE ASSETS,
LIABILITIES, AND ENTITIES BEING TRANSFERRED PURSUANT TO THIS AGREEMENT, AND EACH PARTY HEREBY
EXPRESSLY DISCLAIMS RELIANCE ON ANY REPRESENTATIONS OR WARRANTIES (WRITTEN OR ORAL, STATUTORY,
EXPRESS OR IMPLIED) OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT.



[The next page is the signature page.]



 


21









 




IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth in
the preamble.

	 	 	 	 	 
	 	DYNEGY INC.

 	 
	 	By:  	/s/ Lynn A. Lednicky
 	 
	 	 	Name:  	Lynn A. Lednicky 	 
	 	 	Title:  	President 	 
	 
	 	LS POWER ASSOCIATES, L.P.

 	 
	 	By:  	/s/ John T. King
 	 
	 	 	Name:  	John T. King 	 
	 	 	Title:  	Vice President 	 
	 



[Dissolution Agreement Signature Page]