Document:

Exhibit

Exhibit 10.1
Execution Version
ONCOR ELECTRIC DELIVERY HOLDINGS COMPANY LLC 
ONCOR ELECTRIC DELIVERY COMPANY LLC 
1616 Woodall Rogers Freeway 
Dallas, Texas 75202
August 25, 2017
Sempra Energy 
Power Play Merger Sub I, Inc. 
c/o Sempra Energy 
488 8th Avenue 
San Diego, CA 92101
		
	Attention: 
	J. Walker Martin

Kathryn J. Collier

Re:    Oncor Letter Agreement
Ladies and Gentlemen:
Reference is made to that certain Agreement and Plan of Merger dated August 21, 2017 (the “Merger Agreement”), by and among (i) Energy Future Holdings Corp., a Texas corporation (the “Company”), (ii) Energy Future Intermediate Holding Company LLC, a Delaware limited liability company (“EFIH”), (iii) Sempra Energy (“Parent”) and (iv) Power Play Merger Sub I, Inc., a Delaware corporation (“Merger Sub” and, together with Parent, “Purchasers”), which agreement has been approved by the board of directors of the Company, the board of managers of EFIH, the board of directors of Parent and the board of directors of Merger Sub and will be submitted for approval by the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).  In addition, reference is made to the amended Plan of Reorganization (the “Plan of Reorganization”) attached to the Merger Agreement and filed by Purchasers, the Company, EFIH and other Debtors (as defined below) in connection with the Chapter 11 Cases (as defined below), which, among other things, provided for the transactions contemplated by the Merger Agreement.  Upon the terms and conditions of the Merger Agreement, among other things, Purchasers plan to acquire, pursuant to certain transactions described therein (the “Purchase”), direct or indirect equity interests in the Company and EFIH that indirectly represent all of the outstanding equity interests in Oncor Electric Delivery Holdings Company LLC (“Oncor Holdings”) and at least 80.03% of the outstanding equity interests in Oncor Electric Delivery Company LLC (“Oncor” and, together with Oncor Holdings and their respective Subsidiaries, the “Oncor Entities”).  A full and complete copy of the Merger Agreement (including the Plan of Reorganization, which is attached as an exhibit thereto) has been provided to Oncor Holdings and Oncor.
WHEREAS, the Oncor Entities are “ring-fenced” from the Company and EFIH and their respective Affiliates (as defined below), as a result of which, among other things, (i) the boards of directors of Oncor 

Holdings and Oncor are comprised of a majority of independent directors and (ii) certain arrangements are in place to maintain the separateness of the business and operations of the Company and EFIH from the business and operations of the Oncor Entities (such limitations collectively, the “Ring-Fence”);
WHEREAS, in furtherance of the Purchase and in light of the Ring-Fence, the Order on Rehearing entered in PUCT Docket No. 34077, the limited liability company agreements (as amended) of Oncor Holdings and Oncor (the “LLC Agreements”), the 2007 Separation Agreement (as defined below) and the Investor Rights Agreement (as defined below), the Company and EFIH have requested that Oncor Holdings and Oncor enter into this letter agreement (“Letter Agreement”) and have provided their prior written consent and direction before execution of this Letter Agreement, as the sole shareholder of Oncor Holdings (in the case of EFIH) and as the direct or indirect 80.03% equity interest holders of Oncor to Oncor Holdings and Oncor with respect to their entry into and performance of this Letter Agreement;
WHEREAS, this Letter Agreement sets forth certain rights and obligations of the Oncor Entities and Purchasers to cooperate in the manner set forth herein with respect to initial steps to be taken in connection with the Merger (as defined below) (the “Purchase Transaction”);
WHEREAS, except as expressly set forth herein, this Letter Agreement is not intended to give any Purchaser, directly or indirectly, any right to control or to direct the operations or decisions of any Oncor Entity;
WHEREAS, Oncor Holdings and Oncor (i) have not endorsed or approved any transactions or commitments proposed by the Purchasers, (ii) are not parties to or bound by the Merger Agreement and (iii) have not approved and are not required to approve the Merger Agreement;
WHEREAS, Oncor and Purchasers will use reasonable best efforts to cooperate with Purchasers in the preparation of any filings and in appearances made before the PUCT, as appropriate, in support of Purchasers’ proposal to acquire Oncor and Oncor Holdings, and Purchasers, Oncor and Oncor Holdings agree to use reasonable best efforts to make a single filing by the parties seeking prior approval by the PUCT of the Purchase Transaction;
WHEREAS, Oncor Holdings and Oncor have agreed to operate in the ordinary course of business and materially consistent with the 2017-2018 Plan upon signing of this Letter Agreement, and they have preserved the right to take reasonable actions consistent with prudent industry practices to respond to emergency situations and/or to comply and respond to any requirement, or reasonable request, in a Governmental Request or Order (as defined below); and
WHEREAS, in exchange for the agreements of Oncor Holdings and Oncor in this Letter Agreement, Purchasers have agreed to certain commitments set forth herein with respect to the implications of the Purchase Transaction for Oncor Holdings, Oncor and their employees;
NOW, THEREFORE, in consideration of the premises, representations, warranties, covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

Section 1.Definitions.
(a)    Capitalized terms used in this Letter Agreement but not defined herein have the respective meanings ascribed to them in Exhibit A.  All capitalized terms used but not defined herein or in Exhibit A shall have the meanings ascribed to them in the Merger Agreement.  In the event that a term defined herein or in Exhibit A is defined and ascribed a different meaning in the Merger Agreement, the definition provided herein or in Exhibit A, as applicable, shall control.
(b)    Each term below has the meaning ascribed to such term in the Section set forth opposite such term:
	
		
	Defined Term
	Section

	2007 Separation Agreement
	Exhibit A

	2017-2018 Plan
	§3(a)

	Affiliate
	Exhibit A

	Alternative Proposal
	§4(e)(1)

	Applications
	§5(a)(iv)

	Approval Date
	§4(a)

	Approval Period
	§4(a)

	Bankruptcy and Equity Exception
	Exhibit A

	Bankruptcy Court
	Preamble

	Benefit Plan
	Exhibit A

	Business Day
	Exhibit A

	CBA
	§8(d)

	Chapter 11 Cases
	Exhibit A

	Company
	Preamble

	Confidentiality Agreement
	Exhibit A

	Continuation Period
	§8(a)

	Contract
	Exhibit A

	control
	Exhibit A

	Costs
	Exhibit A

	Debtors
	Exhibit A

	Effective Time
	§8(a)

	EFIH
	Preamble

	Environment
	Exhibit A

	ERISA
	Exhibit A

	FCC Approval
	Exhibit A

	FCC/FERC Applications
	§5(a)(iv)

	FERC
	Exhibit A

	FERC Approval
	Exhibit A

	Financing
	§12(a)

	Governmental Entity
	Exhibit A

	Governmental Request or Order
	Exhibit A

	
		
	Defined Term
	Section

	Indemnified Parties
	Exhibit A

	Interim Period
	§3(a)

	Investor Rights Agreement
	Exhibit A

	Key Regulatory Terms
	§5(a)(v)

	Knowledge
	Exhibit A

	Law
	Exhibit A

	Letter Agreement
	Recitals

	License
	Exhibit A

	Lien
	Exhibit A

	LLC Agreements
	Recitals

	Merger Agreement
	Preamble

	Merger Sub
	Preamble

	Merger
	Exhibit A

	Oncor
	Preamble

	Oncor Entities
	Preamble

	Oncor Employee
	§8(a)

	Oncor Holdings
	Preamble

	Oncor Material Contract
	Exhibit A

	Parent
	Preamble

	Permitted Alternative Proposal
	§4(e)(ii)

	Person
	Exhibit A

	Plan of Reorganization
	Preamble

	PUCT
	Exhibit A

	PUCT Approval
	Exhibit A

	PUCT Filing
	§5(a)(iii)

	Purchase
	Preamble

	Purchase Closing Date
	§3(a)

	Purchase Transaction
	Recitals

	Purchasers
	Preamble

	Reorganized TCEH
	Exhibit A

	Representatives
	§4(a)

	Ring-Fence
	Recitals

	Securities Act
	Exhibit A

	Split Participant Agreement
	§9

	Subsidiary
	Exhibit A

	Surviving Company
	Exhibit A

	Termination Date
	Exhibit A

Section 2.Representations and Warranties of Oncor Holdings and Oncor.  As of the date hereof Oncor Holdings and Oncor hereby represent and warrant to Purchasers as follows:
(a)    Organization, Good Standing and Qualification.  Each of Oncor Holdings and Oncor is a limited liability company duly formed, validly existing and in good standing under the Delaware Limited Liability Company Act and has all requisite limited liability company power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign limited liability company in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to prevent, materially impair or materially delay the ability of Oncor Holdings or Oncor to perform the actions contemplated by, and to fulfill its obligations under, this Letter Agreement.
(b)    Corporate Authority.  Oncor Holdings and Oncor have each approved by all necessary limited liability company action the execution and delivery of this Letter Agreement and the actions contemplated hereby to be taken by the Oncor Entities.  Each of Oncor Holdings and Oncor has all requisite limited liability company power and authority and has taken all limited liability company action necessary in order to execute, deliver and perform its obligations under this Letter Agreement.  This Letter Agreement has been duly executed and delivered by each of Oncor Holdings and Oncor and is a valid and binding obligation of Oncor Holdings and Oncor.  This Letter Agreement is enforceable against each of Oncor Holdings and Oncor in accordance with its terms, subject, as to the enforcement of remedies, to the Bankruptcy and Equity Exception.
(c)    No Conflicts.  As of the date hereof, the execution, delivery and performance by Oncor Holdings and Oncor of this Letter Agreement does not and will not constitute or result in (i) a breach or violation of, or a default under, or otherwise contravene or conflict with, the certificate of formation of Oncor or Oncor Holdings, the LLC Agreements or the comparable governing documents of any other Oncor Entity (ii) with or without notice, lapse of time or both, a breach or violation of, or a default under, or the creation of a Lien on any of the assets of Oncor Holdings or Oncor or any of their Subsidiaries pursuant to, any Contract binding upon Oncor Holdings or Oncor or any of their Subsidiaries, or their respective assets, or any License held by Oncor Holdings or Oncor or any of its Subsidiaries or to which Oncor Holdings or Oncor or any of their Subsidiaries, or any of their respective assets, is subject or (iii) a violation of any Law to which Oncor Holdings or Oncor or any of their Subsidiaries, or any of their respective assets is subject, except, in the case of clause (ii) or (iii) above, for any such breach, violation, termination, cancellation, default, creation, acceleration, consent, loss or change as would not, individually or in the aggregate, reasonably be expected to prevent, materially impair or materially delay the ability of Oncor Holdings or Oncor to fulfill its obligations under this Letter Agreement.
Section 3.Interim Operation.
(a)    Except (i) as otherwise required or specifically permitted by the provisions of this Letter Agreement, (ii) as Parent may approve in writing (such approval, not to be unreasonably withheld, delayed or conditioned), (iii) as part of an asset swap for substantially similar value, 

pursuant to the asset swap and other transactions proposed in PUCT Docket No. 47469, or (iv) as required by or to the extent arising from the proposed rate case settlement in PUCT Docket No. 46957, each of Oncor Holdings and Oncor covenants and agrees as to itself and each of its Subsidiaries that, upon the signing of this Letter Agreement and ending on the earlier of the date of the consummation of the Purchase and other transactions contemplated by the Merger Agreement (the “Purchase Closing Date”) or the Termination Date (the “Interim Period”), each of them will operate in the ordinary course of business and materially consistent with the plan for 2017 and 2018 contained in the May 2016 updated long range business plan of Oncor (the “2017-2018 Plan”) that was provided to the Purchasers (including as to any action or the incurrence of any costs or expenses provided for therein).
(b)    Notwithstanding anything herein to the contrary, in order (i) to prevent the occurrence of, or mitigate the existence of, an emergency situation involving endangerment of life, human health, safety, the Environment or material property, equipment or other assets or (ii) to comply with or otherwise appropriately respond to any requirement, or reasonable request without solicitation, in a Governmental Request or Order, any Oncor Entity may take reasonable actions consistent with prudent industry practices that would otherwise be prohibited pursuant to Section 3(a); provided, however, that Oncor and Oncor Holdings shall provide Purchasers with notice of such emergency situation or Governmental Request or Order as soon as reasonably practicable after obtaining Knowledge thereof.
(c)    Except to the extent expressly set forth herein, nothing contained in this Letter Agreement is intended (i) to give Purchasers, directly or indirectly, any right to control or direct the operations or decisions of any Oncor Entity or (ii) modify or amend the obligations of the parties under either LLC Agreement.
Section 4.Alternative Proposals.
(a)    Notwithstanding anything to the contrary herein, except as specifically permitted by Section 4(c) with respect to a Permitted Alternative Proposal, during the period commencing on the date the Bankruptcy Court enters an order approving the Merger Agreement (such date, the “Approval Date”) and ending on the earlier of the Purchase Closing Date or the Termination Date (such period, the “Approval Period”), Oncor Holdings and Oncor shall not, shall cause each of their respective Subsidiaries not to, and shall cause the directors (other than the Minority Member Directors (as defined in the Oncor LLC Agreement)), officers, employees, investment bankers, attorneys, accountants and other advisors, consultants, agents or representatives of any Oncor Entity (collectively, “Representatives”) not to, (i) initiate, solicit, propose, knowingly encourage or knowingly induce, the submission of, any Alternative Proposal; provided, however, that an Oncor Entity may interact with its equityholders in order to satisfy its fiduciary obligations and its obligations pursuant to the LLC Agreements and the Investor Rights Agreement and may, in response to communications from (without otherwise limiting the provisions of this Section 4) any of its direct equityholders or any third party who makes or seeks to make an unsolicited Alternative Proposal, make available public and non-public information (but only if such equityholder or third party has executed a confidentially agreement with Oncor on terms no less favorable in the aggregate to the 

Oncor Entities than terms of the Confidentiality Agreement) so long as such Oncor Entity promptly provides or makes available to the Purchasers such non-public information made available to such equityholder or third party (to the extent it has not already been provided or made available to the Purchasers), (ii) enter into, maintain or continue negotiations with any Person with respect to, any Alternative Proposal, or (iii) enter into any written letter of intent, agreement in principle or other agreement (whether or not legally binding and whether or not oral or written) with respect to an Alternative Proposal.  In addition, during the Approval Period, Oncor Holdings and Oncor shall promptly advise Parent in writing of any Alternative Proposal, including, unless prohibited by applicable Law, the material terms and conditions of such Alternative Proposal (including any subsequent material modification to such material terms and conditions) and the identity of the Person making the same.  Unless prohibited by applicable Law, Oncor Holdings and Oncor shall keep Parent reasonably informed on a reasonably current basis of the status and material details (including material modifications) of any Alternative Proposal.  During the Approval Period, neither Oncor Holdings nor Oncor shall enter into any agreement with any Person which prohibits any Oncor Entity from providing information to the Purchasers that they are expressly entitled to receive from Oncor Holdings or Oncor in accordance with this Section 4(a); provided, that for all purposes of this Letter Agreement, the reasonable best efforts of Oncor Holdings and Oncor shall not include the expenditure of any fees or expenses or the undertaking of, or response to, any action, suit, claim, cause of action or other form of litigation.
(b)    As of the Approval Date, Oncor Holdings and Oncor represent that as of such date, they are not in negotiations with any Person with respect to any Alternative Proposal and that there is no agreement that would prevent Oncor Holdings or Oncor from complying with their respective obligations under Section 4(a).
(c)    Notwithstanding anything to the contrary contained in Section 4(a), any of Oncor Holdings and Oncor and their Subsidiaries may, but only upon the request of the Company or EFIH, (i) negotiate with stakeholders of the Debtors, facilitate and document the terms of a Permitted Alternative Proposal and (ii) enter into an agreement or agreements with the stakeholders of the Debtors regarding support for and/or financing of such Permitted Alternative Proposal; provided, however, that other than any required disclosure to the Purchasers hereunder, the Oncor Entities shall use reasonable best efforts (x) to keep confidential any solicitation, negotiation, facilitation, and documentation by the applicable Oncor Entities of a Permitted Alternative Proposal and (y) to enter into confidentiality agreements with any counterparty to any agreement regarding support for and/or financing of a Permitted Alternative Proposal, which confidentiality agreement provides that the existence and terms of such Alternative Proposal shall be kept confidential and shall not be publicly disclosed, except in each case to the extent required by applicable Law or pursuant to such confidentiality agreements (including any “cleansing” provisions set forth in such confidentiality agreements) as determined by the applicable Oncor Entities in their sole and absolute discretion.
(d)    Notwithstanding anything to the contrary contained in Section 4(c), such provisions shall not be construed to permit, and Oncor Holdings and Oncor and their Subsidiaries shall not, and shall cause their respective Representatives not to, make or support any filings with or submissions or inquiries to any Governmental Entity, including the PUCT, the FCC and the FERC, 

or make or support any public statements with respect to any Alternative Proposal or any Permitted Alternative Proposal at any time during the Approval Period; provided, however, that the Oncor Entities and their Representatives may (i) respond to requests, communications, or directives received from any Governmental Entity, whether in writing or otherwise, with respect to any Alternative Proposal or Permitted Alternative Proposal, and (ii) take such action as required, or reasonably requested without solicitation, by a Governmental Request or Order with respect to such Alternative Proposal or Permitted Alternative Proposal.  The Oncor Entities shall, unless otherwise prohibited by Law, provide prompt notice to the Purchasers of any requests, communications or directives received by them of the type described in clause (i) or (ii) above and keep the Purchasers reasonably informed on a reasonably prompt basis of material developments in connection therewith to the extent not prohibited by applicable Law or confidentiality agreements with third parties.
(e)    For purposes of this Letter Agreement:
(i)    “Alternative Proposal” means any inquiry, proposal, expression of interest or offer from or by a Person other than the Purchasers or their respective representatives (or, to the extent that Parent consents in writing to any Affiliate of the Purchasers being treated in the same manner as the Purchasers, any such Affiliate of the Purchasers) with respect to (i) a merger, acquisition, consolidation, dissolution, equity investment, liquidation, winding up, reorganization, tender offer, recapitalization, plan of reorganization or liquidation, joint venture, partnership, restructuring, asset purchase, share purchase, share exchange, business combination or similar transaction regarding the Company, EFIH, Oncor Holdings or Oncor or one or more of their Subsidiaries or any of their assets, properties or businesses, (ii) any other transaction in which any Person would acquire in any manner (A) any direct or indirect equity interests in Oncor Holdings or (B) any assets, properties or businesses of Oncor or Oncor Holdings or (iii) any other transaction that is inconsistent in any material respect with, or an alternative that prevents consummation of, the Purchase Transaction; provided that, notwithstanding anything herein to the contrary, in no event will the transactions contemplated by the Agreement and Plan of Merger, dated as of October 30, 2016, by and among Texas Transmission Holdings Corporation, Borealis Power Holdings Inc., BPC Health Corporation, Cheyne Walk Investment Pte Ltd, NextEra Energy, Inc. and WSS Acquisition Company be considered to be an “Alternative Proposal.”
(ii)    “Permitted Alternative Proposal” means any Alternative Proposal but with respect to which members of Oncor who hold at least a majority of the outstanding units representing limited liability company interests in Oncor have delivered to Oncor Holdings and Oncor (with a copy to Parent) a written notice (i) requesting that Oncor enter into, maintain or continue discussions or negotiations with one or more third parties and (ii) certifying that, in the case of a notice delivered by Oncor Holdings, the Company and EFIH are permitted to cause Oncor Holdings to deliver such request under the terms of the Merger Agreement.
Section 5.Filings; Other Actions; Notification.

(a)    Cooperation.
(i)    Subject to the terms and conditions set forth in this Letter Agreement, the Oncor Entities and Purchasers shall use their respective reasonable best efforts to cooperate and to take or cause to be taken all actions, and to do or cause to be done, all things reasonably requested by the Purchasers to negotiate, prepare and file as promptly as reasonably practicable all documentation to effect all necessary notices, reports and other filings and assist the Purchasers in obtaining as promptly as reasonably practicable all consents, registrations, approvals, permits and authorizations necessary to be obtained from any third party and/or any Governmental Entity in connection with the Purchase Transaction.
(ii)    Subject to the terms and conditions set forth in this Letter Agreement, including Section 5(a)(xi), and subject to approval of the application by the board of directors of Oncor, each party hereto shall use its reasonable best efforts to file with the FERC a joint application for the FERC Approval as promptly as reasonably practicable following the date hereof.  In furtherance of the foregoing, each party shall furnish to the other parties in a timely fashion, all documents, pleadings, testimony and other information sufficient for such application to be made.
(iii)    Subject to the terms and conditions set forth in this Letter Agreement, including Section 5(a)(xi), and subject to approval of the filing (including the content of the testimony to be filed by Oncor) by the board of directors of Oncor, each party hereto shall use its reasonable best efforts to submit to the PUCT a single filing (on behalf of the parties) in which the Purchasers will seek prior approval by the PUCT of the Purchase Transaction (the “PUCT Filing”) as promptly as reasonably practicable following the date hereof.  In furtherance of the foregoing, each party shall furnish to the other parties in a timely fashion, all documents, pleadings, testimony and other information sufficient for the PUCT Filing to be made.
(iv)    In connection with any PUCT Filing or application submitted to the FCC or FERC with respect to the Purchase Transaction (together, the “FCC/FERC Applications” and, together with the PUCT Filing, the “Applications”) or in any communications or proceedings whatsoever related thereto, Oncor Holdings and Oncor shall not be required to endorse, or cause any of their Subsidiaries to endorse, as their or their Subsidiaries’ own strategy or commitments, or take actions to support any modification of their or their Subsidiaries’ strategy and business plan that Oncor Holdings or Oncor, as applicable, determines in good faith that it would not support as being in the best interest of Oncor if the Purchase Transaction was not to be completed; provided, however, that nothing in this Section 5(a)(iv) shall affect any Oncor Entity’s obligation to include the Key Regulatory Terms in the Applications, subject to Section 5(a)(v) below.  Nothing contained in this Section 5(a)(iv) is intended to give any Purchaser, directly or indirectly, the right to control or direct any Oncor Entity’s operations or decisions.

(v)    Each of Oncor and Oncor Holdings agrees that (A) the Applications shall include the information concerning the Purchase Transaction, the Oncor Entities, and the Purchasers required by applicable Laws of the State of Texas and other applicable jurisdictions, (B) the Applications and any amendments or supplements thereto shall include the key terms and undertakings set forth in Exhibit B (the “Key Regulatory Terms”) and the jurisdictions relevant thereto and such additional agreements or commitments by the Purchasers as the Purchasers believe, after consultation with the Oncor Entities, are advisable to obtain the PUCT Approval, FERC Approval or FCC Approval, (C) it will cooperate with the efforts of the Purchasers to seek approval of the Key Regulatory Terms in the Applications subject to Section 5(a)(iv), (D) no Oncor Entity shall accept any agreements, commitments or conditions in connection with the Purchase Transaction pursuant to any settlement or other agreement with any Governmental Entity without the prior written consent of Parent and (E) prior to termination of this Letter Agreement, it will not withdraw any filing made by it in connection with the Purchase Transaction without the prior written consent of Parent, such consent to not be unreasonably withheld, conditioned or delayed.  
(vi)    Subject to the terms and conditions set forth in this Letter Agreement, each party hereto shall appear formally (including by providing testimony) or informally before any Governmental Entity if reasonably requested by the other parties hereto or required by such Governmental Entity in connection with any filings contemplated by this Letter Agreement.  
(vii)    Subject to applicable Law and clauses (c) and (e) of this Section 5 relating to the exchange of information and the protection of legal privilege, each of the parties hereto shall provide the other parties hereto a reasonable opportunity to review in advance and, to the extent practicable, each will consult with the other parties hereto on and consider in good faith the views and comments of the other parties hereto in connection with, all material information relating to the Oncor Entities that appears in any filing made with, or written materials or written testimony submitted to, or oral presentations or testimony made to any Governmental Entity in connection with the Purchase Transaction.  In exercising the foregoing rights and performing the foregoing obligations, each party hereto shall act reasonably, promptly and as reasonably practicable.
(viii)    Each party may, in its reasonable judgment and discretion, initiate or otherwise engage in discussions in respect of the Purchase Transaction with any party (or any representative of such party) to the PUCT proceeding related thereto.  If requested by a Governmental Entity or otherwise in response to any Governmental Request or Order, each party hereto may appear at any formal or informal meeting in regards to the Proposed Transactions.  Each party may, in its reasonable judgment and discretion, initiate or otherwise engage in discussions in respect of the Purchase Transaction with any Governmental Entity or any representatives thereof.  
(ix)    In connection with the Purchase Transaction, Oncor and Purchasers will be the primary advocates in the PUCT on Purchasers’ proposal to acquire Oncor.  Oncor and 

Purchasers will jointly lead the efforts to obtain PUCT Approval, subject to the terms of this Letter Agreement, and in good faith will cooperate to the extent practicable on:  (A) the scheduling and conducting of all formal meetings with all Governmental Entities and the staffs thereof, (B) the coordination, terms, commitments, requests, and making of the Applications (and any amendment or supplement thereto), subject to Sections 5(a)(iv) and (xi), and the process for obtaining any consents, registrations, approvals, permits and authorizations of any Governmental Entity, in each case, as may be necessary or advisable in connection with the Applications, filings and approvals contemplated by this Letter Agreement, and (C) the resolution of any investigation or other inquiry of any Governmental Entity (and the staffs thereof), including the PUCT, in each case, as may be necessary or advisable in connection with the Applications, filings and approvals contemplated by this Letter Agreement.  Prior to making any decisions pursuant to the preceding sentence, Parent shall consult in good faith with the Oncor Entities with respect to such decisions and consider in good faith the views of the Oncor Entities.
(x)    The Oncor Entities shall use their reasonable best efforts to cooperate with respect to Purchasers’ efforts to obtain the Supplemental Rulings (as defined in the Merger Agreement).
(xi)    Nothing in this Section 5(a) shall (A) prevent, limit or restrict an Oncor Entity or its Affiliates from interacting, communicating or making filings or applications with, or resolving any investigation or other inquiry of, any agency or other Governmental Entity in the ordinary course of business related to matters other than the Purchase Transaction, (B) prevent, limit or restrict an Oncor Entity or its Affiliates from responding to unsolicited inquiries related to the Purchase Transaction from any agency or other Governmental Entity or interacting with any such agency or other Governmental Entity in response to unsolicited communications related to the Purchase Transaction initiated by any such Person, or (C) require an Oncor Entity or any Representative of an Oncor Entity to take any action that would violate any applicable Law or rule of any Governmental Entity, provided, that each Oncor Entity will provide Parent with a reasonable advance opportunity to review and comment upon any written communication, filing or application related to the Applications and the Oncor Entities will consider in good faith the views of Parent in connection with all such written communications, filings or applications.  For avoidance of doubt Oncor shall prepare, present and have final approval over any testimony or presentations that will be proffered or given to any Governmental Entity by any Oncor officers, directors, employees or representatives and any responses to discovery, Oncor pleadings, any presentation of evidence, or other communications between any Oncor Entity and any Governmental Entity, including in connection with the filings referenced in clauses (ii) through (iv) above (except that such filings shall be prepared in accordance with and contain the provisions required by the applicable provisions of this Section 5).
(xii)    Notwithstanding anything herein to the contrary, if either the Merger Agreement and/or the Plan of Reorganization has been terminated, each of Oncor and Oncor Holdings may defer performance of its obligations under this Section 5(a) or may withdraw 

any application or filing previously made by Oncor.  Further, Oncor shall be entitled, following notice to and consultation with Parent, to withdraw any application or filing previously made by Oncor with any Governmental Entity pursuant to this Section 5 in order to comply with any requirement, or reasonable request without solicitation, in a Governmental Request or Order; provided that Oncor’s board of directors determines in good faith after consultation with its outside legal counsel, and based on advice of such counsel, that not withdrawing any such application or filing would be inconsistent with its fiduciary duties.
(b)    Information.  Subject to applicable Laws and Section 5(e), Oncor and Oncor Holdings, on the one hand, and Purchasers, on the other hand, shall, upon request by the other, furnish such party with all reasonably requested information concerning itself, its Subsidiaries, directors, officers and equityholders and such other matters as may be reasonably necessary or advisable in connection with any statement, filing, notice or application made by or on behalf of Purchasers, Oncor or Oncor Holdings or any of their respective Subsidiaries to or with any third party and/or any Governmental Entity in connection with the Purchase Transaction.
(c)    Status.  Subject to applicable Laws and Section 5(e), and the instructions of any Governmental Entity, each party hereto shall keep the other parties reasonably apprised of the status of the filings and applications made pursuant to this Section 5, including, upon reasonable request, promptly furnishing the other parties with copies of notices or other communications received by any party hereto from any Governmental Entity with respect to the Purchase Transaction.
(d)    Terms and Conditions.  Notwithstanding the obligations set forth in this Section 5, but subject to the other obligations set forth in this Letter Agreement, Parent and Merger Sub shall make all determinations with respect to any term or condition in connection with obtaining the FCC Approval, the FERC Approval and the PUCT Approval or any approval or consent of a Governmental Entity sought by the Purchasers in connection with the Purchase Transaction (whether arising due to a change in Law after the date of this Letter Agreement or otherwise).  In addition, each of Oncor Holdings and Oncor acknowledges and agrees that the Purchasers shall have the right to approve or disapprove of any settlement with respect to the FCC Approval, the FERC Approval, and the PUCT Approval.
(e)    Confidentiality.  Notwithstanding anything to the contrary contained therein, the terms of the Confidentiality Agreement shall survive the execution of this Agreement and shall expire upon the earliest to occur of (i) the Purchase Closing Date, and (ii) two (2) years from the date hereof. All information disclosed pursuant to this Section 5 shall be subject to the Confidentiality Agreement and nothing in this Section 5 shall require any party (i) to violate any of its binding obligations with respect to confidentiality, (ii) to disclose any privileged information or (iii) to fail to comply with any requirement, or reasonable request without solicitation, in a Governmental Request or Order; provided, that, as applicable, each party shall, to the extent permitted by applicable Law, provide notice to the requesting parties that any information is being withheld pursuant to this provision and such parties shall use their respective reasonable best efforts to find a mutually agreeable solution to any such confidentiality and/or privilege concerns, including, if applicable, by sharing privileged 

information as requested pursuant to a common interest agreement with respect to the Applications to be mutually agreed and executed between the applicable parties.
Section 6.Access and Reports.  Subject to applicable Law, upon reasonable notice, each of Oncor Holdings and Oncor shall, and each shall cause its respective Subsidiaries to, afford the officers and other representatives of Parent reasonable access, during normal business hours throughout the Approval Period, to its executive officers, properties, books, contracts and records and, during such period, each of Oncor Holdings and Oncor shall, and each shall cause its Subsidiaries to, furnish to Parent information in its control concerning its business, properties, facilities, operations and personnel as Parent reasonably requests, in each case solely to the extent reasonably necessary to effect the Purchase Transaction; provided that no investigation pursuant to this Section 6 shall (a) unreasonably interfere with the ongoing operations of any Oncor Entity or (b) affect or be deemed to modify any representation or warranty made by an Oncor Entity herein; and provided, further, that the foregoing shall not require any Oncor Entity to (i) permit any inspection, or to disclose any information, that in the reasonable judgment of such Oncor Entity would result in the disclosure of any trade secrets or other confidential information of third parties or violate any of its or any of its Subsidiaries’ obligations with respect to confidentiality if such Oncor Entity shall have used reasonable best efforts to furnish such information in a manner that does not result in any such disclosure or violation, including obtaining the consent of such third party to such inspection or disclosure, (ii) disclose any privileged information of the Oncor Entities if such Oncor Entity shall have used reasonable best efforts to furnish such information in a manner that does not result in the loss of such privilege (including, if applicable, by sharing privileged information as requested pursuant to a common interest agreement with respect to the Applications to be mutually agreed and executed between the applicable parties), (iii) permit any invasive environmental investigation or sampling, including a Phase II environmental assessment or (iv) require disclosure of information that it reasonably determines is competitively sensitive information, including detailed information with respect to transmission development projects, or relates to facilities and infrastructure security procedures.  All requests for information made pursuant to this Section 6 shall be directed to the individuals set forth in Exhibit C.  All such information shall be governed by the terms of the Confidentiality Agreement.
Section 7.Publicity.  The Oncor Entities and Purchasers shall consult with one another prior to issuing any press releases or making any other public announcements with respect to this Letter Agreement or any filings with the Securities and Exchange Commission or submissions to the Bankruptcy Court that specifically relate to this Letter Agreement; provided, however, that nothing herein shall restrict or otherwise limit any party from making any disclosures that such party determines is required by applicable Law.
Section 8.Employees and Employee Benefits.
(a)    During the period commencing at the effective time of the Merger (the “Effective Time”) and ending on the two-year (2) anniversary of the Effective Time (the “Continuation Period”), Purchasers and the Surviving Company and EFIH shall cause Oncor or Oncor Holdings to provide each individual who is an employee of Oncor prior to and as of the Effective Time (each, an “Oncor Employee”) with (i) a base salary or wage rate that is no less favorable than that provided to such Oncor Employee immediately prior to the Effective Time, (ii) aggregate incentive compensation opportunities that are substantially comparable, in the aggregate, to those provided to such Oncor 

Employee immediately prior to the Effective Time and (iii) employee benefits that are substantially comparable, in the aggregate, to those provided to such Oncor Employee immediately prior to the Effective Time.
(b)    During the Continuation Period, Oncor Holdings and Oncor shall not, and Purchasers and the Surviving Company and EFIH shall cause each of Oncor Holdings and Oncor not to, implement any material involuntary workforce reductions (with respect to either field or corporate personnel) of the Oncor Employees.
(c)    From and after the Effective Time, each of Oncor Holdings and Oncor shall, and Purchasers shall exercise all rights as a direct or indirect equityholder of Oncor Holdings and Oncor to cause Oncor Holdings and Oncor to, fully satisfy, fulfill and discharge any obligations to current and former Oncor Employees under the Assumed Plans; provided that, nothing herein shall prevent the amendment or termination of any such plans in accordance with their terms by Oncor Holdings and/or Oncor, and Oncor Holdings and Oncor shall each continue to have any rights, privileges or powers under the Assumed Plans.
(d)    Notwithstanding any other provision of this Section 8 with respect to any Oncor Employee immediately following the Effective Time whose terms and conditions of employment are covered by a collective bargaining agreement (“CBA”), the terms and conditions of such Oncor Employee’s employment shall be governed by the terms of the applicable CBA, as may be modified from time to time.
(e)    Each party hereto hereby acknowledges that, with respect to any employee listed on Exhibit D hereto, a “change in control” or “change of control” within the meaning of each Assumed Plan in which such employee is a participant or to which such employee is a party will occur as a result of the consummation of the Purchase Transaction.  For each employee listed on Exhibit D who chooses to retire from or terminate his or her service with the Oncor Entities in connection with the closing of the Purchase Transaction and so notified Purchaser within three (3) months following the Purchase Closing Date, Purchasers agree to pay any and all benefits (including change in control benefits) to which such individual would be entitled in connection with such retirement or termination, treating such retirement or termination as a resignation with “good reason,” a termination “without cause,” or a retirement under the relevant Assumed Plans.
(f)    In the event that any Oncor Employee becomes a participant in any employee benefit plan of Purchasers or its Subsidiaries, Purchasers shall use commercially reasonable efforts to cause any employee benefit plans in which such Oncor Employee is entitled to participate to take into account for purposes of eligibility and vesting thereunder, service of such Oncor Employees with Oncor Holdings or Oncor, as applicable, prior to the Effective Time as if such service were with Purchasers or its Subsidiaries to the extent provided in accordance with the terms of such employee benefit plans (except (i) with respect to any Oncor Employee who incurs a break in service after the Purchase Closing Date and is subsequently hired, such service will only be credited to the extent such service would have been credited and/or restored in accordance with the terms of a comparable benefit plan immediately prior to the Purchase Closing Date, or (ii) to the extent that it would result in (A) a duplication of benefits, (B) benefit accruals under any defined benefit pension plan (other 

than utilizing such years of service in order to satisfy any requirements for future benefit accrual only under any defined benefit pension plan), or (C) service accrual for any purpose under any post-retirement welfare benefit plan).
(g)    The provisions of this Section 8 are solely for the benefit of the parties to this Letter Agreement, and no Oncor Employee or former Oncor Employee or any other individual associated therewith shall be regarded for any purpose as a third party beneficiary of this Letter Agreement, and nothing herein shall (i) be construed as an amendment to any Benefit Plan for any purpose, (ii) give any Oncor Employee or former Oncor Employee or any other individual associated therewith or any employee benefit plan or trustee thereof or any other third party any right to enforce the provisions of this Section 8 or (iii) obligate the Surviving Company, EFIH, Oncor Holdings or Oncor or any of their respective Affiliates (A) to, subject to Section 8(a)(iii), and as provided in the Split Participant Agreement (as defined below), maintain any particular benefit plan, (B) to retain the employment of any particular employee or (C) to refrain from promoting or demoting any particular employee (or otherwise refrain from reassigning such employee to a new position).
Section 9.Split Participant Agreement.  Oncor shall not amend the Split Participant Agreement, dated October 3, 2016, by and between Oncor and Reorganized TCEH (the “Split Participant Agreement”) without the consent of Parent, such consent not to be unreasonably withheld, conditioned or delayed.
Section 10.Indemnification; Directors’ and Officers’ Insurance.
(a)    Nothing herein shall impair or restrict the ability of any Oncor Entity to honor and perform any of its indemnification obligations to any Representative under any Contract.
(b)    Effective as of the Effective Time, each of Oncor Holdings and Oncor shall, and the Surviving Company and EFIH shall exercise all rights as a direct or indirect equityholder of Oncor Holdings and Oncor to cause Oncor Holdings and Oncor to comply with (i) any indemnification agreement between any Indemnified Party and an Oncor Entity and (ii) the indemnification obligations and exculpation provisions in the LLC Agreements as in effect as of the date hereof.
(c)    Nothing contained in this Letter Agreement shall be construed to prohibit the Oncor Entities from obtaining, with the approval of their respective boards of directors, and fully paying the premium for the extension of (i) the directors’ and officers’ liability coverage of the Oncor Entities’ existing directors’, managers’ and officers’ insurance policies, and (ii) Oncor’s existing fiduciary liability insurance policies, in each case for a claims reporting or discovery period of at least six (6) years from and after the Purchase Closing Date with respect to any claim related to any period of time at or prior to the Purchase Closing Date, which policies may be issued by an insurance carrier selected by the Oncor Entities and may contain terms, conditions, retentions and limits of liability that are acceptable to the Oncor Entities in their sole discretion with respect to any actual or alleged error, misstatement, misleading statement, act, omission, neglect, breach of duty or any matter claimed against a director or officer of any of the Oncor Entities by reason of him or her serving in such capacity that existed or occurred at or prior to the Purchase Closing Date (including in connection with this Letter Agreement or the transactions or actions contemplated hereby); 

provided, that, the premiums for the extension of such insurance policies shall not exceed 250% of the annual premiums currently paid by the Oncor Entities for such insurance policies.
(d)    If, within six (6) years of the Purchase Closing Date, the Surviving Company, EFIH or any of their successors or assigns shall (i) consolidate with or merge into any other corporation or entity and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfer all or substantially all of its properties and assets to any individual, corporation or other entity, then, and in each such case, the Surviving Company, EFIH or their successors or assigns shall make, to the extent not provided for under applicable Law, proper provisions so that the successors and assigns of the Surviving Company or EFIH, as the case may be, assume all of the obligations of the Surviving Company or EFIH set forth in this Section 10.
(e)    The provisions of this Section 10 are intended to be for the benefit of, and shall be enforceable by, each of the Indemnified Parties.
(f)    The rights of the Indemnified Parties under this Section 10 shall be in addition to any rights such Indemnified Parties may have under the certificate of formation, operating agreement or comparable governing documents of any Oncor Entity, or under any applicable Contracts or Laws.  All rights to indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Purchase Closing Date and rights to advancement of expenses relating thereto now existing in favor of any Indemnified Party as provided in the certificate of formation, operating agreement or comparable governing documents of any Oncor Entity or the Company or any existing indemnification agreement between such Indemnified Party and any of the foregoing shall not be amended, repealed or otherwise modified in any manner that would adversely affect any right thereunder of any such Indemnified Party with respect to any acts or omissions occurring at or prior to the Purchase Closing Date.
(g)    To the extent that any Indemnified Parties are entitled to indemnification under both this Letter Agreement and any other contract, agreement or instrument (including the certificate of formation, operating agreement or comparable governing documents of any Oncor Entity or the Company or any indemnification agreement between such Indemnified Party and any of the foregoing) in respect of any services performed by such Indemnified Party as a director, manager, or officer of any of the Oncor Entities, the fact that any such contract, agreement or instrument also provides for indemnification of such Indemnified Parties shall not (i) be construed to diminish or otherwise limit any right or remedy granted to such Indemnified Parties hereunder or (ii) require that any other sources of indemnification or available insurance be primary over the indemnification obligations set forth in this Letter Agreement, any indemnification agreement previously entered with the Indemnified Parties or in the organizational documents of any Oncor Entity.
Section 11.Notice of Current Events.
(a)    At all times during the Interim Period, each of the parties hereto shall notify the other parties hereto orally and in writing upon:  (i) receipt of any written communication from any Person that is a party to an Oncor Material Contract alleging that the consent of such Person (or another Person) is required in connection with the Purchase Transaction; (ii) becoming aware of any 

occurrence, or non-occurrence, of any event that, individually or in the aggregate, would cause any of the representations or warranties of such party or parties contained in this Letter Agreement to be untrue or inaccurate in any material respect; or (iii) becoming aware of any failure of any such party to comply with or satisfy, in any material respect, any covenant, condition or agreement to be complied with or satisfied by it pursuant to this Letter Agreement.
(b)    Parent shall notify Oncor Holdings and Oncor in writing as promptly as practicable (but in no event later than twenty-four (24) hours) after the termination of the Merger Agreement and/or the Plan of Reorganization by any party thereto.
Section 12.Financing.
(a)    During the Approval Period, Oncor Holdings and Oncor each agree to use reasonable best efforts to timely provide, and to use reasonable best efforts to cause their Subsidiaries and their respective Representatives to timely provide, reasonable cooperation in connection with Parent’s arrangement of any debt or equity issuance contemplated by the Merger Agreement or the Plan of Reorganization (each, a “Financing”) (provided that, Parent shall use reasonable best efforts to provide Oncor Holdings and Oncor with notice of any information needed by Parent as soon as reasonably practicable).  Oncor Holdings’ and Oncor’s cooperation shall be limited to the following:  (i) participation by appropriate members of senior management of the Oncor Entities, which participation will be limited to providing Oncor financial and operational information in a reasonable number of meetings, presentations, road shows, due diligence sessions, and sessions with prospective lenders, investors and rating agencies, in each case, at mutually agreeable times and locations and upon reasonable notice; (ii) providing information in its control to Purchasers that is necessary for Purchasers to prepare materials for rating agencies and rating agency presentations, offering documents, private placement memoranda, bank information memoranda, prospectuses and similar documents required in connection with any such Financing, together with procuring customary authorization letters authorizing the distribution of Oncor information to prospective lenders or investors (which customary authorization letters shall be required notwithstanding the reasonable best efforts standard required of Oncor Holdings and Oncor above); (iii) furnishing (A) all information and data reasonably requested by Parent to prepare all pro forma financial statements required to be prepared or are otherwise customary in connection with any Financing registered on Form S-1, Form S-4 or other available Form (as applicable) and (B) all financial statements and financial data of the type and form required to be prepared in accordance with Regulation S-X and Regulation S-K under the Securities Act for offerings of the debt and/or equity securities (as the case may be) contemplated in the respective Financings registered on Form S-1, Form S-4 or other available Form (as applicable) under the Securities Act, including all information required to be incorporated therein, provided, that, if no registration statement is required to be filed for each of the Financings, for each such Financing, financial statements and financial data shall be furnished to the extent customary to consummate the Financing (subject to exceptions customary for a private Rule 144A offering) and, for the avoidance of doubt, would not require financial information otherwise required by Rule 3-10 and Rule 3-16 of Regulation S-X or “segment reporting” and any Compensation Discussion and Analysis or executive compensation information required by Item 402 of Regulation S-K; (iv) using reasonable best efforts to assist Parent and the lenders and investors 

for such Financing or their respective Affiliates in obtaining corporate, facilities and securities ratings, as applicable, in connection with the Financing prior to the launch of the Financing; (v) providing information in its control that is necessary for the preparation of customary schedules and exhibits in connection with the Financing; (vi) furnishing Parent and the lenders and investors for such Financing or their respective Affiliates promptly, and in any event no later than three (3) Business Days prior to an Early Financing Date (as defined in the Merger Agreement) or the Purchase Closing Date, as applicable, with all documentation and other information which any lender or investor providing or arranging the Financing has reasonably requested, including under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the PATRIOT Act, in each case to the extent such request is made at least ten (10) Business Days prior to the Early Financing Date or the Purchase Closing Date, as applicable; (vii) providing customary management representation letters to the independent accountants and causing Oncor’s independent auditors to cooperate in connection with the Financing (including providing accountants’ comfort letters and consents to use their audit reports from Oncor’s independent auditors to the extent required in connection with such Financing); and (viii) otherwise cooperating with the reasonable requests of Parent to satisfy any express conditions precedent to the Financing that require Oncor information, provided that with respect to the foregoing clauses (i)-(viii), (A) no Oncor Entity shall be required to endorse any particular strategy or structure, (B) the Purchasers shall be responsible for any projections, (C) such requested cooperation shall not unreasonably interfere with the ongoing operations of any Oncor Entity, (D) no Oncor Entity shall be required to pay any commitment or other similar fee or incur any other liability or obligation in connection with the Financing, (E) other than customary authorization letters, no Oncor Entity or any of their respective officers, directors, or employees shall be required to execute or enter into or perform any agreement with respect to the Financing that is not contingent upon the consummation of the Merger or that would be effective prior to the Purchase Closing Date, (F) no Persons who are on the board of directors or the board of managers (or similar governing body) of any Oncor Entity prior to the Purchase Closing Date in their capacity as such shall be required to pass resolutions or consents to approve or authorize the execution of the Financing, and (G) no Oncor Entity or any of their respective officers, directors, or employees shall be required to execute any solvency certificate in connection with the Financing.  Nothing contained in this Section 12 or otherwise shall require any Oncor Entity to be an issuer or other obligor with respect to the Financing nor to assume any liability whatsoever for such Financing.
(b)    During the Approval Period, it is understood that Parent may seek to market and consummate all or a portion of the Financing.  In this regard, and for the avoidance of doubt, Oncor Holdings and Oncor acknowledge that their cooperation obligations set forth in Section 12(a) include the obligation to use their reasonable best efforts to cooperate with any such efforts, provided such cooperation obligations are limited to those set forth in Section 12(a).
(c)    Notwithstanding anything herein to the contrary, none of the Oncor Entities or their respective Representatives shall be required to take any action that would subject such Person to actual or potential liability, to bear any cost or expense or to pay any commitment or other similar fee or make any other payment or incur any other liability or provide or agree to provide any indemnity in connection with the Financing or their performance of their respective obligations under this 

Section 12 or any information utilized in connection therewith.  Parent shall indemnify and hold harmless the Oncor Entities and their respective Representatives from and against any and all Costs suffered or incurred by them in connection with the arrangement of the Financing and the performance of their respective obligations under this Section 12 and any information utilized in connection therewith (other than Costs arising from any untrue statement of a material fact in information provided by any Oncor Entity or any omission of a material fact required to be stated in such information or necessary in order to make such information not misleading).  Parent shall, promptly upon request of Oncor Holdings or Oncor, reimburse any Oncor Entity for all reasonable and documented out-of-pocket costs and expenses incurred by such Oncor Entity (including those of its Representatives) in connection with the cooperation required by this Section 12.  Each of Oncor Holdings and Oncor hereby consents to the use of the logos of the Oncor Entities in connection with the Financing; provided that such logos are used solely in a manner that is not intended to or reasonably likely to harm or disparage any Oncor Entity or the reputation or goodwill of any Oncor Entity.
Section 13.Headquarters.  From and after the Purchase Closing Date, Purchasers shall cause the Oncor Entities to maintain their headquarters in Dallas, Texas.
Section 14.Implementation of Key Regulatory Terms.  Each of Oncor Holdings and Oncor agree, subject to Bankruptcy Court Approval and PUCT Approval, to take all actions necessary or appropriate to effect changes to the LLC Agreements of Oncor Holdings and Oncor that are required or permitted to be requested or implemented by Purchasers, with such changes to be effective at the Effective Time to the extent consistent with the PUCT Approval.
Section 15.Miscellaneous.
(a)    Survival.  This Section 15 and the covenants and agreements of the parties hereto contained in Section 8 (Employees and Employee Benefits), Section 10 (Indemnification; Directors’ and Officers’ Insurance), Section 12(c) (Financing) and Section 13 (Headquarters) and the Confidentiality Agreement shall survive the consummation of the Purchase Transaction.  This Section 15 and the covenants and agreements of the parties hereto contained in Section 12(c) (Financing) and the Confidentiality Agreement shall survive the termination of this Letter Agreement.  Subject to the foregoing, all other representations, warranties, covenants and agreements in this Letter Agreement shall not survive the consummation of the Merger.
(b)    Modification or Amendment.  Subject to the provisions of the applicable Laws, at any time prior to the Purchase Closing Date, the parties hereto may only modify or amend this Letter Agreement by written agreement executed and delivered by duly authorized officers of the respective parties.
(c)    Counterparts.  This Letter Agreement may be executed in any number of counterparts (including by electronic means), each such counterpart being deemed to be an original instrument, and all such counterparts taken together constituting one and the same agreement.

(d)    GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(i)    THIS LETTER AGREEMENT, TOGETHER WITH ANY CLAIM, DISPUTE, REMEDY OR LEGAL PROCEEDING ARISING FROM OR RELATING TO THIS LETTER AGREEMENT OR ANY RELIEF OR REMEDIES SOUGHT BY ANY PARTY HERETO, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED, PERFORMED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.  Each of the parties hereto (A) submits to the exclusive jurisdiction of any state or federal court sitting in Dallas County, Texas in any action or proceeding arising out of or relating to this Letter Agreement, (B) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court and (C) agrees not to bring any action or proceeding arising out of or relating to this Letter Agreement (whether on the basis of a claim sounding in contract, equity, tort or otherwise) in any other court.  Each of the parties hereto agrees that a final judgment (subject to any appeals therefrom) in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.  Each of the parties hereto 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 suit, action or proceeding arising out of or relating to this Letter Agreement or the Purchase Transaction in any court specified in accordance with the provisions of this Section 15(d)(i).  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.  Each of the parties hereto hereby irrevocably and unconditionally consents to service of process in the manner provided for notices in Section 15(e).  Nothing in this Letter Agreement will affect the right of any party to this Letter Agreement to serve process in any other manner permitted by Law.
(ii)    EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS LETTER AGREEMENT.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (W) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (X) EACH PARTY UNDERSTANDS AND HAS CONSIDERED 

THE IMPLICATIONS OF THIS WAIVER, (Y) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (Z) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 15(d)(ii).
(e)    Notices.  Any notice, request, instruction or other document to be given hereunder by any party to the others shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, by email or overnight courier:
If to Oncor Holdings or Oncor:
Oncor Electric Delivery Holdings Company LLC 
1616 Woodall Rodgers Freeway 
Dallas, Texas 75202
Attention:    E. Allen Nye, Jr. 
    Kevin R. Fease 
    Michael L. Davitt
Email:    allen.nye@oncor.com 
    kevin.fease@oncor.com  
    michael.davitt@oncor.com

with copies (which shall not constitute notice) to:
Jones Day 
222 East 41st Street 
New York, New York 10017
Attention:    Corinne Ball
Email:    cball@jonesday.com

and

PatVillarealLaw PLLC
25 Highland Park Village, Suite 100869
Dallas, Texas 75205
Attention: Patricia J. Villareal
Email:    pat@patvillareallaw.com

If to Purchasers:
Sempra Energy 
488 8th Avenue
San Diego, California 92101
Attention:    General Counsel
Email:     MWyrsch@sempra.com
with copies (which shall not constitute notice) to:

White & Case LLP 
Southeast Financial Center
200 South Biscayne Boulevard, Suite 4900 
Miami, Florida 33131
Attention:    Thomas E Lauria
Email:     tlauria@whitecase.com

And

White & Case LLP 
1221 Avenue of the Americas 
New York, NY 10020
Attention:    Gregory Pryor and Michael A. Deyong
Email:    gpryor@whitecase.com;  
    michael.deyong@whitecase.com 

or to such other Persons or addresses as may be designated in writing by the party to receive such notice as provided above.  Any notice, request, instruction or other document given as provided above shall be deemed given to the receiving party upon actual receipt, if delivered personally; three (3) Business Days after deposit in the mail, if sent by registered or certified mail; upon receipt if sent by email and received by 5:00 pm (Eastern Time), on a Business Day (otherwise the next Business Day) (provided that if given by email such notice, request, instruction or other document shall be followed up within one (1) Business Day by dispatch pursuant to one of the other methods described herein); or on the next Business Day after deposit with an overnight courier, if sent by an overnight courier.
(f)    Termination.  Notwithstanding anything to the contrary herein, this Letter Agreement may be terminated at any time prior to the Purchase Closing Date, (i) by mutual written consent of the parties hereto, (ii) automatically, and without any action of any of the parties hereto, upon (A) any valid termination of the Merger Agreement by any party thereto or (B) the withdrawal of the Plan of Reorganization or any event that renders the Plan of Reorganization or an order approving the Plan of Reorganization null or void, (iii) by Oncor Holdings, if the board of directors of Oncor Holdings determines in good faith after consultation with its outside legal counsel, and based on the advice of such counsel, that proceeding with this Letter Agreement would be inconsistent with its applicable fiduciary duties or (iv) by Oncor, if the board of directors of Oncor determines in good faith after consultation with its outside legal counsel, and based on the advice of such counsel, that proceeding with this Letter Agreement would be inconsistent with its applicable fiduciary duties.
(g)    Entire Agreement.  This Letter Agreement and the Confidentiality Agreement embody the entire agreement and understanding of the parties in respect of the subject matter contained herein and supersede all prior agreements and understandings between the parties with respect to such subject matter, and reflect all contractual obligations or commitments with Parent 

and Merger Sub.  The parties hereby further represent that, in entering into this Letter Agreement (i) they have been represented and advised by counsel in connection with this Letter Agreement, which they have entered into voluntarily and of their own choice, and not under coercion or duress; (ii) they are relying upon their own knowledge and the advice of counsel; (iii) they knowingly waive any claim that this Letter Agreement was induced by any misrepresentation or nondisclosure which could have been or was discovered before signing this Letter Agreement; and (iv) they knowingly waive any right to rescind or avoid this Letter Agreement based upon presently existing facts, known or unknown.
(h)    Severability.  The provisions of this Letter Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.  If any provision of this Letter Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (i) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (ii) the remainder of this Letter Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
(i)    Assignment.  This Letter Agreement shall not be assignable by operation of law or otherwise without the written consent of the non-assigning parties hereto.  Any purported assignment in violation of this Letter Agreement is void.
(j)    No Third Party Beneficiaries.  Except as provided in Section 10 (Indemnification; Directors’ and Officers’ Insurance), Section 12(c) (Financing), Section 15(k) (Specific Performance; Limitation of Damages) and Section 15(m) (No Recourse), Purchasers, Oncor Holdings and Oncor hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other parties hereto, in accordance with and subject to the terms of this Letter Agreement, and this Letter Agreement is not intended to, and does not, confer upon any Person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the covenants set forth herein.  Without limiting the generality of the foregoing, the Company and EFIH shall not have any right to rely on or enforce any of the representations, warranties, covenants or agreements set forth herein.
(k)    Specific Performance; Limitation of Damages.  The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Letter Agreement were not performed in accordance with their specific terms or were otherwise breached.  Accordingly, each of the parties shall be entitled to specific performance and injunctive relief (but not any other form of equitable relief) to prevent or remedy breaches of this Letter Agreement, without the proof of irreparable damage or any actual damages or losses whatsoever.  Without limiting the foregoing, the parties hereto agree that a party hereto may not assert that another party to this Letter Agreement is in breach of this Letter Agreement unless such non-breaching party provides the purported breaching party with written notice of such allegation within five (5) Business Days of the non-breaching party or its Affiliates first becoming aware of such purported breach.  Prior to the non-

breaching party seeking an injunction pursuant to this Section 15(k), the purported breaching party shall have five (5) Business Days after receiving such notice to cure any such breach.  Within that five (5) Business Day period, the parties to this Letter Agreement also agree that senior management level designees of each party shall meet and confer in an attempt to resolve any claim of a breach.  Each party irrevocably agrees to waive any requirement for the security or posting of any bond in connection with such specific performance or injunctive relief.  Regardless of any other provision in this Letter Agreement, the Merger Agreement, and/or any related transaction, the parties specifically agree that neither Oncor, Oncor Holdings, or their Representatives, nor Purchasers shall be held liable in any event for monetary damages hereunder; provided that Purchasers agree that they may be held liable for monetary damages for a breach of their obligations under Section 10 and Section 12.  Each party also agrees that in the event that any Purchaser asserts any claim against any Oncor Entity or its Representatives based upon or reflecting in any manner any provisions of the Merger Agreement and/or related documents, such claim, if any will be subject to and limited by this Section 15(k).  Notwithstanding anything to the contrary in this Letter Agreement, in no event shall any party hereto or their Representatives be liable to any other party hereunder for any punitive, incidental, consequential, special or indirect damages, including loss of future revenue or income or opportunity, relating to the breach or alleged breach of this Letter Agreement.
(l)    Interpretation; Construction.  The headings herein are for convenience of reference only, do not constitute part of this Letter Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof.  Where a reference in this Letter Agreement is made to a section or exhibit, such reference shall be to a section of or exhibit to this Letter Agreement unless otherwise indicated.  Whenever the words “include,” “includes” or “including” are used in this Letter Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “hereto,” “hereby,” “herein” and “hereunder” and words of similar import when used in this Letter Agreement shall refer to this Letter Agreement as a whole and not any particular provision of this Letter Agreement.  The words “will” and “shall” have the same meaning.  The parties have participated jointly in negotiating and drafting this Letter Agreement.  In the event that an ambiguity or a question of intent or interpretation arises, this Letter Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Letter Agreement.
(m)    No Recourse.  Notwithstanding any other provision of this Letter Agreement, this Letter Agreement may only be enforced against, and any claim or cause of action based upon, arising out of or related to this Letter Agreement may only be brought against, the parties hereto and then only with respect to the specific obligations set forth herein with respect to such party.  Except as expressly set forth herein, none of the Affiliates of the Company, EFIH, Purchasers, Oncor or Oncor Holdings, nor any of their respective Representatives shall have any liability under this Letter Agreement.
(n)    Effectiveness.  The obligations, covenants and representations of Oncor and Oncor Holdings hereunder will not be effective unless and until the Approval Date has occurred, with the exception of the obligations undertaken in (i) Section 2 (Representations and Warranties), (ii) Section 3 (Interim Operations), (iii) Section 5 (Filings; Other Actions; Notification), (iv) Section 11 (Notice 

of Current Events) and (v) Section 15 (Miscellaneous) which will be effective as of the signing of this Letter Agreement.
[Signature Page Follows]

If the parties are in agreement with the terms of this Letter Agreement, please execute one copy of this Letter Agreement in the space provided below and return it to the undersigned, whereupon this Letter Agreement will represent the binding agreement of the parties hereto.
Very Truly yours,
ONCOR ELECTRIC DELIVERY HOLDINGS 
COMPANY LLC
By:     /s/ Robert S. Shapard             
Name:    Robert S. Shapard 
Title:    CEO
ONCOR ELECTRIC DELIVERY COMPANY LLC
By:     /s/ Robert S. Shapard             
Name:    Robert S. Shapard 
Title:    CEO

AGREED TO AND ACCEPTED 
as of the date first set forth above:
SEMPRA ENERGY
By:     /s/ J. Walker Martin             
Name:   J. Walker Martin 
Title:     Executive Vice President and Chief Financial Officer
POWER PLAY MERGER SUB I, INC.
By:     /s/ Kathryn J. Collier             
Name:    Kathryn J. Collier 
Title:    Vice President and Treasurer

Exhibit A 
 
Definitions
Capitalized terms used in this Letter Agreement without definition shall have the following respective meanings:
“2007 Separation Agreement” means the Separation Agreement, dated October 10, 2007, by and between TXU Corp. and Oncor Holdings.
“Affiliate” means, with respect to any Person, any other Person, directly or indirectly, controlling, controlled by, or under common control with, such Person.
“Bankruptcy and Equity Exception” means the bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
“Benefit Plan” means all material benefit and compensation plans, programs, policies or arrangements covering Oncor Employees, including “employee benefit plans” within the meaning of Section 3(3) of ERISA and deferred compensation, change in control, severance, stock option, stock purchase, stock appreciation rights, stock based, incentive and bonus plans, agreements, employment agreements (but only such employment agreements that would reasonably be expected to provide for annual compensation of $100,000 or more), programs, policies or arrangements sponsored, contributed to, or entered into by Oncor Holdings or Oncor or their Subsidiaries.
“Business Day” means any day ending at 11:59 p.m. (Eastern Time) other than a Saturday or Sunday or a day on which banks are required or authorized to close in New York, New York.
“Chapter 11 Cases” means the voluntary cases of the Debtors under chapter 11 of title 11 of the United States Code, 11 U.S.C. § 101 et seq. in the Bankruptcy Court.
“Confidentiality Agreement” means the confidentiality agreement, dated as of August 3, 2017, between Parent and Oncor, as the same may be amended or modified from time to time.
“Contract” means an agreement, lease, license, franchise, contract, note, mortgage, indenture, credit agreement, arrangement or other obligation.
“control” (including the correlative terms “controlling”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Costs” means any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities.

“Debtors” means, collectively, the Company, EFIH and certain entities in which the Company, directly or indirectly, holds an equity interest, that commenced voluntary cases under chapter 11 of title 11 of the United States Code, 11 U.S.C. § 101 et seq.
“Environment” means any and all ambient air, indoor air, surface water and groundwater (including navigable water and wetlands), the land surface or subsurface strata or sediment and flora and fauna.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“FCC Approval” means the consent of the Federal Communications Commission for the assignment and/or transfer of control as applicable, of radio licenses, including point-to-point private microwave licenses held by the Company and/or its Subsidiaries.
“FERC” means the Federal Energy Regulatory Commission.
“FERC Approval” means an order issued by FERC approving the transactions contemplated hereby under section 203 of the Federal Power Act and the FERC’s regulations thereunder.
“Governmental Entity” means any federal, state or local, domestic or foreign governmental or regulatory authority, agency, commission, body, arbitrator, court, regional reliability entity (including the Texas Reliability Entity, Inc.), Electric Reliability Council of Texas, Inc. or any other legislative, executive or judicial governmental entity, excluding in each case, the Bankruptcy Court.
“Governmental Request or Order” means any formal or informal request, action, Law, directive or order (whether temporary, preliminary or permanent), whether written or not, made, enacted, issued, promulgated, enforced or entered by any court, other Governmental Entity of competent jurisdiction, or governmental authority, including without limitation the PUCT, ERCOT, FERC, the Texas Reliability Entity, the Office of the Attorney General of Texas, or any representative thereof.
“Indemnified Parties” means directors, managers and officers of the Oncor Entities.
“Investor Rights Agreement” means the Investor Rights Agreement, dated as of November 5, 2008, among Oncor and certain of its direct and indirect equityholders.
“Knowledge” means, when used with respect to Oncor Holdings and Oncor, the actual knowledge after reasonable inquiry of Robert S. Shapard, David M. Davis, Allen Nye, James A. Greer, Walter Mark Carpenter and Deborah L. Dennis.
“Law” means any federal, state, local or foreign law, statute or ordinance, common law, or any rule, regulation, legally binding standard, judgment, order, writ, injunction, decree, arbitration award, agency requirement or License of any Governmental Entity.
“License” means all permits, certifications, approvals, registrations, clearances, consents, authorizations, franchises, variances, exemptions and orders issued or granted by a Governmental Entity.

“Lien” means any lien, charge, pledge, security interest, claim or other encumbrance.
“Merger” shall mean the merger of Merger Sub with and into the Company with the Company surviving as an indirect Subsidiary of Parent.
“Oncor Material Contract” means any Contract, other than a Benefit Plan, that (A) would be required to be filed by Oncor as a “material contract” as such term is defined in item 601(b)(10) of Regulation S-K of the Securities Act.
“Person” means any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Entity or other entity of any kind or nature.
“PUCT” means the Public Utility Commission of Texas.
“PUCT Approval” means the PUCT’s approval, as applicable, of the transactions contemplated by the Merger Agreement pursuant to authority asserted by the PUCT pursuant to the Public Utility Regulatory Act and the PUCT’s regulations thereunder.
 “Reorganized TCEH” means a new Subsidiary of TCEH formed by TCEH pursuant to the Plan of Reorganization.
“Securities Act” means the Securities Act of 1933, as amended.
“Subsidiary” means, with respect to any Person, any other Person of which at least a majority of the securities or other ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions, is directly or indirectly owned or controlled by such Person and/or by one or more of its Subsidiaries.
“Surviving Company” shall mean the surviving company in the Merger.
“Termination Date” means the date on which the Merger Agreement is validly terminated in accordance with its terms.

Exhibit B 
Key Regulatory Terms 
BOARD
		
	1.
	Separate Board Commitment. At closing and thereafter, Oncor Electric Delivery Company LLC (“Oncor”) will have a separate board of directors. If, at closing or thereafter, Sempra Energy (“Parent”) has competitive affiliates in Texas, the Oncor board of directors will not include any employees of Parent competitive affiliates in Texas, any members from the boards of directors of Parent’s competitive affiliates in Texas, or any individuals with direct responsibility for the management or strategies of such competitive affiliates.

		
	2.
	Independent Board Commitment.  Oncor will have a board of directors comprised of at least thirteen (13) directors. Oncor Electric Delivery Holdings Company LLC (“Oncor Holdings”) will have a board of directors comprised of at least ten (10) directors.  A majority of the Oncor Holdings’ board members and Oncor’s board members will qualify as “independent” in all material respects in accordance with the rules and regulations of the New York Stock Exchange (“NYSE”) (which are set forth in Section 303A of the NYSE Listed Company Manual), from Parent and its subsidiaries.  To the extent Parent has any competitive affiliates in Texas, Oncor Holdings’ and Oncor’s boards of directors would not include any employees of Parent’s competitive affiliates in Texas or any members from the boards of directors of Parent’s competitive affiliates in Texas. 

		
	a.
	The Oncor Board shall have seven (7) Independent/Disinterested Directors, two (2) directors who will be officers of Oncor designated by Oncor Holdings only at the direction of Energy Future Intermediate Holding Company LLC (“EFIH”), two (2) directors who will be designated by Oncor Holdings only at the direction of EFIH, and two (2) directors who will be designated by the Minority Members (as that term is defined in the Oncor LLC Agreement) in accordance with the existing terms of the Oncor LLC Agreement. Any Oncor directors designated by EFIH are referred to as “EFIH Directors.”

		
	b.
	The Oncor Holdings Board shall have six (6) Independent/Disinterested Directors, two (2) directors who will be officers of Oncor Holdings designated by EFIH, and two (2) directors who will be designated by EFIH. 

		
	c.
	The duties of the Board members of Oncor Holdings and Oncor will be to act in the best interests of Oncor consistent with the approved ring-fence and Delaware Law.

		
	3.
	Independence of Board Commitment.  Oncor Holdings’ and Oncor’s Boards cannot be overruled by the board of Parent or any of its subsidiaries on dividend policy, debt issuance, capital expenditures, management and service fees, and appointment or removal of board members, provided that such actions may also require the additional approval of Oncor Holdings’ Board.  

		
	a.
	The appointment or removal of the Chief Executive Officer or the Chief Financial Officer of Oncor shall require a majority vote of Oncor board of directors, which vote must include the unanimous vote of the EFIH Directors.

		
	b.
	Neither Oncor Holdings nor Oncor nor any of their subsidiaries may without the prior written consent of Parent:  (1) enter into or authorize any material transactions with a third party outside ordinary course of business nor enter into any contract, or other similar agreement to effectuate such material transactions; or (2) institute an Oncor bankruptcy filing.

		
	c.
	Only the Oncor Holdings Nominating Committee can replace or remove any of the Independent/Disinterested Directors on the Oncor or Oncor Holdings Boards.  If the Oncor Holdings Nominating Committee is required to fill a vacancy of an Independent Director on either the Oncor Holdings or Oncor Boards, the Nominating Committee will nominate a new director who is Disinterested.  “Disinterested Directors” must:  (1) be independent from Parent and its subsidiaries and affiliated entities in all material respects in accordance with the rules and regulations of the NYSE; and (2) have no material relationship with Parent or its subsidiaries or affiliated entities currently or within the previous ten years.  Former officers of Oncor who otherwise meet these qualifications qualify as “Disinterested Directors.”

		
	d.
	The Independent/Disinterested Directors may make recommendations to the Oncor Holdings Nominating Committee for any new Disinterested Directors.  The Oncor Holdings Nominating Committee will always have a majority of Independent/Disinterested Directors. The appointment of new disinterested directors to either the Oncor Holdings or Oncor Boards shall be subject to the approval by a majority vote of Independent/Disinterested Directors.

		
	e.
	A majority vote of the Independent and/or Disinterested Directors must approve an annual budget if the aggregate amount of such capital and operating and maintenance expenditures in such annual budget is more than a 10% decrease from the capital and operating and maintenance budget for the immediately prior fiscal year.

		
	f.
	The Independent and/or Disinterested Directors have the right to approve any amendments or changes to the key provisions of LLC Agreements relating to:  (1) the Independent Board; (2) the rights and powers of Independent/Disinterested Directors; (3) removal of Directors; and (4) Delaware as controlling law.  Changes to the key provisions of the LLC Agreements shall be subject to Commission approval.  

DIVIDENDS
		
	4.
	Oncor Board’s Right to Determine Dividends Commitment.  The Oncor Board, comprised of a majority of Independent/Disinterested Directors, will have the sole right to determine dividends. 

		
	a.
	Any amendments or changes to the Dividend Policy have to be approved by a majority vote of the Independent/Disinterested Directors.

		
	b.
	The Independent/Disinterested Directors, acting by majority vote, shall have the authority to prevent Oncor or Oncor Holdings from making any dividend if they determine that it is in the best interest of Oncor to retain such amounts to meet expected future requirements of Oncor (including continuing compliance with the debt-to-equity ratio described in Section 10).

		
	5.
	Oncor Credit Ratings and Dividends Commitment.  To eliminate concerns regarding a negative impact on Oncor resulting from Parent’s acquisition of Oncor, and in lieu of providing specifics regarding acquisition funding, Parent commits to the following:

		
	a.
	Parent will ensure that, as of the closing of the transaction, Oncor’s credit ratings at all three major ratings agencies (Standard & Poor’s, Moody’s Investor Service, or Fitch Ratings) will be at or above Oncor’s credit ratings as of June 30, 2017; and

		
	b.
	If the credit rating by any one of the three major ratings agencies (Standard & Poor’s, Moody’s Investor Service, or Fitch Ratings) fall below BBB (Baa2) for Oncor senior secured debt, then Oncor will suspend payment of dividends until otherwise allowed by the Commission.  

DEBT
		
	6.
	Existing Legacy Debt and Liabilities.  Immediately following the closing of the transaction, Parent will reduce the debt that resides above Oncor at EFIH and EFH, such that up to $3.12 billion of debt, in the aggregate, may be incurred and/or remain at reorganized EFH and/or reorganized EFIH. Parent further commits that such debt will be extinguished prior to maturity (i.e., in less than 7 years) and no new debt shall be incurred by reorganized EFH, reorganized EFIH, Power Play HoldCo LLC or Power Play BidCo LLC going forward.

		
	7.
	No Transaction-Related Debt at Oncor Commitment.  Oncor will not incur, guaranty, or pledge assets in respect of any incremental new debt related to financing the transaction at the closing or thereafter.  Oncor’s financial integrity will be protected from the separate operations of Parent’s affiliated retail electric provider (“REP”) or generation company, if any.

		
	8.
	Cross-Default Provisions, Financial Covenants or Rating Agency Triggers.  Oncor will not include in any of its debt or credit agreements cross-default provisions between Oncor’s securities and the securities of Parent or any of its affiliates or subsidiaries.  Oncor will not include in its debt or credit agreements any financial covenants or rating agency triggers related to Parent or any other Parent affiliate.

		
	9.
	Debt-to-Equity Ratio Commitment.  Oncor’s debt will be limited so that its regulatory debt-to-equity ratio (as determined by the Commission) is at or below the assumed debt-to-equity ratio established from time to time by the Commission for ratemaking purposes.  Oncor’s payment of dividends will be limited by compliance with the Commission-approved regulatory debt-to-equity ratio.

		
	10.
	No Inter-Company Debt Commitment.  Oncor will not enter into any inter-company debt transactions with Parent affiliates (other than Oncor subsidiaries) following consummation of the transaction.  

		
	11.
	No Inter-Company Lending Commitment.  Oncor will not lend money to or borrow money from Parent or Parent’s affiliates (other than Oncor subsidiaries). 

		
	12.
	Credit Facility Commitment.  Oncor will not share credit facilities with Parent or Parent’s affiliates (other than Oncor subsidiaries).  

		
	13.
	No Pledging of Assets/Stock Commitment.  Oncor’s assets or stock shall not be pledged for any entity other than Oncor.

		
	14.
	No Recovery of Affiliate REP Bad Debt Commitment.  If there is any Parent REP is affiliated with Oncor, Oncor will not seek to recover from its customers any costs incurred as a result of a bankruptcy of any Parent REP.

		
	15.
	Credit Rating Registration Commitment.  Parent and Oncor will be registered with major nationally and internationally recognized bond rating agencies, such as Standard & Poor’s, Moody’s Investor Service, or Fitch Ratings.  Oncor’s ratings shall reflect the ring-fence provision contemplated herein in order to provide Oncor with a stand-alone (non-linked) credit rating.

BANKRUPTCY LIABILITIES
		
	16.
	Bankruptcy Expenses and Liabilities.  Oncor will not seek recovery in rates of any expenses or liabilities related to EFH’s bankruptcy. This commitment includes the agreement that Oncor will not seek recovery in rates of amounts resulting from any:  (1) tax liabilities resulting from the spin-off of Texas Competitive Electric Holdings Company LLC; (2) asbestos claims relating to non-Oncor operations of or under EFH; or (3) make-whole claims by creditors of EFH or EFIH set forth in the EFH and EFIH Plan of Reorganization.  Oncor’s customers will not be required to pay for these items.

NON-CONSOLIDATION
		
	17.
	Non-Consolidation Legal Opinion.  Parent agrees to obtain a non-consolidation legal opinion that provides that, in the event of a bankruptcy of Parent or any affiliate of Parent, a bankruptcy court would not consolidate the assets and liabilities of Oncor with Parent or any affiliate of Parent.

CAPEX
		
	18.
	Capital Expenditure Commitment.  Oncor shall make minimum capital expenditures equal to a budget of at least $7.5 billion over the five-year period beginning January 1, 2018, and ending December 31, 2022, subject to the following adjustments to the extent reported to the Commission in Oncor’s quarterly earnings monitor report:  Oncor may reduce capital spending due to conditions not under Oncor’s control, including, without limitation, siting delays, cancellations of projects by third-parties, weaker than expected economic conditions, or if Oncor determines that a particular expenditure would not be prudent.

CYBERSECURITY
		
	19.
	Cybersecurity Expenditure Commitment. Oncor shall make minimum cybersecurity expenditures equal to a budget of $35 million over the five-year period beginning January 1, 2018, and ending December 31, 2022.  Oncor shall work cooperatively with other Parent entities with respect to cybersecurity issues.

AFFILIATE ISSUES
		
	20.
	Affiliate Asset Transfer Commitment.  Neither Oncor Holdings nor Oncor will transfer any material assets or facilities to any affiliates (other than Oncor Holdings, Oncor, and their subsidiaries, which are hereinafter referred to as the “ring-fenced entities”), other than a transfer that is on an arm’s-

length basis consistent with the Commission’s affiliate standards applicable to Oncor, regardless of whether such affiliate standards would apply to the particular transaction.
		
	21.
	Arm’s-Length Relationship Commitment.  Each of the ring-fenced entities will maintain an arm’s-length relationship with Parent or Parent’s affiliates (other than the ring-fenced entities) consistent with the Commission’s affiliate standards applicable to Oncor.  

		
	22.
	Separate Books and Records Commitment.  Each of the ring-fenced entities will maintain accurate, appropriate, and detailed books, financial records and accounts, including checking and other bank accounts, and custodial and other securities safekeeping accounts that are separate and distinct from those of any other entity.

		
	23.
	FERC Preemption.  Neither Oncor nor Parent or Parent’s affiliates will assert before the Commission or a Texas court of competent jurisdiction that the Commission is preempted pursuant to the Federal Power Act (e.g., under a FERC tariff) from making a determination regarding the prudence of affiliate costs sought to be allocated to Oncor.

ADDITIONAL COMMITMENTS
		
	24.
	Holding Company Commitment.  Oncor Holdings will be retained between Parent and Oncor.

		
	25.
	Continued Ownership Commitment.  Parent will hold a majority of its indirect ownership interest in Oncor for a period of more than five years after the closing date of the transaction.

		
	26.
	Compliance Report Commitment.  For a period of five years after the closing date of the transaction, Oncor will make annual reports to the Commission regarding its compliance with these commitments.

		
	27.
	Name/Logo Commitment.  Parent commits to maintaining a name and logo for Oncor that is separate and distinct from the names of Parent’s REP and wholesale generation companies or any other current or future Texas competitive affiliate, if any. For the sake of clarity, any Parent REP, wholesale generation company, or any other current or future Texas competitive affiliate will not use the Oncor name, trademark, brand, logo, or any other brand identifying features; nor will Oncor engage in joint marketing, advertising, or promotional efforts with any Parent REP, wholesale generation company, or any other current or future Texas competitive affiliate, in a manner that is inconsistent with the Public Utility Regulatory Act and the Commission's affiliate rules.

		
	28.
	Headquarters/Management Commitment.  Oncor will maintain its separate headquarters and management in Dallas, Texas.  Local management will remain the primary point of contact on all regulatory and operational matters.  

		
	29.
	Oncor Senior Management Succession Plan.  Effective upon closing of the transaction, Robert S. Shapard will assume the role of Executive Chairman of the Oncor Board, and E. Allen Nye, Jr. will assume the role of Chief Executive Officer of Oncor.

		
	30.
	Texas Utility Commitment.  Oncor will continue to operate solely within the state of Texas as a public utility subject to the continuing jurisdiction of the Commission.

		
	31.
	Reliability. For purposes of Substantive Rule 25.52, system average interruption duration index (“SAIDI”) and system average interruption frequency index (“SAIFI”) standards should be calculated for Oncor’s current service area based on Oncor’s forced interruption performance for years 2014, 2015, and 2016.  These standards should go into effect starting with the calendar year 2018.

		
	32.
	Reports of SAIDI and SAIFI to Commission. Oncor will report its actual system-level SAIDI and SAIFI statistics to the Commission in its Quarterly Performance Reports and yearly Service Quality Reports filed pursuant to 16 Tex. Admin Code (“TAC”) §25.81.

		
	33.
	Transaction Costs. None of the transaction costs will be borne by Oncor’s customers, nor will Oncor seek to include transaction costs in rates.  For purposes of this commitment, “Transaction Costs” are those incremental costs paid to advance or consummate the Proposed Transaction.  Examples of Transaction Costs include, but are not limited to: Parent employee time and expenses; Oncor change of control payments; certain executive severance costs related to the transaction; and third party costs, including bank advisors, external legal advisors, rating agencies, and expert witnesses and consultants in each case paid to advance or consummate the Proposed Transaction.  Transaction Costs do not include Oncor employee time.

		
	34.
	Transition Costs. No Parent employee time and expenses, third party costs, fees, expenses or costs of the transition (“Transition Costs”) will be borne by Oncor’s customers, nor will Oncor seek to include Transition Costs in rates.  Transition Costs are those costs necessary to integrate the two companies for Day 1 Readiness, including the one-time transition costs being incurred whether directly or indirectly through affiliate charges to transition Oncor to ownership by Parent and to integrate Oncor’s operations and systems with those of Parent.  Provided, however, that Transition Costs do not include Oncor employee time, costs to achieve savings or synergies or costs that reflect reasonable and necessary costs in providing service to the public.  “Costs to achieve” reflect amounts incurred to realize operating enhancements, efficiency gains, or costs reduction initiatives.

		
	35.
	Workforce. For two years after closing, each current Oncor employee who is employed on the closing date will be provided; (a) a base salary or wage rate no less favorable than the base salary or wage rate provided to such employee immediately prior to the closing date; (b) aggregate incentive compensation opportunities that are substantially comparable in the aggregate to those provided to such employee immediately prior to the closing date; and (c) employee benefits that are substantially comparable in the aggregate to those provided to such employee immediately prior to the closing date.  For two years after closing, Oncor will not implement any material involuntary workforce reductions (with respect to either field or corporate personnel) of Oncor employees.

		
	36.
	Collective Bargaining Agreements. With respect to any Oncor employee whose terms and conditions of employment are covered by a collective bargaining agreement, the terms and conditions of such employment will continue to be governed by the terms of the applicable collective bargaining agreement, as may be modified from time to time.

		
	37.
	Code of Conduct. Oncor will continue to conduct its activities in compliance with its existing code of conduct.

		
	38.
	Commission Jurisdiction.  Oncor and Oncor Holdings will not own, operate, or construct capital assets outside of ERCOT without prior approval from the Commission or take any other action that would impair the Commission’s regulatory jurisdiction.  Neither Oncor, Oncor Holdings, Parent nor their respective affiliates will take any action that would subject ERCOT assets to the jurisdiction of the Federal Energy Regulatory Commission (“FERC”); provided, however, that FERC continues to have jurisdiction under sections 210, 211, and 212 of the Federal Power Act (“FPA”) and may direct transmission and interconnection services over certain existing facilities outside of ERCOT; provided further that the existing reliability and critical infrastructure standards administered by the North American Electric Reliability Corporation (“NERC”), through delegation of authority from FERC, may affect the operations of assets that are deemed part of the bulk electric system. 

		
	39.
	Texas Reliability Entity.  Oncor will not seek to have another NERC Regional Entity other than the Texas Reliability Entity serve as the lead regional entity responsible for monitoring Oncor’s activities and ensuring compliance with NERC Reliability Standards.

		
	40.
	Goodwill.  Any costs of goodwill of Parent or its affiliates (including the pre-existing goodwill recognized by Oncor) will not be included in rate base, cost of capital, or operating expenses in future Oncor ratemaking proceedings.  Write-downs or write-offs of goodwill will not be included in the calculation of net income for dividend payment purposes.

		
	41.
	Pushdown Accounting.  Parent will not elect to apply pushdown accounting for the merger, i.e., the merger will have no impact on Oncor’s assets being acquired; and any incremental goodwill will not be allocated to, or recognized within, Oncor’s balance sheet.

		
	42.
	Tangible and Quantifiable Benefits.  At a minimum, Oncor will provide the following tangible and quantifiable benefits associated with the merger.  Oncor will provide monthly bill credits to electric delivery rates for ultimate credits to customers in an amount equal to 90% of any interest rate savings achieved until: final rates are set in the next Oncor base rate case after the Oncor base rate case currently filed.  Savings will not be included in credits if already realized in rates.  Interest Rate Savings refers to the improvement in Oncor’s borrowing costs post-close relative to those costs as of June 30, 2017 due to improvement in credit ratings and/or improvement in market spreads.  Until final rates are set in the next Oncor base rate case after the Oncor base rate case that is currently filed, Oncor will file a report with the Commission every six months detailing any interest rate savings determined by the amount of debt issued by Oncor by at least 0.15% (amounts above 0.15% being based on actual interest rate savings by Oncor) and demonstrating a calculation of the credit. Parent and Oncor agree to work in good faith with interested parties, including TXU Energy Retail Company LLC, Texas Energy Association for Marketers, Alliance for Retail Markets, and NRG Companies, to determine an acceptable method for implementation of any bill credit to effectuate this commitment, as approved by the Commission.  At a minimum, Oncor shall provide retail electric providers 45-day notice of the amount of any customer credits (e.g., for each customer class, the amount per kwh or per-customer credit that would apply) prior to the effective date of the credits 

and shall implement updated bill credits simultaneously with other changes in Oncor’s rates.  In addition, one year after closing, Oncor will present a merger synergy savings analysis to the Commission and provide monthly bill credits to electric rates for inclusion in customer bills in an amount equal to 90% of any synergy savings until final rates are set in the next Oncor base rate proceeding, in which any total synergy savings shall be reflected in Oncor’s rates.
		
	43.
	LLC Agreements.  The Oncor Holdings and Oncor LLC Agreements shall be amended to the extent necessary to effect all of the commitments herein.

		
	44.
	Competitive Shopping Platforms. Parent agrees that neither Oncor nor Oncor's subsidiaries will host or allow the Oncor name, trademark, brand, logo, or other identifying brand features to be used to promote a competitive retail electric shopping website.

		
	45.
	Equity Commitment. Parent agrees to work in good faith with the other beneficial owners of Power Play BidCo LLC and Oncor’s other members so that, as promptly as practicable and in no event later than 180 days after closing of the transaction, an equity investment is made in Oncor sufficient to achieve an equity to debt ratio to enable Oncor to achieve a capital structure consisting of 42.50% equity and 57.50% long-term debt, as described in paragraph I.B. of the Stipulation dated July 21, 2017 and filed in Application of Oncor Electric Delivery Company LLC for Authority to Change Rates, Docket No. 46957, Joint Motion to Admit Affidavit of Notice, Stipulation, and Supporting Testimony in Evidence; and Remand to the Commission for Review and Approval of Stipulation, Proposed Final Order, and Tariffs (Aug. 2, 2017).

Exhibit C  
 
Requests for Information
Robert S. Shapard
E. Allen Nye, Jr.
David M. Davis

Exhibit D 
 
Change of Control Individuals
Walter Mark Carpenter
Don J. Clevenger
David M. Davis
Deborah L. Dennis
James A. Greer
Michael E. Guyton
E. Allen Nye, Jr.
Robert S. ShapardSecurities
Purchase Agreement

 

This
Securities Purchase Agreement (this “Agreement”),
dated as of August 18, 2017, is entered into by and among MGT Capital Investments, Inc.,
a Delaware corporation (“Company”), MGT Mining Two, Inc., a Delaware corporation (“Mining Sub”,
and together with Company, “Borrower”), and UAHC Ventures LLC,
a Nevada limited liability company, its successors and/or assigns (“Investor”).

 

A.
Company and Borrower are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by the Securities Act of 1933, as amended (the “1933 Act”), and the rules and regulations promulgated thereunder
by the United States Securities and Exchange Commission (the “SEC”).

 

B.
Investor desires to purchase and Borrower desires to issue and sell, upon the terms and conditions set forth in this Agreement
(i) a Secured Convertible Promissory Note, in the form attached hereto as Exhibit A, in the original principal amount of
$2,410,000.00 (the “Note”), convertible into shares of common stock, $0.001 par value per share, of Company
(the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note,
and (ii) a Warrant to Purchase Shares of Common Stock, substantially in the form attached hereto as Exhibit B (the “Warrant”).

 

C.
Mining Sub is a wholly owned subsidiary of Company that (i) is a part of the Company’s ongoing business operations, (ii)
holds and/or controls various assets, and (iii) is a co-borrower under the Note. The proceeds from the Note will provide substantial
benefits to both Company and Mining Sub.

 

D.
This Agreement, the Note, the Warrant, the Escrow Agreement (as defined below), the Mining Sub Security Agreement (as defined
below), the Pledge Agreement (as defined below), and all other certificates, documents, agreements, resolutions and instruments
delivered to any party under or in connection with this Agreement, as the same may be amended from time to time, are collectively
referred to herein as the “Transaction Documents”.

 

E.
For purposes of this Agreement: “Conversion Shares” means all shares of Common Stock issuable upon conversion
of all or any portion of the Note; “Warrant Shares” means all shares of Common Stock issuable upon the exercise
of or pursuant to the Warrant; and “Securities” means, collectively, the Note, the Conversion Shares, the Warrant
and the Warrant Shares.

 

NOW,
THEREFORE, in consideration of the above recitals and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Company and Investor hereby agree as follows:

 

1.
Purchase and Sale of Securities.

 

1.1.
Purchase of Securities. Borrower shall issue and sell to Investor and Investor agrees to purchase from Borrower the Note
and the Warrant. In consideration thereof, Investor shall pay the Purchase Price (as defined below) to Borrower.

 

1.2.
Form of Payment. On the Closing Date (as defined below), Investor shall pay the Purchase Price, payable in United States
Dollars, by wire transfer of immediately available funds pursuant to an Escrow Agreement in substantially the form attached hereto
as Exhibit C against delivery of the Note and the Warrant.

 

    	1 

    	 

    

 

1.3.
Closing Date. Subject to the satisfaction (or written waiver) of the conditions set forth in Section 5 and Section 6 below,
the date of the issuance and sale of the Securities pursuant to this Agreement (the “Closing Date”) shall be
August 18, 2017, or such other mutually agreed upon date. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall occur on the Closing Date by means of the exchange by email of signed .pdf documents, but
shall be deemed for all purposes to have occurred at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.

 

1.4.
Collateral for the Note. The Note shall be secured by (i) the collateral set forth in that certain Security Agreement attached
hereto as Exhibit D listing all of Mining Sub’s assets as security for Mining Sub’s obligations under the Transaction
Documents (the “Mining Sub Security Agreement”), and (ii) a Pledge Agreement substantially in the form attached
hereto as Exhibit E (the “Pledge Agreement”) whereby Company is pledging all of the common stock of
Mining Sub as security for Company’s obligations under the Transaction Documents.

 

1.5.
Original Issue Discount; Transaction Expense Amount. The Note carries an original issue discount of $400,000.00 (the “OID”).
In addition, Company agrees to pay $10,000.00 to Investor to cover Investor’s legal fees, accounting costs, due diligence,
monitoring and other transaction costs incurred in connection with the purchase and sale of the Securities (the “Transaction
Expense Amount”), all of which amount is included in the initial principal balance of the Note. The “Purchase
Price”, therefore, shall be $2,000,000.00, computed as follows: $2,410,000.00 initial principal balance, less the OID,
less the Transaction Expense Amount.

 

2.
Investor’s Representations and Warranties. Investor represents and warrants to Company that as of the Effective Date:
(i) this Agreement, its execution and its delivery has been duly and validly authorized; (ii) this Agreement constitutes a valid
and binding agreement of Investor enforceable in accordance with its terms; (iii) Investor is an “accredited investor”
as that term is defined in Rule 501(a) of Regulation D of the 1933 Act; and (iv) the Investor has had the opportunity to conduct
a due diligence investigation of the Company and the Mining Sub, their respective businesses, assets, financial condition, results
of operations and prospects, and the Investor has had the opportunity to ask questions of and receive answers from management
to the satisfaction of the Investor.

 

    	2 

    	 

    

 

3.
Borrower’s Representations and Warranties.

 

3.1.
Company Representations and Warranties. Company represents and warrants to Investor that as of the Effective Date: (i)
Company is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and
has the requisite corporate power to own its properties and to carry on its business as now being conducted; (ii) Company is duly
qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business
conducted or property owned by it makes such qualification necessary; (iii) Company has registered its Common Stock under Section
12(g) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and is obligated to file reports
pursuant to Section 13 or Section 15(d) of the 1934 Act; (iv) each of the Transaction Documents and the transactions contemplated
hereby and thereby, have been duly and validly authorized by Company and all necessary actions have been taken; (v) this Agreement,
the Note, the Warrant, the Escrow Agreement, the Pledge Agreement and the other applicable Transaction Documents have been duly
executed and delivered by Company and constitute the valid and binding obligations of Company enforceable in accordance with their
terms, subject as to enforceability only to general principles of equity and to bankruptcy, insolvency, moratorium, and other
similar laws affecting the enforcement of creditors’ rights generally; (vi) except as set forth under Schedule 3.1(vi),
the execution and delivery of the Transaction Documents by Company, the issuance of the Securities in accordance with the terms
hereof, and the consummation by Company of the other transactions contemplated by the Transaction Documents do not and will not
conflict with or result in a breach by Company of any of the terms or provisions of, or constitute a default under (a) Company’s
formation documents or bylaws, each as currently in effect, (b) any indenture, mortgage, deed of trust, or other material agreement
or instrument to which Company is a party or by which it or any of its properties or assets are bound, including, without limitation,
any listing agreement for the Common Stock, or (c) any existing applicable law, rule, or regulation or any applicable decree,
judgment, or order of any court, United States federal, state or foreign regulatory body, administrative agency, or other governmental
body having jurisdiction over Company or any of Company’s properties or assets; (vii) except as set forth under Schedule
3.1(vii), no further authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization,
or stock exchange or market or the stockholders or any lender of Company is required to be obtained by Company for the issuance
of the Securities to Investor or the entering into of the Transaction Documents; (viii) none of Company’s filings with the
SEC contained, at the time they were filed, any untrue statement of a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made,
not misleading; (ix) except as set forth under Schedule 3.1(ix), the Company has filed all reports, schedules, forms, statements
and other documents required to be filed by Company with the SEC under the 1934 Act on a timely basis or has received a valid
extension of such time of filing and has filed any such report, schedule, form, statement or other document prior to the expiration
of any such extension; (x) except as set forth under Schedule 3.1(x), there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board or body pending or, to the knowledge of Company, threatened against or affecting Company
before or by any governmental authority or non-governmental department, commission, board, bureau, agency or instrumentality or
any other person, wherein an unfavorable decision, ruling or finding would have a material adverse effect on Company or which
would adversely affect the validity or enforceability of, or the authority or ability of Company to perform its obligations under,
any of the Transaction Documents; (xi) Company has not consummated any financing transaction that has not been disclosed in a
periodic filing or current report with the SEC under the 1934 Act; (xii) Company is not, nor has it been at any time in the previous
twelve (12) months, a “Shell Company,” as such type of “issuer” is described in Rule 144(i)(1) under the
1933 Act; (xiii) with respect to any commissions, placement agent or finder’s fees or similar payments that will or would
become due and owing by Company to any person or entity as a result of this Agreement or the transactions contemplated hereby
(“Broker Fees”), any such Broker Fees will be made in full compliance with all applicable laws and regulations
and only to a person or entity that is a registered investment adviser or registered broker-dealer; (xiv) Investor shall have
no obligation with respect to any Broker Fees or with respect to any claims made by or on behalf of other persons for fees of
a type contemplated in this subsection that may be due in connection with the transactions contemplated hereby and Company shall
indemnify and hold harmless each of Investor, Investor’s employees, officers, directors, stockholders, members, managers,
agents, and partners, and their respective affiliates, from and against all reasonable claims, losses, damages, costs (including
the reasonable costs of preparation and attorneys’ fees) and expenses suffered in respect of any such claimed Broker Fees;
(xv) when issued, the Conversion Shares and the Warrant Shares will be duly authorized, validly issued, fully paid for and non-assessable,
free and clear of all liens, claims, charges and encumbrances; (xvi) neither Investor nor any of its officers, directors, stockholders,
members, managers, employees, agents or representatives has made any representations or warranties to Company or any of its officers,
directors, employees, agents or representatives except as expressly set forth in the Transaction Documents and, in making its
decision to enter into the transactions contemplated by the Transaction Documents, Company is not relying on any representation,
warranty, covenant or promise of Investor or its officers, directors, members, managers, employees, agents or representatives
other than as set forth in the Transaction Documents; (xvii) Company acknowledges that the State of Utah has a reasonable relationship
and sufficient contacts to the transactions contemplated by the Transaction Documents and any dispute that may arise related thereto
such that the laws and venue of the State of Utah, as set forth more specifically in Section 9.3 below, shall be applicable to
the Transaction Documents and the transactions contemplated therein; and (xviii) Company has performed due diligence and background
research on Investor and its affiliates including, without limitation, John M. Fife, and, to its satisfaction, has made inquiries
with respect to all matters Company may consider relevant to the undertakings and relationships contemplated by the Transaction
Documents including, among other things, the following: http://investing.businessweek.com/research/stocks/people/person.asp?personId=7505107&ticker=UAHC;
SEC Civil Case No. 07-C-0347 (N.D. Ill.); SEC Civil Action No. 07-CV-347 (N.D. Ill.); and FINRA Case #2011029203701. Company,
being aware of the matters described in subsection (xviii) above, acknowledges and agrees that such matters, or any similar matters,
have no bearing on the transactions contemplated by the Transaction Documents and covenants and agrees it will not use any such
information as a defense to performance of its obligations under the Transaction Documents.

 

    	3 

    	 

    

 

3.2.
Mining Sub Representations and Warranties. Mining Sub represents and warrants to Investor that: (i) Mining Sub is a corporation
duly organized, validly existing and in good standing under the laws of its state of organization and has the requisite company
power to own its properties and to carry on its business as now being conducted; (ii) Mining Sub is duly qualified as a foreign
entity to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned
by it makes such qualification necessary; (iii) each of the Transaction Documents and the transactions contemplated hereby and
thereby, have been duly and validly authorized by Mining Sub; (iv) this Agreement, the Note, the Mining Sub Security Agreement,
the Escrow Agreement, and the other applicable Transaction Documents have been duly executed and delivered by Mining Sub and constitute
the valid and binding obligations of Mining Sub enforceable in accordance with their terms, subject as to enforceability only
to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting the enforcement of
creditors’ rights generally; (v) except as set forth in Schedule 3.2(v), the execution and delivery of this Agreement, the
Note, the Mining Sub Security Agreement, the Escrow Agreement, and the other applicable Transaction Documents by Mining Sub does
not and will not conflict with or result in a breach by Mining Sub of any of the terms or provisions of, or constitute a default
under (a) Mining Sub’s formation documents or operating agreement, each as currently in effect, (b) any indenture, mortgage,
deed of trust, or other material agreement or instrument to which Mining Sub is a party or by which it or any of its properties
or assets are bound, or (c) to Mining Sub’s knowledge, any existing applicable law, rule, or regulation or any applicable
decree, judgment, or order of any court, United States federal or state regulatory body, administrative agency, or other governmental
body having jurisdiction over Mining Sub or any of Mining Sub’s properties or assets; (vi) Mining Sub has taken no action
which would give rise to any claim by any person or entity for a brokerage commission, placement agent or finder’s fees
or similar payments by Investor relating to the Note or the transactions contemplated hereby; (vii) Investor shall have no obligation
with respect to investment fees or with respect to any claims made by or on behalf of other persons for fees of a type contemplated
in this subsection that may be due in connection with the transactions contemplated hereby and Mining Sub shall indemnify and
hold harmless each of Investor, Investor’s employees, officers, directors, stockholders, managers, agents, and partners,
and their respective affiliates, from and against all reasonable claims, losses, damages, costs (including the reasonable costs
of preparation and attorneys’ fees) and expenses suffered in respect of any such claimed or existing fees; and (viii) Mining
Sub has performed due diligence and background research on Investor and its affiliates including, without limitation, John M.
Fife, and, to its satisfaction, has made inquiries with respect to all matters Mining Sub may consider relevant to the undertakings
and relationships contemplated by the Transaction Documents including, among other things, the following: http://investing.businessweek.com/research/stocks/people/person.asp?personId=7505107&ticker=UAHC;
SEC Civil Case No. 07-C-0347 (N.D. Ill.); SEC Civil Action No. 07-CV-347 (N.D. Ill.); and FINRA Case #2011029203701. Mining Sub,
being aware of the matters described in subsection (viii) above, acknowledges and agrees that such matters, or any similar matters,
have no bearing on the transactions contemplated by the Transaction Documents and covenants and agrees it will not use any such
information as a defense to performance of its obligations under the Transaction Documents.

 

    	4 

    	 

    

 

4.
Borrower Covenants. Until all of Borrower’s obligations under all of the Transaction Documents are paid and performed
in full, or within the timeframes otherwise specifically set forth below, Company and Mining Sub, as applicable, will at all times
comply with the following covenants: (i) so long as Investor beneficially owns any of the Securities and for at least twenty (20)
Trading Days (as defined in the Note) thereafter, Company will timely file on the applicable deadline, as may be extended in accordance
with applicable regulations, all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of the 1934 Act, and
will take all reasonable action under its control to ensure that adequate current public information with respect to Company,
as required in accordance with Rule 144 of the 1933 Act, is publicly available, and will not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination;
(ii) the Common Stock shall be listed or quoted for trading on any of (a) NYSE, (b) NASDAQ, (c) OTCQX, (d) OTCQB, or (e) OTC Pink
Current Information; (iii) when issued, the Conversion Shares and the Warrant Shares will be duly authorized, validly issued,
fully paid for and non-assessable, free and clear of all liens, claims, charges and encumbrances; (iv) trading in Company’s
Common Stock will not be suspended, halted, chilled, frozen, reach zero bid or otherwise cease on Company’s principal trading
market; (v) Company will not make any Variable Security Issuance (as defined below) that results in Company receiving net proceeds
of less than $1,000,000.00 without Investor’s prior written consent, which consent may be granted or withheld in Investor’s
sole and absolute discretion; (vi) at Closing and on the first day of each calendar quarter for so long as the Note remains outstanding
or on any other date during which the Note is outstanding, as may be requested by Investor, Company shall cause its Chief Executive
Officer or President to provide to Investor a certificate in substantially the form attached hereto as Exhibit F (the “Officer’s
Certificate”) certifying in his personal capacity and in his capacity as Chief Executive Officer or President of Company
that Company has not made any Variable Security Issuances where Company received net proceeds of less than $1,000,000.00 without
first obtaining Investor’s written consent; (vii) if at any time the Common Stock trades below $0.005, Company shall, as
soon as practicable but in no event longer than sixty (60) days thereafter, reduce the par value of its Common Stock to $0.00001
or below; and (viii) Mining Sub will not transfer any of its assets outside of the ordinary course of business. For purposes hereof,
the term “Variable Security Issuance” means any issuance of any Company securities that (A) have or may have
conversion rights of any kind, contingent, conditional or otherwise, in which the number of shares that may be issued pursuant
to such conversion right varies with the market price of the Common Stock, or (B) are or may become convertible into Common Stock
(including without limitation convertible debt, warrants or convertible preferred stock), with a conversion price that varies
with the market price of the Common Stock, even if such security only becomes convertible following an event of default, the passage
of time, or another trigger event or condition. For avoidance of doubt, the issuance of shares of Common Stock under, pursuant
to, in exchange for or in connection with any contract or instrument, whether convertible or not, is deemed a Variable Security
Issuance for purposes hereof if the number of shares of Common Stock to be issued is based upon or related in any way to the market
price of the Common Stock, including, but not limited to, Common Stock issued in connection with a Section 3(a)(9) exchange, a
Section 3(a)(10) settlement, or any other similar settlement or exchange.

 

5.
Conditions to Borrower’s Obligation to Sell. The obligation of Borrower hereunder to issue and sell the Securities
to Investor at the Closing is subject to the satisfaction, on or before the Closing Date, of each of the following conditions:

 

5.1.
Investor shall have executed all applicable Transaction Documents and delivered the same to Borrower.

 

5.2.
Investor shall have delivered the Purchase Price into escrow in accordance with Section 1.2 above.

 

    	5 

    	 

    

 

6.
Conditions to Investor’s Obligation to Purchase. The obligation of Investor hereunder to purchase the Securities
at the Closing is subject to the satisfaction, on or before the Closing Date, of each of the following conditions, provided that
these conditions are for Investor’s sole benefit and may be waived by Investor at any time in its sole discretion:

 

6.1.
Company shall have executed this Agreement, the Note, the Warrant, the Escrow Agreement and the Pledge Agreement and delivered
the same to Investor.

 

6.2.
Mining Sub shall have executed this Agreement, the Note, the Escrow Agreement, and the Mining Sub Security Agreement and delivered
the same to Investor.

 

6.3.
Company’s Chief Executive Officer or President shall have executed the Officer’s Certificate and delivered the same
to Investor.

 

6.4.
Company shall have delivered to Investor a fully executed Irrevocable Letter of Instructions to Transfer Agent (the “TA
Letter”) substantially in the form attached hereto as Exhibit G acknowledged and agreed to in writing by Company’s
transfer agent (the “Transfer Agent”).

 

6.5.
Company shall have delivered to Investor a fully executed Secretary’s Certificate substantially in the form attached hereto
as Exhibit H evidencing Company’s approval of the Transaction Documents.

 

6.6.
Company shall have delivered to Investor a fully executed Share Issuance Resolution substantially in the form attached hereto
as Exhibit I to be delivered to the Transfer Agent.

 

6.7.
Mining Sub shall have delivered to Investor a fully executed Secretary’s Certificate substantially in the form attached
hereto as Exhibit J evidencing Mining Sub’s approval of the Transaction Documents.

 

6.8.
Company and Mining Sub shall have delivered to Investor fully executed copies of all other Transaction Documents required to be
executed by either such Borrower herein or therein.

 

7.
Reservation of Shares. On the date hereof, Company will reserve 6,500,000 shares of Common Stock from its authorized and
unissued Common Stock to provide for all issuances of Common Stock under the Note and the Warrant (the “Share Reserve”).
Company further agrees to add additional shares of Common Stock to the Share Reserve in increments of 500,000 shares as and when
requested by Investor if as of the date of any such request the number of shares being held in the Share Reserve is less than
(i) three (3) times the number of shares of Common Stock obtained by dividing the Outstanding Balance (as defined in the Note)
as of the date of the request by the Redemption Conversion Price (as defined in the Note), plus (ii) three (3) times the
number of Warrant Shares (as determined pursuant to the Warrant) deliverable upon full exercise of the Warrant. Company shall
further require the Transfer Agent to hold the shares of Common Stock reserved pursuant to the Share Reserve exclusively for the
benefit of Investor and to issue such shares to Investor promptly upon Investor’s delivery of a conversion notice under
the Note or a notice of exercise under the Warrant.

 

8.
Terms of Future Financings. So long as the Note is outstanding, upon any issuance by Company or Mining Sub of any security
with any term or condition more favorable to the holder of such security or with a term in favor of the holder of such security
that was not similarly provided to Investor in the Transaction Documents, then Company shall notify Investor of such additional
or more favorable term and such term, at Investor’s option, shall become a part of the Transaction Documents for the benefit
of Investor. Additionally, if Company fails to notify Investor of any such additional or more favorable term, but Investor becomes
aware that Company or Mining Sub has granted such a term to any third party, Investor may notify Company of such additional or
more favorable term and such term shall become a part of the Transaction Documents retroactive to the date on which such term
was granted to the applicable third party. The types of terms contained in another security that may be more favorable to the
holder of such security include, but are not limited to, terms addressing conversion discounts, conversion lookback periods, interest
rates, original issue discounts, stock sale price, conversion price per share, warrant coverage, warrant exercise price, and anti-dilution/conversion
and exercise price resets.

 

    	6 

    	 

    

 

9.
Miscellaneous. The provisions set forth in this Section 9 shall apply to this Agreement, as well as all other Transaction
Documents as if these terms were fully set forth therein; provided, however, that in the event there is a conflict between any
provision set forth in this Section 9 and any provision in any other Transaction Document, the provision in such other Transaction
Document shall govern.

 

9.1.
Certain Capitalized Terms. To the extent any capitalized term used in any Transaction Document is defined in any other
Transaction Document (as noted therein), such capitalized term shall remain applicable in the Transaction Document in which it
is so used even if the other Transaction Document (wherein such term is defined) has been released, satisfied, or is otherwise
cancelled or terminated.

 

9.2.
Arbitration of Claims. The parties shall submit all Claims (as defined in Exhibit K) arising under this Agreement
or any other Transaction Document or any other agreement between the parties and their affiliates or any Claim relating to the
relationship of the parties to binding arbitration pursuant to the arbitration provisions set forth in Exhibit K attached
hereto (the “Arbitration Provisions”). The parties hereby acknowledge and agree that the Arbitration Provisions
are unconditionally binding on the parties hereto and are severable from all other provisions of this Agreement. By executing
this Agreement, Borrower represents, warrants and covenants that Borrower has reviewed the Arbitration Provisions carefully, consulted
with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration Provisions are intended
to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations set forth
in the Arbitration Provisions, and that Borrower will not take a position contrary to the foregoing representations. Borrower
acknowledges and agrees that Investor may rely upon the foregoing representations and covenants of Borrower regarding the Arbitration
Provisions.

 

9.3.
Governing Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State
of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any
other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Utah. Each party
consents to and expressly agrees that exclusive venue for arbitration of any dispute arising out of or relating to any Transaction
Document or the relationship of the parties or their affiliates shall be in Salt Lake County, Utah. Without modifying the parties
obligations to resolve disputes hereunder pursuant to the Arbitration Provisions, for any litigation arising in connection with
any of the Transaction Documents (and notwithstanding the terms (specifically including any governing law and venue terms) of
any transfer agent services agreement or other agreement between the Transfer Agent and Company, such litigation specifically
includes, without limitation any action between or involving Company and the Transfer Agent under the TA Letter or otherwise related
to Investor in any way (specifically including, without limitation, any action where Company seeks to obtain an injunction, temporary
restraining order, or otherwise prohibit the Transfer Agent from issuing shares of Common Stock to Investor for any reason)),
each party hereto hereby (i) consents to and expressly submits to the exclusive personal jurisdiction of any state or federal
court sitting in Salt Lake County, Utah, (ii) expressly submits to the exclusive venue of any such court for the purposes hereof,
(iii) agrees to not bring any such action (specifically including, without limitation, any action where Company seeks to obtain
an injunction, temporary restraining order, or otherwise prohibit the Transfer Agent from issuing shares of Common Stock to Investor
for any reason) outside of any state or federal court sitting in Salt Lake County, Utah, and (iv) waives any claim of improper
venue and any claim or objection that such courts are an inconvenient forum or any other claim, defense or objection to the bringing
of any such proceeding in such jurisdiction or to any claim that such venue of the suit, action or proceeding is improper. Finally,
Company covenants and agrees to name Investor as a party in interest in, and provide written notice to Investor in accordance
with Section 9.12 below prior to bringing or filing, any action (including without limitation any filing or action against any
person or entity that is not a party to this Agreement, including without limitation the Transfer Agent) that is related in any
way to the Transaction Documents or any transaction contemplated herein or therein, including without limitation any action brought
by Company to enjoin or prevent the issuance of any shares of Common Stock to Investor by the Transfer Agent, and further agrees
to timely name Investor as a party to any such action. Borrower acknowledges that the governing law and venue provisions set forth
in this Section 9.3 are material terms to induce Investor to enter into the Transaction Documents and that but for Borrower’s
agreements set forth in this Section 9.3 Investor would not have entered into the Transaction Documents.

 

    	7 

    	 

    

 

9.4.
Specific Performance. Borrower acknowledges and agrees that irreparable damage may occur to Investor in the event that
Borrower fails to perform any material provision of this Agreement or any of the other Transaction Documents in accordance with
its specific terms. It is accordingly agreed that Investor shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement or such other Transaction Document and to enforce specifically the terms and provisions
hereof or thereof, this being in addition to any other remedy to which the Investor may be entitled under the Transaction Documents,
at law or in equity. For the avoidance of doubt, in the event Investor seeks to obtain an injunction against Borrower or specific
performance of any provision of any Transaction Document, such action shall not be a waiver of any right of Investor under any
Transaction Document, at law, or in equity, including without limitation its rights to arbitrate any Claim pursuant to the terms
of the Transaction Documents.

 

9.5.
Calculation Disputes. Notwithstanding the Arbitration Provisions, in the case of a dispute as to any determination or arithmetic
calculation under the Transaction Documents, including without limitation, calculating the Outstanding Balance, Warrant Shares,
Exercise Shares (as defined in the Warrant), Delivery Shares (as defined in the Warrant), Lender Conversion Price (as defined
in the Note), Lender Conversion Shares (as defined in the Note), Redemption Conversion Price, Redemption Conversion Shares (as
defined in the Note), Conversion Factor (as defined in the Note), Market Price (as defined in the Note), or VWAP (as defined in
the Note) (each, a “Calculation”), Borrower or Investor (as the case may be) shall submit any disputed Calculation
via email or facsimile with confirmation of receipt (i) within two (2) Trading Days after receipt of the applicable notice giving
rise to such dispute to Borrower or Investor (as the case may be) or (ii) if no notice gave rise to such dispute, at any time
after Investor learned of the circumstances giving rise to such dispute. If Investor and Borrower are unable to agree upon such
Calculation within two (2) Trading Days of such disputed Calculation being submitted to Borrower or Investor (as the case may
be), then Investor will promptly submit via email or facsimile the disputed Calculation to Unkar Systems Inc. (“Unkar
Systems”). Investor shall cause Unkar Systems to perform the Calculation and notify Borrower and Investor of the results
no later than ten (10) Trading Days from the time it receives such disputed Calculation. Unkar Systems’ determination of
the disputed Calculation shall be binding upon all parties absent demonstrable error. Unkar Systems’ fee for performing
such Calculation shall be paid by the incorrect party, or if both parties are incorrect, by the party whose Calculation is furthest
from the correct Calculation as determined by Unkar Systems. In the event Borrower is the losing party, no extension of the Delivery
Date (as defined in the Note) shall be granted and Borrower shall incur all effects for failing to deliver the applicable shares
in a timely manner as set forth in the Transaction Documents. Notwithstanding the foregoing, Investor may, in its sole discretion,
designate an independent, reputable investment bank or accounting firm other than Unkar Systems to resolve any such dispute and
in such event, all references to “Unkar Systems” herein will be replaced with references to such independent, reputable
investment bank or accounting firm so designated by Investor.

 

    	8 

    	 

    

 

9.6.
Counterparts. Each Transaction Document may be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one instrument. The parties hereto confirm that any electronic copy of another
party’s executed counterpart of a Transaction Document (or such party’s signature page thereof) will be deemed to
be an executed original thereof.

 

9.7.
Document Imaging. Investor shall be entitled, in its sole discretion, to image or make copies of all or any selection of
the agreements, instruments, documents, and items and records governing, arising from or relating to any of Borrower’s loans,
including, without limitation, this Agreement and the other Transaction Documents, and Investor may destroy or archive the paper
originals. The parties hereto (i) waive any right to insist or require that Investor produce paper originals, (ii) agree that
such images shall be accorded the same force and effect as the paper originals, (iii) agree that Investor is entitled to use such
images in lieu of destroyed or archived originals for any purpose, including as admissible evidence in any demand, presentment
or other proceedings, and (iv) further agree that any executed facsimile (faxed), scanned, emailed, or other imaged copy of this
Agreement or any other Transaction Document shall be deemed to be of the same force and effect as the original manually executed
document.

 

9.8.
Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the
interpretation of, this Agreement.

 

9.9.
Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute
or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform to such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.

 

9.10.
Entire Agreement. This Agreement, together with the other Transaction Documents, contains the entire understanding of the
parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither
Borrower nor Investor makes any representation, warranty, covenant or undertaking with respect to such matters. For the avoidance
of doubt, all prior term sheets or other documents between Borrower and Investor, or any affiliate thereof, related to the transactions
contemplated by the Transaction Documents (collectively, “Prior Agreements”), that may have been entered into
between Borrower and Investor, or any affiliate thereof, are hereby null and void and deemed to be replaced in their entirety
by the Transaction Documents. To the extent there is a conflict between any term set forth in any Prior Agreement and the term(s)
of the Transaction Documents, the Transaction Documents shall govern.

 

9.11.
Amendments. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by both
parties hereto.

 

    	9 

    	 

    

 

9.12.
Notices. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall
be deemed effectively given on the earliest of: (i) the date delivered, if delivered by personal delivery as against written receipt
therefor or by email to an executive officer, or by facsimile (with successful transmission confirmation), (ii) the earlier of
the date delivered or the third Trading Day after deposit, postage prepaid, in the United States Postal Service by certified mail,
or (iii) the earlier of the date delivered or the third Trading Day after mailing by express courier, with delivery costs and
fees prepaid, in each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other
addresses as such party may designate by five (5) calendar days’ advance written notice similarly given to each of the other
parties hereto):

 

If
to Borrower:

 

MGT
Capital Investments, Inc.

Attn:
Robert Ladd

512
S. Magnum Street, Suite 408

Durham,
North Carolina 27701

 

With
a copy to (which copy shall not constitute notice):

Sichenzia
Ross Ference Kesner LLP

Attn:
Jay Kaplowitz, Esq.

61
Broadway

New
York, New York 10006

 

If
to Investor:

 

UAHC
Ventures LLC

Attn:
John Fife

303
East Wacker Drive, Suite 1040

Chicago,
Illinois 60601

 

With
a copy to (which copy shall not constitute notice):

 

Hansen
Black Anderson Ashcraft PLLC

Attn:
Jonathan Hansen

3051
West Maple Loop Drive, Suite 325

Lehi,
Utah 84043

 

9.13.
Successors and Assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be
performed by Investor hereunder may be assigned by Investor to a third party, including its affiliates, in whole or in part, without
the need to obtain Borrower’s consent thereto. Borrower may not assign its rights or obligations under this Agreement or
delegate its duties hereunder without the prior written consent of Investor.

 

9.14.
Survival. The representations and warranties of Borrower and the agreements and covenants set forth in this Agreement shall
survive the Closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of Investor. Borrower
agrees to indemnify and hold harmless Investor and all its officers, directors, employees, attorneys, and agents for loss or damage
arising as a result of or related to any breach or alleged breach by Borrower of any of its representations, warranties and covenants
set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as
they are incurred.

 

9.15.
Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.

 

    	10 

    	 

    

 

9.16.
Investor’s Rights and Remedies Cumulative; Liquidated Damages. All rights, remedies, and powers conferred in this
Agreement and the Transaction Documents are cumulative and not exclusive of any other rights or remedies, and shall be in addition
to every other right, power, and remedy that Investor may have, whether specifically granted in this Agreement or any other Transaction
Document, or existing at law, in equity, or by statute, and any and all such rights and remedies may be exercised from time to
time and as often and in such order as Investor may deem expedient. The parties acknowledge and agree that upon Borrower’s
failure to comply with the provisions of the Transaction Documents, Investor’s damages would be uncertain and difficult
(if not impossible) to accurately estimate because of the parties’ inability to predict future interest rates and future
share prices, Investor’s increased risk, and the uncertainty of the availability of a suitable substitute investment opportunity
for Investor, among other reasons. Accordingly, any fees, charges, and default interest due under the Note, the Warrant, and the
other Transaction Documents are intended by the parties to be, and shall be deemed, liquidated damages (under Borrower’s
and Investor’s expectations that any such liquidated damages will tack back to the Closing Date for purposes of determining
the holding period under Rule 144 under the 1933 Act). The parties agree that such liquidated damages are a reasonable estimate
of Investor’s actual damages and not a penalty, and shall not be deemed in any way to limit any other right or remedy Investor
may have hereunder, at law or in equity. The parties acknowledge and agree that under the circumstances existing at the time this
Agreement is entered into, such liquidated damages are fair and reasonable and are not penalties. All fees, charges, and default
interest provided for in the Transaction Documents are agreed to by the parties to be based upon the obligations and the risks
assumed by the parties as of the Closing Date and are consistent with investments of this type. The liquidated damages provisions
of the Transaction Documents shall not limit or preclude a party from pursuing any other remedy available at law or in equity;
provided, however, that the liquidated damages provided for in the Transaction Documents are intended to be in lieu of
actual damages.

 

9.17.
Ownership Limitation. Notwithstanding anything to the contrary contained in this Agreement or the other Transaction Documents,
if at any time Investor would be issued shares of Common Stock under any of the Transaction Documents, but such issuance would
cause Investor (together with its affiliates) to beneficially own a number of shares exceeding the Maximum Percentage (as defined
in the Note), then Company must not issue to Investor the shares that would cause Investor to exceed the Maximum Percentage. The
shares of Common Stock issuable to Investor that would cause the Maximum Percentage to be exceeded are referred to herein as the
“Ownership Limitation Shares”. Company shall reserve the Ownership Limitation Shares for the exclusive benefit
of Investor. From time to time, Investor may notify Company in writing of the number of the Ownership Limitation Shares that may
be issued to Investor without causing Investor to exceed the Maximum Percentage. Upon receipt of such notice, Company shall be
unconditionally obligated to immediately issue such designated shares to Investor, with a corresponding reduction in the number
of the Ownership Limitation Shares. For purposes of this Section, beneficial ownership of Common Stock will be determined under
Section 13(d) of the 1934 Act.

 

9.18.
Attorneys’ Fees and Cost of Collection. In the event of any arbitration or action at law or in equity to enforce
or interpret the terms of this Agreement or any of the other Transaction Documents, the parties agree that the party who is awarded
the most money (which, for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees,
or other charges awarded to any party) shall be deemed the prevailing party for all purposes and shall therefore be entitled to
an additional award of the full amount of the attorneys’ fees, deposition costs, and expenses paid by such prevailing party
in connection with arbitration or litigation without reduction or apportionment based upon the individual claims or defenses giving
rise to the fees and expenses. Nothing herein shall restrict or impair an arbitrator’s or a court’s power to award
fees and expenses for frivolous or bad faith pleading. If (i) the Note or Warrant is placed in the hands of an attorney for collection
or enforcement prior to commencing arbitration or legal proceedings, or is collected or enforced through any arbitration or legal
proceeding, or Investor otherwise takes action to collect amounts due under the Note or to enforce the provisions of the Note
or the Warrant, or (ii) there occurs any bankruptcy, reorganization, receivership of Borrower or other proceedings affecting Borrower’s
creditors’ rights and involving a claim under the Note or the Warrant; then Borrower shall pay the costs incurred by Investor
for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding,
including, without limitation, attorneys’ fees, expenses, deposition costs, and disbursements.

 

    	11 

    	 

    

 

9.19.
Waiver. No waiver of any provision of this Agreement shall be effective unless it is in the form of a writing signed by
the party granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any
other provision or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing
waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in
writing.

 

9.20.
Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND
THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT,
OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY
ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH
PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY’S RIGHT TO DEMAND TRIAL BY JURY.

 

9.21.
Time is of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement
and the other Transaction Documents.

 

9.22.
Voluntary Agreement. Borrower has carefully read this Agreement and each of the other Transaction Documents and has asked
any questions needed for Borrower to understand the terms, consequences and binding effect of this Agreement and each of the other
Transaction Documents and fully understand them. Borrower has had the opportunity to seek the advice of an attorney of Borrower’s
choosing, or has waived the right to do so, and is executing this Agreement and each of the other Transaction Documents voluntarily
and without any duress or undue influence by Investor or anyone else.

 

[Remainder
of page intentionally left blank; signature page follows]

 

    	12 

    	 

    

 

IN
WITNESS WHEREOF, the undersigned Investor and Borrower have caused this Agreement to be duly executed as of the date first above
written.

 

SUBSCRIPTION
AMOUNT:

 

	Principal
    Amount of Note:	$2,410,000.00
	 	 
	Purchase
    Price:	$2,000,000.00

 

	 	INVESTOR:
	 	 	 
	 	UAHC Ventures LLC
	 	 	 
	 	By:	United
    American Healthcare Corporation, its Manager
	 	 	 
	 	By:	/s/
    John M. Fife, President
	 	 	John
    M. Fife, President

 

COMPANY:

 

MGT
Capital Investments, Inc.

 

By:
____________________________________________

Printed
Name: ____________________________________

Title:
___________________________________________

 

MINING
SUB:

 

MGT
Mining Two, Inc.

 

By:
____________________________________________

Printed
Name: ____________________________________

Title:
___________________________________________

 

[Signature
Page to Securities Purchase Agreement]

 

    	 

    	 

    

 

ATTACHED
EXHIBITS:

 

	Exhibit
    A	Note
	Exhibit
    B	Warrant
	Exhibit
    C	Escrow
    Agreement
	Exhibit
    D	Mining
    Sub Security Agreement
	Exhibit
    E	Pledge
    Agreement
	Exhibit
    F	Officer’s
    Certificate
	Exhibit
    G	Irrevocable
    Transfer Agent Instructions
	Exhibit
    H	Company
    Secretary’s Certificate
	Exhibit
    I	Share
    Issuance Resolution
	Exhibit
    J	Mining
    Sub Secretary’s Certificate
	Exhibit
    K	Arbitration
    Provisions

 

    	 

    	 

    

 

Exhibit
K

 

ARBITRATION
PROVISIONS

 

1.
Dispute Resolution. For purposes of this Exhibit K, the term “Claims” means any disputes, claims,
demands, causes of action, requests for injunctive relief, requests for specific performance, liabilities, damages, losses, or
controversies whatsoever arising from, related to, or connected with the transactions contemplated in the Transaction Documents
and any communications between the parties related thereto, including without limitation any claims of mutual mistake, mistake,
fraud, misrepresentation, failure of formation, failure of consideration, promissory estoppel, unconscionability, failure of condition
precedent, rescission, and any statutory claims, tort claims, contract claims, or claims to void, invalidate or terminate the
Agreement (or these Arbitration Provisions (defined below)) or any of the other Transaction Documents. The term “Claims”
specifically excludes a dispute over Calculations and enforcement of Investor’s rights and remedies against the personal
property described in the Security Agreement and the Pledge Agreement under the applicable provisions of the Uniform Commercial
Code. The parties to the Agreement (the “parties”) hereby agree that the arbitration provisions set forth in
this Exhibit K (“Arbitration Provisions”) are binding on each of them. As a result, any attempt to rescind
the Agreement (or these Arbitration Provisions) or declare the Agreement (or these Arbitration Provisions) or any other Transaction
Document invalid or unenforceable for any reason is subject to these Arbitration Provisions. These Arbitration Provisions shall
also survive any termination or expiration of the Agreement. Any capitalized term not defined in these Arbitration Provisions
shall have the meaning set forth in the Agreement.

 

2.
Arbitration. Except as otherwise provided herein, all Claims must be submitted to arbitration (“Arbitration”)
to be conducted exclusively in Salt Lake County, Utah and pursuant to the terms set forth in these Arbitration Provisions. Subject
to the arbitration appeal right provided for in Paragraph 5 below (the “Appeal Right”), the parties agree that
the award of the arbitrator rendered pursuant to Paragraph 4 below (the “Arbitration Award”) shall be (a) final
and binding upon the parties, (b) the sole and exclusive remedy between them regarding any Claims, counterclaims, issues, or accountings
presented or pleaded to the arbitrator, and (c) promptly payable in United States dollars free of any tax, deduction or offset
(with respect to monetary awards). Subject to the Appeal Right, any costs or fees, including without limitation attorneys’
fees, incurred in connection with or incident to enforcing the Arbitration Award shall, to the maximum extent permitted by law,
be charged against the party resisting such enforcement. The Arbitration Award shall include default interest (as defined or otherwise
provided for in the Note, “Default Interest”) (with respect to monetary awards) at the rate specified in the
Note for Default Interest both before and after the Arbitration Award. Judgment upon the Arbitration Award will be entered and
enforced by any state or federal court sitting in Salt Lake County, Utah.

 

3.
The Arbitration Act. The parties hereby incorporate herein the provisions and procedures set forth in the Utah Uniform
Arbitration Act, U.C.A. § 78B-11-101 et seq. (as amended or superseded from time to time, the “Arbitration
Act”). Notwithstanding the foregoing, pursuant to, and to the maximum extent permitted by, Section 105 of the Arbitration
Act, in the event of conflict or variation between the terms of these Arbitration Provisions and the provisions of the Arbitration
Act, the terms of these Arbitration Provisions shall control and the parties hereby waive or otherwise agree to vary the effect
of all requirements of the Arbitration Act that may conflict with or vary from these Arbitration Provisions.

 

4.
Arbitration Proceedings. Arbitration between the parties will be subject to the following:

 

4.1
Initiation of Arbitration. Pursuant to Section 110 of the Arbitration Act, the parties agree that a party may initiate
Arbitration by giving written notice to the other party (“Arbitration Notice”) in the same manner that notice
is permitted under Section 9.12 of the Agreement; provided, however, that the Arbitration Notice may not be given by email
or fax. Arbitration will be deemed initiated as of the date that the Arbitration Notice is deemed delivered to such other party
under Section 9.12 of the Agreement (the “Service Date”). After the Service Date, information may be delivered,
and notices may be given, by email or fax pursuant to Section 9.12 of the Agreement or any other method permitted thereunder.
The Arbitration Notice must describe the nature of the controversy, the remedies sought, and the election to commence Arbitration
proceedings. All Claims in the Arbitration Notice must be pleaded consistent with the Utah Rules of Civil Procedure.

 

    	Arbitration Provisions, Page 1

    	 

    

 

4.2
Selection and Payment of Arbitrator.

 

(a)
Within ten (10) calendar days after the Service Date, Investor shall select and submit to Borrower the names of three (3) arbitrators
that are designated as “neutrals” or qualified arbitrators by Utah ADR Services (http://www.utahadrservices.com)
(such three (3) designated persons hereunder are referred to herein as the “Proposed Arbitrators”). For the
avoidance of doubt, each Proposed Arbitrator must be qualified as a “neutral” with Utah ADR Services. Within five
(5) calendar days after Investor has submitted to Borrower the names of the Proposed Arbitrators, Borrower must select, by written
notice to Investor, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration Provisions.
If Borrower fails to select one of the Proposed Arbitrators in writing within such 5-day period, then Investor may select the
arbitrator from the Proposed Arbitrators by providing written notice of such selection to Borrower.

 

(b)
If Investor fails to submit to Borrower the Proposed Arbitrators within ten (10) calendar days after the Service Date pursuant
to subparagraph (a) above, then Borrower may at any time prior to Investor so designating the Proposed Arbitrators, identify the
names of three (3) arbitrators that are designated as “neutrals” or qualified arbitrators by Utah ADR Service by written
notice to Investor. Investor may then, within five (5) calendar days after Borrower has submitted notice of its Proposed Arbitrators
to Investor, select, by written notice to Borrower, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties
under these Arbitration Provisions. If Investor fails to select in writing and within such 5-day period one (1) of the three (3)
Proposed Arbitrators selected by Borrower, then Borrower may select the arbitrator from its three (3) previously selected Proposed
Arbitrators by providing written notice of such selection to Investor.

 

(c)
If a Proposed Arbitrator chosen to serve as arbitrator declines or is otherwise unable to serve as arbitrator, then the party
that selected such Proposed Arbitrator may select one (1) of the other three (3) Proposed Arbitrators within three (3) calendar
days of the date the chosen Proposed Arbitrator declines or notifies the parties he or she is unable to serve as arbitrator. If
all three (3) Proposed Arbitrators decline or are otherwise unable to serve as arbitrator, then the arbitrator selection process
shall begin again in accordance with this Paragraph 4.2.

 

(d)
The date that the Proposed Arbitrator selected pursuant to this Paragraph 4.2 agrees in writing (including via email) delivered
to both parties to serve as the arbitrator hereunder is referred to herein as the “Arbitration Commencement Date”.
If an arbitrator resigns or is unable to act during the Arbitration, a replacement arbitrator shall be chosen in accordance with
this Paragraph 4.2 to continue the Arbitration. If Utah ADR Services ceases to exist or to provide a list of neutrals and there
is no successor thereto, then the arbitrator shall be selected under the then prevailing rules of the American Arbitration Association.

 

(e)
Subject to Paragraph 4.10 below, the cost of the arbitrator must be paid equally by both parties. Subject to Paragraph 4.10 below,
if one party refuses or fails to pay its portion of the arbitrator fee, then the other party can advance such unpaid amount (subject
to the accrual of Default Interest thereupon), with such amount being added to or subtracted from, as applicable, the Arbitration
Award.

 

4.3
Applicability of Certain Utah Rules. The parties agree that the Arbitration shall be conducted generally in accordance
with the Utah Rules of Civil Procedure and the Utah Rules of Evidence. More specifically, the Utah Rules of Civil Procedure shall
apply, without limitation, to the filing of any pleadings, motions or memoranda, the conducting of discovery, and the taking of
any depositions. The Utah Rules of Evidence shall apply to any hearings, whether telephonic or in person, held by the arbitrator.
Notwithstanding the foregoing, it is the parties’ intent that the incorporation of such rules will in no event supersede
these Arbitration Provisions. In the event of any conflict between the Utah Rules of Civil Procedure or the Utah Rules of Evidence
and these Arbitration Provisions, these Arbitration Provisions shall control.

 

4.4
Answer and Default. An answer and any counterclaims to the Arbitration Notice shall be required to be delivered to the
party initiating the Arbitration within twenty (20) calendar days after the Arbitration Commencement Date. If an answer is not
delivered by the required deadline, the arbitrator must provide written notice to the defaulting party stating that the arbitrator
will enter a default award against such party if such party does not file an answer within five (5) calendar days of receipt of
such notice. If an answer is not filed within the five (5) day extension period, the arbitrator must render a default award, consistent
with the relief requested in the Arbitration Notice, against a party that fails to submit an answer within such time period.

 

    	Arbitration Provisions, Page 2

    	 

    

 

4.5
Related Litigation. The party that delivers the Arbitration Notice to the other party shall have the option to also commence
concurrent legal proceedings with any state or federal court sitting in Salt Lake County, Utah (“Litigation Proceedings”),
subject to the following: (a) the complaint in the Litigation Proceedings is to be substantially similar to the claims set forth
in the Arbitration Notice, provided that an additional cause of action to compel arbitration will also be included therein, (b)
so long as the other party files an answer to the complaint in the Litigation Proceedings and an answer to the Arbitration Notice,
the Litigation Proceedings will be stayed pending an Arbitration Award (or Appeal Panel Award (defined below), as applicable)
hereunder, (c) if the other party fails to file an answer in the Litigation Proceedings or an answer in the Arbitration proceedings,
then the party initiating Arbitration shall be entitled to a default judgment consistent with the relief requested, to be entered
in the Litigation Proceedings, and (d) any legal or procedural issue arising under the Arbitration Act that requires a decision
of a court of competent jurisdiction may be determined in the Litigation Proceedings. Any award of the arbitrator (or of the Appeal
Panel (defined below)) may be entered in such Litigation Proceedings pursuant to the Arbitration Act.

 

4.6
Discovery. Pursuant to Section 118(8) of the Arbitration Act, the parties agree that discovery shall be conducted as follows:

 

(a)
Written discovery will only be allowed if the likely benefits of the proposed written discovery outweigh the burden or expense
thereof, and the written discovery sought is likely to reveal information that will satisfy a specific element of a claim or defense
already pleaded in the Arbitration. The party seeking written discovery shall always have the burden of showing that all of the
standards and limitations set forth in these Arbitration Provisions are satisfied. The scope of discovery in the Arbitration proceedings
shall also be limited as follows:

 

(i)
To facts directly connected with the transactions contemplated by the Agreement.

 

(ii)
To facts and information that cannot be obtained from another source or in another manner that is more convenient, less burdensome
or less expensive than in the manner requested.

 

(b)
No party shall be allowed (i) more than fifteen (15) interrogatories (including discrete subparts), (ii) more than fifteen (15)
requests for admission (including discrete subparts), (iii) more than ten (10) document requests (including discrete subparts),
or (iv) more than three (3) depositions (excluding expert depositions) for a maximum of seven (7) hours per deposition. The costs
associated with depositions will be borne by the party taking the deposition. The party defending the deposition will submit a
notice to the party taking the deposition of the estimated attorneys’ fees that such party expects to incur in connection
with defending the deposition. If the party defending the deposition fails to submit an estimate of attorneys’ fees within
five (5) calendar days of its receipt of a deposition notice, then such party shall be deemed to have waived its right to the
estimated attorneys’ fees. The party taking the deposition must pay the party defending the deposition the estimated attorneys’
fees prior to taking the deposition, unless such obligation is deemed to be waived as set forth in the immediately preceding sentence.
If the party taking the deposition believes that the estimated attorneys’ fees are unreasonable, such party may submit the
issue to the arbitrator for a decision. All depositions will be taken in Utah.

 

(c)
All discovery requests (including document production requests included in deposition notices) must be submitted in writing to
the arbitrator and the other party. The party submitting the written discovery requests must include with such discovery requests
a detailed explanation of how the proposed discovery requests satisfy the requirements of these Arbitration Provisions and the
Utah Rules of Civil Procedure. The receiving party will then be allowed, within five (5) calendar days of receiving the proposed
discovery requests, to submit to the arbitrator an estimate of the attorneys’ fees and costs associated with responding
to such written discovery requests and a written challenge to each applicable discovery request. After receipt of an estimate
of attorneys’ fees and costs and/or challenge(s) to one or more discovery requests, consistent with subparagraph (c) above,
the arbitrator will within three (3) calendar days make a finding as to the likely attorneys’ fees and costs associated
with responding to the discovery requests and issue an order that (i) requires the requesting party to prepay the attorneys’
fees and costs associated with responding to the discovery requests, and (ii) requires the responding party to respond to the
discovery requests as limited by the arbitrator within twenty-five (25) calendar days of the arbitrator’s finding with respect
to such discovery requests. If a party entitled to submit an estimate of attorneys’ fees and costs and/or a challenge to
discovery requests fails to do so within such 5-day period, the arbitrator will make a finding that (A) there are no attorneys’
fees or costs associated with responding to such discovery requests, and (B) the responding party must respond to such discovery
requests (as may be limited by the arbitrator) within twenty-five (25) calendar days of the arbitrator’s finding with respect
to such discovery requests. Any party submitting any written discovery requests, including without limitation interrogatories,
requests for production subpoenas to a party or a third party, or requests for admissions, must prepay the estimated attorneys’
fees and costs, before the responding party has any obligation to produce or respond to the same, unless such obligation is deemed
waived as set forth above.

 

    	Arbitration Provisions, Page 3

    	 

    

 

(d)
In order to allow a written discovery request, the arbitrator must find that the discovery request satisfies the standards set
forth in these Arbitration Provisions and the Utah Rules of Civil Procedure. The arbitrator must strictly enforce these standards.
If a discovery request does not satisfy any of the standards set forth in these Arbitration Provisions or the Utah Rules of Civil
Procedure, the arbitrator may modify such discovery request to satisfy the applicable standards, or strike such discovery request
in whole or in part.

 

(e)
Each party may submit expert reports (and rebuttals thereto), provided that such reports must be submitted within sixty (60) days
of the Arbitration Commencement Date. Each party will be allowed a maximum of two (2) experts. Expert reports must contain the
following: (i) a complete statement of all opinions the expert will offer at trial and the basis and reasons for them; (ii) the
expert’s name and qualifications, including a list of all the expert’s publications within the preceding ten (10)
years, and a list of any other cases in which the expert has testified at trial or in a deposition or prepared a report within
the preceding ten (10) years; and (iii) the compensation to be paid for the expert’s report and testimony. The parties are
entitled to depose any other party’s expert witness one (1) time for no more than four (4) hours. An expert may not testify
in a party’s case-in-chief concerning any matter not fairly disclosed in the expert report.

 

4.6
Dispositive Motions. Each party shall have the right to submit dispositive motions pursuant Rule 12 or Rule 56 of the Utah
Rules of Civil Procedure (a “Dispositive Motion”). The party submitting the Dispositive Motion may, but is
not required to, deliver to the arbitrator and to the other party a memorandum in support (the “Memorandum in Support”)
of the Dispositive Motion. Within seven (7) calendar days of delivery of the Memorandum in Support, the other party shall deliver
to the arbitrator and to the other party a memorandum in opposition to the Memorandum in Support (the “Memorandum in
Opposition”). Within seven (7) calendar days of delivery of the Memorandum in Opposition, as applicable, the party that
submitted the Memorandum in Support shall deliver to the arbitrator and to the other party a reply memorandum to the Memorandum
in Opposition (“Reply Memorandum”). If the applicable party shall fail to deliver the Memorandum in Opposition
as required above, or if the other party fails to deliver the Reply Memorandum as required above, then the applicable party shall
lose its right to so deliver the same, and the Dispositive Motion shall proceed regardless.

 

4.7
Confidentiality. All information disclosed by either party (or such party’s agents) during the Arbitration process
(including without limitation information disclosed during the discovery process or any Appeal (defined below)) shall be considered
confidential in nature. Each party agrees not to disclose any confidential information received from the other party (or its agents)
during the Arbitration process (including without limitation during the discovery process or any Appeal) unless (a) prior to or
after the time of disclosure such information becomes public knowledge or part of the public domain, not as a result of any inaction
or action of the receiving party or its agents, (b) such information is required by a court order, subpoena or similar legal duress
to be disclosed if such receiving party has notified the other party thereof in writing and given it a reasonable opportunity
to obtain a protective order from a court of competent jurisdiction prior to disclosure, or (c) such information is disclosed
to the receiving party’s agents, representatives and legal counsel on a need to know basis who each agree in writing not
to disclose such information to any third party. Pursuant to Section 118(5) of the Arbitration Act, the arbitrator is hereby authorized
and directed to issue a protective order to prevent the disclosure of privileged information and confidential information upon
the written request of either party.

 

4.8
Authorization; Timing; Scheduling Order. Subject to all other portions of these Arbitration Provisions, the parties hereby
authorize and direct the arbitrator to take such actions and make such rulings as may be necessary to carry out the parties’
intent for the Arbitration proceedings to be efficient and expeditious. Pursuant to Section 120 of the Arbitration Act, the parties
hereby agree that an Arbitration Award must be made within one hundred twenty (120) calendar days after the Arbitration Commencement
Date. The arbitrator is hereby authorized and directed to hold a scheduling conference within ten (10) calendar days after the
Arbitration Commencement Date in order to establish a scheduling order with various binding deadlines for discovery, expert testimony,
and the submission of documents by the parties to enable the arbitrator to render a decision prior to the end of such 120-day
period.

 

    	Arbitration Provisions, Page 4

    	 

    

 

4.9
Relief. The arbitrator shall have the right to award or include in the Arbitration Award (or in a preliminary ruling) any
relief which the arbitrator deems proper under the circumstances, including, without limitation, specific performance and injunctive
relief, provided that the arbitrator may not award exemplary or punitive damages.

 

4.10
Fees and Costs. As part of the Arbitration Award, the arbitrator is hereby directed to require the losing party (the party
being awarded the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard
to any statutory fines, penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs
and fees of the Arbitration, and (b) reimburse the prevailing party for all reasonable attorneys’ fees, arbitrator costs
and fees, deposition costs, other discovery costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing
party in connection with the Arbitration.

 

5.
Arbitration Appeal.

 

5.1
Initiation of Appeal. Following the entry of the Arbitration Award, either party (the “Appellant”) shall
have a period of thirty (30) calendar days in which to notify the other party (the “Appellee”), in writing,
that the Appellant elects to appeal (the “Appeal”) the Arbitration Award (such notice, an “Appeal
Notice”) to a panel of arbitrators as provided in Paragraph 5.2 below. The date the Appellant delivers an Appeal Notice
to the Appellee is referred to herein as the “Appeal Date”. The Appeal Notice must be delivered to the Appellee
in accordance with the provisions of Paragraph 4.1 above with respect to delivery of an Arbitration Notice. In addition, together
with delivery of the Appeal Notice to the Appellee, the Appellant must also pay for (and provide proof of such payment to the
Appellee together with delivery of the Appeal Notice) a bond in the amount of 110% of the sum the Appellant owes to the Appellee
as a result of the Arbitration Award the Appellant is appealing. In the event an Appellant delivers an Appeal Notice to the Appellee
(together with proof of payment of the applicable bond) in compliance with the provisions of this Paragraph 5.1, the Appeal will
occur as a matter of right and, except as specifically set forth herein, will not be further conditioned. In the event a party
does not deliver an Appeal Notice (along with proof of payment of the applicable bond) to the other party within the deadline
prescribed in this Paragraph 5.1, such party shall lose its right to appeal the Arbitration Award. If no party delivers an Appeal
Notice (along with proof of payment of the applicable bond) to the other party within the deadline described in this Paragraph
5.1, the Arbitration Award shall be final. The parties acknowledge and agree that any Appeal shall be deemed part of the parties’
agreement to arbitrate for purposes of these Arbitration Provisions and the Arbitration Act.

 

5.2
Selection and Payment of Appeal Panel. In the event an Appellant delivers an Appeal Notice to the Appellee (together with
proof of payment of the applicable bond) in compliance with the provisions of Paragraph 5.1 above, the Appeal will be heard by
a three (3) person arbitration panel (the “Appeal Panel”).

 

(a)
Within ten (10) calendar days after the Appeal Date, the Appellee shall select and submit to the Appellant the names of five (5)
arbitrators that are designated as “neutrals” or qualified arbitrators by Utah ADR Services (http://www.utahadrservices.com)
(such five (5) designated persons hereunder are referred to herein as the “Proposed Appeal Arbitrators”). For
the avoidance of doubt, each Proposed Appeal Arbitrator must be qualified as a “neutral” with Utah ADR Services, and
shall not be the arbitrator who rendered the Arbitration Award being appealed (the “Original Arbitrator”).
Within five (5) calendar days after the Appellee has submitted to the Appellant the names of the Proposed Appeal Arbitrators,
the Appellant must select, by written notice to the Appellee, three (3) of the Proposed Appeal Arbitrators to act as the members
of the Appeal Panel. If the Appellant fails to select three (3) of the Proposed Appeal Arbitrators in writing within such 5-day
period, then the Appellee may select such three (3) arbitrators from the Proposed Appeal Arbitrators by providing written notice
of such selection to the Appellant.

 

(b)
If the Appellee fails to submit to the Appellant the names of the Proposed Appeal Arbitrators within ten (10) calendar days after
the Appeal Date pursuant to subparagraph (a) above, then the Appellant may at any time prior to the Appellee so designating the
Proposed Appeal Arbitrators, identify the names of five (5) arbitrators that are designated as “neutrals” or qualified
arbitrators by Utah ADR Service (none of whom may be the Original Arbitrator) by written notice to the Appellee. The Appellee
may then, within five (5) calendar days after the Appellant has submitted notice of its selected arbitrators to the Appellee,
select, by written notice to the Appellant, three (3) of such selected arbitrators to serve on the Appeal Panel. If the Appellee
fails to select in writing within such 5-day period three (3) of the arbitrators selected by the Appellant to serve as the members
of the Appeal Panel, then the Appellant may select the three (3) members of the Appeal Panel from the Appellant’s list of
five (5) arbitrators by providing written notice of such selection to the Appellee.

 

    	Arbitration Provisions, Page 5

    	 

    

 

(c)
If a selected Proposed Appeal Arbitrator declines or is otherwise unable to serve, then the party that selected such Proposed
Appeal Arbitrator may select one (1) of the other five (5) designated Proposed Appeal Arbitrators within three (3) calendar days
of the date a chosen Proposed Appeal Arbitrator declines or notifies the parties he or she is unable to serve as an arbitrator.
If at least three (3) of the five (5) designated Proposed Appeal Arbitrators decline or are otherwise unable to serve, then the
Proposed Appeal Arbitrator selection process shall begin again in accordance with this Paragraph 5.2; provided, however,
that any Proposed Appeal Arbitrators who have already agreed to serve shall remain on the Appeal Panel.

 

(d)
The date that all three (3) Proposed Appeal Arbitrators selected pursuant to this Paragraph 5.2 agree in writing (including via
email) delivered to both the Appellant and the Appellee to serve as members of the Appeal Panel hereunder is referred to herein
as the “Appeal Commencement Date”. No later than five (5) calendar days after the Appeal Commencement Date,
the Appellee shall designate in writing (including via email) to the Appellant and the Appeal Panel the name of one (1) of the
three (3) members of the Appeal Panel to serve as the lead arbitrator in the Appeal proceedings. Each member of the Appeal Panel
shall be deemed an arbitrator for purposes of these Arbitration Provisions and the Arbitration Act, provided that, in conducting
the Appeal, the Appeal Panel may only act or make determinations upon the approval or vote of no less than the majority vote of
its members, as announced or communicated by the lead arbitrator on the Appeal Panel. If
an arbitrator on the Appeal Panel ceases or is unable to act during the Appeal proceedings, a replacement arbitrator shall be
chosen in accordance with Paragraph 5.2 above to continue the Appeal as a member of the Appeal Panel. If Utah ADR Services
ceases to exist or to provide a list of neutrals, then the arbitrators for the Appeal Panel shall be selected under the then prevailing
rules of the American Arbitration Association.

 

(d)
Subject to Paragraph 5.7 below, the cost of the Appeal Panel must be paid entirely by the Appellant.

 

5.3
Appeal Procedure. The Appeal will be deemed an appeal of the entire Arbitration Award. In conducting the Appeal, the Appeal
Panel shall conduct a de novo review of all Claims described or otherwise set forth in the Arbitration Notice. Subject to the
foregoing and all other provisions of this Paragraph 5, the Appeal Panel shall conduct the Appeal in a manner the Appeal Panel
considers appropriate for a fair and expeditious disposition of the Appeal, may hold one or more hearings and permit oral argument,
and may review all previous evidence and discovery, together with all briefs, pleadings and other documents filed with the Original
Arbitrator (as well as any documents filed with the Appeal Panel pursuant to Paragraph 5.4(a) below). Notwithstanding the foregoing,
in connection with the Appeal, the Appeal Panel shall not permit the parties to conduct any additional discovery or raise any
new Claims to be arbitrated, shall not permit new witnesses or affidavits, and shall not base any of its findings or determinations
on the Original Arbitrator’s findings or the Arbitration Award.

 

5.4
Timing.

 

(a)
Within seven (7) calendar days of the Appeal Commencement Date, the Appellant (i) shall deliver or cause to be delivered to the
Appeal Panel copies of the Appeal Notice, all discovery conducted in connection with the Arbitration, and all briefs, pleadings
and other documents filed with the Original Arbitrator (which material Appellee shall have the right to review and supplement
if necessary), and (ii) may, but is not required to, deliver to the Appeal Panel and to the Appellee a Memorandum in Support of
the Appellant’s arguments concerning or position with respect to all Claims, counterclaims, issues, or accountings presented
or pleaded in the Arbitration. Within seven (7) calendar days of the Appellant’s delivery of the Memorandum in Support,
as applicable, the Appellee shall deliver to the Appeal Panel and to the Appellant a Memorandum in Opposition to the Memorandum
in Support. Within seven (7) calendar days of the Appellee’s delivery of the Memorandum in Opposition, as applicable, the
Appellant shall deliver to the Appeal Panel and to the Appellee a Reply Memorandum to the Memorandum in Opposition. If the Appellant
shall fail to substantially comply with the requirements of clause (i) of this subparagraph (a), the Appellant shall lose its
right to appeal the Arbitration Award, and the Arbitration Award shall be final. If the Appellee shall fail to deliver the Memorandum
in Opposition as required above, or if the Appellant shall fail to deliver the Reply Memorandum as required above, then the Appellee
or the Appellant, as the case may be, shall lose its right to so deliver the same, and the Appeal shall proceed regardless.

 

    	Arbitration Provisions, Page 6

    	 

    

 

(b)
Subject to subparagraph (a) above, the parties hereby agree that the Appeal must be heard by the Appeal Panel within thirty (30)
calendar days of the Appeal Commencement Date, and that the Appeal Panel must render its decision within thirty (30) calendar
days after the Appeal is heard (and in no event later than sixty (60) calendar days after the Appeal Commencement Date).

 

5.5
Appeal Panel Award. The Appeal Panel shall issue its decision (the “Appeal Panel Award”) through the
lead arbitrator on the Appeal Panel. Notwithstanding any other provision contained herein, the Appeal Panel Award shall (a) supersede
in its entirety and make of no further force or effect the Arbitration Award (provided that any protective orders issued by the
Original Arbitrator shall remain in full force and effect), (b) be final and binding upon the parties, with no further rights
of appeal, (c) be the sole and exclusive remedy between the parties regarding any Claims, counterclaims, issues, or accountings
presented or pleaded in the Arbitration, and (d) be promptly payable in United States dollars free of any tax, deduction or offset
(with respect to monetary awards). Any costs or fees, including without limitation attorneys’ fees, incurred in connection
with or incident to enforcing the Appeal Panel Award shall, to the maximum extent permitted by law, be charged against the party
resisting such enforcement. The Appeal Panel Award shall include Default Interest (with respect to monetary awards) at the rate
specified in the Note for Default Interest both before and after the Arbitration Award. Judgment upon the Appeal Panel Award will
be entered and enforced by a state or federal court sitting in Salt Lake County, Utah.

 

5.6
Relief. The Appeal Panel shall have the right to award or include in the Appeal Panel Award any relief which the Appeal
Panel deems proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided
that the Appeal Panel may not award exemplary or punitive damages.

 

5.7
Fees and Costs. As part of the Appeal Panel Award, the Appeal Panel is hereby directed to require the losing party (the
party being awarded the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without
regard to any statutory fines, penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid
costs and fees of the Arbitration and the Appeal Panel, and (b) reimburse the prevailing party (the party being awarded the most
amount of money by the Appeal Panel, which, for the avoidance of doubt, shall be determined without regard to any statutory fines,
penalties, fees, or other charges awarded to any part) the reasonable attorneys’ fees, arbitrator and Appeal Panel costs
and fees, deposition costs, other discovery costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing
party in connection with the Arbitration (including without limitation in connection with the Appeal).

 

6.
Miscellaneous.

 

6.1
Severability. If any part of these Arbitration Provisions is found to violate or be illegal under applicable law, then
such provision shall be modified to the minimum extent necessary to make such provision enforceable under applicable law, and
the remainder of the Arbitration Provisions shall remain unaffected and in full force and effect.

 

6.2
Governing Law. These Arbitration Provisions shall be governed by the laws of the State of Utah without regard to the conflict
of laws principles therein.

 

6.3
Interpretation. The headings of these Arbitration Provisions are for convenience of reference only and shall not form part
of, or affect the interpretation of, these Arbitration Provisions.

 

6.4
Waiver. No waiver of any provision of these Arbitration Provisions shall be effective unless it is in the form of a writing
signed by the party granting the waiver.

 

6.5
Time is of the Essence. Time is expressly made of the essence with respect to each and every provision of these Arbitration
Provisions.

 

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    	Arbitration Provisions, Page 7

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