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Exhibit 10.37  

 
  GROUND LEASE    
    

        This Ground Lease (this "Lease") is made as of the 6th day of December, 2000, by and between the CITY OF
DALTON, an incorporated municipality of the State of Georgia, acting by and through the Board of Water, Light and Sinking Fund Commissioners of the City of Dalton, Georgia
(hereinafter called "Landlord"); and DUKE ENERGY MURRAY, LLC, a Delaware limited liability company (hereinafter called "Tenant"); 

WITNESSETH THAT: 

        WHEREAS,
Landlord is the owner of a tract of land located in Land Lots 21 and 22 of the 13th Land District and 3rd Section of Murray County, Georgia, more particularly
described in Exhibit "A" attached hereto and incorporated herein by reference; and 

        WHEREAS,
Tenant desires to lease said land for a term hereinafter provided and acquire a right of first refusal to purchase said land, and Landlord agrees to lease said land and grant a
right of first refusal pursuant to the terms of this Lease; and 

        NOW,
THEREFORE, in consideration of the payment of $10.00 from Tenant to Landlord, the execution and delivery by Tenant of that certain Water Purchase Agreement of even date herewith
between Landlord and Tenant (hereinafter referred to as the "Water Purchase Agreement"), the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt
and legal sufficiency of which is hereby acknowledged, the parties hereto hereby covenant, agree, grant, convey and demise as follows: 

        1.    PREMISES.    Landlord, for and in consideration of the rents, covenants, agreements and stipulations hereinafter
mentioned, reserved, and contained, to be paid, kept and performed by Tenant, has leased, rented, granted and demised, and by these presents does lease, rent, grant and demise unto Tenant, and Tenant
hereby agrees to lease and take upon the terms and conditions which are hereinafter contained, that land described in Exhibit "A" attached hereto and by
this reference made a part hereof containing 48.87 acres owned by Landlord (hereinafter referred to as the "Premises"). 

        2.    TERM.    

        (a)    Initial Term.    Tenant to have, hold and lease the Premises for a term (the "Lease Term") commencing on the
date first above written (said date being referred to herein as the "Commencement Date") and ending at 11:59 p.m. on the later of (i) the date twenty (20) years after the
Commencement Date, and (ii) the expiration date of the initial term under the Water Purchase Agreement (the later of said two dates being hereinafter sometimes referred to as the "Termination
Date"), unless sooner terminated or extended as hereinafter provided; provided, however, that in the event Tenant timely exercises the Right of First Refusal pursuant to the terms of Section 37
below or the right to purchase the Premises under that certain Purchase Option Agreement between Landlord and Tenant dated as of December 6, 2000 (hereinafter referred to as the "Purchase
Option"), and should Landlord default in any of Landlord's obligations under Section 37 below or the Purchase Option, the Termination Date and Lease Term shall be automatically extended until
the closing of the sale and purchase under said Section 37 below or the Purchase Option, as applicable, as provided in Section 37 below. For the purposes of this Lease, the term "Lease
Year" shall refer to the time periods between the Commencement Date and annual anniversary thereof and between the subsequent anniversaries thereof. 

        (b)    Extension Terms.    Landlord does hereby grant to Tenant the rights and options (hereinafter collectively
referred to as the "Extension Options" or individually referred to as an "Extension Option") to unilaterally extend the term of this Lease for two (2) consecutive periods 

1

 

of
twenty (20) years each (hereinafter collectively referred to as the "Extension Terms" or individually referred to as an "Extension Term") commencing upon the expiration of the preceding
term, upon all of the same covenants, agreements, terms, conditions, provisions, restrictions and limitations as set forth in this Lease for the initial Lease Term, except that (i) Tenant shall
have no further right to extend the term of this Lease beyond the second (2nd) twenty (20) year Extension Term, and (ii) the Annual Rent (as hereinafter defined) due during each
Extension Term shall be adjusted as provided in Section 3(a) below. Tenant or any subtenant, assignee or leasehold mortgagee of Tenant may exercise each of the Extension Options, together or
successively, by giving Landlord written notice of exercise at any time, and from time to time, on or before the date one (1) year prior to the expiration of the initial Lease Term of this
Lease or the then current Extension Term, as applicable. For all purposes under this Lease, the term "Lease Term" shall mean and include the initial Lease Term and any exercised Extension Terms, if
any, through which this Lease is extended. The exercise of each Extension Option hereunder is conditioned upon (A) no material "Event of Default" by Tenant under the terms of this Lease, any
sublease of the Premises or the Water Purchase Agreement remaining outstanding and uncured on the date such Extension Option is exercised, and (B) Tenant or any subtenant exercising, or causing
to be exercised, an extension option under the Water Purchase Agreement for a like twenty (20) year extension term. 

        3.    TENANT COVENANTS AND AGREES TO PAY LANDLORD RENT AS FOLLOWS:    

        (a)    Rentals.    Beginning on the Commencement Date and continuing through and including the Termination Date,
Tenant shall pay Landlord annual rent in the amount of FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00) per calendar year (hereinafter sometimes referred to as "Annual Rent") payable in advance in one
annual installment due on December 31 of each calendar year during the Lease Term beginning December 31, 2000, except that Tenant shall pay SIX THOUSAND AND NO/100 DOLLARS ($6,000.00) as
the Annual Rent due for the balance of calendar year 2000 on the Commencement Date. Annual Rent payable hereunder shall at all times be subject to the right of Tenant to offset and apply against such
Annual Rent any amounts owed by Landlord to Tenant under this Lease. 

        Should
Tenant or any subtenant, assignee or leasehold mortgagee exercise any Extension Option hereunder, the Annual Rent due for each Extension Term shall be adjusted as follows: 

	(i)
	The
Annual Rent payable for each year of the first twenty (20) year Extension Term shall be adjusted to an amount equal to the product of multiplying FIFTY THOUSAND AND NO/100
DOLLARS ($58,000.00) by a fraction, the numerator of which shall be the Index (as hereinafter defined) published for the next to the last full calendar month of the initial Lease Term, and the
denominator shall be the Index for September, 2000;

	(ii)
	The
Annual Rent payable for each year of the second twenty (20) year Extension Term shall be adjusted to an amount equal to the product of multiplying FIFTY THOUSAND AND
NO/100 DOLLARS ($50.000.00) by a fraction, the numerator of which shall be the Index published for the next to the last full calendar month of the first Extension Term, and the denominator shall be
the Index for September, 2000. 

        For
purposes of this Lease the term "Index" shall mean the Consumer Price Index for United States All Urban Consumers, All Items (Base Year 1982 -1984 = 100),
published by the United States Department of Labor, Bureau of Labor Statistics. If the Index is modified so that the Base Year differs from the Base Year 1982 - 1984 =
100, the Index shall be converted in accordance with the conversion factor published by the United States Department of Labor. Should the increase made hereby not be calculable due to delay in
publishing of the Index, Tenant shall continue to pay the Annual Rent payable during the immediately preceding portion of the Lease Term until the Annual Rent adjustment is determined hereunder, at
which time Tenant shall 

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commence
payment of the adjusted Annual Rent and shall pay to Landlord a lump-sum retroactive adjustment with respect to the elapsed portion of the applicable Extension Term due within
thirty (30) days after Landlord gives Tenant written notice of the amount of the adjustment. 

        (b)    Additional Rent.    Tenant will also pay from time to time as provided in this Lease as additional rent
("Additional Rent") all other amounts and obligations which Tenant assumes or agrees to pay Landlord under the express terms of this Lease. 

        (c)   Tenant
shall pay interest at the rate of fifteen percent (15%) per annum (or the highest rate permitted by law upon any such amount, whichever is less) on all
installments of Annual Rent and Additional Rent not paid within thirty (30) days after written notice of default from Landlord to Tenant and any subtenant specifying the rental period and the
amount unpaid. 

        (d)    Proration.    If the expiration of the initial Lease Term or any Extension Term is not the last day of any
calendar year. Additional Rent, if any, paid based on an annual amount and Annual Rent, for such calendar year shall be prorated. 

        4.    UTILITY BILLS.    Tenant shall pay for all utilities and services to the Premises during the Lease Term,
including, but not limited to, water, sewer, gas, electricity, fuel, light, heat, and trash and garbage removal used by Tenant in connection therewith. 

        5.    TAXES.    

        (a)   Subject
to Section 5(f) below relating to contests, Landlord shall, after the Commencement Date and thereafter during the remainder of the Lease Term, pay all
real property taxes, general and special assessments, fees in lieu of taxes and like charges imposed by any governmental or quasi-governmental authority on the real property that is a part of the
Premises (hereinafter referred to as "Real Property Taxes"), and each and every installment thereof which shall or may become due and payable, or be liens upon or for or with respect to the Premises
or any part thereof, together with all interest and penalties thereon, under or by virtue of all present or future laws, ordinances, requirements, orders, directives, rules or regulations of the
federal, state, county, town and city governments and of all other governmental authorities whatsoever. Landlord shall pay the Real Property Taxes covered by said tax bill before any interest,
penalty, fine or cost may be added for non-payment. 

        (b)   Subject
to Section 5(f) below relating to contests, Tenant shall, after the Commencement Date and thereafter during the remainder of the Lease Term, pay all
property taxes, general and special assessments and like charges imposed by any governmental or quasi-governmental authority on the leasehold estate granted to Tenant in this Lease for the Premises,
including, without limitation paying all such charges imposed on all buildings, appurtenances or equipment owned by Tenant located on the Premises or Easement Areas (as hereinafter defined; said taxes
being hereinafter referred to as "Leasehold Property Taxes"), and each and every installment thereof which shall or may become due and payable, or be liens upon or for or with respect to the leasehold
estate granted in this Lease, or any buildings, appurtenances or equipment owned by Tenant located on the Premises or Easement Areas, together with all interest and penalties thereon, under or by
virtue of all present or future laws, ordinances, requirements, orders, directives, rules or regulations of the federal, state, county, town and city governments and of all other governmental
authorities whatsoever, subject to the terms of this Section 5(b) set forth below. Both Tenant and Landlord shall use their best efforts to (i) have the leasehold estate for the Premises
and the buildings, appurtenances and equipment owned by Tenant located on the Premises or Easement Areas assessed separately, throughout the Lease Term, from other property owned by Landlord for
purposes of Tenant Taxes (as hereinafter defined), including, without limitation Landlord sending a letter to the Murray County Board of Tax Assessors directing that a separate Tax Parcel
Identification Number(s) be issued for the leasehold estate for the Premises 

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and
the buildings, appurtenances and equipment owned by Tenant located on the Premises or Easement Areas and directing said authorities to separately assess the leasehold estate for the Premises and
the buildings, appurtenances and equipment owned by Tenant located on the Premises or Easement Areas from other property owned by Landlord, and (ii) have all tax bills with respect to the
leasehold estate for the Premises and the buildings, appurtenances and equipment owned by Tenant located on the Premises or Easement Areas throughout the Lease Term, forwarded directly to Tenant for
payment at Duke Energy North America, LLC. 5400 Westheimer Court, Houston Texas 77056, Attention: Larry Wall or such other address as Tenant may
designate from time to time by written notice given in accordance with this Lease. Tenant shall pay the Leasehold Property Taxes covered by said tax bill before any interest, penalty, fine or cost may
be added for non-payment. 

        (c)   Subject
to Section 5(1) below relating to contests, Tenant shall, during the Lease Term, pay all personal property taxes, general and special assessments and like
charges, including, without limitation any charges for equipment owned by Tenant, (the "Personal Property Taxes") imposed by any governmental or quasi-governmental authority on the personal property
owned by Tenant located on the Premises and the Easement Areas, and each and every installment thereof which shall or may become due and payable, or be liens upon or for or with respect to the
Premises, or any part thereof, or any buildings, appurtenances or equipment located thereon or therein or any part thereof, together with all interest and penalties, thereon, under or by virtue of all
present or future laws, ordinances, requirements, orders, directives, rules or regulations of the federal, state, county, town and city governments and of all other governmental authorities
whatsoever. Tenant shall pay the Personal Property Taxes before any interest, penalty, fine or cost may be added for non-payment. (Leasehold Property Taxes and Personal Property Taxes are
hereinafter sometimes collectively referred to herein as "Tenant Taxes"). Both Tenant and Landlord shall use their best efforts to have the personal property and equipment owned by Tenant located on
the Premises or Easement Areas assessed separately from the personal property owned by Landlord for purposes of the computation and billing of Personal Property Taxes. 

        (d)   Within
ten (10) days after written request by Tenant, Landlord will furnish to Tenant for inspection official receipts of the appropriate taxing authority or
other reasonable proof evidencing the payment of all Real Property Taxes due. Within ten (10) days after written request by Landlord, Tenant will furnish to Landlord for inspection official
receipts of the appropriate taxing authority or other reasonable proof evidencing the payment of all Leasehold Property Taxes and Personal Property Taxes due. 

        (e)   Leasehold
Property Taxes (but not Personal Property Taxes) for the first and last years of the Lease Term shall be prorated between Tenant and Landlord on the basis of a
three hundred and sixty-five (365) day year. 

        (f)    Tenant
alone shall have the right, at its own cost and expense, to initiate and prosecute any proceeding as permitted by law for the purpose of obtaining an abatement of
or otherwise contesting (1) the value of the leasehold estate for the Premises, any buildings, appurtenances or equipment located on the Premises and any personal property owned by Tenant
located on the Premises, and (2) the validity or amount of the Tenant Taxes assessed to or levied upon all or any part of said property interests and property, and, if required by law, Tenant
may take such action in the name of Landlord, who shall cooperate with the party taking such action to such extent as Tenant may require, to the end that such proceedings may be brought to a
successful conclusion. Landlord hereby irrevocably grants Tenant a power of attorney to act as Landlord's attorney-in-fact for such purposes, said grant being coupled with an
interest. Tenant shall not be in default of this Lease for failure to pay any Tenant Taxes while same are being contested. Landlord alone shall have the right, at its own cost and expense, to initiate
and prosecute any proceeding as permitted by law for the purpose of obtaining an abatement of or otherwise contesting (1) the value of the 

4

 

unimproved
real estate underlying the Premises, and (2) the validity or amount of the Real Property Taxes assessed to or levied upon all or any part of said real property, in the name of
Landlord. Landlord shall not be in default of this Lease for failure to pay any Real Estate Taxes while same are being contested, so long as such proceeding or contest suspends the obligation to pay
the tax and that nonpayment of such tax or assessment will not result in the sale, loss, forfeiture or diminution of the property or any part thereof or any interest of Tenant or any subtenant
therein. 

        (g)   If
Tenant fails to pay in accordance with this Section 5 any Tenant Taxes or related interest or penalty and is not contesting the same, Landlord may pay the
same, provided that Landlord shall have given to Tenant not less than ten (10) days' prior written notice of Landlord's intention to pay the same, and Tenant shall reimburse Landlord on demand
for the amount of any such payment made by Landlord specified in said notice and any interest due under the terms of Section 3(c) above. 

        (h)   Nothing
contained in this Section 5 or elsewhere in this Lease shall be construed to require Tenant to pay any estate, inheritance, succession, transfer or other
similar tax of Landlord, its, successors, successors-in-title or assigns, including, without limitation, any such taxes
growing out of or in any manner connected with this Lease or Landlord's interest in the Premises, all of which shall be paid by Landlord, or any tax of any kind or nature, including, without
limitation, income tax, capital gains tax, sales tax, excise tax, excess profits tax, transfer tax, or other similar taxes upon the rental and/or First Refusal Purchase Price (as hereinafter defined)
paid by Tenant, all of which shall be paid by Landlord. 

        6.    IMPROVEMENTS.    

        (a)    Construction and Alterations.    Tenant shall have the free and unrestricted right, at any time and from time
to time during the Lease Term, to cut, clear and sell timber from the property, construct improvements on the Premises, and to alter and make additions to the improvements located on the Premises and
to construct on the Premises, and any portion thereof, buildings and other improvements permitted under the zoning classification applicable, from time to time, to the Premises, without the
requirement of any prior consent or approval by Landlord; provided, however, that all such construction shall be performed without cost or expense to Landlord and shall comply with the requirements of
all laws, ordinances, codes and regulations of governmental authorities having jurisdiction of the same. Without the Landlord's prior consent, Tenant may raze, demolish, and/or remove any permanent
buildings, improvements or equipment which may hereafter be constructed on the Premises. All costs and expenses for such razing, demolition and removal shall be paid by Tenant and all building
materials, improvements, equipment and other salvage resulting from any such work shall be the property of Tenant. Tenant, at its expense, will keep the Premises in good and clean order and condition
and will promptly make all necessary repairs, replacements end renewals thereof, whether interior or exterior, structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen. Tenant
waives any right created by any law now or hereafter in force to make repairs to the Premises or any pan thereof at Landlord's expense or to require Landlord to make any such repairs. Tenant, at its
expense, will be responsible for the preservation and safety of the Premises by reason of or in connection with any excavation or other building operation upon the Premises, including without
limitation, all shoring of foundations and walls of the improvements on the Premises or of the ground adjacent thereto, whether or not the owner of the Premises shall be required by any legal
requirements to take such action or be liable for failure to do so. All timber on the Premises, if any, and the proceeds from the sale of any such timber cut on the Premises shall be the property of
Tenant. 

        (b)    Ownership of Improvements.    Any and all buildings and improvements constructed on the Premises or Easement
Areas by Tenant, or by any subtenant claiming under Tenant, shall be 

5

 

and
at all times remain the property of Tenant or such subtenant, as the case may be, until the date one hundred and eighty (180) days after the expiration or earlier permitted termination of
this Lease. Upon such expiration or termination, Tenant shall have no obligation to remove or change such buildings or improvements; provided, however, that all buildings, improvements, furniture,
furnishings, movable fixtures and equipment installed on the Premises or Easement Areas by Tenant, or by any subtenant claiming under Tenant, shall be and remain the property of Tenant or such
subtenant, as the case may be, and may be removed from the Premises and/or Easement Areas within one hundred and eighty (180) days after the expiration of this Lease. Tenant shall have no
obligation to restore the Premises or Easement Areas to their original condition or configuration upon expiration or earlier permitted termination of this Lease. Tenant may install and shall have the
right, but not the obligation, to remove from time to time, within one hundred and eighty (180) days after the expiration of this Lease, Tenant's and any under tenant's buildings, improvements,
trade fixtures, and equipment, which shall include without limitation, turbines, switching equipment, transformers, breakers, generators, pumps, chillers, cooling towers, water processing equipment,
fuel processing equipment, underground tanks, above ground tanks, and any other fixtures, machinery or equipment belonging to Tenant, under tenant or any third party, whether or not attached to the
Premises. In the event Tenant elects to remove any underground storage tank(s), then in consideration of such removal, Landlord shall grant to Tenant reasonable access to the Premises to remove any
such tank(s), to investigate and/or to remediate impacts from such tanks if such activity is required of Tenant by applicable law and the governmental agency having jurisdiction over such activity.
Such access shall continue for the duration of the removal and remediation, even if such access is required more than one hundred and eighty (180) days after the expiration of this Lease.
Nothing set forth in the foregoing sentences is intended to relieve Landlord of any of its legal obligations with regard to any underground storage tanks, if any, installed on the Premises on or
before the date of this Lease, or to impose any obligations on Tenant other than those imposed by applicable law. Should Tenant, or any subtenant claiming under Tenant, elect to remove any buildings,
improvements, furniture, furnishings, movable fixtures and equipment installed on the Premises or Easement Areas after expiration of the Lease Term, Tenant shall (1) pay Landlord a per diem
rental calculated based on the Additional Rent, if any, paid based on an annual amount and the Annual Rent in effect for the last year of the Lease Term for the time used by Tenant or any subtenant to
complete such removal work beyond the expiration date of the Lease Term, and (2) such occupancy and activities shall, be subject to all of the other terms and conditions of the Lease (e.g.
insurance obligations, prohibitions against liens, and indemnity obligations). Notwithstanding any other term or provision of this Lease to the contrary, (i) Tenant and any subtenant shall
complete all work performed at the expiration or any earlier permitted termination of the Lease to remove any buildings, improvements, furniture, furnishings, movable fixtures and equipment installed
on the Premises and/or Easement Areas (as hereinafter defined) in compliance with all applicable laws then in effect, including, without limitation, all applicable environmental laws and laws relating
to underground storage tanks then in effect, (ii) Tenant and any subtenant shall at the expiration or any earlier permitted termination of the Lease leave the Premises, Easement Areas and any
buildings, improvements, fixtures and equipment installed thereon in compliance with all applicable laws then in effect, including, without limitation, all applicable environmental laws and laws
relating to underground storage tanks then in effect, and (iii) the indemnification obligations of Tenant under Section 17 shall survive the expiration or any earlier permitted
termination of this Lease provided that Landlord has notified Tenant of the claim asserted on or before the date two (2) years following the expiration or earlier permitted termination of this
Lease as required in Section 17 below. 

6

   
        7.    INSURANCE    

        (a)   Tenant
or its subtenants, successors, successors-in-title or assigns shall, at their sole expense, maintain at all times during the Lease Term
(i) fire and extended coverage insurance with respect to the Premises, Easement Areas and all improvements of Tenant thereon in an amount not less than eighty percent (80%) of the replacement
value of such property (value of land, foundations and excavation excluded), as such may increase from time to time, (ii) commercial general liability insurance with respect to the Premises and
Easement Areas and the conduct or operation of Tenant's business on the Premises and Easement Areas, naming Landlord as an additional insured, with limits of not less than $3,000,000 for death or
bodily injury to any one or more persons and for property damage combined in any one occurrence, (iii) workers' compensation insurance for all of Tenant's employees in an amount sufficient to
comply with applicable laws and regulations; (iv) employer's liability insurance with a minimum limit of $1,000,000 for bodily injury; and (v) excess liability coverage over the
insurance required by subsection (ii) of this Section, naming Landlord as an additional insured, with combined minimum coverage of $15,000,000. The coverage limitations set forth herein shall
be increased by Tenant from time to time during the Lease Term if reasonably requested by Landlord, but not exceeding the limits typically maintained by similar tenants leasing properties similar to
the Premises. All insurance which Tenant is required to carry hereunder shall be carried with companies licensed to do business in Georgia, and shall be non-cancelable except after thirty
(30) days written notice to Landlord. Landlord agrees that Landlord will not obtain or maintain any fire, casualty or other property damage insurance with respect to the Premises or Easement
Areas or any buildings or improvements thereon during the Lease Term, except during any time period in which Tenant has failed to maintain the coverage required in subpart 7(a)(i) above. 

        (b)   Notwithstanding
anything in this Lease to the contrary, Tenant and any subtenant shall have the right to maintain the insurance coverages set forth in this
Section 7 of the Lease under policies containing provisions and/or under blanket insurance policies covering other premises owned, leased or subleased by Tenant, any subtenant and/or their
affiliates so long as the coverage afforded thereby is equivalent or greater than the insurance coverages and limits required herein. 

        (c)   Upon
the execution of this Lease and thereafter annually upon not less than fifteen (15) days after written notice and request by Landlord to Tenant, Tenant will
deliver to Landlord a certificate of insurance evidencing that Tenant or its subtenant has obtained and is maintaining the insurance coverages required by the Lease, bearing notations evidencing the
payment of premiums, the amount of coverage afforded thereby and such other matters as may be reasonably requested by Landlord. 

        (d)   Landlord
represents that Landlord typically carries, and Landlord shall at all times during the Lease Term continue to carry, at Landlord's sole cost and expense and
without contribution from Tenant, (i) commercial general liability insurance covering the Premises and Easement Areas, insuring against liability with limits of not less than $3,000,000 for
death or bodily injury to any one or more persons and for property damage combined in any one occurrence, and (ii) excess liability coverage over the insurance required by subsection
(i) of this subpart (d) with combined minimum coverage of $15,000,000, all of which coverage and/or policies shall name Tenant, Duke Energy Murray, LLC, Duke Energy Corporation, and
their subsidiaries and affiliates, as additional insureds. The coverage limitation set forth herein shall be increased by Landlord from time to time during the Lease Term if reasonably requested by
Tenant, but not exceeding the limits typically maintained by similar municipalities and utility providers owning properties similar to the Premises and Easement Areas. Upon written notice and request
from Tenant, Landlord shall within fifteen (15) days after the giving of such notice deliver a certificate of such insurance to Tenant which request may be made by Tenant on or before the
Commencement Date, and thereafter annually within fifteen (15) days after written notice and request by Tenant. All insurance which Landlord is 

7

 

required
to carry hereunder shall be carried with companies licensed to do business in Georgia, and shall be non-cancelable except after thirty (30) days written notice to Tenant. 

        8.    CASUALTY AND EMINENT DOMAIN.    

        (a)   Tenant
shall have the right and option to terminate this Lease upon the occurrence of any casualty causing damage to or destruction of the Premises, Easement Areas, any
buildings or improvements thereon, or any portion of the foregoing, at any time during the Lease Term, if Tenant reasonably determines that such damage or destruction cannot be restored using standard
construction methods within one hundred and eighty (180) days after the date of such damage or destruction. Such right to terminate shall be exercised by Tenant by written notice of termination
to Landlord on or prior to the one hundred and twentieth (120) day after the date of such damage or destruction. If no notice of termination is timely given, the right of Tenant to cancel shall
be deemed waived. Tenant shall be entitled to, and shall be paid, any and all insurance proceeds which may be payable with respect to any damage to or destruction of the buildings, trade fixtures,
equipment or other structures or improvements on the Premises, and to the extent owned by Tenant, on the Easement Areas. 

        (b)   In
the event the entire Premises is condemned or otherwise taken under power of eminent domain or conveyed under the threat of condemnation proceedings, then this Lease
shall terminate on the date such condemnation, taking or conveyance, as the case may be, occurs. If any portion of the Premises or Easement Areas, the condemnation of which would render the remaining
Premises useless or without substantial access thereto or without substantial commercial value or unsuitable for Tenant's purposes, is condemned or otherwise taken under the power of eminent domain or
conveyed under the threat of condemnation proceedings, this Lease shall, at the option of Tenant, terminate effective as of the date of such condemnation, taking or conveyance. Such right to terminate
shall be exercised by Tenant by written notice of termination to Landlord on or prior to the sixtieth (60th) day after the date of such condemnation, taking or conveyance, as the case may be. If no
notice of termination is timely given, the right of Tenant to cancel shall be deemed waived. The termination of this Lease as above provided shall not operate to deprive Tenant or Landlord of the
right to make claim pursuant to the terms of this Section 8 against the condemning authority for any damages suffered by Tenant or Landlord, as the case may be. Each party shall be permitted to
seek, claim and receive any award, settlement or judgment permitted to it by law arising out of the exercise of the power of eminent domain over the Premises; the parties shall seek separate awards in
any condemnation proceedings. Landlord and Tenant agree that Landlord shall be entitled to recover, be awarded and be paid the value of the unimproved land contained within the description of the
Premises (the "Unimproved Land Value"), and that Tenant shall be entitled to recover, be awarded and be paid (i) the part of any award attributable to the value of any buildings, improvements,
fixtures and/or equipment on the Premises, (ii) the value of the land contained within the description of the Premises in excess of the Unimproved Land Value, (iii) any consequential
damages to, and diminution in the value of, any portion of the Premises, buildings and/or improvements thereon, not condemned, and (iv) any other measures of damages (including, without
limitation, relocation expenses, value of personal property taken or damaged and any other damages) paid in connection with the condemnation of property. Notwithstanding any term or provision of this
Lease to the contrary, Landlord hereby transfers, conveys and assigns to Tenant the right to receive any award, settlement, judgment or other consideration Landlord receives or is entitled to receive
from any condemning authority in excess of the Unimproved Land Value. Landlord and Tenant agree to diligently pursue their rights to receive any and all awards, settlement, judgments or other
consideration due from any condemning authority, and Landlord and Tenant agree that neither party will settle any condemnation claim or close any sale in lieu of condemnation without the prior written
consent of the other party to such settlement or sale; provided, however, that no consent of Landlord shall be 

8

 

required
after Landlord has received, or will receive as part of any settlement, an amount equal to the Unimproved Land Value. If a portion of the Premises is condemned or otherwise taken or conveyed
under threat of condemnation and this Lease is not terminated, the rent thereafter payable by Tenant to Landlord shall be reduced to such extent as may be fair and reasonable to Landlord and Tenant
under all of the circumstances. If Landlord and Tenant are unable to agree upon an appropriate reduction in rent, each party shall, on the demand of the other, appoint an M.A.I. Appraiser. The two
(2) appraisers shall be instructed to meet and select a third M.A.I. Appraiser, and the three (3) appraisers shall be instructed to determine, within forty-five
(45) days thereafter by majority vote, the amount of the rent reduction hereunder, taking into account only the fair market value of the land included in the Premises in an unimproved state
Premises after the condemnation, taking or conveyance as compared to the fair market value of the land included in the Premises in an unimproved state prior thereto. 

        9.    ASSIGNMENT AND SUBLETTING.    

        (a)   Tenant
and any assignee or successor to Tenant's interest hereunder shall have the right, at any time and from time to time, to assign this Lease and any rights
hereunder, provided that (i) the assignment is accomplished pursuant to a written document under which the assignee shall expressly assume and agree to pay the rent and other payments due
hereunder and agree to perform Tenant's obligations hereunder, and (ii) Landlord consents in writing to such assignment, such consent not to be unreasonably withheld, conditioned or delayed by
Landlord. With respect to any assignment to which Landlord's consent is required under this Lease, Tenant shall give Landlord not less than thirty (30) days prior notice of such assignment,
together with the name of the assignee, income statements and balance sheets for the assignee for the three fiscal years prior to the date of such notice to the extent they exist, and the Moody's
Investors Services, Inc. and Standard & Poors Ratings Group ratings for the assignee to the extent they exist. During said thirty (30) day period Tenant shall provide Landlord any
other information about the assignee Landlord may reasonably request, by notice to Tenant, that is in Tenant's possession. Landlord shall within said thirty (30) day period shall notify Tenant
that Landlord either consents in writing to the subject assignment, or that Landlord refuses to consent to such assignment, in which case Landlord shall state in reasonable detail the basis for its
refusal to consent to the assignment. Should Landlord fail to notify Tenant of its response or not refuse by written notice to consent to the assignment within said thirty (30) day period, then
Landlord shall be deemed to have consented to the assignment. Upon any such assignment, Tenant shall send to Landlord a signed copy of the assignment and assumption and the name, address and telephone
number of the assignee. Upon such assignment and assumption, whether or not the consent of Landlord to such assignment is required under the terms hereof, Tenant shall be released and relieved from
all of its covenants, duties, obligations and liabilities under this Lease accruing or arising on or and after (but not before) the effective date of any such assignment. Landlord hereby agrees to
look solely to such assignee with respect to such covenants, duties, obligations, and liabilities. In addition, Tenant shall have the right to freely grant a security interest, transfer in trust,
mortgage, hypothecate, assign, or otherwise transfer Tenant's right, title, and interest or delegate its duties under this Lease to any institutional or commercial lender, or other person, its
successors or assigns, providing credit or loans to Tenant in connection with the financing, refinancing or operation of the plant to be constructed on the Premises (a "Lender" or "Lenders") and any
Lender may exercise its rights or pursue its remedies available under any loan agreements, security agreements or other instruments or documents between itself and Tenant or otherwise available to
such Lender at law or in equity; and Tenant may assign this Lease without the prior written consent of Landlord to Tenant's Lender(s), but Landlord agrees to execute a consent to such assignment as
may be reasonably requested by such Lender(s). Notwithstanding any other term or provision of this Section 9(a) or this Lease to the contrary, Landlord's consent shall not be required in
connection with any assignment of this Lease or any rights hereunder to (A) MCIDA 

9

 

(as
hereinafter defined), or other governmental entity or governmental development authority, (B) Duke Energy Murray, LLC, a Delaware limited liability company, (C) Duke Energy North
America, LLC, a Delaware limited liability company, (D) any person or entity having a rating for long-term unsecured debt obligations which is equal to or greater than "Baa3", in
the case of a rating issued by Moody's Investors Services, Inc., or "BBB-" in the case of a rating issued by Standard &Poors Ratings
Group (a division of McGraw Hill, Inc.), or an equivalent rating issued by another nationally recognized ratings organization, (E) any person or entity if the payment obligations of such
assignee under Sections 3, 4, 5 and 17 of this Lease of this Lease are guaranteed by a person or entity that holds a credit rating meeting the requirements of clause (D) immediately preceding,
or (F) the payment obligations of such assignee under Sections 3,4, 5 and 17 of this Lease are supported by a letter of credit in an amount not less than FIVE MILLION AND NO/100 DOLLARS
($5,000,000.00) or similar credit support arrangements reasonably acceptable to Landlord (the persons and entities described in subparts (A) through (F) being hereinafter referred to as
the "Approved Parties"). 

        (b)   Tenant
and any assignee or successor to Tenant's interest hereunder shall have the right, at any time and from time to time, to sublease all or any one or more portions
of the Premises, provided, however, that (i) any sublease is accomplished pursuant to a written sublease document under which the subtenant shall expressly assume and agree to pay the rent and
other payments due hereunder and agree to perform Tenant's obligations hereunder with regard to the subleased premises, (ii) any sublease shall expressly provide that the sublease is
subordinate to the terms of this Lease and the subtenant shall be subject to all of the terms of this Lease applicable to the subleased premises, (iii) any sublease shall expressly provide that
Landlord is a third party beneficiary of the assumption required in 9(a)(i) above and as a result Landlord shall have a direct cause of action against any subtenant for breach of any of the
obligations assumed under the sublease, (iv) no sublease shall be for a term which extends beyond the Lease Term, (v) Tenant shall promptly provide Landlord with copies of all written
subleases as evidence thereof, and (vi) Landlord consents in writing to such sublease, such consent not to be unreasonably withheld, conditioned or delayed by Landlord. With respect to any
sublease to which Landlord's consent is required under this Lease, Tenant shall give Landlord not less than thirty (30) days prior notice of such sublease, together with the name of the
subtenant, income statements and balance sheets for the subtenant for the three fiscal years prior to the date of such notice to the extent they exist, and the Moody's Investors Services, Inc.
and Standard & Poors Ratings Group ratings for the subtenant to the extent they exist. During said thirty (30) day period Tenant shall provide Landlord any other information about the
subtenant Landlord may reasonably request, by notice to Tenant, that is in Tenant's possession. Landlord shall within said thirty (30) day period shall notify Tenant that Landlord either
consents in writing to the subject sublease, or that Landlord refuses to consent to such sublease, in which case Landlord shall state in reasonable detail the basis for its refusal to consent to the
sublease. Should Landlord fail to notify Tenant of its response or not refuse by written notice to consent to the sublease within said thirty (30) day period, then Landlord shall be deemed to
have consented to the sublease. Each such sublease shall be subject and subordinate to this Lease. Notwithstanding any other term or provision of this Section 9(b) or this Lease to the
contrary, Landlord's consent shall not be required in connection with any sublease of the Premises or any part thereof entered into with any Approved Party. Landlord agrees to send the subtenants
subleasing all or part of the Premises pursuant to the provisions of this Section 9(b) a copy of any notice Landlord shall send to Tenant with respect to any default by Tenant or any subtenant
under the terms of this Lease, at the same time such notice is sent to Tenant, provided Landlord has been given the name and notice address of such subtenants by written notice given in accordance
herewith. Landlord agrees that subtenants subleasing all or part of the Premises pursuant to the provisions of this Section 9(b) shall have the right to cure any defaults by Tenant or any
subtenant under this Lease. Landlord agrees not to hinder or disturb the 

10

 

quiet
use, possession or enjoyment of the Premises by any subtenant subleasing all or part of the Premises pursuant to the provisions of this Section 9(b), so long as such subtenant agrees to
cure any default by Tenant or any subtenant in the payment of rent or other affirmative obligations of Tenant under this Lease, and thereafter proceeds to diligently and continuously pursue such cure
to completion within a reasonable period of time, which non-disturbance agreement shall run to and be binding upon Landlord and Landlord's successors,
successors-in-title and assigns and any purchaser at a foreclosure of any deed to secure debt, mortgage or similar encumbrance encumbering the Premises. Landlord agrees to
enter into separate non-disturbance and attornment agreements with any subtenants of Tenant, in recordable form, affording them non-disturbance protection so long as the
subtenants agree to cure any default by Tenant in the payment of rent or other affirmative obligations of Tenant under this Lease, which non-disturbance agreements shall run to and be
binding upon Landlord's successors, successors-in-title and assigns and any purchaser at a foreclosure of any deed to secure debt, mortgage or similar encumbrance
encumbering the Premises. 

        10.    LIENS.    

        (a)   Except
as provided under the terms and provisions of this Lease, Tenant is not authorized to subject Landlord's interest in the Premises to any easement, restriction,
lien, charge or encumbrance of any kind or nature. 

        (b)   Tenant
will not directly or indirectly create or permit to be created or to remain, and Tenant will discharge by payment, bonding against or other means, as Tenant may
elect, any lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Premises, Easement Areas or any part thereof,
Tenant's interest therein or rent or any other sum payable under the Lease, other than (i) the Lease, (ii) any Leasehold Mortgage (hereinafter defined), (iii) liens for Tenant
Taxes not yet payable, or payable without the addition of any fine, penalty, interest or cost for nonpayment, or being contested as permitted by Section 5, (iv) Permitted Encumbrances
(hereinafter defined), (v) liens of mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the initial and/or future construction, maintenance, repair, replacement and/or
renewal of any buildings and/or improvements on the Premises and/or Easement Areas or incurred in the ordinary course of business, for sums which under the terms of the related contracts are not at
the time due; and (vi) any easements, estates, interests, privileges and/or other rights permitted by the terms of this Lease or the terms of easements granted to Tenant pursuant to the terms
of this Lease, including, without limitation, Section 13 below. All alterations, additions, improvements, repairs and other work performed by or at the request of Tenant or any of its
subtenants relating to the Premises or Easement Areas, and the charges therefor, shall be the responsibility and expense of Tenant, and Landlord shall have no obligation with respect thereto. 

        (c)   Nothing
contained in this Lease shall constitute any request by Landlord, express or implied, for the performance of any labor or services or the furnishing of any
materials to the Premises in respect of the Premises or any part thereof, on credit or otherwise, nor as giving Tenant any right, power or authority to contract for or permit the performance of any
labor or services or the furnishing of any materials to the Premises in such fashion as would permit the making of any claim against Landlord or Landlord's interest in the Premises or any part
thereof. 

11

   
        11.    MORTGAGE OF TENANTS ESTATE.    

        (a)   Tenant
and any subtenant may place one or more mortgages, security deeds, deeds to secure debt, security interests or any other such instrument securing a debt on
Tenant's and subtenant's respective leasehold interests in the Premises (herein such instruments are referred to as a "Leasehold Mortgage," and the holder thereof being herein referred to as a
"Leasehold Mortgagee"), provided that Tenant and any subtenant shall promptly provide Landlord with a copy of any Leasehold Mortgage. Each such Leasehold Mortgage, however, shall mature not later than
the end of the Lease Term, and shall be a leasehold mortgage only; it is distinctly understood and agreed that the Tenant has no right to mortgage the fee title of the Premises or Landlord's interest
in this Lease, and that each Leasehold Mortgage shall be subject to this Lease. Landlord and Tenant agree that, after the execution and delivery of any such Leasehold Mortgage, this Lease shall not be
modified to materially and adversely affect the interest of the Leasehold Mortgagee without the prior written consent of the Leasehold Mortgagee, if Landlord is given written notice thereof and
provided with a copy of such Leasehold Mortgage. 

        (b)   In
the event Landlord desires to hold Tenant in default under this Lease as defined in Section 12 below, Landlord agrees to give written notice of such default to
each Leasehold Mortgagee, who shall have furnished to Landlord its name and address and requested in writing a copy of default notices. Each Leasehold Mortgagee shall have the same right and time to
cure or cause a cure of default as Tenant has under Section 12 prior to Landlord seeking any remedy permitted under the terms of this Lease, but no Leasehold Mortgagee shall be obligated to
cure or cause a cure of any such default. Landlord agrees to recognize the cure of any default or Event of Default of Tenant by any subtenant, under tenant, assignee or holder of a Leasehold Mortgage. 

        (c)   In
the event any such default is not cured by Tenant or a Leasehold Mortgagee and Landlord seeks specific performance or a judgment for damages by reason of such
default, then Landlord, within ninety (90) days after final disposition of said proceedings, shall send to each Leasehold Mortgagee an offer to enter into a new lease with said Leasehold
Mortgagee on the same terms and conditions as this Lease, except that the tenant shall be said Leasehold Mortgagee instead of Tenant, the commencement date shall be the first day of the first calendar
month following the date said Leasehold Mortgagee delivers the new lease to Landlord and the Termination Date shall be the Termination Date of this Lease, subject to any extensions as provided herein.
The offer may be accepted by said Leasehold Mortgagee by mailing, within fifteen (15) days after the sending of said offer, two (2) duly executed originals of said new lease to Landlord,
together with the payment of all sums due under this Lease up to the commencement date of said new lease. Upon receipt of said new lease and said payment, Landlord shall immediately execute both
originals of said new lease and return one fully executed copy thereof to the new tenant. Upon the commencement date of said new lease, this Lease shall terminate and be of no further force and
effect. As among Leasehold Mortgagees, an acceptance of such offer to enter into a new lease by the Leasehold Mortgagee holding the higher or highest
priority Leasehold Mortgage shall be effective and shall in all respects prevail notwithstanding a prior acceptance by a Leasehold Mortgagee or Leasehold Mortgagees holding subordinate Leasehold
Mortgages. 

        (d)   A
Leasehold Mortgagee shall in no manner or respect whatsoever be liable or responsible for any of Tenant's or subtenant's obligations under this Lease, unless and until
such Leasehold Mortgagee becomes the owner of Tenant's or subtenant's respective interests in the Premises. Should a Leasehold Mortgagee or its designee become the owner of Tenant's or subtenant's
respective interests in the Premises by exercise of a power of sale contained in such Leasehold Mortgage, by foreclosure of such Leasehold Mortgage, by conveyance in lieu of foreclosure or otherwise,
said Leasehold Mortgagee or its designee shall attorn to Landlord, and Landlord will accept such attornment and said Leasehold Mortgagee or its designee and Landlord shall have the 

12

 

same
rights and obligations toward one another which they would have had if this Lease had been entered into with Landlord, as Landlord, and said Leasehold Mortgagee or its designee, as Tenant or
subtenant as the case may be. 

        (e)   Landlord
will, within ten (10) days after written request, confirm in a written document any of the foregoing provisions of this Lease relative to any Leasehold
Mortgages at the request of Tenant. 

        12.    DEFAULT.    

        (a)   It
shall be an "Event of Default" by Tenant hereunder, after expiration of the following notice and cure periods, if: (i) Tenant shall default in the payment of
rent herein reserved when due Landlord hereunder, and shall fail to cure said default within thirty (30) days after Tenant's receipt of written notice of default from Landlord specifying the
rental period and the amount unpaid; (ii) Tenant shall default in the payment of any other sums due Landlord hereunder and shall fail to cure said default within thirty (30) days after
Tenant's receipt of written notice of default from Landlord specifying the requirement under the Lease and the amount unpaid, (iii) Tenant fails to substantially comply with any material term
or provision of this Lease, other than the provision requiring the payment of rent or other payments, and Tenant fails to cure such default within thirty (30) days after Tenant's receipt of
written notice of default from Landlord specifying Tenant's default; provided that if the failure cannot reasonably be cured within thirty (30) days, it shall not be an Event of Default if
Tenant commences to cure within thirty (30) days after Tenant's receipt of said notice of default and thereafter diligently pursues the completion of the same, or (iv) an "Event of
Default" by Tenant or any subtenant occupying the Premises shall remain outstanding and uncured under the Water Purchase Agreement, then, in any of said events, but subject to the other provisions of
this Lease, Landlord, at its option, may at any time thereafter during the continuation of such Event of Default, pursue a civil action against Tenant for any damages suffered as a result of such
Event of Default. Notwithstanding any Event of Default, Landlord may not levy or distrain upon, or otherwise proceed against, by legal process or otherwise, any of Tenant's or its subtenants' or under
tenants' buildings, improvements, fixtures, trade fixtures, machinery, equipment, or other property belonging to Tenant or any subtenant
or under tenant, whether or not attached to the Premises, including, but not limited to, turbines, switching equipment, transformers, breakers, generators, pumps, chillers, cooling towers, water
processing equipment, fuel processing equipment, underground tanks, or above ground tanks; provided, however, nothing in this sentence is intended to restrict Landlord's rights in the event Landlord
obtains a judgment against Tenant following any Event of Default to enforce such judgment by levying against Tenant's personal property. 

        (b)   If
an Event of Default occurs and is continuing, Landlord shall also have the right, at its option, during the continuation of any Event of Default, to make any payment
or perform any act Tenant was required to make or perform, with the same effect as if made or performed by Tenant, and entry by Landlord upon the Premises or any part thereof for such purposes shall
not waive or release Tenant from any Event of Default, and Tenant shall reimburse Landlord on demand (with interest to be paid as provided in Section 3(c)) for all sums so paid by Landlord and
all costs and expenses incurred by Landlord in connection with the performance of such act. 

        (c)   It
is recognized that Tenant may sublease a portion or portions of the Premises, and may not have control over the actions of subtenants. Provided that Tenant shall
require of all subtenants compliance with the provisions of this Lease relating to the use and care of the Premises, then if Landlord seeks to hold Tenant in default for matters solely caused by
actions of subtenants, the thirty (30) day cure periods set forth in Section 12(a) above shall be extended to such time as required for Tenant to cure or cause a cure of such breach by
subtenants by the use of diligent, continuous and good faith efforts (including termination of subleases). 

13

 

        (d)   In
the event Landlord shall default in the performance of any obligation imposed on Landlord by this Lease or shall breach any warranty of Landlord contained in this
Lease, and Landlord shall fail to cure such default or breach within thirty (30) days after receipt of written notice thereof from Tenant (provided that if the default does not involve the
payment of money and cannot reasonably be cured within thirty (30) days, it shall not be an event of default if Landlord commences to cure within thirty (30) days after Landlord's
receipt of notice and thereafter diligently pursues the completion of the same), then, in any such event, in addition to any other remedies available to Tenant at law, in equity or otherwise,
(i) the rental payable hereunder by Tenant to Landlord shall abate so long as such default or breach by Landlord continues, (ii) Tenant may perform on behalf of Landlord and deduct from
the rent due from and after the cure of such default and from the First Refusal Purchase Price or Purchase Price under the Purchase Option, as applicable, all costs to cure and reasonable expenses
Tenant incurs as a result thereof, together with interest at the rate of fifteen percent (15%) per annum or the highest rate permitted by law, whichever is less, upon any such amount from the date
paid or incurred by Tenant until paid by Landlord, (iii) if the default involves the Landlord's failure to comply with the terms of Section 37 below or the Purchase Option Tenant may
apply and offset against the Annual Rent and/or Additional Rent due under the Lease and against the First Refusal Purchase Price and Purchase Price under the Purchase Option any amounts owed by
Landlord to Tenant under the Lease, together with interest at the rate of fifteen percent (15%) per annum or the highest rate permitted by law, whichever is less, upon any such amount from the date
due from Landlord until paid by Landlord, and Tenant shall have the option, in Tenant's sole and absolute discretion, to extend the Lease Term in
accordance with the terms of Section 37 below for a period of time equal to the period each such default or breach continues, and (iv) upon Landlord's failure to cure any such breach or
default as herein provided, and during the continuation of such uncured default Tenant shall have the right and option to terminate this Lease without the payment of any termination fee provided in
Section 36 hereof or otherwise. 

        (e)   Except
as limited by the express terms of this Lease, the rights and remedies of each party as set forth in this Lease are cumulative and are in addition to and not in
lieu of any other rights and remedies available at law or in equity. 

        13.    EASEMENTS ON PREMISES.    Tenant is hereby authorized to grant easements across, under, over and through the
Premises for the installation, construction, maintenance, repair, relocation, removal and/or replacement of natural gas, electric transmission, communication, water, sewer and other utility lines, for
conservation or restriction of any flood plain and/or wet lands areas, for rights of way and for other means of ingress and egress, and Landlord covenants that Landlord will, upon request of any party
to whom any such easement is granted, join in the execution of such easement; provided, however, that, unless Tenant shall exercise its Right of First Refusal contained in Section 37 below or
otherwise purchase the Premises, each easement shall automatically expire (if not sooner terminated by its terms) on the Termination Date of this Lease, as extended by the exercise of any extension
option by Tenant. 

        14.    USE.    Tenant and those holding by, through and under Tenant may use the Premises for any lawful purpose.
Tenant presently intends to use the Premises for the construction and operation of an electric generation plant and related facilities and equipment used by Tenant and its subtenants in conducting
such business operations, for storing and handling fuels and the tanks and pumps required therefore, and for any other purposes ancillary or related to Tenant's and its subtenant's business. Tenant's
actual use of the Premises shall be consistent, in all material respects, with applicable law and regulations. Tenant requires means of access to the Premises from public streets for the motor
vehicles of Tenant and others, at all times, appropriate and sufficient for all of the foregoing purposes and for the construction, installation, repair, replacement and removal of Tenant's
improvements. If Tenant shall for any reason (other than those caused by Tenant) be prevented at any time from using the 

14

 

Premises
for any or all of the foregoing purposes or if the required access shall not be available, Tenant may terminate this Lease by notice to Landlord effective on the date specified in the notice,
without the payment of any termination fee or other consideration by Tenant, and thereafter, except for Tenant's rights and obligations under Sections 6(b) and 17 (a) and (b) hereof,
neither Landlord nor Tenant shall have any further rights, duties or obligations under this Lease and the rent and other sums payable by Tenant for the remainder of the term shall wholly abate. 

        15.    QUIET ENJOYMENT AND REPRESENTATIONS AND WARRANTIES OF LANDLORD.    

        (a)   Landlord
covenants and agrees that Tenant, on paying the rents and observing and keeping the covenants, agreements and stipulations of this Lease on its part to be kept,
shall peaceably and quietly hold, occupy and enjoy said Premises during the Lease Term without any claims, hindrance or disturbance from anyone claiming directly by, through or under Landlord. 

        (b)   Landlord
and Tenant agree that an estate for years is created hereby, and Tenant shall have and enjoy all rights, title, interest and privileges as the owner of a
leasehold estate for the Lease Term, subject to all of the terms of this Lease. 

        (c)   Landlord
and all parties subsequently acquiring Landlord's reversionary interest in the Premises shall hold said reversion subject to all of the terms of this Lease. 

        (d)   Landlord
does hereby warrant and represent to Tenant that as of the date hereof and the commencement of the Lease Term (i) that there are no ground leases,
leases, licenses, deeds to secure debt, deeds of trust, mortgages, security interests, liens or other encumbrances affecting the Premises or Tenant's proposed use thereof, (ii) that Landlord
alone owns and holds good and marketable fee simple title to the Premises, subject only, to those matters set forth on Exhibit "B" attached hereto
incorporated herein by reference, if any, (said matters being herein referred to collectively as the "Permitted Encumbrances"), (iii) that the Premises is a part of certain real property
located in Whitfield and Murray Counties, Georgia, owned by Landlord on which Landlord operates a Land Application System for the land application of wastewater products (a "LAS") and the property on
which the LAS is operated was purchased by the Landlord for the purposes of the operation of the LAS with assistance from the United States Environmental Protection Agency ("EPA") pursuant to a grant
program; (iv) pursuant to a Consent Decree between Landlord, on the one hand, and the EPA, on the other hand, a portion of the LAS which, contains the Premises, can no longer be used for their
intended purposes of land application of bio-solids; (v) the EPA has required that the Premises be taken out of service, as a result the Premises is unsuitable, unserviceable and
inadequate for the uses and purposes for which it was originally acquired, and has not been used by the Landlord for its originally intended purposes for a period of time in excess of twelve
(12) months; (vi) pursuant to Federal regulations the EPA has released the Premises, which tract comprises a portion of the LAS that can no longer be used for land application of
bio-solids, from all claims of the EPA arising by virtue of such grant; (vii) that as a result of being unable to use the Premises for its intended uses and purposes of land
applying bio-solids as part of its operation of the LAS the Landlord has abandoned the Premises for use in connection with the LAS, as well as any and all other waste disposal and sewage
treatment uses and purposes and other governmental functions, and (viii) that Landlord has the good and lawful right, power and authority to execute this Lease and to do all things necessary to
perform its terms, and that, except for the Permitted Encumbrances, Landlord shall warrant and forever defend Tenant, its successors, successors-in-title and assigns, against
the claims of any and all persons whomsoever as to any rights herein granted. 

15

 

        (e)   Landlord
does hereby warrant and represent to Tenant that: 

        (1)   Landlord
has no knowledge of any pending condemnation proceedings affecting the Premises or any part thereof or the Easement Areas identified and described in the
easements granted pursuant to Section 33 below (herein collectively referred to as the "Easement Areas") or any part of such Easement Areas; 

        (2)   Except
for that certain Right of First Refusal contained in Section 37 below and the Purchase Option Agreement, no person, firm or entity has any options to
purchase, rights of first refusal or other rights in or to acquire the Premises or any part thereof and there is no agreement to sell, lease or permit the use of the Premises or the Easement Areas
except for this Lease; 

        (3)   To
the best of Landlord's knowledge, there are no violations of any legal requirements affecting the Premises or the Easement Areas other than the violations alleged in
the EPA Proceeding; and 

        (4)   Except
for the EPA Proceeding, Landlord is not now a party to any litigation affecting the Premises or the Easement Areas or any part thereof or Landlord's right, power
or authority to lease the Premises or any part thereof or to grant the Right of First Refusal contained herein, or to grant the easement agreements described in Section 33 below and Landlord
covenants and agrees to give Tenant prompt notice of the institution of any such litigation. 

        (f)    Landlord
is a municipal corporation of the State of Georgia, duly chartered and existing under and by virtue of the laws of the State of Georgia, which has the power and
authority to own and lease its properties and to carry on its business as presently conducted and as represented in this Lease. 

        (g)   This
Lease has been duly authorized, executed, and delivered by representatives of Landlord who have the requisite power and authority to execute and deliver this Lease
in the name of and on behalf of Landlord, and all necessary approvals by the Landlord required to so bind Landlord have been obtained. 

        (h)   This
Lease represents a valid and binding obligation of Landlord, enforceable against it by its terms, and that entering into this Agreement will not violate any rule,
regulation, charter, by laws, or other agreements binding upon Landlord, except as the enforceability thereof may be limited to bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the enforcement of creditors' rights generally and general equitable principles. 

        (i)    The
execution, delivery, and performance of this Lease will not violate, or be in conflict with, or result in a material breach of, or constitute a default under, any
material agreement, order, judgment,
or decree to which Landlord is a party or by which Landlord is bound, including, without limitation, any agreement, order, judgment, or decree entered into in connection with the EPA Proceeding. 

        For
purpose of this Lease, the term "EPA Proceeding" shall mean that certain is the civil action styled United States of America and the State of Georgia v. Dalton Utilities and the
Water, Light and Sinking Fund Commission of the City of Dalton, Georgia, Civil Action No. 4:98-CV 0191-HLM, pending in the United States District Court for the Northern
District of Georgia, Rome Division, which is an enforcement proceeding in which civil penalties and injunctive relief are sought for alleged violations of the federal Clean Water Act, 33 U.S.C.
Section 1319, by Dalton Utilities in the operation of its wastewater treatment facilities, and includes the claims of citizen intervenors, the State of Alabama, the Weiss Lake Improvement
Association and the Coosa River Basin Initiative. 

16

   
        16.    TRADE FIXTURES.    Landlord recognizes that from time to time throughout the term of this Lease, Tenant or its
subtenants may place upon the Premises, Easement Areas and within any buildings located thereon machinery, equipment and trade fixtures. Landlord does hereby acknowledge and agree that all items of
machinery, equipment and trade fixtures placed on or located upon the Premises and Easement Areas shall be and remain the sole property of Tenant or such subtenants. Such equipment and fixtures may be
removed from the Premises and Easement Areas by Tenant and its subtenants at any time before the expiration or earlier permitted termination of this Lease or within one hundred and eighty
(180) days thereafter, subject, however, to the obligation of Tenant to comply with all of the terms and conditions of Section 6(b) of the Lease. Except as expressly set forth in this
Lease, any such trade fixtures or personalty not removed within one hundred and eighty (180) days after the expiration of this Lease shall be deemed abandoned by Tenant or its under tenants. 

        17.    INDEMNITY.    

        (a)   Tenant
will protect, indemnify and save harmless Landlord from and against all losses, liabilities, obligations, claims, damages, penalties, causes of action, suits,
litigation, judgments, and costs and expenses, including, without limitation, reasonable attorneys' fees, expenses and costs of litigation (all of the foregoing being hereinafter collectively referred
to as "Losses"), imposed upon or incurred by or asserted against Landlord or Landlord's fee interest in the Premises or Easement Areas, or any part thereof, caused in whole or in part by the
following: (a) the use or occupation of the Premises or ownership by Tenant of an estate for years therein by Tenant during the Lease Term or arising out of Tenant's demolition and removal
actions pursuant to Section 6 hereof, (b) any personal injury to or death of persons (including workers) on the Premises during the Lease Term or arising out of Tenant's demolition and
removal actions on the Premises pursuant to Section 6 hereof, (c) any use, non-use or condition of the Premises or any part thereof during the Lease Term or arising out of
Tenant's demolition and removal actions pursuant to Section 6 hereof, (d) performance of any labor or services or the furnishing of any materials to the Premises or any part thereof,
(e) any work to remove any buildings, improvements, fixtures or equipment or restoration of the Premises, (f) any misrepresentation or breach by Tenant of any of the representations or
warranties of Tenant set forth in this Lease, (g) the failure on the part of Tenant to comply with any of the terms of this Lease, or (h) the negligence or wrongful conduct of Tenant, or
any of tenant's agents, employees or invitees. 

        (b)   Tenant,
covenants and agrees not to suffer, permit, introduce or maintain in, on or about any portion of the Premises any asbestos, polychlorinated biphenyls, or any
other Hazardous Substances (as hereinafter defined); provided, however, Tenant shall be entitled to use Permitted Hazardous Materials (as hereinafter defined) provided such use and disposition after
use complies in all material respects with all applicable laws, rules and regulations. For purposes of this Paragraph, the term "Permitted Hazardous Materials" shall mean: (i) all waste
materials currently generated and disposed of in connection with operating an electric power generation plant and related facilities, including, without limitation, garbage and other refuse,
(ii) supplies, chemicals and materials commonly used in the operation, maintenance and cleaning of electric power generation plants and related facilities, (iii) fuel oil, natural gas
and other petroleum products and by-products, including, without limitation, gasoline, diesel fuel, other fuels, oil, waste oil, other lubricants, and propane, and (iv) any other
Hazardous Substances used in the operation of or in connection with any business being operated on the Premises. Without limiting Landlord's other rights under this Section 17 or as otherwise
set forth in this Lease, Tenant further covenants and agrees to indemnify, protect and save Landlord harmless against and from any and all Losses which may at any time be imposed upon, incurred by or
asserted or awarded against Landlord arising from or out of any violation by Tenant of any applicable environmental laws or the existence of any Hazardous Substances on, in, under or affecting all or
any portion of the Premises which were introduced by Tenant or its agents, representatives or invitees, or permitted to be 

17

 

introduced
by Tenant, including, without limitation, (i) the costs of removal of any and all Hazardous Substances introduced to the Premises by Tenant, its agents, representatives or invitees,
from all or any portion of the Premises as required by applicable laws, rules and regulations and the governmental agency having jurisdiction over the Premises, (ii) additional costs required
to take necessary precautions to protect against the release of Hazardous Substances on, in, under or affecting the Premises introduced to the Premises by Tenant or its agents, representatives or
invitees, into the air, any body of water, any other public domain or any surrounding areas in violation of applicable laws, rules and regulations, and (iii) the costs incurred to comply, in
connection with all or any portion of the Premises, with all applicable laws, orders, judgments and regulations with respect to Hazardous Substances used by Tenant, its agents, representative or
invitees on the Premises. Tenant's obligations to indemnify Landlord under the terms of this Section 17 shall be without prejudice to Tenant's rights to collect damages from, seek contribution
from or indemnification from any actually responsible parties. As used in this Lease, the term "Hazardous Substances" means such materials, waste, contaminants or other substances defined as toxic,
dangerous to health or otherwise hazardous by reference to the following sources as amended from time to time: (i) the Resource Conservation and Recovery Act of 1976, 42 USC 6901  et seq. ("RCLA");
(ii) the Hazardous Materials Transportation Act, 49 USC 1801, et seq.;
(iii) the Comprehensive Environmental Response Compensation and Liability Act of 1980, 42 USC 9601 et seq. ("CERCLA"); (iv) applicable
laws of the jurisdiction where the Premises are located, and (v) any federal, state or local statutes, regulations, ordinances, rules or orders issued or promulgated under or pursuant to any of
those laws or otherwise by any department, agency or other administrative, regulatory or judicial body, having jurisdiction over the Premises. 

        (c)   Notwithstanding
any term or provision of Sections 17(a) or (b) above or any other provision of this Lease, Tenant shall have no obligation to indemnify, defend or
hold Landlord harmless from or against any Losses to the extent caused by (i) any condition existing on or at the Premises on the date hereof, (ii) any condition existing on or at the
Premises after the date hereof which is due to any activities conducted on the property adjoining the Premises by parties other than Tenant and its agents, employees, contractors, subcontractors,
including, without limitation, any migration from the property adjoining the Premises to the Premises, (iii) the negligence or wrongful conduct of Landlord or Landlord's agents,
representatives, employees, trustees, successors, successors-in-title or assigns or (iv) the failure on the part of Landlord to perform or comply with any of the terms
of this Lease. When any claim of Losses is caused by the joint negligence or wrongful conduct of Landlord and Tenant or Tenant and a third party unrelated to Tenant, except Tenant's agents, employees,
subtenants or invitees, Tenant's duty to indemnify, defend and hold Landlord harmless shall be in proportion to Tenant's allocable share of the joint negligence or wrongful conduct. Tenant is hereby
subrogated to any rights of Landlord against any other parties whomsoever in connection therewith, provided that Tenant's right of subrogation shall be conditioned upon Tenant continuing to fully
comply with Tenant's obligations under the terms of this subpart 17(c). Landlord shall promptly notify Tenant of any claim asserted against Landlord on account of any such injury or claimed injury
indemnified by Tenant under this Section 17 and shall deliver to Tenant the original or a true copy of each notice or demand received by Landlord and each summons or other process, pleading,
notice or document issued or delivered in connection with any suit or other proceeding to assert or enforce any such claim, suit or other proceeding, together with a request by Landlord that Tenant
resist and defend such claim, suit or other proceeding. Tenant, upon receipt of the required documents and Landlord's request, will, at Tenant's expense, resist and defend such action, suit or
proceeding indemnified by Tenant under this Section 17, or cause the same to be resisted and defended by counsel designated by Tenant and subject to the approval of Landlord in Landlord's
reasonable discretion. Tenant shall control the defense and settlement of any such claim, action, suit or proceeding with attorneys of Tenant's selection, but Landlord shall have the right, at
Landlord's option and expense, to participate in 

18

 

such
defense and settlement. The indemnification obligations of Tenant under this Section 17 shall survive the expiration or any earlier permitted termination of this Lease provided that
Landlord has notified Tenant of the claim asserted as required above on or before the date two (2) years following the expiration or earlier permitted termination of this Lease. 

        (d)   Without
limiting Tenant's other rights under this Section 17 or otherwise set forth in this Lease, Landlord will protect, indemnify and save harmless Tenant from
and against all Losses, imposed upon or incurred by or asserted against Tenant or Tenant's leasehold estate in the Premises or any part thereof, or Tenant's easement rights in the Easement Areas, or
any part thereof, caused in whole or in part by (1) any Environmental Condition (as hereinafter defined) with respect to the Premises which exists on the date hereof or is caused by Landlord,
including, without limitation, the exposure of any person to any such Environmental Condition caused by Landlord, (2) any misrepresentation or breach by Landlord of any of the representations
or warranties of Landlord set forth in this Lease, (3) the failure on the part of Landlord to perform or comply with any of the terms of this Lease, or (4) the negligence or wrongful
conduct of Landlord, or any of Landlord's agents, employees, or invitees. Notwithstanding any term or provision of this Section 17(d) or any other provision of this Lease, Landlord shall have
no obligation to indemnify, defend or hold Tenant harmless from or against any Losses to the extent caused by (i) the negligence or willful conduct of Tenant or Tenant's agents,
representatives, employees, representatives, successors or assigns or (ii) the failure on the part of Tenant
to perform or comply with any of the terms of this Lease. When any claim of Losses is caused by the joint negligence or wrongful conduct of Landlord and Tenant or Landlord and a third party unrelated
to Landlord, except Landlord's agents, representatives, employees, trustees, successors, successors-in-title or assigns, Landlord's duty to indemnify, defend and hold Tenant
harmless shall be in proportion to Landlord's allocable share of the joint negligence or wrongful conduct. Landlord is hereby subrogated to any rights of Tenant against any other parties whomsoever in
connection therewith, provided that Landlord's right of subrogation shall be conditioned upon Landlord continuing to fully comply with Landlord's obligations under the terms of this subpart 17(d).
Landlord's obligations to indemnify Tenant under the terms of this Section 17 shall be without prejudice to Landlord's rights to collect damages from, seek contribution from or indemnification
from any actually responsible parties. Tenant shall promptly notify Landlord of any claim asserted against Tenant on account of any such injury or claimed injury indemnified by Landlord under this
Section 17 and shall deliver to Landlord the original or a true copy of each notice or demand received by Landlord and each summons or other process, pleading, notice or document issued or
delivered in connection with any suit or other proceeding to assert or enforce any such claim, suit or other proceeding, together with a request by Tenant that Landlord resist and defend such claim,
suit or other proceeding. Landlord, upon receipt of the required documents and Tenant's request, will, at Landlord's expense, resist and defend such action, suit or proceeding required to be
indemnified by Landlord under this Section 17, or cause the same to be resisted and defended by counsel designated by Landlord and subject to the approval of Tenant in Tenant's reasonable
discretion. Landlord shall control the defense and settlement of any such claim, action, suit or proceeding with attorneys of Landlord's selection, but Tenant shall have the right, at Tenant's option
and expense, to participate in such defense and settlement. The indemnification obligations of Landlord under this Section 17 shall survive the expiration or any earlier permitted termination
of this Lease provided that Tenant has notified Landlord of the claim asserted as required above on or before the date two (2) years following the expiration or earlier permitted termination of
this Lease. 

        18.    SERVICE OF NOTICE.    All notices, demands or requests of any kind provided for or permitted to be given by
either party pursuant to this Lease shall be in writing addressed to the respective party to be served as set forth below and shall be hand delivered (by the notifying party or a local commercial
courier), sent by nationally recognized overnight courier service for next business day 

19

 

delivery
or United States mail, certified or registered mail return receipt requested, with postage or payment thereof fully prepaid, and shall be deemed to have been given: (a) if sent by hand
delivery, when delivered; (b) if delivered by overnight courier, on the next succeeding business day after delivery to such courier properly addressed; or (c) if by U.S. Mail, the date
on which said notice is shown by the United States Postal Service, or its successor, to have been delivered (or the date on which delivery was attempted if the addressee does not accept delivery): 

	 	 	If to Landlord:	 	* * * * *

* * * * *

* * * * *

* * * * *	 	 
	

 	
 	

 	
 	

and	
 	

 
	

 	
 	

 	
 	

* * * * *

* * * * *

* * * * *

* * * * *	
 	

 
	

 	
 	

 	
 	

and	
 	

 
	

 	
 	

Plus a copy to:	
 	

* * * * *

* * * * *

* * * * *

* * * * *	
 	

 
	

 	
 	

If to Tenant:	
 	

* * * * *

* * * * *

* * * * *

* * * * *	
 	

 
	

 	
 	

 	
 	

and	
 	

 
	

 	
 	

 	
 	

* * * * *

* * * * *

* * * * *

* * * * *	
 	

 
	

 	
 	

Plus a copy to:	
 	

* * * * *

* * * * *

* * * * *

* * * * *

* * * * *	
 	

 

Any
party hereto may, from time to time, by notice in writing served upon the other as aforesaid, designate a different mailing address(es) or a different person(s) to which all such notices or
demands are thereafter to be addressed. 

        19.    SHORT FORM LEASE.    The parties shall, simultaneously with the execution of this Lease, execute and deliver to
each other duplicate originals of an instrument in recordable form which will constitute a short form of lease, setting forth a description of the demised Premises, the Lease Term, Extension Options,
Right of First Refusal, the Section 24 restrictions against Landlord encumbering the Premises, and rights of Tenant to grant easements under Section 13, which short form of Lease shall
be publicly recorded in the Murray County, Georgia records. 

20

   
        20.    PARTIAL INVALIDITY.    If any term, covenant, condition or provision of this Lease or the application thereof
to any person or circumstance shall, at any time or to any extent, be invalid or unenforceable, the remainder of this Lease or the application of such term or provision to persons or circumstances
other than those as to which it is held invalid or unenforceable shall not be affected thereby, and each term, covenant, condition and provision of this Lease shall be valid and be enforced to the
fullest extent permitted by law. 

        21.    CERTIFICATES.    If either party shall desire to sell, sublease, assign, convey or encumber its interest in
this Lease or the Premises, the other party shall, without charge, at any time and from time to time, promptly upon written request of the other, certify to the best of its knowledge by written
instrument duly executed and acknowledged to any subtenant, assignee, mortgagee, lender or proposed purchaser: (a) as to whether this Lease has been supplemented or amended, and if so, the
substance and manner of such supplement or amendment; (b) as to the validity, force and effect of this Lease, in accordance with its tenor as then constituted; (c) as to the existence of
any known default thereunder and if any default is claimed, a specification of the default and the action required to cure the default; (d) as to the existence of any known offsets,
counterclaims or defenses thereto on the part of the non-defaulting party; (e) as to the commencement and expiration dates of the term of this Lease; and (f) as to any other
matters as may be reasonably requested. Any such certificate may be relied upon by the party requesting it and by any other person, firm or corporation to whom the same may be exhibited or delivered,
and the contents of such certificate shall be binding on the party executing same. 

        22.    GOVERNMENTAL AUTHORITY.    The provisions of this Lease and the easement agreements entered into pursuant to
Section 33 below shall not be amended, modified or abrogated by any rules, regulations, orders or other requirements promulgated, enacted or issued by the Landlord after the date of this Lease.
To the extent that the Landlord is protected by sovereign immunity, the Landlord hereby acknowledges that, pursuant to the Georgia Constitution (1983 Ga. Const. Article IX, Section II,
Paragraph IX) and O.C.G.A. Section 36-31-1, the Landlord hereby waives, and that it intends to waive, the defense of sovereign immunity in connection with any
matters related to this Lease and the performance of the Landlord hereunder and the easement agreements entered into pursuant to Section 33 below and the performance of the Landlord thereunder,
to the fullest extent permitted by law. To the extent that the Landlord is protected by sovereign immunity and it is determined for any reason that the Landlord has not effectively waived its
sovereign immunity, then the Landlord further agrees, to the fullest extent permitted by law, not to raise the defense of sovereign immunity in connection with any matters related to this Lease or the
performance of the Landlord hereunder and the easement agreements entered into pursuant to Section 33 below and the performance of the Landlord thereunder. Landlord and Tenant agree that the
terms and provisions of this Section 22 shall only inure to the benefit of Tenant and its successors, successors-in-title, subtenants and assigns, and no other parties
shall be or be deemed a third party beneficiary of the terms or provisions of this Section 22. 

        23.    BINDING EFFECT, JOINT AND SEVERAL LIABILITY.    All of the provisions of this Lease shall be binding upon and
inure to the benefit of the parties hereto and their respective executors, administrators, personal representatives, heirs, successors, successors-in-title, subtenants and
assigns. If any of the parties to this Lease consist of more than one person or entity, each such person and entity shall be jointly and severally liable for the performance of this Lease. 

        24.    NO SUBORDINATION OF LEASE; RESTRICTIONS ON ENCUMBRANCES BY LANDLORD.    This Lease and the Right of First
Refusal granted herein shall not be subordinate to any liens or encumbrances on the fee title to the Premises, other than the Permitted Encumbrances. Landlord shall have the right at all times during
Lease Term, subject to the terms and conditions of this Lease, to encumber Landlord's fee simple interest in the Premises with a deed to secure debt, mortgage and/or security interest and Landlord's
interest in this Lease with an assignment of rents and 

21

 

leases,
in connection with a loan to Landlord, provided that Landlord shall not do, or permit anything to be done, whereby any such interest of Landlord can or may be encumbered by a deed to secure
debt, mortgage, lien, security interest or other encumbrance which would be prior to this Lease or any Leasehold Mortgage or other encumbrance granted by Tenant pursuant to Section 11 above; it
being specifically understood and agreed that each such deed to secure debt, mortgage, security interest and/or assignment of rents and leases placed on the Premises shall by its terms be subject and
subordinate to this Lease, to the right, title and interest of Tenant and its Leasehold Mortgagees in the Premises, the Right of First Refusal of Tenant contained in this Lease and to all security
instruments securing, or which may at any time secure, indebtedness incurred by Tenant in connection with the Premises. In any event, this Lease shall continue in full force and effect to accordance
with its terms so long as this Lease is not terminated in accordance with the provisions hereof, notwithstanding any sale under power, foreclosure, sale in lieu thereof or other proceeding by any
holder of an encumbrance on Landlord's interest in the Premises or this Lease. Landlord shall disclose the existence of and the terms and conditions of this Lease, including the Right of First Refusal
of Tenant under this Lease, to any prospective holders of any deeds to secure debt, mortgages or other encumbrances. Landlord agrees not to alter or encumber in any way Landlord's title to the
Premises after the date of this Lease without the prior written consent of Tenant, which consent may be withheld for any reason or no reason, except for (i) deeds to secure debt, mortgages,
security interests, assignments of rents and leases expressly permitted by the terms of this Section 24 and (ii) a sale or transfer of Landlord's fee title to the Premises by a deed
expressly stating that the sale or transfer is subject to this Lease, the rights of Tenant hereunder (including, without limitation, the Tenant's Right of First Refusal) and any Leasehold Mortgage and
the rights of any Leasehold Mortgagee thereunder. 

        25.    BROKERAGE.    Landlord represents and warrants to Tenant that no broker, agent or finder is entitled to any
commission, fee, or similar compensation as a result of having dealt with Landlord or having been engaged by Landlord in connection with this Lease, and Landlord hereby agrees to defend, indemnify and
hold Tenant harmless from any cost, loss, damage or expense, including, but not limited to, reasonable attorneys' fees and expenses and costs of litigation, which Tenant may incur, suffer or be
threatened with on account of any claim for a fee, commission or similar compensation by any broker, agent or finder who has dealt with Landlord. Tenant represents and warrants to Landlord that no
broker, agent or finder is entitled to any commission, fee, or similar compensation as a result of having dealt with Tenant or having been engaged by Tenant in connection with this Lease, and Tenant
hereby agrees to defend, indemnify and hold Landlord harmless from any cost, loss, damage or expense, including, but not limited to, reasonable attorneys' fees and expenses and costs of litigation,
which Landlord may incur, suffer or be threatened with on account of any claim for a fee, commission or similar compensation by any broker, agent or finder who has dealt with Tenant. The parties agree
that the indemnities contained in this Section 25 shall survive the expiration or any permitted termination of the Lease. 

        26.    AMENDMENTS REQUIRED BY MORTGAGEE.    Landlord does hereby agree that should any Leasehold Mortgagee require
that any provisions of this Lease be amended as a condition to making a mortgage loan or bond offering, Landlord will cooperate reasonably and in good faith in effecting such amendment, provided,
however, that Landlord shall not be called upon to decrease or defer the annual rental payable hereunder, nor to agree to any amendment which would materially and adversely affect Landlord's rights or
remedies hereunder. 

        27.    DEFINITIONS.    As used in this Lease the following words have the following meanings: 

        (a)   The
word "Tenant" shall mean the Tenant for the time being of the leasehold estate created by this Lease, whether it be the original Tenant or any assignee under an
assignment, and if at any time more than one individual or firm comprises Tenant, such word shall mean such individuals and firms, jointly and severally. 

22

 

        (b)   The
word "Landlord" shall mean the Landlord for the time being of the Premises, whether it be the original Landlord or any successor in title, and if at any time more
than one individual or firm comprises Landlord, such word shall mean such individuals and firms, jointly and severally. 

        28.    MERGER.    There shall be no merger of this Lease or the estate created by this Lease with any other estate or
interest in the Premises or any part thereof by reason of the fact that the same person, firm, corporation or other entity may acquire or own or hold, directly or indirectly (a) this Lease or
the estate created by this Lease or any interest in this Lease or in any such estate and (b) any such other estate or interest in the Premises or any part thereof, and no such merger shall
occur unless and until all persons, firms, corporations and other entities having an interest in (i) this Lease or the estate created by this Lease and (ii) any such other estate or
interest in the Premises or any part thereof (including but not limited to any and all subtenants and leasehold mortgagees) shall join in a written instrument effecting such merger and shall duly
publicly record the same. 

        29.    ZONING, PERMITS, SUBDIVISION, ETC.    Landlord understands and agrees that Tenant will develop the Premises for
use as an electric power generation facility. Accordingly, Tenant is hereby authorized, at any time and from time to time during the term of this Lease, in the name of Landlord, Tenant or both, to
file with the appropriate governmental authorities one or more applications (i) to zone and/or to rezone the Premises, or any portion thereof, to such zoning classification as Tenant may from
time to time deem appropriate for such use, (ii) to change the land use plan applicable to the Premises, (iii) to obtain use permits with respect to the Premises, or any portion thereof,
(iv) to obtain variances from zoning and use restrictions otherwise applicable to the Premises, (v) to have conditions placed on the use of the Premises in connection with any zoning or
rezoning, and (vi) to subdivide the Premises, or any portion thereof, as Tenant may from time to time deem appropriate. Landlord agrees to cooperate fully with Tenant in seeking to obtain and
in obtaining such rezoning, permits, variances and subdivisions; provided, however, that all costs and expenses incident to filing such applications and obtaining approval thereof shall be paid by
Tenant. Landlord further agrees, promptly upon request by Tenant, to sign such applications Tenant may seek to file with governmental authorities in order to obtain any zoning, rezoning, change of
land use plan, subdivision, building permits, licenses and other regulatory approvals required in connection with Tenants use of the Premises and/or the demolition or construction of improvements on
the Premises; provided, however, that all costs and expenses incident to filing such applications and obtaining approval thereof shall be paid by Tenant. 

        30.    ENVIRONMENTAL PROVISIONS.    Landlord and Tenant hereby acknowledge the importance of their respective
compliance with all applicable environmental laws both on the Premises, Easement Areas and other property of Landlord. 

        (a)    Landlord's Environmental Audits and Documentation.    Landlord agrees that from and after the Commencement Date
Landlord will, from time to time, make available for inspection and copying by Tenant any all written documentation concerning the environmental matters pertaining to the Premises, Easement Areas and
any property adjacent to or in the vicinity of the Premises, in the care, custody or control of Landlord, including, without limitation, all environmental audits, inspection reports, notices, permits,
licenses, and submissions made or received by Landlord or on behalf of Landlord to or from any local, state or federal agency. Tenant or subtenant shall give Landlord not less than ten
(10) days prior written notice of the date and time of any such inspection. Tenant acknowledges that as part of the EPA Proceeding the Environmental Protection Agency and other federal
governmental agencies have taken exclusive possession of certain records of Landlord concerning the environmental matters for the Premises, Easement Areas and any property adjacent to or in the
vicinity of the Premises and Easement Areas, and for purposes of this Section 30(a) any documents held exclusively by the Environmental Protection Agency and other federal governmental
agencies, and which Landlord does not have copies of, shall not be, or be deemed to be, within the care, custody or control of Landlord. 

23

 

        (b)    Environmental Audit.    

        (1)   Landlord
and Tenant acknowledge and agree that Exhibit "H" attached hereto and made a part hereof (the "Environmental
Audit") establishes the Base Line Quantities (as hereinafter defined in Section 30(b)(3)). 

        (2)   Without
waiving any rights of the Landlord or Tenant either express or implied with respect to third parties, all environmental responsibility shall be allocated between
Landlord and Tenant as follows: 

        (A)  During
the term of the Lease, Tenant shall be responsible for any Environmental Condition (as hereinafter defined) of the Premises or Easement Areas to the extent any
such Environmental Condition is caused by Tenant's activities and as specified in Section 30(b)(3), and 

        (B)  Landlord
shall be responsible for any Environmental Condition of the Premises and/or for which Tenant is not so responsible, (as stated in 30(b)(3)) such as, for
example, but not by way of limitation, migration of contaminants, either subsurface or surface, from other locations to the Premises and/or Easement Areas and/or the presence of Hazardous Substances
on the Premises and/or Easement Areas prior to Tenant's occupancy. 

        (3)   During
the term of the Lease Tenant shall be responsible to investigate and/or remediate any Environmental Condition only if all of the following conditions are true:
(A) such Environmental Condition resulted from the operations of Tenant, and (B) such Environmental Condition is not the result of or product/byproduct of Base Line Quantities or of
Landlord's action or inactions on adjacent properties and (C) such investigation and/or remediation is required by applicable law and the governmental agency having jurisdiction over such
activity. "Base Line Quantities" is defined to mean the quantity or condition in existence on the date of this Lease as established by the Environmental Audit described in Section 30(b)(l) and
modified to the extent required to appropriately reflect any Environmental Condition hereafter reasonably established by Tenant to have existed on the date of this Lease which were not reflected by
the Environmental Audit (such as, but not by way of limitation, preexisting quantities of Hazardous Substance, or underground storage tanks discovered during the course of construction activities and
contemporaneously verified in a written report by a qualified third party). 

        (c)    Landlord's Representations and Warranties.    Landlord agrees with and represents and warrants to Tenant that,
except for the matters claimed, alleged and admitted by Landlord in the EPA Proceeding or the Consent Decree agreed to by Landlord in such proceeding: 

        (1)   For
the period up to and including the Commencement Date, Landlord has at all times complied with all applicable federal, state and local environmental laws and
regulations applicable to the Premises, the Easement Areas and any activities conducted thereon including, without limitation those laws and regulations which require notification to the federal,
state, county, municipality or others prior to lease or sale of the Premises or at any time thereafter. Landlord shall timely obtain any approval or authorization that may be required pursuant to any
law, regulation or ordinance of the state, county or municipality which requires approval or authorization based upon a review of the environmental condition of the Premises and Easement Areas to be
obtained from any governmental agency prior to execution of this Lease, sale of the Premises or grant of the easements described in Section 33 below, to Tenant, its successors or assigns,
including, without limitation, the final unconditional approval from the Environmental Protection Agency of the United States Government for the lease of the Premises and grant of the easements
described in Section 33 below to Tenant 

24

 

pursuant
to the terms of this Lease and releasing the Premises and access easement areas from any restrictions on the sale, lease or transfer of the Premises which were publicly recorded against the
Premises in connection with any governmental grant used to acquire the Premises or Easement Areas. 

        (2)   There
is no pending or threatened private or governmental claim, order or litigation, nor is there any pending or threatened judicial or administrative action or order,
pertaining to or affecting the Premises or Easement Areas. 

25

  

        (3)   Landlord
has not caused or permitted and shall not cause or permit any Hazardous Substances (as herein defined) to be, and has no knowledge that any such Hazardous
Substances were, generated manufactured, refined, transported, treated, stored, disposed, handled, processed, produced or released on the Premises or Easement Areas except in compliance with all
applicable federal, state and local laws and regulations. 

        (4)   That
the Premises and Easement Areas have not previously been used as a landfill, as a dump for garbage, waste, refuse, construction debris or for the storage, disposal
or treatment of Hazardous Substances or hazardous wastes except in compliance with all applicable federal, state and local laws, rules, regulations, codes, ordinances, orders and other applicable law. 

        (5)   That
no Environmental Condition (as hereinafter defined) concerning the Premises, Easement Areas or any real property adjacent to the Premises, Easement Areas or in the
vicinity of the Premises or Easement Areas existed or exists that would adversely affect the Premises or Easement Areas. Landlord has disclosed to Tenant all data, sampling results, reports and other
information regarding the Environmental Condition of the Premises and Easement Areas, which are in the possession of Landlord or of which Landlord has knowledge. For purposes of this Lease,
"Environmental Condition" means the existence of any Hazardous Substances in or on the soil, surface or ground waters, stream sediments, and every other environmental media, which condition could
require investigation and/or remedial action of any kind under applicable federal, state or local statutes, regulations or ordinances or which could result in claims, demands, orders or liabilities by
or to third parties, including without limitation, governmental entities. 

        (6)   Landlord
shall promptly deliver to Tenant written documentation received by Landlord after the date hereof concerning environmental matters pertaining to the Premises,
Easement Areas and any property adjacent to or in the vicinity of the Premises or Easement Areas, including all notices, permits, licenses, and submissions made or received by Landlord or on behalf of
Landlord to or from any local, state or federal agency. 

        (d)    Tenant's Representations and Warranties.    Tenant agrees with and represents and warrants to Landlord as
follows: 

        (1)   Tenant
shall at all times during this Lease comply with all applicable federal, state and local environmental laws and regulations applicable to the Premises and
Easement Areas and any activities conducted by Tenant thereon. 

        (2)   Tenant
shall not cause or permit any Hazardous Substances to be generated, manufactured, refined, transported, treated, stored, disposed, handled, processed, produced or
released on the Premises or Easement Areas except in compliance with all applicable federal, state and local laws and regulations. 

        (e)   During
the term of the Lease, Landlord shall be responsible to investigate and/or remediate any Environmental Condition caused by Landlord. Landlord shall not be
responsible to investigate or remediate any Environmental Condition caused by Tenant. 

        (f)    Tenant
agrees to indemnify, defend and hold Landlord harmless from any Environmental Condition caused by Tenant and for which the Tenant is required to undertake the
investigation and/or remediation as provided in Section 30(b)(3) pursuant to the terms of Section 17(b) above. The indemnification obligations of Tenant under Section 17(b) above
shall survive the expiration or any earlier permitted termination of this Lease provided that Landlord has notified Tenant of the claim asserted as required under Section 17(b) above on or
before the date two (2) years following the expiration or earlier permitted termination of this Lease. 

26

 

        (g)   Tenant's
use of the Premises and Easement Areas shall comply, in all material respects, with all applicable environmental laws. 

        Tenant
acknowledges that the Premises and Easement Areas were previously used by Landlord in the manner represented by Landlord in Section 15(d) hereof. 

        31.    ACCEPTANCE OF SURRENDER.    Except for the termination rights of Tenant expressly set forth in this Lease, no
termination or surrender of the Lease or surrender of the Premises or any part thereof or of any interest therein by Tenant shall be valid or effective unless agreed to and accepted in writing by
Landlord, and no act by any representative or agent of Landlord or other person, other than such a written agreement and acceptance by Landlord, shall constitute an acceptance thereof. 

        32.    NO WAIVER, ETC., BY LANDLORD OR TENANT.    No failure by Landlord or Tenant to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy consequent upon a breach thereof, and no submission by Tenant or acceptance by Landlord of full or partial rent during the
continuance of any such breach, shall constitute a waiver of any such breach or of any such term or a mutual departure from the terms of the Lease. No waiver of any breach shall affect or alter the
Lease, which shall continue in full force and effect, or otherwise affect the respective rights of Landlord or Tenant with respect to any other then existing or subsequent default or Event of Default.
No foreclosure, sale or other proceeding under any mortgage shall discharge or otherwise affect the obligations of Landlord or Tenant hereunder. 

        33.    GRANT BY LANDLORD OF ADDITIONAL CONSTRUCTION, ACCESS, GAS AND WATER PIPELINE AND ELECTRIC TRANSMISSION LINE
RIGHT-OF-WAY EASEMENTS TO TENANT.    Landlord agrees, at no additional cost to Tenant or any subtenant, to grant and convey to Tenant or any subtenant, as Tenant
shall direct, the following easements: 

        (a)   A
non-exclusive access right of way easement in the form of Exhibit "C" attached hereto and made a part
hereof providing for all forms of access to the Premises, including, without limitation, all forms of truck traffic and construction traffic, and said easement having a duration
co-terminus with the Term of this Lease (and shall become a perpetual easement if Tenant should ever purchase the Premises); 

        (b)   One
or more non-exclusive electric transmission line right of way easements as Tenant shall request, each having a width consistent with industry standards
and following the shortest possible route mutually agreeable to Landlord and Tenant, in the form or Exhibit "D" attached hereto and made a part hereof
to provide interconnection between the electric power generation facility to be constructed on the Premises and (i) the Tennessee Valley Authority 230 K.V. transmission line, the easement area
thereunder to be one hundred and fifty feet (150') in width along the entire easement area (ii) the Dalton Utilities ITS 230 K.V. transmission line, the easement area thereunder to be one
hundred and fifty feet (150') in width along the entire easement area, and (iii) the Southern Company/Georgia Power ITS 500 K.V. transmission line, the easement area thereunder to be two
hundred feet (200') in width along the entire easement area, and shall also include an additional five (5) acre easement which shall be located adjacent to the point at which said easement area
abuts the Southern Company/Georgia Power ITS 500 K.V. transmission line, for use as a switchyard or substation, and said easements shall have durations co-terminus with the Term of this
Lease (and shall become perpetual easements if Tenant should ever purchase the Premises); 

        (c)   One
or more non-exclusive natural gas line right of way easements as Tenant shall request, each having a width of seventy foot (70') or wider, consistent
with industry standards, and following the shortest possible route mutually agreeable to Landlord and Tenant, in the form or Exhibit "E" attached hereto
and made a part hereof to provide interconnection between the 

27

 

electric
power generation facility to be constructed on the Premises and (i) the East Tennessee Pipeline Co. natural gas pipeline, and (ii) the Sonat natural gas pipeline, and said
easements shall have durations co-terminus with the Term of this Lease (and shall become perpetual easements if Tenant should ever purchase the Premises); 

        (d)   A
non-exclusive water supply pipeline and waste water discharge pipeline right-of-way easements as Tenant shall request, having a
width of thirty feet (30') along the entire length of the easement, together with an additional forty foot (40') temporary construction easement area along the entire length of the easement (located
as needed to facilitate construction of said pipeline) and following the shortest possible route mutually agreeable to Landlord and Tenant, together with an easement area as needed for Tenant to
install, operate and maintain a pumping station, in the form of Exhibit "F" attached hereto and made a part hereof to provide interconnection between
the electric power generation facility to be constructed on the Premises and the reservoir or other water supply located on Landlord's remaining land, and said easement having a duration
co-terminus with the Term of this Lease (and shall become a perpetual easement if Tenant should ever purchase the Premises); and 

        (e)   A
temporary construction, laydown and parking easement wherein Landlord shall grant to Tenant the right to use the land adjacent to the Premises as identified and
described on Exhibit "I" attached hereto and incorporated herein by reference to be used during the construction of Tenant's electric generation
facility for the storage of materials, equipment, location of construction offices, parking and other uses associated with Tenant's construction, and shall be in the form of  Exhibit "G" attached hereto
and made a part hereof, and shall have a term commencing on the date of this Lease and expiring on December 31, 2003.
 

        Landlord
agrees to grant, execute and deliver the easements described in subparts (a) through (e) immediately above simultaneously with the execution and delivery of this
Lease by Landlord and Tenant, using as the descriptions of the various Easement Areas granted thereunder diagrams and design drawings based on Global Positioning System Coordinates. Landlord agrees
that upon Tenant having surveys prepared of the respective Easement Areas described in said diagrams and design drawings, Landlord and Tenant shall execute and deliver to each other amended and recast
versions of the easements described in subparts (a) through (e) immediately above using legal descriptions based on such surveys to describe those Easement Areas originally depicted by
diagrams or design drawings. 

        Except
for the provision of "Water" (as defined in the Water Purchase Agreement) to the Premises pursuant to the terms of the Water Purchase Agreement, Landlord shall cause Dalton
Utilities to install and provide Tenant and its subtenants, and their contractors and subcontractors, utility services to the Premises and the improvements thereon at Dalton Utilities standard and
usual charges charged to other similar commercial customers of Dalton Utilities and pursuant to the terms of Dalton Utilities normal service agreement, including, without limitation, telephone, cable,
fiber optic and other communications, electricity, low pressure natural gas, potable water and sanitary sewer service. If Dalton Utilities is unable to provide a utility service of the type or to the
extent of service capabilities needed, or is unable to provided any needed utility service at competitive rates or charges compared to other providers, or if the needed utility service is provided
pursuant to a specific contract for the provision of such services on a contract basis to multiple sites of the customer, or if for whatever reason Tenant or any its subtenants, or their contractors
and subcontractors choose in their sole discretion to obtain needed utility services from a service provider other than Dalton Utilities, then Landlord agrees to grant Tenant and any utility company
supplying services to Tenant or its subtenants, and their contractors and subcontractors, any utility easements over other lands presently owned by Landlord needed for purposes of providing such
needed services to the Premises. Additionally, Landlord agrees to grant Tenant and any subtenant easements over other lands presently owned by Landlord needed for purposes of providing storm water
drainage, and the installation of any needed drainage improvements, from the Premises. Any easements to be granted by Landlord pursuant to the 

28

 

two
immediately preceding sentences shall be subject to the following requirements: (i) Landlord shall reasonably determine the location of the easement areas under any such easements,
(ii) each easement shall contain grant, temporary construction easement, term, restrictions on construction and additional provision terms that are comparable to the terms contained in Exhibits
"C" through "G" attached hereto, and (iii) shall be subject to compliance with the terms of O.C.G.A. Section 36-37-7 and any regulations promulgated thereunder. 

        34.    END OF LEASE TERM; SURRENDER OF PREMISES.    Except as otherwise expressly set forth in this Lease, upon the
expiration or other permitted termination of the Lease Term, Tenant shall quit and surrender to Landlord the Premises in good order and condition, ordinary wear and tear, improvements permitted under
this Lease, takings by condemnation (or sales in lieu thereof) and damage by casualty, excepted. 

        35.    INDUSTRIAL REVENUE DEVELOPMENT BOND FINANCING.    Landlord and Tenant acknowledge that Tenant plans to finance
the construction of an electric generation facility and related building(s) and other improvements on the Premises and fund the First Refusal Purchase Price (as hereinafter defined), if the Right of
First Refusal (as hereinafter defined) is exercised, through the issuance of industrial revenue development bonds issued by the Murray County Industrial Development Authority, a public body corporate
and politic created under the laws of the State of Georgia, (hereinafter referred to as "MCIDA"), and that in connection with such bond financing Tenant will assign the Lease, or a part of Tenant's
interest therein, to MCIDA. At the time of such assignment. Tenant intends to sublease the Premises from MCIDA. Landlord understands that MCIDA will require that, following said assignment, MCIDA's
obligations under the Lease will be limited to MCIDA's interest in the Premises and the Lease, and that MCIDA will require that MCIDA be exculpated from any further liability. Tenant agrees that
notwithstanding any such sublease or any such assignment to
MCIDA, Tenant shall remain fully liable for all of Tenant's obligations under this Lease, and such sublease will impose on Tenant, as subtenant, all of the obligations imposed on Tenant hereunder and
that, notwithstanding the assignment of this Lease (or portions thereof) to MCIDA, Landlord will have a right to enforce against Tenant, through attornment or otherwise, all of the obligations imposed
on Tenant hereunder. 

        Landlord
agrees to cooperate with Tenant to enable Tenant to secure financing through MCIDA, including negotiating in good faith an Amended and Recast Lease and such other documents as
may be reasonably necessary to accomplish the foregoing; provided that such Amended and Recast Lease or other documents executed by Landlord shall not diminish or adversely affect Tenant's substantive
rights and/or remedies under this Lease in any material respect. Should Tenant request that Landlord negotiate, execute and deliver any instruments or documents under the terms of this
Section 35 to facilitate the bond financing, Tenant agrees to pay all reasonable attorneys' fee paid or incurred by Landlord in connection with Landlord's review and negotiation of such
instruments and documents. 

        36.    TENANT'S TERMINATION RIGHTS.    

        (a)   Tenant
shall have the right and option to terminate this Lease, for any reason, by written notice given by Tenant to Landlord at any time during the first eighteen
(18) months of the Lease Term, and in consideration for such termination by Tenant, Tenant shall pay Landlord a termination fee in the amount of TWO HUNDRED AND FIFTY THOUSAND AND NO/100
DOLLARS ($250,000.00) on the effective date of termination specified by Tenant in the notice of termination. Tenant shall also have the right and option to terminate this Lease upon thirty
(30) days written notice, in the event that the Water Purchase Agreement between Tenant and Dalton Utilities is terminated for any reason at any time, and in consideration for such termination
by Tenant, Tenant shall pay Landlord a termination fee in the amount of TWO HUNDRED AND FIFTY THOUSAND AND NO/100 DOLLARS ($250,000.00) on the effective date of termination specified by Tenant in the
notice of termination. Upon any such termination by Tenant, Landlord 

29

 

shall
refund to Tenant any prepaid amounts. Should Tenant exercise either of the above-described termination options, the termination shall be effective on the date specified by Tenant in Tenant's
notice, and thereafter neither Landlord nor Tenant shall have any further rights, duties or obligations under this Lease, except for the provisions of this Lease which by their express terms survive
the expiration or permitted termination of this Lease, and the rent and other sums payable by Tenant for the remainder of the term shall wholly abate. 

        37.    TENANTS RIGHT OF FIRST REFUSAL TO PURCHASE THE PREMISES.    

        (a)   Landlord
hereby grants to Tenant the continuing right of first refusal, throughout the Term of this Lease, to purchase the Premises pursuant to the terms of this
Section 37. If at any time during the
Lease Term Landlord enters into a bona fide agreement to sell all or any part of the Premises (the "Offer"), Landlord shall submit written notice thereof to Tenant (together with a copy of such
Offer). Upon receipt of the aforesaid notice and a copy of such Offer from Landlord, Tenant shall have the right (the "Right of First Refusal") exercisable at any time within thirty (30) days
from the date of receipt of such notice and Offer, to purchase the Premises or portion thereof which is the subject of the Offer, upon the same terms and conditions set forth in the Offer, except that
(i) the dates for Tenant's performance under the Offer shall be adjusted to afford Tenant the same time periods for performance as were afforded the original purchaser under the Offer, with
Tenant's time periods for performance to run from the date of Tenant's exercise of the Right of First Refusal, and (ii) on such other terms as: are set forth below in this Section 37. If
Tenant elects to exercise the Right of First Refusal, it shall, prior to the end to said thirty (30) day period, deliver written notice of such exercise to Landlord. The Right of First Refusal
may be exercised by any assignee, subtenant or holder of any leasehold deed to secure debt or leasehold mortgage to whom Tenant has granted such right of exercise by written assignment. In the event
Tenant fails to timely exercise the Right of First Refusal, Tenant shall be deemed to have waived such right in that instance only, except that if the closing pursuant to the original Offer does not
take place within thirty (30) days after the date set forth in the Offer for closing, this Right of First Refusal shall again be deemed applicable to the transaction described in the Offer. It
is further understood that, in the event Tenant does not exercise this Right of First Refusal, this provision shall nevertheless be applicable to any further and future transfers of the Premises, or
any part thereof, by any successor to Landlord. Landlord represents and warrants that no person or entity holds any right of refusal on the Premises, option to purchase, or other right, to acquire all
or any part of the Premises, which is prior to or superior to the Right of First Refusal granted to Tenant hereunder, except for the Purchase Option. 

        (b)   The
purchase price for the Premises shall be the price set forth in the Offer (herein called the "First Refusal Purchase Price"). 

30

  

        (c)   Promptly
upon notice of Tenant's exercise of the Right of First Refusal, Landlord shall apply for and thereafter diligently pursue any approvals or authorizations
required with regard to the sale of the Premises and with regard to subdivision of the Premises. If Landlord shall be in breach of Landlord's obligations under this Lease, including, without
limitation, Landlord's obligations under this Section 37, Tenant may extend the closing date, provided, however, that the rent payable by Tenant to Landlord during any such extended period
shall be abated in full, pro-rated on a per diem basis for each day any such breach by Landlord remains outstanding and uncured. The closing date, as it may be so extended by Tenant, is of
the essence of this Lease. While any breach of this Lease by Landlord remains outstanding and uncured, the Termination Date and the Lease Term shall be deemed extended, upon the same terms as set
forth herein, until the closing hereunder, except to the extent rent abates as set forth in the immediately preceding sentence. The failure of Tenant to enforce the obligation of Landlord under this
Section shall not be deemed a waiver by Tenant of its rights hereunder. The sale shall include the Premises, any unpaid awards or compensation for any condemnation of the Premises or sale in lieu
thereof, all rights of Landlord in streets and roads, on or abutting the Premises, all pipes and utility installations of Landlord therein, and all easements for the benefit of the Premises. Title
shall be good and marketable, fee simple title free and clear of all liens, restrictions and encumbrances and insurable as such at regular rates by any reputable title insurance company selected by
Tenant without the requirement of any further security or indemnity from Landlord or others, subject only to (i) Permitted Encumbrances (ii) any Real Property Taxes not yet due and
payable for the year in which the closing occurs, which taxes shall be prorated at the closing of the sale, and (iii) any and all rights of third parties in the Premises created or caused by
Tenant, or by Landlord at the express written request or with the prior written consent of Tenant (hereinafter collectively the "Permitted Closing Encumbrances"). Landlord shall convey the Premises by
good and sufficient limited warranty deed to Tenant or its nominee, in recordable form. At closing Landlord shall provide Tenant with such evidence of Landlord's authority to execute and deliver the
deed as Tenant and Tenant's title company may reasonably require. Landlord, as seller, shall deliver to Tenant or its nominee all instruments and documents as shall be reasonably necessary for the
consummation of the sale, including, without limitation, a seller's affidavit satisfactory to Tenant's or its nominee's title insurance company so as to enable the title insurance company at the
conclusion of the closing to insure that Tenant or its nominee holds marketable fee simple record title to the Premises subject only to the Permitted Closing Encumbrances. Should any title objections
or defects exist as of the original closing date, other than the Permitted Closing Encumbrances, Tenant shall be entitled to satisfy or remove such title objections and defects and to credit against
the First Refusal Purchase Price all reasonable and necessary costs of such cure, and the Termination Date and the Lease Term shall be deemed extended, upon the same terms as set forth herein, until
the closing hereunder, provided, however, that the rent payable by Tenant to Landlord during any such extended period shall be abated in full, pro-rated on a per diem basis for each day
any such title objections or defects exist. 

        (d)   Rent
shall cease to accrue as of the date of closing. Landlord shall pay all federal, state and local transfer taxes applicable to the transaction, and any taxes, needed
to clear title to the Premises. 

        (e)   This
Right of First Refusal shall survive any sale, transfer or conveyance by Landlord, Landlord's successors, successors-in-title and assigns of
the Premises or any part thereof or rights therein. 

        (f)    Tenant
shall have the right to assign this Lease and/or Right of First Refusal to a qualified intermediary, as that term is defined in the Regulations promulgated under
Section 1031 of the Internal Revenue Code ("IRC Section 1031"), for the purpose of completing a tax-deferred exchange ("Exchange"). If Tenant makes such assignment, then
Tenant shall have the right to delay 

31

 

closing
by up to thirty (30) days to accommodate the Exchange, and provided Landlord is in compliance with the Lease, rent shall continue to accrue and be paid during any such thirty
(30) day extension period. 

        (g)   Notwithstanding
any other provision contained in this Lease to the contrary, should Tenant exercise the Right of First Refusal, the provisions of this Lease shall not
postpone the vesting of fee simple title to the Premises in Tenant for a period of more than ninety (90) years after the date of this Lease, in compliance with the terms of Official Code of
Georgia Section 44-6-200, et seq. The purpose of this provision is to prevent the possible violation of the rule against perpetuities and this provision shall be so
construed. 

        (h)   Notwithstanding
the terms of this Section 37, Tenant's Right of First Refusal shall not apply to any sale, conveyance or other transfer of the Premises to any
governmental entity that controls, is controlled by or under common control with Landlord for nominal consideration in connection with any governmental reorganization (such transferee being
hereinafter referred to as an "Affiliated Governmental Entity"). It is further understood and agreed that, in the event Landlord does sell, convey or otherwise transfer the Premises to one or more
Affiliated Governmental Entities, this Right of First Refusal provision shall nevertheless be applicable to any further and future transfers of the Premises, or any part thereof, by any Affiliated
Governmental Entity and/or their successors, successors-in-title or assigns. 

        38.    LANDLORD'S AND TENANTS REMEDIES, ETC., CUMULATIVE.    Except as expressly limited by the terms of this Lease,
each right, power and remedy of Landlord and Tenant provided for in the Lease or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall
be in addition to every other right, power or remedy provided for in the Lease or now or hereafter existing at law or in equity or by statute or otherwise, and, except as expressly limited by the
terms of this Lease, the exercise or beginning of the exercise by Landlord or Tenant of any one or more of the rights, powers or remedies provided for in the Lease or now or hereafter existing at law
or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by Landlord or Tenant of any or all such rights, powers or remedies. 

        39.    PERFORMANCE OF TENANTS OBLIGATIONS.    All or any part of the obligations of Tenant under this Lease may be
performed by Tenant or any subtenant or other under tenant of Tenant, and Landlord agrees to accept performance of Tenant's obligations by any subtenant or other under tenant. 

        40.    CONVEYANCE BY LANDLORD.    Landlord and any assignee or successor to Landlord's interest hereunder shall have
the right, at any time and from time to time, without the consent of Tenant, and after compliance with the terms of Section 37, to assign this Lease, provided that the assignment is
accomplished pursuant to a written document under which the assignee shall expressly assume and agree to pay and perform all of Landlord's obligations hereunder. Upon any such assignment, Landlord
shall send to Tenant a signed copy of the assignment and assumption and the name, address and telephone number of the assignee. No such assignment shall relieve Landlord from any of its liabilities or
obligations under this Lease accruing or arising on or before the effective date of said assignment and assumption. In case the original or any successor landlord shall convey or otherwise dispose of
the Premises, such landlord or successor shall thereupon from and after the effective date under the above-described assignment and assumption agreement be released from all liabilities and
obligations of Landlord under the Lease (except those accruing or on or before the effective date of such assignment and assumption agreement) and all liabilities and obligations of Landlord under the
Lease shall be binding upon the then owner of the Premises and the Landlord's interest under the Lease. 

        41.    MISCELLANEOUS.    This Lease shall be governed by, construed and enforced in accordance with the laws of
Georgia. Reference to Landlord and Tenant, whenever consistent with the 

32

 

context,
shall include either number and the neuter, feminine or masculine gender where the context permits or requires. In the absence of a specific provision to the contrary, the party upon whom an
obligation is imposed by this Lease shall perform the obligation at its own expense. Section or paragraph headings relating to the content of the particular paragraphs are inserted only for the
purpose of convenience and are not to be construed as part of the particular paragraphs to which they refer, and shall not affect the meaning of this Lease in any way. This Lease constitutes the
entire agreement and understanding between the parties hereto and the parties shall not be bound by any prior or contemporaneous promises, representations, agreements, understandings or inducements
between the parties respecting the subject matter hereof other than those expressly set forth and stipulated in this Lease. This Lease may not be added to or modified in any way except by written
agreement signed by the party or parties charged with the obligations set forth therein. Except as expressly provided elsewhere in this Lease (for example, and not by way of limitation, the provision
for the reasonable access provided to tenant for removal of improvements, buildings and underground storage tanks in sections 6(a) and (b), survival of indemnities under section 17, and
survival of brokerage indemnities under section 25), no provision of this Lease shall survive the expiration or earlier permitted termination of the Lease. It is the intention of the parties
hereto to create an estate for years in the Premises and to create the relationship of landlord and tenant and no other relationship whatsoever, and nothing contained herein shall be construed to
create between Landlord and Tenant any partnership or joint venture or the relationship of debtor and creditor or of principal and agent for any purpose whatsoever. Time is of the essence of each and
every provision hereof. All exhibits to this Lease are hereby incorporated in the Lease and are made a part hereof by reference. This Lease may be executed in any number of counterparts, each of which
is an original, but all of which shall constitute one instrument. 

        42.    LIMITATION OF LANDLORD'S AND TENANTS REMEDIES.    

        (a)   Notwithstanding
any other term or provision of this Lease to the contrary, Landlord hereby forever waives and releases any right that Landlord has to
(i) terminate this Lease as a result of any default or Event of Default by Tenant, or for any other reason, and/or (ii) dispossess Tenant from the Premises and re-enter the
Premises upon any default or Event of Default by Tenant; and Landlord agrees that Landlord's sole and exclusive remedy for any default or Event of Default by Tenant or any under tenant shall be to
bring an action for specific performance of the terms of the Lease or to bring an action for monetary damages suffered by Landlord as a result of an Event of Default by Tenant under the terms of the
Lease and obtain a judgment for such monetary damages, and Landlord may thereafter enforce any such judgment against Tenant by levying against Tenant's personal property. 

        (b)   Notwithstanding
any other term or provision of this Lease to the contrary, Tenant hereby agrees that if Tenant obtains any money judgement against Landlord because of
Landlord's default under this Lease or breach by Landlord of any representation or warranty under this Lease, Tenant's sole remedy to satisfy the judgement shall be to, (i) levy against and
sell any property or assets of Landlord which, now or at any time in the future, are owned, used or operated by Dalton Utilities, its successors, successors-in-title or
assigns, including, without limitation, any successors to the business of Dalton Utilities, and such property and assets shall include, without limitation, any sale, insurance, condemnation or other
proceeds with respect to such property and assets; (ii) garnish or otherwise realize upon any accounts receivable, debts, income or other amounts owed to Dalton Utilities, its successors,
successors-in-title or assigns, including, without limitation, any successors to the business of Dalton Utilities; and/or (iii) exercise any rights of set off permitted
under the terms of this Lease. Nothing in this Section 42(b) shall be interpreted to limit Tenant's rights to be awarded specific performance, temporary restraining orders, injunctive relief or
other equitable remedies. For purpose of this provision, the term "Dalton Utilities" shall mean the utility company, property and assets operated by the Board of Water, Light and Sinking Fund 

33

 

Commissioners
of the City of Dalton, Georgia, its successors, successors-in-title or assigns, including, without limitation, any successors to the business of Dalton Utilities.
For purposes of this provision, the term "Dalton Utilities Assets" shall mean collectively all of the assets identified and described in subparts 42(b)(i) and (ii) immediately above. 

        Notwithstanding
anything to the contrary contained in this Lease, payments of all amounts of any kind or nature whatsoever that may at any time be due and owing to the Tenant pursuant to
the terms of, or resulting from, this Lease shall be payable solely out of the Dalton Utilities Assets and shall not be payable from any other source, including, without limitation, the General Fund
of the City of Dalton. No such payments shall be, or be deemed to be, a debt of the City of Dalton under any circumstance or for any purpose whatsoever, nor shall this Lease constitute a pledge of the
full faith and credit of the City of Dalton, nor shall the City of Dalton appropriate or be required to appropriate funds to pay for any amounts due under this Lease. The Tenant will never have the
right to compel the exercise of
any taxing power of the City of Dalton to pay any amount due to the Tenant under this Agreement, nor to enforce payment thereof against any property of the City of Dalton other than the Dalton
Utilities Assets. The Tenant shall have no recourse for payment hereunder against any other source of funds of the City of Dalton, and the Tenant hereby irrevocably and unconditionally waives any
recourse or claim it may or could otherwise have or allege to have against any other payment source of the City of Dalton other than the Dalton Utilities Assets. 

        No
provision of this Section 42 or other section of this Lease is intended to, nor shall any such provision in any way: (i) grant, convey or otherwise extend to Tenant any
lien, encumbrance or other charge against the Dalton Utilities Assets other than the Premises and Easement Areas; or (ii) modify, impair, subordinate or otherwise affect the rights, obligations
and privileges of Landlord arising under the City of Dalton, Georgia Combined Utilities Revenue Bonds, Series 1997, the City of Dalton, Georgia Combined Utilities Revenue Bonds,
Series 1999, or any other obligation of Landlord; it being understood and agreed that the revenues of Dalton Utilities and all funds created and maintained pursuant to any ordinance enacted for
the purpose of issuance of any such bonds are subject to a prior and superior lien to secure such bonds, and shall not be subject to levy, seizure or other adverse action as may constitute a default
with respect to such bonds. 

        43.    LIMITED GUARANTY AGREEMENT.    Tenant agrees to provide Landlord a Limited Guaranty Agreement in the form of  Exhibit "J" attached hereto and
incorporated herein by reference from Duke Capital Corporation, a Delaware corporation, as Guarantor, having a term of
five (5) years from the date of this Lease. 

[SIGNATURES
BEGIN ON NEXT PAGE] 

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        IN WITNESS WHEREOF, the parties have set their hands and affixed their seals the day and year first above written. 

	 	 	 	 	LANDLORD:
	

 	
 	

 	
 	
CITY OF DALTON, an incorporated municipality of the State of Georgia, acting by and through the Board of Water, Light and Sinking Fund Commissioners of the City of Dalton, Georgia
	

Signed, sealed and delivered

in the presence of:	
 	

 CITY OF DALTON
	

/s/ [Illegible]
	
 	

By:	
 	

/s/ Raymond Elrod (SEAL)

	Unofficial Witness	 	Print Name:	 	Raymond Elrod

	 	 	 	 	Title:	 	Mayor
	

/s/ Kim L. Barashick
	
 	

Attest:	
 	

/s/ Faye L. Martin

	Notary Public	 	Print Name:	 	Faye L. Martin

	 	 	 	 	Title:	 	City Clerk

	

OFFICIAL SEAL

KIM L. BARASHICK

Notary Public, Georgia

WHITFIELD COUNTY

My Commission Expires

August 3, 2002	
 	

(CITY SEAL)
	

My Commission Expires	
 	

 
	
 	

 	
 	

 
	

(NOTARY SEAL)	
 	

 	
 	

 
	 	 	 	 	BOARD OF WATER, LIGHT AND SINKING FUND COMMISSIONERS
	Signed, sealed and delivered

in the presence of:	 	 	 	 
	

/s/ [Illegible]
	
 	

By:	
 	

/s/ Justin M. Robinson (SEAL)

	Unofficial Witness	 	Print Name:	 	Justin M. Robinson

	 	 	 	 	Title:	 	Chairman of the Board of Water, Light and Sinking Fund Commissioners
	

/s/ John P. Neal III
	
 	

Attest:	
 	

/s/ Todd L. Reigel

	Notary Public	 	Print Name:	 	Todd L. Reigel

	 	 	 	 	Title:	 	Secretary

	

OFFICIAL SEAL

JOHN P. NEAL III

Notary Public, Georgia

WHITFIELD COUNTY

My Commission Expires

July 20, 2002	
 	

(COMMISSIONERS SEAL)
	

My Commission Expires	
 	

 
	
 	

 	
 	

 
	

(NOTARY SEAL)	
 	

 	
 	

 
	[SIGNATURES CONTINUED ON NEXT PAGE]

35

 

	 	 	 	 	TENANT:
	

Signed, sealed and delivered

in the presence of:	
 	
DUKE ENERGY MURRAY, LLC, a Delaware limited liability company
	

/s/ [Illegible]
	
 	

By:	
 	

/s/ L A Watt (SEAL)

	Unofficial Witness	 	Print Name:	 	L A Watt

	 	 	 	 	Title:	 	Vice President

	

/s/ Cherise C. Aguilar
	
 	

Attest:	
 	

Madeline A. Coblenz

	Notary Public	 	Print Name:	 	Madeline A. Coblenz

	 	 	 	 	Title:	 	Assistant Secretary

	

 	
 	

 	
 	

(CORPORATE SEAL)
	

My Commission Expires:	
 	

 
	
 	

 	
 	

 
	

(NOTARY SEAL)	
 	

 	
 	

 
	

Cherise C. Aguilar

Notary Public, State of Texas

My Commission Expires

MAY 11, 2001	
 	

 	
 	

 

36

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Exhibit 10.38  

EXECUTION
COPY 

 
 

EMPLOYMENT AGREEMENT    
    

        This EMPLOYMENT AGREEMENT is made and entered into as of February 8, 2007, by and between KGen Power Management Inc., a Delaware corporation (the
"Company"), and Gerald K. Lindner (the "Executive"). 

WITNESSETH: 

        WHEREAS,
the Company desires to employ the Executive as Chief Executive Officer of the Company and KGen Power Corporation ("KGen Power")
and wishes to acquire and be assured of his services on the terms and conditions hereinafter set forth; and 

        WHEREAS,
the Executive desires to be employed by the Company as Chief Executive Officer of the Company and KGen Power and to perform and to serve the Company and KGen Power on the terms
and conditions hereinafter set forth; 

        NOW
THEREFORE, in consideration of the mutual terms, covenants, agreements and conditions hereinafter set forth, the Company and the Executive hereby agree as follows: 

        1.    Employment.    

        (a)   The
Company hereby employs the Executive to serve as a full time employee of the Company, and the Executive hereby accepts such employment with the Company, for the
period set forth in Section 2 hereof. The Executive shall be employed as Chief Executive Officer of the Company and KGen Power and shall
faithfully and competently perform such duties in such manner as the Company and/or and KGen Power may from time to time reasonably direct. The Executive shall report to the Board of Directors of KGen
Power Corporation (the "Board") and shall have the customary powers, responsibilities and authorities of CEOs of corporations of the size, type and
nature of KGen Power, as it exists from time to time, and as are assigned by the Board, subject at all times to the power and authority of the Board to expand or limit such duties, responsibilities or
functions. 

        (b)   Except
as may otherwise be approved in advance by the Board, and except during vacation periods and reasonable periods of absence due to sickness, personal injury or
other incapacity, the Executive shall devote his full time and efforts throughout the Term to the services required of him hereunder. The Executive shall render his services exclusively to the Company
and KGen Power during the Term and shall use his best efforts, judgment and energy to improve and advance the business and interests of the Company and KGen Power in a manner consistent with the
duties of his position. The Executive shall observe and comply with the rules and regulations of the Company and KGen Power regarding the performance of his duties and shall carry out and perform all
orders, directions, and policies given to him. The Executive shall at all times carry out the duties assigned to him in a loyal, trustworthy and businesslike manner. Notwithstanding the foregoing, the
Executive may continue to serve on the boards of directors of companies approved by the Company prior to the date hereof. 

        (c)   The
Executive's principal place of employment shall be in Houston, Texas, such other location as determined by the Company not to exceed sixty (60) miles
therefrom, or at such other location as shall be mutually acceptable to the Executive and the Company. 

        (d)   The
Executive affirms and represents that he is under no obligation to any former employer or other party which is in any way inconsistent with, or which imposes any
restriction 

1

 

upon,
the Executive's acceptance of employment hereunder, the employment of the Executive by the Company, or the Executive's undertakings under this Agreement. 

        2.    Term.    Unless earlier terminated as provided in this Agreement, the term of the Executive's employment under
this Agreement shall be for a period beginning on the date hereof (the "Commencement Date") and ending on the third (3rd) anniversary of
the Commencement Date. At the end of the initial thirty-six (36) month period, Executive's employment hereunder shall automatically be renewed for additional successive twelve
(12) month periods, unless any party gives the others at least ninety (90) days advance written notice of his or its intention not to renew for an additional twelve (12) month
period (the initial thirty-six (36) month period and any successive twelve (12) month renewal periods referred to herein as the
"Term"). 

        3.    Salary, Bonuses and Benefits.    

        (a)    Salary.    In consideration of the services of the Executive rendered hereunder, the Company shall pay the
Executive a base salary (the "Base Salary") at an annual rate of seven hundred fifty thousand dollars ($750,000), payable in regular intervals in
accordance with the Company's payroll practices. The Base Salary shall be subject to annual review by the Board and may be increased, but not decreased, in the sole discretion of the Board. 

        (b)    Annual Bonuses.    In addition to the Base Salary, in respect of each fiscal year during the Term beginning
with the fiscal year ending June 30, 2007, the Executive shall be eligible to receive annual incentive compensation (the "Annual Bonus"), subject
to the attainment of performance criteria established by the Board. The Annual Bonus will be guaranteed for the fiscal year ending June 30, 2007, in the amount of one million
sixty-two thousand, four hundred seventy-three dollars ($1,062,473), and in subsequent fiscal years in an amount and/or percentage to be determined by the Board in its sole discretion (the
initial guarantee and any guarantee thereafter, a "Guaranteed Bonus"). 

        (c)    Stock Options.    The Executive shall be granted "Founders Options" and "Initial Management Options" (the
"Options") in accordance with the descriptions in the Final Offering Memorandum dated December 18, 2006 (the "Offering
Memorandum") and in accordance with the KGen Power Corporation 2006 Equity Incentive Plan and the grant agreements to be dated as of the Acquisition Closing, as set forth in
the Offering Memorandum, which grant agreements will be incorporated in and made a part of this Agreement. In the event of a conflict between the plan, the grant agreements and this Agreement, the
terms of this Agreement shall govern. 

        (d)    Benefits.    During the Term, the Executive shall be: 

        (i)    eligible
to participate in all employee fringe benefits and any qualified and non-qualified pension and/or profit sharing plans that may be provided by the
Company for its employees generally in accordance with the provisions of any such plans, as the same may be in effect on and after the date hereof; 

        (ii)   eligible
to participate in any medical and health plans or other employee welfare benefit plans that may be provided by the Company for its employees generally in
accordance with the provisions of any such plans, as the same may be in effect on and after the date hereof; 

        (iii)  entitled
to twenty (20) days of paid vacation annually in accordance with the Company policy that may be applicable on and after the date hereof to employees
generally; 

        (iv)  entitled
to sick leave, sick pay and disability benefits in accordance with any Company policy or plan that may be applicable to employees on and after the date hereof;
and 

2

 

        (v)   entitled
to reimbursement for all reasonable and necessary out-of-pocket business expenses incurred by the Executive in the performance of his
duties hereunder in accordance with the Company's policies that may be applicable to employees on and after the date hereof; included in the foregoing, the Company will provide the Executive with
reimbursement for his housing costs in the Houston, Texas area and transportation costs associated there with in an amount not to exceed the net after tax amount of two hundred thousand dollars
$200,000 annually. 

        4.    Termination.    

        (a)   The
Executive's employment hereunder shall be terminated upon the occurrence of any of the following (each a
"Termination"): 

        (i)    the
death of the Executive; 

        (ii)   termination
by the Company because of the Executive's inability to perform his duties because of a Disability (as defined below); 

        (iii)  termination
by the Executive at any time for any reason whatsoever (including, without limitation, resignation or retirement) other than for Good Reason (as defined
below); 

        (iv)  termination
by the Company at any time for Cause (as defined below), such termination to take effect immediately upon written notice from the Company to the Executive;
and 

        (v)   termination
(A) by the Company without Cause, or (B) by the Executive for Good Reason. 

        (b)   The
following terms shall have the following meanings: 

        (i)    "Cause" shall mean the Executive: (A) is indicted or charged with a felony or any lesser crime a material element
of which is fraud or dishonesty (but if he is subsequently acquitted or the indictment is otherwise dismissed, other than by plea agreement, his termination will be retroactively treated as being
without Cause); (B) commits an act of dishonesty that causes or is reasonably expected to cause material harm to the Company, or KGen Power or any of their affiliates; (C) materially
breaches this Agreement, which breach is not cured to the Company's reasonable satisfaction within thirty (30) business days of the date on which the Company delivers written notice to
Executive identifying the nature of the breach; (D) breaches any of the written policies or procedures of Company or KGen Power, which breach causes or is reasonably expected to cause material
harm to the Company or KGen Power or any of their affiliates, or (E) engages in intentional misconduct which causes material harm to the Company or KGen Power or any of their affiliates. 

        (ii)   "Disability" shall mean a physical or mental incapacity that prevents the Executive from performing the essential
functions of his position with the Company for a period of one hundred eighty (180) or more days, whether or not consecutive, occurring within any period of twelve (12) consecutive
months as determined (A) in accordance with any long-term disability plan provided by the Company of which the Executive is a participant, or (B) by the following procedure:
The Executive agrees to submit to medical examinations by a licensed healthcare professional selected by the Company, in its sole discretion, to determine whether a Disability exists. In addition, the
Executive may submit to the Company documentation of a Disability, or lack thereof, from a licensed healthcare professional of his choice. Following a determination of a Disability or lack of
Disability by the Company's or the Executive's licensed healthcare professional, the other party may submit subsequent documentation relating to the existence of a Disability from a licensed
healthcare professional selected by such other party. In the event that the medical opinions of such licensed healthcare 

3

 

professionals
conflict, such licensed healthcare professionals shall appoint a third licensed healthcare professional to examine the Executive, and the opinion of such third licensed healthcare
professional shall be dispositive. 

        (iii)  "Good Reason" shall mean the occurrence, without the Executive's prior written consent, of any of the following:
(A) a material reduction in the nature or scope of his duties from those contemplated by this Agreement; (B) a reduction in his then current Base Salary; or (C) the relocation of
his primary office to a location that is not within a sixty (60) miles radius of the Company's then current offices, provided, that any such event will not constitute Good Reason unless and
until the Executive has provided the Company with notice of the event on which Good Reason is based, and the Company fails to remedy the event within thirty (30) days of receipt of such notice. 

        5.    Termination Payments.    

        (a)    Termination Due to Death or Disability.    In the event of a Termination due to the Executive's death or
Disability, the Executive or his estate, as the case may be, shall be entitled, in lieu of any other compensation and benefits whatsoever, to: 

        (i)    payment
of his Base Salary at the rate in effect at the time of Termination until the date of Termination due to death or Disability; 

        (ii)   any
Annual Bonus awarded but not yet paid, payable at such time as the Company pays annual bonuses to similarly situated executives; 

        (iii)  any
Guaranteed Bonus (to the extent not covered in clause (ii), above), pro-rated for the period through the date of Termination; 

        (iv)  any
deferred compensation or bonuses (to the extent not covered in clauses (ii) and (iii), above), including interest or other credits on the deferred amounts,
to the extent provided in the plans or programs providing for deferral; 

        (v)   reimbursement
of expenses incurred but not paid prior to such Termination; 

        (vi)  payment
for any accrued but unused vacation; and 

        (vii) such
rights to other benefits as may be provided in applicable pension and welfare plans of the Company, other than plans providing for severance or other forms of
termination payments, according to the terms and provisions of such plans; 

the
foregoing (i) through (vii) as applied to any terminations hereunder referred to herein as the "Termination Payments"; plus: 

        (viii) continuation
of participation in the Company's group medical, dental and vision plans or, if such coverage is unavailable, under substantially equivalent plans, in
either case in a manner that is tax neutral to the Executive, for a period of twelve (12) months from the date of Termination, and 

        (ix)  immediate
vesting of all unvested Options. 

        (b)    Termination for Cause or Without Good Reason.    In the event that the Company terminates the Executive's
employment for Cause or the Executive terminates his employment without Good Reason or gives the Company notice of his intention not to extend any Term under  Section 2 of this Agreement, the
Executive shall be entitled, in lieu of any other compensation and benefits whatsoever, to the Termination
Payments, and all unvested Options shall be forfeited. In addition, if the Executive terminates his employment without Good Reason or gives the Company notice of his intention not to extend, the
Company will provide the Executive with continuation of participation in the Company's group medical, dental and vision plans or, if such coverage is 

4

 

unavailable,
under substantially equivalent plans, in either case in a manner that is tax neutral to the Executive, for a period of twelve (12) months from the date of Termination or until the
Executive is eligible for substantially equivalent coverage under a new employer's plans prior to the conclusion of the twelve (12) month period. 

        (c)    Termination Without Cause or for Good Reason.    In the event the Company terminates the Executive's employment
hereunder without Cause or the Executive terminates his employment for Good Reason, the Executive shall be entitled, in lieu of any other compensation whatsoever, to: 

        (i)    the
Termination Payments; 

        (ii)   payment
of his Base Salary in effect at the time of Termination for a period of twenty-four (24) months following the effective date of Termination
through the Company's regular payroll; 

        (iii)  continuation
of participation in the Company's group medical, dental and vision plans or, if such coverage is unavailable, under substantially equivalent plans, in
either case in a manner that is tax neutral to the Executive, until the earlier of twenty-four (24) months from the date of Termination or until the date on which the Executive
first becomes eligible for substantially equivalent insurance coverage provided by any other entity following Termination; and 

        (iv)  immediate
vesting of all unvested Options. 

        (d)    Expiration of Term.    In the event that the Executive's employment is terminated by reason of the expiration
of any Term as a result of the Company giving notice of its intention not to extend any Term
under Section 2 of this Agreement, the Executive shall be entitled, in lieu of any other compensation whatsoever, to: 

        (i)    the
Termination Payments; 

        (ii)   payment
of his Base Salary in effect at the time of Termination for a period of twelve (12) months through the Company's regular payroll, commencing on the first
day following the final day of the Term; 

        (iii)  continuation
of participation in the Company's group medical, dental and vision plans or, if such coverage is unavailable, under substantially equivalent plans, in
either case in a manner that is tax neutral to the Executive, for a period of twelve (12) months from the date of Termination; and 

        (iv)  all
unvested Options shall be forfeited; 

provided, however, that the Executive shall have the option of electing to forego the payments and
benefits in clauses (ii) and (iii) in exchange for being released from his obligations in Section 7(d)(iv), below, during the
twelve (12) month period following the date of Termination. 

5

  

        In
the event that either party gives notice to the other party of his or its intention not to extend the then current Term for an additional Term, the Company shall have the option of
discontinuing the Executive's services hereunder at any time after either party has given such notice, subject to the following: (x) the Company shall continue to pay the Executive's Base
Salary and to continue his participation in the Company's benefit plans and programs for the balance of the Term; and (y) no such discontinuation shall constitute Good Reason for the
Executive's termination of his employment. 

        (e)    Non-Duplication of Benefits.    Notwithstanding the foregoing, nothing in this Agreement shall
result in a duplication of payments or benefits provided under this Section 5 or  Section 6, nor shall anything in this Agreement require the
Company to make any payment or to provide any benefit to the Executive that the
Company is otherwise required to provide under any other contract, agreement or arrangement. 

        (f)    General Release.    No payments or benefits payable to the Executive upon the Termination of his employment
pursuant to this Section 5 or Section 6 shall be made to the Executive unless and until
the Executive executes a general release in favor of the Company and KGen Power and their affiliates in a form satisfactory to both the Company and KGen Power and such general release becomes
effective pursuant to its terms. 

        (g)   No
interest shall accrue on or be paid with respect to any portion of any payments hereunder, except as required by law. 

        6.    Change in Control.    

        (a)    Immediate Vesting.    In consideration of the assistance provided by the Executive in anticipation of a Change
in Control (as defined below), all outstanding Options, restricted stock awards, phantom stock and other equity-based awards previously granted to the Executive, if any, shall immediately vest upon a
Change in Control, subject to the Board's discretion to require the cancellation of such equity interest in exchange for a cash payment. 

        (b)    Termination.    If the Executive's employment is terminated by the Company without Cause or by the Executive
for Good Reason within a period commencing six (6) months prior to the announcement of
an anticipated Change in Control and ending six (6) months following a Change in Control, the Executive shall be entitled, in lieu of any other compensation whatsoever, to, 

        (i)    the
payments and benefits set forth in Section 5(c), except that the payments provided for in  Section 5(c)(ii) shall be increased to 2.99 times the
Base Salary, plus 

        (ii)   a
lump sum cash payment equal to the Annual Bonus for the fiscal year during which such termination of employment occurs (determined as if all applicable goals and
targets had been satisfied in full), pro-rated to the date of Termination; 

        (iii)  continuation
of participation in the Company's group medical, dental and vision plans or, if such coverage is unavailable, under substantially equivalent plans, in
either case in a manner that is tax neutral to the Executive, until the earlier of twenty-four (24) months from the date of Termination or until the date on which the Executive
first becomes eligible for substantially equivalent insurance coverage provided by any other entity following Termination; 

and
the provisions of Sections 5(e), (f) and (g) shall
apply. 

        (c)   For
purposes of this Section 6, a "Change in Control" shall mean
any of the following: 

        (i)    any
Person becomes a Beneficial Owner of at least fifty percent (50%) of the common stock of KGen Power, except as the result of (A) any acquisition of common
stock of 

6

 

KGen
Power by KGen Power, or (B) any acquisition of common stock of KGen Power directly from KGen Power (as authorized by the Board); 

        (ii)   individuals
who constitute the Incumbent Board cease for any reason to constitute at least a majority of the Board, and for this purpose, any individual who becomes a
member of the Board after the date of this Agreement whose election, or nomination for election by holders of KGen Power's common stock, was approved by the vote of at least a majority of the
individuals then constituting the Incumbent Board shall be considered a member of the Incumbent Board (except that any such individual whose initial election as director occurs as the result of an
actual or threatened election contest, within the meaning of Rule 14a-l1 under the Securities Exchange Act of 1934 (the "Exchange Act"), or other
actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered); 

        (iii)  The
consummation of a reorganization, merger, share exchange, consolidation, or sale or disposition of all or substantially all of the assets of KGen Power unless, in
any case, the Persons who or which Beneficially Own the common stock of KGen Power immediately before that transaction Beneficially Own, directly or indirectly, immediately after the transaction, at
least seventy-five percent (75%) of the common stock of KGen Power or any other corporation or other entity resulting from or surviving the transaction (including a corporation or other
entity which, as the result of the transaction, owns all or substantially all of common stock of KGen Power or all or substantially all of KGen Power's assets, either directly or indirectly through
one or more subsidiaries) in substantially the same proportion as their respective ownership of the common stock of KGen Power immediately before that transaction 

        (iv)  KGen
Power's shareholders approve a complete liquidation or dissolution of the Company; or 

        (v)   a
sale or other disposition of all or substantially all of KGen Power's assets. 

        (d)   For
purposes of this Section 6. the following terms shall have the meanings indicated: 

        (i)    "Beneficial Owner" means beneficial owner as defined in Rule 13d-3 under the Exchange Act.
("Beneficially Owns" has the correlative meaning.) Any calculation of the number of Voting Securities outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding Voting Securities of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(l)(i) under the Exchange Act. 

        (ii)   "Incumbent Board" means the members of the Board on the effective date of the Agreement (subject, however, to
clause (c)(ii) of the above definition of Change in Control). 

        (e)   Stock Ownership Guidelines. The Executive acknowledges that so long as he benefits from the provisions of this Agreement,
he shall be subject to and bound by the KGen Corporation Stock Ownership Guidelines, as the same may be amended from time to time and as they shall be interpreted by the administrator thereof. 

        7.    Ownership of Ideas; Duty of Loyalty.    

        (a)    General.    The Company is engaged in a continuous program of development, production, marketing and servicing
with respect to its businesses and the clients and customers it services. The Executive's employment hereunder creates a relationship of confidence and trust between the Executive and the Company. The
purpose of the restrictions contained in this Section 7 is to protect the goodwill and other legitimate business interests of the Company, and
the Company would not have entered into this Agreement in the absence of such restrictions. 

7

 

        (b)    Confidential Information.    The Executive hereby covenants, agrees and acknowledges as follows: 

        (i)    The
Executive will have access to and will possess, and the Company promises to provide to the Executive, Confidential Information (as defined below) that has been
created, discovered or developed by, or otherwise is maintained by the Restricted Group (as defined below), including, without limitation, information created, discovered or developed by, or made
known to, the Executive during the Term or arising out of his employment, or in which property rights have been or may be assigned or otherwise conveyed to the Restricted Group, which information has
commercial value in the business in which the Restricted Group is engaged and is treated by the Restricted Group as confidential. 

        (ii)   The
Executive will keep confidential all Confidential Information and will not without the prior written consent of the Board (A) use for his benefit or disclose
at any time during his employment by the Company, or thereafter, except to the extent required by the performance by him of his duties as an employee of the Company and except to the extent required
by law, any Confidential Information obtained or developed by him while in the employ of the Company, or (B) take any Confidential Information with him upon leaving the employ of the Company. 

        (iii)  The
Executive agrees that upon termination of his employment by the Company for any reason, or at such earlier time as the Company may request, the Executive shall
forthwith return to the Company all documents and other property in his possession belonging to the Restricted Group. 

        (c)    Executive Work Product; Inventions.    

        (i)    Ideas,
processes, developments and discoveries conceived by the Executive during the Term (collectively, the "Executive Work
Product"), in any way related to the Confidential Information or the development, production, financing or marketing activities carried on by the Restricted Group, whether
conceived alone or with others during the performance of his duties, and whether or not conceived during the regular working hours of the Company, shall be the sole and exclusive property of the
various members of the Restricted Group, as applicable, and the Executive hereby assigns to the Restricted Group his entire right, title and interest in and to the Executive Work Product. The
Restricted Group shall also have the right to keep any and all of the Executive Work Product as Confidential Information. 

        (ii)   Unless
and except to the extent that the Company specifically agrees in writing to the contrary, the Executive hereby agrees, acknowledges and confirms that any and all
work and other products to which he shall have directly or indirectly contributed during the Term or which other employees shall have produced or to which they shall have contributed under his
supervision or otherwise during the Term shall be deemed to be "works for hire" in and to which the Company shall have full and exclusive right, title and interest. The Executive shall execute any and
all documents reasonably necessary and appropriate to evidence the foregoing, and Executive hereby irrevocably appoints the Company as Executive's attorney in fact (which appointment will be deemed
for consideration and coupled with an interest) to execute and file any such documents on Executive's behalf. 

        (iii)  The
Executive will hold for the Company's sole benefit any Invention, which is to be the exclusive property of the Company or any of its Affiliates under this  Section 7 regardless of whether any patent,
 copyright, trademark or other right or protection is issued. Any and all inventions will be promptly
and fully disclosed by the Executive to the Board or an appropriate senior executive officer of the Company (other than the Executive), and is hereby assigned to the Company, without any additional
compensation therefor. 

8

 

        (d)    Non-Interference with Business Relationships.    During the Restricted Period, the Executive will
not directly or indirectly, as a director, officer, employee, manager, consultant, independent contractor, advisor or otherwise: 

        (i)    make
any statements or perform any acts intended to materially interfere with, reasonably likely to materially interfere with or having the effect of materially
interfering with, any interest of the Restricted Group in their relationship and dealings with existing or potential customers or clients; 

        (ii)   make
any statements or do any acts intended to cause, reasonably likely to cause or having the effect of causing, any customers or clients of the Restricted Group to
make use of the services or purchase the products of any business in which the Executive has or expects to acquire any interest, is or expects to become an employee, officer or director, or has
received or expects to receive any remuneration, if such statements or acts would result or would likely result in such customers or clients ceasing to do material business with any member of the
Restricted Group; 

        (iii)  make
any statement that is likely to have the effect of undermining or disparaging the reputation of the Restricted Group, or their good will, products, or business
opportunities, or that is likely to have
the effect of undermining or disparaging the reputation of any officer, director, agent, representative or employee, past or present, of the Restricted Group, or 

        (iv)  engage
in competition with, or own any interest in, perform any services for, participate in or be connected with any business or organization which engages in material
competition with the Restricted Group in any geographical area in which any business was or is carried on by the Restricted Group (A) as of the Commencement Date or (B) during the
Restricted Period; provided, however, that the provisions of this  Section 7(d) shall not be deemed to
prohibit the Executive's ownership of not more than one percent (1%) of the total shares of all classes of
stock outstanding of any publicly held company. 

        (e)    Non-Solicitation.    During the Restricted Period, the Executive will not directly or indirectly,
as a director, officer, employee, manager, consultant, independent contractor, advisor or otherwise: 

        (i)    employ
or solicit for employment, or advise or recommend to any other person or entity that they employ or solicit for employment, any employee of the Restricted Group
or retain or attempt to retain the services of any individuals who are independent contractors for Restricted Group; or 

        (ii)   solicit
or encourage any employee of the Restricted Group to leave the employ of the Restricted Group, to do any act that is disloyal to the Restricted Group, is
inconsistent with the interests of Restricted Group or violates of any provision of this Agreement or any agreement such employee has with the Restricted Group, or to do any of the foregoing with
respect to any independent contractors for the Restricted Group. 

        For
purposes of the foregoing clauses (i) and (ii), above, an "employee of the Restricted Group" and an "independent contractor for the Restricted Group" shall include any person
who was an employee or independent contractor of or for the Restricted Group at any time within six (6) months prior to the prohibited conduct. 

9

  

        (f)    Definitions.    For the purposes of this Section 7, the
following terms shall have the following meanings: 

        (i)    "Company" shall mean the Company and KGen Power. 

        (ii)   "Compete" shall mean when a person or entity (including, without limitation, the Executive) engages in any of the
following activities: (A) conducts, operates, carries out or engages in the business of merchant electric power generation, or (B) conducts, operates, carries out, engages in or is
involved in any other material business which the Restricted Group may conduct during the Term of this Agreement, in any reasonable geographic area in which such business is conducted by the
Restricted Group. 

        (iii)  "Confidential Information" shall mean all nonpublic and/or proprietary information respecting the business of the
Restricted Group, including, without limitation, its products, programs, projects, promotions, marketing plans and strategies, business plans or practices, business operations, employees, research and
development, intellectual property, software, databases, trademarks, pricing information and accounting and financing data, and methods of design, distribution, marketing, service or procurement,
regardless of whether such information has been reduced to documentary form. Confidential Information also includes information concerning the Restricted Group's clients, customers and suppliers, such
as their identity, address and other information kept by the Restricted Group. Confidential Information does not include information that is, or becomes, available to the public unless such
availability occurs through an unauthorized act on the part of the Executive. 

        (iv)  "Inventions" shall mean all inventions, products, discoveries, improvements, processes, marketing and services methods
or techniques, formulae, designs, styles, specifications, data bases, computer programs (whether in source code or object code), know-how, strategies and data, whether or not patentable or
registrable under copyright or similar statutes, made, developed or created by the Executive, whether at the request or suggestion of the Restricted Group, or otherwise, whether alone or in
conjunction with others, and whether during regular hours of work or otherwise, during the period of his employment by the Company which may pertain to the business, products, or processes of the
Restricted Group, and all papers, drawings, models, data, documents and other material pertaining to or in any way relating to any of the Inventions. 

        (v)   "Restricted Group" shall mean, individually and/or collectively, the Company (including KGen Power) and any person,
corporation or other entity directly or indirectly controlling or under the common control of the Company. For the purposes of this definition, "control" when used with respect to any person,
corporation or other entity means the power to direct the management and policies of such
person or entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. 

        (vi)  "Restricted Period" shall mean the Term of the Executive's employment plus the twelve (12) month period after the
Executive's employment with the Company ceases. 

        (g)   The
Executive represents that his experience, capabilities and circumstances are such that the provisions of this  Section 7 will not prevent him from earning a livelihood. The Employee further agrees
that the limitations set forth in this  Section 7 are reasonable in duration, geographic area and scope and are properly required for the adequate protection of the businesses of the
Restricted Group. It is understood and agreed that the covenants made by the Executive in this Section 7 shall survive the expiration or
termination of this Agreement and the Term. 

        (h)   The
Executive acknowledges and agrees that any remedy at law for any breach or threatened breach of the provisions of this  Section 7 would be inadequate and, therefore, agrees 

10

 

that
the Restricted Group shall be entitled to injunctive relief in addition to any other available rights and remedies in cases of any such breach or threatened breach;  provided, however, that nothing contained herein shall be construed as prohibiting the Restricted Group
from pursuing any other rights and remedies available for any such breach or threatened breach. 

        (i)    Without
limiting the generality of Section 7 hereof, the Executive hereby expressly agrees that the foregoing
provisions of this Section 7 shall be binding upon the Executive's heirs, successors and legal representatives. 

        8.    Indemnification.    

        (a)   Subject
to limitations imposed by law, the Company's by-laws and the Company's Directors' and Officers' Liability Insurance, the Company shall indemnify and
hold harmless the Executive to the fullest extent permitted by law from and against any and all claims, damages, expenses (including attorneys' fees), judgments, penalties, fines, settlements, and all
other liabilities incurred or paid by him in connection with the investigation, defense, prosecution, settlement or appeal of any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative and to which the Executive was or is a party or is threatened to be made a party by reason of the fact that the Executive is or was an officer,
employee or agent of the Company or KGen Power, or by reason of anything done or not done by the Executive in any such capacity or capacities, provided that the Executive acted in good faith, in a
manner that was not grossly negligent and did not constitute willful misconduct and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The Company also shall pay any and all expenses (including attorneys' fees) incurred by the Executive as a result of the Executive being called as a witness
in connection with any matter involving the Company and/or any of its officers or directors. 

        (b)   The
Company shall pay any expenses (including attorneys' fees), judgments, penalties, fines, settlements, and other liabilities incurred by the Executive in
investigating, defending, settling or appealing any action, suit or proceedings described in this Section 8 in advance of the final disposition
of such action, suit or proceeding. The Company shall promptly pay the amount of such expenses to the Executive, but in no event later than ten (10) days following the Executive's delivery to
the Company of a written request for an advance pursuant to this Section 8. together with a reasonable accounting of such expenses. 

        (c)   The
Executive hereby undertakes and agrees to repay to the Company any advances made pursuant to this Section 8 if
and to the extent that it shall ultimately be found that the Executive is not entitled to be indemnified by the Company for such amounts. 

        (d)   The
Company shall make the advances contemplated by this Section 8 regardless of the Executive's financial ability
to make repayment, and regardless whether indemnification of the indemnitee by the Company will ultimately be required. Any advances and undertakings to repay pursuant to this  Section 8 shall be
unsecured and interest free. 

        (e)   The
provisions of this Section 8 shall survive the termination or expiration of this Agreement. 

        9.    Arbitration.    

        (a)    Rules; Jurisdiction.    Any controversy, dispute or claim between the parties, including any controversy,
dispute or claim arising out of, relating to or concerning this Agreement, the breach of this Agreement, the employment of the Executive, or the termination of the Executive's employment (a  "Disputed Matter") will be resolved pursuant to this Section 9. This includes all claims whether
arising in tort or contract and whether arising under statute or common law. Any such controversy, dispute or claim will be settled in Houston, Texas, in accordance with the 

11

 

applicable
rules of the American Arbitration Association (the "AAA") then in effect; provided,  however, that a breach
of the obligations under Section 7 may be enforced by an action for
injunctive relief and damages in a court of competent jurisdiction. If the rules of the AAA differ from any provisions of this Agreement, the provisions of this Agreement will control. 

        (b)    Terms of Arbitration.    The arbitrator chosen in accordance with these provisions shall not have the power to
alter, amend or otherwise affect the terms of these arbitration provisions or the provisions of this Agreement. 

        (c)    Binding Effect.    The arbitrator will have the authority to grant only such equitable and legal remedies that
would be available in any judicial proceeding instituted to resolve a Disputed Matter, and the decision of the arbitrator within the scope of the submission will be final and conclusive upon the
parties. Judgment upon any award rendered by the arbitrator may be entered in any court having subject matter jurisdiction to render such judgment. In the event any provision of this  Section 9 is
found to be unenforceable for any reason by a court or an arbitrator, the court or arbitrator, as the case may be, shall reform this  Section 9 to the extent necessary to render it enforceable.

        (d)    Time for Arbitration.    Any demand for arbitration involving an alleged breach of this Agreement shall be
filed within one (1) year of the date the claim became known or should have become known; provided,  however, any claim involving an alleged statutory
obligation may be filed with the AAA and served on the other party at any time within the period
covered by the applicable statute of limitations. 

        (e)    Payment of Costs.    To the extent permitted by applicable law, each party hereby agrees to pay one half the
arbitrator's fees, the costs of transcripts and all other expenses of the arbitration proceedings; provided,  however, that the arbitrator shall have the
authority to determine payment of costs as part of the award or to allocate costs in accordance with the AAA
rules. 

        (f)    Burden of Proof; Basis of Decision.    For any claim submitted to arbitration, the burden of proof shall be as
it would be if the claim were litigated in a judicial proceeding except where otherwise specifically provided in this Agreement, and the decision shall be based on the application of the law of the
State Texas (as determined from statutes, court decisions and other recognized authorities) to the facts found by the arbitrator. 

        (g)    Judgment.    Within sixty (60) calendar days after the conclusion of any arbitration proceedings
hereunder, the arbitrator shall render findings of fact and conclusions of law in a written opinion setting forth the basis and reasons for any decisions reached by him or her and shall deliver a
signed copy of the award to each party to this Agreement. 

        (h)    Confidentiality.    All aspects of the any arbitration proceeding under this  Section 9shall be confidential, and
neither party may disclose the substance or outcome of any arbitration proceedings, except as follows:
(i) such disclosure is reasonably necessary to carry out and make effective the terms of this Agreement, including without limitation, pleadings or other documents filed seeking entry of
judgment upon an award of the arbitrator; (ii) a party is required by law to respond to any demand for information from any court, governmental entity or governmental agency, or as may be
required by federal or state securities laws; (iii) disclosure is necessary to be made to a party's independent accountants for tax or audit purposes; (iv) disclosure is necessary to be
made to a party's attorneys for purposes of rendering advice or services relating to the Agreement; (v) the parties may mutually agree in writing; or (vi) may otherwise be required by
law. 

12

 

        10.    Miscellaneous.    

        (a)    Entire Agreement; Modifications.    This Agreement constitutes the entire and final expression of the agreement
of the parties with respect to the subject matter hereof and supersedes all prior agreements, oral and written, between the parties hereto with respect to the subject matter hereof. This Agreement may
be modified or amended only by an instrument in writing signed by both parties hereto. 

        (b)    Non-Assignability.    

        (i)    Neither
this Agreement nor any right or interest hereunder shall be assignable by the Executive, his beneficiaries, or legal representatives without the Company's prior
written consent; provided, however, that nothing in this Section
l0(b) shall preclude the Executive from designating a beneficiary to receive any benefit payable hereunder upon his death or incapacity. 

        (ii)   Except
as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation or to exclusion, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be
null, void and of no effect. 

        (c)    Binding Effect.    Without limiting or diminishing the effect of  Section 10(b) hereof, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective heirs, successors,
legal representatives and assigns. 

        (d)    Notices.    Any notice required or permitted to be given under this Agreement shall be sufficient if in writing
and either delivered in person, sent by first class certified or registered mail, postage prepaid or sent by overnight courier, as follows: 

	 	 	To the Company, to:	 	 
	

 	
 	

* * * * *

* * * * *

* * * * *

* * * * *

* * * * *

* * * * *	
 	

 
	

 	
 	

with a copy to:	
 	

 
	

 	
 	

* * * * *

* * * * *

* * * * *

* * * * *

* * * * *	
 	

 
	

 	
 	

To the Executive, to:	
 	

 
	

 	
 	

* * * * *

* * * * *

* * * * *	
 	

 

or
to such other address or addresses as either party may have designated in writing to the other party hereto. 

13

  

        (e)    Severability.    The Executive agrees that in the event that any court of competent jurisdiction shall finally
hold that any provision of Section 7 hereof is void or constitutes an unreasonable restriction against the Executive, such provision shall not be
rendered void but shall apply with respect to such extent as such court may judicially determine constitutes a reasonable restriction under the circumstances. If any part of this Agreement other than  Section 7 is held by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in pan by reason of any
rule of law or public policy, such part shall be deemed to be severed from the remainder of this Agreement for the purpose only of the particular legal proceedings in question and all other covenants
and provisions of this Agreement shall in every other respect continue in full force and effect and no covenant or provision shall be deemed dependent upon any other covenant or provision. 

        (f)    Waiver.    Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall
not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such
right or power at any other time or times. 

        (g)    Tax Obligations.    

        (i)    The
payment of any salary, bonus or other compensation hereunder shall be subject to income tax, social security and other applicable withholdings, as well as such
deductions as may be required under the Company's employee benefit plans. 

        (ii)   It
is intended that all payments hereunder shall comply with Section 409A of the Internal Revenue Code of 1986, as amended (the
"Code", and such section, "Section 409A") and the regulations promulgated thereunder so as not to
subject the Executive to payment of interest or any additional tax under Section 409A. In furtherance thereof, if payment or provision of any amount or benefit hereunder that is subject to
Section 409A at the time specified herein would subject such amount or benefit to any additional tax under Section 409A, the payment or provision of such amount or benefit shall be
postponed to the earliest commencement date on which the payment or provision of such amount or benefit could be made without incurring such additional tax. In addition, to the extent that any
regulations or other guidance issued under Section 409A (after application of the previous provisions of this Section l0(g)(ii) would result the
Executive's being subject to the payment of interest or any additional tax under Section 409A of the Code, the parties agree, to the extent reasonably possible, to amend this Agreement in order
to avoid the imposition of any such interest or additional tax under Section 409A, which amendment shall have the minimum economic effect necessary and be reasonably determined in good faith by
the Company and the Executive. 

        (h)    Relevant Law.    This Agreement shall be construed and enforced in accordance with the internal laws of the
State of Texas without regard to the conflict of law principles thereof. 

        (i)    Counterparts.    This Agreement may be executed in counterparts, each of which shall be deemed an original, but
both of which together shall constitute one and the same instrument. 

        11.    Acknowledgement.    The Executive represents and acknowledges the following: 

        (a)   He
has carefully read this Agreement in its entirety; 

        (b)   He
understands the terms and conditions contained herein; 

        (c)   He
has had the opportunity to review this Agreement with legal counsel of his own choosing and has not relied on any statements made by the Company or its legal counsel
as to the meaning of any term or condition contained herein or in deciding whether to enter into this Agreement; and 

        (d)   He
is entering into this Agreement knowingly and voluntarily. 

[Remainder
of page intentionally left blank.] 

14

 

        IN
WITNESS WHEREOF, the Company and the Executive have duly executed and delivered this Agreement as of the day and year first above written. 

	 	 	KGEN POWER MANAGEMENT INC.
	

 	
 	

By:	
 	

/s/ Donald E. Boyd

	 	 	Name:	 	Donald E. Boyd

	 	 	Title:	 	Executive Vice President

	

 	
 	

EXECUTIVE
	

 	
 	

/s/ Gerald K. Lindner
 Gerald K. Lindner
	

 	
 	

[SEAL]

15

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EMPLOYMENT AGREEMENT

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