Document:

Exhibit 10.2

(Including
amendments through 2/11/07)

3M

PERFORMANCE UNIT PLAN

SECTION 1

Purpose

The purpose of
this plan is to attract talented, competent and resourceful managers to the
Company and to provide a strong incentive for such management employees to
remain with the Company.  The purpose of
the plan is also to provide such management employees an opportunity to acquire
shares of the Company’s common stock, with the belief that such equity
participation will provide incentive for added effort toward the Company’s
growth and success.  The plan is intended
to provide management incentive compensation related to the long-range planning
functions of management participants and the success of the Company in the
long-term context.

SECTION 2

Definitions

(a)  “Company” shall mean 3M Company.

(b)  “Plan” shall mean the Company’s Performance
Unit Plan.

(c)  “Committee” shall mean the Compensation
Committee of the Company’s Board of Directors, excluding any members who are
eligible to receive an award under the Plan.

(d)  “Participant” shall mean a management
employee of the Company or any of its subsidiaries or affiliates who is
designated as a Participant by the Committee.

(e)  “Award” shall mean the determination by the
Committee that a Participant should receive a given number of Performance
Units, as evidenced by a document of notification given a Participant at the
time of such determination.

(f)  “Performance Unit” shall mean a unit of
participation with a face value of $100 which shall constitute the basis from
which a Participant’s payment shall be determined with regard to performance
criteria established by the Committee.

(g)  “Performance Criteria” shall mean such
internal performance criteria for the Company or any business segment thereof
as determined by the Committee with respect to each Award and may include any
one or more of several criteria, such as, but not limited to, return on capital
employed, return on assets or net assets, net sales, sales growth, cash flow,
earnings per share or improvement in earnings per share, return on equity,
stock price, gross margin, operating margin, total shareholder return, economic
value added, economic profit or improvements in economic profit (after-tax
operating income, excluding non-recurring items, less the cost of capital),
earnings before interest and taxes, EBITDA, operating income or improvement in
operating income, improvements in certain asset or financial measures
(including working capital and the ratio of sales to net working capital),
reductions in certain asset or cost areas (including reductions in inventories
or accounts receivable or reductions in laboratory, engineering, sales or
administrative costs), net income or variations of income criteria in varying
time periods, adjusted net income or improvement in adjusted net income, or
general comparisons with other peer companies or industry groups or
classifications with regard to one or more of these criteria.  Such criteria shall include a target for
payment of the Performance Unit at full face value and upper and lower limits
for the measurement of payment to Participants.

 

(h)  “Performance Period” shall mean a period of
no less than three years, as determined by the Committee, during which
Performance Criteria shall be measured for purposes of calculating the payment
with respect to each Performance Unit. 
The Committee may elect, during the initial years of granting
Performance Units, to provide for shorter periods of less than three years.

(i)  “Payment Date” shall mean a date determined
by the Committee at the time of the Award for purposes of making payment to the
Participant.  This date shall be no later
than March 15 of the year immediately following the completion of the
respective Performance Period.

SECTION 3

Participation

(a)  The Committee shall determine and designate
from time to time those management employees of the Company and its
subsidiaries or affiliates who are to be granted Performance Units, and thereby
become Participants, and the number of Performance Units to be granted to each
Participant.

(b)  Performance Units granted by the Committee
shall be by letters of notification to Participants evidencing the Award in
such form as the Committee shall approve, which letters shall comply with and
be subject to the terms and conditions of this Plan.  Further Performance Units may be granted by
the Committee from time to time to Participants, so long as this Plan shall
continue in full force and effect.

SECTION 4

Granting of Performance Units

(a)  Grants of Performance Units shall be
determined and directed by the Committee from time to time.  The letter of notification evidencing the
Award shall specify the number of Performance Units granted to the Participant,
the proration of such Performance Units if the Participant retires prior to the
completion of the relevant Performance Period, the commencement and expiration
of the relevant Performance Period, the Performance Criteria by which the
payment value of the Performance Units will be determined, and the Payment
Date.

(b)  Awards shall be granted to Participants in
recognition of their positions and ability to affect the Company’s
performance.  Either the Company’s books
and records or the Participant’s letter of notification of the Award shall be
deemed conclusive evidence of the granting of an Award and, in the event of
inconsistency or ambiguity, the Company’s books and records shall supersede and
prevail.

SECTION 5

Company Performance

The Performance
Criteria established by the Committee with respect to each Award shall provide
a means by which the Company’s performance may be measured during the
Performance Period specified in the Award. 
Actual Company performance during the Performance Period shall determine
the amount of payment to be received by the Participant at the Payment Date.  The payment value of the Performance Units
shall be adjusted to reflect the actual Company performance during the
Performance Period, within lower and upper limits established by the Committee
at the time of the Award.

SECTION 6

Payment

(a)  The amount payable with respect to each
Performance Unit shall be contingent upon the attainment of Performance
Criteria as established in the Award during the specified Performance Period
and the continued employment of the Participant until the Payment Date as defined
in Section 2(i) hereof.

(b)  Amounts payable with respect to Performance
Units under this Plan shall be paid to Participants in cash, reacquired shares
of the Company’s common stock, or any combination of cash and reacquired shares
of common stock, as determined at the sole discretion of the Committee at the
Payment Date.  The number of shares of
common stock to

 

be transferred by way of payment shall be determined
by dividing the dollar amount of payment to be effected thereby by one hundred
percent (100%) of the fair market value of such common stock as reported on the
New York Stock Exchange Composite Index on the payment date.  The fair market value shall be the average of
the high and low prices so reported.

(c)  A Participant shall obtain no absolute rights
under any Award under this Plan until the Payment Date, except as provided in
Sections 9 and 10 hereof.

(d)  The maximum payment to any Participant under
this Plan with respect to a single Award shall not exceed the amount reasonably
determined by the Committee to equal three-tenths of one percent (0.3%) of the
consolidated net income of the Company, excluding non-recurring items, for the
calendar year immediately preceding the year including the Payment Date.

(e)  Awards of Performance Units shall be paid to
the respective Participants no later than the March 15 immediately following
the completion of the Performance Period for such Units, unless a Participant
shall have made an effective election to defer the receipt of such payment
pursuant to the terms of the 3M Deferred Compensation Plan and all applicable
laws.

SECTION 7

Special Payments

The Committee may
elect, at its sole option, to advance the Payment Date of any Award in the
event of a Participant’s termination of employment for any cause; provided,
however, that the Committee shall not advance the Payment Date of any Award
payable to a Participant who is then eligible to retire pursuant to a pension
plan maintained by the Company.  This
provision shall not confer any right upon a Participant not otherwise conferred
under Sections 6, 9 and 10 hereof.

SECTION 8

Administration

The Plan shall be
administered under the supervision and direction of the Committee.  In administering the Plan, the Committee will
determine the Participants and the number of Performance Units to be granted to
individual participants, establish appropriate Performance Periods and
Performance Criteria as bases for payments under the Plan, and determine the
Payment Date and methods and procedures for payment of Awards under the
Plan.  Further, it may be necessary from
time to time to change or waive requirements of the Plan, or outstanding
Performance Units, to conform with the law, to meet special circumstances not
anticipated or covered in the Plan, or to carry on successful operation of the
Plan, and in connection therewith, the Committee shall have the full power and
authority to:

(a)  Prescribe, amend and rescind rules and
regulations relating to the Plan, or outstanding Performance Units, establish
procedures deemed appropriate for its administration, and make any and all
other determinations not herein specifically authorized which may be necessary
or advisable for its effective administration;

(b)  Make any amendments to or modifications of
the Plan which may be required or necessary to make the Plan set forth herein
comply with the provisions of any laws, federal or state, or any regulations
issued thereunder, and to cause the Company at its expense to take any action
related to the Plan which may be required under such laws or regulations; and

(c)  Contest on behalf of Participants or the
Company, at the expense of the Company, any ruling or decision on any issue
related to the Plan, and conduct any such contest and any resulting litigation
to a final determination, ruling or decision.

Nothing herein
shall be deemed to authorize, and the Committee will have no discretion, to
alter or amend the Performance Criteria or the specific performance goals of
Awards under the Plan after they have been approved by the Committee or
communicated to Participants, whichever shall occur later in time.

 

If required for
compliance with legal or tax guidelines with regard to its role in
administering the Plan, the Committee may act through a subcommittee of at
least two of its members, none of whom shall be eligible to participate in the
Plan.

SECTION 9

Termination of Award

Participation
hereunder shall cease and all rights under the Plan and any Award thereunder
are forfeited by the Participant upon termination of employment for any cause
prior to the Payment Date other than (i) retirement pursuant to any income or
pension plan of the Company or any of its subsidiaries or affiliates, (ii)
retirement because of physical or mental disability, or (iii) death.  The foregoing shall not affect the right of
the Committee to effect special payments as provided in Section 7.

SECTION 10

Retirement or Death

(a)  If a Participant retires pursuant to a
pension plan maintained by the Company or changes employment status as a result
of physical or mental disability prior to the Payment Date of an Award, such
retirement or change in status shall not affect any rights of the Participant
under any Performance Unit grants received by such Participant prior to such
retirement or change in employment status; provided, however, that the
Committee may provide for the proration of the Performance Units granted to a
Participant who retires from employment with the Company prior to the
completion of the Performance Period for such Performance Units.

(b)  If a Participant dies without having received
payment of any Performance Units under outstanding Awards, payment of such
Units shall be made no later than the March 15 of the year following the year
in which the Participant died to such Participant’s surviving beneficiary or
beneficiaries or, if there shall be no such surviving beneficiaries, to such
Participant’s estate in the following manner:

(i)  If the Participant dies
after the expiration of a Performance Period of an Award, the payment shall be
at the full rate previously determined, together with any interest earned
thereon until the date of payment; and

(ii)  If the Participant dies
before the expiration of a Performance Period of an Award, the amount of
payment shall be at the lesser of:

- the face value of each outstanding Performance Unit
for which payment has not been made; or

- any other amount approved, in its discretion, by the
Compensation Committee of the Board of Directors.

(c)  Each Participant shall have the right at any
time to designate any person, persons or entity as the beneficiary or
beneficiaries to whom payment of the Participant’s outstanding Performance
Units shall be made in the event of the Participant’s death.  Any designation filed under the Plan may be
revoked or changed by written instrument so signed and filed prior to the
Participant’s death.

(d)  If a Participant designates more than one
beneficiary to receive such Participant’s outstanding Performance Units and any
beneficiary shall predecease the Participant, the Company shall pay the
deceased beneficiary’s share to the surviving beneficiary or beneficiaries
proportionately, as the portion designated by the Participant for each bears to
the total portion designated for all surviving beneficiaries.

SECTION 11

Transferability

Any rights of a
Participant under this Plan, and in or to an Award, shall be personal in nature
and may not be assigned or transferred (other than a transfer by will or the
laws of descent and distribution).  Any
attempted assignment or transfer of the Award shall be null and void and
without effect.

 

SECTION 12

Withdrawal, Amendment or
Termination of the Plan

The term of the
Plan shall be indefinite and the Plan shall continue in full force and effect
indefinitely until terminated at any time by action of the Company’s Board of
Directors or the Committee.  Any such
termination shall not adversely affect Awards theretofore granted.

The Company’s
Board of Directors or the Committee may at any time withdraw or amend the Plan,
except that there shall be no withdrawal or amendment which shall adversely
affect Awards theretofore granted.

SECTION 13

Change in Control

(a)  For purposes of this Section 13, the
following words and phrases shall have the meanings indicated below, unless the
context clearly indicates otherwise:

(i)  “Person” shall have the
meaning associated with that term as it is used in Sections 13(d) and 14(d) of
the Act.

(ii)  “Affiliates and Associates”
shall have the meanings assigned to such terms in Rule 12b-2 promulgated under
Section 12 of the Act.

(iii)  “Act” means the Securities
Exchange Act of 1934.

(iv)  “Continuing Directors”
shall have the meaning assigned to such term in Article Thirteenth of the
Company’s Restated Certificate of Incorporation.

(v)  “Code”  means the Internal Revenue Code of 1986, as
amended.

(b)  The Plan shall terminate and the Company
shall immediately distribute in cash to the respective Participants the value
of all outstanding Performance Units, as determined in accordance with the
other provisions of this Plan and this Section 13, upon the occurrence of a
Change in Control of the Company.

(c)  For purposes of this Section 13, a Change in
Control of the Company shall be deemed to have occurred if:

(i)  any person (together with
its Affiliates and Associates), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, is or becomes the “beneficial
owner” (as that term is defined in Rule 13d-3 promulgated under the Act),
directly or indirectly, of securities of the Company representing thirty
percent (30%) or more of the combined voting power of the Company’s then
outstanding securities, unless a majority of the Continuing Directors of the
Company’s Board of Directors prior to that time have determined in their sole
discretion that, for purposes of this Plan, a Change in Control of the Company
has not occurred; or

(ii)  the Continuing Directors of
the Company’s Board of Directors shall at any time fail to constitute a
majority of the members of such Board of Directors.

(d)  With respect to those Performance Units for
which the Performance Period has not been completed at the time of a Change in
Control of the Company, the value of such Units for purposes of this Section 13
shall be equal to the product of a fraction, where the numerator of such
fraction is the number of full calendar months completed during the respective
Performance Period and prior to the Change in Control and the denominator of
such fraction is 36, multiplied by the largest of:

(i)  the value of such Performance
Units computed as if the Company’s performance during the remainder of the
Performance Period following the Change in Control equaled its performance
during those full calendar quarters completed during the respective Performance
Period and prior to the date of the Change in Control;

 

(ii)  the value of such
Performance Units computed as if the Performance Period for such Units was the
three consecutive calendar year period ending immediately prior to the year in
which the Change in Control occurs; or

(iii)  any other amount approved,
in its discretion, by the Committee.

(e)  With respect to those Performance Units for
which the Performance Period has been completed at the time of a Change in
Control of the Company, the value of such Units for purposes of this Section 13
shall be the actual value as adjusted to reflect the actual Company performance
during the Performance Period plus interest up to the date of distribution at
the rate determined by the Committee in accordance with the provisions of Section
7.

(f)  In the event that the payments made pursuant
to this Section 13 are finally determined to be subject to the excise tax
imposed by Section 4999 of the Code, the Company shall pay to each Participant
an additional amount such that the net amount retained by such Participant,
after allowing for the amount of such excise tax and any additional federal,
state and local income taxes paid on the additional amount, shall be equal to
the value of the Performance Units distributed to such Participant pursuant to
this Section 13.

(g)  The Company shall pay to each Participant the
amount of all reasonable legal and accounting fees and expenses incurred by
such Participant in seeking to obtain or enforce his rights under this Section
13 or in connection with any income tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code to the payments
made pursuant to this Section 13, unless a lawsuit commenced by the Participant
for such purposes is dismissed by the court as being spurious or
frivolous.  The Company shall also pay to
each Participant the amount of all reasonable tax and financial planning fees
and expenses incurred by such Participant in connection with such Participant’s
receipt of payments pursuant to this Section 13.Exhibit 10.1

EXECUTION COPY

MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT

Dated

January 31, 2007

between

Alliance Energy Renewables, LLC

and

Mirant New York, Inc.

 1

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I

  	
   

  	
   

  	
   

  	
  2

  
	
  1.A

  	
   

  	
  Defined Terms

  	
   

  	
  2

  
	
  1.B.

  	
   

  	
  Interpretation

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II SALE AND PURCHASE OF THE MEMBERSHIP
  INTEREST

  	
   

  	
  11

  
	
  2.01

  	
   

  	
  Membership Interest to be Sold

  	
   

  	
  11

  
	
  2.02

  	
   

  	
  Purchase Price and Payment

  	
   

  	
  11

  
	
  2.03

  	
   

  	
  Adjustments to the Purchase Price

  	
   

  	
  11

  
	
  2.04

  	
   

  	
  Allocation of Purchase Price

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III THE CLOSING

  	
   

  	
  15

  
	
  3.01

  	
   

  	
  Time and Place; Effective Time of Transfer

  	
   

  	
  15

  
	
  3.02

  	
   

  	
  Deliveries by Seller

  	
   

  	
  15

  
	
  3.03

  	
   

  	
  Deliveries by Purchaser

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER

  	
   

  	
  16

  
	
  4.01

  	
   

  	
  Power to Sell the Membership Interest

  	
   

  	
  16

  
	
  4.02

  	
   

  	
  Corporate Organization

  	
   

  	
  16

  
	
  4.03

  	
   

  	
  Due Authorization and Execution; Valid and Binding
  Agreement; No Violation

  	
   

  	
  17

  
	
  4.04

  	
   

  	
  Capitalization

  	
   

  	
  17

  
	
  4.05

  	
   

  	
  Licenses and Permits; Consents and Approvals of
  Governmental Authority

  	
   

  	
  18

  
	
  4.06

  	
   

  	
  Financial Statements

  	
   

  	
  18

  
	
  4.07

  	
   

  	
  No Undisclosed Liabilities

  	
   

  	
  18

  
	
  4.08

  	
   

  	
  Absence of Certain Changes

  	
   

  	
  18

  
	
  4.09

  	
   

  	
  Real Property Leases, Easements and Licenses

  	
   

  	
  19

  
	
  4.10

  	
   

  	
  Litigation

  	
   

  	
  19

  
	
  4.11

  	
   

  	
  Subsidiaries

  	
   

  	
  19

  
	
  4.12

  	
   

  	
  Taxes

  	
   

  	
  19

  
	
  4.13

  	
   

  	
  NYISO

  	
   

  	
  19

  
	
  4.14

  	
   

  	
  Bank Accounts

  	
   

  	
  19

  
	
  4.15

  	
   

  	
  Compliance with Law

  	
   

  	
  20

  
	
  4.16

  	
   

  	
  Material Contracts; Contracts with Affiliates

  	
   

  	
  20

  
	
  4.17

  	
   

  	
  Consents

  	
   

  	
  20

  
	
  4.18

  	
   

  	
  Title to Assets

  	
   

  	
  20

  
	
  4.19

  	
   

  	
  No Other Representations or Warranties; Disclaimer

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V REPRESENTATIONS AND WARRANTIES OF
  PURCHASER

  	
   

  	
  22

  
	
  5.01

  	
   

  	
  Corporate Organization

  	
   

  	
  22

  
	
  5.02

  	
   

  	
  Authorization

  	
   

  	
  22

  
	
  5.03

  	
   

  	
  No Violation

  	
   

  	
  22

  
	
  5.04

  	
   

  	
  Consents and Approvals of Governmental Authoritiess

  	
   

  	
  22

  
	
  5.05

  	
   

  	
  Litigation

  	
   

  	
  23

  

 

 i
 

 

	
  5.06

  	
   

  	
  Brokers

  	
   

  	
  23

  
	
  5.07

  	
   

  	
  “AS IS” SALE

  	
   

  	
  23

  
	
  5.08

  	
   

  	
  Due Diligence Inspections and Reviews

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI CONDUCT OF BUSINESS PENDING THE CLOSING

  	
   

  	
  23

  
	
  6.01

  	
   

  	
  Regular Course of Business

  	
   

  	
  23

  
	
  6.02

  	
   

  	
  Amendments

  	
   

  	
  23

  
	
  6.03

  	
   

  	
  Capital Changes

  	
   

  	
  24

  
	
  6.04

  	
   

  	
  Environmental Remediation; Requirements of
  Governmental Authorities

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII COVENANTS OF THE PARTIES

  	
   

  	
  24

  
	
  7.01

  	
   

  	
  Reasonable Access

  	
   

  	
  24

  
	
  7.02

  	
   

  	
  Confidentiality

  	
   

  	
  24

  
	
  7.03

  	
   

  	
  Hart-Scott-Rodino Act

  	
   

  	
  25

  
	
  7.04

  	
   

  	
  Access to Records;

  	
   

  	
  25

  
	
  7.05

  	
   

  	
  Regulatory and Other Authorizations and Consents

  	
   

  	
  25

  
	
  7.06

  	
   

  	
  Employee Matters

  	
   

  	
  26

  
	
  7.07

  	
   

  	
  No Public Announcement

  	
   

  	
  26

  
	
  7.08

  	
   

  	
  Certain Amounts Owed To Seller and Its Affiliates

  	
   

  	
  26

  
	
  7.09

  	
   

  	
  Provisions Relating to Treatment of Assets and
  Liabilities of the Company Under the Plan

  	
   

  	
  26

  
	
  7.10

  	
   

  	
  Break-Up Fee

  	
   

  	
  27

  
	
  7.11

  	
   

  	
  Further Assurances

  	
   

  	
  27

  
	
  7.12

  	
   

  	
  Supplements to Schedules

  	
   

  	
  27

  
	
  7.13

  	
   

  	
  Tax Matters

  	
   

  	
  27

  
	
  7.14

  	
   

  	
  Required Consents

  	
   

  	
  28

  
	
  7.15

  	
   

  	
  Bankruptcy Court Orders and Related Matters

  	
   

  	
  29

  
	
  7.16

  	
   

  	
  Purchaser Contact with Vendors and Employees

  	
   

  	
  32

  
	
  7.17

  	
   

  	
  Taxes, Prorations and Closing Costs

  	
   

  	
  32

  
	
  7.18

  	
   

  	
  Acknowledgement by Purchaser

  	
   

  	
  33

  
	
  7.19

  	
   

  	
  No Recourse

  	
   

  	
  33

  
	
  7.20

  	
   

  	
  Advice of Changes

  	
   

  	
  33

  
	
  7.21

  	
   

  	
  Casualty Loss

  	
   

  	
  33

  
	
  7.22

  	
   

  	
  Post Closing — Information and Records

  	
   

  	
  35

  
	
  7.23

  	
   

  	
  Insurance

  	
   

  	
  35

  
	
  7.24

  	
   

  	
  Use of Certain Names

  	
   

  	
  35

  
	
  7.25

  	
   

  	
  Settlement Agreement

  	
   

  	
  36

  
	
  7.26

  	
   

  	
  Registration of Company with NYISO

  	
   

  	
  36

  
	
  7.27

  	
   

  	
  Gas Transportation and Balancing Services Agreement

  	
   

  	
  36

  
	
  7.28

  	
   

  	
  Air Title V Permits (Hillburn and Shoemaker
  Facilities)

  	
   

  	
  37

  
	
  7.29

  	
   

  	
  Assignment of Certain Purchase Orders

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII MUTUAL CONDITIONS

  	
   

  	
  37

  
	
  8.01

  	
   

  	
  HSR Act

  	
   

  	
  37

  
	
  8.02

  	
   

  	
  Regulatory and Other Authorizations and Consents

  	
   

  	
  37

  
	
  8.03

  	
   

  	
  Orders

  	
   

  	
  37

  

 

 ii
 

 

	
  ARTICLE IX CONDITIONS TO PURCHASER’S OBLIGATIONS

  	
   

  	
  38

  
	
  9.01

  	
   

  	
  Representations and Warranties True

  	
   

  	
  38

  
	
  9.02

  	
   

  	
  Performance

  	
   

  	
  38

  
	
  9.03

  	
   

  	
  Certificates; Evidence of Compliance

  	
   

  	
  38

  
	
  9.04

  	
   

  	
  Board Resolutions

  	
   

  	
  38

  
	
  9.05

  	
   

  	
  Bankruptcy Court Orders

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X CONDITIONS TO SELLER’S OBLIGATIONS

  	
   

  	
  38

  
	
  10.01

  	
   

  	
  Representations and Warranties True

  	
   

  	
  38

  
	
  10.02

  	
   

  	
  Performance

  	
   

  	
  39

  
	
  10.03

  	
   

  	
  Certificates

  	
   

  	
  39

  
	
  10.04

  	
   

  	
  Board Resolutions

  	
   

  	
  39

  
	
  10.05

  	
   

  	
  Pending Insurance Claims

  	
   

  	
  39

  
	
  10.06

  	
   

  	
  Bankruptcy Court Orders

  	
   

  	
  39

  
	
  10.07

  	
   

  	
  Termination of Gas Transportation Agreement

  	
   

  	
  39

  
	
  10.08

  	
   

  	
  Modification of Title V Permits

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI SURVIVAL AND INDEMNIFICATION

  	
   

  	
  39

  
	
  11.01

  	
   

  	
  Survival

  	
   

  	
  39

  
	
  11.02

  	
   

  	
  Indemnification

  	
   

  	
  40

  
	
  11.03

  	
   

  	
  Limitations on Indemnification

  	
   

  	
  42

  
	
  11.04

  	
   

  	
  Purchaser’s Release of Seller

  	
   

  	
  42

  
	
  11.05

  	
   

  	
  Mitigation and Limitation on Claims. Notwithstanding
  anything to the contrary contained in this Agreement:

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII TERMINATION AND REMEDIES

  	
   

  	
  43

  
	
  12.01

  	
   

  	
  Rights To Terminate

  	
   

  	
  43

  
	
  12.02

  	
   

  	
  Specific Performance

  	
   

  	
  44

  
	
  12.03

  	
   

  	
  Purchaser’s Remedies

  	
   

  	
  45

  
	
  12.04

  	
   

  	
  Seller’s Remedies

  	
   

  	
  45

  
	
  12.05

  	
   

  	
  Effect of Termination

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII MISCELLANEOUS PROVISIONS

  	
   

  	
  46

  
	
  13.01

  	
   

  	
  Commissions and Finders’ Fees

  	
   

  	
  46

  
	
  13.02

  	
   

  	
  Amendment and Modification

  	
   

  	
  46

  
	
  13.03

  	
   

  	
  Waiver of Compliance

  	
   

  	
  46

  
	
  13.04

  	
   

  	
  Expenses

  	
   

  	
  46

  
	
  13.05

  	
   

  	
  Notices

  	
   

  	
  46

  
	
  13.06

  	
   

  	
  Assignment

  	
   

  	
  47

  
	
  13.07

  	
   

  	
  Governing Law

  	
   

  	
  47

  
	
  13.08

  	
   

  	
  Jurisdiction of Bankruptcy Court

  	
   

  	
  48

  
	
  13.09

  	
   

  	
  Effect of Closing Over Known Unsatisfied Conditions
  or Breached Representations, Warranties or Covenants

  	
   

  	
  48

  
	
  13.10

  	
   

  	
  Dispute Resolution

  	
   

  	
  48

  
	
  13.11

  	
   

  	
  Delays or Omissions

  	
   

  	
  49

  
	
  13.12

  	
   

  	
  Conflicts

  	
   

  	
  50

  
	
  13.13

  	
   

  	
  Counterparts

  	
   

  	
  50

  

 

 iii
 

 

	
  13.14

  	
   

  	
  Effectiveness; Binding Effect

  	
   

  	
  50

  
	
  13.15

  	
   

  	
  Headings

  	
   

  	
  50

  
	
  13.16

  	
   

  	
  Entire Agreement

  	
   

  	
  50

  
	
  13.17

  	
   

  	
  No Recourse Against Others

  	
   

  	
  50

  
	
  13.18

  	
   

  	
  Third Parties

  	
   

  	
  50

  
	
  13.19

  	
   

  	
  Mutual Agreement

  	
   

  	
  51

  
	
  13.20

  	
   

  	
  Severability

  	
   

  	
  51

  

 

 iv
 

 

SCHEDULES

	
  

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Seller’s Representatives

  
	
  1.2

  	
   

  	
  Purchaser’s Representatives

  
	
  1.41

  	
   

  	
  Escrow Agreement

  
	
  1.45

  	
   

  	
  Hydroelectric and Gas Turbine Generating Stations

  
	
  2.03(c)

  	
   

  	
  Pre-Approved Capital Expenditures

  
	
  3.02

  	
   

  	
  Form of Assignment for Membership Interest Transfer

  
	
  3.02(d-1)

  	
   

  	
  Assignment of Insurance Claims

  
	
  3.02(d-2)

  	
   

  	
  Assignment of Claims Against Third Parties

  
	
  3.03(a)

  	
   

  	
  Wire Transfer

  
	
  4.03

  	
   

  	
  Agreements Requiring Consent, Notification, Etc.
  (Seller)

  
	
  4.05

  	
   

  	
  Consents and Approvals of Governmental Authorities
  (Seller)

  
	
  4.07

  	
   

  	
  Certain Liabilities

  
	
  4.08

  	
   

  	
  Certain Changes

  
	
  4.09

  	
   

  	
  Real Property Leases, Easements and Licenses

  
	
  4.10

  	
   

  	
  Litigation

  
	
  4.12

  	
   

  	
  Taxes

  
	
  4.14

  	
   

  	
  Bank Accounts

  
	
  4.15

  	
   

  	
  Compliance with Law

  
	
  4.16

  	
   

  	
  Material Contracts

  
	
  4.17

  	
   

  	
  Consents

  
	
  4.18

  	
   

  	
  Title to Assets

  
	
  5.04

  	
   

  	
  Consents and Approvals of Governmental Authorities
  (Purchaser)

  
	
  5.05

  	
   

  	
  Litigation (Purchaser)

  
	
  7.15(b)

  	
   

  	
  Sale Procedures Order

  
	
  7.15(c)

  	
   

  	
  Sale Order

  
	
  7.25

  	
   

  	
  Cross-Indemnity Agreement

  

 

 v

This MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT (this “Agreement”)
is made, as of the 31st day of January, 2007, by and between Mirant New York,
Inc., a corporation organized under the laws of the State of Delaware (“Seller”), and Alliance Energy Renewables, LLC, a limited
liability company organized under the laws of the State of New York (“Purchaser”).

BACKGROUND

A.            Seller
owns a 100% membership interest (the “Membership Interest”)
in Mirant NY-Gen, LLC, a limited liability company organized under the laws of
the State of Delaware (the “Company” or “Mirant NY-Gen”) constituting all of the outstanding
membership interests of the Company. This Agreement sets forth the terms and
conditions upon which Purchaser will purchase the Membership Interest from Seller.

B.            Subject
to the entry of the Bankruptcy Court Orders (as hereinafter defined) and on the
terms and conditions set forth herein, Seller desires to sell to Purchaser the
Membership Interest and Purchaser desires to purchase the Membership Interest from
Seller.

C.            Seller
has offered the Membership Interest pursuant to a competitive bidding process
during which Purchaser viewed information concerning the Membership Interest
and completed its Due Diligence Inspections and Reviews (as defined herein).  The Parties recognize that the Assets (as
defined herein) in these transactions are being sold on an “as is” basis and
free and clear of all liens, claims, encumbrances and interests in accordance
with the terms and conditions herein and that the liabilities of the Company
now existing and hereafter arising through the Plan Effective Date (as defined
herein) shall be satisfied and discharged pursuant to the Plan (as defined
herein), at or prior to the Closing Date.

D.            On
July 14, 2003, Seller and certain of its Affiliates, including Mirant NY-Gen,
filed voluntary petitions for relief under Chapter 11 of Title 11 of the United
States Code (11 U.S.C. §§ 101, et seq.) (the “Bankruptcy
Code”), commencing cases in the United States Bankruptcy Court for
the Northern District of Texas, Fort Worth Division (the “Bankruptcy
Court”), and continue to operate their respective businesses as
debtors and debtors-in-possession.

E.             The
Parties recognize that it is in the best interest of Seller and its Affiliates
to pursue the transactions contemplated herein.

F.             Seller
and Purchaser are entering into this Agreement to evidence their respective
duties, obligations and responsibilities.

NOW,
THEREFORE, in consideration of the respective
representations, warranties, covenants and agreements contained in this
Agreement, each of Seller and Purchaser agrees as follows:

 1
 

ARTICLE I

CERTAIN
DEFINITIONS

1.A          Defined Terms.  As
used in this Agreement each of the following terms shall have the following
meaning:

1.01        “Action” has the
meaning set forth in Section 11.02(a).

1.02        “Affiliate”  of a Person means any other Person that (a) directly or
indirectly controls the specified Person; (b) is controlled by or is under
direct or indirect common control with the specified Person; or (c) is an officer,
director, employee, representative or agent or subsidiary of the Person. For
the purposes of this definition, “control,”  when used with respect to any specified Person, means the
power to direct the management or policies of the specified Person, directly or
indirectly, whether through the ownership of voting securities, partnership or
limited liability company interests, by contract or otherwise.

1.03        “Agreement”
means this Membership Interest Purchase and Sale Agreement, together with the
Schedules and Exhibits hereto.

1.04        “Air Permits” has the
meaning set forth in Section 7.28.

1.05        “Assets”
means all of the Company’s tangible and intangible assets underlying the
presentation of such assets on the Company’s Interim Balance Sheet, as added to
or removed during the period from such date to the Closing Date including, but
not limited to, and the Company’s generating plant to the extent not reflected
on said Interim Balance Sheet as a result of being fully written off or any
other similarly situated properties of the Company.

1.06        “Assignments”
means, collectively, each of the assignments in the form annexed hereto as Schedule
3.02,  Schedule 3.02(d)(1) and Schedule 3.02(d)(2) to be
entered into pursuant to Section 2.01 and Section 2.03(f).

1.07        “Assumed Contracts”
means the executory leases, contracts and other agreements assumed by the
Company under the Plan, which agreements shall include, but not be limited to,
any interconnection agreements to which the Company is a party prior to the
Plan Effective Date, all such agreements to be included in a Schedule to be
mutually agreed between the Parties and approved by the Bankruptcy Court.

1.08        “Auction” has the
meaning set forth in Section 7.15(g).

1.09        “Bankruptcy
Case” means the voluntary petitions filed by Seller and Affiliates
of Seller, under Chapter 11 of Title 11 of the United States Code, as amended
and the resulting proceeding in the Bankruptcy Court.

1.10        “Bankruptcy
Code” means the United States Bankruptcy Code, as the same may be
amended from time to time, in each case as of the relevant date or dates.

 2
 

1.11        “Bankruptcy
Court” has the meaning set forth in paragraph D of the Recitals
hereto.

1.12        “Bankruptcy
Court Orders” has the meaning set forth in Section 7.15(a).

1.13        “Break-Up Fee” has the
meaning set forth in Section 7.15(b).

1.14        “Business Day”
means a day other than Saturday, Sunday or a day on which banks are legally
required or permitted to be closed for business in the State of New York.

1.15        “Capital
Expenditure”  means any
additions or changes to or replacements of property, plant and equipment and
any other expenditures or repairs (including capitalized maintenance costs)
that would be capitalized on Seller’s balance sheet in accordance with Seller’s
capitalization policy.

1.16        “Closing”
has the meaning set forth in Section 2.01.

1.17        “Closing Date”
has the meaning set forth in Section 3.01.

1.18        “Code”
has the meaning set forth in Section 2.04.

1.19        “Commercially
Reasonable Efforts” means those efforts (i) which are reasonably
foreseeable by the Parties at the time of executing this Agreement, (ii) which
a Party would reasonably expect the other Party to take under the circumstances
in order to satisfy its obligations hereunder, and (iii) which a Party would
undertake for its own benefit under similar circumstances in order to achieve
the results contemplated by this Agreement; provided, however, that any efforts
set forth in clauses (i)-(iii) will not require or include any expense or
conduct not ordinarily incurred or engaged in by Persons seeking to implement
transactions of the type contemplated by this Agreement.

1.20        “Company”
has the meaning set forth in the Background section (A) of this Agreement.

1.21        “ConEd” has the
meaning set forth in Section 7.27.

1.22        “Confidential
Information”  has the
meaning assigned to such term in the Confidentiality Agreement.

1.23        “Confidentiality
Agreement” means that certain Confidentiality Agreement dated
September 29, 2006 between Seller and Purchaser.

1.24        “Confirmation Order”
means the order of the Bankruptcy Court confirming the Plan and approving the
transactions contemplated therein.

1.25        “Consent
Order” means the Consent Order dated July 22, 2005, between the
Company and the New York Department of Environmental Conservation relating to
certain 

 3
 

environmental remediation at the Hillburn Facility, as
such Consent Order may be revised, amended or supplemented from time to time.

1.26        “CPR”
means the Center For Public Resources, Inc.

1.27        “Cross Indemnity Agreement”
has the meaning set forth in Section 7.24.

1.28        “Damages”
has the meaning set forth in Section 11.02(a).

1.29        “DEC” means the New
York State Department of Environmental Conservation.

1.30         “Disclosure Statement”
has the meaning set forth in Section 7.15(a).

1.31        “Disclosure Statement
Order” has the meaning set forth in Section 7.15(a).

1.32        “Dispute”
has the meaning set forth in Section 13.07.

1.33        “Disputed Claims” has
the meaning set forth in Section 7.09.

1.34        “Down Payment”
has the meaning set forth in Section 2.02.

1.35        “Due
Diligence Inspections and Reviews” means any due diligence,
inspection or review related to the Membership Interest and Assets and
described in or conducted pursuant to the terms and conditions of the
Confidentiality Agreement.

1.36        “Effective Date” means
the date on which this Agreement is executed by the Parties.

1.37        “Encumbrances” means
any mortgages, pledges, liens, security interests, conditional and installment
sale agreements, activity and use limitations, conservation easements, deed
restrictions, easements, encumbrances and charges of any kind.

1.38        “Environmental
Laws” means any Governmental Rule relating to air emissions, storage
and use of hazardous or toxic substances, generation, treatment, storage, and
disposal of hazardous wastes, waste water discharges and similar environmental
matters, including the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. § 9601 et  seq.), the Hazardous Materials
Transportation Act (49 U.S.C. § 1801 et  seq.), the Resource
Conservation and  Recovery Act (42 U.S.C. § 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S. C. § 1251 et
seq.), the Clean Air Act (42 U.S.C. § 7401 et  seq.), the
Toxic Substances Control Act (15 U.S.C. § 2601 et  seq.), the Oil
Pollution Act (33 U.S.C. § 2701 et  seq.) and the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. § 11001 et  seq.).

1.39        “Escrow Agent” means
Hiscock & Barclay, LLP.

 4
 

1.40        “Escrow
Agreement” means the escrow agreement among Seller, Purchaser and
Escrow Agent dated as of the date hereof substantially in the form of Schedule
1.41 hereto.

1.41        “Event of
Loss” has the meaning set forth in Section 7.21(a).

1.42        “Final Order(s)” means
an order of the Bankruptcy Court (i) that is not the subject of a pending
appeal, petition for certiorari, motion for reconsideration or other
proceedings for review, rehearing or reargument; (ii) that has not been
reversed, vacated, modified or amended, is not stayed and remains in full force
and effect; and (iii) respecting which the time to appeal, to petition for
certiorari, to move for reconsideration or to seek review, rehearing or
reargument shall have expired, as a result of which such order shall have
become final in accordance with Bankruptcy Rule 8002; provided, however, that
no order shall fail to be a Final Order solely because of the possibility that
a motion pursuant to Rule 60 of the Federal Rules of Civil Procedure or
Bankruptcy Rule 9024 may be filed with respect to such order.

1.43        “Financial
Statements” has the meaning set forth in Section 4.06.

1.44        “GAAP” shall mean
generally accepted accounting principles for financial reporting in the United
States.

1.45        “Gas Transportation
Agreement” has the meaning set forth in Section 7.27.

1.46        “Governmental
Approval” means any authorization, consent, approval, waiver,
exception, variance, order, franchise, permit, license or exemption issued by,
and any registration or filing with, any Governmental Authority.

1.47        “Governmental
Authority”  means any
federal, state, local or other governmental, regulatory or administrative
agency, governmental commission, department, board, subdivision, court,
tribunal, or other governmental arbitrator, arbitral body or other authority
having jurisdiction over the matter or Person in question.

1.48        “Governmental
Rule” means, with respect to any Person, any applicable law
(including, but not limited to, common law), statute, treaty, rule, regulation,
ordinance, order, code, judgment, decree, directive, injunction, writ or
similar binding action or decision duly implementing any of the foregoing by
any Governmental Authority, but does not include Governmental Approvals.

1.49        “Grahamsville
Generating Facility” means the approximately 18 MW hydroelectric
electric generating station located on Route 55A, Grahamsville, New York, and
formerly owned by Orange and Rockland Utilities Inc. and previously leased to
Company, which lease expired on October 31, 2006.

1.50        “Hazardous
Substances” means any chemical, material or substance that is listed
or regulated under applicable Environmental Laws as a “hazardous” or “toxic”
substance or waste, or as a “contaminant,” or is otherwise listed or regulated
under applicable Environmental Laws because it poses a hazard to human health
or the environment.

 5
 

1.51        “Hillburn Air Permit”
has the meaning set forth in Section 7.28.

1.52        “Hillburn Facility”
has the meaning set forth in item 1 on Schedule 1.45.

1.53        “HSR Act”  has the meaning set forth in Section 7.03.

1.54        “Hydroelectric and Gas
Turbine Generating Stations” means those stations listed on Schedule
1.45.

1.55        “Indemnifying
Party” has the meaning set forth in Section 11.02(a).

1.56        “Indemnitee”
has the meaning set forth in Section 11.02(a).

1.57        INTENTIONALLY OMITTED

1.58        “Intercompany Claims” means
all claims and causes of action existing  as of the
Closing Date  that  the
Company has or could have asserted against Seller or any Affiliate of
Seller, including without limitation: (i) all “claims”, as defined in Section
101(5) of the Bankruptcy Code against Seller or any Affiliate of Seller, and
all causes of action against Seller or any Affiliate of Seller arising under
sections 542, 544, 545, 547, 548, 549, 550, 552(b) and 553 of the Bankruptcy
Code or any comparable state law affecting creditors rights generally, and
which constitute property of  the Company’s chapter 11 estate
and (ii) any claims arising with respect to any accounts receivable due to the
Company from Seller or any Affiliate of Seller that have been assigned to
Seller or its designee as further described in Sections 2.03(a)(i) and 2.03(f)
of this Agreement.

1.59        “Interim
Balance Sheet” has the meaning set forth in Section 4.06 (ii).

1.60        “Knowledge”  or similar phrases in this Agreement means: (i) in the
case of Seller, the actual, current knowledge of Seller’s representatives or
the Company’s representatives listed in Schedule 1.1 at the date of this
Agreement (or, with respect to any certificate delivered pursuant to Section 9.03,
the date of delivery of such certificate), provided that, with respect to any
third party claims against the Company, actual, current knowledge of the
representatives listed on Schedule 1.1 shall be deemed to include
actual, current knowledge of any actual claims or any contingent or potential
claims against the Company; and (ii) in the case of Purchaser, the actual,
current knowledge of Purchaser’s representatives listed in Schedule 1.2
at the date of this Agreement (or, with respect to the certificate delivered
pursuant to Section 10.03, the date of delivery of such
certificate).

1.61        “Major Loss”
has the meaning set forth in Section 7.21(a).

1.62        “Material
Adverse Effect” means a material adverse effect upon (a) the
business, operations, assets, liabilities, condition (financial or otherwise)
or results of operations of the Company, or (b) the ability of Seller to
consummate the transactions contemplated by this Agreement.

1.63        “Material
Contract” has the meaning set forth in Section 4.16.

 6
 

1.64        “Membership
Interest” has the meaning set forth in the Background section at the
beginning of this Agreement.

1.65        “MET” has the meaning
set forth in Section 4.16.

1.66        “Minor Loss”  means an Event of Loss that is not a Major Loss.

1.67        “Mirant Energy Marketing”
has the meaning set forth in Section 4.16.

1.68        “Mirant Marketing
Agreement” has the meaning set forth in Section 4.16.

1.69        “Mirant NY-Gen” has
the meaning set forth in the Recitals hereto.

1.70        “Mirant Services” has
the meaning set forth in Section 4.16.

1.71        “Necessary
Capital Expenditure”  means any
Capital Expenditure other than a Pre-Approved Capital Expenditure or a
Remediation Expenditure that, in the exercise of Prudent Utility Practices, is
reasonably necessary for the continued operation or maintenance of the
Hydroelectric and Gas Turbine Generating Stations or that is required by
applicable law. Necessary Capital Expenditure does not include any Capital
Expenditure undertaken primarily to expand or re-power the Hydroelectric and
Gas Turbine Generating Stations.

1.72        “NOx Bubble” has the meaning set forth in Section
7.28.

1.73        “NYISO” has the meaning
set forth in Section 7.26.

1.74        “O&R Settlement
Agreement” has the meaning set forth in Section 7.25.

1.75        “Party”  means either Seller or Purchaser, as the context requires
and “Parties” means, collectively, “Seller
and Purchaser”.

1.76        “Person”
means an individual, partnership, joint venture, corporation, limited liability
company, trust, association or unincorporated organization, or any Governmental
Authority.

1.77        “Plan” means the
Chapter 11 plan for Mirant NY-Gen providing, inter alia, for (a) the discharge
to the fullest extent permitted by the Bankruptcy Code of (i) all claims
against Mirant NY-Gen existing on the Plan Effective Date with the exception of
the Southern Company Claims, and (ii) all liens, claims, encumbrances and
interests in any of the Assets existing on the Plan Effective Date, (b) the
assumption of the Assumed Contracts, and (c) the retention by Seller of the
Membership Interest, as the same may be amended, supplemented, or otherwise
modified from time to time, together with the exhibits and schedules thereto,
as the same may be in effect at the time such Chapter 11 plan is confirmed by
the Bankruptcy Court.

1.78        “Plan Effective Date”
means the effective date of the Plan as defined in the Plan, which shall in no
event be sooner than the Closing Date.

 7
 

1.79        “Pre-Approved
Capital Expenditures” has the meaning set forth in Section 2.03(c).

1.80        “Prevailing Bidder”
has the meaning set forth in Section 7.15(g).

1.81        “Prudent
Utility Practices” means any of the practices, methods and acts
engaged in or approved by a significant portion of the competitive electric
generation industry for facilities similar to the Hydroelectric and Gas Turbine
Generating Stations during the relevant time period or any of the practices,
methods or acts which, in the exercise of reasonable judgment in light of the
facts known at the time the decision was made, could have been expected to
accomplish the desired result at a reasonable cost consistent with good
business practices, reliability, safety, law, regulation, environmental
protection and expedition. Prudent Utility Practices are not intended to be
limited to the optimum practices, methods or acts to the exclusion of all
others, but rather, to be acceptable practices, methods or acts generally
accepted in the industry.

1.82        “Purchase
Price” means the consideration to be paid for the Membership
Interest as set forth in Section 2.02.

1.83        “Purchaser”  has the meaning set forth in the introductory paragraph of
this Agreement.

1.84        “Purchaser
Indemnified Parties” has the meaning set forth in Section
11.02(e).

1.85        “Purchaser
Required Consents”  has the
meaning set forth in Section 7.14(a).

1.86        “Records”
has the meaning set forth in Section 7.04.

1.87        “Regulatory
Approvals” means any regulatory approvals required from the Federal
Energy Regulatory Commission and the New York Public Service Commission.

1.88        “Related
Agreements” means the Confidentiality Agreement, the Assignments,
and the Cross Indemnity Agreement (to the extent applicable).

1.89        “Remediation Expenditures”
means expenditures made and to be made by the Company for remediation work
conducted pursuant to (i) the Consent Order and (ii) the Swinging Bridge
Remediation Plan.

1.90        “Review Firm”
has the meaning set forth in Section 2.03(a).

1.91        “Sale Motion” has the
meaning set forth in Section 7.15(a).

1.92        “Sale Order” has the
meaning set forth in Section 7.15(c).

1.93        “Sale Procedures Order”
has the meaning set forth in Section 7.15(b).

 8
 

1.94        “Schedules”
means the schedules to this Agreement.

1.95        “Section”
means a numbered section of this Agreement included within the Article that
begins with the same number as that section.

1.96        “Seller”
has the meaning set forth in the introductory paragraph of this Agreement.

1.97        “Seller Marks” has the
meaning set forth in Section 7.24.

1.98        “Seller Required Consents”
has the meaning set forth in Section 7.14(b).

1.99        “Seller Taxes” has the
meaning set forth in Section 7.15(c).

1.100      “Seller’s
Estimate”  has the
meaning set forth in Section 7. 21(a).

1.101      “Shoemaker Air Permit”
has the meaning set forth in Section 7.28.

1.102      “Southern
Company Claims” has the meaning set forth in Section 11.02(e).

1.103      “Station”
has the meaning set forth in Section 7.21(a).

1.104      “Swinging Bridge Facility” has
the meaning set forth in item 5 on Schedule 1.45.

1.105      “Swinging Bridge Basic
Remediation” means the remediation work under the Swinging Bridge
Remediation Plan other than the Unit 1 Fill-In.

1.106      “Swinging Bridge Remediation
Plan” means the remediation plan for the Swinging Bridge Facility approved
by the Federal Energy Regulatory Commission in its letter dated June 14, 2006,
as such remediation plan may be revised, amended or supplemented from time to
time.  For purposes of this Agreement,
the remediation work under the Swinging Bridge Remediation Plan shall consist
of the Swinging Bridge Basic Remediation and the Unit 1 Fill-In.

1.107      “Tax”
means any federal, state, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Section 59A of the Internal
Revenue Code of 1986, as amended), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property (including assessments, fees or other charges based on the use or
ownership of real property), personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated tax, or
other tax of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not, including without limitation, any item for
which a Person’s liability arises as a transferee or successor-in-interest.

 9
 

1.108      “Third Party
Claim”  means a claim by a Person other
than Seller or a Person related to Seller as described in Section 11.03
or Purchaser or related to Purchaser as described in Section 11.02.

1.109      “Third Party
Sale” has the meaning set forth in Section 7.15(g).

1.110      “Unit 1 Fill-In” means
that part of the Swinging Bridge Remediation Plan consisting of the volumetric “fill-in”
of the penstock and tunnel of Unit 1 at the Swinging Bridge Facility.

1.111      “Unit 1 Fill-In Contract”
has the meaning set forth in Section 2.03(d)(ii).

1.B.      Interpretation.  In this Agreement, unless a clear contrary
intention appears:

(i)            the singular number
includes the plural number and vice versa;

(ii)           reference to any Person
includes such Person’s successors and assigns but, if applicable, only if such
successors and assigns are permitted by this Agreement, and reference to a
Person in a particular capacity excludes such Person in any other capacity;

(iii)          reference to any gender
includes each other gender;

(iv)          reference to any
agreement (including this Agreement), document or instrument means such
agreement, document or instrument as amended or modified and in effect from
time to time in accordance with the terms thereof and, if applicable, the terms
hereof;

(v)           reference to any
Article, Section, Schedule or Exhibit means such Article, Section, Schedule or
Exhibit to this Agreement, and references in any Article, Section, Schedule,
Exhibit or definition to any clause means such clause of such Article, Section,
Schedule, Exhibit or definition;

(vi)          “hereunder,” “hereof,” “hereto”
and words of similar import are references to this Agreement as a whole and not
to any particular Section or other provision hereof or thereof;

(vii)         “including” (and with
correlative meaning “include”) means including without limiting the generality
of any description preceding such term;

(viii)        relative to the
determination of any period of time, “from” means “from and including,” “to”
means “to but excluding,” and “through” means “through and including”;

(ix)           the word “will” shall
be construed to have the same meaning and effect as the word “shall”; and

 10
 

(x)            reference to any law
(including statutes and ordinances) means such law as amended, modified
codified or reenacted, in whole or in part, and in effect from time to time,
including rules and regulations promulgated thereunder.

ARTICLE II

SALE AND PURCHASE OF THE
MEMBERSHIP INTEREST

2.01     Membership Interest to be
Sold.  Subject to the terms and
conditions of this Agreement, at the Closing provided for in Section 3.01
hereof (the “Closing”), Seller
shall sell, transfer and deliver the Membership Interest to Purchaser, and
Purchaser shall purchase the Membership Interest from Seller, pursuant to
Section 363 of the Bankruptcy Code and the Sale Order.

2.02     Purchase Price and Payment.  Subject to the terms and conditions of this
Agreement, as consideration for the Membership Interest, Purchaser will pay to
Seller in cash an aggregate of Three Million U.S. Dollars ($3,000,000) (the “Purchase Price”).  Purchaser shall pay ten percent (10%) of such
amount as a down payment (the “Down Payment”)
to Escrow Agent within ten (10) Business Days of the Effective Date in
accordance with the terms and provisions of the Escrow Agreement.  The balance of the Purchase Price shall be
payable by Purchaser at the Closing. 
Both payments shall be made by wire transfer in U.S. Dollars in
immediately available funds to such account(s) as Seller will designate.

2.03     Adjustments to the
Purchase Price.  The Purchase
Price is subject to adjustment in accordance with the following:

(a)           Working Capital.

(i)            Within ninety (90)
days after the Closing, Seller shall calculate the amount of net working
capital at the Company as of the Closing Date and provide written notice of
such amount to Purchaser.  To the extent
that the amount of the net working capital is greater than zero, Purchaser
shall pay Seller an adjustment within fifteen (15) days of receiving the notice
from Seller; and to the extent that the amount of the net working capital is
less than zero, Seller shall pay Purchaser an adjustment within fifteen (15)
days of issuing such notice.  For
purposes hereof, “net working capital” shall mean cash and cash equivalents,
accounts receivable (excluding accounts receivable due from its Affiliates that
have been assigned to Seller or its designee pursuant to Section 2.03(f)),
prepayments (including prepaid real estate Taxes covering the period after the
Closing Date) and fuel inventory (at the higher of cost or market) less
trade accounts payable and accruals (excluding trade accounts and accruals due
to its Affiliates).  Accounts receivable
shall also exclude: Tax refunds that are subject to the terms of Section
2.03(b) below; and amounts related to insurance and other claims that are
subject to the terms of Section 2.03(e) below. 
Trade accounts payable and accruals shall also exclude: the remediation
work at the Swinging Bridge Facility  that
is subject to the terms of Section 2.03(d) below; amounts recorded for
remediation and monitoring work at the Hillburn Facility; and asset retirement 

 11
 

obligations for all of the Company’s
generating facilities.  The market value
of fuel inventory shall be determined by reference to the price listed in
Platts US Marketscan, Atlantic Coast, Low Sulfur Jet, Barge Quote, published on
the Closing Date, plus all applicable Taxes. If no price is published on the
Closing Date, then the price shall be the average of (i) the price for the
first day for which a price (as determined using the preceding methodology) is
published that precedes the Closing Date and (ii) the price for the first day
for which a price (as determined using the preceding methodology) is published
that next follows the Closing Date. If Platts US Marketscan, or the relevant
location or fuel type ceases to be published, the Parties shall agree on the
appropriate index to be used.

(ii)           In the event of a
dispute with respect to Seller’s calculation of the amount of net working
capital and any adjustment to be paid by Purchaser or Seller pursuant hereto,
Purchaser and Seller shall attempt to reconcile their differences.  If Purchaser and Seller are unable to do so
within sixty (60) days of receipt by Purchaser of Seller’s written notice of
the amount of its calculation, Purchaser and Seller shall submit the disputed
items for resolution to Deloitte & Touche, LLP (Atlanta Office) (the “Review Firm”) which, within ninety (90)
days from such submission, shall determine and report to the Parties upon such
disputed items, and such report shall be final, binding and conclusive on the
Parties hereto.  In acting pursuant to
this Section 2.03(a), the Review Firm shall have the rights, privileges
and immunities of an arbitrator, and its fees shall be paid one half by
Purchaser and one half by Seller.

(b)           Tax Refunds.  All refunds of Taxes relating to the Company
with respect to Tax periods ending on or before the Closing Date will be for
the account of Seller.  To the extent the
Company receives any such refund after the Closing Date, Purchaser shall pay
the amount of such refund to Seller within five (5) Business Days of receipt.

(c)           Pre-Approved Capital
Expenditures and Necessary Capital Expenditures.  From the Effective Date through the Plan
Effective Date, the Company may (without Purchaser’s consent) make:  (i) the Capital Expenditures described on Schedule
2.03(c) (the “Pre-Approved Capital
Expenditures”); and (ii) Necessary Capital Expenditures. Subject to
the provisions of Section 7.21(a), Purchaser will pay to Seller at
Closing, as an addition to the Purchase Price, the amount of capital
contributed by Seller to the Company during such period and expended by the
Company on account of all Pre-Approved Capital Expenditures and Necessary
Capital Expenditures made between the Effective Date and the Closing and not
theretofore paid by Purchaser.

(d)           Remediation
Expenditures.  From the Effective
Date through the Closing, the Company may (without Purchaser’s consent) make
the Remediation Expenditures; subject to the following:

(i)            Purchaser shall not be
liable to reimburse Seller for the Remediation Expenditures;

(ii)           the Unit 1 Fill-In
shall be done in accordance with a fixed price, lump sum contract for same to
be entered into by the Company prior to Closing 

 12
 

(the “Unit
1 Fill-In Contract”), the requirements of the Federal Energy
Regulatory Commission, and other applicable legal requirements.  A copy of the proposed Unit I Fill-In
Contract shall be provided to Purchaser for Purchaser’s comments within a
reasonable time before it is to be finalized and it shall be attached to and,
subject to any required approval of the Bankruptcy Court, become a part of this
Agreement in accordance with Section 7.12(a) and Schedule 2.03(d)(ii).  The Purchase Price shall be reduced by an
amount equal to the difference between the amount stated in the Unit 1 Fill-In
Contract for completion of the work described therein and the unpaid portion of
that amount on the Closing Date.  If the
Company does not enter into the Unit 1 Fill-In Contract on or before the
Closing, the Purchase Price shall be reduced by the estimated amount agreed to
by Purchaser and Seller at or before the Closing as the cost for completion of
the Unit 1 Fill-In. In the event the Parties cannot agree on the estimated
amount as aforementioned, then the amount proposed by Seller shall prevail for
purposes of the Closing; provided, however, that Purchaser shall be entitled to
invoke the dispute resolution provisions contained in Section 13.10 hereof with
respect to such estimated amount; and, provided further, that the Purchase
Price shall be reduced by only such portion of the reduction determined
pursuant to this Section 2.03(d)(ii) which, when aggregated with the Purchase
Price reduction determined pursuant to Sections 2.03(d)(iii) and 2.03(e) and
Seller’s liability under Section 11.03(b)(iii) hereof, does not exceed the
Purchase Price.

(iii)          Seller shall make a good
faith effort to cause Company to complete the Swinging Bridge Basic Remediation
on or before the Closing Date.  If the
Swinging Bridge Basic Remediation is not expected to be completed by the
Closing Date, the Purchase Price shall be reduced in accordance with Section
2.03(e) below; and

(iv)          INTENTIONALLY OMITTED

(v)           INTENTIONALLY OMITTED

(vi)          upon Closing and the
adjustment of the Purchase Price in accordance with Sections 2.03(d) and
2.03(e), if any, the Company shall be responsible for completing the
remediation in accordance with the applicable Consent Order, Swinging Bridge
Remediation Plan, and applicable law and, following Closing and, except as
provided in Section 2.03(e) below, Seller shall have no liability or obligation
to Purchaser or Company for the costs of such completion.

(e)           Remediation
Shortfall.  If the Company is not
reasonably expected to complete the Swinging Bridge Basic Remediation on or
before the Closing Date, then Seller shall notify Purchaser, within fifteen
(15) days prior to the Closing, of Seller’s option to:

(i)            reduce the Purchase
Price for Seller’s good faith written estimate of amounts required to be
expended to complete the applicable remediation, or

 13
 

(ii)            cause the Company to
contract with a third party reasonably acceptable to Purchaser to complete the
applicable remediation, in which case the Purchase Price shall be reduced by
the amount payable to such third party under such contract;

provided,
however, that in the case of either option specified in (i) or (ii)
aforementioned, Seller’s liability shall be limited to an amount which, when
aggregated with Seller’s liability under Section 2.03(d) hereof and Section
11.03(b)(iii) hereof, does not exceed the Purchase Price.

(f)            Insurance Proceeds
and Affirmative Claims Against Third Parties.  Prior to the Closing Date, the Company
will  (i) assign to Seller (or such
Affiliate of Seller as Seller may direct pursuant to the Plan) all of the
Company’s pending insurance claims filed with respect to and related to its
Remediation Expenditures at both the Swinging Bridge Facility and the Hillburn
Facility, which may include, but shall not be limited to, claims in respect of
property, business interruption, and environmental losses.  To the extent an insurance carrier pays
amounts related to such claims to the Company after Closing, the Company shall
hold such amounts in trust for Seller (or Seller’s Affiliate, as the case may
be) and Purchaser shall cause the Company to pay Seller or its Affiliate such
amounts within five (5) Business Days of receipt, (ii) assign to Seller (or
such Affiliate of Seller as Seller may direct pursuant to the Plan)  the Company’s affirmative claims against any
third parties (including, but not limited to, claims originally filed in the
Bankruptcy Case against Orange and Rockland Utilities Inc. and Consolidated
Edison, Inc. and/or any of their respective Affiliates) for actions or
inactions arising prior to the Closing Date, and (iii) assign to Seller (or
such Affiliate of Seller as Seller may direct pursuant to the Plan) all
Intercompany Claims.  If requested by
Seller, Purchaser shall cause re-organized Mirant NY-Gen to cooperate with
Seller (or Seller’s designated Affiliate) in the prosecution of such insurance
and affirmative claims, including making personnel, records, and access to the
Assets reasonably available as needed by Seller; provided, however, that the
costs of prosecuting any such claims shall be borne by, and be for the account
of, Seller.  It is expressly understood
that nothing herein shall affect any claims that the
Company may or could have asserted against any Affiliate
that is party to the O&R Settlement Agreement for setoff, contribution,
reimbursement or indemnity under the O&R Settlement Agreement, or any claim
or cause of action that Purchaser or the Company may assert against
Seller or any other Affiliate of Seller arising under or related to this
Agreement or any agreement entered into pursuant to or in connection with
this Agreement.

2.04     Allocation of Purchase
Price.  Company is a disregarded
entity under Section 7701 of the Internal Revenue Code, of 1986 as amended (the
“Code”).  This purchase constitutes an asset
acquisition under Code Section 1060.  The
Purchaser and the Seller shall allocate the Purchase Price to the Assets of the
Company within ninety (90) days after the Closing Date in a manner consistent
with Section 1060 of the Code and the Treasury Regulations thereunder.  Purchaser shall provide the initial draft of
the allocation.  Each of the Purchaser
and the Seller agrees to file Internal Revenue Service Form 8594, and all
federal, state, local and foreign Tax returns, in accordance with such
allocation.  Each of the Purchaser and
the Seller shall report the transaction contemplated by this Agreement for
federal income Tax and all other Tax purposes in a manner consistent with the
allocation determined pursuant to this Section 2.04; provided, however, that if
the Parties should fail to agree upon the allocation as herein described, then
the matter shall be submitted to a nationally recognized valuation firm whose
decision regarding the allocation will 

 14
 

be binding
upon the Parties.  Each of the Purchaser
and the Seller agrees to provide the other promptly with any other information
required to complete Form 8594.  Each of
the Purchaser and the Seller shall notify and provide the other with reasonable
assistance in the event of an examination, audit or other proceeding regarding
the agreed upon allocation of the Purchase Price.

ARTICLE III

THE CLOSING

3.01     Time and Place; Effective
Time of Transfer.

(a)           Except
as provided by the Bankruptcy Code, Federal Rules of Bankruptcy Procedure, or
any order by the Bankruptcy Court in the Bankruptcy Case, the Closing of the
transactions contemplated by this Agreement will take place at the offices of
Hiscock & Barclay, LLP, 50 Beaver Street, Albany, New York  12207-2830 at 10:00 A.M. local time, on the
Closing Date (as hereinafter defined). 
Subject to Section 11.01 hereof, the Closing shall occur as soon
as practicable after the conditions set forth in Articles VII, VIII, IX and X
have been satisfied or waived, on a date specified in a written notice from
Seller to Purchaser, given at least five days prior to such date (the “Closing Date”), provided, however, that
such date shall not be sooner than the Plan Effective Date.

(b)           For all purposes, the transfer of the Membership
Interest by Seller to Purchaser pursuant to this Agreement shall be effective
at 11:59 P.M. on the date of Closing.

3.02     Deliveries by Seller.  At the Closing, Seller shall deliver the
following to Purchaser:

(a)           Assignment in the form
of Schedule 3.02 hereto duly executed by Seller transferring the
Membership Interest to Purchaser;

(b)           a good standing
certificate for the Company from the Secretary of State of the State of
Delaware and from the Secretary of State of each jurisdiction in which the
Company is authorized to do business as a foreign limited liability company  bearing a date within fifteen (15) days of
the Closing Date;

(c)           resignations of the
Company’s managers and officers, effective on the Closing Date;

(d)           a copy of the
assignments referred to in Section 2.03(f) in the forms attached as
Schedules 3.02(d-1) and 3.02(d-2) hereto;

(e)           the various
certificates, documents and instruments referred to in Article IX hereof;

(f)            the Cross Indemnity
Agreement  referred to in Section 7.25
hereof (to the extent applicable) in the form attached as Schedule 7.25 hereto;
and

(g)           such other items as Purchaser deems reasonably necessary to effectuate
the transactions described in this Agreement; provided, however, that if any
required action with respect 

 15
 

to the Gas Transportation
Agreement as specified in Section 7.27 hereunder has not been completed, then
the Company, Seller, Purchaser and the parties thereto shall enter into an
arrangement to continue the Gas Transportation Agreement with respect to the
Company under the same provisions as existed prior to the Closing until such
time as the replacement agreement specified in Section 7.27 hereunder has been
implemented, and provided, further that, if Seller should be required to pay a
consideration to effectuate the obligations as provided in this clause (g),
then Purchaser shall bear any costs other than nominal costs associated with
the same.

(h)           all documents delivered
by Seller at Closing shall be effective as of 11:59 P.M. on the Closing Date.

3.03     Deliveries by Purchaser.  At the Closing, Purchaser shall deliver the
following to Seller:

(a)           the amount of the
Purchase Price to be paid at the Closing in accordance with Section 2.02,
by wire transfer to the account(s) 
indicated on Schedule 3.03(a):

(b)           a good standing
certificate for Purchaser from the Secretary of State of the State of New York,
bearing a date within fifteen (15) days of the Closing Date; and

(c)           the various
certificates, documents and instruments referred to in Article X hereof; and

(d)           such other items as
Seller deems reasonably necessary to effectuate the transactions described in
this Agreement; provided, however, that if Purchaser is required to pay a
consideration to obtain or otherwise provide any such other item, then Seller
shall bear any costs other than nominal costs associated with the same.

(e)           all documents delivered
by Purchaser at Closing shall be effective as of 11:59 P.M. on the Closing
Date.

ARTICLE IV

REPRESENTATIONS AND
WARRANTIES OF SELLER

Seller
represents and warrants to Purchaser as follows:

4.01     Power to Sell the
Membership Interest.  Subject to
prior approval by the Bankruptcy Court, Seller has the power to sell, assign,
transfer and deliver to Purchaser good title to the Membership Interest, free
and clear of all security interests, liens, pledges, assessments, options and
encumbrances, and with no restriction on the voting rights and other incidents
of record ownership pertaining thereto.

 16

4.02     Corporate Organization.

(a)           Seller is a corporation
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and corporate authority to enter into
this Agreement and to perform its obligations hereunder.

(b)           The Company is a limited
liability company validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and corporate authority
to carry on its business as it is now being conducted and to own the properties
and assets it now owns; and is duly qualified or licensed to do business as a
foreign limited liability company in good standing in all jurisdictions in
which the ownership of property or the conduct of its business requires such qualification,
except where the failure to so qualify would not have a Material Adverse
Effect.

4.03     Due Authorization and Execution; Valid
and Binding Agreement; No Violation.

(a)           Subject to prior approval by
the Bankruptcy Court, the execution, delivery and performance by Seller of this
Agreement have been duly authorized by all necessary corporate action required
by law or by Seller’s and the Company’s organizational documents.  This Agreement has been duly executed and
delivered by Seller and, assuming due authorization, including prior approval
of the Bankruptcy Court, and execution and delivery by Purchaser, constitutes a
valid and binding agreement of Seller, enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting generally the enforcement of creditors’ rights and rules of law
governing specific performance, injunctive relief or other equitable remedies.

(b)           Except as set forth on Schedule
4.05 and, assuming receipt of all consents and approvals required from (i)
Governmental Authorities as disclosed in Schedule 4.03 and (ii) third
parties other than Governmental Authorities as disclosed in Schedule 4.17,
neither the execution and delivery of this Agreement by Seller nor the
consummation of the transactions contemplated hereby will violate any provision
of the organizational documents of Seller or the Company or, to the Knowledge
of Seller, violate, or be in conflict with, or constitute a default under, or
cause the amendment, modification or acceleration of, or give any party the
right to amend, modify or refuse to perform, or modify the time within which
duties are to be performed or rights or benefits are to be received under, or
cause the acceleration of the maturity of any debt or obligation pursuant to,
or result in the creation or imposition of any security interest, lien or other
encumbrance upon any property or asset of Seller or the Company under any lease,
agreement, understanding, restriction or commitment or any judgment, decree, or
order of any court or Governmental Authority to which Seller or the Company is
a party or by which Seller or the Company is bound, or to which the property of
Seller or the Company is subject, except for violations, conflicts or defaults
which would not have a Material Adverse Effect.

4.04     Capitalization.  As of the date of this Agreement, the number
of issued and outstanding membership interests of the Company consists of the Membership
Interest.  The Membership Interest is
validly issued, fully paid and non-assessable; and the Membership Interest is
owned of record by Seller.  As of the
date of this Agreement, there are no outstanding (a) securities convertible
into, exchangeable for or evidencing the right to purchase any capital of the
Company; (b) options, warrants, calls or other rights to purchase or subscribe
to the Company’s 

 17
 

membership
interests or securities convertible into, exchangeable for or evidencing the
right to purchase any membership interests of the Company; or (c) contracts,
commitments, agreements, understandings or arrangements of any kind relating to
the issuance of any membership interests of the Company, any such convertible
or exchangeable securities or any such other securities evidencing the right to
purchase any such options, warrants or rights.

4.05     Licenses and Permits; Consents and
Approvals of Governmental Authority. 

(a)           To the Knowledge of Seller,
Section A of Schedule 4.05 is a list of all licenses and permits issued
by a Governmental Authority to the Company relating to the operation of the
Company’s business (“Existing Licenses and Permits”).  Seller has no Knowledge that any license or
permit from a Governmental Authority is required for such operation other
than:  (i) the Existing Licenses and
Permits, and (ii) licenses and permits not presently held by the Company, if
any, but with respect to which such failure does not have a Material Adverse
Effect.

(b)           To the Knowledge of Seller,
the consent or approval of a Governmental Authority is required in connection
with the execution, delivery and performance of this Agreement by Seller or the
consummation by Seller of the transactions contemplated hereby with respect to:  (i) those Existing Licenses and Permits
listed in Section B of Schedule 4.05 including, but not limited to, an
order by the Federal Energy Regulatory Commission (“FERC”) under Section 203 of
the Federal Power Act (16 USC §824b, as amended) authorizing Purchaser’s
acquisition of the Membership Interests, (ii) those Consent Orders and
agreements with Governmental Authority listed in Section C of Schedule 4.05,
and (iii) the Bankruptcy Case.  Seller
disclaims any representation or warranty regarding the requirement for the
approval or consent of a Governmental Authority in connection with the
execution, delivery and performance of this Agreement by Seller or the
consummation by Seller of the transactions contemplated hereby except to the
extent set forth in this subparagraph (b) and as set forth on Schedule 4.05.

4.06     Financial Statements.  Seller has heretofore delivered to Purchaser
the following (collectively, the “Financial
Statements”):  (a) unaudited
balance sheets of the Company as at December 31, 2004 and December 31, 2005 and
unaudited statements of operations, cash flow and members’ equity for each of
the fiscal years then ended; and (ii) an unaudited balance sheet of the Company
as at September 30, 2006 (the “Interim
Balance  Sheet”) and
unaudited statements of operations, cash flow and stockholders’ equity for the
nine (9) month period then ended.  Such
financial statements of the Company are all in accordance with GAAP.

4.07     No Undisclosed Liabilities.  Except as disclosed in the Financial
Statements, Schedule 4.07, or otherwise in this Agreement and the
Schedules hereto, and except for liabilities and obligations incurred since the
date of the Interim Balance Sheet in the ordinary course of business, to the
Knowledge of Seller, the Company has no liabilities of the type required to be
reflected in financial statements in accordance with GAAP which would have a
Material Adverse Effect which are not reflected or reserved against in the
Interim Balance Sheet.

4.08     Absence of Certain Changes.  To the Knowledge of Seller, except as
disclosed on Schedule 4.08 or as may be required by the Bankruptcy
Court, since the date of the Interim Balance Sheet, (a) there has not been any
Material Adverse Effect, provided that, Seller makes no representations with
respect to (i) business or economic conditions which are generally applicable 

 18
 

to companies
in the Company’s industry, (ii) changes in general business or economic
conditions; (iii) any change resulting from the announcement or pendency of any
of the transactions contemplated by this Agreement; or (iv) any change
resulting from compliance by the Seller with the terms of, or the taking of any
action required by, this Agreement, and (b) the Company has not suffered any
material damage or destruction to any of its Assets, which damage or destruction
is not covered by insurance.

4.09     Real Property Leases, Easements and
Licenses.  Schedule
4.09 lists all:  (a) leases pursuant
to which the Company leases real property from or to other parties, and (b)
easements and licenses pursuant to which the Company receives the right to use
real property or grants the right to others to use real property, but does not
list leases, easements or licenses the absence of which would not have a
Material Adverse Effect .  Copies of such
leases and easements have been made available for review by Purchaser.  Except as set forth on Schedule 4.09,
to the Knowledge of Seller, there are no existing defaults by the Company
thereunder and no event of default has occurred which (whether with or without
notice, lapse of time or the happening or occurrence of any other event) would
constitute a default thereunder by the Company, except such defaults, events of
default or other events that would not have a Material Adverse Effect.

4.10     Litigation.  Except as disclosed on Schedule 4.10,
there is no action, suit, arbitration or proceeding pending or, to the
Knowledge of Seller, threatened against the Company which, if adversely
determined against the Company, would have a Material Adverse Effect.

4.11     Subsidiaries.  The Company does not have any subsidiaries or
own or have the contractual right to vote or to acquire equity interests or any
option, right, warrant or other right or instrument convertible into or
exchangeable or exercisable for any such equity interest of any entity,
corporate or otherwise.

4.12     Taxes.  The Company has filed all federal, state and
local Tax returns required to be filed by it, all such Tax returns are correct
and complete in all material respects and, except as disclosed on Schedule
4.12, the Company has duly paid all Taxes shown to be due on such Tax
returns and there are no claims or Encumbrances against the Company or any of
its Assets due to any unpaid Taxes.  The
provisions for Taxes reflected in the Interim Balance Sheet are
reasonable.  There are no pending actions
or proceedings for the assessment or collection of Taxes from the Company and,
except as disclosed on Schedule 4.12, there is currently no active or
ongoing Tax audit.

4.13     NYISO.  The Assets participate in the energy and
capacity markets and certain ancillary services markets of the NYISO through
Seller’s Affiliate, Mirant Energy Trading, LLC. 
The Assets currently are not eligible to participate in certain
ancillary service markets of the NYISO, including voltage support, regulation,
and black start services.

4.14     Bank Accounts.  Schedule 4.14 sets forth the names of
all banks, trust companies, savings and loan associations, brokerage houses and
other financial institutions at which the Company maintains accounts of any
nature, and the names of all individuals authorized to draw thereon or make
withdrawals therefrom.

 19
 

4.15     Compliance with Law.  Except as set forth on Schedule 4.15
or otherwise in this Agreement and the Schedules hereto, to the Knowledge of
Seller,  the Company is in compliance
in all material respects with all laws, ordinances, regulations, and orders
applicable to them, the failure with which to comply would have a Material
Adverse Effect.  Except as set forth on Schedule
4.15, to the Knowledge of Seller, all licenses, franchises, permits and
other Governmental Approvals held by the Company are valid and sufficient to
permit the operations thereof except where the failure to hold such licenses,
franchises, permits and other Governmental Approvals would not have a Material
Adverse Effect.

4.16     Material Contracts; Contracts with
Affiliates. 
Schedule 4.16 lists each material, written contract or agreement
of the Company that cannot be terminated on notice of thirty (30) days or less
(each of which is herein referred to as a “Material
Contract”) other than real property leases, easements and licenses
referred to in Section 4.09, but does not list contracts or agreements
the absence of which would not have a Material Adverse Affect.  Except as set forth on Schedules 4.09
and 4.16 and except with respect to defaults based upon the filing of
the Bankruptcy Case, to the Knowledge of Seller, with respect to the Material
Contracts, there is no existing default or event of default by the Company or
any event which, with or without due notice or lapse of time or both, would
constitute a default or event of default by the Company, except such defaults,
events of default and other events which, either individually or collectively,
would not have a Material Adverse Effect. Except as set forth on Schedules
4.09, 4.16 and 4.17, each of the Material Contracts is capable of being
assumed by the Company. Effective no later than the Closing Date, all contracts
and agreements between or among the Company and any Affiliate of the Company
and/or Seller shall terminate, including without limitation: (i) that certain
Power Sale, Fuel Supply and Services Agreement dated January 3, 2006, by and
among the Company, Mirant Energy Trading, LLC (“MET”), as the transferee from Mirant Americas Energy
Marketing, LP (“Mirant Energy Marketing”)
and others (the “Mirant Marketing
Agreement”) providing for, among other things, the sale by the
Company to MET of all or a portion of the capacity, electricity, ancillary
services and/or other related products generated by, or available from, the
Company’s generating facilities, and (ii) that certain Administrative Services
Agreement dated January 3, 2006, by and between the Company and Mirant
Services, LLC (“Mirant Services”)
providing for the procurement by the Company from Mirant Services of certain
administrative, accounting and other similar services.

4.17     Consents.  Except for approval by the Bankruptcy Court
and as otherwise listed on Schedule 4.17, to the Knowledge of Seller, no
consent of any third party (other then consents of Governmental Authorities
listed on Schedule 4.03) is necessary to the consummation of the
transactions contemplated hereby, except consents whose failure to obtain would
not have a Material Adverse Effect.

4.18     Title to Assets.  Except as set forth on Schedule 4.18,  the Company has good and valid title to
the Assets reflected in the Interim Balance Sheet, except Assets disposed of in
the ordinary course of business or related to the transfer of the Grahamsville
Generating Facility pursuant to the termination of the sublease for that
facility, since the date of the Interim Balance Sheet. To Seller’s Knowledge,
none of such Assets are subject to any encumbrance except (a) liens reflected
on the Interim Balance Sheet; (b) liens of landlords and liens imposed by law,
such as carriers’, warehousemen’s, mechanics’, materialmen’s and vendors’ liens
incurred in the ordinary course of business consistent with past practice; (c)
purchase money liens arising or created in the 

 20
 

ordinary
course of business consistent with past practices; (d) minor imperfections of
title, if any, none of which would, either individually or collectively, have a
Material Adverse Effect; (e) liens for Taxes not yet due; and (f) leases,
easements and licenses set forth on Schedule 4.09 or such other
easements, leases and licenses that would not, either individually or
collectively, have a Material Adverse Effect.

4.19     No Other Representations or Warranties;
Disclaimer.

(a)           Except for the representations
and warranties contained in this Article IV, none of the Seller, the Company,
nor any other Person acting on behalf thereof (including any of their
respective Affiliates, officers, directors, employees, agents or
representatives) makes any representation or warranty, express, implied,
statutory or arising by operation of law, and Seller hereby disclaims any such
representations or warranties other than those contained in this Article IV,
whether by Seller, the Company, or any of their respective Affiliates,
officers, directors, employees, agents or representatives or any other Person,
notwithstanding the delivery or disclosure to Purchaser or any of its
Affiliates, officers, directors, employees, agents or representatives or any
other Person of any documentation or other information by Seller, the Company,
or any of their respective Affiliates, officers, directors, employees, agents
or representatives or any other Person. 
In connection with Purchaser’s investigation of the Company, Purchaser
has received from Seller and the Company certain financial information.  Purchaser agrees and acknowledges that
Purchaser is taking full responsibility for making its own evaluation of the
adequacy and accuracy of all financial information so furnished to it, and that
Purchaser shall have no claim against Seller or any other Person with respect
thereto, except as otherwise provided in this Agreement.  Accordingly, except as expressly provided in
this Article IV, Seller makes no representation or warranty with respect to
such financial information.

(b)           EXCEPT AS EXPRESSLY PROVIDED
IN THIS ARTICLE IV, PURCHASER IS ACQUIRING THE MEMBERSHIP INTEREST AND THE
COMPANY “AS IS”, “WHERE IS” AND “WITH ALL FAULTS”, AND SELLER EXPRESSLY
DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY
OR ARISING BY OPERATION OF LAW. SPECIFICALLY, WITH RESPECT TO COMPANY’S ASSETS,
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER EXPRESSLY
DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR
IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF THE ASSETS OR AS TO THE
PROSPECTS (FINANCIAL AND OTHERWISE) OR RISKS INCIDENTAL TO THE ASSETS. SELLER
SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY,
USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE
ASSETS OR ANY PART THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF
ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, OR AS TO COMPLIANCE WITH
ENVIRONMENTAL LAWS, OR AS TO THE CONDITION OF, OR COMPANY’S RIGHTS IN, OR ITS
TITLE TO,  THE ASSETS, OR ANY PART
THEREOF, OR WHETHER COMPANY POSSESSES SUFFICIENT REAL PROPERTY AND PERSONAL
PROPERTY INTERESTS TO OWN OR OPERATE THE ASSETS OR TO CONVEY THE ASSETS. EXCEPT
AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT.  SELLER FURTHER SPECIFICALLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY REGARDING THE ABSENCE OF HAZARDOUS 

 21
 

SUBSTANCES OR
LIABILITY OR POTENTIAL LIABILITY ARISING UNDER ENVIRONMENTAL LAWS. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN THIS AGREEMENT, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR
WARRANTY OF ANY KIND REGARDING THE CONDITION OF THE ASSETS OR THE SUITABILITY
OF THE HYDROELECTRIC AND GAS TURBINE GENERATING STATIONS FOR OPERATION AS POWER
PLANTS AND NO SCHEDULE OR EXHIBIT TO THIS AGREEMENT, NOR ANY OTHER MATERIAL OR
INFORMATION PROVIDED BY OR COMMUNICATIONS MADE BY SELLER, WILL CAUSE OR CREATE
ANY WARRANTY, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF THE
ASSETS.

ARTICLE V

REPRESENTATIONS AND
WARRANTIES OF PURCHASER

Purchaser
hereby represents and warrants to Seller as follows:

5.01     Corporate Organization.  Purchaser is a limited liability company
validly existing and in good standing under the laws of its jurisdiction of
formation and has full corporate power and corporate authority to carry on its
business as it is now being conducted and to own the properties and assets it
now owns and to enter into this Agreement and to perform its obligations
hereunder.

5.02     Authorization.  Purchaser has taken all corporate action
required by law or its organizational documents to authorize the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby and this Agreement, assuming due authorization, execution and
delivery by Seller, constitutes a valid and binding agreement of Purchaser
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting generally the enforcement
of creditors’ rights and rules of law governing specific performance,
injunctive relief or other equitable remedies.

5.03     No Violation.  Neither the execution and delivery of this
Agreement by Purchaser nor the consummation of the transactions contemplated
hereby will violate any provision of the organizational documents of Purchaser,
or violate, or be in conflict with, or constitute a default under, or cause the
amendment, modification or acceleration of, or give any Party the right to
amend, modify or refuse to perform, or modify the time within which duties are
to be performed or rights or benefits are to be received hereunder, or cause
the acceleration of the maturity of any debt or obligation pursuant to, or
result in the creation or imposition of any security interest, lien or other
encumbrance upon any property or asset of Purchaser under, any lease,
agreement, understanding, restriction or commitment or any judgment, decree, or
order of any court or governmental or regulatory authority or agency to which
Purchaser is a party or by which Purchaser is bound or to which the property of
Purchaser is subject.

5.04     Consents and Approvals of Governmental
Authoritiess. 
Except for the Bankruptcy Court and as provided on Schedule 5.04,
no consent, approval or authorization of, or declaration, filing or
registration with, any Governmental Authority is required in connection with 

 22
 

the execution,
delivery and performance by Purchaser of this Agreement or the consummation by
Purchaser of the transactions contemplated hereby.

5.05     Litigation.  There is no pending
or, to Purchaser’s Knowledge, threatened action, investigation or request for
information by any Governmental Authority or third person which could result,
or has resulted, in (a) the institution of legal proceedings to prohibit or
restrain the performance of this Agreement or the consummation of the
transactions contemplated hereby or thereby, or (b) a claim for damages as a
result of this Agreement or the consummation of the transactions contemplated
hereby or thereby.  Except as set forth
on Schedule 5.05, Purchaser has no Knowledge of any pending or
threatened litigation, claim, investigation or proceeding, private or
governmental, which directly and specifically relates to the Membership
Interest.

5.06     Brokers.  All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried on by Purchaser
without the intervention of any other Person and in such a manner as not to
give rise to any valid claim against Seller (by reason of Purchaser’s actions)
for a brokerage commission, finder’s fee or other like payment to any Person.

5.07     “AS IS” SALE.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS AGREEMENT, PURCHASER UNDERSTANDS AND AGREES THAT THE MEMBERSHIP INTEREST
AND THE COMPANY’S ASSETS ARE BEING ACQUIRED “AS IS, WHERE IS” ON THE CLOSING
DATE, AND IN THEIR CONDITION ON THE CLOSING DATE AND THAT PURCHASER IS RELYING
ON ITS OWN EXAMINATION OF THE COMPANY AND ITS ASSETS.

5.08     Due Diligence Inspections and Reviews.  Subject to any intentional misrepresentation,
gross negligence or willful misconduct with respect to any information provided
by Seller or its representatives, Purchaser acknowledges and agrees that it
has, prior to its execution of this Agreement, fully completed to its
satisfaction all of its due diligence inspections and reviews.  Subject to the provisions of Section 12.02
hereof, Purchaser will bear all of its own costs, expenses and charges incurred
in connection with its Due Diligence Inspections and Reviews.

ARTICLE VI

CONDUCT OF BUSINESS
PENDING THE CLOSING

Pending the
Closing, and except as otherwise consented to or approved by Purchaser in
writing, Seller agrees to cause the Company to do the following:

6.01     Regular Course of Business.  Except as otherwise provided in Sections
6.04, 7.27 and 7.28 below, the Company shall carry on its business diligently
and substantially in the same manner as heretofore conducted, and the Company
shall not institute any new methods of purchase, sale, lease, management,
accounting or operation or engage in any transaction or activity, enter into
any agreement or make any commitment, except in the ordinary course of business
consistent with past practices or as required by the Bankruptcy Court.

6.02     Amendments.  No change or amendment shall be made in the
organizational documents of the Company.

 23
 

6.03     Capital Changes.  The Company will not issue or sell any
membership interests or other securities, acquire directly or indirectly, by
redemption or otherwise, any such membership interests, reclassify or split-up
any such membership interests, declare or pay any distributions thereon or make
any other distribution with respect thereto, or grant or enter into any
options, warrants, calls or commitments of any kind with respect thereto.

6.04     Environmental Remediation; Requirements
of Governmental Authorities.  The Company shall operate in compliance with
orders from and other requirements of Governmental Authorities, including the
Consent Order dated July 22, 2005, with the New York Department of
Environmental Conservation relating to certain environmental remediation at the
Hillburn Facility and the remediation plan for the Swinging Bridge Facility
approved by the Federal Energy Regulatory Commission in its letter dated June
14, 2006 (as such Consent Order and remediation plan may be revised, amended or
supplemented from time to time).

ARTICLE VII

COVENANTS OF THE PARTIES

Seller hereby
covenants and agrees with Purchaser, and Purchaser hereby covenants and agrees
with Seller that:

7.01     Reasonable
Access. 
Seller shall cause the Company to afford Purchaser and authorized
representatives of Purchaser reasonable access to the books and records of the
Company and to the employees working for the Company (all at reasonable times
during regular business hours, upon prior notice to the Plant Manager of the
Company listed on Schedule 1.1 hereto and in a manner so as not to interfere
with the normal business operations of the Company) in order that Purchaser may
have an opportunity to make such investigations as it shall desire into the
Company and its business.

7.02     Confidentiality.

(a)           General.  Any Confidential Information furnished by
Seller to Purchaser on and after the Effective Date shall be subject to the
Confidentiality Agreement.  In the event
of any conflict between this Agreement and the Confidentiality Agreement, the
provisions of the Confidentiality Agreement shall prevail.

(b)           Regulatory Authorities  and Court of Competent Jurisdiction. Either Party may disclose Confidential
Information to any Governmental Authority or court of competent jurisdiction
where such disclosure is necessary to comply with Section 7.13
hereof.  To the extent permitted by
applicable Governmental Rules, the disclosing Party shall seek confidential
treatment for the Confidential Information provided to any Governmental
Authority and the disclosing Party shall notify the other Party as far in
advance as is practicable of its intention to release Confidential Information to
any Governmental Authority to enable the other Party to seek injunctive relief.

(c)           Disclaimer Regarding Tax Treatment.  Notwithstanding anything in this Agreement or
in any other written or oral understanding or agreement to which the Parties
hereto may be bound, each Party may (i) consult any Tax advisor regarding the
Tax treatment and Tax structure of the transactions contemplated by this
Agreement, and (ii) at any time disclose to any 

 24
 

Person,
insofar as required to comply with Treasury Regulations Section 1.6011-4(b)(3),
the Tax treatment and Tax structure of such transactions and all materials of
any kind (including opinions or other Tax analyses) that are provided relating
to such Tax treatment or Tax structure. 
The preceding sentence is intended to satisfy the requirements for the
transactions contemplated herein to avoid classification as a “confidential
transaction” for purposes of Treasury Regulations Section 1.6011-4(b)(3) and
shall be interpreted consistent with such intent.  This authorization is not intended to permit
disclosure of any information that is unrelated to the Tax treatment or Tax
structure of any transactions contemplated hereby, including (i) the identities
of participants or potential participants in any such transactions, (ii) the
existence or status of any negotiations, and (iii) any pricing or financial
information, except in each case to the extent such information is related to
the Tax treatment or Tax structure of any such transactions.  In addition, each Party acknowledges that it
has no proprietary or exclusive rights to the federal Tax structure of such
transactions or any federal Tax matter or federal Tax idea related to such
transactions.

(d)           Survival.  The obligations of the Parties in this Section 7.02
will survive the termination of this Agreement, the discharge of all other
obligations owed by the Parties to each other, any transfer of title to the
Membership Interest, and the Closing of the transactions contemplated in this
Agreement.

7.03     Hart-Scott-Rodino
Act.  If
required, each Party shall promptly file any Notification and Report Form and
related material that it may be required to file with the Federal Trade
Commission and the Antitrust Division of the United States Department of
Justice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR
Act”) and shall, subject to Section 7.06, use its best efforts to obtain
an early termination of the applicable waiting period and make any further
filings or information submissions pursuant thereto that may be reasonably
necessary, proper or advisable.

7.04     Access
to Records;.

(a)           Prior to and
following the Closing, Seller shall provide Purchaser, its counsel, accountants
and other representatives with access to the books and records of the Company
for periods ending on or before the Closing Date (collectively, the “Records”), upon reasonable notice during
normal business hours.  Seller shall not
dispose of any Records for a period of seven (7) years after the Closing
Date.  Thereafter, Seller shall not dispose
of any Records until it has given reasonable notice to Purchaser of its
intention to do so and given Purchaser a reasonable opportunity to take
possession of the Records to be disposed of.

(b)           Following the
Closing, Purchaser shall provide Seller, its counsel, accountants and other
representatives with access to the books and records of the Company for periods
ending on or before the Closing Date (collectively, the “Records”), upon reasonable notice during
normal business hours.  Purchaser shall
not dispose of any Records for a period of seven (7) years after the Closing
Date.  Thereafter, Purchaser shall not
dispose of any Records until it has given reasonable notice to Seller of its
intention to do so and given Seller a reasonable opportunity to take possession
of the Records to be disposed of.

7.05     Regulatory
and Other Authorizations and Consents.  Each Party will use its best efforts to
obtain the authorizations, consents and approvals of federal, state or local
regulatory 

 25
 

bodies or
other Persons as the same may be necessary for that Party to comply with its
obligations under this Agreement and to consummate the transactions
contemplated hereby and will cooperate fully with the other Party in promptly
seeking to obtain the authorizations, consents and approvals that are or may
become necessary for such Party; provided, however, that neither Purchaser, on
the one hand, nor Seller or the Company, on the other hand, shall be obligated
to:  (a) undertake any additional
financial obligation, dispose of any property or surrender any material right;
(b) otherwise consent to any arrangement or undertake any obligation that
would, in its sole and reasonable judgment, materially adversely affect its
business or properties; or (c) consent to the extension of the Closing Date of
this Agreement beyond that provided in Section 12.01(a)(vi) of this
Agreement.  Without limiting the
preceding portion of this Section 7.05, Purchaser shall be responsible for
obtaining the approval of the New York State Public Service Commission and the
Federal Energy Regulatory Commission for the transaction contemplated by this
Agreement and agrees to file applications for such approvals within fifteen
(15) days of the date of this Agreement. 
Seller agrees to join in such applications, and shall cause the Company
to do the same, provided however, that Purchaser shall be solely responsible
for pursuing and obtaining such approvals and for the cost thereof.  The Parties hereto will not take any action
that will or could have the effect of delaying, impairing or impeding the
receipt of any required authorizations, consents or approvals.

7.06     Employee
Matters. 
Nothing in this Agreement shall confer upon any employee of Seller or of
Seller’s affiliates, subsidiaries and/or third party administrators (“Seller’s
Employees”) the right to employment with Purchaser after the date of
Closing.  Further, Purchaser shall have
no rights, liabilities or obligations with respect to Seller’s Employees or
independent contractors for any period prior to Closing, nor will Purchaser
have any rights, liabilities or obligations with respect to any agreements
related to Seller’s Employees or independent contractors prior to Closing.

7.07     No
Public Announcement.  Neither Party shall issue any press release
or make any other public announcement concerning this Agreement or the
transactions contemplated hereby without the prior approval of the other Party,
which approval shall not be unreasonably withheld.  This Section 7.07 shall not apply to filings
with the Bankruptcy Court in connection with the transactions contemplated by
this Agreement.

7.08        Certain
Amounts Owed To Seller and Its Affiliates.  Subject to any requirements of the Bankruptcy
Court or the Plan, at or prior to Closing, Seller shall cause the Company to
fully repay or otherwise provide for the deemed resolution of any indebtedness
owed by the Company to Seller or any other Affiliate of Seller, including but
not limited to, indebtedness owed under the Debtor-In-Possession Credit
Agreement dated as of February 28, 2006, between Mirant Americas, Inc. and the
Company.

7.09        Provisions
Relating to Treatment of Assets and Liabilities of the Company Under the Plan.
 The Plan shall
provide for the discharge to the fullest extent permitted by the Bankruptcy
Code of all claims (as defined in Section 101(5) of the Bankruptcy Code)
against the Company existing on the Plan Effective Date, including, but not
limited to, all pre- and post-petition secured, priority and unsecured claims
of every kind and nature.  The Plan shall
provide that on the Plan Effective Date, all of the Assets of the Company shall
be free and clear of all liens, claims, encumbrances, and interests existing on
the Plan Effective Date, as if such Assets had been sold pursuant to Section
363 of the Bankruptcy Code.  All payments
and distributions provided for under 

 26
 

the Plan in respect to all allowed claims against the Company and all
costs and expenses incurred in connection with the discharge of all liens,
claims, encumbrances and interests in the Assets existing on the Plan Effective
Date shall be paid or otherwise resolved in accordance with the Plan.  To the extent that there are any disputed
claims against the Company on the Plan Effective Date (the “Disputed Claims”), neither the reorganized
Company nor Purchaser shall have any obligation under the Plan or for the
Disputed Claims.

7.10     Break-Up
Fee.  In
connection with the approval of the Sale Procedures Order, the Break-Up Fee
shall be payable at the times provided in the Agreement.

7.11     Further
Assurances. 
Each Party shall execute and deliver such instruments and take such
other actions as the other Party may reasonably require in order to carry out
the intent of this Agreement.

7.12     Supplements
to Schedules.

(a)           From time to
time prior to the Closing, each Party shall promptly supplement or amend its
Schedules hereto with respect to any matter hereafter arising which, if
existing or occurring as at the Effective Date, would have been set forth or
described in such Schedules.

(b)           For purposes
of determining the satisfaction of the conditions set forth in Sections 9.01
and 10.01, respectively, and the accuracy of the representations and
warranties of each Party contained in this Agreement, the Schedules shall be
deemed to include the information contained therein on the Closing Date, as
such Schedules may be supplemented or amended in accordance with Section
7.12(a) above.

7.13     Tax
Matters.

(a)           The Parties
agree that after the Closing Date, Seller shall have the right to review drafts
of and approve (which approval shall not be unreasonably withheld) all Tax
returns of the Company relating to taxable periods ending (i) on or before the
Closing Date and (ii) after the Closing Date, which encompass periods prior to
the Closing Date.  Copies of each draft
Tax return shall be delivered to Seller at least twenty (20) days prior to the
proposed filing date thereof.  If Seller
does not give Purchaser notice of any objection to such draft within five (5)
days of receipt of the draft, Seller shall be deemed to have approved such
draft.  Purchaser shall, and shall cause
the Company to, cooperate with Seller in the review of all such Tax returns and
in connection therewith provide Seller and its accountants, attorneys and other
representatives reasonable access to any and all books, records and data with
respect to the Company relevant to such Tax returns, including, without
limitation, financial statements, management accounts and work papers of the
Company’s accounting department and the Company’s independent accountants.

(b)           In the event
of a dispute with respect to any such Tax return, Purchaser and Seller shall
attempt to reconcile their differences. 
If Purchaser and Seller are unable to do so within ten (10) days,
Purchaser and Seller shall submit the disputed items for resolution to the
Review Firm, which, within fifteen (15) days from such submission, shall
determine and report to the Parties upon such disputed items, and such report
shall be final, binding and conclusive on the Parties hereto and such Tax
return shall be filed on a basis which reflects such report.  In acting pursuant to 

 27
 

this Section 7.13(b), the Review Firm shall have the rights,
privileges and immunities of an arbitrator, and its fees shall be paid one-half
by Purchaser and one-half by Seller.

(c)           The
provisions of clauses (a) and (b) of this Section 7.13 or any approval
of any Tax return by Seller notwithstanding, Seller shall have no liability
pursuant to Article XI or otherwise arising from or relating to any Tax
election or amended return filed by Purchaser
or the Company  or any
change in the Company’s Tax accounting principles or policies after the Closing
Date which recharacterizes, restates or otherwise affects any item for any
taxable period ending on or prior to the Closing Date.

(d)           Each Party
will promptly notify the other in writing upon receipt by such Party of notice
of any pending or threatened Tax audit or proceeding relating to Taxes of the
Company for any (i) Tax period ending on or before the Closing Date or (ii) Tax
period ending after the Closing Date but which includes the Closing Date.  Seller will have the sole right to represent
the interests of the Company in any audit or Tax proceeding related to Taxes
for Tax periods ending on or prior to the Closing Date and to employ counsel of
its choice at its expense, and Purchaser and Seller agree to cooperate in the
defense of any claim in such audit or proceeding.  Seller will have the right to participate at
its expense in representing the interests of the Company in any audit or
proceeding related to Taxes for any Tax period ending after the Closing Date,
if and to the extent that such period includes any Tax period before the
Closing Date, and to employ counsel of its choice at its expense.  Seller and Purchaser agree to cooperate in
the defense of any claim in such audit or proceeding.

7.14     Required
Consents.

(a)           Except as
provided in Sections 4.05, 7.05 and 7.15, Purchaser
is responsible for obtaining the following (collectively, the “Purchaser Required Consents”):  all authorizations, consents, licenses,
permits and approvals of Governmental Authorities and third Persons required by
applicable law or required by any such third Persons in connection with the
consummation of the transactions contemplated by this Agreement (including the
approvals of the New York State Public Service Commission and the Federal
Energy Regulatory Commission as provided in Section 7.05 and those consents
listed on Schedule 5.04) and any related agreements and with Purchaser’s
operation of the Hydroelectric and Gas Turbine Generating Stations.

(b)           Seller is
responsible for obtaining all authorizations, consents, licenses, permits and
approvals referenced in Section 4.05 hereof to the extent Seller is
required by law or under this Agreement to obtain same (collectively, the “Seller Required Consents”).

(c)           In connection
with obtaining any Purchaser Required Consents or Seller Required Consents from
third Persons, each Party will:

(i)            promptly commence
and use Commercially Reasonable Efforts to obtain all Purchaser Required
Consents or Seller Required Consents, as the case may be;

(ii)           provide the other
Party with the opportunity to comment on drafts of all submissions to such
third Persons sufficiently in advance of the submission thereof insofar as
practicable;

 28
 

(iii)          consider any
comments received from the other Party in good faith;

(iv)          invite the other
Party or its representative to attend all meetings with such third Persons;

(v)           provide copies of
all correspondence from such third Persons promptly after receipt thereof; and

(vi)          promptly following
any request from the other Party, provide a detailed report as to the status of
each Purchaser Required Consent or Seller Required Consent (as the case may be)
and its efforts to obtain the same.

(d)           After the
Closing, Purchaser will notify promptly all relevant Governmental Authorities
and all other third Persons of the change in ownership of the Membership
Interest resulting from the transactions contemplated herein to the extent
required by applicable law or the specific underlying agreements.

7.15     Bankruptcy
Court Orders and Related Matters.  The Parties acknowledge and agree as follows:

(a)           promptly
after the execution of this Agreement, (i) Seller shall, in accordance with all
applicable requirements of, and procedures under, the Bankruptcy Code, file
with the Bankruptcy Court a motion (the “Sale
Motion”) seeking approval of the (A) Sale Procedures Order (as
defined below), and (B) Sale Order (as defined below) and (ii) the Company
shall, in accordance with all applicable requirements of and procedures under,
the Bankruptcy Code, file with the Bankruptcy Court a motion or motions
seeking, among other things, an order (the “Disclosure
Statement Order”), approving the disclosure statement (the “Disclosure Statement”) with respect to the
Plan (which shall be developed through meaningful and timely consultation
between the parties, but with final submission to the Bankruptcy Court in the
sole discretion of Seller), establishing procedures for solicitation of
acceptances to the Plan and setting a hearing on confirmation of the Plan and
seeking entry of the Confirmation Order (the Sale Procedures Order, the Sale
Order, the Disclosure Statement Order and the Confirmation Order, herein
collectively referred to as the “Bankruptcy
Court Orders”).  Seller and
the Company, as applicable, will use Commercially Reasonable Efforts to (1)
cause such Sale Procedures Order, Sale Order, Disclosure Statement Order and
Confirmation Order to be issued, entered and become Final Orders in, as
applicable, Seller’s and the Company’s Bankruptcy Cases, and (2) timely serve
copies of the notices setting forth the hearing date on the Sale Procedures
Order, the Sale Order, Disclosure Statement Order and the Confirmation Order
upon any and all parties in interest entitled or required to receive notice
under all applicable laws, rules and regulations and orders of the Bankruptcy
Court prior to the hearing on such motions (all such motions and actions
relating to the Sales Procedures Order, the Sale Order, the Disclosure
Statement Order and the Confirmation Order will be in form and substance
reasonably acceptable to Purchaser and Seller and their respective
counsel).  Seller further agrees that it
shall not take any action in the Bankruptcy Case which would be contrary to or
inconsistent with this Agreement or any of the terms hereof, and any plan of
reorganization of Seller or order confirming such plan shall in no way
adversely affect the rights of Purchaser under this Agreement.

 29
 

(b)           Seller shall
use its Commercially Reasonable Efforts so that the Bankruptcy Court enters a “Sale Procedures Order”, substantially in
the form attached hereto as Schedule 7.15(b) (and which, as entered by the
Bankruptcy Court, is in a form reasonably acceptable to Purchaser, Seller, and
their respective counsel) that, among other things: (i) names Purchaser as the “stalking
horse” with respect to the Membership Interest, (ii) if there is an overbid as
provided herein, requires the payment of Two Hundred Fifty Thousand Dollars
($250,000) as a break up fee (the “Break-Up
Fee”) under the circumstances and in accordance with the terms of
this Agreement, (iii) requires an initial overbid at least Five Hundred
Thousand Dollars ($500,000) in cash greater than the Purchase Price, (iv)
requires all overbids be accompanied by a down payment equal to ten percent
(10%) of the purchase price offered by the overbidder, (v) requires that each
bidder provide (A) written evidence satisfactory to Seller demonstrating that
such bidder (1) has the financial ability to consummate the purchase of the
Membership Interest and its obligations to perform under the definitive
purchase and sale agreement described in 7.15(b)(vi) herein no later than ten
(10) days following the hearing on the Sale Order; (2) is not affiliated with
Purchaser or Seller (and such Person is not a creditor of Seller or Seller’s
Affiliate) and (B) evidence to Seller and the Bankruptcy Court that it is a bona
fide purchaser and is willing and able to cover its own legal counsel
fees and other costs associated with the sale of the Membership Interest, (vi)
requires the delivery to Seller of an executed copy of a definitive purchase
and sale agreement having the same terms and conditions as those set forth in
this Agreement (except for  the purchase
price, the terms of (i) through (ix) of this Subsection (b), and the reasonable
extension of the dates set forth in Sub-Sections 12.01(a) (iii), (iv), and
(vii) necessary or appropriate in light of such overbid) for a price that
exceeds the purchase price by at least $500,000, no later than five (5) days
prior to the hearing on the Sale Order, (vii) requires subsequent bidding
increments of at least Two Hundred and Fifty Thousand Dollars ($250,000.00),
(viii) requires that any qualified bid, other than Purchaser’s bid pursuant to
this Agreement, be delivered to Seller and Purchaser on or before the deadline
established by the Bankruptcy Court, and (ix) if Purchaser submits the
successful overbid, permits Purchaser to credit the amount of the Break-Up Fee
against such overbid.

(c)           Seller shall
use its Commercially Reasonable Efforts so that the Bankruptcy Court approves
the Sale Order, substantially in the form attached hereto as Schedule 7.15(c)
(and which, as entered by the Bankruptcy Court, is in a form reasonably
acceptable to Purchaser and Seller and their respective counsel), which shall
contain provisions, among other things, (i) approving the sale of the
Membership Interest to Purchaser on the terms and conditions set forth in this
Agreement, (ii) stating that any objections timely filed with respect to the
sale of the Membership Interest, which have not been withdrawn, are overruled
or the interests of such objections have been otherwise satisfied or adequately
provided for by the Bankruptcy Court, (iii) finding that Purchaser is a good
faith purchaser of the Membership Interest under Section 363(m) of the
Bankruptcy Code and that the sale is not subject to avoidance under Section
363(n) of the Bankruptcy Code, (iv) providing that the sale of the Membership
Interest to Purchaser shall be free and clear of any and all liens, claims,
encumbrances and interests of any kind or nature whatsoever under Section 363
of the Bankruptcy Code and any other applicable sections of the Bankruptcy
Code, (v) providing that the Bankruptcy Court shall retain jurisdiction for the
purpose of enforcing the provisions of the Sale Order including, without
limitation, compelling delivery of the Membership Interest to Purchaser and
providing that any liens, claims, encumbrances and interests shall attach
solely to the Purchase Price, (vi) providing that any liens, claims
encumbrances and interests of any kind or nature whatsoever asserted under
laws, rules, regulations or governmental or court orders imposing a stamp Tax,
transfer Tax or similar Tax arising from the transfer of the 

 30
 

Membership Interest to Purchaser or any sales Tax and any other Taxes
of Seller relating to a pre-Closing period (collectively, “Seller Taxes”) shall be filed against Seller’s
estate and shall not be asserted against Purchaser, (vii) providing, if
Purchaser consents, that the Parties hereto shall be authorized to close this
transaction immediately upon execution of the Sale Order and the Confirmation
Order pursuant to Rule 6004(g) of the Federal Rules of Bankruptcy Procedure,
(viii) authorizing and directing Seller to execute, deliver, perform under,
consummate and implement this Agreement, together with all additional
instruments and documents that may be reasonably necessary or desirable to
implement the foregoing, and (ix) determining that Purchaser is not a successor
to Seller or otherwise liable for any of the Liabilities of Seller and
permanently enjoining all persons and entities from commencing, continuing or
otherwise pursuing or enforcing any remedy, claim, cause of action or lien or
Encumbrance against Purchaser or the Membership Interest to Purchaser (the “Sale Order” ).

(d)           The
Disclosure Statement Order and the Confirmation Order shall be in form and
substance reasonably acceptable to Purchaser, Seller and their respective
counsel.  Seller and the Company shall
use Commercially Reasonable Efforts to obtain entry of the Confirmation Order
no later than seventy-five (75) days after execution of this Agreement by the
Parties hereto.  The Confirmation Order
shall, among other things, approve the assumption of all Assumed Contracts and
declare that all Assumed Contracts are valid and binding and in full force and
effect, confirm the Plan pursuant to Section 1129 of the Bankruptcy Code,
approve all documents and actions necessary to implementation of the Plan under
Section 1123(a) of the Bankruptcy Code and provide that the transfer of the
Membership Interest to Purchaser is exempt from Tax pursuant to Section 1146 (c)
of the Bankruptcy Code.

(e)           In the event
an appeal is taken, or a stay pending appeal is requested or reconsideration is
sought, from either the Sale Procedures Order, the Sale Order, the Disclosure
Statement Order or the Confirmation Order, Seller will immediately notify
Purchaser of such appeal or stay request and will provide to Purchaser within
two (2) Business Days a copy of the related notice of appeal or order of stay
or application for reconsideration. 
Seller will also provide Purchaser with written notice and copies of any
other or further notice of appeal, motion or application filed in connection
with any appeal from or application for reconsideration of, any of such orders
and any related briefs.

(f)            Seller will
notify, as is required by the Bankruptcy Code and as may reasonably be
requested by Purchaser, all parties entitled to notice of all motions, notices
and orders required to consummate the transactions contemplated by this
Agreement, including, without limitation, the Sale Procedures Order, the Sale
Order, the Disclosure Statement Order and/or the Confirmation Order, as
modified by orders in respect of notice which may be issued at any time and
from time to time by the Bankruptcy Court.

(g)           Purchaser
acknowledges that the sale of the Membership Interest as contemplated by this
Agreement is subject to Bankruptcy Court approval and to higher and better
counteroffers and that the Membership Interest will be sold to the highest and
best bidder at an auction to be conducted by Seller in connection with the
hearing on the approval of the Sale Order (the “Auction”).  In the
event that the highest and best offer, as determined by Seller is submitted at
the Auction by a purchaser other than Purchaser that (i) is not affiliated with
Purchaser or Seller (and such Person is not a creditor of Seller or Seller’s
Affiliate), (ii) submits to Seller a valid,

 31
 

 irrevocable offer to purchase
the Membership Interest on the same terms as this Agreement (except for the
purchase price, the terms of (i) through (ix) of Subsection 7.15 (b), and the
reasonable extension of the dates set forth in Sub-Sections 12.01(a) (iii),
(iv), and (vii) necessary or appropriate in light of such overbid) for a
purchase price that exceeds the Purchase Price by at least Five Hundred Thousand
Dollars ($500,000), no later than five (5) days prior to the hearing on the
Sale Order, (iii) executes all necessary and appropriate documents, in form and
substance acceptable to Seller, to memorialize the sale (the “Third Party Sale”) and has the financial
ability to consummate the purchase of the Membership Interest and its
obligations to perform under the definitive purchase and sale agreement
described in 7.15(b)(vi) herein no later than ten (10) days following the
hearing on the Sale Order, (iv) satisfies Seller and the Bankruptcy Court that
it is a bona  fide purchaser, and (v) is willing and able to cover
its own legal counsel fees and costs associated with the Third Party Sale,
Seller shall, upon approval of the Bankruptcy Court of a Sale Order naming such
other purchaser as Purchaser and the related Confirmation Order, be entitled to
close such Third Party Sale pursuant to such other offer; provided, however,
that nothing contained herein shall prevent Purchaser from contesting that such
other offer is the highest and best offer. 
Upon entry of the Sale Order authorizing a sale of the Membership
Interest to a purchaser other than Purchaser (the “Prevailing Bidder”), Seller shall direct the Escrow Agent to
return to Purchaser the Down Payment (with all accrued interest thereon) and
Seller shall pay to Purchaser the Break-Up Fee from the first cash proceeds of
the Third Party Sale or any other sale of the Membership Interest within five
(5) days after the closing of the Third Party Sale or any other disposition of
the Membership Interest.  In the event
that Purchaser agrees to be a back-up bidder, Seller shall direct the Escrow
Agent to return the Down Payment (with all accrued interest thereon) to
Purchaser upon the earlier of closing of the sale to the Prevailing Bidder or a
termination of this Agreement by Purchaser according to its terms.  Upon the closing of the Third Party Sale,
payment of the Break-Up Fee to Purchaser from the first cash proceeds of the
Third Party Sale shall be made within five (5) days after the closing of the
Third Party Sale.

7.16     Purchaser
Contact with Vendors and Employees.  Purchaser agrees that, prior to the Closing
Date, it will not contact any vendors, suppliers, employees or other
contracting parties of Seller or Seller’s Affiliates with respect to any aspect
of the Company’s business or the transactions contemplated hereby without the
prior written consent of Seller.

7.17     Taxes,
Prorations and Closing Costs.

(a)           Taxes.

(i)            Purchaser will pay
all Taxes, including sales, use, transfer and documentary transfer Taxes,
arising in connection with the sale and transfer of the Membership
Interest.  Seller and Purchaser will each
pay its own income Taxes.  State and
local real and personal property Taxes relating to the Company for the Tax year
of the Closing will be prorated between Purchaser and Seller on the following
basis:  Seller is to be responsible for
all such Taxes for the period up to the Closing; and Purchaser is to be responsible
for all such Taxes for the period on and after the Closing.  All Taxes assessed on an annual basis will be
prorated on the assumption that an equal amount of Taxes applies to each day of
the year, regardless of how any installment payments are billed or made, except
that Purchaser will bear all supplemental or other state and local real and
personal 

 32
 

property Taxes
which arise out of a change in ownership of the Membership Interest.

(ii)           After the Closing,
Purchaser will notify Seller in writing, within fifteen (15) days after its
receipt of any correspondence, notice or other communication from a taxing
authority or any representative thereof, of any pending or threatened tax
audit, or any pending or threatened judicial or administrative proceeding that
involves Taxes relating to the Membership Interest for the period prior to the
Closing, and will furnish Seller with copies of all correspondence received
from any taxing authority in connection with any audit or information request
with respect to any such Taxes relating to the Membership Interest for the
period prior to the Closing.

(b)           Purchaser’s Closing Costs.  Purchaser will pay: (i) all costs of (1)
any title policy and all endorsements thereto that Purchaser elects to obtain,
(2) all filings required under the HSR Act, (3) Purchaser’s Due Diligence
Inspections and Reviews, and (4) any Person (if any) that is entitled to a
brokerage commission, finder’s fee or other like payment by reason of Purchaser’s
actions, and (ii) one-half (1/2) of any document recordation costs, including
any applicable deed transfer Tax.

7.18     Acknowledgement
by Purchaser. 
Prior to its execution of this Agreement, Purchaser has conducted to its
satisfaction an independent investigation and verification of the Company,
including without limitation its Due Diligence Inspections and Reviews. In
making its decision to execute this Agreement, and to purchase the Membership
Interest, Purchaser has relied and will rely upon the results of its own
independent investigation and verification. 
THE REPRESENTATIONS AND WARRANTIES SET
FORTH IN ARTICLE IV OF THIS AGREEMENT CONSTITUTE THE SOLE AND EXCLUSIVE
REPRESENTATIONS AND WARRANTIES OF SELLER IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY.  There
are no representations, warranties, covenants, understandings or agreements
among the Parties regarding the Membership Interest or its transfer other than
those set forth in this Agreement. 
Except for the representations and warranties expressly set forth in
Article IV, Purchaser disclaims reliance on any representations, warranties or
guarantees, either express or implied by Seller, its officers, directors,
counsel, representatives or agents.

7.19     No
Recourse. 
To the extent the transfer, conveyance, assignment and delivery of the
Membership Interest to Purchaser as provided in this Agreement is accomplished
by deeds, assignments, sublicenses, subleases, subcontracts or other
instruments of transfer and conveyance, whether executed at the Closing or
thereafter, these instruments are made without representation or warranty by,
or recourse against, Seller, except as expressly provided in this Agreement.

7.20     Advice
of Changes. 
Prior to Closing, each Party will promptly advise the other in writing
with respect to any matter arising after execution of this Agreement of which
that Party obtains knowledge and which, if existing or occurring at the date of
this Agreement, would have been required to be set forth in any of the
Schedules.

 33
 

7.21     Casualty
Loss.

(a)           If, at any
time following the Effective Date but prior to Closing, any of the
Hydroelectric or Gas Turbine Generating Stations suffers (each of such Stations
referred to herein as a “Station”)
a total or partial casualty loss (an “Event
of Loss”) that is reasonably estimated to cost in excess of One
Million Dollars ($1,000,000) to repair or replace the damaged Station (a “Major Loss”), Seller will promptly inform
Purchaser of the Major Loss.  As soon as
practicable following the Major Loss, Seller will provide to Purchaser its good
faith, detailed written estimate (“Seller’s Estimate”)  setting forth the amount required to
repair or replace the damaged Station and the estimated time period for
completion of such repair or replacement. Concurrently with the delivery of a
Seller’s Estimate relating to a Major Loss, Seller will notify Purchaser
whether it will repair or replace the Station. 
The completion of the repair or replacement of the Station relating to a
Minor Loss and, if Seller elects to repair or replace the Station relating to a
Major Loss, the completion of the work relating to a Major Loss, will be a
condition to the Closing and the outside date for the Closing set forth in Section
12.01(a)(vii) will be extended by the estimated time period for completion
of such repair or replacement plus thirty (30) days (provided that the overall
number of estimated days for completion of such repair or replacement shall not
exceed ninety (90) days, failing
which Purchaser shall have the option to terminate this Agreement), and the
costs thereof (less any insurance proceeds received by Seller in connection
with such loss) will be deemed a Necessary Capital Expenditure, unless such
costs shall exceed Fifty Thousand Dollars ($50,000), in which event any amount
in excess of Fifty Thousand Dollars ($50,000) shall be for the account of Seller.
If Seller elects not to repair or replace the Station relating to a Major Loss,
the provisions of Section 7.21(b) will apply.

(b)           Purchaser’s Election.

(i)            Within the thirty
(30) day period immediately following receipt of a Seller’s Estimate relating
to a Major Loss and Seller’s election not to repair or replace the damaged
Station, Purchaser will elect, by written notice to Seller, to either:

(1)           terminate this
Agreement pursuant to Section 12.01(a)(v); or

(2)           require a reduction
in the Purchase Price by an amount equal to Seller’s Estimate, in which case
Seller will have no obligation to repair the Station as a result of such Event
of Loss.

(ii)           If Purchaser should
fail to make the election set forth in this Section 7.21(b) within
the thirty (30) day period immediately following receipt of Seller’s notice of
a Major Loss, Purchaser will be deemed to have made the election contained in Section 7.21(b)(i)(2).  To the extent the thirty (30) day period
described in this Section 7.21(b) extends past the outside date for the
Closing set forth in Section 12.01(a)(vii), the outside date for the
Closing shall be extended by such time.

 34

7.22     Post Closing — Information
and Records.

(a)           Purchaser agrees that,
from and after the Closing Date, it will, promptly following the request of
Seller, provide such information and administrative support as will be
reasonably requested by Seller to enable Seller to comply with its obligations
with respect to the issuance of Form 1099 and other Tax reports, reports and
notices relating to income Tax returns, preparation of financial statements and
completion of Seller’s audit for the three fiscal years ended December 31st
following the Closing Date and other similar matters.

(b)           Employees.  Purchaser will make available to Seller on a
reasonable basis and as requested from time to time by Seller after Closing,
those employees of Purchaser with Knowledge of or relevant to the matters
described in this Section 7.22 for the purpose of consultation,
investigation and/or testimony in connection therewith.

7.23     Insurance.  Seller shall maintain or cause to be
maintained in full force and effect all policies of insurance applicable to the
Hydroelectric and Gas Turbine Generating Stations as of the Effective
Date.  All such insurance policies shall
terminate as of the Closing.

7.24     Use of Certain Names.  Within thirty (30) days following the
Closing, Purchaser shall cause the Company to cease using the name “Mirant,”
and any word or expression similar thereto or constituting an abbreviation or
extension thereof (the “Seller Marks”),
including eliminating the Seller Marks from any Assets and disposing of any
unused stationery and literature of the Company bearing the Seller Marks.
Thereafter, neither Purchaser nor any of its Affiliates shall use the Seller
Marks.  Purchaser acknowledges that
neither it nor its Affiliates has any rights whatsoever to use the Seller Marks
after said thirty (30) day period. 
Without limiting the foregoing:

(i)            Within five (5)
Business Days after the Closing Date, Purchaser shall cause the Company to
change its name to a name that does not contain any of the Seller Marks.

(ii)           Within sixty (60) days
after the Closing Date, Purchaser shall provide evidence to Seller, in a format
that is reasonably acceptable to Seller, that Purchaser has made all
governmental filings required pursuant to clause (i) above and has provided
notice to all applicable Governmental Authorities and all counterparties to the
Material Contracts regarding the change of the Company’s and a new address for
the purpose of notice to the Company.

(iii)           Notwithstanding
Purchaser’s right to use the Seller Marks for the time periods set forth in
this Section 7.24,  Purchaser
acknowledges and agrees as follows:  (i)
neither Purchaser nor any of its Affiliates (including the Company after the
Closing Date) shall be deemed an agent, representative or joint venture partner
of Seller; (ii) Seller shall retain sole and exclusive ownership of the
Seller Marks, and all goodwill and rights related thereto; (iii) Purchaser
and its Affiliates (including the Company after the Closing Date) shall not
engage in any conduct or take part in any activity that would be reasonably
likely to (A) impair the validity or enforceability of the Seller Marks,
(B) dilute the distinctiveness of the 

 35
 

Seller Marks, (C) disparage the Seller Marks
or (D) be considered unfair competition or an infringement or other violation
of the rights of Seller or its Affiliates in the Seller Marks;
(iv) Purchaser and its Affiliates (including the Company after the Closing
Date) shall not co-brand any of their goods or services (or communications
describing such goods or services) using any of the Seller Marks; and
(v) notwithstanding anything to the contrary contained in Article XI,
and irrespective of such Article XI, Purchaser shall indemnify, defend and
hold harmless Seller from, against, and in respect of, any and all Damages
incurred or suffered by Seller arising out of or relating to any use of any of
the Seller Marks by Purchaser or any of its Affiliates (including the Company
after the Closing Date).

7.25     Settlement Agreement.  The  Company
is a party to a certain Settlement Agreement dated as of August 31, 2001, by
and among Orange and Rockland Utilities Inc. (“O&R”), Mirant Bowline, LLC (“Bowline”),
Mirant Lovett, LLC (“Lovett”), Hudson Valley Gas Corporation (“Hudson Valley”)
and the Company (the “O&R Settlement Agreement”).
 On
or before the Closing Date, unless O&R has released Company from liability
under the O&R Settlement Agreement, each of the Company, Bowline, and
Lovett shall enter into a cross indemnity agreement (the “Cross Indemnity Agreement”) substantially
in the form attached as Schedule 7.25 hereto, and the same shall have been
finally approved by the Bankruptcy Court with respect to each proceeding
applicable to each of the parties thereto.

7.26     Registration of Company
with NYISO.  Purchaser is
responsible for registering prior to Closing the Company or Purchaser as
representative of the Company as a market participant with the New York
Independent System Operators (“NYISO”).  Seller will cooperate with Purchaser and the
Company in effecting such registration.

7.27     Gas Transportation and
Balancing Services Agreement. 
The Company is a party to a certain Gas Transportation and Balancing
Services Agreement dated December 9, 2002 by and among O&R, Bowline,
Lovett, Company, Consolidated Edison Company of New York, Inc. (“ConEd”), and MET, as transferee of Mirant Energy Marketing,
(the “Gas Transportation Agreement”).  On or before the Closing Date, Seller shall
cause the Company to enter into a written agreement with the other parties to
the Gas Transportation Agreement terminating Company as a party thereto
effective upon Closing.  Seller shall
cooperate with Purchaser so that, on or before the Closing Date, Purchaser may
enter into a written agreement effective upon Closing replacing the operational
supply arrangements available to Company under the Gas Transportation Agreement
so as to allow for the full and complete operation of the Company and its
Assets post-Closing consistent with its operations prior to Closing.  Seller and Purchaser agree that such replacement
agreement will provide for, inter alia, at
least the same level of gas supply, capacity and transportation rights for
Company under such replacement agreement as existed under the Gas
Transportation Agreement prior to Closing, although the price and other terms
therein may be different.  Such
replacement agreement shall be executed by the Company and any other parties
thereto within seven (7) days prior to the Closing Date. Prior to Closing, all
new written agreements referred to in this Section 7.27 shall have been timely
filed with the New York State Public Service Commission and shall be finally
approved by the Bankruptcy Court with respect to each proceeding therein
applicable to the parties to such written agreements.

 36
 

7.28     Air Title V Permits (Hillburn
and Shoemaker Facilities). 
Company is the holder of an Air Title V Permit issued by the New York
State Department of Environmental Conservation (“DEC”) for the Hillburn Facility (Permit #3-3926-00059/00003)
and the Shoemaker Facility (Permit #3-3309-00040/00004) (respectively, the “Hillburn Air Permit” and the “Shoemaker Air Permit”, collectively the “Air Permits” and individually each an “Air Permit”).  After the Effective Date, Company shall apply
for a modification of each Permit to remove the Hillburn and Shoemaker
Facilities from the calculation of the system wide average of Nitrogen Oxide
emissions used to determine compliance with the NOx RACT Limit (as defined in and required by each
Permit) (such calculation being referred to herein as the “NOx Bubble”). 
Prior to filing any such application, Seller shall provide Purchaser
with a copy thereof and accept comments from Purchaser for a reasonable time
thereafter.  Other than such comments to
Seller, Purchaser shall take no action opposing Company’s applications for such
modification.  If Purchaser requests
Seller to cause any such application to include a modification to a Permit
which Purchaser determines is reasonably necessary to allow the Company to
operate in compliance with the Nitrogen Oxide emission limits in the Permits
after the amendment removing the relevant Facility from the NOx   Bubble,
Seller agrees to include such requested modification,  provided that the implementation thereof
shall not cause the Company to incur costs prior to the Closing.  Seller and Purchaser shall cooperate in good
faith to obtain modified Permits consistent with this Section 7.28 that shall
be effective on the Closing Date.

7.29     Assignment of Certain
Purchase Orders.  Prior to the
Closing Date, Seller shall cause Company to assign to Seller or Seller’s
designee the following purchase orders: 
(a) Purchase Order No. NY-6867 between Company and Mead and Hunt, Inc.
(item #9 on Schedule 4.16), and (b) Purchase Order No. NY-8296 between Company
and Burns and Roe Enterprises, Inc. (item #13 on Schedule 4.16).  Seller or Seller’s designee shall assume and
perform all of Company’s obligations under said Purchase Orders for services
performed by the other party thereto after the Effective Date.

ARTICLE VIII

MUTUAL CONDITIONS

The respective
obligations of each Party to consummate the transactions contemplated by this
Agreement are subject to the satisfaction, on or before the Closing Date, of
each of the following conditions, unless waived in writing by each Party.

8.01     HSR Act.  All applicable waiting periods (and any
extensions thereof) under the HSR Act shall have expired or otherwise been
terminated.

8.02     Regulatory and Other
Authorizations and Consents.  All
authorizations, consents and approvals of Governmental Authorities, third
parties and the Bankruptcy Court, shall have been obtained (other than Seller
Required Consents and Purchaser Required Consents).

8.03     Orders.  Other than the approval of the Bankruptcy
Court, neither Party hereto shall be subject to any order or injunction of a
court of competent jurisdiction which prohibits the consummation of the
transactions contemplated by this Agreement.

 37
 

ARTICLE IX

CONDITIONS TO PURCHASER’S
OBLIGATIONS

Each and every
obligation of Purchaser under this Agreement to be performed on or before the
Closing Date shall be subject to the satisfaction, on or before the Closing
Date, of each of the following conditions, unless waived in writing by
Purchaser:

9.01     Representations and
Warranties True.  The
representations and warranties of Seller contained in Article IV hereof shall
be in all material respects true and accurate as of the date when made and at
and as of the Closing Date as though such representations and warranties were
made at and as of such date (unless expressly made at and as of an earlier
date, in which case such representations and warranties shall be true in such
respects only at and as of such earlier date), except for changes permitted or
contemplated by the terms of this Agreement.

9.02     Performance.  Seller shall have performed and complied with
all agreements, obligations and conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.

9.03     Certificates; Evidence of
Compliance.  Seller shall have
furnished Purchaser with such certificates of Seller and/or such other evidence
as Purchaser may reasonably request to demonstrate compliance with the
conditions set forth in this Article IX including, with respect to the
indebtedness owed under the Debtor-In-Possession Credit Agreement dated as of
February 28, 2006, between Mirant Americas, Inc. and the Company, notes marked “cancelled”
and/or otherwise acknowledged by the holder(s) thereof to be discharged, proof
of satisfaction of any mortgages filed against Company’s real property, and
discharge of any liens on record against any Assets.

9.04     Board Resolutions.  A certified copy of such resolutions of the
Board of Directors of Seller as may be required to authorize the transactions
contemplated by this Agreement and the Related Agreements and authorizing
specified officers of Seller to execute and deliver this Agreement, the Related
Agreements and any other documents or instruments which they deem necessary and
appropriate in connection with this Agreement.

9.05     Bankruptcy Court Orders.  The Bankruptcy Court Orders shall (a) have
been entered by the Bankruptcy Court, with such changes as are reasonably
acceptable to Seller and Purchaser and their respective counsel, and (b) become
Final Orders.

ARTICLE X

CONDITIONS TO SELLER’S
OBLIGATIONS

Each and every
obligation of Seller under this Agreement to be performed on or before the
Closing Date shall be subject to the satisfaction, on or before the Closing
Date, of each of the following conditions, unless waived in writing by Seller:

10.01   Representations and
Warranties True.  The
representations and warranties of Purchaser contained in Article V hereof shall
be in all material respects true and accurate as of the 

 38
 

date when made and at and as of
the Closing Date as though such representations and warranties were made at and
as of such date (unless expressly made at and as of an earlier date, in which
case such representations and warranties shall be true in such respects only at
and as of such earlier date), except for changes permitted or contemplated by
the terms of this Agreement.

10.02   Performance.  Purchaser shall have performed and complied
with all agreements, obligations and conditions required by this Agreement to
be performed or complied with by it on or prior to the Closing Date.

10.03   Certificates.  Purchaser shall have furnished Seller with
such certificates of its officers to evidence compliance with the conditions
set forth in this Article X as may reasonably be requested by Seller.

10.04   Board Resolutions.  A certified copy of such resolutions of
Purchaser’s sole member as may be required to authorize the transactions
contemplated by this Agreement and the Related Agreements and authorizing
specified officers or representatives of Purchaser, as the case may be, to
execute and deliver this Agreement, the Related Agreements and any other
documents or instruments which they deem necessary and appropriate in
connection with this Agreement.

10.05   Pending
Insurance Claims.  Written
acknowledgment from each relevant insurance carrier or its broker or other
designee that the Company’s pending claims for losses at the Swinging Bridge
Facility and the Hillburn Facility shall be paid to Seller or such third party
or third parties as the Seller or Company shall designate to each such carrier
prior to Closing.

10.06      Bankruptcy Court Orders.  The Bankruptcy Court Orders shall (i) have been entered by the
Bankruptcy Court, with such changes as are reasonably acceptable to Seller and
Purchaser and their respective counsel, and (ii) become  Final Orders.

10.07      Termination of Gas
Transportation Agreement. 
Company shall have entered into a written agreement effective upon
Closing terminating the Gas Transportation Agreement as to Company, such
written agreement shall have been timely filed with the New York State Public
Service Commission, and all Bankruptcy Court approvals with respect to such
agreement shall have become final and not subject to appeal, all in accordance
with Section 7.27.

10.08      Modification of Title V
Permits.  The Air Permits have
been modified in accordance with Section 7.28, effective upon Closing.

ARTICLE
XI

SURVIVAL
AND INDEMNIFICATION

11.01   Survival.

(a)           All
representations and warranties made by any Party in this Agreement shall
survive the Closing hereunder for a period of ninety (90) days following the
Closing.  Anything in this Agreement to
the contrary notwithstanding, no claim based upon misrepresentation or breach
of representation or warranty shall be made, no action or litigation with
respect thereto commenced, and no remedy shall be available unless written
notice specifying with particularity the 

 39
 

misrepresentation or breach claimed shall have been delivered on or
prior to the expiration of such period.

(b)           All
covenants and agreements made by any Party in this Agreement shall survive the
Closing hereunder until all obligations set forth therein shall have been
satisfied.

11.02   Indemnification.

(a)           Each
Party (each, a “Indemnifying Party”),
as a material inducement to the other party to enter into this Agreement, shall
defend, indemnify, and hold harmless the other Party, such other Party’s
successors and assigns, and all of such other Party’s officers, directors,
lenders, shareholders, beneficial owners, trustees, partners, members,
affiliates, agents and employees (each, an “Indemnitee”,
collectively, the “Indemnitees”)
from and against any and all damages, claims, losses, judgments, awards,
penalties, fines and forfeitures (each, an “Action”),
together with reasonable attorneys’ fees and related litigation or arbitration
costs and expenses of such Indemnitees, of whatever kind or nature, without
limitations being asserted against any of the Indemnitees (collectively, “Damages”), which in any way arise or
result from a breach of any representation, warranty, covenant or agreement of
the Indemnifying Party under this Agreement.

(b)           No
indemnity pursuant to this Agreement shall be paid by the Indemnifying Party:

(i)            on
account of the Indemnitee’s conduct that is established in a final,
non-appealable judgment by a court of competent jurisdiction as having been
knowingly fraudulent, deliberately dishonest, reckless, grossly negligent or
constituting willful misconduct;

(ii)           on
account of the Indemnitee’s conduct that is established in a final,
non-appealable judgment by a court of competent jurisdiction as having
constituted a breach of the Indemnitee’s duty of loyalty to the Indemnifying
Party or as having resulted in any personal profit or advantage to the
Indemnitee to which the Indemnitee was not legally entitled;

(iii)          for
which payment is actually made to the Indemnitee under a valid and collectible
insurance policy or under another valid and enforceable indemnity clause or
agreement, except in respect of any deficit in payment actually received under any
such policy of insurance, indemnity clause or agreement; or

(iv)          if
indemnification is unlawful or has been determined by any regulatory or
administrative body having jurisdiction over the Indemnifying Party to be
against public policy.

(c)           As a
condition precedent to the Indemnitee’s rights of indemnification under this
Agreement, the Indemnitee shall give the Indemnifying Party written notice as
soon as reasonably practicable after becoming aware of any claim made against
the Indemnitee for which indemnification will or could be sought under this
Agreement.  In addition, the Indemnitee
shall give the Indemnifying Party such information and cooperation as the
Indemnifying Party may 

 40
 

reasonably request to enable the Indemnifying Party to perform its obligations
hereunder.  Failure by the Indemnitee to
give such notice shall not deprive the Indemnitee of a right to indemnification
hereunder, provided that the Indemnifying Party has actual knowledge of the
claim and/or is not adversely affected in its ability to defend the claim as a
result of any such failure.

(d)           With
respect to the commencement of any Action of which the Indemnitee notifies the
Indemnifying Party pursuant to clause (c) above:

(i)            the
Indemnifying Party will be entitled to participate therein at its own expense;

(ii)           except
as otherwise provided below, the Indemnifying Party may, at its option and
jointly with any other indemnifying party similarly notified and electing to
assume such defense, assume the defense thereof, with counsel reasonably
satisfactory to the Indemnitee. After written notice from the Indemnifying
Party to the Indemnitee of its election to assume the defense thereof, the
Indemnifying Party will not be liable to the Indemnitee under this Agreement
for any legal or other expenses subsequently incurred by the Indemnitee in
connection with the defense thereof except for reasonable costs of
investigation or as otherwise provided in this clause (d). The Indemnitee shall
have the right to employ separate counsel in such Action, provided that the
fees and expenses of such counsel incurred after written notice from the
Indemnifying Party of its assumption of the defense thereof shall be at the
expense of the Indemnitee unless: (1) the employment of such counsel has been
authorized by the Indemnifying Party, (2) the Indemnitee shall have reasonably
concluded, and so notified the Indemnifying Party, that there is an actual
conflict of interest between the Indemnifying Party and the Indemnitee in the
conduct of the defense of such Action, in which event the Indemnifying Party
shall not be entitled to assume the defense of such Action, or (3) the
Indemnifying Party shall not in fact have employed counsel to assume the
defense of such Action.

(iii)          the
Indemnifying Party shall not be liable to indemnify the Indemnitee under this
Agreement for any amounts paid in settlement of any Action effected by the
Indemnitee without the Indemnifying Party’s prior written consent, which
consent shall not be unreasonably withheld;

(iv)          the
Indemnifying Party shall be permitted to settle any Action, provided that it
shall not settle any Action in any manner that would impose any penalty or
limitation on the Indemnitee without the Indemnitee’s prior written consent,
which consent shall not be unreasonably withheld.

(e)           Seller
shall indemnify, defend and hold harmless Purchaser, Purchaser’s successors and
assigns, and all of Purchaser’s officers, directors, lenders, shareholders,
beneficial owners, trustees, partners, members, affiliates, agents and employees
(collectively, the “Purchaser Indemnified
Parties”) from and against all damages, claims, losses, judgments,
awards, penalties, fines and forfeitures, together with reasonable attorneys’
fees and related litigation or arbitration costs and expenses of such Purchaser
Indemnified Parties, of whatever kind or nature, without 

 41
 

limitation, asserted against, incurred or suffered by any Purchaser
Indemnified Party arising out of or resulting from the Southern Company Claims.
For purposes hereof, “Southern Company Claims”
means any liability of Company associated with the following proofs
of claim filed by The Southern Company in the Bankruptcy Case:  proofs of claim numbered 6398, 6442, 8159,
and 8313. Seller’s obligations under this Section 11.02(e) shall not be subject
to the limitations contained in Sections 11.03(b)(i), 11.03(b)(ii), 11.03(c) or
any other provision of this Agreement.

(f)            Each
Indemnifying Party shall have the right to audit, inspect and copy the books
and records of the Indemnitees with respect to a claim for indemnification
under this Section 11.02.  The
Indemnitees shall cooperate in providing such Indemnifying Party  with reasonable access to its books and
records during normal business hours for this purpose.  If the results of audit or inspection show an
overpayment to any Indemnitee upon any such claim, then such Indemnifying Party
shall repay the amount of such overpayment within fifteen (15) days of the
completion of such audit or inspection.

11.03   Limitations on
Indemnification.

(a)           The
remedies provided in this Article XI shall be exclusive and shall preclude
assertion by either Party of any other rights or the seeking of any and all
other remedies against the other for claims based on this Agreement.

(b)           Any
claims for indemnity under this Agreement shall be subject to the following
limitations and adjustments:  (i) the
provisions of Section 11.02 shall be effective only when the aggregate
amount of all Damages for which a Party may be liable under this Article XI
exceeds two percent (2%) of the Purchase Price, in which case such Party shall
be liable for only such amounts as exceed two percent (2%) of Purchase Price;
(ii) the amount of any claim by either Party for indemnification shall be
subject to adjustment to reflect (A) any actual direct or indirect income Tax
benefit (taking into account the amount of any indemnification actually
received) resulting therefrom to the Indemnitee, (B) any insurance coverage
with respect thereto and (C) any amounts recoverable from third parties based
on claims the Indemnitee has against such third parties which would reduce the
damages that could otherwise be sustained; (iii) subject to the provisions of
Section 11.03(c) hereof, in no event shall a Party be liable, in the aggregate,
for indemnification hereunder in an amount greater than twenty percent (20%) of
Purchase Price; and (iv) neither Party hereto shall be liable to the other
Party for special, incidental, consequential or punitive damages.

(c)           Seller’s liability
under Section 11.03(b) shall be limited to an amount which, when aggregated
with the Purchase Price reductions under Section 2.03(d) and (e) hereof, does
not exceed the Purchase Price.

11.04   Purchaser’s Release of
Seller.  EXCEPT FOR THE RIGHTS OF  PURCHASER SET FORTH IN THIS ARTICLE XI,
COMMENCING ON THE CLOSING DATE, PURCHASER SHALL RELEASE, HOLD HARMLESS AND
FOREVER DISCHARGE SELLER FROM ANY AND ALL CLAIMS, DEMANDS, LIABILITIES
(INCLUDING FINES AND CIVIL PENALTIES), OR CAUSES OF ACTION AT LAW OR IN EQUITY
(INCLUDING ANY ACTIONS ARISING UNDER ENVIRONMENTAL LAWS), DESTRUCTION, LOSS OR
DAMAGE OF ANY KIND OR CHARACTER, WHETHER KNOWN OR UNKNOWN, VISIBLE OR
INVISIBLE, TO THE PERSON OR 

 42
 

PROPERTY OF PURCHASER RESULTING FROM OR
ARISING OUT OF THE PRESENCE OR RELEASE OF ANY HAZARDOUS SUBSTANCE AT, ON,
UNDER, IN, ABOUT OR FROM COMPANY’S REAL PROPERTY. PURCHASER HEREBY
ACKNOWLEDGES, AGREES, REPRESENTS, AND WARRANTS THAT FACTUAL MATTERS NOW UNKNOWN
TO IT MAY HAVE GIVEN OR MAY HEREAFTER GIVE RISE TO CLAIMS THAT ARE PRESENTLY
UNKNOWN, UNANTICIPATED AND UNSUSPECTED BY EITHER PARTY, AND PURCHASER FURTHER
ACKNOWLEDGES, AGREES, REPRESENTS, AND WARRANTS THAT THIS RELEASE HAS BEEN
NEGOTIATED AND AGREED UPON IN LIGHT OF SUCH UNDERSTANDING AND PURCHASER
NEVERTHELESS HEREBY INTENDS TO RELEASE THE SELLER FROM THE CLAIMS, DEMANDS, AND
LIABILITIES DESCRIBED IN THE FIRST SENTENCE OF THIS SECTION 11.04.

11.05   Mitigation and Limitation on
Claims.  Notwithstanding anything
to the contrary contained in this Agreement:

(a)           The
Indemnitee will take all reasonable steps to mitigate all losses, damages and
the like relating to an Action, including availing itself of any defenses,
limitations, rights of contribution, claims against third Persons and other
rights at law or equity, and will provide such evidence and documentation of
the nature and extent of the Action as may be reasonably requested by the
Indemnifying Party.  The Indemnitee’s
reasonable steps include the reasonable expenditure of money to mitigate or
otherwise reduce or eliminate any loss or expense for which indemnification
would otherwise be due under this Article XI, and the Indemnifying Party
will reimburse the Indemnitee for the Indemnitee’s reasonable expenditures in
undertaking the mitigation.

(b)           The
amount of any indemnity in relation to any Action is limited to the amount of
actual damages sustained by the Indemnitee by reason of such breach or
nonperformance, net of the dollar amount of any insurance proceeds or proceeds
from third parties receivable by the Indemnitee or any of its Affiliates with respect
to such Action.

ARTICLE
XII

TERMINATION
AND REMEDIES

12.01   Rights To Terminate.  This Agreement may, by written notice
given on or prior to the Closing Date, in the manner provided in Section 13.05,
be terminated at any time prior to the Closing Date:

(a)           Seller/Purchaser Termination:

(i)            by
Seller, if there has been a material misrepresentation or a material default or
material breach by Purchaser with respect to any of Purchaser’s representations
and warranties in this Agreement or in any Related Agreement or the due and
timely performance of any of Purchaser’s covenants and agreements contained in
this Agreement or in any Related Agreement, and such misrepresentation, default
or breach is not cured by the earlier  of
the Closing 

 43
 

Date or the
date thirty (30) days after receipt by Purchaser of written notice specifying
particularly such misrepresentation, default or breach;

(ii)           by
Purchaser, if there has been a material misrepresentation or a material default
or breach by Seller with respect to Seller’s representations and warranties in
this Agreement or in any Related Agreement or the due and timely performance
prior to the Closing of any of Seller’s covenants and agreements contained in
this Agreement or in any Related Agreement, and such misrepresentation, default
or breach is not cured by the earlier of the Closing Date or the date thirty
(30) days after receipt by Seller of written notice specifying particularly
such misrepresentation, default or breach;

(iii)          by
Seller, on thirty (30) days prior written notice to Purchaser, if Seller shall
not have received all Purchaser Required Consents by September 1, 2007;

(iv)          by
Purchaser, on thirty (30) days prior written notice to Seller if Purchaser
shall not have received all Seller Required Consents by September 1, 2007;

(v)           by
Purchaser in accordance with Section 7.21(b);

(vi)          by
mutual agreement of Seller and Purchaser;

(vii)         by
Seller or Purchaser if (A) all of the orders referenced in clause (viii) below
shall have become Final Orders and (B) the Closing has not occurred on or
before the earlier of September 1, 2007, or the date which is thirty (30) days
after the date upon which the last of all required Regulatory Approvals has
been received, unless such time has been extended pursuant to Section 7.21(b);

(viii)        by
Seller or Purchaser if any of the Sale Procedures Order, Sale Order, Disclosure
Statement Order and Confirmation Order has not been entered or become final in
a sequence such that each of the same shall be a Final Order at or prior to the
Closing Date by September 1, 2007; or

(ix)           by
Seller or Purchaser if at the time the written notice of termination is given,
there is in effect a preliminary or permanent injunction enjoining consummation
of the transactions contemplated hereby.

(b)           Bankruptcy Court Termination.  This Agreement shall automatically terminate
at any time prior to the Closing upon entry by the Bankruptcy Court of the Sale
Order that (i) approves and consummates a Third Party Sale; and
(ii) becomes a Final Order.  This
Agreement also shall automatically terminate at any time prior to the Closing
if the Bankruptcy Court should not approve the transactions contemplated by
this Agreement.

12.02   Specific Performance.  Any Party desiring to proceed with the
Closing despite any failure or refusal of the other Party hereto to so proceed
shall have the right to pursue the remedy of specific performance or to seek an
injunction without the requirement of posting any bond.

 44
 

12.03   Purchaser’s Remedies.  If this Agreement is terminated by Purchaser
pursuant to Section 12.01(a)(ii) because of Seller’s uncured
default hereunder then, subject to the next sentence, Purchaser shall be
entitled to recover the Down Payment and, subject to Bankruptcy Court approval,
damages equal to Purchaser’s actual, reasonable out-of-pocket costs and
expenses incurred in connection with the transactions contemplated by this
Agreement and the costs of Purchaser’s claim against Seller, including but not
limited to, reasonable legal expenses, plus costs and expenses associated with
Purchaser’s Due Diligence Inspection and Reviews, provided that Purchaser’s
total recovery in excess of the Down Payment shall not exceed One Hundred
Thousand Dollars ($100,000.00).  Prior to
Purchaser’s exercise of its remedy pursuant to the previous sentence, Purchaser
may seek specific performance of Seller’s obligations which (if awarded) will
be Purchaser’s sole remedy for such default hereunder.  Purchaser
will have no other remedies, whether at law or in equity, for any such default
by Seller hereunder (provided Purchaser will still be entitled to the benefit
of any obligations, covenants and indemnities hereunder and under the
Confidentiality Agreement and any other Related Agreements which expressly
survive the termination of this Agreement with respect to any other defaults
thereunder by Seller).  Purchaser may
only avail itself of the remedies in this Section 12.03 if, at the
time of Seller’s default, Seller would not be permitted (whether at such time
or as of the expiration of any applicable cure period) to terminate this
Agreement pursuant to Section 12.01(a)(i).

12.04   Seller’s Remedies.  If the purchase of the Membership Interest is
not consummated in accordance with this Agreement by the date set forth in Section 12.01(a)(vii)
because of Purchaser’s default hereunder, or if Seller terminates this
Agreement in accordance with Section 12.01(a)(i), then Seller will
have the right to pursue the remedy of specific performance under Section 12.02
herein which, if awarded, will be Seller’s sole remedy for such default.  If Seller does not seek the remedy of
specific performance for such default, then Seller will, as its sole remedy,
have the right to retain the Down Payment as liquidated damages,  and no other remedy, whether at law or in equity,
for the failure to close by Purchaser hereunder; provided, however, that Seller
will still be entitled to receive any costs and expenses due to Seller pursuant
to this Agreement and the benefit of any obligations, covenants and indemnities
hereunder and under the Confidentiality Agreement by Purchaser which expressly
survive the termination of this Agreement with respect to any other defaults
thereunder by Purchaser.  Seller may only
avail itself of the remedy in this Section 12.04 if, at the time of
Purchaser’s default, Seller is not in material default hereunder.  THE PARTIES
EXPRESSLY AGREE AND ACKNOWLEDGE THAT SELLER’S ACTUAL DAMAGES WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICABLE TO ASCERTAIN AND THAT THE DOWN PAYMENT REPRESENTS
THE PARTIES’ REASONABLE ESTIMATE OF SUCH DAMAGES.  SUCH LIQUIDATED DAMAGES ARE NOT INTENDED AS A
FORFEITURE OR PENALTY.

12.05   Effect of Termination.  Except as set forth in Section 12.03
above, any termination of this Agreement by any Party shall have the effect of
causing this Agreement to thereupon become void and of no further force or
effect whatsoever, and thereupon no Party will have any rights, duties,
liabilities or obligations of any kind or nature whatsoever against any other
Party hereto based upon either this Agreement or the transactions contemplated
hereby, except in each case the obligations of each Party for its own expenses
incurred in connection with the transactions contemplated by this Agreement as
provided in Section 13.04 and the obligations of each party with respect
to confidentiality set forth in Section 7.02 hereof and the
Confidentiality Agreement.

 45
 

ARTICLE
XIII

MISCELLANEOUS
PROVISIONS

13.01   Commissions and Finders’
Fees.  Each of the Parties
represents that the negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Seller directly with
Purchaser in such manner as not to give rise to any claims against any of the
Parties hereto for a brokerage commission, finders’ fee or other like
payment.  Insofar as any such claims are
made which are alleged to be based on an agreement or arrangements made by, or
on behalf of, a Party, such Party agrees to indemnify and hold the other Party
harmless from and against all liability, loss, cost, charge or expense, including
but not limited to, reasonable counsel fees, arising therefrom.

13.02   Amendment and Modification.  This Agreement may only be amended, modified
and supplemented by written agreement executed by Purchaser and Seller and, if
the Bankruptcy Court has already approved this Agreement, with the approval of
the Bankruptcy Court.

13.03   Waiver of Compliance.  Any failure by Seller, on the one hand, or
Purchaser, on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be expressly waived in writing by Purchaser
or Seller, respectively, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.

13.04   Expenses.  Each of the Parties hereto will pay its own
expenses incurred by it or on its behalf in connection with this Agreement or
any transactions contemplated by this Agreement, whether or not such
transactions shall be consummated.  In addition, Purchaser shall bear
the expense of any transfer Tax or sales Tax applicable to the transactions
contemplated hereby.

13.05   Notices.  All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand, by recognized overnight
courier service or facsimile transmission:

(a)           If to
Seller, to:

Mirant
New York, Inc.

c/o
Mirant Corporation

1155
Perimeter Center West

Atlanta,
GA 30338-5416

Attention:
Jeffrey Perry, President

Fax:
(678) 579-3824

Email: 
jeffrey.perry@mirant.com

With a copy to:

Mirant
New York, Inc.

c/o
Mirant Corporation

1155
Perimeter Center West

Atlanta, GA 30338-5416

 46
 

Attention:
Sonnet Edmonds, Vice President

and
Assistant General Counsel

Fax:
(678) 579-5890

Email:

And

Hiscock & Barclay,
LLP

One Park Place

300 South State Street

Syracuse, NY 13202

Attention: George S.
Deptula, Esq.

Fax: (315) 425-8545

Email: gdeptula@hiscockbarclay.com

or to such other Person
or address as Seller shall furnish to Purchaser in writing.

(b)           If to
Purchaser, to:

Alliance
Energy Renewables, LLC

6941
Kassonta Drive

Jamesville,
NY  13078

Attn:
Samuel G. Nappi, President

Fax:
315-682-7089

Email:
snappi@allianceenergy.us

With a copy to:

Troutman Sanders LLP

405 Lexington Avenue

New York, NY 10174

Attention: Howard L. Margulis, Esq.

Fax: 212-704-8330

Email:

or to such other Person
or address as Purchaser shall furnish to Seller in writing.

13.06   Assignment.  This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any
Party hereto without the prior written consent of the other Party; provided,
however, that Purchaser may assign this Agreement and its rights, interests and
obligations hereunder to any of Purchaser’s Affiliates.  Any such assignment shall not release
Purchaser from its obligations hereunder.

13.07   Governing Law.  The validity, interpretation and effect of
this Agreement are governed by and will be construed in accordance with the
laws of the State of New York applicable to contracts made and performed in
such state and without regard to conflicts of laws 

 47
 

rules,
provided that, while the Bankruptcy Case is pending, as to any claim or dispute
involving Seller or its Affiliates, or arising out of or relating to this
Agreement or any Related Agreement (a “Dispute”),
this Agreement shall be governed by and construed and enforced in accordance
with the Bankruptcy Code and, to the extent not inconsistent with the
Bankruptcy Code, the laws of the State of New York applicable to contracts made
and performed in such state and without regard to conflicts of laws rules.

13.08   Jurisdiction of Bankruptcy
Court.  The Parties acknowledge
and agree that the Bankruptcy Court shall have exclusive jurisdiction over this
Agreement and that, while the Bankruptcy Case is pending, any Dispute shall be
properly brought only before the Bankruptcy Court. Notwithstanding the
provisions of this Section 13.08, if and to the extent (i) the
Bankruptcy Court refuses to accept jurisdiction over any Dispute, or
(ii) the Bankruptcy Case is dismissed or closed and does not retain
jurisdiction over a Dispute, the Parties consent to binding arbitration in
accordance with the provisions of Section 13.09.

13.09   Effect of
Closing Over Known Unsatisfied Conditions or Breached Representations,
Warranties or Covenants.  If
Seller or Purchaser elects to proceed with the Closing knowing of any failure
to be satisfied of any condition in its favor or knowing of the breach of any
representation, warranty or covenant by the other Party, the condition that is
known to be unsatisfied or the representation, warranty or covenant which is
known to be breached at the Closing Date will be deemed waived by such Party,
and such Party will be deemed to fully release and forever discharge the other
Party on account of any and all claims, demands or charges, known or unknown,
with respect to the same.

13.10   Dispute Resolution.

(a)           Except as otherwise provided in this Agreement, in the event of any
Dispute, the Party wishing to declare a Dispute shall deliver to the other
party a written notice identifying the disputed issue.

(b)           Either Party may give the other Party written notice of any Dispute
not resolved in the normal course of business. 
Executives of both Parties shall meet at a mutually acceptable time and
place within ten (10) Business Days after delivery of such notice and
thereafter as often as they reasonably deem necessary, to exchange relevant
information and to attempt to resolve the Dispute.  In such meetings and exchanges, a party shall
have the right to designate as confidential any information that such Party
offers.  No confidential information
exchanged in such meetings for the purpose of resolving a Dispute may be used
by a Party in litigation against the other Party; provided that, if the same
information is obtained by the Party seeking to use it through other lawful
means, such as discovery under Section 13.10(c)(iv) below, this provision shall
not bar the use of such information that is so obtained.  If the matter has not been resolved in the
aforementioned manner within thirty (30) days of the disputing Party’s notice
having been delivered, or if the Parties fail to meet within ten (10) Business
Days as required above, either Party may initiate binding arbitration in New
York, New York, as hereafter provided in clause (c) below.

(c)           The Parties agree that all disputes,
controversies or claims that may arise out of the transactions contemplated by
this Agreement, or the breach, termination or invalidity thereof, 

 48
 

including any requests for
emergency or equitable relief and/or specific performance, shall be submitted
to, and determined by, binding arbitration in accordance with the following
procedures:

(i)            Either
Party may submit a dispute, controversy or claim to arbitration by giving the
other Party written notice to such effect, which notice shall describe, in
reasonable detail, the facts and legal grounds forming the basis for the filing
Party’s request for relief.  The
arbitration shall be held before one (1) neutral arbitrator in New York, New
York and a decision as to any matters submitted thereto shall be made by such
arbitrator.

(ii)           Within
thirty (30) days after the other Party’s receipt of such demand, the Parties
shall make a good faith effort to select such arbitrator.  In the event of a failure to make such selection,
and if the Parties cannot resolve their disagreements as to the same within
thirty (30) days, such arbitrator shall be selected by the American Arbitration
Association (“AAA”).  In any event, the
arbitrator shall have a background in, and knowledge of, transactions in the
energy industry and shall otherwise be an appropriate person based on the
nature of the dispute. If a person with experience in such matters is not
available, the arbitrator shall be chosen from the retired federal judges pool
maintained by AAA.

(iii)          The
arbitration shall be governed by the Commercial Arbitration Rules of the AAA.

(iv)          All
discovery shall be guided by the Federal Rules of Civil Procedure.  All issues concerning discovery upon which
the parties cannot agree shall be submitted to the arbitrator for
determination.

(v)           In
rendering an award, the arbitrator shall determine the rights and obligations
of the parties according to the substantive and procedural laws of the State of
New York.

(vi)          The
decision of, and award rendered by, the arbitrator, shall be determined no more
than sixty (60) days after the submission of the case to the arbitrator and
shall be final and binding on the parties and shall not be subject to
appeal.  Judgment on the award may be
entered in and enforced by any court of competent jurisdiction.

(vii)         Each Party shall bear its
own costs and expenses (including filing fees) with respect to the arbitration,
including one-half of the fees and expenses of the arbitrator.

13.11   Delays or Omissions.  Except as expressly provided herein, no delay
or omission to exercise any right, power or remedy accruing to any Party, upon
any breach or default of the other Party to this Agreement, shall impair any
such right, power or remedy of such Party, nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. 
Except as 

 49
 

provided in
Section 13.09, any waiver, permit, consent or approval of any kind or character
on the part of any party of any breach or default under this Agreement, or any
waiver on the part of any Party of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. 
All remedies, either under this agreement or by law or otherwise
afforded to any Party, shall be cumulative and not alternative.

13.12   Conflicts.  In the event of any conflicts or
inconsistencies between the terms of this Agreement and the terms of any of the
Related Agreements, the terms of this Agreement will govern and prevail.

13.13   Counterparts.  This Agreement may be executed simultaneously
in two (2) or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.  The exchange of copies of this Agreement or
other documents or agreements to be delivered pursuant to this Agreement,
including executed signature pages, by electronic transmission will constitute
effective execution and delivery of this Agreement or any such agreement or
document for all purposes. Signatures transmitted electronically will
constitute original signatures for all purposes.

13.14   Effectiveness; Binding
Effect.  This Agreement shall
become effective as to each Party hereto when and only when this Agreement
shall have been executed by such Party; provided, however, that this
Agreement shall be null and void ab  initio as to each Party
hereto in the event that both Parties hereto shall not have executed this
Agreement within five (5) days of the date upon which any Party hereto shall
have executed this Agreement.

13.15   Headings.  The headings of the Sections and Articles of
this Agreement are inserted for convenience only and shall not constitute a
part hereof.

13.16   Entire Agreement.  This Agreement, including the Schedules and
Exhibits hereto, sets forth the entire agreement and understanding of the
Parties hereto in respect of the subject matter contained herein, and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, express
or implied, by any officer, employee or representative of any party hereto,
except the Confidentiality Agreement  and
any other Related Agreements, which remain in full force and effect.

13.17   No
Recourse Against Others. 
This Agreement is solely and exclusively between Purchaser and Seller
and any obligations of Seller created herein shall be the obligations solely of
Seller. The directors, officers, employees, representatives and Affiliates of
Seller or the Company shall have no liability for any obligations of Seller
under this Agreement or for any Damages based on, in respect of or by reason of
this Agreement or Seller’s obligations hereunder or any breach thereof.  Purchaser, for itself and its affiliates
(including, post-Closing, the Company), hereby waives, remises and releases
each director, officer, employee, representative and affiliate of Seller and
the Company from all such obligations and Damages.

13.18      Third Parties.  Except as specifically set forth or referred
to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or entity other than the Parties
hereto and their successors or assigns, any rights or remedies under or by
reason of this Agreement.

 50
 

13.19   Mutual Agreement.   This Agreement embodies the arm’s length
negotiation and mutual agreement between the Parties hereto and shall not be
construed against any Party as having been drafted by it.

13.20   Severability.  If in any jurisdiction, any provision of this
Agreement or its application to any Party or circumstance is restricted,
prohibited or unenforceable, such provision shall, as to such jurisdiction, be
ineffective only to the extent of such restriction, prohibition or
unenforceability without invalidating the remaining provisions hereof and
without affecting the validity or enforceability of such provision in any other
jurisdiction or its application to the other Party or any other
circumstances.  In addition, if any one
or more of the provisions contained in this Agreement shall for any reason in
any jurisdiction be held to be excessively broad as to time, duration,
geographical scope, activity or subject, it shall be construed, by limiting and
reducing it, so as to be enforceable to the extent compatible with the
applicable law of such jurisdiction as it shall then appear.

[The remainder of this page is intentionally left blank]

 51
 

IN WITNESS
WHEREOF, the Parties hereto have executed this Agreement, each by its duly
authorized officer, all as of the day and year first above written.

	
  

  	
  ALLIANCE ENERGY RENEWABLES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Samuel G. Nappi, Chairman and 

  President of Alliance Energy, Inc., 

  the Sole and Managing Member of 

  Alliance Energy Renewables, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MIRANT NEW YORK, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Jeffrey R. Perry, President

  

 

 52

SCHEDULES

ALL CAPITALIZED
TERMS USED IN THESE DISCLOSURE SCHEDULES HAVE THE MEANINGS SET FORTH IN THE
MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT (THE “AGREEMENT”).  THE DISCLOSURES MADE IN THESE DISCLOSURE
SCHEDULES RELATE TO ANY AND ALL OF THE REPRESENTATIONS AND WARRANTIES MADE BY
SELLER IN THIS AGREEMENT.  SCHEDULE
REFERENCES IN THESE DISCLOSURE SCHEDULES ARE FOR CONVENIENCE ONLY, AND THE
DISCLOSURE OF ANY FACT OR ITEM IN ANY DISCLOSURE SCHEDULE REFERENCED BY A
PARTICULAR SECTION OF THE AGREEMENT SHALL BE DEEMED TO HAVE BEEN DISCLOSED WITH
RESPECT TO EVERY OTHER SECTION OF THE AGREEMENT.

MATTERS REFLECTED
IN THESE DISCLOSURE SCHEDULES ARE NOT NECESSARILY LIMITED TO MATTERS REQUIRED
BY THE AGREEMENT TO BE REFLECTED IN THE DISCLOSURE SCHEDULES.  SUCH ADDITIONAL MATTERS ARE SET FORTH FOR
INFORMATIONAL PURPOSES AND DO NOT NECESSARILY INCLUDE OTHER MATTERS OF A
SIMILAR NATURE.  IN NO EVENT SHALL THE
INCLUSION OF ANY SUCH MATTER IN THESE DISCLOSURE SCHEDULES BE DEEMED OR
INTERPRETED TO BROADEN SELLER’S REPRESENTATIONS, WARRANTIES, COVENANTS OR
AGREEMENTS CONTAINED IN THE AGREEMENT. THE INCLUSION OF AN ITEM IN THE
DISCLOSURE SCHEDULES SHALL NOT BE DEEMED AN ADMISSION THAT SUCH ITEM REPRESENTS
A MATERIAL EXCEPTION OR FACT, EVENT OR CIRCUMSTANCE OR THAT SUCH ITEM IS
REASONABLY LIKELY TO RESULT IN A MATERIAL ADVERSE EFFECT.  CAPITALIZED TERMS USED IN THESE DISCLOSURE
SCHEDULES AND NOT DEFINED HEREIN SHALL HAVE THE MEANING SET FORTH IN THE
AGREEMENT.

Schedule 1.1

Seller’s Representatives

Amin M. Lakhani, Project Director,
Sale of NY-Gen

Robert Dowd, Project
Director, Swinging Bridge Remediation

Kevin McLeod, Plant Manager, NY-Gen

Schedule
1.2

Purchaser’s
Representatives

Samuel J. Nappi, Chairman
and President, Alliance Energy, Inc.

Joseph
Klimaszewski, Regional Director, Alliance Energy, Inc.

Schedule
1.41

Form of
Escrow Agreement

THIS
ESCROW AGREEMENT, dated as of                                ,
2007, by and between MIRANT NEW YORK, INC., a Delaware corporation having its
principal place of business at 1155 Perimeter Center West, Atlanta, GA 30338 (“Seller”), ALLIANCE ENERGY RENEWABLES, LLC, a New York
limited liability company having its principal place of business at 6941
Kassonta Drive, Jamesville, NY 13078 (“Purchaser”),
and HISCOCK & BARCLAY, LLP (“Escrow Agent”).
Each of Seller, Purchaser and Escrow Agent shall hereafter be referred to as a “Party”, together, the “Parties”.

WHEREAS, Purchaser and Seller have entered into that
certain Membership Interest Purchase and Sale Agreement dated as of January
___, 2007 (the “Agreement”), which provides for
the sale by Seller to Purchaser of one hundred percent (100%) of a Membership
Interest held by Seller in Mirant NY-Gen, LLC. 
Capitalized terms used herein and not otherwise defined having the
meanings assigned to them in the Agreement, and

WHEREAS, pursuant to Section 2.02 of the Agreement,
Three Hundred Thousand Dollars ($300,000.00), comprising ten percent (10%) of
the Purchase Price, is to be paid by Purchaser to Escrow Agent as a Down
Payment and held in escrow by Escrow Agent in accordance with the terms hereof.

Accordingly,
the Parties hereby agree as follows:

1.             Appointment and
Acceptance of Escrow Agent.

Seller
appoints Hiscock & Barclay, LLP as Escrow Agent, and Hiscock & Barclay,
LLP accepts such appointment and agrees to hold and dispose of the Escrow
Amount (as defined in Section 2 below) in accordance with the terms of this
Escrow Agreement.  Purchaser consents to
such appointment with knowledge that Escrow Agent is acting as counsel for
Seller in connection with the transactions described in the Agreement.  The duties and obligations of Escrow Agent
are those specifically provided in this Escrow Agreement and no other, and
Escrow Agent shall have no liability under, or duty to inquire into, the terms
and provisions of any other agreement or instrument.

2.             Funds to be
Received by Escrow Agent.

The
Escrow Agent hereby accepts the following funds from Purchaser on behalf of
Seller:

Three Hundred Thousand Dollars ($300,000.00)

Upon
being transferred to Escrow Agent, such funds shall be deposited in an interest
bearing account in the name of Escrow Agent, as escrow agent, under the
Employer 

 1
 

Identification
Number of Purchaser.  Such funds,
together with all interest accrued thereon, shall be referred to herein as the “Escrow Amount”.

3.             Release of Escrow
Amount.

The
Escrow Agent shall deliver the Escrow Amount as follows:

(a)           Under Section 7.15(g)
of the Agreement, Purchaser has acknowledged that the sale of the Membership
Interest is subject to Bankruptcy Court approval and to higher and better
counteroffers and that the Membership Interest will be sold to the highest and
best bidder at an Auction, as therein described.  Subject to the provisions contained in the
final sentence of this clause (a), upon receipt of (i) written certification
from Seller indicating that the Bankruptcy Court has entered a Sale Order
authorizing a sale of the Membership Interest to such Prevailing Bidder in the
circumstances described in Section 7.15(g) or, where Purchaser has been
a back-up bidder, that the sale to the Prevailing Bidder has closed, together
with (ii) a written payment instruction (a “Payment
Instruction”) signed by Seller, Escrow Agent shall return the Escrow
Amount to Purchaser no later than the third Business Day after Escrow Agent’s
receipt of said written certification and accompanying Payment Instruction. A
copy of such written certification and Payment Instruction shall be delivered
by Seller to Purchaser contemporaneously with delivery of the same to Escrow
Agent. If Purchaser should exercise its right to terminate this Agreement as
further described in clauses (b), (d) and (e) hereof and such right is
exercised prior to the closing of the sale to the Prevailing Bidder, as
referenced herein, then Escrow Agent shall return the Escrow Amount to Purchaser
upon receipt from Purchaser of the written certifications and accompanying
Payment Instructions referenced in such clauses.

(b)           If the Agreement is
terminated by Purchaser because of a material misrepresentation by Seller or a
material default or breach by Seller with respect to Seller’s representations
and warranties in the Agreement or any Related Agreement or the failure by
Seller to perform in a due and timely manner prior to the Closing of any of
Seller’s covenants and agreements contained in the Agreement or any Related
Agreement, which misrepresentation, default or breach is not cured by the
earlier of the Closing Date or the date thirty (30) days after receipt by
Seller of written notice describing such misrepresentation, default or breach then,
upon receipt of (i) written certification from Purchaser stating (A) the basis
for the termination and describing the facts underlying same, and (B) that, to
the best of Purchaser’s Knowledge, 
Seller is not entitled to terminate the Agreement due to any
misrepresentation, default or breach by Purchaser, as described in Section
12.01(a)(i) of the Agreement, together with (ii) a Payment Instruction signed
by Purchaser, Escrow Agent shall return the Escrow Amount to Purchaser no later
than the third Business Day after Escrow Agent’s receipt of said written
certification and accompanying Payment Instruction. A copy of such written
certification and Payment Instruction shall be delivered by Purchaser to Seller
contemporaneously with delivery of the same to Escrow Agent.

(c)           If the Agreement is
terminated by Seller because of a material misrepresentation by Purchaser or a
material default or breach by Purchaser with respect to Purchaser’s
representations and warranties in the Agreement or any Related Agreement or the
failure by Purchaser to perform in a due and timely manner prior to the Closing
of any of 

 2
 

Purchaser’s
covenants and agreements contained in the Agreement or any Related Agreement,
which misrepresentation, default or breach is not cured by the earlier of the
Closing Date or the date thirty (30) days after receipt by Purchaser of written
notice describing such misrepresentation, default or breach then, upon receipt
of (i) written certification from Seller stating (A) the basis for the
termination and describing the facts underlying same, and (B) that, to the best
of Seller’s Knowledge,  Purchaser is not
entitled to terminate the Agreement due to any material default by Seller,
together with (ii) a Payment Instruction signed by Seller, Escrow Agent shall
release the Escrow Amount to Seller no later than the third Business Day after
Escrow Agent’s receipt of said written certification and accompanying Payment
Instruction. A copy of such written certification and Payment Instruction shall
be delivered by Seller to Purchaser contemporaneously with delivery of the same
to Escrow Agent.

(d)           If the Agreement is
terminated by Purchaser because Seller has elected not to repair or replace
damage to the Station after a Major Loss then, no later than the third Business
Day after Escrow Agent’s receipt of written certification of such event signed
by Purchaser, together with a Payment Instruction signed by Purchaser, Escrow
Agent shall return the Escrow Amount to Purchaser. A copy of such written
certification and Payment Instruction shall be delivered by Purchaser to Seller
contemporaneously with delivery of the same to Escrow Agent.

(e)           If the Agreement is
terminated by either Purchaser or Seller because: (i) all of the orders
referenced in clause (ii) below have become Final Orders but the Closing has
not occurred on or before the earlier of September 1, 2007, or  the date which is thirty (30) days after the
date upon which the last of all regulatory approvals has been received (which
time has not been extended by agreement between the Parties), or (ii) any of
the Sale Procedures Order, Sale Order, Disclosure Statement Order and
Confirmation Order has not been entered or become final in a sequence such that
each of the same shall be a Final Order at or prior to the Closing Date, as the
same may have been extended as described in (i) aforementioned, or (iii) there
is in effect a preliminary or permanent injunction enjoining consummation of
the transactions contemplated under the Agreement at the time the written notice
of termination is given then, no later than the third Business Day after Escrow
Agent’s receipt of written certification from either Purchaser or Seller, as
the case may be, of any such event, together with a Payment Instruction signed
by the certifying Party, Escrow Agent shall release the Escrow Amount to the
other Party. A copy of such written certification and Payment Instruction shall
be delivered by the certifying Party to the other Party contemporaneously with
delivery of the same to Escrow Agent.

(f)            If, prior to making
payment in accordance with this Escrow Agreement, Escrow Agent receives an
objection to payment from either Purchaser or Seller, as the case may be,
Escrow Agent shall not release any of the Escrow Amount pending receipt of
either (i) a Payment Instruction signed by both Purchaser and Seller (a “Joint Payment Instruction”) specifying the
agreement of the Parties as to the action to be taken by Escrow Agent in
respect of payment of the entire Escrow Amount or (ii) a notice from either
Purchaser or Seller stating that the dispute over payment of the Escrow Amount
has been submitted to the American
Arbitration Association for resolution through the dispute resolution procedure
set forth in Section 13.10(c) of the Agreement, and that a final decision of
the arbitration in such proceeding has been rendered (the “Arbitration Decision”), a copy of which is
attached to such notice.  No later
than the third Business Day after Escrow Agent’s receipt of such Payment
Instruction or Arbitration Decision, as applicable, Escrow Agent shall release
the Escrow Amount in accordance therewith. A copy of the notice and 

 3
 

Arbitration
Decision referenced in clause (ii) aforementioned shall be delivered to the
other Party by the Party issuing such notice contemporaneously with delivery of
the same to Escrow Agent.

(g)           If
at any time, Escrow Agent shall receive a Joint Payment Instruction (including
but not limited to, in the circumstances described in clause (f) above) then
Escrow Agent shall release the Escrow Amount in accordance with such Joint
Payment Instruction no later than the third Business Day after Escrow Agent’s
receipt of such Joint Payment Instruction.

(h)           If
Escrow Agent receives written certification from Seller that the Closing under
the Agreement has occurred, together with a Payment Instruction signed by
Seller, Escrow Agent shall release the Escrow Amount to Seller no later than
the third Business Day after Escrow Agent’s receipt of such written
certification and Payment Instruction. A copy of such written certification and
Payment Instruction shall be delivered by Seller to Purchaser contemporaneously
with delivery of the same to Escrow Agent.

Upon
any delivery of the Escrow Amount as provided in this Section 3, this Escrow
Agreement shall terminate, and Escrow Agent shall be released and discharged
from any further responsibility or obligation and from all liability under this
Escrow Agreement.

4.             Concerning Escrow
Agent.

(a)           Escrow Agent shall not
have any liability to any Party or to any third party arising out of its
services as Escrow Agent under this Escrow Agreement, except for damages
directly resulting from Escrow Agent’s gross negligence or willful misconduct.

(b)           Escrow Agent may
consult with, and obtain advice from legal counsel in the event of any dispute
or question as to the construction of any of the provisions hereof or its
duties hereunder, and it shall incur no liability and shall be fully protected
in acting in good faith in accordance with the advice of such counsel.

(c)           Escrow Agent shall not
be bound by any modification of this Escrow Agreement unless it shall have
specifically consented thereto in writing.

(d)           Seller shall indemnify
Escrow Agent and hold it harmless against any loss, liability, damage or
expense (including reasonable attorneys’ fees) or any tax, additions to tax,
interest and penalties (including for failing to file proper tax returns or
information reporting returns) that Escrow Agent may incur as a result of
acting as escrow agent under this Escrow Agreement, except for any loss,
liability, damage or expense arising from Escrow Agent’s own gross negligence
or willful misconduct.  For this purpose,
if Escrow Agent is an attorney or firm of attorneys, the term “attorneys’ fees”
means fees payable to any independent counsel retained by Escrow Agent in
connection with its services under this Escrow Agreement.

(e)           Escrow Agent shall be
entitled to rely upon any judgment, notice, instrument or other writing
delivered to it under this Escrow Agreement without being required to determine
the authenticity of, or the correctness of any fact stated in, that
writing.  Escrow Agent may act in
reliance upon any instrument or signature believed by it to be genuine and may
assume that any 

 4
 

person purporting
to give any notice or receipt of advice or make any statement or execute any
document in connection with this Escrow Agreement has been duly authorized to
do so.

(f)            All of Escrow Agent’s
rights of indemnification provided for in this Escrow Agreement shall survive
the resignation of Escrow Agent, its replacement by a successor Escrow Agent,
its delivery of the Escrow Amount in accordance with this Escrow Agreement, the
termination of this Escrow Agreement and the escrow, and any other event that
occurs after this date.

(g)           Escrow Agent shall have
no responsibility with respect to the sufficiency of the arrangements
contemplated by this Escrow Agreement to accomplish the intentions of the
Parties.

5.             Representations.

Each
of the Parties hereto represents and warrants to the other Parties hereto that
it has full power and authority to enter into and perform this Escrow
Agreement; that the execution and delivery of this Escrow Agreement by it was
duly authorized by all necessary corporate or other action, as applicable; and that
this Escrow Agreement is enforceable against it in accordance with its terms.

6.             Resignation;
Successor Escrow Agent.

Escrow
Agent (and any successor escrow agent) may at any time resign as such upon
fifteen (15) days’ prior written notice to Purchaser and Seller.  Upon receipt of a notice of resignation,
Seller shall select a successor escrow agent within twenty (20) days, but if
within that twenty-day period Escrow Agent has not received a notice signed by
Seller appointing a successor escrow agent and setting forth its name and
address, Escrow Agent may (but shall not be obligated to) select on behalf of
Seller a successor escrow agent.  Seller
shall be solely responsible for the fees and charges of Escrow Agent and any
successor escrow agent.  A successor
escrow agent selected by the resigning Escrow Agent may become Escrow Agent by
confirming in writing its acceptance of the position.  Seller shall sign such other documents as the
successor escrow agent reasonably requests in connection with its appointment.
Escrow Agent shall deliver the Escrow Amount then held by it to the successor
escrow agent selected pursuant to this provision and, upon such delivery, the
successor escrow agent shall become Escrow Agent for all purposes under this
Escrow Agreement and shall have all of the rights and obligations of Escrow
Agent under this Escrow Agreement, and the resigning Escrow Agent shall have no
further responsibilities or obligations and shall be released from all
liability under this Escrow Agreement. 
Notwithstanding the foregoing, if no successor escrow agent has been
designated within the twenty (20) day period referred to above, (a) Escrow
Agent shall have the right to deposit or cause to be deposited the Escrow
Amount with a court of competent jurisdiction, and the parties shall be
required to accept a successor agent appointed by such court and; (b) all
obligations of Escrow Agent hereunder shall thereupon cease and terminate.

 5
 

7.             Notices.

All notices, demands,
instructions, objections or other communications under this Escrow Agreement
shall be in writing and shall be deemed given when sent by United States
certified mail, return receipt requested, or by nationally recognized overnight
courier service (such as FedEx) to the respective Parties at the following
addresses (or at such other address as a Party may specify by notice given in
accordance with this Section 7):

If
to Seller:

Mirant
New York, Inc.

c/o
Mirant Corporation

1155
Perimeter Center West

Atlanta,
GA 30338-5416

Attention:
Jeffrey Perry, President

Fax:
(678) 579-3824

Email: jeffrey.perry@mirant.com

With a copy to:

Hiscock & Barclay,
LLP

Financial Plaza

221 South Warren Street

Post Office Box 4878

Syracuse, NY  13221-4878

Attention: George S.
Deptula, Esq.

Fax: (315) 425-8545

Email:
gdeptula@hiscockbarclay.com

If
to Purchaser:

Alliance
Energy Renewables, LLC

6941
Kassonta Drive

Jamesville,
NY  13078

Attn:
Samuel G. Nappi, President

Fax:
315-682-7089

Email:
snappi@allianceenergy.us

With
a copy to:

Troutman
Sanders LLP

405 Lexington Avenue

New York, NY 10174

Attention: Howard L. Margulis, Esq.

Fax: 212-704-8330

Email: howard.margulis@troutmansanders.com

 6
 

If
to Escrow Agent:

Hiscock & Barclay,
LLP

Financial Plaza

221 South Warren Street

Post Office Box 4878

Syracuse, NY  13221-4878

Attention: George S.
Deptula, Esq.

Fax: (315) 425-8545

Email:
gdeptula@hiscockbarclay.com

8.             Miscellaneous.

(a)           Escrow Agent shall be
reimbursed solely by Seller upon its request for all reasonable expenses,
disbursements and advances incurred or made by it in accordance with the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its agents and counsel).  Escrow Agent shall receive a fee for its
services hereunder in an amount agreed to in writing by Escrow Agent and
Seller.

(b)           If any provision of
this Escrow Agreement is determined by any court of competent jurisdiction to
be invalid or unenforceable in any jurisdiction, the remaining provisions of
this Escrow Agreement shall not be affected thereby, and the invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable that provision in any other jurisdiction.  It is understood, however, that the parties
intend each provision of this Escrow Agreement to be valid and enforceable and
each of them waives all rights to object to any provision of this Escrow
Agreement.

(c)           This Escrow Agreement
shall be binding upon and inure solely to the benefit of the Parties and their
respective successors and permitted assigns. 
Except as expressly provided in Section 6 hereof, no Party may assign
its rights or obligations under this Escrow Agreement or any interest in the
Escrow Amount without the written consent of the other Parties, and any other
purported assignment shall be void.

(d)           This Escrow Agreement
shall be governed by and construed in accordance with the law of the State of
New York without regard to its conflicts-of-law rules or principles.

(e)           The Parties hereby consent and agree that the Supreme Court of the
State of New York for New York County, and the United States District Court for
the Southern District of New York (Manhattan) each shall have personal
jurisdiction and proper venue with respect to any dispute between the Parties; provided
that that the foregoing consent shall not deprive any Party of the right
in its discretion to voluntarily commence or participate in any other forum
having jurisdiction and venue or deprive any Party of the right to appeal the
decision of any such court to a proper appellate court located elsewhere.   Each
Party will not raise, and each Party hereby absolutely, unconditionally,
irrevocably and expressly waives forever, any objection or defense in any such
dispute to any such jurisdiction as an inconvenient forum.

 7
 

(f)            This Escrow Agreement
constitutes the entire agreement between the Parties with respect to the
subject matter hereof, supersedes all other prior agreements and undertakings,
both written and oral, between the Parties with respect to the subject matter
hereof, and cannot be changed or terminated orally.  Any waiver of any provision of this Escrow
Agreement must be in writing.

(g)           This Escrow Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original and all of which taken together shall constitute one and the
same instrument.

(h)           The provisions of this
Escrow Agreement shall be deemed to be for the exclusive benefit of Seller,
Purchaser and Escrow Agent, and shall not be deemed to be for the benefit of,
or enforceable by, any third party.

(i)            Seller, Purchaser and
Escrow Agent each acknowledge that this Escrow Agreement has been mutually
drafted by the Parties and has been the subject of negotiation among the
Parties.

[The remainder of
this page is intentionally left blank]

 8
 

IN WITNESS WHEREOF, the Parties have executed this Escrow Agreement as
of the date first above written.

	
  

  	
  PURCHASER

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ALLIANCE ENERGY RENEWABLES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Samuel G. Nappi

  
	
   

  	
   

  	
  Chairman and President of Alliance Energy, Inc.,

  
	
   

  	
   

  	
  Sole and Managing Member of Alliance Energy

  
	
   

  	
   

  	
  Renewables, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SELLER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MIRANT NEW YORK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ESCROW AGENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HISCOCK & BARCLAY, LLP

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  George S. Deptula, Esq.

  
						

 

 9

Schedule
1.45

Hydroelectric
and Gas Turbine Generating Stations

1.                                       Hillburn
Gas Turbine Generating Station is the approximately 40  MW natural gas and jet fuel fired electric
generating station located at Six 4th Street, Hillburn, New York.

2.                                       Shoemaker
Gas Turbine Generating Station is the approximately 40 MW natural gas and jet
fuel fired electric generating station located at 71 Poison Avenue,  Middletown, New York.

3.                                       Mongaup
Hydroelectric Generating Station is the approximately 4 MW hydroelectric electric
generating station located at 613 Plank Road, Forestburgh, New York.  (Units 1, 2, and 3 are on outage on the
Effective Date).

4.                                       Rio
Hydroelectric Generating Station is the approximately 10 MW hydroelectric
electric generating station located at 72 Power House Road, Glen Spey, New
York.

5.                                       Swinging
Bridge Hydroelectric Generating Station is the approximately 12 MW
hydroelectric electric generating station located at 458 County Route 43,
Forestburgh, New York.  (Unit 1 is on
outage on the Effective Date).

*All of the above references to capacity are
nameplate.  Actual capacity may differ
depending on operating conditions.

Schedule
2.03(c)

Pre-Approved
Capital Expenditures

None.

Schedule
3.02

Form of
Assignment for Membership Interest Transfer

ASSIGNMENT OF
MEMBERSHIP INTEREST

This
Assignment of Membership Interest (the “Assignment”) is made and entered into
as of                           ,
2007, by and between MIRANT NEW YORK, INC., a Delaware corporation (“Assignor”),
and ALLIANCE ENERGY RENEWABLES, LLC, a New York limited liability company (“Assignee”).

WHEREAS,
Assignor and Assignee are parties to that certain Membership Interest Purchase
and Sale Agreement dated as of January 31, 2007 (the “Purchase Agreement”),
pursuant to which Assignee has agreed to purchase from Assignor and Assignor
has agreed to sell to Assignee the 100% membership interest of Assignor in
Mirant NY-Gen, LLC, a Delaware limited liability company (the “Membership
Interest”); and

NOW,
THEREFORE, for and in consideration of the premises and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt,
adequacy and legal sufficiency of which are hereby acknowledged, the parties do
hereby agree as follows:

1.             Capitalized Terms.  Capitalized terms used but not defined herein
shall have the meanings for such terms that are set forth in the Purchase
Agreement.

2.             Assignment of Membership
Interest.  Effective as of the date
of this Assignment, Assignor hereby assigns, sells, transfers and sets over to
Assignee all of Assignor’s right, title, benefits, privileges and interest in
and to the Membership Interest, including without limitation all rights arising
from said Membership Interest.

3.             Terms of the Purchase Agreement.  This Assignment is made pursuant and subject
to the terms of the Purchase Agreement. Assignor and Assignee agree that such
terms shall not be superseded hereby but shall remain in full force and effect
to the full extent provided therein.  In
the event of any conflict or inconsistency between the terms of the Purchase
Agreement and the terms hereof, the terms of the Purchase Agreement shall
govern.

[The remainder of
this page is intentionally left blank]

 1
 

 

IN WITNESS
WHEREOF, the parties have executed this Assignment as of the date first above
written.

	
  ASSIGNOR

  	
   

  	
  ASSIGNEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MIRANT NEW YORK,
  INC.

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
														

 

 2

Schedule
3.02(d-1)

Form of
Assignment of Insurance Claims

This Assignment of
Insurance Claims (the “Assignment”)
is made and entered into as of                            ,
2007, by and between MIRANT NY-GEN, LLC, a Delaware limited liability company (“Assignor”), and MIRANT NEW YORK, INC., a Delaware
corporation (“Assignee”). Capitalized terms used herein and not
otherwise defined having the meanings assigned to them in that certain
Membership Interest Purchase and Sale Agreement dated as of                                ,
2007 (the “Agreement”), between Assignee and
Alliance Energy Renewables, LLC, a New York limited liability company (“Alliance”).

WHEREAS, pursuant
to the Agreement, Alliance has agreed to purchase from Assignee and Assignee
has agreed to sell to Alliance, one hundred percent (100%) of a Membership Interest in Assignor held by
Assignee; and

WHEREAS, Section
2.03(f) of the Agreement provides that, prior to the Closing Date, Assignor
shall assign to Assignee all rights pertaining to insurance claims filed in
respect of losses, damages, and expenses relating to the occurrences giving
rise to the Consent Order for the Hillburn Facility and the Swinging Bridge
Remediation Plan.

NOW, THEREFORE,
for and in consideration of the premises and the mutual covenants contained
herein, and for other good and valuable consideration, the receipt, adequacy
and legal sufficiency of which are hereby acknowledged, Assignor and Assignee
do hereby agree as follows:

1.             Assignment.  Effective as of the date of this Assignment,
Assignor hereby assigns, sells, and transfers over to Assignee all of Assignor’s
right, title, benefits, privileges and interest in and to insurance claims
filed prior to the date hereof by or on behalf of Assignor based upon incidents
and occurrences giving rise to the Remediation Expenditures at the Hillburn
Facility and the Swinging Bridge Facility including, without limitation, claims
in respect of property, business interruption, and environmental losses,
damages, and expenses (collectively, the “Claims”).  Without limiting the scope of the foregoing
assignment, Claims shall include payments made by insurers with respect to the
Claims and the right to receive such payments.

2.             Covenants.  To the
extent an insurance carrier pays amounts related to the Claims to Assignor,
Assignor shall hold such amounts in trust for Assignee and shall pay Assignee
such amounts within five (5) Business Days of receipt.  If requested by Assignee, Assignor shall
cooperate with Assignee in the prosecution of the Claims, including making
personnel, records, and access to the Assets available as needed by Assignee.

 1
 

3.             Application of Agreement Terms.  This Assignment is made pursuant and subject
to the terms of the Agreement. To the extent this Assignment is silent as to
any provision in the Agreement that is relevant to this Assignment, Assignor
and Assignee agree that each such corresponding provision applies to this
Assignment. In the event of any conflict or inconsistency between the terms of
the Agreement and the terms hereof, the terms of the Agreement shall prevail;
such terms in the Agreement shall not be superseded hereby but shall remain in
full force and effect to the full extent provided therein.

IN WITNESS
WHEREOF, Assignor and Assignee have executed this Assignment as of the date
first above written.

	
  ASSIGNOR

  	
   

  	
   

  	
  ASSIGNEE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  MIRANT NY-GEN,
  LLC

  	
   

  	
   

  	
  MIRANT NEW YORK, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
											

 

 2

Schedule
3.02 (d-2)

Assignment
of Claims Against Third Parties

This Assignment of Claims
Against Third Parties (the “Assignment”)
is made and entered into as of                             ,
2007, by and between MIRANT NY-GEN, LLC, a Delaware limited liability company (“Assignor”), and MIRANT NEW YORK, INC., a Delaware
corporation (“Assignee”). Capitalized terms used herein and not
otherwise defined having the meanings assigned to them in that certain
Membership Interest Purchase and Sale Agreement dated as of January 31, 2007
(the “Agreement”), between Assignee and
Alliance Energy Renewables, LLC, a New York limited liability company (“Alliance”).

WHEREAS, pursuant
to the Agreement, Alliance has agreed to purchase from Assignee and Assignee
has agreed to sell to Alliance, one hundred percent (100%) of a Membership Interest in Assignor held by
Assignee; and

WHEREAS, Section
2.03(f) of the Agreement provides that, prior to the Closing Date, Assignor
shall assign to Assignee: (i) all rights pertaining to pending filed claims
against O&R and ConEd and/or any of their respective Affiliates, and (ii)
all Intercompany Claims.

NOW, THEREFORE,
for and in consideration of the premises and the mutual covenants contained
herein, and for other good and valuable consideration, the receipt, adequacy
and legal sufficiency of which are hereby acknowledged, Assignor and Assignee
do hereby agree as follows:

1.             Assignment.  Effective as of the date of this Assignment,
Assignor hereby assigns, sells, and transfers over to Assignee all of Assignor’s
right, title, benefits, privileges and interest in and to: (a) Assignor’s
rights and claims against O&R and ConEd and/or any of their respective
Affiliates that are the subject of Adversary Case No. 06-04141 commenced in The
United States Bankruptcy Court for the Northern District of Texas Fort Worth
Division in Chapter 11 Case No. 03-46590 (DML) (the “Action”), including
without limitation the right to pursue the Action as the assignee of Company,
and (b) the Intercompany Claims.

2.             Covenants.  To the
extent that: (a) O&R, ConEd and/or any of their respective Affiliates pay
amounts related to the Action to Assignor, or (b) Assignee received payment of
any amounts with respect to the Intercompany Claims, Assignor shall hold such
amounts in trust for Assignee and shall pay Assignee such amounts within five
(5) Business Days of receipt.  If
requested by Assignee, Assignor shall cooperate with Assignee in the
prosecution of the Action and the Intercompany Claims, including making
personnel, records, and access to the Assets available as needed by Assignee.

 1
 

3.             Application of Agreement Terms.  This Assignment is made pursuant and subject
to the terms of the Agreement. To the extent this Assignment is silent as to
any provision in the Agreement that is relevant to this Assignment, Assignor
and Assignee agree that each such corresponding provision applies to this
Assignment. In the event of any conflict or inconsistency between the terms of
the Agreement and the terms hereof, the terms of the Agreement shall prevail;
such terms in the Agreement shall not be superseded hereby but shall remain in
full force and effect to the full extent provided therein.

IN WITNESS
WHEREOF, Assignor and Assignee have executed this Assignment as of the date
first above written.

	
  ASSIGNOR

  	
   

  	
   

  	
  ASSIGNEE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  MIRANT NY-GEN,
  LLC

  	
   

  	
   

  	
  MIRANT NEW YORK, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
																

 

 2

Schedule
3.03(a)

Wire
Transfer Instructions

Mirant New York, Inc

Acct # 3752102211

Bank of America

ABA # 0260009593

Schedule 4.03

Governmental Authority Approvals

Governmental Authority
Approvals:

1.             New York Public Service Commission approval of transfer

2.                                       Federal
Energy Regulatory Commission Section 203 filing

3.                                       Notification
to Federal Energy Regulatory Commission regarding change of ownership of
Company.

4.                                       New
York State Department of Environmental Conservation (“NYSDEC”) filing related
to the modification to the Air Permits regarding the NOx Bubble.

5.                                       The
items listed on Schedules 4.05 (Section B) and all items listed on Schedule
4.17.

Schedule 4.05

Licenses and Permits

Section A
(Licenses and Permits for Operation of Company’s Business):

1.                                       Federal
Energy Regulatory Commission Operating License dated April 14, 1992 for Project
No. 10481 (Mongaup).

2.                                       Federal
Energy Regulatory Commission Operating License dated April 14, 1992 for Project
No. 9690 (Rio).

3.                                       Federal
Energy Regulatory Commission Operating License dated April 14, 1992 for Project
No. 10482 (Swinging Bridge), as amended. 
(additional amendment may be required by law for the Unit 1 Fill-In)

4.                                       NYSDEC
Petroleum Bulk Storage Certificate PBS Number 3-412694 issued on November 29,
2005 (Mongaup).

5.                                       NYSDEC
Petroleum Bulk Storage Certificate PBS Number 3-412643 issued on November 29,
2005 (Shoemaker).

6.                                       NYSDEC
Petroleum Bulk Storage Registration Certificate No. 3-990437 issued on January
6, 2006 (Hillburn).

7.                                       Application
for NYSDEC SPDES Permit for Discharge, No. NY-026 5055 (Swinging Bridge Station
#1); application submitted on March 8, 2002.

8.                                       Application
for NYSDEC SPDES Permit for Discharge, No. NY-026 5063 (Swinging Bridge Station
#2); application submitted on March 8, 2002.

9.                                       Application
for NYSDEC SPDES Permit for Discharge, No. NY-026 5047 (Rio); application
submitted on January 9, 2003.

10.                                 NYSDEC
Air Permit ID 3-3926-00039/00003 
(Hillburn)

11.                                 NYSDEC
Air Permit ID3-3309-00040/00004 (Shoemaker)

12.                                 Section
401 Water Quality Certification - Swinging Bridge Project - FERC No. 10482
issued by NYSDEC on September 11, 1989.

13.           Section 401 Water Quality
Certification - Mongaup Falls Project - FERC 10481

issued by NYSDEC on September 11, 1989.

14.                                 Section
401 Water Quality Certification - Rio Project – FERC 9690 issued by NYSDEC on
September 11, 1989.

 1
 

Section B (Licenses and Permits requiring Governmental
Approval to Transfer):

1.                                       Approval
by NYSDEC of transfer of Petroleum Bulk Storage Certificates.

2.                                       Notification
to NYSDEC regarding change of ownership of Company for SPDES Permits, Air
Permits and Section 401 Water Quality Certifications.

3.                                       Notification
to Delaware River Basin Commission regarding change of ownership of Company.

4.                                       Notification
to NYSDEC regarding change in notice provisions and contact information under
the Consent Orders listed under Section C of this Schedule 4.05.

5.                                       An
order of the Federal Energy Regulatory Commission issued under Section 203 of
the Federal Power Act (16 U.S.C. 824b as amended) authorizing Purchaser’s
acquisition of the Membership Interest.

Section C (Consent
Orders and Agreements with Governmental Authorities):

1.                                       Consent
Order (as defined in the Agreement)

2.                                       Consent
Order dated (DEC Index No. CO3-20050519-8-A, dated  September 15, 2005 between the Company and
the NYSDEC (Reimbursement and Environmental Audit).

3.                                       Dissolved
Oxygen Consent Order (as defined in Schedule 4.15)

 2

Schedule
4.07

Certain Liabilities

None.

Schedule 4.08

Certain
Changes

Transfer of the Grahamsville Hydroelectric Generating
Facility on October 31, 2006 to Orange & Rockland Utilities, Inc.

Schedule 4.09

Real Property Leases,
Easements and Licenses

1.                       Easement
for electric transmission lines and distribution system dated April 30, 1941
and recorded May 19, 1946 in Liber 347 cp 23.

2.                       Grant of
Easement dated March 11, 1982 and recorded March 12, 1982 in Liber 1034 cp 84.

3.                       Grant of
Easement dated July 22, 1986 and recorded July 25, 1986 in Liber 1231 cp 230.

4.                       Grant of
Easement dated July 22, 1986 and recorded July 25, 1986 in Liber 1231 cp 242.

5.                       Grant of
Easement dated October 19, 1990 and recorded October 24, 1990 in Liber 1490 cp
117.

6.                       Grant of
Easement dated September 14, 1990 and recorded December 3, 1990 in Liber 1497
cp 111.

7.                       Access and
Patrol Easement and Restrictions dated October 31, 1990 and recorded December
3, 1990 in Liber 1497 cp 120.

8.                       Access and
Patrol Easement and Restrictions dated September 14, 1990 and recorded December
3, 1990 in Liber 1497 cp 140.

9.                       Access and
Patrol Easement and Restrictions dated October 4, 1990 and recorded
April 5, 1991 in Liber 1515 cp 609.

10.                 Access and Patrol
Easement and Restrictions dated October 4, 1990 and recorded April 5, 1991 in
Liber 1515 cp 629.

11.                 Agreement
recorded in Liber 1851 cp 25.

12.                 Easement dated
April 30, 1941 and recorded May 19, 1946 in Liber 347 cp 23.

13.                 Agreement dated
April 10, 1951 and recorded April 30, 1951 in Liber 450 cp 293.

14.                 Easement dated
December 17, 1971 and recorded December 21, 1971 in Liber 761 cp 847 as
assigned by Assignment of Easements dated June 30, 1994 and recorded in Liber
1757 cp 668.

15.                 Easement granted
to People of State of New York dated October 24, 1990 and recorded October 24,
1990 in Liber 1490 cp 469.

16.                 Grant of Right of
Way dated February 4, 1999 and recorded February 4, 1999 in Liber 2083 cp 514.

17.                 Indenture dated
December 31, 1971 and recorded in Liber 765 cp 114 and Liber 1902 cp 106
(Orange County).

18.                 Easements in the
Deed dated October 24, 1990 and recorded October 24, 1990 in Liber 1490 cp 398
and rights reserved in Deed at cp 404 and 405.

19.                 Right of Way
recorded February 22, 1881 in Liber 80 cp 239, in Liber 80 cp 290 and November
18, 1889 in Liber 97 cp 326.

 1
 

20.                 Unrecorded
Easement as disclosed by Town of Forestburgh, Sullivan County Tax Map Section
No. 37 dated September 23, 1965 last revised September 1, 1994.

21.                 Easement dated
April 30, 1941 and recorded May 19, 1946 in Liber 347 cp 23.

22.                 Easement dated
October 19, 1990 and recorded October 24, 1990 in Liber 3364 cp 118 Orange
County.

23.                 Easement dated
October 24, 1990 and recorded October 24, 1990 in Liber 1490 cp 597.

24.                 Easement recorded
in Liber 3365 cp 1, Orange County.

25.                 Easement dated
October 19, 1990 and recorded October 24, 1990 in Liber 3364 cp 235, Orange
County.

26.                 Easement recorded
in Liber 1624 cp 035, Liber 1667 cp 001 and Liber 1801 cp 152.

27.                 Deed dated
February 16, 1999 and recorded March 24, 1999 in Liber 2093 cp 370.

28.                 License recorded
April 21, 1999 in Liber 2100 cp 536 as assigned by Assignment dated June 30,
1999 recorded July 1, 1999 in Liber 2117 cp 448 Sullivan County.

29.                 Right of Way
dated February 4, 1999 and recorded February 11, 1999 in Liber 2083 cp 514.

30.                 Recreational Area
Option Agreement dated October 24, 1990 in Liber 1490 cp 644.

31.                 Provisions in the
unrecorded (1) FERC Hydro License issued April 14, 1992 for Swinging Bridge
Reservoir (License No. 10482); (2) Memorandum of Understanding between Orange
and Rockland Utilities, Inc. and the New York State Department of Environmental
Conservation transmitted by cover letter dated July 16, 1990; and (3) Section
401 Water Quality Certification for Swinging Bridge Reservoir dated September
11, 1989.

32.                 Deed in Liber 765
cp 114.

33.                 Easement in Liber
1490 cp 81.

34.                 Easement in Liber
1490 cp 99.

35.                 Easement dated
October 2, 1990 recorded in Liber 1490 cp 539 as amended in Liber 1851 cp 420
and confirmed in Liber 2216 cp 435.

36.                 Easements in
Liber 1490 cp 398.

37.                 Right of ways in
Deed in Liber 765 cp 114.

38.                 Mines and mineral
rights reserved in deeds of record to Orange and Rockland Utilities, Inc.

39.                 Deeds recorded in
Liber 239 cp 278, Liber 240 cp 21, Liber 240 cp 23, Liber 240 cp 145,
Liber 240 cp 146, Liber 241 cp 330, and Liber 243 cp 641.

40.                 Easement recorded
in Liber 250 cp 534.

41.                 Recreational
rights recorded in Liber 240 cp 210 and Court Order recorded in Liber 2489 cp
46.

42.                 Deed recorded in
Liber 765 cp 114.

43.                 Easement as more
particularly shown on Sheet 13 of Map of Lands Reserved by Orange and Rockland
Utilities, Inc. which Maps are attached to Deed dated December 31, 1971,

 2
 

recorded Apri1 12,
1972 at Book 765 of Deeds, Page 114 of the Sullivan County Clerk’s Office.

44.                 Easements dated
June 30, 1999 recorded in Liber 2117, cp 498, Sullivan County.

45.                 Assignment and
Assumption of Lease dated as of June 30, 1999 and recorded July 1, 1999 in
Liber 2117 cp 453 (Sullivan County).

46.                 Unrecorded
rights, if any, in favor of any electric light or telephone company to maintain
guy wires extending from the described premises to poles located on the roads
on which the described premises abut.

47.                 Underground
encroachments and easements, if any, including pipes and drains, and such
rights as may exist for entry upon said premises to maintain and repair the
same.

48.                 License Agreement
between Mirant New York-Gen, LLC and Russ A. Heyman dated March 23, 2005.

49.                 License Agreement
between Mirant New York-Gen, LLC and Sylvia and Charles Broffman dated February
18, 2005.

50.                 License Agreement
between Mirant New York-Gen, LLC and Allen K. Glass and Judy Glass dated March
23, 2005.

51.                 License Agreement
between Mirant New York-Gen, LLC and Harvey Elgart dated March 23, 2005.

52.                 License Agreement
between Mirant New York-Gen, LLC and R. Scott Clouston dated March 23, 2005.

53.                 License Agreement
between Mirant New York-Gen, LLC and John Williams d/b/a Poppa John’s Weiner
Wagon dated June 6, 2006.

54.                 License Agreement
dated June 30, 1999 between Southern Energy NY-GEN, L.L.C. and Orange and
Rockland Utilities, Inc.

55.                 Assignment and
Assumption of License dated June 30, 1999, and recorded in Book 2117 at page
448.

56.                 License dated April
8, 1999 and recorded in Book 2100 at page 536.

57.                 License
Agreements between Mirant New York-Gen, LLC and Woodstone Toronto Development,
LLC dated October, 2003.

58.                 Right of Entry
and Agreement of Indemnity dated May 12, 2005, by and between the Company and
United Water New York, Inc., as extended by letter dated April 19, 2006.

59.                 Right of Entry
and Agreement of Indemnity dated June 29, 2005, by and between the Company and
the Village of Hillburn, New York, as extended by letter dated May 22, 2006.

60.                 License Agreement
between the Company and Thomas Damiani dated November 13, 2006.

61.                 License Agreement
between the Company and Julie Racenstein dated October 13, 2006.

62.                 License Agreement
between the Company and Ernest F. Thiesing dated October 30, 2006.

63.                 License Agreement
between the Company and Terry M. Geller dated October 13, 2006.

 3
 

64.                 Various license
agreements between the Company and landowners authorizing the erection of
temporary structures on the Swinging Bridge Reservoir.

 4

Schedule
4.10

Litigation

1.                                       Barrett
v. Watkins, Allen, Woodstone Lakes Development, LLC, Woodstone Toronto
Development, LLC, Woodstone Crestwood Development, LLC, Mirant NY-Gen, LLC, and
Dubrovsky, Case No. 948-06, Sullivan County Supreme Court.  The Company’s FERC license requires the
Company to provide certain public access to the Toronto reservoir.  On or about March 1, 2006, FERC notified the
Company in writing that the Company is not in compliance with its FERC license
as a result of the Woodstone Companies having physically blocked certain public
access to the reservoir.  On or about
March 31, 2006, Robert and June Barrett filed suit in the New York Supreme
Court for Sullivan County relating to disputes arising out the Woodstone
Companies’ efforts to restrict access to the Toronto reservoir behind the
Swinging Bridge hydro-electric facility across a road, Pine Grove Road, over
which the Company holds an easement for the purpose of allowing public access
to the reservoir.  On or about June 20,
2006, the Company cross-claimed against Woodstone Lakes Development, LLC,
Woodstone Toronto Development, LLC,  and
Woodstone Crestwood Development, LLC seeking injunctive and declaratory
relief.  The Woodstone Companies answered
the cross-claims of Company on September 27, 2006.  On or about August 24, 2006, Dr. Goldfarb and
Ms. Burke, private citizens, sought to intervene into the Barrett Suit (as
additional plaintiffs), by filling an order to show cause.  The Woodstone Companies opposed the order to
show cause and cross-moved to dismiss the proposed complaint of Dr. Goldfarb
and Ms. Burke.  Company filed papers in
response to the Woodstone Companies’ cross-motion in order to protect its
rights and set forth its position with respect to this case.  On October 26, 2006, a hearing for order to
show cause to intervene was held in Monticello, New York, before Justice
Sackett.  Company  participated in the hearing.  Justice Sackett entertained arguments from
all parties about the merits of the case. 
A decision from the judge on the merits of the motion to intervene is
pending.

2.                                       Proofs of claim filed by The Southern Company in
the Bankruptcy Case.

3.                                       Various pre-petition claims and administrative
claims filed against the Company as part of the Chapter 11 bankruptcy case will
be addressed in the Company’s plan of reorganization.

Schedule 4.12

Taxes

1.             Nothing
to disclose for the Company.

2.                                       Seller is currently under a New York State Income Tax audit, for income
Tax purposes, for years 2002, 2003 & 2004.  
Seller is the taxpayer and is the legal entity responsible for income
Taxes.  The Company is disregarded for
income Tax purposes, and is therefore not obligated for Tax liabilities under
the audit.

Schedule
4.14

Bank
Accounts

1.                                       Mirant NY Gen, LLC

Acct
# 3752102224

Bank
of America – Dallas

Authorized Signers: 
J. William Holden, III; Greg Weber

2.                                       Mirant NY Gen, LLC

Acct
# 4572828

Federal
Investors, Money Market Fund Account

Authorized Traders: 
Greg Weber; Mark Crompton; Rex Croff

Schedule 4.15

Compliance With Law

1.             FERC

On
March 1, 2006, FERC issued a letter denying the Company’s request for an
extension of time to provide FERC with documentation that the Company has
rights to provide public access to the Toronto Dam boat launch on the Toronto
Reservoir via a newly constructed bypass road. 
FERC found that the Company is “in non-compliance with [the Company’s]
license and will continue to be in non-compliance until such time that [the
Company] demonstrate[s] the area is available to the public.”  The Company subsequently filed a
cross-complaint in Barrett v. Woodstone et al.,
(see description in Schedule 4.10), in order to secure its easement rights to
the Toronto Dam boat launch.  The
cross-complaint is currently pending in New York State Supreme Court.

2.             Environmental

(a)           Dissolved
Oxygen:

(i)            The hydroelectric generating units
have not had sufficient levels of dissolved oxygen.

(ii)           On March 7, 2006, the Company entered
into a Consent Order with the NYSDEC with respect to dissolved oxygen at the
hydroelectric facilities (the “Dissolved Oxygen Consent Order.”) The Company
committed to install certain turbine venting equipment at the hydroelectric
generating units to improve dissolved oxygen conditions.  The equipment has been installed at the units
at Rio and Mongaup, but it has not been installed at Swinging Bridge Units 1 or
2.  By the terms of the Dissolved Oxygen
Consent Order, the equipment at Unit 2 should have been installed within thirty
days of the effective date of such order. 
It has not been installed at Unit 2 because the equipment is not
feasible for installation at the facility. 
The Dissolved Oxygen Consent Order does not require equipment to be
installed at Unit 1 unless and until the unit again becomes operational.

(iii)          The
NYSDEC has orally alleged that there may be a violation of the water quality
standards related to temperature levels at the reservoirs for the hydroelectric
facilities.

(b)           Kerosene Spill:

A kerosene spill occurred at the Hillburn generating facility.  The spill is the subject of the Consent
Order.

(c)           Swinging Bridge
Remediation:

 1
 

A sinkhole occurred at the Swinging Bridge dam.  Repairs related to the sinkhole occurrence
are the subject of the Swinging Bridge Remediation Plan.

3.             License Amendment and Notification

An amendment to the Federal Energy Regulatory Commission Operating
License and a notification to the New York State Public Service Commission may
be required by law to reflect the penstock remediation on Swinging Bridge Unit
#1.

 2

Schedule
4.16

Material Contracts

1.                                       Continuing
Site/Interconnection Agreement between the Company and Orange and Rockland
Utilities, Inc. dated November 24, 1998, as amended (the “Interconnection
Agreement”).

2.                                       Settlement
Agreement between the Company, Mirant Lovett, LLC, Mirant Bowline, LLC, Hudson
Valley Gas Corporation, and Orange and Rockland Utilities, Inc. dated August
15, 2001 (may be terminated as to Company or, in the alternative, may be
subject to the Cross Indemnity Agreement, as provided in Section 7.25).

3.                                       Power
Sale, Fuel Supply and Services Agreement dated January 3, 2006 by and among the
Company, Mirant Energy Trading, LLC (“MET”) (as transferee of Mirant Americas
Energy Marketing, LP) and others (to be terminated on or before Closing).

4.                                       Administrative Services Agreement dated January
3, 2006 by and between the Company and Mirant Services, LLC (to be terminated
on or before Closing).

5.                                       Environmental Services Agreement dated December
20, 2006, by and between the Company and Lightship Engineering, LLC (“Lightship”),
and Purchase Order No. NY- 18884 between the Company and Lightship.

6.                                       Gas Transportation and Balancing Services
Agreement for the Mirant Generating Facilities dated December 9, 2002 (the “Gas
Transportation and Balancing Agreement”) (Company to be removed as a party on
or before Closing).

7.                                       Purchase Order No. NY-6106 between Company and
Advance Construction Techniques, Ltd. (may be supplemented by or replaced with
the Unit 1 Fill-In Contract as provided in Section 2.03(d)(ii)).

8.                                       Purchase Order Nos. NY-7557, NY-8089,  NY-6478 between Company and Devine Tarbell
and Associates, Inc.

9.                                       Purchase Order No. NY-6867 between Company and
Mead and Hunt, Inc.  (To be assigned
pursuant to Section 7.29).

10.                                 Purchase
Order Nos. NY-8904, NY-7138 and NY-7139 between Company and Megrant Properties,
Inc.

11.           Purchase Order No.
NY-20204 between Company and Baker Technical Land Services.

12.           Purchase Order No.  NY-5677 between Company and All Bright
Electric.

13.                                 Purchase
Order No. NY-8296 between Company and Burns and Roe Enterprises, Inc.  (To be assigned pursuant to Section 7.29).

 1
 

14.           Purchase Order No.
NY-6467 between Company and Conetec, Inc.

15.           Purchase Order No. 8320
between Company and Devine Tarbell and Associates, Inc.

16.           Purchase Order No. 5530
between Company and Miller Environmental Group, Inc.

17.           Purchase Order No. 7806
between Company and Dominion Engineering, Inc.

18.           Purchase Order No. 7810
between Company and OCS Industries, Inc.

19.           Purchase Order No. 7552
between Company and Deerpark Oil and Heat Company.

20.           Purchase Order No. 6490
between Company and All Bright Electric.

21.           Purchase Order No. 7697
between Company and Henningson Durham and Richardson.

22.           Purchase Order No.
20266 with Geosystems, LP (to be assigned to Company on or before Closing).

23.           Purchase Order No.
20272 with Paul C. Rizzo Associates, Inc. (to be assigned to Company on or
before Closing).

 2

Schedule
4.17

Consents

1.             The consent required under the Interconnection
Agreement.

2.                                       The
consent required to remove the Company from the Gas Transportation and
Balancing Agreement.

Schedule
4.18

Title to Assets

None.

Schedule
5.04

Consents
and Approvals of Governmental Authorities

1.             An order of the Federal Energy Regulatory Commission
issued under Section 203 of the Federal Power Act (16 U.S.C. 824b as amended)
authorizing Purchaser’s acquisition of the Membership Interest.

2.             New York Public Service Commission approval of transfer.

Schedule
5.05

Litigation

None, other than the
Bankruptcy Case, insofar as applicable to the Membership Interest.

Schedule
7.15(b)

Sale
Procedures Order

IN THE
UNITED STATES BANKRUPTCY COURT

FOR THE
NORTHERN DISTRICT OF TEXAS

FORT
WORTH DIVISION

	
  

  	
  )

  	
   

  	 

	 
	
  In re

  	
  )

  	
  Chapter 11 Case

  
	 
	
   

  	
  )

  	
   

  
	 
	
  MIRANT CORPORATION, et  al.,

  	
  )

  	
  Case No. 03-46590 (DML)

  
	 
	
   

  	
  )

  	
  Chapter 11

  
	 
	
   

  	
  )

  	
  Jointly Administered

  
	 
	
  Debtors.

  	
  )

  	
   

  
	 
	
   

  	
  )

  	
   

  
							

 

ORDER
(A) APPROVING THE SALE PROCEDURES IN CONNECTION WITH THE PROPOSED SALE OF
MIRANT NEW YORK, INC.’S MEMBERSHIP INTEREST IN MIRANT NY-GEN, LLC; (B)
APPROVING PAYMENT OF A BREAKUP FEE IN ACCORDANCE WITH THE TERMS OF THE
MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT; (C) SCHEDULING A SALE
HEARING AND AN AUCTION; AND (D) APPROVING THE FORM AND MANNER OF NOTICE OF
THE SALE PROCEDURES AND THE SALE HEARING

Upon the motion, dated February 1, 2007 (the “Sale
Procedures Motion”), of Mirant New York, Inc. (“Mirant New York” or
the “Seller”), as debtor and debtor in possession, for an order (the “Sale
Procedures Order”) (a) approving the Sale Procedures(1) in connection with
the proposed sale, pursuant to sections 105(a), 363(b), (f), (m), and (n), and
1146(c) of title 11 of the United States Code (the “Bankruptcy Code”),
of the Seller’s Membership Interest (the “Membership Interest Sale”) in
Mirant NY-Gen, LLC (“Mirant NY-Gen” and, collectively with Mirant New
York, the “Debtors”) to Alliance

(1) Unless otherwise defined in this Sale Procedures
Order, capitalized terms used herein shall have the same meanings ascribed to
such terms in the Sale Procedures Motion.

 1
 

Energy Renewables, LLC (“Alliance Energy” or
the “Purchaser”) pursuant to that certain Membership Interest Purchase
and Sale Agreement between Mirant New York and Alliance Energy, dated as of
January 31, 2007 (the “Agreement”); (b) approving the payment of a
Breakup Fee (defined below) in accordance with the terms of the Agreement; (c)
scheduling a hearing (the “Sale Hearing”) to consider approval of the
Membership Interest Sale and an Auction (as defined below); and (d) approving
the form and manner of notice of the Sale Procedures and the Sale Hearing; and
no previous motion for similar relief having been made to this Court; and after
due deliberation thereon; and sufficient cause appearing therefor,

IT IS HEREBY FOUND AND DETERMINED THAT:

1.             This
Court has jurisdiction to hear and determine this matter pursuant to
28 U.S.C. §§ 157(b) and 1334(b). 
This matter is a core proceeding within the meaning of 28 U.S.C. §§
157(b)(2).  Venue of this matter is
proper in this Court pursuant to 28 U.S.C. §§ 1408 and 1409(a).

2.             This
Order constitutes a final and appealable order within the meaning of
28 U.S.C. § 158(a).

3.             Due
and proper notice of the Sale Procedures Motion has been given and no further
notice is required.

4.             The
Sale Procedures, in the form set forth in Exhibit
1 annexed hereto, shall govern the Auction of the Membership
Interest to obtain the highest and best offer for the Membership Interest.

5.             The
Sale Procedures and the Breakup Fee provided for in the Agreement are within
the reasonable business judgment of Mirant New York, are in the best interests

 2
 

of Mirant New York and its chapter 11 estate, and are
fair, reasonable, and appropriate in the circumstances.

6.             The
Notice of Auction and Sale Hearing as set forth in Exhibit 2 is reasonably calculated to provide adequate
notice and opportunity for a hearing on any objections to the Sale Motion.

7.             The
terms and conditions of the payment to the Purchaser of the Breakup Fee as set
forth in the Agreement are:

a.             the product of arm’s length, good
faith negotiations, between the Seller and the Purchaser;

b.             a material component of, inducement
for, and condition to, the Purchaser’s willingness to be a stalking horse
bidder under the Agreement; and

c.             within the reasonable business
judgment of Mirant New York, is in the best interests of Mirant New York and its
chapter 11 estate, and is fair, reasonable and appropriate in the circumstances
to establish certainty on the existence and terms of a minimum bid subject to a
reasonable competitive bidding process; and

d.             not likely to adversely affect the
Auction’s competitive bidding process.

ACCORDINGLY, IT IS HEREBY

ORDERED that the Sale Procedures as set forth in Exhibit 1 annexed hereto are hereby
approved in all respects; and it is further

 3
 

ORDERED that in the event of a competing bid for the
Membership Interest, Alliance Energy will be entitled to credit bid the amount
of $250,000.00 to any overbids in accordance with the terms of the Sale
Procedures and the Sale Motion; and it is further

ORDERED that, in accordance with Section 7.15 of the
Agreement, as a result of Seller entering into an agreement for a Third Party
Sale pursuant to the Auction, Seller shall, upon entry of the Sale Order
authorizing such Third Party Sale, return to Purchaser the Down Payment (as
defined in the Agreement) with all interest accrued thereon and, within five
(5) days of such Third Party Sale or any other sale of the Membership Interest,
pay to the Purchaser the Breakup Fee of Two Hundred Fifty Thousand Dollars
($250,000.00) as an administrative expense of the Seller, from the first cash
proceeds of any Third Party Sale or other sale of the Membership Interest.

ORDERED that Mirant New York shall serve within three
(3) business days after entry of this Sale Procedures Order, the Notice of
Auction and Sale Hearing upon (a) all parties entitled to receive notice as of
the date hereof pursuant to the Order Clarifying Order Granting Complex Chapter
11 Bankruptcy Case Treatment, dated August 25, 2004, (b) all parties known
to Mirant New York to have an interest in acquiring the Membership Interest and
the Sale Assets, (c) all entities listed on the schedules of Mirant New York
and Mirant NY-Gen, LLC as holding secured claims and all entities who recorded
or filed proof(s) of claim as secured against Mirant NY-Gen or Mirant New York,
(d) all entities who have recorded in the public record any lien, claim,
encumbrance, or interest in or upon the Membership Interest or any of the
assets of Mirant NY-Gen, (e) the Federal Energy Regulatory Commission, (f) the
Delaware River Basin Commission, (g) the New York Public Service Commission,
(h) the State of New

 4
 

York Department of Environmental Conservation, (i) the
New York City Department of Environmental Protection, (j) the Securities and
Exchange Commission, (k) the United States Environmental Protection Agency, (l)
the Office of the United States Attorney, (m) the United States Department of
Justice, (n) the Internal Revenue Service, (o) all parties granting permits or
licenses to Mirant NY-Gen, (p) the applicable state and local taxing
authorities, and (q) all parties
to Mirant NY-Gen’s executory contracts and unexpired leases, and it is further

ORDERED that the Sale Hearing shall be held on
            , March
    , 2007 at       a.m.
(Prevailing Central Time), or as soon thereafter as counsel may be heard,
before the Honorable D. Michael Lynn, United States Bankruptcy Judge, in the
United States Bankruptcy Court for the Northern District of Texas, Eldon B.
Mahon U.S. Courthouse, 501 West Tenth Street, Fort Worth, TX 76102-3643; and it
is further

ORDERED that the Sale Hearing may be adjourned from
time to time without further notice other than an announcement by Mirant New
York in the Court of such adjournment on the date scheduled for the Sale
Hearing; and it is further

ORDERED that such notice as set forth in the preceding
decretal paragraphs to the Notice Parties shall constitute good and sufficient
notice of the Sale Motion as it relates to Mirant New York’s request for entry
of the Sale Order, the Auction, and the Sale Hearing, and no other or further
notice of the Sale Motion, the Auction, and the Sale Hearing shall be necessary
or required; and it is further

ORDERED that responses or objections, if any, to the
entry of the Sale Order granting the relief requested in the Sale Motion shall
be filed with this Court and served, so as to be actually received no later
than             ,
February    , 2007, at 4:00 p.m.

 5
 

(Prevailing Central Time) on:  (a) Hiscock & Barclay, LLP, One Park
Place, Syracuse, New York 13215, Attn: George S. Deptula, Email:  gdeptula@hiscockbarclay.com; (b) Forshey
& Prostok LLP, 777 Main Street, Suite 1290, Fort Worth, Texas 76102, Attn:
Jeff P. Prostok, Email: 
jprostok@forsheyprostok.com; (c) Mirant New York, Inc., c/o Mirant Corporation,
1155 Perimeter Center West, Atlanta, Georgia 30338, Attn:  Sonnet Edmonds, Vice President and Assistant
General Counsel, Email: 
sonnet.edmonds@mirant.com; (d) Hill Gilstrap, P.C., 1400 West Abram
Street, Arlington, TX 76013, Attn:  Frank
Hill, Email:  fhill@hillgilstrap.com, (e)
Troutman Sanders LLP, 405 Lexington Avenue, New York, NY 10174, Attn:  Hollace T. Cohen, Email:  Hollace.Cohen@troutmansanders.com.

ORDERED that the Seller is authorized and empowered to
take such steps, incur and pay such costs and expenses, and take such action as
may be reasonably necessary to implement this Sale Procedures Order; and it is
further

ORDERED that any objections to the entry of this Sale
Procedures Order that have not been withdrawn, waived or settled, and all
reservations of rights regarding the same, shall be and hereby are OVERRULED on
the merits; and it is further

ORDERED that this Court shall retain jurisdiction over
any matter or dispute arising from or relating to the Sale Procedures and the
implementation of this Sale Procedures Order.

	
  Dated:
                ,
  2007

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  The Honorable D. Michael Lynn

  	 

	 
	
   

  	
   

  	
  United States Bankruptcy Judge

  
								

 

 6
 

EXHIBIT
“1”

SALE PROCEDURES

The following procedures
(the “Sale Procedures”) shall
govern the auction (the “Auction”)
of the Membership Interest held by Mirant New York, Inc. (the “Seller” or “Mirant New York”), as sole member of Mirant NY-Gen, LLC (“Company” or “Mirant NY-Gen” and, with Mirant New York, the “Debtors”). 
These Sale Procedures have been approved and authorized by order dated              ,
2007 (the “Sale Procedures Order”)
of the United States Bankruptcy Court for the Northern District of Texas (the “Bankruptcy Court”) in the chapter 11 case
of Mirant New York (Case No. 03-46641-DML-11).

The Seller has taken all
reasonable steps to obtain the highest and best price for the Membership
Interest.  However, under title 11 of the
United States Code (the “Bankruptcy Code”),
the Seller must demonstrate that it has obtained the highest and best price for
the Membership Interest; such a showing may include giving notice thereof to
the creditors of the Company and other interested parties, providing
information about the Membership Interest to prospective bidders (subject to
appropriate confidentiality agreements), entertaining higher and better offers
from such prospective bidders, and, if necessary, conducting an Auction.

1.             Property to Be Sold.  The Company’s assets include three
hydroelectric power stations and two gas turbine generating facilities located
in southeastern New York and certain real property, easements, permits, and
contracts relating thereto as identified in the Agreement (the “Sale Assets”).  As provided in the Sale Procedures Order, the
sale of the Membership Interest (the “Membership
Interest Sale”) is subject to a determination of which entity has
submitted the highest or otherwise best bid pursuant to the procedures set
forth herein (the “Prevailing Bidder”)
(as defined in Section 8 below). 
Alliance Energy Renewables, LLC (the “Proposed
Purchaser”) and Mirant New York have entered into the Membership
Interest Purchase and Sale Agreement, dated as of January 31, 2007 (the “Agreement”).  The Proposed Purchaser  shall be treated as a Qualified Bidder (as
defined in Section 3 below), and the executed Agreement shall be treated as a
Qualified Bid (as defined in Section 5 below), for all purposes under the Sale
Procedures.

2.             Due Diligence. 
Upon receipt by Hiscock & Barclay, LLP (“Hiscock & Barclay”) or Forshey & Prostok LLP (“Forshey & Prostok”) of (i) an executed
confidentiality agreement in form and substance satisfactory to the Seller in
its sole discretion and (ii) financial disclosure acceptable to, and as
requested by, the Seller, in its sole discretion, which information shall
demonstrate the financial ability of the potential bidder to consummate the
purchase of the Membership Interest and its obligations to perform under the
Agreement, including but not limited to immediately available cash, or a
binding commitment for financing, adequate to pay a price that exceeds the
amount in the Marked Agreement (as defined in Section 5(a) below) by at least
$500,000 in cash, a potential bidder shall be provided with additional
information regarding the Membership

 7
 

Interest and related Sale Assets, and be afforded the
opportunity to inspect the Sale Assets. 
In addition, all reasonable efforts will be made to provide a potential
bidder, who has satisfied the conditions of this Section 2, with such
information as such potential bidder may determine is necessary or relevant to
the formulation of its bid.

NEITHER
HISCOCK & BARCLAY, FORSHEY & PROSTOK, NOR ANY OF THEIR RESPECTIVE
PARTNERS, MEMBERS, COUNSEL, OR ATTORNEYS (COLLECTIVELY, THE “DEBTORS’
ATTORNEYS”) HAS PREPARED ANY OF THE INFORMATION REGARDING MIRANT NEW YORK OR
MIRANT NY-GEN, OR ANY OF THEIR OPERATIONS, SCHEDULED ASSETS, OR FINANCIAL
CONDITION TO BE PROVIDED TO A POTENTIAL BIDDER IN CONNECTION WITH THE SALE
PROCEDURES SET FORTH HEREIN. CONSEQUENTLY, NO REPRESENTATION IS MADE BY ANY OF
THE DEBTORS’ ATTORNEYS REGARDING THE ACCURACY, RELIABILITY, VERACITY, ADEQUACY,
OR COMPLETENESS OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE SALE
PROCEDURES, AND ALL POTENTIAL BIDDERS ARE ENCOURAGED TO CONSULT WITH THEIR OWN
ADVISORS REGARDING ANY SUCH INFORMATION.

3.             Qualified Bidders.

(a)           A potential bidder that satisfies the
following requirements, and that the Seller determines, in its sole discretion,
is reasonably likely to be able to consummate a purchase of the Membership
Interest (including all Purchaser Required Consents set forth in Section 7.14
of the Agreement) shall be considered a “Qualified
Bidder.”  Within three (3)
business days of each potential bidder’s delivery of all of the material
required in subsections (b)(i) through (b)(v) below, the Seller shall notify
such potential bidder in writing as to whether such potential bidder shall be
considered a Qualified Bidder.

(b)           Unless otherwise ordered by the
Bankruptcy Court for cause shown, no bid for the Membership Interest will be
considered unless prior to or in conjunction with making such bid, the bidder
delivers the following items to:  Hiscock
& Barclay, LLP, 50 Beaver Street, Albany, New York  12207, Attn: George S. Deptula.

(i)            if
the potential overbidder has not already entered into a confidentiality
agreement with the Seller, an executed confidentiality agreement (to be
provided upon request) in form and substance satisfactory to Mirant New York in
its sole discretion;

(ii)           financial
disclosure in writing acceptable to, and as requested by, Mirant New York, in
its sole discretion, which information shall demonstrate that the potential
bidder has the financial ability to consummate the purchase of the Membership
Interest and its obligations to perform under the Membership Interest Purchase
and Sale Agreement no later than ten (10) days

 8
 

following
the hearing on the Sale Order including, but not limited to, immediately
available cash or a binding commitment for financing and the willingness and
ability to cover all of the potential bidder’s legal counsel fees and other costs
associated with the sale of the Membership Interest;

(iii)          written
evidence demonstrating that such potential bidder is not affiliated with the
Proposed Purchaser or Mirant New York (and such potential bidder is not a
creditor of Mirant New York or Mirant NY-Gen);

(iv)          written
evidence that the potential bidder has the internal authorizations and
approvals necessary to engage in the transaction without the consent of any
entity that has not already been obtained and that the potential bidder is a bona
fide purchaser; and

(v)            a
cashier’s check made payable to Mirant New York, or cash, or an irrevocable
letter of credit for ten percent (10 %) (the “Deposit”)
of the amount of the Proposed Consideration (as defined in Section 5(b)
below).  If the bidder delivers a letter
of credit to the Seller, such letter of credit must (1) have an expiration date
of not earlier than October 1, 2007, or fifteen (15) days after such other date
proposed in Section 12.01(vii) of the Marked Agreement, and (2) be drawable
upon presentment of an officer’s certificate from Mirant New York stating only
that Mirant New York is entitled to draw on the letter of credit.  The bidder shall forfeit the Deposit and, to
the extent applicable, the Seller may draw on the letter of credit if (1) the
bidder is determined to be a Qualified Bidder and withdraws or modifies its bid
or any subsequent Increased Bid (as defined in Section 7 below), without the
Seller’s consent other than as provided herein before the selection of the
Prevailing Bidder, and/or (2) the bidder is determined to be the Prevailing
Bidder and (A) modifies or withdraws the bid or any subsequent Increased Bid
without the Seller’s consent before the consummation of the sale contemplated
by the Marked Agreement (as defined in Section 5(a) below) or (B) breaches the
Marked Agreement.  The Deposit shall be
returned to the bidder (1) if the bidder is determined not to be a Qualified
Bidder or (2) under the circumstances contemplated by Section 12 hereof.

4.             Time for Submission of Bids.  Any Qualified Bidder that desires to
participate in the Auction shall deliver a copy of its bid so it is received by
Seller not later than 4:00 p.m. (Prevailing Central Time) on Wednesday,
February 28, 2007 (the “Initial Bid Deadline”).
Seller shall provide Purchaser with a copy of all Qualified Bids accompanied by
notice of the Seller’s determination of the Opening Bid (as defined below) no
less than four (4) days prior to the Auction. 
If there are no Qualified Bids, the Purchaser shall be deemed to be the
Prevailing Bidder at the Auction.

5.             Form and Contents of Bids.  To constitute a “Qualified Bid,” a bid must satisfy the following requirements:

 9
 

(a)           the bid must include an executed
irrevocable Membership Interest purchase and sale agreement made upon the same
terms and conditions as those contained in the Agreement (excepting the
purchase price and terms and conditions related to the bankruptcy procedures
and deadlines for satisfying conditions precedent to the closing of the
transaction in Section 7.15(b) of the Agreement, and the reasonable extension
of certain dates set forth in Sections 12.01(iii), (iv), and (vii) of the
Agreement necessary or appropriate in light of such overbid which shall be no
less favorable to the Seller than the terms of the Agreement, and shall set
forth any amendments and modifications to the Agreement, including price,
terms, and any change in the list of agreements to be assumed by Mirant NY-Gen,
which such bidder would propose if it were selected as the Prevailing Bidder
(the “Marked Agreement”).  All
modifications or amendments to the Agreement that are contained in the Marked
Agreement must be “redlined” in order for the Seller to consider the Marked
Agreement;

(b)           the Marked Agreement must provide for
total net cash consideration to the Seller’s chapter 11 estate of not less than
$500,000.00 greater than the purchase price of the Agreement (the “Proposed
Consideration”);

(c)           the Marked Agreement must not be
conditioned upon the ability of the bidder to obtain financing or the outcome
of unperformed due diligence by the bidder. 
In the event that the Marked Agreement contains any additional
conditions to the closing of the Membership Interest Sale (the “Closing”),
none of such conditions shall be materially more burdensome or unfavorable to
the Seller than those set forth in the Agreement;

(d)           the Marked Agreement must be
accompanied by a letter affirmatively (i) setting forth the identity of the
bidder and the contact information for such bidder, (ii) stating that the bidder
offers to purchase the Membership Interest upon the terms and conditions set
forth in the Marked Agreement, (iii) summarizing the Proposed Consideration the
bidder proposes to pay under the Marked Agreement, (iv) identifying any change
in the contracts that the bidder proposes Mirant NY-Gen assume and any
additional cure amount therefor, (v) stating the aggregate value of the
consideration the bidder proposes to pay under the Marked Agreement (which
statement of value shall not be binding on the Seller, the Purchaser, or the
Court), and (vi) stating the form of the Deposit (i.e., letter of credit, cashier’s check, or cash) made by
the bidder; and

(e)           the foregoing materials must be
received by Seller on or before Wednesday, February 28, 2007 at 4:00 p.m.
(Prevailing Central Time) (the “Initial Bid Deadline”).  The Purchaser will receive from the Seller a
copy of all Qualified Bids accompanied by notice of the Seller’s determination
of the Opening Bid (as defined below) no less than four (4) days prior to the
Auction.

6.             Notification of Opening Bid.  At the commencement of the Auction, the
Seller will identify the opening bid (the “Opening Bid”), which will be
the highest or otherwise best Qualified Bid, as determined by the Seller in its
sole discretion.  If no

 10
 

timely Qualified Bid is submitted as determined by the
Seller, or if the Purchaser is the Prevailing Bidder (as defined herein), the
Seller shall request at the Sale Hearing that the Bankruptcy Court approve the
sale of the Membership Interest to the Purchaser.

7.             The Auction.

(a)           The Auction shall commence at
         a.m. (Prevailing Central Time)
on         ,
        , 2007 at the United States
Bankruptcy Court, Eldon B. Mahon U.S. Courthouse, 501 West Tenth Street, Fort
Worth, Texas 76102.  Qualified Bidders
must attend the Auction in person or through an authorized representative or
agent with actual authority to participate in the Auction and bind such
Qualified Bidder.  During the Auction,
any Qualified Bidder may increase its qualified Bid by another Qualified Bid
that:

i.              provides
for cash consideration that exceeds by not less than $250,000.00 the cash
consideration to be paid pursuant to the then highest Qualified Bid or
Increased Bid, if any;

ii.             identifies
specifically any other changes made to the Qualified Bid; and

iii.                                    satisfies
the requirements of Sections 3(b) and 5 above.

Any bid received from a Qualified Bidder during the
Auction that satisfies the requirements set forth in subsections (a)(i) through
(a)(iii) above, shall constitute an “Increased
Bid.”  If the Proposed
Purchaser submits the successful overbid, the Purchaser shall be entitled to
credit the amount of $250,000.00 against such overbid.

(b)           The Seller shall adopt such rules for
bidding at the Auction as it deems appropriate in its sole discretion that will
better promote the goals of the bidding process, allow all Qualified Bidders
reasonable notice and opportunity to submit Increased Bids, and are not
otherwise inconsistent with any order of the Bankruptcy Court or the Agreement.

8.             Selection of Prevailing Bidder.   At the Auction, the Seller shall review and
consider each, if any, of the Qualified Bids and the Increased Bids.  Seller shall determine in its sole discretion
which of the Qualified Bids or Increased Bids constitute the highest and
otherwise best bid for the Membership Interest, provided however, that nothing
contained herein shall prevent the Purchaser from contesting that the bid
selected by the Seller of the Prevailing Bidder is the highest and best offer.  The bidder making the bid that is selected as
the highest or otherwise best bid by the Seller shall be considered the “Prevailing Bidder.”  At the conclusion of the Auction and after
such review, the Seller shall inform each of the Qualified Bidders of the
decision regarding who is the Prevailing Bidder and who made the second highest
or otherwise best bid (the “Backup Bidder”).

 11
 

9.             Release of Down Payment.  Upon entry of the Sale Order authorizing a
sale of the Membership Interest to a purchaser other than Purchaser, Seller
shall direct Escrow Agent to return to Purchaser the Down Payment (as defined
in the Agreement) with all accrued interest thereon; provided that, if
Purchaser agrees to be the Backup Bidder, Seller shall direct the Escrow Agent
to return the Down Payment (with all accrued interest thereon) to Purchaser
upon the earlier of the closing of the Membership Interest Sale to the
Prevailing Bidder or termination of the Agreement by Purchaser according to the
terms of the Agreement.

10.           Failure to Consummate Purchase.  If for any reason the Prevailing Bidder fails
to consummate the Membership Interest Sale, the Seller reserves the right to
consummate the Membership Interest Sale with the Backup Bidder.  If such failure to consummate the purchase is
the result of a breach of the Agreement by the Proposed Purchaser or the Marked
Agreement by the Prevailing Bidder, the Down Payment (as defined in the
Agreement) of the Proposed Purchaser or the Deposit of such Prevailing Bidder
as the case may be shall be forfeited to the Seller.  The Seller specifically reserves the right to
seek all available damages from the defaulting bidder; provided that in the
case of the Proposed Purchaser, the damages shall be limited as provided in
Section 12.04 of the Agreement.

11.           Bankruptcy Court Approval of the
Prevailing Bidder.   An evidentiary
hearing on all of the relief requested in the Seller’s Motion (the “Sale Motion”) to approve the Membership
Interest Sale and to conduct the Auction (the “Sale Hearing”) shall be held before the Bankruptcy Court on          ,
              ,
2007 at          .m. (Prevailing
Central Time).

12.           Return of Deposits.  Within five (5) business days after the
closing of the Membership Interest Sale, the Deposit submitted by each
Qualified Bidder shall be returned, except for those submitted by (a) the
Prevailing Bidder and (b) any bidders that forfeited their Deposit under
Section 3(b)(v) above.  Except as
otherwise provided for herein, in the event the Seller cancels the proposed
sale or withdraws its motion to approve the sale of the Membership Interest,
the Deposit submitted by all of the Qualified Bidders shall be immediately
returned.

13.           Business Judgment of the Seller.  The Seller reserves the right (a) to
determine in its sole discretion whether the amendments and changes contained
in each Marked Agreement are acceptable as terms and conditions to the sale;
(b) to determine, in its sole discretion, which Qualified Bid, if any, is the
highest or otherwise best offer for the Membership Interest; (c) to reject at
any time prior to entry of an order of the Bankruptcy Court approving the sale
to the Prevailing Bidder, any bid which the Seller, in its sole discretion,
deems to be (i) inadequate or insufficient, or (ii) not in conformity with the
requirements of the Bankruptcy Code or the Sale Procedures; and/or (d) to
modify these Sale Procedures in any manner in its sole discretion which is not
otherwise inconsistent with any order of the Bankruptcy Court or the Agreement.

 12
 

EXHIBIT
“2”

IN THE
UNITED STATES BANKRUPTCY COURT

FOR THE
NORTHERN DISTRICT OF TEXAS

FORT
WORTH DIVISION

	
   

  	
  )

  	
   

  	 

	 
	
  In re

  	
  )

  	
  Chapter 11 Case

  
	 
	
   

  	
  )

  	
   

  
	 
	
  MIRANT CORPORATION, et  al.,

  	
  )

  	
  Case No. 03-46590 (DML) 

  
	 
	
   

  	
  )

  	
  Chapter 11

  
	 
	
   

  	
  )

  	
  Jointly Administered

  
	 
	
  Debtors.

  	
  )

  	
   

  
	 
	
   

  	
  )

  	
  Hearing Set: 

  
							

 

NOTICE OF AUCTION AND SALE HEARING
REGARDING

MOTION
OF EXCLUDED DEBTORS FOR ENTRY OF AN

ORDER
(I) AUTHORIZING AND APPROVING THE SALE OF ALL

MEMBERSHIP
INTERESTS IN MIRANT NY-GEN, LLC, BY MIRANT NEW

YORK,
INC. TO ALLIANCE ENERGY RENEWABLES, LLC, OR

ALTERNATIVELY
TO PREVAILING OVERBIDDER, FREE AND CLEAR OF

ALL
LIENS, CLAIMS, ENCUMBRANCES, AND INTERESTS, (II) APPROVING

THE
MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT

BETWEEN
MIRANT NEW YORK, INC., AS SELLER, AND ALLIANCE

ENERGY
RENEWABLES, LLC, AS PROPOSED PURCHASER, AND

AUTHORIZING
THE DEBTORS TO PERFORM THE TERMS THEREOF, AND

(III)
AUTHORIZING CERTAIN EXCLUDED DEBTORS TO ENTER INTO,

MODIFY
OR TERMINATE CONTRACTS AND LEASES PURSUANT TO THE  

MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT

TO ALL INTERESTED PARTIES:

PLEASE TAKE NOTICE that
on February 1, 2007, Mirant New York, Inc. (“Seller” or “Mirant New
York”), Mirant NY-Gen, LLC (“NY-Gen”), Mirant Bowline, LLC, Mirant
Lovett, LLC, and Hudson Valley Gas Corporation (collectively, the “Excluded
Debtors”), as debtors and debtors in possession, filed a motion (the “Sale
Motion”) with the United States Bankruptcy Court for the Northern District
of Texas, Fort Worth Division (the “Bankruptcy Court”), requesting entry
of an order (the “Sale Order”), pursuant to sections 105(a), 363, and
1146(c) of the Bankruptcy Code and Bankruptcy Rules 2002, 6004, 9006, 9007,
9008, 9013, 9014, and 9036 (a) authorizing and approving the sale by Mirant New
York of the Membership Interest(1) to Alliance Energy Renewables, LLC (“Alliance
Energy” or the “Purchaser”), or alternatively to

(1) Except as otherwise defined herein, all
capitalized terms shall have the same meanings ascribed to such terms in the
Sale Motion.

 13
 

prevailing overbidder, free and clear of all liens,
claims, encumbrances and interests pursuant to the terms of the Agreement; (b)
authorizing and approving the Membership Interest Purchase and Sale Agreement
(including all related instruments, documents, exhibits, schedules, lists, and
agreements thereto) between Seller and Purchaser dated January 31, 2007 (the “Agreement”),
which provides for the (i) sale, conveyance, assignment, transfer, and delivery
of the Membership Interest in Mirant NY-Gen to the Purchaser free and clear of
all liens, claims, encumbrances, and interests, and (ii) performance of related
transactions as set forth in the Agreement; and (c) authorizing the Excluded
Debtors to enter into, terminate or modify certain contracts and leases in
connection with the performance and closing of the Agreement.  Concurrently, a motion for approval of
certain sale procedures (“Sales Procedures Motion”) was filed with the
Sale Motion.

PLEASE TAKE FURTHER NOTICE:

A.            Pursuant
to an order, dated
           , 2007,
granting certain of the relief related to, among other things, the Sale
Procedures requested in the Sale Procedures Motion (the “Sale Procedures
Order”), Mirant New York will conduct an auction (the “Auction”)
before the Honorable D. Michael Lynn in the United States Bankruptcy Court for
the Northern District of Texas, Eldon B. Mahon U.S. Courthouse, 501 West Tenth
Street, Fort Worth, Texas 76102-3643 on
           , 2007 at
       (Prevailing Central Time), for the sale of
the Membership Interest.  Parties wishing
to participate in the Auction must become a Qualified Bidder and submit a “Qualified
Bid” so it is received by Seller not later than 4:00 p.m. (Prevailing
Central Time) on Wednesday, February 28, 2007 (the “Initial Bid Deadline”),
to the party specified in the Sale Procedures Order and provide for total consideration
to Mirant New York of not less than $500,000 in cash in excess of the Purchase
Price.  The Sale Procedures Order also
sets forth, among other things, the specific requirements for a bidder to be a
Qualified Bidder and a bid to be a Qualified Bid.

B.            A
hearing (the “Sale Hearing”) will be held on
           , 2007, at
           .m.
(Prevailing Central Time), or as soon thereafter as counsel can be heard,
before the Honorable D. Michael Lynn in the United States Bankruptcy Court for
the Northern District of Texas, Eldon B. Mahon U.S. Courthouse, 501 West Tenth
Street, Fort Worth, Texas 76102-3643, at which time Mirant New York will seek
entry of an order granting the remaining relief requested in the Sale Motion in
accordance with the Sale Procedures Order and the Agreement.

C.            Mirant
New York has selected Alliance Energy as the stalking horse bidder pursuant to
the terms of the Agreement, which Agreement provides, among other things, for
the sale of the Membership Interest to Alliance Energy free and clear of liens,
claims, encumbrances, and interests.

D.            Any
entity that wishes to submit a bid for the purchase of the Membership Interest
must comply in all respects with the terms and conditions established by the
Sale Procedures Order.  Copies of the
Sale Motion, the Sale Procedures Order, and the

 14
 

Agreement are available upon request by contacting
George S. Deptula, Hiscock & Barclay, LLP, One Park Place, 300 South State
Street, Syracuse, New York 13202 or Jeff P. Prostok, Forshey & Prostok LLP,
777 Main Street, Suite 1290, Fort Worth, Texas 76102.

PLEASE TAKE FURTHER NOTICE that
objections, if any, to entry of an order granting the remaining relief
requested in the Sale Motion, must be made in writing, filed with the
Bankruptcy Court, and served in accordance with the terms and conditions
established by the Sale Procedures Order so as to be actually received by the
parties specified in the Sale Procedures Order by 4:00 p.m. (Prevailing Eastern Time) on            , 2007.

PLEASE TAKE FURTHER NOTICE that
in the absence of any timely objection, Mirant New York will submit to the
Bankruptcy Court a form of order setting forth, among other things, that (i)
the notice procedures of the Sale Motion have been satisfied, (ii) no objection
to the Sale Motion was timely made or such objection has been resolved, and
(iii) Mirant New York may proceed with the remaining relief requested in the
Sale Motion.  The form of order will also
provide that to the extent any person or entity has any lien, claim,
encumbrance, or other interest (“Interest”) in the Membership Interest,
pursuant to the Sale Motion, such Interest will attach to the proceeds derived
by Mirant New York from the sale of the Membership Interest in order of their
priority and with the same validity, force, and effect that such Interest has
now against the Membership Interest, if any, subject to all rights and defenses
that Mirant New York may have.

IF YOU FAIL TO RESPOND IN ACCORDANCE
WITH THIS NOTICE, THE BANKRUPTCY COURT MAY GRANT THE REMAINING RELIEF REQUESTED
IN THE SALE MOTION WITHOUT FURTHER NOTICE TO YOU OR THE OPPORTUNITY TO OBJECT.

Dated:    Fort
Worth Texas

February    , 2007

	
  Jeff P. Prostok

  	
  George S.
  Deptula

  	
   

  	 

	 
	
  J. Robert Forshey

  	
  Hiscock & Barclay, LLP

  	
   

  
	 
	
  Forshey & Prostok LLP

  	
  One Park Place

  	
   

  
	 
	
  777 Main Street, Suite 1290

  	
  300 South State Street

  	
   

  
	 
	
  Fort Worth, Texas 76102

  	
  Syracuse, New York 13202

  	
   

  
	 
	
  Telephone:            817/877-8855

  	
  Telephone:            315/425-2725

  	
   

  
	 
	
  Facsimile:               817/877-4151

  	
  Facsimile:               315/425-8545

  	
   

  
							

 

 15

Schedule
7.15(c)

Sale
Order

IN THE
UNITED STATES BANKRUPTCY COURT

FOR THE
NORTHERN DISTRICT OF TEXAS

FORT
WORTH DIVISION

	
  

  	
  )

  	
   

  
	
  In re

  	
  )

  	
  Chapter 11 Case

  
	
   

  	
  )

  	
   

  
	
  MIRANT CORPORATION, et  al.,

  	
  )

  	
  Case No. 03-46590 (DML) 

  
	
   

  	
  )

  	
  Chapter 11

  
	
  Debtors.

  	
  )

  	
  Jointly Administered

  
	
   

  	
  )

  	
   

  

 

ORDER
(I) AUTHORIZING AND APPROVING SALE OF MEMBERSHIP INTEREST IN MIRANT NY-GEN,
LLC, BY MIRANT NEW YORK, INC. TO ALLIANCE ENERGY RENEWABLES, LLC, FREE AND
CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND INTERESTS, (II) AUTHORIZING AND
APPROVING MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT AND THE PERFORMANCE
BY THE DEBTORS OF THE TERMS THEREOF, AND (III) AUTHORIZING DEBTORS TO ENTER
INTO, MODIFY OR TERMINATE CONTRACTS AND LEASES PURSUANT TO THE MEMBERSHIP
INTEREST PURCHASE AND SALE AGREEMENT

Upon the motion dated February 1, 2007 (the “Sale
Motion”)(3) of Mirant New York, Inc. (“Mirant New York” or the “Seller”),
Mirant NY-Gen, LLC (“NY-Gen” or “Company”), Mirant Bowline, LLC
(“Mirant Bowline”), Mirant Lovett, LLC (“Mirant Lovett”), and
Hudson Valley Gas Corporation (“Hudson Valley”) (collectively, the “Excluded
Debtors” or “Debtors”), as debtors and debtors in possession, for
entry of an order pursuant to sections 105(a), 363, and 1146(c) of title 11 of
the United States Code (the “Bankruptcy Code”) and Rules 2002, 6004,
9006, 9007, 9008, 9013, 9014, and 9036 of the Federal Rules of Bankruptcy
Procedure (the 

(3) Terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Sale Motion or the Membership Interest Purchase and
Sale Agreement between Mirant New York, Inc. and Alliance Energy Renewables,
LLC, dated January 31, 2007 (the “Agreement”).

 1
 

“Bankruptcy Rules”) (a) authorizing and
approving the sale by Mirant New York of the Membership Interest in Mirant
NY-Gen to Alliance Energy Renewables, LLC (“Alliance Energy” or the “Purchaser”),
or alternatively to prevailing overbidder, free and clear of all liens, claims,
encumbrances and interests pursuant to the terms of the Agreement; (b) authorizing
and approving the Agreement (including all related instruments, documents,
exhibits, schedules, lists, and agreements thereto) which provides for the (i)
sale, conveyance, assignment, transfer, and delivery of the Membership Interest
in Mirant NY-Gen to the Purchaser free and clear of all liens, claims,
encumbrances, and interests, and (ii) performance of related Transactions as
set forth in the Agreement; and (c) authorizing the Excluded Debtors to enter
into, terminate or modify certain contracts and leases in connection with the
performance and Closing of the Agreement; and adequate and sufficient notice of
the Sale Motion, the Auction, the hearing on the Sale Motion (the “Sale
Hearing”), all Transactions contemplated thereunder, and this Order having
been given; and all parties in interest having been heard, or having had the
opportunity to be heard, regarding the matters raised by the Sale Motion and
relief related thereto; and the Court having reviewed and considered (i) the
Sale Motion and any objections thereto (the “Objections”), and (ii) the
arguments of counsel, and the evidence proffered or adduced at the Sale
Hearing; and it appearing from the affidavits of service heretofore filed with
the Court that due and sufficient notice of the Sale Motion, the Auction, the
Sale Hearing, and the relief sought in connection therewith have been provided
to all parties in interest; and it further appearing that no other or further
notice hereof is required; and it appearing that the relief requested in the
Sale Motion is in the best interests of the Debtors, their chapter 11 estates,
their creditors, and other parties in interest; and upon the record of the Sale
Hearing, including the decision of the Court to approve the Sale Motion as
reflected on the record thereof; and after due deliberation and good 

 2
 

and sufficient cause appearing therefore, this Court
hereby makes the following Findings of Fact and Conclusions of Law:(4)

FINDINGS
OF FACT

IT IS HEREBY FOUND AND DETERMINED THAT:

Jurisdiction,
Final Order, and Statutory Predicates

A.            The
Court has jurisdiction to hear and determine the Sale Motion and to grant the
relief requested therein, pursuant to 28 U.S.C. §§ 157(b) and 1334.  This matter is a core proceeding within the
meaning of 28 U.S.C. §§ 157(b)(2)(A), (K), (N), and (O).  Venue of the chapter 11 cases and the Sale
Motion is proper in this district under 28 U.S.C. §§ 1408 and 1409(a).

B.            This
Court entered the Sale Procedures Order on           ,
2007, under which, among other things, this Court approved certain Sale
Procedures.  The Sale Procedures Order
has become a final and non-appealable order and remains in full force and
effect.

C.            This
Sale Order constitutes a final and appealable order within the meaning of 28
U.S.C. § 158(a).

D.            The
statutory predicates for the relief sought in the Sale Motion are sections
105(a), 363(b), (f), (m), and (n), and 1146(c) of the Bankruptcy Code, as
complemented by Bankruptcy Rules 2002(a)(2), (c)(1), (g), (j), (k), (l), (m),
and (n), 6004(a), (b), (c), (e), (f), and (g), 9006, 9007, 9008, 9013, 9014,
and 9036.

(4) Findings of fact shall be construed as conclusions of law, and
conclusions of law shall be construed as findings of fact when
appropriate.  See
Fed. R. Bankr. P. 7052.  Any statements
of the Court at the hearing on the Sale Motion shall constitute additional
findings of fact and conclusions of law as appropriate and are expressly
incorporated by reference into this Order.

 3
 

The
Mirant Plan and the Excluded Debtors

E.             In
an order dated December 9, 2005, the Bankruptcy Court confirmed the Debtors’ Amended and Restated Second Amended Joint
Chapter 11 Plan of Reorganization for Mirant Corporation and its Affiliated
Debtors Dated December 9, 2005 (the “Mirant Plan”)  with respect to all of the Mirant Debtors
(collectively, the “New Mirant Entities”), except the Excluded Debtors.

F.             On
January 3, 2006, the New Mirant Entities emerged from Chapter 11. The Excluded
Debtors continue to manage and operate their businesses as
debtors-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy
Code.

Retention
of Jurisdiction

G.            It
is necessary and appropriate for the Court to retain jurisdiction as provided
in the Agreement to, among other things, interpret and enforce the terms and
provisions of this Order and the Agreement, and to adjudicate, if necessary,
any and all disputes involving the Debtors concerning or relating in any way
to, or affecting, the Membership Interest Sale including, but not limited to,
the Sale Motion, the Auction, and the Sale Hearing.

Corporate
Authority; Consents and Approvals

H.            The
Seller has full corporate power and authority to execute and deliver the
Agreement and all other documents contemplated thereby and to consummate the
Membership Interest Sale.  The Membership
Interest Sale has been duly and validly authorized by all necessary corporate
actions of the Seller.  No additional
consents or approvals other than the authorization and approval of this Court
and certain Governmental Approvals (as defined in the Agreement) are required
for the Seller to consummate the Membership Interest Sale.  Each of the Excluded Debtors has full
corporate power and authority to execute and deliver all documents and
agreements to which they are a party required or contemplated by the Agreement.

 4
 

Notice
of the Sale Motion

I.              As
evidenced by the affidavits of service previously filed with this Court (the “Notice
Affidavits”) and based upon representations of counsel at the Sale
Hearing:  (i) due, proper, timely,
adequate, and sufficient notice of the Sale Motion, the Auction, and the Sale
Hearing has been provided in accordance with sections 105, 363, and 1146 of the
Bankruptcy Code and Bankruptcy Rules 2002, 6004, 9006, 9007, 9008, 9013, 9014,
and 9036, and in compliance with the Sale Procedures Order, (ii) such notice
was good and sufficient, and appropriate under the circumstances, and (iii) no
other or further notice of the Sale Motion, the Auction, the Sale Hearing, or
the relief sought with respect thereto shall be required.

J.             A
reasonable opportunity to object or to be heard with respect to the Sale
Motion, the Auction, and the Sale Hearing has been afforded to all interested
persons and entities, including:  (a) all
parties entitled to receive notice as of the date hereof pursuant to the Order
Clarifying Order Granting Complex Chapter 11 Bankruptcy Case Treatment, dated
August 25, 2004, (b) all parties known to Mirant New York to have an interest
in acquiring the Membership Interest and the Sale Assets, (c) all entities
listed on the schedules of Mirant New York and Mirant NY-Gen, LLC as holding
secured claims and all entities who recorded or filed proof(s) of claim as
secured against Mirant NY-Gen or Mirant New York, (d) all entities who have
recorded in the public record any lien, claim, encumbrance, or interest in or
upon the Membership Interest or any of the assets of Mirant NY-Gen, (e) the
Federal Energy Regulatory Commission, (f) the Delaware River Basin Commission,
(g) the New York Public Service Commission, (h) the State of New York Department
of Environmental Conservation, (i) the New York City Department of
Environmental Protection, (j) the Securities and Exchange Commission, (k) the
United 

 5
 

States Environmental Protection Agency, (l) the Office
of the United States Attorney, (m) the United States Department of Justice, (n)
the Internal Revenue Service, (o) all parties granting permits or licenses to
Mirant NY-Gen, (p) the applicable state and local taxing authorities, and (q) all parties to Mirant NY-Gen’s
executory contracts and unexpired leases.

Sound
Business Purpose for the Sale of the Membership Interest

K.            Good
and sufficient reasons for approval of the Agreement and the Membership
Interest Sale have been articulated.  The
relief requested in the Sale Motion is within the reasonable business judgment
of the Seller and is in the best interests of the Debtors, their respective
chapter 11 estates and their creditors, and other parties in interest.

L.             The
Seller has demonstrated both (i) good, sufficient, and sound business purpose
and justification and (ii) sufficient circumstances for the entry into the
Agreement and the consummation of the Membership Interest Sale pursuant to
section 363(b) of the Bankruptcy Code, in that, among other things, the
consummation of the Membership Interest Sale to the Purchaser is necessary and
appropriate to maximize the value to the estates of Mirant New York and Mirant
NY-Gen and the Membership Interest Sale will facilitate confirmation of Mirant
NY-Gen’s Plan.

Auction

M.           On
           , 2007, in
connection with the Sale Hearing, the Bankruptcy Court conducted an Auction, in
accordance with the Sale Procedures Order entered by the Court.  At the conclusion of the Auction, the Seller
determined that the Purchaser was the Prevailing Bidder (as defined in the
Agreement) for the Membership Interest pursuant to the terms of the
Agreement.  The Court approved the
results of the Auction at the Sale Hearing on            ,
2007.

 6
 

Good
Faith of the Purchaser

N.            The
terms and conditions set forth in the Agreement are fair and reasonable.  The Seller and the Purchaser extensively
negotiated the terms and conditions of the Agreement in good faith and at arm’s
length, and the Purchaser is entering into the Agreement in good faith and is a
good faith purchaser within the meaning of section 363(m) of the Bankruptcy
Code, and is therefore entitled to the protections afforded thereby.

O.            The
Purchaser is not an “insider” (as that term is defined in section 101 of the
Bankruptcy Code) of Mirant New York or Mirant NY-Gen.  Mirant New York and the Purchaser have not
engaged in any conduct that would cause or permit the Agreement to be avoided
under section 363(n) of the Bankruptcy Code.

Highest
and Best Offer

P.             The
Agreement constitutes the highest and best offer for the Membership Interest.

Q.            The
Seller’s determination that the Agreement constitutes the highest and best
offer for the Membership Interest constitutes a valid and sound exercise of the
Seller’s business judgment.  The
Agreement represents a fair and reasonable offer to purchase the Membership
Interest.  No other entity has submitted
a qualified bid providing greater economic value for the Membership Interest
than the Purchaser.

Validity
of the Transfer of the Membership Interest

R.            The transfer of the
Membership Interest to the Purchaser pursuant to the Agreement is a legal,
valid, and effective transfer of good and marketable title of the Membership
Interest and vests or will vest the Purchaser with all of the Seller’s rights,
title, and interest in the Membership Interest as of the Closing Date free and
clear of all liens, claims, encumbrances, and interests against the Membership
Interest, and pursuant to section 363(f) of 

 7
 

the Bankruptcy Code.

S.             The
Purchaser is purchasing Mirant New York’s Membership Interest and is not
purchasing any of Mirant New York’s other assets.  Additionally, the Agreement provides
that  prior to the Closing Date, Mirant
NY-Gen will assign to Mirant New York (or such Affiliate of Mirant New York as
Mirant New York may direct pursuant to the Mirant NY-Gen Plan) all of Mirant
NY-Gen’s pending insurance claims for losses with respect to the Swinging
Bridge Facility and the Hillburn Facility (which may include, but shall not be
limited to, property, business interruption, and environmental losses),
intercompany receivables and intercompany claims as of the Closing Date, claims
against third parties for actions or inactions arising prior to the Closing
Date (including, but not limited to, claims filed against Orange & Rockland
Utilities, Inc. and Consolidated Edison, Inc. and/or any of their respective
Affiliates), and certain purchase orders, which such assignments are hereby
specifically authorized.

Section
363(f) of the Bankruptcy Code is Satisfied

T.            The
transfer of the Membership Interest pursuant to the Agreement is authorized
pursuant to one or more of the standards set forth in section 363(f)(1) through
(f)(5) of the Bankruptcy Code and, accordingly, the Seller may sell the
Membership Interest to Purchaser free and clear of all liens, claims,
encumbrances, and interests against the Membership Interest, Mirant New York,
and its chapter 11 estate.  The holders
of such liens, claims, encumbrances, and interests against Mirant New York, its
chapter 11 estate, or the Membership Interest, and non-Debtor parties to any
related agreements who did not object, or who withdrew their Objections, to the
Sale Motion, are deemed to have consented pursuant to section 363(f)(2) of the
Bankruptcy Code.  Holders of  liens, claims, encumbrances, or interests and
who asserted an Objection at the Sale Hearing, if any, fall within one or more
of the other subsections of section 

 8
 

363(f) and are adequately protected by having their
liens, claims, encumbrances, and interests, if any, against Mirant New York,
its chapter 11 estate, or the Membership Interest, attach to the cash proceeds
to be received by the Seller under the Agreement, subject to the same priority
and validity (and defenses and objections of the Seller and other parties in
interest, if any, with respect thereto) as are presently existing against the
Membership Interest in which they allege such a lien, claim, encumbrance, or
interest.

Transfer
Taxes

U.            The
transfer of the Membership Interest by Mirant New York to the Purchaser, and to
the extent that the Membership Interest Sale is considered a transfer of the
Sale Assets by Mirant NY-Gen, is and shall constitute a transfer pursuant to
section 1146(c) of the Bankruptcy Code and, accordingly, shall not be taxed
under any law imposing a stamp tax or a sales, use, transfer, duty, value
added, or any other similar tax, including without limitation, any bulk sales
tax under New York law.

Assignment
of the Membership Interest

V.            The
Seller has demonstrated that assignment of the Membership Interest in connection
with the Membership Interest Sale is an exercise of its sound business
judgment, and that such assignment is in the best interests of the chapter 11
estates of Mirant New York and Mirant NY-Gen.

Authorization
to Enter Into, Modify

or
Terminate Ancillary Contracts and Leases

W.           The
Debtors have demonstrated that the execution, modification or termination of
certain Ancillary Agreements pursuant to the terms of the Agreement are in the
best interest of their respective bankruptcy estates and should be authorized,
as applicable, pursuant to Section 363 of the Bankruptcy Code.

 9
 

X.            To
the extent any Findings of Fact set forth above constitute a Conclusion of Law,
the Court so concludes.

CONCLUSIONS
OF LAW

Based upon the foregoing Findings of Fact, IT IS HEREBY
ORDERED, ADJUDGED AND DECREED AS FOLLOWS:

1.             To
the extent any Conclusion of Law set forth below herein constitutes a Finding
of Fact, this Court so finds.

General
Provisions

2.             Except
to the extent that relief was previously granted in the Sale Procedures Order,
the relief requested in the Sale Motion is granted and approved in all
respects.  The sale of the Membership
Interest to Purchaser on the terms and conditions set forth in the Agreement is
approved.

3.             For
the reasons set forth on the record at the Sale Hearing, any Objections to the
Sale Motion, and the relief requested therein that have not been withdrawn,
waived, or settled, (a) are denied and overruled on the merits with prejudice
or (b) the interests of such parties filing Objections have otherwise been
satisfied or adequately provided for under the terms of this Order.

4.             The
terms and provisions of this Order shall be binding in all respects upon, to
the extent applicable, the Debtors, their chapter 11 estates, creditors,
members, managers, shareholders, officers, and directors, and upon all
interested parties, and their respective successors and assigns, including, but
not limited to, all non-Debtor parties asserting any liens, claims,
encumbrances and/or interests in the Membership Interest.

 10
 

Approval
of the Agreement

5.             Pursuant
to sections 363(b) and (f) of the Bankruptcy Code and the Agreement, the
Debtors are authorized and empowered to (i) take any and all actions necessary
or appropriate to effect, consummate, and close (a) the assignment, transfer,
and conveyance of the Membership Interest to the Purchaser, (b) the Membership
Interest Sale, and (c) this Order, and (ii) execute and deliver, perform under,
consummate, implement, and close fully the Agreement and the Ancillary Agreements
(as defined in the Sale Motion), together with all additional instruments and
documents that may be reasonably necessary or desirable to implement the
Membership Interest Sale.

6.             Pursuant
to sections 105(a) and 363(f) of the Bankruptcy Code and on the terms set forth
in the Agreement, upon the Closing provided in the Agreement, the Membership
Interest shall be and hereby is deemed transferred and assigned to the
Purchaser effective as of 11:59 p.m. (Prevailing Central Time) on the Closing
Date, free and clear of all liens, claims, encumbrances, and interests arising
or relating to the period prior to the Closing.

7.             All
persons and entities holding liens, claims, encumbrances, and interests of any
kind and nature accruing, arising or relating to a period on or prior to the
Closing Date with respect to the Membership Interest will be barred, estopped,
and permanently enjoined as of Closing from asserting such liens, claims,
encumbrances, and interests against the Membership Interest or against the
Purchaser and any of its affiliates, stockholders, members, managers, partners,
parent entities, successors, assigns, officers, directors or employees, agents,
representatives, and attorneys, and the Purchaser shall have no liability or
responsibility for any lien, claim, encumbrance, or interest arising, accruing,
or relating to the Membership Interest for a period on or prior to Closing.

 11
 

8.             The
transfer of the Membership Interest to the Purchaser pursuant to the Agreement
constitutes a legal, valid, and effective transfer of good and marketable title
of the Membership Interest, and vests or will vest the Purchaser with all
right, title, and interest in and to the Membership Interest, free and clear of
all liens, claims, encumbrances, and interests. 
Each non-Debtor party to any agreements with Mirant NY-Gen that are not
assumed by Mirant NY-Gen pursuant to the Mirant NY-Gen Plan will, as of
Closing, be barred, estopped, and permanently enjoined from asserting against
the Purchaser or Mirant NY-Gen any default, 
claim, or liability existing, accrued, arising, or relating to any such
agreements.

9.             On
the Closing Date, this Order shall be construed and shall constitute for any
and all purposes a full and complete general assignment, conveyance, and
transfer of the Membership Interest or a bill of sale that transferred good and
marketable title of the Membership Interest to the Purchaser.  Each and every federal, state, and local
governmental agency or department is hereby directed to accept any and all
documents and instruments presented by the Seller or Purchaser which are
necessary or appropriate to consummate the Membership Interest Sale.

10.           Pursuant
to sections 105(a) and 363 of the Bankruptcy Code, and on the terms set forth
in the Agreement, the Debtors are authorized to enter into, modify or terminate
the Ancillary Agreements.

Additional
Provisions

11.           This
Order is and shall be binding upon and shall govern the acts of all entities
including, without limitation, all filing agents, filing officers, title
agents, title companies, recorders of mortgages, recorders of deeds,
administrative agencies, governmental units, secretaries of state, federal,
state, and local officials, and all other persons and entities who may 

 12
 

be required by operation of law, the duties of their
office, or contract, to accept, file, register, or otherwise record or release
any documents or instruments, or who may be required to report or insure any
title or state of title in or to the Membership Interest.  All liens, claims, encumbrances, and
interests against the Membership Interest as of the date of this Order shall
forthwith, upon the occurrence of the Closing on the Closing Date with respect
to the Membership Interest, be removed and stricken as against such Membership
Interest, without further order of the Court or act of any party.  All liens, claims, encumbrances, and
interests against the Membership Interest as of the date of this Order shall
attach solely to the proceeds of the sale with the same validity (and subject
to the same defenses), priority, force and effect that such liens, claims,
encumbrances and interests had in and to the Membership Interest immediately
prior to Closing.  Upon the Closing Date,
the entities listed above in this paragraph are authorized and specifically directed
to strike all such recorded liens or claims against the Membership Interest as
provided for herein from their records, official and otherwise (including those
asserted by a secured lender).

12.           Each
and every federal, state, and local governmental agency, unit or department is
hereby directed to accept this Order as sole and sufficient evidence of the
transfer of title of the Membership Interest and such agency or department may
rely upon this Order in connection with the Membership Interest Sale.

13.           After
the Closing Date, no person or entity, including without limitation, any
federal, state or local taxing authority, may (a) attach or perfect a lien or
security interest against the Membership Interest on account of, or (b) collect
or attempt to collect from the Purchaser or any of its affiliates, any tax or
other amount alleged to be owing by Mirant New York on behalf of Mirant NY-Gen
or Mirant Services, LLC on behalf of Mirant NY-Gen (i) for any period 

 13
 

commencing before and concluding prior to or after the
Closing, or (ii) assessed prior to and payable after the Closing Date, except
as otherwise specifically provided in the Agreement.

14.           The
Purchaser is not a successor to Mirant New York or otherwise liable for any of
the liens, claims, encumbrances, interests, or other liabilities against Mirant
New York and all persons and entities are permanently enjoined from commencing,
continuing, or otherwise pursuing or enforcing any remedy, claim, cause of
action, lien, or encumbrance against Purchaser, the Membership Interest, or
Mirant New York.

15.           The
transfer of the Membership Interest by Mirant New York to the Purchaser, and to
the extent that the Membership Interest Sale is considered a transfer by Mirant
NY-Gen of the Sale Assets, is a transfer pursuant to section 1146(c) of the
Bankruptcy Code and, accordingly, shall not be taxed under any law imposing a
stamp tax or a sales, use, transfer, duty, value added, or any other similar
tax, including without limitation any bulk sales tax under the state law of New
York or other applicable laws.

16.           This
Court retains jurisdiction to, among other things:

i.              interpret,
implement, and enforce the terms and provisions of this Order and the terms of
the Agreement and any Ancillary Agreements, all amendments thereto and any
waivers and consents thereunder and of each of the agreements executed in
connection therewith;

ii.             enter orders in aid
or furtherance of the Membership Interest Sale;

iii.            resolve any disputes
arising under or related to the Agreement or the Membership Interest Sale and
to ensure peaceful use and enjoyment of the Membership Interest;

 14
 

iv.            adjudicate any and all
issues and/or disputes, if any, relating to the Purchaser’s or the Seller’s
right, title, or interest in, to and under the Agreement and related
agreements, and the Purchaser’s or other Debtors’ right, title or interest in,
to and under the Ancillary Agreements to which they are a party;

v.             adjudicate all issues
concerning prorations under the Agreement (including taxes) consistent with the
terms of the Agreement;

vi.            hear and resolve any
application (or disputes or issues relating thereto) to construe the Agreement;

vii.           adjudicate any and all
issues and/or disputes relating to the Seller’s right, title, or interest in
the Membership Interest and the proceeds thereof, the Sale Motion and/or the
Agreement;

viii.          adjudicate any and all
issues and/or disputes relating to the enforcement of this Sale Order including
those terms, without limitation, which compel delivery of the Membership Interest
to Purchaser and provide that any liens, claims, encumbrances, and interests
shall attach solely to the proceeds of the Membership Interest Sale; and

ix.            re-open the Debtors’
chapter 11 cases to enforce the provisions of this Order.

17.           The
consideration provided by the Purchaser for the Membership Interest under the
Agreement is fair and reasonable and may not be avoided under section 363(n) of
the Bankruptcy Code.  Each and every
person or entity is hereby barred, estopped, and permanently enjoined from
commencing or continuing an action seeking relief under section 363(n) of the
Bankruptcy Code.

 15
 

18.           The
Seller has undertaken the Membership Interest Sale in good faith (as that term
is used in section 363(m) of the Bankruptcy Code), and the Purchaser is and
shall continue to be in good faith (as that term is used in section 363(m) of
the Bankruptcy Code) by proceeding to close the Membership Interest Sale.  Accordingly, the reversal or modification on
appeal of the authorization to consummate the Membership Interest Sale approved
hereby shall not affect the validity and enforceability of such Membership
Interest Sale, unless such authorization is duly stayed pending such
appeal.  The Purchaser is a good faith purchaser
of the Membership Interest and entitled to all of the protections afforded by
section 363(m) of the Bankruptcy Code.

19.           The
sale of the Membership Interest to Purchaser under the Agreement will
constitute a transfer for reasonably equivalent value and fair consideration
under the Bankruptcy Code and the laws of all applicable jurisdictions.

20.           The
failure specifically to include any particular provision of the Agreement in
this Order shall not diminish or impair the efficacy of such provision, it
being the intent of this Court that the Agreement and each and every provision,
term, and condition thereof be authorized and approved in its entirety.

21.           Notwithstanding
Bankruptcy Rules 6004(g) and 7062, to the extent applicable, the Seller and the
Purchaser may consummate the Agreement at any time after entry of the Order by
waiving any and all closing conditions set forth in the Agreement that have not
been satisfied and by proceeding to close the Membership Interest Sale without
any notice to the Court, any prepetition or postpetition creditor of Mirant New
York or Mirant NY-Gen, and/or any other party in interest.

22.           The
Agreement and any related agreements, documents, or other instruments may be
modified, amended, or supplemented by the parties thereto, in a writing signed
by such parties 

 16
 

in accordance with the terms thereof, without further
order of the Court, provided that any such modification, amendment, or
supplement is not material.

23.           The
provisions of this Order are non-severable and mutually dependent.

	
  Dated:    Fort
  Worth, Texas

  	
   

  
	
                    ,
  2007

  	
   

  	
   

  
	
  

  	
  The Honorable D. Michael Lynn

  
	
   

  	
  United States Bankruptcy Judge

  

 

 17

Schedule 7.25

Form of
Cross-Indemnity Agreement

CROSS-INDEMNIFICATION AGREEMENT

THIS
CROSS-INDEMNIFICATION AGREEMENT (the “Agreement”),
is entered into this       day of               ,
2007, is by and among MIRANT BOWLINE, LLC (“Bowline”), MIRANT
NY-GEN, LLC (“N.Y. Gen”), MIRANT LOVETT, LLC (“Lovett”)
(Bowline, N.Y. Gen and Lovett each a “Party” and collectively, the “Parties”).

WHEREAS,
the Parties are signatories to a certain settlement agreement dated
August 31, 2001, with Orange and Rockland Utilities, Inc. (“O&R”)
(the “O&R
Settlement Agreement”);

WHEREAS,
each Party or all of the Parties may face liability under the O&R
Settlement Agreement; and

WHEREAS,
the Parties wish to enter into an agreement providing that any liability under
the O&R Settlement Agreement will be borne solely by the Party or Parties
whose failure to perform its or their obligations under the O&R Settlement
Agreement gave rise to the liability   
(each such responsible Party being hereafter referred to as an “Indemnitor”,  collectively,
the “Indemnitors”).

NOW, THEREFORE,
the Parties agree as follows:

1.                                       Definitions.  As used in this Agreement, capitalized terms
and non-capitalized words and phrases shall have the meanings
respectively assigned to them in Schedule I hereto.

2.                                       Exculpation
and Indemnification.

(a)                                  Each
Indemnitor agrees (i) to perform its obligations under this Agreement and the
O&R Settlement Agreement (subject to the right of any Party to reject the
O&R Settlement Agreement under the United States Bankruptcy Code); and (ii)
to indemnify the other Parties in accordance with the provisions of this
Agreement for any Losses that the other Parties may incur due to the Indemnitor’s
failure to perform its obligations as described in clause (i) aforementioned;
provided, however, that the Indemnitor’s indemnification obligations as herein
described shall only apply to the extent that the Losses incurred by the Party
who makes a indemnification claim against the Indemnitor are disproportionate
to those for which such Party would otherwise be liable under the terms of the
O&R Settlement Agreement.

(b)                                 Subject
to the provisions of Section 2(a) hereof, each Party, its Affiliates and each
of their respective Representatives who incurs any liability for any acts or
omissions of an Indemnitor which constitute a failure by such Indemnitor to
comply with its obligation under Section 2(a) hereof (each such Party being 

 1
 

individually referred to as an “Indemnitee”,
collectively, the “Indemnitees”)
shall be indemnified, reimbursed and held harmless by each Indemnitor (on a
joint and several basis if there is more than one Indemnitor) upon demand, and
defend at the expense of the Indemnitor (on a joint and several basis if there
is more than one Indemnitor) with counsel selected by the Indemnitor, from and
against any and all claims, liabilities, expenses (including, without
limitation, the disbursements, expenses and reasonable attorneys’ fees) and
other Losses that may be imposed upon, incurred by or asserted against any
Indemnitee resulting from, arising out of or directly or indirectly related to:
(i) any Indemnity Obligation; (ii) any inaccuracy in or omission from any
representation, warranty or other information contained in the O&R
Settlement Agreement signed or accepted by any Indemnitee or any of its
Representatives or in any certificate, report, statement, schedule or other
document delivered by or on behalf of any Indemnitee pursuant to the O&R
Settlement Agreement, (iii) any default (whether in whole or in part) in the
due or timely observance, performance or satisfaction of any covenant or other
term or provision of this Agreement or the O&R Settlement Agreement by the
Indemnitor in each case whether or not disclosed or known to the Indemnitee and
whether or not the Indemnitee relied thereon or had knowledge thereof; and each
Indemnitor hereby absolutely, unconditionally, irrevocably and expressly waives
and releases forever any and all related claims and actions against each such
Indemnitee to the extent such claims or actions arise out of the acts or
omissions of the Indemnitor.

(c)                                  The
Parties understand and agree that this Section is not intended, and shall not
be deemed or construed, to in any way (i) impose any Indemnity Obligation of
any Indemnitor on any Indemnitee for any purpose whatsoever, (ii) entitle
anyone other than an Indemnitee to any indemnity, reimbursement or other
recovery or benefit under this Section or any other applicable provision of
this Agreement or the O&R Settlement Agreement, or (iii) apply to any Losses
arising under subsections (b)(ii) or (b)(iii) of this Section to the extent
occasioned by any acts or omissions of any Indemnitee amounting to bad faith,
gross negligence or willful misconduct as finally determined pursuant to
Applicable Law by an Authority having jurisdiction.  The preceding exception for bad faith, gross
negligence or willful misconduct is limited to this Section and is not intended
(and shall not be deemed or construed) to in any way qualify, condition,
diminish, restrict, limit or otherwise affect any other exculpation,
indemnification, release, waiver, consent, acknowledgment, authorization or
other term or provision of this Agreement or the O&R Settlement Agreement.

(d)                                 Any
payment due to an Indemnitor from any Indemnitee (including any payment from
any escrow) shall be subject to offset and reduction for any such
indemnification, reimbursement and/or defense and any related Loss owed to the
Indemnitee (on behalf of itself and/or any of its Affiliates).

(e)                                  Each
Indemnitee shall endeavor to give the Indemnitor prompt notice of any action,
suit, proceeding or investigation against or involving either the Indemnitee or
the Indemnitor or any of their respective assets or properties that would be 

 2
 

reasonably likely to give rise to such an indemnification,
reimbursement or defense (each a “Proceeding”); provided,
however, that the failure to give such notice shall not in any way
diminish, reduce or otherwise affect the indemnification, defense or
reimbursement obligations of any Indemnitee with respect thereto under this
Agreement, the O&R Settlement Agreement, or Applicable Law. Each Indemnitee
shall have the right to employ separate counsel of its choice in any Proceeding
and to participate in the defense and settlement thereof.  The Indemnitor shall not be required  to pay the fees and expenses of counsel
selected by any Indemnitee unless any of the following shall occur: (i) the
Indemnitor has given written authorization permitting the Indemnitee to select
and retain counsel to represent the Indemnitee and agreeing that the fees and
expenses of such counsel will be paid by the Indemnitor; (ii) the named parties
to any Proceeding (including impleaded parties) include or are reasonably
likely to include the Indemnitee or any of its Affiliates or Representatives,
and the Indemnitee notifies the Indemnitor that counsel to the Indemnitee (or
counsel to any other Indemnitee) has advised that, in the professional judgment
of such counsel, (x) one or more legal defenses or counterclaims may be available
to such Indemnitee that may be inconsistent with, different from, or additional
to those available to the Indemnitor or any other Indemnitee or (y) use of
counsel selected by the Indemnitor could reasonably be expected to give rise to
a conflict of interest; or (iii) within five (5) Business Days after any
request therefor by the Indemnitee (which notice may be made with or at any
time after the notice required in the first sentence of this subsection is
given), the Indemnitor shall have failed to deliver to the Indemnitee (on
behalf of such Indemnitee and each other Indemnitee) the written agreement of
the Indemnitor to assume at its expense the defense of any Proceeding,
specifying the counsel proposed to be retained. 
If the counsel so proposed by the Indemnitor is not acceptable to the
Indemnitee in its reasonable discretion, then the Indemnitee shall so notify
the Indemnitor within five (5) Business Days and, thereafter, the Indemnitee
shall promptly propose other suitable counsel. When counsel acceptable to the
Indemnitee has been selected, such counsel shall promptly deliver to the
Indemnitee (on behalf of such Indemnitee and all other Indemnitees) written
confirmation that it is representing the Indemnitee and each other Indemnitee
and their interests in such defense, all at the expense of the Indemnitor,
which confirmation shall disclose any other parties such counsel may represent
in such defense or any related matter. In no event shall the Indemnitor be
required under this Section (absent its consent) to pay the fees and expenses
of more than one counsel separate from the counsel selected by the Indemnitor
to represent all Indemnitees in any Proceeding.

(f)                                    Neither
the Indemnitor nor any of its Representatives on its behalf may settle any
Proceeding, or offer or agree to do so, without the prior written consent of
the Indemnitee, which consent will not be unreasonably withheld.  Likewise, neither the Indemnitee nor any of
its Representatives on its behalf may settle any Proceeding, or offer or agree
to do so, without the prior written consent of the Indemnitor, which consent
will not be unreasonably withheld, in each case unless (i) such settlement is
without any further cost, liability or obligation to the 

 3
 

Indemnitor, or (ii) the Indemnitor is then in default
with respect to any of its obligations under this Agreement.

(g)                                 No
Party referenced in clause (f) above shall, without the prior written consent
of the other Party referenced therein: 
(i) settle or compromise any Proceeding or consent to the entry of any
judgment or order that does not include (as an unconditional term thereof) the
delivery by the plaintiff or other claimant to such other Party of a full and
complete written release of such other Party (in form, scope and substance
satisfactory to the other Party in its reasonable discretion) from any and all
obligations and liabilities in respect of such Proceeding and a dismissal with
prejudice of such Proceeding, or (ii) settle or compromise any Proceeding in
any manner that may adversely affect such other Party or obligate such other
Party to pay any sum or perform any obligation whatsoever, each as determined
by such other Party in its reasonable discretion.

(h)                                 All
Losses shall be immediately reimbursable to the Indemnitee(s) when and as incurred
and, in the event of any Proceeding, without the requirement of awaiting the
ultimate outcome of such Proceeding.  The
Indemnitor shall pay to the Indemnitee(s) any and all Losses within ten (10)
days after written notice from the Indemnitee(s) itemizing the amounts thereof
incurred to the date of such notice.  In
addition to any other remedy available for the failure of the Indemnitor to
periodically pay such Losses, such Losses, if not paid within said ten (10) day
period, shall bear interest at the annual rate of eighteen (18) percent per
annum until paid in full.

3.                                       Further
Assurances.  Each Party agrees to do
such further acts and things and to execute and deliver such statements,
assignments, agreements, instruments and other documents as the other Party
from time to time reasonably may request (a) in order to evidence or confirm
the priorities, subordinations, reservations of right and other agreements made
hereunder, or (b) in order to effectuate the purpose and the terms and
provisions of this Agreement, each in such form and substance consistent with
this Agreement as may be reasonably acceptable to the Parties and each at the
sole cost and expense of the requesting Party.

4.                                       Agreement
Absolute, Survival of Representations, Etc. 
Except as otherwise expressly provided in this Agreement, each of the
covenants and other agreements and obligations of each Party contained in this
Agreement: (a) are and shall be absolute, irrevocable and unconditional, and
shall survive and remain and continue in full force and effect in accordance
with their respective terms and provisions, in each case without regard to
(among other things) any invalidity, illegality, non-binding effect or
unenforceability (in whole or in part) for any reason whatsoever of any of the
other terms and provisions of this Agreement or the O&R Settlement
Agreement, including (without limitation) by reason of the absence (in whole or
in part) of any required authentication, authority, capacity, consent,
consideration, disclosure, equivalent value, filing, notice, recordation,
signature, writing or other action, or the presence (in whole or in part) of
any contractual conflict, defense, illegality, misconduct, misrepresentation,
mistake, prohibition, restriction or right of reimbursement, recoupment or
setoff; (b) are and shall be absolute, 

 4
 

irrevocable and unconditional with regard to, and
shall survive and remain and continue in full force and effect in accordance
with their respective terms and provisions following and without regard to,
each of the following (among other things): (i) any extension, stay, moratorium
or statute of limitations or similar time constraint under any Applicable Law,
(ii) any sale, conveyance, assignment, participation or other transfer by any
Party (in whole or in part) to any other Person of any one or more of this
Agreement, the O&R Settlement Agreement, or any one or more of the rights,
powers, privileges, remedies or interests of any Party herein or therein, other
than as expressly prohibited by this Agreement, or (iii) any act or omission on
the part of any Party or any other Person or any other event that otherwise
might constitute a legal or equitable defense or counterclaim; in each case in
such manner and order, upon such terms and provisions and subject to such
conditions as any Party may deem necessary or desirable in its sole and
absolute discretion, without notice to or further assent from any other Party
(except for such notices and actions as may be expressly required under this
Agreement or by Applicable Law), and without affecting any of the rights,
powers, privileges, remedies and other interests of any Party under this
Agreement, the O&R Settlement Agreement, and Applicable Law; (c) shall not
be subject to any defense, counterclaim, set-off, right of recoupment,
abatement, reduction or other claim or determination that any Party may have
against any other Party or any other Person; (d) shall not be diminished or
qualified by the dissolution, reorganization, insolvency, bankruptcy,
custodianship or receivership of any other Party or the inability of any of
them to pay their respective debts or perform or otherwise satisfy their
respective obligations as they become due for any reason whatsoever; and (e)
shall remain and continue in full force and effect without regard to any of the
foregoing events until all obligations under this Agreement and the O&R
Settlement Agreement, as the case may be, have been fully paid and satisfied.

5.                                       Termination.  Notwithstanding the terms in
Section 4 hereof or in any other provision in this Agreement, this Agreement
shall terminate upon the termination of the O&R Settlement Agreement or the
release of N.Y. Gen from its rights and obligations under the O&R
Settlement Agreement, except as to matters arising prior to such termination or
release.

6.                                       Waivers
of Notice, Etc.  Except for notices
to a Party expressly required to be given by the other Party under this
Agreement (and without in any way waiving or affecting any notice or other
action described in this Section and required to or from any other Person under
the O&R Settlement Agreement or Applicable Law), each Party hereby
absolutely, unconditionally, irrevocably and expressly waives forever each and
all of the following from the other Party: (a) acceptance and notice of any
acceptance of this Agreement or the O&R Settlement Agreement; (b) notice of
any action taken or omitted in reliance hereon; (c) presentment and notice
of any presentment; (d) demand for payment and notice of any such demand;
(e) dishonor and notice of any dishonor; (f) protest and notice of any protest;
(h) notice of any material and adverse effect, whether individually or in the
aggregate, or other information respecting (i) the assets, business, cash flow,
expenses, income, liabilities, operations, properties, prospects, reputation or
condition (financial or otherwise) of any Person, and (ii) the ability of any
Person to pay or otherwise satisfy (as and when due) any of their respective
obligations; and (g) any other proof, notice or demand of any kind whatsoever
with respect to any or all of the 

 5
 

Indemnity Obligations. No act or omission of any kind
in connection with any of the foregoing shall in any way impair or otherwise
affect the legality, validity, binding effect or enforceability of any term or
provision of this Agreement, the O&R Settlement Agreement, or any of the
Indemnity Obligations.

7.                                       Enforcement,
Etc.  Each Party, in its sole
discretion, may proceed to exercise or enforce any right, power, privilege,
remedy or interest that it may have under this Agreement, the O&R
Settlement Agreement, or Applicable Law: (a) at law, in equity or in any other
forum available under Applicable Law; (b) without notice except as otherwise
expressly provided herein; (c) without pursuing, exhausting or otherwise
exercising or enforcing any other right, power, privilege, remedy or interest
that it may have against or in respect of any Person or thing; and (d) in such
order and at such times as a Party may elect in its sole and absolute
discretion.

8.                                       Consent
to New York Jurisdiction and Venue, Etc. 
The Parties hereby consent and agree that the Supreme Court of the State
of New York for New York County, and the United States District Court for the
Southern District of New York (Manhattan) each shall have personal jurisdiction
and proper venue with respect to any dispute between the Parties; provided
that that the foregoing consent shall not deprive any Party of the right
in its discretion to voluntarily commence or participate in any other forum
having jurisdiction and venue or deprive any Party of the right to appeal the
decision of any such court to a proper appellate court located elsewhere.   Each Party will not raise, and each Party
hereby absolutely, unconditionally, irrevocably and expressly waives forever,
any objection or defense in any such dispute to any such jurisdiction as an
inconvenient forum.  The preceding
consents to jurisdiction and venue in New York State’s Supreme Court have been
made by the Parties in reliance (at least in part) on Section 5-1402 of the
General Obligations Law of the State of New York, as amended (as and to the
extent applicable), and other Applicable Law. 
Each Party acknowledges and agrees that a final judgment in any action,
suit, or proceeding between the Parties shall be conclusive and binding upon
the Parties and may be enforced against the applicable Party in any other
appropriate jurisdiction by an action, suit or proceeding in such other
jurisdiction.  To the extent that a Party
may be entitled to immunity (whether by reason of sovereignty or otherwise)
from suit in any jurisdiction, from the jurisdiction of any court or from any
other legal process, each Party hereby absolutely, unconditionally, irrevocably
and expressly waives forever such immunity.

9.                                       No
Fiduciary Relationship, Etc.  Each
Party represents and warrants to and acknowledges and agrees with the other
Party that: (a) the Parties’ sole relationship with each other under this
Agreement is that of arm’s-length counter-party; (b) no term or provision
of this Agreement is intended, nor deemed or construed, to (i) impose on any
Party any trust (other than as expressly provided herein), fiduciary,
franchise, agency, advisory or similar duty to or relationship with any other
Party or any of its Representatives, or (ii) make any Party a partner, joint
venturer, Affiliate, agent or other Representative of any other Party, and each
such duty, relationship, status, benefit or right that would otherwise be
imposed by Applicable Law with respect to this Agreement is hereby absolutely,
irrevocably, unconditionally, expressly and forever waived by each Party except
as otherwise expressly provided herein; and (c) each Party has received and
independently 

 6
 

and fully reviewed and evaluated this Agreement, the
obligations and transactions contemplated hereunder and the potential effects
of such obligations and transactions on its own business attributes.

10.                                 Reliance.  Each Party shall be entitled to rely upon any
notice, consent, certificate, affidavit, statement, paper, document, writing or
other communication (which to the extent permitted hereunder may be by telecopy
or telephone) reasonably believed by such Party to be genuine and to have been
signed, sent or made by the proper Person or Persons, and upon opinions and advice
of legal counsel, independent public accountants and other experts selected by
any Party.

11.                                 Notice.  Any notice, request, demand or other
communication permitted or required to be given to a Party under this Agreement
or the O&R Settlement Agreement shall be in writing and shall be sent to
the addressee at the address set forth in Schedule II attached hereto (or at
such other address as shall be designated by notice to the other Party and
Persons receiving copies), effective upon actual receipt (or refusal to accept
delivery) by the addressee on any Business Day, or the first Business Day
following receipt after the close of normal business hours or on any
non-Business Day, by (a) FedEx (or other equivalent national or international
overnight courier) or United States Express Mail, (b) certified,
registered, priority or express United States mail, return receipt requested,
(c) telecopy or (d) messenger, by hand or any other means of actual
delivery.

12.                                 Expenses.  Except as otherwise expressly provided in
this Agreement or the O&R Settlement Agreement, all costs, fees and
expenses incurred in connection with, or in anticipation, administration or
enforcement of, this Agreement shall be paid by the Party incurring such
expenses.  However, this Section is not
intended, and shall not be deemed or construed, to in any way modify or limit
any obligation or liability of any other Person 
for any such costs, fees or expenses under any instrument, agreement or
document in favor of any Indemnitee or Indemnitor.

13.                                 Interpretation,
Severability, Etc.  The Parties
acknowledge and agree that the terms and provisions of this Agreement have been
negotiated, shall be construed fairly as to all Parties hereto, and shall not
be construed in favor of or against any Party. 
In the event that any term or provision of this Agreement shall be
determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to Applicable Law by an Authority having jurisdiction and venue: (a)
that determination shall not impair or otherwise affect the validity, legality
or enforceability by or before that Authority of the remaining terms and
provisions of this Agreement; (b) if that determination was due to the scope or
duration of any such term or provision, the Parties agree that such Authority
shall have the power (and is hereby requested by the Parties) to limit the
scope or duration of such term or provision to the maximum permissible under
Applicable Law so that said provision shall be enforceable in such limited
form; and (c) this Agreement shall be enforced as if the unenforceable
provision were so deleted or limited to the greatest extent permitted by
Applicable Law; in each case except to the extent the deletion or limitation
thereof could reasonably be expected to impair the practical realization of the
principal rights and benefits hereunder of any Party.  No such determination shall impair or
otherwise affect the validity, legality or enforceability of any term or
provision of this 

 7
 

Agreement by or before any other Authority.

14.                                 Successors
and Assigns; Assignment; Intended Beneficiaries.  Whenever in this Agreement reference is made
to any Person, such reference shall be deemed to include the successors,
permitted assigns, heirs and legal representatives of such Person and, without
limiting the generality of the foregoing, all representations, warranties,
covenants and other agreements made by or on behalf of each Party in this
Agreement shall inure to the benefit of the successors, permitted assigns
(including, without limitation, 
participants and any Person for whom such Party may be acting as Agent,
as applicable) and legal representatives of the other Party; provided, however,
that nothing herein shall be deemed to authorize or permit any Party to assign
any of its obligations under this Agreement, and no party shall make any such
assignment.  The terms and provisions of
this Agreement are for the exclusive benefit of the Parties hereto, and no
other Person (including, without limitation, creditors of any Party hereto)
shall have any right or claim against any Party by reason of any of those terms
and provisions or be entitled to enforce any of those terms and provisions
against any Party.

15.                                 No
Waiver by Action, Cumulative Rights, Etc. 
Any waiver or consent respecting this Agreement shall be effective only
if in writing and signed by each applicable Party against whom enforcement may
be sought and then only in the specific instance and for the specific purpose
for which given.  No waiver or consent
shall be deemed (regardless of frequency given) to be a further or continuing
waiver or consent.  The failure or delay
(in whole or in part) of any Party to require performance of, or to exercise or
otherwise enforce any of the rights or remedies of such Party with respect to,
any term or provision of this Agreement shall in no way affect the right of any
Party at a later time to exercise or otherwise enforce any such term or
provision.  No notice to or demand on any
Party or other Person in any case shall entitle such Party or Person to any
other or further notice or demand.  All
representations, warranties, covenants, agreements and obligations of each
Party (whether individual, joint, several or otherwise) in this Agreement and
all rights, powers, privileges, remedies and other interests of each Party
under this Agreement or Applicable Law are cumulative and not alternatives.

16.                                 Governing
Law.  This Agreement  shall be governed by and construed in accordance with the
applicable federal law of the United States of America, and to the extent not
preempted by such federal law, by the applicable law of the State of New York
(other than those conflict of law rules that would defer to the substantive
laws of another jurisdiction).  This governing
law election has been made by the parties in reliance (at least in part) on
Section 5-1401 of the General Obligations Law of the State of New York, as
amended (as and to the extent applicable), and other applicable law.

17.                                 Counterparts,
Amendments, Etc. This Agreement or any supplement, modification, amendment,
restatement or waiver respecting this Agreement may be executed in two  (2) or more counterpart copies of the entire
document or of signature pages to the document, each of which may have been
executed by one or more of the signatories hereto or thereto and delivered by
mail, courier, telecopy, pdf file or other electronic means, but all of which,
when taken together, shall constitute a single instrument or agreement binding
upon all of the signatories hereto or thereto, as the case may be.  Each and every 

 8
 

supplement, modification or amendment to or
restatement of this Agreement shall be in writing and signed by all of the
Parties hereto, as applicable, and each and every waiver of, or consent to any
departure from, any term or provision of this Agreement shall be in writing and
signed by each Party against whom enforcement thereof may be sought.

IN WITNESS WHEREOF, the undersigned have signed this Agreement
or caused it to be signed by their duly authorized signatories effective as of
the date first written above.

	
  

  	
  MIRANT
  BOWLINE, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MIRANT
  NY-GEN, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MIRANT
  LOVETT, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  

 9
 

SCHEDULE I

Definitions and Interpretation

1.             Defined
Terms.

“Affiliate” of a referenced Person shall mean
(a) another Person controlling, controlled by or under common control with such
referenced Person, (b) any other Person beneficially owning or controlling ten
percent (10%) or more of the outstanding voting securities, rights or interests
in the capital, distributions or profits of the referenced Person or (c) any
officer or director of or partner in the referenced Person.  The terms “control”, “controlling”,
“controlled” and the like shall mean the direct or indirect possession
of the power to direct or cause the direction of the management or policies of
a Person or the disposition of its assets or properties, whether through
ownership, by contract, arrangement or understanding, or otherwise. None of the
Parties shall be deemed to be Affiliates of each other.

“Agreement” means the Cross-Indemnification
Agreement among Mirant Bowline LLC, Mirant NY-Gen, LLC, and Mirant Lovett, LLC
dated the      day of                 ,
2007.

“Applicable Law” shall mean any applicable law,
including (without limitation) any applicable: 
(a) federal, state, provincial, territorial, county, municipal, local or
other governmental or quasi-governmental law, statute, ordinance, rule,
regulation, requirement, policy or use or disposal classification or
restriction or interpretation thereof; (b) judicial, administrative or other
governmental or quasi-governmental order, injunction, writ, judgment,
decree, ruling, interpretation, guideline, finding or other directive; (c) common
law or other legal or quasi-legal precedent; (d) arbitrator’s, mediator’s
or referee’s decision, finding, award or recommendation; or (e) charter, rule,
regulation or other organizational or governance document of any national
securities exchange or market or other self-regulatory or governing body or
organization; in each case (i) whether domestic or foreign, (ii) whether at
law, in equity or otherwise, and (iii) as the same may be adopted,
supplemented, modified, amended, restated or replaced from time to time or any
corresponding or succeeding provisions thereof.

“Authority” shall mean any governmental, quasi-governmental
or industry authority, including (without limitation) any federal, state,
provincial, territorial, county, municipal, local or other government or
governmental or quasi-governmental agency, board, branch, bureau,
commission, court, department or other instrumentality or political unit or
subdivision, whether domestic or foreign, any national securities exchange or
market, or any accreditation, self-regulatory or governing body, center,
commission or similar organization.

“Business Day” means a day other than Saturday,
Sunday or a day on which banks are legally required or permitted to be closed
for business in the State of New York.

 10
 

“Indemnitee(s)” has the meaning attributed
thereto in Section 2(b) of the Agreement.

“Indemnitor(s)” has the meaning attributed
thereto in the recitals to the Agreement.

“Indemnity Obligation(s)” shall mean an
Indemnitor’s obligations to indemnify and reimburse any Indemnitees for any and
all of their respective Losses under this Agreement.

“Loss” shall mean any loss, damage, injury,
harm, detriment, decline in value, lost opportunity, liability, exposure,
claim, demand, action, suit, proceeding, arbitration, mediation, investigation,
audit, review, payment, settlement, judgment, award, fine, penalty, tax, fee,
charge, cost or expense (including, without limitation, any liability payment,
any disbursement, expense or fee or other amount paid to any attorney or other
professional advisor, and any costs of investigation or remediation).

“O&R” has the meaning attributed thereto in
the recitals to the Agreement.

“O&R Settlement Agreement” has the meaning
attributed thereto in the recitals to the Agreement.

“Party” and “Parties” shall have the
meanings respectively assigned to them in the opening paragraph of the
Agreement.

“Person” shall include (without limitation) any
manner of association, business trust, company, corporation, estate,
governmental or other Authority, group (including one under Section 13(d)(3) of
the Securities Exchange Act),  joint
venture, limited liability company, natural person, partnership, syndicate,
trust or other entity.

“Proceeding” has the meaning attributed thereto
in Section 2(e) of the Agreement.

“Representative” of a referenced Person shall
mean any subsidiary or other Affiliate of the referenced Person or any
equity-holder, partner, equity holder, member, director, officer, manager,
employee, subcontractor or consultant, agent, attorney, accountant, financial
or other advisor or representative of the referenced Person or of any of its
subsidiaries or other Affiliates.

2.             Rules of
Interpretation.

In the Agreement, the meaning of each capitalized term
or other word or phrase defined in singular form also shall apply to the plural
form of such term, word or phrase, and vice versa; each singular pronoun shall
be deemed to include the plural variation thereof, and vice versa; and each
gender specific pronoun shall be deemed to include the neuter, masculine and
feminine, in each case as the context may permit or required.  Any table of contents or caption, section or
other heading is for reference purposes only and shall not affect the meaning
or interpretation of such document; and each reference to any Section,
subsection, and the like shall mean those of or attached to such document
unless otherwise expressly provided.  The
word “event” shall include (without limitation) any 

 11
 

event, occurrence, circumstance, condition or state of
facts; the words “hereof”, “herein” and “hereunder” and
words of similar import shall refer to such document as a whole and not to any
particular provision of such document; the words “include”, “includes”
and “including” shall be deemed to be followed by the phrase “(without
limitation)”, whether or not so stated, and in any event shall not in any way
(i) limit the generality of the provision preceding such word, (ii) preclude
any other applicable item encompassed by the provision preceding such word, or
(iii) be deemed or construed to do so; and unless the context clearly requires
otherwise, the word “or” shall have both the inclusive and alternative
meaning represented by the phrase “and/or”.  Reference to any Applicable Law, whether
generically or specifically, shall mean such Applicable Law as adopted,
supplemented, modified, amended, restated, codified, replaced or reenacted, in
whole or in part, and then in effect; and each reference to any instrument,
Agreement or other document (including any defined term) in this agreement
shall mean such instrument, lease, agreement or other document as the same may
have been and hereafter may be executed, amended, restated, replaced,
supplemented or otherwise modified.

 12
 

SCHEDULE
II

Addresses
of the Parties

 13

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