Document:

a51294053ex10_1.htm

 

Exhibit 10.1

 

Execution Version

 

	TRANSITION AND SEPARATION AGREEMENT AND RELEASE

 

This Transition and Separation Agreement and Release (this “Agreement”) dated March 1, 2016 is made and entered into by and between Lorenzo Delpani, on behalf of himself, his heirs, executors, administrators and assigns (collectively “Delpani”), and Revlon Consumer Products Corporation (“RCPC”) and Revlon, Inc. (“Revlon”) (RCPC and Revlon collectively, the “Company”).

 

WHEREAS, Delpani has been employed by the Company as its Chief Executive Officer since November 1, 2013 pursuant to his most recently Amended & Restated Employment Agreement dated as of December 12, 2014, including the Company’s Employee Agreement as to Confidentiality and Non-Competition (the “Non-Competition Agreement”) incorporated by reference therein (the “Employment Agreement”);

 

WHEREAS, Delpani and the Company have had and continue to have a reciprocally constructive and value-generating relationship;

 

WHEREAS, Delpani has communicated his consideration about leaving the Company after the time, energy and effort he has spent as Chief Executive Officer in accomplishing the Company’s strategy of value creation;

 

WHEREAS, the Company desires to make an election of rights under Section 4.3 of the Employment Agreement, to provide Delpani with the consideration as described herein and to continue to compensate Delpani for future occasional advisory services;

 

WHEREAS, as further consideration for the Company providing Delpani with the additional compensation and benefits as described herein and for continuing to compensate Delpani for future occasional advisory services, Delpani agrees to refrain from engaging in any activities in violation of the Non-Competition Agreement;

 

WHEREAS, Delpani and the Company desire to settle fully, finally and in an amicable way the terms of Delpani’s resignation as Chief Executive Officer effective March 1, 2016, and his separation from employment with the Company, effective March 31, 2016 (the “Separation Date”); and

 

WHEREAS, from the date of this Agreement through the Separation Date, Delpani will remain on the Company’s payroll and will continue to participate in the Company’s benefit programs, and will be entitled to receive the payments and benefits set forth in Section 3 herein irrespective of the obligations set forth in this Agreement.

 

NOW THEREFORE, in consideration of the covenants and obligations set forth herein, Delpani and the Company agree as follows:

 

1.            NON-COMPETITION PAY.  As contemplated under Section 4.3 of the Employment Agreement, in consideration for Delpani’s signing this Agreement, the Company agrees to provide Delpani the following consideration, pursuant to the terms and conditions set forth in this Agreement:

 

  

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Execution Version

 

 

	
a.        

	
Subject to his compliance with Sections 9, 10 and 12 of this Agreement (each, a “Restrictive Covenant” and collectively, the “Restrictive Covenants”) during the Non-Competition Period (as defined below), the Company agrees to provide Delpani with the following:

 

	
 (i)    

	
The Company will pay Delpani “Non-Competition Pay”, for a total of twenty four (24) months (the “Non-Competition Period”), commencing on the Separation Date and terminating on March 31, 2018.  Delpani’s Non-Competition Pay will be at a rate of six-hundred thousand dollars per annum, representing fifty percent (50%) of his Base Salary (as defined in the Employment Agreement) in effect on the Separation Date, less applicable withholdings and deductions, and will be payable bi-weekly starting on the first regularly scheduled payroll date following the Effective Date (defined below).  In the event of Delpani’s death during the Non-Competition Period, the Company will continue to pay, to Delpani’s estate, the Non-Competition Pay for the duration of the Non-Competition Period.

 

	
(ii)   

	
2016 Pro-Rated Bonus.  In respect of the 2016 fiscal year, to the extent annual bonuses are paid to executives of the Company for such year, the Company will pay Delpani a pro-rated “annual bonus” (as described in Section 3.2 of the Employment Agreement) at the target level to which Delpani is eligible, subject to adjustment based on the Company’s level of attainment of its corporate performance objectives for such year, multiplied by a fraction, the numerator of which is three and the denominator of which is twelve, minus the deductions required by law.  Such amount shall be payable on the date annual bonuses are otherwise paid to similarly situated executives of the Company in accordance with the Revlon Executive Incentive Compensation Plan.

 

	
(iii)  

	
COBRA Premium Payments and Continued Participation in Ex-Pat Medical Program.  Delpani will be permitted to continue participation in the Company’s Medical, Dental and Vision Care programs (the “Benefit Programs”) pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).  Delpani will also continue to participate in the existing medical program sponsored by the Company for the benefit of expatriates (the “Ex-Pat Medical Program”). Delpani may continue participation in the Benefit Programs and Ex-Pat Medical Program with the Company continuing to pay the premiums at the contribution level in effect for active employees until the earliest to occur of (1) the end of the Non-Competition Period; or (2) when Delpani becomes covered by medical, dental and/or vision plans of another employer, or becomes eligible for Medicare.  In the event that, during the Non-Competition Period, Delpani becomes ineligible to participate in any Benefit Program pursuant to COBRA due to the expiration of the 18-month COBRA eligibility period, the Company shall secure and pay the premiums for an alternative means of coverage for Delpani that is substantially comparable to the benefit plans in which Delpani was participating in prior to the Separation Date, until the earliest to occur of (1) the end of the Non-Competition Period; or (2) when Delpani becomes covered by medical, dental and/or vision plans of another employer, or becomes eligible for Medicare.

 

  

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Execution Version

 

 

	
(iv)  

	
Life Insurance. Delpani shall continue to participate in the Company’s group life insurance plan at the same level he participated in such plan prior to the Separation Date, and the Company will continue to pay the applicable monthly premiums, until the end of the Non-Competition Period.

 

	
b.        

	
Non-Solicitation Consideration-Vesting of 2014 Restricted Shares.  In August 2014, Delpani received a restricted stock grant consisting of 328,515 restricted shares of Revlon, Inc. Class A Common Stock (the “2014 Restricted Shares”) pursuant to the Restricted Stock Agreement evidencing the grant of such awards (the “Restricted Stock Agreement”).  The 2014 Restricted Shares were scheduled to vest in equal installments over five (5) consecutive years on March 15th of each such year, beginning on March 15, 2015.  Delpani vested in 65,703 shares on March 15, 2015.  In consideration for Delpani’s signing this Agreement, and in consideration for, and subject to, Delpani’s continued compliance with the Restrictive Covenants during the Non-Competition Period, the Company agrees that:

 

	
(i)    

	
Delpani will remain eligible to vest in the 65,703 shares scheduled to vest on March 15, 2017 (collectively, the “Eligible Shares”), so long as Delpani has not violated any Restrictive Covenant prior to such vesting date.  Notwithstanding anything in the Restricted Stock Agreement to the contrary, as of the date of this Agreement, the 65,703 shares that would have vested on March 15, 2018, and the 65,703 shares that would have vested on March 15, 2019, are hereby forfeited and cancelled without any consideration in respect thereof.

 

	
(ii)   

	
Upon a Change of Control (as defined in the Restricted Stock Agreement) any then-unvested portion of the Eligible Shares shall vest on the consummation of the Change of Control, so long as Delpani has not violated any Restrictive Covenant prior to the date such Change of Control is consummated.

 

  

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Execution Version

 

 

In the event Delpani breaches Section 9 of this Agreement, then the value of any 2014 Restricted Shares which vested during the twelve (12) month period prior to the later of (i) the date on which Delpani’s employment relationship with the Company ends or (ii) the date on which the Advisory Services ends shall be repaid to the Company by Delpani, in cash, within ten (10) days from such date of termination, and the Company is hereby authorized to deduct such amount from any other payments otherwise due to Delpani (the “Repayment Obligation”).

 

For the avoidance of doubt, Delpani shall be permitted to sell vested shares of the Company’s common stock owned or held by him following the Separation Date, subject to Delpani’s compliance with the Company’s policies, including pre-clearance procedures, related to purchases and sales of shares by directors and Section 16 officers of the Company.

 

	
c.         

	
The Board (or a committee thereof) will reasonably consider, in good faith, any request by Delpani to waive or modify all or a portion of the provisions of the Non-Competition Agreement as the Board deems appropriate.

 

2.             ADVISORY SERVICES.  Delpani agrees to the following:

 

	
a.         

	
During the Advisory Period (as defined in this Section 2) Delpani will willingly provide advice, assistance and cooperation to the Company if, as and when requested by the Company’s Board of Directors (the “Board”), provided that the Board will take reasonable efforts to coordinate with Delpani to ensure that Delpani’s schedule is not unreasonably disrupted by the provision of such advice, assistance or cooperation. Such services shall relate to his expertise or experience, including without limitation, providing advisory services as may pertain to the Company’s transitioning to a new Chief Executive Officer (any of the foregoing, the “Advisory Services”).  The Advisory Services shall be provided to the Board and members of the Global Leadership Team.  From the commencement of the Advisory Period through June 30, 2016, Delpani’s obligation to provide the Advisory Services shall be limited to no more than twenty hours per month.  Beginning on July 1, 2016 and continuing through the end of the Advisory Period, Delpani’s obligation to provide the Advisory Services shall be limited to no more than ten hours per month.

 

	
b.         

	
Delpani acknowledges and agrees that unless expressly authorized by the Board, while providing the Advisory Services he is not authorized to speak on behalf of the Company, to enter into agreements on behalf of the Company or to otherwise bind the Company.

 

  

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Execution Version

 

 

	
c.         

	
Advisory Services Pay.  In consideration of Delpani’s agreement to be available to provide the Advisory Services and his actually providing the Advisory Services as and when requested by the Board, but without regard to whether the Board actually makes a request for such services, the Company agrees to pay Delpani during the Advisory Period a fee at a rate of six-hundred thousand dollars ($600,000) per annum, representing fifty percent (50%) of his Base Salary in effect on the Separation Date (the “Advisory Services Pay”), less applicable withholdings and deductions, which will be payable bi-weekly starting on the first regularly scheduled payroll date following the Effective Date.

 

	
d.         

	
The Advisory Period shall begin on the Separation Date and shall continue until the earlier of the following:

 

	
(i)    

	
the end of the twenty fourth (24th) month following the Separation Date;

 

	
(ii)   

	
the date on which the Board gives Delpani notice that it no longer requires Delpani’s provision of the Advisory Services for any reason other than in connection with the existence of Cause (as defined below); provided that, in the case of such termination of the Advisory Services by the Company other than for Cause, the Company shall continue to pay Delpani the remaining Advisory Services Pay until the end of the twenty fourth (24th) month immediately following the Separation Date (subject to his continued compliance with each Restrictive Covenant during such period); and

 

	
(iii)  

	
the date on which Delpani commits any of the following act(s):  (A) the willful failure by Delpani to provide or perform the Advisory Services, (B) Delpani’s conviction of any felony or any crime of moral turpitude, or (C) his breach of any Restrictive Covenant, (any such event under clause (A), (B) or (C), “Cause”).  If and to the extent any occurrence of Cause is capable of cure in the good faith determination of the Board (or a committee thereof), the Company shall provide notice of the same to Delpani, who shall then have ten (10) days to cure such event of Cause to the satisfaction of the Company, it being acknowledged and agreed that the Company's good faith determination as to whether a Cause event is subject to cure shall be final and binding upon the parties.

 

  

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Execution Version

 

 

	
 

	

For the avoidance of doubt, upon the conclusion of the Advisory Period for any reason other than a termination by the Company pursuant to Section 2(d)(ii), the Advisory Services Pay shall cease.

 

	
  

	
If, during the Advisory Period, Delpani resigns as a member of the Board at a time when Cause does not otherwise exist, such resignation will not, on its own, impact Delpani’s right to continue to provide Advisory Services and receive Advisory Pay, subject to his compliance with his other on-going obligations under this Agreement.

 

3.   2015 Annual Bonus and 2014 Transitional LTIP.  This Section 3 sets forth the payments and benefits that Delpani is entitled to receive without regard to any of the covenants, obligations or consideration set forth in this Agreement.  Irrespective of whether this Agreement becomes effective, Delpani will receive from the Company the following payments and benefits:

 

	
  a.      

	
the Company shall pay Delpani $2,160,000 in satisfaction of his annual bonus pursuant to the 2015 Bonus Program (such amount, the “2015 Bonus”).  The 2015 Bonus shall be paid on the date annual bonuses are otherwise paid to similarly situated executives of the Company in accordance with the Revlon Executive Incentive Compensation Plan;

 

	
b.      

	
the Company shall pay Delpani $2,944,000 in respect of his 2014 Transitional LTIP (the “2014 Transitional LTIP”).  Such amount will be paid in a lump sum in March of 2016, in accordance with the terms of the Revlon Executive Incentive Compensation Plan; and

 

	
c.      

	
Delpani will vest in the 65,703 2014 Restricted Shares scheduled to vest on March 15, 2016, subject to the Repayment Obligation.

 

4.   SERVICE ON BOARD OF DIRECTORS/OTHER RESIGNATIONS/ COOPERATION. Delpani shall continue to serve as a member of the Board at the discretion of the Board and as long as so elected by the Company’s shareholders. As of March 1, 2016, Delpani will resign from all other positions that he holds as an officer or otherwise of the Company and its affiliates, and will promptly execute such documents and take such actions as may be necessary or requested by the Company to effect or memorialize the resignation of such positions. Delpani agrees, without limitation as to time, to provide his attendance and truthful testimony where deemed appropriate by the Board, with respect to any investigation or the Company’s defense or prosecution of any existing or future claims with respect to any matters about which Delpani has knowledge by virtue of his employment with the Company or by virtue of providing the Advisory Services. Such assistance and cooperation shall be provided by Delpani without fee or charge, other than reasonable travel expenses and disbursements. Assistance shall be given during regular business hours at locations and times mutually agreed upon by Delpani and the Company, except with respect to mandated court appearances for which he will make himself available upon reasonable notice.

                

  

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Execution Version

 

 

5.              GENERAL RELEASE.  In exchange for the consideration provided to Delpani under Section 1 and Section 2 of this Agreement (collectively, the “Consideration”), Delpani hereby releases and holds harmless Revlon Consumer Products Corporation and Revlon, Inc. and their past, present or future parent and subsidiary companies, corporations, affiliates, divisions, successors and assigns (whether or not incorporated), and any of their past, present or future employees, agents, assigns, officers, directors and shareholders, whether acting in their individual or representative capacity (collectively, the “Releasees”) from and waives any claim, known or unknown, in any legal jurisdiction, that Delpani has presently has, or has had in the past, against the Releasees upon or by reason of any matter, cause or thing whatsoever, from the beginning of the world to the date he signs this Agreement in the first space below, including, without limitation, all claims arising from Delpani’s employment with, or separation of employment from, the Company or otherwise.  Notwithstanding the prior sentence, it is understood and agreed that the only rights or claims that Delpani is not releasing and waiving are (1) rights to receive the compensation and benefits provided to him under this Agreement (2) ERISA vested benefits; (3) government-mandated benefits such as unemployment compensation or COBRA; (4) rights to indemnification pursuant to Section 9 of the Employment Agreement; or (5) any other rights which by law cannot be released.   Also in  exchange for the consideration provided to Delpani under Section 1 and Section 2 of this Agreement, Delpani will reaffirm his signature to this Agreement by executing a replication of this release in the form attached hereto as Exhibit A.

 

6.              EXTENT OF RELEASE.  Without limiting the generality of the preceding “GENERAL RELEASE” Section, this Agreement is intended to and shall release the Releasees from any and all claims or rights arising under any federal, state or local statute, regulation or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866, the Age Discrimination in Employment Act of 1967, the Equal Pay Act, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974 (“ERISA”), the Worker Adjustment and Retraining Act, the Sarbanes-Oxley Act of 2002, and all other statutes, regulations or ordinances regulating the terms and conditions of Delpani’s employment (as any of the foregoing may be amended from time to time), under the common law or in equity (including any claims for wrongful discharge, discrimination, retaliation, whistleblower claims or otherwise), or under any policy, agreement, understanding or promise, written or oral, express or implied, formal or informal, between the Company and Delpani.  As a part of this General Release, Delpani agrees and acknowledges that he is not entitled to any further payments or benefits other than as set forth in this Agreement, including without limitation any notice payments, bonus payments (other than payment of the 2015 Bonus), payments pursuant to any long-term incentive awards under the Revlon Executive Incentive Compensation Plan (including LTIPs but other than the 2014 Transitional LTIP) or severance or termination payments, and any payments of any kind under the Employment Agreement, including any payments under Section 13 of the Employment Agreement in the event a Change of Control occurs within the Non-Competition Period.

 

  

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Execution Version

 

 

7.             TIME TO CONSIDER AND EFFECTIVE DATE.  By signing this Agreement in the space provided below and returning it, and by signing Exhibit A on the Separation Date and returning it, Delpani is confirming his acceptance of the terms and conditions set forth herein, and he is acknowledging the following:

 

	
a.        

	
The terms of this Agreement are not final and binding on the Company until this Agreement is executed by a Company officer or any other duly authorized executive of the Company with appropriate authority.

 

	
b.        

	
Delpani understands that he can take up to twenty-one (21) days from his receipt of the Agreement (the “Consideration Period”) to consider its meaning and effect and to determine whether or not he wishes to enter into it.  In addition, in order to commence receiving the Consideration, Delpani will be required to reaffirm his signature by signing Exhibit A on the Separation Date.  Before signing this Agreement in the space provided below, and before signing Exhibit A on the Separation Date, Delpani is advised to consult with an attorney.  If Delpani chooses to sign the Agreement in the first space before the end of the Consideration Period, he is doing so voluntarily.

 

	
c.        

	
Delpani may revoke his signature within seven (7) days after signing this Agreement in the space below and may revoke his signature within seven (7) days after signing Exhibit A (either such period, the “Revocation Period”).  Any such revocation must be made in a letter executed by Delpani stating specifically that he is revoking his acceptance of this Agreement and personally delivered or postmarked within 7 days after his execution of this Agreement.

 

	
d.        

	
Delpani will forward the Agreement once signed by him in the first space, as well as any notice of his desire to revoke his signature, to:

 

Mark Pawlak, Senior Vice President, Human Resources, 

Employment & Administration

One New York Plaza, New York, NY 10004

mark.pawlak@revlon.com

 

Delpani shall also send a copy of this Agreement, once signed, and any notice of his intention to revoke in pdf format via email to the above address.

 

	
e.        

	
The day following the day the second Revocation Period expires without revocation will be the “Effective Date.”  The Company will commence providing the Consideration in the first Company payroll following the Effective Date, but in no event will any portion thereof be paid before the Separation Date.  Any amounts that otherwise would have been paid immediately after the Separation Date but before the Effective Date will be paid in a lump sum on the first payment date in accordance with the preceding sentence.

 

  

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Execution Version

 

 

8.              OTHER LITIGATION.  Delpani warrants that he has not filed any charges or actions against the Company before or with any public official, administrative agency or in any court of law or other tribunal.

 

9.             CONFIDENTIAL INFORMATION, NON-COMPETITION AND NON-SOLICITATION.  During the Non-Competition Period, Delpani agrees to continue to comply with and perform each and every covenant and undertaking set forth in the Non-Competition Agreement, as modified by this Section 9 and as if the same were fully set forth herein, and which is incorporated herein by this reference.  Without limiting the generality of the foregoing sentence, Delpani affirms the following:

 

	
a.        

	
That he has not divulged any Confidential Information (as defined in the Non-Competition Agreement) and will continue to maintain the confidentiality of such information.

 

	
b.        

	
That due to his role and responsibilities with the Company, Delpani is restricted from (1) becoming or being interested in, or associated with, directly or indirectly, as a director, officer, stockholder, partner, associate, employee, consultant, owner, agent or independent contractor, or in any other capacity, in any Restricted Entity, or (2) engaging in any acts of solicitation, in each instance under the terms of the Non-Competition Agreement, in each case, for the Non-Competition Period.

 

10.            PRESS RELEASE.  Upon any inquiry regarding Delpani’s separation from the Company, either party shall refer to and not deviate from the Press Release dated February 26, 2016.

 

11.           EMPLOYMENT VERIFICATION.  Delpani agrees to refer all inquiries from prospective employers to Ms. Hormozi at mitra.hormozi@revlon.com or Mr. Pawlak at mark.pawlak@revlon.com, and not to any other individual employed by or affiliated with the Company.

 

12.            NON-DISPARAGEMENT.  Delpani agrees and acknowledges that he will not make any statement (orally or in writing) or take any action which, in any way, disparages the Company or the other Releasees.  The Company agrees that it shall instruct its officers and members of its Board to not disparage, criticize or defame Delpani.  Nothing in this Section 12 shall prohibit the Company, the other Releasees or Delpani from providing truthful and accurate facts about the other party where required by lawfully compelled testimony; provided that Delpani notifies the Company in advance of any such testimony and cooperates with the Company’s reasonable efforts with respect to such testimony, to the fullest extent permitted by applicable law.

 

  

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Execution Version

 

 

13.           NON-INTERFERENCE WITH RIGHTS.  Delpani acknowledges that this Agreement does not limit his right, where applicable, to file or participate in an investigative proceeding, including by providing truthful testimony, conducted by the Equal Employment Opportunity Commission or any federal, state or local governmental authority.  Delpani acknowledges and agrees, however, that the consideration provided to him in this Agreement shall be his sole relief, and that he will not be able to obtain any monetary relief or recovery from any such investigation or proceeding, including costs or attorneys’ fees.  Furthermore, nothing in this Agreement prohibits Delpani from reporting possible violations of law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the U.S. Congress, and any agency Inspector General, or from making other disclosures that are protected under the whistleblower provisions of federal or state laws or regulations.  Further, nothing in this Agreement shall be construed to limit, impede or impair the right of any party to communicate with government agencies regarding matters that are within the jurisdictions of such agencies or if compelled by law.  However, Delpani will not comply with any subpoena or court order which may elicit information or documentation regarding the Company, without first notifying Mitra Hormozi, Executive Vice President and General Counsel, at mitra.hormozi@revlon.com, or Mark Pawlak, Senior Vice President, Human Resources, Employment & Administration at mark.pawlak@revlon.com, or by overnight mail to either of them at One New York Plaza, New York, New York, 10004, or any other means designed to provide the Company with as much advance notice as possible of:  (a) the case name, jurisdiction and index, docket or other identification number or designation of the action or proceeding within which the subpoena or order has been served; (b) the date upon which compliance with the subpoena or order has been requested; and (c) the location at which compliance with the subpoena or order has been requested, unless doing so would violate any law, subpoena or court order.

 

14.            CONTINUATION OF MEDICAL, DENTAL AND/OR VISION INSURANCE, FLEXIBLE SPENDING ACCOUNT AND OTHER BENEFITS.  Without limiting Delpani’s rights under Section 1(a)(iii) and (iv):

 

	
a.        

	
If Delpani elects not to enter into this Agreement he will continue to have COBRA rights, with payment of premiums his sole responsibility.

 

	
b.        

	
Following the Non-Competition Period, to the extent eligible, Delpani may continue to participate in the Benefit Programs under COBRA for the remainder of the maximum period for continuation coverage required under COBRA for which Delpani would be eligible by paying premiums to the Company at the applicable rate for COBRA continuation contributions; provided that to remain eligible for such period Delpani must (1) make any and all premium payments at the full rate applicable for COBRA continuation contributions, in such manner as required and as acceptable to the Company; and (2) submit evidence of non-coverage as the Company may request from time to time.

 

	
c.        

	
If Delpani is currently contributing to a Health Care Flexible Spending Account (“HCFSA”), he will be permitted to continue making contributions after the Separation Date if he elects continuation of HCFSA under COBRA on an after-tax basis, subject to the terms and conditions of the HCFSA program and the requirements of COBRA.  If Delpani is currently contributing to a Dependent Care Flexible Spending Account (“DCFSA”), he will be permitted to continue such contributions after the Separation Date, subject to the terms and conditions of the DCFSA program and the requirements of COBRA.  Delpani will be eligible to receive reimbursement for any eligible expenses incurred through his last day of HCFSA and DCFSA participation, subject to his filing of claims within the time requirements of the programs.

 

  

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Execution Version

 

 

	
d.        

	
Long-term disability insurance will cease on the Separation Date.  Delpani may be eligible to convert this coverage to an individual policy within 31 days of the Separation Date.

 

	
e.        

	
Delpani’s coverage under the Employee Assistance Program will cease on the Separation Date.  Delpani may continue the coverage at COBRA rates by enrolling under COBRA.

 

15.           NO OTHER CONSIDERATION DUE.  Delpani affirms that he has been paid and/or has received from the Company all compensation, wages, bonuses, stock, leave or sick time and/or benefits to which he may be entitled and that no other compensation, wages, bonuses, stock and/or benefits are due to his, except as provided in this Agreement.  Delpani further affirms that he has no known workers’ compensation injuries or occupational diseases.  Delpani further affirms he has no outstanding internal allegations, matters and issues that he has not brought to Revlon’s attention.

 

16.           RETURN OF PROPERTY.  Delpani represents that as of the date he signs this Agreement, he has returned all Company property in his possession or control to the Company, including any home-office equipment, and further that all documents, information or data (electronic and hard copies) of, about or belonging to any Releasee, or any companies or individuals with whom Delpani did business on behalf of the Company during his employment, which he had in his possession, custody, or control, regardless of the location or manner in which it was stored (e.g., whether hardcopy, on an electronic device, on the Internet or in the Cloud), has been deleted, destroyed, or returned to the Company, and he has not retained any such information or copies thereof in any form or format whatsoever.

 

17.           BREACH OF AGREEMENT.  For any violation of Sections 9, 10, or 12 of this Agreement (including violations of the Non-Competition Agreement during the Non-Competition Period), Delpani agrees that the Company may immediately cease further payment of sums otherwise payable under Sections 1 and 2 hereof, and the Company’s obligation to provide all other consideration thereunder will be void.  Delpani agrees that if there is a violation of Sections 9, 10, or 12, it will be difficult to measure the exact amount of damages.  Delpani understands and agrees that a violation of Sections 9, 10, or 12 will constitute a material breach of this Agreement which will cause the Company to suffer immediate, substantial and irreparable injury, and which will be a sufficient basis for a Court to award injunctive relief and monetary damages to the Company without affecting the remainder of this Agreement.

 

  

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Execution Version

 

 

18.   NOTICES.  All notices required under the Employment Agreement to effect Delpani’s termination and to invoke the Company’s rights to enforce Delpani’s non-competition and non-solicitation obligations thereunder shall be deemed given by this Agreement.

 

19.   SECTION 409A.  The intent of the parties is that payments and benefits under this Agreement shall comply with or be exempt from Internal Revenue Code Section 409A and applicable guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted in accordance therewith.  In no event whatsoever shall the Company be liable for any tax, interest or penalties that may be imposed on Delpani by Code Section 409A or any damages for failing to comply with Code Section 409A.  To the extent any taxable expense reimbursement or in-kind benefits under this Agreement is subject to Code Section 409A, the amount thereof eligible in any calendar year shall not affect the amount eligible for any other calendar year, in no event shall any expenses be reimbursed after the last day of the calendar year following the year in which Delpani incurred such expenses, and in no event shall any right to reimbursement or receipt of in-kind benefits be subject to liquidation or exchange for another benefit.  Notwithstanding any provisions of this Agreement to the contrary, if Delpani is a “specified employee” (within the meaning of Code Section 409A and determined pursuant to any policies adopted by the Company consistent with Code Section 409A), at the time of Delpani’s separation from service and if any portion of the payments or benefits to be received by Delpani upon separation from service would be considered deferred compensation under Code Section 409A and cannot be paid or provided to Delpani without Delpani incurring taxes, interest or penalties under Code Section 409A, amounts that would otherwise be payable pursuant to this Agreement and benefits that would otherwise be provided pursuant to this Agreement, in each case, during the six-month period immediately following Delpani’s separation from service will instead be paid or made available on the earlier of (a) the first business day of the seventh month following the date of Delpani’s separation from service or (b) Delpani’s death.

 

20.   THIRD PARTY BENEFICIARIES.  Each of the Releasees, other than the Company, is a third party beneficiary of this Agreement and may enforce the provisions hereof applicable to them.

 

  

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Execution Version

 

 

21.            GOVERNING LAW; JURISDICTION; WAIVER OF TRIAL BY JURY.  This Agreement shall be governed by, and construed pursuant to, the laws of the State of New York applicable to transactions executed and to be wholly performed in New York between residents thereof, without regard to the state’s conflict of law provisions that would require application of the laws of a different jurisdiction, except as otherwise preempted by the laws of the United States.  The parties consent and agree to the exclusive jurisdiction of the Federal and State courts sitting in the County of New York for all purposes.  ALSO, AS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT, TO THE EXTENT ALLOWED BY LAW, THE PARTIES KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED ON THIS AGREEMENT OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, THE EMPLOYMENT RELATIONSHIP, OR ACTIONS OR INACTIONS OF ANY PARTY HERETO.  If any action shall be brought to enforce or interpret any of the terms or conditions of this Agreement, the party that substantially prevails shall be entitled to its or his reasonable attorneys’ fees and costs.

 

22.           NO ADMISSIONS.  This Agreement shall not in any way be construed as an admission by the Company or any of the other Releasees that it, he or she has acted wrongfully with respect to Delpani or any other person, and each of the foregoing specifically denies that it, he or she has any liability to or committed any wrongful acts against Delpani or any other person.  Neither this Agreement nor any of its terms may be introduced as evidence as to any issue of law or fact in any proceeding, suit or action, other than an action to enforce this Agreement.

 

23.            ENTIRE AGREEMENT.  This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter hereof, and supersedes all prior agreements, arrangements and understandings, written or oral, relating to the subject matter hereof including any emails or term sheets, including the Employment Agreement, except as expressly set forth herein.  No representation, promise or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.  In entering into, performing and enforcing this Agreement, each of Delpani and the Releasees disclaim any reliance whatsoever on any representations, warranties, promises, understandings or arrangements that are not expressly set forth in this Agreement.  The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver thereof or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

 

24.          ASSIGNMENT.  This Agreement shall be binding upon the parties hereto and their successors and permitted assignees.  This Agreement, and Delpani’s rights and obligations hereunder, may not be assigned by Delpani, nor may he pledge, encumber or anticipate any payments or benefits due hereunder, by operation of law or otherwise.  The Company may assign its rights, together with its obligations, hereunder (a) to any affiliate or (b) to a third party in connection with any sale, transfer or other disposition of all or substantially all of any business to which Delpani’s services are then principally devoted, provided that no assignment pursuant to clause (b) shall relieve the Company from its obligations hereunder to the extent the same are not timely discharged by such assignee.

 

  

13

  

 

Execution Version

 

 

25.   SEVERABILITY.  Any provision of this Agreement that is held to be invalid or unenforceable under any applicable law or regulation shall, to the extent of any such invalidity or unenforceability, be deemed by the parties (a) to be modified to the extent necessary to cure such invalidity or unenforceability and to carry out so far as possible the intention manifested by the provision in question or (b) if necessary, to be omitted from this Agreement, but such invalidity or unenforceability, and such resulting modification or omission, shall not invalidate or render unenforceable the remaining provisions of this Agreement.

 

26.        CONSTRUCTION OF AGREEMENT.  The parties hereto acknowledge and agree that each party has reviewed and negotiated the terms and provisions of this Agreement and has contributed to its drafting.  Accordingly, the rule of construction to the effect that ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement.  Rather, the terms of this Agreement shall be construed fairly as to both parties hereto and not in favor or against either party.  The parties further agree that the Recitals set forth in the beginning of this Agreement shall constitute substantive terms of this Agreement.

 

27.   FREE WILL.  Delpani represents and warrants that he has consulted with, or has had the opportunity to consult with, an attorney of his choosing (such attorney being a person other than a person acting as legal counsel to the Company) in connection with his decision to execute this Agreement, has read and fully understands the terms of this Agreement and their effect, that he has had a reasonable period of time to consider its terms, and that he knowingly and voluntarily, of his own free will and without any duress (and without reliance on any advice from a person acting as legal counsel to the Company), being fully informed and after due deliberation, accepts its terms and signs the same as his own free act.  Delpani understands that as a result of entering into this Agreement he will not have the right to assert that the Company violated any rights in connection with his employment, except as specifically set forth herein.

 

[Remainder of page intentionally left blank.

Signatures on following page.]

 

 

 

 

 

 

  

14

  

 

Execution Version

 

 

IN WITNESS WHEREOF, this Agreement is executed as of the date set forth below.

 

 

	March 1, 2016 	/s/ Lorenzo Delpani
	Date 	Lorenzo Delpani 
	 	 	 
	 	 	 
	 	Revlon, Inc. 
	 	 	 
	 	 	 
	March 1, 2016 	By 	/s/ Mark Pawlak 
	Date 	 	Mark Pawlak 
	 	 	 
Senior Vice President, Human Resources,

Employment & Administration

 

  

15

  

 

Execution Version

EXHIBIT A

 

1.             GENERAL RELEASE.  In exchange for the consideration provided to Delpani under Section 1 and Section 2 of the Transition and Separation Agreement and Release dated March 1, 2016 (the “Agreement”) (such Sections collectively, the “Consideration”), Delpani hereby releases and holds harmless Revlon Consumer Products Corporation and Revlon, Inc. and their past, present or future parent and subsidiary companies, corporations, affiliates, divisions, successors and assigns (whether or not incorporated), and any of their past, present or future employees, agents, assigns, officers, directors and shareholders, whether acting in their individual or representative capacity (collectively, the “Releasees”) from and waives any claim, known or unknown, in any legal jurisdiction, that Delpani has presently has, or has had in the past, against the Releasees upon or by reason of any matter, cause or thing whatsoever, from the beginning of the world to the date he signs this Exhibit A in the space below, including, without limitation, all claims arising from Delpani’s employment with, or separation of employment from, the Company or otherwise.  Notwithstanding the prior sentence, it is understood and agreed that the only rights or claims that Delpani is not releasing and waiving are (1) rights to receive the compensation and benefits provided to him under the Agreement (2) ERISA vested benefits; (3) government-mandated benefits such as unemployment compensation or COBRA; (4) rights to indemnification pursuant to Section 9 of the Employment Agreement; or (5) any other rights which by law cannot be released.   Also in exchange for the consideration provided to Delpani under Section 1 and Section 2 of the Agreement, Delpani is reaffirming his signature to the Agreement by executing this Exhibit A.  Capitalized terms used but not defined in this Exhibit A shall have the meanings given to them in the Agreement.

 

2.             EXTENT OF RELEASE.  Without limiting the generality of the preceding “GENERAL RELEASE” Section, the Agreement and this Exhibit A is intended to and shall release the Releasees from any and all claims or rights arising under any federal, state or local statute, regulation or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866, the Age Discrimination in Employment Act of 1967, the Equal Pay Act, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974 (“ERISA”), the Worker Adjustment and Retraining Act, the Sarbanes-Oxley Act of 2002, and all other statutes, regulations or ordinances regulating the terms and conditions of Delpani’s employment (as any of the foregoing may be amended from time to time), under the common law or in equity (including any claims for wrongful discharge, discrimination, retaliation, whistleblower claims or otherwise), or under any policy, agreement, understanding or promise, written or oral, express or implied, formal or informal, between the Company and Delpani.  As a part of this General Release, Delpani agrees and acknowledges that he is not entitled to any further payments or benefits other than as set forth in the Agreement, including without limitation any notice payments, bonus payments (other than payment of the 2015 Bonus), payments pursuant to any long-term incentive awards under the Revlon Executive Incentive Compensation Plan (including LTIPs but other than the 2014 Transitional LTIP) or severance or termination payments, and any payments of any kind under the Employment Agreement, including any payments under Section 13 of the Employment Agreement in the event a Change of Control occurs within the Non-Competition Period.

 

  

16

  

 

Execution Version

 

 

3.           TIME TO CONSIDER AND EFFECTIVE DATE.  By signing the Agreement returning it, and by signing this Exhibit A and returning it, Delpani is confirming his acceptance of the terms and conditions set forth herein and set forth in the Agreement, and he is acknowledging the following:

 

	
a.         

	
The terms of the Agreement are not final and binding on the Company until the Agreement is executed by a Company officer or any other duly authorized executive of the Company with appropriate authority.

 

	
b.        

	
In order to commence receiving the Consideration, Delpani is required to reaffirm his signature to the Agreement by signing this Exhibit A on the Separation Date.  Before signing this Exhibit A on the Separation Date, Delpani is advised to consult with an attorney.

 

	
c.         

	
Delpani may revoke his signature within seven (7) days after signing this Exhibit A (the “Second Revocation Period”).  Any such revocation must be made in a letter executed by Delpani stating specifically that he is revoking his acceptance of the Agreement and personally delivered or postmarked within 7 days after his execution of this Exhibit A.

 

	
d.         

	
Delpani will forward this Exhibit A once signed by him, as well as any notice of his desire to revoke his signature, to:

 

Mark Pawlak, Senior Vice President, Human Resources, 

Employment & Administration

One New York Plaza, New York, NY 10004

mark.pawlak@revlon.com

 

Delpani shall also send a copy of this Exhibit A, once signed, and any notice of his intention to revoke in pdf format via email to the above address.

 

	
e.         

	
The day following the day the Second Revocation Period expires without revocation will be the “Effective Date.”  The Company will commence providing the Consideration in the first Company payroll following the Effective Date, but in no event will any portion thereof be paid before the Separation Date.  Any amounts that otherwise would have been paid immediately after the Separation Date but before the Effective Date will be paid in a lump sum on the first payment date in accordance with the preceding sentence.

 

  

17

  

 

Execution Version

 

 

IN WITNESS WHEREOF, this Exhibit A is executed as of the date set forth below.

 

 

  

	 	 	 	 
	Date 	 	Lorenzo Delpani 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	Revlon, Inc. 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	By 	 	 
	Date 	 	 	Mark Pawlak 	 
	 	 	 	 
Senior Vice President, Human Resources,

Employment & Administration 

  

                                                                

 

18Exhibit

    
EX 10.1
EXECUTION COPY

AGREEMENT FOR SETTLEMENT OF CLAIMS INCLUDING RELEASES
AND PURCHASE AND SALE OF BENEFICIAL INTERESTS 

among
ALTERNA SPRINGERVILLE LLC and
LDVF1 TEP LLC

as Sellers;
WILMINGTON TRUST COMPANY and
WILLIAM J. WADE
as parties to certain Trust Agreements, each dated as of December 15, 1986, as amended, for the benefit of Sellers

not in their individual capacities, but solely as Owner Trustees (except as expressly provided herein);
TUCSON ELECTRIC POWER COMPANY 

as Purchaser;
and
UNS ENERGY CORPORATION 
as Indemnitor

Dated as of
February 29, 2016

 

TABLE OF CONTENTS
	
				
	 
	 
	Page
	

	 
	 
	 

	ARTICLE I

	DEFINITIONS

	Section 1.1
	Definitions
	3
	

	Section 1.2
	Rules of Interpretation
	6
	

	 
	 
	 

	ARTICLE II

	CONDITIONS TO SETTLEMENT CLOSING

	Section 2.1
	Conditions to Obligations of Purchaser
	7
	

	Section 2.2
	Conditions to Obligations of Sellers
	7
	

	Section 2.3
	Satisfaction of Conditions Precedent
	7
	

	Section 2.4
	Settlement Closing
	8
	

	 
	 
	 

	ARTICLE III

	SETTLEMENT OF CLAIMS

	Section 3.1
	Settlement of Purchaser’s Operating Costs and Other Claims
	9
	

	Section 3.2
	Settlement of Outstanding Owner Trustees Costs
	9
	

	Section 3.3
	Releases and Covenants Not to Sue
	9
	

	Section 3.4
	Non-Admission of Liability or Obligation
	10
	

	Section 3.5
	Dismissal of Current Actions
	10
	

	 
	 
	 

	ARTICLE IV

	PURCHASE AND SALE OF BENEFICIAL INTERESTS

	Section 4.1
	Purchase and Sale of Beneficial Interests
	10
	

	Section 4.2
	Deliverables by Sellers
	11
	

	Section 4.3
	Deliverables by Purchaser
	11
	

	Section 4.4
	Netting at the Settlement Closing
	12
	

	 
	 
	 

	ARTICLE V

	REPRESENTATIONS AND WARRANTIES OF SELLERS AND TRUSTEES

	Section 5.1
	Beneficial Interests
	13
	

	Section 5.2
	Existence
	13
	

	Section 5.3
	Corporate Action
	14
	

	Section 5.4
	No Conflict
	14
	

	Section 5.5
	No Consent Required
	14
	

	Section 5.6
	Litigation
	14
	

	Section 5.7
	No Other Representations or Warranties
	15
	

	Section 5.8
	Representations and Warranties of Wilmington and Wade
	15
	

ii

	
				
	 
	 
	Page
	

	 
	 
	 

	ARTICLE VI

	REPRESENTATIONS AND WARRANTIES OF PURCHASER AND INDEMNITOR

	Section 6.1
	Existence
	17
	

	Section 6.2
	Corporate Action
	17
	

	Section 6.3
	No Conflict
	17
	

	Section 6.4
	No Consent Required
	17
	

	Section 6.5
	Litigation
	18
	

	 
	 
	 

	ARTICLE VII

	ADDITIONAL AGREEMENTS

	Section 7.1
	Tax Matters
	18
	

	Section 7.2
	Expenses
	18
	

	Section 7.3
	Non-Disparagement
	18
	

	Section 7.4
	Termination of Agreements
	19
	

	 
	 
	 

	ARTICLE VIII

	INDEMNIFICATION

	Section 8.1
	Indemnifications by Alterna and LDVF1
	19
	

	Section 8.2
	Indemnifications by Purchaser and Indemnitor
	19
	

	Section 8.3
	Limitations and Survival
	20
	

	Section 8.4
	Notification and Related Matters
	20
	

	 
	 
	 

	ARTICLE IX

	MISCELLANEOUS

	Section 9.1
	Retention of and Access to Records after Settlement Closing
	22
	

	Section 9.2
	Exhibits
	22
	

	Section 9.3
	Assignment
	22
	

	Section 9.4
	Headings
	22
	

	Section 9.5
	Governing Law
	22
	

	Section 9.6
	Submission to Jurisdiction; Selection of Forum
	23
	

	Section 9.7
	Notices
	23
	

	Section 9.8
	Counterparts
	23
	

	Section 9.9
	Successors and Assigns
	23
	

	Section 9.10
	Subrogation
	23
	

	Section 9.11
	Severability of Provisions
	23
	

	Section 9.12
	Entire Agreement; Amendments; Waivers
	24
	

	Section 9.13
	Right to Injunctive Relief
	24
	

	Section 9.14
	Limitation of Owner Trustee Liability
	24
	

iii

Exhibits

		
	Exhibit A:  
	Form of Assignment and Assumption Agreements

		
	Exhibits B - F:
	Forms of Stipulations Dismissing the Current Actions

iv

AGREEMENT FOR SETTLEMENT OF CLAIMS INCLUDING RELEASES
AND PURCHASE AND SALE OF BENEFICIAL INTERESTS
THIS AGREEMENT FOR SETTLEMENT OF CLAIMS INCLUDING RELEASES AND PURCHASE AND SALE OF BENEFICIAL INTERESTS (“Agreement”), dated as of this 29th day of February, 2016  (“Effective Date”), by and among ALTERNA SPRINGERVILLE LLC, a Delaware limited liability company (“Alterna”), LDVF1 TEP LLC, a Delaware limited liability company (“LDVF1” and together with Alterna, “Sellers”), WILMINGTON TRUST COMPANY, a Delaware trust company (“Wilmington”), and WILLIAM J. WADE, an individual (“Wade”), not in their individual capacities but solely as Owner Trustee and Cotrustee (except as expressly provided herein), respectively (together, “Owner Trustees”) under and pursuant to certain Trust Agreements, each dated as of December 15, 1986, as amended, for the benefit of Sellers as Owner Participants (“Trust Agreements”), TUCSON ELECTRIC POWER COMPANY, an Arizona corporation (“Purchaser”), and UNS ENERGY CORPORATION, an Arizona corporation (“Indemnitor”).  Alterna, LDVF1, Owner Trustees, Purchaser, and Indemnitor are sometimes referred to herein collectively as the “Parties,” and individually as a “Party.”
Background
A.    Sellers are each Owner Participants under the Participation Agreement dated as of June 30, 1992 among Sellers, Purchaser, Owner Trustees, and other parties (“Participation Agreement”).
B.    Wilmington and Wade are Owner Trustee and Cotrustee, respectively, under and pursuant to the Trust Agreements.
C.    Owner Trustees are the owner of a 43.0693% Undivided Interest for the benefit of Alterna (“Alterna Undivided Interest”) and the owner of a 7.4257% Undivided Interest for the benefit of LDVF1 (“LDVF1 Undivided Interest”).  
D.    Each Seller holds all of the right, title, and interest in and to one hundred percent (100%) of the beneficial interest under its respective Trust Agreement and in its respective Trust Estate (as defined in Section 2.01 of their respective Trust Agreements), and in their capacity as Owner Participants, all contractual rights and obligations, if any, in, to, and under the Facility Documents to which it is a party (“Alterna Beneficial Interest” as to Alterna; “LDVF1 Beneficial Interest” as to LDVF1; and “Beneficial Interests” collectively).
E.    Sellers and Purchaser desire to evidence the sale, transfer, conveyance, assignment, and delivery by Sellers to Purchaser, and assumption by Purchaser, of the Beneficial Interests.
F.    Sellers desire to sell to Purchaser, and Purchaser desires to purchase from Sellers, their Beneficial Interests for a combined price of USD $85,000,000 pursuant to the terms and conditions set forth herein.
G.    Sellers and Owner Trustees on the one hand, and Purchaser on the other have certain outstanding disputes between them relating to the Facility, including the following 

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currently pending legal actions: (a)  Alterna Springerville LLC, et al. v. Tucson Electric Power Co., Index No. 653898/2014 (NY Supreme Court), (b)  Tucson Electric Power Co. v. Alterna Springerville LLC et al., consolidated with  Wilmington Trust Co. et al. v. Tucson Electric Power Co., Consolidated Matter, AAA Case No. 011500032729 (AAA Arbitration), (c)  Alterna Springerville LLC, et al. v. Tucson Electric Power Co., Index No. 653064/2015 (NY Supreme Court), (d) Tucson Electric Power Company v. Wilmington Trust Co., et al., Index No. 653774/2015 (NY Supreme Court), and (e) Tucson Electric Power Co., FERC Docket No. ER15-124-003, on appeal sub nom Alterna Springerville LLC, et al. v. FERC, Ninth Circuit Case No. 15-73844 (FERC action) (collectively, “Current Actions”) all of which are currently stayed pending execution of this Agreement and, pursuant to the terms hereof, shall be fully settled and resolved upon completion of the Settlement Closing.
H.    As part of certain of the Current Actions and otherwise, Purchaser claims that it is owed operating and maintenance expenses, capital expenditures, administrative and general charges, property or other taxes or assessments (including without limitation, all such property or other taxes or assessments that were or could have been asserted by any state, county or local taxing authority), water costs, fuel costs, and any and all other costs and expenses arising out of or relating to the Facility, including without limitation, costs and expenses set forth on invoices and tax and other bills presented by Purchaser to Owner Trustees and/or Sellers under the Springerville Project Agreement or otherwise (“Operating Costs”).  Without any admission of liability, fault or obligation whatsoever, the Parties wish to settle all Claims (as hereinafter defined), including without limitation, all of Purchaser’s claims for Operating Costs, specifically including all Facility operating and maintenance expenses which will be settled via a payment that Sellers will direct Owner Trustees to make at the Settlement Closing to Purchaser in the combined amount of USD $12,500,000 (“Operating Costs and Other Claims Settlement Amount”).
I.    As part of certain of the Current Actions, Sellers and/or Owner Trustees have asserted Claims against Purchaser.  Without any admission of liability, fault, or obligation whatsoever, the Parties wish to settle all such Claims.
J.    Sellers and Purchaser have entered into a certain Memorandum of Understanding dated January 28, 2016 (“MOU”), that (i) sets forth the principal terms of settlement of all outstanding Claims among the Parties and the transfer of the Beneficial Interests from Sellers to Purchaser, including but not limited to, Purchaser’s and Indemnitor’s agreement to provide a mutually agreeable full indemnity to Sellers (and their respective officers, directors, employees, etc.) with respect to any and all past, current and/or future Claims or liabilities arising out of or related to the Facility, including but not limited to, environmental and other specifically-enumerated subject matters, and the Parties shall provide one another with customary mutually-agreeable reciprocal indemnities, and (ii) requires Sellers and Purchaser to negotiate and prepare definitive and legally binding agreements effectuating such settlement and transfer.
Agreements
In consideration of the foregoing Background and the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency 

2

of which are hereby acknowledged by the Parties, Sellers, Wilmington and Wade (solely with respect to Section 5.08 hereof), Owner Trustees, Purchaser, and Indemnitor, each intending to be legally bound, do hereby agree as follows:
ARTICLE I
 
DEFINITIONS
Section 1.1    Definitions.  
In this Agreement, capitalized terms not defined in this Section or in the preamble or Background of this Agreement shall have the meanings given to them in Schedule Z to the Participation Agreement.  
“Agreement” has the meaning specified in the preamble, above.
“Alterna Beneficial Interest” has the meaning specified in Paragraph D of the Background, above.
“Alterna Purchase Price” has the meaning specified in Section 4.1(a)
“Alterna Undivided Interest” has the meaning specified in Paragraph C of the Background, above.
“Assignment and Assumption Agreements” has the meaning specified in Section 4.1(a).
“Beneficial Interests” has the meaning specified in Paragraph D of the Background, above.
“Chosen Court” has the meaning specified in Section 9.6.
“Claims” has the meaning specified in Section 3.3(a).
“Claim Notice” has the meaning specified in Section 8.4.
“Contamination” means the seeping, spilling, leaking, pumping, pouring, emitting, using, emptying, discharging, injecting, escaping, leaching, dumping, disposing, releasing or the presence of Regulated Substances which require notification, investigation, treatment, response or removal action or remediation under applicable Environmental Law.
“Current Actions” has the meaning specified in Paragraph G of the Background, above.
“Environmental Damages” shall mean all claims, costs and expenses (including construction costs), judgments, damages, losses, penalties, fines, liabilities, including strict liability, encumbrances, liens, costs and expenses of investigation and defense of any claim, whether or not such claim is ultimately defeated, and of any good faith settlement, of whatever 

3

kind or nature, contingent or otherwise, matured or unmatured, foreseeable or unforeseeable, including reasonable attorneys’ and consultants’ fees and disbursements and any out-of-pocket costs payable by Indemnitee to a third party.
“Environmental Law” means all federal, state and local laws, including principles of common law, regulations, statutes, codes, rules, resolutions, directives, orders, executive orders, consent orders, guidance from regulatory agencies, policy statements, judicial decrees, standards, permits, licenses and ordinances, or any judicial or administrative interpretation of any of the foregoing, pertaining to the protection of land, water, air, health, safety or the environment, whether now or in the future enacted, promulgated or issued.
“Facility Documents” means the Operative Documents, the Project Documents and other documents and instruments, entered into pursuant to or contemplated by the Operative Documents and the Project Documents, by Owner Trustees or by anyone acting on Owner Trustees’ behalf (including agents, brokers, advisors, consultants, counsel, employees, officers, members, directors, shareholders, partners, trustees or beneficiaries), excluding any document unrelated to the Plant.
“FERC” means the Federal Energy Regulatory Commission.
“Governmental Authority(ies)” means any foreign, provincial, federal, state, or local government, or any other governmental, administrative, or judicial authority, body, entity, or agency with jurisdiction.
“Governmental Permits” means licenses, franchises, permits, privileges, immunities, approvals, and authorizations from Governmental Authorities.
“Indemnification Expenses” means any and all expenses incurred in connection with investigating, defending, or asserting any Claims, actions, suits, or other proceedings incident to any matter for which a Party is indemnified hereunder (including court filing fees and costs, arbitration fees and costs, witness fees, and reasonable fees and disbursements of legal counsel, expert witnesses, and other professionals).
“Indemnified Party” has the meaning specified in Section 8.4.
“Indemnifying Party” has the meaning specified in Section 8.4.
“Knowledge” means with respect to a Party, actual knowledge.  
“LDVF1 Beneficial Interest” has the meaning specified in Paragraph D of the Background, above.
“LDVF1 Purchase Price” has the meaning specified in Section 4.1(b)
“LDVF1 Undivided Interest” has the meaning specified in Paragraph C of the Background, above.

4

“Losses” means any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, expenses, deficiencies or other charges.
“MOU” has the meaning specified in Paragraph J of the Background, above. 
“Operating Costs” has the meaning specified in Paragraph H of the Background, above. 
“Operating Costs and Other Claims Settlement Amount” has the meaning specified in Paragraph H of the Background, above. 
“Outstanding Owner Trustees Costs” has the meaning specified in Section 7.2.
“Owner Trustees” has the meaning specified in the preamble to this Agreement.
“Participation Agreement” has the meaning specified in Paragraph A of the Background.
“Purchaser” has the meaning specified in the preamble to this Agreement.
“Purchaser Deliverables” has the meaning specified in Section 4.3.
“Purchaser Indemnified Parties” has the meaning specified in Section 8.1.
“Regulated Substances” includes any substances, chemicals, materials or elements that are prohibited, limited, regulated or governed by Environmental Law, or any other substances, chemicals, materials or elements: (i) defined as a “hazardous substance” under the Comprehensive Environmental Response,  Compensation and Liability Act of 1980 (“CERCLA”) (42 U.S.C. §§9601, et seq), as amended by the Superfund Amendments and Reauthorization Act of 1986, and as further amended from time to time, and regulations promulgated thereunder; (ii) defined as a “regulated substance” within the meaning of Subtitle I of the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991), and regulations promulgated thereunder; (iii) designated as a “hazardous substance” pursuant to Section 311 of the Clean Water Act (33 U.S.C. § 1321), or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. § 1317); (iv) defined as “hazardous”, “toxic”, or otherwise regulated, under Environmental Law adopted by the State of Arizona, or its agencies or political subdivisions; (v) petroleum, petroleum products or derivatives or constituents thereof; (vi) asbestos or asbestos-containing materials; (vii) urea formaldehyde foam insulation or urea formaldehyde foam insulation-containing materials; (viii) lead based paint or lead based paint-containing materials; (ix) polychlorinated biphenyls or polychlorinated biphenyl-containing materials; (x) radon or radon-containing or producing materials; (xi) the presence of which requires notification, investigation or remediation under Environmental Law or common law; causes or threatens to cause a nuisance or trespass upon the Facility or to adjacent properties, poses or threatens to pose a hazard to the health or safety of persons on or about the Facility; or (xi) by any laws of any government authority require special handling in its generation, collection, storage, treatment, or disposal.

5

“Released Parties” has the meaning specified in Section 3.3(a).
 “Sellers” has the meaning specified in the preamble to this Agreement.
“Seller Indemnified Parties” has the meaning specified in Section 8.2.
“Seller Deliverables” has the meaning specified in Section 4.2.
“Settlement Closing” has the meaning specified in Section 2.4(a).
“Settlement Closing Date” has the meaning specified in Section 2.4(a).
“Settlement Termination Date” has the meaning specified in Section 2.3(a).
Section 1.2    Rules of Interpretation.  
The following rules shall govern the interpretation of this Agreement:
(a)    Words importing the singular include the plural and words importing the plural include the singular and words importing gender include the masculine, feminine and neuter genders.
(b)    A reference to any agreement means the agreement as amended, modified or supplemented from time to time.
(c)    A reference to any law includes any amendment or modification thereto, all rules and regulations promulgated under such law, and all administrative and judicial authority exercisable thereunder.
(d)    A reference to any person or entity includes its permitted successors and assigns.
(e)    All accounting terms not specifically defined herein shall be construed in accordance with the generally accepted accounting principles and practices set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession in the United States, in each case, as applicable, as of the time of the relevant financial statements referred to herein.
(f)    The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole, including all exhibits hereto, and not to any particular provisions of this Agreement, and article, section, and exhibit references are to this Agreement unless otherwise specified.
(g)    The word “includes” or “including” shall mean “including, without limitation.”

6

ARTICLE II 
CONDITIONS TO SETTLEMENT CLOSING
Section 2.1    Conditions to Obligations of Purchaser.  
Unless waived in writing by Purchaser, the obligation of Purchaser hereunder to complete the transactions contemplated by this Agreement is subject to the satisfaction at or prior to the Settlement Closing of the following conditions:
(a)    each representation and warranty of Sellers, Wilmington, and Wade contained in this Agreement shall be true and accurate in all material respects on and as of the Settlement Closing Date with the same effect as though made on and as of such date, except for any changes, if any, as may be permitted by this Agreement;
(b)    the consummation of the transactions contemplated hereby shall not violate any order, decree, or judgment of any court or governmental body having competent jurisdiction; and
(c)    Purchaser shall have received authorization from the FERC for the transfer of Beneficial Interests and the acquisition by Purchaser of the Alterna Undivided Interest and the LDVF1 Undivided Interest and any other transactions contemplated by this Agreement as required. 
Section 2.2    Conditions to Obligations of Sellers.  
Unless waived in writing by Sellers, the respective obligations of Sellers hereunder to complete the transactions contemplated by this Agreement are subject to the satisfaction at or prior to the Settlement Closing of the following conditions:
(a)    each representation and warranty of Purchaser and Indemnitor contained in this Agreement shall be true and accurate in all material respects on and as of the Settlement Closing Date with the same effect as though made on and as of such date, except for any changes, if any, as may be permitted by this Agreement; 
(b)    the consummation of the transactions contemplated hereby shall not violate any order, decree, or judgment of any court or governmental body having competent jurisdiction; and
(c)    Purchaser shall have received authorization from the FERC for the transfer of Beneficial Interests and the acquisition by Purchaser of the Alterna Undivided Interest and the LDVF1 Undivided Interest and any other transactions contemplated by this Agreement as required. 
Section 2.3    Satisfaction of Conditions Precedent.  
(a)    The Parties shall exercise good faith and due diligence and use their reasonable commercial efforts in satisfying the foregoing conditions precedent. Purchaser shall 

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as soon as practicable following the Effective Date, file with the FERC an application seeking the FERC’s authorization for Purchaser to acquire the Beneficial Interests and for Purchaser to acquire the Alterna Undivided Interest and the LDVF1 Undivided Interest pursuant to this Agreement. The Sellers and Owner Trustees shall cooperate with the Purchaser in submitting such filing. Each Party shall bear its own costs in achieving satisfaction of such condition precedent, and each Party shall give prompt notice to the other Parties when such conditions precedent shall have been satisfied or waived in writing by the Party whose obligation is conditioned thereon.  The Parties shall execute an acknowledgment as of the Settlement Closing Date, stating that all of the conditions precedent in Sections 2.1 and 2.2 have been satisfied or waived.  If any such conditions are not so satisfied or waived on or before 120 days after the Effective Date then either Purchaser or Sellers may, by notice in writing to the other, terminate this Agreement (the date of such notice, the “Settlement Termination Date”); provided, however, that if the only conditions that have not been satisfied at the Settlement Termination Date are the conditions precedent set forth in Sections 2.1(c) and 2.2(c), the Settlement Termination Date shall automatically be extended by an additional sixty (60) days.   Notwithstanding the foregoing, no Party shall be relieved of its obligations hereunder by the failure to satisfy any condition precedent to the extent that the satisfaction of such condition is within such Party’s control.   
(b)    No Party shall be liable to any other for the termination of this Agreement pursuant to this Section 2.3 and each Party shall bear its own costs and expenses attributable to the transactions herein contemplated, provided that Owner Trustees shall be reimbursed by Sellers for their actual costs (including reasonable attorneys’ fees and expenses) relating to this Agreement.
(c)    The stays of the Current Actions shall remain in effect until this Agreement is terminated or, if the Settlement Closing Date shall have occurred, until the dismissal of the Current Actions in accordance with Section 3.5. If this Agreement is terminated prior to the Settlement Closing Date, the Parties shall direct their legal counsel mutually to seek scheduling orders in the Current Actions reflecting sufficient and adequate time for the Parties to fully prepare their claims and defenses.   
Section 2.4    Settlement Closing.
(a)    The purchase and sale provided for in Section 4.1 (the “Settlement Closing”) shall be consummated on the third business day following the date upon which all Parties have provided notification of satisfaction or waiver of all conditions precedent as provided in Section 2.3(a) above, or upon such other date as the Parties mutually agree (“Settlement Closing Date”).
(b)    The Settlement Closing shall occur at 11:00 A.M., New York time, on the Settlement Closing Date at the offices of Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178 or at such other time and place as the Parties may agree.   

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ARTICLE III 
SETTLEMENT OF CLAIMS
Section 3.1    Settlement of Purchaser’s Operating Costs and Other Claims.
(a)    At the Settlement Closing:
(i)    Alterna shall direct Owner Trustees to make a payment to Purchaser of USD $10,661,773.44 for the share of the Operating Costs and Other Claims Settlement Amount corresponding to the Alterna Undivided Interest; and     
(ii)    LDVF1 shall direct Owner Trustees to make a payment to Purchaser of USD $1,838,226.56 for the share of the Operating Costs and Other Claims Settlement Amount corresponding to the LDVF1 Undivided Interest.     
(b)    The Parties agree that payment of the Operating Costs and Other Claims Settlement Amount will fully satisfy all payment obligations of Owner Trustees and, to the extent applicable, Sellers, for all Operating Costs and other Claims.
(c)    The Parties acknowledge that following the payment of the Operating Costs and Other Claims Settlement Amount as described in this Section 3.1, there will be no remaining cash balances in the respective Trusts Estates.
Section 3.2    Settlement of Outstanding Owner Trustees Costs.  
At the Settlement Closing, Sellers shall make payment to Owner Trustees in proportion to Sellers’ respective Undivided Interests in full satisfaction of all Outstanding Owner Trustees Costs.  
Section 3.3    Releases and Covenants Not to Sue.
(a)    Effective upon receipt of the Seller and Purchaser Deliverables and completion of the Settlement Closing, Sellers on the one hand and Purchaser on the other hand, on behalf of themselves and each of their respective agents, representatives, Affiliates, and successors and assigns, expressly covenant not to sue and generally release and discharge each other and the Owner Trustees, including each other’s and the Owner Trustees’ partners, shareholders, members, directors, officers, trustees, employees, agents, attorneys, representatives, agents, heirs, executors, corporate Affiliates, and successors and assigns (collectively for each, the “Released Parties”), from, against and with respect to any and all claims, demands, contracts, accounts, debts, liens, suits, arbitration proceedings, litigation, liability, obligations, actions, causes of action, rights, damages, costs, expenses and Losses of any kind or nature whatsoever, whether known or unknown, suspected or unsuspected, contractual or non-contractual, accrued, contingent or otherwise (“Claims”), which Sellers or Purchaser ever had, now have, or hereafter may have, against each other, the Owner Trustees and/or each other’s Released Parties related to any act, event or occurrence from the beginning of the world through and including the Settlement Closing Date of this Agreement with respect to the Current Actions, and the Plant and any agreements related thereto, including but not limited to, all Operating Costs and other Claims 

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arising out of or relating to the Facility, the Operative Documents, the Project Documents, the Beneficial Interests, and the Trust Agreements.  
(b)    Effective upon the completion of the Settlement Closing, including Owner Trustees’ receipt of the Outstanding Owner Trustees Costs, Owner Trustees, on behalf of themselves and their agents, representatives, Affiliates, and successors and assigns expressly covenant not to sue and release and discharge:
(i)     Sellers and each of Sellers’ Released Parties from, against, and with respect to any and all Claims, including but not limited to any Claims arising under or relating to the Facility Documents or any other agreement to which either of the Sellers and Owner Trustees are parties; and 
(ii)     Except for the indemnity provided under Section 8.2(c) below, Purchaser and each of Purchaser’s Released Parties from, against, and with respect to any and all Claims, including but not limited to any Claims arising under or relating to the Facility Documents, the Current Actions or any other agreement to which either of the Sellers and Owner Trustees are parties through and including the Settlement Closing Date of this Agreement.
(c)    Notwithstanding Sections 3.3(a) and (b) above, the Parties each expressly reserve and do not release or discharge each other with respect to any alleged breach of any of the covenants and other undertakings set forth in this Agreement, all such Claims being expressly reserved by the Parties.
Section 3.4    Non-Admission of Liability or Obligation
Nothing in this Agreement is or shall be construed as an admission of liability or obligation by the Parties, and the Parties expressly deny any and all liability or obligation with regard to the subject matter of this Agreement, including but not limited to, the Current Actions.
Section 3.5    Dismissal of Current Actions    
Upon receipt of the Seller and Purchaser Deliverables and completion of the Settlement Closing, the Parties shall cooperate in filing stipulations of dismissal with the appropriate courts, tribunals, panels, and government agencies for each of the Current Actions. Such stipulations shall be substantially in the forms attached hereto as Exhibits B, C, D, E and F.  
ARTICLE IV 
PURCHASE AND SALE OF BENEFICIAL INTERESTS
Section 4.1    Purchase and Sale of Beneficial Interests.  
(a)    Subject to the completion of the deliveries in Section 4.2 and pursuant to an assignment and assumption agreement substantially in the form attached hereto as Exhibit A (the “Assignment and Assumption Agreement”), and in consideration of the Alterna  

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Purchase Price to be paid by Purchaser, Alterna shall sell, transfer, convey and deliver to Purchaser, and Purchaser shall purchase from Alterna, on the Settlement Closing Date, 100% of the Alterna Beneficial Interest for the price of USD $72,500,059.41 (the “Alterna Purchase Price”).
(b)    Subject to the completion of the deliveries in Section 4.2 and pursuant to an Assignment and Assumption Agreement substantially in the form attached hereto as Exhibit A, and in consideration of the LDVF1 Purchase Price to be paid by Purchaser, LDVF1 shall sell, transfer, convey and deliver to Purchaser, and Purchaser shall purchase from LDVF1, on the Settlement Closing Date, 100% of the LDVF1 Beneficial Interest for the price of USD $12,499,940.59 (the “LDVF1 Purchase Price”).
Section 4.2    Deliverables by Sellers.  
At the Settlement Closing, Sellers will deliver or cause to be delivered the following (the “Seller Deliverables”):
(a)    the Assignment and Assumption Agreements duly executed by Sellers;
(b)    wire transfer instructions for payment of the Alterna Purchase Price;
(c)    wire transfer instruction for payment of the LDVF1 Purchase Price;
(d)    evidence, in form reasonably satisfactory to Purchaser, of Sellers’ receipt of all approvals from Governmental Authorities required to be obtained by Sellers in connection with the transactions contemplated hereby;
(e)    certificates signed by the secretaries of each of the Sellers (i) attaching all resolutions of the governing body of each of such Seller relating to the sale of the Beneficial Interests and the transactions contemplated hereby and (ii) certifying as to the incumbency of the person or persons authorized to execute and deliver such documents as will be executed and delivered on behalf of such Seller at the Settlement Closing; 
(f)    certificates from a duly authorized representative of each of the Sellers certifying that each representation and warranty of such Seller contained in this Agreement, in the Exhibits attached hereto, and in all certificates and documents delivered by such Seller to Purchaser pursuant to this Agreement are true and accurate in all material respects on and as of the Settlement Closing Date; and
(g)    such certificates, other documents and instruments as Purchaser or its counsel may reasonably require in connection with, and to effect, the transactions contemplated by this Agreement and the documents to be executed in connection herewith.
Section 4.3    Deliverables by Purchaser.  
At the Settlement Closing, Purchaser will deliver or cause to be delivered the following documents and deliverables (the “Purchaser Deliverables”):
(a)    the Assignment and Assumption Agreements duly executed by Purchaser; 

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(b)    payment of the Alterna Purchase Price to Alterna;
(c)    payment of the LDVF1 Purchase Price to LDVF1;
(d)    evidence, in form reasonably satisfactory to Sellers, of Purchaser’s receipt of all approvals from Governmental Authorities required to be obtained by Purchaser in connection with the transactions contemplated hereby; 
(e)    certificates signed by the secretary of Purchaser (i) attaching all resolutions of the governing body of Purchaser relating to the sale of the Beneficial Interests and the transactions contemplated hereby and (ii) certifying as to the incumbency of the person or persons authorized to execute and deliver such documents as will be executed and delivered on behalf of Purchaser at the Settlement Closing; 
(f)    certificates from a duly authorized representative of Purchaser  certifying that each representation and warranty of Purchaser contained in this Agreement, in the Exhibits attached hereto, and in all certificates and documents delivered by Purchaser to Sellers pursuant to this Agreement are true and accurate in all material respects on and as of the Settlement Closing Date; and
(g)    such certificates, other documents and instruments as Sellers or their counsel may reasonably require in connection with, and to effect, the transactions contemplated by this Agreement and the documents to be executed in connection herewith.
Section 4.4    Netting at the Settlement Closing
The Parties agree that Sections 3.1 and 4.1 accurately characterize the nature and amounts of certain payments to be made at the Settlement Closing.  The Parties acknowledge that for the Owner Trustees to make the payments required by Section 3.1, Sellers would be required to fund the payments to be made by the Owner Trustees.  For administrative convenience, the Parties agree that in lieu of Sellers funding such payments by the Owner Trustees (i) Sellers will accept a net payment by Purchaser of $61,838,285.97 to Alterna (representing the Alterna Purchase Price less the Operating Cost Settlement Amount payable by the Owner Trustees with respect to the Alterna Undivided Interest) and $10,661,714.03 to LDVF1 (representing the LDVF1 Purchase Price less the Operating Cost Settlement Amount payable by the Owner Trustees with respect to the LDVF1 Undivided Interest), and (ii) Purchaser will accept such netting procedure in full settlement of the Operating Costs and Other Claims Settlement Amount.

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ARTICLE V 
REPRESENTATIONS AND WARRANTIES OF SELLERS AND TRUSTEES
Section 5.1    Beneficial Interests.      
Each of Sellers represents and warrants to Purchaser and Owner Trustees individually, and not jointly, that:    
(a)    such Seller is the record and beneficial owner and has good and valid title to the Beneficial Interests free and clear of all liens and encumbrances.
(b)    prior to the Effective Date, such Seller has provided Purchaser with a true and complete copy of the Trust Agreement, which Trust Agreement is in full force and effect and constitutes a valid, legal and binding obligation of Seller, enforceable against Seller in accordance with its terms, and which Trust Agreement shall not have been amended, modified or supplemented from the copy so provided to Purchaser prior to the Effective Date.
(c)    other than this Agreement and the agreements attached hereto as Exhibits there are no agreements granting any third-party any rights in or to the Beneficial Interests of such Seller.  
(d)    there are no liens or encumbrances on the Beneficial Interests or on the Undivided Interests of such Seller arising by or through such Seller or to their Knowledge, Owner Trustees.
(e)    to Seller’s Knowledge, Owner Trustees are not a party to any agreements related to the Facility or the Trust Estates other than the Facility Documents and Owner Trustees have not incurred any liabilities other than those arising out of the Facility Documents and the incurrence of costs included in Outstanding Owner Trustee Costs. 
(f)    To the Seller’s Knowledge, other than in relation to the Current Actions and the Outstanding Owner Trustee Costs, there are no indemnity obligations owed to the Owner Trustees under the Trust Agreement. 
(g)    Sellers have not entered into, or caused the Owner Trustees to enter into, any Facility Documents other than the Operative Documents and the Project Documents, other than communications and arrangements made in connection with the matters being settled pursuant to this Agreement.
Section 5.2    Existence.  
Each of Sellers represents and warrants individually, and not jointly, to Purchaser and Owner Trustees that such Seller is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware and each has the power to own its properties and assets and carry on its business as now conducted.

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Section 5.3    Corporate Action.  
Each of Sellers represents and warrants individually, and not jointly, to Purchaser and Owner Trustees that such Seller has all requisite power to execute, deliver, and perform this Agreement and all agreements, instruments, and documents being or to be executed and delivered by it hereunder or in connection herewith.  The execution, delivery and performance by such Seller of this Agreement and each of such other agreements, instruments and documents have been duly authorized by all necessary action on the part of such Seller.  This Agreement has been duly executed and delivered by such Seller and is a legal, valid, and binding obligation of such Seller, and each of such other agreements, instruments, and documents, upon execution and delivery, will be a legal, valid, and binding obligation of such Seller, in each case enforceable against it in accordance with its terms, except, in the case of each of the foregoing documents, as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally or by the application of general equitable principles.
Section 5.4    No Conflict.  
Each of Sellers represents and warrants individually, and not jointly, to Purchaser and Owner Trustees that neither the execution nor the delivery of this Agreement or any of the agreements, instruments, and documents being or to be executed and delivered by such Seller hereunder or in connection herewith nor the consummation of the transactions contemplated hereby or thereby nor compliance with or fulfillment of the terms, conditions, and provisions hereof or thereto, will conflict with, result in a breach or violation of the terms, conditions, or provision of, or constitute a default, an event of default, or any event creating rights of acceleration, termination, or cancellation or a loss of rights under, the certificate of formation or operating agreement of such Seller, or any judgment, decree, order, contract, agreement, indenture, instrument, note, mortgage, lease, license, franchise, permit, award, or other authorization, right, restriction or obligation to which such Seller is a party or any of its properties are bound or under any federal, state, or local law, statute, ordinance, rule, or regulation applicable to such Seller.
Section 5.5    No Consent Required.  
Each of Sellers represents and warrants individually, and not jointly, to Purchaser and Owner Trustees that no consent, authorization, approval, order, license, certificate, or permit or act of or from, or declaration or filing with, any Governmental Authority or any party to any contract, agreement, instrument, lease, or license to which such Seller is a party or by which it is bound, is required for the execution, delivery, or performance by such Seller of this Agreement or any of the other agreements, instruments, and documents being or to be executed and delivered by such Seller hereunder or in connection herewith or for consummation of the transactions contemplated except those delivered pursuant to Section 2.1.
Section 5.6    Litigation.  
Each of Sellers represents and warrants individually, and not jointly, to Purchaser and Owner Trustees that to its Knowledge there are no suits, actions, administrative proceedings, 

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arbitrations, governmental investigations, or Claims pending or, to the Knowledge of any of the Sellers, threatened against any of the Parties which question the legality or propriety of the transactions contemplated by this Agreement, other than to the extent applicable the Current Actions, which the Parties expect to settle in accordance with this Agreement.
Section 5.7    No Other Representations or Warranties.  
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, PURCHASER IS PURCHASING THE BENEFICIAL INTERESTS ACKNOWLEDGING THAT THE FACILITY IS "AS IS, WHERE IS AND WITH ALL FAULTS" AND WITHOUT ANY REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, OF ANY KIND WHATSOEVER AS TO THE FACILITY OR THE FACILITY DOCUMENTS.  NEITHER SELLERS NOR ANY RELEASED PARTIES OF SELLERS SHALL BE DEEMED TO HAVE MADE, AND SELLERS FOR THEMSELVES AND THEIR RELEASED PARTIES HEREBY EXPRESSLY DISCLAIM, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, INCLUDING WITHOUT LIMITATION, (A) ANY REPRESENTATION OR WARRANTY AS TO THE VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, QUALITY OF MATERIALS OR WORKMANSHIP, FITNESS FOR USE OR FOR A PARTICULAR PURPOSE, MANUFACTURE OR MARKETABILITY OR EXISTENCE OF THE FACILITY, (B) ANY IMPLIED WARRANTY OF TITLE WITH RESPECT TO THE PREMISES, (C) AS TO THE ADEQUACY OF ANY INSURANCE COVERAGE APPLICABLE TO ANY PART OF THE TRUST ESTATE, (D) AS TO THE COLLECTABILITY OF ANY AMOUNT UNDER ANY FACILITY DOCUMENT, OR (E) AS TO ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR COURSE OF DEALING.
Section 5.8    Representations and Warranties of Wilmington and Wade.  
Wilmington, and where specifically indicated Wade, in their individual capacities represent and warrant as to the matters set forth in this Section 5.8 as follows:
(a)    Wilmington and Wade, both as Individual Trustees and as Owner Trustees, have no outstanding claim for payment under the Trust Agreements or otherwise against Sellers through the Settlement Closing Date, except for the payment of Outstanding Owner Trustees Costs to be made by Sellers to Owner Trustees on the Settlement Closing Date in accordance with Section 3.2;
(b)    Wilmington is a trust company duly organized, validly existing, and in good standing under the laws of the State of Delaware and has the power to own its properties and assets and carry on its business as now conducted.
(c)    Wilmington, either in its individual capacity or as an Owner Trustee, has all requisite corporate or trust power to execute, deliver, and perform this Agreement and all agreements, instruments, and documents being or to be executed and delivered by it hereunder or in connection herewith.  The execution, delivery and performance by Wilmington of this Agreement and each of such other agreements, instruments and documents have been duly 

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authorized by all necessary corporate action on the part of Wilmington.  This Agreement has been duly executed and delivered by Wilmington and the Owner Trustees and is a legal, valid, and binding obligation of Wilmington and the Owner Trustees, and each of such other agreements, instruments, and documents, upon execution and delivery, will be a legal, valid, and binding obligation of Wilmington and the Owner Trustees, in each case enforceable against it in accordance with its terms, except, in the case of each of the foregoing documents, as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally or by the application of general equitable principles.
(d)    Neither the execution nor the delivery of this Agreement or any of the agreements, instruments, and documents being or to be executed and delivered by Wilmington hereunder or in connection herewith nor the consummation of the transactions contemplated hereby or thereby nor compliance with or fulfillment of the terms, conditions, and provisions hereof or thereto, will conflict with, result in a breach or violation of the terms, conditions, or provision of, or constitute a default, an event of default, or any event creating rights of acceleration, termination, or cancellation or a loss of rights under, the articles or bylaws of Wilmington, or any judgment, decree, order, contract, agreement, indenture, instrument, note, mortgage, lease, license, franchise, permit, award, or other authorization, right, restriction or obligation to which Wilmington is a party or any of its properties is bound or under any federal, state, or local law, statute, ordinance, rule, or regulation applicable to Wilmington.
(e)    No consent, authorization, approval, order, license, certificate, or permit or act of or from, or declaration or filing with, any Governmental Authority or any party to any contract, agreement, instrument, lease, or license to which Wilmington is a party or by which it is bound, is required for the execution, delivery, or performance by Wilmington of this Agreement or any of the other agreements, instruments, and documents being or to be executed and delivered by Wilmington hereunder or in connection herewith or for consummation of the transactions contemplated except those delivered pursuant to Section 2.1.  
(f)    To the Knowledge of Wilmington and Wade, there are no suits, actions, administrative proceedings, arbitrations, governmental investigations, or Claims pending or threatened against any of the Parties which question the legality or propriety of the transactions contemplated by this Agreement, other than to the extent applicable the Current Actions, which the Parties expect to settle in accordance with this Agreement.
(g)    To the Knowledge of Wilmington and Wade, other than in relation to the Current Actions and the Outstanding Owner Trustee Costs, there are no indemnity obligations owed to the Owner Trustees under the Trust Agreement.
ARTICLE VI 
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND INDEMNITOR
Each of the Purchaser and Indemnitor represents and warrants to Sellers and Owner Trustees that:

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Section 6.1    Existence and Relationship  
It is a corporation duly organized, validly existing, and in good standing under the laws of the State of Arizona and it has the power to own its properties and assets and carry on its business as now conducted.  Indemnitor is the owner of all common stock of Purchaser and expects to materially benefit from the execution, delivery, and performance of this Agreement.
Section 6.2    Corporate Action.  
It has all requisite power to execute, deliver, and perform this Agreement and all agreements, instruments, and documents being or to be executed and delivered by it hereunder or in connection herewith.  The execution, delivery and performance by it of this Agreement and each of such other agreements, instruments and documents have been duly authorized by all necessary action on its part.  This Agreement has been duly executed and delivered by it and is a legal, valid, and binding obligation of it, and each of such other agreements, instruments, and documents, upon execution and delivery, will be a legal, valid, and binding obligation of it, in each case enforceable against it in accordance with its terms, except, in the case of each of the foregoing documents, as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally or by the application of general equitable principles.
Section 6.3    No Conflict.  
Neither the execution nor the delivery of this Agreement or any of the agreements, instruments, and documents being or to be executed and delivered by it hereunder or in connection herewith nor the consummation of the transactions contemplated hereby or thereby nor compliance with or fulfillment of the terms, conditions, and provisions hereof or thereto, will conflict with, result in a breach or violation of the terms, conditions, or provision of, or constitute a default, an event of default, or any event creating rights of acceleration, termination, or cancellation or a loss of rights under, its articles or bylaws, or any judgment, decree, order, contract, agreement, indenture, instrument, note, mortgage, lease, license, franchise, permit, award, or other authorization, right, restriction or obligation to which it is a party or any of its respective properties is bound or under any federal, state, or local law, statute, ordinance, rule, or regulation applicable to it.
Section 6.4    No Consent Required.  
No consent, authorization, approval, order, license, certificate, or permit or act of or from, or declaration or filing with, any Governmental Authority or any party to any contract, agreement, instrument, lease, or license to which it is a party or by which it is bound, is required for the execution, delivery, or performance by it of this Agreement or any of the other agreements, instruments, and documents being or to be executed and delivered by it hereunder or in connection herewith or for consummation of the transactions contemplated except those delivered pursuant to Section 2.1.

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Section 6.5    Litigation.  
To its Knowledge, there are no suits, actions, administrative proceedings, arbitrations, governmental investigations, or Claims pending or, to its  Knowledge, threatened against any of the Parties which question the legality or propriety of the transactions contemplated by this Agreement, other than the Current Actions, which the Parties expect to settle in accordance with this Agreement,
ARTICLE VII 
ADDITIONAL AGREEMENTS
Section 7.1    Tax Matters.  
(a)    Sales Tax. Purchaser shall pay any and all sales, use, transfer and similar taxes, fees or duties assessed by any federal, state or local taxing authority arising out of the sale, transfer, conveyance or assignment of the Beneficial Interests contemplated by this Agreement.  
(b)    Income Tax. Notwithstanding anything set forth in this Agreement or in the Assignment or Assumption Agreements, Purchaser shall not be responsible to Sellers for any federal, state or local taxes based upon, measured by, or calculated with respect to, net income, net profits, deemed net profits, or gain from the sale, transfer, conveyance or assignment of the Beneficial Interests from Sellers to Purchaser. 
Section 7.2    Expenses.
Sellers and Purchaser shall each be responsible for and shall pay all costs and expenses incurred by it in connection with this Agreement and the transactions contemplated hereby, including all respective legal, consultant, expert, and other expenses incurred in relation to the Current Actions, the Facility, negotiation and preparation of the MOU and this Agreement, excluding only Facility-related expenses previously reimbursed to Sellers by Purchaser.  Sellers shall bear the costs of Owner Trustees (including, without limitation, reasonable attorneys’ fees and expenses, but excluding any Operating Costs other than the Operating Costs and Other Claims Settlement Amount being paid by the Owner Trustees) as incurred through the Settlement Closing Date and shall make payment to Owner Trustees for all such costs (“Outstanding Owner Trustees Costs”) at the time of the Settlement Closing as further described in Section 3.2.  
Section 7.3    Non-Disparagement.
Unless this Agreement is terminated before the Settlement Closing occurs, the Parties agree that they and each of their Affiliates will refrain from making any statement to any third party that disparages, ridicules, or maligns another Party to this Agreement.  This provision does not require withdrawal of any statements that may have been made prior to the Effective Date, including, but not limited to, statements made in connection with the Current Actions, but does require that any such prior statement not be further published or disseminated by or at the direction of the Party making such statement.

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Section 7.4    Termination of Agreements.     
The Participation Agreement, the Tax Indemnity Agreements, and each other agreement related to the Facility to which Sellers and Purchaser are parties shall be terminated as between Sellers and Purchaser on the Settlement Closing Date without the need for further action. 
ARTICLE VIII
 INDEMNIFICATION
Section 8.1    Indemnifications by Alterna and LDVF1.  
Alterna and LDVF1 each hereby agree, on a several basis only, in proportion to their respective percentage ownerships of the Beneficial Interests, to indemnify, defend, protect, and hold harmless Purchaser, together with its officers, directors, shareholders, employees, representatives, attorneys, agents, corporate Affiliates, and successors and assigns (collectively, the “Purchaser Indemnified Parties”), from and against any and all Losses, Claims and Indemnification Expenses incurred subsequent to the Settlement Closing imposed upon or incurred by any Purchaser Indemnified Party as a result of, in connection with, arising from, or otherwise related to:
(i)    any breach or default in the performance of, any covenant, agreement or obligation to be performed by such Seller pursuant to this Agreement; and/or
(ii)    any breach of any warranty or the inaccuracy of any representation by such Seller contained or referred to in this Agreement or in any certificate delivered by or on behalf of such Seller pursuant hereto.
Section 8.2    Indemnifications by Purchaser and Indemnitor.   
(a)    Purchaser and Indemnitor each hereby agree, jointly and severally, to indemnify, defend, protect and hold harmless Sellers, together with their respective officers, directors, shareholders, members, employees, representatives, attorneys, agents,  corporate Affiliates, and successors and assigns (collectively, the “Seller Indemnified Parties”), from and against any and all Losses, Claims and Indemnification Expenses incurred subsequent to the Settlement Closing imposed upon or incurred by any Seller Indemnified Party as a result of, in connection with, arising from or otherwise related to:
(i)    any breach or default in the performance by Purchaser of any covenant, agreement, or obligation to be performed by Purchaser pursuant to this Agreement; 
(ii)    any breach of any warranty or the inaccuracy of any representation by Purchaser contained or referred to in this Agreement or in any certificate delivered by or on behalf of Purchaser pursuant hereto; and/or
(iii)    except as provided under Section 7.1(b) above, any and all past, current, and/or future Claims of any kind to the extent arising out of or related in any way to the Facility, the Facility Documents, the Beneficial Interests, and the Trust Agreements.

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(b)    Without limitation of the foregoing, Purchaser and Indemnitor each hereby further agree, jointly and severally, to indemnify, defend, protect and hold harmless the Seller Indemnified Parties from and against any and all Losses, Claims and Indemnification Expenses incurred subsequent to the Settlement Closing imposed upon or incurred by any Seller Indemnified Party as a result of, in connection with, arising from or otherwise related to:
(i)    any and all Environmental Damages which may at any time be imposed upon, threatened against, incurred by, or asserted or awarded against any Seller Indemnified Party related to the Facility, including without limitation, any presently existing, known or unknown, Contamination on, in or under, or migrating onto or from,  all or any portion of the Facility;
(ii)    any violation of or alleged violation of Environmental Law at the Facility; and/or
(iii)    any violation of or alleged violation of Environmental Law involving any Regulated Substance generated, used, handled, processed, or stored at, or transported to or from, the Facility
(c)    Purchaser acknowledges that the respective Trust Agreements, under which Sellers’ rights, interests, and obligations shall be assigned pursuant to the respective Assignment and Assumption Agreements, contain indemnity obligations running from Sellers in favor of the Owner Trustees and that such indemnity obligations shall become the exclusive obligation of Purchaser upon completion of the transactions contemplated in this Agreement.
Section 8.3    Limitations and Survival.  
The representations and warranties and indemnities contained in this Agreement shall survive the Settlement Closing and shall remain in full force and effect without limitation.
Section 8.4    Notification and Related Matters.  
The Party claiming indemnity hereunder (hereinafter referred to as the “Indemnified Party”) shall give the Party against whom such indemnity is sought (hereinafter referred to as the “Indemnifying Party”) reasonably prompt notice after obtaining knowledge of any claim or the existence of facts as to which recovery may be sought against the Indemnifying Party pursuant to Sections 8.1 or 8.2 (the “Claim Notice”).  If such indemnity will arise from the claim of a third party (as opposed to a claim between Sellers and Purchaser), the Indemnified Party agrees that, within twenty (20) days after it is given written notice of the assertion of any claim as to liability with respect to which indemnity may be sought by it hereunder, the Indemnified Party will notify the Indemnifying Party in writing of such asserted liability.  If, after the receipt of such notice from the Indemnified Party and the expiration of a reasonable period of time to investigate the facts, circumstances and legal foundation upon which such claim of indemnity is based, the Indemnifying Party notifies the Indemnified Party in writing of its election to have the asserted liability challenged or defended by it, the Indemnifying Party thereafter shall be entitled to direct, through counsel of its choosing, the challenge or defense against such asserted liability at its own expense, and shall 

20

keep the Indemnified Party fully informed of its actions; provided, however, the Indemnifying Party shall not make any settlement of any claim without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld.  Without limiting the generality of the foregoing, it shall not be deemed unreasonable to withhold consent to a settlement involving injunctive relief or other equitable relief against the Indemnified Party or its assets, employees or business.  In case the Indemnifying Party so elects to direct such challenge or defense, the Indemnified Party may participate, at its sole cost and expense, unless such participation by the Indemnified Party has been requested in writing by the Indemnifying Party.  In case the Indemnifying Party does not elect as aforesaid to direct such challenge or defense, the Indemnified Party may then, in its sole discretion, elect to challenge or defend such matter, in which event the Indemnified Party’s fees and expenses shall be borne by the Indemnifying Party, and the Indemnified Party shall have the sole right to settle any such asserted liability; provided, that the Indemnifying Party may participate in such challenge or defense at its own expense.  In the event the Indemnifying Party elects to direct such challenge or defense as herein set out, the Indemnified Party shall not settle, pay, or cause or permit to be paid, any part of any claim or demand arising from such asserted liability until the Indemnifying Party consents in writing to such payment (which consent shall not be unreasonably withheld), until the Indemnifying Party withdraws from the challenge or defense of such asserted liability, or until a final judgment from which no appeal has been taken by or on behalf of the Indemnifying Party is entered against the Indemnified Party for such liability.  Then, and in any such event, the Indemnifying Party shall become obligated to pay such liability to the extent such liability is within the terms and conditions hereof.  If the Indemnifying Party elects not to challenge or defend, as it is herein authorized to do, the Indemnified Party shall be entitled to charge such asserted liability, to the extent such liability is within the terms and conditions hereof, to the Indemnifying Party at such time as the Indemnified Party reaches the decision to make no further challenge or defense in connection with such asserted liability on its own behalf as hereinabove authorized.  With respect to any claim for which the Indemnifying Party elects to direct the challenge or defense, the Indemnified Party agrees to cooperate fully with the Indemnifying Party in such challenge or defense by making available to the Indemnifying Party the reasonably required records, employees, and facilities of the Indemnified Party.  The Indemnified Party further agrees to take any and all reasonable steps requested by the Indemnifying Party to mitigate any losses, damages, or expenses with respect to any such claim.  In the event it is ultimately determined that the Indemnified Party was not entitled to indemnification under this Article, or under any other provision of this Agreement, and the Indemnifying Party has nonetheless assumed the defense of such asserted liability, then the Indemnified Party shall, at such time as it is ultimately determined that the Indemnified Party was not entitled to indemnification, reimburse the Indemnifying Party for the costs and expenses, including reasonable attorneys’ fees, incurred by the Indemnifying Party in connection with such assumption.   

21

ARTICLE IX 
MISCELLANEOUS
Section 9.1    Retention of and Access to Records after Settlement Closing.
(a)    For a period of seven years after the Settlement Closing Date, Sellers and their representatives shall have reasonable access to all of the books and records of Purchaser relating to the Beneficial Interests to the extent that such access may reasonably be required by Sellers in connection with matters relating to or affected by the Beneficial Interests prior to the Settlement Closing Date (including, without limitation, for the preparation of Tax Returns and financial statements and other reasonable purposes).  Such access shall be afforded by Purchaser upon receipt of reasonable advance notice and during normal business hours.  Sellers shall be solely responsible for any costs or expenses incurred by it pursuant to this Section 9.1(a).  If Purchaser shall desire to dispose of any of such books and records prior to the expiration of such seven-year period, Purchaser shall, prior to such disposition, give Sellers a reasonable opportunity, at Sellers’ expense, to segregate and remove such books and records as Sellers may select.
(b)    For a period of seven years after the Settlement Closing Date, Purchaser and its representatives shall have reasonable access to all of the books and records of Sellers relating to the Beneficial Interests, including for the preparation of Tax Returns, financial statements, reports to Governmental Authorities and other reasonable purposes.  Such access shall be afforded by Sellers upon receipt of reasonable advance notice and during normal business hours.  Purchaser shall be solely responsible for any costs and expenses incurred by it pursuant to this Section 9.1(b).  If Sellers shall desire to dispose of any of such books and records prior to the expiration of such seven-year period, Sellers shall, prior to such disposition, give Purchaser a reasonable opportunity, at Purchaser’s expense, to segregate and remove such books and records as Purchaser may select.
Section 9.2    Exhibits.  
The Exhibits referred to in this Agreement shall be deemed to be incorporated herein by reference and made a part hereof as if set out in full herein.
Section 9.3    Assignment.  
The rights of any Party under this Agreement shall not be assignable by such Party prior to the Settlement Closing.  Following the Settlement Closing, a Party may assign any of its rights hereunder, but no such assignment shall relieve it of its obligations hereunder.
Section 9.4    Headings.
  The titles and headings contained in this Agreement (including in the Exhibits hereto) are included for purposes of convenience only and shall not be considered a part of this Agreement in construing or interpreting any provision hereof.
Section 9.5    Governing Law.  

22

This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to that state’s choice of law or conflict of laws doctrines.
Section 9.6    Submission to Jurisdiction; Selection of Forum.
The Parties hereto agree (i) that any action or proceeding in respect of any claim arising out of or related to this Agreement or the transactions contemplated by this Agreement, whether in tort or contract or at law or in equity, shall be exclusively brought either in the United State District Court for the Southern District of New York or the Supreme Court of the State of New York for New York County (each, a “Chosen Court”); (ii) to irrevocably submit to the jurisdiction of the Chosen Court to the full extent permitted by law; (iii) waive any objection to laying venue in any such action or proceeding in either Chosen Court; (iv) waive any objection that such Chosen Court is an inconvenient forum; and (v) agree that service of process upon any involved Party in any such action or proceeding shall be effective if notice is given in accordance with this Agreement.
Section 9.7    Notices.  
All notices, requests, demands, and other communications required or permitted to be given or made under this Agreement shall be in writing and shall be deemed to have been given on the date of delivery personally; or the date of deposit with a nationally recognized overnight delivery service or in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, addressed as set forth on the signature pages hereto or to such other person or address as either Party shall designate by notice to the other Party in accordance herewith; or the date of machine receipt or other acknowledgement if sent via e-mail.  
Section 9.8    Counterparts.  
This Agreement may be executed by the Parties in one or more counterparts, all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by each of the Parties and delivered to each Party.
Section 9.9    Successors and Assigns.  
This Agreement shall be binding upon and inure to the benefit of each of the Parties hereto and their respective successors and permitted assigns.
Section 9.10    Subrogation.  
Nothing in this Agreement, express or implied, including the indemnities hereof, shall be deemed to create in any Person or entity other than the Parties signatory hereto and their successors and permitted assigns hereof and, with respect to Article VIII, other than Purchaser Indemnified Parties and Seller Indemnified Parties, (i) any right, remedy, or claim under or by reason of this Agreement or (ii) any rights of subrogation from, through, or under any indemnified Party because of any claim paid or defense provided or otherwise.
Section 9.11    Severability of Provisions.  

23

Wherever possible, each provision hereof shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement or the application thereof to any person or circumstances shall, to any extent and for any reason, be held in any proceeding to be invalid, illegal, or unenforceable, such provision, or the application thereof to any person or circumstance, shall be ineffective to the extent, but only to the extent, of such invalidity, illegality, or unenforceability without invalidating the remainder of such invalid, illegal, or unenforceable provision or any other provisions hereof or the application of such provision to persons or circumstances other than those to which it was held to be invalid, illegal, or unenforceable, but only if and to the extent such construction would not materially and adversely frustrate the Parties’ essential objectives as expressed herein.
Section 9.12    Entire Agreement; Amendments; Waivers.  
This Agreement (including the Exhibits referred to herein and the documents delivered pursuant hereto) constitutes the entire agreement of the Parties hereto pertaining to the subject matter contained herein and supersedes all prior agreements, representations, understandings, or letters of intent (including the MOU (which is hereby terminated)) of the Parties hereto.  This Agreement shall not be amended, modified, or supplemented except by a written instrument signed by an authorized representative of each of the Parties hereto.  Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party or Parties entitled to the benefit thereof.  Any such waiver shall be validly and sufficiently authorized for the purposes of this Agreement if, as to any party, it is authorized in writing by an authorized representative of such Party.  The failure of any Party hereto to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision nor in any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision.  No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.
Section 9.13    Right to Injunctive Relief.
The Parties expressly agree that the breach of any of the terms and conditions hereof may result in irreparable damage for which money damages would be an inadequate remedy.  Accordingly, in the event of a breach or a threatened breach by Purchaser, Sellers or Owner Trustees or by any of their agents or advisors of any of the provisions of this Agreement, and in addition to any other remedy provided herein, by law or in equity, the non-breaching party shall be entitled to seek appropriate injunctive relief in any court specified in Section 9.6.  In addition, the non-breaching Party shall be entitled to receive from the breaching Party its costs and reasonable attorneys’ fees in connection with any successful enforcement of its rights under this Section.
Section 9.14    Limitation of Owner Trustee Liability.
It is expressly understood and agreed by the parties that (except as expressly provided herein) (a) this document is executed and delivered by Wilmington and Wade, not individually or personally, but solely as Owner Trustees, in the exercise of the powers and authority conferred and vested in them, (b) each of the representations, undertakings and 

24

agreements herein made on the part of the Owner Trustees is made and intended not as personal representations, undertakings and agreements by Wilmington or Wade but is made and intended for the purpose for binding only the Owner Trustees, (c) nothing herein contained shall be construed as creating any liability on Wilmington or Wade, individually or personally, to perform any covenant either expressed or implied contained herein of the Owner Trustees, all such liability, if any, being expressly waived by the parties hereto and by any person claiming by, through or under the parties hereto, (d) neither Wilmington nor Wade has made any investigation as to the accuracy or completeness of any representations or warranties made by the Owner Trustees in this Agreement and (e) under no circumstances shall Wilmington or Wade, be personally liable for the payment of any indebtedness or expenses of the Owner Trustees or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Owner Trustees under this Agreement or any other related documents. 

[signature page follows]

25

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

ALTERNA SPRINGERVILLE LLC

By:   /s/ Roger P. Miller                             
Name:    Roger P. Miller
Title:  President

c/o Alterna Capital Partners LLC
15 River Road, Suite 320
Wilton, CT 06897
Attention:  Thomas X. Fritsch, Esq.

LDVF1 TEP LLC

By:   /s/ Constantine M. Dakolias                
Name:  Constantine M. Dakolias
Title:  President

1345 Avenue of the Americas
New York, NY 10105

WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Owner Trustee (except as expressly provided herein) 

By:   /s/ Melinda Morales Romay                 
Name:  Melinda Morales Romay
Title:  Assistant Vice President

Rodney Square North                    
1100 North Market Street                
Wilmington, DE 19890                
Attention: Jose Paredes                

26

WILLIAM J. WADE, not in his individual capacity, but solely as Cotrustee (except as expressly provided herein)

  /s/ William J. Wade                                        
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890

UNS ENERGY CORPORATION

By:   /s/ David Hutchens                                   
Name:  David Hutchens
Title:  President & CEO

88 East Broadway Blvd. 
Mail Stop HQE910 
Tucson, Arizona 85701 
Attention: General Counsel

TUCSON ELECTRIC POWER COMPANY

By:   /s/ David Hutchens                                   
Name:  David Hutchens
Title:  President & CEO

88 East Broadway Blvd. 
Mail Stop HQE910 
Tucson, Arizona 85701 
Attention: General Counsel

27

Exhibit A
ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (“Agreement”) is made this _____, 2016 (“Settlement Closing Date”), by and between [ALTERNA SPRINGERVILLE LLC / TEP LDVF1 LLC], a Delaware limited liability company (“Seller”), and TUCSON ELECTRIC POWER COMPANY, an Arizona corporation (“Purchaser” together with Seller, “Parties”).  Capitalized terms used herein without definition have the respective meanings specified in the Agreement for Settlement of Claims Including Releases and Purchase and Sale of Beneficial Interests between Seller and Purchaser, inter alia,  (the “Purchase Agreement”).

Background

A.    Seller is an Owner Participant under the Participation Agreement.

B.    Seller  holds all  of the right, title, and interest  in and  to one hundred percent (100%) of the beneficial interest under its respective Trust Agreement and in its respective Trust Estate (as defined  in Section 2.01 of its respective Trust  Agreement),  and,  in  its  capacity  as  Owner  Participant,  all  contractual  rights and obligations, if any, in, to, and under the Facility Documents to which it is a party (collectively, the “Beneficial Interest”).

C.    Seller and Purchaser desire to evidence the sale, transfer, conveyance, assignment, and delivery by Seller to Purchaser, and assumption by Purchaser, of the Beneficial Interest.

D.    Seller and Purchaser have entered into the Purchase Agreement to, among other things, govern the terms of the sale, transfer, assignment and assumption of the Beneficial Interest.

Agreements

In consideration of the foregoing Background and the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Parties, Seller and Purchaser, intending to be legally bound, agree as follows:

1.    Assignment.  Seller hereby sells, transfers, conveys, assigns, and delivers to Purchaser as of the Settlement Closing Date all of its present and future right, title and interest in, to and under the Beneficial Interest.

2.    Assumption.  Purchaser hereby accepts the sale, transfer, conveyance, assignment, and delivery of Seller's present and future right, title and interest in, to and under the Beneficial Interest, agrees that it shall be deemed a party to the respective Trust Agreement, the Participation Agreement, and the other Operative Documents to which the Seller as Owner  Participant  is a party and assumes, and  covenants  and agrees to observe and perform, all of the obligations of the Seller 

as Owner Participant arising or accruing under the Trust Agreement, the Participation  Agreement, the  other  Operative  Documents to which it is a party, and any other Facility Document.

3.    No Representation or Warranty.  Except as otherwise provided in the Purchase Agreement, the Seller shall not be deemed to have made, and Purchaser expressly disclaims, any representation or warranty, express or implied, with respect to the Beneficial Interest.

4.    Beneficiaries.  The Owner Trustees, and their respective successors and permitted assigns, are intended beneficiaries of, and may rely upon the representation, warranties, and undertakings contained in, this Agreement.

5.    Amendments. This Agreement may only be amended, modified or terminated by an instrument in writing signed by all of the parties to this Agreement.

6.    Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to that state’s choice of law or conflict of laws doctrines

7.    Effectiveness.  This Agreement and the assignment and assumption to be effected hereby shall be effective from and after the Settlement Closing Date.

8.    Counterparts.  This Agreement may be executed in any number of identical counterparts (which may include facsimile signatures and may be delivered by facsimile or electronic transmission), each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

* * * * *
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

[ALTERNA SPRINGERVILLE LLC
 / TEP LDVF1 LLC]

By:  _____________________________________
                    
Name: 
            
Title:

TUCSON ELECTRIC POWER COMPANY

By:  _____________________________________
                    
Name: 
                    
Title:

Exhibit B

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK

	
			
	

ALTERNA SPRINGERVILLE LLC 

and

LDVFI TEP LLC 

(each together with WILMINGTON TRUST COMPANY and WILLIAM J. WADE, acting solely in their respective capacities as Trustee and Cotrustee),

   Plaintiffs,
 
   - against -

TUCSON ELECTRIC POWER COMPANY,

   Defendant.

	: 
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Index No.:  653898/2014

STIPULATION OF DISCONTINUANCE  

Hon. Jeffrey K. Oing

Plaintiffs Alterna Springerville LLC and LDVF1 TEP LLC, each together with Wilmington Trust Company and William  J. Wade acting solely in their respective capacities as Trustee and Cotrustee (“Plaintiffs”), and Defendant Tucson Electric Power Company (“Defendant”), though their undersigned counsel and pursuant C.P.L.R § 3217(a) (2) and an Agreement for Settlement of Claims Including Releases and Purchase and Sale of Beneficial Interests among the parties dated February 29, 2016, hereby stipulate to the voluntary discontinuance of the instant action  with prejudice and without attorneys’ fees or costs against any party.  
    

    
	
					
	DRINKER BIDDLE & REATH LLP
	 
	MORGAN, LEWIS & BOCKIUS LLP
	 

	 
	 
	 
	 
	 

	BY:
	/s/ Andrew P. Foster
	 
	/s/ Laurie E. Foster
	 

	 
	 
	 
	 
	 

	 
	Andrew P. Foster
	 
	Laurie E. Foster
	 

	 
	Brian C. Pickard (admitted pro hac vice)
	 
	John M. Vassos
	 

	 
	Nicole D. Josko (admitted pro hac vice)
	 
	Heather L. Hopkins
	 

	 
	DRINKER BIDDLE & REATH LLP
	 
	MORGAN, LEWIS & BOCKIUS LLP
	 

	 
	1177 Avenue of the Americas, 41st Floor
	 
	101 Park Avenue
	 

	 
	New York, NY  10036-2714
	 
	New York, NY  10178-0060
	 

	 
	 
	 
	 
	 

	 
	Attorneys for Plaintiffs
	 
	Attorneys for Defendant
	 

	 
	Alterna Springerville LLC
	 
	Tucson Electric Power Company
	 

	 
	and LDVF1 TEP LLC, each together
	 
	 
	 

	 
	with Wilmington Trust Company and
	 
	 
	 

	 
	William  J. Wade acting solely in their
	 
	 
	 

	 
	respective capacities as Trustee and
	 
	 
	 

	 
	Cotrustee
	 
	 
	 

	 
	 
	 
	 
	 

	 
	Dated:  February 29, 2016
	 
	Dated:  February 29, 2016
	 

Exhibit C

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK

	
			
	

ALTERNA SPRINGERVILLE LLC 

and

LDVFI TEP LLC 

   Plaintiffs,
 
   - against -

TUCSON ELECTRIC POWER COMPANY,

   Defendant.

	: 
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:
:
	

Index No.:  653064/2015

STIPULATION OF DISMISSAL 

Hon. Jeffrey K. Oing

Plaintiffs Alterna Springerville LLC and LDVF1 TEP LLC (“Plaintiffs”) and Defendant Tucson Electric Power Company (“Defendant”), though their undersigned counsel and pursuant to C.P.L.R. § 3217 (a) (2)  and an Agreement for Settlement of Claims Including Releases and Purchase and Sale of Beneficial Interests among the parties dated February 29, 2016, hereby stipulate to the voluntary discontinuance of the instant action with prejudice and without attorneys’ fees or costs against any party.

	
					
	DRINKER BIDDLE & REATH LLP
	 
	MORGAN, LEWIS & BOCKIUS LLP
	 

	 
	 
	 
	 
	 

	BY:
	/s/ Andrew P. Foster
	 
	/s/ Laurie E. Foster
	 

	 
	 
	 
	 
	 

	 
	Andrew P. Foster
	 
	Laurie E. Foster
	 

	 
	Ross A. Lewin (admitted pro hac vice)
	 
	John M. Vassos
	 

	 
	DRINKER BIDDLE & REATH LLP
	 
	Heather L. Hopkins
	 

	 
	1177 Avenue of the Americas, 41st Floor
	 
	MORGAN, LEWIS & BOCKIUS LLP
	 

	 
	New York, NY  10036-2714
	 
	101 Park Avenue
	 

	 
	 
	 
	New York, NY  10178-0060
	 

	 
	Attorneys for Plaintiffs
	 
	 
	 

	 
	Alterna Springerville LLC
	 
	Attorneys for Defendant
	 

	 
	and LDVF1 TEP LLC
	 
	Tucson Electric Power Company
	 

	 
	 
	 
	 
	 

	 
	Dated:  February 29, 2016
	 
	Dated:  February 29, 2016
	 

Exhibit D

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK

	
			
	

TUCSON ELECTRIC POWER COMPANY
 
                             Petitioner,
v.

WILMINGTON TRUST COMPANY and WILLIAM J. WADE 

(acting solely as Owner Trustee and Co-Trustee, respectively, under and pursuant to Trust Agreements dated as of December 15, 1986, as amended, for the benefit of Owner Participants Alterna Springerville LLC and LDVF1 TEP LLC),
             Respondents.
	: 
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Index No.:  653774/2015

STIPULATION OF DISCONTINUANCE  

Hon. Jeffrey K. Oing

Respondents Wilmington Trust Company and William J. Wade acting solely as Owner Trustee and Co-Trustee, respectively, under and pursuant to Trust Agreements dated as of December 15, 1986, as amended, for the benefit of Owner Participants Alterna Springerville LLC and LDVF1 TEP LLC (“Respondents”) and Petitioner Tucson Electric Power Company (“Petitioner”), though their undersigned counsel and pursuant to C.P.L.R § 3217 (a) (2) and an Agreement for Settlement of Claims Including Releases and Purchase and Sale of Beneficial Interests among the parties dated February 29, 2016, hereby stipulate to the voluntary discontinuance of the instant action with prejudice and without attorneys’ fees or costs against any party.  

	
					
	DRINKER BIDDLE & REATH LLP
	 
	MORGAN, LEWIS & BOCKIUS LLP
	 

	 
	 
	 
	 
	 

	BY:
	/s/ Andrew P. Foster
	 
	/s/ Laurie E. Foster
	 

	 
	 
	 
	 
	 

	 
	Andrew P. Foster
	 
	Laurie E. Foster
	 

	 
	DRINKER BIDDLE & REATH LLP
	 
	MORGAN, LEWIS & BOCKIUS LLP
	 

	 
	1177 Avenue of the Americas, 41st Floor
	 
	101 Park Avenue
	 

	 
	New York, NY  10036-2714
	 
	New York, NY  10178-0060
	 

	 
	 
	 
	 
	 

	 
	Attorneys for Respondents 
	 
	Attorneys for Petitioner
	 

	 
	 
	 
	 
	 

	 
	Dated:  February 29, 2016
	 
	Dated:  February 29, 2016
	 

Exhibit E

AMERICAN ARBITRATION ASSOCIATION
COMMERCIAL ARBITRATION RULES 

	
		
	

TUCSON ELECTRIC POWER COMPANY,

                            -vs-

ALTERNA SPRINGERVILLE LLC and
LDVF1 TEP LLC

(each together with WILMINGTON TRUST COMPANY, as Owner Trustee, and WILLIAM J. WADE, as Co-Trustee, under separate Trust Agreements dated as of December 15, 1986, as Amended)

with

WILMINGTON TRUST COMPANY and WILLIAM J. WADE, acting solely as Owner Trustee and Co-Trustee respectively under and pursuant to Trust Agreements dated as of December 15, 1986, as amended, for the benefit of Owner Participants Alterna Springerville, LLC and LDVF1 TEP LLC

                            -vs-

TUCSON ELECTRIC POWER COMPANY

	

Consolidated Matter 
Case No. 01-15-0003-2729

STIPULATION OF DISMISSAL

Alterna Springerville LLC and LDVF1 TEP LLC,  each together with Wilmington Trust Company, as Owner Trustee, and William J. Wade, as Co-Trustee, under separate Trust 

Agreements dated as of December 15, 1986, as Amended,  and Tucson Electric Power Company, though their undersigned counsel and pursuant to an Agreement for Settlement of Claims Including Releases and Purchase and Sale of Beneficial Interests among the parties dated February 29, 2016, hereby stipulate to the voluntary discontinuance of the instant proceeding with prejudice and without attorneys’ fees or costs against any party. 

	
					
	DRINKER BIDDLE & REATH LLP
	 
	MORGAN, LEWIS & BOCKIUS LLP
	 

	 
	 
	 
	 
	 

	BY:
	 /s/ Andrew P. Foster
	 
	/s/ Laurie E. Foster
	 

	 
	 
	 
	 
	 

	 
	Andrew P. Foster
	 
	Laurie E. Foster
	 

	 
	Brian C. Pickard
	 
	John M. Vassos
	 

	 
	Nicole D. Josko
	 
	Heather L. Hopkins
	 

	 
	DRINKER BIDDLE & REATH LLP
	 
	MORGAN, LEWIS & BOCKIUS LLP
	 

	 
	1177 Avenue of the Americas, 41st Floor
	 
	101 Park Avenue
	 

	 
	New York, NY  10036-2714
	 
	New York, NY  10178-0060
	 

	 
	 
	 
	 
	 

	 
	Attorneys for
	 
	Attorneys for
	 

	 
	Alterna Springerville LLC and
	 
	Tucson Electric Power Company
	 

	 
	LDVF1 TEP LLC, each together with
	 
	 
	 

	 
	Wilmington Trust Company, and
	 
	 
	 

	 
	William J. Wade
	 
	 
	 

	 
	acting solely as Owner Trustee and Co-Trustee
	 
	 
	 

	 
	respectively under and pursuant to Trust
	 
	 
	 

	 
	Agreements dated as of December 15, 1986,
	 
	 
	 

	 
	as amended, for the benefit of Owner
	 
	 
	 

	 
	Participants Alterna Springerville, LLC and
	 
	 
	 

	 
	LDVF1 TEP LLC
	 
	 
	 

	 
	 
	 
	 
	 

	 
	Dated:  February 29, 2016
	 
	Dated:  February 29, 2016
	 

Exhibit F
Docket No. 15-73844

UNITED STATES COURT OF APPEALS 
FOR THE NINTH CIRCUIT
ALTERNA SPRINGERVILLE LLC, LDVF1 TEP LLC, WILMINGTON TRUST 
COMPANY, AND WILLIAM J. WADE,
Petitioners, v.
FEDERAL ENERGY REGULATORY COMMISSION,
Respondent,
and
TUCSON ELECTRIC POWER COMPANY,
Intervenor
STIPULATION OF DISMISSAL
PURSUANT TO F.R.A.P. 42(b)
Pursuant to Rule 42(b) of the Federal Rules of Appellate Procedure, it is hereby stipulated and agreed by and between the parties that the above-captioned matter is DISMISSED with prejudice and with each party to bear its own costs.

	
				
	/s/ Derek D. Green
	 
	/s/ Ross R. Fulton
	 

	Derek D. Green
	 
	Ross R. Fulton
	 

	Davis Wright Tremaine, LLP
	 
	Federal Energy Regulatory Commission
	 

	1300 SW Fifth Avenue, Suite 2400
	 
	888 First Street, N.E.
	 

	Portland, Oregon 97201
	 
	Washington, D.C. 20426
	 

	(503) 241-2300
	 
	(202) 502-8003
	 

	derekgreen@dwt.com
	 
	Ross.Fulton@ferc.gov
	 

	Counsel for the Petitioners
	 
	Counsel for the Respondent
	 

	
			
	/s/ Jeffrey M. Jakubiak
	 
	 

	Jeffrey M. Jakubiak
	 
	 

	Gibson, Dunn & Crutcher LLP
	 
	 

	200 Park Avenue
	 
	 

	New York, NY 10166
	 
	 

	(212) 351-2498
	 
	 

	jjakubiak@gibsondunn.com
	 
	 

	Counsel for the Intervenor

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