Document:

exv10w79

 

Exhibit 10.79

Annual Base Salaries of Named Executive Officers

     In February 2008, the 2008 annual base salaries of Messrs. Jacobs, Dobson, Landrum, Jines and
Herndon, each of whom is a named executive officer, were approved by the Compensation Committee
(and the Board, in the case of Mr. Jacobs).

	 	 	 
	 	 	2008 Base Salary
	Named Executive Officer	 	(effective April 1, 2008)
	Mark M. Jacobs
	 	 
	President and Chief Executive Officer
	 	$910,000
	Rick L. Dobson
	 	 
	Executive Vice President and Chief Financial Officer
	 	$515,000
	Brian Landrum
	 	 
	Executive Vice President and Chief Operating Officer
	 	$665,000
	Michael L. Jines
	 	 
	Senior Vice President, General Counsel and Corporate Secretary
	 	$430,000
	D. Rogers Herndon
	 	 
	Senior Vice President, Strategic Planning and Business Development
	 	$350,000exv10w80

 

Exhibit 10.80

EXECUTION COPY

 

 

ASSET PURCHASE AGREEMENT

By and Among

RELIANT ENERGY CHANNELVIEW LP

And

RELIANT ENERGY SERVICES CHANNELVIEW LLC

AS SELLERS

And

KELSON ENERGY IV LLC

AS BUYER

Dated as of February 25, 2008

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE 1 DEFINITIONS AND CONSTRUCTION	 	 	1	 
	 
	 	 	 	 	 	 
	      1.1.
	 	Definitions	 	 	1	 
	      1.2.
	 	Construction.	 	 	13	 
	 
	 	 	 	 	 	 
	ARTICLE 2 PURCHASE AND SALE OF THE ACQUIRED ASSETS	 	 	14	 
	 
	 	 	 	 	 	 
	2.1.
	 	Transfer of Acquired Assets	 	 	14	 
	2.2.
	 	Excluded Assets	 	 	15	 
	2.3.
	 	Assumption of Liabilities	 	 	17	 
	2.4.
	 	Excluded Liabilities	 	 	17	 
	2.5.
	 	Non-Assignment of Assigned Contracts	 	 	18	 
	 
	 	 	 	 	 	 
	ARTICLE 3 CONSIDERATION	 	 	20	 
	 
	 	 	 	 	 	 
	3.1.
	 	Purchase Price	 	 	20	 
	3.2.
	 	Deposit	 	 	20	 
	3.3.
	 	Post-Closing Adjustment.	 	 	20	 
	3.4.
	 	Allocation of Purchase Price	 	 	21	 
	3.5.
	 	Equistar Payment	 	 	21	 
	 
	 	 	 	 	 	 
	ARTICLE 4 CLOSING AND DELIVERIES	 	 	22	 
	 
	 	 	 	 	 	 
	4.1.
	 	Closing	 	 	22	 
	4.2.
	 	Closing Deliveries by Sellers to Buyer	 	 	22	 
	4.3.
	 	Closing Deliveries by Buyer	 	 	23	 
	4.4.
	 	RES Fuel Purchase Transactions	 	 	24	 
	 
	 	 	 	 	 	 
	ARTICLE 5 REPRESENTATIONS AND WARRANTIES REGARDING THE ACQUIRED ASSETS	 	 	24	 
	 
	 	 	 	 	 	 
	5.1.
	 	Organization and Qualification; Authority	 	 	24	 
	5.2.
	 	No Conflicts; Consents and Approvals	 	 	25	 
	5.3.
	 	Subsidiaries	 	 	25	 
	5.4.
	 	Financial Statements	 	 	25	 
	5.5.
	 	Absence of Undisclosed Liabilities; Certain Developments	 	 	25	 
	5.6.
	 	Litigation	 	 	26	 
	5.7.
	 	Compliance with Laws	 	 	26	 
	5.8.
	 	Permits	 	 	26	 
	5.9.
	 	Contracts.	 	 	26	 
	5.10.
	 	Taxes	 	 	28	 
	5.11.
	 	Employee Benefit Plans; ERISA.	 	 	29	 
	5.12.
	 	Labor and Employment.	 	 	30	 
	5.13.
	 	Environmental Matters	 	 	31	 
	5.14.
	 	Intellectual Property	 	 	31	 
	5.15.
	 	Real Estate	 	 	32	 
	5.16.
	 	Insurance	 	 	32	 
	5.17.
	 	Federal Regulation	 	 	32	 

 

 

	 	 	 	 	 	 	 
	 	 	 	 		 
	5.18.
	 	Brokers	 	 	32	 
	5.19.
	 	Conduct of Business and Operations	 	 	32	 
	5.20.
	 	Sufficiency of Assets	 	 	32	 
	 
	 	 	 	 	 	 
	ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER	 	 	32	 
	 
	 	 	 	 	 	 
	6.1.
	 	Organization and Qualification	 	 	32	 
	6.2.
	 	Authority	 	 	33	 
	6.3.
	 	No Conflicts; Consents and Approvals	 	 	33	 
	6.4.
	 	Legal Proceedings	 	 	33	 
	6.5.
	 	Compliance with Laws and Orders	 	 	33	 
	6.6.
	 	Brokers	 	 	34	 
	6.7.
	 	Financial Resources	 	 	34	 
	6.8.
	 	No Knowledge of a Sellers’ Breach	 	 	34	 
	6.9.
	 	Opportunity for Independent Investigation	 	 	34	 
	 
	 	 	 	 	 	 
	ARTICLE 7 COVENANTS	 	 	34	 
	 
	 	 	 	 	 	 
	7.1.
	 	Access.	 	 	34	 
	7.2.
	 	Conduct of Business Pending the Closing.	 	 	35	 
	7.3.
	 	Use of Certain Names	 	 	37	 
	7.4.
	 	Support Obligations.	 	 	37	 
	7.5.
	 	Termination of Certain Services, Contracts	 	 	38	 
	7.6.
	 	Insurance	 	 	39	 
	7.7.
	 	Tax Matters.	 	 	39	 
	7.8.
	 	Confidentiality.	 	 	40	 
	7.9.
	 	Employee and Benefit Matters.	 	 	40	 
	7.10.
	 	Public Announcements	 	 	44	 
	7.11.
	 	Expenses and Fees	 	 	45	 
	7.12.
	 	Regulatory and Other Approvals	 	 	45	 
	7.13.
	 	Further Assurances	 	 	46	 
	7.14.
	 	Schedule Update	 	 	46	 
	7.15.
	 	PUCT Matters	 	 	47	 
	7.16.
	 	Equistar Consents	 	 	47	 
	7.17.
	 	Boiler Feedwater Pump	 	 	47	 
	7.18.
	 	Fulfillment of Conditions	 	 	47	 
	7.19.
	 	Cure of Defaults	 	 	47	 
	7.20.
	 	2007 Financial Statements	 	 	47	 
	 
	 	 	 	 	 	 
	ARTICLE 8 BANKRUPTCY PROCEDURES	 	 	48	 
	 
	 	 	 	 	 	 
	8.1.
	 	Bankruptcy Actions.	 	 	48	 
	 
	 	 	 	 	 	 
	ARTICLE 9 CONDITIONS TO THE CLOSING	 	 	49	 
	 
	 	 	 	 	 	 
	9.1.
	 	Conditions to the Obligations of Each Party	 	 	49	 
	9.2.
	 	Conditions to the Obligations of Buyer	 	 	49	 
	9.3.
	 	Conditions to the Obligations of Sellers	 	 	50	 
	 
	 	 	 	 	 	 
	ARTICLE 10 TERMINATION	 	 	51	 
	 
	 	 	 	 	 	 
	10.1.
	 	Termination	 	 	51	 

-ii-

 

	 	 	 	 	 	 	 
	 	 	 	 		 
	10.2.
	 	Effect of Termination	 	 	52	 
	10.3.
	 	Termination Fees.	 	 	52	 
	 
	 	 	 	 	 	 
	ARTICLE 11 INDEMNIFICATION	 	 	53	 
	 
	 	 	 	 	 	 
	11.1.
	 	Survival	 	 	53	 
	11.2.
	 	Indemnification.	 	 	53	 
	11.3.
	 	Waiver of Other Representations.	 	 	55	 
	11.4.
	 	Waiver of Remedies; Certain Limitations	 	 	56	 
	11.5.
	 	Procedures for Indemnification	 	 	58	 
	11.6.
	 	Manner of Payment	 	 	59	 
	 
	 	 	 	 	 	 
	ARTICLE 12 MISCELLANEOUS	 	 	59	 
	 
	 	 	 	 	 	 
	12.1.
	 	Notices	 	 	59	 
	12.2.
	 	Headings	 	 	60	 
	12.3.
	 	Assignment	 	 	60	 
	12.4.
	 	Governing Law	 	 	60	 
	12.5.
	 	Jurisdiction	 	 	60	 
	12.6.
	 	Counterparts	 	 	61	 
	12.7.
	 	Amendments; Extensions.	 	 	61	 
	12.8.
	 	Entire Agreement	 	 	61	 
	12.9.
	 	Severability	 	 	61	 
	12.10.
	 	Joint and Several	 	 	61	 

-iii-

 

EXHIBITS

	 	 	 
	Exhibit A

	 	Form of Bill of Sale
	Exhibit B

	 	Form of Assignment and Assumption Agreement (Contracts)
	Exhibit C

	 	Form of Assignment and Assumption Agreement (Lease)
	Exhibit D

	 	Form of RES Assignment and Assumption Agreement
	Exhibit E

	 	Form of Sale Order
	Exhibit F

	 	Interim Period Capital Expenditures
	Exhibit G-1

	 	Administrative Services Transition Services Agreement
	Exhibit G-2

	 	Fuel and Power Transition Services Agreement
	Exhibit H

	 	Form of Escrow Agreement

DISCLOSURE SCHEDULES

	 	 	 
	Schedule 1.1(x)

	 	Knowledge of Sellers
	Schedule 1.1(y)

	 	Knowledge of Buyer
	Schedule 1.1(z)

	 	Buyer’s Energy Manager
	Schedule 2.1(a)

	 	Real Estate Leases
	Schedule 2.1(b)

	 	Entitled Real Property
	Schedule 2.1(c)

	 	Equipment
	Schedule 2.1(d)

	 	Supplier Contracts
	Schedule 2.1(e)

	 	Other Contracts
	Schedule 2.1(f)

	 	Inventory
	Schedule 2.1(h)

	 	Permits
	Schedule 2.1(g)

	 	Intellectual Property
	Schedule 2.1(i)

	 	Business Records
	Schedule 2.2(m)

	 	Reliant Marks
	Schedule 2.2(p)

	 	Excluded Assets
	Schedule 2.4

	 	Excluded Liabilities
	Schedule 4.2(i)

	 	RES Agreements
	Schedule 5.2(b)

	 	Company Consents
	Schedule 5.2(c)

	 	Sellers’ Governmental Approvals
	Schedule 5.4

	 	Financial Statements
	Schedule 5.5

	 	Undisclosed Liabilities
	Schedule 5.6

	 	Litigation
	Schedule 5.7

	 	Compliance with Laws
	Schedule 5.8

	 	Permits
	Schedule 5.9(a)

	 	Contracts
	Schedule 5.9(c)

	 	Excluded Contracts
	Schedule 5.10

	 	Taxes
	Schedule 5.11(a)

	 	Seller Affiliate Plans
	Schedule 5.11(c)

	 	Favorable Determination Letters
	Schedule 5.12(f)

	 	Seller Affiliate Plan Increases or Acceleration
	Schedule 5.13

	 	Environmental Matters
	Schedule 5.14

	 	Intellectual Property

-iv-

 

	 	 	 
	Schedule 5.15

	 	Real Estate
	Schedule 6.3(c)

	 	Buyer’s Governmental Approvals
	Schedule 7.2

	 	Conduct of Business Pending the Closing
	Schedule 7.4(a)

	 	Support Obligations
	Schedule 7.9(b)

	 	Non-Collective Bargaining Contract Employees
	Schedule 8.1(b)

	 	Publications
	Schedule 8.1(d)

	 	Bid Protections
	Schedule 9.1(c)

	 	Certain Consents

-v-

 

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of February 25, 2008 (the
“Execution Date”), is made by and between Reliant Energy Channelview LP, a Delaware limited
partnership (“Channelview LP”) and Reliant Energy Services Channelview LLC, a Delaware limited
liability company (“RESC” and together with Channelview LP, the “Sellers”) and Kelson Energy IV
LLC, a Delaware limited liability company (the “Buyer”).

RECITALS

     WHEREAS, Channelview LP owns the Channelview Facility and certain other Acquired Assets;

     WHEREAS, on August 20, 2007, Channelview LP filed a voluntary petition for relief under the
Bankruptcy Code in the Bankruptcy Court;

     WHEREAS, RESC owns certain Acquired Assets;

     WHEREAS, on August 20, 2007, RESC filed a voluntary petition for relief under the Bankruptcy
Code in the Bankruptcy Court;

     WHEREAS, on the terms and subject to the conditions set forth in this Agreement, Buyer desires
to purchase from Sellers, and Sellers desire to sell to Buyer, the Acquired Assets, in a sale
authorized by the Bankruptcy Court pursuant to, inter alia, sections 105, 363, and 365 of the
Bankruptcy Code;

     WHEREAS, Buyer also desires to assume, and Sellers desire to assign and transfer to Buyer, the
Assumed Liabilities.

     NOW, THEREFORE, in consideration of the foregoing and their respective representations,
warranties, covenants and undertakings herein contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Sellers and Buyer hereby agree as
follows:

ARTICLE 1

DEFINITIONS AND CONSTRUCTION

     1.1. Definitions. As used in this Agreement, the following terms shall have the
following meanings:

     “2007 Financial Statements” has the meaning set forth in Section 7.20.

     “Accounts Payable” has the meaning set forth in Section 2.4.

     “Accounts Receivable” has the meaning set forth in Section 2.2(c).

     “Acquired Assets” has the meaning set forth in Section 2.1.

 

 

     “Administrative Services Transition Services Agreement” means that certain Transition Services
Agreement, to be dated as of the Closing Date, by and among Operator and Buyer, in substantially
the form of Exhibit G-1 hereto.

     “Adverse Ruling” means relief granted by the Bankruptcy Court to a third party that the Buyer
in good faith believes, based on the advice of counsel, would adversely impact the relief provided
in the Sale Order under Section 363(m) of the Bankruptcy Code.

     “Affiliate” means any Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the Person specified. For purposes of
this definition, control of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether through ownership of voting
securities or ownership interests, by contract or otherwise, and specifically with respect to a
corporation, partnership, trust or limited liability company, shall include direct or indirect
ownership of more than 50% of the voting securities in such corporation or of the voting interest
in a partnership or limited liability company or of the beneficial interest in a trust.

     “Agreement” has the meaning set forth in the Recitals to this Agreement.

     “Assigned Contracts” has the meaning set forth in Section 2.1(e).

     “Assumed Liabilities” has the meaning set forth in Section 2.3.

     “Assumption Agreements” has the meaning set forth in Section 4.2(b).

     “Bankruptcy Code” means Title 11 of the United States Code.

     “Bankruptcy Court” means the United States Bankruptcy Court for the District of Delaware or
such other court having jurisdiction over the Chapter 11 Cases originally administered in the
United States Bankruptcy Court of the District of Delaware.

     “Base Purchase Price” has the meaning set forth in Section 3.1(a).

     “Benefit Plan” means: (a) each “employee benefit plan,” as such term is defined in Section
3(3) of ERISA, (b) each plan or program that would be an employee benefit plan if it were subject
to ERISA, such as foreign plans and plans for directors, (c) each stock bonus, stock ownership,
stock option, stock purchase, restricted stock, stock appreciation rights, phantom stock, or other
equity plan (whether qualified or nonqualified), (d) each bonus, deferred compensation or incentive
compensation plan, and (e) any other material employee benefit plan, program, contract, commitment,
policy, agreement or arrangement of any kind (including, any employment, consulting, retention,
disability, accident, savings and thrift, unemployment compensation, post-retirement, fringe
benefits, cafeteria plans, change in control or severance plan, policy, arrangement or agreement
providing compensation or benefits to any employee (whether active or on leave of absence) and/or
former employee of the Operator, Sellers, their Affiliates or any Commonly Controlled Entity);
provided, that such term shall not include (1) routine employment policies and procedures,
including wage, vacation, holiday, and sick or other
leave policies, (2) workers compensation insurance, and (3) directors and officers liability
insurance.

-2-

 

     “Bid Procedures Order” has the meaning set forth in Section 8.1(d).

     “Business” means the business of generating and selling steam, electric power, capacity and
ancillary services from the Channelview Facility, as managed by Channelview LP, or its Affiliates,
on the date hereof; or, as applicable, RESC’s business of purchasing power from third-parties and
selling power to Equistar pursuant to the Energy Supply Agreement, and any business activities of
Channelview LP or RESC incidental to the foregoing.

     “Business Day” means a day other than Saturday, Sunday or any day on which banks located in
the State of New York and the State of Texas are authorized or obligated to close.

     “Business Records” means all books, files and records (whether in paper or electronic format)
to the extent they apply to the Acquired Assets or the Business, including customer lists,
historical customer files, reports, plans, data, accounting and tax records, test results, product
specifications, drawings, diagrams, training manuals, procedures manuals, logs, engineering data,
safety and environmental reports and documents, maintenance schedules, operating and production
records, inventory records, business plans, and marketing and all other studies, documents and
records but excluding any Retained Books and Records.

     “Buyer” has the meaning set forth in the Recitals to this Agreement.

     “Buyer Governmental Approvals” has the meaning set forth in Section 6.3(c).

     “Buyer Indemnified Group” means Buyer and Buyer’s Affiliates and their respective officers,
directors, managers, members, employees and agents.

     “Buyer Savings Plan” has the meaning set forth in Section 7.9(g).

     “Capital Expenditures” means expenditures for capital additions to, or replacements of,
property, plant and equipment included in the Channelview Facility and other expenditures for
repairs on property, plant and equipment included in the Channelview Facility that would be
capitalized by Sellers in accordance with their normal capitalization policies, which are in
accordance with GAAP.

     “Change of Law” means the adoption, implementation, promulgation, repeal, modification or
reinterpretation of any Law of or by any Governmental Authority which occurs subsequent to the
Execution Date.

     “Channelview Facility” means the 830 MW combined cycle, cogeneration facility located in
Channelview, Texas, and all facilities and equipment owned or leased by Channelview LP in
connection with the Business.

     “Channelview Facility Employees” has the meaning set forth in Section 5.12(a).

     “Channelview LP” has the meaning set forth in the Recitals to this Agreement.

     “Channelview September 30 Balance Sheet” has the meaning set forth in Section 5.5.

-3-

 

     “Chapter 11 Cases” means collectively, the cases commenced under Chapter 11 of the Bankruptcy
Code in the Bankruptcy Court by Channelview LP and RESC, and which are jointly administered under
case no. 07-11160 (MFW).

     “Charter Documents” means, with respect to any Person, the articles of incorporation or
organization and by-laws, the limited partnership agreement, the partnership agreement or the
limited liability company agreement, and/or such other organizational documents of such Person,
including those that are required to be registered or kept in the place of incorporation,
organization or formation of such Person and which establish the legal personality of such Person.

     “Claims” has the meaning set forth in Section 2.2(j).

     “Closing” has the meaning set forth in Section 4.1.

     “Closing Date” has the meaning set forth in Section 4.1.

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

     “Collective Bargaining Contract” means that certain Agreement, effective as of January 1,
2004, between Reliant Energy Corporate Services, LLC, as successor by merger to Reliant Energy
Power Operations I, Inc., and the International Brotherhood of Electrical Workers Local Union No.
66 Houston, Texas.

     “Commonly Controlled Entity” means any trade or business, whether or not incorporated, that,
together with either Seller, would be a “single employer” within the meaning of Section 4001(b) of
ERISA.

     “Company Consents” has the meaning set forth in Section 5.2(b).

     “Confidentiality Agreement” has the meaning set forth in Section 7.8(a).

     “Consent” means any consent, approval, authorization, qualification, waiver or notification of
a Governmental Authority or other Person.

     “Continuing Employee” means each individual who accepts an offer of employment from Buyer or
its designee as provided in Section 7.9(b), reports to work with Buyer or its designee, and is
hired by Buyer or its designee.

     “Contract” means any written contract, agreement, instrument, bond, commitment, lease,
license, evidence of indebtedness, mortgage, indenture, purchase order, binding bid, letter of
credit, security agreement or other written legally binding arrangement.

     “Court Auction Determination” has the meaning set forth in Section 8.1(d).

     “Credit Agreement” means that certain Credit Agreement, dated as of December 15, 1999, as
amended, among Channelview LP, the Lenders parties thereto, The Bank of New York,

-4-

 

as successor
Administrative Agent and Collateral Agent, and Teachers Insurance and Annuity Association of
America, as Institutional Agent.

     “Credit Rating” means, with respect to any Person, each rating given by Standard & Poor’s or
Moody’s, as applicable, to such Person’s long-term, unsecured, unsubordinated debt obligations not
supported by third party credit enhancement.

     “Cure Cost Reserve Amount” has the meaning set forth in Section 7.19.

     “Cure Costs” means all (i) cure costs required to be paid and all defaults required to be
cured as a condition to assumption and assignment of the Assigned Contracts pursuant to section 365
of the Bankruptcy Code and (ii) all contingent, unliquidated or unmatured liabilities under such
Assigned Contracts or under any subcontracts related thereto (whether or not such subcontracts are
Assigned Contracts) arising prior to the Closing Date.

     “Deposit” has the meaning set forth in Section 3.2.

     “Disclosure Schedules” has the meaning set forth in Section 2.1(a).

     “Emission Allowances” means authorizations to emit specified units of substances, whether
those authorizations are described as allowances, offsets, credits or by another term, from the
Channelview Facility that are allocated to the Channelview Facility and owned by Channelview LP as
of the time of Closing, or to which the Channelview Facility becomes entitled to after Closing,
which units are established by any Governmental Authority with jurisdiction over the Channelview
Facility.

     “Energy Manager” means any one of the entities set forth on Schedule 1.1(z) or another
energy manager, which may be an Affiliate of Buyer, reasonably satisfactory to Sellers or RES, as
applicable.

     “Energy Supply Agreement” means that certain Second Amended and Restated Energy Supply
Agreement, dated as of December 15, 1999, by and between Equistar and RESC.

     “Entitled Real Property” has the meaning set forth in Section 2.1(b).

     “Environmental Law” means any federal, state, or local law, statute, ordinance, rule,
regulation, code, directive, judicial or administrative order, judgment, decree, injunction, or
requirement of any Governmental Authority, relating to (a) pollution or the protection,
preservation or restoration of the environment (including air, water vapor, surface water,
groundwater, surface land, subsurface land and natural resources), as the same may be amended or
adopted as of the Closing Date or any date prior to the Closing Date, (b) Releases or threatened
Releases (including, without limitation, Releases into the ambient air, surface water, groundwater,
land, surface and subsurface strata) or otherwise relating to Hazardous Substances; or (c) the use,
storage, recycling, treatment, generation, transportation, processing, handling, labeling, testing,
discharge, control, cleanup, production, or disposal of Hazardous Substances.

     “Equipment” has the meaning set forth in Section 2.1(c).

-5-

 

     “Equistar” means Equistar Chemicals LP, a Delaware limited partnership.

     “ERCOT” means the Electric Reliability Counsel of Texas.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     “Escrow Agent” means Wilmington Trust Company the escrow agent under the Escrow Agreement.

     “Escrow Agreement” means the escrow agreement by and between Sellers, Buyer and the Escrow
Agent, in substantially the form of Exhibit H.

     “Estimated Purchase Price” has the meaning set forth in Section 4.3(a).

     “Excluded Assets” has the meaning set forth in Section 2.2.

     “Excluded Liabilities” has the meaning set forth in Section 2.4.

     “Execution Date” has the meaning set forth in the Recitals to this Agreement.

     “FERC” means the Federal Energy Regulatory Commission.

     “Final Purchase Price” has the meaning set forth in Section 3.3(c).

     “Fuel and Power Transition Services Agreement” means that certain Transition Services
Agreement, to be dated as of the Closing Date, by and among RES and Buyer, in substantially the
form of Exhibit G-2 hereto.

     “Fuel Purchase and Sale Agreement” means that certain Fuel Purchase and Sale Agreement, dated
as of December 15, 1999, by and among RES, Channelview LP and Equistar.

     “Fuel Supply Agreement” has the meaning set forth in Section 2.5.

     “FutureCare Program” has the meaning set forth in Section 7.9(b).

     “GAAP” means generally accepted accounting principles in the United States of America.

     “Generator Operator” has the meaning set forth in Section 5.7.

     “Governmental Authority” means (i) any federal, state, local, or foreign government, (ii) any
court, tribunal, arbitrator, authority, agency, administrative body, taxing authority, commission,
official or other instrumentality of the United States or any state, county, city, municipality,
local authority or other political subdivision or similar governing entity, and (iii) any
governmental, quasi—governmental or non-governmental body administering, regulating or having
general oversight over gas, electricity, power or other markets, including ERCOT, the Texas
Regional Entity and NERC.

-6-

 

     “Hazardous Substance” means any chemical, material or substance in any form, whether solid,
liquid, gaseous, semisolid, or any combination thereof, whether waste material, raw material,
chemical, finished product, byproduct, or any other material or article, listed, defined,
designated, regulated or classified as a pollutant, contaminant, hazardous substance, toxic
substance, hazardous waste, solid waste, or special waste, or that is otherwise listed or
regulated, or as to which liability could be imposed under any Environmental Law; including without
limitation, petroleum products, and toxic mold.

     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

     “Indemnified Party” has the meaning set forth in Section 11.5.

     “Indemnifying Party” has the meaning set forth in Section 11.5.

     “Indemnity Security” has the meaning set forth in Section 11.2(c).

     “Intellectual Property” means any and all (a) patents and patent applications, (b) marks
(including trademarks, service marks, certification marks, collective marks, registered or
unregistered), trade names, designs, expressions and works of authorship, logos, slogans, trade
dress and applications for registration of the foregoing, (c) copyrights, mask works and
applications for registration of the foregoing, and (d) trade secrets and confidential information,
including confidential know-how and any other similar property, whether or not embodied in tangible
form (including but not limited to technical drawings and specifications, shop drawings, manuals,
forms, working notes and memos, technical and laboratory data, notebooks, samples, engineering
prototypes and computer software).

     “Interest Rate” means the prime per annum rate of interest as published by The Wall Street
Journal.

     “Interim Period” means the period of time from the Execution Date until the earlier of the
Closing Date or termination of this Agreement.

     “Inventory” has the meaning set forth in Section 2.1(f).

     “Investment Grade” means an entity having long term, unsecured, unsubordinated debt not
supported by third party credit enhancement that is rated “BBB-” or higher by Standard & Poor’s,
and “Baa3” or higher by Moody’s, and that in either case is not on negative credit watch.

     “IRS” means the U.S. Internal Revenue Service.

     “Knowledge” means, in the case of Sellers, the actual knowledge (as opposed to any
constructive or imputed knowledge) of the individuals listed on Schedule 1.1(x), and in the
case of Buyer, the actual knowledge (as opposed to any constructive or imputed knowledge) of the
individuals listed on Schedule 1.1(y), in each case without inquiry.

     “Laws” means all laws, codes, statutes, rules, regulations, ordinances, orders and other
legally-binding pronouncements having the effect of law of any Governmental Authority.

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     “Leased Real Property” has the meaning set forth in Section 2.1(a).

     “Lenders” means the lenders party to the Credit Agreement.

     “Lien” means any mortgage, pledge, hypothecation, assessment, levy, imposition, charge, claim,
assignment, security interest, easement, deed, restriction, transfer restriction, lien or other
similar restriction or encumbrance of any kind.

     “Losses” means any and all judgments, losses, liabilities, amounts paid in settlement,
damages, fines, penalties, supplemental environmental project costs, deficiencies, losses and
expenses (including interest, court costs, reasonable fees of attorneys, accountants and other
experts and other reasonable expenses of litigation, settlement, judgment or other proceedings or
of any claim, default or assessment).

     “LTMA Support Obligations” shall mean any Support Obligations arising under that certain
Guaranty Agreement, dated as of September 30, 2002, by and between Reliant Energy Power Generation,
Inc. and Siemens Power Generation, Inc.

     “Material Adverse Effect” means any change, event or effect that is materially adverse to the
Acquired Assets, taken as a whole, in each case, except for any such change, event or effect
resulting from or arising out of (a) changes in economic conditions generally or in the industry in
which the Channelview Facility operates, (b) changes in international, national, regional, state or
local wholesale or retail markets for electric power or fuel or related products, including those
due to actions by competitors (excluding any such change to the extent it only or
disproportionately affects the Acquired Assets relative to other combined-cycle cogeneration
facilities in ERCOT), (c) changes in general regulatory or political conditions, including any acts
of war or terrorist activities, (d) changes in national, regional, state or local electric
transmission or distribution systems, (e) strikes, work stoppages or other labor disturbances, (f)
increases in costs of commodities or supplies, including fuel, (g) effects of weather or
meteorological events, (h) any Change of Laws, (i) any actions to be taken pursuant to or in
accordance with this Agreement, (j) any changes, events or effects to which Sellers have cured
prior to or as of Closing, and (k) the Chapter 11 Cases.

     “Material Contracts” has the meaning set forth in Section 5.9.

     “Moody’s” means Moody’s Investors Services, Inc., and its successors.

     “Multiemployer Plan” has the meaning set forth in ERISA § 3(37).

     “NERC” means North American Electric Reliability Corporation.

     “Operator” means Reliant Energy Corporate Services, LLC, a Delaware limited liability company.

     “Other Contracts” has the meaning set forth in Section 2.1(e).

     “Parties” means each of Buyer and Sellers.

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     “Permits” means all licenses, permits, authorizations, approvals, registrations, variances,
exemptions, concessions, franchises and similar consents granted or issued by any Governmental
Authority.

     “Permitted Exceptions” means (i) all Liens and any defects, exceptions, restrictions,
easements, rights of way and encumbrances (x) disclosed in the title commitment referenced in
Schedule 5.15, (y) which are shown on that certain TSPS Category 5 Survey made by Carter
Burgess, dated September 26, 2002, or (z) which a search of the public records would reveal; (ii)
statutory liens for Taxes, assessments or other governmental charges not yet due and payable; (iii)
mechanics’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the ordinary
course of business that are not yet delinquent or, if delinquent, that are being contested in good
faith; (iv) zoning, entitlement and other land use and environmental regulations by any
Governmental Authority; (v) such other Liens, imperfections in title and easements, restrictions
and encumbrances which do not materially detract from the value of, or materially interfere with
the present use of, the Channelview Facility in the aggregate; (vi) Liens arising under fuel
procurement arrangements; (vii) any encumbrances or liens arising under the Credit Agreement in
favor of the Lenders; (viii) liens for pre-petition ad valorem Taxes which will be satisfied by
Sellers upon Closing; and (ix) any rights of Equistar to purchase the partnership interests of
Channelview LP, pursuant to the Second Amended and Restated Agreement Steam Supply Agreement, dated
as of December 15, 1999, between Channelview LP and Equistar.

     “Person” means any natural person, corporation, general partnership, limited partnership,
limited liability company, proprietorship, other business organization, trust, union, association,
entity or Governmental Authority.

     “Pre-Closing Portion” has the meaning set forth in Section 7.7(b).

     “Prudent Industry Practice” means those practices, methods, equipment, specifications and
standards of safety and performance, as the same may change from time to time, as are commonly used
in the North American electric utility industry by independent operators of electric generation
stations of a type and size similar to those constituting the Channelview Facility during a
particular time period as good, safe and prudent engineering practices in connection with the
operation, maintenance, repair and use of gas turbines, electrical generators and other equipment
and facilities with commensurate standards of safety, performance, dependability, efficiency and
economy, and consistent with applicable Laws and Regulations. Prudent Industry Practices are not
intended to be limited to the optimum practice or method to the exclusion of others, but rather to
be a spectrum of possible but reasonable practices and methods generally accepted in the North
American electric utility industry during the relevant time period in light of the circumstances.

     “PUCT” means the Public Utility Commission of Texas.

     “Pump Payments” has the meaning set forth in Section 7.17.

     “Purchase Price Allocation” has the meaning set forth in Section 3.4.

     “QF” has the meaning set forth in Section 5.17.

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     “QSE” means a qualified scheduling entity qualified by ERCOT in accordance with ERCOT Protocol
Section 16, Registration and Qualification of Market Participants, to submit Balanced Schedules and
Ancillary Services bids and settle payments with ERCOT.

     “Real Estate Leases” has the meaning set forth in Section 2.1(a).

     “Real Property” has the meaning set forth in Section 2.1(b).

     “Related Person” means, with respect to any Person, all past, present and future directors,
officers, members, managers, stockholders, employees, controlling persons, agents, professionals,
attorneys, accountants, investment bankers, Affiliates or representatives of any such Person.

     “Release” means any release, spill, leak, discharge, abandonment, disposal, pumping, pouring,
emitting, emptying, injecting, leaching, dumping, depositing, dispersing, allowing to escape or
migrate into or through the environment (including ambient air, surface water, ground water, land
surface and subsurface strata or within any building, structure, facility or fixture) of any
Hazardous Substance, including the abandonment or discarding of Hazardous Substances in barrels,
drums, or other containers.

     “Reliant Energy” has the meaning set forth in Section 2.2(d).

     “Reliant Marks” has the meaning set forth in Section 2.2(m).

     “Representatives” means officers, directors, employees, counsel, accountants, financial
advisers or consultants of either Sellers or Buyer, as applicable.

     “RES” means Reliant Energy Services, Inc.

     “RES Agreements” has the meaning set forth in Section 4.2(i).

     “RES Assignment and Assumption Agreement” has the meaning set forth in Section 4.2(i).

     “RES Fuel Purchase Transactions” shall mean those fuel purchase transactions listed on
Schedule 2 of the Fuel and Power Transition Services Agreement or entered into after the date
hereof in accordance with such Schedule 2.

     “RESC” has the meaning set forth in the Recitals to this Agreement.

     “Retained Books and Records” means: (i) all corporate seals, minute books, charter documents,
corporate stock record books, original tax and financial records and such other files, books and
records to the extent that any of the foregoing relates to any of the Excluded Assets or Excluded
Liabilities or the organization, existence, capitalization or debt financing of a Seller or of any
Affiliate of a Seller; (ii) all books, files and records that would otherwise constitute a Business
Record but for the fact that disclosure of books, files or records could (v) disclose information
related to a Seller or any of its Affiliates concerning public utility regulatory matters,
including matters before ERCOT, the FERC, or other similar bodies, (w) violate any legal

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constraints or obligations regarding the confidentiality thereof, provided that such Seller
shall use its commercially reasonable efforts to obtain a waiver of any such confidentiality
restrictions in order to permit such disclosure, (x) waive any attorney client, work product or
like privilege, (y) disclose information about such Seller or any of its Affiliates that is
unrelated to the Channelview Facility or the Business or (z) disclose information about such Seller
or any of its Affiliates pertaining to energy or project evaluation, energy or natural gas price
curves or projections or other economic predictive models; or (iii) all books and records prepared
in connection with or relating in any way to the transactions contemplated by this Agreement,
including bids received from other parties and analyses relating in any way to the Acquired Assets
or the Assumed Liabilities.

     “Rule” or “Rules” means the Federal Rules of Bankruptcy Procedure.

     “Sale Motion” has the meaning set forth in Section 8.1(b).

     “Sale Order” means an order: (i) (x) in substantially the form of Exhibit E hereto, or
(y) in such other form which is in form and substance reasonably acceptable to Sellers and Buyer
approving this Agreement and all of the terms and conditions hereof, and approving and authorizing
Sellers to consummate the transactions contemplated hereby. Without limiting the generality of the
foregoing, such order shall find and provide, among other things, that (a) other than Permitted
Exceptions, the Acquired Assets sold to Buyer pursuant to this Agreement shall be transferred to
Buyer free and clear of all Liens and liabilities of any Person, such Liens and liabilities to
attach to the Purchase Price, (b) Buyer has acted in good faith within the meaning of section
363(m) of the Bankruptcy Code and, as such, is entitled to the protections afforded thereby, (c)
this Agreement was negotiated, proposed and entered into by the parties without collusion, in good
faith and from arm’s length bargaining positions, (d) Buyer is not acquiring or assuming any of
Sellers’ or any other Person’s liabilities except as expressly provided in this Agreement, (e) all
Assigned Contracts shall be assumed by Sellers and assigned to Buyer pursuant to section 365 of the
Bankruptcy Code, (f) the Bankruptcy Court shall retain jurisdiction to resolve any controversy or
claim arising out of or relating to this Agreement, or the breach hereof as provided in Section
8.1 hereof during the pendency of the Chapter 11 Cases, (g) this Agreement and the transactions
and instruments contemplated hereby shall be specifically enforceable against and binding upon, and
not subject to rejection or avoidance by, each Seller or any trustee of a Seller and its applicable
estate, (h) is it not a principal purpose of any Person entering into this Agreement or any
transactions contemplated by this Agreement to evade liability to which such Person would be
subject under Subtitle D of Title IV of ERISA, and (i) the provisions thereof are non-severable and
mutually dependent; and (ii) that does not require the assignment and assumption of the Cash Flow
Participation Agreement, dated as of December 15, 1999, by and between Channelview LP and Equistar.

     “Schedule Update” has the meaning set forth in Section 7.14.

     “Seller Affiliate Plan” means each Benefit Plan that is sponsored, administered, maintained or
contributed to as of the date of this Agreement by any Affiliate of either Seller and which Benefit
Plan provides benefits with respect to employees of the Operator who are employed at the
Channelview Facility.

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     “Seller Affiliate Savings Plans” means the Reliant Energy, Inc. Savings Plan and the Reliant
Energy, Inc. Union Savings Plan.

     “Seller Indemnified Group” means each Seller and such Seller’s Affiliates and their respective
officers, directors, employees and agents.

     “Sellers” has the meaning set forth in the Recitals to this Agreement.

     “Sellers’ Governmental Approvals” has the meaning set forth in Section 5.2(c).

     “Sellers’ Post-Closing Estimate” has the meaning set forth in Section 3.3(a).

     “Settlement Agreement” means that certain Settlement Agreement, dated as of July 10th, 2007,
by and between Channelview LP, RESC, and Equistar.

     “Severance Plan” means the Reliant Energy, Inc. 2003 Involuntary Severance Benefits Plan for
Employees With Annual Base Pay Less Than $150,000 As Amended and Restated Effective June 1, 2004.

     “Standard & Poor’s” means Standard & Poor’s Ratings Group (a division of McGraw Hill, Inc.),
and its successors.

     “Straddle Period” has the meaning set forth in Section 7.7(b).

     “Supplier Contracts” has the meaning set forth in Section 2.1(d).

     “Support Obligations” has the meaning set forth in Section 7.4(a).

     “Tax” or “Taxes” means any federal, state, local, or foreign income, profits, franchise,
withholding, ad valorem, personal property (tangible and intangible), employment, payroll, sales
and use, social security (or similar), disability, occupation, real property, severance, excise,
gross receipts, utility, severance, license, transfer, stamp, premium, windfall profits,
environmental (including taxes under Code § 59A), customs duties, capital stock, unemployment,
registration, utility, production, value added, alternative or add-on minimum, estimated, and other
taxes imposed by a Taxing Authority of any kind whatsoever, whether computed on a separate or
consolidated, unitary or combined basis or in any other manner, including any interest, penalty or
addition thereto, whether disputed or not.

     “Tax Proceeding” has the meaning set forth in Section 7.7(e).

     “Tax Returns” means any and all returns, reports, statements, information returns or other
similar filings filed or required to be filed with respect to any Taxes, including any supporting
information, schedules, attachments or amendments thereof.

     “Taxing Authority” means, with respect to any Tax, the Governmental Authority or political
subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of
such Tax for such entity or subdivision.

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     “Termination Date” has the meaning set forth in Section 10.1.

     “Texas Regional Entity” means the Texas Regional Entity, a Division of ERCOT.

     “Third-Party Claim” has the meaning set forth in Section 11.5.

     “Transfer Taxes” means all transfer, Real Property transfer, goods and services, value added,
recordation, documentary, stamp, duty, excise and conveyance Taxes and other similar Taxes, duties,
fees or charges, as levied by any Taxing Authority in connection with the transactions contemplated
by this Agreement, provided, however, that for the avoidance of doubt, the term Transfer Taxes
shall not include any income Taxes based on or measured by net income, including the Texas
franchise or margins tax.

     “Transition Services Agreements” means the Administrative Services Transition Services
Agreement and the Fuel and Power Transition Services Agreement.

     “Union” has the meaning set forth in Section 7.9(c).

     “WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988, as amended and
any similar foreign, state or local law, regulation or ordinance.

     “Welfare Benefits” has the meaning set forth in Section 7.9(h).

     1.2. Construction.

          (a) All Article, Section, Subsection, Schedule and Exhibit references used in this Agreement
are to Articles, Sections, Subsections, Schedules and Exhibits to this Agreement unless otherwise
specified. The Exhibits and Schedules attached to this Agreement constitute a part of this
Agreement and are incorporated herein for all purposes.

          (b) If a term is defined as one part of speech (such as a noun), it shall have a corresponding
meaning when used as another part of speech (such as a verb). Unless the context of this Agreement
clearly requires otherwise, words importing the masculine gender shall include the feminine and
neutral genders and vice versa. The words “includes” or “including” shall mean “includes without
limitation” or “including without limitation,” the words “hereof,” “hereby,” “herein,” “hereunder”
and similar terms in this Agreement shall refer to this Agreement as a whole and not any particular
Section or Article in which such words appear and any reference to a Law shall include any
amendment thereof or any successor thereto and any rules and regulations promulgated thereunder.
Currency amounts referenced herein are in U.S. Dollars.

          (c) Time is of the essence in this Agreement. Whenever this Agreement refers to a number of
days, such number shall refer to calendar days unless Business Days are specified. Whenever any
action must be taken hereunder on or by a day that is not a Business Day, then such action may be
validly taken on or by the next day that is a Business Day.

          (d) Sellers may, at their option, include in the Schedules items that are not material, and
any such inclusion, or any references to dollar amounts, shall not be deemed to be

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an acknowledgment or representation that such items are material or would be reasonably
expected to cause a Material Adverse Effect, to establish any standard of materiality or to define
further the meaning of such terms for purposes of this Agreement. Information disclosed in each
Schedule of the Sellers’ Disclosure Schedules shall be deemed to be disclosed in each other
Schedule therein, if it is disclosed in such a way as to make reasonably apparent its relevance or
applicability to another Section of this Agreement or any other Schedule (or subparts thereof) in
order to avoid a misrepresentation hereunder.

          (e) Each Party acknowledges that it and its attorneys have been given an equal opportunity to
negotiate the terms and conditions of this Agreement and that any rule of construction to the
effect that ambiguities are to be resolved against the drafting Party or any similar rule operating
against the drafter of an agreement shall not be applicable to the construction or interpretation
of this Agreement.

ARTICLE 2

PURCHASE AND SALE OF THE ACQUIRED ASSETS

     2.1. Transfer of Acquired Assets. At the Closing, and upon the terms and conditions
herein set forth, each Seller (as applicable) shall sell to Buyer (or Buyer’s designee, in the case
of the Energy Supply Agreement), and Buyer (or Buyer’s designee, in the case of the Energy Supply
Agreement) shall acquire from Sellers, all of each Seller’s right, title and interest in, to and
under the Acquired Assets free and clear of Liens, claims and other interests (except for Permitted
Exceptions) pursuant to sections 105, 363 and 365 of the Bankruptcy Code. “Acquired Assets” shall
mean all of each Seller’s right, title and interest in, to and under all property (tangible or
intangible), rights, goodwill, claims and assets to the extent relating to or used in or held for
use in connection with the Business (except for the Excluded Assets) as the same exist on the
Closing Date including:

          (a) subject to the receipt of any necessary consents or approvals, all of Sellers’ rights
under the leases of real property (the “Real Estate Leases”), listed on Schedule 2.1(a) of
the disclosure schedules accompanying this Agreement (the “Disclosure Schedules”) and the real
property leased by Channelview LP pursuant to the Real Estate Leases, together with any
improvements and fixtures owned by Channelview LP erected on the real property subject to the Real
Estate Leases (the “Leased Real Property”);

          (b) subject to the receipt of any necessary consents or approvals, all of Sellers’ rights
under the easements, rights of way, real property licenses, and other real property entitlements
used in the Business or listed on Schedule 2.1(b) (the “Entitled Real Property” and,
together with the Leased Real Property, the “Real Property”);

          (c) all of (i) Sellers’ owned and leased equipment, spare parts, machinery, furniture,
materials, supplies, fixtures, and other personal property used in the Business, and in connection
with Channelview LP, located on the Real Property or listed on Schedule 2.1(c) (the
“Equipment”); and (ii) any rights of Sellers to the warranties and licenses received from
third parties with respect to the Equipment;

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          (d) subject to the receipt of any necessary consents or approvals, all of Sellers’ rights
under outstanding purchase orders or other similar Contracts used exclusively in the Business
entered into by Channelview LP with any supplier that are listed on Schedule 2.1(d) of the
Disclosure Schedules (“Supplier Contracts”);

          (e) subject to the receipt of any necessary consents or approvals, all of Sellers’ rights
under the Contracts that are listed on Schedule 2.1(e) of the Disclosure Schedules (the
“Other Contracts” and, together with the Real Estate Leases, the Entitled Real Property
constituting Contracts, and the Supplier Contracts, the “Assigned Contracts”);

          (f) all (i) inventories of fuel, chemicals and gas wherever located (including in transit to
the Channelview Facility) and owned by Channelview LP on the Closing Date, or listed on
Schedule 2.1(f) (the “Inventory”), and (ii) any rights of Channelview LP to the warranties
received from third parties with respect to such Inventory;

          (g) any Intellectual Property, including any computer software or systems (i) located at the
Real Property, the offices of RESC or listed on Schedule 2.1(g) and (ii) owned exclusively
by either Seller and licenses held exclusively by either Seller, to the extent transferable, in
each case that pertain solely to the Business;

          (h) to the extent transferable under applicable Law, all rights of either Seller under the
Permits relating exclusively to the Business including those listed on Schedule 2.1(h);

          (i) copies of all Business Records (including those listed on Schedule 2.1(i) to the
extent they apply to the Acquired Assets) and the right to receive mail and other communications
addressed to the Sellers that pertain to the Channelview Facility or the Business;

          (j) all accounts, rights, or allowances involving Emissions Allowances, and all rights to any
future Emission Allowances, if any, that will be granted or allocated with respect to the
Channelview Facility (other than those Emission Allowances expended in the ordinary course of
operation of the Channelview Facility prior to the Closing);

          (k) subject to Section 2.2(o), all claims, causes of action, choses in action, rights
of set-off of any kind, rights of recovery, whether known or unknown, in favor of any of the
Sellers, and pertaining to, arising out of or relating to, the Acquired Assets or offsetting any
Assumed Liabilities, but excluding any of the same relating to any Affiliate of the Sellers, or
relating to any matter covered by the Settlement Agreement; and

          (l) all of Channelview LP’s right, title and interest in the Channelview Facility.

     2.2. Excluded Assets. Notwithstanding anything to the contrary in this Agreement, the
Acquired Assets do not include the following (collectively, the “Excluded Assets”):

          (a) any right, title or interest of any Person other than a Seller in any property or asset;

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          (b) all of Sellers’ cash and cash equivalents, marketable securities, prepaid expenses,
advance payments, surety accounts, deposits and other similar prepaid items (including for the
purchase of natural gas), checks in transit and undeposited checks to the extent attributable to
the period prior to the Closing Date;

          (c) all of Sellers’ accounts and notes receivable to the extent attributable to the period
prior to 11:59 pm on the day prior to the Closing Date (the “Accounts Receivable”);

          (d) other than assets, property, and other rights specifically identified in any Schedule
referenced in Section 2.1 above, any assets, property and other rights held or owned by
Reliant Energy, Inc. (“Reliant Energy”) or its Affiliates to the extent not used in the operation
of the Business;

          (e) financial information or financial statements and proprietary manuals (except rights to
use manuals specific to and necessary for the operation of the Business) prepared by or used by
either Seller or their Affiliates to the extent not relating exclusively to the Business;

          (f) all of Sellers’ rights under Contracts that are not Assigned Contracts;

          (g) all rights to Claims, refunds or adjustments with respect to Excluded Assets, relating to
any proceeding before any Governmental Authority relating to the period prior to the Closing, and
all rights to insurance proceeds or other insurance recoveries: (i) that are reimbursement for,
either Seller’s or such Seller’s Affiliate’s expenditures made prior to the Closing Date for which
insurance proceeds are available or due to a Seller or such Seller’s Affiliates or (ii) to the
extent relating to Excluded Assets or Excluded Liabilities;

          (h) any asset of a Seller that would constitute an Acquired Asset (if owned by such Seller on
the Closing Date) that is conveyed or otherwise disposed of during the period from the date hereof
until the Closing Date either: (i) in the ordinary course of business of the Sellers, (ii) at the
direction of the Bankruptcy Court or (iii) as otherwise permitted by the terms of this Agreement;

          (i) all losses, loss carry forwards and rights to receive refunds, credits and loss carry
forwards with respect to any and all Taxes of Sellers incurred or accrued on or prior to the
Closing Date, including interest receivable with respect thereto;

          (j) any and all rights, demands, claims, credits, allowances, rebates, causes of action, known
or unknown, pending or threatened (including all causes of action arising under sections 510, 544
through 551 and 553 of the Bankruptcy Code or under similar state Laws, including fraudulent
conveyance claims, and all other causes of action of a trustee and debtor-in-possession under the
Bankruptcy Code) or rights of set-off (collectively, “Claims”), of a Seller or any Affiliate of a
Seller: (i) in respect of the Excluded Assets or the Excluded Liabilities, or (ii) arising out of
or relating in any way to the Chapter 11 Cases or any
of the transactions contemplated thereby or entered into as a consequence thereof, including
any claims (as defined in section 101(5) of the Bankruptcy Code) filed, scheduled or otherwise
arising in the Chapter 11 Cases;

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          (k) all shares of capital stock or other equity interests of either Seller and all Affiliates
of Sellers;

          (l) all rights of either Seller arising under this Agreement and under any other agreement
between either Seller and Buyer entered into in connection with this Agreement;

          (m) all rights to or goodwill represented by or pertaining to all names, marks, trade names,
trademarks and service marks incorporating the name Reliant Energy or any other name set forth on
Schedule 2.2(m) (the “Reliant Marks”) and any brand names or derivatives thereof no matter
how used, whether as a corporate name, domain name or otherwise and including the corporate design
logo associated with any Reliant Mark or variant of any Reliant Mark;

          (n) all Retained Books and Records;

          (o) all rights and Claims of a Seller against any Affiliate of such Seller relating to the
Assigned Contracts that arose prior to the Closing Date; and

          (p) any assets set forth on Schedule 2.2(p) of the Disclosure Schedules.

     2.3. Assumption of Liabilities. At the Closing, Buyer shall assume, and Buyer shall
hereafter pay, perform and discharge when due, the following liabilities and obligations
(collectively, the “Assumed Liabilities”):

          (a) all liabilities and obligations of Sellers under the Assigned Contracts, other than
Excluded Liabilities;

          (b) all liabilities and obligations of Sellers under the Permits;

          (c) to the extent provided in Section 7.7(a), Transfer Taxes;

          (d) all liabilities and obligations of Sellers, any of their Affiliates or any of their
respective Related Persons arising under or relating to any environmental matter (including any
liability or obligation arising under any Environmental Law) relating to the Acquired Assets

          (e) any liability for any Taxes attributable to the Acquired Assets to the extent arising or
accruing (on a pro rata daily basis in the case of Taxes other than income Taxes) with respect to a
period (or any portion thereof) beginning after the Closing Date; and

          (f) all other liabilities and obligations relating to or arising from the operation of the
Business or the ownership of the Acquired Assets (other than the Excluded Liabilities), but for
purposes of clarity, excluding liabilities or obligations under the Credit Agreement and any other
Contract (written or oral) which is not an Assigned Contract, including those obligations of
Sellers associated with that certain Channel Area Industrial District Agreement between
Lyondell Petrochemical Company and the City of Houston, dated as of June 17, 1997.

     2.4. Excluded Liabilities. Buyer is assuming only the Assumed Liabilities, and all
liabilities of Sellers not expressly assumed by Buyer pursuant to Section 2.3, whether or
not

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incurred or accrued, whether asserted before, on or after the Closing Date, shall be assumed or
retained, as the case may be, by Sellers, who shall be responsible for paying, performing and
discharging such liabilities and Buyer shall not have any responsibility for such liabilities (such
liabilities are hereinafter referred to as the “Excluded Liabilities”), including: (i) all Cure
Costs and other liabilities and obligations with respect to accounts payable accrued under Assigned
Contracts as of 11:59 pm on the day prior to the Closing Date (the “Accounts Payable”); (ii)
liabilities to the extent arising in connection with Excluded Assets; (iii) any liability for any
Taxes attributable to the Acquired Assets to the extent arising or accruing (on a pro rata daily
basis in the case of Taxes other than income Taxes) with respect to a period (or any portion
thereof) ending on or before the Closing Date; (iv) liabilities with respect to Benefit Plans
(including Seller Affiliate Plans); (v) all liabilities and obligations of Sellers or any Affiliate
thereof representing indebtedness for money borrowed (or any refinancing thereof); (vi) liabilities
with respect to loans made by and, other than with respect to transactions under the Transition
Services Agreements, accounts payable arising from transactions with Affiliates; (vii) any
liability of any of the Sellers for (a) transaction fees and expenses and fees and expenses payable
to lenders, brokers, financial advisors, legal counsel, accountants and other professionals, and
(b) except as provided otherwise in Section 7.7(a), Transfer Taxes; (viii) those listed on
Schedule 2.4 of the Disclosure Schedules; (ix) all liabilities arising out of any exchange act or
securities liability; (x) all costs and expenses associated with the Chapter 11 Cases; (xi) all
liability for any claims discharged pursuant to the Chapter 11 Cases or for claims against either
of the Sellers which are filed after the bar date or disallowed by the Bankruptcy Court; (xii) all
liability for any rejection damages claim filed in the Chapter 11 Cases; and (xiii) all interests
and liabilities that have not been otherwise assumed pursuant to this Agreement, to the extent that
applicable law permits this sale under Section 363 of the Bankruptcy Code to be free and clear of
such interests and liabilities.

     2.5. Non-Assignment of Assigned Contracts. Anything contained herein to the contrary
notwithstanding, (i) this Agreement shall not constitute an agreement to assign any Assigned
Contracts if, after giving effect to the provisions of Sections 363 and 365 of the Bankruptcy Code,
an attempted assignment thereof, without obtaining a Consent, would constitute a breach thereof or
in any way negatively affect the rights of Sellers or Buyer, as the assignee of such Assigned
Contracts and (ii) unless Sellers have otherwise violated the provisions of this Section
2.5, no breach of this Agreement or failure of a closing condition shall have occurred by
virtue of such nonassignment. Sellers shall use commercially reasonable efforts to obtain the
consent of the counterparties to each Assigned Contract, to the extent that after giving effect to
the provisions of Sections 363 and 365 of the Bankruptcy Code, such Consent is required; provided,
that nothing in this Section 2.5 shall (x) require Sellers to make any significant
expenditure or incur any significant obligation on its own or on Buyer’s behalf or (y) prohibit
Sellers from ceasing operations or winding up its affairs following the Closing. Any assignment to
Buyer of any Assigned Contracts that shall, after giving effect to the provisions of Sections 363
and 365 of the Bankruptcy Code, require the Consent of any third party for such assignment as
aforesaid shall be made subject to such Consent being obtained. Without limiting
the foregoing, the Parties agree that, if any required consent to the assignment or release of
RES’ obligations under the Fuel Purchase and Sale Agreement is not obtained, Buyer and Buyer’s
Energy Manager will enter into an agreement (the “Fuel Supply Agreement”) in form and substance
reasonably acceptable to the Parties, in relation to the Fuel Purchase and Sale Agreement, pursuant
to which (i) RES shall consult with Buyer (or Buyer’s Energy Manager)

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with respect to transactions
occurring under the Fuel Purchase and Sale Agreement and keep Buyer and Buyer’s Energy Manager
advised of all transactions thereunder, and not take any material discretionary action thereunder
without Buyer or Buyer’s Energy Manager’s consent, not to be unreasonably withheld; (ii) RES shall
not modify, amend or terminate the Fuel Purchase and Sale Agreement without Buyer’s consent, which
consent shall not be unreasonably withheld or delayed; (iii) RES shall continue to perform and act
such that the gas sold to RES under such agreement shall be resold to the Buyer through the Buyer’s
Energy Manager; (iv) RES shall agree that Buyer’s Energy Manager may be replaced from time to time
in Buyer’s sole discretion with a new Energy Manager, and (v) RES shall use commercially reasonable
efforts to obtain the execution and delivery by Equistar of the RES Assignment and Assumption
Agreement. The Parties agree further that if RES continues to be directly obligated to purchase
gas from Equistar under the Fuel Purchase and Sale Agreement after the Closing Date, Buyer’s Energy
Manager shall, pursuant to the Fuel Supply Agreement, accept and purchase from RES all such gas
accepted and purchased by RES from Equistar. The price for such gas shall be equal to the price
paid for such gas by RES, and the terms and conditions of Buyer’s Energy Manager’s purchase of such
gas shall be substantially identical to the terms and conditions on which RES purchased such gas
from Equistar, and, in turn, such gas shall be resold to the Buyer on such terms and conditions.
The Fuel Supply Agreement shall require RES to indemnify, defend and hold Buyer (and Buyer’s Energy
Manager) harmless from and against any and all claims, losses, damages, liabilities, suits,
payments, costs and expenses, including reasonable attorneys’ fees and costs of investigation
arising out of (i) the performance or breach of the Fuel Purchase and Sale Agreement by RES except
to the extent that a liability arises out of the breach by Buyer or Buyer’s Energy Manager of the
Fuel Supply Agreement, and (ii) any breach or alleged breach of the Fuel Purchase and Sale
Agreement as a result of the Fuel Supply Agreement (except to the extent that a liability arises
out of the breach by Buyer or Buyer’s Energy Manager of the Fuel Supply Agreement). Buyer shall
indemnify defend and hold RES harmless from and against any and all claims, losses, damages,
liabilities, suits, payments, costs and expenses, including attorneys’ fees and costs of
investigation arising out of Buyer’s (or Buyer’s Energy Manager’s) breach of the Fuel Supply
Agreement. At least 10 (ten) days prior to Closing, in the event the Parties will execute the Fuel
Supply Agreement as hereinabove provided at Closing, Buyer may request that Sellers deliver a
guaranty of Reliant Energy of RES’ obligations under the indemnity described in the preceding
sentence, such guaranty to be in form and substance reasonably satisfactory to Buyer and Reliant
Energy with a duration of two (2) years and an aggregate limit of liability of $10 million. If
Reliant Energy, in its sole discretion does not, at least five (5) days prior to Closing, agree to
deliver said guaranty, then Buyer shall have the right, exercisable during the three (3) day period
after Reliant Energy has declined to deliver the guarantee, to terminate this Agreement without any
further obligation or liability of either Party hereunder, it being understood that nothing herein
shall in any way obligate Reliant Energy to deliver said guaranty if requested. Notwithstanding
anything in this Section 2.5 to the contrary in using commercially reasonable efforts to
obtain any consent described above, RES
shall not be obligated to commence litigation or expend any sums of money to obtain such
consent.

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ARTICLE 3

CONSIDERATION

     3.1. Purchase Price. The purchase price to be paid by Buyer to Sellers for the
Acquired Assets is equal to:

          (a) Four Hundred Sixty Eight Million Dollars ($468,000,000) (the “Base Purchase Price”), plus

          (b) the amount of Capital Expenditures paid or payable by the Sellers for work done during the
Interim Period, subject to and in accordance with the budget for which is provided on Exhibit
F hereto, plus or minus (as applicable)

          (c) the amount of the LTMA Adjustment calculated in accordance with Item 6 on Schedule
2.4 .

     3.2. Deposit. On or before the later of (i) February 28, 2008 and (ii) the first
Business Day after the Escrow Agreement is executed by the Escrow Agent, Buyer will deposit with
the Escrow Agent Forty Million Dollars ($40,000,000) (the “Deposit”). The Deposit shall be held
and disbursed pursuant to the terms of the Escrow Agreement and this Agreement. The Parties shall
use commercially reasonable efforts to cause the execution and delivery of the Escrow Agreement as
soon as possible after the date hereof.

     3.3. Post-Closing Adjustment.

          (a) As soon as practicable after the Closing, but no later than 90 days after the Closing
Date, Sellers shall determine the actual adjustment to the Base Purchase Price pursuant to
Section 3.1 as of the Closing Date. Sellers and Buyer shall cooperate and provide each
other access to their respective books and records and those of Channelview LP as are reasonably
requested in connection with the matters addressed in this Section 3.3. Sellers shall
provide Buyer with written notice of such determinations within such 90 days, along with reasonable
supporting information (the “Sellers’ Post-Closing Estimate”).

          (b) If Buyer objects to any determinations set forth in Sellers’ Post-Closing Estimate, then
it shall provide Sellers written notice thereof within 10 Business Days after receiving Sellers’
Post-Closing Estimate. Such notice shall specify in reasonable detail Buyer’s objections to
specific determinations, along with reasonable supporting documentation. Any objections not so
specified shall be deemed waived, and Sellers’ determinations to which specific objections were not
so made shall prevail. If the Parties are unable to agree on the disputed amounts as of the
Closing Date within 120 days after the Closing Date or such longer time as may be agreed by the
Parties, the Parties shall refer such dispute to an internationally recognized accounting firm that
is not the principal accounting firm of Buyer or either Seller, mutually acceptable to Buyer and
Sellers, which firm shall make a final and binding determination as to all such matters in dispute
(and only such matters) on a timely basis (and such accounting firm
shall be instructed to make such determination within 45 days of such engagement or as soon
thereafter as reasonably practicable) and promptly shall notify the Parties in writing of its
resolution. Such firm shall not have the power to modify or amend any term or provision of this

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Agreement. The fees and disbursements of the accounting firm shall be allocated between Buyer and
Sellers in inverse proportion as they shall prevail on the amounts of such disputed items so
submitted (as finally determined by such accounting firm).

          (c) If the Base Purchase Price adjusted using such actual values (as agreed or determined by
the above-referenced accounting firm) (the “Final Purchase Price”) is greater than the Estimated
Purchase Price, then Buyer shall pay Sellers within 10 Business Days after such actual values are
agreed or determined, by wire transfer of immediately available funds, the difference between the
Final Purchase Price and the Estimated Purchase Price plus interest thereon at the Interest Rate
from the Closing Date through and including the date of such payment. If the Final Purchase Price
is less than the Estimated Purchase Price, then Sellers shall pay Buyer within 10 Business Days
after such actual values are agreed or determined, by wire transfer of immediately available funds,
the difference between the Estimated Purchase Price and the Final Purchase Price plus interest
thereon at the Interest Rate from the Closing Date through and including the date of such payment.
In each case, the recipient Party shall designate the account to which such payment is to be made
at least two Business Days prior to the date such payment is due.

     3.4. Allocation of Purchase Price. Within thirty (30) days after the determination of
the Final Purchase Price, Sellers and Buyer shall agree upon an allocation of the purchase price
(as determined in accordance with US federal income tax principles) among the Acquired Assets in
accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder (the
“Purchase Price Allocation”), provided that the purchase price shall not be increased by or
otherwise reflect the obligations under any of the Assigned Contracts. Buyer and Sellers shall
work in good faith to resolve any disagreements regarding the Purchase Price Allocation. If the
Parties fail to agree within such 30-day period upon Purchase Price Allocation, such dispute shall
be resolved by an independent accounting firm mutually acceptable to Buyer and Sellers, and the
decision of such independent accounting firm shall be final and binding on the Parties. Sellers
together shall bear and pay one-half of such fees and other costs charged by such accounting firm
and Buyer shall bear and pay one-half of such fees and other costs. Sellers and Buyer shall each
prepare and timely file IRS Form 8594 “Asset Acquisition Statement Under Section 1060” and any
other similar statements or forms as are prescribed under federal, state, local or foreign Tax Law
(including any exhibits thereto) to report the Purchase Price Allocation. The Parties agree that
they shall not, and shall not permit their Affiliates to take a position on any Tax Return or for
any Tax purpose that is inconsistent with the Purchase Price Allocation unless otherwise required
by applicable laws; provided, however, that neither Sellers nor Buyer shall be obligated to
litigate any challenge to the Purchase Price Allocation by any Governmental Authority. The Parties
agree to provide, and shall cause their Affiliates to provide, each other promptly with any
information required to complete such Tax forms or statements as are required under applicable law
to report the Purchase Price Allocation.

     3.5. Equistar Payment. In accordance with the Settlement Agreement and provided the
Settlement Agreement is then still in effect, Channelview LP agrees to apply $10,000,000 of its
portion of the Purchase Price payable at Closing either to (in Channelview LP’s discretion):
(i) Equistar pursuant to paragraphs 2 and 6 of the Settlement Agreement, or (ii) into the
escrow account contemplated by paragraph 6 of the Settlement Agreement.

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ARTICLE 4

CLOSING AND DELIVERIES

     4.1. Closing. Subject to satisfaction or waiver of the conditions to the Closing set
forth herein, unless the Parties mutually agree otherwise in writing, the closing of the
transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of
Reliant Energy, Inc., 1000 Main Street, 21st Floor, Houston, Texas 77002 at 10:00 A.M. local time,
on the second Business Day after the conditions to the Closing set forth in Article 11
(other than actions to be taken or items to be delivered at the Closing) have been satisfied or
waived by the applicable Party or Parties or such other date and at such other time and place as
may be mutually agreed to in writing (the “Closing Date”). All actions listed in Section
4.2 and Section 4.3 that occur on the Closing Date shall be deemed to occur
simultaneously at the Closing.

     4.2. Closing Deliveries by Sellers to Buyer. At the Closing, the appropriate Seller
shall deliver, or shall cause to be delivered, as applicable, to Buyer the following:

          (a) subject to the receipt of applicable Company Consents and Sellers’ Governmental Approvals,
a bill of sale with respect to the Acquired Assets, duly executed by the appropriate Seller and
substantially in the form of Exhibit A hereto;

          (b) subject to the receipt of applicable Company Consents and Sellers’ Governmental Approvals,
one or more assignment and assumption agreements (the “Assumption Agreements”), in the form
attached as Exhibit B hereto, duly executed by the appropriate Seller or Related Person
with respect to the Assigned Contracts and Assumed Liabilities;

          (c) subject to the receipt of applicable Company Consents and Sellers’ Governmental Approvals,
assignments of the Real Estate Leases and all Entitled Real Property interests held by Channelview
LP, in the form attached as Exhibit C hereto, including, without limitation, all such
interests set forth on Schedules 2.1(a) and 2.1(b), each duly executed by
Channelview LP and in recordable form;

          (d) the Business Records (either at Closing or as soon as practicable thereafter);

          (e) (i) an executed copy of the Administrative Services Transition Services Agreement (to the
extent Buyer notifies Sellers at least ten (10) days prior to the Closing Date that it intends to
enter into the Administrative Services Transition Services Agreement), and (ii) subject to
Section 4.4, an executed copy of the Fuel and Power Transition Services Agreement.

          (f) a duly executed affidavit of non-foreign status that complies with Section 1445 of the
Code;

          (g) duly executed certificates referenced in Section 9.2(c);

          (h) a copy of the Sale Order that has been entered on the docket by the clerk of the
Bankruptcy Court;

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          (i) unless Buyer has elected Gas Services under the Fuel and Power Transition Services
Agreement (which services would include the sale of gas purchased by RES under the Fuel Purchase
and Sale Agreement), either (i) an assignment and assumption agreement executed by RES (the “RES
Assignment and Assumption Agreement”), in substantially the form attached as Exhibit D
hereto, assigning to Buyer’s designee the agreements which RES is a party as set forth in
Schedule 4.2(i) hereto (the “RES Agreements”), or (ii) if required by Section 2.5,
the Fuel Supply Agreement executed by RES; if Buyer has elected such Gas Services, then Sellers
shall deliver the RES Assignment and Assumption Agreement or the Fuel Supply Agreement, as
applicable, at the time such Gas Services terminate; and

          (j) a joint direction letter executed by Sellers instructing the Escrow Agent to (i) transfer
$40,000,000 of the funds held in the Deposit Escrow Account (as defined in the Escrow Agreement)
into the Indemnity Escrow Account (as defined in the Escrow Agreement) and (ii) to transfer all
interest earned in the Deposit Escrow Account as directed by Sellers.

     4.3. Closing Deliveries by Buyer. At the Closing, Buyer shall deliver to Sellers the
following:

          (a) a wire transfer of immediately available funds (to such accounts as Sellers shall have
notified Buyer of at least two Business Days prior to the Closing Date) in an amount equal to the
Base Purchase Price, reduced by the amount of the Deposit together with any interest earned
thereon, as adjusted pursuant to Sections 3.1(b) and 3.1(c), as estimated in good
faith by Sellers (the “Estimated Purchase Price”). Sellers shall deliver the Estimated Purchase
Price in writing to Buyer at least two Business Days prior to the Closing Date and shall attach to
the calculation of the Estimated Purchase Price a schedule showing the estimated adjustments to the
Base Purchase Price pursuant to Sections 3.1(b) and 3.1(c);

          (b) an executed counterpart to the Assumption Agreements relating to the Assigned Contracts
and Assumed Liabilities;

          (c) (i) an executed copy of the Administrative Services Transition Services Agreement (to the
extent Buyer notifies Sellers at least ten (10) days prior to the Closing Date that it intends to
enter into the Administrative Services Transition Services Agreement), and (ii) subject to
Section 4.4, an executed copy of the Fuel and Power Transition Services Agreement;

          (d) a release of the LTMA Support Obligations (other than with respect to amounts owing prior
to Closing) and unless Buyer has elected Gas Services under the Fuel and Power Transition Services
Agreement, either (i) RES Assignment and Assumption Agreement executed by Buyer in substantially
the form attached as Exhibit D hereto, assigning to Buyer’s designee the RES Agreements, or
(ii) if required by Section 2.5, the Fuel Supply Agreement executed by Buyer and Buyer’s
Energy Manager; if Buyer has elected such Gas Services, then Buyer shall deliver the RES Assignment
and Assumption Agreement or the Fuel Supply Agreement, as applicable, at the time such Gas Services
terminate;

          (e) a joint direction letter executed by Buyer instructing the Escrow Agent to (i) transfer
$40,000,000 of the funds held in the Deposit Escrow Account into the Indemnity

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Escrow Account and
(ii) to transfer all interest earned in the Deposit Escrow Account as directed by Sellers; and

          (f) a duly executed certificate as described in Section 9.3(c).

     4.4. RES Fuel Purchase Transactions. If Buyer does not intend to utilize RES’
services under the Fuel and Power Transition Services Agreement, the Parties shall nonetheless
enter into the Fuel and Power Transition Services Agreement with respect to the sale to Buyer of
the fuel purchased by RES under the RES Fuel Purchase Transactions from and after the Closing Date
in accordance with the terms and conditions of the Fuel and Power Transition Services Agreement
(including without limitation under Article VI thereto concerning the supplying of credit support)
but without payment of the monthly fee set forth in Section 2.1 of the Fuel and Power Transition
Services Agreement. Notwithstanding the foregoing, if as of Closing or at anytime thereafter, the
Parties are able to cause one or more of the RES Fuel Purchase Transactions to be novated directly
to Buyer’s Energy Manager, then such transactions shall be excluded from the Fuel and Power
Transition Services Agreement. Each of the Parties shall use commercially reasonable efforts to
cause such novations to occur. Each such novation shall include the acknowledgment of the
counterparty under such RES Fuel Purchase Transaction that it will look solely to RES for the
payments of amounts arising or accruing under such RES Fuel Purchase Transaction prior to the
effective time of such novation.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

REGARDING THE ACQUIRED ASSETS

     Each Seller hereby represents and warrants to Buyer, for itself, and with respect to the
Acquired Assets owned by such Seller that:

     5.1. Organization and Qualification; Authority. Each Seller is duly formed and
existing under the laws of the State of Delaware. Each Seller has the requisite power and
authority to enter into this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby and to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted or as contemplated herein and in accordance with
Sections 363, 1107 and 1108 of the Bankruptcy Code. Each Seller is qualified to transact business
and, where applicable, is in good standing in each jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except in the jurisdictions where the failure
to be so qualified or licensed would not, in the aggregate, be reasonably expected to have a
Material Adverse Effect on such Seller’s ability to perform its obligations hereunder. The
execution and delivery by Sellers of this Agreement and the performance by each Seller of its
respective obligations hereunder have been duly and validly authorized by all necessary limited
partnership or limited liability company (as applicable) action on behalf of such Seller. This
Agreement has been duly and validly executed and delivered by each Seller and constitutes the
legal, valid and binding obligation of such Seller enforceable against such Seller in accordance
with its terms except as the same may be limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar Laws relating to or affecting the rights of creditors
generally or by general equitable principles.

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     5.2. No Conflicts; Consents and Approvals. The execution and delivery by each Seller
of this Agreement and each of the documents contemplated hereby does not, and the performance by
such Seller of its obligations under this Agreement and each of the documents contemplated hereby
and the consummation of the transactions contemplated hereby and thereby will not:

          (a) conflict with or result in a violation or breach of any of the terms, conditions or
provisions of the Charter Documents of such Seller;

          (b) assuming the consents set forth on Schedule 5.2(b) (the “Company Consents”) have
been obtained, require the consent of, notice to or approval of any Person under any Material
Contract which is an Assigned Contract, be in violation of or result in a default (or give rise to
any notice requirement or right of termination, cancellation or acceleration) under any Material
Contract that is an Assigned Contracts except for any such violations or defaults (or rights of
termination, cancellation or acceleration), as would not reasonably be expected to, individually or
in the aggregate, result in a Material Adverse Effect;

          (c) assuming all required filings, approvals, consents, authorizations and notices set forth
on Schedule 5.2(c) (collectively, the “Sellers’ Governmental Approvals”) including the Sale
Order have been made, obtained or given, (i) conflict with or result in a violation or breach of
any term or provision of any Law or writ, judgment, order or decree applicable to Sellers or (ii)
require the consent of, notice to or approval of any Governmental Authority under any applicable
Law, except in each case such conflicts, violations or breaches, or the failure to obtain such
consents or approvals, which would not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect; and

          (d) result in the imposition or creation of a Lien upon or with respect to the Acquired
Assets.

     5.3. Subsidiaries. Sellers have no subsidiaries and do not own equity interests in
any Person.

     5.4. Financial Statements. Attached as Schedule 5.4 are copies of (i) the
audited financial statements of Channelview LP for the years ended December 31, 2005 and December
31, 2006; and (ii) the unaudited balance sheet and statements of income and cash flow of
Channelview LP as of and for the quarter ended September 30, 2007. The December 31, 2006 financial
statements fairly present, in all material respects and in accordance with GAAP, the financial
position and the results of operations, as the case may be, of Channelview LP as of the dates and
for the periods indicated, except in the case of the interim financial statement for footnote
disclosure and year-end audit adjustments.

     5.5. Absence of Undisclosed Liabilities; Certain Developments. Except as recorded in
the September 30, 2007 Balance Sheet included in Schedule 5.4 (the “Channelview September
30 Balance Sheet”) or the notes thereto or as disclosed on Schedule 5.5, and except such
liabilities that do not and would not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect, to their Knowledge, neither Seller has aggregate liabilities
that would be required to be recorded in a balance sheet prepared in accordance with GAAP,

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excluding (i) liabilities under Material Contracts, (ii) liabilities under this Agreement,
(iii) liabilities incurred in the ordinary course of business since September 30, 2007, (iv)
liabilities that will be repaid or extinguished on or prior to the Closing, or not assumed by Buyer
pursuant to the terms hereof, (v) liabilities incurred after the date of this Agreement, in
accordance with Article 8, and (vi) to the extent not otherwise included in (i) — (iii)
and (v) above, administrative expenses in the Chapter 11 Cases.

     5.6. Litigation. Except as disclosed on Schedule 5.6, there is no litigation
pending, or, to either Seller’s Knowledge, threatened in writing against such Seller before any
Governmental Authority or any arbitrator, except for litigation that would not reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect. Except as disclosed
on Schedule 5.6, neither Seller is subject to any judgment, writ, decree, injunction, rule
or order of any Governmental Authority (whether preliminary or final) that prohibits the
consummation of the transactions contemplated by this Agreement or otherwise detracts from the
value of, or interferes with the present use of, the Acquired Assets, other than, in each case,
those that would not reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.

     5.7. Compliance with Laws. Except as disclosed on Schedule 5.7, neither
Seller nor Reliant Energy Power Supply LLC, as registered with NERC and the Texas Regional Entity,
as Generator Operator of the Channelview Facility (in such capacity the “Generator Operator”), is
in violation of or has been given written notice of any current violation of any Law, except
violations that would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect. Except as disclosed on Schedule 5.7, with respect to the
Channelview Facility, to Sellers’ Knowledge, no investigation, audit or review relating to Sellers,
the Channelview Facility, the Generator Operator or any of the other Acquired Assets by any
Governmental Authority is pending or threatened, other than, in each case, those that would not
reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. For
the avoidance of doubt, the representation above, insofar as it relates to the Generator Operator,
is only made with respect to any Law applicable to it in its capacity as Generator Operator.

     5.8. Permits. Each material Permit used with respect to the operation of the
Channelview Facility and the conduct of the Business is set forth on Schedule 5.8(i).
Except as disclosed on Schedule 5.8(ii), neither Seller is in violation of the terms of any
Permit used to conduct their respective businesses as currently conducted, except for violations
which would not reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect. To Sellers’ Knowledge, such Permits are in full force and effect, except as would
not reasonably be expected to have a Material Adverse Effect.

     5.9. Contracts.

          (a) Excluding Assigned Contracts, any Benefit Plans and any Contracts with respect to which
Buyer will not be bound or have any liability after the Closing, Schedule 5.9(a) sets forth
a list as of the date of this Agreement of the following Contracts to which either Seller is bound
(collectively, the “Material Contracts”):

     (i) Contracts for the future purchase, exchange or sale of electric power, steam or
ancillary services or fuel;

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     (ii) Contracts for the future transmission of electric power or fuel or for the storage
of fuel;

     (iii) interconnection Contracts;

     (iv) other than Contracts of the nature addressed by Section 5.9(a)(i) — (ii),
Contracts that grant a right or option to purchase any asset of Sellers, other than in each
case, Contracts entered into in the ordinary course of business consistent with past
practices relating to assets with a value of less than $500,000 individually or $2,000,000
in the aggregate;

     (v) other than Contracts of the nature addressed by Section 5.9(a)(i) — (ii),
Contracts for the future provision of goods or services requiring payments in excess of
$500,000 for each individual Contract, excluding any such Contracts that are terminable by
Sellers without penalty on not more than 30 days’ notice;

     (vi) Contracts under which such Seller has created, incurred, assumed or guaranteed any
outstanding indebtedness for borrowed money or any capitalized lease obligation, or under
which such Seller has imposed a security interest on any of its assets, tangible or
intangible, which security interest secures outstanding indebtedness;

     (vii) letters of credit or outstanding agreements of guaranty, surety or
indemnification, direct or indirect, by Channelview LP, or by a Seller or any Affiliate of a
Seller for the benefit of Channelview LP;

     (viii) Contracts with Reliant Energy or any Affiliate of Reliant Energy relating to the
future provision of goods or services;

     (ix) Contracts under which Channelview LP has advanced or loaned money outside of the
ordinary course of business;

     (x) employment, consulting or separation Contracts and any Contract that will result in
the payment of any severance, termination, “golden parachute,” or similar payments to any
present or former personnel following termination of employment or otherwise as a result of
the consummation of the transactions contemplated by this Agreement and each of the
agreements executed in connection therewith;

     (xi) any collective bargaining agreement;

     (xii) outstanding futures, swap, collar, put, call, floor, cap, option or other
Contracts that are intended to benefit from or reduce or eliminate the risk of fluctuations
in the price of commodities, including electric power, fuel or securities;

     (xiii) Contracts that purport to limit either Sellers’ freedom to compete in any line
of business or in any geographic area;

     (xiv) partnership, joint venture or limited liability company agreements; and

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     (xv) leases for real property.

     (b) Sellers have provided Buyer with, or access to, true and complete copies of all Material
Contracts.

     (c) Except as a result of the filing of the Chapter 11 Cases or as set forth on Schedule
5.9(c) hereto, neither Seller is, and to Sellers’ Knowledge, no counterparty is, in default in
the performance or observance of any term or provision of, and no event has occurred which, with
lapse of time or action by a third party, would result in such a default under any Assigned
Contracts to which either Seller is a party other than as would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.

     5.10. Taxes. Except as set forth on Schedule 5.10:

          (a) Each Seller has duly filed with the appropriate Taxing Authorities all Tax Returns
required to be filed by it, and such Tax Returns are true, correct, and complete in all material
respects.

          (b) Each Seller has duly paid in full any and all Taxes owed by it (whether or not shown or
required to be shown on any Tax Return, except in each case where the failure to file such Tax
Returns or pay such Tax would not reasonably be expected to, in the aggregate, have a Material
Adverse Effect).

          (c) There are no liens for Taxes upon any Acquired Asset, except for liens for Taxes not yet
due.

          (d) As of the date hereof, to Sellers’ Knowledge, there are no pending or threatened in
writing, Tax audits, examinations, actions, suits, claims, investigations or proceedings with
respect to the ownership of the Acquired Assets and no outstanding written deficiencies or
assessments for any amount of Tax have been assessed by any Taxing Authority with respect to Taxes
relating to the ownership of the Acquired Assets that have been received by Sellers.

          (e) There are no outstanding agreements extending or waiving the statutory period of
limitations applicable to any claim for, or the period for the collection or assessment or
reassessment of, Taxes due from either Seller for any taxable period and no request for any such
waiver or extension is currently pending.

          (f) Neither Seller is a party to or bound by any agreement relating to the sharing or
allocation of Taxes.

          (g) Neither Seller is a party to any agreement, Contract, arrangement or plan that (i) has
resulted or could result, separately or in the aggregate, in the payment of any “excess parachute
payment” within the meaning of Section 280G of the Code (or any similar provision of state, local
or foreign Law) or any amount that would not be fully deductible as a result of Section 162(m) of
the Code (or any similar provision of state, local or foreign Law), or (ii) could provide for the
deferral of compensation subject to Section 409A of the Code (or any similar provision of state,
local or foreign Law).

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          (h) Neither Seller currently is the beneficiary of any extension of time within which to pay
any Tax or to file any Tax Return.

          (i) Neither Seller is required to include any item of income in, or exclude any item of
deduction or loss from, taxable income for any taxable period or portion thereof beginning on or
after the Closing Date as a result of (A) a change in method of accounting for a taxable period
beginning on or before the Closing Date, (B) any “closing agreement” described in Section 7121 of
the Code (or any similar provision of state, local or foreign Law) executed on or before the
Closing Date, (C) any installment sale or open transaction disposition made on or before the
Closing Date, or (D) any prepaid amount received on or before the Closing Date.

          (j) All Taxes required to be withheld or collected by Sellers have been duly withheld and
collected and have been properly paid or deposited as required by applicable Laws.

          (k) RESC, at all times since its formation, has been classified and treated for Tax purposes
as a disregarded entity, and not as a corporation.

          (l) Channelview LP, at all times since its formation, has been classified and treated for Tax
purposes as a partnership, and not as a corporation.

     5.11. Employee Benefit Plans; ERISA.

          (a) Schedule 5.11(a) sets forth a true, correct and complete list, as of the Execution
Date, of all Seller Affiliate Plans. No Continuing Employee is entitled to, or may become eligible
to receive, any benefit from a Benefit Plan other than a Seller Affiliate Plan. On or before the
Execution Date, Sellers have made available to Buyer copies (including amendments) of (i) each of
the Seller Affiliate Plans, including any plan documents, trust agreements, annuity contracts,
insurance contracts or other funding documents related to a Seller Affiliate Plan, (ii) the latest
determination letter obtained from the IRS with respect to any Seller Affiliate Plan intended to be
qualified or exempt under Section 401 or 501 of the Code, and (iii) census data for the Channelview
Facility Employees for each Seller Affiliate Plan.

          (b) None of Sellers, Sellers’ Affiliates, or any Commonly Controlled Entity contribute to,
have an obligation to contribute to, or have ever contributed to, or ever had an obligation to
contribute to, any multiemployer plan (within the meaning of Section 3(37) of ERISA).

          (c) All Seller Affiliate Plans and related trust agreements are and have been maintained in
compliance both as to form and operation with all Laws, including the Code and ERISA, except to the
extent that any such non-compliance would not reasonably be expected to have a Material Adverse
Effect. Except as set forth in Schedule 5.11(c), a favorable determination letter as to
qualification under Section 401 of the Code has been issued with respect to any Seller Affiliate
Plan intended to be qualified under Section 401 of the Code, and the related trust has been
determined to be exempt from taxation under Section 501 of the Code. The Sellers and their
Affiliates know of no events or circumstances that have occurred that would adversely affect the
qualified status of any such plans or trusts.

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          (d) Other than as provided under the Collective Bargaining Contract, no individual listed on
Schedule 7.9(b) has ever received employer-subsidized health care or any other non-pension benefits
with respect to employment at the Channelview Facility for more than 3l days after his or her
employment is terminated (other than as required by part 6 of subtitle B of title I of ERISA) and
has never been promised such employer-subsidized post-termination benefits with respect to
employment at the Channelview Facility.

     5.12. Labor and Employment.

          (a) With respect to each individual employed by Operator who performs services for the
Channelview Facility (the “Channelview Facility Employees”), except for the Collective Bargaining
Contract, Operator is not a party to, nor is bound by, the terms of any collective bargaining
agreement or any other Contract with any labor union or representative of employees. To Sellers’
Knowledge, there are no union organization campaigns or attempts to organize or establish any
employee association underway or threatened involving employees of either Seller.

          (b) Channelview LP is in compliance with all laws, rules and regulations relating to labor
relations and employment with respect to the Continuing Employees, except to the extent that any
such non-compliance would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect.

          (c) To Sellers’ Knowledge, no Channelview Facility Employees are in violation of any term or
provision of any employment contract, confidentiality or other proprietary information disclosure
agreement or other contract relating to the right of any such Person to be employed or engaged by a
Seller which would reasonably be expected to have a Material Adverse Effect.

          (d) To Sellers’ Knowledge, none of Operator’s employment policies or practices applicable to
the Channelview Facility Employees are currently being audited or investigated by any Governmental
Authority which would reasonably be expected to have a Material Adverse Effect. To Sellers’
Knowledge there are no current, nor have there been since four (4) years prior to the Closing Date,
any, charges, claims, or demands filed with any Governmental Authority from any current or former
Channelview Facility Employees regarding their employment or former employment at the Channelview
Facility which would reasonably be expected to have a Material Adverse Effect, including claims or
charges of employment discrimination, sexual harassment or unfair labor practices.

          (e) With respect to the Channelview Facility Employees, Operator has complied with all
applicable Laws respecting employment and employment practices, terms and conditions of employment,
wages and hours and other Laws, regulations and requirements related to employment, except to the
extent that any such non-compliance would not reasonably be expected to have a Material Adverse
Effect.

          (f) Except as set forth on Schedule 5.12(f), neither the execution and delivery of
this Agreement or the documents contemplated hereby by the Sellers, the performance by the Sellers
of their obligations hereunder and thereunder, nor the consummation of the transactions

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contemplated hereby and thereby will (i) materially increase or enhance any benefits payable
to a Continuing Employee under any Seller Affiliate Plan, or (ii) materially accelerate the time of
payment or vesting, or increase the amount, of any compensation due to any Continuing Employee
under a Seller Affiliate Plan.

     5.13. Environmental Matters. Except for such matters as disclosed on Schedule
5.13 or for such matters that would not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect:

          (a) With respect to the Acquired Assets, Sellers are in compliance with all applicable
Environmental Laws;

          (b) All Permits required under Environmental Laws for conducting the operations of the
Channelview Facility, as such facility is currently being operated, have been obtained or applied
for and, to the extent obtained, are currently in full force and effect;

          (c) Neither Channelview LP nor any of its Affiliates, with respect to the Channelview
Facility, have received any written notice of a pending Claim from any Governmental Authority or
other Person alleging that it or the Channelview Facility is in violation of, or has liability
under, any applicable Environmental Law;

          (d) To Channelview LP’s Knowledge, there has been no disposal or Release by Sellers or their
Affiliates at, on, under or from the Channelview Facility, except in compliance with Environmental
Laws; and

          (e) Neither Channelview LP nor any of its Affiliates have received any written notice from any
Governmental Authority or other Person alleging that Channelview LP or the Channelview Facility
have liability under applicable Environmental Laws with respect to the disposal or transportation,
or the arrangement for disposal or transportation, of Hazardous Substances from the Channelview
Facility by Channelview LP or any of its Affiliates at or to any off-site location.

     Notwithstanding any other provision of this Agreement to the contrary, this Section
5.13 contains the sole and exclusive representations and warranties of Sellers on environmental
matters with respect to Sellers and the Acquired Assets.

     5.14. Intellectual Property. Except as set forth on Schedule 5.14, or as
would not reasonably be expected to have a Material Adverse Effect, (a) each Seller owns or has the
right to use all Intellectual Property used in the operations of its respective business as
currently conducted; (b) to the Knowledge of Sellers, no Person has or is infringing or
misappropriating any Intellectual Property of Channelview LP that is exclusively used in the
operation of the Channelview Facility; and (c) to the Knowledge of Sellers, no Person has or is
infringing or misappropriating any Intellectual Property of RESC that is used exclusively in the
running of RESC’s Business. Except for such violations which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, neither the Sellers nor the
Channelview Facility have infringed or misappropriated, and the operation of the Channelview
Facility does not infringe or misappropriate any valid rights of third parties with respect to
Intellectual Property.

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     5.15. Real Estate. Channelview LP has delivered or otherwise made available to Buyer
true, correct and complete copies of the surveys, title reports and the ground lease set forth on
Schedule 5.15. Channelview LP does not own any real property or interest in real property
other than pursuant to the Real Estate Leases or with respect to the Entitled Real Property.

     5.16. Insurance. The Channelview Facility and Sellers are covered by valid policies
of insurance as part of Reliant Energy’s corporate insurance program. Such insurance coverage
shall not survive the Closing.

     5.17. Federal Regulation. As of the Closing Date, the Channelview Facility meets the
requirements for a “Qualifying Cogeneration Facility” as defined in Section 3(18)(B) of the Federal
Power Act, as amended, and the rules and regulations thereunder and the Public Utility Regulatory
Policies Act of 1978, as amended (a “QF”).

     5.18. Brokers. Neither Seller has any liability or obligation to pay fees or
commissions to any broker, finder or agent with respect to the transactions contemplated by this
Agreement.

     5.19. Conduct of Business and Operations. To Channelview LP’s Knowledge, since
December 31, 2006, Channelview LP has operated and maintained the Channelview Facility in
accordance with Prudent Industry Practice, except as would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.

     5.20. Sufficiency of Assets. Except for the Excluded Assets and assets consumed in
the ordinary course of business, the Acquired Assets include all of the assets (whether tangible or
intangible) used by the Channelview Facility to conduct the business of the Channelview Facility as
conducted as of each of the date hereof, except as would not reasonably be expected to have a
Material Adverse Effect. Except as would not reasonably be expected to have a Material Adverse
Effect, the Sellers have good title to, or valid license or right to use, free and clear of all
Liens (other than Liens that will be discharged prior to Closing or pursuant to the Chapter 11
Cases, or Permitted Exceptions), all of the tangible personal property described in the preceding
sentence.

ARTICLE 6

REPRESENTATIONS AND WARRANTIES OF BUYER

     In order to induce Sellers to enter into this Agreement and consummate the transactions
contemplated hereby, Buyer hereby represents and warrants to Sellers that:

     6.1. Organization and Qualification. Buyer is a limited liability company duly formed
and existing under the Laws of the State of Delaware. Buyer is qualified to transact business and,
where applicable, is in good standing in each jurisdiction where the nature of the business
conducted by it makes such qualification necessary, except in those jurisdictions where the failure
to be so qualified or licensed would not, in the aggregate, be reasonably expected to result in a
material adverse effect on Buyer’s ability to perform its obligations hereunder.

     6.2. Authority. Buyer has all requisite limited liability company power and authority
to enter into this Agreement, to perform its obligations hereunder and to consummate the

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transactions contemplated hereby. The execution and delivery by Buyer of this Agreement and
the performance by Buyer of its obligations hereunder have been duly and validly authorized by all
necessary limited liability company action on behalf of Buyer. This Agreement has been duly and
validly executed and delivered by Buyer and constitutes the legal, valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms except as the same may be limited by
bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar Laws relating to
or affecting the rights of creditors generally or by general equitable principles.

     6.3. No Conflicts; Consents and Approvals. The execution and delivery by Buyer of
this Agreement and each of the documents contemplated hereby do not, and the performance by Buyer
of its obligations hereunder and under each of the documents contemplated hereby and the
consummation of the transactions contemplated hereby and thereby will not:

          (a) conflict with or result in a violation or breach of any of the terms, conditions or
provisions of its Charter Documents;

          (b) be in violation of or result in a default (or give rise to any right of termination,
cancellation or acceleration) under any material Contract to which Buyer is a party or by which any
of its assets may be bound except for any such violations or defaults (or rights of termination,
cancellation or acceleration) which would not, in the aggregate, be reasonably expected to result
in a material adverse effect on Buyer’s ability to perform its obligations hereunder; or

          (c) assuming all required filings, approvals, consents, authorizations and notices set forth
in Schedule 6.3(c) (collectively, the “Buyer Governmental Approvals”) have been made,
obtained or given, (i) conflict with or result in a violation or breach of any term or provision
of any Law or writ, judgment, order or decree applicable to Buyer or any of its assets or (ii)
require the consent or approval of any Governmental Authority under any applicable Law, except in
each case such conflicts, violations or breaches, or the failure to obtain such consents or
approvals, which would not reasonably be expected to result in a material adverse effect on Buyer’s
ability to perform its obligations hereunder.

     6.4. Legal Proceedings. Buyer has not been served with written notice of any Claim,
and to Buyer’s Knowledge, none is threatened, against Buyer which seeks a writ, judgment, order or
decree restraining, enjoining or otherwise prohibiting or making illegal any of the transactions
contemplated by this Agreement.

     6.5. Compliance with Laws and Orders. Buyer is not in violation of or has been given
written notice of any current violation of any Law applicable to Buyer or its assets the effect of
which, in the aggregate, would reasonably be expected to result in a material adverse effect on
Buyer’s ability to perform its obligations hereunder.

     6.6. Brokers. Buyer does not have any liability or obligation to pay fees or
commissions to any broker, finder or agent with respect to the transactions contemplated by this
Agreement for which Sellers or any of their Affiliates could become liable or obligated.

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     6.7. Financial Resources. Buyer at Closing will have sufficient funds to satisfy its
obligations required to be performed at Closing.

     6.8. No Knowledge of a Sellers’ Breach. Buyer has no Knowledge of any breach by
either Seller of any representation or warranty made hereunder which breach would reasonably be
expected to result in a Material Adverse Effect, of which the Buyer has not advised Sellers.

     6.9. Opportunity for Independent Investigation. Prior to its execution of this
Agreement, Buyer has conducted to its satisfaction an independent investigation and verification of
the current condition and affairs of the Sellers and the Channelview Facility without reliance on
Sellers or any of their Affiliates; provided that such independent investigation and verification
shall not affect the express representations, warranties, covenants or other obligations of Sellers
contained in this Agreement. Buyer has had reasonable and sufficient access to documents, other
information and materials as it considers appropriate to make its evaluations.

ARTICLE 7

COVENANTS

     The Parties hereby, as applicable, covenant and agree as follows:

     7.1. Access.

          (a) During the Interim Period, to the extent within their reasonable control in light of the
commencement of the Chapter 11 Cases, each Seller (as applicable) will provide, and will cause its
Affiliates to provide, Buyer and its Representatives with reasonable access during normal business
hours to the Channelview Facility, and the officers and management employees of Sellers and their
Affiliates who are responsible for the Channelview Facility in such a manner so as not to
unreasonably interfere with the business or operations of Sellers or their Affiliates; provided,
that each Seller shall have the right to (i) have a Representative present for any communication
with employees or officers of such Seller or its Affiliates, and (ii) impose reasonable
restrictions and requirements for safety or operational purposes; provided further, that the right
of access granted hereunder shall not include physical testing or sampling. Notwithstanding the
foregoing, neither Seller shall be required to provide any information or allow any inspection
which (i) such Seller reasonably believe contravenes applicable Law, (ii) constitutes or allows
access to information protected by attorney/client privilege, or (iii) such Seller or its
Affiliates is required to keep confidential or prevent access to by reason of any Contract with
third parties; provided, however, that Sellers shall advise Buyer of the existence of such
Contracts at Closing. Following the Closing, Sellers shall be entitled to retain copies of all
books and records relating to the ownership and/or operation of their respective businesses (as
applicable) and at Buyer’s request after the Closing, to the extent such books and records have not
been disposed of, Sellers shall at Buyer’s sole cost and expense, provide Buyer with a copy of any
such books and records.

          (b) Buyer agrees to indemnify, defend and hold harmless Sellers, their Affiliates and their
Representatives from and against any and all Losses incurred by Sellers, their Affiliates, their
Representatives or any other Person arising out of the access rights under this

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Section 7.1, including any Claims by any of Buyer’s Representatives for any injuries
or Losses while present at the Channelview Facility, EVEN IN INSTANCES OF THE NEGLIGENCE OF
SELLERS, THEIR AFFILIATES OR THEIR REPRESENTATIVES, BUT NOT TO THE EXTENT CAUSED BY THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SELLERS, THEIR AFFILIATES OR THEIR REPRESENTATIVES.

          (c) Each Party agrees that, after the Closing Date, it will use its commercially reasonable
efforts to cooperate with and make available to the other Party and its Representatives for
reviewing and making copies or taking extracts, upon reasonable notice and during normal business
hours, books and records and information of or relating to the Acquired Assets which are necessary
or useful in connection with any investigation, dispute or proceeding or audit by a Governmental
Authority, or any claim by or against a third party involving the Acquired Assets (other than in
connection with disputes between the Parties); provided that no such Party shall be required to
make available any information, books or records, the disclosure of which would cause a waiver of
any applicable privilege or breach of an obligation of confidentiality to a third-party and either
party may make access to such information, books and records conditioned upon execution and
delivery of a confidentiality agreement reasonably satisfactory to the party requesting disclosure.
Further, after the Closing, Buyer shall grant to Sellers or their Representatives the access and
right to make copies or take extracts described in the preceding sentence for such other purpose as
may be reasonably requested by either Seller. The Party requesting any such books and records,
information or cooperation shall bear all of the out-of-pocket costs and expenses of the other
Party reasonably incurred in connection therewith (including out-of-pocket expenses to third
parties incurred by any Party).

     7.2. Conduct of Business Pending the Closing.

          (a) Except as otherwise contemplated by this Agreement or set forth in Schedule 7.2,
during the Interim Period, Sellers will, to the extent within their reasonable control in light of
the commencement of the Chapter 11 Cases:

     (i) use their commercially reasonable efforts to operate and maintain the Channelview
Facility and the Business in the ordinary course of business consistent with past practices
and in accordance with Prudent Industry Practice;

     (ii) use their commercially reasonable efforts to (A) preserve its present business
operations, organization (including management) and goodwill with respect to the Channelview
Facility and (B) preserve its present relationship with Persons having business dealings
with respect to the Channelview Facility;

     (iii) provide to Buyer copies of invoices paid or to be paid during or attributable to
the Interim Period; and

     (iv) provide to Buyer copies of the monthly operations reports delivered to Lenders.

          (b) Except as otherwise contemplated by this Agreement, as set forth in Schedule 7.2,
as required by any Material Contract or material Permit of either Seller, or as consented to by
Buyer, which consent shall not be unreasonably withheld, conditioned or

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delayed, during the Interim Period, each Seller (as applicable) will, to the extent within its
reasonable control (and as applicable in light of the Chapter 11 Cases) with respect to the
Business, the Channelview Facility or the other Acquired Assets, not:

     (i) other than any Permitted Exceptions, permit or allow any Lien securing indebtedness
for borrowed money against any of the Acquired Assets;

     (ii) except in the ordinary course of business consistent with past practice,
terminate, amend or renegotiate in any material respect or grant a waiver of any material
term of, or give any material consent with respect to, any Material Contract which is an
Assigned Contract or Permit, or enter into a Contract after the Execution Date that would be
a Material Contract if entered into prior to the Execution Date (other than Contracts that
will be fully performed prior to Closing or renewals of Contracts in place on the Execution
Date);

     (iii) other than accounts payable incurred in the ordinary course of business
consistent with past practices or otherwise incurred pursuant to the Material Contracts (or
Contracts entered into in accordance with clause (ii) above, after the Execution Date that
would be Material Contracts if entered into prior to the Execution Date), incur, create,
assume or otherwise become liable for indebtedness for borrowed money or issue any debt
securities or assume or guarantee the obligations of any other Person unless in any such
case paid in full and discharged at or before the Closing;

     (iv) fail to maintain their limited partnership or limited liability company existence
or merge or consolidate with any other Person or acquire all or substantially all of the
assets of any other Person;

     (v) issue or sell any membership interests, partnership interests or securities or
rights convertible into membership interests, partnership interests or securities;

     (vi) liquidate, dissolve, recapitalize, reorganize or otherwise wind up its business or
operations if any such action would impact the transactions contemplated hereby;

     (vii) except in the ordinary course of business, sell, assign, license, transfer,
convey, lease or otherwise dispose of any assets with a value in excess of $500,000;

     (viii) make or change any material election with respect to Taxes;

     (ix) make any material change in its accounting principles, methods or policies, except
as otherwise required by GAAP or applicable Law;

     (x) make any loans or purchase any securities of any Person, except for short-term
investments or cash equivalents made in the ordinary course of business consistent with past
practices;

     (xi) cancel, terminate or allow any material property or liability insurance policy to
lapse;

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     (xii) cancel any debts, discount any receivables or waive any claims in excess of
$500,000;

     (xiii) amend or modify its Charter Documents if such amendment or modification would
affect such Seller’s ability to perform its respective obligations hereunder or under the
documents contemplated hereby; or

     (xiv) agree or commit to do any of the foregoing.

     Notwithstanding the foregoing, each Seller may take commercially reasonable actions in
accordance with Prudent Industry Practice with respect to emergency situations and to comply
with applicable Law so long as such Seller shall, and with respect to Channelview LP, to the
extent within its reasonable control in light of the commencement of the Chapter 11 Cases,
promptly (but no later than two (2) Business Days after the taking of any such action)
inform Buyer of such actions.

     For purposes of clarification, it is understood and agreed that Capital Expenditures
made by Sellers for the items and in the amounts set forth in the budget attached hereto as
Exhibit F shall be deemed to have been commercially reasonable and made by Sellers to
operate and maintain the Channelview Facility and the Business in the ordinary course of
business.

     7.3. Use of Certain Names. Within 30 days following the Closing, Buyer shall cease
using the Reliant Marks, including eliminating the Reliant Marks from all Acquired Assets and
disposing of any unused stationery and literature including the Reliant Marks, and thereafter,
Buyer shall not, and shall cause the Channelview Facility not to, use the Reliant Marks or any
logos, trademarks, trade names, patents or other Intellectual Property rights belonging to Sellers
or any of their Affiliates, or which Sellers or any of their Affiliates have the right to use, and
Buyer acknowledges that it, its Affiliates and the Channelview Facility have no rights whatsoever
to use such Intellectual Property. Sellers hereby agree not to object to Buyer’s use of any
Reliant Marks in connection with the operation of the Channelview Facility during the
aforementioned thirty (30) day period.

     Without limiting the foregoing, within 30 days after the Closing Date, Buyer shall provide
evidence to Sellers, in a format that is reasonably acceptable to Sellers, that Buyer has provided
notice to all applicable Governmental Authorities and all counterparties to the Assigned Contracts
regarding the sale of the Acquired Assets to Buyer and the new addresses for notice purposes.

     7.4. Support Obligations.

          (a) Prior to Closing, Buyer shall use commercially reasonable efforts to effect the full and
unconditional release, effective as of the Closing, of the Sellers and their Affiliates from any
credit support obligations provided by Sellers or such Affiliates with respect to the Acquired
Assets or the Business, which are specifically listed on Schedule 7.4(a) at the time
required under such schedule (collectively, the “Support Obligations”), including by offering
within a reasonable time in advance of such release replacement bonds, guaranties, letters of
credit, cash collateral and/or escrow arrangements, as needed, to effect the replacement of such

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Support Obligations, in accordance with the applicable requirements of such Support
Obligations. Sellers shall reasonably cooperate with Buyer in such effort.

          (b) If Buyer is not successful, following the use of commercially reasonable efforts, in
obtaining the complete and unconditional release of Sellers and their Affiliates from the LTMA
Support Obligations as of Closing, then Sellers shall have the right to waive the condition to
Closing set forth in Section 9.3(a); and

     (i) from and after the Closing, Buyer shall continue to use commercially reasonable
efforts to obtain promptly the full and unconditional release of Sellers and their
Affiliates from the LTMA Support Obligations;

     (ii) Buyer shall indemnify Sellers (as applicable) and their Affiliates for any
liabilities, losses, costs or expenses incurred by Sellers or their Affiliates in connection
with the LTMA Support Obligations arising or accruing after the Closing (excluding any such
liabilities, losses, costs or expenses resulting from any breach of the LTMA Support
Obligations) by Sellers and their Affiliates;

     (iii) Buyer shall not, and shall cause its Affiliates not to, effect any amendments or
modifications or any other changes to the contracts or obligations to which any of the LTMA
Support Obligations relate, or to otherwise take any action that in either case would
reasonably be expected to increase, extend or accelerate the liability of either Seller or
their Affiliates under the LTMA Support Obligations, without such Seller’s prior written
consent; and

     (iv) Buyer shall deliver to Sellers at the Closing and maintain at all times thereafter
until the full and unconditional release of the LTMA Support Obligations in accordance with
this Section 7.4, at Sellers’ election, either (A) an irrevocable, standby letter of
credit in the amount of the maximum amount of exposure under the LTMA Support Obligations,
in form and substance and from an issuing bank reasonably satisfactory to Sellers or (B) a
guaranty of the Buyer’s obligations hereunder with respect to the LTMA Support Obligations
from a Person with a Credit Rating of Investment Grade, which guarantee shall be in form and
substance reasonably satisfactory to Sellers.

     7.5. Termination of Certain Services, Contracts. Except as otherwise provided in the
Administrative Services Transition Services Agreement and for purposes of clarity, Buyer shall be
responsible for providing all administrative, operating and energy management services, including
tax, legal, insurance, financial reporting, operations and maintenance services, technical support
and banking services for the Acquired Assets from and after the Closing, and any and all
arrangements under which such services are provided by Reliant Energy or an Affiliate shall not be
assigned to Buyer and/or shall be terminated, as applicable, including serving as a QSE or a
“Retail Electric Provider” with respect to the Channelview Facility.

     7.6. Insurance. Sellers shall be solely responsible for providing insurance to the
Channelview Facility and the Business for periods prior to the Closing. Buyer shall be solely
responsible for providing insurance to the Channelview Facility and the Business for all periods
after the Closing. Buyer acknowledges that no insurance coverage or policy maintained for the

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Channelview Facility or the Business will extend beyond the Closing for the benefit of Buyer.
Buyer shall provide evidence of such independent coverage to Sellers as of Closing.
Notwithstanding any provision hereof to the contrary, if, before the Closing, all or any material
portion of the Acquired Assets is (a) condemned or taken by eminent domain or is the subject of a
pending or threatened condemnation or taking which has not been consummated, or (b) materially
damaged or destroyed by fire or other casualty, Sellers shall notify Buyer promptly in writing of
such fact, and (i) in the case of condemnation or taking, Sellers shall assign or pay, as the case
may be, any proceeds thereof to Buyer at the Closing and (ii) in the case of a fire or other
casualty, Sellers shall either restore such Acquired Asset to substantially the same condition as
before such casualty or assign the insurance proceeds therefrom to Buyer at Closing.

     7.7. Tax Matters.

          (a) Transfer Taxes. Notwithstanding anything in this Agreement to the contrary, all
Transfer Taxes shall be paid one-half by Buyer and one-half by Sellers. Buyer shall file all Tax
Returns required to be filed to report Transfer Taxes.

          (b) Responsibility for Pre-Closing Taxes. Sellers shall be responsible for all Taxes
relating to the Acquired Assets with respect to any period (or portion thereof) ending on or before
the Closing Date. Sellers shall pay, and shall indemnify Buyer, for any such Taxes. For this
purpose, in the case of any taxable period that includes (but does not end on) the Closing Date (a
“Straddle Period”), Taxes (including any applicable withholding obligations) other than income or
franchise Taxes will be allocated between the portion of the Straddle Period ending on the Closing
Date (“Pre-Closing Portion”) and the portion of the Straddle Period beginning on the day after the
Closing Date. The amount of such Taxes allocable to the Pre-Closing Portion will be determined on
the basis of a deemed closing of the books of Sellers as of the close of business on the Closing
Date; provided, that in the case of ad valorem Taxes and any other Tax that is a fixed amount for
the entire taxable period, the amount of each such Tax allocable to the Pre-Closing Portion will be
equal to the product of each such Tax multiplied by a fraction, the numerator of which is the
number of days in the Straddle Period from the commencement of such period through and including
the Closing Date, and the denominator of which is the number of days in the entire Straddle Period.
The amount of Taxes (other than income or franchise Taxes) for a Straddle Period not allocable to
the Pre-Closing Portion shall be allocable to the portion of the Straddle Period beginning the day
after the Closing Date.

          (c) Income and Franchise Taxes. Notwithstanding anything in this Agreement to the
contrary, each Seller shall be responsible for reporting for any income or franchise Taxes for
which it may be liable. Without limiting the foregoing, Sellers shall be responsible for reporting
and paying the Texas franchise Tax and any associated penalties and interest with respect to the
total revenues of Sellers attributable to the Business through and including the Closing Date.
Buyer shall be responsible for reporting and paying the Texas franchise Tax with respect to the
total revenues of the Acquired Assets after the Closing Date.

          (d) Texas Temporary Credits. Buyer (i) acknowledges and agrees that a purchaser of
the Acquired Assets will not be entitled to any Channelview Texas temporary credits; and (ii)
agrees that the Sellers shall have no obligation to the Buyer from and after the Closing, with
respect thereto.

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          (e) Cooperation. Buyer and Sellers shall cooperate fully as and to the extent
reasonably requested by either Party, in connection with the filing of Tax Returns relating to the
Acquired Assets and any audit, litigation or other proceeding (each a “Tax Proceeding”) with
respect to such Tax Returns. Such cooperation shall include, the retention and (upon request and
until the expiration of the applicable statute of limitations,) the provision of records and
information relating solely to the Acquired Assets which are reasonably relevant to any such Tax
Return or Tax Proceeding and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. Promptly following
receipt of any notice of a Tax Proceeding relating to the Acquired Assets with respect to a taxable
period (or portion thereof) ending on or before the Closing Date, the appropriate Seller or Buyer,
as the case may be, shall inform the other Party of such Tax Proceeding. The Buyer and Sellers
further agree, upon reasonable request, to use their commercially reasonable efforts to obtain any
certificate or other document from any Taxing Authority or any other Person, or make any election,
as may be necessary to mitigate, reduce, or eliminate any Tax that could be imposed (including, but
not limited to, with respect to the transactions contemplated hereby).

     7.8. Confidentiality.

          (a) All nonpublic information provided to, or obtained by, Buyer or its Representatives in
connection with the transactions contemplated hereby shall be “Evaluation Material” for purposes of
the letter dated May 24, 2007 between Channelview LP and Kelson Energy, Inc., an Affiliate of Buyer
(the “Confidentiality Agreement”), the terms of which shall continue in force until the Closing;
provided, that Buyer may disclose such information as may be necessary in connection with seeking
Buyer Governmental Approvals.

          (b) Notwithstanding anything to the contrary set forth herein or in any other agreement to
which the Parties hereto are parties or by which they are bound, the obligations of confidentiality
contained herein and therein, as they relate to the Acquired Assets, shall not apply to the U.S.
federal tax structure or U.S. federal tax treatment of the Acquired Assets and the Parties hereto
(and any employee, Representative, or agent of any party hereto) may disclose to any and all
persons, without limitation of any kind, the U.S. federal tax structure and U.S. federal tax
treatment of the Acquired Assets. The preceding sentence is intended to cause the Acquired Assets
not to be treated as having been offered under conditions of confidentiality for purposes of
Section 1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations promulgated under
Section 6011 of the Internal Revenue Code of 1986, as amended, and shall be construed in a manner
consistent with such purpose. In addition, each Party hereto acknowledges that it has no
proprietary or exclusive rights to the tax structure of the Acquired Assets or any tax matter or
tax idea related to the Acquired Assets.

     7.9. Employee and Benefit Matters.

          (a) On or before the Closing, Channelview LP shall take, or shall cause to be taken, all
actions necessary to cause the Continuing Employees to cease to accrue any additional benefits on
or after the Closing Date under all Seller Affiliate Plans (except as set forth in the Transition
Services Agreement to the extent applicable). Prior to the Closing Date, Sellers shall provide
Buyer or its designee with census information for the Continuing Employees and all

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Seller Affiliate Plan documents as necessary for Buyer to construct and implement the benefit
plans required by this Section 7.9.

          (b) Within 45 days after the Execution Date, but effective as of the Closing Date, Buyer or
its designee shall offer employment (which shall be contingent on the occurrence of the Closing to
each individual who is (i) eligible for employment under applicable law, (ii) actively at work on
the Closing Date, and (iii) listed as “actively at work” on Schedule 7.9(b)). Sellers
shall not, and shall cause their affiliates to not, discourage such employees from accepting, or
otherwise interfere with, the offers made by Buyer or its designee, although such employees may, on
their own initiative, post for and be considered for open position with Sellers’ Affiliates. For
purposes of this Section 7.9, an employee is not “actively at work” if the employee applied
for long-term disability benefits or is receiving long-term disability benefits under any long-term
disability plan or program established or maintained by Sellers, Sellers’ Affiliates or any
Commonly Controlled Entity as of the Closing Date. All employees described in the preceding
sentence shall be listed as “not actively at work” on Schedule 7.9(b). The list of
employees identified as “not actively at work” on Schedule 7.9(b) shall be updated as of
the Closing Date. Each offer of employment shall be consistent with the provisions of this
Section 7.9 and shall remain open for a period of at least 10 days. For a period of at
least one year beginning on the Closing Date and subject to the Collective Bargaining Contract (for
covered Continuing Employees) and the remaining paragraphs of this Section 7.9 and such
individual’s continued employment with Buyer or its designee, Buyer or its designee shall cause
each such Continuing Employee to be provided with compensation (including annual incentive
compensation) on a substantially equivalent basis to the compensation provided to such employee by
the Operator immediately prior to the Closing and benefits (including severance benefits and
worker’s compensation benefits) on a basis substantially similar in the aggregate to those provided
to such employee by the Operator immediately prior to the Closing (but excluding participation in a
defined benefit plan, any right to employer contributions to a defined contribution plan,
participation in an employee stock purchase plan, and participation in any stock-based compensation
program, in each case, to the extent not offered to employees of Buyer or its designee).
Notwithstanding the foregoing sentence, Buyer shall not be required to provide post-retirement
medical benefits to any Continuing Employee except for (i) amounts required to be contributed on an
annual basis under the Collective Bargaining Contract to accounts of eligible Continuing Employees
established by Buyer or its designee to replicate amounts referred to as “Basic Credits”,
“Additional Credits” and “Interest” under the Reliant Energy FutureCare program as of the date
hereof (“FutureCare Program”), (ii) providing access to accounts under the FutureCare Program for
eligible Continuing Employees as required under the Collective Bargaining Contract, and (iii) as
required under part 6 of subtitle B of title I of ERISA. After Closing, subject to the Collective
Bargaining Contract (for covered Continuing Employees), the employment policies and practices of
Buyer or its designee shall apply to the Continuing Employees. Individuals listed on Schedule
7.9(b) who are not actively at work on the Closing Date will not become employees of Buyer or
its designee until such time as they are medically certified to return to work, provided such
release is within 6 months of the Closing Date. Offers of employment by Buyer or its designee to
these employees will be made consistent with the conditions outlined in this Section 7.9.

          (c) Buyer acknowledges and agrees that (i) certain employees employed at the Channelview
Facility are represented by the International Brotherhood of Electrical Workers and

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its Local Union No. 66 (the “Union”) pursuant to the terms of the Collective Bargaining
Contract, (ii) Buyer, or its designee, as applicable, will continue to recognize the Union as the
exclusive bargaining representative of the employees whose employment is covered by the Collective
Bargaining Contract, (iii) the Collective Bargaining Contract will continue to be effective until
it expires by its own terms or is renegotiated, and (iv) Buyer or its designee will assume and be
bound by the terms, conditions and provisions of the Collective Bargaining Contract. Buyer further
acknowledges that, subject to the terms of the Collective Bargaining Contract and applicable Law,
Buyer or its designee shall offer employment (which shall be contingent on the occurrence of the
Closing) to the employees covered by the Collective Bargaining Contract. The employment policies
and practices of Buyer or its designee shall apply to the Continuing Employees covered by the
Collective Bargaining Contract to the extent consistent with the Collective Bargaining Contract.
Nothing herein is intended to restrict or prohibit the ability of Buyer or its designee to
negotiate modifications of the Collective Bargaining Contract with the Union.

          (d) Buyer shall cause the employee benefit plans and programs maintained after the Closing by
Buyer or its designee to recognize each Continuing Employee’s years of service and level of
seniority prior to the Closing Date with the Operator (including service and seniority with any
other employer that was previously recognized by the Operator) for purposes of terms of employment
and eligibility, vesting and benefit determination (but not for benefit accrual under any defined
benefit plan) under such plans and programs. Buyer shall cause each employee welfare benefit plan
or program sponsored by Buyer or its designee in which a Continuing Employee may be eligible to
participate on or after the Closing Date to waive any preexisting condition exclusion with respect
to participation and coverage requirements applicable to such Continuing Employee, to the extent
that a Continuing Employee provides Buyer with a certificate of creditable coverage as defined in
Section 701(c)(1) of ERISA.

          (e) To the extent consistent with the Collective Bargaining Contract, as applicable, Buyer
shall cause, or as applicable shall cause its designee to cause, each Continuing Employee and his
or her eligible dependents (including all such Continuing Employee’s dependents covered immediately
prior to the Closing Date by a Seller Affiliate Plan that is a group health plan) to be offered
coverage under a group health plan maintained by Buyer or its designee that (i) provides medical
and dental benefits to the Continuing Employee and such eligible dependents effective immediately
upon the Closing Date and (ii) credits such Continuing Employee, for the year during which such
coverage under such group health plan begins, with any deductibles and co-payments already incurred
during such year under a Seller Affiliate Plan that is a group health plan.

          (f) Buyer expressly agrees that it assumes all obligations to provide any required notice
under the WARN Act, or other applicable Laws, and to pay all severance payments, damages for
wrongful dismissal and related costs, with respect to the termination of any employee of the
Operator employed at the Channelview Facility that occurs on or after the Closing Date. Sellers,
as applicable, shall remain liable for any such liabilities that may arise as a result of any
action taken by Seller prior to the Closing Date.

          (g) Sellers (as applicable) shall cause each Continuing Employee to be permitted to elect on
the Closing Date (or as soon thereafter as reasonably practicable) a direct

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rollover of his/her account balance under a Seller Affiliate Savings Plan to a defined
contribution plan designated by Buyer (the “Buyer Savings Plan”), and Sellers shall cause the
applicable Seller Affiliate Savings Plan to deliver to the Buyer Savings Plan as soon as reasonably
practicable after such date the promissory notes and other loan documentation, if any, of each
Continuing Employee who has elected such a direct rollover in accordance with the procedures as
determined by Sellers and Buyer. Buyer and Sellers shall cooperate and take such actions, if any,
as are necessary to permit the continuation of loan repayments by Continuing Employees to the
Seller Affiliate Savings Plans by payroll deductions during the 90-day period beginning on the
Closing Date; provided, however, that if a Continuing Employee makes a direct rollover election as
described in this Section 7.9(g) within such 90-day period, then the applicable Seller
Affiliate Savings Plan shall continue to accept loan repayments from such Continuing Employee by
payroll deduction until the date of such direct rollover. Buyer shall cause the Buyer Savings Plan
to accept the direct rollover of electing Continuing Employees’ benefits in cash and, if
applicable, promissory notes that are not accelerated from the Seller Affiliate Savings Plans.
Sellers represent, warrant and agree with respect to the Seller Affiliate Savings Plans, and Buyer
represents warrants and agrees with respect to the Buyer Savings Plan, that, as of each date of a
rollover described in this Section 7.9(g), such plan (i) is intended to satisfy the
requirements of Sections 401(a), (k), and (m) of the Code and (ii) will have received, or a pending
application will have been timely filed for, a favorable determination letter from the IRS
regarding such qualified status and covering amendments required to have been adopted prior to the
expiration of the applicable remedial amendment period. Except as required by Law or as required
by the Collective Bargaining Contract, Buyer or its designee shall not be required to provide any
particular benefit under the Buyer Savings Plan. Except as required by Law or as required by the
Collective Bargaining Contract, Buyer or its designee shall not be required to provide any
particular benefit under the Buyer Savings Plan.

          (h) Claims of Continuing Employees and their eligible beneficiaries and dependents for
medical, dental, prescription drug, life insurance, and/or other welfare benefits (“Welfare
Benefits”) (other than long-term disability benefits) that are incurred before the Closing Date
shall be the sole responsibility of the Seller Affiliate Plans. Claims of Continuing Employees and
their eligible beneficiaries and dependents for Welfare Benefits (other than long-term disability
benefits) that are incurred on or after the Closing Date shall be the sole responsibility of Buyer
or its designee. Claims for workers compensation and unemployment compensation arising prior to
Closing shall be the sole responsibility of Sellers and their Affiliates. For purposes of the
preceding provisions of this paragraph, a medical/dental claim shall be considered incurred on the
date when the medical/dental services are rendered or medical/dental supplies are provided, and not
when the condition arose or when the course of treatment began. Claims for long-term disability
benefits that are made under a Seller Affiliate Plan prior to the Closing Date, or that relate to
any condition of a Continuing Employee existing as of the Closing Date as a result of which such
Continuing Employee is not actively at work on the Closing Date, shall be the sole responsibility
of the Seller Affiliate Plan. Except as provided in the preceding sentence, claims of Continuing
Employees and their eligible beneficiaries and dependents for long-term disability benefits that
are incurred from and after the Closing Date shall be the sole responsibility of Buyer or its
designee. For purposes of the preceding provisions of this paragraph, claims for long-term
disability benefits based on an injury or illness occurring prior to the Closing Date will be
deemed to have been incurred prior to the Closing Date. In the case of any claim for benefits
other than a medical/dental claim or a long-term

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disability claim, a claim will be deemed to have been incurred upon the occurrence of the
event giving rise to such claim.

          (i) Except to the extent required by applicable Law, Sellers shall not pay Continuing
Employees their accrued and unused vacation, and Buyer or its designee, as applicable, shall
provide, without duplication of benefits, all such Continuing Employees with vacation time rather
than cash in lieu of vacation time for all accrued and unused vacation through the Closing Date.

          (j) If, within the one-year period beginning on the Closing Date, (i) a Continuing Employee
voluntarily terminates his or her employment with Buyer or its designee within 30 days after the
date upon which he or she is notified that the principal place of his or her employment is changing
to a location that is 25 miles or more from the location of such employee’s principal place of
employment immediately prior to the Closing Date, or (ii) the employment of a Continuing Employee
is terminated by Buyer or its designee for a reason other than cause (as that term is defined in
the Severance Plan as of the Closing Date, but based on the terms of the plan as in effect on the
Execution Date), then, in any such case, Buyer or its designee, as applicable, shall provide such
Continuing Employee with severance benefits at least equal to the severance benefits which such
Continuing Employee would have received under the Severance Plan had the employment of such
Continuing Employee been terminated under circumstances entitling him or her to benefits under such
plan. Such severance benefits shall be determined based on the terms of the Severance Plan in
effect on the Execution Date, but Buyer or its designee shall take into account such Continuing
Employee’s aggregate service with Buyer or its designee and his or her pre-Closing Date service
recognized pursuant to Section 7.9(d). Notwithstanding the foregoing, the provisions of
this Section 7.9(k) shall not apply to any Continuing Employee who is covered by the
Collective Bargaining Contract.

          (k) No assets or liabilities of any Seller Affiliate Plan shall be transferred to, or assumed
by, Buyer or its designee.

     7.10. Public Announcements. Sellers and Buyer will consult with each other before
issuing, and provide each other a reasonable opportunity to review and make reasonable comment
upon, any press release or making any public statement with respect to this Agreement and the
transactions contemplated hereby and, except as may be required by applicable Law or any listing
agreement with the NYSE, will not issue any such press release or make any such public statement
prior to such consultation; provided, that each of the Parties may issue a press release or make
any public statement in response to specific questions by the press, analysts, investors or those
attending industry conferences or financial analyst conference calls; provided further, that each
Party may make disclosures to Persons bound by a confidentiality obligation to the disclosing Party
that covers such disclosed information.

     7.11. Expenses and Fees. Except as expressly provided otherwise herein, all costs and
expenses incurred in connection with this Agreement and the transactions contemplated hereby shall
be paid by the Party incurring such expenses.

     7.12. Regulatory and Other Approvals. During the Interim Period:

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          (a) The Parties will, in order to consummate the transactions contemplated hereby, (i) take
all commercially reasonable steps necessary, and proceed diligently and in good faith and use all
commercially reasonable efforts, as promptly as practicable, to obtain or make, as applicable, all
necessary or appropriate waivers, consents, approvals and authorizations of, filings with and
notices to all third parties and Governmental Authorities required in order to consummate the
transactions contemplated by this Agreement and (ii) provide such other information and
communications to such Governmental Authorities or other Persons as such Governmental Authorities
or other Persons may reasonably request in connection therewith.

          (b) The Parties will provide prompt notification to each other when any such waiver, consent,
approval, authorization, filing or notice referred to in Section 7.13(a) is obtained,
taken, made, given or denied, as applicable, and will advise each other of any material
communications with any Governmental Authority or other Person regarding any of the transactions
contemplated by this Agreement.

          (c) In furtherance of the foregoing covenants:

     (i) Each Party shall prepare, as soon as is practical following the execution of this
Agreement, all necessary filings in connection with the transactions contemplated by this
Agreement that may be required by FERC, the PUCT or other Governmental Authority or under
the HSR Act or any other federal, state or local Laws. Each Party shall submit such filings
as soon as practicable, but in no event later than ten (10) Business Days after the
execution hereof for filings with the FERC, and ten (10) Business Days after the execution
hereof for filings under the HSR Act. The Parties shall request expedited treatment of any
such filings, shall promptly furnish each other with copies of any notices, correspondence
or other written communication from the relevant Governmental Authority, shall promptly make
any appropriate or necessary subsequent or supplemental filings and shall cooperate in the
preparation of such filings as is reasonably necessary and appropriate (provided that HSR
Act filings and attachments need not be exchanged or preapproved by the other party and
provided that any exchange of information between Sellers and Buyer in connection with any
filings shall be done in a manner that complies with applicable antitrust laws). Buyer and
Sellers shall each pay 50% of the filing fees in connection with submissions by the Parties
pursuant to the HSR Act. Except as described in the immediately preceding sentence, each
Party shall bear its own costs incurred in connection with the filing.

     (ii) The Parties shall not, and shall cause their respective Affiliates not to, take
any action that could reasonably be expected to adversely affect the approval of any
Governmental Authority of any of the aforementioned filings. Without limiting the
foregoing, Buyer agrees that except as may be agreed in writing by Sellers or as may be
expressly permitted pursuant to this Agreement, it shall not, and shall not permit any of
its subsidiaries or Affiliates to, acquire, develop or construct any electric generation or
transmission facility, enter into any Contract with respect to any electric generation or
transmission facility, or otherwise obtain control over any electric generation or
transmission facility, located within the State of Texas or the control areas operated by
ERCOT or take any action with any Governmental Authority relating to the foregoing, or
agree, in writing or otherwise, to do any of the foregoing, in each case which could

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reasonably be expected to materially delay the consummation of the transactions
contemplated hereby or result in the failure to satisfy any condition to consummation of the
transactions contemplated hereby.

     (iii) Buyer shall cooperate in good faith with the Governmental Authorities and
undertake promptly any and all action required to complete lawfully the transactions
contemplated by this Agreement, including proffering and consenting to a governmental order
providing for the sale or other disposition, or the holding separate, of particular Acquired
Assets or of any other assets or lines of business of Buyer or its Affiliates in order to
remedy any competition concerns that any Governmental Authority may have. The entry by any
Governmental Authority in any legal proceeding of a governmental order permitting the
consummation of the transactions contemplated hereby but requiring any of the assets or
lines of business of Buyer or its Affiliates to be held separate or sold or disposed of
thereafter (including the Acquired Assets) shall not be deemed a failure to satisfy any
condition to Closing.

          (d) Each Party agrees that, after the Closing Date, it will cooperate in good faith with the
other Parties to complete in a timely manner, all post-closing filings and notices required by FERC
or any other Governmental Authorities.

     7.13. Further Assurances. Subject to the terms and conditions of this Agreement, at
any time or from time to time after the Closing, at any Party’s request and without further
consideration, the other Party shall execute and deliver to such Party such other instruments of
sale, transfer, conveyance, assignment and confirmation, provide such materials and information and
take such other actions and execute and deliver such other documents as such Party may reasonably
request in order to consummate the transactions contemplated by this Agreement.

     7.14. Schedule Update. From time to time, but no less than 15 days prior to the
Closing Date, either Seller may, at its option, supplement or amend and deliver updates to the
Disclosure Schedules (each a “Schedule Update”) that are necessary to complete or correct any
information in such Schedules or in any representation or warranty of such Seller provided,
however, that no such updates shall be permitted with respect to Schedules 2.1(a),
(b), (c), (g), (h), Schedule 2.2(p), Schedule 7.2,
Schedule 7.4(a), and Schedule 8.1(d). If Buyer has the right to terminate the
Agreement pursuant to Section 10.1(c) as a result of such Schedule Update and does not
exercise such right by the tenth day after delivery of the Schedule Update then such Schedule
Update shall be deemed to have amended the appropriate Schedule or Schedules as of the date of this
Agreement, to have qualified the representations and warranties contained in Article 5 as
of the date of this Agreement and to have cured any misrepresentation or breach of warranty that
otherwise might have existed hereunder by reason of the existence of such matter.

     7.15. PUCT Matters. Buyer understands and acknowledges that RESC is certificated by
the PUCT to provide retail electric service to Channelview LP and Equistar under Certificate No.
10044. Buyer acknowledges and accepts the obligation to take all steps required prior to Closing
to (i) apply for its own PUCT certification as a “Retail Electric Provider” and (ii) engage a QSE
to act on Buyer’s behalf with regard to sales of electricity at retail.

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     7.16. Equistar Consents. Buyer will act in good faith and cooperate with Sellers in
obtaining any and all consents of Equistar required for the transaction contemplated by this
Agreement.

     7.17. Boiler Feedwater Pump. Provided such installation is not completed prior to
Closing, and pursuant to paragraph 4.B of the Settlement Agreement (as in effect on the date
hereof), Buyer agrees to complete the installation of the Pump (as defined in the Settlement
Agreement) in accordance with the terms and conditions of the Settlement Agreement. Sellers shall
pay to Buyer amounts incurred by Buyer, to the extent such amounts are reimbursable by Equistar,
and at the time such amounts would otherwise be due from Equistar in accordance with Section 4.B of
the Settlement Agreement, for its share of the work performed after the Closing Date in
connection with the installation of the Pump as required by the Settlement Agreement, subject to
receipt by Sellers of an appropriate invoice and supporting documentation (the “Pump Payments”).

     7.18. Fulfillment of Conditions. Subject to the terms and conditions herein, each of
the Parties hereto shall use its commercially reasonable efforts to consummate and make effective,
as soon as reasonably practicable, the transactions contemplated hereby, including the satisfaction
of all conditions thereto set forth herein, to the extent it can reasonably do so.

     7.19. Cure of Defaults. At or prior to Closing, each Seller shall (i) cure any and
all defaults under the Assigned Contracts required to be cured under the Bankruptcy Code in order
to assign such Contract to Buyer pursuant to Section 365 thereof, and (ii) pay all Cure Costs that
are required to be paid as a condition to the assumption and assignment of such Assigned Contracts
under section 365 of the Bankruptcy Code. At Closing, Sellers shall establish a reserve of cash in
a bank account (the “Cure Cost Reserve Amount”) in an amount sufficient to satisfy any disputed
Cure Costs and any Cure Costs not settled or paid (whether or not then due and payable) prior to
Closing. After Closing, Sellers shall promptly resolve, settle and/or pay from the Cure Cost
Reserve Amount all remaining Cure Costs.

     7.20. 2007 Financial Statements. It is understood and agreed between Buyer and
Sellers that if the audit of the financial statements of Channelview LP for the period ended
December 31, 2007 (the “2007 Financial Statements”) is completed on or prior to Closing, a true,
correct and complete copy of the audited 2007 Financial Statements shall be promptly provided to
Buyer. If the audit of the 2007 Financial Statements is not completed prior to Closing (i.e., the
auditors have not completed their review and approval thereof), Sellers shall provide at Closing
(and, to the extent necessary, at any time thereafter that further information is reasonably
requested by Buyer, provided that such information has to such date been retained by Sellers or
their Affiliates) to Buyer the current form of the 2007 Financial Statements that are under review
by the auditors, contact information for such auditors, all correspondence to and from such
auditors relating to the 2007 Financial Statements which does not contain confidential information
about the Sellers’ Affiliates, and any other relevant documentation and/or materials in Sellers’
possession or control that is reasonably requested by Buyer in order for the auditors to complete
the audit of the 2007 Financial Statements. Buyer, acknowledges that Sellers’ auditors are under
no obligation to, and may opt not to, complete an audit of the 2007 Financial Statements.

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ARTICLE 8

BANKRUPTCY PROCEDURES

     8.1. Bankruptcy Actions.

          (a) The approval of this Agreement by the Bankruptcy Court is required for the Agreement to be
binding and enforceable against the Sellers.

          (b) Not later than two (2) days after the date hereof, Channelview LP shall file with the
Bankruptcy Court and provide sufficient notice to all parties entitled to notice under applicable
provisions of the Bankruptcy Code and Rules, including all Persons who have asserted liens,
encumbrances or other interests in the Acquired Assets, counsel to any official committee appointed
in the Chapter 11 Cases, the United States trustee, all creditors of any debtor in the Chapter 11
Cases and all parties to the Assigned Contracts, in form and substance reasonably satisfactory to
Buyer, of the motion of the Sellers seeking entry of the Sale Order (the “Sale Motion”). In
addition, notice of the Sale Motion and the proposed entry of the Sale Order shall be given by
Sellers (at Sellers’ expense) by publication of a notice, in form and substance reasonably
satisfactory to Buyer, in each publication listed on Schedule 8.1(b). Channelview LP shall
seek a hearing on the Sale Motion to occur as soon as possible in accordance with the Local Rules
of the Bankruptcy Court. In the event that an auction of the Acquired Assets is required by the
Bankruptcy Court, the Sellers shall use commercially reasonable efforts to have the Sale Order
entered on or before sixty (60) days after the date hereof. In the event that no auction of the
Acquired Assets is required by the Bankruptcy Court, the Sellers shall use commercially reasonable
efforts to have the Sale Order entered on or before thirty (30) days after the date hereof. Each
Seller shall promptly provide Buyer with drafts of all documents, motions, orders, filings or
pleadings, that such Seller proposes to file with the Bankruptcy Court that relate to (i) this
Agreement or the transactions contemplated hereunder, (ii) entry of the Sale Order, (iii) the Sale
Motion or (iv) Buyer, and will provide Buyer with a reasonable opportunity to review such documents
in advance of their service and filing. Each Seller shall consult and cooperate with Buyer, and
consider in good faith the views of Buyer with respect to all such filings. Buyer covenants and
agrees that it shall cooperate with Channelview LP in connection with furnishing information or
documents to Channelview LP to satisfy the requirements of adequate assurance of future performance
under section 365(f)(2)(B) of the Bankruptcy Code.

          (c) Seller shall promptly make any filings, take all actions, and use all reasonable efforts
to obtain any and all other approvals and orders of the Bankruptcy Court necessary or appropriate
for consummation of the transactions contemplated hereby, subject to Seller’s obligations to comply
with any order of the Bankruptcy Court and other applicable Laws. Buyer will, if requested by
Sellers, reasonably cooperate with the Sellers with respect to the Chapter 11 Cases in order to
consummate the transactions contemplated hereunder, and will not take any action opposing or
attempting to delay or hinder the transactions contemplated hereby in the Chapter 11 Cases.

          (d) Notwithstanding anything in this Agreement to the contrary, if the Bankruptcy Court
declines to enter the Sale Order on the basis that an auction for the Acquired Assets should first
take place (a “Court Auction Determination”), Sellers shall, within 48 hours

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of such determination, file a bidding procedures motion with the Bankruptcy Court, in form and
substance reasonably satisfactory to Buyer, seeking the entry of an order approving the bid
protections and procedures set forth on Schedule 8.1(d) (“Bid Procedures Order”).

ARTICLE 9

CONDITIONS TO THE CLOSING

     9.1. Conditions to the Obligations of Each Party. The obligations of the Parties to
proceed with the Closing are subject to the satisfaction on or prior to the Closing Date of all of
the following conditions, any one or more of which may be waived in writing (other than the
condition contained in Section 9.1(d), the satisfaction of which cannot be waived), in
whole or in part, as to a Party by such Party:

          (a) no judgment, injunction, order or decree of a court or other Governmental Authority of
competent jurisdiction or other condition arising under Law shall be in effect which has the effect
of making the transactions contemplated by this Agreement illegal or otherwise restraining or
prohibiting the consummation of the transactions contemplated by this Agreement (each Party
agreeing to use its commercially reasonable efforts, including appeals to higher courts, to have
any judgment, injunction, order or decree lifted);

          (b) (i) any waiting period applicable to consummation of the transactions contemplated by this
Agreement under the HSR Act shall have expired or been terminated, and (ii) all Sellers’
Governmental Approvals designated with an asterisk on Schedule 5.2(c) and Buyer’s
Governmental Approvals designated with an asterisk on Schedule 6.3(c) shall have been
filed, made or obtained, as the case may be;

          (c) Subject to Section 2.5, the consents, waivers and approvals listed on Schedule
9.1(c) shall have been obtained (with no conditions that would reasonably be expected to
materially and adversely impact the rights and obligations under the applicable Assigned Contract
for which such consent, waiver or approval is provided) either from the applicable third party or
through entry of the Sale Order; and

          (d) the Bankruptcy Court shall have entered the Sale Order, and the Sale Order shall not have
been stayed, and no Adverse Ruling shall be in effect.

     9.2. Conditions to the Obligations of Buyer. The obligation of Buyer to proceed with
the Closing is subject to the satisfaction on or prior to the Closing Date of the following further
conditions, any one or more of which may be waived, in whole or in part, by Buyer:

          (a) Sellers shall have performed their obligations hereunder required to be performed by such
Seller at or prior to the Closing Date, unless the failure to perform would not reasonably be
expected to have a Material Adverse Effect (except for Channelview LP’s obligations contained in
Section 3.5, which, assuming the Settlement Agreement is then still in effect, shall have
been performed in full through an application of a portion of the payment of the Purchase Price in
accordance with Section 3.5);

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          (b) the representations and warranties of each Seller contained in this Agreement (without
regard to “materiality”, “material adverse effect”, Material Adverse Effect or similar qualifiers)
shall be true and correct as of the Closing Date (except to the extent such representations and
warranties expressly relate to an earlier date, in which case as of such earlier date), except for
failures to be true and correct that would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect;

          (c) Buyer shall have received certificates signed on behalf of each Seller by an executive
officer of each Seller indicating that the conditions provided in Section 9.2(a) and
Section 9.2(b) have been satisfied;

          (d) Sellers shall have complied with their obligations under Section 7.19 in all
material respects;

          (e) Sellers shall have delivered each of the items required by Section 4.2;

          (f) Buyer shall have received a letter from URS consenting to Buyer’s reliance on the Phase I
Environmental Site Assessment, dated as of November 2007, as updated December 20, 2007, in form and
substance reasonably acceptable to Buyer; and

          (g) since the Execution Date, no Material Adverse Effect shall have occurred and be
continuing.

     9.3. Conditions to the Obligations of Sellers. The obligation of Sellers to proceed
with the Closing is subject to the satisfaction on or prior to the Closing Date of the following
further conditions, any one or more of which may be waived, in whole or in part, by Sellers:

          (a) Buyer shall have performed in all material respects all of its obligations hereunder
required to be performed by it at or prior to the Closing Date;

          (b) the representations and warranties of Buyer contained in this Agreement (without regard to
“materiality”, “material adverse effect”, or similar qualifiers) shall be true and correct as of
the Closing Date (except to the extent such representations and warranties expressly relate to an
earlier date, in which case as of such earlier date), except for failures to be true and correct
that would not reasonably be expected, individually or in the aggregate, to have a material adverse
effect on Buyer’s ability to perform its obligations hereunder;

          (c) Sellers shall have received a certificate signed on behalf of Buyer by an executive
officer of Buyer indicating that the conditions provided in Section 9.3(a) and Section
9.3(b) have been satisfied;

          (d) Sellers shall have received the complete and unconditional release of Sellers and their
Affiliates from the LTMA Support Obligations (other than with respect to amounts owing prior to
Closing) and unless Buyer has elected Gas Services under the Fuel and Power Transition Services
Agreement, either (i) the full execution of the RES Assignment and Assumption Agreement, or (ii) or
if required by Section 2.5, the Fuel Supply Agreement shall have been executed by Buyer and
Buyer’s Energy Manager; and

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          (e) Buyer shall have delivered each of the items required by Section 4.3.

ARTICLE 10

TERMINATION

     10.1. Termination. This Agreement may be terminated and the consummation of the
transactions contemplated hereby may be abandoned at any time prior to the Closing only under one
of the following circumstances:

          (a) by mutual written consent of Sellers and Buyer; or

          (b) by either Sellers or Buyer:

     (i) if the Closing has not occurred on or before 6 months after the Execution Date
(such date, the “Termination Date”) provided, that the right to terminate this Agreement
pursuant to this Section 10.1(b)(i) shall not be available to any Party whose breach
of any provision of this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur by the Termination Date; or

     (ii) if any court of competent jurisdiction in the United States or other United States
Governmental Authority shall have issued a final order, decree or ruling or taken any other
final action restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement and such order, decree, ruling or other action
is or shall have become final and nonappealable;

          (c) by Buyer if there has been a material breach by either Seller of any representation,
warranty, covenant or agreement contained in this Agreement which (x) would result in a failure of
a closing condition set forth in Section 9.2(a) — (e) (which is not waived) and (y) cannot
be cured prior to the Termination Date; provided that Buyer is not then in breach in any material
respect of any representation, warranty, covenant or agreement contained herein; and

          (d) by either Seller (i) if Buyer has not made the Deposit on the date required to be made
pursuant to Section 3.2, or (ii) if there has been a material breach by Buyer of any
representation, warranty, covenant or agreement contained in this Agreement which (x) would result
in a failure of a closing condition set forth in Section 9.3(a) — (e) (which is not
waived) and (y) cannot be cured prior to the Termination Date; provided that Sellers are not then
in breach in any material respect of any representation, warranty, covenant or agreement contained
herein.

     The Party desiring to terminate this Agreement pursuant to Section 10.1 (other than
pursuant to Section 10.1(a)) shall give notice of such termination to the other Party.

     10.2. Effect of Termination. In the event of termination of this Agreement by either
Sellers or Buyer prior to the Closing pursuant to the provisions of Section 10.1, this
Agreement shall forthwith become void, and there shall be no liability or further obligation on the
part of Buyer or Sellers or their respective officers or directors (except pursuant to Section
7.1(b), Section 7.8, Section 7.11, Section 10.2, Section 10.3,
Article 11, Section 12.4 and Section 12.5,

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all of which shall survive the termination); provided, that nothing in this Section
10.2 shall relieve any Party from liability for any willful breach of this Agreement by such
Party prior to termination of this Agreement.

     10.3. Termination Fees.

          (a) If this Agreement is terminated pursuant to Section 10.1(d), then in lieu of all
other claims and remedies that might otherwise be available with respect thereto, including
elsewhere hereunder and notwithstanding any other provision of this Agreement, Buyer shall pay
immediately to Sellers as liquidated damages in connection with such termination, an amount in
immediately available funds equal $40,000,000, and Sellers shall have the right immediately to draw
on the Deposit to satisfy such payment obligation of Buyer.

          (b) The provision for payment of liquidated damages in this Section 10.3 has been
included because, in the event of a termination of this Agreement pursuant to Section
10.1(d), the actual damages to be incurred by Sellers can reasonably be expected to approximate
the amount of liquidated damages called for herein and because the actual amount of such damages
would be difficult if not impossible to measure accurately.

          (c) If this Agreement is terminated pursuant to Section 10.1(c), Sellers shall pay
(and shall be jointly and severally responsible for the payment thereof) to Buyer all of Buyer’s
reasonable third-party costs and expenses (including reasonable attorneys’ and accountants’ fees
and related expenses) incurred by Buyer in connection with the transactions contemplated by this
Agreement, including: (i) Buyer’s due diligence review with respect to the Acquired Assets
(including costs and expenses for third party consultants and related reports); (ii) the
negotiation of this Agreement, the exhibits attached hereto and the documents to be executed
pursuant hereto; and (iii) analysis of securities, Tax and other transaction related issues.
Provided, however, that in the event this Agreement is terminated pursuant to Section
10.1(c), Sellers shall only be responsible for Buyer’s third-party expenses to the extent such
expenses do not exceed $2,000,000; provided further that in the event this Agreement is terminated
pursuant to Section 10.1(c) as a result of a willful breach of this Agreement by Sellers,
Sellers shall pay immediately to Buyer as liquidated damages in connection with such termination,
$15,000,000 in immediately available funds. Any obligation of Sellers to pay damages hereunder
shall be an administrative expense under Section 507(a)(1) of the Bankruptcy Code and shall be
payable as specified herein and not be subject to any defense, counterclaim, offset, recoupment or
reduction of any kind whatsoever.

ARTICLE 11

INDEMNIFICATION

     11.1. Survival. All representations, warranties, covenants and agreements contained
herein, and the right to commence any Claim with respect thereto, shall terminate upon the Closing
Date, except that (a) the representations and warranties of Sellers and Buyer contained herein
shall survive until the first anniversary of the Closing Date, (b) the representations and
warranties contained in Section 5.10 shall survive until thirty (30) days after the
expiration of the applicable statute of limitations, and (c) the covenants and agreements of the
Parties contained

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herein that by their terms are to be performed after the Closing Date, shall survive and
continue in effect in accordance with their terms; provided, that in the event written notice of
any Claim for indemnification under Section 11.2(a)(i), Section 11.2(a)(ii),
Section 11.2(d)(i) or Section 11.2(d)(ii) shall have been given in accordance
herewith within the applicable survival period setting forth such Claim in reasonable detail
(including a reasonable specification of the legal and factual basis for such Claim and the Loss
incurred), the representations, warranties, covenants and agreements that are the subject of such
indemnification Claim shall survive with respect to that Claim until such time as the Claim is
fully and finally resolved.

     11.2. Indemnification.

          (a) Subject to the provisions of this Article 11, from and after the Closing, Sellers
shall jointly and severally indemnify, defend and hold the Buyer Indemnified Group harmless from
and against any and all Losses, whether arising out of contract, tort, strict liability, other Law
or otherwise, actually incurred by any of them to the extent arising out of or resulting from:

     (i) any breach as of the Closing Date of a representation or warranty made by either
Seller herein (including the related Schedules);

     (ii) any breach of any covenant or agreement of either Seller herein;

     (iii) the Excluded Liabilities; and

     (iv) any failure of Sellers to make the Pump Payments to Buyer in accordance with
Section 7.17.

          (b) Notwithstanding anything to the contrary in this Agreement, Sellers shall not be liable
for any Losses with respect to the matters set forth in Section 11.2(a) unless (x) a Claim
is timely asserted during the survival period specified in Section 11.1, (y) the Loss with
respect to the particular act, circumstance, development, event, fact, occurrence or omission
exceeds $500,000 (aggregating all Losses arising from substantially identical facts) and (z) the
aggregate of all Losses under Section 11.1(a) exceeds, on a cumulative basis, 2% of the
Final Purchase Price and then only to the extent of such excess. Notwithstanding anything to the
contrary in this Agreement, the aggregate liability of Sellers to the Buyer Indemnified Group
arising under or related to the matters set forth in this Agreement, whether based in contract,
tort, strict liability, other Law or otherwise, shall not exceed 15% of the Final Purchase Price,
provided that the foregoing limitations shall not apply to the Excluded Liabilities and the Pump
Payments.

          (c) In connection with Sellers’ obligations under this Section 11.2, upon Closing,
pursuant to Sections 4.2(j) and 4.3(e), Forty Million Dollars ($40,000,000) will be
transferred into the Indemnity Escrow Account (the “Indemnity Security”) to be held and disbursed
pursuant to the terms of the Escrow Agreement and this Agreement; provided, however, the Sellers
may at any time and in their sole discretion, withdraw the Indemnity Security so long as Reliant
Energy simultaneously provides Buyer with a guaranty of all of Sellers’ obligations under this
Section 11.2, in form and substance reasonably satisfactory to Buyer, such guaranty to
terminate one (1) year from the Closing Date. It is further agreed that at

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any time, beginning one (1) year from the Closing Date, if Sellers have not replaced the
Indemnity Security with a guaranty of Reliant Energy, Sellers may withdraw the entire amount of the
Indemnity Security and any accrued interest without providing any replacement security, provided,
however, if a claim has been made on the Indemnity Security, the amount remaining in the Indemnity
Escrow Account may not be less than the amount of such claim (if the amount of such claim is
indeterminate, the amount remaining in the Indemnity Escrow Account shall be the highest reasonable
estimate for such claim in the reasonable judgment of Buyer).

          (d) Subject to the provisions of this Article 11, from and after the Closing, Buyer
hereby agrees to indemnify, defend and hold the Seller Indemnified Group harmless from and against
any and all Losses, whether arising out of contract, tort, strict liability, other Law or
otherwise, actually incurred by any of them to the extent arising out of or resulting from:

     (i) any breach as of the Closing Date of a representation or warranty made by Buyer
herein;

     (ii) any breach of any covenant or agreement of Buyer herein; and

     (iii) the Assumed Liabilities.

          (e) THE PARTIES INTEND AND AGREE THAT THE INDEMNITY OBLIGATIONS SET FORTH IN THIS SECTION
11.2 ARE INTENDED TO AND SHALL EXTEND TO AND COVER ANY AND ALL LOSSES RESULTING FROM OR CAUSED
IN WHOLE OR IN PART BY ANY ACTIVE, PASSIVE, AFFIRMATIVE, SOLE, CONCURRENT OR OTHER NEGLIGENCE,
STRICT LIABILITY OR OTHER FAULT OF, REGARDLESS OF WHETHER SUCH LOSSES RESULT FROM OR ARE CAUSED IN
WHOLE OR IN PART BY ANY ALLEGED OR ACTUAL NEGLIGENCE OR OTHER FAULT OF, (I) ANY OF THE BUYER
INDEMNIFIED PARTIES WITH RESPECT TO SECTION 11.2(a), AND (II) ANY OF THE SELLER INDEMNIFIED
PARTIES WITH RESPECT TO SECTION 11.2(d); and shall be the sole and exclusive remedy of the
parties hereunder from and after the Closing.

          (f) Notwithstanding anything to the contrary contained in this Agreement, for purposes of
determining whether there has been a breach and the amount of any Losses that are the subject
matter of a claim for indemnification hereunder, each representation and warranty in this Agreement
and each certificate or document delivered pursuant to this Agreement shall be read without regard
and without giving effect to the term(s) “material” or “Material Adverse Effect”, or any derivation
thereof, in each instance where the effect of such term(s) would be to make such representation and
warranty less restrictive (as if such standard or qualification were deleted from such
representation and warranty).

          (g) The indemnification obligations set forth in this Section 11.2 are made
notwithstanding any investigation by or on behalf of Buyer or the result of any investigation and
notwithstanding the participation of Buyer in the Closing.

     11.3. Waiver of Other Representations.

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          (a) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IT IS THE EXPLICIT INTENT OF
EACH PARTY HERETO, AND THE PARTIES HEREBY AGREE, THAT NONE OF SELLERS OR ANY OF THEIR AFFILIATES OR
REPRESENTATIVES HAS MADE OR IS MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WRITTEN OR ORAL, INCLUDING ANY IMPLIED REPRESENTATION OR WARRANTY AS TO THE CONDITION,
MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE
ACQUIRED ASSETS, OR ANY PART THEREOF, EXCEPT THOSE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED
IN ARTICLE 5. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IT IS THE
EXPLICIT INTENT OF EACH PARTY HERETO, AND THE PARTIES HEREBY AGREE, THAT NEITHER BUYER NOR ITS
AFFILIATES OR REPRESENTATIVES HAS MADE OR IS MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING ANY IMPLIED REPRESENTATION OR WARRANTY, EXCEPT THOSE
EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE 6. IN PARTICULAR, AND WITHOUT
IN ANY WAY LIMITING THE FOREGOING, (I) NEITHER SELLER MAKES ANY REPRESENTATION OR WARRANTY
REGARDING ANY ENVIRONMENTAL MATTERS EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5.13, (II)
NEITHER SELLER MAKES ANY REPRESENTATION OR WARRANTY TO BUYER WITH RESPECT TO ANY FINANCIAL
PROJECTIONS OR FORECASTS RELATING TO THE ACQUIRED ASSETS, AND (III) NEITHER SELLER MAKES ANY
REPRESENTATION OR WARRANTY TO BUYER WITH RESPECT TO INFORMATION PROVIDED TO BUYER IN RESPONSE TO
QUESTIONS PRESENTED BY BUYER OR OTHER INFORMATION PROVIDED TO BUYER RELATING TO THE ACQUIRED
ASSETS; PROVIDED, THAT THIS SENTENCE SHALL NOT LIMIT THE EXPRESS REPRESENTATIONS AND WARRANTIES
CONTAINED IN ARTICLE 5.

          (b) EXCEPT FOR THOSE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE 5,
THE ACQUIRED ASSETS ARE BEING TRANSFERRED “AS IS, WHERE IS, WITH ALL FAULTS,” AND SELLERS EXPRESSLY
DISCLAIM ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE
CONDITION, VALUE OR QUALITY OF THE ACQUIRED ASSETS OR THE PROSPECTS (FINANCIAL OR OTHERWISE), RISKS
AND OTHER INCIDENTS OF THE ACQUIRED ASSETS.

          (c) BUYER ACKNOWLEDGES THAT IT HAS INVESTIGATED TO ITS SATISFACTION, THE CONDITION AND
SUITABILITY OF ALL ASPECTS OF THE ACQUIRED ASSETS AND ALL MATTERS AFFECTING THE VALUE OR
DESIRABILITY OF THE ACQUIRED ASSETS, INCLUDING, BUT NOT LIMITED TO, THE OPERATIONAL ASPECTS OF THE
CHANNELVIEW FACILITY, POTENTIAL ENVIRONMENTAL HAZARDS ARISING FROM THE PRESENCE ON OR ABOUT THE
PROPERTY OF HAZARDOUS SUBSTANCES, INCLUDING ASBESTOS, FORMALDEHYDE, RADON GAS, LEAD-BASED PAINT,
OTHER LEAD CONTAMINATION, FUEL OR CHEMICAL STORAGE TANKS, CAVERNS, PIPELINES, ELECTROMAGNETIC
FIELDS, PHOSPHO-GYPSUM OR POLYCHLORINATED BIPHENYLS. EXCEPT AS EXPRESSLY PROVIDED HEREIN,

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NEITHER THE SELLERS, NOR THEIR AFFILIATES OR REPRESENTATIVES MAKES OR HAS MADE ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WRITTEN OR ORAL, AS TO THE PHYSICAL
CONDITION OF THE ACQUIRED ASSETS, THE USES OF THE ACQUIRED ASSETS OR ANY LIMITATIONS THEREON, THE
INCOME TO BE DERIVED THEREFROM, THE COSTS OF OPERATION, COMPLIANCE WITH LAW, AND/OR ANY
REQUIREMENTS FOR ALTERATIONS OR IMPROVEMENTS TO COMPLY WITH LAW, INCLUDING ANY REPRESENTATIONS OR
WARRANTIES PERTAINING TO ZONING, ENVIRONMENTAL OR OTHER LAW; THE UTILITIES, PIPELINES OR OTHER
PHYSICAL EQUIPMENT AND FIXTURES ON THE REAL PROPERTY COMPRISING OR ASSOCIATED WITH THE ACQUIRED
ASSETS OR ANY OTHER ASPECT OF THE ECONOMIC OPERATIONS ON SUCH REAL PROPERTY; THE CONDITIONS OF THE
SOILS, WATER OR GROUNDWATER OF, OR IN THE VICINITY OF, SUCH REAL PROPERTY; THE PRESENCE OR ABSENCE
OF ELECTROMAGNETIC FIELDS, TOXIC MATERIALS OR HAZARDOUS SUBSTANCES ON OR UNDER SUCH REAL PROPERTY
OR IN THE VICINITY OF SUCH REAL PROPERTY; OR ANY OTHER MATTER BEARING ON THE USE, VALUE OR
CONDITION OF THE ACQUIRED ASSETS.

     11.4. Waiver of Remedies; Certain Limitations. Notwithstanding anything in this
Agreement to the contrary:

          (a) the Parties hereby agree that no Party shall have any liability, and no Party shall make
any Claim, for any Loss or other matter, under, relating to or arising out of this Agreement or any
other document, agreement, certificate or other matter delivered pursuant hereto, whether arising
out of contract, tort, strict liability, other Law or otherwise, except as expressly set forth in
Section 3.3, Section 7.1(b), Article 10 and this Article 11.

          (b) NO PARTY SHALL BE LIABLE FOR SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR
INDIRECT DAMAGES OR LOST PROFITS, WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY, OTHER LAW OR
OTHERWISE AND WHETHER OR NOT ARISING FROM THE OTHER PARTY’S SOLE, JOINT OR CONCURRENT NEGLIGENCE,
STRICT LIABILITY OR OTHER FAULT, EXCEPT SUCH DAMAGES THAT ARE PAYABLE TO A THIRD PARTY WITH RESPECT
TO A THIRD PARTY CLAIM FOR WHICH ANY PERSON IS SEEKING INDEMNIFICATION HEREUNDER;

          (c) in calculating any amount of Losses recoverable pursuant to Section 11.2(a) or
Section 11.2(d), the amount of such Losses shall appropriately take into account Tax
consequences and be reduced by (i) any insurance proceeds actually received relating to such Loss,
net of any related deductible and any expenses to obtain such proceeds, and (ii) any recoveries
from third parties pursuant to indemnification (or otherwise) with respect thereto, net of any
expenses incurred by the Indemnified Party in obtaining such third party payment. The Parties
agree to treat any indemnification payment pursuant to this Article 11 as an adjustment to
the Purchase Price for all Tax purposes unless otherwise required by applicable Law. The
Indemnified Party shall use its commercially reasonable efforts to seek insurance recoveries in
respect of Losses to be indemnified hereunder. In the event any insurance proceeds or other

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recoveries from third parties (described in clause (ii) of this Section 11.4(c)) are actually
realized (in each case net of expenses of such recoveries) by an Indemnified Party subsequent to
the receipt by such Indemnified Party of an indemnification payment hereunder in respect of the
claims to which such insurance proceedings or third party recoveries described in clause (ii) of
this Section 11.4(c) relate, appropriate refunds shall be made promptly to the Indemnifying Party
regarding the amount of such indemnification payment (net of reasonable attorney’s fees and other
expenses incurred in connection with such recoveries);

          (d) no Representative or Affiliate of either Seller shall have any personal liability to Buyer
or any other Person as a result of the breach of any representation, warranty, covenant, agreement
or obligation of such Seller in this Agreement and no Representative or Affiliate of Buyer shall
have any personal liability to Sellers or any other Person as a result of the breach of any
representation, warranty, covenant, agreement or obligation of Buyer in this Agreement;

          (e) no member of the Buyer Indemnified Group shall be entitled to indemnification under this
Article 11 if the facts and circumstances giving rise to such claim for indemnification
would result in a breach of Section 6.8 hereof;

          (f) each Party shall have a duty to use commercially reasonable efforts to mitigate any Loss
suffered by such Party in connection with this Agreement;

          (g) No Seller shall have any liability for any Losses that represent the cost of repairs,
replacements or improvements which enhance the value of the repaired, replaced or improved asset
above its value on the Closing Date or which represent the cost of repair or replacement exceeding
the reasonable cost of repair or replacement;

          (h) Buyer, on behalf of itself and its Affiliates (including RESC), hereby releases, waives
and discharges forever each Seller and its Affiliates from all present and future Claims and from
all Losses, present and future, that are or may be attributable to the matters described in
Section 11.3;

          (i) From and after Closing, Buyer, on behalf of itself and its Affiliates, agrees to release
and indemnify and hold harmless Sellers, their Affiliates and the managers, officers, directors and
employees of Channelview LP and RESC (acting in their capacity as such) from and against any Losses
for controlling member liability or breach of fiduciary duty or other duty relating to any
pre-Closing actions or failures to act (including negligence or gross negligence) in connection
with the Business prior to the Closing; provided that nothing in this Section 11.4(h) shall effect
Sellers’ obligations under Section 11.2(a)-(c). THE PARTIES INTEND AND AGREE THAT THE
INDEMNITY OBLIGATIONS SET FORTH IN THIS SECTION 11.4(i) ARE INTENDED TO AND SHALL EXTEND TO
AND COVER ANY AND ALL LOSSES RESULTING FROM OR CAUSED IN WHOLE OR IN PART BY ANY ACTIVE, PASSIVE,
AFFIRMATIVE, SOLE, CONCURRENT OR OTHER NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF, REGARDLESS
OF WHETHER SUCH LOSSES RESULT FROM OR ARE CAUSED IN WHOLE OR IN PART BY ANY ALLEGED OR ACTUAL
NEGLIGENCE OR OTHER FAULT OF ANY OF THE PERSONS TO BE INDEMNIFIED PURSUANT TO THIS SECTION
11.4(i);

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          (j) THE REMEDIES FOR ENVIRONMENTAL CLAIMS SET FORTH IN THIS AGREEMENT SHALL BE THE BUYER’S
SOLE AND EXCLUSIVE REMEDIES AND BUYER EXPRESSLY WAIVES ALL OTHER RIGHTS OF RECOVERY AGAINST SELLERS
UNDER ANY ENVIRONMENTAL LAW INCLUDING, BUT NOT LIMITED TO, THE COMPREHENSIVE ENVIRONMENTAL
RESPONSE, COMPENSATION, AND LIABILITY ACT (CERCLA) AND THE RESOURCE CONSERVATION AND RECOVERY ACT
(RCRA).

     11.5. Procedures for Indemnification. Whenever a Claim shall arise for
indemnification resulting from or in connection with a Claim by a third party (a “Third-Party
Claim”), the Person entitled to indemnification (the “Indemnified Party”) shall promptly notify the
Party from which indemnification is sought (the “Indemnifying Party”) of such Claim and, when
known, the facts constituting the basis of such Claim; provided, that failure to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any liability it may have to the
Indemnified Party, except to the extent that the Indemnifying Party has been prejudiced by such
failure. Following receipt of notice of any such Third-Party Claim, and unless the assumption of
such defense by the Indemnifying Party would be inappropriate due to a conflict of interest, the
Indemnifying Party shall have the option, at its cost and expense, to assume the defense of such
Third-Party Claim and to retain counsel (not reasonably objected to by the Indemnified Party) to
defend any such claim or legal proceeding, and the Indemnifying Party shall not be liable to the
Indemnified Party for any fees of other counsel or any other expenses (except as expressly provided
to the contrary herein) with respect to the defense of such Claim, other than reasonable fees and
expenses of counsel employed by the Indemnified Party for any period during which the Indemnifying
Party has not assumed the defense thereof. In the defense of such Claim, the Indemnifying Party
shall act in good faith and conduct the defense actively and diligently, and in the event the
Indemnifying Party is not complying with the foregoing, the Indemnified Party shall have the right
to assume the defense of such Claim. The Indemnified Party shall have the option of joining the
defense of such Claim (which shall be at the sole cost and expense of the Indemnified Party) with
counsel not reasonably objected to by the Indemnifying Party and counsel for each party shall, to
the extent consistent with such counsel’s professional responsibilities, cooperate with the other
party and any counsel designated by that party. In effecting the settlement or compromise of, or
consenting to the entry of any judgment with respect to, any such Third-Party Claim with respect to
which the Indemnifying Party has assumed the defense in accordance with this Section 11.5,
the Indemnifying Party, or the Indemnified Party, as the case may be, shall act in good faith,
shall consult with the other party and shall enter into only such settlement or compromise or
consent to the entry of any judgment as the other party shall consent, such consent not to be
unreasonably withheld, conditioned or delayed; provided that no such consent shall be required if
(a) there is a full release of the Indemnified Party and (b) the sole relief provided is monetary
damages that are paid in full by the Indemnifying Party. An Indemnifying Party shall not be liable
for any settlement, compromise or judgment entered into by the Indemnified Party not made in
accordance with the preceding sentence. Notwithstanding the rights of Sellers under this
Section 11.5 with respect to the defense of claims, the Buyer shall control any
environmental remediation performed at the Channelview Facility, and shall have the right to take
any action required, in Buyer’s reasonable judgment, by prudent environmental management and plant
operation. Notwithstanding anything to the contrary in this Section 11.5, the Parties
shall jointly control any Tax Proceeding involving Taxes attributable to a Straddle Period.

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     11.6. Manner of Payment. Except as otherwise provided herein, any payment with
respect to an indemnification obligation owing hereunder shall be made by wire transfer of
immediately available funds to an account designated by such indemnified party, within ten (10)
days after determination thereof.

ARTICLE 12

MISCELLANEOUS

     12.1. Notices. All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally to, or mailed by registered or certified mail (return
receipt requested) if and when received by, or sent via facsimile if and when received by, the
Parties at the following addresses (or at such other address for a Party as shall be specified by
like notice):

If to Sellers, to:

Reliant Energy Channelview LP

Reliant Energy Services, Inc.

1000 Main Street, 12th Floor

Houston, Texas 77002

Attention: General Counsel

Facsimile: (713) 537-7465

With a copy to:

Stroock & Stroock & Lavan LLP

180 Maiden Lane

New York, NY 10038

Attention: Michael S. Shenberg

Facsimile: (212) 806-6006

If to Buyer, to:

Kelson Energy IV LLC

6700 Alexander Bell Drive

Columbia, Maryland 21046

Attention: President

Facsimile: (410) 872-9460

With a copy to:

Dickstein Shapiro LLP

1825 Eye Street, N.W.

Washington, DC 20006

Attention: Larry F. Eisenstat, Patrick W. Lynch

Facsimile: (202) 420-2201

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     12.2. Headings. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Agreement.

     12.3. Assignment. This Agreement (including the documents and instruments referred to
herein) shall not be assigned by operation of Law or otherwise by any Party hereto without the
prior written consent of the other Parties hereto, which consent shall not be unreasonably withheld
or delayed; provided that Buyer may assign its rights and interests hereunder (but not any of its
obligations) to (i) any Affiliate, or (ii) any persons providing financing to Buyer in connection
with the transactions contemplated hereby. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and permitted assigns.

     12.4. Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING
VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
ANY CONFLICT OF LAWS PRINCIPLES OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK).

     12.5. Jurisdiction. For so long as Sellers are subject to the jurisdiction of the
Bankruptcy Court, the parties hereto irrevocably elect as the sole judicial forum for the
adjudication of any matters arising under or in connection with the Agreement, and consent to the
exclusive jurisdiction of, the Bankruptcy Court. After Sellers are no longer subject to the
jurisdiction of the Bankruptcy Court, any legal action or proceeding with respect to this Agreement
or the transactions contemplated hereby shall be brought exclusively in the courts of the State of
New York sitting in New York County or of the United States for the Southern District of New York,
and by execution and delivery of this Agreement, each of the Parties consents to the jurisdiction
of those courts. Each of the Parties irrevocably waives any objection, including any objection to
the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any action or proceeding in such jurisdiction in respect of this Agreement
or the transactions contemplated hereby.

     12.6. Counterparts. This Agreement may be executed in two or more counterparts, and
by facsimile and/or electronic transmission, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.

     12.7. Amendments; Extensions.

          (a) This Agreement may not be amended except by an instrument in writing signed on behalf of
each of the Parties.

          (b) At any time a Party may (i) extend the time for the performance of any of the obligations
or other acts of the other Party, (ii) waive any inaccuracies in the representations and warranties
of the other Party contained herein or in any document delivered pursuant hereto

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and (iii) waive compliance with any of the covenants or agreements of the other Party
contained herein. Any agreement on the part of a Party to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such Party. The failure or
delay of any Party to assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of those rights.

     12.8. Entire Agreement. This Agreement, the Confidentiality Agreement and the other
agreements contemplated hereby constitute the entire agreement between the Parties with respect to
the subject matter hereof and supersede all prior agreements, understandings and negotiations, both
written and oral, between the Parties with respect to the subject matter of this Agreement. No
representation, inducement, promise, understanding, condition or warranty not set forth herein has
been made or relied upon by any Party. Neither this Agreement nor any provision hereof is intended
to confer upon any Person other than the Parties hereto any rights or remedies hereunder except as
expressly provided otherwise in Section 7.1(b), Section 7.5, Section 7.10,
Section 7.14 and Article 11.

     12.9. Severability. If any term or other provision of this Agreement is invalid,
illegal, or incapable of being enforced by any rule of applicable Law, or public policy (including
any term or provision of Section 12.5), then such term or provision shall be severed from
the remaining terms and provisions of this Agreement (including the remaining terms and provisions
of Section 12.5), and such remaining terms and provisions shall nevertheless remain in full
force and effect.

     12.10. Joint and Several. Each Seller shall be jointly and severally liable for the
payment and performance of all “Seller” obligations and liabilities hereunder.

[Remainder of Page Intentionally Left Blank]

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

	 	 	 	 	 
	 	RELIANT ENERGY CHANNELVIEW LP

 	 
	 	By:  	Reliant Energy Channelview (Texas) LLC,
 	 
	 	 	General Partner of Reliant Energy Channelview LP 	 
	 	 	 	 
	 	By:  	/s/ Andrew C. Johannesen
 	 
	 	 	Name:  	Andrew C. Johannesen 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 
	 	RELIANT ENERGY SERVICES
CHANNELVIEW LLC

 	 
	 	By:  	Reliant Energy Services, Inc.,
 	 
	 	 	Manager of Reliant Energy Services Channelview LLC 	 
	 	 	 	 
	 	By:  	/s/ Andrew C. Johannesen
 	 
	 	 	Name:  	Andrew C. Johannesen 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 
	 	KELSON ENERGY IV LLC

 	 
	 	By:  	/s/ Neal Cody
 	 
	 	 	Name:  	Neal Cody 	 
	 	 	Title:  	President 	 
	 

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