ASSET PURCHASE AGREEMENT

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

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

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

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

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.

     “ 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 .

     “ 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,

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) .

     “ 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.

     “ 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.

     “ 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.

     “ 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 .

     “ 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

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.

     “ 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.

     “ 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

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;

          (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;

          (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;

          (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

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)

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.

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

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.

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;

          (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

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