before the arkansas public service … · 7fa+e dry low nox combustion turbine generator sets and...

BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION

IN THE MATTER OF ENTERGY ARKANSAS, INC.’S REQUEST FOR APPROVAL OF THE ACQUISITION OF THE HOT SPRING PLANT TO SERVE ITS RETAIL CUSTOMERS

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DOCKET NO. 11-069-U

DIRECT TESTIMONY

OF

STUART BARRETT

DIRECTOR, COMMERCIAL OPERATIONS

ENTERGY SERVICES, INC.

ON BEHALF OF

ENTERGY ARKANSAS, INC.

JULY 15, 2011

APSC FILED Time: 7/15/2011 11:13:45 AM: Recvd 7/15/2011 11:04:03 AM: Docket 11-069-U-Doc. 8

Entergy Arkansas, Inc. Direct Testimony of Stuart Barrett Docket No. 11-069-U

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I. INTRODUCTION AND BACKGROUND

Q. PLEASE STATE YOUR NAME, TITLE, AND BUSINESS ADDRESS. 1

A. My name is Stuart Barrett. I am employed by Entergy Services, Inc. 2

(“ESI”)1, as Director, Commercial Operations for System Planning and 3

Operations (“SPO”) organization.2 My business address is 10055 4

Grogans Mill Road, Parkwood II Building, Suite 300, The Woodlands, 5

Texas, 77380. 6

7

Q. ON WHOSE BEHALF ARE YOU TESTIFYING? 8

A. I am testifying on behalf of Entergy Arkansas, Inc. (“EAI” or the 9

“Company”). 10

11

Q. WHAT ARE YOUR RESPONSIBILITIES AS DIRECTOR, COMMERCIAL 12

OPERATIONS FOR ESI’S SPO ORGANIZATION? 13

A. My responsibilities include management oversight responsibility of the 14

procurement of limited- and long-term (one year or longer) fuel and 15

generation resources to meet the needs of the Operating Companies. In 16

this capacity, I have management oversight responsibility for the 17

competitive resource procurement processes that ESI conducts on behalf 18

1 ESI is a subsidiary of Entergy Corporation that provides technical and administrative services to all of the Entergy Operating Companies, which, in addition to Entergy Arkansas, Inc., include: Entergy Gulf States Louisiana, L.L.C.; Entergy Louisiana, LLC; Entergy Mississippi, Inc.; Entergy New Orleans, Inc.; and Entergy Texas, Inc. 2 SPO provides various technical and administrative services to the Entergy Operating Companies,2 including procuring fuel and purchased power for the Entergy Operating Companies and operating and dispatching the generation resources of the Operating Companies.



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of the Operating Companies, as well as for the commercial negotiations 1

associated with asset procurement that are carried out by a project team 2

consisting of various legal, commercial and operational personnel in the 3

SPO organization. 4

5

Q. PLEASE DESCRIBE YOUR EDUCATION AND BUSINESS 6

EXPERIENCE. 7

A. I graduated with a Bachelor of Science in International Trade and Finance 8

in 1995 from Louisiana State University. In 1997, I earned a Master of 9

Business Administration degree from the University of New Orleans. 10

I joined ESI in May 1997 as an analyst in the Accounting 11

Department. A year later, I moved to the Utility Planning Group of the 12

Finance Department and was involved in the production of business plans 13

for the Entergy Operating Companies. In July 2000, I transferred to the 14

SPO organization as a Senior Analyst in the Power Marketing and Power 15

Contracts group. In 2008, I became Manager of Energy Analysis and 16

Reporting, where I was responsible for gas, oil and power settlements, 17

monthly Intra-System Bill (“ISB”) payments and receipts pursuant to the 18

Entergy System Agreement, and other reporting requirements and 19

analysis generally related to ISB data. 20

In March 2010, I was promoted to my current position as Director of 21

Commercial Operations. 22

23



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Q. WHAT IS THE PURPOSE OF YOUR DIRECT TESTIMONY? 1

A. My testimony supports the Company’s application for approval to acquire 2

the Hot Spring Energy Facility (“Hot Spring Plant” or “Plant”) from KGen 3

Hot Spring LLC (“KGen Hot Spring”). 4

In my Direct Testimony, I: 5

• describe the Hot Spring Plant; 6

• provide an overview of the transaction; 7

• explain the acquisition process and its background, identify 8

related major commercial agreements, and address the costs of 9

the acquisition; 10

• discuss certain key terms of the transaction; and 11

• summarize the due diligence efforts and plant improvements 12

that have been identified. 13

14

Q. WHAT WAS YOUR ROLE IN THE KGEN HOT SPRING TRANSACTION? 15

A. I was responsible for the project team that conducted the due diligence 16

and commercial negotiations on behalf of EAI that resulted in the 17

agreement for EAI to acquire the Hot Spring Plant. 18

19

20



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II. PLANT DESCRIPTION AND TRANSACTION OVERVIEW 1

Q. PLEASE DESCRIBE THE HOT SPRING PLANT. 2

A. The Hot Spring Plant is a nominally-rated 620 MW natural gas-fired, 3

combined-cycle gas turbine (“CCGT”) generating plant. The Hot Spring 4

Plant was constructed by a subsidiary of Duke Energy North America 5

(“Duke”) and went into commercial operation in June 2002. KGen Hot 6

Spring bought the Plant from Duke in 2004. 7

The Hot Spring Plant uses three turbine generator sets to produce 8

electricity. The current configuration is made up of two GE Model 7241 9

7FA+e Dry Low NOx combustion turbine generator sets and one GE 10

Model D11 condensing steam turbine generator set. The site is equipped 11

with Automatic Generation Control (AGC).3 12

The site is located 7 miles southwest of Malvern, Arkansas, in Hot 13

Spring County, on 393 acres adjacent to Highway 67. The site is 14

electrically interconnected to the Etta 500KV substation. 15

16

17

3 AGC is a subsystem that regulates the power output of electric generators within a prescribed area of response.



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III. TRANSACTION OVERVIEW 1

Q. PLEASE DESCRIBE THE SELLER. 2

A. KGen Hot Spring is a special purpose limited liability company that is a 3

wholly owned subsidiary of KGen Power Corporation (“KGen Power”). 4

KGen Power was incorporated in 2006 to acquire, own, and operate 5

electric power generation plants. 6

7

Q. HOW DID THE PROPOSED TRANSACTION COME ABOUT? 8

A. ESI, acting as agent for EAI and the other Operating Companies, 9

conducted a competitive solicitation – the Summer 2009 Request for 10

Proposals (“RFP”) for Long-Term Supply Side Resources (the “Summer 11

2009 RFP”) – for long-term capacity to satisfy multiple supply planning 12

objectives, including EAI’s need for load-following capacity. The Hot 13

Spring Plant was offered into that RFP, and was ultimately selected as a 14

resource for EAI. The Summer 2009 RFP and the corresponding 15

evaluation and selection of resources, including the selection of the Hot 16

Spring Plant, is addressed in the testimony of EAI witness Charles E. 17

DeGeorge. 18

19

Q. PLEASE DESCRIBE THE BASIC STRUCTURE OF THE PROPOSED 20

TRANSACTION ASSOCIATED WITH EAI’S ACQUISITION OF THE HOT 21

SPRING PLANT. 22



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A. The Company and KGen Hot Spring have agreed to an Asset Purchase 1

Agreement (“APA”) in which EAI will acquire the project assets of the Hot 2

Spring Plant from KGen Power for a purchase price of $253 million, 3

subject to adjustments. An executed copy of the APA between EAI and 4

KGen Hot Spring, without the accompanying Highly Sensitive exhibits and 5

schedules, is attached as EAI Exhibit SB-1. The Highly Sensitive exhibits 6

and schedules attached to and made part of the APA are attached as 7

Highly Sensitive EAI Exhibit SB-2. Pursuant to the APA, EAI will be the 8

sole owner of the Hot Spring Plant. The APA obligates both parties to 9

complete the transaction, subject to several closing conditions set forth in 10

the APA, including: 11

• EAI’s obtaining required regulatory and governmental approvals, 12

including: 13

APSC approval of the APA and the transaction, including full 14

cost recovery; 15

Federal Energy Regulatory Commission approvals of the 16

transaction, the related acquisition adjustment, and the 17

transfer of the interconnection agreement under Sections 18

203 and 205 of the Federal Power Act; and 19

U. S. Department of Justice or Federal Trade Commission 20

approval, including the termination or expiration of applicable 21

waiting periods, and filings required under the Hart-Scott-22

Rodino Antitrust Improvements Act. 23



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• Satisfactory completion of the final plant performance test to be 1

performed prior to closing at the Hot Spring Plant. 2

• EAI’s obtaining network transmission service that meets the terms 3

specified in the applicable closing condition. 4

In addition, the APA may generally be terminated by either party if closing 5

does not occur on or before April 28, 2014. 6

7

Q. WHAT ELSE WOULD BE INCLUDED IN THE ACQUISITION? 8

A. As part of the acquisition, EAI also would acquire all rights, title, and 9

interest in the Plant assets, including inventory, various contracts and 10

permits, and the Plant site. 11

12

Q. ARE THERE ANY OTHER MAJOR COMMERCIAL AGREEMENTS 13

ASSOCIATED WITH THIS TRANSACTION? 14

A. Yes. There is also a Long-Term Service Agreement (“LTSA”) between 15

EAI and General Electric International, Inc. (“GEII”). 16

17

Q. PLEASE DESCRIBE THE LTSA. 18

A. The LTSA would provide major maintenance, parts, and service for the 19

combustion and steam turbines at the Hot Spring Plant. Among other 20

terms, the LTSA is conditioned upon EAI’s receiving all necessary 21

regulatory approvals and the closing of the APA transaction. 22

23



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Q. WHAT ARE THE BENEFITS OF THE LTSA VERSUS EAI PERFORMING 1

LONG-TERM MAJOR MAINTENANCE ON THE HOT SPRING PLANT? 2

A. The LTSA is an economically attractive alternative to EAI’s providing its 3

own long-term maintenance services on the Hot Spring Plant’s 4

combustion and steam turbines. In addition, GEII has extensive 5

experience and expertise with respect to CCGT technology. 6

7

Q. WHO WOULD OPERATE THE HOT SPRING PLANT? 8

A. EAI would operate and maintain the Hot Spring Plant and provide 9

maintenance services for the transmission facilities at the Plant. 10

11

Q. WHAT IS EAI’S TOTAL ESTIMATED ACQUISITION COST 12

ASSOCIATED WITH THE TRANSACTION? 13

A. EAI’s total investment to acquire and upgrade the Hot Spring Plant is 14

estimated to be $277.1 million if the closing occurs by August 1, 2012. 15

The total acquisition cost consists of the following: 16

• Purchase price: $253 million, which is consistent with the Hot Spring 17

proposal submitted in the 2009 Summer RFP. 18

• Plant Upgrades: $11.6 million, for post-acquisition capital 19

improvement projects to support the overall performance and reliability 20

of the Hot Spring Plant. 21

• Transaction and Contingency: $12.5 million, consisting of: 22

o contingencies of $10 million; and 23



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o estimated transaction costs of $2.5 million. 1

• Purchase Price Premiums: Subject to certain terms and conditions of 2

the APA, the purchase price can increase as follows: 3

o $5 million for closing on or after August 1, 2012 but before 4

August 1, 2013; and 5

o $5 million for closing on or after August 1, 2013. 6

7

Q. DOES THE ABSENCE OF ANY TRANSMISSION COSTS IN THE 8

LISTING ABOVE MEAN THAT THERE ARE NO EAI TRANSMISSION 9

COSTS ASSOCIATED WITH THE ACQUISITION? 10

A. No. Mr. Castleberry discusses the current status of the analysis regarding 11

transmission costs, including the process for determining whether there 12

will be transmission upgrades associated with obtaining network 13

transmission service for the Hot Spring Plant. 14

15

IV. DUE DILIGENCE INVESTIGATION 16

Q. PLEASE DESCRIBE THE DUE DILIGENCE INVESTIGATION OF THE 17

HOT SPRING PLANT. 18

A. ESI conducted a comprehensive due diligence investigation of the Hot 19

Spring Plant prior to EAI’s entering into the transaction. The due diligence 20

included reviews of engineering, operations, environmental, transmission, 21

fuel supply, plant safety, human resources, employment and benefits, 22

accounting, legal, tax, risk management, credit, real property, personal 23



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property, and intellectual property and information technology issues. As 1

part of the due diligence investigations, contractors were engaged to carry 2

out detailed performance testing of the Hot Spring Plant, a comprehensive 3

condition assessment of the transmission switchyard and ancillary 4

transmission infrastructure, a review of the site’s NERC compliance 5

program, and a thorough environmental assessment of the plant site. 6

7

Q. DID THE DUE DILIGENCE INVESTIGATION RAISE ISSUES THAT 8

REQUIRED ATTENTION AND RESOLUTION? 9

A. Although no major technical issues were identified that would prevent EAI 10

from proceeding with the transaction, the due diligence process uncovered 11

certain technical and fuel supply issues that will be resolved either prior to 12

the closing of the transaction (as stipulated in the APA) or by EAI after 13

closing. 14

15

Q. WHAT TECHNICAL ISSUES DOES EAI PLAN TO ADDRESS AFTER 16

THE CLOSING OF THE TRANSACTION? 17

A. During an outage inspection in 2007, a bow was discovered in the steam 18

turbine rotor. KGen Hot Spring has since taken measures to minimize the 19

effect of this issue on unit operations and has not reported any problems 20

since 2007. KGen Hot Spring is currently following operational protocols 21

established by GEII to minimize or eliminate any further degradation of the 22



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rotor. EAI plans to repair the bow after closing at an estimated cost of $3 1

million. 2

Additionally, as previously noted, the acquisition costs for the Hot 3

Spring Plant include $10.3 million in capital improvements, including 4

various plant/equipment improvements, conversion of information 5

technology systems, and safety enhancements. 6

7

Q. WHAT FUEL SUPPLY ISSUES WERE UNCOVERED DURING THE DUE 8

DILIGENCE INVESTIGATION? 9

A. Until recently, the Hot Spring Plant was served by only one natural gas 10

pipeline (Centerpoint Energy), which historically had not offered adequate 11

flexibility to meet the varying fuel supply needs of a CCGT facility operated 12

in a load-following role. To address this condition, KGen Hot Spring 13

contracted with Texas Eastern Transmission Company to construct an 14

additional fuel interconnect and pipeline, which was completed in June 15

2011. Additionally, EAI is planning post-acquisition capital upgrades at a 16

cost of approximately $1.3 million for the installation of infrastructure 17

necessary to operate both pipeline interconnections simultaneously in 18

order to take full advantage of the flexibility associated with having two 19

fuel supply sources. 20

21

Q. DOES THIS CONCLUDE YOUR DIRECT TESTIMONY? 22

A. Yes. 23


CERTIFICATE OF SERVICE

I, Laura Landreaux, do hereby certify that a copy of the foregoing has been served upon all parties of record by forwarding the same by electronic mail and/or first class mail, postage prepaid, this 15th day of July 2011. /s/ Laura Landreaux

Laura Landreaux




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DOCKET NO. 11-069-U

EAI EXHIBIT SB-1

ASSET PURCHASE AGREEMENT


EXECUTION COPY

#4823-2717-3129v6


by and between

KGEN HOT SPRING LLC,

as Seller,

KGEN POWER CORPORATION,

solely with respect to Section 6.6, Section 6.12, Section 6.15(c), Section 10.3 and Section 11.12,

and

ENTERGY ARKANSAS, INC,

as Purchaser

Dated as of April 28, 2011

EAI Exhibit SB-1 Docket No. 11-069-U

Page 1 of 249


TABLE OF CONTENTS

Page

#4823-2717-3129v6 i

ARTICLE I. DEFINITIONS ...............................................................................................................1Section 1.1. Certain Defined Terms .................................................................................. 1Section 1.2. Certain Interpretive Matters ........................................................................25

ARTICLE II. PURCHASE AND SALE...........................................................................................26Section 2.1. Purchased Assets..........................................................................................26Section 2.2. Excluded Assets ...........................................................................................29Section 2.3. Assumption of Liabilities ............................................................................30Section 2.4. Excluded Liabilities .....................................................................................31

ARTICLE III. CLOSING; PURCHASE PRICE..............................................................................32Section 3.1. Closing..........................................................................................................32Section 3.2. Seller Closing Deliverables.........................................................................33Section 3.3. Purchaser Closing Deliverables ..................................................................33Section 3.4. Purchase Price..............................................................................................34Section 3.5. Inventory and Capital Spares Adjustments ................................................35Section 3.6. Proratable Items ...........................................................................................35Section 3.7. Other Purchase Price Adjustments .............................................................36Section 3.8. Procedures for Closing and Post-Closing Adjustments.............................36Section 3.9. Allocation of Purchase Price.......................................................................38

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLER.................................39Section 4.1. Organization and Existence.........................................................................39Section 4.2. Execution, Delivery and Enforceability .....................................................39Section 4.3. No Violation.................................................................................................40Section 4.4. Compliance with Laws................................................................................40Section 4.5. Bankruptcy Matters .....................................................................................40Section 4.6. Litigation ......................................................................................................41Section 4.7. Owned Real Property; IDA Bond Real Property; Easements...................41Section 4.8. Leased Property ...........................................................................................43Section 4.9. Tangible Personal Property and Inventory.................................................43Section 4.10. Project Contracts..........................................................................................44Section 4.11. Permits..........................................................................................................44Section 4.12. Warranties ....................................................................................................45Section 4.13. Intellectual Property ....................................................................................45Section 4.14. Condition and Sufficiency of Assets ..........................................................46Section 4.15. Environmental Matters ................................................................................46Section 4.16. Tax Matters ..................................................................................................48Section 4.17. Employee Matters ........................................................................................49Section 4.18. Insurance ......................................................................................................49Section 4.19. Regulatory Status.........................................................................................50Section 4.20. Pipeline Status..............................................................................................50Section 4.21. Brokers .........................................................................................................50Section 4.22. Proxy Statement...........................................................................................50

ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................50Section 5.1. Organization and Existence.........................................................................50Section 5.2. Execution, Delivery and Enforceability .....................................................50Section 5.3. No Violation.................................................................................................51


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TABLE OF CONTENTS

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Section 5.4. Litigation ......................................................................................................51Section 5.5. Brokers .........................................................................................................52Section 5.6. Acceptable Purchaser LTSA.......................................................................52Section 5.7. No Additional Representations and Warranties.........................................52

ARTICLE VI. COVENANTS OF THE PARTIES..........................................................................52Section 6.1. Efforts to Close ............................................................................................52Section 6.2. Transaction Expenses ..................................................................................53Section 6.3. Conduct Pending Closing............................................................................54Section 6.4. Regulatory Approvals..................................................................................56Section 6.5. Permit, Emission Allowance and Purchased Project Contract

Transfers.......................................................................................................57Section 6.6. KGen Proxy Statement; Recommendations...............................................59Section 6.7. Plant Performance Tests..............................................................................61Section 6.8. Risk of Loss; Casualty Events ....................................................................66Section 6.9. Insurance ......................................................................................................70Section 6.10. Tax Matters ..................................................................................................71Section 6.11. Employee Matters ........................................................................................73Section 6.12. No Solicitation .............................................................................................75Section 6.13. Notice of Certain Events; Reporting Obligations......................................79Section 6.14. Information and Records.............................................................................80Section 6.15. Confidentiality; Public Announcements ....................................................82Section 6.16. Removal of Excluded Assets ......................................................................83Section 6.17. Trade Names ................................................................................................83Section 6.18. Condemnation ..............................................................................................84Section 6.19. Post-Closing Assurances .............................................................................84Section 6.20. Existing Collateral .......................................................................................85Section 6.21. Purchaser LTSA...........................................................................................85Section 6.22. New Pipeline Completion. .........................................................................85Section 6.23. IDA Bond Property. ...................................................................................85Section 6.24. Capacity Release. ........................................................................................86Section 6.25. Warm-up Line Improvement Project Testing. . ........................................86

ARTICLE VII. PURCHASER'S CONDITIONS TO CLOSING ...................................................86Section 7.1. Agreement Compliance ...............................................................................86Section 7.2. HSR Act .......................................................................................................86Section 7.3. No Restraint .................................................................................................87Section 7.4. Regulatory Approvals and Consents ..........................................................87Section 7.5. Representations and Warranties..................................................................87Section 7.6. Officer's Certificate......................................................................................87Section 7.7. Receipt of Other Documents.......................................................................87Section 7.8. Title Insurance..............................................................................................88Section 7.9. Network Transmission Service ...................................................................88Section 7.10. Material Adverse Effect ..............................................................................88Section 7.11. O&M Agreement .........................................................................................88Section 7.12. Plant Performance Tests..............................................................................88Section 7.13. Escrow Agreement.......................................................................................89


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TABLE OF CONTENTS

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#4823-2717-3129v6 iii

Section 7.14. New Pipeline Completion. . ........................................................................89Section 7.15. IDA Bond Property. ...................................................................................89

ARTICLE VIII. SELLER'S CONDITIONS TO CLOSING...........................................................89Section 8.1. Agreement Compliance ...............................................................................89Section 8.2. HSR Act .......................................................................................................89Section 8.3. No Restraint .................................................................................................89Section 8.4. Regulatory Approvals and Consents ..........................................................89Section 8.5. Representations and Warranties..................................................................90Section 8.6. Officer's Certificate......................................................................................90Section 8.7. Receipt of Other Documents.......................................................................90Section 8.8. LTSA ............................................................................................................91Section 8.9. Escrow Agreement.......................................................................................91Section 8.10. Existing Collateral .......................................................................................91

ARTICLE IX. INDEMNIFICATION...............................................................................................91Section 9.1. Indemnification by Seller ............................................................................91Section 9.2. Indemnification by Purchaser .....................................................................92Section 9.3. Survival.........................................................................................................93Section 9.4. Computation of Losses................................................................................93Section 9.5. Effect of Knowledge....................................................................................93Section 9.6. Method of Asserting Claims .......................................................................94Section 9.7. Purchase Price Adjustment; Payment Address ..........................................97Section 9.8. Subrogation ..................................................................................................97Section 9.9. Cooperation; Mitigation ..............................................................................97Section 9.10. Exclusive Remedy .......................................................................................97Section 9.11. Specific Performance...................................................................................97Section 9.12. Waiver of Certain Damages........................................................................97Section 9.13. Escrow Account...........................................................................................97

ARTICLE X. TERMINATION.........................................................................................................98Section 10.1. Rights to Terminate .....................................................................................98Section 10.2. Effect of Termination ..................................................................................99Section 10.3. Termination Fees .........................................................................................99

ARTICLE XI. GENERAL PROVISIONS .....................................................................................101Section 11.1. Entire Document; Amendments................................................................101Section 11.2. Schedules....................................................................................................101Section 11.3. Counterparts, Signatures, and Originals...................................................102Section 11.4. Severability ................................................................................................102Section 11.5. Assignment.................................................................................................102Section 11.6. Governing Law ..........................................................................................103Section 11.7. Waiver of Jury Trial...................................................................................103Section 11.8. Notices........................................................................................................103Section 11.9. No Third Party Beneficiaries ....................................................................104Section 11.10. No Joint Venture........................................................................................104Section 11.11. Waiver of Compliance...............................................................................104Section 11.12. Nature of KGen's Obligations...................................................................105Section 11.13. Attorneys' Fees...........................................................................................105


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#4823-2717-3129v6 iv

EXHIBITS AND SCHEDULES

Item Description

Exhibit A Form of Assignment and Assumption Agreement

Exhibit B Form of Bill of Sale

Exhibit C Form of DeedExhibit D Form of Escrow Agreement

Exhibit E Form of Post-Closing Confidentiality Agreement

Exhibit F Title Commitment

Exhibit G Form of Title Policy Affidavits

Exhibit H Form of Affidavit of Non-Foreign Status

Exhibit I Form of Joint Defense Agreement

Exhibit J Proxy Statement

Schedule AC Approved Contractors

Schedule CS Capital Spares

Schedule 1.1A Persons With Seller's KnowledgeSchedule 1.1B Persons With Purchaser's Knowledge

Schedule 1.1C Certain Permitted Encumbrances

Schedule 1.1D Description of Project

Schedule 2.1(a) Owned Real Property

Schedule 2.1(b) Certain Intellectual Property of Affiliates of Seller

Schedule 2.1(c) Easements

Schedule 2.1(d) Tangible Personal Property

Schedule 2.1(e) Purchased Inventory

Schedule 2.1(f) Purchased Project Contracts

Schedule 2.1(g) Purchased PermitsSchedule 2.1(i) Purchased Warranties

Schedule 2.1(k) Prepaid Items

Schedule 2.2(b) Specified Excluded Assets

Schedule 2.2(c) Specified Excluded Project Contracts

Schedule 2.2(h) Specified Excluded Intellectual Property Rights

Schedule 4.3 Seller's Consents, Seller's Regulatory Approvals and No Violation


Page 5 of 249


#4823-2717-3129v6 v

Item Description

Schedule 4.4 Compliance with Laws

Schedule 4.6 Seller's LitigationSchedule 4.7 Owned Real Property; Easements – Actions

Schedule 4.8 Leased Personal Property

Schedule 4.9 Register of Inventory

Schedule 4.10 Project Contract Matters

Schedule 4.11 Permit Matters

Schedule 4.13 Intellectual Property

Schedule 4.14(a) Condition of Purchased Assets; Defects

Schedule 4.14(b) Sufficiency of Purchased Assets

Schedule 4.15 Environmental Conditions

Schedule 4.16 Tax MattersSchedule 4.18 Insurance Policies

Schedule 5.3 Purchaser's Consents, Purchaser's Regulatory Approvals and No Violation

Schedule 5.4 Purchaser LitigationSchedule 6.2 Title Endorsements

Schedule 6.7 Plant Performance Test Protocols and Procedures

Schedule 6.20 Existing Collateral

Schedule 7.8 Title Policy Endorsements


Page 6 of 249


CONFIDENTIAL

#4823-2717-3129v6


THIS ASSET PURCHASE AGREEMENT, dated as of April 28, 2011, is made and entered into by and between KGen Hot Spring LLC, a limited liability company organized and existing under the laws of the State of Delaware ("Seller"), and, solely with respect to Section 6.6, Section 6.12, Section 6.15(c), Section 10.3 and Section 11.12, KGen Power Corporation, a corporation organized and existing under the laws of the State of Delaware ("KGen"), on the one hand, and Entergy Arkansas, Inc., a corporation organized and existing under the laws of theState of Arkansas ("Purchaser"), on the other hand.

RECITALS

ESI issued the Entergy System's Summer 2009 Request for Proposals for Long-Term Supply-Side Resources on or about September 24, 2009, and in response, Seller submitted a proposal setting forth commercial terms on which Seller would agree to sell the Project (as defined herein) to one or more of the Entergy Operating Companies (as defined herein).

Seller's proposal was selected by ESI for further consideration as a primary award and, after a period of negotiation, Seller and ESI, as agent for Purchaser, entered into a letter of intent, dated November 16, 2010, for the sale of all of Seller's right, title and interest in and to the Project and certain related properties and assets and, in connection therewith, the assumption by Purchaser of certain related liabilities of Seller.

KGen joins in this Agreement for the limited purposes expressly set forth in Section 6.6, Section 6.12, Section 6.15(c), Section 10.3 and Section 11.12 hereunder to induce Purchaser to enter into the terms and conditions set forth herein and acknowledges that it will derive a material and substantial benefit from the Transactions.

Consistent with the letter of intent, Seller desires to sell, transfer and assign to Purchaser, and Purchaser desires to purchase from Seller, all of Seller's right, title and interest in and to the Project and certain related properties and assets, and in connection therewith, Purchaser has agreed to assume certain related liabilities of Seller, on the terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing recitals and the agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, do hereby agree as follows:

ARTICLE I.DEFINITIONS

Section 1.1. Certain Defined Terms. The following terms, when used in this Agreement with initial letters capitalized, have the meanings set forth below:

"Acceptable Purchaser LTSA" has the meaning set forth in Section 3.5(b).


Page 7 of 249


CONFIDENTIAL

#4823-2717-3129v6 2

"Action" means any action, arbitration, grievance, suit, proceeding (including any proceeding related to a Permit) of any nature, civil, criminal, regulatory or otherwise, in law or in equity, by or before any Governmental Authority or arbitrator or a Governmental Authority audit or investigation.

"Affiliate" has the meaning set forth in Rule 12b-2 of the General Rules and Regulations under the Exchange Act and, with respect to Seller, Operator and GEII shall also include any ERISA Affiliate thereof.

"Agreement" means this Asset Purchase Agreement, together with the Schedules and Exhibits hereto.

"Allocation" has the meaning set forth in Section 3.9.

"Ancillary Agreements" means (i) the Bill of Sale, (ii) the Deed, (iii) the Assignment and Assumption Agreement, (iv) the Escrow Agreement and (v) any and all additional agreements, certificates, documents, and instruments that may be executed and delivered by any Party or any Affiliate thereof at or in connection with the Closing.

"Approved Contractor" means (a) a qualified independent professional contractor, experienced in estimating casualty, or other damage, as the case may be, and the scope and cost of repairs required by the Casualty Event or other occurrence, as the case may be, approved by Purchaser (with such approval not to be unreasonably withheld, conditioned or delayed) to perform work hereunder pursuant to the terms of this Agreement, (b) SAIC Energy, Environment and Infrastructure, LLC (f/k/a R.W. Beck Inc.) and (c) each contractor listed on Schedule AC but solely with respect to the types of work specified following such contractor's name on such Schedule.

"APSC" means the Arkansas Public Service Commission.

"Assignment and Assumption Agreement" means the Assignment and Assumption Agreement, substantially in the form of Exhibit A, to be executed and delivered by Seller and Purchaser at the Closing.

"Assumed Liabilities" has the meaning set forth in Section 2.3.

"Bankrupt" means, with respect to any entity, such entity (i) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar law, (ii) has a petition filed or commenced against it for a proceeding or cause of action under any bankruptcy, insolvency, reorganization, or similar law and such petition is not dismissed within thirty (30) days of its filing, (iii) makes an assignment or any general arrangement for the benefit of creditors, (iv) otherwise becomes bankrupt or insolvent (however evidenced), (v) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or (vi) is generally unable to pay its debts as they fall due.

"Baseline Inventory Value" has the meaning set forth in Section 3.5(a).


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"Bill of Sale" means a Bill of Sale, substantially in the form of Exhibit B, to be executed and delivered by Seller at the Closing.

"Business" means the business of operating the Project and generating and delivering electric energy and capacity and other electric products and services from the Project.

"Business Combination Transaction" means a merger, consolidation, share exchange, tender offer, business combination, reorganization, recapitalization, liquidation, dissolution, joint venture or other similar transaction.

"Business Day" means any day on which Federal Reserve member banks in New York, New York and Houston, Texas are open for business.

"Capacity Release Rules" has the meaning set forth in Section 6.4(e).

"Capacity Test Tolerance" means three (3) MW.

"Capital Spares" means the equipment listed on Schedule CS and any replacements or substitutions thereof procured by Seller pursuant to or in accordance with the LTSA.

"Casualty Event" has the meaning set forth in Section 6.8(a).

"Casualty Event Notice" has the meaning set forth in Section 6.8(b).

"Central Prevailing Time" or "CPT" means standard time or daylight savings time, as applicable to the central time zone.

"CERCLA" means the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601 et seq.

"Closing" has the meaning set forth in Section 3.1.

"Closing Date" has the meaning set forth in Section 3.1.

"Closing Inventory Report" means an Inventory Report dated as of the Closing Date.

"Closing Inventory Value" has the meaning set forth in Section 3.5(a).

"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985.

"Code" means the Internal Revenue Code of 1986.

"Collective Bargaining Agreement" means any and all agreements, verbal or written, between (i) any member of the KGen Group or Operator and (ii) a trade union, labor organization, collective bargaining representative or employee representative of any KGen Group Employee or Operator Employee concerning terms and conditions of employment of such Employee, as well as all modifications of, or amendments to, such agreements, and any Laws that interpret or apply such agreements.


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"Commercially Reasonable Efforts" means efforts that (i) are reasonably within, or should have been reasonably within, the contemplation of the Parties on the Effective Date and are otherwise consistent with past practices of purchasers and sellers of similar assets in transactions of a similar kind and nature and (ii) do not require the performing Party to expend funds or incur obligations other than expenditures and obligations that are customary and reasonable in transactions of a similar kind and nature.

"Condemnation Value" has the meaning set forth in Section 6.18(a).

"Confidentiality Agreement" means that certain Confidentiality Agreement, dated as of August 24, 2010, between KGen Power Management Inc., an Affiliate of Seller that is organized and existing under the Laws of the State of Delaware, and ESI, an Affiliate of Purchaser that is organized and existing under the Laws of the State of Delaware.

"Consents" means consents, authorizations, approvals, releases, waivers, estoppel certificates, and any similar agreements or approvals.

"Consumables" means any and all of the following items of Inventory intended to be used or consumed at the Project in the ordinary course of the conduct of the Business: lubricants, chemicals, fluids, oils, filters, fittings, connectors, seals, gaskets, hardware, wire and other similar materials; maintenance, shop and office supplies; fuel supplies (including diesel fuel), if any, on hand and stored at, or in transit to, the Project Real Property as of the Closing; and all other materials, supplies and other items consumed at the Project in the ordinary course of the Business.

"Contract" means any binding contract, agreement, Collective Bargaining Agreement, purchase order, transaction under a master agreement, license, sublicense, lease, sublease, sale and purchase order, easement, mortgage, security agreement, instrument, guaranty, commitment, or other contract, whether written or oral.

"Contract Capacity" means a Project Capacity of 620 MW.

"Contract CO Emission Rate" means a Project CO Emission Rate within the limits specified in the State of Arkansas Department of Environmental Quality Air Pollution Control Title V Permit No. 1936-AOP-R4 to Operate Air Emissions Equipment held by KGen Hot Spring LLC, issued on August 10, 2009, including the Title IV Acid Rain Permit ORIS Code 55418 and the CAIR Permit.

"Contract Heat Rate" means a Project Heat Rate of 7,100 Btu/kWh.

"Contract NOx Emission Rate" means a Project NOx Emission Rate within the limits specified in the State of Arkansas Department of Environmental Quality Air Pollution Control Title V Permit No. 1936-AOP-R4 to Operate Air Emissions Equipment held by KGen Hot Spring LLC, issued on August 10, 2009, including the Title IV Acid Rain Permit ORIS Code 55418 and the CAIR Permit.

"Damaged Portion" has the meaning set forth in Section 6.8(a).


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"Deductible" has the meaning set forth in Section 9.1(b).

"Deed" means one or more deeds substantially in the form of Exhibit C.

"Defending Party" has the meaning set forth in Section 9.6(d).

"Easements" has the meaning set forth in Section 2.1(c).

"Effective Date" means the date on which this Agreement has been executed and delivered by Seller and Purchaser, as specified in the introductory paragraph of this Agreement.

"Electric Interconnection Facilities" means all structures, facilities, equipment, substations, auxiliary equipment, devices and apparatus that are owned, operated or controlled by Seller, which are directly or indirectly required or installed to interconnect and deliver electric energy from the Project to the applicable delivery points to or on the Transmission System or otherwise, including electric transmission and/or distribution lines, transformation, switching, electric metering equipment, any other metering equipment, communications equipment, and safety equipment, including equipment required to protect (i) the electrical system to which the Project is connected and its customers from faults occurring at the Project and (ii) the Project from faults occurring on the electrical system to which the Project is connected or on other electrical systems to which such electrical system is directly or indirectly connected.

"Emission Allowances" means all authorizations to emit specified units of Hazardous Substances or any other regulated pollutant from the Project or the Project Site, which units are established and required by a Governmental Authority with jurisdiction over the Project or the Project Site under Environmental Law, including under (i) an air pollution control and emission reduction program, (ii) a program designed to mitigate impairment of water resources, including coastal and inland waters, navigable waters, surface waters, watersheds, well water or groundwater, or (iii) any other pollution reduction program, in each case regardless of whether the Governmental Authority establishing such authorizations designates such authorizations by a name other than "allowances" (e.g., as offsets or credits).

"Employee" means, with respect to a Person, any individual who would be treated as a full-time, part-time, or other employee of such Person by applicable federal, state or local Laws, including Tax and employment Laws; provided, that with respect to Operator and GEII, Employees thereof for purposes of this Agreement shall be deemed to mean only those Employees who are, or were, primarily dedicated to work at the Project Site in connection with the Purchased Assets and the Business.

"Employee Pension Benefit Plan" has the meaning set forth in ERISA § 3(2).

"Employee Plan" means and includes each Employee Pension Benefit Plan, each Employee Welfare Benefit Plan, and each other plan, Contract, program, fund or policy, whether written or oral, qualified or non-qualified, funded or unfunded, foreign or domestic, providing for (i) severance pay or benefits, stay pay, salary continuation, change in control payments or benefits, bonuses, profit-sharing, equity options, employee stock ownership or other forms of incentive compensation; (ii) vacation or vacation pay, holiday or holiday pay, sickness or other time-off or sick pay; (iii) health, welfare, medical, dental, disability, life, accidental death and


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dismemberment, employee assistance, educational assistance, relocation or fringe benefits or perquisites, including post-employment benefits; and (iv) deferred compensation, defined benefit or defined contribution, thrift savings, retirement, early retirement or pension benefits, or equity grants that covers any Employee, or that is maintained, administered, sponsored, made available or with respect to which contributions are made or required to be made by Seller or any ERISA Affiliate of Seller in respect of Employees or their beneficiaries or with respect to which Seller or any of its Affiliates has any ongoing obligation or liability whatsoever.

"Employee Welfare Benefit Plan" has the meaning set forth in ERISA § 3(1).

"Encumbrances" means any and all mortgages, pledges, claims, security interests, options, warrants, purchase rights (including rights of first refusal), liens (statutory or otherwise), installment sales agreements, easements, activity and use restrictions and limitations, exceptions, rights-of-way, deed restrictions, defects or imperfections of title, encumbrances and charges of any kind.

"Entergy Operating Companies" means, as of the Effective Date, Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., and Entergy Texas, Inc.

"Environment" means the environment, including any of the following media and any living organism or systems supported by any such media: (i) land, including surface land, sub-surface strata, sea bed and riverbed under water (as described in clause (ii) hereof); (ii) water, including coastal and inland waters, navigable waters, surface waters, ground waters, drinking water supplies and waters in surface and sub-surface strata; and (iii) air, including indoor and outdoor air and air within buildings and other man-made or natural structures above or below ground.

"Environmental Assessment" means a "Phase I" environmental site assessment with respect to the Project and the Project Real Property, dated not more than one hundred eighty (180) days prior to the Closing Date, that may be prepared at Purchaser's discretion by the Environmental Consultant on behalf of Seller and Purchaser in such time and manner as to satisfy CERCLA § 101(35)(B), 42 U.S.C. § 9601(35)(B) and the regulations thereunder defining "all appropriate inquiry," 40 C.F.R. Part 312, and ASTM E1527-05; provided, however, for the avoidance of doubt, the environmental site assessment shall not include any "Phase II" or other intrusive or invasive environmental investigations or sampling, testing or the collection of any environmental media.

"Environmental Claim" means any written notice, claim, suit (whether in law or in equity), demand or other written communication by any Person alleging or asserting a Party's or any other Person's actual or potential liability for investigation, response, investigation costs, cleanup or Remediation costs, compliance costs, enforcement costs, response costs, fees, defense costs, capital expenditures (whether incurred to construct, repair, restore, replace, Remediate or modify any of the Purchased Assets as necessary for a Party to perform its obligations under this Agreement or otherwise) or the funding necessary therefor, actual damages, consequential damages, punitive damages, claims for contribution or indemnity, damages to natural resources or other property, personal injuries (including those arising from or related to toxic torts), fines


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or penalties, based on or resulting from, in whole or in part, (i) the presence or Release of any Hazardous Substance at any location, whether or not on property owned by such Person, (ii) circumstances forming the basis of any violation or alleged violation of or legal obligation or liability pursuant to any Environmental Law, or (iii) claims for Remediation or costs associated with Remediation.

"Environmental Condition" means the presence or Release of a Hazardous Substance in the Environment with respect to the Project or the Project Real Property (wherever migrating) that is in violation of an Environmental Permit in effect and enforceable on or prior to the Closing Date or that is not allowed, approved or permitted by an Environmental Permit and for which there is an obligation under Environmental Law to engage in any monitoring, investigation, assessment, treatment, cleanup, containment, removal, mitigation, reporting, response or restorative work, or with respect to which a Governmental Authority with jurisdiction over such matter has required in writing the foregoing activities under Environmental Laws.

"Environmental Consultant" means AECOM, Inc., or such other recognized environmental consulting firm as shall be selected by Purchaser and reasonably acceptable to Seller.

"Environmental Laws" means all Laws and Environmental Permits relating to pollution or protection of the Environment, including Laws relating to Releases of Hazardous Substances or the manufacture, processing, distribution, use, treatment, storage, transport, disposal or handling of Hazardous Substances, including CERCLA, the Federal Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq., the Toxic Substances Control Act, 15 U.S.C. §§ 2601 through 2629, the Oil Pollution Act, 33 U.S.C. § 2701 et seq., the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq., the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq.), the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq.), the Occupational Safety and Health Act (20 U.S.C. §§ 651 et seq.) (to the extent related to Hazardous Substances or other matters pertaining to the Environment), the Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j, the Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. § 1201 et seq., Arkansas Water and Air Pollution Control Act, Ark. Code Ann. § 8-4-101, et seq., and the Arkansas Solid Waste Management Act, Ark. Code Ann. § 8-6-201, et seq. and any and all similar Laws of the United States of America, the State of Arkansas or any other Governmental Authority having jurisdiction over the Project, the Project Real Property, Seller or the Business.

"Environmental Liability" means any Loss that (i) arises under or relates to any Environmental Condition existing on or prior to the Closing or any related Environmental Claim or (ii) is attributable to any event, action or omission occurring or condition or circumstance existing on or prior to the Closing in violation of any Environmental Law.

"Environmental Permit" means any Permit required, issued, or administratively continued under or in connection with any Environmental Law, including any Order, consent


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decree, judgment or binding agreement issued or entered into by a Governmental Authority under any applicable Environmental Law relating to the Project or the Project Site.

"ERISA" means the Employee Retirement Income Security Act of 1974.

"ERISA Affiliate" means any trade or business (whether or not incorporated) that is or ever has been under common control, or which is or ever has been treated as, or deemed to be, a single employer, with Seller under Section 4001(b)(1) of ERISA or Section 414 of the Code.

"Escrow Account" means the account established and to be maintained by the Escrow Agent pursuant to the Escrow Agreement.

"Escrow Agent" means SunTrust Bank, or such other escrow agent that is mutually designated by Seller and Purchaser between the Effective Date and the Closing.

"Escrow Agreement" means the Escrow Agreement, in the form of Exhibit D, to be executed and delivered by Escrow Agent, Seller and Purchaser at the Closing, as amended by such changes as may be mutually agreed to by Seller and Purchaser.

"ESI" means Entergy Services, Inc.

"Estimated Closing Adjustment" has the meaning set forth in Section 3.8(a).

"Estimated Closing Statement" has the meaning set forth in Section 3.8(a).

"Estimated Purchase Price" has the meaning set forth in Section 3.8(a).

"Exchange Act" means the Securities Exchange Act of 1934.

"Excluded Assets" has the meaning set forth in Section 2.2.

"Excluded Liabilities" has the meaning set forth in Section 2.4.

"Excluded Project Contracts" has the meaning set forth in Section 2.2(c).

"Expiration Date" means the date that is the third anniversary of the Effective Date; provided, that if prior to the Closing (i) (A) a Casualty Event occurs, (B) Seller has made the determination pursuant to Section 6.8(a) or Section 6.8(d) that the Damaged Portion resulting from such Casualty Event would reasonably be expected to be Repaired on or before sixty (60) days prior to the Expiration Date and (C) despite Seller's compliance with Section 6.8, the Damaged Portion is not Repaired in accordance with Good Industry Practices and the other requirements of this Agreement on or before one hundred twenty (120) days prior to the third anniversary of the Effective Date, the "Expiration Date" for purposes of Section 10.1(b) shall be extended such that there are one hundred twenty (120) days between (1) the date on which the Damaged Portion is Repaired in accordance with Good Industry Practices and the other requirements of this Agreement and (2) the "Expiration Date" or (ii) (A) a Testing Defect occurs, (B) Seller has given a Late Testing Notice pursuant to Section 6.7(g) and (C) despite Seller's compliance with Section 6.7, the Testing Repair is not completed on or before one hundred


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twenty (120) days prior to the third anniversary of the Effective Date, the "Expiration Date" for purposes of Section 6.7(g) and Section 10.1(b) shall be extended such that there are one hundred twenty (120) days between (1) the date on which such Testing Repair is completed and (2) the "Expiration Date"; provided, further, that in no event shall the Expiration Date be extended pursuant to clause (i) or (ii) above more than sixty (60) days beyond the third anniversary of the Effective Date.

"Expiring Covenants" means the covenants in Section 6.1 (Effort to Close), Section 6.3(Conduct Pending Closing), Section 6.7 (Plant Performance Test), Section 6.13 (Notice of Certain Events; Reporting Obligations) and Section 6.23 (IDA Bond Property).

"Federal Power Act" means the Federal Power Act, 16 U.S.C. § 791 et seq.

"FERC" means the Federal Energy Regulatory Commission.

"Final Plant Performance Reduction Amount" has the meaning set forth in Section 6.7(k).

"Final Plant Performance Test Results" has the meaning set forth in Section 6.7(j).

"Fuel" means natural gas of sufficient quality to meet all technical specifications of the Project.

"GAAP" means generally accepted accounting principles as in effect from time to time in the United States, applied on a consistent basis.

"Gas Interconnection Facilities" means all structures, pipelines, facilities, equipment, auxiliary equipment, devices and apparatus that are owned, operated or controlled by Seller, which are directly or indirectly required or installed to interconnect and deliver natural gas from the applicable delivery points for natural gas from Texas Eastern Transmission Company's natural gas pipeline to the Project's electric generation units.

"Gas Transportation Agreements" means (i) the Ozark Gas Transportation Agreements, (ii) (a) Amended and Restated Firm (Rate Schedule FT) Transportation Service Agreement, effective as of November 1, 2010, between CenterPoint Energy Gas Transmission Company (f/k/a Reliant Energy Gas Transmission Company) and Seller (TSA No. 1002755), (b) Amended and Restated Firm (Rate Schedule FT) Transportation Service Agreement, effective as of May 1, 2011, between CenterPoint Energy Gas Transmission Company (f/k/a Reliant Energy Gas Transmission Company) and Seller (TSA No. 1002908), (c) Interruptible (Rate Schedule IT) Transportation Service Agreement, dated August 15, 2001, between CenterPoint Energy Gas Transmission Company (f/k/a Reliant Energy Gas Transmission Company) and KGen Hot Spring LLC (f/k/a Duke Energy Hot Spring, LLC) (TSA No. 1002853), and (d) Corrected Rate Schedule PHS Service Agreement (Park/Loan), effective as of May 1, 2011, between CenterPoint Energy Gas Transmission Company and KGen Hot Spring LLC (TSA No. 1007861), and (iii) (a) Service Agreement for Rate Schedule FT-1, dated as of April 1, 2010, between Texas Eastern Transmission, LP and Seller (Contract No. 910756-R1), (b) Service Agreement for Rate Schedule MLS-1, dated as of April 1, 2010, between Texas Eastern Transmission, LP and KGen Hot Spring LLC (Contract No. 910757-R1), and (c) the letter


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agreement, dated April 1, 2010, re: Negotiated Rate Agreement, collectively, and, each a Gas Transportation Agreement.

"GEII" means General Electric International, Inc.

"Good Industry Practices" means those practices, methods and acts generally employed in the independent power generation industry at the particular time in question, in the exercise of reasonable judgment in light of the facts known at the time the decision in question was being made, would have been expected to accomplish the desired result of such decision consistent with good independent power generation practices and the requirements of applicable Laws. Good Industry Practices are not limited to the optimum practices, methods or acts to the exclusion of all others, but rather include a spectrum of possible practices, methods or acts commonly employed in the independent power generation industry during the relevant period in light of the circumstances.

"Governmental Authority" means any federal, state, local, foreign or other governmental subdivision, regulatory or administrative agency, commission, body, court, tribunal, arbitral panel, or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, Tax or other authority or power over the matters specified or, if such matters are not specified, over Seller or Purchaser or their respective Affiliates, each to the extent related to the Project, the Project Site, the Transactions or any related matter, and each as applicable.

"Hazardous Substance" means and includes any hazardous or toxic substance or waste, any contaminant or pollutant or any chemical, element, compound, mixture or substance, whether solid, liquid or gaseous, regulated as toxic or hazardous under applicable Environmental Laws, including (i) natural gas, petrochemical or petroleum products, oil, coal ash, radioactive materials, radon gas, asbestos or asbestos-containing material, polychlorinated biphenyls or transformers or other equipment that contains polychlorinated biphenyls, lead-based paint or urea formaldehyde foam insulation, (ii) any and all chemicals, materials, substances or wastes defined or regulated as "hazardous substances," "hazardous materials," "hazardous constituents," "restricted hazardous materials," "extremely hazardous substances," "hazardous wastes," "extremely hazardous wastes" "restricted hazardous wastes," "toxic substances," "toxic pollutants," "toxic air pollutants," "pollutants," "contaminants" or words of similar meaning and regulatory effect, including as the foregoing may be defined under any Environmental Law, and (iii) any and all other chemicals, materials, wastes or substances, the exposure to or treatment, storage, transportation, use, disposal or Release of which is prohibited, limited or regulated by any applicable Environmental Law.

"Hinds Purchase Agreement" means that certain Asset Purchase Agreement, dated April 28, 2011, between KGen Hot Spring, LLC, and Entergy Mississippi, Inc.

"HOPA Agreement" means that certain Home Office Payment Agreement, dated as of June 2, 2004, by and among Seller, the IDA Bond Trustee and KGen LLC (as assignee of KGen Partners LLC pursuant to the HOPA Assignment and Assumption Agreement, dated as of July 23, 2004).


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"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. §§ 15c-15h, 18a.

"IDA Bond" means that certain $351,318,588.83 Industrial Development Revenue Bond (Duke Energy Hot Spring, LLC Project) No R-2, dated June 17, 2002, held by KGen LLC as the registered owner.

"IDA Bond Contracts" mean, collectively, the IDA Bond, the IDA Bond Indenture, the IDA Lease Agreement, the IDA Bond Guaranty, the HOPA Agreement and the IDA Tax Agreement.

"IDA Bond Guaranty" means that certain Guaranty Agreement, dated as of December 1, 2000, by and between the Seller and the IDA Bond Trustee in connection with the IDA Bond.

"IDA Bond Indenture" means that certain Trust Indenture, dated as of December 1, 2000, between Hot Spring County, Arkansas to IDA Bond Trustee, related to the IDA Bond.

"IDA Bond Other Property" has the meaning set forth in Section 2.1(d).

"IDA Bond Real Property" has the meaning set forth in Section 2.1(a).

"IDA Bond Property" means the IDA Bond Real Property and the IDA Bond Other Property.

"IDA Bond Trustee" means U.S. Bank, N.A. (as successor to Wachovia Bank, National Association), as trustee under the IDA Bond Indenture.

"IDA Lease Agreement" means that certain Lease Agreement, dated as of December 1, 2000, between Hot Spring County, Arkansas and Seller.

"IDA Tax Agreement" means that certain Agreement, dated December 15, 2000, by Seller and accepted by Hot Spring County, Arkansas and Acknowledged and Accepted by the Malvern Special School District, re: obligation to make annual donations in lieu of ad valorum taxes that would be paid to the State of Arkansas, Hot Spring County, the Malvern Special School District and/or other political subdivisions.

"Imaged Document" has the meaning set forth in Section 11.3.

"Indemnitee" has the meaning set forth in Section 9.6(a).

"Indemnitor" has the meaning set forth in Section 9.6(a).

"Indemnity Notice" written notification pursuant to Section 9.6(g) of a claim for payment or indemnity under Article IX by an Indemnitee that does not involve a Third Party Claim, specifying the nature of and basis for such claim.

"Independent Accounting Firm" means PricewaterhouseCoopers LLP.

"Initial Plant Performance Test" has the meaning set forth in Section 6.7(d).


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"Initial Post-Closing Adjustment" has the meaning set forth in Section 3.8(d).

"Insurable Real Property" means the Owned Real Property, IDA Bond Real Property and all Easements appurtenant thereto to the extent such Easements constitute real property.

"Intellectual Property" means intellectual property of any kind or character, including (i) inventions, improvements thereto, and patents, patent applications, and patent disclosures, (ii) trademarks, service marks, trade dress, logos, brand names, trade names, domain names and corporate names, including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (iii) copyrightable works, copyrights, and related applications, registrations, and renewals, and (iv) trade secrets, know-how, and tangible or intangible proprietary business information, software, computer programs, source and object codes, databases, and data.

"Intellectual Property Rights" means (i) all proprietary or other legally enforceable rights with respect to Intellectual Property, including license and similar rights provided under any Contract relating to the Purchased Assets, or any other Law under any jurisdiction that provides protective or other rights with respect to Intellectual Property, including patent, copyright, trademark, service mark, design patent, industrial design, and semi-conductor chip, mask work, trade secret, database, and internet Law, and (ii) all rights to sue and recover damages for infringement, dilution, misappropriation or other violation of such rights.

"Interconnection Facilities" means all of the Electric Interconnection Facilities and Gas Interconnection Facilities.

"Inventory" means any and all of the parts, equipment, supplies and other items of inventory intended to be used or consumed at the Project in the ordinary course of the Business, including (i) Consumables; (ii) new, repaired or refurbished equipment, components, assemblies, or sub-assemblies; (iii) spare, replacement or other parts (including capital and non-capital spare parts); (iv) tools, special tools, or similar equipment; and (v) all associated materials, supplies, and other goods and other similar items of movable property; provided, that for the avoidance of doubt, no Capital Spares shall be considered Inventory hereunder.

"Inventory Report" means an inventory report prepared by Seller in the form set forth in Schedule 2.1(e).

"KGen" has the meaning set forth in the introductory paragraph of this Agreement.

"KGen Board" shall have the meaning set forth in Section 6.6(b)(ii).

"KGen Group" means KGen and its subsidiaries.

"KGen Intervening Event" means an event, change, development, effect, condition, circumstance, matter, occurrence or state of facts that (i) is material to KGen, (ii) was not reasonably foreseeable on the Effective Date, and (iii) becomes known to the KGen Board only after the Effective Date; provided, however, that in no event shall any of the following constitute or lead to a KGen Intervening Event: (A) any action taken by either Party pursuant to and in compliance with its obligations under this Agreement, and the consequences of any such action;


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(B) the receipt, existence or terms of a Takeover Proposal or any inquiry relating thereto or the consequences thereof; or (C) any project, proposal, offer, negotiation or undertaking commenced, discussed or considered by the KGen Board prior to the Effective Date.

"KGen Notice of Intervening Event" shall have the meaning set forth in Section 6.6(b)(ii).

"KGen Recommendation" shall have the meaning set forth in Section 6.6(b)(ii).

"KGen Recommendation Change" shall have the meaning set forth in Section 6.6(b)(ii).

"Knowledge" means the extent of the knowledge, as of the applicable time, of the individuals listed in Schedule 1.1A (with respect to Seller) or Schedule 1.1B (with respect to Purchaser) after the due inquiry by such individuals (or their replacements or successors) of other individuals employed by the applicable Party or any of its Affiliates who would reasonably be expected to have knowledge of such event, fact, circumstance, condition or other matter.

"kW" means kilowatt.

"Late Testing Notice" shall have the meaning set forth in Section 6.7(g).

"Laws" means all applicable federal, state, local, municipal, foreign or other laws, constitutions, statutes, rules, regulations, ordinances, Orders, codes and other legal requirements (excluding Permits) issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Authority, including the common law, Environmental Laws and NERC requirements, including the NERC reliability standards promulgated pursuant to 18 CFR 39.

"Leased Personal Property" has the meaning set forth in Section 4.8(a).

"Letter of Intent" means that letter of intent, dated November 16, 2010, between KGen and Entergy Services, Inc., as agent for Purchaser.

"Load-Following Capacity and Energy" has the meaning set forth in Section 4.14(b).

"Losses" has the meaning set forth in Section 9.1(a).

"LTSA" means the Long-Term Service Agreement, dated as of December 20, 2000, between Seller and GEII.

"Material Adverse Effect" means, with respect to Seller, any occurrence set forth in clause (a) or (b) of this definition, and, with respect to Purchaser, any occurrence set forth in clause (a) of this definition:

(a) any event, fact, circumstance or condition materially impairing such Party's authority, right, or ability to (i) perform any of its material obligations under this Agreement or any Ancillary Agreement to which it is a party or (ii) consummate the Transactions by the Expiration Date; or


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(b) any change (together with all other changes taken together) in, or effect on, the Purchased Assets that is materially adverse to the operations or physical condition of the Purchased Assets taken as a whole, or the assets, properties, financial condition or results of operations of the Business taken as a whole, except that any adverse change or effect to the extent it is due to the following shall be excluded from this clause (b):

(i) a change in the economic conditions of the national or regional electric industry generally affecting such national or regional electric industry as a whole except to the extent that such changes have a materially disproportionate effect on the Purchased Assets relative to other gas-fired generation facilities located in Arkansas;

(ii) a change in the price of natural gas or other commodities for the Purchased Assets;

(iii) a change in market prices for real estate;

(iv) a change in market prices for the sale and purchase of electric generating facilities or capacity, energy, or other products or services therefrom;

(v) an act of terrorism, war (whether or not declared) or military action, excluding acts that cause material physical damage to the Project or gas transportation or water or commodity delivery service to, or electric transmission service or water/effluent/waste disposal from, the Project Site or prevent or materially restrict the intended use of the Project;

(vi) a change in Laws, including those governing national, regional, state or local electric transmission or distribution systems, except to the extent that such changes have a materially disproportionate effect on the Purchased Assets relative to other gas-fired generation facilities located in Arkansas;

(vii) general United States or global economic conditions affecting capital or financial markets generally; and

(viii) the transactions contemplated by this Agreement and the Ancillary Agreements, and any action taken pursuant to and in accordance with this Agreement or any Ancillary Agreement in effect.

"Monthly Inventory Report" means an Inventory Report prepared monthly by or for Seller.

"Monthly Operating Report" means a monthly management report for the applicable period, including technical discussions of capacity availability, energy production, operations and maintenance and regulatory compliance of the Project, with attached reports covering such matters as have been covered in reports previously provided by Seller or are otherwise reasonably requested by Purchaser.

"MW" means megawatt.


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"Natural Gas Act" means the Natural Gas Act, 15 U.S.C. § 717 et seq.

"NERC" means the North American Electric Reliability Corporation.

"New Pipeline" has the meaning set forth in Section 6.22.

"Non-Assigned Asset" has the meaning set forth in Section 6.5(c).

"Non-Defending Party" has the meaning set forth in Section 9.6(d).

"Notice of Inquiry" has the meaning set forth in Section 6.12(c).

"Notice of Superior Offer" shall have the meaning set forth in Section 6.12(d)(ii).

"Notice of Third Party Claim" has the meaning set forth in Section 9.6(a).

"Notice Period" means the period that is thirty (30) days from the date of receipt by the Indemnitor of a Notice of Third Party Claim or Indemnity Notice, as applicable.

"O&M Agreement" means the Operation and Maintenance Agreement, dated as of October 16, 2009, between Seller and Operator.

"Off-Site Location" means any real property related to or used in connection with the Project other than the Project Real Property.

"Operator" means NAES Corporation.

"Order" means any legally binding order, injunction, judgment, decree, ruling, writ, or assessment of a Governmental Authority or decision of an authorized arbitrator.

"Organizational Documents" means the articles of incorporation, certificate of incorporation, certificate of formation, bylaws, operating agreement, certificate of limited partnership, partnership agreement and all other similar documents, instruments or certificates executed, adopted or filed in connection with the creation, formation or organization of a Person, including amendments thereto.

"Owned Real Property" has the meaning set forth in Section 2.1(a).

"Ozark" means Ozark Gas Transmission, L.L.C.

"Ozark Gas Transportation Agreements" means (i) the Service Agreement Under Rate Schedule FTS, Contract No. 820095-R1 dated April 1, 2010 between Ozark and Seller, and (ii) the Negotiated Rate for Rate Schedule FTS Service Agreement No. 820095 dated April 1, 2010 between Ozark and Seller.

"Party" means Seller or Purchaser, as the context requires; "Parties" means, collectively, Seller and Purchaser.


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"Permits" means any and all (i) permits, registrations, licenses, franchises, certificates and Consents of Governmental Authorities, including Environmental Permits, to the extent related to the Project or the Business, and (ii) pending applications for any new permit, registration, license, franchise, certificate or Consent of any Governmental Authority or the renewal, extension or modification of any permit, registration, license, franchise, certificate or Consent of any Governmental Authority.

"Permitted Encumbrances" means (i) liens for Property Taxes and other governmental charges and assessments (x) that are not yet due and payable or (y) the validity of which is being contested in good faith by appropriate proceedings as described in Part I of Schedule 1.1C, (ii) mechanics', materialmens', laborers', carriers', workers', repairers' and other similar liens arising in the ordinary course of business by operation of Law for sums not yet due and payable (provided, that, with respect to any such Encumbrances that will be in existence at Closing, such Encumbrances shall only be Permitted Encumbrances to the extent that the underlying obligations are agreed to be or deemed to be Assumed Liabilities under this Agreement), (iii) the Encumbrances described in Part II of Schedule 1.1C and any and all other Encumbrances that will be and are discharged or released either prior to, or simultaneously with, the Closing, (iv) all matters (other than those set forth in Items 1, 2(a)-(d), 3(h)-(j), 3(p)-(r), 3(nn) and 3(pp) of Schedule B-Section II of the Title Commitment) revealed as exceptions on Schedule B-Section II of the Title Commitment, (v) Encumbrances with respect to any of the Purchased Assets and created by or resulting from the acts or omissions of Purchaser or this Agreement, (vi) any imperfection of title or similar non-monetary Encumbrance that individually or in the aggregate with other such Encumbrances could not reasonably be expected to materially adversely affect Purchaser's ability to operate and maintain the Project and conduct the Business, and (vii) the state of facts shown on the Survey.

"Permitted Transaction" means any inquiry, proposal or offer by a Third Party reasonably acceptable to Purchaser that would otherwise constitute a Takeover Proposal (excluding the proviso in the definition of "Takeover Proposal") but that (a)(i) excludes the capital stock and assets (including the Purchased Assets) of Seller, or (ii) relates to a Business Combination Transaction involving KGen or any direct or indirect subsidiary of KGen (other than Seller) or a sale of the capital stock or other equity interests (as applicable) or the assets of KGen or any direct or indirect subsidiary of KGen (other than Seller) and (b) would not affect, limit or otherwise modify the obligations of KGen (or its successor) or Seller to effect the Transactions in any material and adverse manner, or decrease in any material respect the likelihood of Seller being able to consummate the sale of the Purchased Assets contemplated by this Agreement. For these purposes, any Consent of any Person, or any condition to closing the Takeover Proposal purporting to constitute a Permitted Transaction, that would decrease in any material respect the likelihood of receipt by KGen or Seller of any Consent, or which would reasonably be likely to impose additional restrictions on Purchaser or the Purchased Assets following Closing, will preclude such Takeover Proposal from constituting a Permitted Transaction.

"Person" means any individual, partnership, joint venture, corporation, limited liability company, estate, trust, association or unincorporated organization, any Governmental Authority or any other entity.


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"Plant Performance Parameter" means each of (i) Contract Capacity, (ii) Contract Heat Rate, (iii) Contract NOx Emission Rate, and (iv) Contract CO Emission Rate; collectively, the "Plant Performance Parameters."

"Plant Performance Re-Test" has the meaning set forth in Section 6.7(d).

"Plant Performance Test" means a plant performance test performed in accordance with Good Industry Practices, the protocols and procedures attached hereto as Schedule 6.7, and the requirements of this Agreement and based on American Society of Mechanical Engineers (ASME) standards to determine (i) the Project Capacity, (ii) the Project Heat Rate and (iii) the amount of and rates of CO and NOx emission of the generating units at the Project.

"Plant Performance Test Contractor" means General Physics Corporation or such other independent, experienced and reputable contractor as the Parties may agree upon in a writing signed by the Parties.

"Plant Performance Test Report" has the meaning set forth in Section 6.7(b).

"Plant Performance Test Results" has the meaning set forth in Section 6.7(b).

"Post-Closing Confidentiality Agreement" means the confidentiality agreement to be executed and delivered by KGen and Purchaser at the Closing in the form attached hereto as Exhibit E.

"Post-Closing Statement" has the meaning set forth in Section 3.8(b).

"PPA" means one or more Power Purchase Agreements, if any, between Purchaser and/or an Affiliate of Purchaser and Seller relating to the purchase and sale of capacity, energy and ancillary services from the Project.

"Pre-Closing Period" means any period of time beginning and ending on or prior to the Closing Date.

"Precedent Agreement" has the meaning set forth in Section 6.22.

"Predecessor-in-Interest" means any prior owner of, or predecessor-in-interest with respect to, the Project, including Duke Energy North America, LLC and its Affiliates.

"Prepaid Items" has the meaning set forth in Section 2.1(k).

"Project" means the nominal 620 MW natural gas-fueled electrical generation plant located on the Project Site, and all related assets and properties, real, personal and mixed, and interests therein, owned, operated or controlled by Seller, including two GE combustion turbines with mechanical chillers, two Aalborg heat recovery steam generators, one GE steam turbine, ancillary equipment, Interconnection Facilities, Protective Apparatus, the Project Real Property, the Tangible Personal Property, and the Inventory and, subject to the other terms hereof, any additions thereto or replacements to any of the foregoing. A general description of the generation plant component of the Project is provided in Schedule 1.1D.


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"Project Capacity" means the full-load dependable net electric generating capability of the Project, adjusted to Reference Conditions and expressed in whole kW (with a fractional kW amount below 0.5 being rounded down to the nearest whole kW and a fractional MW amount equal to or above 0.5 being rounded up to the nearest whole kW), determined pursuant to a Plant Performance Test.

"Project CO Emission Rate" means the Project's emission rate of CO (in lbs./MMBtu), determined pursuant to a Plant Performance Test.

"Project Contract" means any Contract (other than licenses or similar rights relating to Intellectual Property), excluding this Agreement and, as and when executed, the Ancillary Agreements, to which Seller is a party, or by which Seller or any of the Purchased Assets is bound, that primarily relates to or has the primary purpose of supporting the Project or the Business.

"Project Heat Rate" means the net heat rate (in Btu/kWh – HHV) of the electric generating units of the Project in the 2 x 1 combined-cycle mode at the Project's baseload operating capabilities, adjusted to Reference Conditions, determined pursuant to a Plant Performance Test.

"Project Insurance Policies" means all insurance policies (including all fidelity bonds and other surety arrangements) carried by or for the benefit of Seller or any Affiliate thereof with respect to the ownership, use, operation or maintenance of the Project, the Project Site or the Business, including all liability, workers compensation, executive risk, fiduciary liability (or any other ERISA plan of protection), all-risk property insurance, self-insurance arrangements, retrospective assessments and business interruption and/or outage policies in respect thereof.

"Project NOx Emission Rate" means the Project's emission rate of NOx (in lbs./MMBtu), determined pursuant to a Plant Performance Test.

"Project Real Property" means the Owned Real Property, the IDA Bond Real Property and the Easements.

"Project Site" means (i) the approximately 393-acre parcel of land upon which the Project is located, in Hot Spring, Arkansas, as described in Part I and Part II of Schedule 2.1(a), and (ii) the Easements.

"Property Tax" means any Tax resulting from and relating to the assessment of real or personal property by any Governmental Authority.

"Proposed Post-Closing Adjustment" has the meaning set forth in Section 3.8(b).

"Proratable Item" means any Proratable Non-Tax Item or Proratable Tax Item.

"Proratable Non-Tax Item" means any item of receipt or disbursement under a Purchased Project Contract or Purchased License, including any Prepaid Item thereunder, covering a period both prior to and following the Closing and incurred by or on behalf of Seller prior to the Closing


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in the ordinary course of business consistent with past practice and the provisions of this Agreement.

"Proratable Tax Item" means the Property Taxes assessed with respect to the Project Real Property and the Taxable Project Personal Property for the year in which the Closing of the Transactions occurs. For the avoidance of doubt, no Tax other than a Property Tax shall be a Proratable Tax Item.

"Protective Apparatus" means such equipment and apparatus that are owned, operated or controlled by Seller, including protective relays, circuit breakers and the like, necessary or appropriate to isolate the Project from the electrical system to which they are connected consistent with Good Industry Practices.

"Proxy Statement" has the meaning set forth in Section 4.22.

"Purchase Price" has the meaning set forth in Section 3.4.

"Purchased Assets" has the meaning set forth in Section 2.1.

"Purchased Intellectual Property" has the meaning set forth in Section 2.1(b).

"Purchased Inventory" has the meaning set forth in Section 2.1(e).

"Purchased Licenses" has the meaning set forth in Section 4.13(b).

"Purchased Permits" has the meaning set forth in Section 2.1(g).

"Purchased Project Contracts" has the meaning set forth in Section 2.1(f).

"Purchased Warranties" has the meaning set forth in Section 2.1(i).

"Purchaser" has the meaning set forth in the introductory paragraph of this Agreement.

"Purchaser Claims" has the meaning set forth in Section 9.1(a).

"Purchaser Group" has the meaning set forth in Section 9.1(a).

"Purchaser Match Period" has the meaning given to that term in Section 6.12(d)(ii).

"Purchaser's Consents" means the notices to or Consents of any Person other than a Governmental Authority required by Purchaser to be made or obtained by or on behalf of Purchaser prior to consummation of the Transactions, as specified in Part I of Schedule 5.3.

"Purchaser's Regulatory Approvals" means the notices to, applications or other filings with or Consents of or from any Governmental Authority of competent jurisdiction over any of Purchaser (including Purchaser's retail operations), any Affiliates of Purchaser, the Project, or the Transactions to be filed, made or obtained by Purchaser or any of its Affiliates that Purchaser deems necessary or advisable for it to consummate the Transactions, including approval from a Governmental Authority having jurisdiction over Purchaser (i) to proceed with the Transactions


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on the terms set forth herein and in the Ancillary Agreements and recover all costs associated with the Transactions on terms acceptable to Purchaser in its sole and absolute discretion (through base rates, fuel adjustment charges, and/or such other rates or charges as may be applied pursuant to a rider or otherwise) pursuant to a finding that the consummation of the Transactions by Purchaser is prudent and in the public interest, and (ii) providing for such other regulatory treatment, including with respect to timing, scope, and means of recovery, as is acceptable to Purchaser in its sole and absolute discretion. Purchaser's Regulatory Approvals are set forth in Part II of Schedule 5.3.

"Purchaser's Required Consents" means the Purchaser's Consents marked with an asterisk on Part I of Schedule 5.3.

"Reference Conditions" has the meaning set forth in Schedule 6.7.

"Release" has the meaning set forth in Environmental Laws, including CERCLA, but also shall include any actual or threatened release, spill, leak, discharge, abandonment, disposal, pumping, pouring, emitting, emptying, injecting, leaching, dumping or deposit into the Environment or any of the Project Real Property, any Hazardous Substance, including the abandonment or discarding of any Hazardous Substance in barrels, drums, or other containers, into or within the Environment.

"Remediation" means any action taken in accordance with or required under Environmental Laws to address an Environmental Condition, or the Release or presence of Hazardous Substances into or in the Environment at the Project Real Property or any Off-Site Location, including (i) monitoring, investigation, assessment, treatment, clean-up, containment, remediation, removal, mitigation, response or restoration work; (ii) obtaining any Permit necessary to conduct any such work; (iii) preparing and implementing any plan or study for such work; (iv) obtaining a written notice from a Governmental Authority with jurisdiction under Environmental Laws that no material additional work is required by such Governmental Authority; (v) any response to, or preparation for, any inquiry, hearing or other proceeding by or before any Governmental Authority with respect to any such Environmental Condition, Release or presence of Hazardous Substances; and (vi) any other activity that is taken in accordance with or required under Environmental Laws to address an Environmental Condition, or the presence or Release of Hazardous Substances in or into the Environment at the Project Real Property or any other Off-Site Location.

"Repair" means, with respect to any Damaged Portion, Repair Portion or Testing Defect, the repair or restoration of the Damaged Portion, Repair Portion or Testing Defect to good working order in accordance with Good Industry Practices, including with respect to any engineering, design, procurement or installation performed by or for Seller or its Affiliates in connection with such repair or restoration. The term "repair or restoration" (and similar terms) shall be broadly construed, and shall include or allow for the replacement of all or any portion of the Damaged Portion, Repair Portion or Testing Defect.

"Representatives" means, as to any Person, its officers, directors, employees, agents, partners, members, counsel, accountants, financial advisers, investment bankers and consultants.


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"Resolution Period" means the period ending thirty (30) days following receipt by an Indemnitee of a written notice from an Indemnitor stating that it disputes all or any portion of a claim set forth in a Notice of Third Party Claim or an Indemnity Notice.

"Restricted Employee" has the meaning set forth in Section 6.11(e).

"SEC" means the United States Securities and Exchange Commission.

"Seller" has the meaning set forth in the introductory paragraph of this Agreement.

"Seller Claims" has the meaning set forth in Section 9.2(a).

"Seller Condition Failure " means, on any date of determination, (1) the conditions in Section 8.3, (the satisfaction of which shall, for purposes of determining whether a Seller Condition Failure exists, be determined on the basis of whether or not such preliminary or permanent Order is in effect at the end of the TP1 Closing Delay Period or the TP2 Closing Delay Period, as applicable), Section 8.4(a) (other than the condition to obtain FERC authorization under Section 203 of the Federal Power Act and the condition that the applicable waiting period, and any and all applicable extensions thereof, for the Transactions under the HSR Act shall have expired or terminated) or Section 8.4(b) have not been satisfied or waived by Seller in its sole and absolute discretion or (2) Seller has not satisfied the Seller requirements in Section 7.1, Section 7.5, Section 7.6 and Section 7.7(h) necessary for the Purchaser conditions to Closing set forth therein to be satisfied.

"Seller's Consents" means the notices to or Consents of any Person other than a Governmental Authority that are required to be made or obtained by or on behalf of Seller or any of its Affiliates prior to the Closing in order to avoid the violation or breach of, or the default under, or the creation of an Encumbrance on the Purchased Assets pursuant to, any Law or any Project Contract or license (or similar right) relating to Intellectual Property to which Seller or any of its Affiliates is a party or to which any of the Purchased Assets are subject. Seller's Consents are specified in Part I of Schedule 4.3.

"Seller Group" has the meaning set forth in Section 9.2(a).

"Seller's Regulatory Approvals" means the notices to, applications or other filings with or Consents of or from any Governmental Authority that are necessary for Seller to consummate the Transactions and to be made or obtained by or on behalf of Seller prior to the Closing. Seller's Regulatory Approvals are specified in Part II of Schedule 4.3.

"Seller's Required Consents" means the Seller's Consents marked with an asterisk on Part I of Schedule 4.3.

"Site Indemnity Agreement" means that certain letter agreement, dated October 27, 2010, between KGen and ESI, as agent for the Entergy Operating Companies.

"Special Meeting" shall have the meaning set forth in Section 6.6(b)(i).


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"Stockholder Approval" means the affirmative vote of the holders of shares representing a majority of the voting power of the outstanding shares of capital stock of KGen authorizing the sale of the Purchased Assets pursuant to this Agreement.

"Subsequent Transaction" has the meaning given to that term in Section 10.3(a)(v).

"Superior Offer" means a Takeover Proposal (but replacing references to "20% or more" in the definition thereof with "50% or more") that (i) is fully financed, (ii) has no condition for a vote of the Third Party's equityholders on any matter, or the consent of its debt holders or lenders (in each case except as would be obtained at or prior to the time at which a definitive agreement with respect to such Takeover Proposal would be executed), (iii) is otherwise on terms that the KGen Board has determined in good faith, by resolution duly adopted, after consultation with KGen's outside legal and financial advisors (which shall include a nationally recognized investment banking firm) and considering such factors as the KGen Board considers to be appropriate (including the conditionality and the timing and likelihood of consummation of such proposal) are more favorable to KGen or the KGen stockholders from a financial point of view than the Transactions, and (iv) the KGen Board has determined in good faith is reasonablycapable of being consummated in a timely manner on the terms proposed.

"Superior Offer Documentation" has the meaning given to that term in Section 6.12(d)(i).

"Survey" means, collectively, as-built surveys of the Insurable Real Property prepared by Randall A. Mansfield, PLS, of Smith, Roberts, Baldischwiler, LLC, as Project No. 112,682 and dated as of March 1, 2011, and prepared by Paxton R. Singleton, RPLS, of Global Surveying Consultants, Inc., as Project No. 11-1014.00, and dated as of February 23, 2011.

"Takeover Proposal" means any proposal or offer from one or more Third Parties relating to (a) any Business Combination Transaction with Seller, (b) any Business Combination Transaction or direct or indirect acquisition or purchase by one or more Third Parties, in a single transaction or a series of related transactions, including by means of the acquisition of capital stock of KGen, Seller or any of their respective Affiliates, of assets or properties that constitute 20% or more of the assets of Seller or 20% or more of equity interests (measured by economic or voting power) of Seller, in each case other than the Transactions, or (c) the acquisition by KGen, Seller or any of their respective Affiliates of any Third Party in a Business Combination Transaction in which the shareholders of the Third Party immediately prior to consummation of such Business Combination Transaction will, immediately following such Business Combination Transaction, directly or indirectly own more than 20% of Seller's consolidated assets or outstanding capital stock, including the issuance by KGen, Seller or any of their respective Affiliates of any class of equity interests (measured by economic or voting power) as consideration for assets or securities of the Third Party that would result in the shareholders of such Third Party owning stock of KGen, Seller or any of their respective Affiliates that would represent, directly or indirectly, ownership of 20% or more of the capital stock or assets of Seller; provided, however, that in no event shall the term "Takeover Proposal" include a Permitted Transaction.

"Tangible Personal Property" has the meaning set forth in Section 2.1(d).


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"Target Closing Date" has the meaning set forth in Section 6.7(c).

"Tax" means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, carbon, Btu, fuel, environmental, customs duties, tariff, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property (including assessments, fees or other charges based on the use or ownership of real property, Property Tax, and ad valorem tax), personal property, transactional, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not, including any item for which liability arises as a transferee or secondary liability in respect to any tax (whether imposed by Law, contractual agreement or otherwise), and any liability in respect of any tax as a result of being a member of any affiliated, consolidated, combined, unitary or similar group.

"Tax Return" means any return, report, information return, declaration, claim for refund or other document, together with all amendments and supplements thereto, including all related or supporting information, required to be supplied to any Governmental Authority responsible for the administration of Laws governing Taxes, including information returns or reports with respect to backup withholding and other payments to third parties.

"Taxable Project Personal Property" means all property subject to ad valorem property Tax that is not Project Real Property.

"Termination Order" has the meaning set forth in Section 10.1(c)(i).

"Testing Defect" shall have the meaning set forth in Section 6.7(g).

"Testing Party" means, with respect to the Initial Plant Performance Test, Seller and, with respect to any other Plant Performance Test, the Party causing the Plant Performance Test to be performed pursuant to Section 6.7.

"Testing Repair" shall have the meaning set forth in Section 6.7(g).

"TETCO" has the meaning set forth in Section 6.22.

"Third Party" means any Person other than Purchaser, KGen, or any of their respective Affiliates.

"Third Party Claim" means a claim, demand or Action instituted or threatened by any Person, other than one made or threatened by a member of the Seller Group or the Purchaser Group, (i) for the enforcement of its rights under or relating to this Agreement or (ii) for which a specific remedy is provided under this Agreement. "Third Party Claim" shall include any claim, other than a claim by a member of the Seller Group or the Purchaser Group, for the costs of conducting Remediation or seeking an Order or demanding that a Person undertake Remediation.

"Title Commitment" means the title commitments attached hereto as Exhibit F.

"Title Insurer" has the meaning set forth in Section 7.8.


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"Title Policy" has the meaning set forth in Section 7.8.

"Total Cost" has the meaning set forth in Section 6.8(c).

"TP1 Closing Delay Period" means a period equal to the number of days from the expiration of Transaction Period 1, through the Trigger Day (regardless of whether the Trigger Day occurs in Transaction Period 2 or thereafter); it being understood and agreed that if the Trigger Day occurs during Transaction Period 1, there shall be no TP1 Closing Delay Period.

"TP2 Closing Delay Period" means a period equal to the number of days from the expiration of Transaction Period 2, through the Trigger Day; it being understood and agreed that if the Trigger Day occurs during Transaction Period 2, there shall be no TP2 Closing Delay Period but there shall be a TP1 Closing Delay Period.

"Transaction Period 1" means the period from the Effective Date through the last day of the fifteenth (15th) consecutive month after the Effective Date.

"Transaction Period 2" means a period beginning on the first day after the expiration of Transaction Period 1 through the last day of the twelfth (12th) consecutive month thereafter.

"Transactions" means the transactions contemplated by this Agreement and the Ancillary Agreements.

"Transfer Tax" means any sales, gross receipts, transfer, transaction, excise, value added, use, real property transfer, stamp, or other similar Tax, including any related penalties, interest and additions thereto.

"Transmission System" means the transmission system of Purchaser and the other Entergy Operating Companies (or any Person succeeding to the ownership or control thereof, including any regional transmission organization), including the substation to which the Project is interconnected.

"Trigger Day" means the day identified in a written notice from Purchaser to Seller as the day on which Purchaser in its sole and absolute discretion has determined that the condition set forth in Section 7.4(a) has been satisfied or waived by Purchaser; provided that the Trigger Day may be no more than one (1) Business Day prior to the date that such notice is received by Seller.

"Uncapped Purchaser Representations" has the meaning set forth in Section 9.2(b).

"Uncapped Seller Representations" has the meaning set forth in Section 9.1(b).

"Warm-up Line Improvement Project Testing" means testing of the warm-up line improvement project the results of which confirm the successful completion of the warm-up line improvement project for the prevention of further degradation of the bow in the steam turbine rotor during hot start conditions by ensuring steam is admitted at the proper temperature, with such testing to be performed under hot start conditions.


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"WARN Act" means the Worker Adjustment and Retraining Notification Act of 1988.

Section 1.2. Certain Interpretive Matters. In this Agreement, unless the context otherwise requires or this Agreement otherwise specifies:

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

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

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

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

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

(f) the phrase "ordinary course of business consistent with past practice" shall be deemed to include practices consistent with Seller's obligations under a PPA;

(g) any accounting term used and not otherwise defined in this Agreement or any Ancillary Agreement has the meaning assigned to such term in accordance with GAAP;

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

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

(j) relative to the determination of any period of time, "from" means "from and including," "to" means "to but excluding" and "through" means "through and including;"

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

(l) all calculations and computations pursuant to this Agreement shall be carried and rounded to the nearest two (2) decimal places;

(m) reference to any "day," "month" or "year" shall be to a calendar day, month or year;


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(n) this Agreement and any documents or instruments delivered pursuant hereto shall be construed without regard to the identity of the Person who drafted the various provisions of the same and any rule of construction that a document is to be construed against the drafting party shall not be applicable either to this Agreement or such other documents and instruments;

(o) the captions of the various Articles, Sections, Exhibits and Schedules of this Agreement have been inserted only for convenience of reference and do not modify, explain, enlarge or restrict any of the provisions of this Agreement;

(p) all amounts in this Agreement are stated and shall be paid in United States currency; and

(q) in the event of any conflict that cannot be reasonably reconciled between the provisions of this Agreement and those of any Exhibit or Schedule, the provisions of this Agreement shall control and prevail.

ARTICLE II.PURCHASE AND SALE

Section 2.1. Purchased Assets. Upon the terms and subject to the conditions contained in this Agreement, at the Closing Seller, or, in the case of the IDA Bond Property, either Seller or Hot Spring County, Arkansas (in Seller's sole and absolute discretion), shall sell, convey, assign, transfer and deliver, to Purchaser, and Purchaser shall purchase and acquire from (x) Seller, all of the right, title and interest of Seller in and to the assets, properties and rights, of every kind, character and nature, whether real, personal, or mixed, fixed, contingent, or otherwise, tangible or intangible, known or unknown, accrued or unaccrued, or carried or not carried on the books and records of Seller, and wherever situated, primarily relating to, used at, or held for use at the Project or in the Business and, solely with respect to the Intellectual Property set forth on Schedule 2.1(b), all of the right, title and interest of the Affiliates of Seller set forth in Schedule 2.1(b), and (y) with respect to the IDA Bond Property only, Hot Spring County, Arkansas, if applicable, and, in each case as the same shall exist on the Closing Date and excluding the Excluded Assets (collectively, the "Purchased Assets"), free and clear of all Encumbrances, other than Permitted Encumbrances. The Purchased Assets include:

(a) (i) all parcels of real property and fee simple interests described in Part I of Schedule 2.1(a), and all appurtenances thereto, together with all buildings, fixtures, component parts, other constructions and other improvements thereon and thereto, including all construction work in progress (collectively, the "Owned Real Property") and (ii) each parcel of real property subject to the IDA Lease Agreement and described in Part II of Schedule 2.1(a)(the "IDA Bond Real Property");

(b) (i) all Intellectual Property of Seller used primarily with respect to or in connection with the Project or the Business, including the Purchased Licenses, other than Intellectual Property Rights retained by Seller pursuant to Section 2.2(h) and (ii) the Intellectual Property listed in Schedule 2.1(b), owned by the Affiliates of Seller as designated therein, including all right, title, and interest, if any, of Seller or any of its Affiliates in and to the names


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"Hot Spring Generating Station," "Hot Spring Generation Facility," "Hot Spring Power Facility," "Hot Spring Power Plant" and "Hot Spring Plant" (and excluding, for the avoidance of doubt, any right to use the name of Seller or any of its Affiliates or any related or similar trade name, trademark, service mark, corporate name, corporate logo or any part, derivative or combination thereof) (collectively, the "Purchased Intellectual Property");

(c) all licenses, rights of way and easements appurtenant to or benefiting the Owned Real Property or the IDA Bond Real Property and easements in gross, held by Seller as well as the right, by way of license, right-of-way, easement, or the like, to permit access to the Project or to locate or operate the Business, including those described in Schedule 2.1(c)(collectively, the "Easements");

(d) all tangible personal and other property (other than the IDA Bond Real Property) subject to the IDA Lease Agreement (the "IDA Bond Other Property"), all machinery (mobile or otherwise), equipment, vehicles, pumps, fittings, tools, furniture, furnishings, meters and metering equipment, Leased Personal Property, Capital Spares and other tangible movable property that is located at the Project Site, or acquired by Seller for use or consumption at the Project, that is not Inventory, including assets temporarily off-site for repair or other purposes, assets being shipped to Seller, or the Project Site, and assets housed or kept off-site, and including the property listed or described in Schedule 2.1(d) (collectively, the "Tangible Personal Property");

(e) all Inventory, including the Inventory listed or described in Schedule 2.1(e) (collectively, the "Purchased Inventory");

(f) subject to Section 2.2(c) and Section 6.5(c), all Project Contracts (i) listed or described in Schedule 2.1(f) (including all Project Contracts added to Schedule 2.1(f) between the Effective Date and the Closing Date with the written consent of Purchaser) and (ii) entered into by Seller in the ordinary course of business consistent with past practices and added to Schedule 2.1(f) by Seller (x) under which the aggregate payments by Purchaser under such Project Contract will be $500,000 or less, (y) that are terminable on thirty (30)-days' notice or less without penalty and under which Purchaser would not be required or reasonably expected to spend more than $100,000 in any such thirty (30)-day notice period or (z) pursuant to which Seller purchases Inventory that replaces Inventory used by Seller between the Effective Date and the Closing in the ordinary course of business consistent with past practices, it being understood that, for purposes of clauses (x), (y) and (z), each individual purchase order shall be deemed a Project Contract (as opposed to the corresponding master agreement) and that the aggregate amount of the payment obligations of Purchaser under the Project Contracts described in and permitted under clause (ii) above shall not exceed $3,500,000 (collectively, the "Purchased Project Contracts");

(g) subject to Section 6.5(c), all Permits held or filed by Seller in connection with the ownership, lease, use, operation, maintenance or repair of the Project or the Business, including those listed or described in Schedule 2.1(g) (collectively, the "Purchased Permits"), to the extent legally transferable by sale;


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(h) all books, records, documents, drawings, reports, operating data, operating safety and maintenance manuals, inspection reports, engineering design plans, blueprints, specifications and procedures and similar items primarily relating to, or used in support of, the Purchased Assets, the Project or the Business and owned by, or in the care, custody or control of, Seller ((x) to the extent such transfer is not prohibited by Law and (y) with respect to items not owned by Seller, absent any present restriction on such transfer), including (i) Environmental logs, data sheets, studies, reports, and records, including correspondence received by or sent to Governmental Authorities; (ii) Permit records and files; (iii) emergency, accident, incident, safety and inspection reports and records, including reports submitted to the U.S. Department of Labor's Occupational Safety & Health Administration, to the extent resulting in or requiring physical changes to the Project and not protected by a legal privilege benefiting Seller or prohibited by Law from being transferred to Purchaser; (iv) operating, maintenance, and repair logs, data sheets, reports and records; (v) vendor lists and vendor purchase orders and records; (vi) engineering design and construction drawings and plans, including as-built drawings, blueprints, and specifications; (vii) records, plans, reports, and drawings relating to the Project Real Property; and (viii) drawings in AutoCAD or similar programs, OEM manuals, and other existing information and data (in electronic form where applicable) necessary to enable parallel migration to Purchaser's information systems, and the right to use and duplicate the foregoing (whether such drawings, information, and data currently exist or need to be generated by Seller using Commercially Reasonable Efforts), all in a format and on a medium reasonably requested by Purchaser, it being understood and agreed that Seller may make and keep additional copies of any of the foregoing, subject to the Post-Closing Confidentiality Agreement, and shall use Commercially Reasonable Efforts to cause any such contractual restrictions on transfer to be waived or otherwise removed;

(i) subject to Section 6.5(c), all unexpired warranties, indemnities, and guarantees made or given by manufacturers, contractors, architects, engineers, consultants, vendors, suppliers and other third parties in connection with or relating to the Project, including the warranties and indemnities provided by GEII in connection with work performed or equipment, items or material provided under the LTSA, and the warranties and guarantees listed or described in Schedule 2.1(i), other than those described in Section 2.2(m) (collectively, the "Purchased Warranties");

(j) all claims or causes of action of Seller against third parties related to the Project or the Business, including indemnification claims, contribution claims, warranty claims, and claims for refunds, prepayments, offsets, recoupment, insurance proceeds, condemnation awards, judgments and the like, other than the claims or causes of action described in Section 2.2(k);

(k) all advance payments, prepayments, prepaid expenses, deposits or the like (other than Proratable Items, the treatment of which is addressed in Section 3.6), in each case to the extent related to the Project or the Business and made by or on behalf of Seller before the Closing Date and applicable to periods on or after the Closing Date, including the items listed or described in Schedule 2.1(k) (collectively, the "Prepaid Items"); and


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(l) subject to Section 6.5(c), all accounts, rights, or allowances involving Emission Allowances, if any, that have been or will be granted or allocated to or purchased for the Project.

Section 2.2. Excluded Assets. Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall constitute or be construed as conferring on Purchaser, and Purchaser shall not be entitled or required to purchase or acquire, any right, title or interest in, to or under the following assets, interests, properties, rights, licenses or Contracts (collectively, the "Excluded Assets") and such assets, interests, properties, rights, licenses and Contracts shall be excluded from and shall not constitute Purchased Assets:

(a) all Tangible Personal Property or Inventory consumed or disposed of prior to the Closing in the ordinary course of business consistent with past practice and the provisions of this Agreement, including Section 6.3, and any Ancillary Agreement in effect or any PPA;

(b) all of the assets, properties, rights or interests owned, used, occupied or held by or for the benefit of Seller or any of its Affiliates that are listed or described in Schedule 2.2(b);

(c) all of the rights and interests of Seller and its Affiliates in, to, under or pursuant to any Project Contract listed or described in Schedule 2.2(c) (collectively, the "Excluded Project Contracts");

(d) all of the rights of Seller and its Affiliates under, and any funds and property held in trust or any other funding vehicle pursuant to, any Employee Plan (and in particular, but without limitation, neither Purchaser nor any of its Affiliates shall be deemed to have assumed or acquired any right to any Employee Plan by reason of any provision of this Agreement);

(e) except to the extent constituting Purchased Assets under Section 2.1(h) or otherwise hereunder, the books and records of Seller and its Affiliates, including Seller's minute books, limited liability company interest books, ledger and company seal;

(f) cash, cash equivalents, bank deposits, accounts and notes receivable, trade or otherwise, other than the Prepaid Items, of Seller and its Affiliates;

(g) certificates of deposit, shares of stock, securities, bonds, debentures, evidences of indebtedness, and interests in joint ventures, partnerships, limited liability companies and other entities of Seller and its Affiliates;

(h) all Intellectual Property Rights listed or described in Schedule 2.2(h);

(i) all rights of Seller and its Affiliates arising under this Agreement, the Ancillary Agreements or any other instrument or document executed and delivered pursuant to the terms of this Agreement or any Ancillary Agreement;

(j) all refunds or credits, if any, of Taxes due to or from Seller or its Affiliates, to the extent provided hereunder;


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(k) the claims or causes of action against third parties to the extent solely relating to or arising under (i) the Pre-Closing Period (except to the extent expressly provided otherwise herein or in any Ancillary Agreement) (ii) an Excluded Project Contract or the Intellectual Property Rights listed or described in Schedule 2.2(h), or (iii) this Agreement, the Ancillary Agreements or any other instrument or document executed and delivered pursuant to the terms of this Agreement or the Ancillary Agreements;

(l) all agreements, arrangements, commitments and other Contracts of any nature in respect of any intercompany transaction between Seller, on the one hand, and any of its Affiliates, on the other hand, whether or not such transaction relates to any contribution to capital, loan, the provision of goods or services, tax sharing arrangements, payment arrangements, intercompany advances, charges or balances, or the like; and

(m) all unexpired warranties, indemnities, and guarantees made or given by manufacturers, contractors, architects, engineers, consultants, vendors, suppliers and other third parties in connection with or relating to the Project that solely relate to (i) the Pre-Closing Period or (ii) an Excluded Project Contract or the Intellectual Property Rights listed or described in Schedule 2.2(h).

Section 2.3. Assumption of Liabilities.

Upon the Closing, Purchaser shall assume, and shall thereafter pay, perform and discharge as and when due, (a) all liabilities and obligations of Seller and, solely with respect to the Intellectual Property set forth on Schedule 2.1(b), the Affiliates of Seller set forth on Schedule 2.1(b), under the Purchased Project Contracts, the Purchased Licenses and the Purchased Permits (subject to Section 6.5), solely to the extent allocable to the period after the Closing Date and not resulting from any breach or default by, or waiver or extension given by or to, Seller or any breach of this Agreement or any Ancillary Agreement by Seller; (b) all liabilities and obligations prorated to Purchaser under Section 3.6; and (c) subject to the other terms of this Agreement, including Article VI and Article IX, Section 2.4, and the Ancillary Agreements, all liabilities and obligations relating to, based in whole or in part on any event, fact, circumstance or condition (or set of events, facts, circumstances or conditions) occurring or existing in connection with, or arising out of (i) the financing, ownership, lease, possession, use, operation, repair, maintenance, or replacement of the Project, the Project Real Property of any of the Purchased Assets, solely to the extent allocable to the period after the Closing, including (A) the delivery, receipt, movement, use, sale, conveyance, transfer, removal or disposal of any fuel, power (including any ancillary service), water, waste or any other Purchased Asset to or from the Project at any time after the Closing, (B) compliance or non-compliance with Laws or Permits (including Environmental Laws) after the Closing, including fines, penalties, charges, and costs, and interest thereon, except to the extent arising from conditions existing or events occurring prior to the Closing, (C) any Environmental Condition or Environmental Liability after the Closing, in each case arising from conditions existing or events occurring solely after the Closing, and (D) any obligation or liability representing indebtedness for money borrowed (or any refinancing thereof) or (ii) any other business, undertaking, or activity of Purchaser, any of its Affiliates, or any future owner or operator of the Project or the Project Real Property, in any such case described in this Section 2.3, after the Closing (collectively, the "Assumed Liabilities").


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Section 2.4. Excluded Liabilities. Except for the Assumed Liabilities, Seller shall retain, and Purchaser shall not assume or be obligated to pay, perform or otherwise discharge or be responsible or liable pursuant to this Agreement or otherwise with respect to, any liability or obligation of Seller or any of its Affiliates, whether or not of, associated with, or arising from any of the Purchased Assets, and whether fixed, contingent or otherwise, known or unknown, accrued or unaccrued, carried or not carried on the books and records of Seller or any of its Affiliates, tangible or intangible (collectively, the "Excluded Liabilities"), including:

(a) any liability or obligation relating to, based in whole or in part on any event, fact, circumstance or condition (or set of events, facts, circumstances or conditions) occurring or existing in connection with, or arising out of, (i) the financing, ownership, lease, possession, use, operation, repair, maintenance, or replacement of the Project, the Project Real Property or any of the Purchased Assets on or prior to the Closing, including (A) the delivery, receipt, movement, use, sale, conveyance, transfer, removal or disposal of any fuel, power (including any ancillary service), water, waste or any other Purchased Asset (or any Excluded Asset, including former assets) to or from the Project at any time as of or prior to the Closing, (B) compliance or non-compliance with Laws or Permits (including Environmental Laws) as of or prior to the Closing, including fines, penalties, charges, and costs, and interest thereon, (C) any Environmental Condition or Environmental Liability in each case arising from conditions existing or events occurring as of or prior to the Closing and (D) any obligation or liability representing indebtedness for money borrowed (or any refinancing thereof) or (ii) any other business, undertaking, or activity of Seller, any of its Affiliates, or any present or former owner (including any Predecessor-in-Interest) or operator of the Project or the Project Real Property, as of or prior to the Closing;

(b) any liability or obligation arising out of or related to the performance or non-performance by Seller as of or prior to the Closing of any Contract or Permit, including any breach by Seller of, default by Seller under, or waiver or extension given by or to Seller with respect to the performance of, any covenant, representation, term or other provision of any of the Purchased Project Contracts, Purchased License or Purchased Permits and that would have been, but for such breach, default, waiver or extension, paid, performed or otherwise discharged on or prior to the Closing;

(c) except as otherwise provided in Section 6.5(b), any liability or obligation of Seller incurred in connection with obtaining any Consent relating to the sale, conveyance, assignment, transfer or delivery of the Purchased Assets to Purchaser or the consummation of the Transactions hereunder;

(d) any liability or obligation of Seller in respect of the pending or threatened Actions set forth (or that should have been set forth) in Schedule 4.6 and the facts and circumstances relating to such matters;

(e) any liability or obligation (i) with respect to any Tax for which Seller is responsible or liable under Section 6.2 or Section 6.10, (ii) with respect to any Tax attributable or allocable to the purchase, sale, ownership, lease, possession, use, operation, repair, maintenance, or replacement of any of the Project as of or prior to the Closing (or any other assets, properties, rights or interests associated, at any time on or prior to the Closing, with the Business), except


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for Taxes for which Purchaser is liable under Section 6.2, or (iii) for which Seller is liable under any Contract providing for the allocation, indemnification or sharing of Taxes;

(f) other than those liabilities or obligations to the extent created directly by the actions of Purchaser or an Affiliate of Purchaser (and, for the avoidance of doubt, that are not derivative of any liabilities or obligations of Seller or any Affiliate of Seller), any liability or obligation relating to any Employee, former Employee, agent, contractor or representative of Seller, Operator or GEII or any of their respective Affiliates, including any liability or obligation related to, arising out of or with respect to: (A) any Employee Plan or Contract or (B) any event, fact, circumstance, occurrence or exposure (or set of events, facts, circumstances, occurrences or exposures) occurring at any time during any period prior to the Closing, in each case whenever any claims arising therefrom or relating thereto mature or are asserted; including any liability or obligation for or relating to (i) the withholding or payment of any federal, state or local income, employment, unemployment, or other Tax; (ii) compensation, severance benefits, vacation pay, continuation coverage, expenses, or any other similar type claim arising under Law relating to employment prior to the Closing or as a result of the consummation of the Transactions; (iii) employment, wage and hour restriction, equal employment opportunity, affirmative action, discrimination, retaliation, tort, or immigration and naturalization Law or any Law relating to employee benefits, employment discrimination, leave, accommodation, severance, labor relations, hiring or retention, safety, any employment contracts or agreements, unemployment, privacy, medical privacy, wages and hours of employees or any other terms or conditions of employment or any other employment-related matter or workplace issue, including COBRA; (iv) any Collective Bargaining Agreement or collective bargaining, labor or labor relations Law; (v) any workers' compensation or any other employee health, accident, disability or safety claim; or (vi) any action (including any action taken in connection with the consummation of the Transactions) that is or could be construed as a "plant closing" or "mass layoff," as those terms are defined in the WARN Act.

(g) any liability or obligation prorated to Seller under Section 3.6; and

(h) any liability or obligation to the extent relating to any Excluded Asset or other asset that is not a Purchased Asset and the ownership, operation and conduct of any business in connection therewith or therefrom.

ARTICLE III.CLOSING; PURCHASE PRICE

Section 3.1. Closing. Subject to the terms and conditions hereof, the consummation of the Transactions (the "Closing") shall take place at the Houston office of Bracewell & Giuliani, LLP, 711 Louisiana Street, Suite 2300, Houston, Texas 77002, at 10:00 a.m. local time, ten (10) Business Days following the date on which the conditions set forth in Article VII and Article VIII, other than those conditions that by their nature are to be satisfied at the Closing, have been either satisfied or waived by the Party for whose benefit such conditions exist, or on such other date or at such other place and time as the Parties may mutually agree. Notwithstanding the foregoing, if the final day of the month in which the Closing is scheduled to occur is a Business Day, the Parties shall use Commercially Reasonable Efforts to cause the Closing to occur on such day. The date on which the Closing occurs is referred to herein as the


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"Closing Date." The Closing shall be effective immediately upon receipt of the Purchase Price by Seller on the Closing Date; provided, however, that if the Closing occurs on the last day of a month, the Closing shall be deemed effective as of 11:59:59 p.m. CPT on the Closing Date.

Section 3.2. Seller Closing Deliverables. At the Closing, Seller shall deliver, or cause to be delivered, to Purchaser the following:

(a) each Ancillary Agreement to which Seller is a party, executed by a duly authorized representative of Seller, and each document, if any, required to be delivered to Purchaser by Seller in accordance with the provisions of any Ancillary Agreement, executed by a duly authorized representative of Seller;

(b) each document required to be delivered to Purchaser by Seller pursuant to Article VII;

(c) copies of each Seller's Consent obtained by Seller with respect to the sale and purchase of the Purchased Assets or the consummation of the Transactions, including with respect to the transfer of any Purchased Project Contract or Purchased License;

(d) evidence, in form and substance reasonably satisfactory to Purchaser, demonstrating that Seller has obtained all of the Seller's Regulatory Approvals and Seller's Required Consents;

(e) Seller's affidavit and gap indemnity agreement, in substantially the form attached hereto as Exhibit G, and any other documents and instruments that may reasonably be required by the Title Insurer in order to issue the Title Policy, executed by a duly authorized representative of Seller;

(f) a certificate and affidavit of non-foreign status of Seller pursuant to Section 1445 of the Code, in substantially the form attached hereto as Exhibit H, executed by a duly authorized representative of Seller (or Seller's tax parent Affiliate, as applicable);

(g) the Post-Closing Confidentiality Agreement, executed by a duly authorized representative of KGen;

(h) to the extent Seller elects for the IDA Bond Property to be transferred to Purchaser from Hot Spring County, Arkansas, (i) a Deed, executed by a duly authorized representative of Hot Spring County, Arkansas, pursuant to which the IDA Bond Property described therein is transferred to Purchaser and (ii) other documents properly executed by Seller or Hot Spring County, Arkansas as and to the extent contemplated by Section 6.23; and

(i) such other documents and instruments reasonably required by Purchaser to consummate the Transactions, properly executed by Seller to the extent required.

Section 3.3. Purchaser Closing Deliverables. At the Closing, Purchaser shall deliver, or cause to be delivered, to Seller (and with respect to clause (a)(i) below, to the Escrow Agent), the following:


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(a) (i) $38,000,000 (the "Escrow Amount"), which shall be paid by Purchaser to the Escrow Agent by wire transfer of immediately available funds for deposit into the Escrow Account and (ii) the Purchase Price (in accordance with Section 3.4) minus the Escrow Amount by wire transfer of immediately available funds to the account or accounts designated by Seller in writing at least three (3) Business Days prior to the Closing Date;

(b) each Ancillary Agreement to which Purchaser is a party, properly executed by Purchaser, and each document required to be delivered to Seller by Purchaser in accordance with the provisions of any Ancillary Agreement, executed by a duly authorized representative of Purchaser, if applicable;

(c) each document required to be delivered to Seller by Purchaser pursuant to Article VIII;

(d) copies of each Purchaser's Consent obtained by Purchaser with respect to the sale and purchase of the Purchased Assets or the consummation of the Transactions,

(e) evidence, in form and substance reasonably satisfactory to Seller, demonstrating that Purchaser has obtained Purchaser's Regulatory Approvals and Purchaser's Required Consents;

(f) the Post-Closing Confidentiality Agreement, executed by a duly authorized representative of Purchaser; and

(g) such other documents and instruments reasonably required by Seller to consummate the Transactions, executed by a duly authorized representative of Purchaser if applicable.

Section 3.4. Purchase Price. The purchase price for the Purchased Assets shall be:

(a) Two Hundred Fifty Three Million Dollars ($253,000,000), if (i) the Trigger Day falls prior to the expiration of Transaction Period 1 or (ii) a Seller Condition Failure has occurred and is continuing at the end of the later to terminate (as measured from the Trigger Day) of the TP1 Closing Delay Period and the TP2 Closing Delay Period;

(b) Two Hundred Fifty Eight Million Dollars ($258,000,000), if (i) the Trigger Day occurs after the expiration of Transaction Period 1 and (ii) on or before the end of the TP1 Closing Delay Period, (1) the conditions in Section 8.3 (the satisfaction of which shall, for purposes of this Section 3.4(b), be determined on the basis of whether or not such preliminary or permanent Order is in effect as of the applicable date of determination), Section 8.4(a) and Section 8.4(b) have been satisfied or waived by Seller in its sole and absolute discretion and (2) Seller has satisfied the Seller requirements in Section 7.1, Section 7.5, Section 7.6 and Section 7.7(h) necessary for the Purchaser conditions to Closing set forth therein to be satisfied; or

(c) Two Hundred Sixty Three Million Dollars ($263,000,000), if (i) the Trigger Day occurs after the expiration of Transaction Period 2 and (ii) on or before the expiration of the TP2 Closing Delay Period, (1) the conditions in Section 8.3 (the satisfaction of


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which shall, for purposes of this Section 3.4(c), be determined on the basis of whether or not such preliminary or permanent Order is in effect as of the applicable date of determination), Section 8.4(a) and Section 8.4(b) have been satisfied or waived by Seller in its sole and absolute discretion and (2) Seller has satisfied the Seller requirements in Section 7.1, Section 7.5, Section 7.6 and Section 7.7(h) necessary for the Purchaser conditions to Closing set forth therein to be satisfied;

the applicable amount, subject to adjustment as provided herein (as adjusted, the "Purchase Price"); provided, however, that if there is a modification to the Purchase Price based on the Final Plant Performance Test Results pursuant to Section 6.7, then each of the unadjusted Purchase Prices set forth in clauses (a), (b), and (c) above shall apply solely to the extent provided in Section 6.7; and provided, further, that if the Closing is delayed as a result of the occurrence of (i) any Casualty Event, or (ii) any of the circumstances described in Section 6.7(g), Section 6.7(k) or Section 6.7(l), then, notwithstanding anything to the contrary, the Purchase Price, prior to any adjustment made herein, shall be the Purchase Price that would have applied, as determined by this Section 3.4, on the date that the Closing would have occurred pursuant to Section 3.1 if such delay had not occurred.

Section 3.5. Inventory and Capital Spares Adjustments.

(a) The Parties agree that the Purchase Price assumes that the aggregate value of the Purchased Inventory included in the Purchase Price is $1,600,000 (the "Baseline Inventory Value"). The Purchase Price shall be adjusted by the difference between the Baseline Inventory Value and the aggregate value of the Purchased Inventory as of the Closing (the "Closing Inventory Value"). The Closing Inventory Value shall be determined in the same manner as the Baseline Inventory Value (i.e., based on the lower of cost or market and otherwise consistent with Seller's past practices). The Purchase Price shall be (i) increased by the amount by which the Closing Inventory Value exceeds the Baseline Inventory Value or (ii) decreased by the amount by which the Closing Inventory Value is less than the Baseline Inventory Value; provided, however, that there shall be no adjustment to the Purchase Price under this Section 3.5unless the difference between the Baseline Inventory Value and the Closing Inventory Value exceeds one percent (1%) of the Baseline Inventory Value.

(b) The Parties agree that the Purchase Price assumes that the Capital Spares as set forth on Schedule CS as of the Effective Date will be available to Purchaser so long as Purchaser has executed a long-term services agreement or similar agreement with GEII or an Affiliate thereof on terms acceptable to Purchaser in its sole and absolute discretion; provided, however, that notwithstanding the forgoing, such agreement shall entitle Purchaser to use the Capital Spares of Seller that would then otherwise belong to Seller under its LTSA (such agreement, the "Acceptable Purchaser LTSA"). In the event that Purchaser has executed the Acceptable Purchaser LTSA but the Capital Spares provided thereunder as of Closing do not include all of the Capital Spares listed on Schedule CS as of the Effective Date, then the Purchase Price shall be decreased by an amount equal to the value of such Capital Spares as set forth on Schedule CS.

Section 3.6. Proratable Items. Except as otherwise provided in this Agreement, each Proratable Item, if any, shall be prorated between Seller and Purchaser as of the


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Closing without any duplication of payment under the Purchased Project Contracts, the Purchased Licenses, this Agreement or otherwise. Seller shall be solely responsible and liable for the portion of any Proratable Item related to the time period (Tax year period for a Proratable Tax Item) ending on or prior to the Closing. Purchaser shall be solely responsible and liable for the portion of any such Proratable Item related to the time period (Tax year period for a Proratable Tax Item) after the Closing; provided, however, that, notwithstanding anything to the contrary herein, Purchaser shall not be responsible or liable for or receive any amount under this Section 3.6 that constitutes an Excluded Liability or an Excluded Asset. In the case of a Proratable Non-Tax Item that is subject to graduated pricing based on volumes, the proration for such Proratable Non-Tax Item shall be based on the average unit price during the applicable time period.

Section 3.7. Other Purchase Price Adjustments. In addition to the adjustments contemplated by Sections 3.4, 3.5 and 3.6, the Purchase Price shall be adjusted in accordance with Section 3.8 and as contemplated by other provisions of this Agreement or any Ancillary Agreement, including Section 6.7(k), Section 6.8(a), Section 6.8(e), Section 6.8(f), Section 6.18(b), Section 6.18(c) and Section 9.7 (for tax purposes). Outstanding amounts payable between the Parties pursuant to Section 6.2 shall be netted and added, if Purchaser is the net payor, or debited, if Seller is the net payor, to the Purchase Price at the Closing.

Section 3.8. Procedures for Closing and Post-Closing Adjustments.

(a) All adjustments to the Purchase Price pursuant to Section 3.5 and Section 3.6 shall be based upon the applicable amounts accrued through the Closing or paid for the most recent year or other appropriate period for which such amounts paid are available. At least twenty (20) but not more than thirty (30) days prior to the then anticipated Closing Date, Seller shall prepare and deliver to Purchaser an estimated closing statement (the "Estimated Closing Statement") that includes and sets forth the actual amounts as of the Closing Date of the adjustments required by this Agreement or, if and to the extent the actual amounts are unavailable, Seller's reasonable best estimate of all adjustments to the Purchase Price required by this Agreement to be made as of the Closing using the best available information (as may be modified under this Section 3.8, the "Estimated Closing Adjustment"). No later than ten (10) days after Purchaser's receipt of the Estimated Closing Statement, Purchaser shall provide to Seller its good faith objections, if any, to the Estimated Closing Adjustment in writing. If Purchaser objects to the Estimated Closing Adjustment within such period, the Parties shall attempt to resolve their differences by good faith negotiation. If the Parties are unable to reach resolution prior to the anticipated Closing Date or if Purchaser does not timely object to the Estimated Closing Adjustment as provided above, the Purchase Price shall be adjusted at the Closing by the amount of the Estimated Closing Adjustment, as modified to reflect any agreement reached between the Parties on any item in dispute. The Purchase Price as adjusted by the Estimated Closing Adjustment or such other amount agreed to by the Parties shall be the "Estimated Purchase Price."

(b) On or before sixty (60) days after the Closing Date, Purchaser shall prepare and deliver to Seller a final closing statement (the "Post-Closing Statement") setting forth Purchaser's determination of all adjustments to the Purchase Price required by this Agreement to be made as of the Closing to the extent not reflected in the Estimated Purchase


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Price (the "Proposed Post-Closing Adjustment"); provided, however, that any post-Closing adjustment with respect to a Proratable Tax Item or another item for which Purchaser, despite its use of Commercially Reasonable Efforts, has not received the information necessary for determination of the actual adjustment shall be made on or before thirty (30) days after Purchaser's receipt of the information necessary to render a final post-Closing adjustment for such Proratable Tax Item or other item and shall otherwise be subject to the procedures set forth in this Section 3.8. The Post-Closing Statement shall be prepared using the identical (when possible) or substantially the same (when not) accounting principles, policies, methods and procedures as Seller used in connection with the calculation or determination of the items reflected on the Estimated Closing Statement.

(c) Each Party shall furnish promptly, and cause its Representatives to furnish promptly, to the other Party and its Representatives any and all documents, material, data and other information reasonably requested by such other Party in connection with calculation or determination of any item reflected (or that should have been reflected) in the Estimated Closing Adjustment or the Post-Closing Statement, as applicable, and, to the extent reasonably necessary, allow prompt, reasonable access of such other Party and its Representatives to programs and software used to prepare the Estimated Closing Adjustment or the Post-Closing Statement and information relating thereto.

(d) On or before thirty (30) days after Purchaser's delivery of the Post-Closing Statement to Seller, Seller may object in good faith to the Proposed Post-Closing Adjustment in writing, stating in reasonable detail each of its objections thereto and the basis therefor and its proposed calculation of any disputed adjustment. If and to the extent Seller does not dispute or timely object to an amount in the Proposed Post-Closing Adjustment, the Estimated Purchase Price shall be further adjusted (the "Initial Post-Closing Adjustment") by the amount in the Proposed Post-Closing Adjustment not in dispute or not timely objected to. The Initial Post-Closing Adjustment shall be effective as of the earlier of the date Purchaser receives Seller's written objections to the Proposed Post-Closing Adjustment or the date such objections are due and not provided.

(e) If Seller objects in good faith to the Proposed Post-Closing Adjustment as provided above, the Parties shall attempt to resolve all such objections by good faith negotiation. If the Parties are able to resolve any such objection, the Purchase Price shall be promptly adjusted in accordance with Section 3.8(g). If the Parties are unable to resolve any such objection after the lapse of forty-five (45) days after Purchaser's delivery to Seller of the Proposed Post-Closing Adjustment, then either Party may submit in writing its proposed adjustments of the Estimated Purchase Price, relating solely to adjustments pursuant to Section 3.5 or Section 3.6, to the Independent Accounting Firm. Each such proposed adjustment shall be materially in accordance with the most recent proposed adjustment made by such Party to the other Party during their good faith negotiations over the item in dispute. In addition, the Parties shall submit such calculations, materials, memoranda, arguments, briefs and evidence in support of their respective positions, and in accordance with such procedures, as the Independent Accounting Firm may require or determine.

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Accounting Firm shall select, for each adjustment of the Estimated Purchase Price in dispute, an adjustment of the Estimated Purchase Price proposed by one of the Parties. The Independent Accounting Firm shall have no authority to alter any such proposal in any way absent manifest error. Each such determination by the Independent Accounting Firm shall be final, binding and conclusive on the Parties as to such adjustments of the Estimated Purchase Price for all purposes and shall not be subject to any further challenge of any kind by the Parties.

(g) Upon the determination of the appropriate adjustments, the Parties shall effectuate such adjustments by including them in the payments to occur at the Closing or, if such adjustments result in payments being due from one Party to the other after the Closing, by the Party from whom such payment is due delivering the payment to the other Party no later than two (2) Business Days after such determination, in immediately available funds or in any other manner as reasonably requested by the payee, together with interest thereon from the Closing Date to the date of payment at a variable rate of interest equal to the "prime rate" as published in The Wall Street Journal from time to time during the applicable period.

(h) Subject to the foregoing, the Independent Accounting Firm may determine the issues in dispute following such procedures, consistent with the provisions of this Agreement, as it deems appropriate and with reference to the amounts in issue. The Parties do not intend to impose any particular procedures upon the Independent Accounting Firm, it being the desire of the Parties that any such disagreement shall be resolved as expeditiously and inexpensively as reasonably practicable. Each Party shall provide the Independent Accounting Firm with such access to documents and personnel as the Independent Accounting Firm may reasonably request and otherwise shall cooperate with the Independent Accounting Firm in the conduct of its work under this Section 3.8; provided, however, that a Party shall have no obligation to provide the Independent Accounting Firm access to any information protected by legal privilege. The Parties agree that the Independent Accounting Firm shall have no liability to the Parties in connection with services, except for acts of bad faith, willful misconduct or gross negligence, and the Parties shall provide such indemnities to the Independent Accounting Firm as it may reasonably request consistent with the foregoing.

(i) The fees and disbursements of the Independent Accounting Firm shall be paid one-half by Seller and one-half by Purchaser.

Section 3.9. Allocation of Purchase Price. Purchaser and Seller shall use their Commercially Reasonable Efforts to jointly agree within one hundred eighty (180) days after the Closing Date to an allocation of the Purchase Price (and any liabilities properly included therein for tax purposes) among the Purchased Assets and Assumed Liabilities that is consistent with the allocation methodology provided by Section 1060 of the Code and the regulations promulgated thereunder (the "Allocation"). Notwithstanding the foregoing, in the event Purchaser and Seller cannot agree as to the Allocation, each Party shall be entitled to take its own position in any Tax Return, Tax proceeding or audit.


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ARTICLE IV.REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Purchaser as follows:

Section 4.1. Organization and Existence. Seller is a limited liability company, duly formed, validly existing and in good standing under the laws of the State of Delaware, and has all requisite limited liability company power and authority to own, use, lease and operate its properties and to carry on the Business. Seller is duly qualified to do business and is in good standing in Arkansas and each other jurisdiction in which the properties owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Seller.

Section 4.2. Execution, Delivery and Enforceability. Seller has all requisite limited liability company power and authority to execute and deliver, and, subject to obtaining the Stockholder Approval, to perform its obligations under, this Agreement and the Ancillary Agreements to which Seller is or becomes a party and to consummate the Transactions. The execution and delivery by Seller of this Agreement and the Ancillary Agreements to which Seller is or becomes a party, and, subject to obtaining the Stockholder Approval, the performance by Seller of its obligations hereunder and thereunder and the consummation by Seller of the Transactions have been, and will be, as applicable duly and validly authorized by all necessary limited liability company action required by Seller, and, except for the Stockholder Approval, no other approvals from the holders of any of Seller's equity or debt securities are necessary to authorize the same. Assuming the due authorization, execution and delivery by Purchaser of this Agreement and the Ancillary Agreements to which Purchaser is or becomes a party, this Agreement constitutes, and each Ancillary Agreement to which Seller is or becomes a party when executed and delivered by Seller shall constitute, the valid and legally binding obligations of Seller, as applicable, enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application relating to or affecting the enforcement of creditors' rights and by general equitable principles. As of the Effective Date, the KGen Board has, by resolution duly adopted at a meeting duly called, (i) approved this Agreement and the Transactions, (ii) deemed such Transactions expedient and for the best interests of KGen, (iii) directed that a resolution authorizing the sale of the Purchased Assets pursuant to this Agreement be submitted to the holders of the outstanding shares of common stock of KGen for their approval at a meeting of the stockholders of KGen duly called and held for such purpose, and (iv) subject to Section 6.6 and Section 6.12, determined to recommend that the stockholders of KGen approve such resolution.


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Section 4.3. No Violation. Assuming receipt of the Seller's Consents set forth in Part I of Schedule 4.3, the Seller's Regulatory Approvals set forth in Part II of Schedule 4.3, the additional Consents and notices set forth in Part III of Schedule 4.3 and Purchaser's Regulatory Approvals, and assuming the expiration or termination of the applicable waiting period under the HSR Act, neither the execution and delivery by Seller of this Agreement or any of the Ancillary Agreements to which Seller is or becomes a party nor Seller's performance or compliance with any provision hereof or thereof, nor Seller's consummation of the Transactions will:

(a) violate, conflict with or result in a breach of any of the provisions of the Organizational Documents of Seller;

(b) conflict with, result in a breach of, constitute (with due notice or lapse oftime or both) a default, or give rise to any right of termination, purchase, first refusal, cancellation, acceleration or guaranteed payment, in each case under the terms, conditions or provisions of any (i) Project Contract or license or similar right relating to Intellectual Property to which Seller is a party or to which any of the Purchased Assets are subject, or (ii) material Purchased Project Contract or material Purchased License;

(c) result in a material violation, conflict or breach of any Law or Permit applicable to Seller, any of the Purchased Assets or the Business; or

(d) result in the creation or imposition of, or given any Person (other than Purchaser) the right to create or impose, any Encumbrance, other than a Permitted Encumbrance, upon any of the Purchased Assets,

except, in the case of subclause (i) of clause (b) above, for such conflicts, breaches, or defaults (or rights of termination, purchase, first refusal, cancellation, acceleration or guaranteed payment) which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Seller.

Section 4.4. Compliance with Laws. Except as set forth in Schedule 4.4, (i) Seller is not and, to Seller's Knowledge, Operator is not, in material violation of any Law applicable to Seller, the Purchased Assets or the conduct of the Business, and (ii) to Seller's Knowledge, neither Seller nor Operator is under investigation or threatened to be under investigation by a Governmental Authority with respect to the Purchased Assets or the conduct of the Business; provided that the only representations and warranties made with respect to the absence of any violation by Seller or Operator of any (a) Environmental Law applicable to Seller, the Purchased Assets or the Business, are set forth in Section 4.15 and (b) Tax Law applicable to Seller, the Purchased Assets or the Business, are set forth in Section 4.16.

Section 4.5. Bankruptcy Matters. Seller is not Bankrupt and there are no claims or proceedings pending or being contemplated by Seller, or, to Seller's Knowledge, threatened against Seller, that could reasonably be expected to result in it being or becoming Bankrupt.


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Section 4.6. Litigation.

(a) Except as set forth in Schedule 4.6, there is no Action pending or, to Seller's Knowledge, threatened against or involving (i) Seller or any of its Affiliates or, to Seller's Knowledge, Operator, before or being conducted by any Governmental Authority or arbitrator relating to the Purchased Assets or the conduct of the Business, or the consummation of any of the Transactions, or (ii) any Employee Plan (or any fiduciary or sponsor of any Employee Plan), in which Employees engaged in the performance of services for the Project or for the operation of the Purchased Assets participate, of Seller or any of its Affiliates or, to Seller's Knowledge, of Operator before or being conducted by or for any Governmental Authority or arbitrator, in each case that, individually or in the aggregate, would reasonably be expected to result, or has resulted, in (A) the institution of legal proceedings to prohibit or restrain the performance by Seller of its obligations under this Agreement or any of the Ancillary Agreements or the consummation of the Transactions, (B) a claim against Purchaser or any of its Affiliates for damages as a result of Seller entering into this Agreement or any of the Ancillary Agreements or the consummation of the Transactions, (C) a Material Adverse Effect on Seller, (D) the creation of an Assumed Liability or (E) the imposition of an Encumbrance other than a Permitted Encumbrance upon any of the Purchased Assets.

(b) There is no Order enjoining Seller from engaging in or continuing any conduct or practice, or requiring Seller to take any material action, in connection with the Purchased Assets or the Business, and neither Seller nor any of its Affiliates is subject to any outstanding Order relating to the Purchased Assets or the Business, other than, in each case, Orders of general applicability.

Section 4.7. Owned Real Property; IDA Bond Real Property; Easements.

(a) Part I of Schedule 2.1(a) sets forth a complete and accurate description of each parcel of real property owned by Seller and primarily used or held for use in the Project or the Business which is material to the Project or the Business. Schedule 2.1(c) sets forth a complete and accurate description of each of the Easements primarily used or held for use at the Project or in the Business which is material to the Project or the Business. Seller has made available to Purchaser accurate and complete copies of the following documents, to the extent in Seller's possession: (i) the deeds (and other documents of conveyance whereby the Owned Real Property was acquired by Seller), (ii) any title insurance policies (including any and all endorsements thereto) insuring fee simple absolute title to the Owned Real Property, including rights in any Easements appurtenant to or benefiting the Owned Real Property, to the extent such Easements constitute real property, (iii) documents referenced in such policies and (iv) ALTA/ACSM surveys related to the Owned Real Property and any Easements appurtenant to or benefiting the Owned Real Property.

(b) Seller has good and marketable fee simple absolute title of record to all of the Owned Real Property, free and clear of all Encumbrances except Permitted Encumbrances. Except for the Easements referenced in Section 4.7(d), Seller has valid and subsisting rights in all of the Easements as grantee, free and clear of all Encumbrances except Permitted Encumbrances.


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(c) Part II of Schedule 2.1(a) sets forth a complete and accurate description of each parcel of real property which is subject to the IDA Lease Agreement. Seller has made available to Purchaser accurate and complete copies of the IDA Lease Agreement and, to the extent in Seller's possession, (i) any title insurance policies (including any and all endorsements thereto) insuring fee simple absolute or leasehold title to the IDA Bond Real Property, including rights in any Easements appurtenant to or benefiting the IDA Bond Real Property, (ii) documents referenced in such policies and (iii) ALTA/ACSM surveys related to the IDA Bond Real Property and any easements appurtenant to or benefiting the IDA Bond Real Property.

(d) Seller has, as of the Effective Date, a good and valid leasehold interest in the IDA Bond Property and the Easements benefitting the IDA Bond Real Property free and clear of all Encumbrances except Permitted Encumbrances. At the Closing, Purchaser will have (i) good and marketable fee simple absolute title of record to all of the IDA Bond Real Property and (ii) valid and subsisting rights as grantee in all Easements benefiting the IDA Bond Real Property, in each case, free and clear of all Encumbrances except Permitted Encumbrances.

(e) Seller is in possession of all of the Owned Real Property and Easements appurtenant to or benefiting the Owned Real Property and has adequate rights of ingress and egress with respect thereto, including all buildings, structures, facilities, fixtures and other improvements thereon. As of the Closing, Purchaser will be in possession of all IDA Bond Real Property and Easements appurtenant to or benefiting the IDA Bond Real Property and have adequate rights of ingress and egress with respect thereto, including all buildings, structures, facilities, fixtures and other improvements thereon.

(f) Except as set forth on Schedule 4.7, there are no Actions pending or, to Seller's Knowledge, threatened by any Person involving (i) the exercise or a claim of eminent domain or similar right over or with respect to all or any material portion of the Owned Real Property or the IDA Bond Real Property or any material portion of real property subject to any Easement appurtenant to or benefiting the Owned Real Property or the IDA Bond Real Property, including any of the improvements thereon, therein, or thereunder or (ii) a reduction of, or increase in, the assessed value of any of the Project Real Property, excluding annual determinations of assessed valuation pursuant to Tax Laws.

(g) With respect to any transmission line owned or controlled by Seller and serving the Project, (i) the entire and continuous length of each such transmission line and related improvements necessary for the conduct of the Business is covered by recorded Easements in favor of Seller (or its Predecessors-in-Interest and their successors and assigns) to the extent such Easements constitute real property and are in recordable form, or is located on the Owned Real Property, (ii) the Easements or instruments by which Seller acquired the Owned Real Property grant Seller (or its Predecessors-in-Interest and their successors and assigns) the right to construct, operate, and maintain such transmission line and related improvements in, over, under, and across the real property covered thereby and (iii) each such transmission line and related improvements is located within the contiguous Project Site and does not encroach upon any adjoining real property.

(h) None of the Project Real Property, including buildings, structures, facilities, fixtures and other improvements, or the conduct of the Business, contravenes or


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violates any building or zoning Law applicable to the Project Real Property other than as would not, individually or in the aggregate, reasonably be expected to interfere in any material respect with the operation of the Business; provided that the only representations and warranties made with respect to the absence of any violation of the Project Real Property of any Environmental Law are set forth in Section 4.15. None of the Project Real Property, including buildings, structures, facilities, fixtures and other improvements contravenes or violates any administrative, occupational safety and health or other Law applicable to the Project Real Property (whether or not permitted on the basis of prior nonconforming use, waiver or variance), and none of the Project Real Property serves any adjoining or other real property for any purpose or is subject to any restrictions relating to flood zoning; other than, in any such case, as would not, individually or in the aggregate, reasonably be expected to interfere in any material respect with the operation of the Business.

Section 4.8. Leased Property.

(a) Except for the IDA Bond Other Property, Schedule 4.8 sets forth a complete and accurate description of each item of Tangible Personal Property leased or licensed to Seller (the "Leased Personal Property") as of the Effective Date.

(b) Seller has good and valid leasehold interests in the Leased Personal Property that is material to the ownership, use, operation or maintenance of the Project, in each case, that is included in the Purchased Assets.

(c) The property held pursuant to the IDA Lease Agreement is the only real property leasehold estate held by Seller.

Section 4.9. Tangible Personal Property and Inventory.

(a) (i) Schedules 2.1(d) and 2.1(e) set forth, respectively, a complete and accurate description of (i) the Tangible Personal Property and Inventory included in the Purchased Assets other than the Leased Personal Property and (ii) each item of Tangible Personal Property or Inventory that is material to the ownership, use, operation or maintenance of the Project, in each case, that is included in the Purchased Assets.

(b) The register of Inventory as of March 31, 2011, is set forth on Schedule 4.9.

(c) Except for the Leased Personal Property and the IDA Bond Other Property, Seller has good and valid title to the Tangible Personal Property and Inventory, free and clear of all Encumbrances except Permitted Encumbrances. At the Closing, Purchaser will have good and valid title to the Tangible Personal Property and Inventory, free and clear of all Encumbrances except Permitted Encumbrances. As of the Closing, no Tangible Personal Property or Inventory included in the Purchased Assets is owned by any Person other than Seller, except for the Leased Personal Property.


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Section 4.10. Project Contracts.

(a) There are no material Project Contracts except for (i) the Purchased Project Contracts and (ii) the Excluded Project Contracts. Seller has made available to Purchaser complete and accurate copies, in all material respects, of all Purchased Project Contracts and Excluded Project Contracts (including all written amendments, modifications, extensions, renewals and supplements thereto). No Affiliate of Seller is a party to a Contract that would constitute a Project Contract if Seller, rather than such Affiliate of Seller, were a party thereto.

(b) Except as set forth in Schedule 4.10, no default, event or condition that, with notice or lapse of time or both, would constitute a default of Seller or, to Seller's Knowledge, any counterparty thereto has occurred or exists under any of the Purchased Project Contracts, except such defaults, events or conditions as (i) to which requisite waivers have been duly obtained or (ii) would not (A) result in any Assumed Liability or (B) give rise to any right of termination under such Purchased Project Contract.

(c) No material Action is pending or, to Seller's Knowledge, threatened against Seller challenging the enforceability of any Purchased Project Contract.

(d) Each Purchased Project Contract constitutes the valid and binding obligation of Seller and, to Seller's Knowledge, the other parties thereto, is in full force and effect and is enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application relating to or affecting the enforcement of creditors' rights and by general equitable principles.

Section 4.11. Permits.

(a) Part I of Schedule 4.11 sets forth a complete and correct list of all material Permits (excluding Environmental Permits, which are the subject of Section 4.15) held by Seller or any of its Affiliates in respect of the Purchased Assets and the conduct of the Business, and, to Seller's Knowledge, Part II of Schedule 4.11 sets forth a complete and correct list of all material Permits (excluding Environmental Permits, which are the subject of Section 4.15) held by Operator on behalf of Seller in respect of the Purchased Assets and the conduct of the Business. The Permits listed in Schedule 4.11, constitute all of the material Permits (excluding the Environmental Permits, which are the subject of Section 4.15) required by Law for the ownership, lease, use, operation, maintenance and repair of the Purchased Assets, as currently operated directly or indirectly by Seller, and the conduct of the Business, as currently conducted directly or indirectly by Seller. Except as set forth in Part III of Schedule 4.11, since August 5, 2004, Seller, an Affiliate of Seller or, to Seller's Knowledge, Operator, as the case may be, held at the time required all Permits (excluding Environmental Permits, which are the subject of Section 4.15) required by Law for the ownership, lease, use, operation, maintenance, or repair of the Purchased Assets or the conduct of the Business as operated or conducted by Seller, any of its Affiliates or Operator.

(b) Each Purchased Permit (excluding Environmental Permits, which are the subject of Section 4.15) is valid and in full force and effect and, as of the Closing, is held by


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Seller. To Seller's Knowledge, no event has occurred that permits the revocation, suspension, limitation or termination of, or the adverse modification, suspension, impairment or limitation in any material respect of, any Purchased Permit (excluding Environmental Permits, which are the subject of Section 4.15). There is, to Seller's Knowledge, no event, fact, circumstance or condition (or set of events, facts, circumstances or conditions) arising out of the ownership,lease, use, operation, maintenance or repair of the Project or the Purchased Assets or the conduct of the Business during the last twelve (12) months that would reasonably be expected to in either case (i) prevent Seller from obtaining the prompt renewal, extension or transfer in connection with the Transactions of any Permit listed (or which should have been listed) on Part I or Part II of Schedule 4.11 with an associated cost not in excess of standard renewal, extension or transfer fees or (ii) require a modification of any Permit listed (or which should have been listed) on Part I or Part II of Schedule 4.11 (other than a modification already obtained); provided, however, nothing in this third sentence of Section 4.11 (A) ensures the prompt renewal, extension or transfer to Purchaser, or the costs associated therewith, of any Permit listed (or which should have been listed) on Part I or Part II of Schedule 4.11 or (B) addresses any delays, rejections, excess costs or modifications, if any, that may arise or relate to the identity or regulatory status of Purchaser.

(c) Except as set forth in Part IV of Schedule 4.11, to Seller's Knowledge, (i) Seller and its Affiliates are, and throughout Seller's ownership of the Project have been, in compliance in all material respects with the Purchased Permits and (ii) Operator is, and during its operation of the Project has been, in compliance in all material respects with the Permits listed in Part II of Schedule 4.11 and all of its obligations with respect thereto, except in the case of (i) and (ii) above for Environmental Permits, which are the subject of Section 4.15.

Section 4.12. Warranties. To Seller's Knowledge, Seller holds and has the right to enforce all of the material Purchased Warranties.

Section 4.13. Intellectual Property.

(a) Part I of Schedule 4.13 sets forth all material Purchased Intellectual Property owned by Seller or any of its Affiliates.

(b) Part II of Schedule 4.13 sets forth all material Purchased Intellectual Property held or possessed (but not owned) by Seller or an Affiliate of Seller that is used in the Business or by the Project. Part II(A) of Schedule 4.13 sets forth the licenses and similar rights pursuant to which Seller or any of its Affiliates holds or possesses the material Intellectual Property Rights described in Part II of Schedule 4.13 (the "Purchased Licenses"). All Intellectual Property Rights set forth in Part II of Schedule 4.13 consist of licenses and similar rights granted by or from Persons who are not Affiliates of Seller.

(c) Except as set forth in Part III of Schedule 4.13, as of the Effective Date, Seller and its Affiliates own, free and clear of all Encumbrances except Permitted Encumbrances, or possess, and as of the Closing, Seller owns, free and clear of all Encumbrances except Permitted Encumbrances, or possesses all Intellectual Property Rights listed in Schedule 4.13.


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(d) The possession or use by Seller, any of its Affiliates or, to Seller's Knowledge, Operator of Purchased Intellectual Property and the business and activities of Seller and its Affiliates related to the Business or the Project, including Seller's obligations in this Agreement, do not, to the Knowledge of Seller, violate or infringe upon the Intellectual Property Rights of any Person. No Person has notified Seller, any of its Affiliates or, to Seller's Knowledge, Operator that Seller, any of its Affiliates, or Operator is violating or infringing upon the Intellectual Property Rights of any Person. To Seller's Knowledge, no Person is infringing upon or violating any Purchased Intellectual Property.

(e) Assuming receipt of the Consents described in Part IV of Schedule 4.13, Seller has the right to provide and transfer to Purchaser for Purchaser's use in connection with the Business and the Project all of the material Purchased Intellectual Property.

Section 4.14. Condition and Sufficiency of Assets.

(a) Except as set forth in Schedule 4.14(a), all of the Tangible Personal Property and Purchased Inventory, and all improvements to the Project Real Property, including all buildings, fixtures, component parts, other constructions and other improvements thereon, thereto, or thereunder, (i) are in good operating condition and repair, subject only to ordinary wear and tear, and (ii) have been maintained by or for Seller since December 7, 2010, in accordance with Good Industry Practices in all material respects.

(b) Except for the Excluded Assets listed on Part I of Schedule 4.14(b) and the Non-Assigned Assets for which Seller's Consents have not been obtained as of the Closing, the Purchased Assets constitute all of the assets, properties, rights (including all real property rights and Intellectual Property Rights) and interests reasonably necessary for the use, operation and maintenance of the Project on the Closing Date according to Good Industry Practices and (ii) each of the Project's generation units to be capable of (A) operating on a consistent basis in accordance with the performance requirements specified on Part II of Schedule 4.14(b) and (B) making available and delivering Load-Following Capacity and Energy to the Transmission System. "Load-Following Capacity and Energy" means the megawatt output level capable, as of a given moment, of being continuously produced and made available, and the electric energy delivered, or to be delivered, in accordance with the specifications set forth on Part III of Schedule 4.14(b).

(c) As of the Closing, no Affiliate of Seller owns an interest in the Purchased Assets (other than indirectly through such Affiliate's ownership interest in Seller).

Section 4.15. Environmental Matters.

(a) (i) The representations and warranties set forth in this Section 4.15(a)relate exclusively to the period of Seller's ownership or control of the Project or any of the Project Real Property. Seller makes no representations and warranties under this Section 4.15with respect to any period prior to Seller's ownership or control of the Project or any of the Project Real Property, except as set forth in Section 4.15(a)(ii). Part A of Schedule 4.15 sets forth a complete and correct list of all material Environmental Permits and all pending applications for any new material Environmental Permits or the renewal, extension or


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modification of any material Environmental Permit held by Seller or any of its Affiliates in respect of the Purchased Assets and the conduct of the Business, and, to Seller's Knowledge, Part B of Schedule 4.15 sets forth a complete and correct list of all material Environmental Permits and all pending applications for any new material Environmental Permit or the renewal, extension or modification of any material Environmental Permit held by Operator on behalf of Seller in respect of the Purchased Assets and the conduct of the Business.

(ii) Except as set forth in Part I of Schedule 4.15, the Project and the Project Real Property are and, since August 5, 2004, have been in compliance in all material respects with all applicable Environmental Laws (including Laws requiring Seller to obtain, maintain, and comply with Environmental Permits) and Environmental Permits. The Seller has obtained and, at all times required, maintained in full force and effect all material Environmental Permits required by Law for the ownership, lease, use, operation, maintenance or repair of the Project, the conduct of the Business and the occupation of the Project Real Property. Each Environmental Permit that is a Purchased Permit is valid and in full force and effect and, as of the Closing, is held by Seller. To Seller's Knowledge, no event has occurred that permits or requires the revocation, suspension, limitation or termination of, or the adverse modification, suspension, impairment or limitation in any material respect of, any material Environmental Permit.

(iii) Except as set forth in Part II of Schedule 4.15, neither Seller nor, to Seller's Knowledge, Operator has generated, transported, used, stored, treated, disposed of, handled or managed Hazardous Substances relating to the Project or the Project Real Property except in compliance in all material respects with all applicable Environmental Laws and Environmental Permits.

(iv) Except as set forth in Part III of Schedule 4.15, to Seller's Knowledge, no Environmental Condition exists at, on, or under the Project Real Property, no Hazardous Substance has been Released by the Project or at, on, or under the Project Real Property and no Hazardous Substance has migrated from the Project Real Property, in each case except in compliance in all material respects with all Environmental Laws and applicable Environmental Permits or as has been Remediated to the satisfaction of the applicable Governmental Authorities and in compliance in all material respects with all Environmental Laws and applicable Environmental Permits. All such Remediations are described in Part III of Schedule 4.15.

(v) Except as set forth in Part IV of Schedule 4.15, there is not any pending or, to Seller's Knowledge, threatened, Environmental Claim with respect to the Project or the Project Real Property. To Seller's Knowledge, Seller does not have any Environmental Liability relating to the Project or the Project Real Property.

(vi) Except as set forth on Part V of Schedule 4.15, to Seller's Knowledge, no above-ground storage tanks, underground storage tanks or other storage or process tanks (in each case, containing any material quantity of any Hazardous Substance) are or have been owned, operated, leased or used at the Project Real Property. Except as set forth on Part V of Schedule 4.15, to Seller's Knowledge, the Project and the Project Real Property do not and have not contained asbestos or asbestos-containing


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material, polychlorinated biphenyls or equipment containing the foregoing, regulated concentrations of lead or lead-based paint, or urea formaldehyde foam insulation.

(vii) Seller has not sought or obtained, and, to Seller's Knowledge, no other Person has sought or obtained, environmental insurance with respect to the Project or the Project Real Property.

(viii) No Encumbrance under any Environmental Law exists or has been imposed or, to Seller's Knowledge, threatened to be imposed by any Governmental Authority on the Project or the Project Real Property and, to Seller's Knowledge, there are no events, facts, circumstances, or conditions (or set of events, facts, circumstances, or conditions) that are otherwise reasonably likely to restrict, encumber or result in the imposition of any Encumbrance under any Environmental Laws with respect to the ownership, occupancy, or use of the Project or the Project Real Property.

(b) To Seller's Knowledge, the representations and warranties set forth in Section 4.15(a) are true and correct with respect to the period prior to Seller's ownership or control of the Project or the Project Site.

(c) Section 4.14(b) and this Section 4.15 contain the sole and exclusive representations and warranties of Seller with respect to environmental, health and safety matters, including all maters arising under Environmental Laws or relating to Environmental Conditions, Environmental Liabilities, Environmental Claims or Hazardous Substances.

Section 4.16. Tax Matters.

(a) Seller or an Affiliate of Seller has prepared in good faith and duly and timely filed, or caused to be duly and timely filed, all Tax Returns relating to the Business or the Project and required to be filed by Seller or any of its Affiliates with the applicable Governmental Authority or Person. All Tax Returns described above are true, correct and complete in all material respects.

(b) All Taxes imposed on or with respect to the Business or the Project, or for which Seller or any of its Affiliates is or could be liable, whether to Governmental Authorities (as, for example, under Law) or to other Persons (as, for example, under Tax allocation agreements or partnership agreements) with respect to all taxable periods, or portions thereof, ending on or before the Closing, and required to be paid by Seller or any of its Affiliates to Governmental Authorities or other Persons, have been paid, whether or not shown as due on the Tax Returns described in Section 4.16(a).

(c) Seller and its Affiliates have complied in all material respects with all Tax Laws and all Tax agreements applicable to the Business or the Project.

(d) Neither Seller nor any of its Affiliates is a party to any Action, nor is any Action, to Seller's Knowledge, threatened for the assessment or collection of any Tax relating to the Business or the Project. No deficiency notice or report has been received, directly or indirectly, by Seller or any of its Affiliates in respect of any Tax relating to the Business or the


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Project that has not resulted in a final binding settlement and payment to the applicable Governmental Authority or Person.

(e) Except as set forth in Part I of Schedule 4.16, (i) (A) to Seller's Knowledge, no Tax Return of Seller or any of its Affiliates relating to the Business or the Project is under examination by the Internal Revenue Service or other Governmental Authority; (B) all deficiencies asserted as a result of any such examination have been paid or finally settled; and (C) no issue has been raised by the Internal Revenue Service or other Governmental Authority in any such examination that, by application of the same or similar principles, would reasonably be expected to result in a proposed deficiency for Seller or any its Affiliates for any other taxable period not so examined or (ii) the period for assessment of the Taxes in respect of each such Tax Return was required to be filed (taking into account any and all applicable extensions and waivers) has expired.

(f) Except as set forth in Part II of Schedule 4.16, there are no outstanding agreements or waivers extending the statutory period of limitation applicable to any Tax Return for any taxable period.

(g) None of the Purchased Assets secures, directly or indirectly, any debt the interest on which is tax-exempt under Section 103(a) of the Code.

Section 4.17. Employee Matters. Seller has no Employee engaged primarily in the performance of services, including operation, management, administrative or similar services, for the Project, the operation of the Purchased Assets or the conduct of the Business. The Purchased Assets and Assumed Liabilities include no rights, liabilities or obligations with respect to any Employee (including any former or future Employee) of any Person, including any right, liability or obligation arising out of or related to any Employee Plan or Contract or under any employment, collective bargaining, labor or labor relations Law (other than rights, liabilities or obligations to the extent created directly by the actions of Purchaser or an Affiliate of Purchaser with respect to such Employee (and, for the avoidance of doubt, that are not derivative of any liabilities or obligations of Seller or any Affiliate of Seller)).

Section 4.18. Insurance. Part I of Schedule 4.18 sets forth a list of all material Project Insurance Policies held by Seller or its Affiliates as of the Effective Date. Seller has provided or made available to Purchaser true and complete copies of the material Project Insurance Policies. All material Project Insurance Policies are in full force and effect in accordance with their terms, and no written notice of cancellation in respect of any material Project Insurance Policy has been received by Seller or any of its Affiliates. Part II of Schedule 4.18 sets forth, as of the Effective Date, by year, for the current policy year and each of the three (3) preceding policy years, exclusively as applied to the Project, (a) a statement describing each material claim under any Project Insurance Policy on a "ground up" basis and setting forth (i) the name of each claimant, (ii) a description of the Project Insurance Policy under which the claim was made by insurer, type of insurance, and coverage period and (iii) the amount and a brief description of the claim; and (b) a statement describing the loss experience for all material claims that were self-insured, including the number and aggregate cost of such claims.


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Section 4.19. Regulatory Status. Seller was determined by FERC to be an exempt wholesale generator within the meaning of Section 32 of the Public Utility Holding Company Act of 1935 by order dated March 12, 2001, in Docket No. EG01-65-000. The Project and Seller have met, and will continue to meet until the consummation of the Transactions at the Closing, all applicable requirements for the maintenance of such exempt wholesale generator status.

Section 4.20. Pipeline Status. With respect to any pipeline owned by Seller and serving the Project, to Seller's Knowledge, such pipeline has (i) been owned at all times by the owner of the Project, (ii) been used only for the delivery of Fuel to the Project, and (iii) only transported Fuel owned by the owner of the Project. Seller owns, leases or controls no pipeline located on an Easement or outside the parcel of land described in Schedule 2.1(a).

Section 4.21. Brokers. Neither Seller nor any Affiliate thereof has employed an agent, broker, finder, investment or commercial banker, or any other Person, in connection with this Agreement or any of the Transactions so as to give rise to any broker's, finder's or similar fee, commission or payment payable by Purchaser or any of its Affiliates.

Section 4.22. Proxy Statement. A draft of the proxy statement to be mailed to the stockholders of KGen pursuant to Section 6.6(a) in respect of the Transactions is attached hereto as Exhibit J, which draft is substantially similar to that which will be submitted to the stockholders of KGen (such draft, together with such changes as may be made in advance of its submission to the stockholders of KGen, the "Proxy Statement"). When mailed to the stockholders of KGen, the Proxy Statement will comply, in all material respects, with the requirements of Law applicable thereto. Notwithstanding the foregoing, Seller makes no representation or warranty with respect to any information supplied by or on behalf of Purchaser which is contained in the Proxy Statement.

ARTICLE V.REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Seller as follows:

Section 5.1. Organization and Existence. Purchaser is a corporation, duly organized, validly existing and in good standing under the laws of the State of Arkansas and has all requisite corporate power and authority to own, use, lease and operate its properties and to carry on its business as now being conducted. Purchaser is duly qualified to do business and is in good standing in Arkansas and each other jurisdiction in which the properties owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Purchaser.

Section 5.2. Execution, Delivery and Enforceability. Purchaser has all requisite corporate power and authority to execute and deliver, and to perform its obligations under, this Agreement and the Ancillary Agreements to which it is or becomes a party and to consummate the Transactions. The execution and delivery by Purchaser of this Agreement and the Ancillary Agreements to which Purchaser is or becomes a party, the performance by


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Purchaser of its obligations hereunder and thereunder and the consummation by Purchaser of the Transactions have been duly and validly authorized by all necessary corporate action required on the part of Purchaser and no other approvals from the holders of any of Purchaser's equity or debt securities are necessary to authorize the same. Assuming the due authorization, execution and delivery by Seller of this Agreement and the Ancillary Agreements to which Seller is or becomes a party, this Agreement constitutes, and the Ancillary Agreements to which Purchaser is or becomes a party when executed by Purchaser shall constitute, the valid and legally binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application relating to or affecting the enforcement of creditors' rights and by general equitable principles.

Section 5.3. No Violation. Assuming receipt of Purchaser's Consents set forth in Part I of Schedule 5.3, Purchaser's Regulatory Approvals set forth in Part II of Schedule 5.3, the additional Consents and notices set forth in Part III of Schedule 5.3 and assuming the expiration or termination of the applicable waiting periods under the HSR Act, neither the execution and delivery by Purchaser of this Agreement or any of the Ancillary Agreements to which Purchaser is or becomes a party, nor Purchaser's compliance with any provision hereof or thereof, nor Purchaser's consummation of the Transactions will:

(a) violate, conflict with, or result in a breach of any provisions of the Organizational Documents of Purchaser;

(b) result in a violation under, conflict with, result in a breach of, constitute (with due notice or lapse of time or both) a default, or give rise to any right of termination, cancellation, acceleration or guaranteed payment, in each case under the terms, conditions or provisions of any material note, bond, mortgage, loan agreement, deed of trust, indenture, license or agreement or other instrument or obligation to which Purchaser is a party or by which Purchaser is bound; or

(c) violate, conflict with or result in a breach of any Law or Permit applicable to Purchaser or any of its assets.

Section 5.4. Litigation. Except as set forth in Schedule 5.4, there is no Action pending or, to Purchaser's Knowledge, threatened against or involving Purchaser or any of its Affiliates before or being conducted by any Governmental Authority or arbitrator that, individually or in the aggregate, would reasonably be expected to result, or has resulted, in (a) the institution of legal proceedings to prohibit or restrain the performance by Purchaser ofPurchaser's obligations under this Agreement or any of the Ancillary Agreements to which Purchaser is or becomes a party or the consummation of the Transactions, (b) a claim against Seller or any of its Affiliates for damages as a result of Purchaser entering into this Agreement or any of the Ancillary Agreements or the consummation by Purchaser of the Transactions or (c) a material delay in or material impairment of Purchaser's performance of its obligations under this Agreement or any of the Ancillary Agreements or a material impairment of the authority, right or ability of Purchaser to consummate the Transactions.


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Section 5.5. Brokers. Neither Purchaser nor any Affiliate thereof has employed an agent, broker, finder, investment or commercial banker, or any other Person, in connection with this Agreement or any of the Transactions so as to give rise to any broker's, finder's or similar fee, commission or payment payable by Seller or any of its Affiliates.

Section 5.6. Acceptable Purchaser LTSA. Purchaser has entered into an Acceptable Purchaser LTSA on or prior to the Effective Date and such Acceptable Purchaser LTSA is valid and binding and will become effective upon the Closing and has not been modified or amended in such a manner as would cause such agreement not to qualify as an Acceptable Purchaser LTSA under the terms of this Agreement.

Section 5.7. No Additional Representations and Warranties. Purchaser acknowledges and agrees that, except for the representations and warranties of Seller expressly set forth in this Agreement or any Ancillary Agreement to which Seller is a party: (a) Seller has not made, and does not make, any representation or warranty, express or implied, oral or written, relating to the Purchased Assets, the Project or the Business, and (b) the Purchased Assets shall be transferred to Purchaser in their condition at the time of Closing without any further representation or warranty whatsoever. Nothing in this Section 5.7 is intended to or shall reduce or limit the liability of Seller with respect to any breach of a representation or warranty of Seller expressly set forth in this Agreement or any Ancillary Agreement to which Purchaser is a party.

ARTICLE VI.COVENANTS OF THE PARTIES

Section 6.1. Efforts to Close.

(a) Subject to the terms and conditions herein, each of the Parties shall cooperate, and shall cause their Representatives to cooperate, with the other and use Commercially Reasonable Efforts to consummate and make effective, as soon as reasonably practicable, the Transactions. Such actions shall include (i) in the case of Seller, exercising Commercially Reasonable Efforts to (A) obtain each of the Consents of any Governmental Authority or other Person required for the Closing to occur or required to transfer, convey and assign the Purchased Assets and the Assumed Liabilities to Purchaser at the Closing, including Seller's Regulatory Approvals and Seller's Consents, (B) effect all other necessary notifications, registrations and filings, including filings under Laws, and all other necessary filings with any Governmental Authority having jurisdiction over Seller or the Project, (C) obtain the instruments and documents described in Section 3.2(e), (D) release or remove, or obtain the release or removal of, all Encumbrances described in Part II of Schedule 1.1C, and (E) satisfy all conditions of Seller to the Closing set forth herein, and (ii) in the case of Purchaser, exercising Commercially Reasonable Efforts to (A) obtain each of the Consents of any Governmental Authority or other Person required for the Closing to occur or required to receive the Purchased Assets and assume the Assumed Liabilities from Seller at the Closing, including Purchaser's Regulatory Approvals and Purchaser's Consents, (B) effect all other necessary notifications, registrations and filings, including filings under Laws, and all other necessary filings with any Governmental Authority having jurisdiction over Purchaser or the Project, (C) order and obtain the Title Policy and (D) satisfy all conditions of Purchaser to the Closing set forth herein. The Parties acknowledge that a request for network transmission service for the Project was filed


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with the Independent Coordinator of Transmission on behalf of Purchaser on or about November 15, 2010.

(b) Nothing in Section 6.1(a) is intended to or shall vary the terms of any discretion or judgment (however expressed) granted to a Party herein or in any Ancillary Agreement. For the avoidance of doubt, and without limiting the generality of the foregoing, nothing in this Agreement shall require Purchaser or any Affiliate of Purchaser to offer, accept, or fulfill any term, condition or limitation on the Purchaser's Regulatory Approvals that is unsatisfactory to Purchaser in its sole and absolute discretion, including any term or condition requiring Purchaser (or any of its Affiliates) to dispose of, sell, or transfer ownership or control of any of its assets, properties or businesses, hold or retain separate particular assets or categories of assets, properties or businesses, or agree to divest, dispose of or hold separate one or more assets or properties or conditioning approval or authorization on any of the same.

Section 6.2. Transaction Expenses. Except as otherwise provided in this Agreement (including the remainder of this Section 6.2) or any Ancillary Agreement, all costs and expenses incurred in connection with this Agreement and the Transactions shall be paid by the Party incurring such expenses, whether or not the Closing occurs. The Parties agree that:

(a) all costs associated with preliminary title reports or commitments concerning the Project Site or the Purchased Assets, the Title Policy, Survey and the endorsements set forth on Schedule 6.2 shall be borne by Purchaser;

(b) all documentary, Purchased Project Contract, Purchased License and Consent or conveyance or assignment fees or similar charges or costs (other than those with respect to the transfer or assignment of a Permit or the Emission Allowances), if any, including Taxes, shall be borne by Seller;

(c) all Permit or Emission Allowance transfer or assignment fees or similar charges or costs, if any, including Taxes, shall be borne by Purchaser;

(d) all recording fees and charges with respect to the transfer of real property from Seller to Purchaser in connection with this Agreement or any Ancillary Agreement shall be borne by Seller;

(e) all amounts charged by the Environmental Consultant in connection with the Environmental Assessment shall be borne one-half by Purchaser and one-half by Seller; and

(f) the filing fee payable in connection with the notifications required to be filed under the HSR Act with respect to the Transactions shall be borne one-half by Purchaser and one-half by Seller.

All costs and expenses payable by one Party to the other Party under this Section 6.2shall be settled (i) upon or within thirty (30) days after termination or expiration of this Agreement or (ii) if the Closing occurs, at the Closing or thereafter in accordance with Sections 3.7 and 3.8.


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Section 6.3. Conduct Pending Closing.

(a) From the Effective Date through the Closing, unless Purchaser shall otherwise consent in writing, which consent shall not be unreasonably withheld, conditioned or delayed, and except for (i) actions required by Law, (ii) actions permitted by this Agreement or any Ancillary Agreement or necessary to consummate the Transactions and expressly contemplated hereunder or thereunder, (iii) actions consented to by or directed by Purchaser or an Affiliate of Purchaser under a PPA and (iv) reasonable actions taken in response to an emergency or an event of force majeure in accordance with Good Industry Practices and promptly disclosed in writing to Purchaser, Seller shall, and, where applicable, shall cause its Affiliates and use Commercially Reasonable Efforts to the extent permitted under the O&M Agreement and the LTSA, as applicable, to cause, Operator and GEII to, conduct the Business and operate and maintain the Project (or cause the Project to be operated and maintained) in accordance with all Laws and Permits in all material respects and in the ordinary course of business consistent with past practices and Good Industry Practices, including (A) operating and maintaining the systems, equipment and machinery of the Project that are Purchased Assets in compliance with all Laws and Permits in all material respects and Good Industry Practices, including compliance with the manufacturer's technical requirements and information and, to the extent applicable, the LTSA in all material respects, (B) making timely and complete application to the applicable Governmental Authority for the renewal of any material Seller's Permit so as to effectuate such renewal reasonably prior to the scheduled expiration date of such Seller's Permit and (C) using Commercially Reasonable Efforts to preserve the good will of lessors, suppliers, licensors, agents, contractors, and other Persons having a material business relationship with Seller or any of its Affiliates with respect to the Project or the Business or Governmental Authorities having jurisdiction over the Project, the Project Real Property or the Business. In addition, with respect to each Contract that would be a Purchased Project Contract or a Purchased License entered into by Seller or any of its Affiliates from and after the Effective Date through the Closing that includes a Purchased Warranty, Seller shall, and where applicable, shall cause its Affiliates to, use Commercially Reasonable Efforts to cause each such Contract to permit Seller or its Affiliates to freely assign such Purchased Warranty to Purchaser without the consent of any Person.

(b) From the Effective Date through the Closing, unless Purchaser shall otherwise consent in writing, which consent shall not be unreasonably withheld, conditioned or delayed, and except for actions required by Law, actions permitted by this Agreement or an Ancillary Agreement or necessary to consummate the Transactions or the transactions contemplated by the Ancillary Agreements and expressly contemplated hereunder or thereunder, actions consented to by or directed by Purchaser or a Purchaser Affiliate under a PPA and, subject to the other terms of this Agreement, reasonable actions taken in response to an emergency or an event of force majeure in accordance with Good Industry Practices and promptly disclosed in writing to Purchaser, Seller shall not, and, where applicable to the Purchased Assets or the Business, shall cause its Affiliates and, use Commercially Reasonable Efforts to the extent permitted under the O&M Agreement to cause Operator, not to:

(i) (A) amend, supplement or otherwise modify in any material respect, or terminate or, except as required by its terms, renew or extend any (1) Purchased Project Contract, (2) Purchased License or (3) Seller's Permit, (B) waive


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any material default by, material term of or material right against, or release, settle or compromise any material claim against, any other party to a Purchased Project Contract, Purchased License or the LTSA, arising out of or related to such Contract, or (C) enter into any new Purchased Project Contract (other than as provided in Section 2.1(f)) or Purchased License;

(ii) sell, lease, license, transfer or otherwise dispose of, or remove from the Project, or make or enter into any Contract for the sale, lease, license, transfer, disposition or removal of, any material asset or property that would be included in the Purchased Assets, except for (A) the disposition of Consumables, or the transfer, disposition or removal of obsolete, broken, damaged or worn-out assets, in the ordinary course of business consistent with past practices and Good Industry Practices, (B) any sale, lease, license, transfer, or disposition of such assets or properties made to Purchaser or its Affiliates, and (C) the conversion of fuel into electric energy in the ordinary course of business;

(iii) permit, allow or cause any of the Purchased Assets to become subject to any Encumbrance, other than a Permitted Encumbrance;

(iv) resolve, settle or compromise any Environmental Claim or any Action under any Law (including Environmental Law) pending before or being conducted by a Governmental Authority, arbitrator or mediator relating to the Business or the Purchased Assets, except to the extent such resolution, settlement or compromise is an Excluded Liability and would not (A) require or involve any post-Closing Remediation or (B) have a material and adverse affect upon Purchaser's ownership, operation or use of, or the value of, the Purchased Assets, or Purchaser's conduct of the Business, after the Closing;

(v) incur any obligation for borrowed money secured by the Purchased Assets other than extensions of credit and similar events in the ordinary course of business or, except for credit support provided to Purchaser, guarantee with the Purchased Assets, or otherwise make the Business liable for the obligations of any Person, other than any obligations for borrowed money, extensions of credit or guarantees that would be discharged on or prior to the Closing;

(vi) delay beyond its due date the payment or discharge of any account payable or other obligation or liability that, upon or after the Closing, would be an Assumed Liability or could reasonably be expected to adversely affect, in any material respect, the operation, maintenance or physical condition of the Purchased Assets or the conduct of the Business;

(vii) sell, transfer, swap, or otherwise make unavailable to Purchaser at the Closing any of the Emission Allowances, except for the surrender of Emissions Allowances to the issuing Governmental Authority in the ordinary course of business consistent with past practices and in accordance with the requirements of Laws;


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(viii) make any material change to the levels of Inventory maintained at the Project, except in the ordinary course of business consistent with past practices and in accordance with Good Industry Practices;

(ix) make any fundamental change to the Business;

(x) hire any Employee who would be an Employee of Seller, or assume any obligation or liability under Law, where Seller would be an employer of any individual primarily dedicated to work at the Project Site in connection with the Purchased Assets and the Business; or

(xi) authorize or commit to do or agree to take, whether in writing or otherwise, any of the foregoing prohibited actions.

(c) Nothing in this Section 6.3 shall preclude Seller or any Affiliate of Seller from (i) paying, prepaying or otherwise satisfying any liability that, if outstanding as of the Closing Date, would be an Assumed Liability or an Excluded Liability, provided that no Assumed Liability or obligation that could reasonably be expected to adversely affect, in any material respect, the operation, maintenance or physical condition of the Purchased Assets or the conduct of the Business is created or increased by or otherwise arises out of the satisfaction of such liability, (ii) incurring any liability or obligation to any third party in connection withobtaining such party's Consent to any Transaction, provided that any and all such liabilities and obligations so incurred are Excluded Liabilities or (iii) acquiring any asset that would be an Excluded Asset.

Section 6.4. Regulatory Approvals.

(a) Seller and Purchaser each shall make and file, or cause to be made and filed, with the United States Federal Trade Commission and the United States Department of Justice all notifications and filings required to be made and filed under the HSR Act with respect to the Transactions. The Parties shall consult with each other as to the appropriate time to make such notifications and filings and shall cooperate with each other with respect to the development and coordination of submission of such notifications and filings. Purchaser and Seller shall use good faith efforts to make such notifications and filings with the United States Federal Trade Commission and the United States Department of Justice on or before August 31, 2011.

(b) Purchaser and Seller shall use good faith efforts to file with the FERC on or before August 31, 2011, the joint application of the Parties seeking authorization of the Transactions pursuant to Section 203 of the Federal Power Act.

(c) Purchaser shall use good faith efforts to file with the FERC on or beforeOctober 31, 2011, its application seeking authorization to recover the costs of any positive acquisition adjustment and related amortization expenses in connection with the Transactions pursuant to Section 205 of the Federal Power Act.

(d) Purchaser shall use good faith efforts to file with the APSC on or before July 15, 2011, its application seeking regulatory approval of the Transaction.


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(e) Seller and Purchaser shall use good faith efforts to file on or before August 31, 2011, (i) a temporary waiver of at least 90 days of the FERC’s capacity release rules as set forth in 18 C.F.R. § 284.8 (“Capacity Release Rules”) and other related FERC policies and requirements with respect to the Gas Transportation Agreements, including the shipper-must-have-title policy, the prohibition on buy-sell arrangements, the prohibition on tying, posting and bidding requirements, and the restrictions on capacity releases above or below the applicable maximum rate, and (ii) any waivers of the FERC Gas Tariff governing service provided pursuant to a Gas Transportation Agreement necessary to relieve Seller of any and all liability under such Gas Transportation Agreement (solely to the extent such liability is allocable to the period after the Closing Date and not resulting from any breach or default by, or waiver or extension given by or to, Seller). Notwithstanding the foregoing, the Parties agree to continue to evaluate whether such a waiver is necessary for all such Gas Transportation Agreements, and, in the event that the Parties mutually agree that such a waiver is not required, the Parties shall not be required to seek the same.

(f) The Parties acknowledge and agree that a Party shall be deemed to have acted in good faith if any of the application filings described in Section 6.4(a), Section 6.4(b), Section 6.4(c), Section 6.4(d), and Section 6.4(e) is delayed beyond the date provided therein as a result of any need to address in such application or resolve any material legal or regulatory risk or issue prior to submission of such application, including any issue arising from communications with the Department of Justice, Federal Trade Commission, FERC or APSC staff, as applicable, any issue concerning application sequencing or docket congestion, and any newly issued or promulgated Law or official guidance.

(g) Purchaser shall, with respect to Purchaser's Regulatory Approvals, and Seller shall, with respect to Seller's Regulatory Approvals:

(i) use Commercially Reasonable Efforts to prevent the entry in a judicial or administrative proceeding brought by any Governmental Authority or any other Person for a permanent or preliminary injunction, temporary restraining order or other similar Order that would make unlawful, prevent or delay consummation of the Transactions; and

(ii) promptly take, in the event that such an injunction or similar Order has been issued in such a proceeding, any and all Commercially Reasonable Efforts, including the appeal thereof and the posting of a bond to vacate, modify or suspend such injunction or Order so as to permit the consummation of the Transactions on a schedule as close as possible to that contemplated by this Agreement.

(h) With respect to the Seller's Regulatory Approvals and Purchaser's Regulatory Approvals referenced in Sections 6.4(a) and 6.4(b), Purchaser and Seller shall, upon the request of the other, mutually execute and deliver a joint defense agreement regarding such applications in substantially the form attached hereto as Exhibit I.

Section 6.5. Permit, Emission Allowance and Purchased Project Contract Transfers.


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(a) Purchaser shall have primary responsibility for securing, at its expense, the transfer or re-issuance at or after the Closing of the Purchased Permits and the Emission Allowances held by or for Seller or any Affiliate thereof, as and when required by Law. Subject to Section 6.2(c), Seller shall use, prior to, on and, if applicable, after the Closing, at its expense, Commercially Reasonable Efforts to cooperate and assist Purchaser with, and shall cause its Affiliates and its and their respective Representatives to use Commercially Reasonable Efforts to cooperate and assist Purchaser with, the transfer and re-issuance of the Purchased Permits and Emission Allowances, including by timely executing and delivering any and all reasonably required forms or providing timely and appropriate notices and information to Governmental Authorities for Purchaser to timely obtain all Purchased Permits and Emission Allowances to be transferred or re-issued to it pursuant to Section 2.1(g) or 2.1(l) and by enforcing legal rights available to it under the terms of the Purchased Permits and Emission Allowances.

(b) Other than as provided in Section 6.5(a) with respect to Purchased Permits and Emission Allowances, Seller shall have primary responsibility for securing, at its expense, Seller's Consents. Subject to Section 6.2(b), Purchaser shall use, prior to, on and, if applicable, after the Closing, and at its expense, Commercially Reasonable Efforts to cooperate and assist Seller with, and shall cause its Representatives to use Commercially Reasonable Efforts to cooperate and assist Seller with, securing Seller's Consents including by timely executing and delivering any and all reasonably required documentation and providing any reasonably required information to any Person from whom a Seller's Consent is sought as so reasonably requested by Seller or such Person.

(c) Seller shall not be obligated or permitted, without Purchaser's prior consent, to transfer a Purchased Permit or Emission Allowance to Purchaser or its designee or a Purchased Project Contract, Purchased License or Purchased Warranty to Purchaser without the applicable Seller's Consent having been obtained if the transfer by Seller or assumption by Purchaser of the same would constitute a breach or default under the Purchased Permit, Emission Allowance, Purchased Project Contract, Purchased License or Purchased Warranty or violate any Law (each a "Non-Assigned Asset"). If any such Seller's Consent is not obtained prior to the Closing, to the extent and for so long as the applicable Non-Assigned Asset shall not have been transferred to Purchaser or its designee, Seller shall, following the Closing, to the extent permitted by Law, hold such Non-Assigned Asset in trust for the use and benefit of Purchaser or its designee, and shall take such other actions (including entering into written agreements, notice of which shall, with respect to each Purchased Permit or Emission Allowance that is a Non-Assigned Asset, be provided, to the extent required by Law, by Purchaser to the Governmental Authority transferring or re-issuing such Non-Assigned Asset) as Purchaser may reasonably request in order to place Purchaser or its designee in a substantively similar position to that which would have been in effect if such Seller's Consent had been obtained, or to provide Purchaser or its designee the full rights, privileges and benefits of, any such Non-Assigned Asset not transferred to Purchaser or its designee. To the extent permitted by Law, Purchaser shall agree to perform for the benefit of Seller and comply with the obligations of Seller, at Purchaser's expense, with respect to the Non-Assigned Assets, to the extent such obligations are reasonably capable of being performed and complied with by Purchaser, from and after the Closing through the completion of the transfer or re-issuance of the Non-Assigned Asset to Purchaser or its designee or the expiration thereof according to its terms. Nothing in this Section 6.5 shall limit a Party's obligations or liabilities under Article III and Section 6.1 or Section 6.2.


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(d) With respect to any applicable compliance period that begins on or before the Closing Date and ends after the Closing Date, (i) Seller shall be responsible for procuring and transferring to Purchaser's or its designated agent's account, on or before the end of such compliance period, sufficient Emission Allowances for such compliance period as required under Law with respect to the Project or the Business for the portion of such period up to and including the Closing (such responsibility, an Excluded Liability), and (ii) Purchaser shall be responsible for procuring and transferring to its own or its designated agent's account, on or before the end of each such compliance period sufficient Emission Allowances for such compliance period as required under Law with respect to the Project or the Business for the portion of such period after the Closing (such responsibility, an Assumed Liability). The Parties agree that, with respect to each such compliance period, Purchaser shall, or shall cause its designated agent to, prepare and timely file all notices and other filings, and take any other commercially reasonable actions, as necessary to comply in all material respects with Laws regarding Emission Allowances for such compliance period with respect to the applicable emissions allocable to the Project or the Business for each such entire compliance period. The Parties further agree that, notwithstanding the transfer to Purchaser or its designated agent pursuant to Section 2.1(l) of the Emission Allowances, the following Emission Allowances included in such Emission Allowances shall be held by Purchaser or its designated agent for the benefit of Seller and used or otherwise applied by Purchaser or its designated agent to satisfy all or part, as applicable, of Seller's responsibilities pursuant to subsection (i) above for each such applicable compliance period: (A) unused and valid Emission Allowances granted with respect to all compliance periods ending on or before the Closing Date; and (B) the portion of the Emission Allowances granted with respect to any of the applicable compliance periods beginning on or before the Closing Date and ending after the Closing Date allocated to Seller based on the total Emission Allowances granted with respect to any such period, multiplied by the percentage representing the number of days during such period that occurred on or prior to the Closing Date divided by the total number of days in such period. After the completion of such actions with respect to all such compliance periods, any excess Emission Allowances with respect to the Project or the Business shall be the sole property of Purchaser.

Section 6.6. KGen Proxy Statement; Recommendations.

(a) KGen Proxy Statement. As promptly as practicable after the Effective Date, but in no event more than fifteen (15) Business Days after the Effective Date, KGen shall cause the Proxy Statement to be mailed to the stockholders of KGen. If any communication proposed to be made by KGen or any of its Representatives generally to the stockholders of KGen will refer to or comment upon the Transactions, prior to the release or issuance of such communication, KGen shall provide Purchaser a reasonable opportunity to review and comment on the portion of such communication that refers to or comments upon the Transactions.

(b) KGen Special Meeting of Stockholders.

(i) Holding Special Meeting. As promptly as practicable after the Effective Date, but in any event (subject to the last sentence of Section 6.6(b)(iii)) within thirty (30) days after KGen mails the Proxy Statement to the stockholders of KGen pursuant to Section 6.6(a), KGen shall in accordance with applicable Law and KGen's certificate of incorporation, bylaws and other similar documents duly call, give notice of,


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convene and hold a special meeting of stockholders (the "Special Meeting") for the purpose of obtaining the Stockholder Approval. KGen shall use its Commercially Reasonable Efforts to solicit from its stockholders proxies in favor of a resolution authorizing the sale of the Purchased Assets pursuant to this Agreement and use its Commercially Reasonable Efforts to take all other action necessary or advisable to secure the Stockholder Approval in compliance with all applicable Laws; and

(ii) KGen Recommendation to Stockholders. The Board of Directors of KGen (the "KGen Board") shall recommend that the stockholders of KGen approve a resolution authorizing the sale of the Purchased Assets pursuant to this Agreement at the Special Meeting (the "KGen Recommendation"), and shall not withdraw, qualify, amend or modify the KGen Recommendation, and no director or executive officer of KGen shall make any statement to the stockholders of KGen, or otherwise directly or indirectly communicate with the stockholders of KGen or with the financial press or general public in a manner that is inconsistent with, the KGen Recommendation (any of the foregoing, a "KGen Recommendation Change"), except that:

(A) the KGen Board may make a KGen Recommendation Change in connection with a Takeover Proposal in accordance with Section 6.12; and

(B) if a KGen Intervening Event shall have occurred, the KGen Board may make a KGen Recommendation Change in response to such KGen Intervening Event before the Stockholder Approval has been obtained if the KGen Board determines in good faith, after consulting with its outside legal advisors, that the failure by the KGen Board to make a KGen Recommendation Change in response to such KGen Intervening Event would be inconsistent with its fiduciary duties under applicable Law.

Notwithstanding clause (B) above, the KGen Board shall not be permitted to make a KGen Recommendation Change in response to a KGen Intervening Event unless, at least fifteen (15) days prior to the KGen Board taking such action, KGen shall have provided written notice to Purchaser (a "KGen Notice of Intervening Event") (1) describing the KGen Intervening Event, and (2) stating that the KGen Board intends to make a KGen Recommendation Change in response to such KGen Intervening Event, and the KGen Board's reasons for making such KGen Recommendation Change. KGen agrees that after delivering a KGen Notice of Intervening Event, Purchaser will be permitted to propose to KGen revisions to the terms of the Transactions such that the KGen Board will no longer be required to make a KGen Recommendation Change, and that KGen and its Representatives will consider in good faith any such revisions to the terms of the Transactions.

(iii) Obligation to Hold Special Meeting Continues. Prior to the termination of this Agreement, the obligation of KGen pursuant to Section 6.6(b)(i) to call, give notice of, convene and hold the Special Meeting and to hold a vote of KGen's stockholders on the adoption of this Agreement and the approval of the sale of the Purchased Assets at the Special Meeting shall not be limited or otherwise affected by the commencement, disclosure, announcement or submission to it of any Takeover Proposal


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(whether or not a Superior Offer), occurrence of a KGen Intervening Event or by a KGen Recommendation Change. In any case in which the KGen Board makes a KGen Recommendation Change, and unless this Agreement is sooner terminated, (i) KGen shall nevertheless submit the resolution regarding the matters contemplated by this Agreement to a vote of its stockholders in accordance with Section 6.6(b)(i) and (ii) the Proxy Statement and any and all accompanying materials (including the proxy card) shall be identical in form and content to the Proxy Statement and any and all accompanying materials (including the proxy card) that would have been prepared by KGen had no KGen Recommendation Change been made, except for appropriate changes to the disclosure in the Proxy Statement (x) stating that such KGen Recommendation Change has been made, (y) describing matters relating to the KGen Intervening Event or Superior Offer, as applicable, to the extent required by applicable Law, and (z) providing such other information as would be required to be disclosed to comply in all material respects with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder if KGen's solicitation of its stockholders were subject to Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder. KGen agrees that, prior to the termination of this Agreement, it shall not submit to the vote of its stockholders any Takeover Proposal (whether or not a Superior Offer, but excluding any Permitted Transaction) or propose to do so. KGen may postpone or adjourn the Special Meeting or delay the solicitation of proxies to the extent necessary to ensure that any supplement or amendment to the Proxy Statement required by Law (including Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder as if KGen's solicitation of its stockholders were subject to Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder) is provided to KGen's stockholders or, if as of the time for which the Special Meeting is scheduled, there are insufficient shares of stock of KGen represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Special Meeting.

Section 6.7. Plant Performance Tests.

(a) The Parties agree that this Section 6.7 shall govern the performance of Plant Performance Tests under this Agreement. All Plant Performance Tests shall be performed in accordance with the requirements of this Agreement. The Testing Party shall bear the costs to conduct the applicable Plant Performance Test and shall reimburse the other Party for the reasonable, documented, out-of-pocket costs and expenses, if any, incurred by such other Party to conduct such Plant Performance Test (i) upon or within thirty (30) days after termination or expiration of this Agreement or (ii) if the Closing occurs, at the Closing. Without limiting the foregoing or the terms of Schedule 6.7, (i) Seller shall be responsible for providing all test instrumentation, equipment, systems, tools, material, labor (including testing specialists), utilities, and services necessary to conduct a Plant Performance Test, and (ii) Purchaser shall schedule and dispatch the Project's electric generation units as required by the Plant Performance Test and purchase the electric energy dispatched to Purchaser therefrom pursuant to the payment terms set forth in any PPA then in effect or, if no such agreement is then in effect, on payment terms mutually agreed to by the Parties. If a Plant Performance Test cannot be performed in accordance with the requirements herein at the time of a scheduled Plant Performance Test due to an equipment failure or malfunction at the Project, a force majeure, or other unplanned outage, the Testing Party shall cause the Plant Performance Test to be rescheduled as soon as possible


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after such unplanned outage has been remedied. Seller may terminate in its discretion, any Plant Performance Test during the conduct thereof and such test shall not be deemed a "Plant Performance Test" for purposes of Section 6.7 (other than this Section 6.7(a)); provided, that if Seller does elect to so terminate such a test, Seller shall cause the Plant Performance Test to be rescheduled as soon as possible and shall be deemed the "Testing Party" with respect to such test for purposes of this Section 6.7(a).

(b) For each Plant Performance Test, the Testing Party shall deliver the final written report of the Plant Performance Test Contractor (the "Plant Performance Test Report") that documents, explains and certifies the performance and final results of such Plant Performance Test (the "Plant Performance Test Results") to the other Party promptly after receipt thereof from the Plant Performance Test Contractor, but in any event within thirty (30) days of such Plant Performance Test. The Plant Performance Test Report shall include the calibration records for the test instrumentation and otherwise meet the requirements set forth in Schedule 6.7. The Testing Party shall provide the other Party with (i) reasonable advance notice of and a reasonable opportunity to witness the Plant Performance Test, (ii) any draft written report prepared by the Plant Performance Test Contractor and delivered to the Testing Party and (iii) a reasonable opportunity to participate in any material communication between the Testing Party and the Plant Performance Test Contractor related to the Plant Performance Test.

(c) The Parties agree that Plant Performance Testing shall be conducted in connection with the Closing. To facilitate planning for such Plant Performance Testing, Purchaser shall notify Seller of its reasonable best estimate of the Closing Date (as may be modified pursuant to clauses (g) or (h) below, the "Target Closing Date") on or before 140 days prior to such date.

(d) No earlier than 120 days prior to the Target Closing Date, but no later than ninety (90) days prior to such Target Closing Date, Seller shall conduct, at its expense, a Plant Performance Test (the "Initial Plant Performance Test"). If the Plant Performance Test Results of the Initial Plant Performance Test indicate that one or more of the Plant Performance Parameters was not achieved, then either Seller or Purchaser may, upon five (5) days' prior written notice to the other Party, elect to conduct, at its expense, no later than forty-five (45) days prior to such Target Closing Date and using the same Plant Performance Test Contractor that performed the Initial Plant Performance Test, another Plant Performance Test (a "Plant Performance Re-Test").

(e) If the Plant Performance Test Results of a Plant Performance Re-Test indicate that one or more of the Plant Performance Parameters was not achieved, then either Seller or Purchaser may, upon five (5) days' prior written notice to the other Party, elect to conduct, at its expense, no later than forty-five (45) days prior to the Target Closing Date, and using the same Plant Performance Test Contractor that performed the Initial Plant Performance Test and any Plant Performance Re-Tests, additional Plant Performance Re-Tests.

(f) If a Party has elected to conduct a Plant Performance Re-Test in accordance with this Section 6.7, such Party shall be the Testing Party for purposes of such Plant Performance Re-Test and shall cause the Plant Performance Re-Test to be conducted. If more


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than one Party has made such an election, the Party first delivering notice of such election to the other Party in accordance with this Agreement shall be deemed the Testing Party.

(g) In the event that the Plant Performance Test Results of the Initial Plant Performance Test or a Plant Performance Re-Test indicate that one or more of the Plant Performance Parameters was not achieved, Seller determines in good faith that such failure was due to one or more identified, non-speculative mechanical, electrical or other physical defects of the Project (a "Testing Defect") and Seller desires to Repair such Testing Defect at its sole cost and expense and conduct a Plant Performance Re-Test but despite the use of Commercially Reasonable Efforts Seller cannot complete such Repair and perform such Plant Performance Re-Test at least forty-five (45) days prior to the Target Closing Date, then:

(i) Seller shall be required to provide to Purchaser notice ("Late Testing Notice") of its intention to perform such Plant Performance Re-Test and indicate, in reasonable detail, the Testing Defect that caused its failure to achieve one or more of the Plant Performance Parameters, the remedial actions that it intends to take to Repair such Testing Defect (such repair, a "Testing Repair") and the expected time for commencement and completion of such Testing Repair and Purchaser shall promptly notify Seller, upon receipt of a Late Testing Notice, as to whether it has any information that would require it to provide notice to Seller under Section 6.7(h) (and, if so, it shallprovide such notice and Section 6.7(h) shall govern);

(ii) Seller shall use Commercially Reasonable Efforts to complete the Testing Repair as soon as reasonably practicable in accordance with Good Industry Practices and the terms of this Agreement;

(iii) if:

(A) the satisfaction of the Plant Performance Test condition under Section 7.12 is the last condition to Purchaser's obligations to be satisfied (other than those conditions that by their nature are satisfied at the Closing), Seller shall designate a new Target Closing Date that is at most one hundred and twenty (120) days (but no fewer than ninety (90) days) after Seller's completion date for the Testing Repair (but in no event shall the Target Closing Date be extended beyond the Expiration Date); or

(B) the satisfaction of the Plant Performance Test condition under Section 7.12 is not the last condition to Purchaser's obligations be satisfied (other than those conditions that by their nature are satisfied at the Closing), Seller shall notify Purchaser in writing of the completion date of such Testing Repair at least fifteen (15) days prior thereto and Purchaser shall designate a new Target Closing Date that is one hundred and twenty (120) days after Seller's completion date for the Testing Repair (but in no event shall the Target Closing Date be extended beyond the Expiration Date);


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and, where the Target Closing Date is so extended, the provisions of this Section 6.7 shall apply as if such new Target Closing Date were the original Target Closing Date established hereunder;

(iv) Seller shall use Commercially Reasonable Efforts to cooperate with Purchaser, include Purchaser in meetings, communications and inspections relating to any Testing Repair conducted under this Section 6.7(g) and otherwise keep Purchaser reasonably informed with respect to any Testing Repair in order to enable Purchaser to make a reasonable, informed evaluation of the quality, sufficiency, and acceptability thereof. Seller shall use Commercially Reasonable Efforts to obtain customary warranties related to any Testing Repairs that are freely assignable to Purchaser. Purchaser shall have the right to approve the completion of any Testing Repairs which such approval will be prompt and will not be unreasonably withheld, conditioned or delayed. All Testing Repairs performed pursuant to this Section 6.7(g) shall be performed by an Approved Contractor.

(v) For purposes of this Section 6.7, any Testing Defect that constitutes parts, machinery, equipment, facilities, systems or others items shall not be considered Repaired if (A) such "Repair" is temporary or transitional in nature or such parts, machinery, equipment, facilities, systems or other items are not, in all material respects, safely and properly connected to, or integrated and operating safely and properly with, the other machinery, equipment, facilities, systems and/or items to which it is connected or integrated or with which it operates, or (B) the operating performance and capabilities of such machinery, equipment, facilities, systems or items or the Project shall have diminished as a result of such Testing Defect or "Repair" or the cost to operate and maintain such machinery, equipment, facilities or systems or the Project following such Testing Defect or "Repair" shall be greater as a result of such Testing Defect or "Repair", in each case, by more than an immaterial amount relative to the operating performance and capabilities or costs prior to the Testing Defect or "Repair; provided, however, that if the operating performance or capability that has diminished as a result of a Testing Defect is Project Capacity or Project Heat Rate, or if such increased operation and maintenance cost is due to the Project having a lower Project Capacity or higher Project Heat Rate than prior to the Testing Defect, then clause (B) shall not apply.

(h) If, after completion of the Initial Plant Performance Test or a Plant Performance Re-Test, Purchaser obtains new information that it cannot achieve Closing within 120 days of the date on which the Initial Plant Performance Test or latest Plant Performance Re-Test was completed due to Purchaser's inability to obtain Purchaser's Regulatory Approvals by such date, then either Seller or Purchaser may, upon five (5) days' prior written notice to the other Party, elect to conduct, at its expense, no later than forty-five (45) days prior to a new Target Closing Date prior to the Expiration Date determined by Purchaser based on its reasonable good faith estimate of the Closing Date (in the event that either such Party desires a Plant Performance Re-Test), and using the same Plant Performance Test Contractor, a new Initial Plant Performance Test as provided in Section 6.7(d).

(i) In addition, if the Plant Performance Test Results for the Initial Plant Performance Test or a Plant Performance Re-Test establish that the Project NOx Emission Rate


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exceeds the Contract NOx Emission Rate and/or the Project CO Emission Rate exceeds the Contract CO Emission Rate and Seller has, or reasonably believes it has, corrected such failure, then Seller shall promptly notify Purchaser of such belief and either Party may, upon five (5) days' prior written notice to the other Party, elect to conduct, at its expense, using the same Plant Performance Test Contractor, a Plant Performance Re-Test as provided herein.

(j) The "Final Plant Performance Test Results" shall be the Plant Performance Test Results for either (i) the Initial Plant Performance Test, if no Plant Performance Re-Test has been conducted, or (ii) the most recent Plant Performance Re-Test, if one or more Plant Performance Re-Tests have been conducted.

(k) The applicable unadjusted Purchase Price set forth in Section 3.4(a), (b) or (c) shall be reduced to reflect the Final Plant Performance Test Results by the amount determined pursuant to this Section 6.7(k) (such amount, the "Final Plant Performance Reduction Amount"). The Final Plant Performance Reduction Amount shall be (i) the amount that is the aggregate effect of sub-clauses (i) and (ii) of this Section 6.7(k), to the extent such amount would require a reduction in the unadjusted Purchase Price, or (ii) zero, in the event such amount would require an increase in the unadjusted Purchase Price.

(i) If the Final Plant Performance Test Results establish that the Project Capacity is below the Contract Capacity, then (A) the unadjusted Purchase Price set forth in Section 3.4(a) shall be reduced by $408.06 for each kW by which the Project Capacity is below the Contract Capacity less the Capacity Test Tolerance, (B) the unadjusted Purchase Price set forth in Section 3.4(b) shall be reduced by $416.13 for each kW by which the Project Capacity is below the Contract Capacity less the Capacity Test Tolerance and (C) the unadjusted Purchase Price set forth in Section 3.4(c) shall be reduced by $424.19 for each kW by which the Project Capacity is below the Contract Capacity less the Capacity Test Tolerance; provided, however, that in no event shall (1) the unadjusted Purchase Price set forth in Section 3.4(a) be reduced by more than $16,000,000, (2) the unadjusted Purchase Price set forth in Section 3.4(b) be reduced by more than $16,316,424, and (3) the unadjusted Purchase Price set forth in Section 3.4(c)be reduced by more than $16,632,456, in each case as a result of this Section 6.7(k)(i). If a Purchase Price reduction pursuant to this Section 6.7(k)(i) would exceed the applicable amount set forth in clause (1), (2) or (3) of this Section 6.7(k)(i), Purchaser shall have the right to terminate this Agreement on account thereof, upon written notice to Seller provided within thirty (30) days of Purchaser's receipt of the Final Plant Performance Test Results. Purchaser shall be entitled to make full use of the time provided in the previous sentence (even if the full use of such time would delay the Closing) to determine whether to exercise its termination right hereunder, and any such delay in the Closing will be considered a delay caused by Seller for purposes of determining the applicable Transaction Period and Purchase Price payable at the Closing.

(ii) If the Final Plant Performance Test Results establish that the Project Heat Rate exceeds the Contract Heat Rate, then each of the unadjusted Purchase Prices set forth in clauses (a), (b), and (c) of Section 3.4 shall be reduced by $70,000 for each Btu/kWh by which the Project Heat Rate exceeds the sum of (A) the Contract Heat Rate and (B) either (1) a tolerance of 100 Btu/kWh, if the Closing occurs on or before


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eighteen (18) months after the Effective Date, or (2) a tolerance of 150 Btu/kWh, if the Closing occurs more than eighteen (18) months after the Effective Date; provided, however, that in no event shall any unadjusted Purchase Price set forth in clause (a), (b) or (c) of Section 3.4 be reduced by more than $16,000,000 as a result of this Section 6.7(k)(ii). If a Purchase Price reduction pursuant to this Section 6.7(k)(ii) would exceed $16,000,000, Purchaser shall have the right to terminate this Agreement on account thereof upon written notice to Seller provided within thirty (30) days of Purchaser's receipt of the Final Plant Performance Test Results. Purchaser shall be entitled to make full use of the time provided in the previous sentence (even if the full use of such time would delay the Closing) to determine whether to exercise its termination right hereunder, and any such delay in the Closing will be considered a delay caused by Seller for purposes of determining the applicable Transaction Period and the Purchase Price payable at the Closing.

(l) If the Final Plant Performance Test Results establish that the Project NOxEmission Rate exceeds the Contract NOx Emission Rate and/or the Project CO Emission Rate exceeds the Contract CO Emission Rate, Seller shall, at its expense, use Commercially Reasonable Efforts to correct any such failure to achieve the Contract NOx Emission Rate and/or Contract CO Emission Rate, as applicable, as soon as reasonably possible, but in no event later than a date sufficient to allow the Closing to occur by the Expiration Date. Any delay in the Closing as a result of the Final Plant Performance Test Results establishing that the Project NOxEmission Rate exceeds the Contract NOx Emission Rate and/or the Project CO Emission Rate exceeds the Contract CO Emission Rate will be considered a delay caused by Seller for purposes of determining the applicable Transaction Period and Purchase Price payable at the Closing.

(m) Notwithstanding anything herein to the contrary, Seller shall not be entitled to any increase in the Purchase Price or any other compensation from Purchaser if the Final Plant Performance Test Results reflect (i) a Project Capacity above the Contract Capacity, (ii) a Project Heat Rate below the Contract Heat Rate, (iii) a Project NOx Emission Rate below the Contract NOx Emission Rate, or (iv) a Project CO Emission Rate below the Contract CO Emission Rate.

Section 6.8. Risk of Loss; Casualty Events.

(a) (i) If, before the Closing, all or any portion of the Purchased Assets, including the Project Real Property, are damaged or destroyed (the portion of the Purchased Assets so damaged or destroyed, the "Damaged Portion"), whether by fire, theft, vandalism, flood, wind, explosion or other casualty (each instance thereof, a "Casualty Event") which Seller estimates in good faith based on Good Industry Practices (i) will result in total out-of-pocket costs to Repair the Damaged Portion (disregarding any proceeds that Seller and/or Affiliates of Seller would reasonably be expected to receive from the applicable Project Insurance Policies in respect of such Damaged Portion) less than $2,000,000 and (ii) would not reasonably be expected to be materially adverse to the operations or physical condition of the Purchased Assets taken as a whole, Seller will: (A) in the event that Seller reasonably determines that such Damaged Portion would reasonably be expected to be Repaired in accordance with Good Industry Practices at least sixty (60) days prior to the Expiration Date either: (1) Repair or cause to be Repaired the Damaged Portion in accordance with Good Industry Practices at least sixty


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(60) days prior to the Expiration Date (in which case Seller shall be entitled to all proceeds of Project Insurance Policies related to such Casualty Event, whether paid prior to, at or following Closing (and Purchaser agrees to hold in trust any such proceeds received by it and promptly pay the same over to Seller)) and the remaining provisions of this Section 6.8 shall not apply to such Casualty Event (unless Seller fails to Repair such Damaged Portion in accordance with Good Industry Practices at least sixty (60) days prior to the Expiration Date in which case Section 6.8(a)(ii) shall apply) or (2) send a Casualty Event Notice and proceed as otherwise provided in this Section 6.8 or (B) where Seller does not reasonably believe that such Damaged Portion can be Repaired in accordance with Good Industry Practices at least sixty (60) days prior to the Expiration Date, apply the provisions of Section 6.8(a)(ii).

(ii) If this provision is applicable as provided in Section 6.8(a)(i), then Purchaser shall proceed with the Transactions and Close and may elect to either (A) require Seller to complete (or cause the completion of) such Repair after the Closing as provided herein at Seller's expense, or (B) (1) complete such Repair as required herein after the Closing at its (i.e., the Purchaser's) own expense and (2) reduce the Purchase Price by the total remaining out-of-pocket costs reasonably estimated by Seller to Repair the Damaged Portion (disregarding any proceeds that Seller and/or Affiliates of Seller would reasonably be expected to receive from the applicable Project Insurance Policies in respect of such Damaged Portion) as determined in accordance with Section 6.8(a).

(b) Seller shall notify Purchaser promptly in writing (the "Casualty Event Notice") of a Casualty Event which Seller estimates in good faith based on Good Industry Practices (i) will result in total out-of-pocket costs to Repair the Damaged Portion (disregarding any proceeds that Seller and/or Affiliates of Seller would reasonably be expected to receive from the applicable Project Insurance Policies in respect of such Damaged Portion) of greater than or equal to $2,000,000, (ii) would reasonably be expected to materially and adversely affect the Purchased Assets or (iii) would not reasonably be expected to be Repaired on or before sixty (60) days prior to the Expiration Date. The Casualty Event Notice shall include (i) the material facts and circumstances surrounding the Casualty Event, (ii) a good faith preliminary assessment of the effect of the Casualty Event on the Project, the Business and the Purchased Assets and (iii) whether or not, and the extent to which, the losses sustained as a result of such Casualty Event are covered by one or more Project Insurance Policies then in effect. Seller shall update and revise the information required to be provided to Purchaser under this Section 6.8 promptly after such information becomes known to Seller.

(c) As promptly as practicable, but in no event later than thirty (30) days after Purchaser's receipt of any Casualty Event Notice, Seller shall determine, in good faith, whether the Damaged Portion would reasonably be expected to be Repaired on or before sixty (60) days prior to the Expiration Date and the estimated Total Cost of such Repair. In making such determination, Seller, with Purchaser's prior written consent, which shall not be unreasonably withheld, conditioned or delayed, shall select an Approved Contractor, to (i) review the Damaged Portion and estimate the scope, cost and duration of the work required to Repair the Damaged Portion or (ii) agree to perform the work required to Repair the Damaged Portion pursuant to contractual arrangements, the terms and conditions of which are reasonably acceptable to Seller and Purchaser. Nothing herein shall prevent the selection of the Approved Contractor pursuant to a bidding process. Seller shall rely upon such estimate or contract (absent


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fraud or manifest material error), as applicable, in making the determination required by the first sentence of this Section 6.8(c). Seller shall be solely responsible for the costs and expenses of obtaining such estimate or contract. "Total Cost" as used in this Section 6.8 shall mean (i) the total out-of-pocket costs to Repair the Damaged Portion less (ii) the sum of any proceeds that Seller and/or Affiliates of Seller would reasonably be expected to receive from the applicable Project Insurance Policies in respect of such Damaged Portion (excluding business interruption insurance).

(d) If Seller determines pursuant to Section 6.8(c) that the Damaged Portion would reasonably be expected to be Repaired as required herein on or before sixty (60) days prior to the Expiration Date for a Total Cost of $13,500,000 or less, then (i) Seller shall bear the costs of and, as between the Parties, exclusive responsibility for Repairing the Damaged Portion in accordance with Good Industry Practices and the other applicable terms of this Agreement, on or before sixty (60) days prior to the Expiration Date, (ii) Seller shall promptly commence and diligently pursue such Repair, until completion thereof, in accordance with its applicable obligations under this Agreement, including Section 6.1, and (iii) the Closing shall be delayed for such reasonable time as is necessary to accomplish the completion of such Repair, but in no event shall such completion be later than sixty (60) days prior to the Expiration Date. Seller shall be entitled to any and all proceeds of Project Insurance Policies with respect to such Casualty Event whether paid prior to, at or following Closing and Purchaser hereby agrees to hold any such proceeds in trust for Seller and promptly pay the same over to Seller.

(e) If Seller determines pursuant to Section 6.8(c) that the Damaged Portion would not reasonably be expected to be Repaired as required herein on or before sixty (60) days prior to the Expiration Date or that the Damaged Portion would not reasonably be expected to be Repaired as required herein for a Total Cost of $13,500,000 or less, then (i) Purchaser may elect to have Seller (A) proceed with the Transactions, (B) reduce the Purchase Price by the estimated Total Cost of such Repair as determined in accordance with this Section 6.8, (C) further reduce the Purchase Price by the sum of (1) all proceeds Seller or any Affiliate of Seller has received from the applicable Project Insurance Policy prior to the Closing in respect of the applicable Damaged Portion (excluding business interruption insurance) and (2) the aggregate amount of all undisputed covered claims arising out of the Casualty Event made by Seller or any of its Affiliates under the applicable Project Insurance Policies, to the extent proceeds from such claims have not been received by Seller or any of its Affiliates as of the Closing, (D) transfer or cause to be transferred to Purchaser at the Closing, for no additional consideration, the irrevocable right to (1) all proceeds Seller or any Affiliate Seller may be entitled to after the Closing from the applicable Project Insurance Policy in respect of the applicable Damaged Portion (excluding business interruption insurance), other than such proceeds for which the Purchase Price was reduced pursuant to clause (C)(2) above, and (2) any and all rights (including defenses), claims and causes of action of any kind that Seller or any of its Affiliates may have against any insurer or third party for damages or losses to the extent arising out such Casualty Event and allocable to the period after the Closing and (E) preserve and maintain the Project in its then-current state in accordance with Good Industry Practices and the other applicable terms of this Agreement pending the Closing, or (ii) either Party may terminate this Agreement. Each Party shall notify the other in writing of any termination of this Agreement elected by such Party pursuant to clause (B) above as promptly as practicable, but in no event later than 60-days after the determination described in the first sentence of this Section 6.8(e) is made. If Purchaser does


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not elect to terminate this Agreement pursuant to this Section 6.8(e) on or before such 60-day period, Purchaser shall be deemed to have required Seller to take the actions set forth in Section 6.8(e)(i) and if Seller does not elect to terminate this Agreement pursuant to Section 6.8(e)(ii) on or before such 60-day period, Seller shall be deemed to have waived its right to terminate in respect of such Casualty Event under Section 6.8(e)(ii). If Purchaser elects the option described in clause (i) above and Seller elects the option described in clause (ii) above, then, irrespective of which election is made first, Purchaser's election shall be disregarded and Seller's election shall be given effect.

(f) If Seller has made the determination pursuant to Section 6.8(d) that the Damaged Portion would reasonably be expected to be Repaired as required herein on or before sixty (60) days prior to the Expiration Date and, despite Seller's compliance with the terms hereof, the Damaged Portion is not Repaired in accordance with Good Industry Practices and the other applicable requirements of this Agreement on or before sixty (60) days prior to the Expiration Date, then Purchaser may, in its sole and absolute discretion, either (i) proceed with the Transactions and (A) require Seller to complete (or cause the completion of) such Repair after the Closing as provided herein at Seller's expense or (B) (1) complete such Repair as required herein after the Closing at its (i.e., the Purchaser's) own expense, (2) reduce the Purchase Price by the positive difference, if any, of (x) the sum of the amount of the proceeds received by Seller and its Affiliates from the applicable Project Insurance Policies (excluding business interruption insurance) prior to the Closing minus (y) the amount of the reasonable, documented out-of-pocket costs expended by Seller on the Repair of such Damaged Portion prior to the Closing and (3) require Seller and, if and to the extent applicable, its Affiliates to transfer or cause to be transferred to Purchaser at the Closing the irrevocable right to all rights (including defenses), claims and causes of action that Seller and its Affiliates may have against any insurer or third party for damages or losses to the extent arising out such Casualty Event and allocable to the period after the Closing or (ii) terminate this Agreement. Purchaser shall notify Seller in writing of any termination of this Agreement pursuant to clause (ii) above on or before thirty (30) days prior to the Expiration Date.

(g) With respect to any Casualty Event where the aggregate cost of the Repair of the Damaged Portion as required herein equals or exceeds $2,000,000, Seller shall not grant its acceptance of any Repair of a Damaged Portion (in whole or in part) under this Section 6.8without Purchaser's prior written consent, which shall not be unreasonably withheld, conditioned or delayed.

(h) For purposes of this Section 6.8, any Damaged Portion that constitutes parts, machinery, equipment, facilities, systems or others items shall not be considered Repaired if (i) such "Repair" is temporary or transitional in nature or such parts, machinery, equipment, facilities, systems or other items are not, in all material respects, safely and properly connected to, or integrated and operating safely and properly with, the other machinery, equipment, facilities, systems and/or items to which it is connected or integrated or with which it operates, or (ii) the operating performance and capabilities of such machinery, equipment, facilities, systems or items or the Project (including, if applicable, energy output, heat rate, emissions quantities) shall have diminished as a result of such Casualty Event or "Repair" or the cost to operate and maintain such machinery, equipment, facilities or systems or the Project following such Casualty Event or "Repair" shall be greater as a result of such Casualty Event or "Repair", in each case, by


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more than an immaterial amount relative to the operating performance and capabilities or costs prior to the Casualty Event or "Repair."

(i) Seller shall use Commercially Reasonable Efforts to cooperate with Purchaser, include Purchaser in meetings, communications and inspections relating to any Repair conducted under this Section 6.8 (other than Section 6.8(a)) in order to enable Purchaser to make a reasonable, informed evaluation of the quality, sufficiency, and acceptability thereof, and complete such Repair on or before sixty (60) days prior to the Expiration Date. All work performed for Seller pursuant to this Section 6.8 shall be performed in accordance with Good Industry Practices and the other applicable terms of this Agreement.

(j) If any Casualty Event has occurred, then, provided Seller complies with this Section 6.8 with respect to such Casualty Event Seller shall not be deemed to be in breach of any representation, warranty or covenant in this Agreement nor shall such Casualty Event constitute a Material Adverse Effect, and, without limiting the foregoing, Purchaser shall not be entitled to any indemnity pursuant to Article IX, to the extent Seller's breach or non-compliance with such representation, warranty or covenant is due solely to the occurrence of such Casualty Event.

Section 6.9. Insurance.

(a) Purchaser acknowledges that, effective upon the Closing, except as provided in Section 6.9(c), Seller or any Affiliate thereof shall terminate or modify the Project Insurance Policies to exclude coverage of the Purchased Assets by Seller or any Affiliate thereof.

(b) From the Effective Date through the earlier of (i) the Closing or (ii) the termination of this Agreement, Seller shall maintain, or cause to be maintained, all Project Insurance Policies held by or for the benefit of Seller as of the Effective Date, provided that, Seller may replace or cause to be replaced any Project Insurance Policies with other policies with substantially similar coverage; provided, further, that with respect to any replacement of current insurers, Seller shall engage financially sound and reputable insurers as per A.M. Best Company ratings.

(c) Notwithstanding Section 6.9(a), Seller shall not (and shall not permit any Affiliate of Seller to) terminate or modify coverage under any "occurrence"-based Project Insurance Policy in such a manner as to prevent Seller from obtaining the benefit of such Project Insurance Policy after the Closing with respect to the Purchased Assets for insured Losses caused by events, facts, or circumstances occurring prior to the Closing.

(d) Seller shall cause Purchaser to be named as an "additional insured," and shall cause the insurer to waive any right of subrogation against Purchaser and its Affiliates, under each of the occurrence-based Project Insurance Policies in effect at any time from the Effective Date through the earlier of the Closing or the termination of this Agreement. After the Closing, Seller, at its own cost and expense, shall (i) subject to Section 6.8, take, and cause its Affiliates to take, all steps necessary or reasonably requested by Purchaser to collect or assist in the collection from applicable insurers of any Loss incurred by Purchaser and covered by any of the Project Insurance Policies (to the extent such Loss has not been paid to Purchaser by Seller),


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and (ii) subject to Section 6.8, cooperate, and cause its Affiliates to cooperate, with and use Commercially Reasonable Efforts to assist Purchaser in the settlement, compromising, or arbitration of any claim of Purchaser under or with respect to any of the Project Insurance Policies in respect of such Loss.

Section 6.10. Tax Matters.

(a) Any and all Transfer Taxes incurred in connection with this Agreement, the Ancillary Agreements and the Transactions shall be borne by Seller. Seller shall timely prepare and file, to the extent required by Law, all necessary Tax Returns and other documentation with respect to all such Transfer Taxes, and timely pay the amount shown as due on such Tax Returns to the applicable Governmental Authority. Purchaser will be entitled to receive such Tax Returns and other documentation reasonably in advance of filing, but not less than ten (10) Business Days prior to the due date of such Tax Returns, and such Tax Returns and other documentation shall be subject to Purchaser's approval, which shall not be unreasonably withheld or delayed. To the extent required by Law, but subject to such review and approval, Purchaser or the appropriate Affiliate of Purchaser, as applicable, shall join in the execution of any such Tax Return or other documentation. To the extent the Transactions constitute a sale of tangible personal property, Purchaser and Seller intend for such sale to qualify as an isolated or occasional sale of tangible personal property pursuant to Ark. Code Ann § 26-52-401(17). Purchaser shall cooperate with Seller to provide all applicable certificates and other documentation necessary to obtain available Tax-exempt status for the Transactions. In preparing and reviewing such Tax Returns, the Parties shall cooperate and act in good faith to resolve any disagreement between them or with any Governmental Authority related to such Tax Returns.

(b) With respect to Proratable Tax Items, Purchaser shall prepare and timely file all Tax Returns required to be filed after the Closing with respect to the Purchased Assets, and shall duly and timely pay all such Taxes shown to be due on such Tax Returns. Purchaser's preparation of any such Tax Returns shall be subject to Seller's approval, which shall not be unreasonably withheld, conditioned or delayed. Purchaser shall make each such Tax Return available for Seller's review and approval no later than twenty (20) Business Days prior to the due date for filing such Tax Return; provided, however, that Seller's failure to approve any such Tax Return shall not limit Purchaser's obligation to timely file such Tax Return and duly andtimely pay all Taxes shown to be due thereon. Not less than five (5) Business Days prior to the due date of any such Taxes, Seller shall pay to Purchaser the portion of the amount shown as due on such Tax Return that is the responsibility of Seller and, to the extent required by Law, Seller or, if applicable, the appropriate Affiliate shall join in the execution of any such Tax Return. In preparing and reviewing such Tax Returns, the Parties shall cooperate and act in good faith to resolve any disagreement between them or with any Governmental Authority related to such Tax Returns.

(c) Seller's preparation of any Tax Return relating to an Encumbrance for Property Taxes on or related to the Purchased Assets that will arise after the Closing Date shall be subject to Purchaser's approval, which shall not be unreasonably withheld, conditioned or delayed. Seller shall make each such Tax Return available for Purchaser's review and approval no later than twenty (20) Business Days prior to the due date for filing such Tax Return;


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provided, however, that Purchaser's failure to approve any such Tax Return shall not limit Seller's obligation to timely file such Tax Returns and duly and timely pay all Taxes shown to be due thereon. Not less than five (5) Business Days prior to the due date of any such Taxes, Purchaser shall pay to Seller the portion of the amount shown as due on such Tax Return that is, as determined in accordance with Sections 3.6 and 3.8, the responsibility of Purchaser and, to the extent required by Law, Purchaser or any of its Affiliates shall join in the execution of any such Tax Return. In preparing and reviewing such Tax Returns, the Parties shall cooperate and act in good faith to resolve any disagreement between them or with any Governmental Authority related to such Tax Returns.

(d) Any refund received for Taxes paid or payable with respect to the Purchased Assets shall be promptly paid (or to the extent payable but not paid due to offset against other Taxes shall be promptly paid by the Party receiving the benefit of the offset) as follows: (i) to Seller, if attributable to Taxes with respect to any Tax year or portion thereof ending on or before the Closing Date (or for any Tax year beginning before and ending after the Closing Date to the extent allocable to the portion of such period beginning before and ending on the Closing Date); and (ii) to Purchaser, if attributable to Taxes with respect to any Tax year or portion thereof beginning after the Closing Date (or for any Tax year beginning before and ending after the Closing Date to the extent allocable to the portion of such period ending after the Closing Date).

(e) From and after the Closing, the Parties shall (and shall cause their respective Affiliates to) cooperate fully with each other and make available or cause to be made available to each other in a timely fashion for consultation, inspection and copying, as applicable, such personnel, Tax data, Tax Returns and filings (or portions thereof), files, books, records, documents, financial, technical and operating data, computer records and other information as may be reasonably required, as may reasonably be requested by the other Party in connection with (i) the preparation or filing by such other Party or any Affiliate thereof of any Tax Return, (ii) any audit or other examination by any Tax authority of or affecting a Party (or an Affiliate thereof) to the extent such audit or examination relates to or arises from the Transactions, the Purchased Assets, or the Business, (iii) any judicial, regulatory or administrative Action relating to liability for Taxes, or (iv) any claim for refund of Taxes (if not inconsistent with this Agreement); provided, however, that a Party shall have no obligation to provide access to (A) any information protected by legal privilege or that it is contractually prohibited from providing to the other, it being agreed that such Party shall use Commercially Reasonable Efforts to remove or obtain a waiver of such contractual prohibitions, or (B) any information related to income taxes. Each Party shall retain and provide the requesting Party with any and all material information relevant to such Tax Return, audit or examination, Action, or claim, and shall make employees of its Affiliates available on a mutually convenient basis to provide additional information about and explanations of any information provided hereunder.

(f) Subject to any shorter period for payment provided elsewhere in this Agreement, a Party shall be entitled to full reimbursement, within thirty (30) days of written request to the other Party, for any Tax borne by such requesting Party that is the responsibility of the other Party pursuant to this Agreement.


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(g) The Parties shall attempt in good faith to resolve any dispute between them as to the amount of Taxes payable by a Party hereunder.

Section 6.11. Employee Matters.

(a) Neither Purchaser nor any of its Affiliates shall have any obligation under this Agreement or otherwise to (i) employ, offer employment to, or engage any Employee, independent contractor or any other Person providing services to the Project or for the operation of the Purchased Assets or (ii) assume any employment Contract, Employee Plan, Collective Bargaining Agreement or other Contract related thereto, and shall have no obligations or liability thereunder or in connection therewith. Seller shall not enter into, make or provide, and shall cause its Affiliates not to enter into, make, or provide, directly or indirectly, any written or verbal agreement, commitment, representation or other communication to current or former Employees or any other Persons that is inconsistent with the provisions of this Section 6.11(a).

(b) (i) Purchaser or any of its Affiliates may, in Purchaser's or such Affiliate's sole and absolute discretion, but upon Seller's approval, which shall not be unreasonably withheld, conditioned or delayed, and subject to the consent of Operator (which Seller shall, upon the request of Purchaser, use Commercially Reasonable Efforts to obtain), communicate with and interview any then-current or former Employee of Operator or any of its Affiliates, who are engaged primarily in the performance of services, including operation, management, administrative or similar services, for the Project, the operation of the Purchased Assets or the conduct of the Business, about the possibility of employment with Purchaser or any of its Affiliates and, in Purchaser's or its Affiliate's sole and absolute discretion, elect to offer employment to any such Employee that would be contingent upon, and would not commence earlier than, the Closing and only on such terms and conditions as Purchaser or its Affiliate shall determine. Nothing in this Agreement shall obligate Purchaser or any of its Affiliates to offer employment to any Employee of Operator or any of its Affiliates after the Closing, or to offer employment after the Closing on the same terms or conditions or with the same benefits offered by Operator or any of its Affiliates, as applicable.

(ii) In the event Purchaser or any of its Affiliates decides to hire any such Employee, Purchaser shall notify Seller of such decision, and Seller shall use Commercially Reasonable Efforts to the extent permitted under the O&M Agreement to cause Operator, subject to Operator's consent, to release such Employee from any confidentiality agreement or other agreement with respect to matters relating to the Project, any of the Purchased Assets or the Transactions that may interfere with such Employee's prospective employment with Purchaser or such Affiliate.

(iii) Seller shall, to the extent provided under any Project Contract or Law, remain liable to Operator, GEII and their respective Affiliates for all costs, expenses, liabilities, claims, wages, benefits, severance, separation, taxes, unemployment, and all other obligations and liabilities of any nature whatsoever relating to the period prior to the Closing with respect to Employees of Operator or GEII and their respective Affiliates who are engaged in the performance of services for the Project or for the operation of the Purchased Assets and relating in any way to their employment, and, for the avoidance of doubt, all such liabilities and obligations shall be Excluded Liabilities.


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Nothing in this Agreement shall create any claim or right on the part of any Employee, and no such Employee shall be entitled to assert any claim or right hereunder or under any Ancillary Agreement.

(c) With respect to any "mass layoff" or "plant closing" as defined by the WARN Act or similar applicable state or local Law affecting any of the Employees or other individuals performing work or services related to or for the Project, Seller shall use Commercially Reasonable Efforts to the extent permitted under the O&M Agreement and the LTSA, as applicable, to cause Operator, GEII and their respective Affiliates (as applicable) to: (i) comply fully with the WARN Act and any and all similar applicable state and local Laws and (ii) perform and discharge the obligation, if any, to serve in a timely manner and fashion all notices required by the WARN Act or similar applicable state or local Law to Employees or other individuals performing work or services related to or for the Project.

(d) Seller shall use Commercially Reasonable Efforts to the extent permitted under the O&M Agreement to cause Operator to provide (i) all COBRA notices to all Employees of Operator or any of its Affiliates performing work or services related to or for the Project, the Purchased Assets, or the Business, and to such Employees' qualified beneficiaries and dependents, required as a result of the completion of the Transactions or a COBRA qualifying event occurring prior thereto or simultaneously therewith and (ii) COBRA continuation coverage to all Employees of Operator or any of its Affiliates performing work or services related to or for the Project, the Purchased Assets, or the Business, and to such Employees' qualified beneficiaries and dependents, who become entitled to COBRA continuation coverage as a result of the completion of the Transactions or a COBRA qualifying event occurring prior thereto or simultaneously therewith.

(e) From the Effective Date until the first anniversary of the Closing or the earlier termination of this Agreement in accordance with its terms, Purchaser shall not, directly or indirectly through its present or future Affiliates or other Persons, without Seller's prior written consent, (i) subject to Section 6.14(a) and Section 6.14(b), initiate contact, or maintain any contact already initiated, with any customer or supplier of Seller or any of its Affiliates regarding the Project (and known by Purchaser to be such a customer or supplier), except in connection with the preparation by Purchaser or any of its Affiliates for the transfer to Purchaser or ownership, use, operation, maintenance, repair, or modification of (or the integration of the operations, systems, processes, and other key business activities and systems relating to) the Purchased Assets, in whole or in part, upon or after the Closing, or (ii) subject to Section 6.11(a)and Section 6.11(b), solicit for employment any individual who is, at the applicable time, an officer or Employee of Seller, any of its Affiliates, or Operator (each a "Restricted Employee"); provided, however, that the foregoing clause (ii) shall not prohibit (A) any general solicitation for employment not specifically directed to a Restricted Employee (e.g., an advertisement or posting in the print, radio or electronic media or a solicitation conducted by a personal placement agent, professional search firm, or employment agency) or the hiring by Purchaser or any of its Affiliates of any Restricted Employee who responds to any such general solicitation, (B) the hiring of a Restricted Employee who directly or indirectly contacts Purchaser or any of its Affiliates of his or her own initiative without any direct or indirect solicitation by Purchaser or any of its Affiliates, (C) from and after the Closing, the solicitation or hiring by Purchaser or any of its Affiliates of any Restricted Employee who is an Employee of Operator or any of its


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Affiliates and, prior to the Closing, was employed primarily at the Project or primarily provided services for the Project or the Business, or (D) the solicitation or hiring by Purchaser or any of its Affiliates of any Restricted Employee according to the terms of this Agreement or the Hot Spring Purchase Agreement. Seller shall cooperate, and cause its Affiliates to cooperate, with Purchaser, its Affiliates, and their respective Representatives in connection with any reasonable request by or for Purchaser to obtain permission from the providers of operation and maintenance, plant management, administrative and similar services to the Project or the Business to allow Purchaser, its Affiliates, and their respective Representatives to contact, interview, and possibly hire, retain, or Contract with the employees or personnel providing such services.

Section 6.12. No Solicitation.

(a) General Rule. Except as set forth in this Section 6.12, none of KGen, Seller or any of their respective Affiliates shall, and KGen and Seller shall each use Commercially Reasonable Efforts to cause its respective Representatives to not, at any time prior to the Closing:

(i) solicit, initiate, seek or knowingly encourage (including through the providing of information), or take any other action to in any way knowingly facilitate, any inquiries, proposals or offers from a Third Party with respect to, or the making of any proposal that constitutes or could reasonably be expected to lead to, a Takeover Proposal (provided, however, that in connection with a request to terminate, waive, amend or modify any provision of, or grant permission under, any standstill provision, which request is made by a Third Party without any solicitation, initiation, knowing encouragement or knowing facilitation by KGen, Seller or any of their respective Affiliates, this clause (i) shall not prohibit the KGen Board from terminating, waiving, amending or modifying any provision of, or granting permission under, any standstill provision if the KGen Board determines in good faith, after consulting with KGen's outside legal advisors, that the failure to do so would be inconsistent with its fiduciary duties under applicable Law);

(ii) furnish any non-public information regarding the Purchased Assets, Seller or KGen to any Person (other than Purchaser or its Representatives) in connection with or in response to a Takeover Proposal or any inquiry, proposal or offer that reasonably could be expected to lead to a Takeover Proposal;

(iii) engage in discussions or negotiations with any Person with respect to any Takeover Proposal or any inquiry, proposal or offer that reasonably could be expected to lead to a Takeover Proposal;

(iv) withdraw or modify, or propose publicly to withdraw or modify the KGen Recommendation, except as permitted by Section 6.6(b) or this Section 6.12;

(v) endorse, approve or recommend, or propose publicly to endorse, approve or recommend, any Takeover Proposal; or


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(vi) negotiate or enter into any confidentiality agreement, term sheet, letter of intent, memorandum of understanding, agreement in principle, acquisition agreement or other similar agreement or document (whether binding or not) for any Takeover Proposal.

Each of KGen and Seller (x) shall, as promptly as practicable following the Effective Date, but in any event within two (2) Business Days of the Effective Date, advise their respective Representatives of the restrictions set forth herein and shall cause its Affiliates to, and shall use its reasonable best efforts to cause its Representatives to, abide by such restrictions, (y) shall, and shall cause its Affiliates to, and shall use its reasonable best efforts to cause its and its Affiliates' Representatives to, immediately cease and cause to be terminated any existing activities, discussions or negotiations with any Persons conducted heretofore with respect to any Takeover Proposal, and (z) request the prompt return or destruction of all confidential information concerning the Purchased Assets, Seller and its Affiliates previously furnished by KGen, Seller, or their respective subsidiaries, Affiliates or Representatives to any Third Party (other than Purchaser) but only to the extent that KGen or Seller has not made such request prior to the Effective Date. KGen and Seller acknowledge and agree that any action taken by any Affiliate or Representative of KGen or Seller (whether or not such Person is purporting to act on behalf of KGen or Seller) that would, had such action been taken directly by KGen or Seller, constitute a breach of the restrictions set forth in this Section 6.12 shall be deemed to constitute a breach of this Section 6.12 by each of KGen and Seller.

Notwithstanding anything to the contrary contained in this Section 6.12, after the Stockholder Approval has been obtained, KGen, Seller or any of their respective Affiliates may take any of the actions described in Section 6.12(a)(i) or (iii) with respect to any potential transaction that reasonably could be expected to lead to a Permitted Transaction; provided, however, that, in advance of such a transaction being deemed a Permitted Transaction by the acknowledgement of Purchaser that such Third Party is reasonably acceptable to Purchaser for the purposes of such definition, neither KGen, Seller nor any of their respective Affiliates will discuss any letter of intent or understanding or any term sheet or provide any non-public information regarding the Purchased Assets, the Transactions, Seller or KGen to such Third Party.

(b) Takeover Proposal. Notwithstanding anything in this Agreement to the contrary, including Section 6.12(a), at any time prior to obtaining the Stockholder Approval, if KGen or any of its Representatives receives a written Takeover Proposal that did not result from a breach of Section 6.12(a) (including any action taken by any Affiliate or Representative deemed to be a breach of Section 6.12(a) by KGen and Seller), KGen, Seller or any of their respective Representatives may contact the Person or Persons making such Takeover Proposal to clarify (but not negotiate) any terms or conditions thereof that the KGen Board may reasonably require to make a good faith determination (after consultation with KGen's outside legal and financial advisors) as to whether such Takeover Proposal is, or could reasonably be expected to lead to, a Superior Offer, and may also:

(i) furnish non-public information regarding KGen, Seller or any of their respective subsidiaries in response to a request by the Third Party who made such Takeover Proposal so long as such Third Party executes (or is otherwise bound by) a


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confidentiality agreement at least as restrictive as the Confidentiality Agreement (a true and complete copy of which shall be provided to Purchaser promptly upon receipt of such Takeover Proposal (with respect to a Third Party already subject to a confidentialityagreement satisfying the provisions of this Section 6.12(b)) or immediately following the execution of same (including any amendment to an existing confidentiality agreement to conform to the provisions of this Section 6.12(b)); provided that (x) in the case of an existing, amended or new confidentiality agreement, as applicable, such confidentiality agreement may not prohibit KGen or Seller from providing information to Purchaser, including information concerning the actual or contemplated Takeover Proposal, to the extent required to permit Seller to satisfy its obligations under Section 6.12(d)(ii) and (y) no such amended or new confidentiality agreement need prohibit the making or amendment of a Takeover Proposal; and/or

(ii) engage in discussions or negotiations with the Third Party who made such Takeover Proposal,

if, prior to taking any of the actions described in clause (i) or (ii), the KGen Board determines in good faith (x) after consultation with KGen's outside legal and financial advisorsthat such Takeover Proposal is, or could reasonably be expected to lead to, a Superior Offer and (y) after consultation with KGen's outside legal advisors, that the failure to take such action would be inconsistent with its fiduciary duties under applicable Law. KGen shall make available, or cause to be made available, to Purchaser (in each case prior to or substantially concurrently with the time it is provided to such Third Party) any non-public information regarding Seller, KGen or any of its subsidiaries provided by KGen or Seller to any Person or Persons who made a Takeover Proposal, to the extent that such information was not previously made available to Purchaser.

(c) Notice of Inquiries. KGen shall (i) notify Purchaser as promptly as practicable (and in any event within twenty-four (24) hours) after the receipt by Seller, KGen or any of their respective Representatives, of any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations regarding any Takeover Proposal, or that could reasonably be expected to result in a Takeover Proposal, specifying the terms and conditions thereof and the identity of the Person making such inquiry, proposal, offer or request (a "Notice of Inquiry") and (ii) keep Purchaser informed on a reasonably current basis of the status of any discussions or negotiations and of any modifications to any such Takeover Proposal or any such inquiries, proposals, offers or requests for information.

(d) Superior Offer.

(i) Actions Following Superior Offer. Notwithstanding anything in this Agreement to the contrary, including Section 6.12(a), at any time prior to obtaining Stockholder Approval (1) the KGen Board may make a KGen Recommendation Change in connection with a Takeover Proposal or (2) KGen and Seller may terminate this Agreement (by delivery of a written notice of termination to Purchaser) so that KGen or Seller may enter into an agreement in respect of a Superior Offer (the "Superior Offer Documentation"), but only if, in the case of either or both of clause (1) or (2) above: (x) Seller or KGen shall have received a Takeover Proposal that did not result from a


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material breach of Section 6.12(a), (y) the KGen Board determines in good faith, after consultation with KGen's outside advisors, that such proposal constitutes a Superior Offer, and, after consultation with KGen's outside legal advisors, that the failure of the KGen Board to make a KGen Recommendation Change and/or the failure of Seller to terminate this Agreement, as applicable, would be inconsistent with the fiduciary duties of the KGen Board under applicable Law, and (z) prior to or contemporaneously with termination of this Agreement pursuant to this Section 6.12(d), KGen shall have paid to Purchaser the termination fee in accordance with Section 10.3(a)(iv).

(ii) Notice and Purchaser Match Rights. Notwithstanding the foregoing, the KGen Board shall not be permitted to make a KGen Recommendation Change and KGen and Seller shall not be permitted to terminate this Agreement pursuant to this Section 6.12(d), in each case in connection with a Superior Offer, unless (x) at least fifteen (15) days has passed since the delivery by Seller to Purchaser of the Notice of Inquiry associated with a Takeover Proposal from the Third Party making such Superior Offer and (y) five (5) Business Days prior to the taking of such action, KGen shall have provided written notice to Purchaser (a "Notice of Superior Offer") (A) specifying the material terms and conditions of the Superior Offer and the identity of the Third Party making the Superior Offer, and (B) stating that the KGen Board intends to make a KGen Recommendation Change or that KGen and Seller intend to terminate this Agreement so that KGen or Seller may enter into the Superior Offer Documentation (in which case such notice shall be accompanied by a copy of the then most recent drafts of the Superior Offer Documentation), as applicable. KGen agrees that after delivering a Notice of Superior Offer, Purchaser will be permitted to propose to KGen revisions to the terms of the Transactions such that the relevant Takeover Proposal shall no longer be deemed a Superior Offer, and that KGen and its Representatives will consider in good faith any such revisions to the terms of the Transactions proposed by Purchaser. KGen Board shall not be permitted to make a KGen Recommendation Change and KGen and Seller shall not be permitted to terminate this Agreement pursuant to this Section 6.12(d), as applicable, if during the five (5) Business Day period after delivery of the Notice of Superior Offer (the "Purchaser Match Period"), Purchaser shall have made to KGen a binding offer to revise the terms of this Agreement and, after consideration of the terms of this Agreement as proposed by Purchaser to be revised by the KGen Board in good faith and after consulting with KGen's outside advisors, the KGen Board concludes that the Takeover Proposal referenced in the Notice of Superior Offer no longer constitutes a Superior Offer. In the event of any amendment to the consideration or any other material revisions to the Superior Offer, KGen shall be required to deliver a new Notice of Superior Offer to Purchaser and to comply with the requirements of this Section 6.12(d)with respect to such new Notice of Superior Offer, including a new Purchaser Match Period except that the new Purchaser Match Period shall be four (4) Business Days.

(e) Tender Offer. Nothing contained in this Agreement shall prohibit KGen or the KGen Board from taking and disclosing to KGen's stockholders a position with respect to a tender offer by a Third Party pursuant to Rule 14e-2 promulgated under the Exchange Act, or from making such disclosure to KGen's stockholders which, in the judgment of the KGen Board, after consulting with outside legal counsel, is reasonably likely to be required under applicable Law; provided, however, that any disclosure made pursuant to this Section 6.12(e) (other than a


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"stop, look and listen" letter or similar communication of the type contemplated by Rule 14d-9(f) under the Exchange Act) shall be deemed to be a KGen Recommendation Change unless the KGen Board expressly states in such disclosure that the KGen Recommendation has not changed.

(f) Permitted Transaction. Purchaser shall respond in writing within ten (10) Business Days from the date of receipt of any written request from KGen for a decision as to whether a Third Party is reasonably acceptable to Purchaser for the purposes of complying with the applicable portion of the definition of Permitted Transaction. KGen shall keep Purchaser reasonably apprised of any negotiations concerning a Permitted Transaction described in clause (a)(ii) of the definition of that term, and shall, at least five (5) Business Days prior to executing documentation providing for such Permitted Transaction, provide Purchaser with a copy of such documentation in order to permit Purchaser to confirm that the relevant transaction complies with the definition of Permitted Transaction.

Section 6.13. Notice of Certain Events; Reporting Obligations.

(a) Promptly after obtaining Knowledge thereof, Seller shall notify Purchaser in writing of, describing in reasonable detail, (i) if and to the extent Purchaser is not copied on such notice or has not participated in or received such communication, any written notice or other written communication from any Governmental Authority in connection with or relating to the Transactions; (ii) any unanticipated maintenance or repair of the Project, or any emergency condition affecting, or unscheduled interruption of, the Business or the operations of Seller, except when the expenditure of Seller and/or its Affiliates or Operator as a result of such maintenance or repair, emergency condition, or interruption would not reasonably be expected to (A) exceed, and does not exceed, $500,000 for any event or condition or group of related events or conditions or (B) result in, and does not result in, a material threat to health or safety or of damage to property of third parties; (iii) any fact, event, circumstance or condition (or set of facts, events, circumstances or conditions) that makes, or would reasonably be expected to make, impossible or unlikely, or otherwise materially threatens, the satisfaction of the conditions in Article VIII or in Section 7.1 or Section 7.5; (iv) any receipt of a written notice of a violation, or written inquiry or investigation into a possible violation, of any Law or Permit relating to the Project or the Business; (v) any additional Permit, or any supplement, amendment or modification of an existing Permit, required or proposed to be sought by Seller or Operator in connection with the Project or the Project Site; or (vi) any organizational effort by a trade union, labor organization, a collective bargaining representative or employee representative on the Project Site or otherwise with respect to the Project; provided that any notification given under any other provision of this Agreement which encompasses the matters required to be disclosed under this Section 6.13 shall be deemed to have been delivered under this Section 6.13 and in compliance therewith. Subject to Section 11.2, no notification made pursuant to this Section 6.13(a) shall be deemed to cure any inaccuracy of any representation or warranty of Seller or to prevent, limit or restrict Purchaser's exercise of its rights under this Agreement prior to Closing.

(b) Promptly after obtaining Knowledge thereof, Purchaser shall notify Seller in writing of, describing in reasonable detail, any fact, event, circumstance or condition (or set of facts, events, circumstances or conditions) that makes impossible or unlikely, or would reasonably be expected to make impossible or unlikely, or otherwise materially threatens, the


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satisfaction of the conditions in Article VII or in Section 8.1 or 8.5. Subject to Section 11.2, no notification made pursuant to this Section 6.13(b) shall be deemed to cure any inaccuracy of any representation or warranty of Purchaser or to prevent, limit or restrict Seller's exercise of its rights under this Agreement prior to Closing.

(c) From and after the Effective Date, Seller shall prepare, or cause to be prepared, a Monthly Operating Report and a Monthly Inventory Report as of the last date of each calendar month, consistent with Seller's practice as of the Effective Date, and shall deliver, or cause to be delivered, the Monthly Operating Report and the Monthly Inventory Report for each such calendar month to Purchaser as soon as practicable but in any event within thirty (30) days of the end of each such calendar month. Unless the Parties otherwise agree, the final Monthly Operating Report and Monthly Inventory Report shall be due within thirty (30) days of the month following the month in which the Closing occurs. In addition, Seller shall provide to Purchaser promptly after the receipt or production thereof by or to Seller or any Affiliate thereof any (i) other material recurring periodic report or other material report by or on behalf of Operator, GEII, or other third party contractor performing work for Seller or any of its Affiliates relating to the Project or the conduct of the Business, including Operator's operating reports pursuant to the O&M Agreement, GEII's monthly "Flash" reports pursuant to the LTSA, and any material budget, budget reconciliation, tracking or monitoring report, request for unbudgeted capital expenditures or material unbudgeted operating expenditures, material test report, or material report relating to any material maintenance on, any material repair, replacement, outage or inspection of, the Project (in whole or in part) or any material report that details or describes any event or activity that has a material adverse affect, or would reasonably be expected to have a material adverse affect, on the Project's capacity, heat rate, or emission rates, (ii) material and non-privileged report relating to the Repair of any Damaged Portion or the Remediation of any Environmental Condition, and (iii) non-privileged report of any material accident or safety incident (to the extent permitted by Law). For purposes of this Section 6.13(c), the term "reports" shall be construed to include memoranda, letters, studies, bulletins, filings, and other comparable written or electronic materials; provided, that in no event shall Seller have any obligation hereunder to disclose to Purchaser any information relating to the price at which, or the Persons from whom or to whom, it purchases or sells natural gas, energy, capacity or other electric services and products.

(d) In addition to the disclosures required under Sections 6.13(a) and 6.13(b), each Party shall apprise the other upon request of its progress with respect to the satisfaction of the conditions of such Party in Article VII or Article VIII, as applicable. Copies of all information provided to a Party under this Section 6.13 shall be materially accurate and complete copies.

Section 6.14. Information and Records.

(a) Prior to the Closing, Seller shall, at Purchaser's sole cost and expense (which shall be limited to the reasonable out-of-pocket expenses of Seller), provide or cause to be provided (to the extent of its ability with respect to unaffiliated third parties) to Purchaser, ESI, and their respective Representatives, upon reasonable prior notice, reasonable access during ordinary business hours, in a manner that does not unreasonably interfere with normal business operations, to (i) working papers, books, data, records, programs, and other material systems or


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information reasonably relating to the Project, the Purchased Assets or the Business, including drawings in AutoCAD or similar programs, OEM manuals, and other information and data, in electronic form where applicable, necessary to enable parallel migration to Purchaser's information systems, and (ii) the Project, the Project Real Property, Operator, GEII, the Project's plant and operations managers, and Representatives of Seller or its Affiliates that are involvedwith the Business, for a reasonable business purpose in connection with the Transactions. The Parties shall use Commercially Reasonable Efforts to cooperate with each other in connection with the foregoing.

(b) (i) Without limiting the generality of, and subject to, Section 6.14(a), Seller agrees that Purchaser and its Representatives shall be provided access under Section 6.14(a) for the purpose of (A) performing or witnessing soil tests and other engineering studies as well as boundary and other surveys of the Project Real Property (or any portion thereof) or other work reasonably related to the procurement of title insurance for the Project, (B) subject to reasonable advance notice to Seller, monitoring the operation and maintenance of the Project, (C) planning and facilitating an orderly transition of the ownership, management and operation of the Project, or integration of the operations, systems, processes, and other key business activities and systems relating to the Project, on the Closing Date, (D) assessing Seller's compliance with and the accuracy of its representations and warranties under this Agreement and any applicable Ancillary Agreement, (E) determining the NERC requirements applicable to the Project and/or understanding or assessing Seller's and Operator's division of responsibility for and compliance with such requirements, (F) observing, monitoring and assessing performance of any material repair, restoration, replacement, testing, cure or Remediation in respect of the Project, in whole or in part, as contemplated by Sections 6.7 and 6.8, and (G) exercising its rights and discharging its obligations under this Agreement.

(ii) With respect to Environmental matters, the right of access under Section 6.14(a) shall include reasonable access in order to (A) allow the performance of and witness the Environmental Assessment, (B) investigate and/or assess the presence, scope and extent of any potential Environmental Condition at the Project Real Property identified by or made known to Purchaser after the Effective Date, including Environmental Liabilities, and (C) observe, monitor and/or assess the status and performance of any Remediation in respect of the Project Real Property, in whole or in part; provided, however, that Purchaser shall not conduct any invasive or destructive environmental or subsurface investigation or any sampling or testing of environmental media, or any "Phase II" Environmental site assessment work on the Project Real Property.

(c) Without limitation of the other applicable terms of this Agreement, after the Closing, each Party shall use Commercially Reasonable Efforts to provide, or cause to be provided, to the other Party (and in addition, in the case of Purchaser, ESI) and its or their respective Representatives, upon reasonable notice and at the requesting Party's cost and expense (which shall be limited to the reasonable out-of-pocket expenses of the non-requesting Party), reasonable access to, in a manner that does not unreasonably interfere with normal business operations, the data, books, records and other material information reasonably relating to, and available Representatives reasonably involved in, the Project or the Business as such Party may reasonably request in connection with any Action, audit, issue, or dispute involving the Project,


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the Business, Seller, any Affiliate of Seller, Purchaser, any Affiliate of Purchaser, Operator or GEII (excluding any dispute or litigation between or among the Parties or their Affiliates) and based upon or arising out of Contracts, Permits, events, facts, circumstances, conditions, acts, or conduct of Seller, any Affiliate of Seller, Purchaser, any Affiliate of Purchaser, Operator, GEII, or any Representatives of any of the foregoing, occurring or in existence on or prior to the Closing and related to the Project or the Business. The Parties shall use Commercially Reasonable Efforts to cooperate with each other in connection with the foregoing.

(d) A Party shall have no obligation to provide access to any document or information under this Section 6.14 that is privileged under Law from third party disclosure or that a Party is prohibited by Contract from providing; provided, however, that (i) the Party subject to such prohibition shall use, upon request by the other Party, Commercially Reasonable Efforts to cause such contractual prohibitions to be removed or waived and (ii) nothing in this Section 6.14(d) shall preclude a Party from contesting by appropriate legal proceedings any claim of privilege asserted by the other Party where the subject information, work product or communication would, but for the application of privilege, be required to be disclosed under this Agreement.

Section 6.15. Confidentiality; Public Announcements.

(a) All information provided or obtained by a Party, directly or indirectly, from or on behalf of the other Party under this Agreement prior to the Closing shall be subject to the Confidentiality Agreement. Seller and Purchaser hereby adopt and agree to be bound, effective as of the Effective Date, by the Confidentiality Agreement as though they were signatories thereto. The Confidentiality Agreement shall terminate upon the Closing.

(b) All information provided or obtained by a Party, directly or indirectly, from or on behalf of the other Party under this Agreement after the Closing shall be subject to the Post-Closing Confidentiality Agreement.

(c) (i) Without limiting the generality of the Confidentiality Agreement, except to the extent required by Law or applicable rules or regulations of a stock or commodities exchange of which it is a member, neither KGen nor Seller, on the one hand, nor Purchaser on the other, nor any of their respective Affiliates shall issue a press release or make any other public announcement concerning the Transactions or the contents of this Agreement without the prior written consent of Seller, in the case of the Purchaser, and Purchaser, in the case of KGen and Seller. If any such announcement or other disclosure is required by any Law or applicable rule or regulation of such stock or commodities exchange, the Person required to make the disclosure shall give the Purchaser, in the case of KGen or Seller, or, the Seller in the case of the Purchaser, to the extent legally permissible, prompt written notice of, and a reasonable opportunity to comment promptly on, the proposed disclosure, and shall limit such disclosure to such information as is reasonably required to comply with such Laws or rules or regulations.

(ii) Notwithstanding anything to the contrary in the foregoing, (a) after the Effective Date, Seller and any Affiliate of Seller may issue or make one or more press releases or other public announcements concerning the Transactions or the contents of this Agreement (including disclosure of the purchase price or any material term of this


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Agreement) without the prior written consent of Purchaser if such press release or public announcement is issued or made for the primary purpose of public disclosure to KGen's shareholders and the information disclosed therein is consistent with the information thatKGen would be required to disclose if it were regulated as a public company by the SEC and subject to the reporting requirements of the Exchange Act or in connection with seeking the Stockholder Approval; provided, however, that the issuance or making of any such press release or public announcement shall be subject to Seller's providing as much prior written notice to Purchaser as is practicable under the circumstances and Seller's reasonable consultation with Purchaser and (b) Seller may disclose the contents of this Agreement and any Ancillary Agreement in connection with a Permitted Transaction or a Takeover Proposal to the extent permitted under Section 6.12.

(d) The Parties agree that nothing hereunder shall obligate either Party to share with the other Party any information, work product or communications of any type or nature whatsoever which a Party determines (in good faith) are subject to privilege, including the attorney-client and/or work product privileges; provided, that nothing in this Section 6.15(d)shall preclude a Party from contesting by appropriate legal proceedings any claim of privilege asserted by the other Party where the subject information, work product or communication would, but for application of privilege, be required to be disclosed under this Agreement.

Section 6.16. Removal of Excluded Assets. From time to time, for a period of up to ninety (90) days following the Closing, Seller may remove, at its sole cost and expense, and without unreasonable interference with the normal business operations or activities of Purchaser at the Project Real Property, any tangible Excluded Asset remaining at, on, in or underthe Project Real Property as of the Closing. The dates and times of any such removal shall be coordinated reasonably in advance with Purchaser. If Seller fails to remove all of the tangible Excluded Assets located at, on, in or under the Project Real Property within such ninety (90)-day period, then each such remaining tangible Excluded Asset shall be deemed to have been abandoned by Seller, and Purchaser may appropriate, sell, store, destroy or otherwise dispose of all or any portion of such tangible Excluded Assets without notice to Seller and without any obligation to account for such tangible Excluded Assets. To the extent the reasonable out-of-pocket costs and expenses incurred by Purchaser in connection with appropriating, selling, storing, destroying or otherwise disposing of such tangible Excluded Assets exceed the revenues received by Purchaser in connection therewith, Seller shall reimburse Purchaser for all such reasonable out-of-pocket excess costs and expenses within ten (10) days of Purchaser's delivery to Seller of a written request therefor. Notwithstanding anything to the contrary contained herein, the terms and conditions of this Section 6.16 shall survive the Closing.

Section 6.17. Trade Names. With respect to any name of Seller or any Affiliate or related or similar trade name, trademark, service mark, corporate name, logo or any similar Intellectual Property that may appear on any of the physical plant constituting the Purchased Assets, Purchaser is hereby granted, fully-paid-up, royalty-free, a limited right and license solely to allow Purchaser to display or retain such Intellectual Property on such Purchased Assets, in the places and in the forms in which they appear on the Project at Closing, for one year following the Closing. Purchaser shall take Commercially Reasonable Efforts to remove all such Intellectual Property from such Purchased Assets within one year after Closing.


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Section 6.18. Condemnation.

(a) If Seller or any of its Affiliates receives written notice prior to the Closing Date from or on behalf of any Person that such Person desires or may seek to acquire any Purchased Asset by condemnation after the Effective Date, Seller shall notify Purchaser promptly in writing (but no later than five (5) Business Days after such notice) of such notice, the facts and circumstances surrounding the potential condemnation and a preliminary assessment of the impact of the condemnation on the Project, including Seller's good faith estimate of the value of the condemnation (which shall include any loss of revenue or increase of costs to Seller under any Contract as a result of such condemnation) (the "Condemnation Value"). Seller shall keep Purchaser reasonably apprised of developments with respect to such proposed condemnation, including modifications to its impact assessments and its good faith estimate of the Condemnation Value and the occurrence of the condemnation, and shall use Commercially Reasonable Efforts to cooperate with Purchaser in connection therewith.

(b) If, upon the occurrence of a condemnation completed prior to the Closing, the Condemnation Value (as determined by a qualified firm reasonably acceptable to Purchaser and Seller) is $13,500,000 or less, the Purchase Price shall be reduced by the amount of such Condemnation Value less the amount of any condemnation award related thereto that is paid or irrevocably assigned to Purchaser.

(c) If, upon the occurrence of a condemnation completed prior to the Closing, the Condemnation Value (as determined by a qualified firm reasonably acceptable to Purchaser and Seller) is greater than $13,500,000 or the occurrence of a condemnation is materially adverse to the operations or physical condition of the Purchased Assets taken as a whole, Purchaser may, at its sole discretion, elect to (i) reduce the Purchase Price by the amount of such Condemnation Value less the amount of any condemnation award related thereto that is paid or irrevocably assigned to Purchaser or (ii) terminate this Agreement by written notice to Seller within thirty (30) days after the later to occur of (A) Seller's delivery of the notice contemplated in Section 6.18(a) or (B) the determination of the Condemnation Value by a qualified firm reasonably acceptable to Purchaser and Seller.

(d) In the event of the occurrence of a condemnation completed prior to Closing, then, provided Seller complies with this Section 6.18 with respect to such condemnation Seller shall not be deemed to be in breach of any representation, warranty or covenant in this Agreement nor shall such completed condemnation constitute a Material Adverse Effect, and, without limiting the foregoing, Purchaser shall not be entitled to any indemnity pursuant to Article IX, to the extent Seller's breach or non-compliance with such representation, warranty or covenant is due solely to the occurrence of such completed condemnation.

Section 6.19. Post-Closing Assurances. After the Closing, each Party shall execute and deliver, upon the reasonable request of the other Party, any and all further instruments or documents, and exercise Commercially Reasonable Efforts to take such further actions as may reasonably be required, to fulfill and implement the terms of this Agreement or realize the benefits intended to be afforded hereby, including such actions as are necessary in connection with obtaining any third party Consent, Permit, or waiver or any regulatory filing as a Party may undertake in connection herewith.


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Section 6.20. Existing Collateral.

(a) Purchaser shall use Commercially Reasonable Efforts to cause (i) all letters of credit listed on Schedule 6.20 to be replaced at or prior to the Closing with letters of credit, cash collateral or other security reasonably acceptable to Purchaser and the beneficiary thereof and (ii) all cash collateral posted by Seller or any of its Affiliates as credit support to contractual counterparties listed in Schedule 6.20, or resulting from a draw on a letter of credit in respect of which Seller or an Affiliate of Seller was the account party listed in Schedule 6.20, to be replaced at or prior to the Closing with letters of credit, cash collateral or other security reasonably acceptable to Purchaser and the beneficiary thereof and any related cash collateral or other security to be returned to Seller.

(b) Within five (5) Business Days of the Effective Date, Purchaser shall cause Entergy Services, Inc. to return to KGen the Hot Spring Letter of Credit (as such term is defined in the Letter of Intent).

Section 6.21. Purchaser LTSA. For so long as the Purchase Price is subject to adjustment pursuant to Section 3.5(b) and Section 3.8, Purchaser shall keep the Acceptable Purchaser LTSA valid and binding and shall not modify, amend or otherwise alter such agreement in any manner as would cause such agreement not to qualify as an Acceptable Purchaser LTSA under the terms of this Agreement.

Section 6.22. New Pipeline Completion. Seller shall use Commercially Reasonable Efforts to cause the pipeline (the "New Pipeline") contemplated by the Precedent Agreement between Seller and Texas Eastern Transmission Company ("TETCO"), dated April 1, 2010 (the "Precedent Agreement"), to be completed and in service in accordance with the terms of the Precedent Agreement on or before March 31, 2012.

Section 6.23. IDA Bond Property. Prior to the Closing, Seller shall use Commercially Reasonable Efforts to, and at the Closing shall, cause good and marketable fee simple absolute title of record to the IDA Bond Property to be transferred to Purchaser and, at the Closing, Purchaser shall accept the same from either, as Seller may determine in its sole and absolute discretion, Hot Spring County, Arkansas or Seller. To the extent the transfer of the IDABond Property is to be made from Hot Spring County, Arkansas rather than Seller, such transfer shall be (a) pursuant to documentation, terms and procedures to be agreed with Hot Spring County, Arkansas that are reasonably acceptable to Seller, (b) without the imposition of any condition or term that is adverse to Purchaser or less beneficial to Purchaser than had the transfer been made directly by Seller and (c) on terms acceptable to Purchaser in its reasonable discretion. The Parties acknowledge and agree that the unwind of the structure reflected in the IDA Bond Contracts contemplated by this Section 6.23 shall occur no later than simultaneously with the Closing (and may include the modification or waiver of any time periods required by the IDA Bond Contracts to the extent necessary to unwind the structure reflected in the IDA Bond Contracts contemplated by this Section 6.23); provided that Seller shall not be required to unwind the structure reflected in the IDA Bond Contracts contemplated by this Section 6.23 at any time prior to the Closing. Purchaser shall use Commercially Reasonable Efforts to assist Seller in causing good and marketable fee simple absolute title of record to the IDA Bond Property to be transferred to Purchaser at the Closing as provided herein, including, if applicable,


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to execute and deliver such documents and instruments reasonably required to consummate such transfer from Hot Spring County, Arkansas directly to Purchaser as contemplated by this IDA Bond Property..

Section 6.24. Capacity Release. In the event that a waiver as described in Section 6.4(e) is not obtained with respect to a Gas Transportation Agreement (other than where the Parties have agreed pursuant to the last sentence of Section 6.4(e) that such a waiver is not required): (a) within fourteen (14) days after the Closing, Seller shall provide Purchaser with a capacity release offer for a permanent release of such Gas Transportation Agreement, designating Purchaser as the pre-arranged replacement shipper and designating Purchaser's pre-arranged bid as the rate(s) applicable to such Gas Transportation Agreement; (b) no later than one business day after Purchaser's receipt of the capacity release offer from Seller, Purchaser will accept the offer; (c) to the extent required under the applicable pipeline’s FERC Gas Tariff or the Capacity Release Rules, the offer will be posted for competitive bidding; and (d) if the release is not subject to competitive bidding, or if Purchaser matches or submits the highest bid in a competitive bidding process, Purchaser will undertake such other actions as necessary under the applicable pipeline’s FERC Gas Tariff to become the replacement shipper under such Gas Transportation Agreement, including executing any reasonably required agreement with the pipeline on terms reasonably acceptable to Purchaser and providing the pipeline any credit support reasonably required by the pipeline and on terms reasonably acceptable to Purchaser.

Section 6.25. Warm-up Line Improvement Project Testing. Seller shall complete the Warm-up Line Improvement Project Testing as soon as practicable, but in any event no later than January 1, 2012, at Seller's sole cost and expense in accordance with Good Industry Practices. Seller shall allow Purchaser to participate in meetings and inspections and review material reports, or correspondence pertaining to such testing in order to enable Purchaser to evaluate the scope, quality and sufficiency thereof, and otherwise use Commercially Reasonable Efforts to keep Purchaser reasonably informed with respect to such testing.

ARTICLE VII.PURCHASER'S CONDITIONS TO CLOSING

The obligations of Purchaser hereunder to purchase the Purchased Assets and assume, pay, perform and discharge the Assumed Liabilities shall be subject to satisfaction at or prior to the Closing of each of the following conditions, except to the extent Purchaser waives such satisfaction in writing:

Section 7.1. Agreement Compliance. Seller shall have performed or complied in all material respects with all covenants, obligations and agreements of Seller contained in this Agreement and the Ancillary Agreements to which Seller is a party that are required to be performed or complied with at or prior to the Closing.

Section 7.2. HSR Act. The applicable waiting period, and any and all applicable extensions thereof, for the Transactions under the HSR Act shall have expired or terminated.


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Section 7.3. No Restraint. There shall be no (a) preliminary or permanent Order in effect on the Closing Date that (i) declares this Agreement or any Ancillary Agreement invalid or unenforceable in any material respect or (ii) restrains, enjoins or otherwise prohibits the consummation of the Transactions, including the transactions contemplated by the Ancillary Agreements, or (b) Action taken, or Law enacted, promulgated or deemed applicable to the Transactions, by a Governmental Authority that, directly or indirectly, prohibits the consummation of the Transactions, including the transactions contemplated by the Ancillary Agreements, as herein or therein provided.

Section 7.4. Regulatory Approvals and Consents.

(a) All of Purchaser's Regulatory Approvals shall have been obtained and shall not have been granted subject to or containing any term or condition not satisfactory to Purchaser, in its sole and absolute discretion, shall be in full force and effect and shall be final and not subject to appeal or otherwise subject to challenge or modification.

(b) All of Purchaser's Required Consents shall have been obtained, shall be in full force and effect and shall be on terms satisfactory to Purchaser in its sole and absolute discretion.

Section 7.5. Representations and Warranties. The representations and warranties of Seller set forth in Article IV that are qualified with respect to materiality (whether by reference to Material Adverse Effect or otherwise) shall be true and correct in all respects, and the representations and warranties of Seller set forth in this Agreement that are not so qualified shall be true and correct in all material respects, in each case on and as of the Closing Date, except to the extent that such representations and warranties by their terms speak as of a date earlier than the Closing Date, in which event they shall be true and correct as of such date.

Section 7.6. Officer's Certificate. Purchaser shall have received a certificate from Seller, executed on its behalf by a duly authorized officer, dated the Closing Date, to the effect that the conditions set forth in Section 7.1 and Section 7.5 have been satisfied.

Section 7.7. Receipt of Other Documents. Purchaser shall have received the following:

(a) a certificate of good standing with respect to Seller, as of a date reasonably near the Closing, issued by the Secretary of State of the State of Delaware;

(b) copies of the limited liability company agreement and the certificate of formation of Seller certified by the Secretary of State of the State of Delaware, together with a certificate of the Secretary or an Assistant Secretary (or similarly situated individual) of Seller that none of such documents have been amended;

(c) copies, certified by the Secretary or an Assistant Secretary (or similarly situated individual) of Seller, of resolutions of Seller's board of directors or similar governing body authorizing the execution and delivery by Seller of this Agreement and each of the Ancillary Agreements to which it is a party and authorizing the performance of its obligations hereunder and thereunder, as applicable, and authorizing or ratifying the execution and delivery


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of, and performance of its obligations under, all of the other agreements and instruments, in each case, to be executed and delivered by Seller in connection herewith;

(d) a certificate of the Secretary or an Assistant Secretary (or similarly situated individual) of Seller identifying the name and title and bearing the signatures of the officers of Seller authorized to execute and deliver this Agreement and each Ancillary Agreement to which it is a party and the other agreements and instruments contemplated hereby;

(e) the Closing Inventory Report;

(f) the documents referenced in Section 3.2;

(g) evidence, to Purchaser's reasonable satisfaction, that all Encumbrances described in Part II of Schedule 1.1C have been released or removed;

(h) receipt of the Seller's Required Consents; and

(i) if Purchaser has elected to have an Environmental Assessment prepared, an Environmental Assessment with respect to the Project and the Project Real Property.

Section 7.8. Title Insurance. Title to the Insurable Real Property shall have been evidenced by the willingness of a title insurance company reasonably acceptable to Purchaser (the "Title Insurer") to issue an owner's policy of title insurance (i) on the ALTA 2006 form owner's policy of title insurance, (ii) insuring Purchaser's ownership of the Insurable Real Property, subject only to the Permitted Encumbrances, (iii) in the name of the Purchaser (all at Purchaser's sole cost and expense), (iv) in the amount specified by Purchaser, but not exceeding the Purchase Price, and (v) including the endorsements set forth in Schedule 7.8 (the "Title Policy"). The willingness of the Title Insurer to issue the Title Policy shall be evidenced either by the issuance thereof at the Closing or by the Title Insurer's delivery of written marked binding commitments or binders, dated as of the Closing Date (but insuring title as of the date title conveyance documents are recorded), to issue such Title Policy, subject to actual transfer of the real property in question. Seller shall execute and deliver to the Title Insurer the document set forth in Section 3.2(a).

Section 7.9. Network Transmission Service. Purchaser shall have received the final results of the facility study with respect to its request for network transmission service for the Project, and the aggregate cost reflected in such facility study for the supplemental upgrades required to provide such network transmission service shall not exceed $40,000,000 (exclusive of any costs included in the Independent Coordinator of Transmission's Base Plan).

Section 7.10. Material Adverse Effect. Since the Effective Date, no Material Adverse Effect with respect to Seller shall have occurred that has not been cured.

Section 7.11. O&M Agreement. Seller shall have terminated the O&M Agreement effective as of the Closing at no cost or expense to Purchaser.

Section 7.12. Plant Performance Tests. The Initial Plant Performance Test and, if elected by Seller or Purchaser, a Plant Performance Re-Test (or if more than one Plant


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Performance Re-Test has been elected to be performed in accordance with Section 6.7, the Plant Performance Re-Test most recently elected to be performed) shall have been performed in accordance with Section 6.7 and the Final Plant Performance Test Results of the Initial Plant Performance Test or, if a Plant Performance Re-Test has been performed, the Plant Performance Re-Test most recently elected to be performed shall have been delivered to Purchaser and shall have established that the Project NOx Emission Rate does not exceed the Contract NOx Emission Rate and the Project CO Emission Rate does not exceed the Contract CO Emission Rate.

Section 7.13. Escrow Agreement. Seller and the Escrow Agent shall have executed and delivered the Escrow Agreement.

Section 7.14. New Pipeline Completion. The New Pipeline shall have been completed in accordance with the requirements of this Agreement.

Section 7.15. IDA Bond Property. Seller shall have caused good and marketable fee simple absolute title of record to the IDA Bond Property to be made available to be transferred to Purchaser at the Closing from either, as Seller may determine in its sole and absolute discretion, Hot Spring County, Arkansas or Seller.

ARTICLE VIII.SELLER'S CONDITIONS TO CLOSING

The obligation of Seller hereunder to sell the Purchased Assets shall be subject to satisfaction at or prior to the Closing of the following conditions, except to the extent Seller waives such satisfaction in writing:

Section 8.1. Agreement Compliance. Purchaser shall have performed or complied in all material respects with all covenants, obligations and agreements of Purchaser contained in this Agreement and the Ancillary Agreements to which Purchaser is a party that are required to be performed or complied with at or prior to the Closing.

Section 8.2. HSR Act. The applicable waiting period, and any and all applicable extensions thereof, for the Transactions under the HSR Act shall have expired or terminated.

Section 8.3. No Restraint. There shall be no (a) preliminary or permanent Order in effect on the Closing Date that (i) declares this Agreement or any Ancillary Agreement invalid or unenforceable in any material respect or (ii) restrains, enjoins or otherwise prohibits the consummation of the Transactions, including the transactions contemplated by the Ancillary Agreements, or (b) Action taken, or Law enacted, promulgated or deemed applicable to the Transactions, by a Governmental Authority that, directly or indirectly, prohibits the consummation of the Transactions, including the transactions contemplated by the Ancillary Agreements, as herein or therein provided.

Section 8.4. Regulatory Approvals and Consents.


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(a) All of Seller's Regulatory Approvals shall have been obtained on terms reasonably acceptable to Seller, shall be in full force and effect and shall be final and not subject to appeal or otherwise subject to challenge or modification.

(b) All of Seller's Required Consents shall have been obtained, shall be in full force and effect and shall be on terms reasonably acceptable to Seller.

Section 8.5. Representations and Warranties. The representations and warranties of Purchaser set forth in Article V that are qualified with respect to materiality (whether by reference to Material Adverse Effect or otherwise) shall be true and correct in all respects, and the representations and warranties of Purchaser set forth in Article V that are not so qualified shall be true and correct in all material respects, in each case on and as of the Closing Date, except to the extent that such representations and warranties by their terms speak as of a date earlier than the Closing Date, in which event they shall be true and correct as of such date.

Section 8.6. Officer's Certificate. Seller shall have received a certificate from Purchaser, executed on its behalf by an authorized officer, dated the Closing Date, to the effect that the conditions set forth in Section 8.1 and Section 8.5 have been satisfied.

Section 8.7. Receipt of Other Documents. Seller shall have received the following:

(a) a certificate of good standing with respect to Purchaser, as of a date reasonably near to the Closing, issued by the Secretary of State of the State of Arkansas;

(b) certified copies of the certificate of incorporation and the bylaws of Purchaser certified by the Secretary of State of the State of Arkansas, together with a certificate of the Secretary or an Assistant Secretary of Purchaser that none of such documents have been amended;

(c) copies, certified by the Secretary or an Assistant Secretary of Purchaser, of resolutions of the board of directors or similar governing body of Purchaser authorizing the execution and delivery by Purchaser of this Agreement, and each of the Ancillary Agreements to which it is a party and the performance of its obligations hereunder and thereunder, and authorizing the execution and delivery of, and performance of its obligations under, all of the other agreements and instruments, in each case, to be executed and delivered by Purchaser in connection herewith;

(d) a certificate of the Secretary or an Assistant Secretary of Purchaser, identifying the name and title and bearing the signatures of the officers of Purchaser authorized to execute and deliver this Agreement, and each Ancillary Agreement to which Purchaser is a party and the other agreements and instruments contemplated hereby; and

(e) the documents referenced in Section 3.3.


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Section 8.8. LTSA. The LTSA shall have been terminated with no termination, cancellation, true-up or similar payment obligations being due from Seller (other than any such payments from Seller arising out of a breach or default by Seller thereunder).

Section 8.9. Escrow Agreement. Purchaser and the Escrow Agent shall have executed and delivered the Escrow Agreement.

Section 8.10. Existing Collateral.

(a) At the Closing (i) all letters of credit listed on Schedule 6.20 have beenreplaced with letters of credit (and the original replaced letters of credit shall have been returned to Seller), cash collateral or other security reasonably acceptable to Purchaser and the beneficiary thereof and (ii) all cash collateral posted by Seller or an Affiliate of Seller as credit support to contractual counterparties listed in Schedule 6.20, or resulting from a draw on a letter of credit in respect of which Seller or an Affiliate of Seller was the account party listed in Schedule 6.20, have been replaced at or prior to the Closing with letters of credit, cash collateral or other security reasonably acceptable to Purchaser the beneficiary thereof in its sole discretion in equal amounts to that replaced.

(b) The Hot Spring Letter of Credit (as such term is defined in the Letter of Intent) shall have been returned to KGen in accordance with Section 6.20(b).

ARTICLE IX.INDEMNIFICATION

Section 9.1. Indemnification by Seller.

(a) Subject to the other provisions of this Article IX, from and after the Closing, Seller shall indemnify and hold harmless Purchaser, its Affiliates and each of their respective Representatives, successors and assigns (collectively, the "Purchaser Group") from and against any and all penalties, obligations, damages, losses, liabilities, payments, costs and expenses, including reasonable legal, accounting and other fees and expenses in connection therewith and reasonable costs and expenses incurred in connection with investigations and settlement proceedings (collectively, "Losses"), suffered, incurred or sustained by any of them or to which any of them become subject, that arise out of, result from or relate to the following (collectively, "Purchaser Claims"):

(i) any breach or violation of any covenant, obligation or agreement of Seller or KGen set forth in this Agreement or any Ancillary Agreement to which Seller or KGen is a party;

(ii) any breach or inaccuracy of any of the representations or warranties made by Seller in this Agreement or any Ancillary Agreement or in any certificate or instrument to be delivered by Seller pursuant hereto or thereto; or

(iii) any of the Excluded Liabilities.


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(b) The Purchaser Group shall be entitled to indemnification pursuant to Section 9.1(a) with respect to any claim for indemnification pursuant to Section 9.1(a)(ii), other than in respect of claims for indemnification arising out of, in connection with or resulting from a breach of the representations and warranties made in Section 4.1 (Organization and Existence), Section 4.2 (Execution, Delivery and Enforceability), Section 4.3(a) (No Violation), Section 4.5(Bankruptcy Matters), Section 4.9(c) (Tangible Personal Property and Inventory), Section 4.16(Tax Matters), Section 4.17 (Employee Matters), and Section 4.21 (Brokers) (collectively, the "Uncapped Seller Representations," none of which shall be limited by this clause (b)), only if (i) the Losses from any individual claim or series of related claims equal or exceed Twenty Five Thousand Dollars ($25,000) and (ii) the aggregate Losses with respect to all such claims equal or exceed One Million Two Hundred Fifty Thousand Dollars ($1,250,000) (the "Deductible"), whereupon Seller shall be obligated to pay, subject to Section 9.1(c), all such amounts in excess of the Deductible.

(c) For indemnification pursuant to Section 9.1(a)(a)(ii), except for indemnification for breaches of the Uncapped Seller Representations (none of which shall be limited by this clause (c)), the maximum indemnification in the aggregate to which the Purchaser Group shall be entitled shall be Thirty Eight Million Dollars ($38,000,000).

(d) Notwithstanding anything contained in this Agreement to the contrary, the representations and warranties set forth in Section 4.16 (Tax Matters) may only be relied upon with respect to Taxes that relate to or arise from the Project or the Business as of or prior to the Closing, and are not a guarantee of any tax position taken or to be taken by Purchaser with respect to Taxes that relate to or arise from the Project or the Business following the Closing.

Section 9.2. Indemnification by Purchaser.

(a) Subject to the other provisions of this Article IX, from and after the Closing, Purchaser shall indemnify and hold harmless Seller, its Affiliates and each of their respective Representatives, and successors and assigns (collectively, the "Seller Group") from and against any and all Losses suffered, incurred or sustained by any of them or to which any of them become subject, that arise out of, result from or relate to the following (collectively, "Seller Claims"):

(i) any breach or violation of any covenant, obligation or agreement of Purchaser set forth in this Agreement or any Ancillary Agreement to which Purchaser is a party;

(ii) any breach or inaccuracy of any of the representations or warranties made by Purchaser in this Agreement or any Ancillary Agreement or in any certificate to be delivered by Purchaser pursuant hereto; or

(iii) any of the Assumed Liabilities.

(b) The Seller Group shall be entitled to indemnification pursuant to Section 9.2(a) with respect to any claim for indemnification pursuant to Section 9.2(a)(ii) other than in respect of claims for indemnification arising out of, in connection with or resulting from a breach of the representations and warranties made in Section 5.1 (Organization and Existence), Section


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5.2 (Execution, Delivery and Enforceability), Section 5.3(a) (No Violation), and Section 5.5(Brokers) (collectively, the "Uncapped Purchaser Representations," none of which shall be limited by this clause (b)), only if (i) the Losses from any individual claim or series of related claims equal or exceed Twenty Five Thousand Dollars ($25,000) and (ii) the aggregate Losses with respect to all such claims equal or exceed the Deductible, whereupon Purchaser shall be obligated to pay, subject to Section 9.2, all such amounts in excess of the Deductible.

(c) For indemnification pursuant to Section 9.2(a)(ii), except for indemnification for breaches of the Uncapped Purchaser Representations (none of which shall be limited by this clause (c)), the maximum indemnification in the aggregate to which the Seller Group shall be entitled shall be Thirty Eight Million Dollars ($38,000,000).

Section 9.3. Survival. The representations, warranties, covenants and agreements set forth in this Agreement, the Ancillary Agreements and any certificates delivered hereunder or thereunder shall survive as follows:

(a) the Uncapped Seller Representations and the Uncapped Purchaser Representations shall survive for the applicable statute of limitations plus thirty (30) days thereafter;

(b) the Expiring Covenants and other representations and warranties survive until eighteen (18) consecutive months have lapsed since the Closing Date; and

(c) the covenant contained in Section 11.12 shall survive until forty-two (42) consecutive months have lapsed since the Closing Date.

Any representation or warranty or covenant or agreement that survives the Closing as provided in the preceding sentence and in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to this Section 9.3 if a related Notice of Third Party Claim or Indemnity Notice (as applicable) shall have been timely given to the Indemnitor in good faith based on facts reasonably expected to establish a valid claim under Article IX on or prior to such termination date, until the related claim for indemnification has been satisfied or otherwise resolved as provided in this Article IX.

Section 9.4. Computation of Losses. For purposes of determining a Party's indemnity obligations and computing Losses under this Article IX, (a) any express qualification or limitation set forth in the applicable representation, warranty, covenant or agreement as to materiality or "Material Adverse Effect" (or words of similar effect) contained therein shall be disregarded and (b) there shall be deducted (i) any indemnification, contribution or other similar payment actually recovered by the Indemnitee (including any insurance proceeds (net of any applicable deductible amounts paid by such Party) and the value of any contractual right of set-off), or (ii) any other amounts that would otherwise result in a duplicative recovery, including due to an adjustment made to the Purchase Price pursuant to Section 3.4, Section 3.5, Section 3.6, Section 3.8, Section 6.2, Section 6.7(k), Section 6.8(d), Section 6.8(e), Section 6.8(f), Section 6.18(b) or Section 6.18(c).

Section 9.5. Effect of Knowledge. The right to indemnification, reimbursement or other remedy based upon the representations, warranties, covenants,


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obligations and agreements herein or in the Ancillary Agreements shall not be affected by any information made available or furnished to, or any investigation or audit conducted (or that could have been conducted) by the other Party or any of its Representatives, or any Party's Knowledge acquired at any time, whether before, on or after the Effective Date or the Closing Date, with respect to the Transactions or the accuracy or inaccuracy of, or compliance or non-compliance with, any such representation, warranty, covenant, obligation or agreement. Each Party shall be entitled to rely upon the representations, warranties, covenants, obligations and agreements of the other Party (and KGen) set forth herein and in the Ancillary Agreements notwithstanding (i) any investigation or audit conducted (or that could have been conducted) or any information received before, on or after the Closing Date or (ii) the decision of any Party to complete the Closing.

Section 9.6. Method of Asserting Claims.

(a) Subject to the terms of this Agreement and upon receipt of an assertion of a claim or demand (whether written or oral) or notice of the commencement of any suit, action or proceeding that is a Third Party Claim against any member of the Purchaser Group or the Seller Group, of which such Person intends to seek indemnification under Section 9.1 or Section 9.2, respectively, the Person seeking indemnification hereunder (the "Indemnitee") shall promptly notify the Party against whom indemnification is sought (the "Indemnitor") in writing of any Loss which the Indemnitee has determined has given or could give rise to a claim under Section 9.1 or Section 9.2, as applicable. Such written notice is herein referred to as a "Notice of Third Party Claim." A Notice of Third Party Claim shall enclose a copy of all papers served, if any, and specify in reasonable detail, the nature of and basis for such Third Party Claim and for the Indemnitee's claim against the Indemnitor under Section 9.1 or Section 9.2, as applicable, together with the amount or, if not then reasonably determinable, the estimated amount, determined in good faith, of the Losses arising from such Third Party Claim. If the Indemnitee fails to provide (or to timely provide) a Notice of Third Party Claim, the Indemnitor shall not be obligated to indemnify the Indemnitee with respect to such Third Party Claim to the extent that the Indemnitor's ability to defend such Third Party Claim has been irreparably prejudiced by such failure of the Indemnitee.

(b) Within the Notice Period, the Indemnitor shall notify the Indemnitee whether or not it disputes its liability to the Indemnitee under Section 9.1 or Section 9.2, as applicable, and whether the Indemnitor has made the irrevocable election to defend and indemnify the Indemnitee against such Third Party Claim, subject to the other terms of this Article IV. The failure of the Indemnitor to provide such notice within the Notice Period shall be deemed a refusal to provide the requested indemnity and defense to such Third Party Claim.

(c) If the Indemnitor notifies the Indemnitee within the Notice Period of its irrevocable election to defend and indemnify the Indemnitee (subject to the other terms of this Article IV) with respect to the Third Party Claim, then, except as hereinafter provided, the Indemnitor shall have the right to contest and defend, at its sole cost and expense, with counsel of its choosing that is reasonably acceptable to the Indemnitee, any such Third Party Claim by all appropriate proceedings, which proceedings will be vigorously and diligently prosecuted by the Indemnitor to a final conclusion or will be settled at the discretion of Indemnitor (but only with the consent of the Indemnitee in the case of any settlement or compromise that (i) provides for


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relief other than the payment of monetary damages as to which the Indemnitee will be indemnified in full, (ii) does not include, as an unconditional term thereof, the giving by the claimant or plaintiff to the Indemnitee of a release, in form and substance satisfactory to the Indemnitee, from all liability in respect of such Third Party Claim or (iii) contains an admission or acknowledgment of guilt or criminal wrongdoing or a violation of any Law by any member of the indemnified Seller Group or Purchaser Group, as applicable). Subject to the other terms of this Section 9.6, the Indemnitor will have full control of such defense and proceedings, including (except as provided in the immediately preceding sentence) any settlement thereof. If the Indemnitee desires to participate in, but not control, the defense or settlement of any Third Party Claim that the Indemnitor is defending under this Section 9.6, it may do so at its sole cost and expense with counsel of its choosing that is reasonably acceptable to the Indemnitor; provided, however, that the Indemnitor will pay the reasonable out-of pocket costs and expenses of such separate counsel only if (x) in the Indemnitee's good faith judgment, it is advisable, based on advice of counsel, for the Indemnitee to be represented by separate counsel because a conflict or potential conflict exists between the Indemnitor and the Indemnitee or (y) the named parties to such Third Party Claim include both the Indemnitor and the Indemnitee and the Indemnitee determines in good faith, based on advice of counsel, that defenses are available to it that are unavailable to the Indemnitor. Notwithstanding the foregoing, the Indemnitee may retain or take over the control of the defense or settlement of any Third Party Claim the defense of which the Indemnitor has elected to control if the Indemnitee irrevocably waives its right to indemnity under Section 9.1 or Section 9.2, as applicable, with respect to such Third Party Claim.

(d) The Party, and such Party's counsel and representatives, defending the Third Party Claim shall consult with the other Party, and such Party's counsel and representatives, throughout the pendency of the Third Party Claim regarding the investigation, defense, settlement, trial, appeal or other resolution of the Third Party Claim. The Parties shall cooperate in the defense of the Third Party Claim. The Party defending the Third Party Claim (the "Defending Party") in accordance with this Section 9.6 shall have reasonable access, during normal business hours and following reasonable notice, to Employees of the other Party (the "Non-Defending Party") who may have knowledge, material, documents or information relevant to the defense of any Third Party Claim. The Non-Defending Party shall make available to the Defending Party, at reasonable times and for reasonable periods, its Employees and representatives and such information, books, and records and other materials in the Non-Defending Party's possession or control and reasonably required by the Defending Party for use in contesting any Third Party Claim (subject to obtaining an agreement to maintain the confidentiality of confidential or proprietary materials in a form reasonably acceptable to both the Defending and Non-Defending Parties). If and to the extent reasonably requested by the Defending Party, the Non-Defending Party shall cooperate with the Defending Party and its counsel in contesting such Third Party Claim or, if appropriate, in making any counterclaim against the Person asserting the Third Party Claim, or any cross-complaint relating to such Third Party Claim against any other Person. The Defending Party shall reimburse the Non-Defending Party for any reasonable, documented out-of-pocket expenses incurred by the Non-Defending Party in cooperating with or acting at the request of the Defending Party.

(e) If with respect to any Third Party Claim (i) the Indemnitor fails to notify the Indemnitee within the Notice Period that the Indemnitor desires to defend such Third Party Claim pursuant to Section 9.2(a), (ii) the Indemnitor gives such notice but fails to defend


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vigorously and diligently such Third Party Claim, (iii) such Third Party Claim (or the facts or allegations related to such Third Party Claim) involves criminal allegations or seeks equitable or injunctive relief or (iv) the Indemnitor does not have the resources to satisfy such Third Party Claim, then the Indemnitee will have the right to defend, at the sole cost and expense of the Indemnitor, the Third Party Claim by all appropriate proceedings, which proceedings will be prosecuted by the Indemnitee in good faith or will be settled at the discretion of the Indemnitee (with the consent of the Indemnitor, such consent not to be unreasonably withheld, conditioned or delayed). The Indemnitee will have full control of such defense and proceedings, including (except as provided in the immediately preceding sentence) any settlement thereof; provided, however, that if requested by the Indemnitee, the Indemnitor will, at the sole cost and expense of the Indemnitor, provide reasonable cooperation to the Indemnitee and its counsel in contesting any Third Party Claim which the Indemnitee is contesting. Notwithstanding the foregoing provisions of this clause (e), if the Indemnitor has notified the Indemnitee within the Notice Period that the Indemnitor disputes its liability hereunder to the Indemnitee with respect to such Third Party Claim and if such dispute is resolved in favor of the Indemnitor in the manner provided in clause (f) below, the Indemnitor will not be required to bear the costs and expenses of the Indemnitee's defense pursuant to this clause (e) or of the Indemnitor's participation therein at the Indemnitee's request, and the Indemnitee will reimburse the Indemnitor in full for all reasonable, document out-of-pocket costs and expenses incurred by the Indemnitee in connection with such litigation.

(f) If the Indemnitor notifies the Indemnitee that it does not dispute its liability to the Indemnitee with respect to the Third Party Claim under Section 9.1 or Section 9.2, as applicable, or fails to notify the Indemnitee within the Notice Period whether the Indemnitor disputes its liability to the Indemnitee with respect to such Third Party Claim, the Loss arising from such Third Party Claim will be conclusively deemed a liability of the Indemnitor under Section 9.1 or Section 9.2, as applicable, and, subject to the limitations set forth in this Article IX, the Indemnitor shall pay the amount of such Loss to the Indemnitee on demand following the final determination thereof. If the Indemnitor has timely disputed its liability with respect to such claim, the Indemnitor and the Indemnitee will proceed in good faith to negotiate a resolution of such dispute, and if not resolved through negotiations within the Resolution Period, such dispute shall be resolved by litigation in a court of competent jurisdiction in accordance with Section 11.6.

(g) In the event any Indemnitee should have a claim under Section 9.1 or Section 9.2, as applicable, against any Indemnitor that does not involve a Third Party Claim, the Indemnitee shall deliver an Indemnity Notice with reasonable promptness to the Indemnitor. The failure by any Indemnitee to give the Indemnity Notice shall not impair such party's rights hereunder except to the extent that an Indemnifying Party demonstrates that it has been irreparably prejudiced thereby. If the Indemnitor notifies the Indemnitee that it does not dispute the claim described in such Indemnity Notice or fails to notify the Indemnitee within the Notice Period whether the Indemnitor disputes the claim described in such Indemnity Notice, the Loss arising from the claim specified in such Indemnity Notice will be conclusively deemed a liability of the Indemnitor under Section 9.1 or Section 9.2, as applicable, and the Indemnitor shall pay the amount of such Loss, as determined under this Article IX, to the Indemnitee on demand following the final determination thereof. If the Indemnitor has timely disputed its liability with respect to such claim, the Indemnitor and the Indemnitee will proceed in good faith to negotiate a


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resolution of such dispute, and if not resolved through negotiations within the Resolution Period, such dispute shall be resolved by litigation in a court of competent jurisdiction in accordance with Section 11.6.

Section 9.7. Purchase Price Adjustment; Payment Address. Any and all payments required to be made under this Article IX shall be deemed adjustments to the Purchase Price. Any indemnification payment hereunder shall be made by wire transfer of immediately available funds to such account(s) as the Indemnitee may designate to the Indemnitor in writing.

Section 9.8. Subrogation. Upon the payment in full of the amounts due to the Indemnitee in respect of any Third Party Claim as provided herein, the Indemnitor shall be subrogated in place of the Indemnitee with respect to any right of action that the Indemnitee may have with respect to the specific subject matter giving rise the claim of indemnification hereunder.

Section 9.9. Cooperation; Mitigation. Seller Group Indemnitees shall reasonably cooperate with Purchaser, and Purchaser Group Indemnitees shall reasonably cooperate with Seller, and each such Indemnitee shall use Commercially Reasonable Efforts to mitigate any and all Losses subject to indemnification hereunder, including, to use Commercially Reasonable Efforts to recover under any insurance policy (including, without limitation under the Title Policy) or under any contractual right of set-off or indemnity.

Section 9.10. Exclusive Remedy. Notwithstanding anything to the contrary in this Agreement, following the Closing, the indemnification provisions of this Agreement are the sole and exclusive remedies for any Losses arising from or relating to this Agreement and the Transactions. In furtherance of the foregoing, all other rights or remedies available at law or in equity, in tort, contract or otherwise are hereby waived, released and discharged by each Party.

Section 9.11. Specific Performance. Each Party acknowledges and agrees that the Transactions are unique and that the other Party will be irreparably injured should such Transactions not be consummated in a timely fashion and will not have an adequate remedy at law if Seller shall fail to sell, or Purchaser shall fail to purchase, as the case may be, the Purchased Assets when required to do so hereunder. In such event, such other Party shall have the right, in addition to any other remedy available in equity or law, to specific performance of such obligation by the non-performing Party, subject to such other Party's performance of its obligations hereunder.

Section 9.12. Waiver of Certain Damages. In no event shall any Party or any of its Affiliates be liable to the other Party or any of its Affiliates for punitive, incidental, indirect, or special damages arising out of or in connection with this Agreement or the Ancillary Agreements; provided, however, that this limitation shall not apply to (a) any Purchaser Claim or Seller Claim for indemnification pursuant to this Article IX from any punitive, incidental, indirect, or special damages owed to a third person under a Third Party Claim or (b) any action pursuant to Section 9.11 by Seller for the Purchase Price.

Section 9.13. Escrow Account. Any indemnification obligations of Seller for Losses incurred under Section 9.1(a) shall be satisfied first from amounts in the Escrow Account,


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and thereafter, subject to the limitations on liability set forth in this Article IX, such indemnification obligations shall be satisfied by Seller.

ARTICLE X.TERMINATION

Section 10.1. Rights to Terminate. Subject to Section 10.2, this Agreement may be terminated:

(a) by mutual written consent of the Parties;

(b) by one Party, upon written notice to the other Party, on or after the Expiration Date; provided, however, that a Party shall not have the right to terminate this Agreement pursuant to this Section 10.1(b) if such failure to consummate the Transactions on or prior to the Expiration Date shall have been caused by a breach of this Agreement or any Ancillary Agreement by the terminating Party;

(c) by one Party, upon written notice to the other Party, if, at any time prior to the Closing, (i) any Governmental Authority of competent jurisdiction shall have issued a permanent Order (A) declaring this Agreement or any Ancillary Agreement invalid or unenforceable in any material respect or (B) restraining, enjoining or otherwise prohibiting or making illegal the consummation of the Transactions, including the transactions contemplated by the Ancillary Agreements, and such Order shall have become final and non-appealable (a "Termination Order"); (ii) any Seller's Regulatory Approval or Purchaser's Regulatory Approval is denied in a final, non-appealable Order or other final, non-appealable action issued or taken by a Governmental Authority with jurisdiction; or (iii) any Action shall have been taken, or Law enacted, promulgated or deemed applicable to the Transactions, including the transactions contemplated by the Ancillary Agreements, by a Governmental Authority with competent jurisdiction that, directly or indirectly, prohibits the consummation of the Transactions, including the transactions contemplated by the Ancillary Agreements, as herein or therein provided; provided, however, that a Party shall not have the right to terminate this Agreement (x) pursuant to subclause (i) of this Section 10.1(c) if such Party or any of its Affiliates has sought the entry of, or has failed to use Commercially Reasonable Efforts to oppose the entry of, such Termination Order or (y) pursuant to subclause (ii) of this Section 10.1(c) if such Party has failed to use Commercially Reasonable Efforts to obtain such Seller's Regulatory Approval or Purchaser's Regulatory Approval, as applicable;

(d) by one Party, if there has been a material default or material breach of any representation, warranty, covenant or obligation contained in this Agreement by the other Party that is not cured by the earlier of the Closing Date or thirty (30) days after receipt by such other Party of written notice from the terminating Party specifying with particularity such breach or default;

(e) by Purchaser in accordance with Section 6.7;

(f) by Seller or Purchaser, as applicable, in accordance with Section 6.8(e) or Section 6.8(f);


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(g) by Seller or Purchaser if:

(i) the Stockholder Approval is not obtained at the Special Meeting called pursuant to Section 6.6(b) (or any adjournment or postponement thereof) (A) at which a vote with respect to the Stockholder Approval was taken, and (B) prior to which a KGen Recommendation Change had not been made;

(ii) the Stockholder Approval is not obtained at the Special Meeting called pursuant to Section 6.6(b) (or any adjournment or postponement thereof) (A) at which a vote with respect to the Stockholder Approval was taken, and (B) prior to which a KGen Recommendation Change had been made.

(h) by Purchaser if KGen breaches its obligation under Section 6.6(b) to hold the Special Meeting for Stockholder Approval within the time period provided in Section 6.6(b)(i);

(i) by Seller in accordance with Section 6.12(d);

(j) by Purchaser in accordance with Section 6.18(c); or

(k) by Purchaser if Purchaser shall have received the final results of the facility study with respect to its request for network transmission service for the Project, and the aggregate cost reflected in such facility study for the supplemental upgrades required to provide such network transmission service exceeds $40,000,000.

Section 10.2. Effect of Termination. If this Agreement is validly terminated pursuant to Section 10.1, the written notice thereof given to the other Party shall specify the provision hereof pursuant to which such termination is made, and upon such termination this Agreement will forthwith become null and void, and there will be no liability or obligations of the Parties hereunder; provided, however, that (i) the provisions with respect to expenses in Section 6.2, confidentiality in Section 6.15(a), termination fees in Section 10.3 and the general provisions in Article XI will continue to apply following any such termination and (ii) nothing in this Section 10.2 shall relieve a Party from liability in the event termination hereunder is due to such Party's willful or intentional breach of any obligation, covenant, agreement or condition in this Agreement or any Ancillary Agreement or fraud in the performance of this Agreement or any Ancillary Agreement.

Section 10.3. Termination Fees.

(a) Seller and Purchaser agree that if this Agreement is terminated:

(i) by Seller or Purchaser pursuant to Section 10.1(g)(i), then KGen shall pay or cause to be paid to Purchaser, within two (2) Business Days of such termination, an amount equal to $1,900,000;

(ii) by Seller or Purchaser pursuant to Section 10.1(g)(ii), then KGen shall pay or cause to be paid to Purchaser, within two (2) Business Days of such termination, an amount equal to $9,500,000;


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(iii) by Purchaser pursuant to Section 10.1(h), then KGen shall pay or cause to be paid to Purchaser, within two (2) Business Days of such termination, an amount equal to $9,500,000;

(iv) by Seller pursuant to Section 10.1(i), then KGen shall pay or cause to be paid to Purchaser, within two (2) Business Days of such termination, an amount equal to $9,500,000; or

(v) by Purchaser or Seller pursuant to Section 10.1(g)(i) and if (A) after the Effective Date and prior to the Special Meeting at which a vote with respect to the Stockholder Approval was taken, a Third Party has publicly announced a Takeover Proposal or otherwise communicates in any material respect with any material stockholders or group of stockholders of KGen a Takeover Proposal and (B) KGen or any of its subsidiaries enters into a definitive agreement with regard to a Takeover Proposal (replacing the references to "20% or more" with "50% or more") with such Third Party or any of its Affiliates, within nine (9) months of the date of termination of this Agreement, or (y) with any other Third Party, within six (6) months of the date of termination of this Agreement (a transaction described in (x) or (y) of this Section 10.3(a)(v)(B), a "Subsequent Transaction"), then KGen shall pay or cause to be paid to Purchaser upon consummation of the transaction contemplated by such definitive agreement an amount equal to $7,600,000. To the extent permitted by Law and enforceable, if a fee is payable pursuant to this Section 10.3(a)(v) in connection with the consummation of a Subsequent Transaction and such fee is not paid when due the applicable Subsequent Transaction shall be void.

(b) In the event that Purchaser receives full payment of all amounts due to Purchaser pursuant to Section 10.3(a), the full receipt of such amounts shall be deemed to be liquidated damages and the sole and exclusive remedy for any and all Losses suffered or incurred by Purchaser in connection with this Agreement (and the termination hereof), the Transactions (and the abandonment thereof) or any matter forming the basis for such termination, and Purchaser shall not bring or maintain any other claim against Seller, KGen or their respective Affiliates or any other Person arising out of this Agreement, any of the Transactions or any matters forming the basis for such termination. The Parties and KGen acknowledge that the Losses incurred by Purchaser would be difficult to determine and that the foregoing liquidated damages amount represents a reasonable estimate of such Losses. Notwithstanding the foregoing, nothing in this Section 10.3(b) shall limit any remedy available to Purchaser under any PPA as a result of a termination of this Agreement.

(c) KGen, Seller and Purchaser acknowledge that the agreements contained in this Section 10.3 are an integral part of this Agreement. In the event KGen shall fail to pay an amount under this Section 10.3, when due, KGen shall reimburse Purchaser for all reasonable costs and expenses actually incurred (including reasonable accrued costs and expenses that become payable) by Purchaser (including reasonable fees and expenses of counsel) in connection with any action (including the filing of any lawsuit) taken to collect payment of such amounts, together with interest on such unpaid amounts at the prime lending rate prevailing during such period as published in The Wall Street Journal, calculated on a daily basis from the date such amounts were required to be paid to the date of actual payment.


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ARTICLE XI.GENERAL PROVISIONS

Section 11.1. Entire Document; Amendments. This Agreement, the Ancillary Agreements, the Site Indemnity Agreement, and the Confidentiality Agreement contain the entire agreement between the Parties with respect to the Transactions, and such agreements supersede all negotiations, representations, warranties, commitments, offers, contracts and writings prior to the Effective Date, written or oral (including the letter of intent, dated November 16, 2010, between KGen and Entergy Services, Inc., as agent for Purchaser, and any agreement, promise, understanding or commitment based upon or made in any term sheet, contract or principal terms summary, bid package or other document prepared or made available by or on behalf of Purchaser or any communication or correspondence of any kind in connection with the Entergy System's Summer 2009 RFP for Long-Term Supply-Side Resources); provided, however, for the avoidance of doubt, the Parties hereby agree that the Site Indemnity Agreement, Confidentiality Agreement and, to the extent executed prior to the Effective Date, any Ancillary Agreements, shall remain in full force and effect in accordance with their terms on and after the Effective Date and the Site Indemnity Agreement and Ancillary Agreements shall remain in full force and effect in accordance with their terms on and after the Closing Date. No modification or amendment of any provision of this Agreement shall be effective unless made in writing referring specifically to this Agreement and duly signed by or on behalf of each of the Parties.

Section 11.2. Schedules.

(a) Each Party may, from time to time prior to the Closing, notify the other of any change or addition to any of the Schedules to this Agreement with respect to any matter arising or discovered after the Effective Date by the delivery to the other of any amendment or supplement thereto, as of a reasonably current date prior to the Closing, but each Party shall in any event at least once, not earlier than ten (10) Business Days and not later than three (3) Business Days prior to the Closing, so notify the other of all such changes of such Party; provided, however, that notwithstanding anything to the contrary contained herein, (i) Seller shall have no right to change, or add to, Schedule 2.1(f) without the prior written consent of Purchaser in its sole and absolute discretion, other than with respect to the addition of a Project Contract in accordance with Section 2.1(f) and (ii) Purchaser shall have no right to change or add to Schedule 2.2(c) or change or delete from Schedule 2.1(f) without the prior written consent of Seller in its sole and absolute discretion, other than with respect to the addition of a Project Contract entered into by Seller after the Effective Date in accordance with Section 2.1(f). Each such notification, change, addition, amendment or supplement pursuant to this Section 11.2(i) by Seller shall have no effect for purposes of determining whether Purchaser's conditions to Closing set forth in Article VII have been fulfilled and (ii) by Purchaser shall have no effect for purposes of determining whether Seller's conditions to Closing set forth in Article VIII have been fulfilled; provided, however, that any such notification, change, addition, amendment or supplement by Seller to reflect any change in Law or to Schedule 2.1(d) (Tangible Personal Property), Schedule 2.1(e) (Purchased Inventory), Schedule 2.1(f) (Project Contracts), but only to the extent permitted by Section 2.1(f), Part I or Part II of Schedule 4.11 (Permits), Part I or Part II of Schedule 4.13 (Intellectual Property), or Part A or Part B of Schedule 4.15(Environmental Matters) shall be deemed to have cured any breach or inaccuracy of such representations and warranties for purposes of determining whether such conditions to Closing


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have been fulfilled. If the Closing occurs, all matters disclosed by either Party pursuant to any such notification, change, addition, amendment or supplement made prior to the Closing shall be deemed to be included in the Schedules as of the Effective Date or applicable later date and to cure any breach or inaccuracy of such representations and warranties for purposes of determining whether any of the Purchaser Group or the Seller Group, as applicable, is entitled to indemnification under Article IX.

(b) The Parties agree that whether particular property subject to the IDA Lease Agreement is classified as real, mixed or personal property under applicable Law, so long as (i) such property is described in a Schedule and (ii) good and marketable fee simple absolute title of record to such property is conveyed to Purchaser at the Closing from either, as Seller may determine in its sole and absolute discretion, Hot Spring County, Arkansas or Seller, then notwithstanding anything to the contrary contained in this Agreement, there shall be no breach of any representation or warranty associated with something being misclassified as real or personal property under this Agreement.

Section 11.3. Counterparts, Signatures, and Originals. This Agreement may be executed in one or more counterparts, each of which is an original, but all of which together constitute one and the same instrument. The Parties agree that this Agreement, the Ancillary Agreements and any other document issued pursuant to this Agreement, or document referenced by the foregoing, will be considered signed when the signature of a party is delivered by facsimile transmission. Such facsimile signature shall be treated in all respects as having the same effect as an original signature. Any original of this Agreement, any Ancillary Agreement or any other document issued pursuant to this Agreement or document referenced by the foregoing may be photocopied and stored on computer tapes and disks (the "Imaged Document"). The Imaged Document, if introduced in printed format in its original form in any judicial, arbitral, mediation, regulatory, or administrative proceeding will be admissible as between the Parties to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall object to the admissibility of the Imaged Document (or photocopies of the Imaged Document) on the basis that such were not originated or maintained in documentary form, under a hearsay rule, a best evidence rule or other evidentiary rule.

Section 11.4. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be valid, binding and enforceable under Law, but if any provision of this Agreement is held to be invalid, void (or voidable) or unenforceable under Law, such provision shall be ineffective only to the extent held to be invalid, void (or voidable) or unenforceable, without affecting the remainder of such provision or the remaining provisions of this Agreement. To the extent permitted by Law, the Parties waive any provision of Law that renders any provision hereof prohibited or unenforceable in any respect.

Section 11.5. Assignment. The rights under this Agreement shall not be assignable or transferable, nor the duties delegable, by either Party without the prior written consent of the other Party, which consent may be granted or withheld in such other Party's sole discretion. Notwithstanding the foregoing, either Party may upon prior written notice to the other Party collaterally assign, mortgage, hypothecate, pledge, or otherwise encumber all or any


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portion of its interest in and to this Agreement and any Ancillary Agreement to its and any of its Affiliates' lenders or other parties providing financing (including lease financing) to such Party or any of its Affiliates and grant to such lenders or financing parties the power to assign the same upon prior written notice to the other Party in connection with an exercise of such lenders' or financing parties' remedies; provided, however, that neither the grant of any such interest, nor the foreclosure of any such interest, shall, to the extent any Party has retained any portion of its interest in and to this Agreement or the Ancillary Agreements, in any way release, reduce or diminish the obligations of such Party to the other Party hereunder with respect to such portion of such Party's interest. Any assignment effected in accordance with this Section 11.5 shall not relieve the assigning Party of its obligations and liabilities under this Agreement and the Ancillary Agreements to which it is a party. Any purported assignment or delegation not effected in accordance with this Section 11.5 shall be deemed void and of no force and effect.

Section 11.6. Governing Law. The validity, interpretation and effect of this Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York without regard to conflicts of law doctrines (other than Section 5-1401 of the New York General Obligations Law), except with respect to matters that (a) are preempted by federal law or are governed by the Law of the respective jurisdiction of incorporation or formation, as applicable, of the Parties, or (b) relate to real property and are governed by the Law of the State of Arkansas. Any action or proceeding arising under this Agreement shall be adjudicated by courts of the State of Texas and the courts of the United States located in the State of Texas, in each case located in Harris County, State of Texas, and appellate courts from any thereof, AND EACH PARTY CONSENTS AND AGREES THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN AND ONLY IN SUCH COURTS AND WAIVES (TO THE MAXIMUM EXTENT PERMITTED BY LAW) ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM OR ANY SIMILAR OBJECTION AND AGREES NOT TO PLEAD OR CLAIM THE SAME.

Section 11.7. Waiver of Jury Trial. EACH OF THE PARTIES EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LITIGATION, ACTION OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

Section 11.8. Notices. Unless this Agreement specifically requires otherwise, any notice, claim, demand or request provided for in this Agreement, or served, given or made in connection with it, shall be in writing and shall be deemed properly served, given or made if delivered in person or sent by facsimile or sent by registered or certified mail, postage prepaid, or by a nationally recognized overnight courier service that provides a receipt of delivery, in each case, to the Parties at the addresses specified below:

If to Seller to:

KGen Hot Spring LLCc/o KGen Power Corporation1330 Post Oak Blvd., Suite 1500Houston, Texas 77056


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Attention: Chief Executive Officer and General CounselFax: (713) 979-1950

with a copy to:

KGen Power Corporation1330 Post Oak Blvd., Suite 1500Houston, Texas 77056Attention: Chief Executive Officer and General CounselFax: (713) 979-1950

and

if to Purchaser to:

Entergy Arkansas, Inc.c/o Entergy Services, Inc.10055 Grogans Mill RoadThe Woodlands, TX 77380Attention: Vice President, Commercial OperationsFax: (281) 297-3929

with a copy to:

Entergy Services, Inc.10055 Grogans Mill Road, Suite 300 The Woodlands, TX 77380Attention: Assistant General CounselFax: (281) 297-3947

Notice given by personal delivery, mail or overnight courier pursuant to this Section 11.8shall be effective upon physical receipt.

Section 11.9. No Third Party Beneficiaries. Except as may be specifically set forth in this Agreement, nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any Person other than the Parties, their respective permitted successors and assigns, and any Person benefiting from the indemnities provided herein, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third Persons to any Party, nor give any third Persons any right of subrogation or action against any Party.

Section 11.10.No Joint Venture. Nothing contained in this Agreement creates or is intended to create an association, trust, partnership or joint venture or impose a trust or partnership duty, obligation or liability on or with regard to any Party.

Section 11.11.Waiver of Compliance. To the extent permitted by Law, any failure to comply with any obligation, covenant, agreement or condition set forth herein or in any Ancillary Agreement, or any breach of any representation or warranty set forth herein or in any Ancillary Agreement, may be waived by the Party entitled to the benefit of such obligation,


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covenant, agreement, condition, representation or warranty only by a written instrument signed by or on behalf of such Party that expressly waives such failure or breach, but any such waiver shall not operate as a waiver of, or estoppel with respect to, any prior or subsequent failure to comply therewith or breach thereof. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, or the waiver of the fulfillment of any such condition, shall not affect the right to indemnification or other remedy based on such representation, warranty, covenant or obligation. The failure of a Party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights. A waiver by a Party of the performance of any covenant, condition, representation or warranty of the other Party shall not invalidate this Agreement, nor shall such waiver be construed as a waiver of any other covenant, condition, representation or warranty. A waiver by a Party of the time for performing any act shall not constitute a waiver of the time for performing any other act or the time for performing an identical act required to be performed at a later time.

Section 11.12. Nature of KGen's Obligations. From and after the Closing, in all instances where an obligation is imposed upon Seller under this Agreement but no similar obligation is expressly imposed upon KGen, KGen shall nevertheless be responsible for any Losses arising from or related to Seller's breach of such obligation; provided, however, that this obligation shall only survive until forty-two (42) consecutive months have lapsed since the Closing Date. This Section 11.12 shall in no way limit Seller's obligations under this Agreement.

Section 11.13.Attorneys' Fees. In any litigation or other proceeding between the Parties relating to this Agreement, the prevailing party shall be entitled to recover from the other its reasonable out-of-pocket costs incurred in connection with such litigation or proceeding, including reasonable attorneys' fees and other legal expenses.

[SIGNATURE PAGE FOLLOWS]


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EXHIBIT A

#4832-4159-5913

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT dated [ ], 201[ ] (this “Assignment Agreement”), is made by and between KGen Hot Spring LLC, a Delaware limited liability company (“Seller”), and Entergy Arkansas, Inc., an Arkansas corporation (“Purchaser”). Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to them in the Asset Purchase Agreement (as defined below).

WHEREAS, Seller owns the Project;

WHEREAS, Seller and Purchaser have entered into that certain Asset Purchase Agreement, dated as of April 28, 2011 (as may be amended from time to time, the “AssetPurchase Agreement”); and

WHEREAS, on the terms and subject to the conditions set forth in the Asset PurchaseAgreement, Seller has agreed to sell, assign, transfer, convey and deliver to Purchaser, and Purchaser has agreed to purchase, accept and assume, the Project on the terms and subject to the conditions set forth therein and herein;

NOW, THEREFORE, pursuant to the terms of the Asset Purchase Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound hereby, hereby agree as follows:

1. Pursuant to, in accordance with and subject to the Asset Purchase Agreement:

(a) Seller hereby assigns and transfers, and Purchaser hereby accepts such assignment and transfer of, all of Seller’s right, title and interest in and to certain assets, properties and rights, of every kind, character and nature, whether real, personal, or mixed, fixed, contingent, or otherwise, tangible or intangible, known or unknown, accrued or unaccrued, or carried or not carried on the books and records of Seller, and wherever situated, primarily relating to, used at or held for use at the Project or in the Business and, solely with respect to the Intellectual Property set forth in Schedule 2.1(b) of the Asset Purchase Agreement, all of the right, title and interest in and to such Intellectual Property of the Affiliates of Seller set forth in Schedule 2.1(b) of the Asset Purchase Agreement, and, in each case as the same shall exist on the Closing Date, as set forth in Sections 2.1(a) through 2.1(l) of the Asset Purchase Agreement (collectively, the “Purchased Assets”); provided that, the Purchased Assets shall expressly exclude any right, title or interest in and to the assets, properties and rights set forth in Sections 2.2(a) through 2.2(m) of the Asset Purchase Agreement (collectively, the “Excluded Assets”).

(b) In connection with the assignment and transfer of the Purchased Assets in accordance with paragraph 1(a) above, Purchaser hereby assumes, and agrees to pay, perform and discharge as and when due, the following, and only the following, liabilities and obligations: (i) all liabilities and obligations of Seller and, solely with respect to the Intellectual Property set forth on Schedule 2.1(b) of the Asset Purchase Agreement, the Affiliates of Seller set forth on Schedule 2.1(b) of the Asset Purchase Agreement, under the Purchased Project Contracts, the Purchased Licenses and the Purchased Permits (subject to Section 6.5 of the Asset Purchase Agreement), solely to the extent allocable to the period after the Closing Date and not resulting


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from any breach or default by, or waiver or extension given by or to, Seller or any breach of the Asset Purchase Agreement or any Ancillary Agreement by Seller; (ii) all liabilities and obligations prorated to Purchaser under Section 3.6 of the Asset Purchase Agreement; and (iii) subject to the other terms of the Asset Purchase Agreement, including Article VI and Article IXthereof, Section 2.4 thereof, and the Ancillary Agreements, all liabilities relating to, based in whole or in part on any event, fact, circumstance or condition (or set of events, facts, circumstances or conditions) occurring or existing in connection with, or arising out of (A) the financing, ownership, lease, possession, use, operation, repair, maintenance, or replacement of the Project, the Project Real Property of any of the Purchased Assets, solely to the extent allocable to the period after the Closing, including (1) the delivery, receipt, movement, use, sale, conveyance, transfer, removal or disposal of any fuel, power (including any ancillary service), water, waste or any other Purchased Asset to or from the Project at any time after the Closing, (2) compliance or non-compliance with Laws or Permits (including Environmental Laws) after the Closing, including fines, penalties, charges, and costs, and interest thereon, except to the extent arising from conditions existing or events occurring prior to the Closing, (3) any Environmental Condition or Environmental Liability after the Closing, in each case arising from conditions existing or events occurring solely after the Closing, and (4) any obligation or liability representing indebtedness for money borrowed (or any refinancing thereof) or (B) any other business, undertaking, or activity of Purchaser, any of its Affiliates, or any future owner or operator of the Project or the Project Real Property, in any such case described in Section 2.3 of the Asset Purchase Agreement, after the Closing (collectively, the "Assumed Liabilities").

(c) Except for the Assumed Liabilities, Seller shall retain, and Purchaser shall not assume or be obligated to pay, perform or otherwise discharge or be responsible or liable with respect to, any liability or obligation of Seller or any of its Affiliates, whether or not of, associated with, or arising from any of the Purchased Assets, and whether fixed, contingent or otherwise, known or unknown, accrued or unaccrued, carried or not carried on the books and records of Seller or any of its Affiliates, tangible or intangible, as set forth in Sections 2.4(a)through 2.4(h) of the Asset Purchase Agreement (collectively, the “Retained Liabilities”).

2. This Assignment Agreement is intended to evidence the consummation of certain transactions contemplated by the Asset Purchase Agreement. This Assignment Agreement is subject in all respects to the terms and conditions of the Asset Purchase Agreement and shall not be construed to limit, enlarge, amend or otherwise alter any of the terms or provisions of, or any rights, duties or obligations under, the Asset Purchase Agreement. In the event of any conflict or inconsistency between this Assignment Agreement and the Asset Purchase Agreement, the terms of the Asset Purchase Agreement shall govern and control.

3. This Assignment Agreement is being effectuated in part pursuant to the Deed and the Bill of Sale, each dated as of the date hereof.

4. To the extent the assignment of any of the Purchased Assets to be assigned by Seller to Purchaser pursuant to this Assignment Agreement shall, without Seller first obtaining the applicable Seller's Consent, (i) constitute a breach or default under any Purchased Project Contract or Purchased Warranty or (ii) violate any applicable Law (each such asset a “Non-Assignable Asset”), this Assignment Agreement shall not constitute a contract to assign the same.


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5. This Assignment Agreement shall be effective as of the Closing, and shall inure to the benefit of Purchaser and its successors and assigns and shall be binding upon Seller and Purchaser and their respective successors and assigns, and no other Person shall have any right, remedy, benefit, liability or obligation under this Assignment Agreement as a third party beneficiary or otherwise.

6. This Assignment Agreement may not be changed, amended, modified, discharged or terminated in any manner other than by an agreement in writing signed by the parties hereto.

7. Neither this Assignment Agreement, nor any of the rights or obligations hereunder, may be assigned by any party without the prior written consent of the other party hereto. Notwithstanding the foregoing, Purchaser may freely (i) grant to its lenders a security interest in its rights under this Assignment Agreement and (ii) assign (after the Closing) its rights hereunder to any Person or Persons acquiring all or substantially all of the Purchased Assets or (in whole or in part) to any Affiliate of Purchaser.

8. The validity, interpretation and effect of this Assignment Agreement and the rights and duties of the parties hereunder shall be governed by and construed in accordance with the Laws of the State of New York. Any suit, action or proceeding arising under or relating to this Assignment Agreement may be brought only in the courts of the State of Texas or the courts of the United States of America located in the State of Texas, in each case located in Harris County, State of Texas. Each party irrevocably submits to the exclusive jurisdiction of the courts of the State of Texas and the courts of the United States of America located in the State of Texas, in each case located in Harris County, State of Texas, over any action, suit or proceeding arising out of or relating to this Assignment Agreement. Each party hereby waives any objection that it may have to the venue of such action, suit or proceeding in any such court or that such suit,action or proceeding in any such court was brought in an inconvenient court and agrees not to plead or claim the same. Each party further agrees that the courts of the State of Texas and the courts of the United States of America located in the State of Texas, in each case located in Harris County, State of Texas, shall have in personam jurisdiction over each of them with respect to any such dispute, controversy, or proceeding. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHTS TO A TRIAL BY JURY WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS ASSIGNMENT AGREEMENT.

9. This Assignment Agreement may be executed in two counterparts, each of which shall be deemed to be an original but both of which shall constitute one and the same agreement. This Assignment Agreement shall become effective when each party hereto shall have received counterparts thereof signed and delivered (by telecopy or other electronic means) by the other party hereto.

10. At any time or from time to time after the Closing, each Party shall, upon the reasonable request of the other Party, execute and deliver any further instruments or documents, and exercise Commercially Reasonable Efforts to take such further actions as may reasonably be required, to fulfill and implement the terms of this Assignment Agreement or realize the benefits intended to be afforded hereby.


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IN WITNESS WHEREOF, the parties have caused this Assignment Agreement to be duly executed and delivered as of the date first set forth above.

KGEN HOT SPRING LLC

By: _________________________________Name: Title:


By: _________________________________Name: Title:

[Signature Page to Assignment and Assumption Agreement]


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EXHIBIT B

#4828-3986-0233

FORM OF BILL OF SALE

KGEN HOT SPRING LLC, a Delaware limited liability company, having an address at 1330 Post Oak Blvd., Suite 1500, Houston, TX 77056 (hereinafter referred to as “Seller”), in consideration of the Purchase Price paid by ENTERGY ARKANSAS, INC., an Arkansas corporation, having an address at c/o Entergy Services, Inc., 10055 Grogans Mill Road, Suite 300, The Woodlands, TX 77380 (hereinafter referred to as “Purchaser”), the receipt and sufficiency of which is hereby acknowledged, does hereby SELL, GRANT, ASSIGN, CONVEY, TRANSFER, SET OVER, AND QUITCLAIM unto Purchaser, its successors and assigns, all of Seller’s right, title and interest in and to the Purchased Assets.

TO HAVE AND TO HOLD the Purchased Assets unto Purchaser, its successors and assigns forever.

This Bill of Sale is made without warranty or representation by Seller of any kind or nature whatsoever except as provided in the Asset Purchase Agreement, dated as of April 28, 2011, between Seller and Purchaser (as the same may be amended, modified and/or supplemented from time to time, the “Asset Purchase Agreement”). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Asset Purchase Agreement.

This Bill of Sale is subject in all respects to the terms and conditions of the Asset Purchase Agreement and shall not be construed to limit, enlarge, amend or otherwise alter any of the terms or provisions of, or any rights, duties or obligations under, the Asset Purchase Agreement. In the event of any conflict or inconsistency between this Bill of Sale and the Asset Purchase Agreement, the terms of the Asset Purchase Agreement shall govern and control.

This Bill of Sale has been duly executed by Seller as of the [ ] day of [ ], 201[ ].

KGEN HOT SPRING LLC

By: ________________________________Name: Title:


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EXHIBIT C

FORM OF DEED


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THIS INSTRUMENT PREPARED BYAND AFTER RECORDING RETURN TO:Scott D. MorganEntergy Services, Inc.639 Loyola Avenue, 22nd FloorMail Code: L-ENT-22ANew Orleans, LA 70113

SPECIAL WARRANTY DEED

KNOW ALL MEN BY THESE PRESENTS:

THAT KGEN HOT SPRING LLC, a Delaware limited liability company (“Grantor”), for and in consideration of the sum of One Thousand Dollars ($1,000.00) and other good and valuable consideration, in hand paid by ENTERGY ARKANSAS, INC., a (“Grantee”), the receipt of which is hereby acknowledged, does hereby GRANT, BARGAIN, SELL and CONVEY unto Grantee, and unto its successors and assigns forever, all of Grantor’s interest, right and title in and to (A) the real property situated in Hot Spring County, Arkansas, described as set forth in Exhibit A attached hereto and incorporated herein, together with all rights, benefits, privileges, easements, tenements, hereditaments and appurtenances thereon or in any way appertaining to such real property (collectively, the “Real Property”) and (B) the rights-of-way and/or easements described on Exhibit B attached hereto and incorporated herein (the “Easements”; together with the Real Property, collectively, the “Property”) , the possession and delivery of which Property Grantee acknowledges.

The warranty herein is subject to the “Permitted Encumbrances” as described on Exhibit Cattached hereto and incorporated herein.

This transfer is made without any warranty whatsoever as to the condition, merchantability, usage or suitability or fitness for a particular purpose or otherwise of the Property and other rights transferred and/or assigned herein, whether express or implied, not even for the return of the purchase price or any part thereof, and Grantee hereby waives all such warranties. Grantee declares that it has had ample opportunity to examine the Property in connection with the use which the Grantee intends to make of such Property. Grantee declares that (i) it accepts said property “as is,” “where is,” and “with all faults”, and (ii) it specifically and particularly waives all claims or causes of actions based on any and all warranties and representations imposed as a matter of law as to the condition, merchantability, usage or suitability or fitness for a particular purpose or otherwise. Notwithstanding the foregoing, nothing in the above waivers is intended to or shall be deemed or construed to amend, abridge, modify or negate any of the express representations and warranties of Grantor (collectively, the “Surviving Warranties”) set forth in that certain Asset Purchase Agreement, dated as of April 28, 2011, by and between Grantor and Grantee (the “Asset Purchase Agreement”), or any Ancillary Agreement (as defined in the Asset Purchase Agreement) to which Grantor is a party, but the Surviving Warranties are not intended to run with the Property, do not create any resolutory conditions with regard to the subject conveyance and do not give rise to any right of rescission in favor of Grantee.


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I certify under penalty of false swearing that the legally correct amount of documentary stamps have been placed on this instrument. Exempt or no consideration paid if none shown.GRANTEE OR AGENT: GRANTEE’S ADDRESS:

GRANTEE’S SIGNATURE


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TO HAVE AND TO HOLD the Property unto Grantee and unto its successors and assigns forever, with all appurtenances thereunto belonging.

And Grantor hereby covenants with Grantee that it will forever warrant and defend the title to the Property, subject to the “Permitted Encumbrances” as described on Exhibit C attached hereto and incorporated herein, against all claims suffered or incurred by Grantor, but against none other.

EXECUTED this _____ day of ____________, 201__.

GRANTOR:

KGEN HOT SPRING LLC,a Delaware limited liability company

By: _______________________________Name:Title:

ACKNOWLEDGMENT

STATE OF ____________________COUNTY OF ____________________

Personally appeared before me, the undersigned authority in and for the said county and state, on this ______ day of _________________, 201__, within my jurisdiction, the within named ______________________________, who acknowledged that he is ___________________ of KGEN HOT SPRING LLC, a Delaware limited liability company, and that for and on behalf of said limited liability company, and as its act and deed, s/he executed the above and foregoing instrument after first having been duly authorized by said limited liability company so to do.

In witness whereof, I hereunto set my hand and official seal.

Notary Public

My commission expires:

(SEAL)


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EXHIBIT ATO


Legal Description of Real Property

1) TRACT A: Fee interest in the following described property pursuant to Deed by McClure Inc. to Duke Energy Hot Spring, LLC (predecessor in interest to KGen Hot Spring LLC), recorded on May 22, 2002 at Book 278, Page 457:

Part of the SW1/4 SW1/4 and part of the SE1/4 SW1/4 of Fractional Section 11, Township 5 South, Range 18 West of the 5th P.M. in Hot Spring County, Arkansas and more particularly described as follows: Commence at the SW corner of Section 11, Township 5 South, Range 18 West; thence North 01 degrees 34 minutes 25 seconds East along the West line of Section 11,1072.19 feet to a point; thence depart said West line East 468.84 feet to the point of beginning; thence North 85 degrees 29 minutes 55 seconds East 814.98 feet to a X-tie fence post; thence South 19 degrees 30 minutes 07 seconds East 244.19 feet to a 1 inch rebar; thence South 11 degrees 50 minutes 42 seconds West 679.79 feet to a point; thence North 84 degrees 54 minutes 14 seconds West 1116.85 feet to a point; thence North 18 degrees 21 minutes 43 seconds East 63.70 feet to a point; thence North 18 degrees 23 minutes 06 seconds East 208.80 feet to a 1¼ inch pipe; thence North 18 degrees 26 minutes 16 seconds East 212.69 feet to a 4” x 6” X-tie post; thence North 36 degrees 58 minutes 49 seconds East 340.45 feet to the point of beginning.

2) TRACT D: Fee interest in the following described property pursuant to Deed by Bobby H. and Alice F. Higgins to Duke Energy Hot Spring, LLC (predecessor in interest to KGen Hot Spring LLC), recorded on June 11, 2001 at Book 274, Page 463:

Part of the S1/2 of Section 11, Township 5 South, Range 18 West of the 5th Principal Meridian, Hot Spring County, Arkansas, being more particularly described as follows: Begin at the SE corner of the SW1/4 SE1/4 of Section 11, Township 5 South, Range 18 West, Hot Spring County, Arkansas; thence North 88 degrees 54 minutes 44 seconds West along the South line of said Section 11, 2786.92 feet to a point; thence depart said South line North 11 degrees 50 minutes 42 seconds East 948.51 feet to a 1 inch rebar; thence North 19 degrees 30 minutes 07 seconds West along a fence line 244.19 feet to a x-tie post; thence North 40 degrees 45 minutes 21 seconds East 362.36 feet to a x-tie post; thence North 23 degrees 15 minutes 21 seconds East 228.82 feet to a x-tie post; thence North 17 degrees 32 minutes 36 seconds East 247.12 feet to a x-tie post; thence depart said fence line North 63 degrees 32 minutes 31 seconds East 601.95 feet to a 1 inch rebar; thence South 75 degrees 53 minutes 23 seconds East 123.45 feet to a #4 rebar with cap; thence South 01 degrees 34 minutes 51 seconds East 999.34 feet to a #4 rebar with cap on the centerline of an existing farm road; thence along said centerline the following courses: North 82 degrees 49 minutes 42 seconds East 126.53 feet; thence North 87 degrees 08 minutes 16 seconds East 46.16 feet; thence South 89 degrees 44 minutes 46 seconds East 117.81 feet; thence South 87 degrees 52 minutes 19 seconds East 80.94 feet; thence North 52 degrees 35 minutes 08 seconds East 47.31 feet; thence North 16 degrees 06 minutes 40 seconds East 71.60 feet; thence North 02 degrees 13 minutes 10 seconds West 159.65 feet; thence North 21 degrees


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33 minutes 40 seconds East 64.51 feet; thence North 62 degrees 48 minutes 46 seconds East 105.55 feet; thence North 82 degrees 37 minutes 36 seconds East 69.25 feet; thence South 87 degrees 34 minutes 40 seconds East 272.50 feet; thence South 85 degrees 30 minutes 08 seconds East 206.02 feet; thence North 86 degrees 14 minutes 17 seconds East 79.81 feet; thence South 87 degrees 26 minutes 28 seconds East 60.02 feet; thence South 76 degrees 49 minutes 21 seconds East 278.82 feet; thence North 85 degrees 12 minutes 58 seconds East 83.99 feet; thence North 61 degrees 55 minutes 29 seconds East 70.40 feet; thence North 06 degrees 42 minutes 40 seconds East 314.47 feet; thence North 10 degrees 34 minutes 00 seconds East 5.10 feet to a point on the East line of the NW1/4 SE1/4 of said Section 11; thence depart said centerline South 02 degrees 56 minutes 33 seconds West along said East line 1830.84 feet to the point of beginning.

3) TRACT E: Fee interest in the following described property pursuant to Deed by Bobby H. and Alice F. Higgins to Duke Energy Hot Spring, LLC (predecessor in interest to KGen Hot Spring LLC), recorded on May 22, 2002 at Book 278, Page 461:

Part of the NW1/4 SE1/4 part of the NE1/4 SW1/4 part of the SE1/4 SW1/4 and SW1/4 SE1/4 of fractional Section 11, Township 5 South, Range 18 West of the 5th P.M. Hot Spring County, Arkansas, and more particularly described as follows: Commence at the SW corner of Section 11, Township 5 South, Range 18 West; thence North 01 degrees 34 minutes 25 seconds East along the West line of Section 11, 1095.65 feet to a point; thence depart said West line, East 2368.26 feet to the point of beginning; thence North 01 degrees 34 minutes 51 seconds West 999.34 feet to a #4 rebar; thence South 75 degrees 54 minutes 23 seconds East 453.45 feet to a #4 rebar; thence North 76 degrees 51 minutes 38 seconds East 68.00 feet to a point; thence South 555.35 feet to a point on the centerline of an existing access easement; thence along said centerline the following courses and distances: thence South 62 degrees 48 minutes 46 seconds West 37.26 feet to a point; thence South 21 degrees 33 minutes 40 seconds West 64.51 feet to a point; thence South 02 degrees 13 minutes 10 seconds East 159.65 feet to a point; thence South 16 degrees 06 minutes 40 seconds West 71.60 feet to a point; thence South 52 degrees 35 minutes 08 seconds West 47.31 feet to a point; thence North 87 degrees 52 minutes 19 seconds West 80.94 feet to a point; thence North 89 degrees 44 minutes 46 seconds West 117.81 feet to a point; thence South 87 degrees 08 minutes 16 seconds West 46.16 feet to a point; thence South 82 degrees 49 minutes 42 seconds West 126.53 feet to the point of beginning.

4) McCLURE TRACT: Fee interest in the following described property pursuant to Deed by McClure, Inc., George L. McClure, Jr. and Frank R. McClure to Duke Energy Hot Spring, LLC (predecessor in interest to KGen Hot Spring, LLC) recorded on May 23, 2001 in Book 274, Page 285 as corrected by deed recorded on August 17, 2004 in Book 288, Page 568:

Part of the SE1/4 SE1/4 of Fractional Section 10, Township 5 South, Range 18 West of the Fifth Principal Meridian and a part of the SW1/4 SW1/4 of Section 11, Township 5 South, Range 18 West of the Fifth Principal Meridian all in Hot Spring County, Arkansas and more particularly described as follows: Commence at the Section corner of Sections 10, 11, 14 and 15; thence North 01 degrees 34 minutes 25 seconds East 599.21 feet to a point; thence North 18 degrees 22 minutes 07 seconds East 2,,25 feet to a 7/8 inch iron rod being the point of beginning; thence South 18 degrees 22 minutes 07 seconds West 161.88 feet to the centerline of a 60 foot Reliant


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Gas line R/W; thence along said centerline North 56 degrees 30 minutes 38 seconds West 79.74 feet to a point on the mean high water line (elev. 209 feet) of the Ouachita River (a navigable stream); thence depart said centerline and along the meanders of said mean high water line to a point being North 27 degrees 37 minutes 38 seconds East 457.32 feet; thence depart said mean high water line South 61 degrees 57 minutes 03 seconds East 5.96 feet to a point; thence South 18 degrees 49 minutes 37 seconds West 309.29 feet to the point of beginning.

5) KIZER TRACT: Fee interest in the following described property pursuant to Deed by William E. Kizer and Polly A, Kizer to Duke Energy Hot Spring, LLC (predecessor in interest to KGen Hot Spring, LLC) recorded on June 1, 2001 at Book 274, Page 329:

Part of the SE1/4 SE1/4 of Fractional Section 10, Township 5 South, Range 18 West of the Fifth Meridian and a part of the SW1/4 SW1/4 Section 11, Township 5 South, Range 18 West of the Fifth Principal Meridian all in Hot Spring County, Arkansas and more particularly described as follows: Commence at the section corner of Sections 10, 11, 14 and 15; thence North 01 degrees 34 minutes 25 seconds East 599.21 feet to a point; thence North 18 degrees 22 minutes 07 seconds East 2.25 feet to a 7/8 inch rod, being the point of beginning; thence South 89 degrees 09 minutes 29 seconds East 209.08 feet to a 1¼ inch pipe; thence South 18 degrees 23 minutes 06 seconds West 208.80 feet; thence South 18 degrees 21 minutes 43 seconds West 63.70 feet to a point on the centerline of a 60 foot Reliant Gas line R/W; thence along said centerline North 59 degrees 17 minutes 56 seconds West 123.17 feet; thence North 56 degrees 30 minutes 38 seconds West 81.82 feet; thence depart said centerline North 18 degrees 22 minutes 07 seconds East 161.88 feet to the point of beginning.

6) COOK TRACT: Fee interest in the following described property pursuant to Deed by Michael R. Cook, Larry W. Cook, Jackie Cook , Stephen A. Cook and Alison Cook to Duke Energy Hot Spring, LLC (predecessor in interest to KGen Hot Spring, LLC) recorded June 1, 2001 at Book 274, Page 337:

Part of the SW1/4 SW1/4 of Fractional Section 11, Township 5 South, Range 18 West of the Fifth Principal Meridian, Hot Spring County, Arkansas and more particularly described as follows: Commence at the Section corner of Sections 10, 11, 14 and 15; thence North 01 degrees 34 minutes 25 seconds East 599.21 feet to a point; thence North 18 degrees 22 minutes 07 seconds East 2.25 feet to a 7/8 inch iron rod being the point of beginning; thence North 18 degrees 49 minutes 37 seconds East 309.29 feet to a point; thence South 61 degrees 57 minutes 03 seconds East 200.00 feet to a 4 x 6 cross tie; thence South 18 degrees 26 minutes 16 seconds West 212.69 feet to a 1¼ inch pipe; thence North 89 degrees 09 minutes 29 seconds West 209.08 feet to the point of beginning.

7) TRACT C: Part of the N1/2 of Section 18, Township 5 South, Range 17 West, of the 5th Principal Meridian, Hot Spring County, Arkansas, being more particularly described as follows: Begin at the NE corner of Section 18, Township 5 South, Range 17 West, Hot Spring County, Arkansas said point being a 5/8 inch rebar w/cap; thence South 02 degrees 07 minutes 22 seconds West along the East line of said Section 18,1846.16 feet to a 5/8 inch rebar w/cap; thence depart said East line North 88 degrees 10 minutes 57 seconds West 2967.49 feet to a 5/8 inch rebar w/cap on the Easterly r/w of the Union Pacific Railroad; thence North 35 degrees 21 minutes 29


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seconds East along said right of way 2211.21 feet to a 5/8 inch rebar w/cap on the North line of said Section 18; thence depart said right of way and along said North line South 88 degrees 17 minutes 02 seconds East 1755.58 feet to the point of beginning.

8) TRACT B: A tract of land being a part of Section 7, Township 5 South of the Base Line Range 17 West of the 5th Principal Meridian and part of Section 8, Township 5 South of the Base Line Range 17 West of the 5th Principal Meridian, all in Hot Spring County, Arkansas more particularly described as follows: The SW1/4 NE1/4 of Section 7; thence NW1/4 SE1/4 of Section 7, that part of the SE1/4 NE1/4 of Section 7 lying West of the R/W of the Missouri Pacific Railroad and that part of the NE1/4 SE1/4 of Section 7 lying West of the right of way of the Missouri Pacific Railroad and that part of the SW1/4 NW1/4 of Section 8 lying West of the right of way of the Missouri Pacific Railroad more particularly described as: Begin at a 5/8 inch rebar being the SW corner of the N1/2 SE1/4 of Section 7, Township 5 South, Range 17 West; thence North 02 degrees 43 minutes 03 seconds East 1410.36 feet to the center of said Section 7; thence North 02 degrees 29 minutes 48 seconds East 1365.22 feet to a X-tie fence post being the NW corner of the S1/2 NE1/4 of said Section 7; thence South 87 degrees 44 minutes 54 seconds East along the North line of said S1/2 2628.94 feet to the NE corner of said S1/2 NE1/4 of said Section 7; thence South 87 degrees 17 minutes 52 seconds East along the North line of the SW1/4 NW1/4 Section 8, Township 5 South, Range 17 West 711.54 feet to a 12 inch spike with cap on the Westerly right of way of the Missouri Pacific/Union Pacific Railroad; thence depart said North line South 35 degrees 25 minutes 39 seconds West along said right of way 1090.47 feet to a X-tie fence corner; thence South 49 degrees 19 minutes 49 seconds East 50.00 feet to a 12 inch spike w/cap; thence South 35 degrees 32 minutes 01 seconds West 2176.03 feet to a X-tie fence corner on the South line of the N1/2 SE1/4 of Section 7; thence North 87 degrees 59 minutes 57 seconds West 1606.12 feet to the point of beginning.


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EXHIBIT BTO


Easements

1) Road Right-of-Way Easement by Sustainable Forest L.L.C. in favor of Duke Energy Hot Spring, LLC (predecessor in interest to KGen Hot Spring, LLC) recorded December 12, 2000 in Book 139, page 5, affecting the following described property:

Part of the El/2 of Section 18, Township 5 South, Range 17 West of the 5th Principal Meridian, Hot Spring County, Arkansas being more particularly described as follows: A 75 foot ingress/egress and utility easement being 37.5 feet each side of the following centerline description: Commence at the NE corner of Section 18, Township 5 South, Range 17 West, Hot Spring County, Arkansas; thence South 02 degrees 07 minutes 22 seconds West along the East line of said Section 18, 1846.16 feet to a 5/8 inch rebar with cap; thence depart said East line North 88 degrees 10 minutes 57 seconds West 2644.37 feet to the point of beginning of the easement herein described, said point being 37.50 feet East of the center section line of said Section 18; thence South 01 degrees 52 minutes 58 seconds West parallel and adjacent to said center section line 3016.28 feet to a point on the Northerly r/w of Hot Spring County Road #36 (aka Lower Etta Road), said point being the point of beginning.

2) Pipeline Right of Way Easement by Sustainable Forests, LLC in favor of KGen Hot Spring, LLC, formerly known as Duke Energy Hot Spring, LLC, recorded June 22, 2001 at Book 142, Page 629, affecting the following described property:

TRACT 1: A 50 foot wide utility easement being 25 feet each side of the following centerline description to the point of intersection of the subject property line and more particularly described as follows: Commence at the SW corner of the SE1/4 SE1/4 of Section 11, Township 5 South, Range 18 West, Hot Spring County, Arkansas; thence North 02 degrees 56 minutes 33 seconds East 49.03 feet to the point of beginning of the easement herein described; thence South 76 degrees 16 minutes 29 seconds East 224.01 feet to a point on the South line of said Section 11, said point being South 88 degrees 54 minutes 44 seconds East 220.17 feet of said SW corner of the SE1/4 SE1/4 and the point of termination.

TRACT 2: A 50 foot wide utility easement being 25 feet each side of the following centerline description to the point of intersection of the subject property line and more particularly described as follows: Commence at the N1/4 corner of Section 13, Township 5 South, Range 18 West, Hot Spring County, Arkansas; thence South 02 degrees 10 minutes 48 seconds West along the center section line of said Section 13, 949.18 feet to the point of beginning of the easement herein described; thence South 75 degrees 48 minutes 38 seconds East 11.70 feet to a point; thence South 76 degrees 01 minutes 52 seconds East 4403.21 feet to a point; thence South 78 degrees 54 minutes 52 seconds East 232.96 feet to a point; thence South 69 degrees 52 minutes 52 seconds East 48.69 feet to a point; thence South 60 degrees 50 minutes 52 seconds East 48.69 feet to a point; thence South 51 degrees 48 minutes 52 seconds East 28.376 feet to a point;


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thence North 35 degrees 21 minutes 27 seconds East 3510.55 feet to a point; thence North 16 degrees 26 minutes 40 seconds West 452.90 feet to a point on the North line of the SW1/4 SE1/4 of Section 7, Township 5 South, Range 17 West, said point being South 87 degrees 59 minutes 57 seconds East 1077.22 feet of the NW corner of said SW1/4 SE1/4 and the point of termination.

TRACT 3: A 50 foot wide utility easement being 25 feet each side of the following center line description to the point of intersection of the subject property line and more particularly described as follows: Commence at the N1/4 corner of Section 18, Township 5 South, Range 17 West, Hot Spring County, Arkansas; thence South 86 degrees 53 minutes 22 seconds East 632.42 feet to a point; thence South 35 degrees 21 minutes 27 seconds West 231.95 feet to a point of beginning of the easement herein described; thence South 54 degrees 38 minutes 33 seconds East 241.50 feet to a point on the Southeasterly r/w of the Missouri Pacific Railroad and the point of termination.

3) Option and Easement Agreement between McClure Inc. and Duke Energy Hot Spring, LLC (predecessor in interest to KGen Hot Spring, LLC) recorded on October 24, 2000 at Book 138, Page 245, as amended by Amended Option and Easement Agreement recorded on March 20, 2001 in Book 142, Page 199, affecting the following described property:

A 50 foot wide utility easement being 25 feet each side of the following centerline description to the point of intersection of the subject property line and more particularly described as follows: Commence at the SE corner of the SW1/4 SW1/4 of Section 11, Township 5 South, Range 18 West, Hot Spring County, Arkansas; thence North 02 degrees 56 minutes 33 seconds East 110.64 feet to a point; thence North 89 degrees 08 minutes 10 seconds West 70.12 feet to a point; thence North 85 degrees 08 minutes 10 seconds West 10.38 feet to a point; thence North 81 degrees 42 minutes 10 seconds West 26.43 feet to the point of beginning of the easement herein described; thence continue North 81 degrees 42 minutes 10 seconds West 8.82 feet to a point; thence North 81 degrees 43 minutes 51 seconds West 698.43 feet to a point; thence North 74 degrees 17 minutes 51 seconds West 32.85 feet to a point; thence North 66 degrees 51 minutes 51 seconds West 35.85 feet to a point; thence North 59 degrees 25 minutes 51 seconds West 350.36 feet to the point of termination.

4) Option and Easement Agreement between Estate of Kenneth Aiken and Duke Energy Hot Spring, LLC (predecessor in interest to KGen Hot Spring, LLC) recorded on October 24; 2000 in Book 138, Page 233 as amended by Amended Option and Easement Agreement recorded May 24, 2001 in Book 142, Page 65, affecting the following described property:

A 50 foot wide utility easement being 25 feet each side of the following centerline description to the point of intersection of the subject property line and more particularly described as follows; Commencing at the NE corner of the NW1/4 of Section 13, Township 5 South, Range 18 West, Hot Spring County, Arkansas; thence South 02 degrees 10 minutes 48 seconds West along East line of said NW1/4 949.18 feet to the point of beginning; thence North 75 degrees 48 minutes 22 seconds West 2695.60 feet to a point lying South 02 degrees 20 minutes 20 seconds West 249.89 feet of NW corner of said NW1/4 and the point of termination.

5) Easement Agreement by Ramona Jean Hearne, Gail H. McClure, Cecelia Addington and


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Duke Energy Hot Spring, LLC (predecessor in interest to KGen Hot Spring, LLC) recorded June 1, 2001 at Book 142, Page 295 and amended by Correction Easement Agreement recorded August 13, 2002 at Book 151, Page 821, affecting the following described property:

A 50 foot utility easement being 25 feet on each side of the following centerline description: Commence at the NE corner of Section 14, Township 5 South, Range 18 West, Hot Spring County, Arkansas; thence South 02 degrees 20 minutes 20 seconds West along the East line of said Section 14 a distance of 249.89 feet to the point of beginning; thence North 76 degrees 16 minutes 29 seconds West 1141.95 feet to a point on the North line of said Section 14 and the point of termination.


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EXHIBIT CTO


Permitted Encumbrances

1. Tract A: one half interest in all gravel on and under said land as reserved by Flora B. Adams in Warranty Deed from Leon Hardwick and Milrene R. Hardwick, dated November 10, 1955, filed for records November 16, 1955, recorded in Book 93, page 521, records of Hot Spring County, Arkansas.

2. Right of Way in favor of Arkla Energy Resources, dated February 20, 1990, filed March 5, 1990 and recorded in Miscellaneous Book 73, page 497, records of Hot Spring County, Arkansas.

3. Easement and Assignment of Easement to Charles C. Hall and Joyce Hall, dated October 2, 1997, filed October 3, 1997 and recorded in Miscellaneous Book 117, page 965, records of Hot Spring County, Arkansas.

4. Wetlands Mitigation Restrictive Covenants executed by Duke Energy Hot Springs, LLC, filed July 22, 2002 and recorded in Miscellaneous Book 151, page 225, records of Hot Spring County, Arkansas.

5. Tract B: Easement in favor of Southwestern Bell Telephone Company, filed April 19, 1955 and recorded in Book 57, page 62, records of Hot Spring County, Arkansas.

6. Tract C: Conditions and reservation of all mineral and mineral rights in, on or under said land as contained in Deed from IP Timberlands Operating Company, Ltd. to Sustainable Forests, LLC, dated April 3, 1998, filed June 22, 1998 and recorded in Book 262, page 777 and Book 262, page 773, records of Hot Spring County, Arkansas.

7. Mineral reservation of one-half of all oil, gas and minerals set forth in Warranty Deed from the heirs of William Kilpatrick to H.C. Cabe and J.C. Cabe, filed October 18, 1943 in Book 71, page 413, records of Hot Spring County, Arkansas.

8. Mineral reservation of one-fourth of all oil, gas and minerals set forth in Correction Mineral Deed from Cabe Land Company to Cabe Cattle Company, filed March 20, 1975 in Book 177, page 639, records of Hot Spring, Arkansas.

9. Right of Way to Arkla Energy Resources from IP Timberlands Operating Company, filed July 26, 1990 in Book 75, page 769, records of Hot Spring County, Arkansas. NOTE: Affects easement only.

10. Easement in favor of Reliant Energy Gas Transmission Company, filed October 28, 2002 and recorded in Miscellaneous Book 142, page 41 and Book 153, page 399, records of


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Hot Spring County, Arkansas.

11. Substation Easement Agreement executed by and between Hot Spring County, Arkansas and Entergy Arkansas, Inc., filed January 17, 2002 and recorded in Miscellaneous Book 147, page 141, records of Hot Spring County, Arkansas.

12. Right of Way from Hot Spring County, Arkansas to Entergy Arkansas, Inc., filed November 27, 2002 and recorded in Miscellaneous Book 154, page 147, records of Hot Spring County, Arkansas.

13. Tract D: An undivided one-half interest in all gravel on and under said lands reserved by previous owner in Warranty Deed, of record in Book 93, page 521, records of Hot Spring County, Arkansas.

14. Twenty foot easement described in Warranty Deed executed by George L. McClure, et al to Bobby H. Higgins, of record in Book 189, page 593, records of Hot Spring County, Arkansas.

15. Right of Way in favor of Arkla Energy Resourced, filed May 16, 1990 in Miscellaneous Book 73, page 651, records of Hot Spring County, Arkansas.

16. Right of Way in favor of Arkla Energy Resources, filed March 5, 1990 in Miscellaneous Book 73, page 497, records of Hot Spring County, Arkansas. (Affects easement)

17. Easement and Assignment of Easement in favor of Charles C. Hall and Joyce Hall, filed October 3, 1997 in Miscellaneous Book 117, page 965, records of Hot Spring County, Arkansas.

18. Easement in favor of Arkla Energy Resources filed March 5, 1990 in Miscellaneous Book 73, page 489, records of Hot Spring County, Arkansas. (Affects Kizer Water Intake)

19. Easement in favor of Arkla Energy Resources filed March 5, 1990 in Miscellaneous Book 73, page 501, records of Hot Spring County, Arkansas. (Affects Kizer Water Intake)

20. Any title or rights asserted by anyone including, but not limited to persons, corporations, governments or other entities to land comprising the shores or bottoms of navigable streams, lakes, bays or riparian rights, if any. Any adverse claim to any part of said land which has been created by artificial means or has accreted to such portion so created.

21. Any portion of subject property lying within the bounds of the Ouachita River.

22. Wetlands Mitigation Restrictive Covenant executed by Duke Energy Hot Spring, LLC filed for record August 22, 2001 in Miscellaneous Book 144, page 91, records of Hot Spring County, Arkansas.

23. Wetlands Mitigation Restrictive Covenant, executed by Duke Energy Hot Spring, LLC,


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filed March 25, 2002 in Miscellaneous Book 148, page 693, records of Hot Spring County, Arkansas.

24. Easement from Carl Robbins and Ola Robbins, filed November 15, 1978 in Miscellaneous Book 38, page 241 to the present and future owners of any or all lands described in Deed from D.W. Hoskins to George L. McClure and W.H. McClure in Deed Book 182, page 799, records of Hot Spring County, Arkansas.

25. Tract E: An undivided one-half interest in all gravel on and under said lands reserved by previous owner in Warranty Deed, filed November 16, 1955 in Book 93, page 521, records of Hot Spring County, Arkansas.

26. Twenty foot easement in Warranty Deed from George L. McClure, et al to Bobby H. Higgins, filed May 11, 1978 in book, 189, page 593, records of Hot Spring, Arkansas.

27. Right of Way in favor of Arkla Energy Resources, filed May 16, 1990 in Book 73, page 651, records of Hot Spring County, Arkansas.

28. Easement from Carl Robbins and Ola Robbins, filed November 15, 1978 in Miscellaneous Book 38, page 241 to the present and future owners of any or all lands described in Deed from D.W. Hoskins to George L. McClure and W.H. McClure in Deed Book 182, page 799, records of Hot Spring County, Arkansas.

29. Option and Easement Agreement between Bobby Higgins and Alice Higgins, Owners and Duke Energy Hot Spring, LLC, filed November 27, 2000 and Miscellaneous Book 138, page 785, records of Hot Spring County, Arkansas.

30. Option and Easement Agreement between Bobby Higgins and Alice Higgins, Owners and Duke Energy Hot Spring, LLC, filed June 20, 2001 in Miscellaneous Book 142, page 645, records of Hot Spring County, Arkansas.

31. Wetlands Mitigation Restrictive Covenants filed July 22, 2002 in Miscellaneous Book 151, page 225, records of Hot Spring County, Arkansas.

32. Concurrent rights of other parties in title in and to the easements described in Schedule A.

33. No insurance is given under this Policy for any property which may have been acquired as a result of accretion or other means of addition to the property which would result in additional property in excess of the original contour line.

34. Any title or rights asserted by anyone, including, but not limited to persons, corporations, governments, or other entities, to lands comprising the shores or bottoms of navigable streams, lakes, bays, or riparian rights, if any. Any adverse claim to any part of said lands which has been created by artificial means or has accreted to such portions so created.

35. Rights of upper and lower riparian owners in and to the use of the waters of Ouachita


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River and the natural flow thereof.

36. Riparian rights incident to the premises.

37. Title to that portion of the property lying below the mean high water mark of Ouachita River.

38. Rights of the United States of America, State of Arkansas, and the public generally in and to that portion of the property lying below the mean high water mark of Ouachita River.

39. Rights, if any, of the public to use as a public beach or recreation area any part of the land lying between the body of water abutting the subject property and the natural line of vegetation, bluff, extreme high water line, or other apparent boundary line separating the publicly used area from the upland private area.

40. Rights, if any, of the property owners abutting the Ouachita River in and to the waters of the Ouachita River and in and to the bed thereof; also boating and fishing rights of property owners abutting the Ouachita River or the stream of water leading thereto or therefrom.

41. Terms and conditions of Easement in favor of George L. McClure and W.H. McClure and their wife, filed November 15, 1978 in Book 38, page 241, records of Hot Spring County, Arkansas.

42. Terms and conditions of Road Right of Way Easement in Favor of Duke Energy Hot Spring, LLC, filed December 12, 2000 in Book 139, page 5, records of Hot Spring County, Arkansas.

43. Terms and conditions of Pipeline Right of Way Easement in Favor of Duke Energy Hot Spring, LLC, filed June 20, 2001 in Book 142, page 29, records of Hot Spring County, Arkansas.

44. Amended Option and Easement Agreement by and between the Estate of Kenneth Aiken and Duke Energy Hot Spring, LLC, filed May 24, 2001 in Book 142, page 65, records of Hot Spring County, Arkansas.

45. Amended Option and Easement Agreement by and between McClure, Inc. and Duke Energy Hot Spring, LLC, filed May 29, 2001 in Book 142, page 199, records of Hot Spring County, Arkansas.

46. Easement Agreement from Ramona Jean Hearne and Gail H. McClure and Cecilia Addington to Duke Energy Hot Spring, LLC, filed June 1, 2001 in Book 142, page 195 and Correction thereof, filed August 13, 2002 in Book 151, page 821, records of Hot Spring County, Arkansas.

47. Easement Agreement from McClure, Inc. to Duke Energy Hot Spring, LLC, filed June 20,


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2001 in Book 142, page 637, records of Hot Spring County, Arkansas.

48. Easement Agreement from McClure, Inc. to Duke Energy Hot Spring, LLC, filed June 20, 2001 in Book 142, page 641, records of Hot Spring County, Arkansas.

49. Grant of Pipeline Easement from Hot Spring County, Arkansas to Texas Eastern Transmission, LP, filed December 15, 2010 in Book 211, page 295, records of Hot Spring County, Arkansas, as to Tract C.

50. Temporary Staging Area Agreement by and between Hot Spring County, Arkansas and Texas Eastern Transmission, LP, dated November 1, 2010, filed December 15, 2010 in Book 211, page 289, records of Hot Spring County, Arkansas, as to Tract C.


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THIS INSTRUMENT PREPARED BYAND AFTER RECORDING RETURN TO:Scott D. MorganEntergy Services, Inc.639 Loyola Avenue, 22nd FloorMail Code: L-ENT-22ANew Orleans, LA 70113


KNOW ALL MEN BY THESE PRESENTS:

THAT HOT SPRING COUNTY, ARKANSAS, a political subdivision under the Constitution and laws of the State of Arkansas (“Grantor”), for and in consideration of the sum of One Thousand Dollars ($1,000.00) and other good and valuable consideration, in hand paid by ENTERGY ARKANSAS, a (“Grantee”), the receipt of which is hereby acknowledged, does hereby GRANT, BARGAIN, SELL and CONVEY unto Grantee, and unto its successors and assigns forever, all of Grantor’s interest, right and title in and to (A) the real property situated in Hot SpringCounty, Arkansas, described as set forth in Exhibit A attached hereto and incorporated herein, together with all rights, benefits, privileges, easements, tenements, hereditaments and appurtenances thereon or in any way appertaining to such real property (collectively, the “Real Property”) and (B) the rights-of-way and/or easements described on Exhibit B attached hereto and incorporated herein (the “Easements”; together with the Real Property, collectively, the “Property”) , the possession and delivery of which Property Grantee acknowledges.

The warranty herein is subject to the “Permitted Encumbrances” as described on Exhibit Cattached hereto and incorporated herein.

This transfer is made without any warranty whatsoever as to the condition, merchantability, usage or suitability or fitness for a particular purpose or otherwise of the Property and other rights transferred and/or assigned herein, whether express or implied, not even for the return of the purchase price or any part thereof, and Grantee hereby waives all such warranties. Grantee declares that it has had ample opportunity to examine the Property in connection with the use which the Grantee intends to make of such Property. Grantee declares that (i) it accepts said property “as is,” “where is,” and “with all faults”, and (ii) it specifically and particularly waives all claims or causes of actions based on any and all warranties and representations imposed as a matter of law as to the condition, merchantability, usage or suitability or fitness for a particular purpose or otherwise. Notwithstanding the foregoing, nothing in the above waivers is intended to or shall be deemed or construed to amend, abridge, modify or negate any of the express representations and warranties of KGen Hot Spring LLC (collectively, the “Surviving Warranties”) set forth in that certain Asset Purchase Agreement, dated as of April 28, 2011, by and between KGen Hot Spring LLC and Grantee (the “Asset Purchase Agreement”), or any Ancillary Agreement (as defined in the Asset Purchase Agreement) to which KGen Hot Spring LLC is a party, but the Surviving Warranties are not intended to run with the Property, do not create any resolutory conditions with regard to the subject conveyance and do not give rise to any right of rescission in favor of Grantee.


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I certify under penalty of false swearing that the legally correct amount of documentary stamps have been placed on this instrument. Exempt or no consideration paid if none shown.GRANTEE OR AGENT: GRANTEE’S ADDRESS:

GRANTEE’S SIGNATURE


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TO HAVE AND TO HOLD the Property unto Grantee and unto its successors and assigns forever, with all appurtenances thereunto belonging.

And Grantor hereby covenants with Grantee that it will forever warrant and defend the title to the Property, subject to the “Permitted Encumbrances” as described on Exhibit C attached hereto and incorporated herein, against all claims suffered or incurred by Grantor, but against none other.

EXECUTED this _____ day of ____________, 201__.

GRANTOR:

HOT SPRING COUNTY, ARKANSASBy: _______________________________Name:Title: County Judge

ATTEST:

_______________________County Clerk

(SEAL)

ACKNOWLEDGMENT

STATE OF ____________________COUNTY OF ____________________

Personally appeared before me, the undersigned authority in and for the said county and state, on this ______ day of _________________, 201__, within my jurisdiction, the within named ______________________________ and _____________, County Judge and County Clerk, respectively, of HOT SPRING COUNTY, ARKANSAS, a a political subdivision under the Constitution and laws of the State of Arkansas, to me personally well known, who stated they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the County and further stated and acknowledged that they had so signed, executed and delivered the foregoing instrument for the considerations, uses and purposes therein mentioned and set forth.

In witness whereof, I hereunto set my hand and official seal.

Notary Public

My commission expires: (SEAL)


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EXHIBIT ATO


Legal Description of Real Property

That portion of the Real Property described in Exhibit A of the Special Warranty Deed from KGen Hot Spring LLC, as grantor, attached to the Asset Purchase Agreement as Exhibit C (the “KGen Hot Spring Deed”) which is owned by Hot Spring County, Arkansas and leased to KGen Hot Spring LLC (the “County Property”). The County Property will be deleted from KGen Hot Spring Deed.


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EXHIBIT BTO


Easements

None.


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EXHIBIT CTO


Permitted Encumbrances

Those Permitted Encumbrances listed on Exhibit C to the KGen Hot Spring Deed which affect the County Property (the “County Permitted Encumbrances”). The County Permitted Encumbrances will be deleted from the KGen Hot Spring Deed.


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EXHIBIT D

#4837-0820-0969

FORM OF ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this "Agreement"), is made and entered into as of this ____ day of ____________, by and among ENTERGY ARKANSAS, INC., an Arkansas corporation ("Purchaser"), KGEN HOT SPRING LLC, a Delaware limited liability company("Seller"), and SUNTRUST BANK, a Georgia banking corporation, as escrow agent (the "Escrow Agent"). Purchaser, Seller and the Escrow Agent are each referred to herein as a "Party" and collectively as the "Parties."

BACKGROUND

A. Purchaser, Seller and, solely with respect to Section 6.6, Section 6.12, Section 6.15(c), Section 10.3 and Section 11.12 of the Purchase Agreement (as defined below), KGen Power Corporation, a Delaware corporation, have entered into an Asset Purchase Agreement dated as of April 28, 2011 (the "Purchase Agreement"), pursuant to which, among other things, Purchaser will purchase from Seller all of Seller's right, title and interest in and to the Project and certain related properties and assets and, in connection therewith, the assumption by Purchaser of certain related liabilities of Seller.

B. Purchaser and Seller have agreed to establish an escrow fund pursuant to Section 3.3 of the Purchase Agreement, providing for the delivery by Purchaser on the Closing Date to the Escrow Agent of the sum of Thirty Million Dollars ($38,000,000) in cash (the "Escrow Amount").

C. The Escrow Agent is willing to act as escrow agent under this Agreement.

AGREEMENT

In consideration of the premises and the mutual promises and agreements contained herein, the Parties, intending to be legally bound, hereby agree as follows:

1. Definitions. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Purchase Agreement.

2. The Escrow Agent Appointment. Purchaser and Seller hereby appoint and designate SunTrust Bank as the Escrow Agent, to receive, hold, administer, invest and distribute the Escrow Fund (as hereinafter defined) in accordance with the terms of this Agreement. The Escrow Agent hereby accepts its appointment as the Escrow Agent and agrees to hold, administer, invest, and disburse the Escrow Fund in accordance with the terms hereof.

3. Escrow Fund. Simultaneously with the execution of this Agreement, Purchaser has delivered to the Escrow Agent, by wire transfer of immediately available funds, the amount of Thirty Million Dollars ($38,000,000) (such sum, as adjusted from time to time pursuant to the terms hereof, being referred to herein as the "Escrow Fund"). The Escrow Fund shall secure the indemnification obligations of Seller with respect to any amounts payable pursuant to Article IX of the Purchase Agreement. The foregoing obligations being secured by the Escrow Fund shall


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2#4837-0820- 0969

hereinafter be referred to, individually, as an "Escrow Claim" and, collectively, as "Escrow Claims." This Agreement shall not change or modify in any way the events or circumstances which give rise to the obligation of Purchaser or Seller to make any payments pursuant to the Purchase Agreement, but shall solely provide Purchaser security therefore. All interest or other income earned from the investment of the Escrow Funds or any portion thereof (the "Earnings") shall not become part of the Escrow Fund and shall not be made available to secure or satisfy any Escrow Claims.

3.1 Investment of Escrow Fund. Unless otherwise instructed in joint written instructions signed by individuals entitled to deliver written instructions on behalf of each of Purchaser and Seller (which individuals shall be identified in the most recent Certificates of Incumbency for Purchaser and Seller, as contemplated by Section 5.12), the Escrow Agent shall invest the Escrow Fund, in accordance with the instructions set forth on Exhibit A attached hereto, in United States-domiciled money market mutual funds that comply with Rule 2a-7 of the Investment Company Act of 1940, as amended, and that offer daily purchase and redemption and strive to maintain a constant $1.00 net asset value (NAV) per share; provided, however, that with respect to any amount retained past the Final Release Date in respect of any outstanding Certificate of Instruction (as defined below), such amounts will continue to be invested in the same manner until such amounts are reasonably expected to be released. All Earnings from the Escrow Fund shall be disbursed by the Escrow Agent to Seller upon receipt of such earnings by the Escrow Agent. On or before the execution and delivery of this Agreement, each of Seller and Purchaser shall provide to the Escrow Agent a completed Form W-9. Except as contemplated pursuant to Section 4, the Escrow Agent shall have no liability for any loss or diminution in the Escrow Fund resulting from investments made in accordance with the provisions of this Agreement. Notwithstanding anything to the contrary herein provided, the Escrow Agent shall have no duty to prepare or file any federal or state tax report or return with respect to the Escrow Fund or any Earnings; provided, that Escrow Agent will be required, in accordance with applicable law, to provide to Seller a Form 1099 with respect to Seller's earnings on the Escrow Fund

3.2 Claims Against the Escrow Fund.

(a) Concurrently with the delivery to Seller of a Notice of Third Party Claim or an Indemnity Notice pursuant to Section 9.6 of the Purchase Agreement, Purchaser will deliver to the Escrow Agent a certificate in substan-tially the form of Annex I attached hereto (a "Certificate of Instruction"). If the amount of Purchaser's indemnifiable Loss with respect to the claim is not known at the time of delivery of the Certificate of Instruction, then Purchaser shall include its reasonable good faith estimate of the amount of its indemnifiable Losses in the Certificate of Instruction. No Certificate of Instruction may be delivered by Purchaser after the close of business on the Business Day (as defined below) immediately preceding [_____, 20__] (the "Final Release Date")1. The Escrow Agent shall give written notice to Seller of its receipt of a Certificate of Instruction not later than the second Business Day next following receipt thereof,

1 Final Release Date to be the 42 month anniversary of Closing.


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3#4837-0820- 0969

together with a copy of such Certificate of Instruction. "Business Day" means any day other than a Saturday, Sunday or any other day on which banking institutions in the State of Georgia are authorized or required by law, regulation or executive order to be closed.

(b) If the Escrow Agent (i) shall not, within thirty (30) calendar days following its receipt of a Certificate of Instruction (the "Objection Period"), have received from Seller a certificate in substantially the form of Annex II attached hereto (an "Objection Certificate") disputing Seller's obligation to pay the Owed Amount referred to in such Certificate of Instruction (and Seller shall deliver a copy of any such Objection Certificate to Purchaser concurrently with the delivery to Purchaser of Seller's dispute of its liability with respect to a claim pursuant to Section 9.6 of the Purchase Agreement), or (ii) shall have received such an Objection Certificate within the Objection Period and shall thereafterhave received either (x) a certificate from Purchaser and Seller substantially in the form of Annex III attached hereto (a "Resolution Certificate") stating that Purchaser and Seller have agreed that the Owed Amount referred to in such Certificate of Instruction (or a specified portion thereof) is payable to the Purchaser Group or (y) a copy of a Final Decision (as defined below) (accompanied by a certificate of Purchaser substantially in the form of Annex IV attached hereto (a "Final Decision Certificate")) stating that the Owed Amount referred to in such Certificate of Instruction (or a specified portion thereof) is payable to the Purchaser Group by Seller, then the Escrow Agent shall, on the second Business Day next following (A) the expiration of the Objection Period or (B) the Escrow Agent's receipt of a Resolution Certificate or a Final Decision Certificate, as the case may be, pay over to Purchaser from the Escrow Fund, by wire transfer of immediately available funds to a bank account of Purchaser's designation, the amount set forth in said Certificate of Instruction or, if such Resolution Certificate or Final Decision Certificate specifies that a lesser amount than such Owed Amount is payable, such lesser amount.

(c) The Escrow Agent shall give written notice to Purchaser of its receipt of an Objection Certificate not later than the second Business Day following receipt thereof, together with a copy of such Objection Certificate. The Escrow Agent shall give written notice to Seller of its receipt of a Final Decision Certificate not later than the second Business Day next following receipt thereof, together with a copy of such Final Decision Certificate.

(d) Upon the payment by the Escrow Agent of the Owed Amount referred to in a Certificate of Instruction, such Certificate of Instruction shall be deemed cancelled. Upon the receipt by the Escrow Agent of a Resolution Certificate or a Final Decision Certificate and the payment by the Escrow Agent of the Owed Amount referred to therein, the related Certificate of Instruction shall be deemed cancelled.

(e) Upon Purchaser's determination that it has no Escrow Claim or has released its Escrow Claim with respect to an Owed Amount referred to in a


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4#4837-0820- 0969

Certificate of Instruction (or a specified portion thereof), Purchaser will promptly deliver to the Escrow Agent a certificate substantially in the form of Annex V attached hereto (a "Purchaser Cancellation Certificate") canceling such Certificate of Instruction (or such specified portion thereof, as the case may be), and such Certificate of Instruction (or portion thereof) shall thereupon be deemed cancelled. The Escrow Agent shall give written notice to Seller of its receipt of a Purchaser Cancellation Certificate not later than the second Business Day next following receipt thereof, together with a copy of such Purchaser Cancellation Certificate.

(f) Upon receipt of a Final Decision stating that none of the Owed Amount referred to in a Certificate of Instruction as to which Seller delivered an Objection Certificate within the Objection Period is payable to the Purchaser Group by Seller, Seller may deliver a copy of the Final Decision (accompanied by a certificate of Seller substantially in the form of Annex VI attached hereto (a "Seller Cancellation Certificate")) cancelling such Certificate of Instruction, and such Certificate of Instruction shall thereupon be deemed cancelled. The Escrow Agent shall give written notice to Purchaser of its receipt of a Seller Cancellation Certificate not later than the second Business Day next following receipt thereof, together with a copy of such Seller Cancellation Certificate.

(g) "Final Decision" means a written settlement signed jointly by Seller and Purchaser, or the entry of a judgment by a court of competent jurisdiction in accordance with Section 11.6 of the Purchase Agreement that has become final and non-appealable (or final decision of an arbitrator in a binding arbitration proceeding, if applicable) with respect to an Escrow Claim. The Escrow Agent shall be entitled to assume conclusively and without independent investigation that evidence of a copy of a written settlement agreement signed by Purchaser and Seller or a copy of a judgment by a court or arbitrator is sufficient and shall have no duty to determine whether any such Final Decision complies with the Purchase Agreement.

3.3 Release of Escrow Fund.

(a) On [_______, 20__]2 (the "First Release Date"), the Escrow Agent shall distribute to Seller, by wire transfer of immediately available funds to a bank account of Seller's designation, an amount (the "First Period Release Amount") equal to the positive difference, if any, of (i) the amount then on deposit in the Escrow Fund minus (ii) an amount (the "First Release Date Required Amount") equal to the greater of (A) the sum of any amounts designated in Certificates of Instruction received by the Escrow Agent prior to the First Release Date that have not been cancelled in accordance with paragraph (d), (e) or (f) of Section 3.2 (such sum, the "FRD Contested Sum") and (B) $26,000,000;

2 First Release Date to be the first day after the 12 month anniversary of Closing.


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5#4837-0820- 0969

(b) On [_______, 20__]3 (the "Second Release Date"), the Escrow Agent shall distribute to Seller, by wire transfer of immediately available funds to a bank account of Seller's designation, an amount (a "Second Period Release Amount") equal to the positive difference, if any, of (i) the amount then on deposit in the Escrow Fund minus (ii) an amount (the "Second Release Date Required Amount") equal to the greater of (A) the sum of any amounts designated in Certificates of Instruction received by the Escrow Agent prior to the Second Release Date that have not been cancelled in accordance with paragraph (d), (e) or (f) of Section 3.2 (such sum, the "SRD Contested Sum") and (B) $12,200,000; and

(c) On the Final Release Date, the Escrow Agent shall distribute to Seller, by wire transfer of immediately available funds to a bank account of Seller's designation, all amounts that remain in the Escrow Fund (the "Final Release Date Amount") less an amount equal to the sum of any amounts designated in Certificates of Instruction received by the Escrow Agent prior to the Final Release Date that have not been cancelled in accordance with paragraph (d), (e) or (f) of Section 3.2. If at any time after the Final Release Date the entire balance remaining in the Escrow Fund exceeds the sum at that time of the amounts designated in Certificates of Instruction received by the Escrow Agent prior to the Final Release Date that have not been cancelled in accordance with paragraph (d), (e) or (f) of Section 3.2, then the Escrow Agent shall promptly pay over to Seller from the Escrow Fund, by wire transfer of immediately available funds to a bank account of Seller's designation, the amount of such excess. At such time on or following the Final Release Date as all Certificates of Instruction received by the Escrow Agent prior to the Final Release Date have been cancelled in accordance with paragraph (d), (e) or (f) of Section 3.2, the Escrow Agent shall promptly pay over to Seller the balance in the Escrow Fund, by wire transfer of immediately available funds to a bank account of Seller's designation. Prior to paying over any amount to Seller pursuant to this Section 3.3, the Escrow Agent shall send prior written notice to Purchaser of such payment at least three (3) Business Days prior to the Final Release Date or other expected payment date, as applicable.

(d) Release of Reserved Amounts. If on any date occurring on or after the First Release Date but prior to the Second Release Date, an Escrow Claim that forms a part of the FRD Contested Sum is finally resolved, the Escrow Agent shall, after payment to Purchaser of any amounts due to Purchaser in connection with such final resolution, recalculate the First Period Release Amount as of such date of resolution and shall, on the second Business Day following such resolution, distribute to Seller, by wire transfer of immediately available funds to a bank account of Seller's designation, the First Period Release Amount, if any, calculated as of such day. If on any date occurring on or after the Second Release Date but prior to the Final Release Date, an Escrow Claim that forms a part of the SRD Contested Sum is finally resolved, the Escrow Agent shall, after

3 Second Release Date to be the first day after the 18 month anniversary of Closing.


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payment to Purchaser of any amounts due Purchaser in connection with such final resolution, recalculate the Second Period Release Amount as of such date of resolution and shall, on the second Business Day following such resolution, distribute to Seller, by wire transfer of immediately available funds to a bank account of Seller's designation, the Second Period Release Amount, if any, calculated as of such day.

(e) Termination of Escrow Fund. The escrow provided for hereunder shall terminate upon the disbursement of the Escrow Fund pursuant to the terms of this Agreement.

3.4 Joint Written Instructions. In addition to the distributions described above, the Escrow Agent shall disburse amounts from the Escrow Fund as instructed in any joint written instructions signed by Purchaser and Seller and delivered to the Escrow Agent. Purchaser and Seller agree to execute and deliver joint written instructions to the Escrow Agent in order to carry out the provisions of this Section 3 of this Agreement and Article X of the Purchase Agreement on a prompt and reasonable basis, all subject to their respective rights under the Purchase Agreement and this Agreement.

4. Escrow Agent.

4.1 Duties. In performing its duties under this Agreement or upon the claimed failure to perform its duties hereunder, the Escrow Agent shall have no liability except for the Escrow Agent's willful misconduct or gross negligence. The Escrow Agent's sole responsibility shall be for the safekeeping and disbursement of the Escrow Fund and the Earnings, in accordance with the terms of this Agreement. The Escrow Agent shall have no implied duties or obligations and shall not be charged with knowledge or notice of any fact or circumstance not specifically set forth herein. The Escrow Agent shall be entitled to rely upon and shall be protected in acting upon any request, instruction, statement or other instrument, not only as to its due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein, which the Escrow Agent shall in good faith believe to be genuine, to have been signed or presented by the Person or parties purporting to sign the same and to conform to the provisions of this Agreement. In no event shall the Escrow Agent be liable for incidental, indirect, special, consequential or punitive damages. The Escrow Agent shall not be obligated to take any legal action or to commence any proceeding in connection with the Escrow Fund, any account in which the Escrow Fund is deposited, or this Agreement, or to appear in, prosecute or defend any such legal action or proceeding. The Escrow Agent may consult legal counsel selected by it in the event of any dispute or question as to the construction of any of the provisions hereof or of any other agreement or of its duties hereunder, and shall incur no liability and shall be fully protected from any liability whatsoever in acting in accordance with the advice, opinion or instruction of such counsel. The Escrow Agent shall not be required to take notice of and shall have no obligations or responsibilities in connection with the Purchase Agreement, the transactions contemplated thereby or any other agreement between any other parties to the Purchase Agreement, other than pursuant to this Agreement.


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4.2 Indemnification.

(a) From and at all times after the date of this Agreement, Purchaser and Seller, jointly and severally, shall, to the fullest extent permitted by law and to the extent provided herein, indemnify and hold harmless the Escrow Agent and each director, officer, employee, attorney, agent and affiliate of the Escrow Agent (collectively, the "Escrow Agent Indemnified Parties") against any and all actions, claims (whether or not valid), losses, damages, liabilities, costs and expenses of any kind or nature whatsoever (including, without limitation, reasonable attorneys' fees, costs and expenses) incurred by or asserted against any of the Escrow Agent Indemnified Parties from and after the date hereof in connection with the Escrow Agent's performance of its duties and obligations under this Agreement; provided, however, that no Escrow Agent Indemnified Party shall have the right to be indemnified hereunder for any liability (or any cost or expense related to such liability, including, without limitation, attorneys' fees, costs and expenses) finally determined by an arbitrator or a court of competent jurisdiction, subject to no further appeal, to the extent such liability results from the gross negligence or willful misconduct of such Escrow Agent Indemnified Party. If any such action or claim shall be brought or asserted against any Escrow Agent Indemnified Party, such Escrow Agent Indemnified Party shall promptly notify Purchaser and Seller in writing, and Purchaser and Seller shall assume the defense thereof, including the employment of counsel and the payment of all expenses. Such Escrow Agent Indemnified Party shall, in its sole discretion, have the right to employ separate counsel in any such action and to participate in the defense thereof, and the reasonable fees and expenses of such counsel shall be paid by such Escrow Agent Indemnified Party unless (i) Purchaser and Seller agree in writing to pay such fees and expenses, (ii) Purchaser and Seller shall fail to assume the defense of such action or proceeding or shall fail, in the reasonable discretion of such Escrow Agent Indemnified Party, to employ counsel reasonably satisfactory to the Escrow Agent Indemnified Party in any such action or proceeding, or (iii) the named parties to any such action or proceeding (including any impleaded parties) include both the Escrow Agent Indemnified Party, on the one hand, and Purchaser or Seller, on the other hand, and the Escrow Agent Indemnified Party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to Purchaser or Seller. All such reasonable fees and expenses payable by Purchaser and Seller pursuant to the foregoing sentence shall be paid from time to time as incurred, both in advance of and after the final disposition of such action or claim. All of the foregoing losses, damages, costs and expenses of the Escrow Agent Indemnified Parties shall be payable by Seller and Purchaser, jointly and severally, upon demand by such Escrow Agent Indemnified Party. The obligations of Purchaser and Seller under this Section 4.2 shall survive any termination of this Agreement and the resignation or removal of the Escrow Agent.

(b) The Parties agree that neither the payment by Purchaser or Seller of any claim by the Escrow Agent for indemnification hereunder nor the


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disbursement of any amounts to the Escrow Agent from the Escrow Fund in respect of a claim by the Escrow Agent for indemnification shall impair, limit, modify or affect, as between Purchaser and Seller, the respective rights and obligations of Seller, on the one hand, and Purchaser, on the other hand, under this Agreement. Seller and Purchaser agree solely among themselves that any obligation for indemnification under this Section 4.2 shall be borne by the Party or Parties determined by a court of competent jurisdiction to be responsible for causing the loss, damage, liability, cost or expense against which the Escrow Agent is entitled to indemnification or, if no such determination is made, then one-half by Purchaser and one-half by Seller.

4.3 Disputes. If, at any time, there shall exist any dispute between Purchaser and Seller with respect to the holding or disposition of any portion of the Escrow Fund or any other obligations of the Escrow Agent hereunder, or if at any time the Escrow Agent is unable to determine, to the Escrow Agent's sole satisfaction, the proper disposition of any portion of the Escrow Fund or the Escrow Agent's proper actions with respect to its obligations hereunder, or if Purchaser and Seller have not, within 30 days of the furnishing by the Escrow Agent of a notice of resignation pursuant to Section 4.4, appointed a successor escrow agent to act hereunder, then the Escrow Agent may, in its sole discretion, take either or both of the following actions:

(a) suspend the performance of any of its obligations under this Agreement until such dispute or uncertainty shall be resolved to the sole satisfaction of the Escrow Agent or until a successor escrow agent shall have been appointed (as the case may be); or

(b) petition (by means of an interpleader action or any other appropriate method) any court of competent jurisdiction, for instructions with respect to such dispute or uncertainty, and pay into or deposit with such court all disputed escrowed funds held by it in the Escrow Fund for holding and disposition in accordance with the instructions of such court, and the Escrow Agent shall thereupon be discharged from all further obligations as the Escrow Agent under this Agreement.

The Escrow Agent shall have no liability to Purchaser, Seller or any other Person with respect to any such suspension of performance or disbursement into court, specifically including any liability that may arise, or be alleged to have arisen, out of or as a result of any delay in the disbursement of funds held in the Escrow Fund or any delay in or with respect to any other action required or requested of the Escrow Agent.

4.4 Resignation of Escrow Agent. The Escrow Agent may resign from the performance of its duties hereunder at any time by giving 30 days' prior written notice to Purchaser and Seller or may be removed, with or without cause, by Purchaser and Seller, acting jointly, at any time by the giving of ten days' prior written notice to the Escrow Agent. Such resignation or removal shall take effect upon the appointment of a successor escrow agent as provided herein. Upon any such notice of resignation or removal, Purchaser and Seller, acting jointly, shall appoint a successor escrow agent hereunder,


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which shall be a commercial bank, trust company or other financial institution domiciled in the United States and that is a member of the Federal Reserve System with a combined capital and surplus in excess of Ten Billion U.S. Dollars ($10,000,000,000) and with a credit rating of "A" or higher from Fitch and S&P and "A2" or higher from Moody's, unless otherwise agreed by Purchaser and Seller. In the event Purchaser and Seller shall fail to appoint a successor escrow agent within 30 days after the resignation or removal of the Escrow Agent, as contemplated hereby, the Escrow Agent may deposit the Escrow Fund into the registry of a court of competent jurisdiction and shall thereupon be discharged from all further duties as Escrow Agent under this Agreement. Upon the acceptance in writing of any appointment as Escrow Agent hereunder by a successor escrow agent, such successor escrow agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Escrow Agent, and the retiring Escrow Agent shall be discharged from its duties and obligations under this Agreement, but shall not be discharged from any liability for actions taken as Escrow Agent hereunder prior to such succession. After any retiring Escrow Agent's resignation or removal, the provisions of this Agreement shall inure to its benefit as to any actionstaken or omitted to be taken by it while it was Escrow Agent under this Agreement.

4.5 Receipt. By its execution and delivery of this Agreement, the Escrow Agent acknowledges receipt of the Escrow Amount.

4.6 Fees. Seller agrees to compensate the Escrow Agent for its services hereunder in accordance with Schedule I attached hereto and, in addition, shall reimburse the Escrow Agent for all of its reasonable out-of-pocket expenses, including attorneys’ fees, travel expenses, telephone and facsimile transmission costs, postage (including express mail and overnight delivery charges), and copying charges in accordance with Schedule I. Notwithstanding the foregoing, all of the indemnification obligations set forth in Section 4.2 shall be payable upon demand by the Escrow Agent and, with respect to the Escrow Agent, shall be a joint and several obligation of Purchaser and Seller, and, solely as between Purchaser and Seller, shall be paid one-half by Purchaser and one-half by Seller, subject to Section 4.2(b). If Purchaser or Seller is required to pay any amount which, as between them, is the responsibility of the other Party, then Purchaser or Seller, as the case may be, shall be entitled to recover such amount from the other Party. The obligations of Purchaser and Seller under this Section 4.6 shall survive any termination of this Agreement and the resignation or removal of the Escrow Agent.

5. Miscellaneous.

5.1 Notices. All notices, communications and deliveries hereunder must be made in writing signed by or on behalf of the Party making the same and shall be delivered personally or by facsimile transmission, by a national overnight courier service or by registered or certified mail (return receipt requested) (with postage and other fees prepaid) as follows:

To Purchaser: Entergy Arkansas, Inc.c/o Entergy Services, Inc.10055 Grogans Mill Road


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The Woodlands, TX 77380Attn: Vice President, System Planning Telephone No. (281) 297-5477 Facsimile No. (281) 297-3929

with a copy to: Entergy Services, Inc.10055 Grogans Mill Road, Suite 300The Woodlands, TX 77380Attn: Assistant General CounselTelephone No. (281) 297-3575Facsimile No. (281) 297-3947

To Seller: KGen Hot Spring LLCc/o KGen Power Corporation1330 Post Oak BoulevardSuite 1500Houston, Texas 77056Attn: Chief Executive Officer and General Counsel Telephone No.: (713) 979-1900 Facsimile No.: (713) 979-1950

with copies to: KGen Power Corporation1330 Post Oak BoulevardSuite 1500Houston, Texas 77056Attn: General CounselAttn: Chief Executive Officer and General Counsel Telephone No.: (713) 979-1900 Facsimile No.: (713) 979-1950

Milbank, Tweed, Hadley & McCloy LLP1 Chase Manhattan Plaza New York, New York 10005Attn: William B. Bice Telephone No. (212) 530-5622Facsimile No.: (212) 822-5622

If to Escrow Agent: SunTrust BankEscrow ServicesMail Code HDQ-5307919 E. Main Street, 7th FloorRichmond, VA 23219Attention: Nickida DooleyTelephone: 804-782-7610Facsimile: 804-782-5858E-Mail Address: [email protected]


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or to such other representative or at such other address of a Party as such Party may furnish to the other Parties in writing. Any such notice, communication or delivery shall be deemed given or made (a) on the date of delivery, if delivered in person, or (b) upon transmission by facsimile if receipt is confirmed by telephone, (c) on the first Business Day following timely delivery to a national overnight courier service or (d) on the fifth Business Day following it being mailed by registered or certified mail; provided, however, that notwithstanding anything to the contrary herein provided, the Escrow Agent shall not be deemed to have received any notice hereunder prior to the Escrow Agent's actual receipt thereof.

5.2 Time of the Essence; Computation of Time. Time is of the essence for each and every provision of this Agreement. Whenever the last day for the exercise of any privilege or the discharge of any duty under this Agreement shall fall upon a day that is not a Business Day, the Party having such privilege or duty may exercise such privilege or discharge such duty on the next succeeding day which is a regular Business Day.

5.3 Assignment; Successors in Interest. No assignment or transfer by any Party of such Party's rights and obligations under this Agreement shall be made except with the prior written consent of the other Parties to this Agreement. This Agreement will be binding upon and will inure to the benefit of the Parties and their respective successors (including any party which acquires all or substantially all the assets of any of the Parties) and permitted assigns, and any reference to a Party shall also be a reference to the successors and permitted assigns thereof.

5.4 Captions. The titles, captions and table of contents contained in this Agreement are inserted in this Agreement only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision of this Agreement.

5.5 Amendment; Waiver. No modification or amendment of any provision of this Agreement shall be effective unless made in writing referring specifically to this Agreement and duly signed by or on behalf of each of the Parties. Any agreement on the part of a Party to any extension or waiver of any provision of this Agreement shall be valid only if set forth in an instrument in writing signed on behalf of such Party. A waiver by a Party of the performance of any covenant, agreement, obligation, condition, representation or warranty hereof shall not be construed as a waiver of any other covenant, agreement, obligation, condition, representation or warranty hereof. A waiver by any Party of the performance of any act will not constitute a waiver of the performance of any other act or an identical act required to be performed at a later time.

5.6 Construction. The provisions of this Agreement shall be construed according to their fair meaning and neither for nor against any Party hereto irrespective of which Party caused such provisions to be drafted. Each of the Parties acknowledges that it has been represented by an attorney in connection with the preparation and execution of this Agreement.


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5.7 No Limitation. The Parties (other than the Escrow Agent) agree that the rights and remedies of any Party under this Agreement shall not operate to limit any other rights and remedies otherwise available to any party under the Purchase Agreement.

5.8 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement or the terms of this Agreement to produce or account for more than one of such counterparts. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or e-mail shall be effective as delivery of a manually executed counterpart of this Agreement.

5.9 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by Law, each Party hereby waives any provision of Law that renders any such provision prohibited or unenforceable in any respect.

5.10 Governing Law and Choice of Forum. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAWS OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

5.11 Other Transactions with Purchaser or Seller. The Escrow Agent and any stockholder, director, officer or employee of the Escrow Agent may become pecuniarily interested in any transaction in which Purchaser or Seller may be interested, and contract and lend money to Purchaser or Seller and otherwise act as fully and freely as though it were not Escrow Agent under this Agreement. Nothing herein shall preclude the Escrow Agent from acting in any other capacity for Purchaser, Seller or for any other entity.

5.12. Authorized Signatures. Contemporaneously with the execution and delivery of this Agreement and, if necessary, from time to time thereafter, the Parties (other than the Escrow Agent) shall execute and deliver to the Escrow Agent a Certificate of Incumbency substantially in the form of Exhibit B hereto (a "Certificate of Incumbency") for the purpose of establishing the identity and authority of Persons entitled to issue notices, instructions or directions to the Escrow Agent on behalf of each such Party. All notices, instructions or directions to the Escrow Agent on behalf of Purchaser or Seller pursuant to this Agreement must be signed by individuals designated as having authority


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to issue such notices, instructions or directions in the most recent Certificate of Incumbency for Purchaser or Seller, as applicable. Until such time as the Escrow Agent shall receive an amended Certificate of Incumbency replacing any Certificate of Incumbency theretofore delivered to the Escrow Agent, the Escrow Agent shall be fully protected in relying, without further inquiry, on the most recent Certificate of Incumbency furnished to the Escrow Agent. Whenever this Agreement provides for joint written notices, joint written instructions or other joint actions to be delivered to the Escrow Agent, the Escrow Agent shall be fully protected in relying, without further inquiry, on any joint written notice, instructions or action executed by persons named in such Certificate of Incumbency.

* * * * *


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Signature page to Escrow Agreement#4837-0820-0969

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

PURCHASER:

ENTERGY ARKANSAS, INC.an Arkansas corporation

By:____________________________________Name:Title:

SELLER:

KGEN HOT SPRING LLCa Delaware limited liability company

By:____________________________________Name: ______________________________Title: _______________________________

ESCROW AGENT:

SUNTRUST BANKa Georgia banking corporation

By:____________________________________Name: ______________________________Title: _______________________________


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SCHEDULE I

SunTrust Bank, as Escrow Agent

Schedule of Fees & Expenses

Acceptance/Legal Review Fee: $500 – one time only and payable at the time of the bank's attorney review of the escrow agreement

The Legal Review Fee includes review of all related documents and accepting the appointment of Escrow Agent on behalf of SunTrust Bank. The fee also includes setting up the required account(s) and accounting records, document filing, and coordinating the receipt of funds/assets for deposit to the Escrow Account. This is a one-time fee payable upon execution of the Escrow Agreement. As soon as SunTrust Bank's outside counsel begins to review the escrow agreement, the legal review fee is subject to payment regardless if the parties decide to appoint a different escrow agent or a decision is made that the escrow agreement is not needed.

Administration Fee: *$1,000.00 – payable at the time of signing the escrow agreement and on the anniversary date thereafter, if applicable

The Administration Fee includes providing routine and standard services of an Escrow Agent. The fee includes administering the escrow account, performing investment transactions, processing cash transactions (including wires and check processing), disbursing funds in accordance with the Agreement (note any pricing considerations below), and providing trust account statements to applicable parties for a twelve (12) month period. If the account remains open beyond the twelve (12) month term, the parties will be invoiced each year on the anniversary date of the execution of the Escrow Agreement. Additional fees will be billed for processing claim notices and/or objections. Extraordinary expenses, including legal counsel fees, will be billed as out-of-pocket. The Administration Fee is due upon execution of the Escrow Agreement.

Out-of-Pocket Expenses: At Cost

Out-of-pocket expenses such as, but not limited to, postage, courier, overnight mail, insurance, money wire transfer, long distance telephone charges, facsimile, stationery, travel, legal (out-of-pocket to counsel) or accounting, will be billed at cost.

Note: This fee schedule is based on the assumption that the escrowed funds will be invested in the SunTrust Institutional Money Market Deposit Option

SunTrust BankDeborah Spitale404.588.7191

[email protected]


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EXHIBIT A

To: SunTrust Bank

I direct and authorize you to invest all temporary cash and the portion of my account(s) that is appropriate to maintain in cash or cash equivalents in a SunTrust Bank deposit option or Federated Funds money market fund, as follows:

Check One:

SunTrust Institutional Money Market Deposit Option

SunTrust Non-Interest Deposit Option

Federated Prime Obligations Fund (POIXX) Federated Treasury Obligations Fund – Institutional share class (TOIXX)

Federated Tax Free Obligations Fund (TBIXX) Federated Treasury Obligations Fund – Institutional Capital share class (TOCXX)

Federated Municipal Obligations (MOFXX) Federated Government Obligations Fund (GOIXX)

Other: United States Treasury Bills, Treasury Notes or Treasury Bonds with a maturity date not in excess of three months from the date of such investment, or if earlier, the Final Release Date

I acknowledge and consent that:

1. I understand that investments in the SunTrust Institutional Money Market Deposit Option are insured, subject to the applicable rules and regulations of the Federal Deposit Insurance Corporation (the "FDIC"), in the basic FDIC insurance amount of $250,000 through December 31, 2013, including principal and accrued interest up to a total of $250,000*. The Parties understand that deposits in the SunTrust Institutional Money Market Deposit Option are not secured. Further, I understand that the SunTrust Institutional Money Market Deposit Option has monthly withdrawal/disbursement restrictions of a maximum of 6 per month and that should the maximum be reached in any one calendar month, the funds will be moved to a SunTrust Bank non-interest bearing deposit option until the beginning of the following month unless an alternate investment vehicle is selected for this purpose.

Alternate Investment Vehicle: Federated Prime Obligations Fund (POIXX)

2. I may view prospectuses and other Federated fund materials, including fee information, at www.federatedinvestors.com.

3. SunTrust Bank may receive compensation in exchange for services ("fees for services") that it provides to various Federated money market mutual funds. These fees for services shall be in addition to, and will not reduce, SunTrust Bank's compensation. Such fees for services will not be paid directly by your account, but will be paid to SunTrust Bank by Federated. The compensation rate to be paid by Federated for such fees for services shall be 0.10% (10 basis points) annually of the total amount of the account assets invested in the Federated money market mutual fund. If your assets are invested in the Institutional Capital Shares of Federated Treasury Obligations Fund, SunTrust Bank will receive additional fees for services paid by Federated Treasury Obligations Fund in an amount equal to 0.10% (10 basis points) annually of the total amount of the account assets invested in the Federated Treasury Obligation Fund's Institutional Capital Shares. The fees for services are subject to change without notice.

4. I understand no transaction charge will be imposed on the account(s) listed below with respect to that portion of the account(s) invested in Federated Funds;

5. I understand that investment funds, except for the SunTrust Deposit options, are not bank deposits and are not obligations of, or insured, endorsed or guaranteed by any SunTrust Bank or their affiliates, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. I further understand that investment in any mutual fund involves some investment risk, including the possible loss of principal.

6. I have full power to direct and authorize investments in account(s) identified below.

This direction and authorization shall continue in effect until revoked by written instruction delivered to the Bank. Until a replacement fund is provided to the Bank all funds will be held in cash.

Date: April ____, 2011Account Name and Number:


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|Error! Unknown document property name.}

#4837-0820-0969

X X Name (printed or typed) Signature*The standard FDIC insurance amount of $250,000 per depositor is in effect through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except IRAs and other certain retirement accounts, which will remain at $250,000 per depositor.


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EXHIBIT B

Certificate of Incumbency(List of Authorized Representatives)

Client Name: __________________________________________________________________

As an Authorized Officer of the above referenced entity, I hereby certify that each person listed below is an authorized signor for such entity, and that the title and signature appearing beside each name is true and correct.

Name Title Signature Contact Number

IN WITNESS WHEREOF, this certificate has been executed by the duly authorized officer whose name and title are set forth below:

By: __________________________ Date: _____________________Title: ________________________


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#4837-0820-0969

ANNEX I

CERTIFICATE OF INSTRUCTION

to

SUNTRUST BANK,

as Escrow Agent

The undersigned, Entergy Arkansas, Inc., an Arkansas corporation ("Purchaser"), pursuant to Section 3.2(a) of the Escrow Agreement, dated as of _____________, 2011, among Purchaser, KGen Hot Spring LLC, a Delaware limited liability company ("Seller"), and you (terms defined in said Escrow Agreement have the same meanings when used herein), hereby:

(a) certifies that (i) Purchaser or the Purchaser Group has sent to Seller a Notice of a Third Party Claim or an Indemnity Notice pursuant to Section 9.6 of the Purchase Agreement, a copy of which is attached hereto, and (ii) the amount of $___________ (the "Owed Amount") is or may be payable to the Purchaser Group by Seller pursuant to Article IX of the Purchase Agreement by reason of the matter described in such notice of claim; and

(b) instructs you to pay to Purchaser from the Escrow Fund the Owed Amount, by wire transfer of immediately available funds to Purchaser's account at _________________, __________________, _________, _________ (Account No.:_________), (i) unless you receive an Objection Certificate from Seller prior to the expiration of the Objection Period, within two Business Days following the expiration of the Objection Period, or (ii) if you receive an Objection Certificate within the Objection Period, within two Business Days following your receipt of a Resolution Certificate or a Final Decision Certificate.


By:________________________________Name:Title:

Dated:____________, ____


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#4837-0820-0969

ANNEX II

OBJECTION CERTIFICATE

to

SUNTRUST BANK,

as Escrow Agent

The undersigned, KGen Hot Spring LLC, a Delaware limited liability company ("Seller"), pursuant to Section 3.2(b) of the Escrow Agreement, dated as of __________, 2011, among Seller, Entergy Arkansas, Inc., an Arkansas corporation ("Purchaser"), and you (terms defined in said Escrow Agreement have the same meanings when used herein), hereby:

(a) disputes that the Owed Amount referred to in the Certificate of Instruction dated _________, ____ is payable to the Purchaser Group by the undersigned pursuant to Article IX of the Purchase Agreement;

(b) certifies that the undersigned has sent to Purchaser a written statement dated ___________, ____ of the undersigned, a copy of which is attached hereto, disputing its liability to the Purchaser Group for the Owed Amount; and

(c) objects to your making payment to Purchaser as provided in such Certificate of Instruction.


By:________________________________Name:Title:

Dated: _____________, ____


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#4837-0820-0969

ANNEX III

RESOLUTION CERTIFICATE

to

SUNTRUST BANK,

as Escrow Agent

The undersigned, Entergy Arkansas, Inc., an Arkansas corporation ("Purchaser"), and KGen Hot Spring LLC, a Delaware limited liability company ("Seller"), pursuant to Section 3.2(b) of the Escrow Agreement, dated as of _____________, 2011, among Purchaser, Seller and you (terms defined in said Escrow Agreement have the same meanings when used herein), hereby:

(a) certify that (i) Purchaser and Seller have resolved their dispute as to the matter described in the Certificate of Instruction dated __________, ____ and the related Objection Certificate dated ___________, ____ and (ii) the final Owed Amount with respect to the matter described in such Certificates is $______________;

(b) instruct you to pay to Purchaser from the Escrow Fund the Owed Amount referred to in clause (ii) of paragraph (a) above, by wire transfer of immediately available funds to Purchaser's account at ____________________, _________________, ________, ________ (Account No.: ___________), within two Business Days of your receipt of this Certificate; and

(c) agree that the Owed Amount designated in such Certificate of Instruction, to the extent, if any, it exceeds the Owed Amount referred to in clause (ii) of paragraph (a) above, shall be deemed not payable to the Purchaser Group and such Certificate of Instruction is hereby cancelled.


By:________________________________Name:Title:


By:________________________________Name:Title:

Dated:______________, ____


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#4837-0820-0969

ANNEX IV

FINAL DECISION CERTIFICATE

to

SUNTRUST BANK,

as Escrow Agent

The undersigned, Entergy Arkansas, Inc., an Arkansas corporation ("Purchaser"), pursuant to Section 3.2(b) of the Escrow Agreement, dated as of _____________, 2011, among Purchaser, KGen Hot Spring LLC, a Delaware limited liability company ("Seller"), and you (terms defined in said Escrow Agreement have the same meanings when used herein), hereby:

(a) certifies that (i) attached hereto is a Final Decision resolving the dispute between Purchaser and Seller as to the matter described in the Certificate of Instruction dated ____________, ____ and the related Objection Certificate dated ____________, ____ and (ii) the final Owed Amount with respect to the matter described in such Certificates, as provided in such order, is $______________;

(b) instructs you to pay to Purchaser from the Escrow Fund the Owed Amount referred to in clause (ii) of paragraph (a) above, by wire transfer of immediately available funds to Purchaser's account at _____________________, ________________, _______, _______ (Account No.: ____________), within two Business Days of your receipt of this Certificate; and

(c) agrees that the Owed Amount designated in such Certificate of Instruction, to the extent, if any, it exceeds the Owed Amount referred to in clause (ii) of paragraph (a) above, shall be deemed not payable to the Purchaser Group and such Certificate of Instruction is hereby cancelled.


By:________________________________Name:Title:

Dated:______________, ____


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#4837-0820-0969

ANNEX V

PURCHASER CANCELLATION CERTIFICATE

to

SUNTRUST BANK,

as Escrow Agent

The undersigned, Entergy Arkansas, Inc., an Arkansas corporation ("Purchaser"), pursuant to Section 3.2(e) of the Escrow Agreement, dated as of _____________, 2011, among Purchaser, KGen Hot Spring LLC, a Delaware limited liability company ("Seller"), and you (terms defined in said Escrow Agreement have the same meanings when used herein), hereby:

(a) certifies that (i) it hereby releases its claim against Seller with respect to [all] [specify portion] of the Owed Amount designated in the Certificate of Instruction dated _____________, ____ and (ii) as a result the Owed Amount with respect to such Certificate ofInstruction is $__________; and

(b) agrees that such Certificate of Instruction is, to the extent released as provided in clause (i) of paragraph (a) above, cancelled.


By:________________________________Name:Title:

Dated:______________, ____


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#4837-0820-0969

ANNEX VI

SELLER CANCELLATION CERTIFICATE

to

SUNTRUST BANK,

as Escrow Agent

The undersigned, KGen Hot Spring LLC, a Delaware limited liability company ("Seller"), pursuant to Section 3.2(f) of the Escrow Agreement, dated as of __________, 2011, among Entergy Arkansas, Inc., an Arkansas corporation ("Purchaser"), Seller and you (terms defined in said Escrow Agreement have the same meanings when used herein), hereby certifies that (i) attached hereto is a Final Decision resolving the dispute between Purchaser and Seller as to the matter described in the Certificate of Instruction dated ____________, ____ and the related Objection Certificate dated ____________, ____ and (ii) as provided in such order, there is no Owed Amount with respect to the matter described in such Certificates.


By:________________________________Name:Title:

Dated:______________, ____


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EXHIBIT E

#4848-3700-4297

FORM OF POST-CLOSING CONFIDENTIALITY AGREEMENT

This POST-CLOSING CONFIDENTIALITY AGREEMENT (this “Agreement”), dated as of [ ], 201[ ], is by and between KGen Power Corporation, a Delaware corporation (“KGen”), and Entergy Arkansas, Inc., an Arkansas corporation (“Purchaser”). KGen and Purchaser are sometimes hereafter referred to individually as “Party” and collectively as “Parties.” Capitalized terms used but not otherwise defined herein shall have their respective meanings ascribed to them in the Asset Purchase Agreement (as defined below).

R E C I T A L S:

A. KGen Hot Spring LLC, a Delaware limited liability company (“Seller”) and Purchaser have entered into that certain Asset Purchase Agreement, dated as of April 28, 2011 (as may be amended from time to time, the “Asset Purchase Agreement”) pursuant to which Seller has agreed to sell to Purchaser the Purchased Assets.

B. The Parties wish to define in this Agreement their respective rights and obligations with respect to Confidential Information subsequent to the Closing.

A G R E E M E N T:

In consideration of the premises and mutual agreements, covenants, and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the Parties, intending to be bound, agree as follows:

1. Definitions. As used herein, “Confidential Information” means, subject to Section 2 below, all confidential, proprietary or competitively sensitive information relating to the Purchased Assets, including, but not limited to, copies of all data, analyses, documents, materials and other information contained in certain books and records and other items transferred to Purchaser relating to the Purchased Assets retained by Seller pursuant to Section 2.1(h) of the Asset Purchase Agreement and any and all post-Closing written reproductions, summaries, notes, analyses, compilations, studies, documents, and materials prepared by or for Seller or its Representatives to the extent containing, reflecting or based upon, in whole or in part, such data, analyses, documents, materials or other information. Confidential Information may be in any form whatsoever, including, without limitation, writings, computer code or programs, logic diagrams, component specifications, drawings, or other media, and may be written or oral. “Representative” means any Person’s Affiliates, and any of their respective shareholders, members, partners, trustees, directors, officers, employees, agents, contractors, lenders or potential lenders, and representatives, including legal counsel, financial advisors, ratings agency advisors, and accountants.

2. Exceptions. Notwithstanding the provisions of Section 1 above, the term “Confidential Information” shall not include information which:

(i) is or becomes, on or after the date hereof, part of the public domain (including pursuant to any permitted public disclosure under Section 3(a)(i) of this


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Agreement) other than as a result of a disclosure by KGen or any of its Representatives after the date of this Agreement that is not permitted by this Agreement;

(ii) is or becomes, on or after the date hereof, available to KGen on a non-confidential basis from a source that is not prohibited, to KGen’s knowledge, from disclosing such information by any contractual, fiduciary or other legal obligation of non-disclosure; or

(iii) is independently developed by KGen without breaching any of its disclosure or use obligations under this Agreement or any other agreement.

3. Limitations on Disclosure.

(a) After the date hereof, KGen may not disclose any Confidential Information to any other person, including, without limitation, a Governmental Authority, except that, subject to Section 3(b) below, KGen may disclose Confidential Information (i) to any third party to whom KGen is or becomes legally compelled by any governmental, judicial, or regulatory authority with jurisdiction to disclose Confidential Information (e.g., by order, deposition, interrogatory, civil investigative demand, request for documents, subpoena, or similar process or rule of procedure, or by statute, rule, or regulation, or other legal requirement), or if KGen or an Affiliate is compelled by applicable securities laws or a stock exchange listing agreement to disclose Confidential Information, but in either case only to the extent disclosure is required; (ii) to any of its Representatives who are directly involved in and require access to such information in connection with the exercise or discharge of KGen’s rights or obligations under the Asset Purchase Agreement (including investigation or defense of any indemnity claim or actions relating to Excluded Liabilities) and whose use of such information is limited to such purpose; and (iii) to the limited extent authorized in writing by Purchaser. The term “person” as used in this Agreement shall be broadly interpreted to include the media and any individual, corporation, partnership, fund, limited liability company, trust, association, joint venture, unincorporated organization, group, governmental entity or any department, agency or political subdivision thereof, or other entity.

(b) KGen agrees that any of its Representatives to whom Confidential Information is disclosed will be informed of the confidential or proprietary nature thereof and will be required to abide by KGen’s obligations under this Agreement, that any action of its Representatives that is inconsistent with the terms of this Agreement shall constitute a breach by KGen of this Agreement and that, as between the Parties, KGen shall be responsible for any use or disclosure of Confidential Information by KGen or any of its Representatives that is not authorized hereunder. KGen further agrees, at its sole expense, to take all reasonable measures (including, without limitation, court proceedings) to restrain its Representatives from prohibited or unauthorized disclosure or use of the Confidential Information.

(c) If KGen or any of its Representatives is required to disclose Confidential Information or any portions thereof under Section 3(a)(i) above, KGen shall give, to the extent legally permissible, prompt written notice of the existence and circumstances surrounding such required disclosure to Purchaser so that Purchaser may seek, at its sole cost and expense, a


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protective order or other relief in the appropriate forum and/or waive compliance by KGen with the terms of this Agreement; provided that KGen shall not be required to share with Purchaser in such notice any information, work product or communications of any type or nature whatsoever that KGen determines (in good faith) are subject to privilege, including attorney-client and/or work product privileges. If Purchaser determines to seek a protective order or other relief, KGen shall use Commercially Reasonable Efforts to cooperate with Purchaser in such undertaking. If, despite KGen’s compliance with its obligations hereunder, such protective order or other relief is not obtained by the time at which KGen or any of its Representatives are, upon the advice of its legal counsel (including in-house legal counsel), legally compelled to make such disclosure, or Purchaser waives in writing compliance with the provisions hereof, KGen or its Representatives may disclose Confidential Information without liability to Purchaser hereunder; provided that KGen agrees to furnish, and to require its Representatives to furnish, only that portion of the Confidential Information legally required to be disclosed upon the advice of such legal counsel (including in-house legal counsel), and provided, further, that KGen shall exercise Commercially Reasonable Efforts to preserve the confidentiality of the Confidential Information, including, without limitation, to diligently undertake to obtain an appropriate protective order or other reliable assurance that any tribunal to which such Confidential Information is disclosed shall accord the Confidential Information (or other information required to be kept confidential pursuant to this Agreement) confidential treatment, but excluding efforts that in effect would duplicate efforts previously made by Purchaser pursuant to this Section 3(c).

4. Term. This Agreement shall commence on the Closing Date and shall continue in effect for a period of two (2) years from the date thereof, and all obligations hereunder shall terminate and expire upon the expiration of such two (2)-year term.

5. No Warranties. Neither Purchaser nor any of its Representatives makes in this Agreement any representation or warranty as to the Confidential Information, including, without limitation, accuracy or completeness, and no such representation or warranty by Purchaser or any of its Representatives shall be deemed made or exist.

6. Integration Clause. This Agreement embodies all of the understandings, and merges all other or prior agreements, understandings or arrangements between the Parties concerning the subject matter hereof.

7. Assignment. This Agreement may not be assigned by a Party without the other Party’s prior written consent (which shall not be unreasonably withheld, delayed or conditioned), except by any Party in connection with the sale or bona fide transfer of all or substantially all of the business or assets of the assigning Party, provided the assignee agrees in writing to be bound by the terms and conditions hereof. Upon any assignment made in compliance with this Section 7, this Agreement shall inure to and be binding upon each assignee of the assigning Party. All assignments in breach of this Agreement shall be null and void. Nothing is this Agreement is intended to confer any rights or remedies under or by reason of this Agreement on Persons other than the Parties and their respective successors and permitted assigns.

8. Equitable Relief. The Parties agree that the restrictions contained herein are fair and reasonable and necessary to protect the legitimate interests of Purchaser, and that Purchaser would suffer irreparable injury if KGen or any of its Representatives were to violate any


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provision of this Agreement. KGen acknowledges and agrees that, without prejudice to any other right and remedy available to Purchaser at law or in equity, Purchaser shall be entitled to (i) injunctive relief and specific performance of the terms hereunder and (ii) recover all reasonable costs and expenses, including reasonable attorneys’ fees, expert witness fees and other out-of-pocket costs, from KGen if there is a breach or threatened breach of any of the provisions of this Agreement by KGen. KGen also agrees that it shall not seek, and agrees to waive (and shall use its reasonable best efforts to cause its Representatives to waive and not to seek), any requirement for the securing or posting of a bond in connection with Purchaser’s seeking or obtaining such relief.

9. Governing Law; Jury Waiver. This Agreement, and all claims hereunder, shall be governed by and construed in accordance with the laws of the state of Texas, without giving effect to the principles of conflict of laws that would require or permit the application of the laws of any other jurisdiction. EACH OF THE PARTIES HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN ANY OF THEM ARISING UNDER THIS AGREEMENT.

10. Multiple Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same document. Any executed counterpart transmitted by facsimile, electronic communication in portable document format (.pdf), or similar transmission by any Party shall be deemed an original and shall be binding upon such Party.

11. Amendments. No amendment, modification, waiver, or other change to this Agreement shall be enforceable, except as specifically provided for in this Agreement, unless reduced to writing and executed by both Parties (or with respect to a waiver, by the waiving Party).

12. No Waiver. Subject to applicable statutes of limitation, no failure or delay, in whole or in part, by Purchaser in exercising any right or power hereunder shall operate as a waiver, full or partial, of such right or power.

13. No Joint Venture. This Agreement does not create and is not evidence of a joint venture, partnership, agency or other similar relationship between the Parties. The Parties acknowledge and agree that (i) they and their Affiliates are involved in the same or similar businesses, (ii) nothing herein or otherwise will restrict either Party or its Affiliates from competing with the other Party and its Affiliates, (iii) there is no fiduciary relationship or other implied obligation of either Party or any of their Affiliates with respect to the subject matter hereof or based on any course of dealing, the Parties’ respective obligations being solely those expressly set forth herein, and (iv) nothing in this Agreement creates any exclusive dealing arrangement between the Parties and their Affiliates with respect to the Confidential Information.

14. Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. Any unenforceable provision shall be


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deemed modified to the limited extent required to permit its enforcement in a manner most closely representing the intention of the Parties as expressed herein.

15. No Consequential or Punitive Damages. NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY HEREUNDER FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES OF ANY KIND OR CHARACTER.

16. Notices. Any notice or other communications required or permitted to be given pursuant to this Agreement shall be confirmed in writing and shall be deemed properly given when hand delivered, sent by overnight mail service, mailed certified mail, return receipt requested, or transmitted by facsimile with date and sending Party identified to the following addresses:

If to Purchaser: Entergy Arkansas, Inc.c/o Entergy Services, Inc.Attn: Vice President, System Planning10055 Grogans Mill Rd., Suite 300The Woodlands, TX 77380

with a copy to:

Entergy Services, Inc.Attn: Assistant General Counsel10055 Grogans Mill Rd., Suite 300The Woodlands, TX 77380.

If to KGen:

KGen Power CorporationAttn: Chief Executive Officer and General Counsel 1330 Post Oak Blvd., Suite 1500Houston, TX 77056

[Signature page follows]


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IN WITNESS WHEREOF, the Parties have entered into this Agreement effective as of the date first written above.

KGEN POWER CORPORATION

By: Name: Title:


By: Name: Title:


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EXHIBIT F

TITLE COMMITMENT


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This commitment is invalid unless the insuring provisions and Schedules A and B are attached.

Commitment No.: NCS-470312-STLO

COMMITMENT FOR TITLE INSURANCE

ISSUED BY

First American Title Insurance Company

AGREEMENT TO ISSUE POLICY

We agree to issue a policy to you according to the terms of this Commitment. When we show the policy amount and your name as the proposed insured in Schedule A, this Commitment becomes effective as of the Commitment Date shown in Schedule A. If the Requirements shown in this commitment have not been met within six months after the Commitment Date our obligation under this Commitment will end. Also, our obligation under this Commitment will end when the Policy is issued and then our obligation to you will be under the Policy. Our obligation under this Commitment is limited by the following:

The Provisions in Schedule A.

The Requirements in Schedule B-I.

The Exceptions in Schedule B-II.

The Conditions on the other side of this page 1. This Commitment is not valid without SCHEDULE A and Sections I and II of SCHEDULE B. FIRST AMERICAN TITLE INSURANCE COMPANY has caused this Commitment to be signed and sealed by its authorized officers and the Commitment will become valid when countersigned by an authorized signatory as of Effective Date shown in Schedule A.


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Commitment No. NCS-470312-STLO Page 2 of 15


Conditions 1. DEFINITIONS

(a) "Mortgage" means, deed of trust or other security instrument. (b) "Public Records" means title records that give constructive notice of matters affecting the title according to the state law where the land is located.

2. LATER DEFECTS The Exceptions in Schedule B Section II may be amended to show any defects, liens or encumbrances that appear for the time in the public records or are created or attach between the Commitment Date and the date on which all of the Requirements (a) and (b) of Schedule B - Section I are met. We shall have no liability to you because of this amendment.

3. EXISTING DEFECTS If any defects, liens or encumbrances existing at Commitment Date are not shown in Schedule B, we may amend Schedule B to show them. If we do amend Schedule B to show these defects, liens or encumbrances, we shall be liable to you according to Paragraph 4 below unless you knew of this information and did not tell us about it in writing.

4. LIMITATION OF OUR LIABILITY Our only obligation is to issue to you the Policy referred to in this Commitment, when you have met its Requirements. If we have any liability to you for any loss you incur because of an error in this Commitment, our liability will be limited to your actual loss caused by your relying on this Commitment when you acted in good faith to:

comply with the Requirements shown in Schedule B - Section I

or

eliminate with our written consent any Exceptions shown in Schedule B - Section II.

We shall not be liable for more than the Policy Amount shown in Schedule A of this Commitment and our liability is subject to the terms of the Policy form to be issued to you.

5. CLAIMS MUST BE BASED ON THIS COMMITMENT

Any claim, whether or not based on negligence, which you may have against us concerning the title to the land must be based on this Commitment and is subject to its terms.


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First American Title Insurance Company National Commercial Services

1600 S. Brentwood Boulevard, Suite 410, St. Louis, MO 63144 (314)785-6200 Phone - (314)785-6201 Fax


Schedule A

1. Effective Date: April 11, 2011, at 8:00 AM

2. Policy or policies to be issued: a. ALTA Owner's Policy (06.17.06) (FEE AND

LEASEHOLD) $TBD

Proposed Insured: Premium: $TBD Entergy, Inc., a Louisiana corporation b. ALTA Loan Policy (06.17.06) $TBD Proposed Insured: Premium: $TBD To Be Determined 3. Title to the fee simple and leasehold estate or interest in the land described or referred to in this

Commitment is at the effective date hereof vested in:

KGEN Hot Spring LLC, a Delaware limited liability company, formerly known as Duke Energy Hot Spring, LLC, a Delaware limited liability company, as to Tracts A, D and E KGEN Hot Spring LLC, a Delaware limited liability company, formerly known as Duke Energy Hot Spring, LLC, a Delaware limited liability company, as to the Leasehold Estate as created by Lease Agreement by and between Hot Spring County, Arkansas, Lessor and Duke Energy Hot Spring, LLC, a Delaware limited liability company, Lessee, filed December 29, 2000 in Miscellaneous Book 139, Page 227, demising Tract B and C described herein for a term of years.

4. The land referred to in this Commitment is described as follows:

TRACT A: Part of the SW 1/4 SW 1/4 and part of the SE 1/4 SW 1/4 of Fractional Section 11, Township 5 South, Range 18 West of the 5th P.M. in Hot Spring County, Arkansas and more particularly described as follows: Commence at the SW corner of Section 11, Township 5 South, Range 18 West; thence North 01 degrees 34 minutes 25 seconds East along the West line of Section 11, 1072.19 feet to a point; thence depart said West line East 468.84 feet to the Point of Beginning; thence North 85 degrees 29 minutes 55 seconds East 814.98 feet to a X-tie fence post; thence South 19 degrees 30 minutes 07 seconds East 244.19 feet to a 1 inch rebar; thence South 11 degrees 50 minutes 42 seconds West, 679.79 feet to a point; thence North 84 degrees 54


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minutes 14 seconds West, 1116.85 feet to a point; thence North 18 degrees 21 minutes 43 seconds East 63.70 feet to a point; thence North 18 degrees 23 minutes 06 seconds East 208.80 feet to a 1 1/4 inch pipe; thence North 18 degrees 26 minutes 16 seconds East, 212.69 feet to a 4" x 6" X-tie post; thence North 36 degrees 58 minutes 49 seconds East, 340.45 feet to the Point of Beginning. TRACT B: A tract of land being a part of Section 7, Township 5 South of the Base Line Range 17 West of the 5th Principal Meridian and part of Section 8, Township 5 South of the Base Line Range 17 West of the 5th Principal Meridian, all in Hot Spring County, Arkansas more particularly described as follows: The SW 1/4 NE 1/4 of Section 7; thence NW 1/4 SE 1/4 of Section 7 and that part of the SE 1/4 NE 1/4 of Section 7 lying West of the R/W of the Missouri Pacific Railroad and that part of the NE 1/4 SE 1/4 of Section 7 lying West of the right of way of the Missouri Pacific Railroad and that part of the SW 1/4 NW 1/4 of Section 8 lying West of the right of way of Missouri Pacific Railroad more particularly described as: Begin at a 5/8 inch rebar being the SW corner of the N 1/2 SE 1/4 of Section 7, Township 5 South, Range 17 West; thence North 02 degrees 43 minutes 03 seconds East 1410.36 feet to the center of said Section 7; thence North 02 degrees 29 minutes 48 seconds East 1365.22 feet to a X-tie fence post being the NW corner of the S 1/2 NE 1/4 of said Section 7; thence South 87 degrees 44 minutes 54 seconds East along the North line of said S1/2 2628.94 feet to the NE corner of said S 1/2 NE 1/4 of said Section 7; thence South 87 degrees 17 minutes 52 seconds East along the North line of the SW 1/4 NW 1/4 Section 8, Township 5 South, Range 17 West 711.54 feet to a 12 inch spike with cap on the Westerly right of way of the Missouri Pacific/Union Pacific Railroad; thence depart said North line South 35 degrees 25 minutes 39 seconds West along said right of way 1090.47 feet to a X-tie fence corner; thence South 49 degrees 19 minutes 49 seconds East, 50.00 feet to a 12 inch spike w/cap; thence South 35 degrees 32 minutes 01 seconds West 2176.03 feet to a X-tie fence corner on the South line of the N 1/2 SE 1/4 of Section 7; thence North 87 degrees 59 minutes 57 seconds West, 1606.12 feet to the Point of Beginning. TRACT C: Part of the N 1/2 of Section 18, Township 5 South, Range 17 West of the 5th Principal Meridian, Hot Spring County, Arkansas, being more particularly described as follows: Begin at the NE corner of Section 18, Township 5 South, Range 17 West, Hot Spring County, Arkansas, said point being a 5/8 inch rebar w/cap; thence South 02 degrees 07 minutes 22 seconds West along the East line of said Section 18, 1846.16 feet to a 5/8 inch rebar w/cap; thence depart said East line North 88 degrees 10 minutes 57 seconds West 2967.49 feet to a 5/8 inch rebar w/cap on the Easterly r/w of the Union Pacific Railroad; thence North 35 degrees 21 minutes 29 seconds East along said right of way 2211.21 feet to a 5/8 inch rebar w/cap on the North line of said Section 18; thence depart said right of way and along said North line South 88 degrees 17 minutes 02 seconds East 1755.58 feet to the Point of Beginning. TOGETHER WITH an easement for ingress and egress described as: Part of the E 1/2 of Section 18, Township 5 South, Range 17 West of the 5th Principal Meridian, Hot Spring County, Arkansas being more particularly described as follows: A 75 foot ingress/egress and utility easement being 37.5 feet each side of the following centerline description: Commence at the NE corner of Section 18, Township 5 South, Range 17 West, Hot Spring County, Arkansas; thence South 02 degrees 07 minutes 22 seconds West along the East line of said Section 18, 1846.16 feet to a 5/8 inch rebar with cap; thence depart said East line North 88 degrees 10 minutes 57 seconds West 2644.37 feet to the Point of Beginning of the easement herein described, said point being 37.50 feet East of the center section line of said Section 18; thence South 01 degrees 52 minutes 58 seconds West parallel and adjacent to said center section line 3016.28 feet to a point on the Northerly r/w of Hot Spring County Road #36 (aka Lower Etta Road), said point being the Point of Beginning. (Book 139-5) TRACT D: Part of the S 1/2 of Section 11, Township 5 South, Range 18 West of the 5th Principal Meridian,


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Hot Spring County, Arkansas, being more particularly described as follows: Begin at the SE corner of the SW 1/4 SE 1/4 of Section 11, Township 5 South, Range 18 West, Hot Spring County, Arkansas; thence North 88 degrees 54 minutes 44 seconds West along the South line of said Section 11, 2786.92 feet to a point; thence depart said South line North 11 degrees 50 minutes 42 seconds East 948.51 feet to a 1 inch rebar; thence North 19 degrees 30 minutes 07 seconds West along a fence line 244.19 feet to a X-tie post; thence North 40 degrees 45 minutes 21 seconds East, 362.36 feet to a X-tie post; thence North 23 degrees 15 minutes 21 seconds East 228.82 feet to a X-tie post; thence North 17 degrees 32 minutes 36 seconds East 247.12 feet to a X-tie post; thence depart said fence line North 63 degrees 32 minutes 31 seconds East 601.95 feet to a 1 inch rebar; thence South 75 degrees 53 minutes 23 seconds East 123.45 feet to a #4 rebar with cap; thence South 01 degrees 34 minutes 51 seconds East 999.34 feet to a #4 rebar with cap on the centerline of an existing farm road; thence along said centerline the following courses: North 82 degrees 49 minutes 42 seconds East, 126.53 feet; thence North 87 degrees 08 minutes 16 seconds East 46.16 feet; thence South 89 degrees 44 minutes 46 seconds East, 117.81 feet; thence South 87 degrees 52 minutes 19 second East 80.94 feet; thence North 52 degrees 35 minutes 08 seconds East 47.31 feet; thence North 16 degrees 06 minutes 40 seconds East 71.60 feet; thence North 02 degrees 13 minutes 10 seconds West 159.65 feet; thence North 21 degrees 33 minutes 40 seconds East 64.51 feet; thence North 62 degrees 48 minutes 46 seconds East 105.55 feet; thence North 82 degrees 37 minutes 36 seconds East 69.25 feet; thence South 87 degrees 34 minutes 40 seconds East 272.50 feet; thence South 85 degrees 30 minutes 08 seconds East 206.02 feet; thence North 86 degrees 14 minutes 17 seconds East 79.81 feet; thence South 87 degrees 26 minutes 28 seconds East 60.02 feet; thence South 76 degrees 49 minutes 21 seconds East 278.82 feet; thence North 85 degrees 12 minutes 58 seconds East 83.99 feet; thence North 61 degrees 55 minutes 29 seconds East 70.40 feet; thence North 06 degrees 42 minutes 40 seconds East 314.47 feet; thence North 10 degrees 34 minutes 00 second East 5.10 feet to a point on the East line of the NW 1/4 SE 1/4 of said Section 11; thence depart said centerline South 02 degrees 56 minutes 33 seconds West along said East line 1830.84 feet to the Point of Beginning. McClure Tract #0010163: Part of the SE 1/4 SE 1/4 of Fractional Section 10, Township 5 South, Range 18 West of the Fifth Principal Meridian of part of the SW 1/4 SW 1/4 of Section 11, Township 5 South, Range 18 West of the Fifth Principal Meridian all in Hot Spring County, Arkansas and more particularly described as follows: Commence at the Section corner of Sections 10, 11, 14 and 15; thence North 01 degrees 34 minutes 25 seconds East 599.21 feet to a point; thence North 18 degrees 22 minutes 07 seconds East 2.25 feet to a 7/8 inch iron rod being the point of beginning; thence South 18 degrees 22 minutes 07 seconds West 161.88 feet to the centerline of a 60 foot Reliant Gas line R/W; thence along said centerline North 56 degrees 30 minutes 38 seconds West 79.74 feet to a point on the mean highwater line (elev. 209 feet) of the Ouachita River (a navigable stream); thence depart said centerline and along the meanders of said mean high water line to a point being North 27 degrees 37 minutes 38 seconds East 457.32 feet; thence depart said mean high water line South 61 degrees 57 minutes 03 seconds East 5.96 feet to a point; thence South 18 degrees 49 minutes 37 seconds West 309.29 feet to the Point of Beginning. (Book 274-285). KIZER TRACT #0010164: Part of the SE 1/4 SE 1/4 of Fractional Section 10, Township 5 South, Range 18 West of the Fifth Principal Meridian and a part of the SW 1/4 SW 1/4 Section 11, Township 5 South, Range 18 West of the Fifth Principal Meridian all in Hot Spring County, Arkansas and more particularly described as follows: Commence at the section corner of Sections 10, 11, 14 and 15; thence North 01 degrees 34 minutes 25 seconds East 599.21 feet to a point; thence North 18 degrees 22 minutes 07 seconds East 2.25 feet to a 7/8 inch rod, being the Point of Beginning; thence South 89 degrees 09 minutes 29 seconds East 209.08 feet to a 1 1/4 inch pipe; thence South 18 degrees 23 minutes 06 seconds West 208.80 feet; thence South 18 degrees 21 minutes 43 seconds West 63.70 feet to a point on the centerline of a 60 foot Reliant Gas Line R/W; thence along said centerline North 59 degrees 17 minutes 56 seconds West 123.17 feet; thence North 56 degrees 30 minutes 38 seconds West 81.82 feet; thence depart said centerline North 18 degrees 22 minutes 07 seconds East 161.88 feet to the Point of


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Beginning. (Book 274-329). COOK TRACT #0010165: Part of the SW 1/4 SW 1/4 of Fractional Section 11, Township 5 South, Range 18 West of the Fifth Principal Meridian, Hot Spring County, Arkansas and more particularly described as follows: Commence at the Section corner of Sections 10, 11, 14 and 15; thence North 01 degrees 34 minutes 25 seconds East 599.21 feet to a point; thence North 18 degrees 22 minutes 07 seconds East 2.25 feet to a 7/8 inch iron rod being the Point of Beginning; thence North 18 degrees 49 minutes 37 seconds East 309.29 feet to a point; thence South 61 degrees 57 minutes 03 seconds East 200.00 feet to a 4" x 6" cross tie; thence South 18 degrees 26 minutes 16 seconds West 212.69 feet to a 1 1/4 inch pipe; thence North 89 degrees 09 minutes 29 seconds West 209.08 feet to the Point of Beginning. (Book 274-337). TOGETHER WITH FOLLOWING EASEMENTS: EASEMENT: (Sustainable Forest 142/629) TRACT 1: A 50 foot wide utility easement being 25 feet each side of the following centerline description to the point of intersection of the subject property line and more particularly described as follows: Commence at the SW corner of the SE 1/4 SE 1/4 of Section 11, Township 5 South, Range 18 West, Hot Spring County, Arkansas; thence North 02 degrees 56 minutes 33 seconds East 49.03 feet to the Point of Beginning of the easement herein described: thence South 76 degrees 16 minutes 29 seconds East, 224.01 feet to a point on the South line of said Section 11, said point being South 88 degrees 54 minutes 44 seconds East 220.17 feet from said SW corner of the SE 1/4 SE 1/4 and the Point of Termination. TRACT 2: A 50 foot wide utility easement being 25 feet each side of the following centerline description to the point of intersection of the subject property line and more particularly described as follows: Commence at the N 1/4 corner of Section 13, Township 5 South, Range 18 West, Hot Spring County, Arkansas; thence South 02 degrees 10 minutes 48 seconds West along the center section line of said Section 13, 949.18 feet to the Point of Beginning of the easement herein described; thence South 75 degrees 48 minutes 38 seconds East 11.70 feet to a point; thence South 76 degrees 01 minutes 52 seconds East 4403.21 feet to a point; thence South 78 degrees 54 minutes 52 seconds East 232.96 feet to a point; thence South 69 degrees 52 minutes 52 seconds East 48.69 feet to a point; thence South 60 degrees 50 minutes 52 seconds East 48.69 feet to a point; thence South 51 degrees 48 minutes 52 seconds East 28.376 feet to a point; thence North 35 degrees 21 minutes 27 seconds East 3510.55 feet to a point; thence North 16 degrees 26 minutes 40 seconds West 452.90 feet to a point on the North line of the SW 1/4 SE 1/4 of Section 7, Township 5 South, Range 17 West, said point being South 87 degrees 59 minutes 57 seconds East 1077.22 feet from the NW corner of said SW 1/4 SE 1/4 and the Point of Termination. (Book 142-629). TRACT 3: A 50 foot wide utility easement being 25 feet each side of the following centerline description to the point of intersection of the subject property line and more particularly described as follows: Commence at the N 1/4 corner of Section 18, Township 5 South, Range 17 West, Hot Spring County, Arkansas; thence South 86 degrees 53 minutes 22 seconds East 632.42 feet to a point; thence South 35 degrees 21 minutes 27 seconds West 231.95 feet to a point of beginning of the easement herein described; thence South 54 degrees 38 minutes 33 seconds East 241.50 feet to a point on the Southeasterly r/w of the Missouri Pacific Railroad and the point of termination. Book 142-629). EASEMENT (McClure, Inc., (138/245 and 142/199) A 50 foot wide utility easement being 25 feet each side of the following centerline description to the point of intersection of the subject property line and more particularly described as follows:


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Commence at the SE corner of the SW 1/4 SW 1/4 of Section 11, Township 5 South, Range 18 West, Hot Spring County, Arkansas; thence North 02 degrees 56 minutes 33 seconds East 110.64 feet to a point; thence North 89 degrees 08 minutes 10 seconds West 70.12 feet to a point; thence North 85 degrees 08 minutes 10 seconds West 10.38 feet to a point; thence North 81 degrees 42 minutes 10 seconds West 26.43 feet to the point of beginning of the easement herein described; thence continue North 81 degrees 42 minutes 10 seconds West 8.82 feet to a point; thence North 81 degrees 43 minutes 51 seconds West 698.43 feet to a point; thence North 74 degrees 17 minutes 51 seconds West 32.85 feet to a point; thence North 66 degrees 51 minutes 51 seconds West 35.85 feet to a point; thence North 59 degrees 25 minutes 51 seconds West 350.36 feet to the point of termination. EASEMENT (Aiken 138/233 and 142/65) A 50 foot wide utility easement being 25 feet each side of the following centerline description to the point of intersection of the subject property line and more particularly described as follows: Commencing at the NE corner of the NW 1/4 of Section 13, Township 5 South, Range 18 West, Hot Spring County, Arkansas; thence South 02 degrees 10 minutes 48 seconds West along the East line of said NW 1/4 949.18 feet to the point of beginning; thence North 75 degrees 48 minutes 22 seconds West 2695.60 feet to a point lying South 02 degrees 20 minutes 20 seconds West 249.89 feet from the NW corner of said NW 1/4 and the point of termination. EASEMENT (Hearne and McClure 142/295 and 151/821 A 50 foot utility easement being 25 feet on each side of the following centerline description; Commence at the NE corner of Section 14, Township 5 South, Range 18 West, Hot Spring County, Arkansas; thence South 02 degrees 20 minutes 20 seconds West along the East line of said Section 14 a distance of 249.89 feet to the point of beginning; thence North 76 degrees 16 minutes 29 seconds West 1141.95 feet to a point on the North line of said Section 14 and the point of termination. TRACT E: Part of the NW 1/4 SE 1/4 and part of the NE 1/4 SW 1/4 and part of the SE 1/4 SW 1/4 and SW 1/4 SE 1/4 of Fractional Section 11, Township 5 South, Range 18 West of the 5th P.M., Hot Spring County, Arkansas and more particularly described as follows: Commence at the SW corner of Section 11, Township 5 South, Range 18 West; thence North 01 degrees 34 minutes 25 seconds East along the West line of Section 11, 1095.65 feet to a point; thence depart said West line, East 2368.26 feet to the point of beginning; thence North 01 degrees 34 minutes 51 seconds West 999.34 feet to a #4 rebar; thence South 75 degrees 54 minutes 23 seconds East 453.45 feet to a #4 rebar; thence North 76 degrees 51 minutes 38 seconds East 68.00 feet to a point; thence South 555.35 feet to a point on the centerline of an existing access easement; thence along said centerline the following courses and distances: thence South 62 degrees 48 minutes 46 seconds West 37.26 feet to a point; thence South 21 degrees 33 minutes 40 seconds West 64.51 feet to a point; thence South 02 degrees 13 minutes 10 seconds East 159.65 feet to a point; thence South 16 degrees 06 minutes 40 seconds West 71.60 feet to a point; thence South 52 degrees 35 minutes 08 seconds West 47.31 feet to a point; thence North 87 degrees 52 minutes 19 seconds West 80.94 feet to a point; thence North 89 degrees 44 minutes 46 seconds West 117.81 feet to a point; thence South 87 degrees 08 minutes 16 seconds West 46.16 feet to a point; thence South 82 degrees 49 minutes 42 seconds West 126.53 feet to the point of beginning.

If there are any questions concerning this commitment, please contact Kevin T. Twellman at [email protected],

or Patricia Brown at [email protected].


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Schedule B - Section I (Requirements)

The following are the requirements to be complied with:

1. Pay the agreed amounts for the interest in the land and/or mortgage to be insured.

2. Pay us the premiums, fees and charges for the Policy.

3. Documents satisfactory to us creating the interest in the land and/or mortgage to be insured must be signed, delivered and recorded.

4. You must tell us in writing the name of anyone not referred to in this Commitment who will get an interest in the land or who will make a loan on the land. We may then make additional requirements or exceptions.

5. If there has been construction, improvements or repairs to or on the property in the last 12 months, or a portion or all of the loan proceeds will be used for such, then unrecorded mechanics lien coverage will not be furnished unless arrangements are made prior to closing. If the property is 1-4 family residential, a Mechanic�s Lien Indemnity Agreement secured by a satisfactory Letter of Credit will need to be furnished to the company. If the property is not 1-4 family residential, either the aforesaid secured indemnity or satisfactory financial statements, indemnities, affidavits and possibly lien waivers, will need to be furnished to the company. Failure to notify the company in writing before closing will invalidate any mechanic's lien coverage given in the policy.

6. In order to delete Exceptions 1, 2, 5 and 6 on Schedule B - II, the Company requires a properly completed and executed Owner's Affidavit in a form that is acceptable to the Company.

7. In regard to KGEN Hot Spring LLC, we require the following:

A) Furnish a copy of the Articles of Organization and the Operating Agreement. B) Furnish a Certificate of Good Standing from the Delaware, Secretary of State's office. C) Furnish a resolution of the members authorizing the proposed transaction. D) The proposed transaction should be executed by all the members of the LLC unless provided otherwise in the operating agreement. If the members of the above referenced limited liability company are entities other than individuals, additional requirements will be made. Upon review of these items we reserve the right to make further requirements.

8. In regard to Entergy, Inc., we require the following:

A) Furnish a copy of the Certificate and Articles of Incorporation. B) Furnish a Certificate of Good Standing from the Louisiana Secretary of State's office. C) Furnish a resolution of the board of directors authorizing the proposed transaction and identifying the parties authorized to execute instruments necessary to close this transaction. Upon review of these items we reserve the right to make further requirements.


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9. Release of Leasehold Mortgage and Fixture Filing, Assignment of Rents and Security Agreement from KGEN Hot Spring, LLC to Union Bank of California, N.A., dated February 8, 2007, filed February 13, 2007 in Book 342, page 771, records of Hot Spring County, Arkansas.

10. Termination of Uniform Commercial Code Financing Statement by and between KGen Hot Spring LLC, debtor and Union Bank of California, N.A., as Collateral Agent, Secured Party, filed February 13, 2007 in Book 342, page 729, records of Hot Spring County, Arkansas.

11. The application for title insurance states that our policy will cover an assignment of the Leasehold Estate shown at Exception J and P on Schedule B Section II herein. In this regard, we make the following requirements: a) Furnish a written statement executed by the owner of the fee simple title of Tract B and C, Hot Spring County, Arkansas, stating that no default has occurred under the terms of the aforesaid lease; and that the leasehold estate created thereby is now in full force and effect and that it has not been further modified, except as herein shown. b) Furnish a fully-executed copy of the Lease and of any amendment or agreement affecting the same to be deposited with us to be retained in our file. c) Record a properly executed Assignment of Lease from KGEN Hot Spring LLC, a Delaware limited liability company, formerly known as Duke Energy Hot Spring, LLC, a Delaware limited liability company, to Entergy, Inc., a Louisiana corporation, for Tract B and C. After having examined said documents, this commitment is subject to such further exceptions, if any, as then may be necessary.

In the event of a cancellation, there will be a minimum charge of $450.00.

CLOSING INFORMATION NOTE: If the closing for the subject property is to be conducted by First American Title Insurance Company, we require all monies due from the purchase to be in the form of a Cashier's Check, Certified Check or Wire Transfer. If the sale proceeds of any "payoffs" pursuant to the closing require "Good Funds" then monies received by us for such must be by bank or wire transfer.

The above applies to all closings unless other specific arrangements are made. Due to wide variances in banking practices and lack of control over funds "on the wire" we cannot accept financial responsibility for delays in the clearing of funds.

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Schedule B - Section II (Exceptions)

Schedule B of the policy or policies to be issued will contain the exceptions to the following matters unless the same are disposed of to the satisfaction of the Company.

1. Defects, liens, encumbrances, adverse claims or other matters, if any, created, first appearing in the public records or attaching subsequent to the effective date hereof but prior to the date the Proposed Insured acquires for value of record the estate or interest or mortgage thereon covered by this Commitment.

2. Standard Exception:

(a) Rights or claims of parties in possession not shown by the public records. (b) Easements or claims of easements, not shown by the public records. NOTE:

The Compnay is in receipt of a survey that is satisfactory for deletion of this exception from the policy when issued.

(c) Encroachments, overlaps, boundary line disputes and any matters which would

be disclosed by an accurate survey and inspection of the premises. NOTE: The Company is in receipt of a survey that is satisfactory for deletion of this exception from the policy when issued.

(d) Any lien or right to a lien, for services, labor, or material heretofore or hereafter

furnished, imposed by law and not shown by the public records.

3. Special Exceptions:

(a) Taxes and assessments for the year(s) 2010 and thereafter, which are due but not yet payable, plus any penalties and interest which may accrue.

(b) Taxes and assessments for the year(s) 2011 and thereafter, which are not yet due and payable, plus any penalties and interest which may accrue.

(c) Tract A: One half interest in all gravel on and under said land as reserved by Flora B. Adams in Warranty Deed from Leon Hardwick and Milrene R. Hardwick, dated November 10, 1955, filed for record November 16, 1955, recorded in Book 93, page 521, records of Hot Spring County, Arkansas.

(d) Right of Way in favor of Arkla Energy Resources, dated February 20, 1990, filed March 5, 1990 and recorded in Miscellaneous Book 73, page 497, records of Hot Spring County, Arkansas.

(e) Easement and Assignment of Easement to Charles C. Hall and Joyce Hall, dated October 2, 1997, filed October 3, 1997 and recorded in Miscellaneous Book 117, page 965, records of Hot Spring County, Arkansas.


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(f) Wetlands Mitigation Restrictive Covenants executed by Duke Energy Hot Springs, LLC, filed July 22, 2002 and recorded in Miscellaneous Book 151, page 225, records of Hot Spring County, Arkansas.

(g) Tract B: Easement in favor of Southwestern Bell Telephone Company, filed April 19, 1955 and recorded in Book 57, page 62, records of Hot Spring County, Arkansas.

(h) Trust Indenture executed by Hot Spring County, Arkansas to First Union National Bank, as Trustee, filed December 29, 2000 and recorded in Miscellaneous Book 139, page 259, records of Hot Spring County, Arkansas.

(i) Uniform Commercial Code Financing Statement executed by Duke Energy Hot Spring, LLC and Hot Spring County, Arkansas, filed January 18, 2001 and recorded as Instrument Number 47291, records of Hot Spring County, Arkansas.

(j) Duties and obligations of the parties to a certain Lease Agreement with option to purchase, by and between Hot Spring County, Arkansas, Lessor and Duke Energy Hot Spring, LLC, a Delaware limited liability company, Lessee, filed December 29, 2000 in Miscellaneous Book 139, Page 227.

(k) Tract C: Conditions and reservation of all mineral and mineral rights in, on or under said land as contained in Deed from IP Timberlands Operating Company, Ltd. to Sustainable Forests, LLC, dated April 3, 1998, filed June 22, 1998 and recorded in Book 262, page 777 and Book 262, page 773, records of Hot Spring County, Arkansas.

(l) Mineral reservation of one-half of all oil, gas and minerals set forth in Warranty Deed from the heirs of William Kilpatrick to H.C. Cabe and J.C. Cabe, filed October 18, 1943 in Book 71, page 413, records of Hot Spring County, Arkansas.

(m) Mineral reservation of one-fourth of all oil, gas and minerals set forth in Correction Mineral Deed from Cabe Land Company to Cabe Cattle Company, filed March 20, 1975 in Book 177, page 639, records of Hot Spring County, Arkansas.

(n) Right of Way to Arkla Energy Resources from IP Timberlands Operating Company, filed July 26, 1990 in Book 75, page 769, records of Hot Spring County, Arkansas. NOTE: Affects easement only.

(o) Easement in favor of Reliant Energy Gas Transmission Company, filed October 28, 2002 and recorded in Miscellaneous Book 142, page 41 and Book 153, page 399, records of Hot Spring County, Arkansas.

(p) Duties and obligations of the parties to a certain Lease Agreement with option to purchase, by and between Hot Spring County, Arkansas, Lessor and Duke Energy Hot Spring, LLC, a Delaware limited liability company, Lessee, filed December 29, 2000 in Miscellaneous Book 139, Page 227.

(q) Trust Indenture executed by Hot Spring County, Arkansas to First Union National Bank, as Trustee, filed December 29, 2000 and recorded in Miscellaneous Book 139, page 259, records of Hot Spring County, Arkansas.

(r) Uniform Commercial Code Financing Statement executed by Duke Energy Hot Spring, LLC and Hot Spring County, Arkansas, filed January 18, 2001 and recorded as Instrument Number 47291, records of Hot Spring County, Arkansas.


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(s) Substation Easement Agreement executed by and between Hot Spring County, Arkansas and Entergy Arkansas, Inc., filed January 17. 2--2 and recorded in Miscellaneous Book 147, page 141, records of Hot Spring County, Arkansas.

(t) Right of Way from Hot Spring County, Arkansas to Entergy Arkansas, Inc., flied November 27, 2002 and recorded in Miscellaneous Book 154, page 147, records of Hot Spring County, Arkansas.

(u) Tract D: An undivided one-half interest in all grave on and under said lands reserved by previous owner in Warranty Deed, of record in Book 93, page 521, records of Hot Spring County, Arkansas.

(v) Twenty foot easement described in Warranty Deed executed by George L. McClure, et al to Bobby H. Higgins, of record in Book 189, page 593, records of Hot Spring County, Arkansas.

(w) Right of Way in favor of Arkla Energy Resources, flied May 16, 1990 in Miscellaneous Book 73, page 651, records of Hot Spring County, Arkansas.

(x) Right of Way in favor of Arkla Energy Resources, flied March 5, 1990 in Miscellaneous Book 73, page 497, records of Hot Spring County, Arkansas. (Affects easement)

(y) Easement and Assignment of Easement in favor of Charles C. Hall and Joyce Hall, flied October 3, 1997 in Miscellaneous Book 117, page 965, records of Hot Spring County, Arkansas.

(z) Easement in favor of Arkla Energy Resources filed March 5, 1990 in Miscellaneous Book 73, page 489, records of Hot Spring County, Arkansas. (Affects Kizer Water Intake)

(aa) Easement in favor of Arkla Energy Resources filed March 5, 1990 in Miscellaneous Book 73, page 501, records of Hot Spring County, Arkansas. (Affects Kizer Water Intake)

(bb) Any title or rights asserted by anyone including, but not limited to persons, corporations, governments or other entities to land comprising the shores or bottoms of navigable streams, lakes, bays or riparian rights, if any. Any adverse claim to any part of said land which has been created by artificial means or has accreted to such portion so created.

(cc) Any portion of subject property lying within the bounds of the Ouachita River.

(dd) Wetlands Mitigation Restrictive Covenant executed by Duke Energy Hot Spring, LLC filed for record August 22, 2001 in Miscellaneous Book 144, page 91, records of Hot Spring County, Arkansas.

(ee) Wetlands Mitigation Restrictive Covenant, executed by Duke energy Hot Spring, LLC, filed March 25, 2002 in Miscellaneous Book 148, page 693, records of Hot Spring County, Arkansas.

(ff) Easement from Carl Robbins and Ola Robbins, filed November 15, 1978 in Miscellaneous Book 38, page 241 to the present and future owners of any or all lands described in Deed from D. W. Hoskins to George L. McClure and W. H. McClure in Deed Book 182, page 799, records of Hot Spring County, Arkansas.


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(gg) Tract E: An undivided one-half interest in all gravel on and under said lands reserved by previous owner in Warranty Deed, filed November 16, 1955 in Book 93, page 521, records of Hot Spring County, Arkansas.

(hh) Twenty foot easement in Warranty Deed from George L. McClure, et al to Bobby H. Higgins, filed May 11, 1978 in Book 189, page 593, records of Hot Spring County, Arkansas.

(ii) Right of Way in favor of Arkla Energy Resources, filed May 16, 1990 in Book 73, page 651, records of Hot Spring County, Arkansas.

(jj) Easement from Carl Robbins and Ola Robbins, filed November 15, 1978 in Miscellaneous Book 38, page 241 to the present and future owners of any or all lands described in Deed from D. W. Hoskins to George L. McClure and W. H. McClure in Deed Book 182, page 799, records of Hot Spring County, Arkansas.

(kk) Option and Easement Agreement between Bobby Higgins and Alice Higgins, Owners and Duke Energy Hot Spring, LLC, filed November 27, 2000 and Miscellaneous Book 138, page 785, records of Hot Spring County, Arkansas.

(ll) Option and Easement Agreement between Bobby Higgins and Alice Higgins, Owners and Duke Energy Hot Spring, LLC, filed June 20, 2001 in Miscellaneous Book 142, page 645, records of Hot Spring County, Arkansas.

(mm) Wetlands Mitigation Restrictive Covenants filed July 22, 2002 in Miscellaneous Book 151, page 225, records of Hot Spring County, Arkansas.

(nn) Loss arising from any Oil, Gas or Mineral interests, conveyed, retained, assigned or any activity on or damage to the insured land caused by the exercise of sub-surface rights or ownership, including but not limited to the right of ingress and egress for said sub-surface purposes. NOTE: This exception will be deleted from the policy when issued.

(oo) Concurrent rights of other parties in title in and to the easements described in Schedule A.

(pp) Loss arising from any judgment liens or other liens of record in any United States District Court or Bankruptcy Court in the State of Arkansas as of the Effective Date hereof that are not reflected in the real property records of the county in which the property is located.

(qq) No insurance is given under this Policy for any property which may have been acquired as a result of accretion or other means of addition to the property which would result in additional property in excess of the original contour line.

(rr) Any title or rights asserted by anyone, including, but not limited to persons, corporations, governments, or other entities, to lands comprising the shores or bottoms of navigable streams, lakes, bays, or riparian rights, if any. Any adverse claim to any part of said land which has been created by artificial means or has accreted to such portions so created.

(ss) Rights of upper and lower riparian owners in and to the use of the waters of Ouachita River and the natural flow thereof.

(tt) Riparian rights incident to the premises.


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(uu) Title to that portion of the property lying below the mean high water mark of Ouachita River.

(vv) Rights of the United States of America, State of Arkansas, and the public generally in and to that portion of the property lying below the mean high water mark of Ouachita River.

(ww) Rights, if any, of the public to use as a public beach or recreation area any part of the land lying between the body of water abutting the subject property and the natural line of vegetation, bluff, extreme high water line, or other apparent boundary line separating the publicly used area from the upland private area.

(xx) Rights, if any, of the property owners abutting the Ouachita River in and to the waters of the Ouachita River and in and to the bed thereof; also boating and fishing rights of property owners abutting the Ouachita River or the stream of water leading thereto or therefrom.

(yy) Terms and conditions of Easement in favor of George L. McClure and W. H. McClure and their wife, filed November 15, 1978 in Book 38, page 241, records of Hot Spring County, Arkansas.

(zz) Terms and conditions of Road Right of Way Easement in favor of Duke Energy Hot Spring, LLC, filed December 12, 2000 in Book 139, page 5, records of Hot Spring County, Arkansas.

(aaa) Terms and conditions of Pipeline Right of Way Easement in favor of Duke Energy Hot Spring, LLC, filed June 20, 2001 in Book 142, page 29, records of Hot Spring County, Arkansas.

(bbb) Amended Option and Easement Agreement by and between the Estate if Kenneth Aiken and Duke Energy Hot Spring, LLC, filed May 24, 2001 in Book 142, page 65, records of Hot Spring County, Arkansas.

(ccc) Amended Option and Easement Agreement by and between McClure, Inc. and Duke Energy Hot Spring, LLC, filed May 29, 2001 in Book 142, page 199, records of Hot Spring County, Arkansas.

(ddd) Easement Agreement from Ramona Jean Hearne and Gail H. McClure and Cecelia Addington to Duke energy Hot Spring, LLC, filed June 1, 2001 in Book 142, page 195 and Correction thereof, filed August 13, 2002 in Book 151, page 821, records of Hot Spring County, Arkansas.

(eee) Easement Agreement from McClure, Inc. to Duke Energy Hot Spring, LLC, filed June 20, 2001 in Book 142, page 637, records of Hot Spring County, Arkansas.

(fff) Easement Agreement from McClure, Inc. to Duke energy Hot Spring County, LLC, filed June 20, 2001 in Book 142, page 641, records of Hot Spring County, Arkansas.

(ggg) Grant of Pipeline Easement from Hot Spring County, Arkansas to Texas Eastern Transmission, LP, filed December 15, 2010 in Book 211, page 295, records of Hot Spring County, Arkansas, as to Tract C.


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(hhh) Temporary Staging Area Agreement by and between Hot Spring County, Arkansas and Texas Eastern Transmission, LP, dated November 1, 2010, filed December 15, 2010 in Book 211, page 289, records of Hot Spring County, Arkansas, as to Tract C.

NOTE: If any requirements shown on Schedule B-Section I of this Commitment are not complied with, then the requirement or the matters constituting the requirement will be shown as an exception or exceptions on the Policy or Policies provided the Company elects to issue such Policy or Policies.


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EXHIBIT G

FORM OF TITLE POLICY AFFIDAVIT

AFFIDAVITFIRST AMERICAN TITLE INSURANCE COMPANY

The undersigned Affiant, in consideration of First American Title Insurance Companyinsuring an interest in or title to the real estate described herein, and being first duly sworn on oath, depose(s) and state(s) as follows:

1. Affiant has knowledge of the real estate described in Commitment No. NCS-470312-STLO (hereinafter identified as the “Premises”).

2. To the best of Affiant’s knowledge, Affiant is in sole possession of the Premises, and no other party has possession, or has right of possession under any tenancy, lease or other agreement, written or oral, other than pursuant to a recorded document, except as follows: __________.

3. No labor, services or materials have been furnished to or for the Premises or theimprovements located thereon during the last 125 days for which full and final payment remains outstanding, except as follows: _________________________________________________________________.

4. Affiant has no knowledge of, and has taken no actions which would create defects, liens, encumbrances, adverse claims or other matters first appearing in the public records or attaching subsequent to the date and time the proposed insured acquires the Premises for value (the “Closing Date”) but prior to the earlier of (a) 5 business days after the Closing Date or (b) the date and time of recording of the deed conveying the Premises to the proposed insured. Affiant expressly agrees to indemnify and hold harmless First American Title Insurance Company from any and all loss including but not limited to attorney's fees and legal costs, arising from any inaccuracies contained in this Paragraph 4.

5. Since February 8, 2007, no proceedings in bankruptcy or receivership have been instituted by or, to the best of Affiant’s knowledge, against Affiant, and Affiant has not since such date made an assignment for the benefit of creditors.


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EXHIBIT G

The undersigned makes this affidavit for the purpose of inducing First American Title Insurance Company under Commitment No. NCS-470312-STLO to issue a policy or policies of title insurance, knowing that First American Title Insurance Company will rely on the truth of the statements made herein.

KGEN HOT SPRING, LLC

By: ________________

Title: ________________

STATE OF _________________ )) ss

COUNTY OF _______________ )

Subscribed and sworn to before me, _________________________, a Notary Public in and for said County and State, this _____day of ___________, _______.

_______________________________________Notary PublicPrint Name: ____________________________

My Commission Expires:

______________________


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EXHIBIT H

#4825-2417-3321

FORM OF NON-FOREIGN STATUS CERTIFICATE

[ ], 201[ ]

Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”), provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U.S. tax purposes (including Section 1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity. Because KGen Hot Spring LLC, a Delaware limited liability company, the transferor of the U.S. real property interest under local law, is a disregarded entity, its owner, KGen Power Corporation, a Delaware corporation (the “Transferor”), is the transferor of the U.S. real property interest for U.S. tax purposes. To inform Entergy Arkansas, Inc., an Arkansas corporation (the “Transferee”), that withholding of tax under Section 1445 of the Code will not be required upon the transfer of a U.S. real property interest by Transferor, the undersigned hereby certifies the following:

1. The Transferor is not a foreign corporation, foreign partnership, foreign trust, foreign estate or foreign person (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder);

2. The Transferor is not a disregarded entity as defined in Treasury Regulations, Subchapter A, Section 1.1445-2(b)(2)(iii);

3. The Transferor’s U.S. employer or tax (social security) identification number is 20-8033747

4. The Transferor’s office address is 1130 Post Oak Boulevard, Suite 1500, Houston, Texas 77056; and

5. For U.S. tax purposes, the Transferor is the transferor of the real property described in Exhibit A.

The Transferor understands that this Certification may be disclosed to the Internal Revenue Service by the Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.


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#4825-2417-3321

Under penalty of perjury, I declare that I have examined this Certification and to the best of my knowledge and belief, it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of the Transferor.

TRANSFERORKGEN POWER CORPORATION

By: _________________________Name: Title:


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#4825-2417-3321

EXHIBIT A


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EXHIBIT I

FORM OF JOINT DEFENSE AGREEMENT

PRIVILEGED AND CONFIDENTIALSUBJECT TO THE ATTORNEY WORK PRODUCT

AND ATTORNEY-CLIENT PRIVILEGES

[______], 2011

BY ELECTRONIC MAIL

[__________________], Esq.[Milbank, Tweed, Hadley McCloy LLPOne Chase Manhattan PlazaNew York, NY 10005-1413]

RE: Joint Defense and Common Interest Letter Agreement (“Agreement”)

Dear [__________________]:

I write in my capacity as antitrust counsel to Entergy Corporation (together with its subsidiaries and controlled affiliates referred to herein as "Entergy" or "my client") to you in your capacity as antitrust counsel to KGen Power Corporation (together with its subsidiaries and controlled affiliates referred to herein as "KGen" or “your client") in order to confirm our understanding with regard to the written or orally communicated documents and information that Entergy and my firm (and any consulting economist or other expert we may retain jointly or separately) have received or will receive from your firm or clients, and the written or orally communicated documents and information that KGen and your firms (and any consulting economist or other expert you may retain jointly or separately) have received or will receive from Entergy or my firm, in connection with any regulatory,


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antitrust or judicial review of Entergy's proposed acquisition (the "Communications") of the “Hot Spring” generation facility and certain related assets in Hot Spring, Arkansas from KGen Hot Spring LLC (the "Proposed Transaction").

1. In connection with the Proposed Transaction, each of us and our clients have concluded that facts known or made known to each may assist the others in preparation of common or joint defenses. Entergy and KGen acknowledge and agree that they share certain common legal interests and that such interests will best be served if they can exchange information, pool their individual work product, and cooperate in a joint defense effort, subject to the continued protections of the attorney-client privilege, the work product doctrine and all other applicable privileges and immunities. Therefore, as previously agreed, the parties will assert a joint defense privilege in connection with certain matters regarding the Proposed Transaction. In addition, Entergy and KGen may add other counsel to this Agreement by having such counsel sign the attached Form of Consent agreeing to bound by the terms of this Agreement.

2. Each of us agrees that we (and our respective law firms) and our clients, and any outside economists or consultants who are now or may be later retained in connection with the Proposed Transaction, will treat all Communications, including this Agreement, among us as confidential within the terms of this Agreement. Except as may be further restricted by any confidentiality agreement between Entergy and KGen (or any of their affiliates), and except as permitted pursuant to the terms of the eighth enumerated paragraph of this Agreement, you and I (and our colleagues and employees at our respective law firms) and our respective clients will not disclose such Communications (or their contents) without the prior approval of Entergy or KGen, as the case may be, to anyone other than the following persons: in-house counsel for Entergy or KGen, any partner or employee of our respective law firms, and consulting economists, other experts, or vendors working on the Proposed Transaction. The categories of persons to whom Communications may be disclosed may be expanded with the joint consent of you and me (on behalf of our respective law firms and our clients), so long as the person added signs the attached Form of Consent agreeing to bound by the terms of this Agreement.

3. In addition, the content of these Communications may be used only in connection with, and for the purpose of, advocating for or defending the Proposed Transaction in any review by any federal, state or local regulatory commission or body, the Antitrust Division of the U.S. Department of Justice, the Federal Trade Commission, a state attorney general, or in any judicial proceeding.

4. Excepted from the requirement to treat Communications as confidential are any Communications that (i) are or become generally available to the public (other than as a result of a disclosure in violation of this Agreement); (ii)


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become available to a party or its counsel on a non-confidential basis from a source other than the other party or its representatives, provided that such source is not known by the recipient to be bound by a confidentiality agreement with, or other obligation of secrecy or non-disclosure to, the other party or another party; or (iii) have been independently developed by the party or its counsel without violating any of the obligations under this Agreement.

5. During the course of this matter, you or I (and our respective law firms) may prepare written materials that are subject to the attorney-client and work product privileges ("Protected Materials"). Each of us, with the consent of the others, may provide Protected Materials in draft form or final version to our respective clients in order to enable them to assist us in representing our clients’ mutual interests in connection with the regulatory and antitrust review of the Proposed Transaction. Protected Materials will be provided subject to the joint defense privilege you and I have agreed to assert in this matter. Any Protected Materials and their contents will not be disclosed to anyone other than (i) the individuals permitted to receive Communications under this Agreement and (ii) the client personnel who review the Protected Material under this paragraph; provided, however, that Entergy and KGen may, as each deems advisable and necessary, reasonably designate all or part of these Protected Materials as competitively sensitive and for "Outside Counsel Only" pursuant to the seventh enumerated paragraph of this Agreement

6. This letter will apply to any information or data derived from the Communications or Protected Materials hereunder that are incorporated in any documents prepared by the receiving party or its counsel.

7. Entergy and KGen, or the counsel for each, may, as each deems advisable and necessary, reasonably designate any competitively sensitive Communications or Protected Materials provided by or on behalf of such party (the "Providing Party") to the other party (the "Receiving Party") under this Agreement as "Outside Counsel Only." Such Communications and Protected Materials and the information contained therein shall be given only to the outside legal counsel and consulting economists (or other experts) of the Receiving Party and will not be disclosed by such outside counsel and consulting economists or other experts to employees, officers or directors of the Receiving Party unless express written permission is obtained in advance from the Providing Party’s outside legal counsel. If all or part of these Communications or Protected Materials are designated for "Outside Counsel Only," they shall not be provided to client personnel unless such Communications or Protected Materials can be redacted, to the satisfaction of the Providing Party, to delete references to information or data deemed confidential by the Providing Party. Entergy and KGen, by counter-signature of this Agreement,


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expressly consent and agree that Communications or Protected Materials designated as "Outside Counsel Only" need not be communicated to them, notwithstanding, among other provisions, the applicable rules of professional conduct of the State of New York or similar provisions under other state laws.

8. In the event one of the parties is required to disclose any Communications or Protected Materials pursuant to the operation of any law, rule or regulation, or pursuant to a subpoena, court order, civil investigative demand or similar judicial, governmental or regulatory body process, that party (the "Compelled Party") will promptly notify the other signatories to this Agreement in writing of the request so that the other parties may seek a protective order or other appropriate remedy, or may waive compliance with the provisions of this Agreement. If in the absence of a protective order or other remedy or the receipt of a waiver by the other parties the Compelled Party is nonetheless required to disclose any Communications or Protected Materials, then the Compelled Party may, without liability hereunder, disclose only that portion of the Communications or Protected Materials the Compelled Party is required to disclose; provided, however, that the Compelled Party shall exercise all reasonable efforts to preserve the confidentiality of all Communications and Protected Materials, including, without limitation, by cooperating with the other parties to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded such Communications and Protected Materials. In addition, for Communications and Protected Materials, each signatory will use reasonable efforts to resist any challenge to the assertion of the attorney-client privilege, work product protection or other privileges or immunities that exist or may exist as a result of this Agreement or the party's respective individual privileges.

9. Each party acknowledges and agrees that documents or other written information or data may be inadvertently or unintentionally provided ("Inadvertently Produced Documents") to the other party in the course of working on the Proposed Transaction. In the event of such inadvertent provision of written materials, the Providing Party may demand in writing the return or destruction of any Inadvertently Produced Documents. Upon receipt of such a written demand, the Receiving Party shall promptly deliver to the Providing Party or destroy (at the Providing Party's option) all copies of the Inadvertently Produced Documents, and shall undertake reasonable measures to ensure that the Inadvertently Produced Documents and the information or data contained therein are not further disseminated by or to the Receiving Party's employees and are not summarized, referenced or otherwise reflected in any other document or database of the Receiving Party.

10. Any signatory to this Agreement may withdraw on prior written notice to the undersigned, in which case this Agreement prospectively will no longer


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apply to the withdrawing signatory, but will continue to protect all Communications and Protected Materials disclosed by or to the withdrawing signatory prior to its withdrawal. Any withdrawing signatory will continue to be bound by this Agreement with regard to any Communications and Protected Materials provided, disclosed, received, learned of or obtained prior to withdrawal. Any withdrawing signatory will promptly deliver to the Providing Party or destroy (at the Providing Party's option) all Communications and Protected Materials (and all copies thereof and extracts therefrom) furnished to the withdrawing signatory or its representatives by or on behalf of the Providing Party. All parties that received Communications and Protected Materials from the withdrawing signatory will promptly deliver to the withdrawing signatory or destroy (at the withdrawing signatory's option) all Communications and Protected Materials (and all copies thereof and extracts therefrom) furnished to the other party or its representatives by or on behalf of the withdrawing signatory.

11. Each of the parties, after full opportunity to discuss the matter with counsel, waives any right to seek disqualification of counsel for the other party based upon disclosure or receipt of information pursuant to this Agreement. Nothing in this Agreement will be construed to affect the separate and independent or joint representation of each party by its counsel.

12. Nothing in this Agreement requires either party or counsel for either party to disclose any particular information or documents to the other party or to counsel for the other party. We and the parties acknowledge that neither party, nor counsel for either party, makes any representation or warranty, either express or implied, as to the accuracy or completeness of any Communications or Protected Materials.

13. In the event the Proposed Transaction between the parties is terminated, each party will promptly deliver to the Providing Party or destroy (at the Providing Party's option) all Communications and Protected Materials (and all copies thereof and extracts therefrom) furnished to the Receiving Party or its representatives, including consulting economists or other experts, by or on behalf of the Providing Party, but in no event shall either party be obligated to disclose or provide Communications or Protected Materials prepared by it or its representatives to the other party. However, notwithstanding the above language, one set of Communications and Protected Materials exchanged may be maintained by outside counsel for each Receiving Party if such party determines in good faith that such retention is necessary or advisable in connection with any pending, threatened or potential claims arising out of the Proposed Transaction theretofore under consideration. Notwithstanding the return or destruction of the Communications and


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Protected Materials exchanged, each party and its representatives will continue to be bound by its obligations of confidentiality and other obligations hereunder.

14. Neither the existence of this Agreement or of a joint defense effort in connection with the Proposed Transaction, nor any Communications, shall be used in any fashion against the signatories to this Agreement, other than as set forth in this Agreement. By way of example and not limitation, it shall not be used offensively or defensively in any litigation between the parties to the Proposed Transaction involving any issue relating to or deriving from the Proposed Transaction, nor will any of the parties claim that counsel is disqualified in such litigation by reason of this Agreement. Further, the execution of this Agreement is not, and should not be construed as, an admission of any fact or liability by a party or that the contemplated transaction raises any issues or affects or limits competition.

15. Each of us and our clients acknowledge and agree that money damages alone would be an insufficient remedy for any actual or threatened breach of any provision of this Agreement. In addition to all other remedies that the non-breaching parties may have, such non-breaching parties shall be entitled to specific performance and injunctive or other equitable relief as a remedy for such actual or threatened breach, and each party further waives any requirement for the securing or posting of any bond in connection with any such remedy.

16. Each party affirms that this Agreement does not establish an attorney-client relationship between your firm and my client or between my firm and your clients. It is further understood and agreed that by entering into this Agreement none of us nor our clients are engaged in a partnership or joint venture, and that we are acting only as counsel for our respective clients and not as counsel for any client of any other party to this Agreement.

17. This Agreement is intended to be consistent with and to supplement any and all confidentiality agreements between the parties, regardless of whether such agreements are existing or executed in the future.

18. By executing the Form of Consent to this Agreement, such signatory acknowledges that he or she has read and is familiar with the rules and regulations of the Federal Energy Regulatory Commission with respect to interrelations between electric public utility affiliates, 18 C.F.R. 35.39, and between the transmission function and the wholesale merchant function within electric public utilities, 18 C.F.R. 358.2 – 358.8, and agrees to abide by same in the performance of this Agreement.

19. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, excluding the conflict of laws principles


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thereof that would require or permit the application of the laws of any other jurisdictions.

Please confirm your agreement to the foregoing terms by counter-signing this Agreement at the place indicated below. This Agreement may be executed in counterparts.

Sincerely,

[_________________][_________________]Counsel for Entergy Corporation (together with its subsidiaries andcontrolled affiliates)

[__________________], Esq. On behalf of [Milbank, Tweed, Hadley McCloy LLP]Counsel for KGen Power Corporation (together withits subsidiaries and controlled affiliates)

____

KGen Power Corporation (together with its subsidiaries and controlled affiliates)

By:

____________________________

Entergy Corporation (together with its subsidiaries andcontrolled affiliates)

By:


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____________________________


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EXHIBIT I

FORM OF CONSENT

I, __ , have read the attached Joint Defense and Common Interest Letter Agreement between Entergy and KGen (as defined therein), and agree to be bound by its terms.


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EXHIBIT J

8089471.10


Four Oaks Place1330 Post Oak Boulevard, Suite 1500

Houston, Texas 77056

May [__ ], 2011

To the Stockholders of KGen Power Corporation:

On behalf of the Board of Directors, we cordially invite you to a Special Meeting of Stockholders of KGen Power Corporation. The Special Meeting will be held on [ ______ __ ], 2011, at [2:00 p.m., local time, in the Central Plains conference room, Suite 200, of the Four Oaks Place building located at 1330 Post Oak Blvd, Houston, Texas 77056].

At the Special Meeting, you will be asked to consider and vote on separate resolutions authorizing:

the sale of our 520 megawatt combined-cycle power generation facility located in Hinds County, Mississippi, to Entergy Mississippi, Inc., for a purchase price of $206 million in cash (or approximately $458/ kilowatt based on 450 megawatt of summer rated power generation capacity), subject to certain adjustments, and

the sale of our 620 megawatt combined-cycle power generation facility located in Hot Spring County,Arkansas, to Entergy Arkansas, Inc., for a purchase price of $253 million in cash (or approximately $408/ kilowatt based on 620 megawatt of summer rated power generation capacity), subject to certain adjustments.

After careful consideration, your Board of Directors determined that the proposed transactions are in the best interests of KGen Power Corporation and its stockholders. Your Board of Directors has unanimously approved the proposed transactions and recommends that you vote “FOR” each of them.

It is important that your views be represented whether or not you are able to be present at the Special Meeting. We urge you to vote on the Internet or by telephone using the number shown on your proxy card, or to complete, sign, date, and return the enclosed proxy card promptly in the accompanying postage-paid envelope.

The enclosed Proxy Statement provides you with detailed information about the Special Meeting, the proposed transactions and the separate Asset Purchase Agreements entered into with respect to each of the two proposed transactions. Copies of the Asset Purchase Agreements are attached as Annexes A and B. We encourage you to read the Proxy Statement and all annexes thereto carefully and in their entirety. You may also obtain additional information about us or the proposed transactions by calling us at (713) 979-1990.

To Vote by Internet and to Receive Materials Electronically

Go to the website (www.proxyvote.com) that appears on your Proxy Card.Enter the control number found in the shaded box on the front of your

Proxy Card and follow the simple instructions.

Choose to receive an e-mail notice when future proxy statements and annual reports areavailable for viewing over the Internet. You will cut down on bulky paper

mailings, help the environment, and lower expenses paid by your company.

The deadline for Internet and telephone voting is 11:59 p.m., Eastern Time, on [ ______ __ ], 2011. We encourage you to vote via the Internet using the control number that appears on the front of your Proxy Card and to choose to view future mailings electronically rather than receiving them on paper.


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EXHIBIT J

8089471.10

Sincerely,

Daniel HudsonChairman

Thomas B. WhitePresident and Chief Executive Officer


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EXHIBIT J

8089471.10


NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held on [ ______ __ ], 2011

NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of KGen Power Corporation will be held on [______ __ ], 2011, at [2:00 p.m., local time, in the Central Plains conference room, Suite 200, of the Four Oaks Place building located at 1330 Post Oak Blvd, Houston, Texas 77056] for the following purposes:

1. To consider and vote on a resolution authorizing the sale of our 520 megawatt combined-cycle power generation facility located in Hinds County, Mississippi, and other assets of our subsidiary KGen Hinds LLC to Entergy Mississippi, Inc., pursuant to an Asset Purchase Agreement dated as of April __, 2011, by and among KGen Hinds LLC, KGen Power Corporation (solely for limited purposes) and Entergy Mississippi, Inc.;

2. To consider and vote on a resolution authorizing the sale of our 620 megawatt combined-cycle power generation facility located in Hot Spring County, Arkansas, and other assets of our subsidiary KGen Hot Spring LLC, to Entergy Arkansas, Inc., pursuant to an Asset Purchase Agreement dated as of April __, 2011, by and among KGen Hot Spring LLC, KGen Power Corporation (solely for limited purposes) and Entergy Arkansas, Inc.; and

3. To transact such other business as may properly come before the Special Meeting or any adjournment or postponement thereof.

This Notice is accompanied by a form of proxy and a Proxy Statement which more fully describes the foregoing items of business.

In accordance with the KGen Power Corporation’s Bylaws, the close of business on May __ , 2011 has been fixed as the record date for the determination of the stockholders entitled to notice of and to vote at the Special Meeting and any adjournment thereof. A list of stockholders entitled to notice of and to vote at the Special Meeting will be available for examination by any stockholder, for any purpose germane to the meeting, at the offices of KGen Power Corporation, 1330 Post Oak Blvd, Suite 1500, Houston, Texas 77056, Attention: William Marlow, Esq. during ordinary business hours for the ten days immediately prior to the Special Meeting. The stockholder list will also be available for inspection at the Special Meeting by any stockholder present at the meeting.

By Order of the Board of Directors,

William R. MarlowSecretary

Houston, TexasMay __, 2011

IMPORTANT

Most stockholders have a choice of voting on the Internet, by telephone, or by mail using a traditional proxy card. Please refer to the proxy card or other voting instructions included with these proxy materials for information on the voting methods available to you. If you vote by telephone or on the Internet, you do not need to return your proxy card.


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EXHIBIT J

i8089471.10

TABLE OF CONTENTS

Questions and Answers About the Voting Procedures for the Special Meeting...............................................................1

Summary................................................................................................................................................................................5The Transactions ....................................................................................................................................................5The Asset Purchase Agreements ...........................................................................................................................8

Cautionary Statement Regarding Forward-Looking Statements .....................................................................................12

The Special Meeting ...........................................................................................................................................................13Date, Time and Place ...........................................................................................................................................13Purpose of the Special Meeting...........................................................................................................................13General..................................................................................................................................................................13Record Date and Share Ownership .....................................................................................................................13Revocability of Proxies........................................................................................................................................13Voting and Solicitation ........................................................................................................................................13Voting via the Internet or by Telephone.............................................................................................................14How to Vote..........................................................................................................................................................14Attending the Special Meeting ............................................................................................................................15Common Stock Ownership of Directors and Executive Officers .....................................................................15Other Matters........................................................................................................................................................15Important Notice Regarding the Availability of Proxy Materials for the Special Meeting ............................15Questions and Additional Information................................................................................................................15

The Transaction ...................................................................................................................................................................16General..................................................................................................................................................................16The Parties to the Transactions ...........................................................................................................................16Background of the Transactions..........................................................................................................................16Board Recommendation; Reasons for the Transactions....................................................................................19Opinions of the Company’s Financial Advisor..................................................................................................21Net Proceeds from the Transactions and Their Expected Use ..........................................................................22Nature of our Business Following the Transactions ..........................................................................................23Interests of Executive Officers and Directors in the Transaction .....................................................................23Stockholder Approval Requirement....................................................................................................................24Appraisal Rights in Respect of the Transaction .................................................................................................24Regulatory Approvals ..........................................................................................................................................24Accounting Treatment of the Transaction ..........................................................................................................25Material United States Federal Income Tax Consequences ..............................................................................25

Terms of the Asset Purchase Agreements .........................................................................................................................26Explanatory Note Regarding the Asset Purchase Agreements .........................................................................26General..................................................................................................................................................................26Purchase Price Adjustments ................................................................................................................................26Representations and Warranties ..........................................................................................................................27Regulatory Approvals ..........................................................................................................................................28Access Prior to Closing........................................................................................................................................28Operation of the Hinds and Hot Spring Facilities Prior to the Closings...........................................................28Proxy Statement; Special Meeting; Board Recommendation ...........................................................................29Restrictions on Solicitation of Other Offers .......................................................................................................29Plant Performance Tests ......................................................................................................................................30Casualty Losses and Condemnation ...................................................................................................................30Other Covenants ...................................................................................................................................................31Conditions to Closing ..........................................................................................................................................31Termination Rights...............................................................................................................................................33


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ii8089471.10

Specific Performance ...........................................................................................................................................34Indemnification ....................................................................................................................................................34Fees and Expenses................................................................................................................................................35

Unaudited Pro Forma Consolidated Financial Statements ...............................................................................................36

Security Ownership of Management..................................................................................................................................43

Where You Can Find Additional Information ..................................................................................................................44

Annex A --- Asset Purchase Agreement, dated as of April__, 2011, by and among KGen Hinds LLC, KGen Power Corporation (solely for limited purposes) and Entergy Mississippi, Inc.

Annex B --- Asset Purchase Agreement, dated as of April __, 2011, by and among KGen Hot Spring LLC, KGen Power Corporation (solely for limited purposes) and Entergy Arkansas, Inc.

Annex C --- Opinion of Credit Suisse Securities (USA) LLC in connection with the sale of the Hinds facility

Annex D --- Opinion of Credit Suisse Securities (USA) LLC in connection with the sale of the Hot Spring facility


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18089471.10

QUESTIONS AND ANSWERS ABOUT THE VOTING PROCEDURES FOR THE SPECIAL MEETING

The following questions and answers are intended to address some commonly asked questions regarding the Transactions, the Asset Purchase Agreements and the Special Meeting. These questions and answers may not address all questions that may be important to you as a stockholder of KGen Power Corporation. Please refer to the “Summary” beginning on page [ _ ] and the more detailed information contained elsewhere in this Proxy Statement, the annexes to this Proxy Statement and the documents referred to or incorporated by reference in this Proxy Statement. See “Where You Can Find Additional Information” beginning on page [ _ ].

Unless the context otherwise requires, in this Proxy Statement, (i) references to “KGen Power Corporation,” “KGen,” “the Company,” “we,” “our,” and “us” refer to KGen Power Corporation, (ii) references to “KGen Hinds” or the “Hinds subsidiary” refer to KGen Hinds LLC, a subsidiary of KGen, and owner of the Hinds facility, (iii) references to “KGen Hot Spring” or “Hot Spring subsidiary” refer to KGen Hot Spring LLC, a subsidiary of KGen, and owner of the Hot Spring facility, (iv) references to “Seller” and “Sellers” refer to KGen Hinds and/or KGen Hot Spring, as applicable, (v) references to the “Hinds facility” refer to our 520 megawatt combined-cycle power generation facility located in Hinds County, Mississippi, (vi) references to the “Hot Spring facility” refer to our 620 megawatt combined-cycle power generation facility located in Hot Spring County, Arkansas, (vii) references to “the Board” refer to the board of directors of KGen, (viii) references to “Entergy Mississippi” refer to Entergy Mississippi, Inc., (ix) references to “Entergy Arkansas” refer to Entergy Arkansas, Inc., (x) references to “Buyer” and “Buyers” refer to Entergy Mississippi and/or Entergy Arkansas, as applicable, (xi) references to “Entergy” refer to Entergy Corporation, parent company of Entergy Arkansas and Entergy Mississippi, (xii) references to the “Hinds Asset Purchase Agreement” refer to that certain Asset Purchase Agreement, dated as of April __, 2011, by and among KGen Hinds, solely for the limited purposes expressly set forth therein, KGen, and Entergy Mississippi, (xiii) references to the “Hot Spring Asset Purchase Agreement” refer to that certain Asset Purchase Agreement, dated as of April __, 2011, by and among KGen Hot Spring, solely for the limited purposes expressly set forth therein, KGen, and Entergy Arkansas, (xiv) references to an “Asset Purchase Agreement” or the “Asset Purchase Agreements” refer to the Hinds Asset Purchase Agreement and/or the Hot Spring Asset Purchase Agreement, as applicable, (xv) references to the “Transaction” or the “Transactions” refer to each or both of the sales of the Hinds facility and other assets of KGen Hinds and of the Hot Spring facility and other assets of KGen Hot Spring pursuant to the Asset Purchase Agreements, and (xvi) references to the “Closings” refer to the consummation of each or both, as applicable, of the Transactions pursuant to the Asset Purchase Agreements.

Q: What are the proposed transactions for which I am being asked to vote?

A: You are being asked to approve separately (i) the sale of our Hinds facility and other assets of our Hinds subsidiary to Entergy Mississippi for a purchase price of $206,000,000 in cash (or approximately $458/kW based on 450 MW of summer rated power generation capacity), subject to certain adjustments, pursuant to the Hinds Asset Purchase Agreement, and (ii) the sale of our Hot Spring facility and other assets of our Hot Spring subsidiary to Entergy Arkansas for $253,000,000 in cash (or approximately $408/kW based on 620 MW of summer rated power generation capacity), subject to certain adjustments, pursuant to the Hot Spring Asset Purchase Agreement. The terms of the Transactions are more fully described below under “The Transactions” beginning on page [ _]. A copy of the Hinds Asset Purchase Agreement is attached to this Proxy Statement as Annex A and a copy of the Hot Spring Asset Purchase Agreement is attached to this Proxy Statement as Annex B. The Board is soliciting your proxy to vote at a special meeting of our stockholders (the “Special Meeting”) being held for the purpose of obtaining stockholder approval of separate resolutions authorizing each of the Transactions and to transact such other business as may properly come before the Special Meeting or any adjournment or postponement thereof.

___________________________________________________________________________________________

Q: What do I need to do now?

A: This Proxy Statement contains important information about the Transactions, including the Special Meeting of the stockholders of KGen. We urge you to carefully read this Proxy Statement, including its annexes. Even if you plan to attend the Special Meeting, if you hold your shares in your own name as the stockholder of record, please vote your shares on the Internet or by telephone using the number shown on your proxy card or by signing, dating and returning the enclosed proxy card. You may also attend the Special Meeting and vote by ballot in person. If you hold your shares in “street name,” follow the procedures provided by your bank, broker or other nominee.

A number of brokers and banks participate in a program provided through Broadridge Financial Solutions, Inc. that offers telephone and Internet votes of proxies. If your shares are held in an account with a broker or bank participating in the Broadridge Financial Solutions, Inc. program, you may vote your proxy for those shares telephonically by calling the telephone number shown on the form received from your broker or bank, or via the


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EXHIBIT J

28089471.10

Internet at Broadridge Financial Solutions, Inc.’s web site at www.proxyvote.com.

Your vote is important. We encourage you to vote as soon as possible.

___________________________________________________________________________________________

Q: Why do the Transactions require stockholder approval?

A: The Board is seeking stockholder approval of the Transactions because we are a Delaware corporation and the Transactions, together, constitute the sale of “substantially all” of our property and assets under Section 271 of the General Corporation Law of the State of Delaware (the “DGCL”). Section 271 of the DGCL requires that a Delaware corporation obtain the approval of the stockholders for the sale of “all or substantially all of its property and assets.” Additionally, approval of each Transaction by stockholders is a condition to the Closing of that Transaction under the applicable Asset Purchase Agreement.

___________________________________________________________________________________________

Q: What will happen if one or both of the Transactions are not approved by stockholders?

A: If the Hinds Transaction is not approved by stockholders, the proposed sale of the Hinds facility and other assets of KGen Hinds to Entergy Mississippi will not be completed. If the Hot Spring Transaction is not approved by stockholders, the proposed sale of the Hot Spring facility and other assets of KGen Hot Spring to Entergy Arkansas will not be completed. If both Transactions are not approved, neither will be completed. In addition, if approval for the Hinds Transaction is not obtained, we will be required to pay a termination fee of $1.5 million and if approval for the Hot Spring Transaction is not obtained, we will be required to pay a termination fee of $1.9 million.

___________________________________________________________________________________________

Q: When are the Transactions expected to be completed?

A: We expect to complete each Transaction that is approved by stockholders at the Special Meeting in mid-2012. However, each of the Transactions is subject to approval of the Federal Energy Regulatory Commission (the “FERC”), clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), certain third-party consents and certain other customary closing conditions. In addition, the closing of the Hinds Transaction is conditioned upon Entergy Mississippi obtaining the approval of that Transaction from the Mississippi Public Service Commission on terms satisfactory to Entergy Mississippi in its sole and absolute discretion, and the closing of the Hot Spring Transaction is conditioned upon Entergy Arkansas obtaining the approval of that Transaction from the Arkansas Public Service Commission on terms satisfactory to Entergy Arkansas in its sole and absolute discretion. The closing of the Hot Spring Transaction is also conditioned on the completion of construction of an 8.5 mile pipeline lateral from the Hot Spring facility pursuant to the Precedent Agreement we previously entered into with the Texas Eastern Transmission Company and the termination of the Industrial Development Authority bond structure in place with Hot Spring County, Arkansas.

Accordingly, it is possible that one or both of the Transactions may be completed on a date before or after mid-2012 or not at all. In addition, each of Asset Purchase Agreements may generally be terminated by either of the parties if the closing of the Transaction subject to that agreement has not occurred on or before April [__], 2014 (subject to certain extensions of up to 60 days in connection with limited events).

___________________________________________________________________________________________

Q: Who is entitled to vote at the Special Meeting?

A: The Board has fixed [ ___ __ ], 2011 as the record date for the Special Meeting (the “Record Date”). If you were a KGen stockholder at the close of business on the Record Date you are entitled to vote your KGen shares at the Special Meeting.

___________________________________________________________________________________________

Q: How many votes do I have?

A: You are entitled to one vote for each share of KGen common stock that you owned as of the Record Date. As of the close of business on the Record Date, there were approximately [ ____ ] outstanding shares of KGen common stock. As of that date, less than 1% of the outstanding shares of KGen common stock were held by the directors and executive officers of KGen.

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Q: What vote is required to approve the Transactions?

A: The affirmative vote of a majority of the outstanding shares of KGen common stock is required to approve each of the Transactions.

James P. Jenkins, a director of the Company, is a Managing Director of King Street Capital Management, L.P. (“KSCM”). Funds for which KSCM provides investment advisory services or is an investment manager, together, own 5,574,000 shares of KGen common stock (approximately [9.96]% of the outstanding shares of common stock). KSCM has entered into agreements with Buyers pursuant to which it has agreed to vote, or cause to be voted, those 5,574,000 shares in favor of the Transactions.

Gerald Stalun, a director of the Company, is a Managing Director of EIG Global Energy Partners (“EIG”). Funds and an investor for which an affiliate of EIG serves as a sub-advisor, together, own 5,714,286 shares of KGen common stock (approximately [10.21]% of the outstanding shares of common stock). EIG has entered into agreements with Buyers pursuant to which it has agreed to vote, or cause to be voted, those 5,714,286 shares in favor of the Transactions.

___________________________________________________________________________________________

Q: How will my proxy be voted?

A: If you vote by Internet, by telephone or by completing, signing, dating and mailing your proxy card or voting instruction card, your shares will be voted in accordance with your instructions. If you are a stockholder of record and you sign, date, and return your proxy card but do not indicate how you want to vote or do not indicate that you wish to abstain, your shares will be voted in favor of the approval of the Transaction.

The deadline for Internet and telephone voting is 11:59 p.m., Eastern Time, on [ ___ __ ], 2011. We encourage you to vote via the Internet using the control number that appears on the front of your Proxy Card and to choose to view future mailings electronically rather than receiving them on paper.

___________________________________________________________________________________________

Q: How does the Board recommend that I vote?

A: The Board unanimously recommends that you vote “FOR” the separate proposals to approve each of the Transactions. You should read “The Transactions—Background of the Transactions” beginning on page [ __ ] and “The Transactions—Board Recommendation; Reasons for the Transactions” beginning on page [ __ ] for a discussion of the factors that the Board considered in deciding to recommend approval of the Transactions.

___________________________________________________________________________________________

Q: When and where is the Special Meeting?

A: The Special Meeting will be held on [ ______ __ ], 2011, at [2:00 p.m., local time, in the Central Plains conference room, Suite 200, of the Four Oaks Place building located at 1330 Post Oak Blvd, Houston, Texas 77056].

___________________________________________________________________________________________

Q: Am I entitled to appraisal rights in connection with the Transactions?

A: No. Delaware law does not provide for stockholder appraisal rights in connection with the Transactions.

___________________________________________________________________________________________

Q: Who can attend the Special Meeting?

A: You are entitled to attend the Special Meeting only if you were a stockholder of the Company as of the close of business on the Record Date, or hold a valid proxy issued by any such stockholder.

___________________________________________________________________________________________

Q: Can I change my vote after I have submitted a proxy or voting instruction card?

A: Yes. If you are a stockholder of record you can change your vote at any time before your proxy is voted at the Special Meeting. You can do this in one of three ways:

you can send a signed notice of revocation to the Secretary of KGen; you can submit a revised proxy bearing a later date by Internet, telephone or mail as described above; or


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you can attend the Special Meeting and vote in person, which will automatically cancel any proxy previously given, or you may revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given.

If you choose the first method of revocation, you must submit your notice of revocation or your new proxy no later than the beginning of the Special Meeting. If you choose the second method of revocation, you must submit your notice of revocation or your new proxy no later than 11:59 p.m., Eastern Time, on [ ______ __ ], 2011. If you are a beneficial owner of shares held in street name, you may submit new voting instructions by contacting your broker, bank or nominee. You may also vote in person at the Special Meeting if you obtain a legal proxy from your broker, bank or nominee and present it to the inspectors of election with your ballot when you vote at the meeting.

Additional information on changing your vote is located on page [ _ ].

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Q: Who can answer any questions I may have about the Special Meeting or the Transactions?

A: Stockholders may call KGen at (713) 979-1990 with any questions they may have.


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SUMMARY

This summary highlights selected information contained in this Proxy Statement and may not contain all the information that may be important to you. Accordingly, we encourage you to read carefully this Proxy Statement, its annexes and the documents referred to or incorporated by reference in this Proxy Statement in their entirety. Each item in this summary includes a page reference directing you to a more complete description of that topic. See “Where You Can Find Additional Information” beginning on page [ __ ].

The Transactions

General (page __)

On April [__], 2011, we entered into (i) the Hinds Asset Purchase Agreement, pursuant to which our subsidiary KGen Hinds agreed to sell our Hinds facility and other of its assets to Entergy Mississippi for a purchase price of $206 million in cash (or approximately $458/kW based on 450 MW of summer rated power generation capacity), subject to certain adjustments and (ii) the Hot Spring Asset Purchase Agreement, pursuant to which our subsidiary KGen Hot Spring agreed to sell our Hot Spring facility and other of its assets to Entergy Arkansas for a purchase price of $253 million in cash (or approximately $408/kW based on 620 MW of summer rated power generation capacity), subject to certain adjustments. Neither the Hinds Transaction nor the Hot Spring Transaction is conditioned on the closing of the other. Accordingly, the Transactions may close at different times and one Transaction may be completed and not the other. A copy of each Asset Purchase Agreement is attached as Annex A, in the case of the Hinds Transaction and Annex B, in the case of the Hot Spring Transaction. We encourage you to read the Asset Purchase Agreements carefully and in their entirety.

If the Transactions are approved by stockholders at the Special Meeting, we expect to complete each Transaction in mid-2012. However, each of the Transactions is subject to approval of the FERC, clearance under the HSR Act, certain third-party consents and certain other customary closing conditions. In addition, the closing of the Hinds Transaction is conditioned upon Entergy Mississippi obtaining the approval of that Transaction from the Mississippi Public Service Commission on terms satisfactory to Entergy Mississippi in its sole and absolute discretion, and the closing of the Hot Spring Transaction is conditioned upon Entergy Arkansas obtaining the approval of that Transaction from the Arkansas Public Service Commission on terms satisfactory to Entergy Arkansas in its sole and absolute discretion. The closing of the Hot Spring Transaction is also conditioned on the completion of construction of an 8.5 mile pipeline lateral from the Hot Spring facility pursuant to the Precedent Agreement we previously entered into with the Texas Eastern Transmission Company and the termination of the Industrial Development Authority bond structure in place with Hot Spring County, Arkansas.

The Parties to the Transactions (page __)

KGen Power Corporation

KGen Power Corporation owns and operates electric power generation plants and sells electricity and electrical generation capacity in the United States. KGen sells power and related products to wholesale purchasers such as retail electric providers, power trading organizations, municipal utilities, electric power cooperatives, and other power generation companies. Its portfolio of facilities currently consists of the Hinds and Hot Spring facilities. KGen was incorporated in 2006 and is headquartered in Houston, Texas.

Entergy Mississippi, Inc.

Entergy Mississippi is a subsidiary of Entergy Corporation, an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy Corporation owns and operates power plants with approximately 30,000 megawatts of electric generating capacity. A regulated public utility, Entergy Mississippi delivers electricity to approximately 437,000 customers in 45 Mississippi counties and has approximately 1,900 employees.

Entergy Arkansas, Inc.

Entergy Arkansas is a subsidiary of Entergy Corporation. A regulated public utility, Entergy Arkansas delivers electricity to approximately 693,000 customers in 63 Arkansas counties and has approximately 3,500 employees.

Board Recommendation; Reasons for the Transactions (page __)


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The Board has unanimously determined that the Transactions are in the best interest of KGen and its stockholders and approved the Asset Purchase Agreements and the Transactions. The Board unanimously recommends that you vote “FOR” the approval of the Transactions.

Opinions of the Company’s Financial Advisor (page __)

The Company’s financial advisor in connection with the Transactions, Credit Suisse Securities (USA) LLC (“Credit Suisse”), delivered to the Board a separate (i) opinion, dated April [__], 2011, as to the fairness, from a financial point of view and as of the date of such opinion, to the Company of the $206 million consideration to be received in the Hinds Transaction (the “Hinds Opinion”) and (ii) opinion, dated April [__], 2011, as to the fairness, from a financial point of view and as of the date of such opinion, to the Company of the $253 million consideration to be received in the Hot Spring Transaction (the “Hot Spring Opinion”). The full texts of the Hinds Opinion and the Hot Spring Opinion are attached to this Proxy Statement as Annexes C and D, respectively, and set forth, among other things, the procedures followed, assumptions made, matters considered and limitations on the scope of review undertaken. These opinions were provided to the Board (solely in its capacity as such) for its information in connection with its evaluation of the consideration to be received by the Company in the Hinds Transaction and the Hot Spring Transaction, as the case may be. The opinions addressed only the fairness from a financial point of view to the Company of the consideration to be received by the Company in such Transactions and did not address any other aspect of the Transactions. These opinions do not constitute advice or a recommendation to any stockholder as to how such stockholder should vote or act on any matter relating to the Transactions.

Net Proceeds from the Transactions and Their Expected Use (page __)

Pursuant to the Hinds Asset Purchase Agreement we will receive $206 million of cash purchase price and pursuant to the Hot Spring Asset Purchase Agreement will receive $253 million of cash purchase price. Each of these purchase price amounts are subject to certain adjustments. The Transactions will be taxable events to us for United States federal income tax purposes. See “Material United States Federal Income Tax Consequences.” We expect that the net proceeds we will receive as a result of the Hinds Transaction will be approximately $[ ___ ] million, and the net proceeds we will receive as a result of the Hot Spring Transaction will be approximately $[ ___ ] million, in each case after giving effect to taxes, transaction fees and expenses and cash bonuses we are required to pay in connection with the Transactions. The final net proceeds we will receive will vary based on final purchase price adjustments, the amount of taxes payable on the gain from the Transactions and the amount of transaction fees and expenses.

The Board expects to distribute substantially all of the net proceeds of the Transactions to the Company’s stockholders after they are received by the Company, including upon release of cash held in escrow by Buyers to support indemnification obligations.

Nature of our Business Following the Transactions (page __)

If both Transactions are completed, we will no longer own any power generation facilities and will not conduct any material business.

Interests of Executive Officers and Directors in the Transaction (page __)

All of our executive officers and one of our directors have interests in the Transactions that may be different from, or in addition to, their interests as KGen stockholders. Restricted Stock Units (“RSUs”) held by Daniel T. Hudson, the Chairman of our Board, and by each executive officer (other than Thomas B. White, our President, Chief Executive Officer and a director), will vest upon the consummation of each of the Transaction as follows: 11,667 held by Mr. Hudson; 5,300 held by James H. Sweeney, Executive Vice President, Energy Management; 5,000 held by William R. Marlow, General Counsel and Secretary; 5,000 held by Charles L. Holland, Executive Vice President, Operations; and 3,867 held by W. Kevin Redmond, Chief Accounting Officer and Controller.

In the event Transactions closes, each of the executive officers will be entitled to receive cash bonuses as follows: in connection with the Hinds Transaction, $236, 455 for Mr. White, $181,383 for Mr. Sweeney, $171,116 for Mr. Marlow, $171,116 for Mr. Holland, and $132,330 for Mr. Redmond; and in connection with the Hot Spring Transaction: $241, 570 for Mr. White, $187,426 for Mr. Sweeney, $176,817 for Mr. Marlow, $176,817 for Mr. Holland, and $136,739 for Mr. Redmond. These bonus amounts were calculated based on the $206 million purchase price for the Hinds Transaction and $253 million of purchase price in the Hot Spring Transaction, but are subject to decrease (or increase) in the event that the


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actual purchase price paid in either Transaction is less (or more) than the purchase price.

For a further description of these interests, see the section on “Interests of Executive Officers and Directors in the Transactions.”

Regulatory Approvals (page __)

Under the terms of the Asset Purchase Agreements and the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the Transactions may not be completed until notification and report forms have been filed with the U.S. Federal Trade Commission (the “FTC”) and the Antitrust Division of the U.S. Department of Justice (the “DOJ”), and until the expiration of a 30 calendar day waiting period, or the early termination of that waiting period, following the parties’ filing of their respective notification and report forms. If the FTC or the DOJ issues a Request for Additional Information and Documentary Material prior to the expiration of the waiting period, the parties must observe a second 30 calendar day waiting period, which would begin to run only after both parties have substantially complied with the request for information, unless the waiting period is terminated earlier or extended with the consent of the parties.

Each of the Transactions cannot be completed without prior approval of the FERC under Section 203 of the Federal Power Act (the “FPA”). KGen and Entergy will file with the FERC a joint application for approval of each of the Transactions under Section 203 of the FPA.

Entergy will also file with the FERC a request under Section 205 of the FPA requesting that the FERC allow Buyers to fully recover in its wholesale rates any amount of the purchase price for the Transactions that are in excess of the book value of the assets. To be approved, the FERC must find that Entergy’s request is just and reasonable, and under current FERC precedent, this requires a demonstration that there are measurable benefits to ratepayers from the acquisition of the assets. The FERC may deny the request, grant approval or determine that it will first set the matter for evidentiary hearing.

Additionally, under the Assets Purchase Agreements, a Buyer need not close its Transaction unless it receives approval from the FERC for any change necessary to the interconnection agreement currently in effect between KGen Hinds and Entergy Mississippi, and the interconnection agreement currently in effect between KGen Hot Spring and Entergy Arkansas (collectively, the “Interconnection Agreements”). If necessary, Entergy will file with the FERC amended Interconnection Agreements under Section 205 of the FPA. To be approved, the FERC must find that Entergy’s request is just and reasonable. The FERC may deny the request, grant approval or determine that it will first set the matter for evidentiary hearing.

In addition, under the Asset Purchase Agreements, each Buyer’s obligation to complete its Transaction is subject to Buyer receiving approval of the Transaction from the applicable state public service commission (the Mississippi Public Service Commission (“MPSC”), in the case of the Hinds Transaction, and the Arkansas Public Service Commission (“APSC”), in the case of the Hot Spring Transaction).

With respect to the Hinds Transaction, Entergy Mississippi will be required to file for and obtain from the MPSC, a Certificate of Public Convenience and Necessity authorizing its acquisition of the Hinds facility. Entergy Mississippi will also seek an order from the MPSC allowing recovery of all costs of the Hinds Transaction in its rates through one of several possible mechanisms. The MPSC certificate filing will be publically noticed, providing an opportunity for intervention by interested parties, will be reviewed by the Mississippi Public Utilities Staff and will be thereafter considered in a hearing before the MPSC. Depending on the rate approval mechanism selected, the proceeding to recover the costs of the Hinds Transaction is expected to follow the same process.

With respect to the Hot Spring Transaction, Entergy Arkansas will be required to obtain approval from the APSC for its acquisition of the Hot Spring Facility. Entergy Arkansas will also seek an order from the APSC in the same proceeding allowing recovery of all costs of the Hot Spring Transaction in its rates through one of several possible mechanisms. The APSC is not required to conduct a public hearing on Entergy Arkansas’ application, but if it determines to have a public hearing, appropriate notice is to be given. Entergy Arkansas’ application will be reviewed by the APSC Staff and will be thereafter approved if the Commission determines the Hot Spring Transaction is consistent with the public interest.

Under the Asset Purchase Agreements, a Buyer need not close its Transaction unless it receives regulatory approval that will allow it to recover all costs associated with the Transaction on terms acceptable to Buyer in its sole discretion (through rates, fuel adjustment charges and/or otherwise) pursuant to a finding that the Transaction is in the public interest and providing for such other regulatory treatment as is acceptable to Buyer in its sole discretion.


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Material United States Federal Income Tax Consequences (page __)

The Transaction will be a taxable event to us for United States federal income tax purposes. The Transaction itself will not result in any United States federal income tax consequences to you. However, stockholders may be subject to United States federal income tax on the special dividend the Board expects to declare out of the net proceeds of the sale.

The Asset Purchase Agreements

General (page __)

The Hinds Asset Purchase Agreement provides that Entergy Mississippi will acquire the Hinds facility and other assets from our Hinds subsidiary for $206 million in cash, subject to certain adjustments, and the Hot Spring Asset Purchase Agreement provides that Entergy Arkansas will acquire the Hot Spring facility and other assets from our Hot Spring subsidiary for $253 million in cash, subject to certain adjustments.

The following are the potential purchase price adjustments provided for in the Asset Purchase Agreements:

if certain conditions to Buyer’s and Seller’s obligation to close a Transaction are satisfied but Buyer has not yet received approval from the applicable state public service commission and other regulatory authorities for the closing of that Transaction, the purchase price under the Asset Purchase Agreement for that Transaction will, so long as Seller is otherwise ready to Close within a specified period after such approvals are obtained, be increased by $5 million (if Buyer’s receipt of state public service commission and other regulatory approval takes longer than 15, but less than 27 months) or $10 million (if Buyer’s receipt of state public service commission and other regulatory approval takes longer than 27 months);

if certain plant performance tests to be performed before Closing establish that the full-load dependable net electric generating capacity (as adjusted to specific summer ambient conditions) of the Hinds facility is more than 3 MW below 450 MW (the “Hinds contract capacity”), or that the full-load dependable net electric generating capacity (as adjusted to specific summer ambient conditions) of the Hot Spring facility is more than 3MW below 620 MW (the “Hot Spring contract capacity”), for each kW by which the capacity is more than 3MW below the applicable contract capacity, the purchase price will be reduced by $457.78/kW in the case of the Hinds facility and $408.06/kW in the case of the Hot Spring facility, up to a maximum reduction to the purchase price as a result of this test of $13.5 million, in the case of the Hinds Transaction, and $16 million in the case of the Hot Spring Transaction (which, if such limit is exceeded will give Buyer the right to terminate the applicable Asset Purchase Agreement), although the $457.78/kW and $408.06/kW reduction amounts and the $13.5 million and $16 million maximum reduction amounts are subject to proportional increase in the event that the purchase price for a facility increases as described above because it takes longer than 15 months, or 27 months, for Buyer to receive approval from the applicable state public service commission and other regulatory authorities;

the purchase price in each Transaction will be reduced by $70,000 for each Btu/Kwh by which the net heat rate of a facility’s electric generating units as established pursuant to the plant performance tests exceeds (a) 7,200 Btu/Kwh, in the case of the Hinds facility, and (b) 7,100 Btu/Kwh, in the case of the Hot Spring facility, in each case, subject to a tolerance of 100 Btu/Kwh, if Closing occurs within 18 months of execution, or 150 Btu/Kwh, if Closing occurs thereafter, up to a maximum reduction to the purchase price as a result of this test of $13.5 million, in the case of the Hinds Transaction, and $16 million in the case of the Hot Spring Transaction (which, if such limit is exceeded will give Buyer the right to terminate the applicable Asset Purchase Agreement);

the purchase price in each Transaction will be decreased (or increased) by the amount by which the value inventory transferred to Buyer at Closing is less than (or greater than) $1.8 million, in the case of the Hinds facility, and $1.6 million, in the case of the Hot Spring facility, unless the difference is less than $18,000, in the case of the Hinds facility or and $16,000, in the case of the Hot Spring facility, in which case there will be no inventory adjustment;

if certain equipment is not transferred by Seller to Buyer at Closing, the purchase price will be reduced by the value of the equipment not transferred as set by reference to a price in the schedule attached to the relevant Asset Purchase Agreement; and


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the purchase price in each Transaction is subject to reduction in the event of certain casualty and condemnation events.

Restrictions on Solicitation of Other Offers (page __)

During the pendency of the Asset Purchase Agreements, we may not (and must cause each of our affiliates, and use commercially reasonable efforts to cause our and their representatives, not to), subject to certain exceptions, (a) solicit, initiate or knowingly encourage the submission of any alternative proposal to acquire the Hinds facility or Hot Spring facility or any proposal to acquire the Company (a “Takeover Proposal”), (b) furnish non-public information regarding us, Sellers or the assets being purchased in connection with or in response to any Takeover Proposal, (c) engage in discussions regarding any Takeover Proposal, (d) endorse or approve any Takeover Proposal, or (e) negotiate or enter into any agreement with respect to any Takeover Proposal. The Board has agreed to recommend to our stockholders the approval of each of the Transactions and may only change its recommendation in certain limited circumstances.

Conditions to Closing (page __)

The parties’ obligations to close each Transaction are subject to a number of conditions to Closing under the Asset Purchase Agreements, including the following:

Buyer’s Conditions to Closing.

KGen stockholder approval;

Seller’s material compliance with its pre-Closing obligations and the material accuracy of its representations under the Asset Purchase Agreement;

expiration or termination of the HSR Act waiting period;

the absence of any order or law prohibiting the consummation of the Transaction;

Buyer’s receipt of approval of the Transaction from the applicable state public service commission (the Mississippi Public Service Commission, in the case of the Hinds Transaction, and the Arkansas Public Service Commission, in the case of the Hot Spring Transaction) and approval from the FERC, in each case on terms satisfactory to Buyer in its sole discretion;

Buyer’s receipt of certain third-party consents and approvals on terms satisfactory to Buyer in its sole discretion;

Buyer’s receipt of a network transmission study for network transmission service for the applicable facility and the aggregate costs reflected in the study for the supplemental upgrades required to the transmission network in respect of such request do not exceed $10 million, in the case of the Hinds facility, and $40 million, in the case of the Hot Spring facility;

no material adverse effect with respect to Seller;

Seller having terminated its Operation and Maintenance Agreement with NAES Corporation at no cost to Buyer in respect of the applicable facility;

the final plant performance tests to be performed before Closing with respect to the applicable facility establish that the facility’s emissions rates do not exceed permitted levels of NOx and CO emission rates;

Buyer’s receipt of the following documents: a title commitment, FIRPTA certificate, and a closing inventory report;

an escrow arrangement has been established, including the deposit of $30 million in the case of the Hinds Transaction and $38 million in the case of the Hot Spring Transaction;


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execution of a post-closing confidentiality agreement;

Sellers completing certain repair and/or mitigation of operational matters;

with respect to the Hot Spring Transaction, the completion of construction of an 8.5 mile pipeline lateral from the Hot Spring facility pursuant to the Precedent Agreement we previously entered into with the Texas Eastern Transmission Company;

with respect to the Hot Spring Transaction, the unwind of the Industrial Revenue Bond structure in place with respect to the Hot Spring facility such that fee title to the facility is transferred to Entergy Arkansas at Closing; and

other customary conditions.

Seller’s Conditions to Closing.


Buyer’s material compliance with its pre-Closing obligations and the material accuracy of its representations under the Asset Purchase Agreement;



receipt of the FERC approval;

Seller’s receipt of certain third-party consents and approvals;

replacement of all applicable existing support obligations;

termination of the Long Term Service Agreement with General Electric International, Inc. applicable to the facility at no cost to Seller; and


Neither the Hinds Transaction nor the Hot Spring Transaction is conditioned on the closing of the other. Accordingly, the Transactions may close a different times and one Transaction may be completed and not the other.

Termination Rights (page __)

Each of the Asset Purchase Agreements may be terminated under a number of circumstances, including, among others:

by mutual written consent of Seller and Buyer;

by Seller or Buyer if the Closing has not occurred on or before the third anniversary of the signing of the Asset Purchase Agreement, subject to extension under limited circumstances up to an additional 60 days;

by Seller or Buyer, if any order or law is issued permanently prohibiting the consummation of the Transaction or any required regulatory approval is denied pursuant to a final, non-appealable order;

by Seller or Buyer, in the event of material uncured breach by the other of the Asset Purchase Agreement;

by Buyer, if the results of the final plant performance tests with respect to the net electric generating capacity or the net heat rate of a facility are such that the purchase price reduction would exceed the


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maximum reduction amounts described above (i.e., $13.5 million in the case of Hinds and $16 million in the case of Hot Spring);

by Seller or Buyer, in the event of certain casualty events;

by Buyer, in the event of certain casualty events or condemnation events;

by Seller or Buyer, if our stockholders do not approve of the Transaction at the Special Meeting;

by Buyer, if we fail to hold the Special Meeting in accordance with the terms of the applicable Asset Purchase Agreement;

by Seller, in order to enter into an alternative agreement for a superior proposal if we pay to Buyer a termination fee and comply with the relevant provisions of the Asset Purchase Agreement, including providing the respective Buyer with at least five business days to match the superior proposal; and

by Buyer, if the network transmission study for the applicable facility reflects aggregate costs for the supplemental upgrades required to the transmission system in excess of $10 million, in the case of the Hinds facility, and $40 million, in the case of the Hot Spring facility.

Termination Fees (page __)

If our Board continues to recommend in favor of a Transaction, but our stockholders do not approve the Transaction at the Special Meeting, we will be obligated to pay a termination fee of $1.5 million to the Buyer of the Hinds facility and $1.9 million to the Buyer of the Hot Spring facility. We will be obligated to pay Buyer an additional $6,225,000, in the case of the Hinds Transaction, and $7,600,000, in the case of the Hot Spring Transaction, if a third party publicly makes a Takeover Proposal before the Special Meeting (or communicates such Takeover Proposal to a material group of stockholders), and within nine months of the termination of the Asset Purchase Agreement, we enter into a definitive agreement for an alternative transaction with that third party (or with any other third party, within six months of the date of termination) and that alternative transaction is subsequently consummated.

If (i) we terminate a Transaction to enter into an alternative agreement for a superior proposal, (ii) our Board withdraws its recommendation in favor of a Transaction and our stockholders do not approve of that Transaction at the Special Meeting or (iii) we fail to hold the Special Meeting in accordance with the Asset Purchase Agreements, we will be obligated to pay to the applicable Buyer a termination fee of $7,725,000, in the case of the Hinds Transaction, and $9,500,000, in the case of the Hot Spring Transaction.

Indemnification (page __)

Subject to certain limitations, we and Sellers have agreed to indemnify the respective Buyers against and in respect of any and all losses incurred in connection with, arising from or as a result of a number of items, including, among others, (a) any breach or any inaccuracy of any of the representations and warranties made in the Asset Purchase Agreements, (b) any breach of the covenants or agreements made in the Asset Purchase Agreements and (c) any of the liabilities that are retained by us. The parties may not generally bring claims against the other for the inaccuracy of representations and warranties in the Asset Purchase Agreements after 18 months have elapsed after Closing, except that for certain specified representations we have made, including with respect to corporate organization, authority and enforceability, non-conflict with governance documents, title to certain tangible personal property, bankruptcy, taxes, employee matters, and brokers, claims may be made by Buyer until 30 days following the expiration of the applicable statute of limitations. After 42 months following each of the Closings our indemnification obligations will cease and Sellers (but not the Company itself) will be solely responsible for any indemnification obligations. In addition, under the terms of the Asset Purchase Agreements, to satisfy our indemnification obligations approximately $30 million of the purchase price under the Hinds Asset Purchase Agreement and $38 million of the purchase price under the Hot Spring Asset Purchase Agreement will be held in escrow, with $10 million of the escrow under the Hinds Asset Purchase Agreement, and $12 million of the escrow under the Hot Spring Asset Purchase Agreement subject to release 12 months after Closing; with an additional $10 million of the escrow under the Hinds Asset Purchase Agreement, and $13.8 million of the escrow under the Hot Spring Asset Purchase Agreement subject to release 18 months after Closing and the remaining escrow amounts subject to release 42 months following Closing.


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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Proxy Statement, documents incorporated by reference, as well as oral statements made or to be made by us contain or will contain statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended as “forward-looking statements”. All statements included in this Proxy Statement, documents incorporated by reference, as well as oral statements made or to be made by us, other than statements of historical fact, that address activities, events or developments that we or our management expect, believe or anticipate will or may occur in the future are forward-looking statements. These statements represent our reasonable judgment on the future based on various factors and using numerous assumptions and are subject to known and unknown risks, uncertainties and other factors that could cause our actual results and financial position to differ materially from those contemplated by the statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Words such as “anticipate”, “estimate”, “project”, “forecast”, “plan”, “may”, “will”, “should”, “expect” and other words of similar meaning identify these forward-looking statements, which appear in a number of places in this Proxy Statement, documents incorporated by reference, as well as oral statements made or to be made by us and include, but are not limited to, all statements relating directly or indirectly to the timing or likelihood of completing the Transaction and the nature of our business after the Transaction, all other statements regarding our intent, plans, beliefs or expectations or those of our directors or officers. Stockholders are cautioned that such forward-looking statements are not assurances for future performance or events and involve risks and uncertainties that could cause actual results and developments to differ materially from those covered in such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks detailed in our Annual Report for the fiscal year ended June 30, 2010, and our Quarterly Reports for the fiscal quarters ended September 30, 2010, December 31, 2010 and March 31, 2011, respectively, which are incorporated by reference into this Proxy Statement, and the following factors:

the occurrence of any event, change or other circumstances that could give rise to the termination of the Asset Purchase Agreements, including a termination of each of the Asset Purchase Agreements under circumstances that could require us to pay a termination fee;

significant delay before completion of the Transactions or the inability to complete the Transactions due to the failure to satisfy conditions to completion of the Transactions, including receipt of required stockholder and regulatory approvals;

delay to closing or the failure of the Transactions to close for any other reason; the possibility that we may be required to make indemnification payments to Buyers out of, or in excess of, the

portion of the purchase price under each of the Asset Purchase Agreements that will be placed into escrow to secure post-Closings indemnification obligations;

the potential difficulties in the retention of executive management and other key employees pending the Closings; we expect both our Hinds and Hot Spring facilities to be free cash flow negative for the foreseeable future and, if

only one or both of the Transactions fails to close, we may not generate sufficient cash or otherwise have sufficient liquidity to operate our facility(ies); and

the amount of the costs, fees, expenses, and other charges related to the Transactions.

Consequently, all of the forward-looking statements we make in this document are qualified by the information contained or incorporated by reference herein, including, but not limited to (a) the information contained under this heading and (b) the information contained under the headings “Risk Factors” and in our consolidated financial statements and notes thereto included in our Annual Report for the fiscal year ended June 30, 2010 and our Quarterly Reports for the fiscal quarters ended September 30, 2010, December 31, 2010 and March 31, 2011, respectively (see “Where You Can Find More Information” beginning on page [__]). We are under no obligation to publicly release any revision to any forward-looking statement contained or incorporated herein to reflect any future events or occurrences.

Any or all of our forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors, many of which are beyond our control. You should carefully consider the cautionary statements contained or referred to in this section in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf.


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THE SPECIAL MEETING

Date, Time and Place

The Special Meeting will be held on [ ______ __ ], 2011, at [2:00 p.m., local time, in the Central Plains conference room, Suite 200, of the Four Oaks Place building located at 1330 Post Oak Blvd, Houston, Texas 77056].

Purpose of the Special Meeting

The purpose of the Special Meeting is for our stockholders to consider and vote upon the following:

a resolution authorizing the sale of the 520 megawatt combined-cycle power generation facility located in Hinds County, Mississippi, and other assets of our subsidiary KGen Hinds LLC to Entergy Mississippi, Inc., pursuant to an Asset Purchase Agreement dated as of April __, 2011, by and between KGen Hinds LLC and, solely for limited purposes, KGen Power Corporation, on the one hand, and Entergy Mississippi, Inc., on the other hand;

a resolution authorizing the sale of the 620 megawatt combined-cycle power generation facility located in Hot Spring County, Arkansas, and other assets of our subsidiary KGen Hot Spring LLC, to Entergy Arkansas, Inc., pursuant to an Asset Purchase Agreement dated as of April __, 2011, by and between KGen Hot Spring LLC and, solely for limited purposes, KGen Power Corporation, on the one hand, and Entergy Arkansas, Inc., on the other hand; and

to transact such other business as may properly come before the Special Meeting or any adjournment or postponement thereof.

General

The enclosed proxy is solicited on behalf of the Board for use at the Special Meeting of Stockholders, or at any adjournment or postponement thereof.

This Proxy Statement, the Notice of Special Meeting of Stockholders and the form of proxy are being mailed to stockholders on or about May [__ ], 2011.

Record Date and Share Ownership

Stockholders of record on the Company’s books at the close of business on [______ __], 2011 are entitled to vote at the Special Meeting. At the Record Date, [_____] shares of our common stock were issued and outstanding. For information concerning stock ownership by our directors and officers, see the section on “Security Ownership of Management” beginning on page [_] below.

Revocability of Proxies

Any proxy given pursuant to this solicitation may be revoked by the person who gave the proxy at any time before its use by: (i) delivering to the Company a written notice of revocation prior to the voting of the proxy, (ii) submitting a subsequent proxy by Internet or telephone or delivering to the Company a duly executed proxy bearing a later date, or (iii) if you are a stockholder of record, attending the Special Meeting and voting in person or revoking your prior proxy. Attendance at the Special Meeting will not, by itself, revoke a proxy.

Voting and Solicitation

Each stockholder of record is entitled to one vote for each share of common stock held in his or her name on the Record Date on each matter submitted to a vote at the Special Meeting.

If properly completed and received by the Company (whether by mail, telephone or Internet) before the Special Meeting, any proxy representing shares of common stock entitled to be voted at the Special Meeting and specifying how it is to be voted will be voted accordingly. Any such proxy, however, which fails to specify how it is to be voted, will be voted in accordance with the recommendation of the Board.


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A quorum of stockholders is necessary to hold a valid Special Meeting. The presence, in person or by proxy, of the holders of a majority of the outstanding shares of common stock entitled to vote at the Special Meeting is necessary to constitute a quorum. The approval of the resolution authorizing the Transaction will require the affirmative vote of holders of a majority of the outstanding shares of common stock. The approval of any other proposals that may be presented at the Special Meeting will require the affirmative vote of a majority of the outstanding shares of common stock entitled to vote and present in person or represented by proxy at the Special Meeting.

Pursuant to Delaware law, the Board must appoint an inspector to act at the Special Meeting. The inspector is to carry out the duties imposed pursuant to Section 231 of the DGCL, including the counting of votes. Votes will be counted by the inspector of election appointed for the meeting, who will separately count “For” and “Against” votes and abstentions. Because approval of each resolution authorizing a Transaction requires the affirmative vote of holders of a majority of the outstanding shares of common stock, abstentions and the failure to vote your shares or to instruct your broker or other nominee to vote your shares on your behalf will have the same effect as a vote “Against” the Transaction. When a stockholder signs or otherwise electronically or telephonically submits the proxy card, he or she appoints Thomas B. White, our President and Chief Executive Officer, and Steven McDowell, our Vice President, Mergers and Acquisitions and Finance, or each of them, as his or her representatives at the Special Meeting. Mr. White or Mr. McDowell will vote the shares, as instructed on the proxy card (whether by mail, telephone or Internet), at the Special Meeting. In this manner, the shares will be voted whether or not the stockholder attends the Special Meeting. Even if the stockholder plans to attend the Special Meeting, he or she should complete, sign and return or otherwise electronically or telephonically submit the proxy card in advance of the Special Meeting in the event of a change in plans.

The cost of soliciting proxies will be borne by KGen. In addition, KGen expects to reimburse brokerage firms and other persons representing beneficial owners of common stock for their expenses in forwarding solicitation material to such beneficial owners. Proxies may be solicited by mail and may be supplemented by telephone or personal solicitation by certain of the directors, officers and regular employees of ours or, at our request, by a professional proxy solicitor. No additional compensation will be paid to directors, officers or regular employees for such services, but if professional proxy solicitors are used, such solicitors will be paid their customary fees by us.

Voting via the Internet or by Telephone

Most beneficial owners whose stock is held in street name receive voting instruction forms from their banks, brokers, or other agents.

A number of brokers and banks participate in a program provided through Broadridge Financial Solutions, Inc. that offers telephone and Internet votes of proxies. If your shares are held in an account with a broker or bank participating in the Broadridge Financial Solutions, Inc. program, you may vote your proxy for those shares telephonically by calling the telephone number shown on the form received from your broker or bank, or via the Internet at Broadridge Financial Solutions, Inc.’s web site at www.proxyvote.com.

How to Vote

Telephone and Internet voting information is provided on your proxy card. A control number, located on the proxy card, is designed to verify your identity, allow you to vote your shares and confirm that your voting instructions have been properly recorded.

If your shares are held in the name of a bank or broker, you should follow the voting instructions on the form you receive from the bank or broker. The availability of telephone or Internet voting will depend on your bank or broker’s voting process. If you choose not to vote by telephone or Internet, please return your proxy card, properly signed, and the shares represented will be voted in accordance with your directions. You can specify your choices by marking the appropriate boxes on the proxy card.

If your proxy card is signed and returned without specifying choices, the shares will be voted FOR the approval of the Transaction, and otherwise in the discretion of the proxies referenced in the proxy card.

We encourage you to vote your shares in advance of the Special Meeting date even if you plan on attending the Special Meeting.


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Attending the Special Meeting

You are entitled to attend the Special Meeting only if you were a stockholder of KGen at the close of business on the Record Date, or hold a valid proxy for the Special Meeting.

Common Stock Ownership of Directors and Executive Officers

As of [ ______ __ ], 2011, our directors and executive officers had, or were deemed to have, beneficial ownership of shares of our common stock representing, in the aggregate, less than 1% of our voting power entitled to vote at the Special Meeting.

Voting Agreements

Funds for which KSCM provides investment advisory services or is an investment manager, together, own 5,574,000 shares of KGen common stock (approximately [9.96%] of the shares of common stock outstanding on the Record Date). KSCM has entered into agreements with Buyers pursuant to which it has agreed to vote, or cause to be voted, those 5,574,000 shares in favor of the Transactions.

Funds and an investor for which an affiliate of EIG serves as a sub-advisor, together, own 5,714,286 shares of KGen common stock (approximately [10.21%] of the shares of common stock outstanding on the Record Date). EIG has entered into agreements with Buyers pursuant to which it has agreed to vote, or cause to be voted, those 5,714,286 shares in favor of the Transactions.

Other Matters

At this time, we know of no other matters to be submitted to our stockholders at the Special Meeting. If any other matters properly come before the Special Meeting, your shares of common stock will be voted in accordance with the discretion of the persons named on the enclosed proxy card in accordance with their best judgment.

Important Notice Regarding the Availability of Proxy Materials for the Special Meeting

This Proxy Statement is available at www.kgenpower.com.

Questions and Additional Information

If you have questions about this Proxy Statement, the Special Meeting or the Transaction or need assistance with voting procedures, you should contact:

KGen CorporationFour Oaks Place

1330 Post Oak Boulevard, Suite 1500Houston, Texas 77056

(713) 979-1990


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THE TRANSACTION

General

We have agreed to sell to Entergy Mississippi our Hinds facility and other assets of our subsidiary KGen Hinds pursuant to the Hinds Asset Purchase Agreement. Our Hinds facility is a natural gas-fired, combined-cycle power generation plant with a nominal capacity of 520 megawatts that is located in Hinds County, Mississippi. The Hinds Asset Purchase Agreement provides for the payment to us of a purchase price of $206 million in cash, subject to certain adjustments.

We have separately agreed to sell to Entergy Arkansas our Hot Spring facility and other assets of our subsidiary KGen Hot Spring pursuant to the Hot Spring Asset Purchase Agreement. Our Hot Spring facility is a natural gas-fired, combined-cycle power generation plant with a nominal capacity of 620 megawatts that is located in Hot Spring County, Arkansas. The Hot Spring Asset Purchase Agreement provides for the payment to us of a purchase price of $253 million in cash, subject to certain adjustments.

For a detailed summary of the Asset Purchase Agreements see “Terms of the Asset Purchase Agreements” beginning on page [_].

The Parties to the Transactions

KGen Power Corporation

KGen Power Corporation1330 Post Oak Blvd, Suite 1500Houston, Texas 77056(713) 979-1900

KGen Power Corporation owns and operates electric power generation plants and sells electricity and electrical generation capacity in the United States. KGen sells power and related products to wholesale purchasers such as retail electric providers, power trading organizations, municipal utilities, electric power cooperatives, and other power generation companies. Its portfolio of facilities currently consists of the Hinds and Hot Spring facilities. KGen was incorporated in 2006 and is headquartered in Houston, Texas.

Entergy Mississippi, Inc.

308 E. Pearl St.Jackson, MS 39201(601) 368-5000

Entergy Mississippi is a subsidiary of Entergy Corporation, an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy Corporation owns and operates power plants with approximately 30,000 megawatts of electric generating capacity. A regulated public utility, Entergy Mississippi delivers electricity to approximately 437,000 customers in 45 Mississippi counties and has approximately 1,900 employees.

Entergy Arkansas, Inc.

425 W. Capitol Ave.Little Rock, AR 72201 (501) 377-4000

Entergy Arkansas is a subsidiary of Entergy Corporation. A regulated public utility, Entergy Arkansas delivers electricity to approximately 693,000 customers in 63 Arkansas counties and has approximately 3,500 employees.

Background of the Transactions

In late 2007 and early 2008, various stockholders had multiple conversations with the then Company management indicating a strong preference to start a strategic review process to determine the best course of action to enhance stockholder


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value, including the start of an auction process to sell the Company or its assets. These discussions led to the appointment to the Board in February 2008 of Daniel T. Hudson and another individual at the request of certain stockholders.

In April 2008, stockholders of the Company acted by written consent to remove three of the Company’s then directors from the Board, including the then Chairman and Chief Executive Officer, and to elect Thomas B. White as a director of the Company. Subsequently, James P. Jenkins and Gerald J. Stalun were appointed as directors of the Company and three directors who were in office prior to the written consent action resigned from the Board.

In May 2008, the Company announced that it would undertake a review of its strategic alternatives and it retained Credit Suisse as its financial advisor in connection with this review.

During the late spring and summer of 2008, in accordance with the Board’s directives, the Company’s financial advisor contacted potential acquirors of the Company and one or more of the Company’s power generation facilities, including potential acquirors of the Hinds and Hot Spring facilities. As part of this process, financial acquirors as well as U.S. and foreign strategic acquirors were contacted to ascertain their possible interest in a transaction with the Company. A number of potential bidders conducted due diligence and submitted indications of interest for an acquisition of the Company as well as acquisitions of individual power generation facilities, including the Hinds and Hot Spring facility.

In October 2008, after the domestic and international credit markets suffered a significant downturn, parties that had expressed an interest in acquiring the Company or its individual power generation facilities expressed strong reservations about continuing their efforts until such time as the credit markets recovered. As a result of these developments, on October 17, 2008, the Board announced to stockholders that it had determined not to bring the sale process to a conclusion at that time. The Board indicated, however, that it would continue to explore and review credible transaction proposals that would increase stockholder value. Thereafter, the Board, with the assistance of the Company’s financial advisor, continued to review the mergers and acquisitions market in the power industry and identify parties potentially interested in a transaction with the Company.

In March 2009, the Board appointed Mr. White as the Chief Executive Officer of the Company. Mr. White remained a director of the Company.

In November 2009, as part of Entergy’s Summer 2009 Request For Proposals for Long-Term Supply Resources (“RFP”), the Company submitted various transaction proposals to Entergy, including proposals for the sale of the Hinds and Hot Spring facilities to Entergy or its subsidiaries on the terms consistent with those reflected in the Asset Purchase Agreements.

In December 2009, a company that we will refer to as “Company A” verbally indicated an interest in purchasing the Hinds and Hot Spring facilities at a purchase price reflecting a value for each facility that was a lower price per kW of the facility’s power generation capacity than the price per kW under the Transactions. The Company thereafter engaged in discussions with Company A regarding its indication of interest. However, Company A did not present any formal proposal to the Company.

In March 2010, Entergy informed the Company that certain of its proposals were “short listed” in the RFP process.

On May 6, 2010, the Company entered into a purchase and sale agreement for the sale of KGen Sandersville LLC, the former subsidiary of the Company that owns the Company’s former Sandersville facility, to an affiliate of ArcLight Capital for a purchase price of $130 million, subject to certain adjustments. That transaction closed on July 9, 2010.

In May 2010, a company we refer to as “Company B” indicated an interest in purchasing the Hot Spring facility at a purchase price reflecting a value for that facility that was a lower price per kW of the facility’s power generation capacity than the price per kW under the Transactions. The Company commenced discussions with Company B regarding its indication of interest.

Also in May 2010, a company we refer to as “Company C” verbally proposed a merger of our Hinds and Hot Spring facilities with facilities of Company C at an indicative valuation for the Hinds and Hot Spring facilities reflecting a lower price per kW of those facilities’ power generation capacity than the price per kW under the Transactions. Company C thereafter performed due diligence on the Hinds and Hot Spring facilities.

Also in May 2010, a company that we refer to as “Company D” verbally expressed an interest in purchasing our Hinds facility at an indicative valuation reflecting a lower price per kW of the facility’s power generation capacity than the


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price per kW under the Transactions. Company D thereafter performed due diligence on the Hinds facility.

In July 2010, Company C informed the Company that it was unwilling to proceed with its proposed merger of our Hinds and Hot Spring facilities with facilities of Company C.

On July 30, 2010, Entergy informed the Company that the Company’s proposals for the sale of the Hinds and Hot Spring facilities were selected as finalists in the RFP process and that Entergy wished to negotiate a letter of intent and exclusivity agreement with the Company and thereafter commenced negotiation of definitive Asset Purchase Agreements for the purchase of the Hinds and Hot Spring facilities.

In August 2010, Company D informed the Company that it had decided on a strategic direction that did not include a purchase of the Hinds facility.

In August 2010, Company B indicated verbally that it would be prepared to offer to purchase the Hot Spring facility at a purchase price reflecting a value for that facility that was a lower price per kW of the facility’s power generation capacity than the price per kW under the Transactions. At a subsequent Board meeting in October, 2010, management and the Board discussed the potential of closing a transaction with Company B, the likely terms and conditions relating thereto, and the potential impact on the discussions with Entergy relating to the sale of the Hinds and Hot Spring facilities. Based on these discussions, the Company informed Company B that the Company was no longer interested in pursuing a transaction with Company B relating to the Hot Spring facility.

At a meeting of the Board on August 31, 2010, the Board discussed with the Company’s financial advisor various potential sale alternatives for the Company and its assets, including the potential sale of the Hinds and Hot Spring facilities to Entergy.

On October 24, 2010, the Company entered into a confidentiality agreement with Entergy relating to a potential sale of the Hinds and Hot Spring facilities. Thereafter, representatives of Entergy conducted extensive due diligence on the Hinds and Hot Spring facilities.

On November 9, 2010, the Board met to discuss the proposed Letters of Intent with Entergy for the sale of the Hinds and Hot Spring facilities. Members of senior management and a representative of Fried, Frank, Harris, Shriver & Jacobson LLP, counsel to the Company, attended the meeting. At the meeting, the Board, with the assistance of Fried Frank, discussed the terms, conditions and obligations of the proposed Letters of Intent as well as the relative merits and risks of the transactions contemplated by the Letters of Intent as compared to the other potential strategic alternatives available to the Company. The Board also discussed the impact of the exclusivity agreements contained in the proposed Letters of Intent on the Company’s ability to pursue alternative transactions. A representative of Fried Frank reviewed with the Board its fiduciary duties in connection with its evaluation of the proposed Letters of Intent. At the meeting, management provided its recommendation that the Company should enter into the proposed Letters of Intent. After discussion, the Board authorized management to execute the Letters of Intent and continue its discussions with Entergy regarding the Transactions.

On November 16, 2010, the Company and Entergy executed Letters of Intent for the sale of the Hinds and Hot Spring facilities, including exclusivity agreements extending until April 14, 2011. Representatives of the Company and Entergy commenced negotiation of the Asset Purchase Agreements for the sale of the Hinds and Hot Spring facilities.

On the January 31, 2011, the Company entered into a purchase and sale agreement for the sale to Oglethorpe Power Corporation of the Company’s former subsidiary KGen Murray I and II LLC, owner of the Company’s former Murray I and II power generation facilities, for $531.25 million, subject to certain adjustments. This transaction subsequently closed on April 8, 2011.

On April 14, 2011, the Board met to discuss the proposed Transactions. Members of senior management, representatives of Credit Suisse and representatives of Fried Frank and Milbank, Tweed, Hadley & McCloy LLP, counsel to the Company, attended the meeting. At the meeting, management updated the Board on the status of the discussions with Entergy and some of the risks related to the Transactions. Management also reported that Entergy had requested that the Letters of Intent previously executed by the Company, including the exclusivity provisions therein, be extended until May 6, 2011. Credit Suisse reviewed with the Board its preliminary financial analysis of the consideration to be received in the Hinds Transaction and its preliminary financial analysis of the consideration to be received in the Hot Spring Transaction. Representatives of Milbank Tweed discussed the terms of the proposed Asset Purchase Agreements and a representative of Fried Frank reviewed with the Board its fiduciary duties in connection with the evaluation of the Transactions. After


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discussion, the Board authorized management to execute extensions of the previously executed Letters of Intent and continue its discussions with Entergy regarding the Transactions.

Between April 14, 2011 and April __, 2011, representatives of Entergy and the Company continued to negotiate the remaining terms of the Asset Purchase Agreements.

The Board met on April__, 2011. Members of senior management, representatives of the Company’s legal and financial advisors attended the meeting. At the meeting, Credit Suisse updated the Board with respect to its financial analyses previously reviewed with the Board on April 14, 2011 regarding the consideration to be received in each of the Transactions and rendered to the Board a separate (i) oral opinion, confirmed by delivery of a written opinion dated April [__], 2011, to the effect that, as of that date and based on and subject to the matters described in its opinion, the $206 million consideration to be received in the Hinds Transaction was fair, from a financial point of view, to the Company and (ii) oral opinion, confirmed by delivery of a written opinion dated April [__], 2011, to the effect that, as of that date and based on and subject to the matters described in its opinion, the $253 million consideration to be received in the Hot Spring Transaction was fair, from a financial point of view, to the Company. Milbank Tweed reviewed with the Board the changes to the terms of the Asset Purchase Agreements since the April 14 meeting. Management then recommended to the Board that the Board approve both of the Transactions and recommend the Transactions to the Company’s stockholders. After discussion, the Board voted unanimously to approve both of the Transactions, to authorize the execution of both Asset Purchase Agreements and to recommend that the stockholders of the Company vote to approve each of the Transactions.

On April__, 2011, Sellers and Buyers and for limited purposes set forth therein, the Company executed the AssetPurchase Agreements.

Board Recommendation; Reasons for the Transactions

After careful consideration, the Board unanimously determined that each of the Transactions is in the best interest of KGen and its stockholders, approved each of the Asset Purchase Agreements and Transactions and recommends that you vote “FOR” the approval of each of the Transactions.

In the course of reaching its determinations, the Board evaluated the Asset Purchase Agreements in consultation with our management and our legal and financial advisors and considered a number of substantive factors, both positive and negative, and potential benefits and detriments of the Transactions. The Board believed that, taken as a whole, the following factors supported its decision to approve the Transactions:

Strategic Review Process. The Board considered the process (which began in 2008) through which we explored strategic alternatives for the sale of the Company or its individual power generation facilities. The Board believes that each of the Transactions is more favorable to the Company and our stockholders than any alternatives for the Hinds and/or Hot Spring facilities that may be available to the Company.

M&A Market for Merchant Facilities. The Board considered its view of the current and future M&A market for power plants, including its view that the M&A market for merchant power facilities such as the Hinds and Hot Spring facilities remained challenging and that the Board does not anticipate a dramatic change in this market over the next 12-15 months.

Likelihood of Entering into Power Purchase Agreement. The Board recognized that the Hinds and Hot Spring facilities could be more valuable if the Company were to enter into long-term power purchase agreements for those facilities. However, it was the view of the Board that the likelihood of the Company being able to enter into attractive long-term power purchase agreements for those facilities in the near term was low.

Purchase Price. The Board considered the $206 million purchase price to be received by us in the Hinds Transaction and the $253 million purchase price to be received by us in the Hot Spring Transaction, including the fact that the full amount of the consideration for each Transaction is to be paid in cash. The Board also considered the potential adjustments to the purchase price to be received in each Transaction, including if certain conditions to Buyer’s and Seller’s obligation to close a Transaction are satisfied but Buyer has not yet received approval from the applicable state public service commission and other regulatory authorities for the Closing of that Transaction, the purchase price under the Asset Purchase Agreement for that Transaction will, so long as Seller is otherwise ready to Close within a specified period after such approvals are obtained, be increased by $5 million (if Buyer’s receipt of state public service commission and other regulatory approval takes longer than 15, but less than 27 months) or $10 million (if Buyer’s receipt of state public service commission and other regulatory approval takes longer than 27 months).


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Likelihood of Consummation of the Transactions. The Board considered the likelihood that each of the Transactions will be completed, including the nature of the conditions to each Buyer’s obligation to consummate its Transaction, and the likelihood that those respective conditions would be satisfied. In that connection, the Board considered that neither of the Asset Purchase Agreements contains a financing condition and, accordingly, the Company is not assuming the risk that Entergy Mississippi or Entergy Arkansas will be unable to obtain financing.

Provisions Allowing Compliance with Fiduciary Duties. The Board considered the fact that the Asset Purchase Agreements include provisions that afford the Board flexibility to comply with its fiduciary duties.

Opinions of the Company’s Financial Advisor. The Board considered the financial analyses of Credit Suisse and its separate (i) opinion, dated April [__], 2011, to the Board as to the fairness, from a financial point of view and as of the date of such opinion, to the Company of the $206 million consideration to be received in the Hinds Transaction and (ii) opinion, dated April [__], 2011, to the Board as to the fairness, from a financial point of view and as of the date of such opinion, to the Company of the $253 million consideration to be received in the Hot Spring Transaction, as more fully described under "Opinions of the Company’s Financial Advisor" beginning on page [ __ ].

The Board also considered a variety of risks and other potentially negative factors relating to the Transactions, including the following:

Potential Negative Purchase Price Adjustments. The Board also considered the potential downward adjustments to the purchase price to be received in each Transaction, including that

if the final plant performance tests to be performed before Closing establish that the full-load dependable net electric generating capacity (as adjusted to specific summer ambient conditions) of the Hinds facility is more than 3 MW below 450 MW (the “Hinds contract capacity”), or that the full-load dependable net electric generating capacity (as adjusted to specific summer ambient conditions) of the Hot Spring facility is more than 3MW below 620 MW (the “Hot Spring contract capacity”), for each kW by which the capacity is more than 3MW below the applicable contract capacity, the purchase price will be reduced by $457.78/kW in the case of the Hinds facility and $408.06/kW in the case of the Hot Spring facility, up to a maximum reduction to the purchase price as a result of this test of $13.5 million, in the case of the Hinds Transaction, and $16 million in the case of the Hot Spring Transaction (which, if such limit is exceeded will give Buyer the right to terminate the applicable Asset Purchase Agreement), although the $457.78/kW and $408.06/kW reduction amounts and the $13.5 million and $16 million maximum reduction amounts are subject to proportional increase in the event that the purchase price for a facility increases as described above because it takes longer than 15 months, or 27 months, for Buyer to receive approval from the applicable state public service commissions and other regulatory agencies; and

the purchase price in each Transaction will be reduced by $70,000 for each Btu/Kwh by which the net heat rate of a facility’s electric generating units as established pursuant to the final plant performance tests exceeds (a) 7,200 Btu/Kwh, in the case of the Hinds facility, and (b) 7,100 Btu/Kwh, in the case of the Hot Spring facility, in each case, subject to a tolerance of 100 Btu/Kwh, if Closing occurs within 18 months of execution, or 150 Btu/Kwh, if Closing occurs thereafter, up to a maximum reduction to the purchase price as a result of this test of $13.5 million, in the case of the Hinds Transaction, and $16 million, in the case of the Hot Spring Transaction (which, if such limit is exceeded will give Buyer the right to terminate the applicable Asset Purchase Agreement).

Risk of Non-Completion and Potential Delay. The Board considered the risk that one or both of the Transactions might not be completed because of the failure to obtain requisite regulatory approvals, including the failure of a Buyer to obtain the approval of a state public utility commission on terms acceptable to Buyer in its sole discretion, failure to obtain necessary third party consents or for other reasons. The Board also considered that if the final plant performance tests to be performed before Closing establish that full-load dependable net electric generating capacity (as adjusted to specific summer ambient conditions) of a facility is below specified minimum levels, the net heat rate of a facility’s electric generating units exceed certain maximum levels or a facility’s emissions rates exceed permitted levels or a network transmission study to be undertaken before Closing establishes that upgrades will be required that will cost more than specified amounts, the applicable Buyer would not be required to close the applicable Transaction. The Board also considered the potentially significant delays in obtaining requisite regulatory approvals and necessary third party consents. In the event that Closing of the Hinds Transaction and/or Hot Spring Transaction is significantly delayed, we risk the departure of our directors, officers and other employees prior to Closing. In addition, if the Hinds Transaction and/or Hot Spring Transaction do not close, we


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will have expended extensive time and will have incurred significant transaction costs.

Possible Payment of Termination Fee. The Board considered the termination fees that would be payable by us to Entergy Mississippi if the Hinds Asset Purchase Agreement is terminated under various circumstances, including the $7.725 million termination fee payable if the Company terminates the Hinds Asset Purchase Agreement and the $9.5 million termination fee payable if the Company terminates the Hot Spring Asset Purchase Agreement, in each case to accept a superior proposal. The Board also considered that the Company would be required to pay a $1.5 million termination fee if the Hinds Asset Purchase Agreement is terminated because the Hinds Transaction is not approved by our stockholders and a $1.9 million termination fee if the Hot Spring Asset Purchase Agreement is terminated because the Hot Spring Transaction is not approved by our stockholders. The Board considered that these termination fees were required by Buyers as a condition to their willingness to execute the Asset Purchase Agreements and believed that the termination fees are reasonable and would not unduly preclude a third party from making a superior proposal.

Possible Disruption of the Business. The Board considered the possible disruption to the business of the Hinds and Hot Spring facilities that might result from the announcement of the Transactions and the resulting distraction of the attention of our management and employees. The Board also considered the fact that the Hinds Asset Purchase Agreement contains certain limitations regarding the operation of the Hinds facility during the period between the signing of the Hinds Asset Purchase Agreement and the Hinds Closing and that the Hot Spring Asset Purchase Agreement contains certain limitations regarding the operation of the Hot Spring facility during the period between the signing of the Hot Spring Asset Purchase Agreement and the Hot Spring Closing. The Board believed that such limitations were customary for transactions similar to the Transactions and appropriately tailored to the specific requirements of the operation of the Hinds and Hot Spring facilities.

Indemnification Obligations. The Board was aware that the Asset Purchase Agreements placed certain indemnification obligations on us which survive the Closing and that to satisfy these obligations $30 million of the purchase price under the Hinds Asset Purchase Agreement and $38 million of the purchase price under the Hot Spring Asset Purchase Agreement will be held in escrow, with $10 million of the escrow under the Hinds Asset Purchase Agreement, and $12 million of the escrow under the Hot Spring Asset Purchase Agreement subject to release 12 months after Closing; with an additional $10 million of the escrow under the Hinds Asset Purchase Agreement, and $13.8 million of the escrow under the Hot Spring Asset Purchase Agreement subject to release 18 months after Closing and the remaining escrow amounts subject to release 42 months following Closing. The Board considered the nature of such indemnification obligations and the risk of liability to us beyond the escrowed amounts.

Payment of Transaction Bonuses. The Board considered the vesting of restricted stock units and the magnitude and size of the bonuses that are payable in connection with the Transactions.

The foregoing discussion summarizes the material factors considered by the Board in its consideration of the Transactions. In view of the variety of factors and the quality and amount of information considered, as well as the complexity of these matters, the Board did not find it practicable to, and did not attempt to, make specific assessments of, quantify, rank or otherwise assign relative weights to the specific factors considered in reaching this determination. The Board conducted an overall review of the factors described above, as well as others, and considered the benefits of the Transaction to outweigh the risks and the factors overall to be favorable to, and to support, its determination. Individual members of the Board may have given different weight to different factors.

Opinions of the Company’s Financial Advisor

The Company retained Credit Suisse to act as the Company’s financial advisor in connection with the Transactions. In connection with Credit Suisse’s engagement, the Board requested that Credit Suisse evaluate the fairness, from a financial point of view, to the Company of the $206 million consideration to be received in Hinds Transaction and the $253 million consideration to be received in the Hot Spring Transaction. On April [__], 2011, at a meeting of the Board held to evaluate the Transactions, Credit Suisse rendered to the Board a separate (i) oral opinion, confirmed by delivery of a written opinion dated April [__], 2011, to the effect that, as of that date and based on and subject to the matters described in its opinion, the $206 million consideration to be received in the Hinds Transaction was fair, from a financial point of view, to the Company and (ii) oral opinion, confirmed by delivery of a written opinion dated April [__], 2011, to the effect that, as of that date and based on and subject to the matters described in its opinion, the $253 million consideration to be received in the Hot Spring Transaction was fair, from a financial point of view, to the Company.

The full texts of the Hinds Opinion and the Hot Spring Opinion, which set forth, among other things, the procedures followed, assumptions made, matters considered and limitations on the scope of review undertaken, are


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attached as Annexes C and D, respectively, and are incorporated into this Proxy Statement by reference in their entirety. These opinions were provided to the Board (solely in its capacity as such) for its information in connection with its evaluation of the consideration to be received by the Company in the Hinds Transaction and the Hot Spring Transaction, as the case may be. The opinions addressed only the fairness from a financial point of view to the Company of the consideration to be received by the Company in such Transactions and did not address any other aspect of the Transactions. These opinions do not constitute advice or a recommendation to any stockholder as to how such stockholder should vote or act on any matter relating to the Transactions.

Each of Credit Suisse’s opinions was necessarily based upon information made available to Credit Suisse as of the date of such opinion and financial, economic, market and other conditions as they existed and could be evaluated on that date. Credit Suisse was not requested to, and it did not, recommend the specific consideration payable in the Transactions, which consideration was determined through negotiations between the Company and Entergy, and the decision to enter into the Asset Purchase Agreements was solely that of the Board. Credit Suisse’s opinions were only one of many factors considered by the Board in its evaluation of the Transactions and should not be viewed as determinative of the views of the Board or management with respect to the Transactions or the consideration payable in the Transactions.

The Company selected Credit Suisse to act as its financial advisor in connection with the Transactions based on Credit Suisse’s qualifications, experience, reputation and familiarity with the Company. Credit Suisse is an internationally recognized investment banking firm and is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, leveraged buyouts, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes.

The Company has agreed to pay Credit Suisse a customary fee for its financial advisory services in connection with each Transaction, a portion of which was payable upon delivery by Credit Suisse of its opinion in connection with such Transaction and a significant portion of which is contingent upon consummation of such Transaction. In addition, the Company has agreed to reimburse Credit Suisse for its reasonable expenses, including fees and expenses of legal counsel, and to indemnify Credit Suisse and related parties for certain liabilities and other items, including liabilities under the federal securities laws, arising out of or related to its engagement. Credit Suisse and its affiliates in the past have provided, currently are providing and in the future may provide services to the Company, Entergy and their respective affiliates, for which services Credit Suisse and its affiliates have received, and will receive, compensation, including (i) during the past two years, having acted as financial advisor to the Company in connection with certain asset dispositions and as a joint bookrunner or co-manager for certain debt offerings of Entergy and certain of its affiliates and (ii) currently acting as a lender under existing credit facilities of Entergy and certain of its affiliates. Credit Suisse is a full service securities firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, Credit Suisse and its affiliates may acquire, hold or sell, for Credit Suisse’s and its affiliates own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of the Company, Entergy, their respective affiliates and any other company that may be involved in the Transactions, as well as provide investment banking and other financial services to such companies.

Net Proceeds from the Transactions and Their Expected Use

Pursuant to the Hinds Asset Purchase Agreement we will receive $206 million of cash purchase price and pursuant to the Hot Spring Asset Purchase Agreement will receive $253 million of cash purchase price. Each of these purchase price amounts are subject to certain adjustments. The Transactions will be taxable events to us for United States federal income tax purposes. See “Material United States Federal Income Tax Consequences.” We expect that the net proceeds we will receive as a result of the Hinds Transaction will be approximately $[___] million, and the net proceeds we will receive as a result of the Hot Spring Transaction will be approximately $[___] million, in each case after giving effect to taxes, transaction fees and expenses and cash bonuses we are required to pay in connection with the Transactions. The final net proceeds we will receive will vary based on final purchase price adjustments, the amount of taxes payable on the gain from the Transactions and the amount of transaction fees and expenses.

The Board expects to distribute substantially all of the net proceeds of the Transactions to the Company’s stockholders after they are received by the Company, including upon release of cash held in escrow by Buyers to support indemnification obligations.


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Nature of our Business Following the Transactions

If both Transactions are completed, we will no longer own any power generation facilities and will not conduct any material business. We will distribute the net proceeds of the Transactions to the Company’s stockholders after they are received by the Company and thereafter liquidate the Company.

Interests of Executive Officers and Directors in the Transaction

When reading this Proxy Statement, you should be aware that our executive officers and directors may have interests in the Transactions that may be different from, or in addition to, the interests of our stockholders generally. Our Board was aware of these interests and considered them, among other factors, in unanimously (i) determining that the Transactions are in the best interest of KGen and its stockholders, (ii) approving the Asset Purchase Agreements and (iii) recommending each of the Transactions to the stockholders. A description of these interests is set forth below.

RSUs held by Executive Officers and Directors

Our Chairman and our executive officers currently hold RSUs. In accordance with the terms of their grant agreements, all of the RSUs held by our Chairman and each of our executive officers (other than Mr. White) will vest upon the consummation of the Transactions as set forth in the table below. Upon vesting, our Chairman and each executive officer and director will generally receive a number of shares equal to the number of RSUs being vested. The following table sets forth the number of RSUs held by our Chairman and our named executive officers that will vest upon consummation of each of the Transactions.

Director/Executive Officers

Hinds Transaction

Number of RSUs

Hot Spring Transaction

Number of RSUs

Daniel T. Hudson, Chairman of the Board

11,667 11,667

James H. Sweeney, Executive Vice President, Energy Management

5,300 5,300

William R. Marlow, General Counsel & Secretary

5,000 5,000

Charles L. Holland, Executive Vice President, Operations

5,000 5,000

W. Kevin Redmond, Chief Accounting Officer and Controller

3,867 3,867

Cash Bonuses

Thomas B. White

Pursuant to Mr. White’s employment agreement, Mr. White will be entitled to receive a cash bonus in connection with the consummation of each of the Transactions as follows:

Hinds Transaction -- $236, 455 Hot Spring Transaction -- $241, 570


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In the event that the purchase price is adjusted, Mr. White’s transaction bonus will be adjusted proportionally.

Other Named Executive Officers

Pursuant to the KGen Power Management Inc. Employee Performance Bonus and Retention Plan for Senior Employees and their respective award letters thereunder, each of Mr. Sweeney, Mr. Marlow, Mr. Holland, and Mr. Redmond will be entitled to receive a cash bonus in connection with the consummation of each of the Transactions as follows:

Bonus AmountMr. Sweeney Mr. Marlow Mr. Holland Mr. Redmond

Hinds Transaction $181,383 $171,116 $171,116 $132,330Hot Spring Transaction $187,426 $176,817 $176,817 $136,739

These bonus amounts for Mr. White, Mr. Sweeney, Mr. Marlow, Mr. Holland, and Mr. Redmond were calculated based on the $206 million purchase price in the Hinds Transaction and $253 million purchase price in the Hot Spring Transaction, but are subject to decrease (or increase) in the event that the actual purchase price paid in either Transaction is less (or more) than the purchase price.

Stockholder Approval Requirement

The Board is seeking stockholder approval of the Transactions because we are a Delaware corporation and the Transactions, together, constitute the sale of “substantially all” of our property and assets under Section 271 of the General Corporation Law of the State of Delaware (the “DGCL”). Section 271 of the DGCL requires that a Delaware corporation obtain the approval of the stockholders for the sale of “all or substantially all of its property and assets.” Additionally, approval of each Transaction by stockholders is a condition to the Closing of that Transaction under the applicable Asset Purchase Agreement.

Appraisal Rights in Respect of the Transaction

Under Delaware law, our stockholders are not entitled to appraisal rights in connection with the Transaction.

Regulatory Approvals

Under the terms of the Asset Purchase Agreements and the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the Transactions may not be completed until notification and report forms have been filed with the U.S. Federal Trade Commission (the “FTC”) and the Antitrust Division of the U.S. Department of Justice (the “DOJ”), and until the expiration of a 30 calendar day waiting period, or the early termination of that waiting period, following the parties’ filing of their respective notification and report forms. If the FTC or the DOJ issues a Request for Additional Information and Documentary Material prior to the expiration of the waiting period, the parties must observe a second 30 calendar day waiting period, which would begin to run only after both parties have substantially complied with the request for information, unless the waiting period is terminated earlier or extended with the consent of the parties. The expiration or termination of the HSR Act waiting period does not preclude the FTC or the DOJ from challenging the Transactions on antitrust grounds and seeking to preliminarily or permanently enjoin one or more of the proposed Transactions. If the Transactions are not consummated within 12 months after the expiration or termination of the initial HSR Act waiting period, KGen and Entergy will be required to submit new notification and report forms with the FTC and DOJ, and a new HSR Act waiting period will have to expire or be earlier terminated before the Transactions could be consummated

Each of the Transactions cannot be completed without prior approval of the FERC under Section 203 of the Federal Power Act (the “FPA”). KGen and Entergy will file with the FERC a joint application for approval of each of the Transactions under Section 203 of the FPA. The FERC will review each of the proposed Transactions to ascertain whether it is consistent with the public interest and whether it will result in cross-subsidization or the pledge or encumbrance of utility assets for the benefit of any “associate company” (as defined in the Public Utility Holding Company Act of 2005). The FERC may grant approval subject to conditions and also retains the authority to issue supplemental orders imposing additional conditions at any time

Entergy will also file with the FERC a request under Section 205 of the FPA requesting that the FERC allow Buyers to fully recover in its wholesale rates any amount of the purchase price for the Transactions that are in excess of the book


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value of the assets. To be approved, the FERC must find that Entergy’s request is just and reasonable, and under current FERC precedent, this requires a demonstration that there are measurable benefits to ratepayers from the acquisition of the assets. The FERC may deny the request, grant approval or determine that it will first set the matter for evidentiary hearing.

Additionally, under the Asset Purchase Agreements, a Buyer need not close its Transaction unless it receives approval from the FERC for any change necessary to the interconnection agreement currently in effect between KGen Hinds and Entergy Mississippi, and the interconnection agreement currently in effect between KGen Hot Spring and Entergy Arkansas (collectively, the “Interconnection Agreements”). If necessary, Entergy will file with the FERC amended Interconnection Agreements under Section 205 of the FPA. To be approved, the FERC must find that Entergy’s request is just and reasonable. The FERC may deny the request, grant approval or determine that it will first set the matter for evidentiary hearing.

In addition, under the Asset Purchase Agreements, each Buyer’s obligation to complete its Transaction is subject to Buyer receiving approval of the Transaction from the applicable state public service commission (the Mississippi Public Service Commission (“MPSC”), in the case of the Hinds Transaction, and the Arkansas Public Service Commission (“APSC”), in the case of the Hot Spring Transaction).

With respect to the Hinds Transaction, Entergy Mississippi will be required to file for and obtain from the MPSC, a Certificate of Public Convenience and Necessity authorizing its acquisition of the Hinds facility. Entergy Mississippi will also seek an order from the MPSC allowing recovery of all costs of the Hinds Transaction in its rates through one of several possible mechanisms. The MPSC certificate filing will be publically noticed, providing an opportunity for intervention by interested parties, will be reviewed by the Mississippi Public Utilities Staff and will be thereafter considered in a hearing before the MPSC. Depending on the rate approval mechanism selected, the proceeding to recover the costs of the Hinds Transaction is expected to follow the same process.

With respect to the Hot Spring Transaction, Entergy Arkansas will be required to obtain approval from the APSC for its acquisition of the Hot Spring Facility. Entergy Arkansas will also seek an order from the APSC in the same proceeding allowing recovery of all costs of the Hot Spring Transaction in its rates through one of several possible mechanisms. The APSC is not required to conduct a public hearing on Entergy Arkansas’ application, but if it determines to have a public hearing, appropriate notice is to be given. Entergy Arkansas’ application will be reviewed by the APSC Staff and will be thereafter approved if the Commission determines the Hot Spring Transaction is consistent with the public interest.

Under the Asset Purchase Agreements, a Buyer need not close its Transaction unless it receives regulatory approval that will allow it to recover all costs associated with the Transaction on terms acceptable to Buyer in its sole discretion (through rates, fuel adjustment charges and/or otherwise) pursuant to a finding that the Transaction is in the public interest and providing for such other regulatory treatment as is acceptable to Buyer in its sole discretion.

Accounting Treatment of the Transaction

If the Transactions are consummated, they are expected to be accounted for as a sale of assets, in conformity with GAAP. At the closing of the Transactions, the excess of the purchase price received by us, less transaction expenses, over the carrying value of the assets sold in the Transactions will be recognized as a gain for financial accounting purposes. For additional information, see “Unaudited Pro Forma Consolidated Financial Statements.”

Material United States Federal Income Tax Consequences

The following is a summary of the material United States federal income tax consequences of the Transactions based upon the Internal Revenue Code of 1986, as amended (the “Code”), applicable U.S. Treasury Regulations, court decisions, and rulings and pronouncements of the Internal Revenue Service, all as in effect on the date hereof and, all of which are subject to change, possibly on a retroactive basis. This summary does not purport to be a complete analysis of all federal income tax consequences of the Transactions, nor does it address any aspect of state, local, foreign or other tax laws.

The Transactions will be treated as a sale of corporate assets in exchange for cash. The Transactions are taxable transactions for United States federal income tax purposes. We will realize gain with respect to the assets sold equal to the difference between the proceeds received by us on such sale and our tax basis in the assets sold.

The Transactions are entirely a corporate action and therefore the Transactions themselves will not be taxable to our stockholders. However, stockholders may be subject to United States federal income tax on distributions the Board expects to declare out of the net proceeds of the Transactions.


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TERMS OF THE ASSET PURCHASE AGREEMENTS

Explanatory Note Regarding the Asset Purchase Agreements

The Asset Purchase Agreements and this summary of their terms have been included to provide you with information regarding the terms of the Asset Purchase Agreements. Factual disclosures about the Company contained in this Proxy Statement or in the Company’s reports posted on our website may supplement, update or modify the factual disclosures about the Company contained in the Asset Purchase Agreements and described in this summary. The representations, warranties and covenants made in the Asset Purchase Agreements by Sellers and Buyers were qualified and subject to important limitations agreed to by Sellers and Buyers in connection with negotiating the terms of the Asset Purchase Agreements. In particular, in your review of the representations and warranties contained in the Asset Purchase Agreements and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purposes of establishing the circumstances in which a party to the Hinds Asset Purchase Agreements may have the right not to consummate the Hinds Transaction if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise and a party to the Hot Spring Asset Purchase Agreements may have the right not to consummate the Hot Spring Transaction if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the Asset Purchase Agreements, rather than establishing matters as facts. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to stockholders and in some cases were qualified by disclosures that were made by each party to the other, which disclosures are not reflected in the Asset Purchase Agreements. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this Proxy Statement, may have changed since the date of the Asset Purchase Agreements and subsequent developments or new information qualifying a representation or warranty may have been included in this Proxy Statement.

General

Hinds Facility

The Hinds Asset Purchase Agreement provides that Entergy Mississippi will acquire the Hinds facility and other assets from our subsidiary KGen Hinds for a purchase price of $206 million in cash (or approximately $458/kW based on 450 MW of summer rated power generation capacity), subject to certain adjustments.

Hot Spring Facility

The Hot Spring Asset Purchase Agreement provides that Entergy Mississippi will acquire the Hot Spring facility and other assets from our subsidiary KGen Hot Spring for a purchase price of $253 million in cash (or approximately $408/kW based on 620 MW of summer rated power generation capacity), subject to certain adjustments.

Purchase Price Adjustments

The following are the potential purchase price adjustments provided for in each of the Asset Purchase Agreements:

if certain conditions to Buyer’s and Seller’s obligation to close a Transaction are satisfied but Buyer has not yet received approval from the applicable state public service commission and other regulatory authorities for the closing of that Transaction, the purchase price under the Asset Purchase Agreement for that Transaction will, so long as Seller is otherwise ready to Close within a specified period after such approvals are obtained, be increased by $5 million (if Buyer’s receipt of state public service commission and other regulatory approval takes longer than 15, but less than 27 months) or $10 million (if Buyer’s receipt of state public service commission and other regulatory approval takes longer than 27 months);

if final results of certain plant performance tests to be performed before Closing establish that the full-load dependable net electric generating capacity (as adjusted to specific summer ambient conditions) of the Hinds facility is more than 3 MW below 450 MW (the “Hinds contract capacity”), or that the full-load dependable net electric generating capacity (as adjusted to specific summer ambient conditions) of the Hot Spring facility is more than 3MW below 620 MW (the “Hot Spring contract capacity”), for each kW by which the capacity is more than 3MW below the applicable contract capacity, the purchase price will be reduced by $457.78/kW, in the case of the Hinds facility, and $408.06/kW, in the case of the Hot Spring facility, up to a maximum reduction to the purchase price as a result of this test of $13.5 million, in the case


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of the Hinds Transaction, and $16 million, in the case of the Hot Spring Transaction (which, if such limit is exceeded will give Buyer the right to terminate the applicable Asset Purchase Agreement), although the $457.78/kW and $408.06/kW reduction amounts and the $13.5 million and $16 million maximum reduction amounts are subject to proportional increase in the event that the purchase price for a facility increases as described above because it takes longer than 15 months, or 27 months, for Buyer to receive approval from the applicable state public service commission and other regulatory authorities;

the purchase price in each Transaction will be reduced by $70,000 for each Btu/Kwh by which the net heat rate of a facility’s electric generating units as established pursuant to the final plant performance tests exceeds (a) 7,200 Btu/Kwh (the “Hinds contract heat rate”), in the case of the Hinds facility, and (b) 7,100 Btu/Kwh (the “Hot Spring contract heat rate”), in the case of the Hot Spring facility, in each case, subject to a tolerance of 100 Btu/Kwh, if Closing occurs within 18 months of execution, or 150 Btu/Kwh, if Closing occurs thereafter; the maximum permitted reduction to the purchase price as a result of this test is $13.5 million, in the case of the Hinds Transaction, and $16 million in the case of the Hot Spring Transaction (which, if such limit is exceeded will give Buyer the right to terminate the applicable Asset Purchase Agreement);

the purchase price in each Transaction will be decreased (or increased) by the amount by which the value inventory transferred to Buyer at Closing is less than (or greater than) $1.8 million, in the case of the Hinds facility, and $1.6 million, in the case of the Hot Spring facility, unless the difference is less than $18,000, in the case of the Hinds facility or $16,000, in the case of the Hot Spring facility, in which case there will be no inventory adjustment;

if certain equipment is not transferred by Seller to Buyer at Closing, the purchase price will be reduced by the value of the equipment not transferred; and

the purchase price in each Transaction is subject to reduction in the event of certain casualty and condemnation events.

Representations and Warranties

The Asset Purchase Agreements contain general representations and warranties made by each Seller, on the one hand, and each Buyer, on the other hand, regarding, in the case of Sellers, their respective businesses, financial condition and structure and, in the case of Buyers and Sellers, certain facts pertinent to the Transactions.

Each of the Hinds subsidiary and the Hot Spring subsidiary has made a number of representations and warranties to each of Entergy Mississippi and Entergy Arkansas, respectively, including representations and warranties related to, among other things, the following matters:

• corporate organization, good standing and qualification; • authority to enter into their respective Asset Purchase Agreements and the enforceability of their respective Asset

Purchase Agreements; • non-violation or conflict with law, governance documents or certain contracts;• compliance with law;• bankruptcy;• litigation and other legal proceedings;• real property and easements;• leased property;• tangible property;• contracts;• permits;• warranties;• intellectual property;• condition and sufficiency of the assets;• environmental matters;• tax matters;• employee matters;


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• insurance;• regulatory status;• pipeline status;• brokers; and• compliance of this Proxy Statement with law.

Each of Entergy Mississippi and Entergy Arkansas has made a number of representations and warranties to each of the Hinds subsidiary and the Hot Spring subsidiary, respectively, including representations and warranties related to, among other things, the following matters:

• corporate organization, good standing and qualification; • authority to enter into their respective Asset Purchase Agreements and the enforceability of their respective Asset

Purchase Agreements; • non-violation or conflict with law, debt documents or governance documents;• litigation and other legal proceedings;• brokers;• entry into an acceptable long term service agreement; and• exclusivity of Seller representations and warranties.

Regulatory Approvals

The parties to the Asset Purchase Agreements have agreed to use good faith efforts to make required regulatory filings under the HSR Act, with the FERC and with applicable state public service commissions within certain periods following the execution of the applicable Asset Purchase Agreement. The parties to the Asset Purchase Agreements have also agreed to use commercially reasonable efforts to prevent any injunction or other order that would delay the consummation of the respective transactions. The filing fees in connection with the filings under the HSR Act are to be divided evenly between the parties to each of the Asset Purchase Agreements.

Access Prior to Closing

Subject to certain limitations, each Seller has agreed to give Buyer reasonable access prior to the Closings, to the power plants, properties, management, books and records including sufficient access to perform certain environmental and other tests.

Operation of the Hinds and Hot Spring Facilities Prior to the Closings

Each of the Hinds subsidiary and the Hot Spring subsidiary has agreed in the Asset Purchase Agreements that, subject to certain exceptions, until the Hinds Closing and Hot Spring Closing, respectively, it will (i) operate and maintain its systems, equipment and machinery in compliance with all laws and permits, in all material respects, and industry practices, (ii) renew applicable government permits, (iii) preserve the goodwill of persons that have a business relationship, (iv) use commercially reasonable efforts to cause the assignment of certain warranties that will be purchased under the Asset Purchase Agreements, and (v) complete certain repair and/or mitigation of operational matters. Each of the Hinds subsidiary and the Hot Spring subsidiary has also agreed that until the Hinds Closing and Hot Spring Closing, respectively, it will not take any of the following actions without the consent of Entergy Mississippi and Entergy Arkansas, respectively:

• amend, waive a default in, or enter into certain contracts;• subject to certain exceptions, dispose of the assets being purchased;• permit the assets being purchased to become subject to certain liens;• settle certain environmental or other claims;• incur certain indebtedness;• delay certain payables or other obligations;• subject to certain exceptions, dispose of certain government emission allowances;• materially change the amount of inventory except in the ordinary course of business;• make any fundamental change to the operation of the respective power plants; or


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• hire certain employees.

Proxy Statement; Special Meeting; Board Recommendation

We have agreed in the Asset Purchase Agreements to send out prior to [_____ __], 2011 a proxy statement to all of our stockholders. We have also agreed to (i) hold the Special Meeting within 30 days of mailing this Proxy Statement, (ii) solicit proxies from our stockholders in favor of Transaction, and (iii) include a recommendation from our board of directors to vote in favor of such resolution. We do have the right to postpone or adjourn the Special Meeting or delay the solicitation of proxies to the extent necessary to ensure that any supplement or amendment required by law is provided to KGen’s stockholders.

Subject to certain exceptions, the Board is required to recommend to our stockholders that they approve resolutions authorizing both Transactions at the Special Meeting. Under certain circumstances, the Board may choose not to make the recommendation to stockholders or withdraw its recommendation if already provided to the stockholders (a “Recommendation Change”). If a material unforeseen event occurs that the Board was not aware of as of the time the Asset Purchase Agreements were signed (the “Intervening Event”) and the Board determines in good faith, after consulting with its legal advisors that the failure by the Board to make a Recommendation Change in response to the Intervening Event would be inconsistent with its fiduciary duties under applicable law, then the Board may make a Recommendation Change; provided that the Board provides 15 days notice to the relevant Buyer before the Recommendation Change is made, and such Buyer is afforded an opportunity to propose revisions to the terms of the Transactions.

Restrictions on Solicitation of Other Offers

Under the Asset Purchase Agreements, we may not (and must cause each of our affiliates, and use commercially reasonable efforts to cause our and their representatives, not to), subject to certain exceptions, (a) solicit, initiate or knowingly encourage the submission of any Takeover Proposal, (b) furnish non-public information regarding us, Sellers or the assets being purchased in connection with or in response to any Takeover Proposal, (c) engage in discussions regarding any Takeover Proposal, (d) endorse or approve any Takeover Proposal, or (e) negotiate or enter into any agreement with respect to any Takeover Proposal. If, however, before our stockholders approve the Transaction, we receive an unsolicited Takeover Proposal from a third party that the Board determines in good faith, after consultation with KGen’s legal and financial advisors, that the failure to take action would be inconsistent with its fiduciary duties under applicable law and would be more favorable to KGen or KGen’s stockholders from a financial point of view and satisfies certain other conditions (a “Superior Proposal”) or would reasonably be expected to lead to a Superior Proposal, we may furnish information to the third party so long as the third party executes or is otherwise bound by a confidentiality agreement at least as restrictive as the confidentiality agreement entered into with Sellers and engage in negotiations with the third party, subject to specified conditions. We must (i) notify Buyers within 24 hours of receipt of any offer that could reasonably be expected to result in a Takeover Proposal (the “Takeover Proposal Notice”), (ii) provide Buyers any non-public information regarding us or our subsidiaries that we provide to the third party who made a Takeover Proposal that was not previously provided to Buyers, (iii) keep Buyers reasonably informed of any Takeover Proposals, including any possible acceptance of a Takeover Proposal, and (iv) give Buyers an opportunity to match any Takeover Proposal.

At any time prior to obtaining the approval of stockholders, the Asset Purchase Agreements may be terminated or a Recommendation Change may be made in order to enter into a Superior Proposal if (i) the solicitation of the Superior Proposal did not violate the terms of the Asset Purchase Agreements, (ii) the failure to terminate the Asset Purchase Agreements or make a Recommendation Change would be inconsistent with the fiduciary duties of the Board under applicable law, and (iii) a termination fee is paid. However, the Board may not terminate the Asset Purchase Agreements or make a Recommendation Change unless at least 15 days have passed since the delivery of the Takeover Proposal Notice, and at least five business days prior to the termination of the Asset Purchase Agreements or the making of a Recommendation Change we notify Buyer or Buyers of the terms of the Superior Offer and the Board’s intention to terminate either or both of the Asset Purchase Agreements and provide Buyers with an opportunity to propose revisions to the terms of the Transactions so that that the Takeover Proposal would no longer be deemed a Superior Offer. The Board may not terminate the Asset Purchase Agreements or make a Recommendation Change if Buyers then make a binding offer to revise the terms of the Asset Purchase Agreements and, after considering the revision, the Board concludes that the Takeover Proposal is no longer a Superior Offer. See “Termination and Termination Fees” below.

Unless the Asset Purchase Agreements are terminated, the Board is required to submit the Transactions to a stockholder vote even if the Board makes a Recommendation Change and the Transactions must be submitted to a stockholder vote prior to the submission of any Takeover Proposal or Superior Proposal.


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However, we note that “Permitted Transactions” are expressly carved-out from the definition of Takeover Proposal. Permitted Transactions are transactions that would otherwise constitute “Takeover Proposals” but that are made by a third party “reasonably acceptable to Buyer” and that (i) exclude the stock and assets of the Hinds subsidiary or Hot Spring subsidiary, as applicable or (ii) (a) relate to a business combination transaction involving the Company or a subsidiary of the Company other than the Hinds subsidiary or the Hot Spring subsidiary, as applicable, and (b) would not affect, limit or modify obligations of the Company, or the Hinds subsidiary or Hot Spring subsidiary, as applicable, to effect the transactions or decrease the likelihood of the relevant Seller being able to consummate the sale of the purchased assets under the Asset Purchase Agreements.

Plant Performance Tests

Each Seller is required to perform a plant performance test between 90 and 120 days prior to the targeted date for Closing. If the results of the plant performance tests indicate that a facility’s full-load dependable net electric generating capacity (as adjusted to specific summer ambient conditions) is below the applicable contact capacity, the heat rate of a facility’s electric generating units exceeds the applicable contact heat rate or a facility’s emissions rates exceeds permitted levels, then the applicable Seller may elect to repair the defects that caused the testing results to fall outside the specified parameters, and such Seller may then perform a re-test to determine if the facility is operating within the specified parameters. Buyer may also request a re-test in such circumstance. If the applicable Seller elects not to do any repairs, or if the re-test indicates that a facility is still not operating within the specified parameters, then the purchase price for that facility may be subject to adjustment as described above under “---Purchase Price Adjustments” or, in certain circumstances, the applicable Buyer has the right to terminate the applicable Asset Purchase Agreement as described below under “---Termination Rights.”

Casualty Losses and Condemnation

If a casualty event occurs prior to the Closing which the applicable Seller estimates in good faith and in accordance with good industry practices (i) will not result in total out-of-pocket costs to Seller of $2 million or more and (ii) would not reasonably be expected to be materially adverse to the facility, such Seller will determine whether the damage can be repaired prior to 60 days prior to the expiration date (i.e., the 3 year anniversary of signing subject to limited extensions). If such Seller determines that the damage can be repaired in such timeframe, it will proceed to repair or elect to send the notice specified in the next paragraph (although the thresholds for sending such notice have not been met). If it proceeds to repair the damage, then such Seller will be entitled to keep all insurance proceeds associated with such casualty. If such Seller determines that it cannot repair the damage within such timeframe (or fails to repair within such timeframe), the applicable Buyer shall proceed with Closing and have the option to either require such Seller to complete the repair after Closing at such Seller’s expense or complete the repair post-Closing at such Buyer’s expense and reduce the purchase price by an amount estimated by such Seller to be the remaining amount necessary to complete the repair.

Each Seller is obligated to send a notice to Buyer if a casualty event occurs that (i) Seller estimates in good faith and in accordance with good industry practices will result in total out-of-pocket costs to Seller of $2 million or more, (ii) would reasonably be expected to be materially adverse to the facility or (iii) Seller determines cannot reasonably be expected to be repaired at least 60 days prior to the expiration date (i.e., the 3 year anniversary of signing subject to limited extensions). After delivery of any casualty event notice, such Seller shall determine in good faith the total cost of repair, which is calculated as the total out-of-pocket costs to Seller less the sums of any loss proceeds that the applicable Seller is reasonably expected to receive. If the applicable Seller determines that the total cost of repair will be greater than $13.5 million or such repair cannot be completed at least 60 days prior to the expiration date, then (i) the applicable Buyer may elect to proceed with Closing and reduce the purchase price or (ii) either party may elect to terminate the Asset Purchase Agreement. If, on the other hand, the applicable Seller determines that the total cost of repair will not be greater than $13.5 million and such repair can be completed in the applicable timeframe, Seller shall have the responsibility to diligently pursue such repair and the Closing shall be delayed for such time as necessary to complete repair in the applicable timeframe (i.e., 60 days prior to the expiration date). In this instance, the applicable Buyer has certain approval rights over the repair process, including the contractor to be used and the sufficiency, quality and acceptability of such repair. If after commencing such repair Seller is unable to complete the repair on time, the applicable Buyer (in its sole discretion) shall have the right to (i) require such Seller to complete the repair after Closing at such Seller’s expense, (ii) complete the repair post-Closing at such Buyer’s expense and reduce the Purchase Price by the positive difference (if any) between the amount of loss proceeds received by Seller and its affiliates prior to Closing and the amount of reasonable out-of-pocket expenses incurred by Seller prior to Closing to conduct such repair or (iii) terminate the Asset Purchase Agreement.

If there is a condemnation event prior to Closing that is determined to be at a value of $13.5 million or less, the


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purchase price shall be reduced by such amount. If the determined value is greater than $13.5 million or the occurrence of condemnation is materially adverse to the operations or physical condition of the purchased assets (taken as a whole), Buyer could (in its sole discretion) elect to proceed with the Transaction and have the purchase price reduced by an amount of such value (less the amount of any condemnation award paid or irrevocably assigned to Buyer) or terminate the Asset Purchase Agreement.

Other Covenants

Sellers are also obligated to comply with the following covenants:

• use commercially reasonable efforts to consummate the Transactions as soon as reasonably practicable and take post-Closing actions that may be required in order to fulfill the terms of the Asset Purchase Agreements;

• take actions to make the required notifications and filings with the relevant governmental authorities in connection with required regulatory approvals and to use commercially reasonable efforts to (i) prevent entry of any injunctions, restraining orders or other similar orders that would prevent or delay the Closing and (ii) promptly take any actions to vacate, modify or suspend such an order;

• take commercially reasonable efforts to cooperate with Buyers in connection with the transfer of permits and emission allowances, including the requirement of Sellers to procure and transfer sufficient emission allowances to Buyers for any applicable compliance period beginning before the Closing Date;

• maintain all required insurance through Closing and cause Buyers to be named as “additional insured” on the relevant policies that are in effect from the date of execution through the earlier of the Closing or the termination of the Asset Purchase Agreements;

• timely prepare and file all tax returns with respect to transfer taxes and pay any amounts that are due and payable thereunder;

• provide notice, promptly after obtaining knowledge thereof, of certain events in connection with the condition of the facilities and the ability of Sellers to comply with certain closing conditions;

• maintain the terms of the confidentiality agreement prior to Closing and maintain all information subject to the terms of the post-Closing confidentiality agreement after Closing; provided that KGen may issue one or more press releases for the primary purpose of public disclosure to KGen’s stockholders;

• complete certain repair and/or mitigation of operational matters;

• use commercially reasonable efforts to complete and place in service the pipeline with Texas Eastern Transmission Company for the Hot Spring Transaction;

• comply with any FERC capacity release requirements with respect to applicable gas transportation agreements;

• with respect to the Hot Spring Transaction, use commercially reasonably efforts to cause fee title to the facility property subject to the Industrial Revenue Bond to be transferred to Entergy Arkansas at Closing; and

• other customary covenants.

Conditions to Closing

Each Buyer’s obligation to complete its Transactions is subject to the satisfaction or waiver, prior to the consummation of the Transaction, of certain conditions, including:


Seller’s material compliance with its pre-Closing obligations and the material accuracy of its representations under the Asset Purchase Agreement;


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Buyer’s receipt of approval of the Transaction from the applicable state public service commission (the Mississippi Public Service Commission, in the case of the Hinds Transaction, and the Arkansas Public Service Commission, in the case of the Hot Spring Transaction) and approval from the FERC, in each case on terms satisfactory to Buyer in its sole discretion;

Buyer’s receipt of certain third-party consents and approvals on terms satisfactory to Buyer in its sole discretion;

Buyer’s receipt of a network transmission study for network transmission service for the applicable facility and the aggregate costs reflected in the study for the supplemental upgrades required to the transmission network in respect of such request do not exceed $10 million, in the case of the Hinds facility, and $40 million, in the case of the Hot Spring facility;

no material adverse effect with respect to Seller;

Seller having terminated its Operation and Maintenance Agreement with NAES Corporation at no cost to Buyer in respect of the applicable facility;

the final plant performance tests to be performed before Closing with respect to the applicable facility establish that the facility’s emissions rates do not exceed permitted levels of NOx and CO emission rates;

Buyer’s receipt of the following documents: a title commitment, FIRPTA certificate, and a closing inventory report;

an escrow arrangement has been established, including the deposit of $30 million, in the case of the Hinds Transaction, and $38 million, in the case of the Hot Spring Transaction;

execution of a post-closing confidentiality agreement;

Sellers completing certain repair and/or mitigation of operational matters;

with respect to the Hot Spring Transaction, the completion of construction of an 8.5 mile pipeline lateral from the Hot Spring facility pursuant to the Precedent Agreement we previously entered into with the Texas Eastern Transmission Company;

with respect to the Hot Spring Transaction, the unwind of the Industrial Revenue Bond structure in place with respect to the Hot Spring facility such that fee title to the facility is transferred to Entergy Arkansas at Closing; and


Each Seller’s obligation to complete the Transactions is subject to the satisfaction or waiver, prior to the consummation of the Transaction, of certain conditions, including:


Buyer’s material compliance with its pre-Closing obligations and the material accuracy of its representations under the Asset Purchase Agreement;




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receipt of the FERC approval;

Seller’s receipt of certain third-party consents and approvals;

replacement of all applicable existing support obligations;

termination of the Long Term Service Agreement with General Electric International, Inc. applicable to the facility at no cost to Seller; and


Neither the Hinds Transaction nor the Hot Spring Transaction is conditioned on the closing of the other. Accordingly, the Transactions may close a different times and one Transaction may be completed and not the other.

Termination Rights

Each of the Asset Purchase Agreements may be terminated under a number of circumstances, including, among others:

by mutual written consent of Seller and Buyer;

by Seller or Buyer if the Closing has not occurred on or before the third anniversary of the signing of the Asset Purchase Agreement, subject to extension under limited circumstances up to an additional 60 days;

by Seller or Buyer, if any order or law is issued permanently prohibiting the consummation of the Transaction or any required regulatory approval is denied pursuant to a final, non-appealable order;

by Seller or Buyer, in the event of material uncured breach by the other of the Asset Purchase Agreement;

by Buyer, if the results of the final plant performance tests with respect to the net electric generating capacity or the net heat rate of a facility are such that the purchase price reduction would exceed the maximum reduction amounts described above (i.e., $13.5 million in the case of Hinds and $16 million in the case of Hot Spring);

by Seller or Buyer, in the event of certain casualty events;

by Buyer, in the event of certain casualty events or condemnation events;

by Seller or Buyer, if our stockholders do not approve of the Transaction at the Special Meeting;

by Buyer, if we fail to hold the Special Meeting in accordance with the terms of the applicable Asset Purchase Agreement;

by Seller, in order to enter into an alternative agreement for a superior proposal if we pay to Buyer a termination fee and comply with the relevant provisions of the Asset Purchase Agreement, including providing the respective Buyer with at least five business days to match the superior proposal; and

by Buyer, if the network transmission study for the applicable facility reflects aggregate costs for the supplemental upgrades required to the transmission system in excess of $10 million, in the case of the Hinds facility, and $40 million, in the case of the Hot Spring facility.

Termination Fees

If our Board continues to recommend in favor of a Transaction, but our stockholders do not approve the Transaction at the Special Meeting, we will be obligated to pay a termination fee of $1.5 million (in the case of the Hinds Transaction) or $1.9 million (in the case of the Hot Spring Transaction) to the applicable Buyer. We will be obligated to pay Buyer an


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additional $6,225,000, in the case of the Hinds Transaction, and $7,600,000, in the case of the Hot Spring Transaction, if a third party publicly makes a Takeover Proposal before the Special Meeting (or communicates such Takeover Proposal to a material group of stockholders), and within nine months of the termination of the Asset Purchase Agreement, we enter into a definitive agreement for an alternative transaction with that third party (or with any other third party, within six months of the date of termination) and that alternative transaction is subsequently consummated.

If we terminate a Transaction to enter into an alternative agreement for a superior proposal, our Board withdraws its recommendation in favor of a Transaction and our stockholders do not approve of that Transaction at the Special Meeting, or we fail to hold the Special Meeting in accordance with the Asset Purchase Agreements, we will be obligated to pay to the applicable Buyer a termination fee of $7,725,000, in the case of the Hinds Transaction, and $9,500,000, in the case of the Hot Spring Transaction.

Specific Performance

The parties agreed that except for the provisions relating to the termination fees which may be paid by each of Sellers to each of the respective Buyers in certain circumstances, each party is entitled to seek specific performance for a failure to consummate the Transactions in a timely manner. Solely prior to Closing, all remedies conferred upon the parties are deemed cumulative with and not exclusive of any one remedy and will not preclude the exercise of any other remedy.

Indemnification

Subject to certain limitations, we and each of Sellers have agreed to indemnify and hold harmless, each of the respective Buyers and their respective officers, directors, employees, agents, partners, members, counsel, accountants, financial advisers, investment bankers, consultants, successors and assigns, in respect of any and all losses incurred (i) resulting from any breach or inaccuracy of any representation or warranty made by Sellers or any breach of any covenant or agreement of Sellers or (ii) arising from any of the liabilities that are retained by Sellers.

Subject to certain limitations, each of Buyers has agreed to indemnify and hold harmless, each of Sellers and its respective officers, directors, employees, agents, partners, members, counsel, accountants, financial advisers, investment bankers, consultants, successors and assigns, in respect of any and all losses incurred (i) resulting from any breach or inaccuracy of any representation or warranty made by Buyers or any breach of any covenant or agreement of Buyers or (ii) arising from any of the liabilities that are assumed by Buyers.

The representations and warranties in the Asset Purchase Agreements will survive for 18 months after the Closings except that certain representations and warranties survive for 30 days following the expiration of the applicable statute of limitations for any losses incurred in connection with breaches of the following representations and warranties:

• corporate organization, good standing and qualification; • authority to enter into the Asset Purchase Agreements and the enforceability of the Asset Purchase Agreements; • non-conflict with governance documents;• title to inventory and tangible property;• bankruptcy;• tax matters;• employee matters; and • brokers.

The covenants related to the parties’ efforts to Close the Transactions and their conduct pending Closing, the plant performance tests described above and reporting obligations survive for 18 months after the Closings whereas other covenants survive indefinitely.

After 42 months following each of the Closings our indemnification obligations will cease and Sellers will be solely responsible for any indemnification obligations.

In addition, the indemnification obligations with respect to the representations and warranties are subject to a number of limitations, including, among others (subject to certain exceptions):

• the indemnification provisions, in regards to breaches of representations or warranties listed above, shall only be effective for individual losses that exceed $20,000 for the Hinds Transaction and $25,000 for the Hot Spring


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Transaction and only to the extent that the aggregate amount of all losses exceeds $1,000,000 for the Hinds Transaction and $1,250,000 for the Hot Spring Transaction; and

• the aggregate liability of all losses for breaches of representations and warranties cannot exceed $30 million in the case of the Hinds Transaction and $38 million in the case of the Hot Spring Transaction.

Fees and Expenses

Whether or not the Transactions are completed, all expenses incurred in connection with the Asset Purchase Agreements and the consummation of the Transaction contemplated thereby will be paid by the party incurring those expenses, except for certain expenses specifically provided for in the Asset Purchase Agreements.


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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma consolidated financial statements and related notes are presented to show effects of the sale of our Hinds facility and our Hot Spring facility.

The pro forma consolidated statements of operations for our fiscal year ended June 30, 2010 and for the [six] months ended [December 31, 2010] are presented to show net income attributable to common stock as if the sales occurred effective [July 1, 2009.] The pro forma consolidated balance sheet is based on the assumption that the sales occurred effective December 31, 2010.

Pro forma data are based on assumptions and include adjustments as explained in the notes to the unaudited pro forma consolidated financial statements. The pro forma data are not necessarily indicative of the financial results that would have been attained had the sales occurred on the dates referenced above and should not be viewed as indicative of operations in future periods. These unaudited pro forma consolidated financial statements should be read in conjunction with the notes hereto and our annual report for the fiscal year ended June 30, 2010 and our quarterly report for the quarter ended December 31, 2010 which are incorporated by reference into this Proxy Statement. See “Where You Can Find Additional Information.”


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Unaudited Pro Forma Consolidated Statement of Operations

Year Ended June 30, 2010

(in thousands, except per share amounts)

Historical KPC

Sandersville Adjustments

Murray Adjustments Adjusted KPC

Hinds Adjustments (a) q

Hot Spring Adjustments (b)

Pro Forma Adjustments

Adjusted Pro Forma

Revenues:Energy sales 155,389$ (85)$ (89,041)$ 66,263$ (37,433)$ (28,830)$ -$ -$ Capacity sales 52,033 - (50,101) 1,932 (1,932) - - - Total revenues 207,422 (85) (139,142) 68,195 (39,365) (28,830) - -

Operating expenses:Cost of fuel 131,898 (73) (76,422) 55,403 (30,805) (24,598) - - Operating and maintenance 39,636 (1,367) (9,900) 28,369 (22,129) (6,240) - - Gas transportation 16,569 - (13,236) 3,333 (1,001) (2,332) - - Selling, general, and administrative 11,689 (120) (369) 11,200 (521) (490) 522 c 10,711 Depreciation 23,978 (1,999) (11,737) 10,242 (3,378) (6,284) - 580 Auxiliary power 8,532 (414) (5,423) 2,695 (1,569) (1,126) - - Insurance 3,466 (287) (1,388) 1,791 (407) (745) - 639 Total operating expenses 235,768 (4,260) (118,475) 113,033 (59,810) (41,815) 522 11,930

Operating loss (28,346) 4,175 (20,667) (44,838) 20,445 12,985 (522) (11,930)

Other income (expenses):Interest expense (12,226) - 12,224 (2) - - - (2) Taxes, other than income taxes (4,134) 1,072 960 (2,102) 1,765 150 - (187) Other (230) - 3 (227) - - - (227) Total other income (expenses) (16,590) 1,072 13,187 (2,331) 1,765 150 - (416)

Loss from continuing operations before taxes (44,936) 5,247 (7,480) (47,169) 22,210 13,135 (522) (12,346)

Income tax benefit from continuing operations - - - - - - - -

Loss from continuing operations after taxes (44,936) 5,247 (7,480) (47,169) 22,210 13,135 (522) (12,346)

Gain on discontinued operations, net of tax - (5,247) 7,480 2,233 - - - 2,233

Net loss (44,936)$ -$ -$ (44,936)$ 22,210$ 13,135$ (522)$ (10,113)

Loss per share from continuing operations-basic (0.80)$ (0.22)$

Loss per share from continuing operations-diluted (0.80)$ (0.22)$ Earnings per share from discontinued operations-basic -$ 0.04$ Earnings per share from discontinued operations-diluted -$ 0.04$ Net loss per share-basic (0.80)$ (0.18)$ Net loss per share-diluted (0.80)$ (0.18)$ Weighted average shares outstanding-basic 55,969 56,175 d 56,175 Weighted average shares outstanding-diluted 55,969 56,182 d 56,182


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8089471.10

Unaudited Pro Forma Consolidated Statement of Operations

For the Six Months Ended December 31, 20101


Historical KPC

Sandersville Adjustments

Murray Adjustments Adjusted KPC

Hinds Adjustments (a)

Hot Spring Adjustments (b)

Pro Forma Adjustments

Adjusted Pro Forma

Revenues:Energy sales 116,122$ 2$ (61,760)$ 54,364$ (30,071)$ (24,293)$ -$ -$ Capacity sales 34,874 - (31,465) 3,409 (3,173) (236) - - Total revenues 150,996 2 (93,225) 57,773 (33,244) (24,529) - -

Operating expenses:Cost of fuel 96,804 - (51,906) 44,898 (25,974) (18,924) - - Operating and maintenance 17,951 (68) (9,703) 8,180 (5,032) (3,148) - - Gas transportation 9,022 - (6,640) 2,382 (612) (1,770) - - Selling, general, and administrative 6,456 (3) (387) 6,066 (308) (309) 326 c 5,775 Depreciation 11,098 - (5,913) 5,185 (1,727) (3,161) - 297 Auxiliary power 4,443 (20) (2,909) 1,514 (824) (690) - - Insurance 1,325 63 (612) 776 (169) (322) - 285 Total operating expenses 147,099 (28) (78,070) 69,001 (34,646) (28,324) 326 6,357

Operating income (loss) 3,897 30 (15,155) (11,228) 1,402 3,795 (326) (6,357)

Other income (expenses):Net gain on s ale of assets 64,991 (64,991) - - - - - - Interest expense (4,591) - 4,591 - - - - - Taxes , other than income taxes (1,565) 24 458 (1,083) 896 75 - (112) Other (73) - 2 (71) - - - (71) Total other income (expenses) 58,762 (64,967) 5,051 (1,154) 896 75 - (183)

Income (loss) from continuing operations before taxes 62,659 (64,937) (10,104) (12,382) 2,298 3,870 (326) (6,540)

Income tax (expense) benefit from continuing operations - - - - - - - -

Income (loss) from continuing operations after taxes 62,659 (64,937) (10,104) (12,382) 2,298 3,870 (326) (6,540)

Gain on discontinued operations, net of tax - 64,937 (10,104) 54,833 - - - 54,833

Net income 62,659$ -$ -$ 42,451$ 2,298$ 3,870$ (326)$ 48,293$

Earnings (loss) per share from continuing operations-basic 1.12$ (0.12)$

Earnings (loss) per share from continuing operations-diluted 1.12$ (0.12)$ Earnings per share from discontinued operations-bas ic -$ 0.98$ Earnings per share from discontinued operations-diluted -$ 0.98$ Net earnings per share-basic 1.12$ 0.86$ Net earnings per share-diluted 1.12$ 0.86$ Weighted average shares outstanding-bas ic 55,997 56,198 d 56,198 Weighted average shares outstanding-diluted 56,089 56,208 d 56,208

1 To be updated for March 31, 2011 financials when available.


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Unaudited Pro Forma Consolidated Balance Sheet

December 31, 2010


Historical KPC

Pro Forma Adjustments (a)

Adjusted Pro Forma

AssetsCurrent assets:Cash and cash equivalents 130,323$ 858,126$ 988,449$ Restricted cash and cash equivalents 7,443 (7,443) - Short-term investments 4,000 (4,000) c - Accounts receivable 7,986 (7,986) - Spare parts inventories 9,513 (9,513) - Prepaid expenses and other current assets 781 (343) 438 Total current assets 160,046 828,841 988,887

Property, plant, and equipment 638,779 (635,354) 3,425 Less: accumulated depreciation 84,917 (82,723) 2,194 Net property, plant, and equipment 553,862 (552,631) 1,231

Contract-based intangibles (net of $41,482 of accumulated amortization) 42,060 (42,060) - Deferred charge 2,070 (2,070) - Deferred financing fees (net of $3,480 of accumulated amortization) 2,784 (2,784) b - Other noncurrent assets 325 (325) - Total assets 761,147$ 228,971$ 990,118$

Liabilities and stockholders' equityCurrent liabilities:Accounts payable and accrued liabilities 17,968$ (15,973)$ b 1,995$ Current portion of long-term debt 1,393 (1,393) - Total current liabilities 19,361 (17,366) 1,995

Long-term debt 132,366 (132,366) - Contract-based intangibles (net of $5,015 of accumulated amortization) 14,484 (14,484) - Other noncurrent liabilities 1,810 (1,793) b 17

Common stock (par value $.01; 150,000 shares authorized; 56,025 shares issued and outstanding at December 31,2010) 560 - 560 Additional paid in capital 743,303 2,166 b 745,469 Retained earnings (accumulated deficit) (150,737) 392,814 242,077 Total stockholders' equity 593,126 394,980 988,106 Total liabilities and stockholders' equity 761,147$ 228,971$ 990,118$

Book value per share 10.59$ 17.57$


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Notes to Unaudited Adjusted Pro Forma Consolidated Financial Statements

Assumptions

The unaudited adjusted pro forma financial statements are provided for illustrative purposes only and are not necessarily indicative of the results that would have been achieved had the sale of the Company’s Hinds and Hot Spring facilities occurred on the dates indicated and is not necessarily indicative of the consolidated financial statements of the Company for any future period. The purpose of the pro forma consolidated financial statements is to show the results of operations had the sale of Hinds and Hot Spring facilities occurred on the indicated dates. On July 9, 2010, the Company sold Sandersville and on April 8, 2011, the Company sold its former KGen Murray I and II LLC. The historical financial statements have been adjusted to show these transactions. Pro forma adjustments are made to show Hinds and Hot Spring post transactions. The unaudited pro forma consolidated financial statements reflect the following assumptions:

• The Company sold the Murray, Hinds and Hot Spring subsidiaries on July 1, 2009.

• As the Company’s previously-owned KGen Sandersville LLC subsidiary was held-for-sale on the Company’s June 30, 2010 historical balance sheet, the results of operations for the year ended June 30, 2010 were treated as discontinued operations. Sandersville’s results of operations were discontinued upon the sale of the Murray subsidiary on July 1, 2009 due to the discontinued involvement in the geographic region comprising that business segment.

• Murray’s results of operations were treated as discontinued operations.

• The debt structure of the Company’s subsidiary, KGen LLC, was assumed to be repaid in full as of July 1, 2009.

• An additional 106,769 shares of common stock issuable upon the vesting of RSUs that vest upon consummation of the sale of the Murray subsidiary were assumed to have been granted and vested on July 1, 2009.

• An additional 47,453 shares of common stock issuable upon the vesting of RSUs that vest upon consummation of the sale of the Hinds subsidiary were assumed to have been granted and vested on July 1, 2009.

• An additional 47,454 shares of common stock issuable upon the vesting of RSUs that vest upon consummation of the sale of the Hot Spring subsidiary were assumed to have been granted and vested on July 1, 2009.

Pro Forma Adjustments to the Unaudited Adjusted Pro Forma Statement of Operations for the Fiscal Year Ended June 30, 2010

a) Reflects the elimination of the results of the Hinds subsidiary for the fiscal year ended June 30, 2010. The net impact is comprised of the following:

1) Elimination of $39.4 million of revenues for the fiscal year ended June 30, 2010.

2) Elimination of $59.8 million of operating expenses for the fiscal year ended June 30, 2010.

3) Elimination of $1.8 million of other expenses for the fiscal year ended June 30, 2010.

b) Reflects the elimination of the results of the Hot Spring subsidiary for the fiscal year ended June 30, 2010. The net impact is comprised of the following:

1) Elimination of $28.8 million of revenues for the fiscal year ended June 30, 2010.

2) Elimination of $41.8 million of operating expenses for the fiscal year ended June 30, 2010.

3) Elimination of $0.2 million of other expenses for the fiscal year ended June 30, 2010.


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c) Reflects the inclusion of the RSU compensation expense that would have been recorded at the assumed grant/vest date of July 1, 2009.

d) Basic loss per share was calculated assuming the weighted average amount of shares of common stock outstanding was 56,174,762 for the fiscal year ended June 30, 2010. Fully diluted loss per share was computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-dilutive.

Pro Forma Adjustments to the Unaudited Adjusted Pro Forma Statement of Operations for the Six Months Ended December 31, 2010

a) Reflects the elimination of the results of the Hinds subsidiary for the six months ended December 31, 2010. The net impact is comprised of the following:

1) Elimination of $33.2 million of revenues for the six months ended December 31, 2010.

2) Elimination of $34.7 million of operating expenses for the six months ended December 31, 2010.

3) Elimination of $0.9 million of other expenses for the six months ended December 31, 2010.

b) Reflects the elimination of the results of the Hot Spring subsidiary for the six months ended December 31,2010. The net impact is comprised of the following:

1) Elimination of $24.5 million of revenues for the six months ended December 31, 2010.

2) Elimination of $28.3 million of operating expenses for the six months ended December 31, 2010.

3) Elimination of $0.1 million of other expenses for the six months ended December 31, 2010.

c) Reflects the removal of the RSUs compensation expense associated with the RSUs that will vest upon the consummation of the sale of the Hinds and Hot Spring subsidiaries recorded during the six months ended December 31, 2010. Reflects the inclusion of the RSU compensation expense that would have been recorded at the assumed grant/vest date of July 1, 2009.

d) Basic earnings per share was calculated assuming the weighted average amount of shares of common stock outstanding was 56,198,147 for the six months ended December 31, 2010. Diluted earnings per share was calculated assuming the weighted average amount of shares of common stock outstanding was 56,207,620 for the six months ended December 31, 2010.

Pro Forma Adjustments to the Unaudited Adjusted Pro Forma Balance Sheet as of December 31, 2010

a) Reflects the elimination of the KGen Murray I and II LLC, the KGen Hinds LLC, and the KGen Hot Spring LLC balance sheets at December 31, 2010 and other cash transaction fees from the purchase prices to calculate the gain upon the sale of the Murray, Hinds and Hot Spring subsidiaries. The net impact is comprised of the following:

1) Addition of $828.8 million of current assets at December 31, 2010. The addition of current assets is made up of expected cash received from the Murray sale of $531.3 million, from the Hinds sale of $206.0 million, and from the Hot Spring sale of $253.0 million offset in part by cash paid for expenses incurred by the sale of $138.3 million for Murray, which includes the payoff of $133.8 million of the debt, $2.5 million for Hinds, and $2.8 million for Hot Spring. In addition, cash is partly offset by the removal of current assets of $11.5 million for Murray, $2.9 million for Hinds, and $3.5 million for Hot Spring.

2) Elimination of $552.6 million of property, plant, and equipment at December 31, 2010. The elimination of $552.6 million of net property, plant and equipment is made up of $303.5 million for Murray, $87.1 million for Hinds, and $162.0 million for Hot Spring.


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3) Elimination of $47.2 million of noncurrent assets at December 31, 2010. The elimination of $47.2 million of noncurrent assets is made up of $44.2 million related to Murray, $0.1 million related to Hinds, and $0.1 million related to Hot Spring. In addition, there was a removal of deferred financing fees of $2.8 million associated with previous financing.

4) Elimination of $17.3 million of current liabilities at December 31, 2010. The elimination of $17.3 million of current liabilities is made up of $9.3 million related to Murray, $2.5 million related to Hinds, and $1.0 million related to Hot Spring. In addition, there was a removal of the current portion of the debt of $1.4 million and short-term derivatives of $3.1 million associated with previous financing.

5) Elimination of $16.2 million of noncurrent liabilities at December 31, 2010. The elimination of $16.2 million of noncurrent liabilities is made up of $0.4 million related to Murray and $14.0 million relate to Hot Spring. In addition, there was a removal of long-term derivatives of $1.8 million associated with previous financing.

6) Addition of $395.0 million of stockholders’ equity balance at December 31, 2010. The addition of $395.0 million represents the net expected gain on sale of the facilities.

b) Reflects the removal of the balance of the deferred financing fees and the balances of the short and long-term swap derivatives associated with the previous financing.

c) Reflects the removal of the short-term investments that are cash collateralizing the two letters of credits of $4.0 million, $2.0 million related to Hinds and $2.0 million related to Hot Spring, which would be eliminated upon sale of these facilities.


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SECURITY OWNERSHIP OF MANAGEMENT

The table below reflects the number of shares of our common stock beneficially owned by (a) each director of the Company, (b) each of our named executive officers and (c) all directors and officers as a group (including officers of the Company not reflected below). Unless otherwise noted, the information is stated as of April__, 2011. There were [56,024,736] shares of our common stock outstanding as of April__, 2011.

Each of the share numbers listed represented less than 1% of our outstanding shares of common stock, except for the share number listed for officers/directors combined, which represented approximately 1.5% of our outstanding shares of common stock.

Officers/Directors

SharesBeneficially

Owned(Daniel T. Hudson .........................................................................................................................................................110,071(1)James P. Jenkins ...........................................................................................................................................................0(2)Gerald J. Stalun ............................................................................................................................................................0(3)Thomas B. White..........................................................................................................................................................23,801James H. Sweeney........................................................................................................................................................240,445(4)William R. Marlow ......................................................................................................................................................151,204(5)Charles L. Holland .......................................................................................................................................................146,428(6)W. Kevin Redmond......................................................................................................................................................98,916(7)

All officers/directors combined................................................................................................................................860,682(8)

Notes:

(1) Mr. Hudson’s shares beneficially owned include 100,000 shares subject to vested option with an exercise price of $19.50 per share.

(2) Mr. Jenkins is a Managing Director of King Street Capital Management, L.P. (KSCM). Funds for which KSCM provides investment advisory services or is an investment manager, together, own 5,574,000 shares of common stock (approximately [9.96]% of the outstanding shares of common stock). These funds hold an economic interest, but no voting rights, in an additional 589,900 shares of common stock (1.05% of the outstanding shares of common stock). Mr. Jenkins disclaims beneficial ownership of these shares.

(3) Mr. Stalun is a Managing Director of EIG Global Energy Partners. Funds and an investor for which an affiliate of EIG Global Energy Partners serves as a sub-advisor, together, own 5,714,286 shares of common stock (approximately [10.21]% of the outstanding shares of common stock). Mr. Stalun disclaims beneficial ownership of these shares.

(4) Mr. Sweeney’s shares beneficially owned listed above include 201,470 shares subject to vested options with exercise prices ranging from $14.00 to $18.20 per share.

(5) Mr. Marlow’s shares beneficially owned listed above include 136,704 shares subject to vested options with exercise prices ranging from $14.00 to $18.20 per share.

(6) Mr. Holland’s shares beneficially owned listed above include 122,678 shares subject to vested options with exercise prices ranging from $14.00 to $18.20 per share.

(7) Mr. Redmond’s shares beneficially owned listed above include 90,266 shares subject to vested options with exercise prices ranging from $14.00 to $18.20 per share.

(8) The shares of all officers and directors combined listed above include 651,118 shares subject to vested options with exercise prices ranging from $14.00 to $19.50 per share. Officers and directors are entitled to vote 81,455 of the shares listed.


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WHERE YOU CAN FIND ADDITIONAL INFORMATION

We provide annual and quarterly reports, proxy statements and other information to our stockholders and posted these documents and information on an Internet web site maintained by us at www.kgenpower.com. You may obtain free copies of these documents and other information by going to the “News and Financials” page of our Internet web site. The information posted on our website, other than copies of the documents listed below, is not part of this Proxy Statement, and therefore is not incorporated herein by reference.

We “incorporate by reference” into this Proxy Statement certain documents we have posted or will post on our website prior to the Special Meeting. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this Proxy Statement. Later information that we post on our website and incorporate by reference into this Proxy Statement will update and supersede earlier information included in this Proxy Statement or incorporated by reference.

We incorporate by reference into this Proxy Statement the following documents posted on our website: Our Annual Report for the Fiscal Year Ended June 30, 2010; Our Quarterly Reports for our fiscal quarters ended September 30, 2010, December 31, 2010 and March

31, 2011; Our proxy statement for our 2010 annual meeting of stockholders; and Any other document that we post on our website after the date of this Proxy Statement to the extent we

indicate in that document that it is incorporated by reference into this Proxy Statement.

Any person, including any beneficial owner of our common stock, to whom this Proxy Statement is delivered may request copies of any of the documents incorporated by reference into this document or other information concerning us, without charge, by written or telephonic request directed to:

KGen Power Corporation1330 Post Oak Blvd, Suite 1500Houston, Texas 77056(713) 979-1990Attention: William Marlow, Esq.

Please request documents by [ ____ __ ], 2011 to ensure receipt before the Special Meeting.


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DOCKET NO. 11-069-U

EAI EXHIBIT SB-2

ASSET PURCHASE AGREEMENT HIGHLY SENSITIVE SCHEDULES

THIS EXHIBIT CONTAINS HIGHLY SENSITIVE PROTECTED INFORMATION PROVIDED PURSUANT TO THE INTERIM PROTECTIVE ORDER NO. 1 IN

APSC DOCKET 11-069-U.
