THIS GUARANTY AGREEMENT (this “Guaranty”), dated as of August 21, 2014 is issued and delivered by DYNEGY INC., a Delaware corporation (the “Guarantor”), for the account of DYNEGY RESOURCE I, LLC, a Delaware limited liability company (the “Obligor”), and for the benefit of Duke Energy SAM, LLC, a Delaware limited liability company (“DESAM”), and Duke Energy Commercial Enterprises, Inc., an Indiana corporation (“DECAM” and together with DESAM, the “Beneficiaries”). Background Statement WHEREAS, the Beneficiaries and Obligor entered into that certain Purchase and Sale Agreement, dated as of August 21, 2014 (the “Purchase Agreement”); WHEREAS, in accordance with the Purchase Agreement, the Beneficiaries and Obligor intend to enter into a Transition Services Agreement upon the closing of the transactions contemplated in the Purchase Agreement (the “Transition Services Agreement” and together the Purchase Agreement, the “Agreements”); and WHEREAS, Beneficiaries have required that the Guarantor deliver to the Beneficiaries this Guaranty as an inducement to enter into the Agreements. Agreement NOW, THEREFORE, in consideration of the foregoing and for good and valuable consideration, the Guarantor hereby agrees as follows: 1. Guaranty; Limitation of Liability. Subject to any rights, setoffs, counterclaims and any other defenses that the Guarantor expressly reserves to itself under this Guaranty, the Guarantor (i) absolutely and unconditionally guarantees the timely payment of the Obligor’s payment and performance obligations under each Agreement and (ii) agrees to cause the Obligor to perform all of its other obligations under each Agreement (such payment and other obligations of the Obligor, the “Guaranteed Obligations”); provided, however, that the Guarantor’s aggregate liability hereunder shall not exceed two billion eight hundred million U. S. Dollars (U.S. $2,800,000,000). Subject to the other terms of this Guaranty, the liability of the Guarantor under this Guaranty is limited to making payments and causing performance expressly required under the Agreements, and except as specifically provided therein, the Guarantor shall not be liable for or required to pay any consequential or indirect loss (including but not limited to loss of profits), exemplary damages, punitive damages, special damages, or any other damages or costs. 2. Effect of Amendments. The Guarantor agrees that the Beneficiaries and the Obligor may modify, amend and supplement the Agreements and that the Beneficiaries may delay or extend the date on which any payment must be made pursuant to either Agreement or delay | | or extend the date on which any act must be performed by the Obligor thereunder, all without notice to or further assent by the Guarantor, who shall remain bound by this Guaranty, notwithstanding any such act by the Beneficiaries. 3. Waiver of Rights. The Guarantor expressly waives (i) protest, (ii) notice of acceptance of this Guaranty by the Beneficiaries, and (iii) demand for payment of any of the Guaranteed Obligations. 4. Reservation of Defenses. Without limiting the Guarantor’s own defenses and rights hereunder, the Guarantor reserves to itself all rights, setoffs, counterclaims and other defenses that the Obligor may have to payment of all or any portion of the Guaranteed Obligations except defenses arising from the bankruptcy, insolvency, dissolution or liquidation of the Obligor and other defenses expressly waived in this Guaranty. 5. Settlements Conditional. If any monies paid to the Beneficiaries in reduction of the indebtedness of the Obligor under either Agreement have to be repaid by the Beneficiaries by virtue of any provision or enactment relating to bankruptcy, insolvency or liquidation for the time being in force, the liability of the Guarantor under this Guaranty shall be computed as if such monies had never been paid to the Beneficiaries. 6. Notice. The Beneficiaries will provide written notice to the Guarantor if the Obligor defaults under either Agreement. 7. Primary Liability of the Guarantor. The Guarantor agrees that the Beneficiaries may enforce this Guaranty without the necessity at any time of resorting to or exhausting any other security or collateral. This is a continuing Guaranty of payment and not merely of collection. 8. Term of Guaranty. This Guaranty shall remain in full force and effect until the earlier of (i) such time as all the Guaranteed Obligations have been discharged, and (ii) the date that is six (6) months after the date that the Purchase Agreement is terminated in accordance with its terms (the “Expiration Date”); provided, however, the Guarantor will remain liable hereunder for Guaranteed Obligations that were outstanding prior to the Expiration Date. 9. Governing Law. This Guaranty shall be governed by and construed in accordance with the internal laws of the State of New York, including Section 5-1401 of the General Obligations Law of the State of New York, but otherwise without giving effect to principles of conflicts of law. 10. Expenses. The Guarantor agrees to pay all reasonable out-of-pocket expenses (including the reasonable fees and expenses of the Beneficiaries’ counsel) relating to the enforcement of the Beneficiaries’ rights hereunder in the event the Guarantor disputes its obligations under this |
