TCEH First Lien  

Creditors

Each holder (collectively, the “EFIH First Lien Creditors”) of a first lien secured note issued by EFIH (collectively, the “EFIH First Lien Notes”) would receive, in full and final satisfaction of its claim, its pro rata share of $4,137 million of new first lien senior secured notes (or the equivalent amount in cash from the issuance of new debt to third parties) to be issued by reorganized EFIH on the effective date of the Restructuring (such notes on terms as described below, the “New EFIH First Lien Notes”).

The New EFIH First Lien Notes would include terms and conditions satisfactory to the TCEH First Lien Creditors, including the following:

•    Maturity: 10 years from the effective date of the Restructuring

•    Call Protection: No-call for 4 years from issuance

•    Interest Rate: 5.25%

The net present value of all future payment obligations, costs incurred and payments made (or to be made) by the Company in connection with refinancing the EFIH First Lien Notes, including, without limitation, any cash or non-cash distributions, the issuance of additional New EFIH First Lien Notes, or the inclusion of a higher interest rate than that set forth above, longer no-call period or other noteholder-favorable terms and conditions for such New EFIH First Lien Notes, shall constitute the “All-

Each holder (collectively, the “EFIH Second Lien Creditors”) of a second lien secured note issued by EFIH (collectively, the “EFIH Second Lien Notes”) would receive, in full and final satisfaction of its claim, its pro rata share of (a) $1,200 million in cash (the “EFIH Second Lien Payment”) from the proceeds of the EFH Equity Contribution (as defined below) and (b) $1,213 million of new second lien senior secured notes (or the equivalent amount in cash from the issuance of new debt to third parties) to be issued by reorganized EFIH on the effective date of the Restructuring (such notes on terms as described below, the “New EFIH Second Lien Notes”).

The New EFIH Second Lien Notes would include terms and conditions satisfactory to the TCEH First Lien Creditors, including the following:

•    Maturity: 10 years from the effective date of the Restructuring

•    Call Protection: No-call for 4 years from issuance

•    Interest Rate: 6.50%

The net present value of all future payment obligations, costs incurred and payments made (or to be made) by the Company in connection with refinancing the EFIH Second Lien Notes, including, without limitation, any cash or non-cash distributions, the issuance of additional New EFIH Second Lien Notes, or the inclusion of a higher interest rate than that set forth above, longer no-call period or other noteholder-favorable terms and conditions for such New EFIH Second Lien Notes, shall constitute the “All-In EFIH Second Lien Refinancing Costs” and the excess, if any, of the All-In EFIH Second Lien Refinancing Costs over $2,413 million shall constitute the “EFIH Second Lien Refinancing Costs.” Any EFIH Second Lien Refinancing Costs that do not require the Company to make a cash payment in respect of such EFIH Second Lien Refinancing Costs on or before the effective date of the Restructuring shall constitute an “EFIH Second Lien Non-Cash Refinancing Cost” (and together with the EFIH First Lien Non-Cash Refinancing Cost, the “EFIH Non-Cash Refinancing Costs”).

The Restructuring would be implemented pursuant to separate chapter 11 plans of reorganization for each of EFH, EFIH and the TCEH Debtors. Consummation of each of the three plans of reorganization would be conditioned upon one another and would occur concurrently. Pursuant to the TCEH plan of reorganization (the “TCEH Plan”), on the effective date of the TCEH Plan, the reorganized TCEH Debtors would incur up to $1.8 billion of first lien senior secured debt, the cash proceeds of which the reorganized TCEH Debtors would transfer to EFH to fund EFH’s plan of reorganization (the “EFH Plan”) and EFIH’s plan of reorganization (the “EFIH Plan”). The TCEH Debtors would in turn receive 100% of the equity interests of reorganized EFH (the “EFH Equity Acquisition”), which the TCEH Debtors would then distribute to TCEH First Lien Creditors pursuant to the TCEH Plan. Consummation of the EFH Equity Acquisition would be conditioned upon, among other things: (1) consummation of the EFIH Plan, pursuant to which reorganized EFH would retain its equity interests in reorganized EFIH in exchange for a new equity contribution from the proceeds of the EFH Equity Acquisition (the “EFIH Equity Contribution”)¹, and which EFIH Plan would be subject to certain conditions (the “EFIH Plan Conditions”) and (2) consummation of the EFH Plan, subject to certain conditions (the “EFH Plan Conditions”).

The EFIH Plan Conditions would include, among others, that reorganized EFIH must have no more than $5.3 billion of total funded debt, which debt shall be on terms satisfactory to the TCEH First Lien Creditors.

The EFH Plan Conditions would include, among others, that reorganized EFH must have no funded debt.

TCEH/EFIH Pro

Forma Capital

Structure

Reorganized TCEH (Up to $9.8 billion total debt)

•    Up to $7.8 billion of senior secured first lien cash-pay debt:

•    $6.0 billion issued to the TCEH First Lien Creditors (or at the TCEH First Lien Creditors’ election, the equivalent amount in cash from the issuance of such new debt to third parties); and

•    Up to $1.8 billion issued to third-parties, the cash proceeds of which would fund the EFH Equity Acquisition.

•    $2.0 billion of pay-in-kind debt of the reorganized TCEH Debtors issued to the TCEH First Lien Creditors.

•    The amount and structure of the pro forma reorganized TCEH debt described herein is conditioned upon and assumes the consummation of the transactions associated with the Restructuring.

•    Unless the TCEH First Lien Creditors agree to the contrary, the amount of the EFH Equity Acquisition (and the amount of debt of the reorganized TCEH Debtors incurred to finance the same) would be reduced by an amount equal to any EFIH Non-Cash Refinancing Costs.

Reorganized EFIH ($5.3 billion total debt)

•    The terms of reorganized EFIH’s debt, and the relative proportion of senior and junior debt, will be structured to optimize reorganized EFIH’s capital structure and minimize its interest expense.

•    EFH, EFIH and the TCEH Debtors must commence voluntary cases under chapter 11 of the Bankruptcy Code before the next payment of interest is due to holders of certain TCEH Junior Claims, after giving effect to any applicable grace periods.

•    The Restructuring, and all of the transactions described herein and related thereto, must be consummated by no later than June 30, 2014.

Employment

Obligations

Indemnification of

Prepetition

Directors, Officers,  

and Managers

Director, Officer,

Manager, and

Employee Tail

Coverage