Ex. 10.2

MASTER FORMATION AND EQUITY INTEREST PURCHASE AGREEMENT

by and among

SEMPRA ENERGY,

SEMPRA GLOBAL,

SEMPRA ENERGY TRADING INTERNATIONAL, B.V.,

and

THE ROYAL BANK OF SCOTLAND PLC

Dated as of July 9, 2007

Table of Contents

Page

ARTICLE I. DEFINITIONS AND USAGE

Section 1.1.

Definitions

1

Section 1.2.

Usage

15

ARTICLE II.
CONTRIBUTION; SALE OF BUSINESS; CLOSING

Section 2.1.

Formation of the Partnership

16

Section 2.2.

Purchase and Sale of Equity Interests of Transferred Companies

16

Section 2.3.

Payment for Equity Interest Purchase by the Partnership and Intercompany Debt
Repayment

17

Section 2.4.

Formation and Closing

17

Section 2.5.

Closing Obligations

17

Section 2.6.

Final Balance Sheet; Payments; Disputes

18

Section 2.7.

Additional Purchase Price Adjustment

20

ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SEMPRA ENERGY

Section 3.1.

Organization and Good Standing

21

Section 3.2.

Enforceability; Authority; No Conflict

21

Section 3.3.

SET Company Records; Accountants Letters

22

Section 3.4.

Transferred Company Interests; Partnership Interests; Title; Sufficiency of
Assets

23

Section 3.5.

No Material Adverse Change

23

Section 3.6.

Employee Benefits

23

Section 3.7.

Compliance with Legal Requirements; Governmental Authorizations

26

Section 3.8.

Legal Proceedings; Orders

27

Section 3.9.

Contracts; No Defaults

27

Section 3.10.

Insurance

29

Section 3.11.

Employees

30

Section 3.12.

Intellectual Property Assets

31

Section 3.13.

Taxes

32

Section 3.14.

Brokers or Finders

34

Section 3.15.

Environmental Compliance

34

Section 3.16.

Financial Statements; No Undisclosed Liabilities

35

Section 3.17.

Affiliate Agreements

36

Section 3.18.

Material Financial Assurances

36

Section 3.19.

FCPA

36

Section 3.20.

Available Funds

36

Section 3.21.

No Other Representation

36

ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF RBS

Section 4.1.

Organization and Good Standing

37

Section 4.2.

Enforceability; Authority; No Conflict

37

Section 4.3.

Bank Holding Company Act Status

38

Section 4.4.

Legal Proceedings

38

Section 4.5.

Brokers or Finders

38

Section 4.6.

Available Funds

38

Section 4.7.

The Partnership

38

Section 4.8.

No Other Representation

39

ARTICLE V.
CONDITIONS PRECEDENT TO RBS’ OBLIGATION TO CLOSE

Section 5.1.

Accuracy of Representations

39

Section 5.2.

Performance

39

(ii)

Section 5.3.

Material Consents and Governmental Approvals

39

Section 5.4.

Additional Documents

39

Section 5.5.

Orders

40

Section 5.6.

Material Adverse Effect

40

Section 5.7.

Closing Certificate

40

Section 5.8.

U.S. Entities Conversion

40

Section 5.9.

Operating Agreement

40

ARTICLE VI.
CONDITIONS PRECEDENT TO SEMPRA ENERGY’S OBLIGATION TO CLOSE

Section 6.1.

Accuracy of Representations

40

Section 6.2.

RBS and Partnership’s Performance

40

Section 6.3.

Material Consents and Governmental Approvals

41

Section 6.4.

Additional Documents

41

Section 6.5.

Orders

41

Section 6.6.

Material Adverse Effect

41

Section 6.7.

Closing Certificate

41

Section 6.8.

U.S. Entities Conversion

41

ARTICLE VII.
ADDITIONAL COVENANTS

Section 7.1.

Conduct of SET Companies

42

Section 7.2.

Information and Access

44

Section 7.3.

Notices of Certain Events

45

Section 7.4.

Filings; Reasonable Best Efforts to Close

45

Section 7.5.

Financial Statements

47

Section 7.6.

Employees and Employee Benefits.

47

Section 7.7.

Retention of and Access to Records

52

(iii)

Section 7.8.

Further Assurances

52

Section 7.9.

No Shop

53

Section 7.10.

Transition Services Agreement

53

Section 7.11.

Other Agreements

54

Section 7.12.

Transition Plans; Novation

54

Section 7.13.

Termination of Certain Agreements

54

Section 7.14.

Insurance

56

ARTICLE VIII.
TERMINATION

Section 8.1.

Termination

56

Section 8.2.

Effect of Termination

56

ARTICLE IX.
INDEMNIFICATION

Section 9.1.

Survival

56

Section 9.2.

Indemnification and Reimbursement by Sempra Energy

57

Section 9.3.

Indemnification and Reimbursement by RBS

59

Section 9.4.

Limitations; Exclusive Remedy

59

Section 9.5.

Third-Party Claims

61

Section 9.6.

Other Claims

62

Section 9.7.

Tax Provisions

62

Section 9.8.

Indemnification Payments; Netting Option

63

ARTICLE X.
GENERAL PROVISIONS

Section 10.1.

Expenses

64

Section 10.2.

Public Announcements and Confidentiality

64

Section 10.3.

Tax Matters

64

(iv)

Section 10.4.

Notices

67

Section 10.5.

Disputes

69

Section 10.6.

Waiver; Remedies Cumulative

71

Section 10.7.

Entire Agreement and Modification

72

Section 10.8.

Assignments, Successors and no Third-Party Rights

72

Section 10.9.

Severability

72

Section 10.10.

Construction

72

Section 10.11.

Governing Law

72

Section 10.12.

Execution of Agreement

72

Section 10.13.

Specific Performance

73

Section 10.14.

Netting and Set-Off on the Closing Date

73

Section 10.15.

Gross-up

73

Section 10.16.

Reimbursement

73

Section 10.17.

Indemnity

73

Section 10.18.

VAT

74

(v)

Exhibits

Exhibit A – Form of LLP Agreement

Exhibit B – Example of EITF 02-3 Calculation

Exhibit C – Form of RBS Indemnity of Sempra Parties for Guarantees of SET
Business

Exhibit D – Form of Commodities Trading Activities Master Agreement

Schedules

Schedule 1 – SET Companies

Schedule 2.2(a) – Transferred Companies

Schedule 2.7 – Specific Reserves

Schedule 3.2(b) – Sempra Energy Required Consents

Schedule 3.2(c) – Sempra Energy Required Governmental Approvals

Schedule 3.4(a) – Transferred Company Interests

Schedule 3.5 – SET Material Adverse Changes

Schedule 3.6(a)(i) – SET Company Employee Benefit Plans

Schedule 3.6(a)(ii) – SET Company Plans

Schedule 3.6(b) – Bonus and Retention Commitments

Schedule 3.6(c)(ii) – Nonqualified SET Company Plans

Schedule 3.6(c)(vi) – Liabilities in Respect of Certain Benefits

Schedule 3.6(e) – Actions Relating to Sempra Plans

Schedule 3.6(f) – Sempra Plans and Effect of This Agreement

Schedule 3.6(g) – Sempra Plans and Section 280G of the Code

Schedule 3.7(a) – SET Company Compliance with Legal Requirements

Schedule 3.7(b) – Governmental Notices

Schedule 3.7(c) – SET Company Governmental Authorizations

Schedule 3.8(a) – Legal Proceedings

Schedule 3.8(b) – Orders

Schedule 3.9(a) – SET Business Contracts

Schedule 3.9(b) – Defaults and Validity of SET Business Contracts

Schedule 3.9(c) – Renegotiations of SET Business Material Contracts

Schedule 3.10(a) – Insurance Policies

Schedule 3.10(b) – Disputed Insurance Claims

Schedule 3.11(a) – Employees

Schedule 3.11(b) – Collective Bargaining Agreements and Compliance, Claims and
Controversies

Schedule 3.12(b) – Infringement of Third Party Intellectual Property by Sempra
Energy

Schedule 3.12(c) – Infringement of SET Intellectual Property by Third Parties

Schedule 3.13(a) – Taxes

Schedule 3.13(d) – Ongoing Audits

Schedule 3.15 – Environmental Matters

Schedule 3.16(a) – Financial Statements

Schedule 3.16(c)(i) – Compensation Changes

Schedule 3.17 – Affiliate Agreements

Schedule 3.18 - Credit Support Agreements

Schedule 4.2(b) – RBS Required Consents

Schedule 4.2(c) – RBS Required Governmental Approvals

Schedule 7.1(m) – 2006 VaR Limits

Schedule 7.1(o) – Special Compensation Adjustments and Retention Awards

Schedule 7.4(a)(ii) – RBS Governmental Licenses

Schedule 7.6(d) – Sempra Plans and SET Company Plans Sponsored Exclusively by
the SET Companies (and that Are Not Sponsored by Sempra Energy or Any of Its
Other Affiliates)

Schedule 7.6(g) – Special Contribution to the SET Company 401(k) Plan (or Under
a Non-Qualified Mirror Savings Plan Established by RBS)

Schedule 7.6(h) – U.S. Severance Benefits

Schedule 7.6(k) – List of Employees with Vested Retiree Welfare Benefits

Schedule 7.12(c) – Conversion to Pass-Through Entities

Schedule 7.13(a) – Affiliate Agreements Surviving Closing

Schedule 9.2(c) – Scheduled California Litigation

Schedule 9.2(d) – Market Behavior Litigation

Schedule 9.2(e) – Scheduled EFS Investigation

Schedule 9.2(g) – Scheduled Matters

(ii)

  

MASTER FORMATION AND EQUITY INTEREST PURCHASE AGREEMENT

This Master Formation and Equity Interest Purchase Agreement, dated as of July
9, 2007, is entered into by and among Sempra Energy, a California corporation
(“Sempra Energy”), Sempra Global, a California corporation and a wholly-owned
subsidiary of Sempra Energy (“Sempra Global”), Sempra Energy Trading
International, B.V., a company formed under the laws of the Netherlands (“SETI”
and, together with Sempra Global, the “Sempra Partners”, and the Sempra
Partners, together with Sempra Energy, the “Sempra Parties”) and The Royal Bank
of Scotland plc (“RBS”), a public limited company incorporated in Scotland.  The
Sempra Parties and RBS may be referred to herein individually as a “Party” and
collectively as the “Parties”.

RECITALS

WHEREAS, the entities listed on Schedule 1 (the “SET Companies”) are direct or
indirect Subsidiaries of Sempra Energy and are engaged in an international
energy, metals and other commodities trading and marketing business (such
business, considered as a whole and as so engaged in by the SET Companies, being
the “SET Business”);

WHEREAS, the Parties wish to form RBS Sempra Commodities LLP (the
“Partnership”), which will be a limited liability partnership constituted under
the Limited Liability Partnership Act 2000 of the United Kingdom and the
regulations made thereunder and which will be governed by the Limited Liability
Partnership Agreement of the Partnership, to be dated as of the Closing Date, as
attached hereto as Exhibit A (the “LLP Agreement”);

WHEREAS, the Sempra Partners wish to sell the SET Business to the Partnership on
the terms set forth in this Agreement;

NOW, THEREFORE, the Parties, in consideration of the mutual promises and
intending to be legally bound, agree as follows:

ARTICLE I.
DEFINITIONS AND USAGE

Section 1.1.

Definitions

For purposes of this Agreement, the following terms and variations thereof have
the meanings specified or referred to in this Section 1.1:

“AAA” – as defined in Section 10.5(a).

“AAA Rules” – as defined in Section 10.5(a).

“Accounting Dispute Notice” – as defined in Section 2.6(c).

“Accounting Expert” – as defined in Section 2.6(c).

“Accrued Compensation” – the aggregate compensation of all SET Company
Employees, including, without limitation, base pay, bonus and commission accrued
as of the Closing Date (whether or not then payable and whether or not required
to be accrued

in accordance with GAAP), but excluding termination payments under the Operating
Agreement and after giving affect to the adjustments described in paragraphs (a)
and (b) of the definition of Agreed Adjustments.

“Affiliate Agreements” – as defined in Section 3.17.

“Agreed Adjustments” – the following balance sheet adjustments: first, (a) all
adjustments necessary to make the Closing Balance Sheet reflect the requirements
of International Financial Reporting Standards, second (b) without duplication,
the reversal of the effects of EITF 02-3, and (c) the addition of $350,000,000.

“Agreement” – this Master Formation and Equity Interest Purchase Agreement, as
the same may be amended, restated, modified or supplemented from time to time in
accordance with its terms, and the Exhibits and Schedules hereto and thereto.

“Allocation Dispute Notice” – as defined in Section 10.3(f)(iii).

“Allocation Notice of Objection” – as defined in Section 10.3(f)(ii).

“Arbitration Demand” – as defined in Section 10.5(a).

“Audited Financial Statements” – as defined in Section 3.16(a).

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

“California Litigation” – the litigation set forth on Schedule 9.2(c) (the
“Scheduled California Litigation”), any successor Proceeding, or any other
Proceeding to the extent arising from conduct that is the same or similar to the
conduct alleged as of the date hereof in the Scheduled California Litigation
during the time period from May 2000 to June 2001 and within the same region as
that alleged as of the date hereof in the Scheduled California Litigation.

 “Cash” – all cash and cash equivalents computed in accordance with GAAP.

 “Closing” – as defined in Section 2.4.

“Closing Balance Sheet” – a consolidated and combined balance sheet of the SET
Companies as of the Closing Date estimated based on the balance sheets of the
SET Companies as of the last day of the most recently completed month and other
available data regarding the then current month and prepared by Sempra Energy in
accordance with GAAP and on a basis consistent with the GAAP conventions used
for the preparation of the Reference Balance Sheet, except that the Agreed
Adjustments shall be made thereon and the estimated Accrued Compensation as of
the Closing Date shall be reflected thereon.

“Closing Book Value” – the consolidated and combined stockholders’ equity of the
SET Companies on the Closing Date as shown on the Closing Balance Sheet.

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“Closing Date” – as defined in Section 2.4.

“Code” – the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder, in each case as in effect from time to time.  References
to sections of the Code shall be construed also to refer to any successor
sections.

“Commodity” –  the meaning assigned to such term in the United States Commodity
Exchange Act as in effect on the date of this Agreement.

“Commodity Transactions” – (i) spot, forward, futures, option, deposit,
consignment, loan, lease, swap, exchange, sale, purchase and repurchase
(including reverse repurchase and prepaid forward transactions) transactions,
hedge transactions, allocated transactions, unallocated transactions,  forward
rate agreements, cap agreements, floor agreements, collar agreements, or any
combination thereof or option or derivative thereon or similar transaction, in
any case involving any Commodity or indices on, or comprised of, any Commodity;
(ii) dealing, market-making, clearing, brokering, trading, marketing, buying,
selling or distributing Commodities or transactions of the type described in
clause (i) of this definition; and (iii) refining, processing, blending,
tolling, otherwise altering, producing, marketing, distributing (at wholesale
and retail), storing, shipping, transporting and generating Commodities through
agreements with third parties

“Company Employees” – as defined in Section 3.6(a).

“Company Plans” – as defined in Section 7.6(d).

“Consent” – any approval, consent, ratification, waiver or other authorization.

“Contemplated Transactions” – all of the transactions expected to be consummated
under Article II of this Agreement.

“Continuation Period” – as defined in Section 7.6(e).

“Contract” – any contract, Lease, license, evidence of Indebtedness, mortgage,
indenture, security agreement or other commitment, undertaking or agreement
(whether written or oral) that is legally binding.

“De Minimis Damages” – any single claim for Out of Pocket and Tax Damages in an
amount that is equal to or less than $1,000,000.

“Determination Date” – as defined in Section 2.4.

“Disclosure Letter” – as defined in the introductory paragraph to Article III.

“Dispute Notice” – as defined in Section 10.5(a).

“EFS Investigation” – the Proceeding described on Schedule 9.2(e) (the
“Scheduled EFS Investigation”), any successor Proceeding, or any other
Proceeding to

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the extent arising from conduct that is the same or similar to the conduct
alleged as of the date hereof in the Scheduled EFS Investigation during the same
time period as that alleged as of the date hereof in the Scheduled EFS
Investigation.

“EITF 02-3” – the effects as at the end of the day immediately preceding the
Closing consistent with historical accounting practice of the SET Companies as
reflected on the Sempra Commodities Net Income and GAAP Adjustments schedule (an
example of which is on Exhibit B).

“Encumbrance” – any lien, option, pledge, assessment, Lease, adverse claim,
levy, charge, security interest, mortgage, right of way, easement, encroachment,
servitude, right of first option, conditional sale Contract, right of first
refusal or similar restriction or Contract to give any of the foregoing.

“Environmental Laws” – Legal Requirements relating to contamination, pollution
or the protection of human health (as it relates to exposure to any hazardous
material or substance), natural resources or the environment.

“Environmental Permits” – as defined in Section 3.15(a).

“Equity Commitment” – (a) options, warrants, convertible securities,
exchangeable securities, subscription rights, conversion rights, exchange
rights, or other Contracts that could require a Person to issue any of its
Equity Interests or to sell any Equity Interests it owns in another Person; (b)
any other securities convertible into, exchangeable or exercisable for, or
representing the right to subscribe for any Equity Interest of a Person or owned
by a Person; (c) statutory pre-emptive rights or pre-emptive rights granted
under a Person’s Governing Documents; and (d) stock appreciation rights, phantom
stock, profit participation, or other similar rights with respect to a Person.

“Equity Interest” – (a) with respect to a corporation, any and all shares of
capital stock; (b) with respect to a partnership, limited liability company,
trust or similar Person, any and all units, interests or other
partnership/limited liability company interests; and (c) any other direct or
indirect equity ownership, participation or voting right or interest in a Person
(including any Contract in the nature of a voting trust or similar agreement or
understanding or indebtedness having general voting rights); provided that with
respect to periods prior to the Closing in no event shall any rights under the
Operating Agreement be deemed an Equity Interest for purposes of this Agreement.

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

“ERISA Affiliate” – any organization which is a member of a controlled group of
organizations within the meaning of Sections 414(b), (c), (m) or (o) of the
Code.

”Excess Reserve Amount” – as defined in Section 2.7.

“Exchange Act” – the Securities Exchange Act of 1934 and any statute successor
thereto, in each case as amended from time to time.

-4-

“FERC” – the United States Federal Energy Regulatory Commission.

“Final Allocation Schedule” – as defined in Section 10.3(f)(ii).

“Final Balance Sheet” – as defined in Section 2.6(b)

“Final Book Value” – as defined in Section 2.6(b).

“Financial Assurances” – as defined in Section 3.18.

“Financial Statements” – as defined in Section 3.16(a).

“FCPA” – the Foreign Corrupt Practices Act of 1977, 15 U.S.C. Sections 78a,
78m(b), 78dd-1, 78dd-2 and 78ff, as amended.

“Formation” – as defined in Section 2.4.

“GAAP” – U.S. generally accepted accounting principles in effect from time to
time, applied on a basis consistent with the SET Companies’ historic accounting
principles and practices.

“Governing Documents” – with respect to any particular entity, (a) if a
corporation, the articles or certificate of incorporation and the bylaws; (b) if
a general partnership, the partnership agreement and any statement of
partnership; (c) if a limited partnership, the limited partnership agreement and
the certificate of limited partnership; (d) if a limited liability company, the
certificate of formation and limited liability company agreement; (e) if another
type of Person, any other charter or similar document adopted or filed in
connection with the creation, formation or organization of the Person; (f) all
equityholders’ agreements, voting agreements, voting trust agreements or other
similar agreements or documents relating to the organization, management or
operation of such entity; and (g) any amendment or supplement to any of the
foregoing.

“Governmental Authorization” – any Consent, license, qualification, certificate,
franchise, confirmation, registration, clearance, Order or permit issued,
granted, given or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement.

“Governmental Body” – any international, federal, state, local, municipal,
foreign or other governmental or quasi-governmental authority or self-regulatory
organization of any nature (including any agency, branch, department, board,
commission, court, tribunal or other entity exercising governmental or
quasi-governmental powers) or exercising, or entitled or purporting to exercise,
any administrative, executive, judicial, legislative, enforcement, regulatory or
taxing authority or power.

“Hazardous Materials” – all hazardous, dangerous or toxic materials or
substances, including natural gas, petroleum and petroleum products (including
crude oil or any fraction thereof), asbestos and asbestos-containing materials,
mold, polychlorinated biphenyls, radiation, lead-containing paint and any other
material that is

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regulated pursuant to any Environmental Laws or that could reasonably be
expected to result in Liability under any Environmental Laws.

“IBA Rules” – as defined in Section 10.5(g).

“IFRS” – the International Financial Reporting Standards promulgated by the
International Accounting Standards Board (which includes standards and
interpretations approved by the International Accounting Standards Board and
International Accounting Standards issued under previous constitutions),
together with its pronouncements thereon from time to time, as adopted by the
European Union, and applied on a consistent basis.

“Inactive Employees” – as defined in Section 7.6(a)(ii).

“Indebtedness” – with respect to any Person, any obligations of such Person
(a) for borrowed money, (b) evidenced by notes, bonds, debentures or similar
instruments, (c) for the deferred purchase price of goods or services (other
than payables or accruals incurred in the Ordinary Course of Business, including
in connection with any trades, hedges or other transactions entered into in
connection with the SET Companies’ trading activities), (d) under capital leases
and (e) in the nature of guarantees of the obligations described in clauses (a)
through (d) above of any other Person (but does not include any Cash collateral
or any obligation under any credit support agreement to return any posted
collateral (including Cash collateral) in each case relating to the Trading
Agreements).

“Indemnified Person” – as defined in Section 9.3.

“Indemnifying Person” – as defined in Section 9.5(a).

“Intellectual Property Licenses” – the agreements with respect to the licensing
of certain trade names, trademarks and co-branded marks and related matters to
be entered into on the Closing Date between (i) RBS and the Partnership and (ii)
Sempra Energy and the Partnership.

“Intercompany Debt” – Any indebtedness for borrowed money or for the deferred
purchase price of goods or services or other payables owed (whether or not due)
by any SET Company, on one hand, to Sempra Energy, its Subsidiaries or
affiliates (other than any SET Company), on the other hand.

“Knowledge” – in the case of Sempra Energy, the actual knowledge of one or more
of its (i) Controller, (ii) Treasurer, (iii) Vice President; Energy Risk
Management, (iv) President and Chief Operating Officer and (v) Chief Financial
Officer, or the knowledge that such persons have after a reasonable inquiry of
persons within Sempra Energy and its Subsidiaries and the SET Companies
reasonably likely to know the applicable information.  Sempra Energy represents
and warrants for purposes of the applicable portions of Article III that the
above persons have completed such reasonable inquiry as of the date of this
Agreement as appropriate in connection with giving the representations and
warranties in the applicable portions of Article III.

-6-

“Lease” – any lease or rental agreement pertaining to the occupancy of any real
property or any lease or rental agreement, license, Contract, right to use or
installment and conditional sale agreement pertaining to the leasing or use of
any Tangible Personal Property.

“Legal Requirement” – any laws, statutes, treaties, rules, regulations,
ordinances, judgments, decrees, principles of common law, codes, orders and
other pronouncements having the effect of law of any Governmental Bodies,
including all Governmental Authorizations.

“Liability” – with respect to any Person, any Indebtedness, liability or
obligation of such Person of any kind, character or description, whether known
or unknown, absolute or contingent, accrued or unaccrued, disputed or
undisputed, liquidated or unliquidated, secured or unsecured, joint or several,
due or to become due, vested or unvested, executory, determined, determinable or
otherwise, and whether or not the same is required by GAAP to be accrued on the
financial statements of such Person.

“LLP Agreement” – as defined in the Recitals.

“Loans” – as defined in Section 7.6(g)(iii).

“Market Behavior Litigation” – other than the California Litigation, any
Proceeding (whether known or unknown, whether or not disclosed in accordance
with this Agreement, and whether or not commenced before or after the date of
this Agreement) brought against any SET Company, RBS, or any of their
Subsidiaries by or before a Governmental Body (excluding a federal or state
court, except in connection with the appeal of any Proceeding commenced before a
Governmental Body that is not a federal or state court) to the extent arising
out of market manipulation, price fixing, false or improper price reporting or
any other substantially similar conduct prior to the Closing Date by any SET
Company or Sempra Energy or its Subsidiaries including, without limitation, the
matters set forth on Schedule 9.2(d).

“Material Consents” – such of the Sempra Energy Required Consents and the RBS
Required Consents the failure of which to be obtained would reasonably be
expected to have a material adverse effect on the business, assets, liabilities,
operations, results of operations, or financial condition of the SET Businesses
taken as an entirety or on any one of the SET Core Businesses.

“Material Governmental Approvals” – the approval of (i) the Federal Reserve
Board, (ii) the FERC, (iii) the United Kingdom Financial Services Authority,
(iv) the London Metal Exchange, (v) LCH Clearnet Limited, and, if required, (vi)
the Commission of the European Communities or, if (vi) is not required, then
(vii) (a) the United Kingdom Office of Fair Trading and (b) of any other member
state of the European Union, and in any case (regardless of whether the approval
in clause (vi) is required), Japan and Switzerland (in each case if necessary),
where the failure to obtain such approval would constitute more than an
immaterial violation of a Legal

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Requirement relating to competition or merger control and where the parties have
been unable to implement alternative arrangements pursuant to Section 7.8(b).

“Net Trading Revenue” – for any period, the total realized gains, unrealized
mark-to-market gains and fee and interest income generated by trading
activities, net of interest expense and transaction fees and expenses for such
period in accordance with IFRS.

“OA Termination Agreement” – as defined in Section 5.9.

“Offtake Agreement” - Third Amended and Restated Copper Concentrate Offtake
Agreement, dated January 24, 2007, between Sempra Metals Concentrates Corp. and
Tritton Resources Limited.

“Operating Agreement” – the Operating Agreement, dated August 6, 1997, among
Steven J. Prince, David A. Messer, Todd Esse, Frank Gallipoli, Enova
Corporation, Pacific Enterprises, Sempra Energy Trading Corporation (f/k/a AIG
Trading Corporation), Sempra Energy (f/k/a Mineral Energy Company) and Wine
Acquisition Inc.

“Order” – any order, writ, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or arbitrator (in each case whether
preliminary or final).

“Ordinary Course of Business” – the ordinary course of business of a Person;
provided that an action taken by a Person will be deemed to have been taken in
the ordinary course of business only if that action is substantially consistent
with the past practices of such Person.

“Out of Pocket and Tax Damages” – any and all (i) out-of-pocket cash
expenditures after Closing actually made by any Indemnified Person, the
Partnership or any of the SET Companies (without duplication of any capital
contribution or loan by a Partner to the Partnership made in respect of any such
out-of-pocket cash expenditures by the Partnership but excluding any other
capital contribution or loan by a Partner to the Partnership) in respect of any
loss, liability, claim, obligation, penalty, action, judgment, suit, proceeding,
damage, together with all reasonably incurred cash disbursements, costs,
expenses (including costs of investigation and defense and appeal and reasonable
attorneys’ fees and expenses) or Taxes of any kind or nature whatsoever, whether
or not involving a Third-Party Claim and, for the avoidance of doubt and without
limitation on the rights of any Indemnified Persons of the Partnership and its
Subsidiaries to make a claim in respect of any out of pocket cash expenditures
after Closing, shall not include any diminution of value of any asset and (ii)
with respect to indemnification for Taxes (including any representation or
warranty with respect to Taxes),  without limitation or duplication, the loss of
or reduction in the amount of any relief, loss, allowance, exemption, credit,
deduction or set off in respect of or from such Taxes (a “Relief”) of or
available to any of the Indemnified Persons, the Partnership or the SET
Companies, in each case, netting such cash expenditures or loss of or reduction
in the amount of any Relief against any Relief which becomes available as a
direct result of such cash

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expenditure or loss or reduction in the amount of Relief; provided that in the
case of the SET Companies or the Partnership, a Relief shall only include a
Relief which was either treated as an asset in the Closing Balance Sheet or
arose or accrued to the SET Companies on or after Closing.

“Parent Plans” – as defined in Section 7.6(d).

“Partners” – the Sempra Partners and RBS, together.

“Partnership” – as defined in the Recitals.

“Party” – as defined in the preamble.

“Permissible Trading Activities” – the conduct of any aspect of the
commodities-related trading businesses comprising part of the SET Business in
accordance with past practices.

“Permitted Encumbrance” – (a) any Encumbrance for Taxes, assessments, government
charges or levies not yet due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP and reflected on the Financial Statements, (b) any
statutory Encumbrance arising in the Ordinary Course of Business by operation of
Legal Requirements with respect to a Liability that is not yet due or delinquent
or that is being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP and reflected on
the Financial Statements, (c) Encumbrances of vendors, suppliers, carriers,
warehousemen, mechanics, materialmen and repairmen incurred in the Ordinary
Course of Business that are not material in nature, (d) pledges or deposits to
secure obligations under workers’ compensation laws or similar legislation or to
secure public or statutory obligations, (e) minor survey exceptions, reciprocal
easement agreements and other customary encumbrances on titles to real property
that (i) were not incurred in connection with any Indebtedness, (ii) do not
render title to the property encumbered thereby unmarketable and (iii) do not,
individually or in the aggregate, materially adversely affect the value or use
of such property for its current and anticipated purposes, and (f) Encumbrances
incurred in the Ordinary Course of Business to secure Indebtedness of any SET
Company or any SET Company obligations under Trading Agreements incurred in the
Ordinary Course of Business.

“Person” – any natural person, corporation, general partnership, limited
partnership, limited liability company, joint venture, trust, union,
proprietorship, Governmental Body or other entity, association or organization
of any nature, however and wherever organized or constituted.

“Physical Energy Infrastructure Assets” – physical assets used for the
generation, production, transmission, storage, refining, distribution or similar
or related handling or processing of electricity, oil, coal, natural gas or
other energy related products or commodities, including power plants, electric
and gas distribution or transmission facilities, pipelines, storage fields, gas
gathering and processing facilities, exploration and

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production equipment, liquefied natural gas liquefaction and regasification
terminals and liquefied natural gas ships and tankers.

“Policies” – as defined in Section 3.10(a).

“Pre-Closing Tax Period” – as defined in Section 9.2(j).

“Proceeding” – any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, judicial or
investigative, whether public or private) commenced, brought, conducted or heard
by or before any Governmental Body or arbitrator.

“Proposed Allocation Schedule” – as defined in Section 10.3(f)(ii).

“Proposed Final Balance Sheet” – as defined in Section 2.6(a).

“Proposed Final Book Value” – as defined in Section 2.6(a).

“Qualifying Subsidiary” – a Person that is a wholly-owned Subsidiary of Sempra
Energy other than the SET Companies and is an entity organized under the laws of
(i) the United States, any state thereof or the District of Columbia if such
Person would become a member of the Partnership in place of Sempra Global or
(ii) the Netherlands, or such other country as to which RBS has given its
consent, if such Person would become a member of the Partnership in place of
SETI, provided that, in either case, the substitution of such Subsidiary for
Sempra Global or SETI, as the case may be, would not have an adverse Tax effect
on the Partnership or RBS.

“RBS” – as defined in the preamble.

“RBS Governmental Licenses” – as defined in Section 7.4(a).

“RBS Material Adverse Effect” – (a) any event, change, circumstance or
occurrence that, individually or together with any other event, change,
circumstance or occurrence, has had or could reasonably be expected to have a
material adverse effect on the ability of RBS or the Partnership, as applicable,
to perform its obligations under this Agreement or the Related Agreements or to
consummate the transactions contemplated hereby or thereby (without duplication
of the events covered by clause (b) below); or (b) as of the Closing Date, RBS’
senior unsecured long-term indebtedness (i) ceases to be rated at least “A” by
Standard & Poor’s and Fitch, and at least “A1” by Moody’s Investor Service,
Inc., or (ii) is rated “A” by either Standard & Poor’s or Fitch, or rated “A1”
by Moody’s Investor Service, Inc. and is currently subject to “negative outlook”
or is on credit watch by the applicable rating agency rating such long-term
indebtedness at the level specified above in this subsection (ii).

“RBS Required Consents” – as defined in Section 4.2(b).

“RBS Welfare Plans” – as defined in Section 7.6(f).

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“Reference Balance Sheet” – the consolidated and combined balance sheet of the
SET Companies as of December 31, 2006, prepared in accordance with GAAP as of
the date of such balance sheet showing the assets, liabilities and stockholders’
equity of the SET Companies as of such date, including the components thereof.

“Related Agreements” – the LLP Agreement, the Commodities Trading Activities
Master Agreement, the Transition Services Agreement and the Intellectual
Property Licenses.

“Representative” – with respect to a particular Person, any director, officer,
manager, employee, agent, consultant, advisor, accountant, financial advisor,
legal counsel or other representative of that Person.

 “Schedule” – each schedule provided by Sempra Energy or RBS, as applicable, in
accordance with this Agreement.

“Scheduled Matters” – the Proceedings set forth on Schedule 9.2(g) and any
successor Proceeding.

“Section 9.2 Indemnified Persons” – as defined in Section 9.2.

“Section 9.3 Indemnified Persons” – as defined in Section 9.3.

“Securities Act” – the Securities Act of 1933 and any statute successor thereto,
in each case as amended from time to time.

“Sempra 401(k) Plan” – as defined in Section 7.6(g)(i).

“Sempra Energy” – as defined in the preamble.

“Sempra Energy Notice of Objection” – as defined in Section 2.6(b).

“Sempra Energy Required Consents” – as defined in Section 3.2(b).

“Sempra Foreign Plan” – as defined in Section 3.6(a).

“Sempra Global” – as defined in the preamble.

“Sempra Lender” – as defined in Section 2.3.

“Sempra Parties” – as defined in the preamble.

“Sempra Partners” – as defined in the preamble.

“Sempra Plans” – as defined in Section 3.6(a).

“Sempra Portion” – for the period from and including the Closing Date to but
excluding the first anniversary thereof, 80%, and, for the period from and
including such first anniversary to but excluding the second anniversary of the
Closing Date, 75%.

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“Sempra Utilities” - the entities listed on Schedule 3 of the LLP Agreement and
each of their respective subsidiaries or successors.

“SET Audited Entities” – as defined in Section 3.16(a).

“SET Business” – as defined in the Recitals.

“SET Business Material Contract” – as defined in Section 3.9(d).

“SET Companies” – as defined in the Recitals; provided that the term “SET
Companies” shall refer to all of the listed entities, collectively, and the term
“SET Company” shall refer to each of such entities.

“SET Company 401(k) Plan” – as defined in Section 7.6(g)(i).

“SET Company Employees” – as defined in Section 3.11(a).

“SET Company Foreign Plan” – as defined in Section 3.6(a).

“SET Company Plans” – as defined in Section 3.6(a).

“SET Core Businesses” – Commodity Transactions with respect to oil (and
byproducts thereof), electricity, natural gas, liquefied natural gas, base
metals, coal, liquefied petroleum gas, biofuels, carbon credits and emissions
credits.

“SET Employment Agreements” – as defined in Section 3.11(a).

“SET Intellectual Property Assets” – as defined in Section 3.12(a).

“SET Material Adverse Effect” – any event, change, circumstance or occurrence
that, individually or together with any other event, change, circumstance or
occurrence, has had or could reasonably be expected to have a material adverse
effect on (a) the business, assets, liabilities, operations, results of
operations, or financial condition of the SET Companies and their Subsidiaries,
taken as a whole, or (b) the ability of the Sempra Partners to perform their
material obligations under this Agreement or any Related Agreement or to
consummate the transactions contemplated hereby or thereby; provided, that any
such effect shall, to the extent resulting from the following, be disregarded in
determining whether a “SET Material Adverse Effect” has occurred or could
reasonably be expected to occur: (i) any changes in Legal Requirements (or
official interpretations thereof) that are generally applicable to commodities
trading businesses or the commodities markets in general, other than any changes
in Legal Requirements (or official interpretations thereof) resulting from (or
otherwise arising in connection with) the actions of any Governmental Body
(including any Governmental Authorization) relating to or otherwise issued in
connection with the transactions contemplated by this Agreement (which changes,
if any, shall not be disregarded in determining whether a “SET Material Adverse
Effect” has occurred); (ii) any adverse change or event to the extent affecting
the economy, commodities trading businesses or the commodities markets in
general; (iii) any failure by the SET Companies to meet any estimates of

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revenues or earnings for any period ending on or after the date of this
Agreement and prior to the Closing, provided that the exception in this clause
shall not prevent or otherwise affect a determination that any change, effect,
circumstance or occurrence underlying such failure has resulted in, or
contributed to, a SET Material Adverse Effect;  and (iv) any adverse change or
effect to the extent resulting from (A) RBS’ refusal to consent to any action
requiring its consent pursuant to Section 7.1 and with respect to which its
consent has been requested by Sempra Energy in writing pursuant to Section 7.1
or (B) RBS’ material breach of its obligations under Section 7.12.

“SETI” – as defined in the preamble.

“Straddle Period” – any taxable period that begins before and ends after the
Closing Date.

“Subsidiary” – with respect to any Person, means another Person (other than a
natural person), of which such first Person is entitled, directly or indirectly
through one or more Subsidiaries, through the ownership or control of voting
securities, other voting ownership or voting partnership interests or otherwise,
to elect at least a majority of its board of directors or other managing
authority or to otherwise, directly or indirectly, control the management of
such Person; provided, that for purposes of this Agreement (but only prior to
Closing), the SET Companies shall be deemed to be Subsidiaries of Sempra Energy.

“Tangible Personal Property” – all office equipment, computer hardware, vehicles
and other similar material items of tangible personal property of every kind,
together with any express or implied warranty by the Third Party manufacturers
or sellers or lessors of any item or component part thereof and all maintenance
records and other documents relating thereto.

“Tax” – any income, gross receipts, license, payroll, employment, excise,
capital gains or corporation tax on capital gains, severance, stamp, stamp duty
reserve tax, occupation, premium, property, environmental, windfall profit,
customs, vehicle, airplane, boat, vessel or other title or registration, capital
stock, franchise, employees’ income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, documentary, value added, alternative, add on
minimum and other tax, fee, assessment, levy, tariff, charge or duty of any kind
whatsoever and any interest, penalty, addition or additional amount thereon
imposed, assessed or collected by or under the authority of any Governmental
Body or payable under any tax sharing agreement or any other Contract.

“Tax Claim” – as defined in Section 9.7(a).

“Tax Laws” – the Legal Requirements of any Governmental Body relating to any
Tax.

“Tax Return” – any return (including any information return), report, statement,
schedule, notice, form, declaration, or claim for refund (including any amended
return, report, statement, schedule, notice, form, declaration, or claim for
refund) filed with or

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submitted to, or required to be filed with or submitted to, any Governmental
Body with respect to Taxes.

“Third Party” – a Person other than Sempra Energy, RBS, the Partnership or any
of their respective Subsidiaries.

“Third-Party Claim” – any claim against any Indemnified Person by a Third Party,
whether or not involving a Proceeding.

“Trading Agreement” – any contract, agreement or other document (whether or not
documented on an ISDA Master Agreement) to effect any Commodity Transaction to
which any SET Company is party with respect to the purchase, sale, transfer of,
transportation, storage, transmission, hedging with respect to, or price of, any
Commodity or any similar good, article, service, right, or interest and any
transaction thereunder entered into to effect any Commodity Transaction.

“Transfer Date” – as defined in Section 7.6(a)(ii).

“Transfer Taxes” – as defined in Section 10.3(e).

“Transferred Companies” – as defined in Section 2.2(a).

“Transferred Company Interests” – as defined in Section 2.2(a).

“Transferred Employees” – as defined in Section 7.6(a)(i).

“Transition Services Agreement” – as defined in Section 7.10.

“Tritton” – any failure of the Tritton Copper Mine to deliver copper or make
payments in lieu thereof under the Offtake Agreement.

“Tritton Performance Levels” – the last to occur of (i) the date on which (a)
the Tritton Mill is expanded to have the capacity to process at least 1.4
million metric tons per annum of  ore, and is thereafter expanded to have the
capacity to process at least 2 million metric tons per annum of ore, and is
successfully operated at an output level of 2 million metric tons per annum for
at least one calendar year, and (b) with respect to the Life of Mine Plan
established for the mine, the mine achieves at least 90% of the projected
results set out for it in such updated plan following the update thereof in late
2007, and the mine is projected to meet all targets after December 2009;
provided, the 90% level will become 100% in the event there is a default under
any existing credit facility with respect to the mine, and (c) an Independent
Competent Person (as defined by the latest edition of The Joint Ore Reserves
Committee of The Australasian Institute of Mining and Metallurgy, Australian
Institute of Geoscientists and Minerals Council of Australia (the “JORC Code”))
confirms for two annual periods that that the deposits identified to underpin
the Tritton Expansion Project are categorized as Proven or Probable Reserves (as
defined in the JORC Code), with RBS agreeing, in its reasonable discretion, to
the cut-off grade and cu price used in assessment (Probable Reserves to be

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discounted 15% for the purposes of calculating the adequacy of reserves), and
(ii) December 31, 2009.

“Unaudited Financial Statements” – as defined in Section 3.16(a).

“VAT” – Value added tax, sales, use and any similar tax imposed by any
Governmental Body, including the United Kingdom.

Section 1.2.

Usage

(a)

Interpretation.  In this Agreement, unless a clear contrary intention appears:

(i)

the singular number includes the plural number and vice versa;

(ii)

reference to any Person includes such Person’s successors and assigns but, if
applicable, only if such successors and assigns are not prohibited by this
Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually;

(iii)

reference to either gender includes the other gender;

(iv)

reference to any 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;

(v)

reference to any Legal Requirement means such Legal Requirement as amended,
modified, codified, replaced or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated thereunder, and
reference to any section or other provision of any Legal Requirement means that
provision of such Legal Requirement from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such section or other provision;

(vi)

“hereunder,” “hereof,” “hereto,” and words of similar import shall be deemed
references to this Agreement as a whole and not to any particular Article,
Section or other provision hereof;

(vii)

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

(viii)

with respect to the determination of any period of time, “from” means “from and
including” and “to” means “to but excluding”; and

(ix)

references to documents, instruments or agreements shall be deemed to refer as
well to all addenda, exhibits, schedules or amendments thereto.

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(b)

Accounting Terms and Determinations.  Unless otherwise specified herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.

(c)

Legal Representation of the Parties.  This Agreement was negotiated by the
Parties with the benefit of legal representation, and any rule of construction
or interpretation otherwise requiring this Agreement to be construed or
interpreted against any Party shall not apply to any construction or
interpretation hereof.

ARTICLE II.
CONTRIBUTION; SALE OF BUSINESS; CLOSING

Section 2.1.

Formation of the Partnership

(a)

Within five (5) Business Days of the Determination Date (as defined in Section
2.4 below), RBS shall cause the incorporation of the Partnership in the United
Kingdom under the Limited Liability Partnership Act 2000 of the United Kingdom
and the regulations made thereunder.  The name of the Partnership on
incorporation shall be RBS Sempra Commodities LLP.  Following incorporation, RBS
shall provide the Sempra Partners with a copy of the Certificate of
Incorporation of the Partnership.

(b)

Upon the terms and subject to the conditions set forth in this Agreement, with
effect from immediately prior to the acquisitions by the Partnership provided
for in Section 2.2 below, Sempra Energy, either directly or through one or more
of the Sempra Partners or its other Subsidiaries (other than the SET Companies),
shall contribute to the Partnership, and RBS and Sempra Energy shall cause the
Partnership to accept from Sempra Energy (directly or indirectly, as
applicable), Cash in an aggregate amount of $1,300,000,000.

(c)

Upon the terms and subject to the conditions set forth in this Agreement, with
effect from immediately prior to the acquisitions by the Partnership provided
for in Section 2.2 below, RBS shall contribute to the Partnership, and RBS and
Sempra Energy shall cause the Partnership to accept from RBS, Cash in an
aggregate amount of $1,355,000,000.

Section 2.2.

Purchase and Sale of Equity Interests of Transferred Companies

Upon the terms and subject to the conditions set forth in this Agreement,
effective as of the Closing, Sempra Energy shall (and shall cause its
Subsidiaries to) sell, assign, transfer and deliver to the Partnership, and RBS
and Sempra Energy shall cause the Partnership to acquire from Sempra Energy, all
of Sempra Energy’s and its Subsidiaries’ right, title and interest in and to all
of the following:

(a)

100% of the Equity Interests (the “Transferred Company Interests”) in each of
the SET Companies set forth on Schedule 2.2(a) hereto (the “Transferred
Companies”), free and clear of any and all Encumbrances except as set forth on
Schedule 2.2(a); and

(b)

subject to Section 10.3(d), copies of all books and records (to the extent
relating primarily to the SET Business or the SET Companies and excluding books
and records relating to Taxes that do not relate exclusively to the SET
Business) not held by the SET Companies.

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Section 2.3.

Payment for Equity Interest Purchase by the Partnership and Intercompany Debt
Repayment

In exchange for the Transferred Company Interests, at the Closing RBS and Sempra
Energy shall cause the Partnership to pay by wire transfer or other immediately
available funds from the amounts contributed pursuant to Section 2.1(b) and (c)
and (as necessary) additional funds borrowed by the Partnership from RBS: (a) to
the Sempra Partners an amount equal to the aggregate of the Closing Book Value
with respect to the SET Companies; and (b) the outstanding balance of all
Intercompany Debt, to the respective obligees thereof, as of the Closing Date.
 With respect to the payment required by clause (a) of this Section, Sempra
Energy shall notify the Partnership and RBS in writing of the portions of the
Closing Book Value to be paid to each of SETI and Sempra Global at least two
Business Days prior to the Closing.  Upon the payment required by clause (b) of
this Section, Sempra Energy shall (and shall cause its Subsidiaries to) settle
or satisfy (including the settlement or satisfaction of all Encumbrances
relating to) such Intercompany Debt.  In the event that there is Intercompany
Debt outstanding that cannot be repaid without additional cost or adverse
consequence (including adverse tax or accounting effects), such Intercompany
Debt shall be assigned to, and any obligations of Sempra Energy or any of its
affiliates (other than the SET Companies) that is a lender (a “Sempra Lender”)
thereunder shall be assumed by the Partnership or, if there would be any
withholding tax imposed on the interest received by the Partnership, then by RBS
(but only if the payments to RBS would not incur withholding tax or would incur
withholding tax at a lower rate than the Partnership), and RBS shall pay (in the
case of an assignment to and assumption by RBS of such debt) or cause the
Partnership to pay to the applicable Sempra Lenders an amount in respect of such
assignment equal to the outstanding Intercompany Debt so assigned.

Section 2.4.

Formation and Closing

The consummation of the transactions provided for in Sections 2.1(b) and (c) and
2.2 of this Agreement (the “Formation”) shall be held on the first day that is
both (i) the first day of a calendar month, and (ii) at least ten (10) Business
Days after, each of the conditions precedent set forth in Articles V and VI has
been satisfied or waived (other than conditions relating to deliveries of
documentation at Closing; provided, that all conditions are also satisfied or
waived at Closing) (such pre-Closing date of satisfaction or waiver, the
“Determination Date”), or at such other time as Sempra Energy and RBS shall
agree in writing.  The consummation of the other transactions provided for in
this Agreement (the “Closing”) shall be held immediately following the Formation
(the date of Formation and Closing, the “Closing Date”).  The Formation and the
Closing shall be held at the offices of Simpson Thacher & Bartlett LLP, 425
Lexington Avenue, New York, New York 10017, or at such other place as Sempra
Energy and RBS shall agree in writing.  

Section 2.5.

Closing Obligations

In addition to any other documents to be delivered under other provisions of
this Agreement, at the Closing:

(a)

Sempra Energy shall deliver to the Partnership, certificates representing the
Transferred Company Interests or such other agreements, certificates and other
documents (including a stock power or similar instrument duly and validly
executed by the transferors thereof), in form and substance reasonably
acceptable to RBS, as shall be necessary to effect the sale of the Transferred
Company Interests to the Partnership.

(b)

Sempra Energy shall deliver to RBS and the Partnership:

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(i)

each Related Agreement to which it is a party, duly executed and delivered by
the appropriate Sempra Parties;

(ii)

evidence of the receipt of all Material Consents, if such consents are set forth
on Schedule 3.2(b), and Material Governmental Approvals;

(iii)

a certificate from Sempra Global in form and substance reasonably satisfactory
to RBS, duly executed and acknowledged, certifying any facts that would exempt
the transfer by Sempra Global of Transferred Company Interests from withholding
under Section 1445 of the Code;

(iv)

a certificate executed by Sempra Energy, dated as of the Closing Date, in
accordance with Section 5.7; and

(v)

the Closing Balance Sheet (which shall have been delivered to RBS at least two
(2) Business Days prior to the Closing Date).

(c)

RBS shall deliver to Sempra Energy and the Partnership:

(i)

evidence of the receipt of all Material Consents, if such consents are set forth
on Schedule 4.2(b), and the Material Governmental Approvals;

(ii)

each Related Agreement to which it is a party, duly executed and delivered by
RBS;

(iii)

a certificate executed by RBS, dated as of the Closing Date, in accordance with
Section 6.7; and

(iv)

the indemnity agreement, substantially in the form of Exhibit C hereto.

(d)

RBS and Sempra Energy shall cause the Partnership to deliver to each of RBS and
Sempra Energy a copy of all of the Related Agreements to which it is a party,
each duly executed and delivered by the Partnership.

Section 2.6.

Final Balance Sheet; Payments; Disputes.

(a)

As promptly as practicable after the Closing Date, but no later than ninety (90)
days thereafter, RBS shall prepare and deliver (with assistance as requested
from the Partnership and the Sempra Parties) to Sempra Energy, a consolidated
and combined balance sheet of the SET Companies (the “Proposed Final Balance
Sheet”) as of the Closing Date.  The Proposed Final Balance Sheet shall reflect
the total assets, liabilities and combined stockholders’ equity together with
(i) the Agreed Adjustments and (ii) the Accrued Compensation (the “Proposed
Final Book Value”) of the SET Companies as of 12:01 a.m. Eastern Standard Time
on the Closing Date and shall be prepared in accordance with GAAP on a basis
consistent with the Closing Balance Sheet (but including the Agreed Adjustments
and the Accrued Compensation described in clause (ii) above).

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(b)

Sempra Energy will have twenty (20) Business Days following delivery of the
Proposed Final Balance Sheet during which to notify the Partnership and RBS in
writing (the “Sempra Energy Notice of Objection”) of any objections to the
preparation of the Proposed Final Balance Sheet or the calculation of the
Proposed Final Book Value, setting forth in reasonable detail the basis of its
objections and, if practical, the U.S. dollar amount of each objection.  In
reviewing the Proposed Final Balance Sheet, Sempra Energy shall be entitled to
reasonable access to all relevant books, records and personnel of the SET
Companies and its Representatives to the extent Sempra Energy reasonably
requests such information and reasonable access to complete its review of the
Proposed Final Balance Sheet.  If Sempra Energy fails to deliver a Sempra Energy
Notice of Objection in accordance with this Section 2.6(b), the Proposed Final
Balance Sheet, together with RBS’ calculation of the Proposed Final Book Value
reflected thereon, shall be conclusive and binding on all Parties and they shall
become the “Final Balance Sheet” and “Final Book Value”.  If Sempra Energy
submits a Sempra Energy Notice of Objection, then (i) for twenty (20) Business
Days after the date RBS receives the Sempra Energy Notice of Objection, RBS and
Sempra Energy will use their commercially reasonable efforts to agree on the
calculation of the Final Book Value and (ii) failing such agreement within
twenty (20) Business Days of such notice, the matter will be resolved in
accordance with Section 2.6(c).

(c)

If RBS and Sempra Energy have not agreed on the Final Book Value within twenty
(20) Business Days after delivery of a Sempra Energy Notice of Objection, then
RBS and Sempra Energy shall each have the right to deliver notice to the other
Party (the “Accounting Dispute Notice”) of its intent to refer the matter for
resolution to PricewaterhouseCoopers LLP or such other international accounting
firm as the parties shall otherwise agree (the “Accounting Expert”).  Within ten
(10) Business Days of the selection of the Accounting Expert, RBS and Sempra
Energy will each deliver to the other and to the Accounting Expert a notice
setting forth in reasonable detail their calculation of the Final Book Value.
 Within fifteen (15) Business Days after receipt thereof, the Accounting Expert
will determine its best estimate of the calculation of the Final Book Value and
provide a written description of the basis for such determination; provided,
that if the Accounting Expert requests a hearing before making a determination,
such hearing shall be held within twenty (20) Business Days of the Parties’
delivery of their respective calculation notices and the determination of the
Final Book Value shall be made within ten (10) Business Days of such hearing.
 The fees and expenses of the Accounting Expert shall be paid pro rata by RBS
and Sempra Energy in accordance with the percentage of the disputed amounts
awarded to the other Party (or its Subsidiaries, which for these purposes shall
include the Partnership and its Subsidiaries as a Subsidiary of RBS) as a result
of the Accounting Expert’s decision.  Each Party will bear the costs of its own
counsel, witnesses (if any) and employees.

(d)

The Parties agree that, to the extent that the Closing Balance Sheet has been
prepared, and the Closing Book Value has been calculated, in accordance with
GAAP using GAAP conventions that are consistent with those GAAP conventions used
in the preparation of the Reference Balance Sheet (other than with respect to
the making of the Agreed Adjustments and the Accrued Compensation in the Closing
Balance Sheet), then the Proposed Final Balance Sheet and Proposed Final Book
Value shall not reflect changes in the assets, liabilities and reserves
associated with Trading Agreements, trades or trading positions as reflected in
the Closing Book Value on the basis of the GAAP conventions used in the
preparation of the Closing Balance Sheet other than to reflect the on-going
operation of the SET Business occurring

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after preparation of the Closing Balance Sheet through the Closing and actual
market conditions as of the Closing Date.  The parties further agree that any
errors, misstatements or omissions of any type in the preparation of the Closing
Balance Sheet and the calculation of Closing Book Value shall not give rise to
any claim for Out of Pocket and Tax Damages or any other claim under this
Agreement, other than as a result of the gross negligence or willful misconduct
of Sempra Energy, the SET Companies or others acting on their behalf in each
case in the preparation of the Closing Balance Sheet and the calculation of
Closing Book Value, except as set forth in this Section 2.6.

(e)

If the Final Book Value exceeds the Closing Book Value, RBS and Sempra Energy
shall cause the Partnership to pay (within two Business Days and using funds
received as capital contributions under Section 2.1 or borrowed under a credit
facility provided by RBS) an amount equal to such excess by wire transfer in
immediately available funds to the Sempra Partners to an account specified by
the Sempra Partners.  If the Final Book Value is less than the Closing Book
Value, the Sempra Partners shall pay, within two Business Days of the receipt of
such Final Balance Sheet, an amount equal to such deficit to the Partnership by
wire transfer in immediately available funds to an account specified by the
Partnership.  Any payment made under this Section 2.6(e) shall be made by way of
an adjustment to consideration paid by each party under Section 2.1, and such
consideration shall be deemed to have been reduced or increased, as the case may
be, by the amount of such payment.

Section 2.7.

Additional Purchase Price Adjustment

Sempra shall deliver to RBS on and as of the date hereof and on and as of the
Closing Date a schedule (“Schedule 2.7”) setting forth the amount of the
associated specific reserves for potential liabilities that have been
established in accordance with GAAP and reflected on the Closing Balance Sheet
for which Sempra has indemnification obligations under Section 9.2 (except under
subsections (a) and (b) of such section).  To the extent that (i) for such
specific reserves, any greater amount or any portion thereof are included in the
Final Balance Sheet, (ii) any matter for which such a specific reserve has been
established is subsequently fully and finally resolved within the survival
periods or time limits set forth in Section 9.1 or the last sentence of Section
9.4(a), as they may be extended by the Sempra Parties in writing prior to the
expiration of such survival periods or time limits, as applicable,  such that
such reserve is no longer required to be maintained by the Partnership under
IFRS and (iii) the total specific reserve for such matter included in the Final
Balance Sheet shall have been in excess of the amount of the aggregate actual
costs incurred or liabilities accrued by the Partnership and the SET Companies
in respect of such matter following the Closing Date, then RBS shall cause the
Partnership promptly to pay over such excess (the “Excess Reserve Amount”) to
SETI and SG, in such proportions as Sempra Energy shall specify, as an
adjustment of the purchase price paid hereunder; provided, if the release of any
Excess Reserve Amount occurs later than one year after the Closing Date, then
such Excess Reserve Amount shall be retained by the Partnership and specially
allocated and distributed to SETI and SG as provided in the LLP Agreement.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SEMPRA ENERGY

Sempra Energy makes to RBS, as of the date hereof, and, unless otherwise
specified, as of the Closing, each of the representations and warranties
contained in this Article

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III, it being agreed that disclosure of any item in any section or subsection of
the disclosure letter delivered to RBS by Sempra Energy prior to the Closing
(the “Disclosure Letter”) shall also be deemed disclosed with respect to any
other section or subsection to which the relevance of such item is readily
apparent.  Notwithstanding any other provision of this Agreement, Sempra Energy
makes no representations or warranties with respect to the value of or
Liabilities associated with any Trading Agreement or, except as set forth in
Section 3.9(b)(i) and Section 3.9(b)(ii), with respect to the validity or
enforceability of any such Trading Agreement.

Section 3.1.

Organization and Good Standing

(a)

Each of Sempra Energy and Sempra Global is a corporation duly organized, validly
existing and in good standing under the laws of the State of California, with
full corporate power and authority to conduct its business as it is now being
conducted.  SETI is a company organized and existing under the laws of the
Netherlands, with full company power and authority to perform its obligations
under this Agreement and the Related Agreements and to conduct its business as
it is now being conducted.  Each of the SET Companies is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which such
SET Company is organized.

(b)

The Sempra Partners and the SET Companies have full corporate power and
authority to conduct the SET Business as it is now being conducted and to own or
use the properties and assets, including the Transferred Company Interests and
the properties and assets of the SET Companies, that they purport to own or use
in conducting the SET Business.

Section 3.2.

Enforceability; Authority; No Conflict

(a)

This Agreement constitutes the legal, valid and binding obligation of the Sempra
Parties enforceable against each in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer or similar laws affecting the enforcement of
creditors’ rights generally and general principles of equity (whether considered
in a proceeding at law or in equity).  Upon the execution and delivery by the
Sempra Parties of the Related Agreements to which each is a party, each of such
Related Agreements will constitute the legal, valid and binding obligation of
such Sempra Parties, enforceable against each in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer or similar laws affecting the
enforcement of creditors’ rights generally and general principles of equity
(whether considered in a proceeding at law or in equity).  Each of the Sempra
Parties has the requisite right, power and authority to execute and deliver this
Agreement and each of the Related Agreements to which each is a party, and to
perform their obligations and consummate the Contemplated Transactions, and such
action has been duly authorized by all necessary corporate action.

(b)

The execution, delivery and performance (excluding for this purpose Section
7.12(b)(ii)) by each Sempra Party of this Agreement or the execution and
delivery any of the Related Agreements to which each is a party, and the
consummation of the Contemplated Transactions, does not and will not:  (i)
violate any provision of its or any of the SET Companies’ Governing Documents,
or any resolution adopted by its board of directors or

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shareholders (or similar management group); (ii) violate or conflict with any
material provisions of any Legal Requirements or any Order to which it or any of
the SET Companies may be subject; (iii) except as set forth on Schedule 3.2(b),
violate, conflict with, result in a material breach of, constitute (with due
notice or lapse of time or both) a material default or cause any material
obligation, penalty or premium to arise or accrue under any material Contract to
which it or any of the SET Companies is a party or by which it or any of the SET
Companies is bound or to which any of its or the SET Companies’ respective
properties or assets is subject; or (iv) result in the creation or imposition of
any Encumbrance except Permitted Encumbrances upon any of the properties or
assets of the SET Companies.

(c)

Except as set forth in Schedule 3.2(c), no material consent, approval,
authorization of, declaration, filing, or registration with, any Governmental
Body is required to be made or obtained by any Sempra Party or any of the SET
Companies in connection with the execution, delivery, and performance of this
Agreement (excluding for this purpose Section 7.12(b)(ii)) or the execution and
delivery of the Related Agreements or the consummation of the Contemplated
Transactions.

Section 3.3.

SET Company Records; Accountants Letters

(a)

Sempra Energy has provided or made available to RBS true, correct and complete
copies of the Governing Documents of the SET Companies, in each case as amended
and in effect on the date hereof.

(b)

The consolidated financial statements of Sempra Energy filed with the Securities
and Exchange Commission comply in all material respects with the applicable
requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act
of 2002 and any rules and regulations promulgated thereunder applicable to such
financial statements.  Sempra Energy is in compliance in all material respects
with the applicable listing and corporate governance rules and regulations of
the New York Stock Exchange.

(c)

The minute books of the SET Companies (or similar books and records kept in
accordance with the Governing Documents of such SET Company) previously made
available to RBS contain true, correct and materially complete records of all
meetings for at least the last three (3) years prior to the date hereof, and
reflect all other material action of the shareholders and board of directors or
similar management group (including committees thereof) of the SET Companies
during such time.  The share certificate books and share transfer ledgers, or
similar books and records of Equity Interests of the SET Companies, as
previously made available to RBS, are true, correct and materially complete.

(d)

All books and records of the SET Companies (and all other books and records of
Sempra Energy, the Partnership or their Subsidiaries relating to the SET
Business) are accurate and complete in all material respects and are maintained
in all material respects in accordance with good business practice and all
applicable Legal Requirements.  The SET Companies (and Sempra Energy, the
Partnership or their Subsidiaries with respect to books and records relating to
the SET Business) maintain appropriate and sufficient systems of internal
accounting controls.

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(e)

Sempra Energy has made available to RBS copies of all material audit-related
letters relating to the SET Companies from independent certified public
accountants to the Sempra Parties and the SET Companies delivered during the
thirty-six (36) months preceding the execution of this Agreement, together with
copies of all material responses thereto.

Section 3.4.

Transferred Company Interests; Partnership Interests; Title; Sufficiency of
Assets

(a)

The Equity Interests of the Transferred Companies and each of their Subsidiaries
(which represent, collectively, all of the SET Companies), are as listed in
Schedule 3.4(a) and, except as set forth in Schedule 3.4(a), all of such Equity
Interests (i) are issued and outstanding, (ii) have been duly authorized and are
validly issued, and, if stock of a corporation, fully paid, and nonassessable,
(iii) were issued in compliance with all applicable securities laws, (iv) were
not issued in breach of any Equity Commitments, and (v) are held of record and
owned beneficially by the Sempra Partners or the SET Companies.  Except as set
forth on Schedule 3.4(a), (A) no Equity Commitments of any of the SET Companies
exist, (B) no Contracts exist with respect to the voting or transfer of any of
the SET Companies’ Equity Interests, (C) no Person is obligated to redeem or
otherwise acquire any of the SET Companies’ Equity Interests and (D) the Sempra
Partners or the SET Companies have good and marketable title to the SET
Companies’ Equity Interests free and clear of all Encumbrances except as set
forth on Schedule 3.4(a) and for Encumbrances in favor of Sempra Energy or its
Affiliates that will be discharged prior to the Closing Date.

(b)

The assets held by the SET Companies (other than Cash and access to credit), or
to be made available to the Partnership pursuant to the Transition Services
Agreement, constitute all of the material assets that are used in or otherwise
necessary for the conduct of the SET Business immediately following the Closing
in substantially the same manner as currently conducted by Sempra Energy and its
Subsidiaries consistent with past practices.

Section 3.5.

No Material Adverse Change

Except as described in Schedule 3.5, (a) since December 31, 2006 and through the
date hereof, the Sempra Partners and the SET Companies, as applicable, have
conducted the SET Business in the Ordinary Course of Business and, (b) since
December 31, 2006 and through the date hereof, there has not been any event or
circumstance in respect of the SET Business, including without limitation its
financial condition, results of operations, or assets and liabilities, that,
individually or in the aggregate with other known events or circumstances, has
resulted in, or could reasonably be expected to result in, a SET Material
Adverse Effect.

Section 3.6.

Employee Benefits

(a)

Schedule 3.6(a)(i) contains a true and complete list of each “employee benefit
plan” (within the meaning of Section 3(3) of ERISA, including, without
limitation, multiemployer plans within the meaning of Section 3(37) of ERISA),
and all equity, equity incentive, severance, employment, change-in-control,
fringe benefit, collective bargaining, bonus, incentive, retention, deferred
compensation, employee loan and all other employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to ERISA
(including any funding mechanism therefor now in effect or required in the
future as a

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result of the transaction contemplated by this Agreement or otherwise) under
which (i) any current or former director, manager, officer, employee or
consultant of the SET Companies (the “Company Employees”) has any present or
future right to benefits and which are contributed to, entered into, sponsored
by or maintained by any of the SET Companies, the Sempra Parties or any of their
respective Subsidiaries or ERISA Affiliates, or (ii) under which any of the SET
Companies or any of their respective Subsidiaries has any present or future
liability (actual or contingent) (the “Sempra Plans”). Schedule 3.6(a)(ii)
contains a true and complete list of each Sempra Plan under which any of the SET
Companies or any of their respective Subsidiaries, following the Closing Date,
could have any present or future liability (actual or contingent) (all such
plans, agreements, programs, policies and arrangements shall be collectively
referred to as the “SET Company Plans”).  Schedules 3.6(a)(i) and (ii)
separately identify Sempra Plans that are maintained outside the jurisdiction of
the United States, or that cover any Company Employees residing or performing
services outside the United States (each, a “Sempra Foreign Plan”, and each
Sempra Foreign Plan that qualifies as a SET Company Plan, a “SET Company Foreign
Plan”).

(b)

With respect to each SET Company Plan other than the SET Employment Agreements,
Sempra Energy has provided to RBS a current, accurate and complete copy (or, to
the extent no such copy exists, an accurate description) thereof and, to the
extent applicable: (i) any related trust agreement or other funding instrument;
(ii) the most recent determination letter, if applicable; (iii) any summary plan
description and other material written communications (or a description of any
material oral communications) by the Sempra Parties, the SET Companies or any of
their respective Subsidiaries or ERISA Affiliates to the Company Employees
concerning the extent of the benefits provided under the SET Company Plan; and
(iv) with respect to the SET Companies’ 401(k) Savings Plan for the three most
recent years (A) the Form 5500 and attached schedules, (B) audited financial
statements and (C) actuarial valuation reports.  Schedule 3.6(b) provides a
complete and accurate list in all material respects of any SET Employment
Agreement that (i) guarantees the payment of compensation to any employee of any
SET Company in an amount in excess of $1,000,000 for periods subsequent to
fiscal year 2007, or (ii) contain a change of control provision that would have
a financial impact of greater than $1,000,000 on any SET Company.

(c)

(i) Each Sempra Plan has been established and administered in all material
respects in accordance with its terms and in substantial compliance with the
applicable provisions of ERISA, the Code and other applicable laws, rules and
regulations; (ii) except as set forth on Schedule 3.6(c)(ii), each SET Company
Plan which is intended to be qualified within the meaning of Section 401(a) of
the Code has received a favorable determination letter as to its qualification,
and to the Knowledge of Sempra Energy nothing has occurred, whether by action or
failure to act, that could reasonably be expected to cause the revocation of
such letter or the loss of such qualification, and each SET Company Plan that is
a SET Company Foreign Plan has been duly registered with the applicable
Governmental Body where required by applicable Legal Requirements; (iii) for
each SET Company Plan with respect to which a Form 5500 has been filed, no
material change has occurred with respect to the financial condition of the SET
Company Plan since the date of such Form; (iv) no notice of a “reportable event”
(as such term is defined in Section 4043 of ERISA) that could reasonably be
expected to result in material liability has been required to be filed for any
Sempra Plan or will be required to be filed in connection with this Agreement;
(v) no nonexempt “prohibited transaction” (as such term is

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defined in Section 406 of ERISA and Section 4975 of the Code) that could
reasonably be expected to result in a material tax or penalty or “accumulated
funding deficiency” (as such term is defined in Section 302 of ERISA and
Section 412 of the Code (whether or not waived)) has occurred with respect to
any SET Company Plan; (vi) except as set forth on Schedule 3.6(c)(vi), none of
the SET Companies has incurred any current or projected liability in respect of
post-employment or post-retirement health, medical or life insurance benefits
for Company Employees, except as required to avoid an excise tax under
Section 4980B of the Code or otherwise except as may be required pursuant to any
other applicable law; (vii) all contributions and premium payments required to
be made as of the date hereof in respect of (x) each SET Company Plan and (y)
each Sempra Plan, with respect to Company Employees, have been made, and all
obligations in respect of each SET Company Plan are fully reflected on the
Financial Statements of the relevant SET Company entity; (viii) all SET Company
Plans that are required to be funded have been funded in all material respects
in accordance with their terms and applicable Legal Requirements; and (ix) each
SET Company Plan, and each Sempra Plan with respect to Company Employees, that
is a “non-qualified deferred compensation plan” (as defined under
Section 409A(d)(1) of the Code) has been operated and administered in compliance
in all material respects with Section 409A of the Code and guidance promulgated
thereunder by the Internal Revenue Service or Department of Treasury.

(d)

None of the SET Company Plans is subject to Title IV of ERISA.  None of the SET
Companies will have any liability (direct or indirect) in respect of any
employee benefit plan that is subject to Title IV of ERISA after the Closing
Date.

(e)

Except as disclosed on Schedule 3.6(e), with respect to any Sempra Plan: (i) no
material actions, suits or claims are pending or, to the Knowledge of Sempra
Energy, threatened; (ii) to the Knowledge of Sempra Energy, no facts or
circumstances exist that could give rise to any such material actions, suits or
claims; and (iii) no administrative investigation, audit or other administrative
proceeding by the Department of Labor, the Pension Benefit Guaranty Corporation,
the Internal Revenue Service or other governmental agencies are pending,
threatened or in progress (including, without limitation, any routine requests
for information from the Pension Benefit Guaranty Corporation).

(f)

Except as disclosed on Schedule 3.6(f), no Sempra Plan exists that, as a result
of the execution of this Agreement, shareholder approval of this Agreement, or
the transactions contemplated by this Agreement (whether alone or in connection
with any other event(s)), could

(i)

result in severance pay or any increase in severance pay upon any termination of
service;

(ii)

accelerate the time of payment or vesting or result in any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or result in any other material obligation; or

(iii)

limit or restrict the right of any of the SET Companies to merge, amend or
terminate any of the SET Company Plans.

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(g)

Except as disclosed on Schedule 3.6(g), no Sempra Plan exists, and there are no
other plans, contracts, agreements or arrangements, that, as a result of the
execution of this Agreement or the transactions contemplated by this Agreement
(whether alone or in connection with other events), could result in any payment
under any such Sempra Plan or other plan, contract, agreement or arrangement
that would not be deductible under Section 280G of the Code.

(h)

There has been no amendment to, written interpretation of or announcement
(whether or not written) to participants relating to, or any change in employee
participation or coverage under, any SET Company Plan that would increase the
expense of maintaining such SET Company Plan above the level of the expense
incurred in respect thereof for the most recent fiscal year ended prior to the
date hereof.

Section 3.7.

Compliance with Legal Requirements; Governmental Authorizations

(a)

Except as set forth in Schedule 3.7(a), since the date that is two years prior
to the date of this Agreement, to the Knowledge of Sempra Energy, the Sempra
Parties and the SET Companies are not and have not been in material violation of
any material Legal Requirements (which term for this purpose shall not include
Environmental Laws or Legal Requirements relating to Taxes; but, shall include
any violations resulting in a fine, penalty or the imposition of any material
condition or limitation on the SET Companies or the SET Business) applicable to
the ownership or operation of the SET Business.

(b)

Except as set forth on Schedule 3.7(b), for the past three years, none of the
Sempra Parties or SET Companies has received any written notice or, to the
Knowledge of Sempra Energy, other notice, from any Governmental Body regarding
any actual, alleged, possible or potential violation of, or failure to comply
with, any material Legal Requirement (which term for this purpose shall not
include Environmental Laws or Legal Requirements relating to Taxes and shall
include any violations resulting in a fine, penalty or the imposition of any
material condition or limitation on the SET Companies or the SET Business)
applicable to it in connection with the conduct or operation of the SET
Business.

(c)

Schedule 3.7(c) contains a complete and accurate list of each material
Governmental Authorization that is held by the SET Companies in connection with
the SET Business.  With respect to each Governmental Authorization listed or
required to be listed in Schedule 3.7(c), (i) each has been issued to the holder
thereof and is valid and in full force and effect except where the failure to be
in full force and effect could not reasonably be expected to have a material
effect on the ability to conduct the SET Core Businesses or the business of the
SET Companies taken as a whole; (ii) except as set forth on Schedule 3.7(c), no
Proceeding is pending or, to the Knowledge of Sempra Energy, threatened to
revoke or amend any such Governmental Authorization; and (iii) the SET Companies
have not received written notice or, to the Knowledge of Sempra Energy, other
notice from any applicable Governmental Body that (A) any such existing
Governmental Authorization will be revoked or (B) any pending application for
any such new Governmental Authorization or renewal of any existing Governmental
Authorization will be denied.

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Section 3.8.

Legal Proceedings; Orders

(a)

Except as set forth in Schedule 3.8(a), there is no pending, or, to Sempra
Energy’s Knowledge, threatened, material Proceeding by or against Sempra Energy
or its Subsidiaries relating to the SET Business (including without limitation
any Proceeding by or against any SET Company) or that could reasonably be
expected to prevent, materially delay, make illegal or otherwise materially
interfere with, any of the Contemplated Transactions.

(b)

Except as set forth in Schedule 3.8(b), there is no Order in regard to the SET
Companies (other than orders of general applicability not specific to any of the
SET Companies) that, individually or in the aggregate, is material to the
properties, assets or operations of the SET Companies.  

Section 3.9.

Contracts; No Defaults

(a)

(i) Schedule 3.9(a) contains, as of the date hereof, an accurate and complete
list of each SET Business Material Contract (or in the case of forms described
in clause (ii), a listing of such forms) and (ii) except for multiple agreements
that are substantially similar to a standard form, in which case only such form
need be made available, the SET Companies have made available to RBS accurate
and complete copies of each such SET Business Material Contract.  

(b)

Except as set forth in Schedule 3.9(b), to the Knowledge of Sempra Energy:

(i)

each SET Business Material Contract and material Trading Agreement is in full
force and effect and is a valid and enforceable obligation of each SET Company
that is a party thereto except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer or
similar laws affecting the enforcement of creditors’ rights generally and
general principles of equity (whether considered in a proceeding at law or in
equity);

(ii)

no event or condition exists that constitutes or, after notice or a lapse of
time or both, will constitute, a material default on the part of Sempra Energy
or any of its Subsidiaries under any such SET Business Material Contract or
material Trading Agreement; and

(iii)

with respect to SET Business Material Contracts for outstanding Indebtedness
exceeding $50,000,000 individually, there are no material prepayment penalties.

(c)

Except for such of the following matters as, individually or in the aggregate,
have not resulted in, and would not reasonably be expected to result in, a
material effect on the ability to conduct the SET Core Businesses or the
business of the SET Companies taken as a whole, and except for the matters set
forth on Schedule 3.9(c), there are no renegotiations of, attempts to
renegotiate or outstanding contractual or statutory rights to renegotiate any
amounts paid or payable under any SET Business Material Contracts with any

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Person having the contractual or statutory right to require such renegotiation
and no such Person has made written demand for such renegotiation.

(d)

For purposes of this Agreement, “SET Business Material Contract” shall mean any
of the following Contracts of the SET Companies used by or in support of the SET
Business (excluding any Contracts to be executed and delivered pursuant to this
Agreement):

(i)

any outstanding Indebtedness exceeding $50,000,000 individually;

(ii)

any material Contract of surety, guarantee or indemnification by any SET Company
outside of the Ordinary Course of Business of the SET Company;

(iii)

any Contract to which any SET Company is a party containing a covenant not to
compete with respect to the SET Business or any SET Company that is currently in
full force and effect;

(iv)

any Affiliate Agreement which will survive the Closing;

(v)

any Contract guaranteeing the payment to any employee of the SET Companies total
annual compensation in excess of $1,000,000 or committing to give any employee a
25% or greater share of the Net Trading Revenues (or other revenue, income or
margin metric) generated by such employee (directly or through the results of a
group of employees);

(vi)

other than Trading Agreements, any Contract which may not be terminated by the
SET Companies without penalty on 90 days or fewer notice and which could
reasonably be expected either to (A) commit any SET Company to aggregate
expenditures of more than $10,000,000 in any calendar year or (B) give rise to
anticipated receipts of more than $10,000,000 in any calendar year;

(vii)

any written Contract in respect of an equity investment or relating to on-going
rights and obligations with respect to a formal written partnership agreement or
a material contractual joint venture;

(viii)

other than customary provisions included in Trading Agreements, agreements with
respect to the sharing, allocation or indemnities of Taxes or Tax costs that
will survive the Closing (other than any agreements which are described in
Sections 3.9(d)(i) – (vi) or 3.9(d)(xi) – (xv), or would be so described in
Section 3.9(d)(i) but for the $50,000,000 threshold, or would be so described in
Section 3.9(d)(vi) but for the limitations in Section 3.9(d)(vi)(A) or (B));

(ix)

 other than in the Ordinary Course of Business, agreements for the sale of any
material assets, property or rights or for the grant of any options or
preferential rights to purchase any material assets, property or rights;

(x)

documents granting any power of attorney with respect to the material affairs of
any SET Company;

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(xi)

other than those that are not material, agreements evidencing settlement of
litigation with outstanding obligations;

(xii)

other than those that are not material, any Contracts not made in the Ordinary
Course of Business;

(xiii)

full requirements purchase or supply contracts with either (a) a remaining term
of more than 36 months (or 60 months in the case of Sempra Energy Solutions) or
(b) an remaining term of longer than 12 months and relating to more than 30,000
million British thermal units per day of natural gas, 2,400 megawatt hours per
day of electricity, 300 metric tons of copper per month, 900 metric tons of lead
per month, 50 metric tons of nickel per month, 750 metric tons of aluminum per
month or 600 metric tons of zinc per month, and gas storage agreements with a
remaining term of longer than 12 months;

(xiv)

tolling (financial and/or physical), energy management or other similar
agreements;

(xv)

any Contract with respect to a Commodity Transaction that (A) has a term longer
than five (5) years and provides for aggregate payments, based on then-current
prices, by or to a SET Company in excess of $1,000,000,000 or (B) provides for
aggregate payments, based on then-current prices, by or to an SET Company in
excess of $5,000,000,000.  For these purposes, “then current prices” means
current prices (which, for purposes of providing the representation in
this Section 3.9(d)(xv) only, were determined as of the close of business on
June 21, 2007), and in the case of (1) a physical Commodity Transaction that
provides for a fixed purchase or sales price,  the US dollar present value of
such price, (2) a physical Commodity Transaction that provides for an index
purchase or sales price, the US dollar present value of the forward prices for
such index during the term of such transaction that are utilized by the SET
Company to determine the mark-to-market valuation for such transaction, and (3)
a Commodity Transaction that is a derivative, the net settlement amount for each
settlement date during the term of such transaction, based on the  US dollar
present value of the applicable forward prices during the term of such
transaction that are utilized by the SET Companies to determine the
mark-to-market valuation for such transaction; and

(xvi)

any material amendments, modifications, extensions or renewals of any of the
foregoing.

Section 3.10.

  Insurance

(a)

Schedule 3.10(a) sets forth a true and complete list of all current policies of
property and casualty insurance (including liability, errors or omissions, and
business interruption insurance) insuring the properties, assets, employees
and/or operations of the SET Business (collectively, the “Policies”), along with
the entities covered by such Policies, aggregate coverage amount and type of
each of the Policies.

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(b)

All Policies are in full force and effect.  None of the Sempra Energy or any of
its Subsidiaries is in default under any material provisions of the Policies,
and, except as set forth on Schedule 3.10(b),  there is no material claim by
Sempra Energy or any of its Subsidiaries or any other Person pending under any
of the Policies as to which coverage has been questioned, denied or disputed by
the underwriters or issuers of such Policies.

Section 3.11.

  Employees

(a)

Schedule 3.11(a) contains a true and materially complete list of all of the
employees of the SET Companies (whether full-time or part-time, actively at work
or on leave) (“SET Company Employees”) as of the respective dates shown on the
applicable portions of the Disclosure Letter (such list to be updated within ten
(10) days of the Closing Date), specifying their position, status and date of
hire, together with a notation next to the name of any employee on such list who
is subject to any written employment, change of control or severance agreement
(aside from the collective bargaining agreements described in Schedule 3.11(b))
(the “SET Employment Agreements”).  Sempra Energy has provided to RBS true,
correct and complete copies of (i) the form of such SET Employment Agreements
for employees residing outside of the United States and (ii) with respect to
employees who meets the criteria outlined in Section 3.9(d)(v) of this
Agreement, (x) where applicable, each SET Employment Agreement materially
differing from the form provided in respect of clause (i) for such employees
residing outside of the United States and (y) each SET Employment Agreement for
each such United States employee.  Unless otherwise indicated on Schedule
3.11(a), as of the date hereof, no SET Company Employee has given written
notice, or has been given written notice by any SET Company, of an intent to
terminate his or her employment with any SET Company.  The SET Companies’ books
and records accurately reflect in all material respects employment histories of
all SET Company Employees.  Except as disclosed in Schedule 3.11(a), as of the
date hereof, no SET Company Employee is on disability or other type of leave.

(b)

Except as set forth on Schedule 3.11(b):

(i)

The SET Companies are not party to or otherwise bound by any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization, no pending representation election petition or
application for certification has been received by any SET Company that names
the SET Company Employees as potentially represented parties, and to Sempra
Energy’s Knowledge, there is no union organizing campaign or other attempt to
organize or establish a labor union, employee organization or labor organization
or group involving SET Company Employees, nor, as of the date hereof, are any of
the SET Companies the subject of any material proceeding asserting that any of
the SET Companies has committed an unfair labor practice or seeking to compel
them to bargain with any labor union or labor organization, nor is there pending
or, to the knowledge of the SET Companies, threatened, nor has there been for
the past five years, any strike, walk-out, work stoppage, slow-down or lockout
involving any of the SET Companies;

(ii)

The SET Companies are in material compliance with all applicable laws regulating
employment and labor relations.  There are no claims,

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controversies, investigations, legal proceedings or complaints relating to
employment with any SET Companies or compliance with laws regulating employment
and labor pending or, to the knowledge of the SET Companies, threatened, by any
Governmental Body, any employees, any party or parties representing any of such
employees, or any former employer of a current employee, against any of the SET
Companies before any court, arbitrator or other tribunal that are reasonably
likely to have a material effect on the ability to conduct the SET Core
Businesses or the business of the SET Companies taken as a whole.  There are no
material charges of discrimination, wrongful termination or other similar
complaints, including complaints related to unpaid wages, bonuses or other
compensation or immigration laws pending against the SET Companies under any
applicable federal or foreign (including international) law involving employees
now or previously employed by the SET Companies, nor, to the knowledge of the
SET Company, do any facts or circumstances exist that could provide a reasonable
basis for the same; and

(iii)

To the Knowledge of Sempra Energy, with respect to the SET Company Employees,
the SET Companies are in material compliance with all applicable Legal
Requirements.

Section 3.12.

  Intellectual Property Assets

(a)

The term “SET Intellectual Property Assets” means all material intellectual
property primarily relating to or used by or in connection with the SET
Business.  The applicable SET Companies are the owners of all right, title and
interest in and to each of the SET Intellectual Property Assets free and clear
of all Encumbrances (except Permitted Encumbrances), or the applicable SET
Companies have a valid and existing license to use the SET Intellectual Property
Assets.  

(b)

Except as set forth in Schedule 3.12(b), to Sempra Energy’s Knowledge, (i)
neither the use of any SET Intellectual Property Assets nor the conduct of the
SET Business (as conducted by the SET Companies immediately prior to the date
hereof and to the Closing consistent with past practices) infringes in any
material respect on any intellectual property rights of any Third Party, and
(ii) no such claims have been asserted that have not been resolved.

(c)

Except as set forth in Schedule 3.12(c), to the Knowledge of Sempra Energy, (i)
no Third Party is infringing in any material respect on any of the SET
Intellectual Property Assets, and (ii) no such claims are pending by Sempra
Energy or its Subsidiaries or threatened by Sempra Energy or its Subsidiaries
against any Third Party.

(d)

The execution, delivery or performance of this Agreement or any of the Related
Agreements by Sempra Energy or any of its Subsidiaries or the consummation of
the Contemplated Transactions will not result in the material loss or impairment
of any of the SET Intellectual Property Assets and will not restrict or
otherwise impair in any material respect the Partnership’s or its affiliate’s
right to use any of the SET Intellectual Property Assets after the Closing Date
without payment of any additional amounts or consideration other than ongoing

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fees, royalties, or payments that would otherwise be required to be paid by
Sempra Energy or its Subsidiaries had the Contemplated Transactions not
occurred.

Section 3.13.

  Taxes

(a)

Except as set forth on Schedule 3.13(a), the Sempra Parties and all of the SET
Companies have filed or caused to be filed all material Tax Returns that are or
were required to be filed by or with respect to the Transferred Companies,
either separately or as a member of a group of corporations, pursuant to
applicable Legal Requirements, and all such Tax Returns are complete and correct
in all material respects to the extent they relate to the Transferred Companies.
 The Sempra Parties and the SET Companies have paid, or made provisions for the
payment of, all material Taxes that have or may have become due pursuant to such
Tax Returns or otherwise, except such Taxes, if any, as are being contested in
good faith and except such Taxes that do not relate to any of the SET Companies.

(b)

There are no Tax liens, charges or powers of sale in respect of Taxes upon any
of the assets or properties of the SET Companies, other than with respect to
Taxes not yet due and payable or Taxes being contested in good faith by
appropriate proceedings.

(c)

There is no tax sharing, tax allocation, indemnity, or other agreement that will
require any payment by any SET Company to any Person that is not a SET Company
after the Closing Date except as reflected on the Closing Balance Sheet.

(d)

Schedule 3.13(d) contains a complete and accurate list of all ongoing audits,
written inquiries and documented investigations of or in respect of all Tax
Returns or Tax otherwise due submitted by the SET Companies and by Sempra Energy
to the extent they relate to the SET Business.  All material deficiencies
proposed as a result of such audits have been paid, reserved against, settled,
or are being contested in good faith by appropriate proceedings.  Schedule
3.13(d) describes all material deficiencies proposed in writing by the IRS or
any other Governmental Body relating to the Tax Returns filed or Tax otherwise
due by any SET Company, Sempra Energy or by any group of corporations to the
extent they relate to the SET Business for all taxable years which are not
closed in respect of each entity since 2000.  Except as described in Schedule
3.13(d), neither the Sempra Partners nor any of the SET Companies has given
waivers or extensions (or is or would be subject to a waiver or extension given
by any other Person) of any statute of limitations relating to the payment of
Taxes of any Transferred Company or for which any Transferred Company may be
liable.

(e)

None of the SET Companies has engaged in any transaction that gave rise to a
disclosure obligation: (i) as a “listed transaction” under Section 6011 of the
Code and the regulations thereunder; (ii) pursuant to Part 7 of the Finance Act
2004 and the regulations thereunder; or (iii) any similar or equivalent
provision of any other state, local or foreign law.

(f)

None of the SET Companies has been either a “distributing corporation” or a
“controlled corporation” in a distribution occurring during the last two years
in which the parties to such distribution treated the distribution as one to
which Section 355 of the Code is applicable.

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(g)

No closing agreement pursuant to Section 7121 of the Code (or any similar
provision of any state, local or foreign law) has been entered into by or with
respect to any of the SET Companies.  

(h)

None of the SET Companies will be required to include any material item of
income in, or exclude any material item of deduction from, taxable income for
any period (or portion thereof) ending after the Closing Date (where such
inclusion or exclusion is not offset by a matching inclusion of an item of
deduction or a matching exclusion of an item of income, respectively) as a
result of any (i) change in method of accounting for a taxable period ending on
or prior to the Closing Date, (ii) “closing agreement” as described in Section
7121 of the Code (or any corresponding or similar provision of state, local or
foreign  income Tax Law) executed on or prior to the Closing Date, (iii)
installment sale or open transaction disposition made on or prior to the Closing
Date, or (iv) prepaid amount received on or prior to the Closing Date, in each
case, not including any items reported on the Closing Balance Sheet.

(i)

None of the assets to be sold, conveyed, assigned, transferred and delivered by
SETI to the Partnership will be United States real property interests within the
meaning of Section 897 of the Code.

(j)

The execution and delivery of this Agreement or any of the Related Agreements by
Sempra Energy or any of its Subsidiaries or the consummation of the Contemplated
Transactions will not result in any Tax becoming payable by the Transferred
Companies as a result of a Transferred Company ceasing to be a member of a group
as defined from time to time for any Tax purpose.  

(k)

Trading and Transportation Management Inc. and its Subsidiaries are entitled to
claim credits under Sections 29 and 45K with respect to its synthetic fuel
operations in Virginia.

(l)

Subsidiaries of SETI have in their records all necessary documentation,
including exemption certificates, to support any claimed “sale for resale”
exemptions from sales taxes and to support exemptions from VAT, Climate Change
Levy, transfer and other indirect Taxes.

(m)

No Swiss social security contributions are due from any SET Company for calendar
years 2002 and 2003.

(n)

Except for such failures to satisfy, maintain or retain as are de minimis, each
of the SET Companies has satisfied all of the statutory and procedural
requirements and has maintained and retained all appropriate or necessary
documents and records to support, justify or defend its position as regards any
material liabilities to customs and excise duties in respect of physical
movements and supplies made to or by them.

(o)

Sempra Energy Trading Holding SARL does not have any liability for Swiss VAT in
respect of supplies made by it, to it or any Person then associated with it in
2002 and 2003.

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Section 3.14.

  Brokers or Finders

None of the Sempra Parties, the SET Companies, or any of their Representatives
has incurred any obligation or liability, contingent or otherwise, for brokerage
or finders’ fees or agents’ commissions or other similar payments in connection
with the Contemplated Transactions for which RBS, the Partnership or the SET
Companies could be liable.

Section 3.15.

  Environmental Compliance

Except as set forth on Schedule 3.15:

(a)

(i) the SET Companies are, and for the last five years were, and insofar as it
affects the SET Business, Sempra Energy and its Subsidiaries are, and during the
term of applicable statutes of limitations at all prior times were, in material
compliance with all applicable material Environmental Laws, (ii) Sempra Energy
and its Subsidiaries insofar as it affects the SET Business, and the SET
Companies and the SET Business possess, and are in material compliance with all
material Governmental Authorizations under or relating to any material
Environmental Law (the “ Environmental Permits ”), (iii) all applications
necessary to renew or obtain any Environmental Permit have been made in a timely
fashion so as to allow the SET Companies to continue to operate in material
compliance with all applicable material Environmental Laws as the SET Business
is presently conducted, (iv) Sempra Energy does not expect any new or renewed
Environmental Permits to include any terms or conditions that would reasonably
be expected to have an adverse impact on the SET Business to any material
extent, and (v) Sempra Energy and its Subsidiaries insofar as it affects the SET
Business, and the SET Companies, are in material compliance with all applicable
material limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any
Environmental Permit, applicable Environmental Laws or contained in any Order
issued, entered, promulgated or approved thereunder by any Governmental Body.

(b)

There are no pending or, to the Knowledge of Sempra Energy, threatened, material
Proceedings under or relating to any Environmental Law including any seeking to
revoke, modify or otherwise adversely impact any Environmental Permit or impose,
or that would reasonably be expected to impose, on Sempra Energy or its
Subsidiaries insofar as it affects the SET Business, or on any SET Company, any
Liability arising under common law as it relates to the protection of the
environment, exposure to Hazardous Materials, or under any Environmental Law
(including the federal Comprehensive Environmental Response, Compensation and
Liability Act) and no written communication regarding any such Proceedings,
revocation, modification or other adverse impact or such Liability has been
received by Sempra Energy or any of its Subsidiaries, and to the Knowledge of
Sempra Energy, no event or condition has occurred or exists that would
reasonably be expected to result in any such Action or Proceeding or written
communication and, to the Knowledge of Sempra Energy, no event or condition has
occurred that would reasonably be expected to result in any material Liability
under or relating to any Environmental Law in respect of the SET Business .
 None of the SET Companies, or insofar as it affects the SET Business, neither
Sempra Energy nor any of its Subsidiaries, is subject to any Order or third
party agreement, order, judgment, decree, directive or Encumbrance with respect
to any Environmental Law or environmental Liability that materially and
adversely affects the operation or business of the SET Companies.

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(c)

To the Knowledge of Sempra Energy, no Hazardous Material is present in a
condition that would reasonably be expected to result in a material liability
under Environmental Law at, and no Hazardous Material has been disposed of,
arranged to be disposed of, released or threatened to be released at or from,
any of the properties or facilities currently or formerly owned, leased or
operated by any of the SET Companies, or by Sempra Energy or any of its
Subsidiaries with respect to the SET Business, in a manner or condition that
would reasonably be expected to result in material Liability to it under or
relating to any Environmental Law.  None of the SET Companies, nor Sempra Energy
nor any of its Subsidiaries insofar as it affects the SET Business, has at any
other location disposed of, arranged to dispose of, released or threatened to
release any Hazardous Material in a manner or condition that, to the Knowledge
of Sempra Energy, would reasonably be expected to result in material Liability
to it under or relating to any Environmental Law.

(d)

None of the SET Companies, nor Sempra Energy nor any of its Subsidiaries insofar
as it affects the SET Business, has assumed or provided indemnity against any
material Liability of any other Person under or relating to any Environmental
Laws.

Section 3.16.

  Financial Statements; No Undisclosed Liabilities

(a)

Schedule 3.16(a) contains true and complete copies of (i) the audited balance
sheet of the each of the SET Companies for which audited statements have been
prepared (such entities, the “SET Audited Entities”), on a stand alone basis, as
of December 31, 2006 and the related statements of operations and cash flows for
the year ended December 31, 2006, including any notes thereto (the “Audited
Financial Statements”) and (ii) (A) the unaudited consolidated and combined
statistical report data with respect to the SET Business as of December 31,
2006, (B) the columnar spreadsheet titled the Sempra Energy Trading Corp.
combined and consolidated balance sheet as of December 31, 2006, and the related
consolidated and combined statements of operations for the annual period ending
thereon, and (C) the unaudited consolidated and combined balance sheets of the
SET Companies as of March 31, 2007 and the related consolidated and combined
statements of operations and cash flows for the quarterly period ending thereon,
including any notes thereto, and in the case of each of the items described in
clauses (A), (B) and (C), reconciled to exclude any items not related to the SET
Business (the “Unaudited Financial Statements” and, together with the Audited
Financial Statements, the “Financial Statements”).  The Financial Statements
have been prepared in conformity with GAAP (except in each case as described in
the notes thereto) and fairly present, subject in the case of the Unaudited
Financial Statements to normal recurring year-end audit adjustments that are not
in the aggregate material in nature or amount, in all material respects, the
financial condition and results of operations of each of the SET Business as of
the respective dates thereof and for the respective periods indicated therein.

(b)

The SET Companies do not have any Liabilities that are required by GAAP to be
reflected on the Financial Statements that are not reflected thereon.  

(c)

Except as provided in the Related Agreements, since the date of the last
Financial Statement, there has not been any (i) increase in the compensation or
fringe benefits of any present or former director, manager, officer or employee
of any of the SET Companies (except as set forth on Schedule 3.16(c)(i) and
except for increases in the Ordinary Course of

-35-

Business that do not otherwise require the consent of Sempra Energy or its
Subsidiaries (other than the SET Companies)), (ii) grant of any severance or
termination pay to any present or former director, manager, officer or employee
of any of the SET Companies (except for grants in the Ordinary Course of
Business or as required under the Sempra Plans, that in either event do not
otherwise require the consent of Sempra Energy or its Subsidiaries (other than
the SET Companies)), (iii) loan or advance of money or other property to any of
present or former directors, manager, officers or employees of any of the SET
Companies (except for loans or advances of business expenses made in the
Ordinary Course of Business pursuant to a Sempra Plan that do not otherwise
require the consent of Sempra Energy or its Subsidiaries (other than the SET
Companies)), (iv) establishment, adoption, entrance into, amendment or
termination of any SET Company Plan, collective bargaining agreement (other than
as may be required by the terms of an existing SET Company Plan or collective
bargaining agreement, or as may be required by applicable law or in order to
qualify under Sections 401 and 501 or to comply with Section 409A of the Code
and except those that do not otherwise require the consent of Sempra Energy or
its Subsidiaries (other than the SET Companies)), or (v) grants of any equity or
equity-based awards, other than in the ordinary course consistent with past
practice.

Section 3.17.

  Affiliate Agreements

Schedule 3.17 provides a complete list of all Contracts between (i) any SET
Company and (ii) Sempra Energy or any director, officer, member or other
Subsidiary or affiliate of Sempra Energy (other than another SET Company and
other than Trading Agreements in respect of Commodities or securities traded on
a regulated commodities or securities exchange) (each referred to herein as an
“Affiliate Agreement” and together the “Affiliate Agreements”) that are in
effect on the date hereof.

Section 3.18.

  Material Financial Assurances

Schedule 3.18 contains a complete list of all of the guarantees, letters of
credit, comfort letters, “keep whole” agreements, bonds or other financial
security arrangements or other credit support arrangements of any type or kind
whatsoever, whether or not accrued, absolute, contingent or otherwise other than
with respect to Trading Agreements (“Financial Assurances”) under which any SET
Company or Sempra Energy is obligated or could reasonably be expected to be
obligated for an amount in excess of $50,000,000, and the amount of each
(including any amount drawn or used) as of May 31, 2007, in each case to the
extent such Financial Assurances have been provided to or for the benefit of any
creditor or counterparty of any SET Company under which Sempra Energy or any of
its Subsidiaries (other than the SET Companies) are responsible or otherwise
obligated; provided, that such schedule may be updated at any time before or
after the Closing Date with effect from the date of such revision.

Section 3.19.

  FCPA

Neither Sempra Energy nor any of its Subsidiaries, nor, to the Knowledge of
Sempra Energy, any officer or director thereof, has violated any provisions of
the FCPA, or the rules and regulations promulgated thereunder in connection with
the operation of the SET Business.

Section 3.20.

  Available Funds

Sempra Energy has available to it all funds necessary for its payments and
contributions to the Partnership required under Article II.

Section 3.21.

  No Other Representation

Except for the representations and warranties contained in this Article III,
neither the Sempra Parties nor any other Person acting on

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behalf of the Sempra Parties makes any representation or warranty, express or
implied, regarding the Sempra Parties or any of their Subsidiaries.

ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF RBS

RBS hereby makes to Sempra Energy as of the date hereof, and, unless otherwise
specified, to Sempra Energy and the Partnership, as of the Closing, each of the
representations and warranties contained in this Article IV.

Section 4.1.

Organization and Good Standing

RBS is a company limited by shares duly organized and validly existing under the
laws of Scotland, with full corporate power and authority to conduct its
business as it is now being conducted.

Section 4.2.

Enforceability; Authority; No Conflict

(a)

This Agreement constitutes the legal, valid and binding obligation of RBS
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer or similar laws affecting the enforcement of
creditors’ rights generally and general principles of equity (whether considered
in a proceeding at law or in equity).  Upon the execution and delivery by RBS of
the Related Agreements to which it is a party, each of such Related Agreements
will constitute the legal, valid and binding obligation of RBS, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer or similar laws affecting the enforcement of creditors’ rights
generally and general principles of equity (whether considered in a proceeding
at law or in equity).  RBS has the requisite right, power and authority to
execute and deliver this Agreement and each of the Related Agreements to which
it is a party, and to perform its obligations and consummate the Contemplated
Transactions, and such action has been duly authorized by all necessary
corporate action.

(b)

Except as set forth on Schedule 4.2(b) (such actions listed on Schedule 4.2(b),
the “RBS Required Consents”), the execution, delivery and performance by RBS of
this Agreement (excluding, for this purpose, Section 7.12(b)(ii)) or any of the
Related Agreements to which it is a party, and the consummation of the
Contemplated Transactions, does not and will not: (i) violate any provision of
the Governing Documents of RBS or its Subsidiaries, or any resolution adopted by
the board of directors or shareholders (or similar management group) of RBS or
its Subsidiaries; (ii) violate or conflict with any material provisions of any
Legal Requirements or any Order to which RBS or its Subsidiaries may be subject;
(iii) violate, conflict with, result in a material breach of, constitute (with
due notice or lapse of time or both) a material default or cause any material
obligation, penalty or premium to arise or accrue under any Contract to which
RBS or any of its Subsidiaries is a party or by which any of them is bound or to
which any of their respective properties or assets is subject; or (iv) result in
the creation or imposition of any Encumbrance except Permitted Encumbrances upon
any of the properties or assets of the SET Companies.  RBS has all necessary
corporate authorizations and approvals necessary in connection with this
Agreement or the Related Agreements or the consummation of the Contemplated
Transactions.

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(c)

Except as set forth in Schedule 4.2(c), no material consent, approval,
authorization of, declaration, filing, or registration with, any Governmental
Body, stockholder or other Person is required to be made or obtained by RBS or
any of its Subsidiaries in connection with the execution, delivery, and
performance of this Agreement (excluding, for this purpose, Section 7.12(b)(ii))
or the Related Agreements or the consummation of the Contemplated Transactions,
including the conduct of the SET Business.

Section 4.3.

Bank Holding Company Act Status

RBS is a financial holding company under the Bank Holding Company Act of 1956,
as amended, and RBS is not aware of any contemplated or threatened change (by
RBS or by any Governmental Body) to that status.

Section 4.4.

Legal Proceedings

Except for such of the following matters as, individually or in the aggregate,
have not resulted in, and would not reasonably be expected to result in, an RBS
Material Adverse Effect, there is no pending, or, to the knowledge of RBS,
threatened, Proceeding by or against RBS or that could reasonably be expected to
prevent, materially delay, make illegal or otherwise materially interfere with,
any of the Contemplated Transactions.  Prior to the date of this Agreement, RBS
has informed Sempra Energy in a true and complete manner of the progress of
material discussions with FERC, the FSA and the Federal Reserve Board with
respect to the transactions contemplated under this Agreement and the Related
Agreements, including any material issues relating to filings to be made to, or
authorizations or orders to be sought from, FERC, the FSA and the Federal
Reserve Board.

Section 4.5.

Brokers or Finders

None of RBS or its Subsidiaries or any of their Representatives has incurred any
obligation or liability, contingent or otherwise, for brokerage or finders’ fees
or agents’ commissions or other similar payments in connection with the
Contemplated Transactions for which Sempra Energy, the Partnership or the SET
Companies could be liable.

Section 4.6.

Available Funds

RBS has available to it all funds necessary for its payments and contributions
to the Partnership and Sempra Energy required under Article II.

Section 4.7.

The Partnership

As of the Closing Date:

(a)

The Partnership was duly formed and is validly existing as a limited liability
partnership under the laws of the United Kingdom.

(b)

Neither RBS nor the Partnership has taken any action, nor have any other steps
been taken or legal proceedings been started or (to the best of the
Partnership’s knowledge and belief) threatened against RBS or the Partnership,
for the Partnership’s winding-up, dissolution, administration or reorganization
or for the appointment of a custodian, receiver, administrator, administrative
receiver, liquidator, trustee or similar officer of it or of any or all of its
assets or revenues.

(c)

The Partnership has not conducted any business prior to the Closing Date.  Other
than through RBS or its Subsidiaries as members, the Partnership does not have
any creditors or claims (at law or in equity) with respect to its assets.

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(d)

Upon execution of the LLP Agreement, subject to any conditions to the execution
thereof in this Agreement or any Related Agreement, the Sempra Partners will be
admitted as members of the Partnership and will not have any claims or
Encumbrances upon their capital account balances or other entitlements under the
LLP Agreement except as reflected in the LLP Agreement.

Section 4.8.

No Other Representation

Except for the representations and warranties contained in this Article IV,
neither RBS nor any other Person acting on behalf of RBS makes any
representation or warranty, express or implied, regarding RBS or any of its
Subsidiaries.

ARTICLE V.
CONDITIONS PRECEDENT TO RBS’ OBLIGATION TO CLOSE

The obligation of RBS to consummate the transactions provided for in this
Agreement is subject to the satisfaction, as of the Closing, of each of the
following conditions (any of which may be waived in writing by RBS, in whole or
in part):

Section 5.1.

Accuracy of Representations

Each of the Sempra Parties’ representations and warranties in Article III of
this Agreement shall be true and accurate in all respects (without regard to any
express qualifier therein as to materiality or Material Adverse Effect), except
for such inaccuracies that have been cured prior to Closing or that,
individually or in the aggregate, have not resulted in, and would not reasonably
be expected to result in, a SET Material Adverse Effect.

Section 5.2.

Performance

Each of the covenants and obligations that Sempra Energy or any of its
Subsidiaries, including the Sempra Parties, is required to perform or to comply
with pursuant to this Agreement at or prior to the Closing shall have been duly
performed or complied with in all material respects.

Section 5.3.

Material Consents and Governmental Approvals

Each of the Material Consents and Material Governmental Approvals shall have
been obtained and shall be in full force and effect, all such Material
Governmental Approvals shall be final orders not subject to any unfulfilled
conditions to their effectiveness, and none of the Material Governmental
Approvals shall impose terms or conditions that, individually or in the
aggregate with other terms and conditions, (a) have resulted in or would
reasonably be expected to result in a SET Material Adverse Effect, or (b) are or
would reasonably be expected to be unduly burdensome to any material portion of
the business of RBS and its Subsidiaries (other than the Partnership or any SET
Companies) including any material change in such business or portion thereof, or
any requirement to dispose of or cease engaging in, owning or operating any
material asset or business.

Section 5.4.

Additional Documents

Sempra Energy shall have caused the documents and instruments required by
Section 2.5 to be executed and delivered by the Sempra Parties, as applicable,
and each such document and instrument shall be in full force and effect and
shall not have been materially breached by any party thereto (other than RBS).

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Section 5.5.

Orders

There shall not be in effect any Order of any Governmental Body of competent
jurisdiction enjoining the consummation of the Contemplated Transactions.  There
shall not be, at the time of Closing, any pending suit, action or proceeding
before any Governmental Body seeking to restrain or prohibit the consummation of
the Closing in accordance with the terms and conditions hereof, which,
considering the merits of the claims, the defenses (procedural and substantive)
available thereto and the likelihood that the opposing parties will ultimately
prevail, is likely to have a SET Material Adverse Effect or an RBS Material
Adverse Effect.

Section 5.6.

Material Adverse Effect

There shall not have occurred since the date hereof and be continuing a SET
Material Adverse Effect.

Section 5.7.

Closing Certificate

Sempra Energy shall have delivered (or caused to be delivered) to RBS a
certificate of a duly authorized officer of Sempra Energy, dated as of the
Closing Date, certifying, to the Knowledge of such officer, the conditions set
forth in Sections 5.1 and 5.2 have been met and satisfied.

Section 5.8.

U.S. Entities Conversion

The entities listed on Schedule 7.12(c) may be reorganized and shall have been
converted into entities eligible to elect to be an entity disregarded as
separate from its owner within the meaning of sections 301.7701-1, 301.7701-2,
and 301.7701-3 of the regulations promulgated by the U.S. Department of the
Treasury pursuant to the Code, and each such entity will be treated as an entity
disregarded as separate from its owner within the meaning of sections
301.7701-1, 301.7701-2, and 301.7701-3 of the regulations promulgated by the
U.S. Department of the Treasury pursuant to the Code; provided that this
condition is deemed satisfied if the Closing occurs on or after November 30,
2007.

Section 5.9.

Operating Agreement

Sempra Energy has provided RBS with evidence of the termination of the Operating
Agreement and complete payment of all “Agreed Payments” (and as defined) under
the “Agreement Related to Operating Agreement dated August 6, 1997”, among the
parties to the Operating Agreement, dated as of July 9, 2007 (the “OA
Termination Agreement”).

ARTICLE VI.
CONDITIONS PRECEDENT TO SEMPRA ENERGY’S OBLIGATION TO CLOSE

The obligation of the Sempra Parties to sell the Transferred Company Interests
and to take the other actions required to consummate the transactions provided
for in this Agreement is subject to the satisfaction, as of the Closing, of each
of the following conditions (any of which may be waived in writing by Sempra
Energy in whole or in part):

Section 6.1.

Accuracy of Representations

Each of RBS’ representations and warranties in Section IV of this Agreement
shall be true and accurate in all respects (without regard to any express
qualifier therein as to materiality or material adverse effect), except for such
inaccuracies that, singly or in the aggregate, have not resulted in, and would
not reasonably be expected to result in, an RBS Material Adverse Effect.

Section 6.2.

RBS and Partnership’s Performance

Each of the covenants and obligations that RBS and the Partnership are required
to perform or to comply with pursuant to

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this Agreement at or prior to the Closing shall have been duly performed or
complied with in all material respects.

Section 6.3.

Material Consents and Governmental Approvals

Each of the Material Consents and Material Governmental Approvals shall have
been obtained and shall be in full force and effect, all such Material
Governmental Approvals shall be final orders not subject to any unfulfilled
conditions to their effectiveness and none of the Material Consents or Material
Governmental Approvals shall impose terms or conditions that, individually or in
the aggregate with other terms and conditions, (a) have resulted in or would
reasonably be expected to result in a SET Material Adverse Effect or (b) are or
would reasonably be expected to be unduly burdensome to any material portion of
the business of Sempra Energy and its Subsidiaries (other than any SET
Companies) including any material change in such business or portion thereof, or
any requirement to dispose of or cease engaging in, owning or operating any
material asset or business.

Section 6.4.

Additional Documents

RBS shall have caused the documents and instruments required by Section 2.5(c) –
(d), including the Indemnity Agreement, to be executed and delivered by RBS or
the Partnership, and each such document and instrument shall be in full force
and effect and shall not have been materially breached by any party thereto
(other than the Sempra Parties or their Subsidiaries).

Section 6.5.

Orders

There shall not be in effect any Order of any Governmental Body of competent
jurisdiction enjoining the consummation of the Contemplated Transactions.  There
shall not be, at the time of Closing, any pending suit, action or proceeding
before any Governmental Body seeking to restrain or prohibit the consummation of
the Closing in accordance with the terms and conditions hereof, which,
considering the merits of the claims, the defenses (procedural and substantive)
available thereto and the likelihood that the opposing parties will ultimately
prevail, is likely to have an RBS Material Adverse Effect or a SET Material
Adverse Effect.

Section 6.6.

Material Adverse Effect

There shall not have occurred and be continuing an RBS Material Adverse Effect.

Section 6.7.

Closing Certificate

RBS shall have delivered (or caused to be delivered) to Sempra Energy a
certificate of a duly authorized officer of RBS, dated as of the Closing Date,
certifying, to the Knowledge of such officer, the conditions set forth in
Sections 6.1 and 6.2 have been met and satisfied.

Section 6.8.

U.S. Entities Conversion

The entities listed on Schedule 7.12(c) may be reorganized and shall have been
converted into entities eligible to elect to be an entity disregarded as
separate from its owner within the meaning of sections 301.7701-1, 301.7701-2,
and 301.7701-3 of the regulations promulgated by the U.S. Department of the
Treasury pursuant to the Code, and each such entity will be treated as an entity
disregarded as separate from its owner within the meaning of sections
301.7701-1, 301.7701-2, and 301.7701-3 of the regulations promulgated by the
U.S. Department of the Treasury pursuant to the Code; provided that this
condition is deemed satisfied if the Closing occurs on or after November 30,
2007.

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ARTICLE VII.
ADDITIONAL COVENANTS

Section 7.1.

Conduct of SET Companies

From and after the date hereof until the Closing, Sempra Energy shall (and shall
cause its Subsidiaries to) continue to take such action necessary to operate the
SET Companies and the SET Business only in the Ordinary Course of Business and
to use commercially reasonable efforts to continue to maintain, in all material
respects, its properties in accordance with past practices and in a condition
suitable for their current use.  Notwithstanding the foregoing, except as part
of the reorganization contemplated by Section 6.8, any reorganization of any
foreign entity into an entity eligible to be treated as a pass through entity
for purposes of U.S. federal, state or local Tax law, or part of a
reorganization that will allow a Qualifying Subsidiary to sell, assign and
deliver to the Partnership the Transferred Companies (so long as any such
reorganization has no adverse impact on the Partnership or RBS), or required
(including by virtue of being an express condition to closing) or explicitly
permitted by the terms of this Agreement or the Related Agreements or with the
prior written consent of RBS (such consent not to be unreasonably withheld or
delayed), Sempra Energy shall (and shall cause its Subsidiaries to):

(a)

not amend or otherwise alter (or propose any amendment or alteration to) the
Governing Documents of any of the SET Companies;

(b)

not create or issue any Equity Commitments, or redeem any Equity Interest of the
SET Companies;

(c)

with respect to Sempra Energy and its Subsidiaries other than the SET Companies,
continue to provide all services previously provided to the SET Companies in
accordance with the Ordinary Course of Business;

(d)

not make any sale, assignment, transfer, abandonment, or other conveyance of any
asset used in the SET Business or any Contract relating to the SET Business
(other than any Trading Agreement, the proposed sale of a seat on the NYMEX, and
the sale of computer trading models with respect to metals and related Commodity
Transactions), in each such case unless (i) such asset or Contract is not
material to the SET Companies or, if material, such transaction was in the
Ordinary Course of Business or (ii) such transaction is a sale or other
disposition of minority equity interests (representing less than 20% of the
outstanding equity of such entity) held by any of the SET Companies for
investment purposes;

(e)

not consent to any action outside of the Ordinary Course of Business of Sempra
Energy or its Subsidiaries (other than the SET Companies) with respect to the
operations of the SET Companies;

(f)

with respect to Sempra Energy and its Subsidiaries (other than solely by the SET
Companies), not create or permit to be created (i) any Encumbrance on the
Transferred Company Interests or (ii) any Encumbrance (other than a Permitted
Encumbrance) on any asset of the SET Companies other than in the Ordinary Course
of Business or that would not materially and adversely affect the ability of the
Partnership or

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the SET Companies to conduct the SET Business as currently conducted consistent
with past practices after the Closing Date or as contemplated in this Agreement
or any of the Related Agreements;

(g)

not enter into or materially amend, modify, extend, renegotiate or terminate any
SET Business Material Contract (as defined solely in subsections (i) through
(xi) of Section 3.9(d), excluding SET Business Material Contracts as defined in
Section 3.9(d)(x) that are in respect of trading authority or Trading
Agreements);

(h)

not change any method of accounting or accounting principle that relates to the
SET Business or the SET Companies, except such changes as are required by a
change in GAAP or that do not, and could not be reasonably expected to, impact
the Closing Balance Sheet or the Final Balance Sheet (or any portion thereof) or
restrict or have a material adverse effect in any manner on the post-Closing
accounting or accounting principles of the Partnership, the SET Business or the
SET Companies;

(i)

not make or change any Tax election, change an annual accounting period, adopt
or change any accounting method with respect to Taxes, file any amended Tax
Return, settle or compromise any proceeding with respect to any Tax claim or
assessment relating exclusively to the SET Companies, surrender any right to
claim a refund of Taxes, consent to any extension or waiver of the limitations
period applicable to any Tax claim or assessment relating exclusively to the SET
Companies, or take any other similar action relating to the filing of any Tax
Return or the payment of any Tax relating to the SET Companies, except with
respect to any of the foregoing in this Section 7.1(i), such changes or actions
that do not, and would not be reasonably expected to, materially impact the
Taxes, Tax refunds, claims or assessments, or Tax accounting or reporting of the
Partnership, the SET Business or the SET Companies, in each case solely for a
taxable period that begins on or after the Closing Date or for the portion of a
Straddle Period that begins on or after the Closing Date;

(j)

not cease to operate any of the SET Core Businesses;

(k)

not enter into any new material business line;

(l)

not purchase or otherwise acquire (x) any material assets (other than in the
Ordinary Course of Business or otherwise in connection with any Trading
Agreements) whether in one transaction or a series of related transactions for
an aggregate purchase price exceeding $10,000,000, (y) any Physical Energy
Infrastructure Assets, or (z) any Equity Interest in any entity whose equity is
not publicly traded other than in the Ordinary Course of Business, or a five
percent or greater Equity Interest in any entity whose equity is publicly
traded;

(m)

not materially change the credit policies used by the SET Companies, except as
consistent with past practice or as reasonably required due to changes in market
conditions;

(n)

not agree, consent to or otherwise permit an increase in or modification to, or
grant exceptions to, the “value at risk” limits for the SET Companies in effect
as of

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December 31, 2006 (as set forth on Schedule 7.1(m) hereto), which individually
or together constitute an increase in permitted “value at risk” limits for the
SET Companies of 20% or more above those limits in effect as of December 31,
2006, except for such increase, modification or exception permitted or granted
on a temporary basis consistent with past practice or as reasonably required due
to changes in market conditions;

(o)

except as disclosed on Schedule 7.1(o), (i) not materially alter the total
compensation of any employee of the SET Companies who the SET Companies (x) have
committed to pay a twenty-five percent (25%) or greater share of the Net Trading
Revenue (or other revenue, income or margin metric) generated by such employee
(directly or through the results of a group of employees), (y) guaranteed total
annual compensation in excess of $2,000,000 or (z) is a Senior Managing Director
or an employee equivalent in stature to an employee holding such title or who,
within the preceding twelve (12) months, had been employed at or above the level
of Senior Managing Director or an equivalent stature, (ii) not grant any
severance or termination pay to any present or former director, manager, officer
or employee of any of the SET Companies other than in accordance with Schedule
7.6(h); (iii) not establish, adopt, enter into, amend or terminate any SET
Company Plan or collective bargaining agreement (other than as may be required
by the terms of an existing SET Company Plan or collective bargaining agreement,
or as may be required by applicable law or in order to qualify under
Sections 401 and 501), or (iv) not grant any equity or equity-based awards to
any present or former director, manager, officer or employee of any of the SET
Companies; or

(p)

not enter into any Contract or take any action to do or engage (or commit to do
or engage) in any of the foregoing.

Section 7.2.

Information and Access

Prior to Closing, Sempra Energy shall (and shall cause its Subsidiaries to) (a)
permit RBS and its Representatives to have reasonable access during normal
business hours, and in a manner so as not to interfere with the normal
operations, to all premises, properties, personnel, accountants, books, records,
contracts and documents of or pertaining to the SET Business; and (b) furnish
RBS and its Representatives with all such information and data concerning the
SET Business as RBS or its Representatives reasonably may request in connection
with their review of information in accordance with subsection (a) of this
Section 7.2, except to the extent that such information is subject to
attorney-client privilege or furnishing any such information or data would
violate any Legal Requirement, Order or Contract applicable to Sempra Energy or
any of its Subsidiaries or by which any of the assets of the SET Companies are
bound; provided, that Sempra Energy shall (and shall cause its Subsidiaries to)
use commercially reasonable efforts to remove any limitation or restriction on
access to RBS and its Representatives.  Notwithstanding anything in this Section
7.2, subject to Section 10.3, Sempra Energy will not be required to permit
access to or furnish Tax Returns, books, records, contract, documents,
information or data relating to Taxes that do not exclusively relate to the SET
Business.

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Section 7.3.

Notices of Certain Events

(a)

Prior to the Closing, each of Sempra Energy and RBS shall (and shall cause their
Subsidiaries to) promptly notify the other Party of:

(i)

any written notice or other written communication from any Person alleging that
the Consent of such Person is or may be required in connection with the
Contemplated Transactions;

(ii)

any material written notice or other material written communication to or from
any Governmental Body (other than the FSA) in connection with the Contemplated
Transactions;

(iii)

the progress of material discussions with the FSA to be provided through updates
to Sempra Energy by RBS promptly following such discussions; and

(iv)

promptly after such Party’s obtaining Knowledge of the same, of any material
inaccuracy, or material violation or material breach by such Person, of any of
its representations or warranties herein.

(b)

Prior to the Closing, Sempra Energy shall (and shall cause their Subsidiaries
to) promptly notify (and with respect to subsections (i) and (ii) below, consult
to the extent reasonably practicable, with) RBS regarding:

(i)

the resignation or termination of any employee of the SET Companies holding the
position of senior managing director (or any more senior position) or any
employee with annual compensation of $2,000,000 or greater;

(ii)

any material disputes (including litigation or written notice threatening
litigation) with counterparties to Trading Agreements involving alleged damages,
or loss or diminution of Net Trading Revenue in excess of $10,000,000 per
applicable Trading Agreement (or series of related Trading Agreements with the
same or related counterparties); and

(iii)

any SET Company entering into, materially amending, modifying, extending or
renegotiating any SET Business Material Contract of the type described in
subsections (xiii), (xiv) or (xv) of Section 3.9(d).

Section 7.4.

Filings; Reasonable Best Efforts to Close

(a)

Until the Closing Date, Sempra Energy and RBS shall (and shall cause their
respective Subsidiaries to), as promptly as practicable, (i) use their
reasonable best efforts (except as otherwise specified in Section 7.12(b)) to
obtain all consents, approvals or actions of, make all filings with and give all
notices to any Governmental Body or any other Person required of the Parties, as
the case may be, to consummate the transactions contemplated hereby and by the
Related Agreements to which it is a party, including all Material Governmental
Approvals and the items set forth on Schedules 3.2(b), 3.2(c), 4.2(b) and
4.2(c); (ii) use their reasonable best

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efforts (except as otherwise specified in Section 7.12(b)) to obtain all
consents, approvals or actions of, make all filings with and give all notices to
any Governmental Body or any other Person necessary for RBS to obtain
Governmental Authorizations from the same Governmental Bodies and on
substantially the same terms and conditions as those Governmental Authorizations
set forth in Schedule 7.4(a)(ii) (“RBS Governmental Licenses”); (iii) provide
such other information and communications to any such Governmental Body or other
Persons as such Governmental Body or other Persons may reasonably request in
connection with the activities listed in this Section 7.4; and (iv) provide
reasonable cooperation to the other Party in connection with the performance of
their obligations under this Section 7.4.  The Parties will provide prompt
notification to each other when any such consent, approval, action, filing or
notice referred to in clauses (i) and (ii) above is obtained, taken, made or
given, as applicable, will keep each other reasonably informed as to the
progress of any such actions and will advise each other of any communications
(and, unless precluded by any Legal Requirement, provide copies of any such
communications that are in writing) with any Governmental Body or other Person
regarding any of the transactions contemplated by this Agreement or any of the
Related Agreements.

(b)

Upon the terms and subject to the conditions set forth in this Agreement, each
of Sempra Energy and RBS shall (and shall cause their respective Subsidiaries
to) use their reasonable best efforts (except to the extent a different standard
is expressly provided for in this Agreement) to consummate the transactions
contemplated by this Agreement.  Notwithstanding anything to the contrary in
this Agreement, nothing contained in this Agreement shall require Sempra Energy,
RBS, the Partnership or any of their respective Subsidiaries to (or to agree to)
dispose of any material assets, make material change in a material portion of
its business, or pay Cash or give any other material consideration to a third
party (except for the incurrence of reasonable costs and expenses by the
Partnership or the SET Companies that are not material in the context of the
commercial objectives to be achieved by the subject efforts of such Person) to
obtain the approval, consent or other action of any Governmental Body or other
Person in connection with the transactions contemplated hereby or any Related
Agreements.

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Section 7.5.

Financial Statements

(a)

From the date of this Agreement through the Closing Date, within forty-five (45)
days after the end of each calendar quarter commencing with the quarter ending
June 30, 2007, Sempra Energy shall provide RBS with a copy of financial
statements and other materials comparable to the Unaudited Financial Statements
of the SET Companies, in each case prepared in accordance with GAAP as of and
for the three-month, six-month or nine-month period, as applicable, then ended,
and (ii) if the applicable calendar quarter is as of the end of any calendar
year, audited financial statements for the SET Audited Entities and statistical
report data with respect to the SET Companies for such calendar year; provided,
that to the extent necessary, Sempra Energy may provide such audited financial
statements within 90 days after the end of such calendar year.  In addition, the
audited balance sheet of the each of the SET Companies for which audited
statements are prepared, on a stand alone basis, as of December 31, 2006 and the
related statements of operations and cash flows for the year ended December 31,
2006, including any notes thereto, which become available between signing and
closing, will be provided promptly to RBS.

(b)

From the date of this Agreement through the Closing Date, within twenty (20)
days after the end of each calendar month, Sempra Energy shall provide RBS with
copies of the unaudited management and operating reports of the SET Companies or
relating to the SET Business prepared in accordance with past practice for each
such calendar month.

Section 7.6.

Employees and Employee Benefits.  

(a)

Employees.

(i)

The Parties intend that all SET Company Employees who are actively at work on
the Closing Date shall continue to be employed by the SET Companies immediately
after the Closing Date (such SET Company Employees, the “Transferred
Employees”); provided that neither the Partnership nor the SET Companies shall
have any obligation to continue employing such SET Company Employees for any
length of time thereafter.

(ii)

With respect to those SET Company Employees who are not actively at work on the
Closing Date because they are on approved short-term disability or long-term
disability leave in accordance with the Sempra Plans (the “Inactive Employees”),
from and after the Closing Date, Sempra Energy shall retain all liability and
obligations in respect of such Inactive Employees, and shall continue to cover
such Inactive Employees under the Sempra Plans; provided that, if any such
Inactive Employee returns to active work at the conclusion of such leave, and in
any case within six months following the Closing Date (or such longer period as
is required by applicable law), such Inactive Employee shall become a
“Transferred Employee” for purposes hereunder as of the date of such person’s
return to active employment with the SET Companies (the “Transfer Date”).

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(b)

Sempra Parties’ Employee Liabilities.  Sempra Energy shall retain and satisfy
any and all responsibility, and RBS and the Partnership shall have no liability
or responsibility whatsoever, for any and all claims, liabilities and
obligations, whether contingent or otherwise, except to the extent such
liabilities, claims and obligations are accrued on the Closing Balance Sheet,
relating to:

(i)

any person who is not a Transferred Employee, including, without limitation, any
unpaid salary, wages, bonuses or other compensation or severance pay, benefits
or group health care coverage required by Section 4980B of the Code or Section
601 of ERISA or similar state law, whether arising on, prior to or after the
Closing Date; and

(ii)

the Sempra Plans and SET Company Plans that are not Company Plans (as defined
below), whether arising on, prior to, or after the Closing Date.

(c)

RBS Employee Liabilities.  RBS shall have sole responsibility and liability, and
the Sempra Parties and the Partnership shall have no responsibility or
liability, for any claims or causes of action of SET Company Employees under
Legal Requirements with respect to employment, wage and working condition
matters that arise as a direct result of acts solely by RBS following the date
hereof and prior to the Closing Date.

(d)

Employee Benefits; General.  Schedule 7.6(d) sets forth a list of all Sempra
Plans and SET Company Plans that are sponsored exclusively by the SET Companies
(and that are not sponsored by Sempra Energy or any of its other affiliates)
(the “Company Plans”).  As of the Closing Date, the SET Companies shall cease to
be participating employers under the Sempra Plans and the SET Company Plans that
are not Company Plans (“Parent Plans”).  As of the Closing Date (or Transfer
Date, if applicable), Transferred Employees shall cease to accrue any further
benefits as active participants and shall have no rights to continue as active
participants under the Parent Plans (without derogation of their rights as
vested, terminated participants).  

(e)

Non-US Employee Benefits.  For non-US-based Transferred Employees, subject to
Legal Requirements, RBS will cause the SET Companies to provide such Transferred
Employees (as a group), during the period beginning immediately following the
Closing Date (or Transfer Date, if applicable) and ending on the first
anniversary of the Closing Date (the “Continuation Period”), with employee
benefits (other than equity-based plans, programs and policies) that are no less
favorable in the aggregate to those employee benefits provided as of the date
hereof under the Company Plans.

(f)

US Welfare Benefits.

(i)

For US-based Transferred Employees, RBS will cause the SET Companies to provide
such Transferred Employees (as a group), during the Continuation Period, with
health and welfare employee benefits (whether or not subject to ERISA) (other
than equity-based plans, programs or policies) that are substantially similar in
the aggregate to those employee health and welfare benefit plans, programs and
policies that are maintained by RBS from time to time for the

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benefit of similarly situated employees of RBS (any such employee health and
welfare benefit plans of RBS in which Transferred Employees become eligible to
participate after the Closing Date shall be referred hereinafter as “RBS Welfare
Plans”).

(ii)

With respect to the RBS Welfare Plans, except to the extent otherwise required
by applicable law, RBS shall cause the SET Companies to use commercially
reasonable best efforts:

(1)

with respect to each such plan that is a medical or health plan, to waive, or
cause the waiver of, any exclusions for pre-existing conditions and waiting
periods for each Transferred Employee and his/her dependents to the extent that
such pre-existing condition exclusions and waiting periods were previously
satisfied under the comparable Sempra Plan or SET Company Plan for the plan year
that includes such transfer;

(2)

with respect to each such plan that is a medical or health plan, to provide each
Transferred Employee with credit for any deductibles and out-of-pocket expenses
paid or incurred by such Transferred Employee prior to his or her transfer to
the RBS Welfare Plan (to the same extent such credit was given under the
comparable Sempra Plan or SET Company Plan) in satisfying any applicable
deductible or out-of-pocket requirements under such RBS Welfare Plan for the
plan year that includes such transfer; and

(3)

to recognize service of the Transferred Employees credited by the Sempra Parties
solely for purposes of eligibility to participate and vesting in any RBS Welfare
Plan in which the Transferred Employees are eligible to participate after the
Closing Date to the extent that such service was recognized for that purpose
under the comparable Sempra Plan or SET Company Plan prior to such transfer;

provided, that in no event shall the Transferred Employees be entitled to any
credit to the extent that it would result in a duplication of benefits with
respect to the same period of service.  Sempra Energy will make available to RBS
employee participation data and year-to-date deductibles and out of pocket
expenses as of the Closing Date.  

(g)

U.S. Retirement Benefits.  

(i)

During the Continuation Period, RBS will cause the SET Companies to continue the
Sempra Energy Trading Retirement & Savings Plan and the related trust (the “SET
Company 401(k) Plan”) for the benefit of the US-

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based Transferred Employees, and to continue to make employer matching and
profit sharing contributions thereunder on substantially the same terms as are
in effect on the date hereof.  The SET Company 401(k) Plan will be amended to
allow the immediate entry, as of immediately following the Closing Date (or
Transfer Date, if applicable), of those Transferred Employees who, immediately
prior to Closing, were active participants under the Sempra Energy Savings Plan
(the “Sempra 401(k) Plan”).  RBS shall cause the SET Companies to recognize
service of the Transferred Employees credited by the Sempra Parties solely for
purposes of eligibility to participate and vesting (but not for any other
purpose, including benefit accruals) in the SET Company 401(k) Plan and any
other RBS retirement plan in which the Transferred Employees are eligible to
participate after the Closing Date to the extent that such service was
recognized for that purpose under the comparable Sempra Plan or SET Company Plan
prior to the Closing Date (or Transfer Date, if applicable); provided, however,
that in no event shall the Transferred Employees be entitled to any credit to
the extent that it would result in a duplication of benefits with respect to the
same period of service.  Sempra Energy will make available to RBS employee
participation data, including service credit, as of the Closing Date.

(ii)

In addition, for US-based Transferred Employees, RBS will cause the SET
Companies to make special employer contributions under the SET Company 401(k)
Plan (or under a non-qualified mirror savings plan to be established by RBS for
this purpose, to the extent such contributions cannot be made under the SET
Company Plan due to limits imposed under the Code) on behalf of each Transferred
Employee who was an active participant under the Sempra Energy Cash Balance Plan
immediately prior to the Closing Date.  Such special employer contributions
shall be determined in accordance with Schedule 7.6(g).  Sempra Energy shall
make contributions under the Sempra Energy Cash Balance Plan and Sempra Energy
Excess Cash Balance Plan on behalf of Transferred Employees in respect of all
periods through and including the Closing Date (or Transfer Date, if
applicable).

(iii)

Effective as of the Closing (or Transfer Date, if applicable), the Transferred
Employees who have an account balance in the Sempra 401(k) Plan shall be
entitled to receive a distribution of their account balance in accordance with
the terms of the Sempra 401(k) Plan and shall be permitted to roll over their
eligible rollover distributions, which may include promissory notes evidencing
outstanding participant loans (“Loans”) under the Sempra 401(k) Plan upon the
same terms and conditions as in effect under the Sempra 401(k) Plan immediately
prior to the rollover of such Loan.  Sempra Energy and the Sempra 401(k) Plan
shall not place any Transferred Employee’s Loan into default so long as such
employee transfers such employee’s account balance under the Sempra 401(k) Plan,
together with the Loan, to the SET Company 401(k) Plan through a direct
rollover.

(iv)

Sempra Energy shall take all action necessary to fully vest all Transferred
Employees, as of the Closing Date (or Transfer Date, if applicable),

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under the Sempra 401(k) Plan and the Sempra Energy Cash Balance Plan. Sempra
Energy shall take all action necessary to ensure that each Transferred Employee
who participates in the Sempra Energy Excess Cash Balance Plan immediately prior
to the Closing Date shall receive credit (for purposes of vesting under such
plan) for all service with the SET Companies following the Closing Date.

(h)

Severance and Salary Protection.  

(i)

RBS shall cause the SET Companies to provide severance benefits to Transferred
Employees who experience a qualifying termination of employment during the
Continuation Period on terms no less favorable than those described in Schedule
7.6(h).  

(ii)

Subject to the proviso in Section 7.6(a)(i), RBS shall cause the SET Companies
to provide each Transferred Employee, during any portion of the Continuation
Period that such employee is a Transferred Employee employed by the SET
Companies, a rate of base salary that is not less than the rate of base salary
that such Transferred Employee received immediately prior to the Closing Date.

(i)

Vacation, Sick Leave and Flex Days.  RBS shall cause the SET Companies to honor
each Transferred Employee’s unused vacation, sick leave and flex days accrued to
the SET Companies as of the Closing Date, under the relevant SET Company Plan.

(j)

Equity Incentives Programs.  Neither RBS, the Partnership nor the SET Companies
shall assume or have any liability or obligation in respect of any options,
warrants, stock appreciation, phantom stock, restricted stock unit or other
similar rights or equity based awards with respect to any security of Sempra
Energy, and all such awards shall remain the sole responsibility of Sempra
Energy.  

(k)

Retiree Medical.  With respect to those Transferred Employees who, as of the
Closing Date (or Transfer Date, if applicable) were vested and eligible to
enroll under the Sempra Plans (that are not SET Company Plans) that provide for
retiree welfare benefits (medical, dental or life), each of whom is listed on
Schedule 7.6(k), Sempra Energy shall take such action as is necessary under such
Sempra Plans to provide that such Transferred Employees shall remain eligible to
enroll for such benefits under such Sempra Plans as in effect from time to time
following such Transferred Employee’s termination of employment with the SET
Companies.  The Sempra Parties shall retain all retiree medical liabilities
under the Sempra Plans and the SET Companies and the Partnership shall have no
liability or obligation in respect of retiree welfare obligations under the
Sempra Plans.

(l)

Other Compensation Plans, Programs and Policies.  Following the Closing Date,
all other compensation plans, programs and policies not specifically addressed
above, including those covering incentives, retention payments, base pay, hiring
bonuses, and special awards, covering employees of the SET Companies will be
administered according to the discretion and direction of the Board of the
Partnership, consistent with RBS policies.

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(m)

No Third Party Beneficiary Rights.  Nothing contained herein, whether express or
implied shall be treated as an amendment or other modification of any
compensation or benefit plan.  This Section 7.6 shall inure exclusively to the
benefit of, and be binding solely upon, the parties to this Agreement and their
respective successors, permitted assigns, executors and legal representatives.
 Nothing in this Section 7.6, expressed or implied, shall be construed to create
any third-party beneficiary rights in any present or former employee, service
provider or any such Person’s alternate payees, dependents or beneficiaries,
whether in respect of continued employment or resumed employment, compensation,
employee benefits or otherwise.

Section 7.7.

Retention of and Access to Records

(a)

After the Closing Date, Sempra Energy shall (and shall cause its respective
Subsidiaries to) retain those books and records not primarily relating to the
SET Business and not held by the SET Companies and shall provide RBS, the
Partnership, their Subsidiaries and their Representatives reasonable access to
such books and records relating in any manner to the SET Business (other than
books and records relating to Taxes, access to which is governed exclusively by
Section 10.3(d)), during normal business hours and on reasonable notice, for any
reasonable business purpose, including without limitation to enable them to
prepare financial statements or tax returns, deal with tax audits or as they may
otherwise reasonably request.

(b)

After the fifth anniversary of the Closing Date, assuming the tax years are
closed with respect to such entities (or such later date as may be required
under Legal Requirements applicable to RBS, the Partnership or any of their
Subsidiaries), Sempra Energy or its Subsidiaries may elect to destroy any books
and records described in Section 7.7(a), upon thirty days’ prior written notice
of such determination being given to the Partnership; provided, that at the
request (made prior to the end of such thirty-day period) and expense of the
Partnership, Sempra Energy or its Subsidiary (as applicable) shall deliver such
books and records to the Partnership in lieu of destroying them.  RBS, the
Partnership and any of their Subsidiaries shall, prior to the fifth anniversary
of the Closing Date or thereafter during the effective term of the requirements
under this Section 7.7(b), advise Sempra Energy as to the Legal Requirements
referred to in the immediately preceding sentence.  Notwithstanding anything in
this Section 7.7(b), Sempra Energy will only be required to deliver to the
Partnership the portions of such books and records that relate to the SET
Business or SET Companies and may redact any statements or other information on
the portions of such books and records that do not relate to the SET Business or
SET Companies.

Section 7.8.

Further Assurances

(a)

The Parties shall (and shall cause their respective Subsidiaries to) cooperate
reasonably with each other and with their respective Representatives in
connection with any steps required to be taken as part of their respective
obligations under this Agreement, and shall furnish upon request to each other
such further information as the other Party may reasonably request for the
purpose of carrying out the intent of this Agreement and the Contemplated
Transactions.

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(b)

The Parties shall use their reasonable best efforts to restructure the
transactions contemplated by this Agreement to permit the Closing to occur prior
to obtaining one or more of the approvals required by clause (vii)(b) of the
definition of Material Governmental Approvals, including by deferring the
transfer of all or part of the SET Business in certain jurisdictions,
liquidating trading positions or other steps to avoid any delay in Closing as a
result of the failure to obtain or delay in obtaining such approvals; provided,
that no party shall be required to agree to take or refrain from taking any
action pursuant to Section 7.8(b) that has more than an immaterial impact on the
economic benefits or risks of the transactions contemplated by this Agreement to
such party.

(c)

Subject to the terms and conditions of this Agreement, at any time or from time
to time after the date of this Agreement, at any Party’s reasonable request and
without further consideration, each Party shall do all acts and things as may be
necessary or desirable and are within its control to carry out the intent of
this Agreement and the Related Agreements, including executing and delivering
further instruments of sale, transfer, conveyance, assignment, novation,
confirmation or other documents that may be reasonably required and providing
additional materials and information.

Section 7.9.

No Shop

Sempra Energy agrees that, between the date of this Agreement and the date this
Agreement is terminated, it shall not, directly or indirectly, through any
Subsidiary, affiliate, representative, consortium or otherwise, initiate,
solicit or encourage, participate in discussions, or enter into negotiations of
any type, directly or indirectly, or enter into a confidentiality agreement,
letter of intent or purchase agreement or other similar agreement with respect
to any sale, lease or other transfer (in whole or part) of any interest in the
SET Business or the SET Companies other than pursuant to Permissible Trading
Activities (including the granting of Encumbrances described in clause (f) of
the definition of “Permitted Encumbrances” made in connection with Permissible
Trading Activities) or any merger, consolidation or business combination
involving the SET Business or the SET Companies other than any such transactions
among and with respect to Sempra Energy and its Subsidiaries and affiliates, or
the purchase of all or any substantial portion of the assets used in the conduct
of the SET Business, or any similar extraordinary transaction with respect to
the SET Business or the SET Companies.

Section 7.10.

Transition Services Agreement

On the Closing Date, RBS and Sempra Energy shall cause the Partnership or some
or all of the SET Companies, as appropriate, to enter into one or more
agreements for the use of assets and provision of services at a cost-based price
in accordance with the same methodology as provided in Section 13.1 of the LLP
Agreement and on other terms no less favorable to the SET Companies and the
Partnership than the terms on which Sempra Energy provides similar goods and
services to other Sempra Energy affiliated companies (“Transition Services
Agreement”) providing for (a) the shared use by the Partnership of certain
assets not owned or held by the SET Companies but used in connection with the
SET Business, and (b) the provision of services currently provided by Sempra
Energy or any Subsidiary of Sempra Energy other than the SET Companies in
connection with the SET Business, including corporate secretary/legal,
regulatory, shared contracts/license, tax, audit, IT and accounting services.

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Section 7.11.

Other Agreements

Effective as of the Closing Date, RBS, Sempra Energy and their Subsidiaries, as
applicable, will enter into each of the Related Agreements substantially in
accordance with the attached form agreements or term sheets.

Section 7.12.

Transition Plans; Novation

(a)

Within 15 days after the execution date of this Agreement, Sempra Energy and RBS
shall form one or more joint transition teams (including, as appropriate,
members selected from the SET Companies) to plan for and perform various
activities set forth in this Section 7.12, as well as other activities to be
performed between the date of this Agreement and Closing.

(b)

From the date of this Agreement until the actions and events contemplated by
clauses (i) through (iii) below are completed, Sempra Energy and RBS shall (and
Sempra Energy shall cause its Subsidiaries to) use their commercially reasonable
efforts to cooperate in good faith and take all reasonable steps necessary to
(and without unreasonable disruptions to):

(i)

prior to Closing, conduct a program to secure the execution by Third Parties of
all Consents and conveyance documents regarding the Contemplated Transactions as
required to satisfy the conditions set forth in Sections 5.3 and 6.3;

(ii)

conduct a program to secure consents, if any are required, from Third Parties to
the Trading Agreements and the SET Business Material Contracts in order for RBS
to assume all rights and obligations under these contractual arrangements as
soon as possible after Closing, either by assignment of the Contracts or by RBS
entering into new agreements with the Third Parties; and

(iii)

cause Sempra Energy and its Subsidiaries to be released from any guarantee,
credit support or other financial arrangement for the benefit of the customers
and creditors of the SET Companies, including obtaining waivers and consents
from any applicable Persons to replace any such credit support with appropriate
credit support from RBS.

(c)

On or before the Closing, Sempra Energy shall convert the entities listed on
Schedule 7.12(c) to entities eligible to elect to be an entity disregarded as
separate from its owner within the meaning of sections 301.7701-1, 301.7701-2,
and 301.7701-3 of the regulations promulgated by the U.S. Department of the
Treasury pursuant to the Code, and each such entity shall have elected to be an
entity disregarded as separate from its owner within the meaning of sections
301.7701-1, 301.7701-2, and 301.7701-3 of the regulations promulgated by the
U.S. Department of the Treasury pursuant to the Code and shall take such other
corporate reorganization steps as are necessary or desirable to achieve the
intended tax effects of such conversions.

Section 7.13.

Termination of Certain Agreements

(a)

From and after the date hereof until completed, Sempra Energy shall, and shall
cause its Subsidiaries to, terminate (without any default, charge, cost or
penalty of any kind

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to RBS or its Subsidiaries or the SET Companies) all of the Affiliate Agreements
(including for this purpose, Trading Agreements with Affiliates) other than
those set forth on Schedule 7.13(a) (which schedule, for the avoidance of doubt,
may be updated at any time from the date hereof up to the Closing Date), with
effect as of the Closing Date.

(b)

On or before the Closing, RBS shall terminate its joint venture with Macquarie
Bank Limited and its affiliates relating to commodities trading activities;
provided that RBS and its Subsidiaries may continue to hold trades made prior to
the Closing by such joint venture until such trades expire, are sold or are
otherwise liquidated; provided, however, RBS shall not, and shall not permit any
of its Subsidiaries to, renew or materially amend, modify, extend or renegotiate
any such trade.

(c)

With effect as of immediately prior to the Closing, Sempra Energy hereby
releases and waives, solely for the benefit of the Partnership, and shall cause
all of its Subsidiaries (other than the SET Companies and the Sempra Utilities)
to release and waive, all rights and remedies of Sempra Energy and its
Subsidiaries (other than the SET Companies) (whether now existing or hereafter
arising and including all common law, tort, contractual, equitable and statutory
rights and remedies) against the SET Companies, each of their Subsidiaries, and
their respective employees, agents and anyone else acting on any of their behalf
in connection with the SET Business, except (i) claims arising under the
Affiliate Agreements set forth on Schedule 7.13(a) (which schedule, for the
avoidance of doubt, may be updated at any time from the date hereof up to the
Closing Date), subrogation rights under any guarantee or other financial
assurance and rights and remedies under this Agreement, any of the Related
Agreements or any Trading Agreements, (ii) with respect to claims of fraud or
misappropriation of material funds or assets, or (iii) to the extent that RBS
otherwise consents in writing in its reasonable discretion following the date
hereof with respect to the pursuit of any such rights or remedies against
employees or other agents of the SET Companies for conduct by such persons
occurring prior to the date hereof; provided that, in connection with any
Proceedings brought against Sempra Energy or its Subsidiaries, the foregoing
release and waiver shall in no way limit the ability of Sempra Energy or its
Subsidiaries to raise any defenses or counterclaims related to such Proceedings.

(d)

With effect as of immediately prior to the Closing, the Parties on behalf of the
SET Companies hereby releases and waives, and shall cause the SET Companies to
release and waive, all rights and remedies of the SET Companies (whether now
existing or hereafter arising and including all common law, tort, contractual,
equitable and statutory rights and remedies) against Sempra and its Subsidiaries
(other than the SET Companies), and their respective employees, agents and
anyone else acting on any of their behalf in connection with the business of
Sempra and its Subsidiaries (other than the SET Business), except (i) claims
arising under the Affiliate Agreements set forth on Schedule 7.13(a) (which
schedule, for the avoidance of doubt, may be updated at any time from the date
hereof up to the Closing Date) (which shall not include any claim whatsoever of
any employees, agents, officers or directors of the SET Companies), subrogation
rights under any guarantee or other financial assurance, and rights and remedies
under this Agreement, any of the Related Agreements or any Trading Agreements,
(ii) with respect to claims of fraud or misappropriation of material funds or
assets, or (iii) to the extent that Sempra otherwise consents in writing in its
reasonable discretion following the date hereof with respect to the pursuit of
any such rights or remedies against employees or other

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agents of Sempra for conduct by such persons occurring prior to the date hereof;
provided that, in connection with any Proceedings brought against the SET
Companies, the foregoing release and waiver shall in no way limit the ability of
the SET Companies to raise any defenses or counterclaims related to such
Proceedings.

Section 7.14.

Insurance

(a)

For all periods through the Closing Date, Sempra Energy will, and will cause its
Subsidiaries to, maintain in effect policies of insurance of a nature, in an
amount, and against such risks as are substantially consistent with past
practice.  

(b)

To the extent that coverage under certain Policies has, prior to the Closing,
been maintained or provided by Sempra Energy or its Subsidiaries (other than
solely by the SET Companies), then from and after the Closing, Sempra Energy
shall (and shall cause its Subsidiaries to) use reasonable best efforts (except
to the extent a different standard is expressly provided for in this Agreement)
to take all action necessary to permit the SET Companies to make any claims
under such Policies (including directors and officers insurance) with respect to
Out of Pocket and Tax Damages relating to activities occurring on or before the
Closing, and shall immediately remit to the Partnership any payments related to
such claims received by Sempra Energy and its Subsidiaries.

ARTICLE VIII.
TERMINATION

Section 8.1.

Termination

This Agreement may be terminated at any time prior to the Closing solely as
follows:

(a)

by mutual written consent of Sempra Energy and RBS; or

(b)

after June 30, 2008, by Sempra Energy or RBS by notice to the other (if none of
such terminating Party is then in material breach of this Agreement which breach
has caused the Closing not to occur prior to such date), if the Closing has not
occurred on or before the date such notice is given.

Section 8.2.

Effect of Termination

In the event this Agreement is terminated pursuant to Section 8.1, all further
obligations of the Parties hereunder shall terminate and this agreement shall
become null and void and of no further force and effect, except for the
obligations set forth in Section 10.5, this Section 8.2 and Article IX, and
except that such termination shall not relieve any Party of any Liability for
any knowing breach of this Agreement or fraud prior to such termination.

ARTICLE IX.
INDEMNIFICATION

Section 9.1.

Survival

All covenants and other agreements in this Agreement to be performed after the
Closing shall survive the Closing and the consummation of the Contemplated
Transactions until so performed. All representations and warranties in this
Agreement shall survive the Closing and the consummation of the Contemplated
Transactions

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for a period of eighteen (18) months from the Closing Date, except that the
representations and warranties contained in Sections 3.1, 3.2, 3.4(a), 3.14,
4.1, 4.2, and 4.5 shall survive indefinitely and the representations and
warranties contained in Section 3.13 shall survive until thirty (30) days after
the expiration of the applicable statute of limitations; provided that, for the
avoidance of doubt, no Section 9.2 Indemnified Person (as defined below) shall
be entitled to an indemnity under Section 9.2(a) if such Section 9.2 Indemnified
Person is actually indemnified under any other clause in Section 9.2.  The right
to indemnification, reimbursement or other remedy based upon such
representations, warranties, covenants and agreements shall not be affected by
any investigation conducted with respect to, or any Knowledge actually acquired
at any time, whether before or after the execution and delivery of this
Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or
compliance with any such representation, warranty, covenant or agreement, except
that the right to indemnification with respect to Knowledge acquired prior to
Closing shall exist if and only if the party acquiring such Knowledge notified
the other parties hereto in writing prior to the Closing Date.

Section 9.2.

Indemnification and Reimbursement by Sempra Energy

Subject to the limitations set forth in Section 9.4, Sempra Energy will
indemnify and hold harmless, without duplication, RBS and its Subsidiaries, and
each of their members, officers, agents, employees and other Representatives
(collectively, the “Section 9.2 Indemnified Persons”), from and against any and
all Out of Pocket and Tax Damages, including any Out of Pocket and Tax Damages
to the Partnership and its Subsidiaries, but excluding in the case of clauses
(a) and (d) only, De Minimis Damages, resulting from:

(a)

any breach of any representation or warranty made by Sempra Energy in Article
III of this Agreement;

(b)

any material breach of or failure to perform or comply with any covenant or
agreement of Sempra Energy in this Agreement other than the first sentence of
Section 7.1 and Section 7.1(e);

(c)

the California Litigation;

(d)

the Market Behavior Litigation;

(e)

any monetary fines, monetary penalties imposed on the SET Companies by any
Governmental Body, and, if such fines or penalties exceed $1,000,000, the
associated legal costs and expenses of the SET Companies with respect to the EFS
Investigation;

(f)

Tritton;

(g)

the Scheduled Matters;

(h)

any Taxes, fines or penalties imposed under the United Kingdom Legal
Requirements and Orders relating to Climate Change Levy, and any associated
legal and other professional costs and expenses, as may be applied to the SET
Business as conducted on or before the Closing Date;

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(i)

the termination of the Operating Agreement, and any and all claims made against
RBS, the SET Companies or the Partnership in respect of termination payments (or
payments made in lieu of termination payments) pursuant to the OA Termination
Agreement, and Taxes (including those arising under Section 409A and 280G of the
Code) with respect to any payments under any of the foregoing agreements;

(j)

any income and direct Taxes (including, for the avoidance of doubt, capital
gains or corporation tax on capital gains) and withholding Taxes with respect to
any taxable period of the Transferred Companies for all taxable periods ending
on or before the Closing Date (“Pre-Closing Tax Period”) and, for a period of
two years following the Closing Date, the Sempra Portion of any other Taxes with
respect to the Pre-Closing Tax Period, and in each case with respect to any
Straddle Period, for the portion thereof ending on the Closing Date;

(k)

any income Taxes imposed as a result of Treasury Regulation Section 1.1502-6 or
comparable provisions of state or local law of the Transferred Companies or any
other Person (other than the Transferred Companies) which is or has ever been
affiliated with any of the Transferred Companies or with whom any of the
Transferred Companies otherwise joins or has ever joined (or is or has ever been
required to join) in filing any consolidated, combined, group, unitary or
aggregate Tax Return, prior to the Closing Date;

(l)

any payments required to be made after the Closing Date to any Person that is
not a SET Company under any Tax sharing, Tax indemnity, Tax allocation or
similar contracts (whether or not written) to which any of the SET Companies are
obligated, or were a party, on or prior to the Closing Date;

(m)

any income Taxes or withholding taxes with respect to income resulting from the
conversion of the entities (or failure to convert such entities) listed on
Schedule 7.12(c) to entities eligible to elect to be an entity disregarded as
separate from its owner within the meaning of sections 301.7701-1, 301.7701-2,
and 301.7701-3 of the regulations promulgated by the U.S. Department of the
Treasury pursuant to the Code;

(n)

any Tax to which RBS or its subsidiaries is charged or subjected in respect of
distribution(s) by the SET Companies of its fifty-one percent (51%) share of any
previously undistributed profits earned, accrued or arising on or before the
Closing Date as reflected in the balance sheets of the SET Companies used for
preparing the Closing Balance Sheet; provided, however, that (x) any Tax for
which an indemnity is provided pursuant to this Section 9.2(n) shall be netted
against any tax credits or other Tax benefit (including for these purposes any
eligible unrelieved foreign tax that arises to RBS as a direct result of the
distribution of such profits and which RBS actually utilizes) and (y) RBS and
Sempra shall use commercially reasonable efforts and shall reasonably cooperate
to defer the distribution of such profits until RBS has determined, in its sole
judgment exercised in good faith, that it will not incur a Tax cost as a result
of such distribution; provided, further, that such deferral shall in no event
extend for a period longer than forty-eight (48) months; or

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(o)

if, as a result of a “determination” under Section 1313(a) of the Code or other
Legal Requirement which effects a change in the allocations of Partnership Net
Income and Partnership Net Loss of the Partnership solely as between Sempra
Global and SETI, RBS or the Partnership incurs a Tax, Sempra Energy or the
relevant Sempra Affiliates that are members of the Partnership, as appropriate,
will pay to RBS or the Partnership, as the case may be, an amount equal to such
Tax. RBS shall provide notice to the Sempra Members of a claim under this
provision within 30 days of receiving written information from a Governmental
Body that such a claim is being asserted pursuant to the provisions of Section
9.7 of this Agreement and the provisions of Section 9.7 shall govern the
administration of such claim; provided, however, that neither Sempra nor any
Sempra Member shall be obligated to make a payment under this Section 9.2(o) to
the extent the Tax incurred by RBS or the Partnership is related to or caused by
Section 482 of the Code, or other transfer pricing or similar provisions of
similar laws.

Section 9.3.

Indemnification and Reimbursement by RBS

Subject to the limitations set forth in Section 9.4, RBS will indemnify and hold
harmless Sempra Energy and its Subsidiaries, and each of their members,
officers, agents, employees and other Representatives (collectively, the
“Section 9.3 Indemnified Persons” and, together with the Section 9.2 Indemnified
Persons, the “Indemnified Persons”) from and against any Out of Pocket and Tax
Damages, including any Out of Pocket and Tax Damages to the Partnership and its
Subsidiaries, but excluding, with respect to clause (a) only, De Minimis
Damages, relating to:

(a)

any breach of any representation or warranty made by RBS in Article IV of this
Agreement;

(b)

any material breach of or failure to perform or comply with, any covenant or
obligation of RBS in this Agreement; or

(c)

any failure to perform or comply with its obligations under the indemnity
agreement attached hereto as Exhibit C.

Section 9.4.

Limitations; Exclusive Remedy

(a)

Sempra Energy shall have no liability with respect to claims under Section
9.2(a), or claims under Section 9.2(b) based on a breach of or failure to
perform or comply with any covenant or agreement of Sempra Energy in Section
7.1, until the total of all Out of Pocket and Tax Damages other than De Minimis
Damages with respect to such matters exceeds fifty million dollars ($50,000,000)
and then only for the amount by which such Out of Pocket and Tax Damages (other
than De Minimis Damages) exceed twenty-five million dollars ($25,000,000);
provided that such limitations shall not apply to claims for any breach of the
representations or warranties in Section  3.6(c)(ix).  Sempra Energy shall have
no liability with respect to claims under Section 9.2(f) upon satisfaction or
achievement by the SET Companies or their applicable Subsidiaries and Affiliates
of the Tritton Performance Levels. In no event shall Sempra Energy’s liability
for indemnification under Sections 9.2(a), (b) and (d) exceed $1 billion;
provided that such limitations shall not apply to claims for any breach of the
representations or warranties in Section 3.6(c)(ix).  Sempra Energy will have
liability under Section 9.2(a) and Section 9.2(b), only if Sempra Energy
receives notice of any claim for Out of Pocket and Tax Damages from the

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Indemnified Person, specifying the factual basis of the claim in reasonable
detail and specifying the amount claimed, within the applicable survival period
as defined in Section 9.1 or with respect to Section 7.1 within eighteen (18)
months after the Closing Date.  Sempra Energy will have liability under Section
9.2(d) only if Sempra Energy receives notice of any claim for Out of Pocket and
Tax Damages from the Indemnified Person, specifying the factual basis of the
claim in reasonable detail and specifying the amount claimed, on or before the
date that is three years from the Closing Date.

(b)

RBS shall have no liability with respect to claims under Section 9.3(a) until
the total of all Out of Pocket and Tax Damages other than De Minimis Damages
with respect to such matters exceeds fifty million dollars ($50,000,000) and
then only for the amount by which such Out of Pocket and Tax Damages (other than
De Minimis Damages) exceed twenty-five million dollars ($25,000,000). In no
event shall RBS’ liability for indemnification under Section 9.3(a) exceed $1
billion. RBS will have liability under Section 9.3(a) only if RBS receives
notice of any claim for Out of Pocket and Tax Damages from the Indemnified
Person, specifying the factual basis of the claim in reasonable detail and
specifying the amount claimed, within the applicable survival period as defined
in Section 9.1.  

(c)

Solely for purposes of calculating Out of Pocket and Tax Damages for which an
indemnity obligation arises under this Article IX with respect of any breach of
any covenant or obligation, or any representation or warranty, contained in this
Agreement, any express qualifications or limitations set forth in such covenant
or obligation, or representation or warranty, as to materiality or “Material
Adverse Effect” contained therein shall be disregarded.

(d)

Notwithstanding anything herein to the contrary, no Indemnified Person shall be
entitled to indemnification or reimbursement under any provision of this
Agreement for any amount to the extent such person or its affiliate has been
indemnified or reimbursed for such amount under any other provision of this
Agreement or any Related Agreement.

(e)

Except in the case of fraud, the exclusive remedy for any Indemnified Person for
Out of Pocket and Tax Damages or other monetary damages arising from a breach of
this Agreement shall be the indemnification provided under this Article IX.
 There shall be no remedy at law for De Minimis Damages arising out of the
events or circumstances described in Sections 9.2(a), 9.2(d), and 9.3(a).

(f)

In no event shall Out of Pocket and Tax Damages be subject to indemnification
under Section 9.2 or 9.3 to the extent such Out of Pocket and Tax Damages were
included as liabilities (including any reserve) in the Final Balance Sheet;
provided that any Out of Pocket and Tax Damages in excess of the amounts so
included as liabilities (including any reserve) in the Final Balance Sheet shall
be subject to indemnification hereunder in accordance with and subject to the
terms, conditions and limitations of this Article IX.

(g)

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL AN
INDEMNIFYING PERSON BE LIABLE FOR ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT,
CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES; provided, however, that if an
Indemnified Person is held liable to a third party for any such Out of Pocket
and Tax Damages and the applicable indemnifying party

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is obligated to indemnify such Indemnified Person for the matter that gave rise
to such Out of Pocket and Tax Damages, then such indemnifying party shall be
liable for, and obligated to reimburse such Indemnified Person for such Out of
Pocket and Tax Damages.  

Section 9.5.

Third-Party Claims

(a)

Promptly (and in any event within 30 days) after receipt by a Person entitled to
indemnity under Section 9.2 or 9.3 of notice of the assertion of a Third-Party
Claim against it or the Partnership, such Indemnified Person shall give notice
to the Person obligated to indemnify under such Section (each, an “Indemnifying
Person”) of the assertion of such Third-Party Claim; provided, that the failure
to notify the Indemnifying Person will not relieve the Indemnifying Person of
any liability that it may have to any Indemnified Person, except to the extent
that the Indemnifying Person demonstrates that the defense of such Third-Party
Claim is actually and materially prejudiced by the Indemnified Person’s failure
to give such notice.

(b)

If an Indemnified Person gives notice to the Indemnifying Person pursuant to
Section 9.5(a) of the assertion of a Third-Party Claim, the Indemnifying Person
shall be entitled to participate in the defense of such Third-Party Claim and,
to the extent that it wishes (unless (x) the Indemnifying Person is also a
Person against whom the Third-Party Claim is made and the Indemnified Person
determines in good faith that joint representation would be inappropriate, (y)
greater than 50% of the Out of Pocket and Tax Damages are reasonably anticipated
to be incurred by the Indemnified Person because such Out of Pocket and Tax
Damages exceed the applicable maximum limit (if any) for indemnification
contained in Section 9.4, or (z) material equitable or other non-monetary relief
is sought from any Indemnified Person pursuant to such Third-Party Claim) to
assume the defense of such Third-Party Claim.  After notice from the
Indemnifying Person to the Indemnified Person of its election to assume the
defense of such Third-Party Claim, the Indemnifying Person shall not, so long as
it diligently conducts such defense, be liable to the Indemnified Person under
this Article IX for any fees of other counsel or any other expenses with respect
to the defense of such Third-Party Claim, in each case subsequently incurred by
the Indemnified Person in connection with the defense of such Third-Party Claim,
other than reasonable costs of investigation. If the Indemnifying Person assumes
the defense of a Third-Party Claim, (i) such assumption will, unless additional
information at the time of the assumption emerges to change this conclusion,
conclusively establish for purposes of this Agreement that the claims made in
that Third-Party Claim are within the scope of and subject to indemnification
(but no such assumption shall affect the applicability of any limit on
indemnification contained in Section 9.4), and (ii) no compromise or settlement
of such Third-Party Claims may be effected by the Indemnifying Person without
the Indemnified Person’s consent (which consent shall not be unreasonably
withheld or delayed) unless (A) there is no finding or admission of any material
violation of Legal Requirement and (B) the sole relief provided is monetary
damages that are paid in full by the Indemnifying Person.  The Indemnified
Person shall have no liability with respect to any compromise or settlement of
such Third-Party Claims effected without its consent if required pursuant to the
immediately preceding sentence.  If notice is given to an Indemnifying Person of
the assertion of any Third-Party Claim and the Indemnifying Person does not,
within twenty (20) days after the Indemnified Person’s notice is given, give
notice to the Indemnified Person of its election to assume the defense of such
Third-Party Claim, the Indemnifying Person will be bound by any

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determination made in such Third-Party Claim or any compromise or settlement
effected by the Indemnified Person.

(c)

With respect to any Third-Party Claim subject to indemnification under this
Article IX: (i) both the Indemnified Person and the Indemnifying Person, as the
case may be, shall keep the other Person reasonably informed of the status of
such Third-Party Claim and any related Proceedings at all stages thereof where
such Person is not represented by its own counsel, and (ii) the Parties agree
(each at its own expense) to render to each other such assistance as they may
reasonably require of each other and to cooperate in good faith with each other
in order to ensure the proper and adequate defense of any Third-Party Claim.

(d)

The provisions of this Section 9.5 shall not govern any Tax Claims, and the
procedures set out in Section 9.7 shall govern for all Tax Claims (except as set
forth in Section 9.7(b)).

Section 9.6.

Other Claims

A claim for indemnification to the extent not resulting from a Third-Party Claim
may be asserted by notice to the Party from whom indemnification is sought and,
unless disputed within 90 days after receipt by the Indemnifying Person of such
notice, in which case the provisions of Section 10.5 shall apply thereto, shall
be paid promptly after such notice.

Section 9.7.

Tax Provisions

(a)

If a claim shall be made by any taxing authority, which, if successful, might
result in an indemnity payment to an indemnified party pursuant to Section 9.2,
then such indemnified party shall give notice to the indemnifying party in
writing of such claim and of any counterclaim the indemnified party proposes to
assert (a “Tax Claim”); provided, however, the failure to give such notice shall
not affect the indemnification provided hereunder except to the extent the
indemnifying party has been materially prejudiced as a result of such failure.

(b)

(i) With respect to any Tax Claim relating to a Pre-Closing Tax Period or (ii)
with respect to any other Tax Claim not included in clause (i) for which Sempra
Energy is the Indemnifying Party (and for these purposes has, subject to any
conditions, agreed to assume the defense of such Tax Claim (and such assumption
will, unless additional information at the time of the assumption emerges to
change this conclusion, conclusively establish for purposes of this Agreement
that the claims made in that Tax Claim are within the scope of and subject to
indemnification (but no such assumption shall affect the applicability of any
limit on indemnification contained in Section 9.4))), Sempra Energy shall,
solely at its own cost and expense, control all proceedings and may make all
decisions taken in connection with such Tax Claim (including selection of
counsel) and, without limiting the foregoing, may in its sole discretion pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with any taxing authority with respect thereto, and may, in its sole
discretion, either pay the Tax claimed and sue for a refund where applicable law
permits such refund suits or contest the Tax Claim in any permissible manner;
provided, that, with respect to Tax Claims described in Section 9.7(b)(ii)
above, (x) Sempra Energy must regularly consult with, and accept the reasonable
comments of, RBS relating to such Tax Claim and (y) Sempra Energy may not settle
such Tax Claim without the consent of RBS, such consent not to be unreasonably
withheld,

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other than, with respect to both (x) and (y), any Tax Claim, any issue arising
from any Tax Claim or any settlement of a Tax Claim where the Tax Claim, issue,
or settlement does not, and would not be reasonably expected to, materially
impact the Taxes, Tax refunds, claims or assessments, or Tax accounting or
reporting of the Partnership, the SET Business or the SET Companies, in each
case solely for a taxable period that begins on or after the Closing Date or for
the portion of a Straddle Period that begins on or after the Closing Date.

(c)

The Partnership shall control all proceedings with respect to any Tax Claim
relating to Taxes of the SET Companies for any Straddle Period (other than Tax
Claims to which Section 9.7(b) is applicable).  The Sempra Parties shall have no
right to participate in the conduct of any such proceeding, other than as set
forth in the LLP Agreement.

(d)

The Partnership shall control all proceedings with respect to any Tax Claim
relating to a taxable period or portion thereof beginning after the Closing Date
(other than Tax Claims to which Section 9.7(b) is applicable).  Sempra Energy
shall have no right to participate in the conduct of any such proceedings, other
than as set forth in the LLP Agreement.

(e)

This Section 9.7, and not Section 9.5, shall govern the procedures for any Tax
Claim.

(f)

The Parties agree to treat any payment made to the Partnership or its
Subsidiaries pursuant to Section 9.8 as a capital contribution to the
Partnership for all Tax purposes, unless otherwise required pursuant to a
“determination” pursuant to Section 1313(a) of the Code.  The Parties agree to
treat any payment made pursuant to Section 9.8 to any entity other than the
Partnership or any of its Subsidiaries as an adjustment to the amount paid to
the Sempra Partners pursuant to Section 2.3(a) and an adjustment to the amount
of cash contributed by RBS to the Partnership pursuant to Section 2.1(c) for all
Tax purposes, unless otherwise required pursuant to a “determination” pursuant
to Section 1313(a) of the Code.  

Section 9.8.

Indemnification Payments; Netting Option

(a)

Unless the Indemnifying Person makes an election pursuant to Section 9.8(b) to
defer payment, with respect to any Out of Pocket and Tax Damages due and payable
under Section 9.2 or Section 9.3 by any Indemnifying Person incurred directly by
the Partnership or its Subsidiaries (as opposed to directly by RBS, Sempra
Energy or their Subsidiaries, other than the Partnership and its Subsidiaries),
such Indemnifying Person shall satisfy its payment obligations by paying the
full amount of such Out of Pocket and Tax Damages to the Partnership.  With
respect to any Out of Pocket and Tax Damages due and payable under Section 9.2
or Section 9.3 by any Indemnifying Person incurred directly by RBS, Sempra
Energy or their Subsidiaries, other than the Partnership and its Subsidiaries,
such Indemnifying Person shall satisfy its payment obligations by paying the
full amount of such Out of Pocket and Tax Damages directly to the applicable
Indemnified Person.

(b)

With respect to any Out of Pocket and Tax Damages due and payable under Section
9.2 or Section 9.3 by any Indemnifying Person incurred directly by the
Partnership or its Subsidiaries (as opposed to directly by RBS, Sempra Energy or
their Subsidiaries, other than the Partnership and its Subsidiaries), at the
option of the Indemnifying Person, such

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Indemnifying Person may defer the immediate payment of such amounts to the
Partnership to the extent that such amounts are reasonably expected to be set
off in their entirety by the Partnership in accordance with Clause 7.3.1 or
7.3.2 of the LLP Agreement on the date of the next distribution of income (under
the terms of the LLP Agreement) otherwise payable to such Indemnifying Person
(or its affiliates that are partners of the Partnership, in the case of Sempra
Energy) and paid to the Indemnified Person in accordance with the procedures set
forth in the LLP Agreement.

ARTICLE X.
GENERAL PROVISIONS

Section 10.1.

Expenses

Except as otherwise expressly provided in this Agreement, the Partnership shall
bear all costs and expenses in connection with the preparation, negotiation and
execution of this Agreement and the Related Agreements and the consummation of
the Contemplated Transactions; provided that, to the extent that this Agreement
is terminated prior to the Closing Date, Sempra Energy and its Subsidiaries on
one hand and RBS and its Subsidiaries on the other hand shall each bear their
own costs and expenses.

Section 10.2.

Public Announcements and Confidentiality

None of the Parties nor their respective Subsidiaries or affiliates shall issue
or cause the publication of this Agreement, any Related Agreement or any press
release or other public announcement or communication with respect to the
Contemplated Transactions without the prior written consent of the other Party
hereto, which consent shall not be unreasonably withheld or withdrawn, except to
the extent a Party’s counsel deems necessary or advisable in order to comply
with the requirements of any Legal Requirement or the regulations or policies of
any securities exchange or other similar regulatory body (in which case the
disclosing Party shall give the other Party notice as is reasonably practicable
of any required disclosure), shall limit such disclosure to the information
required to comply with such Legal Requirement or regulations, and shall use
reasonable efforts to accommodate any suggested changes to such disclosure from
the other Party to the extent reasonably practicable.

Section 10.3.

Tax Matters

(a)

For any Pre-Closing Tax Period of any Transferred Company, Sempra Energy shall
prepare or cause to be prepared, and file or cause to be filed (in a manner
consistent with past practices) with the appropriate taxing authorities all Tax
Returns required to be filed, and shall pay all Taxes due with respect to such
Tax Returns to the extent such returns relate to the Transferred Companies;
provided, that Sempra Energy shall permit the Partnership to review and comment
upon such Tax Returns, to the extent such Tax Returns relate to any Transferred
Company, prior to the filing thereof, such comments to be considered in good
faith by Sempra Energy.

(b)

RBS and Sempra Energy shall cause the Partnership or the Transferred Companies,
as applicable, to prepare (or cause to be prepared) and file or cause to be
filed when due all Tax Returns that are required to be filed by or with respect
to the Transferred Companies

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for taxable years or periods beginning after the Closing Date and shall cause
the Partnership or the Transferred Companies, as applicable, to remit any Taxes
due in respect of such Tax Returns.  

(c)

For any Straddle Period of the Transferred Companies, RBS and Sempra Energy
shall cause the Partnership or the Transferred Companies, as applicable, to
timely prepare or cause to be prepared, and file or cause to be filed, all Tax
Returns required to be filed and shall pay all Taxes due with respect to such
Tax Returns; provided, that Sempra Energy shall reimburse the Partnership and
RBS (in accordance with the procedures set forth in Sections 9.2 and 9.6) for
any amount owed by Sempra Energy pursuant to Section 9.2(j) with respect to the
taxable periods covered by such Tax Returns.  

(d)

The SET Companies, Sempra Energy, and RBS shall cooperate fully, as and to the
extent reasonably requested by any other party, in connection with the filing of
Tax Returns and any audit, litigation or other proceeding with respect to Taxes.
 Such cooperation shall include the retention and (upon such other party’s
request) the provision of records and information reasonably relevant to any
such audit, litigation, or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder.  The SET Companies, Sempra Energy, and RBS
agree (i) to retain all books and records with respect to Tax matters pertinent
to the Transferred Company Interests relating to any taxable period beginning
before the Closing Date until expiration of the statute of limitations (and, to
the extent notified by SET Companies, Sempra Energy, or RBS, as applicable, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and (ii) to
give each other party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if such other party so
requests, the SET Companies or Sempra Energy, as the case may be, shall allow
such other party to take possession of such books and records.  Notwithstanding
anything in this Section 10.3(d), Sempra Energy will only be required to deliver
to the Partnership the portions of such books and records that relate to the SET
Business or SET Companies and may redact any statements or other information on
the portions of such books and records that do not relate to the SET Business or
SET Companies.  In addition to the foregoing, Sempra Energy also shall cooperate
fully with RBS, as and to the extent reasonably requested by RBS, in connection
with RBS’s filing of its Tax Returns and any audits, litigation or other
Proceeding with respect to RBS and its Taxes.

(e)

Notwithstanding any provision of this Agreement to the contrary, all Transfer
Taxes incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Partnership.  Sempra Energy and RBS
shall, and RBS and Sempra Energy shall cause the Partnership to, cooperate in
timely making all filings, Tax Returns, reports and forms as may be required to
comply with the provisions of such Tax Laws.  For purposes of this Agreement,
“Transfer Taxes” shall mean all transfer, stamp duty, stamp duty reserve tax,
documentary, registration and other such taxes (including all applicable real
estate transfer taxes).  

(f)

(i)  The amounts paid by the Partnership pursuant to clause (a) of Section
2.3 shall be allocated among the shares of the SET Companies acquired in
accordance with the fair market value of such shares and, for United States
federal income tax purposes, among the assets of the SET Companies in accordance
with the fair market

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values of such assets to the extent the SET Companies are entities disregarded
for United States federal income tax purposes.  To the extent that any amount
paid by the Partnership is allocated to goodwill, the Parties agree to allocate
this goodwill to the assets and the business transferred by Sempra Global.

(ii)

As promptly as practicable after the Closing Date, but no later than ninety (90)
days thereafter, RBS shall prepare and deliver (with assistance as requested
from the Partnership) to Sempra Energy, an allocation schedule allocating all
such amounts as provided herein (the “Proposed Allocation Schedule”).  Sempra
Energy will have twenty (20) Business Days following delivery of the Proposed
Allocation Schedule during which to notify the Partnership and RBS in writing
(an “Allocation Notice of Objection”) of any objections to the Proposed
Allocation Schedule, setting forth in reasonable detail the basis of its
objections.  In reviewing the Proposed Allocation Schedule, Sempra Energy shall
be entitled to reasonable access to all relevant books, records and personnel of
the SET Companies and its Representatives to the extent Sempra Energy reasonably
requests such information and reasonable access to complete its review of the
Proposed Allocation Schedule.  If Sempra Energy fails to deliver an Allocation
Notice of Objection in accordance with this Section 10.3(f)(ii), the Proposed
Allocation Schedule shall be conclusive and binding on all Parties and shall
become the “Final Allocation Schedule”.  If Sempra Energy submits an Allocation
Notice of Objection, then (A) for twenty (20) Business Days after the date RBS
receives the Allocation Notice of Objection, RBS and Sempra Energy will use
their commercially reasonable efforts to agree on the allocations and (B)
failing such agreement within twenty (20) Business Days of such notice, the
matter will be resolved in accordance with Section 10.3(f)(iii).

(iii)

If RBS and Sempra Energy have not agreed on the Final Allocation Schedule within
twenty (20) Business Days after delivery of an Allocation Notice of Objection,
then RBS and Sempra Energy shall each have the right to deliver notice to the
other Party (the “Allocation Dispute Notice”) of its intent to refer the matter
for resolution to the Accounting Expert.  RBS and Sempra Energy will each
deliver to the other and to the Accounting Expert a notice setting forth in
reasonable detail their proposed allocations.  Within thirty (30) Business Days
after receipt thereof, the Accounting Expert will deliver the Final Allocation
Schedule and provide a written description of the basis for its determination of
the allocations therein; provided, that if the Accounting Expert requests a
hearing before making a determination, such hearing shall be held within twenty
(20) Business Days of the Parties’ delivery of their respective proposed
allocations and the delivery of the Final Allocation Schedule shall be made
within ten (10) Business Days of such hearing.  The fees and expenses of the
Accounting Expert shall be apportioned among RBS and Sempra Energy as the
Accounting Expert shall determine.  Each Party will bear the costs of its own
counsel, witnesses (if any) and employees.

(iv)

The Parties agree to act in accordance with the Final Allocation Schedule for
all Tax purposes (including for purposes of the filing of any Tax Return).  The
Parties will revise the Final Allocation Schedule to the extent necessary to
reflect any payment made pursuant to Section 2.6(e).  In the case of any such
payment, RBS shall prepare and deliver (with assistance as requested from the
Partnership) to Sempra Energy a revised

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Final Allocation Schedule, and the parties hereto shall follow the procedures
outlined above with respect to review, dispute and resolution in respect of such
revision.

Section 10.4.

Notices

All notices, Consents, waivers and other communications required or permitted by
this Agreement shall be in writing and shall be deemed given to a Party when (a)
delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid), (b) sent by facsimile or e-mail with
confirmation of transmission by the transmitting equipment, or (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested,
in each case to the following addresses, facsimile numbers or e-mail addresses
and marked to the attention of the person (by name or title) designated below
(or to such other address, facsimile number, e-mail address or person as a Party
may designate by notice to the other Parties):

If to Sempra Energy:

Sempra Energy

101 Ash Street

San Diego, California  92101

Attention:  Mark Snell, Chief Financial Officer

Telephone:  (619) 696-4694

Facsimile:  (619) 696-4611

With copies to:

Sempra Energy

101 Ash Street

San Diego, California  92101

Attention:  Javade Chaudhri, General Counsel

Telephone:  (619) 696-4641

Facsimile:  (619) 696-6878

Sullivan & Cromwell LLP

125 Broad Street

New York, New York  10004

Attention:  Robert S. Risoleo

      Joseph B. Frumkin

Telephone:  (212) 558-4000

Facsimile:  (212) 558-3588

If to Sempra Global:

Sempra Global

101 Ash Street

San Diego, California  92101

Attention:  Charles McMonagle, Chief Financial Officer

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Telephone:  (619) 696-4512

Facsimile:  (619) 696-4577

With copies to:

Sempra Global

101 Ash Street

San Diego, California  92101

Attention:  Kevin C. Sagara, General Counsel

Telephone:  (619) 696-4345

Facsimile:  (619) 696-4310

Sullivan & Cromwell LLP

125 Broad Street

New York, New York  10004

Attention:  Robert S. Risoleo

      Joseph B. Frumkin

Telephone:  (212) 558-4000

Facsimile:  (212) 558-3588

If to SETI:

RCS Management B.V.

Olympic Plaza

Fred. Roeskestraat 123

1076 EE Amsterdam, the Netherlands

Telephone: 31(0)20 6422415

Facsimile: 31(0)20 5771170

Attention: Andre G.M. Nagelmaker, Managing Director B

With a copy to:

Sempra Energy

101 Ash Street

San Diego, California  92101

Attention:  Javade Chaudhri, General Counsel

Telephone:  (619) 696-4641

Facsimile:  (619) 696-6878

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If to RBS:

The Royal Bank of Scotland plc

c/o RBS Greenwich Capital

600 Steamboat Road

Greenwich, Connecticut  06830

Attention:  Carol Mathis

Telephone:  (203) 618-2585

Facsimile:  (203) 422-4585

with copies to:

The Royal Bank of Scotland plc

c/o RBS Greenwich Capital

600 Steamboat Road

Greenwich, Connecticut  06830

Attention:  Sheldon Goldfarb

Telephone:  (203) 625-6065

Facsimile:  (203) 422-4065

Simpson Thacher & Barlett

425 Lexington Avenue

New York, New York  10017

Attention: John Walker

                 Michael Nathan

Telephone:  (212) 455-2000

Facsimile:  (212) 455-2502

Section 10.5.

Disputes

(a)

In the event of any disagreement, dispute, controversy or claim arising out of
or relating to this Agreement (other than pursuant to Section 2.6 or 10.3(f)
hereof), or the breach, termination or invalidity hereof, the Party asserting
such disagreement, dispute, controversy or claim shall deliver notice thereof to
the other Parties (a “Dispute Notice”), and the Parties shall use their
reasonable best efforts (except to the extent a different standard is expressly
provided for in this Agreement) to settle such disagreement, dispute,
controversy or claim.  To this effect, the Parties shall consult and negotiate
with each other in good faith and, recognizing their mutual interest, attempt to
reach a solution satisfactory to the Parties.  If the Parties do not reach such
a solution within a period of 60 days, then, upon notice by either Party to the
others (an “Arbitration Demand”), all disagreements, disputes, controversies or
claims arising out of or relating to this Agreement, or the breach, termination
or invalidity hereof shall be finally settled by arbitration in accordance with
the International Dispute Resolution Procedures (the “AAA Rules”) of the
International Centre for Dispute Resolution of the American Arbitration
Association (the “AAA”), subject to Section 10.5(g).  Notwithstanding any
provision of this Section 10.5, any disagreement, dispute, controversy or claim
(i) relating to the

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Proposed Final Book Value or Final Book Value shall be resolved exclusively in
accordance with Section 2.6 hereof and (ii) relating to the Proposed Allocation
Schedule or Final Allocation Schedule shall be resolved exclusively in
accordance with Section 10.3(f) hereof.

(b)

Within 30 days of the delivery of an Arbitration Demand, the Sempra Parties,
collectively, and RBS shall each simultaneously select one person to act as
arbitrator, but if either the Sempra Parties or RBS shall fail to appoint an
arbitrator within such period, the AAA shall appoint such arbitrator.  The
arbitrators chosen (or deemed to be chosen) by the Sempra Parties and RBS shall
attempt to agree upon a third arbitrator, but if they fail to do so within 15
days after the appointment of the party-appointed arbitrators, then either the
Sempra Parties or RBS may request that the AAA appoint the third arbitrator.
 The third arbitrator (however chosen) shall be a citizen of a country other
than the United Kingdom or the United States and shall preside over the
arbitration proceedings.  Prior to the commencement of hearings, each of the
arbitrators shall provide an oath or undertaking of impartiality.

(c)

The arbitration panel selected under Section 10.5(b) shall have full power to
decide any disagreement, dispute, controversy or claim referred to in Section
10.5(a) as well as whether such disagreement, dispute, controversy or claim is
within the scope of Section 10.5(a).  All decisions of such panel shall be by
majority vote.  The decision of the arbitration panel shall be final and binding
upon the Parties to the disagreement, dispute, controversy or claim, and
judgment may be enforced upon the award in any court of competent jurisdiction.

(d)

The place of the arbitration shall be New York, New York, and the arbitration
shall be conducted in the English language.

(e)

The arbitration panel may apportion the costs of arbitration in its award, as
provided in the AAA Rules.  

(f)

Any Party may apply to the arbitrator seeking injunctive relief until the
arbitration award is rendered or the controversy is otherwise resolved.  Any
Party also may, without waiving any remedy under this Agreement, seek from any
court having jurisdiction any interim or provisional relief that is necessary to
protect the rights or property of that party, prior to the constitution of the
arbitration panel or pending the arbitration panel’s determination of the merits
of the controversy.

(g)

The International Bar Association Rules on the Taking of Evidence in
International Commercial Arbitration (“IBA Rules”) shall apply together with the
AAA Rules, and where the IBA Rules are inconsistent with the AAA Rules, the IBA
Rules shall prevail but solely as regards the presentation and reception of
evidence.  The arbitration panel provided for herein shall control any
pre-hearing exchange of information, including, but not limited to, the right to
require the Parties to exchange documents or make any Person subject to their
control available for deposition or interview before the hearing.  The Parties
further agree that the Parties shall have the right in advance of any hearing to
take the deposition of (i) any Person who is to be called as a witness in the
arbitration and (ii) upon good cause being shown to the arbitration panel
provided for herein, any Person under the control of a Party.

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(h)

Each Party hereto irrevocably and unconditionally, with respect to enforcement
of any final decision rendered by the arbitration panel under Section 10.5(c)
and interim relief under Section 10.5(f):

(i) submits for itself and its property in any legal action or proceeding
relating to this Agreement, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the State of
New York and England;

(ii) consents that any such action or proceeding may be brought in such courts
and waives 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 court and agrees not to plead or claim the same;

(iii) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to it at its address set
forth in Section 10.4;

(iv) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction;

(v) agrees that equitable remedies in any action or proceeding referred to in
this Section 10.5(h) will be acceptable and agrees that any Party shall be
entitled to such remedy in respect of the enforcement of such Party’s rights
herein; and

(vi) except as set forth in connection with Third-Party Claims, waives to the
maximum extent not prohibited by law, any right it may have to claim or recover
in any legal action or proceeding referred to in this Section 10.5 any special,
exemplary, or punitive damages.

Section 10.6.

Waiver; Remedies Cumulative

The rights and remedies of the Parties to this Agreement are cumulative and not
alternative.  Neither any failure nor any delay by any Party in exercising any
right, power or privilege under this Agreement or any of the documents referred
to in this Agreement will operate as a waiver of such right, power or privilege,
and no single or partial exercise of any such right, power or privilege will
preclude any other or further exercise of such right, power or privilege or the
exercise of any other right, power or privilege.  To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or any of the documents referred to in this Agreement can be discharged by one
Party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other Party; (b) no waiver that may be given by
a Party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one Party will be deemed to be a waiver
of any obligation of that Party or of the right of the Party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.

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Section 10.7.

Entire Agreement and Modification

This Agreement supersedes all prior agreements, whether written or oral, between
the Parties with respect to its subject matter (including any letter of intent
between the Parties related to the subject matter of this Agreement) and
constitutes (along with the Schedules, Exhibits and other documents delivered
pursuant to this Agreement) a complete and exclusive statement of the terms of
the agreement between the Parties with respect to its subject matter; provided,
that this Section 10.7 shall not apply to any confidentiality agreement between
the Parties related to the subject matter of this Agreement, which shall remain
in full force and effect in accordance with its terms.  This Agreement may not
be amended, supplemented, or otherwise modified except by a written agreement
executed by all Parties.  

Section 10.8.

Assignments, Successors and no Third-Party Rights

No Party may, in whole or in part, assign any of its rights or interests or
delegate any of its obligations under this Agreement without the prior written
consent of both RBS and Sempra Energy, and any attempt to do so will be void;
provided, that without prior written consent either RBS or Sempra Energy may
assign any of its or its Subsidiaries’ rights or interests or delegate any of
its obligations under this Agreement to any Subsidiary so long as the assigning
or delegating Party retains its obligations under this Agreement.  Subject to
the preceding sentence, and except as otherwise expressly provided in Sections
9.2 and 9.3, this Agreement will apply to, be binding in all respects upon and
inure to the benefit of the successors and permitted assigns of the Parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the Parties to this Agreement any legal or equitable right,
remedy or claim under or with respect to this Agreement or any provision of this
Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to this Section 10.8.

Section 10.9.

Severability

If any provision (or part thereof) of this Agreement is held illegal, invalid or
unenforceable under any present or future Legal Requirement, and if the rights
or obligations of any Party hereto under this Agreement will not be materially
and adversely affected thereby, (a) such provision (or part thereof) will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision (or part thereof) had never
comprised a part hereof, and (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision (or part thereof) or by its severance herefrom.

Section 10.10.

Construction

The headings of Articles and Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation.  All
references to “Articles,” “Sections” and “Schedules” refer to the corresponding
Articles, Sections and Schedules of this Agreement.

Section 10.11.

Governing Law

This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.

Section 10.12.

Execution of Agreement

This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement. The exchange
of copies of this Agreement and of signature pages by facsimile transmission
shall constitute effective execution and delivery of this Agreement as to the
Parties and may be used in

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lieu of the original Agreement for all purposes.  Signatures of the Parties
transmitted by facsimile shall be deemed to be their original signatures for all
purposes.

Section 10.13.

Specific Performance

Without intending to limit the remedies available to the Parties hereunder, each
Party acknowledges that a breach of, conflict with, or failure to perform or
comply with, any of the covenants contained in this Agreement may result in
material irreparable injury to the other Party or its Affiliates for which there
is no adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or threat
thereof, to the fullest extent permitted by any Legal Requirement, each Party
shall be entitled to seek a temporary restraining order and/or a preliminary or
permanent injunction restraining the activities prohibited hereby or such other
relief as may be required to specifically enforce any of the covenants contained
herein, and to the fullest extent permitted by law, such Party agrees not to
oppose the granting of such injunctive relief on the basis that monetary damages
are an adequate remedy.  Each Party hereby agrees and consents that such
injunctive relief may be sought in the courts in the State of New York, or in
any other court having competent jurisdiction.

Section 10.14.

Netting and Set-Off on the Closing Date

With respect to payments due on the Closing Date with respect to Formation and
Closing only, each of the Parties and the Partnership may net and set off any
payment due from it to another Person (including the Partnership) from and
against any payment due to it at the same time and in the same currency from
such Person.

Section 10.15.

Gross-up

Where any payment is made (including by way of set off) to a Party under this
Agreement pursuant to an indemnity, compensation or reimbursement provision and
that sum is subject to a charge to Tax in the hands of the recipient, the sum
payable shall be increased to such sum as will ensure that after payment of such
Tax (and after giving credit for any tax relief received by or available to the
recipient in respect of the matter giving rise to the payment) the recipient
shall be left with a sum equal to the sum that it would have received in the
absence of such a charge to Tax; provided, however, that this Section shall not
apply to any payments to the Sempra Parties under Article II.

Section 10.16.

Reimbursement

Where any sum constituting an indemnity, compensation or reimbursement to any
Party is paid to a person other than the Party but is treated as taxable in the
hands of the Party, the payer shall promptly pay to the Party such sum as shall
reimburse the Party for all Tax suffered by it in respect of the payment (after
giving credit for any tax relief received by or available to the Party in
respect of the matter giving rise to the payment).

Section 10.17.

Indemnity

Where under the terms of this Agreement one Party is liable to indemnify or
reimburse another Party in respect of any costs, charges or expenses, the
payment shall include in addition thereto an amount equal to any VAT chargeable
on the supply to which the relevant costs, charges or expenses related and not
otherwise recoverable by the other Party, subject to that Party using all
reasonable endeavors to recover such amount of VAT as may be practicable.

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Section 10.18.

  VAT

If any payment under this Agreement constitutes the consideration for a taxable
supply for VAT purposes, then in addition to that payment the payer shall pay an
amount equal to the VAT chargeable on that supply.

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IN WITNESS WHEREOF, the Parties have executed this Agreement, all as of the date
first above written.

SEMPRA ENERGY

By:  /S/ Mark A. Snell

Name: Mark A. Snell

Title: Executive Vice President and

Chief Financial Officer

SEMPRA GLOBAL

By:  /S/ Mark A. Snell

Name: Mark A. Snell

Title: President

SEMPRA ENERGY TRADING INTERNATIONAL, B.V.

By:  /S/ Joseph Allan Householder

Mr. Joseph Allan Householder

Title:  Managing Director A

By:  /S/ Andreas Gerardus Maria Nagelmaker

Mr. Andreas Gerardus Maria Nagelmaker

Title:  Managing Director B

Signature Page – Formation Agreement

THE ROYAL BANK OF SCOTLAND PLC

By:  /S/ Mr. J. A. N. Cameron

Name: Mr. J. A. N. Cameron

Title: Director, Chief Executive, Corporate Markets

Signature Page – Formation Agreement