Exhibit
10.1B


 


Schedules
and Exhibits to the

Credit Sleeve and Reimbursement Agreement

dated as of September 24, 2006,


as
amended and restated as of August 1, 2007


 


(Portions of this Exhibit have been
omitted

pursuant to a request for confidential treatment)


 


	
  SCHEDULE 1.01(a)

  	
  —

  	
  Risk
  Management Policy Violations

  
	
  SCHEDULE
  1.01(b)

  	
  —

  	
  Calculations
  Relating to Exchange Traded Contracts

  
	
  SCHEDULE
  1.01(c)

  	
  —

  	
  Determination
  of K and VaR

  
	
  SCHEDULE
  1.01(e)

  	
  —

  	
  Trademarks

  
	
  SCHEDULE
  1.01(f)

  	
  —

  	
  Credit
  Limit Approval Guidelines

  
	
  SCHEDULE
  2.01(b)

  	
  —

  	
  C&I
  Customer Wholesale Purchase Provisions

  
	
  SCHEDULE
  2.02(a)

  	
  —

  	
  Counterparty
  Document Negotiation Provisions

  
	
  SCHEDULE
  2.04

  	
  —

  	
  C&I
  Contracts and Governmental Contracts receiving ML Guarantee

  
	
  SCHEDULE
  3.04

  	
  —

  	
  Calculation
  and Settlement of Monthly Sleeve Fee

  
	
  SCHEDULE
  3.05

  	
  —

  	
  Calculation
  of Make-whole Payment

  
	
  SCHEDULE
  3.07(a)

  	
  —

  	
  Merrill
  Account

  
	
  SCHEDULE
  5.13

  	
  —

  	
  List
  of Subsidiaries

  
	
  SCHEDULE
  7.14

  	
  —

  	
  List
  of Retail Services

  
	
  SCHEDULE
  12.13

  	
  —

  	
  List
  of Calculation Agents

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  A1

  	
  —

  	
  Form
  of ML Guarantee for Accepted Counterparties

  
	
  EXHIBIT
  A2

  	
  —

  	
  Form
  of ML Guarantee for C&I Customers

  
	
  EXHIBIT
  B

  	
  —

  	
  List
  of Accepted Counterparties

  
	
  EXHIBIT
  C1

  	
  —

  	
  Form
  of EEI Power Purchase and Hedging Contract

  
	
  EXHIBIT
  C2

  	
  —

  	
  Form
  of ISDA Power Purchase and Hedging Contract

  
	
  EXHIBIT
  C3

  	
  —

  	
  Form
  of EEI Power Purchase and Hedging Contract for WMBEs in ERCOT

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  C4

  	
  —

  	
  Form
  of RECs Purchase Contract for ERCOT

  
	
  EXHIBIT
  D1

  	
  —

  	
  Form
  of EEI Collateral Annex

  
	
  EXHIBIT
  D2

  	
  —

  	
  Form
  of ISDA Credit Support Annex

  
	
  EXHIBIT
  E1

  	
  —

  	
  Reliant
  Energy — Retail Risk Policy

  
	
  EXHIBIT
  E2

  	
  —

  	
  Hedge
  Limit Calculations

  
	
  EXHIBIT
  F

  	
  —

  	
  ERCOT
  Asset List

  
	
  EXHIBIT
  G

  	
  —

  	
  Form
  of Joinder Agreement

  
	
  EXHIBIT
  H

  	
  —

  	
  Form
  of Compliance Certificate

  
	
  EXHIBIT
  I1

  	
  —

  	
  Sleeve
  Provider’s Employees with Access to Certain Reliant Retail Obligor
  Information

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  I2

  	
  —

  	
  Reliant
  Retail Obligors’ Employees with Access to Certain Merrill Party Information

  
	
   

  	
   

  	
   

  



 


 

















 


 


Schedule 1.01(a)


To Credit Sleeve
and Reimbursement Agreement

Risk Management Policy Violations


[***]






	
  ***

  	
  The content of this
  Schedule 1.01(a) (consisting of 3 pages) has been omitted and filed
  separately with the Securities and Exchange Commission. Confidential
  treatment has been requested with respect to the omitted portions.

  



 


 

















 


Schedule 1.01(b)


To Credit Sleeve and
Reimbursement Agreement


Calculations Relating to
Exchange Traded Contracts


 


Adjusted Volume:


 


For Exchange Traded Contracts with the following delivery periods and
volume quantities,


 


	
  Period (Month)

  	
   

  	
  ETC Commodity

  Quantities

  	
   

  
	
  0

  	
   

  	
  Q0

  	
   

  
	
  1

  	
   

  	
  Q1

  	
   

  
	
  2

  	
   

  	
  Q2

  	
   

  
	
  3

  	
   

  	
  Q3

  	
   

  
	
  ...

  	
   

  	
  ...

  	
   

  
	
  ...

  	
   

  	
  ...

  	
   

  
	
  N

  	
   

  	
  QN

  	
   

  



 


the “Adjusted Volume” of the Mirror OTC Contracts to be entered
into between REPS and the Sleeve Provider as part of the (EFS Transaction or
ICE Block Transaction) under the Credit Sleeve and Reimbursement Agreement will
be computed as follow:


 


	
  Period (Month)

  	
   

  	
  Adjusted Volume

  	
   

  
	
  0

  	
   

  	
  Q0 / AZP0

  	
   

  
	
  1

  	
   

  	
  Q1 / AZP1

  	
   

  
	
  2

  	
   

  	
  Q2 / AZP2

  	
   

  
	
  3

  	
   

  	
  Q3 / AZP3

  	
   

  
	
  ...

  	
   

  	
  ...

  	
   

  
	
  ...

  	
   

  	
  ...

  	
   

  
	
  N

  	
   

  	
  QN / AZPN

  	
   

  



 


“AZP” shall be the Adjusted Zero Prices that
corresponds to the date on the Adjusted Zero Curve which is defined below.


The Adjusted Volume will be rounded off to the nearest
full unit (mmbtu or mwh).


 


Calculation of Adjusted Zero Curve:


 


The Credit Sleeve Provider will calculate an adjusted LIBOR forward
curve (the “Adjusted LIBOR Forward Curve”) each day by adding the
marginal cost of capital adder (the “MCC Adder”) to the inputs used to
calculate the Merrill Lynch & Co. standard LIBOR curve (the “Merrill
LIBOR Curve”).


 


“MCC Adder” shall be:


 


(a) [***]; for purposes of calculating the Adjusted
Volume of Mirror OTC Contracts executed in connection with (EFS Transactions or
ICE Block Transactions) that are A & R Date Transactions described in
Section 2.03(a) of the Credit Sleeve Reimbursement Agreement; and


 


(b) the marginal cost of capital relative to LIBOR that
all Merrill Lynch & Co.’s trading desks are charged for the use of funds by
Merrill Lynch & Co. (as of the date of such EFS Transaction or ICE Block
Transaction), which amount is relative to LIBOR that is the






	
  ***

  	
  Certain information on
  this page has been omitted and filed separately with the Securities and
  Exchange Commission. Confidential treatment has been requested with respect
  to the omitted portions.

  



 


 

















 


average cost of capital for Merrill Lynch & Co.
across all maturities (such MCC Adder can be positive or negative); for
purposes of calculating the Adjusted Volume of Mirror OTC Contracts executed in
connection with EFS Transactions or ICE Block Transactions that are Ongoing
Transactions described in Section 2.03(b) of the Credit Sleeve Reimbursement
Agreement


 


As of the A & R Date, the MCC Adder described in
subsection (b) above is [***]; however, such amount may change in accordance
with changes to Merrill Lynch & Co.’s marginal cost of capital as described
above.


 


“Merrill LIBOR Curve” shall be the LIBOR curve
used by Merrill Lynch & Co. and its subsidiaries in their U.S. and world
wide swap and futures operations and business and used to mark its interest
rate position to market.   It is understood that Merrill
Lynch & Co. may modify the inputs for how it determines this curve;
however, it will continue to use the same curve for the Merrill LIBOR
Curve as used in this Schedule and for its other operations as described
in the foregoing sentence.


 


Using the Adjusted LIBOR Forward Curve the Sleeve Provider will
calculate a corresponding zero curve (the “Adjusted Zero Curve”), and
provide such Adjusted Zero Curve to REPS on each Business Day, no later than
12:00 p.m. CPT, and such curve shall be applicable to the (EFS Transactions and
ICE Block Transactions) that are executed on that day.  The Adjusted Zero Curve will be a strip of
monthly Adjusted Zero Prices, which represent the present value of $1.00 dollar
received on a specific date in the future, assuming the Adjusted LIBOR Forward
Curve for discounting purposes with discounting being computed utilizing the
continuously compounding methodology. 
The Adjusted Zero Curve provided will have 5 places after the decimal
point.


 


The term of the Adjusted LIBOR Forward Curve and the corresponding
Adjusted Zero Curve will be 72 months, including the then current month;
provided, however, that to the extent REPS currently has or in the future
obtains an Exchange Traded Contract for a longer period, then the Sleeve
Provider will extend the Adjusted LIBOR Forward Curve and the Adjusted Zero
Curve to match such longer period. 
Adjusted Zero Prices that correspond to dates that are between the
Monthly Dates in the table below will be calculated using linear interpolation.  The format utilized by the Sleeve Provider in
providing this information will include at a minimum the following attributes:


 


	
  Period (Month)

  	
   

  	
  Monthly Date

  	
   

  	
  Adjusted LIBOR

  Forward Curve

  	
   

  	
  Adjusted Zero

  Curve

  	
   

  
	
  0

  	
   

  	
   

  	
   

  	
  AL0 = 0

  	
   

  	
  AZP0 = 1

  	
   

  
	
  1

  	
   

  	
   

  	
   

  	
  AL1

  	
   

  	
  AZP1

  	
   

  
	
  2

  	
   

  	
   

  	
   

  	
  AL2

  	
   

  	
  AZP2

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
  AL3

  	
   

  	
  AZP3

  	
   

  
	
  ...

  	
   

  	
   

  	
   

  	
  ...

  	
   

  	
  ...

  	
   

  
	
  ...

  	
   

  	
   

  	
   

  	
  ...

  	
   

  	
  ...

  	
   

  
	
  ...

  	
   

  	
   

  	
   

  	
  ...

  	
   

  	
  ...

  	
   

  
	
  N

  	
   

  	
   

  	
   

  	
  ALN

  	
   

  	
  AZPN

  	
   

  



 


Treatment for Options:


 


For purposes of clarification the Parties agree that no adjustment will
be made to the volumes of options transactions which are transferred pursuant
to EOO Transactions under the Credit Sleeve Reimbursement Agreement, or in
other words the Adjusted Volume of any Mirror OTC Contract that is an option
will be the exact same volume as the volume of the corresponding Exchange
Traded Contract.






	
  ***

  	
  Certain information on this
  page has been omitted and filed separately with the Securities and Exchange
  Commission. Confidential treatment has been requested with respect to the
  omitted portions.

  



 


 

















 


Physical Exposure Management Fee:


 


For Exchange Traded Contracts that provide for physical delivery, (both
futures contracts and options that provide for physical delivery futures
contracts) and are transferred to the Sleeve Provider pursuant to an EFS or EOO
Transaction, the following will apply: 
REPS agrees to pay to Sleeve Provider (or Sleeve Provider agrees to pay
to REPS) a fee (the “Physical Exposure Management Fee” or “PhEM”)
equal to: the actual premium paid or received by Sleeve Provider to liquidate
the physical exposure. Sleeve Provider will provide REPS notice of the PhEM
amount within 2 Business Days of liquidating the physical exposure with a third
party. REPS may request that the Sleeve Provider provide deal tickets as
evidence of the actual premium paid or received by Sleeve Provider.  PhEM shall be due and payable by the
applicable Party at the time of settlement of the Mirror OTC Transaction
associated with such EOO or EFS Transaction.


 


 

















 


 


Schedule 1.01(c)


To Credit Sleeve
and Reimbursement Agreement

Determination of K and VaR


[***]






	
  ***

  	
  The content of this
  Schedule 1.01(c) (consisting of 77 pages) has been omitted and filed
  separately with the Securities and Exchange Commission.  Confidential treatment has been requested
  with respect to the omitted portions.

  



 


 


 


6
















 


 


Schedule 1.01(e)


To Credit Sleeve and Reimbursement Agreement


Trademarks


 


 


	
  NAME

  	
  OWNER

  	
  GOODS/SERVICES

  	
  REG.

  	
  APPL. #

  
	
  Energy Commander

  	
  RERH

  	
  Class 9. Systems comprised of computer hardware and
  integrated computer software for communications, and for monitoring,
  controlling, and managing environmental conditions and energy usage.

  	
  2764995

  	
  76/263578

  
	
  Energy Commander

  	
  RERH

  	
  Class 42. Monitoring,
  controlling and managing of energy usage for commercial, industrial and
  institutional customers; providing information regarding environmental
  conditions and energy usage to commercial, industrial and institutional
  customers.

  	
  2813513

  	
  76/263577

  
	
  PowerZone

  	
  RERH

  	
  Class 35. Promoting events, sports competitions,
  contests and award programs.

  Class 42. Sweepstake services.

  	
   

  	
  78/762804

  
	
  Your Houston Business

  	
  RERH

  	
  Class 16. Business magazines.

  Class 41. Computer services, namely, providing an on-line magazine in the
  field of business.

  	
  2865827

  	
  78/156502

  
	
  Power Card and Design

  	
  RERH

  	
  Class 35. Promoting the services of public libraries
  through sponsorship of library membership cards.

  Class 42. Promoting public awareness of the availability of public library
  facilities and services by sponsorship of library membership cards.

  	
  2428481

  	
  75/940944

  
	
  Reliant

  	
  IP Trust

  	
  Class 36. Energy brokerage services; electricity
  brokerage, namely, the brokerage of electric power and the sale of electric
  power, both generated internally and purchased from electric utilities and
  from other electric power producers, suppliers and sources, for sale and
  transfer to others.

  	
  3097811

  	
  78/622356

  
	
  Reliant

  	
  IP Trust

  	
  Class 39. Distribution and delivery of energy.

  	
  2886710

  	
  78/311694

  
	
  Reliant

  	
  IP Trust

  	
  Class 40. Production and generation of energy.

  	
  2886711

  	
  78/311695

  



 


 

















 


 


	
  NAME

  	
  OWNER

  	
  GOODS/SERVICES

  	
  REG.

  	
  APPL. #

  
	
  Reliant Arena

  	
  IP Trust

  	
  Class 35. Promoting the goods and services of others
  by arranging for sponsors to affiliate their goods and services with
  professional football; rental of advertising space; promoting sports
  competitions and/or events of others; dissemination of advertising matter and
  providing facilities for trade shows and conventions; promoting business and
  tourism in the area of the Reliant Stadium in Houston, Texas.

  	
  2976601

  	
  76/195453

  
	
  Reliant Arena

  	
  IP Trust

  	
  Class 41. Providing stadium facilities for sports
  and entertainment; arranging and conducting athletic competitions; providing
  entertainment in the nature of sporting events and competitions, exhibitions
  and expositions, public performances, concerts, conventions and rodeos;
  information services, namely, providing a wide range of information relating
  to sporting events and competitions, exhibitions and expositions, public
  performances, concerts, conventions and rodeos.

  	
  2896040

  	
  76/195451

  
	
  Reliant Arena

  	
  IP Trust

  	
  Class 42. Restaurant and bar services; providing
  general purpose facilities for exhibitions.

  	
  2943295

  	
  76/195450

  
	
  Reliant Center

  	
  IP Trust

  	
  Class 35. Promoting the goods and services of others
  by arranging for sponsors to affiliate their goods and services with
  professional football; rental of advertising space; promoting sports
  competitions and/or events of others; dissemination of advertising matter and
  providing facilities for trade shows and conventions; promoting business and
  tourism in the area of the Reliant Stadium in Houston, Texas.

  	
  2897602

  	
  76/195564

  
	
  Reliant Center

  	
  IP Trust

  	
  Class 41. Providing stadium facilities for sports
  and entertainment; arranging and conducting athletic competitions; providing
  entertainment in the nature of sporting events and competitions, exhibitions
  and expositions, public performances, concerts, conventions and rodeos;
  information services, namely, providing a wide range of information relating
  to sporting events and related activities by means of the Internet.

  	
  2875207

  	
  76/195562

  
	
  Reliant Center

  	
  IP Trust

  	
  Class 42. Restaurant and bar services; providing
  general purpose facilities for exhibitions.

  	
  2926480

  	
  75/981963

  



 


 

















 


 


	
  NAME

  	
  OWNER

  	
  GOODS/SERVICES

  	
  REG.

  	
  APPL. #

  
	
  Reliant Energy

  	
  IP Trust

  	
  Class 35. Billing services; energy generation
  logistics services, namely, scheduling generation of energy for others, in
  International Class

  	
  3053512

  	
  78/451768

  
	
  Reliant Energy

  	
  IP Trust

  	
  Class 36. Energy brokerage services; electricity
  brokerage, namely, the brokerage of electric power and the sale of electric
  power, both generated internally and purchased from electric utilities and
  from other electric power producers, suppliers and sources, for sale and
  transfer to others.

  	
  3132302

  	
  78/622380

  
	
  Reliant Energy

  	
  IP Trust

  	
  Class 39. Distribution and delivery of energy, in
  International Class 39.

  	
  3053513

  	
  78/451803

  
	
  Reliant Energy

  	
  IP Trust

  	
  Class 40. Production and generation of energy, in
  International Class 40.

  	
  3045140

  	
  78/451815

  
	
  Reliant Energy & Design

  	
  IP Trust

  	
  Class 35. Business consultation services for the
  energy industry; billing for energy suppliers; business marketing consulting
  services in the energy industry; business support services for energy
  suppliers, namely, providing billing information to energy consumers;
  operation for others of facilities and infrastructure for energy generation,
  gathering, transmission, storage and distribution.

  	
  2747525

  	
  75/623509

  
	
  Reliant Energy & Design

  	
  IP Trust

  	
  Class 36. Brokerage in the field of commodities,
  namely, buying, selling, and trading of energy commodities; financial risk
  management services; financing of energy services projects; telephone calling
  card services.

  	
  2681501

  	
  75/623512

  
	
  Reliant Energy & Design

  	
  IP Trust

  	
  Class 39. Public utility services, namely,
  gathering, transmission, distribution, transportation, and storage of energy
  commodities.

  	
  2895973

  	
  75/623308

  
	
  Reliant Energy & Design

  	
  IP Trust

  	
  Class 42. Providing temporary use of online,
  non-downloadable software for use in the field of energy information systems
  for tracking, monitoring, displaying, storing, and reporting actual,
  projected, and historical energy storage, transmission, distribution or
  consumption.

  	
  2983403

  	
  75/623514

  



 


 

















 


 


	
  NAME

  	
  OWNER

  	
  GOODS/SERVICES

  	
  REG.

  	
  APPL. #

  
	
  Reliant Energy & Design

  	
  IP Trust

  	
  Class 42. Engineering design services of energy
  generation facilities and infrastructure; providing information regarding the
  energy industry and energy commodities; promoting public awareness of the
  need for environmentally friendly energy.

  	
  2666766

  	
  75/623309

  
	
  Reliant Park

  	
  IP Trust

  	
  Class 18. Textile shopping bags, attaché cases, book
  bags, tote bags.

  	
  2897601

  	
  76/195468

  
	
  Reliant Park

  	
  IP Trust

  	
  Class 25. Clothing, namely, caps, jackets, polo
  shirts, shirts, sport shirts, sweaters, sweatshirts, t-shirts, rain-wear and
  visors.

  	
  2897600

  	
  76/195465

  
	
  Reliant Park

  	
  IP Trust

  	
  Class 35. Promoting the goods and services of others
  by arranging for sponsors to affiliate their goods and services with
  professional football; rental of advertising space; promoting sports
  competitions and/or events of others; dissemination of advertising matter and
  providing facilities for trade shows and conventions; tourism in the area of
  the Reliant Stadium in Houston, Texas; promoting business and tourism in the
  Reliant Stadium in Houston, Texas.

  	
  2884611

  	
  76/195473

  
	
  Reliant Park

  	
  IP Trust

  	
  Class 41. Providing stadium facilities for sports
  and entertainment; arranging and conducting athletic competitions; providing
  entertainment in the nature of sporting events and related activities;
  information services, namely, providing a wide range of information relating
  to sporting events and related activities by means of the Internet.

  	
  2935264

  	
  76/195471

  
	
  Reliant Park

  	
  IP Trust

  	
  Class 43. Restaurant and bar services; providing
  general purpose facilities for exhibitions.

  	
  2933500

  	
  76/195470

  
	
  Reliant Stadium

  	
  IP Trust

  	
  Class 16. Paper goods, paper materials and printed
  matter, namely, posters, mounted photographs, postcards, pennants, books in
  the field of football and related sporting events and activities; yearbooks,
  paper napkins, and banners.

  	
  2955241

  	
  76/195558

  
	
  Reliant Stadium

  	
  IP Trust

  	
  Class 28. Toys, namely, action figures, balloons,
  promotional game materials. sporting goods, namely, footballs and sports
  balls.

  	
  2929142

  	
  76/195448

  



 


 

















 


 


	
  NAME

  	
  OWNER

  	
  GOODS/SERVICES

  	
  REG.

  	
  APPL. #

  
	
  Reliant Stadium

  	
  IP Trust

  	
  Class 35. Promoting the goods and services of others
  by arranging for sponsors to affiliate their goods and services with
  professional football; rental of advertising space; promoting sports
  competitions and/or events of others; dissemination of advertising matter and
  providing facilities for trade shows and conventions; promoting business and
  tourism in the area of the Reliant Stadium in Houston, Texas.

  	
  2929141

  	
  76/195445

  
	
  Reliant Stadium

  	
  IP Trust

  	
  Class 41. Providing stadium facilities for sports
  and entertainment; arranging and conducting athletic competitions; providing
  entertainment in the nature of sporting events and competitions, exhibitions
  and expositions, public performances, concerts, conventions and rodeos;
  information services, namely, providing a wide range of information relating
  to sporting events and related activities by means of the Internet.

  	
  2896039

  	
  76/195443

  
	
  Reliant Stadium

  	
  IP Trust

  	
  Class 42. Restaurant and bar services; providing
  general purpose facilities for exhibitions.

  	
  2729638

  	
  75/981391

  



 


 
















 


 


Schedule 1.01(f)

To Credit Sleeve
and Reimbursement Agreement

Credit Limit Approval Guidelines


[***]






	
  ***

  	
  The content of this
  Schedule 1.01(f) (consisting of 1 page) has been omitted and filed separately
  with the Securities and Exchange Commission. Confidential treatment has been
  requested with respect to the omitted portions.

  



 


 

















 


 


 


Schedule 2.01(b)


To Credit Sleeve and Reimbursement Agreement


C&I Customer Wholesale Purchase Provisions


 


[***]






	
  ***

  	
  The content of this
  Schedule 2.01(b) (consisting of 5 pages) has been omitted and filed
  separately with the Securities and Exchange Commission. Confidential
  treatment has been requested with respect to the omitted portions.

  



 


 

















 


 


Schedule 2.02(a)


To Credit Sleeve and Reimbursement Agreement


Counterparty Document Negotiation Provisions


 


[***]






	
  ***

  	
  The content of this
  Schedule 2.02(a) (consisting of 3 pages) has been omitted and filed
  separately with the Securities and Exchange Commission. Confidential
  treatment has been requested with respect to the omitted portions.

  



 


 

















 


 


Schedule 2.04


To Credit Sleeve and Reimbursement Agreement


C&I Contracts and Governmental Contracts Receiving ML Guarantee


 


[***]






	
  ***

  	
  The content of this
  Schedule 2.04 (consisting of 1 page) has been omitted and filed separately
  with the Securities and Exchange Commission. Confidential treatment has been
  requested with respect to the omitted portions.

  



 


 

















 


 


Schedule 3.04


To Credit Sleeve and
Reimbursement Agreement


Calculation and Settlement of Monthly Sleeve Fee


 


 


(a)           For
the period from the Effective Date through the Unwind Start Date, on each
Monthly Payment Date, REPS shall pay to the Sleeve Provider a monthly fee in
arrears equal to the Sleeve Fee Factor as in effect from time to time for each
MWh that the Reliant Retail Obligors deliver to their C&I Customers,
Residential Mass Customers and Business Services Mass Customers (excluding any
load provided to Equistar Chemicals, LP in connection with the Channelview
Services Agreement), in each case, in connection with the Retail Energy Business
during such period, as determined by the Sleeve Provider based on (i) with
respect to the ERCOT Market and the PJM Market, settled load data provided from
the applicable Approved ISO, and (ii), with respect to the PJM Market only,
billed sales volumes allocated to a flow month in accordance with Section
(b)(ii)(A)(2) of this Schedule 3.04 (such MWHs, the “ERCOT MWHs” or “PJM
MWHs”, as applicable, and collectively, the “MWHs”, and such monthly
fee as adjusted from time to time, the “Sleeve Fee”).  Payments of the Sleeve Fee will be determined
and made in accordance with the procedures set forth below.


 


As used in this Schedule 3.04, the term “Sleeve Fee
Factor” means $0.40 per MWh provided that
such amount shall be adjusted from time to time as follows: (a) under the
circumstances, in the amount, at the times and for the periods set forth in
Annex A hereto and (b) in the event that the Merrill Parties receive an
indemnity contemplated by Section 9.03(a) of the CSRA, by an additional $0.40
per MWh during the period while such indemnity is in effect (cumulative with
the effect of any adjustment referred to in clause (a)(if any) from time to
time), commencing with first day of the month following the month during which
such indemnity was received and ending on the last day of the month during
which such indemnity is terminated or expires.


 


(b)           REPS
shall deliver to the Sleeve Provider for each delivery month the following
information and associated data relating to the Sleeve Fee as follows:


 


(i)            Monthly Initial Settlement
Calculation:


 


(A)          The initial settlement MWHs for such
month shall be based on the applicable Approved ISO initial statements and the
applicable PJM Line Loss Estimate described below (collectively, the “Preliminary
Statements”):


 


(1)           With respect to the ERCOT Market, the
initial settlement ERCOT MWHs for such month shall be based upon the ERCOT
Initial Statement as defined by Section 9.2.3 of the ERCOT protocols issued on
or about the 10th calendar day of the month following delivery;


 


(2)           With respect to the PJM Market, the
initial settlement PJM MWHs for such month shall be based upon the PJM initial
statements issued on or about the 7th calendar day of the month
following delivery, reduced by the applicable PJM Line Loss Estimate; and


 


(3)           With respect to the PJM Market, a “PJM
Line Loss Estimate” of 3% will be used for the period from August 1, 2007,
through December 31, 2008.  On December
31, 2008, and each December 31st thereafter, the PJM Line Loss
Estimate to be used for the succeeding 12 month period shall be calculated
based on the difference between the PJM published volumes and the actual billed
sales volumes to customers for the most recent preceding 12 month period for
which information to complete such calculation is then available.   Should known or expected regulatory,
operational, or other factors materially impact the reasonableness of using
such calculation methodology for application to future volumes, REPS or Sleeve
Provider may propose alternate calculation 


 


 

















 


 


methodology expected to produce more accurate
estimates by notice to Sleeve Provider or REPS, as the case may be, after which
both parties shall use commercially reasonable efforts to mutually agree to an
appropriate alternate calculation methodology. 
Until such alternate calculation methodology is agreed, the prior
calculation methodology shall be used to calculate the “PJM Line Loss Rate”.  After such alternate calculation methodology
is agreed, such alternate calculation methodology shall be used to calculate the
“PJM Line Loss Rate”.


 


(B)           REPS shall provide to the Sleeve
Provider a summary of the MWHs for such month from the Preliminary Statements
by the 15th calendar day of the month following delivery or, if such
date is not a Business Day, the immediately succeeding Business Day.  In the event that data provided by the
applicable Approved ISO is omitted or incomplete for any day(s) of the subject
month REPS shall provide an “Omission Estimate” for each day to be used for
settlement calculation subject to review and approval by the Sleeve
Provider.  The Sleeve Provider shall be
notified of any Omission Estimate as an explicit notation included as part of
the summary of volumes.


 


(C)           The “Initial Monthly Sleeve Fee
Amount” for such month shall be the MWHs per Schedule 3.04(b)(i)(B) for
such month multiplied by the Sleeve Fee Factor in effect for such month.


 


(D)          Payment of the Initial Monthly Sleeve
Fee Amount for such month under Schedule 3.04(b)(i)(C) shall be due on the next
Monthly Payment Date.


 


(ii)           Monthly Final Settlement
Calculation:


(A)          The settlement MWHs for such month
shall be based on the following:


 


(1)           With respect to the ERCOT Market, the
settlement ERCOT MWHs for such month shall be based on the ERCOT Final
Statement as defined by Section 9.2.4 of the ERCOT protocols issued on or about
the 59th calendar day of the month following delivery; and


 


(2)           With respect to the PJM Market, the settlement PJM MWHs
for such month shall be based on the actual billed sales volumes of PJM MWHs
allocated to such month by flow month, such information available on or about
the 1st calendar day of the 4th month following
delivery.  The actual billed sales
volumes of PJM MWHs allocated to each month by flow month shall be calculated
by taking the volumes for each applicable cycle read covering all or a portion
of the flow month divided by the number of days in such cycle read to determine
a per day volume for such cycle read. 
Such per day volume(s) for the applicable cycle(s) shall be allocated to
each day of the flow month covered by such cycle(s).


 


(B)           REPS shall provide to the Sleeve
Provider:


 


(1)           With respect to the ERCOT Market, a
summary of ERCOT MWHs for such month from the ERCOT Final Statement by the 15th
calendar day of the third month following delivery (i.e. January 2007 shall be
due by April 15, 2007) or, if such date is not a Business Day, the immediately
succeeding Business Day.  In the event
that data provided by ERCOT is omitted or incomplete for any day(s) of the
subject month REPS shall provide an Omission Estimate for each day to be used
for settlement calculation subject to review and approval by the Sleeve
Provider.  The Sleeve Provider shall be
notified of any Omission Estimate as an explicit notation included as part of
the summary of volumes; and


 


 

















 


 


(2)           With respect to the PJM Market Area,
a summary of the actual billed sales volumes of PJM MWHs for such month
allocated to such month by flow month by the 15th calendar day of
the fourth month following delivery (i.e. January 2007 shall be due by May 15,
2007) or, if such date is not a Business Day, the immediately succeeding
Business Day.


 


(C)           The “Monthly Sleeve Fee Amount”
for such month shall be the difference between (i) the MWHs per Schedule
3.04(b)(ii)(B) for such month multiplied by the Sleeve Fee Factor in effect for
such month less (ii) the Initial Monthly Sleeve Amount for such month in
accordance with Schedule 3.04(b)(i)(C). 
If the difference is positive an amount equal to the difference shall be
due to the Sleeve Provider.  If the difference
is negative an amount equal to the absolute value of the difference shall be
due to REPS.


 


(D)          Payment of the Monthly Sleeve Fee
Amount for such month under Schedule 3.04(b)(ii)(C) shall be due on the next
Monthly Payment Date.


 


(iii)          Monthly True-Up Statement
Calculation: Solely with respect to the ERCOT Market, for such delivery
month:


 


(A)          REPS shall provide to the Sleeve
Provider a summary of the ERCOT MWHs for such month from the ERCOT True-Up
Statement as defined by Section 9.2.6 of the ERCOT protocols that have been
received by REPS for such month by the 15th calendar day of the
month during which such information is received or, if such date is not a
Business Day, the immediately succeeding Business Day;


 


(B)           The “True-Up Sleeve Fee Amount”
for such month shall be equal to the product of (i) the ERCOT MWHs per the
ERCOT True-Up Statement provided per Schedule 3.04(b)(iii)(A) for such month
minus the ERCOT MWHs for such month per the ERCOT Final Statement per Schedule
3.04(b)(ii)(B) for such month multiplied by (ii) the Sleeve Fee Factor in
effect for such month.  If the product is
positive an amount equal to the product shall be due to the Sleeve
Provider.  If the product is negative an
amount equal to the absolute value of the product shall be due to REPS; and


 


(C)           Payment of the True-Up Sleeve Fee
Amount for such month under Schedule 3.04(b)(iii)(B) shall be due on the next
Monthly Payment Date.


 


(iv)          Monthly Invoice:  The Sleeve Provider shall provide an invoice
to REPS within two Business Days of the receipt from REPS of the summary of
MWhs in accordance with Schedule 3.04(b)(i), (ii) and (iii) with respect to
such month; provided that if REPS does not furnish
such information in a timely manner, such invoice may be prepared on the basis
of reasonable estimates of such information prepared by the Sleeve
Provider.  The invoice shall include the
following with respect to each Approved ISO, if applicable, for such
month:  (A) the Initial Monthly Sleeve
Fee Amount per Schedule 3.04(b)(i), (B) the Monthly Sleeve Fee Amount per
Schedule 3.04(b)(ii) and (C) the True-Up Sleeve Fee Amount per Schedule
3.04(b)(iii).  The Sleeve Provider will
be the invoicing party regardless of whether the invoice amount is a receivable
or payable amount with respect to the Sleeve Provider


 


(c)           During
the Unwind Period, until the take-out of the Sleeve Provider in accordance with
Section 10.01(a)(i), (ii), (iv) or (v) of the CSRA (the date of such take-out,
the “Take-Out Date”) or the Unwind Conclusion Date, REPS shall pay to
the Sleeve Provider a monthly fee in arrears equal to the Sleeve Fee Factor in
effect from time to time for each  MWh
that the Reliant Retail Obligors:


 


                (i)            deliver to their C&I Customers
starting on the Unwind Start Date in connection with the Retail Energy Business
during such period, to the extent such deliveries are under 


 


 

















 


 


contractual delivery commitments in effect on the
Unwind Start Date, as determined and invoiced by the Sleeve Provider based on
contracted load data provided by REPS; and


 


                (ii)           are projected, with those projections
being those in effect on the Unwind Start Date, to deliver to their Residential
Mass Customers and Business Services Mass Customers starting on the Unwind
Start Date in connection with the Retail Energy Business during such period, to
the extent the supply for such MWHs was hedged under the CSRA on the Unwind
Start Date, as determined and invoiced by the Sleeve Provider based on monthly
projected load data provided by REPS consistent with the data provided in the
daily reporting, as adjusted by the following:


 


                                                                (A)          for Residential Mass Customers, to the
extent there is a greater than 10% migration between current customer count and
customer count as projected on the Unwind Start Date for the current period (as
determined by ESID count), the projected load data (in effect on the Unwind
Start Date) will be adjusted on a pro-rata basis from the start of the month
during which such migration threshold occurred and going forward to reflect the
customers that have migrated; and


 


                                                                (B)           for Business Services Mass Customers
load, to the extent there is a greater than 10% migration between Business
Services Mass Customers load and Business Services Mass Customers load as
projected on the Unwind Start Date for the current period (as determined by
annualized volume (adjusted for seasonality)), the projected load data (in
effect on the Unwind Start Date) will be adjusted on a pro-rata basis from the
start of the month during which such migration threshold occurred and going forward
to reflect the customers that have migrated;


 


(such monthly fee as adjusted from time to time, the “Unwind Sleeve
Fee”).


 


(d)           REPS
shall provide the Sleeve Provider a summary of volumes in MWhs as defined in
Schedule 3.04(c)(i) and (ii) and any other data and computations including ESID
counts and annualized load (adjusted for seasonality) needed by the Sleeve
Provider by the 15th calendar day of each month following each
delivery month or, if such day is not a Business Day, the immediately
succeeding Business Day.  The Sleeve
Provider shall provide an invoice with respect to the Unwind Sleeve Fee to REPS
within two Business Days of the receipt from REPS of the summary of volumes in
accordance with Schedule 3.04(c) (i) and (ii); provided
that if REPS does not furnish such information in a timely manner, such invoice
may be prepared on the basis of reasonable estimates of such information
prepared by the Sleeve Provider.  The
Sleeve Provider will be the invoicing party regardless of whether the invoice amount
is a receivable or payable amount with respect to the Sleeve Provider.  Payment with respect to the Unwind Sleeve Fee
shall be due and payable in arrears for each delivery month on the next Monthly
Payment Date after invoicing and on the Take-Out Date and the Unwind Conclusion
Date.


 


 

















 


 


Annex A to
Schedule 3.04


To Credit Sleeve and Reimbursement Agreement


 


 


 


Certain
Adjustments to the Sleeve Fee Factor


 


 


Sleeve
Fee Increase Zones


 


	
  Zone 1. If there shall occur 1, but not more than 1,
  Level III Violation during any 60 consecutive month period beginning after
  the Effective Date the Sleeve Fee or Unwind Sleeve Fee, as applicable, shall
  be increased by $0.10 per MWh beginning on the 1st day of the
  month following the month during which the Level III Violation occurs through
  the earlier to occur of (a) the last day of the 6th month during
  which no Level III Violations have occurred, (b) an increase in the Sleeve
  Fee or Unwind Sleeve Fee under either Zone 2 or Zone 3 below applies, or (c)
  the Credit Sleeve Termination Date.



  
	
  Zone 2. If there shall
  occur 2, but not more than 2, Level III Violations during any 60 consecutive
  month period beginning after the Effective Date the Sleeve Fee or Unwind
  Sleeve Fee, as applicable, shall be increased by $0.20 per MWh beginning on
  the 1st day of the month following the month during which the
  second Level III Violation occurs through the earlier to occur of (a) the
  last day of the 12th month during which no Level III Violations
  have occurred, (b) an increase in the Sleeve Fee or Unwind Sleeve Fee under
  Zone 3 below applies, or (c) the Credit Sleeve Termination Date.



  
	
  Zone 3. If there shall
  occur 3 or more Level III Violations during any 60 consecutive month period
  beginning after the Effective Date the Sleeve Fee or Unwind Sleeve Fee, as
  applicable, shall be increased by $0.30 per MWh beginning on the 1st
  day of the month following the month during which the third Level III
  Violation occurs through the Credit Sleeve Termination Date.



  



 


 

















 


 


Schedule 3.05


To Credit Sleeve and Reimbursement Agreement


Calculation of Make-whole Payment


 


“Make-whole
Payment” means, as of any date of determination, an amount equal to the
greater of (i) $50,000,000 less the sum of (A) the Structuring Fee (as defined
in Section 3.06 of the CSRA), (B) the PJM Structuring Fee (as defined in
Section 3.06 of the CSRA), and (C) the aggregate amounts of the Monthly Sleeve
Fees that have been paid to the Sleeve Provider as of such date since the
Initial Effective Date (i.e. $50,000,000 — (SF + PJM SF + MSFs)) and (ii) $0,
determined by the Sleeve Provider on such date.


 


 


 
















 


 


Schedule 3.07(a)


To Credit Sleeve and Reimbursement Agreement


Merrill Account


 


JP Morgan Chase


ABA 021000021


Account Number# [***]


Account Name Merrill Lynch Commodities, Inc.


 






	
  ***

  	
  Certain information on
  this page has been omitted and filed separately with the Securities and
  Exchange Commission. Confidential treatment has been requested with respect
  to the omitted portions.

  



 


 

















 


Schedule 5.13


To Credit Sleeve and Reimbursement Agreement


List of Subsidiaries


 


Equity investment


 


1.               RERH Holdings, LLC’s ownership of 1,000 units of the
membership interest of Reliant Energy Retail Holdings, LLC


 


2.               Reliant Energy Retail Holdings, LLC’s ownership of


a.               1,000 units of the membership interest of Reliant
Energy Retail Services, LLC


b.              1,000 units of the membership interest of Reliant
Energy Power Supply, LLC


c.               1,000 units of the membership interest of Reliant
Energy Solutions East, LLC


 


3.               Reliant Energy Retail Services, LLC’s ownership of
1,000 units of the membership interest of RE Retail Receivables, LLC


 


	
   

  	
   

  	
  Jurisdiction of

  Organization

  	
   

  	
  Organizational/Taxpayer

  Identification Number

  	
   

  
	
  RERH Holdings,
  LLC

  	
   

  	
  Delaware

  	
   

  	
  4191623/20-5222227

  	
   

  
	
  Reliant Energy
  Retail Holdings, LLC

  	
   

  	
  Delaware

  	
   

  	
  3279845/76-0655580

  	
   

  
	
  Reliant Energy
  Retail Services, LLC

  	
   

  	
  Delaware

  	
   

  	
  3279840/76-0655567

  	
   

  
	
  R E Retail
  Receivables, LLC

  	
   

  	
  Delaware

  	
   

  	
  3531400/41-2046596

  	
   

  
	
  Reliant Energy
  Power Supply, LLC

  	
   

  	
  Delaware

  	
   

  	
  4142914/20-4823108

  	
   

  
	
  Reliant Energy
  Solutions East, LLC

  	
   

  	
  Delaware

  	
   

  	
  3487883/46-0471983

  	
   

  



 


Address of principal
place of business for all of the above:


1000 Main Street

Houston, Texas  77002


 


 

















 


Schedule 7.14


To Credit Sleeve and Reimbursement Agreement


List of Retail Services


 


 


[***]






	
  ***

  	
  The content of this
  Schedule 7.13 (consisting of 3 pages) has been omitted and filed separately with
  the Securities and Exchange Commission. Confidential treatment has been
  requested with respect to the omitted portions.

  



 


 

















 


Schedule 12.13


To Credit Sleeve and Reimbursement Agreement


List of Calculation Agents


 


[***]






	
  ***

  	
  The content of this
  Schedule 12.13 (consisting of 1 page) has been omitted and filed separately
  with the Securities and Exchange Commission. Confidential treatment has been
  requested with respect to the omitted portions.

  



 


 

















 


Exhibit A1


To Credit Sleeve and Reimbursement Agreement


Form of ML Guarantee for Accepted Counterparties


 


 


GUARANTEE OF MERRILL LYNCH & CO., INC.


WHEREAS, Reliant Energy
Power Supply, LLC, a Delaware limited liability company (“REPS”), and certain
of its affiliates have entered into an agreement with Merrill Lynch
Commodities, Inc., a corporation duly organized and existing under the laws of
the State of Delaware (“MLCI”), and its parent, Merrill Lynch & Co., Inc.,
a corporation duly organized and existing under the laws of the State of
Delaware (“ML & CO.”), related to an enhanced credit structure for the
retail electric business of REPS and its affiliates;


WHEREAS, as part of the
consideration for the above described agreement, ML & Co. has agreed to
issue this Guarantee, guarantying the obligations of REPS under the Agreement
described below, consistent with the terms and conditions set forth below.


FOR VALUE RECEIVED,
receipt of which is hereby acknowledged, ML & CO. hereby unconditionally
guarantees to [                  ] (the “Company”), the due and
punctual payment of any and all amounts payable by REPS, its successors and
permitted assigns, to the extent such successors or permitted assigns are
direct or indirect subsidiaries of RERH Holdings, LLC, a Delaware limited
liability company, under the terms of the [EEI/ISDA]  Master Agreement between the Company and
REPS, dated as of [                 ],
2006 (the “Agreement”), including, in case of default, interest on any amount
due, when and as the same shall become due and payable, whether on the
scheduled payment dates, at maturity, upon declaration of termination or
otherwise, according to the terms thereof. 
In case of the failure of REPS punctually to make any such payment, ML
& Co. hereby agrees to make such payment, or cause such payment to be made,
promptly upon demand made by the Company to ML & Co.; provided, however
that delay by the Company in giving such demand shall in no event affect ML
& Co.’s obligations under this Guarantee. 
This Guarantee shall remain in full force and effect or shall be reinstated
(as the case may be) if at any time any payment guaranteed hereunder, in whole
or in part, is rescinded or must otherwise be returned by the Company upon the
insolvency, bankruptcy or reorganization of REPS or otherwise, all as though
such payment had not been made.


ML & Co. hereby
agrees that its obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Agreement; the absence of any
action to enforce the same; any waiver or consent by the Company concerning any
provisions thereof; the rendering of any judgment against REPS or any action to
enforce the same; or any other circumstances that might otherwise constitute a
legal or equitable discharge of a guarantor or a defense of a guarantor.  ML & Co. covenants that this guarantee
will not be discharged except by complete payment of the amounts payable under
the Agreement.  This Guarantee shall
continue to be effective if REPS merges or consolidates with or into another
entity, loses its separate legal identity or ceases to exist.


ML & Co. hereby
waives diligence; presentment; protest; notice of protest, acceleration, and
dishonor; filing of claims with a court in the event of insolvency or
bankruptcy of REPS; all demands whatsoever, except as noted in the first
paragraph hereof; and any right to require a proceeding first against REPS.


ML & Co. hereby
certifies and warrants that this Guarantee constitutes the valid obligation of
ML & Co. and complies with all applicable laws.  This Guarantee guarantees only payment
obligations of REPS and does not guarantee the performance of any other
obligations of, including, but not limited to, physical delivery or, to the
extent applicable, reporting obligations of REPS.  This Guarantee constitutes a guarantee of payment
and not of collection.


This Guarantee shall be
governed by, and construed in accordance with, the law of the State of New
York.


 

















 


This Guarantee may be
terminated at any time by notice by ML & Co. to the Company given in
accordance with the notice provisions of the Agreement, effective upon receipt
of such notice by the Company or such later date as may be specified in such
notice; provided, however, that this Guarantee shall continue in full force and
effect, and shall be irrevocable, with respect to any payment obligation of
REPS arising under any Transaction under and as defined in the Agreement
entered into prior to the effectiveness of such notice of termination.


This Guarantee becomes
effective upon written notice to such effect from ML & Co., or MLCI on its
behalf, to the Company given in accordance with the notice provisions of the
Agreement making specific reference to this Guarantee and the Agreement.


IN WITNESS WHEREOF, ML
& Co. has caused this Guarantee to be executed in its corporate name by its
duly authorized representative.


 


	
   

  	
  MERRILL LYNCH & CO., INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  



 


 

















 


Exhibit A2


To Credit Sleeve and
Reimbursement Agreement


Form of ML Guarantee for
C&I Customers


 


 


GUARANTEE OF MERRILL LYNCH & CO., INC.


WHEREAS, [Reliant Energy Retail Services, LLC][Reliant
Energy Solutions East, LLC], a Delaware limited liability company (“[RERS][RESE]”),
and certain of its affiliates have entered into an agreement with Merrill Lynch
Commodities, Inc., a corporation duly organized and existing under the laws of
the State of Delaware (“MLCI”), and its parent, Merrill Lynch & Co., Inc.,
a corporation duly organized and existing under the laws of the State of
Delaware (“ML & CO.”), related to an enhanced credit structure for the
retail electric business of [RERS][RESE] and its affiliates;


WHEREAS, as part of the consideration for the above
described agreement, ML & Co. has agreed to issue this Guarantee,
guarantying the obligations of [RERS][RESE] under the Agreement described
below, consistent with the terms and conditions set forth below.


FOR VALUE RECEIVED, receipt of which is hereby
acknowledged, ML & CO. hereby unconditionally guarantees to [                       ] (the “Company”), the due and
punctual payment of any and all amounts payable by [RERS][RESE], its successors
and permitted assigns, to the extent such successors or permitted assigns are
direct or indirect subsidiaries of RERH Holdings, LLC, a Delaware limited
liability company, under the terms of the [Contract] between
the Company and [RERS][RESE], dated as of [                 ]
(the “Agreement”), including, in case of default, interest on any amount due,
when and as the same shall become due and payable, whether on the scheduled
payment dates, at maturity, upon declaration of termination or otherwise,
according to the terms thereof.  In case
of the failure of [RERS][RESE] punctually to make any such payment, ML &
Co. hereby agrees to make such payment, or cause such payment to be made,
promptly upon demand made by the Company to ML & Co.; provided, however
that delay by the Company in giving such demand shall in no event affect ML
& Co.’s obligations under this Guarantee. 
This Guarantee shall remain in full force and effect or shall be
reinstated (as the case may be) if at any time any payment guaranteed
hereunder, in whole or in part, is rescinded or must otherwise be returned by
the Company upon the insolvency, bankruptcy or reorganization of [RERS][RESE]
or otherwise, all as though such payment had not been made.


ML & Co. hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Agreement; the absence of any action to enforce the same;
any waiver or consent by the Company concerning any provisions thereof; the
rendering of any judgment against [RERS][RESE] or any action to enforce the
same; or any other circumstances that might otherwise constitute a legal or
equitable discharge of a guarantor or a defense of a guarantor.  ML & Co. covenants that this guarantee
will not be discharged except by complete payment of the amounts payable under
the Agreement.  This Guarantee shall
continue to be effective if [RERS][RESE] merges or consolidates with or into
another entity, loses its separate legal identity or ceases to exist.


ML & Co. hereby waives diligence; presentment;
protest; notice of protest, acceleration, and dishonor; filing of claims with a
court in the event of insolvency or bankruptcy of [RERS][RESE]; all demands
whatsoever, except as noted in the first paragraph hereof; and any right to
require a proceeding first against [RERS][RESE].


ML & Co. hereby certifies and warrants that this
Guarantee constitutes the valid obligation of ML & Co. and complies with
all applicable laws.  This Guarantee
guarantees only payment obligations of [RERS][RESE] and does not guarantee the
performance of any other obligations of, including, but not limited to,
physical delivery or, to the extent applicable, reporting obligations of
[RERS][RESE].  This Guarantee constitutes
a guarantee of payment and not of collection.


This Guarantee shall be governed by, and construed in
accordance with, the law of the State of New York.


 


 

















 


This Guarantee becomes
effective upon written notice to such effect from ML & Co., or MLCI on its
behalf, to the Company (which notice may be given by e-mail) making specific
reference to this Guarantee and the Agreement.


IN WITNESS WHEREOF, ML
& Co. has caused this Guarantee to be executed in its corporate name by its
duly authorized representative.


 


	
   

  	
  MERRILL LYNCH & CO., INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  



 


 


 

















 


Exhibit B


To Credit Sleeve
and Reimbursement Agreement


List of Accepted
Counterparties


[***]






	
  ***

  	
  The content of this
  Exhibit B (consisting of 6 pages) has been omitted and filed separately with
  the Securities and Exchange Commission. Confidential treatment has been
  requested with respect to the omitted portions.

  



 


 
















 


 


Exhibit C1


To Credit Sleeve
and Reimbursement Agreement


Form of EEI Power
Purchase and Hedging Contract


 


MASTER
POWER PURCHASE AND SALE AGREEMENT


COVER SHEET


This Master Power
Purchase and Sale Agreement (“Master Agreement”)
is made of the following date:                   
(“Effective Date”).  The Master Agreement, together with the exhibits, schedules and
any written supplements hereto, the Party A Tariff, if any, the Party B Tariff,
if any, any designated collateral, credit support or margin agreement or
similar arrangement between the Parties and all Transactions (including any
confirmations accepted in accordance with Section 2.3 hereto) shall be referred
to as the “Agreement.”  The Parties to
this Master Agreement are the following:


	
  Name: 
  Reliant Energy Power Supply, LLC (“REPS” or “Party A”)

  	
  Name: 
  __________ (“_____” or “Party B”)

  
	
   

  	
   

  
	
  All
  Notices:

  	
  All
  Notices:

  
	
   

  	
   

  
	
  Street:
  1000 Main St., Suite 1100, Houston, 77002

  	
  Street:                                                   

  
	
   

  	
   

  
	
  P. O. Box 4455

  City:   Houston, TX               Zip: 77210-4455

  	
   

  City: _______________ Zip:
  _______________

  
	
   

  	
   

  
	
  Attn: Contract
  Administration

  Phone:  (713) 497-5855

  Facsimile:  (713) 497-9562

  Duns:  623988644

  Federal Tax ID Number:  204823108

  With a copy to:

   

  Merrill Lynch Commodities, Inc.

  20 East Greenway Plaza, 7th Floor

  Houston, Texas 77253-3327

  Attn:  Legal

  Phone: 713-544-4975

  Facsimile:  713-544-5551

  	
  Attn: Contract
  Administration

  Phone:                                                  

  Facsimile:                                             

  Duns:                                                    

  Federal Tax ID Number:                     

  
	
   

  	
   

  
	
  Invoices:

  Attn:  ERCOT Settlement Accounting, 11th
  Floor

  Phone:  (713) 497-4402

  Facsimile:  (713) 497-0098

  	
  Invoices:

  Attn:                                              

  Phone:                                           

  Facsimile:                                      

  
	
   

  	
   

  
	
  Scheduling:

  Attn:  ERCOT 24 Hour Scheduling

  Phone:  (713) 497-1144

  Facsimile:  (713) 497-0098

  	
  Scheduling:

  Attn:                                              

  Phone:                                           

  Facsimile:                                      

  
	
   

  	
   

  
	
  Payments:

  Attn:   ERCOT Settlement Accounting, 11th
  Floor

  Phone:   (713) 497-4402

  Facsimile:  (713) 497-0098

  	
  Payments:

  Attn:                                              

  Phone:                                           

  Facsimile:                                      

  



 


 


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  Wire
  Transfer:

  BNK:     Mellon Bank — Pittsburgh, PA

  ABA:     043 000 261  

  ACCT:   1194193

  	
  Wire
  Transfer:

  BNK:                                              

  ABA:                                             

  ACCT:                                           

  
	
   

  	
   

  
	
  Credit
  and Collections:

  Attn:  Credit Risk Management

  Phone:  (713) 497-1052

  Facsimile:  (713) 497-1058

  	
  Credit
  and Collections:

  Attn:                                              

  Phone:                                           

  Facsimile:                                      

  
	
   

  	
   

  
	
  With additional Notices of an Event of Default or Potential Event of
  Default to:

  Attn: Vice
  President and General Counsel —Trading, Suite 2100

  Phone: (713) 497-7063

  Facsimile: (713) 537-7063

   

  	
  With additional Notices
  of an Event of Default or Potential Event of Default to:

  Attn:                                              

  Phone:                                           

  Facsimile:                                      

  



 


The Parties hereby agree
that the General Terms and Conditions are incorporated herein, and to the
following provisions as provided for in the General Terms and Conditions:


Party A
Tariff:  FERC Electric Tariff, Original
Volume No. 1 Dated:  September 19,
2006  Docket Number:  ER06-1272


Party B
Tariff:   Tariff                                                            Dated                                        Docket Number                                


	
  Article Two

  	
   

  
	
   

  	
   

  
	
  Transaction Terms and
  Conditions

  	
  x Optional provision in Section
  2.4.   If not checked, inapplicable.

  
	
  Article Four

  	
   

  
	
   

  	
   

  
	
  Remedies for Failure 

  to Deliver or Receive

  	
  x Accelerated Payment of Damages. If not
  checked, inapplicable.

  
	
  Article Five

  	
  x Cross Default for Party A:

  
	
   

  	
   

  
	
  Events of Default;
  Remedies

  	
  o Party A:                                        

  	
  Cross Default
  Amount $                    

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  x  Other Entity:  Merrill Lynch &   
       Co., Inc. (“ML& Co.”)

  	
  Cross Default
  Amount:  $100,000,000

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  x 
  Cross Default for Party B:

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  o 
  Party B:                                       

  	
  Cross Default
  Amount $                    

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  o 
  Other Entity:                               

  	
  Cross Default
  Amount $                    

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  5.6 
  Closeout Setoff

  
	
   

  	
   

  
	
   

  	
  x   Option
  A (Applicable if no other selection is made.) 
  As amended in Paragraph 10.

  o    Option
  B — Affiliates shall have the meaning set forth in the Agreement unless
  otherwise specified as follows:  With
  respect to Party A, _________; with respect to Party B, ____________.

  



 


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  o    Option
  C (No Setoff)

  
	
  Article 8

  	
  8.1  Party
  A Credit Protection:

  
	
   

  	
   

  
	
  Credit and Collateral
  Requirements

  	
  (a) 
  Financial Information:

  
	
   

  	
   

  
	
   

  	
  o    Option
  A

  o    Option
  B   Specify: ________________

  o    Option
  C   Specify:                                       

  So long as such
  Financial Information is publicly available through the Securities Exchange
  Commission’s EDGAR database or such similar database maintained by the
  Securities Exchange Commission, Party B shall not be required to deliver such
  Financial Information directly to Party A.

  
	
   

  	
   

  
	
   

  	
  (b) 
  Credit Assurances:

  
	
   

  	
   

  
	
   

  	
  x   Not
  Applicable

  o    Applicable

  
	
   

  	
   

  
	
   

  	
  (c) 
  Collateral Threshold:  If
  applicable, the provisions of Section 8.1 (c) of the Master Agreement shall
  be replaced by the provisions of the Collateral Annex attached hereto.

  
	
   

  	
   

  
	
   

  	
  o    Not
  Applicable

  x   Applicable

  
	
   

  	
   

  
	
   

  	
  (d) 
  Downgrade Event:

  
	
   

  	
   

  
	
   

  	
  x   Not
  Applicable

  o    Applicable

  
	
   

  	
   

  
	
   

  	
  (e)  Guarantor for Party B:                                                                                       

  
	
   

  	
   

  
	
   

  	
  Guarantee Amount:  The amount, if any, referenced in the

  Guaranty provided by
  [CP Guarantor], which shall be in the form of Exhibit B, attached hereto.

  
	
   

  	
   

  
	
   

  	
  8.2  Party B Credit Protection:

  
	
   

  	
   

  
	
   

  	
  (a) 
  Financial Information:

  
	
   

  	
   

  
	
   

  	
  o    Option
  A

  x   Option
  B   Specify:  ML&Co.                                           o        Option
  C   Specify:                                       

  So long as such
  Financial Information is publicly available through the Securities Exchange
  Commission’s EDGAR database or such similar database maintained by the
  Securities Exchange Commission, Party A shall not be required to deliver such
  Financial Information directly to Party B.

   

  



 


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  (b) 
  Credit Assurances:

  
	
   

  	
   

  
	
   

  	
  x   Not
  Applicable

  o    Applicable

  
	
   

  	
   

  
	
   

  	
  (c) 
  Collateral Threshold:   If
  applicable, the provisions of Section 8.2 (c) of the Master Agreement shall
  be replaced by the provisions of the Collateral Annex attached hereto.

  
	
   

  	
  o    Not
  Applicable

  x   Applicable

  
	
   

  	
   

  
	
   

  	
  (d) 
  Downgrade Event:

  
	
   

  	
   

  
	
   

  	
  x   Not
  Applicable

  o    Applicable

  
	
   

  	
   

  
	
   

  	
  (e)  Guarantor for Party A: ML&Co.

  
	
   

  	
   

  
	
   

  	
  Guarantee Amount:  The amount, if any, referenced in the
  Guaranty issued by ML&Co., which shall be in the form of Exhibit A
  attached hereto.

  
	
   

  	
   

  
	
  Article 10

  	
   

  
	
   

  	
   

  
	
  Confidentiality

  	
  x 
  Confidentiality Applicable

  	
  If not checked,
  inapplicable.

  
	
   

  	
   

  	
   

  
	
  Schedule M

  	
   

  
	
   

  	
   

  
	
   

  	
  o 
  Party A is a Governmental Entity or Public Power System

  
	
   

  	
  o  Party B is a Governmental Entity or Public
  Power System

  
	
   

  	
  o 
  Add Section 3.6.  If not
  checked, inapplicable

  
	
   

  	
  o 
  Add Section 8.6.  If not
  checked, inapplicable

  



 


	
  Other Changes:  
  Yes

  	
   

  



Article
One:  General Definitions


Section 1.12, “Credit Rating” shall be deleted.  “Credit Rating” shall have the meaning given
in the Collateral Annex.


The following definitions are amended as set forth below:


1. Section 1.1 is revised
to add the following at the end of such section: “Notwithstanding the
foregoing, “Affiliate” means, with respect to Party A, RERH Holdings, LLC, and
any subsidiary thereof, including Reliant Energy Retail Holdings, LLC, and
Reliant Energy Retail Services, LLC,  and
with respect to Party B,                          
[if we know the Affiliates then fill in blank and if not use “Affiliate”] shall
have the meaning given in the first two sentences of this definition..”


2.  Section 1.50 is amended to delete the
reference to Section “2.4” and add “2.5”.


3.  Section 1.51 is amended to add the phrase “for
delivery” immediately before the phrase “at the Delivery Point” in the second
line.


4.  Section 1.53 is amended to (i) delete the
phrase “at the Delivery Point” from the second line and (ii) insert after the
phrase “commercially reasonable manner” in the sixth line, the following phrase
“; provided, however if the Seller is unable after using commercially
reasonable efforts to resell all or a portion of the Product not received by
Buyer, the Sales Price with respect to such unsold Product shall be deemed
equal to zero (0)”.


The following
shall be added as a new definition:


““1.62  Merger Event” means, with respect to a Party or its
Guarantor, as applicable, that such Party or its Guarantor consolidates
or amalgamates with, or merges with or into, or transfers all or substantially
all its assets to, or reorganizes, reincorporates or reconstitutes into or as,
another entity and, at the time of such consolidation, 


 


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amalgamation, merger,
transfer, reorganization, reincorporation or reconstitution:


 


(l)            the resulting, surviving or
transferee entity fails to assume all the obligations of such Party or its
Guarantor under this Agreement to which it or its predecessor was a party; or


(2)           the benefits of any Guaranty fails to
extend (without the consent of the other party) to the performance by such
resulting, surviving or transferee entity of its obligations under this
Agreement.”


Article Two: 
Transaction Terms and Conditions


Section 2.4 is amended by
deleting the words “either orally or” after the words “agreed to” in line
seven.


Section 2.5 is amended by adding the words “regarding
any Transaction and the terms thereof” after the word “Parties” in line three.


Article Four: 
Remedies for Failure to Deliver/Receive


The following is added as
a new Section 4.3:


“4.3   Suspension of Performance.  Notwithstanding, and in addition to the
remedies provided pursuant to Sections 4.1 and 4.2, if Seller or Buyer fails to
schedule and/or deliver/receive all or part of the Product pursuant to a
Transaction, and such failure is not excused under the terms of the Product or
by the other Party’s failure to perform, then upon one (1) Business Day prior
notice, and for so long as the non-performing Party fails to perform, the
performing Party shall have the right to suspend its performance under any or
all Transactions.”


Article Five:  Events of Default; Remedies


Section 5.1(e) is
amended by deleting “hereof;” and replacing it with the following: “and the
Collateral Annex if such failure is not remedied within two (2) Business Days
after written notice”.


Section 5.1(f) is
amended in its entirety as follows:  “a
Merger Event occurs with respect to such Party or its Guarantor;”.


Section 5.1(h)(ii)
is amended to delete the following phrase from the third and fourth line
thereof:  “and such failure shall not be
remedied within three (3) Business Days after written notice”.


The
following is added as an additional Event of Default under Section 5.1:


“Section 5.1(i) an event of default occurs (howsoever determined) with
respect to such Party under any agreement between Party A and Party B under any
forward contract, swap agreement or commodities contract (whether financially
or physically settled) (collectively a “Specified Transaction”), in each case
as defined in the United States Bankruptcy Code, and after giving effect to any
applicable notice requirement or grace period, there occurs a liquidation of,
an acceleration of obligations under, or an early termination of that Specified
Transaction.”


Section 5.2 is
amended to (i) reverse the placement of “(i) and “to” in line three, and  (ii) delete the parenthetical beginning, (“or
to the extent that in the reasonable opinion” through the rest of Section 5.2
and replace with the following:  “(it being
understood, that to the extent in the reasonable opinion of the Non-Defaulting
Party any of the Terminated Transactions may not be liquidated and terminated
under applicable law on the Early Termination Date, then such Terminated
Transactions shall be liquidated and terminated as soon thereafter as is
reasonably practicable).   The
Non-Defaulting Party (or its agent) may determine its Gains and Losses by
reference to information either available to it internally or supplied by one
or more third parties including, without limitation, quotations (either firm or
indicative) of relevant rates, prices, yields, yield curves, volatilities,
spreads or other relevant market data in the relevant markets.  Third parties supplying such information may
include, without limitation, dealers in the relevant markets, information
vendors and other sources of market information.”


Article Seven:  Limitations


Section 7.1 shall
be amended by: (a) deleting “Except as set forth herein” from the first
sentence and “Unless expressly herein provided” from the fifth sentence, (b)
adding “Notwithstanding anything in this Agreement to the contrary” to the
beginning of the fifth sentence, and “set forth in this Agreement” after “indemnity
provision” and before “or otherwise”, also in the fifth sentence, and (c)
adding the following language after the word “Equity” in the 


 


 


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fourth sentence: “(except
for the remedies provided by the Uniform Commercial Code for claims of
anticipatory repudiation)”.


Article Ten:  Miscellaneous


Section 10.2 (vi) is amended to add the phrase “except as disclosed in
each parties’ or its Guarantor’s, as applicable, SEC filing” at the end of the
sentence in Section 10.2.


Section 10.2 (ix) is amended to read in its entirety as follows:


“(ix) it acknowledges and agrees that (A) Transaction(s) constitute “forward
contracts” within the meaning of title 11 of the United States Code (the “Bankruptcy Code”); (B) each of Party A
and Party B is a “forward contract merchant” within the meaning of the
Bankruptcy Code with respect to any Transactions that constitute “forward
contracts”; (C) all payments made or to be made by one Party to the other Party
pursuant to this Agreement constitute “settlement payments” within the meaning
of the Bankruptcy Code; (D) all transfers of Performance Assurance by one Party
to the other Party under this Agreement constitute “margin payments” within the
meaning of the Bankruptcy Code; (E) each Party’s rights under Section 5.2, “Declaration
of an Early Termination Date and Calculation of Settlement Amounts”, of this
Agreement constitutes a “contractual right to liquidate” the Transactions
within the meaning of the Bankruptcy Code; and (F) the other party is not a “utility”
as such term is used in Section 366 of the Bankruptcy Code, and each party
agrees to waive and not to assert the applicability of the provisions of
Section 366 in any bankruptcy proceeding wherein such Party is a debtor. In any
such proceeding, each party further agrees to waive the right to assert that
the other party is a provider of last resort;”


 


Section 10.4 is amended to add the phrase “unless a Claim is due to
such Party’s gross negligence or willful misconduct” at the end of the first
sentence of Section 10.4.


Section 10.5 is amended
to (i) add the words “shall not be unreasonably withheld or delayed” after the
words “which consent” in the second line; (ii) delete the words “may be
withheld in the exercise of its sole discretion” in the second and third line;
(iii) delete subparagraphs (i) and (ii) in their entirety from the fourth
through sixth lines; and (iv) delete “or (iii)” from the eighth line.”


Section 10.11 is amended to (i)add “Merrill Lynch Commodities, Inc. or”
after the word “than” in the third line; 
(ii) add the following phrase after the word “lenders”: “and their
counsel and advisors”; (iii) add the following after the word “accountants”: “Guarantor”;
and (iv) add the following to the end of the paragraph:  “The Parties hereby acknowledge that the
disclosure of price data only without counterparty name does not contravene
this Section 10 so long as the data is disclosed to an index publisher that
publishes the data in aggregated form and does not identify the Parties.”


 


The following shall be
added as a new Section 10.12:


“10.12  With respect to any suit, action or
proceedings relating to this Agreement, each Party irrevocably submits to the
non-exclusive jurisdiction of the courts of the State of New York and the
United States District Court located in the borough of Manhattan in New York
City and waives any objection it may have at any time to the laying of venue of
any such proceedings brought in any such court, waives any claim that such
proceedings have been brought in any inconvenient forum and further waives the
right to object, with respect to such proceedings, that such court does not
have any jurisdiction over such Party. 
EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION, CLAIM
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY CREDIT SUPPORT DOCUMENT.”


The following shall be
added as a new Section 10.13:


“10.13  From the date of entering
into a Transaction under this Master Agreement and throughout the term of such
Transaction, the Parties each warrant and covenant as follows:


(a)     Absent the agreement of all Parties to the
proposed change, the standard of review for changes to any section of this
Master Agreement (including all Transactions and/or Confirmations) specifying
the rate(s) or other material economic terms and conditions agreed to by the
Parties herein, whether proposed by a Party, a non-party or FERC acting sua
sponte, shall be the “public interest” standard of review set forth in United
Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal
Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956)( the “Mobile-Sierra”
doctrine).


 


 


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(b)     The Parties, for themselves and their
successors and assigns, (i) agree that this “public interest” standard shall
apply to any proposed changes in any other documents, instruments or other
agreements executed or entered into by the Parties in connection with this
Master Agreement and (ii) hereby expressly and irrevocably waive any rights
they can or may have to the application of any other standard of review,
including the “just and reasonable” standard.”


(c)     With respect to Transactions in ERCOT,
absent the agreement of all Parties to the proposed change, the standard of
review for changes to any portion of this Master Agreement or any Transaction
entered into hereunder proposed by a Party, a non-party, or the Public Utility
Commission of Texas acting sua sponte,
shall be the “public interest” standard of review set forth in High Plains Natural Gas Co. v. Railroad Commission,
Tex. Cov. Appl. — Austin 1971, writ ref d
n.r.e.)(the “High Plains” doctrine).”


 


The
following shall be added as a new Section 10:14:


“10.14  Credit Sleeve Provisions:


(a)     Consent to
Assignment.  Party B hereby
consents to the assignment by Party A to Merrill Lynch Commodities, Inc. and
Merrill Lynch & Co., Inc (together, the “Merrill Parties”) of all of Party A’s
rights under this Agreement, including all rights to receive payments from
Party B under this Agreement (any such payment, a “Receivable”),
as collateral security for Party A’s obligations to the Merrill Parties in
connection with an enhanced credit structure for Party A’s retail electric
business provided by the Merrill Parties (the “Collateral Assignment”).


 


(b)     Collateral Account.  Party A hereby unconditionally and
irrevocably authorizes and directs Party B to make, and, unless and until
otherwise required by law or this agreement is terminated, Party B hereby
agrees to make, any and all payments in respect of Receivables directly by wire
transfer to the account specified in this Cover Sheet (the “Collateral Account”).  All such payments by Party B to the
Collateral Account shall be free and clear of any deduction, set-off, netting
arrangements or counterclaim, except as expressly provided in this Agreement.


 


(c)     Notice & Right to Cure Events of Default.  As set forth above, the Merrill Parties shall
be provided with all notices under this Agreement, including notices of any
Potential Event of Default or Event of Default hereunder.  In the event of a Potential Event of Default
or Event of Default in which Party A is, or may become, the Defaulting Party,
the Merrill Parties shall be permitted, at their option, to cure such default, [(if such event of default is capable
of being cured by either Merrill Party [TO BE USED AS FALLBACK])] within
any grace period applicable to Party A for  such
Potential Event of Default or Event of Default.”


Additional
Provisions:


The following
provisions shall be added to Schedule P: Products and Related Definitions:


“1.  Other Products and Service Levels.


        If the Parties agree to a service level defined by a
different agreement (i.e., the WSPP agreement, the ERCOT agreement, etc.) for a
particular Transaction, then, unless the Parties expressly state and agree that
all the terms and conditions of such other agreement will apply, such reference
to a service level/product defined by such other agreement means that the
service level for that Transaction is subject to the applicable regional
reliability requirements and guidelines as well as the excuses for performance,
Force Majeure, Uncontrollable Forces, or other such excuses applicable to
performance under such other agreement, to the extent inconsistent with the
terms of this Agreement, but all other terms and conditions of this Agreement remain
applicable including, without limitation, Section 2.2.


 2.   Index Transactions. If the
Contract Price for a Transaction is determined by reference to a third-party
information source, then the following provisions shall be applicable to such
Transaction.


(a)   Market Disruption. If a Market
Disruption Event occurs during a Determination Period, the Floating Price for
the affected Trading Day(s) shall be the fallback reference price specified by
the Parties if the Parties have specified such a fallback reference price.  If the Parties did not specify a fallback
reference price the Floating Price shall be determined by reference to the
Floating Price specified in the Transaction for the first Trading Day
thereafter on which no Market Disruption Event exists; provided, however, if
the Floating Price is not so determined within three (3) Business Days after
the first Trading Day on which the Market Disruption Event occurred or existed,
then the Parties shall negotiate in good faith to agree on a Floating Price (or
a method for determining a Floating Price), and if the Parties have not so
agreed on or before the twelfth Business Day following the first Trading Day on
which the Market Disruption Event occurred or existed, then the Floating Price
shall be determined in good faith by taking the average of two dealer quotes
obtained from Reference Market Makers as defined in the Collateral Annex.


 


 


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    “Determination Period”
means each calendar month a part or all of which is within the Delivery Period
of a Transaction.


      “Exchange” means, in respect of a
Transaction, the exchange or principal trading market specified in the relevant
Transaction.


        “Floating Price” means a Contract Price specified in a
Transaction that is based upon a Price Source.


       “Market Disruption Event” means,
with respect to any Price Source, any of the following events: (a) the failure
of the Price Source to announce or publish the specified Floating Price or
information necessary for determining the Floating price; (b) the failure of
trading to commence or the permanent discontinuation or material suspension of
trading in the relevant options contract or commodity on the Exchange or in the
market specified for determining a Floating Price; (c) the temporary or
permanent discontinuance or unavailability of the Price Source; (d) the
temporary or permanent closing of any Exchange specified for determining a
Floating Price; or  (e) a material change
in the formula for or the method of determining the Floating Price.


        “Price Source” means, in respect of a Transaction, the
publication (or such other origin of reference, including an Exchange)
containing (or reporting) the specified price (or prices from which the
specified price is calculated) specified in the relevant Transaction.


      “Trading Day” means a day in
respect of which the relevant Price Source published the Floating Price.


(b)   Corrections to Published Prices.  For purposes of determining a Floating Price
for any day, if the price published or announced on a given day and used or to
be used to determine a relevant price is subsequently corrected and the
correction is published or announced by the person responsible for that
publication or announcement within two (2) years of the original publication or
announcement, either Party may notify the other Party of (i) that correction
and (ii) the amount (if any) that is payable as a result of that correction.  If, not later than thirty (30) days after
publication or announcement of that correction, a Party gives notice that an
amount is so payable, the Party that originally either received or retained
such amount will, not later than three (3) Business Days after the
effectiveness of that notice, pay, subject to any applicable conditions
precedent, to the other Party that amount, together with interest at the
Interest Rate for the period from and including the day on which payment
originally was (or was not) made to but excluding the day of payment of the
refund or payment resulting from that correction.


(c)   Calculation of Floating Price.  For the purposes of the calculation of a
Floating Price, all numbers shall be rounded to three (3) decimal places.  If the fourth (4th) decimal number
is five (5) or greater, then the third (3rd) decimal number shall be
increased by one (1), and if the fourth (4th) decimal number is less
than five (5), then the third (3rd) decimal number shall remain
unchanged.”


 


 


 


 


 


 


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IN WITNESS
WHEREOF, the Parties have caused this Master Agreement to be duly executed as
of the date first above written.


	
  RELIANT
  ENERGY POWER SUPPLY, LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
  Title:

  	
   

  
							



 


 


DISCLAIMER:  This
Master Power Purchase and Sale Agreement was prepared by a committee of
representatives of Edison Electric Institute (“EEI”) and National Energy
Marketers Association (“NEM”) member companies to facilitate orderly trading in
and development of wholesale power markets. 
Neither EEI nor NEM nor any member company nor any of their agents,
representatives or attorneys shall be responsible for its use, or any damages
resulting therefrom.  By providing this
Agreement EEI and NEM do not offer legal advice and all users are urged to
consult their own legal counsel to ensure that their commercial objectives will
be achieved and their legal interests are adequately protected.


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


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©COPYRIGHT 2000  by the Edison Electric Institute and National Energy Marketers
Association
















Exhibit C2


To Credit Sleeve
and Reimbursement Agreement


Form of ISDA Power Purchase and Hedging Contract


 


ISDA®


International
Swaps and Derivatives Association, Inc.


 


SCHEDULE


 


to the


2002
Master Agreement


 


dated as of        T.B.D.
             


 


between


 


RELIANT ENERGY
POWER SUPPLY, LLC (“Party A”)


 


and


 


                                                                                 (“Party B”)


 


 


Part 1


TERMINATION
PROVISIONS


 


 


In this Agreement:


 


(a)           “Specified
Entity” means in relation to Party A for the purpose of:


 


                                                                                Section
5(a)(v):     Not Applicable


                                                                                Section
5(a)(vi):    Not Applicable


                                                                                Section
5(a)(vii):   Not Applicable


                                                                                Section
5(b)(v):     Not Applicable


 


                in relation to Party B for the purpose of:


 


                                                                                Section
5(a)(v):     Not Applicable


                                                                                Section
5(a)(vi):    Not Applicable


                                                                                Section
5(a)(vii):   Not Applicable


                                                                                Section
5(b)(v):     Not Applicable


 


(b)                                 The “Default Under Specified
Transaction” provision of Section 5(a)(v) of this Agreement and
the definition of “Specified Transaction” of
this Agreement will apply only to each of Party A, Party B, and Party B’s
Credit Support Provider but will not apply to Party A’s Credit Support
Provider.


 


(c)                                  The “Cross
Default” provisions of Section 5(a)(vi) of this Agreement will
apply to both Party A and Party B provided, however, that Section 5(a)(vi)(1)
shall be amended as follows:


 


 

















 


The words “or
other similar condition or event (however described)” in the first  line of the provision are deleted and the
comma in the second line is replaced with “or”.


 


“Threshold Amount” means (i) with respect to Party A, $100,000,000
(or its equivalent in another currency) and (ii) with respect to Party B, $                 
(or its equivalent in another currency).


 


(d)                                 The “Automatic
Early Termination” provision of Section 6(a) of this Agreement
will not apply.


 


(e)           “Termination
Currency” means United States Dollars.


 


(f)                                    “Additional
Termination Event(s)”  will not
apply.


 


 


Part 2


TAX REPRESENTATIONS


 


(a)                                  Payer Tax Representation.  For the purpose of Section 3(e) of this
Agreement, each of Party A and Party B will make the following representation:


 


It is not required
by any applicable law, as modified by the practice of any relevant governmental
revenue authority, of any Relevant Jurisdiction to make any deduction or
withholding for or on account of any Tax from any payment (other than interest
under Section 9(h) of this Agreement) to be made by it to the other party under
this Agreement.  In making this
representation, it may rely on (i) the accuracy of any representations made by
the other party pursuant to Section 3(f) of this Agreement, (ii) the
satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of this
Agreement and the accuracy and effectiveness of any document provided by the
other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and
(iii) the satisfaction of the agreement of the other party contained in Section
4(d) of this Agreement; provided that it shall not be a breach of this
representation where reliance is placed on clause (ii) herein and the other
party does not deliver a form or document under Section 4(a)(iii) by reason of
material prejudice to its legal or commercial position.


 


(b)                                 Payee Tax Representations.  For the purpose of Section 3(f) of this Agreement,
Party A and Party B make the representation(s) specified below, if any:


 


Party A: Party A is a limited liability company
organized under the laws of the State of Delaware and is a resident of the
United States of America for U.S. tax purposes. 
Party A’s Federal Tax I.D. number is 20-4823108.


 


Party B: Party B is a [corporation] organized
under the laws of the State of                  
and is a resident of the United States of America for U.S. tax purposes.  Party B’s Federal Tax I.D. number is                  .


 


 


 

















 


Part 3


AGREEMENT TO DELIVER DOCUMENTS


 


For the purpose of
Sections 4(a)(i) and (ii) of this Agreement, each party agrees to deliver the
following documents, as applicable:


 


	
  Party
  Required to Deliver Document

  	
   

  	
  Form/

  Document/

  Certificate

  	
   

  	
  Date By
  Which

  To Be

  Delivered

  	
   

  	
  Covered
  By Section 3(d) Representation

  
	
  Each party and its
  Credit Support Provider, as applicable.

  	
   

  	
  Copies of documents
  evidencing necessary corporate or equivalent authorizations and approvals
  regarding execution, delivery and performance of this Agreement and any
  Credit Support Document.

   

  	
   

  	
  Upon request.

  	
   

  	
  Yes.

  
	
  Each party and its
  Credit Support Provider, as applicable.

  	
   

  	
  Certificate of
  Authority and specimen signatures of individuals executing this Agreement and
  any Credit Support Document.

   

  	
   

  	
  Upon request.

  	
   

  	
  Yes.

  
	
  Each party.

  	
   

  	
  Specimen signatures or
  other confirming evidence of individuals authorized to execute Confirmations.

   

  	
   

  	
  Upon request.

  	
   

  	
  Yes.

  
	
  Each party and its
  Credit Support Provider, as applicable.

  	
   

  	
  A duly executed
  original of the Credit Support Annex, and, if specified in Part 4 below, a
  guarantee in the form specified below, executed by such party’s Credit
  Support Provider specified below.

   

  	
   

  	
  Upon execution.

  	
   

  	
  Yes.

  
	
  Each party and its
  Credit Support Provider, as applicable.

  	
   

  	
  Audited annual
  financial statements of such party’s Credit Support Provider, or, if no
  Credit Support Provider, such party for each fiscal year prepared in
  accordance with generally accepted accounting principles in the country in
  which such entity is organized and on a basis consistent with that of the
  audited annual financial statements of such entity for its prior fiscal year.

  	
   

  	
  As soon as
  practicable after demand but no later than 120 days after the end of each
  fiscal year of a party’s Credit Support Provider if such financial statement
  is not available on “EDGAR” or its home page on the World Wide Web at http://www.ml.com/,
  with respect to Party A and [Insert Counterparty’s Web Address], with respect
  to Party B.

  	
   

  	
  Yes.

  
	
  Each party and its
  Credit Support Provider, as applicable.

  	
   

  	
  Unaudited financial
  statements of such party’s Credit Support Provider, or, if no Credit Support
  Provider, such party for each quarter prepared in accordance with generally
  accepted accounting principles in the country in which such entity is
  organized and on a basis consistent with that of the annual financial
  statements of such entity.

  	
   

  	
  As soon as
  practicable after demand if such financial statement is not available on
  “EDGAR” or its home page on the World Wide Web at http://www.ml.com/, with
  respect to Party A and [Insert Counterparty’s Web Address], with respect to
  Party B.

  	
   

  	
  Yes.

  



 


 

















Part 4


MISCELLANEOUS


 


(a)           Address for Notices. 
For the purpose of Section 12(a) of this Agreement:


 


                Address for notices or communications to Party A:


 




	
  Street Address:

  	
   

  	
  1000 Main,
  Houston, TX 77002

  
	
  Mailing
  Address:

  	
   

  	
  P.O. Box 4455,
  Houston, TX 77210-4455

  
	
  Attention:

  	
   

  	
  Contract
  Administration

  
	
  Facsimile No.:

  	
   

  	
  (713) 497-9561

  
	
  Telephone No.:

  	
   

  	
  (713) 497-5855

  
	
  Confirmations:

  	
   

  	
  (713) 497-9562
  (Facsimile)

  
	
  Invoices:

  	
   

  	
  (713) 497-0098
  (Facsimile)

  






 


With a copy to:


 




	
  Merrill Lynch Commodities, Inc.

  
	
  20 East Greenway Plaza

  
	
  7th Floor

  
	
  Houston, Texas 77253-3327

  
	
  Attn:  Legal

  
	
  Fax:  713-544-5551

  
	
  Phone:  713-544-4975

  






 


With additional
notices of an Event of Default or Potential Event of Default to:




	
  Street Address:

  	
   

  	
  1000 Main,
  Houston, TX 77002

  
	
  Attention:

  	
   

  	
  Vice President
  and General Counsel

  
	
  Facsimile No.:

  	
   

  	
  (713) 537-7063

  
	
  Telephone No.:

  	
   

  	
  (713) 497-7063

  






 


Address for
notices or communications to Party B:


 




	
  Address:

  	
   

  	
   

  
	
  Attention:

  	
   

  	
   

  
	
  Facsimile No.:

  	
   

  	
   

  
	
  Telephone No.:

  	
   

  	
   

  
	
  Confirmations:

  	
   

  	
  (Facsimile)

  






 


(b)                                 Process Agent. 
For the purpose of Section 13(c) of this Agreement:


 


                Party
A appoints as its Process Agent: CT Corporation Systems, 111 Eighth Avenue, New
York, New York 10011.


 


                Party B appoints as its Process
Agent:                  


 


(c)                                  Offices. 
The provisions of Section 10(a) of this Agreement will apply to this
Agreement.


 


(d)                                 Multibranch
Party.  For the purpose of Section 10(b) neither
Party A nor Party B is a Multibranch Party.


 


(e)                                  Calculation
Agent.  The Calculation Agent is Party A unless
otherwise specified in a Confirmation in relation to the relevant
Transaction.  If Party A is the
Defaulting Party, the Calculation Agent shall be Party B until such time as
Party A is no longer a Defaulting Party. 
All determinations by the Calculation Agent are subject to agreement by
Party A and Party B.  If the Parties are
unable to agree on a calculation made by a particular Calculation Agent, then
the parties shall appoint another mutually acceptable Calculation Agent that is
a recognized dealer in the relevant market. 
Each party agrees to submit invoices on a monthly basis for amounts due
from the other party.


 

















 


(f)            Credit Support Document.


 


	
  (i)

  	
  With respect to Party A and Party B, the Credit
  Support Annex attached hereto, which constitutes a Credit Support Document is
  incorporated by reference in, and made part of this Agreement (unless
  provided otherwise in a Confirmation) as set forth in full in this Agreement.

  
	
   

  	
   

  
	
  (ii)

  	
  With respect to Party
  A, a Guaranty executed by Party A’s Credit Support Provider in the form of
  Exhibit A.

  
	
   

  	
   

  
	
  (iii)

  	
  With respect to Party
  B, a Guaranty executed by Party B’s Credit Support Provider in form and
  substance reasonably satisfactory to Party A.

  



 


(g)                                 Credit Support
Provider.


 


Credit Support
Provider means in relation to Party A: Merrill Lynch & Co., Inc. (“ML&Co.”)


 


                                                Credit Support Provider means in relation
to Party B:                 


 


(h)                                 Governing Law. 
This Agreement will be governed by and construed in accordance with the
laws of the State of New York (without reference to choice of law doctrine), as
provided in Section 5-1401 of the New York General Obligations Law.


 


(i)                                     Jurisdiction. 
Section 13(b)(i) of this Agreement is hereby deleted in its entirety and
replaced with the following:


 


                                                “(b)         Jurisdiction.  With respect to any suit, action or proceedings
relating to this Agreement (“Proceedings”), each party irrevocably:


 


submits to the non-exclusive jurisdiction of the
courts of the State of New York and the United States District Court located in
the borough of Manhattan in New York City in accordance with the provisions of
Section 5-1402 of the New York General Obligations Law.”


 


(j)                                     Waiver of Jury
Trial.  Section 13 of this Agreement is hereby
amended to add the following as a new Section 13(e) of this Agreement:


 


                                                “(e)         WAIVER OF JURY TRIAL.  EACH PARTY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION, CLAIM OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY CREDIT SUPPORT DOCUMENT AND CLAIM OR RECOVER
IN ANY SUCH SUIT, ACTION, CLAIM OR PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE
OR CONSEQUENTIAL DAMAGES. EACH PARTY (i) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF THE OTHER PARTY OR ANY CREDIT SUPPORT PROVIDER HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF SUCH A SUIT, ACTION, CLAIM OR PROCEEDING, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND PROVIDE FOR ANY CREDIT SUPPORT DOCUMENT,
AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION.”


 


(k)                                  Netting of
Payments.  Subparagraph (ii) of Section 2(c) of this
Agreement will not apply and therefore, the Multiple Transaction Payment
Netting specified in Section 2(c) of this Agreement will apply to all
Transactions[, except Power Transactions and Gas Transactions.   Power Transactions and Gas Transactions
shall be netted together in accordance with Parts 7 and 8 of the Schedule.]  REVISE ACCORDINGLY, IF
USING THE GAS AND/OR POWER ANNEX


 
















 


(l)                                     “Affiliate” with respect to Party A, will mean RERH
Holdings, LLC, and any subsidiary thereof, including Reliant Energy Retail
Holdings, LLC,  and Reliant Energy Retail
Services, LLC, and with respect to Party B, will mean                  
or if none use [have the meaning specified in Section 14 of this Agreement.


 


(m)                               No Agency. 
The provisions of Section 3(g) will apply to this Agreement.


 


 


Part 5


OTHER PROVISIONS


 


(a)                                  Absence
of Litigation.  Section 3(c) of this Agreement is hereby
amended by: (i) adding in the third line thereof after the word, “governmental”
the words “or regulatory”; (ii) adding the words “in any material respect
except as disclosed in each parties’ or its Credit Support Provider’s, as
applicable, SEC filing” immediately prior to the end thereof; and (iii)
deleting “, to its knowledge,” after “or” in the first line and reinserting
such phrase before “pending” in the first line of such section.


 


(b)                                 Accuracy
of Specified Information.  Section 3(d) of this Agreement is hereby
deleted in its entirety and replaced with the following:


 


                                                “All information that is furnished in
writing by or on behalf of it to any of the other parties hereto is, as of the
date of the information, true accurate and complete in every material respect,
or, in the case of audited or unaudited financial statements, fairly present
the financial condition of the relevant entity and have been prepared in
accordance with generally accepted accounting principles, consistently applied,
except as otherwise indicated in the notes of such financial statements.”


 


(c)                                  Additional
Representations.  Section 3 of this Agreement is hereby
further amended by adding at the end thereof the following subsections (h),
(i), and (j):


 


“(h)                           Eligible Contract
Participant.  It constitutes an “Eligible Commercial Entity”
and an “Eligible Contract Participant” as such terms are defined in Sections
1a(11) and 1a(12) (respectively) of the Commodity Exchange Act, as amended (7
U.S.C. §§ 1a (11), 1a (12) (2000).


 


                (i)                                     Standardization,
Creditworthiness, and Transferability.  The economic
terms of this Agreement, any Credit Support Document to which it is a party and
each Transaction have been individually tailored and negotiated by it.  It has received and reviewed financial
information concerning the other party and has had a reasonable opportunity to
ask questions of and receive answers and information from the other party
concerning such other party, this Agreement, such Credit Support Document, and
such Transaction, and the creditworthiness of the other party was a material
consideration in its entering into or determining the terms of this Agreement,
such Credit Support Document, and such Transaction.  The transferability of this Agreement, such
Credit Support Document, and such Transaction is restricted as provided herein
and therein.


 


                                                (j)                                     No Reliance.  In
connection with the negotiation of, the entering into, and the confirming of
the execution of, this Agreement, any Credit Support Document to which it is a
party, and each Transaction: (i) it is not relying upon any advice, statements,
recommendations or representations (whether written or oral) of the other party
other than the written representations expressly set forth in this Agreement,
in such Credit Support Document or in the Confirmation of such Transaction;
(ii) the other party has not given to it (directly or indirectly through any
other person) any advice, counsel, assurance, guarantee, or representation
whatsoever as to the expected or projected success, profitability, return, performance,
result, effect, consequence, or benefit (either legal, regulatory, tax,
financial, accounting, or otherwise) of this Agreement, such Credit Support
Document, or such Transaction; (iii) it has consulted with its own legal,
regulatory, tax, business, investment, financial, and accounting advisors to
the extent it has deemed necessary, and it has made its own investment,
hedging, and trading decisions based upon its own judgment and upon any advice
from such advisors as it has deemed necessary, and not upon any view expressed by



 


 

















 


the other party;
(iv) all trading decisions have been the result of arm’s length negotiations
between the parties and are not intended to preclude either Party (or any of
such party’s Affiliates) from undertaking proprietary trading activities,
including hedging and other transactions relating, directly or indirectly, to
generation capacity owned or controlled by such party or its Affiliates; (v) it
is entering into this Agreement, such Credit Support Document, and such Transaction
with a full understanding of all of the risks hereof and thereof (economic and
otherwise) and it is capable of assuming and willing to assume (financially and
otherwise) those risks and (vi) it has the capacity to evaluate (internally or
through independent professional advice) this Agreement, any such Credit
Support Document and each such Transaction (including decisions regarding the
appropriateness or suitability thereof) and has made its own decision to enter
into this Agreement, such Credit Support Document and each such Transaction.”


 


(d)                               Provisions Relating to
Bankruptcy Code.


 


(A)            Each Party acknowledges and agrees
that (i) Power Transaction(s) and Gas Transaction(s) constitute “forward
contracts” within the meaning of title 11 of the United States Code (the “Bankruptcy Code”); (ii) each of
Party A and Party B is a “forward contract merchant” within the meaning of the
Bankruptcy Code with respect to any Transactions that constitute “forward
contracts”; (iii) all payments made or to be made by one Party to the other
Party pursuant to this Agreement constitute “settlement payments” within the
meaning of the Bankruptcy Code; (iv) all transfers of Credit Support by one
Party to the other Party under this Agreement constitute “margin payments” within
the meaning of the Bankruptcy Code; and (v) each Party’s rights under Section
6, “Early Termination”, of this Agreement constitutes a “contractual right to
liquidate” the Transactions within the meaning of the Bankruptcy Code.


 


(B)                                      Each Party acknowledges and agrees that,
for purposes of this Agreement, the other Party is not a “utility” as such term
is used in Section 366 of the Bankruptcy Code, and each Party agrees to waive
and not to assert the applicability of the provisions of Section 366 in any bankruptcy
proceeding wherein such Party is a debtor. In any such proceeding, each Party
further agrees to waive the right to assert that the other Party is a provider
of last resort.


 


 


(e)                                    Accounts.  Payments shall be made in United States
Dollars to the following accounts:


 


                                Party A


 


                                Pay:                        Reliant Energy Power
Supply, LLC


                                Bank:                      Mellon Bank — Pittsburgh,
PA


 


                                Fed.
ABA No.:      043000261


                                Account No. :       1194193


 


                                Party B


 


                                Pay:                                                                                                                        


                                Bank:                                                                                                                      


                                Fed.
ABA No.:                                                                                                      


                                Account
No/


                                CHIPS
UID:                                                                                                           


 


 


(f)                                    Confirmations.  Section
9(e)(ii) is hereby amended by deleting in its entirety and replacing with the
following:


 


                                                “(ii) The parties intend that they are
legally bound by the terms of each Transaction from the moment they 


 

















 


                agree to those terms (whether
orally or otherwise).   Party A shall
send to Party B within three (3) Local Business Days after the Transaction is
entered into a Confirmation setting forth the terms of such Transaction.  Party B shall execute and return the
Confirmation to Party A or request correction in writing of any error within
two (2) Local Business Days of receipt. 
Failure of Party B to respond within such period shall not affect the
validity or enforceability of such Transaction and shall be deemed to be an affirmation
of such terms sent.  If Party A fails to
send a Confirmation within three (3) Local Business Days after the Transaction
is entered into, a Confirmation may be forwarded by Party B to Party A.  If Party A objects to any term(s) of such
Confirmation, Party A shall notify Party B in writing of such objections within
two (2) Local Business Days of Party A’s receipt thereof, failing which Party A
shall be deemed to be an affirmation of such terms sent.  If Party A and Party B each send a
Confirmation and neither party objects to the other party’s Confirmation within
two (2) Local Business Days of receipt, Party A’s Confirmation shall be deemed
to be accepted and shall be the controlling Confirmation, unless (i) Party A’s
Confirmation was sent more than three (3) Local Business Days after the
Transaction was entered into and (ii) Party B’s Confirmation was sent prior to
Party A’s Confirmation, in which case Party B’s Confirmation shall be deemed to
be accepted and shall be the controlling Confirmation.  Failure by either party to send or either
party to return an executed Confirmation or any objection by either party shall
not invalidate the Transaction agreed to by the parties.” However,
notwithstanding the prior paragraph, in the event that any Confirmation for any
Transaction contains  provisions not
relating to the commercial terms of the Transaction, which modify or supplement
the general terms and conditions of this Agreement, such provisions shall not
be deemed accepted unless agreed to in writing by the parties. Failure to send
or to return an executed Confirmation or any objection regarding a Confirmation
by either party shall not invalidate the Transaction agreed to by the parties.”


 


(g)           Illegality.  Section 5(b)(i) is hereby amended by adding
in the first line thereof after the word “provision” and before the comma the
words “(including Part 5(i) Severability of this Schedule).”


 


(h)           Tax Event.  For purposes
of this Agreement, Section 5(b)(iii) is hereby amended to delete the words, “or
there is a substantial likelihood that it will”, as they appear after the word “will”
and before the word “on” in the fourth line thereof.


 


(i)            Severability.  Any provision of this Agreement
(including any Transaction hereunder or any Credit Support Document) which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, such Transaction or
such Credit Support Document or affecting the validity or enforceability of
such provision in any other jurisdiction unless such severance shall
substantially impair the benefits of the remaining portions of this Agreement,
such Transaction or such Credit Support Document or changes the reciprocal
obligations of the parties. The parties hereto shall endeavor in good faith
negotiations to replace the prohibited or unenforceable provision with a valid
provision, the economic effect of which comes as close as possible to that of the
prohibited or unenforceable provision.


 


(j)            Telephone Recording.  Each party to this Agreement
acknowledges and agrees to the taping or electronic recording (“Recording”) of
conversations between the parties regarding any Transaction and the terms thereof
to this Agreement whether by one or the other or both parties, and that any
such Recordings will be retained in confidence, secured from improper access,
and may be submitted as evidence in any suit, action or proceedings relating to
this Agreement or any actual or potential Transaction hereunder.  In the event of any dispute between the
parties relating to an actual or potential Transaction, the parties may use
Recordings and any other “sufficient evidence” (as such term is defined in
Section 5-701(b)(3) of the New York General Obligations Law) that a contract
has been made between the parties as prima facie
evidence of the terms and conditions of such Transaction until such time (if
any) as a written Confirmation has been executed.  Each party waives any further notice of such
monitoring or Recording, and agrees to notify its personnel of such monitoring
or recording and to obtain any necessary consent of such personnel.


 


(k)           Confidentiality.  Unless otherwise
agreed, the contents of this Agreement, 
the Confirmations, and all Transactions, hereunder,  as well as all other documents relating
thereto and any information pertaining thereto made available by either party
or its Credit Support Provider(s) to the other party or its Credit Support
Provider(s) is confidential and shall not be disclosed to any third party
(other than the Credit Support Providers), except for such information (a) as
is or may become generally available to the public, (b) as may be required in
response to any regulatory authority or any lawful summons, subpoena, or
otherwise in connection with any litigation or to comply with any applicable
law, order, regulation, ruling, or accounting


 

















 


                disclosure rule or standard, (c) as may
be obtained from a non-confidential source that disclosed such information in a
manner that did not, to such party’s knowledge, violate its obligations to the
non-disclosing party or its Credit Support Provider(s) in making such
disclosure, (d) as may be furnished to Merrill Lynch Commodities, Inc. (“MLCI”)
or the disclosing party’s Affiliates, and to each of such Person’s auditors,
attorneys, advisors, lenders and their counsel and advisors, or prospective
purchasers which are required to keep the information that is disclosed in
confidence or that is disclosed in connection with communications between the
parties under the terms of Section 7, (e) regarding price, volume or delivery
point(s) of a particular Transaction(s), 
as may be disclosed to an energy pricing information aggregator,
provided that the name or any other identifying information relating to the
other party, including unique attributes or requirements thereof, is redacted
and/or otherwise not disclosed, or (f) as may have been disclosed prior to the
effective date of this Agreement.


 


(l)            Transfer.  Section 7 shall be amended by adding “which
consent shall not be unreasonably withheld or delayed” between “of the Party”
and “,except that” in the first sentence of such Section.


 


(m)          Netting. 
In the event that any Terminated Transaction cannot be aggregated
and netted against all other Terminated Transactions under Section 6(e) of the
Agreement, such excluded Terminated Transactions shall be aggregated and netted
amongst themselves to the fullest extent permitted by law.


 


(n)           Limitation
of Liability.  UNLESS
EXPRESSLY HEREIN PROVIDED, NO PARTY SHALL BE LIABLE UNDER THIS AGREEMENT FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, INCLUDING
CONSEQUENTIAL LOST PROFITS OR OTHER CONSEQUENTIAL BUSINESS INTERRUPTION
DAMAGES, BY STATUTE, IN TORT OR CONTRACT OR OTHERWISE.  IT IS THE INTENT OF THE PARTIES THAT THE
LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT
REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY
PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT OR ACTIVE OR
PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE
LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR
IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS
INCONVENIENT, AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE
APPROXIMATION OF THE HARM OR LOSS.


 


(o)           Method of Notice. Section 12(a)(ii) of the
Agreement is deleted in its entirety.


 


Part 6


ADDITIONAL
PROVISIONS FOR


COMMODITY
DERIVATIVE TRANSACTIONS


 


(a)                                  Amendments to ISDA Commodity
Definitions


Definitions. 
This Agreement and each Transaction are subject to the 2005 ISDA
Commodity Definitions (the “Definitions”), each as published by the
International Swaps and Derivatives Association, Inc. (“ISDA”), and will be
governed in all respects by the Definitions. 
The Definitions are incorporated herein by reference in and made a part
of, this Agreement as if set forth in full herein.  In the event of any inconsistency between the
provisions of this Master Agreement (including the Schedule) and the
Definitions, this Master Agreement (including the Schedule) will prevail.  In the event of any inconsistency between the
provisions of a Confirmation and this Master Agreement (including the Schedule)
or the Definitions, the Confirmation will prevail for the purpose of such
Transaction.


 


(b)           The  “Market Disruption Events”
specified in Section 7.4(d)(i) of the Definitions shall apply, except as
otherwise specifically provided herein or specified in a Confirmation.


 


(c)           The  “Disruption Fallbacks”
specified in Section 7.5 of the Definitions shall apply, except as otherwise
specifically provided in a Confirmation.


 


                “Additional Market Disruption Events”  shall apply only if so specified in the
relevant Confirmation.


 

















 


Part 7


PHYSICALLY SETTLED POWER
TRANSACTIONS


 


Pursuant to ARTICLE XIV of the
2005 ISDA Commodity Definitions, Sub-Annex F (“Power Annex”) is incorporated
into, the Agreement as a new Part 7 to the Agreement; provided, however, that
the following elections set forth in “(j) Elective Provisions” and “(k) Other Provisions” below
shall be applicable to such Part 7.  All references to “Part[6]” in Sub-Annex
F shall be replaced with “Part 7.”


 


(j)    Elective Provisions


1.               (a)(i)
         Applicability of Part 7
to Outstanding Power Transactions.  If
not checked, not applicable.


2.                (a)(ii)         
Applicability of Outstanding Credit Support held by a party in connection with
Outstanding Power Transactions.  If not
checked, not applicable.


3.               (c)
   X     Accelerated Payment Damages.  If not checked, not applicable.


4.               (d)(ii):  Timeliness of Payment


                                   Option A


                                   Option B[CHECK THIS BOX IF NOT USING
GAS ANNEX]


                           X     See Gas Annex[DELETE THIS BOX IF NOT USING GAS
ANNEX]


                        If neither is checked, Option B
shall be deemed to apply.


5.               (h)(i):   Wholesale Power Tariffs


                           X     Party A Electric Tariff.  FERC Electric Tariff, Original Volume No.
1  Dated: 
September 19, 2006   Docket
Number:  ER06-1272


                                   Party B Electric Tariff.  [Tariff/Date/Docket]  


                        If not checked, not applicable.


6.     (h)(ii) 
   X     Applicability of Severability provision.  If not checked, not applicable.


7.               (h)(iii)    X     Applicability of FERC Standard of Review and
Certain Covenants and Waivers.  If not
checked, not applicable.


 


(k)                                  Other Provisions. Notwithstanding anything in the
Agreement to the contrary, including the Power Annex hereby incorporated as
Part 7 to the Agreement and the Schedule to the Master Agreement, the following
provisions shall be deemed to amend and/or supplement the provisions of the
ISDA Power Annex set forth as a new Part 7 to the Agreement:


 


(i)                                     Part 7(b)(iii) Force
Majeure is amended by deleting the last sentence of that
provision and replacing it with the following:


 


                                                                                                    “If the pre-printed form portion of this
Agreement is the 2002 ISDA Master Agreement form, Section 5(b)(ii) of this
Agreement and the concept of “Force Majeure Event” as used elsewhere in this
Agreement shall not apply to any Power Transaction.”


 


(ii)                                  Part 7(c)(iii) Limitation on Condition Precedent  is amended by deleting the section
in inverted commas and replacing it with the following:


 


“(provided, however, that in relation to any Transaction that is a Power
Transaction, the Non-Defaulting Party may suspend performance of any or all
Power Transactions only after providing written notice to the Defaulting Party
and provided further that if an Event of Default or a Potential Event of
Default has occurred and is continuing for longer than ten (10) NERC Business Days
without an Early Termination Date being designated, then the condition
specified in this clause (1) shall cease to be a condition precedent to the
obligations under Section 2(a)(i)).”


 

















 


(iii)                               Part 7(c)(iv) Suspension of Performance shall be added as a new section as follows:


“(iv) Suspension
of Performance.  Notwithstanding, and in addition to the
remedies provided pursuant to Part 7(c)(i) and 7(c)(ii), if Seller or Buyer
fails to schedule and/or deliver/receive all or part of the Product pursuant to
a Transaction, and such failure is not excused under the terms of the Product
or by the other party’s failure to perform, then upon one (1) Local Business
Day prior written notice, and for so long as the non-performing party fails to
perform, the performing party shall have the right to suspend its performance
under any or all Transactions.”


(iv)                              Part 7(d)(v) Disputes and Adjustments of Invoices shall be added as a new section as follows:


“(v) Disputes
and Adjustments of Invoices.  With respect to any Power Transaction,
a party may, in good faith, dispute the correctness of any invoice or
any adjustment to an invoice, rendered under this Agreement or adjust any
invoice for any arithmetic or computational error within twelve (12) months of
the date the invoice, or adjustment to an invoice, was rendered.  In the event an invoice or portion thereof,
or any other claim or adjustment arising hereunder, is disputed, payment of the
undisputed portion of the invoice shall be required to be made when due, with
notice of the objection given to the other party.  Any invoice dispute or invoice adjustment
shall be in writing and shall state the basis for the dispute or
adjustment.  Payment of the disputed
amount shall not be required until the dispute is resolved.  Upon resolution of the dispute, any required
payment shall be made within two (2) Business Days of such resolution along
with interest accrued at the Interest Rate from and including the due date to
but excluding the date paid.  Inadvertent
overpayments shall be returned upon request or deducted by the party receiving
such overpayment from subsequent payments, with interest accrued at the
Interest Rate from and including the date of such overpayment to but excluding
the date repaid or deducted by the party receiving such overpayment.  Any dispute with respect to an invoice is
waived unless the other party is notified in accordance with this section
within twelve (12) months after the invoice is rendered or any specific adjustment
to the invoice is made.  If an invoice is
not rendered within twelve (12) months after the close of the month during
which performance of a Transaction occurred, the right to payment for such
performance is waived.”


 


(v)                                 Part 7(h)(iii) Miscellaneous to this
Agreement is amended by inserting the following as a new subparagraph:


“(E)  With respect to
Transactions in ERCOT, absent the agreement of all Parties to the proposed
change, the standard of review for changes to any portion of this Agreement or
any Transaction entered into hereunder proposed by a Party, a non-party, or the
Public Utility Commission of Texas acting sua
sponte, shall be the “public interest” standard of review set forth
in High Plains Natural Gas Co. v. Railroad
Commission, Tex. Cov. Appl. — Austin 1971, writ ref d n.r.e.)(the “High Plains”
doctrine).”


(vi)          Part 7(i)(ii)(B) shall be deleted and replaced with the
following:


“(B) With respect
to all Power Transactions, the words “(or to deliver or receive the Product,
the exclusive remedy for which is provided in clause (c) of Part 7 of the
Schedule)” are hereby added at the end of the parenthetical of Section
5(a)(ii)(1) of this Agreement.”


(vii)                           Part
7(i)(iv) Definitions:


 “Sales Price” is amended to (i) delete the
phrase “at the Delivery Point” from the second line and (ii) insert after the
phrase “commercially reasonable manner” in the sixth line, the following phrase
“; provided, however if the Seller is unable after using commercially
reasonable efforts to resell all or a portion of the Product not received by
Buyer, the Sales Price with respect to such unsold Product shall be deemed
equal to zero (0)”.


(viii)        Part 7(i)(iv) Definitions is
amended by adding the following definitions:


 “Claims” means all third party claims or
actions, threatened or filed and, whether groundless, false, fraudulent or
otherwise, that directly or indirectly relate to the subject matter of an
indemnity, and the resulting losses, damages, 


 

















 


expenses, attorney’s
fees and court costs whether incurred by settlement or otherwise, and whether
such claims or actions are threatened or filed prior to or after the
termination of this Agreement.


 


(ix)                                Part 7(i) Certain Modifications to this
Agreement  is amended by inserting the following
as new subparagraphs:


(v)           Tax
Event:  Section 5(b)(iii).  With respect to any Power Transaction,
Section 5(b)(iii) is hereby deleted, and the concept of “Tax Event” as used
elsewhere in this Agreement shall not apply to any Power Transactions.


(vi)          Miscellaneous:  Section 9.  Section 9 of this Agreement is hereby amended
by adding the following as a new subsection:


“ (i)                 Other Products and Service
Levels.


If the Parties
agree to a service level defined by a different agreement (i.e., the ERCOT
agreement, etc.) for a particular Transaction, then, unless the Parties
expressly state and agree that all the terms and conditions of such other
agreement will apply, such reference to a service level/product defined by such
other agreement means that the service level for that Transaction is subject to
the applicable regional reliability requirements and guidelines as well as the
excuses for performance, Force Majeure, Uncontrollable Forces, or other such
excuses applicable to performance under such other agreement, to the extent
inconsistent with the terms of this Agreement, but all other terms and
conditions of this Agreement remain applicable.”


 


[Delete if not using Gas
Annex]Part 8


PHYSICALLY SETTLED NATURAL GAS
TRANSACTIONS


 


Pursuant to ARTICLE XIII of
the 2005 ISDA Commodity Definitions, Sub-Annex E (“Gas Annex”) is hereby deemed
to be part of, and incorporated into, the Agreement as a new Part 8 to the
Agreement; provided, however, that the following elections set forth in “(l)
Elective Provisions” “(m) Notices for Gas Transactions” and “(n) “Other
Provisions/Modifications to this Gas Annex”. 
All references to “Part [6]” in Sub-Annex E shall be replaced with “Part
8”.


 


(l)            Elective Provisions


 


1. (a)(ii) —
Outstanding Gas Transactions.  This
Gas Annex shall apply to the following pre-existing Gas Transactions pursuant
to clause (a)(ii):


 


         
Option A: All Gas Transactions outstanding between the parties as of the
date this Gas Annex becomes effective.


 


           Option B: The Gas Transactions listed in
Schedule 1 to this Gas Annex.


 


          Option C: None of the Gas Transactions between the
parties that were executed prior to the date this Gas Annex becomes effective.


 


   X      Option D: Not applicable.


 


If none of the
above options is selected, Option A shall apply.


 


2.
(a)(iii) — Outstanding Gas Credit Support


 


          Outstanding Gas Credit Support held by a party in
connection with Outstanding Gas Transactions shall be deemed to have been
delivered under and in connection with this Agreement pursuant to clause
(a)(iii).


 


If not checked,
not applicable.


 

















 


 


3.
(b)(ii) — Performance Obligation (remedy for breach of Firm obligation)


 


   X     Option A:
Cover Standard


 


          Option B: Spot Price Standard


 


If neither option
is selected, Option A shall apply.


 


4.
(e) — Taxes


 


   X     Option A:
Buyer Pays At and After Delivery Point


 


           Option B: Seller Pays Before and At Deliver
Point


 


If neither option
is selected, Option A shall apply.


 


5.
(f)(ii) — Payment Date


 


           Option A: the later of the 25th Day of Month
following Month of delivery or 10 Days after receipt of the invoice by Buyer
(provided that if the Payment Date is not a Local Business Day, payment is due
on the next Local Business Day following that date).


 


          Option B: the later of the         
Day of Month following Month of delivery or 10 Days after receipt of the
invoice by Buyer (provided that if the Payment Date is not a Local Business
Day, payment is due on the next Local Business Day following that date).


 


          Option C: Notwithstanding anything to the contrary in
the Schedule, payments with respect to both Gas Transactions and Power
Transactions (as defined separately in the Schedule) will be netted and payable
on or before the later of the 20th Day of Month following Month of delivery or
10 Days after receipt of the invoice by Buyer (provided that if the Payment
Date is not a Local Business Day, payment is due on the next Local Business Day
following that date).


 


   X     Option D: Notwithstanding anything to the contrary in
the Schedule, payments with respect to both Gas Transactions and Power
Transactions (as defined separately in the Schedule) will be netted and payable
on or before the later of the 25th Day of Month following Month of delivery or
10 Days after receipt of the invoice by Buyer (provided that if the Payment Date
is not a Local Business Day, payment is due on the next Local Business Day
following that date).


 


If none of the
above options is selected, Option A shall apply.


 


6.
(k)(xxii) — Alternative to Spot Price Index. The parties have selected the following alternative
index as the Spot Price Index:                 .
If no index is specified, the Spot Price Index specified in clause (l)(xxi)
applies.


 


(m)          Notices for Gas Transactions


 


	
  PARTY
  A

  	
  PARTY
  B

  
	
  Invoices:

  	
  Invoices:

  
	
  As set forth in Part 4
  of the Schedule unless otherwise set forth below:

  	
  As set forth in Part 4
  of the Schedule unless otherwise set forth below:

  
	
  Attn: Gas Accounting

  	
  Attn:

  
	
  Phone: 713-497-4143

  	
  Phone:

  
	
  Facsimile: 713-497-9663

  	
  Facsimile:

  



 

















 


	
  Nominations:

  	
  Nominations:

  
	
  As set forth in Part 4
  of the Schedule unless otherwise set forth below:

  	
  As set forth in Part 4
  of the Schedule unless otherwise set forth below:

  
	
  Attn:

  	
  Attn:

  
	
  Phone:

  	
  Phone:

  
	
  Facsimile:

  	
  Facsimile:

  
	
   

  	
   

  
	
  Confirmations:

  	
  Confirmations:

  
	
  As set forth in Part 4
  of the Schedule unless otherwise set forth below:

  	
  As set forth in Part 4
  of the Schedule unless otherwise set forth below:

  
	
  Attn: Contract
  Administration

  	
  Attn:

  
	
  Phone: 713-497-3639

  	
  Phone:

  
	
  Facsimile: 713-497-9562  

  	
  Facsimile:

  
	
   

  	
   

  
	
  Option
  Exercise:

  	
  Option
  Exercise:

  
	
  As set forth in Part 4
  of the Schedule unless otherwise set forth below:

  	
  As set forth in Part 4
  of the Schedule unless otherwise set forth below:

  
	
  Attn:

  	
  Attn:

  
	
  Phone:

  	
  Phone:

  
	
  Facsimile:

  	
  Facsimile:

  
	
   

  	
   

  
	
  o  Wire Transfer - or - o  ACH (check one box):

  	
  o  Wire
  Transfer - or - o  ACH (check one box):

  
	
  Bank:

  	
   

  	
     Bank: 

  	
   

  
	
  ABA: 

  	
   

  	
     ABA: 

  	
   

  
	
  Account: 

  	
   

  	
     Account: 

  	
   

  
	
  Other Details:

  	
   

  	
     Other Details:

  	
   

  
					



 


(n)                                 Other
Provisions/Modifications to this Gas Annex.


 


(i)                                     Part 8(b)(ii) Option A Cover Standard is
amended by adding the following phrase after the phrase   “and no such replacement or sale is
available”: “or the non-breaching party elects, at its sole option not to
replace Gas or sell Gas”.


 


(ii)           Part
8(b)(v) Limitation on
Condition Precedent shall be added as a new section.


 


“(iv)        Limitation on Condition Precedent.  Section 2(a)(iii) of this Agreement is hereby
amended by adding the following phrase at the end of clause (1) immediately
before the last comma of such phrase:


 


“(provided, however, that
in relation to any Transaction that is a Gas Transaction, the Non-Defaulting
Party may suspend performance of any or all Gas Transactions only after
providing written notice to the Defaulting Party and provided further that if
an Event of Default or a Potential Event of Default has occurred and is continuing
for longer than ten (10) Business Days without an Early Termination Date being
designated, then the condition specified in this clause (1) shall cease to be a
condition precedent to the obligations under Section 2(a)(i)).”


 


(iii)                               Part 8(f)(vi) shall be added as a new
section.


 

















 


                                “(vi)  Notwithstanding, and in addition, to the
remedies provided pursuant to Part 8(b), if Seller or Buyer fails to schedule
and/or deliver/receive all or part of the Firm Gas pursuant to a Transaction,
and such failure is not excused by Force Majeure (or for any other reason which
excuses performance of a Firm obligation), then upon one (1) Business Day prior
written notice, and for so long as the non-performing party fails to perform,
the performing party shall have the right to suspend its performance under any
or all transactions between the parties for the purchase and sale of Gas.”


 


(iv)                              Part 8(g)(i) shall be amended by adding the
words “at and” after the word “Gas” in line three.


 


(v)                                 Part 8 (j) shall be amended by adding the
following as new provisions:


 


“(iv)  Tax Event: Section 5(b)(iii).  With respect to any Gas Transaction, Section
5(b)(iii) is hereby deleted, and the concept of “Tax Event” as used elsewhere
in this Agreement shall not apply to any Gas Transactions.”


 


 


Part 9 [change to Part 8 if not
using Gas Annex]


 


(a)                                  Consent to Assignment. 
Party B hereby consents to the assignment by Party A to Merrill Lynch
Commodities, Inc. and Merrill Lynch & Co., Inc (together, the “Merrill Parties”) of all of Party A’s
rights under this Agreement, including all rights to receive payments from
Party B under this Agreement (any such payment, including payments under
Section 2 and Section 6 of the Agreement, a “Receivable”),
as collateral security for Party A’s obligations to the Merrill Parties in
connection with an enhanced credit structure for Party A’s retail electric
business provided by the Merrill Parties (the “Collateral Assignment”).


 


(b)                                 Collateral Account. 
Party A hereby unconditionally and irrevocably authorizes and directs
Party B to make, and, unless and until otherwise required by law or this
agreement is terminated, Party B hereby agrees to make, any and all payments in
respect of Receivables directly by wire transfer to the account specified in
Part 5(e) of this Schedule (the “Collateral Account”).  All such payments by Party B to the
Collateral Account shall be free and clear of any deduction, set-off, netting
arrangements or counterclaim, except as expressly provided pursuant to this
Agreement.


 


(c)                                  Notice & Right to Cure
Events of Default.  Pursuant to Part 4(a) of this
Schedule, the Merrill Parties shall be provided with all notices under this
Agreement, including notices of any Potential Event of Default, Event of
Default or Termination Event hereunder.  In
the event of a Potential Event of Default or Event of Default in which Party A
is, or may become, the Defaulting Party, or a Termination Event in respect of
which Party A is the Affected Party, the Merrill Parties shall be permitted, at
their option, to cure such default or Termination Event,
within any grace period applicable to Party A for  such
Potential Event of Default, Event of Default or Termination Event.


 


 
















 


 


SIGNATURE PAGE


 


OF THE


 


SCHEDULE


 


TO THE


 


2002 MASTER AGREEMENT


 


BETWEEN


 


RELIANT ENERGY POWER SUPPLY, LLC (“PARTY A”)


 


AND


 


_____________________ (“PARTY B”)


 


 


 


IN
WITNESS WHEREOF, the parties hereto have executed this document as of the date
specified on the first page hereof.


 


	
  Reliant Energy Power Supply, LLC

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Title:

  	
   

  
							



 


 


 

















 


Exhibit C3


To Credit Sleeve
and Reimbursement Agreement


Form of EEI Power Purchase and Hedging Contract for
WMBEs in ERCOT


 


MASTER POWER PURCHASE AND
SALE AGREEMENT


COVER SHEET


This Master Power
Purchase and Sale Agreement (“Master Agreement”)
is made as of the following date:                     
(“Effective Date”).  The Master Agreement, together with the exhibits, schedules and
any written supplements hereto, the Party A Tariff, if any, the Party B Tariff,
if any, any designated collateral, credit support or margin agreement or
similar arrangement between the Parties and all Transactions (including any
confirmations accepted in accordance with Section 2.3 hereto) shall be referred
to as the “Agreement.”  The Parties to
this Master Agreement are the following:


	
  Name:  Reliant Energy Power Supply, LLC (“REPS” or
  “Party A”)

  	
  Name:                                (“Party B”)

  
	
   

  	
   

  
	
  All Notices:

  	
  All Notices:

  
	
   

  	
   

  
	
  Street:
  1000 Main St., Suite 1100, Houston, 77002

  	
  Street:                                                   

  
	
   

  	
   

  
	
  P. O. Box 4455

  City:   Houston, TX               Zip: 77210-4455

  	
   

  City: _______________ Zip:
  _______________

  
	
   

  	
   

  
	
  Attn: Contract
  Administration

  Phone:  (713) 497-5855

  Facsimile:  (713) 497-9562

  Duns:  623988644

  Federal Tax ID Number:  20-4823108

  	
  Attn: Contract
  Administration

  Phone: 

  Facsimile: 

  Duns:                                                    

  Federal Tax ID Number: 

  
	
   

  	
   

  
	
  Invoices:

  Attn:  ERCOT Settlement Accounting, 11th
  Floor

  Phone:  (713) 497-4402

  Facsimile:  (713) 497-0098

  	
  Invoices:

  Attn: 

  Phone: 

  Facsimile: 

  
	
   

  	
   

  
	
  Scheduling:

  Attn:  ERCOT 24 Hour Scheduling

  Phone:  (713) 497-1144

  Facsimile:  (713) 497-0098

  	
  Scheduling:

  Attn:                                              

  Phone:                                           

  Facsimile:                                      

  
	
   

  	
   

  
	
  Payments:

  Attn:   ERCOT Settlement Accounting, 11th
  Floor

  Phone:   (713) 497-4402

  Facsimile:  (713) 497-0098

  	
  Payments:

  Attn: 

  Phone: 

  Facsimile: 

  
	
   

  	
   

  
	
  Wire
  Transfer:

  BNK:     Mellon Bank — Pittsburgh, PA

  ABA:     043 000 261  

  ACCT:   119 4193

  	
  Wire
  Transfer:

  BNK: 

  ABA: 

  ACCT: 

  



 


 


 

















 


	
  Credit
  and Collections:

  Attn:  Credit Risk Management, 11th
  Floor

  Phone:  (713) 497-1052

  Facsimile:  (713) 497-1058

  	
  Credit
  and Collections:

  Attn: 

  Phone: 

  Facsimile: 

  
	
   

  	
   

  
	
  With additional Notices of an Event of Default or Potential Event of
  Default to:

  Attn: Vice
  President and General Counsel

  Phone: (713) 497-7063

  Facsimile: (713) 537-7063

   

  	
  With additional Notices
  of an Event of Default or Potential Event of Default to:

  Attn: 

  Phone: 

  Facsimile: 

  



 


The Parties hereby agree
that the General Terms and Conditions are incorporated herein, and to the
following provisions as provided for in the General Terms and Conditions:


Party A
Tariff:   FERC Electric Tariff, Original
Volume No. 1  Dated:  September 19, 2006  Docket Number: ER06-1272


Party B Tariff:   No Tariff 




	
  Article Two



  	
   

  	
   

  	
   

  	
   

  
	
  Transaction Terms and Conditions

  	
   

  	
  x Optional provision in Section 2.4.If
  not checked, inapplicable.

  
	
   

  	
   

  	
   

  
	
  Article Four



  	
   

  	
   

  	
   

  	
   

  
	
  Remedies for Failure 

  to Deliver or Receive

  	
   

  	
  x Accelerated Payment of Damages. If not
  checked, inapplicable.

  
	
   

  	
   

  	
   

  
	
  Article Five

  	
   

  	
  o Cross Default for Party A: Not
  Applicable

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Events of Default; Remedies

  	
   

  	
  o Party A:

  	
   

  	
  Cross Default Amount

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o Other Entity:

  	
   

  	
  Cross Default Amount

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o Cross Default for Party B: Not
  Applicable

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o Party B:

  	
   

  	
  Cross Default Amount

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o Other Entity:

  	
   

  	
  Cross Default Amount

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.6 Closeout Setoff

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  x Option A (Applicable if no other
  selection is made.)

   

  	
   

  	
   

  
	
   

  	
   

  	
  o Option B — Affiliates shall have the
  meaning set forth in the Agreement unless otherwise specified as
  follows:  

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o Option C (No Setoff)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 8



  	
   

  	
  8.1 Party A Credit Protection:

  	
   

  	
   

  
	
  Credit and Collateral Requirements

  	
   

  	
     (a) Financial Information:

  	
   

  	
   

  
	
   

  	
   

  	
  x Option A

  o Option B Specify: 

  o Option C Specify:



  	
   

  	
   

  






 

















 




	
   

  	
   

  	
  (b) Credit Assurances:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  x Not Applicable

  o Applicable

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c) Collateral Threshold:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  x Not Applicable

  o Applicable

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d) Downgrade Event:

  	
   

  	
   

  
	
   

  	
   

  	
  x Not Applicable

  o Applicable

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e) Guarantor for Party B: Not Applicable

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Guarantee
  Amount: Not Applicable

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.2 Party B Credit Protection:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)
  Financial Information:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o Option A

  x Option B Specify: RERH Holdings, LLC

  o Option C Specify:

  

  So long as such Financial Information is publicly available through the
  Securities Exchange Commission’s EDGAR database or such similar database
  maintained by the Securities Exchange Commission, Party B shall not be
  required to deliver such Financial Information directly to Party B.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b) Credit Assurances:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  x Not Applicable

  o Applicable

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c) Collateral Threshold:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  x Not Applicable

  o Applicable

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d) Downgrade Event:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  x Not Applicable

  o Applicable

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e) Guarantor for Party A: Not Applicable

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Guarantee
  Amount: Not Applicable

  	
   

  	
   

  






 


 


 

















 




	
  Article 10



  	
   

  	
   

  	
   

  	
   

  
	
  Confidentiality

  	
   

  	
  x Confidentiality Applicable

  	
   

  	
  If not checked, inapplicable.

  
	
  Schedule M

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o Party A is a Governmental Entity or
  Public Power System

  	
   

  	
   

  
	
   

  	
   

  	
  o Party B is a Governmental Entity or
  Public Power System

  	
   

  	
   

  
	
   

  	
   

  	
  o Add Section 3.6. If not checked,
  inapplicable

  	
   

  	
   

  
	
   

  	
   

  	
  o Add Section 8.6. If not checked,
  inapplicable

  	
   

  	
   

  






 


Other Changes:   Yes


 


Article
One:  General Definitions


The following
definitions are amended as set forth below:


Section 1.1 is revised to
add the following at the end of such section: “Notwithstanding the foregoing,
“Affiliate” means, with respect to Party A, RERH Holdings, LLC, and any
subsidiary thereof, including Reliant Energy Retail Holdings, LLC, and Reliant
Energy Retail Services, LLC, and with respect to Party B, shall have the
meaning given in the first two sentences of this definition.”


1.  Section 1.50 is amended to delete the
reference to Section “2.4” and add “2.5”.


2.  Section 1.51 is amended to add the phrase
“for delivery” immediately before the phrase “at the Delivery Point” in the
second line.


3.  Section 1.53 is amended to delete the phrase
“at the Delivery Point” from the second line and (ii) insert after the phrase
“commercially reasonable manner” in the sixth line, the following phrase “;
provided, however if the Seller is unable after using commercially reasonable
efforts to resell all or a portion of the Product not received by Buyer, the
Sales Price with respect to such unsold Product shall be deemed equal to zero
(0)”.


The following
shall be added as a new definition:


“1.62  “Merger Event” means, with respect to a
Party, such Party consolidates or amalgamates with, or merges into or with, or
transfers all or substantially all of its assets to, or reorganizes,
reincorporates or reconstitutes into or as, another entity and at the time of
such consolidation, amalgamation, merger, transfer, reoganization,
reincorporation or reconstitution the resulting, surviving or transferee entity
fails to assume all the obligations of such Party.


Article Two:
Transaction Terms and Conditions


Section 2.4 is
amended by deleting the words “either orally or” after the words “agreed to” in
line seven.


Section 2.5 is
amended by adding the words “regarding any Transaction and the terms thereof”
after the word “Parties” in line three.


Article Four:  Remedies for Failure to Deliver/Receive


The following is added as
a new Section 4.3:


“4.3   Suspension of Performance.  Notwithstanding, and in addition to the
remedies provided pursuant to Sections 4.1 and 4.2, if Seller or Buyer fails to
schedule and/or deliver/receive all or part of the Product pursuant to a
Transaction, and such failure is not excused under the terms of the Product or
by the other Party’s failure to perform, then upon one (1) Business Day prior
notice, and for so long as the non-performing Party fails to perform, the
performing Party shall have the right to suspend its performance under any or
all Transactions.”


Article Five:  Events of Default; Remedies


5.1  Section 5.1(f) is amended in its entirety as
follows:  “a Merger Event occurs with
respect to such Party;”.


5.2          Section
5.2 is amended to (i) reverse the placement of “(i)” and “to” in line three,
and (ii) delete the parenthetical beginning, “(or, to the extent that in the
reasonable opinion” through the rest of Section 5.2 and replace with the


 


 


 






 


 












 


                         following:
“(it being understood, that to the extent in the reasonable opinion of the
Non-Defaulting Party any of the Terminated Transactions may not be liquidated
and terminated under applicable law on the Early Termination Date, then such
Terminated Transactions shall be liquidated and terminated as soon thereafter
as is reasonably practicable.    The Non-
Defaulting Party (or its agent) may determine its Gains and Losses by reference
to information either available to it internally or supplied by one or more
third parties including, without limitation, quotations (either firm or
indicative) of relevant rates, prices, yields, yield curves, volatilities,
spreads or other relevant market data in the relevant markets.  Third parties supplying such information may
include, without limitation, dealers in the relevant markets, information
vendors and other sources of market information.”


Section 5.6(A)
shall be deleted in its entirety and replaced with the following:  “Party B shall make each payment due under this
Agreement without deduction, set-off or counterclaim, except (A) as
specifically provided in Article 6, and (B) that Party B, if it is the
Non-defaulting Party shall be entitled to set off the Termination Payment owed
by Party B to Party A under this Agreement (whether pursuant to Article 6 or
under any other provision under this Agreement) against amounts owed by Party A
to Party B under this Agreement (whether pursuant to Article 6 or under any
other provision under this Agreement). 
Party A shall make each payment due under this Agreement without
deduction, set-off counterclaim, except (A) as specifically provided in Article
6 , and (B) that Party A, if Party A is the Non-defaulting Party shall be
entitled to set off the Termination Payment owed by Party A to Party B under
this Agreement (whether pursuant to Article 6 or under any other provision
under this Agreement) against amounts owed by Party B to Party A under this
Agreement (whether pursuant to Article 6 or under any other provision under this
Agreement).  For the avoidance of doubt:


(A)      the term “Party
A” means Reliant Energy Power Supply, LLC (and any other Person that succeeds
to all of the rights and obligations of Reliant Energy Power Supply, LLC under
this Agreement in accordance with its terms), and ‘Party A’ shall in no event
include any of its affiliates or any other Person except as stated above; and


(B)        the term “Party
B” means [insert name of Party B] (and any other Person that succeeds to all of
the rights and obligations of [insert name of Part B] under this Agreement in
accordance with its terms), and ‘Party B’ shall in no event include any of its
affiliates or any other Person except as stated above.


Article
Seven:  Limitations


7.1    Section 7.1 shall be amended by: (a)
deleting “Except as set forth herein” from the first sentence and “Unless
expressly herein provided” from the fifth sentence, (b) adding  “Notwithstanding anything in this Agreement
to the contrary” to the beginning of the fifth sentence, and “set forth in this
Agreement’ after “indemnity provisions” and before “or otherwise”, also in the
fifth sentence, and (c) adding the following language after the word “Equity”
in the fourth sentence: “except for the remedies provided by the Uniform
Commercial Code for claims of anticipatory repudiation”.


 


Article Ten:  Miscellaneous


Section 10.2(vi) is
amended to add the phrase “except as disclosed in each parties’ or its
Guarantor’s, as applicable, SEC filing” at the end the of sentence in Section
10.2


Section 10.2 (ix) is
amended to read in its entirety as follows:


“(ix) it acknowledges and agrees that (A) Transaction(s) constitute “forward
contracts” within the meaning of title 11 of the United States Code (the “Bankruptcy Code”); (B) each of Party A
and Party B is a “forward contract merchant” within the meaning of the
Bankruptcy Code with respect to any Transactions that constitute “forward
contracts”; (C) all payments made or to be made by one Party to the other Party
pursuant to this Agreement constitute “settlement payments” within the meaning
of the Bankruptcy Code; (D) all transfers of Performance Assurance by one Party
to the other Party under this Agreement constitute “margin payments” within the
meaning of the Bankruptcy Code; (E) each Party’s rights under Section 5.2, “Declaration
of an Early Termination Date and Calculation of Settlement Amounts”, of this
Agreement constitutes a “contractual right to liquidate” the Transactions
within the meaning of the Bankruptcy Code; and (F) the other party is not a “utility”
as such term is used in Section 366 of the Bankruptcy Code, and each party
agrees to waive and not to assert the applicability of the provisions of
Section 366 in any bankruptcy proceeding wherein such Party is a debtor. In any
such proceeding, each party further agrees to waive the right to assert that
the other party is a provider of last resort;”


 

















 


Section 10.4 is amended
to add the phrase “unless a Claim is due to such Party’s gross negligence or
willful misconduct” at the end of the first sentence of Section 10.4.


Section 10.5 is amended
to (i) add the words “shall not be unreasonably withheld or delayed” after the
words “which consent” in the second line; (ii) delete the words “may be
withheld in the exercise of its sole discretion” in the second and third line;
(iii) delete subparagraphs (i) and (ii) in their entirety from the fourth
through sixth lines; and iv) delete “or (iii)” from the eighth line.


Section 10.10 is hereby
amended to add the following phrase at the end of the sentence after the words “United
States Bankruptcy Code”, “, except such Transactions that provide for maturity
within two (2) days after the Transaction has been agreed to by the Parties.


“Section 10.11 is amended
(i) to add “Merrill Lynch Commodities, Inc. or “ after the word “than” in the
third line, (ii) to add the following phrase after the word “lenders”:  “and their counsel and advisors”; and (iii)
to add the following after the word “accountants”: “Guarantor”.


The following language
shall be added to the end of Section 10.11:


“The Parties hereby acknowledge that the disclosure of price data only
without counterparty name does not contravene this Section 10 so long as the
data is disclosed to an index publisher that publishes the data in aggregated
form and does not identify the Parties.


Notwithstanding anything
in this Section to the contrary, the terms and conditions of this Master
Agreement and any and all Confirmations may be disclosed to customers of Party
A and its affiliates without restriction or limitation on the use of such
information, or subsequent disclosure, by such customers, and as is necessary
to comply with the requirements of electricity purchase and sale
agreements.  Further, the particulars of
any dispute between Party A and Party B may be disclosed to the City of Houston
in order to comply with Section 10.12 of this Master Agreement.


To the extent it is necessary for Party B to disclose the terms of any
Transaction to a supplier of Energy to Party B (“Supplier”), Party B may,
provided that it receives prior written approval from Party A (which shall not
be unreasonably withheld), disclose the terms of such Transaction. Party B
shall (a) disclose the terms of such Transaction only to those representatives
of Supplier who need to know, solely for the purposes of evaluating Party B’s
credit and/or payment rights or requirements; (b) inform the Supplier and its
representatives of the confidential nature of the terms of such Transaction;
and (c) be responsible for any breach of the confidentiality provisions
pertaining to such disclosed Transaction by the Supplier or any of its
representatives.”


 The following is added as a new Section 10.12:


“10.12     Dispute Resolution.  Any controversy between the Parties involving
the construction or application of any of the terms, covenants or conditions of
this Master Agreement or any Transaction shall, on the written request of one
Party served upon the other or upon notice by the City of Houston’s Affirmative
Action Director (the “Affirmative Action Director”) served on both Parties, be
submitted to binding arbitration, under the Texas General Arbitration Act (Tex.
Civ. Prac. & Rem. Code Ann., Ch. 171 --- the “Act”).  Arbitration shall be conducted according to
the following procedures:


(a)                                  Upon the decision of the Affirmative
Action Director or upon written notice to the Affirmative Action Director from
either Party that a dispute has arisen, the Affirmative Action Director shall
notify both Parties that they must resolve the dispute within thirty (30) days
or the matter may be referred to arbitration.


(b)                                 If the dispute is not resolved within the
time specified, either Party or the Affirmative Action Director may submit the
matter to arbitration conducted by the American Arbitration Association under
the rules of the American Arbitration Association on file in the Office of the
City of Houston’s Affirmative Action Division.


(c)                                  Each Party shall pay all fees required of
it by the American Arbitration Association and sign a form releasing the
American Arbitration Association and its arbitrators from liability for
decisions reached in the arbitration.


(d)                                 If the American Arbitration Association
no longer administers Affirmative Action arbitration for the City of Houston,
the Affirmative Action Director shall prescribe alternate procedures as
necessary to provide 

















 


arbitration by neutrals in accordance with the requirements of Chapter
15 of the Houston City Code of Ordinances.


(e)                                  All arbitrations shall be conducted in
Houston, Texas unless the Parties agree to another location in writing.


The following is added as
a new Section 10.13:


“10.13 With respect to any suit, action or proceeding
relating to this Agreement, each Party irrevocably submits to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the borough of Manhattan in New York City and waives
any objection it may have at any time to the laying of venue of any such
proceedings brought in any such court, waives any claim that such proceedings
have been brought in any inconvenient forum and further waives the right to
object, with respect to such proceedings, that such court does not have
jurisdiction over such Party.  EACH PARTY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION, CLAIM OR PROCEEDING
RELATING TO THIS AGREEMENT OR CREDIT SUPPORT DOCUMENT.


The following is added as
a new Section 10.14


“10.14     Additional
Warranties and Covenants.   From the
date of entering into a Transaction under this Agreement and throughout the
term of such Transaction, the Parties each warrant and covenant as follows:


(a)                                  such Transaction has been negotiated at
arms length between Parties of equal sophistication and represents a
bargained-for exchange;


(b)                                 neither Party will directly or indirectly
challenge the equity, fairness or reasonableness of any terms or conditions set
forth in or established according to such Transaction, as those terms or
conditions may be at issue before any Governmental Authority or court, if the
successful result of such challenge would be to preclude or excuse all, or any
portion of, the performance of such Transaction by either Party;


(c)                                  each Party shall agree that the prices
agreed upon in such Transaction are just and reasonable and waives any right it
may have (now or in the future) to refunds related thereto; and


(d)                                 without limiting the foregoing, neither
Party shall exercise any of its respective rights under Section 205 or 206 of
the Federal Power Act to challenge or seek to modify any of the rates or other
terms and conditions of such Transaction.


For the purposes
of such Transaction, “Governmental Authority” means the government of the
United States or any state or territory thereof including the executive
branches and offices, a municipality, county, governmental board, air quality
management districts, public power authority, public utility district, joint
action agency, or other political subdivision, public entity, agency or
instrumentality of the United States, one or more states or territories of the
United States or any combination thereof or any regional reliability counsel,
independent systems operator, regional transmission authority, power exchange
or similar body or utility or other entity with power or control over
emissions, air quality, energy, electric or gas transmission, transportation,
or distribution.”


The following is added as
a new Section 10.15:


“10.15     MWBE Covenants.


(a)                                  Party B shall not delegate or subcontract
more than 50% of the work under this Master Agreement or any Transaction to any
other subcontractor or supplier without the express written consent the
Affirmative Action Director.


(b)                                 Party B shall permit representatives of
the City of Houston, at all reasonable times, to perform (1) audits of the
books and records of Party B, and (2) inspections of all places where work is
to be undertaken in connection with this Agreement and/or any and all
Transactions.  Party B shall keep such
books and records available for inspection for at least four (4) years after
the end of its performance under this Master Agreement and/or any and all
Transactions.  Nothing in this provision
shall change the time for bringing a cause of action.


(c)                                  Within five (5) Business Days of the full
execution of this Master Agreement, Party A and Party B shall 

















 


designate in writing to the Affirmative Action Director its respective
agent for receiving any notice required or permitted to be given pursuant to
Chapter 15 of the Houston City Code of Ordinances, along with the street and
mailing address and phone number of such agent.”


The following is added as
a new Section 10.16:


“10.16     Standard
of Review.   From the date of
entering into a Transaction under this Master Agreement and throughout the term
of such Transaction, the Parties each warrant and covenant as follows:


(d)                                 Absent the agreement of all Parties to
the proposed change, the standard of review for changes to any section of this
Master Agreement (including all Transactions and/or Confirmations) specifying
the rate(s) or other material economic terms and conditions agreed to by the
Parties herein, whether proposed by a Party, a non-party or FERC acting sua
sponte, shall be the “public interest” standard of review set forth in United
Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal
Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956)( the “Mobile-Sierra”
doctrine).


(e)                                  The Parties, for themselves and their
successors and assigns, (i) agree that this “public interest” standard shall
apply to any proposed changes in any other documents, instruments or other
agreements executed or entered into by the Parties in connection with this
Master Agreement and (ii) hereby expressly and irrevocably waive any rights
they can or may have to the application of any other standard of review,
including the “just and reasonable” standard.”


(f)                                    With respect to Transactions in ERCOT,
absent the agreement of all Parties to the proposed change, the standard of
review for changes to any portion of this Master Agreement or any Transaction
entered into hereunder proposed by a Party, a non-party, or the Public Utility
Commission of Texas acting sua sponte,
shall be the “public interest” standard of review set forth in High Plains Natural Gas Co. v. Railroad Commission,
Tex. Cov. Appl. — Austin 1971, writ ref d
n.r.e.)(the “High Plains” doctrine).”


The following is added as
a new Section 10.17:


(a)                                  Consent to Assignment.  Party B hereby consents to the assignment by
Party A to Merrill Lynch Commodities, Inc. and Merrill Lynch & Co., Inc.
(together, the “Merrill Parties”) of all of Party A’s rights under this
Agreement, including all rights to receive payments from Party B under this
Agreement (any such payment, a “Receivable”),
as collateral security for Party A’s obligations to the Merrill Parties in
connection with an enhanced credit structure for Party A’s retail electric
business provided by the Merrill Parties (the “Collateral Assignment”).


(b)                                 Collateral Account.  Party A hereby unconditionally and irrevocably
authorizes and directs Party B to make, and, unless and until otherwise
required by law or this agreement is terminated, Party B hereby agrees to make,
any and all payments in respect of Receivables directly by wire transfer to the
account specified in the Cover Sheet (the “Collateral Account”).  All such payments by Party B to the
Collateral Account shall be free and clear of any deduction, set-off, netting
arrangements or counterclaim, except as expressly provided in this Agreement.


(c)           Notice & Right to Cure Events of
Default.  As set forth above, the Merrill
Parties shall be provided with all notices under this Agreement, including
notices of any Potential Event of Default or Event of Default hereunder.  In the event of a Potential Event of Default
or Event of Default in which Party A is, or may become, the Defaulting Party,
the Merrill Parties shall be permitted, at their option, to cure such default ,
[(if such event of default is capable of being cured by either Merrill Party)
TO BE USED AS FALLBACK] within any grace period applicable to Party A for such
Potential Event of Default or Event of Default.”


 


Additional
Provisions:


The following
provisions shall be added to Schedule P: Products and Related Definitions:


“Index Transactions. If
the Contract Price for a Transaction is determined by reference to a
third-party information source, then the following provisions shall be
applicable to such Transaction.


(b)           Market Disruption. If a Market
Disruption Event occurs during a Determination Period, the Floating Price for
the affected Trading Day(s) shall be the fallback reference price specified by
the Parties if the Parties have specified such a fallback reference price.  If the Parties did not specify a fallback reference
price the Floating Price shall be determined by 

















 


reference to the
Floating Price specified in the Transaction for the first Trading Day
thereafter on which no Market Disruption Event exists; provided, however, if
the Floating Price is not so determined within three (3) Business Days after
the first Trading Day on which the Market Disruption Event occurred or existed,
then the Parties shall negotiate in good faith to agree on a Floating Price (or
a method for determining a Floating Price), and if the Parties have not so
agreed on or before the twelfth Business Day following the first Trading Day on
which the Market Disruption Event occurred or existed, then the Floating Price
shall be determined in good faith by taking the average of two dealer quotes
obtained from dealers of the highest credit standing which satisfy all the
criteria that the Seller applies generally at the time in deciding to offer or
to make an extension of credit.


“Determination Period” means each calendar
month a part or all of which is within the Delivery Period of a Transaction.


 “Exchange” means, in respect of a
Transaction, the exchange or principal trading market specified in the relevant
Transaction.


“Floating Price”
means a Contract Price specified in a Transaction that is based upon a Price
Source.


“Market Disruption
Event” means, with respect to any Price Source, any of the following
events: (a) the failure of the Price Source to announce or publish the
specified Floating Price or information necessary for determining the Floating
price; (b) the failure of trading to commence or the permanent discontinuation
or material suspension of trading in the relevant options contract or commodity
on the Exchange or in the market specified for determining a Floating Price;
(c) the temporary or permanent discontinuance or unavailability of the Price
Source; (d) the temporary or permanent closing of any Exchange specified for
determining a Floating Price; or  (e) a
material change in the formula for or the method of determining the Floating
Price.


“Price Source”
means, in respect of a Transaction, the publication (or such other origin of
reference, including an Exchange) containing (or reporting) the specified price
(or prices from which the specified price is calculated) specified in the
relevant Transaction.


“Trading Day”
means a day in respect of which the relevant Price Source published the  Floating Price.


(b)           Corrections to Published Prices.  For purposes of determining a Floating Price
for any day, if the price published or announced on a given day and used or to
be used to determine a relevant price is subsequently corrected and the
correction is published or announced by the person responsible for that
publication or announcement within two (2) years of the original publication or
announcement, either Party may notify the other Party of (i) that correction
and (ii) the amount (if any) that is payable as a result of that
correction.  If, not later than thirty
(30) days after publication or announcement of that correction, a Party gives
notice that an amount is so payable, the Party that originally either received
or retained such amount will, not later than three (3) Business Days after the
effectiveness of that notice, pay, subject to any applicable conditions
precedent, to the other Party that amount, together with interest at the
Interest Rate for the period from and including the day on which payment
originally was (or was not) made to but excluding the day of payment of the
refund or payment resulting from that correction.


(c)           Calculation of Floating Price.  For the purposes of the calculation of a
Floating Price, all numbers shall be rounded to three (3) decimal places.  If the fourth (4th) decimal number
is five (5) or greater, then the third (3rd) decimal number shall be
increased by one (1), and if the fourth (4th) decimal number is less
than five (5), then the third (3rd) decimal number shall remain
unchanged.”


 

















 


IN WITNESS WHEREOF, the
Parties have caused this Master Agreement to be duly executed as of the date
first above written.


	
  RELIANT ENERGY POWER SUPPLY, LLC

  	
  [CounterParty]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name: 

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title: 

  	
   

  
							



 


 


DISCLAIMER:  This Master Power Purchase and Sale Agreement
was prepared by a committee of representatives of Edison Electric Institute (“EEI”)
and National Energy Marketers Association (“NEM”) member companies to
facilitate orderly trading in and development of wholesale power markets.  Neither EEI nor NEM nor any member company
nor any of their agents, representatives or attorneys shall be responsible for
its use, or any damages resulting therefrom. 
By providing this Agreement EEI and NEM do not offer legal advice and
all users are urged to consult their own legal counsel to ensure that their
commercial objectives will be achieved and their legal interests are adequately
protected.


 

















 


Exhibit C4


To Credit Sleeve
and Reimbursement Agreement


Form of RECs Purchase Contract for ERCOT


Transaction Confirmation


 


Date:                
      , 200    


 


Re:          Renewable
Energy Credits


 


This Transaction Confirmation,
together with the attached General Terms and Conditions, constitute the
Purchase and Sale Contract (“Contract”) between                               
(“Counterparty”) and Reliant Energy Power Supply, LLC (“REPS”)  (together, the “Parties”) based on the terms
set forth herein.  Terms used but not
defined herein will have the meanings ascribed thereto in the Public Utility
Commission of Texas (“PUCT”) Substantive Rule Section 25.173, or any successor
thereto (the “Texas Rules”).  “Business
Day” means any day, other than Saturday and Sunday, on which commercial banks
are open for business in Texas.


 


	
  Seller:

  	
   

  	
  Counterparty

  
	
   

  	
   

  	
   

  
	
  Buyer:

  	
   

  	
  REPS, at 1000 Main Street, Houston, Texas 77002.

  
	
   

  	
   

  	
   

  
	
  Product:

  	
   

  	
  Renewable energy credits (“RECs”) for Texas, as
  provided for in the Texas Rules. Each REC represents one megawatt hour of
  electricity generated by renewable energy technology in Texas, certified by
  the PUCT and tracked by the Program administrator, in each case as provided
  for in the Texas Rules.

  
	
   

  	
   

  	
   

  
	
  Quantity:

  	
   

  	
  _________________ RECs

  
	
   

  	
   

  	
   

  
	
  Price:

  	
   

  	
  Total U.S. $          (U.S.$ /REC)

  
	
   

  	
   

  	
   

  
	
  Vintage Year:

  	
   

  	
  200    . All RECs sold and
  delivered hereunder will be produced during the period between January 1,
  200     and December 31, 200    .

  
	
   

  	
   

  	
   

  
	
  Delivery and Payment:

  	
   

  	
  The Product will be delivered and paid for under the
  following terms: [OPTION A OR OPTION B TO BE DETERMINED BY RELIANT]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Delivery will be effectuated through the “Renewable
  energy credits trading program” (as defined in the Texas Rules). Title to the
  Product will transfer at such time as the “Program administrator” (as defined
  in the Texas Rules) recognizes the transfer by Seller of the Product from
  Seller’s “Renewable energy credit account” (as defined in the Texas Rules) to
  Buyer’s Renewable energy credit account. Unless Buyer notifies Seller
  otherwise, Buyer’s Renewable energy credit account will be: “Reliant Energy
  Power Supply, LLC.” Buyer will promptly confirm, in accordance with the
  requirements of the Program administrator, such transfer by Seller to Buyer
  of the Product. Each Party shall provide to the other any information or
  documentation required by the Program administrator to effectuate delivery
  hereunder and will comply with, and will assist the other Party to comply
  with any and all regulatory obligations relating to recording, the transfer
  of, and tracking the transfer of the RECs sold hereunder. With regard to the
  performance of their obligations hereunder, the Parties will abide by the
  provisions set forth in Section 14 of the ERCOT Protocols and the Texas
  Rules.

  
	
   

  	
   

  	
   

  



 






 












OPTION A:


By 9:30 a.m. Central
Prevailing Time on [insert date],
Seller will deliver to Buyer (i) the full Quantity of RECs, and (ii) an invoice
for the amount to be paid by Buyer hereunder for such RECs.  With regard to (ii) above, Buyer will pay
Seller as provided for herein within five (5) Business Days of Buyer’s receipt
of both the Product and invoice.  All
funds to be paid to Seller shall be made in immediately available funds (U.S.
Dollars) by wire transfer.  If either
Party fails to remit any amount payable by it when due, interest on such unpaid
portion shall accrue at a rate equal to the prime interest rate in effect at
the time as published by Citibank, N.A. plus two percent (2%) (the “Interest
Rate”) from the date payment is due to the date of payment.


 


OPTION B:


By [insert
date], Seller will deliver to Buyer an invoice for the amount to be
paid by Buyer hereunder for delivery of the Product.  Within three (3) Business Days of Buyer’s
receipt of such invoice, Buyer will pay to Seller an amount equal to the
Price.  By no later than 9:30 a.m.
Central Prevailing Time on the second Business Day following Seller’s receipt
of the payment provided for herein, Seller will deliver to Buyer the full
Quantity of RECs.  All funds to be paid
to Seller shall be made in immediately available funds (U.S. Dollars) by wire
transfer.  If either Party fails to remit
any amount payable by it when due, interest on such unpaid portion shall accrue
at a rate equal to the prime interest rate in effect at the time as published
by Citibank, N.A. plus two percent (2%) (the “Interest Rate”) from the date
payment is due to the date of payment.


 


Payment:                                                                                             The invoice from Seller to Buyer will be
sent to the following:


 


Reliant Energy Power
Supply, LLC


Attn:       ERCOT Settlements


P.O. Box 148


                                                                                                                                                Houston, TX  77001-0148


                                                                                                                                                Phone:    713-497-2792


                                                                                                                                                Fax:         713-497-0098


 


Payment by Buyer
to Seller shall be made to the following account:


 


                                                                                                                                                Bank:


For the Account of:


                                                                                                                                                ABA No.:


                                                                                                                                                Account No.:


 


                                                                                                                                                With respect to the payment of
Receivables (as defined herein) by Seller to Buyer, as set forth in Section 6
of this Contract, Seller shall make all such payments to the Buyer’s Collateral
Account (as defined herein), as more specifically described in Section 6
hereof.


 

















 


 


Term:                                                                                                              This Contract will terminate after the
full Quantity of the Product has been delivered and paid for under the terms
hereof (the “Term”).  Provided, that,
Section 1 of the Special Conditions, and Sections 1 and 10 of the General Terms
and Conditions will each survive termination.


 


Special Conditions:                                      1.                                       Seller covenants, represents and warrants
the following to Buyer:


 


a)     The RECs sold by Seller to Buyer hereunder
comply with the technical specifications as set forth in this Confirmation and
have not been sold, retired, claimed or represented as part of electricity
output, usage or sales, or used to satisfy renewable energy or other
obligations in any state or jurisdiction, nor will Seller take any such action
with respect to such RECs subsequent to the transfer thereof to Buyer.


 


b)    With regard to the RECs sold by Seller to
Buyer hereunder, Seller has, and conveys to Buyer sole and exclusive title
(free of any liens, claims, security interests, encumbrances and other defects
of title).


 


                                                                                                                                                2.                                       Each Party covenants that upon its
receipt of notice from the Program administrator that the transfer of RECs
pursuant to a transaction will not be recognized or Delivery of Product was not
made as required pursuant to the terms of a transaction, it will immediately so
notify the other Party, providing a copy of such notice, and both Parties will
cooperate in taking such action as are necessary and commercially reasonable to
cause such transfer to be recognized and such Product Delivered.


 


3.                                       gThe General Terms and Conditions attached hereto are
included herein for all purposes and are an integral part of this
Contract.  Provided, that, to the extent
there is any conflict between a provision in the General Terms and Conditions
and this Transaction Confirmation, the terms of the Transaction Confirmation
shall control.  This Contract sets forth
the entire agreement between the Parties with respect to the REC purchase
identified in this document superseding any and all contemporaneous or prior
conversations, memoranda, agreements (oral or written) or other communication
with respect to its subject matter between the Parties or any of their
respective agents. This Contract may not be terminated (other than as provided
in this Contract) or changed except by a writing signed by both Parties.  No right, obligation or provision of this
Contract shall be deemed waived unless such waiver is evidenced by a writing
signed by the Party charged with the waiver and any such waiver shall be
strictly limited to the express terms of such writing.  No representations or warranties have been
given other than those expressly stated in this Contract to induce either Party
to enter into this Contract.


 


[Remainder of Page Intentionally Left Blank]

















 


IN
WITNESS WHEREOF,
and intending to be legally bound, the Parties have executed this Contract by
the undersigned duly authorized representatives as of the date of this
Contract.


 


 


	
  Counterparty

  	
  Reliant Energy Power Supply, LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  	
  Date

  	
   

  	
   

  
									



 

















 


GENERAL TERMS AND CONDITIONS


 


1.             Events of
Default and Remedies.


1.1       An “Event of Default” shall mean, with respect to a
Party (a “Defaulting Party”), the occurrence of any of the following:


(a)                the failure to make, when due, any payment required pursuant to this
Contract if such failure is not remedied within three (3) business days after
written notice;


(b)               the failure by
Seller to deliver to Buyer, when required pursuant to this Contract, the RECs
if such failure is not remedied within three (3) business days after written
notice;


 


(c)                any representation
or warranty made by such Party herein is false or misleading in any material
respect when made or when deemed made or repeated;


 


(d)               a material breach
of a covenant or obligation (other than as separately provided for in this
Section 1.1) set forth in this Contract not cured within five (5) days
following written notice thereof


 


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


 


(f)                  such Party
consolidates or amalgamates with, or merges with or into, or transfers all or
substantially all of its assets to, another entity and, at the time of such
consolidation, amalgamation, merger or transfer, the resulting, surviving or
transferee entity fails to assume all the obligations of such Party under this
Contract to which it or its predecessor was a party by operation of law or
pursuant to an agreement reasonably satisfactory to the other Party.


 


1.2         If an Event of Default with respect to a Defaulting
Party shall have occurred and be continuing, the other Party shall have the
right to (i) suspend performance, (ii) withhold any payments due to the
Defaulting Party under this Contract, and (iii) terminate this Contract on two
(2) business days prior notice to accelerate all amounts owing between the
Parties and to liquidate and recover its damages resulting from such Event of
Default in accordance with the methodology set forth in Section 1.3 below.


 


1.3         If Seller fails to deliver all or part of the Quantity
of the Product in accordance with the terms of this Contract or if there is an
Event of Default hereunder in respect of Seller, Seller shall pay Buyer, within
ten (10) days of receipt of an invoice from Buyer an amount equal to the
product of (i) the deficiency in the Quantity of Product delivered and (ii) the
positive difference, if any, obtained by subtracting the per unit Price from
the per unit Replacement Price. “Replacement Price” means the price at which
Buyer, acting in a commercially reasonable manner, purchases (if at all)
substitute or replacement Product, having the same or a subsequent Vintage Date
as the Product, for the Product not delivered by Seller, plus any commercially
reasonable costs of Buyer to obtain replacement Product, less any costs Buyer
avoids as a consequence of Seller’s failure to perform; or, absent any such
purchase, the market price for such quantity of substitute or replacement
Product having the same or a subsequent Vintage Date as the Product; provided,
however, in no event shall the Replacement Price include any penalties, or
similar charges or any stranded costs. 
For amounts of Product for which Seller breaches its obligations pursuant
to Section 1 of the Special Conditions in the Transaction Confirmation, Seller
will be deemed 


 

















 


not to have delivered such Product to Buyer and, as
such, notwithstanding anything to the contrary, Buyer will be entitled to the
remedies set forth in this Section 1.3.


 


If Buyer fails to receive
all or part of the Quantity of the Product in accordance with the terms of this
Contract or if there is an Event of Default hereunder in respect of Buyer,
Buyer shall pay Seller, within ten (10) days of receipt of an invoice from
Seller, an amount equal to the product of (i) the deficiency in the Quantity of
Product received and (ii) the positive difference, if any, obtained by
subtracting the per unit Sales Price from the per unit Price. “Sales Price”
means the price at which Seller, acting in a commercially reasonable manner,
resells (if at all) the Product not received by Buyer, less any costs Seller
avoids as a consequence of Buyer’s failure to perform; or, absent any such
sale, the market price for such quantity of substitute or replacement Product;
provided, however, in no event shall the Sales Price include any penalties, or
similar charges or any stranded costs.


1.4         THE PARTIES
CONFIRM THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS
CONTRACT SATISFY THE ESSENTIAL PURPOSES HEREOF, THAT SUCH EXPRESS REMEDY OR
MEASURE OF DAMAGES SHALL BE THE PARTY’S SOLE AND EXCLUSIVE REMEDY FOR FAILURE
OF THE OTHER TO MAKE OR TAKE DELIVERY HEREUNDER, THE OBLIGOR’S LIABILITY SHALL
BE LIMITED AS SET FORTH AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY
ARE WAIVED. FOR BREACH OF ANY OTHER OBLIGATION IMPOSED IN THIS CONTRACT, THE
OBLIGOR’S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT
ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY AVAILABLE TO IT AND ALL
OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. NEITHER PARTY SHALL
BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, PUNITIVE, SPECIAL, EXEMPLARY OR
INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY
STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION IN THIS CONTRACT OR
OTHERWISE.  IT IS THE INTENT OF THE
PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF
DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE
NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT,
OR ACTIVE OR PASSIVE.  TO THE EXTENT ANY
DAMAGES REQUIRED TO BE PAID HEREUNDER ARE DEEMED TO BE LIQUIDATED, THE PARTIES
ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE,
OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE LIQUIDATED
DAMAGES CONSTITUTE A REASONABLE APPROXIMATION OF THE ESTIMATED HARM OR LOSS
ATTRIBUTABLE TO A BREACH.


2.             No Waiver. 
No waiver at any time by any Party hereto of its rights with respect to
the other Party or with respect to any matter arising in connection with the
Contract shall be considered a waiver with respect to any subsequent default or
matter.


3.             Assignment. 
Neither Party shall assign this Contract without the prior written
consent of the other Party, which consent may not be unreasonably withheld;
provided that, Seller expressly consents to the Collateral Assignment (as
defined herein, and as more specifically set forth in Section 6 of this
Contract), by Buyer to Merrill Lynch Commodities, Inc., and Merrill Lynch &
Co., Inc., (together, the “Merrill Parties”). 
Additionally, either Party may, without the consent of the other Party
(and without relieving itself from liability hereunder), (i) transfer or assign
this Contract to an affiliate of such Party which affiliate’s creditworthiness
is equal to or higher than that of such Party, or (ii) transfer or assign this
Contract to any person or entity succeeding to all or substantially all of the
assets whose creditworthiness is equal to or higher than that of such Party;
provided, however, that in each such case, any such assignee shall agree in
writing to be bound by the terms and conditions hereof and so long as the
transferring Party delivers such tax and enforceability assurance as the non-transferring
Party may reasonably request.


4.             Taxes and Indemnity.  Seller will be responsible for any taxes
imposed by any government authority on the creation, ownership, or transfer of
the Product under this Contract up to and including the time and place at which
title transfers.  Buyer will be
responsible for any taxes imposed by any government authority on the receipt or
ownership of the Product after the time and place at which title transfers.  Each Party will indemnify, defend and hold
harmless the other Party from and against any claims or demands made by others
arising from or out of any event, circumstance, act or incident first occurring
or existing during the period when title to the Product is vested in such Party
as provided herein, except to the extent arising from such Party’s own gross
negligence or willful misconduct.  Each
Party will 

















 


indemnify,
defend and hold harmless the other Party against any taxes for which such Party
is responsible as provided herein.


5.             Representations.


5.1           From
the date of entering into this Contract and throughout the Term of this
Contract, the Parties each warrant and covenant as follows:


a)              it is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation;


b)             it has all regulatory authorizations necessary for it
to legally perform its obligations under this Contract;


c)              it has the requisite authority to enter into and
perform its respective obligations under the Contract;


d)             the obligations hereunder are binding on it;


e)              it is not the subject of any bankruptcy proceeding or
involved in litigation that would materially affect its ability to perform
hereunder, except as provided for in any SEC Filing by it or any of its
affiliates;


f)                the Contract has been negotiated in the ordinary
course of  business, in good faith, for
fair consideration on an arms length basis between Parties of equal
sophistication and represents a bargained for exchange; and


g)             it has entered into this Contract in connection with
the conduct of its business and it has the capacity and ability to perform its
obligations hereunder.


6.                                       Credit Sleeve Provisions


 


(a)                                  Consent to Assignment.  Seller hereby consents to the assignment by
Buyer to the Merrill Parties of all of Buyer’s rights under this Contract,
including all rights to receive payments from Seller under this Contract (any
such payment, a “Receivable”), as collateral security for Buyer’s obligations
to the Merrill Parties in connection with an enhanced credit structure for
Buyer’s retail electric business provided by the Merrill Parties (the “Collateral
Assignment”).


 


(b)                                 Collateral Account.  Buyer hereby unconditionally and irrevocably
authorizes and directs Seller to make, and, unless and until otherwise required
by law, or this Contract is terminated, Seller hereby agrees to make, any and
all payments in respect of Receivables directly by wire transfer to the account
specified below (the “Collateral Account”). 
All such payments by Seller to the Collateral Account shall be free and
clear of any deduction, set-off, netting arrangements or counterclaim, except
as expressly provided pursuant to this Contract.


 


                                                Collateral Account


 


	
   

  
	
   

  
	
   

  



 


(c)                                  Notice & Right to Cure Events of
Default.  Pursuant to Section 7 of these
General Terms and Conditions, the Merrill Parties shall be provided with all
notices under this Contract, including notices of any Event of Default, or any
event that with notice of lapse of time would be an Event of Default (a “Potential
Event of Default”) hereunder.  In the
event of a Potential Event of Default or Event of Default in which Buyer is, or
may become, the Defaulting Party, the Merrill Parties shall be permitted, at
their option, to cure such default,  if such
Event of Default or Termination Event is capable of being cured by either
Merrill Party, within any grace period applicable to Buyer for  such Potential Event of Default or
Event of Default.


 


7.             Notices.  All notices to REPS under the Contract shall
be given to:  


 


	
  Reliant Energy Power Supply, LLC

  Attn: Contract Administration

  P. O. Box 4455

  Houston, TX77210-4455

  Phone: (713) 497-5855

  Facsimile: (713) 497-9561

   

   

  All notices to         
  under the Contract shall be given to:

  	
   

  	
  With additional Notices
  of an Event of Default or Potential

  Event of Default to:

  Attn: Dave Sladic, Vice President and Deputy General Counsel

  Phone: (713) 497-7063

  Facsimile: (713) 537-7063

   

  With additional Notices
  of an Event of Default or

  Potential Event of Default to:

  



 

















 


With a copy to:


 


Merrill Lynch Commodities, Inc.


20 East Greenway Plaza


7th Floor


Houston, Texas 77253-3327


Attn:                                            Legal


Fax:   713-544-5551


Phone:                                   713-544-4975


 


 


Except as otherwise expressly provided herein, all notices to the other
Party under the Contract shall be in writing and shall be deemed effective upon
receipt if received prior to 5:00 p.m., local time, on a business day, or on
the next succeeding business day if otherwise.


 


8.             Choice of Law.  This Contract will be governed by the laws of
the state of [New York/Texas], without regard to choice of law doctrine.


 


9.             Waiver of Jury
Trial.  Each Party waives its
respective right to any jury trial with respect to any litigation arising
under, or in connection with this Contract.


 


10.           Confidentiality.  Except to the extent required by any
governmental or judicial authority or process, including without limitation as
may be necessary for Buyer to demonstrate compliance with any renewable energy
requirements imposed by the state of Texas and the Electric Reliability Council
of Texas, the Parties will not disclose the provisions of this Contract to any
party, except as hereinafter provided:  A
Party may disclose the provisions of this Contract to its officers, directors,
employees, agents, accountants and attorneys (collectively, “Representatives”)
and to its affiliates and its affiliates’ Representatives.  Additionally, REPS will have the right to
disclose the provisions of this Contract to Merrill Lynch Commodities, Inc. and
Merrill Lynch & Co., Inc.


 

















Exhibit D1


To Credit Sleeve
and Reimbursement Agreement


Form of EEI Collateral Annex


 


PARAGRAPH 10


to the


COLLATERAL ANNEX


to the


EEI MASTER POWER PURCHASE AND SALE AGREEMENT


 


CREDIT ELECTIONS COVER SHEET


 


DATED AS OF


 


[   T.B.D.    
]


 


 


BETWEEN


 


RELIANT ENERGY POWER SUPPLY, LLC
(“Party A”)


 


AND


 


_________________________________________
(“Party B”)


 


AND


 


MERRILL
LYNCH COMMODITIES, INC. (“MLCI”)


 


 


Paragraph 10.   
Elections and Variables


 


I.              Collateral
Threshold.


 


A.                                    Party
A Collateral Threshold.


 


o           $                             
(the “Threshold Amount”). [DELETE the following language if we use this option
& the amount is Zero (0)    The
amount (the “Threshold Amount”) equal to the lower of (i) the maximum amount
payable under guaranty provided by [Party B][Party B’s Guarantor] guaranteeing
Party B’s payment obligations hereunder, if any, and (ii) $                             ;
provided, however, that the Collateral Threshold for Party A shall be
zero [remove the following if no Guaranty provided - if (i) no Guaranty has
been provided or (ii) upon the occurrence and during the continuance of an
Event of Default or a Potential Event of Default with respect to Party A; and
provided further that, in the event that, and on the date that, Party A
cures the Potential Event of Default on or prior to the date that Party A is
required to post Performance Assurance to Party B pursuant to a demand made by
Party B pursuant to the provisions of the Collateral Annex on or after the
occurrence of such Potential Event of Default, (i) the Collateral Threshold for
Party A shall automatically increase from zero to the Threshold Amount and (ii)
Party A shall be relieved of its obligation to post Performance Assurance
pursuant to such demand.]


 






 












 


o           The amount (the “Threshold Amount”)
equal to the amount set forth below under the heading “Party A Collateral
Threshold” opposite the Credit Rating for Party A’s Guarantor on the relevant
date of determination, and if Party A’s Guarantor’s Credit Ratings shall not be
equivalent, the [lower/higher] Credit Rating shall govern; provided, however,
that the Collateral Threshold for Party A shall be zero if (i) no Guaranty has
been provided, (ii) on the relevant date of determination Party A’s Guarantor
does not have a Credit Rating from any rating agency specified below or (iii)
an Event of Default or a Potential Event of Default with respect to Party A has
occurred and is continuing; and provided further that, in the event
that, and on the date that, Party A cures the Potential Event of Default on or
prior to the date that Party A is required to post Performance Assurance to
Party B pursuant to a demand made by Party B pursuant to the provisions of the
Collateral Annex on or after the occurrence of such Potential Event of Default,
(i) the Collateral Threshold for Party A shall automatically increase from zero
to the Threshold Amount and (ii) Party A shall be relieved of its obligation to
post Performance Assurance pursuant to such demand.


 


	
  Party A

  Collateral Threshold

  	
   

  	
  S&P Credit Rating

  	
   

  	
  Moody’s Credit Rating

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $                  

  	
   

  	
  AA- (or above)

  	
   

  	
  Aa3 (or above)

  
	
  $                  

  	
   

  	
  A+ thru A-

  	
   

  	
  A1 thru A3

  
	
  $                  

  	
   

  	
  BBB+

  	
   

  	
  Baa1

  
	
  $                  

  	
   

  	
  BBB

  	
   

  	
  Baa2

  
	
  $                  

  	
   

  	
  BBB-

  	
   

  	
  Baa3

  
	
  $                  

  	
   

  	
  BB+

  	
   

  	
  Ba1

  
	
  $                  

  	
   

  	
  BB

  	
   

  	
  Ba2

  
	
  $                  

  	
   

  	
  BB-

  	
   

  	
  Ba3

  
	
  $                  

  	
   

  	
  B+

  	
   

  	
  B1

  
	
  $                  

  	
   

  	
  B

  	
   

  	
  B2

  
	
  $                  

  	
   

  	
  Below B

  	
   

  	
  Below B2

  
	
  $                  

  	
   

  	
  Unrated

  	
   

  	
  Unrated

  



 


o           The
amount (the “Threshold Amount”)  set
forth below under the heading “Party A Collateral Threshold” opposite the
Credit Rating for [Party A][Party A’s Guarantor] on the relevant date of
determination, and if [Party A’s][Party A’s Guarantor’s] Credit Ratings shall
not be equivalent, the lower Credit Rating shall govern or (b) zero if on the
relevant date of determination [Party A][its Guarantor] does not have a Credit
Rating from the rating agency(ies) specified below or an Event of Default or a
Potential Event of Default with respect to Party A has occurred and is
continuing; provided, however, in the event that, and on the date that,
Party A cures the Potential Event of Default on or prior to the date that Party
A is required to post Performance Assurance to Party B pursuant to a demand
made by Party B pursuant to the provisions of the Collateral Annex on or after
the occurrence of such Potential Event of Default, (i) the Collateral Threshold
for Party A shall automatically increase from zero to the Threshold Amount and
(ii) Party A shall be relieved of its obligation to post Performance Assurance
pursuant to such demand.


 


	
  Party A

  Collateral Threshold

  	
   

  	
  Credit Rating

  	
   

  	
  Credit Rating

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $                  

  	
   

  	
               
  (or above)

  	
   

  	
               
  (or above)

  
	
  $                  

  	
   

  	
   

  	
   

  	
   

  
	
  $                  

  	
   

  	
   

  	
   

  	
   

  
	
  $                  

  	
   

  	
   

  	
   

  	
   

  
	
  $                  

  	
   

  	
  Below 

  	
   

  	
  Below 

  



 


o            The amount of the
Guaranty Agreement dated            
from            , as
amended from time to time but in no event shall Party A’s Collateral Threshold
be greater than $           .


 

















 


o            Other — see attached threshold
terms


 


 


B.                                    Party
B Collateral Threshold.


 


o            $                             
(the “Threshold Amount”).  [DELETE the
following language only if   we use this
option & the amount is Zero (0)   
The amount (the “Threshold Amount”) equal to the lower of (i) the
maximum amount payable under guaranty provided by [Party B][Party B’s
Guarantor] guaranteeing Party B’s payment obligations hereunder, if any, and
(ii) $                             ;;
provided, however, that the Collateral Threshold for Party B shall be
zero [remove the following if no Guaranty provided - if (i) no Guaranty has
been provided or (ii) upon the occurrence and during the continuance of an
Event of Default or a Potential Event of Default with respect to Party B; and provided
further that, in the event that, and on the date that, Party B cures the
Potential Event of Default on or prior to the date that Party B is required to
post Performance Assurance to Party A pursuant to a demand made by Party A
pursuant to the provisions of the Collateral Annex on or after the occurrence
of such Potential Event of Default, (i) the Collateral Threshold for Party B
shall automatically increase from zero to the Threshold Amount and (ii) Party B
shall be relieved of its obligation to post Performance Assurance pursuant to
such demand.]


 


o            The amount (the “Threshold
Amount”) equal to the [delete highlighted language if Guaranty is uncapped or
no Guarantor at all] lower of (i) the maximum amount payable under the guaranty
provided by Party B’s Guarantor guaranteeing Party B’s payment obligations
hereunder, if any and (ii) the] amount set forth below under the heading “Party
B Collateral Threshold” opposite the Credit Rating for Party B[‘s Guarantor] on
the relevant date of determination, and if Party B’s [Guarantor’s] Credit
Ratings shall not be equivalent, the [lower/higher] Credit Rating shall govern
provided, however, that the Collateral Threshold for Party B shall be zero if
[(i) no Guaranty has been provided, delete if Party B has no Guarantor] (ii) on
the relevant date of determination Party B[‘s Guarantor] does not have a Credit
Rating from any rating agency specified below or (iii) an Event of Default or a
Potential Event of Default with respect to Party B has occurred and is
continuing; and provided, further that, in the event that, and on the
date that, Party B cures the Potential Event of Default on or prior to the date
that Party B is required to post Performance Assurance to Party A pursuant to a
demand made by Party A pursuant to the provisions of the Collateral Annex on or
after the occurrence of such Potential Event of Default, (i) the Collateral
Threshold for Party B shall automatically increase from zero to the Threshold
Amount and (ii) Party B shall be relieved of its obligation to post Performance
Assurance pursuant to such demand.


 


	
  Party B

  Collateral Threshold

  	
   

  	
  Credit Rating

  	
   

  	
  Credit Rating

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $                  

  	
   

  	
  AA- (or above)

  	
   

  	
  Aa3 (or above)

  
	
  $                  

  	
   

  	
  A+ thru A-

  	
   

  	
  A1 thru A3

  
	
  $                  

  	
   

  	
  BBB+

  	
   

  	
  Baa1

  
	
  $                  

  	
   

  	
  BBB

  	
   

  	
  Baa2

  
	
  $                  

  	
   

  	
  BBB-

  	
   

  	
  Baa3

  
	
  $                  

  	
   

  	
  BB+

  	
   

  	
  Ba1

  
	
  $                  

  	
   

  	
  BB

  	
   

  	
  Ba2

  
	
  $                  

  	
   

  	
  BB-

  	
   

  	
  Ba3

  
	
  $                  

  	
   

  	
  B+

  	
   

  	
  B1

  
	
  $                  

  	
   

  	
  B

  	
   

  	
  B2

  
	
  $                  

  	
   

  	
  Below B

  	
   

  	
  Below B2

  
	
  $                  

  	
   

  	
  Unrated

  	
   

  	
  Unrated

  



 

















 


 


o            The amount (the “Threshold
Amount”) set forth below under the heading “Party B Collateral Threshold”
opposite the Credit Rating for [Party B][Party B’s Guarantor] on the relevant
date of determination, and if [Party B’s][Party B’s Guarantor’s] Credit Ratings
shall not be equivalent, the lower Credit Rating shall govern or (b) zero if on
the relevant date of determination [Party B][its Guarantor] does not have a
Credit Rating from the rating agency(ies) specified below or an Event of
Default or a Potential Event of Default with respect to Party B has occurred
and is continuing; provided, however, in the event that, and on the date
that, Party B cures the Potential Event of Default on or prior to the date that
Party B is required to post Performance Assurance to Party A pursuant to a
demand made by Party A pursuant to the provisions of the Collateral Annex on or
after the occurrence of such Potential Event of Default, (i) the Collateral Threshold
for Party B shall automatically increase from zero to the Threshold Amount and
(ii) Party B shall be relieved of its obligation to post Performance Assurance
pursuant to such demand:


 


	
  Party B

  Collateral Threshold

  	
   

  	
  Credit Rating

  	
   

  	
  Credit Rating

  
	
   

  	
   

  	
               
  (or above)

  	
   

  	
               
  (or above)

  
	
  $                  

  	
   

  	
   

  	
   

  	
   

  
	
  $                  

  	
   

  	
   

  	
   

  	
   

  
	
  $                  

  	
   

  	
   

  	
   

  	
   

  
	
  $                  

  	
   

  	
  Below 

  	
   

  	
  Below 

  



 


 


o            The amount of the
Guaranty Agreement dated            
from            , as
amended from time to time but in no event shall Party B’s Collateral Threshold
be greater than $           .


 


o            Other — see attached threshold
terms.


 


 


II.            Eligible
Collateral and Valuation Percentage.


 


The following items will
qualify as “Eligible Collateral” for the Party specified:


	
   

  	
   

  	
  MLCI

  (on behalf of Party

  A and itself)

  	
   

  	
  Party B

  	
   

  	
  Valuation
  %

  
	
  (A) Cash

  	
   

  	
  [X]

  	
   

  	
  [X]

  	
   

  	
  100%

  
	
  (B) Letters of
  Credit.  100% of the undrawn portion of such
  Letter of Credit unless either (i) a Letter of Credit Default shall have
  occurred and be continuing with respect to such Letter of Credit, or (ii)
  twenty (20) or fewer Business Days remain prior to the expiration of such
  Letter of Credit, in which cases the Valuation Percentage shall be zero (0).

  	
   

  	
  [X]

  	
   

  	
  [X]

  	
   

  	
  100%

  
	
  (C) Negotiable debt obligations issued by
  the U.S. Treasury Department having an original maturity at issuance of not
  more than one year (“Treasury Bills”)

  	
   

  	
  [X]

  	
   

  	
  [X]

  	
   

  	
  99%

  
	
  (D) Negotiable debt obligations issued by
  the U.S. Treasury Department having an original maturity at issuance of more
  than one year but not more than ten years (“Treasury Notes”)

  	
   

  	
  [X]

  	
   

  	
  [X]

  	
   

  	
  98%

  
	
  (E) Negotiable debt obligations issued by
  the U.S. Treasury Department having an original maturity at issuance of more
  than ten years (“Treasury Bonds”)

  	
   

  	
  [X]

  	
   

  	
  [X]

  	
   

  	
  95%

  



 


 

















 


III.           Independent
Amount.       (NOT APPLICABLE)


 


A.                                    Party
A Independent Amount.     (NOT
APPLICABLE)


 


o                                   Party A shall have a Fixed Independent
Amount of $                   .   If the Fixed Independent Amount option is
selected for Party A, then Party A (which shall be a Pledging Party with
respect to the Fixed IA Performance Assurance) will be required to Transfer or
cause to be Transferred to Party B (which shall be a Secured Party with respect
to the Fixed IA Performance Assurance) Performance Assurance with a Collateral
Value equal to the amount of such Independent Amount (the “Fixed IA Performance
Assurance”).   The Fixed IA Performance
Assurance shall not be reduced for so long as there are any outstanding
obligations between the Parties as a result of the Agreement, and shall not be
taken into account when calculating Party A’s Collateral Requirement pursuant
to the Collateral Annex.  Except as
expressly set forth above, the Fixed IA Performance Assurance shall be held and
maintained in accordance with, and otherwise be subject to, Paragraphs 2, 5(b),
5(c), 6, 7 and 9 of the Collateral Annex.


 


o                                   Party A shall have a Full Floating
Independent Amount of $                   .    If the Full Floating Independent Amount
option is selected for Party A, then for purposes of calculating Party A’s
Collateral Requirement pursuant to Paragraph 3 of the Collateral Annex, such
Full Floating Independent Amount for Party A shall be added by Party B to its
Exposure Amount for purposes of determining Net Exposure pursuant to Paragraph
3(a) of the Collateral Annex.


 


o                                   Party A shall have a Partial Floating
Independent Amount of $                   .   If the Partial Floating Independent Amount
option is selected for Party A, then Party A will be required to Transfer or
cause to be Transferred to Party B Performance Assurance with a Collateral
Value equal to the amount of such Independent Amount (the “Partial Floating IA
Performance Assurance”) if at any time Party A otherwise has a Collateral
Requirement (not taking into consideration the Partial Floating Independent
Amount) pursuant to Paragraph 3 of the Collateral Annex.   The Partial Floating IA Performance
Assurance shall not be reduced so long as Party A has a Collateral Requirement
(not taking into consideration the Partial Floating Independent Amount).   The Partial Floating Independent Amount
shall not be taken into account when calculating a Party’s Collateral
Requirements pursuant to the Collateral Annex. 
Except as expressly set forth above, the Partial Floating Independent
Amount shall be held and maintained in accordance with, and otherwise be
subject to, the Collateral Annex.


 


B.                                    Party
B Independent Amount.       [ (NOT APPLICABLE)  ]


 


o                                   Party B shall have a Fixed Independent
Amount of $                   .    If the Fixed Independent Amount Option is
selected for Party B, then Party B (which shall be a Pledging Party with
respect to the Fixed IA Performance Assurance) will be required to Transfer or
cause to be Transferred to Party A (which shall be a Secured Party with respect
to the Fixed IA Performance Assurance) Performance Assurance with a Collateral
Value equal to the amount of such Independent Amount (the “Fixed IA Performance
Assurance”).   The Fixed IA Performance
Assurance shall not be reduced for so long as there are any outstanding
obligations between the Parties as a result of the Agreement, and shall not be 


 

















 


taken into account
when calculating Party B’s Collateral Requirement pursuant to the Collateral
Annex.  Except as expressly set forth
above, the Fixed IA Performance Assurance shall be held and maintained in
accordance with, and otherwise be subject to, Paragraphs 2, 5(b), 5(c), 6, 7
and 9 of the Collateral Annex.


 


o                                   Party B shall have a Full Floating
Independent Amount of $                   .     If
the Full Floating Independent Amount Option is selected for Party B then for
purposes of calculating Party B’s Collateral Requirement pursuant to Paragraph
3 of the Collateral Annex, such Full Floating Independent Amount for Party B
shall be added by Party A to its Exposure Amount for purposes of determining
Net Exposure pursuant to Paragraph 3(a) of the Collateral Annex.


 


o                                   Party B shall have a Partial Floating
Independent Amount of $                   .     If the Partial Floating Independent Amount
option is selected for Party B, then Party B will be required to Transfer or
cause to be Transferred to Party A Performance Assurance with a Collateral
Value equal to the amount of such Independent Amount (the “Partial Floating IA
Performance Assurance”) if at any time Party B otherwise has a Collateral
Requirement (not taking into consideration the Partial Floating Independent
Amount) pursuant to Paragraph 3 of the Collateral Annex.   The Partial Floating IA Performance
Assurance shall not be reduced for so long as Party B has a Collateral
Requirement (not taking into consideration the Partial Floating Independent
Amount).   The Partial Floating
Independent Amount shall not be taken into account when calculating a Party’s
Collateral Requirements pursuant to the Collateral Annex.   Except as expressly set forth above, the
Partial Floating Independent Amount shall be held and maintained in accordance
with, and otherwise be subject to, the Collateral Annex.


 


 


IV.           Minimum
Transfer Amount.


 


A.            Party
A Minimum Transfer Amount:             $1


 


B.            Party
B Minimum Transfer Amount:             $1


 


 


V.            Rounding
Amount.


 


A.            Party A Rounding Amount:               $250,000


 


B.            Party
B Rounding Amount:               $250,000


 


 


VI.           Administration
of Cash Collateral.


 


A.            Party
A Eligibility to Hold Cash.


 


o                                   Party A shall not be entitled to hold
Performance Assurance in the form of Cash.  
Performance Assurance in the form of Cash shall be held in a Qualified
Institution in accordance with the provisions of Paragraph 6(a)(ii)(B) of the
Collateral Annex.  Party A shall pay to
Party B in accordance with the terms of the Collateral Annex the amount of
interest it receives from the Qualified Institution on any Performance
Assurance in the form of Cash posted by Party B.


 


x                                  MLCI and its
Custodian  shall be entitled to
hold (and, for the avoidance of doubt, use in accordance with Paragraph
6(a)(ii)) Performance Assurance in the form of Cash on behalf of Party A and
the Merrill Parties provided
that the following conditions are satisfied: 
(1) it is not a Defaulting Party and (2) Cash shall be held only in any
jurisdiction within the 

















 


United States.   
To the extent Party A is entitled to hold Cash, the Interest Rate
payable to Party B on Cash shall be as selected below:


 


 


Party A Interest Rate.


 


x          The
“Interest Rate” will be at a rate per
annum equal to the one month London Interbank Offered Rate for Dollar deposits
as may from time to time be in effect as reported in The Wall Street
Journal.  Such interest shall be
calculated on the basis of the actual number of days elapsed and on the basis
of a year of 360 days.


 


o    Other - 


 


B.            Party
B Eligibility to Hold Cash.


 


o                                   Party B shall not be entitled to hold
Performance Assurance in the form of Cash. 
Performance Assurance in the form of Cash shall be held in a Qualified
Institution in accordance with the provisions of Paragraph 6(a)(ii)(B) of the
Collateral Annex.  Party B shall pay to
Party A in accordance with the terms of the Collateral Annex the amount of
interest it receives from the Qualified Institution on any Performance
Assurance in the form of Cash posted by Party A.


 


x                                  Party B shall
be entitled to hold Performance Assurance in the form of Cash provided that the following conditions
are satisfied:  (1) it is not a
Defaulting Party and (2) Cash shall be held only in any jurisdiction within the
United States.    To the extent Party B
is entitled to hold Cash, the Interest Rate payable to Party A on Cash shall be
as selected below:


 


Party B Interest Rate.


 


x                                  The “Interest Rate”
will be at a rate per annum equal to the one month London Interbank Offered
Rate for Dollar deposits as may from time to time be in effect as reported in
The Wall Street Journal.  Such interest
shall be calculated on the basis of the actual number of days elapsed and on
the basis of a year of 360 days.


 


o            Other - 


 


C.                                    Notwithstanding
the foregoing Party A Eligibility to Hold Cash or Party B Eligibility to Hold
Cash, MLCI, Party A and Party B hereby covenant and agree that, except at such
times as, in the case of Party A, ML&Co., or, in the case of Party B, it or
its Guarantor, as the case may be, has a Credit Rating of at least Baa2 (Moody’s)
or BBB (S&P), in the case of Party A, MLCI, and in the case of Party B,
Party B will cause all Performance Assurance received from the other Party to
be entered in one or more accounts (each, a “CA Collateral Account”) with a
Qualified Institution, each of which accounts may include property of other
parties, but will bear a title indicating the Pledging Party’s interest in said
account and the Performance Assurance in said account.  In the event the Credit Ratings shall not be
equivalent, the lower Credit Rating shall govern.  In addition, the Secured Party may direct the
Pledging Party to deliver Eligible Collateral directly into the Secured Party’s
CA Collateral Account(s).  The Secured
Party may move the CA Collateral Accounts from one Qualified Institution to
another upon reasonable notice to the Pledging Party.  The Secured Party shall cause statements
concerning the Performance Assurance to be sent to the Pledging Party on
request, which may not be made more frequently than once in each calendar
month.


 


VII.         Notification
Time.


 


o            Other
— 12:00 p.m. Central Standard Time


 

















 


 


VIII.        General.


 


With
respect to the Collateral Threshold, Independent Amount, Minimum Transfer Amount
and Rounding Amount, if no selection is made in this Cover Sheet with respect
to a Party, then the applicable amount in each case for such Party shall be
zero (0).  In addition, with respect to
the “Administration of Cash Collateral” section of this Paragraph 10, if no
selection is made with respect to a Party, then such Party shall not be
entitled to hold Performance Assurance in the form of Cash and such Cash, if
any, shall be held in a Qualified Institution pursuant to Paragraph 6(a)(ii)(B)
of the Collateral Annex.    If a Party is
eligible to hold Cash pursuant to a selection in this Paragraph 10 but no
Interest Rate is selected, then the Interest Rate for such Party shall be the
Federal Funds Effective Rate as defined in Section VI of this Paragraph 10.


 


 


IX.           Additional
Amendments to Collateral Annex.


 


Introductory Paragraph.


 


                                                Delete “Paragraph 10 Elections” in the first
introductory paragraph and replace it with “Paragraph 10 Cover Sheet”.


 


Paragraph 1.   Definitions.


 


The following definitions
are amended as set forth below:


 


The definition of “Letter
of Credit” is deleted in its entirety and replaced with the following:


 


“Letter of Credit” shall mean an irrevocable, transferable,
standby Letter of Credit, issued by a Qualified Institution, in a form as the
issuing bank may require and which is reasonably acceptable to the Party in
whose favor the Letter of Credit is issued.


 


The definition of “Notification Time” is amended to  “12:00 p.m. Central Standard Time”.


 


The definition of “Performance Assurance” is amended by replacing “6(a)(iv)”
with 6(a)(iii)”.


 


The definition of “Qualified Institution” is deleted in its
entirety and replaced with the following:


 


“Qualified Institution”  means a  major U.S. commercial bank or a foreign
bank that is not an affiliate of any Party to this Agreement with a U.S. branch
office which is not the Pledgor (or a subsidiary or Affiliate of the Pledgor)
and with a Credit Rating of at least “A-” by S&P and “A3” by Moody’s.


 


The definition of “Reference
Market-maker” is deleted in its entirety and replaced with the following:


 


“Reference Market-maker” means a leading
broker, dealer or published index in the relevant market selected by a Party
determining its Exposure in a commercially reasonable manner.  Such leading dealers shall not be parties to
this Agreement or Affiliates of a Party to this Agreement.


 


The definition of “Secured
Party” is amended by replacing “3(b)” with “3(a)”.


 


Paragraph 5.  Reduction and
Substitution of Performance Assurance.


 


Subparagraph 5(a) shall be amended by adding the word “Local” before the
words “Business Day in line eighteen.


 


Paragraph 6.   Administration of
Performance Assurance.


 

















 


[The following
subparagraph 6(a)(iv) shall be added following subparagraph 6(a)(iii):


 


(iv)          Distributions.  So long as no Event of Default or  Potential Event of Default with respect to
the Pledging Party has occurred and is continuing, and no Early Termination
Date for which any unsatisfied payment Obligations of the Pledging Party exist
has occurred or been designated as the result of an Event of Default with
respect to the Pledging Party, and to the extent that an obligation to Transfer
Performance Assurance would not be created or increased by the Transfer, in the
event that the Secured Party or its Custodian is holding Treasury Bills,
Treasury Notes, or Treasury Bonds (“Treasury PA”) and Secured Party receives or
is deemed to receive Distributions on a Local Business Day, the Secured Party
will Transfer (or caused to be Transferred) to the Pledging Party such Distributions
not later than the following Local Business Day.  On or after the occurrence of a Potential
Event of Default or an Event of Default with respect to the Pledging Party or
an Early Termination Date as a result of an Event of Default with respect to
the Pledging Party, the Secured Party or its Custodian shall retain any such
Distributions as additional Performance Assurance hereunder until the
obligations of the Pledging Party under the Agreement have been satisfied in
the case of an Early Termination Date or for so long as such Event of Default
is continuing in the case of an Event of Default. For purposes of this
paragraph, “Distributions” means with respect to Treasury PA, all principal,
interest and other payments and distributions of cash or other property with
respect thereto, regardless of whether the Secured Party has disposed of that
Treasury PA under Paragraph 6(ii). 
Distributions will not include any item of property acquired by the
Secured Party upon any disposition or liquidation of Treasury PA.] [Remove if
deleting negotiable debt obligations from Section II]


 


Subparagraph
6(b)(iii) is amended by deleting the words “occurrence thereof” and replacing
them with the words “Pledging Party’s receipt of notice hereunder” in the
fourth line.


 


                                                Subparagraph 6(c) shall be deleted in its
entirety and replaced with the following:


 


“SCHEDULE 1 to
Collateral Annex” shall be deleted in its entirety.


 


Demands and Notices.  All demands,
specifications and notices under this Annex will be made pursuant to the
Notices Section of this Agreement, unless otherwise specified here:


 


	
  Party A:

  	
   

  	
  Attn:  Credit
  Risk Management

  

  Street Address:

  1000 Main St., 11th Floor

  Houston, TX  77002

  

  Mailing Address:

  P O Box 4455

  Houston, TX 77210-4455

  

  

  

  

  With a copy to (other than copies of notices in respect of demands under
  Paragraphs 4 and 5):

  	
   

  	
  Telephone:

  Facsimile:

  

  

  

  

  

  

  

  

  

  

  

  Telephone:

  Facsimile:



  	
   

  	
  (713) 497-1052

  (713) 497-1058

  

  

  

  

  

  

  

  

  

  

  

  (713) 544-4975

  (713) 544-5551

  
	
   

  	
   

  	
   

  Merrill Lynch Commodities, Inc.

  20 East Greenway Plaza, 7th Floor

  Houston, Texas 77253-3327

  Attn:Legal

  	
   

  	
   

   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party B:

  	
   

  	
   

  	
   

  	
  Telephone:

  Facsimile:

  	
   

  	
   

  



 

















 


Addresses for Transfers.


 


	
  Party A:

  U. S. Dollars

  

  

  



  	
   

  	
  Payment to:

  

  For Account of:

  Account #:

  Federal ABA#:

  



  	
   

  	
  JP Morgan Chase Bank,

  New York, NY

  Merrill Lynch Commodities, Inc.

  066657474

  021000021

  



  
	
  Party B:

  U.S. Dollars

  	
   

  	
  Payment to:

  For Account of:

  Account #:

  Federal ABA#:

  	
   

  	
   

  



 


Other Provisions.


UCC.                    Each Party agrees that the provisions of this
Agreement supersede and replace in their entirety any requirements of law
relating to adequate assurance of future performance, including without
limitation Article 2 of the Uniform Commercial Code.  This Collateral Annex is a Security Agreement
under the provisions of the Uniform Commercial Code of the State of New York.


 


Credit Sleeve Provisions.


 


(i)                                     In connection with the Collateral
Assignment described in “Credit Sleeve Provisions” on the Cover Sheet, Party A,
Party B and MLCI agree that:


 


(A)                              Party B shall Transfer all Eligible
Collateral required to be Transferred hereunder by Party B directly to the
account provided above (“Addresses for Transfer”) for Party A and, any such
Transfer, to the extent thereof, shall satisfy Party B’s obligations to make
Transfers to Party A hereunder;


 


(B)                                MLCI shall Transfer all Eligible
Collateral required to be Transferred hereunder by Party A directly to the
account provided above (“Addresses for Transfer”) for Party B and, any such
Transfer, to the extent thereof, shall satisfy Party A’s obligations to make
Transfers to Party B hereunder;


 


(C)                                Party A hereby unconditionally and
irrevocably authorizes and directs MLCI to make and receive, on behalf of Party
A and the Merrill Parties, and MLCI hereby unconditionally agrees to make and
receive, on behalf of Party A and the Merrill Parties, the Transfers described
in clauses (A) and (B) above;


 


(D)                               Party A has pledged and assigned to the
Merrill Parties its rights under this Collateral Annex to receive, hold and use
the Eligible Collateral transferred to MLCI hereunder in accordance with the
terms of this Collateral Annex on behalf of Party A and on behalf of the
Merrill Parties in connection with the Collateral Assignment;


 


(E)                                 Party A and Party B consent to the
Collateral Assignment, and agree to perform their obligations, under the Cover
Sheet, “Credit Sleeve Provisions”, for the benefit of the Merrill Parties; and


 


(F)                                 Any amendment, supplement, waiver or
other modification of, or any forbearance from exercising any rights with
respect to the terms or provisions contained in this Collateral Annex requires
the express written consent of Party A, Party B and MLCI.


 


(ii)                                  MLCI agrees to comply with the
confidentiality obligations set forth in Section 10.11, as amended.


 

















 


(iii)                               All information that is furnished in
writing by or on behalf of it to any of the other Parties hereto is, as of the
date of the information, true, accurate and complete in every material respect,
or, in the case of audited or unaudited financial statements, fairly present
the financial condition of the relevant entity and have been prepared in
accordance with generally accepted accounting principles, consistently applied,
except as otherwise indicated in the notes of such financial statements.


 


(iv)                              Paragraph 5.6 of the Agreement shall be
deleted in its entirety and replaced with the following:  “Party B shall make each payment due under
this Agreement without deduction, set-off or counterclaim, except (A) as
specifically provided in Article 6 of the Agreement, and (B) that Party B, if
it is the Non-defaulting Party shall be entitled to set off the Termination
Payment owed by Party B to Party A under this Agreement (whether pursuant to
Article 6 or under any other provision under this Agreement) against amounts
owed by Party A to Party B under this Agreement (whether pursuant to Article 6
or under any other provision under this Agreement).  Party A, or MLCI on its behalf, shall make
each payment due under this Agreement without deduction, set-off counterclaim,
except (A) as specifically provided in Article 6 of the Agreement, and (B) that
Party A, or MLCI on its behalf, if Party A is the Non-defaulting Party shall be
entitled to set off the Termination Payment owed by Party A to Party B under
this Agreement (whether pursuant to Article 6 or under any other provision
under this Agreement) against amounts owed by Party B to Party A under this
Agreement (whether pursuant to Article 6 or under any other provision under
this Agreement).  For the avoidance of
doubt:


 


                                                                                                (A)                              the term “Party A” means Reliant Energy
Power Supply, LLC (and any other Person that succeeds to all of the rights and
obligations of Reliant Energy Power Supply, LLC under this Agreement in
accordance with its terms), and Party A shall in no event include any of its
affiliates or any other Person except as stated above; and


 


                                                                                                (B)                                the term “Party B” means [insert legal
name of Party B] (and any other Person that succeeds to all of the rights and
obligations of [insert legal name of Party B] under this Agreement in
accordance with its terms), and Party B shall in no event include any of its
affiliates or any other Person except as stated above.


 


(v)                                 Except as provided in the Cover Sheet
under “Credit Sleeve Provisions”, the only rights, covenants and obligations in
the Agreement that shall be applicable to MLCI are those that are set forth in
provisions that either specifically refer to MLCI by name, or that specifically
refer to “each of the three parties”. 
All of the other provisions in the Agreement that refer to: “Pledging
Party”, “Secured Party”, “Defaulting Party”, “Affected Party”, “a Party”, “appropriate
party”, “other party”, “the parties”, “both parties”, “each Party”, “either
Party” or “neither Party” shall not be interpreted as references to MLCI, but
shall be interpreted as references to: Party A; Party B; both Party A and Party
B; each of Party A and Party B; either Party A or Party B; or neither Party A
nor Party B as is indicated by the context.


 


(vi)                              MLCI
Termination Right.  Each of MLCI’s rights and obligations
hereunder, including its rights and obligations to Transfer and receive
Performance Assurance, may be terminated at any time by notice by MLCI to Party
A and Party B given in accordance with the notice provisions of the Agreement,
effective upon receipt of such notice by Party A and Party B or such later date
as may be specified in such notice; provided that MLCI’s rights and obligations
hereunder shall continue in full force and effect, and shall be irrevocable,
with respect to any obligation, including its rights and obligations to
Transfer and receive Performance Assurance, arising under any Transaction under
and as defined in the Agreement entered into prior to the effectiveness of such
notice of termination.


 

















 


IN WITNESS WHEREOF, the parties hereto have
executed this document as of the date specified on the first page hereof.


 


	
  RELIANT ENERGY POWER
  SUPPLY, LLC

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MERRILL LYNCH
  COMMODITIES, INC.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
							



 






 












 


Exhibit D2


To Credit Sleeve
and Reimbursement Agreement


Form of ISDA Collateral Annex


PARAGRAPH
13


 


OF THE


 


CREDIT
SUPPORT ANNEX


 


DATED AS OF


 


[   T.B.D.    
]


 


BETWEEN


 


RELIANT
ENERGY POWER SUPPLY, LLC (“Party A”)


 


AND


 


                                                    
(“Party B”)


 


AND


 


MERRILL LYNCH COMMODITIES, INC. (“MLCI”)


 


 


Paragraph 13.  Elections and Variables


 


(a)                                 Security Interest. 
The term “Obligations” as used in this
Annex includes the following additional obligations:


 


With respect to Party A:  None


With respect to Party B:  None


 


(b)           Credit
Support Obligations.


 


(i)            Delivery Amount, Return Amount and Credit Support
Amount.


 


(A)          “Delivery Amount” has the
meaning specified in Paragraph 3(a).


 


(B)                                “Return
Amount”
has the meaning specified in Paragraph 3(b).


 


(C)                                “Credit
Support Amount” has the meaning specified in Paragraph 3.


 


(ii)                                  Eligible Collateral. The following items will qualify as “Eligible Collateral” for the
party specified:


 


 


	
   

  	
   

  	
  MLCI

  (on behalf of Party A

  and itself)

  	
   

  	
  Party B

  	
   

  	
  Valuation

  %

  
	
  (A) Cash

  	
   

  	
  [X]

  	
   

  	
  [X]

  	
   

  	
  100%

  
	
  (B) Negotiable debt obligations issued by
  the U.S. Treasury Department having an original maturity at issuance of not
  more than one year (“Treasury Bills”)

  	
   

  	
  [X]

  	
   

  	
  [X]

  	
   

  	
  99%

  
	
  (C) Negotiable debt obligations issued by
  the U.S. Treasury Department having an original maturity at issuance of more
  than one year but not more than ten years (“Treasury Notes”)



  	
   

  	
  [X]

  	
   

  	
  [X]

  	
   

  	
  98%

  
	
  (D) Negotiable debt obligations issued by
  the U.S. Treasury Department having an original maturity at issuance of more
  than ten years (“Treasury Bonds”)

  	
   

  	
  [X]

  	
   

  	
  [X]

  	
   

  	
  95%

  



 


 

















 


(iii)                               Other Eligible Support. The following items will qualify as “Other Eligible Support” for
the party specified:


 


Party A  Party
B


Letter of Credit
(as defined in Paragraph 13(j))                   [X]                         [X]


 


The Valuation
Percentage shall be 100% unless (i) a Letter of Credit Default shall apply with
respect to such Letter of Credit, or (ii) twenty (20) or fewer Business Days
remain prior to the expiration of such Letter of Credit, in either of which case
the Valuation Percentage shall be zero (0).


 


(iv)          Thresholds.


 


(A)                              “Independent
Amount”
means with respect to Party A:             None


“Independent
Amount” means
with respect to Party B:              None


 


(B)           “Threshold”


 


For Party A, “Threshold” shall mean the
amount (the “Credit Amount”) [delete highlighted language if Guaranty is
uncapped or no Guarantor equal to the lower of (i) the maximum amount payable
under guaranty provided by Party A’s Credit Support Provider guaranteeing Party
A’s payment obligations hereunder, if any, and (ii) the amount] set forth below
under the heading “Party A Threshold” opposite the Credit Rating for Party A’s
Credit Support Provider on the relevant date of determination, and if Party A’s
Credit Support Provider’s Credit Ratings shall not be equivalent, the
[lower/higher] Credit Rating shall govern; provided, however, that the
Threshold for Party A shall be zero if (i) [delete the following highlighted
language if no Guaranty provided for Party A 
no Guaranty has been provided,] (ii) on the relevant date of
determination Party A’s Credit Support Provider does not have a Credit Rating
from any rating agency specified below or (iii) an Event of Default or
Potential Event of Default with respect to Party A has occurred and is
continuing; and provided further that, in the event that, and on the
date that, Party A cures the Potential Event of Default on or prior to the date
that Party A is required to post a Credit Support Amount to Party B pursuant to
a demand made by Party B pursuant to the provisions of the Credit Support Annex
on or after the occurrence of such Potential Event of Default, (i) the
Threshold for Party A shall automatically increase from zero to the Credit
Amount and (ii) Party A shall be relieved of its obligation to post the Credit
Support Amount pursuant to such demand.


 

















 


 


	
  Party A

  Threshold

  	
   

  	
  S&P Credit Rating

  	
   

  	
  Moody’s Credit Rating

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AA- (or above)

  	
   

  	
  Aa3 (or above)

  
	
   

  	
   

  	
  A+ thru A-

  	
   

  	
  A1 thru A3

  
	
   

  	
   

  	
  BBB+

  	
   

  	
  Baa1

  
	
   

  	
   

  	
  BBB

  	
   

  	
  Baa2

  
	
   

  	
   

  	
  BBB-

  	
   

  	
  Baa3

  
	
   

  	
   

  	
  BB+

  	
   

  	
  Ba1

  
	
   

  	
   

  	
  BB

  	
   

  	
  Ba2

  
	
   

  	
   

  	
  BB-

  	
   

  	
  Ba3

  
	
   

  	
   

  	
  B+

  	
   

  	
  B1

  
	
   

  	
   

  	
  B

  	
   

  	
  B2

  
	
   

  	
   

  	
  Below B

  	
   

  	
  Below B2

  
	
   

  	
   

  	
  Unrated

  	
   

  	
  Unrated

  



 


 


For Party B, “Threshold” shall mean the
amount (the “Credit Amount”) [Remove the following highlighted language if CP
Guaranty is uncapped or no Guarantor equal to the lower of (i) the maximum
amount payable under guaranty provided by Party B’s Credit Support Provider
guaranteeing Party B’s payment obligations hereunder, if any, and (ii) the
amount] set forth below under the heading “Party B Threshold” opposite the
Credit Rating for Party B’s Credit Support Provider on the relevant date of
determination, and if Party B’s Credit Support Provider’s Credit Ratings shall
not be equivalent, the [lower/higher] Credit Rating shall govern; provided,
however, that the Threshold for Party B shall be zero if (i) [delete the
following highlighted language if no Guaranty provided for Party B   no Guaranty has been provided,] (ii) on the
relevant date of determination Party B’s Credit Support Provider does not have
a Credit Rating from any rating agency specified below or (iii) an Event of
Default or Potential Event of Default with respect to Party B has occurred and
is continuing; and provided further that, in the event that, and on the
date that, Party B cures the Potential Event of Default on or prior to the date
that Party B is required to post a Credit Support Amount to Party A pursuant to
a demand made by Party A pursuant to the provisions of the Credit Support Annex
on or after the occurrence of such Potential Event of Default, (i) the
Threshold for Party B shall automatically increase from zero to the Credit
Amount and (ii) Party B shall be relieved of its obligation to post the Credit
Support Amount pursuant to such demand.


 


	
  Party B

  Threshold

  	
   

  	
  S&P Credit Rating

  	
   

  	
  Moody’s Credit Rating

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AA-
  (or above)

  	
   

  	
  Aa3
  (or above)

  
	
   

  	
   

  	
  A+
  thru A-

  	
   

  	
  A1
  thru A3

  
	
   

  	
   

  	
  BBB+

  	
   

  	
  Baa1

  
	
   

  	
   

  	
  BBB

  	
   

  	
  Baa2

  
	
   

  	
   

  	
  BBB-

  	
   

  	
  Baa3

  
	
   

  	
   

  	
  BB+

  	
   

  	
  Ba1

  
	
   

  	
   

  	
  BB

  	
   

  	
  Ba2

  
	
   

  	
   

  	
  BB-

  	
   

  	
  Ba3

  
	
   

  	
   

  	
  B+

  	
   

  	
  B1

  
	
   

  	
   

  	
  B

  	
   

  	
  B2

  
	
   

  	
   

  	
  Below B

  	
   

  	
  Below B2

  
	
   

  	
   

  	
  Unrated

  	
   

  	
  Unrated

  



 


(C)           “Minimum
Transfer Amount” means with respect to Party A: $1


                “Minimum
Transfer Amount” means with respect to Party B: $1


 

















 


(D)                               “Rounding”. The Delivery Amount will be rounded up,
and the Return Amount will be rounded down, in each case to the nearest
integral multiple of $250,000.


 


(c)           Valuation and Timing.


 


(i)                                     “Valuation Agent”
means , for purposes of Paragraphs 3 and 5, the party making the demand under
Paragraph 3; for purposes of Paragraph 4(d), the Secured Party for purposes of
calculating the Value of the Substitute Credit Support and Posted Credit
Support involved in the substitution; and for purposes of Paragraph 6(d), the
Secured Party receiving or deemed to receive the Distributions or the Interest
Amount, as applicable; provided that in all cases, if an Event of Default or
Potential Event of Default has occurred and is continuing with respect to the
party designated as the Valuation Agent, then in such case, and for so long as
the Event of Default or Potential Event of Default continues, the other party
shall be the Valuation Agent


 


(ii)                                  “Valuation Date” means each day which is a Local Business
Day for Party A, Party B and MLCI.


 


(iii)                               “Valuation
Time”
means the close of business on the Local Business Day before the Valuation Date
or date of calculation, as applicable; provided that the calculations of Value
and Exposure will be made as of approximately the same time on the same date.


 


(iv)                              “Notification
Time”
means 12:00 p.m., Central time, on a Local Business Day.


 


(d)                                 Conditions Precedent and
Secured Party’s Rights and Remedies. There shall be no “Specified Condition” with respect
to Party A or Party B.


 


(e)           Dispute Resolution.


 


(i)                                     “Resolution
Time”
means 12:00 p.m., Central time, on second Local Business Day following the date
on which the notice is given that gives rise to a dispute under Paragraph 5.


 


(ii)                                  “Alternative”. 
The provisions of Paragraph 5 will apply, except that (i)(B) shall be
deleted and the following substituted therefor:


 


                                                            (B) calculating the Exposure for the
Transaction(s) in dispute by each party seeking quotations at mid-market from
four Reference Market-makers.  Each party
shall disregard the “highest” and the “lowest” quotations obtained and take the
arithmetic average of the remaining two, to come up with an average “Market
Price” for the disputed Transaction(s). Each party’s average Market Price shall
then be averaged to obtain an “Average Market Price” which shall be the price
used to calculate the Exposure related to the disputed Transaction(s). If less
than four (but at least one) quotations are available to a party with respect
to a disputed Transaction(s), then such party shall take the arithmetic average
of the obtained quotations to calculate such party’s average Market Price. If
no quotations are available for a particular Transaction(s), then the Valuation
Agent’s original calculations will be used for such Transaction(s);


 


(f)            Holding and Using Posted Collateral.


 


(i)                                     “Eligibility
to Hold Posted Collateral; Custodians”.


 


                                                            MLCI and its Custodian (if any) will be
entitled to hold Posted Collateral pursuant to Paragraph 6(b) on behalf of
Party A and the Merrill Parties; provided that the following conditions
applicable to it are satisfied:


 


(A)          Party A is not a Defaulting Party.


 


(B)                                Posted Collateral may be held only in the
United States.


 


Party B and its
Custodian (if any) will be entitled to hold Posted Collateral pursuant to
Paragraph 6(b); provided that the following conditions applicable to it are
satisfied:


 

















 


(A)          Party B is not a Defaulting Party.


 


(B)           Posted Collateral may be held only in
the United States.


 


Notwithstanding the foregoing, MLCI, Party A and Party
B hereby covenant and agree that, except at such times as, in the case of Party
A, ML&Co., or, in the case of Party B, it or its Credit Support Provider,
as the case may be, has a Credit Rating of at least Baa2 (Moody’s) or BBB
(S&P), in the case of Party A, MLCI, and in the case of Party B, Party B
will cause all Posted Collateral received from the other party to be entered in
one or more accounts (each, a “CSA Collateral Account”) with a Qualified
Institution, each of which accounts may include property of other parties, but
will bear a title indicating the Pledgor’s interest in said account and the
Posted Collateral in said account.  In
the event the Credit Ratings shall not be equivalent, the lower Credit Rating
shall govern.  In addition, the Secured
Party may direct the Pledgor to deliver Eligible Collateral directly into the
Secured Party’s CSA Collateral Account(s). 
The Secured Party may move the CSA Collateral Accounts from one
Qualified Institution to another upon reasonable notice to the Pledgor.  The Secured Party shall cause statements
concerning the Posted Collateral to be sent to the Pledgor on request, which
may not be made more frequently than once in each calendar month.


 


(ii)                                  “Use of Posted Collateral”. Unless Posted Collateral is required to
be held in a CSA Collateral Account pursuant to clause (i) above, the
provisions of Paragraph 6(c) will apply to (A) MLCI as “Secured Party” on
behalf of Party A and the Merrill Parties and (B) Party B.


 


(g)           Distributions and Interest Amount.


 


(i)                                     “Interest
Rate”.  The “Interest Rate”
will be at a rate per annum equal to the one month London Interbank Offered
Rate for Dollar deposits as may from time to time be in effect as reported in
The Wall Street Journal.  Such interest
shall be calculated on the basis of the actual number of days elapsed and on
the basis of a year of 360 days.


 


(ii)                                  “Transfer of Interest
Amount”. The Transfer of the Interest Amount will be made on the
second Local Business Day following each calendar month, and on any Local
Business Day that Posted Collateral in the form of Cash is transferred to the
Pledgor pursuant to Paragraph 3(b), in either event upon receipt of an invoice
prior to such date, and, if no invoice is received before such date, within one
Local Business Day of receipt of such invoice.


 


(iii)          Alternative to Interest Amount.  The provisions of Paragraph 6(d)(ii) will
apply.


 


 


 (h)                              Other Eligible Support and
Other Posted Support.


 


 


(i)            “Transfer” with respect to Other Eligible Support and
Other Posted Support means:


 


(A)                              For purposes of Paragraph 3(a), delivery
of the Letter of Credit by the Pledgor or issuer of the Letter of Credit to the
Secured Party at the address of the Secured Party specified in the Notices
Section of this Agreement, or delivery of an executed amendment to such Letter
of Credit (extending the term or increasing the amount available to the Secured
Party thereunder) by the Pledgor or the issuer of the Letter of Credit to the
Secured Party at the address of the Secured Party specified in the Notices
Section of this Agreement; and,


 


                (B)           For purposes of Paragraph 3(b), by the return of an
outstanding Letter of Credit by the Secured Party to the issuing bank, at the
address of the issuing bank specified in the Letter of Credit or delivery to
the issuing bank at such address of an amendment to the Letter of Credit
executed by the Secured Party (reducing the amount available to the Secured
Party thereunder).


 


 

















 


 


(ii)   “Letter of
Credit Provisions”.


 


Other Eligible
Support and Other Posted Support in the form of a Letter of Credit shall be
subject to the following provisions:


 


(A)                              Unless otherwise agreed in writing by the
parties, each Letter of Credit shall be Transferred in accordance with the
provisions of this Annex, and the Secured Party shall be the named beneficiary
under each Letter of Credit.  The Pledgor
shall (i)  if the issuer of a Letter of Credit previously Transferred to
the Secured Party has indicated its intent not to renew such Letter of Credit,
Transfer a substitute Letter of Credit or other Eligible Collateral having the
same Value, and (ii) if the issuer of a Letter of Credit shall commit a Letter
of Credit Default of the type specified in clause (i) or (ii) of the definition
thereof (including but not limited to such issuer’s failure to honor the
Secured Party’s properly documented request to draw thereon), Transfer for the
benefit of the Secured Party Eligible Collateral within one (1) Local Business
Day after the Pledgor receives notice of such dishonor, provided that, at the
time the Pledgor is required to perform in accordance with (i) or (ii) above,
the Delivery Amount applicable to the Pledgor equals or exceeds the Pledgor’s
Minimum Transfer Amount.


 


(B)                                The Pledgor may, at its option, Transfer
a Letter of Credit by (A) causing the issuing bank to execute an amendment
increasing the outstanding amount available for drawing under a previously
Transferred Letter of Credit or (B) establishing one or more additional Letters
of Credit.  If (i) the Pledgor shall
fail to cause the issuing bank to renew, substitute, or sufficiently increase
the amount of a Transferred Letter of Credit, Transfer one or more additional
Letters of Credit, or otherwise Transfer sufficient Eligible Credit Support and
(ii) the Delivery Amount applicable to the Pledgor equals or exceeds the
Pledgor’s Minimum Transfer Amount as a result of such failure, then the Secured
Party may draw on the entire, undrawn portion of any Transferred Letter of
Credit upon submission to the bank issuing such Letter of Credit an Letter of
Credit certificate specifying the amounts due and owing to the Secured Party in
accordance with the stated requirements of the Letter of Credit. The Pledgor
shall remain liable for any amounts due and owing to the Secured Party and
remaining unpaid after the application of the amounts so drawn by the Secured
Party.


 


(C)                                Upon the occurrence of a Letter of Credit
Default solely of the type specified in clause (i) of the definition thereof,
the Pledgor agrees to deliver a substitute Letter of Credit or other Eligible
Credit Support to the Secured Party in an amount at least equal to that of the
Letter of Credit to be substituted on or before the first (1st) Business Day
after written demand by the Secured Party.


 


(D)                               Notwithstanding Paragraph 10, in all
cases, the costs and expenses (including but not limited to the reasonable
costs, expenses, and external attorney’s fees of the Secured Party) of causing
an issuing bank to establish, renew, substitute, cancel, increase or reduce the
amount available for drawing under (as the case may be) one or more Letters of
Credit shall be borne by the Pledgor.


 


(iv)          “Certain
Rights and Remedies”.


 


Secured
Party’s Rights and Remedies. For purposes of Paragraph 8(a)(ii), the Secured
Party may draw on any Transferred Letter of Credit in an aggregate amount equal
to any amounts payable by the Pledgor with respect to any Obligations and hold
or apply the proceeds thereof in accordance with the Agreement.


 


(v)                                 “Additional Definitions”. 
As used in this Annex:


 


“Credit
Rating”
shall mean, with respect to a party or entity on any date of determination, the
respective rating then assigned to such party’s or entity’s unsecured, senior
long-term debt or deposit obligations (not supported by third-party credit
enhancement) by S&P or Moody’s, as applicable; and if no rating is assigned
to such party’s or entity’s unsecured, senior, long-term debt or deposit






 












 


obligations by any of S&P or Moody’s, the general
issuer credit rating or long-term issuer rating, as applicable, assigned by
such rating agencies to such party or entity.


 


“Letter of
Credit”
shall mean an irrevocable, transferable, standby Letter of Credit, issued by a
Qualified Institution,  in a form as the
issuing bank may require and which is reasonably acceptable to the party in
whose favor the Letter of Credit is issued.


 


“Letter of Credit Default” shall mean with respect to an outstanding Letter of
Credit, the occurrence of any of the following events: (i) the issuer of such
Letter of Credit shall fail to maintain a Credit Rating of at least “A-” by
S&P or “A3” by Moody’s; (ii) the issuer of the Letter of Credit shall fail
to comply with or perform its obligations under such Letter of Credit if such
failure shall be continuing after the lapse of any applicable grace period;
(iii) the issuer of such Letter of Credit shall disaffirm, disclaim, repudiate
or reject, in whole or in part, or challenge the validity of, such Letter of
Credit; (iv) such Letter of Credit shall expire or terminate, or shall fail or
cease to be in full force and effect, prior to the stated expiration date on
the Letter of Credit; or (v) any event analogous to an event specified in
Section 5(a)(vii) of this Agreement shall occur with respect to the issuer of
such Letter of Credit provided, however, that no Letter of Credit
Default shall occur in any event with respect to a Letter of Credit after the
time such Letter of Credit is required to be canceled or returned to the
Pledgor in accordance with the terms of this Annex.


 


“Moody’s” means Moody’s Investors Services, Inc. or its
successor.


 


“Qualified
Institution”  means a  major U.S. commercial bank or a foreign bank that is not an
affiliate of any party to this Agreement with a U.S. branch office which is not
the Pledgor (or a subsidiary or Affiliate of the Pledgor) and with a Credit
Rating of at least “A-” by S&P or “A3” by Moody’s.


 


“Reference Market-maker” means a leading broker, dealer or published index in
the relevant market selected by a party determining its Exposure in a
commercially reasonable manner.  Such
leading dealers shall not be parties to this Agreement or Affiliates of a party
to this Agreement.


 


“Security
Agreement” shall
mean an agreement which creates or provides for a security interest.


 


“S&P” means the Standard & Poor’s Rating Services, a
Division of The McGraw-Hill Companies, Inc., or its successor.


 


“Value” with respect to Other Eligible Support and Other Posted Support means
the undrawn currently available amount of any Letter of Credit maintained by
the Pledgor (or its Credit Support Provider) for the benefit of the Secured
Party, multiplied by the then applicable Valuation Percentage.


 


 


(j)                                  Demands and Notices. All demands, specifications and notices
under this Annex will be made pursuant to the Notices Section of this
Agreement, unless otherwise specified here:


 


	
  Party A:

  	
   

  	
  Attn: Credit Risk
  Management

  

  Street Address:

  

  1000 Main St., 11th Floor

  Houston, TX 77002

  	
   

  	
  Telephone:

  Facsimile:

  



  	
   

  	
  (713) 497-1052

  (713) 497-1058

  



  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mailing Address:

  

  P O Box 4455

  Houston, TX 77210-4455

  

  With a copy to (other than copies of notices in respect of demands under
  Paragraph 3):

  

  Merrill Lynch Commodities, Inc.

  20 East Greenway Plaza, 7th Floor

  Houston, Texas 77253-3327

  Attn: Legal



  	
   

  	
   

  Telephone:

  Facsimile:

  	
   

  	
   

  (713) 544-4975

  (713) 544-5551

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party B:

  	
   

  	
   

  	
   

  	
  Telephone:

  Facsimile:

  	
   

  	
   

  


















 


(k)           Addresses for Transfers.


	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party
  A:

  U. S. Dollars

  	
   

  	
  Payment to:

  

  For Account of:

  Account #:

  Federal ABA#:



  	
   

  	
  JP Morgan Chase Bank,

  New York, NY

  Merrill Lynch Commodities, Inc.

  066657474

  021000021



  
	
  Party B:

  U.S. Dollars

  	
   

  	
  Payment to:

  For Account of:

  Account #:

  Federal ABA#:

  	
   

  	
   

  



 


(l)            Other Provisions.


 


(i)                                  Paragraph 6(d)(i)is hereby amended by
adding the following sentence:


 


“Subject to Paragraph 4(a) and only to the extent
contemplated in the previous sentence, if a Secured Party receives or is deemed
to receive Distributions on a day that is not a Local Business Day, or after
its close of business on a Local Business Day, it will Transfer Distributions
to the Pledgor on the second following Local Business Day.”


 


(ii)                              Paragraph 7 is amended as follows: In
clause (i), the words “and/or Other Eligible Support” are inserted on line 1
after the words “of Eligible Collateral”.


 


(iii)                          UCC. Each party agrees that the provisions of this
Agreement supersede and replace in their entirety any requirements of law
relating to adequate assurance of future performance, including without
limitation Article 2 of the Uniform Commercial Code.


 


(iv)                            References throughout this Credit Support
Annex to “Swap Transactions” are deleted.


 


 (m)         Credit Sleeve Provisions.


 


(v)                                 In connection with the enhanced credit
structure provided by MLCI and Merrill Lynch & Co., Inc (together with
MLCI, the “Merrill Parties”) to Party A
described in Part 9 of the Schedule, Party A, Party B and MLCI agree that:


 

















 


(A)                              Party B shall Transfer all Eligible
Credit Support required to be Transferred hereunder by Party B directly to the
account provided in paragraph 13(l) for Party A and, any such Transfer, to the
extent thereof, shall satisfy Party B’s obligations to make Transfers to Party
A hereunder;


 


(B)                                MLCI shall Transfer all Eligible Credit
Support required to be Transferred hereunder by Party A directly to the account
provided in paragraph 13(l) for Party B and, any such Transfer, to the extent
thereof, shall satisfy Party A’s obligations to make Transfers to Party B
hereunder;


 


(C)                                Party A hereby unconditionally and
irrevocably authorizes and directs MLCI to make and receive, on behalf of Party
A and the Merrill Parties, and MLCI hereby unconditionally agrees to make and
receive, on behalf of Party A and the Merrill Parties, the Transfers described
in clauses (A) and (B) above;


 


(D)                               Party A has pledged and assigned to the
Merrill Parties its rights under this Credit Support Annex to receive, hold and
use the Eligible Credit Support transferred to MLCI hereunder in accordance
with the terms of this Credit Support Annex on behalf of Party A and on behalf
of the Merrill Parties in connection with the Collateral Assignment;


 


(E)                                 Party A and Party B consent to the
Collateral Assignment, and agree to perform their obligations, under Part 9 of
the Schedule for the benefit of the Merrill Parties;


 


(F)                                 Any amendment, supplement, waiver or
other modification of, or any forbearance from exercising any rights with
respect to the terms or provisions contained in this Credit Support Annex
requires the express written consent of Party A, Party B and MLCI; and


 


(G)                                Each of MLCI and Party B makes the
representations to the other party set forth in Paragraph 9 of this Credit
Support Annex.


 


(vi)                              MLCI agrees to comply with the
confidentiality obligations described in Part 5(j) of the Schedule.


 


(vii)                           All information that is furnished in
writing by or on behalf of it to any of the other parties hereto is, as of the
date of the information, true, accurate and complete in every material respect,
or, in the case of audited or unaudited financial statements, fairly present
the financial condition of the relevant entity and have been prepared in
accordance with generally accepted accounting principles, consistently applied,
except as otherwise indicated in the notes of such financial statements. [Note:
This provision should be consistent with Section 3(d) of the ISDA Master
Agreement as modified by the Schedule.]


 


(viii)                        Set-off. Paragraph 6(f) of the Agreement shall
be deleted in its entirety and replaced with the following: “Party B shall make
each payment due under this Agreement without deduction, set-off or
counterclaim, except (A) as specifically provided in Section 2 of the
Agreement, and (B) that Party B, if it is the Non-defaulting or Non-affected
Party, shall be entitled to set off the Early Termination Amount owed by Party
B to Party A under this Agreement (whether pursuant to Section 6 or under any
other provision under this Agreement) against amounts owed by Party A to Party
B under this Agreement (whether pursuant to Section 6 or under any other provision
under this Agreement). Party A, or MLCI on its behalf, shall make each payment
due under this Agreement without deduction, set-off or counterclaim, except (A)
as specifically provided in Section 2 of the Agreement, and (B) that Party A,
or MLCI on its behalf, if Party A is the Non-defaulting or Non-affected Party,
shall be entitled to set off the Early Termination Amount owed by Party A to
Party B under this Agreement (whether pursuant Section 6 or under any other
provision under this Agreement) against amounts owed by Party B to Party A under
this Agreement (whether pursuant to Section 6 or under any other provision
under this Agreement). For the avoidance of doubt:


 


(A)                              the term “Party A” means Reliant Energy
Power Supply, LLC (and any other Person that succeeds to all of the rights and
obligations of Reliant Energy Power Supply, LLC under 


 

















 


this Agreement in accordance with its terms), and ‘Party
A’ and shall in no event include any of its affiliates or any other Person
except as stated above; and


 


(B)                                the term “Party B” means [insert legal
name of Party B] (and any other Person that succeeds to all of the rights and
obligations of [insert legal name of Party B] under this Agreement in
accordance with its terms), and ‘Party B’ and shall in no event include any of
its affiliates or any other Person except as stated above.


 


(ix)                                Except as provided in Part 9(a) of the
Schedule, the only rights, covenants and obligations in the Agreement that
shall be applicable to MLCI are those that are set forth in provisions that
either specifically refer to MLCI by name, or that specifically refer to “each
of the three parties”. All of the other provisions in the Agreement that refer
to: “Pledgor”, “Secured Party”, “Valuation Agent”, “Defaulting Party”, “Affected
Party”, “Disputing Party”, “a party”, “appropriate party”, “other party”, “the
parties”, “both parties”, “each party”, “either party” or “neither party” shall
not be interpreted as references to MLCI, but shall be interpreted as
references to: Party A; Party B; both Party A and Party B; each of Party A and
Party B; either Party A or Party B; or neither Party A nor Party B as is
indicated by the context.


 


(x)                                   MLCI Termination Right. Each of MLCI’s rights and obligations
hereunder, including its rights and obligations to Transfer and receive
Eligible Credit Support, may be terminated at any time by notice by MLCI to
Party A and Party B given in accordance with the notice provisions of the
Agreement, effective upon receipt of such notice Party A and Party B or such
later date as may be specified in such notice; provided that MLCI’s rights and
obligations hereunder shall continue in full force and effect, and shall be
irrevocable, with respect to any obligation, including its rights and
obligations to Transfer and receive Eligible Credit Support, arising under any
Transaction under and as defined in the Agreement entered into prior to the
effectiveness of such notice of termination.


 

















 


 


SIGNATURE PAGE


 


TO


 


PARAGRAPH 13


 


OF THE


 


CREDIT SUPPORT ANNEX


 


AMONG


 


RELIANT ENERGY POWER SUPPLY, LLC (PARTY “A”)


 


AND


 


                                                                              (PARTY
“B”)


 


AND


 


MERRILL LYNCH COMMODITIES, INC. (“Merrill”)


 


IN WITNESS WHEREOF, the parties hereto have
executed this document as of the date specified on the first page hereof.


 


	
  RELIANT
  ENERGY POWER SUPPLY, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MERRILL
  LYNCH COMMODITIES, INC.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
						



 

















 


 


Exhibit E1


To Credit Sleeve
and Reimbursement Agreement


Reliant Energy —
Retail Risk Policy


[***]






***   
The content of this
Exhibit E1 (consisting of 22 pages) has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.


 

















 


Exhibit E2


To Credit Sleeve
and Reimbursement Agreement


Hedge Limit
Calculations


[***]






***   
The content of this
Exhibit E2 (consisting of 2 pages) has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.


 

















 


Exhibit F


To Credit Sleeve
and Reimbursement Agreement


ERCOT Asset List


[***]






***     The content of this Exhibit F (consisting of 1 page)
has been omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with respect to the
omitted portions.


 

















 


 


Exhibit G


To Credit Sleeve
and Reimbursement Agreement


Joinder Agreement


 


FORM OF
JOINDER AGREEMENT


([Subsidiary])


 


This JOINDER AGREEMENT
dated as of [date] (this “Agreement”), is among the undersigned and the
other parties to each of the agreements listed on Schedule A attached
hereto (each a “Joined Agreement” and together the “Joined Agreements”).
With respect to each Joined Agreement, the undersigned hereby agrees with the
parties hereto as follows:


Effective as of the date
hereof, the undersigned by its signature
below hereby becomes a party to each Joined Agreement in the capacity
indicated on Schedule A attached hereto, in each case in accordance with
the applicable provisions of such Joined Agreement for parties joining such
Joined Agreement, if any, and, without limiting the joinder requirements of any
Joined Agreement, the undersigned hereby (a) assumes all the obligations under
each Joined Agreement applicable to the undersigned in the capacity in which it
is joining thereunder, (b) agrees to be bound by the provisions of each Joined
Agreement applicable to the undersigned in the capacity in which it is joining
thereunder as if the undersigned had been an original party thereto, and (c)
confirms that, after joining each Joined Agreement as set forth above, the
representations and warranties set forth in each Joined Agreement applicable to
the undersigned in the capacity in which it is joining thereunder are true and
correct in all material respects as of the date hereof; provided however,
that the undersigned shall have no liability for the observance and performance
of the terms, conditions, and obligations under any Joined Agreement applicable
to the undersigned in its capacity thereunder which accrue prior to the date
hereof to the extent the same is expressly set forth on Schedule A attached
hereto with respect to such Joined Agreement.


To the extent required by
the terms of each Joined Agreement, the joinder of the undersigned to such
Joined Agreement as provided herein is acknowledged and agreed below by the
applicable parties hereto. This Agreement shall be construed as a separate
agreement with the parties to each Joined Agreement, and no party to this
Agreement that is not a party to such Joined Agreement shall have any rights
with respect to such Joined Agreement by virtue of this Agreement.


This Agreement may be
executed by one or more of the parties hereto on any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. As expressly supplemented hereby, each
Joined Agreement shall remain in full force and effect.


THIS JOINDER AGREEMENT
AND THE JOINED AGREEMENTS REPRESENT THE FINAL AGREEMENT AMONG THE APPLICABLE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.


THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES TO ANY JOINED AGREEMENT.


[signatures
follow]


 

















 


IN WITNESS WHEREOF this Joinder Agreement is executed
and delivered as of the          day of
                   ,
             .


	
  [SUBSIDIARY]

  	
   

  
	
  By:

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
			



 


	
  Acknowledged and Agreed:

  
	
   

  
	
  [                                     ]

  
	
   

  	
   

  
	
  By:

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  



 






 












 


Schedule A


 


Joined
Agreements


 


	
  Counterparties

  	
   

  	
  Agreement

  	
   

  	
  Capacity Joined

  	
   

  	
  Liability

  
	
  Merrill Lynch &
  Co., Inc. (“ML&Co”), a Delaware corporation, and Merrill Lynch
  Commodities, Inc. (“MLCI”), a Delaware corporation.



  	
   

  	
  Credit Sleeve and
  Reimbursement Agreement dated as of September 24, 2006 (the “CSRA”), among
  Reliant Energy Power Supply, LLC, and the Other Reliant Retail Obligors
  listed on the signature pages thereto, on one hand, and ML&Co and MLCI,
  on the other hand, as the same may be amended, supplemented, restated,
  renewed, replaced, waived or otherwise modified from time to time .



  	
   

  	
  Other Reliant Retail
  Obligor

  	
   

  	
  The undersigned shall
  have no liability for the observance and performance of the terms,
  conditions, and obligations under applicable to the undersigned in its
  capacity under the CSRA which accrue prior to the date hereof.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Merrill Lynch Capital
  Corporation, a Delaware corporation (“MLCC”).

  

  



  	
   

  	
  Working Capital
  Facility dated as of September 24, 2006 (the “WCF”), among MLCC, as Lender, REPS,
  as Borrower, and the Other Reliant Retail Obligors, as Guarantors, as the
  same may be amended, supplemented, restated, renewed, replaced, waived or
  otherwise modified from time to time.

  	
   

  	
  Additional Guarantor

  	
   

  	
  The undersigned shall
  have no liability for the observance and performance of the terms,
  conditions, and obligations under applicable to the undersigned in its
  capacity under the WCF which accrue prior to the date hereof.



  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reliant Energy, Inc., a
  Delaware corporation (“REI”), Reliant Energy Corporate Services, LLC, a
  Delaware limited liability company) (“RECS”), Reliant Energy Solutions East,
  LLC, a Delaware limited liability company (“RESE” and together with REI and
  RECS, the “Reliant Counterparties”),

  	
   

  	
  Master Services
  Agreement dated as of September 24, 2006 (the “MSA”), among the Reliant
  Counterparties and the Retail Companies listed on the signature pages
  thereto, as the same may be amended, supplemented, restated, renewed,
  replaced, waived or otherwise modified from time to time.

  	
   

  	
  Retail Company

  	
   

  	
  The undersigned shall
  have no liability for the observance and performance of the terms,
  conditions, and obligations under applicable to the undersigned in its
  capacity under the MSA which accrue prior to the date hereof.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reliant Counterparties

  	
   

  	
  Transition Agreement
  dated as of December 1, 2006 (the “Transition Agreement”), among the Reliant
  Counterparties and the Retail Companies listed on the signature pages
  thereto, as the same may be amended, supplemented, restated, renewed, replaced,
  waived or otherwise modified from time to time.



  	
   

  	
  Retail Company

  	
   

  	
  The undersigned shall
  have no liability for the observance and performance of the terms,
  conditions, and obligations under applicable to the undersigned in its
  capacity under the Transition Agreement which accrue prior to the date
  hereof.



  



 

















 


Exhibit H


To Credit Sleeve
and Reimbursement Agreement


Form
of Compliance Certificate


 


 


FORM OF
COMPLIANCE CERTIFICATE


 


To:          Merrill Lynch
Commodities, Inc., a Delaware corporation, as Sleeve Provider 


 


                This Compliance
Certificate is furnished pursuant to that certain Credit Sleeve and
Reimbursement Agreement, dated as of September 24, 2006, as amended and
restated in connection with the occurrence of the Effective Date as of December
1, 2006 (as the same may be further amended or otherwise modified from time to
time, the “Agreement”), among Reliant Energy Power Supply, LLC, a
Delaware limited liability company (“REPS”), the Other Reliant Retail
Obligors specified therein (together with REPS, the “Reliant Retail Obligors”),
Merrill Lynch Commodities Inc., a Delaware corporation, as Sleeve Provider, and Merrill Lynch
& Co., Inc., a Delaware corporation (“ML&Co.”, and together with
the Sleeve Provider, the “Merrill Parties”).  Capitalized terms used herein but not
otherwise defined shall have the meanings given to such terms in the Agreement.


 


                THE UNDERSIGNED
HEREBY CERTIFIES THAT:


 


1.                                       I am the duly elected                
of RERH Holdings, LLC.


 


2.             I have reviewed the terms of the
Agreement and I have made, or have caused to be made under my supervision, a
detailed review of the transactions and conditions of the Reliant Retail
Obligors during the accounting period covered by the attached financial
statements.


 


3.             The examinations described in
paragraph 2 did not disclose, and I have no knowledge of, the existence of any
condition or event constituting a Default with respect to a Reliant Event of
Default, as such term is defined under the Agreement.


 


4.             Exhibit A attached hereto includes
certain financial statements required under the terms of the Agreement, all of
which financial statements are true, complete and correct in all material
respects. 


 


5.             The
aggregate amount of all individual asset sales with gross cash proceeds in an
amount greater than $500,000, but less than $5,000,000, is $                           
for the quarter ending                           .
The aggregate amount of all such individual asset sales since December 1, 2006,
is $                                 .



 


        The foregoing certifications, together
with the financial statements attached as Exhibit A hereto, are made and
delivered this                    
day of                  ,
20     .


 


	
   

  	
  RERH Holdings, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				



 

















Exhibit I1


To Credit Sleeve and
Reimbursement Agreement


Sleeve Provider’s
Employees with Access to Certain Reliant Retail Obligor Information


 


 [***]






***  The
content of this Exhibit I1 (consisting of 2 pages) has been omitted and filed
separately with the Securities and Exchange Commission.  Confidential
treatment has been requested with respect to the omitted portions.

















Exhibit I2

To Credit Sleeve and Reimbursement Agreement

Reliant Retail Obligor’s Employees with Access to Certain Merrill Party
Information


[***]






***  The
content of this Exhibit I2 (consisting of 7 pages) has been omitted and filed
separately with the Securities and Exchange Commission.  Confidential
treatment has been requested with respect to the omitted portions.