Document:

exv10w2

 

EXHIBIT 10.2

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

     This Agreement is entered into, as of January 5, 2007, by and among each of the following:

APX Inc.

Allegheny Energy Supply Company, LLC

American Electric Power Service Corp.

Aquila Merchant Services, Inc.

Avista Energy, Inc.

BP Energy Company

Calpine Energy Services, L.P.

Commonwealth Energy Corporation (n/k/a Commerce Energy, Inc.)

Constellation NewEnergy, Inc.

El Paso Marketing, LP (f/k/a El Paso Merchant Energy, LP)

Enron Energy Services, Inc.

Enron Power Marketing, Inc.

Sacramento Municipal Utility District

Salt River Project Agricultural Improvement and Power District

Merrill Lynch Capital Services, Inc.

Morgan Stanley Capital Group Inc.

Tractebel Energy Marketing, Inc. (n/k/a Suez Energy Marketing NA, Inc.)

TransAlta Energy Marketing (US) Inc.

Sempra Energy Solutions LLC

UC Davis Medical Center (The Regents of the University of California)

Sierra Pacific Industries

     Each of the above-described entities is a Sponsoring Party, and collectively are
Sponsoring Parties to this Agreement and, together with the Subject Parties, are “Parties” to this
Agreement. Unless otherwise expressly provided for herein, each capitalized term used in this
Agreement shall have the meaning set forth for such term in Section 1 or as defined elsewhere in
this Agreement.

RECITALS

     Whereas, various of the Parties are engaged in or have an interest in complex and disputed
proceedings including but not limited to proceedings before FERC and related appeals pending before
the United States Court of Appeals for the Ninth Circuit, Enron Bankruptcy Proceedings, Calpine
Bankruptcy Cases, appellate proceedings, litigation, and investigations regarding numerous issues
and allegations arising from events in the Western electricity markets in 2000 and 2001, including
but not limited to transactions facilitated by the APX.

     Whereas, the Sponsoring Parties collectively represent approximately 95% of the value
attributable to the APX Transactions during the Settlement Period;

     Whereas, EESI and EPMI, both participants in the APX, are debtors in the Enron Bankruptcy
Cases;

 

 

     Whereas, Calpine Energy Services, L.P. (successor in interest to Calpine Power Services
Company) (“Calpine”), a participant in the APX, is a debtor in the Calpine Bankruptcy Cases;

     Whereas, the Parties have determined that it is preferable to settle the disputes addressed
herein, rather than engage in costly, protracted and uncertain litigation and to facilitate
distribution of funds claimed to be owed and owing by and to the Parties;

     Whereas, this Agreement contemplates a comprehensive resolution of all disputes and other
matters between the Parties with respect to the APX Related Claims, except as expressly reserved in
Section 6.7 below, (i) through the settlement of the regulatory proceedings, bankruptcy
proceedings, appellate proceedings, litigation, proofs of claim, and claims identified herein,
solely as to the portions thereof pertaining to the APX Related Claims between the Parties, and
(ii) by effectuating the transactions, granting of rights and benefits, and assumption of
obligations specified and provided for herein; and

     Whereas, the Parties believe that the implementation of this Agreement will simplify and
expedite the overall re-settlement of the California centralized markets during the Settlement
Period, avoid potential future issues with respect to cash clearing and liability arising from the
APX Related Claims, and, therefore, serves the public interest.

     Now, Therefore, in consideration of the mutual covenants and agreements, and other good and
valuable consideration provided for herein, the sufficiency of which is hereby acknowledged,
intending to be legally bound, and to resolve definitively and for all time, any and all present,
past and potential differences and disputes between them related to the APX Related Claims, except
as expressly reserved in Section 6.7, and subject to and upon the terms and conditions hereof, the
Parties agree as follows:

AGREEMENT

1. DEFINITIONS

     The following capitalized terms, which are in addition to other terms with initial capital
letters defined in the body of this Agreement or by the context in which they appear in this
Agreement, when used in this Agreement shall have the meanings specified in this Section when used
herein.

	 	1.1.	 	“Affiliate” means, with respect to any person, any other person (other than an
individual) that, directly or indirectly, through one or more intermediaries, controls, or
is controlled by, or is under common control with, such person. For this purpose,
“control” means the direct or indirect ownership of fifty percent (50%) or more of the
outstanding capital stock or other equity interests having ordinary voting power.
	 
	 	1.2.	 	“Agreement” means this APX Settlement and Release of Claims Agreement as the same may
be amended, modified, supplemented, or replaced from time to time by written agreement of
the Parties.
	 
	 	1.3.	 	“APX” means APX Inc. also having done business as the Automated Power Exchange.

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	 	1.4.	 	“APX Escrow Account” shall have the meaning provided in Section 4.5.
	 
	 	1.5.	 	“APX Holding Account” means the account that APX uses to cash clear PX and ISO amounts
for APX Participants.
	 
	 	1.6.	 	“APX Monetary Reserve” means one or more APX accessible accounts maintained with
Comerica Bank – California, or a successor entity appointed by APX, that contains cash to
secure all or a portion of the obligations of certain APX Participants.
	 
	 	1.7.	 	“APX Participant” means the entities identified on Exhibit A attached hereto and their
respective Guarantors.
	 
	 	1.8.	 	“APX Payment Recipients” mean all APX Participants entitled to receive a net payment
pursuant to this Agreement, as indicated in Exhibit B attached hereto.
	 
	 	1.9.	 	“APX Related Claims” means all claims, demands, causes of action, offsets or setoffs
and any resulting losses, damages, expenses, attorneys’ fees and court costs that the
Parties and their Affiliates or Guarantors have or may have against each other and their
Affiliates or Guarantors in the FERC Proceedings during the Settlement Period arising out
of the APX’s participation in the PX and ISO centralized markets for wholesale electricity
including, but not limited to (a) ISO Amendment 51 and/or ISO GFN Adjustments involving APX
and included in the cash clearing for APX Transactions and (b) FERC refunds for APX
Transactions during the Settlement Period.
	 
	 	1.10.	 	“APX Transactions” means energy and ancillary services bids, offers, purchases, sales
and related transmission schedules submitted and/or completed by APX in the ISO and PX
centralized markets and all APX Participant bids and offers, and resulting transactions,
that APX cleared among APX Participants.
	 
	 	1.11.	 	“Authorized Person” means a representative of a Party with authority to bind the Party
to the terms of this Agreement.
	 
	 	1.12.	 	“Bankruptcy Code” means Title 11 of the United States Code, as the same may be amended
from time to time.
	 
	 	1.13.	 	“Bankruptcy Rule 9019 Motion” has the meaning set forth in Section 7.5.
	 
	 	1.14.	 	“Business Day” means a calendar day falling within Monday through Friday except for
Federal holidays.
	 
	 	1.15.	 	“California Parties” means collectively, Pacific Gas and Electric Company, Southern
California Edison Company, San Diego Gas & Electric Company, the People of the State of
California, ex rel. Bill Lockyer, Attorney General, the California Department of Water
Resources acting solely under authority and powers created by California Assembly Bill 1
from the First Extraordinary Session of 2000-2001, codified in Sections 80000 through 80270
of the California Water Code (“CERS”), the California Electricity Oversight Board, and the
California Public Utilities Commission.

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	 	1.16.	 	“Calpine Bankruptcy Cases” means collectively, the cases commenced under Chapter 11 of
the Bankruptcy Code by Calpine Corporation and certain affiliates on or after the initial
petition date of December 20, 2005, styled In re Calpine Corporation, et al., Chapter 11
Case Nos. 05-60200 (BRL), et al., Jointly Administered, pending before the United States
Bankruptcy Court for the Southern District of New York.
	 
	 	1.17.	 	“Calpine Bankruptcy Court” means the court before which the Calpine Bankruptcy Cases
are pending: United States Bankruptcy Court, Southern District of New York.
	 
	 	1.18.	 	“Calpine Bankruptcy Court Order” means the Calpine Bankruptcy Court order granting the
Required Calpine Bankruptcy Court Approval regardless of whether such order or orders are
subject to appeal; provided that such order or orders have not been stayed pending such
appeal.
	 
	 	1.19.	 	“Contributing Seller” has the meaning given in Section 4.4.
	 
	 	1.20.	 	“EESI” means Enron Energy Services, Inc.
	 
	 	1.21.	 	“Enron” or the “Enron Parties” means EPMI and EESI.
	 
	 	1.22.	 	“Enron Bankruptcy Cases” means, collectively, the cases commenced under Chapter 11 of
the Bankruptcy Code by the Enron Debtors and certain affiliates on or after the Initial
Petition Date, styled In re Enron Corp. et al., Chapter 11 Case No. 01-16034 (AJG) Jointly
Administered, pending before the Enron Bankruptcy Court.
	 
	 	1.23.	 	“Enron Bankruptcy Court” means the court before which the Enron Bankruptcy Cases are
pending: United States Bankruptcy Court, Southern District of New York.
	 
	 	1.24.	 	“Enron Bankruptcy Court Order” means the Enron Bankruptcy Court order granting the
Required Approval with respect to the Enron Bankruptcy Proceedings, in accordance with
Sections 7.1 and 7.3 of this Agreement.
	 
	 	1.25.	 	“Enron Bankruptcy Proceedings” means, collectively, the Enron Bankruptcy Cases and all
related adversary proceedings, claims objection proceedings, and appeals pending before the
Enron Bankruptcy Court and the United States District Court for the Southern District of
New York, and any proceedings on remand.
	 
	 	1.26.	 	“Enron-California Parties Settlement Agreement” means that certain settlement between
Enron, the California Parties, and the FERC’s Office of Market Oversight and Investigations
(“OMOI”) approved by FERC in an order dated November 15, 2005.
	 
	 	1.27.	 	“Enron Debtors” means EPMI and EESI, together with their Affiliates, all as debtors in
possession (or reorganized debtors) on behalf of themselves and their respective estates.
	 
	 	1.28.	 	“Enron Non-Settling Parties” has the meaning given in Section 2.2.1.

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	 	1.29.	 	“Enron Plan” means the Supplemental Modified Fifth Amended Joint Plan of Affiliated
Debtors Pursuant to Chapter 11 of the Bankruptcy Code confirmed by the Enron Bankruptcy
Court on or about July 15, 2004, in the Enron Bankruptcy Cases as it may be amended,
modified, or supplemented from time to time in accordance with the terms thereof.
	 
	 	1.30.	 	“Enron PX Collateral” means the cash collateral and letter of credit proceeds held in
the Enron PX Collateral Account totaling one hundred forty five million four hundred fifty
two thousand nine hundred forty seven dollars and no cents ($145,452,947) as of November
30, 2006 and including any additional accrued interest prior to distribution as required
herein.
	 
	 	1.31.	 	“Enron PX Collateral Account” means the Bank of New York Trust company, N.A.
segregated escrow sub-accounts Number 028269 identified to EPMI.
	 
	 	1.32.	 	“Enron Settlement Amount” means eleven million dollars and no cents ($11,000,000).
	 
	 	1.33.	 	“Enron Settlement Reserve” has the meaning given in Section 2.2.1.
	 
	 	1.34.	 	“EPMI” means Enron Power Marketing, Inc.
	 
	 	1.35.	 	“Execution Date” means, with respect to a Sponsoring Party, the date upon which this
Agreement has been executed by such Party, including execution by any Party in accordance
with Section 9.2 of this Agreement.
	 
	 	1.36.	 	“Existing Global Settlements” are those listed on Exhibit F.
	 
	 	1.37.	 	“FERC” means the Federal Energy Regulatory Commission.
	 
	 	1.38.	 	“FERC Proceedings” means the Refund Proceeding and any related appeals and/or
petitions for review and any proceedings on remand relating to the foregoing proceeding
insofar and only to the extent that such proceedings are related to the APX Transactions.
	 
	 	1.39.	 	“FERC Settlement Order” means a FERC order meeting the requirements for a Required
FERC Approval in accordance with Section 7 of this Agreement, regardless of whether such
order is subject to requests for rehearing or appeals and regardless of whether such order
is subsequently modified or reversed by FERC or a court subsequent to the Settlement
Effective Date; provided that on the Settlement Effective Date, such order has not been
stayed by FERC or a reviewing court pending such rehearing or appeal.
	 
	 	1.40.	 	“Final and Non-Appealable” with respect to an order of the Enron Bankruptcy Court,
shall mean such order has not been reversed, stayed, modified, amended or vacated and as to
which (a) any appeal taken, petition for certiorari or motion for rehearing or
reconsideration that has been filed, has been finally determined or dismissed or (b) the
time to appeal, seek certiorari or move for reconsideration or rehearing has expired and

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	 	 	 	no appeal, petition for certiorari or motion for reconsideration or rehearing has been
timely filed.
	 
	 	1.41.	 	“Final Staff Report” means the final report entitled “Final Report on Price
Manipulation in Western Markets — Fact-Finding Investigation of Potential Market
Manipulation of Electric and Natural Gas Prices” issued by FERC staff on March 26, 2003 in
FERC Docket No. PA02-2.
	 
	 	1.42.	 	“FPA” means the Federal Power Act, as codified at 16 U.S.C. §791a et. seq., as the
same may be amended from time to time.
	 
	 	1.43.	 	“Governmental Authority” means any “governmental unit” as defined in Section 101 of
the Bankruptcy Code.
	 
	 	1.44.	 	“Guarantor” means with respect to a Party, one who guarantees the payment obligations
of the Party pursuant to the applicable ISO tariff, the PX tariff or the APX Participant
agreement.
	 
	 	1.45.	 	“Initial Distribution” has the meaning given in Section 4.5.
	 
	 	1.46.	 	“Initial Petition Date” means December 2, 2001, the date certain that the Enron
Debtors, including EPMI and EESI, filed petitions for relief under Chapter 11 of the
Bankruptcy Code and commenced the Enron Bankruptcy Cases in the Enron Bankruptcy Court.
	 
	 	1.47.	 	“Initial Staff Report” means the Initial Report released by FERC staff on August 13,
2002 in connection with the FERC investigation in FERC Docket No. PA02-2.
	 
	 	1.48.	 	“ISO” means the California Independent System Operator Corporation, a California
public benefit corporation, and any successor thereto.
	 
	 	1.49.	 	“ISO Amendment 51” means the system recalculation performed by the ISO pursuant to
procedures described by the ISO in filings made in FERC Docket No. ER03-746, the purpose of
which was to establish the appropriate baseline against which to apply the mitigated market
price methodology to applicable APX Transactions during the Refund Period.
	 
	 	1.50.	 	“ISO GFN Adjustments” means ISO adjustments for the April 1998 to June 20, 2001
timeframe made pursuant to an approved good faith negotiation that are to be cash cleared
in connection with the Refund Proceeding.
	 
	 	1.51.	 	“Material Change Notice” has the meaning given in Section 7.4.
	 
	 	1.52.	 	“Net Buyers” mean all APX Participants that, on a net basis and without regard to
Short Payments owed to them, are entitled to refunds for APX Transactions during the Refund
Period, as indicated in Exhibit B by the designation “NB”.

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	 	1.53.	 	“Net Sellers” mean all APX Participants that, on a net basis and without regard to
Short Payments owed to them, are identified as potential refund payers for APX Transactions
during the Refund Period, as indicated in Exhibit B by the designation “NS”.
	 
	 	1.54.	 	“Party” and “Parties” have the meanings set forth in the preamble to this Agreement
and is inclusive of their Affiliates and Guarantors.
	 
	 	1.55.	 	“Pre-Refund Period” means the period from May 1, 2000 through October 1, 2000.
	 
	 	1.56.	 	“PX” means the California Power Exchange Corporation, a California public benefit
corporation.
	 
	 	1.57.	 	“Refund Period” means the period from October 2, 2000 through June 20, 2001.
	 
	 	1.58.	 	“Refund Interest Reserve” has the meaning set forth in Section 4.1.3.
	 
	 	1.59.	 	“Refund Proceeding” means San Diego Gas & Electric Co., et al., FERC Docket No.
EL00-95, et al.
	 
	 	1.60.	 	“Required Approvals” means the Required FERC Approval and Required Enron Bankruptcy
Court Approval.
	 
	 	1.61.	 	“Required Calpine Bankruptcy Court Approval” means an order issued by the Calpine
Bankruptcy Court approving this Agreement, as described in Section 7.4, authorizing the
Calpine to grant releases in Section 6 below and authorizing the allocation of the Calpine
Short Payments and associated interest and the release of collateral as set forth in
Section 4.3.
	 
	 	1.62.	 	“Required Enron Bankruptcy Court Approval” means issuance of an Enron Bankruptcy Court
Order that is Final and Non-Appealable.
	 
	 	1.63.	 	“Required FERC Approval” means an order issued by FERC approving this Agreement as
required herein in Section 7.
	 
	 	1.64.	 	“Retained Enron PX Collateral” has the meaning given in Section 4.2.
	 
	 	1.65.	 	“Scheduled Liabilities” means the liability schedules prepared and filed by the Enron
Debtors with the Enron Bankruptcy Court at or about the time the Enron Debtors filed the
Enron Bankruptcy Cases, reflecting sums owed to various third parties.
	 
	 	1.66.	 	“Seller Contribution Funding Agreement” has the meaning given in Section 4.4.
	 
	 	1.67.	 	“Seller Funding Amount” has the meaning given in Section 4.4.
	 
	 	1.68.	 	“Settlement Effective Date” has the meaning set forth in Section 2.3.
	 
	 	1.69.	 	“Settlement Period” means the combined Pre-Refund Period and Refund Period.

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	 	1.70.	 	“Shortpay Interest Reserve” has the meaning set forth in Section 4.1.3.
	 
	 	1.71.	 	“Short Payments” means all funds owed to any APX Participant by the ISO or PX in
connection with its APX Transactions during the Settlement Period, inclusive of unpaid soft
cap reversals and PX default payment funds held in escrow by the PX as well as $234,799 of
CAISO Short Payments due APX Participants for the period July-August 2001.
	 
	 	1.72.	 	“Sponsoring Party” means all signatories to this Agreement, including those Parties
first identified above together with those Parties that elect to become a Sponsoring Party
pursuant to Section 9.2.
	 
	 	1.73.	 	“Subject Parties” means those entities identified in Exhibit A that are not Sponsoring
Parties.
	 
	 	1.74.	 	“Supporting Parties” means Puget Sound Energy, Inc. (“Puget”), Avista Energy, Inc.
(“Avista”), and Coral Power, L.L.C. (“Coral”). Avista is both a Sponsoring Party and a
Supporting Party. Puget and Coral are signatories to this Agreement as Supporting Parties
for the sole purpose of acknowledging and supporting its provisions as a means to resolve
such parties’ objections to EPMI’s July 20, 2006 motion for release the Enron PX Collateral
in FERC Docket Nos. EL00-95-000 and EL00-98-000.

			
	2. CONDITIONS TO EFFECTIVENESS; SETTLEMENT EFFECTIVE DATE; TERMINATION

	 	2.1.	 	Agreement Binding as of the Execution Date. Except as provided in Section 2.4 and
Section 4.1.1.2, this Agreement shall be a binding obligation of each Party immediately
upon the Execution Date.
	 
	 	2.2.	 	Conditions Precedent to Certain Obligations. The occurrence of the Settlement
Effective Date is a condition precedent to: the obligation of a Party to make payments or
to allow or release claims or defenses under Sections 4, 5 and 6 hereof, and the
effectiveness of all such obligations, allowances, or releases specified hereunder. It
shall also be a condition to the effectiveness of this Agreement that Enron and the
California Parties reach agreement in accordance with Section 13.6 of the Enron-California
Parties Settlement Agreement to modify the Enron-California Parties Settlement Agreement
with respect to APX refunds and associated interest from CERS set forth in Section 4.1.4,
4.1.5 and 4.3.3 such that the Enron–California Parties Settlement Agreement is consistent
with Section 4.1.1.1 of this Agreement with respect to the rights of Enron Non Settling
Parties; provided this condition may be waived by Enron subject to Enron’s full and
complete performance of the Enron-California Parties Settlement Agreement including
sections 4.1.4, 4.1.5, and 4.3.3 thereof. It shall be a further condition to the
effectiveness of this Agreement, unless expressly waived by Enron, that, in accordance with
Section 7 and unless the FERC Settlement Order makes an express, specific finding to the
contrary, the FERC Settlement Order shall be deemed and construed as an order finding and
concluding:

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	 	2.2.1.	 	The following funds are sufficient and adequate to protect the interests of Enron
Non-Settling Parties: (a) the Enron Settlement Amount, plus (b) the Retained Enron
PX Collateral, to create a total fund of fourteen million five hundred thousand
dollars and no cents ($14,500,000.00) in the Enron PX Collateral Account (the
“Enron Settlement Reserve”), plus (c) the funds already set aside in escrow
(approximately $2.8 million) pursuant to the Enron-California Parties Settlement
Agreement for “Non-Settling Participants” (as that term is defined in the
Enron-California Parties Settlement Agreement) so long as they remain “Non-Settling
Participants” (the “Enron Non-Settling Parties”), such funds totaling approximately
$17.3 million, provided, however, that the Enron Settlement Reserve shall be used,
if and only if, any refund amounts due to the Enron Non-Settling Parties from Enron
(as determined by FERC) resulting from participation in the ISO and PX markets are
unpaid directly as a result of EPMI’s bankruptcy or otherwise.
	 
	 	2.2.2.	 	The allocation of the Enron Settlement Reserve for the Enron Non-Settling Parties
set forth in Exhibit D is appropriate to protect the interests of the Supporting
Parties, as well as the other Enron Non-Settling Parties, as described in Exhibit
D, if and only if, any refund amounts due to the Enron Non-Settling Parties from
Enron (as determined by FERC) resulting from participation in the ISO and PX
markets are unpaid directly as a result of EPMI’s bankruptcy or otherwise.
	 
	 	2.2.3.	 	Subject to the terms and conditions of this Agreement, EPMI’s motion for release
of the Enron PX Collateral is reasonable and the PX is ordered to immediately
release from the Enron PX Collateral Account to EPMI, for payment to its creditors
under the Enron Plan, the balance of EPMI’s assets held by the PX in excess of the
Enron Settlement Reserve, plus applicable interest, in the amount of one hundred
forty one million nine hundred fifty two thousand nine hundred forty seven dollars
and no cents ($141,952,947.00) (which amount reflects the balance in the Enron PX
Collateral account as of November 30, 2006 plus the Enron Settlement Amount less
the Enron Settlement Reserve), plus interest accrued on the Enron PX Collateral
after November 30, 2006.

	 	2.3.	 	Settlement Effective Date. The “Settlement Effective Date” shall occur on the
beginning of the third Business Day following the latest of the following dates: (i) the
date when the Required FERC Approval (as defined in Section 7) has been issued, provided
that a Material Change Notice has not been timely and properly given by a Sponsoring Party
as to such approval in accordance with Section 7.4 (unless the other Sponsoring Parties
agree in writing, on or before March 1, 2007, that the Settlement Effective Date has
occurred notwithstanding any such Material Change Notice), and (ii) the date when the
Required Enron Bankruptcy Court Approval has been received provided that no Material Change
Notice has been timely and properly given by a Sponsoring Party as to such approval in
accordance with Section 7.4 (unless the other Sponsoring Parties agree in writing, on or
before March 1, 2007, that the Settlement Effective Date has occurred notwithstanding any
such Material Change Notice). On

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	 	 	 	the Settlement Effective Date, Enron shall provide the Sponsoring Parties and the PX
with written notice of the occurrence of the Settlement Effective Date.
	 
	 	2.4.	 	Termination. This Agreement shall terminate in the event any of the following occurs,
and not otherwise: (a) unless waived by Enron, if a fully-executed Agreement constituting
part of an offer of settlement pursuant to Rule 602 of FERC’s Rules of Practice and
Procedure, along with a motion for expedited approval, is not filed with FERC on or before
January 5, 2007; (b) unless waived by Enron, if FERC has not issued an order approving the
Agreement by March 1, 2007; (c) as to the FERC Settlement Order, FERC issues an order
denying approval of this Agreement, or a Sponsoring Party provides to the other Sponsoring
Parties with a Material Change Notice and the other Sponsoring Parties do not agree in
writing on or before March 1, 2007 that the Settlement Effective Date has occurred
notwithstanding the Material Change Notice; (d) as to the Enron Bankruptcy Court Order, the
Enron Bankruptcy Court issues an order denying approval of this Agreement, or a Sponsoring
Party provides to the other Sponsoring Parties with a Material Change Notice and the other
Sponsoring Parties do not agree in writing on or before March 1, 2007 that the Settlement
Effective Date has occurred notwithstanding the Material Change Notice; or (e) the
Settlement Effective Date has not occurred by the third Business Day after March 1, 2007,
unless all Sponsoring Parties consent voluntarily in writing to an extension of such date.
Upon the occurrence of the Settlement Effective Date, this Agreement shall not thereafter
terminate for any reason. The Sponsoring Parties agree that from and after the Settlement
Effective Date (i) they shall be bound by the terms of this Agreement notwithstanding any
order or ruling reversing, remanding or otherwise modifying this Agreement on rehearing,
reconsideration, appeal or remand of the Enron Bankruptcy Court Order and/or the FERC
Settlement Order, and (ii) they shall use reasonable efforts to defend and preserve the
terms of this Agreement against any such order or ruling.
	 
	 	2.5.	 	Effect of Termination. In the event of termination pursuant to Section 2.4, this
Agreement shall be of no further force or effect, with all rights, claims, defenses,
duties, and obligations of the Parties thereafter restored as if this Agreement had never
been executed.

			
	3. SETTLEMENT AND ACKNOWLEDGMENT

	 	3.1.	 	Acknowledgement of Compromise. The payments and other consideration agreed to in this
Agreement, along with the covenants and obligations herein, settle and compromise the APX
Related Claims and/or defenses of the Parties against each other in the various proceedings
described in Exhibit C attached hereto and avoid costly, protracted and uncertain
litigation and ensure expedient release of payments under the Agreement.

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4. MONETARY CONSIDERATION PROVIDED BY THE PARTIES

	 	4.1.	 	Monetary Consideration. The monetary settlement consideration exchanged by the Parties
shall be comprised of the following terms pursuant to the FERC Settlement Order:

	 	4.1.1.	 	The Parties shall pay and be paid the amounts set forth on Exhibit B attached
hereto, subject to the following adjustments:

	 	4.1.1.1.	 	Enron shall be paid the Enron Settlement Amount ($11,000,000.00) from
the APX Escrow Account within ten (10) Business Days of the Settlement
Effective Date, which funds shall be used to establish the Enron
Settlement Reserve as described in Section 4.2 below. Notwithstanding
any other provision in this Agreement and subject to Section 2.2 of this
Agreement with regard to Sections 4.1.4, 4.1.5 and 4.3.3 of the
Enron-California Parties Settlement Agreement, the Enron Settlement
Amount is not subject to any adjustment for any reason as of the
Settlement Effective Date.
	 
	 	4.1.1.2.	 	Calpine’s rights and obligations under this Agreement shall be null
and void unless the Required Calpine Bankruptcy Court Approval is
received on or before February 28, 2007. Calpine shall provide written
notice to the Sponsoring Parties immediately upon the receipt of the
Required Calpine Bankruptcy Court Approval. In the event that Calpine
does not obtain the Required Calpine Bankruptcy Court Approval by
February 28, 2007, then Calpine shall be excluded from this Agreement and
the amounts to be paid to Net Buyers, as reflected in Exhibit B shall be
reduced on a pro rata basis, by the amount of Calpine’s contribution to
the settlement, as reflected in Exhibit B and APX shall proceed to make
proportional assignment of its rights, title and interest in Proof of
Claim No. 3655 in the Calpine Bankruptcy Cases to the Net Buyers
reflected on Exhibit B. In this event, the Parties retain all rights and
claims otherwise available to them against Calpine, including but not
limited to, in the FERC Proceedings and the Calpine Bankruptcy Case, and
this Agreement shall have no effect on those rights and claims.
	 
	 	4.1.1.3.	 	In the event that any Party is excluded from this Agreement pursuant
to Section 9.3, then the amounts to be paid to Net Buyers, as reflected
in Exhibit B shall be increased or decreased on a pro rata basis by the
amounts allocated to such Party as reflected in Exhibit B.
	 
	 	4.1.1.4.	 	In the event that amounts due and owing to the APX from the ISO
and/or PX are reduced or not paid for any reason, the amounts to be paid
to Net Buyers, as reflected in Exhibit B, shall be decreased on a

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	 	 	 	pro rata basis by the amount the ISO and/or PX fail to pay APX.
Tractebel will waive its cost recovery filing as moot upon the
Settlement Effective Date and will file to withdraw its filing with
prejudice as of the date the FERC Settlement Order becomes final and
non-appealable. The ISO and PX shall not reduce the refunds to be
paid to APX on account of Tractebel’s cost recovery filing.
	 
	 	4.1.1.5.	 	Within five (5) Business Days following the Settlement Effective
Date, APX shall initiate the necessary actions to opt-in to the Existing
Global Settlements set forth on Exhibit F, and thereafter use its best
efforts to successfully complete such opt-ins. APX shall provide status
reports of its efforts in this respect to the Net Buyers at no less than
monthly intervals. Within two (2) Business Days following the filing of
this Agreement with FERC, APX will supply a copy of this Agreement and
all Exhibits to each of the named sellers in the Global Settlement
Agreements listed in Exhibit F of this Agreement, and specifically advise
each such seller of the existence of this Section 4.1.1.5. To the extent
that the California Parties and the named sellers under the Existing
Global Settlements agree to waive the deadline provisions for opting into
those Global Settlements, APX will opt-in to the Existing Global
Settlements within five (5) Business Days of the Settlement Effective
Date, or as soon thereafter as any such waivers are provided. All
amounts, including interest, paid to APX as a result of it opting into
the Existing Global Settlements will be paid to APX in accordance with
the terms of those Settlements, and will be flowed through to the Net
Buyers listed on Exhibit B on a pro rata basis in accordance with the
terms of Section 4.5.
	 
	 	4.1.1.6.	 	Within two (2) Business Days following the Settlement Effective Date,
APX shall pay or debit, as appropriate, to the APX Participants the net
collateral listed on Exhibit J, provided however, the collateral shown
for EESI on Exhibit J shall be paid as directed in Section 4.5.

	 	4.1.2.	 	Subject to any adjustments pursuant to Section 4.1.1, and pursuant to the
procedures set out in Section 4.5, APX shall be ordered to pay and distribute to
APX Payment Recipients, in accordance with the amounts shown on Exhibit B (a) all
refunds owed to and received by APX from the ISO and PX, including such refunds
resulting from APX’s successful opt-in efforts pursuant to Section 4.1.1.5 of this
Agreement, plus interest; plus (b) all Short Payments, including those arising from
payment defaults, owed to APX from the ISO and PX, to the extent received from the
ISO and PX, including interest subject to Sections 4.1.3 and Section 4.3; plus (c)
five million one hundred sixty one thousand one hundred seventy eight dollars and
ninety six cents ($5,161,178.96) held in the APX Holding Account; plus (d) two
million forty five thousand eight hundred twenty two dollars and no cents

12

 

	 	 	 	($2,045,822.00) held as collateral for EESI, which amount shall be released by
APX from the APX Monetary Reserve to the APX Escrow Account; plus (e) the
Seller Funding Amount under Section 4.4.
	 
	 	4.1.3.	 	The ISO and PX will include interest on the refunds and Short Payments that they
will provide APX pursuant to Section 4.5(a) of this Settlement Agreement. The
interest will be determined in accordance with the Commission’s applicable rulings
in this proceeding. To the extent that either the ISO or PX has an interest
short-fall below the interest rates otherwise required by the Commission’s
regulations and rulings in this proceeding related to either the refunds and Short
Payments owed APX for APX Transactions in the PX and ISO centralized markets during
the Refund Period, they will be permitted to hold-back, as necessary, 25 percent of
the interest otherwise owed to APX on the refunds (“Refund Interest Reserve”) and
Short Payments (“Shortpay Interest Reserve”), and subject to Section 4.3 pertaining
to Calpine. APX shall distribute all of the interest that it receives from the ISO
and PX to the Net Buyers on Exhibit B on a pro rata basis in accordance with the
provisions of Section 4.5. At the conclusion of the FERC Proceedings, to the
extent that FERC does not require the ISO or PX to utilize any or all of the
Shortpay Interest Reserve and/or the Refund Interest Reserve to cover interest
short-falls related to APX Transactions, the ISO and PX shall distribute such
amounts (inclusive of any actual additional interest that may accumulate thereon)
to APX, and APX shall distribute any such amounts within five (5) Business Days of
receipt to the Net Buyers listed on Exhibit B on a pro rata basis.
	 
	 	4.1.4.	 	To the extent any net refunds, including interest related thereto, are paid by
the ISO and/or PX to the APX for APX Transactions during the Pre-Refund Period,
those amounts shall be paid and distributed to the Net Buyers on Exhibit B in
proportion to their pro rata share of APX Transactions during the Pre-Refund
Period. This Agreement does not address who is responsible for any refunds (if
any) that FERC may hereafter direct be paid to the ISO and/or PX in respect of APX
Transactions for the Pre-Refund Period; provided, however, that in no event will
EPMI/EESI or APX itself have any responsibility for paying any such refunds. All
Parties reserve their rights to contest any proposal that refunds are owed in
respect of APX Transactions refunds for the Pre-Refund Period and to appeal any
finding by FERC that such refunds are owed for the Pre-Refund Period; provided,
however, that with respect to the Settlement Period in its entirety, no claim for
intra-APX market refunds will be advanced by any Party. Under no circumstances
will the operation of this Section 4.1.4 alter, decrease, increase or otherwise
change the fixed amounts due Enron pursuant to Section 4.1.1.1 hereof.

	 	4.2.	 	Enron Settlement Reserve. The Enron Settlement Amount shall be transferred from the
APX Escrow Account to the Enron PX Collateral account. In addition, Enron hereby agrees to
set aside an additional three million five hundred thousand dollars and no cents
($3,500,000.00) in funds from the Enron PX Collateral (the “Retained Enron

13

 

	 	 	 	PX Collateral”) to establish the Enron Settlement Reserve in the total amount of
fourteen million five hundred thousand dollars and no cents ($14,500,000.00) to be held
in the Enron PX Collateral Account as described in Section 2.2.1. The Enron Settlement
Reserve is available to settle the claims of the Enron Non-Settling Parties, if and only
if, any refund amounts due to the Enron Non-Settling Parties from EPMI (as determined by
FERC) resulting from Enron’s participation in the PX and ISO markets are unpaid for any
reason directly as result of EPMI’s bankruptcy or otherwise. In the event that the
Enron Settlement Reserve for Enron Non-Settling Parties is not needed for the Enron
Non-Settling Parties and/or Supporting Parties for the purpose stated, then the balance
plus accrued interest shall be paid to EPMI by the PX at the earliest possible date
without further action by EPMI.
	 
	 	4.3.	 	Calpine Monetary Consideration. Of the Short Payments plus interest owed to Calpine,
Calpine hereby agrees, subject to receipt of the Required Calpine Bankruptcy Court Approval
on or before February 28, 2007, to release and contribute on the Settlement Effective Date
two million five hundred eighty nine thousand two hundred fifty one dollars and no cents
($2,589,251.00) plus interest accrued on this amount to the APX Escrow Account. So long as
the Required Calpine Bankruptcy Court Approval has been received on or before February 28,
2007, upon receipt of amounts owed to it by the PX and ISO the APX shall, within ten (10)
days of the Settlement Effective Date, pay to Calpine the sum of (a) the remaining two
million five hundred eighty nine thousand two hundred fifty one dollars and no cents
($2,589,251.00) of Short Payments, plus (b) interest accrued on this amount, plus (c) the
Calpine collateral shown on Exhibit J. Subject to receipt of the Required Calpine
Bankruptcy Court Approval on or before February 28, 2007, APX, the Enron Parties, and
Constellation NewEnergy, Inc. agree to withdraw with prejudice their proofs of claims
against Calpine in the Calpine Bankruptcy Cases, in the form and substance of the notices
of withdrawal attached as Exhibit E hereto including without limitation, Proof of Claim
Nos. 3655 filed by APX, 2998 filed by Constellation NewEnergy, Inc., and 4079 and 4087
filed by the Enron Parties. Calpine, APX, Constellation NewEnergy, Inc. and the Enron
Parties agree that each shall act reasonably and in good faith to cooperate and to take all
reasonable steps to secure satisfaction of the terms specified in this Section 4.3. Upon
the Settlement Effective Date and subject to the Required Calpine Bankruptcy Court Approval
being received no later than February 28, 2007, that part of Proof of Claim No. 5285 filed
by FERC concerning APX Transactions and APX Related Claims and the claims of the Subject
Parties in the Calpine Bankruptcy Cases concerning APX Transactions and APX Related Claims,
if any, shall be deemed to have been satisfied. Other than the claims identified in this
Section 4.3, the Sponsoring Parties represent that no other claims have been filed by the
Sponsoring Parties in the Calpine Bankruptcy Cases for APX Related Claims. No claim filed
in the Calpine Bankruptcy Cases by any of the Parties for non-APX Related Claims shall be
affected in any way by this Agreement.
	 
	 	4.4.	 	Seller Contributions. As part of the aggregate consideration paid for the settlement,
certain Net Sellers (each a “Contributing Seller” and together the “Contributing Sellers”)
have entered into a written payment agreement with APX (the “Seller Contribution Funding
Agreement”) that (a) directs APX to function as agent for the net

14

 

	 	 	 	payees under the settlement and (b) prohibits disclosure of the identity of any of the
Contributing Sellers or their respective payment amounts. Pursuant to the terms of the
Seller Contribution Funding Agreement, the Contributing Sellers will forward to APX
fixed dollar amounts totaling in the aggregate of one million two hundred fifty thousand
dollars and no cents ($1,250,000.00) (the “Seller Funding Amount”), with such payments
to be made by each such Contributing Seller via wire transfer to APX within five (5)
Business Days of the date of the Settlement Effective Date in compliance with the terms
of Section 4.5 of this Agreement. APX shall provide all Sponsoring Parties with written
confirmation that the APX has received the aggregate Seller Funding Amount within seven
(7) Business Days of the date of the Settlement Effective Date. In the event that a
Contributing Seller does not comply with its obligation under the Seller Contribution
Funding Agreement to make a required payment, APX shall disclose, to any APX Payment
Recipient hereunder requesting such disclosure, the identity of such noncompliant
Contributing Seller and the amount of such Contributing Seller’s required payment under
the Seller Contribution Funding Agreement, and any such APX Payment Recipient hereunder
has standing to and may seek to enforce such payment obligation directly against any
such noncompliant Contributing Seller.
	 
	 	4.5.	 	Payments. Within five (5) Business Days of the Settlement Effective Date, in order to
facilitate the distribution of funds by APX to the APX Payment Recipients, (a) the ISO and
PX shall release to APX all funds owed to APX, including refunds and Short Payments for APX
Transactions during the Refund Period, plus interest thereon, subject to the provisions of
Section 4.1.3 regarding interest, (b) the Parties required to release receivables reflected
in Exhibit B shall provide such releases to APX; (c) APX shall release five million one
hundred sixty one thousand one hundred seventy eight dollars and ninety six cents
($5,161,178.96) in the APX Holding Account; (d) APX shall release from the APX Monetary
Reserve two million forty five thousand eight hundred twenty two dollars and no cents
($2,045,822.00) held as collateral for Enron; and (e) the Contributing Sellers shall pay
the Seller Funding Amount. All amounts referred to in the preceding sentence shall be
placed in a segregated account to be established by the APX at its expense for purposes of
effectuating this Agreement (the “APX Escrow Account”). Within ten (10) Business Days of
the Settlement Effective Date, APX shall distribute all of the monies contained in the APX
Escrow Account to the APX Payment Recipients shown on Exhibit B on a pro rata basis in
accordance with Exhibit B, as may be adjusted pursuant to Section 4.1.1 (the “Initial
Distribution”). All funds, if any, owed to APX related to APX’s opt-in to the Existing
Global Settlements in accordance with Section 4.1.1.5, shall be placed in the APX Escrow
Fund immediately upon receipt. APX shall thereafter provide notice to the Parties of the
amount and source of such funds received, and shall distribute all such funds to Net Buyers
shown on Exhibit B on a pro rata basis within five (5) Business Days of receipt. Any
failure or delay in receipt of payments, or the timing of the receipt of any funds related
to APX’s opt-in to the Existing Global Settlements, shall not alter or prevent in any
manner the immediate release of the balance of the Enron PX Collateral, as contemplated in
Section 2.2.3 and the FERC Settlement Order. To the extent that APX receives additional
funds covered by this Agreement from the ISO and/or the PX after the Initial Distribution,
APX shall immediately notify

15

 

	 	 	 	the Parties of such receipt and distribute such additional funds within two (2) Business
Days of receipt to the APX Payment Recipients shown on Exhibit B on a pro rata basis in
accordance with Exhibit B.

5. NON-MONETARY CONSIDERATION

	 	5.1.	 	Additional Consideration Exchanged. Simultaneous with the Settlement Effective Date,
additional non-monetary consideration shall be, and shall be deemed to have been, exchanged
in the form and substance of the mutual releases set forth in Section 6.
	 
	 	5.2.	 	UC Davis Medical Center. The UC Davis Medical center represents that the generation
unit at the University of California Davis Medical Center only sold ancillary services to
the ISO during the Refund Period. APX submitted unit-specific bids and schedules on behalf
of the Regents of the University of California (“Regents”) to the ISO and APX received
unit-specific dispatch instructions and ancillary service awards from the ISO. Settlement
statements from the ISO clearly identify all UC Davis Medical Center schedules and
transactions by unit designation for instructed energy, deviations and ancillary service
award. If the Regents and the California Parties reach a settlement of refund issues
related to APX Transactions prior to the Settlement Effective Date, the Regents shall be
excluded from this Agreement. The APX Participants will not impede the Regents from
settling issues directly related to the APX Transactions with the California Parties.

6. SCOPE OF SETTLEMENT AND RELEASES; RELEASES AND WAIVERS

	 	6.1.	 	Settlements of Proceedings by the Parties. Subject to the Required Approvals under
this Agreement, all claims by any Party against any other Party for refunds, disgorgement
of profits, or other monetary or non-monetary remedies for the APX Related Claims,
including without limitation those claims described in Section 6.2 through 6.6, shall be
deemed resolved with prejudice and settled simultaneously with the Settlement Effective
Date.
	 
	 	6.2.	 	Releases by Enron Under the Bankruptcy Code. Effective on the Settlement Effective
Date, each of the Enron Debtors, acting on behalf of themselves and on behalf of each of
their respective estates and on behalf of any party (or parties) purporting to act on
behalf of the estates of each of the Enron Debtors, and on behalf of the Reorganized
Debtors (as defined in the Enron Plan), release the Parties from any and all claims,
obligations, causes of action and liabilities arising from the APX Related Claims including
but not limited to, any and all such claims, obligations, causes of action and/or
liabilities arising from APX Related Claims (a) under any of Sections 542, 543, 544, 545,
547, 548, 549, or 553 of the Bankruptcy Code to avoid any alleged transfer to or seek
turnover from the Parties, (b) under Section 550 of the Bankruptcy Code to recover any such
alleged transfer, (c) under Section 510(c) of the Bankruptcy Code to subordinate any claim
of the Parties, or (d) under Sections 502(d) or 502(j) of the Bankruptcy Code and/or any
claims arising under or in connection with contract(s) and/or transactions for the purchase
and sale of electric power and related products and services.

16

 

	 	6.3.	 	Releases by Calpine Under the Bankruptcy Code. Subject to receipt of the Required
Calpine Bankruptcy Court Approval on or before February 28, 2007, effective on the
Settlement Effective Date, Calpine, acting on its own behalf on behalf of its estate and on
behalf of any party (or parties) purporting to act on behalf of its estate, releases the
Parties from any and all claims, obligations, causes of action and liabilities arising from
the APX Related Claims including but not limited to, any and all such claims, obligations,
causes of action and/or liabilities arising from APX Related Claims (a) under any of
Sections 542, 543, 544, 545, 547, 548, 549, or 553 of the Bankruptcy Code to avoid any
alleged transfer to or seek turnover from the Parties, (b) under Section 550 of the
Bankruptcy Code to recover any such alleged transfer, (c) under Section 510(c) of the
Bankruptcy Code to subordinate any claim of the Parties, or (d) under Sections 502(d) or
502(j) of the Bankruptcy Code and/or any claims arising under or in connection with
contract(s) and/or transactions for the purchase and sale of electric power and related
products and services.
	 
	 	6.4.	 	Impact of Settlement on Enron PX Collateral. As a condition of Agreement, the Parties
agree that EPMI shall be paid the Enron PX Collateral in accordance with Section 2.2.3.
The Supporting Parties agree that any objections to EPMI’s July 20, 2006 motion for release
of the Enron PX Collateral in FERC Docket Nos. EL00-95-000 and EL00-98-000 are resolved by
the terms of this Agreement, including Section 2.2, and hereby agree to withdraw such
objections upon the establishment of the Enron Settlement Reserve in accordance with
Exhibit D, without material modification, and the occurrence of the Settlement Effective
Date. No further action shall be required of the Supporting Parties to implement the
provisions of this Section 6.4.
	 
	 	6.5.	 	FERC and Federal Power Act Releases. Subject to Section 6.7 below, the Parties shall,
as of the Settlement Effective Date, forever release, acquit and discharge each other
Party, and their respective present and former agents, attorneys, accountants, employees,
representatives, officers, managers, directors, Affiliates, subsidiaries, Guarantors,
successors and assigns, from all existing and future claims before the FERC and/or under
the FPA, and any amendments to the FPA pursuant to the Energy Policy Act of 2005, for the
Settlement Period, if and to the extent applicable, relating to the APX Related Claims that
the Parties:

	 	6.5.1.	 	Charged, collected or were paid unjust, unreasonable or otherwise unlawful rates,
terms or conditions for energy, ancillary services, transmission or congestion in
the Western electricity markets;
	 
	 	6.5.2.	 	Manipulated the Western electricity markets in any fashion (including, but not
limited to, claims of economic or physical withholding, gaming, fraud or
misrepresentation or alleged forms of market manipulation discussed in the Initial
Staff Report or Final Staff Report, or any other forms of wrongful conduct,
electricity market manipulation, violation of any applicable tariff, regulation,
law, rule or order relating to the Western electricity markets; or
	 
	 	6.5.3.	 	Entered into the APX Transactions when the Western electricity markets were
non-competitive.

17

 

	 	6.6.	 	Civil Claims Releases. Subject to Section 6.7 below, the Parties shall, as of the
Settlement Effective Date, forever release, acquit and discharge the other Party and their
respective present and former agents, attorneys, accountants, employees, representatives,
officers, managers, directors, Affiliates, subsidiaries, Guarantors, successors and assigns
from all past, existing and future claims, actions or causes of action for civil damages,
equitable relief and/or attorneys fees, for the Settlement Period, concerning, pertaining
to, arising from or relating to, in whole or in part, directly or indirectly, the APX
Related Claims that the Parties:

	 	6.6.1.	 	Charged, collected or were paid unjust, unreasonable or otherwise unlawful rates,
terms or conditions for energy, ancillary services, transmission congestion in the
Western electricity markets;
	 
	 	6.6.2.	 	Manipulated the Western electricity market in any fashion (including, but not
limited to, claims of economic or physical withholding, gaming, fraud or
misrepresentation or other alleged forms of market manipulation discussed in the
Initial Staff Report or Final Staff Report, or any other forms of wrongful
conduct);
	 
	 	6.6.3.	 	Were unjustly enriched by the foregoing released claims or otherwise violated any
applicable tariff, regulation, law, rule or order relating to transactions in the
Western electricity markets;
	 
	 	6.6.4.	 	Claimed, charged, collected or retained profits associated with transactions made
while the seller was in violation of orders, directives or regulations of FERC,
including orders granting market-based rate authority or placing express or implied
obligations or conditions on behavior relating to such authority;
	 
	 	6.6.5.	 	Breached, defaulted or failed to perform any obligation under any contract, or
any guarantee of payment or performance, for the purchase or sale of electricity
(physical or financial) or related transactions, or engaged in fraud or
misrepresentation in connection therewith; or
	 
	 	6.6.6.	 	Entered into the APX Transactions when the Western electricity markets were
non-competitive.

	 	6.7.	 	Reservations and Limitations on Releases.

	 	6.7.1.	 	Claims Reservation. Nothing within, nor any provision of, this Agreement shall
in any way or manner be construed as constituting a waiver or release of any claims
or defenses, positions, grounds, arguments or theories of relief, which are
expressly reserved, as to any of the Non-Settling Participants.
	 
	 	6.7.2.	 	Existing or Future Proceedings. Subject to the provisions of Section 3.1, the
Parties shall remain free to participate in any existing or future proceeding, or
to initiate any proceeding, addressing matters not settled in

18

 

	 	 	 	this Agreement, including, but not limited to, generic issues concerning
market structure, scheduling rules, generally applicable market rules, and
generally applicable price mitigation.
	 
	 	6.7.3.	 	No Waiver as to Non-APX Related Claims. The releases set forth herein apply
solely to APX Related Claims and the Parties hereto and do not constitute a waiver
by any of the Parties of existing or future non-APX Related Claims.
	 
	 	6.7.4.	 	No Third Party Beneficiaries or Admissions. This Agreement is not intended to
confer upon any person or entity that is not a Party any rights or remedies
hereunder, and no one, other than a Party, is entitled to rely on any
representation, warranty, covenant, release, waiver or agreement contained herein.
Moreover, except for the purpose of enforcing the terms and conditions of this
Agreement as between and among the Parties, nothing herein shall establish any
facts or precedents as between the Parties and any third parties as to any dispute.
Each Party expressly denies any breach, liability, wrongdoing or culpability with
respect to the claims against it released in this Agreement, or any other matter
addressed in this Agreement, and does not, by execution of this Agreement, admit or
concede any actual or potential breach, fault, wrongdoing or liability in
connection with any facts or claims that have been or could have been alleged
against it with respect thereto. Neither this Agreement, nor any act performed or
document executed pursuant to or in furtherance of this Agreement:

	 	6.7.4.1.	 	Is or may be deemed to be, or may be used as, an admission of, or
evidence of, the validity of any released claim, or of any wrongdoing or
liability of any of the Parties;
	 
	 	6.7.4.2.	 	Is or may be deemed to be, or may be used as, an admission of, or
evidence of, any fault or omission of any of the Parties in any civil,
criminal, regulatory or administrative proceeding in any court,
administrative agency, regulatory authority, or other tribunal; or
	 
	 	6.7.4.3.	 	Shall be offered or accepted in evidence or alleged in any pleading,
except to obtain the Required Approvals, or to enforce the terms of and
obtain the benefits of this Agreement. In no event shall this Agreement,
any of its provisions or any negotiations, statements or court
proceedings relating to them or the settlement contemplated by this
Agreement in any way be construed as, offered as, received as, used as or
deemed to be evidence of any kind in any action, or in any judicial,
administrative, regulatory or other proceeding, except in a proceeding to
enforce the terms or obtain the benefits of this Agreement or to obtain
the Required Approvals. The Parties may file this Agreement in any other
action that may be brought against them in order to support a defense or
counterclaim based on principles of res judicata, collateral estoppel,
release, good-faith

19

 

	 	 	 	settlement, judgment bar or reduction or any theory of claim
preclusion or issue preclusion or similar defense or counterclaim.

	 	6.8.	 	Effectiveness of Releases; Waiver of Unknown Claims. The Parties acknowledge and agree
that, except as expressly reserved in Section 6.7, it is their intention that the releases
granted pursuant to this Section 6 shall be effective on the Settlement Effective Date to
bar all causes of action, demands and claims for monetary relief, including costs,
expenses, attorneys’ fees, damages, losses and liabilities of every kind, known or unknown,
suspected or unsuspected, with respect to the APX Related Claims specified in this Section
6. In furtherance of this intention, the Parties with respect to the specific matters
released herein, each knowingly, voluntarily, intentionally and expressly waive, as against
each other, any and all rights and benefits conferred by California Civil Code Section 1542
and any law of the United States and any state or territory of the United States or
principle of common law that is similar to Section 1542 or otherwise provides, in sum or
substance, that a release does not extend to claims which the party does not know or
suspect to exist in its favor at the time of executing the release, which if known by it,
would have materially affected its settlement with the other party. Section 1542 provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR
HER SETTLEMENT WITH THE DEBTOR.

	 	 	 	In connection with such waiver and relinquishment, the Parties each acknowledge they are
aware they may hereafter discover facts in addition to or different from those which
they know or believe to be true and with respect to the subject matter of this
Agreement, but it is their intention hereby, except as expressly reserved in Section
6.7, to fully, finally and forever settle and release all matters, disputes,
differences, known or unknown, suspected or unsuspected, asserted or unasserted that are
set forth in this Section without regard to the subsequent discovery or existence of
such additional or different facts. This Agreement is intended to include in its effect
all claims encompassed within this Agreement and releases set forth in this Section 6,
including those which the Parties may not know or suspect to exist at the time of
execution of this Agreement, and this Agreement contemplates the extinguishment of all
such claims arising from the APX Related Claims, except as expressly reserved in Section
6.7. The releases set forth in this Section 6 shall be, and remain in effect as, full
and complete releases, notwithstanding the discovery or existence of any such additional
or different facts relating to the subject matter of this Agreement.
	 
	 	6.9	 	Binding Effect. This Agreement, including the releases contained in Sections 6.2 and
6.3, shall be binding and inure to the benefit of the Sponsoring Parties, and their
respective successors and assigns, and shall remain in full force and effect,
notwithstanding the entry of an order confirming any Chapter 11 plan in the Enron and/or
Calpine Bankruptcy Cases, an order converting the Enron and/or Calpine

20

 

	 	 	 	Bankruptcy Cases to Chapter 7, or an order dismissing the Enron and/or Calpine
Bankruptcy Cases.

7. REQUIRED APPROVALS; OBTAINING REQUIRED APPROVALS

	 	7.1.	 	Required Approvals. This Agreement shall be subject to approval as set forth in this
Section 7 by the Enron Bankruptcy Court and the FERC.
	 
	 	7.2.	 	Required FERC Approval. The FERC, by issuance of the FERC Settlement Order(s), shall
approve the terms of this Agreement without material change or condition unacceptable to
any Party (in the exercise of its reasonable discretion) (if so approved, then such
approval shall be a “Required FERC Approval”). Unless the FERC Settlement Order makes an
express, specific finding to the contrary, or unless expressly waived by Enron, the FERC
Settlement Order shall be deemed and construed, as an order finding and concluding that:
(a) the Enron Settlement Reserve to be retained in the Enron PX Collateral Account is
sufficient and adequate to protect the interests of Non-Settling Participants in the
Enron-California Parties Settlement Agreement for any and all liabilities of any of the
Enron Parties to those Non-Settling Participants with respect to the FERC Proceedings; and
(b) the remainder of the Enron PX Collateral should be and is hereby ordered to be
immediately released to EPMI for payment to its creditors under the Enron Plan.
	 
	 	7.3.	 	Required Enron Bankruptcy Court Approval. The Enron Bankruptcy Court, by entry of the
Enron Bankruptcy Court Order that is Final and Non-Appealable, shall grant the relief
sought in the Bankruptcy Rule 9019 Motion and approve this Agreement without material
change or condition unacceptable to any Party in the exercise of its reasonable discretion
(if so approved, then such approval shall be a “Required Enron Bankruptcy Court Approval”).
	 
	 	7.4.	 	Notice of Material Unacceptable Change or Condition. If any approval described in
Section 7.1 and 7.2 and 7.3 includes a change or condition to the terms of this Agreement
that materially and adversely affects any Sponsoring Party, then the affected Sponsoring
Party shall provide to the other Sponsoring Parties written notice of such material change
or condition (and its lack of consent thereto) within three (3) Business Days of the date
of the issuance of such approval (the “Material Change Notice”). If such Sponsoring Party
gives notice of its lack of consent in the manner described above, then the applicable
approval shall not be deemed to be a “Required FERC Approval” or a “Required Enron
Bankruptcy Court Approval” (as the case may be), and shall not fulfill the condition that
such Required Approval has been obtained for the purpose of the definition of the
Settlement Effective Date unless the other Sponsoring Parties agree in writing on or before
March 1, 2007 that the Settlement Effective Date has occurred notwithstanding the existence
of such unacceptable material change or condition.
	 
	 	7.5.	 	Enron Bankruptcy Court Motion. On or about the same day when this Agreement is filed
at FERC, the Enron Debtors and the Reorganized Debtors (as defined in the Enron Plan) shall
file a motion requesting Enron Bankruptcy Court approval of this

21

 

	 	 	 	Agreement pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure
(“Bankruptcy Rule 9019 Motion”), together with a form of order approving the Bankruptcy
Rule 9019 Motion.
	 
	 	7.6.	 	Calpine Bankruptcy Court Motion. On or after the day this Agreement is filed at FERC,
after obtaining necessary corporate approvals, and after discussing the terms of the
Agreement with key constituencies in the Calpine Bankruptcy Cases, Calpine shall file a
Bankruptcy Rule 9019 Motion requesting Calpine Bankruptcy Court approval of the releases to
be granted by Calpine in Section 6 above and approval of the allocation of the Calpine
Short Payments and associated interest and release of collateral as set forth in Section
4.3 above pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, together with
a form of order approving such Bankruptcy Rule 9019 Motion.
	 
	 	7.7.	 	Requests for Approval. This Agreement shall be reviewed by the FERC without prior
certification by an Administrative Law Judge. The Sponsoring Parties will cooperate in
obtaining the Required FERC Approval, Required Enron Bankruptcy Court Approval, and
Required Calpine Bankruptcy Court Approval, in preparing motions requesting such approvals,
and, in the case of the Required Enron Bankruptcy Court Approval and Required Calpine
Bankruptcy Court Approval, in preparing proposed orders approving this Agreement in a form
acceptable to the Sponsoring Parties. The Bankruptcy Rule 9019 Motions shall include a
request that the Enron Bankruptcy Court’s and Calpine Bankruptcy Court’s approvals and
findings become effective immediately upon entry notwithstanding the ten (10) day stay
provided for in Bankruptcy Rule 6004(g).

8. ISO AND PX ACCOUNTING AND IMPLEMENTATION

	 	8.1.	 	FERC-Directed Compliance. The FERC Settlement Order shall constitute authorization and
direction to the APX, ISO and PX to implement the terms of this Agreement. Upon and as a
result of the FERC’s approval of this Agreement in the FERC Settlement Order, the APX, ISO
and/or PX shall be required to do the following:

	 	8.1.1.	 	General Accounting Treatment. APX, ISO and PX shall conform their books and
records to reflect the distributions, payments, offsets, transfers, deemed
resolution of claims, and status of accounts that were made pursuant to this
Agreement.
	 
	 	8.1.2.	 	Accounting Treatment of Distributions to Parties. APX, ISO and PX shall reflect
on their books and records that the Parties have, through this Agreement, been paid
in full their share of all amounts that were made pursuant to this Agreement.
	 
	 	8.1.3.	 	Termination of Interest Accrual. PX and ISO shall reflect in their books and
records, with respect to Parties, that the accrual of interest at the
FERC-established rate on principal amounts ceases upon the distribution of funds
from the PX and/or the ISO to the APX for purposes of the accounts of the PX and
the ISO.

22

 

	 	8.2.	 	FTR Payments. Morgan Stanley Capital Group, Inc. (“MSCG”) asserts that, upon issuance
of the FERC Settlement Order, it has resolved all claims by or against it arising from the
FERC Proceedings. No Party to this Agreement shall object to a request by MSCG to the ISO
to disburse amounts owing to MSCG for ISO Firm Transmission Rights held by MSCG during the
2000-2001 period.

9. OPT-IN RIGHTS AND EXCLUSIONS

	 	9.1.	 	Notice. Those APX Participants listed on Exhibit A who have not executed this
Agreement by January 5, 2007 (i.e., Subject Parties) shall be served (or service shall be
attempted) by APX with the Notice attached as Exhibit G on or before January 8, 2007
providing them with written notice of this Agreement and their rights hereunder.
	 
	 	9.2.	 	Right to Become a Sponsoring Party. A Subject Party may become a Sponsoring Party by
providing notice from an Authorized Representative to the other Parties on or before the
Settlement Effective Date, which notice shall serve as evidence of such Party’s execution
of this Agreement. A Subject Party that becomes a Sponsoring Party pursuant to this
Section 9.2 shall be entitled to any benefits of this Agreement as of the Execution Date.
	 
	 	9.3.	 	Rights to Exclusion.

	 	9.3.1.	 	Show Cause. A Subject Party may assert and show cause, in accordance with the
settlement comment procedures established by FERC for this Agreement, as to why
such Party should be excluded from this Agreement by the FERC Settlement Order,
and any such Subject Party that is specifically excluded from this Agreement by
the FERC Settlement Order shall not be or be deemed a Party to this Agreement;
provided that all other Subject Parties shall be and be deemed by the FERC
Settlement Order to be bound by this Agreement. The amounts set forth on Exhibit
B shall be adjusted by APX as appropriate to reflect the deletion of any Subject
Party specifically excluded from this Agreement by the FERC Settlement Order.
	 
	 	9.3.2.	 	Calpine. Calpine shall obtain entry of the Calpine Bankruptcy Court Order by
February 28, 2007 or shall be excluded from this Agreement.
	 
	 	9.3.3.	 	Parties Seeking Approvals. The Parties identified on Exhibit H represent they
cannot obtain the necessary approvals by January 5, 2007 and shall have until
January 15, 2007 to obtain such approvals and provide written notice to the other
Parties that such approval has been obtained. Upon the receipt of the notice
contemplated in the preceding sentence, such Party shall become a Sponsoring
Party. If notice is not received by January 15, 2007, such Party shall be
excluded from this Agreement.
	 
	 	9.3.4.	 	Releases. Any Party excluded from this Agreement pursuant Sections 9.3.1,
9.3.2 and/or 9.3.3 shall not be deemed to have provided or received any of the
waivers, releases, or other benefits set forth in this Agreement.

23

 

	 	9.4.	 	Other Parties. All Subject Parties that do not elect to become a Sponsoring Party
pursuant to Section 9.2 and who are not excluded from this Agreement pursuant to Section
9.3 shall be deemed to have consented to this Agreement and shall be bound by its terms.

10. REPRESENTATIONS, WARRANTIES, AND COVENANTS

	 	10.1.	 	Representations of Parties. Representations and warranties of Enron Debtors are not
made herein as such matters are to be addressed by the Enron Bankruptcy Court in the Enron
Bankruptcy Court Order. The participation of Calpine in this Agreement and the
representations of Calpine contained herein are conditioned on entry of the Calpine
Bankruptcy Court Order; and Calpine upon the entry of the Calpine Bankruptcy Court Order
and each of the other Parties makes the following representations and warranties, for
itself only, to each other Party, to be effective from and after the Execution Date:

	 	10.1.1.	 	Organizational Status, Power and Authority. The Parties possess all necessary
power and authority to execute, deliver and perform its obligations under this
Agreement.
	 
	 	10.1.2.	 	Authority to Execute. The execution, delivery, election to participate in and
performance of this Agreement (a) are within its powers, (b) have been duly
authorized by all necessary action on its behalf and all necessary consents or
approvals have been obtained and are in full force and effect, and (c) do not
violate any of the terms and conditions of any applicable law, or materially
violate any contracts to which it is a party. Each counsel or other Authorized
Person executing this Agreement or any of its Exhibits on behalf of any Party
hereto hereby warrants that such Authorized Person has the full authority to do so.
	 
	 	10.1.3.	 	Binding Obligation. This Agreement constitutes a legal, valid and binding
obligation, enforceable against it in accordance with its terms.
	 
	 	10.1.4.	 	Ownership of Claims. Except as set forth in this Agreement, it is the sole
owner of the bankruptcy, civil, FERC and any and all other claims and rights that
are being addressed, resolved and compromised by it pursuant to this Agreement and,
except as provided in this Agreement, there has been no sale, assignment, transfer,
pledge or hypothecation, or attempted sale, assignment, transfer, pledge or
hypothecation, by it of any such rights or claims, whether directly, indirectly, by
operation of law or otherwise.
	 
	 	10.1.5.	 	No Insiders. None of the representatives of the Parties who have acted as
negotiators or decision-makers for a Party (other than EPMI and EESI) in connection
with this Agreement is a current or former insider or current or former affiliate
of EPMI or EESI. For purposes of the immediately preceding sentence, the terms
“insider” and “affiliate” shall have the meanings given to them in Section 101 of
the Bankruptcy Code.

24

 

	 	10.2.	 	Further Assurances. The Parties covenant among themselves that at all times from and
after the Settlement Effective Date, they will, upon the reasonable request of the other
Parties, their successors and assigns, execute and/or deliver such further documents,
agreements, instruments, and accounts and other books of record, and shall cooperate and do
such other and further acts, as may be reasonably necessary to effectuate the terms and
provisions of this Agreement.
	 
	 	10.3.	 	Mistakes of Fact or Law. In entering and making this Agreement, the Parties assume
the risk of any mistake of fact or law. If the Parties, or any of them, should later
discover that any fact they relied upon in entering this Agreement is not true, or that
their understanding of the facts or law was incorrect, then the Parties shall not be
entitled to seek rescission of this Agreement by reason thereof. This Agreement is
intended to be final and binding upon the Parties regardless of any mistake of fact or law.
	 
	 	10.4.	 	Calpine Successor In Interest. Calpine represents that it is the successor in
interest to Calpine Power Services Company by operation of law pursuant to the merger of
Calpine Power Services Company into Calpine.
	 
	 	10.5.	 	Constellation Successor In Interest. Constellation NewEnergy, Inc. represents that it
is the successor in interest to AES New Energy and NewEnergy Ventures.

11. GOVERNING LAW; INTERPRETATION

	 	11.1.	 	Governing Law. To the extent not governed by federal law, this Agreement shall be
governed by and construed in accordance with the laws of the State of California, without
regard to its conflict of laws principles. Each Party irrevocably waives its right to a
jury trial with respect to any litigation arising under or in connection with this
Agreement to the fullest extent permitted by law.
	 
	 	11.2.	 	Entire Agreement. This Agreement contains the entire agreement among the Parties with
respect to the subject matter hereof and there are no agreements, understandings,
representations, or warranties among the Parties other than those set forth or referred to
herein. Each of the Parties expressly disclaims any reliance upon any representations or
warranties not stated herein.
	 
	 	11.3.	 	Headings. The headings or titles of Sections and Exhibits used in this Agreement (in
bold typeface) are for convenience only and shall be disregarded in interpreting this
Agreement.
	 
	 	11.4.	 	Parties Represented by Counsel. The Parties acknowledge that they have sought the
advice of, and have been advised by, legal counsel of their choice in connection with the
negotiation of this Agreement, and that the Parties have willingly entered into this
Agreement with a full understanding of the legal and financial consequences of this
Agreement.
	 
	 	11.5.	 	Drafting of Agreement. The Parties acknowledge that (i) this Agreement is the result
of negotiations among, and has been reviewed by, each Party and its respective counsel,

25

 

	 	 	 	and (ii) all Parties contributed to the drafting of this Agreement. Accordingly, this
Agreement shall be deemed to be the product of all Parties, and no ambiguity shall be
construed in favor of or against any Party on the basis that it drafted the ambiguous
provision.
	 
	 	11.6.	 	Rules of Interpretation. The following rules of interpretation shall apply to this
Agreement, including all Exhibits:

	 	11.6.1.	 	Singular; Plural. Unless the context otherwise requires, words used in this
Agreement shall include in the singular number the plural and in the plural number
the singular.
	 
	 	11.6.2.	 	Self Reference; Incorporation by Reference; Cross Reference. Except as
otherwise specified herein, all references in this Agreement to a “Section” or
“Exhibit” shall mean a Section or Exhibit of this Agreement. The words “hereof,”
“herein,” and “hereunder,” and words of similar import when used in this Agreement,
including the Exhibits, shall, unless otherwise specified, refer to this Agreement
as a whole and not to any particular Section, Exhibit or provision of this
Agreement, and all references to Section, Sections or Exhibits shall be to all
subparts of such Sections or Exhibits. All Exhibits or Appendices shall be deemed
to be incorporated by reference and made a part of this Agreement.
	 
	 	11.6.3.	 	Inclusive of Permitted Successors. Unless otherwise stated, any reference in
this Agreement to any person or entity shall include its permitted successors and
assigns and, in the case of any Governmental Authority, any entity succeeding to
its functions and capabilities.
	 
	 	11.6.4.	 	Inclusive References. When used herein, the words “include,” “includes,” and
“including” shall not be limiting and shall be deemed in all instances to be
followed by the phrase “without limitation.”

12. MISCELLANEOUS

	 	12.1.	 	Notices. All notices, demands and other communications between or among any of the
Parties hereunder shall be in writing and shall be deemed to have been duly given: (i)
when personally delivered; (ii) upon actual receipt (as established by confirmation of
receipt or otherwise) during normal business hours, otherwise on the first (1st) Business
Day thereafter, if transmitted by facsimile or telecopier with confirmation of receipt;
(iii) on the date of receipt when mailed by certified mail, return receipt requested,
postage prepaid; or (iv) on the date of receipt when sent by overnight courier; in each
case, to the addresses set forth in Section 12.2, or to such other addresses as a Party may
from time to time specify by notice to the other Parties given pursuant to this Section
12.1. Email addresses are provided for convenience only and do not constitute notice.
	 
	 	12.2.	 	Parties’ Addresses. Notices required under this Agreement shall be delivered pursuant
to the notice information provided under Exhibit I of this Agreement.

26

 

	 	12.3.	 	Successors and Assigns. Subject to Section 12.8, this Agreement shall be binding upon
and inure to the benefit of the Parties hereto and their respective permitted successors
and assigns. Nothing in this Agreement shall be construed or interpreted to impart any
rights or obligations to any third party (other than a permitted successor or assignee
bound to this Settlement Agreement).
	 
	 	12.4.	 	Costs. Except as provided in this Agreement, each of the Parties shall pay its own
costs and expenses, including attorneys’ fees, incurred in connection with the disputes
that are settled herein and the negotiation, preparation and implementation of this
Agreement including costs and expenses incurred in preparing stipulations, making motions
and seeking and obtaining the Required Approvals.
	 
	 	12.5.	 	Modifications. This Agreement may be modified only if in writing and signed by each
of the Sponsoring Parties affected by the proposed modification. No waiver of any
provision of this Agreement or departure from any term of this Agreement shall be effective
unless in writing and signed by the Sponsoring Party giving the waiver. No modification
will be effective unless any approval of the FERC or the Enron Bankruptcy Court that may be
required with respect to such modification, if any, has been received. Absent agreement of
all Sponsoring Parties to the proposed change, the standard of review for any changes to
this Agreement 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). The Sponsoring Parties further
stipulate that: (a) the terms of this Agreement were negotiated at arms-length and were
reached voluntarily and in good faith; and (b) the terms of this Agreement have no adverse
impact on retail rates.
	 
	 	12.6.	 	Waiver. The failure of any Party hereto to enforce any condition or provision in this
Agreement at any time shall not be construed as a waiver of that condition or provision
unless such waiver is in writing and signed by the waiving Party; nor shall it forfeit any
rights to future enforcement thereof.
	 
	 	12.7.	 	Illegality. Should any provision of this Agreement be held illegal, such illegality
shall not invalidate the whole of this Agreement; instead, the Parties shall, subject to
applicable law, use their best efforts to meet and confer within thirty (30) days of such
determination to reform the Agreement and shall work in good faith to reach agreement
within ninety (90) days in order to give effect to the original intention of the Parties in
all material respects.
	 
	 	12.8.	 	Assignments. No rights or obligations herein may be assigned by any Party without the
prior written consent of the other Parties, which consent shall not be unreasonably
withheld.
	 
	 	12.9.	 	Joint and Several Liability. Nothing in this Agreement shall be deemed to create any
joint and several liability among the Parties with respect to the APX Related Claims in the
FERC Proceedings to create a “Joint Liability Claim” as that term is defined in the Enron
Plan and the Bankruptcy Code.

27

 

	 	12.10.	 	Consents; Acceptance. Unless otherwise expressly provided herein, any consent,
acceptance, satisfaction, cooperation, or approval required of a Party under this Agreement
shall not be unreasonably withheld or delayed.
	 
	 	12.11.	 	Choice of Forum. Nothing in this Agreement is intended to effect a choice of forum, as
between the FERC, Enron Bankruptcy Court, and Calpine Bankruptcy Court for the resolution
of any dispute, if any, that may arise under this Agreement.
	 
	 	12.12.	 	Expediency. Time shall be of the essence for purposes of construing and enforcing this
Agreement.

     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly
authorized officers or representatives. This Agreement may be executed in any number of
counterparts, each of which, when executed, will be deemed to be an original and all of which taken
together will be deemed to be one and the same instrument. This Agreement may be executed by
signature via facsimile or .pdf (portable document format) transmission, which shall be deemed to
be the same as an original signature.

[SIGNATURES APPEAR ON THE PAGES THAT FOLLOW]

28

 

COMMERCE ENERGY, INC. SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	COMMERCE ENERGY, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	      /s/ R. NICK CIOLL
 

	 	 
	 

	 	Name:
	 	R. Nick Cioll	 	 
	 

	 	Title:
	 	Chief Risk Officer	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

 

MORGAN STANLEY CAPITAL GROUP INC. SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	MORGAN STANLEY CAPITAL GROUP INC.
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	      /s/ DEBORAH L. HART
 

Deborah L. Hart
	 	 
	 

	 	Title:
	 	Vice President	 	 
	 

	 	Date:
	 	January 3, 2007	 	 

 

 

MERRILL LYNCH CAPITAL SERVICES, INC. SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	MERRILL LYNCH CAPITAL SERVICES, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ KEITH BAILEY
 

	 	 
	 

	 	Name:
	 	Keith Bailey	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

 

APX INC. SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	APX INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ THOMAS K. LEWIS, JR.
 

	 	 
	 

	 	Name:
	 	Thomas K. Lewis, Jr.	 	 
	 

	 	Title:
	 	Chairman and Chief Executive Officer	 	 
	 

	 	Date:
	 	January 5, 2007	 	 

 

 

EL PASO MARKETING, LP (f/k/a EL PASO MERCHANT ENERGY, LP)

SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	EL PASO MARKETING, LP
	 
	 	 	 	 	 	 
	 

	 	By:
	 	      /s/ BRYAN NESKORA
 

	 	 
	 

	 	Name:
	 	Bryan Neskora	 	 
	 

	 	Title:
	 	Vice President	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

 

SIERRA PACIFIC INDUSTRIES

SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	SIERRA PACIFIC INDUSTRIES
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ MARK D. EMMERSON
	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Mark D. Emmerson	 	 
	 

	 	Title:
	 	Chief Financial Officer	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

 

ENRON SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	ENRON POWER MARKETING, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	      /s/ L. DON MILLER
 

	 	 
	 

	 	Name:
	 	L. Don Miller	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 
	 

	 	Date:
	 	January 4, 2007	 	 
	 
	 	 	 	 	 	 
	 	 	ENRON ENERGY SERVICES, INC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	      /s/ K. WADE CLINE
 

	 	 
	 

	 	Name:
	 	K. Wade Cline	 	 
	 

	 	Title:
	 	Chief Executive Officer	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

 

CONSTELLATION NEWENERGY, INC. SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	CONSTELLATION NEWENERGY, INC
	 
	 	 	 	 	 	 
	 

	 	By:
	 	      /s/ JORDAN P. KARP
 

	 	 
	 

	 	Name:
	 	Jordan P. Karp	 	 
	 

	 	Title:
	 	Division General Counsel, Constellation NewEnergy, Inc.	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

 

AEP SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

American Electric Power Service Corporation, as agent for Appalachian Power
Company, AEP Texas Central Company, AEP Texas North Company, Columbus Southern
Power Company, Indiana Michigan Power Company, Kentucky Power Company, Ohio
Power Company, Public Service Company of Oklahoma, and Southwestern Electric
Power Company

	 	 	 	 	 	 	 
	 

	 	By:
	 	      /s/ BRIAN X. TIERNEY
 

	 	 
	 

	 	Name:
	 	Brian X. Tierney	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

 

SEMPRA ENERGY SOLUTIONS LLC SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	SEMPRA ENERGY SOLUTIONS LLC
	 
	 	 	 	 	 	 
	 

	 	By:
	 	      /s/ WILLIAM B. GODDARD
 

	 	 
	 

	 	Name:
	 	William B. Goddard	 	 
	 

	 	Title:
	 	Vice President Commodity Supply & Operations	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

 

CALPINE ENERGY SERVICES, L.P. SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	CALPINE ENERGY SERVICES, L.P.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ ALEXANDRE B. MAKLER
 

	 	 
	 

	 	Name:
	 	Alexandre B. Makler	 	 
	 

	 	Title:
	 	Counsel for Calpine Energy Services, L.P.	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

 

AQUILA MERCHANT SERVICES, INC SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	AQUILA MERCHANT SERVICES, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ JODI CULP
 

	 	 
	 

	 	Name:
	 	Jodi Culp	 	 
	 

	 	Title:
	 	President	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

 

AVISTA ENERGY, INC. SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	AVISTA ENERGY, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ DENNIS VERMILLION
 

	 	 
	 

	 	Name:
	 	Dennis Vermillion	 	 
	 

	 	Title:
	 	President	 	 
	 

	 	Date:
	 	January 3, 2007	 	 

 

 

ALLEGHENY ENERGY SUPPLY COMPANY, LLC

SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	ALLEGHENY ENERGY SUPPLY COMPANY, LLC
	 
	 	 	 	 	 	 
	 

	 	By:
	 	      /s/ THOMAS J. KALUP
 

	 	 
	 

	 	Name:
	 	Thomas J. Kalup	 	 
	 

	 	Title:
	 	Vice President-Market Optimization & Dispatch	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

 

TRANSALTA SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	TRANSALTA ENERGY MARKETING (US) INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	      /s/ STERLING KOCH
 

	 	 
	 

	 	Name:
	 	Sterling Koch	 	 
	 

	 	Title:
	 	Director of Regulatory and Legal Affairs and General Counsel	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

 

SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT

AND POWER DISTRICT

SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ ROBERT S. NICHOLS
	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Robert S. Nichols	 	 
	 

	 	Title:
	 	Assistant Treasurer	 	 
	 

	 	Date:
	 	January 5, 2007	 	 

 

 

BP AND TRACTEBEL SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	BP ENERGY COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	      /s/ MARK R. HASKELL	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Mark R. Haskell	 	 
	 

	 	Title:
	 	Partner, Morgan, Lewis & Bockius LLP 

as Counsel to and Authorized Representative 

of BP Energy Company
	 	 
	 

	 	Date:
	 	January 4, 2007	 	 
	 
	 	 	 	 	 	 
	 	 	TRACTEBEL ENERGY MARKETING, INC.

(n/k/a SUEZ ENERGY MARKETING, N.A.)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ MARK R. HASKELL	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Mark R Haskell	 	 
	 

	 	Title:
	 	Partner, Morgan, Lewis & Bockius LLP 

as Counsel to and Authorized Representative 

of Tractebel Energy Marketing, Inc.

(n/k/a Suez Energy Marketing, N.A.)
	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

 

PUGET SOUND ENERGY, INC. SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT1

	 	 	 	 	 	 	 
	 	 	PUGET SOUND ENERGY, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ GARY D. BACHMAN	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Gary D. Bachman	 	 
	 

	 	Title:
	 	Member, Van Ness Feldman, P.C.	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

District of Columbia : 58

Subscribed and Sworn to before me, in my presence,

this 4th day of January, 2007

	 	 	 
	/s/ Melessa Y. Watkins

	 	 
	 	 	 
	Notary Public, D.C.
	 	 

My commission expires  11-30-2008

 

			
	1	 	As a Supporting Party, Puget Sound Energy,
Inc. is a signatory to this Agreement for the sole purpose described in Section
1.74.

 

 

CORAL POWER, L.L.C., INC. SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	CORAL POWER, L.L.C.1	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ ROBERT R. REILLEY	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Robert R. Reilley	 	 
	 

	 	Title:
	 	Vice President, Regulatory Affairs	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

			
	1	 	As a Supporting Party, Coral Power, L.L.C, is
a signatory to this Agreement for the sole purpose described in Section 1.74.

 

 

SACRAMENTO MUNICIPAL UTILITY DISTRICT SIGNATURE PAGE

TO

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

	 	 	 	 	 	 	 
	 	 	SACRAMENTO MUNICIPAL UTILITY DISTRICT	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ JAN SCHORI	 	 
	 

	 	 	 	 	 	 
	 

	 	Name.
	 	Jan Schori	 	 
	 

	 	Title:
	 	 General Manager	 	 
	 

	 	Date:
	 	January 4, 2007	 	 

 

 

EXHIBIT A

APX and APX Participants

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

APX Inc.

Abacus Energy Services, LLC

ACN Power, Inc.

Allegheny Energy Supply Company, LLC

American Electric Power Service Corp.

Ancor L.L.C.

Aquila Merchant Services, Inc.

Avista Energy, Inc.

BBOSS, LLC

Big Creek Water Works, Ltd.

BP Energy Company

Calpine Energy Services, L.P.

Cinergy Services, Inc.

City of Sunnyvale Power Gen. Facility

Clean Earth Energy Incorporated

Commonwealth Energy Corporation (n/k/a Commerce Energy, Inc.)

Constellation NewEnergy, Inc.

CSW Power Marketing

DukeSolutions, Inc.

Eagle Power LLC

East Bay Municipal Utility District

Eastern Pacific Energy

El Paso Marketing, LP (f/k/a El Paso Merchant Energy, LP)

Energy 2001 Inc.

Enron Energy Services, Inc.

Enron Power Marketing, Inc.

Entergy-Koch Energy Trading, L.P.

FPL Energy Power Marketing, Inc.

Friendly Power Company, LLC

Gas Recovery System, Inc.

Go Green

Imperial Valley Resource Recovery Co.

Keystone Energy Services

Los Alamos Energy, LLC

Merrill Lynch Capital Services, Inc.

Midway Sunset Cogeneration Company

Morgan Stanley Capital Group Inc.

NRG Power Marketing Inc.

Powercom

PowerSource Corp.

QST Energy Trading Inc.

Sacramento Municipal Utility District

Salt River Project Agricultural Improvement and Power District

Page 1 of 2

 

 

Exhibit A

APX and APX Participants

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

Sempra Energy Solutions LLC

Sierra Pacific Industries

TenderLand Power Company, Inc.

Torch Operating Company Brea

Tractebel Energy Marketing, Inc. (n/k/a Suez Energy Marketing NA, Inc.)

TransAlta Energy Marketing (US) Inc.

Turlock Irrigation District

UC Davis Medical Center (The Regents of the University of California)

Utility.com

Wellhead Electric, L.P.

Page 2 of 2

 

 

Exhibit B

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Market Participant	 	Status	 	Short Pay	 	Totals (in Millions $)
	Calpine Power Services Co./Calpine Energy Services, L.P.
	 	NS	 	 	5.1710615663	 	 	 	 	 
	American Electric Power Service Corp.
	 	NS	 	 	0.0000000000	 	 	 	 	 
	Avista Energy
	 	NS	 	 	1.6704801967	 	 	 	 	 
	El Paso Merchant Energy
	 	NS	 	 	3.1265354284	 	 	 	 	 
	UC Davis Medical Center
	 	NS	 	 	2.7323337900	 	 	 	 	 
	Merrill Lynch Capital Services, Inc.
	 	NS	 	 	11.6240400841	 	 	 	0.8000000000	 
	BP Energy Company
	 	NS	 	 	0.3060349465	 	 	 	 	 
	East Bay Municipal Utility District
	 	NS	 	 	0.4430855020	 	 	 	 	 
	Sierra Pacific Industries
	 	NS	 	 	0.4148900771	 	 	 	 	 
	Cinergy Services, Inc.
	 	NS	 	 	-0.0103940000	 	 	 	 	 
	Tractebel Energy Marketing, Inc.
	 	NS	 	 	0.2303306562	 	 	 	 	 
	FPL Energy Power Marketing, Inc.
	 	NS	 	 	0.0000000000	 	 	 	 	 
	Big Creek Water Works, Ltd.
	 	NS	 	 	0.0000236738	 	 	 	 	 
	Aquila Merchant Services
	 	NS	 	 	0.0000000000	 	 	 	 	 
	Turlock Irrigation District
	 	NS	 	 	0.0019752787	 	 	 	 	 
	Los Alamos Energy, LLC
	 	NS	 	 	0.0000000000	 	 	 	 	 
	Wellhead Electric, L.P.
	 	NS	 	 	0.0000000000	 	 	 	 	 
	QST Energy Trading Inc.
	 	NS	 	 	0.0000000000	 	 	 	 	 
	Powercom
	 	NS	 	 	0.0056563965	 	 	 	 	 
	Energy 2001 Inc.
	 	NS	 	 	0.0030260912	 	 	 	 	 
	CSW Power Marketing
	 	NS	 	 	0.0000000000	 	 	 	 	 
	Ancor L.L.C.
	 	NS	 	 	0.0000000000	 	 	 	 	 
	City of Sunnyvale Power Gen. Facility
	 	NS	 	 	0.0000000000	 	 	 	 	 
	Keystone Energy Services
	 	NS	 	 	0.0000000000	 	 	 	 	 
	Entergy-Koch Energy Trading, Inc.
	 	NS	 	 	0.0940335925	 	 	 	0.0141743585	 
	ACN Power, Inc.
	 	NS	 	 	1.1560805954	 	 	 	0.3221481700	 
	Gas Recovery System, Inc.
	 	NS	 	 	1.4329228338	 	 	 	0.3875597038	 
	Commonwealth Energy Corporation (Commerce Energy, Inc.)
	 	NS	 	 	8.6688164078	 	 	 	6.5245444853	 
	Eagle Power LLC
	 	NB	 	 	0.0000000000	 	 	 	0.0000000533	 
	BBOSS,LLC
	 	NB	 	 	-0.0000001621	 	 	 	0.0000159615	 
	Friendly Power Company, LLC
	 	NB	 	 	0.0000000000	 	 	 	0.0003526773	 
	Abacus Energy Services, LLC
	 	NB	 	 	0.0000358872	 	 	 	0.0003700606	 
	Eastern Pacific Energy
	 	NB	 	 	0.0000000000	 	 	 	0.0004700997	 
	DukeSolutions, Inc.
	 	NB	 	 	-0.0000007835	 	 	 	0.0118698687	 
	TenderLand Power Company, Inc.
	 	NB	 	 	0.0208016526	 	 	 	0.0137417665	 
	Imperial Valley Resource Recovery Co.
	 	NB	 	 	0.0000000000	 	 	 	0.0177499572	 
	NRG Power Marketing Inc.
	 	NB	 	 	0.0000000000	 	 	 	0.0342440065	 
	Allegheny Energy Supply Company, LLC
	 	NB	 	 	0.0000000000	 	 	 	0.0415818550	 
	Salt River Project
	 	NB	 	 	0.0000000000	 	 	 	0.0461264899	 
	Torch Operating Company Brea
	 	NB	 	 	0.0285314726	 	 	 	0.1041900972	 
	Clean Earth Energy Incorporated
	 	NB	 	 	0.0000000000	 	 	 	0.1531065034	 
	Midway Sunset Cogeneration Company
	 	NB	 	 	0.0000000000	 	 	 	0.1993041378	 
	Unidentified
	 	NB	 	 	0.0000000000	 	 	 	0.0000000000	 
	Go Green
	 	NB	 	 	0.0002881000	 	 	 	0.2539719439	 
	PowerSource Corp.
	 	NB	 	 	0.0000000000	 	 	 	0.3697237985	 
	Sacramento Municipal Utility District (APX1)
	 	NB	 	 	-1.4512428856	 	 	 	0.8143465260	 
	Utility.com
	 	NB	 	 	0.0000000000	 	 	 	1.1009637664	 
	TransAlta Energy Marketing US, Inc.
	 	NB	 	 	0.0000000000	 	 	 	1.3083069977	 
	Sempra Energy Solutions LLC
	 	NB	 	 	0.1842385691	 	 	 	2.7731574801	 
	Constellation New Energy
	 	NB	 	 	0.6796295600	 	 	 	4.5137957764	 
	Sacramento Municipal Utility District (APX3)
	 	NB	 	 	0.0000000000	 	 	 	9.0377340329	 
	Morgan Stanley Capital Group Inc.
	 	NB	 	 	2.6442452766	 	 	 	23.8639853833	 
	Enron Energy Services
	 	Other	 	 	 	 	 	 	11.0000000000	 
	Total
	 	 	 	 	 	 	 	 	 	 	62.9075359574	 

 

 

EXHIBIT C

Cases and Proceedings Resolved By Settlement Agreement (only insofar and to the extent they 
relate
to refund liabilities and payments to and through APX Inc.).

FERC PROCEEDINGS

San Diego Gas & Elec. Co. v. Sellers of Energy and Ancillary Services, F.E.R.C. Docket Nos.
EL00-95-000, et al. and EL00-98-000, et al. (only insofar and to the extent this proceeding relates
to refund liabilities and payments to and through APX Inc.).

CASES FILED BY APX PENDING IN THE 9th CIRCUIT

	 	 	 	 	 	 	 
	Case No.	 	Filed	 	Orders on Review	 	APX Issue
	02-72528

	 	8/17/01 (DC)1

8/9/02 (9th)
	 	April 26, 2001, and
June 19, 2001,
orders initiating
investigation and
imposing mitigation
(must-offer
requirements, price
controls, etc.).
95 FERC ¶ 61,115
(2001), reh’g, 95
FERC ¶ 61,418
(2001)
	 	whether the scope
of FERC’s
investigation
should include APX
	 
	 	 	 	 	 	 
	03-74629

04-73423

	 	12/19/03

7/9/042
	 	October 16, 2003,
and May 12, 2004,
orders on refund
liability. 105
FERC ¶ 61,066
(2003), reh’g, 107
FERC ¶ 61,165
(2004)
	 	allocation of
refund liability as
between APX and the
APX Participants
(“joint and
several” liability
issue)
	 
	 	 	 	 	 	 
	05-73309

	 	5/23/05
	 	November 23, 2004,
and March 24, 2005,
orders describing
APX as a
“jurisdictional
Scheduling
Coordinator.” 109
FERC ¶ 61,218
(2004), reh’g, 110
FERC ¶ 61,336
(2005).
	 	jurisdictional
status of APX,
i.e., whether APX
is a
“jurisdictional
Scheduling
Coordinator”

OTHER RELEVANT 9th CIRCUIT CASES

	 	 	 	 	 	 	 	 	 
	Case No.	 	Petitioner	 	Filed	 	Orders on Review	 	APX Issue
	05-70419

	 	Allegheny
	 	1/25/05
	 	October 16, 2003,
November 23, 2004,
and May 12, 2004,
orders on refund
liability and
initially denying
Allegheny’s motion
to intervene out of
time, but later
granting rehearing
and addressing
APX/Participants
liability issues.
105 FERC 61,066
(2003), 107 FERC ¶
61,165 (2004),
reh’g, 109 FERC ¶
61,218 (2004)
	 	allocation of
refund liability as
between APX and the
APX Participants
(“joint and
several” liability
issue)
	 
	 	 	 	 	 	 	 
	04-73502

	 	MSCG
	 	7/12/04
	 	October 16, 2003,
and May 12, 2004,
orders on refund
liability. 105
FERC ¶ 61,066
(2003), reh’g, 107
FERC ¶ 61,165
(2004)
	04-73406

	 	El Paso Merchant
	 	7/8/04	 	 
	04-74703

	 	Calpine
	 	9/13/043	 	 
	04-73517

	 	Avista4
	 	7/12/04	 	 

 

			
	1	 	Transferred to 9th Circuit on May 15, 2002.
	 
	2	 	APX filed an Opening Brief in these dockets on
December 23, 2004. However, the cases were subsequently held in abeyance and
briefs were withdrawn.
	 
	3	 	Transferred from D.C. Circuit.
	 
	4	 	Avista filed its rehearing request as part of the
“APX Market Participants” group, which also included BP and Tractebel.

 

 

EXHIBIT D

Enron Settlement Reserve

Allocation of Enron Settlement Reserve Set Aside Specifically for Supporting Parties:1

	 	 	 	 	 
	Avista Energy, Inc.
	 	$	257,749	 
	Coral Power, LLC
	 	$	548,641	 
	Puget Sound Energy
	 	$	401,580	 
	Total For Supporting Parties
	 	$	1,207,970	 

Allocation of Enron Settlement Reserve Set Aside for Enron Non-Settling Parties and Supporting
Parties:

	 	 	 	 	 
	Enron Non-Settling Parties
	 	$	13,292,030	 
	Including Supporting Parties
	 	 	 	 
	 
	 	 	 	 
	Total Enron Settlement Reserve
	 	$	14,500,000	 

 

			
	1	 	Capitalized terms have the meaning set forth
in the APX Settlement And Release Of Claims Agreement.

 

 

EXHIBIT E

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

	 	 	 
	 

	 	)
	In re:

	 	)
	)

	 	Chapter 11
	Calpine Corporation, et al.,

	 	)
	)

	 	Case No. 05-60200 (BRL)
	Debtors.

	 	)          Jointly Administered
	 

	 	)

NOTICE OF WITHDRAWAL OF CLAIMS WITH PREJUDICE

NAME OF CLAIMANT:

CLAIM Nos.:

     Pursuant to Fed. R. Bankr. P. 3006, Claimant                                          hereby withdraws with
prejudice the above-described claims (the “Claims”). Claimant warrants that it has not sold,
assigned, factored or otherwise transferred any interest in the Claims. Claimant further
warrants that it will not file any further amendments to the Claims. Claimant hereby releases
each of the above-referenced Debtors and their respective successors, affiliates, assigns and
estates, from any and all claims, liabilities, debts, causes of action or other obligations
arising from, related to or in connection with the Claims.

	 	 	 
	 

	 	[COMPANY NAME]
	 
	 	 
	 

	 	[Insert Address]
	 
	 	 
	 

	 	By:
	 
	 	 
	 

	 	          (print name)
	 

	 	Its: [Insert title]
	 

	 	Date:

 

 

EXHIBIT F

Existing Global Settlements

	1 	 	Williams Settlement Agreement and Release of Claims, Docket Nos. EL00-95, et al., filed
April 27, 2004, approved, San Diego Gas & Electric Co. v. Sellers, 108 FERC ¶ 61,002 (2004),
reh’g denied 111 FERC ¶ 61,186 (2005).

	2.	 	Dynergy Settlement and Release of Claims Agreement, Docket Nos. EL00-95, et al., filed June
28, 2004, approved, San Diego Gas & Electric Co. v. Sellers, 109 FERC 161,071 (2004), reh’g
denied 111 FERC ¶ 61,186 (2005).
	 
	3.	 	Duke Settlement and Release of Claims Agreement, Docket Nos. EL00-95, et al., filed October
1, 2004, approved San Diego Gas & Electric Co. v. Sellers, 109 FERC ¶ 61,257 (2004), reh’g
denied 111 FERC ¶ 61,186 (2005).
	 
	4.	 	Mirant Settlement and Release of Claims Agreement, Docket Nos. EL00-95, et al., filed
January 31, 2005, approved, San Diego Gas & Electric Co. v. Sellers, 111 FERC ¶ 61,017
(2005), reh’g denied, 111 FERC ¶ 61,354 (2005).
	 
	5.	 	Public Service Company of Colorado Settlement and Release of Claims Agreement, Docket Nos.
EL00-95, et al., filed September 14, 2005, approved, San Diego Gas & Electric Co. v.
Sellers, 113 FERC ¶ 61,235 (2005).
	 
	6.	 	Idaho Power Company Settlement and Release of Claims Agreement, Docket Nos. EL00-95, et
al., filed February 17, 2006, approved, San Diego Gas & Electric Co. v. Sellers, 115 FERC ¶
61,230 (2006), reh’g denied 117 FERC ¶ 61,020 (2006).
	 
	7.	 	Reliant Settlement and Release of Claims Agreement, Docket Nos. EL00-95, et al., filed
November 3, 2005, approved, San Diego Gas & Electric Co. v. Sellers, 113 FERC ¶ 61,308
(2005), reh’g denied, 115 FERC 61,257 (2006).
	 
	8.	 	Eugene Water and Electric Board Settlement and Release of Claims Agreement, Docket Nos.
EL00-95, et al., filed August 6, 2006.

 

 

EXHIBIT G

Pro Forma

NOTICE OF SETTLEMENT AND RIGHTS

To: Addressee

From: APX Inc.

Subject: Settlement of Claims and Liabilities Relating to APX Transactions

Date: January 5, 2007

     You are receiving this Notice of Settlement and Rights because you are an entity, or
successor to an entity, that contracted and received services from APX Inc (formerly Automated
Power Exchange) with respect to markets overseen by the California Independent System Operator
(ISO) and/or California Power Exchange (PX) during the periods May 1, 2000 through October 1,
2000 (“Pre-Refund Period”) and/or October 2, 2000 through June 20,2001 (“Refund Period”) and/or
the ISO Amendment 51 and Good Faith Negotiations resulting in settlement adjustments dating back
to April 1, 1998.

     As you may be aware, extensive regulatory proceedings have been ongoing for several years
before the Federal Energy Regulatory Commission (“FERC”) and the United States Court of Appeals
for the Ninth Circuit to determine whether and to what extent prices charged and collected for
wholesale sales of electricity in these markets during the Pre-Refund and Refund Periods were
unlawful and subject to refund. Much of this litigation has already been resolved through a
series of complex settlements.

     The purpose of this Notice is to advise you that a comprehensive settlement agreement has
been reached between and among many of the entities receiving service from the APX Inc. during
these periods. Collectively, these entities represent over 95% of the amounts in issue (whether
measured in terms of liabilities for refunds or entitlements to refunds) among all APX
Participants receiving such APX services. A copy of that settlement agreement has been filed
today with the FERC in Docket Nos. EL00-95, et al, and is enclosed with this Notice.

     Approval of the enclosed settlement by the FERC will finally resolve all “APX-Related
Claims” as defined in the settlement. This will include any claims or liabilities that your
company may have with respect to the subject services.

     Your company’s rights are set forth in Section 9 of the settlement. Briefly summarized,
you have the right (i) to elect to become a “Sponsoring Party” to the settlement, (ii) to take
action to demonstrate to the FERC why you should be excluded from the settlement, or (iii) to
take no action, in which case you will, by default, become a “Subject Party.” It is important
for you to understand that, if you take no action to be excluded from this settlement, your
rights with respect to the matters addressed in this settlement will be determined by the terms
of this settlement.

 

 

     The parties sponsoring this settlement are requesting that the FERC establish a deadline of
January 19, 2007 for comments on this settlement. If the FERC establishes a different date for
comments, APX will so notify you. If your company determines that it wants to be excluded from
the settlement, you should, on or before the comment date, file with the FERC a petition for
leave to intervene in the EL00-95 proceedings (if you are not presently a party to those
proceedings), along with a statement and any supporting information you choose to submit as to
why your company should not be bound by the settlement.

     APX Participants electing to become Sponsoring Parties may do so at any time up until the
“Settlement Effective Date,” as described in the settlement.

     APX Inc. believes approval of this settlement will be in the best interests of all affected
APX Participants.

     The FERC’s rules governing settlement are found at 18 C.F.R. ’ 385.602, and can be accessed
via the FERC web site at http://ferc.gov. APX stands prepared to assist any APX
Participant interested in knowing more about how to participate in the FERC process. You may
contact APX Inc. at the following address:

Roger Yang

V.P., Hosted Solutions

APX, Inc.

5201 Great America Parkway

Suite 522

Santa Clara, CA 95054

Voice: 408-517-2146

E-Mail: RYang@apx.com

2

 

EXHIBIT H

APX Participants Who Need Approval

	1.	 	UC Davis Medical Center (The Regents of the University of California).

 

 

EXHIBIT I

Notice Addresses

SPONSORING PARTIES

	 	 	 	 	 	 	 
	If to APX Inc., to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	APX, Inc.
	 	 	 	John & Hengerer
	 

	 	5201 Great America Parkway
	 	 	 	1200 17th Street, N.W.
	 

	 	Suite 522
	 	 	 	Suite 600
	 

	 	Santa Clara, CA 95054
	 	 	 	Washington, D.C. 20036-3013
	 

	 	Attention: Roger Yang
	 	 	 	Attention: Douglas John
	 

	 	Facsimile: (408) 517-2985
	 	 	 	Facsimile: (202) 429-8805
	 
	 	 	 	 	 	 
	If to Allegheny Energy Supply Company, LLC, to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	Allegheny Energy Supply Company, LLC
	 	 	 	Allegheny Energy, Inc.
	 

	 	800 Cabin Hill Dr.
	 	 	 	800 Cabin Hill Dr.
	 

	 	Greensburg, PA 15601
	 	 	 	Greensburg, PA 15601
	 

	 	Attention: Vice President, Market
	 	 	 	Attention: General Counsel
	 

	 	Optimization & Dispatch
	 	 	 	Facsimile: (724) 830-5151
	 

	 	Facsimile: (724) 838-6892	 	 	 	 
	 
	 	 	 	 	 	 
	If to American Electric Power Service Corp., to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	American Electric Power
	 	 	 	Jones Day
	 

	 	155 W. Nationwide Blvd., Suite 500
	 	 	 	51 Louisiana Avenue, N.W.
	 

	 	Columbus, OH 43215
	 	 	 	Washington, D.C. 20001-2113
	 

	 	Attention: John C. Crespo, Esq.
	 	 	 	Attention: Kevin J. McIntyre
	 

	 	Facsimile: (614) 583-1603
	 	 	 	Facsimile: (202) 626-1700
	 
	 	 	 	 	 	 
	If to Aquila Merchant Services, Inc., to:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Aquila, Inc.	 	 	 	 
	 

	 	20 West Ninth Street	 	 	 	 
	 

	 	Kansas City, MO 64105-1711	 	 	 	 
	 

	 	Attention: Christopher Reitz	 	 	 	 
	 

	 	Facsimile: (816) 467-3611	 	 	 	 

 

 

	 	 	 	 	 	 	 
	If to Avista Energy, Inc., to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	Van Ness Feldman, P.C.
	 	 	 	Avista Energy, Inc.
	 

	 	1050 Thomas Jefferson Street, N.W.
	 	 	 	201 West North River Drive
	 

	 	Washington, D.C. 20007
	 	 	 	Spokane, WA 99201
	 

	 	Attention: Cheryl Feik Ryan
	 	 	 	Attention: Derrick Coder
	 

	 	Facsimile: (202) 338-2416
	 	 	 	Facsimile: (509) 688-6154
	 
	 	 	 	 	 	 
	If to BP Energy Company, to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	BP Energy Company
	 	 	 	Morgan Lewis
	 

	 	501 Westlake Park Blvd.
	 	 	 	1111 Pennsylvania Avenue, N.W.
	 

	 	Houston, TX 77253
	 	 	 	Washington, D.C. 20004
	 

	 	Attention: Gary N. Brown, Esq.
	 	 	 	Attention: Mark R. Haskell
	 

	 	Facsimile: (281) 366-7503
	 	 	 	Facsimile: (202) 739-3001
	 
	 	 	 	 	 	 
	If to Calpine, to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	Calpine Energy Services, L.P.
	 	 	 	Calpine Corporation
	 

	 	717 Texas Avenue, Suite 1000
	 	 	 	3875 Hopyard Road, Suite 345
	 

	 	Houston, TX 77002
	 	 	 	Pleasanton, CA 94588
	 

	 	Attention: General Counsel
	 	 	 	Attention: Legal Department
	 

	 	Telecopier No: (713) 830-2001
	 	 	 	Telecopier No.: (925) 479-7303
	 
	 	 	 	 	 	 
	If to Calpine Energy Services, L.P, to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	Sutherland Asbill & Brennan LLP
	 	 	 	Sutherland Asbill & Brennan LLP
	 

	 	1275 Pennsylvania Avenue, N.W.
	 	 	 	1275 Pennsylvania Avenue, N.W.
	 

	 	Washington, D.C. 20004
	 	 	 	Washington, D.C. 20004
	 

	 	Attention: Keith R. McCrea
	 	 	 	Attention: Keith R. McCrea
	 

	 	Facsimile: (202) 637-3593
	 	 	 	Facsimile: (202) 637-3593
	 
	 	 	 	 	 	 
	If to Commonwealth Energy Corporation 
(n/k/a Commerce
Energy, Inc.), to:	 	 With copies to:
	 
	 	 	 	 	 	 
	 

	 	Commerce Energy, Inc.
	 	 	 	Commerce Energy, Inc.
	 

	 	600 Anton Boulevard, Suite 2000
	 	 	 	600 Anton Boulevard, Suite 2000
	 

	 	Costa Mesa, CA 92626
	 	 	 	Costa Mesa, CA 92626
	 

	 	Attention: President
	 	 	 	Attention: Legal Department
	 

	 	Facsimile: (714) 481-6589
	 	 	 	Facsimile: (714) 481-6589
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	McDermott Will & Emery LLP
	 

	 	 	 	 	 	600 Thirteenth Street, N.W.
	 

	 	 	 	 	 	Washington, D.C. 20005-3096
	 

	 	 	 	 	 	Attention: Catherine Krupka
	 

	 	 	 	 	 	          Erin M. Murphy
	 

	 	 	 	 	 	Facsimile: (202) 756-8087

 

 

	 	 	 	 	 	 	 
	If to Constellation NewEnergy, Inc., to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	Constellation NewEnergy, Inc.
	 	 	 	Foley & Lardner, LLP
	 

	 	750 East Pratt Street
	 	 	 	Washington Harbour
	 

	 	17th Floor
	 	 	 	3000 K Street, N.W., Suite 500
	 

	 	Baltimore, MD 21202
	 	 	 	Washington, D.C. 20007
	 

	 	Attention: Jordan Karp
	 	 	 	Attention: Ronald N. Carroll
	 

	 	Facsimile: (410) 783-3009
	 	 	 	Facsimile: (202) 672-5399
	 
	 	 	 	 	 	 
	If to El Paso Marketing, LP (f/k/a El Paso 

Merchant Energy, LP), to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	El Paso Corporation
	 	 	 	McDermott Will & Emery LLP
	 

	 	1001 Louisiana, Room 3034B
	 	 	 	600 Thirteenth St., NW
	 

	 	Houston, TX 77002
	 	 	 	Washington, DC 20005
	 

	 	Attention: Robert Baker
	 	 	 	Attention: Kenneth W. Irvin
	 

	 	 	 	 	 	Facsimile: (202) 756-8087
	 

	 	 	 	 	 	Email: Kirvin@mwe.com
	 
	 	 	 	 	 	 
	If to the Enron Parties, to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	Enron Power Marketing, Inc.
	 	 	 	Enron Power Marketing, Inc.
	 

	 	Enron Energy Services, Inc.
	 	 	 	Enron Energy Services, Inc.
	 

	 	1221 Lamar, Suite 1600
	 	 	 	1221 Lamar, Suite 1600
	 

	 	Houston, TX 77010
	 	 	 	Houston, TX 77010
	 

	 	Attention: President
	 	 	 	Attention: Legal Department
	 

	 	Facsimile: (713) 646-2555
	 	 	 	Facsimile: (713) 646-3490
	 
	 	 	 	 	 	 
	If to Merrill Lynch Capital Services, Inc., to:	 	With copies to:
	 
	 	 	 	 	 	 
	 

	 	Merrill Lynch Capital Services, Inc.

4 World Financial Center

Floor 7

New York, NY 10080

Attention: Keith A. Bailey

Facsimile: (212) 449-9576

	 	 	 	Merrill Lynch Capital Services, Inc.

Office of General Counsel

Debt Markets Counsel

4 World Financial Center

New York, NY 10080

Attention: Chris Haas

          Michelle Kershaw

Facsimile: (212) 449-6993
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Merrill Lynch Capital Services, Inc.
	 

	 	 	 	 	 	Office of General Counsel
	 

	 	 	 	 	 	GMI Litigation
	 

	 	 	 	 	 	4 World Financial Center
	 

	 	 	 	 	 	New York, NY 10080
	 

	 	 	 	 	 	Attention: Jonathan Schorr
	 

	 	 	 	 	 	Facsimile: (212) 669-0799

 

 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	McDermott Will & Emery LLP
	 

	 	 	 	 	 	600 Thirteenth Street, N.W.
	 

	 	 	 	 	 	Washington, D.C. 20005-3096
	 

	 	 	 	 	 	Attention: Catherine Krupka
	 

	 	 	 	 	 	          Erin M. Murphy
	 

	 	 	 	 	 	Facsimile:
	 
	 	 	 	 	 	 
	If to Morgan Stanley Capital Group Inc., to:	 	With copies to:
	 
	 	 	 	 	 	 
	 

	 	Morgan Stanley Capital Group Inc.
	 	 	 	Morgan Stanley Capital Group Inc.
	 

	 	2000 Westchester Avenue
	 	 	 	2000 Westchester Avenue
	 

	 	Purchase, NY 10577
	 	 	 	Purchase, NY 10577
	 

	 	Attention: Deborah L. Hart
	 	 	 	Attention: Legal Department
	 

	 	Facsimile: (212) 507-8843
	 	 	 	Facsimile: (914) 225-5717
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	McDermott Will & Emery LLP
	 

	 	 	 	 	 	600 Thirteenth Street, N.W.
	 

	 	 	 	 	 	Washington, D.C. 20005-3096
	 

	 	 	 	 	 	Attention: Catherine Krupka
	 

	 	 	 	 	 	          Erin M. Murphy
	 

	 	 	 	 	 	Facsimile: (202) 756-8087
	 
	 	 	 	 	 	 
	If to Sacramento Municipal Utility District, to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	Sacramento Municipal Utility District
	 	 	 	Stinson Morrison Hecker LLP
	 

	 	General Counsel’s Office
	 	 	 	1150 18th Street, N.W.
	 

	 	6201 S Street, M.S. B406
	 	 	 	Suite 800
	 

	 	Sacramento, CA 95817
	 	 	 	Washington, D.C. 20036
	 

	 	Attention: Laura Lewis
	 	 	 	Attention: Glen Ortman
	 

	 	Facsimile: (916) 732-6581
	 	 	 	Facsimile: (202) 785-9163
	 
	 	 	 	 	 	 
	If to Salt River Project Agricultural Improvement and 

Power District, to:	 	 With a copy to:
	 
	 	 	 	 	 	 
	 

	 	Salt River Project Agricultural
	 	 	 	Salt River Project Agricultural
	 

	 	Improvement and Power District
	 	 	 	Improvement and Power District
	 

	 	1521 N. Project Drive
	 	 	 	1521 N. Project Drive
	 

	 	Mail Station ISB336
	 	 	 	Mail Station PAB207
	 

	 	Tempe, AZ 85281
	 	 	 	Tempe, AZ 85281
	 

	 	Attention: Robert S. Nichols,
	 	 	 	Attention: Jessica J. Youle,
	 

	 	          Assistant Treasurer
	 	 	 	          Legal Department
	 

	 	Facsimile: (602) 683-0993
	 	 	 	Facsimile: (602) 236-5370

 

 

	 	 	 	 	 	 	 
	If to Sempra Energy Solutions LLC, to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	Sempra Energy Solutions LLC
	 	 	 	Sempra Commodities
	 

	 	101 Ash Street
	 	 	 	58 Commerce Road
	 

	 	San Diego, CA 92101
	 	 	 	Stamford, CT 06902
	 

	 	Attention: William Goddard
	 	 	 	Attention: Daniel M. Hecht, Legal
	 

	 	 	 	 	 	Department
	 
	 	 	 	 	 	 
	If to Sierra Pacific Industries, to:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Sierra Pacific Industries	 	 	 	 
	 

	 	19794 Riverside Avenue	 	 	 	 
	 

	 	Anderson, California 96007	 	 	 	 
	 

	 	Attention: Bob Ellery	 	 	 	 
	 
	 	 	 	 	 	 
	If to Tractebel Energy Marketing, Inc. (n/k/a Suez 

Energy Marketing NA, Inc.), to:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Suez Energy Marketing NA, Inc.	 	 	 	 
	 

	 	1990 Post Oak Blvd.	 	 	 	 
	 

	 	Suite 1900	 	 	 	 
	 

	 	Houston, TX 77056	 	 	 	 
	 

	 	Attention: Ray Cunningham, Esq.	 	 	 	 
	 

	 	Facsimile: (713) 636-1980	 	 	 	 
	 
	 	 	 	 	 	 
	If to TransAlta Energy Marketing (US) Inc., to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	TransAlta Energy Marketing (US) Inc.
	 	 	 	Vinson & Elkins, LLP
	 

	 	110 - 12th Avenue, S.W.
	 	 	 	The Willard Office Building
	 

	 	Calgary, Alberta
	 	 	 	1455 Pennsylvania Avenue, N.W.
	 

	 	T2P 2MI
	 	 	 	Washington, D.C. 20004-1008
	 

	 	Attention: Sterling Koch
	 	 	 	Attention: Stephen Angle
	 

	 	Facsimile: (403) 267-2575
	 	 	 	Facsimile: (202) 879-8965
	 
	 	 	 	 	 	 
	If to UC Davis Medical Center (The Regents of the
University of California), to:	 	 	 	 
	 

	 	The Regents of the University of California	 	 	 	 
	 

	 	(UC Davis Medical Center)	 	 	 	 
	 

	 	1111 Franklin Street	 	 	 	 
	 

	 	8th Floor	 	 	 	 
	 

	 	Oakland, CA 94607-5200	 	 	 	 
	 

	 	Attention: Eric K. Behrens, Esq.	 	 	 	 
	 

	 	Facsimile: (510) 987-9757	 	 	 	 

 

 

SUPPORTING PARTIES

	 	 	 	 	 	 	 
	If to Coral Power, L.L.C., to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	Shell Trading and Power Company
	 	 	 	Foley & Lardner, LLP
	 

	 	909 Fannin Street, Plaza Level 1
	 	 	 	Washington Harbour
	 

	 	Houston, TX 77010
	 	 	 	3000 K Street, N.W., Suite 500
	 

	 	Attention: Robert H. Reilley
	 	 	 	Washington, D.C. 20007
	 

	 	Facsimile: (713) 265-5632
	 	 	 	Attention: Ronald N. Carroll
	 

	 	 	 	 	 	Facsimile: (202) 672-5399
	 
	 	 	 	 	 	 
	If to Puget Sound Energy, Inc., to:	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	Van Ness Feldman, P.C.
	 	 	 	Puget Sound Energy
	 

	 	1050 Thomas Jefferson Street, N.W.
	 	 	 	PSE-12
	 

	 	Washington, D.C. 20007
	 	 	 	P.O. Box 97034
	 

	 	Attention: Gary Bachman
	 	 	 	Bellevue, WA 98009-9734
	 

	 	Facsimile: (202) 338-2416
	 	 	 	Attention: Jennifer O’Connor
	 

	 	 	 	 	 	Facsimile: (425) 462-3300

 

 

SUBJECT PARTIES

If to Abacus Energy Services, LLC, to:*

Abacus Energy Services, LLC

438 West Cypress St.

Glendale, CA 91204

Attention: Cinta Putra

Telephone: (818) 409-0510

If to ACN Power, Inc., to:

ACN

13620 Reese Blvd. E.

Suite 400, Bldg. XII

Huntersville, NC 28078

Attention: Colleen R. Jones

Telephone: (704) 370-4967

If to Ancor L.L.C., to:*

Ancor L.L.C.

12839 Daisy Court

Yucaipa, CA 92399

Attention: Andrew Wardenski

Telephone: (909) 795-7902

If to BBOSS, LLC, to:*

BBOSS

P.O. Box 226818

Los Angeles, CA 90022

Attention: Jim Baca

Telephone: (562) 693-6934

If to Big Creek Water Works, Ltd., to:*

Big Creek Water Works, Ltd.

224 Kingsbury Grade

Stateline, NV 89449

Attention: Brian Ring

Telephone: (775) 588-7300

 

 

If to Cinergy Services, Inc., to:

Cinergy Services, Inc.

139 East Fourth Street, EF 401

Cincinnati, OH 45201

Attention: Kevin Carter

Telephone: (513) 419-5120

If to City of Sunnyvale Power Gen.
Facility, to:

City of Sunnyvale Power Gen. Facility

456 West Olive Ave.

Sunnyvale, CA 94088

Attention: Mark Bowers

Telephone: (408) 730-7421

If to Clean Earth Energy Inc., to:*

Clean Earth Energy Inc.

200 West 17th Street, Suite 80

Cheyenne, WY 82001

Attention: Ronald Radmer

Telephone: (307) 638-7188

If to CSW Power Marketing, to:*

CSW Power Marketing

2 West 2nd Street

Tulsa, OK 74103

Attention: Woody Lally

Telephone: (918) 594-4026

If to DukeSolutions, Inc., to:*

DukeSolutions, Inc.

526 S. Church Street

Charlotte, NC 28202-1904

Attention: Legal Department

Telephone: (704) 594-6200

 

 

If to Eagle Power LLC, to:*

Eagle Power LLC

2221 Ocean Ave., Suite 307

Santa Monica, CA 90405

Attention: Robert Mariani

Telephone: (310) 366-5240

If to East Bay Municipal Utility District, to:

East Bay Municipal Utility District

375 11th Street

Oakland, CA 94607-4240

Attention: Saji Pierce

Telephone: (510) 287-2013

If to Eastern Pacific Energy, to:*

Eastern Pacific Energy

21913 Saturn Street, Suite G

Brea, CA 92821

Attention: Martin Sielen

If to Energy 2001 Inc., to:

Disbursing Agent for Energy 2001 Inc.

13542 W. Spring Meadow Drive

Sun City West, AZ 85375-3709

Attention: David Fitzpatrick

Telephone: (623) 388-4614

If to Energy-Koch Trading, Inc., to:

Energy-Koch Trading, Inc.

P.O. Box 3327

Houston, TX 77253-3327

Attention: Melissa Beckett

Telephone: (713) 544-5618

If to FPL Energy Power Marketing,
Inc., to:

FPL Energy Power Marketing, Inc.

700 Universe Blvd.

Juno Beach, FL 33408

Attention: West Power Desk

Telephone: (561) 691-7171

 

 

If to Friendly Power Company, LLC, to:*

Friendly Power Company, LLC

4275 Executive Square, Suite 250

La Jolla, CA 92037

Attention: Scott Levine

Telephone: (888) 576-9375

If to Gas Recovery System, Inc., to:

Gas Recovery System, Inc.

5717 Brisa Street

Livermore, CA 94550

Attention: Alan J. Purves/Tom Halter

Telephone: (925) 606-3700

If to Go Green, to:

Go Green

167 Alice Ave.

Campbell, CA 95008

Attention: Rick Kohl

Telephone: (408) 370-2525

If to Imperial Valley Resource
Recovery Co., to:*

Imperial Valley Resource Recovery Co.

3505 Hwy 111

Imperial, CA 92251

Attention: Rolf Peterson

Telephone: (760) 344-8943

If to Keystone Energy Services, to:*

Keystone Energy Services

9200 Sunset Blvd., Suite 1020

Los Angeles, CA 90069

Attention: L. Michael Caldewell

Telephone: (310) 275-9008

 

 

If to Los Alamos Energy, LLC, to:*

Los Alamos Energy, LLC

P.O. Box 676

Los Alamos, CA 93440

Attention: Hannes Faul

Telephone: (805) 377-2004

If to Midway Sunset Cogeneration
Company, to:

Midway Sunset Cogeneration Company

3466 W. Crocker Springs Road

Fellows, CA 93224

Attention: Janie Alvidres

Telephone: (661) 768-3017

If to NRG Power Marketing Inc., to:

NRG Power Marketing Inc.

211 Carnegie Center

Princeton, NJ 08540

Attention: Legal Department

Telephone: (609) 524-4500

If to Powercom, to:*

Powercom

1055 West 7th Street, Suite 100

Los Angeles, CA 90017

Attention: Christopher Leisgang

Telephone: (213) 622-9226

If to PowerSource Corp., to:

PowerSource Corp.

8306 Wilshire Blvd., #301

Beverly Hills, CA 90211

Attention: Roman Gordon

Telephone: (310) 854-4343

 

 

EXHIBIT J

OMITTED

CONTAINS MATERIAL

SUBJECT TO

PROTECTIVE ORDER

     The amount set forth on Exhibit J for Commerce Energy, Inc. is $ 95,378.exv10w9

 

Exhibit 10.9

THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT AND WAIVER

     THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT AND WAIVER (this “Amendment”),
dated March 15, 2007, is entered into among COMMERCE ENERGY, INC., a California corporation
(“Borrower”), COMMERCE ENERGY GROUP, INC., a Delaware corporation (“Parent”),
WACHOVIA CAPITAL FINANCE CORPORATION (WESTERN), a California corporation, as Agent and Lender
(“Agent”), and THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation, as co-Lender
(“Co-Lender”).

RECITALS

     A. Borrower, Parent and Agent have previously entered into that certain Loan and Security
Agreement dated June 8, 2006 (the “Loan Agreement”) as amended by the First Amendment to
Loan and Security Agreement and Waiver dated September 20, 2006 (the “First Amendment”) and
the Second Amendment to Loan and Security Agreement and Waiver dated October 26, 2006 (the
“Second Amendment”), pursuant to which Agent and Co-Lender, as assignee of a portion of
Agent’s original rights and obligations under the Loan Agreement, have made certain loans and
financial accommodations available to Borrower. Terms used herein without definition shall have
the meanings ascribed to them in the Loan Agreement.

     B. The following Events of Default have occurred and are continuing under the Loan Agreement:
(i) Parent and its Subsidiaries failed to maintain a Fixed Charge Coverage Ratio of not less than
1.1 to one for the period of nine (9) consecutive months ended November 30, 2006, as required by
Section 9.17 of the Loan Agreement (as amended by the Second Amendment); and (ii) during the period
from January 25, 2007 through January 31, 2007 (inclusive), Borrowers failed to maintain Excess
Availability of not less than $5,000,000 as required by Section 9.17.1 of the Loan Agreement (as
added by the Second Amendment). The foregoing Events of Default will collectively be referred to
herein as the “Known Existing Defaults”.

     C. Borrower has requested that Agent and Co-Lender waive the Known Existing Defaults and amend
the Loan Agreement on the terms and conditions set forth herein.

     D. Borrower and Parent are entering into this Amendment with the understanding and agreement
that, except as specifically provided herein, none of Agent’s and Co-Lender’s rights or remedies as
set forth in the Loan Agreement is being waived or modified by the terms of this Amendment.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

 

 

     1. Amendment to Loan Agreement. Section 9.17.1 of the Loan Agreement (as added by the
Second Amendment) is hereby amended and restated to read in its entirety as follows:

“9.17.1 Excess Availability. Borrowers shall, at all times during each of
the periods set forth below, maintain Excess Availability of not less than the
amount set forth opposite such period:

	 	 	 
	Periods	 	Amounts
	2/1/07 through 7/31/07
	 	$5,000,000
	On and after 8/1/07
	 	$10,000,000”

     2. Consents.

          (a) Sale/Leaseback Transaction. Borrower now desires to enter into a sale/leaseback
transaction for certain Equipment with a value of approximately $1,000,000 (the
“Sale/Leaseback”), which would be prohibited by Section 9.7(b) of the Loan Agreement (the
Borrower having already sold assets during the current fiscal year with a value of approximately
$900,000, which when added to the value of the Equipment in the Sale/Leaseback, would exceed the
maximum aggregate sum permitted in clause (vi) of Section 9.7(b) of the Loan Agreement). Agent and
Co-Lender hereby consent to the Sale/Leaseback and agree that the Sale/Leaseback will not
constitute a Default or Event of Default under the Loan Agreement.

          (b) Bond Indemnity. Parent now desires to enter into an Agreement of Indemnity in
favor of International Fidelity Insurance Company (“Surety”), in the form previously
supplied to Agent, with respect to a certain bond to be issued by Surety in the amount of $300,000
(the “Indemnity Agreement”) and to grant Surety a security interest in the personal
property and fixtures of Parent as provided in the Indemnity Agreement, which would be prohibited
by Sections 9.8 and 9.9 of the Loan Agreement. Agent and Co-Lender hereby consent to the Indemnity
Agreement (including such security interest) and agree that the Indemnity Agreement (including such
security interest) will not constitute a Default or Event of Default under the Loan Agreement,
provided that Surety duly executes and delivers a subordination agreement in form and
substance satisfactory to Agent with respect to such security interest.

          (c) Limitations on Consents. The foregoing consents shall apply only to the
Sale/Leaseback and the Indemnity Agreement as specifically described above, and in all other
respects, Agent and Co-Lender reserve and preserve their rights to require the strict compliance by
Borrower and Parent with Sections 9.7, 9.8, and 9.9 of the Loan Agreement and all of the other
terms and provisions of the Financing Agreements.

     3. Waiver of Known Existing Defaults. Each of Agent and Co-Lender hereby waives the
Known Existing Defaults and waives enforcement of its rights against Borrower and Parent arising
from the Known Existing Defaults; provided, however, nothing herein shall be deemed
a waiver with respect to any failure of Borrower or Parent to comply fully with Section 9.17 of the
Loan Agreement as to periods ending after November 30, 2007 and Section 9.17.1 of the Loan
Agreement as modified by this Amendment. Subject to this Amendment becoming

2

 

effective as set forth in Section 4 below, this waiver shall be deemed effective, as to each
Known Existing Default, on the date of the first occurrence of such Known Existing Default. This
waiver shall be effective only for the specific defaults comprising the Known Existing Defaults,
and in no event shall this waiver be deemed to be a waiver of enforcement of Agent’s or Co-Lender’s
rights with respect to any other Defaults or Events of Default now existing or hereafter arising.
Nothing contained in this Amendment nor any communications between Borrower or Parent and Agent or
Co-Lender shall be a waiver of any rights or remedies Agent or Co-Lender has or may have against
Borrower or Parent, except as specifically provided herein. Except as specifically provided
herein, Agent and Co-Lender hereby reserve and preserve all of their rights and remedies against
Borrower and Parent under the Loan Agreement and the other Financing Agreements.

     4. Effectiveness of this Amendment. The effectiveness of this Amendment, and the
waivers provided herein, are conditioned upon the occurrence of each of the following:

          (a) Amendment. Agent shall have received this Amendment, fully executed in a
sufficient number of counterparts for distribution to all parties.

          (b) Amendment Fee. Agent shall have received an amendment fee in the amount of
Thirty-Five Thousand Dollars ($35,000) for the benefit of Agent and Co-Lender based upon their
respective Pro Rata Shares, which fee is fully earned as of and due and payable on the date hereof.

          (c) Representations and Warranties. The representations and warranties set forth
herein and in the Loan Agreement shall be true and correct.

          (d) Other Required Documentation. All other documents and legal matters in connection
with the transactions contemplated by this Amendment shall have been delivered or executed or
recorded and shall be in form and substance satisfactory to Agent.

     5. Representations and Warranties. Each of Borrower and Parent represents and
warrants as follows:

          (a) Authority. Such party has the requisite corporate power and authority to execute
and deliver this Amendment, and to perform its obligations hereunder and under the Financing
Agreements (as amended or modified hereby) to which it is a party. The execution, delivery and
performance by such party of this Amendment have been duly approved by all necessary corporate
action and no other corporate proceedings are necessary to consummate such transactions.

          (b) Enforceability. This Amendment has been duly executed and delivered such party.
This Amendment and each Financing Agreement (as amended or modified hereby) is the legal, valid and
binding obligation of such party, enforceable against such party in accordance with its terms, and
is in full force and effect.

          (c) Representations and Warranties. The representations and warranties contained in
each Financing Agreement (other than any such representations or warranties that,

3

 

 by their terms, are specifically made as of a date other than the date hereof) are correct on
and as of the date hereof as though made on and as of the date hereof.

          (d) Due Execution. The execution, delivery and performance of this Amendment are
within the power of such party, have been duly authorized by all necessary corporate action, have
received all necessary governmental approval, if any, and do not contravene any law or any material
contractual restrictions binding on such party.

          (e) No Default. After giving effect to the waivers contained in this Amendment, no
event has occurred and is continuing that constitutes a Default or Event of Default.

     6. Governing Law. The validity, interpretation and enforcement of this Amendment and
any dispute arising out of the relationship between the parties hereto, whether in contract, tort,
equity or otherwise, shall be governed by the internal laws of the State of California but
excluding any principles of conflicts of law or other rule of law that would cause the application
of the law of any jurisdiction other than the laws of the State of California.

     7. Counterparts. This Amendment may be executed in any number of counterparts, each
of which shall be an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Amendment by telefacsimile or other
electronic method of transmission shall have the same force and effect as the delivery of an
original executed counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile or other electronic method of transmission shall also deliver an
original executed counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of this Amendment.

     8. Reference to and Effect on the Financing Agreements.

          (a) Upon and after the effectiveness of this Amendment, each reference in the Loan Agreement
to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Loan Agreement,
and each reference in the other Financing Agreements to “the Loan Agreement”, “thereof” or words of
like import referring to the Loan Agreement, shall mean and be a reference to the Loan Agreement as
modified and amended hereby.

          (b) Except as specifically amended above, the Loan Agreement and all other Financing
Agreements, are and shall continue to be in full force and effect and are hereby in all respects
ratified and confirmed and shall constitute the legal, valid, binding and enforceable obligations
of Borrower or Parent (as applicable) to Agent and Co-Lender.

          (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of Agent or Co-Lender under any
of the Financing Agreements, nor constitute a waiver of any provision of any of the Financing
Agreements.

          (d) To the extent that any terms and conditions in any of the Financing Agreements shall
contradict or be in conflict with any terms or conditions of the Loan Agreement, after giving
effect to this Amendment, such terms and conditions are hereby deemed

4

 

 modified or amended accordingly to reflect the terms and conditions of the Loan Agreement as
modified or amended hereby.

     9. Estoppel. To induce Agent and Co-Lender to enter into this Amendment and to
continue to make advances to Borrower under the Loan Agreement, Borrower hereby acknowledges and
agrees that, as of the date hereof, there exists no right of offset, defense, counterclaim or
objection in favor of Borrower as against Agent or Co-Lender with respect to the Obligations.

     10. Integration. This Amendment, together with the other Financing Agreements
(including the First Amendment), incorporates all negotiations of the parties hereto with respect
to the subject matter hereof and is the final expression and agreement of the parties hereto with
respect to the subject matter hereof.

     11. Severability. In case any provision in this Amendment shall be invalid, illegal
or unenforceable, such provision shall be severable from the remainder of this Amendment and the
validity, legality and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

     12. Submission of Amendment. The submission of this Amendment to the parties or their
agents or attorneys for review or signature does not constitute a commitment by Agent or Co-Lender
to waive any of their rights and remedies under the Financing Agreements, and this Amendment shall
have no binding force or effect until all of the conditions to the effectiveness of this Amendment
have been satisfied as set forth herein.

5

 

     IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above
written.

	 	 	 	 	 
	 	COMMERCE ENERGY, INC.,

a California corporation

 	 
	 	By:  	/s/
LAWRENCE CLAYTON, JR.	 
	 	Name:  	Lawrence Clayton, Jr.	 
	 	Title:  	Chief
Financial Officer	 
	 

	 	 	 	 	 
	 	COMMERCE ENERGY GROUP, INC.,

a Delaware corporation

 	 
	 	By:  	/s/
LAWRENCE CLAYTON, JR.	 
	 	Name:  	Lawrence Clayton, Jr.	 
	 	Title:  	Senior
Vice President, Chief Financial Officer	 
	 

	 	 	 	 	 
	 	WACHOVIA CAPITAL FINANCE 
CORPORATION (WESTERN),

a California corporation, as Agent and Lender

 	 
	 	By:  	/s/
CARLOS VALLES	 
	 	Name:  	Carlos Valles	 
	 	Title:  	Director
	 

	 	 	 	 	 
	 	THE CIT GROUP/BUSINESS CREDIT, INC.,

a New York corporation, as Lender

 	 
	 	By:  	/s/
STEVEN SCHUIT	 
	 	Name:  	Steven Schuit	 
	 	Title:  	Vice
President	 
	 

6

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