Document:

Exhibit 10.18

 

SHARE REPURCHASE AGREEMENT

 

THIS SHARE REPURCHASE
AGREEMENT (this “Agreement”) is made as of the 18th day of October,
2005, by and between Chris Heidelberger (the “Seller”), and Click Commerce, Inc.,
a Delaware corporation (the “Company”).

 

WHEREAS, the Company
issued certain shares of its common stock pursuant to an Asset Purchase
Agreement, dated February 2, 2005, by and among ChannelWave, Inc., a
Delaware corporation, CWV Acquisition Corp., a Delaware corporation and a
direct, wholly-owned subsidiary of the Company, and the Company (the “Asset
Purchase Agreement”);

 

WHEREAS, the Seller owns
certain shares of the Company’s common stock issued in connection with the
Asset Purchase Agreement;

 

WHEREAS, the Company
wishes to purchase from Seller, and Seller wishes to sell to the Company, a
total of 19,250 shares (the “Repurchased Shares”) of the Company’s
common stock issued in connection with the Asset Purchase Agreement, upon the
terms and subject to the conditions contained herein;

 

NOW, THEREFORE, in
consideration of the foregoing and the mutual representations, warranties,
covenants and agreements herein contained, the Seller and the Company agree as
follows:

 

1.             Repurchase.  Subject to the terms and conditions of this
Agreement, simultaneously with the execution of this Agreement, the Company
hereby purchases, acquires and takes assignment and delivery from the Seller
of, and the Seller hereby sells, assigns, transfers and delivers to the
Company, all of the Seller’s right, title and interest in and to the
Repurchased Shares (the “Repurchase”).

 

2.             Total
Consideration.  In consideration for
the Repurchased Shares, the Company shall pay to the Seller $15.50 per share of
the Company’s common stock or $298,375.00 in the aggregate (the “Total Consideration”)
for all of the Repurchased Shares.  In
connection with the Repurchase and as soon as reasonably practicable following
the execution of this Agreement, (i) the Seller shall transfer to the
Company through physical delivery or customary DTC electronic transfer all of
the Repurchased Shares, which shall be duly endorsed to the Company, and (ii) the
Company shall pay to the Seller the Total Consideration by wire transfer of
immediately available funds to an account designated by the Seller prior to the
Repurchase.

 

3.             Seller
Representations and Warranties.  The
Seller hereby represents and warrants to the Company as follows:

 

(a)           Legal and Beneficial Owners; Transfer.  As of the date of the Repurchase, the Seller
is the legal, and sole record and beneficial, owner of the Repurchased Shares,
and such Repurchased Shares are free of all adverse claims, rights, options to
acquire, charges, restrictions, commitments, liens or encumbrances, and the
transfer of such Repurchased Shares to the Company pursuant to the Repurchase
will transfer to the Company good and valid title to such Repurchased Shares,
free of all adverse claims, rights, options to acquire, charges, restrictions,
commitments, liens or encumbrances.  The
Seller is not a party to, nor is the Seller

 

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aware of, any voting agreement,
voting trust or similar agreement or arrangement relating to the Repurchased
Shares.  The Seller has not sold,
pledged, hypothecated or otherwise transferred any of the Repurchased Shares or
any interest therein to any other person, and there are no outstanding options,
rights, calls, commitments of any kind relating to, or any presently effective
agreements or understandings with respect to, any of the Repurchased Shares
that would affect or prevent the sale of the Repurchased Shares to the Company
as contemplated by this Agreement;

 

(b)           Due Execution.  This Agreement has been duly executed and
delivered by the Seller and is a legal, valid and binding instrument enforceable
against the Seller in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency and other similar laws relating to the
enforcement of creditors’ rights generally and to general principles of equity;

 

(c)           No Conflict.  Neither the execution and delivery of this
Agreement nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof, will conflict with or result in a breach
of, or constitute a default (with notice or passage of time or both) under any
provision of any law, governmental rule, regulation, judgment, decree or order
binding on the Seller or the charter, bylaws, or trust documents of the Seller
or any provision of any mortgage, indenture, contract, agreement or other
instrument to which the Seller is a party or by which he or the Repurchased
Shares are bound;

 

(d)           Review of
Agreement.  The Seller has carefully
read each provision of this Agreement and the Asset Purchase Agreement and, to
the extent he desired, has discussed this Agreement and the Asset Purchase
Agreement with his legal counsel and financial advisors.  Having read this Agreement, the Seller does
hereby consent to this Agreement for all purposes under applicable law;

 

(e)           Review of
Information.  The Seller has received
and carefully reviewed the information provided by the Company in connection
with its current business operations and plans, including the confidential
information provided pursuant to the Confidentiality Agreement between the
Seller and the Company dated October 13, 2005 through both telephone
discussions with the Company’s senior management and in the confidential
Information Memorandum, dated October 18, 2005, from John Tuhey of the
Company (collectively, the “Information”). 
The Seller also acknowledges that the Company also files annual,
quarterly and current reports, proxy statements and other information with the
Securities and Exchange Commission (the “Commission”), and that the Seller has
been informed that these filings are available on the Internet at the
Commission’s website at www.sec.gov and at the Company’s website at
www.clickcommerce.com.  The Seller has,
to the extent he desired, had an opportunity to review such filings, has had an
opportunity to discuss such filings and the Company common stock with the
Company and his legal counsel and financial advisors and has conducted such
investigation of the Company as he has deemed appropriate and has had the
questions he has asked of the Company answered to his satisfaction;

 

(f)            Economic Risk.  The Seller has been able to and,
notwithstanding the effect of the transactions contemplated by this Agreement,
can continue to bear the economic risk of his investment in shares of the
Company’s common stock and has such knowledge and

 

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experience in financial or
business matters that he is capable of evaluating the merits and risks of such
investment;

 

(g)           Sophistication.  The Seller (i) is a sophisticated person
with respect to the transactions contemplated by this Agreement and the Asset
Purchase Agreement, (ii) has made an informed decision regarding his entry
into this Agreement and (iii) has independently and without reliance upon
the Company or any other party related to the Company, and based on such
information as the Seller has deemed appropriate, made his own analysis and
decision to enter into this Agreement;

 

(h)           Consultation with
Counsel.  The Seller (i) fully
understands his rights to discuss all aspects of this Agreement with his
private attorneys, (ii) has availed itself of this right to the extent he
desired, (iii) has carefully read and fully understands all of the terms
of this Agreement, (iv) has not transferred or assigned any rights or
claims that he is hereby purporting to release herein, (v) is voluntarily,
and with proper and full authority, entering into this Agreement, and (vi) has
considered all of his rights and claims carefully before executing this
Agreement;

 

(i)            Questionnaire.  The Seller has fully and completely set forth
the relevant information required in the Questionnaire attached hereto as Exhibit A,
and all information provided by the Seller therein is true, correct and
complete; and

 

(j)            Brokers.  The Seller has not incurred, nor will he
incur, directly or indirectly, any liability for brokerage or finders’ fees or
agents’ commissions or investment bankers’ fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.

 

4.             Company Representations and Warranties.  The Company hereby represents and warrants to
the Seller as follows:

 

(a)           Organization and Good Standing.  The Company is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware;

 

(b)           Power and
Authority.  The Company has full
power, authority and right to execute, deliver and perform this Agreement and
has taken all necessary action to authorize the execution, delivery and
performance by him of this Agreement;

 

(c)           Due Execution.  This Agreement has been duly executed and
delivered by the Company, and is a legal, valid and binding instrument
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency and other similar laws
relating to the enforcement of creditors’ rights generally and to general
principles of equity; and

 

(d)           No Conflict.  Neither the execution and delivery of this
Agreement nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof, will conflict with or result in a breach
of, or constitute a default (with notice or passage of time or both) under any
provision of any law, governmental rule, regulation, judgment, decree or order
binding on the Company or the charter or bylaws of the Company or any provision
of any

 

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mortgage, indenture, contract,
agreement or other instrument to which the Company is a party or by which he is
bound.

 

5.             Additional
Agreements.  The Seller hereby acknowledges,
agrees and confirms that:

 

(a)           Waiver.  The Seller hereby waives any right that the
undersigned may have under the Asset Purchase Agreement (including Section 4.14
thereof) related to the issuance, registration or resale of any and all Company
common stock owned by the undersigned, including without limitation, the
Repurchased Shares;

 

(b)           Arm’s Length
Negotiations.  This Agreement and the
terms and conditions hereof are the result of arm’s length negotiations with
the Company and the per share price reflected in the Total Consideration may be
more, less or equal to the prevailing market price of the Company common stock
at the time of the Repurchase.  The
Seller acknowledges that the Company has made no representations or warranties
with respect to this Agreement or the transactions contemplated hereby except
as expressly set forth in Section 4 of this Agreement;

 

(c)           Information.  The Seller hereby acknowledges that he has
been afforded (i) the opportunity to ask such questions as the Seller has
deemed necessary of, and to receive answers from, representatives of the
Company concerning the terms and conditions of this Agreement and the
Information and (ii) access to information about the Company and its
financial condition, results of operations, business, properties, management
and prospects sufficient to enable he to evaluate the transactions contemplated
by this Agreement.  The Seller
acknowledges that he has received and reviewed a copy of the Asset Purchase
Agreement and has received and reviewed such other documents (including the
Information and the Information Memorandum) as he has deemed necessary; and

 

(d)           Release.  By the execution and delivery of this
Agreement and acceptance of the amounts payable in respect of the Repurchased
Shares under this Agreement, the Seller (the “Releasor”), on behalf of himself/
and his heirs, legal representatives, successors and assigns, hereby releases,
acquits and forever discharges, to the fullest extent permitted by law, the
Company, any subsidiary or parent company of the Company and any successor to
the Company (now or hereafter existing) and each of their respective past,
present or future officers, managers, directors, shareholders, partners,
members, Affiliates, employees, counsel and agents (each a “Releasee”) of, from
and against any and all actions, causes of action, claims, demands, damages,
judgments, debts, dues and suits of every kind, nature and description
whatsoever, including with respect to the Repurchased Shares (collectively “Claims”),
which such Releasor or its heirs, legal representatives, successors or assigns
ever had, now has or may have against any Releasee on or by reason of any
matter, cause or thing whatsoever.  The
Releasor agrees not to, and agrees to cause his respective Affiliates and
subsidiaries not to, assert any Claim, directly or indirectly, against the
Releasees.  Notwithstanding the
foregoing, each Releasor and his respective heirs, legal representatives,
successors and assigns retain, and do not release, their rights and interests
under the terms of this Agreement or under the terms of the Asset Purchase
Agreement solely to the extent of the Releasor’s right to receive that portion
of any amounts that may hereafter become payable out of the escrow established
thereunder (other than with respect to any Claims related to the issuance,
registration or repurchase of the Repurchased Shares).

 

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6.             Applicable Law.  This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Illinois without giving effect to the principles of conflicts of law thereof.

 

7.             Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

8.             Successors and Assigns.  This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors,
assigns, and affiliates, but shall not be assignable by either party hereto
without the prior written consent of the other party hereto.

 

9.             Waiver. 
No party may waive any of the terms or conditions of this Agreement
except by an instrument in writing duly signed by each of the parties.

 

10.           Stock Transfer
Taxes.  Any stock transfer taxes with
respect to the surrender of the Repurchased Shares will be paid by the Seller
and the amount to be so paid by the Seller will be deducted from any funds
distributable by the Company to the Seller under this Agreement.  If, however, payment for the Repurchased
Shares is to be made to any person other than the Seller, the amount of any
stock transfer taxes (whether imposed on the Seller or such other person)
payable on account of the transfer to such person will be deducted from the
payment if satisfactory evidence of the payment of such taxes, or exemption
therefrom, is not submitted.

 

11.           Backup Federal
Income Tax Withholding and Substitute Form W-9.  Under the “backup withholding” provisions of
U.S. Federal tax law, the Company may be required to withhold a portion of the
consideration for the Repurchased Shares. 
To prevent backup withholding, the Seller should complete and sign the
Substitute Form W-9 below, and either: (a) provide the Seller’s
correct taxpayer identification number (“TIN”) and certify, under penalties of
perjury, that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the Seller has not been notified by the Internal
Revenue Service (“IRS”) that the Seller is subject to backup withholding as a
result of failure to report all interest or dividends, or (ii) the IRS has
notified the Seller that the Seller is no longer subject to backup withholding;
or (b) provide an adequate basis for exemption.  If “Applied For” is written in Part I of
the substitute Form W-9, the Company will retain the required portion of
any payment during the sixty (60) day period following the date of the
Substitute Form W-9.  If the Seller
furnishes the Representative with his or her TIN within sixty (60) days of the
date of the Substitute W-9, the Company will remit such amount retained during
the sixty (60) day period to the Seller, and no further amounts will be
retained or withheld from any payment made to the Seller thereafter.  If, however, the Seller has not provided the
Company with his TIN within such sixty (60) day period, the Company will remit
such previously retained amounts to the IRS as backup withholding and will
withhold the required portion of any payment in respect of the Repurchased Shares
made to the Seller thereafter until the Seller furnishes a TIN to the
Company.  In general, an individual’s TIN
is the individual’s Social Security Number. 
If the Company is not provided with the correct TIN or an adequate basis
for exemption, the Seller may be subject to a $50 penalty imposed by the IRS
and backup withholding.

 

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Failure to complete the Substitute Form W-9 will not, by itself,
cause the Repurchased Shares to be deemed invalidly delivered, but may require
the Company to withhold 28% of the amount of any payments in respect of such
Repurchased Shares made pursuant to this Agreement.  Backup withholding is not an additional
federal income tax.  Rather, the federal
income tax liability of a person subject to backup withholding will be reduced
by the amount of tax withheld.  If
withholding results in an overpayment of taxes, a refund may be obtained from
the IRS.

 

12.           Federal and State Income Tax
Withholding.  After written notice to
the Seller, the Company may withhold federal and state income tax required to
be withheld under applicable law from the amounts payable under this Agreement.

 

13.           Entire Agreement; Amendment.  This Agreement constitutes the entire
agreement, and supersedes all other prior agreements and understandings, both
written and oral, among the parties hereto and their affiliates with respect to
the matters set forth in this Agreement. 
This Agreement may not be amended except by an instrument in writing
signed by the Company and the Seller to which the amendment relates.

 

14.           Confidentiality/Public
Announcements.  The Seller shall make
no public announcements or otherwise communicate with any news media or any
other person (other than the other party), with respect to this Agreement or
any of the transactions contemplated hereby, without prior written consent of
the Company.  The Company shall make such
public announcements or filings with the Commission as it believes are required
by applicable law, the Commission or the Nasdaq National Market or deemed by it
to be necessary or appropriate under the circumstances.  Nothing contained herein shall prevent (a) the
Company from promptly making all filings with governmental authorities or
disclosures with the Nasdaq National Market, as may, in its judgment, be
required in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby or (b) either party
from disclosing the terms of this Agreement to such party’s legal counsel,
financial advisors or accountants in furtherance of the transactions
contemplated by this Agreement; provided, however, that each such person shall
be obligated to maintain the confidentiality of this Agreement in accordance
herewith.

 

15.           Expenses.  Whether or not the transactions contemplated
hereby are consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby and thereby shall be paid by
the party incurring such expenses.

 

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IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed and delivered as of
the date first above written.

 

	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  CHRIS HEIDELBERGER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris
  Heidelberger

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  CLICK COMMERCE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M.
  Tuhey

  	
   

  
	
   

  	
  Name: John M. Tuhey

  
	
   

  	
  Title: General Counsel

  

 

7Exhibit 10.1

 

SETTLEMENT
AND RELEASE OF CLAIMS AGREEMENT

 

This Agreement is entered into as of October 12,
2005, by and among each of the Reliant Parties, OMOI, each of the California
Parties, each of the Additional Claimants, each of the Class Action Parties,
and each of the Local Governmental Parties. 
Each of the Reliant Parties, OMOI, the California Parties, Additional
Claimants, Class Action Parties, and Local Governmental Parties is a “Party,”
and collectively they 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 Article 1 or as defined elsewhere in this
Agreement.

 

RECITALS

 

A.  Whereas, various of
the Parties are engaged in or interested in complex and disputed regulatory
proceedings, appellate proceedings, litigation, and investigations regarding
numerous issues and allegations arising from events in the California and
western electricity and natural gas markets;

 

B.  Whereas, the Parties
have determined that it is preferable to settle the disputes addressed herein,
rather than litigate;

 

C.  Whereas, the Parties
entered into a Memorandum of Understanding on August 12, 2005 (“Memorandum
of Understanding”), under which they agreed to resolve their disputes and to
further memorialize their settlement through this Agreement which will, when
fully executed, and subject to the provisions of Section 8.9, supersede in
its entirety the Memorandum of Understanding;

 

D.  Whereas, this Agreement
contemplates a comprehensive resolution of all disputes and other matters
addressed herein (i) through the settlement of the regulatory proceedings,
appellate proceedings, litigation, and claims identified herein, and (ii) by
effectuating the transactions, granting of rights and benefits, and assumption
of obligations specified and provided for herein (such comprehensive resolution
and such transactions are referred to herein collectively as the “Settlement”);
and

 

E.  Whereas, CERS and
Reliant concurrently are finalizing a settlement of the claims described in Section 8.7.2,
below, as contemplated by the Memorandum of Understanding;

 

Now, Therefore, in consideration of the mutual covenants
and agreements, and other good and valuable consideration provided for herein,
and subject to and upon the terms and conditions hereof, the Parties agree as
follows:

 

1

 

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, when used in this Agreement, including the Exhibits hereto,
shall have the meanings specified in this Article 1.

 

1.1           “Additional Claimants” means the Oregon Attorney General and the
Washington Attorney General.

 

1.2           “Agreement” means this Settlement and Release of Claims
Agreement, including all Exhibits, as the same may be amended, modified,
supplemented, or replaced from time to time.

 

1.3           “Assigned Assets” means, collectively, the refunds and other
rights to payment Reliant is assigning to the California Parties, effective as
of the Settlement Effective Date, pursuant to Sections 4.3.1, 4.3.2 and 4.3.3
of this Agreement.

 

1.4           “Audit Period” has the meaning set forth in Section 5.6.1.

 

1.5           “Available Operating
Capacity” has the meaning
set forth in Section 5.1.

 

1.6           “Business Day” has the same meaning as provided in
California Civil Code Section 9.

 

1.7           “California Attorney
General” means the People of
the State of California, ex
rel. Bill Lockyer, Attorney
General.

 

1.8           “California Class” means the plaintiff class representatives
in the Wholesale Electricity Antitrust Cases, on behalf of themselves, and a
settlement class composed of all persons and entities in the State of
California who purchased electric power for purposes other than resale or
distribution since July 1, 1998, including all persons and entities within
the class definition pled in the Master Complaint filed in Wholesale
Electricity Antitrust Cases.

 

1.9           “California Litigation
Escrow” has the meaning set
forth in Section 6.2.

 

1.10         “California Parties” means, collectively, PG&E, SCE,
SDG&E, the California Attorney General, CERS, CEOB and the CPUC.

 

1.11         “California Utilities” means PG&E, SCE and SDG&E.

 

1.12         “CEOB” means the California Electricity Oversight
Board.

 

1.13         “CERS” means 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

 

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the
California Water Code.  CERS does not
include the California Department of Water Resources with respect to the State
Water Project.

 

1.14         “Class Action
Effective Date” has the
meaning set forth in Section 2.5.

 

1.15         “Class Action Parties” means the California Class and the
Egger Class.

 

1.16         “Commandeering Litigation” means the litigation arising from the
commandeering by Governor Davis of the block forward contracts of PG&E and
SCE, including the coordinated proceedings pending before the Superior Court
for the State of California for the County of Sacramento known as the Inverse
Condemnation Cases, Judicial Council Coordination Proceeding No. 4203.

 

1.17         “CPUC” means the California Public Utilities
Commission.

 

1.18         “CPUC General Order 167” means the “General Order Implementing and
Enforcing Electric Generator General Duty Standards, Maintenance Standards, and
ISO’s Outage Coordination Protocol” adopted by the CPUC in its Decision 04-05-018,
and reported at 2004 Cal. PUC LEXIS 227 (May 6, 2004).

 

1.19         “Deemed Distribution” has the meaning set forth in Section 6.4.2.

 

1.20         “Deemed Distribution
Participant” means the
Market Participants listed on Exhibit C.

 

1.21         “Deposit Fund Account” has the meaning set forth in Section 4.2.4.

 

1.22         “Egger Class” means the plaintiffs in Egger, et al. v. Dynegy, Inc.,
et al., Case No. 03 CV
1060 RHW (S.D. Cal.) (“Egger”), on behalf of themselves and all persons and
entities in Oregon, Washington, Utah, Nevada, Idaho, New Mexico, Montana and
Arizona who purchased electric power for purposes other than resale or
distribution since July 1, 1998, including all persons and entities within
the class definition pled in Egger.

 

1.23         “Emissions Offset” means the claim for recovery of emissions
costs incurred by a Market Participant’s generating units during the refund
period as adopted by FERC.  See, e.g., San Diego Gas &
Elec. Co. v. Sellers, et al.,
96 FERC ¶ 61,120 at 61,519 (Jul. 25, 2001) (adopting emissions cost
adjustment to seller refund liabilities).

 

1.24         “Execution Date” means the date this Agreement has been
executed by the Reliant Parties, OMOI, each of the California Parties, each of
the Additional Claimants, and each of the Class Action Parties.  The Execution Date may occur independently of
any execution or non-execution of this Agreement by the Local Governmental
Parties.

 

1.25         “FERC” means the Federal Energy Regulatory
Commission.

 

3

 

1.26         “FERC Allowances
Determination” means the
FERC order directing the payment of Fuel Cost Allowances in the FERC Refund
Proceedings, regardless of whether such order is subject to requests for stay,
rehearing or appeal, provided that such order has not been stayed pending such
rehearing or appeal.

 

1.27         “FERC Interest
Determination” means the
FERC order directing the payment of interest on receivables and refunds based
on the ISO and PX settlement reruns and refund calculations, regardless of
whether such order is subject to requests for stay, rehearing, or appeal,
provided that such order has not been stayed pending such rehearing or appeal.

 

1.28         “FERC Interest Rate” shall have the meaning set forth in 18
C.F.R. § 35.19a(a)(2) (2005) or any successor thereto.

 

1.29         “FERC Receivables
Determination” means the
FERC order issued in the FERC Refund Proceedings which provides the Parties
with sufficient information to establish the final amount of the Reliant
Receivables, regardless of whether such order is subject to requests for stay,
rehearing or appeal, provided that such order has not been stayed pending such
rehearing or appeal.

 

1.30         “FERC Refund Allocation
Matrix” means the matrix
attached as Exhibit B that sets forth the various allocation percentages
with respect to certain portions of the Settlement Amount that are applicable
to each Settling Claimant and others that are owed refunds or other amounts in
the FERC Refund Proceedings pursuant to this Agreement.

 

1.31         “FERC Refund Determination” means the FERC order establishing the
amount of Reliant Refunds owed to Non-Settling Participants, regardless of
whether such order is subject to requests for stay, rehearing or appeal,
provided that such order has not been stayed pending such rehearing or appeal.

 

1.32         “FERC Refund Proceedings” means the proceedings conducted before FERC
in FERC Docket Nos. EL00-95, et
al., EL03-170, EL03-180, et al., PA02-2, IN03-10 and EL03-59 as they relate
to sales in the ISO and PX markets and sales to CERS for the period January 1,
2000 - June 20, 2001, and any related appeals and/or petitions for review
and any proceedings on remand.

 

1.33         “FERC Settlement Order” means the FERC order granting the Required
Approval with respect to FERC, in accordance with Sections 10.1 and 10.1.1 of
this Agreement.

 

1.34         “Final Staff Report” means the final report entitled “Final
Report On Price Manipulation In Western Markets — Fact Finding Investigation Of
Potential Manipulation Of Electric And Natural Gas Prices” issued by FERC staff
on March 26, 2003 in Docket No. PA02-2.

 

1.35         “Fuel Cost Allowance” means the claim for recovery of fuel costs
incurred by generating units made pursuant to FERC orders in the FERC Refund
Proceedings.

 

4

 

See, e.g., San Diego Gas & Elec. Co., et al., 102 FERC ¶ 61,317 at PP 56-63 (Mar. 26,
2003), 103 FERC ¶ 61,078 (Apr. 22, 2003), 105 FERC ¶ 61,066 (Oct. 16,
2003), 107 FERC ¶ 61,166 (May 12, 2004), 108 FERC ¶ 61,219 (Sept. 2,
2004).

 

1.36         “GADS Data” has the meaning set forth in Section 5.6.2.

 

1.37         “Governmental Authority” means any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to a government.

 

1.38         “ISO” means the California Independent System
Operator Corporation, a California public benefit corporation.

 

1.39         “Local Governmental Parties” means those of the following identified
entities that have executed this Agreement on or about the Execution Date,
subject to obtaining the approvals referenced in Section 10.2:  The City and County of San Francisco; the
City of Oakland; the County of Santa Clara; the County of Contra Costa; Valley
Center Municipal Water District; Padre Dam Municipal Water District; Ramona
Municipal Water District; Helix Water District; Vista Irrigation District;
Yuima Municipal Water District; Fallbrook Public Utility District; Borrego
Water District; Metropolitan Transit Development Board; San Diego Trolley, Inc.;
San Diego Transit Corporation; and Sweetwater Authority.

 

1.40         “Market Participants” means, other than the ISO and PX
themselves, those entities that were ISO scheduling coordinators or PX
participants or otherwise directly sold energy to or purchased energy from the
ISO and/or PX during part or all of the Settlement Period.

 

1.41         “Memorandum of
Understanding” has the
meaning set forth in Paragraph C of the Recitals.

 

1.42         “NERC” means the North American Electric
Reliability Council.

 

1.43         “Net Refund Recipient” means a Settling Participant that is owed
net refunds after consideration of amounts that the particular Settling
Participant may itself owe to the market in the form of refunds.

 

1.44         “Net Payers” has the meaning set forth in Section 6.4.4.

 

1.45         “Non-Settling Participants” means Market Participants other than the
Reliant Parties, the California Parties, Additional Claimants, Class Action
Parties, Local Governmental Parties, and the Opt-In Participants.

 

1.46         “OMOI” means FERC’s Office of Market Oversight and
Investigations.

 

1.47         “Opt-In Participant” means a Market Participant that has elected
to join this Settlement in accordance with Article 9.

 

5

 

1.48         “Oregon Attorney General” means the State of Oregon, Department of
Justice, Office of the Attorney General, Hardy Myers, Attorney General.

 

1.49         “Partnership/Gaming
Proceeding” means the
proceedings in FERC Docket Nos. EL03-137, et al. (including
Docket No. EL03-170) and EL03-180, et al. and any
related appeals and/or petitions for review and any proceedings on remand.

 

1.50         “Party” and “Parties” have the meanings set forth in the preamble
to this Agreement.

 

1.51         “PG&E” means Pacific Gas and Electric Company.

 

1.52         “PG&E Plan Escrow” means the escrow established by PG&E
pursuant to PG&E’s plan of reorganization and other ancillary agreements
for payment of its outstanding debts to the PX and to the ISO.

 

1.53         “Post-January 17, 2001
Period” means the period January 18,
2001 through June 20, 2001, but, with respect to PX transactions, not any
period included in the Pre-January 18, 2001 Period.

 

1.54         “Pre-January 18, 2001
Period” means the period October 2,
2000 through January 17, 2001.  When
applied to PX transactions, the Pre-January 18, 2000 period means the
period October 2, 2000 through January 31, 2001.

 

1.55         “Pre-October Period” means the period May 1, 2000 through October 1,
2000.

 

1.56         “PX” means the California Power Exchange
Corporation, a California public benefit corporation.

 

1.57         “PX Retained Claims
Litigation” means the
actions filed by the PX against former governors and officers of the PX for
transactions and events that began prior to the effective date of the PX’s plan
of reorganization on April 1, 2003. 
These proceedings are identified in Attachment B-1 to the settlement
agreement filed with FERC on September 1, 2005, as part of an offer of
settlement in FERC Docket Nos. ER05-167, et al.

 

1.58         “PX Settlement Clearing
Account” means any and all
accounts of the PX or the reorganized PX holding funds in trust pursuant to the
terms of the PX Tariff, ISO Tariff, or a court order.  The PX Settlement Clearing Account does not
include collateral and funds held for payment of chargeback entitlements, which
are maintained in segregated accounts, as those terms are defined in the PX’s
First Amended Chapter 11 Plan.

 

1.59         “PX Wind-Up Charges” means the charges payable under FERC’s
orders in FERC Docket Nos. ER05-167, ER02-2234, ER03-139, ER03-791, ER04-111
and ER04-785 or such other charges that the PX may seek from its Market
Participants and that are put into effect through acceptance by FERC of a PX
tariff.

 

6

 

1.60         “Receivables Excess” means the amount, if any, by which the
actual Reliant Receivables are more than $299,546,045 as determined by FERC in
the FERC Receivables Determination.

 

1.61         “Receivables Shortfall” or “Receivables Shortfalls” means the
amount, if any, by which the actual Reliant Receivables are less than
$299,546,045 as determined in the FERC Receivables Determination.

 

1.62         “Refund Period” means the period October 2, 2000
through June 20, 2001.

 

1.63         “Refund Excess” means the amount, if any, by which the
funds deposited in the Reliant Refund Escrow for refunds to Non-Settling
Participants based on the FERC Refund Allocation Matrix, exceed the amounts
needed to satisfy all refund awards made to Non-Settling Participants for any
particular period, e.g. the Pre-October Period, the Pre-January 18,
2001 Period, or the Post-January 17, 2001 Period, as determined by FERC.

 

1.64         “Refund Shortfall” means the amount, if any, by which the
funds deposited in the Reliant Refund Escrow for refunds to Non-Settling
Participants based on the FERC Refund Allocation Matrix, are insufficient to
satisfy all refund awards made to Non-Settling Participants for any particular
period, e.g. the Pre-October Period, the Pre-January 18,
2001 Period, or the Post-January 17, 2001 Period, as determined by FERC.

 

1.65         “Reliant” or the “Reliant Parties”
means Reliant Energy, Inc., Reliant Energy Services, Inc., a Delaware
corporation, Reliant Energy Power Generation, Inc., Reliant Energy
California Holdings, Inc., Reliant Energy Coolwater, Inc., Reliant
Energy Ellwood, Inc., Reliant Energy Etiwanda, Inc., Reliant Energy
Mandalay, Inc., Reliant Energy Ormond Beach, Inc. and each of the
affiliates and subsidiaries of Reliant Energy, Inc. listed on Exhibit A,
which shall be bound to this Agreement by the execution of this Agreement by
Reliant Energy, Inc.

 

1.66         “Reliant Gaming Settlement” means the Agreement and Stipulation filed
in FERC Docket No. EL03-170 on August 29, 2003 and approved by FERC
on March 4, 2004, Reliant
Resources, Inc., 106
FERC ¶ 61,207 (2004).

 

1.67         “Reliant/OMOI Settlement” means the Stipulation and Consent Agreement
in Docket Nos. EL03-59, IN03-10 and PA02-2, approved by FERC on October 2,
2003, Reliant Energy Services, Inc., 105 FERC ¶ 61,008 (2003), as modified by
FERC order issued September 22, 2004, Reliant Energy Services, Inc., 108 FERC ¶ 61,278 (2004).

 

1.68         “Reliant Receivables” means all of Reliant’s rights and claims to
payment by or from the PX and/or the ISO for sales of energy and ancillary
services into the California power markets during the period January 1,
2000 through June 20, 2001 (including the amount of interest on unpaid
amounts of Reliant Receivables, the right to which attaches to the Reliant
Receivables).  As of August 12,
2005, the Parties were informed by the PX and ISO that Reliant has a claim to
unpaid

 

7

 

receivables,
before interest, totaling $299,546,045. 
The Reliant Receivables include $31,253,850, which reflects a reversal
of the PX soft cap (as calculated in accordance with FERC’s order of April 26,
2001 in the FERC Refund Proceedings, San Diego Gas & Elec. Co. v. Sellers, 95 FERC ¶ 61,115 (2001)).  The Reliant Receivables shall not reflect any
third party Emissions Offsets or Fuel Cost Allowance costs charged to Reliant.

 

1.69         “Reliant Refunds” means the amounts determined by FERC in the
FERC Refund Proceedings that Reliant is required to pay to Market Participants.

 

1.70         “Reliant Refund Escrow” has the meaning set forth in Section 6.2.

 

1.71         “Required Approvals” means the approvals set forth in Article 10.1.

 

1.72         “RES” means Reliant Energy Services, Inc.

 

1.73         “SCE” means Southern California Edison Company.

 

1.74         “SDG&E” means San Diego Gas & Electric
Company.

 

1.75         “Settlement” has the meaning set forth in Paragraph D of
the Recitals.

 

1.76         “Settlement Amount” has the meaning set forth in Section 4.1.

 

1.77         “Settlement Effective Date” has the meaning set forth in Section 2.4.

 

1.78         “Settlement Period” means the period January 1, 2000
through December 31, 2001.

 

1.79         “Settling Claimants” means the Additional Claimants and the California
Parties.

 

1.80         “Settling Participants” means the Settling Claimants and the Opt-In
Participants.

 

1.81         “Stay Period” has the meaning set forth in Section 10.3.

 

1.82         “Unsettled Participant
Refund Amount” has the
meaning set forth in Section 7.2.

 

1.83         “Unsettled Reliant Refund
Amount” has the meaning set
forth in Section 7.1.3.

 

1.84         “Washington Attorney
General” means the
Washington State Office of the Attorney General, Rob McKenna, Attorney General.

 

1.85         “WECC” means the Western Electricity Coordinating
Council (formerly the Western Systems Coordinating Council).

 

1.86         “Wholesale Electricity
Antitrust Cases” means,
collectively, Gordon
v. Reliant Energy, Inc.,
et al., Case No. GIC 758487 (San Diego Super.
Ct., Nov. 27, 2000); Hendricks
v. Dynegy Power Marketing, Inc., et al., Case No. GIC 758565 (San

 

8

 

Diego
Super. Ct., Nov. 29, 2000); Sweetwater Authority v. Dynegy Power Marketing, Inc., et
al., Case No. GIC
760743 (San Diego Super. Ct., Jan. 16, 2001); State of California, ex rel. City Attorney for the City and County of
San Francisco, Dennis J. Herrera v. Dynegy Power Marketing, Inc., et
al., Case No. SCV
318189 (San Fran. Super. Ct., Jan. 18, 2001); Pier 23 Restaurant and Oscar’s Photo Lab v. PG&E Energy Trading, Inc., et
al., Case No. SCV
318343 (San Fran. Super. Ct., Jan. 24, 2001); and Bustamante v. Dynegy, Inc., et
al., Case No. BC 249705
(Los Angeles Super. Ct., May 2, 2001), previously coordinated as Wholesale
Electricity Antitrust Cases I & II, California Judicial Council
Coordination Proceeding Nos. 4204 and 4205.

 

1.87         “Williams, Dynegy, Duke,
Mirant and Enron Settlements”
means the settlements among certain suppliers involved in the FERC Refund
Proceedings the California Parties, OMOI and others, each of which either was
approved by FERC in orders reported at San Diego Gas & Elec. Co. v. Sellers, 108 FERC ¶ 61,002 (Jul. 2, 2004)
(Williams); 109 FERC ¶ 61,071 (Oct. 25, 2004) (Dynegy); 109 FERC ¶ 61,257
(Dec. 7, 2004) (Duke); and 111 FERC ¶ 61,017 (Apr. 13, 2005)
(Mirant), or, in the case of Enron, is pending approval before FERC in Docket No. EL00-95
(offer of settlement filed Aug. 24, 2005).

 

2.             CONDITIONS TO EFFECTIVENESS; SETTLEMENT EFFECTIVE
DATE; TERMINATION

 

2.1           Agreement Binding on Execution Date.  Except (i) as provided in
Section 2.3, and (ii) as to OMOI, whose obligations under this
Agreement shall not be effective until the issuance of the FERC Settlement
Order, this Agreement shall be a binding obligation of each Party immediately
upon the Execution Date.  If any Local
Governmental Entity has not yet received its approval (referenced in Section 10.2)
by the Execution Date, the obligations as to that Local Governmental Entity
shall not be effective until such approval is obtained.

 

2.2           Opt-In Participants.  Each Opt-In Participant shall be bound by all
of the provisions of this Agreement in accordance with Section 9.1.

 

2.3           Conditions Precedent to Certain Obligations.  It
is a condition precedent to (i) the obligation of a Party to make
payments, assign receivables or other rights to payment, assume liabilities, or
release claims hereunder, and (ii) the effectiveness of all releases and
the withdrawals of claims, defenses, protests, petitions for rehearing and
challenges specified hereunder, that the Settlement Effective Date has
occurred.

 

2.4           Settlement Effective Date.  The “Settlement Effective Date”
shall occur on the date, following the Execution Date, that the Required
Approval with respect to FERC (as defined in Section 10.1) has been
entered, issued, or otherwise obtained and is in full force and effect and not
then stayed, notwithstanding that a request for stay, rehearing, or appeal may
then be pending.  The Settlement
Effective Date is not dependent on the occurrence of the Class Action
Effective Date.

 

9

 

2.5           Class Action Effective Date.  The Class Action
Effective Date with respect to the California Class shall be the date on
which the order certifying the California Class for settlement purposes
and the final judgment of approval as between Reliant and the California Class is
final and no longer subject to any further appeal, and, with respect to the
Egger Class, shall be that date on which the order certifying the Egger Class for
settlement purposes, and the final judgment of approval of the Settlement as
between Reliant and the Egger Class, is final and no longer subject to any
further appeal.

 

2.6           Termination (Other Than As to Class Action Parties). 
Except as provided in Section 2.7, if the Settlement Effective Date
has not yet occurred, and unless otherwise agreed to by the Parties (other than
the Class Action Parties) in writing, this Agreement shall terminate on
the earlier to occur of :  (i) the
date on which a FERC order rejecting the settlement in whole or in material
part (including any refusal on the part of FERC to issue an order directing the
PX to release funds from the PX Settlement Clearing Account as required in this
Agreement) becomes final and no longer subject to appeal; or (ii) September 1,
2006.  Nothing herein shall be construed
as obligating any Party to appeal an order that fails to approve this
Settlement.

 

2.7           Effect of Termination.  In the event of termination pursuant to Section 2.6,
this Agreement, except for the provisions set forth in this Section 2.7
and in Sections 10.3, 14.1, 14.3, 14.4, 14.5, 14.6, 15.3 and 15.4, shall be
null and void and of no further effect, with all rights, duties and obligations
of the Parties thereafter restored as if this Agreement had never been
executed; provided, however, that the Parties may, in the sole discretion of
each Party, agree to attempt to modify the Agreement in a manner that would
resolve the grounds for which the Required Approval with respect to FERC was denied,
and provided further that the tolling provision set out at Section 8.9
shall survive any such termination.

 

2.8           Termination as Between Reliant and the Class Action Parties.  The
reciprocal obligations in this Agreement as between Reliant and each of the Class Action
Parties shall terminate on the entry of an order of the pertinent court denying
preliminary or final approval of this Agreement as to any such Class Action
Party; provided that, if review of any such order is sought, the termination
shall not be effective until the order is final.  Any such termination as between Reliant and
the Class Action Parties has no effect on this Agreement as between
Reliant and the Settling Participants.

 

3.             SETTLEMENT AND ACKNOWLEDGMENT

 

3.1           Settlement and Acknowledgement of Compromise.  The
payments and other consideration specified in this Agreement, along with the
covenants and obligations set forth in this Agreement, settle and compromise
the Parties’ and Opt-In Participants’ claims in the releases set forth in this
Agreement.

 

10

 

4.             MONETARY CONSIDERATION PROVIDED BY THE RELIANT
PARTIES

 

4.1           Settlement Amount.  In consideration of the respective covenants
herein, Reliant has provided or shall provide the monetary consideration set
forth in Sections 4.1.1, 4.1.2, 4.1.3, 4.1.4 and 4.1.5 (collectively the “Settlement
Amount”).

 

4.1.1        Reliant Receivables (approximately $299,546,045).  The
Reliant Receivables shall be assigned to the California Parties free and clear of
all liens, claims, encumbrances, and interests of any kind whatsoever,
including any liens or encumbrances related to the borrowings referenced in Section 11.4.

 

4.1.2        Prior Settlement Amounts ($64,653,274). 
Certain of Reliant’s prior settlements with FERC trial staff and OMOI
shall comprise part of the Settlement Amount as follows:

 

(i)            The settlement amount of $836,000.16
previously negotiated by Reliant with respect to the Reliant Gaming Settlement
shall comprise part of the Settlement Amount and shall be distributed pursuant
to future FERC orders in the gaming proceedings, FERC Docket Nos. EL03-170.  The payment of $836,000.16 shall be in
addition to the cash payments provided for in Sections 4.1.2(ii), 4.1.2(iii),
4.1.3 and 4.1.4 of this Agreement.

 

(ii)           The settlement amount of $13,817,274 previously negotiated by Reliant
and FERC staff and approved by FERC on January 31, 2003, 102 FERC ¶ 61,108
(2003), with respect to withholding during the period June 20-21, 2000,
for which sums have already been distributed, shall comprise part of the
Settlement Amount, and the allocations already ordered by FERC shall not be
revised.  All Parties and Opt-In
Participants shall withdraw their objections to that settlement.

 

(iii)          The settlement amount of $50,000,000 previously negotiated by Reliant
and OMOI in the Reliant/OMOI Settlement shall comprise part of the Settlement
Amount, with the allocation as to Parties and Opt-In Participants to be
established by the Pre-October Period Allocation percentages in the FERC
Refund Allocation Matrix, and any allocations to other parties to be determined
by further FERC order in the Partnership/Gaming Proceeding.  The payment of such $50,000,000 shall be in
addition to the payments provided for in Sections 4.1.2(i), 4.1.2(ii), 4.1.3
and 4.1.4 of this Agreement.

 

4.1.3        Cash to Additional Claimants ($7,000,000). 
Reliant shall pay $3,500,000 in cash to each of the Additional Claimants
for a total of $7,000,000.

 

11

 

4.1.4        Additional Cash Consideration ($131,503,955). 
Reliant shall pay in cash to the California Parties additional
consideration of $131,503,955.

 

4.1.5        Interest on ISO and PX Transactions (estimated to be $10,000,000 -
$25,000,000).  Reliant shall assign to the California
Parties, free and clear of all liens, claims, encumbrances and interests of any
kind whatsoever, any and all interest that, absent such assignment, Reliant
would have been owed by the ISO and PX in relation to transactions from January 1,
2000 through June 20, 2001, which interest amount is estimated as of the
date of this Agreement to be between $10,000,000 and $25,000,000.  The assigned interest will in no event be
less than zero, and Reliant will be responsible for payment to the ISO and/or
PX of any interest it is determined to owe to the ISO or PX in excess of
interest owed to Reliant.

 

4.2           Settlement Amount Assignment and Payment Procedures.  The
payment by Reliant of the Settlement Amount shall be accomplished as follows:

 

4.2.1        Assignment of Reliant Receivables.  As of the Settlement Effective
Date (i) the Reliant Parties shall, and do hereby, waive and release their
claims against the obligors on the Reliant Receivables and assign, sell,
transfer, convey and deliver to the California Parties, free and clear of all
claims, liens and encumbrances whatsoever, including any liens or encumbrances
related to the borrowings referenced in Section 11.4, and (ii) the
California Parties shall, and do hereby, assume, purchase, acquire and accept,
without recourse to the Reliant Parties, all of the Reliant Parties’ right,
title and interest in and to the Reliant Receivables and all claims, rights of
action and defenses otherwise available to the Reliant Parties arising from or
relating to the Reliant Receivables, as they may be adjusted at any time after August 12,
2005, whether in the preparatory rerun, in the FERC Refund Proceedings, or
through any other ISO or PX settlement adjustments permitted under applicable
ISO or PX tariffs.  The foregoing term “without
recourse” shall not, however, limit or be construed as limiting in any way any
rights the California Parties have with respect to the Reliant Parties pursuant
to the express written provisions, representations and warranties of this
Agreement.  Each of the Reliant Parties
hereby irrevocably authorizes the California Parties, and their respective
attorneys, agents, and employees, at any time and from time to time to file in
any filing office in any Uniform Commercial Code jurisdiction any initial
financing statements and amendments thereto that (i) describe the
foregoing transfer, and (ii) provide any other information required by Part 5
of Article 9 of the Uniform Commercial Code of the jurisdiction in which
such filing is made necessary for the sufficiency or filing office acceptance
of such financing statements or amendments, including whether such Reliant
Party is an organization, its type of organization and the charter or
organization identification number issued to such Reliant Party.  The California Parties agree to provide the
Reliant Parties with a reasonable opportunity to review and comment on any such

 

12

 

Uniform
Commercial Code filings in advance of making such filings. Further, the Parties
acknowledge and agree that: (i) the assignment of Reliant Receivables
includes the right to interest on such Reliant Receivables pursuant to the FERC
Interest Determination; (ii) the assignment of the Reliant Receivables
pursuant to this Agreement does not include claims and defenses that arise as a
result of the various contractual relationships among the Reliant Parties
themselves; (iii) such claims and defenses shall not affect, hinder or
impair the Reliant Receivables assigned to the California Parties hereunder;
and (iv) the Reliant Receivables shall be used by the California Parties
for the payment of refunds and other payments to Settling Participants as
provided for under this Agreement or as the California Parties may separately
agree upon among themselves as provided in Section 6.2.

 

4.2.2        Scope of Assigned Reliant Receivables. 
Except as otherwise expressly provided herein, the Reliant Receivables
shall include any and all positive or negative allocations of charges or
credits that may be made by the ISO or PX that cause an adjustment up or down
in the Reliant Receivables as a result of or on account of ISO and PX
transactions by or concerning Reliant in the period from January 1, 2000
through June 20, 2001.  To the
extent that the ISO or PX is determined in any future proceeding or for any
reason to owe any additional amounts to Reliant or be owed any additional
amounts by Reliant for the period from January 1, 2000 through June 20,
2001, such amounts are assigned to or, subject to the limitations set forth in
Sections 6.9 and 8.7, become the responsibility of the California Parties.  However, charges or credits that pertain to
Reliant transactions in the ISO or PX during periods prior to January 1,
2000 or after June 20, 2001 are not Reliant Receivables assigned to the
California Parties, shall not in any way affect the Reliant Receivables, and
shall remain the responsibility of or accrue to the benefit of Reliant.  FERC’s approval of this Agreement in the FERC
Settlement Order shall constitute direction to the ISO and PX to recognize and
implement the assignment of the Reliant Receivables, as provided in Sections
4.1.1, 4.2.1 and this 4.2.2 and the treatment of PX Wind-Up Charges as provided
in Sections 7.4 and 8.7.7.

 

4.2.3        Transfer of Assigned Reliant Receivables Amount.  The
FERC order described in Section 10.1 below shall be deemed to authorize
and direct the PX to make the transfer set forth in Section 6.3.2.

 

4.2.4        Payment Associated with the Reliant Gaming Settlement. 
Within ten (10) Business Days after the Settlement Effective Date,
Reliant shall pay the amount of $836,000.16 to a Deposit Fund Account
established by the United States Treasury on behalf of FERC, in accordance with
the FERC’s orders regarding the Reliant Gaming Settlement and FERC orders in
the gaming proceedings, FERC Docket Nos. EL03-137, et al.  All Parties
and

 

13

 

Opt-In
Participants shall remain free to assert any position they choose concerning
the proper allocation by FERC of such settlement amount.

 

4.2.5        Payments Associated with the Reliant/OMOI Settlement. 
Within ten (10) Business Days of the Settlement Effective Date,
FERC shall cause to be transferred to an account designated by the California
Parties any and all amounts paid by Reliant pursuant to the Reliant/OMOI
Settlement that are allocable to Parties and Opt-In Participants as established
by the allocation percentages for the Pre-October Period in the FERC
Refund Allocation Matrix, but not Reliant/OMOI Settlement amounts allocable to
Non-Settling Participants which shall be allocated in the Partnership/Gaming
Proceeding.  Any additional payments owed
by Reliant under the Reliant/OMOI Settlement shall be made when due to such
account designated by the California Parties rather than the accounts specified
in the Reliant/OMOI Settlement.  The
payment schedule adopted in the Reliant/OMOI Settlement shall not be
revised.  To ensure the timely
performance of its payment obligations under the terms of the Reliant/OMOI
Settlement, if, as of January 31, 2006 (or, if later, as of the Settlement
Effective Date) the amount remaining to be paid under the Reliant/OMOI
Settlement is greater than $10,000,000, then Reliant shall obtain, within ten (10) Business
Days thereof, an irrevocable, standby letter of credit in the amount remaining
to be paid under the Reliant/OMOI Settlement as of such date.  Any such letter of credit shall be, in form
and substance, acceptable to the California Parties, and shall be issued by a
U.S. commercial bank or foreign bank with a U.S. branch whose non-credit
enhanced, senior unsecured long-term debt at all times prior to the expiration
of the letter of credit is at least A- from S&P or A3 from Moody’s Investor
Service.

 

4.2.6        Additional Cash Payments.  No later than ten (10) Business
Days after the Settlement Effective Date, Reliant shall pay the cash amounts
set forth in sub-sections (i) through (iii) of this Section 4.2.6:

 

(i)            $131,503,955 by wire transfer, from funds
other than the Reliant Receivables, into an interest bearing escrow account
designated as the Reliant Refund Escrow; and

 

(ii)           $3,500,0000 by wire transfer, from funds other than the Reliant
Receivables, to the Oregon Attorney General, which shall be deposited into the
Department of Justice Client Trust Account established pursuant to ORS 180.200,
for distribution from that account by the Oregon Attorney General as provided
by law for such funds; and

 

(iii)          $3,500,0000 by wire transfer, from funds other than the Reliant
Receivables, to the Washington Attorney General, which shall be used for the
direct or indirect benefit of energy consumers in the

 

14

 

State
of Washington at the sole discretion of the Washington Attorney General.  Up to twelve percent (12%) of the total
amount transferred to the Washington Attorney General may be used to pay for
costs, attorneys’ fees and administrative expenses incurred by the Washington
Attorney General in its investigation and settlement negotiations, including costs,
attorneys’ fees, and administrative expenses related to implementation of this
Agreement.

 

4.3           Assignment of Rights to Refunds and Other Rights to Payment (Assigned
Assets).

 

4.3.1        Refunds Payable to Reliant Parties.  In addition to payment of the
Settlement Amount, the Reliant Parties, except as provided below in Section 4.3.2,
shall, and do hereby waive and release their claims to and assign, sell,
transfer, convey and deliver to the California Parties, free and clear of all
claims, liens, and encumbrances, effective as of the Settlement Effective Date,
all of their right, title and interest in and to any additional refunds and
associated interest, surcharges, and other charges that are either directly or
indirectly through others allocated to any of the Reliant Parties and to which
the Reliant Parties may be found to be entitled in FERC Docket Nos. EL00-95, et al, and EL00-98, et al., including any refunds from
suppliers payable to Reliant pursuant to a settlement of the type described in Section 8.7.6
of this Agreement.

 

4.3.2        Refunds Payable by CERS.  In addition to payment of the
Settlement Amount, the Reliant Parties shall, and do hereby waive and release
their claims to and assign, sell, transfer, convey and deliver to CERS free and
clear of all claims, liens, and encumbrances, effective as of the Settlement
Effective Date, all of their right, title and interest in and to any refunds
and associated interest resulting from any mitigation of sales by CERS of
imbalance energy into the ISO real-time market, as well as surcharges and other
charges associated with such sales, that may be payable pursuant to FERC’s May 12,
2004 Order on Requests for Rehearing and Clarification in Docket Nos. EL00-95, et al., and EL00-98, et. al., and subsequent orders, and all of
their right, title and interest in and to any such refunds and associated
interest, surcharges, and other charges that are either directly or indirectly
through others allocated to any of the Reliant Parties

 

4.3.3        Assignment of Retained Claims Litigation, Commandeering Litigation.  The
Reliant Parties waive and release and assign to PG&E, SCE and SDG&E
(for the benefit of their ratepayers), free and clear of any interests, liens,
claims and encumbrances, effective as of the Settlement Effective Date, any
claim that Reliant may have had to proceeds of the PX Retained Claims
Litigation and proceeds from the Commandeering Litigation.

 

15

 

4.4           This Section intentionally left blank.

 

4.5           Cooperation.  The Parties shall cooperate with each other
in providing the data and information necessary to implement this Article 4.

 

4.6           Failure of Consideration.  In the event that (i) the
assignment of the Reliant Receivables to the California Parties as provided for
under Sections 4.1.1 and 4.2.1 or assignment of the Assigned Assets as provided
for under Section 4.3 fails as a result a breach by Reliant of its
representations and warranties set forth in Section 11.1 and/or Section 11.2
and/or Section 11.4; (ii) the Reliant Receivables or any other rights
to payment assigned pursuant hereto fail to transfer to the California Parties,
pursuant to Sections 4.2.3, 4.3 and 6.3, free and clear of all liens, claims,
encumbrances and interests of any kind whatsoever; (iii) the cash
transfers required of Reliant pursuant to Sections 4.1.3, 4.1.4 and 4.2.6 are
not timely made, in whole or in part, as required by this Agreement; or (iv) any
Reliant Party takes any of the following actions, or any of the following
actions are taken against any Reliant Party, and that action is reasonably
likely to have a material adverse effect on the ability of the other Reliant
Parties to perform fully and timely their obligations under this
Agreement:  (a) it commences a
voluntary case, or an involuntary case is commenced against it and not
dismissed within thirty (30) days thereafter, within the meaning of the United
States Bankruptcy Code (11 U.S.C. § 101 et seq.), (b) it consents to
the appointment of a custodian of it or for all or substantially all of its
property, or (c) it makes a general assignment for the benefit of its
creditors, then the California Parties may at their option, subject to the
Reliant Parties’ cure rights set forth below, terminate this Agreement in
writing in its entirety ab
initio except as to the
tolling provisions of this Agreement and the other provision of this Agreement
identified in Section 2.7, i.e., as though the Settlement Effective Date had
never occurred.  All notices of
termination delivered pursuant to this Section 4.6 shall be in writing and
addressed to the Reliant Parties in accordance with the notice provisions set
forth herein, and clearly state the grounds for termination, the identity of
any Reliant Parties as to which clause (iv) above applies (if applicable),
and the date on and after which such termination shall be effective.  If the grounds for termination include clause
(i) and/or (ii) and/or (iii) above and one or more of the
Reliant Parties completely cures all defaults under those clauses that are identified
in the California Parties’ notice of termination within five (5) Business
Days after the Reliant Parties’ receipt of that notice of termination,
including payment of interest at the FERC Interest Rate on any payments past
due under this Agreement, then this Agreement shall not terminate ab initio and all defaults identified in the California
Parties’ notice of termination with respect to clause (i) and/or clause (ii) and/or
clause (iii) above shall be deemed to have been cured.

 

5.             RELIANT’S NON-MONETARY CONSIDERATION

 

5.1           Extension of Reliant’s Must-Offer Obligation.  Upon the termination of Reliant’s must-offer obligation pursuant to
FERC’s Order Approving Stipulation and Consent Agreement, Fact-Finding Investigation into
Possible Manipulation

 

16

 

of Electric and Natural Gas Prices, 102 FERC ¶ 61,108 at 61,289 (2003), Reliant
shall continue to abide by a must-offer obligation for two additional years, by
which it will submit supplemental energy bids for all uncommitted, Available
Operating Capacity, as defined in this Section 5.1, from its generation
assets located in California into the ISO imbalance energy market for all hours
for which the ISO has issued a 24-Hour Forecast or Alert Notice pursuant to its
Operating Protocol E-508 (Sep. 8, 2003). 
“Available Operating Capacity” is the unloaded and otherwise uncommitted
capacity at the time a supplemental energy bid is submitted from a generating
unit that is either on-line and synchronized or capable of being on-line and
synchronized, calculated at the unit’s maximum operating level:

 

(i)            Adjusted for legitimate operating
limitations, maintenance outages or reductions in capacity;

 

(ii)           Adjusted for any limitations on operation under applicable law;

 

(iii)          Adjusted for limitations under reliability must run agreements;

 

(iv)          Minus capacity committed to be scheduled under a bilateral agreement;

 

(v)           Minus capacity subject to real-time control by unaffiliated
third-parties;

 

(vi)          Minus capacity committed to provide ancillary services to the ISO
either through the ISO’s Ancillary Services market or through self-provision by
a Scheduling Coordinator;

 

(vii)         Minus capacity committed to self-provide station power; and

 

(viii)        Minus the capacity committed to deliver energy or provide operating
reserve to an electric distribution utility to serve retail customers.

 

5.2           Reliant Compliance with FERC Market Behavior Rules. 
Reliant shall comply with FERC’s Docket No. EL01-118 market
behavior rules, as they may be in force and amended from time to time.  Reliant will not challenge, by means of
objection, rehearing, appeal or otherwise, the market behavior rules adopted
in the November 17, 2003 order, Investigation
of Terms and Conditions of Public Utility Market-Based Rate Authorizations, 105 FERC ¶ 61,218 (2003), and the May 19,
2004 order on rehearing, 107 FERC ¶ 61,175 (2004), provided that this
commitment will not limit or restrict Reliant’s right to participate in any
future proceeding in the event of a remand to FERC of the market behavior rules by
the Court in Cinergy
Marketing & Trading, L.P. v. FERC, Nos. 04-1168, et
al. (D.C. Cir.), or to
defend itself in any FERC investigation or complaint proceeding involving an
alleged violation of such market behavior rules or to comment in any
future proceeding on the interpretation or application of the market behavior
rules.

 

17

 

5.3           Reliant Compliance with ISO Tariff.  Reliant will comply with
applicable ISO tariff provisions; provided, however, that each of the Parties
is free to advocate changes in those tariff provisions.

 

5.4           Reliant Cooperation with Respect to Claims Against Other Entities.

 

5.4.1        Cooperation with the California Parties and Class Action Parties.  Reliant
will cooperate with the California Parties in pursuing claims and potential
claims against suppliers other than Reliant relating to the operation of the
California electricity and natural gas markets during the period January 1,
2000 through June 20, 2001, by making available to the California Parties
such information and documents as they may specify that are (i) relevant
to such claims, (ii) in its possession or control, and (iii) not
proprietary or privileged.  With respect
to issues concerning the California or western electricity markets, Reliant
shall make available to the California Parties and the Class Action
Parties any current employees or consultants with knowledge of such information
as witnesses; provided that, interviews or depositions shall be scheduled at
mutually convenient times and the California Parties and Class Action
Parties shall coordinate their requests for both documents and witnesses so as
to avoid duplication and unnecessary burden on Reliant.  With respect to issues concerning natural gas
markets, Reliant shall make available to the California Parties any current
employees with knowledge of such information as witnesses; provided that,
interviews or depositions shall be scheduled at mutually convenient times and
the California Parties shall coordinate their requests for both documents and
witnesses so as to avoid duplication and unnecessary burden on Reliant.  OMOI shall be permitted to attend and ask
questions at any interview or deposition conducted pursuant to this Section 5.4.1,
and, at its request, shall be provided with copies of any written information
provided through such cooperative efforts. 
With respect to the Class Action Parties, Reliant will accept
service by e-mail or fax delivery of document requests concerning matters
relevant to the Class Action Parties’ claims arising from the operation of
the California or western electricity markets during the period from January 1,
2000 through June 20, 2001, provided Reliant is given reasonable time to
comply.  Such cooperation as set forth in
this Section 5.4.1 shall be effective as of the Settlement Effective Date.

 

5.4.2        Responsibility for Costs.  Each of the California Parties
or Class Action Parties that invokes its rights under the foregoing
provisions to obtain Reliant’s cooperation shall reimburse Reliant for
reasonable out-of-pocket expenses (except for attorneys’ fees) incurred by
Reliant in connection with providing that Party or Parties the cooperation
specified in Section 5.4.1.  Only
Parties that have made a request for cooperation under Section 5.4.1 shall
be responsible to Reliant for such reimbursement of costs associated with the
request.

 

18

 

5.5           Extension of Certain Power Sales Conditions. 
Reliant will comply with the following power sales conditions (from Article IV,
Section 3 of the Reliant/OMOI Settlement) with respect to its sales of
electricity in the WECC through December 31, 2006.  RES will sell power (other than any power
that may be the subject of the auction described in Section IV, paragraph
4 of the Reliant/OMOI Settlement) at market-based rates subject to the
following conditions:

 

5.5.1        Reliant to Provide Monthly Reports to OMOI.  RES’s
sales of electricity in the United States portion of the WECC will be subject
to review by FERC.  During the period
ending December 31, 2006, RES shall provide monthly reports to OMOI,
including the information in Section 5.5.2, pursuant to the
confidentiality provisions of 18 C.F.R. § 388.112 (2005).  Such reports shall be provided to OMOI within
ten (10) Business Days of the end of each calendar month through December,
2006.

 

5.5.2        Reports to Include Data on Electricity Trades.  On a
transaction-by-transaction basis, RES shall provide to OMOI data on all its completed
electricity trades in the United States portion of the WECC.  The data shall include counter-party name and
buy-sell indication, and if executed on an electronic trading platform, the
name of the electronic trading platform. 
The reports shall further provide price, quantity, transaction date,
start and end date, and delivery point for each transaction.  RES shall provide any additional information
regarding such trades as OMOI reasonably requests.

 

5.5.3        Reliant Communications Subject to OMOI Review.  RES
shall provide OMOI upon request, pursuant to the confidentiality provisions of
18 C.F.R. § 388.112 (2005), with copies of emails, instant messages (e.g., AOL Instant Messages) and telephone
conversations of RES’s power traders with market participants for transactions
in the United States portion of the WECC that OMOI randomly requests for review
by OMOI.  To facilitate OMOI’s review,
RES will retain copies of emails of employees trading electricity in the United
States portion of the WECC beginning on the effective date of the Reliant/OMOI
Settlement and continuing thereafter on a rolling six-month basis.  Beginning with the effective date of the
Reliant/OMOI Settlement and continuing for three years thereafter, RES will
also retain copies, in audiotape or electronic audio file format, of all
telephone conversations of employees trading electricity in the United
States.  In addition, Reliant’s
Compliance Director for Trading and Compliance Manager for Trading will be
located on the trade floor(s) to monitor trading activity and will also
randomly monitor emails, instant messages and telephone conversations and will
provide to OMOI monthly reports of this monitoring activity, pursuant to the
confidentiality provisions of 18 C.F.R. § 388.112 (2005).

 

19

 

5.6           Generation Outage Audit and Compliance Program.

 

5.6.1        Semi-Annual Outage Audits.  For a period of twelve (12)
months following the Settlement Effective Date (the “Audit Period”), Reliant
shall, at its expense, retain Washington Group International, or if Washington
Group International is unable to perform the audit, another independent
consulting or engineering company mutually agreed upon by Reliant and the CPUC,
to perform semi-annual audits of outages during the Audit Period at Reliant’s
generating plants in California.  The
findings of each audit shall be provided directly by that independent company
to OMOI and the CPUC, and shall be provided simultaneously to Reliant, without
prior review by Reliant.  The audits
shall review whether plant outages were legitimate and of an appropriate
duration under the circumstances relevant to each outage.

 

5.6.2        CPUC Review of Reliant GADS Data.  Within 30 days of the
Settlement Effective Date, Reliant shall provide to the CPUC Reliant’s
operations data for the “Generation Availability Data System” (“GADS Data”),
compiled by the North American Electric Reliability Council (“NERC”), for the
period January 1998 through November 2004.  For a period of thirty-six (36) months from
the Settlement Effective Date, Reliant shall submit its GADS Data for Reliant’s
California plants to NERC, and shall simultaneously authorize NERC to release
that data and provide it directly to the CPUC. 
Reliant may request that the CPUC treat all or part of the GADS Data
confidentially, and the CPUC will rule on such requests pursuant to the
California Public Records Act (Title 1, Division 7, Chapter 3.5 of the
California Government Code).

 

5.6.3        Reliant Compliance with CPUC General Order 167. 
Reliant shall comply with the requirements set forth in CPUC General
Order 167, provided, however, that Reliant is free to advocate changes to such
requirements, and to challenge the applicability of such requirements to
Reliant.

 

5.6.4        Reliant Compliance with CPUC Document Requests. 
Reliant shall comply with requests by the CPUC for inspection of
non-privileged documents under Reliant’s control, to the extent required by
applicable state and federal law.

 

5.7           Antitrust Compliance Program.  Reliant Energy, Inc. shall
institute, within thirty (30) Business Days after the Settlement Effective
Date, an antitrust compliance program. 
The antitrust compliance program shall include not less than the
following for directors, officers and employees of Reliant Energy, Inc.’s
western commercial operations:  (i) mandatory
antitrust training, which may be computer based training, for each officer and
employee; (ii) written compliance standards to be distributed to each
officer and employee; (iii) annual review of the compliance program by the
officers and directors of Reliant Energy, Inc.

 

20

 

responsible
for this program; (iv) appointment of an antitrust compliance officer or
an antitrust compliance committee, which may be the Ethics or Compliance
Officer and the Office of Ethics and Compliance of Reliant Energy, Inc.; (v) confidential
reporting systems; (vi) disciplinary mechanisms to ensure enforcement of
standards; and (vii) protocols and procedures for initiating and concluding
internal investigations.  For purposes of
this Section 5.7, with respect to Reliant Energy, Inc., the term “employee”
shall mean all U.S. exempt employees at the manager level or above for western
commercial operations, and the terms “officers” and “directors” shall mean,
respectively, the U.S. officers directing western commercial operations and
U.S. directors of Reliant Energy, Inc. 
Nothing in this Section 5.7 is intended to suggest or reflect that
any antitrust compliance program currently maintained by Reliant Energy, Inc.
is not fully compliant with the requirements set out herein.

 

5.8           ISO and PX Information.  The Reliant Parties authorize the ISO and PX
to provide to the California Parties on or after the Execution Date any
additional information, materials, or data that would otherwise be available to
one or more of the Reliant Parties and that are otherwise not available to the
California Parties and that are related to Reliant’s sales and purchases in the
ISO and/or PX markets during the Settlement Period; provided, that except as
otherwise provided by applicable law, each of the California Parties agrees
that it shall maintain such information in confidence and shall not disclose it
to third parties other than (i) to its employees, lenders, counsel,
accountants, advisors, or consultants who have a need to know such information
for purposes of implementing or administering this Agreement (including the
determination or allocation of the settlement proceeds) and who have agreed to
keep such information confidential, or (ii) to OMOI, which shall treat any
such information so provided as privileged pursuant to 18 C.F.R. § 388.112(c) (2005)
and shall place such information in a non-public file, or (iii) to FERC or
a court to the extent necessary to implement this Agreement or to pursue claims
against entities other than Reliant relating to the Settlement Period, or (iv) as
required by applicable law, rule, or regulation or any administrative,
legislative, or judicial order.

 

6.             DISPOSITION AND ALLOCATION OF THE SETTLEMENT
AMOUNT

 

6.1           Allocation and Distribution of the Settlement Amount.  The
Settlement Amount to be provided pursuant to Section 4.1 shall be
allocated and distributed among certain Market Participants and others in the
manner set forth in this Article 6. 
For purposes of this Article 6, the period May 1, 2000 through
June 20, 2001 shall be divided into the Pre-October Period, the Pre-January 18,
2001 Period, and the Post-January 17, 2001 Period.

 

6.2           Escrow Accounts.  No later than ten (10) Business Days
after the Settlement Effective Date, the California Parties shall establish an
escrow account (the “Reliant Refund Escrow”) for the purpose of receiving,
holding and transferring the Reliant Receivables and certain cash payments to
the extent provided for herein.  The
California Parties shall also establish a separate escrow account (the

 

21

 

“California
Litigation Escrow”) for the purpose of receiving, holding and transferring such
portion of the Reliant Receivables and cash payments that may be required or
permitted herein to be transferred to the California Litigation Escrow as the
California Parties may agree upon among themselves.  The California Parties may from time to time
transfer to the California Litigation Escrow amounts in the Reliant Refund
Escrow that are not needed for refunds to others, provided however that no such
transfer shall occur before the principal payments described in Section 6.4.7
are effectuated.  The costs of creating
and maintaining the Reliant Refund Escrow, the California Litigation Escrow,
and any other escrow accounts created in connection with this Agreement shall
be the responsibility of the California Parties.  In the event that both the Reliant Refund Escrow
and the California Litigation Escrow are not available to begin receiving funds
ten (10) Business Days after the Settlement Effective Date, then all time
periods provided in this Agreement for the payment of funds that include
payments to or from the Reliant Refund Escrow or the California Litigation
Escrow shall be extended by the number of days between the tenth (10th)
Business Day after the Settlement Effective Date and the date on which both the
Reliant Refund Escrow and the California Litigation Escrow are available to
begin receiving funds.  Upon payment by
the Reliant Parties of the cash consideration required pursuant to Section 4.2.6
of this Agreement, except as expressly provided herein, the Reliant Parties
shall have no further liability or obligation to make payments into the Reliant
Refund Escrow or the California Litigation Escrow.

 

6.3           Transfer of Reliant Receivables.

 

6.3.1        Notice to the ISO and the PX.  No later than six (6) Business
Days after the Settlement Effective Date, the California Parties shall advise
the ISO and the PX that the full amount of the Reliant Receivables has been
assigned to the California Parties pursuant to Section 4.2.1, and such
assigned Reliant Receivables shall be applied to the funding of the
consideration provided for in this Agreement. 
The California Parties also shall identify for the PX the amounts of any
Deemed Distributions, as provided for in Section 6.4.2.

 

6.3.2        Transfer of Reliant Receivables to Reliant Refund Escrow.  No
later than ten (10) Business Days after the Settlement Effective Date, the
PX shall transfer a cash payment from the PX Settlement Clearing Account to the
Reliant Refund Escrow, equal to the then current estimated amount of the
Reliant Receivables, excluding interest thereon, (i) less an amount equal
to the total of all Deemed Distributions pursuant to Section 6.4.2, (ii) less
an amount equal to all distributions of funds relating to the period January 1,
2000 through June 20, 2001 (including interest thereon) that have been
paid by the ISO or the PX to the Reliant Parties after the Execution Date but
prior to such cash transfer (such distributions being subject to Section 6.3.4),
(iii) plus the amounts owed by Market Participants with negative
allocations shown on the FERC Refund

 

22

 

Allocation
Matrix, provided that, consistent with a settlement among Enron, OMOI, and the
California Parties, the amount relating to Enron as shown on the FERC Refund
Allocation Matrix shall be transferred without reduction for Fuel Cost
Allowance or Emissions Offset (under that agreement Enron is a Net Payer in the
amount of $2,370,437).  Subject to the
provisions of Section 4.5, the Reliant Parties will comply with their
obligations as specified in other provisions of this Agreement, but shall have
no additional obligations with respect to the amount referenced in this Section 6.3.2,
including with respect to whether such amount is actually transferred by the PX
or deposited into the Reliant Refund Escrow.

 

6.3.3        Transfer of Reliant Receivables to California Litigation Escrow.  Upon
a final determination of the amount of the Reliant Receivables in the FERC
Receivables Determination, the PX shall transfer and deposit into the
California Litigation Escrow the amount, if any, by which the Reliant
Receivables exceeds the sum of the amounts transferred to the Reliant Refund
Escrow pursuant to Section 6.3.2 and the amounts credited as Deemed
Distributions.  The Reliant Parties will
comply with their obligations as specified in other provisions of this
Agreement, but shall have no additional obligations with respect to the amounts
referenced in this Section 6.3.3, including with respect to whether such
amounts are actually transferred or deposited into the California Litigation
Escrow.

 

6.3.4        Early Distribution of Reliant Receivables.  In
the event the ISO or PX distributes to Reliant any part of the Reliant
Receivables subsequent to August 12, 2005 and prior to the final
distribution of funds pursuant to Section 6.3.2 (including distributions
occurring prior to the Settlement Effective Date), the Reliant Party receiving
such Reliant Receivables shall hold such amounts in trust for the California
Parties and within fifteen (15) Business Days (or, in the case of such distributions
prior to the Settlement Effective Date, within fifteen (15) Business Days after
the Settlement Effective Date) transfer an equal amount, plus associated
interest at the annual rate of 3.75%, to the Reliant Refund Escrow or such
other escrow as the California Parties may designate.

 

6.4           Allocation to Market Participants.

 

6.4.1        FERC Refund Allocation Matrix.  The FERC Refund Allocation
Matrix, Exhibit B, shows the allocation, as determined by the California
Parties, among the California Parties and those other Market Participants that
are owed refunds.  The FERC Refund
Allocation Matrix contains an allocation to three time periods (the Pre-October Period,
the Pre-January 18, 2001 Period and the Post-January 17, 2001 Period)
of refunds available for Settling Participants. 
The amounts shown in the FERC Refund Allocation Matrix reflect, among
other things, an allowance for the Fuel Cost Allowance claims previously
submitted by the Reliant

 

23

 

Parties
in the FERC Refund Proceedings in the amount reflected in Section 6.4.4.  Subject to the adjustments set forth herein,
each Settling Participant shall be allocated the net refund amounts shown for
that Settling Participant on the FERC Refund Allocation Matrix.  All distributions of funds according to the
FERC Refund Allocation Matrix shall be paid in cash or as Deemed Distributions
(as described in Section 6.4.2) to those entities entitled to receive
funds in accordance with the FERC Refund Allocation Matrix and which are either
Parties to this Agreement or which are Opt-In Participants as defined in Section 9.1.  Refunds with respect to the Pre-October Period
shall be allocated only with respect to purchases during the period May 1,
2000 through October 1, 2000.  The
additional amount shown on the FERC Refund Allocation Matrix as being payable
to the California Parties’ account shall be allocated pursuant to a separate
agreement among the California Parties.

 

6.4.2        Deemed Distributions to Deemed Distribution Participants. 
Certain Settling Participants, including PG&E, owe pre-refund
amounts to the PX or ISO for transactions during the period from January 1,
2000 through June 20, 2001 or owe refunds to the market as calculated in Exhibit Nos.
CPX-51 and ISO-30 in the FERC Refund Proceedings for that period and are listed
in Exhibit C as Deemed Distribution Participants.  Distribution of settlement proceeds to Deemed
Distribution Participants under this Agreement will take the form of a
reduction (a “Deemed Distribution”) against such amounts owed and shall be
reflected on the books of the ISO and PX. 
The Parties agree, and the FERC Settlement Order shall constitute FERC’s
determination, that the PG&E Plan Escrow may be reduced in an amount equal
to PG&E’s Deemed Distributions under this Agreement.  Other Settling Participants who do not
qualify as Net Refund Recipients shall also receive their allocable refunds in
the form of an offset against their outstanding market obligations.

 

6.4.3        Net Refund Recipients.  Except as provided for Deemed
Distribution Participants, the net refunds to be paid to each Settling
Participant as shown on Exhibit B shall be paid from the Reliant Refund
Escrow in the form of cash.

 

6.4.4        Fuel Cost Allowances and Emissions Offsets.  The
Settlement and the FERC Refund Allocation Matrix reflect an agreed upon
Emissions Offset of $14,604,291 and an agreed upon Fuel Cost Allowance of
$63,250,845.  The Reliant Parties shall
not seek any additional Fuel Cost Allowance or any additional Emissions Offset
as against the Settling Participants for the period beginning January 1,
2000 through June 20, 2001. 
Settling Participants are responsible for their ultimate allocable share
of the agreed upon Fuel Cost Allowance and Emissions Offset, with the allocation
based on the FERC Allowances Determination. 
The Fuel Cost Allowance and Emissions Offset provided for herein shall,
as to the total amounts applicable to the market as a whole, remain fixed as to
the Parties and the

 

24

 

Opt-In
Settling Participants.  The proposed
allocation of charges for such allowance to individual Market Participants,
which is currently based on gross load, shall be subject to adjustment and “true-up”
to comply with the FERC Allowances Determination.  Because the charges for Fuel Cost Allowances
and Emissions Offsets can exceed the refunds due to a Market Participant, some
Market Participants may be shown as owing money in the FERC Refund Allocation
Matrix.  Such Market Participants that
become Settling Participants (“Net Payers”) will not receive or be liable for
payment until the date that FERC requires Market Participants to pay such
allowances in the FERC Refund Proceedings, at which time the payments owed to
or owing from such Net Payers will be adjusted based on the FERC Allowances
Determination.

 

6.4.5        Payment of Interest.  No interest on refunds under this Settlement
or on Reliant’s Receivables shall be released from the PX Settlement Clearing
Account or paid to any Party or Opt-In Participant until the FERC Interest
Determination has been issued and taken effect without being stayed.  At such time, interest shall be paid to each
Party or other Market Participant in accordance with the FERC Interest
Determination, except that all net interest otherwise due to Reliant for
transactions from January 1, 2000 through June 20, 2001, is assigned
and shall be paid to the California Parties as provided for in Sections 4.1.5
and 4.2.1.  Notwithstanding the
foregoing, the amounts allocated as refunds in the FERC Refund Allocation
Matrix for the Pre-October Period shall not bear interest except as may be
earned in any escrows or accounts separately established under this Settlement
and interest accruals shall further be subject to the limitations set forth in Section 7.3.

 

6.4.6        Net Payer.  Any amount shown on the FERC Refund
Allocation Matrix as owed by a Party other than Reliant, or by an Opt-In
Participant, will be reflected on the books of the ISO and PX as an additional
amount owed by that Party or Opt-In Participant.  To determine whether an amount is owed for
purposes of the foregoing sentence, amounts relating to particular periods, e.g. the Pre-October Period, the Pre-January 18,
2001 Period or the Post- January 17, 2001 Period, shall be netted against
each other.

 

6.4.7        Timing of Payments.  Except as provided in Section 6.4.5,
principal payments on refunds reflecting the amount shown in the FERC Refund
Allocation Matrix, either in the form of cash from the Reliant Refund Escrow or
through the offset of payables provided for in the case of Deemed
Distributions, shall be effectuated for Settling Participants, including Opt-In
Participants, no later than twenty (20) Business Days after the Settlement
Effective Date.

 

6.4.8        Distributions to Non-Settling Participants and Disposition of Escrowed
Funds.  Amounts specified on the FERC Refund
Allocation Matrix as payable to Market Participants who, by not making the
election

 

25

 

provided
in Article 9, become Non-Settling Participants will be retained in the
Reliant Refund Escrow until issuance of the FERC Refund Determination.  If FERC determines that Reliant owes refunds
pursuant to the FERC Refund Determination or interest pursuant to the FERC
Interest Determination to any Non-Settling Participant, it shall be paid first
from the amounts retained in relation to Non-Settling Participants in the
Reliant Refund Escrow, until such funds are exhausted, with any balance to be
paid pursuant to Section 6.8.  To
the extent that amounts set aside for Non-Settling Participants in the Reliant
Refund Escrow are in excess of the amount necessary to pay such Non-Settling
Participants pursuant to the FERC Refund Determination and the FERC Interest
Determination, the remaining amount from the Non-Settling Participant set-aside
will be transferred to the California Litigation Escrow.

 

6.5           Receivables Shortfalls and Excesses; Refund Shortfalls and Excesses.

 

6.5.1        Pre-October Period.  Subject to Section 6.9,
the California Utilities shall be responsible for a share of any Refund
Shortfall or Receivables Shortfall allocated to the Pre-October Period.  Any such responsibility shall be deemed to be
a reversal of amounts allocated to the California Utilities and shall be paid
to the ISO and/or the PX, as appropriate, from the amounts allocated to the
California Utilities, on a pro rata basis determined with reference to the
principal amount of refunds (including Deemed Distributions) allocated to each
of the California Utilities in the FERC Refund Allocation Matrix for that
period.  The California Utilities shall
be entitled to payment of any Refund Excess or Receivables Excess allocated to
the Pre-October Period.  Said amount
shall be paid into the California Litigation Escrow and allocated among the
California Utilities on a pro rata basis determined with reference to the total
principal amount of the refund (including Deemed Distributions) allocated to
each of the California Utilities in the FERC Refund Allocation Matrix for that
period.

 

6.5.2        Pre-January 18, 2001 Period.  Subject to Section 6.9,
the California Utilities shall be responsible for a share of any Refund
Shortfall or Receivables Shortfall allocated to the Pre-January 18, 2001
Period.  Any such responsibility shall be
deemed to be a reversal of amounts allocated to the California Utilities under
this Agreement and shall be paid to the ISO and/or the PX, as appropriate, from
the amounts allocated to the California Utilities, on a pro rata basis
determined with reference to the principal amount of refunds (including Deemed
Distributions) allocated to each of the California Utilities in the FERC Refund
Allocation Matrix for that period.  The
California Utilities shall be entitled to payment of any Refund Excess or
Receivables Excess allocated to the Pre-January 18, 2001 Period.  Said amount shall be paid into the California
Litigation Escrow and allocated among the California Utilities on a pro rata
basis determined with reference to the total principal amount of the refund

 

26

 

(including
Deemed Distributions) allocated to each of the California Utilities in the FERC
Refund Allocation Matrix for that period.

 

6.5.3        Post-January 17, 2001 Period.  Subject to Section 6.9 and
in accordance with Section 6.11, CERS shall be responsible for any Refund
Shortfall or Receivables Shortfall allocated to the Post-January 17, 2001
Period, and shall be entitled to payment of any Refund Excess or Receivables
Excess allocated to the Post-January 17, 2001 Period, except to the extent
any refunds paid to CERS for the Post-January 17, 2001 Period pursuant to
the FERC Refund Allocation Matrix are subsequently reallocated to the
California Utilities by agreement of CERS and the California Utilities.

 

6.6           Impact of FERC Allowances Determination.  To
the extent Reliant’s total Fuel Cost Allowance is determined by FERC in the
FERC Allowances Determination to be greater than $63,250,845, Reliant shall be
entitled to recover from each Non-Settling Participant that Non-Settling
Participant’s allocable share of the difference, including, notwithstanding
anything to the contrary in Section 4.2, any associated interest on the
difference, as determined by FERC.  To
the extent Reliant’s total Fuel Cost Allowance is determined by FERC in the
FERC Allowances Determination to be less than $63,250,845, Reliant shall be
responsible for paying to each Non-Settling Participant that Non-Settling
Participant’s allocable share of the difference, including any associated
interest on the difference, as determined by FERC.  In no case shall the California Parties be
responsible for costs, additional refunds, or offsets to refunds associated
with Reliant’s Fuel Cost Allowance.  In
particular, the California Parties shall not be responsible to Non-Settling
Participants for costs, additional refunds, or offsets to refunds associated
with Reliant’s Fuel Cost Allowance beyond each Non-Settling Participant’s
allocated share of the $63,250,845 included in the FERC Refund Allocation
Matrix.  Reliant shall be responsible for
any Emissions Offset and Fuel Cost Allowance amounts or claims allocated to
Reliant in connection with Reliant’s purchases from other sellers.  Reliant shall continue to pursue, at its expense,
its Emissions Offset as to Non-Settling Participants, and shall take all
reasonable actions as requested by the California Parties to pursue such
Emissions Offset.

 

6.7           Funds in the California Litigation Escrow; Distributions to Local
Governmental Parties.  All funds in the California Litigation Escrow
shall be distributed in accordance with a separate agreement among the
California Parties which shall provide for the allocation of $3,600,000 among
the Local Governmental Parties pursuant to the Local Governmental Allocation
Matrix, Exhibit D.  If a Local
Governmental Party does not execute this Agreement, the consideration that
would have been paid to that entity (as identified on the Local Governmental
Allocation Matrix) shall be paid to Reliant pursuant to Section 10.2.  Distributions from the California Litigation
Escrow will accrue interest only from the date the California Litigation Escrow
is funded and at the rate of interest earned on the funds held therein.

 

27

 

6.8           Non-Settling Participants.  Subject to the limitations of
Sections 6.9 and 6.10, the California Parties shall pay to the ISO and/or the
PX, as appropriate, from the Reliant Refund Escrow, the California Litigation
Escrow or otherwise, any refunds due to Non-Settling Participants by the
Reliant Parties in connection with transactions in the ISO or the PX markets
during the Pre-October Period and Refund Period, as determined by FERC in
the FERC Refund Proceedings. 
Notwithstanding the foregoing, Non-Settling Participants shall not
receive any accelerated payment of the Reliant Parties’ refunds under the
Settlement or this Agreement and shall not be guaranteed any specific level of
refunds.

 

6.9           Limitations on California Parties’ Obligations. 
Notwithstanding any other provision of this Agreement, the obligation of
any of the California Parties to pay money to Non-Settling Participants (i) shall
be limited to payment of claims in the FERC Refund Proceedings arising from
Reliant’s transactions in the ISO or the PX markets during the Pre-October Period
and the Refund Period, and shall not encompass payment of claims arising from
other transactions or in any other proceeding, and (ii) shall not, in any
event, exceed the total amount of refunds and/or offsets allocated to that
California Party pursuant to this Agreement for the applicable period as set
forth in the FERC Refund Allocation Matrix. 
Without limiting the foregoing, nothing in this Agreement shall require
the California Parties to bear any liability to any party relating to (i) Reliant
sales outside of the ISO and PX for the period January 1, 2000 through June 20,
2001 or (ii) for any Reliant transactions prior to January 1, 2000 or
after June 20, 2001.

 

6.10         Reliant Settlements with Non-Settling Participants.  The
Reliant Parties retain the right to negotiate with and enter into settlements
of claims with Non-Settling Participants, and such settlements may, subject to
any necessary approvals, establish the amount of refunds payable to such
Non-Settling Participants by the Reliant Parties, but, absent written consent
of each of the California Parties, acting in their sole discretion, the amount
of any such settlement that will be paid from the Reliant Refund Escrow, the
California Litigation Escrow, or otherwise by the California Parties may not
exceed the amount that would have been allocated to that Non-Settling
Participant if it had become an Opt-In Participant.

 

6.11         CERS Amount.  From the amount of refunds that otherwise are
due to CERS pursuant to Section 6.4.1 (excluding any refunds allocated to
short term bilateral sales made to CERS by Reliant), an amount determined
solely by CERS shall be withheld in the Reliant Refund Escrow, or other escrow
specified by CERS, in order to pay any claims against CERS arising under Section 6.5.3
and any of Sections 6.12.1 through 6.12.5 (amounts held in escrow pursuant to
this Section 6.11 are denoted as the “CERS Escrow”).  CERS may withdraw funds from the CERS Escrow (i) from
time to time with the prior written consent of the California Utilities if CERS
can demonstrate to the reasonable satisfaction of the California Utilities
that, after giving effect to such withdrawal, the CERS Escrow shall have
sufficient funds on deposit to satisfy in full the aforementioned obligations,
and (ii) in whole or in part following the later to occur of the
following, provided that all claims of CERS arising under Section 6.5.3 or
any of

 

28

 

Sections
6.12.1 through 6.12.5 have been paid in full: 
(a) issuance by FERC of the FERC Receivables Determination and the
final resolution of any requests for rehearing or any appeals thereof, or, if
no such requests for rehearing or appeals are filed, the lapse of any period
within which such requests or appeals must be filed; (b) issuance by FERC
of the FERC Refund Determination and the final resolution of any requests for
rehearing or any appeals thereof, or, if no such requests for rehearing or
appeals are filed, the lapse of any period within which such requests or
appeals must be filed; (c) issuance by FERC of the FERC Interest
Determination and the final resolution of any requests for rehearing or any
appeals therefrom or, if no such requests for rehearing or appeals are filed,
the lapse of any period within with such requests for rehearing or appeals must
be filed; or (d) issuance by FERC of the FERC Allowances Determination and
the final resolution of any requests for rehearing or appeals therefrom or, if
no such requests for rehearing or appeals are filed, the lapse of any period
within which such requests for rehearing or appeals must be filed.

 

6.12         Effect of Subsequent FERC Orders and Appeals.

 

6.12.1      Changed FERC Interest Determination.  If, as a result of a FERC
order on rehearing, reconsideration, or remand, or an order by a court of
appeals (in each case that is a final order that is no longer subject to
appeal), the FERC Interest Determination is changed in a way that increases or
decreases the interest amount paid to Settling Participants associated with
refunds and other distributions pursuant to this Agreement, then the amount of
such interest paid to Settling Participants shall be trued-up among the
Settling Participants or between the Settling Participants and the Reliant
Refund Escrow, by way of refund or surcharge, with interest at the FERC
Interest Rate or such other rate as FERC may determine to be applicable, to
give full effect to the change from the FERC Interest Determination.  Reliant shall have no additional obligations
with respect to a changed FERC Interest Determination.

 

6.12.2      Changed FERC Allowances.  If, as a result of a FERC order
on rehearing, reconsideration, or remand, or an order by a court of appeals (in
each case that is a final order that is no longer subject to appeal), the FERC
Allowances Determination is changed in a way that increases or decreases the
allocation of Fuel Cost Allowances and/or the allocation of Emissions Offsets
among the Settling Participants, then the amount of Fuel Cost Allowances and/or
Emissions Offsets paid to or by each Settling Participant pursuant to this
Agreement shall be trued-up among such Settling Participants, by way of refund
or surcharge, with interest at the FERC Interest Rate or such other rate as
FERC may determine to be applicable, to give full effect to the change from the
FERC Allowances Determination.

 

6.12.3      Changed FERC Receivables.  If, as a result of a FERC order
on rehearing, reconsideration, or remand, or an order by a court of appeals (in

 

29

 

each
case that is a final order that is no longer subject to appeal), the FERC
Receivables Determination is changed in a way that increases or decreases the
amount of the Reliant Receivables, then the amount of Reliant Receivables paid
by the ISO and the PX to the California Parties pursuant to this Agreement
shall be trued-up among the ISO, the PX and the California Parties, by way of
refund or surcharge, with interest at the FERC Interest Rate or such other rate
as FERC may determine to be applicable, to give full effect to the change from
the FERC Receivables Determination. 
Reliant shall have no additional obligations with respect to changed
FERC Receivables other than as provided in Section 11.4.

 

6.12.4      Changed FERC Refund Determination.  If, as a result of a FERC order
on rehearing, reconsideration, or remand, or an order by a court of appeals (in
each case that is a final order that is no longer subject to appeal), the FERC
Refund Determination is changed in a way that increases or decreases the amount
of refunds owed by Reliant to any particular Non-Settling Participant for the
Pre-October Period, the Pre January 18 Period or the Post January 17
Period, then the amount paid to or received from such Non-Settling Participant
for the Pre-October Period, the Pre January 18 Period and the Post January 17
Period shall be trued up among the California Parties and such Non-Settling
Participant, by way of refund or surcharge, with interest at the FERC Interest
Rate or such other rate as FERC may determine to be applicable, to give full
effect to the change to the FERC Refund Determination.  With the exception of the Fuel Cost
Allowance, Reliant shall have no additional obligation with respect to changed
FERC Refund Determination.

 

6.12.5      Payment Procedures.  All payments pursuant to this Section 6.12
shall be made at the time and in the manner specified by FERC or the court of
appeals.  If neither FERC nor the court
of appeals specifies the time and manner for such payments, then such payments
shall be made by wire transfer within twenty (20) Business Days after the date
that the applicable FERC or court of appeals order changing the FERC Interest
Determination, the FERC Allowances Determination, the FERC Receivables
Determination, or the FERC Refund Determination has become final and no longer
subject to appeal.

 

6.12.6      Reliant Refund Escrow Balance.  Any amounts not distributed to
Settling Participants pursuant to this Agreement that remain in the Reliant
Refund Escrow after all refunds and associated interest have been paid to
Settling Participants and Non-Settling Participants, as provided in this
Agreement, shall be transferred to the California Litigation Escrow.

 

7.             ISO AND PX ACCOUNTING AND IMPLEMENTATION

 

7.1           FERC-Directed Compliance.  The FERC Settlement Order
shall constitute authorization and direction to the ISO and PX to implement the
terms of this

 

30

 

Agreement.  As a result of the FERC’s approval of this Agreement
in the FERC Settlement Order, the ISO and/or PX shall be required to do the
following:

 

7.1.1        General Accounting Treatment.  The ISO and PX shall conform
their books and records to reflect the distributions, payments, offsets,
transfers, deemed resolution of claims, and status of accounts provided for in
this Agreement.

 

7.1.2        Accounting Treatment of Assigned Reliant Receivables.  The
PX and ISO shall reflect on their books and records all distributions from the
PX Settlement Clearing Account to the Reliant Refund Escrow that represent
payments of amounts owed by the ISO to Reliant for the Reliant
Receivables.  The ISO shall recognize, as
a reduction in the amounts payable by the PX to the ISO, all distributions from
the PX Settlement Clearing Account to the Reliant Refund Escrow that represent
payments of amounts owed by the ISO to Reliant for the Reliant Receivables.

 

7.1.3        Calculation and Accounting Treatment of Distributions to Settling
Participants and Non-Settling Participants.  The ISO and PX shall calculate
the amount, if any, that Reliant would owe in refunds if the refund pricing
methodology in FERC’s orders in the FERC Refund Proceedings were applied for
each of three time periods:  the Pre-October Period,
the Pre-January 18, 2001 Period, and the Post-January 17, 2001 Period
(“Unsettled Reliant Refund Amount”), and submit those calculations for approval
to FERC at the same time that they submit their calculations of refunds for
other Market Participants.

 

7.1.4        Calculation and Accounting Treatment of Refunds Owed to Reliant.  The
ISO and PX shall calculate the amount, if any, that Reliant would be owed in
refunds if the refund pricing methodology in FERC’s orders in the FERC Refund
Proceedings were applied for each of the three time periods: the Pre-October Period,
the Pre-January 18, 2001 Period, and the Post-January 17, 2001
Period, and submit those calculations for approval to FERC at the same time
that they submit their calculations of refunds owed to other Market
Participants.  Subject to, and after
adjustment on account of, the provisions of Sections 4.3.2 and 8.4.2 of this
Agreement, such refunds owed to Reliant for any period shall be reflected on
the books of the ISO and PX as payable to the California Parties to implement
the assignment provided for in Section 4.3.1 of this Agreement.

 

7.2           Calculation of Reliant Refund Amounts For Individual Market
Participants.  Following the date of the FERC Refund
Determination, but prior to the date on which refunds are to be paid pursuant
to the FERC Refund Determination, the ISO and PX shall determine the portion of
the Unsettled Reliant Refund Amounts that, absent this Agreement, would be
deemed to be owed to each Market Participant that is entitled to receive
refunds (“Unsettled Participant Refund

 

31

 

Amount”).  The ISO and PX shall determine the Unsettled
Participant Refund Amount for each Market Participant by multiplying the
Unsettled Reliant Refund Amounts for each respective time period (the Pre-October Period
(if ordered by FERC), the Pre-January 18, 2001 Period and the Post-January 17,
2001 Period) by each Market Participant’s percentage share of total refunds in
the combined ISO and PX markets for that time period.

 

7.2.1        Accounting Treatment of Distributions to Settling Participants.  The
ISO and PX shall reflect on their books and records that Settling Participants
have, through this Agreement, been paid in full their share of all Reliant
Refunds allocated to them under this Agreement and shall not be entitled to
receive the Unsettled Participant Refund Amount if different from the amount of
Reliant Refunds allocated to each respective Settling Participant under this
Agreement.

 

7.2.2        Accounting Treatment of Deemed Distributions.  The
PX and ISO shall reflect Deemed Distributions on the books and records of the
PX and ISO as reductions in the amounts owed to the PX and/or ISO by any
Settling Participant that receives a Deemed Distribution.

 

7.2.3        Accounting Treatment of Distributions to Non-Settling Participants.  The
ISO and PX shall reflect distributions from the Reliant Refund Escrow to
Non-Settling Participants pursuant to Section 6.8 as payments to
Non-Settling Participants.

 

7.3           Termination of Interest Accrual.  The PX and ISO shall reflect in
their books and records, with respect to Settling Participants, that the
accrual of interest at the FERC-established rate on principal amounts subject
to the FERC Interest Determination as provided for in Section 6.12 ceases
upon the distribution of funds from the PX and/or the ISO to the Reliant Refund
Escrow pursuant to this Agreement, or as may be accomplished through the
implementation of Deemed Distributions, and, for purposes of the accounts of
the PX and the ISO, no interest on such funds shall accrue after distribution
except as may be earned on transferred amounts while on deposit in the Reliant
Refund Escrow.

 

7.4           Implementation of Agreement.  FERC’s approval of this
Agreement in the FERC Settlement Order shall constitute its direction (i) to
the ISO and the PX to recognize and implement the assignment of the Reliant
Receivables and the treatment of PX Wind-Up Charges in accordance with this
Agreement, and (ii) to the PX to reverse any offsets previously made to
the Reliant Receivables to reflect PX Wind-Up Charges that Reliant is instead
obligated to pay in cash pursuant to Section 8.7.7 of this Agreement.

 

7.5           Duty of Cooperation.  Each Party shall reasonably and in good faith
cooperate and take all reasonable steps to secure (i) the release of funds
from the PX Settlement Clearing Account to the Reliant Refund Escrow as
contemplated by this Agreement; (ii) the accounting treatment contemplated
under this Article 7; and (iii) any other acts of the PX or the ISO
necessary to effectuate the terms of

 

32

 

this
Agreement.  This duty of cooperation
shall include making individual or joint requests to the PX or the ISO,
executing appropriate waivers, providing data and providing other assistance to
the PX and the ISO as necessary to implement this Agreement.

 

7.6           Tariff Waivers.  FERC’s approval of this Agreement in the FERC
Settlement Order shall constitute a grant of such waivers of the ISO and the PX
tariffs as may be necessary for the ISO and the PX to disburse such funds as
required by this Agreement, to account for transfers, allocations and
distributions of funds as required by this Agreement, and to otherwise
implement this Agreement.

 

8.             SCOPE OF SETTLEMENT AND RELEASES; WITHDRAWALS,
RELEASES AND WAIVERS

 

8.1           Settlement.

 

8.1.1        Settlement of FERC Refund
Proceedings.  In return for the consideration specified
elsewhere in this Agreement, and subject to the required regulatory approvals
under this Settlement, all claims against Reliant for refunds, disgorgement of
profits, billing adjustments, or other monetary or non-monetary remedies in the
FERC Refund Proceedings shall be deemed settled, provided that the FERC Refund
Proceedings shall not be deemed settled as to Non-Settling Participants, and provided
further that nothing herein affects the CERS claim described in Section 8.7.2.

 

8.1.2        Impact of Settlement on FERC
Refund Proceedings.  Reliant and the California Parties shall not
contest the amount of refund liability and/or offsets (exclusive of interest)
attributable to Reliant in FERC Docket Nos. EL00-95, et al.  Reliant and
the California Parties will not dispute the outcome of Docket Nos. EL03-59,
EL03-170, EL03-180, PA02-2, IN03-10, and FERC’s physical withholding
investigation, as they relate to Reliant, because they are resolved by this
Settlement, and the California Parties will withdraw their petition for
rehearing in Docket No EL03-170. 
Dismissal of objections to the Reliant/OMOI Settlement shall not be
deemed an admission by the California Parties that FERC has jurisdiction over
the gas issues in the Reliant/OMOI Settlement and approval of this Settlement
by FERC shall constitute FERC’s acknowledgment that nothing in the orders
approving this Settlement or the Reliant/OMOI Settlement shall be deemed to
have precedential value against the California Parties in future proceedings
concerning FERC’s jurisdiction over conduct of participants in natural gas and
transportation markets.

 

8.1.3        Withdrawal of Certain Protests.  Each
California Party that filed a protest in Docket Nos. ER99-2079, ER99-2080, ER99-2081,
ER99-2082 and ER99-2083 shall withdraw its protest in those proceedings within
twenty (20) Business Days of the Settlement Effective Date.

 

33

 

8.1.4        Reservation of Claims. 
Notwithstanding anything to the contrary in this Agreement, Reliant
shall be deemed to retain all claims and defenses it may have against
Non-Settling Participants.

 

8.1.5        Withdrawal of Certain Outstanding
Challenges to FERC Orders.  Except as necessary to assert claims and
defenses as provided in Section 8.1.4 above, Reliant and the California
Parties shall withdraw all outstanding challenges to the orders in the FERC
Refund Proceedings with respect to Reliant and California Parties. The
California Parties may continue to assert their respective positions on those
issues, and may continue to assert any position on refunds and other relief as
related to suppliers other than Reliant.

 

8.2           Release of ISO and PX Disputes and PX Chargeback Amounts.  With
respect to transactions related to sales of electricity and ancillary services
by Reliant or transmission congestion charges applicable to the same, Reliant
waives and releases any disputes regarding existing ISO and PX settlements for
the period from January 1, 2000 through June 20, 2001 upon the
Settlement Effective Date.  FERC approval
of this Settlement shall constitute an order to release to Reliant the amount
of the Reliant chargebacks.

 

8.3           Scope of Certain Releases.  The releases set forth in
Sections 8.4 through 8.6 shall run to, benefit and be enforceable by any
individual who, as a past or present officer, director, agent, or employee of a
corporate or organizational party that receives the benefits of such releases insofar
as s(he) participated as an officer, director, agent or employee in or might be
claimed to be liable for any of the actions or events of potential liability
for which a party is released by Sections 8.4 through 8.6, and shall run to,
benefit and be enforceable as well by CenterPoint Energy Inc., its affiliates
and subsidiaries, and by El Dorado Energy, LLC to the extent any such claim is
based on, or arises out of, or relates to conduct of Reliant, its directors,
officers, employees or agents, which conduct is the subject of this
Agreement.  Nothing in this Agreement
shall limit the rights of the California Parties to seek relief from any entity
other than Reliant for sales of power generated by El Dorado Energy, LLC that
were made by any entity other than Reliant; provided, however, that the
California Parties shall not seek additional relief from Reliant associated
with such sales by an entity other than Reliant.

 

8.4           FERC and Federal Power Act Releases.

 

8.4.1        Mutual Releases.  Subject to Section 8.7 below, the
California Parties, on the one hand, and Reliant, on the other hand, as of the
Settlement Effective Date, hereby release the other from all existing and
future claims before FERC and/or under the Federal Power Act arising from or
relating to any allegation that, during the Settlement Period:

 

(i)            Reliant or any California Party charged or
collected unjust, unreasonable or otherwise unlawful rates, terms or conditions
for

 

34

 

natural
gas, transportation of gas, electric energy, ancillary services, or
transmission congestion in the western energy markets; or

 

(ii)           Reliant or any California Party manipulated the western electricity or
gas markets in any fashion (including claims of economic or physical
withholding, gaming, forms of electricity market manipulation discussed in the
Final Staff Report, or any other forms of market manipulation), or otherwise
violated any applicable tariff, regulation, law, rule or order relating to
the western energy markets.

 

8.4.2        Additional Release.  Reliant, as of the Settlement Effective Date,
hereby releases each of the California Parties from all existing and future
claims before FERC and/or under the Federal Power Act arising from or relating
to any allegation that, during the Settlement Period, any California Party is
liable for any additional payments to Reliant not provided for herein for
congestion charges or for electric energy or ancillary services.

 

8.4.3        Waiver Regarding Assigned Assets to CERS. 
Effective as of the Settlement Effective Date, Reliant hereby waives, to
the extent not assigned to CERS pursuant to Section 4.3.2 of this
Agreement, all rights it has or may claim to have to refunds and associated
interest resulting from any mitigation of sales by CERS of imbalance energy
into the ISO real-time market, as well as surcharges and other charges
associated with such sales, that may be payable pursuant to FERC’s May 12,
2004 Order on Requests for Rehearing and Clarification in Docket Nos. EL00-95
and EL00-98 and subsequent orders.

 

8.4.4        Withdrawal of Claims in PG&E Bankruptcy. 
Within ten (10) Business Days following the Settlement Effective
Date, Reliant will withdraw with prejudice all claims filed by it in the
PG&E bankruptcy.

 

8.5           Gas and Civil Claims Releases.

 

8.5.1        Mutual Releases.  Subject to Section 8.7 below, the
California Parties and Additional Claimants, on the one hand, and Reliant, on
the other hand, as of the Settlement Effective Date, hereby release the other
from all past, existing and future claims for civil damages and/or penalties
and/or equitable relief, including disgorgement and restitution, or FERC relief
concerning, pertaining to, or arising from, or relating to allegations that,
for the Settlement Period, Reliant or any California Party or Additional
Claimant:

 

(i)            Charged or collected unjust, unreasonable or
otherwise unlawful rates, terms or conditions for natural gas, transportation
of gas,

 

35

 

electric
energy, ancillary services, or transmission congestion in the western
electricity and natural gas markets;

 

(ii)           Manipulated the western electricity or natural gas markets in any
fashion (including claims of economic or physical withholding, gaming,
misreporting to price index publishers, forms of market manipulation discussed
in the Final Staff Report, or any other forms of market manipulation);

 

(iii)          Was 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 or natural gas markets; or

 

(iv)          Violated any antitrust law or is liable for any monetary or
non-monetary damages or other remedies relating to Reliant’s acquisition,
operation, or management of facilities for the generation of power in the
western United States.

 

8.5.2        Additional Release.  Reliant as of the Settlement Effective Date,
hereby releases each of the California Parties from all past, existing and
future claims for civil damages and/or penalties and/or equitable relief,
including disgorgement and restitution, or FERC relief concerning, pertaining
to, or arising from, or relating to allegations that any California Party is
liable for any additional payments to Reliant not provided for herein for congestion
charges or for sales of natural gas, electric energy, or ancillary services
during the Settlement Period.

 

8.6           Reliant, Class Action Parties and Local Governmental Parties
Releases.

 

8.6.1        Mutual Releases.  The Class Action Parties and the Local Governmental
Parties, on the one hand, and Reliant, on the other hand, as of the dates
specified in Section 8.6.2, hereby forever release the other from all
past, existing and future claims for civil damages and/or penalties and/or
equitable relief, including disgorgement and restitution, concerning,
pertaining to, or arising from or relating to Reliant’s actions in connection
with the provision of electricity at any time prior to the August 12, 2005
date of the Memorandum of Understanding, including any claims:

 

(i)            For any excessive, unlawful, or unjust and
unreasonable charges, rates or prices in California and western electricity
markets;

 

(ii)           Relating to the existence or exercise of market power in California and
western electricity markets;

 

(iii)          Relating to any alleged violations of any governing electricity-related
tariff, order, resolution or rule applicable to California and

 

36

 

western
electricity markets, including ISO and PX Market Monitoring and Information
Protocols;

 

(iv)          Relating to Reliant’s acquisition, operation, or management of
facilities for the generation of electric power in California and western
electricity markets;

 

(v)           Arising from or relating to Reliant’s operations in connection with the
purchase, sale, trading, marketing or transmission of electric power, including
its bidding, trading or participation in California or western electricity
markets, or any economic or physical withholding; or

 

(vi)          Any other claim that was alleged or could have been alleged by the Class Action
Parties or Local Governmental Parties, including any claim based on alleged
conspiracy to restrain trade or fix prices in California or western electricity
markets.

 

Without limitation, the release in this Section 8.6.1
waives and resolves any and all claims, causes of action, demands or other
liability of any nature whatsoever that the California Class and/or Egger Class have
made, or could have made, or on behalf of whom was made, against Reliant in or
before any federal, state, or local court or agency arising out of or related
to the foregoing, under any claim or cause of action, including but not limited
to claims under California Business & Professions Code § 17200,
California Business & Professions Code § 16720, California Code
of Civil Procedure § 526a, any federal antitrust statute, or any similar
statute or claim of any other state, or any common law tort theory.

 

8.6.2        Release Effective Dates.  As to the Class Action
Parties, the releases provided in Section 8.6.1 above are effective on the
Class Action Effective Date as defined in Section 2.5.  As to the Local Governmental Parties, the
releases provided in Section 8.6.1 above are effective on the Settlement
Effective Date, or such later date should approval under Section 10.2
occur after the Settlement Effective Date.

 

8.6.3        No Impact on California Parties - Reliant Releases. 
Nothing in the releases set forth in Section 8.6.1 shall be
construed as in any manner expanding or otherwise amending or modifying any of
the releases provided in this Agreement to Reliant by the California Parties,
nor shall Reliant assert the releases set forth in Section 8.6.1 as a bar
to claims that may be brought by any of the California Parties with respect to
the period subsequent to December 31, 2001, including claims that the
California Parties, or any of them, may bring in their representative
capacities on behalf of retail electric or natural gas customers.  With the exception of the CPUC (which was not
a party to the Memorandum of Understanding) each of the California Parties
represents that as of the Execution Date, it

 

37

 

was
not aware of any claim it may have against Reliant that pertains to the period
subsequent to December 31, 2001 (other than any claims that might exist
under reliability must run contracts or on-going bilateral contracts) and which
would be encompassed within the releases set forth in Section 8.6.1 if the
California Parties were providing those same releases.

 

8.7           Limitations on Releases.

 

8.7.1        Cooperation with Investigations; Participation in FERC Proceedings.  The
California Parties and Additional Claimants may continue to cooperate with all
state and federal investigations and to participate in all matters before FERC;
provided that, as of the Settlement Effective Date, the California Parties and
Additional Claimants shall withdraw from and not prosecute any litigation,
administrative proceedings or investigations with respect to Reliant insofar as
such prosecution would be inconsistent with the foregoing released claims.

 

8.7.2        Reservation of CERS/Reliant Claims.  The releases set forth in
Sections 8.1, 8.2, 8.3, 8.4 and 8.5 do not include any claims by CERS against
Reliant or by Reliant against CERS arising from or relating to that certain
letter agreement by and between Reliant and CERS dated February 16, 2001,
short term purchases due to billing or accounting errors, reconciliation of
payments reflected on invoices for transactions conducted, imbalance energy
(including unpaid ISO purchases) and accounting disputes relating to imbalance
energy procured by CERS, or emissions credits taken by Reliant, all of which
claims are hereby expressly preserved and will be addressed in a concurrent
settlement agreement between Reliant and CERS which settlement shall address
any and all such claims for the period prior to the Execution Date of the
Memorandum of Understanding.

 

8.7.3        No Waiver by Attorneys General as to Criminal and Certain Other Claims.  The
releases set forth in Sections 8.2, 8.3 and 8.4 do not constitute a waiver or
release of any claims by the California Attorney General or the Additional
Claimants for any actions of or omissions either before or subsequent to the
Settlement Effective Date which are either: (i) willfully fraudulent;
provided, however, that this release does extend to such claims (if any) that
are based solely upon acts or omissions that (a) occurred prior to the
Settlement Effective Date and (b) are currently known by the California
Attorney General’s Office or the Additional Claimants; or (ii) criminal.

 

8.7.4        PG&E v. FERC, Ninth Circuit No. 03-72874.  The releases set forth herein
include a release of all claims by the California Parties against Reliant in
the petition for review now pending before the Ninth Circuit in PG&E v. FERC, Case Nos. 03-72874, et al. 
However, there is no settlement of the proceeding or release as between
FERC and the

 

38

 

California
Parties.  The California Parties may
attempt to continue to pursue the proceeding as against FERC.  FERC, on the other hand, may seek to have the
proceeding dismissed entirely as the result of this Settlement.  It is agreed that the outcome of the Ninth
Circuit proceeding will have no bearing on amounts owed by or to Reliant, and
that Reliant will withdraw from the proceeding.

 

8.7.5        Participation in Other Proceedings.  Except as otherwise provided
herein, all Parties to this Agreement and those Market Participants that agree
to accept the benefits of this Settlement shall remain free to participate,
without limitation, in any existing proceeding with respect to parties other
than Reliant, or to initiate or participate in any future proceeding to the
extent not inconsistent with the releases set forth in Sections 8.2, 8.3, 8.4,
8.5 and 8.6, including proceedings addressing, prospectively, generic issues
concerning market structure, scheduling rules, generally applicable market
rules, and generally applicable price mitigation.

 

8.7.6        California Parties’ Settlements.  Reliant agrees not to oppose
any settlement between the California Parties and any other supplier that
substantially conforms to the terms of this Agreement or with the terms of the
Williams, Dynegy, Duke, Mirant and Enron Settlements.  If Reliant has a claim to refunds in the FERC
Refund Proceedings against any other supplier, then Reliant will seek to join
the Williams, Dynegy, Duke, Mirant and Enron Settlements and will join any
settlement between the California Parties and such supplier that substantially
conforms to the terms of this Agreement or with the terms of the Williams,
Dynegy, Duke, Mirant and Enron Settlements and take any and all action
reasonably required by the California Parties to implement the terms of the
assignments provided for in Section 4.3 of this Agreement, provided that,
if such other supplier has a claim to refunds in the FERC Refund Proceedings
against Reliant, then such other seller agrees to opt-in to the Settlement,
even if the five-day notice period for opt-ins has passed, to the extent it has
not already done so.

 

8.7.7        Payment of PX Wind-Up Charges.  Reliant will pay in cash to the
PX, and not through offsets, any PX Wind Up Charges allocated to Reliant for
the period up to the Settlement Effective Date. 
The California Parties shall be responsible for all PX Wind-Up Charges
that Reliant would have been responsible for absent this Agreement with respect
to the PX’s activities from and after the Settlement Effective Date.  To the extent that the PX previously obtained
payment from Reliant for PX Wind-Up Charges by set off against the Reliant
Receivables, the FERC Settlement Order shall be deemed to direct the PX to
reverse such setoff.

 

8.7.8        Qualifying Facilities.  Nothing in this Agreement shall prevent the
California Parties from taking any position in any proceeding concerning

 

39

 

the
prices applicable to sales by qualifying facilities, and nothing in this
Agreement shall limit the relief that the CPUC may order in any proceeding
before it, including the CPUC’s Order Instituting Rulemaking into
Implementation of Public Utilities Code Section 390, Rulemaking 99-11-02.

 

8.7.9        Continuation of CPUC Investigation.  Nothing in this Agreement shall
restrict the ability of the CPUC to continue its investigation of the
manipulation of natural gas prices or services, generator operation and
maintenance, or to carry out its responsibilities under California Senate Bill
39 of the 2001-2002 Second Extraordinary Session.

 

8.7.10      CPUC Investigatory Authority.  Nothing in this Agreement
shall restrict the ability of the CPUC to collect information or investigate
any matter for the purposes of making policy and/or legal arguments for rule changes,
market reform, market mitigation, or related matters, or from making such
policy arguments in any forum, based on information resulting from such
investigation.

 

8.7.11      Scope of Certain Limitations.  Nothing in Sections 8.7.8,
8.7.9 or 8.7.10 above is intended or shall be construed to (i) permit any
of the California Parties to seek additional compensation or other relief as
against Reliant with respect to the transactions, conduct and other matters
that are encompassed within the releases set forth in Sections 8.4.1 and 8.5.1
or (ii) limit the ability of Reliant to challenge any actions taken or
recommendations made by the CPUC in connection with the proceedings or
investigations referred to in Sections 8.7.8, 8.7.9 and 8.7.10.

 

8.7.12      Nothing in the releases set forth in Section 8.6.1 shall be
construed in any manner as releasing any claim specifically asserted in the
Master Class Action Complaint dated March 9, 2005 filed against
Reliant in the cases denominated as the “Price Indexing Cases,” coordinated
under Natural Gas Anti-Trust Cases I, II, III and IV, California
Judicial Council Coordination Proceeding Nos. 4221, 4224, 4226 and 4228.

 

8.8           Effectiveness of Releases.  It is the intention of the
Parties that the releases granted pursuant to this Article 8 shall be effective
as a bar to all causes of action and demands for monetary relief, including
costs, expenses, attorneys’ fees, damages, losses and liabilities of every
kind, known or unknown, suspected or unsuspected, herein above specified in
this Article 8.  In furtherance of
this intention, Reliant on the one hand and the California Parties, the Class Action
Parties, the Local Governmental Parties, the Additional Claimants and OMOI, on
the other hand, 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 any state or territory of the United States or principle of
common law that is similar to Section 1542.  Section 1542 provides:

 

40

 

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

 

In connection with such waiver and relinquishment,
the Parties each acknowledge that they are aware that they may hereafter
discover facts in addition to or different from those which they now know or
believe to be true and with respect to the subject matter of this Agreement,
but that it is their intention hereby to fully, finally and forever settle and
release all matters, disputes, differences, known or unknown, suspected or unsuspected,
that are set forth in this Article 8. 
This Agreement is intended to include in its effect, without limitation,
other than the limitations set forth in Section 8.7, all claims
encompassed within the settlement and releases set forth in this Article 8,
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.  The
Releases set forth in this Article 8 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.  Notwithstanding the waiver of
California Civil Code Section 1542, the Parties acknowledge and agree that
the releases provided for in this Agreement, although intended to be full and
complete releases applicable to both known and unknown claims with respect to
the matters described, are nonetheless specific to the matters set forth in this
Article 8 and are not intended to create general releases as to claims, or
potential claims, based on any matters other than those described in this Article 8.

 

8.9           Tolling.  Pending the approvals specified in Section 10.1,
the Parties agree to continue the currently in place tolling of any statutes of
limitations or similar defenses based on the passage of time with respect to
the matters released in this Article 8 (and for this purpose the continued
tolling provided for in the Memorandum of Understanding shall be deemed to have
continued as though provided under this Agreement as well so that no gap shall
result from the fact that this Agreement has superseded the Memorandum of
Understanding).  If this Agreement is
terminated pursuant to Sections 2.6 or 4.6 or approval is not obtained as
provided in Section 10.1, or if this Agreement is otherwise invalidated,
the Parties agree notwithstanding any other provision in this Agreement that
the tolling provided for in this provision will remain in effect through the
date of such termination, non-approval or invalidation.

 

8.10         Compensatory Nature of Settlement.  All payments made by Reliant
pursuant to this Settlement represent compensation to Settling Participants for
the matters released herein.

 

41

 

9.             MARKET PARTICIPANTS’ ELECTION TO PARTICIPATE IN
SETTLEMENT

 

9.1           Election to Participate in Settlement. 
Subject to the terms of this Agreement, upon the filing of this
Agreement at FERC, any Market Participant that elects to be bound by this
Agreement may become an Opt-In Participant and shall be bound by this Agreement
by notifying FERC that the Market Participant wishes to become a Settling
Participant, using the form of notice attached hereto as Exhibit F.  Opt-In Participants shall have rights and
obligations provided for them under this Agreement, even though such Opt-In
Participants shall not be Parties or Settling Claimants hereto.  Electronic copies of the notice required by
the first sentence of this Section 9.1 shall be served, in accordance with
FERC’s rules, on each person designated on (i) the ListServ established
for the proceedings in FERC Docket Nos. EL00-95, et al., and (ii) the
ListServ established for the Partnership/Gaming Proceeding.  Any Market Participant that has not provided
such notice and the required service on or before the date that is five (5) Business
Days following the issuance by FERC of the FERC Settlement Order shall have no
right to participate in the Settlement contemplated in this Agreement, absent
the written agreement of the California Parties and the Reliant Parties, and
shall be deemed to be a “Non-Settling Participant” for purposes of this
Agreement.

 

9.2           Releases.  Subject to the terms of this Agreement, each
Market Participant electing to be an Opt-In Participant bound by this Agreement
pursuant to Section 9.1 shall be deemed to have provided all of the
waivers and releases of claims against the Reliant Parties that are set forth
in Article 8, and the Reliant Parties shall be deemed to have provided or
received the waivers and releases set forth in Article 8 as they relate to
such Opt-In Participant.  Non-Settling
Participants shall not be deemed to have provided or received any of the
waivers, releases, or other benefits set forth in this Agreement.  If an Opt-In Participant itself is determined
by FERC to owe refunds to the ISO or PX on account of transactions during 2000
and 2001, opting into this Agreement shall not be deemed to reduce or alter the
amount of refunds that such Opt-In Participant owes.

 

10.          REQUIRED APPROVALS; OBTAINING LOCAL GOVERNMENTAL
APPROVALS; STAYS

 

10.1         Required Approvals.  The Settlement made pursuant to this
Agreement shall be subject to approval by:

 

10.1.1      FERC.  FERC in the FERC Settlement Order, which
order shall be deemed to authorize and direct the ISO and PX to implement the
terms of this Settlement and, if necessary, to grant waiver of any tariff
provisions that may provide for contrary resolution of the matters covered by
this Settlement; and

 

10.1.2      The CPUC.  The CPUC, which approval shall be implemented
by the CPUC entering into this Agreement as a Party.  CPUC approval shall constitute permission for
SCE to consummate this Settlement.

 

42

 

Each of the two approvals provided for above shall
include approval of all of the terms and conditions of this Agreement in its
entirety without material change or condition unacceptable to any adversely
affected Party (collectively, the “Required Approvals” and each a “Required
Approval”).  If any Required Approval,
or, if the Settlement Effective Date has not then occurred, any order resulting
from a request for rehearing or an appeal of any of the Required Approvals,
includes a material change or condition that adversely affects any Party, then
each Party so affected shall communicate its consent or lack of consent to such
change or condition in writing to the other Parties within five (5) Business
Days after the date on which the decision, order, or ruling constituting the
Required Approval, or any order resulting from a request for rehearing or
appeal of any Required Approval, was issued. 
The failure of an affected Party to provide written notice to the other
Parties in accordance with the foregoing sentence shall constitute acceptance
by such Party of the material change or condition.  In such cases where an order includes a
material change or condition, the Required Approval will be deemed to have
occurred on the date all Parties have indicated consent by providing written
notice to the other Parties or by failing to provide timely notice.

 

10.2         Approvals for Local Governmental Parties.  This
Agreement shall also be subject to approval, with respect to provisions
pertaining to Local Governmental Parties, by such Local Governmental Parties’
governing boards or councils, if necessary; provided, however, that:  (i) the failure of any such Local
Governmental Party to obtain the approval of this Agreement by its governing
board or council shall not diminish the effectiveness of this Agreement as to
all other Parties; (ii) if any Local Government Party has not obtained
such approval within ninety (90) days of the Execution Date, Reliant, at its
sole and absolute discretion, may elect to terminate the Agreement as to that
Local Government Party and, in accordance with Section 6.7, the
consideration that would have been paid to that entity (as identified on the
Local Governmental Parties’ Allocation Matrix, Exhibit D) shall be paid to
Reliant.

 

10.3         Cooperation Regarding Stay of Lockyer v Reliant.  On August 23,
2005, the court in State
of California, ex rel Bill Lockyer, et al. v. Reliant Energy, et al., U.S. District Ct. (N.D. Cal.) Case No. C-02-1788-VRW
(“Lockyer v. Reliant”) entered an order staying the action in its
entirety pending orders from the FERC and CPUC either approving or disapproving
the Settlement.  The parties to Lockyer v. Reliant shall maintain or seek to extend this stay
in full force and effect until the earlier of (i) the Settlement Effective
Date or (i) the date this Agreement is terminated (each a “Stay
Period”).  No collateral estoppel or
other prejudice to the rights, claims or defenses of any party to that case
shall arise during or on account of the Stay Period and none of the parties to
that case shall have any argument based on the doctrine of laches or similar
equitable grounds due to inaction during the applicable Stay Period.  During the Stay Period, the parties to Lockyer v. Reliant shall not initiate any discovery, and shall
not seek to enforce any outstanding discovery, including subpoenas to third
parties, in that case.

 

43

 

11.          REPRESENTATIONS, WARRANTIES AND COVENANTS

 

11.1         Representations of all Parties and Settling Participants.  Each
Party (except for the Class Action Parties, as to whom this Agreement is
subject to court approval and the Local Governmental Parties, as to which
governing board or council approval of this Agreement may be necessary) and
each Opt-In Participant makes the following representations and warranties, for
itself only, to each other Party and Opt-In Participant, to be effective from
and after (i) for the Parties, the Execution Date and (ii) for Opt-In
Participants, the date of opt-in pursuant to Section 9.1:

 

11.1.1      Organizational Status, Power and Authority. 
Except for any Governmental Authority, it is a corporation or limited
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation. 
It possesses all necessary power and authority to execute, deliver and
perform its obligations under this Agreement.

 

11.1.2      Authority to Execute.  If applicable, the execution, delivery,
election to participate and performance of this Agreement (i) are within
its powers, (ii) 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 (iii) do not violate any of the terms and
conditions of any applicable law, or materially violate any contracts to which
it is a party.  In addition, Reliant
Energy, Inc. represents and warrants that it has the authority to sign on
behalf of, and to bid to the terms and conditions of this Agreement, each of
the affiliates and subsidiaries listed on Exhibit A hereto.

 

11.1.3      Binding Obligation.  This Agreement constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.

 

11.1.4      Ownership of Claims.  It is the sole owner of the claims which are
being resolved and compromised by it pursuant to this Agreement.  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.

 

11.2         Representations of the Reliant Parties.  The
Reliant Parties jointly and severally represent and warrant to the California
Parties that the exact legal name of each of the Reliant Parties is accurately
set forth in the definition of Reliant Parties and that Reliant Energy Services, Inc.
is a Delaware corporation and the sole owner of the Reliant Receivables and the
Assigned Assets.  The Reliant Parties
further jointly and severally warrant and represent that the entities listed in
Exhibit A are wholly owned by Reliant Energy, Inc., and, to the best
of their knowledge, the organizational charts attached hereto as Exhibit A
provide true and correct

 

44

 

representations
of the Reliant organizational structure during the time periods covered by the
releases set forth in Article 8 of this Agreement.

 

11.3         Understanding of Terms.  In executing this Agreement, or, with respect
to Opt-In Participants, in electing to participate in this Agreement:

 

11.3.1      Independent Investigation.  Each Party and Opt-In
Participant acknowledges that it has relied on its own independent
investigation and conducted its own due diligence with respect to the subject
matter of this Agreement and in determining whether or not to enter into this
Agreement or accept the benefits of this Settlement, including a review of the
underlying contracts, agreements, transactions, instruments and applicable law in
connection herewith, or has been afforded an opportunity to review relevant
information, ask questions and receive satisfactory answers concerning this
Settlement and the terms and conditions of this Agreement;

 

11.3.2      Expert Evaluation.  Each Party and each Opt-In Participant
acknowledges it is experienced in or had the opportunity to consult with
experts who are experienced in wholesale and retail electric and gas commodity,
risk management and other transactions and possesses the knowledge, experience
and sophistication to allow it to fully evaluate and accept the merits and
risks of entering into the transactions contemplated by this Agreement or
accepting the benefits of this Settlement; and

 

11.3.3      Information Access.  Each Party acknowledges that the Reliant
Parties made available information and analysis to support their valuation
regarding refunds and receivables.

 

11.4         Warranties Regarding the Reliant Receivables and Assigned Assets.

 

11.4.1      Amount of Reliant Receivables.  Reliant warrants and represents
that the amount of the Reliant Receivables as set forth in Sections 1.68 and
4.1.1 is consistent with all information concerning its claimed receivables, of
which it has knowledge as of the Execution Date.

 

11.4.2      Encumbrances and Reliant Receivables and Assigned Assets. 
Reliant further warrants and represents that, except to secure
borrowings under its corporate credit and debt agreements (a schedule of
which is set forth as Exhibit G), it has not, as of the date of this
Agreement, pledged, hypothecated, encumbered, sold, transferred or otherwise
assigned, to any third party voluntarily, or involuntarily or by way of set off
or offset, any portion of (i) its PX or ISO receivables to be included in
the Reliant Receivables, and (ii) the Assigned Assets.

 

11.5         Covenants.  The Reliant Parties covenant to the
California Parties that:

 

45

 

11.5.1      At all times between the Execution Date and the Settlement Effective
Date, they will not sell, assign, transfer, pledge, hypothecate, encumber, or
otherwise transfer in whole or in part to any third party, whether voluntarily
or involuntarily or by way of setoff or offset, any of the Reliant Receivables
or Assigned Assets; provided, however, assignments, pledges, or encumbrances on
a pari passu basis with the
corporate credit and debt agreements set forth in Exhibit G, hereto, are
permitted so long as Reliant Energy Services, Inc. at all times between
the Execution Date and the Settlement Effective Date will remain the sole owner
of the Reliant Receivables and the Assigned Assets and such assignments,
pledges, or encumbrances will not impair Reliant’s ability to transfer the
Reliant Receivables and the Assigned Assets to the California Parties free and
clear of all claims, liens, encumbrances and interests on the Settlement
Effective Date as provided herein; and

 

11.5.2      At all times between the Execution Date and the twentieth (20th) day
after the Settlement Effective Date, the Reliant Parties will promptly provide
to the California Parties written notice of any change in their legal name or
jurisdiction of organization; and

 

11.5.3      At all times from and after the Settlement Effective Date, the Reliant
Parties will, upon the reasonable request and at the sole expense of the
California Parties, execute and/or deliver such further documents, agreements,
instruments, and account and other books of record, and shall cooperate and do
such other and further acts, as may be necessary to effectuate the Reliant
Parties’ transfer of the Reliant Receivables and the Assigned Assets pursuant
to Sections 4.1.1, 4.2.1, 4.2.3, 4.3.1, 4.3.2 and 4.3.3, and enforce the
claims, rights of action and defenses of the Reliant Parties acquired in
connection therewith.

 

12.          IMPLEMENTATION OF CLASS ACTION SETTLEMENTS

 

12.1         Submittal for Notice Order.  California and Egger Class Counsel
(collectively “Class Counsel”) shall each submit this Agreement to a
pertinent court and shall each separately apply for entry of an order (the
“Notice Order”) in their respective cases to be agreed to by Reliant and Class Counsel.  The Egger Class Plaintiffs shall file a
separate action in San Diego Superior Court for the purpose of effectuating
this Settlement.

 

12.2         Notice Order.  The Notice Order in each of the California Class and
Egger Class Cases will request, inter alia:

 

12.2.1      Class Certification.  Certification of the pertinent Class for
settlement purposes only;

 

12.2.2      Preliminary Approval.  Preliminary approval of the settlement set
forth in this Agreement; and

 

46

 

12.2.3      Class Notice.  Approval of the form and method of settlement
notice or notices, agreed to by Reliant and Class Counsel, which notice
shall set forth the general terms of the settlement set forth in this Agreement
and the date of the Settlement Hearing as described below.  The costs of class notice regarding Reliant’s
settlement with the Class Action Parties shall be paid 50% by the Class Action
Parties and 50% by Reliant.

 

12.3         Settlement Hearing.  California and Egger Class Counsel shall
each request that after notice is given, the Court(s) hold hearing(s) (the
“Settlement Hearings”) in which the settlement with the applicable of Classes
as set forth herein shall be approved as fair, adequate and reasonable, and
enter final judgment of dismissal with prejudice pursuant to the settlement as
to Reliant.  The judgment of dismissal
shall confirm the parties’ agreement that the approving Court(s) retain
jurisdiction under California Code of Civil Procedure § 664.6 to enforce
the terms of the Agreement that apply to Reliant and the Class Action
Parties.

 

12.4         Requests for Exclusion.  If prior to the Settlement Hearing in either
or both of the California and Egger Class Actions, persons who otherwise would
be members of either Class have timely requested exclusion (“Requests for
Exclusion”) from their respective Class in accordance with the provisions
of the applicable Notice Order and the notice given pursuant thereto, and such
persons in either Class in the aggregate represent claims in an amount
greater than that acceptable to Reliant, then Reliant shall have, in its sole
and absolute discretion, the option to terminate this Agreement as to that
Class.  Copies of all Requests for
Exclusion received, together with copies of all written revocations of Requests
for Exclusion received shall be delivered to Reliant’s counsel within seven (7) Business
Days before the applicable Settlement Hearing. 
Termination by Reliant under this Section 12.4 shall in no manner
affect Reliant settlement with the California Parties, the Additional Claimants
Parties and any Opt-In Participant.

 

12.5         No Solicitation.  California and Egger Class Counsel will
neither solicit nor encourage members of either Class to request exclusion.

 

12.6         Settlement Class Certification.  Solely for the purposes of the
settlement of the California and Egger Cases, the Reliant Parties and the
California and Egger Classes agree to the certification of the California and
Egger Classes as defined above; and Class Counsel and Reliant agree to
request jointly that the Court in each case enter an order, which, among other
things, certifies the applicable Class. 
In the event that this Agreement is not finally approved, or is terminated,
canceled, or fails to become effective for any reason, any class certification,
solely for the purpose of the settlement of the California and/or Egger Cases,
shall be null and void and the plaintiffs in those actions and Reliant shall
revert to their respective positions immediately prior to the execution of this
Agreement.  Under no circumstances shall
this Agreement be used as an admission or evidence concerning the
appropriateness of class certification should the Agreement be terminated in
whole or part.  Reliant reserves the
right to oppose class certification should this Agreement be terminated in
whole or part. Termination

 

47

 

by
Reliant under this Section 12.6, or any other failure of this agreement to
become effective as to the California and/or Egger Classes shall in no manner
affect Reliant’s settlement with the California Parties, the Other Claimant
Parties and any Additional Settling Participant.

 

12.7         Attorneys’ Fees.  Reliant shall not oppose separate requests by
California Class Counsel and Egger Class Counsel for awards of
attorneys’ fees and costs not to exceed $3,342,857 and $557,142, respectively,
excluding interest.  The actual amount of
each award shall be determined by the California Class and Egger Class courts,
respectively, subject to the above-stated limits. Reliant agrees to pay the
actual amounts so awarded, not to exceed the above-stated limits, into such
accounts as California Class Counsel and Egger Class Counsel may
designate within ten (10) Business Days of the entry of the applicable
order(s) awarding attorneys’ fees and costs; provided that:  (i) in the event of a successful appeal
by any person or entity that challenges any award of attorneys’ fees or costs,
or challenges any other part of this Agreement, each law firm for the Class Action
Parties agrees to repay the full amount of all attorneys’ fees and costs paid
to that law firm that are impacted by the successful appeal, with interest at
the annual rate of 4% from the date of an initial payment to and including the
date of repayment and to provide reasonable security for such repayment to that
counsel in the form set forth in Exhibit H hereto; and (ii) if the
trial court has not approved either fee application by March 1, 2006, with
respect to such application, Reliant shall pay interest on the amounts that are
actually awarded at the annual rate of 4% from March 1, 2006 to and
including the date of the payment.

 

12.8         Miscellaneous.  All Parties to this Agreement acknowledge and
agree that the Settlement Amount described in Section 4.1 constitutes a
direct and substantial benefit to the Class Action Parties and shall
constitute a setoff or offset with respect to all claims that are released
pursuant to Section 8.6.1.  The
Settling Participants agree not to oppose court approval of Reliant’s
settlement of the California Class and Egger Class actions, or Class Counsel’s
applications for attorneys’ fees and costs.

 

13.          DISPUTE RESOLUTION

 

13.1         Resolution by FERC.  If any disputes arise between the Parties
and/or the PX or the ISO in connection with the fulfillment of the Parties’
obligations under this Agreement, the Parties shall present such disputes to
the FERC for resolution pursuant to FERC’s rules and regulations, subject
to each Party’s rights to seek rehearing and judicial review of FERC’s
decisions and orders pertaining to the resolution of such disputes.  This provision shall not apply, however, to
any disputes which may arise with respect to the class action settlement
provisions under Sections 12.1 through 12.7.

 

48

 

14.          GOVERNING LAW; INTERPRETATION

 

14.1         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.

 

14.2         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 herein.  Each
of the Parties expressly disclaims any reliance upon any representations or
warranties not stated herein.

 

14.3         Headings.  The headings or titles of Articles or Sections
used in this Agreement (in bold typeface) are for convenience only and shall be
disregarded in interpreting this Agreement.

 

14.4         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.

 

14.5         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, 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.

 

14.6         Rules of Interpretation.  The following rules of
interpretation shall apply to this Agreement, including all Exhibits.

 

14.6.1      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.

 

14.6.2      Self Reference; Incorporation by Reference; Cross Reference. 
Except as otherwise specified herein, all references in this Agreement
to an “Article,” “Section,” or “Exhibit” shall mean an Article, 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 attached hereto, shall, unless otherwise
specified, refer to this Agreement as a whole and not to any particular
Article, Section, Exhibit or provision of this Agreement, and all
references to Articles, Sections or Exhibits shall be to all subparts of such
Articles, Sections or Exhibits.  All
Exhibits shall be deemed to be incorporated by reference and made a part of
this Agreement.

 

49

 

14.6.3      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 entity or party,
any entity succeeding to its functions and capabilities.

 

14.6.4      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.”

 

15.          MISCELLANEOUS

 

15.1         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
individuals and addresses set forth in Exhibit E, 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 15.1.  Email addresses are provided for convenience
only and do not constitute notice.

 

15.2         Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective permitted
successors and assigns and in the case of any governmental party, any entity
succeeding to its functions and capabilities.

 

15.3         No Third-Party Beneficiaries; No Admissions.  This
Agreement is not intended to confer upon any person or entity that is not a
Party or an Opt-In Participant any rights or remedies hereunder, and no one,
other than a Party or an Opt-In Participant, 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 and
the Opt-In Participants, nothing herein shall establish any facts or precedents
as between the Parties, the Opt-In Participants, and any third parties as to
the resolution of any dispute.  Each
Settling Participant and Reliant Party expressly denies any 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 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:  (i) is or may be deemed to be, or may be
used by a

 

50

 

Settling
Participant or a Reliant Party as, an admission of, or evidence of, the
validity of any released claim, or of any wrongdoing or liability of any of the
Parties or Opt-In Participant; (ii) is or may be deemed to be, or may be
used by a Settling Participant or a Reliant Party as, an admission of, or
evidence of, any fault or omission of any of the Parties or Opt-In Participant
in any civil, criminal, regulatory or administrative proceeding in any court,
administrative agency, regulatory authority, or other tribunal; or (iii) shall
be offered in evidence or alleged in any pleading by any Settling Participant
or any Reliant Party, except to obtain the Required Approval, 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
this Agreement or the Settlement 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.

 

15.4                           Costs. 
Except as provided in this Agreement, each of the Parties and each
Opt-In Participant 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.

 

15.5                           Modifications.  This
Agreement may be modified only if in writing and signed by each of the 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
Settling Claimants with respect to any waiver requested by the Reliant Parties
and by the Reliant Parties with respect to any waiver requested by the Settling
Claimants.  No modification will be
effective unless any approval of the CPUC or FERC that may be required with
respect to such modification, if any, has been received.

 

15.6                           Assignments.  No
Party shall, except as provided in Section 4.2.1, assign or transfer this
Agreement or its rights or obligations hereunder without the prior written
consent of the other affected Parties; provided, however, that any Party may,
without the consent of the other Parties (and without relieving itself from
liability hereunder), transfer or assign this Agreement to any person or entity
succeeding to all or substantially all of the assets of such Party, provided
that the assignee agrees in writing to be bound by the terms and conditions
hereof.

 

15.7                           Joint and Several Liability. 
Nothing in this Agreement shall be deemed to create any joint and
several liability among the Settling Participants.

 

15.8                           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.

 

51

 

SIGNATURES

 

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 transmitted to other parties 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

 

Reliant
Signature Page

Reliant
Signature Page

Reliant
Signature Page

OMOI
Signature Page

PG&E
Signature Page

SCE
Signature Page

SDG&E
Signature Page

California
Attorney General Signature Page

CERS
Signature Page

CEOB
Signature Page

CPUC
Signature Page

Oregon
Attorney General Signature Page

Washington
Attorney General Signature Page

California
Class Signature Page

Egger
Class Signature Page

Local
Governmental Party Signature Pages — Pages for any or all of the
following:

The City and County of San Francisco

The City of Oakland

The County of Santa Clara

The County of Contra Costa

Valley Center Municipal Water District

Padre Dam Municipal Water District

Ramona Municipal Water District

Helix Water District

Vista Irrigation District

Yuima Municipal Water District

Fallbrook Public Utility District

Borrego Water District

Metropolitan Transit Development Board

San Diego Trolley, Inc.

San Diego Transit Corporation

Sweetwater Authority

 

52

 

RELIANT
SIGNATURE PAGE

TO
SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

AMONG RELIANT, OMOI, CALIFORNIA PARTIES,
ADDITIONAL CLAIMANTS,

CLASS ACTION PARTIES, AND LOCAL GOVERNMENTAL PARTIES

 

 

	
   

  	
  RELIANT ENERGY, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  RELIANT ENERGY SERVICES, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  RELIANT ENERGY POWER GENERATION, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

Signature Page

 

53

 

	
   

  	
  RELIANT ENERGY CALIFORNIA HOLDINGS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  RELIANT ENERGY COOLWATER, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  RELIANT ENERGY ELWOOD, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

 

	
   

  	
  RELIANT ENERGY ETIWANDA, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  RELIANT ENERGY MANDALAY, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  RELIANT ENERGY ORMOND BEACH, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

 

OMOI
SIGNATURE PAGE

TO
SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

AMONG RELIANT, OMOI, CALIFORNIA PARTIES,
ADDITIONAL CLAIMANTS,

CLASS ACTION PARTIES, AND LOCAL GOVERNMENTAL PARTIES

 

 

	
   

  	
  THE FEDERAL ENERGY REGULATORY COMMISSION OFFICE OF MARKET OVERSIGHT
  AND INVESTIGATIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

 

PG&E
SIGNATURE PAGE

TO
SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

AMONG RELIANT, OMOI, CALIFORNIA PARTIES,
ADDITIONAL CLAIMANTS,

CLASS ACTION PARTIES, AND LOCAL GOVERNMENTAL PARTIES

 

 

	
   

  	
  PACIFIC GAS AND ELECTRIC COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

 

SCE
SIGNATURE PAGE

TO
SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

AMONG RELIANT, OMOI, CALIFORNIA PARTIES,
ADDITIONAL CLAIMANTS,

CLASS ACTION PARTIES, AND LOCAL GOVERNMENTAL PARTIES

 

 

	
   

  	
  SOUTHERN CALIFORNIA EDISON COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

 

SDG&E
SIGNATURE PAGE

TO
SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

AMONG RELIANT, OMOI, CALIFORNIA PARTIES,
ADDITIONAL CLAIMANTS,

CLASS ACTION PARTIES, AND LOCAL GOVERNMENTAL PARTIES

 

 

	
   

  	
  SAN DIEGO GAS & ELECTRIC COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

 

CALIFORNIA
ATTORNEY GENERAL SIGNATURE PAGE

TO
SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

AMONG RELIANT, OMOI, CALIFORNIA PARTIES,
ADDITIONAL CLAIMANTS,

CLASS ACTION PARTIES, AND LOCAL GOVERNMENTAL PARTIES

 

 

	
   

  	
  THE PEOPLE OF THE STATE OF CALIFORNIA, EX REL. BILL LOCKYER, ATTORNEY GENERAL OF THE STATE OF
  CALIFORNIA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

 

CERS
SIGNATURE PAGE

TO
SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

AMONG RELIANT, OMOI, CALIFORNIA PARTIES,
ADDITIONAL CLAIMANTS,

CLASS ACTION PARTIES, AND LOCAL GOVERNMENTAL PARTIES

 

 

	
   

  	
  CALIFORNIA DEPARTMENT OF WATER RESOURCES, ACTING SOLELY UNDER THE
  AUTHORITY AND POWERS CREATED IN CALIFORNIA ASSEMBLY BILL 1 FROM THE FIRST
  EXTRAORDINARY SESSION OF 2000-2001, CODIFIED IN SECTIONS 80000 THROUGH 80270
  OF THE CALIFORNIA WATER CODE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

 

CEOB
SIGNATURE PAGE

TO
SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

AMONG RELIANT, OMOI, CALIFORNIA PARTIES, ADDITIONAL
CLAIMANTS,

CLASS ACTION PARTIES, AND LOCAL GOVERNMENTAL PARTIES

 

 

	
   

  	
  CALIFORNIA ELECTRICITY OVERSIGHT BOARD

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

 

CPUC
SIGNATURE PAGE

TO
SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

AMONG RELIANT, OMOI, CALIFORNIA PARTIES,
ADDITIONAL CLAIMANTS,

CLASS ACTION PARTIES, AND LOCAL GOVERNMENTAL PARTIES

 

 

	
   

  	
  CALIFORNIA PUBLIC UTILITIES COMMISSION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

 

OREGON
ATTORNEY GENERAL SIGNATURE PAGE

TO SETTLEMENT
AND RELEASE OF CLAIMS AGREEMENT

AMONG RELIANT, OMOI, CALIFORNIA PARTIES,
ADDITIONAL CLAIMANTS,

CLASS ACTION PARTIES, AND LOCAL GOVERNMENTAL PARTIES

 

 

	
   

  	
  HARDY MYERS, ATTORNEY GENERAL OF THE STATE OF OREGON in his capacity
  as the chief law enforcement officer of the state, and to the greatest extent
  permitted by law

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

 

WASHINGTON
ATTORNEY GENERAL SIGNATURE PAGE

TO
SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

AMONG RELIANT, OMOI, CALIFORNIA PARTIES,
ADDITIONAL CLAIMANTS,

CLASS ACTION PARTIES, AND LOCAL GOVERNMENTAL PARTIES

 

 

	
   

  	
  ROB MCKENNA, ATTORNEY GENERAL OF THE STATE OF WASHINGTON in his
  capacity as the chief law enforcement officer of the state, and to the
  greatest extent permitted by law

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

 

CALIFORNIA CLASS SIGNATURE
PAGE

TO
SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

AMONG RELIANT, OMOI, CALIFORNIA PARTIES,
ADDITIONAL CLAIMANTS,

CLASS ACTION PARTIES, AND LOCAL GOVERNMENTAL PARTIES

 

 

	
   

  	
  CALIFORNIA CLASS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

 

EGGER CLASS SIGNATURE
PAGE

TO
SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

AMONG RELIANT, OMOI, CALIFORNIA PARTIES,
ADDITIONAL CLAIMANTS,

CLASS ACTION PARTIES, AND LOCAL GOVERNMENTAL PARTIES

 

 

	
   

  	
  EGGER CLASS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

 

LOCAL
GOVERNMENTAL PARTY SIGNATURE PAGE

TO
SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

AMONG RELIANT, OMOI, CALIFORNIA PARTIES,
ADDITIONAL CLAIMANTS,

CLASS ACTION PARTIES, AND LOCAL GOVERNMENTAL PARTIES

 

	
   

  	
  THE CITY AND COUNTY OF SAN FRANCISCO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  THE CITY OF OAKLAND

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  THE COUNTY OF SANTA CLARA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  THE COUNTY OF CONTRA COSTA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  VALLEY CENTER MUNICIPAL WATER DISTRICT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  PADRE DAM MUNICIPAL WATER DISTRICT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  RAMONA MUNICIPAL WATER DISTRICT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  HELIX WATER DISTRICT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  VISTA IRRIGATION DISTRICT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  YUIMA CENTER MUNICIPAL WATER DISTRICT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  FALLBROOK PUBLIC UTILITY DISTRICT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  BORREGO WATER DISTRICT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  METROPOLITAN TRANSIT DEVELOPMENT BOARD

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  SAN DIEGO TROLLEY, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  SAN DIEGO TRANSIT CORPORATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  SWEETWATER AUTHORITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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EXHIBIT C

Settlement and Release of
Claims Agreement

 

DEEMED
DISTRIBUTION PARTICIPANTS

 

Pacific Gas and Electric Company

British Columbia Power Exchange Corporation

Sempra Energy Trading Corporation

Puget Sound Energy

El Paso Power Services Company

Idaho Power Company

City of Pasadena

Transalta Energy Marketing Inc.

Constellation Power Source Inc.

Automated Power Exchange

PECO Energy Company

Western Area Power Admin.-Redding

 

C-1

 

EXHIBIT D

Settlement and Release of
Claims Agreement

 

LOCAL
GOVERNMENTAL PARTIES’ ALLOCATION MATRIX

 

	
  The City and County of San Francisco

  	
   

  	
  $

  	
  666,666.00

  	
   

  
	
  The City of Oakland;

  	
   

  	
  $

  	
  666,667.00

  	
   

  
	
  The County of Santa Clara

  	
   

  	
  $

  	
  666,667.00

  	
   

  
	
  The County of Contra Costa;

  	
   

  	
  $

  	
  666,667.00

  	
   

  
	
  Valley Center Municipal Water District

  	
   

  	
  $

  	
  245,673.12

  	
   

  
	
  Padre Dam Municipal Water District

  	
   

  	
  $

  	
  126,007.28

  	
   

  
	
  Ramona Municipal Water District

  	
   

  	
  $

  	
  164,702.82

  	
   

  
	
  Helix Water District

  	
   

  	
  $

  	
  105,115.07

  	
   

  
	
  Vista Irrigation District

  	
   

  	
  $

  	
  48,175.90

  	
   

  
	
  Yuima Municipal Water District

  	
   

  	
  $

  	
  81,285.11

  	
   

  
	
  Fallbrook Public Utility District

  	
   

  	
  $

  	
  46,187.56

  	
   

  
	
  Borrego Water District

  	
   

  	
  $

  	
  34,762.60

  	
   

  
	
  Metropolitan Transit Development Board

  	
   

  	
  $

  	
  —

  	
   

  
	
  San Diego Trolley, Inc.

  	
   

  	
  $

  	
  —

  	
   

  
	
  San Diego Transit Corporation

  	
   

  	
  $

  	
  —

  	
   

  
	
  Sweetwater Authority

  	
   

  	
  $

  	
  81,423.54

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  3,600,000.00

  	
   

  

 

D-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}]]