Document:

EXHIBIT 10.6B

Schedules
and Exhibits to the

Credit Sleeve and Reimbursement Agreement

Dated September 24, 2006,

As amended and restated December 1, 2006

(Portions
of this Exhibit have been omitted

Pursuant to a request for confidential treatment)

	
  SCHEDULE
  1.01(a)

  	
   

  	
  -

  	
   

  	
  Risk Management Policy Violations

  
	
  SCHEDULE 1.01(b)

  	
   

  	
  -

  	
   

  	
  Calculations Relating to Exchange Traded Contracts

  
	
  SCHEDULE 1.01(c)

  	
   

  	
  -

  	
   

  	
  Determination of K and VaR

  
	
  SCHEDULE 1.01(e)

  	
   

  	
  -

  	
   

  	
  Trademarks

  
	
  SCHEDULE 1.01(f)

  	
   

  	
  -

  	
   

  	
  Credit Limit Approval Guidelines

  
	
  SCHEDULE 2.02(a)

  	
   

  	
  -

  	
   

  	
  Counterparty Document Negotiation Provisions

  
	
  SCHEDULE 2.04

  	
   

  	
  -

  	
   

  	
  C&I Contracts and Governmental Contracts
  receiving ML Guarantee on Effective Date

  
	
  SCHEDULE 3.04

  	
   

  	
  -

  	
   

  	
  Calculation and Settlement of Monthly Sleeve Fee

  
	
  SCHEDULE 3.05

  	
   

  	
  -

  	
   

  	
  Calculation of Make-whole Payment

  
	
  SCHEDULE 3.07(a)

  	
   

  	
  -

  	
   

  	
  Merrill Account

  
	
  SCHEDULE 5.13

  	
   

  	
  -

  	
   

  	
  List of Subsidiaries

  
	
  SCHEDULE 7.14

  	
   

  	
  -

  	
   

  	
  List of Retail Services

  
	
  SCHEDULE 12.13

  	
   

  	
  -

  	
   

  	
  List of Calculation Agents

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT A1

  	
   

  	
  -

  	
   

  	
  Form of ML Guarantee for Accepted Counterparties

  
	
  EXHIBIT A2

  	
   

  	
  -

  	
   

  	
  Form of ML Guarantee for C&I Customers

  
	
  EXHIBIT B

  	
   

  	
  -

  	
   

  	
  List of Accepted Counterparties

  
	
  EXHIBIT C1

  	
   

  	
  -

  	
   

  	
  Form of EEI Power Purchase and Hedging Contract

  
	
  EXHIBIT C2

  	
   

  	
  -

  	
   

  	
  Form of ISDA Power Purchase and Hedging Contract

  
	
  EXHIBIT D1

  	
   

  	
  -

  	
   

  	
  Form of EEI Collateral Annex

  
	
  EXHIBIT D2

  	
   

  	
  -

  	
   

  	
  Form of ISDA Credit Support Annex

  
	
  EXHIBIT E1

  	
   

  	
  -

  	
   

  	
  Reliant Energy Retail Risk Policy

  
	
  EXHIBIT E2

  	
   

  	
  -

  	
   

  	
  Reliant Energy Wholesale Risk Control Policy

  
	
  EXHIBIT F

  	
   

  	
  -

  	
   

  	
  ERCOT Asset List

  
	
  EXHIBIT G

  	
   

  	
  -

  	
   

  	
  Form of Joinder Agreement

  
	
  EXHIBIT H

  	
   

  	
  -

  	
   

  	
  Form of Compliance Certificate

  
	
  EXHIBIT I1

  	
   

  	
  -

  	
   

  	
  Sleeve Provider Employees with Access to Data

  
	
  EXHIBIT I2

  	
   

  	
  -

  	
   

  	
  Reliant Employees with Access to Data

  

 

Schedule 1.01(a)

To Credit Sleeve and Reimbursement Agreement

Risk Management Policy Violations

[***]

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

Schedule 1.01(b)

To Credit Sleeve and Reimbursement Agreement

Calculations Relating to Exchange Traded Contracts

Adjusted Volume:

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

	
  Period (Month)

  	
   

  	
  ETC Commodity Quantities

  	
   

  
	
  0

  	
   

  	
  Q0

  	
   

  
	
  1

  	
   

  	
  Q1

  	
   

  
	
  2

  	
   

  	
  Q2

  	
   

  
	
  3

  	
   

  	
  Q3

  	
   

  
	
  —

  	
   

  	
  —

  	
   

  
	
  —

  	
   

  	
  —

  	
   

  
	
  N

  	
   

  	
  QN

  	
   

  

 

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

	
  Period (Month)

  	
   

  	
  Adjusted Volume

  	
   

  
	
  0

  	
   

  	
  Q0 / AZP0

  	
   

  
	
  1

  	
   

  	
  Q1 / AZP1

  	
   

  
	
  2

  	
   

  	
  Q2 / AZP2

  	
   

  
	
  3

  	
   

  	
  Q3 / AZP3

  	
   

  
	
  —

  	
   

  	
  —

  	
   

  
	
  —

  	
   

  	
  —

  	
   

  
	
  N

  	
   

  	
  QN / AZPN

  	
   

  

 

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

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

Calculation of Adjusted
Zero Curve:

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

“MCC Adder” shall be:

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

(b) the marginal cost of capital relative to LIBOR that all Merrill
Lynch & Co.’s trading desks are charged for the use of funds by Merrill
Lynch & Co. (as of the date of such EFS Transaction or ICE Block
Transaction), which amount is relative to LIBOR that is the average cost of
capital for Merrill Lynch & Co. across all maturities (such MCC Adder can
be positive or negative); for purposes of calculating the Adjusted Volume of
Mirror OTC Contracts executed in connection with EFS Transactions or ICE Block
Transactions that are Ongoing Transactions described in Section 2.03(b) of the
Credit Sleeve Reimbursement Agreement

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

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

Using the Adjusted LIBOR
Forward Curve the Sleeve Provider will calculate a corresponding zero curve
(the “Adjusted Zero Curve”), and provide such Adjusted Zero Curve to
REPS on each Business Day, no later than 10:00 a.m. CST, and such curve shall
be applicable to the (EFS Transactions and ICE Block Transactions) that are
executed on that day.  The Adjusted Zero
Curve will be a strip of monthly Adjusted Zero Prices, which represent the
present value of $1.00 dollar received on a specific date in the future,
assuming the Adjusted LIBOR Forward Curve for discounting purposes with
discounting being computed utilizing the continuously compounding methodology.  The Adjusted Zero Curve provided will have 5
places after the decimal point.

The term of the Adjusted LIBOR Forward Curve and the
corresponding Adjusted Zero Curve will be 72 months, including the then current
month; provided, however, that to the extent REPS currently has or in the
future obtains an Exchange Traded Contract for a longer period, then the Sleeve
Provider will extend the Adjusted LIBOR Forward Curve

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

 2
 

and the Adjusted Zero
Curve to match such longer period. 
Adjusted Zero Prices that correspond to dates that are between the
Monthly Dates in the table below will be calculated using linear
interpolation.  The format utilized by
the Sleeve Provider in providing this information will include at a minimum the
following attributes:

	
  Period (Month)

  	
   

  	
  Monthly Date

  	
   

  	
  Adjusted LIBOR

  Forward Curve

  	
   

  	
  Adjusted Zero

  Curve

  	
   

  
	
  0

  	
   

  	
   

  	
   

  	
  AL0 = 0

  	
   

  	
  AZP0 = 1

  	
   

  
	
  1

  	
   

  	
   

  	
   

  	
  AL1

  	
   

  	
  AZP1

  	
   

  
	
  2

  	
   

  	
   

  	
   

  	
  AL2

  	
   

  	
  AZP2

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
  AL3

  	
   

  	
  AZP3

  	
   

  
	
  —

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  —

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  —

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  N

  	
   

  	
   

  	
   

  	
  ALN

  	
   

  	
  AZPN

  	
   

  

 

Treatment for Options:

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

Physical Exposure Management Fee:

For Exchange Traded
Contracts that provide for physical delivery, (both futures contracts and
options that provide for physical delivery futures contracts) and are
transferred to the Sleeve Provider pursuant to an EFS or EOO Transaction, the
following will apply:  The Mirror OTC
Transaction’s confirm will specify that REPS agrees to pay to Sleeve Provider
(or Sleeve Provider agrees to pay to REPS) a fee (the “Physical Exposure
Management Fee” or “PhEM”) equal to: either (i) the actual EFS or
EOO Transaction premium paid or received by Sleeve Provider to liquidate the
physical exposure or (ii) if Sleeve Provider takes the position in its own
book, the average of two broker quotes on the day Sleeve Provider takes the
position (which quotes shall be of the applicable buy or sell side from the
Sleeve Provider’s perspective of the premium for the EFS or EOO of the same
product and delivery month), multiplied by the volume in the EFS or EOO
Transaction.  Sleeve Provider will
provide REPS notice of the PhEM amount within 2 Business Days of either
liquidating the physical exposure with a third party or taking the position on
the Sleeve Provider’s own book.  REPS may
request that the Sleeve Provider provide deal tickets as evidence of the actual
premium paid or received by Sleeve Provider or instant messaging prints of
broker quotes.  PhEM shall be due and
payable by the applicable Party at the time of settlement of the Mirror OTC
Transaction associated with such EOO or EFS Transaction.

 

 3

Schedule 1.01(c)

To Credit Sleeve and Reimbursement Agreement

Determination of K and VaR

[***]

 

***                           The
content of this Schedule 1.01(c) (consisting of 72 pages) has been omitted and
filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

Schedule 1.01(e)

To Credit Sleeve and
Reimbursement Agreement

Trademarks

 

	
  NAME

  	
   

  	
  OWNER

  	
   

  	
  GOODS/SERVICES

  	
   

  	
  REG.

  	
   

  	
  APPL. #

  
	
  Energy Commander

  	
   

  	
  RERH

  	
   

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

  	
   

  	
  2764995

  	
   

  	
  76/263578

  
	
  Energy Commander

  	
   

  	
  RERH

  	
   

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

  	
   

  	
  2813513

  	
   

  	
  76/263577

  
	
  PowerZone

  	
   

  	
  RERH

  	
   

  	
  Class 35. Promoting events, sports competitions,
  contests and award programs. Class 42. Sweepstake services.

  	
   

  	
   

  	
   

  	
  78/762804

  
	
  Your Houston Business

  	
   

  	
  RERH

  	
   

  	
  Class 16. Business magazines. Class 41. Computer
  services, namely, providing an on-line magazine in the field of business.

  	
   

  	
  2865827

  	
   

  	
  78/156502

  
	
  Power Card and Design

  	
   

  	
  RERH

  	
   

  	
  Class 35. Promoting the services of public libraries
  through sponsorship of library membership cards. Class 42. Promoting public
  awareness of the availability of public library facilities and services by
  sponsorship of library membership cards.

  	
   

  	
  2428481

  	
   

  	
  75/940944

  
	
  Reliant

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  3097811

  	
   

  	
  78/622356

  
	
  Reliant

  	
   

  	
  IP Trust

  	
   

  	
  Class 39. Distribution and delivery of energy.

  	
   

  	
  2886710

  	
   

  	
  78/311694

  
	
  Reliant

  	
   

  	
  IP Trust

  	
   

  	
  Class 40. Production and generation of energy.

  	
   

  	
  2886711

  	
   

  	
  78/311695

  

 

 1
 

 

	
  Reliant Arena

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2976601

  	
   

  	
  76/195453

  
	
  Reliant Arena

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2896040

  	
   

  	
  76/195451

  
	
  Reliant Arena

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2943295

  	
   

  	
  76/195450

  
	
  Reliant Center

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2897602

  	
   

  	
  76/195564

  
	
  Reliant Center

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2875207

  	
   

  	
  76/195562

  
	
  Reliant Center

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2926480

  	
   

  	
  75/981963

  
	
  Reliant Energy

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  3053512

  	
   

  	
  78/451768

  

 

 2
 

 

	
  Reliant Energy

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  3132302

  	
   

  	
  78/622380

  
	
  Reliant Energy

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  3053513

  	
   

  	
  78/451803

  
	
  Reliant Energy

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  3045140

  	
   

  	
  78/451815

  
	
  Reliant Energy & Design

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2747525

  	
   

  	
  75/623509

  
	
  Reliant Energy & Design

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2681501

  	
   

  	
  75/623512

  
	
  Reliant Energy & Design

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2895973

  	
   

  	
  75/623308

  
	
  Reliant Energy & Design

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2983403

  	
   

  	
  75/623514

  
	
  Reliant Energy & Design

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2666766

  	
   

  	
  75/623309

  

 

 3
 

 

	
  Reliant Park

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2897601

  	
   

  	
  76/195468

  
	
  Reliant Park

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2897600

  	
   

  	
  76/195465

  
	
  Reliant Park

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2884611

  	
   

  	
  76/195473

  
	
  Reliant Park

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2935264

  	
   

  	
  76/195471

  
	
  Reliant Park

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2933500

  	
   

  	
  76/195470

  
	
  Reliant Stadium

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2955241

  	
   

  	
  76/195558

  
	
  Reliant Stadium

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2929142

  	
   

  	
  76/195448

  
	
  Reliant Stadium

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2929141

  	
   

  	
  76/195445

  

 

 4
 

 

	
  Reliant Stadium

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2896039

  	
   

  	
  76/195443

  
	
  Reliant Stadium

  	
   

  	
  IP Trust

  	
   

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

  	
   

  	
  2729638

  	
   

  	
  75/981391

  

 

 

 5

Schedule 1.01(f)

To Credit Sleeve and
Reimbursement Agreement

Credit Limit
Approval Guidelines

[***]

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

Schedule 2.02(a)

To Credit Sleeve and
Reimbursement Agreement

Counterparty Document
Negotiation Provisions

[***]

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

 

Schedule 2.04

To Credit Sleeve and Reimbursement Agreement

C&I Contracts and Governmental Contracts

Receiving ML Guarantee on
Effective Date

[***]

***                           The
content of this Schedule 2.04 (consisting of 2 pages) has been omitted and
filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

Schedule 3.04

To Credit Sleeve and Reimbursement Agreement

Calculation and
Settlement of Monthly Sleeve Fee

(a)           For the period from the Effective
Date through the Unwind Start Date, on each Monthly Payment Date, REPS shall
pay to the Sleeve Provider a monthly fee in arrears equal to the Sleeve Fee
Factor as in effect from time to time for each MWh that the Reliant Retail
Obligors deliver to their C&I Customers, Residential Mass Customers and
Business Services Mass Customers (excluding any load provided to Equistar
Chemicals, LP in connection with the Channelview Services Agreement), in each
case, in connection with the Retail Energy Business during such period, as
determined by the Sleeve Provider based on settled load data provided from
ERCOT (such MWHs, the “ERCOT MWHs” and such monthly fee as adjusted from
time to time, the “Sleeve Fee”). 
Payments of the Sleeve Fee will be determined and made in accordance
with the procedures set forth below.

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

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

(i)            Monthly
Initial Settlement Calculation:

(A)          The settlement ERCOT MWHs shall be
based on the ERCOT Initial Statement as defined by Section 9.2.3 of the ERCOT
protocols issued on or about the 10th calendar day of the month following delivery;

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

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

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

(ii)           Monthly
Final Settlement Calculation:

(A)          The settlement ERCOT MWHs shall be
based on the ERCOT Final Statement as defined by Section 9.2.4 of the ERCOT
protocols issued on or about the 59th calendar day of the month following
delivery;

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

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

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

(iii)          Monthly True-Up Statement
Calculation:

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

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

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

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

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

(i)            deliver
to their C&I Customers starting on the Unwind Start Date in connection with
the Retail Energy Business during such period, to the extent such deliveries
are under contractual delivery commitments in effect on the Unwind Start Date,
as determined and invoiced by the Sleeve Provider based on contracted load data
provided by REPS; and

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

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

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

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

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

Annex A to

Schedule 3.04

To Credit Sleeve and
Reimbursement Agreement

Certain
Adjustments to the Sleeve Fee Factor

Sleeve
Fee Increase Zones

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

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

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

Schedule 3.05

To Credit Sleeve and Reimbursement Agreement

Calculation of Make-whole
Payment

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

Schedule 3.07(a)

To Credit Sleeve and Reimbursement Agreement

Merrill Account

JP Morgan Chase

ABA 021000021

Account Number# [***]

Account Name Merrill Lynch Commodities, Inc.

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

Schedule 5.13

To Credit Sleeve and Reimbursement Agreement

List of Subsidiaries

Equity investment

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

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

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

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

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

 

	
  

  	
   

  	
  Jurisdiction of Organization

  	
   

  	
  Organizational/Taxpayer 

  Identification Number

  
	
  RERH Holdings, LLC

  	
   

  	
  Delaware

  	
   

  	
  4191623/20-5222227

  
	
  Reliant Energy Retail Holdings, LLC

  	
   

  	
  Delaware

  	
   

  	
  3279845/76-0655580

  
	
  Reliant Energy Retail Services, LLC

  	
   

  	
  Delaware

  	
   

  	
  3279840/76-0655567

  
	
  R E Retail Receivables, LLC

  	
   

  	
  Delaware

  	
   

  	
  3531400/41-2046596

  
	
  Reliant Energy Power Supply, LLC

  	
   

  	
  Delaware

  	
   

  	
  4142914/20-4823108

  

 

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

1000 Main Street

Houston, Texas  77002

Schedule 7.14

To Credit Sleeve and Reimbursement Agreement

List of Retail Services

[***]

***                           The
content of this Schedule 7.14 (consisting of 3 pages) has been omitted and
filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

Schedule 12.13

To Credit Sleeve and Reimbursement Agreement

List of Calculation Agents

[***]

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

Exhibit A1

To Credit Sleeve and Reimbursement Agreement

Form of ML Guarantee for Accepted Counterparties

GUARANTEE OF MERRILL LYNCH
& CO., INC.

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

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

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

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

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

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

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

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

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

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

	
  

  	
  MERRILL LYNCH & CO., INC.

   

  	 

	
   

  	
  By:

  	
   

  
	
   

  	 

	
   

  	
  Name:

  	
   

  
	
   

  	 

	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
				

 

Exhibit A2

To Credit Sleeve and Reimbursement Agreement

Form of ML Guarantee for C&I Customers

GUARANTEE OF MERRILL LYNCH
& CO., INC.

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

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

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

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

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

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

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

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

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

	
  

  	
  MERRILL LYNCH & CO., INC.

   

  	 

	
   

  	
  By:

  	
   

  
	
   

  	 

	
   

  	
  Name:

  	
   

  
	
   

  	 

	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
				

 

Exhibit B

To Credit Sleeve and Reimbursement Agreement

List of Accepted Counterparties

[***]

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

 

Exhibit
C1

To Credit Sleeve and Reimbursement Agreement

Form of EEI Power Purchase and Hedging Contract

EXECUTION VERSION

MASTER POWER PURCHASE AND SALE AGREEMENT

COVER
SHEET

This Master Power Purchase and Sale Agreement (“Master Agreement”) dated             
shall not become effective until the date on which the Guaranty issued by
Merrill Lynch & Co., Inc. becomes effective (“Effective Date”).  The Master Agreement,
together with the exhibits, schedules and any written supplements hereto, the
Party A Tariff, if any, the Party B Tariff, if any, any designated collateral,
credit support or margin agreement or similar arrangement between the Parties
and all Transactions (including any confirmations accepted in accordance with
Section 2.3 hereto) shall be referred to as the “Agreement.”  The Parties to this Master
Agreement are the following:

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

  “Party A”)

  	
   

  	
  Name:              
  (“          ”
  or “Party B”)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  All Notices:

  	
   

  	
  All Notices:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  Street:                                           

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  P. O. Box 4455

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  City: Houston, TX 

  	
  Zip: 77210-4455

  	
   

  	
  City:                                            

  	
  Zip:                     

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attn: Contract Administration

  	
   

  	
  Attn: Contract Administration

  	
   

  	
   

  	
   

  	
   

  
	
  Phone: (713) 497-5855 or 4138

  	
   

  	
  Phone:                                          

  	
   

  	
   

  	
   

  	
   

  
	
  Facsimile: (713) 497-9562

  	
   

  	
  Facsimile:                                    

  	
   

  	
   

  	
   

  	
   

  
	
  Duns: 623988644

  	
   

  	
  Duns:                                            

  	
   

  	
   

  	
   

  	
   

  
	
  Federal Tax ID Number: 204823108

  	
   

  	
  Federal Tax ID Number:                                                

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Merrill Lynch Commodities, Inc.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20 East Greenway Plaza, 7th Floor

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Houston, Texas 77253-3327

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attn: Legal

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Phone: 713-544-4975

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Facsimile: 713-544-5551

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Invoices:

  	
   

  	
  Invoices:

  	
   

  	
   

  	
   

  	
   

  
	
  Attn: ERCOT
  Settlement Accounting, 11th Floor

  	
   

  	
  Attn:                                         

  	
   

  	
   

  	
   

  	
   

  
	
  Phone: (713)
  497-4402

  	
   

  	
  Phone:                                      

  	
   

  	
   

  	
   

  	
   

  
	
  Facsimile: (713)
  497-0098

  	
   

  	
  Facsimile:                                

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Scheduling:

  	
   

  	
  Scheduling:

  	
   

  	
   

  	
   

  	
   

  
	
  Attn: ERCOT 24
  Hour Scheduling

  	
   

  	
  Attn:                                         

  	
   

  	
   

  	
   

  	
   

  
	
  Phone: (713)
  497-1144

  	
   

  	
  Phone:                                      

  	
   

  	
   

  	
   

  	
   

  
	
  Facsimile: (713)
  497-0098

  	
   

  	
  Facsimile:                                

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Payments:

  	
   

  	
  Payments:

  	
   

  	
   

  	
   

  	
   

  
	
  Attn:ERCOT
  Settlement Accounting, 11th Floor

  	
   

  	
  Attn:                                         

  	
   

  	
   

  	
   

  	
   

  
	
  Phone:(713)
  497-4402

  	
   

  	
  Phone:                                      

  	
   

  	
   

  	
   

  	
   

  
	
  Facsimile: (713)
  497-0098

  	
   

  	
  Facsimile:                                

  	
   

  	
   

  	
   

  	
   

  
								

 

 1
 

 

	
  Wire Transfer:

  	
   

  	
  Wire Transfer:

  
	
  BNK:

  	
   

  	
  BNK:                                                                                           

  
	
  ABA:[Insert
  Collateral Account Info] 

  	
   

  	
  ABA:                                                                                           

  
	
  ACCT:

  	
   

  	
  ACCT:                                                                                         

  
	
   

  	
   

  	
   

  
	
  Credit and Collections: 

  	
   

  	
  Credit and Collections: 

  
	
  Attn: Credit
  Risk Management 

  	
   

  	
  Attn:                                                                                            

  
	
  Phone: (713)
  497-1052 

  	
   

  	
  Phone:                                                                                         

  
	
  Facsimile: (713)
  497-1058

  	
   

  	
  Facsimile:                                                                                    

  
	
   

  	
   

  	
   

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

  	
   

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

  
	
  Attn: Vice
  President and General Counsel —Trading,

  	
   

  	
  Attn:                                                                                            

  
	
  Suite 2100 

  	
   

  	
  Phone:                                                                                         

  
	
  Phone: (713)
  497-5361 

  	
   

  	
  Facsimile:                                                                                    

  
	
  Facsimile: (713)
  537-7063

  	
   

  	
   

  

 

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

	
  Party A Tariff: [TO BE SUPPLIED]

  	
   

  	
  Dated                            

  	
   

  	
  Docket Number                                

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party B Tariff: Tariff

  	
   

  	
  Dated                            

  	
   

  	
  Docket Number                                

  

 

	
  Article Two

  	
   

  	
   

  	
   

  	 

	
  Transaction Terms and Conditions

  	
   

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

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  Article Four

  	
   

  	
   

  	
   

  	 

	
  Remedies for Failure

  to Deliver or Receive

  	
   

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

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  Article Five

  	
   

  	
  x
  Cross Default for Party A:

  	
   

  	 

	
  Events of Default; Remedies

  	
   

  	
  o
  Party A:                                            

  	
   

  	
  Cross Default Amount $                     

  
	
   

  	
   

  	
  x
  Other Entity: Merrill Lynch &

  Co., Inc.

  	
   

  	
  Cross Default Amount 

  $100,000,000

  
	
   

  	
   

  	
  o
  Cross Default for Party B:

  	
   

  	
   

  
	
   

  	
   

  	
  o
  Party B:                                             

  	
   

  	
  Cross Default Amount 

  
	
   

  	
   

  	
  o
  Other Entity:                                     

  	
   

  	
  $                     

  
	
   

  	
   

  	
   

  	
   

  	
  Cross Default Amount $                     

  
	
   

  	
   

  	
  5.6
  Closeout Setoff

  	
   

  	 

	
   

  	
   

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

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

  	
   

  	 

 2
 

 

	
  

  	
  o
  Option C (No Setoff)

  
	
   

  	
   

  
	
  Article 8

  	
  8.1 Party A Credit Protection:

  
	
   

  	
   

  
	
  Credit and Collateral Requirements

  	
  (a) Financial Information:

  
	
   

  	
   

  
	
   

  	
  o
  Option A

  o
  Option B Specify:                     

  o
  Option C Specify:                     

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

  
	
   

  	
   

  
	
   

  	
  (b) Credit Assurances:

  
	
   

  	
   

  
	
   

  	
  x
  Not Applicable

  o
  Applicable

  
	
   

  	
   

  
	
   

  	
  (c) Collateral Threshold: See Attached
  Collateral Annex

  
	
   

  	
   

  
	
   

  	
  o
  Not Applicable

  x
  Applicable

  
	
   

  	
   

  
	
   

  	
  (d) Downgrade Event:

  
	
   

  	
   

  
	
   

  	
  x
  Not Applicable

  o
  Applicable

  
	
   

  	
   

  
	
   

  	
  (e)
  Guarantor for Party B:                                                                                   

  
	
   

  	
   

  
	
   

  	
  Guarantee
  Amount:                                                                              

  
	
   

  	
   

  
	
   

  	
  8.2 Party B Credit Protection:

  
	
   

  	
   

  
	
   

  	
  (a) Financial Information:

  
	
   

  	
   

  
	
   

  	
  o
  Option A

  x
  Option B Specify: Merrill Lynch & Co., Inc.

  o
  Option C Specify:                                                                       

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

  
	
   

  	
   

  
	
   

  	
  (b) Credit Assurances:

  
	
   

  	
   

  
	
   

  	
  x
  Not Applicable

  o
  Applicable

  

 

 3
 

 

	
   

  	
  (c) Collateral Threshold: See attached
  Collateral Annex

  
	
   

  	
   

  
	
   

  	
  o
  Not Applicable

  x
  Applicable

  
	
   

  	
   

  
	
   

  	
  (d) Downgrade Event:

  
	
   

  	
   

  
	
   

  	
  x
  Not Applicable

  o
  Applicable

  
	
   

  	
   

  
	
   

  	
  (e)
  Guarantor for Party A: Merrill Lynch & Co., Inc.

  
	
   

  	
   

  
	
   

  	
  Guarantee
  Amount:$           ,
  as amended from time to time

  
	
   

  	
   

  
	
  Article 10

  	
   

  
	
  Confidentiality

  	
  x
  Confidentiality Applicable

  	
  If not checked, inapplicable.

  
	
   

  	
   

  	
   

  
	
  Schedule M

  	
   

  
	
   

  	
  o
  Party A is a Governmental Entity or Public Power System

  
	
   

  	
  o
  Party B is a Governmental Entity or Public Power System

  
	
   

  	
  o
  Add Section 3.6. If not checked, inapplicable

  
	
   

  	
  o
  Add Section 8.6. If not checked, inapplicable

  

 

	
  Other Changes:

  	
  Yes

  	
   

  
	
   

  	
   

  

Article
One: General Definitions

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

The following
definitions are amended as set forth below:

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

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

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

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

The following
shall be added as a new definition:

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

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

 4
 

 

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

Article Two: Transaction Terms and Conditions

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

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

Article Four: Remedies
for Failure to Deliver/Receive

The following is added as
a new Section 4.3:

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

Article Five: Events
of Default; Remedies

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

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

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

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

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

Section 5.2 is
amended to (i) reverse the placement of “(i)” and “to” in line three, (ii)
delete the following phrase from lines eleven and twelve “are commercially
impracticable to liquidate and terminate or” and (iii) delete the following
phrase from lines thirteen and fourteen “under applicable law on the Early
Termination Date, as soon thereafter as is reasonably practicable).” The
following shall be added to the end of Section 5.2: “under applicable law on
the Early Termination Date, then each such Transaction (individually, an “Excluded
Transaction” and collectively, the “Excluded Transactions”) shall be terminated
as soon thereafter as reasonably practicable), and upon termination shall be
deemed to be a Terminated Transaction and the Termination Payment payable in
connection with all such Transactions shall be calculated in accordance with
Section 5.3 below. The Gains and Losses for each Terminated Transaction shall
be determined by calculating the amount that would be incurred or realized to
replace or to provide the economic equivalent of the remaining payments or
deliveries in respect of that Terminated Transaction. The Non-Defaulting Party
(or its agent) may determine its Gains and Losses by reference to information
either available to it internally or supplied by one or more third parties
including, without limitation, quotations (either firm or indicative) of
relevant rates, prices, yields, yield curves, volatilities, spreads or other
relevant market data in the relevant markets. Third parties supplying such
information may include, without limitation, dealers in the relevant markets,
information vendors and other sources of market information.”

The following
shall be added to the end of Section 5.4: “To secure its obligations under this
Agreement, each Party hereby grants to the other Party a present and continuing
security interest in, lien on, and right to setoff against, its payment
obligations to the other Party under this Agreement. Each Party acknowledges
and agrees that the pledge of its payment obligations to the other Party under
this Agreement shall serve to “margin,” “guaranty” or “secure” such obligations
within the meaning of the Bankruptcy Code, as defined in Section 10.2 herein.”

 5
 

Article Seven: Limitations

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

Article Ten: Miscellaneous

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

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

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

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

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

Section 10.8 is amended to delete the following sentence on line twenty
“Any provision declared or rendered unlawful by any applicable court of law
Parties.” and replace with the following sentence “If performance of this
Agreement is declared or rendered unlawful by any applicable court or law or
regulatory agency or deemed unlawful because of a statutory change
(individually or collectively, such events being referred to herein as a “Regulatory
Event”), such Regulatory Event will not otherwise affect the remaining lawful
obligations that arise under this Agreement; and provided, further, that if a
Regulatory Event occurs, the Parties shall use their best efforts to reform
this Agreement in order to give effect to the original intention of the
Parties.”

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

The following shall be
added as a new Section 10.12:

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

 6
 

The following shall be
added as a new Section 10.13:

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

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

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

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

“10.14 Credit Sleeve Provisions:

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

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

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

Additional
Provisions:

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

“1.    Other Products and Service Levels.

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

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

(a)   Market Disruption. If a Market
Disruption Event occurs during a Determination Period, the Floating Price for
the affected Trading Day(s) shall be the fallback reference price specified by
the Parties if the Parties have specified 

 7
 

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

 

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

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

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

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

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

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

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

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

 8
 

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

	
  RELIANT ENERGY POWER SUPPLY, LLC

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
  Title:

  	
   

  
								

 

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

 

 9

Exhibit C2

To Credit Sleeve and Reimbursement Agreement

Form of
ISDA Power Purchase and Hedging Contract

EXECUTION VERSION

ISDA®

International
Swaps and Derivatives Association, Inc.

SCHEDULE

to the

2002
Master Agreement

dated as of      T.B.D.           

between

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

and

                                                      (“Party B”)

Part 1

TERMINATION
PROVISIONS

In this Agreement:

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

Section 5(a)(v):                                     Not
Applicable

Section 5(a)(vi):                                    Not
Applicable

Section 5(a)(vii):                                   Not
Applicable

Section 5(b)(v):                                     Not Applicable

in relation to
Party B for the purpose of:

Section 5(a)(v):                                     Not
Applicable

Section 5(a)(vi):                                    Not
Applicable

Section 5(a)(vii):                                   Not
Applicable

Section 5(b)(v):                                     Not Applicable

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

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

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

 1
 

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

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

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

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

Part 2

TAX REPRESENTATIONS

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

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

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

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

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

Part 3

AGREEMENT TO DELIVER DOCUMENTS

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

 2
 

 

	
  Party Required to

  Deliver Document

  	
   

  	
  Form/

  Document/

  Certificate

  	
   

  	
  Date By Which

  To Be

  Delivered

  	
   

  	
  Covered By

  Section 3(d)

  Representation

  
	
  Each party and
  its Credit Support Provider, as applicable.

  	
   

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

  	
   

  	
  Upon request.

  	
   

  	
  Yes.

  
	
  Each party and
  its Credit Support Provider, as applicable.

  	
   

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

  	
   

  	
  Upon request.

  	
   

  	
  Yes.

  
	
  Each party.

  	
   

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

  	
   

  	
  Upon request.

  	
   

  	
  Yes.

  
	
  Each party and
  its Credit Support Provider, as applicable.

  	
   

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

  	
   

  	
  Upon execution.

  	
   

  	
  Yes.

  
	
  Each party and
  its Credit Support Provider, as applicable.

  	
   

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

  	
   

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

  	
   

  	
  Yes.

  
	
  Each party and
  its Credit Support Provider, as applicable.

  	
   

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

  	
   

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

  	
   

  	
  Yes.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 3
 

Part 4

MISCELLANEOUS

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

Address for
notices or communications to Party A:

	
   

  	
  Street Address:

  	
  1000 Main, Houston, TX 77002

  
	
   

  	
  Mailing Address:

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

  
	
   

  	
  Attention:

  	
  Contract Administration

  
	
   

  	
  Facsimile No.:

  	
  (713) 497-9561

  
	
   

  	
  Telephone No.:

  	
  (713) 497-4138

  
	
   

  	
  Confirmations:

  	
  (713) 497-9562 (Facsimile)

  

With a copy to:

	
  

  	
  Merrill Lynch Commodities, Inc.

  
	
   

  	
  20 East Greenway Plaza

  
	
   

  	
  7th Floor

  
	
   

  	
  Houston, Texas 77253-3327

  
	
   

  	
  Attn:

  	
  Legal

  
	
   

  	
  Fax:

  	
  713-544-5551

  
	
   

  	
  Phone:

  	
  713-544-4975

  

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

	
  

  	
  Street Address:

  	
  1000 Main, Houston, TX 77002

  
	
   

  	
  Attention:

  	
  Vice President and General Counsel

  
	
   

  	
  Facsimile No.:

  	
  (713) 497 - 5361

  
	
   

  	
  Telephone No.:

  	
  (713) 537 - 7063

  

Address for
notices or communications to Party B:

	
  

  	
  Address:

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
  Facsimile No.:

  	
   

  
	
   

  	
  Telephone No.:

  	
   

  
	
   

  	
  Confirmations:

  	
  (Facsimile)

  

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

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

Party B appoints as its Process Agent:                           

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

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

(e)                                  Calculation Agent.  The Calculation Agent is Party A unless
otherwise specified in a Confirmation in relation to the relevant
Transaction.  If Party A is the
Defaulting Party, the Calculation Agent shall be Party B until such time as
Party A is no longer a Defaulting Party. 
All determinations by the Calculation Agent are subject to agreement by
Party A and Party B.  If the Parties are
unable to agree on a calculation made by a

 4
 

particular
Calculation Agent, then the parties shall appoint another mutually acceptable
Calculation Agent that is a 

recognized dealer
in the relevant market.  Each party
agrees to submit invoices on a monthly basis for amounts due 

from the other party.

(f)            Credit Support Document.

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

(ii)           With respect to Party A, a Guaranty
executed by Party A’s Credit SupportProvider in the form of Exhibit A.

(iii)          With respect to Party B, a Guaranty
executed by Party B’s Credit SupportProvider in form and substance reasonably
satisfactory to Party A.

(g)                                 Credit Support Provider.

Credit Support
Provider means in relation to Party A: Merrill Lynch & Co., Inc.

Credit Support
Provider means in relation to Party B:                                             

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

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

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

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

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

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

 5
 

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

(l)                                     “Affiliate” with
respect to Party A, will mean Reliant Energy Retail Holdings, LLC, and any
subsidiary thereof, including Reliant Energy Retail Services, LLC, and Reliant
Energy Retail Receivables, LLC, and with respect to Party B, will have the
meaning specified in Section 14 of this Agreement.

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

Part 5

OTHER PROVISIONS

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

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

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

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

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

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

 6
 

(j)                                     Line of Business.  Each party has entered into this Agreement
(including each Transaction hereunder) in conjunction with its line of business
(including financial intermediation services) or the financing of its business.

(k)                                  No Reliance.  In connection with the negotiation of,
the entering into, and the confirming of the execution of, this Agreement, any
Credit Support Document to which it is a party, and each Transaction: (i) it is
not relying upon any advice, statements, recommendations or representations
(whether written or oral) of the other party other than the written
representations expressly set forth in this Agreement, in such Credit Support
Document or in the Confirmation of such Transaction; (ii) the other party has
not given to it (directly or indirectly through any other person) any advice,
counsel, assurance, guarantee, or representation whatsoever as to the expected
or projected success, profitability, return, performance, result, effect,
consequence, or benefit (either legal, regulatory, tax, financial, accounting,
or otherwise) of this Agreement, such Credit Support Document, or such
Transaction; (iii) it has consulted with its own legal, regulatory, tax,
business, investment, financial, and accounting advisors to the extent it has
deemed necessary, and it has made its own investment, hedging, and trading
decisions based upon its own judgment and upon any advice from such advisors as
it has deemed necessary, and not upon any view expressed by the other party;
(iv) all trading decisions have been the result of arm’s length negotiations
between the parties and are not intended to preclude either Party (or any of
such party’s Affiliates) from undertaking proprietary trading activities,
including hedging and other transactions relating, directly or indirectly, to
generation capacity owned or controlled by such party or its Affiliates; (v) it
is entering into this Agreement, such Credit Support Document, and such
Transaction with a full understanding of all of the risks hereof and thereof
(economic and otherwise) and it is capable of assuming and willing to assume
(financially and otherwise) those risks and (vi) it has the capacity to
evaluate (internally or through independent professional advice) this
Agreement, any such Credit Support Document and each such Transaction
(including decisions regarding the appropriateness or suitability thereof) and
has made its own decision to enter into this Agreement, such Credit Support
Document and each such Transaction.”

(d)                               Provisions Relating to Bankruptcy Code.

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

(B)                                      To secure its obligations under this
Agreement, each Party hereby grants the other Party a present and continuing
security interest in, lien on, and right to setoff against, its respective
payment obligations to the other Party under this Agreement.  Each Party acknowledges and agrees that the

 7
 

pledge of its payment obligations to the other Party
under this Agreement shall serve to 

“margin,”
“guaranty” or “secure” such obligations within the meaning of the Bankruptcy
Code.

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

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

Party A

Pay:                          [INSERT COLLATERAL ACCOUNT INFO]

Bank:

Fed. ABA No.:

Account No/CHIPS
UID:

Party B

Pay:                                                                                                                           

Bank:                                                                                                                        

Fed. ABA No.:                                                                                                         

Account No/                                                                                                             

CHIPS UID:                                                                                                             

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

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

 8
 

which
modify or supplement the general terms and conditions of this Agreement, such
provisions shall not be deemed accepted unless agreed to in writing by the
parties. Failure to send or to return an executed Confirmation or any objection
regarding a Confirmation by either party shall not invalidate the Transaction
agreed to by the parties.”

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

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

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

(j)                                     Confidentiality.  Unless otherwise agreed, the contents of this Agreement,  the Confirmations, and all Transactions,
hereunder,  as well as all other
documents relating thereto and any information pertaining thereto made available
by either party or its Credit Support Provider(s) to the other party or its
Credit Support Provider(s) is confidential and shall not be disclosed to any
third party (other than the Credit Support Providers), except for such
information (a) as is or may become generally available to the public, (b) as
may be required in response to any regulatory authority or any lawful summons,
subpoena, or otherwise in connection with any litigation or to comply with any
applicable law, order, regulation, ruling, or accounting disclosure rule or
standard, (c) as may be obtained from a non-confidential source that disclosed
such information in a manner that did not, to such party’s knowledge, violate
its obligations to the non-disclosing party or its Credit Support Provider(s)
in making such disclosure, (d) as may be furnished to the disclosing party’s
Affiliates, and to each of such Person’s auditors, attorneys, advisors, lenders
and their counsel and advisors, or prospective purchasers which are required to
keep the information that is disclosed in confidence or that is disclosed in
connection with communications between the parties under the terms of Section
7, (e) regarding price, volume or delivery point(s) of a particular
Transaction(s),  as may be disclosed to
an energy pricing information aggregator, provided that the name or any other
identifying information relating to the other party, including unique
attributes or requirements thereof, is redacted and/or otherwise not disclosed,
or (f) as may have been disclosed prior to the effective date of this
Agreement.

 9
 

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

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

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

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

Part 6

ADDITIONAL
PROVISIONS FOR

COMMODITY
DERIVATIVE TRANSACTIONS

(a)           Amendments to ISDA Commodity Definitions

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

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

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

 

 10

 

[(d)                             The
following “Disruption Fallback” specified in Section 7.5 of the 2005 ISDA
Commodity Definitions shall be deleted and replaced with the following, except
as otherwise specified in the relevant Confirmation, with respect to Gas
Transactions only:

“Postponement”
means that if there is no single price published for such
location for such day, but there is published a range of prices, then the price
shall be the average of such high and low prices.  If no price or range of prices is published
for such day, then the price shall be the average of the following: (i) the
price for the first day for which a price or range of prices is published that
next precedes the relevant day; and (ii) the price for the first day for which
a price or range of prices is published that next follows the relevant day.”] [DELETE IF NOT USING THE GAS ANNEX]

Part 7

Physically Settled Power Transactions

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

(j)            Elective Provisions

1.                                       (a)(i) o
Applicability of Part 7 to Outstanding Power Transactions.  If not checked, not applicable. [IF REPS TRANSACTIONS GOING UNDER THIS CONTRACT CHECK BOX AND ADD THE
FOLLOWING LANGUAGE: “For the avoidance of doubt, this Agreement
shall govern all Outstanding Power Transactions entered into under the Master
Power Purchase and Sale Agreement dated [insert date] in accordance with Part
7(a)(ii).”  ALSO, DELETE “IF NOT CHECKED,
NOT APPLICABLE” LANGUAGE ABOVE IF BOX CHECKED.]

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

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

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

o  
Option A

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

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

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

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

x   Party A Electric Tariff.  [TO BE
SUPPLIED]

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

If not checked, not applicable.

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

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

 11
 

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

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

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

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

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

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

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

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

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

 12
 

invoice is not rendered within twelve (12) months after the close of
the month during which performance of a Transaction occurred, the right to
payment for such performance is waived.”

(iv)                              Part 7(h)(ii)  Severability  is amended by deleting the first
sentence of that provision and replacing it with the following:

“If elected under
clause (j) as being applicable with respect to Power Transactions only, if
performance of this Agreement is declared or rendered unlawful by any
applicable court or law or regulatory agency or deemed unlawful because of a
statutory change (individually or collectively, such events being referred to
herein as a “Regulatory Event”), such Regulatory Event will not otherwise
affect the remaining lawful obligations that arise under this Agreement.”

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

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

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

 “Claims” means
all third party claims or actions, threatened or filed and, whether groundless,
false, fraudulent or otherwise, that directly or indirectly relate to the
subject matter of an indemnity, and the resulting losses, damages, expenses,
attorney’s fees and court costs whether incurred by settlement or otherwise,
and whether such claims or actions are threatened or filed prior to or after
the termination of this Agreement.

  “WSPP
Agreement” means the Western Systems Power Pool Agreement as amended from time
to time.

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

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

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

“ (i)         Other
Products and Service Levels.

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

 13
 

[Delete if not using Gas Annex]Part 8

Physically Settled Natural Gas Transactions

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

(l)            Elective Provisions

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

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

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

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

x  Option
D: Not applicable.

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

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

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

If not checked, not applicable.

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

x  Option
A: Cover Standard

o  Option B: Spot Price Standard

If neither option is
selected, Option A shall apply.

4. (e) —
Taxes

x  Option
A: Buyer Pays At and After Delivery Point

o  Option B: Seller Pays Before and At Deliver
Point

If neither option is
selected, Option A shall apply.

5. (f)(ii) —
Payment Date

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

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

 14
 

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

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

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

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

(m)          Notices for Gas Transactions

	
  PARTY A

  	
   

  	
  PARTY B

  
	
  Invoices:

  	
   

  	
  Invoices:

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

  	
   

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

  
	
  Attn: Gas Accounting

  	
   

  	
  Attn:

  
	
  Phone: 713-497-4143

  	
   

  	
  Phone:

  
	
  Facsimile: 713-497-9663

  	
   

  	
  Facsimile:

  
	
   

  	
   

  	
   

  
	
  Nominations:

  	
   

  	
  Nominations:

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

  	
   

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

  
	
  Attn:

  	
   

  	
  Attn:

  
	
  Phone:

  	
   

  	
  Phone:

  
	
  Facsimile:

  	
   

  	
  Facsimile:

  
	
   

  	
   

  	
   

  
	
  Confirmations:

  	
   

  	
  Confirmations:

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

  	
   

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

  
	
  Attn: Contract Administration

  	
   

  	
  Attn:

  
	
  Phone: 713-497-3639

  	
   

  	
  Phone:

  
	
  Facsimile: 713-497-9562

  	
   

  	
  Facsimile:

  
	
   

  	
   

  	
   

  
	
  Option Exercise:

  	
   

  	
  Option Exercise:

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

  	
   

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

  

 

 15
 

 

	
  Attn:

  	
   

  	
  Attn:

  
	
  Phone:

  	
   

  	
  Phone:

  
	
  Facsimile:

  	
   

  	
  Facsimile:

  
	
   

  	
   

  	
   

  
	
  oWire Transfer - or - oACH
  (check one box):

  	
   

  	
  oWire Transfer - or - oACH
  (check one box):

  
	
  Bank: 

  	
   

  	
   

  	
  Bank:

  	
   

  
	
  ABA: 

  	
   

  	
   

  	
  ABA: 

  	
   

  
	
  Account: 

  	
   

  	
   

  	
  Account: 

  	
   

  
	
  Other Details:

  	
   

  	
   

  	
  Other Details:

  	
   

  
									

 

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

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

(ii)                                  Part
8(b)(iv) Fixed Price
Contracts shall be added as a new section:

“(iv)                        Fixed Price
Contracts.  From time-to-time the parties may agree to
fix the Contract Price paid for a certain Contract Quantity under a transaction
(“Fixed Price Contract”).  A Fixed Price
Contract shall mean any transaction with a Firm performance obligation in which
the agreed price (per unit volume) for the delivery of the Contract Quantity is
expressed either as: (i) a flat dollar amount, or (ii) a range of dollar
amounts, which is limited either at the lowest value or the highest value, or
both.  For any Fixed Price Contract, the
Contract Quantity must be nominated by Buyer and shall be deemed to be the
first Gas purchased at the Delivery Point. 
If more than one Fixed Price Contract is applicable between the parties
at the same Delivery Point for any period, then the first Gas purchased during
such period shall be attributed to the Fixed Price Contract that was executed
earliest, followed by any additional Contract Quantities in chronological order
of Fixed Price Contract execution.

In consideration of the foregoing premises, the
parties agree that, should performance of a Fixed Price Contract be interrupted
or reduced due to Force Majeure or for any other reason which excuses performance
of a “Firm” obligation for more than three (3) consecutive Days or for five (5)
Days in any Month, then the party which has received the Force Majeure or other
non-performance notice may, at its sole discretion, elect to terminate the
Fixed Price Contract for the remainder of the term of the Fixed Price Contract
for the termination payment provisions of the Master Agreement shall apply to
such remaining term of the terminated transaction.  Such termination right may be exercised
within the ten (10) Business Days immediately following the interruption or
reduction by delivery of a written termination notice.”

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

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

“(provided, however, that
in relation to any Transaction that is a Gas Transaction, if an Event of
Default or a Potential Event of Default has occurred and is continuing for
longer than ten (10) Business Days without an Early Termination 

 16
 

Date being designated,
then the condition specified in this clause (1) shall cease to be a condition
precedent to the obligations under Section 2(a)(i).”

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

“(vi)        In addition, for so long as
non-performance under Part 8(b) is continuing, the performing party may, upon
one (1) Local Business Day notice, suspend its performance under any or all
transactions between the parties for the purchase and sale of Gas.”

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

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

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

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

(a)                                  Notwithstanding anything to the contrary,
this Agreement shall not become effective until the date on which the
Guaranty issued by Merrill Lynch & Co., Inc. becomes effective.

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

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

(d)                                 Notice & Right to Cure Events of Default.  Pursuant to Part 4(a) of this Schedule, the
Merrill Parties shall be provided with all notices under this Agreement,
including notices of any Potential Event of Default, Event of Default or
Termination Event hereunder.  In the
event of a Potential Event of Default or Event of Default in which Party A is,
or may become, the Defaulting Party, or a Termination in respect of which Party
A is the Affected Party, the Merrill Parties shall be permitted, at their
option, to cure such default or termination event,
[(if such event of default or termination event is capable of being cured by
either Merrill Party [TO BE USED AS FALLBACK])] within any grace period
applicable to Party A for  such
Potential Event of Default, Event of Default or Termination Event.

 17
 

 

	
  SIGNATURE PAGE

  
	
  OF THE

  
	
  SCHEDULE

  
	
  TO THE

  
	
  2002
  MASTER AGREEMENT

  
	
  BETWEEN

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

  
	
  AND

  
	
                           (“PARTY
  B”)                         

  

 

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

	
  Reliant Energy Power Supply, LLC

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
								

 

 

 18

 

Exhibit
D1

To Credit Sleeve and Reimbursement Agreement

Form of
EEI Collateral Annex

Draft for Discussion Purposes Only

Notice:  This proposed
draft of the Collateral Annex has been modified from

the version posted on the EEI Website as of January 1, 2005
as marked below.

PARAGRAPH 10

to the

COLLATERAL ANNEX

to the

EEI
MASTER POWER PURCHASE AND SALE AGREEMENT

CREDIT
ELECTIONS COVER SHEET

DATED AS
OF

[    T.B.D.    ]

BETWEEN

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

AND

                                                                                       (“Party B”)

 

AND

MERRILL
LYNCH COMMODITIES, INC. (“MLCI”)

Paragraph
10.    Elections and Variables

I.              Collateral Threshold.

A.                                    Party
A Collateral Threshold.

o           $                          
(the “Threshold Amount”); provided, however, that the Collateral
Threshold for Party A shall be zero upon the occurrence and during the
continuance of an Event of Default or a Potential Event of Default with respect
to Party A; and provided further that, in the event that, and on the
date that, Party A cures the Potential Event of Default on or prior to the date
that Party A is required to post Performance Assurance to Party B pursuant to a
demand made by Party B pursuant to the provisions of the Collateral Annex on or
after the occurrence of such Potential Event of Default, (i) the Collateral
Threshold for Party A shall automatically increase from zero to the Threshold
Amount and (ii) Party A shall be relieved of its obligation to post Performance
Assurance pursuant to such demand.

 1
 

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

	
  Party A

  Collateral Threshold

  	
   

  	
  S&P Credit Rating

  	
   

  	
  Moody’s_Credit Rating

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $                                                            

  	
   

  	
  AA- (or above)

  	
   

  	
  Aa3 (or above)

  
	
  $                                                            

  	
   

  	
  A+ thru A-

  	
   

  	
  A1 thru A3

  
	
  $                                                            

  	
   

  	
  BBB+

  	
   

  	
  Baa1

  
	
  $                                                            

  	
   

  	
  BBB

  	
   

  	
  Baa2

  
	
  $                                                            

  	
   

  	
  BBB-

  	
   

  	
  Baa3

  
	
  $                                                            

  	
   

  	
  BB+

  	
   

  	
  Ba1

  
	
  $                                                            

  	
   

  	
  BB

  	
   

  	
  Ba2

  
	
  $                                                            

  	
   

  	
  BB-

  	
   

  	
  Ba3

  
	
  $                                                            

  	
   

  	
  B+

  	
   

  	
  B1

  
	
  $                                                            

  	
   

  	
  B

  	
   

  	
  B2

  
	
  $                                                            

  	
   

  	
  Below B

  	
   

  	
  Below B2

  
	
  $                                                            

  	
   

  	
  Unrated

  	
   

  	
  Unrated

  

 

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

	
  Party A

  Collateral Threshold

  	
   

  	
  Credit Rating

  	
   

  	
  Credit Rating

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $                                                                                     

  	
   

  	
   

  	
  (or above)

  	
   

  	
   

  	
  (or above)

  
	
  $                                                                                     

  	
   

  	
   

  	
   

  	
   

  
	
  $                                                                                     

  	
   

  	
   

  	
   

  	
   

  
	
  $                                                                                     

  	
   

  	
   

  	
   

  	
   

  
	
  $                                                                                     

  	
   

  	
  Below                 

  	
   

  	
  Below                 

  
							

 

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

 2
 

o                                   Other — see
attached  threshold terms

B.                                    Party
B Collateral Threshold.

o                                   $                   (the
“Threshold Amount”); provided, however, that the Collateral Threshold
for Party B shall be zero upon the occurrence and during the continuance of an
Event of Default or a Potential Event of Default with respect to Party B; and
provided further that, in the event that, and on the date that, Party B
cures the Potential Event of Default on or prior to the date that Party B is
required to post Performance Assurance to Party A pursuant to a demand made by
Party A pursuant to the provisions of the Collateral Annex on or after the
occurrence of such Potential Event of Default, (i) the Collateral Threshold for
Party B shall automatically increase from zero to the Threshold Amount and (ii)
Party B shall be relieved of its obligation to post Performance Assurance
pursuant to such demand.

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

 

	
  Party B

  Collateral Threshold

  	
   

  	
  Credit Rating

  	
   

  	
  Credit Rating

  
	
  $                                                                                       

  	
   

  	
  AA- (or above)

  	
   

  	
  Aa3 (or above)

  
	
  $                                                                                       

  	
   

  	
  A+ thru A-

  	
   

  	
  A1 thru A3

  
	
  $                                                                                       

  	
   

  	
  BBB+

  	
   

  	
  Baa1

  
	
  $                                                                                       

  	
   

  	
  BBB

  	
   

  	
  Baa2

  
	
  $                                                                                       

  	
   

  	
  BBB-

  	
   

  	
  Baa3

  
	
  $                                                                                       

  	
   

  	
  BB+

  	
   

  	
  Ba1

  
	
  $                                                                                       

  	
   

  	
  BB

  	
   

  	
  Ba2

  
	
  $                                                                                       

  	
   

  	
  BB-

  	
   

  	
  Ba3

  
	
  $                                                                                       

  	
   

  	
  B+

  	
   

  	
  B1

  
	
  $                                                                                       

  	
   

  	
  B

  	
   

  	
  B2

  
	
  $                                                                                       

  	
   

  	
  Below B

  	
   

  	
  Below B2

  
	
  $                                                                                       

  	
   

  	
  Unrated

  	
   

  	
  Unrated

  

 

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

 3
 

demand made by Party A pursuant to the provisions of
the Collateral Annex on or after the occurrence of such Potential Event of
Default, (i) the Collateral Threshold for Party B shall automatically increase
from zero to the Threshold Amount and (ii) Party B shall be relieved of its
obligation to post Performance Assurance pursuant to such demand:

	
  Party B

  Collateral Threshold

  	
   

  	
  Credit Rating

  	
   

  	
  Credit Rating

  
	
   

  	
   

  	
   

  	
  (or above)

  	
   

  	
   

  	
  (or above)

  
	
  $                                                                                     

  	
   

  	
   

  	
   

  	
   

  
	
  $                                                                                     

  	
   

  	
   

  	
   

  	
   

  
	
  $                                                                                     

  	
   

  	
   

  	
   

  	
   

  
	
  $                                                                                     

  	
   

  	
  Below                 

  	
   

  	
  Below               

  
							

 

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

o                                   Other — see
attached  threshold terms.

II.            Eligible Collateral and Valuation
Percentage.

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

	
  

  	
   

  	
  MLCI

  (on behalf

  of Party A

  and itself)

  	
   

  	
  Party B

  	
   

  	
  Valuation %

  
	
  (A) Cash

  	
   

  	
  x

  	
   

  	
  x

  	
   

  	
  100%

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

  	
   

  	
  x

  	
   

  	
  x

  	
   

  	
  100%

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

  	
   

  	
  x

  	
   

  	
  x

  	
   

  	
  99%

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

  	
   

  	
  x

  	
   

  	
  x

  	
   

  	
  98%

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

  	
   

  	
  x

  	
   

  	
  x

  	
   

  	
  95%

  

 

III.           Independent Amount.       (NOT APPLICABLE)

A.                                    Party
A Independent Amount.     (NOT
APPLICABLE)

 4
 

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

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

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

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

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

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

o                                   Party B shall have a Partial Floating
Independent Amount of $                  .     If the Partial Floating Independent Amount
option is selected for Party B, then Party B will be required to Transfer or
cause to be Transferred to Party A Performance Assurance with a 

 5
 

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

IV.           Minimum Transfer Amount.

A.            Party A Minimum Transfer Amount:             $1

B.            Party B Minimum Transfer Amount:             $1

V.            Rounding Amount.

A.            Party
A Rounding Amount:               $250,000

B.            Party B Rounding Amount:               $250,000

VI.           Administration of Cash Collateral.

A.            Party A Eligibility to Hold Cash.

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

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

Party A
Interest Rate.

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

o            Other
-                                                                                                  

 6
 

B.            Party B
Eligibility to Hold Cash.

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

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

Party B
Interest Rate.

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

o            Other
-                                                                                                  

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

VII.         Notification Time.

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

VIII.        General.

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

 IX.          Additional
Amendments to Collateral Annex.

Introductory Paragraph.

 7
 

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

Paragraph 1.   Definitions.

The following definitions are amended as set forth below:

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

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

The definition of “Notification Time”
is amended to add “a.m.” after “11:00”.

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

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

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

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

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

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

Paragraph 5. 
Reduction and Substitution of Performance Assurance.

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

Paragraph 6.  
Administration of Performance Assurance.

Paragraphs 6(a)(i), 6(a)(ii)(A), and 6(a)(ii)(B) are amended by
deleting such paragraphs in their entirety.

Paragraph 6(a)(ii) is amended by deleting the last sentence of such
section with the words beginning “provided however” and ending “then:” and
replacing such words with a period.

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

(iv)          Distributions.  So long as no Event of Default or  Potential Event of Default with respect to
the Pledging Party has occurred and is continuing, and no Early Termination
Date for which any unsatisfied payment Obligations of the Pledging Party exist
has occurred or been designated as the result of an Event of Default with
respect to the Pledging Party, and to the extent that an obligation to Transfer
Performance Assurance would not be created or increased by the Transfer, in the
event that the Secured Party or its Custodian is holding Treasury Bills,
Treasury Notes, or Treasury Bonds (“Treasury PA”) and Secured Party receives or
is deemed to receive Distributions on a Local Business Day, the Secured Party
will Transfer (or caused to be Transferred) to the Pledging Party such
Distributions not later than the following Local Business Day.  On or after the occurrence of a Potential
Event of Default or an Event of Default with respect to the Pledging Party or
an Early Termination Date as a result of an Event of Default with respect to
the Pledging Party, the Secured Party or its Custodian shall retain any such
Distributions as additional Performance Assurance hereunder until the
obligations of the Pledging Party under the Agreement have been satisfied in
the case of an Early Termination Date or for so long as such Event of Default
is continuing in the case of an 

 8
 

Event of Default. For purposes of this paragraph, “Distributions” means
with respect to Treasury PA, all principal, interest and other payments and
distributions of cash or other property with respect thereto, regardless of
whether the Secured Party has disposed of that Treasury PA under Paragraph
6(ii).  Distributions will not include
any item of property acquired by the Secured Party upon any disposition or
liquidation of Treasury PA.

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

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

“(c) Without limiting the Secured Party’s rights under Paragraph 6(c),
the Secured Party will exercise reasonable care to assure the safe custody of
all Performance Assurance to the extent required by applicable law, and in any
event the Secured Party will be deemed to have exercised reasonable care if it
exercises at least the same degree of care as it would exercise with respect to
its own property.  Except as specified in
the preceding sentence, the Secured Party will have no duty with respect to
Performance Assurance, or enforce or preserve any rights pertaining thereto.”

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

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

	
  Party A:

  	
  Attn: Credit Risk Management 

  	
  Telephone:

  	
  (713) 497-1052

  
	
   

  	
   

  	
  Facsimile:

  	
  (713) 497-1058

  
	
   

  	
  Street Address: 

  	
   

  	
   

  
	
   

  	
  1000 Main St., 11th Floor 

  	
   

  	
   

  
	
   

  	
  Houston, TX 77002 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Mailing Address: 

  	
   

  	
   

  
	
   

  	
  P O Box 4455 

  	
   

  	
   

  
	
   

  	
  Houston, TX 77210-4455

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Merrill Lynch Commodities, Inc. 

  	
  Telephone: 

  	
  (713) 544-4975

  
	
   

  	
  20 East Greenway Plaza, 7th Floor 

  	
  Facsimile:

  	
  (713) 544-5551

  
	
   

  	
  Houston, Texas 77253-3327 

  	
   

  	
   

  
	
   

  	
  Attn:Legal

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Party B:

  	
   

  	
  Telephone:

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
   

  

 

 9
 

Addresses for Transfers.

	
  Party A:

  U. S. Dollars

  	
   

  	
  Payment to:

  For Account of:

  Account #:

  Federal ABA#:

  	
   

  	
  JP Morgan Chase Bank,

  New York, NY

  Merrill Lynch Commodities, Inc.

  323009980

  021000021

  
	
  Party B:

  U.S. Dollars

  	
   

  	
  Payment to:

  For Account of:

  Account #:

  Federal ABA#:

  	
   

  	
   

  

 

Other Provisions.

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

Credit
Sleeve Provisions.

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

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

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

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

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

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

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

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

(iii)                               All
information that is furnished in writing by or on behalf of it to any of the
other Parties hereto is, as of the date of the information, true, accurate and
complete in every material respect, or, in the case of audited or unaudited
financial statements, fairly present the financial condition of the 

 10
 

relevant entity
and have been prepared in accordance with generally accepted accounting
principles, consistently applied, except as otherwise indicated in the notes of
such financial statements.

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

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

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

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

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

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

 

	
  RELIANT ENERGY POWER SUPPLY, LLC

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	 

	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	 

												

 

 11
 

 

	
  MERRILL LYNCH COMMODITIES, INC.

  	
   

  	 

	
   

  	
   

  	 

	
  By:

  	
   

  	
   

  	 

	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	 

							

 

 12

Exhibit D2

To Credit Sleeve and Reimbursement Agreement

Form of
ISDA Credit Support Annex

PARAGRAPH
13

OF THE

CREDIT
SUPPORT ANNEX

DATED AS
OF

[    T.B.D.    ]

BETWEEN

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

AND

                                                           (“Party
B”)

AND

MERRILL LYNCH COMMODITIES, INC. (“MLCI”)

Paragraph 13.  Elections and Variables

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

With
respect to Party A:  None

With
respect to Party B:  None

(b)           Credit Support Obligations.

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

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

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

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

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

 1
 

 

	
  

  	
   

  	
  MLCI

  (on behalf of Party A and

  itself)

  	
   

  	
  Party B

  	
   

  	
  Valuation %

  
	
  (A) Cash

  	
   

  	
  x

  	
   

  	
  x

  	
   

  	
  100%

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

  	
   

  	
  x

  	
   

  	
  x

  	
   

  	
  99%

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

  	
   

  	
  x

  	
   

  	
  x

  	
   

  	
  98%

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

  	
   

  	
  x

  	
   

  	
  x

  	
   

  	
  95%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

	
  

  	
  Party A

  	
   

  	
  Party B

  
	
  Letter of Credit (as
  defined in Paragraph 13(j))

  	
  x

  	
   

  	
  x

  

 

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

(iv)          Thresholds.

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

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

(B)                                “Threshold”

For Party A, “Threshold” shall mean the
amount (the “Credit Amount”) equal to the lower of (i) the maximum amount
payable under guaranty provided by Party A’s Credit Support Provider guaranteeing
Party A’s payment obligations hereunder, if any, and (ii) the amount set forth
below under the heading “Party A Threshold” opposite the Credit Rating for
Party A’s Credit Support Provider on the relevant date of determination, and if
Party A’s Credit Support Provider’s Credit Ratings shall not be equivalent, the
[lower/higher] Credit Rating shall govern; provided, however, that the
Threshold for Party A shall be zero if (i) on the relevant date of
determination Party A’s Credit Support Provider does not have a Credit Rating
from any rating agency specified below or (ii) an Event of

 2
 

Default, Potential Event of
Default with respect to Party A has occurred and is continuing; and provided
further that, in the event that, and on the date that, Party A cures the
Potential Event of Default on or prior to the date that Party A is required to
post a Credit Support Amount to Party B pursuant to a demand made by Party B
pursuant to the provisions of the Credit Support Annex on or after the
occurrence of such Potential Event of Default, (i) the Threshold for Party A
shall automatically increase from zero to the Credit Amount and (ii) Party A
shall be relieved of its obligation to post the Credit Support Amount pursuant
to such demand.

	
  Party A

  Threshold

  	
   

  	
  S&P Credit

  Rating

  	
   

  	
  Moody’s Credit

  Rating

  	
   

  
	
   

  	
   

  	
  AA-(or
  above) 

  	
   

  	
  Aa3
  (or above)

  	
   

  
	
   

  	
   

  	
  A+
  thru A-

  	
   

  	
  A1
  thru A3

  	
   

  
	
   

  	
   

  	
  BBB+

  	
   

  	
  Baa1

  	
   

  
	
   

  	
   

  	
  BBB

  	
   

  	
  Baa2

  	
   

  
	
   

  	
   

  	
  BBB-

  	
   

  	
  Baa3

  	
   

  
	
   

  	
   

  	
  BB+

  	
   

  	
  Ba1

  	
   

  
	
   

  	
   

  	
  BB

  	
   

  	
  Ba2

  	
   

  
	
   

  	
   

  	
  BB-

  	
   

  	
  Ba3

  	
   

  
	
   

  	
   

  	
  B+

  	
   

  	
  B1

  	
   

  
	
   

  	
   

  	
  B

  	
   

  	
  B2

  	
   

  
	
   

  	
   

  	
  Below
  B

  	
   

  	
  Below
  B2

  	
   

  
	
   

  	
   

  	
  Unrated

  	
   

  	
  Unrated

  	
   

  

 

For Party B, “Threshold” shall mean the
amount (the “Credit Amount”) equal to the lower of (i) the maximum amount
payable under guaranty provided by Party B’s Credit Support Provider
guaranteeing Party B’s payment obligations hereunder, if any, and (ii) the
amount set forth below under the heading “Party B Threshold” opposite the
Credit Rating for Party B’s Credit Support Provider on the relevant date of
determination, and if Party B’s Credit Support Provider’s Credit Ratings shall
not be equivalent, the [lower/higher] Credit Rating shall govern; provided,
however, that the Threshold for Party B shall be zero if (i) on the relevant
date of determination Party B’s Credit Support Provider does not have a Credit
Rating from any rating agency specified below or (ii) an Event of Default,
Potential Event of Default with respect to Party B has occurred and is
continuing; and provided further that, in the event that, and on the
date that, Party B cures the Potential Event of Default on or prior to the date
that Party B is required to post a Credit Support Amount to Party A pursuant to
a demand made by Party A pursuant to the provisions of the Credit Support Annex
on or after the occurrence of such Potential Event of Default, (i) the
Threshold for Party B shall automatically increase from zero to the Credit
Amount and (ii) Party B shall be relieved of its obligation to post the Credit
Support Amount pursuant to such demand.

 3
 

 

	
  Party B

  Threshold

  	
   

  	
  S&P Credit

  Rating

  	
   

  	
  Moody’s Credit

  Rating

  
	
   

  	
   

  	
  AA- (or above)

  	
   

  	
  Aa3 (or above)

  
	
   

  	
   

  	
  A+ thru A-

  	
   

  	
  A1 thru A3

  
	
   

  	
   

  	
  BBB+

  	
   

  	
  Baa1

  
	
   

  	
   

  	
  BBB

  	
   

  	
  Baa2

  
	
   

  	
   

  	
  BBB-

  	
   

  	
  Baa3

  
	
   

  	
   

  	
  BB+

  	
   

  	
  Ba1

  
	
   

  	
   

  	
  BB

  	
   

  	
  Ba2

  
	
   

  	
   

  	
  BB-

  	
   

  	
  Ba3

  
	
   

  	
   

  	
  B+

  	
   

  	
  B1

  
	
   

  	
   

  	
  B

  	
   

  	
  B2

  
	
   

  	
   

  	
  Below B

  	
   

  	
  Below B2

  
	
   

  	
   

  	
  Unrated

  	
   

  	
  Unrated

  

 

	
  (C)

  	
   

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

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (D)

  	
   

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

  

 

(c)           Valuation and Timing.

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

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

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

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

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

 4
 

(e)           Substitution.

(i)            “Substitution
Date” has the meaning specified in Paragraph 4(d)(ii).

(ii)                                  “Consent”. If specified here
as applicable, then the Pledgor must obtain the Secured Party’s consent for any
substitution pursuant to Paragraph 4(d): Applicable, unless Eligible Credit
Support is being substituted.

(f)            Dispute Resolution.

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

(ii)                                  “Value”.  For the purpose of Paragraphs 5(i)(C) and
5(ii), the Value of Posted Credit Support will be calculated as follows: (i) in
the case of Cash, the face amount thereof; (ii) in the case of Letters of
Credit, the undrawn currently-available amount thereunder, unless a Letter of
Credit Default exists with respect to such Letter of Credit, in which case the
Value of such Letter of Credit shall be zero.

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

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

(g)           Holding and Using Posted Collateral.

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

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

(A)          Party A is not a
Defaulting Party.

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

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

(A)          Party B is not a Defaulting Party.

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

 5
 

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

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

(h)           Distributions and Interest Amount.

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

(ii)                                  “Transfer of Interest Amount”. The
Transfer of the Interest Amount will be made on the second Local Business Day
following each calendar month, and on any Local Business Day that Posted
Collateral in the form of Cash is transferred to the Pledgor pursuant to
Paragraph 3(b), upon receipt of an invoice.

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

(i)                                    Additional
Representation(s).  Each party
represents to the other in accordance with Paragraph 9 that it is not and will
not become a party to or otherwise be bound by any agreement, other than this
Agreement, or any Master Netting Agreement or similar Agreement thereto (to
which the three parties hereto are parties thereto), which restricts in any
manner the rights of any present or future holder of any of the Posted
Collateral with respect hereto.

(j)                                    Other
Eligible Support and Other Posted Support.

(i)                                     “Value” with respect to Other
Eligible Support and Other Posted Support means the stated amount (undrawn
portion) of any Letter of Credit maintained by the Pledgor (or its Credit
Support Provider) for the benefit of the Secured Party, unless a Letter of
Credit Default exists with respect to such Letter of Credit, in which case the
Value of such Letter of Credit shall be zero.

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

 6
 

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

(B)                                For
purposes of Paragraph 3(b), by the return of an outstanding Letter of Credit by
the Secured Party to the Pledgor, at the address of the Pledgor specified in
the Notices Section of this Agreement, or delivery of an executed amendment to
the Letter of Credit in form and substance satisfactory to the Pledgor
(reducing the amount available to the Secured Party thereunder) by the Pledgor
or the issuer of the Letter of Credit to the Secured Party at the Secured Party’s
address specified in the Notices Section of this Agreement. If a Transfer is to
be effected by a reduction in the amount of an outstanding Letter of Credit
previously issued for the benefit of the Secured Party, the Secured Party shall
not unreasonably withhold its consent to a commensurate reduction in the amount
of such Letter of Credit and shall take such action as is reasonably necessary
to effectuate such reduction.

(iii)          “Letter of Credit
Provisions”.

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

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

(B)                                The
Pledgor may, at its option, Transfer a Letter of Credit by (A) causing the
issuing bank to execute an amendment increasing the outstanding amount
available for drawing under a previously Transferred Letter of Credit or (B) establishing
one or more additional Letters of Credit. 
If (i) the Pledgor shall fail to cause the issuing bank to renew,
substitute, or sufficiently increase the amount of a Transferred Letter of
Credit, Transfer one or more additional Letters of Credit, or otherwise
Transfer sufficient Eligible Credit Support and (ii) the Delivery Amount
applicable to the Pledgor equals or exceeds the

 7
 

Pledgor’s Minimum
Transfer Amount as a result of such failure, then the Secured Party may draw on
the entire, undrawn portion of any Transferred Letter of Credit upon submission
to the bank issuing such Letter of Credit an L/C Certificate specifying the
amounts due and owing to the Secured Party in accordance with the stated
requirements of the Letter of Credit. The Pledgor shall remain liable for any
amounts due and owing to the Secured Party and remaining unpaid after the
application of the amounts so drawn by the Secured Party.

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

(D)                               Notwithstanding
Paragraph 10, in all cases, the costs and expenses (including but not limited
to the reasonable costs, expenses, and external attorney’s fees of the Secured
Party) of (i) causing an issuing bank to establish, renew, substitute,
cancel, increase or reduce the amount available for drawing under (as the case
may be) one or more Letters of Credit or (ii) the Secured Party in
exercising any of its rights, powers or obligations under Paragraph 13(m) shall
be borne by the Pledgor.

(iv)          “Certain
Rights and Remedies”.

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

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

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

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

“Letter of Credit Default” shall mean with
respect to an outstanding Letter of Credit, the occurrence of any of the
following events: (i) the issuer of such Letter of Credit shall fail to
maintain a Credit Rating of at least “A-” by S&P or “A3” by Moody’s; (ii)
the issuer of the Letter of Credit shall fail to comply with or perform its
obligations under such Letter of Credit if such failure shall be continuing
after the lapse of any applicable grace period; (iii) the issuer of such Letter
of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part,
or challenge the validity of, such Letter of Credit; (iv) such Letter of Credit
shall expire or terminate, or shall fail or cease to be in full force and
effect, prior to the stated expiration date on the Letter of Credit; or (v) any
event analogous to an event specified in Section 5(a)(vii)

 8
 

of this Agreement
shall occur with respect to the issuer of such Letter of Credit provided,
however, that no Letter of Credit Default shall occur in any event with
respect to a Letter of Credit after the time such Letter of Credit is required
to be canceled or returned to the Pledgor in accordance with the terms of this
Annex.

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

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

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

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

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

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

	
  

  	
  Party A:

  	
  Attn: Credit Risk Management 

  	
  Telephone: 

  	
  (713) 497-1052 

  
	
   

  	
   

  	
   

  	
  Facsimile: 

  	
  (713) 497-1058

  
	
   

  	
   

  	
  Street Address: 

  	
   

  	
   

  
	
   

  	
   

  	
  1000 Main St., 11th Floor 

  	
   

  	
   

  
	
   

  	
   

  	
  Houston, TX 77002 

  

  Mailing Address: 

  	
   

  	
   

  
	
   

  	
   

  	
  P O Box 4455 

  	
   

  	
   

  
	
   

  	
   

  	
  Houston, TX 77210-4455 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Telephone:

  	
   

  
	
   

  	
   

  	
   

  	
  Facsimile:

  	
   

  
	
   

  	
   

  	
  Merrill Lynch Commodities, Inc

  	
   

  	
   

  
	
   

  	
   

  	
  20 East Greenway Plaza, 7th Floor 

  	
   

  	
   

  
	
   

  	
   

  	
  Houston, Texas 77253-3327 Attn: Legal 

  	
   

  	
   

  
	
   

  	
   

  	
  Fax: 713-544-5551 

  	
   

  	
   

  
	
   

  	
   

  	
  Phone: 713-544-4975

  	
   

  	
   

  
	
   

  	
  Party B:

  	
   

  	
  Telephone:

  	
   

  
	
   

  	
   

  	
   

  	
  Facsimile:

  	
   

  

 

 9
 

(l)                                    Addresses
for Transfers.

	
  

  	
  Party A: 

  	
  Payment to: 

  	
  JP Morgan Chase Bank, 

  
	
   

  	
   

  	
  U. S. Dollars

  	
  New York, NY 

  
	
   

  	
   

  	
  For Account of: 

  	
  Merrill Lynch Commodities, Inc. 

  
	
   

  	
   

  	
  Account #: 

  	
  323009980 

  
	
   

  	
   

  	
  Federal ABA#:

  	
  021000021

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Party B: 

  	
  Payment to:  

  	
   

  
	
   

  	
   

  	
  U.S. Dollars

  	
   

  
	
   

  	
   

  	
  For Account of:

  	
   

  
	
   

  	
   

  	
  Account #: 

  	
   

  
	
   

  	
   

  	
  Federal ABA#:

  	
   

  
					

 

(m)          Other Provisions.

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

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

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

(iii)                          This
Credit Support Annex is a Security Agreement under the provisions of the
Uniform Commercial Code of the State of New York.

(iv)                          Power of Attorney.   If the Pledgor fails (i) to execute and
deliver to the Secured Party such financing statements, specific assignments,
or other documents as provided in Paragraph 11(b) or (ii) to do such other
things relating to any Posted Collateral as the Secured Party may reasonably
request in order to protect and maintain its security interest in such Posted
Collateral and to protect, preserve, and realize upon such Posted Collateral,
then the Secured Party is hereby authorized (but not required) by the Pledgor
to complete and execute such financing statements, specific assignments, and
other documents as the Secured Party deems necessary or appropriate for such
purposes. The Pledgor hereby appoints the Secured Party, during the term of
this Agreement, as the Pledgor’s agent and attorney-in-fact to complete and
execute such financing statements, specific assignments and other documents and
to perform all other acts which the Secured Party may deem necessary or
appropriate to protect and maintain its security interest in any Posted
Collateral and to protect, preserve, and realize upon such Posted Collateral.
The power-of-attorney granted herein to the Secured Party is coupled with an
interest and is irrevocable during the term of this Agreement.

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

 

 10

 

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

(vii)                        The
definition of “Exposure” in Paragraph
12 of the Annex is hereby amended to read in its entirety as follows:

‘Exposure’
means for any Valuation Date or other date for which Exposure is calculated and
subject to Paragraph 5 in the case of a dispute, the amount, if any, that
would be payable to a party that is the Secured Party by the other party
(expressed as a positive number) or by a party that is the Secured Party to the
other party (expressed as a negative number) pursuant to Section 6(e)(ii)(1) of
this Agreement if all Transactions were being terminated as of the relevant
Valuation Time, on the basis that (i) that party is not the Affected Party and
(ii) United States Dollars is the Termination Currency; provided
that for purposes of
determining Exposure,  the Close-out
Amount will be determined by the Valuation Agent on behalf of that party using
its estimates at mid-market of the amounts that would be paid for transactions
providing the economic equivalent of (x) the material terms of the
Transactions, including the payments and deliveries by the parties under
Section 2(a)(i) in respect of the Transactions that would, but for the
occurrence of the relevant Early Termination Date, have been required after
that date (assuming satisfaction of the conditions precedent in Section
2(a)(iii)); and (y) the option rights of the parties in respect of the
Transactions.

(n)           Credit Sleeve Provisions.

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

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

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

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

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

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

(F)                                 Any
amendment, supplement, waiver or other modification of, or any

 11
 

forbearance
from exercising any rights with respect to the terms or provisions contained in
this 

Credit Support Annex
requires the express written consent of Party A, Party B and MLCI; and

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

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

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

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

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

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

(v)                                Except
as provided in Part 9(a) of the Schedule, the only rights, covenants and
obligations in the Agreement that shall be applicable to MLCI are those that
are set forth in provisions that either specifically refer to MLCI by name, or
that specifically refer to “each of the three parties”.  All of the other provisions in the Agreement
that refer to: “Pledgor”, “Secured Party”, “Valuation Agent”, “Defaulting Party”,
“Affected Party”, “Disputing Party”, “a party”, “appropriate party”, “other
party”, “the

 12
 

parties”, “both
parties”, “each party”, “either party” or “neither party” shall not be
interpreted as references 

to MLCI, but shall
be interpreted as references to: Party A; Party B; both Party A and Party B;
each of 

Party A and Party
B; either Party A or Party B; or neither Party A nor Party B as is indicated by
the 

context.

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

 13
 

SIGNATURE PAGE

TO

PARAGRAPH 13

OF THE

CREDIT SUPPORT ANNEX

AMONG

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

AND

                                                    (PARTY
“B”)

AND

MERRILL LYNCH COMMODITIES, INC. (“Merrill”)

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

	
  RELIANT
  ENERGY POWER SUPPLY, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  MERRILL
  LYNCH COMMODITIES, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
										

 

 14

Exhibit E1

To Credit Sleeve and Reimbursement Agreement

Reliant Energy — Retail Risk Policy

[***]

***      The
content of this Exhibit E1 (consisting of 16 pages) has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

Exhibit E2

To Credit Sleeve and Reimbursement Agreement

Reliant Energy-Wholesale Risk Control Policy

[***]

***      The
content of this Exhibit E2 (consisting of 35 pages) has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

Exhibit F

To Credit Sleeve and Reimbursement Agreement

ERCOT Asset List

[***]

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

Exhibit
G

To Credit Sleeve and Reimbursement Agreement

Joinder Agreement

FORM OF JOINDER AGREEMENT

([Subsidiary])

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

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

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

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

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

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

 

[signatures
follow]

 

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

	
  

  	
  [SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

	
  Acknowledged and Agreed:

  
	
   

  
	
  [                              ]

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					

 

Signature Page to
Joinder Agreement

Schedule
A

Joined
Agreements

 

	
  Counterparties

  	
   

  	
  Agreement

  	
   

  	
  Capacity Joined

  	
   

  	
  Liability

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

  	
   

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

  	
   

  	
  Other Reliant Retail Obligor

  	
   

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

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

  	
   

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

  	
   

  	
  Additional Guarantor

  	
   

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

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

  	
   

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

  	
   

  	
  Retail Company

  	
   

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

  
	
  Reliant
  Counterparties

  	
   

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

  	
   

  	
  Retail Company

  	
   

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

  

 

Exhibit
H

To Credit Sleeve and Reimbursement Agreement
 Form of Compliance Certificate

FORM
OF COMPLIANCE CERTIFICATE

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

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

THE UNDERSIGNED
HEREBY CERTIFIES THAT:

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

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

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

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

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

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

 

	
  

  
	
   

  	
  RERH Holdings,
  LLC

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

EXHIBIT A
TO COMPLIANCE CERTIFICATE

FINANCIAL STATEMENTS

Exhibit I1

To Credit Sleeve and Reimbursement Agreement
 Sleeve Provider Employees with Access
to Data

[***]

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

Exhibit I2

To Credit Sleeve and Reimbursement Agreement
 Reliant Employees with Access to Data

[***]

***      The
content of this Exhibit I2 (consisting of 7 pages) has been omitted and filed separately
with the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.Exhibit 10.14

SUPPLEMENTAL
GUARANTEE AGREEMENT

Supplemental Guarantee
Agreement (this “Supplemental Guarantee
Agreement”), dated as of September 21, 2006, among Reliant
Energy Power Supply, LLC (the “Guaranteeing
Subsidiary”), a Delaware limited liability company, a subsidiary of
Reliant Energy, Inc. (or its permitted successor), a Delaware corporation (the “Company”), the Company, the other Subsidiary
Guarantors (as defined in the Guarantee Agreement referred to herein) and J.P.
Morgan Trust Company, National Association, as trustee under the Indenture (as
defined in the Guarantee Agreement referred to below) (the “Trustee”).

WITNESSETH

WHEREAS, the Company and the Subsidiary Guarantors have
heretofore executed and delivered to the Trustee a Guarantee Agreement (the “Guarantee Agreement”), dated as of December 22, 2004, providing
for the Company’s guarantee (the “REI Guarantee”)
of the Pennsylvania Economic Development Financing Authority’s (“PEDFA”) Exempt Facilities Revenue Bonds (Reliant Energy
Seward, LLC Project), Series 2001A (the “Series 2001A Bonds”),
and the Subsidiary Guarantors’ guarantees of the REI Guarantee;

WHEREAS, the Guarantee Agreement provides that under
certain circumstances the Guaranteeing Subsidiary shall execute and deliver to
the Trustee a supplemental guarantee agreement pursuant to which the
Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s
Obligations under the REI Guarantee and the Guarantee Agreement (the “Subsidiary Guarantee”); and

WHEREAS, pursuant to Section 9.01 of the Guarantee
Agreement, the Trustee, the Company and the other Subsidiary Guarantors are
authorized to execute and deliver this Supplemental Guarantee Agreement.

NOW THEREFORE, in consideration of the foregoing and
for good and valuable consideration, the receipt of which is hereby
acknowledged, the Guaranteeing Subsidiary, the Trustee, the Company and the
other Subsidiary Guarantors mutually covenant and agree for the equal and
ratable benefit of the Holders of the Series 2001A Bonds as follows:

1.             Capitalized Terms.  Unless otherwise defined in this Supplemental
Guarantee Agreement, capitalized terms used herein without definition shall
have the meanings assigned to them in the Guarantee Agreement.

2.             Agreement to be Bound;
Guarantee.  The Guaranteeing
Subsidiary hereby becomes a party to the Guarantee Agreement as a Subsidiary Guarantor
and as such will have all of the rights and be subject to all of the
Obligations and agreements of a Subsidiary Guarantor under the Guarantee
Agreement.  The Guaranteeing Subsidiary
hereby agrees to be bound by all of the provisions of the Guarantee Agreement applicable
to a Subsidiary Guarantor and to perform all of the Obligations and agreements
of a Subsidiary Guarantor under the Guarantee Agreement.  In furtherance of the foregoing, the
Guaranteeing Subsidiary shall be deemed a Subsidiary Guarantor for purposes of
Article 12 of the Guarantee Agreement, including, without limitation, Section
12.02 thereof.

 1
 

3.             NEW YORK LAW TO GOVERN. 
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS SUPPLEMENTAL GUARANTEE AGREEMENT BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

4.             Counterparts.  The parties may sign any number of copies of
this Supplemental Guarantee Agreement. 
Each signed copy shall be an original, but all of them together
represent the same agreement.

5.             Effect of Headings.  The Section headings herein are for
convenience only and shall not affect the construction hereof.

6.             The Trustee.  The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Guarantee Agreement or for or in respect of the recitals contained
herein, all of which recitals are made solely by the Guaranteeing Subsidiary
and the Company.

7.             Ratification of Guarantee
Agreement; Supplemental Guarantee Agreement Part of Guarantee Agreement.  Except as expressly amended hereby, the Guarantee
Agreement is in all respects ratified and confirmed and all the terms,
conditions and provisions thereof shall remain in full force and effect.  This Supplemental Guarantee Agreement shall
form a part of the Guarantee Agreement for all purposes, and every Holder of Series
2001A Bonds heretofore or hereafter authenticated and delivered shall by bound
hereby.

 2
 

IN WITNESS WHEREOF, the parties hereto have caused
this Supplemental Guarantee Agreement to be duly executed and attested, all as
of the date first above written.

Dated : September 21, 2006.

	
  

  	
   

  	
  RELIANT ENERGY POWER SUPPLY,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Lloyd A.
  Whittington

  
	
   

  	
   

  	
  Name: 

  	
  Lloyd A.
  Whittington

  
	
   

  	
   

  	
  Title: 

  	
   Vice President and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RELIANT ENERGY,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   /s/ Andrew C. Johannesen

  
	
   

  	
   

  	
  Name: 

  	
   Andrew C. Johannesen

  
	
   

  	
   

  	
  Title: 

  	
   Vice President and Asst. Treasurer

  
						

 

 3
 

 

	
  

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY ASSET MANAGEMENT, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY BROADBAND, INC.

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY CALIFORNIA HOLDINGS, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY COMMUNICATIONS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY COOLWATER, INC.

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY CORPORATE SERVICES, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY ELLWOOD, INC.

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY ETIWANDA, INC.

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY FLORIDA, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY KEY/CON FUELS, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY MANDALAY, INC.

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY NORTHEAST GENERATION, INC.

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY NORTHEAST HOLDINGS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY ORMOND BEACH, INC.

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY POWER GENERATION, INC.

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY RETAIL HOLDINGS, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY SABINE (TEXAS), INC.

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY SERVICES DESERT BASIN, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY SERVICES MID-STREAM, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY SEWARD, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY TRADING EXCHANGE, INC.

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY VENTURES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
  RELIANT ENERGY WHOLESALE GENERATION, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Andrew C. Johannesen

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: 

  	
  Andrew C. Johannesen

  
	
   

  	
   

  	
   

  	
   

  	
  Title: 

  	
  Assistant Treasurer of the corporations and limited

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  liability companies, and of the general partners of
  the limited partnerships, listed above

  
								

 

 4
 

 

	
  

  	
   

  	
  RELIANT ENERGY SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Andrew C. Johannesen

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Andrew C. Johannesen

  
	
   

  	
   

  	
  Title:  

  	
  Vice President and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RELIANT ENERGY RETAIL SERVICES, LLC

  
	
   

  	
   

  	
  RELIANT ENERGY ELECTRIC SOLUTIONS, LLC

  
	
   

  	
   

  	
  RELIANT ENERGY SOLUTIONS EAST, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Lloyd A. Whittington

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Lloyd A. Whittington

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Treasurer of the limited 

  
	
   

  	
   

  	
  liability companies listed above

  
									

 

 5
 

 

	
   

  	
  RELIANT ENERGY CAPTRADES
  HOLDING CORP.

  
	
   

  	
  RELIANT ENERGY
  SABINE (DELAWARE), INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Patricia F.
  Genzel

  
	
   

  	
  Name:

  	
  Patricia F.
  Genzel

  
	
   

  	
  Title:

  	
  President

  
					

 

 6
 

 

	
  

  	
  J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, as
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ Michael
  J. Judge

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  	
   

  

 

 7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}]]