Document:

<PAGE>

                                                                     EXHIBIT 4.5

                   RELIANT ENERGY TRANSITION BOND COMPANY LLC

                                     Issuer

                                      and

                             BANKERS TRUST COMPANY

                                    Trustee

                             BANKERS TRUST COMPANY

                            Securities Intermediary

                          FIRST INDENTURE SUPPLEMENT

                        Dated as of _____________, 2001

                             ______________________

                        Series 2001-1 Transition Bonds
<PAGE>

          This FIRST INDENTURE SUPPLEMENT dated as of __________, 2001 (this
"Supplement"), by and between Reliant Energy Transition Bond Company LLC, a
Delaware limited liability company (the "Issuer"), and Bankers Trust Company, a
New York banking corporation, in its capacity as trustee (the "Trustee"), and
Bankers Trust Company, in its capacity as the Securities Intermediary hereunder
(the "Securities Intermediary") under the Indenture dated as of __________,
2001, between the Issuer and the Trustee (the "Indenture").

                             PRELIMINARY STATEMENT

          Section 9.01 of the Indenture provides, among other things, that the
Issuer and the Trustee may at any time and from time to time enter into one or
more indentures supplemental to the Indenture for the purposes of authorizing
the issuance by the Issuer of a Series of Transition Bonds and specifying the
terms thereof. The Issuer has duly authorized the execution and delivery of this
Supplement and the creation of a Series of Transition Bonds with an initial
aggregate principal amount of $[_________] to be known as the Issuer's
Transition Bonds, Series 2001-1 (the "Series 2001-1 Transition Bonds"). All acts
and all things necessary to make the Series 2001-1 Transition Bonds, when duly
executed by the Issuer and authenticated by the Trustee as provided in the
Indenture and this Supplement and issued by the Issuer, the valid, binding and
legal obligations of the Issuer and to make this Supplement a valid and
enforceable supplement to the Indenture have been done, performed and fulfilled
and the execution and delivery hereof have been in all respects duly and
lawfully authorized. The Issuer and the Trustee are executing and delivering
this Supplement in order to provide for the Series 2001-1 Transition Bonds.

          In order to secure the payment of principal of and interest on the
Series 2001-1 Transition Bonds issued and to be issued under the Indenture
and/or any Series Supplement, the Issuer hereby confirms the Grant to the
Trustee for the benefit of the Holders of the Series 2001-1 Transition Bonds
from time to time issued and outstanding, all of the Issuer's right, title and
Interest in, to and under the Collateral, including without limitation, the
Transition Property transferred by the Seller to the Issuer as of the Initial
Transfer Date pursuant to the Sale Agreement and all proceeds thereof.

          The Trustee, on behalf of the Holders of the Series 2001-1 Transition
Bonds, acknowledges the confirmation of such Grant, accepts the trusts hereunder
in accordance with the provisions hereof and agrees to perform its duties
required in the Indenture and this Supplement.

                                   ARTICLE I

                                  DEFINITIONS

          All terms used in this Supplement that are defined in the Indenture,
either directly or by reference therein, have the meanings assigned to  them
therein, except to the extent such terms are defined or modified in this
Supplement or the context clearly requires otherwise.

                                       1
<PAGE>

                                  ARTICLE II

                         OTHER DEFINITIONAL PROVISIONS

        SECTION 2.01. "Authorized Denominations" means $1,000 and integral
multiples thereof, except for one transition bond of each class which may be of
a smaller denomination.

        SECTION 2.02. "Collateral" means, with respect to any class of the
Series 2001-1 Transition Bonds, the Trust Estate as defined in the Indenture
which will secure the Transition Bonds.

        SECTION 2.03. "Expected Amortization Schedule" means Schedule A to this
Supplement.

        SECTION 2.04. "Expected Final Payment Date" means, with respect to any
Class of the Series 2001-1 Transition Bonds, the expected final payment date
therefor, as specified in Article 4 of this Supplement.

        SECTION 2.05. "Final Maturity Date" means, with respect to any Class of
the Series 2001-1 Transition Bonds, the final maturity date thereof, as
specified in Article 4 of this Supplement.

        SECTION 2.06. "Interest Accrual Period" means, with respect to any
Payment Date, the period from and including the preceding Payment Date (or, in
the case of the first Payment Date, from and including the Series Issuance Date)
to and excluding such Payment Date.

        SECTION 2.07. "Interest Rate" has the meaning set forth in Article 4 of
this Supplement.

        SECTION 2.08. "Overcollateralization Amount" has the meaning set forth
in Section 5.04 of this Supplement.

        SECTION 2.09. "Payment Date" has the meaning set forth in Section 5.01
of this Supplement.

        SECTION 2.10. "PUCT" means the Public Utility Commission of Texas or any
successor.

        SECTION 2.11. "Record Date" shall mean, with respect to any Payment
Date, the close of business on the Business Day prior to such Payment Date.

        SECTION 2.12. "Required Capital Amount" has the meaning set forth in
Section 5.05 of this Supplement.

        SECTION 2.13. "Series Issuance Date" has the meaning set forth in
Section 3.02 of this Supplement.

                                       2
<PAGE>

        SECTION 2.14. "Transition Charge" has the meaning set forth in the
Servicing Agreement executed _____________________, 2001 between Reliant Energy
Transition Bond Company LLC and Reliant Energy, Incorporated.

                                  ARTICLE III

                       DESIGNATION; SERIES ISSUANCE DATES

        SECTION 3.01. DESIGNATION. The Series 2001-1 Transition Bonds shall be
designated generally as the Issuer's Transition Bonds, Series 2001-1 and further
denominated as Classes __________.

        SECTION 3.02. SERIES ISSUANCE DATE. The Series 2001-1 Transition Bonds
that are authenticated and delivered by the Trustee to or upon the order of the
Issuer on ________, 2001 (the "Series Issuance Date") shall have as their date
of authentication ________, 2001. Each other Series 2001-1 Transition Bond shall
be dated the date of its authentication.

                                  ARTICLE IV

               INITIAL PRINCIPAL AMOUNT; INTEREST RATE; EXPECTED
                    FINAL PAYMENT DATE; FINAL MATURITY DATES

          The Transition Bonds of each Class of the Series 2001-1 Transition
Bonds shall have the initial principal balance, Expected Final Payment Date and
Final Maturity Date and bear interest at the Interest Rate as set forth below:

<TABLE>
<CAPTION>

                 Initial Principal    Expected Final        Final
      Class            Amount          Payment Date     Maturity Date    Interest Rate
      -----      -----------------    --------------    -------------    -------------
<S>              <C>                  <C>               <C>               <C>

</TABLE>

          The Expected Final Payment Date for each Class of the Series 2001-1
Transition Bonds will be the date when the outstanding Principal balance of that
Class will be reduced to zero if payments are made according to the Expected
Amortization Schedule for that Class.  The Final Maturity Date for each Class of
the Series 2001-1 Transition Bonds will be the date when the Issuer is required
to pay the entire remaining unpaid Principal balance, if any, of all outstanding
Series 2001-1 Transition Bonds of that Class.

          Interest on the Series 2001-1 Transition Bonds will be paid before
Principal of the Series 2001-1 Transition Bonds.  If there is a shortfall in the
amounts available in the Collection Account to make Interest payments, the
Trustee will distribute Interest pro rata to each Series and Class of Transition
Bonds based on the amount of Interest payable on each Outstanding Series.
Interest on the Series 2001-1 Transition Bonds [(other than Class____)] will be
calculated on the basis of a 360-day year of twelve 30-day months. [Interest on
the Class ___ Transition Bonds will be calculated on the basis of [to be
completed if floating rate Transition Bonds are being issued.]]

                                       3
<PAGE>

                                   ARTICLE V

                 PAYMENT DATES; EXPECTED AMORTIZATION SCHEDULE
                 FOR PRINCIPAL; INTEREST; OVERCOLLATERALIZATION
                        AMOUNT; REQUIRED CAPITAL AMOUNT

        SECTION 5.01. PAYMENT DATES. The Payment Dates for each Class of the
Series 2001-1 Transition Bonds are March 15 and September 15 of each year or, if
any such date is not a Business Day, the next succeeding Business Day,
commencing on March 15, 2002, and continuing until the earlier of repayment of
such Class in full and the applicable Final Maturity Date.

        SECTION 5.02. EXPECTED AMORTIZATION SCHEDULE FOR PRINCIPAL. Unless an
Event of Default has incurred and is continuing and the unpaid Principal amount
of all Series of Transition Bonds has been declared to be due and payable
together with accrued and unpaid Interest thereon, on each Payment Date the
Trustee shall distribute to the Series 2001-1 Transition Bondholders of record
as of the related Record Date amounts payable in respect of the Series 2001-1
Transition Bonds pursuant to Section 8.02(e) of the Indenture as Principal, in
accordance with the Expected Amortization Schedule. To the extent that more than
one Class of the Series 2001-1 Transition Bonds is to receive payments of
Principal in accordance with the Expected Amortization Schedule on any Payment
Date, such amounts will be allocated pro rata between such Classes based on the
Principal scheduled to be paid to such Classes in accordance with the Expected
Amortization Schedule on such Payment Date; provided, however, that if one or
more Classes did not receive Principal on the prior Payment Date and as a result
the aggregate Outstanding Amount of such Class or Classes was not reduced to the
balance indicated in the Expected Amortization Schedule on such Payment Date,
then such Classes will be

        (a) allocated funds from the Series 2001-1 Subaccount to make up such
     shortfalls prior to any Classes receiving funds in respect of Principal
     scheduled to be paid on the current Payment Date and

        (b) allocated funds from the Series 2001-1 Subaccount in respect of
     prior shortfalls on a pro rata basis based on the amount of such
     shortfalls;

provided, however, that other than in the event of a redemption in no event
shall a Principal payment pursuant to this Section 5.02 on any Class on a
Payment Date be greater than the amount that reduces the Outstanding Amount of
such Class of Series 2001-1 Transition Bonds to the amount specified in the
Expected Amortization Schedule for such Class and Payment Date.

        SECTION 5.03. INTEREST. Interest will be payable on each Class of the
Series 2001-1 Transition Bonds [which bears Interest at a fixed rate] on each
Payment Date as follows:

        (a) if there has been a payment default, any Interest payable but unpaid
     on any prior Payment Date, together with Interest on such unpaid Interest,
     if any, and

                                       4
<PAGE>

        (b) accrued Interest on the Principal balance of each Class of the
     Series 2001-1 Transition Bonds as of the close of business on the preceding
     payment date, or the date of the original issuance of the Class of the
     Series 2001-1 Transition Bonds, as applicable, after giving effect to all
     payments of Principal made on the preceding Payment Date.

provided that, with respect to the initial Payment Date or if no payment has yet
been made, Interest on the outstanding Principal balance shall accrue from and
including the Series Issuance Date to, but excluding, the following Payment
Date, and thereafter from and including the previous payment date to but
excluding the applicable payment date until the Transition Bonds have been paid
in full, at the interest rate indicated in Article IV.

        SECTION 5.04. OVERCOLLATERALIZATION AMOUNT. The Overcollateralization
Amount for the Series 2001-1 Transition Bonds shall be $________ million which
represents 0.5% of the initial outstanding Principal balance of the Series 2001-
1 Transition Bonds. The Trustee will deposit collected Transition Charges
remitted to it by the Servicer in the Overcollateralization Subaccount over the
term of the Series 2001-1 Transition Bonds on each Payment Date up to the
Scheduled Overcollateralization Level, which is listed in the table below.

<TABLE>
<CAPTION>
                               SCHEDULED                                            SCHEDULED
                         OVERCOLLATERALIZATION                                OVERCOLLATERALIZATION
    PAYMENT DATE                 LEVEL                  PAYMENT DATE                  LEVEL
    ------------         ---------------------          -----------           ---------------------
<S>                      <C>                            <C>                   <C>

</TABLE>

          If amounts available in the General Subaccount and the Reserve
Subaccount are not sufficient on any Payment Date to make scheduled payments to
the Transition Bondholders and to pay the expenses, fees and charges specified
in the Indenture, the Trustee shall draw on amounts in the Overcollateralization
Subaccount to make those payments.

        SECTION 5.05. REQUIRED CAPITAL AMOUNT. The Required Capital Amount for
the Series 2001-1 Transition Bonds shall be $___________, which is equal to 0.5%
of the initial outstanding Principal balance of the Series 2001-1 Transition
Bonds.

        SECTION 5.06. ISSUER TO DELIVER REVISED SCHEDULE A. Not later than the
date of any partial redemption of the Series 2001-1 Transition Bonds, the Issuer
shall deliver to the Trustee a replacement Schedule A hereto, adjusted to
reflect such partial redemption and setting forth the revised Expected
Amortization Schedule for each Payment Date.

        SECTION 5.07. NO PREMIUM. No Premium will be payable in connection with
the early redemption of the Series 2001-1 Transition Bonds.

                                       5
<PAGE>

                                  ARTICLE VI

                            AUTHORIZED DENOMINATIONS

        The Series 2001-1 Transition Bonds shall be issuable in the Authorized
Denominations.

                                  ARTICLE VII

                                   REDEMPTION

        SECTION 7.01. MANDATORY REDEMPTION. The Series 2001-1 Transition Bonds
shall not be subject to mandatory redemption.

        SECTION 7.02. OPTIONAL REDEMPTION. The Issuer may, at its option, redeem
all, but not less than all, of the Transition Bonds of Series 2001-1 on any
Payment Date in accordance with Section 10.01 of the Indenture if, after giving
effect to payments that would otherwise be made on such Payment Date, the
Outstanding Amount of such Series has been reduced to less than five percent of
the initial Principal balance of such Series.

                                 ARTICLE VIII

                               CREDIT ENHANCEMENT

        No credit enhancement (other than the Overcollateralization Amount,
the Required Capital Amount and any adjustments to the Transition Charges
approved by the PUCT as contemplated in the Servicing Agreement) is provided for
the Series 2001-1 Transition Bonds.

                                  ARTICLE IX

             DELIVERY AND PAYMENT FOR THE SERIES 2001-1 TRANSITION

               BONDS; FORM OF THE SERIES 2001-1 TRANSITION BONDS

        The Trustee shall deliver the Series 2001-1 Transition Bonds to the
Issuer when authenticated in accordance with Section 2.02 of the Indenture.  The
Series 2001-1 Transition Bonds of each Class shall be in the form of Exhibit A
hereto.

                                   ARTICLE X

                                 MISCELLANEOUS

        SECTION 10.01. CONFIRMATION OF INDENTURE. As supplemented by this
Supplement, the Indenture is in all respects ratified and confirmed and the
Indenture, as so supplemented by this Supplement, shall be read, taken, and
construed as one and the same instrument.

        SECTION 10.02. EFFECTS OF HEADINGS. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.

                                       6
<PAGE>

        SECTION 10.03. COUNTERPARTS. This Supplement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.

        SECTION 10.04. GOVERNING LAW. This Supplement shall be construed in
accordance with the laws of the State of Texas, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.

                                       7
<PAGE>

          IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Supplement to be duly executed by their respective officers thereunto duly
authorized as of the first day of the month and year first above written.

                              RELIANT ENERGY TRANSITION BOND COMPANY LLC,
                              as Issuer

                              By:
                                 ----------------------------------------
                                 Name:
                                 Title:

                              BANKERS TRUST COMPANY,
                              not in its individual capacity but solely as
                                 Trustee on behalf of the Transition
                                 Bondholders,

                              By:
                                 ----------------------------------------
                                 Name:
                                 Title:
<PAGE>

                                   SCHEDULE A

                         Expected Amortization Schedule

                         Outstanding Principal Balance

<TABLE>
<CAPTION>
  Payment Date       Class ___       Class ___       Class ___       Class ___       Class ___       Class ___
  ------------       ---------       ---------       ---------       ---------       ---------       ---------
<S>                  <C>             <C>             <C>             <C>             <C>             <C>

</TABLE>
<PAGE>

                         EXHIBIT A TO SERIES SUPPLEMENT

REGISTERED                             $

No. _______

                      SEE REVERSE FOR CERTAIN DEFINITIONS

                                   CUSIP NO.

          THE PRINCIPAL OF THIS CLASS __ TRANSITION BOND WILL BE PAID IN
INSTALLMENTS AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT
OF THIS CLASS __ TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ON THE FACE HEREOF.

                   RELIANT ENERGY TRANSITION BOND COMPANY LLC

                 TRANSITION BONDS, SERIES 2001-1, Class _____.

<TABLE>
<CAPTION>
                                 Initial           Expected Final Payment          Class Final
      Bond Rate             Principal Amount                Date                  Maturity Date
      ---------             ----------------       ----------------------         -------------
<S>                         <C>                    <C>                            <C>

       ______%                  $_________                __________                __________

</TABLE>

          Reliant Energy Transition Bond Company LLC, a limited liability
company organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to the
Registered Holder hereof, or registered assigns, the Original Principal Amount
shown above in quarterly installments on the Payment Dates (as defined below)
and in the amounts specified on the reverse hereof or, if less, the amounts
determined pursuant to Section 8.02(e) of the Indenture, in each year,
commencing on the date determined as provided on the reverse hereof and ending
on or before the Class Final Maturity Date, to pay the entire unpaid Principal
hereof on the Class Final Maturity Date and to pay Interest, at the Bond Rate
shown above at a [floating] [fixed] rate calculated as follows [insert rate or
formula], on each _____________, _____________, _____________ and _____________,
and or if any such day is not a Business Day, the next succeeding Business Day,
commencing on ________, 2001 and continuing until the earlier of the payment of
the Principal hereof and the Class Final Maturity Date (each a "Payment Date"),
on the Principal amount of this Series 2001-1, Class __ Transition Bond
outstanding from time to time.  Interest on this Series 2001-1, Class __
Transition Bond will accrue for each Payment Date from the most recent Payment
Date on which Interest has been paid to but excluding such Payment Date or, if
no Interest has yet been paid, from ________, 2001.  Interest will be computed
on the basis of a 360-day year of twelve 30-day months the actual number of days
from the preceding Payment Date, to but excluding the next Payment Date, divided
by 360.  Such Principal of and Interest on this Series 2001-1, Class __
Transition Bond shall be paid in the manner specified on the reverse hereof.
<PAGE>

          The Principal of and Interest on this Series 2001-1, Class __
Transition Bond are payable in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.  All payments made by the Issuer with respect to this Class __
Transition Bond shall be applied first to Interest due and payable on this Class
__ Transition Bond as provided above and then to the unpaid Principal of and
premium, if any, on this Class __ Transition Bond, all in the manner set forth
in Section 8.02(e) of the Indenture.

          The Texas Electric Choice Plan provides that the State of Texas
pledges for the benefit and protection of financing parties and the electric
utility, that it will not take or permit any action that would impair the value
of the Transition Property, or except as permitted . . . [THROUGH THE TRANSITION
CHARGE ADJUSTMENT PROCESS] . . . reduce, alter, or impair the Transition Charges
to be imposed, collected, and remitted to financing parties, until the
Principal, Interest, and premium, and any other charges incurred and contracts
to be performed in connection with the related Transition Bonds have been paid
and performed in full.

          Reference is made to the further provisions of this Class __
Transition Bond set forth on the reverse hereof, which shall have the same
effect as though fully set forth on the face of this Class __ Transition Bond.

          Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Class __
Transition Bond shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any purpose.

          IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by an Authorized Officer of the Member.

Date:

                              RELIANT ENERGY TRANSITION BOND COMPANY LLC,

                              By:
                                 -------------------------------------------
                                 Name:
                                 Title:
<PAGE>

                    TRUSTEE'S CERTIFICATE OF AUTHENTICATION

Dated: ______________, 2001

          This is one of the Class ____ Transition Bonds of the Series 2001-1
Transition Bonds, designated above and referred to in the within-mentioned
Indenture.

                              BANKERS TRUST COMPANY,
                                 not in its individual capacity but
                                 solely as Trustee on behalf of the
                                 Transition Bondholders,

                              By:
                                 --------------------------------------
                                 Name:
                                 Title:
<PAGE>

                           REVERSE OF TRANSITION BOND

          This Series ___, Class __ Transition Bond is one of a duly authorized
issue of Transition Bonds of the Issuer, designated as its Transition Bonds
(herein called the "Transition Bonds"), issued and to be issued in one or more
Series, which Series are issuable in one or more Classes, and this Series
Transition Bond, in which this Series 2001-1, Class __ Transition Bond
represents an Interest, consists of Classes, including the Class __ Transition
Bonds (herein called the "Class __ Transition Bonds"), all issued and to be
issued under an indenture dated as of ________, 2001, and a series supplement
thereto dated as of ________, 2001 (such series supplement, as supplemented or
amended, the "Supplement" and, collectively with such indenture, as supplemented
or amended, the "Indenture"), each between the Issuer and Bankers Trust Company,
as Trustee (the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the Collateral property pledged, the nature
and extent of the security, the respective rights, obligations and immunities
thereunder of the Issuer, the Trustee and the Holders of the Transition Bonds
and the terms and conditions under which additional Transition Bonds may be
issued.  All terms used in this Class __ Transition Bond that are defined in the
Indenture, as supplemented or amended, shall have the meanings assigned to them
in the Indenture.

          The Class __ Transition Bonds, the other Classes of Series __
Transition Bonds and any other Series of Transition Bonds issued by the Issuer
are and will be equally and ratably secured by the Collateral pledged as
security therefor as provided in the Indenture or the Series 2001-1 Supplement.

          The Principal of this Class __ Transition Bond shall be payable on
each Payment Date only to the extent that amounts in the Collection Account  are
available therefor, and only until the outstanding Principal balance thereof on
such Payment Date (after giving effect to all payments of Principal, if any,
made on such Payment Date) has been reduced to the Principal balance specified
in the Expected Amortization Schedule which is attached to the Supplement as
Schedule A, unless payable earlier either because

          (i) an Event of Default shall have occurred and be continuing and the
     Trustee or the Holders of Transition Bonds representing not less than a
     majority of the Outstanding Amount of the Transition Bonds of all Series
     have declared the Transition Bonds to be immediately due and payable in
     accordance with Section 5.02 of the Indenture,

          (ii) the Issuer, at its option, shall have called for the redemption
     of the Series Transition Bonds in whole or from time to time in part
     pursuant to Section 10.01 of the Indenture, or

          (iii) the Issuer shall have called for the redemption of the Series
     2001-1 Transition Bond in whole pursuant to Sections 7.01 of the
     Supplement.

However, actual Principal payments may be made in lesser than expected amounts
and at later than expected times as determined pursuant to Section 8.02(e) of
the Indenture.  The entire
<PAGE>

unpaid Principal amount of this Series 2001-1, Class __ Transition Bond shall be
due and payable on the earlier of the Class Final Maturity Date hereof and the
Redemption Date, if any, herefor. Notwithstanding the foregoing, the entire
unpaid Principal amount of the Transition Bonds shall be due and payable, if not
then previously paid, on the date on which an Event of Default shall have
occurred and be continuing and the Trustee or the Holders of the Transition
Bonds of all Series representing not less than a majority of the Outstanding
Amount of the Transition Bonds have declared the Transition Bonds to be
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. All Principal payments on the Class __ Transition Bonds shall be made
pro rata to the Class __ Transition Bondholders entitled thereto based on the
respective Principal amounts of the Series 2001-1, Class __ Transition Bonds
held by them.

          Payments of Interest on this Class __ Transition Bond due and payable
on each Payment Date, together with the installment of Principal or premium, if
any, due on this Class __ Transition Bond on such Payment Date shall be made by
check mailed first-class, postage prepaid, to the Person whose name appears as
the Registered Holder of this Class __ Transition Bond (or one or more
predecessor of such Transition Bond) in the Transition Bond Register as of the
close of business on the Record Date or in such other manner as may be provided
in the Supplement, except that with respect to Class __ Transition Bonds
registered on the Record Date in the name of a Clearing Agency, payments will be
made by wire transfer in immediately available funds to the account designated
by such Clearing Agency and except for the final installment of Principal and
premium, if any, payable with respect to this Class __ Transition Bond on a
Payment Date which shall be payable as provided below.  Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears in the Transition Bond Register as of the applicable Record Date without
requiring that this Class __ Transition Bond be submitted for notation of
payment.  Any reduction in the Principal amount of this Class __ Transition Bond
(or any one or more predecessor to such Transition Bond) effected by any
payments made on any Payment Date shall be binding upon all future Holders of
this Class __ Transition Bond and of any Class __ Transition Bond issued upon
the registration of transfer hereof or in exchange hereof or in lieu hereof,
whether or not noted hereon.  If funds are expected to be available, as provided
in the Indenture, for payment in full of the then remaining unpaid Principal
amount of this Class __ Transition Bond on a Payment Date, then the Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the second preceding Record Date to such Payment
Date by notice mailed no later than five days prior to such final Payment Date
and shall specify that such final installment will be payable to the Registered
Holder hereof as of the Record Date immediately preceding such final Payment
Date and only upon presentation and surrender of this Class __ Transition Bond
and shall specify the place where this Series 2001-1, Class __ Transition Bond
may be presented and surrendered for payment of such installment.

          The Issuer shall pay Interest on overdue installments of Interest on
this Class __ Transition Bond at the Bond Rate for Class __ to the extent
lawful.

          As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Class __ Transition Bond may be  registered
in the Transition Bond Register upon surrender of this Class __ Transition Bond
for registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, duly endorsed by, or accompanied by
<PAGE>

a written instrument of transfer in form satisfactory to the Trustee duly
executed by the Holder hereof or his attorney duly authorized in writing, with
such signature guaranteed by an Eligible Guarantor Institution, and thereupon
one or more new Class __ Transition Bonds of any Authorized Denominations and in
the same aggregate initial Principal amount will be issued to the designated
transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Class __ Transition Bond, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange.

          Prior to the due presentment for registration of transfer of this
Class __ Transition Bond, the Issuer, the Trustee and any agent of the Issuer or
the Trustee may treat the Person in whose name this Class __ Transition Bond is
registered (as of the day of determination) as the owner hereof for the purpose
of receiving payments of Principal of and premium, if any, and Interest on this
Class __ Transition Bond and for all other purposes whatsoever, whether or not
this Class __ Transition Bond be overdue, and neither the Issuer, the Trustee
nor any such agent shall be affected by notice to the contrary.

          The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Transition Bonds under the Indenture
at any time by the Issuer with the consent of the Holders of Transition Bonds
representing a majority of the Outstanding Amount of all Transition Bonds at the
time Outstanding of each Series or Class to be affected.  The Indenture also
contains provisions permitting the Holders of Transition Bonds representing
specified percentages of the Outstanding Amount of the Transition Bonds of all
Series, on behalf of the Holders of all the Transition Bonds, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences.  Any such consent or
waiver by the Holder of this Class __ Transition Bond (or any one of more
predecessor of such transition bonds) shall be conclusive and binding upon such
Holder and upon all future Holders of this Class __ Transition Bond and of any
Class __ Transition Bond issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Class __ Transition Bond.  The Indenture also permits
the Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Transition Bonds issued
thereunder.

          The term "Issuer" as used in this Series 2001-1, Class __ Transition
Bond includes any successor to the Issuer under the Indenture.

          The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holders of
Transition Bonds under the Indenture.

          The Class __ Transition Bonds are issuable only in registered form in
Authorized Denominations as provided in the Indenture and the Supplement,
subject to certain limitations therein set forth.

          This Class __ Transition Bond, the Indenture and the Supplement shall
be construed in accordance with the laws of the State of [Texas], without
reference to its conflict of
<PAGE>

law provisions, and the obligations, rights and remedies of the parties
hereunder and thereunder shall be determined in accordance with such laws.

          No reference herein to the Indenture and no provision of this Class
___ Transition Bond or of the Indenture shall alter or impair the obligation of
the Issuer, which is absolute and unconditional, to pay the Principal of  and
Interest on this Class __ Transition Bond at the times, place, and  rate, and in
the coin or currency herein prescribed.

                                   ASSIGNMENT

          Social Security or taxpayer I.D. or other identifying number of
assignee

          FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________

                         (name and address of assignee)

the within Class ___ Transition Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints

                        (name and address of appointee)

attorney, to transfer said Class ___ Transition Bond on the books kept for
registration thereof, with full power of substitution in the premises.

Dated:

____________________            _____________________________________*
                                Signature Guaranteed:

* NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Class Transition Bond
in every particular, without alteration, enlargement or any change whatsoever.<PAGE>

                                                                    EXHIBIT 10.1

                      TRANSITION PROPERTY SALE AGREEMENT

                                    between

                  RELIANT ENERGY TRANSITION BOND COMPANY LLC
                                    Issuer

                                      and

                         RELIANT ENERGY, INCORPORATED
                                    Seller

                           Dated September   , 2001
<PAGE>

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>

<S>                              <C>                                                <C>
ARTICLE I                        DEFINITIONS                                         1
  Section 1.01                   Definitions                                         1
  Section 1.02                   Other Definitional Provisions                       1

ARTICLE II                       CONVEYANCE OF THE TRANSITION PROPERTY               2
  Section 2.01                   Conveyance of the Initial Transition Property       2
  Section 2.02                   Conditions to Conveyance of the Transition
                                 Property                                            3

ARTICLE III                      REPRESENTATIONS AND WARRANTIES OF SELLER            5
  Section 3.01                   Organization and Good Standing                      5
  Section 3.02                   Due Qualification                                   5
  Section 3.03                   Power and Authority                                 5
  Section 3.04                   Binding Obligation                                  5
  Section 3.05                   No Violation                                        6
  Section 3.06                   No Proceedings                                      6
  Section 3.07                   Approvals                                           6
  Section 3.08                   The Transition Property                             6
  Section 3.09                   Solvency                                            7
  Section 3.10                   The Financing Order                                 8
  Section 3.11                   State Action                                        8
  Section 3.12                   No Court Order                                      9
  Section 3.13                   Approvals Concerning the Transition Property        9
  Section 3.14                   No Proceedings Concerning the Texas Electric
                                 Choice Plan                                         9
  Section 3.15                   Assumptions                                         9
  Section 3.16                   Creation of the Transition Property                 9
  Section 3.17                   Prospectus                                         10
  Section 3.18                   Conversion to a Limited Liability Company          10
  Section 3.19                   Nature of Representations and Warranties           10

ARTICLE IV                       COVENANTS OF THE SELLER                            11
  Section 4.01                   Seller's Existence                                 11
  Section 4.02                   No Liens or Conveyances                            11
  Section 4.03                   Delivery of Collections                            11
  Section 4.04                   Notice of Liens                                    11
  Section 4.05                   Compliance With Law                                12
  Section 4.06                   Covenants Related to the Transition Property       12
  Section 4.07                   Protection of Title                                13
  Section 4.08                   Taxes                                              14
  Section 4.09                   Filings Pursuant to Financing Order                14

</TABLE>
<PAGE>

<TABLE>
<CAPTION>

<S>                              <C>                                                <C>

ARTICLE V                        ADDITIONAL UNDERTAKINGS OF SELLER                  14
  Section 5.01.                  Liability of the Seller; Indemnities               14
  Section 5.02.                  Merger or Consolidation of, or Assumption of the
                                 Obligations of, the Seller                         16
  Section 5.03.                  Conversion of the Seller to a Limited Liability
                                 Company                                            18
  Section 5.04.                  Limitation on Liability of the Seller And Others   18

ARTICLE VI                       MISCELLANEOUS PROVISIONS                           18
  Section 6.01                   Amendment                                          18
  Section 6.02                   Notices                                            18
  Section 6.03                   Assignment by the Seller                           19
  Section 6.04                   Assignment to the Indenture Trustee                19
  Section 6.05                   Limitations on Rights of Others                    19
  Section 6.06                   Severability                                       19
  Section 6.07                   Separate Counterparts                              20
  Section 6.08                   Headings                                           20
  Section 6.09                   Governing Law                                      20
  Section 6.10                   Nonpetition Covenants                              20

APPENDIX A                       DEFINITIONS
</TABLE>
<PAGE>

     TRANSITION PROPERTY SALE AGREEMENT (this "Agreement") dated September    ,
2001, between RELIANT ENERGY TRANSITION BOND COMPANY LLC, a Delaware limited
liability company (the "Issuer"), and RELIANT ENERGY, INCORPORATED, a Texas
corporation, as seller (the "Seller").

     WHEREAS, the Issuer desires to purchase from time to time the Transition
Property created pursuant to the Texas Electric Choice Plan and the Financing
Order;

     WHEREAS, the Seller is willing to sell its rights and interests under the
Financing Order to the Issuer whereupon such rights and interests will become
the Transition Property;

     WHEREAS, the Issuer, in order to finance the purchase of the Transferred
Transition Property, will from time to time issue one or more series of
Transition Bonds under the Indenture; and

     WHEREAS, the Issuer, to secure its obligations under the Transition Bonds
and the Indenture, will pledge its right, title and interest in the Transferred
Transition Property and this Sale Agreement to the Indenture Trustee for the
benefit of the Transition Bondholders.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and intending to be legally bound hereby, the parties hereto
agree as follows:

                                   ARTICLE I

                                  DEFINITIONS

      Section 1.01  Definitions. Capitalized terms used herein and not otherwise
defined herein have the meanings assigned to them in Appendix A to this
Agreement.

      Section 1.02  Other Definitional Provisions.

          (a) "Agreement" means this Transition Property Sale Agreement, as the
     same may be amended, supplemented or otherwise modified from time to time.

          (b) Non-capitalized terms used herein which are defined in the Texas
     Electric Choice Plan, as the context requires, have the meanings assigned
     to such terms in the Texas Electric Choice Plan, but without giving effect
     to amendments to the Texas Electric Choice Plan after the date hereof which
     have a material adverse effect on the Issuer or the Transition Bondholders.

          (c) All terms defined in this Agreement shall have such defined
     meanings when used in any certificate or other document made or delivered
     pursuant hereto unless otherwise defined therein.

          (d) The words "hereof," "herein," "hereunder" and words of similar
     import when used in this Agreement shall refer to this Agreement as a whole
     and not to any particular

                                       1
<PAGE>

     provision of this Agreement; Section, Schedule and Exhibit references
     contained in this Agreement are references to Sections, Schedules and
     Exhibits in or to this Agreement unless otherwise specified; and the term
     "including" shall mean "including without limitation."

          (e) The definitions contained in this Agreement are applicable to the
     singular as well as the plural forms of such terms.

                                   ARTICLE II

                     CONVEYANCE OF THE TRANSITION PROPERTY

      Section 2.01  Conveyance of the Initial Transition Property.

          (a) In consideration of the Issuer's payment to or upon the order of
     the Seller of $                                   (the "Initial Purchase
     Price") by wire transfer of funds immediately available on the date hereof
     to Seller's account no.                               at                ,
     routing transit ABA #                                   , subject to the
     satisfaction or waiver of the conditions specified in Section 2.02, the
     Seller does hereby irrevocably sell, transfer, assign, set over and
     otherwise convey to the Issuer, without recourse (subject to the
     obligations of the Seller herein) or warranty, except as set forth herein,
     all right, title and interest of the Seller in, to and under the Financing
     Order as identified in the Bill of Sale delivered pursuant to Section
     2.02(a) on or prior to the Initial Transfer Date whereupon such rights and
     interests under the Financing Order shall become the Initial Transition
     Property (such sale, transfer, assignment, setting over and conveyance of
     the Initial Transition Property to include, to the fullest extent permitted
     by the Texas Electric Choice Plan, the right to impose, collect and receive
     the Transition Charges related to the Initial Transition Property, as the
     same may be adjusted from time to time).  Such sale, transfer, assignment,
     setting over and conveyance of the Initial Transition Property is hereby
     expressly stated to be a sale or other absolute transfer and, pursuant to
     Section 39.308 of the Texas Electric Choice Plan and other applicable law,
     is a true sale and is not a secured transaction and title, legal and
     equitable, has passed to the Issuer.  The preceding sentence is the
     statement referred to in Section 39.308 of the Texas Electric Choice Plan.
     The Seller agrees and confirms that upon payment of the Initial Purchase
     Price and the execution and delivery of this Agreement and the related Bill
     of Sale, the sale, transfer and assignment hereunder shall be effective and
     the Seller shall have no right, title or interest in, to or under the
     Initial Transition Property.

          (b) Subject to the satisfaction or waiver of conditions specified in
     Section 2.02, the Issuer does hereby purchase the Initial Transition
     Property from the Seller for the consideration set forth in paragraph (a)
     above.

          (c) The Seller and the Issuer each acknowledge and agree that the
     purchase price for the Initial Transition Property sold pursuant to this
     Agreement is equal to its fair market value at the time of sale.

                                       2
<PAGE>

          (d) The Seller and the Issuer further agree that from time to time,
     the Seller may offer to sell, and the Issuer may purchase, the Seller's
     rights and interests under separate financing orders as of Subsequent
     Transfer Dates whereupon such rights and interests under subsequent
     financing orders shall become Subsequent Transition Property, subject to
     the satisfaction or waiver of the conditions specified in Section 2.02, in
     exchange for consideration to be agreed upon (the "Subsequent Purchase
     Price").  The Seller and the Issuer hereby agree that each such sale,
     transfer, assignment, setting over and conveyance of any Subsequent
     Transition Property shall include, to the fullest extent permitted by the
     Texas Electric Choice Plan, the right to impose, collect and receive the
     Transition Charges related to such Subsequent Transition Property, as the
     same may be adjusted from time to time.  Such sale, transfer, assignment,
     setting over and conveyance of the Subsequent Transition Property is hereby
     stated to be a sale or other absolute transfer and, pursuant to Section
     39.308 of the Texas Electric Choice Plan and other applicable law, will be
     a true sale and is not a secured transaction and title, legal and
     equitable, will pass to the Issuer.  The preceding sentence is the
     statement referred to in Section 39.308 of the Texas Electric Choice Plan.
     The Seller agrees and confirms that upon payment of the applicable
     Subsequent Purchase Price and the execution and delivery of the related
     Bill of Sale, the sale, transfer and assignment to the Issuer thereunder
     shall be effective and the Seller shall have no right, title or interest
     in, to or under the Subsequent Transition Property which is the subject of
     such Bill of Sale.

          (e) Notwithstanding the foregoing, in the event that any  sale,
     transfer, assignment, setting over and conveyance of any Transition
     Property is determined by any court of competent jurisdiction not to be a
     true sale as contemplated by the parties and as provided in Section 39.308
     of the Texas Electric Choice Plan, then such sale, transfer, assignment,
     setting over and conveyance shall be treated as a pledge of and grant of a
     security interest in such Transition Property under Section 39.309 of the
     Texas Electric Choice Plan and under Articles 8 and 9 of the Uniform
     Commercial Code as enacted in the State of Texas and each other applicable
     jurisdiction (the "UCC"), and the Seller shall be deemed to have granted,
     and does hereby grant, as of the date hereof, a security interest to the
     Issuer on behalf of itself and the Indenture Trustee in such Transition
     Property to secure a payment obligation incurred by the Seller in the
     amount paid by the Issuer for the Transition Property.

      Section 2.02  Conditions to Conveyance of the Transition Property.  The
obligation of the Seller to sell, and the obligation of the Issuer to purchase
Transition Property upon the Initial Transfer Date or any Subsequent Transfer
Date shall be subject to and conditioned upon the satisfaction or waiver of each
of the following conditions:

          (i) on or prior to the applicable Transfer Date, the Seller shall
     deliver to the Issuer a duly executed Bill of Sale identifying the
     Transition Property to be purchased as of that date, substantially in the
     form of Exhibit A hereto;

          (ii) as of the applicable Transfer Date, no breach by the Seller of
     its representations, warranties or covenants in this Agreement shall exist
     and the Seller shall have

                                       3
<PAGE>

     delivered to the Issuer and the Indenture Trustee an Officers' Certificate
     to such effect and no Servicer Default shall have occurred and be
     continuing;

          (iii)  as of the applicable Transfer Date:

               (A) the Issuer shall have sufficient funds available to pay the
          purchase price for the Transferred Transition Property to be purchased
          on such date, and

               (B) all conditions set forth in the Indenture to the issuance of
          one or more Series of Transition Bonds intended to provide such funds
          shall have been satisfied or waived;

          (iv) on or prior to the applicable Transfer Date, the Seller shall
     have taken all actions required under the Texas Electric Choice Plan, the
     Financing Order and other applicable law for the Issuer to have ownership
     of the Transferred Transition Property to be purchased on such date, free
     and clear of all Liens other than Liens created by the Issuer pursuant to
     the Indenture; and the Issuer or the Servicer, on behalf of the Issuer,
     shall have taken any action required for the Issuer to grant the Indenture
     Trustee a first priority perfected security interest in the Trust Estate
     and maintain such security interest as of such date (including all actions
     required under the Texas Electric Choice Plan, the Financing Order and the
     UCC);

          (v) in the case of any sale of Subsequent Transition Property only,
     the Seller shall have provided the Issuer and each Rating Agency with a
     notice specifying the Subsequent Transfer Date for such Subsequent
     Transition Property not later than ten (10) days prior to the Subsequent
     Transfer Date;

          (vi) the Seller shall have delivered to each Rating Agency and to the
     Issuer any Opinions of Counsel requested by the Rating Agencies;

          (vii)  the Seller shall have delivered to the Indenture Trustee and
     the Issuer an Officers' Certificate confirming the satisfaction of each
     condition precedent specified in this Section 2.02;

          (viii)  in the case of any sale of Subsequent Transition Property, the
     Seller shall have taken any action necessary to satisfy any Rating Agency
     Condition; and

          (ix) the Seller shall have received the Initial Purchase Price or the
     Subsequent Purchase Price, as applicable, in funds immediately available on
     the applicable Transfer Date.

                                       4
<PAGE>

                                  ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF SELLER

     As of each Transfer Date, the Seller makes the following representations
and warranties on which the Issuer has relied and will rely in acquiring the
Transferred Transition Property. The following representations and warranties
are made under existing law as in effect as of the applicable Transfer Date.
The Seller shall not be in breach of any representation or warranty herein as a
result of a change in law (which does not include a final, non-appealable
judicial holding by a court of competent jurisdiction that the provisions of the
Texas Electric Choice Plan relevant to securitization are unconstitutional)
occurring after the applicable Transfer Date.  The representations and
warranties shall survive the sale of the Transferred Transition Property to the
Issuer and the pledge thereof on each Transfer Date to the Indenture Trustee
pursuant to the Indenture.

      Section 3.01  Organization and Good Standing.  The Seller is a corporation
duly organized and in good standing under the laws of the State of Texas, with
corporate power and authority to own its properties and to conduct its business
as currently owned or conducted.

      Section 3.02  Due Qualification.  The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business requires such qualifications,
licenses or approvals (except where the failure to so qualify or obtain such
licenses and approvals would not be reasonably likely to have a material adverse
effect on the Seller's business, operations, assets, revenues or properties).

      Section 3.03  Power and Authority.  The Seller has the corporate power and
authority to obtain the Financing Order and to execute and deliver this
Agreement and to carry out its terms; the Seller has the corporate power and
authority to own the rights and interests under the Financing Order, and to sell
and assign the rights and interests under the Financing Order, whereupon such
rights and interests will become the Transition Property, to the Issuer, and the
Seller has duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery and performance of this
Agreement have been duly authorized by the Seller by all necessary corporate
action.

      Section 3.04  Binding Obligation.  This Agreement constitutes a legal,
valid and binding obligation of the Seller enforceable against the Seller in
accordance with its terms subject to bankruptcy, receivership, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors' or
secured parties' rights generally from time to time in effect and to general
principles of equity (including concepts of materiality, reasonableness, good
faith and fair dealing), regardless of whether considered in a proceeding in
equity or at law.

      Section 3.05  No Violation.  The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not:
(i) conflict with or result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or by-laws of the Seller, or any indenture, mortgage,
credit

                                       5
<PAGE>

agreement or other agreement or instrument to which the Seller is a party or by
which it or its properties is bound; (ii) result in the creation or imposition
of any Lien upon any of the Seller's properties pursuant to the terms of any
such indenture or agreement or other instrument; or (iii) violate any existing
law or any existing order, rule or regulation applicable to the Seller of any
Governmental Authority having jurisdiction over the Seller or its properties.

      Section 3.06  No Proceedings.  Except as disclosed in the prospectus and
the related prospectus supplement, each dated September __, 2001, of the Issuer
relating to the Transition Bonds (together, the "Prospectus"), there are no
proceedings pending and, to the Seller's knowledge, (x) there are no proceedings
threatened and (y) there are no investigations pending or threatened before any
Governmental Authority having jurisdiction over the Seller or its properties
involving or relating to the Seller or the Issuer or, to the Seller's knowledge,
any other Person:

          (i) asserting the invalidity of this Agreement, any of the other Basic
     Documents, the Transition Bonds, the Texas Electric Choice Plan or the
     Financing Order;

          (ii) seeking to prevent the issuance of the Transition Bonds or the
     consummation of any of the transactions contemplated by this Agreement or
     any of the other Basic Documents;

          (iii)  seeking any determination or ruling that could reasonably be
     expected to materially and adversely affect the performance by the Seller
     of its obligations under, or the validity or enforceability of, this
     Agreement, any of the other Basic Documents or the Transition Bonds; or

          (iv) challenging the Seller's treatment of the Transition Bonds as
     debt of the Seller for federal or state income, gross receipts or franchise
     tax purposes.

      Section 3.07  Approvals.  Except for continuation filings under the UCC
and other filings under the Texas Electric Choice Plan and the UCC, no approval,
authorization, consent, order or other action of, or filing with, any
Governmental Authority is required under an applicable law, rule or regulation
in connection with the execution and delivery by the Seller of this Agreement,
the performance by the Seller of the transactions contemplated hereby or the
fulfillment by the Seller of the terms hereof, except those that have been
obtained or made and those that the Seller, in its capacity as Servicer under
the Servicing Agreement, is required to make in the future pursuant to the
Servicing Agreement.  The Issuance Advice Letter has been filed in accordance
with the Financing Order.

      Section 3.08  The Transition Property.

          (a) Information.  Subject to Section 3.15, all information, as amended
     or supplemented from time to time prior to the date this representation is
     made, provided by the Seller to the Issuer with respect to the Transferred
     Transition Property (including the Financing Order and the Issuance Advice
     Letter) is correct in all material respects.

                                       6
<PAGE>

          (b) Effect of Transfer.  Each sale, transfer, assignment, setting over
     and conveyance herein contemplated constitutes a sale or other absolute
     transfer of all right, title and interest of the Seller in, to and under
     the Financing Order from the Seller to the Issuer whereupon such rights and
     interests shall become the Transition Property; upon execution and delivery
     of this Agreement and the related Bill of Sale and payment of the Initial
     Purchase Price or Subsequent Purchase Price, as applicable, the Seller will
     have no right, title or interest in, to or under the Transferred Transition
     Property; and such Transferred Transition Property would not be a part of
     the estate of the Seller as debtor in the event of the filing of a
     bankruptcy petition by or against the Seller under any bankruptcy law.

          (c)  Transfer Filings.

               (i)   The Seller is the sole owner of the rights and interests
               under the Financing Order to be sold to the Issuer on the
               applicable Transfer Date.

               (ii)   On the Transfer Date, immediately upon the sale hereunder,
               such Transferred Transition Property will have been validly sold,
               assigned, transferred, set over and conveyed to the Issuer free
               and clear of all Liens (except for any Lien created in favor of
               the Transition Bondholders pursuant to Section 39.309 of the
               Texas Electric Choice Plan or any Lien created by the Issuer
               under the Basic Documents).

               (iii)    All actions or filings (including filings with the Texas
               Secretary of State in accordance with the rules prescribed under
               the Texas Electric Choice Plan and the UCC) necessary in any
               jurisdiction to give the Issuer a first priority perfected
               ownership interest in the Transferred Transition Property and to
               grant to the Indenture Trustee a first priority perfected
               security interest in such Transferred Transition Property, free
               and clear of all Liens of the Seller or anyone else, have been
               taken or made.

      Section 3.09  Solvency.  After giving effect to the sale of any
Transferred Transition Property hereunder, the Seller:

          (i) is solvent and expects to remain solvent,

          (ii) is adequately capitalized to conduct its business and affairs
     considering its size and the nature of its business and intended purposes,

          (iii)  is not engaged and does not expect to engage in a business for
     which its remaining property represents an unreasonably small portion of
     its capital,

          (iv) reasonably believes that it will be able to pay its debts as they
     come due, and

                                       7
<PAGE>

          (v) is able to pay its debts as they come due and does not intend to
     incur, or believe that it will incur, indebtedness that it will not be able
     to repay at its maturity.

      Section 3.10  The Financing Order.

          (a) The provisions of the Texas Electric Choice Plan relevant to
     securitization are valid and constitutional under the Texas and United
     States Constitutions; the Financing Order as issued on May 31, 2000 has
     been issued by the Texas Commission in accordance with the Texas Electric
     Choice Plan; the Financing Order and the process by which it was issued
     comply with all applicable laws, rules and regulations and the Financing
     Order is final and non-appealable and in full force and effect.

          (b) As of the date of issuance of any Series of the Transition Bonds,
     the Transition Bonds of that Series (including those issued in respect of
     Subsequent Transition Property) will be entitled to the protections
     provided by the Texas Electric Choice Plan and the Financing Order, and the
     Financing Order and the Transition Charges authorized therein will have
     become irrevocable and not subject to reduction, impairment or adjustment
     by further action of the Texas Commission, except as permitted by Section
     39.307 of the Texas Electric Choice Plan, and the Issuance Advice Letter
     relating to the Transferred Transition Property to be sold on such date has
     been filed in accordance with the Financing Order.  The Texas Commission
     has not issued any order prior to the third business day after submission
     of the Issuance Advice Letter that the Transition Bonds do not comply with
     Ordering Paragraph 5 of the Financing Order and the initial Transition
     Charges and the final terms of the Transition Bonds set forth in the
     Issuance Advice Letter have become effective.

     Section 3.11   State Action.

          (a) Under the Texas Electric Choice Plan, the State of Texas has
     pledged that it will not take or permit any action that would impair the
     value of the Transition Property, or, except as permitted in Section 39.307
     of the Texas Electric Choice Plan, reduce, alter or impair the Transition
     Charges until the principal, interest and premium, if any, and any other
     charges incurred and contracts to be performed in connection with the
     Transition Bonds, have been paid and performed in full.

          (b) Under the laws of the State of Texas and the United States, the
     State of Texas could  not constitutionally take any action of a legislative
     character, including the repeal or amendment of the Texas Electric Choice
     Plan, which would substantially limit, alter or impair the Transition
     Property or other rights vested in the Transition Bondholders pursuant to
     the Financing Order, or substantially limit, alter, impair or reduce the
     value or amount of the Transition Property, unless such action is a
     reasonable exercise of the State of Texas' sovereign powers and of a
     character reasonable and appropriate to further a legitimate public
     purpose, and, under the takings clauses of the State of Texas and United
     States Constitutions, the State of Texas could not repeal or amend the
     Texas Electric Choice Plan or take any other action in contravention of its
     pledge quoted above without paying just compensation to the

                                       8
<PAGE>

     Transition Bondholders, as determined by a court of competent jurisdiction,
     if doing so would constitute a permanent appropriation of a substantial
     property interest of the Transition Bondholders in the Transition Property
     and deprive the Transition Bondholders of their reasonable expectations
     arising from their investments in the Transition Bonds; however, there is
     no assurance that, even if a court were to award just compensation, it
     would be sufficient to pay the full amount of principal of and interest on
     the Transition Bonds.

      Section 3.12  No Court Order.  There is no order by any court providing
for the revocation, alteration, limitation or other impairment of the Texas
Electric Choice Plan, the Financing Order, the Issuance Advice Letter, the
Transferred Transition Property or the Transition Charges or any rights arising
under any of them or that seeks to enjoin the performance of any obligations
under the Financing Order.

      Section 3.13  Approvals Concerning the Transition Property.  No other
approval, authorization, consent, order or other action of, or filing with any
Governmental Authority is required in connection with the creation or transfer
of the Seller's rights and interests under the Financing Order and the Issuer's
purchase of the Transferred Transition Property from the Seller, except those
that have been obtained or made.

      Section 3.14  No Proceedings Concerning the Texas Electric Choice Plan.
Except as disclosed in the Prospectus, there are no proceedings pending, and to
the best of the Seller's knowledge, (i) there are no proceedings threatened and
(ii) there are no investigations pending or threatened, before any Governmental
Authority having jurisdiction over the Issuer or the Seller or their respective
properties challenging the Texas Electric Choice Plan or the Financing Order.

      Section 3.15  Assumptions.  The assumptions used in calculating the
Transition Charges in the Issuance Advice Letter are reasonable and made in good
faith; however, notwithstanding the foregoing, the Seller makes no
representation or warranty, express or implied, that the assumptions used in
calculating such Transition Charge will in fact be realized.

      Section 3.16  Creation of the Transition Property.

          (a) Upon the effectiveness of the Issuance Advice Letter and the
     transfer of the Seller's rights and interests under the Financing Order and
     the Issuer's purchase of the Transition Property from the Seller pursuant
     to this Agreement, the Transferred Transition Property constitutes a
     present property right.

          (b) Upon the effectiveness of the Issuance Advice Letter and the
     transfer of the Seller's rights and interests under the Financing Order and
     the Issuer's purchase of the Transferred Transition Property from the
     Seller pursuant to this Agreement, the Transferred Transition Property
     includes, without limitation:

               (1) the right to impose, collect and receive the Transition
     Charges authorized in the Financing Order, including, without limitation,
     the

                                       9
<PAGE>

     right to receive Transition Charges in amounts and at times sufficient
     to pay principal and interest on the Transition Bonds and make deposits to
     the overcollateralization subaccount,

               (2) all rights and interest of the Seller under the Financing
     Order,

               (3) the rights to file for periodic adjustments of the Transition
     Charges as provided in the Financing Order, and

               (4) all revenues and collections resulting from Transition
     Charges.

          (c) Upon the effectiveness of the Issuance Advice Letter and the
     transfer of the Seller's rights and interests under the Financing Order and
     the Issuer's purchase of the Transferred Transition Property from the
     Seller on such Transfer Date pursuant to this Agreement, the Transferred
     Transition Property is not subject to any Lien created by a previous
     indenture.

      Section 3.17  Prospectus.  As of the date hereof, the information
describing the Seller under the caption "Reliant Energy" and the caption "The
Servicer of the Transition Property" in the prospectus dated September [___],
2001 is true and correct in all material respects.

      Section 3.18  Conversion to a Limited Liability Company.  The conversion
of the Seller into a Texas limited liability company will not:

          (a) interrupt the Seller's existence,

          (b) affect the Seller's rights, title and interests in its real estate
     and other property or its power and authority to perform its obligations
     under this Agreement, the Servicing Agreement or the other Basic Documents,
     or

          (c) impair or diminish the liabilities and obligations of the Seller,
     including, without limitation, its obligations under this Agreement or any
     other Basic Document.

      Section 3.19  Nature of Representations and Warranties.  The
representations and warranties set forth in Section 3.08 and Section 3.10
through Section 3.17, insofar as they involve conclusions of law, are made not
on the basis that the Seller purports to be a legal expert or to be rendering
legal advice, but rather to reflect the parties' good faith understanding of the
legal basis on which the parties are entering into this Agreement and the other
Basic Documents and the basis on which the Transition Bondholders are purchasing
the Transition Bonds, and to reflect the parties' agreement that, if such
understanding turns out to be incorrect or inaccurate, the Seller will be
obligated to indemnify the Issuer and its permitted assigns (to the extent
required by and in accordance with Section 5.01), and that the Issuer and its
permitted assigns will be entitled to enforce any rights and

                                       10
<PAGE>

remedies under the Basic Documents on account of such inaccuracy to the same
extent as if the Seller had breached any other representations or warranties
hereunder.

                                   ARTICLE IV

                            COVENANTS OF THE SELLER

      Section 4.01  Seller's Existence.  Subject to Section 5.02, so long as any
of the Transition Bonds is outstanding, the Seller shall keep in full force and
effect its existence and remain in good standing under the laws of the state of
its organization, and shall obtain and preserve its qualification to do business
in each jurisdiction in which such qualification is or will be necessary to
protect the validity and enforceability of this Agreement and each other
instrument or agreement to which the Seller is a party necessary to the proper
administration of this Agreement and the transactions contemplated hereby.

      Section 4.02  No Liens or Conveyances.  Except for the conveyances
hereunder or any Lien under Section 39.309 of the Texas Electric Choice Plan for
the benefit of the Issuer, the Indenture Trustee and the Transition Bondholders,
the Seller shall not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on, any of the
Transition Property, whether now existing or hereafter created, or any interest
therein. The Seller shall not at any time assert any Lien against or with
respect to any Transferred Transition Property, and shall defend the right,
title and interest of the Issuer and the Indenture Trustee, as assignee of the
Issuer, in, to and under the Transferred Transition Property, whether now
existing or hereafter created, against all claims of third parties claiming
through or under the Seller.

      Section 4.03  Delivery of Collections.  It is anticipated that the Seller
will receive collections under the terms and provisions of the Intercreditor
Agreement in respect of the Transition Charges or the proceeds thereof other
than in its capacity as the Servicer.  The Seller shall pay the Servicer all
payments received by the Seller in respect thereof, in accordance with the
Intercreditor Agreement, as soon as practicable after receipt thereof by the
Seller, but in no event later than two Business Days after receipt.

      Section 4.04  Notice of Liens.  The Seller shall notify the Issuer and the
Indenture Trustee promptly after becoming aware of any Lien on any Transferred
Transition Property other than the conveyances hereunder, any Lien under the
Basic Documents or any Lien under Section 39.309 of the Texas Electric Choice
Plan or the UCC for the benefit of the Issuer or the Transition Bondholders.

      Section 4.05  Compliance With Law.  The Seller shall comply with its
organizational or governing documents and all laws, treaties, rules, regulations
and determinations of any Governmental Authority applicable to the Seller,
except to the extent that failure to so comply would not materially adversely
affect the Issuer's or the Indenture Trustee's interests in the Transferred
Transition Property or under any of the Basic Documents or the Seller's
performance of its obligations hereunder.

                                       11
<PAGE>

      Section 4.06  Covenants Related to the Transition Property.

          (a) So long as any of the Transition Bonds is outstanding, the Seller
     shall:

               (i) treat the Transition Bonds as debt of the Issuer and not of
          the Seller, except for financial reporting or tax purposes,

               (ii) disclose in its financial statements that it is not the
          owner of the Transferred Transition Property and that the assets of
          the Issuer are not available to pay creditors of the Seller or any of
          its Affiliates (other than the Issuer),

               (iii)  disclose the effects of all transactions between the
          Seller and the Issuer in accordance with generally accepted accounting
          principles, and

               (iv) not own or purchase any Transition Bonds.

          (b) So long as any of the Transition Bonds is outstanding,

               (i) in all proceedings relating directly or indirectly to the
          Transferred Transition Property, the Seller shall: (A) affirmatively
          certify and confirm that it has sold all of its rights and interests
          under the Financing Order to the Issuer (other than for financial
          reporting or tax purposes), and (B) not make any statement or
          reference in respect of the Transferred Transition Property that is
          inconsistent with the ownership thereof by the Issuer (other than for
          financial accounting or tax reporting purposes);

               (ii) the Seller shall not take any action in respect of the
          Transferred Transition Property except solely in its capacity as the
          Servicer thereof pursuant to the Servicing Agreement or as
          contemplated by the Basic Documents, including without limitation, the
          Intercreditor Agreement; and

               (iii)  the Issuer shall not sell transition bonds under a
          separate financing order in connection with the issuance of additional
          transition bonds unless the Rating Agency Condition shall have been
          satisfied.

          (c) The Seller agrees that upon the sale by the Seller of the
     Transferred Transition Property to the Issuer pursuant to this Agreement:

               (i) to the fullest extent permitted by law, including the Texas
          Electric Choice Plan and applicable Texas Commission Regulations, the
          Issuer shall have all of the rights originally held by the Seller with
          respect to the Transferred Transition Property, including the right to
          collect any amounts payable by any Person responsible for remitting
          Transition Charges to the Servicer under the terms of the Financing
          Order or the Texas Electric Choice Plan or applicable tariff in
          respect of such Transferred Transition Property as provided in the
          Financing Order and the Texas

                                       12
<PAGE>

          Commission Regulations, notwithstanding any objection or direction to
          the contrary by the Seller, and

               (ii) any payment to the Issuer by any Person responsible for
          remitting Transition Charges to the Servicer under the terms of the
          Financing Order or the Texas Electric Choice Plan or applicable tariff
          shall discharge such Person's obligations in respect of such
          Transferred Transition Property to the extent of such payment,
          notwithstanding any objection or direction to the contrary by the
          Seller.

      Section 4.07  Protection of Title.  The Seller shall execute and file such
filings, and cause to be executed and filed such filings, and take all such
actions, all in such manner and in such places as may be required by law fully
to preserve, maintain and protect the interests of the Issuer and the Indenture
Trustee in the Transferred Transition Property, including all filings required
under the Texas Electric Choice Plan and the UCC relating to the transfer of the
ownership of the rights and interests under the Financing Order by the Seller to
the Issuer and the Issuer's ownership of the Transferred Transition Property and
the pledge of the Transferred Transition Property by the Issuer to the Indenture
Trustee. The Seller shall deliver (or cause to be delivered) to the Issuer and
the Indenture Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
The Seller shall institute any action or proceeding necessary to compel
performance by the Texas Commission or the State of Texas of any of their
obligations or duties under the Texas Electric Choice Plan, any Financing Order
or any Issuance Advice Letter with respect to the Transferred Transition
Property, and the Seller agrees to take such legal or administrative actions,
including defending against or instituting and pursuing legal actions and
appearing or testifying at hearings or similar proceedings, in each case as may
be reasonably necessary:

          (a) to protect the Issuer and the Transition Bondholders from claims,
     state actions or other actions or proceedings of third parties which, if
     successfully pursued, would result in a breach of any representation set
     forth in Article III; or

          (b) to block or overturn any attempts to cause a repeal of,
     modification of or supplement to the Texas Electric Choice Plan, the
     Financing Order, any Issuance Advice Letter or the rights of Transition
     Bondholders by legislative enactment or constitutional amendment that would
     be adverse to the Issuer, the Indenture Trustee or the Transition
     Bondholders.

The costs of any such actions or proceedings shall be reimbursed by the Issuer
to the Seller from amounts on deposit in the collection account as an operating
expense in accordance with the terms of the Indenture.  The Seller's obligations
pursuant to this Section 4.07 shall survive and continue notwithstanding that
the payment of operating expenses pursuant to the Indenture may be delayed (it
being understood that the Seller may be required to advance its own funds to
satisfy its obligation hereunder).  The Seller designates the Issuer as its
agent and attorney-in-fact to execute any filings of financing statements,
continuation statements or other instruments required of the Seller pursuant to

                                       13
<PAGE>

this Section, it being understood that the Issuer shall have no obligation to
execute any such instruments.

      Section 4.08  Taxes.  So long as any of the Transition Bonds is
outstanding, the Seller shall pay all material taxes, assessments and
governmental charges imposed upon it or any of its properties or assets or with
respect to any of its franchises, businesses, income or property before any
penalty accrues thereon if the failure to pay any such taxes, assessments and
governmental charges would, after any applicable grace periods, notices or other
similar requirements, result in a Lien on the Transferred Transition Property;
provided that no such tax need be paid if the Seller or one of its Affiliates is
contesting the same in good faith by appropriate proceedings promptly instituted
and diligently conducted and if the Seller or such Affiliate has established
appropriate reserves as shall be required in conformity with generally accepted
accounting principles.

      Section 4.09  Filings Pursuant to Financing Order.  The Seller shall
comply with all filing requirements, including making any post-closing filings,
in accordance with the Financing Order.

                                   ARTICLE V

                       ADDITIONAL UNDERTAKINGS OF SELLER

     The Seller hereby undertakes the obligations contained in this Article V
and acknowledges that the Issuer shall have the right to assign its rights with
respect to such obligations to the Indenture Trustee for the benefit of the
Transition Bondholders.

      Section 5.01. Liability of the Seller; Indemnities.

          (a) The Seller shall be liable in accordance herewith only to the
     extent of the obligations specifically undertaken by the Seller under this
     Agreement.

          (b) The Seller shall indemnify the Issuer and the Indenture Trustee,
     for itself and on behalf of the Transition Bondholders and any subsequent
     Transition Bondholders, and each of their respective officers, directors,
     managers, employees and agents for, and defend and hold harmless each such
     Person from and against, any and all taxes (other than any taxes imposed on
     Transition Bondholders solely as a result of their ownership of Transition
     Bonds) that may at any time be imposed on or asserted against any such
     Person under existing law as of any Transfer Date as a result of the sale
     and assignment of the Seller's rights and interests under the Financing
     Order by the Seller to the Issuer, the acquisition or holding of the
     Transferred Transition Property by the Issuer or the issuance and sale by
     the Issuer of the Transition Bonds, including any sales, gross receipts,
     general corporation, personal property, privilege, franchise or license
     taxes, but excluding any taxes imposed as a result of a failure of such
     Person to properly withhold or remit taxes imposed with respect to payments
     on any Transition Bond, in the event and to the extent such taxes are not
     recoverable as Qualified Costs, it being understood that the Transition
     Bondholders shall be entitled to enforce their

                                       14
<PAGE>

     rights against the Seller under this Section 5.01(b) solely through a cause
     of action brought for their benefit by the Indenture Trustee.

          (c) The Seller shall indemnify the Issuer and the Indenture Trustee,
     for itself and on behalf of the Transition Bondholders, and each of their
     respective officers, directors, managers, employees and agents for, and
     defend and hold harmless each such Person from and against, any and all
     amounts of principal of and interest on the Transition Bonds not paid when
     due or when scheduled to be paid in accordance with their terms and the
     amount of any deposits to the Issuer required to have been made in
     accordance with the terms of the Basic Documents which are not made when so
     required, in each case as a result of the Seller's breach of any of its
     representations, warranties or covenants contained in this Agreement.

          (d) The Seller shall indemnify the Issuer and the Indenture Trustee,
     for itself and on behalf of the Transition Bondholders, and each of their
     respective officers, directors, managers, employees and agents for, and
     defend and hold harmless each such Person from and against, any and all
     liabilities, obligations, claims, actions, suits or payments of any kind
     whatsoever that may be imposed on or asserted against any such Person
     (other than any liabilities, obligations or claims for or payments of
     principal of or interest on the Transition Bonds) together with any
     reasonable costs and expenses incurred by such Person, in each case as a
     result of the Seller's breach of any of its representations, warranties or
     covenants contained in this Agreement.

          (e) The indemnification obligations of the Seller under this Section
     5.01 shall rank pari passu with all other general unsecured obligations of
     the Seller.

          (f) Indemnification under this Section 5.01 shall survive the
     resignation or removal of the Indenture Trustee and the termination of this
     Agreement and shall include reasonable fees and expenses of investigation
     and litigation (including reasonable attorneys' fees and expenses).  The
     Seller shall not indemnify any party under this Section 5.01 for any
     changes in law (which does not include a final, non-appealable judicial
     holding by a court of competent jurisdiction that the provisions of the
     Texas Electric Choice Plan relevant to securitization are unconstitutional)
     after the Transfer Date.

          (g) The Seller shall pay any and all taxes levied or assessed upon all
     or any part of the Issuer's property or assets based on existing law as of
     the Transfer Date.

Notwithstanding the foregoing, in no event shall any such foregoing indemnity
extend to the collectibility of the Transition Charges from any Person
responsible for remitting Transition Charges to the Servicer under the terms of
the Financing Order, the Texas Electric Choice Plan or an applicable tariff, or
the creditworthiness of any such Person.

                                       15
<PAGE>

      Section 5.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Seller.

Any Person:

          (a) into which the Seller may be merged or consolidated and which
     succeeds to all or substantially all of the electric transmission and
     distribution business of the Seller (or, if transmission and distribution
     are split, which provides wire service directly to customers),

          (b) which results from the division of the Seller into two or more
     Persons and which succeeds to all or substantially all of the electric
     transmission and distribution business of the Seller (or, if transmission
     and distribution are split, which provides wire service directly to
     customers),

          (c) which may result from any merger or consolidation to which the
     Seller shall be a party and which succeeds to all or substantially all of
     the electric transmission and distribution business of the Seller (or, if
     transmission and distribution are split, which provides wire service
     directly to customers),

          (d) which may succeed to the properties and assets of the Seller
     substantially as a whole and which succeeds to all or substantially all of
     the electric transmission and distribution business of the Seller (or, if
     transmission and distribution are split, which provides wire service
     directly to customers), or

          (e) which may otherwise succeed to all or substantially all of the
     electric transmission and distribution business of the Seller (or, if
     transmission and distribution are split, which provides wire service
     directly to customers),

which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of the Seller under this Agreement, shall be the
successor to the Seller hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement; provided,
however, that

          (i) immediately after giving effect to such transaction, no
     representation or warranty made pursuant to Article III shall have been
     breached and no Servicer Default, and no event that, after notice or lapse
     of time, or both, would become a Servicer Default, shall have occurred and
     be continuing,

          (ii) the Rating Agencies shall have received prior written notice of
     such transaction,

          (iii)  the Seller shall have delivered to the Issuer and the Indenture
     Trustee an Officers' Certificate and an Opinion of Counsel each stating
     that such consolidation, merger or succession and such agreement of
     assumption comply with this Section 5.02 and that all conditions precedent,
     if any, provided for in this Agreement relating to such transaction have
     been complied with,

                                       16
<PAGE>

          (iv) the Seller shall have delivered to the Issuer and the Indenture
     Trustee an Opinion of Counsel either

               (A) stating that, in the opinion of such counsel, all filings to
          be made by the Seller, including filings with the Texas Commission
          pursuant to the Texas Electric Choice Plan and the UCC, that are
          necessary fully to preserve and protect the respective interests of
          the Issuer and the Indenture Trustee in the Transferred Transition
          Property have been executed and filed, and reciting the details of
          such filings, or

               (B) stating that, in the opinion of such counsel, no such action
          is necessary to preserve and protect such interests, and

          (v) the Seller shall have delivered to the Issuer, the Indenture
     Trustee and the Rating Agencies an opinion of independent tax counsel (in
     form and substance satisfactory to the Seller, and which may be based on a
     ruling from the Internal Revenue Service) to the effect that, for federal
     income tax purposes, such transaction will not result in a material adverse
     federal income tax consequence to the Seller, the Issuer, the Indenture
     Trustee or the Transition Bondholders.

Subject to Section 5.03, the Seller shall not consummate any transaction
referred to in clauses (a), (b), (c), (d) or (e) above except upon execution of
the above described agreement of assumption and compliance with clauses (i),
(ii), (iii), (iv) and (v) above. When any Person acquires the properties and
assets of the Seller substantially as a whole and succeeds to all or
substantially all of the electric transmission and distribution business of the
Seller (or, if transmission and distribution are split, which provides wire
services directly to customers), or otherwise becomes the successor to the
Seller in accordance with the terms of this Section 5.02, then upon the
satisfaction of all of the other conditions of this Section 5.02, the Seller
shall automatically and without further notice be released from its obligations
hereunder.

      Section 5.03. Conversion of the Seller to a Limited Liability Company.
Notwithstanding anything in this Agreement to the contrary, the Seller shall be
able to convert to a Texas limited liability company without the execution of an
agreement of assumption and without compliance with clauses (i), (ii), (iii),
(iv) and (v) of Section 5.02.

      Section 5.04. Limitation on Liability of the Seller And Others. The Seller
and any director, officer, employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person, respecting any matters arising
hereunder.  Subject to Section 4.07, the Seller shall not be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its obligations under this Agreement, and that in its opinion may
involve it in any expense or liability.

                                       17
<PAGE>

                                  ARTICLE VI

                            MISCELLANEOUS PROVISIONS

      Section 6.01  Amendment.

          (a)  This Agreement may be amended in writing by the Seller and the
     Issuer, with the consent of the Indenture Trustee and the Texas Commission
     and the satisfaction of the Rating Agency Condition.  Promptly after the
     execution of any such amendment or consent, the Issuer shall furnish
     written notification of the substance of such amendment or consent to each
     of the Rating Agencies.

          (b) Prior to the execution of any amendment to this Agreement, the
     Issuer and the Indenture Trustee shall be entitled to receive and rely upon
     an Opinion of Counsel stating that the execution of such amendment is
     authorized or permitted by this Agreement.  The Issuer and the Indenture
     Trustee may, but shall not be obligated to, enter into any such amendment
     that affects their own rights, duties or immunities under this Agreement or
     otherwise.

      Section 6.02  Notices.  Unless otherwise specifically provided herein, all
demands, notices and communications upon or to the Seller, the Issuer, the
Indenture Trustee or the Rating Agencies under this Agreement shall be in
writing, delivered personally, via facsimile, reputable overnight courier or by
certified mail, return-receipt requested, and shall be deemed to have been duly
given upon receipt

          (a) in the case of the Seller, to Reliant Energy, Incorporated, 1111
     Louisiana, Houston, Texas 77002, Attention:  Treasurer,

          (b) in the case of the Issuer, to Reliant Energy Transition Bond
     Company LLC, 1111 Louisiana, Suite 4400,  Houston, Texas 77002 , Attention:
     Manager,

          (c) in the case of Moody's, to Moody's Investors Service, Inc., ABS
     Monitoring Department, 99 Church Street, New York, New York 10007,

          (d) in the case of Standard & Poor's, to Standard & Poor's Ratings
     Group, 55 Water Street, New York, New York 10041, Attention: Asset Backed
     Surveillance Department,

          (e) in the case of Fitch, to Fitch, Inc., 1 State Street Plaza, New
     York, New York 10004, Attention: ABS Surveillance, and

          (f) in the case the Indenture Trustee, at the address provided for
     notices or communications to the Indenture Trustee in the Indenture;

                                       18
<PAGE>

or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.

      Section 6.03  Assignment by the Seller.  Notwithstanding anything to the
contrary contained herein, except as provided in Section 5.02, this Agreement
may not be assigned by the Seller.

      Section 6.04  Assignment to the Indenture Trustee.  The Seller hereby
acknowledges and consents to any pledge, assignment and grant of a security
interest by the Issuer to the Indenture Trustee pursuant to the Indenture for
the benefit of the Transition Bondholders of all right, title and interest of
the Issuer in, to and under the Transferred Transition Property and the proceeds
thereof and the assignment of any or all of the Issuer's rights hereunder to the
Indenture Trustee.  Notwithstanding such assignment, in no event shall the
Indenture Trustee have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.

      Section 6.05  Limitations on Rights of Others.  The provisions of this
Agreement are solely for the benefit of the Seller, the Issuer and the Indenture
Trustee, on behalf of itself and the Transition Bondholders, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Trust Estate or
under or in respect of this Agreement or any covenants, conditions or provisions
contained herein.

      Section 6.06  Severability.  Any provision of this Agreement that 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 hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

      Section 6.07  Separate Counterparts.  This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

      Section 6.08  Headings.  The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.

      Section 6.09  Governing Law.  THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

      Section 6.10  Nonpetition Covenants.  (a) Notwithstanding any prior
termination of this Agreement or the Indenture, the Seller shall not, prior to
the date which is one year and one day after the termination of the Indenture,
petition or otherwise invoke or cause the Issuer to invoke the process

                                       19
<PAGE>

of any Governmental Authority for the purpose of commencing or sustaining a case
against the Issuer under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or any substantial part of
the property of the Issuer, or ordering the winding-up or liquidation of the
affairs of the Issuer.

     (b) Notwithstanding any prior termination of this Agreement or the
Indenture, the Issuer shall not, prior to the date which is one year and one day
after the termination of the Indenture, petition or otherwise invoke or cause
the Seller to invoke the process of any Governmental Authority for the purpose
of commencing or sustaining a case against the Seller under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Seller or any substantial part of the property of the Seller, or ordering the
winding-up or liquidation of the affairs of the Seller.

                    [Rest of page intentionally left blank]

                                       20
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers as of the day and year
first above written.

                       RELIANT ENERGY TRANSITION BOND COMPANY LLC,
                       as Issuer,

                       By:
                          ---------------------------------------
                          Name:
                          Title:

                       RELIANT ENERGY, INCORPORATED,
                       as Seller,

                       By:
                          ---------------------------------------
                          Name:
                          Title:

                                       21
<PAGE>

                            APPENDIX A - DEFINITIONS

The definitions contained in this Appendix A are applicable to the singular as
well as the plural forms of such terms.

     "Administration Agreement" means the Administration Agreement, dated as of
September __, 2001, between the Issuer and the Seller, as the same may be
amended, supplemented or otherwise modified from time to time.

     "Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, control when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms controlling and controlled
have meanings correlative to the foregoing.

     "Agreement" or this "Sale Agreement" or the "Sale Agreement" means this
Transition Property Sale Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.

     "Basic Documents" means the Certificate of Formation of the Issuer which
was filed with the Secretary of State of the State of Delaware on November 10,
1999, as amended on ______________ the Amended and Restated Limited Liability
Company Agreement of the Issuer dated September __, 2001, this Sale Agreement,
each Bill of Sale, the Servicing Agreement, the Intercreditor Agreement, the
Administration Agreement and the Indenture.

     "Bill of Sale" means any bill of sale issued by the Seller to the Issuer
pursuant to the Sale Agreement evidencing the sale of the Transition Property by
the Seller to the Issuer.

     "Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in the City of Houston, Texas, or in the City of New
York, New York, are required or authorized by law or executive order to remain
closed.

     "Class" means, with respect to any Series of Transition Bonds, any one of
the classes of Transition Bonds of that Series, as specified in the applicable
Series Supplement.

     "Default" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.

     "Event of Default" has the meaning specified in Section 5.01 of the
Indenture.

     "Financing Order" means the Financing Order issued by the Texas Commission
on May 31, 2000, pursuant to the Texas Electric Choice Plan, as such order may
hereafter be supplemented by an order of the Texas Commission.

                                      A-1
<PAGE>

     "Fitch" means Fitch, Inc., or its successor.

     "Governmental Authority" means any court or any federal or state regulatory
body, administrative agency or governmental instrumentality.

     "Holder" or "Transition Bondholder" means the Person in whose name a
Transition Bond of any Series or Class is registered on the Transition Bond
Register.

     "Indenture" means the Indenture, dated as of September __, 2001, between
the Issuer and the Indenture Trustee, as the same may be amended and
supplemented from time to time by one or more indentures supplemental thereto,
and shall include the forms and terms of the Transition Bonds established
thereunder.

     "Indenture Trustee" means Bankers Trust Company, a New York banking
corporation, or its successor or any successor Indenture Trustee under the
Indenture.

     "Initial Purchase Price" has the meaning specified in Section 2.01(a)
hereof.

     "Initial Transfer Date" means the Series Issuance Date for the first Series
of Transition Bonds.

     "Initial Transition Property" means the Transition Property identified in
the Bill of Sale delivered pursuant to Section 2.01(a) on or prior to the
Initial Transfer Date and purchased by the Issuer from the Seller as of the
Initial Transfer Date pursuant to the Sale Agreement.

     "Intercreditor Agreement" means the Intercreditor Agreement, dated as of
September __, 2001, among the Issuer, the Seller and __________________________,
as the same may be amended, supplemented or otherwise modified from time to
time.

     "Issuance Advice Letter" shall mean each issuance advice letter submitted
to the Texas Commission by the Seller pursuant to the Financing Order in
connection with the issuance of a Series of Transition Bonds.

     "Issuer" means Reliant Energy Transition Bond Company LLC, a Delaware
limited liability company, or its successor under the Indenture.

     "Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.

     "Moody's" means Moody's Investors Service, Inc., or its successor.

     "Officers' Certificate" means a certificate signed, in the case of the
Seller, by

          (a) the chairman of the board, the president, the vice chairman of the
     board, any executive vice president or any vice president; and

                                      A-2
<PAGE>

          (b) the treasurer, any assistant treasurer, the secretary or any
     assistant secretary.

     "Opinion of Counsel" means one or more written opinions of counsel who may
be an employee of or counsel to the Issuer or the Seller, which counsel shall be
reasonably acceptable to the Indenture Trustee, the Issuer or the Rating
Agencies, as applicable, and which shall be in form reasonably satisfactory to
the Indenture Trustee, if applicable.

     "Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), business trust, limited liability company, unincorporated organization
or government or any agency or political subdivision thereof.

     "proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.

     "Qualified Costs" has the meaning assigned to that term in the Texas
Electric Choice Plan and the Financing Order.

     "Rating Agency" means any rating agency rating the Transition Bonds of any
Class or Series at the time of issuance thereof at the request of the Issuer,
which initially shall be Moody's, Fitch and S&P.  If no such organization or
successor is any longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization or other comparable Person designated
by the Issuer, written notice of which designation shall be given to the
Indenture Trustee and the Issuer.

     "Rating Agency Condition" means, with respect to any action, the
notification to each Rating Agency of such action and the notification in
writing by S&P and Fitch to the Indenture Trustee and the Issuer that such
action will not result in a reduction or withdrawal of the then current rating
by such Rating Agency of any outstanding Series or Class of Transition Bonds.

     "Reliant Energy" means Reliant Energy, Incorporated, a Texas corporation,
or its successor.

     "Retail Electric Provider" means any Person certified by the Texas
Commission pursuant to the relevant provisions of the Texas Electric Choice Plan
and any Texas Commission order to be a "retail electric provider" under the
Utilities Code of the State of Texas.

     "Seller" means Reliant Energy, or its successor, in its capacity as seller
of the rights and interests under the Financing Order to the Issuer pursuant to
the Sale Agreement.

     "Series" means any series of Transition Bonds issued and authenticated by
the Issuer pursuant to the Indenture, as specified in the Series Supplement
therefor.

     "Series Issuance Date" means, with respect to any Series, the date on which
the Transition Bonds of such Series are to be originally issued in accordance
with Section 2.10 of the Indenture and the Series Supplement for such Series.

                                      A-3
<PAGE>

     "Series Supplement" means an indenture supplemental to the Indenture that
authorizes a particular Series of Transition Bonds.

     "Servicer" means Reliant Energy, in its capacity as the servicer of the
Transition Property, and each successor to Reliant Energy (in the same capacity)
pursuant to the Servicing Agreement.

     "Servicer Default" means an event specified in Section 6.01 of the
Servicing Agreement.

     "Servicing Agreement" means the Servicing Agreement, dated as of September
__, 2001, between the Issuer and the Servicer and acknowledged by the Indenture
Trustee, as the same may be amended and supplemented from time to time.

     "Standard & Poor's" or "S&P," means Standard & Poor's Ratings Group, a
division of The McGraw-Hill Companies, or its successor.

     "Subsequent Purchase Price" has the meaning specified in Section 2.01(d)
hereof.

     "Subsequent Sale" means the sale of additional rights and interests under a
separate financing order by the Seller to the Issuer after the Initial Transfer
Date, subject to the satisfaction of the conditions specified in the Sale
Agreement and the Indenture.

     "Subsequent Transfer Date" means the date that a Subsequent Sale will be
effective, specified in a written notice provided by the Seller to the Issuer
pursuant to the Sale Agreement.

     "Subsequent Transition Property" means Transition Property identified in a
Bill of Sale delivered pursuant to Section 2.02(d) with respect to the
Subsequent Transfer Date for such Transition Property and purchased by the
Issuer from the Seller as of such Subsequent Transfer Date pursuant to the Sale
Agreement.

     "Texas Commission" means the Public Utility Commission of Texas or any
successor.

     "Texas Commission Regulations" means, at any time, any regulations, orders
or directives promulgated, issued or adopted by the Texas Commission and in
effect at such time.

     "Texas Electric Choice Plan" means the Act of May 21, 1999, 76th Leg. R.S.
ch. 405, 1999.

     "Transfer Date" means the Initial Transfer Date or any Subsequent Transfer
Date, as applicable.

     "Transferred Transition Property" means the Transition Property that has
been purchased by the Issuer pursuant to a particular Bill of Sale.

                                      A-4
<PAGE>

     "Transition Bond" means any of the transition bonds (as defined in the
Texas Electric Choice Plan) issued by the Issuer pursuant to the Indenture.

     "Transition Bond Register" means a register, kept by the Transition Bond
Registrar on behalf of the Issuer, in which, subject to such reasonable
regulations as it may prescribe, the Transition Bond Registrar shall provide for
the registration of Transition Bonds and the registration of transfers of
Transition Bonds.

     "Transition Bond Registrar" means the Indenture Trustee, in its capacity as
keeper of the Transition Bond Register, or any successor to the Indenture
Trustee in such capacity.

     "Transition Charges" means the nonbypassable amounts to be charged for the
use or availability of electric services, approved by the Texas Commission under
the Financing Order to recover Qualified Costs, that may be collected by the
Seller, its successors, an assignee or other collection agents as provided in
the Financing Order.

     "Transition Property" means the rights and interests of Seller or its
successor under the Financing Order, once those rights are first transferred to
the Issuer or pledged in connection with the issuance of the Transition Bonds,
including the irrevocable right to impose, collect and receive through
Transition Charges payable by retail electric customers within Seller's
certificated service area as it existed on May 1, 1999, an amount sufficient to
cover the qualified costs of Seller authorized in the Financing Order, the right
to receive Transition Charges in amounts and at times sufficient to pay
principal and interest and make other deposits in connection with the Transition
Bonds and all revenues and collections resulting from Transition Charges.

     "Trust Estate " has the meaning specified in the Granting Clause of the
Indenture.

     "UCC" means, unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.

                                      A-5
<PAGE>

                                   EXHIBIT A

                                  BILL OF SALE

     1.   This Bill of Sale is being delivered pursuant to the Transition
Property Sale Agreement, dated as of September __, 2001 (the "Sale Agreement"),
between Reliant Energy, Incorporated (the "Seller") and Reliant Energy
Transition Bond Company LLC (the "Issuer").  All capitalized terms used but not
defined herein have the respective meanings ascribed thereto in the Sale
Agreement.

     2.   In consideration of the Issuer's payment to the Seller of
$[______________], receipt of which is hereby acknowledged, the Seller does
hereby irrevocably sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse or warranty, except as set forth in the Sale Agreement,
all right, title and interest of the Seller in, to and under the [Initial]
[Subsequent] Transition Property identified on Schedule 1 hereto (such sale,
transfer, assignment, setting over and conveyance of the [Initial] [Subsequent]
Transition Property includes, to the fullest extent permitted by the Texas
Electric Choice Plan, the right to impose, collect and receive the Transition
Charges related to the [Initial] [Subsequent] Transition Property, as the same
may be adjusted from time to time).  Such sale, transfer, assignment, setting
over and conveyance is hereby expressly stated to be a sale or other absolute
transfer and, pursuant to Section 39.308 of the Texas Electric Choice Plan and
other applicable law, is a true sale and is not a secured transaction and title,
legal and equitable, has passed to the Issuer.  The preceding sentence is the
statement referred to in Section 39.308 of the Texas Electric Choice Plan.  The
Seller agrees and confirms that, after giving effect to the sale evidenced by
this Bill of Sale, the Seller has no right, title or interest in, to or under
the [Initial] [Subsequent] Transition Property.

     3.   The Issuer does hereby purchase the [Initial] [Subsequent] Transition
Property identified on Schedule 1 hereto from the Seller for the consideration
set forth in paragraph 2 above.

     4.   The Seller and the Issuer each acknowledge and agree that the purchase
price for the [Initial] [Subsequent] Transition Property sold pursuant to this
Bill of Sale and the Sale Agreement is equal to its fair market value on the
date hereof.

     5.   The Seller confirms that each of the representations and warranties on
the part of the Seller contained in the Sale Agreement are true and correct in
all respects on the date hereof as if made on the date hereof.

     6.   This Bill of Sale may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.

     7.   THIS BILL OF SALE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE
<PAGE>

PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

     IN WITNESS WHEREOF, the Seller and the Issuer have duly executed this Bill
of Sale as of the ___ day of ______, ____.

                       RELIANT ENERGY TRANSITION BOND COMPANY LLC,
                         as Issuer,

                       By:
                          ----------------------------------------
                          Name:
                          Title:

                       RELIANT ENERGY, INCORPORATED,
                       as Seller,

                       By:
                          ----------------------------------------
                          Name:
                          Title:
<PAGE>

                                   SCHEDULE 1
                                       to
                                  BILL OF SALE

                   [Initial] [Subsequent] Transition Property

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