Document:

Exhibit 4.1

 

 

EXECUTION
COPY

RELIANT ENERGY, INC.,

as Issuer

7.625% SENIOR NOTES DUE 2014

FOURTH SUPPLEMENTAL INDENTURE

Dated as of June 13, 2007

To

SENIOR INDENTURE

Dated as of December 22, 2004

Wilmington Trust Company,

as Trustee

 

 

 

 

 

 

CROSS-REFERENCE TABLE*

	
  Trust Indenture

  Act Section

  	
   

  	
  Supplemental

  Indenture Section

  
	
  310(a)(1)

  	
   

  	
  N.A.

  
	
    (a)(2)

  	
   

  	
  N.A.

  
	
    (a)(3)

  	
   

  	
  N.A.

  
	
    (a)(4)

  	
   

  	
  N.A.

  
	
    (a)(5)

  	
   

  	
  N.A.

  
	
    (b)

  	
   

  	
  N.A.

  
	
    (c)

  	
   

  	
  N.A.

  
	
  311(a)

  	
   

  	
  N.A.

  
	
    (b)

  	
   

  	
  N.A.

  
	
    (c)

  	
   

  	
  N.A.

  
	
  312(a)

  	
   

  	
  2.03

  
	
    (b)

  	
   

  	
  11.03

  
	
    (c)

  	
   

  	
  11.03

  
	
  313(a)

  	
   

  	
  N.A.

  
	
    (b)(1)

  	
   

  	
  N.A.

  
	
    (b)(2)

  	
   

  	
  7.01(f)

  
	
    (c)

  	
   

  	
  11.02

  
	
    (d)

  	
   

  	
  N.A.

  
	
  314(a)

  	
   

  	
  N.A.

  
	
    (b)

  	
   

  	
  N.A.

  
	
    (c)(1)

  	
   

  	
  N.A.

  
	
    (c)(2)

  	
   

  	
  N.A.

  
	
    (c)(3)

  	
   

  	
  N.A.

  
	
    (d)

  	
   

  	
  N.A.

  
	
    (e)

  	
   

  	
  N.A.

  
	
    (f)

  	
   

  	
  N.A.

  
	
  315(a)

  	
   

  	
  N.A.

  
	
    (b)

  	
   

  	
  N.A.

  
	
    (c)

  	
   

  	
  N.A.

  
	
    (d)

  	
   

  	
  N.A.

  
	
    (e)

  	
   

  	
  N.A.

  
	
  316(a) (last
  sentence)

  	
   

  	
  N.A.

  
	
    (a)(1)(A)

  	
   

  	
  N.A.

  
	
    (a)(1)(B)

  	
   

  	
  N.A.

  
	
    (a)(2)

  	
   

  	
  N.A.

  
	
    (b)

  	
   

  	
  N.A.

  
	
    (c)

  	
   

  	
  N.A.

  
	
  317(a)(1)

  	
   

  	
  N.A.

  
	
    (a)(2)

  	
   

  	
  N.A.

  
	
    (b)

  	
   

  	
  N.A.

  
	
  318(a)

  	
   

  	
  N.A.

  
	
    (b)

  	
   

  	
  N.A.

  
	
    (c)

  	
   

  	
  11.01

  

 

N.A. means not applicable.

*  This Cross
Reference Table is not part of the Indenture.

TABLE OF CONTENTS

	
  

  	
   

  	
  Page

  
	
  ARTICLE
  1.

  	
   

  	
   

  
	
  DEFINITIONS AND
  INCORPORATION

  	
   

  	
   

  
	
  BY REFERENCE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  Section 1.02

  	
   

  	
  Other Definitions

  	
   

  	
  6

  
	
  Section 1.03

  	
   

  	
  Incorporation by Reference of Trust Indenture Act

  	
   

  	
  6

  
	
  Section 1.04

  	
   

  	
  Rules of Construction

  	
   

  	
  6

  
	
  Section 1.05

  	
   

  	
  Relationship with Base Indenture

  	
   

  	
  7

  
	
  ARTICLE
  2.

  	
   

  	
   

  
	
  THE NOTES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.01

  	
   

  	
  Form and Dating

  	
   

  	
  7

  
	
  Section 2.02

  	
   

  	
  Execution and Authentication

  	
   

  	
  8

  
	
  Section 2.03

  	
   

  	
  Holder Lists

  	
   

  	
  8

  
	
  Section 2.04

  	
   

  	
  Transfer and Exchange

  	
   

  	
  8

  
	
  Section 2.05

  	
   

  	
  Issuance of Additional Notes

  	
   

  	
  12

  
	
  ARTICLE
  3.

  	
   

  	
   

  
	
  REDEMPTION AND
  PREPAYMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
   

  	
  Notices to Trustee

  	
   

  	
  13

  
	
  Section 3.02

  	
   

  	
  Selection of Notes to Be Redeemed or Purchased

  	
   

  	
  13

  
	
  Section 3.03

  	
   

  	
  Notice of Redemption

  	
   

  	
  14

  
	
  Section 3.04

  	
   

  	
  Effect of Notice of Redemption

  	
   

  	
  14

  
	
  Section 3.05

  	
   

  	
  Deposit of Redemption or Purchase Price

  	
   

  	
  14

  
	
  Section 3.06

  	
   

  	
  Notes Redeemed or Purchased in Part

  	
   

  	
  15

  
	
  Section 3.07

  	
   

  	
  Optional Redemption

  	
   

  	
  15

  
	
  Section 3.08

  	
   

  	
  Mandatory Redemption

  	
   

  	
  15

  
	
  ARTICLE
  4.

  	
   

  	
   

  
	
  COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
   

  	
  Payment of Notes

  	
   

  	
  15

  
	
  Section 4.02

  	
   

  	
  Maintenance of Office or Agency

  	
   

  	
  16

  
	
  Section 4.03

  	
   

  	
  Reports

  	
   

  	
  16

  
	
  Section 4.04

  	
   

  	
  Compliance Certificate

  	
   

  	
  17

  
	
  Section 4.05

  	
   

  	
  Taxes

  	
   

  	
  17

  
	
  Section 4.06

  	
   

  	
  Stay, Extension and Usury Laws

  	
   

  	
  17

  
	
  Section 4.07

  	
   

  	
  Liens

  	
   

  	
  18

  
	
  Section 4.08

  	
   

  	
  Corporate Existence

  	
   

  	
  18

  
	
  Section 4.09

  	
   

  	
  Offer to Repurchase Upon Change of Control

  	
   

  	
  19

  
	
  Section 4.10

  	
   

  	
  Payment for Consents

  	
   

  	
  20

  
	
  ARTICLE
  5.

  	
   

  	
   

  
	
  SUCCESSORS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
   

  	
  Merger, Consolidation, or Sale of Assets

  	
   

  	
  21

  
	
  Section 5.02

  	
   

  	
  Successor Corporation Substituted

  	
   

  	
  21

  

 

 i
 

 

	
  ARTICLE 6.

  	
   

  	
   

  
	
  DEFAULTS AND
  REMEDIES

  	
   

  	
   

  
	
  Section 6.01

  	
   

  	
  Events of Default

  	
   

  	
  22

  
	
  Section 6.02

  	
   

  	
  Acceleration

  	
   

  	
  23

  
	
  Section 6.03

  	
   

  	
  Waiver of Past Defaults

  	
   

  	
  23

  
	
  Section 6.04

  	
   

  	
  Collection Suit by Trustee

  	
   

  	
  23

  
	
  Section 6.05

  	
   

  	
  Priorities

  	
   

  	
  23

  
	
  ARTICLE
  7.

  	
   

  	
   

  
	
  TRUSTEE’S
  COMPENSATION AND INDEMNITY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
   

  	
  Compensation and Indemnity

  	
   

  	
  24

  
	
  ARTICLE
  8.

  	
   

  	
   

  
	
  LEGAL DEFEASANCE
  AND COVENANT DEFEASANCE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.01

  	
   

  	
  Option to Effect Legal Defeasance or Covenant
  Defeasance

  	
   

  	
  25

  
	
  Section 8.02

  	
   

  	
  Legal Defeasance and Discharge

  	
   

  	
  25

  
	
  Section 8.03

  	
   

  	
  Covenant Defeasance

  	
   

  	
  26

  
	
  Section 8.04

  	
   

  	
  Conditions to Legal or Covenant Defeasance

  	
   

  	
  26

  
	
  Section 8.05

  	
   

  	
  Deposited Money
  and Government Securities to be Held in Trust; Other Miscellaneous Provisions

  	
   

  	
  27

  
	
  Section 8.06

  	
   

  	
  Repayment to Company

  	
   

  	
  27

  
	
  Section 8.07

  	
   

  	
  Reinstatement

  	
   

  	
  28

  
	
  ARTICLE
  9.

  	
   

  	
   

  
	
  AMENDMENT,
  SUPPLEMENT AND WAIVER

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.01

  	
   

  	
  Without Consent of Holders

  	
   

  	
  28

  
	
  Section 9.02

  	
   

  	
  With Consent of Holders

  	
   

  	
  29

  
	
  Section 9.03

  	
   

  	
  Compliance with Trust Indenture Act

  	
   

  	
  30

  
	
  Section 9.04

  	
   

  	
  Revocation and Effect of Consents

  	
   

  	
  30

  
	
  Section 9.05

  	
   

  	
  Notation on or Exchange of Notes

  	
   

  	
  31

  
	
  Section 9.06

  	
   

  	
  Trustee to Sign Amendments, etc

  	
   

  	
  31

  
	
  ARTICLE
  10.

  	
   

  	
   

  
	
  SATISFACTION AND
  DISCHARGE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.01

  	
   

  	
  Satisfaction and Discharge

  	
   

  	
  31

  
	
  Section 10.02

  	
   

  	
  Application of Trust Money

  	
   

  	
  32

  
	
  ARTICLE
  11.

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.01

  	
   

  	
  Trust Indenture Act Controls

  	
   

  	
  32

  
	
  Section 11.02

  	
   

  	
  Notices

  	
   

  	
  32

  
	
  Section 11.03

  	
   

  	
  Communication by Holders with Other Holders

  	
   

  	
  33

  
	
  Section 11.04

  	
   

  	
  No Personal Liability of Directors, Officers,
  Employees and Stockholders

  	
   

  	
  34

  
	
  Section 11.05

  	
   

  	
  Governing Law

  	
   

  	
  34

  
	
  Section 11.06

  	
   

  	
  No Adverse Interpretation of Other Agreements

  	
   

  	
  34

  
	
  Section 11.07

  	
   

  	
  Successors

  	
   

  	
  34

  
	
  Section 11.08

  	
   

  	
  Severability

  	
   

  	
  34

  
	
  Section 11.09

  	
   

  	
  Counterpart Originals

  	
   

  	
  34

  
	
  Section 11.10

  	
   

  	
  Table of Contents, Headings, etc

  	
   

  	
  34

  

 

 ii
 

EXHIBITS

Exhibit A                                               Form of
Note

 iii

FOURTH SUPPLEMENTAL INDENTURE, dated as of June 13,
2007, between Reliant Energy, Inc., a Delaware corporation (the “Company”), and Wilmington Trust Company, a Delaware banking
corporation, as trustee (the “Trustee”).

The Company has heretofore executed and delivered to
the Trustee a Senior Indenture, dated as of December 22, 2004 (the “Base Indenture”), as supplemented by the First Supplemental
Indenture thereto, dated as of December 22, 2004, among the Company, the
Guarantors (as defined therein) and the Trustee, the Second Supplemental
Indenture thereto, dated as of September 21, 2006, among the Company, the
Guarantors (as defined therein), Reliant Energy Power Supply, LLC and the
Trustee and the Third Supplemental Indenture thereto, dated as of December 1,
2006, between the Company and the Trustee, providing for the issuance from time
to time of one or more series of the Company’s securities.

The Company desires and has requested the Trustee
pursuant to Section 901(7) of the Base Indenture to join with them in the
execution and delivery of this Supplemental Indenture in order to supplement
the Base Indenture as and to the extent set forth herein to provide for the
issuance and the terms of the Notes (as defined below).

Section 901(7) of the Base Indenture provides that a
supplemental indenture may be entered into by the Company and the Trustee
without the consent of any Holders (as defined in the Base Indenture) to
establish the form or terms of Securities of any series as permitted by
Sections 201 and 301 of the Base Indenture.

The execution and delivery of this Supplemental
Indenture has been duly authorized by a Board Resolution of the Company.

All conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument in accordance with
its terms have been performed and fulfilled by the parties hereto and the
execution and delivery thereof have been in all respects duly authorized by the
parties hereto.

The Company and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of Holders (as
defined herein) of the 7.625% Senior Notes due 2014 (the “Notes”):

ARTICLE
1.

DEFINITIONS AND INCORPORATION

BY REFERENCE

Section 1.01                                                              Definitions.

For all purposes of the Supplemental Indenture, the
following terms shall have the respective meanings set forth in this Section.

“Additional Notes” means additional notes (other than
the Initial Notes) issued from time to time under this Supplemental Indenture
in accordance with Section 2.05 hereof, as part of the same series as the
Initial Notes.

“Applicable Premium”
means, with respect to any Note on any Redemption Date, the greater of:

(1)                                  1.0%
of the principal amount of such Note; or

(2)                                  the
excess of:

 1
 

(a)                                  the
present value at such Redemption Date of (i) the payment of principal on the
maturity date of the Notes plus (ii) all required interest payments due on the
Note through the maturity thereof (excluding accrued but unpaid interest to the
Redemption Date), computed using a discount rate equal to the Applicable
Treasury Rate as of such Redemption Date plus 50 basis points; over

(b)                                 the
principal amount of the Note.

“Applicable Procedures”
means, with respect to any transfer or exchange of or for beneficial interests
in any Global Note, the rules and procedures of the Depositary that apply to
such transfer or exchange.

“Applicable Treasury Rate”
means, as of any Redemption Date for any series of notes, the yield to maturity
as of such Redemption Date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
business days prior to the Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data))
most nearly equal to the period from the Redemption Date to the maturity date
of the applicable series of notes; provided, however, that if the period from the Redemption Date to the
maturity date of the applicable series of notes is less than one year, the
weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year will be used.

“Base Indenture” has the meaning set forth in the
preamble to this Supplemental Indenture.

“Beneficial Owner”
has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the
Exchange Act.  The terms “Beneficially
Owns” and “Beneficially Owned” have a corresponding meaning.

“Change of Control” means the occurrence of any of the
following:

(1)                                                                                  the direct or indirect sale, transfer,
conveyance or other disposition (other than by way of merger or consolidation),
in one or a series of related transactions, of all or substantially all of the
properties or assets of the Company and its Subsidiaries taken as a whole to
any “person” (as that term is used in Section 13(d) of the Exchange Act, but
excluding any employee benefit plan of the Company, and any person or entity
acting in its capacity as trustee, agent or other fiduciary or administrator of
such plan);

(2)                                                                                  the adoption of a plan relating to the
liquidation or dissolution of the Company;

(3)                                                                                  the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of
which is that any “person” (as defined above) becomes the Beneficial Owner,
directly or indirectly, of more than 50% of the Voting Stock of the Company,
measured by voting power rather than number of shares;

(4)                                                                                  the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors;
or

(5)                                                                                  the Company consolidates with, or merges with
or into, any Person, or any Person consolidates with, or merges with or into,
the Company, in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of the Company is converted into or exchanged for
cash, securities or other property, other than any such transaction where the
Voting

 2
 

Stock of the Company
outstanding immediately prior to such transaction is converted into or
exchanged for Voting Stock (other than Disqualified Stock) of the surviving or
transferee Person constituting a majority of the outstanding shares of such
Voting Stock of such surviving or transferee Person (immediately after giving
effect to such issuance).

“Channelview”
means Reliant Energy Channelview, L.P.

“Commission”
means the U.S. Securities and Exchange Commission.

“Company”  means
Reliant Energy, Inc., and any and all successors thereto.

“Consolidated
Net Tangible Assets” means, as of any date of determination, the
total amount of all assets of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter for which the Company’s financial statements are available, less
the sum of:

(1)                                                                                  the Company’s consolidated current
liabilities as of such quarter end, determined on a consolidated basis in
accordance with GAAP; and

(2)                                                                                  the Company’s consolidated assets that are
properly classified as intangible assets as of such quarter end, determined on
a consolidated basis in accordance with GAAP.

“Continuing Director” means, as of any date of determination,
any member of the Board of Directors of the Company who:

(1)                                                                                  was a member of such Board of Directors on
the date of this Supplemental Indenture; or

(2)                                                                                  was nominated for election or elected to such
Board of Directors with the approval of a majority of the Continuing Directors
who were members of such Board at the time of such nomination or election.

“Credit Agreement”
means the credit agreement, dated as of June 12, 2007, among the Company, as
borrower, the subsidiary guarantors party thereto, Deutsche Bank AG, New York
Branch, as administrative agent, and the lenders party thereto.

“Custodian”
means the Trustee, as custodian with respect to the Notes in global form, or
any successor entity thereto.

“Default”
means any event that is, or with the passage of time or the giving of notice or
both would be, an Event of Default.

“Definitive Note” means a certificated Note registered in the
name of the Holder thereof and issued in accordance with Section 2.04 hereof,
substantially in the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend.

“Description of Notes”
means the section titled “Description of Notes” in the Prospectus Supplement,
dated June 6, 2007, related to the issuance and sale of the Initial Notes.

 3
 

“Disqualified Stock”
means any Capital Stock that, by its terms (or by the terms of any security
into which it is convertible, or for which it is exchangeable, in each case at
the option of the holder of the Capital Stock), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder of the
Capital Stock, in whole or in part, on or prior to the date that is 91 days
after the date on which the Notes mature (other than pursuant to a change of
control provision substantially similar to Section 4.09 hereof).

“Excluded Project Subsidiary” means
any Subsidiary of the Company whose principal purpose is the construction,
acquisition or operation of a project and whose debt is without recourse or
liability to the Company or any of its other Subsidiaries (except (i) recourse
against another Excluded Project Subsidiary, including any direct or indirect
parent entity of any Excluded Project Subsidiary substantially all the assets
of which consist of the equity of one or more Excluded Project Subsidiaries
(ii) recourse against the equity of an Excluded Project Subsidiary pledged by
the Company or any of its Subsidiaries to secure the debt of such Excluded
Project Subsidiary or any Subsidiary of such Excluded Project Subsidiary).

“Existing
Liens” means Liens, on the property or assets of the Company or any
of its Subsidiaries, existing on the date of the supplemental indenture
securing Indebtedness outstanding or committed to be funded on that date
(including, but not limited to, (i) Indebtedness outstanding or committed to be
funded under the Credit Agreement, (ii) PEDFA Bond Indebtedness and (iii)
Indebtedness under the Retail Working Capital Agreement).

“GAAP” means
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
have been approved by a significant segment of the accounting profession, which
are in effect from time to time.

“Global Notes”
means, individually and collectively, each of the Global Notes substantially in
the form of Exhibit A hereto issued in accordance with Section 2.01 hereof.

“Global Note Legend”
means the legend set forth in Section 2.04(f), which is required to be placed
on all Global Notes issued under this Supplemental Indenture.

“Government
Securities” means direct obligations of, or obligations guaranteed
by, the United States of America (including any agency or instrumentality
thereof) for the payment of which obligations or guarantees the full faith and
credit of the United States of America is pledged and which are not callable or
redeemable at the issuer’s option.

“Holder” means a
Person in whose name a Note is registered.

“Indenture” means the Base
Indenture, as supplemented by this Supplemental Indenture, governing the Notes,
in each case, as amended, supplemented or otherwise modified from time to time
in accordance with its respective terms.

“Indirect Participant”
means a Person who holds a beneficial interest in a Global Note through a
Participant.

“Initial Notes”
means the first $575,000,000 aggregate principal amount of Notes issued under
this Supplemental Indenture on the Issue Date.

 4
 

“Issue Date” means June 13, 2007.

“Lien” means, with respect to any property or asset, any
mortgage, deed of trust, deed to secure debt, lien, pledge, hypothecation,
encumbrance, restriction, collateral assignment, charge or security interest
in, on or of such property or asset.

“Notes” has
the meaning assigned to it in the preamble to this Supplemental Indenture.  The Initial Notes and the Additional Notes
shall be treated as a single class for all purposes under this Supplemental
Indenture.  Unless the context otherwise
requires, all references to the Notes shall include the Initial Notes and any
Additional Notes.

“Participant”
means, with respect to the Depositary, a Person who has an account with the
Depositary.

“PEDFA Bond Indebtedness”
means Indebtedness outstanding on the date of the supplemental indenture
incurred by the Company or guaranteed by the Company in tax-exempt industrial
development bond financings, the proceeds of which were used to finance the
development, construction or acquisition of the 520 MW coal facility and related
assets owned by Reliant Energy Seward LLC and located in New Florence, Indiana
County, Pennsylvania.

“Refinancing Liens”  means Liens granted in connection with extending, renewing,
replacing or refinancing in whole or in part any Indebtedness secured by Liens
described in clauses (1) through (4) of Section 4.07 hereof; provided that Refinancing Liens do not (i) extend to
property or assets other than property or assets of the type that were subject
to the original Lien or (ii) secure Indebtedness having a principal amount in
excess of the amount of Indebtedness being extended, renewed, replaced or
refinanced.

“Retail Working Capital
Agreement” means the Working Capital Facility, dated as of September
24, 2006, among RERH Holdings, LLC and its subsidiaries and Merrill Lynch &
Co. Inc., as amended and restated on December 1, 2006.

“Securities Act” means the Securities Act of 1933, as
amended, or any successor statute or statutes thereto.

“Significant Subsidiary”
means any Subsidiary that would be a “significant subsidiary” as defined in
Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities
Act, as such Regulation is in effect on the date of this Supplemental
Indenture; provided that clause (3) of such
definition will be disregarded.

“Stated Maturity”
means, with respect to any installment of interest or principal on any series
of Indebtedness, the date on which the payment of interest or principal was
scheduled to be paid in the documentation governing such Indebtedness as of the
date of this Supplemental Indenture, and will not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.

“Supplemental
Indenture” means this Fourth Supplemental Indenture, dated as of the
Issue Date, between the Company and the Trustee, governing the Notes, as
amended, supplemented or otherwise modified from time to time in accordance with the Base
Indenture and the terms hereof.

“Trust Indenture Act” means the Trust Indenture Act of 1939, as
amended (15 U.S.C. §§ 77aaa-77bbbb).

 5
 

Section 1.02                                                              Other
Definitions.

	
  Term

  	
   

  	
  Defined in

  Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Change of Control Offer”

  	
   

  	
  4.09

  	
   

  
	
  “Change of Control Payment”

  	
   

  	
  4.09

  	
   

  
	
  “Change of Control Payment Date”

  	
   

  	
  4.09

  	
   

  
	
  “Covenant Defeasance”

  	
   

  	
  8.03

  	
   

  
	
  “Event of Default”

  	
   

  	
  6.01

  	
   

  
	
  “Indebtedness”

  	
   

  	
  4.07

  	
   

  
	
  “Legal Defeasance”

  	
   

  	
  8.02

  	
   

  

Section 1.03                                                              Incorporation
by Reference of Trust Indenture Act.

Whenever this Supplemental Indenture refers to a
provision of the Trust Indenture Act, the provision is incorporated by
reference in and made a part of this Supplemental Indenture.

The following Trust Indenture Act terms used in this
Supplemental Indenture have the following meanings:

“indenture securities”
means the Notes;

“indenture security Holder” means a Holder of a Note;

 “indenture trustee” or “institutional trustee” means the Trustee; and

“obligor” on
the Notes means the Company, and any successor obligor upon the Notes.

All other terms used in this Supplemental Indenture
that are defined by the Trust Indenture Act, defined by Trust Indenture Act
reference to another statute or defined by Commission rule under the Trust
Indenture Act have the meanings so assigned to them.  All other capitalized terms used herein and
not otherwise defined shall have the meanings provided in the Base Indenture.

Section 1.04                                                              Rules
of Construction.

Unless the context
otherwise requires:

(1)          a term has the meaning
assigned to it;

(2)          an accounting term not
otherwise defined has the meaning assigned to it in accordance with GAAP;

(3)          “or” is not exclusive;

(4)          words in the singular
include the plural, and in the plural include the singular;

(5)          “will” shall be
interpreted to express a command;

(6)          provisions apply to
successive events and transactions;

 6
 

(7)          references to sections
of or rules under the Securities Act will be deemed to include substitute,
replacement of successor sections or rules adopted by the Commission from time
to time; and

(8)          references to sections of the Indenture refer to sections of this
Supplemental Indenture.

Section 1.05                                                              Relationship with Base
Indenture.

The terms and provisions contained in the Base
Indenture shall constitute, and are hereby expressly made, a part of this
Supplemental Indenture and the Company and the Trustee, by their execution and
delivery of this Supplemental Indenture, expressly agree to such terms and
provisions and to be bound thereby. 
However, to the extent any provision of the Base Indenture conflicts
with the express provisions of this Supplemental Indenture, the provisions of
this Supplemental Indenture shall govern and be controlling.

The Trustee accepts the amendment of the Base
Indenture effected by this Supplemental Indenture and agrees to execute the
trust created by the Base Indenture as hereby amended, but only upon the terms
and conditions set forth in the Indenture, including the terms and provisions
defining and limiting the liabilities and responsibilities of the Trustee in
the performance of the trust created by the Base Indenture, and without
limiting the generality of the foregoing, the Trustee shall not be responsible
in any manner whatsoever for or with respect to any of the recitals or
statements contained herein, all of which recitals or statements are made
solely by the Company, or for or with respect to (1) the validity or
sufficiency of this Supplemental Indenture or any of the terms or provisions
hereof, (2) the proper authorization hereof by the Company, (3) the due
execution hereof by the Company or (4) the consequences (direct or indirect and
whether deliberate or inadvertent) of any amendment herein provided for, and
the Trustee makes no representation with respect to any such matters.

ARTICLE
2.

THE NOTES

Section 2.01                                                              Form
and Dating.

(a)          General.  The Notes
shall be issued in registered global form without interest coupons.  The Notes and the Trustee’s certificate of
authentication shall be substantially in the form of Exhibit A hereto.  The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage.  The Company shall furnish any such notations,
legends or endorsements to the Trustee in writing.  Each Note shall be dated the date of its
authentication.  The Notes shall be in
denominations of $2,000 and integral multiples of $1,000 in excess of $2,000.

The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of the Indenture and the
Company and the Trustee, by their execution and delivery of this Supplemental
Indenture, expressly agree to such terms and provisions and to be bound
thereby.  However, to the extent any
provision of any Note conflicts with the express provisions of the Base
Indenture, the provisions of the Note shall govern and be controlling, and to
the extent any provision of the Note conflicts with the express provisions of
this Supplemental Indenture, the provisions of this Supplemental Indenture
shall govern and be controlling.

(b)         Global Notes.  Notes
issued in global form shall be substantially in the form of Exhibit A attached
hereto (including the Global Note Legend thereon).  Notes issued in definitive form shall be
substantially in the form of Exhibit A attached hereto (but without the Global
Note Legend thereon).

 7
 

Each Global Note shall represent such of the outstanding Notes as will
be specified therein and each shall provide that it represents the aggregate
principal amount of outstanding Notes from time to time as reflected in the
records of the Trustee and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions.  The Trustee’s records shall be noted to
reflect the amount of any increase or decrease in the aggregate principal
amount of outstanding Notes represented thereby, in accordance with
instructions given by the Holder thereof as required by Section 2.04 hereof.

Section 2.02                                                              Execution
and Authentication.

One Officer must sign the Notes for the Company by
manual or facsimile signature.

If an Officer whose signature is on a Note no longer
holds that office at the time a Note is authenticated, the Note will
nevertheless be valid.

A Note will not be valid until authenticated by the
manual signature of the Trustee.  The
signature will be conclusive evidence that the Note has been authenticated
under this Supplemental Indenture.

The Trustee shall, upon receipt of a Company Order,
authenticate Notes for original issue under this Supplemental Indenture,
including any Additional Notes issued pursuant to Section 2.05 hereof.  The aggregate principal amount of Notes
outstanding at any time may not exceed the aggregate principal amount of Notes
authorized for issuance by the Company pursuant to one or more Company Orders,
except as provided in Section 306 of the Base Indenture.

The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Notes.  An authenticating agent may authenticate
Notes whenever the Trustee may do so.  Each
reference in this Supplemental Indenture to authentication by the Trustee
includes authentication by such agent. 
An authenticating agent has the same rights as an Agent to deal with
Holders, the Company or an Affiliate of the Company.

Section 2.03                                                              Holder
Lists.

The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with Trust Indenture Act
§ 312(a).  If the Trustee is not the
Securities Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders and the
Company shall otherwise comply with Trust Indenture Act § 312(a).

Section 2.04                                                              Transfer
and Exchange.

(a)          Transfer and Exchange of Global Notes.  A Global Note may not be transferred as a
whole except by the Depositary to a nominee of the Depositary, by a nominee of
the Depositary to the Depositary or to another nominee of the Depositary, or by
the Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary.  All Global
Notes shall be exchanged by the Company for Definitive Notes if:

(1)          the Company delivers to
the Trustee notice from the Depositary that it is unwilling or unable to
continue to act as Depositary or that it is no longer a clearing agency
registered under

 8
 

the Exchange
Act and, in either case, a successor Depositary is not appointed by the Company
within 120 days after the date of such notice from the Depositary;

(2)          the Company in its sole
discretion determines that the Global Notes (in whole but not in part) should
be exchanged for Definitive Notes and delivers a written notice to such effect
to the Trustee; or

(3)          there has occurred and
is continuing a Default or Event of Default with respect to the Notes.

Upon the occurrence of any of the preceding events in
(1), (2) or (3) above, Definitive Notes shall be issued in such names and in
any approved denominations as the Depositary shall instruct the Trustee.  Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 304 and 306 of the Base
Indenture.  Every Note authenticated and
delivered in exchange for, or in lieu of, a Global Note or any portion thereof,
pursuant to this Section 2.04 hereof or Sections 304 or 306 of the Base
Indenture, shall be authenticated and delivered in the form of, and shall be, a
Global Note.  A Global Note may not be
exchanged for another Note other than as provided in this Section 2.04(a),
however, beneficial interests in a Global Note may be transferred and exchanged
as provided in Section 2.04(b),  (c) and
(d) hereof.

(b)         Transfer and Exchange of Beneficial Interests in the Global Notes.  The transfer and exchange of beneficial
interests in the Global Notes shall be effected through the Depositary, in
accordance with the provisions of this Supplemental Indenture and the
Applicable Procedures.  Transfers of
beneficial interests in the Global Notes also will require compliance with
either subparagraph (1) or (2) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:

(1)          Transfer of
Beneficial Interests in the Same Global Note.  Beneficial interests in any Global Note may
be transferred to Persons who take delivery thereof in the form of a beneficial
interest in a Global Note.  No written
orders or instructions shall be required to be delivered to the Securities
Registrar to effect the transfers described in this Section 2.04(b)(1).

(2)          All Other
Transfers and Exchanges of Beneficial Interests in Global Notes.  In connection with all transfers and
exchanges of beneficial interests that are not subject to Section 2.04(b)(1)
above, the transferor of such beneficial interest must deliver to the
Securities Registrar both:

(A)      a written order from a
Participant or an Indirect Participant given to the Depositary in accordance
with the Applicable Procedures directing the Depositary to credit or cause to
be credited a beneficial interest in another Global Note in an amount equal to
the beneficial interest to be transferred or exchanged; and

(B)        instructions given in
accordance with the Applicable Procedures containing information regarding the
Participant account to be credited with such increase.

Upon satisfaction of all
of the requirements for transfer or exchange of beneficial interests in Global
Notes contained in this Supplemental Indenture and the Notes or otherwise
applicable under the Securities Act, the Trustee shall adjust the principal
amount of the relevant Global Note(s) pursuant to Section 2.04(g) hereof.

 

 9
 

(c)          Transfer or Exchange of Beneficial Interests in Global Notes for
Definitive Notes.

(1)          If
any holder of a beneficial interest in a Global Note proposes to exchange such
beneficial interest for a Definitive Note or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a Definitive
Note, then, upon satisfaction of the conditions set forth in Section 2.04(b)(2)
hereof, the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section 2.04(g)
hereof, and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in the
appropriate principal amount.  Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.04(c)(1) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest requests through instructions to the Securities Registrar from or
through the Depositary and the Participant or Indirect Participant.  The Trustee shall deliver such Definitive
Notes to the Persons in whose names such Notes are so registered.

(d)         Transfer and Exchange of Definitive Notes for Beneficial Interests in
Global Notes.

A Holder of a
Definitive Note may exchange such Note for a beneficial interest in a Global
Note or transfer such Definitive Notes to a Person who takes delivery thereof
in the form of a beneficial interest in a Global Note at any time.  Upon receipt of a request for such an
exchange or transfer, the Trustee shall cancel the applicable Definitive Note
and increase or cause to be increased the aggregate principal amount of one of
the Global Notes.

If any such exchange or
transfer from a Definitive Note to a beneficial interest is effected pursuant
to the previous paragraph at a time when a Global Note has not yet been issued,
the Company shall issue and, upon receipt of a Company Order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Global Notes in
an aggregate principal amount equal to the principal amount of Definitive Notes
so transferred.

A Holder of Definitive
Notes may transfer such Notes to a Person who takes delivery thereof in the
form of a Definitive Note.

(e)          Transfer and Exchange of Definitive Notes for Definitive Notes.  Upon request by a Holder of Definitive Notes
and such Holder’s compliance with the provisions of this Section 2.04(e), the
Securities Registrar shall register the transfer or exchange of Definitive
Notes.  Prior to such registration of
transfer or exchange, the requesting Holder must present or surrender to the
Securities Registrar the Definitive Notes duly endorsed or accompanied by a
written instruction of transfer in form satisfactory to the Securities
Registrar duly executed by such Holder or by its attorney, duly authorized in
writing.  In addition, the requesting
Holder must provide any additional certifications, documents and information,
as applicable, required pursuant to the following provisions of this Section
2.04(e).

(f)            Legends.  A legend in
substantially the following form will appear on the face of all Global Notes
issued under this Supplemental Indenture unless specifically stated otherwise
in the applicable provisions of this Supplemental Indenture.

 “THIS GLOBAL
NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE FOURTH SUPPLEMENTAL INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.04 OF THE FOURTH SUPPLEMENTAL INDENTURE, (2)
THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
2.04(a) OF THE FOURTH SUPPLEMENTAL INDENTURE, (3) THIS GLOBAL NOTE MAY BE
DELIVERED TO THE

 10
 

TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 309 OF
THE BASE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF RELIANT ENERGY, INC.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.  UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

(g)         Cancellation and/or Adjustment of Global Notes.  At such time as all beneficial interests in a
particular Global Note have been exchanged for Definitive Notes or a particular
Global Note has been redeemed, repurchased or canceled in whole and not in
part, each such Global Note shall be returned to or retained and canceled by
the Trustee in accordance with Section 309 of the Base Indenture.  At any time prior to such cancellation, if
any beneficial interest in a Global Note is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Note or for Definitive Notes, the principal amount of Notes
represented by such Global Note will be reduced accordingly and a notation will
be made on the records maintained by the Trustee or by the Depositary at the
direction of the Trustee to reflect such reduction; and if the beneficial
interest is being exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Note, such
other Global Note will be increased accordingly and a notation will be made on
the records maintained by the Trustee or by the Depositary at the direction of
the Trustee to reflect such increase.

(h)         General Provisions Relating to Transfers and Exchanges.

(1)          To permit registrations
of transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Global Notes and Definitive Notes upon receipt of a Company Order
in accordance with Section 2.02 hereof or at the Securities Registrar’s
request.

(2)          No service charge shall
be made to a Holder of a Global Note or to a Holder of a Definitive Note for
any registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections
3.06, 4.09 and 9.05 hereof and Section 304 of the Base Indenture).

(3)          The Securities Registrar
shall not be required to register the transfer of or exchange any Note selected
for redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part.

 11
 

(4)          All Global Notes and
Definitive Notes issued upon any registration of transfer or exchange of Global
Notes or Definitive Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Supplemental Indenture, as the Global Notes or Definitive Notes surrendered
upon such registration of transfer or exchange.

(5)          The Company shall not be
required:

(A)      to issue, to register the
transfer of or to exchange any Notes during a period beginning at the opening
of business 15 days before the day of any selection of Notes for redemption
under Section 3.02 hereof and ending at the close of business on the day of
selection;

(B)        to register the transfer
of or to exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part; or

(C)        to register the transfer
of or to exchange a Note between a record date and the next succeeding interest
payment date.

(6)          Prior to due presentment
for the registration of a transfer of any Note, the Trustee, any Agent and the
Company may deem and treat the Person in whose name any Note is registered as
the absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and none of
the Trustee, any Agent or the Company shall be affected by notice to the
contrary.

(7)          The Trustee shall
authenticate Global Notes and Definitive Notes in accordance with the
provisions of Section 2.02 hereof.

(8)          All certifications,
certificates and Opinions of Counsel required to be submitted to the Securities
Registrar pursuant to this Section 2.04 to effect a registration of transfer or
exchange may be submitted by facsimile.

Section 2.05                                                              Issuance
of Additional Notes.

The Company shall be entitled, upon delivery of an
Officer’s Certificate, Opinion of Counsel and Company Order to issue Additional
Notes under this Supplemental Indenture which shall have identical terms as the
Initial Notes issued on the Issue Date, other than with respect to the date of
issuance and issue price.  The Initial
Notes issued on the Issue Date and any Additional Notes issued shall be treated
as a single class for all purposes under this Supplemental Indenture.

With respect to any Additional Notes, the Company
shall set forth in a resolution of its Board of Directors and an Officer’s
Certificate, a copy of each which shall be delivered to the Trustee, the
following information:

(a)          the aggregate principal
amount of such Additional Notes to be authenticated and delivered pursuant to
this Supplemental Indenture; and

(b)         the issue price, the
issue date and the CUSIP number of such Additional Notes.

 12
 

ARTICLE
3.

REDEMPTION AND PREPAYMENT

Section 3.01                                                              Notices
to Trustee.

If the Company elects to redeem Notes pursuant to the
optional redemption provisions of Section 3.07 hereof, it must furnish to the
Trustee, at least 30 days (45 days in the case of a partial redemption) but not
more than 60 days before a Redemption Date, an Officer’s Certificate setting
forth:

(1)          the clause of this
Supplemental Indenture pursuant to which the redemption shall occur;

(2)          the Redemption Date;

(3)          the principal amount of
Notes to be redeemed; and

(4)          the redemption price.

Section 3.02                                                              Selection
of Notes to Be Redeemed or Purchased.

If less than all of the Notes are to be redeemed or purchased at any
time, the Trustee shall select Notes for redemption or purchase on a pro rata basis unless otherwise required by law or
applicable stock exchange requirements, if any.

In the event of partial redemption by lot, the
particular Notes to be redeemed or purchased shall be selected, unless
otherwise provided herein, not less than 30 nor more than 60 days prior to the
redemption by the Trustee from the outstanding Notes not previously called for
redemption.

The Trustee shall promptly notify the Company in
writing of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to be
redeemed.  Notes and portions of Notes
selected shall be in amounts of $2,000 or whole multiples of $1,000 in excess
of $2,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed.  Except as
provided in the preceding sentence, provisions of this Supplemental Indenture
that apply to Notes called for redemption also apply to portions of Notes
called for redemption.

No Notes of $2,000 or less shall be redeemed in
part.  Notices of redemption shall be
mailed by first class mail at least 30 but not more than 60 days before the
Redemption Date to each Holder to be redeemed at its registered address, except
that redemption notices may be mailed more than 60 days prior to a Redemption
Date if the notice is issued in connection with a defeasance of the Notes or a
satisfaction and discharge of this Supplemental Indenture.  Notices of redemption may not be conditional.

If any Note is to be redeemed in part only, the notice
of redemption that relates to that Note shall state the portion of the principal
amount of that Note that is to be redeemed. 
A new Note in principal amount equal to the unredeemed portion of the
original Note shall be issued in the name of the Holder of the original Note
upon cancellation of the original Note. 
Notes called for redemption become due on the date fixed for
redemption.  On and after the Redemption
Date, interest ceases to accrue on Notes or portions of them called for
redemption.

 13
 

Section 3.03                                                              Notice
of Redemption.

At least 30 days but not
more than 60 days before a Redemption Date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address, except that redemption
notices may be mailed more than 60 days prior to a Redemption Date if the
notice is issued in connection with a defeasance of the Notes or a satisfaction
and discharge of this Supplemental Indenture pursuant to Article 8 or 10 of
this Supplemental Indenture.  Notices of
redemption may not be conditional.

The notice will identify the Notes to be redeemed and
will state:

(1)          the Redemption Date;

(2)          the redemption price;

(3)          if any Note is being
redeemed in part, the portion of the principal amount of such Note to be
redeemed and that, after the Redemption Date upon surrender of such Note, a new
Note or Notes in principal amount equal to the unredeemed portion will be
issued upon cancellation of the original Note;

(4)          the name and address of
the Paying Agent;

(5)          that Notes called for
redemption must be surrendered to the Paying Agent to collect the redemption
price;

(6)          that, unless the Company
defaults in making such redemption payment, interest on Notes called for
redemption ceases to accrue on and after the Redemption Date;

(7)          the paragraph of the
Notes and/or section of this Supplemental Indenture pursuant to which the Notes
called for redemption are being redeemed; and

(8)          that no representation
is made as to the correctness or accuracy of the CUSIP number, if any, listed
in such notice or printed on the Notes.

At the Company’s request, the Trustee shall give the
notice of redemption in the Company’s name and at its expense; provided, however, that the Company has delivered to the
Trustee, at least 45 days prior to the Redemption Date (or such shorter period
as the Trustee in its sole discretion may allow), an Officer’s Certificate
requesting that the Trustee give such notice and setting forth the information
to be stated in such notice as provided in the preceding paragraph.

Section 3.04                                                              Effect
of Notice of Redemption.

Once notice of redemption is mailed in accordance with
Section 3.03 hereof, Notes called for redemption become irrevocably due and
payable on the Redemption Date at the redemption price.  A notice of redemption may not be
conditional.

Section 3.05                                                              Deposit
of Redemption or Purchase Price.

One Business Day prior to the redemption or Purchase
Date, the Company shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption or purchase price of, accrued interest, and
premium, if any, on all Notes to be redeemed or purchased on that date.  Promptly after the

 14
 

Company’s written request, the Trustee or the Paying
Agent shall promptly return to the Company any money deposited with the Trustee
or the Paying Agent by the Company in excess of the amounts necessary to pay
the redemption or purchase price of, accrued interest, and premium, if any, on,
all Notes to be redeemed or purchased.

If the Company complies with the provisions of the
preceding paragraph, on and after the redemption or Purchase Date, interest
will cease to accrue on the Notes or the portions of Notes called for
redemption or purchase.  If a Note is
redeemed or purchased on or after an interest record date but on or prior to
the related interest payment date, then any accrued and unpaid interest shall
be paid to the Person in whose name such Note was registered at the close of
business on such record date.  If any
Note called for redemption or purchase is not so paid upon surrender for
redemption or purchase because of the failure of the Company to comply with the
preceding paragraph, interest shall be paid on the unpaid principal, from the
redemption or purchase date until such principal is paid, and to the extent
lawful on any interest not paid on such unpaid principal, in each case at the
rate provided in the Notes and in Section 4.01 hereof.

Section 3.06                                                              Notes
Redeemed or Purchased in Part.

Upon surrender of a Note that is redeemed or purchased
in part, the Company shall issue and, upon receipt of a Company Order, the
Trustee shall authenticate for the Holder at the expense of the Company a new
Note equal in principal amount to the unredeemed or unpurchased portion of the
Note surrendered.

Section 3.07                                                              Optional
Redemption.

(a)                                  The
Company may on any one or more occasions redeem all or a part of the Notes,
upon not less than 30 nor more than 60 days’ prior notice, at a redemption
price equal to 100% of the principal amount of the Notes redeemed plus the
Applicable Premium as of, and accrued and unpaid interest if any, to the
Redemption Date, subject to the rights of Holders on the relevant record date
to receive interest due on the relevant interest payment date.

(b)         Except
pursuant to clause (a) above, the Notes are not redeemable at the Company’s
option prior to their maturity.  The
Company is not prohibited, however, from acquiring Notes in market transactions
by means other than a redemption, whether pursuant to a tender offer or
otherwise.

(c)          Any
redemption pursuant to this Section 3.07 shall be made pursuant to the
provisions of Section 3.01 through 3.06
hereof.

Section 3.08                                                              Mandatory Redemption.

The Company is not required
to make mandatory redemption or sinking fund payments with respect to
the Notes.

ARTICLE
4.

COVENANTS

Section 4.01                                                              Payment
of Notes.

The Company shall pay or cause to be paid the
principal of, premium, if any, and interest on the Notes on the dates and in
the manner provided in the Notes. 
Principal, premium, if any, and interest will be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary
thereof,

 15
 

holds as of 10:00 a.m. Eastern Time on the due date
money deposited by the Company in immediately available funds and designated
for and sufficient to pay all principal, premium, if any, and interest then due.

Section 4.02                                                              Maintenance
of Office or Agency.

The Company shall maintain in the Borough of
Manhattan, the City of New York, an office or agency (which may be an office of
the Trustee or an affiliate of the Trustee or Securities Registrar) where Notes
may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Company in respect of the Notes and the
Indenture may be served.  The Company
shall give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. 
If at any time the Company fails to maintain any such required office or
agency or fails to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.

The Company may also from time to time designate one
or more other offices or agencies where the Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such
designation or rescission will in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, the
City of New York for such purposes.  The
Company shall give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.

The Company hereby designates the Corporate Trust
Office of the Trustee as one such office or agency of the Company in accordance
with Section 1002 of the Base Indenture.

Section 4.03                                                              Reports.

Whether or not required by the Commission’s rules and regulations, so
long as any Notes are outstanding, the Company shall furnish to Holders or
cause the Trustee to furnish to Holders:

(1)          within 90 days of the
end of each fiscal year and within 45 days of the end of each fiscal quarter,
all annual and quarterly reports that would be required to be filed with the
Commission on Forms 10-K and 10-Q if the Company were required to file such
reports; and

(2)          within the time periods
specified in the Commission’s rules and regulations that would be applicable if
the Company were subject to such rules and regulations, all current reports
that would be required to be filed with the Commission on Form 8-K if the
Company were required to file such reports.

All such reports shall be prepared, within the time
periods specified above, in all material respects in accordance with all of the
rules and regulations applicable to such reports.  Each annual report on Form 10-K will include
a report on the Company’s consolidated financial statements by the Company’s
independent registered public accounting firm. 
In addition, the Company shall file a copy of each of the reports
referred to in clauses (1) and (2) above with the Commission for public
availability within the time periods specified in clauses (1) and (2) above
(unless the Commission will not accept such a filing).  To the extent such filings are made, the
reports shall be deemed to be furnished to the Trustee and Holders on the date
filed.

If the Company is no longer subject to the periodic
reporting requirements of the Exchange Act for any reason, the Company shall
nevertheless continue filing the reports specified in this Section 4.03 with
the Commission within the time periods specified above unless the Commission
will not accept such

 16
 

a filing.  The
Company agrees that it shall not take any action for the purpose of causing the
Commission not to accept any such filings. 
If, notwithstanding the foregoing, the Commission will not accept the
Company’s filings for any reason, the Company shall post the reports referred
to in this Section 4.03 on its website within the time periods specified in
clauses (1) and (2) above.

Section 4.04                                                              Compliance
Certificate.

(a)          The
Company shall deliver to the Trustee, within 90 days after the end of each
fiscal year, an Officer’s Certificate stating that a review of the activities
of the Company and its Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing Officers with a view to determining
whether the Company has kept, observed, performed and fulfilled its obligations
under the Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in the
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of the Indenture (or, if a Default or Event of
Default has occurred, describing all such Defaults or Events of Default of
which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.  The Company’s fiscal year ends December 31st.

(b)         So long as
not contrary to the then current recommendations of the American Institute of
Certified Public Accountants, the year-end financial statements delivered
pursuant to Section 4.03 above shall be accompanied by a written statement of
the Company’s independent public accountants (who shall be a firm of
established national reputation) that in making the examination necessary for
certification of such financial statements, nothing has come to their attention
that would lead them to believe that the Company has violated any provisions of
Article 4 or Article 5 hereof in so far as such provisions relate to financial
and accounting matters or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.

(c)          So long as
any of the Notes are outstanding, the Company shall deliver to the Trustee,
forthwith upon any Officer becoming aware of any Default or Event of Default,
an Officer’s Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.

Section 4.05                                                              Taxes.

The Company shall pay,
and shall cause each of its Subsidiaries to pay, prior to delinquency, all
material taxes, assessments, and governmental levies except such as are
contested in good faith and by appropriate proceedings or where the failure to
effect such payment is not adverse in any material respect to Holders.

Section 4.06                                                              Stay,
Extension and Usury Laws.

The Company covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of the Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it shall not, by
resort

 17

to any such law, hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.

Section 4.07                                                              Liens.

(a)  The Company
will not, and will not permit any of its Subsidiaries to, create or permit to
exist any Lien upon any property or assets at any time owned by the Company or
any of its Subsidiaries to secure any indebtedness for money borrowed (which in
no event shall include any capital leases or operating leases) that is
incurred, issued, assumed or guaranteed by the Company or any of its
Subsidiaries (“Indebtedness”), without providing
for the Notes to be equally and ratably secured with (or prior to) any and all
such Indebtedness and any other Indebtedness similarly entitled to be equally
and ratably secured, for so long as such Indebtedness is so secured; provided, however, that
the provisions of this Section 4.07(a) 
will not apply to, or prevent the creation or existence of:

(1) Existing Liens;

(2)
purchase money Liens securing Indebtedness having a principal amount that does
not exceed the cost or value of the purchased property;

(3) Liens in favor of the Company or its Subsidiaries;

(4)
other Liens securing Indebtedness having an aggregate principal amount,
measured as of the date of creation of any such Lien and the date of incurrence
of any such Indebtedness, not to exceed 15% of the Company’s Consolidated Net
Tangible Assets; and

(5) Refinancing Liens.

(b)  If the
Company or any of its Subsidiaries proposes to create or permit to exist a Lien
on any property or assets at any time owned by the Company or any of its
Subsidiaries to secure any Indebtedness, other than as permitted by Section
4.07(a)(1) through 4.07(a)(5), the Company will give prior written notice
thereof to the Trustee, who will forward such notice to Holders, and the
Company will further agree, prior to or simultaneously with the creation of
such Lien, effectively to secure all the Notes equally and ratably with (or prior
to) such other Indebtedness for so long as such other Indebtedness is so
secured.

Section 4.08                                                              Corporate
Existence.

Subject to Article 5
hereof, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect:

(1)          its corporate existence,
and the corporate, partnership or other existence of each of its Subsidiaries,
in accordance with the respective organizational documents (as the same may be
amended from time to time) of the Company or any such Subsidiary; and

(2)          the rights (charter and
statutory), licenses and franchises of the Company and its Subsidiaries;

provided, however,
that the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Subsidiaries, if (a) the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the

 18
 

Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to Holders and (b) if a Subsidiary is to be dissolved, such
Subsidiary has no assets.

Section 4.09                                                              Offer
to Repurchase Upon Change of Control.

(a)          Upon the
occurrence of a Change of Control, each Holder shall have the right to require
the Company to repurchase all or any part (equal to $2,000 or an integral
multiple of $1,000 in excess of $2,000) of such Holder’s Notes pursuant to an
offer (a “Change of
Control Offer”) to
each Holder on the terms set forth in this Section 4.09.  In such Change of Control Offer, the Company
shall offer to each Holder a  payment in
cash (the “Change of
Control Payment”)
equal to 101% of the aggregate principal amount of Notes repurchased from such
Holder plus accrued and unpaid interest on the Notes repurchased, if any, to
the date of purchase, subject to the rights of Holders on the relevant record
date to receive interest due on the relevant interest payment date.  Within 30 days following any Change of
Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and stating:

(1)          that the Change of
Control Offer is being made pursuant to this Section 4.09 and that all Notes
tendered will be accepted for payment;

(2)          the purchase price and
the purchase date, which date will be no earlier than 30 days and no later than
60 days from the date such notice is mailed (the “Change of Control Payment Date”);

(3)          that any Note not
tendered will continue to accrue interest;

(4)          that, unless the Company
defaults in the payment of the Change of Control Payment, all Notes accepted
for payment pursuant to the Change of Control Offer will cease to accrue
interest after the Change of Control Payment Date;

(5)          that Holders electing to
have any Notes purchased pursuant to a Change of Control Offer shall be
required to surrender the Notes, with the form entitled “Option of Holder to
Elect Purchase” on the reverse of the Notes completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;

(6)          that Holders will be
entitled to withdraw their election if the Paying Agent receives, not later
than the close of business on the second Business Day preceding the Change of
Control Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes delivered
for purchase, and a statement that such Holder is withdrawing his election to
have the Notes purchased; and

(7)          that Holders whose Notes
are being purchased only in part will be issued new Notes equal in principal
amount to the unpurchased portion of the Notes surrendered, which unpurchased
portion must be equal to $2,000 in principal amount or an integral multiple of
$1,000 in excess of $2,000.

The Company shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable in connection
with the repurchase of the Notes as a result of a Change in Control.  To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section
4.09, the

 19
 

Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under this Section 4.09 by virtue of such compliance.

(b)         On the
Change of Control Payment Date, the Company shall, to the extent lawful:

(1)          accept for payment all
Notes or portions of Notes properly tendered pursuant to the Change of Control
Offer;

(2)          deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions of Notes properly tendered; and

(3)          deliver or cause to be
delivered to the Trustee the Notes properly accepted together with an Officer’s
Certificate stating the aggregate principal amount of Notes or portions of
Notes being purchased by the Company.

The Paying Agent shall promptly mail to each Holder
properly tendered the Change of Control Payment for such Notes, and the Trustee
shall promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered,
if any; provided that each new Note shall be in
a principal amount of $2,000 or an integral multiple of $1,000 in excess
thereof.  The Company shall publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.

(c)          The provisions described in Sections 4.09 (a)
and (b) shall apply whether or not other provisions of this Supplemental
Indenture are applicable.  Except as
described in Sections 4.09 (a) and (b) hereof, Holders shall not be permitted
to require that the Company repurchase or redeem the Notes in the event of a
takeover, recapitalization or similar transaction.

(d)         Notwithstanding anything to the contrary in
this Section 4.09, the Company shall not be required to make a Change of Control
Offer upon a Change of Control if (1) a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.09 hereof and purchases all Notes
properly tendered and not withdrawn under the Change of Control Offer, or (2)
notice of redemption has been given pursuant to Section 3.07 hereof, unless and
until there is a default in payment of the applicable redemption price.  A Change of Control Offer may be made in
advance of a Change of Control, with the obligation to pay and the timing of
payment conditioned upon the consummation of the Change of Control, if a
definitive agreement to effect a Change of Control is in place at the time of
the Change of Control Offer.

Section 4.10                                                              Payment
for Consents

The Company shall not, directly or indirectly, pay or
cause to be paid any monetary consideration to or for the benefit of any Holder
for or as an inducement to any consent under or waiver or amendment of any of
the terms or provisions of the Indenture or the Notes unless such consideration
is offered to be paid and is paid to all Holders that consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.

 20
 

ARTICLE
5.

SUCCESSORS

Section 5.01                                                              Merger, Consolidation, or
Sale of Assets.

The
Company shall not, directly or indirectly: (1) consolidate or merge with or
into another Person (whether or not the Company is the surviving corporation);
or (2) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company and its
Subsidiaries taken as a whole, in one or more related transactions, to another
Person; unless:

(1)          either:

(A)      the Company is the surviving
corporation; or

(B)        the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, conveyance or other disposition has been
made is a corporation, partnership or limited liability company organized or
existing under the laws of the United States, any state of the United States or
the District of Columbia; provided that
if the Person is a partnership or limited liability company, then a corporation
wholly-owned by such Person organized or existing under the laws of the United
States, any state of the United States or the District of Columbia that does
not and will not have any material assets or operations shall become a
co-issuer of the Notes pursuant to a supplemental indenture duly and validly
executed by the Trustee; and

(2)          the Person formed by or
surviving any such consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, conveyance or other
disposition has been made assumes all the obligations of the Company under the
Notes and the Indenture pursuant to supplemental indentures or other documents
and agreements reasonably satisfactory to the Trustee.

In addition, the Company shall not, directly or
indirectly, lease all or substantially all of its properties or assets, in one
or more related transactions, to any other Person.

This Section 5.01 shall not apply to:

(1)                a merger of the Company with an Affiliate
solely for the purpose of reincorporating the Company in another jurisdiction
or forming a direct holding company of the Company; or

(2)                any consolidation or merger, or any sale,
assignment, transfer, conveyance, lease or other disposition of assets between
or among the Company and its Subsidiaries.

Section 5.02                                                              Successor
Corporation Substituted.

Upon any consolidation or merger, or any sale,
assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole in a transaction that is subject to, and that complies with the
provisions of, Section 5.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such
sale, assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, lease, conveyance or

 21
 

other disposition, the provisions of the Indenture
referring to the “Company” shall refer instead to the successor corporation and
not to the Company), and may exercise every right and power of the Company
under the Indenture with the same effect as if such successor Person had been
named as the Company herein; provided, however,
that the predecessor Company shall not be relieved from the obligation to pay
the principal of, interest, premium on the Notes except in the case of a sale
of all of the Company’s assets in a transaction that is subject to, and that
complies with the provisions of, Section 5.01 hereof.

ARTICLE
6.

DEFAULTS AND REMEDIES

Section 6.01                                                              Events of Default.

Each
of the following is an “Event of Default”:

(1)                                  default for 30 days in the payment when due
of interest on the Notes;

(2)                                  default in payment when due of the principal
of, or premium, if any, on the Notes;

(3)                                  failure by the Company or any of its
Subsidiaries for 90 days after notice from the Trustee or Holders of at least
25% in aggregate principal amount of the outstanding Notes to comply with any
of the other agreements in this Supplemental Indenture or any security
documents required by this Supplemental Indenture;

(4)                                  the acceleration of the maturity of any
Indebtedness for money borrowed (other than the Notes) of the Company or any of
its Significant Subsidiaries (other than an Excluded Project Subsidiary or
Channelview and its Subsidiaries) having an aggregate principal amount
outstanding in excess of 5% of the Company’s Consolidated Net Tangible Assets,
if such acceleration is not rescinded or annulled, or such indebtedness shall
not have been discharged, within 15 days after the date of such acceleration;

(5)                                  failure
by the Company or any of its Significant Subsidiaries to pay final and
non-appealable judgments aggregating in excess of 5% of the Company’s
Consolidated Net Tangible Assets, which judgments are not covered by
indemnities or third-party insurance, which judgments are not paid, discharged,
vacated or stayed for a period of 90 days;

(6)                                  the
Company pursuant to or within the meaning of Bankruptcy Law:

(A)                              commences
a voluntary case,

(B)                                consents
to the entry of an order for relief against it in an involuntary case,

(C)                                consents
to the appointment of a custodian of it or for all or substantially all of its
property,

(D)                               makes
a general assignment for the benefit of its creditors, or

(E)                                 generally
is not paying its debts as they become due; or

 22
 

(7)          a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that:

(A)                              is
for relief against the Company in an involuntary case;

(B)                                appoints
a custodian of the Company or for all or substantially all of the property of
the Company; or

(C)                                orders
the liquidation of the Company;

and the order or decree remains unstayed and in effect
for 60 consecutive days.

Section 6.02                                                              Acceleration.

In the case of an Event of
Default specified in Section 6.01(6) or (7) hereof, all outstanding Notes will
become due and payable immediately without further action or notice.  If any other Event of Default occurs and is
continuing, the Trustee or Holders of at least 25% in principal amount of the
then outstanding Notes may declare all of the Notes to be due and payable
immediately.  Holders of a majority in
aggregate principal amount of the then outstanding Notes by written notice to
the Trustee may on behalf of all Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived.

Section 6.03                                                              Waiver
of Past Defaults.

Holders of a majority in aggregate principal amount of
the then outstanding Notes by written notice to the Trustee may on behalf of
the Holders of all the Notes waive any existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase); provided,
however, that Holders of a majority in aggregate principal amount of
the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such
acceleration.  Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of the Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

Section 6.04                                                              Collection
Suit by Trustee.

If an Event of Default specified in Section 6.01(1) or
(2) occurs and is continuing, the Trustee is authorized to recover judgment in
its own name and as trustee of an express trust against the Company for the
whole amount of principal of, premium, if any, and interest remaining unpaid on
the Notes and interest on overdue principal and, to the extent lawful, interest
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.

Section 6.05                                                              Priorities.

If the Trustee collects any money pursuant to this
Article 6, it shall pay out the money in the following order:

 23
 

First:                                     to
the Trustee, its agents and attorneys for amounts due under Section 7.01 hereof
and Section 607 of the Base Indenture, including payment of all compensation,
expenses and liabilities incurred, and all advances made, by the Trustee and
the costs and expenses of collection;

Second:                       to Holders
for amounts due and unpaid on the Notes for principal, premium, if any, and
interest, ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium, if any, and
interest, respectively; and

Third:                                 to
the Company or to such party as a court of competent jurisdiction shall direct.

The Trustee may fix a record date and payment date for
any payment to Holders pursuant to this Section 6.05.

ARTICLE
7.

TRUSTEE’S COMPENSATION AND INDEMNITY

Section 7.01                                                              Compensation
and Indemnity.

(a)          The
Company shall pay to the Trustee from time to time reasonable compensation for
its acceptance of this Supplemental Indenture and services hereunder.  The Trustee’s compensation will not be
limited by any law on compensation of a trustee of an express trust.  The Company shall reimburse the Trustee
promptly upon request for all reasonable disbursements, advances and expenses
incurred or made by it in addition to the compensation for its services.  Such expenses will include the reasonable
compensation, disbursements and expenses of the Trustee’s agents and counsel.

(b)         The Company
shall indemnify the Trustee against any and all losses, liabilities or expenses
incurred by it arising out of or in connection with the acceptance or administration
of its duties under this Supplemental Indenture and/or the Notes including the
costs and expenses of enforcing this Supplemental  Indenture and/or the Notes against the
Company (including this Section 7.01) and defending itself against any claim
(whether asserted by the Company or any Holder or any other Person) or
liability in connection with the exercise or performance of any of its powers
or duties hereunder, except to the extent any such loss, liability or expense
may be attributable to its negligence or bad faith or willful misconduct.  The Trustee shall notify the Company promptly
of any claim for which it may seek indemnity. 
Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder. 
The Company shall defend the claim and the Trustee shall cooperate in
the defense.  The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel.  The Company shall not have
to pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.

(c)          The
obligations of the Company under this Section 7.01 will survive the
satisfaction and discharge of this Supplemental Indenture.

(d)         To secure
the Company’s payment obligations in this Section 7.01(d), the Trustee will
have a Lien prior to the Notes on all money or property held or collected by
the Trustee, except that held in trust to pay principal and interest on
particular Notes.  Such Lien shall
survive the satisfaction and discharge of this Supplemental Indenture.

(e)          When the
Trustee incurs expenses or renders services after an Event of Default specified
in Section 6.01(6) and (7) hereof occurs, the expenses and the compensation for
the services (including the

 24
 

fees and expenses of its agents and counsel) are intended to constitute
expenses of administration under any Bankruptcy Law.

(f)            The
Trustee shall comply with the provisions of Trust Indenture Act
§ 313(b)(2) to the extent applicable.

(g)         The Company’s
obligations under this Section 7.01 shall survive the resignation or removal of
the Trustee, any termination of this Supplemental Indenture, including any
termination or rejection of this Supplemental Indenture in any insolvency or
similar proceeding and the repayment of all the Notes.

ARTICLE
8.

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01                                                              Option
to Effect Legal Defeasance or Covenant Defeasance.

The Company may, at the
option of its Board of Directors evidenced by a resolution set forth in an
Officer’s Certificate, at any time, elect to have either Section 8.02 or 8.03
hereof be applied to all outstanding Notes upon compliance with the conditions
set forth below in this Article 8.

Section 8.02                                                              Legal
Defeasance and Discharge.

Upon the Company’s exercise under Section 8.01 hereof
of the option applicable to this Section 8.02, the Company shall, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed
to have been discharged from their obligations with respect to all outstanding
Notes on the date the conditions set forth in Section 8.04 hereof are satisfied
(hereinafter, “Legal Defeasance”).  For this purpose, Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which will thereafter be deemed to be “outstanding”
only for the purposes of Section 8.05 hereof and the other Sections of the
Indenture referred to in clauses (1) and (2) below, and to have satisfied all
their other obligations under such Notes and this Supplemental Indenture and,
to the extent applicable, the Base Indenture (and the Trustee, on demand of and
at the expense of the Company, shall execute proper instruments acknowledging
the same), except for the following provisions which will survive until
otherwise terminated or discharged hereunder:

(1)          the rights of Holders of
the then outstanding Notes to receive payments in respect of the principal of,
or interest or premium, if any, and on such Notes when such payments are due
from the trust referred to in Section 8.04 hereof;

(2)          the Company’s
obligations with respect to such Notes under Article 2 and Section 4.02 hereof;

(3)          the rights, powers,
trusts, duties and immunities of the Trustee hereunder and under the Base
Indenture, and the Company’s obligations in connection therewith; and

(4)          this Article 8.

Subject to compliance with this Article 8, the Company
may exercise its option under this Section 8.02 notwithstanding the prior
exercise of its option under Section 8.03 hereof.

 25
 

Section 8.03                                                              Covenant
Defeasance.

Upon the Company’s exercise under Section 8.01 hereof
of the option applicable to this Section 8.03, the Company shall, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from each of their obligations under Sections 4.07 and 4.09 hereof
with respect to the outstanding Notes on and after the date the conditions set
forth in Section 8.04 hereof are satisfied (hereinafter, “Covenant Defeasance”), and the Notes will
thereafter be deemed not “outstanding” for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but will continue to be deemed “outstanding”
for all other purposes hereunder (it being understood that such Notes will not
be deemed outstanding for accounting purposes). 
For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply will not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of the Indenture and such
Notes shall be unaffected thereby.  In
addition, upon the Company’s exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, subject to the satisfaction of the conditions
set forth in Section 8.04 hereof, Sections 6.01(3) and 6.01(4) hereof shall not
constitute Events of Default.

Section 8.04                                                              Conditions
to Legal or Covenant Defeasance.

(a)          In order to exercise either Legal Defeasance
or Covenant Defeasance under either Section 8.02 or 8.03 hereof:

(1)                                  the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of Holders, cash in U.S. dollars,
non-callable Government Securities, or a combination of cash in U.S. dollars
and non-callable Government Securities, in amounts as will be sufficient, in
the opinion of a nationally recognized investment bank, appraisal firm or firm
of independent public accountants to pay the principal of, or interest and
premium on the Notes that are then outstanding on the Stated Maturity or on the
applicable Redemption Date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular Redemption
Date;

(2)                                  in the case of Legal Defeasance, the Company
must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the
Trustee confirming that (a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the date of
this Supplemental Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel will confirm that, Holders of the then outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;

(3)                                  in the case of Covenant Defeasance, the
Company must deliver to the Trustee an Opinion of Counsel reasonably acceptable
to the Trustee confirming that the holders of the Notes that are then
outstanding will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as would
have been the case if such Covenant Defeasance had not occurred;

 26
 

(4)                                  no Default or Event of Default shall have
occurred and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to such
deposit);

(5)                                  such Legal Defeasance or Covenant Defeasance
may not result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than this Supplemental Indenture) to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound;

(6)                                  the Company must deliver to the Trustee an
Officer’s Certificate stating that the deposit was not made by the Company with
the intent of preferring Holders over the other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company; and

(7)          the Company must deliver to the Trustee an Officer’s Certificate and an
Opinion of Counsel, each stating that all conditions precedent relating to the
Legal Defeasance or the Covenant Defeasance have been complied with.

(b)         Upon the
occurrence of a Legal Defeasance or a Covenant Defeasance, the Trustee shall
send written notice of such Legal Defeasance or Covenant Defeasance to the
Company.

Section 8.05                                                              Deposited
Money and Government Securities to be Held in Trust; Other Miscellaneous
Provisions.

Subject to Section 8.06 hereof, all money and
non-callable Government Securities (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee, collectively for purposes of
this Section 8.05, the “Trustee”)
pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be
held in trust and applied by the Trustee, in accordance with the provisions of
such Notes and the Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as Paying Agent) as the Trustee may
determine, to Holders of such Notes of all sums due and to become due thereon
in respect of principal, premium, if any, and interest, but such money need not
be segregated from other funds except to the extent required by law.

The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against the cash or
non-callable Government Securities deposited pursuant to Section 8.04 hereof or
the principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account the Holders.

Notwithstanding anything in this Article 8 to the
contrary, the Trustee shall deliver or pay to the Company from time to time
upon the written request of the Company any money or non-callable Government
Securities held by it as provided in Section 8.04 hereof which, in the opinion
of a nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 8.04(1) hereof), are in excess of the amount
thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.

Section 8.06                                                              Repayment
to Company.

Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of the principal
of, premium, if any, or interest on any Note and remaining unclaimed for two
years after such principal, premium, if any, or interest has become due and
payable

 27
 

shall be paid to the Company on its written request or
(if then held by the Company) will be discharged from such trust; and the
Holder of such Note will thereafter be permitted to look only to the Company
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, will thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in the
New York Times and The Wall Street Journal (national edition), notice that such
money remains unclaimed and that, after a date specified therein, which will
not be less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining shall be repaid to the Company.

Section 8.07                                                              Reinstatement.

If the Trustee or Paying Agent is unable to apply any
United States dollars or non-callable Government Securities in accordance with
Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company’s obligations under the
Indenture and the Notes will be revived and reinstated as though no deposit had
occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee
or Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however,
that, if the Company makes any payment of principal of, premium, if any, or
interest on any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of Holders to receive such payment
from the money held by the Trustee or Paying Agent.

ARTICLE
9.

AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01                                                              Without
Consent of Holders.

Notwithstanding Article Nine of the Base Indenture and
Section 9.02 of this Supplemental Indenture, the Company and the Trustee may
amend or supplement this Supplemental Indenture or the Notes without the consent of any
Holder:

(1)                                  to cure any ambiguity, defect or
inconsistency;

(2)                                  to provide for uncertificated Notes in
addition to or in place of certificated Notes or to alter the provisions of
Article 2 hereof (including the related definitions) in a manner that does not
adversely affect any Holder;

(3)                                  to provide for the assumption of the Company’s
obligations to Holders by a successor to the Company pursuant to Article 5
hereof;

(4)                                  to make any change that would provide any
additional rights or benefits to Holders, including the addition of guarantees,
or that does not adversely affect the legal rights under this Supplemental
Indenture of any such Holder;

(5)                                  to comply with requirements of the Commission
in order to effect or maintain the qualification of this Supplemental Indenture
under the Trust Indenture Act;

 28
 

(6)                                  to conform the text of this Supplemental
Indenture or the Notes to any provision of the “Description of the Notes”
section of the Company’s Prospectus Supplement dated June 6, 2007, relating to
the initial offering of the Notes, to the extent that such provision in the “Description
of the Notes” was intended to be a verbatim recitation of a provision of this
Supplemental Indenture or the Notes;

(7)                                  to evidence and provide for the acceptance
and appointment under this Supplemental Indenture of a successor Trustee
pursuant to the requirements thereof; or

(8)                                  to provide for the issuance of Additional
Notes accordance with the limitations set forth in this Supplemental Indenture
as of the date hereof.

Upon the request of the Company authorizing the
execution of any such amended or supplemental indenture, and upon receipt by
the Trustee of the documents described in Section 903 of the Base Indenture and
Section 9.06 hereof, the Trustee shall join with the Company in the execution
of any amended or supplemental indenture authorized or permitted by the terms
of this Supplemental Indenture and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under the Indenture or otherwise.

Section 9.02                                                              With
Consent of Holders.

(a)          Except as
provided below in this Section 9.02, the Company and the Trustee may amend or
supplement this Second Supplemental Indenture and the Notes with the consent of
Holders of at least a majority in aggregate principal amount of the Notes then
outstanding (including, without limitation, consents obtained in connection
with a tender offer or exchange offer for, or purchase of, the Notes), and,
subject to Section 6.04 hereof, any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the principal of, premium
or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Supplemental Indenture or the Notes may be waived with the consent of Holders
of a majority in principal aggregate amount of the then outstanding Notes
(including, without limitation, consents obtained in connection with a tender
offer or exchange offer for, or purchase of, the Notes).

Section
101 of the Base Indenture shall determine which Notes are considered to be “outstanding”
for purposes of this Section 9.02.

Upon the written request of the Company and upon the
filing with the Trustee of evidence satisfactory to the Trustee of the consent
of Holders as aforesaid, and upon receipt by the Trustee of the documents
described in Section 603 of the Base Indenture and Section 9.06 hereof, the
Trustee shall join with the Company in the execution of such amended or
supplemental indenture unless such amended or supplemental indenture directly
affects the Trustee’s own rights, duties or immunities under the Indenture or
otherwise, in which case the Trustee may in its discretion, but will not be
obligated to, enter into such amended or supplemental indenture.

It is not necessary for the consent of Holders under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it is sufficient if such consent approves the substance thereof.

After an amendment, supplement or waiver under this
Section 9.02 becomes effective, the Company shall mail to Holders affected thereby
a notice briefly describing the amendment, supplement or

 29
 

waiver.  Any
failure of the Company to mail such notice, or any defect therein, will not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver.

Subject to Section 6.04
hereof and  Section 508 of the Base Indenture,
Holders of a majority in aggregate principal amount of the Notes outstanding
may waive compliance in a particular instance by the Company with any provision
of this Supplemental Indenture or the Notes. 
However, without the consent of each Holder affected, an amendment,
supplement or waiver under this Section 9.02 may not (with respect to any Notes
held by a non-consenting Holder):

(1)                reduce the principal amount of Notes whose
Holders must consent to an amendment, supplement or waiver hereunder or under
the Base Indenture as to the Notes;

(2)                reduce the principal of or change the fixed
maturity of any Note;

(3)                reduce the rate of or change the time for
payment of interest on any Note;

(4)                waive a Default or Event of Default in the
payment of principal of, or interest or premium on the Notes (except a
rescission of acceleration of the Notes by Holders of at least a majority in
aggregate principal amount of the outstanding Notes and a waiver of the payment
default that resulted from such acceleration);

(5)                make any Note payable in currency other than
that stated in the Notes;

(6)                make any change in the provisions of this
Supplemental Indenture relating to waivers of past Defaults or the rights of
Holders to receive payments of principal of, or interest or premium on the
Notes;

 (7)             make
any change in Section 6.03 and 9.02 hereof or Section 508 of the Base
Indenture.

(b)         Other than
as expressly provided in Section 9.02 above, the Base Indenture may only be
amended, supplemented or otherwise modified as and to the extent provided in
the Base Indenture.

Section 9.03                                                              Compliance
with Trust Indenture Act.

Every amendment or supplement to this Supplemental
Indenture or the Notes will be set forth in a amended or supplemental Indenture
that complies with the Trust Indenture Act as then in effect.

Section 9.04                                                              Revocation
and Effect of Consents.

Until an amendment, supplement or waiver becomes
effective, a consent to it by a Holder of a Note is a continuing consent by the
Holder of a Note and every subsequent Holder of a Note or portion of a Note
that evidences the same debt as the consenting Holder’s Note, even if notation
of the consent is not made on any Note. 
However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective.  An amendment, supplement or
waiver becomes effective in accordance with its terms and thereafter binds
every Holder.

 30
 

Section 9.05                                                              Notation
on or Exchange of Notes.

The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated.  The Company in exchange for all Notes may
issue and the Trustee shall, upon receipt of a Company Order, authenticate new
Notes that reflect the amendment, supplement or waiver.

Failure to make the appropriate notation or issue a
new Note will not affect the validity and effect of such amendment, supplement
or waiver.

Section 9.06                                                              Trustee
to Sign Amendments, etc.

The Trustee shall sign
any amended or supplemental indenture authorized pursuant to this Article 9 if
the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. 
In executing any amended or supplemental indenture, the Trustee will be
entitled to receive and (subject to Section 602 of the Base Indenture) will be
fully protected in relying upon an Officer’s Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by the Indenture.

ARTICLE
10.

satisfaction and discharge

Section 10.01                                                        Satisfaction
and Discharge.

This Supplemental
Indenture will be discharged and will cease to be of further effect as to all
Notes issued hereunder, when:

(1)          either:

(a)          all Notes that have been
authenticated, except lost, stolen or destroyed Notes that have been replaced
or paid and Notes for whose payment money has been deposited in trust and
thereafter repaid to the Company, have been delivered to the Trustee for
cancellation; or

(b)         all Notes that have not
been delivered to the Trustee for cancellation have become due and payable by
reason of the mailing of a notice of redemption or otherwise or will become due
and payable within one year and the Company has irrevocably deposited or caused
to be deposited with the Trustee as trust funds in trust solely for the benefit
of Holders, cash in U.S. dollars, non-callable Government Securities, or a
combination of cash in U.S. dollars and non-callable Government Securities, in
such amounts as will be sufficient without consideration of any reinvestment of
interest, to pay and discharge the entire indebtedness on the Notes not delivered
to the Trustee for cancellation for principal, premium, if any, and accrued
interest to the date of maturity or redemption;

(2)          no Default or Event of
Default has occurred and is continuing on the date of the deposit (other than a
Default or Event of Default resulting from the borrowing of funds to be applied
to such deposit) and the deposit will not result in a breach or violation of,
or constitute a default under, any other instrument to which the Company is a
party or by which the Company is bound;

(3)          the Company has paid or
caused to be paid all sums payable by it under this Supplemental Indenture; and

 31
 

(4)          the Company has
delivered irrevocable instructions to the Trustee under this Supplemental
Indenture to apply the deposited money toward the payment of the Notes at
maturity or the Redemption Date, as the case may be.

In addition, the Company must deliver an Officer’s
Certificate and an Opinion of Counsel to the Trustee stating that all
conditions precedent to satisfaction and discharge have been satisfied.

Notwithstanding the satisfaction and discharge of this
Supplemental Indenture, if money has been deposited with the Trustee pursuant
to subclause (b) of clause (1) of this Section, the provisions of Section 10.02
hereof and Section 8.06 hereof will survive. 
In addition, nothing in this Section 11.01 will be deemed to discharge
those provisions of Section 7.01 hereof and Section 607 of the Base Indenture,
that, by their terms, survive the satisfaction and discharge of this
Supplemental Indenture.

Section 10.02                                                        Application
of Trust Money.

Subject to the provisions of Section 8.06 hereof, all
money deposited with the Trustee pursuant to Section 10.01 hereof shall be held
in trust and applied by it, in accordance with the provisions of the Notes and
the Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal, premium, if any,
and interest for whose payment such money has been deposited with the Trustee;
but such money need not be segregated from other funds except to the extent
required by law.

If the Trustee or Paying Agent is unable to apply any
money or Government Securities in accordance with Section 10.01 hereof by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company’s obligations under this Supplemental Indenture
and the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 10.01 hereof; provided that
if the Company has made any payment of principal of, premium, if any, or
interest on any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of Holders to receive such payment
from the money or Government Securities held by the Trustee or Paying Agent.

ARTICLE
11.

MISCELLANEOUS

Section 11.01                                                        Trust
Indenture Act Controls.

If any provision of this Supplemental Indenture
limits, qualifies or conflicts with the duties imposed by Trust Indenture Act
§318(c), the imposed duties will control.

Section 11.02                                                        Notices.

Any notice or communication by the Company or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others’ address:

 32
 

If to the Company:

Reliant Energy, Inc.

1000 Main Street 

Houston, TX 77002

Telecopier No.: (713) 497-3000

Attention: General Counsel

With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

Telecopier No.:  (212) 735-2000

Attention:  Richard B. Aftanas

If to the Trustee:

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890

Telecopier No.:  (302) 636-4143

Attention: Corporate Trust Administration

The Company or the Trustee, by notice to the other may
designate additional or different addresses for subsequent notices or
communications.

All notices and communications (other than those sent
to Holders) will be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.

Any notice or communication to a Holder will be mailed
by first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on
the register kept by the Securities Registrar. 
Any notice or communication will also be so mailed to any Person
described in Trust Indenture Act § 313(c), to the extent required by the
Trust Indenture Act.  Failure to mail a
notice or communication to a Holder or any defect in it will not affect its
sufficiency with respect to other Holders.

If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it.

If the Company mails a notice or communication to
Holders, it will mail a copy to the Trustee and each Agent at the same time.

Section 11.03                                                        Communication
by Holders with Other Holders.

Holders may communicate pursuant to Trust Indenture
Act § 312(b) with other Holders with respect to their rights under the
Indenture or the Notes.  The Company, the
Trustee, the Securities Registrar and anyone else shall have the protection of
Trust Indenture Act § 312(c).

 33
 

Section 11.04                                                        No
Personal Liability of Directors, Officers, Employees and Stockholders.

No director, officer, employee, incorporator or
stockholder of the Company, as such, will have any liability for any
obligations of the Company under the Notes or this Supplemental Indenture, or
for any claim based on, in respect of, or by reason of, such obligations or
their creation.  Each Holder by accepting
a Note waives and releases all such liability. The waiver and release are part
of the consideration for issuance of the Notes. The waiver may not be effective
to waive liabilities under the federal securities laws.

Section 11.05                                                        Governing
Law.

THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN
AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE AND THE NOTES WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 11.06                                                        No
Adverse Interpretation of Other Agreements.

This Supplemental Indenture may not be used to
interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries
or of any other Person.  Any such
indenture, loan or debt agreement may not be used to interpret this
Supplemental Indenture.

Section 11.07                                                        Successors.

All agreements of the Company in the Indenture and the
Notes will bind its successors.  All agreements
of the Trustee in the Indenture will bind its successors.

Section 11.08                                                        Severability.

In case any provision in the Indenture or in the Notes
is invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions will not in any way be affected or impaired
thereby.

Section 11.09                                                        Counterpart
Originals.

The parties may sign any number of copies of this
Supplemental Indenture.  Each signed copy
will be an original, but all of them together represent the same agreement.

Section 11.10                                                        Table
of Contents, Headings, etc.

The Table of Contents, Cross-Reference Table and
Headings of the Articles and Sections of this Supplemental Indenture have been
inserted for convenience of reference only, are not to be considered a part of
this Supplemental Indenture and will in no way modify or restrict any of the
terms or provisions hereof.

[Signatures on following pages]

 34

SIGNATURES

Dated as of June
13, 2007

	
  

  	
  RELIANT ENERGY, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ Andrew C. Johannesen

  	
   

  
	
   

  	
  Name: Andrew C. Johannesen

  
	
   

  	
  Title: Vice President & Treasurer

  

 

 1

	
  

  	
  Wilmington Trust Company,

  
	
   

  	
   

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Michael G. Oller, Jr.

  	
   

  
	
   

  	
   

  	
  Name: Michael G. Oller, Jr.

  
	
   

  	
   

  	
  Title: Senior Financial Services Officer

  

 

EXHIBIT A

[Face
of Note]

CUSIP
NUMBER: 75952B AN5

ISIN NUMBER: US75952BAN55

7.625% Senior
Notes due 2014

	
  No.

  	
   

  	
  $                              

  

 

RELIANT ENERGY, INC.

promises to pay to                                                           
or registered assigns,

the principal sum of                                              Dollars
on June 15, 2014.

Interest Payment
Dates:  June 15 and December 15.

Record Dates:  June 1 and December 1.

Dated:  June 13, 2007

IN WITNESS
WHEREOF, the Company has caused this Note to be duly executed.

	
  

  	
  RELIANT ENERGY, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

Date of
Authentication:

This Note is one of the
Securities of

a series
designated therein referred to

in the within-mentioned Indenture:

	
  WILMINGTON TRUST COMPANY,

  
	
    as Trustee

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  

 

 A-1
 

[Back of Note]

7.625% Senior Notes due 2014

[Insert the Global Note Legend, if applicable
pursuant to the provisions of the Supplemental Indenture]

Capitalized terms used herein have the meanings
assigned to them in the Supplemental Indenture referred to below unless
otherwise indicated.

(1)   Interest.  Reliant Energy, Inc., a Delaware corporation
(the “Company”), promises to pay interest on the
principal amount of this Note at 7.625% per annum from June 13, 2007 until
maturity.  The Company shall pay interest
semi-annually in arrears on June 15 and December 15  of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”).  Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that
if there is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further,
that the first Interest Payment Date shall be December 15, 2007.  Interest will be computed on the basis of a
360-day year of twelve 30-day months.

(2)   Method of Payment.  The Company shall pay interest on the Notes
to the Persons who are registered Holders at the close of business on the June
1 or December 1 next preceding the Interest Payment Date, even if such Notes
are canceled after such record date and on or before such Interest Payment
Date, except as provided in Section 307 of the Base Indenture with respect to defaulted
interest.  The Notes will be payable as
to principal, premium, if any, and interest at the office or agency of the
Company maintained for such purpose within the City and State of New York, or,
at the option of the Company, payment of interest may be made by check mailed
to Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately
available funds will be required with respect to principal of and interest and
premium, if any, on all Global Notes and all other Notes Holders of which will
have provided wire transfer instructions to the Company or the Paying
Agent.  Such payment shall be 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.

(3)   Paying Agent and
Securities Registrar. 
Initially, Wilmington Trust Company, the Trustee under the Indenture,
will act as Paying Agent and the Securities Registrar.  The Company may change any Paying Agent or
the Securities Registrar without notice to any Holder.  The Company or any of its Subsidiaries may
act in any such capacity.

(4)   Indenture.  This Note is one of a duly authenticated
series of securities of the Company issued and to be issued in one or more
series under a Senior Indenture (the “Base Indenture”), dated as of December
22, 2004, between the Company and the Trustee, as amended by the Fourth
Supplemental Indenture (the “Supplemental Indenture”
and, together with the Base Indenture, the “Indenture”),
dated as of June 13, 2007, among the Company and the Trustee.  The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb).  The Notes are subject to all such terms, and
Holders are referred to the Indenture and the Trust Indenture Act for a
statement of such terms.  To the extent
any provision of this Note conflicts with the express provisions of the Base
Indenture, the provisions of this Note shall govern and be controlling, and to
the extent any provision of this Note conflicts with the express provisions of

 A-2
 

the
Supplemental Indenture, the provisions of the Supplemental Indenture shall
govern and be controlling.  The Company
shall be entitled to issue Additional Notes pursuant to Section 2.05 of the
Supplemental Indenture.

(5)   Optional Redemption.  The Company may on any one or more
occasions redeem all or a part of the Notes, upon not less than 30 nor more
than 60 days’ prior notice, at a redemption price equal to 100% of the
principal amount of Notes redeemed plus the Applicable Premium as of, and
accrued and unpaid interest if any, to the Redemption Date, subject to the
rights of Holders on the relevant record date to receive interest due on the
relevant interest payment date.

(6) Mandatory Redemption. The Company shall not be required to
make mandatory redemption or sinking fund payments with respect to the Notes.

(7) Repurchase at Option of
Holder.  Upon the occurrence
of a Change of Control, each Holder shall have the right to require the Company
to repurchase all or any part (equal to $2,000 or an integral multiple of
$1,000 in excess of $2,000) of such Holder’s Notes pursuant to an offer (a “Change of Control Offer”) to each Holder on the terms set
forth in the Supplemental Indenture.  In
such Change of Control Offer, the Company shall offer to each Holder a payment
in cash (the “Change of Control Payment”) equal
to 101% of the aggregate principal amount of Notes repurchased from such Holder
plus accrued and unpaid interest on the Notes repurchased, if any, to the date
of purchase, subject to the rights of Holders on the relevant record date to
receive interest due on the relevant interest payment date.  Within 30 days following any Change of
Control, the Company shall mail a notice to each Holder pursuant to Section
4.09 of the Supplemental Indenture.

(8) Notice of Redemption. 
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder whose Notes are to be
redeemed at its registered address. 
Notes in denominations larger than $2,000 may be redeemed in part but
only in whole multiples of $1,000 in excess of $2,000, unless all of the Notes
held by a Holder are to be redeemed.  On
and after the Redemption Date interest ceases to accrue on Notes or portions
thereof called for redemption.

(9) Denominations, Transfer, Exchange.  The Notes are in registered form without
coupons in denominations of $2,000 and integral multiples of $1,000 in excess
of $2,000.  The transfer of Notes may be
registered and Notes may be exchanged as provided in the Supplemental
Indenture.  The Securities Registrar and
the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the Supplemental
Indenture.  The Company need not exchange
or register the transfer of any Note or portion of a Note selected for redemption,
except for the unredeemed portion of any Note being redeemed in part.  Also, the Company need not exchange or
register the transfer of any Notes for a period of 15 days before a selection
of Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.

(10) Persons Deemed Owners. 
The registered Holder of a Note may be treated as its owner for all
purposes.

(11) Amendment, Supplement and Waiver.  The Base Indenture may be amended as provided
therein.  Subject to certain exceptions,
the Supplemental Indenture or the Notes may be amended or supplemented with the
consent of Holders of at least a majority in principal amount of the then
outstanding Notes, and any existing default or compliance with any provision of
the

 A-3
 

Supplemental Indenture or the Notes may be
waived with the consent of Holders of a majority in principal amount of the
then outstanding Notes.  Without the
consent of any Holder, the Supplemental Indenture or the Notes may be amended
or supplemented (i) to cure any ambiguity, defect or inconsistency, (ii) to
provide for uncertificated Notes in addition to or in place of certificated
Notes, (iii) to provide for the assumption of the Company’s obligations to
Holders in the case of a merger or consolidation or sale of all or
substantially all of the Company’s assets pursuant to Article 5 of the
Supplemental Indenture, (iv) to make any change that would provide any
additional rights or benefits to Holders, including the addition of guarantees,
or that does not adversely affect the legal rights under the Supplemental
Indenture of any such Holder, (v) to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act, (vi) to conform the text of the Supplemental
Indenture or the Notes to any provision of the Description of Notes to the
extent that such provision in the Description of Notes was intended to be a
verbatim recitation of a provision of the Supplemental Indenture or the Notes,
(viii) to evidence and provide for the acceptance and appointment under the
Indenture of a successor trustee pursuant to the requirements thereof, and (ix)
to provide for the Issuance of Additional Notes in accordance with the
limitations set forth in the Supplemental Indenture as of the date of the
Supplemental Indenture.

(12) Defaults and Remedies. 
Events of Default include:  (i)
default for 30 days in the payment when due of interest on the Notes;  (ii) default in payment when due of the principal
of, or premium, if any, on the Notes; (iii) failure by the Company for 90 days
after notice from the Trustee or Holders of at least 25% in aggregate principal
amount of the outstanding Notes, to comply with any of the other agreements in
the Supplemental Indenture or any security documents required by the Indenture;
(iv) the acceleration of the maturity of any Indebtedness for money borrowed
(other than the Notes) of the Company or any of its Significant Subsidiaries
(other than an Excluded Project Subsidiary or Channelview and its Subsidiaries)
having an aggregate principal amount outstanding in excess of 5% of the Company’s
Consolidated Net Tangible Assets, if such acceleration is not rescinded or
annulled, or such indebtedness shall not have been discharged, within 15 days
after the date of such acceleration; (v) failure by the Company or any of its
Significant Subsidiaries to pay final and non-appealable judgments aggregating
in excess of 5% of the Company’s Net Consolidated Tangible Assets, which
judgments are not covered by indemnities or third-party insurance, which
judgments are not paid, discharged vacated or stayed for a period of 90 days;
and (vi) the
Company pursuant to or within the meaning of Bankruptcy Law: (A) commences a
voluntary case, (B) consents to the entry of an order for relief against it in
an involuntary case, (C) consents to the appointment of a custodian of it or
for all or substantially all of its property, (D) makes a general assignment
for the benefit of its creditors, or (E) generally is not paying its debts as
they become due; or (vii) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (A) is for relief against the Company in
an involuntary case; (B) appoints a custodian of the Company or for all or
substantially all of the property of the Company; or (C) orders the liquidation
of the Company; and the order or decree remains unstayed and in effect for 60
consecutive days.

(13) Trustee Dealings with Company.  The Trustee, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not the Trustee. 
However, in the event that the Trustee acquires any conflicting interest
it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue as trustee or resign. 
Any Agent may do the same with like rights and duties.  The Trustee is also subject to Sections 611
and 612 of the Base Indenture.

 A-4
 

(14) No Recourse Against Others. 
No director, officer, employee, incorporator or stockholder of the
Company, as such, will have any liability for any obligations of the Company
under the Notes or the Indenture or for any claim based on, in respect of, or
by reason of, such obligations or their creation.  Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws.

(15) Authentication.  This
Note will not be valid until authenticated by the manual signature of the
Trustee or an authenticating agent.

(16) Abbreviations. 
Customary abbreviations may be used in the name of a Holder or an
assignee, such as:  TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).

(17) CUSIP Numbers. 
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. 
No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon.

(18) Governing Law. THE INTERNAL LAW OF THE
STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THE SUPPLEMENTAL
INDENTURE, AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.

The Company shall furnish
to any Holder upon written request and without charge a copy of the Base
Indenture and the Supplemental Indenture. 
Requests may be made to:

Reliant
Energy, Inc.

1000 Main Street 

Houston, TX 77002

Telecopier No.: (713) 497-3000

Attention: General Counsel

 A-5

Assignment Form

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:                                                                                                                        

                                                   (Insert
assignee’s legal name)

(Insert
assignee’s soc. sec. or tax I.D. no.)

 

 

 

 

(Print
or type assignee’s name, address and zip code)

and irrevocably appoint                                                                                                                                                                   
 to transfer this Note on the books of the Company.  The agent may substitute another to act for
him.

Date:                                  

	
  

  	
  Your Signature:

  	
   

  
	
   

  	
  (Sign exactly as
  your name appears on the face of this Note)

  
	
   

  	
   

  
	
  Signature Guarantee*:

  	
   

  	
   

  
				

 

*              Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor acceptable to the Trustee).

 A-1

Option of Holder to Elect Purchase

If you want to elect to have this Note purchased by
the Company pursuant to Section 4.09 of the Supplemental Indenture, check the
appropriate box below:

x  Section 4.09

If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.09 of the Supplemental Indenture, state
the amount you elect to have purchased:

$                          

Date:                             

	
  

  	
  Your Signature:

  	
   

  
	
   

  	
  (Sign exactly as
  your name appears on the face of this Note)

  
	
   

  	
   

  
	
   

  	
  Tax Identification No.:

  	
   

  
	
   

  	
   

  
	
  Signature Guarantee*: 

  	
   

  	
   

  
					

 

*              Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor acceptable to the Trustee)

 A-1Exhibit 4.2

 

EXECUTION COPY

RELIANT ENERGY, INC.,

as Issuer

7.875% SENIOR NOTES DUE 2017

 

FIFTH SUPPLEMENTAL INDENTURE

Dated as of June 13, 2007

To

SENIOR INDENTURE

Dated as of December 22, 2004

Wilmington Trust Company,

as Trustee

 

 

 

 

CROSS-REFERENCE TABLE*

	
  Trust Indenture

  Act Section

  	
   

  	
  Supplemental 

  Indenture Section

  
	
  310(a)(1)

  	
   

  	
  N.A.

  
	
  (a)(2)

  	
   

  	
  N.A.

  
	
  (a)(3)

  	
   

  	
  N.A.

  
	
  (a)(4)

  	
   

  	
  N.A.

  
	
  (a)(5)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  N.A.

  
	
  (c)

  	
   

  	
  N.A.

  
	
  311(a)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  N.A.

  
	
  (c)

  	
   

  	
  N.A.

  
	
  312(a)

  	
   

  	
  2.03

  
	
  (b)

  	
   

  	
  11.03

  
	
  (c)

  	
   

  	
  11.03

  
	
  313(a)

  	
   

  	
  N.A.

  
	
  (b)(1)

  	
   

  	
  N.A.

  
	
  (b)(2)

  	
   

  	
  7.01(f)

  
	
  (c)

  	
   

  	
  11.02

  
	
  (d)

  	
   

  	
  N.A.

  
	
  314(a)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  N.A.

  
	
  (c)(1)

  	
   

  	
  N.A.

  
	
  (c)(2)

  	
   

  	
  N.A.

  
	
  (c)(3)

  	
   

  	
  N.A.

  
	
  (d)

  	
   

  	
  N.A.

  
	
  (e)

  	
   

  	
  N.A.

  
	
  (f)

  	
   

  	
  N.A.

  
	
  315(a)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  N.A.

  
	
  (c)

  	
   

  	
  N.A.

  
	
  (d)

  	
   

  	
  N.A.

  
	
  (e)

  	
   

  	
  N.A.

  
	
  316(a) (last sentence)

  	
   

  	
  N.A.

  
	
  (a)(1)(A)

  	
   

  	
  N.A.

  
	
  (a)(1)(B)

  	
   

  	
  N.A.

  
	
  (a)(2)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  N.A.

  
	
  (c)

  	
   

  	
  N.A.

  
	
  317(a)(1)

  	
   

  	
  N.A.

  
	
  (a)(2)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  N.A.

  
	
  318(a)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  N.A.

  
	
  (c)

  	
   

  	
  11.01

  

 

N.A. means not
applicable.

*  This Cross
Reference Table is not part of the Indenture.

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE
  1.

  
	
  DEFINITIONS AND
  INCORPORATION

  
	
  BY REFERENCE

  
	
   

  
	
  Section 1.01

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  Section 1.02

  	
   

  	
  Other Definitions

  	
   

  	
  6

  
	
  Section 1.03

  	
   

  	
  Incorporation by Reference of Trust Indenture Act

  	
   

  	
  6

  
	
  Section 1.04

  	
   

  	
  Rules of Construction

  	
   

  	
  6

  
	
  Section 1.05

  	
   

  	
  Relationship with Base Indenture

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  2.

  
	
  THE NOTES

  
	
   

  
	
  Section 2.01

  	
   

  	
  Form and Dating

  	
   

  	
  7

  
	
  Section 2.02

  	
   

  	
  Execution and Authentication

  	
   

  	
  8

  
	
  Section 2.03

  	
   

  	
  Holder Lists

  	
   

  	
  8

  
	
  Section 2.04

  	
   

  	
  Transfer and Exchange

  	
   

  	
  8

  
	
  Section 2.05

  	
   

  	
  Issuance of Additional Notes

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  3.

  
	
  REDEMPTION AND
  PREPAYMENT

  
	
   

  
	
  Section 3.01

  	
   

  	
  Notices to Trustee

  	
   

  	
  13

  
	
  Section 3.02

  	
   

  	
  Selection of Notes to Be Redeemed or Purchased

  	
   

  	
  13

  
	
  Section 3.03

  	
   

  	
  Notice of Redemption

  	
   

  	
  14

  
	
  Section 3.04

  	
   

  	
  Effect of Notice of Redemption

  	
   

  	
  14

  
	
  Section 3.05

  	
   

  	
  Deposit of Redemption or Purchase Price

  	
   

  	
  14

  
	
  Section 3.06

  	
   

  	
  Notes Redeemed or Purchased in Part

  	
   

  	
  15

  
	
  Section 3.07

  	
   

  	
  Optional Redemption

  	
   

  	
  15

  
	
  Section 3.08

  	
   

  	
  Mandatory Redemption

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  4.

  
	
  COVENANTS

  
	
   

  
	
  Section 4.01

  	
   

  	
  Payment of Notes

  	
   

  	
  15

  
	
  Section 4.02

  	
   

  	
  Maintenance of Office or Agency

  	
   

  	
  16

  
	
  Section 4.03

  	
   

  	
  Reports

  	
   

  	
  16

  
	
  Section 4.04

  	
   

  	
  Compliance Certificate

  	
   

  	
  17

  
	
  Section 4.05

  	
   

  	
  Taxes

  	
   

  	
  17

  
	
  Section 4.06

  	
   

  	
  Stay, Extension and Usury Laws

  	
   

  	
  17

  
	
  Section 4.07

  	
   

  	
  Liens

  	
   

  	
  18

  
	
  Section 4.08

  	
   

  	
  Corporate Existence

  	
   

  	
  18

  
	
  Section 4.09

  	
   

  	
  Offer to Repurchase Upon Change of Control

  	
   

  	
  19

  
	
  Section 4.10

  	
   

  	
  Payment for Consents

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  5.

  
	
  SUCCESSORS

  
	
   

  
	
  Section 5.01

  	
   

  	
  Merger, Consolidation, or Sale of Assets

  	
   

  	
  21

  
	
  Section 5.02

  	
   

  	
  Successor Corporation Substituted

  	
   

  	
  21

  
						

 

 i
 

 

	
  ARTICLE 6.

  
	
  DEFAULTS AND
  REMEDIES

  
	
   

  
	
  Section 6.01

  	
   

  	
  Events of Default

  	
   

  	
  22

  
	
  Section 6.02

  	
   

  	
  Acceleration

  	
   

  	
  23

  
	
  Section 6.03

  	
   

  	
  Waiver of Past Defaults

  	
   

  	
  23

  
	
  Section 6.04

  	
   

  	
  Collection Suit by Trustee

  	
   

  	
  23

  
	
  Section 6.05

  	
   

  	
  Priorities

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  7.

  
	
  TRUSTEE’S
  COMPENSATION AND INDEMNITY

  
	
   

  
	
  Section 7.01

  	
   

  	
  Compensation and Indemnity

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  8.

  
	
  LEGAL DEFEASANCE
  AND COVENANT DEFEASANCE

  
	
   

  
	
  Section 8.01

  	
   

  	
  Option to Effect Legal Defeasance or Covenant
  Defeasance

  	
   

  	
  25

  
	
  Section 8.02

  	
   

  	
  Legal Defeasance and Discharge

  	
   

  	
  25

  
	
  Section 8.03

  	
   

  	
  Covenant Defeasance

  	
   

  	
  26

  
	
  Section 8.04

  	
   

  	
  Conditions to Legal or Covenant Defeasance

  	
   

  	
  26

  
	
  Section 8.05

  	
   

  	
  Deposited Money and Government Securities to be Held
  in Trust; Other Miscellaneous Provisions

  	
   

  	
  27

  
	
  Section 8.06

  	
   

  	
  Repayment to Company

  	
   

  	
  27

  
	
  Section 8.07

  	
   

  	
  Reinstatement

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  9.

  
	
  AMENDMENT,
  SUPPLEMENT AND WAIVER

  
	
   

  
	
  Section 9.01

  	
   

  	
  Without Consent of Holders

  	
   

  	
  28

  
	
  Section 9.02

  	
   

  	
  With Consent of Holders

  	
   

  	
  29

  
	
  Section 9.03

  	
   

  	
  Compliance with Trust Indenture Act

  	
   

  	
  30

  
	
  Section 9.04

  	
   

  	
  Revocation and Effect of Consents

  	
   

  	
  30

  
	
  Section 9.05

  	
   

  	
  Notation on or Exchange of Notes

  	
   

  	
  31

  
	
  Section 9.06

  	
   

  	
  Trustee to Sign Amendments, etc

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  10.

  
	
  SATISFACTION AND
  DISCHARGE

  
	
   

  
	
  Section 10.01

  	
   

  	
  Satisfaction and Discharge

  	
   

  	
  31

  
	
  Section 10.02

  	
   

  	
  Application of Trust Money

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  11.

  
	
  MISCELLANEOUS

  
	
   

  
	
  Section 11.01

  	
   

  	
  Trust Indenture Act Controls

  	
   

  	
  32

  
	
  Section 11.02

  	
   

  	
  Notices

  	
   

  	
  32

  
	
  Section 11.03

  	
   

  	
  Communication by Holders with Other Holders

  	
   

  	
  33

  
	
  Section 11.04

  	
   

  	
  No Personal Liability of Directors, Officers,
  Employees and Stockholders

  	
   

  	
  34

  
	
  Section 11.05

  	
   

  	
  Governing Law

  	
   

  	
  34

  
	
  Section 11.06

  	
   

  	
  No Adverse Interpretation of Other Agreements

  	
   

  	
  34

  
	
  Section 11.07

  	
   

  	
  Successors

  	
   

  	
  34

  
	
  Section 11.08

  	
   

  	
  Severability

  	
   

  	
  34

  
	
  Section 11.09

  	
   

  	
  Counterpart Originals

  	
   

  	
  34

  
	
  Section 11.10

  	
   

  	
  Table of Contents, Headings, etc

  	
   

  	
  34

  

 

 ii
 

 

	
  EXHIBITS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Form of Note

  	
   

  	
   

  

 

 iii

FIFTH SUPPLEMENTAL INDENTURE, dated as of June 13,
2007, between Reliant Energy, Inc., a Delaware corporation (the “Company”), and Wilmington Trust Company, a Delaware banking
corporation, as trustee (the “Trustee”).

The Company has heretofore executed and delivered to
the Trustee a Senior Indenture, dated as of December 22, 2004 (the “Base Indenture”), as supplemented by the First Supplemental
Indenture thereto, dated as of December 22, 2004, among the Company, the
Guarantors (as defined therein) and the Trustee, the Second Supplemental
Indenture thereto, dated as of September 21, 2006, among the Company, the
Guarantors (as defined therein), Reliant Energy Power Supply, LLC and the
Trustee and the Third Supplemental Indenture thereto, dated as of December 1,
2006, between the Company and the Trustee, and the Fourth Supplemental
Indenture thereto, dated as of the date hereof, between the Company and the
Trustee, providing for the issuance from time to time of one or more series of
the Company’s securities.

The Company desires and has requested the Trustee
pursuant to Section 901(7) of the Base Indenture to join with them in the
execution and delivery of this Supplemental Indenture in order to supplement
the Base Indenture as and to the extent set forth herein to provide for the
issuance and the terms of the Notes (as defined below).

Section 901(7) of the Base Indenture provides that a
supplemental indenture may be entered into by the Company and the Trustee
without the consent of any Holders (as defined in the Base Indenture) to
establish the form or terms of Securities of any series as permitted by
Sections 201 and 301 of the Base Indenture.

The execution and delivery of this Supplemental
Indenture has been duly authorized by a Board Resolution of the Company.

All conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument in accordance with
its terms have been performed and fulfilled by the parties hereto and the
execution and delivery thereof have been in all respects duly authorized by the
parties hereto.

The Company and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of Holders (as
defined herein) of the 7.875% Senior Notes due 2017 (the “Notes”):

ARTICLE
1.

DEFINITIONS AND INCORPORATION

BY REFERENCE

Section 1.01                                                              Definitions.

For all purposes of the Supplemental Indenture, the
following terms shall have the respective meanings set forth in this Section.

 “Additional
Notes” means additional notes (other than the Initial Notes)
issued from time to time under this Supplemental Indenture in accordance with
Section 2.05 hereof, as part of the same series as the Initial Notes.

“Applicable Premium”
means, with respect to any Note on any Redemption Date, the greater of:

(1)                                  1.0%
of the principal amount of such Note; or

 1
 

(2)                                  the
excess of:

(a)                                  the
present value at such Redemption Date of (i) the payment of principal on the
maturity date of the Notes plus (ii) all required interest payments due on the
Note through the maturity thereof (excluding accrued but unpaid interest to the
Redemption Date), computed using a discount rate equal to the Applicable
Treasury Rate as of such Redemption Date plus 50 basis points; over

(b)                                 the
principal amount of the Note.

“Applicable Procedures”
means, with respect to any transfer or exchange of or for beneficial interests
in any Global Note, the rules and procedures of the Depositary that apply to
such transfer or exchange.

“Applicable Treasury Rate”
means, as of any Redemption Date for any series of notes, the yield to maturity
as of such Redemption Date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
business days prior to the Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data))
most nearly equal to the period from the Redemption Date to the maturity date
of the applicable series of notes; provided, however, that if the period from the Redemption Date to the
maturity date of the applicable series of notes is less than one year, the
weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year will be used.

 “Base Indenture”
has the meaning set forth in the preamble to this Supplemental Indenture.

 “Beneficial Owner” has the meaning assigned to such term in
Rule 13d-3 and Rule 13d-5 under the Exchange Act.  The terms “Beneficially Owns” and “Beneficially
Owned” have a corresponding meaning.

“Change of Control” means the occurrence of any of the
following:

(1)                              the direct or indirect sale, transfer,
conveyance or other disposition (other than by way of merger or consolidation),
in one or a series of related transactions, of all or substantially all of the
properties or assets of the Company and its Subsidiaries taken as a whole to
any “person” (as that term is used in Section 13(d) of the Exchange Act, but
excluding any employee benefit plan of the Company, and any person or entity
acting in its capacity as trustee, agent or other fiduciary or administrator of
such plan);

(2)                              the adoption of a plan relating to the
liquidation or dissolution of the Company;

(3)                              the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of
which is that any “person” (as defined above) becomes the Beneficial Owner,
directly or indirectly, of more than 50% of the Voting Stock of the Company,
measured by voting power rather than number of shares;

(4)                              the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors;
or

(5)                              the Company consolidates with, or merges with
or into, any Person, or any Person consolidates with, or merges with or into,
the Company, in any such event pursuant to 

 2
 

a transaction in which any
of the outstanding Voting Stock of the Company is converted into or exchanged
for cash, securities or other property, other than any such transaction where
the Voting Stock of the Company outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person constituting a
majority of the outstanding shares of such Voting Stock of such surviving or
transferee Person (immediately after giving effect to such issuance).

 “Channelview”
means Reliant Energy Channelview, L.P.

“Commission”
means the U.S. Securities and Exchange Commission.

“Company”  means
Reliant Energy, Inc., and any and all successors thereto.

“Consolidated
Net Tangible Assets” means, as of any date of determination, the
total amount of all assets of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter for which the Company’s financial statements are available, less
the sum of:

(1)                              the Company’s consolidated current
liabilities as of such quarter end, determined on a consolidated basis in accordance
with GAAP; and

(2)                              the Company’s consolidated assets that are
properly classified as intangible assets as of such quarter end, determined on
a consolidated basis in accordance with GAAP.

“Continuing Director” means, as of any date of determination,
any member of the Board of Directors of the Company who:

(1)                              was a member of such Board of Directors on
the date of this Supplemental Indenture; or

(2)                              was nominated for election or elected to such
Board of Directors with the approval of a majority of the Continuing Directors
who were members of such Board at the time of such nomination or election.

“Credit Agreement”
means the credit agreement, dated as of June 12, 2007, among the Company, as
borrower, the subsidiary guarantors party thereto, Deutsche Bank AG, New York
Branch, as administrative agent, and the lenders party thereto.

 “Custodian” means the Trustee, as custodian
with respect to the Notes in global form, or any successor entity thereto.

“Default”
means any event that is, or with the passage of time or the giving of notice or
both would be, an Event of Default.

“Definitive Note” means a certificated Note registered in the
name of the Holder thereof and issued in accordance with Section 2.04 hereof,
substantially in the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend.

“Description of Notes”
means the section titled “Description of Notes” in the Prospectus Supplement,
dated June 6, 2007, related to the issuance and sale of the Initial Notes.

 3
 

“Disqualified Stock”
means any Capital Stock that, by its terms (or by the terms of any security
into which it is convertible, or for which it is exchangeable, in each case at
the option of the holder of the Capital Stock), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder of the
Capital Stock, in whole or in part, on or prior to the date that is 91 days
after the date on which the Notes mature (other than pursuant to a change of
control provision substantially similar to Section 4.09 hereof).

“Excluded Project Subsidiary”
means any Subsidiary of the Company whose principal purpose is the
construction, acquisition or operation of a project and whose debt is without
recourse or liability to the Company or any of its other Subsidiaries (except
(i) recourse against another Excluded Project Subsidiary, including any direct
or indirect parent entity of any Excluded Project Subsidiary substantially all
the assets of which consist of the equity of one or more Excluded Project
Subsidiaries (ii) recourse against the equity of an Excluded Project Subsidiary
pledged by the Company or any of its Subsidiaries to secure the debt of such
Excluded Project Subsidiary or any Subsidiary of such Excluded Project
Subsidiary).

“Existing
Liens” means Liens, on the property or assets of the Company or any
of its Subsidiaries, existing on the date of the supplemental indenture
securing Indebtedness outstanding or committed to be funded on that date
(including, but not limited to, (i) Indebtedness outstanding or committed to be
funded under the Credit Agreement, (ii) PEDFA Bond Indebtedness and (iii)
Indebtedness under the Retail Working Capital Agreement).

“GAAP” means
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
have been approved by a significant segment of the accounting profession, which
are in effect from time to time.

“Global Notes”
means, individually and collectively, each of the Global Notes substantially in
the form of Exhibit A hereto issued in accordance with Section 2.01 hereof.

“Global Note Legend”
means the legend set forth in Section 2.04(f), which is required to be placed
on all Global Notes issued under this Supplemental Indenture.

“Government
Securities” means direct obligations of, or obligations guaranteed
by, the United States of America (including any agency or instrumentality
thereof) for the payment of which obligations or guarantees the full faith and
credit of the United States of America is pledged and which are not callable or
redeemable at the issuer’s option.

“Holder” means a
Person in whose name a Note is registered.

“Indenture” means the Base
Indenture, as supplemented by this Supplemental Indenture, governing the Notes,
in each case, as amended, supplemented or otherwise modified from time to time
in accordance with its respective terms.

“Indirect Participant”
means a Person who holds a beneficial interest in a Global Note through a
Participant.

“Initial Notes”
means the first $725,000,000 aggregate principal amount of Notes issued under
this Supplemental Indenture on the Issue Date.

 4
 

“Issue Date” means June 13, 2007.

“Lien” means, with respect to any property or asset, any
mortgage, deed of trust, deed to secure debt, lien, pledge, hypothecation, encumbrance,
restriction, collateral assignment, charge or security interest in, on or of
such property or asset.

“Notes” has
the meaning assigned to it in the preamble to this Supplemental Indenture.  The Initial Notes and the Additional Notes
shall be treated as a single class for all purposes under this Supplemental
Indenture.  Unless the context otherwise
requires, all references to the Notes shall include the Initial Notes and any
Additional Notes.

“Participant”
means, with respect to the Depositary, a Person who has an account with the
Depositary.

“PEDFA Bond Indebtedness”
means Indebtedness outstanding on the date of the supplemental indenture
incurred by the Company or guaranteed by the Company in tax-exempt industrial
development bond financings, the proceeds of which were used to finance the
development, construction or acquisition of the 520 MW coal facility and
related assets owned by Reliant Energy Seward LLC and located in New Florence,
Indiana County, Pennsylvania.

“Refinancing Liens”  means Liens granted in connection with extending, renewing,
replacing or refinancing in whole or in part any Indebtedness secured by Liens
described in clauses (1) through (4) of Section 4.07 hereof; provided that Refinancing Liens do not (i) extend to
property or assets other than property or assets of the type that were subject
to the original Lien or  (ii) secure
Indebtedness having a principal amount in excess of the amount of Indebtedness
being extended, renewed, replaced or refinanced.

“Retail Working Capital
Agreement” means the Working Capital Facility, dated as of September
24, 2006, among RERH Holdings, LLC and its subsidiaries and Merrill Lynch &
Co. Inc., as amended and restated on December 1, 2006.

“Securities Act” means the Securities Act of 1933, as amended,
or any successor statute or statutes thereto.

“Significant Subsidiary”
means any Subsidiary that would be a “significant subsidiary” as defined in
Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities
Act, as such Regulation is in effect on the date of this Supplemental
Indenture; provided that clause (3) of such
definition will be disregarded.

“Stated Maturity”
means, with respect to any installment of interest or principal on any series
of Indebtedness, the date on which the payment of interest or principal was
scheduled to be paid in the documentation governing such Indebtedness as of the
date of this Supplemental Indenture, and will not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.

“Supplemental
Indenture” means this Fifth Supplemental Indenture, dated as of the
Issue Date, between the Company and the Trustee, governing the Notes, as
amended, supplemented or otherwise modified from time to time in accordance with the Base
Indenture and the terms hereof.

“Trust Indenture Act” means the Trust Indenture Act of 1939, as
amended (15 U.S.C. §§ 77aaa-77bbbb).

 5
 

Section 1.02                                                              Other
Definitions.

	
  

  	
   

  	
  Defined in

  	
   

  
	
  Term

  	
   

  	
  Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Change of Control Offer”

  	
   

  	
  4.09

  	
   

  
	
  “Change of Control Payment”

  	
   

  	
  4.09

  	
   

  
	
  “Change of Control Payment Date”

  	
   

  	
  4.09

  	
   

  
	
  “Covenant Defeasance”

  	
   

  	
  8.03

  	
   

  
	
  “Event of Default”

  	
   

  	
  6.01

  	
   

  
	
  “Indebtedness”

  	
   

  	
  4.07

  	
   

  
	
  “Legal Defeasance”

  	
   

  	
  8.02

  	
   

  

Section 1.03                                                              Incorporation
by Reference of Trust Indenture Act.

Whenever this Supplemental Indenture refers to a
provision of the Trust Indenture Act, the provision is incorporated by
reference in and made a part of this Supplemental Indenture.

The following Trust Indenture Act terms used in this
Supplemental Indenture have the following meanings:

“indenture securities”
means the Notes;

“indenture security Holder” means a Holder of a Note;

 “indenture trustee” or “institutional trustee” means the Trustee; and

“obligor” on
the Notes means the Company, and any successor obligor upon the Notes.

All other terms used in this Supplemental Indenture
that are defined by the Trust Indenture Act, defined by Trust Indenture Act
reference to another statute or defined by Commission rule under the Trust
Indenture Act have the meanings so assigned to them.  All other capitalized terms used herein and
not otherwise defined shall have the meanings provided in the Base Indenture.

Section 1.04                                                              Rules
of Construction.

Unless the context otherwise
requires:

(1)          a term has the meaning
assigned to it;

(2)          an accounting term not
otherwise defined has the meaning assigned to it in accordance with GAAP;

(3)          “or” is not exclusive;

(4)          words in the singular
include the plural, and in the plural include the singular;

(5)          “will” shall be
interpreted to express a command;

(6)          provisions apply to
successive events and transactions;

 6
 

(7)          references to sections
of or rules under the Securities Act will be deemed to include substitute,
replacement of successor sections or rules adopted by the Commission from time
to time; and

(8)          references to sections of the Indenture refer to sections of this
Supplemental Indenture.

Section 1.05                                                              Relationship with Base
Indenture.

The terms and provisions contained in the Base
Indenture shall constitute, and are hereby expressly made, a part of this
Supplemental Indenture and the Company and the Trustee, by their execution and
delivery of this Supplemental Indenture, expressly agree to such terms and
provisions and to be bound thereby. 
However, to the extent any provision of the Base Indenture conflicts
with the express provisions of this Supplemental Indenture, the provisions of
this Supplemental Indenture shall govern and be controlling.

The Trustee accepts the amendment of the Base
Indenture effected by this Supplemental Indenture and agrees to execute the
trust created by the Base Indenture as hereby amended, but only upon the terms
and conditions set forth in the Indenture, including the terms and provisions
defining and limiting the liabilities and responsibilities of the Trustee in
the performance of the trust created by the Base Indenture, and without
limiting the generality of the foregoing, the Trustee shall not be responsible
in any manner whatsoever for or with respect to any of the recitals or
statements contained herein, all of which recitals or statements are made
solely by the Company, or for or with respect to (1) the validity or
sufficiency of this Supplemental Indenture or any of the terms or provisions hereof,
(2) the proper authorization hereof by the Company, (3) the due execution
hereof by the Company or (4) the consequences (direct or indirect and whether
deliberate or inadvertent) of any amendment herein provided for, and the
Trustee makes no representation with respect to any such matters.

ARTICLE
2.

THE NOTES

Section 2.01                                                              Form
and Dating.

(a)          General.  The Notes
shall be issued in registered global form without interest coupons.  The Notes and the Trustee’s certificate of
authentication shall be substantially in the form of Exhibit A hereto.  The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage.  The Company shall furnish any such notations,
legends or endorsements to the Trustee in writing.  Each Note shall be dated the date of its
authentication.  The Notes shall be in
denominations of $2,000 and integral multiples of $1,000 in excess of $2,000.

The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of the Indenture and the
Company and the Trustee, by their execution and delivery of this Supplemental
Indenture, expressly agree to such terms and provisions and to be bound
thereby.  However, to the extent any
provision of any Note conflicts with the express provisions of the Base
Indenture, the provisions of the Note shall govern and be controlling, and to
the extent any provision of the Note conflicts with the express provisions of
this Supplemental Indenture, the provisions of this Supplemental Indenture shall
govern and be controlling.

(b)         Global Notes.  Notes
issued in global form shall be substantially in the form of Exhibit A attached
hereto (including the Global Note Legend thereon).  Notes issued in definitive form shall be
substantially in the form of Exhibit A attached hereto (but without the Global
Note Legend thereon).  

 7
 

Each Global Note shall represent such of the outstanding Notes as will
be specified therein and each shall provide that it represents the aggregate
principal amount of outstanding Notes from time to time as reflected in the
records of the Trustee and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions.  The Trustee’s records shall be noted to
reflect the amount of any increase or decrease in the aggregate principal
amount of outstanding Notes represented thereby, in accordance with
instructions given by the Holder thereof as required by Section 2.04 hereof.

Section 2.02                                                              Execution
and Authentication.

One Officer must sign the Notes for the Company by
manual or facsimile signature.

If an Officer whose signature is on a Note no longer
holds that office at the time a Note is authenticated, the Note will
nevertheless be valid.

A Note will not be valid until authenticated by the
manual signature of the Trustee.  The
signature will be conclusive evidence that the Note has been authenticated
under this Supplemental Indenture.

The Trustee shall, upon receipt of a Company Order,
authenticate Notes for original issue under this Supplemental Indenture,
including any Additional Notes issued pursuant to Section 2.05 hereof.  The aggregate principal amount of Notes
outstanding at any time may not exceed the aggregate principal amount of Notes
authorized for issuance by the Company pursuant to one or more Company Orders,
except as provided in Section 306 of the Base Indenture.

The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Notes.  An authenticating agent may authenticate
Notes whenever the Trustee may do so. 
Each reference in this Supplemental Indenture to authentication by the
Trustee includes authentication by such agent. 
An authenticating agent has the same rights as an Agent to deal with
Holders, the Company or an Affiliate of the Company.

Section 2.03                                                              Holder
Lists.

The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with Trust Indenture Act
§ 312(a).  If the Trustee is not the
Securities Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders and the
Company shall otherwise comply with Trust Indenture Act § 312(a).

Section 2.04                                                              Transfer
and Exchange.

(a)          Transfer and Exchange of Global Notes.  A Global Note may not be transferred as a
whole except by the Depositary to a nominee of the Depositary, by a nominee of
the Depositary to the Depositary or to another nominee of the Depositary, or by
the Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary.  All Global
Notes shall be exchanged by the Company for Definitive Notes if:

(1)          the Company delivers to
the Trustee notice from the Depositary that it is unwilling or unable to
continue to act as Depositary or that it is no longer a clearing agency
registered under 

 8
 

the Exchange
Act and, in either case, a successor Depositary is not appointed by the Company
within 120 days after the date of such notice from the Depositary;

(2)          the Company in its sole
discretion determines that the Global Notes (in whole but not in part) should
be exchanged for Definitive Notes and delivers a written notice to such effect
to the Trustee; or

(3)          there has occurred and
is continuing a Default or Event of Default with respect to the Notes.

Upon the occurrence of any of the preceding events in
(1), (2) or (3) above, Definitive Notes shall be issued in such names and in
any approved denominations as the Depositary shall instruct the Trustee.  Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 304 and 306 of the Base
Indenture.  Every Note authenticated and
delivered in exchange for, or in lieu of, a Global Note or any portion thereof,
pursuant to this Section 2.04 hereof or Sections 304 or 306 of the Base
Indenture, shall be authenticated and delivered in the form of, and shall be, a
Global Note.  A Global Note may not be
exchanged for another Note other than as provided in this Section 2.04(a),
however, beneficial interests in a Global Note may be transferred and exchanged
as provided in Section 2.04(b),  (c) and
(d) hereof.

(b)         Transfer and Exchange of Beneficial Interests in the Global Notes.  The transfer and exchange of beneficial
interests in the Global Notes shall be effected through the Depositary, in
accordance with the provisions of this Supplemental Indenture and the
Applicable Procedures.  Transfers of
beneficial interests in the Global Notes also will require compliance with
either subparagraph (1) or (2) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:

(1)          Transfer of
Beneficial Interests in the Same Global Note.  Beneficial interests in any Global Note may
be transferred to Persons who take delivery thereof in the form of a beneficial
interest in a Global Note.  No written
orders or instructions shall be required to be delivered to the Securities
Registrar to effect the transfers described in this Section 2.04(b)(1).

(2)          All Other
Transfers and Exchanges of Beneficial Interests in Global Notes.  In connection with all transfers and
exchanges of beneficial interests that are not subject to Section 2.04(b)(1)
above, the transferor of such beneficial interest must deliver to the
Securities Registrar both:

(A)      a written order from a
Participant or an Indirect Participant given to the Depositary in accordance
with the Applicable Procedures directing the Depositary to credit or cause to
be credited a beneficial interest in another Global Note in an amount equal to
the beneficial interest to be transferred or exchanged; and

(B)        instructions given in
accordance with the Applicable Procedures containing information regarding the
Participant account to be credited with such increase.

Upon satisfaction of all
of the requirements for transfer or exchange of beneficial interests in Global
Notes contained in this Supplemental Indenture and the Notes or otherwise
applicable under the Securities Act, the Trustee shall adjust the principal
amount of the relevant Global Note(s) pursuant to Section 2.04(g) hereof.

 

 9
 

(c)          Transfer or Exchange of Beneficial Interests in Global Notes for
Definitive Notes.

(1)          If
any holder of a beneficial interest in a Global Note proposes to exchange such
beneficial interest for a Definitive Note or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a Definitive
Note, then, upon satisfaction of the conditions set forth in Section 2.04(b)(2)
hereof, the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.04(g) hereof, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount.  Any Definitive Note
issued in exchange for a beneficial interest pursuant to this Section
2.04(c)(1) shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest
requests through instructions to the Securities Registrar from or through the
Depositary and the Participant or Indirect Participant.  The Trustee shall deliver such Definitive
Notes to the Persons in whose names such Notes are so registered.

(d)         Transfer and Exchange of Definitive Notes for Beneficial Interests in
Global Notes.

A Holder of a
Definitive Note may exchange such Note for a beneficial interest in a Global
Note or transfer such Definitive Notes to a Person who takes delivery thereof
in the form of a beneficial interest in a Global Note at any time.  Upon receipt of a request for such an
exchange or transfer, the Trustee shall cancel the applicable Definitive Note
and increase or cause to be increased the aggregate principal amount of one of
the Global Notes.

If any such exchange or
transfer from a Definitive Note to a beneficial interest is effected pursuant
to the previous paragraph at a time when a Global Note has not yet been issued,
the Company shall issue and, upon receipt of a Company Order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Global Notes in
an aggregate principal amount equal to the principal amount of Definitive Notes
so transferred.

A Holder of Definitive
Notes may transfer such Notes to a Person who takes delivery thereof in the
form of a Definitive Note.

(e)          Transfer and Exchange of Definitive Notes for Definitive Notes.  Upon request by a Holder of Definitive Notes
and such Holder’s compliance with the provisions of this Section 2.04(e), the
Securities Registrar shall register the transfer or exchange of Definitive
Notes.  Prior to such registration of
transfer or exchange, the requesting Holder must present or surrender to the
Securities Registrar the Definitive Notes duly endorsed or accompanied by a
written instruction of transfer in form satisfactory to the Securities
Registrar duly executed by such Holder or by its attorney, duly authorized in
writing.  In addition, the requesting
Holder must provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.04(e).

(f)            Legends.  A legend in
substantially the following form will appear on the face of all Global Notes
issued under this Supplemental Indenture unless specifically stated otherwise
in the applicable provisions of this Supplemental Indenture.

 “THIS GLOBAL
NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE FIFTH SUPPLEMENTAL INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.04 OF THE FIFTH SUPPLEMENTAL INDENTURE, (2)
THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
2.04(a) OF THE FIFTH SUPPLEMENTAL INDENTURE, (3) THIS GLOBAL NOTE MAY BE
DELIVERED TO THE TRUSTEE FOR 

 10
 

CANCELLATION PURSUANT TO SECTION 309 OF THE BASE
INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY
WITH THE PRIOR WRITTEN CONSENT OF RELIANT ENERGY, INC.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.  UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

(g)         Cancellation and/or Adjustment of Global Notes.  At such time as all beneficial interests in a
particular Global Note have been exchanged for Definitive Notes or a particular
Global Note has been redeemed, repurchased or canceled in whole and not in
part, each such Global Note shall be returned to or retained and canceled by
the Trustee in accordance with Section 309 of the Base Indenture.  At any time prior to such cancellation, if
any beneficial interest in a Global Note is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Note or for Definitive Notes, the principal amount of Notes represented
by such Global Note will be reduced accordingly and a notation will be made on
the records maintained by the Trustee or by the Depositary at the direction of
the Trustee to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
will be increased accordingly and a notation will be made on the records
maintained by the Trustee or by the Depositary at the direction of the Trustee
to reflect such increase.

(h)         General Provisions Relating to Transfers and Exchanges.

(1)          To permit registrations
of transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Global Notes and Definitive Notes upon receipt of a Company Order
in accordance with Section 2.02 hereof or at the Securities Registrar’s
request.

(2)          No service charge shall
be made to a Holder of a Global Note or to a Holder of a Definitive Note for
any registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections
3.06, 4.09 and 9.05 hereof and Section 304 of the Base Indenture).

(3)          The Securities Registrar
shall not be required to register the transfer of or exchange any Note selected
for redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part.

 11
 

(4)          All Global Notes and
Definitive Notes issued upon any registration of transfer or exchange of Global
Notes or Definitive Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Supplemental Indenture, as the Global Notes or Definitive Notes surrendered
upon such registration of transfer or exchange.

(5)          The Company shall not be
required:

(A)      to issue, to register the
transfer of or to exchange any Notes during a period beginning at the opening
of business 15 days before the day of any selection of Notes for redemption
under Section 3.02 hereof and ending at the close of business on the day of
selection;

(B)        to register the transfer
of or to exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part; or

(C)        to register the transfer
of or to exchange a Note between a record date and the next succeeding interest
payment date.

(6)          Prior to due presentment
for the registration of a transfer of any Note, the Trustee, any Agent and the
Company may deem and treat the Person in whose name any Note is registered as
the absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and none of
the Trustee, any Agent or the Company shall be affected by notice to the
contrary.

(7)          The Trustee shall
authenticate Global Notes and Definitive Notes in accordance with the
provisions of Section 2.02 hereof.

(8)          All certifications,
certificates and Opinions of Counsel required to be submitted to the Securities
Registrar pursuant to this Section 2.04 to effect a registration of transfer or
exchange may be submitted by facsimile.

Section 2.05                                                              Issuance
of Additional Notes.

The Company shall be entitled, upon delivery of an
Officer’s Certificate, Opinion of Counsel and Company Order to issue Additional
Notes under this Supplemental Indenture which shall have identical terms as the
Initial Notes issued on the Issue Date, other than with respect to the date of
issuance and issue price.  The Initial
Notes issued on the Issue Date and any Additional Notes issued shall be treated
as a single class for all purposes under this Supplemental Indenture.

With respect to any Additional Notes, the Company
shall set forth in a resolution of its Board of Directors and an Officer’s
Certificate, a copy of each which shall be delivered to the Trustee, the
following information:

(a)          the aggregate principal
amount of such Additional Notes to be authenticated and delivered pursuant to
this Supplemental Indenture; and

(b)         the issue price, the
issue date and the CUSIP number of such Additional Notes.

 12
 

ARTICLE
3.

REDEMPTION AND PREPAYMENT

Section 3.01                                                              Notices
to Trustee.

If the Company elects to redeem Notes pursuant to the
optional redemption provisions of Section 3.07 hereof, it must furnish to the
Trustee, at least 30 days (45 days in the case of a partial redemption) but not
more than 60 days before a Redemption Date, an Officer’s Certificate setting
forth:

(1)          the clause of this
Supplemental Indenture pursuant to which the redemption shall occur;

(2)          the Redemption Date;

(3)          the principal amount of
Notes to be redeemed; and

(4)          the redemption price.

Section 3.02                                                              Selection
of Notes to Be Redeemed or Purchased.

If less than all of the Notes are to be redeemed or purchased at any
time, the Trustee shall select Notes for redemption or purchase on a pro rata basis unless otherwise required by law or
applicable stock exchange requirements, if any.

In the event of partial redemption by lot, the
particular Notes to be redeemed or purchased shall be selected, unless
otherwise provided herein, not less than 30 nor more than 60 days prior to the
redemption by the Trustee from the outstanding Notes not previously called for
redemption.

The Trustee shall promptly notify the Company in
writing of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to be
redeemed.  Notes and portions of Notes
selected shall be in amounts of $2,000 or whole multiples of $1,000 in excess
of $2,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed.  Except as
provided in the preceding sentence, provisions of this Supplemental Indenture
that apply to Notes called for redemption also apply to portions of Notes
called for redemption.

No Notes of $2,000 or less shall be redeemed in
part.  Notices of redemption shall be
mailed by first class mail at least 30 but not more than 60 days before the
Redemption Date to each Holder to be redeemed at its registered address, except
that redemption notices may be mailed more than 60 days prior to a Redemption
Date if the notice is issued in connection with a defeasance of the Notes or a
satisfaction and discharge of this Supplemental Indenture.  Notices of redemption may not be conditional.

If any Note is to be redeemed in part only, the notice
of redemption that relates to that Note shall state the portion of the
principal amount of that Note that is to be redeemed.  A new Note in principal amount equal to the
unredeemed portion of the original Note shall be issued in the name of the
Holder of the original Note upon cancellation of the original Note.  Notes called for redemption become due on the
date fixed for redemption.  On and after
the Redemption Date, interest ceases to accrue on Notes or portions of them
called for redemption.

 13
 

Section 3.03                                                              Notice
of Redemption.

At least 30 days but not
more than 60 days before a Redemption Date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address, except that redemption
notices may be mailed more than 60 days prior to a Redemption Date if the
notice is issued in connection with a defeasance of the Notes or a satisfaction
and discharge of this Supplemental Indenture pursuant to Article 8 or 10 of
this Supplemental Indenture.  Notices of
redemption may not be conditional.

The notice will identify the Notes to be redeemed and
will state:

(1)          the Redemption Date;

(2)          the redemption price;

(3)          if any Note is being
redeemed in part, the portion of the principal amount of such Note to be
redeemed and that, after the Redemption Date upon surrender of such Note, a new
Note or Notes in principal amount equal to the unredeemed portion will be
issued upon cancellation of the original Note;

(4)          the name and address of
the Paying Agent;

(5)          that Notes called for
redemption must be surrendered to the Paying Agent to collect the redemption
price;

(6)          that, unless the Company
defaults in making such redemption payment, interest on Notes called for
redemption ceases to accrue on and after the Redemption Date;

(7)          the paragraph of the
Notes and/or section of this Supplemental Indenture pursuant to which the Notes
called for redemption are being redeemed; and

(8)          that no representation
is made as to the correctness or accuracy of the CUSIP number, if any, listed
in such notice or printed on the Notes.

At the Company’s request, the Trustee shall give the
notice of redemption in the Company’s name and at its expense; provided, however, that the Company has delivered to the
Trustee, at least 45 days prior to the Redemption Date (or such shorter period
as the Trustee in its sole discretion may allow), an Officer’s Certificate
requesting that the Trustee give such notice and setting forth the information
to be stated in such notice as provided in the preceding paragraph.

Section 3.04                                                              Effect
of Notice of Redemption.

Once notice of redemption is mailed in accordance with
Section 3.03 hereof, Notes called for redemption become irrevocably due and
payable on the Redemption Date at the redemption price.  A notice of redemption may not be
conditional.

Section 3.05                                                              Deposit
of Redemption or Purchase Price.

One Business Day prior to the redemption or Purchase
Date, the Company shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption or purchase price of, accrued interest, and
premium, if any, on all Notes to be redeemed or purchased on that date.  Promptly after the 

 14
 

Company’s written request, the Trustee or the Paying
Agent shall promptly return to the Company any money deposited with the Trustee
or the Paying Agent by the Company in excess of the amounts necessary to pay
the redemption or purchase price of, accrued interest, and premium, if any, on,
all Notes to be redeemed or purchased.

If the Company complies with the provisions of the
preceding paragraph, on and after the redemption or Purchase Date, interest
will cease to accrue on the Notes or the portions of Notes called for
redemption or purchase.  If a Note is
redeemed or purchased on or after an interest record date but on or prior to
the related interest payment date, then any accrued and unpaid interest shall
be paid to the Person in whose name such Note was registered at the close of
business on such record date.  If any
Note called for redemption or purchase is not so paid upon surrender for
redemption or purchase because of the failure of the Company to comply with the
preceding paragraph, interest shall be paid on the unpaid principal, from the
redemption or purchase date until such principal is paid, and to the extent
lawful on any interest not paid on such unpaid principal, in each case at the
rate provided in the Notes and in Section 4.01 hereof.

Section 3.06                                                              Notes
Redeemed or Purchased in Part.

Upon surrender of a Note that is redeemed or purchased
in part, the Company shall issue and, upon receipt of a Company Order, the
Trustee shall authenticate for the Holder at the expense of the Company a new
Note equal in principal amount to the unredeemed or unpurchased portion of the
Note surrendered.

Section 3.07                                                              Optional
Redemption.

(a)                                  The
Company may on any one or more occasions redeem all or a part of the Notes,
upon not less than 30 nor more than 60 days’ prior notice, at a redemption
price equal to 100% of the principal amount of the Notes redeemed plus the
Applicable Premium as of, and accrued and unpaid interest if any, to the
Redemption Date, subject to the rights of Holders on the relevant record date
to receive interest due on the relevant interest payment date.

(b)         Except
pursuant to clause (a) above, the Notes are not redeemable at the Company’s
option prior to their maturity.  The
Company is not prohibited, however, from acquiring Notes in market transactions
by means other than a redemption, whether pursuant to a tender offer or
otherwise.

(c)          Any
redemption pursuant to this Section 3.07 shall be made pursuant to the
provisions of Section 3.01 through 3.06
hereof.

Section 3.08                                                              Mandatory Redemption.

The Company is not required
to make mandatory redemption or sinking fund payments with respect to
the Notes.

ARTICLE
4.

COVENANTS

Section 4.01                                                              Payment
of Notes.

The Company shall pay or cause to be paid the
principal of, premium, if any, and interest on the Notes on the dates and in
the manner provided in the Notes. 
Principal, premium, if any, and interest will be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary
thereof, 

 15
 

holds as of 10:00 a.m. Eastern Time on the due date
money deposited by the Company in immediately available funds and designated
for and sufficient to pay all principal, premium, if any, and interest then
due.

Section 4.02                                                              Maintenance
of Office or Agency.

The Company shall maintain in the Borough of
Manhattan, the City of New York, an office or agency (which may be an office of
the Trustee or an affiliate of the Trustee or Securities Registrar) where Notes
may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Company in respect of the Notes and the
Indenture may be served.  The Company
shall give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. 
If at any time the Company fails to maintain any such required office or
agency or fails to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.

The Company may also from time to time designate one
or more other offices or agencies where the Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such
designation or rescission will in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, the
City of New York for such purposes.  The
Company shall give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.

The Company hereby designates the Corporate Trust
Office of the Trustee as one such office or agency of the Company in accordance
with Section 1002 of the Base Indenture.

Section 4.03                                                              Reports.

Whether or not required by the Commission’s rules and regulations, so
long as any Notes are outstanding, the Company shall furnish to Holders or
cause the Trustee to furnish to Holders:

(1)          within 90 days of the
end of each fiscal year and within 45 days of the end of each fiscal quarter,
all annual and quarterly reports that would be required to be filed with the
Commission on Forms 10-K and 10-Q if the Company were required to file such
reports; and

(2)          within the time periods
specified in the Commission’s rules and regulations that would be applicable if
the Company were subject to such rules and regulations, all current reports
that would be required to be filed with the Commission on Form 8-K if the
Company were required to file such reports.

All such reports shall be prepared, within the time
periods specified above, in all material respects in accordance with all of the
rules and regulations applicable to such reports.  Each annual report on Form 10-K will include
a report on the Company’s consolidated financial statements by the Company’s
independent registered public accounting firm. 
In addition, the Company shall file a copy of each of the reports
referred to in clauses (1) and (2) above with the Commission for public
availability within the time periods specified in clauses (1) and (2) above (unless
the Commission will not accept such a filing). 
To the extent such filings are made, the reports shall be deemed to be
furnished to the Trustee and Holders on the date filed.

If the Company is no longer subject to the periodic
reporting requirements of the Exchange Act for any reason, the Company shall
nevertheless continue filing the reports specified in this Section 4.03 with
the Commission within the time periods specified above unless the Commission
will not accept such 

 16
 

a filing.  The
Company agrees that it shall not take any action for the purpose of causing the
Commission not to accept any such filings. 
If, notwithstanding the foregoing, the Commission will not accept the
Company’s filings for any reason, the Company shall post the reports referred
to in this Section 4.03 on its website within the time periods specified in
clauses (1) and (2) above.

Section 4.04                                                              Compliance
Certificate.

(a)          The
Company shall deliver to the Trustee, within 90 days after the end of each
fiscal year, an Officer’s Certificate stating that a review of the activities
of the Company and its Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing Officers with a view to determining
whether the Company has kept, observed, performed and fulfilled its obligations
under the Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in the
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of the Indenture (or, if a Default or Event of
Default has occurred, describing all such Defaults or Events of Default of
which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.  The Company’s fiscal year ends December 31st.

(b)         So long as
not contrary to the then current recommendations of the American Institute of
Certified Public Accountants, the year-end financial statements delivered
pursuant to Section 4.03 above shall be accompanied by a written statement of
the Company’s independent public accountants (who shall be a firm of
established national reputation) that in making the examination necessary for
certification of such financial statements, nothing has come to their attention
that would lead them to believe that the Company has violated any provisions of
Article 4 or Article 5 hereof in so far as such provisions relate to financial
and accounting matters or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.

(c)          So long as
any of the Notes are outstanding, the Company shall deliver to the Trustee,
forthwith upon any Officer becoming aware of any Default or Event of Default,
an Officer’s Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.

Section 4.05                                                              Taxes.

The Company shall pay,
and shall cause each of its Subsidiaries to pay, prior to delinquency, all
material taxes, assessments, and governmental levies except such as are
contested in good faith and by appropriate proceedings or where the failure to
effect such payment is not adverse in any material respect to Holders.

Section 4.06                                                              Stay,
Extension and Usury Laws.

The Company covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of the Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it shall not, by
resort

 17

to any such law, hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.

Section 4.07                                                              Liens.

(a)  The Company
will not, and will not permit any of its Subsidiaries to, create or permit to
exist any Lien upon any property or assets at any time owned by the Company or
any of its Subsidiaries to secure any indebtedness for money borrowed (which in
no event shall include any capital leases or operating leases) that is
incurred, issued, assumed or guaranteed by the Company or any of its
Subsidiaries (“Indebtedness”), without providing
for the Notes to be equally and ratably secured with (or prior to) any and all
such Indebtedness and any other Indebtedness similarly entitled to be equally
and ratably secured, for so long as such Indebtedness is so secured; provided, however, that
the provisions of this Section 4.07(a) 
will not apply to, or prevent the creation or existence of:

(1) Existing Liens;

(2)
purchase money Liens securing Indebtedness having a principal amount that does
not exceed the cost or value of the purchased property;

(3) Liens in favor of the Company or its Subsidiaries;

(4)
other Liens securing Indebtedness having an aggregate principal amount,
measured as of the date of creation of any such Lien and the date of incurrence
of any such Indebtedness, not to exceed 15% of the Company’s Consolidated Net
Tangible Assets; and

(5) Refinancing Liens.

(b)  If the
Company or any of its Subsidiaries proposes to create or permit to exist a Lien
on any property or assets at any time owned by the Company or any of its
Subsidiaries to secure any Indebtedness, other than as permitted by Section
4.07(a)(1) through 4.07(a)(5), the Company will give prior written notice
thereof to the Trustee, who will forward such notice to Holders, and the
Company will further agree, prior to or simultaneously with the creation of
such Lien, effectively to secure all the Notes equally and ratably with (or prior
to) such other Indebtedness for so long as such other Indebtedness is so
secured.

Section 4.08                                                              Corporate
Existence.

Subject to Article 5
hereof, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect:

(1)          its corporate existence,
and the corporate, partnership or other existence of each of its Subsidiaries,
in accordance with the respective organizational documents (as the same may be
amended from time to time) of the Company or any such Subsidiary; and

(2)          the rights (charter and
statutory), licenses and franchises of the Company and its Subsidiaries;

provided, however,
that the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Subsidiaries, if (a) the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the 

 18
 

Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to Holders and (b) if a Subsidiary is to be dissolved, such
Subsidiary has no assets.

Section 4.09                                                              Offer
to Repurchase Upon Change of Control.

(a)          Upon the
occurrence of a Change of Control, each Holder shall have the right to require
the Company to repurchase all or any part (equal to $2,000 or an integral
multiple of $1,000 in excess of $2,000) of such Holder’s Notes pursuant to an
offer (a “Change of
Control Offer”) to
each Holder on the terms set forth in this Section 4.09.  In such Change of Control Offer, the Company
shall offer to each Holder a payment in cash (the “Change of Control Payment”) equal to 101% of the aggregate
principal amount of Notes repurchased from such Holder plus accrued and unpaid
interest on the Notes repurchased, if any, to the date of purchase, subject to
the rights of Holders on the relevant record date to receive interest due on
the relevant interest payment date. 
Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder describing the transaction or transactions that
constitute the Change of Control and stating:

(1)          that the Change of
Control Offer is being made pursuant to this Section 4.09 and that all Notes
tendered will be accepted for payment;

(2)          the purchase price and
the purchase date, which date will be no earlier than 30 days and no later than
60 days from the date such notice is mailed (the “Change of Control Payment Date”);

(3)          that any Note not
tendered will continue to accrue interest;

(4)          that, unless the Company
defaults in the payment of the Change of Control Payment, all Notes accepted
for payment pursuant to the Change of Control Offer will cease to accrue
interest after the Change of Control Payment Date;

(5)          that Holders electing to
have any Notes purchased pursuant to a Change of Control Offer shall be
required to surrender the Notes, with the form entitled “Option of Holder to
Elect Purchase” on the reverse of the Notes completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;

(6)          that Holders will be
entitled to withdraw their election if the Paying Agent receives, not later
than the close of business on the second Business Day preceding the Change of
Control Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes delivered
for purchase, and a statement that such Holder is withdrawing his election to
have the Notes purchased; and

(7)          that Holders whose Notes
are being purchased only in part will be issued new Notes equal in principal
amount to the unpurchased portion of the Notes surrendered, which unpurchased
portion must be equal to $2,000 in principal amount or an integral multiple of
$1,000 in excess of $2,000.

The Company shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable in connection
with the repurchase of the Notes as a result of a Change in Control.  To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section
4.09, the 

 19
 

Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under this Section 4.09 by virtue of such compliance.

(b)         On the
Change of Control Payment Date, the Company shall, to the extent lawful:

(1)          accept for payment all
Notes or portions of Notes properly tendered pursuant to the Change of Control
Offer;

(2)          deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions of Notes properly tendered; and

(3)          deliver or cause to be
delivered to the Trustee the Notes properly accepted together with an Officer’s
Certificate stating the aggregate principal amount of Notes or portions of
Notes being purchased by the Company.

The Paying Agent shall promptly mail to each Holder
properly tendered the Change of Control Payment for such Notes, and the Trustee
shall promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered,
if any; provided that each new Note shall be in
a principal amount of $2,000 or an integral multiple of $1,000 in excess
thereof.  The Company shall publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.

(c)          The provisions described in Sections 4.09 (a)
and (b) shall apply whether or not other provisions of this Supplemental
Indenture are applicable.  Except as
described in Sections 4.09 (a) and (b) hereof, Holders shall not be permitted
to require that the Company repurchase or redeem the Notes in the event of a
takeover, recapitalization or similar transaction.

(d)         Notwithstanding anything to the contrary in
this Section 4.09, the Company shall not be required to make a Change of Control
Offer upon a Change of Control if (1) a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.09 hereof and purchases all Notes
properly tendered and not withdrawn under the Change of Control Offer, or (2)
notice of redemption has been given pursuant to Section 3.07 hereof, unless and
until there is a default in payment of the applicable redemption price.  A Change of Control Offer may be made in
advance of a Change of Control, with the obligation to pay and the timing of
payment conditioned upon the consummation of the Change of Control, if a
definitive agreement to effect a Change of Control is in place at the time of
the Change of Control Offer.

Section 4.10                                                              Payment
for Consents

The Company shall not, directly or indirectly, pay or
cause to be paid any monetary consideration to or for the benefit of any Holder
for or as an inducement to any consent under or waiver or amendment of any of
the terms or provisions of the Indenture or the Notes unless such consideration
is offered to be paid and is paid to all Holders that consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.

 20
 

ARTICLE
5.

SUCCESSORS

Section 5.01                                                              Merger, Consolidation, or
Sale of Assets.

The
Company shall not, directly or indirectly: (1) consolidate or merge with or
into another Person (whether or not the Company is the surviving corporation);
or (2) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company and its
Subsidiaries taken as a whole, in one or more related transactions, to another
Person; unless:

(1)          either:

(A)      the Company is the surviving
corporation; or

(B)        the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, conveyance or other disposition has been
made is a corporation, partnership or limited liability company organized or
existing under the laws of the United States, any state of the United States or
the District of Columbia; provided that
if the Person is a partnership or limited liability company, then a corporation
wholly-owned by such Person organized or existing under the laws of the United
States, any state of the United States or the District of Columbia that does
not and will not have any material assets or operations shall become a
co-issuer of the Notes pursuant to a supplemental indenture duly and validly
executed by the Trustee; and

(2)          the Person formed by or
surviving any such consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, conveyance or other
disposition has been made assumes all the obligations of the Company under the
Notes and the Indenture pursuant to supplemental indentures or other documents
and agreements reasonably satisfactory to the Trustee.

In addition, the Company shall not, directly or
indirectly, lease all or substantially all of its properties or assets, in one
or more related transactions, to any other Person.

This Section 5.01 shall not apply to:

(1)                a merger of the Company with an Affiliate
solely for the purpose of reincorporating the Company in another jurisdiction
or forming a direct holding company of the Company; or

(2)                any consolidation or merger, or any sale,
assignment, transfer, conveyance, lease or other disposition of assets between
or among the Company and its Subsidiaries.

Section 5.02                                                              Successor
Corporation Substituted.

Upon any consolidation or merger, or any sale,
assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole in a transaction that is subject to, and that complies with the
provisions of, Section 5.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such
sale, assignment, transfer, lease, conveyance or 

 21
 

other disposition is made shall succeed to, and be
substituted for (so that from and after the date of such consolidation, merger,
sale, lease, conveyance or other disposition, the provisions of the Indenture
referring to the “Company” shall refer instead to the successor corporation and
not to the Company), and may exercise every right and power of the Company
under the Indenture with the same effect as if such successor Person had been
named as the Company herein; provided, however,
that the predecessor Company shall not be relieved from the obligation to pay
the principal of, interest, premium on the Notes except in the case of a sale
of all of the Company’s assets in a transaction that is subject to, and that
complies with the provisions of, Section 5.01 hereof.

ARTICLE
6.

DEFAULTS AND REMEDIES

Section 6.01                                                              Events of Default.

Each
of the following is an “Event of Default”:

(1)                                  default for 30 days in the payment when due
of interest on the Notes;

(2)                                  default in payment when due of the principal
of, or premium, if any, on the Notes;

(3)                                  failure by the Company or any of its
Subsidiaries for 90 days after notice from the Trustee or Holders of at least
25% in aggregate principal amount of the outstanding Notes to comply with any
of the other agreements in this Supplemental Indenture or any security
documents required by this Supplemental Indenture;

(4)                                  the acceleration of the maturity of any
Indebtedness for money borrowed (other than the Notes) of the Company or any of
its Significant Subsidiaries (other than an Excluded Project Subsidiary or
Channelview and its Subsidiaries) having an aggregate principal amount
outstanding in excess of 5% of the Company’s Consolidated Net Tangible Assets,
if such acceleration is not rescinded or annulled, or such indebtedness shall
not have been discharged, within 15 days after the date of such acceleration;

(5)                                  failure
by the Company or any of its Significant Subsidiaries to pay final and
non-appealable judgments aggregating in excess of 5% of the Company’s
Consolidated Net Tangible Assets, which judgments are not covered by
indemnities or third-party insurance, which judgments are not paid, discharged,
vacated or stayed for a period of 90 days;

(6)                                  the
Company pursuant to or within the meaning of Bankruptcy Law:

(A)                              commences
a voluntary case,

(B)                                consents
to the entry of an order for relief against it in an involuntary case,

(C)                                consents
to the appointment of a custodian of it or for all or substantially all of its
property,

(D)                               makes
a general assignment for the benefit of its creditors, or

(E)                                 generally
is not paying its debts as they become due; or

 22
 

(7)          a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that:

(A)                              is
for relief against the Company in an involuntary case;

(B)                                appoints
a custodian of the Company or for all or substantially all of the property of
the Company; or

(C)                                orders
the liquidation of the Company;

and the order or decree remains unstayed and in effect
for 60 consecutive days.

Section 6.02                                                              Acceleration.

In the case of an Event of
Default specified in Section 6.01(6) or (7) hereof, all outstanding Notes will
become due and payable immediately without further action or notice.  If any other Event of Default occurs and is
continuing, the Trustee or Holders of at least 25% in principal amount of the
then outstanding Notes may declare all of the Notes to be due and payable
immediately.  Holders of a majority in
aggregate principal amount of the then outstanding Notes by written notice to
the Trustee may on behalf of all Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived.

Section 6.03                                                              Waiver
of Past Defaults.

Holders of a majority in aggregate principal amount of
the then outstanding Notes by written notice to the Trustee may on behalf of
the Holders of all the Notes waive any existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase); provided,
however, that Holders of a majority in aggregate principal amount of
the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such
acceleration.  Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of the Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

Section 6.04                                                              Collection
Suit by Trustee.

If an Event of Default specified in Section 6.01(1) or
(2) occurs and is continuing, the Trustee is authorized to recover judgment in
its own name and as trustee of an express trust against the Company for the
whole amount of principal of, premium, if any, and interest remaining unpaid on
the Notes and interest on overdue principal and, to the extent lawful, interest
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.

Section 6.05                                                              Priorities.

If the Trustee collects any money pursuant to this
Article 6, it shall pay out the money in the following order:

 23
 

First:                                     to
the Trustee, its agents and attorneys for amounts due under Section 7.01 hereof
and Section 607 of the Base Indenture, including payment of all compensation,
expenses and liabilities incurred, and all advances made, by the Trustee and
the costs and expenses of collection;

Second:                       to Holders
for amounts due and unpaid on the Notes for principal, premium, if any, and
interest, ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium, if any, and
interest, respectively; and

Third:                                 to
the Company or to such party as a court of competent jurisdiction shall direct.

The Trustee may fix a record date and payment date for
any payment to Holders pursuant to this Section 6.05.

ARTICLE
7.

TRUSTEE’S COMPENSATION AND INDEMNITY

Section 7.01                                                              Compensation
and Indemnity.

(a)          The
Company shall pay to the Trustee from time to time reasonable compensation for
its acceptance of this Supplemental Indenture and services hereunder.  The Trustee’s compensation will not be
limited by any law on compensation of a trustee of an express trust.  The Company shall reimburse the Trustee
promptly upon request for all reasonable disbursements, advances and expenses
incurred or made by it in addition to the compensation for its services.  Such expenses will include the reasonable
compensation, disbursements and expenses of the Trustee’s agents and counsel.

(b)         The Company
shall indemnify the Trustee against any and all losses, liabilities or expenses
incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Supplemental Indenture and/or the Notes
including the costs and expenses of enforcing this Supplemental Indenture
and/or the Notes against the Company (including this Section 7.01) and
defending itself against any claim (whether asserted by the Company or any
Holder or any other Person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith or willful misconduct.  The Trustee
shall notify the Company promptly of any claim for which it may seek
indemnity.  Failure by the Trustee to so
notify the Company shall not relieve the Company of its obligations
hereunder.  The Company shall defend the
claim and the Trustee shall cooperate in the defense.  The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel.  The Company shall not have to pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.

(c)          The
obligations of the Company under this Section 7.01 will survive the
satisfaction and discharge of this Supplemental Indenture.

(d)         To secure
the Company’s payment obligations in this Section 7.01(d), the Trustee will
have a Lien prior to the Notes on all money or property held or collected by
the Trustee, except that held in trust to pay principal and interest on
particular Notes.  Such Lien shall
survive the satisfaction and discharge of this Supplemental Indenture.

(e)          When the
Trustee incurs expenses or renders services after an Event of Default specified
in Section 6.01(6) and (7) hereof occurs, the expenses and the compensation for
the services (including the 

 24
 

fees and expenses of its agents and counsel) are intended to constitute
expenses of administration under any Bankruptcy Law.

(f)            The
Trustee shall comply with the provisions of Trust Indenture Act
§ 313(b)(2) to the extent applicable.

(g)         The Company’s
obligations under this Section 7.01 shall survive the resignation or removal of
the Trustee, any termination of this Supplemental Indenture, including any
termination or rejection of this Supplemental Indenture in any insolvency or
similar proceeding and the repayment of all the Notes.

ARTICLE
8.

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01                                                              Option
to Effect Legal Defeasance or Covenant Defeasance.

The Company may, at the
option of its Board of Directors evidenced by a resolution set forth in an
Officer’s Certificate, at any time, elect to have either Section 8.02 or 8.03
hereof be applied to all outstanding Notes upon compliance with the conditions
set forth below in this Article 8.

Section 8.02                                                              Legal
Defeasance and Discharge.

Upon the Company’s exercise under Section 8.01 hereof
of the option applicable to this Section 8.02, the Company shall, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed
to have been discharged from their obligations with respect to all outstanding
Notes on the date the conditions set forth in Section 8.04 hereof are satisfied
(hereinafter, “Legal Defeasance”).  For this purpose, Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which will thereafter be deemed to be “outstanding”
only for the purposes of Section 8.05 hereof and the other Sections of the
Indenture referred to in clauses (1) and (2) below, and to have satisfied all
their other obligations under such Notes and this Supplemental Indenture and,
to the extent applicable, the Base Indenture (and the Trustee, on demand of and
at the expense of the Company, shall execute proper instruments acknowledging
the same), except for the following provisions which will survive until
otherwise terminated or discharged hereunder:

(1)          the rights of Holders of
the then outstanding Notes to receive payments in respect of the principal of,
or interest or premium, if any, and on such Notes when such payments are due
from the trust referred to in Section 8.04 hereof;

(2)          the Company’s
obligations with respect to such Notes under Article 2 and Section 4.02 hereof;

(3)          the rights, powers,
trusts, duties and immunities of the Trustee hereunder and under the Base
Indenture, and the Company’s obligations in connection therewith; and

(4)          this Article 8.

Subject to compliance with this Article 8, the Company
may exercise its option under this Section 8.02 notwithstanding the prior
exercise of its option under Section 8.03 hereof.

 25
 

Section 8.03                                                              Covenant
Defeasance.

Upon the Company’s exercise under Section 8.01 hereof
of the option applicable to this Section 8.03, the Company shall, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from each of their obligations under Sections 4.07 and 4.09 hereof
with respect to the outstanding Notes on and after the date the conditions set
forth in Section 8.04 hereof are satisfied (hereinafter, “Covenant Defeasance”), and the Notes will
thereafter be deemed not “outstanding” for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but will continue to be deemed “outstanding”
for all other purposes hereunder (it being understood that such Notes will not
be deemed outstanding for accounting purposes). 
For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply will not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of the Indenture and such
Notes shall be unaffected thereby.  In
addition, upon the Company’s exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, subject to the satisfaction of the conditions
set forth in Section 8.04 hereof, Sections 6.01(3) and 6.01(4) hereof shall not
constitute Events of Default.

Section 8.04                                                              Conditions
to Legal or Covenant Defeasance.

(a)          In order to exercise either Legal Defeasance
or Covenant Defeasance under either Section 8.02 or 8.03 hereof:

(1)                                  the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of Holders, cash in U.S. dollars,
non-callable Government Securities, or a combination of cash in U.S. dollars
and non-callable Government Securities, in amounts as will be sufficient, in
the opinion of a nationally recognized investment bank, appraisal firm or firm
of independent public accountants to pay the principal of, or interest and
premium on the Notes that are then outstanding on the Stated Maturity or on the
applicable Redemption Date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular Redemption
Date;

(2)                                  in the case of Legal Defeasance, the Company
must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the
Trustee confirming that (a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the date of
this Supplemental Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel will confirm that, Holders of the then outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;

(3)                                  in the case of Covenant Defeasance, the
Company must deliver to the Trustee an Opinion of Counsel reasonably acceptable
to the Trustee confirming that the holders of the Notes that are then
outstanding will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as would
have been the case if such Covenant Defeasance had not occurred;

 26
 

(4)                                  no Default or Event of Default shall have
occurred and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to such
deposit);

(5)                                  such Legal Defeasance or Covenant Defeasance
may not result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than this Supplemental Indenture) to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound;

(6)                                  the Company must deliver to the Trustee an
Officer’s Certificate stating that the deposit was not made by the Company with
the intent of preferring Holders over the other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company; and

(7)                                  the Company must deliver to the Trustee an
Officer’s Certificate and an Opinion of Counsel, each stating that all conditions
precedent relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.

(b)         Upon the
occurrence of a Legal Defeasance or a Covenant Defeasance, the Trustee shall
send written notice of such Legal Defeasance or Covenant Defeasance to the
Company.

Section 8.05                                                              Deposited
Money and Government Securities to be Held in Trust; Other Miscellaneous
Provisions.

Subject to Section 8.06 hereof, all money and
non-callable Government Securities (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee, collectively for purposes of
this Section 8.05, the “Trustee”)
pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be
held in trust and applied by the Trustee, in accordance with the provisions of
such Notes and the Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as Paying Agent) as the Trustee may
determine, to Holders of such Notes of all sums due and to become due thereon
in respect of principal, premium, if any, and interest, but such money need not
be segregated from other funds except to the extent required by law.

The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against the cash or
non-callable Government Securities deposited pursuant to Section 8.04 hereof or
the principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account the Holders.

Notwithstanding anything in this Article 8 to the
contrary, the Trustee shall deliver or pay to the Company from time to time
upon the written request of the Company any money or non-callable Government
Securities held by it as provided in Section 8.04 hereof which, in the opinion of
a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 8.04(1) hereof), are in excess of the amount
thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.

Section 8.06                                                              Repayment
to Company.

Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of the principal
of, premium, if any, or interest on any Note and remaining unclaimed for two
years after such principal, premium, if any, or interest has become due and
payable 

 27
 

shall be paid to the Company on its written request or
(if then held by the Company) will be discharged from such trust; and the
Holder of such Note will thereafter be permitted to look only to the Company
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, will thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in the
New York Times and The Wall Street Journal (national edition), notice that such
money remains unclaimed and that, after a date specified therein, which will
not be less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining shall be repaid to the Company.

Section 8.07                                                              Reinstatement.

If the Trustee or Paying Agent is unable to apply any
United States dollars or non-callable Government Securities in accordance with
Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company’s obligations under the
Indenture and the Notes will be revived and reinstated as though no deposit had
occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee
or Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however,
that, if the Company makes any payment of principal of, premium, if any, or
interest on any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of Holders to receive such payment
from the money held by the Trustee or Paying Agent.

ARTICLE
9.

AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01                                                              Without
Consent of Holders.

Notwithstanding Article Nine of the Base Indenture and
Section 9.02 of this Supplemental Indenture, the Company and the Trustee may
amend or supplement this Supplemental Indenture or the Notes without the consent of any
Holder:

(1)                                  to cure any ambiguity, defect or
inconsistency;

(2)                                  to provide for uncertificated Notes in
addition to or in place of certificated Notes or to alter the provisions of
Article 2 hereof (including the related definitions) in a manner that does not
adversely affect any Holder;

(3)                                  to provide for the assumption of the Company’s
obligations to Holders by a successor to the Company pursuant to Article 5
hereof;

(4)                                  to make any change that would provide any
additional rights or benefits to Holders, including the addition of guarantees,
or that does not adversely affect the legal rights under this Supplemental
Indenture of any such Holder;

(5)                                  to comply with requirements of the Commission
in order to effect or maintain the qualification of this Supplemental Indenture
under the Trust Indenture Act;

 28
 

(6)                                  to conform the text of this Supplemental
Indenture or the Notes to any provision of the “Description of the Notes”
section of the Company’s Prospectus Supplement dated June 6, 2007, relating to
the initial offering of the Notes, to the extent that such provision in the “Description
of the Notes” was intended to be a verbatim recitation of a provision of this
Supplemental Indenture or the Notes;

(7)                                  to evidence and provide for the acceptance
and appointment under this Supplemental Indenture of a successor Trustee
pursuant to the requirements thereof; or

(8)                                  to provide for the issuance of Additional
Notes accordance with the limitations set forth in this Supplemental Indenture
as of the date hereof.

Upon the request of the Company authorizing the
execution of any such amended or supplemental indenture, and upon receipt by
the Trustee of the documents described in Section 903 of the Base Indenture and
Section 9.06 hereof, the Trustee shall join with the Company in the execution
of any amended or supplemental indenture authorized or permitted by the terms
of this Supplemental Indenture and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under the Indenture or otherwise.

Section 9.02                                                              With
Consent of Holders.

(a)          Except as
provided below in this Section 9.02, the Company and the Trustee may amend or
supplement this Second Supplemental Indenture and the Notes with the consent of
Holders of at least a majority in aggregate principal amount of the Notes then
outstanding (including, without limitation, consents obtained in connection
with a tender offer or exchange offer for, or purchase of, the Notes), and,
subject to Section 6.04 hereof, any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the principal of, premium
or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Supplemental Indenture or the Notes may be waived with the consent of Holders
of a majority in principal aggregate amount of the then outstanding Notes
(including, without limitation, consents obtained in connection with a tender
offer or exchange offer for, or purchase of, the Notes).

Section
101 of the Base Indenture shall determine which Notes are considered to be “outstanding”
for purposes of this Section 9.02.

Upon the written request of the Company and upon the
filing with the Trustee of evidence satisfactory to the Trustee of the consent
of Holders as aforesaid, and upon receipt by the Trustee of the documents
described in Section 603 of the Base Indenture and Section 9.06 hereof, the
Trustee shall join with the Company in the execution of such amended or
supplemental indenture unless such amended or supplemental indenture directly
affects the Trustee’s own rights, duties or immunities under the Indenture or
otherwise, in which case the Trustee may in its discretion, but will not be
obligated to, enter into such amended or supplemental indenture.

It is not necessary for the consent of Holders under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it is sufficient if such consent approves the substance thereof.

After an amendment, supplement or waiver under this
Section 9.02 becomes effective, the Company shall mail to Holders affected
thereby a notice briefly describing the amendment, supplement or 

 29
 

waiver.  Any
failure of the Company to mail such notice, or any defect therein, will not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver.

Subject to Section 6.04
hereof and  Section 508 of the Base Indenture,
Holders of a majority in aggregate principal amount of the Notes outstanding
may waive compliance in a particular instance by the Company with any provision
of this Supplemental Indenture or the Notes. 
However, without the consent of each Holder affected, an amendment,
supplement or waiver under this Section 9.02 may not (with respect to any Notes
held by a non-consenting Holder):

(1)                reduce the principal amount of Notes whose
Holders must consent to an amendment, supplement or waiver hereunder or under
the Base Indenture as to the Notes;

(2)                reduce the principal of or change the fixed
maturity of any Note;

(3)                reduce the rate of or change the time for
payment of interest on any Note;

(4)                waive a Default or Event of Default in the
payment of principal of, or interest or premium on the Notes (except a
rescission of acceleration of the Notes by Holders of at least a majority in
aggregate principal amount of the outstanding Notes and a waiver of the payment
default that resulted from such acceleration);

(5)                make any Note payable in currency other than
that stated in the Notes;

(6)                make any change in the provisions of this
Supplemental Indenture relating to waivers of past Defaults or the rights of
Holders to receive payments of principal of, or interest or premium on the
Notes;

 (7)             make
any change in Section 6.03 and 9.02 hereof or Section 508 of the Base
Indenture.

(b)         Other than
as expressly provided in Section 9.02 above, the Base Indenture may only be
amended, supplemented or otherwise modified as and to the extent provided in
the Base Indenture.

Section 9.03                                                              Compliance
with Trust Indenture Act.

Every amendment or supplement to this Supplemental
Indenture or the Notes will be set forth in a amended or supplemental Indenture
that complies with the Trust Indenture Act as then in effect.

Section 9.04                                                              Revocation
and Effect of Consents.

Until an amendment, supplement or waiver becomes
effective, a consent to it by a Holder of a Note is a continuing consent by the
Holder of a Note and every subsequent Holder of a Note or portion of a Note
that evidences the same debt as the consenting Holder’s Note, even if notation
of the consent is not made on any Note. 
However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective.  An amendment, supplement or
waiver becomes effective in accordance with its terms and thereafter binds
every Holder.

 30
 

Section 9.05                                                              Notation
on or Exchange of Notes.

The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated.  The Company in exchange for all Notes may
issue and the Trustee shall, upon receipt of a Company Order, authenticate new
Notes that reflect the amendment, supplement or waiver.

Failure to make the appropriate notation or issue a
new Note will not affect the validity and effect of such amendment, supplement
or waiver.

Section 9.06                                                              Trustee
to Sign Amendments, etc.

The Trustee shall sign
any amended or supplemental indenture authorized pursuant to this Article 9 if
the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. 
In executing any amended or supplemental indenture, the Trustee will be
entitled to receive and (subject to Section 602 of the Base Indenture) will be
fully protected in relying upon an Officer’s Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by the Indenture.

ARTICLE
10.

satisfaction and discharge

Section 10.01                                                        Satisfaction
and Discharge.

This Supplemental
Indenture will be discharged and will cease to be of further effect as to all
Notes issued hereunder, when:

(1)          either:

(a)          all Notes that have been
authenticated, except lost, stolen or destroyed Notes that have been replaced
or paid and Notes for whose payment money has been deposited in trust and
thereafter repaid to the Company, have been delivered to the Trustee for
cancellation; or

(b)         all Notes that have not
been delivered to the Trustee for cancellation have become due and payable by
reason of the mailing of a notice of redemption or otherwise or will become due
and payable within one year and the Company has irrevocably deposited or caused
to be deposited with the Trustee as trust funds in trust solely for the benefit
of Holders, cash in U.S. dollars, non-callable Government Securities, or a
combination of cash in U.S. dollars and non-callable Government Securities, in
such amounts as will be sufficient without consideration of any reinvestment of
interest, to pay and discharge the entire indebtedness on the Notes not
delivered to the Trustee for cancellation for principal, premium, if any, and
accrued interest to the date of maturity or redemption;

(2)          no Default or Event of
Default has occurred and is continuing on the date of the deposit (other than a
Default or Event of Default resulting from the borrowing of funds to be applied
to such deposit) and the deposit will not result in a breach or violation of,
or constitute a default under, any other instrument to which the Company is a
party or by which the Company is bound;

(3)          the Company has paid or
caused to be paid all sums payable by it under this Supplemental Indenture; and

 31
 

(4)          the Company has
delivered irrevocable instructions to the Trustee under this Supplemental
Indenture to apply the deposited money toward the payment of the Notes at
maturity or the Redemption Date, as the case may be.

In addition, the Company must deliver an Officer’s
Certificate and an Opinion of Counsel to the Trustee stating that all
conditions precedent to satisfaction and discharge have been satisfied.

Notwithstanding the satisfaction and discharge of this
Supplemental Indenture, if money has been deposited with the Trustee pursuant
to subclause (b) of clause (1) of this Section, the provisions of Section 10.02
hereof and Section 8.06 hereof will survive. 
In addition, nothing in this Section 11.01 will be deemed to discharge
those provisions of Section 7.01 hereof and Section 607 of the Base Indenture,
that, by their terms, survive the satisfaction and discharge of this
Supplemental Indenture.

Section 10.02                                                        Application
of Trust Money.

Subject to the provisions of Section 8.06 hereof, all
money deposited with the Trustee pursuant to Section 10.01 hereof shall be held
in trust and applied by it, in accordance with the provisions of the Notes and
the Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal, premium, if any,
and interest for whose payment such money has been deposited with the Trustee;
but such money need not be segregated from other funds except to the extent
required by law.

If the Trustee or Paying Agent is unable to apply any
money or Government Securities in accordance with Section 10.01 hereof by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company’s obligations under this Supplemental Indenture
and the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 10.01 hereof; provided that
if the Company has made any payment of principal of, premium, if any, or
interest on any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of Holders to receive such payment
from the money or Government Securities held by the Trustee or Paying Agent.

ARTICLE
11.

MISCELLANEOUS

Section 11.01                                                        Trust
Indenture Act Controls.

If any provision of this Supplemental Indenture
limits, qualifies or conflicts with the duties imposed by Trust Indenture Act
§318(c), the imposed duties will control.

Section 11.02                                                        Notices.

Any notice or communication by the Company or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others’ address:

 32
 

If to the Company:

Reliant Energy, Inc.

1000 Main Street 

Houston, TX 77002

Telecopier No.: (713) 497-3000

Attention: General Counsel

With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

Telecopier No.:  (212) 735-2000

Attention:  Richard B. Aftanas

If to the Trustee:

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890

Telecopier No.:  (302) 636-4143

Attention: Corporate Trust Administration

The Company or the Trustee, by notice to the other may
designate additional or different addresses for subsequent notices or
communications.

All notices and communications (other than those sent
to Holders) will be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.

Any notice or communication to a Holder will be mailed
by first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on
the register kept by the Securities Registrar. 
Any notice or communication will also be so mailed to any Person
described in Trust Indenture Act § 313(c), to the extent required by the
Trust Indenture Act.  Failure to mail a
notice or communication to a Holder or any defect in it will not affect its
sufficiency with respect to other Holders.

If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it.

If the Company mails a notice or communication to
Holders, it will mail a copy to the Trustee and each Agent at the same time.

Section 11.03                                                        Communication
by Holders with Other Holders.

Holders may communicate pursuant to Trust Indenture
Act § 312(b) with other Holders with respect to their rights under the
Indenture or the Notes.  The Company, the
Trustee, the Securities Registrar and anyone else shall have the protection of
Trust Indenture Act § 312(c).

 33
 

Section 11.04                                                        No
Personal Liability of Directors, Officers, Employees and Stockholders.

No director, officer, employee, incorporator or
stockholder of the Company, as such, will have any liability for any
obligations of the Company under the Notes or this Supplemental Indenture, or
for any claim based on, in respect of, or by reason of, such obligations or
their creation.  Each Holder by accepting
a Note waives and releases all such liability. The waiver and release are part
of the consideration for issuance of the Notes. The waiver may not be effective
to waive liabilities under the federal securities laws.

Section 11.05                                                        Governing
Law.

THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN
AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE AND THE NOTES WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 11.06                                                        No
Adverse Interpretation of Other Agreements.

This Supplemental Indenture may not be used to
interpret any other indenture, loan or debt agreement of the Company or its
Subsidiaries or of any other Person.  Any
such indenture, loan or debt agreement may not be used to interpret this
Supplemental Indenture.

Section 11.07                                                        Successors.

All agreements of the Company in the Indenture and the
Notes will bind its successors.  All
agreements of the Trustee in the Indenture will bind its successors.

Section 11.08                                                        Severability.

In case any provision in the Indenture or in the Notes
is invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions will not in any way be affected or impaired
thereby.

Section 11.09                                                        Counterpart
Originals.

The parties may sign any number of copies of this
Supplemental Indenture.  Each signed copy
will be an original, but all of them together represent the same agreement.

Section 11.10                                                        Table
of Contents, Headings, etc.

The Table of Contents, Cross-Reference Table and
Headings of the Articles and Sections of this Supplemental Indenture have been
inserted for convenience of reference only, are not to be considered a part of
this Supplemental Indenture and will in no way modify or restrict any of the
terms or provisions hereof.

[Signatures on following pages]

 34

SIGNATURES

Dated as of June
13, 2007

	
  

  	
   

  	
  RELIANT ENERGY, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Andrew C. Johannesen

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Andrew C. Johannesen

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Vice President & Treasurer

  	
   

  	
   

  

 

 1

 

	
  

  	
  WILMINGTON TRUST COMPANY,

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  as Trustee

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
      /s/ Michael G. Oller, Jr.

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Michael G. Oller, Jr.

  	
   

  	
   

  
	
   

  	
   

  	
  Title: Senior Financial Services Officer

  	
   

  	
   

  

 

EXHIBIT A

[Face of Note]

CUSIP
NUMBER: 75952B AP0

ISIN NUMBER: US75952BAP04

7.875% Senior
Notes due 2017

	
  No.

  	
   

  	
  $                            

  

RELIANT ENERGY, INC.

promises to pay to                                                       
or registered assigns,

the principal sum of                                     Dollars
on June 15, 2017.

Interest Payment
Dates:  June 15 and December 15.

Record Dates:  June 1 and December 1.

Dated:  June 13, 2007

IN WITNESS WHEREOF, the
Company has caused this Note to be duly executed.

	
   

  	
  RELIANT ENERGY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

Date of
Authentication:

This Note is one of the
Securities of

a series
designated therein referred to

in the within-mentioned Indenture:

	
  WILMINGTON TRUST COMPANY,

  	
   

  	
   

  
	
    as Trustee

  	
   

  	
   

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  
					

 

 A-1
 

[Back of Note]

7.875% Senior Notes due 2017

[Insert the Global Note Legend, if applicable
pursuant to the provisions of the Supplemental Indenture]

Capitalized terms used herein have the meanings
assigned to them in the Supplemental Indenture referred to below unless
otherwise indicated.

(1)  Interest.  Reliant
Energy, Inc., a Delaware corporation (the “Company”),
promises to pay interest on the principal amount of this Note at 7.875% per
annum from June 13, 2007 until maturity. 
The Company shall pay interest semi-annually in arrears on June 15 and
December 15  of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”).  Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that
if there is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further,
that the first Interest Payment Date shall be December 15, 2007.  Interest will be computed on the basis of a
360-day year of twelve 30-day months.

(2)  Method of Payment. 
The Company shall pay interest on the Notes to the Persons who are
registered Holders at the close of business on the June 1 or December 1 next
preceding the Interest Payment Date, even if such Notes are canceled after such
record date and on or before such Interest Payment Date, except as provided in
Section 307 of the Base Indenture with respect to defaulted interest.  The Notes will be payable as to principal,
premium, if any, and interest at the office or agency of the Company maintained
for such purpose within the City and State of New York, or, at the option of
the Company, payment of interest may be made by check mailed to Holders at
their addresses set forth in the register of Holders; provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest and premium, if any, on all Global
Notes and all other Notes Holders of which will have provided wire transfer
instructions to the Company or the Paying Agent.  Such payment shall be 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.

(3)  Paying Agent and Securities Registrar.  Initially, Wilmington Trust Company, the
Trustee under the Indenture, will act as Paying Agent and the Securities
Registrar.  The Company may change any
Paying Agent or the Securities Registrar without notice to any Holder.  The Company or any of its Subsidiaries may
act in any such capacity.

(4)  Indenture.  This Note
is one of a duly authenticated series of securities of the Company issued and
to be issued in one or more series under a Senior Indenture (the “Base Indenture”),
dated as of December 22, 2004, between the Company and the Trustee, as amended
by the Fifth Supplemental Indenture (the “Supplemental Indenture”
and, together with the Base Indenture, the “Indenture”),
dated as of June 13, 2007, among the Company and the Trustee.  The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb).  The Notes are subject to all such terms, and
Holders are referred to the Indenture and the Trust Indenture Act for a
statement of such terms.  To the extent
any provision of this Note conflicts with the express provisions of the Base
Indenture, the provisions of this Note shall govern and be controlling, and to
the extent any provision of this Note conflicts with the express provisions of
the Supplemental Indenture, the provisions of 

 A-2
 

the
Supplemental Indenture shall govern and be controlling.  The Company shall be entitled to issue
Additional Notes pursuant to Section 2.05 of the Supplemental Indenture.

(5)  Optional Redemption.  The
Company may on any one or more occasions redeem all or a part of the Notes,
upon not less than 30 nor more than 60 days’ prior notice, at a redemption
price equal to 100% of the principal amount of Notes redeemed plus the
Applicable Premium as of, and accrued and unpaid interest if any, to the
Redemption Date, subject to the rights of Holders on the relevant record date
to receive interest due on the relevant interest payment date.

(6)  Mandatory Redemption. The Company shall not be required to
make mandatory redemption or sinking fund payments with respect to the Notes.

(7)  Repurchase at Option of
Holder.  Upon the occurrence
of a Change of Control, each Holder shall have the right to require the Company
to repurchase all or any part (equal to $2,000 or an integral multiple of
$1,000 in excess of $2,000) of such Holder’s Notes pursuant to an offer (a “Change of Control Offer”) to each Holder on the terms set
forth in the Supplemental Indenture.  In
such Change of Control Offer, the Company shall offer to each Holder a  payment in cash (the “Change of
Control Payment”) equal to 101% of the aggregate principal amount of
Notes repurchased from such Holder plus accrued and unpaid interest on the
Notes repurchased, if any, to the date of purchase, subject to the rights of
Holders on the relevant record date to receive interest due on the relevant
interest payment date.  Within 30 days
following any Change of Control, the Company shall mail a notice to each Holder
pursuant to Section 4.09 of the Supplemental Indenture.

(8)  Notice of Redemption. 
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder whose Notes are to be
redeemed at its registered address. 
Notes in denominations larger than $2,000 may be redeemed in part but
only in whole multiples of $1,000 in excess of $2,000, unless all of the Notes
held by a Holder are to be redeemed.  On
and after the Redemption Date interest ceases to accrue on Notes or portions
thereof called for redemption.

(9)  Denominations, Transfer, Exchange.  The Notes are in registered form without
coupons in denominations of $2,000 and integral multiples of $1,000 in excess
of $2,000.  The transfer of Notes may be
registered and Notes may be exchanged as provided in the Supplemental
Indenture.  The Securities Registrar and
the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the Supplemental
Indenture.  The Company need not exchange
or register the transfer of any Note or portion of a Note selected for redemption,
except for the unredeemed portion of any Note being redeemed in part.  Also, the Company need not exchange or
register the transfer of any Notes for a period of 15 days before a selection
of Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.

(10)  Persons Deemed Owners. 
The registered Holder of a Note may be treated as its owner for all
purposes.

(11)  Amendment, Supplement and Waiver.  The Base Indenture may be amended as provided
therein.  Subject to certain exceptions,
the Supplemental Indenture or the Notes may be amended or supplemented with the
consent of Holders of at least a majority in principal amount of the then
outstanding Notes, and any existing default or compliance with any provision of
the 

 A-3
 

Supplemental
Indenture or the Notes may be waived with the consent of Holders of a majority
in principal amount of the then outstanding Notes.  Without the consent of any Holder, the
Supplemental Indenture or the Notes may be amended or supplemented (i) to cure
any ambiguity, defect or inconsistency, (ii) to provide for uncertificated
Notes in addition to or in place of certificated Notes, (iii) to provide for
the assumption of the Company’s obligations to Holders in the case of a merger
or consolidation or sale of all or substantially all of the Company’s assets
pursuant to Article 5 of the Supplemental Indenture, (iv) to make any change
that would provide any additional rights or benefits to Holders, including the
addition of guarantees, or that does not adversely affect the legal rights
under the Supplemental Indenture of any such Holder, (v) to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act, (vi) to conform the text of the
Supplemental Indenture or the Notes to any provision of the Description of
Notes to the extent that such provision in the Description of Notes was
intended to be a verbatim recitation of a provision of the Supplemental Indenture
or the Notes, (viii) to evidence and provide for the acceptance and appointment
under the Indenture of a successor trustee pursuant to the requirements
thereof, and (ix) to provide for the Issuance of Additional Notes in accordance
with the limitations set forth in the Supplemental Indenture as of the date of
the Supplemental Indenture.

(12)  Defaults and Remedies. 
Events of Default include:  (i)
default for 30 days in the payment when due of interest on the Notes;  (ii) default in payment when due of the
principal of, or premium, if any, on the Notes; (iii) failure by the Company
for 90 days after notice from the Trustee or Holders of at least 25% in
aggregate principal amount of the outstanding Notes, to comply with any of the
other agreements in the Supplemental Indenture or any security documents
required by the Indenture; (iv) the acceleration of the maturity of any
Indebtedness for money borrowed (other than the Notes) of the Company or any of
its Significant Subsidiaries (other than an Excluded Project Subsidiary or
Channelview and its Subsidiaries) having an aggregate principal amount
outstanding in excess of 5% of the Company’s Consolidated Net Tangible Assets,
if such acceleration is not rescinded or annulled, or such indebtedness shall
not have been discharged, within 15 days after the date of such acceleration;
(v) failure by the Company or any of its Significant Subsidiaries to pay final
and non-appealable judgments aggregating in excess of 5% of the Company’s Net
Consolidated Tangible Assets, which judgments are not covered by indemnities or
third-party insurance, which judgments are not paid, discharged vacated or
stayed for a period of 90 days; and (vi) the Company pursuant to or within the meaning
of Bankruptcy Law: (A) commences a voluntary case, (B) consents to the entry of
an order for relief against it in an involuntary case, (C) consents to the
appointment of a custodian of it or for all or substantially all of its
property, (D) makes a general assignment for the benefit of its creditors, or
(E) generally is not paying its debts as they become due; or (vii) a court of
competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case; (B) appoints a
custodian of the Company or for all or substantially all of the property of the
Company; or (C) orders the liquidation of the Company; and the order or decree
remains unstayed and in effect for 60 consecutive days.

(13)  Trustee Dealings with Company.  The Trustee, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not the Trustee. 
However, in the event that the Trustee acquires any conflicting interest
it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue as trustee or resign. 
Any Agent may do the same with like rights and duties.  The Trustee is also subject to Sections 611
and 612 of the Base Indenture.

 A-4
 

(14)  No Recourse Against Others. 
No director, officer, employee, incorporator or stockholder of the
Company, as such, will have any liability for any obligations of the Company
under the Notes or the Indenture or for any claim based on, in respect of, or
by reason of, such obligations or their creation.  Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws.

(15)  Authentication.  This
Note will not be valid until authenticated by the manual signature of the
Trustee or an authenticating agent.

(16)  Abbreviations. 
Customary abbreviations may be used in the name of a Holder or an
assignee, such as:  TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).

(17)  CUSIP Numbers. 
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. 
No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon.

(18)  Governing Law. THE INTERNAL LAW OF THE
STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THE SUPPLEMENTAL
INDENTURE, AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.

The Company shall furnish
to any Holder upon written request and without charge a copy of the Base
Indenture and the Supplemental Indenture. 
Requests may be made to:

Reliant
Energy, Inc.

1000 Main Street 

Houston, TX 77002

Telecopier No.: (713) 497-3000

Attention: General Counsel

 A-5

Assignment Form

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:                                                                                                                                    

(Insert assignee’s legal
name)

(Insert
assignee’s soc. sec. or tax I.D. no.)

 

 

 

(Print
or type assignee’s name, address and zip code)

and irrevocably appoint                                                                                                                            

to transfer this Note on the books of the Company.  The agent may substitute another to act for
him.

Date:                                 

Your Signature:                                                                                 

(Sign exactly as
your name appears on the face of this Note)

Signature Guarantee*:                                              

*              Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor acceptable to the Trustee).

 A-1

Option of Holder to Elect Purchase

If you want to elect to have this Note purchased by
the Company pursuant to Section 4.09 of the Supplemental Indenture, check the
appropriate box below:

x  Section 4.09

If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.09 of the Supplemental Indenture, state
the amount you elect to have purchased:

$                         

Date:                              

Your
Signature:                                                                                        

(Sign exactly as
your name appears on the face of this Note)

Tax Identification No.:                                                                             

Signature
Guarantee*:                                      

*              Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor acceptable to the Trustee)

 A-1

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