Document:

exv10wg

 

Exhibit 10.G

INDEMNIFICATION AGREEMENT

     This Indemnification Agreement (this “Agreement”) is made and delivered this               day of
                   ,      , (the “Effective Date”) by El Paso Corporation (the “Company”), to and for the
benefit of                     (“Participant”).

RECITALS

     WHEREAS, in order to induce Participant to continue as an officer of the Company (an
“Officer”) and/or in the capacity of a fiduciary under certain of the Company’s employee benefit
plans (a “Fiduciary”), the Company is executing and delivering to Participant this Indemnification
Agreement.

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

SECTION 1. Right To Indemnification

     If Participant is made a party or is threatened to be made a party to or is involved (including,
without limitation, as a witness) in any actual or threatened action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the
fact that he is or was an Officer and/or Fiduciary or, while an Officer and/or Fiduciary, is or was
serving as an officer, director, employee or agent of any subsidiary of the Company (or otherwise
is or was serving at the request of the Company including service with respect to any employee
benefit plan), whether the basis of such proceeding is alleged action in an official capacity as an
Officer or Fiduciary or in any other capacity while serving as an Officer and/or Fiduciary, he
shall be indemnified and held harmless by the Company to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such amendment permits the Company
to provide broader indemnification rights than said law permitted the Company to provide prior to
such amendment), or by other applicable law as then in effect, against all expense, liability and
loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts to
be paid in settlement) actually and reasonably incurred or suffered by him in connection therewith
and such indemnification shall continue after Participant has ceased to be an Officer and/or a
Fiduciary and shall inure to the benefit of Participant’s heirs, executors and administrators;
provided, however, that except as provided in Section 2 of this Agreement with respect to
proceedings seeking to enforce rights to indemnification or to advancement of expenses, the Company
shall be required to indemnify Participant in connection with a proceeding (or part thereof)
initiated by Participant only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Company (the “Board”). The right to indemnification conferred in this Agreement
shall include the right to be paid by the corporation the reasonable expenses (including attorneys’
fees) incurred in defending any such proceeding in advance of its final disposition (hereinafter an
“advancement of expenses”); further provided, however, that, if the General Corporation Law of the
State of

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Delaware requires, an advancement of expenses incurred by Participant in his capacity as an
Officer and/or a Fiduciary (and not in any other capacity in which service was or is rendered by
Participant while an Officer and/or a Fiduciary, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the Company of an undertaking, if
permitted by Federal Law, by or on behalf of Participant, to repay all amounts so advanced if it
shall ultimately be determined that he is not entitled to be indemnified under this Agreement, or
otherwise, and provided further that except as provided in Section 2 of this Agreement with respect
to proceedings seeking to enforce rights to indemnification or an advancement of expenses, the
Company shall be required to advance expenses to Participant in connection with a proceeding
initiated by him only if such proceeding was authorized by the Board.

SECTION 2. Right To Bring Suit

     If a claim under Section 1 of this Agreement is not paid in full by the Company (following the
final disposition of the proceeding) within sixty (60) days after a written claim has been received
by the Company, except in the case of a claim for an advancement of expenses, in which case final
disposition of the proceeding is not required and the applicable period shall be twenty (20) days,
Participant may at any time thereafter bring suit against the Company to recover the unpaid amount
of the claim and, to the extent successful in whole or in material part, Participant shall be
entitled to be paid the expense of prosecuting such suit. Participant shall be presumed to be
entitled to indemnification under this Agreement upon submission of a written claim (and, in an
action brought to enforce a claim for an advancement of expenses, where the required undertaking,
if any is required, has been tendered to the Company), and thereafter the Company shall have the
burden of proof to overcome the presumption that Participant is not so entitled. Neither the
failure of the Company (including its Board, independent legal counsel, or its stockholders), to
have made a determination prior to the commencement of such suit that indemnification of
Participant is proper in the circumstances, nor an actual determination by the Company (including
its Board, independent legal counsel or its stockholders) that Participant is not entitled to
indemnification, shall be a defense to the suit or create a presumption that Participant is not so
entitled.

SECTION 3. Nonexclusivity of Rights

     The rights to indemnification and to the advancement of expenses conferred in this Agreement
are in addition to and shall not be exclusive of any other right Participant may have or hereafter
acquire under any statute, provision of the Restated Certificate of Incorporation of the Company or
its By-laws, or under any other plan, program, arrangement, agreement, vote of stockholders or
disinterested Directors or otherwise.

SECTION 4. Insurance, Contracts and Funding

     The Company may maintain insurance, at its expense, to protect itself and Participant against any
expense, liability or loss, whether or not the Company would have the power to indemnify
Participant against such expense, liability or loss under the General Corporation Law of the State
of Delaware. The Company may enter into contracts with Participant in furtherance

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of the provisions of this Agreement and may create a trust fund, grant a security interest or
use other means (including, without limitation, a letter of credit) to ensure the payment of such
amounts as may be necessary to effect indemnification as provided in this Agreement. To the extent
the Company maintains an insurance policy or policies providing directors’, officers’ and
fiduciaries liability insurance, Participant shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage available for any Company
director, officer or fiduciary.

SECTION 5. Change of Control

(a)       “Change in Control” shall mean the occurrence of any of the following:

(I)       An acquisition (other than directly from the Company) of any voting securities of the
Company (the “Voting Securities”) by any “Person” (as the term “person” is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), immediately after which such Person has “Beneficial Ownership” (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of more than twenty percent (20%) of (1)
the then-outstanding shares of common stock of the Company (or any other securities into
which such shares of common stock are changed or for which such shares of common stock are
exchanged) (the “Shares”) or (2) the combined voting power of the Company’s then-outstanding
Voting Securities; provided, however, that in determining whether a Change in
Control has occurred pursuant to this paragraph (I), the acquisition of Shares or Voting
Securities in a “Non-Control Acquisition” (as hereinafter defined) shall not constitute a
Change in Control. A “Non-Control Acquisition” shall mean an acquisition by (i) an employee
benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any
corporation or other Person the majority of the voting power, voting equity securities or
equity interest of which is owned, directly or indirectly, by the Company (for purposes of
this definition, a “Related Entity”), (ii) the Company or any Related Entity, or (iii) any
Person in connection with a “Non-Control Transaction” (as hereinafter defined);

(II)       The individuals who, as of the Effective Date, are members of the board of directors of
the Company (the “Incumbent Board”), cease for any reason to constitute at least a majority
of the members of the board of directors of the Company or, following a Merger (as
hereinafter defined), the board of directors of (x) the corporation resulting from such
Merger (the “Surviving Corporation”), if fifty percent (50%) or more of the combined voting
power of the then-outstanding voting securities of the Surviving Corporation is not
Beneficially Owned, directly or indirectly, by another Person (a “Parent Corporation”) or
(y) if there is one or more than one Parent Corporation, the ultimate Parent Corporation;
provided, however, that, if the election, or nomination for election by the
Company’s common stockholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for purposes of the Plan, be
considered a member of the Incumbent Board; and provided, further,
however, that no individual shall be considered a member of the Incumbent Board if
such individual initially assumed office as a result of an actual or threatened solicitation of

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proxies or consents by or on behalf
of a Person other than the board of directors of the Company (a “Proxy Contest”), including
by reason of any agreement intended to avoid or settle any Proxy Contest; or

(III)       The consummation of:

                     (i)       A merger, consolidation or reorganization (1) with or into the Company or (2) in
which securities of the Company

are issued (a “Merger”), unless such Merger is a
“Non-Control Transaction.” A “Non-Control Transaction” shall mean a Merger in which:

         (A)       the stockholders of the Company immediately before such Merger own directly
or indirectly immediately following such Merger at least fifty percent (50%) of the
combined voting power of the outstanding voting securities of (x) the Surviving
Corporation, if there is no Parent Corporation or (y) if there is one or more than
one Parent Corporation, the ultimate Parent Corporation;

         (B)       the individuals who were members of the Incumbent Board immediately prior
to the execution of the agreement providing for such Merger constitute at least a
majority of the members of the board of directors of (x) the Surviving Corporation,
if there is no Parent Corporation, or (y) if there is one or more than one Parent
Corporation, the ultimate Parent Corporation; and

         (C)       no Person other than (1) the Company, (2) any Related Entity, or (3) any
employee benefit plan (or any trust forming a part thereof) that, immediately prior
to the Merger, was maintained by the Company or any Related Entity, or (4) any
Person who, immediately prior to the Merger had Beneficial Ownership of twenty
percent (20%) or more of the then outstanding Shares or Voting Securities, has
Beneficial Ownership, directly or indirectly, of twenty percent (20%) or more of the
combined voting power of the outstanding voting securities or common stock of (x)
the Surviving Corporation, if fifty percent (50%) or more of the combined voting
power of the then outstanding voting securities of the Surviving Corporation is not
Beneficially Owned, directly or indirectly by a Parent Corporation, or (y) if there
is one or more than one Parent Corporation, the ultimate Parent Corporation;

                     (ii)       A complete liquidation or dissolution of the Company; or

                     (iii)       The sale or other disposition of all or substantially all of the assets of the
Company and its subsidiaries taken as a

whole to any Person (other than (x) a transfer to a
Related Entity, (y) a transfer under conditions that would constitute a Non-Control
Transaction, with the disposition of assets being regarded as a Merger for this purpose or
(z) the distribution to the Company’s stockholders of the stock of a Related Entity or any
other assets).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely
because any Person (the “Subject Person”) acquired Beneficial Ownership of more than

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the permitted amount of the then outstanding Shares or Voting Securities as a result of the
acquisition of Shares or Voting Securities by the Company which, by reducing the number of
Shares or Voting Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons; provided, that if a Change in Control
would occur (but for the operation of this sentence) as a result of the acquisition of
Shares or Voting Securities by the Company and, after such share acquisition by the Company,
the Subject Person becomes the Beneficial Owner of any additional Shares or Voting
Securities and such Beneficial Ownership increases the percentage of the then outstanding
Shares or Voting Securities Beneficially Owned by the Subject Person, then a Change in
Control shall occur.

     (b)       Change in Control of the Company. The Company agrees that if there is a Change in
Control of the Company, then with respect to all matters thereafter arising concerning the rights
of Participant to indemnity payments and expense advances under this Agreement, any other
agreements, the Restated Certificate of Incorporation or the By-laws now or hereafter in effect
relating to a proceeding, the Company shall seek legal advice only from special independent counsel
selected by Participant and approved by the Company (which approval shall not be unreasonably
withheld), and who has not otherwise performed services for the Company (other than in connection
with such matters) or Participant. In the event that Participant and the Company are unable to
agree on the selection of the special independent counsel, such special independent counsel shall
be selected by lot from among at least five law firms in New York City, New York or Houston, Texas
selected by Participant, each having no less than 50 partners. Such selection shall be made in the
presence of Participant (and his legal counsel or either of them, as Participant may elect). Such
special independent counsel, among other things, shall determine whether and to what extent the
Participant would be permitted to be indemnified under applicable law and shall render its written
opinion to the Company and Participant to such effect.

     The Company agrees to pay the reasonable fees of the special independent counsel referred to
above and to fully indemnify such counsel against any and all expenses (including attorneys’ fees),
claims, liabilities and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.

SECTION 6. No Modification

     No supplement, modification or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver. Any waiver to this agreement shall be in
writing.

SECTION 7. Subrogation

     In the event of payment under this Agreement, the Company shall be subrogated to the extent of
such payment to all of the rights of recovery of Participant, who shall execute all papers required
and shall do everything that may be necessary to secure such rights, including the

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execution of such documents necessary to enable the Company effectively to bring suit to enforce
such rights.

SECTION 8. No Duplication of Payments

     The Company shall not be liable under this Agreement to make any payment in connection with
any proceeding against Participant to the extent Participant has otherwise actually received
payment (under any insurance policy or otherwise) of the amounts otherwise indemnifiable hereunder.

SECTION 9. Notification and Defense of Proceedings

     Participant agrees that he will use all reasonable efforts to notify the Company promptly
after receipt by Participant of notice of the commencement of any proceeding if he anticipates that
a request for indemnification in respect thereof is to be made against the Company under this
Agreement; but failure to so notify the Company will not relieve the Company from any
indemnification or other obligation or liability which it may have to Participant. With respect to
any such proceeding as to which Participant notifies the Company of the commencement thereof:

     (a)       the Company will be entitled to participate therein at its own expense; and

     (b)       except as otherwise provided below, to the extent that it may wish, the Company jointly
with any other indemnifying party similarly notified will be entitled to assume the defense
thereof, with counsel satisfactory to Participant. After notice from the Company to Participant of
its election to assume the defense thereof, the Company will not be liable to Participant under
this Agreement for any legal or other expenses subsequently incurred by Participant in connection
with the defense thereof other than reasonable costs of investigation or as otherwise provided
below. Participant shall have the right to employ its counsel in such proceeding, but the fees and
expenses of such counsel incurred after notice from the Company of its assumption of the defense
thereof shall be at the expense of Participant unless (i) the employment of counsel by Participant
has been authorized by the Company, (ii) Participant shall have reasonably concluded that there may
be a conflict of interest between the Company and Participant in the conduct of the defense of such
proceeding or (iii) the Company shall not in fact have employed counsel to assume the defense of
such proceeding, in each of which cases the fees and expenses of counsel shall be at the expense of
the Company. The Company shall not be entitled to assume the defense of any proceeding brought by
or on behalf of the Company or as to which Participant shall have made the conclusion provided for
in clause (ii) of this subsection 9(b).

     (c)       The Company shall not be liable to indemnify Participant under this Agreement for any
amounts paid in settlement of any proceeding effected by Participant without the Company’s prior
written consent. The Company shall not settle any proceeding in any manner which would impose any
penalty or limitation on Participant without Participant’s prior written consent. Neither the
Company nor Participant will unreasonably withhold their consent to any proposed settlement.

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SECTION 10. No Presumptions

     For purposes of this Agreement, the termination of any proceeding against Participant by
judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea
of nolo contendere, or its equivalent, shall not create a presumption that Participant did not meet
any particular standard of conduct or have any particular belief or that a court has determined
that indemnification is not permitted by applicable law. In addition, neither the failure of the
Company to have made a determination as to whether Participant has met any particular standard of
conduct or had any particular belief, nor an actual determination by the Company that Participant
has not met such standard of conduct or did not have such belief, prior to the commencement of
legal proceedings by Participant to secure a judicial determination that Participant should be
indemnified under applicable law shall be a defense to Participant’s claim for indemnification or
create a presumption that Participant has not met any particular standard of conduct or did not
have any particular belief.

SECTION 11. Acknowledgment of Reliance

     The Company acknowledges that Participant is relying on this Agreement and the promises and
agreements of the Company herein in continuing his service as an Officer and/or a Fiduciary and in
agreeing to undertake and in undertaking his responsibilities, duties and services to and for the
Company in connection therewith.

SECTION 12. Miscellaneous

     This Agreement shall be governed by and construed in accordance with the laws of the State of
Delaware. Each provision hereof is intended to be severable and the invalidity or illegality of
any portion of this Agreement shall not affect the validity or legality of the remainder.

     Executed as an instrument under seal as of the day and year first above written.

	 	 	 	 	 
	 	 	EL PASO CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 	 	Name: Douglas L. Foshee
	 	 	Title: President & Chief Executive Officer
	 	 	Hereunto duly authorized

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Schedule A

OFFICER INDEMNIFICATION AGREEMENTS

Effective August 4, 2005

Stephen C. Beasley

James J. Cleary

Gregory G. Gruber

David M. Leland

Daniel B. Martin

Gene T. Waguespack

James C. Yardley<PAGE>
                                                                    EXHIBIT 10.1

                 CITY OF HOUSTON, TEXAS, ORDINANCE NO. 2005-692

AN ORDINANCE GRANTING TO CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC THE RIGHT,
PRIVILEGE AND FRANCHISE TO USE THE PUBLIC RIGHTS-OF-WAY TO USE, LICENSE, OR
EXPLOIT THE COMPANY'S FACILITIES WITHIN THE PUBLIC RIGHTS-OF-WAY TO CONDUCT AN
ELECTRIC DELIVERY BUSINESS IN THE CITY AND FOR SUCH OTHER BUSINESS PURPOSES AS
THE COMPANY MAY DESIRE FROM TIME TO TIME, SPECIFICALLY INCLUDING, BUT NOT
LIMITED TO, THE GRANTING OF ACCESS TO THOSE FACILITIES FOR THE DELIVERY OF
BROADBAND THROUGH POWER LINES OR SIMILAR SERVICE WITHIN THE CITY OF HOUSTON,
TEXAS.

                                   * * * * * *

         WHEREAS, City of Houston, Texas Ordinance No. 1957-929 (the "1957
Franchise") granted an electrical lighting and power franchise to Houston
Lighting & Power Company, for a term expiring August 21, 2007; and

         WHEREAS, Company is the successor to Reliant Energy,
Incorporated.("REI"), which was the successor to Houston Lighting & Power
Company, by virtue of a corporate restructuring of REI that occurred in August
2002, in which REI was merged with and into an indirect wholly owned subsidiary
of CenterPoint Energy, Inc., which was converted into a limited liability
company and was renamed CenterPoint Energy Houston Electric, LLC; and

         WHEREAS, Company owns and operates a electric delivery business within
the corporate limits of the City and Company is willing to continue to provide
electric delivery services within the corporate limits of the City; and

         WHEREAS, Company and the City have reached agreement on the terms and
conditions of a renewal franchise; and

         WHEREAS, it is hereby found and determined by the City Council of the
City of Houston that it is in the best interests of the City that a franchise to
use the public rights-of-way to conduct an electric delivery business in the
city and for such other business purposes as the company may desire from time to
time be granted to the Company, subject to the terms and conditions described in
this ordinance; NOW, THEREFORE,

BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF HOUSTON, TEXAS:

         SECTION 1. That the facts contained in the preamble to the Ordinance
are determined to be true and correct and are hereby adopted.

         SECTION 2. Definitions.

         Annual Adjustment Factor has the meaning set forth in Section 11 below.

<PAGE>

         Annual Franchise Fee has the meaning set forth in Section 11 below.

         Base Amount has the meaning set forth in Section 11 below.

         Broadband over Power Lines (BPL) or "Access BPL" has the same meaning
as that used by the Federal Communications Commission in Section 15.3 of its
Rules as reprinted below:

                  Access Broadband over Power Line (Access BPL). A carrier
                  current system installed and operated on an electric utility
                  service as an unintentional radiator that sends radio
                  frequency energy on frequencies between 1.705 MHz and 80 MHz
                  over medium voltage lines or over low voltage lines to provide
                  broadband communications and Is located on the supply side of
                  the utility service's points of interconnection with customer
                  premises. Access BPL does not include power line carrier
                  systems as defined in Section 15.3(t) of this part or In-House
                  BPL as defined in Section 15.3(gg) of this part.

         City means the City of Houston, Texas, a municipal corporation of the
State of Texas.

         City Council means the governing body of the City, or its designee.

         Company means CenterPoint Energy Houston Electric, LLC, a Texas limited
liability company.

         Effective Date means the date on which this Franchise becomes effective
pursuant to Section 4 below.

         First Rate Case has the meaning set forth in Section 14 below.

         Force Majeure means forces or conditions not reasonably within the
control of a party, including a strike; war or act of war (whether an actual
declaration of war is made or not); insurrection; riot; act of public enemy;
accident; fire; flood or other act of God; sabotage; shortages in materials,
supplies and equipment; governmental regulations, limitations and restrictions
as to the use and availability of materials, supplies and equipment and as to
the use of services; unforeseen and unusual demands for service; or other
events, where the affected party has exercised all due care in the prevention
thereof and such causes or other events are without the fault or negligence of
the affected party.

         Franchise means this Ordinance and the rights and privileges granted by
this Ordinance.

<PAGE>

         Franchise Area means the area within the boundaries of the City as of
the Effective Date and as same may change from time to time during the term of
the Franchise.

         Other Services means any service exclusive of the transmission and
distribution of electricity provided or allowed to be provided through the use
or license of the System for a fee, including but not limited to BPL.

         Person means any individual, firm, partnership, association,
corporation, company or organization of any kind.

         Public Rights-of-Way means the areas in, under, upon, over, across, and
along any and all of the present and future Streets or streams now or hereafter
owned or controlled by City.

         PUC means the Public Utility Commission of Texas or its successor
agency with equivalent jurisdiction.

         Retail Customer means any Person taking delivery of electricity from
Company, at a point of delivery within the Franchise Area.

         Rider HOU Amount has the meaning set forth in Section 11 below.

         Street means the surface and the space above and below any public
street, road, highway, alley, bridge, sidewalk, or other public place or way.

         System means the Company's facilities erected, constructed, maintained,
operated, used, extended, removed, replaced, and repaired, as necessary, by
Company pursuant to this Franchise, including without limitation, all poles,
pole lines, towers, transmission lines, wires, guys, conduits, cables, and other
desirable instrumentalities and appurtenances (including telegraph and telephone
poles and wires for use of Company), necessary and proper for the purpose of
transmitting and distributing electricity to the City and the inhabitants of
said City or other Persons, for any purpose for which electricity may be used.

         Tracking Rider has the meaning set forth in Section 14 below.

         SECTION 3. Subject to the terms, conditions and provisions of this
Franchise, City hereby grants to Company the right, privilege and franchise to
use City's Public Rights-of-Way to construct, maintain, operate and use
Company's System to conduct within the City an electric delivery business and
the right to use, license, or exploit the System within the Public Rights-of-Way
for Other Services. This Franchise does not restrict City's right to impose
reasonable fees upon third parties for the use of the Public Rights-of-Way to
provide Other Services, including the right to impose fees upon providers of BPL
service, so long as such fees are assessed on a non-discriminatory basis with
those charged to other companies providing services competitive with the Other
Services.

<PAGE>

         SECTION 4. Upon the filing with City by Company of the acceptance
required hereunder, this Franchise shall be in full force and effect for a term
and period of thirty (30) years from and after the first day of July, 2005.

         SECTION 5. All poles erected by Company pursuant to the authority
herein granted shall be of sound material and reasonably straight, and shall be
so set that they shall not interfere with the flow of water in any gutter or
drain, and so that the same shall interfere as little as practicable with the
ordinary travel, on the Streets or other Public Rights-of-Way. Within the
Streets or other Public Rights-of-Way of City, the location and route of all
poles, stubs, guys, anchors, lines, conduits and cables placed and constructed
and to be placed and constructed by Company in the construction and maintenance
of Company's System in the City, shall be subject to the reasonable and proper
regulation, control and direction of City, or of any City official to whom such
duties have or may be duly delegated, which regulation and control shall
include, but not by way of limitation, the right to require in writing, to the
extent provided in Section 10, the relocation of Company's System at Company's
cost within the Streets or other Public Rights-of-Way whenever such shall be
reasonably necessary to accommodate City Public Works improvement projects
within such Streets or Public Rights-of-Way.

         SECTION 6. In consideration for the compensation set forth in Sections
11 and 15, City agrees that if City sells, convoys, or surrenders possession of
any portion of the Public Right-of-Way that is being used by Company pursuant to
this Franchise, City, to the maximum extent of its right to do so, shall first
grant Company an easement for such use; and the sale, conveyance, or surrender
of possession of the Public Right-of-Way shall be subject to the right and
continued use of Company.

         SECTION 7. Company and its contractors shall give City reasonable
notice of the dates, location, and nature of the work to be performed on the
System within the Public Rights-of-Way. Following completion of work in Public
Rights-of-Way, Company shall repair the affected Public Rights-of-Way as soon as
possible, but in all cases shall comply with all City ordinances governing time
periods and standards relating to excavating in the Public Rights-of-Way. No
Street or other Public Right-of-Way shall be encumbered by construction,
maintenance or removal work by Company for a longer period than shall be
necessary to execute such work.

         SECTION 8. The service furnished hereunder to City and its inhabitants
shall be first-class in all respects, considering all circumstances, and Company
shall furnish the grade of service to Retail Customers as provided by its rate
schedules and shall maintain its System in reasonable operating condition during
the continuance of this Franchise. Company's tariffs shall govern the rates,
access to service, terms and quality of electric delivery services provided by
Company. An exception to this requirement is automatically in effect when due to
Force Majeure. In any Force Majeure event, Company shall do all things
reasonably within its power to restore normal service.

         SECTION 9. Company, on the written request of any person, shall remove
or raise or lower its wires temporarily to permit construction work in the
vicinity thereof or

<PAGE>

to permit the moving of houses or other bulky structures. The expense of such
temporary removal, raising or lowering of wires shall be paid by the benefited
party or parties, and Company may require such payment in advance, being without
obligation to remove, raise, or lower its wires until such payment has been
made. Company shall be given not less than forty-eight (48) hours advance notice
to arrange for such temporary wire changes.

         SECTION 10. Company shall construct, operate, and maintain its
transmission and distribution facilities in substantial accordance with
Company's own Service Standards and the National Electrical Safety Code
("NESC"). Company shall determine the specific location and the method of
construction and types of materials used in building, maintaining, and operating
Company's transmission and distribution facilities. City shall require its
employees and contractors performing work for the benefit of City to comply with
all applicable laws, statutes codes and standards (including, without
limitation, Section 752 of the Texas Health and Safety Code, as the same may be
amended or replaced, and the NESC) when working near Company's System and to
report as soon as practicable any damage done to Company's System. Company also
agrees to require its employees and contractors performing work for the benefit
of City to comply with all applicable laws, statutes codes and standards
(including, without limitation, Section 752 of the Texas Health and Safety Code,
as the same may be amended or replaced, and the NESC) when working near City's
facilities and to report as soon as practicable any damage done to City's
facilities. Company shall relocate facilities within Public Rights-of-Way at
Company's own expense, exclusive of street lighting and facilities installed for
service directly to City, to accommodate City Public Works improvement projects,
including but not limited to street widening, change of grade, water, sewer, or
drainage upgrades, construction or reconstruction projects and minor relocation
of traffic lanes. City shall bear the costs of all relocations of street
lighting and facilities installed for service directly to City and of any
relocation of other facilities requested by City for reasons other than City
Public Works improvement projects. Except in the event of an emergency, City
shall give Company at least seventy-two (72) hours notice when requesting the
bracing of Company's poles. Company shall pay for the bracing to accommodate
City Public Works improvement projects, including but not limited to street
widening, change of grade, water, sewer, or drainage upgrades, construction or
reconstruction projects and minor relocation of traffic lanes.

         SECTION 11. In consideration for the rights and privileges herein
granted, Company agrees to pay to City during the term of this Franchise an
annual franchise fee (referred to herein as "Annual Franchise Fee"), subject to
an Annual Adjustment Factor as set forth below. Except as set forth in Section
15, payment of the Annual Franchise Fee shall be the total compensation payable
to City in consideration for the right, privilege and franchise herein conferred
for Company's use of the Public Rights-of-Way to construct, operate, use and
maintain its System for the provision of electricity transmission and
distribution service and its right to use, license, or exploit its System for
Other Services.

<PAGE>

         The Annual Franchise Fee shall be calculated as follows:

            1.    The "Annual Franchise Fee" for the twelve-month period
                  beginning July 1, 2005, shall be (a) the Base Amount plus (b)
                  the Rider HOU Amount (if and only if approved, no longer
                  subject to appeal, and in effect).

            2.    The "Base Amount* for the Annual Franchise Fee is $88,100,000.

            3.    City agrees to enact Rider HOU, a rider to Company's tariff,
                  to be effective as of the Effective Date of this Franchise.
                  Rider HOU shall be designed to permit Company to recover fees
                  totaling $8,500,000 (the "Rider HOU Amount") from retail
                  electric providers serving Retail Customers.

            4.    The Annual Franchise Fee for each succeeding twelve-month
                  period, including the period beginning July 1, 2006, shall be
                  adjusted by multiplying the Base Amount and the Rider HOU
                  Amount by the Annual Adjustment Factor. The "Annual Adjustment
                  Factor" for any given year shall be a fraction, the numerator
                  of which shall be the kWh delivered by Company within the
                  Franchise Area (inclusive of street lighting) in the previous
                  calendar year and the denominator of which shall be the kWh
                  delivered by Company within the Franchise Area (inclusive of
                  street lighting) in 2004, said amount being 28,650,282,466
                  kWh. (Example: Assuming Rider HOU is still in effect, the
                  Annual Franchise Fee for the twelve-month period beginning
                  July 1, 2008 =($88.1 million + $8.5 million) x 2007
                  kWh/28,650,282,466 kWh).

         In no case, however, shall the Annual Franchise Fee be less than the
Base Amount plus the Rider HOU Amount set forth in this section; provided,
however, that Company shall at all times retain the right to recover from City
any amounts paid (or refuse to pay any amounts not yet paid) to City under Rider
HOU for which Company is denied recovery by any regulatory authority.

         In calculating the amount to be paid each year, Company shall offset
its Annual Franchise Fee payments with the amount of the Municipal Account
Franchise Credits and Municipal Franchise Fee Credits provided in Company's
tariffs and applicable to City in the prior calendar year. The Annual Franchise
Fee shall be payable in equal monthly installments due the first day of each
calendar month. Company shall calculate the new franchise fee to be payable for
each twelve-month period beginning July 1st and shall provide the same along
with the basis for such calculation to City for its review no later than April
1st of each year. If Company does not receive an objection from City by May
31st, Company shall implement the adjusted annual franchise fee payment on July
1st.

<PAGE>

         SECTION 12. The parties agree that the franchise payments due under
this Franchise are reasonable and necessary and that the parties shall use their
best efforts to enable Company to recover these payments through its electric
rates.

         SECTION 13. Except as provided in Section 15, the Annual Franchise Fee
payable hereunder shall be the total compensation payable by Company to City for
Company's use of the Public Rights-of-Way for the conduct of its business under
the Franchise. City shall not charge any additional license, charge, fee, street
or alley rental, or other character of charge or levy for the use or occupancy
of the Public Rights-of-Way in City, or any pole tax or inspection fee tax. If
City does charge Company any additional license, charge, fee, street or alley
rental, or other character of charge or levy, then Company may deduct the amount
charged from the next succeeding franchise payment or payments until fully
reimbursed. The Franchise shall constitute a permit to perform all work on
Company's System within the Public Rights-of-Way and to park vehicles in the
Streets and other Public Rights-of-Way when necessary for the installation,
removal, operation or maintenance of Company's System. Company and contractors
performing work for Company shall not be required to obtain any permits in
addition to the Franchise or to pay any fee in addition to the Annual Franchise
Fee in order to perform work on Company's System or to park within the Streets
and other Public Rights-of-Way. Company shall give City reasonable notice of the
dates, location and nature of any excavation work and shall cooperate with City
to avoid unnecessary disruption, and Company shall comply with all City
ordinances governing time periods and standards relating to excavating in the
Public Rights-of-Way.

         SECTION 14. In the first rate case to review Company's base rates
following the Effective Date (the "First Rate Case"), City shall support
Company's request to (a) include in Company's base rates the entire
then-effective Annual Franchise Fee, (b) include in its tariff a new rider that
permits Company at all times thereafter to recover through its rates any portion
of the Annual Franchise Fee in excess of the amount included in Company's
then-effective retail base rate tariff (the "Tracking Rider") and (c) eliminate
from Company's tariffs Rider HOU. If, as a result of the First Rate Case, or any
subsequent rate case, Company's entire then-effective Annual Franchise Fee is
not included in Company's base rates and/or Company is not permitted to
implement the Tracking Rider, then Company shall be required to pay only so much
in franchise fees as the amount of franchise fees used by the PUC to calculate
Company's then-effective rates.

         SECTION 15. In addition to the considerations set forth in Section 11,
Company shall furnish, free of charge, subject to the use of City, such pole
and/or duct space as may be required from time to time for the installation of
City-owned traffic, police and fire alarm system conductors; provided such
conductor space does not exceed the capacity of one crossarm on any one pole or
one interior duct and provided such space is then available on existing poles or
ducts. Company shall allow for the expanded use of existing energized conductors
by City for the purposes of providing traffic signal communication
interconnectivity with prior written approval from Company. The specific
location for these traffic, police and fire alarm conductors on Company poles or
ducts

<PAGE>

shall be determined by Company and shall be allotted at the time specific
applications for space are received from City. All City traffic, police and fire
alarm circuits on Company poles and ducts shall be designed and installed,
operated and maintained in compliance with the applicable provisions of the NESC
and other laws, statutes, codes and ordinances applicable to private parties and
so as to create no interference, corrosion, harm, damage or hazard with, to or
from Company's System or Company's business. All plans for such city traffic,
police and fire alarm circuits must be submitted for Company's written approval
prior to installation. Any modifications to Company's System necessary to
accommodate such installation shall be paid by City. If, after installation,
City's equipment is found to interfere with Company's System or business,
Company and City shall work together to address the problem and, if deemed
practical by Company, preserve City's access. Where main underground duct lines
are located between manholes, Company shall permit free of charge the
installation in one interior duct by City of its traffic, police or fire alarm
signal cables; provided space is available in an interior duct not suitable for
power circuits without interference with Company's system neutral conductors.
All cables installed by City in Company ducts shall be of the non-metallic
sheath type to prevent corrosive or electrolytic action between City and Company
owned cables. A request for duct assignment shall in each instance be submitted
to Company and a sketch showing duct allocation shall be received from Company
prior to the installation of City cables in Company-owned duct lines. All
City-owned conductors and cables, whether on poles or in duct lines, shall be
constructed, maintained and operated in such manner as to not interfere with or
create a hazard in the operation of Company's System or Company's business. If
after installation, City's equipment is found to interfere with Company's System
or business, Company and City shall work together to address the problem and, if
deemed practical by Company, preserve City's access.

         In addition to the consideration set forth in Section 11, Company shall
permit City to use, free of charge, extra space on its street light poles to
install City-owned traffic control signs and decorative banners, with prior
written approval from Company and provided that such use is consistent with the
NESC and other applicable engineering and operational codes and standards.

         NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT, IT IS FURTHER
AGREED THAT COMPANY SHALL NOT BE RESPONSIBLE TO ANY PARTY OR PARTIES WHATSOEVER
FOR ANY CLAIMS, DEMANDS, LOSSES, SUITS, JUDGMENTS FOR DAMAGES OR INJURIES TO
PERSONS OR PROPERTY BY REASON OF THE CONSTRUCTION, MAINTENANCE, INSPECTION OR
USE OF THE TRAFFIC SIGNAL LIGHT SYSTEMS, POLICE AND FIRE ALARM SYSTEMS, TRAFFIC
CONTROL SIGNS, OR DECORATIVE BANNERS BELONGING TO CITY AND CONSTRUCTED UPON
COMPANY'S POLES OR STREET LIGHT POLES OR IN ITS DUCTS, AND CITY SHALL INDEMNIFY
AND HOLD COMPANY HARMLESS AGAINST ALL SUCH CLAIMS, LOSSES, DEMANDS, SUITS AND
JUDGMENTS, TO THE EXTENT PERMITTED BY THE TEXAS TORT CLAIMS ACT, BUT CITY DOES
NOT, BY THIS AGREEMENT, ADMIT PRIMARY LIABILITY TO ANY THIRD PARTY BY REASON OF
CITY'S OPERATION AND USE OF SUCH TRAFFIC SIGNAL LIGHT

<PAGE>

SYSTEMS, POLICE AND FIRE ALARM SYSTEMS, TRAFFIC CONTROL SIGNS, OR DECORATIVE
BANNERS, SUCH BEING A FUNCTION OF GOVERNMENT.

         SECTION 16. City may conduct an audit or other inquiry, or may pursue a
cause of action in relation to the payment of the Annual Franchise Fee only if
such audit, inquiry, or pursuit of a cause of action concerns a payment made
less than two (2) years before commencement of such audit, inquiry, or pursuit
of a cause of action. City shall bear the costs of any such audit or inquiry.
All books and records related to Company's operations under this Franchise shall
be available to City. Upon receipt of a written request from City, such
documents shall be made available for inspection and copying no later than
thirty (30) days from the receipt of such request. Amounts due to City for past
underpayments or amounts due Company for past overpayments shall include
interest calculated using the annual interest rates for overcharges as set by
the Texas Public Utility Commission. Said interest shall be payable on such sum
from the date the initial payment was due until it is paid.

         SECTION 17. The parties agree to waive any and all claims, asserted or
unasserted, arising out of prior franchise agreements including, without
limitation, the ordinance passed by the Mayor of the City of Houston on the 21st
day of August, 1957, granting a franchise to Houston Lighting & Power Company
except those claims relating to Company's obligations as determined in the audit
underway at the time of the execution of this Franchise and any claims
associated with Company's fulfillment of its obligations during the period of
September 2004 through June 2005.

         SECTION 18. Nothing contained in this Franchise shall ever be construed
as conferring upon Company any exclusive rights or privileges of any nature
whatsoever.

         SECTION 19. It shall be Company's obligation as provided in Section 8
hereof to furnish efficient electrical service to the public at reasonable rates
and to maintain its property in good repair and working order except when
prevented from so doing by forces and conditions not reasonably within the
control of Company. Should Company fail or refuse to maintain its System in good
order and furnish efficient service at all times throughout the life of this
grant, except only when prevented from so doing by Force Majeure, or should
Company fail or refuse to furnish efficient service at reasonable rates,
lawfully determined by City, throughout the life of this grant, excepting only
during such periods as Company shall in good faith and diligently contest the
reasonableness of the rates in question, then it shall forfeit and pay to City
the sum of Twenty Five Dollars ($25) for each day it shall so fail or refuse
after reasonable notice thereof and a hearing thereon by City. Any suit to
recover such penalty shall be filed within one year from the date the penalty
accrues.

         SECTION 20. This Franchise is granted subject to the lawful provisions
of Section 17, Article II, of the Charter of City of Houston, which provisions
are incorporated herein. If for the purposes of such Section it shall ever
become necessary to ascertain the mode of determining fair valuation, such fair
valuation shall mean current fair market value. If City should elect to exercise
its rights under such Section, payment of a fair valuation shall be required,
the mode of ascertaining which, if not agreed upon by the

<PAGE>

parties, shall be determined in an appropriate proceeding filed in any Court
having jurisdiction.

         SECTION 21. If any term or other provision of the Franchise is
determined by a nonappealable decision by a court, administrative agency, or
arbitrator to be invalid, illegal, or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of the Franchise shall
nevertheless remain in full force and effect so long as the economic or legal
substance is not affected in any manner materially adverse to either party. Upon
such determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties shall negotiate in good faith to modify
the Franchise so as to effect the original intent of the parties as closely as
possible.

         SECTION 22. SUBJECT TO SECTION 15, COMPANY, ITS SUCCESSORS AND ASSIGNS,
SHALL PROTECT AND HOLD CITY HARMLESS AGAINST ALL CLAIMS FOR DAMAGES OR DEMANDS
FOR DAMAGES TO ANY PERSON OR PROPERTY BY REASON OF THE CONSTRUCTION AND
MAINTENANCE OF ITS ELECTRICITY TRANSMISSION AND DISTRIBUTION SYSTEM, OR IN ANY
WAY GROWING OUT OF THE GRANTING OF THIS FRANCHISE, EITHER DIRECTLY OR
INDIRECTLY, OR BY REASON OF ANY ACT, NEGLIGENCE, OR NONFEASANCE OF THE
CONTRACTORS, AGENTS OR EMPLOYEES OF COMPANY, ITS SUCCESSORS OR ASSIGNS, AND
SHALL REFUND TO CITY ALL SUMS WHICH IT MAY BE ADJUDGED TO PAY ON ANY SUCH CLAIM,
OR WHICH MAY ARISE OR GROW OUT OF THE EXERCISE OF THE RIGHTS AND PRIVILEGES
HEREBY GRANTED, OR BY THE ABUSE THEREOF, ANY COMPANY, ITS SUCCESSORS AND
ASSIGNS, SHALL INDEMNIFY AND HOLD CITY HARMLESS FROM AND ON ACCOUNT OF ALL
DAMAGES, COSTS, EXPENSES, ACTIONS, AND CAUSES OF ACTION, TO THE EXTENT PERMITTED
BY THE TEXAS TORT CLAIMS ACT, THAT MAY ACCRUE TO OR BE BROUGHT BY ANY PERSON,
PERSONS, COMPANY OR COMPANIES AT ANY TIME HEREAFTER BY REASON OF THE EXERCISE OF
THE RIGHTS AND PRIVILEGES HEREBY GRANTED, OR OF THE ABUSE THEREOF.

         SECTION 23. In granting this Franchise, it is understood that the
lawful power vested by law in City to regulate all public utilities within City,
and to regulate the local rates of public utilities within City within the
limits of the Constitution and laws, and to require all persons or corporations
to discharge the duties and undertakings, for the performance of which this
Franchise was made, is reserved; and this grant is made subject to all lawful
rights, powers and authorities, either of regulation or otherwise, reserved to
City by its Charter or by the general laws of this State.

         SECTION 24. This Franchise replaces all former franchise agreements
with Company, or its predecessors, which are hereby repealed. There is
specifically and particularly repealed that certain City of Houston, Texas
Ordinance No. 1957-929 passed by the Mayor of City of Houston on the 21st day of
August, 1957, granting a franchise to Houston Lighting & Power Company.

<PAGE>

         SECTION 25. City by the granting of this Franchise does not surrender
or to any extent lose, waive, impair or lessen the lawful powers and rights, now
or hereafter vested in City under the Constitution and statutes of the State of
Texas and under the Charter of City to regulate the rates and services of
Company; and Company by its acceptance of this Franchise agrees that all such
lawful regulatory powers and rights as the same may be from time to time vested
in City shall be in full force and effect and subject to the exercise thereof by
City at any time and from time to time.

         SECTION 26. Within 30 days following the final passage and approval of
this ordinance, the Company shall file with the City Secretary, accompanied by
appropriate authorized corporate resolutions in a form acceptable to the City
Attorney, a written statement in the following form signed in its name and
behalf:

         "To the Honorable Mayor and the City Council of the City of Houston,
Texas:

         For itself, its successors and assigns, Grantee, CENTERPOINT ENERGY
         HOUSTON ELECTRIC, LLC, hereby accepts the attached ordinance and agrees
         to be bound by all of its terms, conditions and provisions."

                                        CENTERPOINT ENERGY HOUSTON
                                        ELECTRIC, LLC

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

         "Dated this the _____ day of  ______________________, 2005."

         SECTION 27. This Franchise, having been published as required by
Article II, Section 17 of the City Charter shall take effect and be in force
from and after 30 days following its final passage and approval, and receipt by
the City of Company's acceptance filed pursuant to Section 26. In compliance
with the provisions of Article II, Sections 17 and 18, of the City Charter, the
Company shall pay the cost of those publications and any costs associated with
any elections held regarding this Franchise required by such Charter provisions.

         SECTION 28. Every notice, order, petition, document, or other direction
or communication to be served upon the City or the Company shall be deemed
sufficiently given if sent by registered or certified mail, return receipt
requested. Every such communication to the Company shall be sent to:

         VICE PRESIDENT, REGULATORY RELATIONS
         CENTERPOINT ENERGY, INC.
         1111 LOUISIANA STREET
         HOUSTON, TEXAS 77002

<PAGE>

Every such communication to the City or the City Council shall be sent to the

         DIRECTOR, FINANCE & ADMINISTRATION DEPARTMENT
         611 WALKER, 10TH FLOOR
         HOUSTON, TEXAS 77002

and, as applicable,  to the

         CITY ATTORNEY,                     CITY SECRETARY
         CITY HALL ANNEX                    CITY HALL ANNEX
         900 BAGBY, 4TH FLOOR               900 BAGBY, PUBLIC LEVEL
         HOUSTON, TEXAS 77002               HOUSTON, TEXAS 77002

The mailing of such notice, direction, or order shall be equivalent to direct
personal notice and shall be deemed to have been given the earlier of receipt or
two business days after it was mailed.

         SECTION 29. The rights and remedies provided herein are cumulative and
not exclusive of any remedies provided by law, and nothing contained in this
Franchise shall impair any of the rights of the City or the Company under
applicable law, subject in each case to the terms and conditions of this
Franchise.

         PASSED first reading the 1st day of June, 2005.

         PASSED second reading the 8th day of June, 2005.

         PASSED third and final reading the 15th day of June, 2005.

         APPROVED the 15th day of June, 2005.

ATTEST/SEAL:

         /s/ Anna Russell
-------------------------------
City Secretary                                             /s/ Bill White
                                                   ----------------------------
                                                   Mayor of the City of Houston

     /s/ Judy Gray Johnson
-------------------------------
Director,
Finance and Administration Dept.

Prepared by Legal Dept.       /s/ Arturo G. Michel
                        -------------------------------
                        Arturo G. Michel, City Attorney

LD#
   ---------------

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